Financial Review - Bouygues

Commission, the building has beenheavily renovated; package 13 of the high-speed raillink to eastern France: this package,part of the high-speed line that will linkParis and Strasbourg in 2007, involvedthe construction of 27 civil engineeringworks on a 27 km section between theSeine-et-Marne and Aisne départements; the West Middlesex Hospital, a 400-bed PFI project.Masan Bay bridge projectin South KoreaBouygues Construction reportedoperating income of €132m in 2004compared with €37m in 2003. All entitiescontributed to the increase, havingbenefited from the group's reorganisation.The favourable outcome ofvarious claims and negotiations alsohelped to improve the result.Order books at the start of 2005 weresatisfactory at €4.6bn, with businesssecured for the coming year up 4% onDecember 2003.In 2004, the firm was awarded thesecond phase of the M5 motorway inHungary (35-year concession, €350mof works to be carried out byBouygues Construction), the secondphase of Highway 2000 in Jamaica(35-year concession, €68m of works)and the Masan Bay bridge in SouthKorea (30-year concession, €183mof works, of which BouyguesConstruction will carry out 50%).Building and civil worksSales at the building and civil worksdivision rose by 9% in 2004 to€4,806m. 55% of the total (€2,653m)was generated in France and 45%(€2,153m) on international markets.FranceConstruction of private-sector apartmentblocks and public buildingsincreased in 2004. The industrialbuildings and office markets levelledoff after declining for several months.Sales at Bouygues Bâtiment Ile-de-France stabilised at €1,089m in 2004after falling in 2003. The new organisationby area of expertise, completedin early 2004, enables the firm to serveits customers better by offering solutionsadapted to their needs. The mainprojects delivered were the rehabilitationof the Opus 12 tower at LaDéfense, the new headquarters of LeMonde for the newspaper's sixtiethbirthday, and the Young People'sClinic. Other significant projectsincluded the 14-floor Exaltis tower inCourbevoie (€52m), the complete renovationof a complex on BoulevardHaussmann in Paris (€46m) and theconstruction of two office buildingsand a canteen for Siemens at Châtillon(€39m).Outside the Paris region, local subsidiariesoperate on both the buildingand the civil works segments. Currentprojects include the A28 motorwayand the Megajoule Laser Facility (theworld's second largest nuclear simulationcentre commissioned by theAtomic Energy Commissariat at a costof €135m). Regional subsidiaries arepositioning themselves on markets,such as prison building, where designfactors add value. The growing importanceof such projects, and of propertydevelopment activities, hasenabled regional subsidiaries to makeup for the lack of major projects and torecord a high level of business, reportinga 6% increase in sales in 2004to €1,140m. Bouygues EntreprisesFrance Europe, for example, wasawarded contracts to build an undergroundcar-park in Chartres city centre(€19m) and an office complex inMarseille's Euroméditerranée district(€16m).Sales by Bouygues Travaux Publicsin France rose from €190m in 2003 to€271m in 2004, mostly due to a fullyear's work on the A28 and MégajouleLaser Facility, plus several packagesof the high-speed rail link to easternFrance. In contrast, Bouygues TravauxPublics won fewer major projects inFrance than in previous years. Orderbooks were down on 2003 and thefirm will have to step up the internationalside of its business over thecoming months.In 2004, Bouygues Travaux Publicswas awarded a €46m design-buildcontract for the Grésillons sewagetreatment plant.16