Imtech publishes first quarter 2013 results

(PresseBox) ( Gouda, )
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- Imtech had a difficult first quarter 2013
- Revenue at 1,211 million euro, stable versus Q1 2012
- Operational EBITDA of -13.6 million euro versus -48.0 million euro in Q1 2012 (restated)
- Net loss of 59.6 million euro versus a net loss of 79.4 million euro in Q1 2012 (restated)
- Net debt of 1,220 million euro versus 950 million at the end of Q1 2012 and 773 million euro at the end of Q4 2012
- Imtech set new medium term targets

Royal Imtech N.V. had a difficult first quarter. Revenue remained stable despite difficult trading in the Benelux and Germany. Imtech has announced a restructuring program to improve its cost structure and bring capacity in line with market conditions in particular in the Benelux and Germany. Usually, Imtech does not publish detailed first quarter results but is doing so now to provide shareholders full information in light of recent events.

Gerard van de Aast, CEO: 'The last quarter was a turbulent and difficult one for Imtech. The investigations in Germany and Poland have been a burden for the company and a distraction for management and the organisation. Besides difficult trading, results in the quarter were also impacted by costs associated with the investigations and financial restructuring related to obtaining a waiver and amendment from our current main financiers. Imtech now needs to move forward. We will do so with a new set of management targets and a strengthened set of business controls in place.'

Comparative figures Q1 2012

The comparative figures for Q1 2012 have been adjusted where relevant and appropriate in line with the 2012 financial statements. This impact is particularly relevant in the Benelux and Germany & Eastern Europe. See also the appendix with the financial summaries for more information.

Net interest-bearing debt and working capital

The net interest-bearing debt in Q1 2013 increased by 448 million euro versus year-end 2012. The comparative fluctuation in Q1 2012 amounted to 374 million euro. The increase in net debt is the result of a negative EBITDA in Q1 2013, the normal Q1 seasonal pattern in working capital, the reversal of year-end factoring in ICT, pay-out of severance related to the 2012 restructuring plans, costs associated with the investigations and financial restructuring costs, a small acquisition impact as announced in December 2012 (paid in January 2013) and capital expenditure. Within the working capital, the payment terms with creditors have, to a large extent, been normalised.

Revenue

In Q1 2013, which is seasonally a weak quarter, the revenue remained stable compared to Q1 2012 despite difficult trading conditions in particular in the Benelux and Germany & Eastern Europe. These conditions resulted in a revenue decrease of 18% in Benelux and 12% in Germany. In the UK & Ireland revenue increased by 18% also impacted by the acquisition of Capula in 2012. In Spain & Turkey revenue increased by 81% due to the acquisition impact of Turkey. The revenue in Nordic increased by 9% also impacted by the acquisition of EMC Talotekniikka in Finland. In ICT, Traffic & Marine the revenue decreased by 2%.

Non-operational costs

In Q1 2013 the non-operational costs amounted to 12.0 million euro and relate to costs made for restructuring, predominantly in Nordic, and 9 million euro for advisory costs related to the investigations and financial restructuring.

EBITDA

As a result of the write-offs recorded in 2012, a comparison of EBITDA at group level is less meaningful. In UK & Ireland, EBITDA increased by 9%. The Nordic EBITDA decreased by 64% as a result of integration costs, increased margin pressure and slight delays at a number of new projects. For ICT, Traffic & Marine, EBITDA decreased by 23% as a result of margin pressure within ICT and disappointing project results in Traffic which results in a loss and Marine improved its EBITDA although impacted by lower results in the services activities and some delays at large projects. Group management costs increased by 3.6 million euro, including the 9 million euro for advisory costs related to the investigations and financial restructuring.

Depreciation and Amortisation

The increase in depreciation to 11.9 million euro is in line with the growth of the company. Amortisation of intangible assets amounted to 11.3 million euro by an increase of 2.3 million euro, primarily due to the impact of acquisitions.

Net finance result

In Q1 2013, the net finance result decreased by 5.2 million euro to -19.1 million euro. The net finance result includes the net interest expenses on the net interest-bearing debt position, part of financial restructuring costs, as well as net interest expenses on employee benefits, currency effects, other finance expenses, such as bank guarantees and factoring fees, and adjustments in the valuation of certain assets and liabilities.

The net interest expenses amounted to 12.2 million euro compared to 10.1 million euro in Q1 2012. The increase is related to the increase of net interest bearing debt. The financial restructuring costs, consisting mainly of bank fees, included in the net finance results amounted to 3.6 million euro.

Tax

In Q1 2013 the tax expense (credit) increased compared to Q1 2012 due to fewer losses for which potential tax benefits could not be fully recognized.

The net interest-bearing debt in Q1 2013 increased by 448 million euro versus year-end 2012. The comparative fluctuation in Q1 2012 amounted to 374 million euro. The increase in net debt is the result of a negative EBITDA in Q1 2013, the normal Q1 seasonal pattern in working capital, the reversal of year-end factoring in ICT, pay-out of severance related to the 2012 restructuring plans, costs associated with the investigations and financial restructuring costs, a small acquisition impact as announced in December 2012 (paid in January 2013) and capital expenditure. Within the working capital, the payment terms with creditors have, to a large extent, been normalised.

Operational and financial restructuring 2013

Operational restructuring

Taking into account the ongoing difficult market conditions in the Netherlands, it has been decided to implement a restructuring programme in order to strengthen the competitiveness and profitability of our companies in the Netherlands as announced on 23 April 2013. This mainly concerns capacity reductions in the office buildings and Infra businesses in response to the structurally lower market volumes and outlook.

