Q1 2017 results: CONTINUED GROWTH IN REVENUE AND EBITDA

Key developments:

  • Revenue in Q1 up 21% to € 25.6 million (Q1 2016: € 21.1 million)
  • Organic revenue increase of 7%.
  • EBITDA increased by 27% to € 2.8 million (Q1 2016: € 2.2 million).
  • Integration of Nozhup accomplished

Key figures

(in € millions) Q1 2017 Q1 2016 Δ
Revenue 25.6 21.1 + 21%
EBITDA 2.8 2.2 + 27%

Jos Blejie, CEO of ICT Group N.V.: “We have started the year 2017 in line with expectations across all our business segments, resulting in revenue and profitability growth in the first quarter compared with the first quarter of 2016. During the first three months we focused on the completion of the integration of Nozhup to be able to immediately reap the benefits of this acquisition. We continue to be committed to the execution of the company strategy, in which gaining market share and investments in new technologies and business solutions are key. Given the current positive economic circumstances we reiterate that we expect a further growth in both revenue and profitability for the full year 2017 versus 2016.”

Financial developments

Revenue in the first quarter of 2017 increased to € 25.6 million compared to € 21.1 million in the first quarter of 2016. Organically, excluding Nozhup and 1 month BMA (consolidated as from February 2016), revenue grew 7%. Due to the acquisition of Nozhup the segment ICT Netherlands increased substantially.

Overall the markets ICT operates in continued their positive development this first quarter of 2017. In Q1 2017 ICT made further progress in the execution of its strategy with the completion of the integration of Nozhup into the ICT Netherlands organisation. All ICT subsidiaries recorded positive results. EBITDA came in at € 2.8 million in the first quarter, compared with € 2.2 million in the same period of 2016.

Strategic themes

ICT has made clear choices in terms of growth. ICT focuses on the themes Smarter Industries, Smarter Cities and Smarter Health. Within these themes ICT delivers the highest added value to its customers. As Nozhup’s activities are focussed on Smarter Industries and Smarter Cities, in these areas more growth was realised this first quarter of 2017 than in Smarter Health.

Revenue split per theme (in € millions) Q1 2017 Q1 2016 Δ
Smarter Industries 15.4 13.2 + 17%
Smarter Cities 6.1 4.4 + 39%
Smarter Health 2.5 2.3 + 9%
Other 1.5 1.3 + 15%
Total revenue 25.6 21.1 + 21%

ICT Group completes integration of Nozhup

In September 2016 ICT Group acquired Nozhup, thereby gaining significant scale in the industrial automation market. Nozhup is consolidated for the full quarter in the segment ICT Netherlands. As part of the integration process of Nozhup into ICT a legal merger took effect at the end of March 2017.

Outlook

ICT’s management reiterates the outlook given at the annual results announcement in March. ICT will continue to focus on the further leveraging of the strategic platform it has successfully built over the past years, aimed at organic growth combined with acquisitions. The goal of the acquisition strategy is to achieve strong positions in each of ICT’s three main themes. Overall, the markets in which ICT is active are developing positively from a demand perspective, although some markets do remain challenging. ICT expects its capital expenditures and research & development expenditures for 2017 to grow in line with the increased scale of the company. The tight labour market remains a potential bottleneck, and attracting and retaining the right people continues to be one of our key priorities.

Based on the above, ICT expects further growth in revenue and EBITDA in 2017 compared to 2016.

Press release: Full Year Results 2016 ICT GROUP NV

ICT REPORTS REVENUE INCREASE OF 25%, WITH A 44% HIGHER EBITDA

Accelerated execution of strategy drives strong results

Highlights FY 2016

  • Revenue up 25% to € 89.7 million, 8% organic growth
  • EBITDA increased 44% to € 10.3 million, organically EBITDA was up 5%
  • The recent acquisitions contributed considerably to the growth in revenue and results
  • The net result came in at € 5.0 million, a 41% increase compared to 2015
  • Proposed dividend of € 0.33 per share for the year 2016

Highlights Q4 2016

  • Revenue up 32% to € 26.6 million, EBITDA increased 74% to € 4.0 million
  • Organically revenue and EBITDA growth was in line with the full year growth; consolidation of Nozhup and BMA significantly contributed to the group’s Q4 results

Outlook

  • ICT expects a further growth in revenue and EBITDA for 2017 compared to 2016

Key figures

Jos Blejie, CEO of ICT Group N.V.: “2016 has been a good year in which we have made many steps in the execution of our strategy. We continued with a clear focus on what we try to accomplish every day; making the world a bit smarter with our technologies and skills. We further shaped the company into an even more customer centric organisation, which translated into healthy organic growth of 8%. With the acquisitions of the past year, we have further strengthened our position in our three main themes; Smarter Industries, Smarter Cities and Smarter Health. In 2016 we continued to challenge innovation and entrepreneurship. With success. A range of new business development initiatives were originated. We will continue to invest substantially in new technologies and the development of new solutions. We defined our strategy in 2015, delivered on an accelerated execution in 2016, and are excited to continue our successful strategy and further build on our strong foundation in 2017.”

Strategy update

Progress in 2016
In 2016, ICT made significant further progress in the execution of its strategic road map. The company completed the transition to a more customer centric business unit structure. ICT combined its strong organic development with growth through acquisitions. In the beginning of 2016 ICT completed the purchase of 51% of the shares of BMA, a leading Dutch Healthcare software company active in the domain of obstetrics. This transaction further enhanced ICT’s position in the field of Smarter Health.

At the end of the first half year of 2016, ICT acquired the water related activities of Dynniq and in September ICT acquired Nozhup, active in industrial process automation in industry and public infrastructure. With these acquisitions, ICT is well on track to deliver on its ambition to become one of the largest Industrial Technology players in the Netherlands, serving the global themes Smarter Industries and Smarter Cities.

The Polish operations had not reached the necessary scale to continue to make the operation viable. Therefore the ICT Poland operations were closed with effect from 31 May 2016. ICT’s focus on a single nearshoring entity supported the considerable growth of Strypes Bulgaria.

Initiatives to spark entrepreneurship in the organization have led to multiple initiatives originated at all levels and business units in the organization. A number of these have the potential to grow to viable business propositions, such as ICT Mobile, which bundles the latest mobile technologies in the Mobile Enterprise App Platform. ICT’s focus on new business development is also reflected by the commitment to invest 1.5% of revenue in R&D. The investments, geared towards all kind of new technologies in new product market combinations, are vital to the company’s future success.

The change of the statutory name from ICT Automatisering N.V. to ICT Group N.V., was adopted by the AGM in May 2016. The new name better reflects the clear focus and the international character of the company.

Focus in 2017
ICT aims to obtain a leading position in each of the three defined themes. To support the transition from a leading software integrator to a total technology and service provider, ICT furthermore strives to increase its higher value added revenue from projects as well as from services and licences. Moreover, ICT has the ambition to serve its international customers, also outside the Netherlands. An ambition that will gradually be pursued in its growth strategy.

Nozhup will be fully, legally and operationally, integrated within the ICT Netherlands organisation. The integration is expected to be completed by the end of 2017. Raster and BMA will continue to operate under their own label, like Improve, of course in close collaboration with the group. Integration of processes and uniform systems will stimulate this collaboration and will increase efficiency. In terms of Research & Development and technology, ICT continues its path towards the next professionalization level, focused on digital transformation.

Furthermore ICT is and will continue to invest in ‘Wellbeing at work’. This includes intellectually challenging assignments, better work places and the simplification of administrative tasks. As the battle for talent continues, attracting and retaining our people remains one of our key priorities.

