Deteriorating performance of the property market compels additional impairments; break-even profit forecast for 2010
Bunnik, the Netherlands, 4 November 2010 - The Dutch residential market offered no indications of recovery in recent months. Many municipal authorities have put new projects on hold and have cut planned capacity. Recent studies have revealed that the number of regions in the Netherlands experiencing population decline is growing. BAM acknowledges that the outlook for the Dutch residential market is increasingly gloomy. The number of projects that have been postponed or discontinued is increasing. In addition, current developments are experiencing the impact of waning momentum, declining numbers and a mood of austerity, resulting in yields that are not only reduced, but also take longer to generate.
In response to the developments mentioned above, which have only intensified in recent months, BAM has taken a €127 million charge for the impairment of the property positions of the Dutch property development firm AM. In addition, AM will achieve an operational loss of approximately €50 million due to disappointing sales and sales proceeds, the writing down of planning costs and insufficient overhead coverage.
As a consequence of the measures outlined above, AM is expected to report a pre-tax loss of approximately €177 million for all of 2010. The BAM Executive Board has every confidence that AM will generate a modest, positive result in 2011.
Development in the results of the other sectors is exceeding expectations. BAM is expected to report a break-even net result for all of 2010.
According to internal calculations, as at 30 September 2010, BAM met the requirements of financial covenants, and there is no compelling reason for the impairment of goodwill in AM.
On Thursday, 18 November 2010, BAM will announce the figures for the first nine months of 2010.
Further information:
- press: Arno C. Pronk, 31 (0)30 659 86 21;
- analysts: Patrick.R.E. Snippe, 31 (0)30 659 87 07.
At 11 a.m. on 4 November 2010, during a conference call for analysts and journalists (which will be conducted in Dutch), the Executive Board of Royal BAM Group will make a brief presentation explaining this press release. If you wish to listen in on the session, please call 31 (0)10 29 44 233. Please note, however, that you will not have an opportunity to ask questions. An MP3-format recording of the conference call will be made available afterwards