When Grontmij N.V. was founded in 1915, its vision was
sustainable land consolidation and reclamation for the
agricultural sector and the development of the rural areas.
Almost a century later, the company has developed and
grown, but it is essentially the same: Grontmij creates
value for its customers and shareholders by designing and
realising sustainable living and working environments.
Grontmij’s mission is to be the best local service provider
for design, consultancy, management, engineering and
contracting in the environmental, water, energy, building,
industry and transportation sectors.
We aim to achieve this through the design and realisation
of plans for the future together with the people and
parties in our regions. Our highly skilled and expert staff
have a deep knowledge of the chosen markets and
sectors and provide a full range of services throughout
the project chain.
Key figures 3
Overview 2008 4
Foreword 8
Information for shareholders 10
Supervisory Board 13
Report of the Supervisory Board 14
Meetings 14
Committees 15
Remuneration report 15
Composition 18
Financial statements and dividend 19
Executive Board 22
Report of the Executive Board 24
Mission, objectives and strategy 24
Market 29
Risk management 37
Financial performance 43
Organisation and personnel 50
Corporate Governance 52
Declarations 55
Corporate Social Responsibility Report 58
Financial statements 71
Report of Stichting Preferente Aandelen Grontmij 127
Report of Stichting Administratiekantoor van Aandelen Grontmij N.V. 128
2008 2007 2006 2005 2004
Revenue EUR 1,000
Total revenue 846,223 772,846 543,122 441,481 472,884
Third-party projects expenses 182,254 174,701 158,612 147,977 184,343
Net revenue 663,969 598,145 384,510 293,504 288,541
Workforce (average) fte
Own staff 6,816 6,256 4,140 3,391 3,381
Agency staff 511 400 334 279 230
Total 7,327 6,656 4,474 3,670 3,611
Workforce (at year-end) fte 7,478 6,780 6,337 3,514 3,502
Profitability
Earnings before interest and income tax (EBIT) EUR 1,000 58,186 47,992 30,362 20,036 18,415
Amortisation of intangible assets EUR 1,000 6,948 6,087 2,633 -
-Earnings before interest, income tax and amortisation (EBITA) EUR 1,000 65,134 54,079 32,995 20,036 18,415
EBIT as percentage of total revenue % 6.9 6.2 5.6 4.5 3.9
EBIT as percentage of net revenue % 8.8 8.0 7.9 6.8 6.4
EBITA as percentage of total revenue % 7.7 7.0 6.1 4.5 3.9
EBITA as percentage of net revenue % 9.8 9.0 8.6 6.8 6.4
Profit after income tax EUR 1,000 38,770 32,720 22,053 13,229 11,388
Profit after income tax as a
percentage of total revenue % 4.6 4.2 4.1 3.0 2.4
Profit after income tax as a
percentage of net revenue % 5.8 5.5 5.7 4.5 3.9
Profit per employee € 5,291 4,916 4,929 3,605 3,154
Return on Equity % 23.3 22.1 18.7 14.1 11.2
Shares*
Shares in issue at year-end 17,764,920 17,794,920 17,794,920 16,164,920 16,164,920 Shares in issue, average 17,764,920 17,794,920 16,698,252 16,164,920 16,164,920
Earnings per share € 2.16 1.84 1.31 0.81 0.69
Dividend per share (2008: proposal) € 1.15 1.10 0.75 0.53 0.44
Dividend/earnings per share % 53 60 57 65 64
Highest price € 30 41 23 15 10
Lowest price € 14 22 15 10 6
Closing price € 18 24 22 15 10
Year-end balance sheet
Total equity EUR 1,000 174,943 157,203 138,708 97,042 91,247
Total assets EUR 1,000 627,344 596,619 533,810 351,399 327,672
Intangible assets and goodwill EUR 1,000 202,071 168,776 170,723 8,834 8,361 Loans and other interest bearing liabilities EUR 1,000 116,330 102,211 117,707 32,674 18,544
200 600 2004 2005 2006 2007 2008 441.5 735.1* 543.1 772.8 846.2 400 300 500 700
*2006 pro forma (including 12 months Carl Bro)
472.9 0 10 20 30 2004 2005 2006 2007 2008 5 15 25 35 40 45 13.2 11.4 32.7 38.8
Result after tax
In millions of euros
*2006 pro forma (including 12 months Carl Bro)
22.1 28.3* 2.16 0.20 0.70 1.20 2004 2005 2006 2007 2008 1.70 2.20 0.81 0.69 1.31 1.84
Earnings per share
In euros 1,000 0 2,000 3,000 4,000 5,000 2004 2005 2006 2007 2008 6,000 7,000 8,000 3,514 3,502 6,337 6,780 7,354
Number of staff at end of year (in FTEs)
0.5 1.0 1.5 2.0 2.5 3.0 2004 2005 2006 2007 2008 3.5 4.0 3.0% 2.4% 3.9%* 4.2% 4.6%
*2006 pro forma (including 12 months Carl Bro)
2 1 3 4 5 2004 2005 2006 2007 2008 6 7 8 9 10 11 6.8% 6.4% 8.0%* 8.6% 9.0%
EBITA (% based on net revenue)
In miljoen euro
4.5%
3.9% 5.8%*
6.1%
7.0% 9.8% 7.7%
EBITA (% based on revenue)
*2006 pro forma (including 12 months Carl Bro)
4 5 6 7 8
Belgium Denmark Germany/Poland The Netherlands United Kingdom/
Ireland 9 10 11 12 13 Sweden 6.1% 6.1% 6.3% 12.6% 7.8% 8.2% 7.5% 8.0% 8.4% 8.1% 2007 2008 EBIT by country (%) (amortisation allocated in Holdings & Eliminations)
10.3% 9.2% Revenue by country (%) Belgium Denmark Germany/Poland The Netherlands United Kingdom/Ireland Sweden
Holdings & Eliminations 7.9% 20.2% 13.7% 10.5% 6.9% 1.6% 40.8% 6.6% 19.5% 11.1% 11 1% 12.4% 6.9% 2.7%
2008
2007Regional & rural development
Environmental management
Soil
At the end of 2008 and with many markets in turmoil, Grontmij can look back on a period in which a lot has been achieved. Over the last five years, the strategy and services portfolio have been adjusted, our debts have been reduced significantly, profitability has increased and, due to the acquisition and subsequent integration of Carl Bro, the Group has become a major European player. In 2008, we further strengthened our international portfolio through strategic acquisitions, including Whitelaw Turkington, Trett Consultants, Roger Preston & Partners in the United Kingdom; Teldako in Sweden and KPI Systems in Poland. In Belgium we acquired a participation in Libost, and in the Netherlands we strengthened our portfolio with the acquisition of Stoel & Partners. We reduced our project development and waste processing operations and earned prestigious awards. We also made ourselves heard in international debates on sustainability. At the end of 2008 we have a full order book for over a year going forward.
Our most important targets achieved in 2008:
o an operating margin on revenue (EBITA on Total Revenue) of 7.7%; o an increase in earnings per share of more than 17% compared with 2007; o an interest cover ratio in excess of 9.3;
o repayment of € 20 million on the loans for the Carl Bro and United Kingdom acquisitions.
