Hello, ladies and gentlemen, and welcome to the DATAGROUP SE Investors and Analyst Conference Call. The presentation for today's call can be found on the company's homepage. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Mr. Max Schaber.
Hello, here's Max Schaber. I'm pleased to meet you for our daily conference call with the half year figures 2019/20. First of all, we have had a really strong first half year in terms of revenue. We could come from EUR 183 million up to EUR 170 million. The EBITDA also went up from 24 to 23.7, and the EPS grew 44% to EUR 1.07 per share. The strong increase in these figures is also based on first time consolidation of Portavis.
We have had an EUR 11 million positive effect from the badwill of Portavis, but from these EUR 11 million, we put EUR 5.5 million provisions to be quite sure for the next half year to have enough room, enough space for eventual bad influences of Corona and others. Our latest acquisition, Diebold Nixdorf Portavis, which we have closed at the second March, consolidated from March 2020. We have acquired 68% of the shares from Diebold Nixdorf. 25% percent actually remain with the Hamburger Sparkasse. This is actually counted as a financial debt in our balance sheets, and 7% stays at Sparkasse Bremen.
DATAGROUP has options to acquire these shares, and also, the minorities have options to sell us these shares, and therefore it is accounted as if we would have acquired it actually. So we have financial liabilities with the whole price we negotiated with these parties. Portavis is an experienced service provider for IT services in the financial services sector. They support Hamburger Sparkasse, Sparkasse Bremen, and Hamburg Commercial Bank on the basis of long-term service agreements. We expand our existing sector know-how and our customer relationship in the financial sector, and can establish ourselves in the market even stronger as a bank-independent operational service provider for IT operations. Portavis has two hundred employees and is expected to generate revenue of some EUR 66 million in the current fiscal year.
Some 35 million EUR will be consolidated in DATAGROUP's fiscal year. At present, Portavis has an EBIT margin of 4%. Medium-term target is to grow it around 8%-10%. So Portavis is, for DATAGROUP, a very important acquisition, which came up with some around 14 million EUR cash. This cash is paid for taking over pension provisions and also the share price we buy brought us down to a nearly null payment for the whole operation, and this brings us to a negative price, to a Badwill, which we can count.
With this acquisition, the balance sheet of DATAGROUP grew significantly from EUR 320 million at the end of September up to EUR 377 million to the end of March this year. Exact figures of the balance sheet you can see on the company presentation you can find on our website. The balance sheet reflects a strong growth of DATAGROUP. The expansion is EUR 75 million. The main effect comes from Portavis around EUR 80 million. We have reduced the net debt slightly from EUR 65 million to EUR 60 million.
Cash in from Portavis was more than EUR 35 million, and we have had also a cash out from the dividend payment, and we also paid some loans back in the size of EUR 7 million. Finance leases came up because of the first time consolidation of Portavis. And we also grew the pension liabilities around EUR 30 million through the Portavis pension obligations, and the whole pension liabilities in DATAGROUP went down by EUR 5.6 million because the interest rates induced recalculations of the pension liabilities. The profit and loss statement brought a fast growth of the revenues.
We came up from 108, 109, 139 in the first half year 18/19 up to 170 million, which counts up to a change of 22.6%. So, the gross profit also went up from 99.8 to 117, which is 17.4%. Personnel expenses went up also, but this is based on firstly, a lot of people came in with Portavis, and also the organization of the holding, DATAGROUP holding, grew to give us the ability to grow in the future. EBITDA went up from 20.4 million up to 23.6 million.
EBIT was a bit down from 10.2 to 9.6. I will come to, I will come in detail to that later. Earnings before tax went also a bit down, but net income jumped up, which is based on a specific effect in taxes, because the goodwill is nearly without any tax, so that we could grow the the EPS from 0.74 up to 1.07. The EBITDA I explained before is mainly driven from the purchase price bargain from Portavis. But from this, around 11 million, we put back a risk, a risk provision of 5.5 million for possible restructuring expenses in the future half year.