Notes to the results

Revenue
In 2016, ICT Group’s revenue came in at € 89.7 million, 25% higher than the € 71.8 million reported in 2015. Organically, revenue increased by 8% and 17% of growth was driven by the recent acquisitions Raster, BMA and Nozhup. Organic growth was driven by the increase in the number of FTEs, higher average rates and improvements in a number of markets in which ICT is active.

Revenue at ICT Netherlands increased 13% to € 69.0 million in 2016, from € 61.0 million in the previous year. This includes four months of revenue from Nozhup, as this activity was consolidated in ICT Netherlands from September onwards. Organically, ICT Netherlands recorded 7% higher revenues. Nozhup is meeting expectations and is making a clear contribution to ICT Netherlands’ profitability. In 2016, ICT Netherlands managed to realise 2% higher average rates. Productivity levels and licences and materials sales were more or less unchanged compared to the previous year.

The conditions on the Dutch industrial market were favourable last year, which was reflected in the solid performance of the ICT business units active in this market. The public infrastructure sector saw a lot of activity in 2016 and ICT was able to benefit from this and record strong results. ICT realised healthy growth in the Healthcare segment and sees plenty of opportunities for continued growth in this market. With the recent acquisition of BMA, ICT has clearly strengthened its position in this market.

Strypes Bulgaria (“ICT Nearshoring”) saw its revenues increase 33% to € 7.6 million in 2016, from € 5.7 million in 2015. Strypes has more than doubled its employee numbers since ICT acquired the company in early 2015, and has broadened its customer base by gaining a number of new clients. To be able to manage this increase in size and to ensure continued and sustainable strong growth, in 2016 Strypes invested in the professionalization of the organization, including quality controls. These investments, which will continue in 2017, are already paying off, as Strypes was able to increase its profitability substantially in the second half of the year compared to the first half. This resulted in an EBITDA increase of 5% to € 1.7 million for the full year 2016.

The segment ‘Other’ recorded revenues of € 14.3 million in 2016 (2015: € 6.2 million).
Raster is delivering on target, despite the continuing difficult market conditions in the oil & gas industry in 2016. Their niche position, high quality standards and direct client relationships make them resilient in these challenging market circumstances.
Improve performed well, in line with last year. In 2015, Improve achieved a substantial improvement in performance and the company was able to maintain its results at this level in 2016.
After a challenging first half of the year, in which BMA performed below expectations as a result of postponed projects, the second half of 2016 saw a recovery in results. The Dutch market is a declining market, as the number of hospitals is declining due to a number of mergers. However, BMA developed a new generation of software to facilitate international expansion, as this new generation software is easier to connect to different protocols in different countries. BMA is in a strong position for this international expansion.
ICT Poland was closed down in the first half of 2016. On balance, the five months of revenue from ICT Poland was offset by the costs of closing down the operation.

Costs/ personnel expenses
In 2016, personnel costs increased by 20% to € 52.0 million (2015: € 43.5 million), as a result of the marked increase in the number of employees and a modest increase in salaries. Other operating expenses increased by 14%, mainly as a result of the recent acquisitions. In 2016, ICT invested in office accommodation, marketing & sales and its financial reporting & human resources processes, with investment levels similar to those in 2015. The HR investments focused primarily on improving the HR processes at the companies ICT has acquired over the past two years. In addition, ICT invested more heavily in recruitment last year. The costs related to strategic initiatives and the realisation of acquisitions and partnerships amounted to € 0.5 million (2015: € 0.6 million).

EBITDA
EBITDA for the full year 2016 increased by 44% to € 10.3 million, compared to € 7.1 million in 2015. Organically, EBITDA was up 5%, with ICT Netherlands and Strypes Bulgaria both recording higher EBITDA compared to 2015. The overall EBITDA margin increased to 11.5% in 2016 from 9.9% in 2015.

Amortisation and depreciation
ICT has attributed a value to, and is amortising a number of intangible assets, including order backlog, software and customer relations of its recent acquisitions. Amortisation amounted to € 2.3 million in 2016, comprising € 0.7 million related to Strypes Bulgaria, € 0.6 million to Raster and € 0.6 million to BMA. For Nozhup, the annual amortisation will be € 0.4 million. Depreciation amounted to € 0.6 million in 2016 (2015: € 0.5 million).

Operating profit amounted to € 7.4 million in 2016 (2015: € 5.3 million). The operating margin was 8.2%, compared to 7.4% in 2015.

The results from joint ventures and associates
InTraffic was more or less in line with last year and contributed € 0.2 million to the results.

LogicNets performance improved significantly in 2016, as revenues from the platform doubled and the losses were halved in 2016 compared to 2015. Last year, we saw the completion of the development of the platform into a standardised solution, which has improved the marketability of the software platform. LogicNets won a number of reputable new customers. Despite the improvements on all key parameters, LogicNets is still lagging its original ambitious plans. ICT therefore decided to take an impairment on its stake in LogicNets in the fourth quarter of 2016. The downward valuation of LogicNets, including our share in the loss, amounted € 0.6 million. The book value of LogicNets per year-end 2016 amounted to € 0.5 million.

In 2016, ICT issued loans to start-up company CIS Solutions, a selling agency (for LogicNets and Internet of things solutions) in Germany. As the company is not yet profitable, the loans have been devalued by € 0.4 million in accordance with IFRS requirements. The book value of the loans was € 0.2 million as per year end 2016.

The total result from joint ventures and associates amounted to a loss of € 0.8 million (2015: € 0.3 million loss).

Interest expenses increased to € 0.5 million in 2016, from € 0.3 million in 2015, as a result of increased financing for the recent acquisitions, as well as the accrued interest on the deferred acquisition consideration for the remaining 49% of BMA. In July 2016, ICT extended its acquisition credit facility with Rabobank to € 11 million from € 6 million. Additionally, ICT increased its working capital credit facility to € 10 million from € 6 million. The conditions of the facilities remained unchanged.

Taxes
In 2016, corporate income taxes related to the continuing business activities amounted to € 1.7 million, compared with € 1.1 million in 2015. ICT finalised the liquidation of ICT Germany in 2016. In 2014, ICT recognised a deferred tax liability related to the liquidation of ICT Germany. Given that the German activities were officially liquidated in Q4 2016, and the liability no longer exists, this liability has now been released. As a result, taxes from discontinued operations for 2016 amounted to a credit of € 0.8 million.

Net profit for the full year 2016 amounted to € 5.0 million, compared with € 3.6 million in 2015, an increase of 41%. This translates into earnings per share of € 0.56 for 2016 (2015: € 0.41). The number of outstanding ordinary shares had increased to 9,288,309 at year-end 2016 (31 December 2015: 8,747,544) due to shares issued as purchase consideration on acquisitions in 2016.

Cash flow movement

The group cash (and cash equivalents) position amounted to € 5.6 million at year-end 2016, compared to € 6.7 million at year-end 2015. The cash flow from operating activities amounted to € 5.1 million positive in 2016 (2015: € 6.1 million positive). The higher cash income from operating activities was more than offset by the higher income tax paid. Cash flow from investment activities amounted to € 8.4 million negative, compared to € 11.8 million negative cash flow in 2015. The largest impact on the cash flow from investment activities in 2016 came from the net investments less cash acquired related to the acquisition of BMA and Nozhup (€ 6.3 million) and investments in office accommodation (€ 1.1 million).
Cash flow from financing activities amounted to € 2.2 million positive (2015: € 1.0 million positive), as a result of the net effect of dividend paid (€ 2.3 million), the payment of the earn-out obligation related to the acquisition of Strypes Bulgaria (€ 1.6 million) and the use of acquisition financing (€ 6.2 million cash inflow) related to the acquisition of BMA and Nozhup.
The net cash flow amounted to € 1.1 million negative (2015: € 4.7 million negative).

