First half-year results 2014

Barendrecht, 25 August 2014Autonomous revenue growth and stable results
Divestment german activities, focus on growth and strategy execution
Key developments:

  • Revenue in H1 2014 up 7.3% at € 32.4 million, as a result of more licence sales and more direct employees in the Netherlands.
  • H1 2014 result from continuing operations  in line with H1 2013 at  € 2.3 million.
  • On 11 August ICT announced the divestment of its German activities to ALTEN.
  • Partnership with LogicNets strengthened through a broadened exclusive distribution agreement for Western-Europe and the acquisition of a 20% strategic stake by ICT.

Key figures (*)

(in millions of €) H1 2014 H1 2013 Change
Revenue 32.4 30.2 + 7.3 %
Revenue Added Value 29.2 28.0 + 4.1 %
Operating result from continuing operations 2.3 2.3
Net profit from continuing operations 1.7 2.1
Result after taxes from discontinued operations (0.7) (0.9)
Net profit 0.9 1.3
(in €)
Earnings per share (**) 0.11 0.14

(*)     In conformity with IFRS 11, effective 1 January 2014, InTraffic (as a joint venture) is no longer consolidated in the statement of comprehensive income in revenue, costs and EBIT but is presented as a single line item in the consolidated statement of comprehensive income under financial income. The 2013 figures have been accordingly restated for comparison purposes.
In conformity with IFRS 5, ICT Germany classifies as “Discontinued operations” following the decision to divest the operations and is presented as a separate line item in the income statement, being the total loss post tax of the German operations for the period as ‘result from discontinued operations’
(**)    Based on the average number of outstanding ordinary shares.
Jos Blejie, CEO of ICT Automatisering N.V.: “Our focus has been on the execution of our strategy. We have taken additional steps to get our house in order of which the sale of our German based activities is the most significant. We are creating a stable platform from which we can roll out our strategy and can grow the business on a sustainable basis. We did succeed in realizing autonomous growth in the Netherlands and were able to keep profitability at the same level as in the first half of 2013 despite the considerable outlays on marketing and sales and on the recruitment of young professionals. The strategic stake we intend to take in our partner LogicNets will create attractive commercial opportunities in Western Europe. In the foreseeable future we will remain focused on the further execution of our strategy, combining autonomous growth and growth through strategic acquisitions. We reiterate our outlook that we expect to improve profitability in the year 2014 compared with 2013.”
Notes to the results
Financial developments
ICT (ICT)’s revenue in the first half of 2014 was € 32.4 million compared to € 30.2 million in the first half of 2013. As a result of licence sales and the increase in operational hours facilitated by the increased number of direct employees in the Netherlands, ICT was able to realise 7.3% higher revenue than in the comparable period in 2013. The licence sales are a consequence of the partnership formed with LogicNets generating a number of new projects.
The operating result from continuing ordinary operations in the first half of 2014 was in line with the first half of 2013 and amounted to € 2.6 million. The operating margin decreased due to the significant outlays made in marketing and sales and on the recruitment of young professionals. There is however still pressure on the secondment rates in the market.
The costs related to the consideration of strategic options, including the due diligence and transaction costs for Brandfort, amounted to  € 0.3 million (H1 2013: € 0.3 million). In the beginning of April, the discussions for the contemplated transaction with Brandfort were terminated.
Despite numerous attempts over the past years to make its German business profitable, ICT foresees that the German activities will not contribute to a positive result in 2014. Together with the fact that in Germany ICT does not have the necessary critical mass to serve the multinational corporations, the company decided to discontinue its activities based in Germany.
On 11 August an agreement was signed to sell the German activities to ALTEN.
As a result, ICT Germany classifies as “Discontinued operations”. The result from these operations in the first half of 2014 amounted to a loss of € 0.7 million (H1 2013: loss of € 0.9 million).
Taxes in the first half of 2014 amount to € 0.6 million, which is relatively high compared with the € 0.3 million in the first half of 2013. The tax burden last year was low due to a tax write-down of part of the intercompany loans between the Netherlands and Germany. In the second half of 2013 this has been corrected, so on a yearly basis there will be no difference in the comparison 2014 versus 2013.
Net profit was € 0.9 million, compared with a profit of € 1.3 million in the first half of 2013. The cash position as at 30 June 2014 improved to € 7.5 million (June 30, 2013: €  5.9 million). The balance sheet total decreased  from € 46.5 million at year-end 2013 to € 42.8 million at 30 June 2014 as a result of the classification of ICT Germany as “Discontinued operations” in accordance with IFRS 5.
The Vertical Machine & Systems managed to record positive results, in line with expectations, continuing the trend of the second half of 2013. The relatively modestly sized Healthcare and Energy Verticals, are developing in line with expectations and the Healthcare Vertical in particular has acquired a number of interesting contracts.
The Verticals Industrial Automation and Logistics realized positive but disappointing results due to lower than expected demand from customers, and as a result of this a lower productivity of employees.
Automotive Netherlands managed to record positive results. Productivity was particularly high in the first quarter of 2014 with a slight decrease in the second quarter.
The results of Improve Quality Services are better than last year as training activity is picking up in the Netherlands, whereas  the performance of InTraffic, a joint venture with Movares, was lower than expected due to a delay in orders. This led to a significant decrease in the result compared to last year.
The company will continue its strategy of offering innovative effective product/market solutions, enriched with state-of-the-art technology. Each vertical offers market specific solutions in which ICT has a high level of expertise, which allows the company to offer its clients greater added value. This puts ICT in a position to execute projects for its clients independently, making use of the specialist expertise and experience it has gained from previous assignments for its clients. As a result, ICT is able to realise innovative solutions for its clients that are also both repeatable and scalable.
Significant events after the balance sheet date
Sale of ICT Germany
As announced in a press release on 11 August of this year, ICT has reached agreement with ALTEN GMBH on the sale of the German activities. The signing of the formal agreements and closing of the transaction are both subject to the usual conditions precedent. ICT and ALTEN expect to complete the transaction before the end of October 2014. Following the sale of the German commercial activities, ICT intends to liquidate its German subsidiary. The disclosure of the financial aspect of the divestment is being limited  to the statement that, on balance, the result on the divestment of the German activities will be slightly positive for ICT. In addition, as a consequence of the liquidation, it is expected that a deferred tax benefit can be recognized in 2015.
Strategic partnership  LogicNets
On 24 August  ICT signed a Letter of Intent with LogicNets inc  to enter into a strategic partnership comprising a distribution and implementation partner agreement for Western Europe and the acquisition by ICT of a 20% stake in that company . The strategic stake  provides ICT with a firm grip on future software developments as the solutions are pivotal to its customers. ICT’s investment will range between US $ 2 and 3 million.
ICT will continue to focus on efficiency and on execution of the strategy combining autonomous growth with growth through acquisitions. The sale of the German Automotive activities and the signing of the distribution agreement with LogicNets are important first steps in this execution. Based on the backlog of projects and the experience that the second half of the year is generally better than the first half in our business, we continue to expect  that 2014 will represent an  improvement in the operating profit from continuing operations compared with 2013.

‘Condensed consolidated interim financial statements’ document

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