Vestas Annual Report 2007 No
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Vestas annual report 2007 Vestas annual report 2007 No. 1 in Modern Energy ...........................................004 Financial highlights for the Group ....................................006 Non-financial highlights for the Group .................................007 Overview ....................................................008 Management report ............................................. 012 Corporate governance ............................................024 Consolidated accounts ...........................................040 Management report Management Non-financial issues .............................................096 Annual accounts for Vestas Wind Systems A/S ............................ 104 Shareholders and the stock exchange .................................. 115 Information about the company ...................................... 120 Index ...................................................... 122 Consolidated accounts Consolidated Non-financial issues Non-financial This annual report is available in Danish and English. In case of doubt, the Danish version shall apply. Vestas Wind Systems A/S Systems Wind Vestas No. 1 in Modern Energy No. 1 in Modern Energy 004 Vestas annual report 2007 Wind power is today a competitive and predictable type of energy The massive investments we are making at Vestas in these years that makes it possible to build strong capacity quickly and locally are aimed at supporting this progress. We are building new factories without adversely impacting on the environment as it involves and the industry’s most advanced facilities for development and neither CO2 emissions nor nuclear waste or the consumption of testing of our products to ensure the reliability that is instrumental Vestas annual report 2007 large volumes of water. In other words, wind power satisfies all the for generating growth. First and foremost, however, we invest in our requirements for modern energy. employees, for as we say at Vestas: 'People before megawatt'. Consequently, on the threshold of 2008, we see a huge potential for This is our starting point for intensively seeking to recruit thousands wind power. However, we also recognise that it will take a focused of new colleagues in the coming years and developing the skills effort at many levels to exploit this potential and accomplish our held by the more than 15,000 employees whose willpower and ambitions for the future. Additional focus on training throughout the commitment have propelled Vestas to the leadership position we Group, recruitment of thousands of new employees, an increasing hold today. At the same time, we endeavour to improve safety in number of higher-yielding factories, more reliable wind power everything we do. Even though we still see employees suffering plants and substantially improved profitability are some of the key injuries, our dedicated efforts consistently yield good results, and in prerequisites that we will need to combine to ensure that Vestas 2007, we reduced the incidence of industrial injuries by 13 per cent. becomes the world’s strongest energy brand. We emphasise our However, our efforts in this area are not complete until we avoid commitment to this ambition by presenting Vestas as ‘No. 1 in industrial injuries altogether, for in line with our mission statement: report Management Modern Energy’. 'Failure is not an option'. This is not something you accomplish overnight, but we have taken Our focus in this area is underlined by the fact that improved safety many steps in the right direction in 2007. An EBIT margin of just is one of the eligibility criteria for the bonus scheme which covers over 9 per cent and a net working capital of EUR (68)m demonstrate all Vestas from 2008, allowing each individual employee to benefit that Vestas is now a much more healthy business than it was just from good results for Vestas. two years ago. The progress is attributable to improved in-house procedures and better prices and conditions. Quality – a prerequisite for growth In 2007, Vestas again experienced that one of the greatest im- But even though we achieved strong bottom-line figures, it is pediments to growth, development and improved profitability is quality important to emphasise that at Vestas we do not confuse good failures in a number of wind turbine components, as well as a much times with good management. We know that distinct improvements too unstable supply situation. Both factors cost a lot of money every are required in a large number of areas. That is not least because day, not only for Vestas, but for the entire supply chain. Our close the requirements imposed on us automatically grow as wind power customer dialogue has taught us that improvements are required Consolidated accounts Consolidated be comes a more and more important part of the power supply in in two areas: turbine reliability and our service. Consequently, it is many