Page 1

Results for the year 2006 • First year of reporting under IFRS. • Revenue of €2,116 million, a like-for-like increase of 6.2% over 2005. • Operating income of €271 million (12.8% of revenue), a like-for-like increase of 29.3%. • Further reduction in net financial debt, by 17% to €473 million. • Basic earnings per share €1.93 (2005: €1.43), an increase of 35%. Fullydiluted earnings per share €1.92 (2005: €1.42). • Proposed dividend of €0.19 gross per share (€0.1425 net), an increase of 19%. The Board of Directors, at its meeting held on 19 April 2007, approved the submission of the consolidated accounts for the year 2006 for approval by the General Meeting of Shareholders to be held on 23 May 2007.

Comments Aliaxis’ results for 2006 are reported for the first time under IFRS. The comparative figures for 2005 have been restated on the same basis (details of the transition to IFRS and the impact on the Group’s accounts are available on the Aliaxis web-site, “”). Revenue from sales in 2006 was €2,116 million (2005: €1,969 million), an overall increase of 7.5%. At constant exchange rates, and excluding the impact of changes in the scope of the consolidation, the increase was 6.2%. Operating income was €271 million (2005: €208 million), representing 12.8% (2005: 10.6%) of revenue, after charging €4.5 million (2005: €6.1 million) of restructuring costs and goodwill impairment of €2.0 million (2005: €21.5 million). The overall increase in operating income was 30.3%. At constant exchange rates, and excluding the impact of changes in the scope of the consolidation, the increase was 29.3%. Operating cash flow (“EBITDA”) reached €345 million (2005: €302 million), representing 16.3% (2005:15.3%) of revenue. Aliaxis’ strong overall performance in 2006 resulted mainly from a second successive year of good profit growth by the Group’s businesses in North America, combined with improved trading conditions throughout Europe. In North America, sales volumes were lower than in 2005, due to the slowdown in the residential housing market in the USA, and lower volumes in the municipal sector in Canada. Revenue and margins benefited from stronger selling prices as levels of inventory in the product supply chain remained abnormally low for much of the year in the aftermath of hurricanes Katrina and Rita in the second half of 2005. However, Ipex Inc (Canada) and/or Ipex LLC (USA) have been named, together with other defendants, in a number of lawsuits including, late in 2006, a certified class action in Nevada seeking damages in connection with alleged defects and a propensity to fail of a plumbing product sold by them. The companies will vigorously defend these actual and threatened actions. It is not possible at this early stage to estimate the potential outcome of these proceedings. Growth in Europe strengthened as the year progressed, influenced by a recovery in Germany after years of stagnation. The German economy grew by 2.5% in 2006, and the French and Spanish residential construction markets also remained very strong, while in Italy activity grew at about the same rate as in 2005. In the UK, the repairs, maintenance and improvement market fell by 2.6% in 2006 although new residential housing starts increased after a weak 2005. Elsewhere, trading was mixed, with activity in New Zealand slowing as a result of higher interest rates, but strong demand in Australia for irrigation products in the second half. In South Africa and South America, the Group’s businesses continued to make solid progress. In China and Asia in general, markets remained very competitive. The net financial result for the year was a net charge of €29 million (2005: €41 million), of which €31 million (2005: €39 million) represented net interest expenses. The reduction reflected the benefit of the 2005 re-financing as well

as positive cash flows in 2005 and 2006. Income taxes, consisting of current and deferred taxes, amounted to €81 million (2005: €48 million), representing an effective income tax rate of 34% (2005: 29%). A number of adjustments made in 2005 were not repeated in 2006, and excluding the effect of these adjustments, the underlying tax rate in 2005 would also have been 34%. The Group’s share of net profit for 2006 was €165 million (2005: €122 million), and its basic earnings per share were €1.93 (2005: €1.43), an increase of 35%. On a fully-diluted basis, the earnings per share were €1.92 (2005: €1.42).

The Group’s auditors have approved the consolidated annual accounts without qualification and have confirmed that the financial information summarised in this press release is consistent with those accounts.

Summary consolidated profit and loss account € million

2006 (IFRS)

2005 Inc/(dec) (IFRS)





271 12.8%

208 10.6%


Net Financial Debt decreased during 2006 from €573 million to €473 million, a reduction of 17%. The reduction was the result of strong operating cash flow and after new investment of €96 million (2005: €72 million) in capital expenditure and business acquisitions.

Operating income Net financial result




Outlook for 20 07

Profit before income taxes




Income taxes















On 14 February 2007, the Group completed a transaction whereby it acquired a 51% interest in a new company named Aliaxis Latinoamérica Co operatief U.A. The new company combines Aliaxis’ existing businesses in Latin America with those of Durman Esquivel S.A., a group having operations in eleven countries in that region. The creation of Aliaxis Latinoamérica will have a significant impact on the Group’s results. On a pro-forma basis, revenues in Latin America will account for around 12% of the Group’s revenue in 2007 (2006: 2%). “

Press Release 20 April 2007

In North America, we expect trading in 2007 to be more difficult, with a lower level of housing starts and continuing uncertainty in the housing market. The outlook in Europe is more positive and we anticipate good levels of activity in most of our major markets. The slowdown in Australasia is likely to lead to more difficult trading conditions. Aliaxis’ main priorities in 2007 will be to integrate into the Group the new businesses of Aliaxis Latinoamérica, and to continue the implementation of measures to enhance profitability. A continued focus on cash flow generation will enable the Group to pursue both organic and carefully targeted external development.

ANALYSIS OF REVENUE By geographical area Asia & Australasia 9% South America 2%

Net profit attributable to : Minority interests Group equity holders € per share, share of Group equity holders *

% Inc/(dec)

Basic earnings per share




Fully-diluted earnings per share




* Per share data calculated on the total weighted number of shares in issue, net of treasury shares.

€ million

Africa 4%

North America 34%

By industrial activity Other 12%

Pressure Systems 35%

Share of profit from equity accounted investees

Summary consolidated balance sheet

Europe 51%

Other Building Products 14%

% of revenue

2006 (IFRS)

2005 Inc/(dec) (IFRS)

Intangible Assets




Property, Plant and Equipment




Non-Current Investments




Deferred Tax Asset




Other Non-Current Assets Total Non-Current Assets

27 1,125





Non-Cash Working Capital Total

348 1,473

321 1,483

27 (10)

Equity (attributable to Group)




Minority Interests Total Equity

11 858

12 754

(1) 104

Non-Current Liabilities




Deferred Tax Liability




473 1,473

573 1,483

(100) (10)

Net Financial Debt Total Gravity Systems 39%

Contact: Yves Mertens (Group Finance Director) Don Bailey (Group Corporate Development Manager) Tel. 32-2-775 5050 – Fax. 32-2-775 5051 E-mail: