Welcome to the DATAGROUP SE conference call on the 2019 to 2020 financial statement. At the moment, all participants are on mute. The floor will be open for questions after the presentation. If you would like to ask a question, please press the hand symbol or type your question into the question box. The presentation is also available for download in the Investor Relations section on DATAGROUP's website. I would now like to welcome Mr. Max Schaber, CEO of DATAGROUP. Hello, and welcome to our analyst call for the final 2019 to 2020 numbers. First of all, I can say we have had a very, very interesting year, and some information in a nutshell. We have reached solid numbers with a significant top-line growth. There also is the share of services revenues further increased. We have decreased low margin, so the low-margin hardware revenues, and this will bring up recurring revenues further up. All our market units have had solid business figures. Some of the local branches have had record results last year. Also, our sales departments have been very successful with 21 new CORBOX customers and 14 upsells in the existing customership. But also, we have had, unfortunately, negative events burdened, which burdened the results very heavy. First of all, only some small impacts from the corona pandemic on the RPA business and on the Ulm branch, but the main thing was big losses and risk provisions in DATAGROUP Financial IT Services. Next page. So that counts up to a growth of the revenues from 16.8%, coming from EUR 306.8 million t o EUR 358 million revenues. EBITDA also increased up to EUR 53.8 million to a EBITDA margin of 15%, but EPS went before risk provision a bit down, and after risk provision, it went down nearly to the null line. The extraordinary effects which causes that has been EUR 11.6 million positive effect from the Portavis goodwill, and EUR 24.6 million extraordinary costs in the financial service sector, thereof are 12 million risk provisions. We did this big risk provision. Can you go back in the slide? Thank you. We did this big risk provision because we thought we want to cover it, all that bad things in the FIS, we would cover it in last year's figures. So we expect that with this EUR 12 million risk provision, the case is fine now, and we do not expect further losses from this unit. I will come back to that a bit later, how it works with the restructuring. Next page, please. Financial IT Services burdened the DATAGROUP results. We have had transitions for big, newly gained customers, which suffered these delays in twenty twenty, twenty twenty-one, twenty twenty. But much higher than expected, we have had to hire freelancers for these big transitions. Approximately 100 freelancers for more than one year, we had to hire. This cost us more than EUR 15 million in one year, which was not expected before. Also, some production processes and delivery of service quality within Financial IT Services, the former IKB, was not according to our DATAGROUP standards, and we also have had a high level of complexity in these new projects. Next page. What have we done to fix the problems? We implemented a task force in April 2020. We changed the total local management, we improved the cost structures. We reduced massively expensive freelancer capacity, and also the deployment of DATAGROUP experts. We redesigned business processes and also billing structures, which led us to a much better liquidity situation in the FIS, as we have had in 2020. We have, in 2020, sorry. We have done a renegotiation of contracts with our customers, and we also improved the exchange with our customership. Also, we have implemented a much closer monitoring of the complete business development by the top management. That means, the C-level is informed every week about the success of restructuring through the FIS management, the new FIS management. We implemented Alexandra Mülders, which is a very, very experienced restructuring manager, which did a brilliant job in Cologne a few years before. We implemented her in Düsseldorf, which is not far away from Cologne, and she does, at the moment, a brilliant job. All what we did is showing very, very good results, which I come later to. Next page, please. So let's have a look on some figures of the last fiscal year. First of all, revenues went up 16.8%. EBITDA also went up, but it contains these EUR 11.6 million purchase bargain from Portavis acquisition. But the risk provision is covered also in this result. EUR 12 million, you remember, we did risk provisions for the FIS. The net income went massively down because tax effect was the main effect that it went so much down. But this effect could presumably reverse in the coming year, in the actual year. So we are in a good hope that we can cover, but we or better reverse this negative tax effect in the actual fiscal year. This will bring us, presumably to a very good result this year. Next page, please. What is happening on the balance sheet? First of all, balance sheet was increasing the total amount from EUR 320 million to EUR 385 million, to end up 20.4%. This is mainly because the acquisition of Portavis. For example, we got a lot of pension, and a lot of cash, and a lot of business volume, which brought us to a very fast expansion of the total balance sheet. What did we do on the financing side? We repaid EUR 7.5 million Schuldscheindarlehen. The pension provisions increased due to the Portavis deal, and also we increased leasing liabilities, because we sold some hardware to a leasing company