countries, and as a growing number of manufacturers enter imperative that we quickly remedy the situation. the market. Competition is set to become much tougher in the years ahead, and Vestas should not only develop the most effective In our capacity as market leader, we have responded to the situ ation. wind tur bines, but also be the most efficient manufacturer of wind In 2008, we will place firm requirements to our suppliers – external as power plants. well as our own factories – that their products must meet the 4 Sigma standard, both in terms of ability to supply and quality. This calls for From good intentions to actions massive improvements of skills and performance in many places, In 2007, wind power confirmed its current position as a strong but it is quite simply a necessity for wind power to accomplish its supplement to conventional sources of energy such as oil and gas. full potential. We also spend many resources on standardising and Thus, a number of important and visionary decisions were made upgrading our services and related communications. The objective during the year, allowing for wind power in earnest to become part is the same: to significantly improve customer loyalty. of the global energy supply. However, long-term visions will not suffice. Wind power targets for 2020 or 2030 must be followed up Like in 2007, we will be ‘Vestas busy’ again in 2008. Busy expanding issues Non-financial by detailed legislation, and in the years to come, Vestas will seek our operations considerably – expecting to generate reve nue of EUR to ensure that such legislation becomes a reality. In popular terms, 5.7bn – while at the same time improving our profitability. Our EBIT good intentions with respect to wind power are not worth very much margin and net working capital are still more impor tant than our if you are unable to find sites on which to install the turbines. market share. We are confident that we are already well equipped to solve the task and thereby consolidate Vestas’ position as No. 1 From one to ten per cent – a major challenge in Modern Energy. Our ambition at Vestas is for wind power to cover at least ten per cent of global electricity consumption by 2020 – against a mere one per cent today. Although a realistic ambition, it requires much Bent Erik Carlsen Ditlev Engel more than political support. Not only Vestas, but the entire industry Chairman of the Board of Directors President and CEO needs to and must reach a much higher level in terms of capacity, quality as well as professionalism. Vestas Wind Systems A/S Systems Wind Vestas No. 1 in Modern Energy Vestas annual report 2007 005 Financial highlights for the Group 1) mEUR 2007 2006 2005 2004 2003 Highlights Income statement Revenue 4,861 3,854 3,583 2,363 1,653 Gross profit 825 461 84 120 150 Profit before financial income and expenses, depreciation and amortisation (EBITDA) 579 328 9 64 142 Operating profit/(loss) (EBIT) 443 201 (116) (49) 74 Profit/(loss) of financial items 0 (40) (42) (41) (22) Profit/(loss) before tax 443 161 (158) (89) 54 Profit/(loss) for the year 291 111 (192) (61) 36 Balance sheet Balance sheet total 4,296 3,654 3,085 2,881 1,390 Equity 1,516 1,262 962 1,162 613 Provisions 305 265 239 181 166 Average interest-bearing position (net) 179 (299) (560) (625) (236) Net working capital (68) 122 498 686 603 Investments in property, plant and equipment 265 153 95 89 85 Cash flow statement Cash flow from operating activities 701 598 148 (30) 153 Cash flow from investing activities (317) (144) (137) (201) (119) Cash flow from financing activities (54) (101) (46) 458 (19) Change in cash at bank and in hand less current portion of bank debt 330 353 (35) 227 15 Employees Average number of employees 13,820 11,334 10,300 9,449 6,394 Number of employees at the end of the year 15,305 12,309 10,618 9,594 6,525 Ratios Financial ratios2) Gross margin (%) 17.0 12.0 2.4 5.1 9.1 EBITDA (%) 11.9 8.5 0.3 5.0 8.6 Operating profit margin (EBIT) (%) 9.1 5.2 (3.2) (2.1) 4.5 Return on invested capital (ROIC) (%) 30.9 11.9 (13.2) (3.8) 8.1 Solvency ratio (%) 35.3 34.5 31.2 40.3 44.1 Return on equity (%) 21.0 10.0 (18.1) (6.9) 5.9 Gearing (%) 9.9 13.8 51.2 50.1 40.4 Share ratios2) Earnings per share 1.6 0.6 (1.1) (0.5) 0.3 Book value per share 8.2 6.8 5.5 6.6 5.8 Price / book value 9.0 4.7 2.5 1.3 2.2 P / E-value 47.1 52.8 (12.7) (18.2) 38.6 Cash flow from operating activities per share 3.8 3.2 0.8 (0.2) 1.5 Dividend per share 0.0 0.0 0.0 0.0 0.0 Payout ratio (%) 0.0 0.0 0.0 0.0 0.0 Share price 31 December (EUR) 74.0 32.0 13.9 8.8 13.1 Average number of shares 185,204,103 182,722,520 174,911,173 150,815,322 105,003,966 Number of shares at the end of the year 185,204,103 185,204,103 174,911,173 174,911,173 105,003,966 1) Financial highlights for 2003 have not been restated to reflect the new accounting policies nor do they contain the figures for NEG Micon A/S and therefore correspond to the financial highlights presented in the annual report for 2004.