Good afternoon, ladies and gentlemen. On behalf of Montega, welcome to the JDC Group earnings call regarding the half-year figures of 2022, which will be presented by the CEO, Dr. Sebastian Grabmaier, and the CFO, Ralph Konrad. The floor will be open for upcoming questions following the presentation. Having said that, I hand over to you, Mr. Grabmaier.
Yeah, thank you very much. A very warm welcome from my side, yeah, to the earnings call of JDC Group, first half year 2022. I hope you can hear me, nice and clear. I'm virtually on the other side of the world, with another time zone, about 12 hours different from Germany. I apologize for the dark background. It's in the middle of the night. Yeah, let me introduce you myself. My name is Sebastian Grabmaier. I founded JDC Group together with my partner, Ralph Konrad. I'm responsible for products, strategy, sales, PR, investor relations, as I know many of you, and also, important things like data security.
Yes, Ralph Konrad is my name. CFO, by origin of JDC, but in the meantime, I'm also responsible for IT operations, finance, and I took over the legal department, so I have a lot of fun and a lot of things to do.
All right. Who we are, most of you know us by heart. Many of you are investors already, so let me introduce yourself to JDC Group really quickly. We are the most modern tech stack in the processing of insurance processes in the German market. What we do is we take in the data of all the insurance companies. That's more than 220. All the alternative asset managers, the asset management platforms, the mortgage banks. We take in the data, we standardize it, and we process it. Then we throw it out in different visualizing systems, either via an API structure into the systems of our clients or on our own or show the data on our own visualizing systems to all kinds of customers.
Not only individual agents or brokers, but the banks, insurance companies, other fintech, insurtech companies, and via our smartphone application, also to 200,000 direct clients in the markets. Now, we almost have 4 million contracts on the platform, so that's 3.9 million contracts. We process data and give you, as a customer, a full data and document feed, a full commission calculation, comparison platforms, so you have an insurance supermarket, if you want, on your smartphone. You can see that the development of the company is really nice in the past years. You can see that we're not only growing, but over time growth is increasing. We have a very good half in 2022 as we think.
Our turnover growth is +18%, so that's up from EUR 68.6 million to EUR 81 million. EBITDA also increases even more from EUR 4.3 million to EUR 5.4 million. You can see that coming from a first quarter with a growth of 20%, Q2 we show growth of almost 16%, which we are very, very content with against the backdrop of what's happening in the world. We have a Ukraine war in the middle of Europe. We have an increase of inflation, an increase of interest rates, and, you know, a slowdown in real estate markets. Compared to what we see in the markets, that's a very, very good development of our JDC Group.
We still follow a long-term growth path with our very big clients, but also that we can show you in the next slide also with the broad business of our more than 16,000 IFAs. If you look at the distribution of growth here for the first half of 2022, you can see that the IFA business is just developing nicely. It's up 19%, or it's EUR 8.3 million growth contribution. But the growth, that's what we told you on the last quarters always, the growth will rather come from the major customers. Here you can see that this segment picks up nicely with more than 30% growth. That's a contribution of EUR 3.5 million.
Advisory also is up, which is a somewhat of a surprise. You can imagine if advisors cannot go out to their customers because they have COVID or the customers have COVID, or there is inflation and nobody wants to buy a house, it's very surprisingly that this is still in a plus of almost 5% or a contribution of EUR 0.8 million. Our direct customers, you could see this over the last quarters as we are not spending money for advertising or the direct customer segment not to be in competition with our major clients. This is on a slight turn path with a minus of 10%.
Overall, we now reached EUR 81 million in first half year 2022, which is a very, very good development as we think. If you look at the turnover split, you can see that already 22% of our business is the contribution of major customers.
Okay. Let's go one step deeper into the figures. If you look at total revenues, as Sebastian said, EUR 68.6 million-EUR 81 million, which is a growth of 18%. Growth is coming mainly from the Advisortech business, which grew by 19.5%, and advisory only by 4.9%. Regarding the reasons Sebastian mentioned, people don't think about buying an insurance product, but how to fill the oil tank for the winter. That's why you see almost no growth in advisory business in the second quarter, but still a solid growth in the Advisortech platform of 17.6%. That's the very good news. Gross profit is increasing by 25%.
20.5% in the second quarter. EBITDA is up EUR 200,000 or 10% in the second quarter, leads to a total increase in EBITDA and EBIT of around about 25% in the first half year. If we go one step deeper into the Advisortech platform, you see that, as mentioned, platform is growing by 17.6% in the second quarter. Gross profit is up 22.8%, which is a nice number, but you have to consider that one of the effects is the consolidation of our Morgen & Morgen subsidiary, which was not in the figures in 2021, but is now consolidated in 2022.
The reason why the gross margin is not growing faster is that we a little bit suffer from the market development. We have a smaller gross margin out of the trailer fees in the mutual fund business that makes around about EUR 400,000. That's the bad news. The good news is we were able to cover this by new upfront fees. We are growing in business despite this environment. The very good development is that the number of contracts transferred on the platform has increased in the past, as we told you, and this leads to a nicely increasing recurring fees in the insurance business.
That leads to more than EUR 1 million turnover per quarter, which is now there that we did not have last year. We were able to cover this gap coming from the mutual fund business, but that's again the reason why our gross profit was not up higher than you can see here. Personnel expenses and other expenses are also up from EUR 3.3 million - EUR 4.6 million and EUR 1.8 million - EUR 2 million in the second quarter. The reason is again Morgen & Morgen. The date of first consolidation was the first of August last year.
After the third quarter, there will be better comparable because then we are talking about the same scope of consolidation. EBITDA was up EUR 1.5-EUR 1.6, and in total, EUR 4.5-EUR 5.3, which is a growth of 18%. Okay, let's look into the advisory segment. Overall, 4.9% growth from EUR 17.3 million - EUR 18.1 million. As mentioned in the second quarter, only very slow growth or stable development by 0.1%. We see the nice development that the gross margin is nevertheless up and is increasing much higher than revenues.
The reason for this is we mentioned this before, that our Austrian team mainly now focuses on products that are initiated by ourselves, giving us much more gross margin, leading to a better profitability of the complete segment. You can see this EBITDA is up EUR 200 ,000 or 13%, despite the situation that turnover in the second quarter did not grow. In the first half year, EBITDA is up 65% from EUR 0.9 million - EUR 1.5 million. Let's look at cash and liabilities. You know, we have a bond outstanding. Interest-bearing liabilities are EUR 19.5 million. We started with EUR 21.9 million cash on hand.
You look at this chart. If you look at this chart, you might think that we are burning cash. That's not the fact. Cash is down. Net cash, sorry, from EUR 2.0 million in the first quarter to EUR 1.5 million in the second quarter. The reason comes from investment and financing activities. If you look in the cash flow statement, which is provided in our investor relations website, then you can see that operating cash flow in the first half year was EUR 3.1 million. We had -EUR 2.1 million cash flow from investment activities.
We had deferred payments of around about EUR 1 million for former investments, and we invested EUR 500,000 initially in our financing platform, mortgage platform, S-Fin, which we mentioned. We paid back EUR 1.2 million of loan in financing activities, and we had another EUR 250,000 investment in own shares from our share buyback program. That's the reason why our cash is a little bit down, but nevertheless, we are still cash flow positive, generating nice liquidity. Yeah, actual situation, you know this better than we do. The bond is quoted at 101%, so very stable. The share price was nicely up since yesterday, 20.80.
When we started this conference, we had a share price of EUR 19.80. The very nice situation is that we are around about the 100-day average line, which is a good technical signal. We are not far away from the 200-day average. We are quite content with the development of the share price, especially if you look at other tech companies that suffer harder from the environment. Sebastian.
Yes, let's come to some spotlights. I think we are hardworking. As you can see, we are award-winning company, our tech platform wins more and more the attraction of major client, but also in the broad IFA market, you can see a very nice development, and sometimes there is good news on the award side. We want to tell you a little bit about the start of Plug-InSurance, our new occupational benefit platform, that we roll out right now in the second half of the year. As we can see that occupational pension management and occupational health management is some of the growth factors in the insurance industry in Germany.
We will give you a little report about the new JV we founded together with Bain Capital and our major shareholder, Great-West Inc. That's Canada Life. We just published that we have a new platform customer that's the Ecclesia broker, the broker of the Protestant churches in Germany and who is the biggest broker in Germany. Let's start with the Finanzwelt award. This is a comprehensive broker pool service award in seven categories. JDC could win the very best rating in six out of seven possible categories. For the best marketing support, the best product range, product management, for processes, services, administration, for software support, digitization, for sales support, and for the training of our brokers.
You might ask yourself what's missing, and that's the interesting part. We ended up second in the broker orientation, meaning that some of the brokers don't like us reporting about the successes with very big clients, because then they might think they come in second. That's not a bad signal, I guess, because we still are the second in the entire market. You can see that we don't have a cannibalization or a channel conflict here, as we are number one in six out of seven and number two in the seventh category. Very nice sign of the month.
Yeah. Maybe let me add that there's no competitor or meaningful competitor of JDC who has the same award. They have a lot less good or best ratings in smaller number of categories. There's only one very small broker pool in Germany that has a comparable award.
Yeah. Some words for our pension benefits and employee benefits platform. You can see that there are some startup companies out there with a very high valuation with just delivering occupational pension management. The platform we're launching has all the different sales channels in occupational care. That's occupational pension management, occupational health management, occupational disability, and also later nursing or care for elderly paid by employee benefits.
