From upheaval to new start - Vom Umbruch zum Aufbruch Creating a multinational leader in construction services - 2019 half-year results Media and ...
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From upheaval to new start – Vom Umbruch zum Aufbruch Creating a multinational leader in construction services 2019 half-year results Media and analysts conference Zurich, 20 August 2019
First half-year 2019
Highlights and key developments
Implenia achieved EBITDA of CHF 72.9 million in the first half of 2019
Implenia confirms earnings expectations for transitional year 2019, as well as
medium-term target margin for EBITDA
All divisions contributed to positive result;
Development and Buildings in particular achieved very good results
Corrective measures are working; despite good underlying performance, Civil
Engineering and Specialties are, as expected, still subject to continued negative influences
New organizational structure is proving effective and, thanks to clear roles and
responsibilities, is enabling rapid implementation of our strategic initiatives
© Implenia | Media and analysts Conference | August 2019 | Page 2
First half-year 2019
Contents
Business Financials Strategy Update Q&A
Update and Outlook
André Wyss Marco Dirren André Wyss André Wyss
CEO CFO CEO CEO
Marco Dirren
CFO
© Implenia | Media and analysts Conference | August 2019 | Page 3
First half-year 2019
Business Update: Implenia Group and its Divisions
© Implenia | Media and analysts Conference | August 2019 | Page 4
Business Update
Implenia Group – result confirms our expectations
6,369 (+2.2%) 2,184 (+2.8%) 72.9 (n.a.) Better quality in Order Book thanks
Order Book Revenue EBITDA to more selective order acquisition
CHF million CHF million CHF milllion
Revenue growth attributable to
6,234 6,369 internationalisation strategy in
72.9 Civil Engineering (incl. FX +4.8%)
2,124 2,184
56.0 Good underlying performance overall
1 by the divisions
41.4
As expected, EBITDA brought down by lack
of contribution margin from projects corrected
at the end of 2018, and by costs of strategy
implementation
June June June June June June No further unexpected corrections
2018 2019 2018 2019 2018 2019 identified
1 Excl. IFRS 16
© Implenia | Media and analysts Conference | August 2019 | Page 5
Business Update
Implenia Group’s four entrepreneurial divisions
Development Buildings Civil Engineering Specialties
Integrated project End-to-end construction Specialised civil Differentiated
developer services provider engineering business provider
with innovative business for all types of new builds with strong engineering in attractive niches and
models and refurbishments capabilities with a focus on innovation
Site and property development General and total contractor Tunnel construction, special Wooden construction, formwork,
foundations and regional facade technology, pretensioning
business (e.g. road and railway technology, construction site
construction) logistics, gravel plants
© Implenia | Media and analysts Conference | August 2019 | Page 6
Business Update
Development – strong result and good prospects
199 (+25.2%) 27.4 (n.a.) Successful sales, e.g. KIM inno-living
Real estate portfolio EBITDA in Winterthur
CHF million CHF million
Markets in relevant segments show
199 positive development
27.4
1 More investment in the division’s port-
159 23.0 27.1
folio, net CHF 13.5 million in first half-year
and CHF 40 million since June 2018
Real estate portfolio June 2019 at
CHF 199 million at purchase value
Evaluating greater value creation:
Investing in investment properties combined
with innovative financing models
June June June June
2018 2019 2018 2019 Geographical orientation:
Team started in Germany
1 Excl. IFRS 16
© Implenia | Media and analysts Conference | August 2019 | Page 7
Business Update
Buildings – order quality improves