We have also a very strong development in parent companies. You remember that parent companies are companies who are consolidated in the DATAGROUP, more than three years. These companies run all very well. We have some not very good developments in the DATAGROUP Ulm, which is affected by COVID. In that case, we do not get so many new customer contracts as we have expected before the COVID was on the screen, and also we have some bigger effects in big projects.
They did not come up so fast we have expected, and so we have to spend more money in these bigger projects, but we expect to solve these problems within the next six months, so that we expect a better development in EBITDA, even without any special effects like this purchase price bargain. EBIT temporary is diluted. The EBIT margin and EBIT Portavis and DATAGROUP Ulm are currently EBIT margin dilutive. Currently, Portavis is around 4%, and DATAGROUP Ulm is at 9%. We have also slight increase in personnel expenses due to staffing in the holding structure to match needs of a growing organization.
And we have a significant effect from postponement and launching costs, which with large customers in the financial services industry. And also we have some smaller dilutive effects from COVID-19. For example, if you see that we have some revenues around 30 million revenues in project-oriented business like RPA and mobile solutions. In this sector, customers are very careful to order new contracts, and therefore we have some negative effects here in this sector. Overall, the COVID is only with a slightly effect to see in our revenues and EBITDA and EBIT. Cash flow from investing activities is surely based on this big money from Portavis is positive.
We went from minus EUR 6 million last half year to plus EUR 24 million in this half year. It but it also contains around EUR 4 million data center operations, investments, and around three million for new workplaces, and another one point one six million for furniture and office equipment. So, for the cash flow from investing activities, from operating activities, we went from minus three hundred and seventy-one to minus three point one four eight million in this half year. The reason for that is surely the increase of the decrease of trade payables and other liabilities, which and some other effects you can see in our investor presentation.
We have a few newly acquired and some very satisfied existing customers over the last months, but it is a bit. The new order intake is a bit slow in the area of COVID-19. Companies are in our business, which is not a hardware business, which is not selling computers, but selling long-term service contracts. It's a bit reduced over the last two, three months, but we expect with a reduced COVID surrounding that it will grow again. We also expect after COVID more investments in secure data environments, and this also will drive our business in the future.
DATAGROUP ranks the fifth year in a very, very good position in customer satisfaction. You can see that we are in Germany on position six with a customer satisfaction of 73% overall, and you should remember, you should see that we are the best German Mittelstand provider in this list, in the Whitelane list, and we are also very good ranked in other lists, like Best Employer 2020, like Most Attractive IT Service Provider 2020, and so on. DATAGROUP is in terms of quality and in terms of customer satisfaction very, very good on the way.
We are also on a very good way with our main growth sector, the M&A. We plan to acquire other companies. We are in good negotiations with two smaller companies which bring a lot of know-how in the cloud area and some production capacities in service desk utilities. So that we are very hopeful for the future and we see that we are on the right way. What we have to say is, if you grow via M&A in such a size we do, we surely have some times to realign the companies we buy.
For example, Portavis, with an EBIT margin around 4%, we have to develop this company to a better EBIT margin. Also, we bought this DATAGROUP Ulm, former IT-Informatik, which brings more than EUR 20 million revenues this year, but no EBIT. This cost us EBIT margin overall, but only for a short time. We normally need one or two years to develop these companies into a proper EBIT margin, EBITDA margin, and this we also will do at these both Portavis and DATAGROUP Ulm. But if we want to grow in this way, we have to handle these things.
And now, in the times of COVID-19, it is sure that the customer, new customers, are not so aggressively in giving new contracts, and that we have to handle. So, it is, yeah, we have interesting times, yes, at the moment, but we feel very good for the future. We are not afraid, in, for the future, on the way what we know today, surely. I can only speak what we know today. And this is the reason why we have withdrawn our guidance, from the shareholders meeting. But this is only on the reason based that we are not sure what we can really show for the full year figures.
We will see when we can give a new guidance. At the moment, we see a clear picture. We will give a new guidance for the whole year. On the long run, we are expecting higher demand for cloud and collaboration related services, and so we see the growth of DATAGROUP on the long run, and we also see a growth of profitability in the long run. So far, for the half year figures and the actual news of DATAGROUP, now you can ask questions to my words.
