Heijmans has increased its previously released profit forecast for 2005. Net profit is now expected to come out at approximately 85 million (2004: 72 million*). This brings the profit on each ordinary share to about 3.60. The profit is calculated based on IFRS.
"Heijmans is on the threshold of a new growth phase," said Guus Hoefsloot, Chairman of the Heijmans Executive Board. "The measures taken over the last two years have resulted in healthy balance sheet ratios and a positive cash flow. The current order book has risen by 15% compared to the end of 2004 and has high quality projects, leading us to expect organic growth. We expect to generate about 2.8 billion in revenues for 2005."
The demand for homes continues to be good. In the first four months of 2005, house prices in the Netherlands further increased. The sale of a number of projects with homes in the more expensive segment (over 400,000) also prospered. Heijmans is also increasingly successful in full area development such as that in Kanaleneiland Utrecht and Meerstad Groningen, for example. The office market continues to contend with vacancies. Because of this, Heijmans has made provisions for vacant, unsold office buildings. This means that risks connected with this are covered until the end of 2006. What can be seen is a shift by tenants from old to new property. New offices are only occasionally under development and construction.
In a construction market characterised by tight price formation, Heijmans has seen high quality demand from the healthcare and education sectors. Approximately 25% of the order book comes from projects for Heijmans' property development activities. In addition, Heijmans is focussing on the PFI (private finance initiative) projects that the government is bringing onto the market. In one of the largest projects, the renovation of the Ministry of Finance, the consortium of which Heijmans is a part is now one of the last three bidders.
The lowest point as regards pricing levels has been reached in the infrastructure division. Volumes are visibly picking up, the margins not yet. Major projects will make a substantial contribution to the Heijmans' result in this sector in 2005.
Private involvement in financing of major projects
In view of the positive developments with respect to the involvement of private parties in planning, financing and implementing projects and the principles underlying government policy in this area, Heijmans has decided to incorporate its activities in this regard in a separate business unit. This company will become home to knowledge of and offers for projects relating to what are known as DBFMO activities (design, build, finance, maintain and operate) for all the divisions.
Outside the Netherlands, Heijmans is active in three countries: Belgium, the UK and Germany. The markets in Belgium and the UK are good; Germany is still not showing any signs of recovery. Heijmans is keeping a toe in the water in Germany in the form of two companies (total turnover approx. 40 million) to be able to respond quickly to any increase in temperature. Developments in Belgium are satisfactory, in the UK definitely good.
A number of long-term projects have been undertaken in the UK, such as the four-year master contracts for Banes Care Homes and Glamorgan Care Homes (total approx. 65 million) and a three-year contract for social housing development in Oxford (approx. 45 million). In Belgium, Heijmans has taken on Queens' Park in Brussels (20 million) and a project for the redevelopment of the local hospital into a hotel, 40 apartments and 8,000 m2 shops was started in Tongelre. Lastly, Heijmans has entered into a partnership with Telenet to put interactive TV connections into people's homes.
Heijmans' financial position has been further strengthened. The operational cash flow for 2005 will be positive. The issue last March of 1,635,000 ordinary shares means that the cumu