Q3 2020 results ICT Group

Strong third quarter; Revenue up 7%, EBITDA increased by 47%

Highlights Q3 2020

  • Revenue up 7% to € 38.3 million (Q3 2019: € 35.9 million), organic revenue growth 3.5%
  • EBITDA increased 47% to € 4.7 million (Q3 2019: € 3.2 million); reflecting the effect of measures taken in H1
  • EBITDA margin increased to 12.2% compared to 8.8% in Q3 2019

Highlights 9M 2020

  • Revenue increased 3% to € 119.7 million (9M 2019: € 115.7 million)
  • Organic growth in Q3 compensated the slowdown earlier this year, resulting in flat organic growth YTD
  • EBITDA was up 13% to € 13.5 million (9M 2019: € 12.0 million)

Outlook

  • Management increases outlook: EBITDA full year 2020 expected in the range of
    € 18 to € 19 million

Key figures

Jos Blejie, CEO of ICT Group N.V.:
“We are pleased with the results achieved in the third quarter. The recovery that started in June continued during the summer months, resulting in productivity reaching the desired levels again towards the end of Q3. This translated in a positive revenue growth trend year to date. Business activity allowed for hiring again from June onwards, driving organic growth in the third quarter. 

To date COVID-19 is having a limited impact on the business, primarily impacting the secondment activities, while the project business sustained its favourable development. Our nearshoring activities in Bulgaria continue their strong performance. 

The cost reduction measures taken in the first half year are bearing fruit as evidenced by the strong increase in EBITDA in the third quarter, resulting in a solid improvement of our EBITDA margin to 12.2%. 

Although uncertainties in relation to the COVID-19 pandemic limit our visibility, we increase our outlook for the remainder of the year, based on the strong third quarter results and the effects of the measures taken.” 

Financial developments

In the third quarter of 2020 revenue increased by 7% to € 38.3 million from € 35.9 million in the same period last year. This increase is partly attributable to the acquisition of Proficium in November 2019 and Esprit in July 2020. Organically, revenue increased 3.5% compared to the third quarter 2019, following the recovery in productivity levels. For the first nine months of 2020 revenue came in at € 119.7 million, a 3% increase compared to the same period last year.

EBITDA showed an increase of 47% to € 4.7 million in the third quarter of 2020 compared to € 3.2 million in the same period in 2019. The measures taken in the first half of the year to streamline the organisation and increase efficiency, impacting both direct and indirect costs, have paid off. Combined with the recovered productivity levels, this resulted in improved  profitability. The EBITDA margin increased to 12.2% (Q3 2019: 8.8%). Year-to-date the margin was 11.3% (YTD 2019: 10.4%).

Productivity levels improved in the third quarter, although COVID-19 continued to impact especially the secondment business. The nearshoring activities in Bulgaria performed very well, benefiting from projects being outsourced to Bulgaria. This resulted in increased revenue and improved margins.

To cover the employee participation plan and the LTI-plan (Long Term Incentive) of the Executive Board, ICT issued new shares to preserve cash. 132,096 new ordinary shares were issued, representing an increase of 1.4% of the outstanding share capital. The shares have been admitted to trading on 11 September 2020 after which the number of outstanding shares total 9.697.106 shares.

Outlook

Barring unforeseen circumstances, in particular the economic uncertainties related to COVID-19, management expects that revenue in the second half of 2020 will be higher than in the first half of 2020 with EBITDA for the full year 2020 expected to be in the range of € 18 to € 19 million.

Furthermore we continue to strongly believe in the attractiveness of the long term market perspectives as the digital transformation will continue in all the markets we operate in. We remain fully committed to deliver on our mid-term objective of increasing annual revenue to between € 200 and € 230 million, with a targeted EBITDA margin between 13% and 15%.

Improve wederom nummer 3 in de beste ICT-opleiders van Nederland

We zijn trots om aan te kondigen dat Improve, een onderdeel van ICT Group, wederom tot de beste IT-opleiders van Nederland behoort. Volgens de ranglijst van Computable, heeft Improve met een verbeterde score van 8,74 in 2019 naar 9,48 in 2020 voor de tweede keer op rij de 3e positie weten te behalen.

De opleiders zijn op verschillende factoren beoordeeld. Improve behaalt de hoogste scores op:
* De betrokkenheid van de docenten/trainers.
* Het niveau van de docenten/trainers.
* De toepasbaarheid van lesstof in de praktijk.
* De waarde van het diploma of certificaat.