If you ask, and this is a recent survey, if you ask employees in the market, what's the most important thing, if they decide for employer, they will say that a company pension plan is now in the focus of employees because you can see that, you know, due to inflation, then wages raise, but they don't raise as fast as inflation. People are a little bit worried about their pensions, and a company pension plan is in the mind of 80% of employees now when they choose for an employer, being very important or important. You can see that the next is company health insurance, so it's very important also to offer this to recruit new employees.
When you read the newspapers in Germany, you can see that the labor market is, you know, very, very empty. There is no way there's more than 20,000 jobs that cannot be filled. Employers now start to offer more and more of these benefits for employees. You see that all the rest, childcare, canteen services, or, well, phone, laptop, what we provide anyways, is coming a little bit later. The car that's the loving baby of the Germans comes last in this list. Yes. What's the backdrop? They're actually looking for their own platform for digitizing their own pension benefits.
We came around screening the market and there is one player in the market by far, it's a company called eVorsorge that dominates the tech side of the market. Whenever a big corporation's looking for a platform, they would almost all end up with a system of eVorsorge. The trouble is comparable to an SAP system, if you want, it's very hard to configure for an individual broker or individual employer. What we did is we came together with this company, founded a joint venture called Plug-InSurance. Within award-winning systems, we standardized their big toolbox into a pre-configured system that's specifically meeting the demand of the normal mid-size companies.
Small and mid-size employers now have a system where, in a full digital platform, the employees can choose for a contract and sign the contract online. The employer can counter-sign it online, and then the employer gets a full platform. He can see all the contracts of all insurance companies behind the company and behind the individual employee as you're used to it in the private business. The employer on top gets a full calculation of not only the changes in its insurance portfolio, but also the changes as to the labor contract and as to his booking for his HR department. Both Social Security and tax are calculated out of the system.
With one Plug-InSurance, the employer gets a full digital platform, which is very unique in the market. We expect to launch this platform in September and we already have every big German insurance company signing for the platform. We will definitely show the entire breadth of the German insurance market in the occupational pension side.
Okay. Another news was our new platform partner, Ecclesia, as Sebastian mentioned. This is the broker owned by the Evangelical Church in Germany and the Caritas Association and other church organizations. Now we are something sometimes on the road in the name of the Lord. That's, let's say it this way. Ecclesia is a market leader in Germany. It's the biggest broker in Germany, with a focus on commercial and industrial insurance with very impressive numbers. A total balance sheet of EUR 500 million. Thereof approximately EUR 400 million equity. Group turnover is EUR 250 million with a net profitability of approximately EUR 30 million. It's a very good and very stable customer.
Why do they target talks to JDC? The reason is that they have no integrated platform for their private clients business. They are focused on commercial and industrial insurance, but every commercial broker has also private clients. This is the goal that we target together, is to manage these Ecclesia private customer business, not commercial or industrial, within the JDC platform for better customer service. What we will do, we will migrate these private businesses from various Ecclesia subsidiaries to one platform. We will digitize this business and help Ecclesia again to service their private clients in a better and more modern way.
Nevertheless, this is a very big broker, but we are just beginning with a small number of customers and contracts. We're talking about 50,000 contracts in the beginning, which will lead to a turnover of JDC in a single-digit million range. The lower single-digit million range. But with a good margin for us, and again, this is a very nice, good big customer, best brand name in the market. We are very happy to have also Ecclesia on board. They will also contribute to our further development.
Yes, we'll talk more about the joint venture with Bain Capital and Great-West. One more word to Ecclesia. It shows that we can reach out to customers of all different sales channels, not only the insurance companies like OTA or the agent networks, but again next to Lufthansa, BMW, a very, very big broker. We still have a full pipeline that we are not content with just having the savings banks or just having the corporate banks. We'll just keep on going out to the market and acquire other clients. Yeah, let me talk more about the joint venture. You can see that in Germany, the broker market is now consolidating with increasing speed.
There's a number of players out there, U.K. private equity, AnaCap or HgCapital coming from the U.S. There's a lot of interest in the market now to consolidate the German broker business as what is happening in U.K. or U.S. that deep pockets are buying a number of midsize and bigger brokers starting from a EUR 1 million turnover upwards. You can see that there's a number of transactions now. The market has been sleeping for some years, and it was clear that this would happen as to the demographic factors. German commercial brokers normally are 55, 57 or 60 years old, and at some point when they think of retiring, they can see that they do not find successors.
It's a very easy game to just acquire volume and then get a higher valuation. This attracts a number of other private equity companies to the German market. Bain Capital asked us to provide not only the platform to aggregate all these contract portfolios, but be the digitizing platform that everything that can be digitized in these target companies can then be brought to our platform. Every target company will have a contract with our platform. This will add a very nice revenue stream to the JDC platform. In the joint venture company that we founded, Bain Capital has the majority. We can say that 65% and 35% is the part of Great-West JDC.
