Annual results 2015
and strategy update
Annual results 2015 and strategy update
Amsterdam, 18 February 2016
Royal BAM Group nv
Annual results 2015 and strategy update | 18 February 2016
1
Royal BAM Group nv
BAM delivers Back in Shape and updates strategy
Back in Shape programme completed successfully
within five quarters
Adjusted 2015 result improved, driven by Civil engineering;
held back by Dutch non-residential Construction
Positive cash flow from property divestments
and trade working capital improvement
Order book increase due to multi year civil engineering
project wins, intake quality improving
Dividend proposal of 2 cents per share
Updated strategy for 2016-2020:
‘Building the present, creating the future’
Annual results 2015 and strategy update | 18 February 2016
2
Royal BAM Group nv
Revenue and adjusted results per sector
(in € million)
2015
Revenue
2014
Result
Revenue
Result
Construction and M&E services
3,266
-9.2
3,016
-5.5
Civil engineering
3,926
74.4
3,949
14.2
Property
474
15.5
477
19.6
PPP
185
18.7
258
38.6
-428
1.0
-386
1.4
7,423
100.4
7,314
68.3
Eliminations and other
Total sectors
Annual results 2015 and strategy update | 18 February 2016
3
Royal BAM Group nv
Construction and M&E services
Market
• UK non-residential markets improved; cautious
growth NL residential, NL non residential still
subdued; BE and DE stable.
(in € million)
Revenue
Result
Order book
TWC efficiency
Business
• Revenue: UK helped by FX; NL non residential up;
DE higher due to strong order intake 2014.
• Result: NL negative due to some older non
residential projects and under recovery overhead,
plan being finalised to restore profitability; rebound
in UK reflects improved market.
• Order book: adjusted for FX up by 1%.
• TWC efficiency: improved to -10.4% at year-end
2015
■ 2014
Annual results 2015 and strategy update | 18 February 2016
■ 2015
4
Royal BAM Group nv
Civil engineering
Market
(in € million)
Revenue
• IE and UK improved; NL cautiously improving; DE
unchanged stable; BE lower government spending;
INT effected by developments oil and gas.
Result
Business
• Revenue: NL lower activity on larger projects; UK
revenue stable before FX effect; IE higher reflecting
market position; increase INT due to order phasing. Order book
• Result: supported by NL, INT and IE. Profitability
restored in UK and DE after losses in 2014.
• Order book: increase due to wins of some large
multi year projects in NL, IE and DE. UK higher due
to FX.
• TWC efficiency: Further improved to -6.2% by
■ 2014
■ 2015
end 2015.
Annual results 2015 and strategy update | 18 February 2016
TWC efficiency
5
Royal BAM Group nv
Property
Market
• Continued twin track development NL residential
market.
• Non-residential property UK improved; BE stable
and NL weakened further.
(in € million)
Revenue
Result
Business
• Revenue: residential higher reflecting rising house
sales; non-residential down due lower divestments. Homes sold NL
• Result: residential thin margins due to
development on impaired land;
• Homes sold NL: 17% up to 2,187; sales to private
buyers increased from 70% to 75%.
• Net investment: decreasing due to divestments of
non residential property and impairment (€34m).
■ 2014
Annual results 2015 and strategy update | 18 February 2016
Net investment
■ 2015
6
Royal BAM Group nv
PPP
Market
• Good opportunities in most home markets.
(in € million)
Portfolio (number)
Result
Revenue
Investment
Business
• Portfolio: grew to 41 due to four project wins (hit
rate 50%).
• Result: book profits lower reflecting two transfers
to the JV with PGGM (2014: six).
• Revenue: €0.7 bn construction revenue secured
for operational sectors; portfolio generates nearly
€100m recurring maintenance revenue per year.
• Investment: increased due to the growing
portfolio.
In 2015 secured construction revenue for
operational sectors
Annual results 2015 and strategy update | 18 February 2016
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Royal BAM Group nv
Income statement
(in € million, unless stated otherwise)
2015
Margin
Total sectors
100.4
1.4%
2014
68.3
Group overhead
-9.6
-0.6
Group interest charge
-2.6
-5.5
Adjusted result before tax
88.2
1.2%
62.2
Restructuring
-38.6
-68.8
Impairments
-39.1
-115.8
2.8
-
Income tax
-2.3
15.5
Non-controlling interest
-0.8
-1.2
Net result
10.2
Pension one-off
Annual results 2015 and strategy update | 18 February 2016
0.1%
-108.2
Margin
0.9%
0.9%
Neg.
