DPA's operating result (EBITDA) increases by 27%

 

-    Peter Smit, CEO of DPA Flex Group N.V. to stand down on 1 July 2008

-    Turnover grew to 84.3 million euros (an increase of 6% compared to 2006)

-    The gross margin (28.1%) shows constant positive development throughout the year

-    On an annual basis the gross margin was 23.7 million euros (HY1 11.9 million euros)

-    The operating result (EBITDA) increased by 27% to 7.6 million euros

-    On 4 March 2008 an agreement in principle was reached for the sale of activities in Spain

-    Conink Consultants B.V. was acquired and added to DPA Supply Chain People B.V.

 

 

 

 

Figures for 2007 compared to the combined organisation figures for 2006

* impairment of 26.5 million euros

Figures for HY2 2007 compared to the combined organisation figures for HY2 2006

*Including impairment of 3.5 million

 

N.B. In these notes the 2007 normalised pro forma figures are compared to the pro forma figures for the combined organisation of the previous year, unless stated otherwise.

 

Assumptions:

-    The figures for GEOS IT Professionals B.V. are included in the consolidation as per 1 January 2007

-    The figures for Conink Consultants B.V. are included in the consolidation as per 1 September 2007

-    Normalisation 1; In 2006 an amount of 700 thousand euros was included in the operating expenses because of a one-off rebate from the Employee Insurance Administration Agency (UWV)

-    Normalisation 2; In 2007 there was a reduction of 750 thousand euros in the personnel expenses due to the reorganisation provision

-    Normalisation 3; In 2007 a correction of 500 thousand euros was made related to moving activities from The Hague and Rotterdam to the central location in Amsterdam

-    Turnover is shown excluding turnover from brokerage, this is included via the margin as commission fee

-    The activities of the Spanish subsidiary are shown under discontinued activities

 

-         Turnover of DPA Flex Group increased during 2007 by 6% to 84.3 million euros (the increase including turnover from brokerage is 13%)

-         Turnover of DPA Nederland increased by 1% to 63.2 million euros

-         Turnover of DPA Supply Chain People increased by 81% to 7.7 million euros

-         Turnover of GEOS IT Professionals increased by 7% to 12.1 million euros

-         Turnover of Conink Consultants remained stable at 1.3 million euros just as in 2006

 

The turnover growth for the whole year is 6%. In the first six months a growth of 7% was realised. Traditionally performance in the second six months of the year is better than in the first, however, the turnover growth of DPA Nederland stagnated, particularly in the last two months. This stagnation was mainly due to reduced demand for external personnel at the financial institutions in the Netherlands, and DPA Nederland is very active in this sector. This is a sector plagued with problems following the credit crisis and the integration of two large banking institutions.

 

With respect to the development of turnover, the other operating companies have not suffered from the unrest in the financial markets.

-         DPA Flex Group's gross margin increased by 12% to 23.7 million euros

-         DPA Nederland's gross margin increased by 7% to 16.5 million euros

-         DPA Supply Chain People's gross margin increased by 112% to 3.0 million euros

-         GEOS IT Professionals' gross margin increased slightly to 3.8 million euros

-         Conink Consultants' gross margin is a little lower than in 2006

 

On an annual basis the gross margin increased from 26.5% to 28.1%. Looking at the six-monthly figures, the greatest increase was in the second six months when the margin increased from 27.9% in 2006 to 29.5% in 2007. Thus the margin showed a clearly positive development throughout the year. In absolute terms the total gross margin improved due to increased turnover of the smaller operating companies and overall due to an increase in the average hourly rate. Other positive effects on the margin are because of the increased margin on third parties and the distribution of the margin across the various turnover groups is favourable to DPA.

 

For the newly acquired Conink Consultants and GEOS IT Professionals we consider 2007 to be a transitional year, and we can expect to see advantages from the commercial synergy as integration is completed in 2008. While both of these organisations had a more internal focus in 2007 the absolute gross margin remained stable at 2006 levels. On the other hand, GEOS maintained turnover growth due to increased collaboration with third parties, which was an expected development in the current market with a shortage of SAP and Oracle consultancy and development personnel and which enabled GEOS to fulfil is growth ambitions.

