Mutares SE & Co. KGaA (MUX) Earnings Call Transcript & Summary

Yes, dear ladies and gentlemen, dear shareholders, I'm very happy to welcome you today on our second Capital Markets Day here in Frankfurt. Many of you are today at home due to the corona pandemic, and I also want to welcome you on the screens. My name is Robin Laik, and I'm the founder of Mutares Group. From background, I studied finance, and then I went into operations. I was operational manager of L'Oréal first, Controller of 2 group companies. And then I went to Escada, a German women fashion producer. And this company, I started as a Controller, and then I took over a CEO position of a perfume business. It was a EUR 50 million business and EUR 10 million of losses. And I was the manager in charge to do the restructuring. So I closed down a factory in France. I exited the U.S. market. And after a while, the company was breakeven. But even though the company was breakeven, we didn't have great profits. And then we decided to go for an M&A process, and we decided to exit the business. And we sold the business to Wella Group, and Wella put into all their shelves of the perfumeries, the dew glasses worldwide, our perfume bottles. And we had a long-term license agreement with the Wella Group. And this contract helped us to have a very profitable business within the Escada Group at that time. So this was the most profitable business. And 13 years ago, I was sitting on my kitchen table, and I said that's what I personally want to do. I want to buy companies which are underperforming, and I want to enter these companies with my own teams and want to restructure, create value out of the underperforming assets. And that's why 13 years ago, I started the Mutares adventure. And today, we are a company of EUR 2 billion in size. We have 15,000 employees all over Europe and the world. And I'm very happy to show you today a new guidance. We, as a Management Board, we have decided to install a new guidance for the Mutares Group. And this guidance, I would like to explain today -- to you today. Looking to our agenda today, so we want to show you this new guidance. What are we aiming for? What is the target? Where do we want to develop our company? Then there is Mark Friedrich, our CFO, who will run us through our financials. Then we have 3 companies that we would like to present. We have the CEOs here. We have Christian Klingler here. We have Richard Sobotta here, who will present BEXity and keeeper and the Donges Group. And we would like to close this business, again, with explaining what is the guidance and what are we targeting for as the Mutares Group. What is our new guidance about? We just announced at 15:00 today, our new guidance. And this corona pandemic was for all of us a very difficult time. And in our portfolio, we have 19 companies onboard. It was very, very heavy, and I want to thank to -- want to give thanks to all of my employees who are working so hard to keep all these companies running, these underperforming assets. And you can imagine that in these times, when a corona pandemic happens and if you have to shut down your plants, this was a very challenging situation. On the other hand, for us, as Mutares Holding, it was a unique chance. And we, in the last year, we more or less doubled our sales. When you look at last year figures, we had EUR 1 billion in sales. Today, we are talking about a company which has a EUR 2 billion figure on annualized base. And in this year, we did 12 transactions. So every month, there was either a buy or an exit, 12 transactions in 10 months. And our new focus, our new target is to achieve until 2023, EUR 3 billion sales. And why is this group sale so important? We, as Mutares, we have an own consulting team. And when we had last year only 40 consultants, this year, we talked about a consultant income of EUR 35 million with 70 consultants. So when we go to these underperforming assets, and that's our typical platform investments, we go to these big corporates. And these companies do have EUR 100 million in sales, but they do have EUR 10 million of losses. And what we ask them is to fund the business with cash, with equity and with a lot of assets. And with these assets, we do the turnaround. We do the turnaround and bring this company back to profitability. That's what we are aiming for. We are creating value in these companies. And out of these funds that are available in this company, we pay our own consultants. And our target is to have -- we have -- this year, we have a EUR 35 million consulting income. And we have a total income of like EUR 50 million. When you take dividends plus consulting income, that's our management fee. And we, as a Management Board, we are committed, and we have approved this by the Supervisory Board that we want to have a net proceed of 1% -- net profit of 1% of these consolidated revenues. So if the company has a EUR 2 billion turnover, we want to have at least a EUR 20 million net profit. And these management fees, which is composed of consulting income and of dividends, will increase in -- until 2023 to EUR 100 million in sales. This is our target. So we have today EUR 40 million to EUR 50 million and want in the next 3 years to come to an amount of EUR 100 million in income. When you see here the second bullet point, this leads us to a EUR 60 million profit. So I've mentioned that we want to have 1% of net proceeds coming only on dividends and consulting income, a team which will grow. Today, we are talking about 70 consultants. We want to have 140 until 2023 and to 2% -- but we want to achieve 2%. And where does this come from? So we have 1% which comes from the management fee, covering all costs. And in addition to this, we want to have a 1%, at least 1% on exit proceeds. So we want to offer or to show that this company which has, over the last 3 years, always paid out EUR 1 dividend, which is about 1% on this gross sales. We want to show that this target will be now 2% until 2023 and having a result, a net result of EUR 60 million. We are aiming to be the first company you think about when these big corporates want to exit the underperforming assets. So these underperforming assets, the first moment when they think, "Okay, I want to separate a company where I've sent in my own consultants, I've asked external consultants to help me, the Roland Bergers and the McKinseys, when they come to an exit, they want to sell to Mutares. And this is what we successfully did this year. We did a lot of transactions, 9 buys only in the first 10 months, and this will continue. When it comes to the return on invested capital, we have a target to turn around the companies with our own team and then to exit the companies with a return of 7 to 10 after 3 to 5 years. We will keep our dividend, which is a base dividend of EUR 1 per share, but we want to show you that there's additional profit coming when it comes now to these exits. And with this strategy, we want to be the #1 turnaround investor all over Europe. Here, you see 4 -- 5 ours, our identity, our mission, our vision, our goal and our values. And I would like to start with the last point, our values. All of this is based on entrepreneurship. For us, when we enter into this company, we take over responsibility by ourselves. So we are not a private equity fund, which is far. We are the entrepreneurs who enter into this company and to take over responsibility with personal integrity and with us. When we come into these companies, I tell to my employees, we will run these companies like my wife run our own household, in a very hands-on driven base. And we are looking for and coming to our identity. We are looking for opportunities. And we want to create value out of these opportunities. These assets and these companies, the people are frustrated. So when you are a loss-making company, you have the so-called non-beloved child out of a big corporate. No one takes care of it. The managers have left. You have quality issues. The P&L is so weak, and the frustration is so strong. And we come into these companies, and together with the team, we will manage it. And you will hear this afternoon some of my managers, and you will see that we have a strong entrepreneurial spirit in our team. What is our mission? Our mission is to be the leader in this turnaround investments all over Europe. So being the first in mind when you talk about restructuring is Mutares. And in this COVID-19 pandemic, we see many targets. So this is a situation where our growth potential is so strong as we see now so many opportunities coming on our table. And of course, we, as already mentioned, we want to let the shareholders participate on our profits. You see here on the right side that we paid out EUR 45 million in dividends over the last 3 years. We have today EUR 35 million, only consulting income, very profitable one. We just did 12 transactions in 2020. And our target is to come from this EUR 1.8 billion where we are today to EUR 3 billion in 2023. When it comes to this transaction, it's all about reputation. And for a big corporate, let's call it Siemens, and you ask a big corporate to pay you a dowry to take over these underperforming assets, the last euro is not important. What is important and why are we so successful in these transactions in this year? We are now here for 13 years. And we did very nice restructurings over the past. And when the people look at you and at your team, you're a handsome manager, and that's why -- and that's what we build on. The trust that we build on is very important. And then there's a local approach on the second column here. Local approach means we are talking here about 9 subsidiaries today where we have own local teams, teams that are doing M&A and operations. And we have this all over Europe. So we are really a pan-European company. When I started the business, I did more or less all the transaction by myself. I bought the companies. I went into these companies as a CEO. Today, we have a local approach, which helps a lot. When I ask Constantin, he's so well connected in Milano. When I ask Philip in Paris or Alex in the U.K., when I talk about Carl and Jesse in the Nordics, we have Santiago in Spain. We have a very strong local team, and that's important, and that's key for us. That's our identity is that we are local. It's not a German business. It's really a pan-European business. We buy in 3 sectors. So when you see our consulting team, which brings really value to these companies, it's a strong engineering background. That's why we like automotive companies. We like also industry-driven mechanical engineering companies. And we have today also consumer goods, which is -- as the third pillar of our sectors in which we do invest. We are targeting to buy companies EUR 50 million to EUR 500 million. The first company that I bought 13 years ago only had EUR 5 million in sales. It was a sunglass business from Uvex. Today, we are targeting bigger companies for we see that's a leverage is much higher when we sent our team in into bigger companies than to the small companies. For us, dividend capacity is key. So we paid out EUR 45 million over the last 3 years. We do communicate today that next year we will also have the EUR 1 dividend as base dividend. But we want to let the shareholder participate, if there are exit proceeds coming in, and we are quite optimistic that this is possible. ESG criteria is important. We are a stock-listed company. That's why compliance is for us, key. And we do pay a lot of attention, and that's also a criteria in which we are differentiating from other competitors. And maybe a small look on our M&A activities here. So we see a lot of companies. But many of the companies -- so you see here the number of 3,500 opportunities. And this number has now really increased due to COVID times. So many companies are presented to us, but in many case, it's not fitting. So for example, we do not buy out of administration. When a company is insolvent, that's not interesting to us or if there is too much bank debt in the company. What we want to buy is a strong balance sheet, and that's why we are asking the seller to fund the business with cash. And out of these 3,500 opportunities, we did 100 binding offers, and we came here to 9 targets that we acquired only in 2020. On the right side, you see our offices. We are, today, represent in the Western European countries. We just opened, a week ago our office in Madrid. We will also go now to Stockholm, to Sweden where we hired 2 individuals who will run our Swedish and our Spain business. When I look at our portfolio, we have different cycles. So when I look to automotive, we are very in early the stage. And this, for us, important here, we will have a look on the different portfolios after this afternoon. And I'm also keen on listening to my team who's presenting this afternoon. Then we have the Engineering & Technology, which is more on the late cycle, and we have consumer goods. And for us, the 3 sectors are for us quite beneficial. Why? For there are some sectors who suffered very strongly due to COVID-19, especially the automotive business was very tough this year. But we have other sectors like consumer goods. One example is we have a producer of toilet paper with Cenpa. And this business was in COVID times a very good running business. And that's why it's so important to have a balanced portfolio. Out of these 19 companies, there are some which are really hit with COVID and others which even profit from this -- in this COVID times. What happened in 2020? So you see that we bought here 9 companies. We exited 3. And we did a bond raising, and we even did a tap for the bond. And this shows you that we were really active and I think the most active investor, turnaround investor all over Europe in this first 10 months of the year. And you can see here that we did not only do platform investment. A platform investment is a typical investment, strong P&L loss, we have to enter with our own team and do the restructuring. But we also do add-on acquisitions. An add-on acquisition is an acquisition when we have already turned around the company and we want to grow even in regions, so either in regions or in products. And that's why like we buy a machine, sometimes buy a company to grow our market share. And so you see that we did this year 6 platform investments and 3 add-ons, and we exited 3 companies. At that stage, I'm proud to present now Johannes Laumann, our Chief Investment Officer.

