Financial excellence

Implenia aims to create sustainable value. The company constantly adjusts its structures and procedures to market developments as it seeks to remain competitive for the long term. In this way Implenia ensures its processes are efficient and customer-focused, achieves a good balance of opportunities and risks, and maintains its freedom as a business.

6.1Creating long-term value

Implenia aims to create sustainable value for all its stakeholders. With this aim in mind the group strives for financial excellence – increasing profitability, increasing the company’s long-term value, and ensuring a healthy funding base, adequate liquidity and an appropriate level of capital. Financial excellence results from the work of the company’s employees, supported and facilitated by efficient processes.

Securing a good operational and financial performance in the short, medium and long term requires accurate management and monitoring of financial flows. This is especially true of a company like Implenia that provides a huge range of services – from consultancy and project development, to general and total contracting, to the execution of challenging construction works of all types and sizes. In the construction business, where margins are relatively low, it is also vital that a company has control of costs and uses effective project and risk management to give a realistic picture of the financial situation. Only then can the right action be taken at the right time.

The concept of “economic profit”

As one of the priorities within the “Sustainable Implenia” initiative, Implenia continued with the introduction of the value-based management concept (“economic profit”) during the period under review. This model gears the group’s services and management processes to the long-term, sustainable creation of enterprise value. It facilitates target-actual comparisons, making it easier to measure attainment of goals. The concept is based on three basic value drivers – growth, cost efficiency and capital efficiency – from which key performance indicators (KPIs) can be derived. These are straightforward measures for operational activities, such as capacity utilisation, labour costs per hour, billing days and payment times. KPIs give employees and the operational units specific levers with which they can positively influence the creation of enterprise value. Since they form part of the MbO concept, KPIs also influence personnel management and compensation.

Added to this are the regulatory requirements. As a listed company Implenia prepares its accounts in accordance with commercial standards and in particular with IFRS (International Financial Reporting Standards) accounting rules. Implenia also has a comprehensive internal controlling system to further ensure the quality of its financial reporting. It has independent units carry out its internal audits, and brings in another organisation to do the external audit. It regularly publishes its annual and interim figures in the annual and half-year reports, creating transparency for its stakeholders and thus fostering trust.

Return on invested capital (ROIC)

 

6.2Good business performance

Since its creation in 2006, Implenia has developed into a strong, financially robust company offering a comprehensive range of services, a well positioned brand and an extremely solid base in the Swiss market and selected international target markets. In both 2012 and 2013 the company achieved record results in terms of sales, EBITDA, operating profit, consolidated profit and return on invested capital. Incoming new orders across the group are keeping pace with the dynamic business performance, and Implenia is on course to reach its medium-term EBIT goal of CHF 140-150 million. For detailed information on the business performance during the period under review, please refer to the relevant annual and half-year reports.

 

Distribution of net added value 2013

 

The extent to which each stakeholder group participates in the value created by Implenia is shown in the value creation statement (see table). Gross added value includes all the income that the company realises in one financial year. Expenditure on goods and services supplied by third parties and depreciation are then deducted to give net value added (2013: CHF 921 million, see table). By far the greatest share of this goes to employees in the form of wages. Creditors receive interest payments on the capital they have provided. The state receives tax payments. The remaining added value – i.e. consolidated profit – is distributed to shareholders or is retained and reinvested by the company.

 

 

6.3Structures adjusted

Implenia strives to remain competitive and to keep improving its financial excellence, so it regularly adjusts structures and processes in the light of new insights and technological developments. The company took an important step in 2013 as part of the “Daring to Shape the Future” project when it carried out a strategic restructuring of the group into sectoral and functional units. The Modernisation & Development, Buildings and Tunnelling & Civil Engineering Sectors look after institutional and cross-regional customers, providing the expertise needed for their complex projects. The Regions, meanwhile, are the face Implenia shows in the regional markets, serving local customers in Switzerland and Norway. Implenia also created a new Technical Support unit, which serves as the group’s technical “conscience” and functions as an engine of sustainability and innovation. Central group functions are still consolidated within the Corporate Center. The new structure helps Implenia get closer to its markets and customers and puts it in a position to reach its qualitative and quantitative targets. Reorganisation has also allowed Implenia to broaden its management base. The former Executive Committee has been replaced by a Group Executive Board (GEBO) whose members are the CEO, the operational heads and the head of the Corporate Center. This ensures that the expertise and experience within Implenia’s operating units carry more weight at the highest level of management.

Alongside this organisational restructuring, Implenia also streamlined and simplified its legal structure. All the existing operational units in Switzerland were brought together under the roof of Implenia Switzerland Ltd. This has brought clear efficiency gains – for example, there is no longer any need for internal accounting between different units.

Moving from project-based to central procurement opens up potential for cost savings.

 

 

6.4Processes optimised and SAP strengthened as a key tool

To reflect the new structure and the refined business processes, Implenia introduced a new central work tool at the start of 2014 – SAP. Targeted adjustments to processes and systems have been made to increase efficiency and streamline system structures. In the cost accounting / controlling area, for example, structures and processes were simplified. One of the results of this was to speed up internal reporting.

In procurement, the aim was to complete the move from project-based to centralised purchasing and to realise cost savings for the whole group. Consequently, Implenia optimised its whole procurement process – making it more transparent, simplifying procedures and redefining responsibilities – and implemented it in SAP.

The group also developed an integrated risk management system that is also based on SAP. For more details see the report.

6.5Financial excellence in training and development

In order to establish the topic more firmly in operational areas and to train employees, financial excellence is also integrated into Implenia’s ongoing programme of internal training and development. In 2013, for example, specific modules on financial excellence were included in the initial “Winning the Future” management development programme. There are plans to include the topic in future internal training modules too, such as the programme for new and prospective managers launched this year.

6.6Achievement of goals 2012 /2013

Implenia wants to create long-term value and ensure its freedom to conduct business as it sees fit.

Strategy

Goals for 2012/2013

Achievement of goals

Status

Create sustainable financial value
(“Economic Profit”)

  • Introduce value-
    oriented management
  • Risk management organisation built up and introduced (chapter 6.4)
   
  • Uniform group-wide Enterprise resource planning solution introduced (chapter 6.4)
   
  • Business management training programme developed and delivered to managers in “Winning the Future” (Report chapter 3)
   
  • Group structure adjusted to the new strategy (chapter 6.3)

Goal fully achievedGoal partially achievedGoal not achieved

6.7Goals and activities 2014 /2015

Implenia wants to create long-term value and ensure its freedom to conduct business as it sees fit.

Strategy

Goals for 2014/2015

Activities 2014/2015

Focus processes on value creation

  • Create sustainable financial value
  • Continue developing risk management and introduce to whole organisation
  • Targeted business training for managers
  • Develop management indicators (KPIs) adapted to the market and the organisation
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