Financial performance

14 - Target: Creating return on capital employed above 10 per cent

Management summary

We are disappointed that the project loss at sea lock IJmuiden set back our 2017 result by €68 million and damaged our margin by 1% point. Apart from this, the majority of our activities performed in line with our expectations. Our order book grew as anticipated while we maintained our tender discipline. We had another year of positive business cash flow and our overall financial position remains solid.

We made further progress delivering on our strategy Building the present, creating the future. Looking ahead, we will accelerate execution to capitalise on our potential. Key priorities remain pre-construction management, business controls, digitalisation and IT standardisation and of course implementing the key learnings from sea lock IJmuiden. 

 15 - Key financial results
(x €1 million, unless otherwise stated)







Adjusted result before tax



Margin (%)



Result before tax






Net result attributable to the shareholders of the Company



Order book



Earnings per share

5 cents

17 cents

Dividend proposal

10 cents

9 cents




16 - Result before tax
(x €1 million, unless otherwise stated) 




Continuing operations



Adjusted result before tax, depreciation and amortisation charges 



Depreciation and amortisation charges



Adjusted result before tax



Impairment charges



Restructuring and other exceptional costs



Pension one-off



Result before tax






Income tax



Result for the year






Non-controlling interests



Net result attributable to shareholders
of the Company







Revenue of €6,604 million was €372 million (5 per cent) below the level of 2016. Of this, 40 per cent (€142 million) came through the weakening of the pound sterling with softening of revenue in the Construction and Property sector offset by some growth in Ireland and Germany.


The adjusted result before tax for the year 2017 was heavily impacted by the project loss (€68 million) at the lock IJmuiden in the Netherlands. There was also some negative impact from the Eindhoven Airport parking garage collapse. Both items were included in the result for the fourth quarter. These were partly offset by the strongly improved performance of Construction and Property sector. The result of PPP was slightly ahead of last year.
Net result is impacted by an impairment of €40 million of deferred tax assets, triggered by the loss on sea lock IJmuiden and cumulative past underperformance in the Dutch fiscal entity.

Order book 

As at 31 December 2017 the order book (orders in hand for the next five years) amounted to €11.6 billion, representing an increase of €1.4 billion in the year (2016: decrease of €1.3 billion in the year). Of the current order book position, €5.7 billion (2016: €5.4 billion) is expected to be carried out in 2018 and €5.9 billion (2016: €4.8 billion) in the years after. In addition, the Group has more than €1.8 billion (2016: €2.1 billion) in the order book beyond five years, mainly comprising of long-term maintenance contracts for PPP projects.

Earnings per share 

The number of outstanding ordinary shares of the Group increased by 2.6 million in 2017 to 273.2 million shares as at 31 December 2017, due to stock dividend minus the repurchase of shares for the conditional performance share plan. (Diluted) earnings per share amounted to 5 euro cents (2016: 17 euro cents).

Dividend proposal 

BAM’s policy is to pay out 30 to 50 per cent of the net result for the year subject to considering the balance sheet structure supporting the strategic agenda and the interests of the shareholders. BAM’s net result for 2017 of €12.5 million included a charge of €40 million for the impairment of deferred tax assets. Since this item is one-off non-operational and non-cash in nature, BAM has added back this item for the payout calculation. Therefore, BAM proposes a dividend of 10 euro cents per ordinary share for 2017 (2016: 9 euro cents) which equates to a payout ratio of 50 per cent of the adjusted net result. Subject to approval by the Annual General Meeting on 18 April 2018, this will be paid in cash with a scrip alternative on 16 May 2018. BAM will repurchase and cancel shares to offset the dilution due to shareholders taking the scrip alternative. The dividend return amounts to 2.6 per cent, based on the 2017 closing price (2016: 2.1 per cent).

