Brunel International : Press Release Brunel Q3 2019 results

Australasia (unaudited)
P&L amounts in EUR million
	Q3 2019	Q3 2018	Δ%			YTD 2019	YTD 2018	Δ%
Revenue	31.1	30.4	2%	a		88.4	86.4	2%	b
Gross Profit	2.6	2.5	5%			7.3	7.0	3%
Gross margin	8.3%	8.1%				8.2%	8.1%
Operating costs	2.9	2.5	16%	c		8.5	7.5	13%	d
EBIT	-0.3	-				-1.2	-0.5	-129%
EBIT %	-0.8%	-0.1%				-1.4%	-0.6%
Average directs	906	917	-1%			907	925	-2%
Average indirects	86	80	8%			85	77	10%
Ratio direct / Indirect	10.5	11.5				10.7	12.0

a 3 % like-for-like b 3 % like-for-like c 14 % like-for-like d 13 % like-for-like Like-for-like is measured excluding the impact of currencies and acquisitions

Australasia includes Australia and Papua New Guinea. We achieved limited growth despite the low number of new projects in the Oil & Gas industry in this year. The increase in operating costs mainly relates to increased sales activities to prepare for upcoming projects.

Middle East & India (unaudited)
P&L amounts in EUR million
	Q3 2019	Q3 2018	Δ%			YTD 2019	YTD 2018	Δ%
Revenue	29.5	22.6	31%	a		85.1	62.1	37%	b
Gross Profit	5.1	4.0	26%			15.0	11.0	37%
Gross margin	17.2%	17.8%				17.7%	17.7%
Operating costs	2.5	1.9	32%	c		7.3	5.5	33%	d
EBIT	2.6	2.1	24%			7.7	5.5	41%
EBIT %	8.6%	9.1%				9.1%	8.8%
Average directs	2,605	3,478	-25%			3,411	2,992	14%
Average indirects	142	116	23%			136	114	19%
Ratio direct / Indirect	18.3	30.0				25.0	26.2

a 23 % like-for-like b 30 % like-for-like c 21 % like-for-like d 26 % like-for-like Like-for-like is measured excluding the impact of currencies and acquisitions

Middle East & India continues its strong, double digit growth, mainly driven by the results in Qatar and Kuwait. We have seen a small decline in revenue in India.

As a result of the implementation of IFRS 16, for Q3 an amount of EUR 0.4 million is now recorded under operating costs, which was previously (2018) recorded in cost of sales.

Rest of world (unaudited)
P&L amounts in EUR million
	Q3 2019	Q3 2018	Δ%			YTD 2019	YTD 2018	Δ%
Revenue	72.8	55.1	32%	a		197.1	149.7	32%	b
Gross Profit	11.0	8.4	31%			28.6	22.7	26%
Gross margin	15.1%	15.3%				14.5%	15.2%
Operating costs	11.4	7.9	44%	c		29.7	23.9	24%	d
EBIT	-0.4	0.5				-1.1	-1.2	9%
EBIT %	-0.5%	0.9%				-0.6%	-0.8%
Average directs	2,688	2,490	8%			2,659	2,735	-3%
Average indirects	418	365	15%			413	374	10%
Ratio direct / Indirect	6.4	6.8				6.4	7.3

a 29 % like-for-like b 29 % like-for-like c 39 % like-for-like d 21 % like-for-like Like-for-like is measured excluding the impact of currencies, acquisitions and discontinued operations Rest of World includes Americas, Asia, Russia and the remaining European countries, but excludes the results from BIS. Asia and Americas are the main growth drivers, following increased activities in the Oil & Gas sector. Revenue growth exceeds growth in direct headcount due to a change in the mix.

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

Discontinued operations - Brunel Industry Services

As announced in our press release on 23 October, we have decided to halt our operations in BIS. The market for shale oil & gas experienced a slowdown bringing the revenues of our BIS-activities at a very low level of EUR 2.4 million in Q3. As we had built up our organisation in the past period, there was a disbalance between capacity and activities, resulting in significant operational losses of EUR 6.5 million in Q3.

As announced in the October press release, we expect to incur operational losses for BIS in Q4 of EUR 2.5 million and one-off costs of EUR 8 million to cease activities and speed up the finalization of current projects.

Cash position

In line with seasonal patterns, the cash position increased to EUR 81.7 million (30 June 2019: EUR 60.6 million).

Effective tax rate

Due to the fact that the losses incurred by BIS in 2019 will not result in a refund of corporate income tax, nor result in a deferred tax asset, our effective tax rate for 2019 will be over 70%, compared to 34% over 2018. Additionally, the deferred tax asset on the balance sheet relating to the US of EUR 3.7 million is expected to be (partially) impaired.

Dividend

Brunel has the dividend policy to pay out between 30% and 100% of the result over the year. In light of the developments in BIS, we will exclude the results from discontinued activities and use normalised earnings as the basis for dividend over 2019.

Outlook for 2019

For our continued activities, revenue for the full year is expected to be between EUR 980 million and EUR 1,030 million, with EBIT between EUR 37 million and EUR 42 million.

Reported EBIT is expected to be between EUR 15 million and EUR 20 million for the full year 2019. Including BIS, revenue will be between EUR 1,025 million and 1,075 million.