Grontmij: 2003 result in line with expectations

Grontmij reported a result after taxes excluding exceptional income and expenses in 2003 of EUR 7.7 million (2002: EUR 13.9 million). This was in line with the half-year report and the press release of 17 November 2003.

Grontmij is conducting a restructuring programme in order to improve the profitability of Consultancy & Engineering. The aim of the restructuring is a long-term cost reduction of EUR 15-20 million on an annual basis from 2005 onwards. The number of indirect staff is to fall by 235 by the end of 2005. The number of locations in the Netherlands is to be reduced from thirty to twenty.

Grontmij is focussing on Consultancy & Engineering, traditionally its core activity. The capital-intensive activities are to be reduced in stages. The resultant cash flow is to be used for the growth of the knowledge-intensive activities.

Revenue and result for 2003
Grontmij’s total revenue rose in 2003 to EUR 506 million (2002: EUR 495 million). The result after taxes fell in 2003 to EUR 4.9 million (2002: EUR 13.9 million), partly due to the EUR 13.5 million restructuring provision formed for taxation and the tax-free profit on the sale of the 5.94% interest in Q-Park of EUR 6 million. Excluding this exceptional income and expenses the result after taxes amounted to EUR 7.7 million (2002: 13.9 million).

The fall in the result was due to cost increases (personnel costs, pension charges and IT expenses) and lower margins. Price erosion in the market rendered it virtually impossible to pass on all the cost increases. The margin before interest and taxation achieved by Consultancy & Engineering was 2.4% (2002: 4.3%), and by Development & Operations 4.5% (2002: 7.5%).

Balance sheet and cash flow
The net debt balance sheet position was converted into a net cash position of EUR 1.3 million (2002: net debt position of EUR 70.2 million). The reduction of work in progress and trade receivables during the last few months of 2003improved the net cash position by over EUR 40 million compared with the end of 2002. In addition, the proceeds from the sale of the interest in Q-Park of EUR 27 million helped improve the net cash position.

The balance sheet total as at 31 December 2003 fell by 16% to EUR 299 million (2002: EUR 357 million). The group capital ratio (equity as a percentage of the balance sheet total) rose to 38% (2002: 31%).

Earnings per share and dividend
The number of shares in issue increased in 2003 by 2.6% to 4,041,230 (2002: 3,937,875) owing to dividend being taken in shares. The result after taxes per share amounted to EUR 1.22 (2002: EUR 3.52).

Grontmij has a consistent dividend policy of distributing some 40% of the result after taxes (excluding exceptional income and expenses). The dividend for 2003 will amount to EUR 0.76 per share (2002: EUR 1.41). The dividend will be distributed entirely in cash.

The accelerated reduction in the number of temporary employees at Grontmij in the Netherlands by 250 announced in May 2003 was completed by the end of the year. The number of employees fell to 4,105 (2002: 4,477).

The restructuring announced in November 2003 is now fully underway. In order to improve the profitability of Consultancy & Engineering, the two business units which address the Dutch market for these services, Advies & Techniek and Bouw & Installaties, are being integrated. The number of locations in the Netherlands is being reduced from thirty to around twenty. The restructuring is designed to reduce the number of managers and staff in support services by 235, of which 135 in 2004.

Grontmij is anticipating for a long-term cost reduction of EUR 15-20 million on an annual basis from 2005 onwards, of which some 50% will need to be achieved in 2004.

Focus on knowledge-intensive activities; divestment Development & Operations
The evaluation of the strategy and portfolio was completed in early 2004. The main thrust of the Grontmij strategy

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