Ackermans & van Haaren: Results 2003

 

The Board of Directors of Ackermans & van Haaren NV is pleased to announce that the consolidated net profit (part of the group) for the year 2003 amounts to € 55.1 million, which confirms the expected recovery of the results compared to an exceptionally weak 2002 (€ 14.8 million).

 

 

Key figures Consolidated balance sheet AvH group	2003              (€ million)	2002            (€ million)
Net equity (part of the group)	600.0	563.0
Net cash position of AvH and subholdings	78.3	45.4
Figures per share	2003                   (€)	2002            (€)
Number of shares	33.496.904	33.496.904
Consolidated net profit per share	1.64	0.44
Gross dividend	0.54	0.51
Net dividend:     ordinary	0.4050	0.3825
VVPR	0.4590	0.4335

 

 

The sharp improvement of the results for 2003 compared to 2002 is due to

- the continually increasing contribution of financial services (+12,3% in 2003 compared to 2002) in uncertain market conditions

-  the recovery of the contribution by Sofinim, due to capital gains (Unisel, Coditel, Medisearch International) and the absence of major write-offs

-  a significant contribution  (€ 26.5 million) from GIB and Quick, both acquired end 2002.

This result was obtained despite the sizeable negative contribution by Solvus, both in terms of net current result and the exceptional amortization of goodwill.

 

The contribution by "AvH and subholdings" is slightly more negative in 2003 compared to 2002, notwithstanding a decrease in interest charges, due to lower capital gains on the portfolio in 2003 (Fortales capital reduction, capital gains on the sale of Pride and Van Lanschot shares) compared to 2002 (capital gains on sales of Gevaert and Unilever shares).

The contribution by "GIB" (consolidated in accordance with the 50% stake) consists, on the one hand, of € 6.6 million mainly from financial results and capital gains resulting from a further reduction of the GIB portfolio, and on the other hand of € 16.1 million resulting from write-backs of provisions (on a total amount of € 82.4 million).

 

The "other non-recurrent" results comprise a.o.

on the one hand:

- capital gains realised on the sale of insurance broker Ch. Lejeune Ltd. (€ 3.7 million) and Scaldis Invest shares;

- write-backs on amounts written-off on Sipef shares;

and on the other:

- provisions for possible future option obligations (€ 0.2 million) and

- provision for the earn-out obligations in the context of the agreement with the Delen family regarding Finaxis (€ 7.8 million).

 

In 2003 the results Finaxis are taken into account pro rata 60% in the consolidated AvH results.

 

As in previous years, a provision was book to neutralize the loss that AvH would incur in the event that the family Delen would exercise its option on 50%  of Promofi, the subholding which controls a 60% stake in Finaxis, for a global amount of € 54.3 million per 31.12.2003 (incl. take-over of  € 22.5 million debts).

 

The contribution to this provision in 2003 has had a negative impact on the profit-and-loss account of € 7.8 million.  The total provision,  built up in the past years, amounted to € 38 million by the end of 2003.

 

The exercise of the option by the family Delen at the beginning of 2004, will have no impact on the 2004 results, due to the write-back of this provision.

 

As announced early January 2004, AvH has reached an agreement with the minority shareholders of Finaxis and the family Delen, which will result in a direct participation of AvH in Finaxis of 75%, and which represents a net investment - spread over the years 2004-2006 -  of € 175 million.

 

AvH improved its treasury position in 2003 significantly partly due to a number of divestments.

The investment portfolio (including unrealized capital gains) of AvH amounts to € 108.5 million as of 31/12/2003 (against € 106.8 million on 31/12/2002).  External financial debt was reduced to  € 58.3 million (compared to € 142.4 million on 31/12/2002).

Including cash reserves, the net treasury position of AvH on 31/12/2003 amounted to € 78.3 million (compared to € 45.4 million on 31/12/2003).

 

 

DEME realised a lower (-15.8%) result in 2003 (€ 26.1 million) compared to 2002  (€ 31 million), mainly due to conditions in Singapore.

The ongoing closure of the sand concessions in Malaysia and Indonesia has disrupted the timing and return of the works in Singapore.

On the other hand, DEME experienced a higher level of activity in Europe, mainly in France, as well as in India and Australia.  Furthermore, DEME succeeded in penetrating further into new markets in Latin America and the Middle East.

Both DEC (environment) and DBM (building materials) successfully continued their international development.  Scaldis (wreck salvage) was a leading partner in the salvage of the sunken car-carrier "Tricolor".

At the start of 2004, a new trailing suction hopper dredger "Pallieter" (5.400m³) was launched.  DEME also placed an order for a large sea-going cutter (36,000 hp) expected to be delivered mid-2005.

