The equity capital of INVL Technology, a company that invests in information technology businesses, at 30 June 2016 was EUR 23.93 million, or EUR 1.965 per share, and compared with the beginning of the year decreased by 1.3 per cent. The value of the company's portfolio of businesses holdings reached EUR 20.58 million in the first half of this year. Its change was mainly due to the company's acquisition of Algoritmu Sistemos in March of this year and of Andmevara in April. The portfolio's value at the end of 2015 was EUR 16.96 million.
"On obtaining a closed-end investment company – UTIB -license this July, INVL Technology started a new 10-year phase in which it will seek to generate a significant return for investors by focusing on increasing the value of the companies it controls. In pursuit of these goals, we'll continue to invest in national-level businesses based in European countries, promoting the globalization of their operations, and thus also opening up new markets and creating opportunities for INVL Technology companies to expand their portfolio of services,” said Kazimieras Tonkunas, Managing Partner for UTIB INVL Technology at INVL Asset Management.
He said the performance of the businesses shows the chosen strategy of globalizing business and focusing on developing markets is working, especially considering the reduced growth potential of European and Baltic IT markets in recent years. "Outstanding results were achieved in the first half of this year by the cybersecurity firm NRD CS, which quadrupled revenue, and by the NRD group, which works in the area ofbusiness climate improvement and e-governance and whose revenue doubled. Our IT infrastructure companies and providers of solutions for IT intensive industries all performed stably," Tonkunas said.
Assessing the value of specific INVL Technology holdings, at the end of the second quarter the equity value of Vitma UAB – which owns BAIP UAB with its subsidiary Acena UAB – was EUR 11.49 million, that of NRD CS UAB was EUR 1.85 million, that of the NRD group was EUR 3.95 million, and that of Informatikos Pasaulis UAB was EUR 4 thousand. FINtime UAB, Inventio UAB (which acquired Algoritmu Sistemos UAB) and Andmevara AS were not consolidated during the reporting period and were valued at cost. Their respective valuations were EUR 229 thousand, EUR 2.4 million and EUR 665 thousand. The company INVL Technology itself had no income from investment activities during the period and its net loss at mid-year was EUR 0.318 million.
Since its share offering last July, the company so far has invested in Etronika and Algoritmu Sistemos in Lithuania and Estonia's Andmevara. These acquisitions have a total value of EUR 3.25 million. Also in terms of expansion, in February the business process outsourcing provider FINtime was set up, and NRD group has established Norway Registers Development Rwanda Ltd., which offers the portfolio of services of the NRD group and other companies controlled by INVL Technology in Rwanda. INVL Technology plans to continue investing in business acquisitions, for that allocating money raised in the share offering as well as earnings.
International projects continued
The NRD group, which works in the area of business climate improvement and e-governance (and comprises Norway Registers Development AS with its subsidiaries NRD UAB, Etronika UAB, Norway Registers Development East Africa Ltd., Norway Registers Development Rwanda Ltd. and the associated company Infobank Uganda Ltd.), in the first half of this year continued projects in Tanzania, Zanzibar, Uganda, Burundi, Mauritius, the Kingdom of Lesotho and Southeast Asia, and won new international tenders.
Revenue of the NRD group, including Etronika, doubled in the reporting period from a year earlier to EUR 2.834 million. Excluding Etronika's results, revenue of the NRD group grew by about 46 per cent to EUR 2.061 million. The NRD group's EBITDA (earnings before interest, tax, depreciation and amortization) for the first half of 2016 was a negative EUR 107 thousand, compared with a positive EBITDA of EUR 147 thousand in the same period last year. The biggest factor behind the change in the profit of the NRD group was Etronika, which was consolidated into the group's accounts effective 1 July 2015 when it was acquired by Norway Registers Development. Results were also influenced by costs related to accelerated expansion in Rwanda and Tanzania.
