ICT AUTOMATISERING BOOKS 30% RISE IN NET PROFIT 2000
03/16/2001
ICT Automatisering N.V. (ICT) booked net profit of EUR 13.4 million in 2000, up 30% compared with the EUR 10.3 million reported in 1999. Earnings per share rose 29% to EUR 1.59 in 2000, from EUR 1.23 in 1999. Turnover increased by 33% to EUR 85.9 million in 2000, compared with EUR 64.7 million in 1999. The number of employees increased by 76 to 953 at year-end 2000 from 877 in 1999.
The ICT management expects to exceed average market growth in 2001 and realise profit growth of at least 20%.
Notes to the results
Operating results rose 31% to EUR 19.8 million, compared with EUR 15.1 million in 1999. ICT was able to almost fully offset the lower margins at companies acquired in 1999, resulting in an operating margin of 23.1%, compared with 23.4% in 1999, and a net profit margin of 15.6%, compared with 15.9% in 1999. A key factor in this context was ICT’s increasing ability to market services with high added value as a result of the growing number of strategic alliances.
ICT this year once again realised healthy turnover growth of 32.7% to EUR 85.9 million, with a contribution of around 12% from the acquisition of Xirius. All three divisions contributed to the turnover growth, with growth mainly at the divisions ICT Embedded and ICT Telecom limited by the extent to which it was possible to recruit staff. In the year 2000, ICT successfully implemented a number of initiatives to realise a more affective gearing of the supply of work and people. As a result, the capacity utilisation improved in the second half of 2000 to once again reach the level seen in 1999.
Depreciations increased by 14% to EUR 1.4 million. ICT expects a further increase in depreciation in 2001 as a result of the new premises in Groningen and an increase in the number of work places elsewhere in the organisation. Other operating costs increased 27% to EUR 16.8 million. This can be attributed primarily to higher lease car costs. The cost of staff recruitment remained with EUR 1.4 million approximately the same.
The balance of interest income and expenses rose to EUR 570 thousand in 2000 from EUR 332 thousand in 1999, due to the ample cash position and a higher short-term interest rate. The tax burden dropped slightly in 2000, to 32.7%, from 32.9% in 1999. Shareholders’ equity was up 19% to EUR 22.6 million, from EUR 19 million in 1999. ICT wrote off acquisition-related goodwill of EUR 3.5 million in 2000.
Personnel
Despite continuing shortages on the labour market, ICT was successful in the recruitment and retention of personnel. The average number of staff increased by 23% to 917 in 2000, from 744 in 1999. ICT employed a total staff of 953 at year-end 2000, compared with 877 at the end of 1999.
ICT recruited relatively more experienced IT staff than school-leavers in 2000. Staff turnover was 14% in 2000, partly due to a greater turnover resulting from the integration of acquired companies.
In 1999, the deployment of professionals was increasingly influenced by mobility issues as a result of longer commuting times. By increasing the number of projects at its own offices, ICT largely succeeded in solving this problem in 2000. This enables ICT to open offices in areas, not necessarily close to clients, but in areas with a potential of new personnel. In this context, ICT opened a software development centre in Groningen in February 2001 and the preparations for a centre in Almere are well under way. In spite of the setting up of successful instruments, the shortage in the labour market remains a factor in slowing down growth. ICT will therefore continue its intensive recruitment efforts in order to maintain the desired growth in personnel.
Business in 2000
ICT continued to strengthen its position in 2000 and also broadened its client base internationally. In the year under review, ICT continued to work on its strategic objectives, in which strategic partnerships are becoming increasingly important. Although ICT continues to look for takeover opportunities for its divisions, this has not yielded the desired results in 2000. ICT is maintaining its carefully defined acquisitions criteria, in which quality prevails.
ICT Embedded
The ICT Embedded division proved resistant to the reluctance of the market to invest in I(C)T in 2000 and succeeded in meeting earlier forecasts. This high level of predictability and continuity is the result of our policy in recent years, in which we explicitly chose three clearly defined embedded market segments: Consumer Systems and Multi Media (CSMM), Distributed Systems and Mechatronics (DSM) and Professional Systems and Industry (PSI). This means that in terms of R&D, ICT works for the large players that market products. The complexity of the development processes emphasizes the high added value of ICT, which enables ICT to act more and more as a strategic partner, which increases the predictability of turnover as well. In addition to the selection of clearly defined segments, another important factor is the company has realised, in recent years, the sufficient critical mass, developed know-how and skill with respect to the management of processes related to software development extended its existing knowledge of the market and subject matter.
The ICT Embedded division realised a turnover of EUR 66.8 million. In order to boost its position, ICT aims to broaden its client base internationally, which resulted in a new and important alliance with a large German concern in 2000. The company also carried out its first projects for Asian clients. In the year 2000, the Embedded division could not meet the great demand because of a shortage of qualified personnel. ICT expects to be able to reduce part of this shortage by setting up regional Software Development centres.
ICT Telecom
The ICT Telecom division was also faced with demand that exceeded the supply of services ICT can offer. This new division realised a turnover of EUR 13.5 million. ICT Telecom offers services both in the form of projects and in secondment, with the aim being to develop a complete line of business, to which the acquisition of Xirius is an important step. Alliances in the form of partnerships are also very important in this segment. If it can find the necessary staff, ICT has some interesting partnerships to look forward to. ICT will continue its efforts to meet the staff requirements in the growing telecom market.
ICT Office
ICT Office focuses on the construction of front-end systems and e-business. The turnover of this operation came in at EUR 5.6 million. Within ICT Office, the Oracle expertise of X-tern, which became part of the ICT Group in 1999, is a valuable addition to the portfolio. Market demand for Oracle expertise combined with a specific development environment (Microsoft, Borland, Internet) increased in 2000. The cooperation between ICT Office and the other divisions also improved in the second half of 2000, which will increase the potential for synergies with certain segments of other divisions.
Dividend proposal
The General Meeting of Shareholders will be asked to pay out a dividend NLG 1.40 in cash (1999: NLG 1.08) per subscribed share with a nominal value of NLG 0.20. Unlike in previous years, no optional stock dividend will be proposed.
Outlook
The ICT management maintains its positive view of market developments. The extent to which ICT can benefit from the growth will once again depend on the availability of qualified personnel in 2001. ICT will continue its intensive recruitment policy. Moreover, ICT will continue its policy of taking employment to the regions by setting up software development centres. For 2001, ICT expects these measures to contribute to the company exceeding average market growth. ICT expects to realise net profit growth of at least 20%.
Appendices:
- consolidated profit and loss account
2000 in EUR
- consolidated balance sheet as of 31 December 2000 in EUR