PORR AG English translation of original German version for convenience purposes only.
REMUNERATION REPORT 2023
OF
PORR AG
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English translation of original German version for convenience purposes only.
1. INTRODUCTION
-
Background
The 140th Annual General Meeting of PORR AG ("PORR" or the "Company") resolved on the principles for the remuneration of the members of the Management Board and Supervisory Board of PORR ("Remuneration Policy") for the first time on 28 May 2020 in accordance with Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement ("Shareholder Rights Directive") and the provisions of the Stock Corporation Act (Aktiengesetz - AktG; "AktG") based thereon. The Remuneration Policy was adjusted and amended at PORR's Annual General Meeting on 28 April 2023. This version of the Remuneration Policy applies to the period relevant for this remuneration report.
This Remuneration Report for the remuneration of the members of the Management Board and Supervisory Board of PORR has been prepared by the Management Board and Supervisory Board of PORR in accordance with Section 78c AktG in order to provide an overview of the remuneration granted or owed to the members of the Management Board and Supervisory Board on the basis of the Remuneration Policy (Section 78a AktG and Section 98a AktG), including all benefits in any form during the financial year 2023. It was reviewed by the remuneration committee and resolved by the Supervisory Board in its meeting on 20 March 2024.
This Remuneration Report implements the requirements set out in Section 78c AktG and Section 98a AktG for the preparation of remuneration reports for members of the Management and Supervisory Board of PORR as a listed company. It is also based on Statement 37 of the Austrian Financial Reporting and Auditing Committee ("AFRAC Statement"). The Guidelines of the European Commission ("EC") on the standardised presentation of the remuneration report under Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement ("Guidelines") were also taken into account. However, the Guidelines were only available in draft form at the time of the preparation of this report and therefore this Remuneration Report only takes into account the Guidelines to the extent that they are in line with the AFRAC Statement.
This Remuneration Report shall be submitted to the Annual General Meeting for voting pursuant to Section 78d Paragraph 1 AktG. The vote is of a recommendatory nature. - Financial situation of PORR in the reporting year
- Global economy under pressure
The global economy was burdened by numerous factors in 2023. On the one hand, ongoing and new geopolitical conflicts were responsible for some massive uncertainty and restrictions in global trade. On the other hand, negative economic data, rising key interest rates and persistently high inflation dampened economic growth. In the European Union, the impact of the Ukraine conflict is clearly noticeable. As a result, export demand in particular stagnated in 2023. Overall, the European Commission is seeing economic growth of 0.5% for 2023. Rising real incomec in 2024 - driven by falling inflation rates and subsequent wage and salary adjustments - will lead to higher consumption. Corporate investment activity is also likely to increase further due to the need to adapt to energy and climate targets. The EC experts are forecasting economic growth of 1.3% for Europe in 2024.
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English translation of original German version for convenience purposes only.
Subdued consumption due to high inflation, rising interest rates and the ongoing labour shortage have also impacted investment activity in Austria. Overall, the Institute for Advanced Studies ("IHS") nevertheless expects economic output to decline by 0.7% in 2023. However, the experts are much more confident for the following year 2024 and forecast economic growth of 0.8%.
The picture in Germany is broadly similar. The German Federal Ministry for Economic Affairs and Climate Protection (Bundesministerium für Wirtschaft und Klimaschutz - BMWK; "BMWK") expects economic output to fall by 0.3% in 2023. The experts anticipate a turnaround in the second half of 2024. The ifo Institute therefore anticipates economic growth of 0.9% in 2024, assuming the federal budget for 2024 remains unchanged. In addition to the only slightly higher inflation rates in Switzerland, the Swiss economy also came under pressure due to a major bank getting into difficulties. The Swiss State Secretariat for Economic Affairs is forecasting economic growth of 0.8 % for 2023. With rises in consumer spending and a normalisation of the international environment, growth should recover to 1.5% next year. Inflation also saw a temporary shapr rise in Poland, the Czech Republic, Slovakia and Romania in the reporting year. The EC expects economic growth of 0.2% in Poland, 1.1% in Slovakia and 1.8% in Romania in 2023. Only in the Czech Republic do the experts see a slight decrease in output of 0.4%. For 2024, the Vienna Institute for International Economic Studies (Wiener Institut für Internationale Wirtschaftsvergleiche - WIIW; "WIIW") sees positive impetus. Poland and Romania are forecast to grow by 2.7% and 2.9% respectively. The Czech Republic and Slovakia are expected to expand their economic output by 1.1% and 2.3% respectively.