Bekijk hier de volledige ranglijst.

Additude Academy: Digitale informatiebijeenkomsten 30 september

Goede software developers zijn zeldzaam. Dat geldt helemaal als de professional ook moet voldoen aan specifieke eisen. Techrecruiter Additude, onderdeel van ICT Group, is gespecialiseerd in het vinden van de juiste kandidaat bij het juiste bedrijf. Binnen de eigen Academy leidt Additude zelf kandidaten op, in opdracht en naar wens van de klant.

Begin 2020 is Additude gestart met het organiseren van intensieve opleidingsprogramma’s. Zo start in het najaar van 2020 het opleidingsprogramma tot PLC Engineer. Daarin gaat Additude een groepje PLC Engineers opleiden, die na het afronden van de opleiding bij een opdrachtgever aan de slag gaan. Dit gebeurt in opdracht van vijf bedrijven:

– Netbeheerder TenneT
– CoNet (IT-specialist in de industriële sector)
– Systeemintegrator EKB
– Kaak Groep (leverancier van apparatuur voor industriële bakkerijen)
– Indeff

Additude organiseerde op woensdag 30 september 5 digitale informatiebijeenkomsten om nieuwe deelnemers te werven en te informeren over het opleidingsprogramma. De opleiding gaat in oktober van start, waarbij het opleidingstraject bestaat uit drie delen:

Deel 1: Persoonlijk leiderschap
In deze training ontwikkelen de kandidaten hun kwaliteiten op het gebied van samenwerken, communicatie, persoonlijke presentatie, persoonlijke effectiviteit en daadkracht.

Deel 2: Theoretische leergang
De theoretische leergang richt zich voornamelijk op het PLC domein en Scrum. De doorlooptijd is 2 weken en de leergang wordt afgesloten met een toetsing richting PLC en PSM1.

Deel 3: Praktische leergang
Als onderdeel van de totale leergang is het van groot belang dat de theoretische opgedane kennis in de praktijk wordt toegepast. De junior PLC Engineers werken in scrumteams en in sprints leveren ze een werkende “applicatie” op.

ICT Group opent nieuw hoofdkantoor in Rotterdam

Per september is het hoofdkantoor van ICT Group verhuisd naar het centrum van Rotterdam. Ons nieuwe kantoor is gevestigd op de 19e verdieping van het FIRST Office Building. Het huidige kantoor in Barendrecht zal worden gebruikt voor onze project gerelateerde zaken.

Jos Blejie: “We zijn erg blij dat op het moment dat we moesten uitbreiden we in staat waren om kantoorruimte te krijgen in dit nieuwe pand, aangezien FIRST Rotterdam vanwege zijn duurzaamheid de beoordeling “Excellent-certificaat” heeft gekregen van BREEAM-NL”.

ICT Group Rotterdam

De belangrijkste duurzame installaties omvatten circa 200 zonnepanelen die zich op het dak van het gebouw bevinden en een ondergrondse koude-warmteopslag die het gebouw verwarmt en koelt. Daarnaast is het gebouw voorzien van een grijswatercircuit, dat regenwater gebruikt om toiletten door te spoelen. Deze installaties passen perfect in de focus van ICT Group op duurzaamheid. Door de ligging tegenover Rotterdam Centraal Station is het gebouw bovendien uitstekend bereikbaar met het openbaar vervoer.

Ons nieuwe adres is:
ICT Group N.V.
Weena 788
3014 DA Rotterdam

We kijken er naar uit u te verwelkomen op ons nieuwe kantoor, waar we uiteraard voldoen aan alle voorschriften met betrekking tot Covid-19.

Woody kiest Additude Sweden als nieuwe digitale partner

De Zweedse bouwmateriaal leverancier Woody Bygghandel en Additude Sweden, een ICT Group-bedrijf, starten een belangrijke samenwerking rond e-commerce en digitalisering, nu Woody de volgende stap wil zet in het digitaliseringsproces. Woody gebruikt moderne technieken om nieuwe diensten, betere beschikbaarheid en betere service aan te bieden aan zowel klanten als de lokale bouwmateriaal leveranciers van de Woody Group.

Het partnerschap omvat zowel de werving van essentieel personeel om de competentie van Woody op digitaal gebied te versterken als nieuwe ontwikkeling, het beheer en de ondersteuning van Plattan – Woody’s oplossing voor e-commerce en digital business. De overeenkomst omvat ook de migratie van Plattan naar het Microsoft Azure platform.