DEME intends to use this cutter to respond to the rising demand for new port infrastructure and the growing levels of business in areas such as the Middle East.

DEME's order book at the start of 2004 totalled € 1,005 million, in line with the start of 2003 (€ 1,090 million), with a shift of the nature of the work towards the cutter segment.

As long as the uncertainty around Singapore remains, the important "large hoppers" segment will suffer from temporary overcapacity, with margins being under pressure as a result.

DEME will continue to position itself cautiously in these market conditions, while expanding and increasing the profitability of its diversification activities and continuing to monitor its operating costs.

 

ALGEMENE AANNEMINGEN VAN LAERE had a healthy order book despite a difficult construction market.  The results (€ 1.2 million in 2003 against € 8.8 million in 2002) were negatively impacted by restructuring costs at a subsidiary, and start-up losses in The Netherlands.

Furthermore, the result in 2002 was € 4.1 million exceptionally higher due to the change of accounting rules relating to project completion to a "percentage of completion" method.

For 2004, Van Laere expects a result in line with last year in a competitive market.

 

 

The results of SOLVUS were again very negative in 2003 as a result of pressure on turnover and margins in the Dutch market on the one hand, and operating losses at subsidiaries such as Schoevers, Bureau van Dijk Computer Services (BVDCS) as well as in Germany and Switzerland.  On the other hand, structural cost-cutting led to additional exceptional expenses and provisions (€ -14.4 million) and additional impairment of goodwill (€ - 35.9 million) was booked for BVDCS and Creyf's Switzerland.

This resulted in a decrease in turnover of 4.9% to € 1,447.3 million.  Gross profit margin decreased by 256 basis points from 25.6% in 2002 to 22.9% in 2003.  Nevertheless, market share was gained in France and Spain.

As a result, Solvus recorded a significant negative result of € -61.4 million, after the loss of € -40.2 million in 2002.

However, overhead costs were reduced with 8.8% compared to 2002, which is equivalent  to a reduction of 13.5% on an annualised basis.  Furthermore, stricter working capital management, particularly with regard to customer credit, led to a substantial reduction in net debt by € 72 million, down to € 192.5 million.

 

Moreover, Solvus started to refocus on a more limited number of operations with lasting profit capacity.  Schoevers Bedrijfsopleidingen was sold at the start of 2004.  With respect to BVDCS, negotiations are under way with a view to disinvest all or part of its business entities within the foreseeable future.

 

Solvus should regain a positive net result in 2004.  The restructuring measures decided in 2003 will pay off fully in 2004.  The strengthening of the management teams and the corporate culture are expected to invigorate the commercial effectiveness.  A sustained economic recovery can but accelerate the recovery of operational profitability.

 

 

BANK DELEN  recorded strong results with an increase of 16.8% to € 16.9 million in very unstable market conditions.  Partly due to the net growth in assets managed in the difficult stock market years 2001-2003 and the recovery of stock markets in the second half of 2003, the total assets entrusted to Bank Delen at the end of 2003 rose to  € 5,910 million  (compared to € 5,109 million on 31/12/2002).  This means that Bank Delen has even exceeded the total assets held at the end of the record stock market year of 2000.

Due to continued strict cost control, the cost/income ratio remained at a low 43%.  In light of the current stock market climate, there is reason to be optimistic for Bank Delen.  It is also generally expected that the EBA context could be a positive stimulus for the stock market and the financial sector.

 

BANK J. VAN BREDA & C° was able, despite a difficult market environment, to increase its net result by 10.6% to € 19.6 million. The clientele of entrepreneurs and professionals grew by 8.5% in 2003.  In 2003, one-third of the new clients again came from regions where the bank has only been operating since 2001. The volume of lending to the target group rose 5% to € 972 million.  The assets entrusted by clients rose sharply by 14% to € 2,673 million.  Insurance investments rose by 38%, and the volume in asset management by 15%.  Bank Delen currently manages € 820 million for customers of Bank J. Van Breda & C°, of which € 618 million in asset management and € 202 million via bevek/sicav funds managed by Bank Delen.  The leasing and car finance business were able to improve their results further, due to tight cost control.

Notwithstanding the substantial investments in the sales organisation and the network, cost/income was kept at a very competitive ratio of 54%.  The solvency ratio amounted to a very sound 13.2%.

Investments in the sales network will enable the bank to grow further, partly driven by a healthier economic climate and a stock market recovery.

 

LEASINVEST was more or less able to maintain its result at € 5.2 million. In addition to the recurrent contributions of LRE bevak/sicafi, Leasinvest was able to generate capital gains from the rotation of its portfolio, including the sale of the Wickes certificates.