2,771 (-16.9%) 1,103 (-1.4%) 21.3 (n.a.) A more selective acquisition policy
Order Book Revenue EBITDA is improving the quality of the Order Book
CHF million CHF million CHF million
Revenue in Switzerland and Austria
slightly higher than a year ago
3,333 1,119 1,103
Shortages of certain trades in Germany
2,771
21.3 lead to slightly lower revenue than
previous year
1
16.7 16.6
Immediate measures in South Baden
largely complete
Focus on complex large-scale projects
in line with strategy
June June June June June June Good market position in Switzerland,
2018 2019 2018 2019 2018 2019 Germany and Austria
1 Excl. IFRS 16
© Implenia | Media and analysts Conference | August 2019 | Page 8
Business Update
Civil Engineering – making use of market opportunities internationally
3,455 (+26.1%) 1,118 (+7.7%) 18.5 (n.a.) Order Book is broadly based – underlines
Order Book Revenue EBITDA good positioning in home markets
CHF million CHF million CHF million
Continued positive revenue and earnings
effect from large-scale projects
3,455
Turnarounds in Swiss regional business and
2,739 in Germany progressing according to plan
1,118
1,037
18.5 Measures in Norway having an impact,
no further corrections identified
Good position in home markets
to take advantage of market opportunities
5.3
1
June June June June -4.5
2018 2019 2018 2019 June June
2018 2019
1 Excl. IFRS 16
© Implenia | Media and analysts Conference | August 2019 | Page 9
Business Update
Specialties – niche services and innovation
144 (-11.6%) 120 (-14.2%) 6.5 (n.a.) Successful acquisitions in wood
Order Book Revenue EBITDA construction, in pretensioning and
CHF million CHF million CHF million facade technology
Reduced revenue owing to external project
delays in wind energy projects
162
11.6 Strategic review of individual businesses
144 139
120 within division by end of the year
6.5 Measures in Poland having an impact,
1 no further corrections identified
6.3
Creation of “Implenia Innovation Hub”
Appointment of Anita Eckardt as Division
June June June June June June Head from 1 September 2019
2018 2019 2018 2019 2018 2019
1 Excl. IFRS 16
© Implenia | Media and analysts Conference | August 2019 | Page 10Business Update
What we are every day: construction services provider for complex major projects
Development “Fribourg-Alt.671” Buildings “Bavaria Towers”, Munich Civil Engineering "CERN", Cessy Specialties “Humboldt Forum”, Berlin
© Implenia | Media and analysts Conference | August 2019 | Page 11First half-year 2019
Financials
© Implenia | Media and analysts Conference | August 2019 | Page 12Financials
Overview of new IFRS 16 standard
IFRS 16 Impact on Implenia as at 30.06.2019
Balance sheet
Total assets Total assets + CHF 131.0 million
Equity ratio Equity ratio -0.9%
Net-cash-position
Income statement
EBITDA EBITDA + CHF 31.5 million
EBIT
EBT –
Cash flow statement1
Cash flow from operating activities
Free cash flow Free cash flow + CHF 29.4 million
Cash flow from financing activities
1 IFRS 16 has no influence on reported total cash flow
© Implenia | Media and analysts Conference | August 2019 | Page 13Financials
Result in line with our expectations
Income statement (shortened), CHF million EBITDA1 deviation of CHF 14.6 million:
Two-thirds due to lack of contribution
72.9
margin in Norway and Poland as
communicated at end-2018
One-third due to costs of strategy
-61.5 implementation
Compared to previous year,
11.4 9.3 depreciation (excl. IFRS 16) on
-2.1 -8.6 -0.2 0.5 a comparable level
EBITDA Depreciation Operating PPA Operating Financial Taxes Consolidated
income income result profit Operating income excl. PPA lower as
excl. PPA a consequence (predicted in Outlook)
20191
Remainder of PPA amortisation
41.4 -31.5 9.9 -2.1 7.8 -6.4 -0.4 1.1
for 2nd half 2019: CHF 2.1 million
2018 -14.6
56.0 -28.8 27.2 -9.1 18.1 -6.2 -3.0 8.9 Financial result and taxes
