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Bam UK dives into the red

Royal Bam’s UK business has made a £2.5M (€3.4M) loss for the 2014 financial year.

The firm, which operates in the UK as Bam Nuttall and Bam Construct, had reported a £14.5M pre-tax profit the year before.

Turnover of £1.54bn (€2.08bn) was up on the £1.39bn (€1.88bn) posted in 2013.

The negative result was blamed on tough trading conditions in the UK construction and M&E sectors, and a problem civil engineering contract which Bam announced in July 2014.

Another troubled civils project caused Bam’s Germany business to record a loss.

And in Ireland, the firm has taken a £15.5M (€21M) hit on two PPP toll road contracts.

Results review

The overall group performance showed revenue increasing to £5.41bn (€7.31bn) from £5.21bn (€7.04bn) in 2013.

But the profit-before-tax figure dropped to £46M (€62.2M) from £55.6M (€75.2M).

Impairments in 2014 ran to £85M (€115.9M), mostly relating to residential land bank positions in the Netherlands, with the remainder accounted for by the two Irish PPP toll road contracts.

“The overall group result was held back by a weak year in the operational sectors due to working through older contracts and under-recovery of overheads in the Netherlands,” said Rob van Wingerden, CEO of Royal BAM Group.

In civil engineering, group-wide revenue for 2014 slipped by 1% to £2.92bn (€3.95bn). However, UK turnover was up by £68M (€92M) of which £52.5M (€71M) was currency effect.

The profit of £10.5M (€14.2M) for the year was down considerably on the £45.4M (€61.4M) posted in 2013 due to the two problem contracts in the UK and Germany.

Restructuring

Royal Bam is carrying out a major restructuring in its Dutch and Belgian businesses, which cost the business £50.9M (€68.8M) in 2014.

It has also launched a ‘Back in Shape’ programme, aimed at improving tendering and delivery. A statement from the firm said: “All tenders are now subject to the stage gate process, and with peer reviews for larger or more complex tenders. There is more focus on contractual awareness and cost forecasting as well as a mandatory evaluation of the financing of each potential tender.”

Van Wingerden added: “The Back in Shape programme is making good progress. The simplified new structure to make us more effective on the outside and efficient on the inside is in place. New and improved processes are being implemented that will result in better project control. And we are strengthening our culture with a focus on balancing risks and rewards.”


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