Interim / Quarterly Report • Aug 24, 2017
Interim / Quarterly Report
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| About Ordina | 3 |
|---|---|
| Statement from the Management Board | 4 |
| Key figures Ordina N.V. | 5 |
| Highlights H1 2017 | 6 |
| Highlights Q2 2017 | 6 |
| Jo Maes, Ordina CEO, on the results | 6 |
| Management agenda | 7 |
| Developments Q2 2017 | 8 |
| Developments H1 2017 | 8 |
| Market developments | 9 |
| Employees | 10 |
| Financial developments | 11 |
| Risk Management | 13 |
| Additional information | 14 |
| Condensed consolidated interim financial statements | |
| Consolidated balance sheet Ordina N.V. | 16 |
| Consolidated profit and loss account Ordina N.V. | 17 |
| Consolidated statement of comprehensive income | 18 |
| Consolidated statement of changes in equity | 19 |
| Consolidated cash flow statement Ordina N.V. | 20 |
Notes to the condensed consolidated interim financial statements 21
Ordina is the largest independent IT services provider in de Benelux, with around 2,700 employees. We devise, build and manage IT applications in the public sector, financial services, industry and the healthcare sector. Our goal is IT that helps people. IT that matters and that has been developed without wasting any resources. We do this by working with our clients in partnerships for sustainable innovation.
Ordina was founded in 1973. The company's shares have been listed on NYSE Euronext Amsterdam since 1987 and are included in the Small Cap Index (AScX). In 2016, Ordina recorded turnover of EUR 344 million. You will find additional information on our corporate website: www.ordina.com.
This document comprises the 2017 interim report and the condensed consolidated interim financial statements of Ordina N.V. This interim report has been prepared in accordance with IAS 34, 'Interim Financial Reporting'. This interim report does not contain all the information required for financial statements. It should therefore be read in conjunction with the consolidated financial statements for the full year 2016. These interim financial statements are unaudited.
The Management Board hereby declares, in accordance with Section 5:25d (2) (c) of the Dutch Financial Supervision Act, that to the best of their knowledge:
Nieuwegein, 23 August 2017
J. Maes, CEO J.W. den Otter, CFO
| Change H1 2017 on |
|||
|---|---|---|---|
| H1 2016 | H1 2017 | H1 2016 | |
| (in thousands of euros, unless indicated otherwise) | |||
| Revenue the Netherlands | 133,555 | 126,693 | $-5.1%$ |
| Revenue Belgium / Luxembourg | 44,197 | 46,216 | 4.6% |
| Total Revenue | 177,752 | 172,909 | $-2.7%$ |
| Recurring | 3,125 | 1,900 | |
| EBITDA Margin the Netherlands | 2.3% | 1.5% | |
| EBITDA Belgium / Luxembourg | 5,198 | 5,053 | |
| EBITDA Margin Belgium / Luxembourg | 11.8% | 10.9% | |
| EBITDA | 8,323 | 6,953 | 1,370- |
| EBITDA margin | 4.7% | 4.0% | $-0.7%$ |
| Redundancy costs | 3,441 | 3,286 | |
| Net profit | 2,954 | 1,034 | 1,920- |
| Shareholders' equity 1 | 144,987 | 145,580 | |
| Capital asset ratio | 60 | 62 | |
| Intangible fixed assets 1 | 135,593 | 133,330 | $-1.7%$ |
| Tangible fixed assets | 5,863 | 5,093 | $-13.1%$ |
| Total assets | 243,273 | 235,076 | $-3.4%$ |
| Days Sales Outstanding (DSO) | 57 | 54 | |
| Days Payables Outstanding (DPO) | 61 | 61 | |
| Net cash position | 72 | 2,159 | |
| Leverage ratio 1 | $-0.0$ | $-0.1$ | |
| Average number of staff (FTE) | 2,756 | 2,597 | |
| Average number of direct staff (FTE) | 2,431 | 2,286 | |
| Average number of indirect staff (FTE) | 326 | 311 | |
| Number of staff at end of reporting period (FTE) | 2,751 | 2,605 | |
| Number of direct staff at end of reporting period (FTE) | 2,426 | 2,288 | |
| Number of indirect staff at end of reporting period (FTE) | 325 | 317 | |
| Number of shares outstanding at end of reporting period (in thousands) | 93,082 | 93,256 | 0.2% |
| Per-share information (based on average number of issued shares) in euros | |||
| Shareholders' equity | 1.52 | 1.56 | |
| Cash generated from operating activities | $-0.13$ | 0.01 | |
| Earnings | $-0.04$ | 0.03 | |
| Earnings - diluted | $-0.04$ | 0.03 |
Nieuwegein, 24 August 2017
"The market demand for IT expertise and solutions remains high. The pressure on revenue in the second quarter was largely due to a reduction in the number of employees when compared to the same period last year. Ordina once again recorded growth in the public sector for the first time since 2014, both in the Netherlands and in Belgium/Luxembourg. Revenue growth levelled off somewhat in Belgium/Luxembourg in the second quarter due to a temporary increase in availability. The operation continues to record a healthy return.
Productivity declined in the first half compared to the same period of 2016. The streamlining of the management of our company has resulted in improvements in recent months. In addition, we are continuously training and retraining our employees, so we can provide the expertise that is in high demand in the market. Our recruitment campaign 'Do you look beyond the code?' has resulted in an increase in the influx of new employees in the Netherlands of more than 20% compared to 2016. The recruitment and retention of professionals are our top priorities for 2017 in view of our ambition to grow with our own employees.
To respond more effectively to market demands, we have focused our market strategy on five core propositions. Our 'High performance teams' concept has been well-received by our clients. Ordina is ahead of the market with this concept. In the coming period, we will also launch and upscale the remaining four propositions."
Ordina has combined its services in five core propositions to increase our brand recognition and the added value we create for our clients: High performance teams, Intelligent Data-Driven Organisations (IDDO), Digital Acceleration, Business Platforms and Security & Privacy.
We will continue to upscale the successful launch of the High performance teams to make it one of Ordina's main spearheads in the period ahead.
We have combined our expertise in business analytics, data platforms, Internet of Things, GEO IT and artificial intelligence in the IDDO concept. We will upscale Security & Privacy in the period ahead to help our clients to comply with European privacy directives. We plan to launch the Digital Acceleration and Business Platforms propositions in the autumn of this year.
Ordina wants to grow with its own direct employees, so recruitment and retention have been key priorities for our management since the start of this year. The campaign 'Do you look beyond the code?' paid off and resulted in an increase of 20% in the influx of new employees in the Netherlands compared to 2016. To intensify our recruitment campaign even further, we have initiated additional actions in the second half of the year.
