WET News

14 Leaders 2014 the LeADeRS 2014 VINCI performs well despite tough conditions VINCI concentrates on core objectives to help build for the ture. The group topped our Operating Margin Top 10 table V INCI Construction UK en- tered 2013 with a record order book and a record secured workload, says its managing director, Andrew Ridley- Barker. This meant the company was able to concentrate on profitability and cer- tainty of delivery. He says the the compa- ny's core objectives are designed to help it build for the future and protect and en- hance its margins as we move forward. With the focus on: • Streamlining the business • Sharing expertise • Customer focus • Supply chain management • Zero defects • Reducing bureaucracy • Building Information Modelling (BIM) • Innovation and collaboration Operating Margin % VINCI Construction 452.6 AECOM Design Build 159 Dawnus 10.4 Amey 7.6 Peter Duffy 5.6 Stonbury 5.1 Lewis Civil Engineering 4.7 Skanska 4.1 J Murphy 3.9 Morrison US 3.7 "Concentrating more time and resources on fewer bids, we aim to increase the aver- age value of the projects we undertake" VINCI Construction UK has per- formed well despite tough market condi- tions, achieving a turnover similar to 2011. With the UK construction sector continuing to contract and create a chal- lenging operating environment, the company focused on increasing its pro- ductivity and efficiency through innova- tion, collaboration and knowledge shar- ing. It achieved its largest-ever order book for the 12 months ahead, with 74% of budget for 2013 secured by the end of 2012. Throughout the year VINCI enhanced its presence in key industry areas. A con- tract to build BNP Paribas Real Estate's new London headquarters helped it regain a commercial foothold in the capi- tal, and it continued its working relation- ships with London Underground, Cross- rail and Network Rail, and entered the final stages of the Sheffield Building Schools for the Future (BSF) programme, which is widely recognised as one of the most successful BSFs in the country. The group's position on the P21+ health framework, in joint venture with Sir Robert McAlpine, also continues to be successful, and good progress was made on several large projects for Tesco Stores and on the extension of the Nottingham Tram network. VINCI says it consolidated its position in the nuclear decommissioning and energy from waste sectors. With the majority of its projects under £5M, it now focuses more on strategic frameworks and higher-value project work. It is aware that there is greater competition for lower-value projects and pursues projects with an increased average value. "This shiŸ will enable us to strengthen our presence in key markets, increase our chances of success at tender stage, and improve our growth potential. Also, we know historically that higher value projects return a higher margin", says the group. In the North West and North East, the majority of VINCI Construction UK's work has historically been based in the public non-housing sector, particularly public health and education. With public sector spending in decline, it has aligned itself more closely with the private sector in these regions. The Midlands continued to see considerable growth in the industrial sector, and in the South it is targeting larger projects and being more selective with tender opportunities. "Concentrating more time and resources on fewer bids, we aim to increase the average value of the projects we undertake," says the group. Throughout the year, the majority of its business activity was focused in five VINCI Construction UK Astral House, Imperial Way, Watford, Herts. www.vinciconstruction.co.uk leaders 2104 15 The Numbers 10 11 12 %chaNge Sales £M 1015.76 1068.12 1056.77 -1.06 Gross profit £M 108.89 91.53 83 -9.32 Operating profit £M 32.27 10.94 4.52 -58.71 Pre-tax profit £M 33.39 17.29 4.94 -71.4 Staff 3,586 3,702 3,717 0.41 Net assets £M 39.68 51.03 54.31 6.43 The raTIOs 10 11 12 % chaNge Return on capital % 84.1 33.9 9.1 -73.14 Gross margin % 10.72 8.57 7.85 -8.35 Operating margin % 396.8 463.9 452.6 -2.44 Net margin % 3.3 1.6 0.5 -71.11 Sales/employee £K 93.3 128.4 152.8 19.03 sectors – Infrastructure, Education, Retail, Health and Commercial Building. The impact of the economic chal- lenges and the construction industry con- traction has been hardest felt in the building business, especially in the South where tough competition, supply chain insolvencies and long lead times have all conspired to reduce operating margins. VINCI has strategic partnerships in place to broaden rail activities to include mainline electrification and involvement in High Speed 2. In the energy market, through VINCI Environment UK, Taylor Woodrow submitted bids for turnkey energy-from-waste contracts in partner- ship with specialist PFI waste contractors. Activities in nuclear decommissioning continued at Sellafield and Bradwell, and in the renewable energy market Taylor Woodrow is the preferred contractor for the Avonmouth Biomass scheme. Taylor Woodrow is also reviewing options for future development of gravity-based structure (GBS) offshore wind technology. VINCI Construction UK's international activity is located in the Middle East, where it secured two contracts with the Saudi Arabian National Water Company in Jeddah in a joint venture with a local company, Al Muhaidib Contracting Com- pany. The contracts, which have a com- bined total value of £110M, are for the design and build of the Briman Strategic Water Reservoir and the Al Khumra Li—- ing Station. The Briman site will comprise eight circular above-ground, post-tensioned tanks which will be developed in collabo- ration with Freyssinet, its post-tension subcontractor. The tanks, each 120m in diameter and 18m deep, will be among the largest of their kind in the world with a combined total volume of 1.5Mm 3 . The UK construction market has been challenging

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