Kapsch initiated a set of measures to secure its growth strategy in the first quarter of 2014/15

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  • Existing projects continue to progress well, new installation projects fail to materialize

  • Revenue and EBIT below the previous year, profit for the period improved

  • Comprehensive set of measures to improve profitability initiated

  • Growth strategy maintained with project and technology potential


2014/15 Q1: 1 April – 30 June 2014

Revenues

118.0

  -3 %

121.4

EBIT

    0.6

-83 %

    3.7

Profit for the period

    0.3

-

   -1.0


Vienna, August 20, 2014 – Kapsch TrafficCom AG (ISIN AT000KAPSCH9), listed on the Vienna Stock Exchange in the prime market segment, reports positive project progress in the first quarter of fiscal year 2014/15 with continued success in the ongoing installation and operation projects. However, the forecast market growth still has not materialized, and no new projects arose. In particular, no invitations to tender for major toll projects in Europe are in the immediate vicinity. Kapsch TrafficCom has therefore initiated a set of measures for adapting its growth-oriented organizational structure to this situation.

The Kapsch TrafficCom Group continued to enjoy positive developments in its projects during the first quarter of 2014/15. In North America, progress was made in the installation of the toll system in Texas, the first system integrated by Kapsch TrafficCom in this region. In July, the company received a second system order in the U.S.A. for an electronic toll collection system on the New York State Thruway. Kapsch TrafficCom sees great potential for the future in this first system order from a toll agency of the E-ZPass Group.

The first expansion stage of the nationwide electronic toll collection system in Belarus has been in operation for one year. At the beginning of August 2014, the system was further increased to 1,189 km. The continued expansion will also lead to another rise in registered vehicles.

The nationwide electronic toll collection system in Poland has been in operation for three years. With 2,653 kilometers of toll roads and 1.6 million on-board units (OBUs), it is now the largest toll system of the Kapsch TrafficCom Group. By the year 2018, it should be expanded to 7,000 km.

The toll system in the South African Gauteng province also went into operation at the beginning of December 2013. The payment rate remains very low, but the system operation has reached the break-even point in the meantime. However, the project in its entirety is still negative for Kapsch TrafficCom. The company plans to work with the customer to improve the profitability.

The invitation to tender for the toll system in Russia has been postponed several times, most recently until 22 September. The realization of the project currently appears uncertain. In view of the disappointed reaction on the capital market, Kapsch TrafficCom emphasizes that this is only one of the group’s potential future projects.

Financial position

Within this ambivalent environment, Kapsch TrafficCom Group brought in revenue of EUR 118.0 million during the first quarter of fiscal year 2014/15 after EUR 121.4 million in the same quarter of the previous year, a decline of 2.8 %. The operating result (EBIT) fell from EUR 3.7 million to EUR 0.6 million. This weak result reflects the lack of additional installation projects. At the same time, the company bears the high costs of maintaining international structures and resources and also invests strategically in research and development. A view of the operating projects in isolation clearly shows positive development by the Kapsch TrafficCom Group.

The profit for the period, which was previously negative due to currency exchange effects is once again positive during the quarter under report at EUR 0.3 million. The key balance sheet figures were also noticeably improved thanks to the ongoing repayment of the financing for the project in Belarus. The net working capital and net debt are significantly below the comparison values of the previous year, and the free cash flow is once again positive at EUR 32.4 million after EUR -37.2 million in the previous year.

Growth strategy

Kapsch TrafficCom continues to expect growth in the market for intelligent transportation systems (ITS) as well as associated changes in the market structure and composition. The toll collection market is currently developing more slowly than predicted, and expected major projects have not materialized. During the quarter under report, the company therefore initiated a comprehensive set of measures to reduce the costs associated with maintaining complex structures and resources in line with the current market development. Kapsch TrafficCom continues to strive for a two-digit EBIT margin in order to focus strongly on continuing its growth strategy.

Cost reductions were achieved already in the previous year, and these efforts are now being intensified. This applies in particular to costs that have arisen due to growth related to the broad ITS portfolio and the group’s increasingly global position. The resources maintained for potential projects and investments will also be reevaluated even as care is taken not to restrict the project and technology potential. At the same time, the planning and implementation of the strategic growth paths will be intensified.

From an operational perspective, Kapsch TrafficCom will concertedly continue its existing projects during the current fiscal year, and the company also expects expansions in existing systems as well as some new projects. Kapsch TrafficCom eagerly looks forward to the outcome of the invitation to tender in Russia. In addition, the company is actively contacting parties potentially interested in toll systems and expects this approach to also bear fruit.

Notification

The report on the first quarter of fiscal year 2014/15 can be found under www.kapsch.net/ktc/investor_relations/reports/download/Quarterly-reports/2014-15/KTC_IR_Report_FY15-Q1.

Kapsch TrafficCom is a provider of intelligent transportation systems (ITS) in the application fields of road user charging, urban access and parking, road safety enforcement, commercial vehicle operations, electronic vehicle registration, traffic management and V2X cooperative systems. Kapsch TrafficCom covers with end-to-end solutions the entire value creation chain of its customers as a one-stop shop, from components and design to the installation and operation of systems. The solutions of Kapsch TrafficCom help to finance infrastructure, to increase traffic safety, to optimize traffic flow, and to reduce environmental pollution from traffic. The core business is to design, build and operate electronic toll collection systems for multi-lane free flow traffic. References in 44 countries on all continents make Kapsch TrafficCom a recognized supplier of electronic toll collection worldwide. As part of the Kapsch Group, a family-owned Austrian technology group founded in 1892, Kapsch TrafficCom, headquartered in Vienna, Austria, has subsidiaries and representative offices in 33 countries, has been listed on the Vienna Stock Exchange (KTCG) since 2007, and generated with more than 3,300 employees revenues of

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