While employee turnover has declined, it is not yet at the desired level. Working in teams (high performance teams) is a key factor in the retention of employees and in the recruitment of new talents.
We have boosted efforts to make sure that our know-how and skills remain up-to-date. For instance, we have had a number of successful retraining projects in recent months. Groups of employees are retrained to add in-demand expertise, such as in the field of Low-Code Platforms. This approach creates a sustainable increase in the deployability of our employees.
In the period under review, we have focused very strongly on raising productivity. We have streamlined the management of our company and shortened our core processes. We have eliminated administrative 'intermediate stations' and combined separate departments in a logical manner. As a result we can now process and follow up on requests from our clients more quickly.
The effective management of overhead costs is a constant priority. The overhead reduction announced on 11 July of this year is now almost complete. Our aim to achieve an effective and efficient organisation remains a key topic in the management agenda.
Revenue Q2 2017
Revenue declined by 3.6% to EUR 84.7 million in the second quarter of 2017 (Q2 2016: EUR 87.9 million). The number of workable days was 61 in both the Netherlands and in Belgium/Luxembourg (Q2 2016: 62). The impact on revenue of one working day is around EUR 1.0 million in the Netherlands and around EUR 0.3 million in Belgium/Luxembourg.
| Change | |||
|---|---|---|---|
| Q2 2017 on | |||
| Q2 2016 1 | Q2 2017 | Q2 2016 1 | |
| (in thousands of euros) | |||
| the Netherlands | 65,416 | 61,996 | $-5.2%$ |
| Delivery | 60,478 | 57,057 | $-5.7%$ |
| Innovation Cluster | 4,938 | 4,939 | 0.0% |
| Belgium/Luxembourg | 22,485 | 22,703 | 1.0% |
| TOTAL | 87,901 | 84,699 | $-3.6%$ |
1Q2 2016 figures have been adjusted to reflect the current organisational structure for comparison purposes.
Revenue H1 2017
EBITDA (after redundancy costs) declined to EUR 2.7 million in the second quarter (Q2 2016: EUR 3.7 million). Redundancy costs came in at EUR 2.4 million in Q2 2017 (Q2 2016: EUR 1.5 million). A number of one-off items totalling EUR 3.1 million had a net positive impact on the result. The result corrected for these items was EUR 0.4 million negative.
The one-off items included the release of a provision for vacant office space (positive impact EUR 3.8 million) on the back of a new lease agreement for the head office in Nieuwegein. In addition, the number of internal projects have been rationalised in the context of the effectiveness & efficiency programme. This resulted in a number of one-off items that had a negative impact of EUR 0.7 million.
Revenue declined by 2.7% to EUR 172.9 million in the first half of 2017 (H1 2016: EUR 177.8 million). The number of workable days was 126 in the Netherlands (H1 2016: 125). The number of workable days in Belgium/Luxembourg was 125 (H1 2016: 125).
| H1 2016 1 | H1 2017 | Change H1 2017 on H1 2016 1 |
|
|---|---|---|---|
| (in thousands of euros) | |||
| the Netherlands | 133,555 | 126,693 | $-5.1%$ |
| Delivery | 123,558 | 116,661 | $-5.6%$ |
| Innovation Cluster | 9,997 | 10,032 | 0.4% |
| Belgium/Luxembourg | 44.197 | 46,216 | 4.6% |
| TOTAL | 177,752 | 172.909 | $-2.7%$ |
1H1 2016 figures have been adjusted to reflect the current organisational structure for comparison purposes.
| Overview working days | 2016 | 2017 | |||
|---|---|---|---|---|---|
| NL | NL | в | |||
| Q1 | 63 | 63 | 65 | 64 | |
| Q2 | 62 | 62 | 61 | 61 | |
| Q3 | 66 | 64 | 65 | 63 | |
| Q4 | 64 | 62 | 63 | 62 | |
| Total | 255 | 251 | 254 | 250 |
EBITDA (after redundancy costs) declined to EUR 7.0 million in the first half of 2017 (H1 2016: EUR 8.3 million). Redundancy costs came in at EUR 3.3 million (H1 2016: EUR 3.4 million). The EBITDA margin declined to 4.0% (H1 2016: 4.7%).
| H1 2016 1 | H1 2017 | |||
|---|---|---|---|---|
| (in thousands of euros) | ||||
| the Netherlands | 3.125 | 2.3% | 1,900 | 1.5% |
| Delivery | 4.802 | 3.9% | 2.301 | 2.0% |
| Innovation Cluster | $-1,677$ | $-16.8%$ | $-401$ | $-4.0%$ |
| Belgium/Luxembourg | 5.198 | 11.8% | 5,053 | 10.9% |
| TOTAL | 8,323 | 4.7% | 6.953 | 4.0% |
1H1 2016 figures have been adjusted to reflect the current organisational structure for comparison purposes.
Netherlands In the Netherlands, we recognise the segments Delivery and innovation cluster.
Revenue at Delivery fell by 5.6% to EUR 116.7 million in H1 2017. The EBITDA margin declined to 2.0% (H1 2016: 3.9%), as a result of lagging productivity and a reduced number of direct FTEs.
Revenue at the innovation cluster rose slightly by 0.4% to EUR 10.0 million. The EBITDA improved to EUR 0.4 million negative (H1 2016: EUR 1.7 million negative).
Productivity declined in the second quarter, particularly in April. The streamlining of the management of our company has resulted in improvements in recent months. In addition, we are constantly training and retraining our employees so we can respond more effectively to the demand for the expertise the market requires.
Belgium/ Luxembourg In Belgium/Luxembourg, revenue increased by 4.6% to EUR 46.2 million (H1 2016: EUR 44.2 million). The EBITDA margin fell to 10.9% (H1 2016: 11.8%). The shortage in the labour market is also increasing in Belgium and Luxembourg, which has made recruiting new employees more challenging. As a result, the number of direct employees has increased less rapidly. In addition to this, productivity was lower, especially in April. The Belgium/Luxembourg operation is still recording healthy returns.
Revenue Q2 2017
Revenue declined by 3.6% to EUR 84.7 million in the second quarter of 2017 (Q2 2016: EUR 87.9 million).
| Change Q2 2017 on |
|||
|---|---|---|---|
| Q2 2016 1 | Q2 2017 | Q2 2016 1 | |
| (in thousands of euros) | |||
| Public | 29,213 | 31,010 | 6.2% |
| Financial services | 26,276 | 22,632 | $-13.9%$ |
| Industry | 26,101 | 25,347 | $-2.9%$ |
| Healthcare | 6,311 | 5,710 | $-9.5%$ |
| TOTAL | 87,901 | 84,699 | $-3.6%$ |
1Q2 2016 figures have been adjusted for comparison purposes in connection with the reclassification of a number of clients.
