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• Revenue rose by 5% to EUR 1,437 million
• The operational result rose sharply by 56% to EUR 57.6 million
• The net result was a loss of EUR 15.5 million due to impairment losses
• Further rise in size of order book to EUR 2.1 billion (2009: EUR 1.8 billion)
• Oranjewoud nv is new shareholder of Strukton

Utrecht, 28 March 2011

Gerard Sanderink, Chairman of the Group Management Board: ‘The takeover means that it is now clear, as was desired, what course Strukton’s future will take; Strukton’s operations will be continued as before within the boundaries of a single company. Strukton’s strength lies in realising complex projects in complex environments. We seek to provide considerable added value, which lets us stand out in the market. It should be clear to our clients that they can rely on us, that they will get value for money and that they can expect trend setting solutions.’

Raymond Steenvoorden, Group Management Board: ‘The focus over the past year has very much been on improving the operational results and realising free cash flows. Last year was a tumultuous year because of the sale of Strukton, and we had to deal with an extremely challenging market at the same time. We are therefore pleased that we were able to show a significant improvement in the operational result despite this. Of course, it is disappointing that we were not able to translate this into a good net result as well. Impairments of goodwill and intangible assets totalling EUR 35.9 million – because of the write-down of intangible assets and goodwill relating to the acquisitions in the past of Worksphere and Jernbaneservice (Norway) – led eventually to a net loss for us. However, the healthy operational results and the good cash flow situation are important parameters for us when considering the sustained recovery of profitability. In addition, we have also seen the opportunity to further develop a number of niche positions, which allows us to face the challenges of the future with confidence.’

Course of business in 2010
For Strukton, 2010 was dominated by the takeover. Strukton’s future course has been assured now that Oranjewoud nv has become the new shareholder.
Strukton, a full-service provider for infrastructure and accommodation solutions, realised revenue of EUR 1.437 billion in 2010 (2009: EUR 1.368 billion), an increase of 5%.
Around 70% of the revenue (2009: 69%) and 88% of the operational result (2009:123%) can be accounted for by the segments operating in the infrastructure sector. Strukton operates in a large number of different areas in this sector, which has turned out to be less affected by the economic recession than other sectors in the construction industry.

The recovery in profitability is partly due to the fact that all the operating companies made a positive contribution to the operational result in 2010, despite the still challenging market conditions. There was a significant increase in revenue at Strukton Rail, and Strukton Worksphere grew too. Volumes at Strukton Civiel and Strukton Bouw were slightly below the level for 2009.

• In 2010 the operational result (EBITDA) rose by more than 56% to EUR 57.6 million (2009: EUR 37.0 million). This substantial improvement is mainly due to the activities in rail infrastructure and improved results for the construction segment.
• The net result for Strukton was a loss of EUR 15.5 million (2009: EUR 0.8 million profit), as a result of impairments of intangible assets totalling EUR 35.9 million.
• The order book volume has reached an all-time high: EUR 2.1 billion, over 11% higher than at the end of 2009 (EUR 1.8 billion).
• Solvency rose to 23.1% (2009: 22.1%). This is excluding PPP debts as they are non-recourse.

Course of business at Strukton companies

• Rail infrastructure and information systems
• Civil infrastructure
• Construction and property development
• Technical services and maintenance
• Strukton Integrale Projecten

Sustainability
In 2010, Strukton became the first group to achieve level 5 – the highest level possible – on ProRail’s CO2 performance ladder.
Sustainability does not just play a significant role within the company's own business operations. The skills present within Strukton allow us to be of maximum service to our clients in realising their sustainability objectives.
Strukton is constantly looking for new ways of recycling building materials. Strukton has been using gravel in new projects for some years, for example in the new N57 trunk road in Zeeland and in the underwater concrete in the Museumpark multi-storey car park in Rotterdam. In 2010 Strukton developed another cradle-to-cradle building material, called ‘green concrete’. In addition, old ballast (the gravel between railway sleepers) is recycled to create foundation blocks.
In addition to the various initiatives to make its own business operations more sustainable, Strukton also seeks to use the knowledge and expertise present within its own organisation to make buildings more sustainable and to help customers reduce CO2 emissions.
For example, Strukton Systems has won two contracts  to build power substations for wind farms in the North Sea (DanTysk and Riffgat). Strukton Rolling Stock is working on developing traction electronics that will reduce the amount of energy needed to make a train run. Strukton Rail is also developing a concept for the storage of braking energy in vehicles.

