Value creation 2016
Value added analysis shows how HOCHTIEF generates added value while quantifying how the various public and private stakeholder groups benefit as a result.
HOCHTIEF continued to rigorously pursue its strategic path in 2016 in order to further increase profitability and liquidity. Sustainability in our activities resulted in a renewed listing in the Dow Jones Sustainability Index (DJSI). This commitment to sustainability further enhances our attractiveness to customers as well as on the capital and labor markets.
Net value added as a percentage of corporate performance was 20.2%, at the same level as in the prior year. The HOCHTIEF Group once again distributed the lionís share of net value added in 2016 to employees, as in past years. This large proportion of value added means that we can continue offering attractive employment on fair terms. The progress in this area is an outcome of the transformation processes set in motion in the HOCHTIEF Group over the last few years. Distributions to minority shareholders accounted for a total of EUR 113.0 million of value added in 2016. The reduction relative to the prior year mainly relates to the increase in our ownership interest in the CIMIC Group.
At 4.6% (EUR 187.2 million), the proportion of value added distributed to public authorities in 2016 was once again on a par with the prior year.
In today's difficult, low-interest market environment, HOCHTIEF's favorable credit standing makes it an enduringly attractive investment opportunity for lenders and equity investors. The proportion of value added distributed to lenders in 2016 was EUR 161.8 million-a decrease on the prior year due to the reduction in debt and interest rates. HOCHTIEF aims to afford shareholders their commensurate share in the company's positive earnings performance. The correspondingly higher dividend in 2016 resulted in a significant increase in the portion distributed to our shareholders and the Company itself, to EUR 320.5 million or 7.9% of net value added.
| Sources of value added | 2016 | 2015 | ||
|---|---|---|---|---|
| EUR million | % | EUR million | % | |
| Sales | 19,908.3 | 98.6 | 21,096.6 | 98.9 |
| Changes in inventories | (93.0) | -0.5 | 18.5 | 0.1 |
| Other operating income | 372.5 | 1.8 | 217.5 | 1.0 |
| Corporate performance | 20,187.8 | 100.0 | 21,332.6 | 100.0 |
| Materials | (14,778.2) | -73.2 | (15,484.3) | -72.6 |
| Other operating expenses | (1,208.1) | -6.0 | (1,203.4) | -5.6 |
| Other investment expenses | (38.5) | -0.2 | (51.2) | -0.2 |
| Input costs | (16,024.8) | -79.4 | (16,738.8) | -78.5 |
| Investment and interest income | 87.4 | 0.4 | 92.8 | 0.4 |
| Net income from participating interests | 114.9 | 0.6 | 155.7 | 0.7 |
| Gross value added | 4,365.3 | 21.6 | 4,842.3 | 22.7 |
| Depreciation and amortization | (287.7) | -1.4 | (413.8) | -1.9 |
| Net value added | 4,077.6 | 20.2 | 4,428.5 | 20.8 |
| Distribution of value added | 2016 | 2015 | ||
|---|---|---|---|---|
| EUR million | % | EUR million | % | |
| Employees | 3,295.1 | 80.8 | 3,664.8 | 82.8 |
| Lenders | 161.8 | 4.0 | 240.2 | 5.4 |
| Minority shareholders | 113.0 | 2.8 | 124.9 | 2.8 |
| Public authorities | 187.2 | 4.6 | 190.2 | 4.3 |
| HOCHTIEF and shareholders | 320.5 | 7.9 | 208.3 | 4.7 |
| Net value added | 4,077.6 | 100.0 | 4,428.5 | 100.0 |
Value creation 2015
Value added analysis shows how HOCHTIEF generates added value while quantifying how the various public and private stakeholder groups benefit as a result.
In connection with the disposals of activities, sales have decreased by approximately EUR 1 billion. The transformation processes completed in 2015 and the effective action taken to further boost profitability and liquidity at HOCHTIEF led within the same year to a slight increase (by 0.5%) in net value added expressed as a percentage of corporate performance. We benefit across the board from our commitment to sustainability, which among other aspects enhances our attractiveness on the capital and labor market.
In 2015, the HOCHTIEF Group once again distributed the lion’s share of net value added—83% of the total—to employees. This large proportion of value added means that we can continue offering attractive employment on fair terms. In this area, too, the changes relative to the prior year correspond with the transformation processes in the HOCHTIEF Group.
In today’s difficult, low-interest market environment, HOCHTIEF’s good credit standing makes it an enduringly attractive investment opportunity for lenders and equity investors. The proportion distributed to lenders in the year under review came to EUR 240.2 million. The portion distributed to shareholders and HOCHTIEF itself was EUR 208.3 million, mainly as a result of our consistent dividend policy. This represented 4.7% of net value added.