Our strength lies in a combination of deep knowledge of technical solutions and the environment, organisational skills and project management capabilities throughout the lifecycle of the built and natural environments. Our extensive network of offices in Europe ensures that we are capable of making a substantial contribution to the achievement of a sustainable working and living environment, not only through large-scale projects but also and primarily through numerous smaller, regional projects. From 2009, we have adopted the Global Reporting Initiative throughout the Group. Conducting business in a sustainable, socially involved manner is encapsulated in the day-to-day work of our planners, designers and engineers. The international economic crisis may lead to new opportunities for the creation of a fundamentally new vision on a sustainable society and economy. Climate change and the need for greater sustainability in the global economy compel us to search out and achieve new concepts and solutions through multidisciplinary processes.
We intend to be one of the leading companies in the field of sustainable design, consultancy and management. Thanks to hard work and good collaborations of our people, we have already taken huge steps in the right direction. The Executive Board would like to express its appreciation to the Group’s clients and staff.
Douwe van der Werf, CFO of Grontmij N.V., has decided to leave the company. For more than five years he has successfully contributed to the development of Grontmij. I would like to thank Douwe for his hard work, loyalty and support in helping to restructure and grow the company.
The outlook for 2009
In the autumn of 2008, what had started with the US sub-prime mortgage crisis, rapidly turned into a full-blown, global financial crisis – almost overnight. The shock was tremendous and its tremors are being felt in the real economies of both our home markets and the rest of the world.
Since the fourth quarter of last year, market conditions have continued to deteriorate, mainly affecting the building and industrial related services. Our focus on sustainable design and management services, however, delivers strong inflow in our order book in the energy, water and environment sectors not least through our innovative solutions, such as SHARON and Pharmafilter, and other technologies. Our knowledge and the increasing needs of our clients in the transportation sector also secure a steady stream of orders that we expect to be of a structural nature.
confident about the future, given the increased uncertainty and dynamics of the current economic environment, we will further refine our outlook when we announce interim 2009-performance.
De Bilt, 11 March 2009 Sylvo Thijsen
C A P I T A L S T R U C T U R E , D E P O S I T A R Y R E C E I P T S A N D L I S T I N G
Grontmij´s authorised capital consists of 30 million ordinary shares with a nominal value of € 0.25 each and 30 million preference shares with a nominal value of € 0.25 each. As at 31 December 2008, 17,764,920 ordinary shares were issued. No preference shares were issued as per that date. Stichting Administratiekantoor van Aandelen Grontmij N.V. (the Foundation) administrates approximately 98% of Grontmij´s ordinary shares, against which depositary receipts have been issued. The depositary receipts for ordinary shares in Grontmij are listed on Euronext Amsterdam and are included in the Amsterdam Small Cap Index (AScX). As per the end of 2008 the market capitalisation of Grontmij amounted to € 311 million (€ 17.51 as per year-end 2008). Aside from legal limitations, there are no restrictions on the transfer of shares or depositary receipts for shares. No special controlling rights are attached to ordinary or preference shares. Holders of depositary receipts for ordinary shares may exchange these receipts for ordinary shares without any restrictions. The 2008 report of the Foundation can be found on page 128. E A R N I N G S A N D D I V I D E N D P E R S H A R E
Grontmij seeks to achieve an annual increase in earnings per share and wants its shareholders to benefit from this. Earnings per share increased by 17.4% to € 2.16 (2007: € 1.84). In determining the proposed dividend for 2008, the company’s solvency, cash position and anticipated cash flow have been considered. Based on these considerations, the dividend for the year, as proposed to the Annual General Meeting of Shareholders, will be € 1.15 (2007: € 1.10) per share. This means approximately 53% of the company’s profit will be distributed through dividends. Payment of the dividend will be in cash.
I N V E S T O R R E L A T I O N S
Grontmij strives to ensure equal access to all relevant financial and non-financial information. We provide information on financial results, strategy and developments within the Group through our annual report and regular press releases. In addition, Grontmij actively maintains contacts with the financial community through road shows (one-on-one meetings with investors), investor conferences and analysts’ meetings. During 2008, road shows were organised in Grontmij´s six home markets (Belgium, Denmark, Germany, the Netherlands, Sweden and the United Kingdom) and France. Our CEO and CFO are closely involved in all investor relations activities. Moreover, the Annual General Meeting of Shareholders and the analysts’/press meetings can be followed by audio webcast.
In 2008, we provided more qualitative and quantitative information on the first and third-quarter results. Compared to previous years, our reporting on the first-half and year-end results included more information on geographical segmentation, market developments and organic growth.
E M P L O Y E E S H A R E O W N E R S H I P S C H E M E
Grontmij introduced an employee share-ownership scheme in 1999. This scheme offers our Dutch employees the opportunity to invest in the company through Stichting Medewerkersparticipatie Grontmij without incurring transaction or custody fees. These participations are represented by depositary receipts, purchased on Euronext Amsterdam by the Stichting.
During 2008, a new employee share-ownership scheme was introduced. The new scheme is designed for all Grontmij employees with the exception of the members of the Executive Board. So far, the scheme has been rolled out in the Netherlands, the United Kingdom, Ireland and Poland. Under the new scheme and based on a resolution of the Executive Board, employees may, up to a certain percentage of their fixed income, invest in the company through Stichting Employee Share Purchase Plan. The employee acquires participations in Stichting Employee Share Purchase Plan, which in turn buys a corresponding number of depositary receipts in Grontmij N.V. on Euronext Amsterdam. The participations are issued at a discount of 15% of the underlying market value of the depositary receipts. Participations must be retained for a period of three years. After this period, each employee receives one additional participation for every four participations he or she holds. Matching participations and their corresponding initial participations must be held for a further two years before they can be sold. As in the other plan, the employee incurs no transaction or custody fees. At the end of 2008, 32 members of staff were registered for 1,973 participations.
The maximum amount that may be invested through these schemes is set at 5% of the issued share capital of Grontmij N.V. There are no options schemes available at Grontmij.
E Q U I T Y I N T E R E S T S
Based on information publicly available as of 31 December 2008 and/or information provided by major shareholders, the following shareholders have an interest of more than 5% in the share capital of Grontmij:
Delta Deelnemingen Fonds 10.6%
Parcom Quoted Equity Management BV 6.3%
Capital Research and Management Company 5.2%*
Aviva plc 5.1%
Mr C.A.C.C. Oomen 5.1%
* Voting rights on these shares are held by Smallcap World Fund Inc. K E Y F I G U R E S P E R S H A R E
Amounts in euros per share*
2008 2007 2006 2005 2004
Result after tax 2.16 1.84 1.31 0.81 0.69
Result after tax + depreciation and amortisation 3.19 2.27 1.91 1.43 1.42
Dividend 1.15 1.10 0.75 0.53 0.44
Payout ratio 53% 60% 61% 65% 64%
Highest price 30 41 23 16 10
Lowest price 14 22 15 10 6
Closing price 18 24 22 15 10
Number of ordinary shares (at year-end) 17,764,920 17,764,920 17,764,920 16,164,920 16,164,920
Increase of earnings per share 17% 40% 62% 17% 123%
S H A R E P R I C E M O V E M E N T S
The price of Grontmij shares has varied as follows compared to the AEX and AScX (indexed on the basis of 100 as at 3 March 2005) since 2004 (Source: Euronext).