Impairments
In 2010 an impairment of intangible assets totalling EUR 35.9 million (2009: EUR 1.4 million) had to be recognised. This is largely attributable to Worksphere and Jernbaneservice.
Despite the fact that the results of Strukton Worksphere developed in line with expectations in the year under review, changes in IAS 36 and changing market conditions meant that an impairment of EUR 30.3 million had to be entered in the 2010 accounts. This impairment concerned the goodwill and the intangible assets relating to the acquisition of Worksphere in 2006.
An impairment totalling EUR 5.2 million was recognised for the goodwill paid in the acquisition of Jernbaneservice in Norway during 2006 to 2007.

Financial result
While capital requirements remained roughly constant, there has been a significant improvement in the financial result. This is largely due to the positive result on derivatives of EUR 1.1 million (a loss of EUR 0.5 million in 2009) and the financial result for PPP projects in operation, which was EUR 0.4 million as opposed to a loss in 2009.
On the other hand, there were non-recurring transaction costs of approximately EUR 0.3 million as a result of new funding.

Equity and cash flows
The cash flow from ordinary business operations was EUR 38.5 million in 2010 (2009: EUR 56.9 million). This cash flow is excluding the expenditure of EUR 76.3 million on construction in the ongoing PPP projects; such expenditure was classified as investment up until last year, but this year it has been included in the cash flow from operating activities.
Furthermore, a restrained investment policy continued to be pursued – as a result of the 2005-2008 investment programme – and no acquisitions were made in 2010.
When the takeover took place, the balance sheet position was strengthened by a capital injection of EUR 10 million. The new financing agreement consists of a long-term loan of EUR 60 million and a working capital facility. At the end of 2010 the cash and cash equivalents, and the amounts drawn under the working capital facility gave a combined net positive balance of EUR 108.4 million. Consequently, Strukton complied amply with the covenants agreed with the financers at the end of 2010.
The reported net loss and the above-mentioned capital payment of EUR 10 million resulted in a fall of EUR 5 million in equity to EUR 167 million. The adjusted equity in 2009 was EUR 172 million.
The balance sheet total excluding PPP projects fell by EUR 51 million, which caused Strukton's solvency – adjusted for the financing of PPP projects – to rise to 23.1% (2009: 22.1%). Solvency including non-recourse financing was 17.2% as a result of the slight fall in equity and the increase in the balance sheet total of EUR 23 million, as opposed to 18.2% in 2009.

Takeover by Oranjewoud nv
On 23 July 2010 NS and Oranjewoud nv reached agreement on the sale of Strukton. After approval had been granted, the transaction took place on 29 October 2010. From this date onwards the results of Strukton are included in the consolidated financial statements of Oranjewoud nv.

Order book
Strukton closed 2010 with its order book volumes at an all-time high. This is the case for both the regular order book and the order book for PPP projects, which are generally long term in nature.

Outlook
Strukton faces 2011 full of confidence, partly because of its well filled order book. It aims to stabilise the operational result (EBITDA) and to make further reductions in the funding requirements arising in the course of the year. Another point for attention in 2011 is the reduction of the costs of failure.
The market for public private partnerships is expected to grow substantially after years of hesitation. The Dutch Rutte Cabinet has identified this as one of its priorities. Strukton has now acquired considerable experience in this market, and has consequently acquired a leading position. If Strukton is to tackle these complex projects successfully, it will need to invest further in system integration. Collaboration between the operating companies and the integration of systems, cultures and working methods are required in order to operate successfully in the chosen fields.
As in 2010, Strukton will continue in 2011 with its programmes in the areas of socially responsible business practices and CO2 reductions (2% reduction per annum).

Download the full Annual Report 2010 (.pdf - 2,06 MB).

You can watch a short film of the Annual Report on our website (.wmv - 27,7 MB) or on YouTube. 

This press release has also been issued in Dutch. In the event of any discrepancies between the original Dutch press release and this English translation, the Dutch version prevails.