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.

ICT Group op InfraTech – Tunnelplein

Future proof. Klaar voor de toekomst. InfraTech 2019 is hét kennisplatform waar de opdrachtgevers, aannemers, ingenieursbureaus en toeleveranciers laten zien waarom de Nederlandse infrasector al jarenlang tot de wereldtop behoort.

ICT Group op InfraTech – Tunnelplein
Onze kennis van diverse markten zoals Engineering & R&D, Infra & Mobility, Healthcare Technology and Industrial Automation stelt ons in staat diverse innovatieve oplossingen te realiseren. InTraffic, NedMobiel en OrangeNXT hebben zich onlangs bij ICT Group gevoegd en gezamenlijk staan wij op het Tunnelplein tijdens de InfraTech 2019.

ICT Infra & Mobility Solutions
De Infra & Mobility unit van ICT Group, waar InTraffic, ICT Water & Infra, OrangeNXT en Nedmobiel deel van uitmaken, focussen op infrastructuur en mobiliteits-issues. Door onze expertise en kennis op het gebied van engineering & realisatie van procesautomatisering, mobiliteitsoplossingen, tunnel veiligheid en assetmanagement kunnen we iedere complexe uitdaging aan. Door deze samenwerking kunnen we Nederland toegankelijk, veilig, beschikbaar en duurzaam maken.

Tijdens de InfraTech kunt u nader kennis maken met ICT Group, InTraffic, Nedmobiel en OrangeNXT. Graag laten wij u zien hoe wij Infra & Mobility Solutions toepassen om steden (en tunnels) steeds een beetje slimmer te maken. U bent van harte welkom om aan te sluiten bij een van onze presentaties op het Tunnelplein.

Bekijk hier het programma.

Wouter van de Bunt nominated for appointment to the Supervisory Board

ICT Group N.V. (ICT) today announces the nomination of Mr. Wouter van de Bunt for appointment as member of the Supervisory Board of ICT Group. His nomination made by the Supervisory Board will be on the agenda of the Annual General Meeting of Shareholders of ICT Group on 15 May 2019. At that same meeting the re-appointment of Theo van der Raadt, chairman of the Supervisory Board, will also be on the agenda. This nomination will be for a two year period, in line with the corporate governance code. Mr. Fritz Fröschl, whose second term ends on 15 May 2019, will not be available for re-election.

Wouter van de Bunt (57) was partner at KPMG where he has held several roles in the past 20 years, the latest being Global Head of Mergers & Acquisitions. His focus was on M&A within the national and global Technology, Media and Telecom sector. Prior to KPMG he worked for a number of years at private equity firms and he started his career as an auditor at Ernst & Young.

Theo van der Raadt, chairman of the Supervisory Board of ICT Group: “It is with pleasure that we nominate Wouter van de Bunt for appointment to the Supervisory Board. His extensive experience in the IT sector will be valuable for ICT Group and complement our board. At the same time, I would like to thank Fritz Fröschl for his valuable contribution to the development of the company in the past eight years.”

Wouter van de Bunt will be nominated for appointment for a period of four years until the AGM in 2023. In addition, there will be a proposal to re-appoint Theo van der Raadt, whose second term ends on 15 May 2019, for a two-year period, until the AGM in 2021. This is to ensure sufficient continuity in the Supervisory Board. Both nominations will be made under the condition that the general meeting does not make use of its right of recommendation. After the (re-)appointments, ICT Group’s Supervisory Board will, effective 15 May 2019, consist of the following members: Theo van der Raadt (Chairman), Deepak Luthra, Gina van der Werf and Wouter van de Bunt. Mr. van de Bunt will become member of the Audit Committee.

ICT Group strategy 2022 – DEVELOP THE FUTURE

Today, ICT Group N.V. (“ICT”) presents the outcome of its strategy update ‘DEVELOP THE FUTURE’ at its first Capital Markets Day in Eindhoven. The full presentation is available on the corporate website as well as the Closing statements of the Capital Markets Day.

The buy and build strategy continues to be fully focused on profitable growth, combining a healthy organic growth with selective acquisition opportunities.

