NEWS RELEASE NEWS RELEASE NEWS RELEASE STRUKTON ACHIEVES MAJOR IMPROVEMENT IN NET RESULT IN 2011 Major improvement in net result with a profit of EUR 14.4 million (2010: loss of 15.5 million) Fall of 8.3% in revenue to EUR 1,318 million (2010: 1,438 million) Slight fall of 4% in operational result to EUR 55.3 million (2010: EUR 57.6 million) Impairment losses of EUR 6.4 million in goodwill and intangible assets (2010: 35.9 million) Dividend proposal: no dividend payments Substantial increase in solvency to 23.2% (2010: 17.2%). If PPP non-recourse financing is excluded, solvency is 26.6% (2010: 23.1%) Size of order book virtually unchanged at EUR 2.0 billion (2010: 2.1 billion) Utrecht, 25 May 2012 Figures (in million) 2011 2010 Revenue Operational result Net result Cash flow from ordinary business operations Order book Equity Invested capital Solvency Average number of employees 1,318.0 55.3 14.4 (10.6) 1,985.0 186.8 177.7 26.6% 5,906 1,437.5 57.6 (15.5) 38.5 2,065.0 166.7 179.2 23.1% 6,159 Gerard Sanderink, Chairman of the Board: Strukton achieved a positive operational result in 2011. This is a good performance, given that markets are still difficult. Measures were required at a number of points in the organisation in order to adjust costs in line with market conditions. Unfortunately, this involved the loss of around one hundred and fifty jobs. The order book is well filled, with orders totalling EUR 2.0 billion. The various business units have started to collaborate to an extensive degree, letting us to carry out integral projects in their entirety for our clients. Our strategic focus remains the three markets of rail infrastructure, civil infrastructure, and the construction, maintenance and management of buildings. Within these markets, we concentrate on a number of specialist areas in which we excel. We will be putting more emphasis on developing products further into concepts and marketing them. Unfortunately there were two aberrations with a negative effect on the results, one at a branch office outside the Netherlands and one for an infrastructure project. The aim is to improve control and prevent such unexpected losses in future by having more design checks and audits during project execution as well as by keeping a closer watch on things. Revenue fell slightly compared with 2010, partly due to two large projects that were still in the preliminary phase in 2011 and not yet in full production. These were the Groene Loper (Green
Page 2 / 6 Carpet) for the A2 motorway in Maastricht and the A15 Maasvlakte-Vaanplein motorway section near Rotterdam, both Strukton Civiel projects. There was also a limited fall in revenue from Strukton Rail s domestic and foreign operations. Two significant sales took place in 2011. Both these sales had a positive impact on the balance sheet and led to a substantial reduction in Strukton's indebtedness. The first was the sale to RECO/BUKO of an industrial site of 36,000 m 2 including buildings in Utrecht as well as a number of operations run by the plant business, Strukton Materieel. The second sale was of 80% of the stake in six PPP projects to DIF Infrastructure II. Besides its 20% minority interest, Strukton will remain very actively involved operationally during the construction and commercial operation phases of these projects. This sale frees up capital for Strukton, enabling the company to play a significant part in future PPP projects too as a provider of equity. Strukton also continues to use its know-how and experience with DBFM(O) to find the best possible solution for its clients. Preparations for the takeover of road construction company Ooms Nederland Holding BV also took place in 2011. This takeover was completed at the beginning of 2012. The operations taken over were the groundwork, road building and hydraulic engineering operations, the Dutch consultancy operations (Unihorn) and part of the non-dutch infrastructure operations within Ooms International Holding Company. Course of business in 2011 After a period with yearly increases in revenue, revenue fell by 8.3% in 2011 to EUR 1,318 million. This was mainly due to two large civil engineering projects that were still in the preliminary phase in 2011 and were not yet in full production (the Groene Loper project for the A2 motorway in Maastricht and the A15 Maasvlakte-Vaanplein motorway section close to Rotterdam) and to lower levels of production by Strukton Civiel s specialist business units. There was also a slight decrease in the revenue from Strukton Rail s domestic and foreign operations. The operational result (EBITDA) was EUR 55.3 million in 2011, despite the slight fall in revenue and challenging market conditions. All segments made a positive contribution to this operational result. The net result improved significantly in 2011 with a profit of EUR 14.4 million. At EUR 2.0 billion, the size of the order book is virtually unchanged compared with 2010 (2010: EUR 2.1 billion). Strukton's solvency improved considerably in 2011. Solvency was 23.2% in 2011 (2010: 17.2%). If PPP non-recourse financing is excluded, solvency was 26.6% (2010: 23.1%). The sale of an 80% stake in the PPP projects also meant that the non-recourse PPP financing included in the balance sheet fell to EUR 64.2 million (2010: EUR 161.3 million). Course of business per segment Rail infrastructure and information systems Strukton Rail (in millions) 2011 2010 Revenue 585.9 616.1 Operational result 27.0 37.2 Employees at year end 3,125 3,162 There were good results in 2011 for all countries and specialist areas with the exception of Norway, even though the market is still difficult in some countries. There was a very tragic accident in Sweden, in which one Strukton Rail employee died.