Likewise, the percentage of value added distributed to public authorities in 2015 was well into positive figures, at 4.3% (EUR 190.2 million).
| Sources of value added | 2015 | 2014 | ||
|---|---|---|---|---|
| EUR million | % | EUR million | % | |
| Sales | 21,096.6 | 98.9 | 22,099.1 | 99.1 |
| Changes in inventories | 18.5 | 0.1 | (30.4) | -0.1 |
| Other operating income | 217.5 | 1.0 | 225.4 | 1.0 |
| Corporate performance | 21,332.6 | 100.0 | 22,294.0 | 100.0 |
| Materials | (15,484.3) | -72.6 | (15,745.6) | -70.6 |
| Other operating expenses | (1,203.4) | -5.6 | (1,767.6) | -7.9 |
| Other investment expenses | (51.2) | -0.2 | (31.9) | -0.1 |
| Input costs | (16,738.8) | -78.5 | (17,545.1) | -78.7 |
| Investment and interest income | 92.8 | 0.4 | 104.4 | 0.5 |
| Net income from participating interests | 155.7 | 0.7 | 118.5 | 0.5 |
| Gross value added | 4,842.3 | 22.7 | 4,971.8 | 22.3 |
| Depreciation and amortization | (413.8) | -1.9 | (440.4) | -2.0 |
| Net value added | 4,428.5 | 20.8 | 4,531.4 | 20.3 |
| Distribution of value added | 2015 | 2014 | ||
|---|---|---|---|---|
| EUR million | % | EUR million | % | |
| Employees | 3,664.8 | 82.8 | 4,423.9 | 97.6 |
| Lenders | 240.2 | 5.4 | 284.6 | 6.3 |
| Minority shareholders* | 124.9 | 2.8 | (9.2) | -0.2 |
| Public authorities | 190.2 | 4.3 | (45.4) | -1.0 |
| HOCHTIEF and shareholders* | 208.3 | 4.7 | (122.6) | -2.7 |
| Net value added | 4,428.5 | 100.0 | 4,531.4 | 100.0 |
Profit distributions to minority shareholders in the CIMIC Group were the main factor in the amount distributed to minority shareholders (EUR 124.9 million) in 2015.
Value creation 2014
With HOCHTIEF’s value creation, we want to present how we contribute to public and private incomes. This consideration shows the measure of the value for its stakeholders created by the company’s sustainable economic activities.
| Value creation in 2014 | 2014 | 2013 (adjusted) | ||
|---|---|---|---|---|
| in EUR m | in % | in EUR m | in % | |
| Sales | 22,099.1 | 99.1 | 22,498.7 | 98.4 |
| Changes in inventories | -30.4 | -0.1 | -77.9 | -0.3 |
| Other operating income | 225.4 | 1.0 | 454.4 | 2.0 |
| Corporate performance | 22,294.0 | 100.0 | 22,875.2 | 100.0 |
| Materials | -15,745.6 | 70.6 | -15,540.7 | 67.9 |
| Other operating expenses | -1,767.6 | 7.9 | -1,331.2 | 5.8 |
| Other investment and interest expenses | -31.9 | 0.1 | -24.6 | 0.1 |
| Input costs | -17,545.1 | 78.7 | -16,896.4 | 73.9 |
| Investment and interest income | 104.4 | 0.5 | 78.9 | 0.3 |
| Net income from participating interests | 118.5 | 0.5 | 210.4 | 0.9 |
| Gross value added | 4,971.8 | 22.3 | 6,268.1 | 27.4 |
| Depreciation and amortization | -440.4 | 2.0 | -686.4 | 3.0 |
| Net value added | 4,531.4 | 20.3 | 5,581.6 | 24.4 |
| Use of value added | 2014 | 2013 (adjusted) | ||
|---|---|---|---|---|
| in EUR m | in % | in EUR m | in % | |
| To employees | 4,423.9 | 97.6 | 4,740.8 | 84.9 |
| To creditors | 284.6 | 6.3 | 310.9 | 5.6 |
| To minority interest* | -9.2 | -0.2 | 301.1 | 5.4 |
| To the public sector | -45.4 | -1.0 | 158.2 | 2.8 |
| To company & shareholders * | -122.6 | -2.7 | 70.6 | 1.3 |
| Net value added | 4,531.4 | 100.0 | 5,581.6 | 100.0 |
* from continued operations
As in the previous years, most of the Group’s value added in 2012 was again distributed to our employees. In 2014, employees benefit from 97.6 percent of net value, which corresponds to an amount of EUR 4,423.9 million. The high added value contribution allows us the continued offering of jobs with adequate payment.
The percentage distributed to lenders in the fiscal year amounted to EUR 284.6 million. HOCHTIEF enjoys high credit standing, and in the current market environment with low interest rate levels thus offers an attractive investment option, e.g. through capital market bonds issued for outside creditors.
The share of the public sector was negative and, in the reporting year, it resulted essentially from deferred tax assets by the recognition of accounting provisions for credit risk in relation to project receivables at CIMIC (former Leighton).
The share in value added which went to minority shareholders, to the company and shareholders from continued operations in fiscal 2014 was essentially affected by the recognition of accounting provisions for credit risk in relation to project receivables at CIMIC.
Fortunately, we were able to pay an increased dividend of EUR 1.90 per share to our shareholders.