to bring down our investments in this sector. And also we have regarding to IFRS 15 and 16 new rental agreements in Frankfurt, Mainz, and Ulm, which brought an expansion of EUR 10.5 million finance lease liabilities. But this is not operational business. It comes from cost to amortization and depreciation. Next page, please. Cash flow was mainly influenced by the acquisition of Portavis. We received EUR 35.6 million net cash after paying the price for Portavis. This was a very good deal, but with that, with the deal, it there came a lot of pension obligations. But the whole pension obligation is covered by the net cash. It's better than the obligation, which is covered. So we have had a quite good cash situation and have it at the moment. Surely, it was also the CapEx influenced by projects like One ERP and One HR. We do in the DATAGROUP SE to have a better performance and more, a bit more centralized structures in the SE. So let me see. Okay, next page, please. Operating activities have been heavily burdened by financial services division. Seventeen point eight million compared to fifteen point eight million in the previous year. This is stopped now. We will have not such big spending for hardware and will bring down the investments in computers so that we also have a lower cash flow, a negative cash flow from investing activities, and we will have also in the next years we will have also a lower depreciation coming from lower investments this year. The sale of receivables from customers had a cash flow improving effect of around EUR 13 million. Next page, please. What is going on now? We... Our fiscal year is now three months, our actual fiscal year, and we started incredibly good into this new fiscal year. The performance of all DATAGROUP market units are much better than we expected that. We have also a much better progress in the restructuring process from FIS. Risk provisions in nineteen twenty, we did cover all costs related to DATAGROUP FIS. And also, the M&A pipeline is very well filled, so that we expect to close one or two deals within the next month. Also, the sales activities have been successfully shifted to virtual formats. In the first lockdown, it was very difficult to get the customers online. It was very difficult to have had sales pitches with the customers. They are scared about the first lockdown, and they have other thoughts than buying new IT. But now it has shifted, and we are, let me say, even a bit more successful as before. We also are on a very good way with organizational improvements. We have had the Project SQUARE, we have the One HR, and the One ERP situation projects, which are running very well. We will close these, we will finish these projects until the end of this, of the actual fiscal year, and we expect a lot of savings in the next years from these investments and from these new processes we implemented within the organization. This is also very important to manage the future growth, when we buy some new companies, some new targets, we will benefit a lot from these new projects. What makes me very lucky is that we are, again, with a very high customer satisfaction on the market, acting on the market. Next page, please. We are again top three in customer satisfaction with much better percentage. As you can see, we are in the top group, in this research that evaluated 850 IT outsourcing and cloud sourcing contracts. 21 IT service providers are evaluated in Germany. This is the report, which is only done in Germany. The complete report is done European-wide, but we are not active in the outside region of Germany, in the European region. We are only active in Germany, so we are only here in the German report included. The most interesting thing is that we got top three with top ranks in cloud capability. We are on rank one of all these competitors, what belongs to cloud capability. We also are very good rank one in innovation. I think that the reason for that is that we bought this RPA company. You remember Almato? We bought two years ago, and that led us to a good rank in the category innovation. Also, the project Cloudeteer, you remember, we bought 25% of a cloud consulting company, which is called Cloudeteer, and with this company, we did very interesting Hybrid Cloud solutions, and one pure cloud solution, which implements the Impfzentren in Germany. I don't know the exact English word, but these are the centers who you can be with vaccine against COVID, you can be impft. I don't know the word. And this is a pure cloud project, which we could realize within four weeks. We did 60 of these COVID-19 vaccine centers, which was a very, very interesting success and which led to very good figures, to very good numbers. Also, we are very good in business understanding. We are on rank 2, and we are best in customer loyalty. So all of these points will bring us to better business in the future, to better market share in the future, and this will bring us to an accelerated growth in the future. Next page. The newest corona lockdown, we expect only little impact on our business because we can deliver our services as usual to our customers. We learned within the first lockdown how to deliver fast and in a high quality level. This brings us to our strong customer base with long-term contracts, and they will deliver stable, recurring revenues. As I told you before, this brings us to increasing profitability and increasing revenue volume. The high level of remote work among the DATAGROUP workforce, up to 90% of our employees are able