as expected
1 Excl. IFRS 16
© Implenia | Media and analysts Conference | August 2019 | Page 14Financials
Higher costs are mainly due to the implementation of the strategy
Change in EBITDA of the functions, CHF million Core initiatives of strategy
implementation in the first half
of 2019:
-0.5 Value Assurance
-0.8 Procurement Excellence
ERP-Transformation INSPIRE
-2.9 New organization
3.3
Approximately 50% of the costs for
strategy implementation (a total of
approximately CHF 10 million) are
-0.7 management expenses, the other half
are divisional costs
-4.1
June Management IAS 19 June IFRS 16 June
2018 expenses (net) 2019 2019
(excl. IFRS 16)
© Implenia | Media and analysts Conference | August 2019 | Page 15Financials
Implenia’s balance sheet is solid
Assets (shortened), CHF million Continuing high level
of cash and cash equivalents
30.06.2019 30.06.2018
Real estate transactions valued at
Cash & cash equivalents, derivatives 706.0 823.3 acquisition cost; market value much
Real estate transactions 198.8 158.7 higher
Other current assets 1,204.7 1,199.8
Other current assets almost
Total current assets 2,109.5 2,181.8 unchanged, despite late payments
by a few customers
Goodwill 300.5 310.5
Rights of use from leases 139.7 - Rights of use from leasing (IFRS 16)
lower than expected as of balance
Other non-current assets 403.6 385.4
sheet date
Total non-current assets 843.8 695.9
Increase in other fixed assets driven
Total assets 2,953.2 2,877.7 mainly by CAPEX needed to handle
Order Book
© Implenia | Media and analysts Conference | August 2019 | Page 16Financials
Implenia is determined to maintain its investment grade rating
Equity and Liabilities (shortened), CHF million Lower accounts payable because of
prompter payments to creditors
30.06.2019 30.06.2018
Increase in financial liabilities due to
Accounts payable 411.0 475.1 IFRS 16; no other significant changes
Other current liabilities 1,254.5 1,170.9
Robust net cash position (excluding
Total current liabilities 1,665.5 1,646.0 liabilities from leasing) of around
CHF 200 million
Long-term financial liabilities 606.9 499.5
Other non-current liabilities 110.1 129.1 Equity ratio remains solid by industry
standards (including subordinated
Total non-current liabilities 717.0 628.6 convertible bonds: 26.2%)
Total equity 570.8 603.2
Total equity and liabilities 2,953.2 2,877.7
Equity ratio 19.3% -
Equity ratio excl. IFRS 16 20.2% 21.0%
© Implenia | Media and analysts Conference | August 2019 | Page 17Financials
Equity ratio – confident about year-end position
Change in equity (shortened), CHF million Equity influenced by purchase price
x% Equity ratio
allocation (PPA), other comprehensive
income (OCI) and dividends
2.0
585.2 0.0 585.2
-1.5 PPA amortisation: CHF 90 million
-6.3 in total since 2015
Equity ratio: IFRS 16 leads
-9.2
0.6 570.8 to a reduction of 0.9% due to
increase in total assets
Equity IFRS Equity Consolidated PPA OCI Dividends Other effects Equity
31.12.18 01.01.19 profit after tax 30.06.19 Increase in equity ratio expected
excl. PPA in second half of 2019 owing to
20.5% 19.4% 19.3%
increases in income and lower
20.2%1
PPA amortisation
2018
654.9 -14.2 640.7 15.3 -6.4 -13.0 -36.6 3.2 603.2
© Implenia | Media and analysts Conference | August 2019 | Page 18Financials
Free cash flow influenced by various reporting date effects
Free cash flow, CHF million Reporting date-related change in
net current assets
72.9
Generally successful incoming
payments – delays caused by late
payments by a few customers
182.3
More timely payments to creditors
7.3 Higher investment in
-13.5
-18.9 -134.5 33.0 machinery fleet
-167.5 29.4
-196.9 Continuous Investments in
EBITDA Change Real estate Interest Other Cashflow Invest. Free IFRS 16 Free Division Development’s portfolio
in Net transactions and taxes from Cashflow Cashflow
Working operating excl.
