The equity of INVL Technology, a company that invests in IT businesses, was EUR 29 million at the end of 2019, or EUR 2.38 per share. The latter figure increased 3.3% during the year. The value of the company’s financial assets at the end of the reporting period was EUR 25.9 million and increased EUR 1.7 million during the year. Audited net profit for 2019, including revaluation of financial assets, was EUR 0.9 million, and compared with 2018 decreased 77.9%.
The aggregated revenues of the businesses INVL Technology owns increased 6% in 2019 to EUR 34.5 million (from EUR 32.6 million in 2018), while aggregate EBITDA was EUR 2.26 million (the previous year’s EBITDA figure is not directly comparable due to a change of accounting principles in 2019).
“We seek to grow the value of the assets we hold, which is why last year we gave attention to the consolidation of businesses, structural reorganization and the development of proprietary products. That required one-off costs in the reporting period but over the long term will have a positive impact,” said Kazimieras Tonkūnas, INVL Technology’s managing partner.
In late 2019, completion of the reorganization of the Novian group put fully in place a structure –under formation since 2018– of three business directions at INVL Technology: business climate improvement and e-governance, IT services and software, and cybersecurity. Moreover, the owned businesses have increased their share of revenue earned abroad in recent years. In 2018, more than a third of the companies’ revenues was in foreign countries, and last year 44 percent of their revenue was obtained from projects in 47 countries.
The new structure of the Novian IT services and software group will make it possible to offer clients comprehensive digital transformation projects, high-performance computing technologies and their application, and artificial intelligence and Internet of Things technologies. In addition, the acquisition of the Norwegian company Zissor through Novian in April 2019 enlarged the portfolio of services offered by Novian’s companies along with opportunities for growth in Norway and the broader Nordic region as well as the UK.
Norway Registers Development AS, which works in the area of business climate improvement and e-governance, in 2019 established a management consulting unit. The group strengthened its centralized sales and marketing capacity, reorganized and simplified its geographical business model, centralized financial management and administration, and broadened its product offering and areas of expertise.
The cybersecurity firm NRD CS in 2019 developed and enhanced proprietary products and continuous cybersecurity monitoring services. Since 2018, the company has been conducting two research and product development projects with a value of EUR 2.1 million partially financed by European Union funds.
In 2020, INVL Technology plans to conduct acquisitions in the Baltic and Nordic countries through the businesses it owns. The company this year will optimize business holding structures and reorganize financial management and control.
“It is projected that the consolidation and structural reorganization of INVL Technology’s companies and outlays to develop proprietary products will generate significate revenue and value growth starting in 2021,” Kazimieras Tonkūnas said.
Possible impact of the coronavirus pandemic on the company’s operations assessed
Assessing the outlook for 2020, the company published a comment on the potential impact of the coronavirus pandemic. INVL Technology assesses its potential impact on the company’s activities over the short and medium term as slightly negative. The drop in value on world markets recently of information technology companies active in the private and public sectors has been among the smallest of all industries and the value of some companies has even increased. Therefore INVL Technology, from the information it possesses, is unable to forecast what the long-term impact on the value of its shares will be.
The customers of the businesses owned are public and financial institutions, banks, large utility companies and retail chains. It is considered that their activity is important and, therefore, likely to be continued also under conditions of quarantine and restricted travel. Agreements signed by the owned businesses suggest that operations without interruptions can be planned for the next several months.
Working conditions of quarantine and limited mobility have strengthened the short-term need for digitization and cybersecurity services worldwide. That may also increase the long-term need for IT services and products.
All of INVL Technology’s businesses currently are prioritizing the safety of their employees and customers, thus most employees are working and serving customers remotely. Working under the conditions of quarantine is not expected to have a material impact on the businesses which are owned, since most of them performed remote work and projects prior to the crisis as well. Working remotely might, however, mean that some of the owned businesses’ projects abroad will take longer to complete.
Despite the potentially positive developments, there is a chance that IT companies serving sectors impacted by the coronavirus may reorient in the second half of the year and increase competition in areas that are relevant to INVL Technology’s businesses. Liquidity problems may arise due to longer settlement terms.
Assessing the financial condition of the owned businesses, their external debt level is low. The value of assets under management may be reduced at present and the company plans to realise them by 2026. If circumstances change or consequences become clearer, the company will provide separate notification.
18 business holdings active in three business directions
INVL Technology’s companies operate in three directions. Operating in the area of business climate improvement and e-governance is the Norwegian company NRD Companies AS with its subsidiaries: Norway Registers Development AS of Norway with a Lithuanian subsidiary, NRD Systems UAB and Etronika UAB of Lithuania, Norway Registers Development East Africa Ltd in Tanzania, Norway Registers Development Rwanda Ltd in Rwanda, NRD Bangladesh Ltd in Bangladesh, and the associate company Infobank Uganda Ltd in Uganda.
Working in the area of IT services and software is the Lithuanian company Novian UAB with its subsidiaries: Zissor AS of Norway, BAIP UAB of Lithuania with its subsidiaries Andmevara Services OU in Estonia and Andmevara SRL in Moldova, and Algoritmu Sistemos UAB of Lithuania with its controlled companies Acena UAB in Lithuania and Andmevara AS in Estonia. Operating in the area of cybersecurity is NRD CS UAB.
In July 2016, INVL Technology began to operate as a closed-end investment company. Its management was assumed by INVL Asset Management – a part of Invalda INVL, one of the leading asset management groups in the Baltics. INVL Technology will operate as a closed-end investment company until 14 July 2026.