Sam Aston, CEO of Additude AB Sweden, sounded the gong of the Amsterdam Stock Exchange to celebrate the merger with ICT Group.
Additude, which is located in Malmö, Sweden, is one of southern Sweden’s leading IT consulting firms. The company offers market-leading services within industrial innovation processes, project engagements and consultancy. This acquisition perfectly fits ICT Group’s international expansion strategy, in which the Northern European countries are defined as important spearhead.
With the addition of Additude to the group, ICT will benefit company-wide from a unique mix of competences and skills. The acquisition also opens up the opportunity to offer ICT’s proprietary OrangeNXT proposition to Additude’s existing and new clients in Sweden.
Today ICT Group (ICT) announced its intent to acquire 65% of the shares of BNV Mobility (BNV). ICT aims to make BNV’s platform TURNN the Mobility as a Service (MaaS) solution of ICT Group. MaaS is about providing a seamless travelling experience using all mobility means possible based on real-time information. Travelling time, comfort and costs are optimized based on individual needs.
Acquiring the majority of the shares of BNV will be a logical next step for ICT to accelerate its position in the MaaS market. Within the ICT group, InTraffic is the leading company on travel information systems for public transport, NedMobiel has extensive capabilities and experience in comparable mobility projects in the Dutch market and ICT has the platform knowledge. BNV is one of the leading B2G and B2B Smart Mobility Services firms in the Netherlands. As an experienced mobility provider with a unique know how in behavioral changes of commuters, BNV has been recognised by the Dutch government as a MaaS institute. The full breath of capabilities within ICT Group combined with the specific position of BNV will enable ICT to successfully deliver the MaaS service to the Dutch market and at a later stage to other European Countries.
Jos Blejie, CEO ICT Group: “We are impressed by the current TURNN solution technology of BNV. The specific position of BNV in combination with the use of leading-edge technologies and the power of ICT Group in the Dutch market makes a new combination undoubtfully successful.
MaaS is a new market, but we are convinced it will develop to a sizable market, driven by global issues like city density and pollution. MaaS is one of our strategic themes. This step will strengthen our position as frontrunner and create a dominant position from the start.”
Rehu de Bruijn, CEO BNV Mobility: “We are thrilled to become part of this group as it opens up opportunities of growth acceleration on the platform capabilities through ICT Group’s competence centers and resources, for example in artificial intelligence, machine learning and in-depth knowledge of a broad range of mobility operations. At the same time the access to ICT Group’s business and partner network will help boost our sales and marketing efforts and hence significantly grow our customer base.”
ICT’s strategy is to become a successful European technology solution provider offering time hire services, delivering fixed price projects and software as a service to internationally operating companies and governmental institutes. As part of this strategy ICT Group is looking specifically for a MaaS offering in the Netherlands. The other main shareholder in BNV is Egis, a French group with international activities in transport and mobility services. ICT is convinced that this strategic alliance between Egis and ICT Group shall accelerate the strategic (inter)national MaaS ambitions.
Important acquisitions in Infra & Mobility and launch of OrangeNXT mark important steps in execution of strategic roadmap
Highlights FY 2018
Revenue up 24% to € 129.9 million, 6% organic growth
Underlying EBITDA rose 19% to € 14.2 million, reflecting an underlying EBITDA margin of 11%
Acquisitions of NedMobiel and remaining 50% of InTraffic were completed; significantly strengthening ICT’s strategic position in Infra & Mobility
Software as a Service solutions now bundled in OrangeNXT, a strong platform that supports customers in their digital transformation
Net profit increased to € 9.4 million, including one-off accounting gains of € 4.1 million
Proposed dividend of € 0.38 per share for the year 2018
Highlights Q4 2018
Revenue up 30% to € 37.2 million, EBITDA up 28% to € 5.4 million (Q4 2017: € 28.5 million and
€ 4.2 million, respectively)
Organic revenue growth of 8%
ICT expects further growth in revenue and EBITDA in 2019 compared to 2018
Jos Blejie, CEO of ICT Group N.V.: “We are pleased with the revenue growth of 24% and the EBITDA margin we reported in 2018. Our results show that we are delivering on our promise of healthy and profitable growth while taking significant steps in the execution of our strategy. We significantly enhanced our position in Smarter Cities with our recent acquisitions and are now even better positioned to support our customers in their digital transformation with the OrangeNXT software solutions that combine our expertise and domain knowledge. In 2018 we celebrated our 40th anniversary. Throughout the years we have come to mean more and more to our customers and have grown into leaders in our core markets. I am proud of our over 1,250 professionals who really make a difference. In January 2019 we acquired Additude, a leading Swedish IT consultancy that is a perfect fit with our international expansion strategy. For 2019 we expect higher revenue and EBITDA.”
Progress in 2018
In 2018 ICT significantly strengthened its position in Smarter Cities with the acquisition of NedMobiel and InTraffic. The purchase of 100% of the shares in NedMobiel, a Dutch consultancy specialised in complex infrastructures, was completed in January 2018. This acquisition increases revenue from both projects and consultancy services, thus enabling ICT to move up the value chain. Moreover, the acquisition of NedMobiel positions ICT well in Mobility as a Service (MaaS), a concept which is expected to be a major game changer in Smarter Cities.
