GRONTMIJ : Financial press release

Cost reductions and French divestment process progressing well

De Bilt - Grontmij N.V. a listed consulting & engineering company with strong European presence, today announces its results for the second quarter and first half of 2014. In the second quarter, markets across Europe on average developed moderately positive, thereby continuing the first signs of recovery reported in the first quarter. EBITA margin excluding exceptional items improved in the first half of 2014 to 3.5% (HY 2013: 2.4%), despite a slightly lower operating margin in the second quarter. Margin increase is mainly driven by improved performance in the Netherlands and cost savings. Good progress is made on the divestment process of the French activities, with interest from both financial and strategic parties. In the second quarter,  € 19.5 million of convertible cumulative preference shares ('Cumprefs') were issued, further strengthening Grontmij's financial position.

Key points Q2 2014 & HY 2014 (1)

• Total revenue Q2 2014 € 168.5 million (Q2 2013: € 180.7 million), with organic decline of 5.7%. Net revenue Q2 2014 below last year at € 140.5 million (Q2 2013: € 147.4 million), with organic decline of 3.6%, impacted as expected by the decline in the Dutch market and less working days. For HY 2014, organic decline on net revenue was modest at 1.3%
• EBITA excluding exceptional items Q2 2014 € 4.7 million (Q2 2013: € 5.7 million). Good developments in a number of countries, and in particular in the Netherlands, were offset by lower results in Denmark and Sweden; EBITA margin excluding exceptional items was 2.8% in Q2 2014, compared to 3.1% last year; For HY 2014, the EBITA margin improvement was primarily driven by cost reductions and developed in line with internal expectations, from 2.4% in 2013 to 3.5% this year
• Exceptional items in the second quarter of - € 5.1 million, increased compared to last year (Q2 2013: - € 0.5 million) resulting mainly from the additional restructuring measures
• Net result from continuing operations (2) in Q2 2014 was - € 10.0 million (Q2 2013:  - € 1.3 million), impacted by increased exceptional items (€ 5.1 million) and an increase in finance expenses as a result of the IFRS treatment of the (non-cash) fair value fluctuations of the convertible cumulative preference shares of € 5.0 million. Net result from continuing and discontinued operations in Q2 2014 was - € 14.6 million (Q2 2013:  - € 1.7 million) including the result in France (- € 4.6 million)
• Trade working capital (TWC) at the end of Q2 2014 was 17.1% (Q2 2013: 16.4%) due to higher TWC levels in Belgium and Germany
• Net debt (2) based on continuing operations per 30 June 2014 was € 67.4 million (Q2 2013: € 138.5 million)

Highlights Rebalanced 'Back on Track' strategy 2014 - 2016:
Restructuring:

• Cost reduction programme is proceeding well. Measures taken in the first half year represent an annual run rate of € 11 million against the 2013 actual cost base (excluding 2015 - 2016 inflation)
• OPEX improvements: in the second quarter, Grontmij continued to embed the five processes in all operating countries. Internal audits have been performed in Sweden, Turkey and Poland
• Portfolio optimisation: The divestment process of the French activities is progressing according to schedule: an Information Memorandum has been sent out to interested parties, both financial and strategic. Grontmij has terminated the sale agreement for the Naarderbos Golfcourse and is seeking discussions with other interested parties
• Accelerate improvements NL: Good progress is being made in the Netherlands, with implementation of the strategic plan to reduce costs, improve OPEX and grow the Dutch business in a sustainable manner. In the first half of 2014, EBITA margin excluding exceptional items in the Netherlands improved from 3.3% to 4.9%

Realising profitable growth
Grontmij's strategy is aimed at restructuring the business and realising profitable growth, focusing on five Group Growth Segments: Energy, Water, Highways & Roads, Sustainable Buildings and Light Rail.

Within these segments, a notable number of projects have been won in the second quarter of 2014 such as three major wind farm assignments in Denmark, Belgium and the Netherlands (Energy), the Alliance contract with Anglian Water that was signed in the UK as part of AMP6 (Water), the management contract for the Niels Bohr Building (Sustainable Buildings), and the design for the International Financial & Technology Centre in Wuhan, China (Sustainable Buildings).

Michiel Jaski, CEO Grontmij N.V.: 'With the improvement of our profit margin as Grontmij's most important long term strategic target, we are pleased to report on the trend in the first half of 2014. Excluding exceptional items our EBITA-margin of 3.5%, compared to 2.4% in the first six months last year, indicates Grontmij is making progress to get back on track. Although the margin in Q2 was slightly lower than last year, continued operations were in line with our internal expectations. The decisions announced earlier this year to implement an additional round of restructuring and to start the process to divest our remaining French activities strongly influenced net income in Q2. The good news is that the restructuring and strategic turn-around of the Netherlands is showing its early results. The divestment process in France is running on schedule with interest from both strategic and financial parties. We are pleased with the interest for our French activities and look forward to bring the divestment process to a positive closure.'


(1)  As per 30 June 2014, the French Engineering & Consultancy business is classified as asset held for sale and is qualified as discontinued operations, in accordance with the requirements of IFRS 5. For more details please refer to Note 6 of the interim financial statements 2014.

(2)  Under IFRS, the convertible cumulative preference shares ('Cumprefs') are classified as a liability. Under Dutch law and for the covenant calculations the Cumprefs are classified as equity. For more details please refer to the Refinancing paragraph in this press release.


Download the financial press release
Financial press release Q2 2014 -excluding Interim Financial Statements
Financial press release Q2 2014 -including Interim Financial Statements

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