ICT Group publishes annual report 2019

ICT Group N.V. has today published its annual report 2019 on its website (www.ict.eu/annualreport).

The Annual General Meeting of Shareholders will take place on 13 May 2020, 10:30 CET at Novotel Rotterdam, K.P. van der Mandelelaan 150, Rotterdam. The convocation for the AGM, including the agenda, the accompanying explanatory notes and other information, will be published on the company website no later than 31 March 2020.

Press release: FULL YEAR RESULTS 2019 ICT GROUP

Revenue increase of 20%; EBITDA margin impacted by lower productivity in the second half

Highlights FY 2019

  • Full year revenue came in at € 155.5 million, up 20%; organic growth was 3%
  • Pre-IFRS 16 EBITDA came in lower at € 11.7 million (FY 2018: € 13.5 million), as a result of lower productivity levels in the second half of the year. EBITDA amounted to € 16.5 million including IFRS 16 effects
  • Pre-IFRS EBITDA margin came in at 7.5% (FY 2018: 10.4%)
  • Net profit amounted to € 2.7 million (FY 2018: € 9.5 million) also due to € 3.5 million lower accounting gains
  • Acquisition of Additude marks international expansion into Sweden

Highlights Q4 2019

  • Revenue in Q4 came in at € 39.7 million (Q4 2018: € 37.2 million); organic revenue was down 6%
  • Pre-IFRS EBITDA came in at € 3.3 million in Q4 2019 (Q4 2018: € 5.4 million)
  • Proposition in Smarter Cities strengthened by acquisition of Proficium 

Jos Blejie, CEO of ICT Group N.V.:

“2019 got off to a good start with strong revenue growth, both organically, particularly in the high-tech and automotive industries, and as a result of acquisitions. During the summer we were confronted with the abrupt termination of several projects, causing a considerable decrease in productivity. We have taken immediate measures and increased focus and efforts of the team. At the same time we have been confronted with a more prudent buying behaviour in the industry in the latter part of 2019. In comparison with the excellent last quarter of 2018 these effects caused an organic decline in the fourth quarter of 2019.

The year was also marked by significant strategic steps in terms of growing our international footprint, increasing our successful nearshoring activities and strengthening our position in Infra & Mobility. We are on track to achieve the desired revenue split between secondment, projects and proprietary IP, thus creating a more robust business model. In 2019 we have put more focus in our investment initiatives, with a specific aim at Mobility as a Service and the OrangeNXT solutions. To further drive our international reach we will expand OrangeNXT and Additude to other countries and anticipate building more of our solutions in our nearshoring facilities in Bulgaria. Therefore we are confident that we are able to deliver on our mid-term objectives by 2022.”

Strategy update

In 2019 ICT refined its proposition by further focussing on areas where the company can truly make a difference for its customers. ICT excels in technological solutions in Engineering R&D and Industrial Automation, sustainable mobility, infrastructure and healthcare. ICT’s Software as a Service solutions (OrangeNXT) are also offered across these markets, as are its nearshoring offerings.

International expansion

The acquisition of Additude in Sweden early 2019 was an important step in the international expansion of the company. In line with its strategic direction, ICT expects Additude to become the platform for the Northern European market, offering high-profile industrial technology consulting services.

Accelerating nearshoring

To further enlarge its nearshoring position in Bulgaria, ICT acquired two start-up companies in 2019, Kodar and Up2. Kodar closely collaborates with the University of Plovdiv, which increases ICT’s access to technical talents in the second largest city of Bulgaria. With Up2 ICT gains access to talents in the world of app development. At the end of 2019 the Group employs over 250 professionals in Bulgaria, representing a growth of 26% compared to 2018.

 Mobility as a Service

In the year under review ICT took important steps towards strengthening its offering in the field of MaaS. With the acquisition of BNV Mobility, one of the leading smart mobility services firms in the Netherlands, in Q2 2019, ICT significantly increased its position in the mobility market. To enable more efficient and decisive operations, BNV’s activities were fully integrated into InTraffic. The MaaS platform (TURNN) was further developed and commercialized. At the end of 2019 TURNN was involved in several pilots in Groningen, Drenthe, Limburg and the Eindhoven area. 

Strong growth in software solutions

ICT’s offering of proprietary software solutions showed very strong growth in the past year. OrangeNXT welcomed HelloFresh, an innovative player in the meal-kit market, as a large new customer of the MobileNXT SaaS platform. The platform enables HelloFresh to manage its expanding supply chains efficiently and reduce costs while optimising the consumer experience.

