Q3 results 2014 ICT Automatisering

ICT reports flat third quarter revenues

Full year outlook reiterated

  • Revenue in Q3 2014 in line with last year at € 14.2 million
  • Operating result from continuing operations in Q3 came in at € 0.7 million (Q3 2013: € 0.8 million)
  • Sale of the German activities completed
  • Management reiterates expectation of improved operating result from continuing operations for the full year 2014 compared to 2013

Key Figures

(in € millions) Q3 2014 Q3 2013 Δ 9 months 2014 9 months 2013 Δ
Revenue 14.2 14.3 – 1% 46.6 44.5 + 5%
Revenue Added Value 13.1 12.9 + 1% 42.2 40.9 + 3%
Operating result from continuing operations 0.7 0.8   2.9 3.0  

(*) 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’

Financial developments

ICT (ICT) announces revenues in the third quarter of 2014 came in at € 14.2 million, from € 14.3 million in the third quarter of 2013. The third quarter is traditionally a lesser period due to the summer holidays, with in addition this year more young professionals not yet fully productive. Revenue over the first nine months of the year amounted to € 46.6 million compared to € 44.5 million over the first nine months 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 5 % higher revenues than in the comparable period in 2013. The operating result from continuing operations came in at € 0.7 million in the third quarter, compared with € 0.8 million in the same period of 2013. The operating result from continuing operations in the first nine months of 2014 was in line with the first nine months of 2013 and amounted to € 2.9 million. The operating margin decreased due to the significant outlays made in marketing and sales. In addition the successful recruitment drive for young professionals, that understandably were not immediately fully productive, impacted the margin. ICT has completed the sale of its German activities to Alten GmbH, a German subsidiary of Alten SA. As a result of the divestment, ICT will liquidate its German subsidiary, ICT Software Engineering GmbH. As a consequence of the liquidation there will be a deferred tax benefit to be recognized, on which ICT is in discussions with the Dutch tax authorities. Further to the Letter of Intent signed end of August, ICT entered into a Strategic partnership with LogicNets in the second half of October. This strategic partnership comprises a distribution and implementation partner agreement for Western Europe and the acquisition by ICT of a 20% stake in LogicNets inc.

Outlook

ICT will continue to focus on the execution of the strategy combining autonomous growth with growth through acquisitions. Based on the backlog of projects and the experience that the fourth quarter of the year is generally the best quarter of the year in our business, we continue to expect that 2014 will represent an improvement in the operating profit from continuing operations compared with 2013 (€ 4.2 Million).

ICT Automatisering reports continued improvement in revenue and EBIT in Q1


Key Developments in first quarter:
– Revenue in Q1 2014 up 1.7% at € 18.9 million
– In Q1 2014 operating result from ordinary operations (before exceptional items) improved € 0.3 million to € 1.1 million due to an improved utilisation rate as well as the ongoing reduction of indirect costs.
– The Q1 operating result amounted to € 0.8 million, due to exceptional charges of € 0.3 million related to the Brandfort transaction.
Key figures *

(in € millions) Q1 2014 Q1 2013 Δ
Revenue 18.9 18.6 + 1.7%
Operating result from ordinary operations
(before exceptional items)
1.1 0.8
Exceptional charges ** 0.3 0.0
Operating result 0.8 0.8


* InTraffic classifies as a joint venture. As a result of IFRS 11,  effective per 1 January 2014,  InTraffic (as a joint venture) is no longer part in the statement of comprehensive income in revenue, costs and EBIT. From 1 January 2014 onwards the net result of InTraffic is being presented in one single line in the consolidated statement of comprehensive income under financial income. 2013 figures have been restated to reflect  to this new situation.
** This concerns corporate development expenses related to the consideration of strategic options, including the proposed acquisition of Brandfort.

Financial developments
ICT (ICT)’s revenue in the first quarter of 2014 was € 18.9 million compared to € 18.6 million in the first quarter of 2013. As a result of increased demand for ICT services, ICT was able to realise 1.7% higher revenues than in the comparable period in 2013.
The operating result from ordinary operations amounted to € 1.1 million in the first quarter, compared with € 0.8 million in the same period of 2013. The improvement in results was due to the higher utilisation rate of our staff as a result of an increase in demand for ICT’s services. In addition, the reduction of indirect costs also resulted in improved profitability. This improvement was partly off-set by lower than expected project results.
The costs related to the considerations of strategic options including the costs for due diligence and transaction costs for Brandfort amounted to  € 0.3 million. In the beginning of April, the discussions for the contemplated transaction with Brandfort were terminated.
Operational developments
The Verticals Machine & Systems and Logistics managed to record positive results, in line with expectations, continuing the trend of the second half of 2013. The vertical Industrial Automation realized positive but disappointing results due to lower than expected demand from customers, and as a result of this a lower productivity of employees, and lower average rates per hour. The Automotive Vertical recorded a slightly negative operating result in the first quarter, with the Netherlands achieving better than expected results in combination with disappointing results in Germany. An action plan is therefore being implemented in Germany. Both the German market circumstances as well as progress on the action plan is being monitored closely and additional actions will be taken as and when necessary.
The performance of InTraffic was lower than expected due to a delay in orders. The results of Improve are slightly better than last year as training activity is picking up in the Netherlands.
Outlook
ICT’s focus on Verticals and the continued reduction of indirect costs have had a positive impact on the performance and results of the company. The economic conditions improved slightly but remain challenging due to continued volatility. As we see in the first quarter of 2014, the range of measures that management took last year positively impacts our operating profit from ordinary operations. We expect 2014 to show a continued improvement of the operating profit from ordinary operations compared to 2013.

