Annual Report 2007 - Muehlhan AG

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32 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.
We issued a letter of credit for uS$ 5.0 million for our subsidiary company Certified Coatings Company, Concord, California (CCC). it serves to secure contractual performance for the uS$ 19.5 million-contract for the new construction of the New oakland bay bridge in San francisco. it is expected to run until 2013. position of the group Assets 2007 2006 total assets in kEur 128,319 122,767 debt-to-equity ratio in % 53.5 51.7 Equity in kEur 59,714 59,287 Equity ratio in % 46.5 48.3 Financial position Cash flow in kEur 9,365 13,930 investments in fixed assets in kEur 12,531 7,795 Earnings position Sales in kEur 196,092 184,389 other operating income in kEur 6,535 4,498 Ebit * in kEur 2,861 8,104 Ebitda ** in kEur 9,362 13,878 * profit from operations ** profit from operations and depreciation rounding differences may occur. personnel ManaGeMent divisions share group ManageMent report Group Consolidated FinanCial stateMents Number of employees increases slightly in principle, the Muehlhan Group bases its staffing needs on the volume of business for the projects to be worked on. Especially in the case of short-term or temporary contracts, a portion of the personnel requirement is covered by external workers. in the case of long-term projects with a sustainable volume of business, we have established our own staff during the course of the fiscal year. With an average number of employees for the year of 2,318 for the 2006 fiscal year, the staffing level for the Muehlhan Group increased up to 2,396 during the previous year. 2007 2006 Europe (incl. Central divisions) 1,568 1,514 america 430 556 asia 398 248 Total 2,396 2,318 the regional distribution and the increase in the labour force is based primarily on the sales growth in the Group: finally, in the uSa, where sales were weak, high-cost jobs were phased out, while new employees were hired in the booming markets in the Middle East and southeast asia, and there mostly at relatively favourable contract terms. environMental protection and health and saFety Measures Environment-friendly processes with efficiency in the context of our QHSE (quality, health, safety, and environmental protection program), we pursue environmental protection actively. as one of the first providers in our industry, our subsidiary companies have converted surface blasting procedures from the use of copper slag for cleaning steel surfaces to the steel grit recycling process (µ-arc), which is markedly more environmentally friendly. by doing so, each year the Group avoids the creation of considerable amounts of hazardous waste. 33
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Page 5 and 6: Content 2 ManageMent 2 Foreword 5 E
Page 7 and 8: ManageMent divisions share Group Ma
Page 9 and 10: Executive Bodies executive board Dr
Page 19 and 20: One is successful not primarily as
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