RoodMicrotec N.V.: RoodMicrotec: provisional annual figures for 2014

Zwolle, 12 March 2015

2014 HIGHLIGHTS

Commercial/operational

• Sales in 2014 of EUR 9.971 million fell by 11% compared to 2013 (EUR 11.180 million) due to longer lead times and postponement of some big orders. Decline mainly in Test, Test Engineering and Qualification & Reliablity.
• Lower sales and seizing new market opportunities have resulted in a net result of EUR 1.369 million negative in 2014 (2013: EUR 0.189 million negative).
• More investments in the second half of 2014 in sales and marketing.
• Setup of Automotive Competitive Centre and investments in automotive infrastructure as a result of new automotive projects and new prospects.
• Investments in highly promising projects like 'light switches based on radiofrequency'.
• Strategic partnership with Fraunhofer Institute IIS.
• Further strengthening of SCM.
• New test handling and programming equipment to handle new promising products of (new) customers.
• Sharp increase of our quote portfolio and a continued positive book-to-bill ratio.
• Significant headcount cost reduction programme resulting in EUR 1.3 million within the next 3 years. This program is partly based on attrition, but also partly on forced layoffs.
• The difference in personnel costs compared to 2013 was caused mainly by a non-recurring income in respect of the pension scheme.
• Strategic adjustment in response to changing market conditions. Our new approach involves longer lead times.

Financials

• EBITDA: EUR 544k negative (2013: EUR 965k positive).
• EBIT (operating result) is EUR 1,336k negative (2013: EUR 82k positive).
• Net result of EUR 1,369k negative (2013: EUR 189k negative): at year-end 2014 the company had approximately EUR 15 million tax losses available which are indefinite in time. The company has recognised only 10% of these losses as in previous years. We take a conservative approach in this.
• Net cash flow improved from EUR 36k in 2013 to EUR 1.018k in 2014. The net cash from operating activities amounted EUR 263k negative in 2014 compared to EUR 17k positive in 2013.
• The working capital position improved strongly from EUR 831k negative in 2013 to EUR 150k positive in 2014.
• Decrease in solvency rate to 36% (H1 2013: 44%) as a result of the negative result and the decrease of the pension discount rate to 2% (This change in discount rate had a negative impact on the equity position of EUR 1.1 million).
• Issue of € 2.500 million bond loan and repayment of bank loans; all short-term loans, except the finance lease, were redeemed using the proceeds from the bond loan. This form of financing has greatly reduced RoodMicrotec's finance liabilities for the short term.

KEY FIGURES

(X EUR 1,000)	IFRS	IFRS	IFRS	IFRS	IFRS
	2014	2013	2012	2011	2010
	Unaudited	Audited	Audited	Audited	Audited
Net sales	9,971	11,180	11,971	15,717	15,563
Gross margin	8,184	9,021	9,688	12,342	12,242
EBITDA	-544	965	703	1,865	2,361
EBIT (operating result)	-1,336	82	-181	709	733
Cash flow from operating activities	-263	17	899	1,939	1,689
Net result	*-1,369	-189	-281	588	448
Capital, debt & liquidity ratios
Total assets	*11,170	11,947	12,915	12,857	13,726
Group equity	*3,978	5,396	5,457	6,139	5,647
Net debt	2,119	1,613	2,716	2,686	3,334
Capital (=net debt + equity)	*6,097	7,009	8,173	8,824	8,981
Gearing ratio (net debt / capital)	*35%	23%	33%	30%	37%
Solvency (group equity / total liabilities)	*36%	45%	42%	48%	41%
Debt ratio (net debt / EBITDA)	-3.90	1.67	3.86	1.44	1.41
Net working capital	108	-831	-922	-831	-569
Working capital ratio (curr.ass. / curr.liab.)	1.05	0.80	0.76	0.79	0.87
Assets
Tangible fixed assets	5,567	5,446	6,347	5,732	5,710
Investments in tangible fixed assets	499	535	1,475	1,024	681
Depreciation of tangible fixed assets	792	869	860	1,156	1,600
Data per share (x EUR 1)
Capital and reserves	0.09	0.14	0.15	0.17	0.16
Operating results	-0.03	0.00	-0.01	0.02	0.02
Cash flow	-0.01	0.00	0.03	0.05	0.05
Net result	-0.03	0.00	-0.01	0.02	0.01
Share price: year-end	0.25	0.16	0.15	0.16	0.17
Share price: highest	0.35	0.18	0.23	0.31	0.19
Share price: lowest	0.15	0.14	0.15	0.14	0.15
Issue of nominal shares
At year end (x 1,000)	43,519	38,674	35,769	35,769	35,769
Number of FTEs (permanent)
At year-end	94	96	103	106	120
Average	97	99	103	111	124
Sales (total) / average FTEs (permanent)	103	113	116	142	126

