French divestment progressing
De Bilt, 30 October 2014 - Grontmij N.V. a listed consulting & engineering company with strong European presence, today announces its results for the third quarter of 2014. Despite the fragile macro environment across Europe, Grontmij's operating margin improved in the third quarter of 2014 with EBITA excluding exceptional items of € 4.8 million (Q3 2013: € 1.9 million). The increase is mainly driven by cost savings across the Group and the performance in the Netherlands. Total revenues showed organic decline of 4.0%, while net revenues were more in line with last year, showing an organic decline of 0.8%. The divestment process of the French activities is progressing according to plan, with bids received in September from both financial and strategic parties.
Key points third quarter[1]
Total revenue Q3 2014 € 154.4 million (Q3 2013: € 161.6 million), with organic decline of 4.0%. Net revenue Q3 2014 below last year at € 127.6 million (Q3 2013: € 129.7 million). Organic decline on net revenue was 0.8%, reflecting the increased focus on own production
EBITA excluding exceptional items Q3 2014 € 4.8 million (Q3 2013: € 1.9 million). Profitability improved in all countries except Sweden; EBITA margin excluding exceptional items was 3.1% in Q3 2014, compared to 1.2% last year
Net result from continuing operations in Q3 2014 was € 1.2 million (Q3 2013: - € 7.8 million), mainly due to improved operational performance and lower finance expenses. Net result from continuing and discontinued operations in Q3 2014 was - € 2.7 million (Q3 2013: - € 8.1 million) and includes both the net result in France (- € 1.4 million) and an impairment on France (- € 2.4 million) taken in Q3 2014
Trade working capital (TWC) at the end of Q3 2014 was 17.1% (Q3 2013: 15.0%) due to higher TWC levels in The Netherlands, Belgium and Germany
Net debt[2] based on continuing operations per 30 September 2014 was € 86.9 million and includes the Cumprefs (€ 22.3 million) and € 21.0 million of net debt previously recorded under discontinued operations. Net debt for covenants per end of Q3 2014 was € 65.7 million
Highlights Rebalanced 'Back on Track' strategy 2014 - 2016:
Restructuring:
Cost reduction programme is on track. Measures taken year to date 2014 represent an annual run rate of € 13 million against the 2013 actual cost base (excluding 2015 - 2016 inflation), with a one-off cash out realised of € 5 million
OPEX improvements: the implementation of the five processes is work in progress and on schedule to reach the year-end implementation target of 95% in all operating countries
Portfolio optimisation: The divestment process of the French activities is progressing according to plan: at the end of Q3 non-binding bids have been received from both financial and strategic parties. Grontmij is now entering the next phase of the divestments process
At the end of September, Grontmij announced the intended divestment of the 24% stake in and associated receivables on the 'Ruimte voor Ruimte' sustainable development partnership for approx. € 8 million
Accelerate improvements NL: Despite the fragile market in the Netherlands, progress continues to be made, with improved results in the third quarter, mainly as a result of the cost reductions
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 in which Grontmij provides tangible solutions for her clients have been won in the third quarter of 2014:
For DONG Energy, 50 Danish and Swedish Grontmij consultants are converting the Skearbaeck Power station into a fully sustainable power station for 55,000 households, creating a lasting impact in the Danish environment
In the Netherlands, a 3-year framework agreement with Grontmij and partners guarantees TenneT to have the best support in creating a sustainable energy network
The span of Grontmij's knowledge on water technology and coastal protection has been recognised in projects all over the world. Grontmij engineers support the Laos Provincial Department of Public Works and Transport in training and project management support for a number of water and road infrastructure projects
Grontmij's strong attachment to the rapidly changing hospital sector is supported with the substantial Danish project win for constructing a Psychiatric Centre for Region Midt in Aarhus, Denmark, combining sustainable building solutions whilst creating a comfortable and pleasant environment for people to recover in, to work in and to visit
Michiel Jaski, CEO Grontmij N.V: 'In the third quarter we have achieved a good improvement of our profit margin thereby continuing the trend of the first half of 2014. Margin improvement is Grontmij's most important long term strategic priority and we are on track to make 2014 a year of progress. We are moving forward with the process to divest the remaining French activities. With interest from a number of both strategic and financial parties we have entered the next phase of the divestment process.'
[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 Q2 2014 press release, published on 4 August 2014 and available on our website.