Revenue declined by 2.7% to EUR 172.9 million in the first half of 2017 (H1 2016: EUR 177.8 million).
H1 2017
| Q2 2016 1 | Q2 2017 | Change Q2 2017 on Q2 2016 1 |
|
|---|---|---|---|
| (in thousands of euros) | |||
| Public | 29,213 | 31,010 | 6.2% |
| Financial services | 26,276 | 22,632 | $-13.9%$ |
| Industry | 26,101 | 25,347 | $-2.9%$ |
| Healthcare | 6,311 | 5,710 | $-9.5%$ |
| TOTAL | 87,901 | 84,699 | $-3.6%$ |
1H1 2016 figures have been adjusted for comparison purposes in connection with the reclassification of a number of clients.
Public Revenue in the public sector increased by 4.1% to EUR 62.1 million in the first half of 2017 (H1 2016: EUR 59.7 million). Revenue in the public sector increased in both the Netherlands and in Belgium/Luxembourg. The increase was largely driven by the successful implementation of the framework agreements for IT hiring that Ordina won in 2016.
Industry Revenue in the industry sector was up 1.5% at EUR 52.2 million (H1 2016: EUR 51.5 million). This increase was largely due to growth at logistics clients. We continue to see a decline in demand and reluctance to invest among a number of specific clients in the telecoms and energy sectors in the Netherlands due to reorganisations.
Healthcare Revenue in the healthcare market segment was down 4.2% at EUR 11.9 million (H1 2016: 12.4 million). Revenue declined in the field of compliance consultancy in the pharmaceutical sector in Belgium.
The number of direct employees declined by 94 FTEs in the first half of 2017. The labour market campaign 'Do you look beyond the code?' has increased the influx of new employees in the Netherlands by 20%. The number of indirect employees was up by 10 FTEs. The number of indirect FTEs will decline in H2 2017 on the back of the overhead reduction. At the end of H1 2017, the total number of employees stood at 2,605 FTEs (year-end 2016: 2,689 FTEs).
| FTE ultimo 2016 | In | Out | FTE H1 2017 | |
|---|---|---|---|---|
| Direct FTE Indirect FTE |
2.382 307 |
212 41 |
306 31 |
2.288 317 |
| TOTAL | 2.689 | 253 | 337 | 2.605 |
The turnover percentage among direct employees is around 26% on an annual basis, both in the Netherlands and in Belgium/Luxembourg. Ordina has taken additional measures in the field of retention & recruitment and to further boost employee engagement. It is still our ambition remains to recruit 500 employees in the Netherlands and 200 in Belgium/Luxembourg in 2017.
Ordina will continue its programme for Young Professionals; a total of 70 YPs started work at Ordina in the first half of 2017 (H1 2016: 63).
Revenue development Revenue declined by 2.7% to EUR 172.9 million in the first half of 2017 (H1 2016: 177.8 million). The number of workable days was 126 in the Netherlands (H1 2016: 125) and 125 in Belgium/Luxembourg (H1 2016: 125).
EBITDA EBITDA (after redundancy costs) was EUR 7.0 million in the first half of the year (H1 2016: EUR 8.3 million). Redundancy costs came in at EUR 3.3 million (H1 2016: EUR 3.4 million).
| H1 2016 | H1 2017 | |
|---|---|---|
| (in thousands of euros) | ||
| EBITDA | 8,323 | 6,953 |
| Depreciation & amortisation | 2,663 | 4,178 |
| EBIT | 5,660 | 2,775 |
| Finance costs - net | -317 | -247 |
| Earnings before taxes | 5,343 | 2,528 |
| Taxes | -2,389 | -1,494 |
| Net profit | 2,954 | 1,034 |
Ordina made no acquisitions or disposals in the first half of 2017.
Depreciation Total depreciations amounted to EUR 4.2 million (H1 2016: EUR 2.7 million). The increase in depreciations was partly due to the fact that we decommissioned a part of our ERP application. The streamlining of our processes prompted us to opt for a simplified IT landscape. As a result, we have accelerated the depreciation of part of the ERP application.
| Net profit & | The net profit was EUR 1.0 million in the first half of 2017 (H1 2016: EUR 3.0 million). Net earnings per share (EPS) |
|---|---|
| EPS | came in at EUR 0.01 (H1 2016: EUR 0.03). |
Productivity / availability Productivity averaged 68.8% during the first half of 2017 (H1 2016: 70.2%). Availability came in at an average of 9.7% in the first half of 2017 (H1 2016: 9.1%).
Net debt and cash flow At the end of Q2 2017, the cash position stood at EUR 2.2 million (end-Q2 2016: EUR 0.1 million). This improvement was largely driven by tight working capital management.
The net cash position declined by EUR 0.5 million compared to the end of 2016 (year-end 2016: net positive cash position of EUR 2.7 million). The movements in the net cash position in the first half of the year were as follows:
(rounded up, in EUR millions)
| Year-end 2016 | 2.7- |
|---|---|
| Net result | 1.0- |
| Depreciation | 4.2- |
| Working capital, provisions & other | 1.5 |
| Interest & income taks | 0.4 |
| Net investments | 1.9 |
| Dividend payments | 1.9 |
| at 30 June 2017 | 2.2- |
The leverage ratio, as formulated in the financing agreement, stood at -0.1 at 30 June 2017 and was therefore below the maximum of 2.5 agreed with the financiers. The Interest Cover Ratio stood at 43.1 at 30 June 2017. This was therefore above the minimum of 5.0 agreed with the financiers.
The financing facility agreed in May 2015 has a term of five (5) years, with an initial term of three (3) years and an option for two extensions of one (1) year each. The second one (1) year extension through May 2020 was agreed on the same terms in April of 2017.
The following is an overview of the ratios compared with the covenants agreed with the banks:
| Norm | Actual | |
|---|---|---|
| Ratio up to last two quarters before end of agreement ¹ | 2.5 | -0.1 |
| Ratio during last two quarters of agreement ¹ | 2.0 |
.
| Norm | Actual | |
|---|---|---|
| Ratio | 5.0 | 43.1 |
1The financing facility has a term of five years, with an initial term of three years and an option for two extensions of one year each, both of which have since been agreed.
In the 2016 Annual report (pages 71 and onwards), Ordina describes the main objectives and procedures of its risk management and control systems, as well as any mitigating measures. Ordina has evaluated the identified risks and determined that the main risks identified remain the same in the second half of 2017. The main risks are:
For more details on this subject, we refer to Ordina's 2016 annual report on our corporate website: www.ordina.com.
