GRONTMIJ: New appointments to address challenges

Grontmij announces that its Supervisory Board will nominate Mr. Frits Vervoort for appointment as member of the Executive Board and CFO.
Furthermore, Mr. Schnoebelen (ex CEO and major shareholder of Ginger) will become COO, and will focus on the reinforcement of the economic efficiency of the operations.
Grontmij also intends to appoint Mr. Van der Zouw (1954) to the Supervisory Board. Furthermore Mr. Tiemstra (1952) will be appointed as advisor to the Supervisory Board.

Our view:
Grontmij last week (Thursday 24 November) announced that the current CFO would leave the company, after close consultation. Mr. Vervoort should start his activities as CFO as per 1 December 2011, while the current CFO Mr. Mel Zuydam is set to leave the company at 31 December 2011.
Mr Vervoort (1962) has over thirty years of experience as financial expert. He worked at E&Y, Reed Elsevier, Vendex International and Vedior. In 2000 he became Finance Director of Vedior and in 2001 he started as CFO. He will be nominated for a period of four years.
Mr. Van der Zouw has a track record as CEO of Eriks Group and holds non-Executive roles at Van Wijnen Holding, Den Helder Airport, HGG and Newdell Company.
Mr. Tiemstra is a former CFO of Hollandsche Beton Group and Hagemeyer, and has 22 years in financial and general management experience at Unilever (23,96 EUR, 0,67%). He currently holds non-executive and advisory roles at the Autoriteit Financiële Markten (AFM), Amnesty International, Vereniging Effecten Uitgevende Ondernemingen (VEUO),Bruynzeel Holding, Dienst Uitvoering Onderwijs (DUO), MegaGroup and Reinier de Graaf Groep.

Conclusion:
Through these senior appointments, Grontmij has added extra senior experience to the Group, in order to address the challenging market environment. Through the appointment of Mr. Schnoebelen as COO, Grontmij intends to reinforce the economic efficiency of its operations.
Given the challenging economic environment, rights issue overhang (net debt / EBITDA > 3.0x, no covenants communicated) but cheap multiples, we feel a Hold rating is warranted for the time being.