The acquisition of the remaining 50% of InTraffic in March 2018 further enhances ICT’s innovation and product development capabilities in the field of Rail Infrastructure and Mobility. The integration process is focused on increasing efficiency to bring InTraffic’s margins more in line with ICT’s overall margins.
In September 2018 ICT acquired the remaining 49% of the shares in ICT Mobile. This acquisition was a jump-start for OrangeNXT, which combines all promising ICT Group software solutions to help its customers reap the full benefits that digital transformation has to offer. OrangeNXT is focused on ready to use software solutions, offered as Software as a Service.
In 2015 ICT started the development of a new platform, Motar, to anticipate the trend of low coding in industrial environments. Low-code software is being used to speed up design and development processes with minimal hand-crafted code, thus minimising programming errors. In 2017 Motar had its first successes in the automotive industry and based on that ICT decided to adapt Motar to other industries. This led to the launch of the company ICT Motar, embracing the High-tech version of the platform, in the second half of 2018.
Strategic update: ‘Develop the future’
At the Capital Markets Day in November 2018 ICT presented its ‘Develop the Future’ strategic update, defining its strategic roadmap and new long term objectives for 2022 as follows:
– to increase the company’s annual revenue to around € 200-230 million in 2022 through organic growth of more than 5% along with acquisitions
– to maintain a profitability margin (EBITDA) of between 10 and 12%
Focus in 2019
Growth will again be the main focus for 2019. Our growth path is defined by our strategic roadmap 2022. The buy-and-build strategy continues to be fully focused on profitable growth, combining healthy organic growth with selective acquisition opportunities.
ICT aims to grow organically in a tight labour market by:
– remaining an employer of choice
– seizing opportunities provided in high growth areas and industries with our Software as a Service solutions bundled in OrangeNXT
– accelerating our nearshoring offerings
At the same time ICT will continue to pursue suitable acquisitions. This includes companies with compelling offerings in the countries in which ICT is already active as well as other geographies, with a focus on Northern Europe. After the balance sheet date ICT announced the acquisition of Additude, a leading Swedish IT consultancy firm. This acquisition is a perfect fit with this international expansion strategy.
Notes to the results
Performance of ICT Group
In 2018 ICT Group revenue rose 24% to € 129.9 million (2017: € 105.0 million). Organic growth, i.e. excluding the contribution of NedMobiel and the nine-month consolidation of InTraffic, in revenue was 6%. Organic growth was driven mainly by the strong performance at ICT Netherlands as a result of the increase in FTEs and higher productivity. Added value increased by 22% to € 114.2 million in 2018 (2017: € 93.4 million).
Market conditions in the industries we serve remained favourable in 2018. The Automotive, High Tech and Machine & Systems markets showed substantial growth, driven by increased customer spending. Public opinion and discussions on sustainability have resulted in lower demand for projects in our Oil & Gas industry unit.
The growth in revenue relating to Smarter Cities was mainly due to the acquisitions of InTraffic and NedMobiel. Smarter Cities also realised solid organic growth in 2018. Spending on public infrastructure remained high in 2018 due to good economic circumstances. Also, government spending on mobility solutions remained high. Our Smarter Cities cluster benefited from these favourable conditions.
The growth in Smarter Health achieved in 2017 could not be sustained. Although the healthcare sector continued to invest in robust, life-prolonging and life-improving IT solutions, ICT saw a decline in revenue due a lower and later availability of the new foetal monitors for sale by BMA and lower productivity in the ICT Healthcare unit.
Personnel costs increased 23% to € 76.7 million (2017: € 62.5 million), in line with the increase in the number of FTEs, both as a result of acquisitions and organic growth in the 2018 financial year.
Other operating expenses increased to € 24.0 million (2017: € 18.9 million), mainly because of the recent acquisitions. The costs relating to strategic initiatives and acquisitions and partnerships amounted to € 0.3 million (2017: € 0.2 million). Furthermore, in connection with the acquisition of InTraffic one-off costs of € 0.8 million were incurred for contract termination fees. Other operating expenses also included non-recurring costs of € 0.4 million relating to the 40th anniversary of the company and start-up costs of € 0.4 million for ICT Belgium BVBA.
Underlying EBITDA came in at € 14.2 million in 2018, an increase of 19% compared to € 12.0 million in 2017. Taking the one-off costs of € 0.8 million relating to the aforementioned contract termination fees at InTraffic into account, EBITDA increased by 12% year-on-year to € 13.5 million.
The underlying EBITDA margin decreased from 11.4% in 2017 to 11.0% in the year under review. This decrease in the underlying EBITDA margin is due to the non-recurring costs related to the 40-year anniversary of the company and start-up costs in ICT Belgium.
Performance per segment
ICT Netherlands showed a strong performance in 2018. Revenue was up 10% to € 89.3 million as a result of more hires and increased productivity, supported by positive market circumstances. Organically, revenue was up approximately 8%. In the year under review EBITDA increased 31% to € 10.8 million. This significant growth in EBITDA compared to 2017 was the result of increased project activity and material sales.
