Welcome to the DATAGROUP SE conference call on the half year report for the financial year 2021, 2022. 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. Oliver Thome, CFO of DATAGROUP SE.
Ladies and gentlemen, I would like to welcome you to DATAGROUP's conference on the half year figures. My name is Oliver Thome. I'm CFO of DATAGROUP. As you have probably already seen in the press release, the first six months have started very well for us. We had a strong start into the year in the first quarter, you know, with a substantial increase in revenues, margins, and earnings. The development also continued in the second quarter. Revenues in the first six months increased by 71% to nearly EUR 250 million. The organic growth of about 4.2% during the last twelve-month period is within the expectation in the management board.
The first time full consolidated companies, the URANO and dna, today, DATAGROUP BIT Oldenburg, were also able to develop very well in the DATAGROUP's environment. The strong development of our CORBOX sales is reflected in 11 new customers, 26 contract renewals, and 16 contract extensions. The EBITDA could even be improved by 23.5% to EUR 37.4 million. Next slide, please. The great development of our EBIT from 47.5% to a total of EUR 20.5 million is also reflected in the EPS, which increased by 14.5% to EUR 1.50. In the same period of the previous year, the EPS was significantly positively influenced by a very positive tax effect from the activation of deferred taxes.
The increase in net income from this financial year to the previous financial year is therefore only limitedly comparable. Next slide, please. Summarized, we had a very strong performance in the first six months. We do not recognize negative impact from the war in Ukraine, and we are not affected by the supply chain bottleneck. Next slide, please. I'm pleased to show you some selected profit and loss figures. In the first six months, as I already mentioned, we were able to significantly increase the revenue by more than 17%. The gross profit could be increased by more than 13%, but, and that's very important, on the other hand, you can see the personnel costs only rose by about 11.2%.
We were able to translate the good sales and cost development into a significant increase in our profitability in the EBITDA and especially in the EBIT. Next slide, please. You can see the increase in good balances in the selected key balance sheet figures, and this is due to the acquisition of URANO and BIT Oldenburg, former DNA, in the past financial year. The net debt increased by around EUR 20 million due to acquisitions and the dividend payment from this year. The equity ratio likewise increased significantly to more than 25%, thanks to the strong results. Next slide, please. In the cash flow statement, you can primarily see the already mentioned strong increase in the operating cash flow driven by the good operating earnings.
The cash flow from investing activities shows on one hand the earn-out of two company acquisitions of the past fiscal year. The CapEx investments, on the other hand, could be reduced to a normal level comparable to the previous year. The cash flow from financing activities shows the finance leases in a range from the previous year. Beyond that, we made the dividend payment. Next slide, please. The long-planned change in the management board was completed on April first. Max H.-H. Schaber, you know very well, resigned from his position on the management board at the end of the last annual general meeting in March and is now member of the supervisory board.
Andreas Baresel, my colleague, has been on the DATAGROUP management board since 2018 and joins DATAGROUP since a long time, and he is succeeding Max H.-H. Schaber as CEO. With Dr. Sabine Laukemann, who has been working for the company since almost 20 years, the appointment of the management board was completed. Next slide, please. We were able to continue our long M&A history in this year, and this has been the 29th acquisition. With the purchase of 100% of the shares in the Hövermann IT, we can strengthen the North Rhine-Westphalia and Lower Saxony region. In addition, the acquisition allows us to add SAP Business One to our SAP experience. Further, we can use Hövermann IT's own structures comparable to our CORBOX to address customers in the German Mittelstand.
We see a clear potential for DATAGROUP, especially in the customer segment, and we are pleased to be able to win a great team with a very successful company for us. Next slide, please. Those of you who have been with us for a long time know the excellent development of our share price. In the past financial year, in particular, the share price developed very, very positively. The current crisis in Ukraine is putting pressure on stock exchanges around the world. The DATAGROUP share is also currently affected. Overall, we are nevertheless very satisfied with the development over long-term periods and assume that the share price will recover again in the future. We are also not affected, I just mentioned, by the global delivery difficulties for hardware. Next slide, please. You know, we keep what we promised.
The turnover, EBITDA and the net income exceeded the estimations of the consensus 2021. At our general meeting on the tenth of March, we published the guidance for the current fiscal year with a turnover between EUR 480 million and EUR 500 million and an EBIT between EUR 39 million and EUR 43 million. In the first six months, we are moving at the upper end of the expectation, and so far, we have not seen any signs that the goals we have set will not be achieved. Next slide, please. There were only a few changes in the shareholder structure in the past financial year. What's very important for us is that our anchor investor, Max Schaber, will remain invested long-term in the company and this still in his new role in the supervisory board. Next slide, please.