Focus in 2020

In 2020 ICT aims to further strengthen its position both in the industries it services and in the geographies in which the company operates. ICT aims to expand its international operations. The company will also continue to fuel the growth of own IP solutions, such as OrangeNXT. At the same time business processes will be further optimised throughout the whole Group by implementing one way of working. Reducing complexity within the organisation through further integration and centralisation will increase effectiveness and efficiency.

Notes to the results

In the financial analysis below focus is put on the pre-IFRS 16 results because it facilitates a fair comparison.

Performance ICT Group

In 2019 ICT Group’s revenue came in at € 155.5 million, an increase of 20%, organically revenue increased 3%. Revenue growth was mostly attributable to the acquisitions of InTraffic (acquired and consolidated in April 2018), Additude (acquired in January 2019 and consolidated as of February 2019), BNV Mobility (acquired in March 2019 and consolidated as of April 2019) and Proficium (acquired in and consolidated as of November 2019). After a strong first half, organic revenue growth was significantly impacted by the sudden termination of a number of projects in the second half by certain large clients.

Revenue added value increased 13% compared to 2018, reflecting an increase of projects and related equipment as well as an increase in use of freelance professionals.

The personnel costs increased 22% to € 93.6 million (post-IFRS 16: € 91.5 million) compared to € 76.7 million in 2018, mainly a combination of the increase in FTEs and higher wages.

Other operating expenses decreased slightly from € 24.0 million in 2018 to € 23.6 million in 2019 (post-IFRS 16: € 20.9 million), as a result of cost efficiency measures. In 2018 other operating costs included one-off contract termination fees of € 0.8 million, following the acquisition of InTraffic. The costs related to strategic initiatives and the realisation of acquisitions and partnerships increased significantly in 2019 to € 0.7 million, compared to € 0.3 million in 2018.

EBITDA came in at € 11.7 million (post-IFRS 16: € 16.5 million), 13% down compared to € 13.5 million in 2018. The EBITDA margin decreased to 7.5% (2018: 10.4%). This was due to the lower productivity that impacted both the secondment business and projects in the second half of the year.

IFRS 16

IFRS 16 ‘Leases’ is effective as of 1 January 2019. Under this new IFRS standard an asset, defined as the right to use the leased item, and a financial liability, representing the present value of future lease payments to be made, are recognised. Consequently, IFRS 16 leads to a shift from operating lease costs to depreciation and amortisation and financial expenses. In 2019 IFRS 16 had an effect of € 4.8 million on EBITDA and an equal and opposite impact on depreciation and amortisation.

Performance per segment

Change in segmentation

In line with the new reporting structure, as of 1 January 2019 ICT changed its reporting segments. The activities in the Netherlands are segmented along the end-markets: Engineering R&D, Industrial Automation (including Raster IA), Infra & Mobility (including InTraffic, BNV, and NedMobiel) and Healthcare Technology Solutions (including BMA). In addition, Bulgaria and Sweden are separate segments. The segment Other includes Improve, OrangeNXT, ICT Belgium, CIS Solutions, ICT Motar and Group holding costs.

Engineering R&D

In this segment, ICT is active in the R&D of the industrial sectors Automotive, High Tech and Machine Building.
In the first half of the year this segment benefited from the high demand in the Automotive industry which translated into a strong performance. In the second half market developments across the spectrum of industries ICT serves weakened. The abrupt termination of a number of projects significantly impacted profitability of this segment during the second half of the year.

Industrial Automation

In the Industrial Automation segment, Logistics & Transport, Industry and Outsourced services are the main business units for ICT. In the first half ICT divested Raster Products. Raster Industrial Automation remains part of the ICT Group.
Port Logistics showed good growth in revenue and profitability, all other units showed a stable performance.

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. InTraffic improved its margin to the average ICT Group level.
The Infra & Mobility segment experienced lower productivity in the Energy and Water & Infrastructure activities and results were also impacted by the upfront outlays in Mobility as a Service.

Healthcare Technology

To strengthen the efficiency of the total Healthcare offering, the integration of the different activities into one ICT Healthcare, which started in the first half of the year, is now completed. Although the part of the healthcare market ICT serves stagnated, sales of foetal heart monitors increased, which resulted in an improved performance compared to last year. This performance was offset by a weak performance of the other secondment activities in the Healthcare entity. 

Bulgaria

In Bulgaria, the nearshoring activities realised healthy growth in both revenue and EBITDA, mainly driven by ongoing demand for nearshoring services. The economies of scale are translating in better margins. The investments in the past period are bearing fruit and the nearshoring activities are performing within the desired margin bandwidth again.

