First quarter results in line with expectations

5/24/2005, 7:00 AM (Source: GlobeNewswire)
1Q2005: Solid topline growth, increase in net profit Net sales: € 41.9 million (+11%) EBITA: € 3.5 million (-3%) Current profit: € 2.8 million (+4%) Net profit: € 2.8 million

Brussels, 24 May 2005
ARINSO International (Euronext Brussels: ARIN), a global HR Services
partner offering innovative HR business solutions, announces first
quarter 2005 net sales of € 41.9 million, an increase of
11%. First quarter's diluted net current profit per share increases
by 6% to € 0.19 per share. "We feel comfortable with our Q1
performance as we continue to build market share, leveraging on our
strong ability to execute", said Jos Sluys, ARINSO Chief Executive
Officer. "In a market in which competition is fierce, and with clear
signs of industry consolidation, ARINSO is strengthening its position
thanks to our best practice in HR Innovation."

ARINSO is proud to announce that Jozef Cornu has been co-opted as
Independent Director. Jo Cornu, a former President and COO of Alcatel
Telecom and currently holding the position of board member at
Alcatel, KBC Group, Afga Gevaert, Barco and Chairman of ISTAG, brings
a wealth of experience in international business to the ARINSO Board.

Consolidated net sales amount to € 41.9 million, up 11%
compared to 1Q2004, entirely through organic growth. At unchanged
exchange rates, sales growth would have been 12%. The company is
particularly pleased that this growth materialized in all three
business lines: HR Strategy, HR Integration & HR Outsourcing.

ARINSO reports a quarterly EBITA of € 3.5 million, a margin
of 8.3% - slightly higher than the full year 2004 margin, and in line
with the Company's guidance on short-term profit margins.

Net profit for the period (€ 2.8 million) equals current net
profit in the first quarter as ARINSO, in accordance with IFRS, no
longer depreciates the positive consolidation differences as from Jan
2005. In line with IAS 36, a yearly impairment test will be performed
on the consolidation goodwill. The net book value of the remaining
goodwill is € 3.0 million.

The start of the year 2005 has been particularly promising with the
win of several contracts on euHReka®, ARINSO's ready to use global HR
& Payroll platform based on SAP. Through some early successes,
euHReka is already today clearly recognized in the market for its
innovative, flexible and competitive offering.

In The Netherlands, ARINSO People Services ('APS') announced an
agreement with one of the most important bank-insurance companies,
whereby APS will be responsible for the salary administration of
51,000 employees. ARINSO People Services US is clearly on track,
already servicing four clients and their 20,000 employees. Asia
Pacific, the ARINSO off-shore center, continues to deliver strong
growth and increasing margins. In Europe, ARINSO's local operations
for the most part reached their financial & commercial targets. In
Europe, ARINSO expects an important breakthrough of euHReka's
European Managed Payroll solution in 2005-2006.


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:

With € 1.5 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.

Representing 27% of Q1 2005 sales, up from 25% in 2004 and 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.

In the United States, the HR Outsourcing contract with Hospira (NYSE:
HSP) turned succesfully operational in Jan 2005 from ARINSO's new
Atlanta Service Center. ARINSO's European payroll contracts at
Schindler & Kone have started servicing the first countries in
January 2005 from our Madrid Service Center - with an ambitious
roll-out scheduled for 2005.

ARINSO witnesses increasing demand in its Integration Business and
our outstanding delivery capabilities put us on the shortlist of most
large implementation projects. The project business still accounts
for 69% of group sales.

