Annual Results 2004 AvH-group

| Source: Ackermans & van Haaren Ackermans & van Haaren

* AvH realises record profits for 2004
- due in part to significant exceptional results
- Solvus shows a profit
- Bank Delen/Bank J. van Breda & C° : increased participation to 75% early
2004
* Increase (+20.4%) of dividend to € 0.65 per share

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 2004 amounts to € 134.2 million, which represents an increase of 144% compared to the moderate year of 2003 (€ 55.1 million).
 

 

 
 
 

 
General comments on the figures
 
The record profits for 2004 are due on the one hand to improved operation of the group companies (see below) and on the other hand to significant exceptional results.
 
During the course of 2004, the group has made major investments in the further expansion of its strategic participations.
Thus, at the beginning of 2004, the reorganisation of the shareholder structure of Finaxis was completed, bringing the participation of AvH to 75%. This represented a total net investment of € 175 million, of which € 60 million (net) had already been paid in 2004. The balance is payable at the beginning of 2005 and 2006. Already in 2004, this transaction resulted in a significantly higher contribution in profits made by Bank Delen and Bank J. Van Breda & C°, but also in higher goodwill amortisation.
In the first quarter, the strategic participation in DEME was also increased from 48.5% to 50%.
Finally, the group was also able to increase its participation in Brinvest from 62.55% to 94.59%.
 
The improvement in the profits of 'AvH and subholdings' is primarily due to a capital gain in the amount of € 9 million realised on the sale of part of the Almanij shares. In 2003, capital gains were realised in the portfolio (€ 4.9 million) on the sale of Fortales, Pride and Van Lanschot. The loss by AdArma amounted to € 2.1 million over 2004. This participation has been divested in the meantime. In this context, a provision of € 1 million was set up as a one-off charge.
 
The contribution by GIB (AvH share 50%) consists on the one hand of € 7.7 million, primarily from capital gains resulting from the further reduction of the portfolio (among others Gecotec and Disport), and on the other hand of the write-back of provisions in the amount of € 37.4 million. The balance of provisions of GIB at AvH amounts to € 28.8 million.
 
Goodwill amortisations (€ -13.9 million vs -2.9 million in 2003) have increased considerably as a result of the above-mentioned Finaxis transaction (+ € 10.8 million). We remind here that as from 2005, in accordance with the IFRS valuation rules, goodwill may no longer be amortised, but rather an impairment test will be performed annually possibly resulting in exceptional amortisations.
 
Other non-recurrent profits (€ 40.4 million vs € 3.3 million in 2003) include, in addition to several smaller capital gains and losses, primarily the capital gain (€ 41.5 million) realised on the sale of the BIAC participation (4.67%).
 
In 2004, AvH has further improved its treasury position, notwithstanding significant investments (€ 107.9 million: restructuring of Finaxis, increase in Brinvest and DEME participation, capital increase Sipef). This was also made possible by divestments (shares in BIAC, Almanij).
The AvH investment portfolio (including unrealised capital gains) as of 31.12.2004 amounts to € 160 million vs € 108.5 million as of 31.12.2003.
External financial debt as of 31.12.2004 amounts to € 103 million.
Including liquidities, the net treasury position of AvH as of 31.12.2004 thus increased to €119.3 million (compared with € 78.3 million in 2003).
 
 
Comments relating to the most important group companies
 
DREDGING, ENVIRONMENTAL AND CONSTRUCTION SERVICES
DEME realised a respectable profit of € 30.3 million in 2004 (2003: € 26.1 million) with sales of € 650.2 million (2003: € 720.2 million). This result is due among other things to exceptional results.
The (temporary) slow-down in the activity in Singapore was offset by new projects in Russia, Italy, Morocco, India, and, for the first time, China.
Important new projects were secured especially in the Middle East for example via the joint venture company Qatar Dredging Cy (DEME 44.1%) the contract for the construction of a platform for the new airport at Doha (Qatar) worth € 337 million.
Especially the order book for the large cutter dredgers grew considerably. DEME expects the delivery of a new large seagoing cutter (38,000 horsepower) 'd'Artagnan' by October 2005.
The order book for DEME at the end of 2004 amounted to € 1,001 million compared with € 1,005 million at the end of 2003. Based on good occupation rate for both the hoppers and the cutters, and the further evolution in sales, DEME expects to realise a considerably higher operational profit in 2005 than in 2004.
Furthermore, it is generally expected that during the course of 2005 Malaysia and Indonesia will reopen their borders to sand extraction, to the benefit of the land reclamation work in Singapore. However, at the moment it is not certain how and when this work will be resumed.
 
