Grontmij Reports Weak Start of the Year

DE BILT, The Netherlands, April 29, 2015 /PRNewswire/ --

Total order book increasing, stabilising in the Netherlands 

Grontmij N.V., a listed consulting & engineering company with strong European presence, today announces its results for the first quarter of 2015. Despite modest signs of recovery across Europe, Grontmij's markets remain fragile particularly in the Netherlands. The year started out weak, especially in January and February, with an organic decline in the first quarter on total revenue of 1.7%. EBITA excluding exceptional items in Q1 2015 of € 3.7 million (Q1 2014: € 7.0 million) was impacted by lower results in the Netherlands and Denmark. On 31 March 2015 Grontmij completed the divestment of Parera, one of its French subsidiaries. Grontmij continues the divestment process of its remaining French operations, and intends to complete the French divestment process in 2015.  

Key points first quarter 

• Total revenue Q1 2015 € 166.1 million (Q1 2014: € 168.8 million), with organic decline of 1.7 %. Net revenue Q1 2015 below last year at € 141.2 million (Q1 2014: € 144.6 million). Organic decline on net revenue of 2.4%, mainly influenced by lower net revenues in Sweden and the Netherlands off-setting growth in Germany and Other markets
• EBITA excluding exceptional items Q1 2015 of € 3.4 million (Q1 2014: € 7.0 million), impacted by weak revenue development in the Netherlands, and lower results in Denmark on remaining work for the 2011 hospital project. EBITA margin excluding exceptional items of 2.1% in Q1 2015, compared to 4.1% last year. EBITA was affected by € 0.9 million of one-off expenses
• Overall net result in Q1 2015 of  € 3.6 million (Q1 2014: - € 2.3 million) including the gain on the sale of Parera. Net result from continuing operations in Q1 2015 of - € 1.8 million (Q1 2014:  - € 1.6 million)
• Order book for the Group increased driven by positive developments in Denmark and UK, with order book in the Netherlands stabilising at the end of the quarter
• Trade working capital (TWC) at the end of Q1 2015 was 15.2% (Q1 2014: 15.6%). The underlying improvement in TWC is 1% as the year-on-year business mix change has a negative impact on TWC (0.6%)
• Net debt^[1] based on continuing operations per 31 March 2015 was € 61.6 million including € 20.9 million related to the Convertible Cumulative Preference Shares ('Cumprefs'). Net debt for covenants per end of

Q1 2015 was € 35.8 million (Q1 2014: € 66.6 million), resulting in a leverage ratio of 1.5x, well within the Group's covenant.

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

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1. 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 2014 Annual accounts, available on our website.  

Restructuring: 

• Cost reduction programme: cost reductions in line with target at the end of Q1 2015 of € 14.4 million against the 2013 actual cost base, with a one-off cash out realised of € 8.3 million (out of an expected € 12 million)
• OPEX improvements: focus has been on improving pipeline management including a more formalised 'Win business process' in the Netherlands, Denmark and Sweden and strengthening the project review process in Denmark
• Portfolio optimisation: Grontmij completed the divestment of Parera, one of its French subsidiaries on 31 March 2015. The divestment process of the remaining French operations continues, and Grontmij intends to complete the French divestment process in 2015. Grontmij restates that following the divestment of the French operations, a transaction-related loss will be incurred
• Accelerate improvements NL: The first quarter of 2015 started out weak in the Netherlands as the business was impacted by ongoing difficult (local) market circumstances. Grontmij continued the cost reductions and further improvements of processes like 'Win business' and pipeline management. As a result of a strong focus on sales with measures taken in the first months of 2015, order book is stabilising

Realising profitable growth 

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

Within these segments, a number of projects in which Grontmij provides tangible solutions for its clients have been won in the first quarter of 2015:

• As a leading expert in Energy, Grontmij was appointed by PGE Polish Energy Group to manage the construction of a waste-to-energy facility in Rzeszów, Poland. When completed in 2018, the installation will be able to process up to 100,000 tons of municipal waste per year, generating electrical power and heating for the entire region
• In the Netherlands, Grontmij was assigned a five year framework contract to renew gas infrastructure for Gasunie. The total value of the five-year framework contract for Grontmij is expected to be between 15 and 20 million euro's
• Grontmij's knowledge of infrastructure was recognised by Rijkswaterstaat, the Dutch infrastructure authority, as Grontmij is appointed to draw up infrastructural plans for the busy Utrecht ring road. An improved routing plan and a second-phase environmental impact assessment will enable Rijkswaterstaat to achieve better traffic flow and improve the area's liveability
• In Denmark, Grontmij, together with other partners, was awarded the Danish Lighting Award 2014 for its work on the new Novo Nordisk headquarters in Bagsværd, Denmark. The lighting is integrated and enhances the architecture and the building's functions, with high visual comfort and energy efficient luminaries. Grontmij wins the award for the second consecutive year and for the third time since the award was established in 2008.

Michiel Jaski, CEO Grontmij N.V: 'The start of 2015 has not been easy, as already indicated at the end of February when we published our full year 2014 results. For a set of different reasons our performance in two of our key markets, the Netherlands and Denmark, was under pressure in the first quarter and actions have been taken. In the Netherlands our program to put full focus on sales delivered the first results stabilising the order book towards the end of the first quarter. In Denmark the change of leadership, the increased focus on cost efficiencies and the project review process, are important steps we have taken to achieve stability and to accelerate financial improvements. In Q1 we announced and closed a first transaction in the divestment process of the remaining businesses in France. We expect to conclude this process during the course of 2015. Overall, the first quarter has not changed the long term ambitions or the outlook of Grontmij. We foresee 2015 to be a year of progress on the road to our most important long term strategic priority of 6-8% EBITA margin.' 

Visit our website for the full press release: http://www.grontmij.com/mediacenter  

http://www.grontmij.com

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