Højgaard Holding Annual report 2018

Annual report 2018

The board of directors of Højgaard Holding A/S has today considered and approved the annual report for 2018 which follows below in its entirety and with the following introduction and summary.

Introduction

As previously announced the two foundations, Knud Højgaards Fond and Ejnar og Meta Thorsens Fond, have resumed negotiations on a merger of the two listed companies Højgaard Holding A/S and Monberg & Thorsen A/S, with Højgaard Holding A/S as the continuing company under the name MT Højgaard Holding A/S, which, accordingly, will own 100% of MT Højgaard A/S. These negotiations are progressing according to plan, and the merger is expected to be adopted at the annual general meetings of the companies on 5 April 2019.

On 7 February 2019, Knud Højgaards Fond announced a commitment to granting MT Højgaard Holding a subordinate loan of DKK 400 million after the completion of the merger. The funds will be used to make a corresponding capital injection in MT Højgaard which will ensure a sound basis for putting MT Højgaard’s operations back on a healthy footing. Subsequently, the subordinate loan facilities of DKK 650 million, which the foundation had previously committed to providing to MT Højgaard, will be reduced to DKK 250 million.

As part of the preparation for the merger, Højgaard Holdings’ shares in Højgaard Industri A/S were sold to Knud Højgaards Fond at the end of the year. After having been awarded a new four-year contract for the production of concrete sleepers for BaneDanmark the shares in Højgaard Industri were valued by two independent valuation experts at approx. DKK 32 million.

In connection with the preparations for the above merger a decision has been made to change the accounting principle for the measurement of investments in subsidiary and jointly controlled enterprise in the parent company’s financial statements from the previous “cost” to “book value”. The accounting consequences of this change are described in note 1. The comparative figures have been adjusted.

Summary

• In 2018, the Højgaard Holding group realised revenue of DKK 58 million. The operating profit of DKK 6 million is on a level with 2017. 
• The Højgaard Holding group recorded a loss before tax of DKK 300 million, which is DKK 262 million up on last year’s loss of DKK 38 million. The group’s loss before tax is negatively affected in particular by the lower results in the MT Højgaard group, in which the Højgaard Holding group’s share this year amounted to a loss of DKK 318 million compared to a loss of DKK 46 million last year.
• The Højgaard Holding group recorded a loss after tax of DKK 300 million compared to a loss of DKK 40 million in 2017.
• Equity in Højgaard Holding as of 31 December 2018 amounts to DKK 190 million and is positively influenced by a debt forgiveness of DKK 63 million from Knud Højgaards Fond to the jointly controlled enterprise MT Højgaard.
• The jointly controlled enterprise MT Højgaard (in which Højgaard Holding A/S holds a share of 54%) recorded an operating loss (EBIT) of DKK 547 million, compared to a profit of DKK 51 million for 2017. Results after tax (before minority interests) amounted to a loss of DKK 588 million for the year, compared to a loss of DKK 58 million for 2017. Results for 2018 are negatively affected by a provision of DKK 400 million for MgO boards, write-downs on a few larger civil works projects totalling DKK 130 million, and write-down of the deferred tax asset.  For 2019, the MT Højgaard group expects revenue at the level of DKK 7.0 billion and an operating profit (EBIT) at the level of DKK 75 million. In addition to our share of 54% in the MT Højgaard group’s profit after tax and minorities and transaction costs related to the planned merger Højgaard Holding expects a small loss for the year. 
• The final profit outlook for 2019 for the consolidated company will not be announced until after the merger has been implemented and probably not until the interim financial statements for the first half of 2019 are presented. The merger will be accounted for using the acquisition method, and the accounting consequences in the form of purchase price and purchase price allocation, etc., consequently cannot be finally determined until after the merger has been implemented. For accounting purposes, the date of the final adoption of the merger will be the acquisition date.
• No distribution of dividends for 2018 will be proposed. 

The annual report for 2018 of the MT Højgaard group, which we have just published, and the annual report for 2018 of Højgaard Holding A/S are available for download at the company’s website www.hojgaard.dk

Attachment

• 2019-02-21 Højgaard Holding Annual report 2018