BESIX Group looks back on a challenging 2015 – 2016 will be a pivotal year with favorable prospects
BESIX Group records steady growth in revenues, but net result falls short of expectations
Despite a more competitive environment BESIX Group achieved a turnover of EUR 2,160 million in 2015, a year-on-year growth of 8% as compared to 2014. This increase in revenues was largely due to activities in the Middle East, most notably in the United Arabic Emirates, Qatar and Oman where we witnessed a rebound notwithstanding on-going pressure on oil prices. The net result of the Group lags behind expectations and amounted to EUR 3.8 million (against EUR 62.9 million in 2014), adversely impacted by operational losses in 2 countries. The regional entities, BESIX RED and Concessions & Assets performed at record levels. BESIX Group ends 2015 with a historically high order book, which creates favorable conditions for a turnaround of the result in 2016.
In 2015 the Contracting division of BESIX Group suffered from substantial losses for 2 projects in the Kingdom of Saudi Arabia (Jazan Marine Terminal) and Egypt (Mall of Egypt), which amounted to about EUR 75 million. Difficult working conditions were the underlying causes of these losses and provisions, with claims being raised which are generally reflected in the income statement only to the extent that an agreement has been reached with the client.
The segments Marine & Civil International and Australia performed well and profitability in the United Arabic Emirates and Qatar increased year-on-year. Europe was down as compared to last year, reflecting some difficulties and operational losses experienced for the EDF Saclay project in France.
Our diversification strategy pays off: regional contractors, BESIX RED and Concessions & Assets achieve record performance
Against difficult market circumstances the regional contractors within the Group performed well with a record profitability of EUR 14.5 million, partly driven by an increased focus on the private sector given declining public spending. Illustrative of the synergies across our regional contractors is BE Wind, the joint venture between Franki Foundations and West Construct. Appealing to the increased demand for wind energy, they have jointly developed an offer for concrete pedestals for wind turbines and introduced it to the market with success.
BESIX RED, the real estate entity within the Group, also had a record year in 2015 with net earnings at EUR 10.2 million thanks to an attractive portfolio of real estate projects. Additional equity has been made available by the Group to BESIX RED to enable it to pursue further growth opportunities in the coming years in Belgium, France and Luxembourg.
Concessions & Assets contributed EUR 12.4 million to the result and further improved its recurrent profitability. It is a market in which we wish to grow further.
Financial position remains strong
BESIX Group’s 2015 consolidated net cash position (excluding the impact of real estate debt) amounted to EUR 143.4 million, a healthy liquidity position despite a decrease of 106.6 million as compared to last year. Cash generation was down, due to lower results and an increase in working capital requirements throughout the year. The Group’s solvency ratio amounted to 24.4%, which is well in excess of the minimum industry standards.
Engineering: a driving force in finding innovative solutions for complex tendering and Design & Build projects
In 2015 the BESIX Engineering department was involved in 160 projects and 90 tenders. The department could demonstrate its added value for amongst others the design of the LNG terminal in Bahrein, the building of multiple locks in the Netherlands and the successful tendering for the FFR Grand Stade de Rugby in Paris, France. For the renovation of the Velser tunnel in the Netherlands a detailed BIM model has been developed, which virtually rebuilds the tunnel. The BESIX Project Management tool (BPM), based on principles of systems engineering (ISO 15288), was applied for the first time in a project of this scale. Engineering recognizes the importance of Integral Design Management in order to reduce failure costs during execution. One of the innovative designs for which Engineering took home the ‘Betonprijs 2015’ in the category Constructive Design is the Neeltje Jans Radar tower, the highest nautical tower in Europe, marked by a very high structural rigidity.
Continued focus on safety and sustainability
In 2015 we could further improve our safety record. After a small hick-up in 2014, accident statistics have resumed their downward trend again, the result of a lot of hard work and a continuous focus on safety by all our teams in the field. Bringing these numbers further down will remain our first priority.
The Group confirmed its commitment to corporate social responsibility by joining the United Nations Global Compact Ten Principles in order to confirm our adherence to their values in terms of human rights, work conditions, environment and business practices.
Through its core activities too BESIX contributed to energy efficient building with projects like Post X, the first passive office location in Antwerp and BREAAM certified buildings like Trebel in Brussels, the MIVB-STIB maintenance center in Haren and the Kons development project in Luxembourg.