17 - Financial position
(x €1 million, unless otherwise stated)







Cash and cash equivalents 696 739
Less: borrowings (503) (612)
Net cash



Add: non-recourse financing



Recourse net cash






Capital employed



- Non-current assets



- Net working capital






Shareholders’ equity



Capital base



Total assets 



Solvency (%)



Cash and cash equivalents 

Cash and cash equivalents was €696 million as at 31 December 2017 (2016: €739 million), of which €217 million (2016: €223 million) concerns the Group’s share of cash and cash equivalents in joint operations.

18 - Business cash flow 1
(x €1 million) 


Full year


Full year





Group: net cash result 2



Investments (in)tangible fixed assets



Trade working capital 3



Net investment:



- Property






Other changes in working capital




Business cash flow












Pensions (additional)







Change in cash position






1 These metrics are not directly compatible with the IFRS-based condensed cash flow statement.
2 Net cash result is net result excluding depreciation, impairments, cash out related to restructuring, movements of provisions and book profit on sale of PPP projects.
3 Working capital excluding property positions, PPP receivables, assets and liabilities held for sale, derivatives, provisions, taxes, other receivables and other payables.

The business cash flow was again positive. Investments in (in)tangible assets increased after years of structural lower investments. BAM invested in equipment and in the patented development of Gravity Based Foundations for offshore wind power.

The property cash flow was mainly driven by the transfer (as announced in November 2016) of the property positions in the north east of the Netherlands and the sale of the Stadium Complex Zwolle. Other changes in working capital in 2017 were driven by changes in accruals, and negative effects from the cash flow in relation to joint arrangements whereas in the same period in 2016 there was a favourable effect from the cash flow in relation to joint arrangements. 

The cash outflow from restructuring in 2017 relates mainly to the Netherlands for prior year restructurings. Other included the effect of the weaker pound sterling and the purchase of treasury shares. 


As at 31 December 2017 total borrowings amounted to €503 million (2016: €612 million) of which €265 million (2016: €368 million) concerned non-recourse debt. Non-recourse loans associated with PPP projects decreased with €84 million (2016: increase €79 million) and property development decreased in 2017 with €17 million (2016: €30 million decrease) principally due to PPP project divestments in the year and consequential debt repayments.

As at 31 December 2017 a net cash position is achieved of €193 million (2016: €127 million net cash position). This position comprised of cash and cash equivalents minus borrowings of €503 million (2016: €612 million). 

The Group had two credit facilities as at 31 December 2017: unsecured subordinated convertible bonds for €125 million and a committed syndicated credit facility of €400 million. The bonds will be convertible into ordinary shares of BAM with a nominal value of €0.10 each. The bonds are subordinated to BAM’s senior payment obligations. The bonds will carry an annual coupon of 3.5 per cent payable semi-annually and a conversion price of €5.2245. The bonds will be redeemed at their principal amount on or around 13 June 2021. BAM will have the option to call all but not some of the outstanding bonds at their principal amount plus interest from 28 June 2019, if the value of a BAM share exceeds for a specified period of time a price which is 30 per cent higher than the conversion price.

The committed syndicated credit facility has a duration until 31 March 2022 and as at 31 December 2017 the committed syndicated credit facility was not used, just as in 2016.

19 - Borrowings
(x €1 million, unless otherwise stated)




Non-recourse debt



















Subordinated convertible bonds






Recourse debt









Financial lease
















The recourse net debt, part of the recourse leverage ratio in BAM’s financing arrangements, mainly comprising equity bridge loans for PPP projects and property loans on a recourse basis minus cash and cash equivalents, amounted to a net cash position of €458 million as at 31 December 2017, €37 million down compared to 2016. 

Capital employed

Non-current assets
On balance, non-current assets decreased in the year with €39 million (2016: decrease €61 million).

As the net capital expenditures in the year were higher than the annual depreciation, the carrying amount of property, plant and equipment increased with €12 million to €282 million. The majority of the capital expenditures concerned the asset category equipment and installations in the sector Civil engineering. 

Intangible assets predominantly comprises goodwill with a carrying amount of €375 million, a decrease of €4 million compared to 2016 owing to the lower exchange rate of the British pound sterling. Goodwill is tested for impairment annually and this did not result in an impairment. The sensitivity analyses indicated that for a Belgian cash-generating unit, representing a goodwill amount of €16 million, a limited headroom remains in case of a negative change of 50 basis points on the discount rate and/or growth rate beyond the forecast period.