You can see that we will continue to actively present our company to existing and potential investors at roadshows and conferences, underline the attractiveness of DATAGROUP's business model in Germany, Europe, and in U.S. right in this moment. Next slide, please. We have now come to the end of the presentation. I would like to thank you for your interest in DATAGROUP, and I'm now happy to answer your questions.
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. Alternatively, you can type your question into the question box.
Are there any questions I can answer?
The first question is from Knut Woller.
Okay.
You have to unmute yourself, then you can ask your question. Mr. Woller, you have to unmute yourself. Alternatively, you can type your question into the question box below. Mr. Woller?
Thank you. Can you hear me now?
Yes.
We can hear you.
Excellent. There seems to have a problem with the unmuting function. Great, we came together. A couple of questions. The first one, if I did the math correctly and we saw it in a declining organic revenue growth rate versus Q1, where you said it was 5.6% in the last twelve months. We are now at 4.2%. If I did the math correctly, organic revenues were only flat in the second quarter. Is that first a correct assumption? And secondly, what are you expecting for the remainder of the year? And then I would have the three other questions, which I would do one by one, if that's fine with you, Oliver.
Yes. Nice. This is a quite good question. This is the problem we just discussed between us both that the question, what's the organic growth? When you look, we exceeded very strong our CORBOX business. That's more than 4.2%. It's right, we had very strong quarter two in the past fiscal year. The ramp up in comparison to the previous year we only made 4.2%, but we increased our CORBOX business more than this. We are now evaluating this ratio, and I think this is much more interesting for you to see how our core business is developing itself. I do not assume a declining organic growth in the future.
Do you expect an acceleration again from what we have seen now in the last two quarters or last three quarters? I think it was between 0% and 2%.
We have to see. We have made some very interesting order intake, what I've just shown in the slide in the presentation with the new contracts. For example, we have a big exhibition company in North Rhine-Westphalia, where we placed a full IT outsourcing with every technology of our CORBOX. A very, very nice development, and this is only one of the examples of the development of our business. You will see the organic growth of our CORBOX business in this year, maybe mainly in the next year because you know our business very well and we at first in such a situation have to shift the customers from existing systems to our systems.
The main value will come in the end of the year, and mainly in the next year.
Okay. Looking at the second quarter, we saw what I think is quite unusual, a sequential revenue decline of service and maintenance revenues. What's the reason for that? It's only been EUR 0.3 million, but normally, this revenue line is up substantially quarter-over-quarter. Is that something like you cited the delay in onboarding or what's driving that?
It's a delay of onboarding, but on the other hand, that we didn't make a further acquisition. When you try to show the growth in our CORBOX business without our inorganic growth, you have seen that we had a first consolidation of dna and of URANO in the last year on the first of May. It's not so good comparable. I think we are very straightforward, and we are looking very good in the end of this year. We are moving on the upper line of our estimation and think we will achieve our goals.
We didn't have just shown the new acquisition, Hövermann IT in our accounts in the first half year. We have to evaluate what will be the effect of this and what will it make with our estimation for this year. I'm very positive.
Thank you. Then, the last two ones first, on the pension liabilities, the decline we saw on the balance sheet likely reflects the rising interest rates, and you probably have to offset or you have a headwind for that, in terms of interest expenses, I assume. Is the Q2 run rate we saw, hence, something we should expect for the remainder of the year in terms of interest expenses?
We have to see, Knut Woller. I'm not sure. What you have recently seen is that we have our interest rates. They rise and they rose, and that means that our pension provisions can put it down. You know, this is an effect only shown in the equity, not in our profit and loss accounts.
Okay. Interest was not affected by that?
Interest? No, no, no. Not in the profit.
Okay.
Not in the profit.
Okay.
Accounts. No, no.
Okay, thanks. The last one, the earn-outs that we saw for the two acquisitions last year, are there any earn-outs left for these acquisitions or not?
There is an earn-out just open for the fiscal year 2022, with which will be the earn-out cash flow in the first quarter, I think, or the second quarter of 2023.
Okay. Thanks very much.
Thank you.
The second question is from Andreas Wolf. Mr. Wolf, you're now.
Yeah. Hi.
Yeah.
Hi. Good morning. I have a couple of questions as well. The first one would be on Hövermann IT. What is the EBITDA contribution that we should expect from this company? Or is the EBITDA contribution basically offset by integration costs? On Koelnmesse, should we expect any costs related to client transition, as we saw in other client onboarding situations in the past? What are your expectations here? The third would be on the IT security of your clients. Obviously, attacks on client IT infrastructures are increasing or enterprise infrastructures in general are increasing. Does DATAGROUP have any agreements here with clients that guarantee that their IT will remain secure?
