BRUNEL INTERNAT (AMS:BRNL) CORRECTION: Brunel International NV: Strong increase in profitability on the basis of accelerating growth.

Transparency directive : regulatory news

14/08/2018 08:06
Amsterdam, 14 August 2018

 

Key points Q2 2018

  • EBIT up to EUR 4 million
  • Revenue up by 17% to EUR 221 million

 

Key points H1 2018

  • EBIT up 148% to EUR 11 million
  • Revenue up by 13% to EUR 435 million

 

Jilko Andringa, CEO of Brunel International N.V.:
"I`m excited to see our growth accelerate, and to present a strong increase in profitability. I`m thrilled by the underlying level of activities we see in our internal teams, in the sales pipeline and in our communities of professionals. With strong global collaboration, we are able to help our global clients with our entrepreneurship and compliant delivery. The economic conditions in our key markets remain healthy, whilst the segments of the global Oil & Gas market we operate in are clearly recovering. All Brunel colleagues keep demonstrating our unique capabilities to attract and retain specialists to help our clients continue to grow, while talent is scarce. I trust we will be able to maintain this performance in the rest of the year, especially considering that not all the initiatives we have started are fully contributing yet."

 

 

Brunel International (unaudited)
P&L amounts in EUR million         
  Q2 2018 Q2 2017 Change%    H1 2018 H1 2017 Change%  
Revenue   221.3   188.9 17% a     435.1   385.3 13% b
Gross Profit   48.7   39.7 23%      98.7   86.9 14%  
Gross margin 22.0% 21.0%     22.7% 22.6%   
Operating costs   44.6   40.8 9% c     87.4   82.4 6% d
EBIT   4.1   -1.2 n/a      11.3   4.6 148%  
EBIT % 1.8% -0.6%     2.6% 1.2%   
          
Average directs   11,889   9,201 29%      11,558   9,093 27%  
Average indirects   1,539   1,496 3%      1,533   1,478 4%  
Ratio direct / Indirect   7.7   6.2       7.5   6.2   
          
a 16 % like-for-like       
b 14 % like-for-like       
c 10 % like-for-like       
d 7 % like-for-like



      
Like-for-like is measured excluding the impact of currencies and acquisitions            

 


H1 2018 results by division

P&L amounts in EUR million

Summary:

 

Revenue Q2 2018 Q2 2017 Change%   H1 2018 H1 2017 Change%
        
DACH region 65.8 56.6 16%   130.0 117.9 10%
The Netherlands 54.1 46.6 16%   110.3 94.5 17%
Australasia 28.2 21.5 31%   56.0 45.4 23%
Middle East & India 20.3 15.1 34%   39.5 31.0 27%
Rest of world 52.9 49.2 8%   99.4 96.4 3%
        
Total 221.3 188.9 17%   435.1 385.3 13%

 

 

EBIT Q2 2018 Q2 2017 Change%   H1 2018 H1 2017 Change%
        
DACH region 4.7 2.7 70%   10.4 10.1 2%
The Netherlands 1.1 0.6 84%   5.3 3.2 68%
Australasia -0.5 -0.6 12%   -0.5 -0.7 32%
Middle East & India 1.7 0.3 557%   3.4 0.7 404%
Rest of world -0.4 -1.9 77%   -2.3 -3.9 41%
Unallocated -2.4 -2.3 6%   -5.0 -4.8 4%
        
Total 4.1 -1.2 -453%   11.3 4.6 148%

 

 

DACH region (unaudited)
P&L amounts in EUR million        
  Q2 2018 Q2 2017 Change%    H1 2018 H1 2017 Change%
Revenue   65.8   56.6 16%      130.0   117.9 10%
Gross Profit   20.1   17.1 18%      40.7   39.1 4%
Gross margin 30.6% 30.2%     31.3% 33.2%  
Operating costs   15.4   14.4 7%      30.3   29.0 4%
EBIT   4.7   2.7 70%      10.4   10.1 2%
EBIT % 7.1% 4.8%     8.0% 8.6%  
         
Average directs   2,606   2,401 9%      2,565   2,389 7%
Average indirects   476   453 5%      474   442 7%
Ratio direct / Indirect   5.5   5.3       5.4   5.4  

 

Revenue

After the investments in the sales force during prior years, we now see growth in all businesses within the DACH region.
This region includes Germany with both its secondment and projects business, Switzerland, Austria and Czech Republic. Revenue per working day increased by 15% in Q2. Headcount at 30 June 2018 is 9% above last year`s headcount.