We monitor the risks we have identified on a continuous basis. Nevertheless, it is possible that new or previously unidentified risks emerge that are not yet known and that could potentially have a material impact on our business operations, targets and results. We will continuously monitor any known and new risks and take control measures and initiate mitigating actions whenever this is deemed necessary.
Joyce van Wijnen, Investor Relations Mail: [email protected] Telephone: +31 (0)30 663 7000
Jeroen Hellenberg, Communications Mail: [email protected] Telephone: +31 (0)30 663 8557
Annemieke den Otter, CFO Mail: [email protected] Telephone: +31 (0)30 663 7111
Jo Maes, CEO Mail: [email protected] Telephone: +31 (0)30 663 7111
| 11 October 2017 | Shareholder event |
|---|---|
| 1 November 2017 | Trading update Q3 |
| 16 February 2018 | Publication 2017 annual results |
| 26 April 2018 | Trading update Q1 |
| 26 April 2018 | Annual General Meeting of Shareholders |
09:00 hrs CET – Media call Ordina will explain its results on Thursday, 24 August 2016, at 09:00 hrs CET during a media call (call number +31 20 531 5870).
10:30 hrs CET – Analyst presentation
Ordina will present its results on Thursday, 18 August at 10:30 hrs CET at an analyst meeting at the Wyndham Apollo Hotel in Amsterdam. You can follow this presentation via a webcast. You can follow the webcast via the link you will find on our corporate website: www.ordina.com.
The presentation will be available on our website following the webcast.
This document contains forward looking statements regarding the financial performance of Ordina N.V. and outlines certain plans, targets and ambitions based on current insights. Such forecasts are obviously not without risk and entail a certain degree of uncertainty since there are no guarantees regarding future circumstances. There are multiple factors that could potentially result in the actual results and outcomes differing from those outlined in this document. Such factors include: general economic trends, the pace of globalisation of the markets for solutions, IT and consulting, increased performance commitments, scarcity on the labour market, and future acquisitions and disposals.
| 30 June 2016 | 31 Dec 2016 | 30 June 2017 | |||
|---|---|---|---|---|---|
| (in thousands of euros) | |||||
| Assets | |||||
| Intangible fixed assets | 135,593 | 136,162 | 133,330 | ||
| Tangible fixed assets | 5,863 | 4,677 | 5,093 | ||
| Investments in associates | 442 | 397 | 397 | ||
| Deferred income tax assets | 18,080 | 17,859 | 18,429 | ||
| Total fixed assets | 159,978 | 159,095 | 157,249 | ||
| Transition costs | 847 | 585 | 341 | ||
| Trade and other debtors | 72,376 | 68,891 | 66,859 | ||
| Cash & cash equivalents | 10,072 | 2,691 | 10,627 | ||
| Total current assets | 83,295 | 72,167 | 77,827 | ||
| Total assets | 243,273 | 231,262 | 235,076 | ||
| Equity and liabilities | |||||
| Issued capital | 9,308 | 9,326 | 9,326 | ||
| Share premium reserve | 135,986 | 136,219 | 136,119 | ||
| Retained earnings | -3,261 | -3,179 | -899 | ||
| Profit for the reporting period | 2,954 | 5,038 | 1,034 | ||
| Shareholders' equity | 144,987 | 147,404 | 145,580 | ||
| Employee related provisions | 971 | 868 | 883 | ||
| Other provisions | 4,399 | 3,889 | - | ||
| Non-current liabilities | 5,370 | 4,757 | 883 | ||
| Borrowings / cash & cash equivalents | - | - | 2,468 | ||
| Borrowings / revolver | 10,000 | - | 6,000 | ||
| Other provisions | 3,659 | 1,501 | 989 | ||
| Trade and other payables | 74,939 | 71,927 | 73,461 | ||
| Current tax payable | 4,318 | 5,673 | 5,695 | ||
| Total current liabilities | 92,916 | 79,101 | 88,613 | ||
| Total liabilities | 98,286 | 83,858 | 89,496 | ||
| Total equity and liabilities | 243,273 | 231,262 | 235,076 |
| H1 2016 | FY 2016 | H1 2017 | |
|---|---|---|---|
| (in thousands of euros) | |||
| Revenue (net) | 177,752 | 343,575 | 172,909 |
| Cost of hardware, software and other direct costs | 4,341 | 6,474 | 3,264 |
| Work contracted out (hired staff) | 39,171 | 77,276 | 43,836 |
| Personnel expenses | 117,314 | 228,327 | 113,865 |
| Amortisation | 1,349 | 2,794 | 3,206 |
| Depreciation | 1,314 | 2,607 | 972 |
| Other operating expenses | 8,603 | 16,365 | 4,991 |
| Total operating expenses | 172,092 | 333,843 | 170,134 |
| Operating profit (EBIT) | 5,660 | 9,732 | 2,775 |
| Finance costs - net | -317 | -627 | -247 |
| Share of profit of associates | - | -45 | - |
| Profit before income tax | 5,343 | 9,060 | 2,528 |
| Income tax | -2,389 | -4,022 | -1,494 |
| Net profit | 2,954 | 5,038 | 1,034 |
| Net profit is attributable to: | |||
| Shareholders of Ordina | 2,954 | 5,038 | 1,034 |
| Net profit | 2,954 | 5,038 | 1,034 |
| (in euros, unless indicated otherwise) | |||
| Earnings per share - basic | 0.03 | 0.05 | 0.01 |
| Earnings per share - diluted | 0.03 | 0.05 | 0.01 |
| Number of shares outstanding at end of reporting period (in thousands) | 93,082 | 93,256 | 93,256 |
| H1 2016 | FY 2016 | H1 2017 | |
|---|---|---|---|
| (in thousands of euros) | |||
| Net profit | 2,954 | 5,038 | 1,034 |
| Items not te be reclassified to profit or loss in subsequent periods | |||
| Actuarial gains and losses on defined benefit plans | - | -51 | - |
| Tax on items taken directly to or transferred from equity | - | 13 | - |
| Other comprehensive income, net of tax | - | -38 | - |
| Total comprehensive income | 2,954 | 5,000 | 1,034 |
| Issued capital | Share premium reserve |
Retained earnings |
Net profit for the reporting period Total equity |
||
|---|---|---|---|---|---|
| (in thousands of euros) | |||||
| At 1 January 2016 | 9,296 | 135,855 | -224 | -3,168 | 141,759 |
| Changes in H1 2016 | |||||
| Net profit for the reporting period | - | - | - | 2,954 | 2,954 |
| Other comprehensive income: | |||||
| Actuarial gains and losses | - | - | - | - | - |
| Total comprehensive income for the reporting period | - | - | - | 2,954 | 2,954 |
| Transactions with owners: | |||||
| Appropriation of profit previous year | - | - | -3,168 | 3,168 | - |
| Issue related to share-based payments | 12 | 131 | -143 | - | - |
| Other movements regarding to share-based payments | - | - | 274 | - | - |
| Total transactions with owners | 12 | 131 | -3,037 | 3,168 | 274 |
| At 30 June 2016 | 9,308 | 135,986 | -3,261 | 2,954 | 144,987 |
| Changes in H2 2016 | |||||
| Net profit for the reporting period | - | - | - | 2,084 | 2,084 |
| Other comprehensive income: | |||||
| Actuarial gains and losses | - | - | -38 | - | -38 |
| Total comprehensive income for the reporting period | - | - | -38 | 2,084 | 2,046 |
| Transactions with owners: | |||||
| Appropriation of profit previous year | - | - | - | - | - |
