Heijmans records modest result in 2013 despite tough year Capital position remains strong, solvency ratio at 29% Key developments Good results Roads and Civil in Belgium and Germany, considerable improvements in Non- residential, but decline in results Roads and Civil Netherlands. Property Development steady and modest loss at Residential Building; 1,082 homes sold in 2013, compared with 1,081 in 2012, with an increase in the proportion of sales to private buyers over the course of the year; Revenues at € 2.1 billion, down almost 11% from € 2.3 billion in 2012; Net profit 2013 € 2 million, compared with a loss of € 88 million in 2012 given write-down on intangible assets, impairment on property assets and reorganisation charges; Underlying operating profit € 23 million, down from € 27 million in 2012; Solvency ratio 29%, from 28% in 2012; Order book at € 1.7 billion per year-end 2013, down from € 1.9 billion at end-June 2013, with lower order intake at Roads and Civil; Proposed dividend per ordinary share of € 0.15 for 2013, compared with € 0.25 in 2012. Key figures 2H 2013 1H 2013 2013 2012 x 1 € million Revenues 1.125 929 2.054 2.318 Underlying operating result 1 21 2 23 27 Operating result 15 -2 13 -87 Result after tax 7 -5 2 -88 Earnings per share ( in €) 0,37 -0,27 0,10 -5,10 Order book 1.659 1.866 1.659 2.026 Net debt 141 214 141 149 Number of FTE 7.361 7.611 7.361 7.872 1. underlying operating result is the operating result excluding w rite dow n on property development, impairment of goodw ill, restructuring costs, result on the sale of subsidiaries and pension income. Bert van der Els, chairman of Heijmans Executive Board: “This past year was challenging. The market remains tough and we saw a decline in revenues in our property, residential building and infra activities. I am satisfied that our result has remained close to last years‟ level. Our Non-residential activities generate profit and our operations in Germany and Belgium are performing well. We devoted considerable attention to improving our performance in 2013, by focusing efforts on increasing the uniformity of processes and improving efficiency in tendering, project management and purchasing. One of our priorities in 2013 was the focus on our „improve the core‟ programme as a strategic target and this will remain a priority in 2014. In addition to our Improvement drive, we are also focusing on Innovation. We are developing smart technological concepts that address social issues and we are successfully translating these into sustainable and viable solutions. Some strong examples of this are the Hydrea Thermpipe making it to the finals of the TEDxBinnenhof innovation event, the Dutch Design Award for the Dutch National Military Museum and the Accenture innovation award for Smart Highway. Collaborating with parties that share our innovative drive is vital in order to move ahead, not only for Heijmans, but for the entire construction sector. With that in mind, in early 2014 we teamed up with the public sector and corporate and science sectors to launch the SPARK campus initiative: the first cross-over for innovation and technology in the Dutch construction sector.” Key developments 2nd half 2013 Residential After another difficult year, the residential market seems to have bottomed out, and the market showed the first signs of recovery in the 4th quarter of 2013. This was reflected in relatively high sales figures and an increase in the number of homes sold to private buyers compared to the previous year. Heijmans sold a total of 1,082 homes in the full-year 2013, with 542 of these sold in the 4th quarter, virtually unchanged from the total of 1,081 in 2012. Of the total homes sold in 2013, 437 were sold to private customers, compared with 357 in 2012. Competition in the market remains fierce, which is putting pressure on revenues and profit, especially in Residential Building. Despite this, Property Development still managed to acquire some interesting projects, such as the high-profile transformation of the Wijnhaven area in The Hague and the Kanaleneiland development in Utrecht. In the southern town of Ouddorp, Residential will build and deliver 205 holiday homes within a year for the Duynhille holiday park. Heijmans is also responding to the new reality in the housing market with its ‘Huismerk’ concept. Heijmans realised a total of 52 Huismerk homes in Landsmeer in 2013 and realised a highly energy-efficient variant of the concept in Almere Stad. Heijmans has also teamed up with DUS Architects and Henkel to develop the first printed house in the Netherlands, in an effort to gain expertise in the field of 3D printing. Last year, Residential Building completed the reorganisation announced in 2012, which meant a reduction of more than 250 jobs. Non-Residential Non-Residential devoted considerable attention to getting its house