Working days

  Q1 Q2 Q3 Q4 FY
2018 63 60 65 62 250
2017 65 59 65 60 249

 

Gross Profit

Q2 2018 had 1 additional working day compared to 2017.  The gross margin adjusted for working days in Q2 is 29.6% (2017: 30.2%). The impact of the new legislation on our gross margin has weakened compared to Q1 and the productivity in our automotive competence center has improved.
H1 2018 had 1 less working day compared to 2017.  The gross margin adjusted for working days in H1 is 31.8% (2017: 33.2%)

Operating costs

Operating costs in H1 increased with 4% mainly driven by continued investments in our commercial organization.


 

Brunel Netherlands (unaudited)
P&L amounts in EUR million        
  Q2 2018 Q2 2017 Change%    H1 2018 H1 2017 Change%
Revenue   54.1   46.6 16%      110.3   94.5 17%
Gross Profit   14.2   12.3 16%      31.2   26.6 17%
Gross margin 26.3% 26.3%     28.2% 28.2%  
Operating costs   13.1   11.7 12%      25.9 23.4 11%
EBIT   1.1   0.6 84%      5.3   3.2 68%
EBIT % 2.1% 1.3%     4.8% 3.3%  
         
Average directs   2,455   2,181 13%      2,437   2,153 13%
Average indirects   434   437 -1%      428   437 -2%
Ratio direct / Indirect   5.7   5.0       5.7   4.9  

 

Revenue

All business lines, except Insurance & Banking, contribute to the growth. The moderate growth in headcount since the beginning of this year is in line with our normal seasonality with moderate growth in H1 and stronger growth in H2. The outlook for H2 confirms that the development in H2 will be in line with our normal seasonality.

Working days

  Q1 Q2 Q3 Q4 FY
2018 64 61 65 64 254
2017 65 61 65 63 254

 

Gross Profit

The gross margin remained stable in Q2. H1 2018 had 1 less working day compared to 2017.  The gross margin adjusted for working days in H1 is 28.7% (2017: 28.2%)

Operating costs

The operating costs increased due to continuous investment in technology and the costs for the finish of the Volvo Ocean Race in The Hague. Our investments in technology include our new data analytics activity and job platform.

 

Australasia (unaudited)
P&L amounts in EUR million         
  Q2 2018 Q2 2017 Change%    H1 2018 H1 2017 Change%  
Revenue   28.2   21.5 31% a     56.0   45.4 23% b
Gross Profit   2.2   1.5 47%      4.6   3.3 38%  
Gross margin 7.8% 7.0%     8.2% 7.3%   
Operating costs   2.7   2.1 29% c     5.1   4.0 28% d
EBIT   -0.5   -0.6 12%      -0.5   -0.7 32%  
EBIT % -1.8% -2.7%     -0.9% -1.6%   
          
Average directs   932   482 93%      928   462 101%  
Average indirects   75   69 8%      76   72 5%  
Ratio direct / Indirect   12.5   6.9       12.2   6.4   
          
a 3 % like-for-like       
b 2 % like-for-like       
c 17 % like-for-like       
d 15 % like-for-like       

 

Revenue

Australasia includes Australia and Papua New Guinea. The mining activities of SES Labour Solutions we acquired last year are growing and contributing. In Australia, we continue to work on the finalisation and commissioning of large projects in Oil & Gas that started years ago.

Gross Profit

The improved gross margin is mainly the result of the acquisition of SES. The margins in the existing business remain stable.

Operating costs

Operating costs remained at the same level as 2017 adjusted for SES Labour Solutions.

 

 

Middle East & India (unaudited)
P&L amounts in EUR million         
  Q2 2018 Q2 2017 Change%    H1 2018 H1 2017 Change%  
Revenue   20.3   15.1 34% a     39.5   31.0 27% b
Gross Profit   3.6   2.0 81%      7.0   4.2 65%  
Gross margin 17.8% 13.2%     17.6% 13.6%   
Operating costs   1.9   1.7 12% c     3.6   3.5 3% d
EBIT   1.7   0.3 557%      3.4   0.7 404%  
EBIT % 8.2% 1.7%     8.7% 2.2%   
          
Average directs   3,105   993 213%      2,748   1,039 164%  
Average indirects   114   109 5%      113   105 8%  
Ratio direct / Indirect   27.3   9.1       24.3   9.9   
          
a 42 % like-for-like       
b 40 % like-for-like       
c 17 % like-for-like       
d 9 % like-for-like       


Revenue

The very strong growth is the result of the footprint and capabilities we maintained in the downturn in combination with successes in diversification. Especially in Kuwait, Qatar and India we have won major projects, mostly technical specialists.

