ICT BOOKS NET PROFIT OF € 3.1 MILLION IN FIRST HALF 2007
08/31/2007
Key developments first half 2007
• Turnover in the first half of 2007 increased by 11.9% to € 43.5 million
• Net profit down 23% to € 3.1 million in first half 2007
• Hans Oberg new member of the Executive Board as per 1 September 2007
• Completion acquisition LINEAS, increase of stake in Improve (50%) and Rialtosoft (100%)
• Outlook 2007: ICT expects net profit of € 6 million
| (in EUR millions) | H1 2006 | H1 2005 | Change |
| Turnover ICT Embedded ICT Solutions | 38.9 21.0 | 34.6 18.3 | 12.6% 14.4% |
| Operating result | 5.3 | 4.4 | 20.3% |
| Net profit | 4.1 | 3.3 | 23.0% |
| (in EUR) |  | | |
| Earnings per share 1) | 0.50 | 0.40 | 25.0% |
1) Based on average number of outstanding ordinary shares.
Bram Schot, CEO of ICT Automatisering N.V. (ICT), explains:
“ICT has further strengthened its market positions with the acquisition of LINEAS in Germany and the expansion of its stakes in Improve and Rialtosoft. Developments at ICT Embedded in the Netherlands continued to be difficult. The capacity utilisation did improve in the course of the second quarter, however, based on current insights we do not expect this improvement to continue in the second half of 2007. The Solutions activities showed healthy progress, although labour market shortages hampered growth.
The participation in LINEAS has added considerably to the effectiveness of the German activities. The developments in Germany instil us with great confidence for the future and the attainability of the target of 300 people in 2010. In 2007, we expect ICT as a whole to realise net profit of € 6 million.”
Explanatory notes to the results
In the first half of 2007, ICT saw its turnover increase by 11.9% to € 43.5 million, due to a 31.9% rise in turnover at ICT Solutions. Turnover at ICT Embedded dropped 7.8% to € 19.0 million. The results of the 60% participation in the German company LINEAS Automotive GmbH have been consolidated proportionally from 1 June 2007.
The operating result was down to € 3.8 million, a drop of 27.9% from € 5.3 million in the first half of 2006. This drop was largely due to lower capacity utilisation at the Dutch Embedded activities. The impact of the downward trend seen in the fourth quarter of 2006 were still clearly noticeable here in the first half of the year. In addition, ICT as a whole was negatively impacted by the fact that it was not possible to pass the increase in wages fully on to our clients. The operating margin in the first half of 2007 was 8.8%, compared with 13 .6% in the first half of 2006.
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As a result of an increase in the number of employees and an increase in average wages, personnel costs increased by 21.2% to € 26.1 million.
Turnover per employee (corrected for hired-in staff) dropped by 3.1% to € 44,858, from
€ 46,316 in the first half of 2006, as a result of a lower capacity utilisation at ICT Embedded. This lower capacity utilisation level is the result of the bankruptcy of BenQ Mobile and the reorganisations at a number of major Automotive customers in the second half of 2006. In addition, the developments at ICT Embedded show a mixed picture in terms of geographical spread in the Netherlands. For instance, the expansion of the customer base in Groningen and Deventer has proven more troublesome than expected, which meant the capacity utilisation level there is much lower than in Eindhoven.
Net profit in the first half of 2007 was € 3.1 million, compared with € 4.1 million in the first half of 2006.
Personnel and organisation
The number of employees as per 30 June showed an increase to 944, from 910 at year-end 2006. Staff turnover, calculated as a percentage on an annual basis, increased to 17%, from 14% for the full-year 2006. The continued growth of ICT Solutions and the German activities in particular was hindered in the first half of 2007 by a shortage of qualified personnel.
Strategy
ICT’s strategy remains unchanged and focused on the further expansion of its position in its chosen markets, with the aim of making ICT one of the leading players in those markets. For ICT Solutions, the emphasis of the activities will remain in the Netherlands. For ICT Embedded, the expansion of the German activities is also a high priority. In line with this strategy, ICT in late May completed the acquisition of the 60% stake in the German company LINEAS Automotive GmbH (LINEAS). It is our intention to acquire the remaining 40% stake in LINEAS in the coming years.
Management
As per 1 September, Mr J. (Hans) Oberg will join the Executive Board of ICT Automatisering N.V. The Executive Board will then have two members: Mr A. Schot (chairman) and Mr J. Oberg. The appointment is in line with the policy of the Supervisory Board to expand the Executive Board of the company to two people to safeguard the management of the company.