About ICT
ICT’s goal is to simplify and improve our clients’ business, production and communication processes and to make them more flexible. We do this by using our high-grade technological expertise. We deploy this expertise in the form of inventive and effective product and market combinations. ICT is organised in line with the markets we serve. We have six verticals: Automotive, Industrial Automation, Logistics, Machine & Systems, Healthcare and Energy. Each vertical offers professionals with specific know-how and expertise of a market’s products and processes. For more detailed information on ICT, visit our website at www.ict.eu.
For further information:
Femmy de Rijk – Marketing & Communications ICT Automatisering N.V.
Telephone: +31 (0) 88 908 2000 / +31 (0)6 10 51 3745.
E-mail:  Femmy.de.rijk@ict.eu

ICT annual results 2013: substantial increase operating result

FOCUS ON VERTICALS AND PROJECT RELATED BUSINESS PAYS OFF

Key Developments in 4th Quarter and full year 2013:

  • Full year revenue increased by 2.1% to € 79.5 million (2012: € 77.8 million), this increase was realized in the second half of the year 2013 compared to the second half of the year 2012 (+6.1%).
  • Compared to Q4 2012 , operating result from ordinary operations in Q4 2013 increased € 1.7 million.
  • The full year 2013 operating result from ordinary operations before exceptional items increased substantially from € 1.7 million to € 4.9 million. The operating margin increased to 6.2% in 2013 (2012: 2.2%).
  • Net cash flow from operating activities was € 5.3 million.
  • Impairment of Improve Quality Services (€ 3.4 million) influenced net result.
  • Net result amounted to a loss of € 1.1 million (2012: loss of € 5.2 million).


