Development of activities
During the first half of this year the developments in the markets in which Heijmans is active were predominantly positive. In the market for the sector of Homes and Offices the demand for more expensive owner-occupied private homes in particular was still as strong. Heijmans is involved in a number of very large office building projects for third parties. The strong growth in turnover and result generated by Heijmans' own property development projects had a very positive effect on the result, which was otherwise mitigated by an extensive and logistically, complicated public utility construction project. The large infrastructural works in which Heijmans is involved, such as the Betuwespoorlijn, the HSL Zuid and the Westerschelde Oeververbinding, are making good progress, which has led to strong growth in the turnover and result in the Traffic and Transport sector. In the Industry and Production sector the effects of the postponement of investments, in the petrochemical industry in particular, are still evident. This puts slight pressure on the turnover and results in this sector. In terms of Heijmans' activities outside the Netherlands, Heijmans International is feeling the effects of the reduced spending of local governments in Belgium following the election year 2000 and the pressure on investments in networks assigned by telecom companies.
Acquisitions
Heijmans acquired three companies during the first half of this year. In addition to Koninklijke IBC BV, the other two companies were Roks Montage Holland BV and Dirk Buyse Grondwerken NV in Belgium. The three acquired companies contributed a total of EUR 270 million to the turnover (afther the elimination of intercompany) and realized EBIT of EUR 9.6 million during the first half of 2001, accounting for 60 % of the growth in the EBIT during the first six months of this year. The organic growth in the EBIT of Heijmans N. V. was EUR 5.5 million during the first half of this year (the said figure includes the amortization of goodwill in connection with the acquisitions). The acquired companies are expected to realize total EBIT of EUR 27.6 million in 2001 as predicted. As has already been announced, the net margin fell from 3.0 % to 2.8 % as a result of the acquisition of IBC (in 2000 operating independently IBC realized a net margin of 2.1 %). The integration of Koninklijke IBC is proceeding entirely according to plan. One of the objectives of the integration process - the realization of synergistic cost advantages of at least EUR 10 million on an annual basis - will clearly be achieved.
The operating result (EBIT) increased from EUR 30.5 million during the first six months of 2000 to EUR 45.6 million during the first half of 2001. The tax burden increased from 31.6 % to 33.2 % in the first half of 2001.
Shareholders' equity and solvency
As a result of the issue of new shares in connection with the acquisition of Koninklijke IBC and the take-up of stock dividend, the average increase in the number of outstanding shares was 9.2 % in the first half of 2001, from 18,248,246 to 19,925,845 as of 30 June 2001. The group equity increased from EUR 177.2 million as of
1 January to EUR 244.5 million as of 30 June of this year. By the end of June solvency was 33.9 %, as opposed to 27.9 % at the end of June the previous year. Subordinated loans worth EUR 61 million exerted a positive effect on the level of solvency. During the first half of the year a sum of more than EUR 65 million was credited to the shareholders' equity as a result of the capitalization of goodwill. EUR 60 million of this sum was generated by the acquisition of Koninklijke IBC. A sum of EUR 15 million was added to the shareholders' equity (net) as a result of the change in the accounting principles introduced with effect from 1 January 2001, from profit recognition on completion of the project to profit recognition on a proportional basis during the course of the project.
Order book
As of 30 June of this year the order book of Heijmans N. V. amounted to more than
EUR 2.3 billion, as opposed to EUR 1.3 billion at the end of June 2000. The order book includes only those projects for which a written contract has been issued and projects on which work has already started. The volume of work in hand as of 30 June 2001 was considerably higher than at the end of June 2000, amounting to approximately
EUR 7.2 billion.
Prospects
As already announced at the time of the publication of the annual accounts for 2000 in March of this year, the Executive Board of Heijmans N. V. expects the company to realize a turnover of approximately EUR 2.25 billion in 2001 with a net profit of at least EUR 68 million (+ 40 %). The profit per share is expected to increase by 30 %, taking into account the issue of shares with a view to financing the takeover of IBC and the capitalization of purchased goodwill as a result of the acquisition. Heijmans maintains its long-term objectives of a turnover of EUR 2.5 billion in 2003 (not including acquisitions) with profitability at a level of at least 3.5 % net.