 

Margin generated by the combined organisation

 

Margin generated by DPA Nederland per turnover group

 

Distribution of the margin generated by DPA Nederland across the turnover groups

 

Operating expenses have increased slightly from 20.7% to 21% in relation to turnover. A number of structural changes were initiated in 2007 which have already lead to efficiency improvements and savings on personnel costs and these should have continuing effect in 2008. The stated cost advantages of 400 thousand euros in the second half of the year surpassed expectations. This positive effect on the ratio of turnover to indirect costs is expected to continue into 2008. The comparison between the second six months of 2007 and 2006 shows a 5% drop in the operating expenses. This is due to the reorganisation implemented by DPA Nederland and the programme of savings on other expenses initiated in 2007.

The operating result before depreciation (EBITDA) is 27% higher than in the previous year. The application of the IFRS rules means that DPA Flex Group has valued its subsidiary in Spain at the lower fair value instead of at book value. The operational result from Spain including the downward revaluation has lead to a "Result from discontinued activities" of 4.1 million euros.

 

This one-off adjustment does not affect the DPA Flex Group's EBITDA, but does affect the net profit and the earnings per share. If the downward revaluation is not taken into consideration, then the net profit excluding impairment with respect to the combined organisation increased from 3.2 million euros in 2006 to 4.8 million euros in 2007, which is equivalent to an increase of 50%. Based on the consolidated figures the earnings per share, including the dilution, would have increased from 0.31 to 0.46 eurocent, which is an increase of 48%.

 

Despite DPA Flex Group's increasing turnover (pro forma) the receivables balance has more or less remained stable at 21 million euros. This means that the group DSO has been reduced by 7 days to 54.

 

The growth in EBITDA and the reduction in the DSO have resulted in an improved cash flow from operational activities (pro forma). This cash flow has been deployed to repay loans and reduce the credit facilities required on the current account.

 

On 4 March 2008 an agreement in principle was reached with Cibeirnos about the acquisition of the activities of DPA Spain. Following consultation with the acquiring party and the existing clients an acquisition price will not be disclosed. The takeover may have a modest positive effect on the results for 2008.

 

Because of the dynamic developments within the (financial) markets DPA considers it premature to make any forecast statements for 2008.

 

On 1 July 2008 Peter Smit will stand down as chair of the Executive Board of DPA Flex Group N.V. After heading up the organisation for 18 years Peter has decided to retire.

 

Peter established DPA in 1990 and laid the foundations for one of the leading providers of staffing solutions in the Netherlands. Under his leadership the organisation has taken several steps that influenced the success of DPA, such as the launch on the stock market in 1999 and a number of acquisitions.

 

The organisation in the Netherlands has now entered a new phase, and the time is ripe for a new director for DPA. After stepping down Peter will continue to be involved in the organisation as consultant.

 

The DPA Supervisory Board is very grateful to Peter for his devotion and contribution to the development and growth of the company.

 

The long-term strategic objective is to create healthy financial results, so that DPA Flex Group can invest in sustainable capacity for long-term growth and at the same time maintain a solid balance sheet. Growth will be achieved through both organic growth and acquisitions. Growth in existing and new markets and in areas of expertise will be necessary to hold the leading position in the Finance & IT secondment market, but this must not be at the expense of the focus and gross margin. Newly acquired companies will be carefully integrated or brought into the organisation as independent operating units within the existing structure, before further acquisitions are made.

 

 

Specific statements in this document concern forecasts relating to future financial conditions and results from activities of DPA Flex Group N.V. and specific plans and objectives. Naturally such forecasts embrace risks and a degree of uncertainty as they relate to events in the future and depend on circumstances which will then be applicable. There are many factors that can contribute to the actual results and developments will diverge from the forecasts described in this document. Such factors may include: general economic conditions, shortages in the labour market, changes in demand for (flexible) personnel, changes in employment regulations, future fluctuations in listed price and interest rates, future acquisitions, acquisitions and disinvestments and the speed of technological developments. The forecasts are therefore only valid on the date of publication.

 

 

DPA Flex Group N.V. is a specialised provider of staffing solutions with a listing on Euronext's Next Excellent.

 

The operating companies trading under the names DPA Flex Professionals, DPA Supply Chain People, Conink Consultants and GEOS IT Professionals, fulfil the need within companies and institutions for temporary staff with knowledge and expertise in the areas of Finance, IT and Procurement & Logistics.

 

DPA Flex is an ambitious and cutting-edge expertise supplier of value-adding flex professionals.

 

For further information please visit www.dpaflex.com

 

N.B. The figures stated in this press release have not been audited by an accountant and the financial statements have not yet been drawn up.

 

 

For further information:

 

Peter Smit, CEO

+31 (0)20 515 15 14 / +31 (0)6 53 53 54 21

 

Jan van Duijn, CFO

+31 (0)20 515 15 14 / +31 (0)6 13 85 30 85