From the beginning on, as long as we can finance it, JDC will have a part of 10% in the shareholder structure and also in the investment structure in the initial investment phase. But as Great-West is just providing financing, Bain Capital will bring in this team for strategic leadership and also the structured sales processes to buy a huge number of brokers in a very short time in a buy and build section. You can compare it to their vehicle in the U.S., a very successful Keystone Advisory Partners bought more than 20 brokers with a investment capital both equity and debt of more than EUR 300 million.
This will be one of the biggest brokers on the commercial side in the German market and also fill in the blind side if you want the last gap in the entire platform or insurance market. We're one of the market leaders already in the private sectors, but now this will bring the platform to be one of the biggest volume aggregators on the commercial side as well. We will be the exclusive platform. The turnover is transferred on. The operational setup is in process. We have a CEO appointed. We can publish this hopefully in September as he's still on his cancellation period. We expect the first M&A transactions to be active.
As you all know, M&A is not done in two months or three months. We have to do a proper due diligence on the targets, and we can see that in the beginning of 2023, we can plan to have the first targets on board. This will be a very nice stream for additional revenue with our normal platform margins to the JDC platform. As I said, the goal is to build up one of the largest commercial brokers within the next three to five years.
Okay. We have one question in the Q&A, but we will come to this later on in the section where questions are answered. Maybe let's summarize guidance and actual achievements. We guided EUR 165 million-EUR 175 million. We achieved EUR 81 million in the first half year. Normally, second half year is a little bit stronger, so you can imagine that we are on track. Although the second quarter was not so strong as it could have been if the world was different, and the same with EBITDA. We guided more than EUR 11 million, and we feel very comfortable to deliver what we guided.
We have published some other goals. We wanted to roll out successfully further savings banks in the Provinzial region. We are on track here. We have 20 savings banks already on the platform. Another 30-40 are expected to sign contracts and onboard until the end of the year. The business that is now in our books is still very little, but it's growing at 100% per month. That's very nicely. Maybe next door for the full year figures, we can show some more detail on this. We are still busy with the onboarding of the other public insurers. There's no news that we can publish right now.
We are very successful in leveraging existing partnerships. Almost all big customers show more turnover, more contracts per customer, and a better profitability using our platform. As mentioned in this and the last earnings calls, we have added further major customers, good brands with a good potential, Gothaer and Ecclesia, and especially here. We have added meaningful further features, further automation, that we showed you in the last earnings call. Until now, we are very happy with the year so far.
Yeah. That comes to a very paradox situation because if you look at the KPI of JDC and the internal factors of the company, everything is just according to plan. We reach all of our goals, all of our KPIs via sticking to our guidance. As you can see that both turnover and earnings, they follow this growth path that we gave you end of last year. As you can see also, the onboarding of these very big clients is just going on, and also the savings banking sector, it was a remark in an interview by Provinzial that told the goal to add or onboard 60 of the savings bank on the Provinzial region this year and another 20 first quarter next year.
VKB shows us that they were signaling us that they want to bring all their 80-something savings banks that are interested in the platform in one go at some point end of the year, beginning of next year. We will have more than 160 savings banks on the platform mid of next year. All of these KPIs we gave you are developing just on track or better than planned. We have the backdrop of the situation economically worldwide. In Germany, we can see that the entrepreneur's confidence is at one of the lowest points in the market, but still German companies are delivering good growth and also good earnings.
If you look at the beginning of the quarter, you have a quite blurred outlook because with a war going on less than 2,000 km away and all the impacts of inflation and highest interest rates, it's very hard to predict the future, but still month-over-month the company's delivering. This is why we added a little caveat. We have a government in Germany that's very stable and also basically doing quite a good job. Then we have a health minister that has some ideas about further vaccination plans and COVID protection. We don't know this development, how this unfolds, and also the energy crisis that's already kicking in Germany.
As we are still dependent in Germany on Russian gas, on the other hand, we are delivering weapons to Ukraine. This is an unsolved conflict. In the end, it will end up what people could think in a compromise that there will be enough gas to heat the houses and this might develop not as bad as people write it in the newspapers for now. This is why we added this little caveat because we think that it's very conservative to stick with our guidance. We were asked in the first quarter, because this was very excellent, whether we would bring it up.
We said we wouldn't do it because we don't know what the development will be. If you ask us now, we are very confident that we keep this guidance and we will grow just as we planned last year. Again, as you see, all the factors that are directly dependent on the companies are just in the green lights and up, and the only risks are overall market risk and political risks that basically touch all the companies outside. Again, as we do not have any supply chain outside or as we do not have any teams in Eastern Europe, we are not hit by the conflict. It's just the confidence of the markets and the clients.