Sweden

With the acquisition of Additude in January this year, ICT expanded to Sweden. The integration into the ICT Group is complete and cross selling opportunities are being exploited. Given the business model of Additude, with a large pool of freelancers, it operates below the average ICT margin.
Productivity in the second half was lower than anticipated, which impacted the margins.

In the segment ‘Other’, Improve showed a slightly lower performance. OrangeNXT doubled its revenue in 2019, driven by product development and new customers. Despite this successful year of operations, OrangeNXT posted start-up losses as expected. Holding costs increased as a result of higher M&A costs.

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. Total amortisation for 2019 (pre-IFRS) amounted to € 5.4 million (2018: € 3.8 million). Depreciation (pre-IFRS) for 2019 amounted to € 1.4 million (2018: € 1.2 million).

The result from associates came in at a loss of € 0.9 million (2018: € 0.4 million loss). The loss is mainly attributable to GreenFlux which, as anticipated, is still loss-making and also reflects ICT’s share of an impairment by GreenFlux on its assets.

Financing expenses came in at € 1.1 million in 2019, an increase compared to € 0.9 million in 2018, due to increased financing.

Taxes in 2019 amounted to € 1.0 million compared with € 2.1 million in 2018.

Net profit in 2019 included a one-off accounting gain of € 0.7 million, as a result of the revaluation of ICT Group’s stake in GreenFlux following the second round of investment by other shareholders. Net profit in 2018 included one-off accounting gains of € 4.1 million in total, of which € 3.5 million was related to the revaluation of the 50% stake in InTraffic already held by ICT and € 0.6 million to the revaluation of ICT Group’s stake in GreenFlux (first round of investment by other shareholders).

Reported net profit for 2019 came in at € 2.7 million (2018: € 9.5 million). This represents earnings per share of € 0.27 (2018: € 0.99). As a result of stock dividend the number of outstanding ordinary shares increased to 9,565,010 at 31 December 2019 (31 December 2018: 9,463,878).

Cash flow developments

In 2019 the net operational cash flow amounted to € 14.4 million (2018: € 11.1 million). The increase is the net effect of increased tax payments, IFRS 16 effects and positive results of disciplined working capital management.

In 2019 the cash outflow on investment activities amounted to € 17.6 million, compared with € 10.2 million in 2018. The main elements of this outflow were the purchase price cash considerations for the acquisitions of Additude, BNV, the payment of the earn-out for the remainder of BMA and Proficium and investments in product development and housing facilities. Cash inflow concerned the sale of Raster Products.

The cash inflow from financing activities amounted to € 2.8 million (2018: cash outflow € 0.9 million). The main elements are the net effect of dividend paid (€ 2.3 million cash outflow) and the increased acquisition financing and the lease liabilities (following IFRS 16).

The net cash position at 31 December 2019 was € 5.8 million (31 December 2018: € 6.2 million). The net cash outflow amounted to € 0.4 million in 2019 (2018: € 0.1 million).

Balance sheet structure

Shareholders’ equity increased to € 54.5 million at the end of 2019 from € 54.2 at the end of 2018, mainly following the net effect of the dividend payment of € 2.3 million and net profit of € 2.7 million. The balance sheet total increased to € 124.4 million at year-end 2019 from € 95.6 million at year-end 2018 as a result of the acquisitions of Additude, BNV and Proficium. In addition the implementation of IFRS 16 lease accounting caused a balance sheet increase of € 13.1 million (lease assets as well as liabilities). The solvency ratio (shareholders’ equity/total assets) stood at 44% at year-end 2019, although lower compared with 57% at year-end 2018, it reflects ICT’s sound financial basis.

Personnel

At 31 December 2019 ICT Group employed 1,413 FTEs (1,468 employees), 15% higher than the 1,227 FTEs (1,274 employees) at year-end 2018. The recent acquisitions and ongoing recruitment efforts contributed to this increase.

Dividend

ICT proposes a dividend of € 0.30 per share for the 2019 financial year (2018: € 0.38). The proposed dividend is subject to the approval of the Annual General Meeting of Shareholders (AGM) to be held on 13 May 2020. For the calculation of the proposed dividend, the net profit realised is adjusted for the accounting gains recognised in 2019 as well as non-cash amortisation amounts. This results in an adjusted net profit for the full year 2019 of € 7.2 million. The proposed dividend of € 0.30 per share represents a pay-out ratio of 40% of adjusted net profit, which is in line with ICT’s dividend policy. ICT offers the option of distribution of the dividend in cash or in shares.

ICT will calculate the dividend payment in shares one day after the end of the optional period on the basis of the weighted average price of ICT shares during the last five trading days of the optional period, which shall end on 2 June 2020. The dividend in cash or in shares will be payable on 4 June 2020.

