SGS - 2003 YEAR END RESULTS

1/15/2004, 8:05 AM (Source: GlobeNewswire)

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For the 5th consecutive semester, SGS has improved performance, delivering a net income before exceptionals for the year of CHF 224 million, an increase of 50% on a constant currency basis (41% on a reported basis). The top line grew in local currencies by 7.1% (2.6% as reported), with nearly all businesses improving sales over the prior year. Margins have now reached 12.2%, with the second half of the year at 12.7%. The Board of Directors will propose a dividend of CHF 9.00 per share, 50% higher than the regular 2002 dividend. The Group confirms its targets for 2005 at CHF 45 earnings per share.

Overview

Revenue for the Group improved to CHF 2,454 million, up 163 million
on the same period last year in local currency terms (62 million on a
reported basis) in an uneven trading environment, caused in the main
by unusual geopolitical events and climatic conditions.

Strong revenue growth was achieved in Consumer Testing, Oil Gas &
Chemicals and Systems & Services Certification with all these
businesses delivering more than +10% growth.

Operating income improved by CHF 96 million or 47% to CHF 300 million
at constant currencies (CHF 84 million on a reported basis).
Operating margins in all businesses continued to improve with the
most significant upward shifts being achieved by Consumer Testing,
Systems and Services Certification, Life Sciences and Trade Assurance
Services.

Net financial income of CHF 10 million was below that of the same
period last year by CHF 3 million, reflecting the continued global
reduction in yields. The tax rate of 22% is at the low end of the
range the Group expects for the medium term.

Net profit before exceptionals increased from CHF 159 million to CHF
224 million. Exceptionals, which reduced 2002 net income by 50
million, were positive for 2003, with CHF 3 million being collected
on discontinued government receivables.

Cash from operations improved by over CHF 74 million to CHF 325
million on the back of the earnings improvement. This inflow of cash
was used to fund net investment in fixed assets of CHF 146 million
and the payment of the dividend of CHF 56 million. Group net cash
increased from CHF 402 million at the end of 2002 to CHF 493 million
at the year end.


FINANCIAL HIGHLIGHTS
CHF million 2002 2003

Revenues 2 392 2 454
Change in % 2.6

EBITDA 311 396
Change in % 27.3

Operating income 216 300
Change in % 38.9

Operating margin in % 9.0 12.2

Profit before tax 140 303
Change in % 116.4

Net profit 109 227
Change in % 108.3

Net profit before
exceptionals 159 224
Change in % 40.9

Free cash flow 121 168
Change in % 38.8

Net cash 402 493

Average number of shares (000's) 7 773 7 662

Earnings per share (CHF) before exceptionals 20.46 29.24
Change in % 42.9

Earnings per share (CHF) after exceptionals 14.02 29.63
Change in % 111.3

Period end number of employees 32 008 33 006
Change in % 3.1





Acquisitions and Disposals

In December the Group announced the acquisition of Medisearch
International in Belgium, a leading Clinical Research organization,
with annual turnover of nearly €13 million. In the first
half of 2003, SGS concluded the sale of small laboratory activities
in France and Spain due to their sub-optimal size. Their combined
turnover was less than CHF 20 million.

Proposed Dividend

The Board of Directors will recommend to the Annual General Meeting
on 23 March 2004 the approval of a dividend of CHF 9.00 per share,
which represents a significant increase over 2002 levels of CHF 7.25
(of which CHF 1.25 was a special dividend on occasion of the Group's
125th anniversary). This payout ratio is in line with the Group's
policy of distributing in the range of 25-33% of consolidated Group
income.

Significant Shareholders

At 31 December 2003 , Mr August von Finck and his family held 23.7%
of the capital and voting rights of the Company. Worms & Cie held
23.8%.

Capital Structure and Vision

At an Extraordinary Shareholders' Meeting held on 9 December 2003,
the Directors received approval for the issuance of 1,000,000 shares
of conditional, and 500,000 shares of authorized capital. This
initiative provides the Group with sufficient resources to engage in
meaningful acquisition activity in support of its newly outlined
vision.