Balance sheet structure

As a result of the net effect of the payment of dividend of € 2.3 million, the issuance of € 5.4 million in new shares related to the acquisition of BMA and Nozhup, and net profit of € 5.0 million, shareholders’ equity increased to € 43.7 million in 2016 (2015: € 35.5 million). The balance sheet total has increased to € 79.2 million at year-end 2016, from € 58.2 million at year-end 2015, as a result of the acquisitions made last year. Solvency (shareholders’ equity/total assets) stood at 55% at year-end 2016, compared with 61% at year-end 2015, which represents a very sound financial basis.

Personnel

The total number of employees stood at 919 FTE’s at year-end 2016, an increase of 20%. This increase was due to both acquisitions and increased recruitment efforts.

Dividend proposal

ICT proposes a dividend of € 0.33 per share for the 2016 financial year (2015: € 0.24). The dividend payment is subject to the approval of the Annual General Meeting of Shareholders (AGM) to be held on 10 May 2017. For the calculation of the proposed dividend, the realised net profit is adjusted for the non-cash amortisation amounts and the downward valuation of LogicNets. This results in an adjusted net profit for the full year 2016 of € 7.7 million. The proposed dividend represents of € 0.33 per share represents a pay-out ratio of 40% of the adjusted net profit. ICT will offer an option for payment in cash or in shares.

ICT will determine 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 29 May 2017. The dividend will be payable, in cash or in shares, on 7 June 2017.

Outlook

In 2017, ICT will continue to focus on the further leveraging of the strategic platform it has successfully built over the past years, aimed at organic growth combined with acquisitions. The goal of the acquisition strategy is to achieve strong positions in each of ICT’s three main themes. Overall, the markets in which ICT is active are developing positively from a demand perspective, although some markets do remain challenging. ICT expects its capital expenditures and research & development expenditures for 2017 to grow in line with the increased scale of the company. The tight labour market remains a potential bottleneck, and attracting and retaining the right people continues to be one of our key priorities.

Based on the above, ICT expects further growth in revenue and EBITDA in 2017 compared to 2016.

Cautionary statement
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.

2016 financial information
The 2016 financial information included in the Extracts from Consolidated Financial Statements attached to this press release is derived from the Annual Report 2016, 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 10 May 2017. In accordance with section 393, title 9, book 2 of the Netherlands Civil Code, Deloitte Accountants B.V. has issued an unqualified auditor’s opinion on the Annual Report.

Annexes: Extracts from Consolidated Financial Statements 2016
– Consolidated statement of total comprehensive income
– Consolidated balance sheet
– Consolidated statement of changes in equity
– Consolidated statement of cash flows
– Other financial information
– Segment information

Click here to download the Annex of the Annual Results of 2016

NS (Dutch Railways) selects ICT Group for Manufacturing Execution System at NedTrain

NS (Dutch Railways) recently selected ICT Group to deliver a Manufacturing Execution System (MES) at NedTrain in Haarlem. NedTrain, a subsidiary of NS, overhauls and maintains train bodies at its Refurbishment & Overhaul workshop in Haarlem.

NedTrain is modernizing the process of overhauling wheelsets by building a new and sustainable production workshop, a new production line, a new production machine park, and by applying an IT system (MES) for real-time production control of all machines and transport systems. All data from the overhaul process is stored and managed in MES in order to comply with the increasingly stringent legislation with regard to rail safety.
ICT Group is developing the MES using the AspenTech AspenOne software. The solution will consist of hardware and software, as well as an application that will run on mobile barcode scanners and that will be used by the production staff. A service contract for the duration of several years is part of the project.

The introduction of MES at NedTrain must result in an efficient, ‘lean’ production process (Manufacturing Excellence), as well as quality improvements. The new production facility is scheduled for completion in the middle of 2017. The new workshop will have an annual overhaul capacity of 3,000 wheelsets. Following professional overhaul, the wheels will have a new lifespan of approx. 1.2 million kilometers.

ICT Group N.V.: Q3 results show continued trend in revenue growth and improvement of profitability

Key developments:

Q3 2016

  • Revenue in Q3 up 23% at € 21.0 million (Q3 2015: € 17.1 million), organic revenue growth 5%.
  • EBITDA in Q3 amounted to € 2.1 million (Q3 2015: € 1.7 million).
  • Acquisition of Nozhup completed on 6 September 2016.

Year to date 2016

  • In the first nine months of 2016 revenue was up 22% at € 63.1 million (YTD 2015: € 51.7 million), organic revenue growth 7%.
  • EBITDA in the first nine months amounted to € 6.3 million (YTD 2015: € 4.8 million), an increase of 30%.
  • ICT confirms its expectation of an improvement in EBITDA between 25%-35% for the full year 2016 compared to 2015.

 Key figures

(in € millions) Q3 2016 Q3 2015 Δ YTD 2016 YTD 2015 Δ
Revenue 21.0 17.1 23 % 63.1 51.7 22 %
EBITDA 2.1 1.7 27 % 6.3 4.8 30 %

Jos Blejie, CEO of ICT Group N.V.: “The positive trend of the first half of 2016 continued in the third quarter. Our revenue development is strong, both organically and through our successful acquisition strategy, with all subsidiaries contributing to the growth. Our latest acquisition, Nozhup, strengthens our position in Industrial Automation and is consolidated from 1 September onwards. Our profitability continues to improve. Furthermore, we have won a number of important contracts in the past months. Based on these developments we confirm our expectation of an improvement in EBITDA between 25 and 35% for the full year 2016.”

Financial developments
Revenue in the third quarter of 2016 increased to € 21.0 million compared to € 17.1 million in the third quarter of 2015. Revenue grew 5% organically in the, due to the holiday season traditionally weaker third quarter. All ICT subsidiaries contributed to this growth. Revenue over the first nine months of the year amounted to € 63.1 million compared to € 51.7 million last year, supported by an organic growth of 7%.

Within ICT Netherlands, productivity levels in the third quarter have been comparable to the same quarter last year, but ICT increased average rates and achieved better project results, which led to an increase in revenue. Revenue of Strypes Bulgaria increased compared to Q3 last year. Also the other recent acquisitions performed well, in line with expectations. Nozhup was included in the results for the first time, for one month.

EBITDA amounted to € 2.1 million in the third quarter, compared to € 1.7 million in the same period of 2015. In the first nine months of 2016 EBITDA improved to € 6.3 million (first nine months 2015: € 4.8 million). The recent acquisitions, increased number of staff, slightly higher average rates and good project results, all contributed to this improvement. At the same time the double digit growth in Bulgaria was supported by the continued investments in the quality controls and professionalization of the organisation.

Acquisition of Nozhup
ICT has completed the purchase of 100% of the shares of Nozhup as of 6 September 2016. With this acquisition ICT gains significant scale in the industrial automation market. At the same time, it considerably widens ICT’s customer base and scope of activities in this market. The purchase consideration comprised a cash payment and an amount in ICT shares. The share capital was diluted with 443,058 shares as from 9 September 2016. On a full year basis, the acquisition will substantially enhance the earnings per share.

Extended credit facility
In anticipation of the acquisition of Nozhup, ICT has extended its acquisition credit facility with Rabobank in July 2016 from € 6 million to € 11 million. Additionally, ICT has increased its working capital credit facility from € 6 million to € 10 million. The conditions of the facilities remained unchanged.

Outlook
ICT continues to aim for organic growth in combination with growth through acquisitions. ICT will focus on further leveraging its recent acquisitions. Given the strategic progress made and its acquisitions, ICT confirms its expectation for the full year 2016 of an improvement in EBITDA between 25%-35% compared to the full year 2015.