At Strypes Bulgaria (ICT Nearshoring) revenue rose slightly to € 9.9 million in 2018. The ongoing investments in the organisation limited EBITDA in 2018 to € 1.9 million, the same level as in 2017. The increased organisational effectiveness was necessary to safeguard further growth of our nearshoring activities.
InTraffic was consolidated as of 1 April 2018 and contributed € 14.6 million to revenue in the last nine months of 2018. EBITDA came in at € 1.3 million excluding one-off costs of € 0.8 million relating to contract termination fees. Although InTraffic’s margin is currently below the ICT Group target margin range, we are already seeing the first benefits of the steps being taken to increase efficiency at InTraffic. The aim is to bring InTraffic’s margins more in line with ICT’s overall group margins and the full impact of these measures will materialise in the course of 2019.
The ‘Other’ segment posted revenue of € 20.1 million (2017: € 16.4 million). Improve performed in line with last year, with slightly better margins. The performance of Raster stabilised compared to last year. BMA’s performance decreased due to lower hardware (foetal heart monitors) sales and lower software sales in the Netherlands. NedMobiel exceeded expectations in the second half of 2018 and OrangeNXT also performed well with better-than-expected revenue growth. CIS Solutions was consolidated as of the fourth quarter of 2018. CIS is developing as planned.
Other financial information
ICT has attributed a value to, and is amortising, several intangible assets including the order backlog, software and customer relations at its recent acquisitions. Total amortisation in 2018 amounted to
€ 3.8 million (2017: € 2.7 million). Depreciation totalled € 1.2 million in 2018 (2017: € 0.9 million).
Operating profit came in at € 8.6 million in 2018 (2017: € 8.4 million). As a result of the higher amortisation, the operating margin declined to 6.6% from 8.0% in 2017.
The result from joint ventures reflects the contribution of InTraffic for one quarter as InTraffic was still reported as a joint venture in the first quarter of 2018. The result from associates amounted to a loss of € 0.4 million (2017: € 0.4 million loss), mainly attributable to GreenFlux. The result was foreseen in line with Greenflux’ future growth strategy. LogicNets achieved a breakeven result in 2018.
Financing expenses increased to € 0.9 million in 2018 from € 0.5 million in 2017 as a result of increased financing for the recent acquisitions and a loss on the write-off of loans to Valuemaat which filed for bankruptcy in the first half of 2018 (€ 0.2 million). Financing income came in at € 0.3 million and relates mainly to a deferred acquisition consideration adjustment for BMA.
Taxes in 2018 amounted to € 2.1 million compared with € 1.9 million in 2017.
In 2018 ICT Group recognised € 4.1 million in accounting gains. As a result of the acquisition of the remaining 50% in InTraffic, ICT recognised a one-off accounting gain of € 3.5 million related to the revaluation of the 50% stake in InTraffic already held by ICT. Following the investment by new shareholders in GreenFlux, ICT’s stake was diluted from 24.49% to 19.57%. As a result of the revaluation of its stake, ICT realised a one-off accounting gain of € 0.6 million.
Net profit increased to € 9.4 million in 2018 compared with € 5.2 million in 2017. This translates into earnings per share of € 0.99 (2017: € 0.56). The number of outstanding ordinary shares increased during the year under review to 9,463,878 (31 December 2017: 9,411,301) due to the 2017 stock dividend.
Cash flow movement
In 2018 the net operational cash flow amounted to € 11.1 million (2017: € 7.9 million). This positive development is in line with the results growth in 2018 and a result of disciplined working capital management.
In 2018 the cash outflow on investment activities amounted to € 10.2 million, compared with € 2.9 million in 2017. The main elements of this outflow were the purchase price cash consideration for the acquisitions of NedMobiel and 50% of InTraffic (€ 7.8 million) and investments in product development and housing facilities.
The cash outflow from financing activities amounted to € 0.9 million (2017: € 4.3 million). The main elements are the net effect of dividend paid (€ 2.4 million cash outflow) and the balance of new financing arranged for acquisitions and the repayments of existing acquisition financing (€ 1.7 million cash inflow).
The net cash position at 31 December 2018 was € 6.2 million (31 December 2017: € 6.3 million). The net cash outflow amounted to € 0.1 million (2017: € 0.7 million inflow).
Balance sheet structure
Mainly as a result of the net effect of the dividend payment of € 2.4 million and net profit (€ 9.4 million), shareholders’ equity increased to € 54.2 million in 2018 (2017: € 47.7 million). The balance sheet total increased to € 95.6 million at year-end 2018 from € 81.6 million at year-end 2017 as a result of the acquisitions of InTraffic and NedMobiel. The solvency ratio (shareholders’ equity/total assets) stood at 57% at year-end 2018, compared with 58% at year-end 2017, reflecting ICT’s sound financial basis.
At 31 December 2018 ICT Group had 1,227 FTEs (1,274 employees), 24% higher than the 990 FTEs (1,032 employees) at year-end 2017. The acquisitions of InTraffic and NedMobiel and ongoing recruitment efforts contributed to this increase.
