March 5th, 2008
2007 was another successful year for Eurofins. The Group’s key objectives were met by maintaining a strong margin in the Up-to-Standards perimeter and making good progress in reducing by around 60% a ¤11.5m proforma loss in the Under Development business. In addition to this the Group grew significantly, organically (by around 11%) and by acquisition, so that not only did reported revenues grow 34% to ¤492m, but on a proforma basis the Group’s 2007 revenues have now reached ¤566m. Eurofins is also pleased to announce that following completion of a budget review of recently acquired companies it has just raised its revenue objective for 2008 from ¤600m* to ¤620m. Operationally, Eurofins carried out significant investment in 2007 to strengthen its market leading position on an increasingly global level. This comprised start-ups in four new countries, five new laboratories (in both existing and new countries) and expansion investment in many laboratories.
- Revenue growth of 34% to ¤492m in 2007 from ¤368m in 2006
- On a proforma basis the Eurofins Group revenues in 2007 were ¤566m
- Revenue objective for 2008 is now raised from ¤600m to ¤620m
- Entry into four new countries through start-ups and acquisitions
- EBITDA increases to ¤66.1m from ¤57.3m in 2006
- Margin improvement in full 2006 proforma perimeter
- Margin of Up-to-Standard*** perimeter reached 14.4%, ahead of 14% target
- Cash generated from operations up 30% to ¤56.8m
- Total EPS remains steady at ¤1.27
As Eurofins carried out many acquisitions in 2006 and 2007 which had a significantly different profitability profile from the rest of the Eurofins Group, the evolution of various perimeters is given below.
Evolution of 2006 Perimeter in 2007 In 2007 the existing business (2006 proforma) grew organically at around 11% from ¤406m (¤411m at 2006 exchange rates) to ¤451m. Margins improved, with proforma EBITAS** increasing 20% (from ¤32m to ¤38m) on a constant exchange rate basis.
¤ million 2006 2007Proforma
(with 2007 exch. rates) 2007 result of 2006 proforma Revenues 406.5 450.8 EBITAS** 32.0 38.3 Margin (%) 7.9% 8.5%
Evolution of the Up-to-Standard business
We continue to publish the Up-to-Standards*** and Under Development*** perimeters as a relevant measure of the performance of the operations of the Group. In looking at the two perimeters, each succeeded in achieving their objectives. Up-to-Standards reported revenues of ¤311m and the EBITAS** margin of 14.4% exceeded the targeted 14%. In the Under-Development perimeter, revenues were ¤181m and the significant proforma loss from 2006 of ¤11.5m was successfully addressed so that by the end of the year it reported a loss of only ¤4.5m, which included some losses from 2007 acquisitions. This was nonetheless above the target of - ¤5m set for that perimeter at the beginning of 2007.
Overall reported revenues increased by 34%, ahead of expectations, to ¤492m, up from ¤368m in 2006. At EBITDA level the Group reported an increase to ¤66.1m in 2007 from ¤57.5m in 2006 and likewise EBITAS** increased from ¤38.0m to ¤40.2m in 2007. Furthermore the very healthy development of the Group is underlined by the increase of 30% of the cash generated from operations to ¤56.8m (2006 ¤43.6m).
¤ million 2007 2007 2007Up-to-Standards Under Development Reported
Revenues 311.1 180.6 491.8 EBITAS** 44.7 -4.5 40.2 Margin (%) 14.4% n.a. 8.2%
Acquisitions leading to the new 2007 Proforma base
In 2007 Eurofins acquired companies which generated annual revenues of about ¤115m for the whole year. As the bulk of these transactions were closed later in the year, only ¤41m of this was consolidated in the official accounts of the Group with a marginally positive EBITAS**. On a full year proforma basis they contribute an EBITAS** loss of over ¤4.5m. The new additions mean that the 2007 proforma Under Development perimeter has losses of ¤12.5m. The Group expects to make a small profit in this Under Development perimeter in 2008.
¤ million 2007 2007 2007 2007 2007Proforma
Up-to-Standards Proforma Under Development Proforma Total 2007 result of 2006 proforma Proforma acquisitions Revenues 316.1 249.5 565.6 450.8 114.8 EBITAS** 46.2 -12.5 33.7 38.3 -4.6 Margin (%) 14.6% n.a. 6.0% 8.5% n.a
Operating and Financing performance
Eurofins secured its financing for the medium term during May 2007 with the issuance of ¤100m of deeply subordinated perpetual securities (“hybrid instrument”). This was highly successful and three times over-subscribed. More importantly this instrument is classified as equity under IFRS and therefore gives Eurofins the capacity to raise more senior debt if needed (up to ¤117m under the current covenants at end 2007). Eurofins’ net debt position at 31.12.2007 was ¤108.6m, compared to ¤119.6m in 2006.