Page 3 / 6 Strukton Rail achieved a sound profit in the Netherlands and also showed good results in Belgium, Germany, Sweden, Denmark and Italy. The operations in Norway were discontinued in January 2012 as Strukton Rail was unable to build up the organisation to the desired level. Strukton Systems achieved excellent results and Strukton Rolling Stock also closed with a profit. Eurailscout achieved a break-even result. The strategy of becoming more international once again proved successful in 2011. Strukton Rail's European character is mainly reflected in its deployment of machinery and specialist know-how throughout Europe. The greater scale means that Strukton Rail can continue to invest in larger, more sophisticated machinery and work in a commercially viable way in each country. Strukton Rail's business development focuses on increasing the capacity of the track. That is why a new, automated inspection method was implemented in 2011. Strukton Rail has also drawn up a proposal for using an auto-transformer substation for highly targeted increases in the amount of electrical power delivered. This relatively minor adjustment doubles the amount of power available on the track at just the locations where it is needed. Civil infrastructure Strukton Civiel (in millions) 2011 2010 Revenue 298.8 392.7 Operational result 10.1 13.3 Employees at year end 935 976 Strukton Civiel was able to hold its ground relatively well during the recession in 2011, although it did have to adjust revenue expectations downwards slightly. This was because of the poor market in the regional segment, fewer new projects than had been budgeted and the fact that some large-scale projects were still in the design phase in 2011. Less revenue meant that Strukton Civiel had to make further improvements to the general level of costs. There was also a limited loss of jobs. Strukton Civiel s strategy is focused on achieving steady, viable growth by extending the infrastructure chain and broadening its coverage of the supply chain in specialist areas. That is why the road construction company Ooms Civiel, which has operations in the west of the Netherlands, was purchased in 2011. Over the next few years, clients will take on a more prominent role within the existing strategy. Strukton Civiel will also concentrate on a number of specialist techniques and project categories, such as parking concepts and immersed tunnels. Furthermore, Strukton Civiel will focus on specialist foundation techniques, renewable energy and soundproofing facilities using alternative materials. A new business unit Strukton Civiel Asset Management was set up in 2011. It will concentrate on the long-term maintenance of DBFMO projects. Another new strategic business unit is Strukton Verkeerstechnieken, which focuses on traffic management systems and technical systems for tunnels. Construction and property development Strukton Bouw (in millions) 2011 2010 Revenue 181.2 189.9 Operational result 5.9 0.3 Employees at year end 304 367 Strukton Bouw achieved a profit in 2011, albeit a small one. Prior-year charges for projects that have already been closed and a provision for reorganisation had negative effects, which were offset by a good operational result.
Page 4 / 6 The market remains incredibly challenging, with a clear increase in the number of foreign players. These parties are looking for Dutch partners, such as Strukton, which has led to interest in cooperation with the other Strukton operating companies. A further adjustment to the size of the workforce was unavoidable at the end of 2011, given order book volumes. After this reorganisation, Strukton Bouw can face 2012 with confidence. The strategy has been refined further; the focus is on healthcare projects, the construction of hotels, accommodation for students and young people, data centres and temporary housing, and revitalising office buildings. Strukton Bouw has decided only to bid in tenders if there is sufficient chance of success. The smart construction method has been introduced for work in existing projects. Discussing the plan of approach with all the relevant parties before a project starts is expected to improve the efficiency of the execution. This is intended to let Strukton Bouw reduce project costs and strengthen its competitive position. Technical services and maintenance Strukton Worksphere (in millions) 2011 2010 Revenue 252.1 238.8 Operational result 12.3 6.8 Employees at year end 1,466 1,518 Strukton Worksphere had an excellent year in 2011, achieving growth despite a substantial falling-off in the market and pressure on margins. The healthy results are a direct consequence of its strategy; Strukton Worksphere has longlasting, stable contracts with established clients, which ensure a regular flow of projects. The focus is on further strengthening this position and investing in long-standing client relationships. There are increasing numbers of players in the maintenance market who compete exclusively on price. Strukton Worksphere also seeks to operate in that segment and aims to be the cost leader. Costs can be cut further by investing in efficiency and IT applications. This results in a customised model in which clients can choose between a competitive, no-frills offer, a highquality offer or something in between - without compromising on the basic quality, of course. Strukton Worksphere focuses on making further improvements to maintenance and asset management and also on revitalising property. Other growth markets are the healthcare sector and data centres. Strukton Worksphere s distinguishing features are the degree to which it takes its clients into account and its affinity with client processes. Sustainability Strukton's basic premise is that people, the environment and clients deserve just as much care and attention as its business operations. The interests of People and Planet are of equal value and complementary to commercial requirements and quality (Profit). In 