Sometimes we are beneficiaries of this part also because if people are afraid they buy more insurance that and Ralph said this bringing up our new business figures and more than offsetting any well slower growth because it's not a minus we're still on the levels of average last year. There's rather no growth in the investment trailer fee side but then this is offset by growth in new business.
Okay. That's it with our presentation. Now we're happy to answer your questions.
Thank you very much, first of all, for your presentation. You can ask your questions either via chat or by audio line. There are some people who dialed in via phone. In that case, please press the star key followed by number nine, and then the star key followed by number six to unmute yourself. As you already mentioned, Mr. Konrad, there's one question in the chat box. We may answer that before we go over to the audio line questions.
Mm-hmm.
The advisors' good figures have not yet filtered through the overall figures, so they're not reflected in the overall figures. What is the outlook in this regard, and when will the overall numbers become positive, and what is the current hurdle?
Sorry, I'm just a little bit confused because I have now three or four windows with questions that popped up at the same time. Would you please be so kind and repeat this question?
Certainly. It's also the question in the Q&A box.
Yeah.
The first one. It's about the Advisortech's good figures which are not yet reflected in the overall figures, and what is the outlook there, and when you assume it to be to become positive, and what are the current hurdles?
Yeah. We think that the figures in the Advisortech business are positive. Again, we had a growth of, I think, 17.9% in this second quarter, which is very good. If markets are normal, then we would've seen maybe 23% or 24% or 25% growth in the second quarter. I think we are on a very good track to have a 20% growth rate in the Advisortech business.
This will lead to the guidance that we gave, and the guidance is, again, EUR 165 million - EUR 175 million of turnover and more than EUR 11 million in EBITDA. The hurdles are what Sebastian mentioned. There, we don't have internal hurdles. We have more activity of the existing customers despite the situation that they do less business. It's more business on our platform. That means they bundle their business over proportionally on our platform, and that's the reason why Advisortech is growing as opposed to the advisory business.
If you look in our advisory business, in the second quarter where you see there's no growth, that's the market. The market doesn't grow at the moment, but JDC is growing by approximately 20%. The hurdles again is the emotional environment out there. People are afraid of the future, and they don't know how to pay their gas or oil for winter, and that's not the best environment to think about an insurance. That's all. No internal hurdles.
Yes.
Sebastian.
I really want to affirm what Ralph's saying. If you question when the overall figures turn into the positive, we cannot really understand your question because the figures are very positive. In the second quarter, in a war quarter, if you want, where people are afraid of a nuclear conflict with Russia and where the inflation is up and the gas prices are up 50%-70%, right? Our development with a plus of almost 16% in growth and in earnings growth of more than 25% is very positive.
What we think in overall growth in the first half year of 18%+, there's not many companies in the market that grow like this in a downturn of the capital markets at the same time. Let me assure you that we're very happy with the development of both segment actually because it's not that easy, as Ralph said, in the advisory segment to even have a growth. Advisortech is growing with 20% or more, just as we predicted. Again, we're very happy with the development.
All right. Thank you for elaborating. We are now hearing the questions from Benjamin Kohnke.
Good afternoon, gentlemen. I hope you can hear me all right.
Yes.
Thank you. A few nitty-gritty questions to start with, please. Sebastian, you kindly sort of gave an outlook of what you expect from the savings banks sort of end of this year, beginning or in the course of 2023. I think that's very helpful. Just to confirm or just to ask, in the first half of this year, of 2022, is it fair to assume that the savings banks sort of contributed around about EUR 1 million - EUR 2 million to your revenues? In this context, are you still confident that you can generate around about EUR 6 million-EUR 7 million with them for the full year? Would be the first question. Second question on the advisory segment.
I think it's very clear that, you know, the market didn't see any growth. Therefore, advisory was kind of flat year-over-year. Could you provide an early kind of indication if the trend continued into Q3? Last nitty-gritty question, if we may. Morgen & Morgen contribution of that business in the first half, also around about EUR 2 million? Thank you.
Okay. Maybe I can answer at first, Sebastian. Ben asked you the question, but I give you some answer to-
No, no emotions here.
Some answer to Morgen & Morgen because there were some other questions in the chat by Edwin De Jong and some others who wanted to know what is the organic development and what is the contribution by M&A. The Morgen & Morgen, you can assume with EUR 500,000 turnover per month. That's around about EUR 3 million turnover for the first half year. The second question was the advisory segment trend. You asked if this let's say slowdown trend will continue in the third quarter. At the end, we don't know.
If you look at the actual numbers of new applications, then I would say, there's a yeah, there's a little pullback. It goes into the right direction. Yeah? I don't think that we will see a long-term yeah, a long-term slowdown.