Source: Euronext
Indexed share price movement (100 on 3 March 2005)
F I N A N C I A L C A L E N D E R 2 0 0 9
14 May Publication of first quarter figures for 2009 14 May Annual General Meeting of Shareholders 20 August Publication of half year figures for 2009 12 November Publication of third quarter figures for 2009
Dates for 2010 will be published on our website: www.grontmij.com/investorrelations/financialcalendar 0 50 100 150 200 250 300 350 400 2004 2005 2006 2007 2008 Grontmij AEX AScX
S.E. Eisma (vice-chairman)
Year born 1949 Nationality Dutch Appointed 2005 Current term expires and eligible for reappointment 2009 Current positions lawyer and partner with De Brauw Blackstone Westbroek NV, chairman of the Supervisory Board of HAL Holding NV and member of the Supervisory Board of Rabobank Nederland, professor at the University of Amsterdam, member of the capital market committee of the Authority Financial Markets and chairman of the Supervisory council of Hogeschool van Beeldende Kunsten, Muziek en Dans in The Hague.
P.E. Lindquist
Year born 1960 Nationality Swedish Appointed 2007 Current term expires and eligible for reappointment 2011 Most important previous positions Group Vice-president, Head of Franchise and Factory Sales at Scania, Executive Vice-president at Europe Alfa Laval.
Current position CEO of PIAB AB.
J.H.J. Zegering Hadders
Year born 1946 Nationality Dutch Appointed 2005 Current term expires and eligible for reappointment 2009 Most important previous positions CEO of ING Nederland, Director of Exploitatiemaatschappij Tunnel onder de Noord, Director of Exploitatiemaat-schappij Wijkertunnel Current positions Member of the Supervisory Board of Fortis NV, Econcern NV and GET Holding NV, Member of the Bussum Municipal Council, Member of the Supervisory Council of ICT Regie, chairman of Stichting Nieuw Holland and Member of the Executive Committee of the BKVB (Beeldende Kunsten, Vormgeving en Bouwkunst) fund.
On 31 December 2008, none of the members of the Supervisory Board held any shares or depositary receipts in Grontmij N.V. The remuneration of the members of the Supervisory Board is described on page 116.
F.L.V. Meysman (chairman)
Year born 1952 Nationality Belgian Appointed 2001 Reappointed 2005 Current term expires and eligible for reappointment 2009 Most important previous positions
chairman of the Executive Board of Sara Lee/DE NV, Executive Vice-president and Director of Sara Lee Corporation and chairman of the Supervisory Board of Corporate Express Current positions Member of the Supervisory Board of GIMV (Gewestelijke Investerings Maatschappij voor Vlaanderen), Spadel SA and Picanol NV.
It has been a turbulent year in many of the markets where Grontmij operates. However, the Supervisory Board is gratified to report that Grontmij has managed to remain on track, pursuing its strategy vigorously throughout the reporting year. Performance is commendable, especially at a time when many sectors are under pressure.
M E E T I N G S
During 2008, the full Supervisory Board met with the Executive Board on six occasions. During those meetings all members were present. In view of the current economic downturn, considerable time was spent on the possible effects for Grontmij, its strategy, results, outlook, financing arrangements and employee base. In addition to these extensive discussions, strategic targets were monitored to 2010, especially given Grontmij’s growth ambitions. Potential acquisitions and divestments were evaluated against projected growth scenarios. In 2008, acquisitions were made in the United Kingdom (three companies), Sweden, Poland and the Netherlands (two companies). Developments in all home markets and focus countries were regular agenda points, as were specific market sectors and expansion of fields of expertise. The Supervisory Board also discussed corporate governance developments especially in view of the report of the Monitoring Committee Corporate Governance of December 2008 and recommendations of representatives of stakeholder groups. Most of the recommendations were applied. In 2008, no changes were made to Grontmij’s governance structure.
Supervisory Board meetings are pre-scheduled, also to ensure proper supervision of the Group’s reporting commitments. Quarterly, interim and full-year results were reviewed in depth. Representatives of KPMG, Grontmij’s auditor, attended the meeting where the full-year results were discussed. Key topics throughout the year are close monitoring of finance and treasury activities, budgets and forecasts, the Group’s cash-flow situation, share-price developments and share-price performance in comparison with Grontmij’s peers, not least in light of the current volatility on financial markets. Similarly, risk management and control systems, potential risks and claims, the operation of systems (IT and others), business procedures and contingency-scenario planning were recurring topics. Human Resources are always on the agenda. Priority topics are developments affecting staff, turnover of employees, recruitment of professionals and management development. In 2008 the Supervisory Board also discussed Grontmij’s commitment to corporate social responsibility and the way it would report on this topic.
Two of the Supervisory Board meetings were held on location: one in our office in Leeds in the United Kingdom, and the other in our office in Waddinxveen, the Netherlands. During the meeting in Leeds, the Supervisory Board met with local management who presented an overview of activities per sector, economic developments and outlook for the United Kingdom market. The meeting in Waddinxveen offered the opportunity to meet with local staff and was combined with a site visit. As part of the introduction and training programme, some of the non-Dutch members of the Executive and Supervisory Boards attended a session with an external lawyer where they were introduced to Dutch corporate governance principles and best practices. During 2008, the Supervisory Board had one closed meeting (without the presence of the members of the Executive Board). During this meeting, the Supervisory Board discussed its own performance and performance of each committee based on a questionnaire completed by all members of the Supervisory Board and Executive Board. It also discussed its composition in view of the specific competences of each member, the rotation schedule and the profile of a potential future Supervisory Board member. Finally, the Supervisory Board reviewed the functioning of the Executive Board as a whole, and its individual members, the result of which was satisfactory.
C O M M I T T E E S
The Supervisory Board has two committees. Each committee reports to the Supervisory Board and informs same of the content of their meetings at the next Supervisory Board meeting.
Audit committee
The Supervisory Board as a whole serves as the audit committee. Mr Zegering Hadders chairs the audit committee. In 2008, the audit committee met four times. The external auditor attended the meetings where the interim and full-year results were discussed.
The following matters, among others, were discussed in the audit committee meetings:
o the annual figures for 2007 and the quarterly and half-yearly figures for 2008; o budget 2009 and quarterly comparison of actual figures against budgets; o the auditor’s management letter and Board report;
o treasury and working-capital management;
o financing position, including repayment schedules and loan covenants;
o the structure and performance of the Group’s internal risk-management and control systems; o the role and performance of the external auditor;
o the role and appointment of our new internal auditor.
Minutes have been taken of all of the meetings. Appointment and remuneration committee
The appointment and remuneration committee, consisting of Mr Meysman and Mr Eisma, met twice during 2008.
Main points at these meetings were the individual performance of Executive Board members and their remuneration in 2008. The achievement of targets in 2007 and related short-term bonus for Executive Board members payable in 2008 was reviewed. The committee approved the profile and appointment of a new company secretary and reviewed the Group’s corporate head-office organisation. The committee also discussed the design and implementation of a new Employee Share Purchase plan. The appointment and remuneration committee reported on the above matters to the Supervisory Board through the minutes of its meetings. In addition, the committee prepared the remuneration report for 2008 for approval by the Supervisory Board. R E M U N E R A T I O N R E P O R T
This report was prepared by the appointment and remuneration committee and approved by the Supervisory Board on 11 March 2009. The report describes current policy, as adopted by the Extraordinary General Meetings of Shareholders in May 2005, August 2006 and May 2007. The actual remuneration in 2008 is included in the annual accounts, page 116. Since May 2007, the remuneration policy has remained unchanged. During 2008 the policy was reviewed leading to only one addition, that is described below.
Remuneration policy
General
The aim of our remuneration policy is to attract, motivate and retain qualified board members who will contribute to the long-term success of Grontmij as a leading international consulting and engineering firm active primarily in North-West Europe. The policy is designed to reward members of the Executive Board for their contribution to the Group’s performance and shareholder value.