| Issue related to share-based payments | 18 | 233 | -251 | - | - |
| Other movements regarding to share-based payments | - | - | 371 | - | 371 |
| Total transactions with owners | 18 | 233 | 120 | - | 371 |
| At 31 December 2016 | 9,326 | 136,219 | -3,179 | 5,038 | 147,404 |
| At 1 January 2017 | 9,326 | 136,219 | -3,179 | 5,038 | 147,404 |
| Changes in H1 2017 | |||||
| Net profit for the reporting period | - | - | - | 1,034 | 1,034 |
| Other comprehensive income: | |||||
| Actuarial gains and losses | - | - | - | - | - |
| Total comprehensive income for the reporting period | - | - | - | 1,034 | 1,034 |
| Transactions with owners: | |||||
| Appropriation of profit previous year | - | - | 5,038 | -5,038 | - |
| Dividend distribution | - | - | -1,865 | - | -1,865 |
| Issue related to share-based payments | - | - | - | - | - |
| Other movements regarding to share-based payments | - | -100 | -893 | - | -993 |
| Total transactions with owners | - | -100 | 2,280 | -5,038 | -2,858 |
| At 30 June 2017 | 9,326 | 136,119 | -899 | 1,034 | 145,580 |
| H1 2016 | H1 2017 | |
|---|---|---|
| (in thousands of euros) | ||
| Cash flow from operating activities | ||
| Net profit for the reporting period | 2,954 | 1,034 |
| Adjustments for: | ||
| Finance costs - net | 317 | 247 |
| Income tax expense | 2,389 | 1,494 |
| 2,706 | 1,741 | |
| Operating profit | 5,660 | 2,775 |
| Adjustments for: | ||
| Amortisation | 1,349 | 3,206 |
| Depreciation | 1,314 | 972 |
| Share-based payments | 274 | -993 |
| 2,937 | 3,185 | |
| Operating profit before changes in working capital and provisions | 8,597 | 5,960 |
| Movements in transition costs | 323 | 244 |
| Movements in trade and other receivables | -4,453 | 2,032 |
| Movements in current liabilities | -3,551 | 1,021 |
| Movements in provisions (long-term) | -103 | -3,874 |
| -7,784 | -577 | |
| Cash generated from operations | 813 | 5,383 |
| Interest paid | -196 | -121 |
| Income taxes paid | -1,736 | -2,041 |
| Net cash from operating activities | -1,119 | 3,221 |
| Cash flow from investing activities | ||
| Additions to intangible fixed assets | -2,634 | -374 |
| Additions to tangible fixed assets | -713 | -1,514 |
| Net cash used in investing activities | -3,347 | -1,888 |
| Cash flow from financing activities | ||
| Drawings of borrowings (Revolver) | 5,000 | 6,000 |
| Dividends paid | - | -1,865 |
| Net cash used in financing activities | 5,000 | 4,135 |
| Net movements in cash and cash equivalents | 534 | 5,468 |
| Movements in cash | 534 | 5,468 |
| Cash and cash equivalents at beginning of the reporting period | 9,538 | 2,691 |
| Cash and cash equivalents at the end of the reporting period / net | 10,072 | 8,159 |
Ordina N.V. has its registered office in Nieuwegein, the Netherlands. These condensed consolidated interim financial statements for the six months ended 30 June 2017 comprise the financial information of Ordina N.V. and all its subsidiaries ('the group').
Ordina is the largest independent IT services provider in the Benelux, with around 2,700 employees. We devise, build and manage IT solutions for organisations in the public sector, in the financial services sector, the industrial sector and in the healthcare sector. We aim for IT that helps people. IT that matters and that has been developed without wasting any resources. And we do so by working with our clients in partnerships for sustainable innovation.
Ordina was founded in 1973. Its shares have been listed on the NYSE Euronext Amsterdam stock exchange since 1987 and are included in the Small Cap Index (AScX).
The condensed consolidated interim financial statements have been prepared in accordance with IAS 34, 'Interim Financial Reporting', as adopted for use within the European Union. They do not contain all the information that is required for a full set of financial statements, and should therefore be read in conjunction with the Ordina N.V. consolidated financial statements for the full year 2016. The 2016 Annual Report (including the consolidated financial statements for the financial year 2016) is available online at: www.ordina.com.
The condensed consolidated interim financial statements were prepared by the Management Board and approved for publication by the Supervisory Board on 23 August 2017. The condensed consolidated interim financial statements are unaudited.
Ordina's condensed consolidated interim financial statements have been drawn up in Dutch and in English, with the Dutch text prevailing.
For an explanation of the accounting policies for the valuation, determination of results and statement of cash flows, we refer you to the consolidated financial statements for the full year 2016. The consolidated financial statements for the full year 2016 were drawn up in accordance with the International Financial Reporting Standards (IFRS), as adopted by the European Union. The accounting standards have been applied consistently for all subsidiaries and across all periods as presented in these condensed consolidated interim financial statements. The same accountingstandards have been applied to the interim report, with the exception of the new standards, amendments to standards and interpretations outlined below, which have been included and found relevant for Ordina. The group's reporting currency is the euro.
Insofar as applicable, the group has applied all published IFRS standards, amendments and interpretations that came into effect on 1 January 2017. These standards and interpretations had no material impact on the group. No published IFRS standards and interpretations that were not yet applicable for reporting periods that commence on 1 January 2017 have been applied early.
IFRS 9, 'Financial instruments'. This standard explains the classification, measurement and reporting of financial fixed assets and liabilities. This standard comes into force on 1 January 2018. Ordina does not expect the application to have a material impact on the company's consolidated financial statements.
IFRS 15, 'Revenues from contracts with customers'. The standard provides standards for the reporting of the scope and timing of revenues to be recognised. The standard comes into force on 1 January 2018. The standard follows a five-step model. The premise is that revenue recognised corresponds to the amount the entity expects to receive in exchange for the services and goods delivered. Ordina does not expect the application to have a material impact on the company's consolidated financial statements. Ordina is currently assessing the adjustment of systems, valuation policies and procedures required to enable the company to apply the new standard.
