H.E.S. BEHEER P R E S S R E L E A S E
Europoort/Rotterdam, 25 July 2014
S T R O N G O P E R A T I N G R E S U L T F O R H E S B E H E E R I N F I R S T H A L F
INTERIM REPORT
Adjusted net profit 19% higher, net profit figures not comparable due to non-recurring revaluation of BTT in first half of 2013 and exceptional expenses in first half of 2014
H.E.S. Beheer N.V., Rotterdam, posted an adjusted net profit of €13.1 million for the first half of this year (first half 2013: €11.0 million), thanks to a 6.9% increase in the volume of bulk products received. All segments of the market (coal, industrial minerals, agribulk/biomass and oil products) exhibited growth. Iron ore shipments in particular rose sharply in connection with assistance activities of a temporary nature.
The net profit for the first half of 2014 (€9.3 million) cannot strictly be compared with the profit for the first six months of the preceding year (€21.8 million). As announced in the press release of 9 July 2014, both the interim results and the full-year figures for 2013 have been restated in connection with the non-recurring increase of €10.8 million in the valuation of what was initially a 50% investment in Botlek Tank Terminal, BTT. The restatement is in accordance with IFRS 3 Business Combinations and does not affect cash flows in any way. The net profit for the first half of 2014 was adversely affected by exceptional expenses of €3.8 million connected with the acquisition of ATIC Services S.A. and the planned takeover of HES Beheer itself.
Application of IFRS 11, under which proportionate consolidation of joint ventures is no longer permitted, means that OBA and Rotterdam Bulk Terminal (RBT) have ceased to be included in the consolidation (on a proportionate basis) with effect from the beginning of the 2014 reporting period. The 2013 interim results presented for comparison purposes do not include proportionate consolidation of these companies either. OBA and RBT have instead been recognised using the equity method according to IFRS 11 Joint Arrangements.
The remaining 78% of the logistics services provider ATIC Services S.A. was recently acquired, giving HES Beheer 100% ownership of this company. ATIC will be fully consolidated with effect from 1 July 2014. The carrying amount of the previously held 22% interest will undergo revaluation in the second half of the year, coupled with allocation of the purchase price for ATIC calculated in accordance with IFRS 3 Business Combinations.
The increase in the adjusted profit is largely accounted for by a higher contribution from EMO, a company in which HES Beheer still held a beneficial interest of 36.6% in the first half of the year (with effect from 30 June 2014: 57%) and, to a lesser extent, EBS (100%). The contributions from BTT (100%) and OVET (beneficial interest 47.7%; with effect from 30 June 2014: 49.9%) were also higher. The contribution from OBA (beneficial interest 73.8%; with effect from 30 June 2014: 74.9%) was maintained at the strong level of the corresponding period last year. The results of NHBS in the UK (100%), MTMG in Poland (22.2%) and RBT (50%) were down on the first half of 2013.
Despite reduced revenue at the UK subsidiary NHBS, consolidated revenue was up by 15.7%, thanks to higher revenue at EBS and BTT. The consolidated operating expenses, however, rose even more sharply, increasing by 25.3%, largely on account of the exceptional expenses incurred by HES Beheer, included in other operating expenses. The share in the results of associates rose from €10.1 million to €11.4 million, owing to higher contributions from EMO and OVET.
The adjusted earnings per share rose from €1.22 to €1.40, despite an increase in the number of shares outstanding (9.3 million as opposed to 9.0 million). However, the increase in the recognised carrying amount of BTT in 2013 and the exceptional expenses in the first half of 2014 had the effect of reducing reported net earnings per share from €2.41 to €1.00.
In the consolidated balance sheet, the ATIC transaction has been provisionally accounted for at the net amount of the investment, included in investments in associates, resulting in a sharp increase in the balance sheet total. The increase in bank borrowings caused the capital ratio to fall from 57.8% as at year-end 2013 to 46.2% as at 30 June 2014. After the full consolidation of ATIC later this year, the balance sheet total will again undergo a sharp increase.
The management is not making any statement about the expected full-year results at this stage in view of continuing uncertainties surrounding market conditions.
