Cenk Düzyol, Chairman of the Board of Management of Ballast Nedam N.V. reflects:
“Looking back at 2020, the year can only be described as ‘extraordinary’. The COVID-19 pandemic will be mentioned in our history books, along with the many challenges for us as human beings and our business on a global scale. Its impact was unprecedented and made us humble.
Fortunately, due to our policies, elaborate measures and the dedication of our employees, we managed to keep the number of contaminations within our company limited and under control. Because we were able to keep almost all projects operational, we stayed on track with our business plan and even exceeded it.
We delivered a positive result and growth in 2020, despite these circumstances. We are financially healthy and stable. Our lean organisation, strong decentralised business units, continued focus on cost reduction and careful tendering have paid off. Also, investments in safety procedures, innovation and sustainability delivered high quality standards on our operations.
With the strength of our committed and skilled people, we focus on achieving results. Our entrepreneurial mindset enables us to continuously grow and to take on new challenges. We are able to adapt to complex and difficult circumstances and to find new ways to continuously improve ourselves.”
Despite the challenging circumstances, we managed to realise financial results that exceed our expectations.
- Revenue € 947.6 million (2019: € 874.1 million)
- Operating result including results from joint ventures € 26.7 million (2019: € 11.7 million)
- Underlying EBITDA € 42.3 million (2019: € 19.1 million)
- Net result € 31.1 million (2019: € 12.8 million)
- Stable order book of € 1.4 billion (2019: € 1.5 billion)
- Solvency 24.1% (2019: 10.7%)
- Liquidity € 220.0 million (2019: € 201.0 million)
- Equity € 167.4 million (2019: € 77.1 million)
Our net profit increased by 143% compared to 2019 and amounts to € 31.1 million. This is primarily due to our activities in the Construction division which includes residential projects, infrastructural works and non-residential projects. In addition, the divisions Ballast Nedam Development and Ballast Nedam Industriebouw made a strong contribution. The shareholder’s equity increased to € 167.4 million.
Our working capital ratio is stable at 1.3. We realised an increased quality of the order intake with a growth to € 867 million and a stable order book of € 1.4 billion. Our gross margin as well as our underlying EBITDA have improved. The gross margin in 2020 is € 46.5 million and underlying EBITDA increased by € 23.2 million from € 19.1 million in 2019 to € 42.3 million in 2020.
To significantly increase the financial solvency ratio to a level of 24.1% and to create an excellent position to benefit from for future expansion and investments, our parent company Renaissance Construction B.V. completed a share premium contribution of € 60 million. This once again shows the long-term commitment of our ultimate shareholder Rönesans Holding A.Ş. With this equity increase, the solvency ratio reaches the level of our best performance years again.
This represents a very strong and healthy status especially considering that the total indebtedness of Ballast Nedam has come down significantly as a result of a voluntary early repayment of a loan amounting to € 75 million. Before the share premium contribution and the voluntary early repayment of the aforementioned loan, Ballast Nedam already had a healthy cash position above € 200 million.
Ballast Nedam has decided not to make use of the ‘Noodmaatregel Overbrugging voor Werkgelegenheid’ (NOW) scheme. At the beginning of the pandemic the NOW scheme was applied when many factors were still uncertain. After all it became clear that we do not need the extra financial support and the deposit will be refunded.
Resilience and the ability to learn and adapt are our key success factors
In 2020 we continued our path of being a flexible organisation when changes occur. Our ability to learn and adapt is not only a way of working; it is also a mindset. It is our eagerness to continuously want to improve and challenge ourselves to become better. To become better as professionals and as a company as a whole. That means investing in highly skilled people, improved procedures, working methods, and our supply chain. We explore new ways of working, including how we manage and control risks and find solutions together. This leads to added value for our clients. To accomplish this, we focus on improving the safety, wellbeing and sustainability of our environment. Our challenge to continuously improve is the very essence of our company.
Focus on people and relationships
None of our accomplishments would be possible without our dedicated employees. They empower us to become better and we have the ambition to remain their employer of choice. We offer our expertise by being close to markets and in contact with our clients. Open and honest communication is highly effective to create better mutual understanding and sustainable relationships. Our clients appreciate our close relationships, local presence, transparent communication and proactive risk management.
At Ballast Nedam, working safely is of primary importance. Because health is the essence of our existence. Because we believe that working safely is one of the pillars on which a healthy organisation rests. We also focus on sustainability to minimise the footprints we leave on our environment. Sustainability has become an important aspect in many parts of our organisation. This will continue to grow in the coming years. Our focus on digital transformation and innovation not only helps us to offer the best suitable solutions to our clients, but also reinforces sustainability goals. Ultimately, we are dedicated to sustaining and expanding our corporate social responsibility so that we can contribute to other people’s wellbeing.
Working safely. Returning home healthy.