1Q2005: CONSOLIDATED PROFIT & LOSS STATEMENT
unaudited


IFRS - in EUR Q1 2004 Q1 2005 Growth
Net sales 37,723,972 41,863,487 + 11%
Rebilled expenses 1,392,139 2,262,970
Other operating income 459,899 377,623
Purchases 3,417,463 4,140,633
Personnel costs 23,250,416 27,172,380
Services and other goods 8,576,717 8,950,566
Depreciation and amortization expenses 1,445,650 615,901
Depreciation on fixed assets 464,873 615,901
Depreciation on goodwill 980,777 -
Other operating expenses 265,147 135,835
PROFIT FROM OPERATIONS 2,620,617 3,488,763
EBITA 3,601,394 3,488,763 - 3%
EBITA margin 9.5% 8.3%
Financial revenue 376,837 849,135
Financial costs 304,377 227,822
PROFIT BEFORE TAX 2,693,077 4,110,076
Taxes 955,866 1,271,276
Income taxes 1,116,708 1,546,047
Changes in deferred taxes -160,842 -274,770
PROFIT AFTER TAX 1,737,211 2,838,800
Minority Interest
NET PROFIT for the period 1,737,211 2,838,800 + 63%
CURRENT PROFIT * for the period 2,717,988 2,838,800 + 4%

Nominal number of shares 14,667,823 14,550,823
Weighted average number of shares
outstanding 13,992,539 14,512,483
Weighted average number of shares after
dilution 14,771,344 14,876,483
Net profit per share (in EUR) ** 0.13 0.20
Diluted net profit per share (in EUR) ** 0.12 0.19
Current net profit per share (in EUR) ** 0.19 0.20
Diluted net profit earnings per share
(in EUR) ** 0.18 0.19

* Net Current profit = after tax before depreciation on
consolidation goodwill
** Weighted average number of shares



As of 2004 ARINSO publishes full results under International
Financial Reporting Standards (IFRS). The IFRS valuation rules can be
downloaded as from the ARINSO 2004 Annual Report:

http://www.arinso.com/investor/annual_index.cfm
March 31, 2005: CONSOLIDATED BALANCE SHEET
Unaudited


IFRS in EUR
ASSETS Dec 31 '04 March 31 '05
Non-current Assets 11,653,122 12,598,336
Property, plant and equipment 3,597,979 3,994,684
Goodwill 2,979,598 2,979,597
Intangible assets 5,891 5,505
Long term receivables 3,053,654 3,320,702
Deferred tax Assets 2,016,000 2,297,848
Current Assets 105,486,728 107,117,102
Tax assets 1,323,469 1,625,863
Trade and other receivables 54,944,475 54,571,042
Cash and Cash equivalents 49,218,784 50,920,197
Total Assets 117,139,850 119,715,438

LIABILITIES Dec 31 '04 March 31 '05
Equity 79,058,426 81,735,041
Capital 61,910,548 61,910,548
Reserves 12,224,162 17,934,364
Result of the year 5,710,202 2,838,800
Translation differences -442,205 -246,262
Treasury shares -344,281 -702,410
Third parties 2,500 2,500
Non-current liabilities 189,320 196,395
Deferred Tax liabilities 189,320 196,395
Current Liabilities 37,889,604 37,781,502
Interest bearing liabilities 3,197,094 3,331,892
Tax liabilities 1,373,604 2,160,548
Trade and other liabilities 32,327,871 31,452,348
Provisions 991,035 836,713
Total Liabilities 117,139,850 119,715,438



March 31, 2005: EQUITY RECONCILIATION


IFRS in EUR
Dec 31 '04 + - March 31 '05
Equity 79,058,426 81,735,041

Capital 61,910,548 61,910,548
Reserves 12,224,162 5,710,202 17,934,364
Result of the year 5,710,202 2,838,800 5,710,202 2,838,800
Translation differences -442,205 195,943 -246,262
Treasury shares -344,281 358,129 -702,410



BALANCE SHEET and CASH FLOW STATEMENT

ARINSO's consolidated balance sheet per 31 March 2005 remains
extremely solid, with a solvency ratio (equity vs. total assets) of
68% and a cash position exceeding € 50 million, allowing the
group to independently invest in its strategic HRO ambitions.

Since the start of the year, ARINSO has generated € 2.1
million cash flow from operating activities. After the net investment
of € 0.6 million in 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. The balance sheet at 31
March 2005 contains long and short-term receivables related to
pre-financed contracts amounting to more than € 4 million.

In line with previous announcements, ARINSO announced on 29 April
2005 that the Employee Stock Options Plan, of which the final section
matured in 2005, has led to a capital increase of €
1,780,625 and the creation of 508,750 new shares.

STAFFING
Per 31 March 2005, ARINSO International employed 1,812 staff in 22
countries. Compared to 2004, this is an increase of 23%.