Jos Blejie, CEO of ICT Automatisering N.V.:“The further roll out of our verticals strategy and the continued reduction of indirect costs have led to clear improvements in results in 2013, despite the fact that the market remains dominated by a reluctance to invest. We have signed a number of partnerships with leading players in a number of our key industries. These partnerships are of vital importance for the successful introduction of our products and services. For the coming year, we will further roll out our strategy and boost efforts in promising product market combinations. Our company is well-positioned for further growth, we are confident that 2014 will show a further improvement in the operating result compared to 2013.”
Notes to the results
ICT’s total revenue raised by 2.1% to € 79.5 million (2012: € 77.8 million). Revenue at ICT Netherlands increased by 6.2% to € 66.0 million (2012: € 62.1 million). Especially in the second half of 2013 ICT realized a substantial increase in revenue compared to the second half of 2012, as a result of increased demand for ICT’s services, and a consequent improved utilisation rate. All verticals, except Automotive Germany showed an increase in revenue. InTraffic saw its revenue increase, whereas at Improve, revenue was down considerably. The cost of sales, mostly material, expenses and outsourced work, increased to € 9.4 million (2012: € 9.0 million) as a result of different mix of business.
Personnel expenses, at € 50.0 million in 2013, were down slightly from the € 50.2 million recorded in 2012. This was largely due to the lower average number of employees (minus 19 FTE). As in 2012, ICT incurred one-off costs in 2013. In 2012 this amounted to € 2.6 million and comprised of a provision for so-called onerous contracts, the sale of the Neustadt activities and other restructuring measures. In 2013, this amounted to € 1.4 million. € 1.0 million of these costs concern expenses related to investigations of strategic combinations. The other € 0.4 million exceptional costs were related to the termination benefit of the former CEO who left the company in November 2013.
The focus on the reduction of indirect costs – is now paying off. In 2013, indirect costs – including depreciation on tangible assets – came in at € 16.9 million, down 12% from the € 19.3 million recorded in 2012. Including the depreciation charges on fixed assets, indirect expenses came in at 21% of revenue in 2013, down from nearly 25% in 2012, mainly as a result of lower indirect personnel costs and lower rental costs.
The total operating result before exceptional items for the year 2013 increased to € 4.9 million or 6.2% of revenues compared to € 1.7 million or 2.2 % of revenues in 2012. The improvement in results was due primarily to the improved utilisation rate of our staff as a result of an increase in demand for ICT’s services. In addition, the sale of the Neustadt activities (Q4 2012) and the reduction of indirect costs also resulted in improved profitability.
The Verticals Machine & Systems (including Healthcare and Energy), Industrial Automation and Logistics managed to record positive and improved results compared to 2012. The vertical Automotive was loss making during 2013 (€ 0.6 million negative; 2012: € 2.1 negative). However, in the second half of 2013, the operating result of the Automotive Vertical was € 0.1 million positive. Automotive Germany did book improved results compared with the previous year and the first half of 2013. The appointment of new management with a focus on business development, the departure of a number of professionals who could not be deployed on a structural basis, and also the ongoing reduction in the number of indirect employees resulted in a small loss of € 0.1 million in the fourth quarter.
The performance of InTraffic developed positive, while the results of Improve Quality Services lagged. This was largely due to companies postponing training courses in the current economic climate.
The Vertical Automotive Germany and Improve Quality Services were again critically assessed for goodwill impairment purposes. Based on this it was decided to again impair goodwill for Improve Quality Services B.V. for an amount of € 3.4 million.
Taxes in 2013 totalled €1.2 million. ICT devaluated the loans to Germany as a result of losses in Germany for an amount of € 2.4 million. As a result a deferred tax liability was recognized for an amount of € 0.6 million.
Net loss was € 1.1 million, compared with a loss of € 5.3 million in 2012. This translates into a loss per outstanding weighted average ordinary share of € 0.13. The number of outstanding ordinary shares on 31 December 2013 amounted unchanged to 8,747,544.
Q4 2013 results
Revenue in Q4 2013 increased 9.0% to € 21.0 million compared to € 19.2 million in the last quarter of 2012. In the fourth quarter of 2013, an operating result from ordinary operations of € 2 million was realized, a substantial improvement from € 0.3 million in Q4 2012. This exceptional improvement was due to a relatively high number of working days in combination with an improved utilisation rate.
Balance sheet structure
Shareholders’ equity decreased to € 30.3 million, mainly as the result of the addition of the net loss for 2013. The trade receivables and other receivables have decreased by approximately € 0.3 million as of year-end 2013 due to effective billing and debtor collection. The balance sheet total decreased with € 0.6 million from € 47.8 million at year-end 2012 to € 47.2 million at year-end 2013. The solvency (shareholders’ equity/total assets) developed from 65.9% at year-end 2012 to 64.2% at year end 2013.
Cash flow development
The group’s cash position was € 10.1 million at year-end 2013 compared to € 5.9 million 2012. The company continues to focus on proper cash management. The cash flow from operations amounted to € 5.3 million positive in 2013 (2012: € 0.5 million negative). The increase is mainly the result of improved results and income tax received.
Personnel
The total number of employees in FTEs at end 2013 (751 FTE) was down 2.7% compared to end 2012 (772 FTE). This was largely related to the lower number of indirect employees. For 2014 we expect to grow in FTE in line with our revenue development.
Reporting
As per 1 January 2013, ICT’s strategy is focused primarily on verticals, with a secondary focus on country and regional/office level. Prior to the year under review, ICT reported its results on the basis of two ‘Operating Segments’, namely ICT the Netherlands and ICT Germany. Effective from the financial year 2013, ICT reports internally on the basis of the segments : Industrial Automation, Machine & Systems (including Healthcare en Energy), Logistics, Automotive, and the participation Improve Quality Services.
Strategy
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.
Management changes
Mr. Jan Willem Wienbelt succeeded Mr. Anno Kamphuis as CFO a.i. as from 1 September 2013. Mr. Carlo D’Agnolo stepped down as CEO on 17 November 2013 and was succeeded by Mr. Jos Blejie on 1 December 2013. His permanent appointment as Statutory Director as well as the formal appointment of Mr. Jan Willem Wienbelt as member of the Executive Board and Statutory Director shall be notified to the Annual General Meeting on 21 May 2014.
Composition of the Supervisory Board
At the General Meeting on 21 May 2014, Mr. Jan Sinoo ́s term on the Board will expire. The Board will submit a proposal to the General Meeting to reappoint Mr. Jan Sinoo for a new 4 year term.
Dividend
It is proposed to the General Meeting of Shareholders that a dividend be paid out for the 2013 financial year at the amount of € 0.15 per share in cash based on the number of ordinary shares outstanding at year end 2013. This reflects the dividend policy of a payout ratio of 40% of the net profit. For 2013 this net profit was corrected for € 4.4 million of impairment loss and exceptional costs.
Significant events after the balance sheet date
In June DPA Group N.V. (DPA) announced that it had taken a 20.4% shareholding in the company and proposes to combine its business with ICT’s. After further discussions with DPA and further assessment of the various strategic options ICT has ceased further conversations with DPA regarding its proposal.
On 18 November 2013, ICT announced it had reached agreement with Brandfort B.V. (Brandfort) on a proposed acquisition of Brandfort. Brandfort is a medium-sized engineering company with 250 employees and annual revenue of € 16.7 million. ICT and Brandfort have an excellent strategic fit and the acquisition will lead to accelerated growth and offers both ICT and Brandfort access to a number of new clients and a stronger relationship with existing clients.
On 18 December 2013 the management and supervisory board of ICT received a letter of DPA in which they requested ICT to convene an Extraordinary General Meeting (EGM) with the proposed acquisition of Brandfort as voting item on the agenda.