to work from home office, so the lockdown will bring us not to a negative impact. In opposite, we expect a little positive impact from that because people don't have to drive to work, people are mainly good enabled within their home offices, and they are probably a bit more concentrated and focused on work. Not all of them, but if you have little children, it's not so easy if they are around your desk. But mainly, the employees are managing that very good. We have also a strong focus on health protection for employees and customers, and this led us to very, very good figures. We count all cases of COVID, and we have very, very lower percentage figures of COVID in our company than we have it in over Germany in total, and I told it before, sales activities have been shifted to virtual formats, and we expect an increase in new customer wins. Next page, so upcoming events, you can see that in that list. I'm very interested to hear your questions to our last year and to the actual business of DATAGROUP. The floor is now open for questions. If you would like to ask a question, please press the Hand symbol. You will then be unmuted and able to ask your question. You can also use the question box to type in your question. We have four questions from Mr. Knut Woller. I will read them because there are currently some technical difficulties. The first question is: When I asked you last year in March whether a capital increase is required, you responded, "Not in the next 12 months to 18 months." How is your view today? Okay, I will answer directly. We are not planning a capital increase over the next, let me say, six to twelve months. This means not that it is more necessary to do that. We have enough cash for buying some other companies, some new companies, so we don't need a capital increase now. The second question from Mr. Knut Woller is: Adjusted for M&A, your revenues seem to have declined in 2019, 2020. Should we expect organic revenue growth year over year in 2020, 2021? Yes, we do. We have a very, very strong development, what we can see now. We don't have the Q1 figures now, but we have some monthly results, and these results show a very strong development, and we will grow organically also. His third question is: D&A went substantially up in the fourth quarter of 2019, 2020. Is this a run rate for 2020 and 2021, or will it further rise given the CapEx development in twenty nineteen and twenty twenty? Okay, I told in the presentation that we try to bring down our investments because we don't have to invest so much hardware in dedicated customer situations. This will lead us to a lower percentage in the future. Yeah. This year could be affected. We are working on one or two big projects, but also we will have much more EBITDA, so that it will have no negative effect on net results. We expect much higher net results this year than last year based on no losses in the whole group and also in relation to turnover lower D&A figures. His fourth question is: How do you want to achieve your EBIT margin ambition in 2021, 2022, given the substantial increase of D&A? Yeah. Okay. We have had a downturn coming from FIS, but we stay to our midterm ambition, 9% EBIT to show. I think we will increase the EBIT margin dramatically from last year, from the reporting year to the actual year, but I cannot give you exact figures, but it will go up very massive. The next question is from Yeah. Let. [crosstalk] Sorry. It will go up very massive. The reason for that is that we grow, we will grow the revenues, and we also will grow the EBITDA volume in total, and we have to invest not these big amounts like we did in the last years, because the investments have mainly be made for the big projects in the financial industry, and we don't have these projects in the future, in the mid-future. The next question is from Mr. Lucas Spang. Yes. Hi, good morning, Mr. Schaber. Good morning. Let me come again on the margin topic, which was mentioned by Mr. Knut Woller. I think it's nearly impossible that you will reach the 9% in the 2021, 2022 fiscal year. Or is it more or less a mid-term and target, and this is not really for 2021, 2021, 2022? It's more a midterm target. Yeah. Because of the FIS, we have to shift that a bit. Yeah. But I think it will not need five years. Let me say, I cannot say it exactly at the moment, but it is our goal, it is our target to do that. And we are on a very good way in the moment, but we will not reach it in 2020, 2021. But we are on a good way. Yeah. And then, in the report, you mentioned that you reached 2% organic growth. But you also mentioned, and in the past you had a very nice figure in the presentation, where you reported organic growth and transition companies and also the inorganic growth. So can you give us the number for the companies in transition and from the M&A transactions? No, I cannot give you an exact figure for these segments of the business. We don't figure out that exactly. But what we do is that we deliver the figures of the parent companies and this. And in total, let me see. Please, back office, give me this number. Is that 2% growth, is that in the parent companies or, I'm not sure at the moment. But what I can say is that we have a very, very strong growth, actually. The figures this year will be very, very good in this sector. For example, the Stuttgart company is 20%-25% above the budget. Yeah. It's not the whole group, but some of the companies are very, very good on the way, and all are above budget. We have not one company below the budget, actually. Is this more or less a one-time effect or is this sustainable? I cannot look in the future, but we think it is a combination of more investment of our customers despite of Corona, and also our market position gets better and better. We are improve our capabilities for efficient service delivery, and it's a mix of all, which counts up. Okay. And the last question is about the transition projects. Yeah. Can you quantify the positive effect on the revenue side you expect for this year due to the finalized transitions? Yeah. It is, transitions itself don't bring any effect on the revenue in the period of transition. Yeah. The revenue will come with the in-between name, with the start of service delivery, and this number I don't have exactly. We don't count exactly all new revenues from in-between, from started service contracts. But let me [crosstalk]. Projects on like FIS projects. Yeah, on the FIS projects. This will bring, let me say, around EUR 10 million. Mm-hmm. Okay. So more or less. More or less. the number you missed last year in this area. Really, that, that's exactly. Exactly that. Okay. Yeah. Okay. I'm not sure, is it nine or eleven, but around ten. Mm-hmm. Okay, thanks. Good. Next questions are from Mr. Edwin de Jong. There seems to be a problem with the audio connection, but he wrote the questions in the question box, so I will just read them. The first question is: Can you elaborate a little on the pension provision related to Portavis? Is that a defined benefit scheme? Can we expect more provisions? Sorry, could you repeat the question? Sure. Can you elaborate a little on the pension provision related to Portavis? Is that a defined benefit scheme? Can we expect more provisions? This, I would give to the back office, please. So we answer that in a few moments. All right. His next question is: Can you elaborate a little on M&A pipeline pricing and how you see the M&A markets develop in 2021? Yes, I can. We see increasing prices. Probably you remember we have had multiples of around four. These times are done. At the moment, we have to pay, let me say, between five and, in exceptional cases, eight times. But we are also good on the way in terms of, we actually have four companies we are looking very close, and two of them are really realistic to get. The volume is around, let me say, one of them is a bit below EUR 10 million, and the second one is above EUR 30 million, all surely yearly revenue. So DATAGROUP doesn't count the yearly revenue as if to our figures, we count only the realized figures. And so it can bring, if we are on a good way, it can bring between EUR 20 million and EUR 25 million on top of our revenues. The next part of the question was how is the M&A market in total developing? It's a bit different. Smaller companies below EUR 15 million revenues a year are very, very often on the market, a lot of them. We get every week a new offer, and we look at a lot of them. I think we have seen around 50 short memos and 20 memorandums to 30 memorandums, and we are in a closer negotiation with, let me say, five, six. Four of them are realistic, and two of them are very, very hot, so it's a good market for us. There is no reason to be pessimistic in the M&A scene, but it's more expensive than before. Now I have the answer for the question, what about the pension provisions? We don't expect any additional pension schemes in Portavis. So it will stay at that level, but the normal changes based on interest rates and based on living parameters of these pensions, you cannot avoid. Okay. The next question is from Mr. Andreas Wolf. Yeah, hi, it's Andreas Wolf, Warburg Research. Three questions, basically from my side. So, the first one would be on your RPA business, which was a bit of a weak spot last year. If I look at software providers in this space, located in the U.K., like Blue Prism, there seems to be still hard times ahead of those players. So what's your view on the business? Is it already developing better than last year? And then, with regard to DATAGROUP Ulm and the virtual selling formats that you've mentioned during your presentation, Max Schaber. Do you already see positive effects here, or what is the current development? What should we expect for 2021? And finally, on CapEx, what is the level that we should expect for 2021? Thank you. Okay. The CapEx question I give to the back office, please. Almato, which is the company we combined, DATAGROUP Mobile Solutions and Almato, is running very well this year. It's a recovery of our RPA services. But what we see is that not only our RPA services, but the combination of mobile projects and automation projects are running very well. We also see that we can have a good cross-selling from the Almato RPA experts to other DATAGROUP companies. This is running good. It is not exploding, but it is running very well, so that we'll have a very good year for Almato. To Ulm, yes, Ulm is running much better, but we also use in Ulm. We also are restructuring a bit in Ulm, but sales are going up. Business is running better than last year because all customers I explained before are now used to accept virtual formats also for sales. In the CapEx area, the first or last question was, we expect around EUR 18 million CapEx, which should be a bit lower in terms of percentage that last year. Great. Thank you. Yeah. The next question is from Mr. Sasha Giphaus. There seems to be trouble with the audio connection, but I can read the question. Could you explain what kind of acquisitions are in your