Strategy Sharpened; Growth Goal Increased ARNHEM, The Netherlands,
March 3 /PRNewswire-FirstCall/ -- - Net income from operations rose
25%; proposed dividend EUR 1.23 per share (+23%) - Gross revenue
22% higher at EUR 1.5 billion, organic growth 16% - Margin
surpasses 10% goal and ends at 10.5% - Strong growth and margin
improvement in all business lines - Within the sharpened strategy
the growth goal was raised to 15% per year - Outlook for 2008 is
positive ARCADIS (EURONEXT: ARCAD)(NASDAQ:ARCAF), the international
consultancy, design, engineering and management services company
again achieved excellent results in 2007. Net income from
operations (before amortization and non-operational items) was 25%
higher at EUR 62.3 million. Per share, this is EUR 3.06 against EUR
2.47 in 2006. Gross revenue rose 22% to EUR 1.5 billion, driven in
part by a record organic growth of 16%. The margin improved further
to 10.5% (2006: 9.4%), and for the first time surpassed the 10%
goal. Performance was strong across the board. In all three
business lines organic growth was (well) above our targets while
margins improved. Geographically, all regions contributed to the
improved profits, particularly the Netherlands, Brazil and the
United States. ARCADIS proposes to increase the dividend of EUR
1.23 per share (2006: EUR 1.00) to be distributed in cash. This is
40% of net income from operations. In 2007 we acquired 8 companies,
in total adding 1460 people and EUR 192 million in new revenues.
The main acquisition was that of U.S.-based RTKL, a global player
in architectural design and planning with 1050 people. In the
Netherlands, the acquisition of Alkyon serves to strengthen our
position in the strong international growth market for water
management. Smaller takeovers in the Netherlands, Germany, Belgium
and Chile added specialties while in the U.K. the activities in the
environmental market and in project management were expanded. CEO
Harrie Noy about the results: "The excellent performance is a
result of strong growth, further margin improvement and a fine
contribution from acquisitions. The especially high organic growth
underlines the success with which our people were able to
capitalize on the favorable current market conditions. The strong
focus on clients and on internal cooperation to maximize
utilization of knowledge enabled us to increase market share,
particularly in environmental markets. The fourth consecutive year
of margin improvement is a good indication that our strategic
accent on activities with higher added value is reaping results."
Key figures Amounts in EUR 1 million, unless otherwise stated
Fourth Quarter Full year 2007 2006 2007 m 2006 Gross revenue 422
342 24% 1,510 1,233 22% Ebita 32.7 23.9 37% 107.2 78.8 36% Ebita
recurring 31.4 23.9 32% 105.9 78.8 34% Net income 17.8 14.6 22%
54.9 44.9 22% Net income per share (in EUR) 1) 0.88 0.72 22% 2.70
2.22 22% Net income from operations 2) 19.2 16.5 16% 62.3 50.0 25%
Ditto, per share (in EUR) 1,2) 0.94 0.81 16% 3.06 2.47 24% 1) In
2007 based on 20.3 million shares outstanding (in 2006: 20.2
million) 2) Excluding amortization and non-operational items Fourth
Quarter Gross revenue increased 24%. The contribution from
acquisitions was 13%; the currency effect 4% negative. Organic
growth was high at 15% and remained at a good level in almost all
countries. In Brazil, a turn key energy project with a significant
amount of subcontracting caused a strong revenue increase. In the
United States, organic growth came out to 9%. Here, the strong
decline in land development continued, while several large
environmental projects that included considerable subcontracting
were completed. Net revenue - the part of revenues produced by our
own staff - increased by 21%, of which 16% was a result of
acquisitions. The currency effect was 4% negative. The 9% organic
growth was lower than gross revenues due to an increase in the
level of subcontracting, particularly in infrastructure. In the
fourth quarter, two acquisitions were completed: environmental
consultancy Vectra (gross revenue EUR 14.5 million, 110 employees)
in the U.K. specialized in providing health & safety and
risk-management services and Idesol (gross revenue EUR 4 million,
70 employees) in Chile, to strengthen our position in the fast
growing mining sector. EBITA was impacted by two non-operational
issues: the sale of real estate in France (book gain EUR 1.4
million) and the introduction of a share participation plan for