Having made significant progress in improving executional efficiency,
we have now set our sights on becoming the most competitive and the
most productive service organisation in the world. The core
competencies in testing, inspection, verification and certification
will continue to be improved in order to achieve best in class
status. And our portfolio of businesses will be widened to leverage
these core competencies, since our skills have application in a
variety of contexts, especially where the attributes of independence
and integrity are the key element at play.

Outlook

The Group expects to continue to significantly improve operating
performance in 2004, determined to achieve the 2005 targets of CHF 45
earnings per share. This is notwithstanding the recent weakness in
the US dollar and currencies which trade in tandem. Although we are
of the view that this weakness will persist and perhaps even
accentuate over the short term, the medium to long term view is that
a more balanced exchange rate will ultimately be established.

Georges Muller
Chairman

Sergio Marchionne
Chief Executive


Accounting Principles

The audited financial statements are prepared in accordance with the
accounting and reporting requirements of the International Financial
Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB) and with the Standing Interpretations issued
by the Standing Interpretation Committee of the IASB.

These condensed consolidated accounts are based on the accounts of
the individual subsidiaries at 31 December, which have been drawn up
according to uniform Group accounting principles.

2002 business segment information was adjusted to reflect the new
organisational structure.



CONSOLIDATED PROFIT & LOSS
CHF million 2002 2003

Revenues 2 392 2 454

Operating income 216 300
Exceptionals (80) 3

Goodwill (9) (10)

EBIT 127 293
Net financial income 13 10

Profit before taxes and minority interests 140 303
Taxes (27) (68)

Profit after taxes 113 235
Minority interest (4) (8)

Net profit 109 227

Net profit before exceptionals (net of tax) 159 224





CHANGES IN SHAREHOLDERS' EQUITY
CHF million 2002 2003

As at 1 January 982 897

Dividend (47) (56)

Purchase of Treasury shares (63) 0

Translation (84) 4

Net profit 109 227

As at 31 December 897 1 072




CONSOLIDATED CASH FLOW
CHF million 2002 2003

EBIT 127 293

Adjustment for non cash items 92 103
(increase)/decrease in net working capital 0 (36)
Changes in other provisions 57 4
Taxes paid (25) (39)

Cash from operations 251 325

Net sale/(purchase) of fixed assets (111) (146)
Other (19) (11)

Free cash flow 121 168

Financing 14 10
Dividend paid (47) (56)
Net cash (used in)
acquisitions/disposals (54) (18)
Purchase of treasury shares (63) 0
Exchange on opening balances (62) (6)
Translation differences on flows 47 (7)

Increase/(decrease) in net cash (44) 91




+------------------------------------------------------------+
| CONSOLIDATED BALANCE SHEET | | |
|--------------------------------------------+-------+-------|
| CHF million | 2002 | 2003 |
|--------------------------------------------+-------+-------|
| Non-current asset | | |
|--------------------------------------------+-------+-------|
| Land building and equipment | 374 | 415 |
|--------------------------------------------+-------+-------|
| Other long-term assets | 88 | 120 |
|--------------------------------------------+-------+-------|
| Goodwill and other intangible assets | 107 | 147 |
|--------------------------------------------+-------+-------|
| Total non-current asset | 569 | 682 |
|--------------------------------------------+-------+-------|
| Current asset | | |
|--------------------------------------------+-------+-------|
| Trade accounts and notes receivables | 495 | 571 |
|--------------------------------------------+-------+-------|
| Other current assets | 254 | 243 |
|--------------------------------------------+-------+-------|
| Cash and short term investments | 532 | 526 |
|--------------------------------------------+-------+-------|
| Total current asset | 1 281 | 1 340 |
|--------------------------------------------+-------+-------|
| Total assets | 1 850 | 2 022 |
|--------------------------------------------+-------+-------|
| Shareholders' equity | 897 | 1 072 |
|--------------------------------------------+-------+-------|
| Minority interests | 18 | 18 |
|--------------------------------------------+-------+-------|
| Non-current liabilities | | |
|--------------------------------------------+-------+-------|
| Long term loans | 48 | 11 |
|--------------------------------------------+-------+-------|
| Provisions and other liabilities | 272 | 281 |
|--------------------------------------------+-------+-------|
| Total non-current liabilities | 320 | 292 |
|--------------------------------------------+-------+-------|
| Current liabilities | | |
|--------------------------------------------+-------+-------|
| Trade and other payables | 260 | 299 |
|--------------------------------------------+-------+-------|
| Other current liabilities | 355 | 341 |
|--------------------------------------------+-------+-------|
| Total current liabilities | 615 | 640 |
|--------------------------------------------+-------+-------|
| Total liabilities and shareholders' equity | 1 850 | 2 022 |
+------------------------------------------------------------+





