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Netcompany - Interim report for the nine months ended 30 September 2021

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Netcompany grew revenue by 14.9% and realised 25.1% margin and continued to improve free cash flow in Q3 2021.

Company Announcement

No. 19/2021

4 November 2021

Summary

In Q3 2021, Netcompany grew revenue in constant currencies to DKK 790.7m – 13.8% compared to the same period last year. In reported currencies revenue grew 14.9%.

Adjusted EBITA grew 2.3% to DKK 199.9m compared to DKK 195.5m in Q3 2020, corresponding to an adjusted EBITA margin of 25.1%.

Average number of full-time employees grew by 558 from 2,827 in Q3 2020 to 3,385 in Q3 2021, corresponding to a growth of 19.8% - all organic.

Free cash flow remained strong and improved by 22% from DKK 149.9m in Q3 2020 to DKK 182.9m in Q3 2021. As a consequence of the strong cash flow Netcompany reduced bank debt by DKK 150m in Q3 2021.

At the beginning of October 2021, revenue visibility for the full year of 2021 was DKK 3,273.8m compared to DKK 2,719.9m at the same time in 2020.

For 2021, Netcompany maintains expectations to organic revenue growth in constant currencies of between 18%-20% and adjusted EBITA margin for the organic business in constant currencies to be around 23-25%. Netcompany expects adjusted EBITDA margin for the organic business in constant currencies to be around 25-27%.

Based on current expectations for full year performance and cash flow, Netcompany will initiate a share buyback programme of DKK 50m to be executed during the remaining part of 2021, which will bring the total cash redistribution to shareholders to DKK 150m in 2021.

At 31 October 2021, Netcompany completed the acquisition of Intrasoft International S.A. at an enterprise value of EUR 235m on a debt-free basis, which brings the debt leverage to around 2.7x. The acquisition is expected to increase Netcompany’s non-organic revenue growth with around 9-10 percentage points and to have a dilutive impact on total adjusted EBITDA and total adjusted EBITA margins of 1-2 percentage points.

”We realised revenue growth of 15% during Q3 2021 based on continued strong momentum in Denmark, UK and Norway and we increased our margins to above 25% for the quarter.

We welcomed more than 450 new Netcompany employees during the quarter and it makes me proud that we are able to attract new talent to our family that continues to grow.

The growth was accelerated in October where we completed the acquisition of Intrasoft International S.A., which will elevate Netcompany into a leading position in Europe. The combined company will have more than 6,000 employees and be a strong IT services company with leading platforms for public and private sectors including a leading presence in the EU institutions.

I am excited to welcome all Intrasoft employees and customers to our family and thrilled about the growth opportunities this presents for the future.”

André Rogaczewski,
Netcompany CEO and Co-founder


Performance highlights for Q3 2021

  • Revenue increased by 14.9% to DKK 798m in reported currencies and by 13.8% in constant currencies.

  • Gross profit margin was 41.2% against 42.2% in Q3 2020.

  • Adjusted EBITA margin was 25.1% against 28.1% in Q3 2020.

  • Free cash flow remained strong and improved by 22% to DKK 182.9m.

  • Cash conversion rate was 158.3% and normalised for tax payment conversion rate was 118.5%.

  • Debt leverage to 12 months rolling adjusted EBITA was 0.7x.

  • Strong free cash flow was used to reduce bank debt with DKK 150m.


Financial overview

For full details on financial performance, see enclosed Company announcement Q3 2021.


Conference details

In connection with the publication of the results for Q3 2021, Netcompany will host a conference call on 4 November 2021 at 11.00 CEST.

The conference call will be held in English and can be followed live via the company’s website; www.netcompany.com

Dial-in details for investors and analysts:

DK: +45 82 33 31 94

UK: +44 333 300 9265

US: +1 631 913 1422 (PIN: 56435484#)

Webcast Player URL: https://streams.eventcdn.net/netcompany/2021q3


Additional information

André Rogaczewski, CEO
+45 70 13 14 40

Thomas Johansen, CFO
+45 51 19 32 24




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