employees in the U.K. (charge EUR 0.1 million). Excluding these two
items recurring EBITA grew by 32%. Of this amount 26% came from
acquisitions; the currency effect was 4% negative. The organic
growth of 9% mainly came from the Netherlands and other European
countries. As a result of procedural delays, the contribution from
carbon credits from the biogas installations in Brazil was zero in
the quarter, while this amounted to EUR 0.6 million in the fourth
quarter of 2006. Corrected for this item, EBITA organically rose
12%. This was somewhat lower than earlier quarters due to the
impact of land development in the U.S. Net income from operations
was 16% higher. This is lower than the increase in recurring EBITA,
particularly because the 2006 fourth quarter saw non-recurring tax
advantages. Full year Gross revenue increased 22%. The contribution
from acquisitions was 10%; the currency effect 4% negative. At 16%,
organic growth was well above our goal of 5%. Almost all countries
showed double-digit organic growth, with the largest contributions
coming from the Netherlands, the United States and Brazil. In
Poland, project delays appear to be over which led to strong
activity growth. Net revenue grew by 20% to above one billion
euros. The contribution from acquisitions was 12%; the currency
effect 3% negative. Organic growth amounted to 11% and was lower
than gross revenue growth as a result of considerable amounts of
third party work in energy projects in Brazil and several large
environmental projects in the United States. Excluding the above
mentioned two non-operational items, recurring EBITA increased 34%
to EUR 105.9 million. Acquisitions contributed 20%; the currency
effect was negative 4%. The organic increase of 18% was the result
of profit increases in the Netherlands, Brazil and the United
States, while Poland, Germany and Chile also saw better returns.
The contribution from carbon credits was EUR 2.6 million (2006: EUR
0.6 million). The margin (recurring EBITA as % of net revenue)
improved to 10.5% (2006: 9.4%) as a result of portfolio changes and
productivity improvements in existing operations. The strongest
increase occurred in buildings: to 9.9% (2006: 7.3%). In the other
segments margins also improved, in infrastructure to 8.8% (2006:
8.4%) and in environment to 13.5% (2006: 12.0%). Financing charges
primarily increased as a result of investments in acquisitions.
Excluding derivatives to hedge interest and currency risks,
financing charges increased to EUR 8.1 million (2006: EUR 4.6
million). In addition, the 2006 figure was positively impacted by a
one-off interest gain of EUR 0.5 million. The tax rate rose to
32.8%, (2006: 30.2%) as a result of the abovementioned
non-recurring tax benefits in 2006, geographical changes in taxable
income and because option costs in the Netherlands are no longer
tax deductible. The loss in associated companies of EUR 0.8 million
(2006: EUR 0.5 million) resulted from Brazilian energy projects
that experienced start-up problems and contract delays. Minority
interest increased to EUR 2.6 million (2006: EUR 1.5 million),
mainly the result of positive developments in Brazil, where ARCADIS
owns 50.01% of the shares. Cash flow, investments and balance sheet
Cash flow from operational activities was at the healthy level of
EUR 79 million (2006: EUR 86 million). The slight decline compared
to 2006 mainly resulted from changes in tax payments and a limited
increase in working capital. Investments in acquisitions amounted
to EUR 102 million of which EUR 17 million was for after payments.
Goodwill acquired amounted to EUR 85 million and identifiable
intangible assets amounted to EUR 15 million. The balance sheet
total rose to EUR 922 million (2006: EUR 736 million). Despite the
strong organic growth, working capital declined as a percentage of
gross revenue. Predominantly due to investments in acquisitions,
net debt increased to EUR 134 million (2006: EUR 45 million). The
balance sheet ratios remained strong. The net debt to EBITDA ratio
was 1.0 (2006: 0.4); and the interest coverage ratio was 14 (2006:
17). Developments per service area The figures stated below relate
to gross revenue developments and discuss the comparison between
the full years 2007 and 2006, unless otherwise note. -
Infrastructure Gross revenue rose 11% with a currency impact of
minus 2% and an acquisition effect of on balance minus 1% as a
result of the divestment of Euroconsult. Organic growth was 13%.