- Divergent development in the construction industry
In 2023, the production volume of the European construction industry stagnated and only recorded slight growth of 0.3%. However, this performance varied greatly from region to region. There were also significant differences within the construction industry between building construction and civil engineering. The average monthly growth in civil engineering for all EU countries was 3.4% compared to the same month in the previous year. There was a decline of 0.3% in building construction.
This is mainly due to residential construction. It came under significant pressure due to the stricter financing environment. In contrast to this is non-residential building construction. Here, healthcare construction - not least due to demographic change - will provide significant positive impetus from 2024 onwards. In industrial construction, the green transformation and the planned European energy transition will ensure good long-term growth prospects, particularly in Eastern Europe. Civil engineering has a stabilizing effect on the entire construction industry. The European Recovery and Resilience Facility and the NextGenerationEU budget are particularly supportive in this regard. Environmental and energy policy also places a strong focus on civil engineering. Focal points here are sustainable mobility as well as energy security and independence.
- Performance development
In 2023 PORR's production output totalled EUR 6,577 million and was therefore 5.6% higher than the previous year. Both Poland and Romania, as well as Germany, recorded double-digit growth. The areas of civil engineering Romania and infrastructure Poland also performed particularly well.
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English translation of original German version for convenience purposes only.
- Order development
The order backlog amounted to EUR 8,452 million as of 31 December 2023, an increase of 3.0%. During the year, the order backlog was temporarily at a record level. The significant increase in incoming orders in December of the previous year meant that the high rises during the year could not be achieved over the year as a whole. The order intake rose by 2.7% compared to the previous year to EUR 6,835 million. This development is primarily attributable to infrastructure construction, particularly tunnel construction. The order backlog therefore remains well above the value of an annual output.
- Revenue and earnings performance
In 2023 the PORR Group's revenue totalled EUR 6,048.5 million reaching a new record level.
In the income from companies accounted for using the equity method (at-equitybilanzierten Unternehmen), the income from interests in consortiums increased significantly and totalled EUR 106.8 million. Overall, the income from companies accounted for using the equity method rose by 74.6% to EUR 98.6 million.
Other operating income fell by 3.8% to EUR 181.9 million. The decline is due in particular to the absence of a one-off effect from the previous year. Due to the increase in variable, mainly project-related costs, other operating expenses rose by 9.9% to EUR 394.3 million. Other operating expenses rose by 9.9% to EUR 394.3m due to the increase in variable, mainly project- related costs.
The cost of materials and other related production services increased at a significantly lower rate than revenue, rising by 3.4% to EUR 4,142.1 million. Staff expenses rose by a total of 7.7% to EUR 1,453.7 million due to an increase in the average number of staff and amendments to the collective labour agreement.
Overall, the earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 8.0% to EUR 344.3 million.
Depreciation, amortisation and impairment expense rose only slightly by 2.6% compared to the previous year and amounted to EUR 204.0 million. This led to earnings before interest and taxes (EBIT) of EUR 140.3 million up by 16.8% on the previous year.
The financial result improved by 5.0% to EUR -9.6 million. Earnings before taxes (EBT) thus rose by 18.8% to EUR 130.7 million.
The tax rate was 27.3% with the tax result amounting to EUR -35.7 million (2022: EUR -27.4 million). This resulted in a EUR 12.4 million improvement in profit for the period to EUR 95.0 million (2022: EUR 82.6 million). Earnings per share increased by 34.3% and totalled EUR 2.21 in the reporting year (2022: EUR 1.65).