+-------------------------------------------------------------------+
| EXCHANGE RATES |
|-------------------------------------------------------------------|
| | Balance Sheet | Profit & Loss |
| | | account |
| | end of period rate | Year to date |
| | CHF | average rate CHF |
|---------------------------+--------------------+------------------|
| | Dec. 02 | Dec. 03 | 2002 | 2003 |
|---------------------------+----------+---------+---------+--------|
| Australia | 78.65 | 93.24 | 84.55 | 87.65 |
| AUD 100 | | | | |
|---------------------------+----------+---------+---------+--------|
| EU | 145.48 | 156.06 | 146.70 | 152.09 |
| EUR 100 | | | | |
|---------------------------+----------+---------+---------+--------|
| Great Britain | 223.78 | 221.55 | 233.43 | 219.86 |
| GBP 100 | | | | |
|---------------------------+----------+---------+---------+--------|
| USA | 139.56 | 124.86 | 155.68 | 134.57 |
| USD 100 | | | | |
+-------------------------------------------------------------------+




Agricultural Services

Comparable revenues in Agricultural Services were flat at CHF 242
million in 2003 (reported decline of 3.4%), due to unusually dry
weather conditions across Europe - from France to the Black Sea
region - and Australasia. Margins improved from 9.8% to 10.0% as a
result of cost savings measures and a slight improvement in the
business mix.

Against this backdrop of low crop yields in the major trading areas,
the increased emphasis on newer products and geographies has started
to deliver benefits. South America has progressed well, particularly
Brazil, thanks to GMO traceability and new business development in
the Matogroso region. Collateral Management and Guaranteed Business
Solutions products continue to deliver revenue growth.

Asia showed a slight decline in revenue mainly due to India where the
excellent business made last year in rice export has not been
repeated this year, though this was partially offset by market share
gains in other commodities.



+------------------------------------------+
| AGRICULTURAL SERVICES |
|------------------------------------------|
| CHF million | 2002 | 2003 |
|--------------------------+-------+-------|
| Revenues | 250.4 | 241.8 |
|--------------------------+-------+-------|
| Change in % | | (3.4) |
|--------------------------+-------+-------|
| Change due to | | |
|--------------------------+-------+-------|
| Volume and Prices | | -- |
|--------------------------+-------+-------|
| Currency Translation | | (8.6) |
|--------------------------+-------+-------|
| Acquisitions/(Disposals) | | -- |
|--------------------------+-------+-------|
| Operating Income | 24.6 | 24.3 |
|--------------------------+-------+-------|
| Change in % | | (1.2) |
|--------------------------+-------+-------|
| Operating Margin % | 9.8 | 10.0 |
+------------------------------------------+





Minerals Services

The Minerals business grew by 5.1% on a comparable basis during the
period (4.3% on a reported basis). With the synergies associated with
the integration of the acquisitions concluded in 2002, margins grew
to 12.7% from 9.9%.

Exploration activity is expanding at an accelerated pace, especially
in gold and platinum, sustained by higher prices and availability of
funding. The combination of these factors has positively impacted the
outsourced, on-site geochemistry laboratories as well as the off-site
commercial exploration laboratories with a number of new contracts
signed for mine-site laboratories in South America, Africa, Canada
and Asia.

The coal business in the USA remained relatively flat after a
particularly slow start to the year, the result of earlier
stockpiling. This was partially offset by gains in the Chinese coke
market where further development and investment showed positive
results, though this has been recently impacted by export
restrictions. In Russia the Group capitalised on the further
expansion and rationalisation in the industry becoming the leading
provider of services to that industry.

