BAM Abbreviated Annual Report 2011 - Siteseeing in the world of ...

BAM PPP is responsible for Royal BAM Group’s involvement in the European Public-Private Partnerships (PPP) market.
BAM PPP’s result reflects the investment activities. Profit arising from construction and maintenance activities
associated with PPP projects is reported under the relevant sectors.
Operating from offices in Bunnik, Birmingham, Brussels,
Dublin, Frankfurt am Main and Glasgow, BAM PPP is
active in the roads, rail, education, health care, judicial
and general accommodation sectors in the BAM Group’s
European home markets.
The result before tax in 2011 was €10.5 million
(2010: €3.5 million). The improvement in
profitability during 2011 reflects the continuing
successes in winning projects, the initial impact
of the joint venture with PGGM into which the
first transfer of projects was completed.
In 2011, BAM PPP was awarded five new
concessions, three of which reached financial
close during the year. The two projects
remaining at the preferred bidder stage are
expected to reach financial close during the first
half of 2012. The new concessions increase the
committed net investment obligation for the
portfolio by €54 million which – after taking
account of the impact of transfers into the joint
venture with PGGM – increases committed net
investment to €253 million (2010: €240 million), of which
€88 million (2010: €87 million) has actually been
invested. The directors’ valuation of the portfolio at
31 December 2011 was approximately €300 million
(31 December 2010: approximately €300 million)
reflecting the net impact of our successful investment
and strategic divestment activities during the year.
As at 31 December 2011, BAM had 36 PPP contracts in
its order book (including the two preferred bidder
contracts), of which 29 are managed by BAM PPP; the
remaining seven contracts involve a very limited amount
of shareholders’ equity and are managed by sister
companies responsible for the construction and
maintenance work under the contract.
Additions to the PPP portfolio in 2011 included:
• two prison projects at Beveren and Dendermonde
in Belgium;
• the extension of the A9 motorway in Thuringia
in Germany;
• the upgrade of the N11 and junction improvements
on the N7 in Ireland (preferred bidder) and
• Schools Bundle 3 in Ireland consisting of 8 new
schools on 7 sites (preferred bidder).
BAM PPP’s projects are distributed across all of BAM’s
European markets and are predominantly availability
based. The ratio of accommodation to civil engineering
projects is also balanced, although civil engineering
schemes are often greater in scope and therefore, when
expressed as a percentage of committed equity,
infrastructure projects represent 61 percent of BAM’s
current portfolio.
In May 2011 BAM PPP signed a joint venture agreement
with Dutch pension fund manager PGGM. The
committed investment in the joint venture totalled €390
million, of which €240 million is to be allocated to new
projects and €150 million to existing projects. The
agreement provided BAM PPP with the twin benefits of a
significant and robust position from which to pursue
further projects and a stable platform within which
equity can be recycled whilst also allowing BAM PPP to
retain a long term interest in concessions. Progress
achieved by the joint venture to date has been good with
eight bids commenced and three existing projects
transferred in December 2011.
Notwithstanding continuing economic uncertainty, the
PPP market remained robust during 2011 and is
continuing to offer an attractive level of bidding
opportunities. There is a clear trend towards bigger
infrastructure projects which are particularly interesting
to BAM which is well positioned to play a key role in this
market because of the comprehensive range of
integrated services available within the BAM
organisation. The high level of bidding activity
experienced during 2011 is expected to continue in 2012.
The Netherlands and Belgium are expected to be the
most active markets offering a wide range of road, rail,
judicial, education and general accommodation
schemes. The United Kingdom appears likely to offer
improved deal flow particularly from schemes located in
Scotland, however projects in England remain subject to
the current review of PFI by the Government and it is
currently unclear as to when and in what form further
projects will be progressed. The German and Swiss
markets appear likely to continue to offer steady growth.
It is not likely that there will be many opportunities
emerging from the Irish market in the short to medium
term following the announcement of the recent
Government spending review. The underlying
performances of projects in their construction and
operational phases were stable and in line with
expectations in 2011.
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2011