Thank you, Robin, and a very warm welcome afternoon, morning to the U.S. and late evening to Asia. Johannes Laumann, I'm the Chief Investment Officer since mid of 2019 with a strong operational background and a long-lasting consulting background as well. I'm heading the transactions, the portfolio and the Investor Relations side. Let me take this opportunity to summarize up quickly what Robin said in the beginning and what is the consequence of what you have seen so far and what is the consequence of the outlook we would like also to share with you today. So when you see the sales growth, I think Robin has said, when we started with sunglasses from Uvex in 2008, with EUR 6 million in sales, you see quite a steep curve, which occurs here for the first 15 years of this company. Now in 2018 and '19, we were around EUR 800 million, EUR 900 million in sales. And what you see now is that we expect in 2020 roughly a number of EUR 1.7 billion, EUR 1.8 billion of sales with an increasing plan until 2023 to EUR 3 billion, which is a number, which has to been seen as a net number. So this, of course, not only includes the buy side, but also includes the sell side. And a business cycle for us or an investment cycle for us is only over if we have divested the company. So this is a net number. We want to grow by another EUR 1.2 billion until 2023, which doesn't -- which means we need to buy actually more than EUR 1.2 billion in order to achieve this because until then, we also have great plans on the divestment side. Why do we do all this? It's for the benefit of the holding because that's where you gentlemen are invested, which is the interest of the capital market, which is also our interest as management and Supervisory Board holds more than 40% of the shares. We basically split up into 2 cycles. So firstly, the management fee covering all costs will bring us as a guidance around about 1% of the total annualized revenue as a profit in the holding, which will lead to the guidance we give today of a base dividend of EUR 1, not only for 2020, but also for the way forward. And then on the right side, the exciting -- the very exciting thing is we have given already a guidance of 7 to 10x cash we want to make out of an invested euros. And we do see great potential on further development of the dividend with a performance dividend depending on lucrative exits we will have until 2023. So the 2 together will lead, I think, to a very -- or will underline the success of the acquisition buy and sell side, which was shown there recently. Just a quick summary on this one. So on the left side, you see at the moment, Mutares Holding, revenues of EUR 40 million to EUR 50 million, EUR 1.8 billion in sales, EUR 20 million EBIT, which relates to the 1% of the annualized revenue as a basis. We are currently traded on the market with roughly 4x sales or 7x profitability, while we do see our peers more in the range of 15. I think the rest of the table, 2023 is kind of self-explaining. So if we increase our profitability, of course, we also will, consequently, would mathematically decrease the multiple on the EV sales and the multiple on the profitability. However, we do see great potential here. In a nutshell, we will focus on growth. So the company, which was founded in 2008 with EUR 6 million of sales, it's planned to go up to EUR 3 billion, holding revenue of roughly EUR 100 million. This is the growth path. We want to double our consulting colleagues all over Europe in order to achieve that. The return is 7 to 10x cash return on every invested euros we do. This can be a purchase price for add-ons. This can be a capital injection, a financing, a loan, whatever it is. But every euro the holding gives to a portfolio needs to come back 7 or 10x of the investment. And last but not least, we want to introduce the mechanism of a base dividend of EUR 1 and a performance dividend driven by larger and significant excess over the next months and years. Before we hand over to group financials and Mark Friedrich, our CFO, in the lead, are there any questions so far on this point, then please shoot.

I have a quick question to the management. You said, if I understood it correctly that you're charging 1% of revenue, right? And I think Robin said that you earned EUR 35 million management fee a year. Now, you also said that you're at EUR 1.8 billion annual income, if I take 1%, I only get EUR 18 million. So what's the difference of EUR 35 million?