ICT convened an EGM on 11 February 2014 with the proposed acquisition of Brandfort as informal voting as sole agenda item. 73% of the issued share capital was represented at the meeting. 53% of the share capital represented at the meeting voted in favour of the Brandfort transaction. After careful considerations of all remarks of the shareholders the Board decided to continue with the transaction.
Outlook
In 2013, ICT’s focus on Verticals and the continued reduction of indirect costs have had a positive impact on the performance and results of the company. The economic conditions slightly improved but remain challenging due to continued volatility. On the other hand, the range of measures that management took will be felt fully in 2014. We therefore expect 2014 to show a continued improvement in the operating profit from ordinary operations compared to 2013.
Operational developments
Automotive
The Automotive Vertical develops, sells and implements products and services throughout the entire automotive supply chain. Core business is developing embedded software for automotive systems in the infotainment and telematics market. New deals came from WABCO Automotive, LG Electronics, gConcepts.
Revenue at the Automotive Vertical was down 1.7% at € 19.1 million, from € 19.5 million, excluding € 1.4 million divested Neustadt operations, in 2012. Revenue at Automotive Germany amounted to € 13.5 million, a decrease of 5.7% compared to the previous year (€ 14.3 million, excluding € 1.4 million divested Neustadt operations). Revenue at Automotive Netherlands amounted to € 5.6 million, an increase of 9.5% compared to the previous year (€ 5.1 million).
Logistics
The Logistics vertical is largely active in port logistics and goods transport. Overall it has been a positive year for the Logistics Vertical, The investment in developing targeted propositions based on our new Supply Chain Platform paid off. At the same time investments in the team ensured that we are well equipped in all types of logistics such as harbour logistics and warehouse logistics. Overall we won more assignments and deals for PostNL (Cloud solution) Zuivelhoeve, Zeelandia and Fedex.
The revenue of the Logistics Vertical increased to € 9.3 million, from € 8.5 million in 2012, an increase of 10.1%, largely due to an increased demand from larger customers, leading to more assignments which resulted in a higher productivity.
Industrial Automation
As a system integrator, the activities of the Industrial Automation vertical are focused entirely on the implementation of software for primary processes. These are largely processes in the field of water management, plant automation in the Food & Feed industry and the continuous flow chemicals sector. Despite the volatile demand in these sectors, ICT has in the past few years been extremely successful in water management for semi-government organisations. This vertical has performed well over the past few years.
The vertical performed well thanks to increased customer demand. ICT acquired a number of new contracts, such as Waterschap Rijn en Ijssel, Plant One, CSi Industries and Hoogheemraadschap of Schieland and the Krimpenerwaard (HHSK) projects. Revenue increased by 9.0% to € 14.6 million, from € 13.4 million in 2012, due to an increased customer demand for projects, and as a result project related material purchases.
Machine & Systems
The Machine & Systems vertical focuses on the development of total solutions, a significant proportion of which consists of embedded software, as well as hardware. This vertical has also built up specific expertise in Calibration, Performance and Diagnostics (CPD) that it offers to the market as outsourcing services. In addition, the vertical has invested structurally in the development and successful delivery of an end-to-end Connected Devices solution, which provides a total solution, from Embedded right through to the Cloud.
The vertical Machine & Systems is mostly active in the OEM market. While we are facing price pressure from OEM-s, revenue went up 3.2% at € 28.2 million, from € 27.4 million in 2012, thanks to an increase in the overall demand for secondment and the number of projects and services delivered. In addition the vertical saw an increase in the number of direct employees and an improvement of productivity.
For ASML, ICT is now farming out the entire calibration arm, coming from being an outsourcing partner. ICT has made progress are made in connectivity services, a growth market in which we are able to deliver the full range of services.
We expanded our Healthcare operations, that are part of this vertical, last year through a long-term partnership with the PALGA foundation. We also established an international presence through the partnership with the Massachusetts General Hospital. The cooperation with our U.S. partner LogicNets will be key to the new Dutch and international contracts.
In the energy sector we, in collaboration with our partner GreenFlux, work on Smart Charging, which anticipates on the rising popularity of electric vehicles (EVs). In addition we have launched new pilots such as Smart Grid in Balance (with GreenFlux) and PowerMatching City with our partners Kema, TNO, Essent, Enexis and TU/e.
Improve Quality Services
Improve is active in the market for testing services, a segment that has in recent years proven particularly sensitive to reluctance to invest. The year 2013 was a difficult year for training. This market lagged behind expectations, however a small recovery could be seen in the second half of the year. The economic situation led to companies deciding to postpone or cancel training. In 2013 turnover mainly decreased in the area of training, especially in the first half of the year. Interim services and consultancy decreased slightly compared to 2012, due to a lack of highly qualified consultants. In 2013 revenue decreased by 10.6% to € 3.2 million.
InTraffic
The focus of the InTraffic business is on the public transport sector. A significant portion of InTraffic’s revenue is generated by development and maintenance activities for ProRail. Revenue at the InTraffic joint venture increased with 3.2% to € 6.9 million in a stable market. The operating result in 2013 has improved tremendously as a result of improved efficiency.
About ICT
ICT’s goal is to simplify and improve our clients’ business, production and communication processes and to make them more flexible. We do this by using our high-grade technological expertise. We deploy this expertise in the form of inventive and effective product and market combinations. ICT is organised in line with the markets we serve. Our verticals: Automotive, Industrial Automation, Logistics, Machine & Systems, Healthcare and Energy, offers professionals with specific know-how and expertise of a market’s products and processes. For more detailed information on ICT, visit our website at www.ict.eu.
For further Information:
Femmy de Rijk – Marketing & Communications ICT Automatisering N.V. Telephone: +31 (0)88 908 23 05 or +31 (0)6 10 51 3745. E-mail: Femmy.de.rijk@ict.nl Cautionary statement
This press release contains forward-looking statements. Forward-looking statements are always based on assumptions and estimates relating to uncertain events over which ICT Automatisering N.V. has no control. They concern, for example, measures taken by the Dutch and other governments, currency movements, price fluctuations, changes in law and regulations, legal precedents and market developments. ICT Automatisering N.V. would like to stress that the contents of this press release are based on the information that is currently available. The reality can always deviate from expectations for the future. ICT Automatisering N.V. has no obligation to update the statements contained in this document, unless required by law.
Auditor’s involvement
The full year 2013 and 2012 summary financial information, as set out on pages 8 to 11 of this press release has been derived from ICT Automatisering N.V.’s 2013 financial statements, as included in the 2013 Annual Report (the financial statements), which have not been published. In accordance with article 2:395 of the Netherlands Civil Code, we state that our auditor, Deloitte Accountants B.V., has issued an unqualified opinion on the financial statements.
For a better understanding of the company’s financial position and results and of the scope of the audit of Deloitte Accountants B.V., this report should be read in conjunction with the financial statements from which these summary financial statements have been derived and the auditor’s report of Deloitte Accountants B.V. thereon issued on March 12, 2014. We plan to publish the financial statements by including on the company’s website on April 7, 2014. The general meeting has not yet adopted the financial statements.
Annexes – Consolidated financial statements 2013:
– Consolidated statement of total comprehensive income
– Consolidated balance sheet
– Consolidated statement of changes in equity
– Consolidated statement of cash flows
– Other financial information

