ANNUAL GENERAL MEETING 2018 MAKING THE WORLD A LITTLE SMARTER THE NEXT LEVEL
Cautionary Statement Any forward-looking statements in this presentation factors which are neither manageable nor foreseeable by ICT and some of which are beyond ICT’s control. refer to future events and may be expressed in a variety of ways, such as “expects”, “projects”, “anticipates”, “intends” or other similar words In view of these uncertainties, no certainty can be (“Forward - looking statements”). ICT Group N.V. given about ICT’s future results or financial position. (“ICT”) has based these forward -looking statements We advise you to treat ICT’s forward -looking on its current expectations and projections about statements with caution, as they speak only as of the future events. ICT’s expectations and projections may date on which the statements are made. ICT is under change and ICT’s actual results, performance or no obligation to update or revise publicly any forward- achievements could differ significantly from the looking statement, whether as a result of new results expressed in, or implied by, these forward- information, future events or otherwise, except as looking statements, due to possible risks and may be required under applicable (securities) uncertainties and other important legislation.
Agenda 1 Business Highlights 2 Operational developments 3 Financial Results 4 Strategy and outlook 5 Q & A
1. BUSINESS HIGHLIGHTS
2017 FULL YEAR RESULTS SUMMARY Revenue up 17% Revenue Added value revenue 7% organic growth (2016: 8%) € 105.0 m € 93.4 m Attrition low but increasing + 17% (2016: € 89.7 m) + 18% (2016: € 79.4 m) Recruitment environment remains challenging + 7% Organic growth EBITDA increase 17% Productivity and rates in line with 2016 EBITDA Operational cash flow All units perform in line with expectations, except € 7.9 m € 12.0 m for BMA (H2 2017 above expectations) and Raster (H2 2017 below expectations) + 17% (2016: € 10.3 m) + € 2.8 m (2016: € 5.1 m) Operational cash flow Improvement in line with expectations Net profit Earnings per share Net result and EPS € 5.2 m € 0,56 adjusted for one- off tax gain in 2016 (€0.8m), net profit was up 24% in line with growth of the + 4% (2016: € 5.0 m) company (2016: € 0,56) All in € millions rounded, except earnings per share
M & A HIGHLIGHTS DURING THE YEAR Nozhup Q1 Q2 Ultimo Q1 operationally and legally integrated HighTech Solutions Announcement of the acquisition Integration of 27 passionate professionals joining ICT of 100% of the shares of Integration with Machine & Systems unit Completed. End of 2017 fully integrated Divestment Strypes Netherlands No cultural fit and likelihood to obtain majority NedMobiel Q3 Q4 27 bachelor/master degree professionals Infrastructure safety, asset management and mobility Divestment minority stake of Announcement of the signing of an LOI for acquisition of Post-year end event 25% in Strypes Nederland to 100% of the shares of existing shareholders. Announcement of the signing LOI for the acquisition of 50% of the shares of InTraffic from Movares
FY 2017 RATIOS EBITDA margin in line with 2016 EBITDA / revenue Net profit / revenue In rapidly growing organisation 11.4 % 5.0 % Net profit as % of revenue lower than 2016 (2016: 11.5%) (2016: 5.6 %) Adjusted for one off tax-gain in 2016 net profit as % of revenue in line with 2016 Solvency Revenue / FTE 58.4 % € 108.7 k Average revenue per FTE increased 1.3% Due to tight labour market average cost per (2016: 55.2 %) (2016: € 107.3 k) employee increased 2.6% EBITDA / FTE increased 0.7% to € 12.4k / FTE Indirect cost / revenue Average FTE Indirect costs in line with 2016 19.8 % 966 Slight increase due to salary increases and recruitment costs (2016: 19.6 %) (2016: 836)
2017 EMPLOYEE DEVELOPMENT 131 175 Attrition 13 % (2016: 12 %) is reflecting the battle for talent in the market 27 At 31 December 2017 ICT employs 1,032 people (31/12/2016: 969) 990 Inflow in line with expectations and last year 919 Outflow in Q4 higher than anticipated Employee satisfaction 7.1 (2016: 7.0) Hirings Leavers FTE as at FTE as at Effect HTS Acquisition 31/12/2017 31/12/2016
2017 REVENUES BY CATEGORY Split of revenues did not materially change: € 44.8 m 2017 2016 50 € 39.1 m € 38.8 m 45 € 33.3 m Product sales Product sales Other Other 40 4% 3% 5% 5% Secondment Secondment 35 43% 44% Recurring Recurring 30 11% 11% 25 € 11.3 m 20 € 9.7 m 15 € 5.3 m € 4.7 m € 4.7 m € 2,9 m 10 5 Projects Projects 37% 0 37% SECONDMENT PROJECTS RECURRING PRODUCT OTHER SALES 2017 2016