Besides decrease in goodwill, intangible assets increased with €18 million, mainly due to investment in Gravity Based Foundations and non-integrated software.

PPP receivables decreased in 2017 to €249 million from €359 million principally due to construction progress on current PPP projects (€127 million) compensated by the transfer of one project to the joint venture with PGGM (€150 million). In 2017, just as in 2016, no PPP receivables were reclassified to assets held for sale to the PGGM joint venture.

The carrying amounts of investments (accounted for using the equity method) and other financial assets increased in the year with €10 million (from €86 million to €96 million) respectively remains at the same level as last year (€92 million).

Net working capital
Net working capital (current assets excluding cash and cash equivalents minus current liabilities excluding current borrowings) as at 31 December 2017 amounted to minus €515 million (2016: minus €456 million). Gross investment in property development has been reduced with €39 million in 2017 to €591 million, as a consequence of property sales, divestments and an impairment charge of €4 million (2016: €48 million). Net investment in property development, taking into account associated borrowings, amounted to €446 million (2016: €475 million).

Shareholders’ equity and capital base 

Shareholders’ equity increased by €18 million in 2017 to €852 million as at 31 December 2017. This increase is principally due to the net result for the year of €13 million. 

Capital base includes the subordinated convertible bonds of €115.0 million (2016: €112.5 million). The difference between the nominal value of the convertible bonds of €125 million and the reported value of €115.0 million, consists of the valuation of the conversion right and transaction cost. 


As at 31 December 2017 solvency is 21.2 per cent (2016: 19.7 per cent) determined by using the capital base. Given the higher capital base and the lower balance sheet total, solvency increased in 2017. Recourse solvency, the ratio in accordance with the bank covenants, slightly increased to 29.4 per cent as at 31 December 2017 (2016: 29.0 per cent), which comfortably exceeds the required minimum of 15 per cent. 

Other significant movements in balance sheet items  

Post-employment benefits
The net benefit liability amounted to €43 million as at 31 December 2017, a decrease of €39 million compared to 2016 principally due to changes in actuarial assumptions, specifically the discount rate used.

Provisions, other than post-employment benefits, decreased by €28 million to €114 million (2016: €142 million), predominantly effected by the decrease of the restructuring provision by €27 million. In 2017 €3.0 million were added to the restructuring provision, €2.9 million of unused provisions were released and €24.7 million were used for payments on restructurings, mainly in the Netherlands.

Deferred tax assets and liabilities
The Group has a net deferred tax asset of €190 million (2016: €223 million) principally reflecting the tax losses carried forward in the Netherlands and Germany. The valuation as at 31 December 2017 allows for estimates of the level and timing of future taxable profits for the upcoming nine years (the Netherlands) and for an indefinite period (Germany) including available tax planning opportunities. In 2017 an impairment of the deferred tax assets of €40 million was made, triggered by the loss on sea lock IJmuiden and cumulative past underperformance in the Dutch fiscal entity, including large impairments on property  and restructuring charges in prior years

Assets and liabilities held for sale
The assets and liabilities held for sale as at 31 December 2017 amount to €9 million (2016: €40 million) for the assets and €0 million (2016: €4 million) for the liabilities and are fully attributable to one remaining property position to be transferred in the Northeast part of the Netherlands. In 2016 the assets and liabilities held for sale were fully attributable to the proposed sale of all 47 property development positions in the Northeast part of the Netherlands.


In 2017, BAM recognised a tax expense of €44.9 million (2016: €10.9 million). Excluding the impairment of deferred tax assets of €40 million, the effective tax rate of the Group for 2017 is 8.4 per cent (2016: 18.1 per cent), influenced predominantly by the use of previously unrecognised tax losses.

