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.