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Imtech investigates Polish projects and postpones publication of its 2012 financial statements
• Substantial write-off of at least 100 million euro expected on Polish projects
• Board of Management orders forensic investigation into possible irregularities
• Local Polish management suspended
• Reclassification of cash and cash equivalents in 2012 half-yearly financial statements
• Write-off will lead to non-fulfilment of covenants with lenders
• EBITA for 2012, before write-off on Polish projects and extraordinary items, higher than in 2011
• No dividend distribution over 2012 expected
• Annual General Meeting of Shareholders on 3 April 2013 postponed
Gouda, the Netherlands - Royal Imtech N.V. (IM-AE, technical services provider in and outside Europe) has been severely harmed by lack of financing of its largest customer in Poland and possible irregularities in respect of Imtech projects in Poland. Imtech has ordered a forensic investigation into the situation that has arisen. Pending the findings of this investigation the local Polish management has been suspended. Imtech’s Board of Management expects at least 100 million euro in already incurred costs will be written-off. Because the exact amount of the write-off cannot be accurately determined at this moment, Imtech’s financial statements for 2012 cannot be drawn-up. As a result the presentation of the 2012 financial statements planned for tomorrow, 5 February 2013, and the Annual General Meeting of Shareholders, scheduled for 3 April 2013, have been postponed until further notice. The expectation is that no dividend will be distributed over 2012.
The consequence of the expected write-off will be that, when its 2012 financial statements are drawn-up, Imtech will no longer fulfil its covenants with lenders – average ratios of 3.0 maximum for net debt/EBITDA and 4.0 minimum for interest coverage. As a result Imtech will begin consultations with its lenders. Imtech has retained Rabobank as its financial advisor for these consultations.
The write-off of at least 100 million euro relates to three projects for Adventure World Warsaw and one project involving energy-generating bio power stations, also in Warsaw. These projects have a combined value of 757 million euro.
Imtech has established that the advanced payments for the four Polish projects do not comply with the agreements made with the customer regarding the availability of the payments to Imtech. This is because the customer has not secured its financing.
After an initial investigation, and partly based on the annual audit by KPMG, the Board of Management has decided that a forensic investigation of the circumstances under which the projects concerned were accepted and executed should be carried out. Irregularities in these or other Imtech projects in Poland cannot be ruled out. Pending the findings of this investigation the local management in Poland has been suspended.
The Board of Management has also determined that a promissory note and pledged accounts related to the Adventure World Warsaw project - amounting to around 200 million euro - that had been recognised in the half-yearly 2012 financial statements under cash and cash equivalents must, according to IFRS, be reclassified under current financial assets. Most of this amount was recognised as an advance payment under work in progress for the four projects concerned. This advance payment was considerably higher than the incurred costs. As stated above, the advance payments have not become available to Imtech. The effect of this is incorporated in the expected write-off of at least 100 million euro.
Before the write-off on the Polish projects and the reorganisation expense as announced in October 2012, the EBITA for 2012 was higher than the EBITA in 2011. As at 31 December 2012 the net debt position was around 800 million euro. Excluding the Polish projects the order book as at 31 December 2012 amounted to around 6.4 billion euro.
The ‘lock-up period’ will be extended until the date on which the financial statements for 2012 are published.