2004: Successful roll-out of HR Outsourcing Strategy

2/28/2005, 7:00 AM (Source: GlobeNewswire)
Strong growth in all activities with sustained margins Net sales: € 153.1 million (+17.5%) EBITA: € 12.2 million (-8%) Current profit: € 9.6 million (+2%) Net profit: € 5.7 million (+3%)

Brussels, 28 February 2005
ARINSO International (Euronext Brussels: ARIN) has achieved its
financial & operational targets for 2004. In a market that is showing
early signs of recovery, ARINSO expanded its customer base &
services portfolio through innovation and a focused transition from a
consultancy to an HR service business. The first HRO & Payroll
contracts which were announced in 2003 & early 2004 are being
successfully on-boarded to our HR Service Centers. Hospira, a
specialty pharma delivery company, is an important new HRO deal
serviced from ARINSO's US Service Center as of Jan 2005. Hospira is
ARINSO's 7th full HRO deal.

Consolidated net sales amounted to € 153.1 million, up 17%
compared to 2003 - entirely through organic growth. At unchanged
exchange rates, sales growth would have been 19%. The company is
particularly pleased that this growth materialized in all three
business lines: HR Strategy, HR Integration & HR Outsourcing.

ARINSO reports full year EBITA of € 12.2 million, a margin
of 8.0% - recovering well from a dip in the second quarter. In 2004,
EBITA margins reflect important investments in the realization of the
HR Outsourcing strategy.
Net profit for the period (€ 5.7 million) and current net
profit, after tax & before depreciation on consolidation goodwill
(€ 9.6 million), improved modestly compared to 2003. Net
profit per share grew 5% to € 0.40.

2004 has been an important milestone in the rollout of ARINSO's HR
Outsourcing strategy. At the start of 2005, ARINSO People Services is
providing full HR administration for some 140,000 active employees in
Europe and the Americas. The total population for which ARINSO
provides Payroll Services is close to 250,000. These volumes clearly
put ARINSO on the map in the emerging HR Outsourcing market.
Especially in Pan-European Payroll outsourcing ARINSO has developed
an ERP-based offering which is unique in the marketplace, and which
will be further commercialized in the coming years.

ARINSO's local operations for the most part reached their financial &
commercial targets, further establishing ARINSO's recognition as an
innovative & reliable HR & Payroll partner. Outperformers are Asia
Pacific, where ARINSO's offshore strategy is starting to pay off, and
in Europe the Netherlands, Switzerland, Spain, Italy & Finland with
some highly successful contract wins & go-lives.

OUTLOOK for 2005:
ARINSO targets double digit sales growth for the coming years. In the
short term, the company expects a sustained EBITA margin of at least
8%, reflecting ongoing significant business development investments
and start-up costs related to new outsourcing contracts. In the mid
term, ARINSO is confident that a 10% EBITA margin is achievable.

ARINSO's business model consists of three areas:

HR BUSINESS CONSULTING
With € 6 million net sales (4%), the HR Strategy team has
become a trusted advisor to a growing number of leading employers in
Europe & North America. ARINSO's consultants assist multinational
organizations in determining their current HR Service model and
examining the potential of centralizing & possibly outsourcing HR
Services to decrease administrative costs while increasing the
quality of HR services. Our HR Transformation methodology serves many
clients in a move towards HR Shared Services or Outsourcing.

ARINSO PEOPLE SERVICES
Representing well above 25% of 2004 sales, up from 20% in 2003,
ARINSO's outsourcing activities are a key growth driver for the
group. Important investments in business development, infrastructure
& expertise are necessary to build ARINSO's long-term market share in
HR & Payroll Outsourcing. These investments reached € 5.5
million in 2004, and are all expensed as they occur. New outsourcing
deals lead to additional start-up costs, which are reflected in a
lower EBITA margin. Still, ARINSO remains confident that sacrificing
short term margins in order to build a long-term market position in
the fast-growing and attractive HR & Payroll outsourcing industry is
the right strategic choice.

In the United States a new HR Outsourcing contract was closed in the
4th quarter. Hospira (NYSE: HSP), a global specialty pharmaceutical
delivery company, selected ARINSO as their HRO partner for a 5 year,
$ 20 million contract covering 9,000 US employees. This contract
turned operational in Jan 2005 from ARINSO's new Atlanta Service
Center. ARINSO's European payroll contracts with industry rivals
Schindler and Kone have started servicing the first countries in
January 2005 from our Madrid Service Center - with an ambitious
roll-out scheduled for 2005.

