Ongoing Cost Overruns on A15 Affect Ballast Nedam's Results

NIEUWEGEIN, the Netherlands, October 6, 2014 /PRNewswire/ --

Ballast Nedam expects the results for 2014 to deteriorate as a result of ongoing cost overruns on the public-private partnership project A15 Maasvlakte-Vaanplein, carried out by the consortium A-Lanes A15. In addition, the Infrastructure division is dealing with disappointing project results.

On 7 July Ballast Nedam stated that due to its 40% share in the A15 Maasvlakte-Vaanplein project, it would have to take losses of €87 million, which it would also have to prefinance in expectation of the outcome of the contractually established dispute resolution procedure. In the most recent project report from A-Lanes A15, the total cost overruns have risen from €217 million to €253 million.

As a result of Ballast Nedam's 40% share, this would increase the company's losses from €87 million to approximately €100 million. Ballast Nedam expects that cost overruns will increase further in the final quarter. As long as there is uncertainty regarding the processing of the claims submitted by A-Lanes A15, Ballast Nedam is unable to indicate the precise amount of the losses after settlement of the claims.

The ongoing cost overruns are having a significant effect on the company's solvency and liquidity position. In discussions with the head of the Directorate-General for Public Works and Water Management, the importance of speeding up claims processing is being emphasized. According to IFRS accounting rules, Ballast Nedam may not include any amount whatsoever relating to the expected compensation by the Directorate-General for Public Works and Water Management in its figures.

The programme of divestment of businesses that do not contribute to the strategic focus on integrated projects and the industrialization of the construction process, announced in February, will continue unabated. Discussions on the divestment of a cluster of businesses in the Specialized Companies and Supplies division are at an advanced stage.

Despite the expected disappointing results, at the end of the third quarter Ballast Nedam expects to continue to honour its agreements with the banks regarding the covenants and credit facilities.

Ballast Nedam targets its strategic focus at successfully acquiring and carrying out integrated projects in the working areas of housing, mobility, energy and nature in the Netherlands and internationally. We will expand related activities in niche markets and work on projects where we can make a difference for the client with our expert knowledge and skills. Ballast Nedam applies a differentiated market approach for its three divisions.

With further industrialization of the building process through the use of innovative modular concepts and standardization Ballast Nedam creates enduring quality at the lowest possible life cycle costs for its clients and society. The Ballast Nedam share is included in the Amsterdam Small Cap Index (AScX) of NYSE Euronext. http://www.ballast-nedam.com