Yes, dear participants, if you would like to raise a question, please press nine followed by a star key. If you would like to withdraw your question, press nine and star again. And we have a few questions coming in. First question comes from Mr. Knut Woller from Baader Bank. Please go ahead.
Yeah, hello. Thanks for taking-
Hi.
My questions. A couple. The first one on the organic growth: Can you share with us what the organic growth was in the first half? The second one, I know that you're not providing guidance at this stage, but if we strip out the tailwind, the net tailwind from the badwill and the restructuring, which is round about 5.5 million EBITDA declines in an organic perspective in H1, would you rule out an organic EBITDA decline in the current fiscal year? Then, thirdly, on the maintenance CapEx, they have been at a record level, again, in H1. Can you give us an idea what the expectation is for the full year? And lastly, I was surprised not to see minorities excluded in the calculation of the earnings per share, given that you own only 68% of Portavis. What is the reason for that? Thanks.
Okay. Thank you, Knut, for your questions. First of all, the organic growth. You will remember that we brought in the figure of parent companies. And if we see parent companies, we have an organic growth around 4%, a bit more than 4% in the first half year. So the organic growth is intact, but what we see in the last two months of the half year, we saw a bit of declining in organic growth, so but it is still positive yet. Second question. No, I will first answer the last question to the minorities. Minorities are included in the accountancy.
It is included. I explained that in my words for the reason that it is nearly sure that we buy the 25% and the 7% of Sparkasse Bremen and 25% of Haspa, of Sparkasse Hamburg. It is included as a financial liability, and therefore the revenues and EBIT is fully included in our figures, and has not to be outlined at the bottom of the balance sheet and at the bottom of the P&L. Okay, second question was?
The maintenance CapEx.
Maintenance CapEx.
Knut, can you repeat question two?
Yeah, of course. It's the maintenance CapEx. They were at a record level now in H1, and I just wanted to get a feeling for the full year. And the last one was whether you would rule out an organic EBITDA decline in the fiscal year?
Yes. Okay. First of all, organic, what do you mean with organic decline? I think we can at the actual point, what we can see, there will be no decline of a full year EBITDA, yeah. But it's, it could be... Yeah, we see no decline of EBITDA at the full year, yeah? I cannot give you an answer exactly what we see, is it all organic or not, because we have these provisions, and we are not sure what we need from these provisions. Maintenance CapEx will be at the top, I think, in this first half year. We expect lower in the second half year.
For example, our investment has been EUR 11 million in computer hardware in the first half year, and we expect for the full year, I think 18, so it should go down. It could be changed by Portavis. I'm not exactly clear what Portavis brings, but yeah, we will see it probably in the next three months what exactly will happen there. I think that we will go down a bit with maintenance CapEx.
Thank you, and just a clarification on the EBITDA, that you say you don't expect a full year EBITDA decline. That's including the net tailwind from the badwill and the provisions. Is that correct?
Let me see. Mm-hmm. Let me see. ... Need a moment. I cannot give you an answer to this exactly at the moment, Knut.
Okay.
Yeah, cannot answer this question exactly at the moment.
Okay.
I don't want to say something wrong.
No worries. Thank you.
Okay. Thank you.
The next question comes from Mr. Kristoffer Froberg from Berenberg. Please go ahead.
Hi. Thank you very much for taking my question. I have two, actually. Just firstly on underlying profitability with your parent companies or parental companies. How is your profitability developing there, and is, I guess, the underlying decline in EBITDA excluding the badwill and the provisions is that only just from the new companies in the consolidation, or do you have other effects within your existing parent companies as well?
No, we have some effects in companies which are in transition, yeah? Which, first of all, this is the DATAGROUP Ulm, former IT-Informatik, and we also have effects in the financial sector. But in the parent companies, we have only a bit weak development in the RPA and mobile business. I explained before. This is a project-oriented business, which is a bit weak at the moment with some new projects we expected before COVID, and now it is shifted into the future. The answer is our parent companies, the basic business is running very well. We had some hiccups in these companies in transition, and we have some hiccups, as I explained, in the newer companies. Yeah.
