Ordina is the largest independent IT-services provider of the Benelux. The company can be characterized primarily as an IT-temp labor provider, and services many large local customers that outsourced their IT-functions in the past to Ordina. IT-consulting and recently launched ‘high performance teams’ are gaining importance but still constitute a minority of its business.
The majority of Ordina’s business is Dutch (71,5% of revenue in 2018) and a minority but increasing part of its business is Belgian/Luxembourgish (28,5% of revenue in 2018). Interestingly this is also where Ordina earns the majority of its EBITDA (65,5% in 2018).
Its business is divided in 4 target customer markets Public, Finance, Industry and Healthcare. The segments Industry and Finance are struggling. Health Care grew on average with 12% per year but is still a small business. Public is the only segment with substantial growth in recent years.
Ordina has been founded in 1973 by a French company also named Ordina (“ordinateur” is the French translation
of the word “computer”). In 1985 the Dutch Ordina became independent via a management buy-out and two years later its shares were listed on Euronext Amsterdam. Ordina is included in the Small Cap Index (AScX) under the ticker ORDI.
The past decade has been a turbulent one for Ordina: during the financial crisis, being an economic cycle sensitive company, it was hit hard and struggled ever since. While its revenue was still €696,5 million in 2008, it dropped by 50% over 5 successive years and hovers around the level of approximately €350 million since then.
In the late ‘90s and early ‘00s Ordina actively acquired competitors to meet its growth objectives. The past decade however, it became clear that these acquisitions didn’t improve its position as expected. The result is a large amount of (already partly impaired) goodwill on its balance sheet, redundant management layers, an above-industry level of overhead and
a Dutch workforce that is on average 10 years older that their Belgian and Luxembourgish counterparts and also above- industry average.
These elements weigh on Ordina’s competitiveness and have encouraged it to already sell part of the earlier acquired companies. The last divestiture dates from 2011 and Ordina’s focus has been on organic growth for over ten years now.
Over the last 10 years, Ordina has been named as a potential acquisition target several times. In 2009 it even hired Deutsche Bank to find a buyer. This process was cancelled in 2010 due to a lack of interest.
In the meanwhile, however, Indian competitors started looking for targets to get foothold in the Benelux. And more recently, Norwegian company Visma has been mentioned as a potential buyer. Visma bought Dutch software company Roxit Group early 2019 and Raet in 2018 and has been known for looking new candidates/targets within the industry.
Until now, all attempts to acquire Ordina have been blocked by its largest shareholder Jan Niessen. He is not willing to take a loss on his investment, but as the share price is improving, and his losses revert, the likelihood of an acquisition improves.
In October 2014 journalists from Zembla exposed fraud committed by Ordina over the period 2005-2010 and broadcasted this news on national Dutch television. Ordina omitted misbehavior and was exposed to several lawsuits, including one from its largest shareholder (Jan Niessen), who had bought himself in the company just one month before the broadcast and lost a severe amount on his investment.
January 1st, 2017 new management has been appointed, as part of a large reorganization program. After one more disappointing year, the reorganization seems to start paying off, leading to slightly improved results. And with the settlement of the main uncertainties, Ordina’s future seems to be brighter than it was in recent years. It’s noteworthy however that the company is still in the middle of a transformation process and results are still below-industry average.