Outlook

ICT remains fully focused on profitable growth and will continue to execute its buy-and-build strategy; combining healthy organic growth with selective acquisition opportunities.

We foresee demand in the markets we serve in the first half of 2020 to be in line with the second half of 2019. The global economic circumstances are anticipated to remain uncertain in 2020 and therefore we refrain from giving an outlook for 2020. Despite these uncertainties we do see ongoing demand for digital transformation projects. We remain fully committed to deliver on our mid-term objective of increasing annual revenue to between € 200 and € 230 million by 2022, with a targeted EBITDA margin between 13% and 15% (including IFRS 16 effects).

Click here to download the Annex of the Annual Results of 2019.

Gina van der Werf steps down as Supervisory Board Member ICT Group

Due to personal circumstances, Gina van der Werf has decided to step down, effective the end of the year 2019, as member of the Supervisory Board of ICT Group N.V. Mrs. van der Werf joined the Supervisory Board in May 2018.

Theo van der Raadt, chairman of the Supervisory Board of ICT Group: “I regret but respect Gina’s decision and would like to thank her for her efforts on behalf of the ICT Group. Her input was highly appreciated.”

The Supervisory Board has started the process of finding a successor for Mrs. van der Werf.

ICT Group versterkt healthcare activiteiten met nieuw label: ICT Healthcare Technology Solutions

ICT Group heeft besloten haar healthcare activiteiten in zowel BMA  als ICT Netherlands  te integreren in een nieuw label: ICT Healthcare Technology Solutions (HCTS). Hiermee versterkt ICT Group haar positie in de medische markt. Per 1 januari 2020 zal dit traject volledig zijn afgerond maar recent is al een belangrijke mijlpaal bereikt: de lancering van de website van het nieuwe label.

ICT Healthcare Technology Solutions wordt het label waarmee de Europese markt zal worden bediend. Door de integratie ontstaat een bundeling van kennis en ervaring op het gebied van Medical Software Development, Radiotherapie en technologische producten voor de Obstetrie. De samenvoeging biedt synergie, waardoor nog meer toegevoegde waarde  kan worden gerealiseerd binnen onze dienstverlening. Dit heeft niet alleen voordelen voor de klant, maar geeft ook meer mogelijkheden voor eigen medewerkers en andere IT professionals om zich binnen HCTS te ontwikkelen.

Door de expertise van beide bedrijven samen te voegen, kan ICT Group beter en sneller voorzien in de behoefte van de klant, ontstaat meer slagkracht als het gaat om de inzet van middelen en kan het partnernetwerk worden geoptimaliseerd.

ICT Group N.V. is een toonaangevende industrial technology solutions and services provider. Onze specifieke kennis van de markt stelt ons in staat om innovatieve oplossingen te realiseren. Bij ICT Group werken ongeveer 1400 gepassioneerde technische specialisten. De volgende bedrijven zijn onderdeel van ICT Group N.V.: ICT Netherlands, ICT Belgium, Additude (Sweden), CIS Solutions Germany, Strypes (Bulgaria), Raster Industriële Automatisering, InTraffic, NedMobiel, BNV, ICT Healthcare Technology Solutions, OrangeNXT and Improve.

 

 

Q3 2019 results impacted by weak market developments

Key developments:

Q3 2019

  • Revenue grew 13% to € 35.9 million (Q3 2018: € 31.8 million), organic revenue growth came in at 2%
  • EBITDA (Pre-IFRS 16) was down to € 2.0 million (Q3 2018: € 3.1 million), mainly impacted by weak market conditions in the industry

9M 2019

  • Revenue rose 25% to € 115.7 million (9M 2018: € 92.7 million), organic revenue growth of 7%.
  • Underlying EBITDA (Pre-IFRS 16) amounted € 9.0 million (9M 2018: € 8.9 million)
  • EBITDA (Pre-IFRS 16) amounted € 8.4 million (9M 2018: € 8.1 million)

Outlook

  • FY 2019 EBITDA (Pre-IFRS 16) forecast at between € 10 and € 12 million

Key figures

Jos Blejie, CEO of ICT Group N.V.: “After a strong first half of 2019, the third quarter was disappointing for ICT Group. In our business the third quarter is traditionally a quarter with uncertainties due to the summer breaks. Although we anticipated the high organic growth levels to level off in the second half of the year, we did not foresee the rate of deterioration in market conditions. Clients terminated a number of projects unexpectedly, impacting productivity in the third quarter. At the same time, we see increased momentum for our Software as a Service offerings, and we continue to invest in these innovative solutions. These upfront outlays do however impact the short term profitability. We expect the situation of the third quarter to stabilize in the fourth quarter. We have taken the necessary measures and have trust in the recovery of our margins. The anticipated lower productivity in the traditionally strong fourth quarter will however impact EBITDA in the fourth quarter. We therefore expect EBITDA for the full year 2019 to come in at between €10 to €12 million.”

