News

, November 11, 2010

Trading Update Ordina N.V.

Ordina reports sequential revenue growth in Q3 2010

Financial Highlights Q3 2010

  • Increase in recurring revenue in Q3 2010 (EUR 108.6 million) compared to Q2 2010 (EUR 107.1 million), despite fewer working days due to the summer holiday season.
  • Recurring revenue for Q3 2010 stood at EUR 108.6 million, a decrease of 9% compared to Q3 2009 (EUR 119.3 million).
  • Continuation of revenue growth per working day for the third consecutive quarter.
  • Strong revenue increase of 10% in the finance market in comparison to Q2 2010.
  • Recurring EBITDA in Q3 2010 of EUR 2.6 million (Q3 2009: EUR 5.6 million).
  • Positive operational cash flow in Q3 2010 (over EUR 1 million).
  • Net Debt position increased slightly in the third quarter to EUR 68.2 million at 30 September 2010 (EUR 67.1 million at the end of Q2 2010), keeping ratios well within the covenants as agreed with lenders.

Operational Highlights Q3 2010

  • Stabilization of tariffs in Q3 2010.
  • Productivity improvement has continued into Q3 2010.
  • The average number of fte’s is 3,575 in Q3 2010, a reduction of 11% in comparison to Q3 2009 (4,035 fte’s).
  • Revenue share from long term contracts increased to 33% (Q3 2009: 31%).
  • Integer divested on 24 August 2010.
  • Appointment of Stépan Breedveld as new member of the Management Board with responsibility for the activities in the Dutch market.

Outlook 2010

  • Divestment of Ormit is expected to be finalized this week.
  • Based on current market developments, Ordina expects to realize a recurring EBITDA of approximately EUR 16 million for 2010.
  • Recently, Ordina paid in cash the third interest payment in relation to the subordinated loan closed in 2009. Subsequently, Ordina will issue new ordinary shares under the current underwriting agreement on 19 November 2010. The share issue will represent an amount of EUR 0.9 million.
  • Expected Net Debt position will decrease to approximately EUR 48 million at the end of Q4 2010, with which Ordina will remain within its covenants as agreed with lenders.

Explanation

Today, Ordina N.V. publishes its trading update for the third quarter of 2010. The third quarter numbers provided, including comparables from previous quarters, are excluding the recently divested subsidiary Integer and are including Ormit.

Recurring revenue for the third quarter of 2010 amounted to EUR 108.6 million. Although this is lower in comparison to the same quarter last year (revenue: EUR 119.3 million), the third quarter revenue showed a slight revenue increase compared to Q2 2010. Corrected for seasonality this growth is even stronger, as the third quarter contains less working days then other quarters due to the summer holiday season. Consequently, the clear upward trend for revenue per working day, which became visible in the first half of this year, clearly continued in the third quarter. This provides further validation of the upward movement. Tariffs have stabilized compared to the previous quarter.

The finance market in particular showed a strong improvement with a revenue growth of 10% in comparison to Q2 2010. As expected, activities in the public market were still negatively affected by continued and long lasting unclarity as to the formation of a new coalition government in the Netherlands. The revenue decline in the public market amounted to 5% in comparison to Q2 2010. Demand for our services in the public market is high, which is being demonstrated by the high number of ‘pilot projects’ that were initiated. Ordina is very well positioned in this market, something the company will benefit from once activities in this segment do pick up.

As a result of our strategy we see an increase in the revenue from long term contracts and from offshore. The revenue share from long term contracts improved to 33% in Q3, compared to 31% in the same quarter last year, whereas the revenue share from offshore activities increased from 6% in Q3 2009 to 7% this quarter.

Recurring EBITDA in the third quarter of 2010 was EUR 2.6 million, compared to EUR 5.6 million for the same quarter last year. Recurring EBITDA in the second quarter of 2010 amounted to EUR 3.4 million.

Productivity in the third quarter has increased structurally compared to the third quarter last year, a continuation of the trend starting in the first half of 2010.

The operational cash flow in the third quarter was positive (EUR 1,2 million). Net Debt position at the end of the third quarter showed a slight increase to EUR 68.2 million in comparison to the previous quarter of EUR 67.1 million. With total Net Debt to adjusted EBITDA of 2.8 (maximum 3.5) and an Interest Coverage Ratio of 4.8 (minimum 3.5) as per the end of Q3 2010, Ordina remained well within its covenants as agreed with lenders. Due to a continued focus on strict working capital management, the company recorded Days of Sales Outstanding (DSO) of 52 days in Q3 2010. This is an improvement of 1 day compared to the second quarter of 2010.

In line with its strategy to focus on its core activities in the areas of consulting, ICT and outsourcing, Ordina announced on 14 October the intention to sell Ormit to its current management and two investors for a total amount of EUR 11.7 million. With this transaction, Ordina reduces its Net Debt and strengthens its balance sheet. The divestment of Ormit is expected to be finalized this week.