ICT proposes a dividend of € 0.38 per share for the 2018 financial year (2017: € 0.35). The proposed dividend is subject to the approval of the Annual General Meeting of Shareholders (AGM) to be held on 15 May 2019. For the calculation of the proposed dividend, the net profit realised is adjusted for the accounting gains recognised in 2018 as well as non-cash amortisation amounts. This results in an adjusted net profit for the full year 2018 of € 9.1 million. The proposed dividend of € 0.38 per share represents a pay-out ratio of 40% of adjusted net profit. ICT offers the option of distribution of the dividend in cash or in shares.
ICT will calculate the dividend payment in shares one day after the end of the optional period on the basis of the average price of ICT shares during the last five trading days of the optional period, which shall end on 3 June 2019. The dividend in cash or in shares will be payable on 5 June 2019.
Events after balance sheet date
In January 2019 ICT acquired full ownership of Additude AB, one of southern Sweden’s leading IT consultancy firms. With over 160 employees, Additude realises an annual turnover of around € 16 million. The company provides software and engineering consultancy services supporting customers in their innovation processes, product development and growth strategy. Additude primarily operates in the IT and engineering markets and serves many of Sweden’s largest and technology-intensive companies. This acquisition is a perfect fit with ICT’s international expansion strategy, in which the northern European countries are defined as an important spearhead.
In January 2019 ICT prolonged and extended its financing arrangements. To fund the company’s growth ambitions, the acquisition facility was extended from € 11 to € 25 million at better terms. The working capital arrangement increased from € 10 to € 12.5 million to cover for the larger size of the company. The covenant requirements related to Senior Net Debt to EBITDA ratio increased from 2.0 to 2.5. The other covenants did not change.
Growth will again be the main focus in 2019, as defined in the company’s strategic roadmap 2022. ICT is fully focused on profitable growth and will continue to execute its buy-and-build strategy; combining healthy organic growth with selective acquisition opportunities.
The employment market for IT talents remains very challenging. Attracting and retaining the right people is a top priority.
ICT expects its capital expenditure and research & development expenses to increase in 2019, in line with the increased scale of the company.
ICT is fully committed and confident in its ability to deliver on its long-term objective of increasing annual revenue to € 200 to € 230 million by 2022, while maintaining an EBITDA margin between 10 and 12%. For 2019 ICT expects further revenue and EBITDA growth.
This press release contains forward-looking statements. Forward-looking statements are always based on assumptions and estimates relating to uncertain events over which ICT Group N.V. has no control. They concern, for example, measures taken by the Dutch and other governments, currency movements, price fluctuations, changes in law and regulations, legal precedents and market developments. ICT Group N.V. would like to stress that the contents of this press release are based on the information that is currently available. The reality can always deviate from expectations for the future. ICT Group N.V. has no obligation to update the statements contained in this document, unless required by law.
In this press release, where information has been presented in thousands or millions of units, amounts may have been rounded. Accordingly, totals of columns or rows of numbers in tables or charts may not be equal to the apparent sum of the individual items. Actual numbers may differ from those contained herein due to such rounding.
2018 financial information
The 2018 financial information included in the Extracts from Consolidated Financial Statements attached to this press release is derived from the Annual Report 2018, that has been authorized for issue. The Annual Report has not yet been published by law and still has to be adopted by the Annual General Meeting on 15 May 2019. In accordance with section 393, title 9, book 2 of the Netherlands Civil Code, PricewaterhouseCoopers Accountants N.V. has issued an unqualified auditor’s opinion on the Annual Report.
Annexes: Extracts from Consolidated Financial Statements 2018
– Consolidated statement of comprehensive income
– Consolidated balance sheet
– Consolidated statement of changes in equity
– Consolidated statement of cash flows
– Other financial information
– Segment information
ICT Group N.V. (ICT) announces that today it has acquired full ownership of Additude AB (Additude). Additude, located in Malmö, Sweden, is one of southern Sweden’s leading IT consulting firms. The company offers market-leading services within industrial innovation processes, project engagements and consultancy. Their customers include many of Sweden’s largest and technology-intensive companies. This acquisition perfectly fits ICT’s international expansion strategy, in which the Northern European countries are defined as important spearhead.
With over 160 professionals Additude realizes an annual turnover of around € 16 million. The company provides software and engineering consultancy services supporting customers in their innovation processes, product development and growth strategy. Additude’s total range of services is primarily aimed at the IT and engineering markets. They have been appointed the prestigious “Gasell” award by Dagens Industry (The Swedish Financial Magazine) during 2016, 2017 and 2018. This distinction is awarded annually to the fastest growing companies in Sweden.
With the addition of Additude to the group, ICT will benefit company-wide from a unique mix of competences and skills. The acquisition also opens up the opportunity to offer ICT’s proprietary OrangeNXT proposition to Additude’s existing and new clients in Sweden.