* These items are still under discussion with our auditor. The audit has not yet been completed.

Sales result

RoodMicrotec N.V.'s sales in 2014 were EUR 9.972 million (2013: EUR 11.179 million), a 11% decrease compared to 2013. Net sales are presented below, broken down by market segment.

(x EUR 1,000)		2013	2014
Automotive		2,961	2,671
Telecoms		257	239
Industrial/Medical		5,883	5,545
Electra Data Proc.		556	527
Consumer		419	478
Hi-rel/Space		1,104	512
Total		11,180	9,972

Net sales broken down by customer type:

(x EUR 1,000)		2013	2014
Fabless companies		5,046	5,116
OEMs		3,936	3,501
IDMs		1,369	731
Distributors & others		829	624
Total		11,180	9,972

The sales results of the business units compared to 2013*):

(x EUR 1,000)	2013	2014	Approx. change
Test	4,526	3,504	-22.6%
Supply Chain Management	2,465	2,850	+15.7%
Failure & Technology Analysis	1,447	1,517	+4.8%
Test Engineering	584	516	-11.6%
Qualification & Reliability	2,158	1,585	-26.6%
Total	11,180	9,972	-10.8%

*) Due to an altered definition of sales by BU, there has been a shift between BUs.

Business units

Semi-annual sales result:

(x EUR 1,000)		HY2 2014		HY1 2014 *		Approx. change
Test	1,796		1,708		+5.2%
Supply Chain Management	1,532		1,318		+16.2%
Failure & Technology Analysis	813		704		+15.4%
Test Engineering	252		264		-4.5%
Qualification & Reliability	809		776		+4.3%
Total	5,202		4,770		+ 9.0%

*) Due to an altered definition of sales by BU, there has been a shift in sales between BUs, leading to an adjustment of the sales figures for the first half year. The total sales for the half year have not been adjusted.

In the second half of 2014, sales increased markedly compared to the average for the first half of this year. However, sales are still under pressure from postponed projects.

On the other hand, the quote portfolio (quotations to customers) remains high at over EUR 10 million. In addition, between 50 - 90% of the quotations results in an order (hitrate). In 2014, the book-to-bill ratio was above 1.0 in all quarters, and the average for the full year was between 1.1 and 1.2. This is significantly higher than in the past.

The fact that the factors set out above have not yet resulted in a material increase of sales is related to the inevitable long preparation times for most of the projects. However, once these projects start to generate sales, these will be recurring sales. Recurring sales will give us a far more stable position than we used to be able to realise.
We anticipate that for several projects we will be able to finalise the phase preceding actual production in the next 5 - 8 months. As of that time, these projects will start to generate actual turnover.

'Currently, all our indicators are green and we anticipate that we will be able to profit from this in 2015. We have worked hard to put ourselves in this position in the course of 2014, both in terms of winning projects and in terms of the (staff) structure of the company. One interesting initiative in this context is the setup of an Automotive Competence Centre. OEMs and FCs have responded to this with great enthusiasm because they are interested in the high tech market. This clearly distinguishes us from other market parties,' said Philip Nijenhuis, RoodMicrotec CEO.

Trends
Outsourcing
Medium-sized companies are increasingly working together in order to raise their joint services to a higher level so as to best combat competition from Asian countries. OEMs who still develop ASICs or other chips in-house will increasingly outsource this work to independent service providers like RoodMicrotec.
This outsourcing trend is expected to continue. Partly due to its infrastructure, RoodMicrotec is in an excellent position to profit from this optimally.

