Troubled Heijmans targets Dutch market
By Ian Vallely19 February 2017
Property development and building business Heijmans plans to focus fully on the Dutch market following news that it made a preliminary net loss of around €110 million in 2016.
Heijmans has reached agreement with its consortium of banks on the refinancing of the company. New agreements with the banking group include an extension of financing to June 2019 and a phased reduction of its credit facility to €122m.
The company said that this agreement secured its financing and provided a significant step towards recovery.
Ton Hillen, CEO of Heijmans, added, “We consider the confidence the banks have shown in us, in particular through the one-year extension, as an important condition to make Heijmans strong and vital once again.
“Although the loss-making projects have had a significant impact on the results, the agreements we have reached with the clients involved do result in a clear improvement of the company’s risk profile…
“The losses we have had to recognise on these projects had a strong negative impact on the cash flow in the second half of the year. By recognising the effects of these projects now, we have reduced their risk profile and we can take these projects to successful completion on the basis of the new agreements. This, combined with the refinancing, is a considerable step forward towards full recovery.”
The company has also adjusted its focus, to ensure it can continue business sustainably in the future. Hillen explained, “From this point onwards, we will focus only on the Netherlands with a tightened focus on our core competencies in the segments Property Development, Residential Building, Non-Residential and Infrastructure.
“The previously reported divestment of the Belgian activities and the sale of all German activities are part of this strategy and contribute to the reduction of our net debt. In the coming years, we will focus on recovery of our profitability, debt reduction, and structural improvement of our capital ratios, while our commercial focus will be on market segments in which we are strong and where we can realise healthy margins.”
Heijmans’ preliminary results for 2016 show lower revenues than in the previous year at almost €1.9 billion (2015: almost €2bn) “due to the selective acquisition policy and stagnation in production on a number of projects”. The underlying operating loss for 2016 will amount to €66m (2015: loss of €5m), with a net loss of approximately € 110m (2015: loss of €27m).
Meanwhile, Heijmans and the Province of Noord-Holland have reached agreement about the N23 Westfrisiaweg project. With immediate effect, Heijmans will resume work on the N23 Westfrisiaweg and expects to be able to open the road to traffic at the end of 2018. Ongoing arbitration proceedings will also be suspended.
A difference of opinion had arisen about the realisation of the project concerning the soil condition. Intensive discussions have resulted in agreement concerning the continuation of the project.
Member of the Provincial Executive Elisabeth Post (Mobility), said, "Resumption of the work on the N23 Westfrisiaweg is in the interest of the residents and business community in the West-Friesland region. We specifically felt that responsibility jointly with Heijmans. We held intensive discussions. It was not always easy, but it was constructive. This is why we were able to find a good solution and reach agreement. I am happy that the work will now be resumed as quickly as possible and that together with Heijmans, we will be working to open the road at the end of 2018."
Ruud Majenburg, member of Heijmans’ executive board, added, “The agreement puts an end to an undesirable situation for road users, nearby residents and companies. We are happy that the attempts made to find a solution ultimately resulted in this agreement. We will work together to complete the remainder of the project.”