CEO Harrie Noy commented: "Central governments continue to invest to
stimulate the fragile economic recovery, but pressure on local government
budgets weakens growth in the infrastructure market. The budding economic
recovery leads to increased demand from the private sector, especially in the
environmental market. The commercial real estate market in Europe and the
U.S. is stable at a low level, but the focus on niche markets and
opportunities in Asia and the Middle East again led to an increase of backlog
in buildings. Continuous attention to cost control and a client focused
approach, keeps the margin at a good level."
Key figures
Amounts in EUR million, unless otherwise noted First Quarter change
2010 2009 in %
Gross revenues 448 418 7%
Net revenues 325 291 12%
EBITA 29.3 27.9 5%
Net income from operations 1) 17.1 15.5 10%
Ditto, per share (in EUR) 1) 0.26 0.26 0%
Average shares outstanding (in millions) 66.5 60.1
1) Before amortization and non-operational items
Analysis
Gross revenues rose 7%. The currency effect was minus 1%. The
contribution from acquisitions - especially Malcolm Pirnie - was 16%.
Organically, revenues declined 8%.
Net revenues (revenues generated by our own staff) rose 12%. The currency
effect was minus 1%, the contribution from acquisitions 17%. The organic
decline of 4% was at the same level as in the fourth quarter of 2009. As a
result of the completion of several projects with a large amount of
subcontracting, gross revenues organically declined more than net revenues.
In most European countries, organic growth weakened, while in the U.S.
revenues declined organically, although less than last year especially due to
increasing demand in the private sector environmental market. The strongest
organic decline was still seen in the real estate market in England and at
RTKL, although in RTKL a recovery is visible.
EBITA rose 5% to EUR 29.3 million. The currency effect was minus 2%;
acquisitions contributed 13%. On balance, the organic decline was 6%. In
England, last year's restructuring yielded results, while in most other
European countries results improved slightly. Offsetting this was a limited
decrease of results in the Netherlands and Belgium, partly caused by the
harsh winter, while in Brazil a number of energy projects generated a loss.
As a result, the margin (EBITA as a percentage of net revenues) of 9.0% was
slightly behind last year (2009: 9.6%). In the U.S. and in RTKL the good
order intake in combination with a focus on cost control had a positive
effect on results.
Just like last year, there was no contribution from the sale of carbon
credits in Brazil. The procedures that caused the delay have almost been
completed and the sale is expected to start again in the second quarter. Also
because of the myriad opportunities in Brazil, strategic options for the
Brazilian energy projects are being reviewed.
Financing charges were EUR 4.1 million compared to EUR 2.4 million last
year - after correction for the proceeds of the unwinding of derivates of EUR
7.5 million early 2009. The increase is mainly the result of acquisitions.
Net income from operations increased 10%. This is more than the increase
in EBITA as a result of lower taxes and a higher contribution from associated
companies.
Developments per business line
Figures noted below concern gross revenues for the first three months of
2010 compared to the same period last year, unless otherwise noted. As of
2010, Water is a separate business line, whereas before this was part of
Infrastructure.
- Infrastructure (25% of gross revenues)
Gross revenues declined 4%. The currency effect was 3%. The organic
revenue decline of 7% in part resulted from the completion late last year of
a number of large projects with extensive subcontracting. Net revenues
declined only slightly, also as a result of the harsh winter. After local
markets came under pressure in the U.S. earlier, this was now also noticeable
in Europe. Central government programs generated growth in Belgium, the
Netherlands and Central Europe. A consortium with ARCADIS was selected for
the high speed rail line Tours - Bordeaux, the largest PPP project ever in
France.
- Water (20% of gross revenues)
Gross revenues more than doubled as a result of the merger with Malcolm
Pirnie. The currency effect was minus 1%. Organically, gross revenues
increased 1% and net revenues by 4%, especially due to increased demand in
water management. In Brazil, a large contract was won for the Sao Francisco
River to combat continual water shortages. Pressure on local government
budgets also impacts the water market, but to a lesser extent. Malcolm Pirnie
is able to offset declines in the western and southern U.S. with more work in
the northeast.