Secured bond
The successful issue of bonds with mortgage cover via NPEX and the strengthening of our equity have had a very positive impact on our balance sheet ratios and on our financial position in general, so we will be able to roll out our strategy better. This improved position allows us to contribute more actively to the development of new products, generating recurring sales.

Co-creating, co-operation and co-investing
Our new strategy involves co-investing in new promising projects while also investing in additional sales capacity, the latter mainly in order to compensate for the decline in sales in our 'traditional' product portfolio. By co-investing in promising projects, we aim to try to break through the continuing lending restraint in the financial markets, which often frustrates our customers, many of which are Fabless Companies (FCs), in their development. With our approach, we aim both to boost the development of FCs and increase our sales and our position in the marketplace.

We have transformed the company from a pure testhouse into a semiconductor company for new applications. Where in the past everything revolved around equipment and the operators, we are now focusing on finding solutions and offering a complete product based on integrated services throughout the lifetime of the product/chip. In this way, we will contribute more actively to new product development (co-creating and co-operation), which will result in recurring sales and in long-term projects that yield more stable, more predictable and less cyclic sales.
The majority of the headcount is nowadays of engineering degree level or similar. And our customer base is completely changed. We used to supply a few major IDMs, but now our main customers are Fabless Companies and OEMs like Philips, Siemens, Bosch and Porsche.
The new strategy also means co-investing in new and promising projects, which is partly aimed at breaking through the ongoing lending restraint in the financial markets.
The memorandum of understanding on the communication chip is a concrete example of the co-operation aspect of our new strategy. The device can be used in a number of advanced electronic applications such as smart metering, home, building and industrial automation. With ultra low power consumption, it allows wireless communication between 'things' (objects, products, equipment, systems) and between these things and humans, as envisaged in the EU initiative 'The Internet of Things' (IoT).
New product development
In our new strategy we focus increasingly on supporting product development by OEMs and FCs. This has already resulted in several contracts for long-term projects and recurring sales. In addition, we are working on preparations for 10 - 20 also long-term projects with recurring sales. These form the backbone of our growth strategy. We anticipate that these projects will be turned into contracts in the near future, which will lead to structural additional sales. In order to raise the volume of orders long-term, we continue to work on strengthening our sales organisation.

Partnership with Fraunhofer Institute
RoodMicrotec and the Fraunhofer Institute for Integrated Circuits IIS agreed in 2014 to expand their existing collaboration. The aim is to offer customers complete solutions from ASIC design to supply chain management.

Fraunhofer IIS, one of Europe's leading IC design facilities located in Erlangen, Germany, and RoodMicrotec, an independent value-added service provider in the area of micro and optoelectronics for FCs and OEMs, will combine their experience, know-how, equipment and highly skilled staff in order to provide customers with a more efficient and complete supply chain solution from concept covering all the processes of design, manufacture, assembly, electrical test and qualification, down to delivery of the product ready for volume production of the customer's end product.

Reliability of our business planning
Our planning and budgeting process is a very thorough and therefore time-consuming process. All our sales managers and directors are involved in this process. Our sales forecasts are based on information coming from our customers, a bottom-up approach.
The results of the diligently prepared information from our customers are reflected in our budget. This also means that leads and prospects generated after the budget period, as of January 2015, throughout the year are not taken into account.
Our experience over the past 10 years has shown us that in some cases growth is much higher than expected, sometimes lower. During the crisis, as of 2009, the uncertainty has been higher than normal. For example, we had a very successful period between the second half 2010 and the first half 2011. In that period our revenue increased significantly, but unfortunately deteriorated again in the second half of 2011.

Strong improved indicators and significant cost reductions
Our total revenue over the last 10 years increased very strong between 2004 and 2011. We had a deterioration during the crisis. In 2014 our revenues increased in the second half year compared to the first half year. The total revenue is the sum of our three segments: FCs and OEMs on the one hand, and IDMs on the other. Our revenue increase was caused by our improved position in FCs and OEMs. In 2004, revenue from IDMs was roughly approx..70% of total revenue, in 2014 less than 10%. Conversely, our revenue from FCs and OEMs increased sharply from about 30% to 90% in 2014. We realised significant growth in our core segment, which is an important element in our strategic forecast. Another aspect is that FCs need a longer start-up phase, but will later lead to much more recurring business.