- Assets and financial position
As of 31 December 2023, the total assets of the PORR Group stood at EUR 4,135.7 million A reduction of 0.3% against the previous year despite the increase in output.
Non-current assets increased by 6.1% to EUR 1,547.3 million. Current assets fell by 3.7% to EUR 2,588.4 million.
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English translation of original German version for convenience purposes only.
As of the reporting date, equity totalled EUR 860.2 million and was therefore 7.7% higher than in the previous year. The equity ratio rose by 1.5 PP to 20.8%, while at the same time profit participation rights/hybrid capital as a percentage of total equity was reduced to 28.8% over the course of the year.
Liabilities fell significantly by EUR 72.4 million or 2.2%. While trade payables (Verbindlichkeiten aus Lieferungen und Leistungen) and other liabilities were significantly reduced, project-related construction provisions increased considerably.
In terms of net debt, PORR once again achieved a net cash position (Net-Cash-Position) at the end of 2023. This stood at EUR 40.1 million (2022: EUR 59.0 million).
- Cashflow
the operating cash flow increased by EUR 9.4 million to EUR 277.0 million compared to the previous period due to the improved net profit in the reporting period.
In contrast, cash flow from operating activities fell slightly by 3.6% year-on-year to EUR 276.4 million (2022: EUR 286.8 million). The funds from the reduction in trade receivables (Forderungen aus Lieferungen und Leistungen) were used to reduce liabilities, primarily trade payables (Verbindlichkeiten aus Lieferungen und Leistungen).
Cash flow from investing activities increased by EUR 80.8 million to EUR -177.0 million. This is due in particular to higher investments in property, plant and equipment - primarily due to the delayed delivery of vehicles - as well asin equipment and mixing plants as part of the expansion of the permanent business in the segment CEE.
Cash flow from financing activities totalled EUR -127.5 million (2022: EUR -300.9 million). While the amounts for dividend payments, interest on profit participation (Genusskapital) and hybrid capital (Hybridkapital) as well as lease financing were comparable to the previous year's figures, hybrid capital totalling EUR 51.1 million was also reduced in 2022.
PORR's free cash flow (FCF) stood at EUR 99.4 million, a reduction of EUR 91.2 million. This is primarily due to pandemic-relatedcatch-up effects on investments - such as the delayed delivery of vehicles.
- Key data Operating data
in EUR million
Production output1
Foreign share
Order backlog
Order intake
Staffing level (average)
2023 | Change | 2022 | ||
6,577 | 5.6 % | 6,226 | ||
54.9 % | 0.7 PP | 54.2 % | ||
8,452 | 3.0 % | 8,204 | ||
6,835 | 2.7 % | 6,659 | ||
20,665 | 2.1 % | 20,232 | ||
1 The production output corresponds to the output of all companies and consortiums (fully consolidated, equity method, proportional or those of minor significance) in line with the interest held by PORR AG.
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English translation of original German version for convenience purposes only.
Earnings indicators
in EUR million
Revenues
EBITDA
EBIT
EBT
Profit/loss for the period
Earnings per share (in EUR)
2023 | Change | 2022 | ||
6,048.5 | 4.5 % | 5,786.0 | ||
344.3 | 8.0 % | 318.9 | ||
140.3 | 16.8 % | 120.1 | ||
130.7 | 18.8 % | 110.0 | ||
95.0 | 15.0 % | 82.6 | ||
2.21 | 34.3 % | 1.65 | ||
Financial position indicators
in EUR million
Total assets
Equity
(incl. Non-controlling interests)
Equity ratio
Cash and cash equivalents
Net debt
Cash flow and investments
in EUR million
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Free Cash flow
CAPEX1
Depreciation/amortization
31.12.2023 | Change | 31.12.2022 | ||
4,136 | -0.3 % | 4,147 | ||
860 | 7.7 % | 799 | ||
20.8 % | 1.5 PP | 19.3 % | ||
631 | -3.7 % | 656 | ||
-40 | -32.1 % | -59 | ||
2023 | Change | 2022 | ||
276.4 | -3.6 % | 286.8 | ||
-177.0 | 84.0 % | -96.2 | ||
-127.5 | -57.6 % | -300.9 | ||
99.4 | -47.9 % | 190.6 | ||
329.5 | 39.5 % | 236.2 | ||
204.0 | 2.6 % | 198.8 | ||
1 Investments in property, plant and equipment and intangible assets
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English translation of original German version for convenience purposes only.