Martijn Smitt, Executive Director, responsible for the Health, Safety & Environment theme explains our vision on working safely. “Every year construction in the Netherlands still has too many incidents and accidents. After all, every accident is one too many. These incidents and accidents have a major impact for those involved, their families and their colleagues. That is why we have to look after each other more and better in our construction industry. Anyone who works for us can therefore count on an employer who takes safe working conditions seriously. Society also expects companies to take their responsibility in this. At Ballast Nedam, working safely comes first, because health is the essence of our existence. And because we believe that working safely is one of the pillars on which a healthy organisation rests. That is why safety is essential in every step we take.
That is also why we initiated a new safety movement in the past year to further increase and improve safety awareness at every stage of our process even faster. With only one goal, namely the pursuit of zero accidents. In our renewed approach, we are grateful to make use of the systematic and successful approach of our parent company Rönesans Holding.”
An eye to the future
Bramske van Beijma, our new director Corporate Social Responsibility explains our shared vision on sustainability: “The construction sector makes a major contribution to society by executing infrastructure and real estate projects. At the same time, it has an enormous impact on the environment in which it operates. With great dedication, Ballast Nedam is working on realising a future-proof environment. Sustainability is a very important priority that is enshrined in our policy.
One of our goals is to achieve CO2 neutral construction sites in 2030 and become CO2 neutral ourselves as a company. We are confident in achieving these goals as we have already reduced our CO2 footprint with 57% between 2008 and 2020. On the CO2 performance ladder we certified on the highest level. To achieve CO2 neutral construction sites, we invest in zero emission equipment. Together with partners we team up in sustainable initiatives such as ‘De Groene Koers’ and ‘Emissieloos Netwerk Infrastructuur’.
Another example which contributes to our goal to achieve CO2 neutral construction sites in 2030 are the site office units: 17% of these units have already been made energy-neutral since 2020.
Also, we will focus more on circularity in the way how we design and construct projects by focusing on re-use of materials and waste reduction. It requires a different way of working in the supply chain with subcontractors and suppliers through more collaboration and alignment. Sustainability will shape our company more and more, from design to execution and from office to the construction site.”
Several new projects were added to our orderbook in 2020. An example is project Jonas, a remarkable project, centrally built in the IJburg Bay in Amsterdam. A total of 273 apartments will be realised and a wide range of functions, including a rooftop beach, a commercial plinth, an underground parking garage and the impressive 'canyon'. Development contracts were signed and zoning plan procedures were started for Tuinbuurt Vrijlandt Rotterdam (290 residential units) and Cartesius Utrecht (2510 residential units).
We realised a true milestone highlight at the Gaasperdammertunnel (A9), when the 5 tunnel tubes were all opened for road traffic and the realisation of the longest land tunnel in the Netherlands became a fact. We continue our large infrastructure works at the A24 Blankenburgverbinding that connects the A20 and A15.
Meanwhile our complex high rises continue to rise. At The CoolTower in Rotterdam we are building a 154 meters high tower which contains 280 luxury apartments and services. Tower Ten (WTC) in Amsterdam and the Galaxy Tower in Utrecht are two examples where we build in city centres under complex circumstances.
In 2020 the urban development project ’Middenzone Gezondheidspark Dordrecht’ was awarded to Ballast Nedam Development, granting the opportunity for the development and realisation of 720 sustainable residential units, a parking garage and commercial units.
The first part of the project SVGG in Eindhoven, the townhall, won the Cobouw Sustainability Award in 2020. This consortium project consists of making seven buildings more sustainable over the next ten years, for example with a more than 50% energy neutrality and more than 95% reuse of materials released.
The Green Avenue (De Groene Loper) in the city of Maastricht has won the Sustainable Residential Development award of the European Property Award 2020-21 for the Netherlands. This internationally acclaimed award, which was presented for the 27th time this year, is the crowning glory of the exceptional work and has once again proved to be one of the most sustainable area developments in the Netherlands.
In Hemmathagama, Sri Lanka, the first pipeline has been laid for the new water treatment plant. Ballast Nedam International takes care of this water supply project from design to completion. In this area, 17000 families from seven villages will be given access to clean drinking water which will change their lives and improve their health significantly.
Digital Transformation & Innovation
Our new director of Digital Transformation & Innovation Paulus Eckhardt explains our vision on digitalisation and innovation: “We are at a tipping point of exponential technological advancement, with the potential to redefine the construction industry and its business model. Digital emerging technologies are transforming our lives in ways that were unimaginable even a decade ago. Machine learning and artificial intelligence are no longer science fiction; they are already automating and optimising operations business wise and changing our private lives.
Ballast Nedam is fully committed to digitalisation and innovation. This provides more added value for our customers. We can make faster and better decisions, reduce costs and improve our processes. Great examples in 2020 are our leading involvement for launching the BIM base Infra and developing the first digital application with some industry peers for automating our engineering processes, helping us to reduce and solve risks with our clients. We will continue playing a leading role in the construction industry for digital transformation and innovation. We create competitive advantage and add value to the way we design, build and manage assets, because we show our clients that we are in control of their project and make sure there are no surprises.
