Koninklijke VolkerWessels N.V. reports a net result attributable to shareholders of € 137 million and an all-time high order book of €8.9 billion. All segments contributed to our EBITDA with strong growth recorded in our Dutch Construction & Real Estate Development segment, our Energy & Telecoms Infrastructure segment as well as our UK operations. These results are underpinned by a solid underlying operational cash flow.
- EBITDA including OpenIJ provision of € 251 million (-5.3%), in line with latest outlook
- Net result attributable to shareholders of € 137 million (-2.1%)
- Net cash position improved by € 69 million to € 366 million
- Order book at historical high of € 8,924 million (+10.3%)
- ROCE of 20.1% (from 21.8%) and solvency ratio of 32.5% (from 31.5%)
- Revenue increased to € 5,924 million (+3.7%)
- Proposed final dividend of € 0.77 per share (total dividend of € 1.05 per share)
- 2019 EBITDA to increase, on track to meet medium term objectives
Jan de Ruiter, Chairman of the Management Board
“All our divisions contributed to the 2018 EBITDA of € 251 million which is in line with the outlook from our nine months trading update. Excluding the additional provision taken in 2018 for OpenIJ, EBITDA increased to € 290 million. We recorded strong results in our Construction & Real Estate Development segment, our Energy & Telecoms Infrastructure segment and our UK operations. North America recorded a reduced contribution which was predominantly caused by unusual weather conditions, our German operations contributed in line with last year whilst our Dutch Infrastructure segment’s result decreased due to the additional 2018 provision for the OpenIJ project as well as the ongoing repositioning of this segment.
The construction of the world’s largest sea lock at IJmuiden (the OpenIJ project) is progressing well and yet still challenging. During the year, two significant milestones were achieved: Volker Staal en Funderingen successfully immersed the first lock head and in December 2018 the three lock doors arrived safely in the port of Rotterdam. During 2018 we increased the loss provision for the project by € 39 million which brings the total VolkerWessels’ share of the provision to € 107 million. OpenIJ finalised the discussion with its banking syndicate regarding the rescheduling of the financing of OpenIJ on 21 February 2019. OpenIJ can resume drawing from its banking facilities in line with the agreed new schedule with immediate effect.
Rijkswaterstaat (‘RWS’ the single largest client in the Dutch Infrastructure sector) is currently in consultation with the Infrastructure sector with the goal to review its tendering and procurement processes. VolkerWessels is actively participating in these discussions. We aim for an outcome which combines innovation and sustainability goals with a more balanced division of risk between client and contractor (which can amongst others be done by choosing appropriate contract forms for integrated complex projects). Other important outcomes must be shorter tender processes and reduced tender costs as this currently represents a significant waste of man hours in a sector where skilled labor is scarce and difficult to come by.
Our focus remains on controlled profitable growth, strong cash conversion and strategic bolt-on acquisitions. We are very pleased with our strong cash conversion, which resulted in a significantly higher net cash position at the year-end, despite funding OpenIJ with € 98 million from our own funds. Our net cash position increased to € 366 million, up € 69 million from the same period in 2017 and our focus on reducing strategic working capital is clearly bearing fruit. During 2018 we made two bolt-on acquisitions: Joulz Energy Solutions (now a stand-alone subsidiary of Visser & Smit Hanab) in the Netherlands and PJ Davidson, a slip form concrete contractor in the UK. Both acquisitions further strengthen our local leadership positions and will positively contribute to our future results. Both acquisitions bring in additional specialist capabilities and will enhance our overall offering as well as our results.
Our revenue of over € 5.9 billion is once again the result of the delivery of a vast number of projects throughout 2018. We are particularly proud of the construction of the new head office and distribution centre for Eosta (the organic fruit importer and distributor), the Prinses Maxima Centrum in Utrecht (a Children’s hospital specialised in cancer treatment), the finalization of the North South Metro line in Amsterdam and the successful delivery of the DBFM N18 project. Significant progress was also made on our pilot for low temperature geothermal energy in the Netherlands. In the UK we completed the 3rd phase of the North Western Electrification Project and made good progress on our West Anglia Mainline project. We are also very pleased with the successful re-tender for Service area 24 in British Columbia.
We continue to focus on innovation, digitalisation and sustainability, three topics which will become more and more inter-related over the next few years. More ambitious goals with respect to our CO2 footprint and the reduction of primary resources require ongoing focus and different ways of doing business. In 2018 we formulated six KPI’s to measure our progress on delivery of our sustainability objectives, making our efforts in this respect both tangible and measurable.
We propose to pay a final dividend of € 0.77 per share, which, together with the interim dividend paid in November 2018 of € 0.28 per share, brings the total dividend to € 1.05 in line with the 2017 dividend.”
The UK government has pledged £250 million of funding to construction to support uptake and integration of technology. And with over 600,000 workers needing to be reskilled by 2040 to ensure they are up to date with evolving technologies, it’s clear there is a huge way to go to embrace a true digital revolution within the industry.
With a heavily mobile workforce, complex supply chain and site-based labour at its core, shifting the culture of the industry to embrace digital is a tall order, and one which Lincolnshire-based firm, The Marketplace, is tackling through it’s bespoke, on-line, sales lead generation service.
Jason Kay, Co-Founder of The Marketplace, believes new technology, quick and easy access and a more ‘personal’ approach, will revolutionise the way in which the construction industry searches for tendering opportunities and sales leads in the future, he says:
“We know from our own trials with innovative systems and applications that technology can bring huge benefits to the way people search for tendering and contract opportunities. Accessing accurate and valid data, at the right time is a challenge every business faces, none more so than in the construction industry. We’ve had over 40 years in supply chain management and procurement and we’ve seen the good, the bad and the ugly when it comes to SME’s ability to access new business.
The Marketplace is based on our philosophy of know, like and trust – a collaborative approach which puts the ‘human’ element back into sales lead generation. We believe our digital offering and our more personal approach fits today’s need for a closer connection with the supply chain and opportunities to tender for work. After all, people buy from people!”
With constricting construction output, there has never been a better time to provide a unique service, especially for SMEs. Digital tools, such as The Marketplace system, offers quick and easy access to a time-strapped construction professional.
Gareth Alexander, Co-Founder of The Marketplace believes a more bespoke digital lead generation service gets you quickly to the sales leads which are right for you. He says:
“We provide access to sales leads that are unadvertised, and really want to level the playing field when it comes to giving SMEs the chance to tender for projects in a timely manner. We often find that SMEs are frustrated by the lack of opportunities afforded to them, especially when dealing with established consortiums and relationships within the industry. Our database and fee structure gives SMEs more flexibility with no minimum contract, and no out of date information all delivered digitally.”
Unlike other industries, there is a huge interdependency in construction; between architects, suppliers, contractors and workers, and it is the relationships between these groups, which ultimately decides who gets the job. Digital technology can make the transition between these relationships smooth and effortless. Clients also benefit from personal weekly reports on tender activity and hot leads that are accurate and relevant to their business. For the price of a daily coffee, it gives them real value for money.