Supervisory Board remuneration
The appointment and remuneration committee periodically assesses the remuneration for the members of the Supervisory Board. The Annual General Meeting of Shareholders (AGM) decides on the actual remuneration.
The members of the Supervisory Board receive a fixed compensation not related to the results of the Group.
In 2007, the AGM approved a proposal to fix the remuneration of the members of the Supervisory Board at € 28,000 per annum and at € 40,000 per annum for its chairman. In addition, a proposal was approved to pay an amount of € 1,000 per meeting to those members of the Supervisory Board who are required to attend such meetings outside the country in which they are domiciled. The approved remuneration of the members of the Supervisory Board constitutes a realistic payment for the duties performed and responsibilities held by the members of a Supervisory Board of an international, listed company. Details of the remuneration of the members of the Supervisory Board in 2008 are provided on page 116.
Executive Board remuneration
o Contract terms: Mrs Nørgaard was appointed for a period of four years in August 2006. The other members of the Executive
Board were appointed for an indefinite term. If members of the Executive Board are asked to leave the company, they will receive an amount equal to one year’s salary. No specific agreement has been entered into between any member of the Executive Board and Grontmij N.V. providing for compensation in the event of termination of employment or dismissal as member of the Executive Board following a public bid for the company.
o Benchmarking and peer group: The remuneration of the members of the Executive Board is based on a comparison with
the remuneration of members of Executive Boards of other listed and non-listed European companies active in the same sector, taking into account the relevant complexity, scope and risk profile. In addition, the remuneration for each member is
determined by taking into account the specific responsibilities of the members of the Executive Board. The companies in the peer group are: ARCADIS, Fugro, DHV, Ballast Nedam, WS Atkins plc, WSP, Sweco and the Pöyry Group. The following elements of the total remuneration were included in the comparison: total cash per year (fixed and variable salary) plus long-term incentives such as share and/or option schemes. The benchmarking exercise is performed by the appointment and remuneration committee with the advice of an external compensation and benefits consultant, and was carried out most recently in 2006.
o Fixed remuneration: The fixed annual salary bandwidths were set in 2006. The Supervisory Board sets the fixed annual
salaries for the members of the Executive Board within these bandwidths. In principle, these bandwidths are indexed annually. In 2007, neither the bandwidth nor the fixed salaries were adjusted. In 2008, indexation (4%) led to the following new bandwidths:
Within these bandwidths, the fixed remuneration of the members of the Executive Board was increased in 2008 according to their performance. Further details are provided on page 116. In view of current economic market conditions, the Executive Board proposed to the Supervisory Board not to make a proposal to the Shareholders meeting to amend the bandwidth of the individual salaries for the year 2009 nor to increase the salaries in 2009 which proposal was adopted by the Supervisory Board. Chairman of the Executive Board: € 364,000 – € 437,000
Other members of the Executive Board: € 260,000 – € 333,000
o Variable remuneration: In designing this remuneration policy, the Supervisory Board analysed the possible outcome of
the variable remuneration components and the effect thereof on remuneration. The variable remuneration consists of two elements: a result-dependent bonus and a value-dependent bonus. The variable remuneration is linked to predetermined, assessable and influenceable targets as described below.
These targets underpin the strategy of the company as they relate to the strategic and financial targets set for the years 2007-2010. The maximum variable remuneration for the chairman of the Executive Board amounts to 90% of the fixed annual salary. The maximum variable remuneration for the other members of the Executive Board amounts to 65% of the fixed annual salary.
o Performance-dependent bonus
For the chairman of the Executive Board, the performance dependent bonus represents a maximum of 60% of the fixed annual salary, two-thirds of which (40%) is based on operational objectives and one-third (20%) on individual objectives.
For all other members of the Executive Board, this part represents a maximum of 45% of the fixed annual salary, two-thirds of which (30%) is based on operational objectives and one-third (15%) on individual objectives. For commercial and strategic reasons, the operational targets are only disclosed ex post whilst individual targets are not disclosed ex post or ex ante. In 2008, the criteria for operational targets were as follow:
a Net earnings per share after tax (weighting: 30% in the case of the chairman and 20% for the other members). The target was to achieve net earnings per share after tax of 13.5-15% above 2007 level (100% pay out when 15% or more is realised). In 2008, the net earnings per share after tax amounted to € 2.16, thus fully achieving the set target.
b Return on Equity (RoE): return on average equity (weighting: 10% for all members). The target is an RoE of 15-20% (100% pay out when 20% is realised). RoE amounted to 23.3% in 2008, thereby fully achieving the set target.
Individual performance criteria are based on the individual responsibilities of the members of the Executive Board. There are four to six targets, some quantitative and others qualitative. Two targets are of a financial nature (solvency ratio and interest coverage ratio) while at least two targets are of an operational, Group-wide nature (such as growth in home markets and cross selling synergies). In 2008, the members of the Executive Board achieved 16-12% of the maximum of 20% and 15%, respectively (2007: 12.5-13.6%).
o Value-dependent bonus
For the chairman of the Executive Board, this part represents a maximum of 30% of the fixed annual salary; for all other members of the Executive Board this represents a maximum of 20% of the fixed annual salary. The value dependent bonus is related to the annual average performance of Grontmij’s share price. Grontmij’s annual average share price performance is compared with the average annual share price performance over a three-year period of all companies included in the AEX, AMX and AScX of Euronext Amsterdam. No payments are made if Grontmij’s performance is the same or less than that of the Euronext group of companies. If there is a positive difference of 10% or more (Grontmij’s share-price performance is above the Euronext group of companies’ share-price performance), the maximum value-dependent bonus is paid. A proportionate amount is paid for a positive difference between more than 0% and 10%. The bonus is paid once every three years in the financial year following the approval of the financial statements of the last year of the three-year period. The current three-year period runs from 2006 through 2008. Grontmij’s share-price performance in comparison with the Euronext group of companies over each of the years 2006 through 2008 is >10% positive. As a consequence, the maximums of 30% and 20% over the years 2006-2008 respectively will be paid in 2009.
Pensions
In 2006, the pension scheme for all members of the Executive Board was changed to a combination of a final-pay and a defined-contribution scheme. No pension premiums are paid over fixed income above a maximum of € 300,000. In addition, the company’s maximum annual pension contributions will not exceed € 75,000 per member of the Executive Board. In 2008, the following scheme applied to the Dutch members of the Executive Board:
o up to € 64,230 of a member’s fixed salary – a final-pay plan (via Stichting Pensioenfonds Grontmij); o from € 64,230 to € 108,449 – a defined-contribution plan (via Stichting Pensioenfonds Grontmij);
o from € 108,449 to € 300,000 – an additional defined-contribution plan based on which up to 25% of the fixed income from
€ 108,449 to € 300,000 of the relevant member is paid into an individual pension plan.
Other benefits
Since 1999, the members of the Executive Board have the opportunity to invest in the company through Stichting Medewerkers- participatie Grontmij without incurring transaction or custody fees. The new Employee Share Purchase Scheme introduced in 2008 is not open to members of the Executive Board nor is there an option scheme available for the members of the Executive Board.
Supervisory Board fairness review
The Supervisory Board retains the option of a so-called fairness review only on the variable remuneration related to individual targets. All other parts of the remuneration are fixed or related to predetermined and assessable targets and based on Dutch labour law and the applicable labour contracts not subject to a discretionary review.
Remuneration in 2008
Full details of remuneration in 2008 can be found on page 116 of this annual report.