The EUR 35 million -- so what we do is we don't charge a flat fee of 1%. We do charge our consultings into the company. So the 1% is the profit in the holding, which is the EUR 18 million you're referring to. The EUR 35 million, Robin was mentioning, is the revenue out of this consulting fee in the holding. And fortunately and luckily for us, there is also some fixed costs in the holding such as salaries and other things, which we appreciate.

But we, here, in this corona times, what we experienced is that we bought a lot of companies. So each month, we bought a company. And even last year, we bought 10 companies. And so the growth story of Mutares is very strong. And what is not reflected in our valuation, what we saw is that our consulting income, which is a very profitable pillar, is not reflected. We do have today business with 70 consultants, which does only on consulting EUR 35 million already today. And in addition to this, we have profitable companies which pay out dividends to us. So we believe that we have a EUR 40 million to EUR 50 million total income without exit proceeds. And if you add then exit proceeds, we want to achieve a 2% out of the annual sales on a net income level.

Second question, on your investment process versus your disposal program. Is this quite independent or they need to sort of like free up capacity, free up capital, i.e., divest further before you can -- on new investment opportunities, how do you think about this relationship?

We have, on both sides, all the freedom. So we don't need to invest money. There is no dry powder lying somewhere, which needs to be invested. We are looking for the right moment, for the right time to divest the company. And this is not a question of we need to free up capacity within the existing portfolio and then give it to a new buy, right? Well, the first comes then. The -- what we try to do always on these consultancy is not to bring in the people and let them in as long as they can. At a certain point in time, our intention is to -- that our consultants make themselves obsolete because that means the local management and the company runs very, very well. This is then, on the other hand, most of the time, the moment where we say maybe Mutares is not the right owner of the business anymore, and then we start a structured divestment process. But the idea of the consultant is not to just sit there, enjoy breakfast, lunch and dinner and then go away. It's make to himself obsolete. So a typical time our consultants are in a firm is 12 to 18 months. And then it depends if new add-on acquisition comes on top. So then, of course, the cycle starts again with integration, et cetera, et cetera. But typically, 12 to 18 months, and I think in the cases later on, you will also see that. And -- but this is a typical cycle for a one single company. And then depending on a acquisition, of course, this can be prolonged.

And we -- for your question, we raised all the bond. So this was when you think about our returns that we are achieving, out of the money that we invested to the companies, we want to have 7 to 10x return. And that's why we took a bond this year to also differentiate. In the beginning, we only bought companies for EUR 1. Today, we have -- especially with this add-on acquisitions, sometimes, we are investing more than EUR 10 million to these add-on acquisitions.

All right. Mark, where do you hide? Here.

I'm not hiding. Thanks. So thanks, Johannes, for the introduction. So my name is Mark Friedrich, CFO of the Group since 2015. And I will guide you through the financials, starting with the big picture. But also, we'll add here and there first glance at Q3, which will be published in the second week of October. So starting with a high-level overview. Means for us still the Group revenues of EUR 620 million in the first half of the year 2020. And consequently, we added, compared to prior presentations, the consulting revenue of the holding, approximately EUR 14 million. And here, first glance on Q3. Just for Q3, we have Group sales of EUR 450 million and consulting revenues of EUR 8.6 million or approximately what we had for the first half of the year 2019, we have here, in both figures, only in Q3. So that just reflects the growth that we just saw in our pipeline and M&A business. On the other hand, Group EBITDA and Group adjusted EBITDA remains quite important figures for us. I would go into detail for the adjusted EBITDA because it's a bit to explain why we adjust our EBITDA. And on the other hand, you will see in the Q3 figures that our cash and cash equivalents again increased substantially due to the bond rates, so the tap that we did, but also due to our business model where we added portfolio companies that normally bring in cash, free cash to the Group. First explanation, the Group adjusted EBITDA, which is quite important since we have some influences in our reported EBITDA. Here, just taking the first half of 2020 where we had a bit more than EUR 40 million in reported EBITDA that we adjust by around EUR 60 million due to these income from buying and purchase, so the difference between the equity and the purchase price, which is normally positive. We acquire more equity than we pay because the companies are loss-making and somebody wants to get rid of it. And on the other hand, we restructure and have, therefore, one-offs. So we introduced social plans. We closed sites. And then we have on the end of the cycle also a deconsolidation effect. So we sell companies, and that all affects the reported EBITDA, and to present a run rate figure means a figure that gives you more insight about the operational performance of the portfolio, we end up with the adjusted EBITDA, which was for first half of 2020 negative. And I will explain later why this can be also good and where we have to maybe separate the portfolio companies to have a better -- to better view on the adjusted EBITDA. But before I come to that, I'm running you through the different segments that already Robin mentioned. So first one, Automotive & Mobility, which were actually in the past always the biggest one in the Group because we consider it as a home turf. Here in 2020, first half, we had a bit more than EUR 200 million in sales. But you can also here see, in Q2, the substantial decrease compared to Q1 due to the COVID-19 shutdown that pretty much everybody experienced in the industry. But looking already ahead, Q3, we would see more than EUR 170 million in sales just in Q3. Also compared on a like-for-like basis, compared to Q2, means with the portfolio entities that you see here, without the acquisitions, we will see an increase of more than 30% in sales. So also our portfolio recovers quite heavily in Q3. And it's good for us because that means that the work that we did during Q2 where we had to cover -- where we had to focus on the liquidity measures helps us now to recover in the working capital increases that we see due to the increase in business now. Even though we struggled in terms of going to our portfolio companies, in Q2, we were able to restructure a part of it. We introduced a new IT system in Plati. We started the reorganization of the STS, especially the headquarter close to Munich. And on the other hand, we were also able to relocate part of the production at KICO from Germany to Poland. So we were able to make progress not as fast as we wanted to, but at least, we see in Q3 that this kind of turned out to be the right way. Second segment is Engineering & Technology, which is getting bigger and bigger due to the big acquisitions and the add-on acquisitions, especially here, Donges Group, that we did in the past. And like Johannes has already said, this is actually an industry where we have a couple of companies that are in the building industry, so quite long-term contracts. And here, you see an increase in sales. And it will further increase in Q3. And here, you see a positive EBITDA for Q2, which really fits what we just explained to you that this is kind of an [indiscernible] business that helps us also through these complicated times that we had in Q2. I want to highlight here, the Donges Group, which we will hear later from Johannes, which contributes quite positively to this almost EUR 4 million or EUR 5 million in adjusted EBITDA. This is a really strong group that we built up during the last 2 years. And on the other hand, also quite positively contributing was Gemini, where we did quite a good and fast restructuring in 2019. Coming to the last segment, which is actually the fastest-growing segment in the Group currently, Goods & Services, where we had at the -- in Q2 2020, we had 5 entities in there. But in Q3, we added 3 portfolio companies here with SABO and the Nexive and Nexans. So this will increase quite fast now. And here, we will also see a substantial increase in sales level in Q3 compared to Q1. And on the other hand, here, again, it's quite a mix that we have in the segment where we have, on the one hand, portfolio companies like Cenpa or keeeper, which we will hear also later, that kind of -- are positively affected by COVID-19. And that's why we see an adjusted EBITDA for the Q2 of 1.1. And in the end, we ended up with minus 1.5. So altogether, you see that for the first half of the year, we had the adjusted EBITDA of minus 16 which is already quite different in terms of the segments that we look at. And it is even more different when we look at the life-cycle stages. Robin and Johannes were explaining that we want to grow and that we want to also exit portfolio companies. And in between, we restructure the companies with our own team. And we try to give more transparency with this life-cycle stages slide where we have kind of reshuffled the portfolio companies in the different stages. First one, realignment, so that's the stage that the portfolio companies enter once they come into the group. And it's quite important that it's well understood that this bucket has always a negative adjusted EBITDA. Because we acquire companies that have adjusted -- a negative EBITDA, so that's why it's quite good that we see here minus EUR 12 million for the first half of the year. And for the first time, we splitted it into the different quarters. We will deliver that kind of transparency also in the coming finance call that we do on a quarterly basis so that you can really follow the different developments of the Group. And here, we have these 4 companies that we pretty much acquired in the last 12 months. And for Q3, we were seeing that there will be a big increase in sales because we added all these companies in Q3. But also, you will see a big increase in terms of adjusted EBITDA loss, which will be actually on the same level as only the half year that you see here. Once our team has entered into the portfolio companies and start to restructure, start to increase the performance, start to focus on growth again, so that also the growth part contributes to a development where we can then reach the optimization phase. And the optimization phase normally starts after 12 to 18 months where we kind of shift focus away from the restructuring, which should be actually completed, means social plans should be kind of closed and paid out. We now focus on growth, external and internal growth. And here, we actually expect kind of a breakeven EBITDA, adjusted EBITDA. And you see here that for the first half, it's negative, mainly due to the -- by keeeper group. And in Q3, this is actually exactly where we want to have it, around 0. And once we have kind of optimized in terms of second wave in cost reduction, but also kind of looking forward to growth, the companies enter the harvesting stage, means the last stage that we actually consider in our Group and where we are actually willing to sell the portfolio companies. And in this stage, obviously, the company should be positive. And that's what you exactly see here that the segment -- the harvesting stage contributes positive to the adjusted EBITDA, which will be even higher. It will be twice the amount in adjusted EBITDA that you see here in Q3, which reflects the strong recovery of especially companies like the STS Group, for example, but also Elastomer. And obviously, also the Donges Group contributes quite positive to the adjusted EBITDA of more than EUR 10 million that we currently see for Q3. To kind of connect the dots where we heard today that consulting revenue and our own team is quite important to kind of go through the life cycles, we, as a Mutares Holding, have approximately a bit more than 50% of our consulting sales is in the realignment phase. So most of our team is currently working on the restructuring phase. Approximately 25% of our sales come from the realignment phase. So we still are there in trying to -- try to push and try to bring the portfolio companies forward, and the last 20% of our consulting sales come from the harvesting stage. So 2 messages, obviously. As long as we grow the portfolio group and as long as we enter new portfolio companies in our Group, we will have to also extend our consulting group and our consulting members because we have to handle it somehow. And second message is, we will always follow the portfolio companies. It means we have always a share of revenue that goes along the life cycle. But it goes down as more longer the portfolio companies are in the group, but it's important that we still -- that we follow the portfolio companies until the exit, like Johannes said, a life cycle is done once the portfolio companies have left our group. Coming to the last slide, and Robin already mentioned it, to push our business model and to kind of repeat a Donges story, we decided to go for a Nordic bond. And we decided that actually already last year and had the initial raise of EUR 50 million in January, February this year, which was quite successful. It was a complete new stakeholder group that we had to address here, which where we were able to convince them from our business model and that it's a good decision to give us EUR 50 million to kind of accelerate our business in terms of using these proceeds, especially for add-on acquisitions. In August, we decided then to do a tap of EUR 20 million. So that means that we, as a holding, have now external debt of EUR 70 million in the group that we can use to develop our portfolio and to kind of support the strategy that we have outlined today and that we will outline more in the next couple of months. And with this, I think we do again a Q&A. If there are any questions, happy to answer now or later.