2011 Strukton retained level 5 the highest level on the CO 2 performance ladder. This is a unique achievement in the sector because no other company is at level 5 for rail and civil engineering and construction and electrical and mechanical engineering all at once. Strukton is championing CO 2 reduction throughout the supply chain. A third of heavy goods vehicles on the motorways are connected to the construction industry. Strukton is collaborating with partners in the concrete and glass supply chains to investigate the options for organising transport more efficiently, for example by combining delivery and collection journeys. It is also continually looking for options within its own organisation for making business processes even more sustainable. That is why in 2011 Strukton Bouw, Strukton Civiel and Strukton Worksphere jointly appointed two employees who will be working full-time on sustainability. Strukton Rail had already appointed a sustainability officer. Furthermore, the Thinking Green think tank was set up in 2011. This team, with members from all parts of the organisation, serves as a promoter for sustainability projects. For instance, Strukton is working
Page 5 / 6 in Rotterdam on making nine municipal swimming pools more sustainable. The swimming pools will be more energy-efficient, CO 2 emissions will be reduced, and water and air quality will be improved. Furthermore, in Amsterdam Strukton Worksphere has started installing twoand-a-half thousand public recharging outlets for electric vehicles. Strukton itself is increasingly opting for electrically powered transport in its projects. Impairments Impairments totalling EUR 6.4 million were recognised in 2011 (2010: EUR 35.9 million). This sum was largely for the write-down on goodwill for Strukton Rail s participating interest in Norway. In 2010 and 2011, impairments were recognised in goodwill and intangible assets acquired as part of takeovers in previous years. These impairments do not involve any outgoing cash flows and the write-downs have resulted in a much stronger balance sheet. Financial result Once again, there was an improvement in the financial result in 2011 compared with the previous year. The loss of EUR 5.1 million euros meant that the financial result was 19.1% better than in 2010 (a loss of EUR 6.3 million). This improvement was a result of lower financing costs and increased income from PPP projects. Cash flow and financing The total net cash flow in 2011 was a negative flow of EUR 7.4 million (2010: positive flow of EUR 9.6 million). This was mainly due to a fall in the pre-financing for large infrastructure projects and the loss on Strukton Rail s operations in Norway. The cash flows from the sale of the PPP projects and Strukton Materieel s assets are recognised in the investment cash flows. The net cash flow from investment activities was EUR 5.6 million (2010: a negative flow of EUR 5.8 million). This means the extensive programme of investments in property, plant and equipment was fully funded by the proceeds from the disposals. There was an early repayment of EUR 15.0 million on bank loans in December 2011. The net cash flow from financing activities in 2011 was EUR 19.3 million (2010: EUR 53.3 million). This mainly reflects the loans taken out as part of the non-recourse financing for the PPP projects. Acquisitions and disposals On 6 December 2011, Strukton reduced its share in six PPP projects by selling an 80% stake in Strukton Finance Holding to DIF Infrastructure II. This disposal fits with the strategy of freeing up capital in order to invest further in Strukton s new activities. Strukton remains operationally involved in these projects and will continue to invest in PPP projects in the future. On 13 October 2011 Strukton sold the land, property, plant and equipment owned by its plant business, Strukton Materieel, to RECO/BUKO. The operations of the plant business are not part of Strukton s core activities and this disposal frees up money for the repayment of debts, and investments in core activities. On 5 January 2012 Strukton Civiel acquired a 100% stake in Ooms Nederland Holding BV. This transaction involved Strukton Civiel taking over the infrastructure operations of Ooms Avenhorn Group BV. The details of this transaction will be included in the 2012 financial statements. Order book The size of the order book fell slightly but is still high at EUR 2.0 billion. All four segments have well-filled order books for 2012. The execution of long-term PPP projects accounts for EUR 429 million of this order book. (in millions) 2011 2010 Regular order book 1,556 1,516 Order book for PPP projects 429 549 Total order book 1,985 2,065
Page 6 / 6 Outlook The strategic and commercial decisions that were made in 2011 mean that Strukton can face 2012 with confidence. Market conditions may still be difficult, but Strukton does have a wellfilled order book. However, keeping proper control of projects and reducing the costs of failure remain a priority. Strukton is well placed for the future as it has made the right choices at the right times. About Strukton Strukton is a full-service provider in the field of infrastructure and accommodation solutions. The focus is on the delivery of products and services aimed at mobility, transport hubs and uninterrupted operation. Strukton is a company with approximately 5,900 employees and revenue of EUR 1.3 billion in 2011. Strukton is a proactive partner, covering the entire process from design through to operation. It combines the specific know-how and experience of the five operational companies to give end-users a pleasurable travelling experience and enable them to live, work, relax and learn in comfortable conditions. www.strukton.com Note for editors For additional information please contact: Annemarie Hoogendoorn, Corporate Communications, tel.: +31 (0)30-248-6344 The full annual report and associated film clip can be found at www.strukton.com/annualreport. CC/AH