In 2005, ARINSO will launch euHReka®, our pan-European HR & Payroll
platform for the mid-size market. Initial pilot clients such as
Belgium's ELIA are already being successfully serviced since a number
of months. ARINSO expects to see an important breakthrough in
pan-European Managed Payroll in 2005-2006.

ARINSO TECHNOLOGY SERVICES
ARINSO witnesses increasing demand in its Integration Business and
our outstanding delivery capabilities put us on the shortlist of most
large implementation projects.
In Europe, results were in line with expectations with strong
performance in markets such as the Netherlands, Switzerland, Spain,
Italy & Finland.
2004: CONSOLIDATED PROFIT & LOSS STATEMENT


IFRS - in EUR 2003 2004 Growth
Net sales 130,286,596 153,057,620 + 17%
Rebilled expenses 7,021,098 6,752,259
Other operating income 2,163,357 1,722,438
Purchases 17,113,736 16,057,142
Personnel costs 79,429,957 95,836,348
Services and other goods 26,797,623 34,250,900
Depreciation and amortisation expenses 5,689,629 5,987,225
Depreciation on fixed assets 1,786,110 2,064,113
Depreciation on goodwill 3,903,519 3,923,112
Other operating expenses 1,107,095 1,138,883
PROFIT FROM OPERATIONS 9,333,011 8,261,819
EBITA 13,236,530 12,184,931 - 8%
10.2% 8.0%
Financial revenue 2,250,174 1,733,032
Financial costs 1,635,571 1,289,844
PROFIT BEFORE TAX 9,947,614 8,705,007
Taxes 4,389,176 2,994,805
Income taxes 4,294,336 3,698,394
Changes in deferred taxes 94,840 -703,589
PROFIT AFTER TAX 5,558,438 5,710,202
Minority Interest
NET PROFIT for the period 5,558,438 5,710,202 + 3%
CURRENT PROFIT * for the period 9,461,957 9,633,314 + 2%

Nominal number of shares 14,667,823 14,550,823
Weighted average number of shares 14,587,912 14,335,714
Weighted average number of shares
after dilution 15,204,163 14,890,456
Net profit per share ** 0.38 0.40
Diluted net profit per share ** 0.37 0.38
Current net profit per share ** 0.65 0.67
Diluted net profit earnings per share
** 0.62 0.65
* Net Current profit = after tax before
depreciation on consolidation goodwill
** Weighted average number of shares


The statutory auditor, KPMG, represented by P.P. Berger, confirms
that his audit work, which is substantially completed, has not
revealed any significant matters, requiring adjustment to the
accounting information included in this press release.

As of 2004 ARINSO publishes full results under International
Financial Reporting Standards (IFRS) - using 2003 IFRS reference
figures. The IFRS valuation rules and the converted financials for
2003 with full reconciliation can be downloaded as from the ARINSO
2003 Annual Report:
http://www.arinso.com/investor/annual_index.cfm
4Q 04: CONSOLIDATED PROFIT & LOSS STATEMENT


IFRS - in EUR 4Q 2003 4Q 2004 Growth
Net sales 36,856,482 41,860,483 + 14%
Rebilled expenses 1,808,491 2,108,377
Other operating income 703,118 437,833
Purchases 7,155,974 4,999,832
Personnel costs 21,315,823 25,596,259
Services and other goods 6,459,545 9,504,177
Depreciation and amortisation expenses 1,421,131 1,577,793
Depreciation on fixed assets 442,320 597,011
Depreciation on goodwill 978,811 980,782
Other operating expenses 434,182 449,020
PROFIT FROM OPERATIONS 2,581,436 2,279,610
EBITA 3,560,247 3,260,392 - 8%
9.7% 7.8%
Financial revenue 856,901 502,374
Financial costs 904,980 433,696
PROFIT BEFORE TAX 2,533,357 2,348,288
Taxes 737,384 562,269
Income taxes 976,366 307,336
Changes in deferred taxes -238,982 254,933
PROFIT AFTER TAX 1,795,973 1,786,019
Minority Interest
NET PROFIT for the period 1,795,973 1,786,019 - 1%
CURRENT PROFIT * for the period 2,774,784 2,766,801 + 0%

Nominal number of shares 14,667,823 14,550,823
Weighted average number of shares
outstanding 14,587,912 14,335,714
Weighted average number of shares after
dilution 15,204,163 14,890,456
Net profit per share ** 0.12 0.12
Diluted net profit per share ** 0.12 0.12
Current net profit per share ** 0.19 0.19
Diluted net profit earnings per share ** 0.18 0.19
* Net Current profit = after tax before depreciation on
consolidation goodwill
** Weighted average number of shares

