Aalberts NV

Earnings Release • Feb 26, 2015

Aalberts Industries

increases earnings per share +10%

Langbroek, 26 February 2015

Highlights

• o Revenue EUR 2,201 million, increase +8% (organic +3.1%)
• o Operating profit (EBITA) +10% to EUR 247 million; EBITA-margin 11.2%
• o Net profit before amortisation +11% to EUR 168 million; earnings per share EUR 1.52
• o Free cash flow +27% to EUR 222 million
• o Strengthened market positions due to acquisitions Nexus Valve, Flamco and Impreglon
• o Dividend proposal +12% to EUR 0.46 per share in cash

Key figures

in EUR million	2014	2013	DELTA
Revenue	2,201	2,040	8%
Added-value	1,332	1,223	9%
Added-value as a % of revenue	60.5	60.0
Operating profit (EBITDA)	332	305	9%
EBITDA as a % of revenue	15.1	14.9
Operating profit (EBITA)	247	225	10%
EBITA as a % of revenue	11.2	11.0
Net profit before amortisation	168	152	11%
Average number of shares (x million)	110.6	110.1	-
Earnings per share before amortisation (x EUR 1)	1.52	1.38	10%
Cash dividend per share (x EUR 1)	0.46	0.41	12%
Total equity as a % of total assets	47.9	52.8
Net debt	690	480	44%
Leverage ratio: Net debt / EBITDA (12-months-rolling)	1.9	1.6
Interest cover ratio (12-months-rolling)	22.6	19.0
Net debt / Total equity	0.6	0.5
Cash flow (net profit + depreciation + amortisation)	253	232	9%
Free cash flow (before interest and tax)	222	175	27%
Capital expenditure	85	106	(20%)
Net working capital	427	373	14%
Net working capital as a % of revenue (12-months-rolling)	18.0	18.3
Capital employed	1,866	1,535	22%
Return on capital employed (ROCE 12-months-rolling)	14.0	14.6
Number of employees at end of period (x1)	14,492	12,311	18%
Effective tax rate in %	27.4	26.8

Wim Pelsma

Chief Executive Officer

ANOTHER GOOD YEAR FOR AALBERTS INDUSTRIES. WE MANAGED TO REALISE A RECORD REVENUE OF EUR 2,201 MILLION AND A RECORD NET PROFIT OF EUR 168 MILLION, AN INCREASE OF 11% COMPARED TO 2013. EARNINGS PER SHARE INCREASED 10% TO EUR 1.52.

As a result of our focus on technologies with growth potential and continuous improvement of our joint marketing and sales approach, we have achieved an organic growth of 3.1%, despite difficult conditions in Europe in some markets.

In addition to the organic growth, we strengthened our market positions with three acquisitions (Nexus Valve, Flamco and Impreglon). These are valuable additions to our product and technology portfolio and our global service network.

As a group we have delivered a good performance and managed to increase the free cash flow with 27%. Despite two major acquisitions, we managed to keep our net debt to a level below two times EBITDA with an equity of 48% of total assets.

A cash dividend of EUR 0.46 per share (2013: EUR 0.41) will be proposed, an increase of 12%.

Financial results

The revenue increased by 8% (3.1% organic) to EUR 2,201 million (2013: EUR 2,040 million). The addedvalue margin (revenue minus raw materials and work subcontracted) amounted to 60.5% (2013: 60.0%).

Operating profit (EBITA) increased by 10% to EUR 246.7 million (2013: EUR 224.6 million), 11.2% of total revenue (2013: 11.0%). Net interest expenses amounted to EUR 15.7 million (2013: 16.0 million). Income tax increased to 56.4 million (2013: 49.8 million); the effective tax rate was 27.4% (2013: 26.8%). Net profit before amortisation increased by 11% to EUR 167.9 million (2013: EUR 151.7 million), EUR 1.52 per share (2013: EUR 1.38).

Investments in tangible fixed assets decreased by 20% to EUR 85 million (2013: EUR 106 million). Net working capital increased to EUR 427 million, 18.0% of revenue (2013: EUR 373 million, or 18.3%), mainly due to acquisitions. The free cash flow improved strongly and increased by EUR 47 million to EUR 222 million (2013: EUR 175 million). The return on capital employed (ROCE) was 14.0% (2013: 14.6%).

Total equity remained at a good level of 47.9% of total assets (2013: 52.8%), while as a result of acquisitions, net debt increased by EUR 210 million to EUR 690 million (2013: EUR 480 million). The leverage ratio was 1.9, well below the bank covenant <3.0; the interest cover ratio improved from 19.0 to 22.6.