RELATED PARTY TRANSACTIONS
Related party transactions over the reporting period consisted of the
directors' and the worldwide executive management's remuneration of
€ 0.8 million.

1Q2005: PRIMARY SEGMENT REPORTING


Regions NET SALES EBITA EBITA %
Q1 Q1
Q1 2004 Q1 2005 growth Q1 2004 Q1 2005 growth 2004 2005
Europe 31,141,674 33,611,702 +8% 4,368,571 3,006,963 -31% 14.0% 9.0%
Americas 6,663,036 6,913,720 +4% 84,052 140,372 +67% 1.3% 2.0%
Asia Pacific 524,953 1,573,478 +200% -193,436 410,823 -36.8% 26.1%
Not 100,860 165,519 -657,794 -69,394
allocated

Total 38,430,523 42,264,419 3,601,394 3,488,763 -3%
Intersegment 706,551 400,932
eliminations
GROUP 37,723,972 41,863,487 +11% 3,601,394 3,488,763 -3% 9.5% 8.3%



The primary segment information is presented in accordance with the
Group's geographical segments based on the location of the servicing
company. As from 2005 the geographical segments are presented as
Americas, Europe and Asia Pacific, as such reflecting the internal
management reporting, which is mainly based on the business model of
the group, and increasingly focuses on the presence of HR Service
Centers in the three main time zones.
1Q2005: CASH FLOW STATEMENT



in EUR Q1 2004 Q1 2005
OPERATING ACTIVITIES
Profit from operations 2,620,618 3,488,763
Depreciation and write-offs 464,873 615,901
Depreciation on consolidation goodwill 980,777 0
Profit and loss on sale of fixed assets -773 -10,249
Operating cash flow 4,065,494 4,094,416
Taxes Paid -569,818 -1,061,497
Changes in trade and other assets -2,141,813 106,385
Changes in trade and other liabilities 721,569 -875,523
Change of provision -234,999 -154,322
Operational interests income 0 50,737
Currency translation differences -37,587 -66,203
NET CASH FLOW FROM OPERATING ACTIVITIES 1,802,847 2,093,992
Investments in Tangible and Intangible Fixed
Assets
Investments in tangible and intangible fixed
assets (-) -560,348 -978,451
Income from the sale of fixed assets (+) 13,812 32,874
Net cash flow from investments in FA -546,536 -945,577
Net cash flow from investments in FFA 240,075 304,365
NET CASH FLOW FROM INVESTING ACTIVITIES -306,461 -641,212
FINANCING ACTIVITIES
Long and short term financing 615,784 134,798
Capital increase 0 0
Acquisition/sale of treasury shares -627,533 -358,129
Interest paid on debts (-) -34,603 -64,753
Other financial income and charges -133,012 330,964
NET CASH FLOW FROM FINANCING ACTIVITIES -179,364 42,881
TOTAL NET CASH FLOWS 1,317,021 1,495,660
EFFECTS OF EXCHANGE RATE CHANGES 221,490 205,753
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 39,720,365 49,218,784
End of the period
Total cash and cash equivalents at end of the
period 41,258,876 50,920,197
NET INCREASE OF INVESTMENTS AND CASH 1,538,511 1,701,413



Update on the ARINSO share buy-back program:

Per 31 March 2005 ARINSO owned 65,636 treasury shares. ARINSO aims to
continue the execution of its share buy back program in the months to
come. The Board enacted on April 26 2005 the cancellation of 50,122
own shares.

Board of Directors
With the co-optation of Mr. Cornu, the Board of ARINSO counts seven
directors, of which four are independent non-executives.

Willy Breesch Chairman (non-executive)
Jan Carlsson Non-executive Board Member
Luc Van den Bossche Non-executive Board Member
Jo Cornu Non-executive Board Member
Jos Sluys CEO
Marleen Vercammen CFO
Rudy Vandenberghe Executive Board Member



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 more than 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:


+---------------------------------------------+
| 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. Should
you wish to be on our distribution list for press releases, please
inform invest@arinso.com

Financial Service
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Montagne du Parc 3
1000 Bruxelles
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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.
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