Non-financial key data | ||||||||
2023 | Change | 20221 | ||||||
Energy consumption within | 736,629 | -5.1 % | 775,986 | |||||
PORR (MWh) | ||||||||
Energy intensity (MWh/TEUR)
Self-generated green electricity (MWh)
Direct Greenhouse Gas (GHG) emissions - scope 1 (t CO2e)
Indirect Greenhouse Gas (GHG) emissions - scope 2 (t CO2e)
Other Greenhouse Gas (GHG) emissions - scope 3 (t CO2e)
Intensity of GHG emissions (scope 1+2) (t CO2e/TEUR)
Total waste (t)
Recycled materials used (t)
Total water consumption (Tm³)
Work related injuries (rate)
Staff on parental leave (number)
0.114 | -10.4 % | 0.127 | ||
354 | 7.3 % | 330 | ||
161,991 | -1.4 % | 164,249 | ||
20,504 | -39.3 % | 33,767 | ||
72,081 | 78.2 % | 40,442 | ||
0.028 | -13.3 % | 0.033 | ||
10,651 | 16.3 % | 9,158 | ||
109,515 | 17.5 % | 93,200 | ||
218 | -9.1 % | 240 | ||
13.5 | -11.6 % | 15.3 | ||
415 | 10.4 % | 376 | ||
Training hours (h)
Performance reviews (number)
Share of female staff
Share of women in middle and lower management
Share of women in training to become future managers
Anti-corruption training (Number of employees)
126,658 | 22.3 % | 103,547 | ||
7,046 | 8.6 % | 6,488 | ||
16.1 % | 0.3 PP | 15.8 % | ||
16.4 % | 2.3 PP | 14.1 % | ||
38.7 % | 14.7 PP | 24.0 % | ||
3,965 | 25.6 % | 3,158 | ||
1 Partially adjusted comparison values due to change in reporting entity.
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English translation of original German version for convenience purposes only.
Key data regarding shares
in EUR
Number of shares as at 31 December
Last close (Schlusskurs) as at 31 December
2023 | Change | 2022 | ||
39,278,250 | - | 39,278,250 | ||
12.70 | 8.0 % | 11.76 | ||
Annual maximum price
Annual low price
Market capitalization as at 31 December (in EUR million)
14.80 | 5.7 % | 14.00 | ||
11.00 | 22.2 % | 9.00 | ||
498.8 | 8.0 % | 461.9 | ||
Dividend per share | 0.751 | 25.0 % | 0.60 | ||||
Dividend yield | 5.9 %1 | 0.8 | PP | 5.1 % | |||
Payout ratio | 33.9 %1 | -2.5 | PP | 36.4 % | |||
Price-earnings ratio | 5.7 | -19.5 % | 7.1 | ||||
1 Proposal to the Annual General Meeting
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English translation of original German version for convenience purposes only.
2. REMUNERATION REPORT OF THE MANAGEMENT BOARD
2.1 Basic principles of the Remuneration Policy
The remuneration of the Management Board should be appropriate and attractive in national and international comparison. The remuneration of the Management Board should be an incentive for the members of the Management Board to continuously strengthen and increase the performance of the Company and its earnings. At the same time, the Supervisory Board of PORR would also like to see continuity with regard to the composition of the Management Board and the members of the Management Board. Without appropriate remuneration for the Management Board, there would be a risk that members of the Management Board would no longer consider PORR attractive in this respect and would pursue other professional activities. There is also the risk that without appropriate remuneration, no sufficient motivation for the sustainable development and strengthening of PORR can be achieved. The remuneration of the members of the PORR Management Board should contain fixed and variable components.
