Royal BAM Group’s UK operations post strong financial results

Royal BAM Group companies in the UK are reporting strong performances for the year ending 31 December 2010. The combined turnover for BAM Construct UK, BAM Nuttall and BAM PPP amounts to £1.79 billion with a combined pre-tax profit £36.7million. This represents a margin of more than 2.0% - one of the best in the sector.

Martin Rogers, member of the Executive Board of Royal BAM Group, says: ‘The turnover result positions Royal BAM Group’s UK operations in the top tier of the UK market. BAM Construct UK, BAM Nuttall and BAM PPP report a healthy order book position with a figure of £2.76 billion at the year ending 31 December 2010. The companies are performing well in the face of difficult market conditions.

‘The three UK operations have combined their resources to strengthen the BAM brand in the UK and have used the expertise of the other 25 Royal BAM Group companies world wide to leverage a significant market position in the UK. BAM looks to positively influence development of the UK construction industry by being a serious contributor to bodies such as the CBI, UKCG, IUK, CECA, etc.’

BAM Construct UK delivers consistent performance in 2010

BAM Construct UK - highlights
• Improved liquidity position of £271 million
• Highest ranking construction company on the Sunday Times Best 100 Companies To Work For
• 77% of projects in 2010 had no reportable accidents (2009: 66%)
• Construction turnover of £1bn with 2.4% margin

BAM Construct UK - financial summary

*BAM Construct UK made a cost provision in 2010 of £7.5 million (2009 £10.3 million) against the carrying value of its current property developments in the UK.

Graham Cash, BAM Construct UK’s Chief Executive, says: ‘The economic cycle for major contractors means we enter the worst of the recession comparatively late, and trading conditions for the next two or three years will therefore be extremely challenging. Under these circumstances, our results are very strong. We have an enviable overall liquidity position of £271 million, and nearly £1.8 billion work in hand.

‘Our underlying commitment has been to continue to invest in our people and the quality of sustainable building design and delivery. This is reflected by being the leading construction company in the Sunday Times 100 Best Companies to Work For, being a Sunday Times Green Company, and our pioneering use of new technology for design, environmental management, and building information modelling that places us at the front of our markets. Our integrated multiple-business model means we are able to adapt quickly to new market demands such as those that will arise from the Government's review of procurement of schools buildings, led by Sebastian James. Our flexibility allows BAM to deliver new build and refurbishment projects from £500,000 to over £100 million and across a variety of market sectors.

‘Every one of BAM’s seven regional construction divisions was profitable with turnovers of £100 million or more. BAM’s integrated business model also includes BAM Design, BAM Services Engineering and BAM FM (Facilities Management) all of which also made profits.’

While BAM made impairments against its portfolio of property developments, Graham Cash said: ‘The company is confident about the improving outlook for commercial property development at the high end of the market. It has recommenced its development at Chiswick Green, London, an example of a BAM Properties’ development which is designed by BAM Design, built by BAM Construction, and supported by BAM Services Engineering and BAM Plant. BAM Properties made disposals or lettings during the year to tenants such as BSkyB (in Stockport) and Nike in Glasgow and has purchased a prime site at 110 Queen Street, Glasgow for development.’

Graham Cash added: ‘Public spending cuts have affected our business already and our supply chain. The early signs of recovery in the property and commercial markets promise more in the south east than in the north of England and Scotland, where trading conditions are the most difficult. We will continue to focus on our core businesses, maintaining our talent pool and our ability to innovate.’

BAM Nuttall delivers solid financial performance with enhanced forward order book

BAM Nuttall - highlights 2010
• Enhanced order book of £967 million as at 31 December 2010
• Lost time incidents reduced by 40%
• 16% reduction in total company carbon emissions
• Record number of employees undergoing training through apprenticeships

Steve Fox, Chief Executive of BAM Nuttall, comments: ‘Despite the challenging market conditions, arising from the recession and the substantial spending cuts imposed by the new government, BAM Nuttall has had another very successful year.

‘The financial results reinforce our position as one of the UK’s leading civil engineering businesses. Turnover reached a new record of £694.8 million. Pre tax profit at £15.7 million is down on 2009 levels but exceeds the forecast at the start of 2010 and still represents an industry leading percentage result. The forward order book also stands at a new record level of £967 million. This reflects the significant contracts that were secured in 2010 including Victoria Station Upgrade, Managed Motorways, Crossrail Station Caverns and Western Running Tunnels, Luton Dunstable Guided Busway and Northumbria Water Framework. Our focus is on pursuing work with secure funding and adopting selective bidding practices, including continuing to work with our carefully selected partners.

‘We are continuing to work in combination with Royal BAM Group companies and also with some of Europe’s other leading construction organisations where appropriate in order to leverage our business into a superior and sustainable market position.

‘This year has been pivotal in the development of our Beyond Zero thinking. Throughout our business, from the boardroom to the worksite, the meaning of Beyond Zero has started to become consolidated into the very essence of what BAM Nuttall is about.

‘2010 proved to be our best ever year in health and safety performance with the total number of lost time incidents down by 40% and those resulting in more serious injuries showing a 25% reduction, both on 2009 figures. The use of Observation Cards has increased significantly, indicating a further improvement in our workforce engagement in accident prevention. We were awarded a number of important Construction Industry Safety Awards including RoSPA, Construction News and Network Rail.

Beyond Zero is BAM Nuttall’s programme and vision to drive continuous improvement in the fields of health, safety, welfare and the environment and to eliminate detrimental impact to the planet. It is encouraging to see that we have again made significant improvements in our effort to reduce greenhouse gas emissions. We have recorded a 16% reduction in 2010, due mainly from a reduction in the use of gas oil on our sites, 3 million litres less than in 2009. We also recorded a 35% reduction in electricity demand in 2010 which indicates real progress in this important area. However some aspects of our carbon footprint are very sensitive to the type of work we undertake. We were delighted to become a Sunday Times Green Company in 2010.

Also very encouraging is our performance in reducing waste sent to landfill. Our efforts in 2010 mean that we have now seen a 70% drop since 2008 and this puts BAM Nuttall ahead of the 2012 WRAP 50% target.

More details of our carbon footprint and waste, together with other aspects of our progress towards Beyond Zero can be seen on the latest update of our sustainability report, available via the BAM Nuttall website.

Our continuing and growing investment in learning and development has seen increasing employee engagement and motivation. All learning and development activities for all our employees are now being delivered through our BAM Nuttall Academy, which ensures rigorous standards and quality, and integrates the development opportunities across all disciplines and at all levels.

Our successful apprenticeship programme continues to expand and is keenly sought after by potential candidates’.

BAM PPP in the UK positioned for future projects with a capital value in excess of £1 billion

Robert Young, Director of BAM PPP in the UK, said: ‘During 2010 BAM PPP continued to work closely with Royal BAM Group companies to further strengthen the BAM brand. Success was achieved on two Building Schools for the Future bids with BAM Construct UK. Work began on the Borders Railway bid with BAM Nuttall and BAM Rail; this will continue throughout 2011. Beyond these projects BAM PPP is positioning itself with its sister companies and other partners for a number of major infrastructure and accommodation PPP projects scheduled to commence in 2011. These projects have a combined capital value in excess of £1 billion.’

Further Info
Peter Bishop - Head of Public Relations & Corporate Communication
BAM Nuttall Limited
St James House, Knoll Road, Camberley,
Surrey GU15 3XW
Tel: 01276 63484
Fax:01276 66060
peter.bishop@bamnuttall.co.uk