Principally in the Netherlands solid growth occurred due to
investments in (rail) infrastructure and a favorable municipal
market. In Belgium, France and Poland, revenues also increased, as
they did in Brazil and Chile where investments in mining and energy
projects drove growth. In the U.S., water and transportation drove
growth, which was somewhat offset by a strong decline in land
development due to the poor housing market. - Environment Gross
revenue increased 16%. The contribution from acquisitions was 2%;
the currency effect negative 8%. The very strong organic growth of
22% mainly came from the United States where the introduction of a
client focused business model resulted in a larger market share,
particularly with industrial clients. Although no new GRiP(R)
contracts were won, backlog in the United States increased by 16%
measured in net revenue terms. In Brazil, activities saw strong
growth, particularly for multinationals, while also in most
European countries and Chile a healthy growth level was achieved. -
Buildings Gross revenue grew 71% of which 60% was a result of
acquisitions. This was primarily driven by RTKL (acquired early
July) but also included PinnacleOne in the United States and a
number of smaller acquisitions in European countries. There was no
currency effect. The organic growth of 11% was driven by the
expansion in management and consulting services in the Netherlands,
Belgium, Germany and the U.K. ARCADIS Worldwide Project Consulting,
aimed at services for international property investors, took off
strongly. Demand for 'green buildings' is increasing strongly,
offering opportunities for the combination of real estate and
environmental expertise. Strategy sharpened with higher growth goal
The ARCADIS strategy in recent years has been successful. In the
2003 - 2007 time frame, average annual revenue growth was more than
15%, while margins improved from 6% to 10.5%. Acquisitions and
divestments served to adjust the portfolio and change the profile
of the Company. Because the strategy is reviewed every 2 to 3
years, this was again done in 2007. This resulted in a revised
strategy entitled: 'Building global leadership'. The revised
strategy builds on our achievements with the sharper ambition to
reach leading positions in each of the three market segments in
which ARCADIS is active. In infrastructure we want a leading
position in rail, water and large transportation corridors. In
environment, the goal is a leading market position in environmental
services for private companies, while in buildings it is our
ambition to create a differentiating position through
internationally providing high level design, management and
consultancy services. Client focus through systematic account
management, globally seamless service delivery and operating as one
company from strong local positions, remain core elements of the
strategy. Because of the changing activity mix and the long term
market outlook, the growth goal has been raised to15%, with at
least half coming from organic growth. The target for the growth of
earnings per share was raised to 15% (based on net income from
operations and the current financing structure). Both of these
goals are excluding currency effects. Because the size of
acquisitions can vary considerably, these targets are set as
average over a period of a number of years. The margin target was
maintained at minimally 10%. The growth goals per business line are
as follows: Organic growth Margin target goal Infrastructure 6% 8%
- 9% Environment 12% 12% - 13% Buildings 8% 10% - 11% Total >
7.5% > 10% In case of structural portfolio changes, for example
acquisitions, the goals will be re-evaluated. The policy remains
aimed at productivity improvement and activities with higher added
value and growth potential. Achieving the above mentioned targets
will also depend on market conditions. Outlook In all countries
where ARCADIS is active, expansion and improvement of
infrastructure is an important priority. In Europe, the solid
economic conditions positively impact the investments in
infrastructure, while PPP initiatives are used to solve bottlenecks
quicker with private sector money. In the United States, the
transportation market is expected to be stable, while the framework
contract that was won in New Orleans last year, is a good basis for
further growth in the water market. Meanwhile, less than 1% of
total revenues comes from the American market for land development,
rendering its impact limited. Raw material demand drives continued
favorable market conditions in Brazil and Chile. The considerable
attention for sustainability and climate change is positive for the
environmental market. Many multinational companies want
international service providers, as a result of which our market
share in the environmental market can increase further. It is
expected that new opportunities will arise in 2008 for GRiP(R),
both with the U.S. Department of Defense, and with the
redevelopment of private sector polluted sites. The acquisition of
LFR ($ 127 million gross revenue, 480 employees) completed at the
end of January 2008, has strengthened our geographic position in
the western United States and adds air quality, industrial hygiene,
geotechnical and guaranteed remediation services and will allow us
to create synergy benefits similar to BBL. In the buildings market,
our position has been considerably strengthened in recent years
with services high in the value chain. RTKL has a backlog that is
40% higher than a year ago, and concentrates on opportunities in
hospitals, government buildings and the international market. For
project management and consultancy services the backlog is good.