ICT Group is selected by Danone Nutricia to develop manufacturing software for new smart factory

ICT Group was selected by leading global baby food producer Danone Nutricia to develop the complete manufacturing execution system for a new plant in Cuijk, The Netherlands. The facility is Danone’s largest investment in Europe and will double the Dutch production capacity for its international early life nutrition brands. ICT will be responsible for the detailed engineering, delivery, installation and implementation of the software. Resulting in a 24/7 operational smart factory that will start its production in late 2017.

Danone Nutricia chose ICT Group after completing a similar and successful project at the baby food production plant of Danone Nutricia in Fulda, Germany. Bas Hazewinkel, Business Development Manager Food / Feed and Beverage at ICT Group: ‘This means that the software ICT will provide in Cuijk is based on a proven and fully operational Wonderware Manufacturing Execution System (MES) – the linking pin between customer demand and the machines delivering the right product. With ICT’s solution, Danone Nutricia will be able to build another state-of-the-art factory, characterized by highly intelligent production processes, connected machinery, integrated information systems, traceability of products and continuous performance analysis.’

For more in depth information, please watch our presentation about the MES solution ICT Group implemented at Danone’s plant in Fulda, Germany. This presentation was held at the Wonderware Benelux Knowledge Exchange 2016.

Press Release: half year results 2016 ICT Group

STRONG FIRST HALF YEAR RESULTS
On track to become a leading total technology solutions provider

Highlights H1 2016

  • Revenue up 22% to € 42.1 million, 8% organic growth
  • EBITDA increased 32% to € 4.2 million
  • Net profit at € 2.1 million, an increase of 44% (H1 2015: € 1.5 million)
  • Acquisition of BMA in the field of Smarter Health completed
  • Intended acquisition of Nozhup in the field of Smarter Industries as announced on 12 July 2016
  • Barring unforeseen circumstances, ICT expects an improvement in EBITDA between 25%-35% for the full year 2016 compared to 2015.

Key figures

Key figures
(in millions of €) H1 2016 H1 2015 Change
Revenue 42.1 34.6 22%
Revenue Added Value 37.3 31.8 18%
EBITDA 4.2 3.2 32%
Amortisation / depreciation 1.2 1.1 8%
Operating result 3.0 2.1 44%
Net profit 2.1 1.5 44%
(in €)
Earnings per share (*) 0.24 0.17 41%

(*) Based on the average number of outstanding ordinary shares.

Jos Blejie, CEO of ICT Group N.V.: “We are pleased with the developments of this first half year. Both in terms of results as well as in the further roll out of our strategy. We realised strong revenue and EBITDA growth, to which all our key activities contributed. We closed the acquisition of BMA, thereby strengthening our position in Smarter Health. We announced the expansion of our water infrastructure services through the acquisition of the Dynniq activities. And finally, early July, we announced the intended acquisition of Nozhup, with which we will gain significant scale in the Industrial Automation markets. These are all important steps in our road map to becoming a leading total technology solutions provider. In March we decided to close our Polish operations and focus our nearshoring business on Strypes in Bulgaria, which is further professionalising its organisation to enable sustainable growth. We are confident about the second half of the year and therefore expect an improvement in EBITDA between 25-35% for the full year 2016.”

Strategy update
In the first half of 2016 ICT made important steps in the execution of its strategic road map. The success of the earlier strategic choices is reflected in the strong financial results realised in the first half of the year. In 2015 ICT changed its organisational structure from verticals to business units, to spark the entrepreneurial spirit within ICT. This resulted in the first half of 2016 in a profitable autonomous growth of 8%.

In February 2016 ICT completed the purchase of 51% of the shares of BMA (Buro Medische Automatisering), a leading Dutch Healthcare software company active in obstetrics. The remaining 49% will be acquired after a period of three years. This transaction also marks an important step in ICT’s growth strategy and further enhances ICT’s position in the field of Smarter Health.

The acquisition of Raster in September 2015 marked an important step in strengthening ICT’s position in the Oil and Gas market. In June 2016, ICT acquired the water related services activities of Dynniq, which strengthened ICT’s expertise in Smarter Cities. In July 2016, we announced the proposed acquisition of Nozhup, active in process automation in the industry and infrastructure markets. With these acquisitions, ICT is well on track to deliver on its ambition to become one of the largest Industrial Automation players in the Netherlands, addressing the global themes Smarter Industries and Smarter Cities.

Furthermore at the end of March 2016 ICT announced the closure of the ICT Poland operation with effect from 31 May 2016. As the Polish operations had not reached the necessary scale to continue to make the operation viable, ICT decided to focus its nearshoring strategy fully on Strypes Bulgaria.

At the beginning of July 2016 a new legal entity (start-up), ICT Mobile B.V., was incorporated, in which ICT holds 51% of the shares (49% is owned by the two founders). With this new activity ICT is responding to the trend of enterprises embracing mobile processes and adopting a mobile strategy at high speed.

At the AGM held on 11 May 2016 the statutory name change of ICT Automatisering N.V. to ICT Group N.V., was adopted. The new name better reflects the international character of the company and also enables the company to easier add new labels to the group.

Notes to the results
In the first six months of 2016 ICT Group’s revenue came in at € 42.1 million, up 22% compared to € 34.6 million reported in H1 2015. Organically, revenue increased by 8%. This was driven by increased number of staff, slightly higher average rates and good project results, whilst overall productivity was slightly lower.

Revenue at ICT Netherlands increased 7% to € 32.3 million in H1 2016 from € 30.1 million in the same period last year. Productivity levels were more or less at the same levels as last year, but ICT was able to increase the average rate and the company realised good project results. Licences and materials sales were below expectations. Market circumstances in the Industrial Automation market remained challenging. Other markets, including High Tech, Machine & Systems, Automotive, Healthcare and Logistics, showed a positive development. ICT sees ample opportunities in Healthcare that realised good growth percentages.

Strypes Bulgaria (“ICT Nearshoring” or “Strypes”) saw a 26% increase in revenue from € 2.5 million in H1 2015 to € 3.2 million in the first six months of 2016. As Strypes further broadened its client base, it continued to decrease the firm’s dependency on its largest client. In the past six months Strypes invested efforts both on new clients as well as on the internal processes, with the objective to further professionalise the organisation and to ensure that Strypes Bulgaria will be able to continue its strong growth path. Given these outlays we anticipate a temporisation of the results.

Raster contributed revenues of € 2.9 million in the first six months of 2016. Despite the still challenging Oil and Gas market, Raster showed a good performance, in line with expectations.

The segment ‘other’ (Improve, BMA and ICT Poland) recorded revenues of € 4.2 million. The market for training is favourable as is reflected in the revenue recorded by Improve, which slightly improved over last year. BMA performed below expectations as a result of postponement of projects, but expects to improve in the second half of the year and the new product developments are running on schedule. As a result of the closure of the Polish operations as per 31 May 2016, revenue of ICT Poland was slightly down compared to H1 2015.

Personnel costs increased overall to € 24.9 million (H1 2015: € 21.6 million), as a result of both salary increases as well as the increase in number of employees. Other operating expenses also increased, mainly as a result of the most recent acquisitions. The costs related to strategic initiatives and the realisation of acquisitions and partnerships amounted to € 0.3 million (H1 2015: € 0.3 million).

EBITDA for the first six months of 2016 increased by 32% to € 4.2 million, compared to € 3.2 million in the comparable period in 2015. Organically (excluding BMA and Raster) EBITDA was in line with last year. Profitability at ICT Netherlands increased, but this was off-set by the increased investments in Strypes Bulgaria and the costs related to the closure of the Polish operations. The EBITDA margin increased from 9.2% in H1 2015 to 9.9% in H1 2016.