2018 Capital activities IFRS 16
56.0 -134.1 -0.7 -25.0 -10.8 -114.6 -24.3 -138.9 - -138.9
© Implenia | Media and analysts Conference | August 2019 | Page 19First half-year 2019
Strategy Update
© Implenia | Media and analysts Conference | August 2019 | Page 20Strategy Update
We strive to be a multinational leader in construction services
Vision Mission
Be a multinational leader Sustainably develop properties and construct buildings
in construction services as well as infrastructure with and for people to fit their modern living,
working and mobility needs
© Implenia | Media and analysts Conference | August 2019 | Page 21Strategy Update
Our four strategic pillars and what we achieved since we launched
Profitable Talent and
Portfolio Innovation
growth organization
Strong differentiated Increased market share Fast scaling of proven Right people and skills
businesses and margins innovations in right roles
Portfolio of four critical-sized, Operational Excellence Program Innovation Hub to be launched New operating model quickly
dif-ferentiated and for future growth: in September: implemented:
entrepreneurial Divisions in New, holistic Value Assurance Five innovation fields derived Entrepreneurship, func-
attractive markets defined and framework from mega trends tional excellence and local
implemented relationships
Digitalization 3-gate process (validate, pi-
(BIM, ERP transformation) lot, implement) supported by Simplicity, consistency
Organic and inorganic portfolio tools and coaching and clear roles & responsi-
Procurement Excellence
optimization options across bilities enable strategy
geographies and the value chain Lean Construction
implementation
further detailed Toolbox roll-out
Deep-dive on next pages
© Implenia | Media and analysts Conference | August 2019 | Page 22Strategy Update
Value Assurance: Holistic framework to improve performance being implemented
up until 2018 2019 from 2020
No holistic Group-wide Risk 4 project classes based on risk Project classes based on risk
Management framework factors, with committees for factors refined by analytics
Milestone only for Tender approval decision-making and escalation Milestones for Project Selection
Governance Milestones for Project Selection, and Tender Approval plus Reviews
Decision-making competency
mainly based on volume Tender Approval and execution during execution for all projects
for large projects
No standardized classification Group-wide standardized Standardized classification and
and reporting across units classification and reporting reporting incl. early warning
Standards Limited analytics to assess Group-wide early warning indicators and analytics tools
patterns of successful projects indicators and first analytics embedded in ERP
Limited Risk Management Ramp up of Value Assurance Value Assurance Org. & networks
Organization resources to evaluate projects organization and new capabili- for knowledge sharing in place
and drive knowledge sharing ties initiated New capabilities e.g. SWAT
© Implenia | Media and analysts Conference | August 2019 | Page 23Strategy Update
Digitalization: ERP transformation and further deployment of BIM on track
up until 2018 2019 from 2020
Fragmented processes ▪ Enterprise-wide mapping of core Blueprint implementation piloted
ERP-Trans- and systems (e.g., due and support processes in Switzerland in 2020
to acquisitions)
formation ▪ Blueprint for future harmonized Roll-out of refined blueprint
INSPIRE Transformation and digitaliza-tion processes defined to all markets from 2021
program INSPIRE initiated
BIM capability built up, with ▪ Set of use cases enlarged ▪ Roll-out of use cases across
Building development of first use cases, (planning and execution phase) countries as per defined plan
Information mainly in planning phase
Modeling
▪ Roll-out of use cases across ▪ BIM as competitive advantage,
Different levels of maturity and countries through group wide BIM with model-based core processes
(BIM) expertise across countries strategy and enabled workforce
© Implenia | Media and analysts Conference | August 2019 | Page 24Strategy Update
New organization and operating model implemented, with benefits for the Group
up until 2018 2019 from 2020
Fragmented businesses with Four integrated businesses with Portfolio optimization via organic
Businesses (partially) overlapping scope clearly defined scope, activities and inorganic moves
and activities and accountability to drive profitable growth
Primarily locally focused functions Integrated and elevated Functions driving best practices
(no Corporate Center) functions and knowledge exchange across
Functions with global reach divisions and countries
Several contact persons in countries One defined contact person in Country organizations contribute
for external stakeholders and internal each country (Country President to shaping the future of industry
Countries alignment as coordinating role) as thought leaders and employers
of choice
© Implenia | Media and analysts Conference | August 2019 | Page 25First half-year 2019
Outlook
© Implenia | Media and analysts Conference | August 2019 | Page 26Outlook
Sustained growth in our home markets
16
Implenia’s home markets, EUR billion +8.3%
Civ. Eng.
