In the first half of the year 2002, Heijmans N.V. (construction and related activities) has achieved operating returns of EUR 1,068 million. This represents an increase by 9% in relation to the operating returns of EUR 981 million realized during the first half of 2001. This said increase is primarily the result of an organic growth in the operating returns.
The net profit increased by 21%, from EUR 27.9 million during the first half of 2001 to
The net profit increased by 21%, from EUR 27.9 million during the first half of 2001 to
EUR 33.8 million by the end of June of this year. The profit per ordinary share increased by 9% to EUR 1.46 (as opposed to EUR 1.34 at the end of the first half-year of 2001). Earlier this year Heijmans predicted that the net profit for 2002 would increase by 20% to
EUR 84 million. However, Heijmans is now predicting a net profit of around EUR 87 million (an increase of 24% in comparison to 2001) in relation to a turnover of approximately
EUR 2.5 billion.
Markets
The long series of years that showed positive economic figures finally came to an end in 2001. The downturn in the economy continued during the first six months of 2002. The markets in which Heijmans operates cannot entirely avoid this development either.
In the Homes and Offices market segment, the Heijmans' production of homes has remained constant. 836 homes were sold in the first half of 2002 as opposed to
1,767 in 2001. Here the continued comfortable capital position of consumers and the tension, although reduced, still present in the housing market have ensured that housing prices have remained stable. The market for commercial real estate has entered a slump. Heijmans has countered this by acquiring projects in the public sector (healthcare and education). Thus when investing in ground positions Heijmans is currently pursuing a policy of restraint. Ground positions are being replaced rather than increased. The investments in ground positions during the first half of 2002 were the result of commitments entered into in the past.
In the Traffic and Transport sector huge projects such as the Betuwespoorlijn,
the HSL Zuid and the Westerschelde Channel Connection were all well under way.
As was also the case in 2001, the budgets for these large projects meant that less work was put out to tender in the market for smaller projects. This is reflected in the slight drop in the order book. The decrease is also influenced by restraint on the part of authorities in view of the so-called VAT compensation funds for the local councils which comes into effect in
January 2003. For local councils this can lead to financial benefits of 19% (the highest VAT rate).
In the Industry and Production market, the industry companies derived their returns principally from maintenance orders and contracts. Because of the drop in the volume of production of new construction, the industry companies and the production companies both had to contend with a drop in demand.
In Belgium Heijmans' activities were slightly hindered by the slowdown in spending by local government. Improvement was evident in the housing market. Together with the KBC Bank Heijmans succeeded in pulling in the Centrumontwikkeling Leuven project - one of the largest inner-city redevelopment projects in Europe. In the road construction sector the construction of the HSL between Antwerp and the Dutch border proved to be the main source of income. However, the Mobility Masterplan for Antwerp, which is yet to be implemented, makes for good prospects in the longer term.
Acquisitions
Acquisitions are an important part of Heijmans' growth strategy. Operating within tightly formulated limiting conditions, over the next few years Heijmans aims to increase its income from operations by an average of 13% on an annual basis purely by means of acquisitions. Dekker Geleiderail B.V. and Gebroeders van der Veeken B.V. were both acquired in the second half of 2001. During the first six months of this year these companies contributed EUR 3 million to the income from operations.
During the first half of 2002 Heijmans announced the takeover of Moeskops' Bouwbedrijf NV (Belgium), Proper-Stok Groep B.V., Ingenieursbureau Van Kleef B.V. and Aannemingsmaatschappij G. van Herk Tzn. B.V. These companies will be included in the consolidated figures from 1 July 2002. Earlier today Heijmans announced the takeover of Himmos N.V. in Belgium and Stork Infratechniek B.V. With these takeovers Heijmans will once again meet its acquisition targets in 2002 and 2003.
Result
The earnings before interest and tax (EBIT) increased from EUR 45.6 million during the first six months of 2001 to EUR 51.9 million during the first half of 2002. The tax burden fell from 33.2% to 26.2% during the first half of 2002. In addition to the implementation of tax-deductible losses, the reduction in the tax burden was also due to the ruling by the Supreme Court that external due diligence costs are considered to be tax deductible.
Shareholders' equity and the capital base
The average number of shares outstanding increased by 12.5%, from 19,925,845 in the middle of 2001 to 22,428,101 at 30 June 2002. The increase was primarily due to the taking up of stock dividend, the share issue within the context of the acquisition of Koninklijke IBC B.V. and the exercising of stock options. The group equity increased from EUR 285 million as of 1 January 2002 to EUR 380 million as of 30 June of this year. In addition to retained profits and options issued, the increase in the group equity was also due to an issue of cumulative financing preference shares in exchange for a sum of EUR 66 million. As of 30 June this year, solvency based on guarantee capital (shareholders' equity and subordinated loans) amounted to 35.1% as compared with 30.5% as of 30 June 2001.
The order book
At the end of June 2002, the order portfolio amounted to about EUR 2.2 billion, which represents an increase of 12% as compared with the end of 2001. 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 2002 was considerably higher, amounting to over EUR 7 billion.
Prospects
As already announced at the time of the publication of the annual accounts for 2001 in March of this year, Heijmans' Executive Board expects the company to realize a turnover of approximately EUR 2.5 billion in 2002 with a net profit of approximately EUR 84 million (+ 20%). As a result of acquisitions, this forecast has been adjusted and a net profit of approximately EUR 87 million (+24%) is expected for 2002. The profit per share is expected to rise by 13% based on an average number of ordinary shares of approximately 22.4 million over 2002 as a whole.
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