Brunel International NV: "Mixed fourth quarter in Europe; restructuring and transforming Energy".
Key points Q4 2016
Revenue down by 27% to EUR 211 million
Gross margin up to 21.9% from 20.1%
Operating costs up by 10% to EUR 44 million
Operating costs include EUR 3.5 million for restructuring in Energy
EBIT down from EUR 18 million to EUR 2 million

Key points FY 2016
Revenue down by 28% at EUR 885 million
Gross margin at 21.1% from 18.7%
Operating costs down by 8% to EUR 160 million
EBIT down by 52% to EUR 27 million
Net profit at EUR 11 million
Proposed dividend EUR 0.40 per share

Brunel International (unaudited)
P&L amounts in EUR million
Q4 2016 Q4 2015 Change % FY 2016 FY 2015 Change %
Revenue 210.6 287.2 -27% a 884.9 1,228.9 -28% b
Gross Profit 46.2 57.6 -20% 187.1 230.0 -19%
Gross Margin 21.9% 20.1% 21.1% 18.7%
Operating costs 44.1 40.0 10% c 160.3 173.9 -8% d
EBIT 2.1 17.6 -88% 26.8 56.1 -52%
EBIT % 1.0% 6.1% 3.0% 4.6%
Average directs 9,078 10,604 -14% 9,315 10,894 -14%
Average indirects 1,435 1,539 -7% 1,481 1,601 -7%
Ratio direct/indirect 6.3 6.9 6.3 6.8

a -27% at constant currencies
b -27% at constant currencies
c -9% at constant currencies
d -7% at constant currencies

Revenue
Revenue development in Q4 in Europe appears flat year on year. However, this is composed of growth in Germany and other Europe, offset by a decrease in The Netherlands. Energy managed to achieve a slight increase compared to Q3 due to some short term projects, but still a strong decline compared to last year.

Gross Profit
As a result of the change in business mix with higher margins in Europe compared to Energy, the gross margin improved by 1.8ppt to 21.9%.

Operating Costs
Operating costs are impacted significantly in Q4 by one off restructuring and redundancy cost. Adjusted for these costs operating costs are at the same level as last year. The decrease in Energy is offset by an increase in Europe.

EBIT
EBIT in Europe dropped compared to a very strong Q4 in 2015, and also the decrease in Energy was significant. Overall EBIT decreased by 88% to EUR 2 million in the fourth quarter.

Revenue
Revenue for The Netherlands was still impacted by the drop in headcount earlier this year due to the new law DBA, but also less growth in the second half of the year compared to last year and one less working day in Q4. Revenue per working day decreased by 13%.

Gross Profit
The downward trend of the gross margin due to price pressure and lower productivity continued in Q4. This quarter also had one less working day. The lower productivity is the result of continued training initiatives and pro active hiring.

Operating Costs
Operating costs are slightly higher than 2015 as a result of investments in our sales force and recruitment initiatives.

EBIT
Lower revenue at lower margins resulted in a decrease in EBIT of 61%.

Effective tax rate

In 2016 the effective tax rate increased from 33.6% to 56.2%, mainly as a result of an impairment of deferred tax assets of EUR 3.7 million. Due to the lower EBIT level, this impairment has a significant impact on our effective tax rate for 2016.

Cash position
The December 2016 cash balance amounted to EUR 149 million. Working capital as at 31 December is slightly higher than anticipated due to some short term projects in Energy towards the end of the year.

Dividend
We propose a dividend of EUR 0.40 per share.

Outlook
For The Netherlands we expect that the headcount growth we have resumed from July 2016 onwards will continue. This will result in revenue growth, despite the fact that we have started 2017 at a lower level than 2016. In Germany a new law will come in to effect in 2017. We expect that we have taken the appropriate measures and expect to see the growth continuing in 2017. Profitability in Germany will be impacted in 2017 by three less working days. For Energy we will see the full year impact of the decline in revenue in 2016, in combination with a further decline in headcount especially in the first half of 2017. As a result of our efforts towards new activities we expect that the revenue will be stabilizing in the second half of 2017 and we could even be returning to growth.

Jan Arie van Barneveld, CEO of Brunel International N.V.: "The ongoing crisis in the Oil & Gas sector made 2016 an exceptionally challenging year for us at Brunel. We're now working hard to adapt the organization to these changing market conditions. First and foremost, by making ourselves more efficient, leaner and smarter in existing markets. At the same time, however, we do see new opportunities emerging for this part of the company. Both in terms of expanding our services, but also by entering markets outside Oil & Gas. However, it'll be a while before we see these initiatives and developments reflected in our results. And although recovery of the market for Oil & Gas projects is inevitable, making any more specific predictions at this time is difficult. Except for one: as always, we're confident about the resilience and entrepreneurial qualities of our people. And as a result, optimistic about the medium-to-long term developments and opportunities for this part of the business.

In Europe, overall growth and profit development in the region have been positive, but we have also seen considerable underlying differences in 2016. The Netherlands started the year very strongly, but then saw growth completely evaporate with the introduction of new legislation for engaging freelancers. The negative effects of which were luckily a one-off phenomenon. Meanwhile Germany managed in 2016 to accelerate even the impressive growth path achieved in 2015. But though the differences between countries are significant, the underlying results of all our European organizations in 2016 have once more been stronger across the region.

The robust organizations we have in Europe will form the basis for a return to growth. And, partly as a result of changes forced by the crisis, Energy will also soon be contributing to those growth figures. We live in times that are challenging, but also changing. And for strong organizations like Brunel, change always brings with it opportunities."

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