Remuneration policy for 2009 and beyond
The appointment and remuneration committee has reviewed the current policy and decided to add the following.
The members of the Supervisory Board consider it important to align the interest of management with the interest of Grontmij’s shareholders. In recent years, some of our shareholders have also indicated that they would appreciate an alignment through share ownership. At the same time, however, the Supervisory Board is well aware of the social debate concerning (free) share purchase and/or option schemes. In light of the above, the Supervisory Board has decided not to introduce a share bonus or option scheme, but instead discussed the introduction of voluntary share ownership guidelines with the members of the Executive Board. The Supervisory Board is pleased to announce that the members of the Executive Board have indicated that they are willing to voluntarily invest part of their value dependent cash bonus in (depositary receipts for) Grontmij shares. Such investment could, over time and on a voluntary basis, rise to approximately one-year’s fixed annual salary. Investing in (depositary receipts for) Grontmij shares will take place within the rules and regulations for insider trading, as approved by the Supervisory Board.
Other than the above, no additions or changes to the policy are deemed necessary. Composition of the Supervisory Board
During 2008, no changes occurred in the composition of the Supervisory Board. All members of the Supervisory Board are independent, as required in best-practice Clause III.2 of the Dutch Corporate Governance Code.
Financial statements and dividend
The financial statements for 2008 were prepared and endorsed by the Executive Board pursuant to their statutory obligation under article 2:101 (2) of the Dutch Civil Code and article 2:25c (2c) of the Financial Markets Supervision Act. The statements were discussed by the Supervisory Board in the presence of the external auditor. After the review of the unqualified opinion provided by KPMG Accountants N.V., as well as the findings of the external auditor as summarised in a report to the Board of Supervisory Directors and the Executive Board, the financial statements were endorsed by all members of the Board of Supervisory Directors pursuant to their statutory obligation under article 2:101 (2) Dutch civil code. The Supervisory Board recommends the Annual General Meeting of Shareholders adopt these financial accounts. In addition, it recommends that the Executive and Supervisory Boards be discharged from liability in respect of the managerial and supervisory duties respectively that they have performed.
The Supervisory Board has approved the Executive Board’s proposal to add € 18.8 million of the result after tax and minority interest of € 38.3 million (2007: € 32.7 million) to the other reserves. It further recommends the Annual General Meeting of Shareholders approves the remaining € 19.5 million to be paid out as dividend of € 1.15 (2007: € 1.10) per share.
The Supervisory Board regrets the resignation of CFO Douwe van der Werf as per March 31, 2009 but is grateful for his enormous dedication to the company over the past five years and wishes him every success on the road ahead.
As the Supervisory Board of Grontmij, we would like to extend our thanks to management and employees. It is their ongoing commitment to Grontmij that has generated such excellent results.
De Bilt, 11 March 2009 F.L.V. Meysman (chairman) S.E. Eisma (vice-chairman) P.E. Lindquist
European Water Framework Directive
Water resources management
Water treament & supply
Waste water treatment
Sewerage systems
S. Thijsen (Chief Executive Officer)
Year born 1959 Nationality Dutch Appointed 2001 (member), 2003 (Chief Executive Officer), joined Grontmij in 1984 Most important previous position Managing Director of Grontmij Advies & Techniek Other positions Vice-chairman of the Dutch Council for Housing, Spatial Planning and the Environment, chairman of the Government Tenders Committee of the Confederation of Netherlands Industry and Employers (VNO-NCW), chairman of Commission of Economic and Legal Affairs of the Dutch Association of Consulting Engineers (ONRI), member of the Board of Wood and Timber Platform in the Netherlands, and member of the Supervisory Council of CUR-net and Utrechts Landschap.
D.G.H. van der Werf (Chief Financial Officer)
Year born 1955 Nationality Dutch Appointed 2003, joined Grontmij in 2003 Most important previous position Chief Financial Officer of Heerema Fabrication Group Other position lecturer in financial audit and accounting at the Erasmus University in Rotterdam.
B.W. Nørgaard (Chief Operating Officer)
Year born 1958 Nationality Danish Appointed 2006, joined Grontmij (previously Carl Bro) in 2001 Most important previous position CEO of Carl Bro A/S Other positions chairman of the Stakeholder Council of Energinet.dk, member of the Board of DTU - Technical University of Denmark, Member of the General Council of Dansk Industri, member of the Board of Roskilde Bank A/S, member of the Board of EUDP, the Danish Energy Authority’s Energy Technology Development and Demonstration programme
G.P. Dral (Chief Operating Officer)
Year born 1955 Nationality Dutch Appointed 2003, joined Grontmij in 1976 Most important previous position Managing Director of Grontmij Bouw & Installaties Other positions chairman of the Supervisory Board of Rabobank Zaanstreek e.o., vice-chairman of the Dutch Association of Consulting Engineers (ONRI), member of ConsulTable, member of the Board of Bouw van de Randstad, member of the Maritime & Water Project Team of the Economic Advisory Council of Dordrecht, member of the Board of Stichting ‘Nieuw Holland’.
On 31 December 2008 Mr S. Thijsen held 3,361 (2007: 3,361) participations Grontmij and 2,000 (2007: 0) shares Grontmij (or depository receipts for them). On 31 December 2008 Mr G.P. Dral held 1,486 (2007: 1,442) participations Grontmij and 1,500 (2007: 100) shares Grontmij (or depositary receipts for them). Mr D.G.H. van der Werf and Mrs B.W. Nørgaard did not hold any participations or shares (or depositary receipts for them) in Grontmij on 31 December 2008.
The remuneration of the Executive Board is described on page 116.
S. van Nieuwkuyk
M i s s i o n s t ate m e n t, o b j e c t i ve s a n d s t rate g y
When Grontmij N.V. was founded in 1915, its vision was sustainable land consolidation and reclamation for the agricultural sector and the development of the rural areas. Almost a century later, the company has developed and grown, but it is essentially the same: Grontmij creates value for its customers and shareholders by designing and realising sustainable living and working environments.
Grontmij’s mission is to be the best local service provider for design, consultancy, management, engineering and contracting in the environmental, water, energy, building, industry and transportation sectors. We aim to achieve this through the design and realisation of plans for the future together with the people and parties in our regions. Our highly skilled and expert staff have a deep knowledge of the chosen markets and sectors and provide a full range of services throughout the project chain. F I N A N C I A L O B J E C T I V E S
Grontmij is focused on improving results and value creation in the long term. Consequently, the company does not provide targets for earnings per share per quarter or per year.
Grontmij’s goal is to achieve an annual increase in earnings per share. Its long-term policy is aimed at securing a rise in net profit by widening margins and increasing revenue. This is based on the following financial objectives:
o an operating margin (EBITA based on Total revenue) of 8-9% in 2010;
o an annual increase in revenue of 10-15% per annum (a combination of organic growth and add-on acquisitions); o a sound solvency ratio (in the range of 25-30%);
o a healthy interest coverage ratio (EBIT/interest ≥5);
Grontmij’s financial strategy is designed to take advantage of and/or optimise:
o the relationship between the risks involved in its various business operations and their income; o the relationship between equity, and short- and long-term loans;
o the use of both public and private capital markets; o the term and stages of various funding components.
S T R A T E G Y 2 0 0 7 2 0 1 0
Our core business is provided through the Group’s consulting and engineering firms. We have office networks in six home markets and we deliver project services in a selected number of other markets in Europe. Our highly-expert operating compa-nies work in the environmental, water, energy, building, industry and transportation sectors, delivering services to the public and private sectors in urban areas (or regions of economic development) and covering all segments of the project chain, including design, consultancy, management and engineering.