I think that, that you actually report on an organic growth basis, and they sort of -- to provide a little more transparency on the, obviously, on the right portfolio that already exists.

So I just repeat your question just for the audience that is not here today. So the question was if we can add even more transparency by separating organic growth of the portfolio companies that already exist, the like-for-like basis versus the M&A add-on sales. We will consider it for the next quarterly call. That is on the 10th of November. I think it's quite reasonable to give that kind of transparency and to explain about developments of the different groups. Good. Thanks. And with this, we hand over to the first portfolio company.

So the first portfolio company right before the break, at least for the people here in the audience, BEXity, presented by Christian Klingler, Managing Director of Mutares and Managing Director of BEXity. Enjoy.

Thank you. Hello, everybody, and thank you for coming in today to Frankfurt, and also thanks to everybody on the screen today. I hope you're all well. My name is Christian Klingler. I'm principal in the Mutares portfolio team and currently also Interim CEO of BEXity, one of our new investments, which we have acquired last year. I've also been heavily involved previously at Balcke-Dürr, for example, at Donges SteelTec, at Gemini. My background originally is, I'm a chartered accountant from Ernst & Young many, many years ago where I've worked in audit and transaction services. And later, I've worked for Alvarez & Marsal in the restructuring performance improvement team in Munich. To my first slide, I'm delighted to talk to our new company, BEXity Gmbh, which is an Austrian logistics company, active in the groupage charter and warehousing business. A few specifics on the deal. The company was founded more than 30 years ago in 1987. We have acquired the company in December last year. Signing was around October, closing at the end of December. It was a typical transaction for us, which means that it's been a carve-out of business lines, which was considered to be noncore to the Austrian rail. It was a privatization. It was one of -- it was the first privatization for Mutares. We are very happy to have done one of those. The company is headquartered in Vienna. It has about 855 employees. Of which, very interestingly, 250 have civil servants status, which is quite a tricky one when you do a transaction. And I will explain a little bit later how we managed to do that. And the company is a mid-market company with about EUR 200 million revenues and, as usual, heavily loss-making with about EUR 25 million of a negative EBIT in 2019. On this slide, I'd like to present to you the management, which is one of a specific characteristic of Mutares. We have a portfolio team, and we distinguish ourselves very strongly from other investors by having a consulting firm within the firm, which means that we have got people who go in and do the restructuring. But we don't do that just normally as you would expect or which you probably have seen from other private equity firms where there is an operating partner who from time to time goes to the portfolio company and sees how the process is being developing. No, we actually go in, especially in the first phase, where we're heavily involved, where in the first couple of weeks, we put the restructuring program together, identify what's needed, and also, we are not shy of taking on interim line management roles, which we have done here, and this is why I'd like to show you this chart. The management team is a mixture of the management which we have bought, but also ourselves. Because in this instance, we had to decide that we have to make a change to the management, and we were happy to go in and take on interim roles. So half is Mutares and about half is corporate. So in this instance, we have taken on the interim CSO role. We've taken on the interim operations manager and also the interim CEO role in this instance. So just generally about BEXity. BEXity, as I said, is about EUR 200 million of revenues. About half is in the groupage business. What is groupage? Groupage is a shipment from A to B of about 1 to 2 pallets. A pallet is up to 3 tons of weight. We ship within Austria, but also we ship internationally. We guarantee our customer's delivery of within 24 and 48 hours. And we have a huge volume of shipments within groupage, 2.5 million annually. And I'm pleased to say that BEXity is the quality leader in Austria when it relates to on-time deliveries of our shipments. We have, in this pillar, a huge amount of customers, so 14,000 very reputable customers. So from Bosch, INTERSPORT, Miele, which is a dishwasher producer and so on where we are clearly the #1 in Austria. Number two is the charter business. Charter means that we pick up shipments from our customers, and we bring it to where the customer needs it. It's a very high-margin business, EUR 60 million -- EUR 61 million of revenues. And we target 35 countries worldwide, predominantly in Europe, of course. The other stream of revenues is the warehousing business. We offer 30,000 square meters block storage and about 115,000 pallet storage spaces, which also makes us a huge player in the Austrian market. Customers in this segment are Unilever, Nestlé, Maresi and so on, so big firms who count on our services. What is the USB of BEXity? As you can see here, and for those who don't know, this is the map of Austria with capital of Vienna in the east. It shows a green line here, which is the rail track, which is one of our USBs. None of our competitors have that. We have about 30% of our shipments on rail, which is cheaper, which is economically more friendly. And our customers love that, specifically the Unilevers, the retailers, they all want to build on green. And only us, we have got the access to that tracks, and that makes it very attractive also on revenue generation in the future. You can see there are about 16 squares. The orange means that these are distribution centers. We have -- we cover Austria quite nicely. So in each of the districts or regions, we have got a site, which makes it, for us, very easy to access literally all of the valleys in Austria economically. We have warehouses which are on the map the -- with the blue squares, and the mixture of that actually gives us a very, very good network and footprint in Austria. So probably one of the questions that you might have is why did we acquire that company and why did the seller give it to us? Well, you can see I've tried to list 5 points here. So why did we buy the company? Well, one, it was, which is also different to other investments which we make. The industry is a viable industry. We don't shy away from investing into industries which are difficult, which are structurally not sound. You could compare the textile industry. You could compare the nuclear power industry. But in this instance, logistics is a sound business. It's driven by the economical environment. But otherwise, the business is there. It's nothing running away. Number two is it is a national leader in this market. It has a strong heritage of the seller from the Austrian rail. People know it from -- and I have highlighted that here in red, it's the Bahn Express, which -- where we have also taken our name from. So it has a good reputation. It's ecofriendly, so we can build up on the future trends, which is -- which goes more and more into low CO2 emissions. And although, I've written that in the last point, but it is clearly a carve out. It's ideal for us. There is a potential for an operational improvement. And this is why we have taken it. Why has the seller given it to us? Well, clearly, if you can imagine, if you do a privatization and you are a politically influenced corporate, you would want a reliable partner. We could demonstrate that we are a reliable partner because, one, we have got the operational expertise to take on a company of the size of EUR 200 million with nearly 1,000 employees, where there is complexity in it, where you have an IT carve-out, which is complex, where you need to demonstrate also that afterwards, you are the one who can take that into the -- into sound areas, basically. So we could show -- clearly show that. And we have made big progress so far. So we're also on the IT carve-out, which was very different during the pandemic, where you couldn't buy the hardware on time, we have managed to actually progress quite well on the IT carve-out as well. So just to give you a bit of a flavor on the numbers. Initially, always what we do is in our first phase is we go through the numbers during our diagnostic phase. In the past, BEXity has had revenues of EUR 260 million, which has shrunk to EUR 200 million in 2019 when we bought it. But as you can see, that the bottom line has never improved. So they have clearly lost ground in the market. And when we benchmarked it on the right side, you can see that in the industry, there is an EBIT margin of 2% for transportation and 3% for warehousing. So basically, our task is if you want to reach that benchmark, we have got an earnings gap to fill of about EUR 29 million. So then a few words on the pandemic, to start off with the negative effects on the right side. Of course, during the pandemic, when the shops closed and automotive was heavily impacted because the supply chain broke, that also had an impact on us. And we have lost about 30% of