Of course, results realised in the past do not offer guarantees for the future, but that applies both ways. This means that a disappointing year may be followed by a very successful year.

Part of our strategy is also to strengthen our sales force, which we hope will result in a further increase of our quote portfolio, hitrate and book-to-bill ratio in 2015. This expectation is in line with the thoroughly prepared bottom-up forecasts from our sales managers/customers. All indicators point to increasing revenue and results, none point to the opposite.
The management of RoodMicrotec is convinced, based on strong evidence, of the correctness of the strategic choices we have made and of future growth which will result in better financial results, as presented in our forecast.

Of course, revenue guarantees for the year are impossible. We do not consider uncertainty concerning revenue as an argument to reduce the forecast for reasons of prudence. An annual report which shows too negative a perspective concerning the future is as incorrect and unreliable as a report which is too optimistic. From our point of view, we feel bound to disclose in our annual report, as we have done in the past, the uncertainty concerning future prospects.

As discussed before, our growth is coming from FCs and OEMs. The difference with doing business for IDMs is that orders from IDMs create business at short notice, while orders from FCs and OEMs require extensive preparation times and involve greater uncertainty. The financial crisis has reduced our revenue significantly. Many customers are unable to get funding in time. We have changed the way we work with our customers by introducing co-creating, co-operation, co-investing.

Despite the fact that we expect higher revenue in the coming years, we will reduce our headcount significantly. This will be achieved partly through natural wastage and partly by reassigning and reorganising tasks and responsibilities. Forced lay-offs are not excluded.

Order postponement
Our customers' sales forecasts raised expectations for 2014, as many had predicted strong growth. But sales growth proved elusive. Forecasts were adjusted downwards in the course of the year in the face of uncertainty in the market, which was partly due to ongoing uncertainty in the financial markets. This resulted in a mixed picture. The quote portfolio remained high and even increased, but actual order placement often proved elusive. Projects were frequently postponed as well. Normally, postponed contracts tend to be offset by un-forecast new opportunities, but this was less the case in 2014. We expect that a majority of the postponed projects will be (re)started as of 2015.
The continuing order postponements in 2014 also contrasted with the increased quote portfolio. In spite of the positive developments and the fact that our new strategy has been received so well, the postponements were affecting our sales. On the other hand, we are proud to be playing an ever more important part in the supply chain for OEMs and FCs by supporting their new product development, which is reflected in our 2014 quote portfolio and book-to-bill ratio (see next paragraph). This significant upswing in our quote portfolio would have been unthinkable just a few years ago.

Quote portfolio and hitrate
In the second half of 2014, sales increased markedly compared to the average for the first half of this year. However, sales remain under pressure from postponed projects.

Our quote portfolio increased to more than EUR 10 million. In addition, between 50 and 90% of the quotes result in orders, and this overall hitrate trend (quotations turned into orders) continues to rise. In 2014, the book-to-bill ratio was above 1.0 in all quarters, and the average for the full year was between 1.1 and 1.2. This is significantly higher than in the past.

The fact that the factors set out above have not yet resulted in a material increase of sales is related to the inevitable long lead times for many of the projects. However, once these projects start to generate sales, these will be recurring sales. Recurring sales give us a far more stable position than we used to be able to realise.
We anticipate that for several projects we will be able to finalise the phase preceding actual production in the next 5 - 8 months. As of that time, these projects will start to generate actual turnover.

Currently, all the lights are green and we anticipate that all this will start to bear fruit in 2015. We have worked hard in 2014 to put ourselves in this position, both in terms of winning projects and in terms of the (staff) structure of the company. An interesting initiative in this context is the setup of an Automotive Competence Centre (see at the top of this report). OEMs and FCs have received it with great enthusiasm because they are interested in the high tech market. This clearly distinguishes us from other market parties.

Personnel, sales by employee and headcount

The average number of full-time employees (FTE) decreased by approx. 2 % from 99 FTEs in 2013 to 97.0 FTEs in 2014. Sales per full-time employee decreased by approx. 10 % from EUR 113,000 in 2013 to EUR 103,000 in 2014.

The strategy change mentioned in this report has obviously impacted the organisation, leading to a different composition and management of our staff. We plan to optimise our organisation, in balance with the new service portfolio. A significant headcount reduction in some business areas is inevitable. The total reduction will be between 10% - 15% in 3 years, resulting in a cost reduction of EUR 1.3 million in 3 years. This programme is based on attrition as well as on forced layoffs. Reductions will occur only after the completion of appropriate consultation processes and in accordance with local legal practices.

Outlook 2015

Ongoing postponement of orders makes is difficult for us to state when the sales increase anticipated by our high hitrate will materialise.  During 2014 we improved our forecasting system and besides  customer forecasts, we use indicators based on our quote portfolio, hitrate and book-to-bill ratio. All these indicators are positive. We are also mindful of recent developments, with the euro falling in value on one hand, and quantitative easing in the capital market on the other hand, in conjunction with the World Semiconductor Trade Statistics (WSTS) global market growth forecast of 3.4% for 2015 and 3.1% for 2016. However, these figures are still below the 6% multi-year average since 2000. Both in view of the general market outlook, the macroeconomic forecasts and based on our internal analyses we expect gradual sales growth in 2015, that is to say, skewed towards the second half of the year.
We maintain our previously stated long-term objective to realise annual autonomous growth of between 3 and 13% at an average 6% growth of the semiconductor market up to 2017, and of improving the operating and net results.

The present headcount will be reduced by approximately 15% in the next 3 years to bring it in line with our new strategy and the corresponding market position, preferably of course through natural wastage. Forced lay-offs are not excluded.

RoodMicrotec will continue to strengthen its product portfolio, inter alia by focusing on FCs and OEMs (particularly on outsourcing: project Atlas).

Conference call Thursday March 12, 2015, 8.30 am (before opening stock exchange)
There will be a conference call for press, analysts and other interested parties. The telephone number to join the call is + 31 20 531 5850.

With reference to our previous press release the publication of our annual report 2014 has been rescheduled to April 6^th,2015 as a result to this the Annual General Shareholders Meeting will be held on Monday May 18^th, 2015.

Financial agenda

6 April 2015	Publication annual report 2014
14 May 2015 18 May 2015	Trading update Annual general meeting of shareholders
9 July 2015	Publication sales figures first half 2015
27 August 2015	Publication interim report 2015
27 August 2015	Conference call for press and analysts
12 November 2015	Publication trading update
7 January 2016	Publication annual sales figures 2015
25 February 2016	Publication annual figures 2015
25 February 2016	Conference call for press and analysts
10 March 2016	Publication annual report 2015
21 April 2016	Annual general meeting of shareholders
12 May 2016	Publication trading update
7 July 2016	Publication sales figures first half 2016
25 August 2016	Publication interim report 2016
25 August 2016	Conference call for press and analysts
15 November 2016	Publication trading update

Consolidated statement of profit or loss

(x EUR 1,000)	Notes	unaudited 2014	audited 2013
Net sales	1	9,971	11,180
Cost of sales	2	-1,787	-2,159
Gross profit		8,184	9,021
Personnel expenses	3	-6,027	-5,351
Other operating expenses	4	-2,701	-2,705
Total operating expenses		-8,728	-8,056
EBITDA		-544	965
Depreciation and amortisation	5	-792	-883
EBIT		-1,336	82
Financial expenses	6	-177	-230
Profit before tax		-1,513	-148
Taxation	7	144*	-41
Net profit (loss)		-1,369	-189

Net profit attributable to:

Owners of the company		-1,369	-189
Non-controlling interests		-	-
Net profit (loss)		-1,369	-189

Earnings per share

Basic	16	-0.06	-0.01
Diluted	16	-0.05	-0.01

* These items are still under discussion with our auditor. The audit has not yet been completed.