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Royal BAM Group nv
Cash flow analysis
(in € million)
2015
2014
85
20
-53
-42
∆ Trade working capital
31
-15
Net Investment Property
71
83
Net investment PPP
-6
68
-33
15
95
129
-
-7
Restructuring
-54
-9
Pensions (additional)
-36
-24
∆ Group loans
-
-40
Others
8
27
13
76
Net cash result
Investments TFA
∆ Other working capital
Business cash flow
Dividend
∆ Cash position
Annual results 2015 and strategy update | 18 February 2016
•
Business cash flow 2015
supported by improved result
and property divestments.
•
Trade working capital improved
after strong inflow at year end
2014.
•
PPP cash flow lower due to fewer
transfers to joint venture PGGM.
•
Cash out other working capital
due to changes in accruals for
taxes.
•
Additional pension payment as
agreed for UK closed schemes.
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Royal BAM Group nv
Trade working capital
Trade working capital
Trade working capital
(in € million)
(in € million and TWC as %)
0
3.000
0%
2.000
-200
1.000
-5%
0
-400
-1.000
-10%
-600
-2.000
-3.000
Q2
2014
Q4
2014
Q2
2015
Q4
2015
Work-in-progress credit
Work-in-progress debit
Trade and other receivables
Trade and other payables
Trade working capital
Annual results 2015 and strategy update | 18 February 2016
-800
-15%
Q4
Q1
2014
Q2
Q3
Q4
Q1
2015
Q2
Q3
Q4
Trade working capital Q-end
Average TWC as % of 4-Q rolling revenue
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Royal BAM Group nv
Financial position
(in € million, unless stated otherwise)
FY15
FY14
Cash position
637
624
Interest-bearing debt
597
664
40
-40
Recourse net cash position
359
336
Shareholders’ equity
902
827
Capital base
1,027
952
Balance sheet total
4,852
4,956
Capital ratio
21.2%
19.2%
Capital employed
1,804
1,870
Return on capital employed
0.2%
Neg.
Net cash / (debt) position
Annual results 2015 and strategy update | 18 February 2016
•
Recourse cash position improved
by €23 million, including €54
million cash out for restructuring.
•
Capital ratio improved to 21.2%
helped by higher capital base and
lower balance sheet total.
•
Existing revolving credit facility
and subordinated loan extended
until 2018.
•
Group was within all of its banking
covenants.
11
Royal BAM Group nv
Back in Shape delivered (1)
Overhead
Trade working capital
Divestments
(in € million)
(in € million)
(in € million)
660
0
200
640
620
-200
600
150
€105
580
-400
560
100
€312
540
-600
50
520
500
-800
480
end 2013
end 2015
Annual results 2015 and strategy update | 18 February 2016
Q2
2014
Q4
2015
0
2014
2015
12
Royal BAM Group nv
Back in Shape delivered (2)
Operational
audit
Stage Gate 1
Stage Gate 2
Stage Gate 3
Stage Gate 4
Stage Gate 5
Decision
to tender
Initial
validation
Approval of
A-form
Approval final
contract
If won:
reality check
Tender
submitted
Contract
awarded
Peer review
Annual results 2015 and strategy update | 18 February 2016
13
Royal BAM Group nv
Order book
2015
2014
Δ
Construction and
M&E services
4,608
4,424
+4%
Civil engineering
6,272
5,129
+22%
Property
797
859
-7%
PPP
558
548
+2%
-735
-660
11,500
10,300
Eliminations and other
Total sectors
Annual results 2015 and strategy update | 18 February 2016
+12%
•
Order book quality improving
due to new stage gate
tendering.
•
Positive movement order
book includes €0.3 bn
currency effects.
•
Growth in civil engineering
due to order intake large
multi year projects in NL,
INT and IE.
•
PPP higher as a result of
two project wins.
14
Royal BAM Group nv
Sustainability
Safety
CO2
Waste
(IF)
(kilotonnes)
(kilotonnes)
6
300
300
5
250
250
4
200
200
3
150
150
2
100
100
1
50
50
0
0
0
Annual results 2015 and strategy update | 18 February 2016
•
IF (Incidents per millions
hours worked) reduced
from 5.0 to 4.5
•
CO2 emissions,
corrected for turnover,
reduced by 5%
•
Construction and office
waste, corrected for
turnover, reduced 12%
15
Royal BAM Group nv
Dividend 2015
BAM proposes a dividend of 2 euro cents
per ordinary share, in line with its
dividend policy to pay out 30 to 50% of
the net result for the year. This will be
paid in cash, with a scrip alternative.
Annual results 2015 and strategy update | 18 February 2016
16
Royal BAM Group nv
Outlook
For the full year 2016, BAM expects the
adjusted result before tax to be higher
than the level of 2015. BAM anticipates a
restructuring charge of approximately
€20 million, mainly related to the Dutch
activities.
Annual results 2015 and strategy update | 18 February 2016
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Royal BAM Group nv
‘Building the present,
‘Building
the present,
creating
the future’
creating the future’
Annual results 2015 and strategy update | 18 February 2016
18
Royal BAM Group nv
Strategy 2016-2020
‘Building the present, creating the future’
Focus
project
portfolio
Shape
business
portfolio
Create
future
portfolio
Differentiating capabilities
BAM’s unique culture
Annual results 2015 and strategy update | 18 February 2016
19
Royal BAM Group nv
External analysis
Industry economics favour
focus on scale or expertise
Markets mixed,
vulnerable macro
outlook
New technologies
are reshaping our
value chain
Customers face new challenges
Annual results 2015 and strategy update | 18 February 2016
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Royal BAM Group nv
Internal analysis
Back in Shape
Culture
Project analysis
Structure Processes
Cost reduction
Working capital
Project control
Divestments
Annual results 2015 and strategy update | 18 February 2016
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Royal BAM Group nv
Focusing project portfolio (1)
project results
< 2014
Back in Shape
Focus
Σ
Fix
2020
Σ projects
Annual results 2015 and strategy update | 18 February 2016
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Royal BAM Group nv
Focusing project portfolio (2)
Scale
Annual results 2015 and strategy update | 18 February 2016
Expertise
23
Royal BAM Group nv
Focusing project portfolio (3)
Selection
Stage gate
Annual results 2015 and strategy update | 18 February 2016
Peer review
Operational
audit
24
Royal BAM Group nv
Home markets
Shape business portfolio
Inside
Fix or
exit
Develop new propositions
along lifecycle
Outside
Stay
out
Leverage high-margin
specialisms
High
Low
Level of competition
Annual results 2015 and strategy update | 18 February 2016
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Royal BAM Group nv
Create future portfolio
Digital construction process
Annual results 2015 and strategy update | 18 February 2016
Digital built environment
26
Royal BAM Group nv
Culture
Culture
Performance
Profitable
projects
Selected
segments
Ownership
Collaboration
Learning
Understanding
Execution
Proposition
Innovation
Annual results 2015 and strategy update | 18 February 2016
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Royal BAM Group nv
Capabilities
Profit
Operating companies
Group Profit
Project
selection
+
Project
execution
Annual results 2015 and strategy update | 18 February 2016
Synergies in
selected
specialisms
Smart
engineering
Controls &
systems
Talent development and
exchange
Best in
industry
digital
Financial
strength
=
BAM
value
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Royal BAM Group nv
Targets 2020
Profit
Profit
Profit
People
Safety IF < 3.5
ROCE >10%
Planet
Adjusted
pre tax margin
2-4%
Property
< €500m
TWC < -10%