Peter Sjödahl, CEO van Woody Bygghandel, geeft aan dat “Additude SE een totaal leverancier is die werkt met geavanceerde technologie en de mogelijkheid heeft om alle vaardigheden en diensten te bieden die Woody nodig heeft op het gebied van e-commerce en digital business. Met Additude als nieuwe partner zal Woody haar positie in e-commerce en de digitale business verder ontwikkelen, beide centraal, voor lokale mede-eigenaren en klanten.”

Sam Aston, CEO van Additude, zegt “voor Additude is het zowel een voorrecht als een bevestiging van de competentie van ons bedrijf om deel uit te maken van Woody’s ontwikkeling en digitaliseringsproces. Woody Bygghandel, met een lange en succesvolle geschiedenis in haar vakgebied, bevindt zich midden in een spannende ontwikkeling om het bedrijf te vernieuwen en moderne IT-technologie verder toe te passen voor zowel partners als B2B klanten. We zijn trots dat we het voorrecht hebben Woody hierbij te helpen”, concludeert Sam Aston.

OVER DE BEDRIJVEN:
Additude, met hoofdkantoor in Malmö, Zweden, is een modern IT-adviesbureau met toonaangevende consultants op het gebied van innovatie, technologie en headhunting. De combinatie van de breedte, het dienstenaanbod en de diepe specialisatie van elke unit maakt Additude tot een sterke partner die zowel ondersteuning kan bieden in innovatie, strategisch advies als complete technologische oplossingen in constructie, ontwerp, elektronica, embedded systemen en software.

Woody Bygghandel, opgericht in 1944, is een van de toonaangevende leveranciers van bouwmaterialen in Zweden. De keten is eigendom van 50 lokale bouwmateriaal leveranciers met in totaal meer dan 100 winkels in heel Zweden en op Åland die samenwerken op het gebied van inkoop, marketing, IT, milieu en duurzaamheid, evenals onderwijs.

Om meer te weten over de samenwerking, bekijk deze video.

H1 2020 results ICT Group

Solid first half 2020

Highlights H1 2020

  • Revenue in H1 2020 increased 2% to € 81.4 million (H1 2019: € 79.8 million), organically down 1.3%
  • EBITDA was stable at € 8.9 million (H1 2019: € 8.8 million)
  • COVID-19 impact was limited in Q1, effects were more visible in April and May and as of June productivity recovered
  • Precautionary measures taken to cut costs and to preserve cash already bear fruits as of June
  • Revised financing agreement in place, including additional € 10 million credit facility and extension of repayment schedule
  • Management expects revenue and EBITDA for the second half of 2020 to be in line with the first half of 2020

Key figures

Jos Blejie, CEO of ICT Group N.V.:
“First and foremost I would like to thank our clients and employees for their flexibility and loyalty during these uncertain times. It shows that passion for technology unites and continues also when working from home. Pre-corona we saw productivity levels steadily improving; however the crisis impacted productivity in April and May. During June productivity levels increased again. Revenue slightly increased in the first half of 2020 compared to the same period last year. Particularly our secondment services in Sweden and the Netherlands were impacted by COVID-19. Our activities in Bulgaria showed a substantial organic growth. Overall our projects in high tech and public infrastructure continued at the same level as before COVID-19. We also saw the favourable development of our SAAS (software as a service) activities continue. Our diversified revenue portfolio offers strength and resilience.

As evidenced by the performance in June, we are well positioned to benefit quickly when business activities overall would return again to normal levels. Based on this positive trend we expect the results in the second half of the year to be in line with the first half of 2020. In addition we continue to strongly believe in the attractiveness of the long term market perspectives as the digital transformation will continue in all the markets we operate in.”

COVID-19 measures

In light of the COVID-19 crisis ICT has taken necessary measures to cut and control costs, with a strong focus on cash management. These measures already have an effect as of June. ICT did not apply for governmental support (NOW – 1) in the Netherlands.

ICT concluded a revised financing agreement which includes an additional € 10 million government secured facility by Rabobank, to provide ICT with a back-up financing facility in case the crisis would further intensify. Furthermore, we agreed on a 6-month extension of the redemption schedule and a temporary increase of the net debt / EBITDA ratio to 3.5.

Personnel

At 30 June 2020, ICT Group employs 1,503 people (1,453 FTEs), around 2.4% higher than at year-end 2019.

Notes to the results

Performance ICT Group
ICT Group’s revenue came in at € 81.4 million in the first half of 2020, a 2.0% increase compared to € 79.8 million reported in H1 2019. Organically, excluding acquisitions and divestments, revenue decreased by 1.3%.

Personnel costs increased to € 49.1 million (H1 2019: € 46.4 million), in line with the increase in FTE’s and salary increases.

Other operating expenses decreased from € 10.6 million in H1 2019 to € 9.6 million in the first half of 2020, mainly as a result of the measures taken in light of the COVID-19 crisis. The costs related to strategic initiatives in H1 2020 amounted to € 0.1 million compared to € 0.5 million in H1 2019.

For the first six months of 2020 EBITDA was more or less stable at € 8.9 million, compared to € 8.8 million in the comparable period in 2019. The EBITDA margin decreased slightly to 10.9% (H1 2019: 11.1%).

Performance per segment

Engineering R&D
In this segment, ICT is active in the R&D of the industrial sectors Automotive, High Tech and Machine Building.
The HighTech activities were not impacted by COVID-19 and are performing in line with expectations. We do see an impact in the Automotive activities, but at the same time the sales funnel looks promising. The Machine & Systems unit, in particular the secondment business, was impacted significantly. Customers are scaling back development programmes, which is impacting productivity. We do however see customers starting up again.

Industrial Automation
In this segment Logistics & Transport, Industry and Outsourced services are the key markets for ICT.
This segment serves customers that have been heavily impacted by the crisis. Especially the activities in the units Logistics &Transport and Industry were significantly impacted in the second quarter. However we do see demand increasing again.

Infra & Mobility
In the public domain ICT focuses on services around capital assets in the area of Water, Energy, Road and Rail infrastructure as well as Mobility.
This segment experienced little impact of COVID-19. Many projects in the public domain are continuing, however we do see some pressure on secondment activities within the Water & Infra unit. The TURNN entity, ICT’s Mobility as a Service activities, continued its positive development. After a number of successful pilots the first customer contracts, with both municipalities and large companies, were won and completed.

Healthcare Technology
The performance of the Healthcare unit is affected by COVID-19. This is mainly the case at the consultancy activities that were already operating at lower productivity levels before the crisis. The activities focused on the sale of the foetal care products did show a positive performance.

Bulgaria
ICT’s nearshoring entity Strypes saw a further increase in customer demand, which translated into substantial organic growth. Our strategic decision to accelerate our nearshoring activities clearly paid off. Strypes is well positioned to capitalize upon the increasing demand for nearshoring activities. The integration of Kodar and Up2 is ongoing and progressing according to plan. EBITDA margins further increased during the first half of 2020.

Sweden
Additude, acquired in February 2019, is now fully integrated into ICT. Also here COVID-19 had an impact in the second quarter. On the other hand one of the largest contracts was recently prolonged. Hiring activities are under pressure from COVID-19, therefore recovery of the margins is lagging behind.

Other
The segment ‘Other’ includes a number of small entities as well as the holding costs of the group. As Improve is mainly engaged in trainings, the second quarter was heavily impacted by COVID-19. OrangeNXT is performing in line with plan although COVID-19 is putting some pressure on the growth rate. Nevertheless OrangeNXT progresses out of the start-up phase and realised a small profit. The results of the German and Belgian entities have been slightly positive.

Other financial information

ICT has attributed a value to and is amortising several intangible assets, including order backlog, software and customer relations of its acquisitions. Amortisation in the first half of 2020 amounted to € 2.6 million (H1 2019: € 2.6 million). Depreciation for the first half of 2020 amounted to € 3.5 million (H1 2019: € 3.1 million).

The result from associates amounted to a profit of € 0.4 million (H1 2019: € 0.3 million loss). The profit was mainly the result of a one-off gain realised at one of the associates.

Financing expenses came in at € 0.6 million in the first six months of 2020 (H1 2019: € 0.5 million).

Taxes in the first half of 2020 amounted to € 0.5 million compared with € 0.5 million in the first half of 2019.

Reported net profit for the first six months of 2020 came in at € 2.1 million (H1 2019: € 2.5 million). In the net profit for H1 2019 a one-off accounting gain of € 0.7 million was included as a result of the revaluation of ICT Group’s stake in GreenFlux. The earnings per share came in at € 0.20 (H1 2019: € 0.27). The number of outstanding ordinary shares were stable compared to year-end 2019 and amounted to 9,565,010.