Would this lead, if let's say a client infrastructure is entered, to any obligations for DATAGROUP? Is this basically paid for the service more or less without bearing any risk for DATAGROUP? Thank you.
Mr. Wolf, thank you for your questions. At first, you asked for the EBITDA from Hövermann. As you maybe know from the past, we do not publish the details, but you can believe me that their business model they make is very profitable. They are in the area of the Mittelstand. It's below us. You know, we are focused as DATAGROUP SE for with customers with a yearly revenue stream of about between EUR 100 million and EUR 5 billion. Hövermann is quite concentrated in companies between EUR 25 million and EUR 100 million. What you see is that there is very often an owner-based structure in the governance which is very long-term focused and is very focused on having a quite functional IT.
At the second one, you know, is one of the big things which is giving us tailwinds in the next years, the situation of employees. To getting employees for small mid-cap companies, which are, for example, in the building industry or machine industry, is very hard to acquire. To manage the IT and to manage a safe IT, especially for the customers Hövermann is looking for and is concentrated for very difficult. They are looking for a partner. They are looking for a partner like Hövermann, and there the sensitivity of the price is lower than at DATAGROUP SE. We estimate a higher margin in EBITDA and EBIT comparable to DATAGROUP SE.
The second one you asked, Koelnmesse, I don't know if you are a little bit afraid of our business we made with our FIS in the past. This is not comparable. Koelnmesse is quite a CORBOX and our core business. This is more or less for us the ideal customer you can imagine. This is one of our strength, you know. We have a centralized production approach. With this centralized production approach, we are able to combine the technical experience of our production units as well for our market units, to be the best partner for this customer, Koelnmesse.
I think it will more or less be our current fiscal year to move them, to shift them to our system, so that we will see the success of Koelnmesse in the next financial year. I'm very positive that this will be a very good customer for us and with a normal range of expectation of our margins. The third question you had was the point of IT security. In our customer situation, we see some more activities, but not as we expected maybe three or four months ago.
What we are doing is permanently to make pen testing on our own systems to see if there is maybe a bottleneck or some risks we have in our own security situation. This works quite well, and so we didn't have an incident right now. On the other hand, services which we give to our customers come from our own security operations center with our SIEM and services. We have additional services like GRC, that means governance and risk management consulting. We have a quite good stack inside of security solutions for our customers.
As well as, you know, one of our points, our major points in our data centers is to make our backups, and there we can offer our customers, it's called immutable backup. Immutable backups means that they are different from their own network, and they are for themselves so close that it's not possible for a tech to get in touch with this immutable backup. Our customers know very well. We inform them for the security status of their contract. They can choose if they want to make their higher level or let it on the level they just have in the status quo and in the stand of the technical standard.
Okay, thank you. Maybe one follow-up, if I may. You've touched upon staff, IT staff in general. What's the average age at DATAGROUP ? I'm just asking because obviously the baby boomer generation is starting to retire and there are also some quite mature companies within DATAGROUP. Maybe you could comment on this as well. Thank you.
The average age, I have to give it a little bit after the telephone conference call, because I do not know. I would expect it will be between 35 and 45 years, but I do not.
Oh, okay.
We will after.
Okay, great. Thank you.
Another question is from Yannik Siering. Mr. Siering.
It's working?
Yeah. Yes.
Okay. Great. Thanks for taking my question. I would have three. First, could you provide some color on the current demand environment, especially in your core sectors of government and banking, also considering the macro uncertainties? Secondly, maybe some more detail on the progress of the BIT units in general and also on the earnings recovery of that unit. Lastly, a question on how you handle wage inflation. Are you still able to renegotiate rates with customers and pass on the higher costs? That would be it for now. Thanks.
Okay. Mr. Siering, welcome. Thank you for the questions. At first, government and banking, you know, we have a strong relationship to government, especially to the government IT structures from Baden-Württemberg, as well as Hessen and Rheinland-Pfalz. When this may be a question to look for what's the budget for the government for IT structures. We do not recognize in our core business because our core business is running the IT. You cannot cover these budgets, you cannot lower these budgets because your IT must run.
We are now in a process to get maybe an extension with our customer BITBW, in which we are in a process of our contract situation, but it's very stable. Maybe the second part of the question, what about banking? What we recognize is that the strategic way to invest in the banking sector is the right way, because especially small banks, which are covered by the same rules they have to handle, is much more difficult for them. This is a problem for them. They are looking for a service provider where we have built our CORBOX, especially for the banking sector.
Besides the Bit Düsseldorf and Bit Hamburg, to your second question, we are now in a phase where we organically from the structures and from the business model are putting them together. In Hamburg, we have a very strong unit for banking and very successful unit with this banking structure. Now, putting these existing customers from Düsseldorf into the way the colleagues in Hamburg work. There we are in progress, and I'm very positive that we will handle these customers by the end of the year in the system and structure of our Bit Hamburg.