Click here to view ‘Annex Annual Results 2013’

ICT Automatisering reports improved results in Q3

  • • Revenue in Q3 2013 up 3% at € 18.9 million.
  • • Operating result from ordinary operations rose to € 1.0 million in the third quarter of this year, from
    € 0 million in Q3 2012, largely as a result of the focus on Verticals and the measures implemented to reduce indirect costs.
  • • Machine & Systems, Industrial Automation and Logistics Verticals record positive results.
  • • Automotive Vertical achieves break-even in the third quarter.

Financial developments

ICT (ICT) announces revenue in the third quarter of 2013 came in at € 18.9 million, from € 18.4 million in the third quarter of 2012. The third quarter is traditionally a lesser period, due to the summer holidays, but thanks to increased demand ICT was able to realise 3% higher revenue compared with the comparable period in 2012. Corrected for € 0.6 million turnover from the Neustadt activities, which were sold in 2012, revenue was up 6%.
Revenue over the first nine months of the year was unchanged from the comparable period last year. Restated for the Neustadt activities (revenue € 1.4 million), which were sold in 2012, and exceptional project results in the first half of 2012 (revenue € 1.1 million), revenue was up 4.0%.
The operating result from ordinary operations came in at € 1.0 million in the third quarter, compared with € 0.0 million in the same period of 2012. The operating result from ordinary operations over the first nine months was € 2.9 million, compared with € 1.4 million in the same period of 2012. The improvement in results was due primarily to improved utilisation rate of our staff as a result of an increase in demand for ICT’s services. In addition, the sale of the Neustadt activities and the reduction of indirect costs also resulted in improved profitability. Indirect costs as a percentage of revenue fell to 21%, from 24% in the 2012 period.

Key figures

(in € millions) Q3 2013 Q3 2012 Δ 9 months 2013 9 months  2012 Δ
Revenue 18.9 18.4 + 3% 58.5 58.6 (0.1)%
Revenue Added Value 16.7 16.0 + 4.3% 51.9 51.2 + 1.3%
Operating result from ordinary operations 1.0 0.0 2.9 1.4
Exceptional charges * 0.3 0.0 0.6 1.3
Operating result 0.7 0.0 2.3 0.1
Net profit 0.5 (0.1) 1.7 (0.5)

* this represents one-off costs or costs that are not related to ordinary operating activities. In 2012, this was a provision for onerous contracts, while in in 2013 it concerns corporate development expenses related to the consideration of strategic options, including the preparations for the proposed cooperation with Brandfort.

Operational developments

The adopted strategy, with its focus on verticals, has in 2013 led to a clear improvement in results, despite the fact that the market remains dominated by a reluctance to invest. The Machine & Systems, Industrial Automation and Logistics Verticals managed to record positive results in the third quarter, continuing the trend of the first half of the year. The Automotive Vertical recorded a break-even operating result in the third quarter, with the Netherlands achieving a modest positive result and Germany a slightly negative result. The performance of InTraffic was stable, while the results of Improve Quality Services lagged. This was largely due to companies postponing training courses in the current economic climate.

Development of revenue at Verticals

Revenue at the Automotive Vertical was down 3.4% at € 4.7 million, from € 4.8 million in the third quarter of 2012. The productivity of our own workforce improved both in the Netherlands and in Germany, while hiring of freelance staff was down.
The revenue of the Logistics Vertical increased to € 2.2 million, from € 1.9 million in the third quarter of 2012, an increase of 14.2%, largely due to more assignments which resulted in a higher  productivity.
The Industrial Automation Vertical saw revenue increase by 10.7% to € 3.5 million, from € 3.1 million in the third quarter of 2012, due to an increased customer demand.
Revenue at the Machine & Systems Vertical (including Energy and Healthcare) was up 7.1% at € 6.7 million, from € 6.3 million in the third quarter of 2012, thanks to an increase in the number of projects.
Revenue at the InTraffic joint venture was stable. Improve Quality Services had a disappointing quarter, as a result of low participation in training courses, which account for a considerable proportion of the revenue.
The Verticals that operate from the Netherlands recorded a satisfactory operating result. The German operation is active solely in the Automotive Vertical. The operating result of the Automotive Vertical was break-even, with the Netherlands showing a modestly positive result and Germany a slightly negative result.

Outlook

In the first nine months of 2013, the focus on Verticals and the continued reduction of indirect costs have had a positive impact. The economic conditions remain challenging, however, due to continued volatility. We reiterate our expectation, barring unforeseen circumstances, of a material improvement in the operating result compared to full-year 2012. Herewith, we expect that the final quarter of 2013 will show a continued improvement in the operating result from ordinary operations compared to the third quarter of the year.

About ICT

ICT’s goal is to simplify and improve our clients’ business, production and communication processes and to make them more flexible. We do this by using our high-grade technological expertise. We deploy this expertise in the form of inventive and effective product and market combinations. ICT is organised in line with the markets we serve. We have six verticals: Automotive, Industrial Automation, Logistics, Machine & Systems, Healthcare and Energy. Each vertical offers professionals with specific know-how and expertise of a market’s products and processes. For more detailed information on ICT, visit our website at www.ict.eu.

For further Information:

Femmy de Rijk – Marketing & Communications ICT Automatisering N.V.
Telephone: +31 (0)6 10 51 3745. E-mail:  femmy.de.rijk@ict.nl

ICT Automatisering reports a positive development in Q1 2013 operating result

Restructuring measures starting to have effect

ICT (ICT) realized a revenue of € 19.8 million for the first three months of 2013. This is a reduction of 5.1% compared with € 20.9 million for the same period of last year. The underlying revenue development though was positive. Corrected for three aspects, which are explained below, revenue was up 2.5% compared with the same period of 2012.
The first quarter of 2013 had two working days fewer than the same period of 2012. This had an impact of some € 0.5 million on revenue and operating result.
The second explanation for the reduction in revenue lies in the fact that in the first quarter of 2012, we realized revenue and profit of € 0.7 million on a number of projects for which the main part of the work was carried before 2011.
Finally, the sale of the Neustadt activities as per 1 December 2012 had a negative impact on revenue of around € 0.3 million.
Operating result in the first quarter was unchanged from the same period of 2012 at € 0.9 million. However, profit in the first quarter of 2013 showed an important improvement when corrected for the two fewer working days and the profit realized on the above-mentioned projects.
The measures we took in 2012 in the areas of infrastructure, indirect cost and management are starting to have a positive effect on results. Indirect expenses were down € 0.5 million in the first quarter of 2013 compared with the same period of last year, largely due to savings on indirect personnel costs and rental costs.
Below we discuss revenue development per vertical, corrected for the above-mentioned effects.
Revenue at the Automotive Vertical was up 8.3% at € 5.0 million, largely due to healthy productivity at the Dutch operations. Revenue from the deployment of internal staff at the German operations was slightly lower and from freelancers higher.
Revenue at the Logistic Vertical rose to € 2.3 million, an increase of almost 5%, primarily on the back of improved productivity.
The Industrial Automation Vertical saw revenue rise 8.0% to € 3.7 million, largely thanks to a higher average yield per hour, the result of more cost-efficient project execution.
Revenue at the Machine & Systems Vertical (including Energy and Healthcare) was down 2.2% at € 6.9 million due to a slightly lower deployment of staff.
The developments at the joint venture InTraffic were positive. However, Improve Quality Services had a disappointing first quarter, largely due to low participation in training courses that account for a considerable part of the company’s revenue.
The Verticals that operate from the Netherlands realized a satisfactory operating margin. The German operations are fully active in the Automotive Vertical and have not yet realised an operating profit, though losses have fallen considerably. We continue to strive for a break-even result for the full-year 2013.
We are positive about the development of the group’s results for the full-year 2013 and, barring unforeseen circumstances, we expect a material improvement in the operating result compared to full-year 2012.