The expansion into the non-ferrous and precious metals markets began
to show positive results. Four centres of excellence were established
offering laboratory services to supplement our non-ferrous inspection
business.



+-------------------------------------------+
| MINERALS SERVICES |
|-------------------------------------------|
| CHF million | 2002 | 2003 |
|--------------------------+-------+--------|
| Revenues | 268.4 | 279.9 |
|--------------------------+-------+--------|
| Change in % | | 4.3 |
|--------------------------+-------+--------|
| Change due to | | |
|--------------------------+-------+--------|
| Volume and Prices | | 13.0 |
|--------------------------+-------+--------|
| Currency Translation | | (15.1) |
|--------------------------+-------+--------|
| Acquisitions/(Disposals) | | 13.6 |
|--------------------------+-------+--------|
| Operating Income | 26.7 | 35.5 |
|--------------------------+-------+--------|
| Change in % | | 33.0 |
|--------------------------+-------+--------|
| Operating Margin % | 9.9 | 12.7 |
+-------------------------------------------+




Oil, Gas & Chemicals Services

Despite an erratic oil market and a less than exciting development in
chemicals, the Business has delivered comparable revenue growth of
16.8% (reported 10.1%). The continuing reinforcement of the
international sales and development teams resulted in market share
gains across all regions.

In addition to the top line growth, the full year impact of last
year's streamlining and the successful turnaround of less profitable
affiliates allowed the margins to improve to 10.9% from 8.0%.

Growth momentum is being maintained. The Americas and Europe continue
to perform strongly, capitalising on the solid network of field
operations and laboratories. Sizeable outsourcing contracts in the
UK, Netherlands, Germany and elsewhere in Europe have also boosted
sales.

Investment in on-site laboratories at key locations is spurring the
development in the FSU and Asia, especially China. These investments
will place SGS in a lead position to reap the benefits of the
expected growth of these markets.

OIL, GAS & CHEMICALS SERVICES

+----------------------------------------------------------------+
| CHF million | 2002 | 2003 |
|-----------------------------------------------+-------+--------|
| Revenues | 398.7 | 439.1 |
| Change in % | | 10.1 |
|-----------------------------------------------+-------+--------|
| Change due to | | |
| Volume and Prices | | 62.8 |
| Currency Translation Acquisitions/(Disposals) | | (25.2) |
| | | 2.8 |
|-----------------------------------------------+-------+--------|
| Operating Income | 32.0 | 47.9 |
| Change in % | | 49.7 |
| | | |
|-----------------------------------------------+-------+--------|
| Operating Margin % | 8.0 | 10.9 |
| | | |
+----------------------------------------------------------------+




Life Science Services

Life Science's comparable revenues declined by 4.5% (4.1% on a
reported basis) though margins increased significantly to 10.0% from
5.4% through restructuring and operational improvements.

The new leadership is now in place and has created a strong
foundation on which to implement the strategy for the business and to
drive future growth.

Clinical research volumes are slightly down due to delays with
customer projects, although profitability has improved through
operational efficiency gains. The opening of a new research unit at
the Antwerp University Hospital and the recent acquisition of
Medisearch International in Belgium will strengthen the scope and
improve the capacity of the clinical research services in Europe. The
acquisition also establishes a presence in North America and enables
SGS to offer local clinical research expertise to existing and future
clients.

The quality control business has performed well in Canada and Europe,
with the exception of Germany. The business in the USA has now been
restructured and returned to profitability after the poor performance
in the earlier part of the year.

LIFE SCIENCE SERVICES

+-------------------------------------------------------+
| CHF million | 2002 | 2003 |
|----------------------------------------+------+-------|
| Revenues | 61.6 | 59.1 |
| Change in % | | (4.1) |
|----------------------------------------+------+-------|
| Change due to | | |
| Volume and Prices Currency Translation | | (2.8) |
| Acquisitions/(Disposals) | | 0.3 |
| | | -- |
|----------------------------------------+------+-------|
| Operating Income | 3.3 | 5.9 |
| Change in % | | 78.8 |
| | | |
|----------------------------------------+------+-------|
| Operating Margin % | 5.4 | 10.0 |
+-------------------------------------------------------+




Consumer Testing Services

With comparable revenues of CHF 272 million, our Consumer Testing
Services business grew by 14.2% in 2003 (reported 1.5%). The very
strong performances in East Asia, South East Asia and Latin America
were the main drivers of this growth. The ongoing investments in E&E
(Electrical and Electronic) labs in Asia continue to deliver top line
growth.

Operating margins are now 14.5% compared to 9.4% in 2002. This strong
increase is mainly due to the impact of increased volumes on existing
infrastructure and the rapid growth in Softlines and Hardlines, which
are traditionally more profitable than Food and E&E, with the latter
being burdened by the depreciation of the significant capital
commitments it has received.

Testing is now close to 65% of the Business and remains the main
focus of the business. Although SGS retained global leadership in
inspection, SGS is determined to keep investing strategically in new
lab locations and lab expansions in Latin America, East Europe and
especially in Asia. Our Hong Kong and Shanghai textile labs are now
working 24 hours, 7 days a week, and similar capacity utilizations
are being targeted in other parts of the network.

The business is also paying close attention to the growing Auditing
business, be it Code of Conduct, Factory Quality audits, Food safety
and Health, Private label support etc.

The strengthening of the international sales teams in the main
importing countries for the large retailers, importers and speciality
shops, combined with a dedicated sales team for the local
manufacturers, vendors and exporters, has produced good results and
will be further enhanced in 2004. These initiatives are designed to
establish SGS as the pre-eminent supplier of testing services for
consumer products.

CONSUMER TESTING SERVICES

+----------------------------------------------------------------+
| CHF million | 2002 | 2003 |
|-----------------------------------------------+-------+--------|
| Revenues | 268.4 | 272.3 |
| Change in % | | 1.5 |
|-----------------------------------------------+-------+--------|
| Change due to | | |
| Volume and Prices | | 33.6 |
| Currency Translation Acquisitions/(Disposals) | | (13.1) |
| | | (16.6) |
|-----------------------------------------------+-------+--------|
| Operating Income | 25.1 | 39.4 |
| Change in % | | 57.0 |
|-----------------------------------------------+-------+--------|
| Operating Margin % | 9.4 | 14.5 |
+----------------------------------------------------------------+




Systems & Services Certification

Systems & Services Certification revenues of CHF 230 million were
14.0% up on 2002 (8.0% on a reported basis). Operating margin rose to
15.1% from 11.4%, a result of increased volumes and the initiatives
taken over the last 18 months to reduce cost and improve processes.

During the second half-year, revenues have been positively impacted
by the clients' need to be certified according to the 2000 version of
the ISO 9000 standard before year end.

Growth was mostly driven by ISO 9000 market segment with strong
performance in Asia and more particularly in China and Japan. In
Western Europe, the traditional ISO 9000 market is maturing and
accordingly new products and services are being developed to decrease
the dependence on this market. A new certification service tailored
to the need of small businesses has been developed and introduced in
25 key countries.

ISO 14001 (environment) and OHSAS 18001 (health and safety) are still
growing strongly. Service certification programs are actively
developed in Western Europe. In France, for the first time last year,
this activity was larger and more profitable than the traditional 3rd
party certification activity.

Several global contracts have been signed, mainly for integrated
certification audits (combining quality, environment and safety) and
in the field of service audits with car dealers and catering
activities.



+---------------------------------------------------+
| SYSTEMS & SERVICES CERTIFICATION | | |
| CHF million | 2002 | 2003 |
|----------------------------------+-------+--------|
| Revenues | 212.7 | 229.7 |
| Change in % | | 8.0 |
|----------------------------------+-------+--------|
| Change due to | | 28.2 |
| Volume and Prices | | |
|----------------------------------+-------+--------|
| Currency Translation | | (11.2) |
|----------------------------------+-------+--------|
| Acquisitions/(Disposals) | | -- |
|----------------------------------+-------+--------|
| Operating Income | 24.2 | 34.7 |
| Change in % | | 43.4 |
|----------------------------------+-------+--------|
| Operating Margin % | 11.4 | 15.1 |
+---------------------------------------------------+




Industrial Services

Comparable revenues grew by 3.5% for Industrial Services (reported
3.0%). Operating margins have improved slightly to 10.6% from 10.4%.

The regulatory inspection business is growing well and producing good
margins, particularly within the construction sector. Spain continues
to account for a large portion of this growth although margins are
now coming under pressure. Volumes are increasing in the construction
testing laboratories in the Far East and investments in new
laboratories in China are driving further growth as this market
starts to open up to non-governmental construction service companies.

The oil, gas and energy sector is performing well, partly due to the
global contracts signed earlier in the year and the increase in the
supply of technical support staff to projects in Africa, the Middle
and Far East. Recent contract wins in Africa and Europe for
inspection services to the liquid natural gas sector confirm the
Group's strategy to focus on this sector.

After a slow start to the year, the non-destructive testing market is
showing signs of recovery with some large contracts having been won
in Western Europe, Africa and the Middle East. The recent investment
in new technologies is already generating new business with new
clients.



+------------------------------------------+
| INDUSTRIAL SERVICES |
|------------------------------------------|
| CHF million | 2002 | 2003 |
|--------------------------+-------+-------|
| Revenues | 320.6 | 330.1 |
| Change in % | | 3.0 |
|--------------------------+-------+-------|
| Change due to | | 11.0 |
| Volume and Prices | | |
|--------------------------+-------+-------|
| Currency Translation | | (3.9) |
|--------------------------+-------+-------|
| Acquisitions/(Disposals) | | 2.4 |
|--------------------------+-------+-------|
| Operating Income | 33.5 | 34.9 |
| Change in % | | 4.2 |
|--------------------------+-------+-------|
| Operating Margin % | 10.4 | 10.6 |
+------------------------------------------+



Environmental Services

The Environmental Services business sector experienced a mixed year
in its analytical and field services segments due to competitive
pricing pressures, overcapacity and prolonged winter weather in its
larger and more mature markets encompassing the US, Benelux and
Germany. Key restructuring actions were undertaken in these markets
to position the businesses for growth in 2004.

Revenues grew by 6.2% on a comparable basis (5.8% reported) and
further improved operating margin to 6.5%. Revenue growth was driven
by Spain, Italy, Finland, Taiwan, Australia, Canada and Chile, with
good operating margin performances in East Asia, South America, and
South East and East Europe.

2003 has seen the business focus on developing transnational
relationships with major customers. The business expanded its
geographic network by entering new markets in Europe, the Middle East
and Asia to strengthen its service capabilities geared to
international clients.

The business entered the laboratory outsourcing and environmental
data management segments with significant projects awarded in the
Netherlands, Italy and Taiwan.



+------------------------------------------+
| ENVIRONMENTAL SERVICES |
|------------------------------------------|
| CHF million | 2002 | 2003 |
|--------------------------+-------+-------|
| Revenues | 162.6 | 172.0 |
| Change in % | | 5.8 |
|--------------------------+-------+-------|
| Change due to | | |
| Volume and Prices | | 10.0 |
|--------------------------+-------+-------|
| Currency Translation | | (2.3) |
|--------------------------+-------+-------|
| Acquisitions/(Disposals) | | 1.7 |
|--------------------------+-------+-------|
| Operating Income | 9.5 | 11.2 |
| Change in % | | 17.9 |
|--------------------------+-------+-------|
| Operating Margin % | 5.8 | 6.5 |
+------------------------------------------+



Automotive Services

Automotives Services comparable revenues declined by 3.6% versus
prior year (11.7% down on a reported basis). Margins however improved
to 9.9% in 2003 from 5.7% in 2002.

The US car market remained depressed and generous incentives offered
last year for early return of leased vehicles resulted in the number
of cars requiring inspection decreasing significantly. The impact of
this volume shortfall was more than offset by operational
efficiencies, resulting in better margins.

Good overall performance in both revenue growth and margin
improvements has been delivered in the statutory inspection markets
(Ireland, Argentina, Uruguay and Ivory Coast).

New business that will come on stream in 2004 includes two new
vehicle data management contracts awarded in the USA, the inspection
of private hire vehicles in London (UK) and the offering of
comprehensive inspections to accompany auctioned cars on Ebay, the
first time that automotive inspections have been offered directly to
the consumer.