During the first half of this year the developments in the markets in which Heijmans is active were predominantly positive. In the market for the sector of Homes and Offices the demand for more expensive owner-occupied private homes in particular was still as strong. Heijmans is involved in a number of very large office building projects for third parties. The strong growth in turnover and result generated by Heijmans' own property development projects had a very positive effect on the result, which was otherwise mitigated by an extensive and logistically, complicated public utility construction project. The large infrastructural works in which Heijmans is involved, such as the Betuwespoorlijn, the HSL Zuid and the Westerschelde Oeververbinding, are making good progress, which has led to strong growth in the turnover and result in the Traffic and Transport sector. In the Industry and Production sector the effects of the postponement of investments, in the petrochemical industry in particular, are still evident. This puts slight pressure on the turnover and results in this sector. In terms of Heijmans' activities outside the Netherlands, Heijmans International is feeling the effects of the reduced spending of local governments in Belgium following the election year 2000 and the pressure on investments in networks assigned by telecom companies.
Acquisitions
Heijmans acquired three companies during the first half of this year. In addition to Koninklijke IBC BV, the other two companies were Roks Montage Holland BV and Dirk Buyse Grondwerken NV in Belgium. The three acquired companies contributed a total of EUR 270 million to the turnover (afther the elimination of intercompany) and realized EBIT of EUR 9.6 million during the first half of 2001, accounting for 60 % of the growth in the EBIT during the first six months of this year. The organic growth in the EBIT of Heijmans N. V. was EUR 5.5 million during the first half of this year (the said figure includes the amortization of goodwill in connection with the acquisitions). The acquired companies are expected to realize total EBIT of EUR 27.6 million in 2001 as predicted. As has already been announced, the net margin fell from 3.0 % to 2.8 % as a result of the acquisition of IBC (in 2000 operating independently IBC realized a net margin of 2.1 %). The integration of Koninklijke IBC is proceeding entirely according to plan. One of the objectives of the integration process - the realization of synergistic cost advantages of at least EUR 10 million on an annual basis - will clearly be achieved.
The operating result (EBIT) increased from EUR 30.5 million during the first six months of 2000 to EUR 45.6 million during the first half of 2001. The tax burden increased from 31.6 % to 33.2 % in the first half of 2001.
Shareholders' equity and solvency
As a result of the issue of new shares in connection with the acquisition of Koninklijke IBC and the take-up of stock dividend, the average increase in the number of outstanding shares was 9.2 % in the first half of 2001, from 18,248,246 to 19,925,845 as of 30 June 2001. The group equity increased from EUR 177.2 million as of
1 January to EUR 244.5 million as of 30 June of this year. By the end of June solvency was 33.9 %, as opposed to 27.9 % at the end of June the previous year. Subordinated loans worth EUR 61 million exerted a positive effect on the level of solvency. During the first half of the year a sum of more than EUR 65 million was credited to the shareholders' equity as a result of the capitalization of goodwill. EUR 60 million of this sum was generated by the acquisition of Koninklijke IBC. A sum of EUR 15 million was added to the shareholders' equity (net) as a result of the change in the accounting principles introduced with effect from 1 January 2001, from profit recognition on completion of the project to profit recognition on a proportional basis during the course of the project.
Order book
As of 30 June of this year the order book of Heijmans N. V. amounted to more than
EUR 2.3 billion, as opposed to EUR 1.3 billion at the end of June 2000. The order book includes only those projects for which a written contract has been issued and projects on which work has already started. The volume of work in hand as of 30 June 2001 was considerably higher than at the end of June 2000, amounting to approximately
EUR 7.2 billion.
Prospects
As already announced at the time of the publication of the annual accounts for 2000 in March of this year, the Executive Board of Heijmans N. V. expects the company to realize a turnover of approximately EUR 2.25 billion in 2001 with a net profit of at least EUR 68 million (+ 40 %). The profit per share is expected to increase by 30 %, taking into account the issue of shares with a view to financing the takeover of IBC and the capitalization of purchased goodwill as a result of the acquisition. Heijmans maintains its long-term objectives of a turnover of EUR 2.5 billion in 2003 (not including acquisitions) with profitability at a level of at least 3.5 % net.