HEIJMANS : Half year results 2014: moderate first half year, growth order book

• Net loss of € 8 million, (H1 2013 loss of € 5 million);
• Revenues first half of 2014 at € 823 million (€ 912 million in H1 2013);
• Order book increases across the board: € 2.3 billion at end-June 2014 vs. € 1.6 billion at end-2013;
• Infra The Netherlands reports negative result, Infra Belgium improved from year-earlier period;
• Number of homes sold in first half of 2014 increased to 482 (386 homes in H1 2013); share of homes sold to private buyers increased to 244 (172 homes in H1 2013);
• Net debt at € 99 million as per end-June 2014, compared with € 121 million end-June 2013, solvency 30%

Figures drawn up taking into account new IFRS 11 rules. Comparable figures have also been adjusted. See section 7.3 for explanation.

"I am not happy with the result. It simply has to improve. We believe that the strong growth in our order book right across the board and the increasingly stronger recovery in the residential market offer a clear perspective for improvements. We will continue with our improve the core program, which focuses on purchasing, tender and project management, will certainly help us to achieve this. We are fully committed to this course and I expect the operating result to improve the coming periods.

The acquisition of prestigious and integrated projects, such as the N23 and Eurojust, plus the PPP projects A9, RIVM and A12 demonstrate the quality of our business and the opportunities for the future. We will be devoting a great deal of time to the preparation for these projects. The recruitment of the chief technology officer will accelerate our innovation portfolio even further. As a centrally managed organisation, we focus on projects in which this strength creates added value for our clients."

There is a marked recovery in the housing market. The decrease in mortgage interest rates and the focus of housing corporations on their core business has boosted the position of (new-build) private homes for sale as well as the liberalised sector rental homes. In the first half of 2014, Heijmans sold 482 homes, compared to 386 in the same period of last year. Of these, 244 were sold to private buyers, up from 172 in the first half of 2013. This offers perspective for the second half of 2014 and 2015. Due to historically low production volumes, the first half of 2014 was, as expected, a very difficult period. This resulted in a loss of € 4 million at Property Development and Residential Building in the first half of 2014, compared with a loss of € 8 million in the same period of 2013. On the other hand, Property Development and Residential Building realised a significant number of Huismerk (private label) homes in the past six months. This standardised and competitively priced concept is therefore proving an effective response to the current market conditions. The past half year Property Development began development of the Wijnhaven area in The Hague and the sale of the Fenix Loodsen lofts in Rotterdam. In addition, Property Development not only put a relatively large number of projects such as these onto the market, but is also preparing the sale of a number of other projects. This will enable the company to respond quickly to the recovery in the market. The order book at both Property Development and Residential Building increased considerably due to the market recovery.

Non-Residential had a solid period with a modestly positive operating result in the first half of 2014. The introduction of project phasing and tight risk management is bearing fruit. The integrated approach, combining technology and construction in a single organisation, gives this business a unique market proposition. This resulted in a number of prestigious projects in the past six months, such as the renovation and new-build of De Resident complex in The Hague, as well as the new premises for the national public health and environment body RIVM and Eurojust. The project Datacenters in Apeldoorn was completed the past half year.The Utrecht music centre TivoliVredenburg, comprising five concert halls, was opened by King Willem Alexander in early July. In Belgium, Heijmans Construction, together with the Willemen Groep, will in the near future start on the radical renovation and new build of the 'Elisabethzaal' concert halls in the centre of Antwerp. German Oevermann's Hochbau activities acquired the contract for the construction of a shopping centre in Dorsten. The gross surface of the new shopping centre is 45.000 m2 and a parking garage.

With a loss of € 5 million, the result was well below the result reported in the same period of last year (first half 2013: a positive result of € 11 million). Due to stiff competition surrounding regional projects on the one hand and little margin potential in large projects on the other hand, the results are significantly lower than the first half year of 2013. Our persistent emphasis on continuous improvement both commercially as in the execution of projects and services at regional works, should lead to improved results the coming period. Furthermore, the order book is well filled following the acquisition of projects such as the N23, A9, A12 road projects and the new public transport hub at Schiphol Airport, as well as the Bioscience Park in Leiden. Roads and Civil were involved in some prominent projects in the past six months, such as the temporary traffic measures related to the international Nuclear Summit in The Hague, temporary parking sites for government planes at Schiphol Airport for that same summit and the parking arrangements for the hockey world championships in The Hague. Heijmans was also responsible for the innovative hockey field for this global sports event in The Hague.

The Belgian Infra operations performed extremely well in the first half of the year. In Belgium, Heijmans is involved in a number of projects, including the tunnel installations and the control system for the Liefkenshoek rail link in Antwerp. The German infra activities, consisting of the companies Franki and Oevermann performed as expected the past half year despite the heavy competition.