Reorganisation of current business Strategy Enhanced profitability 8-9% Portfolio Management Divestments step by step - non core - poor performers
- Consolidation in our home markets (Belgium, Denmark, Germany, the Netherlands, Sweden and United Kingdom) - Top 3 position in Europe
- Expansion in new niche markets involving products such as water, energy and transportation (including rail)
- Gaining new market share
- Entering new regions in Central and Eastern Europe - Selected PFI’s (Private Finance Initiatives)
Temporary and limited financial involvement in projects can generate additional cash flow for the expansion of our consultancy and engineering operations. Long-term involvement in development projects and commercial operations is not part of our core business.
In the long term, Grontmij aims to achieve a balance between the various activities in its six market sectors and in the different phases of the project chain. Due to the diverse range of its related activities, Grontmij can reduce its vulnerability to fluctuations in the market sectors considerably. The Group constantly assesses its portfolio and product market combinations. Based on these assessments it decides whether to start up, improve, acquire or divest activities in specific product market combinations. The broad spread of its activities in mature European economies ensures good control of business risks. Avoiding dependence on one market or single group of clients is an essential component of Grontmij’s strategy. The result is a Group that is less cyclical than it would be if it did not operate in different market sectors and countries. Profit margins vary by activity, depending on the specific market circumstances. On average, the target profit margin is higher for activities with a relatively high-risk profile or activities with substantial impact on the value of clients’ assets, compared to mono-disciplinary engineering activities.
2007 2006 2003 norm repair sell/stop 0 2 4 6 8 10 12 14 Multidisciplinary
project management Engineering Contracting
Asset management & maintenance Consultancy & design - More cooperation top design firms - Limited “own” technology - Invest in competences - Training - Cost cutting - Sell/partner industr. eng. - Decrease volume - Risk management - Training
- PFI with contractors - Invest
- Frameworkcontract
EBIT %
2008
M A R K E T S E C T O R S
Regional European player
Increasing internationalisation and European integration means that from a strategic viewpoint it is relevant to compare Grontmij’s position with larger engineering firms in Europe. Based on details provided by the Swedish Federation of Consulting Engineers and Architects (2007 figures), Grontmij ranked seventh (2006: 7th) among similar European engineering firms in terms of personnel numbers. Based on revenue, Grontmij is ranked fourth in Europe (2006: 4th).
The increase in internationalisation is a result of the need to create a larger platform to better exploit knowledge with international clients and large(r) projects. At the same time, economies of scale can be used to cope with rising overheads, investments in IT and participation in various types of contracts. A common feature of all large engineering firms is that they are working on forward integration to create added value and stabilise their cash flows.
Even for international engineering firms, projects essentially remain a local activity. In light of the local nature of the European market, the large differences between regions and countries in terms of economic activity and the complexity of projects, consolidation will take place in phases. Building up a network of offices that is firmly anchored locally or regionally so that every office can offer several disciplines across the entire project chain sets high requirements in terms of knowledge and the organisational capacity of a company.
Grontmij
Global players
- <20% in home markets - trends towards specialisation - international clients - market cap > € 1 billion
Regional players - >70% in home markets - multidisciplinary generalists - local clients
- market cap € 100-750 million
o Transportation planning & logistics o Highways & roads
o GIS & ICT
o Railways & rail stations o Waterways & harbours o Geo-data TR ANSPOR T A T ION
oIndustrial site development oChemical industry oFood & pharmaceutical oOil & gas industry oMining, steel & metal oBiochemical
INDUSTR
Y
o Urban development oResidential building oRetail & commercial building oLogistics & distribution oOffices
oEducation, health, culture oIndoor sports & leisure oParking
oReal estate management
BUILDING
o Energy management
o Conventional power plants (fossil) o Energy storage
o Renewable energy
o Energy transmission & distribution o Nuclear power plants
o Energy consumption
ENERGY
oWater framework directive oWater resources management oWater treatment & supply oWaste water treatment oSewerage systems oFlood & coastal protection
WA
T
E
R
oRegional & rural development oEnvironmental management oSoil
oWaste oNature & ecology oOutdoor sports & leisure
For Grontmij, it is important to keep pace with developments in the international engineering market. In addition to a strong position in our home markets, market positions in the Eastern European economy are important to future growth. Grontmij is aiming for a clear regional European profile, with a strong presence in a limited number of countries or regions. In the years 2009 and 2010, we will start to select and develop one or two market sectors for further global growth.
Home markets
Our home markets are Belgium, Denmark, Germany, the Netherlands, Sweden and the United Kingdom. These countries have a decentralised political decision-making structure where our dense office network located close to the client is of great value. Decisions, especially on spatial planning, building and infrastructure, are taken by municipalities and provincial administrations. Through our close location and solid connections with these local authorities, Grontmij is able to attract a constant stream of assignments. Our aim is to be among the top three firms in our business in these countries. Further growth in our home markets will largely take place through a combination of organic growth and acquisitions. Potential acquisitions will focus on companies with specialist knowledge and/or acquiring privatised government stakeholdings.
Focus countries
Focus countries are countries where Grontmij is represented in one or two specific market segments, such as environment or transportation. The Baltic States, the Czech Republic, Hungary, Ireland, Poland and Turkey are our focus countries; the majority are members of the European Union. Many of the European Union’s long-term programmes in the field of transportation, the environment and agriculture, among other things, serve to strengthen economic structures.
We expect above-average growth in the following market segments in these focus countries in the years ahead:
o water (flooding and waste water);
o transportation (roads, railways and parking solutions); o energy (biomass and residual heat, among other technologies).
Private investment is required in other market segments as a response to urbanisation and growing prosperity:
o area development (residential and commercial); o transportation management.
A local presence is vital, as is thorough knowledge of and the ability to navigate European tendering legislation and procedures. In order to carry out projects profitably in our focus countries, we will invest in local consultancy firms. These firms will constitute the basis for the future expansion of the Grontmij network.
By combining operations in our home markets with those in our focus countries, Grontmij will enlarge its footprint as a regional European player. Grontmij aims to secure a superior position in the European market by 2010.
0 250 500 750 1,000 1,250 1,500 Sector specialisations to global services 2004 nr. 1 in the Netherlands 2007 nr. 4 in Europe > 2010 nr. 1-3 in Europe
B, GE, NL B, DK, GE, NL, S, UK B, DK, GE, NL, S, UK
Rev
International project management
Thanks to its acquisition of Trett Consulting in the United Kingdom, Grontmij now has the ability to provide high-end manage-ment services for blue chip clients worldwide. Grontmij Trett Consulting is a recognised leader in providing project (contract) management and consultancy services solving contractual, financial and management problems worldwide. For the larger projects in the building, industry, transportation and energy sectors we are asked to investigate both technical and legal matters. Our specialist teams combine particular construction and engineering expertise with law and arbitration practice. This enables them to scrutinise problems in light of related legislation and recent court decisions and to bridge the technical-legal gap.