2004: CONSOLIDATED BALANCE SHEET


ASSETS Dec 31 '03 Dec 31 '04
Non-current Assets 13,515,905 11,653,122
Property, plant and equipment 2,272,936 3,597,979
Goodwill 6,902,710 2,979,598
Intangible assets 4,115 5,891
Long term receivables 3,114,131 3,053,654
Deferred tax Assets 1,222,013 2,016,000
Current Assets 87,558,351 105,486,728
Tax assets 1,119,567 1,323,469
Trade and other receivables 46,718,419 54,944,475
Cash and Cash equivalents 39,720,365 49,218,784
Total Assets 101,074,256 117,139,850

LIABILITIES Dec 31 '03 Dec 31 '04
Equity 70,527,989 79,058,426
Capital 60,654,923 61,910,548
Reserves 12,075,786 12,224,162
Result of the year 5,558,436 5,710,202
Translation differences -274,325 -442,205
Treasury shares -7,486,832 -344,281
Third parties 2,500 2,500
Non-current liabilities 107,412 189,320
Interest bearing liabilities 8,490 0
Deferred Tax liabilities 98,922 189,320
Current Liabilities 30,436,355 37,889,604
Interest bearing liabilities 3,197,094
Tax liabilities 1,338,330 1,373,604
Trade and other liabilities 28,362,927 32,327,871
Provisions 735,098 991,035
Total Liabilities 101,074,256 117,139,850


2004: EQUITY RECONCILIATION


Dec 31 '03 + - Dec 31 '04
Equity 70,527,989 79,058,426

Capital 60,654,923 1,255,625 61,910,548
Reserves 12,075,786 5,658,067 5,509,691 12,224,162
Reserves 12,075,786 5,558,436 17,634,222
Cancellation of treasury
shares 5,509,691 -5,509,691
Profit on the sale of
treasury shares 99,631 99,631
Result of the year 5,558,436 5,710,202 5,558,436 5,710,202
Translation differences -274,325 167,880 -442,205
Treasury shares -7,486,832 -971,814 -8,114,365 -344,281



BALANCE SHEET and CASH FLOW STATEMENT

ARINSO's consolidated balance sheet per 31 Dec 2004 remains extremely
solid, with a solvency ratio (equity vs. total assets) of 67% and a
cash position of € 49 million, allowing the group to
independently invest in its strategic HRO ambitions.

Since the start of the year, ARINSO has generated € 6.4
million cash flow from operating activities. Together with €
3.2 million from investing & financing activities, ARINSO generates
sufficient cash to realize its business plan ambitions for the
foreseeable future. In view of the long-term outsourcing contracts,
ARINSO continues to invest considerably in capital expenditure and
pre-financing leveraging. In 2004, ARINSO pre-financed more than
€ 4 million for its HRO clients.

STAFFING
Per 31 Dec 2004, ARINSO International employed 1,769 staff in 22
countries. Compared to 2003, this is an increase of 26% - partly
because of the set-up of the various ARINSO HR Service Centers in
Asia, the US and Europe.

RELATED PARTY TRANSACTIONS
Related party transactions over the reporting period consisted of the
directors' and the worldwide executive management's remuneration of
€ 2.5 million.

2004: PRIMARY SEGMENT REPORTING


in EUR NET SALES EBIT EBIT %
Regions 2003 2004 growth 2003 2004 growth 2003 2004
West Europe 43,069,517 47,177,580 10% 5,783,746 3,900,478 -33% 13% 8%
Central 36,030,091 46,245,819 5,394,999 7,447,458 15% 16%
Europe 28% 38%
North Europe 15,651,701 19,408,386 24% 1,880,487 1,279,059 -32% 12% 7%
South Europe
& Latin 13,681,629 19,796,630 45% 1,052,523 2,259,637 115% 8% 11%
America
North 25,573,668 24,907,502 2,713,790 -237,873 11% -1%
America -3% -109%
Asia Pacific 2,869,104 4,232,568 48% 202,868 613,247 202% 7% 14%
Not 603,834 841,624 -3,791,884 -3,077,075
allocated 39% -19%
Total 137,479,545 162,610,108 18% 13,236,529 12,184,931 -8%
Intersegment 7,192,949 9,552,488
elim.
ARINSO GROUP 130,286,596 153,057,620 17% 13,236,529 12,184,931 -8% 10% 8%


