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Thursday, 14 March 2013

Imtech blew it in Poland and is kicked out of the door at “Adventure World Warszawa”, after paying an unknown sum in "alimony". Is this the end of this soap?! No, I guess!

Hit the road Jack and don't you come back
no more, no more, no more, no more.

Royal Imtech NV (IM:NA), the Dutch engineering and Consultancy agency has been involved in one of the biggest Dutch soap opera’s of 2012/2013.

Some of the contents of this article have been subject to a rectification. Please read this rectification first before you continue with reading this article.

It started on 20 November 2012, when ABN Amro analyst Teun Teeuwisse rang the alarm bell on the cash position of Imtech Germany. Here are the pertinent snips of a news message in Het Financieele Dagblad (

The concerns have been concentrated on one of the fastest growing departments of Imtech Germany. A liquidity problem emerged there, as the large customers of Imtech, like Audi and the Berlin Airport, started to pay their bills later and later. Imtech compensates the questionable payment behaviour of its customers by paying its suppliers later itself. Payment of those bills is postponed up to 300 days.

According to ABN Amro-analyst Teun Teeuwisse, the liquidity problem of Imtech is so big that Imtech might not be able to meet the agreements with its banks (i.e. covenants) anymore. In this case, a follow-on stock offering or a renegotiation of the banking conditions would be inevitable.

The unthinkable happened: Imtech contacted the ABN Amro and angrily confronted Teun Teeuwisse with his findings; what the hell had he been thinking?!

ABN Amro slightly pulled the chicken switch and presented a refurbished version of its analyst report. However, the conclusions remained largely intact, just as its sell-advice.

The next leg came on 8 February 2013, when – out of the blue – Imtech made a public statement that it had to write off €100 million on its groundbreaking Polish project: to develop the Polish adventure park Adventure World Warszawa, in combination with two ‘green’ energy plants.

I heard this statement by the (former) Imtech CEO René van der Bruggen and I was flabbergasted by the height of this write off amount. What went wrong there?!

Afterwards, I saw a picture in ‘Het FD’ of a desolate piece of ground with only one pitiful arch standing. Was this supposed to be a future adventure park, which should be finished in 2015?!  Was this piece of ground a location on which a large share of the €100 million had been spent already? I immediately guessed that this was ‘not just a simple bread and butter affair’, but that there had to be some kind of fraud involved.

A few weeks later, on 27 February 2013, the rookie CEO of Imtech Gerard van de Aast, announced that not €100 million had to be written off, but no less than €300 million: €150 million on the German operation and €150 million on the Polish project. This led to my second article:

The figure of €300 million in write-offs becomes even more shocking when we look at the personnel number, the revenues and profits of Imtech's German and East-European operation in 2011: with 5326 employees, the German/East-European subsidiary of this Dutch company collected €1506 million in revenues and an EBITA (Earnings before Interest, Taxes and Amortization) of €127 million (€107.8 million in 2010).

In other words, this write-off blew Imtech's EBITA of 2011, 2010 and partly 2009 skyhigh. Per personnel member, a mindboggling amount of €56,326 in revenues is down the drain. The German / East-European Imtech personnel worked from January until 15 March 2012 for free! Can you believe it?! I can’t!

The only ‘optimistic and non-cynical’ reasons for such mega-losses could be that:
  • Imtech spent €300 million on salaries, purchases of materials & tools and on hiring subcontractors for the execution of new and existing projects in Germany and Poland, without checking if the people, who arranged these assignments, had any money to spend;
  • Nobody bothered to send an invoice in Germany and Poland for at least three months in 2012 or forgot to do so in a substantial number of cases for a number of years in a row, without reporting this properly;
  • The invoices actually had been sent, but everybody forgot to check if these lost invoices had been paid at all. Of course, nobody had bothered to report this to the Dutch head-office; 
Later, in an interview with the paper version of Het Financieele Dagblad (no link available), the new CEO Gerard van de Aast more or less admitted that there had been fraud involved in the Polish project– or irregularities, as he called it – and I expect that the same will happen on the events in Germany, sooner or later. 
  • How could it otherwise be that something simple, like late payments in Germany lead to losses of no less than €150 million Euro? Like I calculated, this is more than €56,000 per employee in Germany or 2,5 months of revenues, down the drain;
  • And how could this mega-loss be pushed under the German carpet, without Dutch headquarters hearing or knowing anything about this? Your guess is as good as mine;
  • Or DID Dutch headquarters know about this inevitable mega-loss, but decided the headoffice to assume the ostrich position? Who knows! 
The stupidest thing that Imtech did in November 2012, was trying to kill the messenger; in this case Teun Teeuwisse of ABN Amro. This is always a tell-tale signal that you will find a huge pile of manure, when you start to dig deeply in the financials of such a firm.

One thing is certain: although the whole Imtech soap is far from over yet, the Polish sidestory has been finished by today.

Adventure World Warszawa(AWW) came with the following crystal-clear message: 
  • Adventure World Warsaw announces today that it has reached an out of court settlement with Royal Imtech and its affiliates. The settlement is final and binding. It resolves in a consensual manner all the issues on which the parties were divided in relation to the realization of Adventure World Warsaw and ancillary projects. The settlement also ends the cooperation between the parties. The parties will not disclose any financial details of the settlement.
I am of course very curious how much Imtech will pay to AWW in penalties / damage restitution and I would be very grateful when anybody would mail me this amount, especially my Polish readers or Dutch / German insiders in this story. Of course this amount would be printed strictly anonymously. You can find my email address under my profile picture.

One thing is sure: some hedge funds / private equity companies still don’t trust Imtech: as of today, these funds/companies  are still holding a short position of 8.35% in Imtech; this percentage is based on the data from the Authority Financial Markets.

This massive short still exists, in spite of the imminent promotion of the fund to the AEX, the Amsterdam main index; something which would normally spur the rates of such a stock.

This must be a tell-tale signal that this article has not been the last episode of the Imtech soap.


  1. AWW buys of Imtech, not the other way around

  2. Nice analyses, but for the assumption that Imtech payed AWW; it is off course the other way around.