About ICT

ICT’s goal is to simplify and improve our clients’ business, production and communication processes and to make them more flexible. We do this by using our high-grade technological expertise. We deploy this expertise in the form of inventive and effective product and market combinations. ICT is organised in line with the markets we serve. We have six verticals: Automotive, Industrial Automation, Logistics, Machine & Systems, Healthcare and Energy. Each vertical offers professionals with specific know-how and expertise of a market’s products and processes. For more detailed information on ICT, visit our website at www.ict.eu. 

For further information:

Femmy de Rijk – Marketing & Communications ICT Automatisering N.V.
Telephone: +31 (0)6 10 51 3745. Email: Femmy.de.rijk@ict.nl

Annual results 2012

  • Q4 operating profit is € 0.3 million, in line with the expectations communicated in November, significantly lower than the relatively high comparative level of € 1.6 million in 2011. H2 operating profit is also € 0.3 million as Q3 operating profit was nil.
  • Full year operating profit before exceptional items decreased to € 1.7 million from € 4.0 million. The main reason for a lower profit is a decline in utilisation levels.
  • The German activities in 2012 were again loss making. However the results did show an improvement compared to last year mainly due to the performance in the second half of 2012.
  • From mid 2012 onwards we have taken drastic measures by closing structural loss making activities, reducing indirect cost and strengthening management. We believe these measures should lead to an at least break-even German operation in 2013 and profitability thereafter albeit at a lower level than anticipated previously.
  • As a consequence, goodwill for ICT Germany has been impaired by € 2.0 million. In addition, a € 0.3 million goodwill adjustment was made as part of the cost of the Neustadt operation divestment. Furthermore, Improve has been impaired by € 1.5 million.
  • The costs related to the divestment of the Neustadt operation and reduction of indirect staff both in the Netherlands and Germany amount to € 1.2 million.
  • The net result in 2012 is € 5.3 million negative (2011: € 8.3 million negative).
  • Management proposes to pass dividend for 2012.
annualresults_2012_overview_nl

Carlo D’Agnolo, CEO of ICT: “In 2012, markets were dominated by a continued reluctance to invest in IT, with modest signs of recovery seen in the summer. However, this upturn did not persist and after summer we were again confronted with a decline in demand and a consequent drop in employee productivity. As a result, our revenue for the year was down slightly compared to the previous year, while our operating result showed a sharp decline.
To improve profitability we implemented restructuring measures for both Germany and the Netherlands, mainly to reduce indirect costs. Regarding our professionals we are balancing between keeping the right level of expertise in anticipation of an actual market rebound, and being cost-conscious in the face of the current market reality. In 2013, the focus will be on further implementing the announced measures on the one hand and on pursuing the opportunities we clearly see in a number of our markets on the other hand.”

Notes to the results

ICT’s total revenue fell by 3% to € 77.8 million (2011: € 80.2 million). Revenue at ICT Netherlands  declined by 4% to € 62.1 million (2011: € 64.9 million). Where in the first half of the year a slight increase in revenue was realized, revenue fell sharply in the second half, as a result of continuous low demand in IT markets and a consequent low utilisation rate.

In 2012, revenue at ICT Germany amounted to € 15.7 million, a modest increase of 3% compared to the previous year (€ 15.3 million). This increase was realized in the second half of the year, when revenue amounted to € 7.9 million compared to € 7.5 million in 2011. In Germany, ICT was able to improve its average return per hour. In the Netherlands it was raised slightly.

The cost of sales, mostly material, expenses and outsourced work, increased marginally to € 9.0 million (2011: € 8.9 million). Personnel costs increased slightly from € 49.8 million in 2011 to € 50.0 million this year. Operating costs decreased slightly, marketing costs increased but this was more than compensated by a reduction in other operating costs.

The total operating result before exceptional items for the year 2012 declined to € 1.7 million (2011: € 4.0 million). The operating result in the Netherlands fell sharply to € 3.8 million for the full year 2012 from € 6.7 million in 2011. This was the result of lower utilisation levels, especially December showed very low productivity levels. The lower number of direct employees in the Netherlands compared to last year also impacted the result. ICT Germany continued to make a loss also in 2012, but the operating results, before exceptional items, did improve compared to the previous year, from an operating loss of €2.7 million to an operating loss of € 2.0 million.

In Germany the operating result in Automotive has improved in 2012 compared to 2011. The result of the Neustadt operation that focused on non-Automotive activities deteriorated compared to 2011. This operation was divested at the end of 2012. The average utilization rate in Germany was lower than in the previous year, but improved in the second half of the year compared to the first half and was better than the second half in 2011. During 2012, ICT Germany has implemented the same infrastructure, i.e. systems, procedures, etc., as in The Netherlands. This has made it feasible to reduce the number of indirect cost substantially. Also the number of offices has been reduced. The full impact of this will be visible as -per first half 2013.