Based on Purchase Price Allocation, ICT has attributed a value to and is amortising a number of intangible assets, including order backlog, software and customer relations of its recent acquisitions. Amortisation amounted to € 0.9 in the first half of 2016, comprising € 0.3 million related to Strypes Bulgaria, € 0.3 million related to Raster and € 0.3 million related to BMA. Depreciation for the first half of 2016 amounted to € 0.2 million (H1 2015: € 0.2 million).

The operating profit amounted to € 3.0 million in H1 2016 (H1 2015: € 2.1 million).

The results from joint venture InTraffic increased compared to last year and contributed € 0.1 million to the results. The result from associates improved to € 0.1 million negative (H1 2015 € 0.2 million negative), mainly due to a better performance of LogicNets Inc.

Taxes in the first half of 2016 amounted to € 0.7 million compared with € 0.4 million in the first half of 2015.

Net profit for the first six months of 2016 amounted to € 2.1 million, compared with € 1.5 million in H1 2015. This translates into earnings per share of € 0.24 for H1 2016. The number of outstanding ordinary shares increased during the first half year 2016 to 8,845,251 (31 December 2015: 8,747,544).

Cash flow movement
As usual for the first half of the year, net operational cash flow amounted to € 0.3 million negative in H1 2016 (H1 2015: € 0.8 million negative). The cash position per 30 June 2016 decreased to € 1.2 million (31 December 2015: € 6.7 million). This was mainly due to investments in housing facilities, the payment of the earn out obligation related to the acquisition of Strypes Bulgaria, the purchase price cash consideration of the acquisition of BMA, and the payment of dividend. The acquisition of BMA was partly financed from the acquisition facility.

Balance sheet structure
In the first half of 2016, shareholders’ equity increased to € 36.3 million (31 December 2015: € 35.5 million) as a result of the net effect of dividend paid of € 2.1 million, issuance of new shares of € 0.8 million, related to the acquisition of BMA and net profit of € 2.1 million. The balance sheet total increased from € 58.2 million at year-end 2015 to € 70.3 million at 30 June 2016, as a result of the acquisitions in the last half year. Solvency (shareholders’ equity/total assets) represents a sound financial basis and stood at 52% at the end of June 2016 (61% at year-end 2015).

Personnel
The total number of employees at 30 June 2016 was around 4% higher than at year-end 2015. This was due to both acquisitions and as well as increased recruitment efforts.

Significant events after the balance sheet date
On 11 July 2016, ICT signed a letter of intent to acquire Nozhup. With this intended acquisition ICT gains significant scale in the industrial automation market. At the same time it considerably widens ICT’s customer base in this market. Nozhup will immediately contribute to the profitability of ICT.

In anticipation of the intended acquisition of Nozhup, ICT has extended its acquisition credit facility with Rabobank in July 2016 from € 6 to € 11 million. Additionally ICT has increased its working capital credit facility from € 6 million to € 10 million. The conditions of the facilities remained unchanged.

Composition of the Supervisory Board
At the General Meeting of Shareholders held on 11 May 2016, Mr. Luthra was reappointed for a second four-year term as member of the Supervisory Board.

Outlook
ICT continues to aim for organic growth in combination with growth through acquisitions. ICT will focus on further leveraging its recent acquisitions. Given the strategic progress made and its acquisitions, ICT expects for the full year 2016 an improvement in EBITDA between 25%-35% compared to the full year 2015.

Condensed consolidated interim financial statements 30 June 2016

Strong first quarter for ICT – Revenue and operating result improved

Key developments:

  • Revenue in Q1 up 23% at € 21.1 million (Q1 2015: € 17.1 million)
  • Organically revenue increased by 10%.
  • EBITDA from continuing operations increased to € 2.2 million (Q1 2015: € 1.4 million).
  • All subsidiaries showed profitable growth, Raster and BMA performed in line with expectations.
  • In March ICT announced the closure of the Polish activities.

Jos Blejie, CEO of ICT Automatisering N.V.: “We have started the year 2016 with confidence. We are pleased with the profitable growth shown at all our subsidiaries. We are committed to further execute the company strategy. In 2016, we will further leverage the acquisition of Raster and BMA. We will continue to implement a customer-centric approach with clear focus on the targeted markets addressing the different themes in each market. We reiterate that we expect this to lead to a further improvement in both revenue and profitability.”

Financial developments
Revenue in the first quarter of 2016 increased to € 21.1 million compared to € 17.1 million in the first quarter of 2015. Organically, excluding Raster and BMA, revenue grew 10%. All ICT subsidiaries contributed to this increase in revenue. Where in Q1 2015 ICT Netherlands saw a slowdown in demand and postponements of projects in the industrial automation, the improvement seen in the second half of 2015 continued in the first quarter of 2016. Strypes as well as Improve Quality Services performed well and the acquisitions, Raster and BMA showed a favourable development, in line with expectations.

EBITDA from continuing operations came in at € 2.2 million in the first quarter, compared with € 1.4 million in the same period of 2015. All subsidiaries contributed to this improvement.

Closure of Polish activities
On 22 March 2016, ICT announced the closure of its ICT Poland operation with effect from 31 May 2016. Although ICT Poland realised an improvement in the past year, the Polish activities had not reached the necessary scale to continue to make the operation viable. Therefore, in a consolidating market, ICT decided to focus its nearshoring strategy fully on Strypes Bulgaria which has already achieved healthy growth and has the clear potential to continue to expand its customer base.

Outlook
ICT’s management reiterates the outlook given at the annual results announcement in March. ICT’s primary focus continues to be the execution of its strategy. ICT will further leverage the acquisitions of Strypes, Raster and BMA. ICT continues to aim for organic growth in combination with growth through acquisitions. Given the strategic progress made and its acquisitions, ICT expects a further improvement in revenue and EBITDA in 2016 compared with 2015, despite continued challenging conditions in various geographical markets and industries.

Press release: Annual Results 2015

ICT REPORTS REVENUE GROWTH AND SUBSTANTIAL INCREASE IN EBITDA

ACQUISITIONS AND NEW ORGANISATIONAL STRUCTURE MARK IMPORTANT STEPS IN STRATEGY EXECUTION

Highlights 2015

  • Revenue up 14% to € 71.8 million, 4% organic growth
  • EBITDA came in at € 7.1 million, an increase of 53%
  • Strypes Bulgaria contributed significantly; the collaboration with ICT Netherlands resulted in a broadening of the client base and healthy growth
  • Net result came in at € 3.6 million (FY 2014: € 5.0 million, incl. € 5.6 million deferred tax benefit)
  • The net operational cash flow amounted to € 6.1 million positive in 2015 (2014: € 3.8 million positive)
  • Proposed dividend of € 0.24 per share for the year 2015
  • For 2016, ICT expects further growth of revenue and EBITDA compared with 2015

Key figures

Screen Shot 2016-03-03 at 07.51.52

Jos Blejie, CEO of ICT Automatisering N.V.: “The year 2015 has been a dynamic year for ICT, in which we have made good progress with the implementation of our strategy. The organizational model has been further aligned with ICT’s business approach; customer-centric with a clear focus on the targeted markets. The acquisitions of Strypes and Raster are, in their own way, important steps on our strategic roadmap to becoming a total technology & service provider. Although market circumstances in The Netherlands did improve in 2015 compared to 2014, the market remained challenging. Nevertheless we have been able to realize healthy top line growth, both organically as well as through acquisitions. 2 Furthermore our profitability showed a marked improvement to which all our activities contributed. In 2016, we will continue to execute the defined strategy and further leverage our recent acquisitions. We are confident that this will lead to a further improvement in both revenue and profitability.”