Consolidated statement of balance sheet

(x EUR 1,000)	Notes	Unaudited 2014	Audited 2013
Assets
Property, plant and equipment	8	5,567	5,446
Intangible assets	9	1,741*	1,741
Deferred taxes	10	1,079*	910
Financial assets	11	487*	497
Non-current assets		8,874	8,594
Inventories	12	344	283
Trade and other receivables	13	1,760	2,359
Cash and cash equivalents	14	192	711
Current assets		2,296	3,353
Total assets		11,170	11,947
Equity and liabilities
Share capital		4,788	4,255
Share premium		18,084	17,851
Revaluation reserve		2,082	1,668
Retirement benefit reserve		-2,204	-975
Retained earnings		-21,266*	-19,897
Mezzanine capital		2,494*	2,494
Group equity	15	3,978	5,396
Loans and borrowings	18	2,266	279
Retirement benefit obligation	19	2,738*	2,088
Non-current liabilities		5,004	2,367
Bank overdraft	14	-	1,537
Loans and borrowings	18	45	508
Trade and other payables	20	2,085	2,081
Current tax liabilities	18	58	58
Current liabilities		2,188	4,184
Total equity and liabilities		11,170	11,947

* These items are still under discussion with our auditor. The audit has not yet been completed.

Consolidated cash flow statement*

(x EUR 1,000)	Notes	Unaudited 2014	Audited 2013
EBITDA		-544	965
Adjustments for:
-  Movements in provisions and pensions		-141	-630
-  Share-based payments	17	59	20
-  Accrued interest	6	-	-9
-  Other adjustments		-2	-
Changes in working capital
-  Inventories	12	-61	22
-  Trade and other receivables	13	599	-270
-  Trade and other accrued liabilities	18,20	4	140
Cash generated from operating activities		-86	476
Interest paid	6	-177	-221
Net cash from operating activities		-263	17
Cash flows from investing activities
Acquisition of property, plant and equipment	8	-499	-535
Disposal of property, plant and equipment	8	-	567
Di-/investments in pension assets	19	-500	493
Proceeds from financial assets	11	10	452
Net cash from investing activities		-989	977
Cash flows from financing activities
Proceeds from issue of share capital	15	707	400
Payment of compensation mezzanine capital	15	-	-292
Proceeds from borrowings		2,550	50
Repayment of borrowings		-903	-1,116
Payment of bond issuance costs	18	-100	-
Amortization of discount and bond issuance costs	18	16	-
Net cash flow from financing activities		2,270	-958
Net cash flow		1,018	36
Cash -/- bank overdrafts at 1 January	14	-826	-862
Cash -/- bank overdrafts at 31 December	14	192	-826
Net cash flow		1,018	36

* The audit has not yet been completed.

About RoodMicrotec
With 45 years' experience as an independent value-added service provider in the area of micro and optoelectronics, RoodMicrotec offers fabless companies, OEMs and other companies a one-stop shopping proposition. With its powerful solutions RoodMicrotec has built up a strong position in Europe.

Our services comply with the industrial and quality requirements of the high reliability/space, automotive, telecommunications, medical, IT and electronics sectors.

'Certified by RoodMicrotec' concerns inter alia testing of products to the stringent ISO/TS 16949 standard that applies to suppliers to the automotive industry. The company also has an accredited laboratory for test activities and calibration to the ISO/IEC 17025 standard.

The value-added services comprise inter alia (eXtended) supply chain management, failure & technology analysis, qualification & burn-in, test- & product engineering, production test (including device programming and end-of-line service), ESD/ESDFOS assessment & training, quality & reliability consulting and total manufacturing solutions with partners.

RoodMicrotec has branches in Germany (Dresden, Nördlingen, Stuttgart), the UK (Bath) and the Netherlands (Zwolle).

Further information:
Philip Nijenhuis, CEO
Telephone:        [phone]
Email:              [e-mail] (mailto:[e-mail])
Website:           www.roodmicrotec.com (http://www.roodmicrotec.com)

RoodMicrotec- Provisional annual figures 2014 (http://hugin.info/130789/R/1902349/676394.pdf)

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Source: RoodMicrotec N.V. via Globenewswire

HUG#1902349