Financial developments

In the third quarter of 2019 revenue increased by 13% to € 35.9 million from € 31.8 million in the same period last year, fully driven by the acquisitions of Additude and BNV in Q1 2019. Organically, revenue growth was limited to 2% in the third quarter, mainly due to the market developments. For the first nine months of the year revenue amounted to € 115.7 million (9M 2018: € 92.7 million). All segments showed growth over the 9 months period compared to last year. Organically, revenue rose 7% year-to-date.

EBITDA decreased to € 2.0 million in the third quarter of 2019 compared to 3.1 million in the same period in 2018. A decline in productivity was the main reason for this decrease.

In the first nine months of 2019 EBITDA was slightly higher in absolute terms compared to last year. The EBITDA margin came in at 7.3% year-to-date (9M 2018: 8.8%). The costs related to strategic initiatives and the realisation of acquisitions and partnerships in 9M 2019 were higher at € 0.6 million (9M 2018: € 0.1 million). In 2018, following the acquisition of InTraffic, one-off costs of € 0.8 million were incurred as contract termination fees.

In the Netherlands performance of the segment Engineering R&D was affected by the termination of a number of projects. The Infra & Mobility segment experienced lower productivity in the Energy activities and results were also impacted by the upfront outlays in Mobility as a Service. The Swedish activities (Additude) reported lower than anticipated results due to low productivity. In Bulgaria, the nearshoring entity Strypes realised healthy growth in both revenue and EBITDA, mainly driven by ongoing demand for nearshoring services.

Outlook

ICT remains fully focused on profitable growth and will continue to execute its buy-and-build strategy; combining healthy organic growth with selective acquisition opportunities. Given the developments this third quarter, the main focus on the short term will be on improving productivity. We have taken necessary measures and we are confident that our margins will recover. For the long term, ICT is fully committed to deliver on its objective of increasing annual revenue to between € 200 and € 230 million by 2022, with a targeted EBITDA margin between 10 and 12%.

We expect stabilisation of the productivity levels though at a lower level than traditionally in fourth quarters. As a result we anticipate a lower EBITDA in the second half of the year compared to the first half. For the full year 2019 this is expected to result in an EBITDA between € 10 and 12 million.

Press release: Half Year Results 2019 ICT Group

FIRST HALF YEAR 2019: Strong revenue and EBITDA growth

International expansion and strengthened position in Smarter Cities mark important steps in strategic roadmap

Highlights H1 2019

  • Revenue came in at € 79.8 million, an increase of 31%, organic growth was 9%
  • EBITDA increased to € 8.8 million including IFRS 16 effects. Pre-IFRS 16 EBITDA increased 27% to € 6.4 million (H1 2018: € 5.1 million)
  • Underlying net profit amounted to € 1.9 million, up 24% compared to H1 2018
  • Acquisition of Additude marks international expansion into Sweden
  • Mobility as a Service strengthened with acquisition of BNV Mobility
  • Letter of intent signed to acquire Proficium to strengthen position of ICT in Smarter Cities
  • Outlook 2019: ICT expects further growth in revenue and EBITDA in the second half of 2019 compared to the first half of 2019

Key figures*

Jos Blejie, CEO of ICT Group N.V.:
“In the first half of 2019 ICT Group showed strong revenue growth, on the back of both acquisitions and robust organic growth. The latter was in particular driven by the strong demand in the High Tech and Automotive sectors. Moreover, with the international expansion, the growth in our nearshoring capabilities and the strengthening of our market position in Infra & Mobility, we are well underway in delivering on our strategic agenda. Our efforts are clearly valued by our business partners, as demonstrated by various awards we received from a number of our key partners in the past months.”

Strategy update

On 23 January 2019 ICT completed the acquisition of Additude. In line with ICT’s strategic direction to expand business into new geographies, ICT foresees Additude to become the platform for the Northern European market offering high-profile industrial technology consulting services. The integration of Additude is ongoing and on schedule. The first cross selling opportunities are being explored.

On 27 March 2019 ICT completed the purchase of 65% of the shares of BNV Mobility, one of the leading Smart Mobility Services firms in the Netherlands with a software MaaS solution. The remaining 35% shares have been acquired in July 2019. Acquiring BNV is a logical next step for ICT to accelerate its position in the Mobility as a Service (MaaS) market. ICT will continue to invest in the enhancements and expansion of the BNV developed MaaS system.