our shipments, end of March, beginning of April. We have mitigated that by furloughing staff, which was very generous in Austria. We have been able to take advantage of that. For us, we have been very proactive. We have seen the crisis coming. So generally, at Mutares, we have set up a task force, which was also guided by the headquarter. And we have very early figured out what we need to apply for, what we need to do. So when the pandemic hit, we had all of the papers together and to apply for the furloughing scheme. Of course, we had additional costs, the extra cleaning and the extra monitoring, whatever you need to do to manage it. And we had, number three, also some delays, as I mentioned earlier, on the hardware, for example. We couldn't get the laptops and the printers on time because shipments from China were very difficult. The IT cost are generally has been doing very well. We have managed to catch up. We planned it very conservatively. So I'm pleased that there has been no long-term impact from that side. On the positive effects, clearly, we have seen, on the contrary, also high demand for food, sanitary products and our warehousing activities, which have picked up enormously. So everybody wanted to buy washing powder, pasta, soups, et cetera. We had, as a KPI, just to give you a bit of a flavor. Usually, we have 30,000 picks in our warehouse, and then we had double and triple actually during that time. So the transportation segment went down, but the warehousing went up. So overall, we were quite flat out. What we could show with proper crisis management also, and this is my second point, is that we managed to win customers. We were ahead of the game. We communicated very clearly to our customers via our website. So they knew were the pandemic hit, which areas in Austria were in quarantine, where they could get shipments, where they couldn't. Things changed daily, and we have communicated really well, and that also gave our customers an impression that we actually can handle shipments during difficult times. That was, of course, also fueled by the new trend, which means that actually also that people buy more online. We could say that the customers are happy now to buy things online, which they wouldn't usually buy. Warehouses were full of plants, but not like small plants, big plants, which usually you would want to see first. And also what we could see is that the small customer in regions, traders who sell wine, suddenly, also want to sell products, and they need transportation, and this is where they also approached us. Third point is what changed also during the pandemic is there is, I think, a little bit of a rethinking of the logistics chain. So big corporates don't want to have their warehouses across the border because during the pandemic, you will find -- you might find it difficult actually to cross the border. And this is what they have recognized, and I think this could be good thing for our warehouse business. And we have seen that trend coming through quite a lot actually in the last months. So overall, what I'm saying is that, of course, we have lost revenue, EUR 1.6 million in total, but our counterinitiative have come through quite nicely. So we only made a small loss of about EUR 100,000 in the first half. Generally, a little bit also on the diagnostics, what's the strength of BEXity? The first one mentioned here is the connection to the national rail network, which gives us the green touch. The coverage that we have in Austria, with our 16 sites, no other competitor has that. As a weakness, when we buy assets, typically carve-outs, corporates don't want that anymore. Of course, they haven't invested in it heavily over the last year. So we see that there is some change required, specifically on the digitalization, which means that our competitors, what they have is a customer can look online where their shipment is. We don't have that yet or not to that degree, which we would like to have. So that's one thing to work on. The other one is that if you buy a company from a state-owned business, well, things work a little bit differently. So you might have to speak to people on one or the other day and change mindsets, and we've been doing that quite successfully as well recently. Opportunities. There is a great opportunity for the business. We are the national leader. We want to grow internationally. That doesn't mean we want to buy a company like that, but we can actually grow organically by increasing our charter business. And as an opportunity also, BEXity is a completely new brand because it was an asset deal, so we had -- we could not use the old brand, but that gave us a clean cut and a new start. And I think we have been doing some good marketing recently. And we can see some brand awareness coming through quite nicely, and people also start liking to work for BEXity, which is good. What are the threats? If you remember, originally, usually, I'm responsible for the balloons to go up, but suddenly, I don't know what's happening today. One of our threats is clearly that we need to win back customers. When you remember the chart or the table that I've shown you we're we have -- we come from EUR 260 million of revenues, we are now down to EUR 200 million. That's not because of the market change, nor that has been due to the old times where not enough focus was put on the marketing and sales development, which means that we had stuff which weren't incentivized sufficiently to actually bring in business because it didn't matter so much. We have changed that, and we are already now seeing customers coming back. So the market is clearly there. We just now need to see that these customers come back quickly. That will be one of the challenges. The other challenge is that we remain the footprint as it is to keep building up on the distribution network. So a few words on what we have done, just to give you a bit of a flavor of how we work. As I've said, initially, upon acquisition, we go in with a team. We look at the situation, confirm if there have been any changes to what we have seen in the due diligence and then we come up with a diagnostics report. And once we have got that, we go into the implementation. What we have done since then and we've been working on this company now for a bit more than 9 months, we have changed management. We have put a new organizational structure in place, which wasn't there initially. And we also made clear what the real roles and responsibilities are of each of the leaders and of the managers there. That was clearly not what we have wanted. When you do restructuring, you need to do restructuring with all of the people. So you also need to give them a chance to make improvements, and you need to also give them the reporting lines where they actually can say what they want, where they can be responsible for sites, for earnings, et cetera. And once you have done that, you can have a team, and you can sort of have achieved the results together. We have, of course, also started with our headcount restructuring. When you come from such a high revenue base and you lose revenues, you need to take out volume. We have taken excess capacity out. So far, about 120 civil clerks have exited. If you remember, initially, I've said that, about 250 we have taken on. Typically, when you buy a company, you would be a little bit scared about taking on civil servants. We saw that. And what we have done is also we have applied a mechanism that allowed us to actually outsource the staff into an external company, which is still helped by the seller and lease it as we please. And we can also end contracts without -- you could compare it to temporary workers' agency where you just hand back the staff if you don't require them anymore. So that was a very elegant solution and which gave us also the speed with the restructuring because otherwise, you couldn't terminate employment contracts so fast. Otherwise, we've done a full SG&A cost reduction. As we always do, we have redesigned the sales and marketing team. We have already won back customers. We have closed nonprofitable sites. We have exited the pharma business, which was loss-making and also required a lot of CapEx, which we didn't have. And so far, also we have been 75% through with our IT covered. So what are the next steps? Clearly, we need to keep going on with our cost rightsizing program. But on the M&A strategy, what it is, is that we want to play -- want to remain a national player. This is where our market is. This is where we need to build up on our leadership position, and we want to grow internationally the charter business and the international groupage. The other thing is also what we need to do is we -- BEXity, we need to make sure what it stands for. We do warehousing. We do international groupage. We have products which are dangerous in terms of gases we deliver. Literally, we do everything at this stage. And I think that we need to have a clear focus so that people understand what BEXity stands for and what our main product is really. We also will tackle even more the sales losses by putting a CRM tool in place, by recruiting new staff on the marketing side just to give that another boost into the coming year. And on the operations, of course, we will optimize the operations, the shop floor staff as per the revenues required. That's been from BEXity. I hope it was understandable. I'm happy to take any questions if you have. Yes, please.