Continuity and growth
Grontmij intends to consolidate its strong market positions and to expand them where possible. Among other things, our margins can be improved in regions where our core business has a relatively large market share. We expect to extend our range of services and to ensure ongoing sustainable growth by organic growth and acquisitions. In this respect, we will also examine the potential for cooperation with the larger firms in the engineering and consultancy sector to achieve our objectives sooner. In addition to financial considerations, our acquisitions need to satisfy the following criteria:
o enhance our market share in regions where we currently have a limited market share; o penetrate new and interesting regions for Grontmij (economic growth);
o acquire new competencies, technologies or groups of customers, provided that this strengthens our market position
(especially environmentally related e.g. water, energy). In addition, we assess acquisitions in terms of their:
o relationship with our operations and culture; o potential for growth;
o client base;
o leading position in the market or region; o managerial qualities and styles; o risk profile.
B U S I N E S S O P E R A T I O N S
Our target margins can be achieved through economies of scale, market positioning and selective project acceptance. Grontmij is managed on the basis of its net results and, to a lesser extent, on the basis of growing revenue. The successful execution of projects is based on effective and efficient collaboration between the various business units, a critical mass and having sufficient qualified professionals. We have improved our capacity-utilisation rate by moving staff between various activities within regional office networks and by sharing information through our IT systems. Our day-to-day business operations in our existing markets are predominantly directed in accordance with the following factors, which determine profit:
o order book and tender-hit rate; o project management; o capacity management; o working-capital management; o labour costs.
The Executive Board monitors these factors and manages our business operations in this spirit. The following aspects are important for increasing our net results:
o increasing sales to our existing clients through innovation and better cross-selling techniques;
o focusing on education and training for staff in project management, commercial and general managerial positions; o continuous alignment with the market and capitalisation of future market demands.
S T R A T E G I C A C T I O N S T A K E N I N 2 0 0 8
As part of its 2007-2010 strategy, action taken by Grontmij in 2008 included:
o consolidating its position in the United Kingdom through the acquisition of Whitelaw Turkington, Trett Consulting and
Roger Preston & Partners;
o participation in Libost in Belgium;
o acquisition of Teldako (energy consultants) in Sweden; o acquisition of KPI (transportation consultants) in Poland;
o establishing four Group committees in the fields of Market and customers, Systems (IT), Values (CSR) and HR.
S U M M A R Y O F S T R A T E G I C A C T I O N P O I N T S F O R 2 0 0 9 A N D 2 0 1 0 In the next two years, Grontmij will focus on the following strategic action points:
o consolidating its position in its home markets (especially in the United Kingdom and Germany), in selected urban regions
(including Central and Eastern Europe);
o consolidating, and where opportune, expand market sectors and fields of expertise;
o meeting its financial objective of EBITA based on revenue of 8–9% (including third-party project expenses); o consolidating its leading position in the fields of sustainable design, consultancy and management.
M a r ke t
G E N E R A L M A C R O E C O N O M I C D E V E L O P M E N T S A N D P R O S P E C T S
In 2008, GDP in most European Union (EU) economies hovered close to recession: the most recent official data estimate sharp falls to just under 1% growth in Europe in 2008 and negative growth in 2009; growth in 2007 was still around 3%. A slight upturn is predicted for 2010. We have already seen a severe contraction in world trade and manufacturing output. The housing market, usually a key indicator, is also stagnating and has collapsed in some countries. It seems no economy is immune, although forecasts for some Eastern European countries are more positive than those for the north-west of Europe.
It is against this backdrop that many sectors are looking to government consumption and public spending to provide some relief. However, while this is welcome news in the short-term, it will have significant impact on public finance deficits in the longer term. For Grontmij, the economic environment will result in moderate demand for most consulting and engineering services in North-West Europe. In the Industry and building sector demand will slow down. Pressure on the labourmarket segments relevant for Grontmij will impact organic growth due to scarcity in professional recruitment pools, especially in the Netherlands and Denmark, and some specific niches, such as energy. This will oblige the organisation to select projects and financial resources to obtain a better mix at higher rates. Training and retaining existing employees will become more important. Growth rates vary from one EU member state to the next. This can be explained in part by new member states playing catch up and by where ‘old’ members are in their economic cycle, although outlooks for all are dismal.
GDP growth (%) Euro statistics 1/2009
2007 2008 2009 2010 Home markets Belgium 2.8 1.4 -1.9 0.3 Denmark 1.9 0.2 -1.0 0.6 Germany 2.5 1.7 -2.3 0.7 The Netherlands 2.7 1.8 -2.0 0.2 Sweden 3.5 1.0 -1.4 1.2 United kingdom 3.1 1.0 -2.8 0.2 Focus countries Czech Republic 5.8 4.1 1.7 2.3 Hungary 2.0 2.0 -1.6 1.0 Ireland 4.9 -2.4 -5.0 0.0 Poland 6.5 5.4 2.0 2.4 Turkey 4.5 4.5 4.3 5.2 Baltics (average) 6.3 -2.4 -5.0 -2.6
Energy management
Conventional powerplants
Energy storage
Renewable energy
Energy transmission & distribution
M A R K E T D E V E L O P M E N T S B Y C O U N T R Y
Grontmij’s strategy is based on geographical market penetration. We off er and provide a full range of services spanning the entire project chain, from consultancy, design and engineering to overall management. Operating through a network of local and regional offi ces within selected European markets, Grontmij provides comprehensive services to both the public and private sectors. For decades, we have pursued this comprehensive approach to servicing our clients and executing projects. Our long-standing expertise has generated a highly experienced, effi cient and decentralised managerial structure in our home markets and focus countries with access to strong product know-how and expertise within the organisation. As a Group, Grontmij is involved in more than 25,000 projects every year. Of these projects, 90% are multidisciplinary, executed by teams representing more than one fi eld of expertise. Grontmij brings together a range of technical and management expertise to address our clients’ projects in the urban and natural environments.
Over the past year, demand for our services has continued to grow despite a weakening economic outlook in the whole of Europe. The Group reports on business activities in the six main geographic operating units.
Belgium Review of 2008
Economic growth remained relatively strong in 2008, largely due to continuing demand from the public sector. Grontmij reinforced its already strong position in the Belgian market by securing a number of larger projects in urban areas, such as Brussels and Antwerp. We also won assignments from major industrial clients, such as BP and Jansen Pharma. Through the
participation in Libost, Grontmij is consolidating its geographical spread and position in the infrastructure sector in Flanders. Our Belgian organisation proved that EBIT in excess of 10% on revenues (including third-party costs) can be achieved, even in the current climate.
Examples of new assignments in 2008 are:
o design of the cycling infrastructure along the ‘inner ring’ (R20) in Brussels.
Besides meeting the needs of increasing cycle traffi c, an improved public-transport fl ow is a priority in the plans;
o Grontmij manages the execution of maintenance and repairs for 150 school
buildings in Flanders. Sustainability and energy performance are important items in this project;
o design for the construction of a separated sewer system along the
N253 (between Leuven and Overijse) and adjacent streets.
Outlook for 2009
The economic and political uncertainty in Belgium will lead to a provisional 2009 Budget, which is unlikely to contain any signifi cant new policies. If policy remains unchanged, the budget defi cit will increase, refl ecting the impact of declining economic growth on public revenues and spending. This will aff ect our operational margin by minus 1-2% in 2009. Denmark
Review of 2008
Although the Danish economy was slowing down, especially in the building sector, Grontmij has further strengthened its position in the transport, water and environmental sectors. Revenue rose by 13.7% in Denmark through organic growth, while EBIT remained unchanged.