In June 2019 ICT signed a letter of intent to acquire 100% of the shares of Proficium, a fast growing company delivering consultancy services and secondment in the Public Infrastructure market. With this acquisition ICT will further strengthen its position in engineering and consultancy in Smarter Cities.

Furthermore, as agreed at the time of acquisition, ICT purchased the remaining 49% of the shares in BMA in June 2019. Following the acquisition of BMA as a whole, the various health activities within the ICT group will be integrated into one Healthcare Technology unit by the end of this year.

To further increase its nearshoring position in Bulgaria, ICT recently acquired Kodar, a start-up closely collaborating with the University of Plovdiv, thereby expanding its access to technical talents in the second largest city of Bulgaria.

Personnel

At 30 June 2019, ICT Group employs 1,412 people (1,290 FTEs), around 10% higher than at year-end 2018. The acquisitions and successful recruitment campaigns worldwide have contributed to this growth. This also results in one of every two recruits being non-Dutch, evolving the total personnel profile into a more international mix of around 40% being non-Dutch.

Notes to the results

Performance ICT Group
In the first half of 2019 ICT Group’s revenue came in at € 79.8 million, up 31% compared to € 60.9 million reported in H1 2018. Organically revenue increased by 9%. This was mainly driven by strong demand in the High Tech and Automotive sector. This organic growth partly excludes InTraffic (acquired and consolidated in April 2018), Additude (acquired in January 2019 and consolidated as of February 2019) and BNV Mobility (acquired in March 2019 and consolidated as of April 2019).

Personnel costs increased significantly to € 46.4 million (H1 2018: € 37.4 million), primarily because of the increase in FTE’s and salary increases.

Other operating expenses increased from € 12.1 million in H1 2018 to € 13.0 million in the first half of 2019 (post-IFRS 16: € 10.6 million), mainly because of the recent acquisitions and additional outlays in new business development and recruitment. The costs related to strategic initiatives and the realisation of acquisitions and partnerships in H1 2019 was at a high level amounting to € 0.5 million (H1 2018:
€ 0.1 million). In 2018, following the acquisition of InTraffic, one-off costs of € 0.8 million were incurred as contract termination fees.

For the first six months of 2019 EBITDA increased to € 6.4 million (post-IFRS 16: € 8.8 million), compared to € 5.1 million in the comparable period in 2018. The EBITDA margin decreased to 8.0% (H1 2018: 8.3%).

IFRS 16
IFRS 16 ‘Leases’ is effective as of 1 January 2019. Under this new IFRS standard an asset, which is the right to use the leased item, and a financial liability, being the present value of future lease payments to be made, are recognised. Consequently, IFRS 16 leads to a shift from operating lease costs to depreciation and amortisation and financial expenses. In H1 2019 IFRS 16 had an effect of € 2.4 million on EBITDA and an equal and opposite impact on depreciation and amortisation.

Performance per segment

Change in segmentation
Since 1 January 2019 ICT changed its reporting segments in line with the new reporting structure. The activities in the Netherlands are segmented along the end-markets: Engineering R&D, Industrial Automation (including Raster IA), Infra & Mobility (including InTraffic, BNV, and NedMobiel) and Healthcare Technology Solutions (including BMA). In addition, Bulgaria and Sweden are separate segments. The segment Other includes Improve, OrangeNXT, ICT Belgium, CIS Solutions, ICT Motar and holding costs.

Engineering R&D
In this segment, ICT is active in the R&D of the industrial sectors Automotive, High Tech and Machine Building.
In the first six months this segment benefited from the high demand in the Automotive industry. Despite this strong performance, we anticipate that the high growth levels will start levelling off in the second half of the year.

Industrial Automation
In the segment Industrial Automation Logistics & Transport, Industry and Outsourced services are the key markets for ICT. In the first half ICT divested Raster Products. Raster Industrial Automation remains part of the ICT Group.
The segment showed a strong performance, to which all units contributed. EBITDA increased significantly following improved productivity and project results. Furthermore Raster received the highest partnership award of Schneider Electric and was accepted at the Master Level of the Schneider Electric Alliance Program. Raster is one of only two European preferred partners within this Program.

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. InTraffic is fully consolidated in this first half year and improved its margin to the ICT Group target level in the course of the first six months of 2019.

Healthcare Technology
Although the addressable healthcare market stagnates, BMA’s performance improved compared to last year, driven by increased sales of foetal heart monitors. The integration of the different activities into one ICT Healthcare entity, aimed at strengthening the total Healthcare offering, started in the first half of the year and should be completed before the end of the year.