So on all 3 branches but especially groupage and warehousing, what about autonomizing , do you have new autonomous vehicles in these branches?

Yes. So the question is if we have our own vehicles so that actually we can be more independent in the business. We don't do -- we have 7 vehicles only. But otherwise, we prefer to leave it outsourced as it is because the margins aren't there with the vehicle business. These are also businesses which are very, very small. So we employ about 50 of those businesses. Each one has about 1, 2, 3 trucks, and none of those would give us the leverage to save costs. To the contrary, it would add more risk to the BEXity business because we would have to fill the trucks. And otherwise, we can order the trucks as we please. Good. Any other questions? Thank you very much.

So Christian, thank you.

Thank you.

So I think it's a very good example what Mutares stands for. To buy a company which is state-owned from the Austrian state, this was for us a really big challenge. And we are there in a competitive environment. There are other private equity players. Here's a balloon for you. And we were the one who were the chosen one, but it's a tough business. I mean you have seen the figures. We talk here about a 10% net loss each year, EUR 200 million sales, EUR 20 million of losses. And Christian has shown us a plan where it comes back to breakeven now. And it's a tough work. We have to do the same work with less people. And that's what you, Christian, managed in a very strong manner. It's -- he was also along with the company. But as being Austrian, this was a real competitive advantage in the M&A process and now also as a manager. So thank you, Christian. And I think we have now our coffee break here, and we meet us back at in half an hour, 17:15. Thank you.

Thank you. [Break]