ALGEMENE AANNEMINGEN VAN LAERE had a respectable 2004 in the Belgian market, and was able to supplement its order book adequately in a very competitive market. The consolidated loss (€ -1.5 million) is primarily due to the reduction of loss-making activities in the Netherlands.
 
HUMAN RESOURCES SERVICES
SOLVUS was able to realise a positive net profit for 2004 (€ 0.8 million). Total operating income increased to € 1.45 billion, which implies organic growth of 4.2%. The increasing growth in sales in the 3rd quarter and primarily in the 4th quarter is a positive sign for 2005. Solvus was also able to realise growth in the 4th quarter in the important Dutch market, after a difficult beginning to the year.
Gross margin was under pressure the entire year, and organically decreased by 130 base points to 20.5%. Due in part to sustained cost-saving efforts, the operating result amounts to 2.3% (€ 33 million) of sales. General costs for 2004 amount to 18.3% (2H04: 17.6%) of sales. In addition, the target of a further debt reduction was realised with a decrease from € 192.6 million to € 164.3 million.
Solvus announced its intention to organise a squeeze out on the remaining BvDCS shares.
For 2005, Solvus forecasts higher sales and profit than in 2004. Continued economic recovery and increasing demand from the SME segment could provide extra support for the projected growth.
 
 
FINANCIAL SERVICES
BANK DELEN again succeeded to increase net profit to € 17.4 million (2003: € 16.9 million) amid changing international market conditions. Total assets entrusted to Bank Delen as of 31.12.2004 amounted to € 6,753 million compared with € 5,910 million as of 31.12.2003.
The EBA regime has certainly contributed to this result. This regularisation possibility was in line with the banks strategy for many years' focused on  tax compliant  and usable assets. 
 
Thanks to the  thorough specialisation of its advisers and their experience  regarding estate planning, the bank has delivered a much better performance in the EBA/DLU context than its marketshare.
 
Notwithstanding further investment in its commercial organisation, the cost/income ratio of 38.5% remains at an extremely competitive level. With net assets at € 103.1 million, return on equity of 17.4% remains very good.
In its 2004 survey, Euromoney designated Bank Delen the '3rd private bank' in Belgium, and even 2nd best in the area of 'Privacy & Security' and 'Relationship Management'.
Bank Delen expects to be able to realise further growth of assets under management in 2005.
 
BANK J. VAN BREDA & C° had an exceptionally good year in 2004 and its profit increased to € 24.0 million (2003: € 19.6 million). The bank realised a net growth in profit for the 9th successive year. Fee revenue increased by 10% due in part to strong growth in insurance investments (+32%) and asset management (+32%). Notwithstanding the fact that operational costs increased due to substantial investments in additional commercial personnel and the renovation of bank branches, the cost-income ratio remains at a competitive 55%. Write-offs on loans remain at a low level.
The number of target group relations of entrepreneurs and liberal professions increased by 6.5%. Loan volume to target group clients increased by 20% to almost € 1.2 billion. In 2004, assets entrusted by clients witnessed record growth of 17% to € 3,118 million. Today Bank Delen manages € 815 million for clients of Bank J. Van Breda & C°. With net assets of € 141.8 million, return on equity is now 17.4%. Thanks to strict cost control and continuous risk management, both Leasing J. Van Breda & C° and Van Breda Car Finance continue to realise strong profit levels.
Further development of the existing target group clients and steady additional growth in the number of new clients should allow the growth in profits for Bank J. Van Breda & C° to continue in the medium term.
 
LEASINVEST realised a profit of € 1.8 million (2003: € 5.3 million). In addition, via a partial split, the Montoyer 63 building has been contributed in the BEVAK/SICAFI Leasinvest Real Estate. This resulted in a capital gain of € 12.2 million.
The property development and real estate promotion activity made only a limited contribution to the results, but the required building permits are expected in 2005 so that the realisation of these projects can be started at the end of 2005/beginning of 2006.
The BEVAK/SICAFI Leasinvest Real Estate acquired two buildings (Montoyer 63 and Sq de Meeus 5/6), which increased the portfolio value to € 295 million. Occupancy (92.4%) and rental return (7.36%) ended slightly lower as of 31.12.2004. However, perspectives for filling the (expected) unoccupied offices are positive.
 
