Ballast Nedam Trading Update for the Third Quarter of 2014

NIEUWEGEIN, the Netherlands, October 24, 2014 /PRNewswire/ --

The poor market conditions showed no improvement in the third quarter. Competition was consequently considerable, and accordingly prices have not improved. Ballast Nedam achieved a somewhat lower revenue than in the third quarter of 2013, which is attributable in particular to declining revenue in Infrastructure. Unlike the first half-year, Ballast Nedam has acquired several major projects on the domestic market in the third quarter.

Ballast Nedam's losses continued to rise in the third quarter of 2014. The increasing losses on the A15 Maasvlakte - Vaanplein highway project were responsible for most of the pressure on profit. These losses are attributable to considerable additional cost overruns. The project results achieved in the Infrastructure division were also disappointing. Satisfactory results were achieved in the offshore niche market and on several major complex building projects. The companies in the Specialized Companies and Supplies division also contributed well, mainly because of the implemented reorganisations and cost savings.

On 6 October Ballast Nedam announced a loss in connection with its 40% stake in the A15 Maasvlakte - Vaanplein highway project of approximately € 100 million, which is to be prefinanced pending the outcome of the contractual dispute settlement proceedings. Ballast Nedam expects the cost overruns to continue to rise in the final quarter. Until it becomes clear how the claims submitted by A-Lanes A15 will be handled, Ballast Nedam is unable to make any statement about the precise amount of the post-settlement loss.

The financing position including the non-recourse loans improved in the third quarter by € 71 million to a debt of € 59 million. The net cash component in this figure was € 50 million. The cash requirement will increase in the fourth quarter in line with the normal seasonal pattern. Ballast Nedam has secured the consent of the banks on the continued availability of the credit facilities under the terms and conditions as agreed with the banks.

The order book contracted in the third quarter from € 1 188 million in the first half-year to € 1 059 million. The order book includes the N31 Traverse Harlingen road widening project, in which approximately 3 kms of the N31 will be upgraded to a dual carriageway with two lanes in each direction. The total value of this design & construct contract with the Directorate-General for Public Works and Water Management is around € 84 million. The Amrumbank offshore wind project with a contract value of some € 15 million was realized in the third quarter. Construction started on the Westermeerwind wind farm in August. Ballast Nedam will design, deliver and install the foundations for the 48 wind turbines. The approximate joint contract value for the consortium with Mammoet will be € 52 million.

The following projects had yet to be entered into the order book in the third quarter of 2014. The A9 Gaasperdammerweg public-private partnership (PPP) project was awarded to IXAS Zuid-Oost, a consortium including Ballast Nedam. The project comprises the design, build, management, maintenance and financing of the existing and new infrastructure on the A9 highway between Diemen and Holendrecht. The approximate total nominal project size of the order is € 700 million, including twenty years of management and maintenance after the new infrastructure becomes available. The contract with the Directorate-General for Public Works and Water Management was signed in September 2014 and financial close is expected in November.

The Dutch Province of Jesuits has awarded Ballast Nedam the contract for the new 'Hofgebouw' project on the Brakkenstein Monastery site in Nijmegen. Hofgebouw comprises 98 residential and care apartments, communal rooms and a two-floor underground car park with approximately 140 spaces. The project is scheduled for completion in 2016. Ballast Nedam is to build three blocks with 104 apartments for social rent with parking spaces for the Thuisvester housing association in Oosterhout. The contract has also been signed for the Thialf stadium renovation project in Heerenveen. The joint contract value of these three projects is approximately € 72 million.

On the offshore niche market Ballast Nedam has been awarded a contract for subsea inspection and maintenance in the Butendiek offshore wind farm. This is the first maintenance contract outside the Netherlands, and it will commence on 1 January 2015 with an initial term of five years. Ballast Nedam designed, delivered and installed the eighty foundations for this wind farm. The final foundation was installed last month.

Update on financial measures 

Ballast Nedam announced a package of measures in February to strengthen the financial structure and improve solvency.

• The € 30 million rights issue was completed successfully on 23 July 2014.
• The pace of the disposalsprogramme of companies that do not contribute to the strategic focus on integrated projects and industrialization of the building process was maintained. Talks about the divestment of a cluster of companies in the Specialized Companies and Supplies division are at an advanced stage. The sale of the alternative fuels companies CNG Net B.V., LNG24 B.V. and CNG Net Realisatie en Onderhoud B.V. to funds managed by Bencis Capital Partners B.V. was completed in the third quarter for approximately € 26.5 million, with a book profit in excess of € 5 million for Ballast Nedam. The sale was also completed of Ballast Nedam's 30% stake in Beheersmaatschappij Fr. Bontrup B.V. to the owner of the other 70% of the shares.
• The improvement programme embarked upon in the first half is now in the implementation phase. The programme includes improvements for the control of working capital and of various projects, with a focus on cost saving. The programme is aimed at reducing working capital with € 50 million and achieving cost savings of € 25 million by the end of 2016.

As previously announced, an Extraordinary General Meeting of Shareholders of Ballast Nedam N.V. will be held on Friday, 14 November 2014. The items on the agenda include an amendment of the Articles of Association and a change in the membership of the Supervisory Board. The proposed amendment to the Articles of Association is for a separation of the roles of company secretary and secretary to the Supervisory Board. The Supervisory Board proposes furthermore to nominate Mr J.S.T. Tiemstra as a member of the Supervisory Board. Both of the above are voting items. The nomination and appointment of Mr Tiemstra is connected with the departure of Mr A.N.A.M. Smits as announced in early June 2014. Following Mr Tiemstra's appointment Mr Smits will stand down as a member of the Supervisory Board.

2014 will have been a demanding year for Ballast Nedam. In view of the lack of clarity about how the claims submitted by A-Lanes A15 will be handled, Ballast Nedam is refraining from any specific forecast.

Ballast Nedam targets its strategic focus at successfully acquiring and carrying out integrated projects in the working areas of housing, mobility, energy and nature in the Netherlands and internationally. We will expand related activities in niche markets and work on projects where we can make a difference for the client with our expert knowledge and skills. Ballast Nedam applies a differentiated market approach for its three divisions.

With further industrialization of the building process through the use of innovative modular concepts and standardization Ballast Nedam creates enduring quality at the lowest possible life cycle costs for its clients and society. The Ballast Nedam share is included in the Amsterdam Small Cap Index (AScX) of NYSE Euronext. http://www.ballast-nedam.com

SOURCE Ballast Nedam N.V.