Strategy update

Progress in 2015
To support clients in the most optimal way, ICT aims to get as close to them as possible by fully understanding the way they operate, their environment and their needs. ICT therefore aligned its organizational structure with its business approach. The change from verticals into business units does not only allow working closer to the markets and customers, but has also rooted ownership and innovation deeper in the business units. The acquisitions done in 2015 all contributed to the strategic goals. From the near shoring capabilities of Strypes to the products from systems integrator Raster.

Focus in 2016
ICT continuously works on the execution of its strategic road map. The transition to the business unit structure is expected to fully mature in 2016. Attracting and retaining people remains a top priority, for which providing technological challenge and an entrepreneurial environment is key. Furthermore, ICT will continue to further leverage the recent acquisitions, including a more effective utilisation of the near-shoring capacity of Strypes, plus the state-of-the-art LogicNets platform. Raster will team up with the ICT industrial automation business to open up new markets. In addition the acquisition of BMA in February 2016 further enhances ICT’s position in the field of Smarter Health.

Notes to the results

As of 2015, in line with IFRS requirements and the new reporting and organizational structure, ICT Netherlands (ICT NL) and ICT Nearshoring (Strypes Bulgaria) are presented as separate segments. The other individual legal entities, comprising ICT Poland, Improve Quality Services and Raster, are presented aggregated as ‘Other’.

ICT’s revenue came in at € 71.8 million in 2015, an increase of 14% on the € 63.0 million reported in 2014. Revenue increased organically by 4%, driven by a modest market improvement, enabling a slight increase in average tariffs and FTE.

Revenue at ICT Netherlands improved slightly, to € 61.0 million in 2015 from € 60.3 million in 2014. The challenging conditions in the Oil and Gas industry indirectly impacted the Industrial Automation activities of ICT in the Netherlands and resulted in lower secondment demand from customers. The second half of the year did however show an improvement over the first half of 2015. Furthermore, licences and materials sales were lower, mainly due to lower licence sales related to the LogicNets platform. ICT realised profitable growth in all other markets. ICT managed to record positive results in the High Tech, Water & Infrastructure, Automotive and Logistics markets. This is in line with expectations, and reflects the improvement in economic conditions. The relatively modest sized Healthcare and Energy activities realised higher growth percentages. ICT further expanded the Healthcare and Energy operations by winning new assignments and starting new commercial partnerships.

Strypes Bulgaria (ICT Nearshoring) recorded revenue of € 5.7 million. Strypes’ broadened client base decreased the firm’s dependency on its largest client. The commercial collaboration between ICT Netherlands and Strypes Bulgaria was an important contributor to the growth of ICT’s nearshoring activities.

The segment ‘other’ (Improve, ICT Poland and Raster) recorded revenue of € 6.2 million. Improve and ICT Poland profited from better market circumstances. The companies gained new customers and consequently revenue improved. Raster contributed to revenue for one quarter of 2015 in the segment ‘other’ and performed in line with expectations.

Cost of sales
The cost of materials and subcontractors increased € 0.5 million to € 6.2 million in 2015 (2014: € 5.7 million). This increase was the net effect of an increase of € 0.9 million due to the acquisitions of Strypes 3 and Raster and a net drop of € 0.4 million in the cost of sales at ICT Netherlands, due to lower LogicNets licence sales.

Costs / personnel expenses
Personnel costs increased overall to € 43.5 million (2014: € 40.2 million), mainly as a result of the increase in number of employees. As Strypes is the main contributor to this increase, the average cost per FTE decreased. Other operating expenses also increased as a result of the acquisition of Strypes and Raster. ICT incurred costs and made outlays on office accommodation, marketing & sales and for the improvement of finance and human resources processes. As in 2014, ICT once again incurred costs in connection with the investigation and realisation of acquisitions and partnerships. In 2015, these costs amounted to € 0.6 million (2014: € 0.8 million).

EBITDA for the full year 2015 increased by 53% to € 7.1 million, compared to € 4.7 million in 2014. The acquisition of Strypes made a strong contribution to this improvement, adding € 1.6 million. Organic increase of EBITDA amounted to 13.6%. The EBITDA margin increased from 7.4% to 9.9% in 2015.

Amortisation and depreciation
The acquisition of Strypes Bulgaria was completed on 6 January of last year. On the basis of the Purchase Price Allocation, ICT has valued the company’s order backlog and customer relations; the latter to be amortised over a period of five years as from acquisition date. As a result, amortisation for 2015 amounted to € 1.2 million (a € 543,000 one-off on backlog and € 650,000 on customer relations). ICT completed the acquisition of Raster on 16 September 2015. The Preliminary Purchase Price Allocation valued the software and customer relations at € 4.2 million combined, to be amortised over a period of six and eight years respectively, resulting in an annual amortisation of € 620,000. As Raster was only acquired in September of last year, amortisation amounted to € 154,000 in 2015.

Depreciation for the year 2015 amounted to € 0.5 million (2014: € 0.3 million).

The operating profit amounted to € 5.3 million in 2015 (2014: € 3.2 million). The operating margin was 7.4%, compared to 5.0% in 2014.

Result from Joint Ventures
The result from joint venture InTraffic amounted to € 0.3 million. InTraffic performed well and in line with last year.

Result from associates
The result from associates, mainly ICT’s participation in LogicNets, was negative. Sales of the LogicNets software platform are lagging. ICT firmly believes in the strategic importance of the platform, but given the delay in the roll-out of the platform ICT revalued its stake in LogicNets. This resulted in a downward valuation of € 0.4 million in the last quarter of 2015, bringing the result from associates to a loss of € 0.6 million in 2015.

Corporate income tax amounted to € 1.1 million in 2015. In 2014 taxes amounted to € 4.3 million positive mainly as a result of a deferred tax benefit of € 5.6 million in the Netherlands, related to the liquidation of the German subsidiary.

Net profit for the year amounted to € 3.6 million, compared with € 7.8 million (or € 3.4 million adjusted for the € 5.6 million deferred tax benefit and € 1.2 million impairment charges) in 2014. This translates into earnings per ordinary share of € 0.41. The number of outstanding ordinary shares remained unchanged during the year at 8,747,544.

Q4 2015 results

Revenue in Q4 2015 increased 22% to € 20.1 million compared to the last quarter of 2014 (€ 16.5 million). The fourth quarter EBITDA showed, in line with the full year, 49% growth to € 2.3 million (2014: € 1.6 million).

Cash flow movement

The group cash (and cash equivalents) position amounted to € 6.7 million at year-end 2015, compared to € 11.3 million at year-end 2014. The net operational cash flow amounted to € 6.1 million positive in 2015 (2014: € 3.8 million positive). Cash flow from investment activities amounted to € 11.8 million negative, compared to € 0.3 million positive cash flow in 2014. The largest impact on the cash flow from investment activities in 2015 came from the net investments less cash acquired related to the acquisition of Strypes (€ 3.9 million) and Raster (€ 6.8 million). Dividends paid to shareholders of ICT N.V. amounted € 2.0 million (2014: € 1.3 million). The net cash flow amounted to € 4.7 million negative (2014: € 2.7 million positive).

Balance sheet structure

As a result of the net effect of dividend paid of € 2 million and net profit of € 3.6 million, shareholders’ equity increased to € 35.5 million. The balance sheet total increased to € 58.2 million at year-end 2015, from € 49.4 million at year-end 2014, as a result of the acquisitions made last year. Raster was partly financed through an acquisition financing facility of € 3.0 million, while the balance sheet total also includes an earn-out obligation of € 1.5 million for Strypes. Solvency (shareholders’ equity/total assets) stood at 61% at year-end 2015, compared with 69% at year-end 2014, which represents a very sound financial basis.

