Mid year results DHV Group: Asia, Africa and North America perform well, Netherlands under pressure

• Leadership in sustainability
• Success with innovations

The DHV Group, international provider of engineering and consultancy services, notes some recovery in the market. During the first half of 2010, the company’s sales volume was 16% higher than during the same period of 2009. The construction market, however, lags behind expectations, as do contracts from Dutch local authorities. It is largely the stagnation in the Netherlands which accounts for the 4% decrease in turnover compared to the first half of 2009. The over-capacity resulting from this decreased demand had a negative effect on the operating result. In Asia, Africa and North America, the DHV Group continued to perform well.

Mid year results

Home markets

Results in Asia were good, largely due to the Group’s involvement in projects financed by international financiers such as the World Bank and the Asian Development Bank. In China, DHV signed a number of contracts for new water treatment plants. NACO was awarded several airport contracts in Asia and the Middle East.

In Africa, all operating companies achieved results in excess of the budget and growth is expected to continue during the second half of 2010. The anticipated ‘post-World Cup dip’ has not occurred yet.

Transportation projects accounted for the greater part of revenue derived in North America. Although turnover fell slightly, the results remained good. In the second half of 2010, airport related projects and the economic stimulus packages, announced by both the American and Canadian governments, are likely to have a positive effect.

In Europe, the DHV Group performed on par with the level established in 2009, although the operating result in the Netherlands was below target due to price-based competition and over-capacity. Many projects have been delayed further to governmental budget deficits and the uncertainty caused by local elections and the formation of a new government.

The implementation of a new business information system demanded much attention during the first half year. The system has now been successfully rolled out within NACO and DHV in the Netherlands.

Corporate Responsibility

DHV aspires to become an acknowledged leader in Corporate Responsibility and innovation. The Group’s CR Report 2009 was published in June 2010. The DHV Group is entirely ‘climate-neutral’ as of 2010. Since many years, the company has been promoting environmental awareness among its staff, the use of ‘green’ energy, sustainable transportation and green offices. These efforts have resulted in a reduction of the Group’s CO2 footprint (expressed as tons CO2 per employee) from approx. 3.6 in 2007 to 2.9 in 2009. The remaining emissions are compensated.

The ‘green’ renovation of DHV’s head office in Amersfoort will be completed in early 2011, whereupon the building’s energy label will have been upgraded to the highest level A coming from G, and CO2 emissions cut by 41%. In the Netherlands, the use of A-label lease vehicles has risen from 5% in 2008 to 31% in 2010.

Climate-conscious solutions are central to many of the Group’s projects, and we support recognized international frameworks. In China, DHV realized the accreditation of three hydropower stations as CO2 reduction projects by the Clean Development Mechanism (CDM) Executive Board of the United Nations.

In South Africa, DHV Group’s subsidiary SSI has launched the ‘Sunday Soccer Initiative’, inspired by the recent World Cup competition held in the country. Eighty disadvantaged children now have access to training equipment and can attend weekly coaching sessions run by members of the Young SSI staff association. This initiative follows on the successful SSI Saturday Schools in mathematics and science.

Success with innovations

DHV has won the ‘Vernufteling’ award, an annual prize presented in recognition of the most innovative project undertaken by a Dutch engineering consultancy. DHV’s invention is the first technology to enable recycling of the nitrogen and phosphates removed from wastewater.

Building upon the success of a demo installation of DHV’s Nereda® water treatment technology, a contract has been signed with the Veluwe Water Management Authority in the Netherlands for a full scale Nereda® wastewater treatment plant. The new plant will use considerably less energy and chemicals than the conventional solution and will also take up much less space.

In a recent survey, members of the public were asked to state which of several plans for the upgrading of the Dutch Afsluitdijk (‘Closure Dike’) they would prefer to see put into practice. The plan proposed by the ‘Waddenwerken’ consortium (DHV, Imares and Hosper) emerged as the clear favorite. Under this proposal, the height of the dike will not be increased. Instead, mud flats will be established to widen the water defense line in a way which allows it to ‘grow’ with the sea.

Prospects

The second half of 2010 is expected to be similar to the first half: international performance will remain strong while revenue in the Netherlands will remain below target. Management will therefore continue to pursue cost reductions and improved cashflow. Internationally, many new projects in water and transportation are expected.