A successful first half of 2010 - another semester of revenue increase, full order books and an optimistic outlook
Strategic milestone – Implenia takes over Sulzer Immobilien AG

Dietlikon, 31 August 2010 – The construction and construction services company Implenia looks back on a successful first half of 2010. With its CHF 1.06 billion in group revenue, a slight increase over the previous half-year, Implenia managed to significantly increase the operating income to CHF 19.4 million (previous year: CHF 10.5 million) and consolidated profit to CHF 12.5 million (previous year: CHF 6.2 million). Thanks to a steady stream of new orders, order book volume remained high, totalling CHF 3.5 billion (previous year: 3.3 CHF billion). In addition, Implenia is taking over Sulzer Immobilien AG, including its real estate properties and its development divi-sion. Implenia thereby strengthens its strategically relevant Project Development business segment.

The group revenue of the first half of 2010 was CHF 1.06 billion, 2% more than in the previous year. The increase is mostly due to turnover in the development and construction segments. The operating income before net financial expenses and taxes reached CHF 19.4 million, exceeding the previous year’s result of CHF 10.5 million by 85%. Com-pared with the same period the previous year, consolidated profit doubled, totalling CHF 12.5 million (previous year: CHF 6.2 million). As of 30 June 2010, total order book volume for the group stood at CHF 3,540 million. Contributing to this outcome was a steadier stream of orders compared with the same period the previous year and with the level at the end of 2009. Orders now extend well beyond the current year.

The net cash position of the group increased from CHF 25.2 million in the previous year to 47.4 million by the end of June 2010. The equity totalled CHF 457.9 million (previous year: CHF 426.7 million), while the free cash flow before financing activities decreased due to seasonal fluctuations in the net working capital to CHF -61.6 million (previous year: CHF -7.1 million).

As a strategic milestone, Implenia is taking over Sulzer Immobilien AG, including its real estate properties as well as its development division with its staff, for a purchase price of about CHF 82 million.


Real Estate Division
The Real Estate Division (General Contracting, Project Development, Engineering) showed a turnover of CHF 574.2 million for the first six months of 2010 (previous year: CHF 552.0 million). Turnover increased markedly for project development and increased slightly for new construction in the area of General Contracting. In the Conversions seg-ment, turnover was down. The strong rise in EBIT before special charges – from CHF 13.3 million in the previous year to CHF 16.4 million in the first half of 2010 – can be accredited to steadier levels of income in Project Development. Order book volume, which approximately CHF 1.8 billion by the end of June 2010 (previous year: CHF 1.5 billion), gives cause for optimism.

The general contracting segment had an operating income of CHF 6.1 million in the reporting semester, down from CHF 9.1 million in the previous year. The drop was caused by a decrease in volume in the Conversions segment, though new construction showed a positive trend. For the second half-year, a stabilization is projected in the Conver-sions segment. General Contracting should hence profit from healthy performance in the Buildings segment. With turnover unchanged, the Reuss group, which specializes in engineering and sustainability, proved that the 2009 result was no fluke.

The Real Estate segment (Project Development) was very successful. In the first six months of 2010, it more than doubled its operating income to CHF 10.3 million (previous year: CHF 4.2 million). The strategy of aiming toward a growing yet structurally balanced portfolio with the lowest possible level of volatility has proved successful.

Infrastructure Construction Division
The Infrastructure Construction Division was able to increase its turnover in the first half of 2010 by 6% to CHF 534.8 million (previous year: CHF 504.7 million). Order book volume at the end of June 2010 was CHF 950.8 million, signifi-cantly higher than last year’s (CHF 911.5 million). The EBIT before special charges amounted to CHF -6.7 million. In the previous year, it was CHF -7.4 million. Due to seasonal factors, however, the significance of the results from the first half-year is rather limited. Implenia was able to evade ongoing pricing pressures to some extent by concentrating on the challenging Civil Engineering segment, where the company further secured its leading position. After regular increases in division operating income over years, the challenge will lie in maintaining high performance levels for 2010.

Industrial Construction Division
At the beginning of 2010, Implenia amalgamated its former Tunnel + Total Contracting and Global Solutions divisions into the new Industrial Construction Division. By creating this new division, Implenia plans to position itself for selec-ted foreign markets as a partner for complex projects, primarily in the Infrastructure segment. The previous year’s high results were all but matched thanks to major tunnelling projects, reaching CHF 9.4 million (EBIT before non-recurring items) (previous year: CHF 10.2 million). Non-consolidated revenue increased by 21% to CHF 86.5 million (previous year: CHF 71.2 million). At the end of June, order book volume stood at CHF 806.2 million (previous year: CHF 983.9 million).

Operating income of the Tunnel + Total Contracting segment amounted to CHF 11.5 million, nearly the level of the previous year (CHF 13.2 million). Order book volume continues to extend over several years. In Global Solutions, Im-plenia is proceeding as planned with the projects acquired in Russia. The associated prepayments were made in view of the long-term attractiveness of business opportunities in the markets in question. Good profit margins have also been generated by a number of advisory mandates. The construction of the 37-storey high-rise building in Turin will make a solid contribution to profits over the course of the next few years.

Strategic milestone
As a strategic milestone, Implenia is taking over Sulzer Immobilien AG, including its real estate and its development properties, but not facility management. The purchase price is about CHF 82 million. The takeover encompasses, amongst others, around 230 000 m2 of real estate in industrial and central zones in attractive locations in the «Sulzer Areal» area in the city center of Winterthur and in Oberwinterthur. Implenia is also taking over the Real Estate Devel-opment division, which has many years of experience in plot development, project development and the sale of in-dustrial properties. All staff in this division shall be retained by Implenia. The execution of the takeover is subject to the governmental approval which, according to current planning, is expected to take place at the end of October 2010. With this investment, Implenia is further expanding its strategically relevant Project Development segment as well as strengthening its position in the very attractive economic region of Zurich/Winterthur. With the acquired prop-erties and business divisions, Implenia would like to contribute to the positive and sustainable development of Winter-thur and is looking forward to good cooperation with the city and its people.

Sustainability
Implenia is convinced that comprehensively aligning the company strategy with principles of sustainability strengthens the group’s future viability significantly and generates added value for all stakeholders. Therefore, the group’s stra-tegic priorities have been embedded in fully integrated key sustainability areas, which are now being implemented in specific projects.

Management team strengthened
As announced last year, Implenia appointed a new CEO in the half year under review. After a successful introductory period, Hanspeter Fässler will assume his new position on 1 September 2010. Anton Affentranger will now concen-trate on his job as Chairman of the board of directors. Furthermore, René Zahnd was internally appointed as the new Head of the Real Estate Division on 1 March 2010.

Implenia’s first bond placement a success
In April 2010, Implenia placed a bond for the first time in its history. The bond, totalling over CHF 200 million with a coupon of 3.125% and a term of six years, was nearly six times oversubscribed. The bond will improve Implenia’s debt repayment profile and strengthen its financing structure.

Optimistic outlook
With all group divisions on track, Implenia views the coming months with optimism. At present, consolidated profit looks set to exceed the previous year’s level. This positive forecast is based above all on strong order book volumes, which will serve Implenia far beyond the current year.