Activities in the Middle East will be expanded. With the recently
won 5-year facility management contract for Philips, we can further
expand these services. CEO Harrie Noy concludes: "The outlook for
ARCADIS is positive. The markets in which we operate offer
significant prospects. Our strong home market positions, client
focused approach and internal synergy, provide a fine basis for
growth and enlargement of our market share. In addition,
acquisitions remain high on our priority list. Barring unforeseen
circumstances, we expect further growth of revenue and income for
2008." ARCADIS is an international company providing project
management, design, consultancy and engineering services to enhance
mobility, sustainability and quality of life. Infrastructure -
Environment - Buildings. ARCADIS develops, designs, implements,
maintains and operates projects. For companies and governments.
With more than 13,000 employees and over EUR1.5 billion in gross
revenue. A multinational presence with an extensive international
network and knowledge and experience that is internationally
renowned. Focused on creating value for clients. Responsible and
committed, thinking and acting. Results count. AS OF MARCH 4, 2008,
THE ARCADIS SHARE IS INCLUDED IN THE MIDKAP INDEX OF EURONEXT
AMSTERDAM. Except for historical information contained herein, the
statements in this release are forward-looking statements that are
made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements involve known and unknown risks and uncertainties that
may cause the company's actual results in future periods to differ
materially from forecasted results. Those risks include, among
others, risks associated with possible changes in environmental
legislation and risks with regard to the Company's ability to
acquire and execute projects. These and other risks are described
in ARCADIS' filings with the Securities and Exchange Commission
over the last 12 months, copies of which will be available from the
SEC or may be obtained upon request from the Company. This press
release has been drafted in the period between preparation and
approval of the annual accounts of ARCADIS NV. The figures in this
press release for the full year 2007 have been derived from the
annual accounts of ARCADIS NV which were not yet public at the
moment this press release is issued. These annual results were
audited and the auditor has issued an unqualified report. The
annual accounts have not yet been adopted by the General Meeting of
Shareholders. The figures related to the fourth quarter 2007 in
this press release are unaudited. - tables follow - ARCADIS NV
CONDENSED CONSOLIDATED STATEMENT OF INCOME Amounts in EUR millions,
unless otherwise stated Fourth quarter Full year 2007 2006 2007
2006 Gross revenue 422.3 341.5 1,510.2 1,233.0 Materials, services
of third parties and subcontractors (151.3) (117.6) (505.7) (395.6)
Net revenue 271.0 223.9 1,004.5 837.4 Operational cost (233.4)
(195.2) (878.5) (740.9) Depreciation (6.5) (4.8) (20.4) (17.7)
Other income 1.6 1.6 EBITA 32.7 23.9 107.2 78.8 Amortization
identifiable intangible assets (4.1) (3.2) (12.2) (8.3) Operating
income 28.6 20.7 95.0 70.5 Financing items (2.3) (1.5) (8.6) (3.5)
Income from associates (0.2) (0.1) (0.8) (0.5) Income before taxes
26.1 19.1 85.6 66.5 Income taxes (8.5) (4.4) (28.1) (20.1) Profit
for the period 17.6 14.7 57.5 46.4 Attributable to: Net income
(Equity holders of the Company) 17.8 14.6 54.9 44.9 Minority
interest (0.2) 0.1 2.6 1.5 Net income 17.8 14.6 54.9 44.9
Amortization identifiable intangible assets after taxes 2.7 2.1 7.9
5.9 Book gain sale real estate, net of taxes (1.0) (1.0) Option
costs UK share save scheme 0.1 0.1 Net effects of financial
instruments (0.4) (0.2) 0.4 (0.8) Net income from operations 19.2
16.5 62.3 50.0 Net income per share 0.88 0.72 2.70 2.22 Net income
from operations per share 0.94 0.81 3.06 2.47 Weighted average