By investing now and by building significant barriers-to-entry in the form of market-leading positions, a global network of standardized state-of-the-art laboratories, the latest technology and top quality service, Eurofins aims to achieve sustainable long-term success:
- A significant amount of money has been spent on the Group’s infrastructure in 2007. Capex during the year was significantly higher than in previous years, reaching ¤48.1m, representing just under 10% of revenues (2006 ¤25.7m, 7%). This was spent on the consolidation of existing facilities (e.g. Paris, Rennes and Saverne in France, Munich in Germany, Heerenveen in the Netherlands, Des Moines in the US), the redevelopment or construction of laboratories to the highest standards (e.g. Singapore, London, Denver) and the ongoing rolling out of IT systems for laboratory management and Group-wide marketing (COMLims and eLIMS).
- We now have a new senior Management team whose achievements and international experience will enable them to bring leadership and direction to each of our main markets as Eurofins invests, acquires and grows organically.
- By the end of 2007 Eurofins established a presence in four new countries (Slovakia, Finland, Hungary and Bulgaria), continued in its development of other recently established areas (China, Singapore, Norway, Sweden, Poland, Brazil, Italy and Spain) and acquired ¤115m of revenues. With the purchase of Analycen, Eurofins accelerated its expansion in Scandinavia in a deal that adds market share and has the potential to reach Group profitability standards within a shorter space of time than usual. The other significant transaction involved the acquisition of the genomics business Operon, which brings a good geographic and strategic fit (especially in the US and Japan) along with the opportunity to create efficiencies in production. Combined these two businesses added around ¤60m in annual revenues and 600 employees to the Eurofins Group.
In 2007 Eurofins took advantage of the unique position it is in to invest in the markets in which it operates to create sustainable competitive advantage for the long term. The Board firmly believes that this is the best strategy for the Group and one that will pay off in substantial value creation.
In 2008 Eurofins believes that secular megatrends will continue to support the demand for safety and high quality in the food, pharmaceuticals and environment markets, which in turn supports demand for testing in these areas. The revenue objective of ¤620m for 2008, including 10% organic growth, is nevertheless an ambitious one. Beyond 2008 the Group’s management confirms its objectives to reach annual revenues of US$ 1 billion next year (2009) and ¤1 billion by 2011. Our Up-to-Standards perimeter continues to work towards the medium term objective of a 15% margin. Our objectives for the Under Development perimeter are that it makes a small profit in 2008 and reaches Group standards within three years. Eurofins’ Management continues to be very much focused on achieving these and the remainder of its long-standing objectives.
- cf press release 18 January 2008
- EBITAS - earnings before interest, tax, amortisation and non-cash charges for stock options
- Up-to-Standards represents the established base, including the ongoing and stable businesses such as the Competence Centres and most proximity laboratories where the Group’s systems, structure and processes have been deployed for some time.
- Under-Development includes the remainder of the business and represents companies or countries with new activities or start-ups, companies or countries (e.g. Scandinavia, UK) under full reorganisation due to the integration of less profitable acquisitions and also the recent additional investments in corporate structure that relate to delivering further growth.
For further information about Eurofins please visit www.eurofins.com or contact: Investor Relations Phone: +32-2-769 7383 E-mail: email@example.com
Notes for the editor:
Eurofins - a global leader in bio-analysis
Eurofins Scientific is a life sciences company operating internationally to provide a comprehensive range of analytical testing services to clients from a wide range of industries including the pharmaceutical, food and environmental sectors. With about 7,000 staff in more than 150 laboratories across 29 countries, Eurofins offers a portfolio of over 25,000 reliable analytical methods for evaluating the authenticity, origin, safety, identity, composition and purity of biological substances and products. The Group is committed to provide its customers with high quality services, accurate results in time and, if requested, expert advice by our highly qualified staff.
The Eurofins Group is one of the global market leaders in this field of applied life sciences. It intends to pursue its dynamic growth strategy and expand both its technology portfolio and its geographic reach. Through R&D, in-licensing and acquisitions, the Group draws on the latest developments in the field of biotechnology to offer its clients unique analytical solutions and the most comprehensive range of testing methods.
As one of the most innovative and quality oriented international players in its industry, Eurofins is ideally positioned to support its clients’ increasingly stringent quality and safety standards and the demands of regulatory authorities around the world. The shares of Eurofins Scientific are listed on the NYSE Euronext Paris (ISIN FR0000038259) and Frankfurt (WKN 910251) Stock Exchanges (Reuters EUFI.LN, Bloomberg ERF FP, ESF, EUFI.DE).
This press release contains forward-looking statements and estimates that involve risks and uncertainties. The forward-looking statements and estimates contained herein represent the judgement of Eurofins Scientific as of the date of this release. These forward-looking statements are not guarantees for future performance, and the forward-looking events discussed in this release may not occur. Eurofins Scientific disclaims any intent or obligation to update any of these forward-looking statements and estimates. All statements and estimates are made based on the data available to the Company as of the date of publication, but no guarantee can be made as to their validity.
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