ICT AUTOMATISERING NET PROFITS FIRST HALF OF 2003 RISE TO €1.8 MILLION
09/12/2003
ICT Automatisering N.V. (ICT) has earned a profit for the first half of 2003 of €1.8 million, compared with €1.0 million in the first half of 2002, on a practically unchanged turnover of €31.3 million. The profit per share rose in the first six months of 2003 to €0.21. The hesitation on the part of ICT’s customers to invest continues as yet in 2003. Although there are cautious signs of recovery, the various markets in which ICT is active show a varying picture. Because of the market’s unpredictability, there is insufficient information to be able to give any outlook regarding turnover and profits for 2003 as a whole.
Results highlights
The first quarter proceeded satisfactorily for ICT, but in the second quarter the company was confronted with the postponement of projects and cutbacks by ICT customers. In addition, price pressure maintained in the market, especially for the Solutions division. On balance, the turnover of €31.3 million was virtually the same as for the same period last year (1st half of 2002: €32.0 million). Also, greater use of capacity led to significant improvement of the operating result, from €1.2 million in 2002 to €2.3 million in the first half of 2003.
In the last two years, ICT has adopted various cost-saving measures. Even after this, stringent cost monitoring remained one of the priorities for management. Total operating costs showed a drop in the first half of 2003 of 6%, to €29 million (1st half of 2002: €30.8 million). The fall in staffing costs was the main contributing factor to this, as a consequence of the drop in the number of employees. The tax burden over the first half of 2003 came to 30.3%.
Balance sheet highlights
The rise in receivables is due mainly to the inflow of new customers, where the contract settlement led to late invoicing. In addition, ICT was faced with a longer payment period for a Chinese customer owing to Chinese regulations. The cash position has further decreased as a result of the payment of dividends.
ICT’s balance sheet maintained its strong level, with a solvency ratio of 71.3%.
Staff and organisation
The number of employees on 30 June 2003 came to 832, compared with 857 at the end of 2002. The reduction in staff is the result of measures enacted last year. Staff turnover came down, amounting to 6% on an annual basis over the first half of 2003.
In the second half of 2003, ICT will modify its organisational structure, by broadening the management structure in the organisation. Management teams for each division will be formed, which will report directly to the Board of Directors.
Business developments
ICT Embedded
Turnover for ICT Embedded increased in the first half of 2003 to €18.2 million (1st half 2002: €17.7 m.). The strategic position of ICT Embedded proved its strength once more, which is proved by the growth of the number of new customers. Various markets in which ICT Embedded is active showed signs of recovery, offset by opposite movements such as the postponement of projects and cutbacks by customers. In the first half of 2003, ICT showed that it was capable of utilising market opportunities when these came up. Nonetheless, the relevant markets for ICT do not for the time being give evidence of consistent and structural market recovery.
Consumer Systems and MultiMedia (CSMM)
ICT distinguishes itself in this market positively on those points that are critical success factors for this segment, such as its track record in time-critical development projects and its power to innovate. As a result, ICT has been able to acquire new customers in this segment, in spite of difficult market conditions.
The mobile communications segment showed clear signs of recovery compared with the same period last year. Here, ICT has been able to reap the rewards of focussed investments made internally in expanding knowledge and technologies such as GPRS/EDGE. This enabled ICT
to adapt to the market directly as soon as demand for these services grew. At the moment, ICT is investing for this market in knowledge of UMTS.
The home entertainment market remained difficult in the first half of 2003. In the period under review the MHP stack (MultiMedia Home Platform) has developed further in collaboration with IRT. During the IFA in Berlin, the demonstration of the MHP stack was received positively, and this will also be presented next week at the IBC fair in Amsterdam. The automotive market shows signs of stable growth.
ICT is noting a number of cautiously positive developments in this market. However, structural recovery for the CSMM segment is dependent on a further recovery in consumer confidence.
Distributed Systems & Mechatronics (DSM)
The market conditions for the DSM segment continue to be difficult. In this segment, ICT has had long-term collaboration with many of its customers at strategic level, which has provided ICT professionals much critical knowledge with regard to customers’ development projects. This has enabled ICT to maintain its market position in this still hesitant market. Given the strong position that ICT already has in this segment in Holland, new customers are being acquired mainly abroad.
ICT Solutions
In this division ICT is concentrating on the entire software development process of information systems that drive a primary process or provide information on such processes. In the first half of 2003 the turnover of ICT Solutions fell from €14.3 million to €13.1 million, resulting mainly from the pressure on prices. Although ICT Solutions has maintained their share in the various markets, the market conditions have remained difficult. In this segment ICT benefits from their wide customer base. ICT’s strong financial position, which offers customers the certainty of a lasting relationship, also appears to be important from a commercial point of view.
ICT Solutions aims for collaborative relationships in this segment, both to gain knowledge and to effect increases of scale. This is critical in order to operate in this market successfully. In the first half of the year, ICT Solutions has converted its collaborative relationship with Holland Rail Consult into the joint venture InTraffic, which has been consolidated for 50% in the results since 1st April this year. The combination of ICT’s knowledge of IT and Holland Rail Consult’s knowledge of transport matters will enable InTraffic to develop more effective solutions.
Strategy
ICT continue to focus on strategic partners in all their chosen markets. For ICT Embedded there are increasing possibilities abroad, with ICT concentrating in particular on the German market. ICT’s new customers in Germany and the market opportunities the company see in this market appear to provide a sufficient basis to set up an office in Germany in 2004. At ICT Solutions, ICT will continue to concentrate on alliances.
Prospects
ICT has a strong position in the markets in which they operate. This will enable ICT to derive maximum benefit as soon as the market recovers. However, the market is highly unpredictable. Positive signals alternate from time to time with new cutbacks by customers, as a result of which projects are being postponed for the time being. In some markets ICT sees cautious indications of recovery, but when and to what extent a genuine structural recovery will occur is still not certain. Because of the unpredictability of the market, there is still not sufficient insight to be able to issue any statement about expectations for the turnover and performance for 2003 as a whole.
Enclosed:
Consolidated profit and loss account ICT Automatisering N.V.
Consolidated Balance Sheet ICT Automatisering N.V
Consolidated Cash Flow Statement ICT Automatisering N.V.