The operating margin before exceptional items for the group came in at 2.2% in 2012 compared to 5.0% in 2011.

Exceptional items

Due to the bankruptcy of real estate company Eurocommerce in the second quarter of this year, ICT recognized a provision for onerous contracts, pertaining to the rent of the building in Deventer. ICT will no longer receive rental income from subletting part of this office building to Eurocommerce.

Early 2013 ICT has reached agreement with the owner of the building to pay-off its rental obligations since a co-tenant has been found. The decision was made to give up additional office space to meet the wishes of the co-lessee. The onerous contract provision at 2012 year-end was re-measured based on this new situation.

In addition, the offices in Braunschweig are no longer used. The total provision taken for onerous contracts amounts to € 1.8 million. The rental cost for these facilities and some other for which the conditions have been renegotiated, will reduce substantially as of 2013.

To enhance the profitability in both the Netherlands and Germany, ICT has implemented a number of cost reducing measures. The implementation of the group ERP system has been one of the preconditions to reduce costs in Germany. It has improved controls and delivery of effective management information. Both in the Netherlands and Germany, ICT has taken measures to further reduce the number of indirect staff notably in support areas such as Finance, IT and secretarial support. Including the divestment costs of the Neustadt activities the total cost are € 1.2 million. In addition, goodwill on ICT Germany was impaired by € 277,000, which reflects the proportional amount of goodwill that can be appropriated to the Neustadt operation relative to the overall goodwill pertaining to ICT Software Engineering GmbH. Including this impairment, the total divestment cost for Neustadt amounted to € 637,000.

German operations did not recover at a level that was earlier anticipated, with the measures explained above we believe the operation is well positioned to reach at least break-even in 2013, and thereafter should generate profits albeit at a lower level than anticipated previously. This view has led to the decision to impair goodwill for ICT Germany for a further € 2 million in addition to the € 10.2 million that was impaired in 2011.

Goodwill for the Improve Quality Services B.V. acquisition was reduced by € 1.5 million in view of the developments of results over the last years and the expectation that its profitability should improve albeit at a slower pace than early felt feasible.

In addition ICT adjusted its 2011 financial accounts to reflect its obligation to purchase the remaining 25% in the share capital of Improve. The estimated liability at year-end 2011 reduced as a result of a lower profit before tax which is the basis for the calculation of the purchase price of the remaining 25%. As a consequence, € 477,000 was recognized as a gain in the profit and loss accounts of 2012.

Towards the end of 2012, ICT reached an agreement with the works council regarding a new pension structure. The final pay pension scheme has been converted into an average pay pension scheme. As a result the pension liability on the restated balance sheet per end 2011 of € 0.7 million was released in the last quarter of 2012.

The Deferred Tax Asset for accumulated fiscal losses by ICT Software Engineering GmbH was written-off. End 2011 we held € 717,000 of carry forward losses on the balance sheet. Following a review of IFRS principles, it was decided to no longer recognize these. This does not imply that carry forward losses cannot be used to compensate any future profits.

The balance of interest income and interest charges increased to € 538,000 in 2012 (2011: € 326,000).

Liquidity

The group cash position was € 5.9 million at year-end 2012 compared to € 8.1 million 2011. Working capital was at a higher level at year end mainly as a consequence of the tax receivable. The company continues to focus on proper cash management, though we are faced with markets in which customers demand longer payment terms.

Relevant events occurring after balance sheet date
On 1 January 2013, 15% of the remaining 25% were acquired of Improve Quality Services. Although the initial contract stipulated that all remaining shares should be acquired, the contract was amended in order to allow the acquisition of the remaining 10% shares at a later date. The fair value for the remaining shares is estimated at an amount of € 580,000. The remaining 10% of the shares will be acquired on 1 January 2015.

Personnel

At the end of 2012 the company had 772 FTEs compared to 794 at year-end 2011. In Germany, FTEs stood at 161 at the start of the year and 141 at year end 2012. This is essentially the impact of the divestment of the Neustadt operation. In the Netherlands, the number of FTEs went from 619 FTEs at the start of 2012 to 617 at year-end 2012. The number of FTEs in Poland was 14 at year-end 2012, the same as year-end 2011. Staff turnover was approximately 14%, with the turnover in Germany higher than in The Netherlands. Absence due to illness went down to 2.3% (2.8% in 2011).

Strategy

ICT, in line with the strategy approved by the AGM 2 years ago, focuses on adding value through providing specialised expertise and added-value solutions based on innovative technology. This will enable the company to improve profitability and create growth going forward. ICT has developed a market approach based on verticals (functional application areas). This approach will start on a fully fledged basis as per 2013 and verticals will become the primary operating segment as per early 2013.

To make a shift to being a house with a solid mix of expertise areas including system integrator capabilities, ICT increasingly offers project based solutions which it manages itself or on time & material basis. Where relevant, ICT will continue to offer secondment solutions.

ICT meets the growing demand among its clients for affordable and proven solutions by offering repeatable and scalable innovative solutions that take into account the entire product lifecycle.  Affordable solutions are also driven by making smarter use of near- and off-shoring. In addition to its successful recruitment drive in Poland, ICT is exploring options elsewhere.

Retaining and sharing knowledge within the organization is an important element in increasing the added value provided to clients. ICT employees are educated and challenged on a continuing basis, this also creates a positive environment from a recruitment perspective.

Dividend 2012

In view of the reported loss and the resultant cash outflows over the year 2012, management proposes to the shareholders, with approval of the Supervisory Board, not to distribute a dividend over fiscal year 2012. ICT feels it is in the interest of the company and its stakeholders to keep cash available to finance further efficiency measures and organic growth in the key business areas.

Outlook

2012 was characterized by the postponement of investment decisions by our clients across all our markets, which put revenues and profit under pressure. We expect the economic climate to remain difficult. On the other hand, the range of measures that management has taken are expected to have a positive effect starting early 2013. Given the volatility, ICT feels it is inadvisable to express an outlook for 2013.