Primary segment information is presented in accordance with the
Group's geographical segments based on the location of the servicing
company.
2004: CASH FLOW STATEMENT


in EUR 2003 2004
OPERATING ACTIVITIES
Profit before tax 9,947,611 8,705,007
Finance income and expense -614,603 -443,188
Depreciation and write-offs 1,786,110 2,064,113
Depreciation on consolidation goodwill 3,903,519 3,923,112
Profit and loss on sale of fixed assets 3,116 20,765
Operating cash flow 15,025,753 14,269,809
Taxes Paid -5,668,799 -3,867,021
Changes in trade and other assets -13,813,273 -8,165,579
Changes in trade and other liabilities 5,306,561 3,964,945
Change of provision -1,375,906 255,937
Currency translation differences -101,162 -49,517
NET CASH FLOW FROM OPERATING ACTIVITIES -626,826 6,408,573
Investments in Tangible and Intangible Fixed
Assets
Investments in tangible and intangible fixed
assets (-) -1,932,896 -3,534,688
Income from the sale of fixed assets (+) 86,760 122,102
Net cash flow from investments in FA -1,846,136 -3,412,586
Net cash flow from investments in FFA 940,238 980,000
NET CASH FLOW FROM INVESTING ACTIVITIES -905,898 -2,432,587
FINANCING ACTIVITIES
Long and short term financing -5,129 3,188,604
Capital increase 409,500 1,255,625
Acquisition/sale of treasury shares -7,486,832 1,732,491
Interest paid on debts (-) -201,390 -183,219
Other financial income and charges -290,795 -353,593
NET CASH FLOW FROM FINANCING ACTIVITIES -7,574,646 5,639,908
TOTAL NET CASH FLOWS -9,107,370 9,615,894
EFFECTS OF EXCHANGE RATE CHANGES -522,610 -117,475
ON CASH AND CASH EQUIVALENTS
NET INCREASE OF INVESTMENTS AND CASH
Beginning of the period
Total cash and cash equivalents at beginning
of the period 49,350,345 39,720,365
End of the period
Total cash and cash equivalents at end of the
period 39,720,365 49,218,784
NET INCREASE OF INVESTMENTS AND CASH -9,629,980 9,498,419



Update on the ARINSO share buy-back program:

Per 31 December 2004 ARINSO owned 33,329 treasury shares. ARINSO aims
to continue the execution of its share buy back program in the months
to come.

About ARINSO International

ARINSO International (Euronext Brussels: ARIN) is a global HR
Services partner offering innovative HR business solutions to the
world's largest employers. ARINSO is dedicated to HR Excellence
through Strategic Consultancy, Outsourcing Services and Technology
Integration Services.

ARINSO was founded in 1994 and currently employs close to 1,800 staff
in 22 countries: Belgium, Luxembourg, the Netherlands, France, Spain,
Portugal, Italy, United Kingdom, Germany, Sweden, Switzerland,
Finland, Poland, US, Canada, Argentina, Brazil, Mexico, Singapore,
Malaysia, Thailand & Morocco.
www.arinso.com

Information for Shareholders:


+--------------------------------------------------------+
| 29 Apr 2005 | Annual Shareholders' Meeting | 10h00 CET |
|-------------+------------------------------+-----------|
| 24 May 2005 | Q1 2005 Results | 07h00 CET |
|-------------+------------------------------+-----------|
| 6 Sep 2005 | H1 2005 Results | 07h00 CET |
|-------------+------------------------------+-----------|
| 15 Nov 2005 | Q3 2005 Results | 07h00 CET |
|-------------+------------------------------+-----------|
| 27 Feb 2006 | Full 2005 Results | 07h00 CET |
+--------------------------------------------------------+


The 2004 Annual Report can be downloaded from www.arinso.com as of
March 31, 2005. Should you wish to be on our distribution list for
press releases, please inform invest@arinso.com

Financial Service
Fortis Bank
Montagne du Parc 3
1000 Bruxelles
View document
More information
ARINSO International
Marleen Vercammen
Chief Financial Officer
Tel. +32 2 558 06 70
Fax +32 2 558 06 80
marleen.vercammen@arinso.com

Safe Harbor
This report contains statements which address key issues as ARINSO's
growth strategy, future financial results, market positions,
pipeline, and solutions development. Such statements, including but
not limited to the "Outlook", should be carefully considered, and it
should be understood that many factors could cause forecasted and
actual results to differ from these statements. These factors
include, but are not limited to price fluctuations, currency
fluctuations, developments in personnel costs, legal issues, and
legislative, fiscal, and other regulatory measures. Stated
competitive positions are based on management estimates supported by
information provided by specialized external agencies.
Copyright GlobeNewswire, Inc. 2016. All rights reserved.
You can register yourself on the website to receive press releases directly via e-mail to your own e-mail account.