IFRS 16 'Leases'. Based on this standard, virtually all lease contracts that are currently qualified as operational leases will be qualified as financial leases. The standard comes into force on 1 January 2019. In view of the fact that Ordina has a large number of operational rental and lease contracts, the application is expected to have a significant impact on Ordina's
consolidated financial statements. The application of the new standard will result in a sharp increase in total assets and liabilities. In addition to this, EBITDA will increase as a result of a shift of the operational lease costs from operating expenses to depreciation and interest expenses. Under the new standard, lease contracts will have an impact on results due to the fact that the financing component within the contract term is greater at the commencement of the contract term than at the end of the contract term (so-called front loading). At this point in time, it is not possible to give a reliable estimate of the financial impact of the introduction of this standard. Ordina expects to complete the full assessment of the impact of IFRS 16 by the end of 2017 / in early 2018.
The preparation of the consolidated interim financial statements requires management to make estimates and assumptions that have an impact on the valuation of assets and liabilities, on the determination of results, as well as on the reported contingent assets and liabilities. Actual results may differ from these estimates and assumptions.
The assumptions and estimates are based on historical experience and various other factors that can be deemed reasonable under the circumstances. Said assumptions and estimates are continually evaluated. For a list of the most critical assumptions and estimates, we refer you to section 5 of the notes to the consolidated financial statements for 2016, as included in the 2016 annual report. There were no significant changes in said assumptions and estimates in the first half of 2017, with the exception of the impact from the renewal of the lease contract for the head office in Nieuwegein related to the provision for vacant office space (see note on page 28).
In its 2016 annual report (page 75 and onwards), Ordina described in detail the critical risks identified and its risk management and control systems. Ordina has evaluated the risks identified and determined that the main risks identified remain applicable in the second half of 2017.
The organisation is structured in line with Ordina's services. The information reported on a monthly basis to the Management Board, in its capacity as chief operating decision maker, is in line with this structure. Ordina's results are divided to reflect the company's various segments. The Management Board's decision-making is based on this information. Ordina discloses segment information on the basis of how the internal governance, reporting lines and decision-making is organised within the company. Ordina recognises the segments Delivery the Netherlands, the innovation cluster and Belgium/Luxembourg.
The Management Board's financial assessment of the segments focuses primarily on revenue and EBITDA. Finance results are not attributed to the individual segments, as cash resources are managed by the central treasury department. Segment results do not include interest income or interest expenses, corporate income tax, or the results from associates.
Segment information is provided for the segments Delivery the Netherlands, the innovation cluster and Ordina Belgium/Luxembourg. Segment results, assets and liabilities consist of items that are directly or reasonably attributable to the segment in question. The prices and terms of inter-segment transactions are determined on an arm's length, objective basis. Segment-related capital expenditure is the total amount of costs incurred during the reporting period to acquire assets for the segment that are expected to be used for more than one reporting period.
Management information related to balance sheet positions and the analysis of same is aggregated at the level of Ordina the Netherlands (Delivery the Nederlands and the innovation cluster together) and Ordina Belgium/Luxembourg.
| Nederland | België / Luxemburg |
Totaal | |||
|---|---|---|---|---|---|
| H1 2017 | Delivery | Innovation cluster |
subtotaal Nederland |
||
| (in thousands of euros, unless indicated otherwise) | |||||
| Total revenue per segment | 120,227 | 11,670 | 131,897 | 47,066 | 178,963 |
| Inter-segment revenue | -3,566 | -1,638 | -5,204 | -850 | -6,054 |
| Revenue | 116,661 | 10,032 | 126,693 | 46,216 | 172,909 |
| EBITDA | 2,301 | -401 | 1,900 | 5,053 | 6,953 |
| Amortisation | -3,206 | - | -3,206 | ||
| Depreciation | -722 | -250 | -972 | ||
| Operating profit (EBIT) | -2,028 | 4,803 | 2,775 | ||
| Finance costs - net | -245 | -2 | -247 | ||
| Share of profit of associates | - | - | - | ||
| Profit before income tax | -2,273 | 4,801 | 2,528 | ||
| Income tax | 570 | -2,064 | -1,494 | ||
| Net profit | -1,703 | 2,737 | 1,034 | ||
| EBITDA margin | 2.0% | -4.0% | 1.5% | 10.9% | 4.0% |
| Nederland | België / Luxemburg |
Totaal | |||
|---|---|---|---|---|---|
| H1 2016 | Delivery | Innovation cluster |
subtotaal Nederland |
||
| (in thousands of euros, unless indicated otherwise) | |||||
| Total revenue per segment | 127,079 | 11,435 | 138,514 | 45,406 | 183,920 |
| Inter-segment revenue | -3,521 | -1,438 | -4,959 | -1,209 | -6,168 |
| Revenue | 123,558 | 9,997 | 133,555 | 44,197 | 177,752 |
| EBITDA | 4,802 | -1,677 | 3,125 | 5,198 | 8,323 |
| Amortisation | -1,335 | -14 | -1,349 | ||
| Depreciation | -1,065 | -249 | -1,314 | ||
| Operating profit (EBIT) | 725 | 4,935 | 5,660 | ||
| Finance costs - net | -314 | -3 | -317 | ||
| Share of profit of associates | - | - | - | ||
| Profit before income tax | 411 | 4,932 | 5,343 | ||
| Income tax | -232 | -2,157 | -2,389 | ||
| Net profit | 179 | 2,775 | 2,954 | ||
| EBITDA margin | 3.9% | -16.8% | 2.3% | 11.8% | 4.7% |
| SEGMENT INFORMATION (CONTINUED) | ||
|---|---|---|
| -- | --------------------------------- | -- |
| 30 June 2017 | the Netherlands |
Belgium/ Luxembourg |
Total |
|---|---|---|---|
| (in thousands of euros, unless indicated otherwise) | |||
| Intangible fixed assets | 116,188 | 17,142 | 133,330 |
| Tangible fixed assets | 4,064 | 1,029 | 5,093 |
| Financial fixed assets | 18,701 | 125 | 18,826 |
| Total assets | 189,221 | 45,855 | 235,076 |
| Investments in intangible fixed assets | 374 | - | 374 |
| Investments in tangible fixed assets | 1,213 | 175 | 1,388 |
| Amortisation | 3,206 | - | 3,206 |
| Depreciation | 722 | 250 | 972 |
| Number of staff at end of reporting period (FTEs) | 1,937 | 668 | 2,605 |
| Average number of staff (FTEs) | 1,921 | 676 | 2,597 |
| 30 June 2016 | the Netherlands |
Belgium/ Luxembourg |
Total |
|---|---|---|---|
| (in thousands of euros, unless indicated otherwise) | |||
| Intangible fixed assets | 118,446 | 17,147 | 135,593 |
| Tangible fixed assets | 4,798 | 1,065 | 5,863 |
| Financial fixed assets | 18,366 | 156 | 18,522 |
| Total assets | 194,134 | 49,139 | 243,273 |
| Investments in intangible fixed assets | 2,634 | - | 2,634 |
| Investments in tangible fixed assets | 411 | 236 | 647 |
| Amortisation | 1,335 | 14 | 1,349 |
| Depreciation | 1,065 | 249 | 1,314 |
| Number of staff at end of reporting period (FTEs) | 2,118 | 633 | 2,751 |
| Average number of staff (FTEs) | 2,136 | 621 | 2,756 |
Movements in intangible fixed assets in the first half of 2017 can be specified as follows:
| Goodwill | Software | PPA related | Total | |
|---|---|---|---|---|
| (in thousands of euro's) | ||||
| Carrying amount at year-end 2016 Investments Depreciations |
124,495 - - |
10,762 374 -2,754 |
905 0 -452 |
136,162 374 -3,206 |
| Carrying amount at 30 June 2017 | 124,495 | 8,382 | 453 | 133,330 |
The investments of EUR 0.4 million in software in the first half of 2017 (first half of 2016: EUR 2.6 million) are primarily related to the ERP package at Ordina the Netherlands. The software for this investment was partly produced in-house. The ERP application was taken into use on 1 January 2015. The ERP application will be amortised over a period of seven years. In the first half of 2017, Ordina decided to no longer use a part of the functionality within the ERP application, which consequently
resulted in a change in the estimated life of this part of the application. An amount of around EUR 1.7 million of the amortisation costs for the first half of 2017 was related to the decommissioning of this part of the application.