Outlook
ICT expects profit of € 6 million for the full year 2007. This means a downward adjustment compared with earlier forecasts. This is the result of unexpectedly disappointing developments at ICT Embedded in the Netherlands. Steps have now been taken and further steps are being prepared to realise a structural improvement in the capacity utilisation level.
Developments in the first half of 2007
ICT Embedded
Turnover in the first half of 2007 was down 7.8% to € 19.0 million as a result of the termination of the German activities of BenQ and the reorganisation in the Automotive industry in the second half of 2006. The number of staff employed at this division increased to 500 as per 30 June 2007, compared with 460 at year-end 2006.
The 60% stake in Lineas Automotive GmbH is consolidated proportionally in the results of ICT Embedded as per 1 June 2007. Lineas Automotive GmbH had 64 employees as per 1 January 2007 while turnover in 2006 was € 5.6 million.
Sectors
C&MM Home Entertainment
In recent years there has been a declining market for the C&MM Home Entertainment activities. In addition, a number of large clients continue to reorganise while the decision-making in terms of investments is slow. As a result, turnover showed a slight decrease in the first half of the year compared with the same period of last year, despite the introduction of new business models.
C&MM Telecom
As a result of the bankruptcy of BenQ Mobile in Septe mber 2 006, turnover d roppe d
su bs tantially in the first half of 2007 when compared to the same period of 2006. In the first six months of 2007, ICT acquired a number of new clients. The contribution from these clients is insufficient to fully compensate for the loss of BenQ Mobile.
Healthcare
The Healthcare sector booked a healthy rise in turnover in the first half of the year. In addition to the application of embedded software in complex diagnostic systems, the trend towards far-reaching automation and integration in the medical sector has continued unabated, which is making issues such as connectivity and security increasingly important. In the first half of the year, ICT has formed cooperative links with a number of smaller players.
Manufacturing
As in 2006, this sector booked a clear rise in turnover in the first half of 2007. In order to realise a greater distribution of turnover and competencies, ICT decided in 2006 to extend the focus to include machine builders in the northern part of the Netherlands. Despite the fact that the majority of the turnover is still realised in the southern part of the Netherlands, ICT did acquire a number of new clients in the northern part of the Netherlands in the first half of the year.
Traffic & Automotive
Due in part to ICT’s latest acquisition (LINEAS), the main concentration of the activities in this sector has shifted to Germany. The Dutch activities are strongly dependent on projects executed in-house, which have proven difficult to acquire. The German operation booked strong organic growth in the first six months of the year, based on the local presence. Turnover was stable in the first six months of 2007, compared with the first half of 2006.
ICT Solutions
ICT Solutions booked an increase in turnover of 31.9% to € 23.7 million in the first half of 2007. The number of employees working at this division had fallen to 419 at end-June 2007 (year-end 2006: 425 employees).
Sectors
C&MM Telecom
The active players in this market are still making investment decisions slowly. Despite this caution, the turnover in the first half was stable compared with the year-earlier period, thanks to continued investments in know-how and new technologies. Due in part to the technological choice for IMS (IP Multimedia Subsystem), ICT, in cooperation with Nokia Siemens Networks, acquired KPN as a client in the first six months of the year. KPN’s choice of IMS and ICT may help accelerate the investment decisions among other players in this market.
Manufacturing
The acquisition of Procos as per 1 July 2006 made ICT one of the top players in the Manufacturing market. In the past six months, ICT has won new clients and increased business with existing clients. This has resulted in a substantial increase in turnover. In the next six months, ICT’s focus will be on the further expansion of this solid position. For one, we will be opening a new office in the city of Haarlem in September. There is a great deal of potential business in the area around Haarlem (Noord-Holland) and at this point we have no local presence in the area.
Logistics
The turnover in this sector grew in the first half of this year, due in part to a number of new clients in the field of material handling. The focus for the rest of the year will be on increasing business with existing clients and the expansion of the client base in the material handling market.
Traffic & Automotive
In this sector, ICT is primarily active via its subsidiary InTraffic. The turnover in the Traffic & Automotive market dropped slightly in the first half of the year compared with the same period a year earlier.
Enclosed:
- consolidated profit and loss account firs t half 2007
- conso lid a ted balance sheet as of
30 June 2007
- consolidated cash flow statement first half 2007