Annual results 2015 and strategy update | 18 February 2016
Net positive impact
29
Royal BAM Group nv
Implementation of strategy is key in 2016
Plan
People
Delivery
 Culture
 Capabilities
 Focus project portfolio
 Shape business portfolio
 Create future portfolio
Annual results 2015 and strategy update | 18 February 2016
Project Management Office
30
Royal BAM Group nv
Annexes
Home sales the Netherlands
Property investments
PPP investments
Net debt analysis
Revenue sector/country
Covenants
Annual results 2015 and strategy update | 18 February 2016
31
Royal BAM Group nv
Home sales the Netherlands
2015
2014
Q1
496
444
Q2
602
492
Q3
542
488
Q4
547
453
2,187
1,877
Number of homes sold from own development:
Total
Annual results 2015 and strategy update | 18 February 2016
32
Royal BAM Group nv
Property investments
(in € million, unless stated otherwise)
Total investments (Q4 2015)
Q4 2015
Q4 2014
Land and building rights
429
420
700
Property development
311
403
600
Total investments (a)
740
823
500
(in € million)
400
116
161
300
80
57
200
Total loans (b)
196
218
100
Property associates/JV (c)
100
92
Net investments (a)–(b)+(c)
644
697
Non-recourse loans
Recourse loans
Annual results 2015 and strategy update | 18 February 2016
NL
UK
Residential
BE
IE
Non-residential
33
Royal BAM Group nv
PPP investments
(in € million, unless stated otherwise)
Q4 2015
Q4 2014
276
318
-195
-206
-53
-63
PPP associates/JV/other
44
10
Investment equity1)
72
59
Committed equity2)
114
101
Total invested & committed equity
186
160
NPV Total invested & committed equity (A)
162
144
NPV Future equity cash inflows (B)
239
222
Estimated unrealised value (B) – (A)
77
78
PPP assets (intangibles, receivables)
Non-recourse PPP loans
Recourse PPP loans (equity bridges)
1)
2)
BAM share invested in equity of PPP contracts
Excluding contracts in preferred bidder stage
Annual results 2015 and strategy update | 18 February 2016
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Royal BAM Group nv
Net debt analysis
Q4 2015
Q4 2014
Bank overdrafts and other loans
195
124
133
452
124
14
7
206
170
135
511
124
22
7
Total interest-bearing debts
597
664
Less: cash
637
624
40
-40
359
336
(in € million, unless stated otherwise)
Non recourse PPP loans
Non recourse project financing
Other project financing
Total ‘project related’
Subordinated loan
Financial lease liabilities
Net cash / (debt) position
Recourse net cash position
Annual results 2015 | 18 February 2016
35
Royal BAM Group nv
Revenue sector/country
Construction
and M&E
Services
Civil
engineering
Property
development
PPP
Total
Netherlands
15%
14%
4%
1%
34%
United Kingdom
15%
15%
1%
0%
31%
Belgium/L’bourg
3%
7%
1%
0%
11%
Germany/Swiss
7%
4%
-
0%
11%
Ireland
-
4%
0%
1%
5%
International
-
8%
-
-
8%
40%
52%
6%
2%
100%
Total
Revenue per sector/country 2015 as a percentage of gross total revenue 2015
Annual results 2015 | 18 February 2016
36
Royal BAM Group nv
Recourse leverage ratio
Recourse interest coverage ratio
9,3
10,0
9,0
8,0
1,0
-1,2
-0,6 -1,1
4,0
15Q4
15Q3
15Q2
15Q1
14Q4
14Q3
3,0
14Q2
15Q4
15Q3
15Q2
15Q1
14Q4
14Q3
14Q2
14Q1
13Q4
13Q3
13Q2
13Q1
12Q4
6,8
5,0
-2,6
Recourse leverage
7,3
8,8
5,6
14Q1
-2,8
7,4
6,0
13Q4
-0,9
7,7
6,6
13Q3
-1,1 0,9
6,4
7,0
13Q2
1,5
0,8
1,4
7,6
7,3
12Q4
1,4
8,3
7,8
13Q1
4,0
3,0
2,0
1,0
0,0
-1,0
-2,0
-3,0
-4,0
Limit recourse leverage
Recourse interest coverage
Limit recourse interest coverage
Recourse solvency ratio
33,0%
31,6%
31,1%
28,0%
25,3%
30,2%
30,0%
25,5%
25,3%
29,3%
28,3%
23,5%
23,0%
30,7%
30,5%
25,0%
18,0%
Recourse solvency
15Q4
15Q3
15Q2
15Q1
14Q4
14Q3
14Q2
14Q1
13Q4
13Q3
13Q2
13Q1
12Q4
13,0%
Limit recourse solvency
Annual results 2015 and strategy update | 18 February 2016
37
Royal BAM Group nv
Contact details
BAM Investor Relations
Joost van Galen
+31(0) 30 659 87 07
[email protected]
Annual results 2015 and strategy update | 18 February 2016
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