Brunel International N : Press Release Brunel Q4 and FY 2019 results

The gross margin is 26.8% in Q4 2019 (Q4 2018: 27.7%). The decrease in gross margin is mainly the result of the mix between own personnel vs. freelancers and a lower productivity. The number of working days had no impact in Q4.

Working days:

Operating costs have decreased as a result of rightsizing the organization to the current activity level. This will give us a good basis to grow our profitability in 2020.

a 10 % like-for-like
b 5 % like-for-like
c -6 % like-for-like
d 7 % like-for-like
Like-for-like is measured excluding the impact of currencies and acquisitions

Australasia includes Australia, New Zealand and Papua New Guinea. We have managed to achieve moderate revenue growth, mainly in the Oil & Gas market. The increase in operating costs for the full year mainly relate to continued investments in our commercial organization and office moves.

a 25 % like-for-like b 28 % like-for-like c 17 % like-for-like d 24 % like-for-like Like-for-like is measured excluding the impact of currencies and acquisitions The performance in the Middle East & India remains strong. The continued double digit growth is mainly driven by the performance in Qatar and Kuwait. Gross margin decreased slightly due to a different mix of projects.

a 36 % like-for-like
b 36 % like-for-like
c 45 % like-for-like
d 32 % like-for-like
Like-for-like is measured excluding the impact of currencies and acquisitions

The region Americas includes Canada, United States, Mexico, Guyana and Brazil. All countries contributed to growth in revenue. Operating costs have increased as a result of investments in the sales force and the opening of our entity in Guyana, to facilitate continued strong growth. We are well positioned to continue to profitability.

a 27 % like-for-likeb 26 % like-for-likec 40 % like-for-liked 20 % like-for-likeLike-for-like is measured excluding the impact of currencies and acquisitions

Rest of World includes Asia, Russia, Belgium and Europe & Africa. The main growth driver in the region is Asia following increased activities in the Oil & Gas sector. Revenue growth exceeds growth in direct headcount due to a change in the mix. The change in the mix also explains the lower gross margin.

Operating cost increased due to further investments in our sales force and new branches in China.

Brunel Industry Services

As announced in our press release on 23 October, we are winding down our operations in BIS. In Q4, we managed to terminate all existing client contracts, except, as planned, the project for the water treatment plant. We also terminated all staff contracts and agreements with contractors that are not working on the water treatment plant, sold all assets and terminated the leases of 1 of our 3 locations. The loss for Q4 was EUR 10.4 million, in line with our forecasted EUR 10.5 million. We continue to expect to finalize the water treatment project in Q2 2020.

Segment reporting

Starting Q4 2019 we will report Americas separately. All regions exceeding 10% of total revenue, EBIT or total assets are reported separately, while the remaining regions are combined in Rest of World. Until the previous quarter, Americas was included in Rest of World.

Effective tax rate

Due to the fact that the losses in BIS do not result in a refund of corporate tax, nor in a recognition of a deferred tax asset, the effective tax rate increased from 33.7% in 2018 to 99.2% in 2019. This was strongly affected by the loss in BIS and the related impairment of deferred tax assets.

Cash position

The December 2019 cash balance, including cash deposits, amounted to EUR 91.9 million and decreased by EUR 14.1 million YoY.

Dividend

The reported earnings per share over 2019 amount to EUR 0.08. Excluding the losses incurred in BIS, our earnings per share amount to EUR 0.43. In line with the policy to pay out between 30% and 100% of the result over the year, we propose a pay-out ratio over 70% over 2019, of the adjusted earnings per share, as announced at our Q3 results. This comes down to a dividend of EUR 0.30 per share, an increase of 20% compared to the EUR 0.25 per share over 2018.

Outlook

We are mindful of the possible impact of the Corona-virus on our activities in China, although the impact on our overall results so far is limited. We are cautiously optimistic about 2020. With the 14% revenue growth achieved over 2019, we will start at a higher level in many regions outside Europe, and we clearly have more growth opportunities in these regions. In Europe, we start at a lower level, but we have rightsized our operations, whilst strengthening the organisation, creating new opportunities for growth, especially in DACH.