Jan van Rooijen, CFO, said: "After a disappointing year in 2012, VolkerWessels saw a strong recovery in profits last year. We are pleased with the solid results because all sectors contributed to the profit recovery. We recorded a positive net result in all sectors. Despite shrinking volumes, overcapacity and price pressure, our focus on margin rather than volume and on risk management was instrumental in the healthy development of our results. Our strategy, which focuses on broadening the value chain and the spread of our activities and regions, yielded a solid result."
Since Reggeborgh acquired the remaining shares from CVC Capital Partners, VolkerWessels has once more become a family business: a reliable partner synonymous with sustainable quality, long-term relationships, a solid financial position and an entrepreneurial spirit. Even when market conditions remain challenging, there are always opportunities. In the past, VolkerWessels has proved that there is strength to be gained from identifying those opportunities early on and being alert to future opportunities. We are cautiously positive as regards the economic outlook for 2014, but it is our confidence in our own strength that makes us optimistic about the future."
Given the difficult market conditions, we are pleased with our healthy order book. The quality of our order book has been improved by a good spread in activities and regions combined with an increase in multi-year contracts. These contracts generate a stable flow of income, and so they are important building blocks for future revenue and results.
Financing projects is a challenge which we do not expect to overcome in the short term. Investment in care facilities has come to a standstill, companies are shelving projects and commercial property in particular is difficult to finance. In these market conditions, our solid financial position, dependable image and network of private investors are crucial.
Despite the tough market conditions, Building & Property Development in the Netherlands has achieved a limited positive result. In 2013 a write-down of € 11 million was made for a limited number of land and real estate holdings, as compared to € 191 million in 2012.
Our construction companies are generally performing moderately well, although there have been a number of restructuring measures taken at companies which used to depend primarily on housing which had a negative impact on the result in 2013.
Highlights in 2013
One particularly innovative and sustainable project that is underway is the new accommodation for network operator Liander. The 1200 employees are collaborating in the creative process to help to transform the existing building into a sustainable complex. Work is now underway on the Westluidense Poort building in Tiel, a "temple of culture" in the heart of the historic city. We have also made great progress towards zero energy living. We build houses which generate energy and have optimum insulation.
Given the difficult market conditions, the majority of operating companies managed to record a satisfactory result. They were able to increase their order book and market share, operate smarter and more efficiently or set themselves apart with niche capabilities and superior knowledge. The new tender regulations, which came into force on 1 April 2013, provide for greater recognition of quality by stipulating that the public sector must not award contracts solely on the basis of the lowest price. In this fickle market, multi-year projects and long-term framework and maintenance contracts are important building blocks in our order book. VolkerInfra's holistic and multidisciplinary approach enables us to serve clients at every stage of a project.
Highlights in 2013
We are protecting villages and towns against the threat of flooding; one example is the Noordwaard de-poldering project. By creating additional space for Dutch rivers, we can prevent excessively high water levels and dike breaches. The second Juliana Canal sluice in Gouda also provides further protection. By building a second sluice (alongside the existing one), we are separating working vessels from leisure craft, which improves safety. On land, our projects include major railway improvement works near Enschede. In Utrecht, we have started dismantling the many kilometres of railway track.
In the Netherlands and Belgium, the market for distribution networks and pipelines (onshore) is still struggling with government cutbacks and low market volumes due to a downturn in new construction projects. Despite these tough market conditions, we saw a recovery in our result in this sector, recording another positive result. This was achieved by improving our processes and exercising restraint in accepting EPC projects.
Highlights in 2013
We have started a number of new offshore wind projects off the coast of the United Kingdom and Germany, for which we are laying and installing the energy infrastructure. We have undertaken the complex reconstruction of the underground telecom infrastructure in the heart of Rotterdam. As well as relocating many metres of cable, we also laid new cables. Another project that we are particularly proud of is the Last Mile, which involves connecting 279 high-voltage substations to 21 fibre optic rings in the Netherlands. The result is a new reliable fibre optic network.
During 2013 VolkerWessels UK was awarded a number of long-term framework contracts and innovative alliance contracts. These provide a regular volume of rail infrastructure, highways maintenance and environmental projects. The UK government is prioritising infrastructure investment as a means of stimulating the economy, with a particular emphasis on transport and energy infrastructure. We now have increasingly strong positions in these markets.
Highlights in 2013
VolkerWessels UK has commenced an eight-year contract to maintain and enhance the highways in Central London. Gatwick airport's runway resurfacing was completed and work has started to reroute the A45 to create space for the runway extension in Birmingham. There are numerous rail infrastructure projects underway, including the delivery of Thameslink depots, rail systems renewals and railway infrastructure enhancements. Lastly, the award of frameworks for the Environment Agency and National Grid enhance the growing order book which means the company can look forward to strong growth in the future.
Highlights in 2013
For VolkerStevin Canada, 2013 was dominated by severe flooding around Calgary. Help was given to the province of Alberta during the worst flooding in its history. In the wake of the floods, a huge amount of work was required to repair all the damage to the infrastructure, such as roads and bridges, and there is still a large amount to be completed. The Calgary Highways maintenance contract was renewed for a further 2 years, until mid-2016.
Impairments to land and real estate holdings were €11 million in 2013 (2012: €196 million).
Solvency is 25% before profit distribution, which is a significant improvement compared with 2012 (20%). The positive net result for 2013 of € 117 million, and the reduction in total assets, contributed to the strong improvement in our solvency at the end of 2013.
We focus unerringly on structurally reducing working capital and net debt. In the last few years we have substantially reduced our debt, leaving VolkerWessels net debt-free at year-end 2013. Consequently, our financial position is solid and the covenant criteria for our banking facilities were satisfied comfortably as at 31 December 2013.