 
PRIVATE EQUITY
The contribution of SOFINIM decreased because as no capital gains were realised on the participations in 2004. Moreover, for reasons of prudence, certain receivables or participations within the Sofinim portfolio were written of for € 8.7 million.
Most participations realised higher profits in 2004 vs 2003 :
 
-   ILLOCHROMA: was able to limit its loss due to good operations in Germany, but a structural cost problem remains in Belgium
-   AVIAPARTNER: was able to take advantage of a better economic climate and commercial success to realise strong growth in sales and net profit
-   OLEON: witnessed a strong profit recovery, due in part to a new, more focused organisation into business units
-   NMC: witnessed a considerable increase in profits, despite a strong increase in raw material prices and start-up expenses for several new projects
-   EGEMIN has,  just like the ICT- automation sector, not been able to take advantage of the recovery of the Belgian economy in 2004
-   ALURAL: realised its best result in years, and has taken further steps with respect to expansion abroad
-   HERTEL: realised a further growth in sales. Profit even increased substantially, despite a difficult market
-   ARCOMET: due to higher sales and the effects of the restructuring that took place during previous years, losses were further reduced
-   UBF: in the summer of 2004, United Broadcast Facilities (UBF), acquired Cinevideogroep (NL), NOB Decor (NL), Videohouse (B), NOB Germany (D) and NOB Hungary (H), thus further developing into an important European television facility group
- CORN VAN LOOCKE: realised excellent results for 2004
- SCF: in a difficult market, the focus was placed entirely on retail activities. A new CEO was recently appointed
- VUM (via Synvest): realised a further increase in sales and profit, and launched several new commercial initiatives
- ATENOR was in 2004 once again successful  in the real estate promotion  business (North Galaxy-building, Laurentide)
 
The investment activity of Sofinim remained limited in 2004. These investments concerned exclusively follow-up investments in the amount of € 5 million. Divestments remained limited and  amounted to € 8.7 million.
 
The EVCA valuation of the Sofinim portfolio as of 31.12.2004 amounted to € 298.9 million before a dividend of € 7 million (30.06.2004: € 291.2 million: 31.12.2003: € 290.3 million).
 
QUICK RESTAURANTS (AvH share 28.9%) realised a growth in sales to € 722 million, which represents like-for-like growth of 5.3%.
The streamlining of the network and the updated positioning based on 'taste' has strengthened the position of Quick considerably.
Net profit increased from € 12.9 million to € 30.2 million.
In 2005, Quick will continue to renovate its restaurants and will again realise several well-considered openings.
 
Prospects 2005
In the current economic circumstances, the Board of Directors of Ackermans & van Haaren is moderately optimistic about profit growth for 2005 (before exceptional results).
 
Transition to IFRS
AvH, as all listed companies, is required to prepare consolidated annual accounts under International Financial Reporting Standards ("IFRS") as of 2005 onward and will provide comparative information for 2004. These standards differ significantly from Belgian generally accepted accounting principles ("GAAP"). The group has prepared the required amendments to accounting policies along with changes required to reporting systems to enable timely compliance with IFRS.
 
Under IFRS, equity (group share) at 31 December 2004 amounts to € 801.9 million (€ 730.9 million - before profit distribution - under Belgian Gaap) while net result (group share) for the period ending 31 December 2004 amounts to € 135.5 million (€ 134.2 million under Belgian GAAP). As required for companies belonging to the Euronext NextPrime segment, AvH has prepared an explanatory note on the impact of the adoption of IFRS which is available on its website www.avh.be.
This note is also attached to the press release available on the website (see also appendix 2).
 
 
Dividend 2004
The Board of Directors shall propose to the general shareholders' meeting on 23 May 2005 a gross dividend of € 0.65 per share, i.e. an increase of 20.4% compared to the previous year (€ 0.54 gross). The proposed net dividend will then amount to € 0.4875 per share or € 0.5525 per share + VVPR strip.
 
If the general shareholders' meeting approves this proposal the dividend shall be payable as from June 1st 2005 on presentation of coupon nr. 6 at the counters of Bank Delen, Bank J. Van Breda & C°, Bank Degroof, Fortis Bank, ING Bank Belgium, KBC Bank, Dexia Bank and Petercam.
 
Calendar 2005
9 May 2005                        annual report 2004 available
23 May 2005                       general shareholders' meeting and quarterly update Q1 2005
1 June 2005                        payment of dividend
9 September 2005               results H1 2005
28 November 2005              quarterly update Q3 2005
 
Declaration by the Auditor
The auditor has confirmed that his audit, which has been carried out thoroughly, has not revealed any significant adjustments which should be included in the accounting information published in the press release.
Antwerpen, March 8th 2005
 
Ernst & Young Bedrijfsrevisoren BCV
represented by
Boudewijn Van Ussel           Patrick Rottiers
partner                             partner
 
Ackermans & van Haaren is a diversified group active in 4 key sectors: dredging and environmental services (DEME, one of the largest dredging companies in the world), human resources services (Solvus Resource Group, number 5 in the European temporary labor market), financial services (Bank Delen, one of the largest independent private asset managers in Belgium - Bank J. Van Breda & C°, niche bank for entrepreneurs and liberal professions) and private equity (Sofinim, one of the largest private equity providers in Belgium with an EVCA-valuation of € 298.9 million). The group concentrates on a limited number of strategic participations with a potential for growth. Market capitalisation of AvH is approximately € 1 billion.
AvH is included in the BEL Mid index and is a member of Euronext Next Prime.
 