Further, a cost-savings and efficiency programme has also commenced in Germany. The planned personnel and cost reductions will further support our German operations' effectiveness and profitability.

Various smaller efficiency programmes will be implemented at other Imtech companies. The total anticipated restructuring charges in 2013 will amount to approximately 80 million euro and will lead to a loss of approximately 1,300 jobs, particularly in the Netherlands (550 jobs) and Germany (550 jobs). This charge will be included in Q2 2013. Imtech is in consultation with the Works Council and trade unions regarding implementation of the restructuring plan. Implementation has started and will principally be completed before the end of 2013.

Financial restructuring

Due to the situation that has arisen in the beginning of 2013, we had to make substantial out of pocket costs for approximately 110 million euro. These costs include fees for (forensic) investigations, financial advisors, cost of the auditor, underwriting of the rights issue, arrangement for the bridge facility, one-off waiver fees for lenders and miscellaneous other costs.

The revenue in Benelux decreased by 18%, reflecting ongoing difficult market circumstances and adverse weather conditions. The ongoing difficult market conditions have given the necessity for an additional restructuring (in addition to the restructuring programme 2012) to reduce our headcount by another 550 jobs to reduce our cost structure and bring the capacity in line with market conditions. The restructuring costs are not included yet. The order book decreased by 7%. The headcount decreased 6% due to the 2012 restructuring program.

In Germany & Eastern Europe, the revenue decreased by 12% as a result of the difficult circumstances for the cluster Germany & Eastern Europe. To bring the cost structure in line with the current market conditions and target margin range, we have announced earlier a costs-savings programme and restructuring to reduce our headcount by 550 jobs. The order book decreased by 8%.

In the UK & Ireland the revenue increased by 18% also impacted by the acquisition of Capula in May 2012. The EBITDA margin decreased as a consequence of weak performance of the UK engineering services, which was partly off-set by the strong performance of the international business. The order book increased by 8%.

In Spain & Turkey the revenue increased due to the acquisition impact of the Turkish technical services provider AE Arma-Elektropanç in March 2012. The revenue in Spain increased by 1% compared to Q1 2012. The EBITDA increased by 3.2 million euro to 0.5 million euro. The order book in Spain was stable and in Turkey the order book increased.

The revenue in Nordic increased by 9% to 211.2 million euro. This increase is related to the acquisition of the Finnish technical services provider EMC Talotekniikka, as announced on 18 December 2012, as well as four small acquisitions in 2012. The EBITDA decreased by 64% reflecting one-off costs relating to the integration plan carried out in Nordic (approximately 3 million euro), increased pressure on margins in general as well as a number of new projects have been slightly delayed. The order book has increased by 27%.

In ICT, Traffic & Marine the revenue decreased by 2% with a decline in ICT and growth in Traffic and Marine. The revenue growth in Traffic is related to two small acquisitions in 2012. ICT had to deal with some margin pressure. Traffic realised a loss due to disappointing project results. Marine improved its EBITDA although impacted by lower results in the services activities and some delays at large projects.

Group management

The group management costs increased by 3.6 million euro to 11.9 million euro, including 9 million euro for advisory costs related to the investigations and financial restructuring and increase of number of employees to 54 employees (2012: 48 employees).

Outlook

2013 will be a year of transition. In several markets, in particular the Benelux and Germany, Imtech has to deal with lower market volumes and has to adjust its cost base to these market conditions. On 23 April 2013, Imtech announced a restructuring programme of 80 million euro. As a result of the recent events, Imtech is in the process of a financial restructuring for which it expects out of pocket costs of approximately 110 million euro and increased interest margins going forward. No specific forecasts are being made regarding 2013.

Acquisitions in 2013

In December 2012 the acquisition of the Finnish technical services provider EMC Talotekniika (EMC) was announced. The transfer of ownership took place in January 2013. EMC generates approximately 100 million euro revenue on annual basis with 580 employees.

Medium term targets

Imtech has set new medium term targets including an organic growth of GDP plus, with additional growth through acquisitions in fragmented markets when the leverage ratio is below 2.0x. For the EBITDA margin, Imtech aims for a range of 4.0% to 6.0%. With the announced focus on cash, Imtech targets a cash conversion ratio, based on operational cash flow as percentage of EBITA, of 90% and a leverage ratio of 1.5-2.0x by the end of 2015. Furthermore dividend pay-out will be 40% of net result for shareholders as soon as the leverage is below 2.0x.

Financial calendar

- 28 June 2013: Annual General Meeting of shareholders in Rotterdam.
The agenda includes discussion of the 2012 annual figures, discussion of the report to shareholders about the results of the investigations, amendment to the articles of association and issue of shares for the rights issue, and amendment of the remuneration policy;
- 2 August 2013: Extraordinary General Meeting of shareholders in Rotterdam.
The agenda includes the adoption of the 2012 Annual Accounts, appointment of two new supervisory board members;
- 27 August 2013: publication of 2013 semi-annual figures.

Press conference

Today at 10.00 hours (CET) Imtech will organize a press conference in the Novotel Amsterdam City hotel, Europaboulevard 10 in Amsterdam. This meeting will be video webcasted via www.imtech.com.

Analyst meeting

Today at 12.00 hours (CET) Imtech will organize a sell-side analyst meeting in the Novotel Amsterdam City hotel, Europaboulevard 10 in Amsterdam. This meeting will be video webcasted via www.imtech.com.

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