Organic growth, in a tight labour market, is based on the following key elements:
• Remain an employer of choice
• Grasp the opportunity of high growth areas and industries with our software as a service solutions bundled in OrangeNXT
• Accelerate ICT’s nearshoring offerings

Besides organic growth, ICT will look into international expansion in Northern European countries and into companies with compelling offerings in the countries in which ICT is already active.

Based on the above ICT has defined its new long term objectives towards 2022:
• Double the company’s revenue from 2017 towards 2022 to around € 200 to 230 million with organic growth of more than 5% combined with acquisitions
• Maintain profitability margins (EBITDA) between 10 and 12%

Jos Blejie CEO: “Our strategy presented today, is building further upon the strong fundament of our consistent execution and track record over the past years. We believe ICT Group is uniquely positioned in the areas we serve, through our multi-domain expertise combined with in-depth industry knowledge, and our ability to integrate this in a compelling technology solution. At the same time we have been investing in new technologies enabling us to expand our unique Industrial and Operational Technology position, including developing in-house (proprietary) solutions. This is opening up new opportunities, both in terms of geographies and business models. The digital transformation demands are such that we will grow and support our customers globally and extend our business internationally. Evolving into a truly European Technology Solutions Provider.”

Q3 2018 RESULTS: REVENUE AND EBITDA GROWTH CONTINUES

Key developments:

Q3 2018

  • Revenue grew 23% to € 31.8 million (Q3 2017: € 25.8 million), organic revenue growth of 3%
  • EBITDA of € 3.1 million, up 24% compared to € 2.5 million in Q3 2017
  • Software solutions bundled in OrangeNXT

9M 2018

  • Revenue rose 21% to € 92.7 million (9M 2017: € 76.5 million), organic revenue growth of 5%.
  • Underlying EBITDA of € 8.9 million (9M 2017: € 7.8 million). Including one-off costs for contract termination fees at InTraffic (€ 0.8 million), EBITDA amounted to € 8.1 million

Outlook

  • FY 2018 underlying EBITDA forecast at between € 13 and 14 million

Key figures

Jos Blejie, CEO of ICT Group N.V.: “ICT Group continues to realise good growth while making strategic progress in becoming a leading total solutions provider. The acquisition of the remaining shares in ICT Mobile was the jumpstart for OrangeNXT in which we have bundled promising ICT Group software solutions to help our customers reap all the benefits that digital transformation has to offer. We are convinced that combining our in-depth industry knowledge with our ability to connect people, devices and data provides a unique offering. Our outlook for the fourth quarter is positive and we expect an underlying EBITDA of between € 13 and € 14 million for the full year 2018.” 

Financial developments
In the third quarter of 2018 revenue increased by 23% to € 31.8 million from € 25.8 million in the third quarter of 2017. Organically, i.e. excluding NedMobiel and the full consolidation of InTraffic, revenue grew 3%. For the first nine months of the year revenue amounted to € 92.7 million (9M 2017: € 76.5 million). Revenue rose 5% organically year-to-date.

EBITDA increased to € 3.1 million in the third quarter from € 2.5 million in the same period of 2017, mainly as a result of improved productivity at ICT Netherlands and recent acquisitions. The EBITDA margin was 9.7% in the third quarter, in line with 2017 (9.6%).

In the first nine months of 2018 EBITDA was up 4% compared to last year. Underlying EBITDA, i.e. excluding the one-off costs of € 0.8 million in the second quarter of 2018 relating to contract termination fees at InTraffic, increased by 14% compared to the same period last year. The resulting underlying EBITDA margin came in at 9.6% year-to-date (9M 2017: 10.2%). The positive impact of higher productivity levels at ICT Netherlands was offset by substantially lower EBITDA margins at InTraffic and lower hardware sales at BMA. 

Strategic themes
ICT has made clear choices in terms of growth, focusing on the strategic themes of Smarter Industries, Smarter Cities and Smarter Health. Smarter Cities realised considerable growth, mainly as a result of the acquisition of NedMobiel and the remaining stake in InTraffic. Smarter Industries posted good organic revenue growth, while revenue in Smarter Health declined as a result of lower hardware sales at BMA and lower productivity in the ICT Healthcare unit.