pipeline? Are these more tech-oriented, or what can we expect on additional turnover? Yeah. We have a lot of different companies in our eyes. So first of all, we will acquire a smaller company, which is in the IT services sector, in the service desk sector, which brings us a much better capability, much better delivery in the day-to-day service desk area, which is below EUR 10 million revenues. Second one is a bigger company, which is an exact copy of, let me say, DATAGROUP Stuttgart, which is a classic company, a market side company, which is a classic system house, with customers in public affairs, with industry customers, and it is located in the Rhine-Main, in the bigger Rhine-Main area, Rhineland-Palatinate, where we are good on the way, but the market there is so big that we can have another market company. Next up, we have a follow-up question from Mr. Klug. Oh, sorry. What we also do is to have a look on a security company in with all these aspects of data security. But these companies are very expensive, so we have to look very keen on these companies, and we have to decide, should we pay multiples in a double digit area? I'm not sure that we do that, but if there is a good opportunity, we will. So you can see, we have all three types: specific services, an all-rounder services company, and also a very technical company, which is on our table. We now have a follow-up question from Mr. Knut Woller. Mm-hmm. Hi, thanks for the follow-up. Mr. Schaber, just on the D&A question, I wanna get back. I understand that if revenues grow, that it could go down percentage-wise as a percentage of revenues. However, I think, the absolute number of, D&A should go up. I mean, in Q4, you had eleven million, so, since there's no reason to believe that there will be a big decline, I think you should be north of forty million D&A this year. And you also cited two larger, projects still this year, and I mean, eighteen million is still not a big decline in D&A. So I would believe that you should be north of forty million depreciation and amortization. Is that correct? I will give that to the back office, and in this question, please look at the planning of investments and depreciation. Mr. Woller, one thing is that we cannot plan exactly the amortization, because... It is not clear which companies we buy. It is not clear how the company is structured, and so you cannot plan the amortization. But amortization is from the past, it is declining. And but if we buy a bigger company, it could grow up very fast. So we cannot plan that exactly. And we, yeah. I understand that. I mean, it was just based on the current scale and scope. I think PPA is declining based on your presentation by less than EUR 1 million this year. There will be a bigger drop than in the year after. But if I just take your normal, so the depreciation and amortization ex PPA, that was substantially up in the fourth quarter, so, I think more than EUR 9 million, and that won't go away. So I think in theory, you should be well above EUR 40 million this year. We will exactly respond that after the call. I see from the back office, but it is not sure that we have the same. D&A surely will not go so fast down because even if you invest less, it needs a bit time to bring that figures down. But the very important message is that we are looking very exact on these figures, that we are looking very strong on investing lower amount of money, so that we expect, and this is also one way to bring up your EBIT margin, that we invest lower amounts, and this will happen. Yeah. But we come back with the D&A. We decided to have a percentage of depreciation we want to reach, and so we come with this figure after the presentation. Thank you. The next question is from Mr. Raphael Eggensperger. His question is: Hello, do you see existing customers significantly asking for additional services more than in pre-corona times? We see that more services to manage the equipment and the IT surrounding for the employees working in home office. We also see that services for collaboration tools, like Teams, are requested much more than before, but overall, there is nearly the same what we deliver now. Yeah, but more of them, more of it. At the moment, we have no further questions. If anyone would still like to ask a question, please press the hand symbol or write your question into the question box. I have a figure now from the back office. We expect, based on our November budget forecast, 28.9 million EUR AfA, which is depreciation, and EUR 4.6 million amortization, Firmenwertabschreibung for the year. It counts up to 33-34. Without acquisitions, without additional acquisitions, we cannot count, we cannot calculate yet. Right. We have a follow-up question from Mr. Knut Woller. Yep. Yeah. Thanks for the number, but I mean, the depreciation and amortization was EUR 11 million in Q4, so why is it declining in your planning? I don't understand it. I mean, the normal depreciation, excluding PPA, was around EUR 10 million in Q4, so I do not understand why from Q4 on, it should decline. I'm not sure whether this number can be correct. Okay, we declare that, and we come with that later. Okay? Okay. Thank you. We have no further questions. For your information, the conference call will also be made available on the DATAGROUP website afterwards. Good. So thank you very much for participating, and we'll hear you next time. Very good. Have a good time, stay safe, and stay gesund, and so I hope to see you again at one of our next conferences. Goodbye.