SOURCE: ARINSO

February 26, 2007 01:20 ET

2006: Solid foundations for continued growth

BRUSSELS, BELGIUM -- (MARKET WIRE) -- February 26, 2007 --




Continued strong sales growth at steadily improving margins
          Net sales:              EUR  203.8 million      (+ 16%)
          EBITDA:                 EUR  20.6 million       (+ 18%)
          EBITA:                  EUR  17.3 million       (+ 18%)
          Current profit:         EUR  11.8  million      (- 1%)
          Net profit:             EUR  9.3  million       (+4%)

Brussels, 26 February 2007

ARINSO International (Euronext Brussels: ARIN), a global HR Services market leader, reports 2006 results with strong net sales growth and steadily increasing margins. Over the past 12 months, ARINSO doubled its total volume in HR & Payroll Outsourcing contracts: with more than 600,000 employees serviced globally, a target has been reached which was originally set for the end of 2007. Across the board, ARINSO's strong growth figures provide solid foundations allowing the company to outline an ambitious strategic direction for the period 2007-2010.

2006 consolidated net sales reached EUR 203.8 million, an increase of 16% compared to 2005. Earnings before amortization, interest & taxes (EBITA) increased 18% to EUR 17.3 million, resulting in a full year EBITA margin of 8.5%, a slight improvement compared to the previous year.

Current profit amounted to EUR 11.8 million (-1%) and has been impacted by evolutions in unrealized exchange differences, changes in the financial structure of the Group following the substantial capital decrease in July 2006, as well as by related one-time costs. Disregarding the financial impact of the capital decrease, the current profit would have increased with more than 15%. Net profit reached EUR 9.3 million (+4%), following the impairment of EUR 2.5 million on unallocated consolidation goodwill in Q4. Current net profit per share came in at EUR 0.79.

2006 has proven to be a landmark year in ARINSO's strategic growth plan. Back in 2001 the decision was taken to expand the service portfolio towards HR & Payroll Outsourcing - with a clear ambition to balance revenues between integration projects and recurring outsourcing contracts. This target will be met in the course of 2007.

ARINSO's three business lines performed well. HR Outsourcing accounts for 39% of group sales, compared to 32% in 2005. In absolute figures, this represents a growth of 42%, marking HRO as the main driver of company growth. HR Integration accounts for 57% of group sales, compared to 64% in 2005. HR Strategy shows stable revenues accounting for 4% of group sales.



Fourth quarter performance

4Q06 showed double digit net sales growth for the 14th consecutive quarter. Net sales amounted to EUR 55.7 million (+19%) while EBITA reached EUR 4.9 million (+16%) resulting in a margin of 8.8%. Current profit reached EUR 2.9 million (-11%). Net profit in the fourth quarter amounted to EUR 0.5 million.

At year end, the purchase price allocation related to the 2006 acquisitions of OpenHR and Lansdowne was finalized in accordance with IFRS 3. As a result of changed market conditions and a decrease in sales for Lansdowne, impairment of EUR 2.5 million was taken on the Lansdowne goodwill.


Growth across all continents

ARINSO has witnessed strong market demand both in HR Outsourcing and in HR integration activities, across Europe & Africa (EMEA), North and South America (Americas), and APAC (Asia and Australia). ARINSO EMEA (+15%) accounts for 77% of group sales, ARINSO Americas (+21%) represents 18% of group sales, while ARINSO APAC (+60%) accounts for 5% of group sales.

In the EMEA region, ARINSO established offices in Denmark, headquartered in Copenhagen, and in South Africa, headquartered in Durban. These new operations fill geographic blanks by leveraging ARINSO's global delivery network and by tapping into the potential of local markets.

Recent US deals, including a contract with CA, have further strengthened ARINSO's position in the Americas, establishing a solid foundation for future growth. In South America, ARINSO continued the development of its Buenos Aires Service Center, servicing the entire American continent.

In 2006, ARINSO continued its expansion in APAC with the establishment of offices in Australia and the setup of an HR Service Center in Manila, the Philippines. ARINSO's off-shore expansion is valued as a key commercial asset by customers and is already being reflected in important offshoring deals with European and global customers.


News- & dealflow

During 2006, ARINSO extended its SAS 70 audit for HR & Payroll services to include pan-European coverage. Early 2007, ARINSO announced an unqualified opinion on its SAS 70 Type II audit report covering 10 service centers throughout Europe. The SAS 70 audit process helps ARINSO rendering high quality services more efficiently to its clients and proves the company has an effective system of internal controls in place. By the end of 2007, ARINSO expects to achieve a SAS 70 certification for all of its global service centers.

ARINSO's outsourcing pipeline for 2007 remains excellent, with a number of sizeable deals to be closed over the next quarters. Overall, 2006 was marked by outsourcing contract wins at Accenture/Unilever, Bank of America, Baxter, Repsol, Delta Lloyd, CA, and a Dutch financial institution.

Strategic outlook 2007-2010

ARINSO's board and management feel that the company has reached a turning point in its long-term development and have therefore decided to articulate an ambitious growth strategy for the coming years.

The following observations are our starting point:

- The HR Outsourcing industry is coming of age across the
globe - with generally accepted double-digit annual growth rates.
-    Competitive pressures along with internal alignment and
compliance issues are leading many global companies to investigate
the potential of HR Outsourcing. Early HRO successes will accelerate
this trend.
- Entry barriers for new providers have been raised in recent
years; further consolidation is expected to take place.
ARINSO occupies a unique position in this market:
-         We are the only provider with a truly pan-European and
global footprint, with demonstrated SAP HR and Oracle-PeopleSoft
expertise in almost 50 countries globally.
-         We have built HR & Payroll systems for 1 in 5 Global
Fortune 500 companies, bringing us the credibility and demonstrated
success the market is looking for.
-         In recent years, we have demonstrated that we successfully
execute our HRO strategy, with continued strong topline growth and
stable to increasing profitability.
-         With our wide array of technology tools and industry
expertise, including our global euHReka HR platform, ARINSO holds the
key to successful HRO roll-outs, for which technology is considered a
crucial component.
ARINSO sets the following targets for 2007-2010
-         We aim to increase our revenues, at the pace of the market
and become a leading player in the global HRO market by 2010.
-         We expect that HR & Payroll outsourcing will grow to 75% of
our business, advancing further our recurring revenue model. We
expect this growth in HRO to be further triggered by increasing
industry demand.
-         We target servicing at least 2.5 million employees for our
global customer base by 2010.
-         In the mid term, we aim at a sustainable 10% EBITA margin
as the volume dynamics in our service centers start to work
optimally.

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