OrangeNXT
In September 2018 ICT Group acquired the remaining 49% of the shares in ICT Mobile from its management. The software solutions provided by ICT Mobile have been housed with the solutions provided by other ICT Netherlands business units in OrangeNXT (formerly ICT Mobile), to distinguish the software as a service offerings from traditional time hire and project activities.   

CIS Solutions Germany
CIS Solutions is a reselling agency for LogicNets and Internet of Things solutions in Germany for which ICT Group provided loans in 2016. In the third quarter of 2018 the outstanding convertible loans were converted into shares. Combined with an additional investment, ICT Group obtained 66% of the shares in CIS Solutions Germany.

Outlook
Going forward ICT Group will continue to focus on growth, both organically and through acquisitions. ICT Group continues to invest in creating a strong platform to take its transformation into a total solution provider to the next level. The battle for talent continues and attracting and retaining the right people remains a key priority.

For the full year 2018 ICT Group expects underlying EBITDA to come in at between € 13 and € 14 million.

ICT Group acquires remaining 49% in ICT Mobile – Software propositions consolidated in new entity OrangeNXT

ICT Group N.V. (ICT) announces that it has acquired the remaining 49% of the shares of ICT Mobile B.V. (ICT Mobile) from management. The software solutions of ICT Mobile together with software solutions of other business units within ICT Netherlands will be consolidated into a new entity, OrangeNXT (www.orangenxt.com), to distinct software offerings from the traditional time hire and project activities within ICT.

OrangeNXT focuses on ready to use software solutions, offered as Software as a Service. The plug-and-play cloud platform that connects people, devices and data consists of three solutions. ConNXT provides asset management and predictive maintenance solutions. MobileNXT delivers real-time tracking and tracing support for field service engineers, logistics staff, parcel delivery services and auditors. DigitalNXT helps companies to accelerate their digital transformation. The solutions of OrangeNXT are aimed at the smarter cities and smarter industries segments and cover many industries, from water management to logistics and transportation.

ICT Mobile was established as a start-up in 2016 together with the current management, Huub van der Linden and Jeroen Donkers. Both have a long track record in the Enterprise Mobility market, and will stay on board to lead OrangeNXT, together with director Alliances John Koot. The purchase consideration will be paid in cash. Further financial details will not be disclosed.

Press release: Half Year Results 2018 ICT Group

FIRST HALF YEAR 2018: SOLID PERFORMANCE

– Growth momentum maintained –

Highlights H1 2018

  • Revenue increased 20% to € 60.9 million, 5% organic growth
  • Underlying EBITDA up 9% to € 5.8 million (H1 2017: € 5.3 million). Including one-off costs related to the contract termination fees at InTraffic (€ 0.8 million), EBITDA was € 5.1 million
  • Net profit came in at € 5.7 million (H1 2017: € 2.6 million), including one-off accounting gains of
    € 4.1 million related to the acquisition of InTraffic and the revaluation of ICT’s stake in GreenFlux
  • Acquisitions of InTraffic and NedMobiel completed
  • Outlook 2018: ICT expects further growth in revenue and EBITDA in the second half of 2018 compared to the first half of 2018

Key figures

Jos Blejie, CEO of ICT Group N.V.:
“ICT Group continues its growth momentum and achieved revenue and EBITDA growth. This growth is supported by favourable market conditions and driven by the right strategic actions, positioning the company higher in the value chain. Our recent acquisitions NedMobiel and InTraffic further strengthened our offering in Smarter Cities, allowing us to serve any client in the field of mobility and infrastructure. Having achieved leading positions in Smarter Cities and Smarter Industries, our focus will now shift to strengthening our position in Smarter Health in the coming periods. Moreover, we cautiously look for international expansion in our traditional Industrial activities. Our key challenge remains attracting and retaining professionals, while keeping salary increases in balance with tariffs.”