Welcome back. Ladies and gentlemen, welcome back here in Frankfurt. Welcome back on the screens. I have the pleasure to present you the Donges Group, a success story, from acquisition to harvesting. Don't be surprised or puzzled why I'm standing here. I'm not fired. I'm still the CIO of Mutares, but I was more or less the founder and former CEO of the Donges Group who created this. And I would like to share with you the Donges Group story from a shareholder perspective rather than from a too much operational perspective because we all believe this is a sort of role model for our strategy, which was presented today, which was guided today, and that you see the importance of all the different instruments playing into one single company. Donges Group was a creation of a group starting at the end of 2017, and it was a great teamwork. It was a teamwork between the local management and the people. It was a teamwork between all our Mutares consulting on this acquisition, and it was a great teamwork with all the M&A people helping to create this group. Donges Group is our largest and, at the moment, most profitable asset in our portfolio, owning very strong brands such as Donges SteelTec, Kalzip, NORDEC, FDT and Norsilk, and is a unique provider of a one-stop solution. Donges Group manufactures steel structures, including envelope and roof systems and including envelope and roof products as well as infrastructure products. In 2020, we expect a sales volume of EUR 384 million with an adjusted EBITDA of EUR 18 million. This is the first, almost year where this group is together in the current form and shape, you will see that in a second. We have 1,400 dedicated people in this group, 10 production locations all over Europe. The creation of the Donges Group is a buy-and-build strategy. It started 2017 with the acquisition of Donges SteelTec from Mitsubishi Hitachi, EUR 40 million of sales, a reported EBITDA of minus EUR 3 million and adjusted EBITDA of minus EUR 5 million. This is where all started, a Mutares case, a strong balance sheet, loss-making P&L and a lot to improve. We followed the buy-and-build strategy. Donges Group, Kalzip went on in order to extend the product portfolio. Kalzip is a leading manufacturer of steel roofing systems and steel -- sorry, of aluminum roofing system and aluminum facade systems. Then we extended our geographical footprint with Normek, which later on was included into NORDEC, just the last acquisition, FDT, another product for roofing membranes in Manheim and then Norsilk, a provider of wooden solutions for buildings. And last but not least, the last add-on transaction, which was also seen in 2020 closed, was Ruukki, which then created NORDEC. Ruukki was a transaction. We have made EUR 130 million in sales and it was bringing EUR 5 million to EUR 6 million of EBITDA with a very positive equity position. So this was a clear strategic add-on acquisition, where we also used our newly raised bond in order to partially finance this acquisition through equity from the Mutares Holding, and the rest of the equity was provided by Donges itself. And if you see the different products offering, this is what we have created in Europe, a very unique group with a very deep value chain, starting from roofing, facade and other product-related building products, and then building frames and infrastructure. This company, when you -- when we talked a lot about COVID-19, this company was hardly impacted by COVID. So the heaviest impact on this company was their Indian business because in India, we face a lockdown since almost 6 months now. So all of these products result in a one-stop solution. So a customer can come to us, and we will provide him a full envelope structure. Steel structure of the building, facade, whatever he wants, roof can be a Kalzip roof, aluminum, very high end, FDT Rhepanol roof. We can have wooden structures, which you see here delivered by Norsilk and we have glass and steel envelope products within the NORDEC group. So overall, we have -- we are a provider of an envelope, full envelope solution, with our own manufacturing capacities in-house. To give you a little bit of sniff of the landmark projects we have, as we are based in Frankfurt, of course, the first one is Frankfurt-chosen one. So Donges SteelTec was part of the steel structure on the European bank, the Central Bank here in Frankfurt, another landmark project with a Kalzip structure is the new [indiscernible] quarter here. The roof is a Kalzip roof and a very well-known bridge here, Hansell Bridge, is also made by Donges SteelTec. So you face from day-to-day here, our products. Very strong footprint in the Nordics, of course, through our Nordics, but you also see international ones, starting from the U.S. with the STAPLES center in L.A., Marina Bay Sands, Singapore and in the U.K. and also Middle East and Russia. So when we split in between the geographical location, and this is also part of the future story, in my view, on this company, is we are a very European-based organization. And you see there is only 5% of the revenue outside Europe, 1% in Asia, 1% in the U.S. and 3% -- sorry, 3% Asia, 1%, rest of the world, which is mainly Middle East. So basically, there is nothing outside Europe. When you see the competitive landscape of it, we perceive Donges as an integrated one-stop shop, because we have the ability to design and manufacture and commission a full building, and we have several projects, and I can't mention project names due to NDAs, but we have several projects where we won the project because we have the engineering capacity and ability of the whole building. So we could make it for our customers fit for shape and not doing only segments and parts of it, but we can really -- we are not a manufacturer. We are not a design office, and we are not a kind of erection and commissioning company. We're all in one. And of course, all the interfaces are cut, and that makes Donges Group so unique compared over competition. When we talk about growth potential of the Donges Group, especially on 2 things, you have seen there's almost nothing in the U.S. There are some landmark projects like the STAPLES Center. The U.S. market, the addressable market is EUR 117 billion, which is, of course, large. And Donges has EUR 2 million revenues in 2019 in the complete United States of America. This is very close to nothing. Eastern Europe, it's a little bigger, but they are also not much to add. EUR 27 million is a nice revenue position, but compared to the size of the market, a very, very strong growth potential in this market. Now before -- I'm happy to answer question on it. I would like to give you a little insight on the Donges Group, a little bit more sensitive insight when it comes to the numbers. In 2018, late in '18, we made the acquisition of Kalzip. After 1 year of Donges SteelTec, the Group was EUR 62 million and EUR 3 million negative EBITDA. This year, we expect to set EUR 384 million and EUR 18 million of EBITDA. And next year, the first full year of the whole entire group, because NORDEC and the Ruukki transaction only materialized in April. The first entire year of the group will have EUR 93 million and EUR 27 million of EBITDA. And this is a group of a size which is a very, very strong player in the European market. So as -- we as Mutares want to perceive, first in mind, first in choice for turnaround in Europe, Donges Group, if you go for an envelope solution or if you go for specific products, in the old Europe where Donges Group is active, Donges is perceived as first in mind, first in choice. For us, coming to the Mutares and shareholder view, as I said, this is a fantastic investment. We are talking about 7 to 10x what we want to do on our invested equity. Without an exit of this group, we have already achieved a 15x return. So therefore, this is a kind of role model. This is kind of a unique setup we have created here together with a big team, together with a successful team. And this should illustrate the way forward, and this should illustrate what we want to do in the next years in order to become the EUR 3 billion revenue sales company, and the company is providing sustainable and high dividends to its shareholders. Last but not least, to give you a little bit of insight and -- from the market and the last, and this is something I said, which was put on this slide for some reason, but the neutral feedback on the market, and I just put it there, don't want to read it out, is basically to confirm what we as shareholders see in this group. And I think this is a very good feedback also that the market customers, market experts, confirms that what is created there is unique and successful. Thank you very much to have a look from that. Thank you very much and I would like to use that because I know some of the team members are on the call or even in the room, for the great contribution to this. This is a Mutares success story, and a very big one indeed. And this was the creation and this was the achievement of a wonderful team. Thank you very much. Any questions?

Can you maybe be a little more specific on the return on investment that you showed on one of the slides? So that comes, obviously, through consulting fees plus the dividend?

That's correct.

When do you think you start to pay out dividends?

So the question was the 15x return on invest, which I showed earlier, how did that come through consulting fees and portfolio dividends and when did Donges start to pay dividend. The first question is very easy, because the answer is yes. It comes through consulting fees and portfolio dividends, and I cannot tell you exactly the date and months anymore, to be honest. But the first time Donges paid a dividend was in 2019.

And so the rough split there, let's say the rough split compounding these to be over invest?

60-40, 60% consulting and 40% dividend. This is a very rough calculation, Mr. [indiscernible].

Is this a typical split that you see a from typical Mutares investment?

The question was, if this is a 60-40 split consulting fee dividend is a typical split for Mutares investment. It's almost impossible to say that in that general way. So I think each individual investment is different. It depends also a little bit on the strategy. We would -- honestly, we would wish that both is in absolute numbers as high as possible, not so much the percentages. But it can't be really, say it depends on the strategy of the company. It depends on our strategy. When we want to exit the company, what is our plan? What is our growth plan? What is our add-on strategy? So it's very difficult to mention this.

Yes. So I think Johannes said, thanks to the team, and it's a great teamwork, but also thanks to Johannes. This is -- what we've seen here in this short slide is only a time period of 2.5 years. So to make out of a EUR 30 million companies with EUR 5 million EBITDA loss, EUR 20 million EBITDA company with EUR 380 million in sales. So really great achievement, Johannes. So we are quite happy to have him on board level of Mutares today and to help us to develop this company, Mr. [indiscernible].

Yes. I have one question concerning the valuation. Which EBITDA margin is realistic for this sector or for this kind of company? What do you think? Is it 5x, or is it 6x?

Do you want to repeat the question? Mr. [indiscernible] asked what kind of EBITDA multiple should we allocate to this business?

The typical EBITDA multiple is hard to say. We see competitors' transaction, which are multiples of 10 and above, which is more on the envelope side. When you go more to the steel side, it's a little bit lower. But if you are somewhere in the range -- in the high single-digit range, I think it's a good estimated guess. At the end, it depends on -- you need to find the right guy at the right time, with the right deep pockets.

And are you looking for an exit right now?

When you look at us, we are quite opportunistic.

We have to ask again, do you want to repeat the question. Are we looking to exit the Donges Group?

The answer is very conservative. We are always looking for exits for all our portfolio companies.