Jos Blejie, CEO ICT: ”In line with our strategic direction to expand our business into new geographies, we foresee Additude to become the platform within ICT for the Northern European market offering high-profile industrial technology consulting services. We are impressed by the track record of Additude, including the realized profitable revenue growth over the last few years. From a cultural point of view, we see a good fit, which we believe is essential to collaborate and we are looking forward to welcoming Additude to the ICT family.”
Sam Aston, CEO Additude: “We are excited to become part of ICT Group and plan to leverage specific industry knowledge and operational expertise to grow our business with large industrial organizations and development-oriented customers in Sweden and other countries in the future. We see ample cross selling opportunities in the areas of innovations, growth and product development and we can benefit from ICT’s nearshoring capabilities in Bulgaria to support and develop projects performed in Sweden.”
Additude AB will be consolidated as from February. Financial details will not be disclosed.
Oaklins acted as the exclusive financial advisor to ICT.
ICT Group N.V. (ICT) today announces the nomination of Mr. Wouter van de Bunt for appointment as member of the Supervisory Board of ICT Group. His nomination made by the Supervisory Board will be on the agenda of the Annual General Meeting of Shareholders of ICT Group on 15 May 2019. At that same meeting the re-appointment of Theo van der Raadt, chairman of the Supervisory Board, will also be on the agenda. This nomination will be for a two year period, in line with the corporate governance code. Mr. Fritz Fröschl, whose second term ends on 15 May 2019, will not be available for re-election.
Wouter van de Bunt (57) was partner at KPMG where he has held several roles in the past 20 years, the latest being Global Head of Mergers & Acquisitions. His focus was on M&A within the national and global Technology, Media and Telecom sector. Prior to KPMG he worked for a number of years at private equity firms and he started his career as an auditor at Ernst & Young.
Theo van der Raadt, chairman of the Supervisory Board of ICT Group: “It is with pleasure that we nominate Wouter van de Bunt for appointment to the Supervisory Board. His extensive experience in the IT sector will be valuable for ICT Group and complement our board. At the same time, I would like to thank Fritz Fröschl for his valuable contribution to the development of the company in the past eight years.”
Wouter van de Bunt will be nominated for appointment for a period of four years until the AGM in 2023. In addition, there will be a proposal to re-appoint Theo van der Raadt, whose second term ends on 15 May 2019, for a two-year period, until the AGM in 2021. This is to ensure sufficient continuity in the Supervisory Board. Both nominations will be made under the condition that the general meeting does not make use of its right of recommendation. After the (re-)appointments, ICT Group’s Supervisory Board will, effective 15 May 2019, consist of the following members: Theo van der Raadt (Chairman), Deepak Luthra, Gina van der Werf and Wouter van de Bunt. Mr. van de Bunt will become member of the Audit Committee.
Today, ICT Group N.V. (“ICT”) presents the outcome of its strategy update ‘DEVELOP THE FUTURE’ at its first Capital Markets Day in Eindhoven. The full presentation is available on the corporate website as well as the Closing statements of the Capital Markets Day.
The buy and build strategy continues to be fully focused on profitable growth, combining a healthy organic growth with selective acquisition opportunities.
Organic growth, in a tight labour market, is based on the following key elements:
• Remain an employer of choice
• Grasp the opportunity of high growth areas and industries with our software as a service solutions bundled in OrangeNXT
• Accelerate ICT’s nearshoring offerings
Besides organic growth, ICT will look into international expansion in Northern European countries and into companies with compelling offerings in the countries in which ICT is already active.
Based on the above ICT has defined its new long term objectives towards 2022:
• Double the company’s revenue from 2017 towards 2022 to around € 200 to 230 million with organic growth of more than 5% combined with acquisitions
• Maintain profitability margins (EBITDA) between 10 and 12%
Jos Blejie CEO: “Our strategy presented today, is building further upon the strong fundament of our consistent execution and track record over the past years. We believe ICT Group is uniquely positioned in the areas we serve, through our multi-domain expertise combined with in-depth industry knowledge, and our ability to integrate this in a compelling technology solution. At the same time we have been investing in new technologies enabling us to expand our unique Industrial and Operational Technology position, including developing in-house (proprietary) solutions. This is opening up new opportunities, both in terms of geographies and business models. The digital transformation demands are such that we will grow and support our customers globally and extend our business internationally. Evolving into a truly European Technology Solutions Provider.”
Revenue grew 23% to € 31.8 million (Q3 2017: € 25.8 million), organic revenue growth of 3%
EBITDA of € 3.1 million, up 24% compared to € 2.5 million in Q3 2017
Software solutions bundled in OrangeNXT
Revenue rose 21% to € 92.7 million (9M 2017: € 76.5 million), organic revenue growth of 5%.
Underlying EBITDA of € 8.9 million (9M 2017: € 7.8 million). Including one-off costs for contract termination fees at InTraffic (€ 0.8 million), EBITDA amounted to € 8.1 million
FY 2018 underlying EBITDA forecast at between € 13 and € 14 million
Jos Blejie, CEO of ICT Group N.V.: “ICT Group continues to realise good growth while making strategic progress in becoming a leading total solutions provider. The acquisition of the remaining shares in ICT Mobile was the jumpstart for OrangeNXT in which we have bundled promising ICT Group software solutions to help our customers reap all the benefits that digital transformation has to offer. We are convinced that combining our in-depth industry knowledge with our ability to connect people, devices and data provides a unique offering. Our outlook for the fourth quarter is positive and we expect an underlying EBITDA of between € 13 and € 14 million for the full year 2018.”