Yeah, then the third part, Ben, of your question was the development of the savings bank sectors. As we said, it's as fast or slow as we thought. We still think that their plans of about 5 million this year, yeah, that's what we expect to see this year. No change here because they're just rolling out as fast or slow as we thought.
All right. Thank you. Maybe just one last one from my side, and that is on Ecclesia, if I may. So I understand the sort of part of you know the arguably small private insurance business that sort of transferred to the JDC platform. I was just wondering, you know, around their commercial and industrial insurance business, is there any optionality or any plans that JDC could also be of help there to make their you know business on that front just much more effective?
Yes. We think so, yes. Because first, we will start with a very small portfolio of Ecclesia's business with 50,000 contracts. And if you know our average figures, with contracts, having, on average, EUR 35 per contract, with Ecclesia's a little bit more. We'll start with a smaller single-digit revenue stream. Then this is just historic business of Ecclesia because Ecclesia actually is a fast-growing broker group. They bought Schunck, for example, another very big commercial broker in Germany that is now part of the group, and they have many, many more group companies. So there's a lot of potential on the private side already. Yes, Ben, you're right.
We will see that the digitizing wave not only ends at the private sectors, but like the smaller parts of commercial will be open for digitization as well. Most of, let's say the more normal around the corner business like hairdressers or butchers or bakers, that's very similar to the private business. Just remind you, we already have between 25,000 and 30,000 commercial contracts on the platform that digitize, and the platform can do this already.
In the turn of the year or coming up of the business with Bain Capital and Great-West on the new JV side, we will expand the platform in a segment a little bit and then also can offer digitization services in the standardized commercial sector of the commercial business. This is what we then will be able to roll out in the market as well.
Yeah. Maybe let me add, we had three business fields where we would say our service was not top in class. The first was the occupational pension management. The second was mortgage and financing. The third was this industrial or corporate insurance business. Yeah. If you look at our newest joint ventures or projects, then we touch these three fields. We now have our own mortgage financing platform with S-Fin that we started in the first half of the year. We started the joint venture with eVorsorge . We have the leading or one of the leading occupational pension management platforms. With the joint venture, we will focus on commercial and industrial insurance.
Of course, we will elaborate our platform to have an even better service and better features there. I would say by the middle or the end of next year, there's a lot more potential in these fields. There's business conducted by our brokers that we don't get today, but maybe we'll get it tomorrow.
That's great. Thank you very much.
Thank you, Ben.
Thank you for your questions, Mr. Kohnke. We are now hearing the questions from someone who dialed in via phone. Please, state your name and your institute before asking your question. Thank you.
Hi. I have a question regarding the pilot of R+V. When would you expect that they will decide whether they go forward? This decision, on what criteria is it based? I mean, if you do a good job as you have, and I'm sure you do, is it then clear that they go forward, or maybe they do several pilots with separate, you know, of your competitors, and then they decide among them? That is one question. The other question is, you signed Provinzial and Versicherungskammer Bayern. There are others, you know, in the other regions of Germany. Yeah, I must admit, I was hoping that also I hear about successes on those. Have they already decided what they are gonna do? Yeah.
A third question is, have you lost any major tenders? The fourth question is, can you say something about the growth next year? Would it be higher than this year's growth, or what would you expect? Thank you.
Okay. Thanks for your questions.
Thank you for the question. Let's start with R+V. R+V is the insurer of the cooperative banks. Just to remind all the others, we have a five-year contract with R+V that, after a pilot period with four of their major banks, they plan to roll out our platform to all the other cooperative banks. As I hear, this project is going just as planned, and we're happy with the results. Ralph, you have just new details on this that we. There's no other competitors. They don't run a pilot-
Yeah
with your core platform, but just
Yeah
exclusively with JDC.
Yeah. That's what we can say. There is no other pilots. Would've been way too complex. Yeah, the pilot project is up and running. We have our first bank onboarded right now. The pilot will be with four banks, and yeah, when do they decide? I don't know. They will decide when they are ready to decide. We will not give R+V a reason not to do this project with us.
Yeah.
Let's say it this way. We are very confident, and the feedbacks, the early stage feedbacks, are quite positive.
Yeah, this comes also to your second question. We have not lost any tender yet, right? Have we lost any client? Yeah, unfortunately, we had to publish that was almost two years ago now, that we lost comdirect as to the merger into Commerzbank, which was I think the only client we really lost in the past. The others are happy or very happy and we do everything to keep them and to have them happy. Also in the tenders, we're very successful. As you could see in the past, Ecclesia, they're specialists in the market. They'd look at every other platform, and we won the deal. As well as Gothaer, they looked in the platform, then we won the deal.
The savings banks, which was a very hard competition to get this very, very big contract, we won the deal, and also the cooperative banks was a process, of many, many years, where in the end, we will show you that we will win the entire project.