Goodwill is monitored at the level of a group of cash-generating units within Ordina. These groups of cash-generating units are the same as the recognised segments. Ordina recognises the segments Delivery the Netherlands, the innovation cluster and Belgium/Luxembourg. Ordina conducts impairment tests on the goodwill at least once a year, on the basis of the relevant (groups of) cash-generating units. Goodwill is monitored at the level of and attributed to the segments Delivery the Netherlands and Belgium/Luxembourg.
The annual impairment test is conducted in the fourth quarter of each calendar year. In the first six months of 2017, Ordina assessed whether there were any indications for an impairment of goodwill or other fixed assets. The development of results at Ordina's Dutch operations in the first half of 2017 prompted Ordina to conduct an interim impairment test. Ordina based this interim impairment test on forward growth of 1.0% (year-end 2016: 1.0%) and a discount rate of 9.2% for Delivery/the Netherlands (year-end 2016: 9.2%) and 9.9% for Belgium/Luxembourg (year-end 2016: 9.9%). The interim impairment test did not result in an impairment for any of the segments as at 30 June 2017.
In addition to the valuation, Ordina conducted sensitivity analyses based on a lower EBITDA-margin and a lower continuous growth in combination with a higher discount rate. For the segment Delivery the Netherlands, the sensitivity analysis resulted in a potential impairment that varied between EUR 3.2 million and (when forward growth was reduced to 0.0% from 1.0% in combination with an increase in the discount rate to 9.7% from 9.2%) and EUR 13.7 million (when the forward growth was reduced to 0.0% from 1.0% in combination with an increase in the discount rate to 10.7% from 9.2%).
The table below shows goodwill specified per segment:
| 30 June 2017 | |
|---|---|
| (in thousands of euro's) | |
| Delivery Nederland Belgium/Luxembourg |
107,353 17,142 |
| Carrying amount at 30 June 2017 | 124,495 |
Movements in tangible fixed assets in the first half of 2017 can be specified as follows
| Total | |
|---|---|
| (in thousands of euro's) | |
| Carrying amount at year-end 2016 | 4,677 |
| Investments | 1,388 |
| Depreciations | 972- |
| Carrying amount at 30 June 2017 | 5,093 |
The investments of EUR 1.4 million in the first half of 2017 (first half 2016: EUR 0.6 million) are largely related to replacement investments for computer equipment.
Movements in paid-up and called-up share capital can be specified as follows:
| 2016 | 2017 | |
|---|---|---|
| (in thousands) | ||
| At 1 January Issue related to share-based payment |
92,959 123 |
93,256 - |
| At 30 June | 93,082 | 93,256 |
As per 30 June 2017, Ordina has one (1) paid-up priority share and 93,255,934 ordinary shares (year-end 2016: one (1) priority share and 92,255,934 ordinary shares). No shares were issued in the first half of 2017. For the settlement of the variable longterm bonus for the period 2014-2016, which took place in the first half of 2017, Ordina purchased a total of 137,114 treasury shares and subsequently disbursed said shares. Ordina acquired these shares at a price of EUR 2.025 per share. At 30 June 2017, Ordina had no treasury shares in its possession.
In 2016, Ordina issued a total of 297,262 shares, with 123,480 shares issued in the first half of 2016. The share issues in 2016 were all related to share-based bonuses in connection with the variable long-term bonus schemes of the members of the Management Board.
Movements in the other long-term provisions in the first half of 2017 can be specified as follows:
| Total | |
|---|---|
| (in thousands of euro's) | |
| Carrying amount at year-end 2016 | 3,889 |
| Used amounts during the reporting period | 121- |
| Release due to due to the renewal of the lease contract | 3,768- |
| Carrying amount at 30 June 2017 | - |
The other long-term provision pertains to the vacant office space at the Ordina head office in Nieuwegein, for which there is a contractual lease obligation. The release due to the renewal of the lease contract pertains to the change in the contractual lease obligation related to the head office in Nieuwegein.
On 5 April 2017, Ordina agreed a new lease contract with the same lessor. The new contract pertains to the extension (at different terms) of the lease for the head office in Nieuwegein, which now excludes the C tower from the lease contract. The signing of the new lease contract effectively terminated the existing / old contract prematurely. Ordina has recognised a vacant office space provision for the vacant C tower since 2013. As said the C tower is no longer a part of the new lease contract, the provision has been released (EUR 3.8 million) and the related deferred tax asset has been written down (EUR 0.9 million). On balance, the release of the vacant office space provision will have a one-off positive net impact of EUR 2.9 million in 2017.