Sure. Thank you, and then just on sort of your mid to long term EBIT/EBITDA margin, and also probably absolute figures and your ambitions there. How do you see DATAGROUP as a whole transition towards that mid to long term ambition? First of all, A, what is it? Does it still remain? And B, how do you see yourself moving towards that target?
Yeah. Okay, first of all, our ambition in EBIT was 9%, and this 9%, we do not want to change at the moment, but we see that it might take a bit longer to reach the 9%. But this depends very, very on how COVID is going on, and what acquisitions we can do. If we pay a lot for very profitable acquisitions, it is easy and easier to reach it, but our way to do it is to buy really cheap companies with a very low EBIT multiple, such as IT-Informatik is, and such as Portavis is, and to work on the development of the EBIT.
And this means probably we need a bit longer to achieve to get at the 9%, but we say we will hold on this yet at the moment. This is what we see at the moment. Probably we will reach it a year later, could be.
All right, so a year later, just for clarification, would be maybe in the fiscal year 2022?
2022 to 2023, around that. Yes.
Okay. Super. Thank you very much, Mike.
Yeah.
The next questioner is Mr. Andreas Wolf from Warburg Research. The floor is yours.
Yeah, hi. A couple of questions from my side. So the first one would be on also DATAGROUP Ulm. Could you provide us some insight into what kind of services you would have expected to come in, which are now being postponed or not being, which are not in demand by clients right now? And then, the second is on NRW.BANK. Is it possible to quantify the impact of the delays you had here in the second quarter or the project revenue shifts? And then with regard to Almato, do you already have visibility when the situation at Almato might improve? Because I guess that the difficulties to enter customer sites might persist maybe for another quarter or two, I don't know. That's
Yeah.
Probably not that easy to tell, but maybe you could share your view with us. My last question is on short-time work, if there are any areas within DATAGROUP where short-time work is implemented, and what the positive impact from that was in the last quarter. Probably it will be in the next quarter, I would assume, so in Q3. But yeah, some insights into this would be helpful. Thank you.
Okay. Good. Thank you, Andreas. First of all, DATAGROUP Ulm. We took over assets and people of a very, very crazy company. Crazy in this way: they had costs of very high rent costs, very high car costs, and they had been very bad organized. This was the reason we did not overtake contracts on the customer side. That we wouldn't overtake risks in customer contracts, and therefore, we did not take these contracts. The plan was to make all these contracts with the interesting customers, with the bigger customers, on a new level and a new basis. This works quite well, but then came COVID.
And COVID releases and made it not so easy to renew all these customer relations. But we think this is only an effect, a shift effect. What we see actually, that it is getting better over the last two or three weeks in DATAGROUP Ulm. So we expect, as we said before, that we are on a operational null at the end of this fiscal year. This means, the September should be positive. And it is around, it is nearly positive now.
It's a bit up and down over the last months, but there is no catastrophe, but it is not bringing positive EBIT in, in total this year to our P&L and, yeah, to our P&L. Good. Second was NRW Bank. NRW Bank is a big project, and it is not as easy, and we think we have. In this year, we will have a negative impact of this project. I cannot count it in detail, but we have expected a positive effect, and it comes with a negative effect, which will be, let me say, probably EUR 2 million, around EUR 2 million this year. So, okay, the third question was Almato.
Almato is seeing since four weeks, it's getting better again with the business, but we expected at the beginning of the year, we expected around 3-3.5 million positive EBITDA, and we now think that we come out with a positive EBITDA of between 1.5 and 2 million. So here, the effect is significant, and but we are working on it, and we see light at the end of the tunnel. Okay, the fourth question was short-time workers. Yes, we use short-time possibilities, especially in customer situations like Lufthansa Technik. And we have at the moment, in total, in May, 240 short-time workers, which count up to around 80 people full-time equivalent in short time.
This will protect us from very bad influences of COVID. We pay a bit additional money to our short-time workers so that they come out not only with 60% of their net, but they come out now around 80% of their net income, so that we have no very bad effect out of this. The bad effect of COVID is only to get not as many new business as we expected. Yeah. So we have no minus, and there will be a part of shift into the future.
