Critical IT Infrastructure Managed Services

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Regarding the situation of Novian Systems and its business prospects

2024 / 01 / 11

The Novian group of IT service companies notes that one of its group companies, Novian Systems (hereinafter – the Company), on 26 May 2021 signed a contract with the Public Procurement Office of Lithuania for services to modernise the SAULĖ IS Central Public Procurement Information System (hereinafter – the Contract).

The total value of the Contract is EUR 5.969 million (including VAT), including EUR 3.617 million (including VAT) for system development services and EUR 1.585 million (including VAT) for maintenance services. The development services envisaged in the Contract were to be provided by 1 October 2023.

During the performance of the Contract, the project’s scope increased significantly and efforts were made to negotiate with the contracting entity regarding the management of the project’s scope, timeframe and price.

Having failed to reach an agreement with the contracting entity, on 2 June 2023 the Company was forced to take the matter to the Vilnius Regional Court. As the contracting entity failed to provide the conditions necessary for the proper performance of the contractual obligations, the Company on 7 January 2024 terminated the Contract on its part. The court proceedings are currently still ongoing.

On 10 January 2024, the Public Procurement Office announced that it had also terminated the Contract with the Company and placed the Company on its List of Unreliable Suppliers.

The Company will seek to resolve the situation in court or by negotiation.

The Company stresses that, despite its inclusion on the list, in light of the legal regulations, it hopes to participate in public procurement tenders, subject to certain conditions, upon providing the contracting entities with evidence that it has taken sufficient measures to demonstrate its reliability.

In Novian’s assessment, the inclusion of Novian Systems on the List of Unreliable Suppliers has a negative reputational impact on the Company and also complicates the Company’s operations and growth possibilities during the period of its inclusion on the list. It should be noted that the other companies of the Novian group can continue to participate in public procurement tenders without restriction.

The Novian group had aggregated revenue of EUR 33.04 million in 2022, whereas Novian Systems had revenue of EUR 4.59 million. The group’s EBITDA for the year was EUR 1.5 million, while the EBITDA of Novian Systems was EUR 0.065 million.

In January-September 2023, the Novian group had aggregated revenue of EUR 26.6 million, while Novian Systems had revenue of EUR 3.5 million. The Novian group’s EBITDA for the same period was EUR 0.27 million, whereas the EBITDA of Novian Systems was a negative EUR 0.4 million. Those results were negatively impacted by the significantly increased costs of the SAULĖ IS project.

The Novian group includes companies based in Lithuania, Estonia and other countries that work in the areas of programming, technologies and digitization.

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