Developments per division

ICT Netherlands

ICT BV

On 1 April 2012, HUMIQ was renamed ICT.

As a result of the decline in the number of projects during the year 2012, the utilization levels in the Netherlands decreased accordingly. In addition, the overall number of professionals in the Netherlands was lower due to the selective recruitment policy in combination with some layoffs of professionals with a structurally low utilization rate. This will improve productivity in 2013. The unfavorable timing of the Christmas holidays also impacted productivity. Revenue and consequently operating result decreased, especially in the second half of the year.

To improve profitability of the Dutch activities a number of measures were taken to further reduce indirect costs. These will take effect as from the first half 2013.
The recruitment activities remain focused on selectively hiring new direct employees taking into account the anticipated growth of the activities in the high-tech machine building sector. This has resulted in an increase of the number of direct employees in the second half, from 460 in August to 480 in December.

ICT’s vertical Industrial Automation showed favorable developments in the first half of the year, particularly in the area of Water. ICT acquired a number of new contracts in the first months of the year, such as the assignment with Hoogheemraadschap Rijnland. The second half of the year showed a slow down compared to the first half although several contacts were signed such as the contract with Watermaatschappij Limburg. Over the year Industrial Automation showed a positive result.

The Logistics Vertical experienced a slow year, due to the postponement of investment decisions on client side. This resulted in a slow down of new contracts. The second half of the year gained pace. ICT invested in developing targeted propositions based on our new Supply Chain Platform. A partner contract with Motorola was signed.  Investments in the team have been made to ensure we are well equipped in all varieties of logistics, such as harbor logistics.

In the vertical Machine & Systems, mostly active in the OEM market, ICT’s results suffered from lower utilization. On the positive side, ICT has a large long term customer base providing relatively stable turnover.  We invested in the expansion of hardware know-how and we added a know-how cluster for Windows Azure in our Groningen location, to boost the focus on Cloud Computing.  We also continued to expand our partner networks, adding CoDeSys to enable us to deliver services such as machine control, product development and software services to our clients more effectively and more quickly.

Within Healthcare a successful pilot was completed with the Catharina Hospital in Eindhoven which resulted in the market launch of the innovative application mPACSView.

The Energy vertical serves the upcoming market for sustainable energy. ICT’s role in the Power Matching City project as smart grid technology partner and the partnership with GreenFlux for delivery of a platform of charging points for electronic transportation is merely the starting point of ICT’s presence in this market.

Improve Quality Services

In 2012 the market for training lagged behind as the economic situation made companies decide to postpone or even cancel training budgets. Improve however continues to invest in developing and updating courses to keep its leading market position. Revenue in 2012 increased slightly, but the operating result decreased as a result of lower occupancy degree of its courses. From 2013 onwards Improve is focusing more and more on consultancy and certifying training. Flexible staffing supports profitability at lower demand levels.

InTraffic

Revenue in 2012 stabilized compared to the previous year, both Prorail related revenue as well as revenue from other clients. The operating result in 2012 was also more or less on the same level as last year. The first half showed an increase in both revenue and operating result which was offset by a slight drop in the second half of the year. For 2013, we expect the revenue from ProRail to slightly grow, as well as the revenue from other customers.

ICT Germany

ICT Germany did not contribute to the operating result in 2012, though its results did show an improvement compared to the previous year. ICT Germany welcomed more than 10 new customers and in addition to that a small number of former customers found their way back to ICT. This was reflected in an increase in revenue.

To further improve the returns of the German activities, a number of cost saving measures have been put in place. This was initiated by the implementation of the same systems and procedures which are used in The Netherlands. Also the number of offices in Germany was reduced. In December 2012, ICT divested its activities in Neustadt as they no longer complemented ICT’s core business and were structurally loss making. All remaining activities are in the Automotive Vertical. Although we are confident that the measures taken should lead to an at least break-even operation in 2013, profitability for 2014 and beyond is expected to be more moderate than anticipated 12 months ago.
Heavy emphasis was set on growth through the recruitment of new staff. Staff turnover, however, remained high due to the very tight German labour market. Nevertheless ICT managed to keep the absolute number of staff at the same level. ICT paid considerable attention to the organisation in Poland in 2012.

Last year was a volatile year for the Automotive sector. The drop in sales in the European automotive market and hesitation in other markets such as Asia caused that Tier-1 suppliers and OEMs became more reluctant to hire seconded expertise and to start software engineering projects.  As a consequence, we saw delays in projects at Tier-1s and OEMs, which led to delays in the start-up of projects that negatively impacted the average utilization rate. Although volatile, the geographical integration of our automotive activities in both the Netherlands and Germany has shown already first signals of synergy.

In view of the potential of the German market and the position ICT Germany has managed to build, ICT is confident about its opportunities in the German market. Further development of solutions for the Automotive industry will be key in 2013.

Appendices:

  • Condensed consolidated profit and loss account for 2012, derived from the audited annual accounts
  • Other financial information
  • Condensed Balance sheet as at 31 December 2012, derived from the audited annual accounts
  • Condensed consolidated statement of changes to shareholders’ equity, derived from the audited annual accounts
  • Condensed Cash flow statement for 2012, derived from the audited annual accounts

Turnover third quarter flat; results under pressure

ICT (ICT) announces that turnover in the third quarter of 2012 amounted to € 18.4 million, in line with the same period last year (€ 18.4 million). In the Netherlands turnover decreased from € 14.8 million to € 14.2 million. As of the second half last year, ICT Netherlands encountered continuing challenging market conditions here. This is reflected in the number of projects. Turnover in Germany increased by 5% to € 4.2 million. Operating result for the group was break-even in the third quarter of 2012, compared to € 0.8 million last year. Read more