in order in 2013. The organisation also made progress on the completion of the integration of Non-residential Building and Technical Services, unambiguous project phasing and risk management. Non-Residential has chosen a niche profile, geared towards complex buildings requiring a combination of technology, design and construction, and operates on the premise of „margin over volume‟. Non-Residential‟s business include realisation, together with service, management and maintenance. Heijmans has successfully won numerous projects on the basis of price-quality ratio or so-called EMVI criteria, which express the added value to a project. Examples of these projects are the Laurentius Hospital in Roermond, the DSM Technology Campus in Delft and the Schiphol Airport Security Zone. In the autumn of 2013, Heijmans won the Dutch Design Award for the best contractor for the PPP project for the construction of the new National Military Museum in Soesterberg. Heijmans ability to offer fully integrated solutions combining the full range of disciplines remains a major differentiating factor in the market and has been a key factor in the successful completion of several highly complex projects, such as the Meander Medical Centre in Amersfoort and the Vredenburg Concert hall in Utrecht. Infra A considerable proportion of the revenues at Roads and Civil comes from large-scale integrated projects for public sector clients. The combination of budget cuts and a slower phasing of projects in this sector reduced market volume in the second half of 2013 and increased competition and pressure on prices. Heijmans nonetheless managed to acquire a number of major projects, such as the Drachtsterweg project in Leeuwarden and the renovation of the Wilhelmina locks in Zaandam. Heijmans‟ Roads and Civil score highly on quality criteria that are increasingly important in projects like these, such as design, the management and the reduction of disturbance in the vicinity of projects and traffic throughput. The rapid completion of the A2 motorway Den Bosch-Eindhoven, the construction of the Vonk & Vlam parking garage in the centre of Den Bosch, and railway projects in the centres of Utrecht, Eindhoven and Bilthoven are perfect examples of this quality-led approach. Heijmans acquired Brinck Groep at the end of 2013, in a move aimed at further increasing its market share in smart metering and the realisation of new projects in the field of sustainable energy and smart grids. The Belgian and German activities remained stable and they make an outstanding contribution to the group in terms of performance and expertise. Oevermann acquired a number of large infra projects in the past year, including the widening of the A1 (Bocklemünd-Cologne North) to six lanes and the renovation of the A4 motorway (Düren-Kerpen). Furthermore, Franki laid the foundations for a large number of onshore wind turbines in Germany, Poland, Austria and Belgium for client Enercon. Financial Heijmans‟ capital position is healthy, with a solvency ratio of 29%. Our net interest-bearing debt stood at € 141 million at year-end 2013, down from € 149 million at year-end 2012, due to, amongst others, an in-house programme to improve working capital and the „sub 10‟ share issue in August. The program for targeted divestments of property and other assets, running through year-end 2014, generated more than € 5 million in the second half of 2013. The recourse net debt improved to € 13 million, from €24 million in 2012. The order book stood at € 1.7 billion at year-end 2013, down from € 1.9 billion at the end of June 2013. The underlying operational result amounted to € 21 million in the second half of 2013 compared to € 23 million in the second half of 2012. Key developments 2013 Many sectors faced a decrease in revenues in 2013. Mainly at Property Development and Residential, but also in large integrated infra projects we are seeing an evident decline. This led to a decrease of 15% in total revenues from the Dutch operations in 2013. The revenues from the Belgian and German activities combined fell by approximately 2%. Heijmans entered into a joint venture with 3i Infrastructure Fund (previously Barclays Infrastructure Funds Management) in the form of Heijmans Capital B.V. for the financing of DBFMO (design, build, finance, maintain, operate) projects. The first project brought into the joint venture was the National Military Museum in in Soesterberg. The tender pipeline currently contains four PPP projects, in which Heijmans is in the final phase of the tendering process. Heijmans has a two-pronged strategy. First, we are focusing on the improvement of our core activities and processes by streamlining purchasing, commercial, tender and project management. Our second strategic focus is on revitalisation by developing new markets via our promising innovations and concepts.