+-------------------------------------------+
| AUTOMOTIVE SERVICES |
|-------------------------------------------|
| CHF million | 2002 | 2003 |
|--------------------------+-------+--------|
| Revenues | | 211.0 |
| Change in % | 238.9 | (11.7) |
|--------------------------+-------+--------|
| Change due to | | |
| Volume and Prices | | (7.9) |
|--------------------------+-------+--------|
| Currency Translation | | (20.0) |
|--------------------------+-------+--------|
| Acquisitions/(Disposals) | | -- |
|--------------------------+-------+--------|
| Operating Income | | 20.8 |
| Change in % | 13.7 | 51.8 |
|--------------------------+-------+--------|
| Operating Margin % | 5.7 | 9.9 |
+-------------------------------------------+




Trade Assurance Services

Revenues of Trade Assurance Services increased by 5.6% on a
comparable basis (4.7% reported) mainly due to the start-up of the
contracts with the government of Haiti, Indonesia, Madagascar,
Mexico, and Venezuela partially offset by the terminated contract
with the government of Angola.

Margins improved significantly to 20.5%. This improvement was
achieved through gains in productivity, restructuring measures, and
increasing import volumes in Africa.

During 2003, Trade Assurance Services successfully extended or
renewed contracts with the Governments of Cambodia, Cameroon, and
Ecuador. Contracts with the Governments of Bolivia, Central African
Republic, Malawi and Mali were terminated during the year. New
Forestry contracts were signed in Cambodia, Congo Brazzaville, and
Indonesia.

Two new services were introduced during 2003: TradeNet Ghana and
ValuNet Mexico. TradeNet Ghana has been very successful in reducing
customs clearance times and increasing revenues. ValuNet Mexico
started in August 2003 and supports Mexican customs in investigating
declared customs values for high-risk transactions and has enabled
Mexican Customs to capture additional revenues far in excess of the
cost of the program.

Further developments in products' enhancement included the deployment
of the SGS proprietary risk management system (SGS Profiler) in
existing and new programs, as well as the rolling out of the SGS
Climate Change Program and the SGS Rating for NGOs.



+------------------------------------------+
| TRADE ASSURANCE SERVICES |
|------------------------------------------|
| CHF million | 2002 | 2003 |
|--------------------------+-------+-------|
| Revenues | | 219.5 |
| Change in % | 209.7 | 4.7 |
|--------------------------+-------+-------|
| Change due to | | |
| Volume and Prices | | 11.5 |
|--------------------------+-------+-------|
| Currency Translation | | (1.7) |
|--------------------------+-------+-------|
| Acquisitions/(Disposals) | | -- |
|--------------------------+-------+-------|
| Operating Income | 23.0 | 45.1 |
| Change in % | | 96.1 |
|--------------------------+-------+-------|
| Operating Margin % | 11.0 | 20.5 |
+------------------------------------------+



English version is binding


CORPORATE OFFICE
1 place des Alpes
P.O. Box 2152
CH - 1211 Geneva 1
t +41 (0)22 739 91 11
f +41 (0)22 739 98 86
e enquiries@sgs.com
www.sgs.com

2004 HALF YEAR RESULTS
Tuesday, 13 July 2004

ANNUAL GENERAL MEETING OF SHAREHOLDERS
Tuesday, 23 March 2004

STOCK EXCHANGE LISTING
SWX Swiss Exchange, SGSN
STOCK EXCHANGE TRADING
virt-x

COMMON STOCK SYMBOLS
Bloomberg: Registered Share: SGSN
Reuters: Registered Share: SGSZn.S
Telekurs: Registered Share: SGSN
ISIN: Registered Share: CH0002497458


CORPORATE COMMUNICATIONS & INVESTOR RELATIONS
Jean-Luc de Buman
SGS SA
1 place des Alpes
P.O. Box 2152
CH - 1211 Geneva 1
t +41 (0)22 739 93 31
f +41 (0)22 739 98 61
www.sgs.com


The 2003 YEAR END RESULTS including tables can be downloaded from the
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