Operational developments

In Building Installations the markets in Europe were still challenging. Positive signs were visible in some countries. The sales of product lines with growth potential was successful. North America made a good year. Especially because of the growth of the new products and complete offering of the portfolio. The focus will remain on improving our joint marketing and sales approach, efficiency improvements and the utilisation of the various production sites.

In Climate Control good growth was achieved. The cooperation within this activity is intensified. Also the business is strengthened with two acquisitions. Nexus Valve, with a leading position in balancing valves, offers an opening to the North American market. The acquisition in the Netherlands of the strong brand Flamco extends the portfolio with expansion vessels, safety and efficiency-control valves. These additions enable Climate Control to offer a complete system solution with high added-value in many countries.

Industrial Controls achieved organic revenue growth, despite a decline in the semiconductor market during the year and challenging conditions in the Russian market in the second half year. In contrast, especially the activities in the industrial markets in North America and Europe and the beer & soft drink market performed well. Local investments and new products kept revenue on a good level in the district energy and oil & gas activities. Also several projects started to further improve (production) efficiency.

Industrial Services showed good revenue growth, although there was an impact by start-up and expansion costs of several production sites. Some smaller locations were integrated in bigger facilities to realise more efficiency. The acquisition of Impreglon strengthened the market position in surface treatment, the technology portfolio and the service network, especially in North America.

The focus remains on continuous strengthening of the market positions, improvement of the marketing and sales approach, further implementation of the Operational Excellence projects and the integration and optimisation of the recent acquisitions.

It is expected that further profitable growth will be realised in 2015.

More information (from 8 am CET): Financial calendar

Wim Pelsma (CEO) John Eijgendaal (CFO)

+31 (0)343 56 50 80 info@aalberts.com

Outlook Dividend

Aalberts Industries proposes to increase the cash dividend per ordinary share by 12% to EUR 0.46 (2013: EUR 0.41). A proposal will be submitted to the General Meeting, to be held on 21 April 2015.

10 March 2015	Publication annual report 2014 (website)
24 March 2015	Registration date for General Meeting
20 April 2015	Trading update (before start of trading)
21 April 2015	General Meeting
23 April 2015	Quotation ex-dividend
24 April 2015	Record date for dividend
19 May 2015	Paying out dividend
13 August 2015	Publication of interim figures 2015 (before start of trading)
22 October 2015	Trading update (before start of trading)
25 February 2016	Publication of annual figures 2015 (before start of trading)

Attachments: Consolidated income statement, balance sheet, cash flow statement, equity, Segment reporting, Key figures.

Consolidated income statement

in EUR million	2014	2013
REVENUE	2,200.8	2,040.0
Raw materials and work subcontracted	(868.9)	(816.7)
Personnel expenses	(617.8)	(564.6)
Depreciation of property, plant and equipment	(84.8)	(79.9)
Amortisation of intangible assets	(20.4)	(17.5)
Other operating expenses	(382.7)	(354.2)
Total operating expenses	(1,974.6)	(1,832.9)
OPERATING PROFIT	226.2	207.1
Net interest expense	(15.7)	(16.0)
Foreign currency exchange results	(1.1)	(3.1)
Derivative financial instruments	(0.7)	0.2
Net interest expense on employee benefit plans	(2.7)	(2.5)
Net finance cost	(20.2)	(21.4)
PROFIT BEFORE TAX	206.0	185.6
Tax expenses	(56.4)	(49.8)
NET PROFIT AFTER TAX	149.6	135.8
Attributable to:
Shareholders	147.5	134.2
Non-controlling interests	2.1	1.6
NET PROFIT BEFORE AMORTISATION	167.9	151.7
Earnings per share before amortisation
Outstanding	1.52	1.38
Diluted	1.52	1.38

Consolidated balance sheet

before profit appropriation in EUR million	31-12-2014	31-12-2013
ASSETS
Goodwill	624.7	513.2
Other intangible assets	278.9	177.7
Property, plant and equipment	720.3	616.2
Deferred income tax assets	29.6	20.4
Non-current assets	1,653.5	1,327.5
Inventories	491.4	425.0
Trade receivables	247.7	212.0
Other current assets	61.5	31.8
Cash and cash equivalents	0.1	0.1
Current assets	800.7	668.9
TOTAL ASSETS	2,454.2	1,996.4
EQUITY AND LIABILITIES
Shareholders' equity	1,143.3	1,042.3
Non-controlling interests	32.4	12.1
Total equity	1,175.7	1,054.4
Non-current borrowings	428.3	159.4
Employee benefit plans	87.0	63.8
Deferred income tax liabilities	103.7	69.5
Other provisions and long-term liabilities Non-current liabilities	15.7 634.7	9.4 302.1
Current borrowings	158.2	207.8
Current portion of non-current borrowings	104.0	113.1
Trade and other payables	229.5	205.5
Current income tax liabilities	14.9	7.7
Other current liabilities	137.2	105.8
Current liabilities	643.8	639.9
TOTAL EQUITY AND LIABILITIES	2,454.2	1,996.4