Okay, thank you. One follow-up, if I may. Do you see any change in customer behavior with existing clients and the ongoing multi-year contracts with regard to, let's say, digital-
Could you repeat? I didn't understand it exactly.
I hope you can hear me better now.
Yeah.
A quick follow-up, if I may. So do you see any change in customer behavior within existing clients with regard to multi-year contracts, et cetera? Yeah, changing payment patterns or whatever, customers asking to support you in terms of payment periods, et cetera? Thank you.
No, no, we didn't see. There is from our many customers surely we discuss in very few situations, but there was no reduction of payments. We have a very exact. We manage our customer situations very exact. And there is no sign that they want to reduce the contracts or payments or want to have payment negotiations. No. So the business model of DATAGROUP is fully intact. Yeah.
Okay. Thank you.
Yeah.
We have one more question coming from Mr. Lucas Panka from DZ Bank. Please go ahead.
Yes. Hi, good afternoon, Mr. Schaber.
Hi.
Two questions from my side. The first question, again, on DATAGROUP Ulm. Can you please give us a more concrete number of the EBITDA contribution from this entity in the first half and the Q2? And then the second question on the NRW.BANK project, in the report is also mentioned that operating cash flow was again stressed due to investments for this project. So the question is: How long will we see still these investments for this project?
Okay. Hi, Lucas. I will answer the second question. At first, we expect at the moment what we see no additional investments in this project. The complete hardware is installed now, and we have to invest only if we have more business in the future, in this project. So, we see that we have a few work, a few additional work to do all these very high complicated sceneries, like reporting, et cetera. And this will cost us some money in the future, but there will be nearly no investment in NRW in terms of hardware and software what we have to do.
The first question to DATAGROUP Ulm, we do not report exact figures of the companies in detail. I can give you only what I said before. DATAGROUP Ulm will come to a positive EBIT within this year, but not for the whole year, but it will bring a positive EBIT next year, and this will start with the last months of the year. Because we have only a little gap at the moment, and it will not bring losses over next years.
So, but in the first half year, it was not profitable on EBITDA level?
It was not profitable. Exactly.
Okay. Thanks. Okay.
Next question-
But that is what I said. Sorry. That is what I said all the time. The DATAGROUP Ulm, we can change it very rapidly, but we have no positive EBIT, EBITDA and EBIT effects in the first half year. Okay?
Thank you. The next questioner is a private investor, Mr. Tobias Reitz. The floor is yours.
Hello, Schaber.
Hello.
English or German, does it matter?
It doesn't matter to me, but for the others, maybe English would be better.
Okay. Then my first question is, you see problems to reach your long-term guidance for twenty twenty-five? There you reach EBITDA margin of 13%.
Mm-hmm.
My second question is: You said that you're actually in negotiations to acquire new companies. When will the acquisitions approximately completed in the near future? What means this year, or would it be in the next year? Thank you.
Okay. Very good. Yeah, first of all, we... That is not, not a guidance, it's an ambition in twenty-five, yeah? And, and we just have reached the 13% EBITDA, so, I think, we will hold that EBITDA margin over the next years. I hope we can increase it, and I'm, yeah, we are on a good way to increase it. These effects you see at the moment are, yeah, these are mainly one-time effects. And, the second, where-
M&A. M&A.
Yeah, M&A. Okay. What do we see? We are in two concrete situations. It is a small company which is very, very interesting. It's a more consulting company, and this is, let me say, we expect it over the next two months and the second one is a bit bigger. It's not a big company, but it's a bit bigger, and there we are on a basis of an offer out, and the signs are very good. We see a good chance to get that company over the next, let me say, four to six months.
Okay. Thank you kindly, and I wish you well.
Yeah, thank you.
Ladies and gentlemen, in order to register a question, please press nine followed by a star key. Mr. Schaber, there seem to be no further questions in the queue.
Okay. Thanks a lot to all participants. I hope we could give you a good picture of DATAGROUP. Let me say, our business model is working very well. Our business model surely has impacts such as positive impacts, like a badwill. Sometimes we have also a negative impact, but in total, business model is totally in a good shape, and we are developing the company. We are working on our efficiency, and we will come back to the good profitability, and we hope you stay with DATAGROUP. Thank you.