Renewed and extended credit facility

To create room for the execution of ICT’s buy and build strategy, ICT renewed and extended its credit facilities in the third quarter of 2015. The renewed facility consists of three credit facilities. The first facility of € 1.5 million is used for providing guarantees and securities. The second credit facility amounts to € 6 million; this is committed and can be used for working capital financing. The third credit facility also amounts to € 6 million and can be used to finance acquisitions. An amount of € 3 million of the acquisition facility was used for the acquisition of Raster in the third quarter of 2015.

Personnel

In the past year, ICT was able to hire 127 FTE. 81 of these were young professionals, while 46 were more experienced seniors. The total number of employees at year-end 2015 was 21% higher than at year-end 2014. This was due to acquisitions and increased recruitment efforts. Attrition of staff remained acceptable at 11 %.

Dividend proposal

ICT shall propose to the Annual General Meeting of Shareholders to be held on 11 May 2016 that a dividend be paid out for the 2015 financial year in the amount of € 0.24 per share in cash, based on the number of ordinary shares outstanding at year-end 2015. For the purpose of the calculation of the proposed dividend, the net profit is adjusted for the non-cash amortisation amounts and the downward valuation of LogicNets. This results in an adjusted net profit for the full year 2015 of € 5.3 million. The proposed dividend of € 0.24 per share represents a pay-out ratio of 40% of the adjusted net profit.

Significant events after the balance sheet date

On 5 February 2016, ICT acquired 51% of the shares of BMA (Bureau Medische Automatisering), a leading Dutch Healthcare software company based in Houten. The purchase consideration for 51% of the shares amounts to € 3.2 million in total and comprises a cash payment of € 2.4 million and an amount paid in (newly issued) ICT shares of € 0.8 million (97,707 shares).

Composition of the Supervisory Board

The term of Mr. Deepak Luthra expires in 2016. The General Meeting to be held on 11 May 2016, will be asked to reappoint Mr. Luthra for a second four-year term.

Outlook

ICT’s primary focus continues to be the execution of its strategy. ICT will further leverage the acquisitions of Strypes, Raster and BMA. ICT continues to aim for organic growth in combination with growth through acquisitions. ICT expects the capital expenditures and research & development expenditures for 2016 to be in line with those recorded in 2015. For 2016 we expect the growth in the number of FTE to be in line with our revenue development.

Given the strategic progress made and its acquisitions, ICT expects a further improvement in revenue and EBITDA in 2016 compared with 2015, despite continued challenging conditions in various geographical markets and industries.

Cautionary statement
This press release contains forward-looking statements. Forward-looking statements are always based on assumptions and estimates relating to uncertain events over which ICT Automatisering 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 Automatisering 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 Automatisering 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.

2015 financial information
The 2015 financial information included in the Extracts from Consolidated Financial Statements attached to this press release are derived from the Annual Report 2015. This Annual Report 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 16 May, 2016. In accordance with section 393, title 9, book 2 of the Netherlands Civil Code, Deloitte Accountants B.V. has issued an unqualified auditor’s opinion on the Annual Report.

Annexes: Extracts from Consolidated Financial Statements 2015
– Consolidated statement of total comprehensive income
– Consolidated balance sheet
– Consolidated statement of changes in equity
– Consolidated statement of cash flows
– Other financial information
– Segment information

Click here to download the Annex of the Annual Results of 2015

Press Release: Q3 Results 2015

Q3 2015: revenue growth and improvement of profitability 

Key developments:

  • Revenue in Q3 up 20% at € 17.1 million (Q3 2014: € 14.2 million), organic revenue growth 9%.
  • EBITDA from continuing operations in Q3 came in at € 1.7 million (Q3 2014: € 0.7 million).
  • Acquisition of Raster completed on 16 September 2015.
  • ICT raises its expectation of an improvement in EBITDA to a range of 40%-50% for the full year 2015 compared to 2014.

Key figures (*)

tabel

(*) In conformity with IFRS 5, ICT Germany classifies as “Discontinued operations” following the decision to divest the operations and is presented as a separate line item in the income statement, being the total loss post tax of the German operations for the period as ‘result from discontinued operations’

Financial developments
Revenue in the third quarter of 2015 increased to € 17.1 million compared to € 14.2 million in the third quarter of 2014. Excluding Strypes Bulgaria, revenue grew 9 % (organic growth). All ICT subsidiaries contributed to revenue growth. During the third quarter, ICT Netherlands partly recovered from the slowdown in demand and postponements of projects in the industrial automation markets in the first half of 2015. ICT Netherlands managed to improve productivity rates of employees as a result of more demand of customers.

Revenue over the first nine months of the year amounted to € 51.7 million compared to € 46.6 million over the first nine months of 2014. Organically revenue grew 2.2%. Intensive collaboration between ICT Netherlands and Strypes Bulgaria resulted in additional growth in Bulgaria.

EBITDA from continuing operations came in at € 1.7 million in the third quarter, compared with € 0.7 million in the same period of 2014, all subsidiaries contributed to this improvement. In the first nine months of 2015 EBITDA improved to € 4.8 million (first nine months 2014: € 3.1 million). The acquisition of Strypes positively impacted the EBITDA margin. Improve Quality Services and ICT Poland also contributed to this improvement. The improvement was partly off-set by lower than expected results in the Netherlands due to postponement of projects in the first half of 2015.

The operating result from continuing ordinary operations in the first nine months of 2015 amounted to € 3.5 million (first nine months 2014: € 2.9 million). The acquisition of Strypes Bulgaria was completed on January 6th 2015. In compliance with IFRS 3 order backlog and customer relations have been valued as a result of a Preliminary Purchase Price Allocation. As a result the total amortization for the first nine months of 2015 amounts to € 1.0 million. Depreciation amounts to € 0.3 million for the first nine months of 2015.

Acquisition of Raster
ICT has completed the purchase of 100% of the shares of Raster as of the 16 September. The acquisition of Raster will substantially enrich ICT’s Industrial Automation activities and will further improve ICT’s position as a total solutions provider and open up new markets and customers. The acquisition will have a direct positive impact on ICT’s earnings as of the closing date. Raster figures are included in the group’s results as from the 16 September.

Renewed and extended credit facility
To create room for the execution of ICT’s buy and build strategy, ICT renewed and extended its credit facilities in the third quarter of 2015. The renewed facility consist of three credit facilities. The first facility of € 1.5 million, is advised and is used for providing guarantees and securities. The second credit facility amounts to € 6 million, is committed and can be used for working capital financing. The third credit facility also amounts to € 6 million and can be used for financing of acquisitions. From the acquisition facility € 3 million has been used for the acquisition of Raster in the third quarter of 2015.

Outlook
ICT continues to execute its strategy offering innovative and effective product/market solutions, enriched with state-of-the-art technology, combining autonomous growth with growth through acquisitions. Based on the performance year to date September 2015 and barring unforeseen circumstances, ICT raises its full year 2015 expectation of an improvement in EBITDA (operating profit before depreciation and amortization from continuing operations) between 40%-50% compared to 2014.