- Environment (35% of gross revenues)
Gross revenues rose 2%. The currency effect was minus 3% and the
contribution from acquisitions 11% (environmental activities Malcolm Pirnie).
The organic decline was 6%, but in net revenues was limited to 1%, a clear
improvement from previous quarters. This also resulted from the large
contract wins in the U.S. in 2009 and from a gradually increasing demand from
companies as a result of the economic recovery. In Europe, activities rose
almost across the board. A five year framework contract was signed with
ExxonMobil for environmental services in ten European countries.
- Buildings (20% of gross revenues)
Revenues were down 15% at a currency effect of minus 2%. A small
acquisition in the healthcare field in the Netherlands contributed 1%.
Organically gross revenues were down 13%, net revenues 14%. The commercial
real estate market in England and the U.S. has stabilized at a low level.
RTKL compensates the decline in the U.S. and Europe with projects in Asia and
the Middle East. The assignment for the design of the Shanghai Changzheng
Pudong hospital, the largest new hospital in China, marks the breakthrough.
In Belgium demand for industrial services is increasing.
Outlook
The economic recovery is becoming more visible, especially in the United
States. However, the recovery is fragile and it remains to be seen to what
extent economic conditions will impact the different markets in which ARCADIS
is active.
The infrastructure market remains healthy because governments continue to
invest, mostly based on multiyear investment programs. In Europe, ARCADIS is
involved in many of these programs. The attraction of PPP initiatives, for
which ARCADIS is very well positioned, is increasing. The stimulus package in
the U.S. helps, but the effect on our activities will be limited. Brazil
offers many opportunities for growth, both in the public and the private
sector, while in Chile reconstruction work is done following the earthquake.
In the water market the need for drinking water, a cleaner environment
and flood protection are important growth drivers. This is strengthened by
the attention for climate change. The effect of pressure on local government
budgets is expected to be limited. Synergy with Malcolm Pirnie offers many
opportunities in this market. Currently the strategy for water is being
worked out with the aim of also expanding internationally. Priorities are
Brazil, Chile and the Middle East.
In the environmental market regulation and sustainability provide a solid
basis. Clients use the recession to focus on their core business, while
outsourcing portfolios of contaminated sites for clean-up. This trend, which
in the U.S. led to a number of large contracts, is expected to continue. Our
strong competitive position, based on international presence and advanced
technology, will allow us to gain market share, especially now that private
sector demand comes up again and vendor reduction is increasing. We also
benefit from growing demand for consultancy on energy savings and carbon
footprint reduction.
The buildings market appears to be bottoming out. For the second quarter
in a row backlog increased. The commercial market stabilized, without
expectations for a recovery in the short term. At RTKL the situation clearly
improved as a result of strong order intake in Asia, the Middle East and in
healthcare. This development, and the fact that demand from the public
sector, including schools and healthcare, remains at a good level, may lead
to a recovery of revenues in the second half of 2010. Facility management can
also contribute to this.
CEO Harrie Noy concluded: "In the first quarter our backlog again grew by
5%. All business lines contributed to this growth. Although infrastructure
growth weakens due to pressure in local markets, this is offset by the
improving outlook for environment and buildings, also resulting from
increasing demand from private sector clients. This means that in the second
half further recovery is possible and organic activity growth may occur.
Maintaining margins remains a priority. The integration with Malcolm Pirnie
creates synergy opportunities and as of 2011, operational benefits. Further
expansion through acquisitions remains on our agenda. Themes like
sustainability, climate change, urban renewal, mobility, water and energy
offer a positive long term outlook. Because of uncertainties about the
economy, it is too early to give a specific outlook for 2010."