Okay. The next question was, Provinzial, VKB. A little correction. You said we signed with Provinzial and VKB. That's right and not right. We signed with Provinzial, and we signed a contract with VKB because they took a participation, and it's like a shareholder agreement where we agreed that we will have a long-term cooperation. But we didn't sign the cooperation contract yet. We are negotiating about this. I think it's very likely that this cooperation will take place. It's the same with the others. There are no news to publish, but that does not mean that there are no news.
All these talks are in progress and you yeah we cannot do everything at the same time, but we are working hard.
You can see that a nice gentleman, Mr. Bosse of a subsidiary VKB called Interconnect, joined the supervisory board of JDC, which gives you a signal that VKB really takes it serious and now really starts the operational progress as well. If you look it up, Interdirect has another shareholder, Ralph. Deeper details for this.
Sorry, I didn't get this.
Well, Interconnect not only has Provinzial and VKB as shareholders.
Yeah. Yes, Interconnect has only VKB as a shareholder, but Interconnect is the IT provider for the so-called S-Versicherungsmanager GmbH. The S-Versicherungsmanager GmbH belongs to the three biggest public insurers, which is VKB, Provinzial and S-Versicherung . Maybe this gives you some flavor what might happen in the future.
What Ralph is trying to say is that it's kind of likely that S-Versicherung will use their own platform, S-Versicherungsmanager. Ralph?
Yes.
Maybe some other public insurers, in their wisdom, will join the move, right? We will see some movement there. The last question, I hope that we answered the first three to your contentment, is on the outlook of future growth. I think we have a very good practice of telling you what we do and what we plan for at end of the year and give you a guidance like year-over-year as the platform progresses.
We don't give you a multi-year guidance, but as we give you also in the past, we can tell you that if you just add up the figures of the potential turnovers that come to the platform of the very big contracts of Provinzial and VKB and the cooperative banks, then you would have to say that the growth has to pick up just to fulfill the numbers we already gave you, right?
On our conservative guidance plan that we always fulfilled in the past years, we guide conservatively a growth that we keep, but then you will see that, yeah, quarter-over-quarter and half-year-over-half-year. All these very big contracts will be executed and then also bring more turnover to the platform. If we just add up the contracts that we signed, the growth will pick up in the years to come.
Okay. We have some questions in the chat. Maybe I can answer this. One question of Stijn Allebaut , I hope, and that's right. Sorry if not. Could you give more color on the impact of inflation on your turnover? Higher inflation means higher commissions, I guess, and the costs. A very good question. Thank you. Inflation at the end is a friend of a company like JDC because the insurers increase the premium related to the inflation.
We know that, for instance, car insurance will, on average, increase the premiums from 7%-10%, because of higher costs and so on and so on coming from inflation. Another news that we heard from several insurance companies is that house insurances will become much more expensive, up to 15% increase all over the market, because it's the same. The cost of the damages are higher and of course the insurers use this to increase the premiums, which will lead to higher commissions, higher recurring commissions, as commissions always are linked to the premium. Yeah, we are not...
At the end, we are not happy with this inflation development because it's bad for the complete economy, but especially for JDC, for the premiums, it's a good development.
The good side is that there's a little gap in time because the rise of the insurance premiums this goes in the year, in next year to come. Also commission as a direct percentage of the premium is then one year delayed if you want. As Ralph said, this is quite good for the platform. The important point is that our cost base is not inflating as much as the commission income base, right? There will be some inflation as especially people that can afford to move jobs in the IT department especially, we have to pay them more than before.
As compared to other countries in Europe, the development still is quite conservative in the German environment, right? You see now the first strikes in the airline industries asking for more than 5% raises. This is not an overall market development yet, although we will see some inflation in our personnel costs, Ralph.
Next question from Jean-Philippe Tissot. Thank you, and congrats for the great progress. Thank you. Could you please provide me some sort of idea of how much in terms of revenues and margins the joint venture with eVorsorge means for JDC? In the year right now, there will be no relevant turnover in 2022. It will begin in 2023. It depends on how good our broker will adapt to the new platform. We know that our broker all do corporate pension business, but they are not conducting this business via the JDC platform because we didn't have an offering right now. Now we have an offering.
It's very hard to put numbers on this. Maybe Sebastian you can give a feeling how we see the market and maybe some figures of our competitor in this field.
Yeah. The good thing is with like a very small number of companies that use the platform, a turnover can go up quite significantly, right? We have one very big company in the pipeline that will provide us with now 3,000 employee contracts over the next two years within our advisory part, and this alone will bring another EUR 2 million turnover to the platform by one project alone. The potential is huge. It's very big. This, if you look at valuation of other companies offering occupational pension platforms, you will see very high valuation on that side because there's so much potential. Because you
It's hard to explain, as we all look at private systems that we're now used to in Germany, that you can see all the contracts and documents in the private business on a platform like JDC's. This was not the case in the corporate occupational pension side. Before or up to now, you had to know your employee and what insurance cover he has to find his contract on your platform. If you know that Mr. Meyer is with Allianz, you would find him in your system. If Mr. Müller is maybe with HDI, then you would find him, but there was no overview over all the data of all insurance companies. This is the first time this is provided market-wide and over all of the insurance groups in Germany.
