Half-Year results 2003 Ballast Nedam

Radical reorganization is paying off. Ballast Nedam on its way to recovery: EBIT Euro 6 mln (half-year 2002: Euro 93 mln loss), net result Euro 3 mln (half-year 2002: Euro 105 mln loss)

After two loss-making years Ballast Nedam is showing a profit again over the first half year of 2003. This is the result of a radical reorganization. In the past year 880 people were made redundant. In addition the work force decreased by 770 as a result of disinvestments.

The reorganization is taking place under increasingly difficult market circumstances in the Dutch home market. Nonetheless the Dutch construction divisions have realized higher results in the first half-year. The Ballast Nedam International restructuring process is developing more successfully than expected. The reorganization of the activities in the United Kingdom continues, after the losses were substantially reduced in the first half-year.

Group turnover decreased by Euro 174 million compared with the same period last year. Of this decrease Euro 106 million relates to our participation in the dredging joint venture Ballast Ham Dredging, which participation we sold at the end of 2002. The remaining decline in turnover relates to the international activities (including the United Kingdom) conform the strategy of the Group.

Activities in the Netherlands
The Dutch construction divisions Ballast Nedam Building & Development and Ballast Nedam Infra performed well in a declining market (EBIT Euro 18 million compared with Euro 13 million half-year 2002). In the market one has to contend with challenging market conditions, increasing pressure on price levels and budgetary constraints of the Dutch government. Notwithstanding this turnover grew with 5 %.

Thanks to a prudent operational policy and tight risk management, the Building & Development division is barely exposed to risk relating to lack of occupancy of its housing and office developments.

In the Industry and Trade division the Raw Materials and Specialties clusters are also performing satisfactorily. The Prefab cluster, however, has to deal with overcapacity, turnover delays and as a result thereof margin pressure. This has lead to efficiency measures (circa 100 redundancies) and these measures have already shown their effects in the first half-year.

In 2002 the decision was made to withdraw from the risky international projects market. This process is proceeding more rapidly and better than expected. At present there remain three sizable projects under construction the last one of which will be completed in the beginning of 2005. The reduction of the work force is ahead of schedule. Ballast Nedam International is reporting a break-even result after a half-year 2002 loss of Euro 53 million. In the whole of 2002 the loss was Euro 103 million.

United Kingdom
The reorganization of Ballast Plc, the subsidiary company in the United Kingdom, is being continued. In the first half-year of 2003 the losses were sizably reduced from Euro 51 million over the same period of 2002 to Euro 15 million. The first phase of the reorganization process â€" the restructuring of the Southern regions â€" is by now successfully completed. Over the past two years the work force of Ballast Plc has been reduced from 1500 to 1000 people.

The next step focuses on improving the results of Ballast Plc as a whole. This includes a further streamlining of the regional organization. It also includes a continuation of the overhead reduction program. Four offices on sub-regional level are being closed. This will lead to approximately 275 redundancies.

Since last August the Managing Director of Ballast Nedam Building and Development is also acting as Chairman of Ballast Plc. He is responsible for the continued intensive restructuring process. The Dutch division is providing additional management support (on regional and project level). With these measures Ballast Plc is being positioned in such a way that the company can benefit from the positive developments in the British

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