Financial press release - Grontmij announces 2013 Full Year results, rebalanced strategy and refinancing

Decisive steps supported by additional equity and amended financing arrangements

 

De Bilt, 26 February 2014 - Grontmij N.V., a listed consulting & engineering company with strong European presence, today announces its fourth quarter and full year 2013 results, together with a rebalanced 'Back on Track' strategy and a refinancing with additional equity and amended financing arrangements. European markets are challenging, mainly in the Netherlands and France, and the improvement in profitability in 2013 has not matched Grontmij's expectations. Grontmij will take decisive steps in 2014, to allow for a successful execution of the 'Back on Track' strategy in the period to 2016. The rebalanced strategy includes additional restructuring measures, portfolio optimisation and a programme to accelerate improvements in the Netherlands. These next steps require a solid financial framework, for which agreement has been reached with our major shareholders and banking syndicate. Pursuant to this agreement, the balance sheet will be strengthened with € 40 million of new equity, accompanied by a more flexible financing arrangement with an adjusted covenant schedule. The additional equity will be provided through a combination of a private placement with institutional investors of new ordinary shares by means of an Accelerated Book Build (ABB[1]) and a private placement of convertible cumulative preference shares.
Key points full year 2013[2]

Total revenue FY 2013 € 763.4 million (FY 2012: € 789.6 million), with organic decline of 2.6%, mainly driven by France (- 10.4%) and the Netherlands (- 5.4%) 

EBITA excluding exceptional items for FY 2013 increased by 10% to € 17.1 million (FY 2012: € 15.6 million), with improved profitability in the UK, Belgium and Other markets; Exceptional gain of  € 0.8 million (FY 2012: - € 24.2 million);  EBITA margin on total revenue excluding exceptional items of 2.2% (FY 2012: 2.0%) 

Net result for the full year improved to - € 14.8 million (FY 2012: - € 31.5 million), also influenced by an impairment on goodwill in France (FY 2013 - € 12.1 million) and the partial hedge ineffectiveness of interest rate swaps (FY 2013: - € 3.3 million) 

Net debt per 31 December 2013 at € 54.1 million (FY 2012: € 113.1 million) 

Trade working capital at the end of 2013 decreased to € 108.2 million (FY 2012 € 118.7 million). Trade working capital as % of total revenue was 14.2% at year-end (versus 15.0% at the end of 2012) 

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

Additional cost reduction programme: aimed at total annual cost reductions of € 15 million (post-inflation) to be achieved by 2016; expected one-off cash out of  € 13 million 

OPEX improvements: aimed at embedding the five key processes (being Pipeline Management, Bid Decision Management, Project Budget and Follow-up, Change Management and Client Satisfaction Surveys) in all our operating countries stimulating profitable growth and reducing costs, including a targeted reduction of project write downs by 0.5 - 0.75% of total revenue by 2016 

Portfolio optimisation: In 2014, Grontmij will review the strategy for the French engineering businesses and assess the strategic options for the French activities; the in 2012 identified non-core assets in the Netherlands will be discontinued or sold 

Accelerate improvements NL: decisive steps are necessary in the Netherlands executing on the new strategy developed in 2013: repositioning towards attractive markets and client segments, optimisation of the services portfolio, further professionalise the organisation and realise additional cost reductions 

Realising profitable growth: Grontmij continues to invest in the five long term attractive growth segments in which it has or can claim market leadership in its domestic markets or cross-borders: Water, Energy, Highways & Roads, Sustainable Buildings and Light Rail. 

Margin and trade working capital ('TWC') targets: Grontmij extends and reconfirms the margin target for 2016 of 6 - 8% EBITA excluding exceptional items and sets a new target for TWC of 13% of total revenue by 2016 

Refinancing:

Equity issuance of € 40 million: 

Private placement with institutional investors of approx. 6 million new ordinary shares by means of an Accelerated Book Build ('ABB'), which is guaranteed by all six major shareholders at a floor price of € 3.20 

Private placement of convertible cumulative preference shares ('Cumprefs') with three major shareholders for a gross amount of € 40 million minus the gross proceeds of the ABB  

Amended financing arrangements: 

Additional liquidity and adjusted covenant schedule reflecting the seasonal pattern of Grontmij's trade working capital requirements and allowing for additional headroom 

Michiel Jaski, CEO Grontmij N.V.: 'Our performance in the fourth quarter and our set of Full Year Results for 2013 show Grontmij is gradually making progress on the way to full recovery. Net debt is significantly lower at year-end and with our successful trade working capital programme we outperformed the target for the end of 2013. However, we also have to acknowledge that our operational results are improving at a slow pace and do not meet our internal expectations. The recent developments in some of our markets, especially in France and the Netherlands, have put additional pressure on our overall performance. Moving forward, we need to take further decisive steps to accelerate the Back on Track strategy and deliver on our long term strategic targets. Grontmij today announces a rebalanced strategy, including an additional round of restructuring for 2014. The financial framework to execute all these steps and unlock the true potential of our abilities, is an important precondition to succeed. We have reached agreement on the refinancing of Grontmij in close consultation with our major shareholders and the banks, providing the company with a stable and sustainable platform to build on. We particularly appreciate the support from our major shareholders in this respect. The new financing and equity arrangements are tailored to our company's specific needs and better reflect the seasonal patterns of our operations. Grontmij is confident in achieving its long term strategic objectives. We're facing the future with confidence and are looking forward to fully focus on our operations, improve our operational excellence, invest in attractive market segments and countries and serve our clients even better.'

 

[1] For details on the ABB, please see the separate press release published at 26 February 2014
[2] Based on continued operations (i.e. excluding French Monitoring & Testing)

See our website for the full press release

For more information please contact:
Grontmij N.V., Michele Negen, Investor Relations Manager, T +31 30 220 78 31


www.grontmij.com

Financial press release - Grontmij 2013 Full Year results


This announcement is distributed by Nasdaq OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: GRONTMIJ N.V. via Globenewswire
HUG#1764626