Bulgaria
ICT’s nearshoring entity Strypes reported a considerable increase in revenue in the first six months of 2019. EBITDA grew at a somewhat lower pace due to one-off additional investments in sales and marketing and the costs related to the acquisition of Kodar. With the acquisition of Kodar, a start-up collaborating closely with the University of Plovdiv, ICT has expanded to the second largest city of Bulgaria.

Sweden
With the acquisition of Additude in February this year, ICT expanded to Sweden. Additude continued its strong growth, in line with expectations. The tight labour market is impacting the margins as Additude hired a higher number of temporary staff than usual. The integration into the ICT Group is ongoing and on schedule. Cross selling opportunities are being exploited.

The segment ‘Other’ includes a number of small entities as well as the holding costs of the group. Improve performed in line with last year and was listed in the top 3 of best IT trainers in the Netherlands, published by Enigma Research. OrangeNXT, ICT’s Software as a Service engine, showed strong revenue growth over last year, driven by ICT’s proprietary products developed over the last few years. Furthermore, OrangeNXT was awarded Country Partner of the year 2019 by Microsoft Netherlands.

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. The amortisation for Additude in the first half of 2019 amounted to € 0.5 million. Total amortisation in the first half of 2019 (pre-IFRS) amounted to € 2.6 million (H1 2018: € 1.8 million). Depreciation (pre-IFRS) for the first half of 2019 amounted to € 0.7 million (H1 2018: € 0.5 million).

The result from associates amounted to a loss of € 0.3 million (H1 2018: € 0.2 million loss), mainly attributable to GreenFlux which is, as expected, still loss-making.

Financing expenses came in at € 0.5 million in the first six months of 2019, similar to the comparable period in 2018.

Taxes in the first half of 2019 amounted to € 0.5 million compared with € 0.7 million in the first half of 2018.

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 following the second round of investment by other shareholders. The net profit in H1 2018 included one-off accounting gains of € 4.1 million in total, of which € 3.5 million was related to the revaluation of the 50% stake in InTraffic already held by ICT and € 0.6 million to the revaluation of ICT Group’s stake in GreenFlux.

Reported net profit for the first six months of 2019 came in at € 2.5 million (H1 2018: € 5.7 million). This translates into earnings per share of € 0.27 (H1 2018: € 0.59). The number of outstanding ordinary shares increased during the first half year 2019 to 9,565,010 (31 December 2018: 9,463,878) due to stock dividend. Excluding the one-off accounting gains as explained above the underlying net profit came in at € 1.9 million in H1 2019 compared to € 1.5 million in H1 2018, an increase of 24%.

Cash flow movement

In the first half of the year, net operational cash flow amounted to € 3.8 million positive (H1 2018: € 3.7 million positive).
The net cash position per 30 June 2019 was € 1.6 million positive (31 December 2018: € 6.2 million positive). This decrease was the balanced effect of the purchase price paid for acquisitions, new financing arranged for acquisitions, the repayments of existing acquisition financing, the payment of dividend, investments in product development and normal working capital patterns.

Balance sheet structure

At the end of the first half of 2019, shareholders’ equity stood at € 53.3 million (31 December 2018: € 53.3 million). The balance sheet total increased from € 95.6 million at year-end 2018 to € 126.8 million at 30 June 2019. The main impact were the acquisitions of Additude and BNV. In addition the implementation of IFRS 16 lease accounting caused a balance sheet increase of € 12.9 million (lease assets as well as obligations). Solvency (shareholders’ equity/total assets) stood at 43% at the end of June 2019 (57% at year-end 2018), still reflecting a sound financial basis.

Outlook

ICT is fully focused on profitable growth and will continue to execute its buy-and-build strategy; combining healthy organic growth with selective acquisition opportunities. The employment market for IT talents remains very challenging. Attracting and retaining the right people is a top priority.
ICT is fully committed and confident in its ability to deliver on its long-term objective of increasing annual revenue to between € 200 and € 230 million by 2022, with a targeted EBITDA margin between 10 and 12%.

Barring unforeseen circumstances, ICT expects further growth in revenue and EBITDA in the second half of 2019 compared to the first half of 2019.

Click here to download the Annex: Condensed consolidated interim financial statements 30 June 2019

ICT signs letter of intent to acquire 100% shares of Proficium

ICT Group N.V. (ICT) has signed a Letter of Intent to acquire 100% of the shares of Proficium B.V. (Proficium). Proficium is a fast growing company delivering consultancy services and secondment in the infra market. Its services include developing and deploying tooling and database applications. Proficium has over 20 employees and generates annual turnover of around € 3 million.