Financial developments In the third quarter of 2018 revenue increased by 23% to € 31.8 million from € 25.8 million in the third quarter of 2017. Organically, i.e. excluding NedMobiel and the full consolidation of InTraffic, revenue grew 3%. For the first nine months of the year revenue amounted to € 92.7 million (9M 2017: € 76.5 million). Revenue rose 5% organically year-to-date.
EBITDA increased to € 3.1 million in the third quarter from € 2.5 million in the same period of 2017, mainly as a result of improved productivity at ICT Netherlands and recent acquisitions. The EBITDA margin was 9.7% in the third quarter, in line with 2017 (9.6%).
In the first nine months of 2018 EBITDA was up 4% compared to last year. Underlying EBITDA, i.e. excluding the one-off costs of € 0.8 million in the second quarter of 2018 relating to contract termination fees at InTraffic, increased by 14% compared to the same period last year. The resulting underlying EBITDA margin came in at 9.6% year-to-date (9M 2017: 10.2%). The positive impact of higher productivity levels at ICT Netherlands was offset by substantially lower EBITDA margins at InTraffic and lower hardware sales at BMA.
Strategic themes ICT has made clear choices in terms of growth, focusing on the strategic themes of Smarter Industries, Smarter Cities and Smarter Health. Smarter Cities realised considerable growth, mainly as a result of the acquisition of NedMobiel and the remaining stake in InTraffic. Smarter Industries posted good organic revenue growth, while revenue in Smarter Health declined as a result of lower hardware sales at BMA and lower productivity in the ICT Healthcare unit.
OrangeNXT In September 2018 ICT Group acquired the remaining 49% of the shares in ICT Mobile from its management. The software solutions provided by ICT Mobile have been housed with the solutions provided by other ICT Netherlands business units in OrangeNXT (formerly ICT Mobile), to distinguish the software as a service offerings from traditional time hire and project activities.
CIS Solutions Germany CIS Solutions is a reselling agency for LogicNets and Internet of Things solutions in Germany for which ICT Group provided loans in 2016. In the third quarter of 2018 the outstanding convertible loans were converted into shares. Combined with an additional investment, ICT Group obtained 66% of the shares in CIS Solutions Germany.
Outlook Going forward ICT Group will continue to focus on growth, both organically and through acquisitions. ICT Group continues to invest in creating a strong platform to take its transformation into a total solution provider to the next level. The battle for talent continues and attracting and retaining the right people remains a key priority.
For the full year 2018 ICT Group expects underlying EBITDA to come in at between € 13 and € 14 million.
ICT Group N.V. (ICT) announces that it has acquired the remaining 49% of the shares of ICT Mobile B.V. (ICT Mobile) from management. The software solutions of ICT Mobile together with software solutions of other business units within ICT Netherlands will be consolidated into a new entity, OrangeNXT (www.orangenxt.com), to distinct software offerings from the traditional time hire and project activities within ICT.
OrangeNXT focuses on ready to use software solutions, offered as Software as a Service. The plug-and-play cloud platform that connects people, devices and data consists of three solutions. ConNXT provides asset management and predictive maintenance solutions. MobileNXT delivers real-time tracking and tracing support for field service engineers, logistics staff, parcel delivery services and auditors. DigitalNXT helps companies to accelerate their digital transformation. The solutions of OrangeNXT are aimed at the smarter cities and smarter industries segments and cover many industries, from water management to logistics and transportation.
ICT Mobile was established as a start-up in 2016 together with the current management, Huub van der Linden and Jeroen Donkers. Both have a long track record in the Enterprise Mobility market, and will stay on board to lead OrangeNXT, together with director Alliances John Koot. The purchase consideration will be paid in cash. Further financial details will not be disclosed.
Revenue increased 20% to € 60.9 million, 5% organic growth
Underlying EBITDA up 9% to € 5.8 million (H1 2017: € 5.3 million). Including one-off costs related to the contract termination fees at InTraffic (€ 0.8 million), EBITDA was € 5.1 million
Net profit came in at € 5.7 million (H1 2017: € 2.6 million), including one-off accounting gains of
€ 4.1 million related to the acquisition of InTraffic and the revaluation of ICT’s stake in GreenFlux
Acquisitions of InTraffic and NedMobiel completed
Outlook 2018: ICT expects further growth in revenue and EBITDA in the second half of 2018 compared to the first half of 2018
Jos Blejie, CEO of ICT Group N.V.: “ICT Group continues its growth momentum and achieved revenue and EBITDA growth. This growth is supported by favourable market conditions and driven by the right strategic actions, positioning the company higher in the value chain. Our recent acquisitions NedMobiel and InTraffic further strengthened our offering in Smarter Cities, allowing us to serve any client in the field of mobility and infrastructure. Having achieved leading positions in Smarter Cities and Smarter Industries, our focus will now shift to strengthening our position in Smarter Health in the coming periods. Moreover, we cautiously look for international expansion in our traditional Industrial activities. Our key challenge remains attracting and retaining professionals, while keeping salary increases in balance with tariffs.”