On corporate income tax, taxes on wages, social security contributions and VAT, the Group paid a total amount of €725 million in 2017. Relative to the Group's  revenue, the share of taxes paid deviates most from the share of revenue in the Netherlands. Here, the Group's share of taxes is relatively high compared to revenue. 

20 - Taxes paid in 2017 
(x €1 million, unless otherwise stated)










United Kingdom 

















Rest of the world 








Business line results

With effect from 2016, the Group has changed its reporting sectors to align with its implemented updated strategy. The ten operating companies now report as three sectors: Construction and Property, Civil Engineering and PPP. The Construction and Property activities are now managed and reported as one integrated business line. In addition, construction activities in Ireland, Belgium and at BAM International have been reclassified from Civil engineering to Construction and Property.

Construction and Property 

21 - Construction and Property

At Construction and Property, revenue was €3,708 million, which was lower by €416 million including the negative impact of the pound sterling of €82 million. Revenue reduced mainly at Dutch non-residential construction following the trend of the order book and in the UK due to caution in the construction market and the absence of property development transactions. Ireland had higher revenues reflecting BAM’s strong position in a growing market. 

The total sector result was €73.0 million including a property development result of €26.7 million, equal to 2016, with a good contribution from Dutch residential. Germany delivered a break even result for the full year after the refocusing of activities in 2016. The benefits of the recently acquired projects will become slowly visible in the results, while negotiations on settlements at older projects are ongoing. All other regions delivered solid margins according to expectations. Dutch house sales were up by 7 per cent to 2,316 due to planning and zoning constraints at municipalities.

The year-end order book was higher by €626 million (10 per cent) including a negative FX of €61 million. The increase came mainly from the Netherlands and Ireland. The order book at Dutch non-residential started to grow slowly after years of decline and the increase at residential construction and property reflects the increasing demand for new build homes. Order book at BAM International grew due to onshore project wins.

The gross investment in property reduced by €39 million to €591 million at the end of 2017. These investments were financed by €75 million recourse property loans (year-end 2016: €69 million) and €69 million non-recourse property loans (year-end 2016: €86 million).

Civil engineering 

22 - Civil engineering


In Civil engineering, revenue rose by €65 million to €2,964 million, including negative FX of €59 million. Revenue in the Netherlands and at BAM International reduced slightly and was up in all other regions including the UK at constant currency.

The sector result was severely impacted by the project loss at sea lock IJmuiden in the Netherlands. The Dutch activities were also held back by the competitive regional market. The small losses at Belgium and BAM International reflected the challenging market conditions, however both markets appear to have bottomed out. All other regions had margins of 2per cent or above.

The order book rose by €743 million (19 per cent), mainly due to multiyear project awards in the UK and Germany.


23 - PPP 


PPP had a result of €19 million coming mostly from existing portfolio. One project was transferred to the joint venture with PGGM. At the end of the year the BAM/PGGM joint venture was selected preferred bidder for the German road project A10/A24 and financial close was reached in February 2018. The order book reduced during the year due to the progress on the construction of projects. The pipeline of active bids remains healthy. The total directors’ valuation of the PPP portfolio as at the end of 2017 was €229 million, which included €75 million of unrealised value. At the end of 2017 the number of PPP projects in the portfolio was 44 of which BAM PPP retains an interest in 40; for the remaining 4 projects only asset management services are provided by BAM PPP. In 2017 BAM PPP was awarded a contract to provide asset management services to a further project (Zaanstad Prison) owned by third party investors. 

BAM PPP’s projects are spread across BAM’s European markets with revenue based mainly on the availability criterion. 
The ratio of accommodation to civil engineering projects is balanced, although civil engineering projects are generally greater in size.

The joint venture with PGGM continued to grow in 2017, with an investment in a further project. The joint venture provides BAM PPP with the twin benefits of a strong position from which to pursue further projects and a stable platform within which equity can be made available for new investments.

BAM PPP harnesses the strengths, experience and expertise within Royal BAM Group, coordinating the provision of whole lifecycle solutions for the benefit of our public-sector clients. The company focuses on BAM’s European home markets where the Group has proven construction and maintenance skills and expertise. The strategy aims to grow the portfolio providing short-term construction turnover, long-term facility management and lifecycle turnover, equity investment returns and asset management income.

