The Board of Management of N.V. Nederlandsche Apparatenfabriek “Nedap” has taken a number of decisions at the end of this financial year, which on balance will have a positive effect on the result for 2014 and the financial position of the company. The market group Energy Systems will be downsized, and a one-off expense was recognised for this in 2014. A modification of the pension scheme has also been agreed, which will lead to a one-off receivable in 2014. At the same time the company’s main bank has agreed to a new, favourable, credit facility.
Reorganisation of Energy Systems
As stated in the press release of 13 November 2014, Nedap had been reviewing the strategic options for the market group Energy Systems. The market group Energy Systems has been confronted by a deterioration in the economic outlook for its PowerRouter product over the past few months. It is also expected that the market for ‘distributed storage’, which the PowerRouter is aimed at, will develop in a less favourable way over the coming years than previously thought. The Board of Management of Nedap has therefore decided to adjust the size of the activities of the market group in line with the changed economic conditions. This means that the organisation and the number of employees will be reduced, so that the costs in 2015 will be at a structurally lower level than in 2014.
This adjustment will be accompanied by one-off items of expenditure charged to the result for the financial year 2014 of € 6.5 million after tax, consisting of impairment losses on assets and provisions. Approximately 80% of these one-off items of expenditure have a non-cash character.
Nedap is conducting exploratory discussions with possible strategic partners for the PowerRouter. At this point in time, it is not yet certain that these discussions will lead to a transaction or any form of collaboration.
New pension scheme
With the consent of the works council, the Board of Management of Nedap has decided to convert the pension scheme, which a large part of the Nedap employees (Nedap N.V. in Groenlo and Nsecure B.V. in Barendrecht) participate in, from a Defined Benefit (DB) scheme into a Defined Contribution (DC) scheme effective as per 1 January 2015. This conversion will have a number of non-cash consequences for the annual accounts. Although the exact consequences can only be determined after 31 December 2014, due to the rationalisation of future pension liabilities the post-tax profit for 2014 is expected to go up by around € 10 million. Furthermore, on account of the actuarial results, approximately € 3 million will have to be charged directly to equity (IFRS regulations: IAS 19). As of 2015, the total pension costs will increase slightly due to the current market conditions for pension schemes.
Result for 2014
The financial consequences of the downsizing of the market group Energy Systems and the new pension scheme are expected on balance to lead to a € 3.5 million increase in the profit over 2014. The Board of Management expects a profit after taxes of around € 12.5 million for 2014 (2013: € 9.8 million). The total revenue, in line with the earlier forecasts, will be several per cent up on 2013 (€ 173.7 million).
The aforementioned expectations are based on the facts known at the time of writing of this press release. The adjustment of the pension scheme and unforeseen circumstances could still lead to significant changes in the result for 2014.
New credit agreement
Nedap has concluded a new credit agreement with the company’s main bank ABN AMRO, as a result of which the term of the facility has been extended and the interest charges will also go down. The facilities have a total size of € 44 million, consisting of a Combination Facility of € 30 million and a Roll-Over Facility of € 14 million. The Combination Facility does not have an end date and the Roll-Over Facility has a term of 5 years. No covenants have been agreed, the facilities have a flexible repayment schedule, and the financing takes into account seasonal trends.
The annual figures for 2014 will be published on 12 February 2015 after trading hours.