Consolidated cash flow statement

in EUR million	2014	2013
CASH FLOWS FROM OPERATING ACTIVITIES
Operating profit	226.2	207.1
Adjustments for:
Depreciation of property, plant and equipment	84.8	79.9
Amortisation of intangible assets	20.4	17.5
Result on sale of equipment	(1.2)	0.2
Changes in provisions and other movements	(16.3)	(7.2)
Changes in inventories	(18.9)	(3.7)
Changes in trade and other receivables	(2.3)	(10.6)
Changes in trade and other payables	14.6	3.6
Changes in working capital	(6.6)	(10.7)
CASH FLOW FROM OPERATIONS	307.3	286.8
Finance expenses paid	(15.0)	(18.9)
Income taxes paid	(56.8)	(55.0)
Net cash from operating activities	235.5	212.9
Cash flows from investing activities
Acquisition/disposal of subsidiaries	(246.1)	(25.1)
Purchase of property, plant and equipment	(85.6)	(110.7)
Purchase of intangible assets	(4.3)	(3.1)
Proceeds from sale of equipment	4.3	2.4
Net cash from investing activities	(331.7)	(136.5)
Cash flows from financing activities
Proceeds from non-current borrowings	323.5	19.4
Repayment of non-current borrowings	(120.9)	(137.0)
Dividends paid	(45.3)	(17.3)
Non-controlling interests and other cash flows	(2.0)	(0.3)
Net cash from financing activities	155.3	(135.2)
NET CASH FLOW (CHANGE IN CASH AND CURRENT BORROWINGS)	59.1	(58.8)
Cash and current borrowings at beginning of period	(207.7)	(150.2)
Net cash flow (change in cash and current borrowings)	59.1	(58.8)
Currency differences on cash and current borrowings	(9.5)	1.3
Cash and current borrowings as at end of period	(158.1)	(207.7)

Consolidated statement of comprehensive income

in EUR million	2014	2013
Profit for the period	149.7	135.8
Exchange rate differences	14.5	(14.9)
Fair value changes derivative financial instruments	1.8	3.7
Remeasurement pension liabilities	(17.6)	(1.3)
Taxes on direct equity movements	2.6	(1.4)
Total comprehensive income	151.0	121.9
Attributable to:
Shareholders	145.9	120.6
Non-controlling interests	5.1	1.3

Consolidated statement of changes in equity

in EUR million	Issued capital	Share premium account	Other reserves	Currency translation & hedging reserve	Retained earnings	Shareholders' equity	Non-controlling interests	Total equity
As at 1 January 2013	27.3	201.1	596.0	(20.6)	135.1	938.9	11.1	950.0
Dividend 2012	0.3	(0.3)	-	-	(17.3)	(17.3)	(0.3)	(17.6)
Addition to other reserves	-	-	117.8	-	(117.8)	-	-	-
Share based payments	-	-	0.1	-	-	0.1	-	0.1
Total comprehensive income	-	-	(1.0)	(12.6)	134.2	120.6	1.3	121.9
As at 31 December 2013	27.6	200.8	712.9	(33.2)	134.2	1,042.3	12.1	1,054.4
As at 1 January 2014	27.6	200.8	712.9	(33.2)	134.2	1,042.3	12.1	1,054.4
Dividend 2013	-	-	-	-	(45.3)	(45.3)	(0.4)	(45.7)
Addition to other reserves	-	-	88.9	-	(88.9)	-	-	-
Share based payments	-	-	(0.4)	-	-	(0.4)	-	(0.4)
Acquisitions	-	-	-	-	-	-	17.7	17.7
Transactions with non- controlling interests	-	-	0.8	-	-	0.8	(2.1)	(1.3)
Total comprehensive income	-	-	(13.8)	12.2	147.5	145.9	5.1	151.0
As at 31 December 2014	27.6	200.8	788.4	(21.0)	147.5	1,143.3	32.4	1,175.7

Segment reporting - Key figures per business

REVENUE (in EUR million)

	2014	2013	DELTA
Building Installations	1,045.5	1,006.6	4%
Climate Control	339.8	265.0	28%
Industrial Controls	417.9	405.3	3%
Industrial Services	468.7	416.6	13%
Holding / Eliminations	(71.1)	(53.5)
TOTAL	2,200.8	2,040.0	8%

EBITA (in EUR million)

	2014	2013	DELTA
Building Installations	99.8	93.6	7%
Climate Control	35.4	25.6	38%
Industrial Controls	53.5	51.3	4%
Industrial Services	62.7	57.2	10%
Holding / Eliminations	(4.7)	(3.1)
TOTAL	246.7	224.6	10%

EBITA AS A % OF REVENUE

	2014	2013	DELTA
Building Installations	9.5	9.3	0.2
Climate Control	10.4	9.6	0.8
Industrial Controls	12.8	12.7	0.1
Industrial Services	13.4	13.7	(0.3)
Holding / Eliminations
TOTAL	11.2	11.0	0.2

CAPEX (in EUR million)

	2014	2013	DELTA
Building Installations	27.1	28.6	(5%)
Climate Control	4.7	4.6	2%
Industrial Controls	11.4	26.0	(56%)
Industrial Services	41.2	46.8	(12%)
Holding / Eliminations	0.1	0.1
TOTAL	84.5	106.1	(20%)

Revenue per region

in EUR million	2014	SHARE (%)	2013	DELTA
Western & Northern Europe	1,284	58	1,201	7%
North America	450	21	401	12%
Eastern Europe	229	10	222	3%
Southern Europe	77	3	69	11%
Middle East & Africa	61	3	56	9%
Far East	43	2	36	20%
Other countries	57	3	55	4%
TOTAL	2,201	100	2,040	8%

Revenue per end market

in EUR million	2014	SHARE (%)
Building Installations	782	36
Building Efficiency	306	14
Industrial	267	12
Automotive	226	10
Machine build	187	9
District energy, Oil & gas	113	5
Water & gas supply, Irrigation	98	4
Semiconductor	87	4
Turbine & Aerospace	52	2
Beer & soft drink	40	2
Other	43	2
TOTAL	2,201	100

Key figures

	2014	2013	2012	2011	2010
Result (in EUR million)
Revenue	2,201	2,040	2,025	1,937	1,683
Added-value	1,332	1,223	1,197	1,146	1,004
Operating profit (EBITDA)	332	305	296	279	248
Operating profit (EBITA)	247	225	219	209	180
Net profit before amortisation	168	152	152	146	117
Depreciation	85	80	77	71	68
Cash flow* (net profit + depreciation)	253	232	229	216	186
Free cash flow (before interest and tax)	222	175	150	173	177
Balance sheet (in EUR million)
Intangible assets	904	691	686	701	609
Property, plant and equipment	720	616	592	565	530
Capital expenditure	85	106	104	84	63
Net working capital	427	373	370	345	304
Total equity	1,176	1,054	950	859	746
Net debt	690	480	542	606	594
Capital employed	1,866	1,535	1,492	1,464	1,339
Total assets	2,454	1,996	1,965	1,932	1,778
Number of employees at end of period (x1)	14,492	12,311	12,048	12,282	11,536
Ratios
Added-value as a % of revenue	60.5	60.0	59.1	59.1	59.7
EBITDA as a % of revenue	15.1	14.9	14.6	14.4	14.8
EBITA as a % of revenue	11.2	11.0	10.8	10.8	10.7
Interest cover ratio (12-months-rolling)	22.6	19.0	14.4	12.9	10.4
Net profit* as a % of revenue	7.6	7.4	7.5	7.5	7.0
Total equity as a % of total assets	47.9	52.8	48.3	44.4	42.0
Net debt / total equity	0.6	0.5	0.6	0.7	0.8
Return on capital employed (ROCE 12-months-rolling)	14.0	14.6	14.7	14.3	13.4
Leverage ratio (12-months-rolling)	1.9	1.6	1.8	2.0	2.3
Shares issued (in millions)
Ordinary shares (average)	110.6	110.1	108.9	107.5	106.4
Ordinary shares (at year-end)	110.6	110.6	109.4	108.1	106.7
Figures per share (in EUR)
Cash flow*	2.29	2.10	2.10	2.01	1.74
Net profit*	1.52	1.38	1.40	1.36	1.10
Dividend	0.46	0.41	0.35	0.34	0.28
Share price at year-end	24.54	23.18	15.70	12.98	15.77

* Before amortisation