This means that the question of earnings on the one hand we are earning money with our banking sector. With the banking sector in common with BIT Hamburg and BIT Düsseldorf we are positive in the situation right now. We will have to exceed this because we have some contracts you know from the past which are not so positively for us, but we are still working on this. We are on the right way. Our way we have defined two years ago we are on track. There is no sign for us that we are missing the way in this sector.
On the other hand, this is very important to know, is that it works quite good to onboard new customers. We just cannot tell you the name, but we have a new customer in this sector which we can onboard with average profitability for us. There's no question of the branch of the sector. You can earn money or lose. This has been, with our FIS, a bad contract situation, but we are working on it, and the new contracts are much more profitable. The third question you asked was the wage inflation.
A question I'm now getting very often, but my answer therefore is that this is a thing in IT industry and IT business which is not new. The main point of wage inflation, I myself recognized nearly five years ago. This has been the time in which there was a shift from the technical guys because since nearly five years, you need much more guys which are educated in virtualization for networks, for operations. These guys were off, so the wage inflation just started very strong five years ago. What we have now is a wave with a wage inflation is very strong combined with the inflation of energy we have now at this moment.
This is another thing we now recognize for us strongly or more strong than in the past, so we manage it very well. On the other hand, that's very important to understand our business model, we are not a system integrator. We are an IT service provider. Our contract situation and the work in progress or the work how we produce IT is quite different from the Bechtle, for example, Computacenter or CANCOM, because that's what we are doing is a centralized production base in our ops operation production in Nuremberg.
We are able to combine with the standardization of these workloads to combine people all over Germany in the company because the standardization allows us to hire people in regions of Germany where the wage inflation is not so high, like in Eastern Germany or Northern Eastern Germany. We can bring them to a market unit there. Organizationally, we are able to put them into our progress and work of our operations. You have seen, and this is very, very important, we rise our net sales, our revenue side, but we reduced the personal costs 70%. Our revenues rise, but our personal costs only 11%. This means that the wage inflation, we are looking quite for this.
We are here looking forward, but this is no impact we have now in our half-year report, and I do not think that it will be a hard impact for this fiscal year for us.
Great. Thanks a lot.
The next question is again from Knut Woller. Mr. Woller, you may.
Okay. Yeah. It just said that I can speak now. Here I am. Looking at the Koelnmesse contract, is there any impact on CapEx this year, or do you handle that via leases? On the tax rate, which was a bit higher in H1 than one might have expected, what is the expectation for the full year? I think lastly, on the vaccination centers, I think you won two centers last year, one in Q1 and the second one in the third quarter. Given the easing lockdown measures and also testing and vaccination being now in full swing, is there any negative impact expected or not from this tailwind not maybe repeating this year? Thank you.
At first, the question of Kölnmesse and the CapEx costs, they are fully included in our expectation estimation for the current fiscal year. As you have just mentioned, if it will be made by a CapEx costs, which causes a depreciation or by leasing costs, which causes the other expenses, in the EBIT it's the same. I'm very focused on the EBIT, you know, and there will be no impact, which we do not expect for the current fiscal year in our estimation. The second one, what you asked was the tax ratio. It's right. In the past year, we had acquisition with the dna, our banking sector.
This banking sector acquisition cost the profitability or the possibility to activate our deferred taxes of the IFRS. It was a very special positive situation we do not have in this first half year. We have a nearly normal tax rate of about 35%. We have some possibilities which we are now looking for, which can decline the tax rate for this year, but I cannot announce it for this moment. We are looking for this, if this is possible with our auditors. The third question you had was about the vaccination centers. The vaccination centers are not still in the same size like we did have one year ago.
You know, they are put a little bit down and the contract situation will be prolonged meanwhile to the middle of the year or sometimes a little bit later. What's the expectation? It's very hard to see. In our expectation, we are not thinking about that it will rise in the second half of the year very much. For myself, but I do not repeat it, is that I expect that the vaccination center will remain this year to cover possible risks from these both variants of COVID. But in what kind of investments and maybe in earnings for us in vaccination center it will go, I cannot estimate.
We expect it a little bit declining of this situation of the vaccination centers. On the other hand, we have some projects we now start in our core business of our CORBOX. We are pretty good to reach our goals, especially when the vaccination centers decline a little bit.
Thank you.
Right now we have no further questions. Thank you for-
So-
Yeah. Sorry, go ahead.
When there are no further questions, I thank you for your attention and your interest in DATAGROUP SE, and I wish you all the best. Stay healthy. See us next time. Thank you very much.