Strategy update

In January 2018 ICT completed the purchase of 100% of the shares of NedMobiel B.V., a Dutch expert consultancy company for complex infrastructures. With some 25 professionals, NedMobiel has approximately € 3 million revenues. This acquisition supports ICT’s transition from a leading software integrator to a total technology and service provider, by increasing revenue from projects as well as from consulting services.

ICT completed the acquisition of the remaining 50% of the shares of InTraffic B.V. ICT now holds 100% of the shares of InTraffic. The acquisition of InTraffic enables ICT to further expand its position in the strategic ‘Smarter Cities’ theme. Together with the recent NedMobiel acquisition and the unit Water and Infrastructure ICT is now able to fully service Water, Rail and Road infrastructures and mobility.

InTraffic’s current margin is below ICT Group’s target margin range. In cooperation and integration, the focus will be on increasing efficiency. The objective is to bring InTraffic’s margins more in line with ICT’s overall margins. InTraffic, located in Nieuwegein, designs and builds applications for Traffic Management, Infrastructure Monitoring and Travel Information. The company was founded in 2003 as a joint venture between ICT and engineering company Movares. With 150 professionals InTraffic generates annual turnover of approximately € 19 million.

Notes to the results

Performance ICT Group
In the first half year of 2018 ICT Group’s revenue came in at € 60.9 million, up 20% compared to € 50.7 million reported in H1 2017. The revenue growth showed a consistent trend. Organically, excluding the contribution of HTS, NedMobiel and three months full consolidation of InTraffic, revenue increased by 5%. This was mainly driven by the good performance of ICT Netherlands where project activities, especially in the area of Automotive and Water & Infra, increased substantially.

Strategic themes

ICT’s growth strategy focuses on the themes Smarter Industries, Smarter Cities and Smarter Health. Within these themes, ICT delivers added value to its customers. All underlying markets benefited from good market circumstances and have shown growth in the first half of 2018. Smarter Cities nearly doubled, due to the acquisitions of NedMobiel and InTraffic’s remaining 50% stake. Organically Smarter Cities realised 17% growth. The declining revenue in Smarter Health is a result of a delay in the delivery of foetal heart monitors at BMA and lower productivity in the ICT Healthcare unit.

Personnel costs increased significantly to € 37.4 million (H1 2017: € 31.0 million), primarily because of an increase in number of employees and salary increases.

Other operating expenses also increased to € 12.1 million (H1 2017: € 8.9 million), mainly because of the recent acquisitions. The investment levels in H1 2018 increased compared to the first half of 2017. ICT continued its increased outlays in recruitment and education. The costs related to strategic initiatives and the realisation of acquisitions and partnerships amounted to € 0.2 million (H1 2017:
€ 0.1 million). Furthermore, following the acquisition of InTraffic, one-off costs of € 0.8 million were incurred as contract termination fees. Other operating expenses also included one-off costs of € 0.4 million related to the 40-year anniversary of the company and start-up costs of € 0.2 million for ICT Belgium BVBA.
Underlying EBITDA for the first six months of 2018 increased to € 5.8 million, compared to € 5.3 million in the comparable period in 2017. Including the one-off costs of € 0.8 million related to the contract termination fees at InTraffic, EBITDA decreased by 5% compared to the same period last year.

The underlying EBITDA margin decreased from 10.5% in H1 2017 to 9.5% in H1 2018. This decrease in the underlying EBITDA margin is the balanced effect of a good performance at ICT Netherlands, the substantially lower EBITDA margins at InTraffic and lower results at Raster and BMA.

Performance per segment

ICT Netherlands showed a strong performance in the first half of 2018. Revenue increased 13% to
€ 44.4 million in H1 2018 from € 39.3 million in the same period last year. The increase is the result of positive market circumstances and firm recruitment efforts which led to more FTE’s and increased productivity. Organically, revenue was up approximately 9%. EBITDA increased 31% from € 3.6 million in the first half of 2017 to € 4.7 million in H1 2018. As a result of more project activities, licences and materials sales grew significantly compared with last year.

Strypes Bulgaria (“ICT Nearshoring”) reported an increase in revenue from € 4.6 million in H1 2017 to € 4.8 million in the first six months of 2018. The investments in the organisation, mainly in quality improvement are ongoing. This resulted in an operational margin at the same level as in the first half of 2017. EBITDA came in at € 0.9 million in H1 2018 (H1 2017: € 0.9 million).