In January 2018 ICT completed the purchase of 100% of the shares of NedMobiel B.V., a Dutch expert consultancy company for complex infrastructures. With some 25 professionals, NedMobiel has approximately € 3 million revenues. This acquisition supports ICT’s transition from a leading software integrator to a total technology and service provider, by increasing revenue from projects as well as from consulting services.
ICT completed the acquisition of the remaining 50% of the shares of InTraffic B.V. ICT now holds 100% of the shares of InTraffic. The acquisition of InTraffic enables ICT to further expand its position in the strategic ‘Smarter Cities’ theme. Together with the recent NedMobiel acquisition and the unit Water and Infrastructure ICT is now able to fully service Water, Rail and Road infrastructures and mobility.
InTraffic’s current margin is below ICT Group’s target margin range. In cooperation and integration, the focus will be on increasing efficiency. The objective is to bring InTraffic’s margins more in line with ICT’s overall margins. InTraffic, located in Nieuwegein, designs and builds applications for Traffic Management, Infrastructure Monitoring and Travel Information. The company was founded in 2003 as a joint venture between ICT and engineering company Movares. With 150 professionals InTraffic generates annual turnover of approximately € 19 million.
Notes to the results
Performance ICT Group
In the first half year of 2018 ICT Group’s revenue came in at € 60.9 million, up 20% compared to € 50.7 million reported in H1 2017. The revenue growth showed a consistent trend. Organically, excluding the contribution of HTS, NedMobiel and three months full consolidation of InTraffic, revenue increased by 5%. This was mainly driven by the good performance of ICT Netherlands where project activities, especially in the area of Automotive and Water & Infra, increased substantially.
ICT’s growth strategy focuses on the themes Smarter Industries, Smarter Cities and Smarter Health. Within these themes, ICT delivers added value to its customers. All underlying markets benefited from good market circumstances and have shown growth in the first half of 2018. Smarter Cities nearly doubled, due to the acquisitions of NedMobiel and InTraffic’s remaining 50% stake. Organically Smarter Cities realised 17% growth. The declining revenue in Smarter Health is a result of a delay in the delivery of foetal heart monitors at BMA and lower productivity in the ICT Healthcare unit.
Personnel costs increased significantly to € 37.4 million (H1 2017: € 31.0 million), primarily because of an increase in number of employees and salary increases.
Other operating expenses also increased to € 12.1 million (H1 2017: € 8.9 million), mainly because of the recent acquisitions. The investment levels in H1 2018 increased compared to the first half of 2017. ICT continued its increased outlays in recruitment and education. The costs related to strategic initiatives and the realisation of acquisitions and partnerships amounted to € 0.2 million (H1 2017:
€ 0.1 million). Furthermore, following the acquisition of InTraffic, one-off costs of € 0.8 million were incurred as contract termination fees. Other operating expenses also included one-off costs of € 0.4 million related to the 40-year anniversary of the company and start-up costs of € 0.2 million for ICT Belgium BVBA. Underlying EBITDA for the first six months of 2018 increased to € 5.8 million, compared to € 5.3 million in the comparable period in 2017. Including the one-off costs of € 0.8 million related to the contract termination fees at InTraffic, EBITDA decreased by 5% compared to the same period last year.
The underlying EBITDA margin decreased from 10.5% in H1 2017 to 9.5% in H1 2018. This decrease in the underlying EBITDA margin is the balanced effect of a good performance at ICT Netherlands, the substantially lower EBITDA margins at InTraffic and lower results at Raster and BMA.
Performance per segment
ICT Netherlands showed a strong performance in the first half of 2018. Revenue increased 13% to
€ 44.4 million in H1 2018 from € 39.3 million in the same period last year. The increase is the result of positive market circumstances and firm recruitment efforts which led to more FTE’s and increased productivity. Organically, revenue was up approximately 9%. EBITDA increased 31% from € 3.6 million in the first half of 2017 to € 4.7 million in H1 2018. As a result of more project activities, licences and materials sales grew significantly compared with last year.
Strypes Bulgaria (“ICT Nearshoring”) reported an increase in revenue from € 4.6 million in H1 2017 to € 4.8 million in the first six months of 2018. The investments in the organisation, mainly in quality improvement are ongoing. This resulted in an operational margin at the same level as in the first half of 2017. EBITDA came in at € 0.9 million in H1 2018 (H1 2017: € 0.9 million).
InTraffic is consolidated as of 1 April 2018 and contributed revenue of € 4.4 million in the second quarter. EBITDA included one-off costs of € 0.8 million, resulting from contract termination fees and amounted to a loss of € 0.6 million.