Cash flow movement

In the first half of the year, net operational cash flow increased significantly to € 6.8 million positive (H1 2019: € 3.8 million positive), partly due to postponement of tax payments. Also the net cash position increased and amounted to € 8.0 million positive per 30 June 2020 (31 December 2019: € 5.8 million positive). This increase was the result of the positive effect of cash preserving measures including the resolution at the AGM not to declare a dividend and the extension of the redemption schedule of the company’s loans, combined with the positive development of the operational cash flow.

Balance sheet structure

At the end of the first half of 2020, shareholders’ equity stood at € 56.6 million (31 December 2019: € 54.5 million). The balance sheet total increased from € 124.4 million at year-end 2019 to € 129.3 million at 30 June 2020. Solvency (shareholders’ equity/total assets) was unchanged at 44% at the end of June 2020 (44% at year-end 2019), reflecting a sound financial basis.

Outlook

Long term market perspectives remain attractive as we continue to believe in the ongoing digital transformation in all the markets we operate in. We remain fully committed to deliver on our mid-term objective of increasing annual revenue to between € 200 and € 230 million, with a targeted EBITDA margin between 13% and 15%.

Barring unforeseen circumstances, in particular in relation to COVID-19, management expects that revenue and EBITDA in the second half of 2020 will be in line with the first half of 2020.

In these unprecedented times, our diversified revenue portfolio offers strength and resilience, while we put the well-being and safety of our employees and customers first at all times.

Click here to download the Annex: Condensed consolidated interim financial statements 30 June 2020

ICT acquires Esprit Management & IT Services

ICT Group N.V. (ICT) has acquired 100% of the shares of Esprit Management & IT Services B.V. (Esprit). Esprit was founded in 1999 and is active in technical software development and recruitment services in the technical automation domain. It employs over 20 professionals and generates annual turnover of around € 2 million.

After an initial integration period Esprit and Additude Netherlands, the Dutch branch of the Swedish company Additude acquired by ICT in 2019, will be merged. The strong reputation of Additude in recruitment services combines perfectly with the excellent position of Esprit in recruitment and consulting services in technical software development. Their combined offering will broaden ICT’s services to its clients and also open up an additional part of the labor market for ICT. Marc Reijnen, founder of Esprit, will lead the integration and further development of this new combination within ICT.

Jos Blejie, CEO of ICT: “I am pleased with Esprit becoming part of ICT. Esprit has a strong and consistent track record within the industrial automation sector and embedded software development in the Netherlands, offering both synergies as well as complementary services to ICT. We welcome Esprit to the ICT Group and to become part of the ambition to lead the ongoing digitalisation for our clients.”

ICT Group convenes extraordinary meeting of shareholders

ICT Group N.V. (ICT) today published the convocation for its Extraordinary General Meeting of Shareholders (EGM) that will be held via a live video-webcast on Thursday 20 August 2020. The key agenda item is the proposal to appoint Janneke Niessen
(1977, Dutch nationality) as member of the Supervisory Board.

The EGM will be organized in the same manner as the recent AGM, in light of the COVID-19 pandemic and following the Emergency-Act. The EGM will only be electronically accessible for shareholders via a live video-webcast. Shareholders can vote through an electronic proxy and have the opportunity to submit questions to ICT prior to the EGM at bava2020@ict.nl.

ICT Group nominates Janneke Niessen for appointment to Supervisory Board

ICT Group N.V. (ICT) today announces the nomination of Mrs. Janneke Niessen for appointment as member of the Supervisory Board of ICT Group. Her nomination made by the Supervisory Board will be on the agenda of an Extraordinary General Meeting of Shareholders to be held on 20 August 2020. The convocation for this meeting will be published shortly.

Janneke Niessen (1977, Dutch nationality) is a serial entrepreneur and investor. In the past she has started and exited 2 international tech companies. She is co-initiator of InspiringFifty, an initiative that aims to increase diversity in tech by making female role models more visible. Mrs. Niessen furthermore holds supervisory and advisory board positions at various organisations, including Codam and FutureNL.

Theo van der Raadt, chairman of the Supervisory Board of ICT Group: “We are very pleased with the nomination of Janneke Niessen as member of the Supervisory Board of ICT Group. Her broad and extensive experience as an entrepreneur and investor in sectors related to digitalisation and Industry 4.0 as well as her involvement with many start-ups, both as mentor and investor, will be highly valuable to the company.”

This press release contains information that qualifies as inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation.