Risk Profile

More on our Risk Profile

Ordina’s material risks can be divided into market and strategic risks, financial risks and operational risks.

Market and strategic risks

  • Given our market and strategic objectives, we are confronted with the following risks:
    The risk profile of projects is on the increase. Customers require clearer obligations for results within which Ordina must operate. As a result, winning or losing such contracts may have a material impact on the performance of Ordina.
  • The current economic crisis will result in a (temporary) waver in demand for IT services. The Dutch government aims to increase efficiency and to become more compact. IT can help to achieve this. Up to present we have primarily noticed cost reduction on the part of the government, however, which has had an impact on turnover and profit development at Ordina.
  • The offshore trend is continuing, driven by both shortages on the employment market and cost control. This trend poses a threat as well as an opportunity.

Financial risks

  • Much of Ordina’s portfolio of activities, particularly in the areas of Consulting and IT services, are and remain, sensitive to upturns and downturns in the market, with most of the costs of a service provider being fixed. It is of the essence that we continue to focus on increasing our revenue from long-term contracts, cutting costs and increasing the flexibility of our cost-base so that we are able to post a sound performance regardless of cyclical movements.
  • The maturing of the IT services market has caused structural pressure on fees and margins. Ordina defends itself against this development by its strategic positioning. In addition, we will continue to invest in methods and systems that guarantee the efficient performance of projects and will take concrete steps to structure the supporting processes as effectively and efficiently as possible. 
  • Over the past years, Ordina has deliberately pursued a strategy to rapidly increase market share via acquisitions. With profitable acquisitions, a material part of the purchase price is made up of goodwill. If the economy were to falter at any point in the future, we might have to post an impairment loss on some of the goodwill.
  • Ordina has renewed its financing in 2011. Yet, there is a risk (due to lower turnover, resulting in a negative operating cash flow) that agreements with banks could be affected. This sends a negative message to our clients, and it could also impact our actual and potential revenue.

Operational risks

  • Control of increasingly larger projects, some of which are executed offshore while remaining Ordina’s responsibility combined with an overall shift from responsibility for delivering best efforts to responsibility for results, continues to pose a risk that requires and receives our professional attention on a continuous basis.
  • Our working conditions must continuously be adapted to changes in the demand from the market. We will have to be flexible in this regard. Employee satisfaction in the IT sector is in general low. Also at Ordina there is also room for improvement and we strive to be in the 'top quartile' in our industry.
  • Continuation of labour shortage in the long term could slow future growth and profitability.