Leasinvest manages directly and indirectly approximately € 500 million of real estate assets.  The LRE bevak/sicafi, in which Leasinvest holds 40.8%, now holds a portfolio of € 265.8 million, with an occupancy rate of 95.45% and a rental return of 7.74%.  For 2004, Leasinvest forecasts a considerable rise in net profits, due to the sale of a number of real estate assets.

 

 

The contribution of SOFINIM recovered spectacularly.

The contribution of Sofinim NV was positive again, thanks to write-backs of amounts written-off (including SES).

 

 

Within the portfolio, all consolidated companies recorded a positive result, except for Illochroma and Oleon.

A few comments on the consolidated companies:

-  ILLOCHROMA: the loss is largely attributable to a weak first semester, which could not be compensated despite a good summer, and the loss of large orders in Latin America.

-  OLEON had an eventful year, with a drastic reorganisation phase, including a redundancy plan, and renegotiation of credit facilities.  The company ended with a slightly negative operational result, and a significant negative net result due to the restructuring costs and provisions.

-  AXE Investments recorded an increase in its results due to a sale of real estate assets (Atlantic House in Antwerp) and the participation in Telindus.

-  HERTEL recorded a healthy increase in turnover and results, due to a differentiated range of services.

-  NMC recorded a substantial increase in its results, despite the difficult economic climate for its sector.

-  UBF turned in a stable result, and took its first steps on the Belgian market via the purchase of the Manhattan studio complex in Leuven.

-  CODITEL is no longer consolidated since 1/07/03, following the sale to Altice One.

-  AVIAPARTNER's results recovered slightly in a still very volatile and competitive market.

-  VUM (via Synvest) was able to reap the rewards of the Pegasus restructuring plan in 2003, with a strong improvement in results.  The VUM group booked a number of remarkable commercial successes.

-  SCF (E5-Mode) experienced a decrease in turnover and profits in the first halfyear, due to the impact of lower consumer confidence and the exceptionally hot summer.

 

The net capital gains in private equity were realized on the reorganization of the interest in Unisel/SCF (€ 10.9 million) and the sale of the participations in Coditel (€ 1.0 million) and Medisearch International (€ 3.9 million).

Write-offs in the portfolio remained limited to € 0.8 million. 

In total Sofinim has divested € 65.3 million. The investments related only to follow-up investments amounting to € 31.5 million (including Blomhof (Worldcom Belgium), Mercapital and SCF).

The EVCA valuation of Sofinim, after distribution of a dividend of € 6.6 million, amounted on 31/12/2003 to € 290.3 million compared to € 272 million at the end of 2002.

 

QUICK RESTAURANTS (AvH stake 28.9%) realised the first positive results of the turnaround in 2003.  "Like-for-like" sales rose 4.4%, as a result of which turnover rose to € 263.8 million and the net current result by 36% to € 23.6 million.  Total sales under the brand name (i.e. excluding franchises) amounted to € 696.9 million. Due to a successful refinancing operation, including the capital increase which was supported by the general public, the capital and reserves rose to € 154.6 million, reducing debt to € 36.7 million.  Quick will again pay out a dividend.

 

 

In the current economic circumstances the Board of Directors is moderately optimistic about the profit growth in 2004, certainly if Solvus fulfils its expectations.

The rearrangement of the shareholdersstructure of Finaxis, entitling AvH to consolidate 75%, will contribute to a greater stability of the group results in the future.

 

 

The Board of Directors shall propose to the general shareholders' meeting on 24 May 2004 a gross dividend of € 0.54 per share, i.e. an increase of 6% compared to the previous year (€ 0.51 gross). The proposed net dividend will then amount to € 0.41 per share or € 0.46 per share + VVPR strip.

 

If the general shareholders' meeting approves this proposal the dividend shall be payable from June 3rd 2004 on presentation of coupon nr. 5 at the counters of Bank Delen, Bank J. Van Breda & C°, Bank Degroof, Fortis Bank, KBC Bank, ING Bank Belgium, Dexia Bank and Petercam.

 

 

24 May 2004                                  general shareholders' meeting and quarterly update Q1 2004

3 June 2004                                   payment of dividend

9 September 2004                        results H1 2004

22 November 2004                        quarterly update Q3 2004

 

 

 

 

 

 

 

All press releases issued by AvH and its most important group companies as well as the 'Investor Presentation' can also be consulted on the renewed AvH website: www.avh.be and http://www.ackermansvanhaaren.com

 

Antwerp, March 17th  2004