All press releases issued by AvH and its most important group companies as well as the 'Investor Presentation' can also be consulted on the AvH website: www.avh.be.
 
Antwerpen, March 11th  2005
 
For further information please contact
Luc Bertrand                                                  Jan Suykens
CEO - Chairman of the Executive Committee        CFO - Member of the Executive Committee
tel: +32.3.231.87.70                                        tel: +32.3.897.92.13
e-mail : dirsec@avh.be                                    e-mail : dirsec@avh.be
 
 
Appendix 1 :  
 

 
Appendix 2 :
 
Transition to IFRS
 
Ackermans & van Haaren issues its consolidated accounts in accordance with IFRS from 2005 onwards with comparative information for 2004.
 
In accordance with IFRS 1, AvH has applied the following options when issuing the opening balance sheet as at 1 January 2004:
-          business combinations with origin before the transition date are not restated
-          the cumulative translation differences are included in the consolidated reserves
-          the actuarial gains and losses on post-employment obligations are recognized in equity
-          IFRS 2 "share-based payment" is applied to options granted after 7 November 2002
-          the transitional provisions of IFRS 4 "Insurance" were applied.
 
 
 
 
1.   Change in consolidation scope
 
Full consolidation
The consolidated accounts of AvH are most significantly influenced by IAS 27, resulting in a change in the consolidation scope and methods. As from the 1998 accounts, all operational affiliated companies are consolidated using the equity method and limits the methods of full and proportional integration to AvH and its respective subholdings. According to AvH, this presentation raises the transparency of the consolidated accounts by avoiding totalling together as such the assets, liabilities and results of the companies active in highly diversified sectors such as dredging, building, staffing services, financial services and private equity. The method thus applied gives a better view of the profitability, the risk position and the group's assets.
 
IAS 27 does, however, indicate that a subsidiary is not excluded from consolidation because its business activities are dissimilar from those of the other entities within the group, since additional information per unit is provided via the segment reporting. Therefore, the following affiliated companies are consolidated through full integration under IFRS: Van Laere, NMP, Solvus, Finaxis, Bank J. Van Breda & C° & Leasinvest.
 
Jointly controlled companies
IFRS 31 offers the choice of consolidating interests in jointly controlled entities using the proportionate consolidation or the alternative equity method. AvH prefers the equity method for DEME, Delen Investments, BDM-ASCO-BtB and GIB.
 
Private equity
The participations relating the Venture Capital activity of AvH, mainly through Sofinim, are measured at fair value, in accordance with IAS 28 & 39. Changes in fair value are recognized in the profit and loss accounts.
As a consequence, the stakes held by Sofinim are no longer consolidated using the equity method.
 
2.   Post-employment obligations and stock options
Provisions are set up for the group's defined benefit pension obligations and the stock option plans (in accordance with IAS 19 & IFRS 2).
 
3.   Provisions
     The derecognition by IFRS of provisions for major repair and maintenance as well as for the banking funds (Internal Security Fund & Fund for General Banking Risks) results in a significant increase of the equity in the opening balance and a limited decrease of the net result as of 31 December.
 
4.   Goodwill amortizations
Under IFRS, goodwill is no longer amortized but is submitted to an annual impairment test.
 
5.   Investment property
Rented buildings (mainly Leasinvest) are measured at fair value (IAS 40) which is in accordance with the current measurement of the buildings of the Sicafi Leasinvest Real Estate under Belgian GAAP.
The unrealised capital gains on the leased buildings is included in the consolidated reserves of the opening balance; through which, under IFRS, the capital gain realised on the contribution of the Montoyer building in the Leasinvest Real Estate sicafi is restricted to the increase in value of 2004.
 
6.   Deferred taxes
     The most important IFRS-adjustment relates to the recognition of deferred tax liabilities on diverse statutory tax-exempt reserves which will be realized at short term.
 
7.   Available for sale portfolio (AFS)
     The recognition of the unrealized capital gains on the AFS-portfolio (mainly AvH, subholdings and the investment portfolios of the banks) leads to a significant increase of the consolidated equity.
 

Attachments

Annual Results 2004