The acquisition of Proficium is in line with ICT’s buy-and-build strategy, combining healthy organic growth with selective acquisition opportunities. With the existing water & infrastructure activities of ICT Netherlands and the acquisitions of NedMobiel and InTraffic, ICT is already firmly positioned in the Dutch infra consultancy and engineering market. The specific skills of Proficium with regard to asset management and maintenance engineering further strengthen ICT’s position in this market.

Jos Blejie, CEO ICT: “Proficium is a well-respected supplier on the Dutch infrastructure market. As NedMobiel and Proficium have already successfully worked together on many projects, we believe that these companies have a perfect cultural fit. This acquisition enables ICT to further strengthen its position for engineering and consultancy in Smarter Cities”.

The transaction is expected to be closed in August 2019. Further financial details will not be disclosed.

OrangeNXT door Microsoft Nederland verkozen tot “Country Partner van het jaar 2019”

Vandaag heeft Microsoft Nederland bekend gemaakt dat OrangeNXT uit duizenden partners gekozen is als “Country Partner van het jaar 2019”. Een grote eer en een geweldige prestatie. OrangeNXT Eindhoven, een snel groeiende spin-off van ICT Group N.V., heeft een focus: Klanten succesvol maken door slimme verbindingen te leggen tussen mensen, apparaten en data.

Microsoft benadrukt in haar berichtgeving dat OrangeNXT zich onderscheidt door haar expertise en zeer uitgebreide kennis van operationele technologie te combineren met de specifieke vraag van iedere klant. OrangeNXT levert state-of-the-art oplossingen om haar klanten te ondersteunen bij hun digitale transformatie. Hierbij combineert OrangeNXT haar kennis en de kennis van ICT Group in relevante domeinen zoals: Operationele Technology (OT) Industriële IoT, Artificiële Intelligentie, Machine Learning en automatisering van mobiele gebruikers. OrangeNXT levert Software as a Service gebaseerd op Microsoft Azure.

John Koot, Director Alliances: “We zijn ontzettend trots op het feit dat Microsoft OrangeNXT heeft gekozen als “Country Partner van het jaar 2019”. Onze kracht ligt in het feit dat wij onze klanten kunnen helpen hun bedrijf digitaal te transformeren. Bij OrangeNXT streven wij er altijd naar ultieme klanttevredenheid. Dit bereiken wij door zeer intensief met hen samen te werken. Wij worden hierbij op het gebied van co-creatie, verkoop en marketing ondersteund door Microsoft. De toekenning van deze prijs bevestigt ons dat wij op de goede weg zijn.”

Press release: shareholders meeting ICT Group adopts all resolutions

ICT Group N.V. (ICT) announces that the Annual General Meeting of Shareholders (AGM), which was held today, adopted all proposed resolutions. This included the appointment of Mr. Wouter van de Bunt and Mrs. Angélique de Vries-Schipperijn, and the reappointment of Mr. Theo van der Raadt, as members of the Supervisory Board of ICT Group.

In line with the proposal, the AGM approved a dividend of € 0.38 per share for the 2018 financial year. The dividend will be payable, in cash or in shares, on 5 June 2019. 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 3 June 2019. The ex-dividend date is 17 May 2019.

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ICT Group N.V. is a leading industrial technology solutions and services provider. Our specific industry knowledge of various markets, enables us to realise innovative solutions. Approximately 1400 passionate technical specialists are working for the ICT Group. The following subsidiaries are the main operating entities of the ICT Group: ICT Netherlands (ICT Automatisering Nederland B.V.), ICT Belgium (ICT Belgium BVBA), Additude Sweden (Additude AB), CIS Germany 66% (CIS Solutions GmbH), Strypes Bulgaria (Strypes EOOD), InTraffic B.V., Raster (Raster Industriele Automatisering B.V.), Improve (Improve Quality Services B.V.), NedMobiel B.V., OrangeNXT B.V., BMA (Buro Medische Automatisering B.V.) and BNV 65% (BNV Mobility).

For further information:
ICT Group
Carla Stuifzand, marketing director
+31 (0)88 908 2000
E-mail: info@ict.nl
www.ict.eu

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

Divestment Raster Products B.V.

HMS Industrial Networks AB, a wholly owned subsidiary of HMS Networks AB, located in Halmstad, Sweden, has today acquired all shares in Raster Products B.V. from Raster Beheer B.V., an ICT Group company. For several years Raster Products has been HMS’ primary distributor of Ewon products in the Netherlands. Raster Industrial Automation remains a subsidiary of ICT Group.

You can find the press release of HMS Networks here.