ABO-Group Environment NV

Interim / Quarterly Report • Sep 13, 2019

ABO-Group - Half Year Results 2019

Ghent, 13 September 2019 – 17.00 CET – Press Release / Regulated Information

ABO-Group, the engineering firm specializing in construction, environment and energy, today announced its 2019 consolidated financial half-year figures.

Highlights of the first half of 2019

• Geotechnics: key growth driver of the group
• Organic revenue growth of 8.3%
• EBITDA +61% (+35.3% excl. IFRS 16)
• Loss-making division closed down
• New sustainable building opened in Marseille

Outlook

• Acquisition of Innogeo successfully completed
• Targets confirmed

	H1 2018 In € 000	H1 2019 In € 000 (*)	Change In € 000	Change In %	Per share
Revenue	21,782	23,600	1,818	8.3%	In €
Total operating income	22,348	24,002	1,654	7.4%
EBITDA	2,046	3,303	1,257	61.4%	0.31
Depreciation	1,296	2,075	779	60.1%
Operating profit	750	1,228	478	63.7%	0.12
Financial result	-185	-328	-143	-77.3%
Profit before tax	565	900	335	59.3%
Net profit	328	601	273	83.2%	0.06
Net profit (group share)	326	558	232	71.2%
Total equity	14,050	15,707	1,657	11.8%	1.49
Balance sheet total	39,935	49,364	9,429	23.6%

(*) The new IFRS 16 standard applies as of 1 January 2019. This had a positive impact of €534k on the H1 2019 EBITDA, albeit offset by a negative impact of €509k on depreciation and of €54k on the financial result. Consequently, the total impact of IFRS 16 on the H1 2019 net profit was €-22k.

Highlights of the first half of 2019

Geotechnics: growth driver of the group

In line with the strategy, the geotechnical division is the group's growth driver. Revenue in that division increased by 14% in the first six months. For the first time, the geotechnical activities account for more than 50% of the group's revenue. Soil & Environment also reported a solid 9% growth. The downturn in Asbestos & Energy is entirely attributable to the energy division, where a major framework contract came to an end, while the asbestos division continues to report a double-digit growth. The decrease in other revenue is the result of the phase out and integration of the international division.

	H1 2018 In € 000	H1 2019 In € 000	Change In € 000	Change In %	% of Revenue
Geotechnics	10,535	12,012	1,477	14.0%	50.9%
Soil & Environment	9,580	10,455	875	9.1%	44.3%
Asbestos & Energy	1,123	1,067	-56	-5.0%	4.5%
Other	545	66	-478	-87.8%	0.3%
Revenue	21,782	23,600	+1,818	+8.3%	100%

Organic revenue growth of 8.3%

The group reported an overall organic revenue growth of 8.3%, which is well above the target of 5%. Each of the three home countries contributed to this result, with France and the Netherlands even reporting a double-digit growth.

	H1 2018 In € 000	H1 2019 In € 000	Change In € 000	Change In %	In % Revenue
France	9,119	10,368	+1,249	+13.7%	43.9%
Belgium	7,542	8,074	+532	+7.1%	34.2%
The Netherlands	4,599	5,114	+515	+11.2%	21.7%
International	522	44	-478	-91.5%	0.2%
Total revenue	21,782	23,600	+1,818	+8.3%	100%

France

The geotechnical division, which accounts for more than 80% of revenue in France, is driven by largescale projects, such as the development of transport infrastructure (e.g. SNCF, Grand Paris), industrial sites (EDF, Engie, …), and new infrastructure for the Olympic Games in Paris. The environmental division reported an 8% growth.

Belgium

Belgium reported an organic growth of 7%, driven by strong growth at ABO (soil and environment), Geosonda (geotechnical fieldwork) and Translab (measurement of asbestos in ambient air & laboratory activities). Environmental fieldwork (temporary fall-off in complex drilling assignments) and the energy department (end of a framework contract) performed less well.

The Netherlands

The Dutch construction market continues to do well, although the growth was primarily driven by the environmental fieldwork division as capacity was restored. Nevertheless, the further geographical expansion and accompanying investment in staff and equipment still fall short of yielding their maximum return. An organic growth of more than 11% was realized.

International

The group reoriented its international strategy following the disposal of the business activity of Ecorem NV with effect from 1 March 2019. International assignments are now covered by the existing brands and group companies instead of being sought in the context of a distinct business segment. In the first six months, for example, Sialtech and Geosonda carried out assignments in Sweden and Poland.

EBITDA +61%

The solid revenue growth is reflected in a strong increase in EBITDA by 61% to €3.3 million. The implementation of the new IFRS 16 standard already resulted in an organic growth by €534k. On a like-for-like basis, a clear and convincing leap of 35% can be seen. The traditional mainstays of the group, ERG Géotechnique and ABO, both recorded a solid year-on-year improvement. Depreciation increased from €1.3 million to €2.1 million, of which €0.5 million is attributable to the application of IFRS 16. In a number of operating companies, decisions to invest in staff and equipment have increased costs, without so far producing the desired results. Further operational improvement would therefore seem a realistic assumption. All in all, the operating profit has already increased by 64%, from €750k to €1,228k. The financial charges increased due to a combination of higher debts and the impact of IFRS 16. The higher overall profitability means higher taxes. The net profit is just short of having doubled, rising from €328k to €601k.

Loss-making division closed down

The unpredictability of new order intake outside of Europe prompted the group to phase out this division. The disposal of the business activity of Ecorem finalized this process.

New sustainable building opened in Marseille

In France, the new multipurpose and green office building in Vitrolles opened at the beginning of April. The building is strategically well located, next to the airport of Marseille Provence and with a direct connection by train and high-speed rail to

Marseille and other cities.

It has a floor area of 1,200 m² and includes a warehouse and geotechnical laboratory, along with 60 workstations. The total investment was just over €3 million, which was virtually entirely financed by bank loans. The building provides room for growth of both the environmental and geotechnical divisions.

The full set of figures (consolidated income statement, balance sheet and cash flow statement, and statement of changes in equity) is attached to this press release.

Outlook

Acquisition of Innogeo completed

On 1 July 2019, ABO acquired the French geophysics engineering firm Innogeo. For ABO this means a valuable addition to the product portfolio. A first integration and synergy exercise has already been successfully completed. The services of Innogeo can also be deployed in Belgium and the Netherlands for many of the group's clients. In France, however, the company has its own distinct growth trajectory. Innogeo is expected to contribute approximately €0.5 million to the group's revenue.

Targets confirmed

ABO-Group confirms its medium-term ambition of double-digit organic and acquisitive revenue growth. Focus is on the organic expansion of the product offering (towards infrastructure, stability, urban development, etc.), machinery (complementary drilling techniques), and tapping into new geographical markets. The group also continues to seek to strengthen its market position in the home countries Belgium, the Netherlands and France through acquisitions. The group screens the market intensively in search of businesses that fit into its strategy.

The second half of the year looks positive; the order book of ABO-Group is well-filled in each of its markets. This leads us to expect the second half of the year to be in a similar vein, based on a highquality execution of orders. For 2019, the group has set itself the target of around €50 million revenue and a double-digit EBITDA margin.

Financial calendar

31/03/2020: 2019 annual figures 27/05/2020: General Meeting

Statement regarding the fair presentation of the interim condensed consolidated financial information and the fair overview of the interim report

Frank De Palmenaer, CEO, and Johan Reybroeck, CFO, declare that, to their knowledge, the interim condensed consolidated financial information for the six-month period ending 30 June 2019, which was prepared in accordance with IAS 34 "Interim Financial Reporting" as approved by the European Union, gives a true and fair view of the assets, the financial position and the results of the company and the companies included in the consolidation. The interim report gives a fair overview of the most significant events and key transactions with related parties that have taken place during the first six months of the financial year and their effect on the interim condensed financial information, as well as a description of the most significant risks and uncertainties for the remaining months of the financial year.

About ABO-Group

ABO-Group is a company listed on Euronext Brussels, specializing in consultancy & engineering, testing & monitoring in the areas of construction, environment and energy. ABO-Group endeavours to offer its customers a sustainable solution in its three home countries (Belgium, the Netherlands and France) and internationally.

A more detailed description of the group's activities can be found on the website of ABO-Group (www.abo-group.eu).

For more information, please contact:

Frank De Palmenaer Johan Reybroeck CEO ABO-Group Environment NV CFO ABO-Group Environment NV

investors@abo-group.eu

T +32 9 242 88 88 Maaltecenter Blok G, Derbystraat 255, B-9051 Ghent (SDW), Belgium

This press release is available on our website www.abo-group.eu.

Consolidated interim income statement (non-audited)

	For the six months ending on 30 June
In €000	2019	2018
Revenue	23 600	21 782
Other operating income	402	566
Total operating income	24 002	22 348
Purchases	-2 306	-2 583
Services and other goods	-7 512	-7 353
Employee benefit obligations	-10 526	-10 115
Depreciation	-2 075	-1 296
Other operating expenses	-355	-251
Operating profit	1 228	750
Financial charges	-332	-192
Financial income	4	7
Profit before taxes from continuing operations	900	565
Taxes	-299	-235
Net profit from continuing operations	601	330
Loss from discontinued operations, after tax	-	-2
Net profit	601	328
Net profit (loss) attributable to the
parent company's shareholders	559	326
minority interests	42	2
Earnings per share for the shareholders
Basic and diluted	0.057	0.031
Earnings per share (continuing operations)
Basic and diluted	0.057	0.031
Earnings (loss) per share (discontinued operations)
Basic and diluted	-	-0.000
Weighted number of shares (basic earnings per share)	10 569	10 569
Weighted number of shares with impact of dilution	10 569	10 569

Consolidated interim total result (non-audited)

	For the six months ending on 30 June
In €000	2019	2018
Net profit	601	328
Unrealized profit - transferable to the income statement
Revaluation of buildings	-	-
Impact of taxes	-	-
Change in fair value of financial assets available for sale	2	-23
Impact of taxes	-	-
Unrealized profit - non-transferable to the income statement
Revaluation of net pension commitments	-	27
Impact of taxes	-	-7
Unrealized earnings, after tax	2	-3
Total result, after tax	603	325
Total result attributable to
parent company's shareholders	561	323
minority interests	42	2

Consolidated interim balance sheet (non-audited)

	30 June	31 December
In €000	2019	2018
Fixed assets
Goodwill	844	844
Intangible fixed assets	1 591	1 670
Tangible fixed assets	21 491	15 887
Deferred tax assets	924	889
Financial assets available for sale	27	35
Other financial assets	608	646
Total fixed assets	25 485	19 971
Short-term assets
Stocks	694	676
Trade receivables	17 541	16 512
Other current assets	1 155	974
Cash and cash equivalents	4 489	4 795
Total short-term assets	23 879	22 957
Total assets	49 364	42 928

	30 June	31 December 2018
In €000	2019
Total equity
Capital	4 857	4 857
Consolidated reserves	6 952	6 708
Unrealized profit	2 522	2 509
Equity attributable to the shareholders of the group	14 331	14 074
Minority interests	1 376	1 050
Total equity	15 707	15 124
Long-term liabilities
Financial debts	9 422	5 085
Deferred tax liabilities	1 314	1 382
Provisions	695	688
Other long-term liabilities	8	-
Total long-term liabilities	11 439	7 155
Current liabilities
Financial debts	10 989	8 392
Trade debts	4 925	5 730
Tax liabilities	415	652
Other current liabilities	5 889	5 875
Total current liabilities	22 218	20 649
Total equity and liabilities	49 364	42 928

Consolidated overview of changes in equity

Attributable to the shareholders of the
Capital	Consolid ated reserves	Unrealiz ed profit	Total	Minority interests	Total equity
4 857	6 074	1 591	12 522	1 203	13 725
	326		326	2	328
		-3	-3	-	-3
	326	-3	323	2	325
4 857	6 400	1 588	12 845	1 205	14 050
4 857	6 708	2 509	14 074	1 050	15 124
	559		559	42	601
		2	2		2
	559	2	561	42	603
A	-406	102	-304	284	-20
	91	-91
4 857	6 952	2 522	14 331	1 376	15 707
			parent company

Consolidated cash flow statement

In €000		For the six months ending on 30 June
		2018
Operating activities
Net profit	601	328
Non-cash costs and operational adjustments
Depreciation of tangible fixed assets	1 953	1 106
Depreciation of intangible fixed assets	122	115
Profit on sale of tangible fixed assets	-23	-54
Changes in provisions	-36	-57
Changes in impairment losses on clients	-122	3
Financial income	-4	-7
Financial charges	332	192
Deferred tax expenses (income)	-103	-7
Tax expenses	402	242
Adjustments to working capital
Decrease (increase) in other financial assets, trade receivables and other current assets	-1 164	-18
Decrease (increase) in stocks	-18	-59
Increase (decrease) in trade debts and other debts	-750	-1 177
	1 190	607
Interest received	4	5
Taxes paid	-518	-510
Net cash flow from operating activities	676	102

		For the six months ending on 30 June
In €000	2019	2018
Investment activities
Investments in tangible fixed assets	-987	-1 015
Investments in intangible fixed assets	-43	-18
Sale of tangible fixed assets	28	133
Acquisition of subsidiary	-20	-
Net cash flow from (used in) investment activities	-1 022	-900
Financing activities
Income from loans	3 777	1 241
Repayments of loans	-2 462	-1 496
Repayments of leasing debts	-942	-
Interest paid	-188	-109
Other financial income (charges)	-145	-82
Net cash flow from financing activities	40	-446
Net increase in cash and cash equivalents	-306	-1 244
Cash and cash equivalents at the start of the year	4 795	3 525
Cash and cash equivalents at the end of the period	4 489	2 281
Other non-cash transactions
Finance leases, incl. IFRS 16	-6 573	-469