Yeah, it's huge potential and, Jean-Philippe, as you know, we just put a number on the figures when we have very precise ideas about this. All we can say here is that it can be very big, but we don't know really a good figure to give you.
Maybe we can tell you with the, let's say, guidance of business plan for the next year, when we have. When we see it a little bit more clear, when platform is live, and we see the first feedback of the brokers, and then we can give you more details on this. We have two questions left. Two questions from Edwin De Jong, and one from Dirk Verbiesen .
Edwin asks, "Can you give some more color on the development of organic growth and of total and per division?" The second question is related, "Of the 200 basis points increase in gross margin, what part is M&A, and what are other moving parts?" There's no M&A in the advisory segment. In the Advisortech segment it's only Morgen & Morgen. As I mentioned, it's EUR 500,000 turnover a month. As Morgen & Morgen doesn't have a payout to brokers, because it's software license fees, it's also EUR 500,000 a month in gross margin. This answers your second question as well.
If you would carve out Morgen & Morgen out of the Advisortech segment, we would see, like EUR 2.5 million-EUR 3 million less in turnover, and in gross margin. The last question of Dirk Verbiesen , "Hi, now, we have seen some interesting additional customer wins, beyond Provinzial and adding the new initiatives for the platform. How do you see the midterm strategic targets to double revenues and accelerate EBITDA in the current state of JDC and signed customers?" Sebastian.
Maybe I start to answer this, Dirk.
Yeah.
Yeah, thank you for your question. The figures of doubling the revenues, that's from our Vision 2020 - end of 2020. We said, we want to double revenues 2020 until end of 2025. This would lead to a quadrupling of EBITDA. I think we're right on track as we showed, this is just based on the development of the savings bank sector. We're not happy with only doubling the platform revenues, because we want to add up all the other contracts, R+V, plus Ecclesia, plus Gothaer, and all the future clients to come.
Because we'll not stop acquiring other companies, but we'll go on in our acquisition machine and put one after the other of the very big clients in the market to the platform, because we don't want them to sign up with others. Maybe this is to add on the questions before. We haven't lost one tender or beauty contest we took part in, but we don't want the others to win a very big client. This is why we're still active in acquiring new customers. We just also here right on track what we said before, that we'll bring up the savings banks to the platform successfully.
This just on the move, and we keep with our vision that this should lead to a doubling of revenues by like 2020, by end of 2025.
All right. It seems that all questions have been answered now, and we are coming to the end of your earnings call. Mr. Grabmaier, Mr. Konrad, thanks again for your presentation, and also for taking the time, also during the late night hours, to answer the questions. To all analysts and investors also, thank you very much for your attention, and I hand over to you, Mr. Grabmaier, for some final remarks before closing.
Yeah. Maybe we want to repeat the situation that we have now. We're very content with the development of JDC's platform and the company as a whole over the last six months or also in the last two and a half years. The only outlook for the future beginning of the quarter. Right now it's very hard to predict how the overall environment is developing. We have so much political influence in the capital markets and in development of the overall politics in Europe. It's very hard to tell, and it's very surprising. Month after month, the company is delivering.
We think that we saw a strong quarter two in 2022 with growth only a little bit down. Because if you would've asked us after the breakout of Ukraine war how this would affect us, we were not as positive. If you repeat the last earnings call maybe, you see that we were not as positive. We're very positive on development on our platform and our own company. If you ask us on the development of the overall markets, we just don't know. This is the little paradox we have here.
as we also stated in our press release, we are more than happy on the development of the insurance business, especially on all these contracts coming to the platform that will provide recurring revenue for the future, and also the development of new business that is now offsetting all we're losing in the capital markets. Very positive outlook when it comes to JDC. Ralph, I don't know whether you want to add on this?
No.
Not on this? Yeah. We always ask that whether as a management we think whether the stock is cheap or not, right? We never give you an own opinion on that. What we can see, we show you that we started a share buyback program just before the last general assembly, only with a running time of six weeks. As we could see, there was a very good investment for you shareholders and us shareholders. We do it again. Both management and supervisory board think that it's a very good situation to buy back shares, to create value for all of us. Because obviously we think that there's a lot more potential than well very short-term or mid-term view to the valuation of the stock day by day.
We believe in the development of the group. The supervisory board and all our major shareholders that are represented in the supervisory board think so as well. You can take your own decision. Thank you for your trust and your confidence. We'll be with you in the years to come.