Press Release: FIRST- HALF YEAR RESULTS 2015 ICT AUTOMATISERING

REVENUE GROWTH AND IMPROVEMENT IN EBITDA

SIGNIFICANT STEPS REALIZED IN EXECUTION STRATEGY


Key developments:

  • Revenue in H1 2015 up 7% at € 34.6 million, mainly attributable to the acquisition of Strypes Bulgaria
  • H1 2015 EBITDA improved to € 3.2 million; 9.2% of revenue (H1 2014: € 2.4 million, 7.5% of revenue)
  • Acquisition of Strypes Bulgaria completed on 6 January 2015. Intensive collaboration between ICT Netherlands and Strypes Bulgaria bears fruit.
  • Price Purchase Allocation on Strypes completed, intangibles identified and valued, resulting in period amortization of € 0.9 million in H1 2015
  • Letter of intent signed end of June to acquire industrial systems integrator RASTER


Key figures (*)

(in millions of €) H1 2015 H1 2014 Change
Revenue 34.6 32.4 6.8%
Revenue Added Value 31.8 29.2 8.9%
EBITDA from continuing operations 3.2 2.4 33.3%
Amortization / depreciation 1.1 0.2
Operating result from continuing operations 2.1 2.3
Net profit from continuing operations 1.5 1.7
Result after taxes from discontinued operations                                – -0.7
Net profit 1.5 0.9
(in €)
Earnings per share (**) 0.17 0.11

(*)  In 2014, in conformity with IFRS 5, ICT Germany classified as “Discontinued operations” following the decision to divest the operations and is presented as a separate line item in the income statement, being the total loss post tax of the German operations for the period as ‘result from discontinued operations’.
(**)  Based on the average number of outstanding ordinary shares.


Jos Blejie, CEO of ICT Automatisering N.V.
: “In the first six months of this year, our focus has been on the execution of our strategy. The acquisition of near-shore company Strypes in Bulgaria is an important step in this execution. It provides us access to lower-cost quality solutions based on rapid development techniques, and a competitive edge in today’s market. Intensive collaboration between The Netherlands and Bulgaria is showing good results. The intended acquisition of RASTER that we announced end of June this year, will substantially enrich our Industrial Automation activities and will further improve ICT’s position as a total solutions provider and open up new markets and customers. These actions support us in creating a stable platform from which we can further roll out our strategy and can grow our business sustainable. Although in the first half of 2015 ICT Netherlands was confronted with a slowdown in demand in the markets served by industrial automation, we do envisage a recovery of demand in the second half of 2015.”

Strategy
The company will continue its strategy of offering innovative effective product/market solutions, enriched with state-of-the-art technology. Each unit offers market specific solutions in which ICT has a high level of expertise, which allows the company to offer its clients greater added value. This puts ICT in a position to execute projects for its clients independently, making use of the specialist expertise and experience it has gained from previous assignments for its clients. As a result, ICT is able to realise innovative solutions for its clients that are also both repeatable and scalable. The acquisition of new business and the development of new emerging markets are key focus areas of ICT’s strategy.

Acquisition of Strypes Bulgaria
On 6 January 2015, ICT acquired 100% of the shares of Strypes Bulgaria. Strypes Bulgaria is a specialist in embedded software development based on modern agile methodologies. The total purchase price of the acquired shares, including the earn-out amounts to € 5.4 million. Goodwill resulting from the transaction amounts to approximately € 1.4 million (after the implementation of the Purchase Price Allocation).

Acquisition of remaining shares Improve Quality Services
According to the original contract the remaining 10% of the shares of Improve was acquired on 1 January 2015.

Letter of Intent signed to acquire RASTER
End of June 2015, ICT signed a letter of intent to acquire 100% of the shares of Raster Holding BV (RASTER), a Dutch based system integrator. The intended acquisition marks a significant step in the growth strategy of ICT. RASTER operates in the domain of industrial automation and more specifically in the area of industrial process automation, production automation, software development and consultancy.

Segmentation (IFRS 8)
The acquisition of new business and the development of new emerging markets are key focus areas of ICT’s strategy, which resulted in a new organizational structure that came into effect in Q1 2015. Therefore ICT decided to change the management control of the company. ICT reassessed how to apply IFRS 8 with respect to segment disclosure in its financial statements. In the past the breakdown of cash-generating units (CGU(s)) was aligned with the segmentation of ICT. This alignment is also reassessed.

Taking into account how management manages and monitors ICT NL’s business units, future impairment testing will take place at (total) ICT NL level, resulting in partial aggregation of CGU levels as from 2015, in line with the organizational changes and in line with IFRS requirements.

Financial developments H1 2015
ICT’s revenue in the first half of 2015 was € 34.6 million compared to € 32.4 million in the first half of 2014. This increase was mainly attributable to the acquisition of Strypes Bulgaria (ICT Nearshoring BV) which realised € 2.5 million of revenue.

ICT Netherlands is confronted with postponement of projects and realised revenues of € 30.1 million compared with € 30.7 million in the first half of 2014. As a result of these postponements ICT realised lower licences and materials sales than in the first half of 2014. In the industrial markets we were also confronted with lower than expected secondment demand from customers.

Intensive collaboration between ICT Netherlands and Strypes Bulgaria resulted in additional growth in Bulgaria from 54 fte on acquisition date up to 85 fte per 30 June 2015. This growth is mainly attributable to the acquisition of new customers.

In the segment other both Improve Quality Services and ICT Poland realised revenue growth due to business generated at new customers. Improve Quality Services realised revenue growth of around 15 % (H1 2015: € 1.9 million / H1 2014 € 1.6 million). ICT Poland is working closely together with ICT Netherlands in the Automotive markets.

The realised EBITDA (earnings before interest, taxes, amortization and depreciation) amounted to € 3.2 million in the first half of 2015, compared with € 2.4 million in the same period of 2014. Strypes Bulgaria contributed to this improvement with a realised EBITDA of € 0.7 million. Improve Quality Services and ICT Poland also contributed to this improvement with € 0.3 million. The improvement was partly off-set by lower than expected results in the Netherlands due to postponement of projects and transferred activities to Bulgaria.

The Acquisition of Strypes Bulgaria was completed on 6 January this year. In compliance with IFRS 3, as a result of a Preliminary Purchase Price Allocation, order backlog and customer relations have been valued. As a result the total amortization amounts to € 0.9 million in the first half of 2015 (€ 0.543 million one off on backlog and € 0.325 million on customer relations). Customer relations have been valued at € 3.3 million to be amortized over a period of 5 years as from acquisition date. The amortization on customer relations amounts of € 0.6 million a year.

The operating result from continuing ordinary operations in the first half of 2015 amounted to € 2.1 million (H1 2014 € 2.3 million).  The acquisition of Strypes positively impacted the operating margin (€ 0.7 million). The amortization on Strypes Bulgaria as described above (€ 0.9 million) had a negative impact. The costs related to the consideration of strategic options, including the due diligence and transaction costs for Strypes and Raster, amounted to € 0.3 million (H1 2014: € 0.3 million).

Taxes in the first half of 2015 amounted to € 0.4 million compared with € 0.6 million in the first half of 2014. Net profit was € 1.5 million, compared with a profit of € 0.9 million in the first half of 2014.

The balance sheet total decreased from € 49.4 million at year-end 2014 to € 49.1 million at 30 June 2015 mainly as a result of the net effect of dividend paid of € 2 million and net profit of € 1.5 million realized in the first half of 2015. The net cash flow from continuing operations amounted to € 0.8 million negative in the first half of 2015 (H1 2014: € 0.4 million negative) as a result of a relatively high amount of creditors on the balance sheet per year end 2014, to be paid in the first half of 2015. The cash position per 30 June 2015 decreased to € 4.1 million (June 30, 2014: € 7.5 million). This was mainly due to the payment of the acquisition price for Strypes Bulgaria and dividend paid.

Composition of the Supervisory Board
The term of the Chairman, Mr. Van der Raadt and member Mr. Fröschl expired in May 2015.  The Annual General Meeting of Shareholders reappointed Mr. Van der Raadt and Mr. Fröschl for an additional four-year term on 13 May 2015.

Outlook
ICT continues to execute its strategy offering innovative and effective product/market solutions, enriched with state-of-the-art technology, combining autonomous growth with growth through acquisitions. Barring unforeseen circumstances, ICT expects for the full year 2015 an improvement in EBITDA (operating profit before depreciation and amortization from continuing operations) between 25%-35% compared to 2014.

Condensed consolidated interim financial statements