InTraffic is consolidated as of 1 April 2018 and contributed revenue of € 4.4 million in the second quarter. EBITDA included one-off costs of € 0.8 million, resulting from contract termination fees and amounted to a loss of € 0.6 million.

The segment ‘Other’ recorded revenues of € 9.1 million (H1 2017: € 7.4 million). The market for Improve was positive and the company performed in line with the first six months of 2017. For Raster the challenging market conditions in the oil and gas sector continued, which negatively impacted the company’s performance. BMA performed less compared with last year mainly due to a delay in the delivery of foetal heart monitors. NedMobiel performed in line with expectations and realised margins in line with ICT Group’s target margins in the first half of 2018.

Other financial information

Amortisation and depreciation
ICT has attributed a value to and is amortising several intangible assets, including order backlog, software and customer relations of its recent acquisitions. The amortisation for InTraffic and NedMobiel in the first half of 2018 amounted to € 0.4 million. Total amortisation in the first half of 2018 amounted to € 1.8 million (H1 2017: € 1.2 million). Depreciation for the first half of 2018 amounted to
€ 0.5 million (H1 2017: € 0.5 million).

The operating profit amounted to € 2.8 million in H1 2018 (H1 2017: € 3.7 million). As a result of lower EBITDA and higher amortization, the operating margin decreased to 4.6%, compared to H1 2017 (7.2%).

Results from joint ventures and associates
InTraffic was still reported as a joint venture in the first quarter of 2018. The results in Q1 2018 were in line with Q1 2017. The result from associates amounted to a loss of € 0.2 million (H1 2017: € 0.2 million loss), mainly attributable to GreenFlux. LogicNets achieved a break-even result in the first half of the year. CIS Solutions (Germany) developed in line with plan which resulted in a small loss in the first half of 2018.

Financing expenses increased to € 0.5 million in the first six months of 2018, from € 0.3 million in the comparable period in 2017, as a result of increased financing for the recent acquisitions and a loss on the devaluation of loans to Valuemaat that filed for bankruptcy in the first half of 2018 (€ 0.2 million).

Taxes in the first half of 2018 amounted to € 0.7 million compared with € 0.7 million in the first half of 2017.

One-off accounting gains
As a result of the acquisition of the remaining 50% in InTraffic, ICT had to recognize a one-off accounting gain of € 3.5 million, related to the revaluation of the 50% stake in InTraffic already held by ICT.

Following the investment by new shareholders in GreenFlux, ICT’s stake dilutes from 24.49% to 19.57%. As a result of the revaluation of its stake in GreenFlux, ICT realized a one-off accounting gain of € 0.6 million.

The impact of step up accounting and purchase price allocation of both transactions is explained in detail in the notes to the interim financial statements.

Net profit for the first six months of 2018 increased to € 5.7 million, compared with € 2.6 million in H1 2017. An amount of € 5.6 million is attributable to the shareholders of ICT Group N.V. (H1 2017:
€ 2.5 million). This translates into earnings per share of € 0.59 (H1 2017: € 0.27). The number of outstanding ordinary shares increased during the first half year 2018 to 9,463,878 (31 December 2017: 9,411,301) due to stock dividend.

Cash flow movement

In the first half of the year, net operational cash flow amounted to € 3.7 million positive (H1 2017: € 0.5 million negative). The net cash position per 30 June 2018 was € 2.0 million positive (31 December 2017: € 6.3 million positive). This decrease was the balanced effect of the purchase price paid for acquisitions, new financing arranged for these acquisitions, the repayments of existing acquisition financing, the payment of dividend, investments in housing facilities, and normal working capital patterns.

Balance sheet structure

In the first half of 2018, shareholders’ equity increased to € 50.4 million (31 December 2017: € 47.7 million) mainly as a result of the net effect of net profit of € 5.7 million and dividend paid of € 2.4 million. The balance sheet total increased from € 81.6 million at year-end 2017 to € 95.3 million at 30 June 2018, as a result of the acquisition of InTraffic and NedMobiel. Solvency (shareholders’ equity/total assets) stood at 52.8% at the end of June 2018 (58% at year-end 2017).