PORR operates in the construction industry. This business segment is characterized, among other things, by the fact that it is subject to cycles and is project-driven. PORR's earnings come from numerous construction projects of various types and from different countries. Due to this business model, it is necessary to grant both fixed and variable remuneration to the members of the PORR Management Board. Variable, performance-related remuneration elements are intended to motivate the members of the Management Board to optimize the earnings of the PORR Group in a sustainable and risk-conscious manner. The fixed (basic) remuneration is intended to counteract uncertainties with regard to fluctuations in earnings in the construction industry. However, without appropriate fixed (basic) remuneration to prevent the effects of earnings fluctuations on remuneration, there would be a risk that PORR would no longer be attractive in terms of exercising Management Board functions and would no longer be comparable on a national and international level.
The members of the Management Board should receive an overall remuneration package that is customary and appropriate by national and international standards. This also includes additional remuneration components, such as inclusion in an insurance policy for their Management Board activities (so-called "D&O insurance"), the provision of a company car, or inclusion in a company pension insurance policy.
For the reasons stated above, the Supervisory Board is of the opinion that the Remuneration Policy contributes to the business strategy and the long-term development of the Company.
The Remuneration Policy prepared by the Supervisory Board was submitted for voting for the first time at the Annual General Meeting 2020. Most recently, the Annual General Meeting 2023 voted on a version of the Remuneration Policy that had been adjusted and amended by the Supervisory Board. The changes made in 2023 relate to the amendments to the Remuneration Policy with regard to the introduction of a long-term incentive program (Long Term Incentive Program - LTIP; "LTIP") and the definition of the relevant plan conditions. In 2021, a Remuneration Report was submitted to the Annual General Meeting for voting for the first time.
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English translation of original German version for convenience purposes only.
2.2 Total remuneration and explanations for active members of the Management Board
In the financial year 2023, the following persons were continuously active members of the Management Board of PORR from 1 January 2023 to 31 December 2023:
- Ing. Karl-Heinz Strauss, MBA, FRICS (Chairman of the Management Board)
- Bmst. Ing. Josef Pein
- Dipl.-Ing.Jürgen Raschendorfer
- Mag. Klemens Eiter
The total remuneration of the Management Board generally comprises
- a fixed Management Board remuneration,
- a variable short-term (bonus) and a variable long-term (Long Term Incentive Program) Management Board remuneration, as well as
- additional components of Management Board remuneration.
In order to provide PORR shareholders with an overview of the total remuneration of Management Board members in accordance with the requirements of Section 78c AktG, the total remuneration of Management Board members is presented in tabular form in ANNEX 1. The presentation format is based on AFRAC Statement 37.
Each member of the Management Board shall receive a variable short-term Management Board remuneration annually, depending on the achievement of the parameters to be determined by the Supervisory Board. The Supervisory Board is entitled to determine financial or non- financial criteria, such as the determination of key compliance aspects, or a combination of both. In particular, each member of the Management Board shall endeavour sustainable steps towards achieving an EBT margin of 3%. This goal supports the current business policy and strategic orientation of PORR and is intended to promote the sustainable positive development of the Company.
The prerequisite for the granting of this variable short-term Management Board remuneration (bonus) is for all Management Board members to fulfil a catalogue of criteria consisting of quantitative and qualitative elements, which is to be determined by the remuneration committee of the Supervisory Board. The remuneration committee has determined the following criteria in a resolution dated 22 February 2023:
- Positive development of the PORR Group
- Achievement of the budget 2023
- Implementation of sustainable steps to achieve an EBT margin of 3% based on PORR 2025
- Establishment of the Green & Lean strategy in the Group with the implementation of the first ESG and Lean projects
- Updating the Group strategy 2023 to 2025
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Porr AG published this content on 22 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 March 2024 08:15:09 UTC.
