Half year results 2020

In Utrecht, Heijmans won the performance contract for the South district of the Central region of the Netherlands. This means we are responsible for the day-to-day maintenance on roads, green areas, public lighting and keeping service areas clean. Heijmans is also set to carry out large-scale maintenance on the A6 motorway between Lelystad Noord and the Ketel bridge.

Our mission – building a healthy living environment – remains our guiding principle when making choices. Based on the strategy to deliver better, smarter and more sustainable work, we continue to focus on the long term. For Schiphol, in addition to delivering parking spaces for six thousand cars, we also provided a climate-adaptive innovation. The material used makes it possible to store water underground to prevent any disruptions above ground. In addition, Heijmans was the founding father of the Emission-free Infrastructure Network, with the aim of speeding up emission-free operations. Climate-adaptive construction should result in less flooding, less heat stress, reduce the adverse effects of prolonged drought and subsidence, and increase biodiversity.

Inner-city area development remains a spearhead of our strategy, as do partnerships with our clients. We teamed up with the municipality of Vlaardingen to develop an urban development plan for Vijfsluizen in Vlaardingen, geared towards building for the future: sustainable, circular and nature-inclusive. The design for the neighbourhood is inspired by the landscape itself: so rather than houses with greenery around them, it is the other way around. Care for the environment and climate plays a major role in this approach.

The tender process for the renewal of the A6 was also special in several respects. Award criteria included both circularity and sustainability. Our solution for the smart phasing of the work also played a role in winning the contract. For the first time, the Dutch Ministry of Public Works and Waterways used the 'competitive dialogue light', a tendering method in which partnership is central.

In Amersfoort Vathorst, we are building innovative XS homes from rock wool and wood, with the maximum focus on sustainability, circularity and a healthy indoor climate. In addition to being highly efficient, these starter homes - built in the form of an old factory - also boast a special architectural look and feel. These XS homes, which Heijmans developed in-house, are part of Heijmans’ living concept and are also being built in the Parijsch project in Culemborg.

Revenue came in at €839 million in the first half of 2020, an increase of 15% compared to last year (first half 2019: € 730 million). All sectors saw a rise in revenue. Building & Technology recorded the strongest increase, with both the residential building activities and the non-residential activities increasing in volume by some 20%.

Although the impact of Covid-19 was present, we did not see any projects come to a halt. In some instances, we were even able to utilise additional opportunities as clients wanted to accelerate the execution of activities. This included the construction of infrastructure for electric driving and renovations of business premises that saw substantially reduced occupancy as a result of Covid-19. The 15% increase in revenue compared to last year was largely due to timing effects. The very mild winter also had a positive impact. For the full year 2020, Heijmans is aiming for revenue that is at least the same level as last year.

The underlying EBITDA improved in the first half of 2020 when compared with the first half of 2019 and came in at € 41 million (first half of 2019: € 36 million). In the Property Development and Residential Building activities, this was largely the result of increased volumes. Infra had a very good first half of the year. We have increased our ability to get in control of projects in recent years. In the six months under review, this resulted in a number of positive adjustments on projects that have been completed, and we have been able to release risk reservations.

The impact of Covid-19 on costs was largely manageable. We felt the impact of this most clearly in the larger non-residential projects that in relative terms involve more foreign work teams and deliveries.

The net result for the first half of 2020 remained unchanged compared with the previous year. This resulted in earnings per share after taxes of € 0.71. The main differences compared with last year were the improved underlying EBITDA and higher taxes. Although Heijmans still has unrecognised tax loss carry-forwards, out of prudence we recognised almost the entire tax burden on the pre-tax profit in H1. Financial expenses were also slightly lower than last year, as the syndicated loan remained unused in H1.

Net debt stood at € 43 million at end-June 2020 (end-June 2019: € 99 million). In addition to the healthy operating results, we also saw a strong working capital improvement, primarily as a result of effective receivables collection and strong pre-financing in projects. Average debt utilisation continued to decline, resulting in lower financing costs. The syndicated loan remained unused in its entirety and the cumulative preference shares declined slightly.

At end-June 2020, solvency stood at 26.9%, compared with the comparative figure for last year of 24.7%. The increase in solvency was mainly due to the addition of the net profit to the reserves. We have gradually strengthened our balance sheet in recent years to a robust level, which puts Heijmans in a good position to withstand the current uncertain market conditions. The syndicated loan of € 121 million was originally scheduled to expire on 30 June 2022. In consultation with our banking syndicate, this facility has been extended by one year until 30 June 2023 on the same terms.

As a result, Heijmans has further strengthened its financing relationships and becomes less sensitive to any fluctuations on the capital markets in the light of the current economic conditions.

At €2.0 billion at the end of June 2020, our order book remains at a healthy level and comparable to year-end 2019. There is a good spread across the sectors and a solid foundation for the remainder of 2020 and 2021. Because Heijmans has focused less on extremely large projects in recent years due to its selective tendering policy, the composition of the order book has become slightly more short-cyclical. Clients’ spending patterns will be particularly relevant to the development of the order book after 2020.

Based on a well distributed order book and strong progress in our projects, we look back on a good first half of 2020 and look forward to the full year with confidence. We expect performance (revenue, underlying EBITDA and net debt) to be at least at the same level as last year. All business units have solid foundations and the outlook for the second half of 2020 is good.

It should be noted that the situation regarding Covid-19 and possible nitrogen measures are currently difficult to predict. As a result, there is some lack of clarity for the medium term, particularly with regard to the housing sales climate and clients’ spending patterns in the infrastructure sector. However, we are an agile organisation with a solid foundation in the sub-markets in which we operate. We are continuing to build on the solid foundations of recent years. Should market conditions give us cause to do so, we will act proactively.

On 5 November of this year, Heijmans will publish a trading update before the opening of the stock exchange.