Personnel

At 30 June 2018, ICT Group employs 1,199 people (1,148 FTEs), around 16% higher than at year-end 2017. The acquisitions of InTraffic and NedMobiel and ongoing recruitment efforts contributed to this increase.

Outlook

ICT will continue to focus on growth, organically as well as through acquisitions. With the full consolidation of InTraffic and the acquisition of NedMobiel the company increased its size in Smarter Cities. Increasing its size in Smarter Health remains a focus point for the company. ICT will continue to be disciplined and cautious in its acquisition strategy.

ICT expects its capital expenditures and research & development expenditures to increase in 2018, in line with the increased scale of the company. ICT invests in creating a strong platform to bring the transformation into a total solution provider to the next level. The battle for talent continues and attracting and retaining the right people remains to be one of our key priorities.

Based on the above, ICT expects further growth in revenue and EBITDA in the second half of 2018 compared to the first half of 2018.

Click here to download the Annex of the Condensed consolidated interim financial statements of 30 June 2018

ICT Group gaat automatisering vijftien rioolwaterzuiveringen vervangen

Roy Jansen (COO ICT Group) en Joost de Ruig (directeur water HNK)

Hoogheemraadschap Hollands Noorderkwartier (HHNK) gunt het vervangen van de procesautomatisering van vijftien rioolwaterzuiveringsinstallaties (RWZI’s) aan ICT Group. HHNK koos voor ICT Group vanwege de uitstekende verhouding tussen prijs en kwaliteit.

Het huidige automatiseringssysteem van de rwzi’s van HHNK is vijftien tot twintig jaar oud, is gedateerd en dient om meerdere redenen vervangen te worden.

Gefaseerde aanpak
Een belangrijke taak van Hoogheemraadschap Hollands Noorderkwartier (HHNK) is het transporteren en zuiveren van afvalwater. Dit wordt gedaan met behulp van rioolgemalen, rioolwaterzuiveringsinstallaties en een SlibDroogInstallatie (SDI). Met deze opdracht worden  procesinstallaties van HHNK voor de rwzi’s gefaseerd in vijf jaar tijd vervangen.

Voordelen
Een nieuw ICT-systeem biedt meerdere voordelen. Het maakt het ook makkelijker om op verschillende doelen te sturen. Denk bijvoorbeeld aan het besparen van energie terwijl het zuiveringsrendement hoog blijft. Een nieuw systeem kan ook makkelijker met andere systemen communiceren zoals onder meer peilgemalen of de rioolgemalen van HHNK en de gemeenten.

Klaar voor de toekomst
HHNK oordeelde dat ICT Group de projectaanpak, de cybersecurity en informatievoorziening goed op orde heeft. Het waterschap toonde ook veel waardering voor de uitgebreide beschrijving van de test- en calamiteiten procedure, ombouwplan en het gegeven dat ICT Group zonder voorbehoud kan voldoen aan de gevraagde performance eisen.

Trots
Jos Blejie, CEO ICT Group is trots dat ICT Group de opdracht heeft gekregen. “Als totaalleverancier van technologie en diensten heeft ICT een sterke positie in de watermarkt. Wij leveren altijd de hoogst haalbare toegevoegde waarde aan onze klanten.”

ICT Group op Wonderware Benelux Knowledge Exchange

Tijdens het jaarlijks evenement ‘Wonderware Knowledge Exchange’is ook ICT Group aanwezig als sponsor en met een tafelpresentatie. Ontmoet op deze dag onze collega’s Bas Hazewinkel, Martin Bijl, Leendert Mijnders en Alvin Riemersma.

Tijdens deze dag projecteert Wonderware dit jaar de nieuwste Wonderware software releases en ontwikkelingen binnen de industrie en infrastructuur letterlijk op het witte doek. Dit doen zij onder andere aan de hand van praktijkcases die gepresenteerd gaan worden door zowel system integrators als eindgebruikers.

Lees hier meer over het evenement.