Etronika's revenue grew from EUR 514 thousand in the first half of 2015 to EUR 773 thousand in the first half of 2016. Over the same period, its EBITDA loss shrank from EUR 295 thousand to EUR 119 thousand. In 2015 Etronika had revenue of EUR 1.835 million and EBITDA of EUR 112 thousand.
Estonia-based Andmevara, which was acquired in April this year, currently serves 250 clients in Estonia and Moldova. In June 2016 a contract was signed for partial digitalization of the Moldova State Archive and implementation of a search system.
New contracts signed in Europe, Rwanda and Burundi
BAIP, which works in the area of IT infrastructure, in the first half of the year carried out projects and signed new contracts in the Baltic states, Denmark, Norway, Rwanda and Burundi. The company implemented projects and maintenance agreements in a variety of Lithuanian institutions and organizations. BAIP continued to provide services for the largest retail chains and Scandinavian banks in Latvia and Estonia, and also expanded its activities in Norway.
In addition, BAIP together with NRD East Africa implemented three modernization projects at Rwanda's Central Bank this year with a total value of EUR 2.193 million. Two of the projects began last year and the third began this year after a new tender was won. A new maintenance agreement was also signed with the central bank of Burundi during the first half of 2016.
Acena has shifted to a service provider business model focusing on large corporate clients and the development of its own services and custom solutions.
The revenue of the IT infrastructure businesses increased to EUR 5.044 million in the first 6 months of this year, from EUR 4.985 million in 6 months of 2015. EBITDA and net profit in this area decreased in the first half of 2016 due to higher costs for international expansion. EBITDA was EUR 245 thousand and net profit was EUR 19 thousand.
Business results in the area were also impacted by delays in the start of a new EU structural funds investment programme, which has reduced public sector demand for IT services this year. Procurement under the new EU programme, which is currently being set up, is expected to begin at year-end. Lost income in the Baltic public sector this year has been offset by international activities and long-term service agreements with large corporate clients, namely banks and retail chains.
Projects carried out in Lithuania, Burundi, Bhutan and Bangladesh
The results of the cybersecurity firm NRD CS were boosted in the first half of 2016 by international expansion and services enhancing cybersecurity prevention capabilities. Revenue quadrupled, from EUR 150 thousand in the first half of 2015 to EUR 672 thousand in the same period this year. The company's EBITDA improved from a negative EUR 147 thousand in 6 months of 2015 to a positive EUR 94 thousand in the same period of this year.
In the first 6 months 2016, NRD CS signed new international contracts and carried out projects in Lithuania, Burundi, Bhutan and Bangladesh. In Lithuania, an IT forensics modernization project was completed at the Police Department and security testing, auditing, consulting and training projects were conducted. A cooperation agreement was also signed with Kaunas University of Technology for joint research in the area of cybersecurity.
As part of NRD group projects, NRD CS specialists completed deployment of an IT governance and management framework at the central bank of Burundi and conducted a pre-investment study for an e-government infrastructure project in Lesotho. In the Kingdom of Bhutan, a project with NRD AS and BAIP to establish a national cybersecurity incident response team was completed. And in Bangladesh, NRD CS and NRD AS are continuing a project to establish a national cybersecurity incident response team.
Contract signed to develop product, packaging and waste accounting information system
In the first half of this year, the largest clients of Algoritmu Sistemos, which provides solutions for IT intensive industries, were the Klaipeda municipality, the National Health Insurance Fund, Lithuanian Airports and the State Tax Inspectorate. This year the company has also signed contracts with Lithuania's Environmental Protection Agency, the State Studies Foundation and the Vilnius municipality. A 1.7-million-euro contact was signed with the Ministry of Environment for the development and implementation of a Unified Product, Packaging and Waste Accounting Information System. Algoritmu Sistemos, which was acquired by INVL Technology in March this year, was profitable in the second quarter of 2016, with revenue of EUR 624 thousand and EBITDA of EUR 138 thousand.
Enclosed:
Financial statements of INVL Technology for 6 months of 2016;
Interim report for 6 months of 2016.