Ordina does not recognise a termination payment related to the prematurely terminated lease contract. Neither the termination agreement related to the old lease contract, nor the new lease contract itself includes such a payment. However, it is possible that the settlement of the old contract has in some way been discounted in the new agreement. The transaction involves the termination of the lease for the C tower and the extension of the lease for the other spaces, with the price of the extended lease reduced with immediate effect and the inclusion of a rent-free period. On this basis, it is not yet possible to make a reliable estimate of any termination payment that has possibly been included in the new contract as a lease-incentive. Moreover, Ordina has limited insight into the business rationale of the lessor. On the basis of external market research and its own analyses, Ordina considers the new lease contract as in line with current market levels. The agreed rent-free periods have been recognised as a lease-incentive liability.
Ordina's net debt stood at EUR 2.2 million negative at 30 June 2017 (end-June 2016: EUR 0.1 million negative). Net debt can be specified as follows:
| 30 June 2016 | 30 June 2017 | |
|---|---|---|
| (in thousands of euro's) | ||
| Cash and cash equivalents | 10,072 | 10,627 |
| Bank credit | - | 2,468- |
| 10,072 | 8,159 | |
| Bank Credit / Revolver | 10,000- | 6,000- |
| Net cash position | 72 | 2,159 |
In May 2015, Ordina agreed a new financing facility with ABN Amro Bank and ING. This new financing facility is for the amount of EUR 30 million, is fully committed and is a revolving facility of EUR 20.0 million and a current account credit facility of EUR 10.0 million. The new financing agreement has a maximum term of five (5) years, with an initial term of three (3) years and an option to extend twice by one (1) year. Following the first extension in 2016, Ordina and its banks agreed a second extension of one (1) year in the first half of 2017. As a consequence of this second extension, the term of the financing agreement ends in May 2020.
As at 30 June 2017, Ordina had taken up an amount of EUR 6.0 million from the revolving facility, which is recognised under the short-term bank debt (as at 30 June 2016: EUR 10.0 million).
The key elements regarding the covenants included in the financing facility are a maximum leverage ratio (determined on the basis of the total net debt/ adjusted EBITDA ratio) and an Interest Cover Ratio (determined on the basis of (adjusted) EBITDA / total interest ratio, as defined in the financing agreement). The leverage ratio has been set at a maximum of 2.5, and 2.0 for the final two quarters of the (possibly extended) term. The Interest Cover Ratio has been set at a minimum of 5.0. The covenants are based on the consolidated (interim) financial statements as drawn up in accordance with IFRS. The adjustment to the EBITDA for one-off expenses and reorganisation costs was set at a maximum of EUR 5.0 million for the year 2015 and a maximum of EUR 3.0 million for 2016 and subsequent years.
The table below outlines the applicable covenants and the compliance with same at end-June 2017:
| Realisation 2017 H1 | Finance agreement | ||
|---|---|---|---|
| Leverage ratio | -0.1 | <= 2,5 | |
| Interest Cover Ratio | 43.1 | >= 5,0 | |
| Guarantor Cover Ratio | 84% | >=80% | |
| Security Cover Ratio | 86% | >= 70% |
The interest on the financing facility is set on the basis of the prevailing base rate (EURIBOR) plus a surcharge of 1.0%. The base rate depends on the interest period to be determined by Ordina, which can in principle vary from one to six months.
Earnings per share are calculated by dividing the profit after taxes by the average number of outstanding shares. The diluted earnings per share takes into account the shares that are expected to be issued in connection with the share-based bonuses. The earnings per share were calculated on the basis of the following information:
| H1 2016 | H1 2017 | |
|---|---|---|
| (in thousands of euros, unless indicated otherwise) | ||
| Profit for the period | 2,954 | 1,034 |
| Average number of outstanding shares (in thousands) | 93,049 | 93,256 |
| Impact of potential dilution | ||
| Conditionally granted shares | 1,379 | 421 |
| Average number of outstanding shares diluted (in thousands) | 94,428 | 93,677 |
Current taxes for the half-year period under review have been calculated on the basis of the estimated effective annual tax rate applied to pre-tax profit. The effective tax rate for the first six months of 2017 was 59.1% (44.4% for the full-year 2016, and 44.7% for the first half of 2016). The discrepancy between the nominal tax rate of 25.0% and the effective tax rate is largely due to the composition of the taxable amounts across the various countries, in combination with tax rate differences abroad, as well as the impact of non-deductible amounts.
Deferred taxes are valued in line with the expected method of settlement or realisation. The deferred tax asset pertains primarily to recognised tax losses, as well as temporary differences in valuation related to tangible fixed assets and liabilities. An amount of around EUR 9.7 million of the total of EUR 18.4 million in recognised tax losses is related to the valuation of recognised tax losses.
The long-term component of the performance-related remuneration of the members of the Management Board comprises a payment in Ordina N.V. shares, with a term of three years for each current scheme. This performance-related long-term remuneration is explained in detail in the 2016 annual report. In connection with the performance-related long-term bonus for the members of the Management Board, Ordina recognised an expense of approximately EUR 102,000 in the personnel expenses for the first half of 2017 (first half of 2016: EUR 170,000).
The remuneration of the members of the Management Board is determined annually by the Supervisory Board. For an explanation of the remuneration policy pertaining to the members of the Management Board, we refer you to the Report of the Supervisory Board as included in the 2016 annual report. The total remuneration for the Management Board amounted to EUR 769,000 in the first half of 2017, compared with EUR 704,000 in the first half of 2016.
The total remuneration for the members of the Supervisory Board amounted to EUR 112,000 in the first half of 2017, compared with EUR 111,000 in the first half of 2016.
Ordina's revenue and profit are subject to a limited degree of seasonal influences. The seasonal influences pertain primarily to employees taking their holidays, the emphasis of which is in the second half of the year. The movement in working capital is partly influenced by the settlement of obligations related to items such as holiday pay, bonus payments and pension premiums in the first half of the year.
The nature and scale of off-balance sheet liabilities as per 30 June 2017 were materially unchanged from those reported in note 29 to the consolidated financial statements for the financial year 2016, with the exception of the committed bank guarantees and financial obligations related to lease contracts. By virtue of the new lease contract closed in the second quarter of 2017 related to the head office in Nieuwegein, which runs to 31 March 2028, the committed bank guarantees were around EUR 0.5 million lower and the financial lease liability for the period after 1 July 2017 increased by around EUR 9.9 million.
On the basis of IFRS13 'Fair value measurement', the interim financial statements are supposed to include disclosures on how fair value is measured. The book value of the current assets, payables and other debts are close to their fair value due to the short-term nature of these instruments. Trade receivables are also close to their fair value, as any potential downward valuation has already been taken into account via a provision for bad debts.
There have been no events since 30 June 2017 that might have a material impact on or that might require adjustments to the balance sheet positions as at 30 June 2017, as presented in these interim financial statements.
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