Solutia, Gent
Belgium Revenue (in millions of euros) EBIT (%) Staff (FTEs) at year end
2008 2007 Δ 2008 2007 Δ 2008 2007 Δ
In 2008, Grontmij in Denmark worked on the following on-going and new projects:
o Grontmij is tasked with the consultancy and basic design related to the construction
of the Rødsand 2 Off shore Wind Farm, located south of Lolland in Denmark. Our consultancy services will include: optimisation of the wind farm’s layout with
respect to visual and environmental impacts, geotechnical considerations, water depths, grid connection, construction costs and production yield;
o the district heating company in Århus, the second-largest city in Denmark,
extended its contract with Grontmij for energy-saving measures into 2009 and 2010;
o the municipality of Skive has been chosen as Denmark’s Energy City in recognition
of its pioneering approach to both climate and energy. Grontmij plays an active role in facilitating the process.
Outlook for 2009
Although GDP will decline in Denmark, Grontmij is strongly positioned in design and project management for the transportation, water and environmental sectors.
Germany/Poland Review of 2008
Grontmij has considerable critical mass in Germany/Poland (more than 700 employees) in the building, transportation and environmental sectors. Strong order intake combined with a motivated management team created sustainable improvements in profi tability (EBIT) throughout 2008.
In 2008, Grontmij raised its profi le through a number of remarkable projects:
o Grontmij was mandated by WINGAS, a consortium of Wintershall (BASF) and
Gazprom, to acquire the property rights for the construction of a 120-kilometre section of the Ostsee-Pipeline-Anbindungs-Leitung – the landside connection of the North-Stream-Pipeline from Russia through the Baltic Sea in eastern Germany. Grontmij will conduct negotiations with some 1,250 property owners;
o Grontmij will plan the structural framework for the new 70-metre high-rise offi ce
building for the Deutsche Börse AG in Frankfurt/Eschborn. This building project is based on an ecological concept that includes heat recovery, combined heat-power-cooling generation and the use of solar energy and resource-saving building materials.
Outlook for 2009
The German government is working on a stimulus plan designed to boost the economy. As a result, we expect increased growth in our order infl ow in the building, transportation and energy sectors. Grontmij expects profi tability levels in 2009 to be comparable to 2008.
Denmark Revenue (in millions of euros) EBIT (%) Staff (FTEs) at year end
2008 2007 Δ 2008 2007 Δ 2008 2007 Δ
171.2 150.6 13.7% 6.1 6.1 0% 1,331 1,200 10.9%
Germany/Poland Revenue (in millions of euros) EBIT (%) Staff (FTEs) at year end
2008 2007 Δ 2008 2007 Δ 2008 2007 Δ 66.6 51.4 29.6% 12.6 6.3 100% 729 522 39.7% DZ Bank, Frankfurt Renewable energy
The Netherlands Review of 2008
The Netherlands is Grontmij’s largest home market (representing approximately 39% of Group revenue). Our market position in the Netherlands has improved in the energy, water and transportation sectors. Due to the long-term nature of many of the projects we are carrying out in the infrastructure, environmental and water sectors, we have a well-spread portfolio for the future.
In the Netherlands, Grontmij acquired the following consultancy assignments:
o development of the Spoorzone Delft (railway area), generating revenue of
approximately € 13.5 million. Grontmij is drawing up design plans to double the current track and develop a 2.3-kilometre rail tunnel, underground station and car park, while creating public space. The project has been set up according to the innovative Systems Engineering process to achieve a proper balance between economic results, and social and environmental requirements;
o assignment for the design and engineering of energy-saving aspects for the new
Waste Management Services plant in ‘s-Hertogenbosch;
o the Pharmafi lter technology is a highly innovative way to achieve better water
quality while also saving on water and energy consumption. In September 2008 Grontmij received the biennial Aquatech Innovation Award for the Pharmafi lter project. Earlier in the year, the Pharmafi lter Concept received other awards including the European Environmental Press Award and the prestigious 2008 ‘De Vernufteling’ award.
Outlook for 2009
Economic slowdown will strongly aff ect the housing and building market. However, we see an increase in the transportation, environment, water and energy sectors on both national and local levels.
Sweden
Review of 2008
In Sweden, Grontmij is transforming itself from a production engineer to a calibre technical consultant. Some of our low-yield operations were discontinued, while our more profi table services were strengthened. The acquisition of the energy consultants fi rm, Teldako, is in line with this strategy.
Major projects in 2008:
o Grontmij is involved in the extension of an existing tramway in Stockholm.
The assignment includes planning and designing all constructions and bridges
for the approximately three-kilometre extension;
o design of a 70-megawatt wind farm. This is an overall commitment and Grontmij
will be responsible for all aspects of the project, from applying for environmental
permits to infrastructure and park layout;
o the Municipality of Täby, north of Stockholm, is planning a new large-scale district heating network and cogeneration
plant over the coming four to fi ve years. Grontmij Sweden is responsible for researching the network infrastructure, project management and setting up a distribution organisation.
The Netherlands Revenue (in millions of euros) EBIT (%) Staff (FTEs) at year end
2008 2007 Δ 2008 2007 Δ 2008 2007 Δ
332.1 315.2 5.4% 8.2 7.8 5.1% 2,666 2,551 4.5%
Essingeleden Spoorzone Delft
Sweden Revenue (in millions of euros) EBIT (%) Staff (FTEs) at year end
2008 2007 Δ 2008 2007 Δ 2008 2007 Δ
Outlook for 2009
Grontmij has a good order book for 2009, especially in the transportation and energy sectors. We expect a slight growth in revenues, despite a slow-down in the general economy.
United Kingdom and Ireland Review of 2008
Despite the fi nancial crisis and its impact specifi cally on the United Kingdom building sector, Grontmij maintained profi tability and still has an impressive order intake and pipeline for its multidisciplinary services. The three companies acquired in the fi rst half of 2008 contributed to revenue and results in line with expectations. The results were however negatively aff ected by the decline of the pound sterling.
Important projects in 2008:
o as part of our framework with Yorkshire Water to provide telemetry consultancy
services, Grontmij has been awarded a commission to manage the installation of fi rst-time telemetry at 700 combined sewer overfl ows and sewage pumping stations. This is part of Yorkshire Water’s pollution prevention programme;
o Grontmij was part of the project team that received three Highways Agency
Major Project awards in December 2008 for work undertaken on the 9 km stretch of motorway from Carlisle to Guardsmill. Grontmij delivered some of the most technically challenging aspects of the job, including two very large and complex bridge designs. In doing so, we helped deliver the whole scheme under budget, ahead of schedule, and to a very high standard of quality;
o in conjunction with the @one Alliance partners that are delivering Anglian
Water’s current capital expenditure programme, Grontmij is developing an innovative carbon footprint calculator. Based on newly developed embodied and operational carbon models, this new tool will enable design engineers to measure carbon impact at every stage of the development of an asset, from choosing the optimum design to completion and operation.
Outlook for 2009
Grontmij is strongly positioned in asset management, especially in the water sector. A large proportion of the United Kingdom water business is tied up in framework contracts. In 2009, the biggest challenge to and infl uence on our United Kingdom performance will be the eff ect of the framework renewal cycle of the water companies’ asset management programmes (AMP). We expect that after tendering, start-up procedures on the terms of the AMP-5-year cycle frameworks should be constituted before the summer of 2009. At the end of 2008, we have a considerable order book in other market sectors for 2009.
United Kingdom/Ireland Revenue (in millions of euros) EBIT (%) Staff (FTEs) at year end
2008 2007 Δ 2008 2007 Δ 2008 2007 Δ
115.4 85.8 34.5% 8.1 8.4 -3.6% 1,279 949 34.8%
M6 from Carlisle to Guardsmill