About ARCADIS:
ARCADIS is an international company providing consultancy, design,
engineering and management services in infrastructure, water, environment and
buildings. We enhance mobility, sustainability and quality of life by
creating balance in the built and natural environment. ARCADIS develops,
designs, implements, maintains and operates projects for companies and
governments. With 15,000 employees and EUR 1.8 billion in revenues, the
company has an extensive international network supported by strong local
market positions. ARCADIS supports UN-HABITAT with knowledge and expertise to
improve the quality of life in rapidly growing cities around the world. Visit
us at: http://www.arcadis.com
ARCADIS NV
CONDENSED CONSOLIDATED STATEMENT OF INCOME
Amounts in EUR millions, unless otherwise
stated First quarter
2010 2009
Gross revenue 448.2 418.0
Materials, services of third parties and
subcontractors (122.7) (127.5)
Net revenue 325.5 290.5
Operational cost (289.8) (257.0)
Depreciation (6.5) (5.9)
Other income 0.1 0.3
EBITA 29.3 27.9
Amortization identifiable intangible assets (1.6) (1.2)
Operating income 27.7 26.7
Net finance expense (4.1) 5.1
Income from associates 0.7 0.1
Profit before income taxes 24.3 31.9
Income taxes (8.2) (11.5)
Profit for the period 16.1 20.4
Attributable to:
Net income (Equity holders of the Company) 15.9 20.2
Minority interest 0.2 0.2
Net income 15.9 20.2
Amortization identifiable intangible assets
after taxes 1.0 0.8
Lovinklaan employee share purchase plan 0.2 0.1
Net effects of financial instruments (5.6)
Net income from operations 17.1 15.5
Net income per share (in euros) 0.24 0.34
Net income from operations per share (in
euros) 0.26 0.26
Weighted average number of shares (in
thousands) 66,526 60,108
ARCADIS NV
CONDENSED CONSOLIDATED BALANCE SHEET
Amounts in EUR millions
March 31 December 31,
Assets 2010 2009
Intangible assets 359.0 342.7
Property, plant & equipment 85.3 84.8
Investments in associates 27.8 26.2
Other investments 0.2 0.2
Other non-current assets 22.1 19.8
Derivatives 0.2 1.2
Deferred tax assets 20.0 18.0
Total non-current assets 514.6 492.9
Inventories 0.5 0.5
Derivatives 0.4 0.1
(Un)billed receivables 577.5 555.1
Other current assets 46.1 35.9
Corporate tax assets 13.9 6.2
Cash and cash equivalents 155.8 224.5
Total current assets 794.2 822.3
Total assets 1,308.8 1,315.2
Equity and liabilities
Shareholders' equity 365.4 351.7
Minority interest 17.7 16.8
Total equity 383.1 368.5
Provisions 29.5 28.4
Deferred tax liabilities 20.1 10.8
Loans and borrowings 362.1 342.1
Derivatives 2.7 0.8
Total non-current liabilities 414.4 382.1
Billing in excess of cost 155.5 158.8
Corporate tax liabilities 8.2 7.4
Current portion of loans and borrowings 5.3 5.6
Current portion of provisions 5.0 6.0
Derivatives 4.6 2.7
Accounts payable 109.3 128.9
Accrued expenses 15.6 21.3
Bankoverdrafts 8.1 12.0
Short term borrowings 15.7 14.9
Other current liabilities 184.0 207.0
Total current liabilities 511.3 564.6
Total equity and liabilities 1,308.8 1,315.2
ARCADIS NV
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Amounts in EUR millions
Share Share Hedging Cumulative
Capital Premium Reserve Translation
Reserve
Balance at December 31,
2008 1.2 36.2 (40.2)
Profit for the period
Exchange rate differences 3.9
Taxes related to
share-based compensation
Other comprehensive income 3.9
Total comprehensive income
for the period 3.9
Dividends to shareholders
