News

Jeroen Hellenberg, April 30, 2015

Ordina N.V. results first quarter 2015

Turnover declines, limited impact on margin

Highlights
• Recurring EBITDA down at EUR 4.1 million (Q1 2014: EUR 4.8 million);
• Recurring EBITDA margin drops to 4.7% (Q1 2014: 5.1%);
• Turnover declines by 4.9% to EUR 88.5 million (Q1 2014: EUR 93.6 million);
• Net debt position improved at EUR 7.0 million (Q1 2014: EUR 12.4 million), ratio net debt / adjusted EBITDA stands at 0.7 (maximum leverage ratio: ≤ 1.50);
• Ordina nominated for the Computable Awards 2015;
• Clockwork nominated for Dutch Interactive Awards.

Stépan Breedveld, CEO Ordina, about the results
“Turnover at our largest division, T&C, fell in the first quarter, while the other divisions managed to realise (normalised) growth in difficult market conditions. The effect on the margin was limited, as a result of our constant focus on costs and a more selective projects intake.
Our net debt position improved to EUR 7.0 million. 
 
Recent media reports and the debate related to public sector IT projects have led to a delay in decision-making on IT projects in the public and healthcare markets in the Netherlands. A number of large industrial clients are currently in the midst of cost cutting exercises, which is having an impact on the hiring in of IT staff.

Our main priority for the period ahead will be raise productivity. Our salesforce effectiveness programme should result in greater focus and specialisation in our client approach. We are also accelerating our innovation programme by creating increasing our focus in areas that represent value for our clients. Our initiatives on this front are gaining recognition. For instance, we have been nominated for the Computable Awards 2015 and Clockwork, Ordina’s digital engagement bureau, has been nominated for the Dutch Interactive Awards.”

Outlook
We decline to give a forecast for the coming period.

Turnover

Turnover in the Public Sector and Healthcare segments was down as a result of delays in decision-making following recent media reports and the debate related to government IT projects. Turnover in Financial Services remained relatively stable. The decline in the Industry sector was driven largely by cost cutting at a number of large clients in the energy and telecommunications sectors.

Technology & Competencies
The Technology & Competencies division designs and builds applications for our clients in the form of secondment, sourcing and project contracts for both out of the box and tailor-made solutions. Turnover declined by 12.3% to EUR 41.3 million (Q1 2014: EUR 47.1 million). This decline was largely due to a drop in the number of public sector projects and a decline in demand from a number of large clients in the energy and telecom sectors who are currently implementing cost reduction programmes.

Business Consulting & Solutions
The Business Consulting & Solutions division advises clients on how they can improve their processes and IT systems. The division also combines business know-how and technical expertise to devise sustainable solutions in the field of business intelligence, (digital) client interaction, chain integration and security. Turnover declined by 3.6% to EUR 14.0 million (Q1 2014: EUR 14.6 million). Corrected for the downsizing of the generic activities of Ordina Consulting Public and the sale of Fundation (impact Q1: EUR 1.2 million), turnover was up 5.0% as a result of new projects for clients in the carriers and mainports sector and growth at a number of smaller financial institutions.   

Application Management
The Application Management division is responsible for management, maintenance and renovation of applications in the form of long-term contracts. Turnover was up 3.3% at EUR 14.4 million (Q1 2014: EUR 13.9 million). Turnover was up primarily at a number of clients in the carriers and mainports sector.   

Belgium/Luxembourg
Turnover in the Belgium/Luxembourg division rose by 4.5% to EUR 18.8 million (Q1 2014: EUR 18.0 million). The increase in turnover was largely on the back of growth at large clients in the industry and financial services sectors in both Belgium and Luxembourg.

Sourcing
The Sourcing division acts as strategic partner for large clients, helping them to improve the added value of hired-in IT personnel. Client-specific improvement programmes in the field of productivity improvements, talent development, know-how exchange and innovation are an integral part of this approach. As from 2015, Sourcing is no longer reported as a separate division but deployed on a broader scale for the clients of all divisions in the form of a differentiated delivery model. As from 1 January 2015, the turnover and costs of the sourcing model will be reported in the results of the divisions delivering the services in the Netherlands.

Growth and innovation
Our salesforce effectiveness programme should contribute to an increase in productivity. Our Commerce department will be working in smaller teams with a more clearly defined specialisation in terms of delivery models.
We will accelerate our positioning as an innovative IT partner. We have defined a number of ‘growth diamonds’ in which we join forces with our clients to experiment with innovative applications that add value to their business. It is also important in this context that we expand and intensify our ties with universities, start-ups and knowledge centres to arrive at co-creation with those organisations.  
 
Employees
At the end of the first quarter of 2015, the number of direct employees was up by 7 FTEs, partly as a result of the intensified recruitment of Young Professionals. The number of indirect employees was up by 6 FTEs, who filled existing vacancies.  
In order to further improve productivity, we are making pro-active investments in the training and education of our employees using a T-shaped approach. This means that in addition to training in technical competencies, we are also investing in business know-how and soft skills. 

Financing
The net debt stood at EUR 7.0 million at the end of Q1 2015, an improvement compared to the first quarter of 2014 (Q1 2014: EUR 12.4 million). When compared to year-end 2014, the net debt position increased by EUR 16.6 million, largely as a result of regular seasonal influences (Q4 2014: EUR 9.6 million cash positive). The ratio of net debt / adjusted EBITDA stood at 0.8 (maximum leverage ratio: ≤1.50) and the Interest Cover Ratio stood at 8.6 (minimum interest cover ratio: ≥ 5.0). The ratios are therefore well within the limits agreed in the bank covenants.


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