2017 REVENUES BY THEME Split of revenues did change as a result of transfer of Logistics activities to Smarter Industries: € 71.1 m 80 2017 2016 € 61.9 m 70 60 Other Other 6% 6% 50 Smarter health Smarter Health 12% 11% 40 30 € 16.4 m Smarter Smarter € 11.9 m € 11,2 m Cities* € 11,0 m Cities* 13% 16% 20 Smarter € 6.3 m Smarter € 5.0 m Industries* Industries* 68% 10 69% 0 SMARTER SMARTER SMARTER OTHER INDUSTRIES* CITIES* HEALTH 2017 2016 * Logistic activities transferred from Smarter Cities to Smarter Industries
2017 REVENUES BY GEOGRAPHY North America Asia 1% Rest of Europe 2% 5% Germany 6% Netherlands 85% • No comparable numbers 2016
INITIATIVES, JOINT VENTURES AND ASSOCIATES AHEAD OF PLAN IN LINE WITH PLAN BEHIND PLAN GREENFLUX (24.49%) CIS SOLUTIONS (0%) LOGICNETS (20%) • Growth > 200% • Growth > 100% in line with • Organic growth was below expectations with first major expectations • Well ahead of 2017 growth contracts signed in H1 2017 • Still not profitable, which targets with openings in • Reached break-even in H2 2017 Poland, Germany and UK resulted in full impairment ICT MOBILE (51%) UNIT DIGITAL TRANSF. INTRAFFIC (50%) • Profitable growth > 150% • Profitable growth > 200% • Lower second half due to cost reduction plans of • Growing rapidly and ahead largest customer ProRail of schedule
Q1 2018 RESULTS Revenue growth 12% • Organic growth 6% Revenues EBITDA € 28.7 m € 6.5 m Underlying EBITDA margin lower than Q1 2017 + 12 % (Q1 2017: € 25.6 m) (Q1 2017: € 2.8 m) • Underlying EBITDA increased to € 3.0 million • Including one- off accounting gain of approximately € 3.5 million, mainly related to the revaluation of the 50% stake Underlying EBITDA Underlying EBITDA / in InTraffic already held by ICT revenue 10.3 % € 3.0 m • ICT Netherlands performed well. The results of Strypes + 6% (Q1 2017: € 2.8 m) Bulgaria are somewhat behind. Raster is experiencing a (Q1 2017: 10.9%) lack of larger new projects • Acquisitions of NedMobiel and Intraffic completed
2. OPERATIONAL DEVELOPMENTS
SEGMENT ICT NETHERLANDS Revenue growth 18% Revenues EBITDA Nozhup was main contributor € 81.3 m € 8.3 m Productivity levels in line with last year Average tariff increase in line with average salary + 18% (2016: € 69.0 m) + 24% (2016: € 6.6 m) increase EBITDA up 24% O rganic growth EBITDA / revenue Full year consolidation of Nozhup 10.2 % Consolidation of HTS from June 2017 onwards (2016: 9.6%)
SEGMENT STRYPES BULGARIA Revenue up 27% Revenues EBITDA Increase recorded at both existing and new € 1.9 m € 9.6 m clients + 27% (2016: € 7.6 m) + 12% (2016: € 1.7 m ) EBITDA increased 12% Continued investments in the organisational effectiveness in a rapidly growing company to safeguard continued strong and sustainable growth EBITDA / revenue 19.5 % (2016: 22.0%)
SEGMENT OTHER Revenue growth Revenues EBITDA IMPROVE showed recovery in H2 after slow start to € 1.8 m € 16.4 m the year RASTER achieved a good H1 but showed a more + 14 % (2016: € 14.3 m) - 6% % (2016: € 2.0 m) moderate H2 BMA benefited from a delayed launch of foetal heart monitoring equipment EBITDA IMPROVE in line with expectations RASTER experienced margin pressure as a result of the adverse impact of two projects BMA recorded substantially better results
3. FINANCIAL RESULTS
Consolidated statement of comprehensive income (x € 1,000) 2017 2016 % Change Continuing operations Revenue 104,989 89,729 17.0% Cost of Materials and subcontractors 11,594 10,354 12.0% Employee benefit expenses 62,516 52,014 20.2% Depreciation and amortisation 3,559 2,924 21.7% Other operating expenses 18,881 17,065 10.6% Total operating expenses 96,550 82,357 17.2% Operating profit 8,439 7,372 14.5% Financial expenses (546) (538) Financial income 62 6 Result from joint ventures 113 221 Result from associates (541) (1,044) Other financial results 0 - Result before taxes from continuing operations 7,527 6,017 Income tax expense (1,915) (1,705) Net profit from continuing operations 5,612 4,312 Discontinued operations Net profit after taxes from discontinued operations - 810 Net profit 5,612 5,122 Net profit attributable to: - Shareholders of ICT Group N.V. 5,226 5,006 4.4% - Non-controlling interests 386 116
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