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HES Beheer Press Release
25 July 2014
Material events in the first half of 2014 and since the balance sheet date (30 June 2014)
On 1 April 2014, OBA acquired the site of a neighbouring terminal operator. The site in question extends to 9ha and was formerly known as ACP, an enclave within the existing OBA terminal. The acquisition gives OBA a continuous site extending to 70ha. The combination of the two sites will enable OBA to make significant efficiency savings. The existing storage capacity (2-2.5 million tonnes) has been increased by around 600,000-700,000t.
On 1 April 2014, the extension to the BTT site was handed over to the Port of Rotterdam, doubling the available area. The new site extension (created by filling in part of the harbour basin) will enable BTT to build 550,000m3 of extra tank storage capacity, possibly in stages.
16 May 2014 saw the official opening of the new 65,000m3 covered storage facility of EBS Europoort. The new shed is connected with plans to develop an agri-hub at this site on behalf of a major customer. The Port of Rotterdam is currently working on the construction of a new jetty to accommodate ocean-going vessels of 16m draught.
On 30 June 2014, the transfer took place of the 78% interest in logistics services provider ATIC Services S.A. held by ArcelorMittal, giving HES Beheer 100% ownership of this company. On the same date, 50.1% of OVET Holding B.V. was sold to Oxbow Coal B.V. This transaction now gives HES Beheer a combined direct and indirect interest in OVET Holding of 49.9% (was 47.7%).
17 July 2014 saw the publication of the offer memorandum with which 1908 Acquisition B.V. (part of Hestya Energy B.V.)
has made a public bid for the entire issued and outstanding share capital of H.E.S. Beheer N.V. Shareholders have from 18
July to 17 September 2014 to accept the offer of €43.64 (cum dividend) each for their shares. Further information
concerning the takeover bid will be provided at an extraordinary general meeting of shareholders to be held on 3
September 2014. The offer memorandum has been published on the HES Beheer website www.hesbeheer.com> Investor
Relations.
Related party disclosures
In the first half of the year, a limited amount of work was performed for and/or contracted out to joint ventures and associates.
The reported revenue includes an amount of €0.1 million in respect thereof.
Principal risks and uncertainties Reference is made to the 2013 annual report. Directors' statement
The management of the company hereby declares that, to the best of its knowledge, the 2014 interim financial statements,
prepared in accordance with IAS 34 Interim Financial Reporting, give a true and fair view of the assets, the liabilities, the financial position and the profit of HES Beheer and the companies included in the consolidation. The management also states that the interim report presents a true and fair view of the information required pursuant to Article 5.25d, paragraphs 8 and 9, of the Financial Supervision Act.
Management of H.E.S. Beheer N.V. C.S.M. Molenaar
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HES Beheer Press Release
25 July 2014
INTERIM FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
(x €1 million)
Restated
Revenue 32.5 28,1
Costs of work subcontracted 4.1 3.6
Maintenance costs 2.8 2.7
Staff costs 11.0 9.7
Depreciation and amortisation 3.6 2.8
Other operating expenses 10.7 6.9
Operating result 0.3 2.4
Share in results of associates 11.4 10.1
Gain from increase in investment - 10.8
Interest income 0.1 0,1
Finance expense -2.4 -1.4
Tax -0.1 -0.2
Adjusted net earnings per share (x €) 1.40 1.22
Net earnings per share (x €) 1.00 2.41
Diluted earnings per share (x €) 0.99 2.39
Share price at end of period (x €) 42.99 38.70
Net profit 9.3 21.8
Exceptional consultancy fees 3.1 - Result on increase in carrying amount of investment - -12.5
Settlement of financial instruments 0.7 1.7
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HES Beheer Press Release
25 July 2014
CONDENSED CONSOLIDATED BALANCE SHEET(x €1 million)
30 June
2014
31 December
2013
Restated