But digitalisation and innovation is about more than technology. It is also a cultural change, concerning people, organisations, processes and agile ways of working. Our BIM4Project approach is reflecting this and our colleagues are changing and improving themselves by making use of our best practices. Validation of our construction methodology by BIM2Construct and 4D scheduling will be the standard to offer the best possible technical solutions for our clients. We are on the right track and will continue attracting the right talents by our digital and innovative way of working.”
Distinctive way of working
As a construction and development company we focus on our project deliverables. Safety, quality, in-time delivery and (cost) efficiency are our license to operate. At the same time, we focus on our process deliverables. It is about our sincere willingness to cooperate with clients, partners and subcontractors on an equal basis with a strongly committed team that is led by ambitious leaders. Therefore, our way of working is distinctive. We are transparent about potential risks upfront, challenge existing assumptions by seeking new and innovative pathways, and we operate personally and up close. This way we find the best solutions together.
Risk management and tender management
Sander Lefevre, member of the Board of Management of Ballast Nedam shares his expertise and vision on risk management and tender management: “To make a difference in the construction sector we believe a professional approach on both risk management and cooperation with our clients is of key importance. In the Netherlands we are generally working with highly skilled people, in a complex environment and we are making use of well-developed integrated contracts. On top of that we find ourselves in a rapidly changing world in terms of innovation, CO2 reduction and circularity.
To balance these four distinctive factors well, it requires that we spend serious time on technical content and feasibilities of a project as well as to optimise cooperation through open communication, pro-active attitude and commitment of experienced people involved. This applies to both client and contractor side, and all fully aligned at an early stage of the process before signing a final contract. A designed plan can only be successful when constructability is discussed and prepared into detail. It then starts with the question: ‘What is the best solution to the problem?’ This question can only be answered given the objectives of the client, while looking closely to the environment and our mutual future.
"Ballast Nedam on the one hand offers specialised solutions for unique elements of a project whereas on the other hand we make good use of solutions we gained from the past through experience, to optimise production processes and lower failure costs. We bring our own experience and know-how to the table and employ employees with a mixture of the required ‘out of the box thinking mentality’ and ‘soft skills’ to accelerate towards improved solutions for the future of the Netherlands. When we put in this effort from both sides it will in the end automatically result in fair risk distribution in which we solve risks, instead of shifting them towards each other. It also leads to predictable projects with minimal impact on the environment. We can adjust this tailormade to each individual project for Ballast Nedam and apply this approach to each project to make sure we can offer the best solution to our clients. That is how we challenge ourselves and our clients to improve.”
Outlook: challenge to improve further
In the circumstance that COVID-19 is under control, the Dutch Central Bureau of Statistics expects an estimated economic growth of 2.1% in 2021 in the Netherlands. The construction industry is then expected to follow the positive trend. All the more reason to remain a lean and flexible organisation, as we have been over the past years.
Despite the COVID-19 challenges, we believe that for the year 2021 further growth of revenue and profit can be achieved. In addition to organic growth, as a result of the changing market conditions we see growth potential by investing in opportunities. This could be national and/or international acquisitions of companies and projects, but also investments in (real estate) developments.
We also strive to enhance our international network and utilise our ability to accept and execute projects abroad. This will be supported by our large-scaled international supply chain. Our international reputation is very strong and we see abundant opportunities.
With our strong order book for 2021 we have a solid starting position for the year. New projects were already signed in 2021 such as the construction of 2.4 kilometres of quays and earth-retaining walls in the Princess Amalia Harbour, which Ballast Nedam will realise as part of a consortium, as well as the realisation of Koningin Julianaplein, a new city entrance in The Hague. This new city entrance will be built on top of the new public bicycle parking and consists of two towers, each 90 meters high. After completion, The Hague will have 396 brand new apartments, of which 51 are social rental homes. In addition, 2400 m2 is intended for commercial space.
We will embrace new challenges
In the coming years we will continue to improve all aspects of our company, the added value to our clients and the care for our environment.
We will keep on investing in our human capital and keep pursuing the improvement of the margins on projects by focusing on a strong order book through selective and strategic tendering. We will also remain committed to strong procurement in our existing business lines. With our ‘can do’ mentality and open mindset, we will be able to achieve our goals. Our expectation is that our outlook will be positive in terms of revenue and profit and that we will achieve further financial growth. We have faith in our capabilities and strengths. We share the benefits of having Rönesans Holding as our solid parent company, which ENR ranked 23rd in the list of the world’s largest international construction companies in 2020.
We will embrace new challenges to learn, adapt and grow. Ballast Nedam is financially healthy and ready for the challenges of the future in the construction industry; with confidence, we challenge to improve every day.