number of shares (in thousands) 20,244 20,209 20,330 20,234 ARCADIS
NV CONDENSED CONSOLIDATED BALANCE SHEET Amounts in EUR millions
December 31, 2007 December 31, 2006 ASSETS Non-current assets 332.9
234.7 Current assets 588.8 501.8 TOTAL 921.7 736.5 EQUITY AND
LIABILITIES Shareholders' equity 187.7 188.9 Minority interest 11.5
11.8 Total equity 199.2 200.7 Non-current liabilities 229.7 165.5
Current liabilities 492.8 370.3 TOTAL 921.7 736.5 CONDENSED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Amounts in EUR millions
Share Additional Reserve Retained Shareholders'Minority Total
capital paid-in exchange earnings equity interest equity capital
rate differences Balance at 1-1-2006 1.0 44.2 6.4 124.6 176.2 11.9
188.1 Exchange rate differences (14.0) (14.0) - (14.0) Taxes
related to share-based payments 6.4 6.4 6.4 Income directly
recognized in equity (14.0) 6.4 (7.6) (7.6) Profit for the period
44.9 44.9 1.5 46.4 Total income / (expenses) for the period (14.0)
51.3 37.3 1.5 38.8 Share-based compensation 1.8 1.8 1.8 Dividends
to shareholders (13.4) (13.4) (0.3) (13.7) Own shares purchased for
granted options (17.6) (17.6) (17.6) Options exercised 4.6 4.6 4.6
Other changes (0.4) (0.4) Expansion ownership (0.9) (0.9) Balance
at 12-31-2006 1.0 44.2 (7.6) 151.3 188.9 11.8 200.7 Balance at
1-1-2007 1.0 44.2 (7.6) 151.3 188.9 11.8 200.7 Exchange rate
differences (22.2) (22.2) 0.7 (21.5) Taxes related to share-based
compensation (0.1) (0.1) (0.1) Income directly recognized in equity
(22.2) (0.1) (22.3) 0.7 (21.6) Profit for the period 54.9 54.9 2.6
57.5 Total income / (expenses) for the period (22.2) 54.8 32.6 3.3
35.9 Share-based compensation 4.2 4.2 4.2 Dividends to shareholders
(20.4) (20.4) (2.0) (22.4) Own shares purchased for granted options
(19.8) (19.8) (19.8) Options exercised 2.2 2.2 2.2 Expansion
ownership (1.6) (1.6) Balance at 12-31-2007 1.0 44.2 (29.8) 172.3
187.7 11.5 199.2 ARCADIS NV CONDENSED CONSOLIDATED CASH FLOW
STATEMENT Amounts in EUR millions Full year Full year 2007 2006 Net
income 54.9 44.9 Depreciation and amortization 32.6 26.0 Gross cash
flow 87.5 70.9 Net working capital (0.8) 11.2 Other changes (7.8)
4.3 Net cash provided/(used) by operating activities 78.9 86.4
Investments/divestments (net) in: (In)tangible fixed assets (19.1)
(18.4) Acquisitions/divestments (87.7) (46.1) Financial assets
(8.7) (4.4) Net cash used in investing activities (115.5) (68.9)
Net cash provided by financing activities 32.0 12.7 Exchange rate
differences (4.3) (2.6) Change in cash and equivalents (8.9) 27.6
Cash and cash equivalents at January 1 101.5 73.9 Cash and cash
equivalents at December 31 92.6 101.5 ATTACHMENT TO PRESS RELEASE
ANNUAL RESULTS 2007 OF ARCADIS NV Geographical information in euro
millions or % Gross revenue 2007 2006 Netherlands 374 323 Other
European 342 278 countries United States 656 518 Rest of world 138
114 Total 1,510 1,233 Geographic mix (gross revenue) 2007 2006
Netherlands 25% 26% Other European 23% 23% countries United States
43% 42% Rest of world 9% 9% Total 100% 100% EBITA, recurring 2007
2006 Netherlands 26.2 17.4 Other European 22.6 18.8 countries
United States 44.6 34.8 Rest of world 12.5 7.8 Total 105.9 78.8
Margin, recurring 2007 2006 Netherlands 10.3% 7.8% Other European
8.2% 8.3% countries United States 10.9% 10.5% Rest of world 19.6%
14.0% Total 10.5% 9.4% Information about business lines Gross
revenue 2007 2006 Infrastructure 622 562 Environment 537 465
Buildings 351 206 Total 1,510 1,233 Activity mix (gross revenue)
2007 2006 Infrastructure 41% 45% Environment 36% 38% Buildings 23%
17% Total 100% 100% Margin, recurring 2007 2006 Infrastructure 8.8%
8.4% Environment 13.5% 12.0% Buildings 9.9% 7.3% Total 10.5% 9.4%
Visit us on the internet: http://www.arcadis-global.com/
DATASOURCE: ARCADIS NV CONTACT: For more information contact: Joost
Slooten of ARCADIS at +31-26-3778604 or e-mail at .
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