Gross Profit

The gross margin has increased as a result of additional services we are delivering on our major projects.

Operating costs

Our existing organisation is able to manage this strong growth without any significant increases in operating cost.

 

 

Rest of world (unaudited)
P&L amounts in EUR million         
  Q2 2018 Q2 2017 Change%    H1 2018 H1 2017 Change%  
Revenue 52.9 49.2 8% a   99.4 96.4 3% b
Gross Profit 8.5 6.8 25%    15.3 13.7 12%  
Gross margin 16.1% 13.9%     15.4% 14.2%   
Operating costs   8.9   8.7 2% c     17.6   17.6 0% d
EBIT   -0.4   -1.9 77%      -2.3   -3.9 41%  
EBIT % -0.8% -3.8%     -2.3% -4.0%   
          
Average directs   2,791   3,145 -11%      2,880   3,050 -6%  
Average indirects   386   374 3%      387   371 4%  
Ratio direct / Indirect   7.2   8.4       7.4   8.2   
          
a 6 % like-for-like       
b 3 % like-for-like       
c 6 % like-for-like       
d 5 % like-for-like       

 

Revenue

Rest of World includes Americas, Russia, Belgium and South East Asia. Americas and Russia are achieving significant growth. South East Asia is also growing week on week, but still has challenging comparatives due to significant projects that ended in Q2 last year.

Gross profit

The increased gross margin is due to a change in the contribution of several regions.

 

Effective tax rate

The effective tax rate in the first half year of 2018 is 54.4% (2017 at 75.6%). As a greater part of our businesses is profitable again, the impact of tax losses not recognized as deferred tax asset on the effective tax rate has reduced. Due to the seasonality in our Netherlands and DACH business we expect the effective tax rate for the full year to come down significantly to just under 40%.  

 

Risk profile

Reference is made to our 2017 Annual Report (pages 69 - 86).
Reassessment of our earlier identified risks and the potential impact on occurrence has not resulted in required changes in our internal risk management and control systems.

 

Cash position

Brunel`s cash position decreased to EUR 100 million, due to an increase in working capital as a result of the growth, our normal seasonality in our cash flow and the dividend payment in June.

 

Segment reporting

In Q1, we have changed our segment reporting in accordance with Brunel`s regional approach. The main regions are: DACH (Germany, Austria, Switzerland and Czech Republic), The Netherlands, Americas, Australasia, Europe & Africa, Middle East & India, Russia & Caspian area and South East Asia. This is the basis on which internal reports are provided to the Chief Executive Officer for assessing performance and determining the allocation of resources within the Group.

From Q1 onwards, all regions exceeding 10% of total revenue or EBIT are reported separately. The remaining regions are combined in Rest of World. Main changes in our segment reporting are:

  • Austria, Switzerland and Czech Republic are now included in DACH and were previously reported under Other Europe.
  • Australasia and Middle East & India were previously reported under Global Business.
  • The other regions within Global Business, and Belgium, are now reported under Rest of World.

The change in segment reporting has no impact on the net profit or loss of the Group. To enable comparisons with prior period performance, the 2017 segment information is updated accordingly.

The main items for the adjusted segment reporting for 2017 are included in the appendix to this press release.

 

Outlook for 2018

Throughout our business, we see the growth and profitability accelerating. We see an opportunity to benefit from the scarcity in the labour market with our strong brand and communities of professionals. Across the globe the investment level is increasing and our diversification efforts will continue to contribute to our growth.

For the full year, we expect revenue between EUR 875 million and EUR 925 million and EBIT between EUR 32 million and EUR 38 million.

 

Statement of the Board of Directors

The Board of Directors of Brunel International N.V. hereby declares that, to the best of its knowledge, the interim financial statements give a true and fair view of the assets, liabilities, financial position and result of Brunel International N.V. and the companies jointly included in the consolidation, and that the interim report gives a true and fair view of the information referred to in the eighth and, insofar as applicable, the ninth subsection of Section 5:25d of the Dutch Act on Financial Supervision and with reference to the section on related parties in the interim financial statements.

Amsterdam, 14 August 2018
Brunel International N.V.

Jilko Andringa (CEO)
Peter de Laat (CFO)



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