2016: a pivotal year
2016 will be a turning point for the BESIX Group in multiple ways. Challenges within our industry are manifold with a shift from Build to Design & Build, often extended with Maintenance & Finance, geopolitical changes, the increased complexity of projects and risk-exposure and rapid PPP growth. These developments require a greater adaptability and reflection on the markets and regions we wish to focus on.
2016 will also be the year during which the BESIX Group will roll out the Dare Change program which was launched by the executive committee end of 2015. This program intends to improve the operational performance of the Group and to streamline internal processes. Specific focus will go to a better risk, performance and knowledge management.
In order to prepare our company even better for future challenges, we will also reinforce efforts to structurally support innovation within our company.
With a view to leadership succession part of our executive committee who took the reins after the management buy-out in 2004, will gradually pass on the torch to the younger generations. A first step was made in July by nominating Jean Polet and Pierre Sironval as new members of the Group’s Strategic and Executive Committee. Carlo Schreurs was appointed Chief Development Officer and became a member of BESIX Board of Directors.
BESIX Group formulates ambitious Triple 3 strategy for 2016-2022
In 2016 we intend to continue our organic growth, extend our regional footprint and diversify our business further in order to broaden our service offerings. To this end we have formulated the Triple 3-Strategy: by 2022 we aspire to exceed EUR 3 billion revenues through 3 income streams evenly generated by Construction Europe, Construction International and other activities, with a net profitability margin of minimum 3%. A third strategic goal is to add at least 3 new business ventures next to our current activities. Our innovation program will help us to achieve this goal.
We are also committed to continue our support to the growth of Watpac, the Australian construction services company in which we currently hold a participation of 27%.
Order book and outlook 2016
BESIX Group started 2016 with a historically high order book representing a contractual value of EUR 3,229 million (against 2,962 million in 2015), with a balanced composition of the order portfolio across the activities of the Group. The increase of the order book in the course of 2015 was largely driven by the activities in the Middle East, where we could secure several contracts for prestige projects.
In Qatar we won the contract for building additional aircraft stands for the Hamad International Airport of Doha and we also received the green light for a new stadium in view of the 2022 FIFA World Cup in addition to the on-going renovation works for the Khalifa stadium. To top things off we were assigned the contract for building the Royal Atlantis Resort & Residences, a major leisure and residential complex on Jumairah Palm Island, Dubai.
In Europe too we were assigned multiple major contracts before the 2015 year-end. Through the Sas van Vreeswijk consortium BESIX Nederland is taking the lead in a PPP project for building the third chamber, renovating the existing monumental chambers and the maintenance of the entire Beatrix lock complex commissioned by Rijkswaterstaat. Still in the Netherlands, and together with Sanotec, the Group’s division which specializes in water management systems, we were also granted the contract for the design, renovation and construction of the Den Bosch sewage treatment installation. BESIX Nederland also secured the contract for the Traverse Dieren project, a 600 meter long underpass in the center of Dieren, near Arnhem. Early 2016 we could add the building of the Utrecht Hogeschool to the order book.
In France we could secure the contract for building a hospital (Clinique Saint Jean L’Ermitage) on the site of Melun, France.
In Belgium we won the contract for the Hanzeterminal in Zeebrugge, one of the last extensions of the inner port. Furthermore we obtained the contracts and already started the works for a large building complex in Ghent and the Ijzerlaan project in Antwerp, one of the first projects of the Oosterweel connection.
In addition we could add the second phase of the residential building complex Lustica Bay in Montenegro and the Gotthard Residences in Andermatt, Switzerland to the order book.
Johan Beerlandt, CEO BESIX Group:
“With this order book and our focus on improved operational performance a turnaround of our result in 2016 is within reach. We observe that commissioners are increasingly appreciating our total solution approach: our in-house Engineering department and multidisciplinary activities are making a difference for innovative design and high quality execution, putting risk mitigation and reduction of societal hindrance first. I thank our clients for their trust in 2015 and hope that BESIX continues to be their preferential partner for future projects. In the course of 2016 we will carefully prepare succession of the leadership of the BESIX Group in order to safeguard a sustainable future for our company."
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