The segment ‘Other’ recorded revenues of € 9.1 million (H1 2017: € 7.4 million). The market for Improve was positive and the company performed in line with the first six months of 2017. For Raster the challenging market conditions in the oil and gas sector continued, which negatively impacted the company’s performance. BMA performed less compared with last year mainly due to a delay in the delivery of foetal heart monitors. NedMobiel performed in line with expectations and realised margins in line with ICT Group’s target margins in the first half of 2018.
Other financial information
Amortisation and depreciation
ICT has attributed a value to and is amortising several intangible assets, including order backlog, software and customer relations of its recent acquisitions. The amortisation for InTraffic and NedMobiel in the first half of 2018 amounted to € 0.4 million. Total amortisation in the first half of 2018 amounted to € 1.8 million (H1 2017: € 1.2 million). Depreciation for the first half of 2018 amounted to
€ 0.5 million (H1 2017: € 0.5 million).
The operating profit amounted to € 2.8 million in H1 2018 (H1 2017: € 3.7 million). As a result of lower EBITDA and higher amortization, the operating margin decreased to 4.6%, compared to H1 2017 (7.2%).
Results from joint ventures and associates
InTraffic was still reported as a joint venture in the first quarter of 2018. The results in Q1 2018 were in line with Q1 2017. The result from associates amounted to a loss of € 0.2 million (H1 2017: € 0.2 million loss), mainly attributable to GreenFlux. LogicNets achieved a break-even result in the first half of the year. CIS Solutions (Germany) developed in line with plan which resulted in a small loss in the first half of 2018.
Financing expenses increased to € 0.5 million in the first six months of 2018, from € 0.3 million in the comparable period in 2017, as a result of increased financing for the recent acquisitions and a loss on the devaluation of loans to Valuemaat that filed for bankruptcy in the first half of 2018 (€ 0.2 million).
Taxes in the first half of 2018 amounted to € 0.7 million compared with € 0.7 million in the first half of 2017.
One-off accounting gains
As a result of the acquisition of the remaining 50% in InTraffic, ICT had to recognize a one-off accounting gain of € 3.5 million, related to the revaluation of the 50% stake in InTraffic already held by ICT.
Following the investment by new shareholders in GreenFlux, ICT’s stake dilutes from 24.49% to 19.57%. As a result of the revaluation of its stake in GreenFlux, ICT realized a one-off accounting gain of € 0.6 million.
The impact of step up accounting and purchase price allocation of both transactions is explained in detail in the notes to the interim financial statements.
Net profit for the first six months of 2018 increased to € 5.7 million, compared with € 2.6 million in H1 2017. An amount of € 5.6 million is attributable to the shareholders of ICT Group N.V. (H1 2017:
€ 2.5 million). This translates into earnings per share of € 0.59 (H1 2017: € 0.27). The number of outstanding ordinary shares increased during the first half year 2018 to 9,463,878 (31 December 2017: 9,411,301) due to stock dividend.
Cash flow movement
In the first half of the year, net operational cash flow amounted to € 3.7 million positive (H1 2017: € 0.5 million negative). The net cash position per 30 June 2018 was € 2.0 million positive (31 December 2017: € 6.3 million positive). This decrease was the balanced effect of the purchase price paid for acquisitions, new financing arranged for these acquisitions, the repayments of existing acquisition financing, the payment of dividend, investments in housing facilities, and normal working capital patterns.
Balance sheet structure
In the first half of 2018, shareholders’ equity increased to € 50.4 million (31 December 2017: € 47.7 million) mainly as a result of the net effect of net profit of € 5.7 million and dividend paid of € 2.4 million. The balance sheet total increased from € 81.6 million at year-end 2017 to € 95.3 million at 30 June 2018, as a result of the acquisition of InTraffic and NedMobiel. Solvency (shareholders’ equity/total assets) stood at 52.8% at the end of June 2018 (58% at year-end 2017).
At 30 June 2018, ICT Group employs 1,199 people (1,148 FTEs), around 16% higher than at year-end 2017. The acquisitions of InTraffic and NedMobiel and ongoing recruitment efforts contributed to this increase.
ICT will continue to focus on growth, organically as well as through acquisitions. With the full consolidation of InTraffic and the acquisition of NedMobiel the company increased its size in Smarter Cities. Increasing its size in Smarter Health remains a focus point for the company. ICT will continue to be disciplined and cautious in its acquisition strategy.
ICT expects its capital expenditures and research & development expenditures to increase in 2018, in line with the increased scale of the company. ICT invests in creating a strong platform to bring the transformation into a total solution provider to the next level. The battle for talent continues and attracting and retaining the right people remains to be one of our key priorities.
Based on the above, ICT expects further growth in revenue and EBITDA in the second half of 2018 compared to the first half of 2018.
ICT Group N.V. (ICT) has signed an agreement as Gold Cloud Partner with Microsoft for an extension of the current Azure Cloud Contract. In addition, ICT has proceeded to purchase Microsoft Surface Devices.
Jos Blejie, CEO ICT Group: “As Technology Solutions Provider, we utilize innovative architectures and services. A partner eco-system is linked with the solutions we have to offer. I am delighted that Microsoft and ICT have renewed and extended their relationship once again.”
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