Intangible assets | 28.1 | 28.1 | |
Property, plant and equipment | 125.4 | 121.6 | |
Investments in associates | 176.0 | 103.0 | |
Other financial assets | 0.3 | 0.3 | |
Non-current assets | 329.8 | 253.0 | |
Inventories | 0.3 | 0,3 | |
Trade and other receivables | 12.5 | 11.9 | |
Cash | 16.4 | 4.3 | |
Current assets | 29.2 | 16.5 | |
Total assets | 359.0 | 269.5 | |
Shareholders' equity | 165.7 | 155.9 | |
Loans | 159.8 | 67.7 | |
Deferred tax liabilities | 0.1 | 0.1 | |
Provision for employee benefits | 5.7 | 5.6 | |
Other provisions | - | 2.9 | |
Long-term liabilities | 165.6 | 76.3 | |
Bank loans | 9.2 | 15.4 | |
Other current liabilities | 18.5 | 21.9 | |
Current liabilities | 27.7 | 37.3 | |
Total equity and liabilities | 359.0 | 269.5 | |
Capital ratio | 46.2% | 57.8% |
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HES Beheer Press Release
25 July 2014
(x €1 million)
1st half 2014 1st half 2013Restated
Issued share capital and reservesPosition as at 1 January 155.9 122.1
Option rights 0.1 0.1
Exercise of option rights -0.5 - Dividend - - Interest rate swaps 0.7 2.8
Exchange differences on investments in associates
IAS 19R
0.2
-
-0.3
-6.0
Net profit for first half 9.3 21.8
165.7 140.5
(x €1 million)
1st half 2014 1st half 2013Restated
Net profit 9.321.8
Exchange differences 0.2 -0.3
Other gains and losses recognised directly in equity 0.7 2.8
(x €1 million)
1st half 2014 1st half 2013Restated
Profit before tax 9.3 22.0
Other cash flow from operating activities 15.8 6.5
Net cash flows from operating activities 25.1 28.5
Cash flow from investing activities -101.7 -30.1
Cash flow from financing activities 88.7 4.3
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HES Beheer Press Release
25 July 2014
SEGMENT INFORMATION(x €1 million)
1st half 2014EBS | HES UK | BTT | OBA | OVET | EMO/ | MTMG | Other |
Holding | EKOM |
100% 100% 100% 73.80% 47.70% 36.60% 22.20%
Revenue | 23.3 | 2.5 | 6.7 | 23.2 | 7.1 | 28.7 | 1.6 | 0.9 |
Result on increase in carrying amount of investment Operating expenses | - 20.7 | - 2.1 | - 6.1 | - 17.1 | - 6.1 | - 20.6 | - 1.5 | -0.7 6.0 |
Profit before tax 2.6 0.4 0.6 6.1 1.0 8.1 0.1 -5.8
Tax - -0.1 - -1.5 -0.2 -2.0 - -
Net profit 2.6 0.3 0.6 4.6 0.8 6.1 0.1 -5.8
1st half 2013EBS | HES UK | BTT* | OBA | OVET | EMO/ | MTMG | Other |
Holding | EKOM |
100% 100% 50/100% 73.80% 47.70% 36.60% 22.20%
Revenue | 21.4 | 3.1 | 4.6 | 24.5 | 7.3 | 25.8 | 1.6 | 1.2 |
Result on increase in carrying | - | - | - | - | - | - | - | 10.8 |
amount of investment | ||||||||
Operating expenses | 19.7 | 2.3 | 4.2 | 18.4 | 6.4 | 19.5 | 1.4 | 2.9 |
Profit before tax 1.7 0.8 0.4 6.1 0.9 6.3 0.2 9.1
Tax - -0.2 - -1.5 -0.2 -1.8 - -
Net profit 1.7 0.6 0.4 4.6 0.7 4.5 0.2 9.1
*BTT in the first quarter accounted for as a 50% investment in an associate and, in the course of the second quarter, as a 100%
investment.
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HES Beheer Press Release
25 July 2014
IAS 34
The interim report has been prepared on the basis of IAS 34 as endorsed for use in the EU. This interim report should be read in conjunction with the 2013 financial statements and the press release of 9 July 2014.
The comparative figures for the first half of 2013 had been restated in accordance with the press release issued by H.E.S. Beheer N.V. on 9 July 2014. In the comparative figures for 2013, the 50% interests in OBA Group B.V. and Rotterdam Bulk Terminal (R.B.T.) B.V. are no longer included in the consolidation on a proportionate basis, as required by IFRS 11, which became applicable as from the commencement of the 2014 reporting period. Proportionate consolidation is no longer permitted under IFRS 11.
ATIC Services S.A. has been recognised at cost in the consolidated balance sheet of H.E.S. Beheer N.V. as at 30 June 2014. Allocation of the purchase price of ATIC will be made in the second half of 2014.
The financial information has not been examined by the external auditors.
Note for editors
For further information, contact Ms E.L. Groenendijk, Director Special Projects, tel. +31 (0)181 25 81 53, e-mail e.groenendijk@hesbeheer.nl
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