12
+5.0%
61 288 Civ. Eng.
-0.8% -0.4%
49 Civ. Eng. Buildings
+3.4%
9 35 Civ. Eng.
+2.1% +1.2%
Civ. Eng. Buildings
14 48
+3.4% +0.3%
Civ. Eng. Buildings
Home markets
Other markets
CAGR 2018-2021 investments
Source: Euroconstruct June 2019, Average Forecast Investments 2019-2021
© Implenia | Media and analysts Conference | August 2019 | Page 27Outlook
We have a strong plan for our way forward
Long term
Medium-term
2019
Creation of conditions for Profitable growth and market Transformation of our
long-term profitable growth share gain in our markets and business through innovation in
innovation our projects, services, and
Financial strengthening of
ways of working
our business (incl. cash flow)
Commitment to investment
grade rating
© Implenia | Media and analysts Conference | August 2019 | Page 28Outlook
Guidance and medium-term target confirmed
2019 Medium-term target
Over CHF 150 million before cost of
strategy implementation Confirmation of target margin
EBITDA1 from 5.25% to 5.75%
Expected strategy implementation costs
of around CHF 20 million
Grow profitably and in all our markets to
Revenue gain market share
1 Excl. IFRS 16
© Implenia | Media and analysts Conference | August 2019 | Page 29Dates and Contacts
Capital Market Day 1 October 2019
Capital Market Day
2019 Annual Report 25 February 2020 1 October 2019
Time: 9.30 a.m. to 5 p.m.
AGM 24 March 2020
Marco Dirren, CFO
Contact for investors
ir@implenia.com, +41 58 474 45 15
Silvan Merki, CCO
Media contact
communication@implenia.com, +41 58 474 74 77
© Implenia | Media and analysts Conference | August 2019 | Page 30We are happy to answer your questions
Legal notice
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confidential and/or legally protected information. The presentation may include including text, images, logos and product names, is either the
forward- looking information and statements, including statements concerning the property of Implenia, or is used by Implenia with permission.
outlook for our businesses. These statements are based on current expectations,
estimates and projections about the factors that may affect our future performance, Whilst we use all reasonable attempts to ensure the accuracy
including global economic conditions and the economic conditions of the regions and and completeness of all contents, Implenia gives no warranties
industries that are major markets for Implenia. These expectations, estimates and or representations of any kind that material in this presentation
projections are generally identifiable by statements containing words such as is complete, accurate, reliable or timely, or that it does not
"expects", "believes", "estimates", "targets", "plans", "outlook", or similar expressions. infringe third-party rights.
Numerous risks and uncertainties, many of which are beyond our control, could cause The contents of this presentation may not be reproduced,
our actual results to differ materially from the forward-looking information and modified or copied, or used for any commercial purposes, or
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rights reserved.
Although Implenia believes that the expectations reflected in all such forward-looking
statements are based upon reasonable assumptions, it can give no assurance that This legal notice applies to any Group Company of Implenia
these expectations will be achieved. Implenia also disclaims any obligation to update Ltd.
these forward-looking statements to reflect future events or developments.
2017-09-08
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