The PPP markets continue to offer an attractive supply of bidding opportunities. The bidding opportunities are spread across all of our markets. Opportunities in new markets working in conjunction with BAM International are looked at on a project by project basis. Interest in providing long term debt remains strong from both bank and institutional lenders for both primary and refinancing transactions.

BAM PPP Portfolio financial performance
At year-end 2017, shareholders equity invested by BAM PPP totaled €68 million (2016: €66 million). BAM PPP invested €18 million and transferred €15 million to the BAM PPP PGGM joint venture in 2017. BAM PPP does not invest in projects until their structural completion, with the shareholders’ equity part being financed with a bridging loan. 

Committed equity is €101 million, all by the joint venture. The invested and committed equity totaled €169 million. New projects will mainly be undertaken by the joint venture.

The future asset flow is based on the expected inflow of cash from the concessions portfolio for the shareholders’ equity (dividends, interest and repayment). The discounted value of this future cash inflow is the Director’s valuation and totals €229 million (2016: €238 million). 

A comparison of the directors’ valuation and the discounted value of the invested and committed equity results in an unrealised value of the portfolio of €75 million (2016: €73 million). 

Business development
The current portfolio provides BAM PPP with returns on equity investments, in addition, as at year-end 2017, to an order book of construction turnover of €382 million and facility management and lifecycle turnover for BAM sister companies of €3.5 billion. BAM PPP has in the pipeline 10 active bids, providing potential equity investments of €214 million, potential construction turnover of €2.1 billion and potential facility management turnover (excluding lifecycle) of €0.9 billion.

Directors’ valuation
The directors’ valuation is intended to illustrate movements in the value of the PPP portfolio during the year taking account of the impact of intervening transactions, through the application of a consistent methodology. The valuation is based on the forecast returns of the projects, based on current projections, and may differ significantly from the book value of the investments shown in the accounts. Cash flows accruing from projects are calculated on the basis of financial models, based on contractual terms with clients and have been approved by external lenders. The valuation is calculated using the widely acknowledged discounted cash flow basis, discounting all future cash flows to BAM PPP at an appropriate discount rate. All future cash flows are converted into euros. All projects that have reached financial close are taken into account; projects for which BAM PPP is the preferred bidder are excluded until financial close is achieved.

Discount rates
BAM PPP applies discount rates based on the company’s knowledge of the market, the agreed transfer mechanism with PGGM, through the joint venture, and the use of a simple project phase analysis. 

A higher discount rate is applied from financial close through to construction completion before stepping it down once into operations due to the reduced risk and greater certainty of future cash flows. BAM PPP believes this approach is preferable to using an adjusted market risk free rate approach as we have the benefit of up-to-date market information based on our discussions and agreement with PGGM.

24 - Portfolio financial performance 2017
(x €1 million, unless otherwise stated)





Invested equity




Committed equity




Total invested and committed equity 




Future equity cash flows 




Implied forecast unrealised value in the portfolio 








The table below shows the sensitivity of the directors’ valuation if all the project discount rates applied are changed simultaneously by plus or minus 1 per cent and 2 per cent.

25 - Sensitivity of the directors’ valuation


Discount rate 


Difference in


(€ million)

(€ million)






















26 - Directors’ valuation 2017
(x €1 million, unless otherwise stated)

Valuation as at December 2016


Dividends and distributions received since December 2016


Repayments and divestments since December 2016


Exchange rate movements


Rebased December 2016




Valuation at December 2017


New projects added


Revaluation 2017 1


Increase/decrease in portfolio valuation




1 The revaluation 2017 consists of a combination of factors including: - The discount unwind (over time, the discounted value increases given that the future value is a year closer);

  • The impact of changes in discount rates applied as projects move into operations;
  • Operational performance gains as a result of factors such as the impact of macro-economic changes, higher inflation, better performance, successful asset management, changes in demand and revisions to costs.