Share-based compensation
Options exercised
Balance at March 31, 2009 1.2 36.2 (36.3)
Balance at December 31,
2009 1.3 106.8 0.1 (28.4)
Profit for the period
Exchange rate differences 2.5
Effective portion of
changes in fair value of
cash flow hedges (1.3)
Taxes related to
share-based compensation
Other comprehensive income (1.3) 2.5
Total comprehensive income
for the period (1.3) 2.5
Dividends to shareholders
Share-based compensation
Purchase of shares
Options exercised
Balance at March 31, 2010 1.3 106.8 (1.2) (25.9)
TABLE CONTINUES BELOW
Amounts in EUR millions Retained Total Minority Total
earnings Share- Interest equity
holders'
equity
Balance at December 31, 2008 210.4 207.6 12.3 219.9
Profit for the period 20.2 20.2 0.2 20.4
Exchange rate differences 3.9 0.7 4.6
Taxes related to share-based
compensation - - -
Other comprehensive income - 3.9 0.7 4.6
Total comprehensive income for
the period 20.2 24.1 0.9 25.0
Dividends to shareholders (0.1) (0.1)
Share-based compensation 1.5 1.5 1.5
Options exercised 0.1 0.1 0.1
Balance at March 31, 2009 232.2 233.3 13.1 246.4
Balance at December 31, 2009 271.9 351.7 16.8 368.5
Profit for the period 15.9 15.9 0.2 16.1
Exchange rate differences 2.5 0.7 3.2
Effective portion of changes in
fair value of cash flow hedges (1.3) (1.3)
Taxes related to share-based
compensation (0.5) (0.5) (0.5)
Other comprehensive income (0.5) 0.7 0.7 1.4
Total comprehensive income for
the period 15.4 16.6 0.9 17.5
Dividends to shareholders - -
Share-based compensation 2.5 2.5 2.5
Purchase of shares (7.2) (7.2) (7.2)
Options exercised 1.8 1.8 1.8
Balance at March 31, 2010 284.4 365.4 17.7 383.1
ARCADIS NV
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Amounts in EUR millions First quarter
2010 2009
Cash flows from operating activities
Profit for the period 16.1 20.4
Adjustments for:
Depreciation and amortization 8.1 7.1
Taxes on income 8.2 11.5
Net finance expense 4.1 (5.1)
Income from associates (0.7) (0.1)
35.8 33.8
Share-based compensation 2.5 1.5
Change in fair value of derivatives in operating income 0.2
Change in inventories - 0.2
Change in receivables (17.3) 10.8
Change in deferred taxes 8.4 3.0
Change in provisions (0.7) 1.0
Change in billing in excess of costs (9.1) (3.4)
Change in current liabilities (64.8) (50.5)
Dividend received - 0.1
Interest received 0.6 1.3
Interest paid (3.2) (6.1)
Corporate tax paid (6.0) (16.0)
Net cash from operating activities (53.6) (24.3)
Cash flows from investing activities
Investments in (in)tangible assets (4.8) (9.0)
Divestments of (in)tangible assets - 0.5
Investments in consolidated companies (2.8) (1.1)
Investments in associates and other financial
non-current assets (2.0) (1.8)
Divestments of associates and other financial
non-current assets 0.7 1.1
Net cash used in investing activities (8.9) (10.3)
Cash flows from financing activities
Proceeds from options exercised 1.8 0.1
Purchase of own shares (7.2)
New long-term loans and borrowings 1.6 0.3
Repayment of long-term loans and borrowings (2.4) (6.3)
Changes in short-term borrowings 0.2 1.0
Settlement of financing derivatives (2.5)
Net cash from financing activities (8.5) (4.9)
Net change in cash and cash equivalents less
bankoverdrafts (71.0) (39.5)
Exchange rate differences 6.2 2.0
Cash and cash equivalents less bankoverdrafts at
January 1 212.5 111.7
Cash and cash equivalents less bankoverdrafts at March
31 147.7 74.2
SOURCE ARCADIS NV
