Annual Report 2007 - Muehlhan AG

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Ship Repair business growing robustly,
great potential for the coming years
the Ship repair business is already growing better than
ever expected. this appears to be the harbinger of growth
that will most likely continue to last for decades. as a result
of the heavy increase in Ship Newbuilding activity, the
demand for repairs will increase by a multiple in the next
few years. With an average useful life of about thirty years,
only a fraction of the transport volume added as a result
of the new construction will be deducted as a result of the
withdrawal from service of old ships from the repair market.
the total volume of steel to be processed, which is in the
so-called repair window (ships starting from the fifth year
through withdrawal from service), will therefore continue to
increase exponentially over the coming years.
Muehlhan expands presence at
manufacturers of wind energy turbines
Muehlhan was able to further strengthen its position
as the market leader in the rapidly growing field of initial
coatings for steel towers for wind turbines. by the end
of the fiscal year, we were also able to finalize a multi-
year production contract for an american wind turbine
manu facturer working in denmark for a total volume of
Eur 36.7 million. because of it, we expect additional
business, even outside of Europe.
position with respect to
net assets and
Financial positions
Investments in fixed assets
in the amount of EUR 12.5 million
as a result of the capital increase of Eur 22.3 million
which occurred at the time of the initial public offering,
it was possible for us to make various expansion investments,
and to acquire three other companies.
due to the excellent order volume of our sub sidiary
company Gerüstbau Muehlhan GmbH, Hamburg, we
invested more than Eur 2.0 million in additional scaffolding
material. at our subsidiary company Haraco,
Singapore, we invested approximately Eur 2.1 million in a
new location. the previous location had to be abandoned
due to the expansion of the shipyard operations of our
client and our own need for space associated with it.
likewise, we made an investment at a new location for our
company Meaux inc., lafayette, uSa, which is active in the
offshore sector. the old location had been destroyed by
hurricane Katrina in 2005. all in all, Eur 1.0 million was
invested in tangible assets here during the fiscal year.
for the first time as of 1 July 2007, we consolidated
Muehlhan Corrosion protection Service Co. ltd. (MCN),
with headquarters in Shanghai, China, which was acquired
on 15 September 2006 from our chairman of the Supervisory
board and shareholder dr Wulf-dieter H. Greverath.
the purchase price was Eur 0.8 million. by taking over
the company, we have secured a presence in what
will be the world’s largest Ship Newbuilding and Ship
repair market, and which is important to us.
Within the fourth quarter of 2007, we acquired two
companies in the united arab Emirates. both companies
carry the name procon and have their headquarters in
dubai and abu dhabi. the companies are active in the field
of passive fire proofing, which means the application of
fire-protective coatings. by taking over these companies,
we assume that growth in the region will accelerate considerably
and that synergies with the corrosion protection
business will be realised both on the client side as well
as with the provision of labour.
New arrangements of corporate bond terms
the weak earnings situation caused us to be unable
to fulfil two of a total of three major terms of our bond
issue of Eur 35.0 million floated in 2006. the ratio of
earnings before interest and taxes to financing costs,
as well as earnings before depreciation, interest and
taxes to gross debt were not fulfilled.
in the middle of March 2008, an addendum agreement
(“amendment”) was approved by the bond creditor, a
uS american insurance company, according to which
it waives the termination right to which it is entitled
as a result of the violation of the bond terms. in return,
in december 2007 we pledged half of the Eur 10.0 million
amount for an expected term of 14 or 26 months.
We were able to avoid an interest rate adjustment in
this manner. the liquidity position of the Group is not
en dangered as a result.