Yes, but what is also true, we communicated today that we will have 1% net income on group sales. And if group sales is growing to EUR 3 billion, it's EUR 30 million without exits, and that's the net income. And we said that we want to have at least 1% when it comes to these exit proceeds. That's the EUR 60 million that we announced today. And of course, the Donges Group is one of the assets. We have other assets which are quite interesting, which -- where we could think about an exit. And by this, I would like now to ask Richard Sobotta, the CEO of our keeeper Group to present.

Yes. Thank you very much. Good evening from our side. I am Richard Sobotta. I'm in charge as CEO for the keeeper Group, and I'm very happy to give you today an overview about the keeeper Group. In the following, I would like to present to you first keeeper as a company and its products. Then I would like to give you some insights about the achievements we accomplished so far during our transformation journey. And finally, I would like to summarize, show you the targets for the remaining months of this year and also for 2021. What is our vision for keeeper? Actually, the keeeper Group follows the vision to be the first in choice of high-quality day-to-day convenience products in and around the home. And actually, we have 2 pillars in our business model: first of all, reliable plastic products, for kitchen, home, kits, storage and also our newly introduced eco line; the second pillar is based on our recently acquired add-on, keeeper tableware, which provides a broad portfolio of napkins. As you'll see, we are in the consumer goods industry. Therefore, the relationship to our clients is very important, and therefore, our brand, keeeper, is one of our main assets. Keeeper brand has been built up in 2016 and has been awarded with the German brand award. Here, you find the overview of our product range, and I'm quite sure that everybody of you has touched one of our products. On the left-hand side, you see the plastic products, the kitchen line, the home line, storage, kits and also our eco line, which is 100% based on recycled material. On the right-hand side, keeeper tableware, with the napkins, and as you'll see, most certainly, in the do-it-yourself markets, in the retailer or maybe even in the restaurant around the corner, you have touched at least once, one of our products. In total, we are generating EUR 100 million of sales yearly. On the left-hand side, our keeeper injection molding business, producing more than millions of plastic items per year. On the right-hand side, our napkin business, where we are producing more than 1 billion single napkins per year. And as you see by these numbers, keeeper is just not only a producer of consumer goods with a strong brand. We are also a logistics provider because it's required from our customers, to be ready for delivery on time within 48 hours. And therefore, logistics is also one of our success factors in our business model. Here, the overview of our footprint, our main headquarter is based in Stemwede, close to Hanover, where we have all the central functions. The main production side is based in Poland for our plastic products in Bydgoszcz. And close to Cologne, there is the factory of keeeper tableware for our napkin business. Recently, we are -- we have started to establish a joint venture in Russia with [indiscernible], in order to address the third largest market for plastic products. EUR 100 million turnover are based on the selling of our products in 4 different continents, more than 40 different countries in 6 business segments, and actually we work together as a team, with more than 900 employees to reach that. Here you see an illustration of our major clients. Actually, retailers, furniture stores, studio sales markets, and also we are addressing the online channel, and the main customers are similar for both business units. So for our keeeper plastic product as well as for keeeper tableware. So why does keeeper meet the criteria of Mutares? First of all, we are generating very stable revenue streams. We saw it after the first COVID wave, actually our sales increased, even higher than before the first wave. So we are in the consumer goods business, and therefore even in troubling times, our revenue streams are quite stable. The second point, we have a very strong customer bases, as shown before, and therefore actually this is a good basis for additional Mutares portfolios to enhance our customer bases in order to strengthen the top line. Point number 3, we have a strong brand, and right now on product portfolio, which is established in our market since more than 30 years. Point number 4, our industry is very fragmented, therefore we are quite sure that we can achieve an additional acquisition next year, with a targeted sales volume between EUR 30 million and EUR 50 million annual sales. And finally, like for every Mutares portfolio, we have operational potential for optimization. So on the bottom line as well as on the top line, we went through on an optimization, and our aim is to implement lease standards, especially for the bottom line, in order to reach a very competitive productivity level. After giving the introduction into keeeper, I would like now to share some insights about our path back to the success. What is our target with keeeper? Actually, we are aiming on an EBITDA of 15%. And as you see here compared to our competitors, we aim to achieve this until the end of 2022. The average competitors, they have an EBITDA level of 7%, best-in-class competitors of 20%. And actually one of the top competitors reached even 23%. So therefore, we are quite convinced that this is a very good opportunity to develop keeeper to a very profitable business. How do we want to achieve that? What is the Mutares strategy? First of all, we centralized our production in our blend in Poland in Eastern Europe in order to leverage the very low labor costs there. The second point, we are increasing our productivity level by the implementation of lean standards, especially from the field of the automotive industry, and especially in this strategy, it was very helpful to use our Mutares consulting colleagues in order to reach that very fast. Pillar number 3, classical OpEx and overhead optimization. And point number 4, the acquisition of an add-on, in order to establish the market leader in our industry. Here, some illustration of our recent months, the last 18 months of our turnaround story. Keeeper has been acquired in June 2019. Within the first 100 days, we developed a turnaround program with our Mutares colleagues, caught pace 2021 in order to change our business. One of the major pillars of this program was, of course, the transfer of the production from Germany, Stemwede to Poland, and therefore in November 2019, we negotiated a social blend. It was the basis then to shut down the production and transfer it to Poland. At the end of 2019, we acquired the napkins business from Metsä Tissue in order to establish keeeper tableware. And in the second quarter 2020, we transferred the last machine from Stemwede to Poland in order to centralize our production there. In August of this year, the last workforce in Stemwede related to the production was released, and also, I'm very happy to say that in August, we fully paid off all external debts. One of our recent milestones we achieved was the opening of the Warmia warehouse in Poland, Bydgoszcz, which we have opened 3 weeks ago. And for the next couple of months, we will extend our machine park. We will open our new logistics area in Stemwede. And in the first quarter 2021, we will implement a quality management system in Bydgoszcz, Poland, in order to provide 100% quality. So what did we achieve by this transformation? Within the last 18 months, we achieved a significant improvement of EBITDA of more than EUR 6 million, based on our 3 pillars of our program, operations, OpEx and sales and marketing. And you see, on this slide, this is the typical instruments we use in many, many other portfolio companies. Starting from the footprint optimization, implementing production excellence, optimizing the marketing and the product range and, also, of course, work on OpEx. I would like to give you now some insights about our achievements. The main pillar was, of course, the footprint optimization. By negotiating the social plan, by transferring the production, the maintenance and all production-related functions from Stemwede to Bydgoszcz, we were able to release 75 colleagues. We centralized our marketing sales, controlling and also the technical development in Stemwede and transformed the old production area to a modern semi-automated logistics center. And of course, this was the requirement in order to in-source 5 external warehouses, in order to reduce complexity and save costs. In Bydgoszcz, we are now operating more than 53 injection molding machines. So it's truly a very impressive production. You'll see on the slides, on the left hand slide, just one -- actually just 3 machines. And OpEx optimization was another pillar of the optimization of Stemwede. On this slide, I show the new logistics area on Bydgoszcz, Warmia, this is a fully new warehouse with more than 15,000 square meters and storage was 16,000 pellets. And as I mentioned before, keeeper is also a logistics provider and therefore, this new Warmia center is really an evolution in the step of our strategy. Before that, we have 6 external warehouses, distributed in the city, in the region, and now we are able to provide our products from one single warehouse directly connected to our production area in Bydgoszcz with an semi-automated train, and therefore, we are really able to gain even more productivity increases, not only on the level of production, also in the level of logistics. And the additional potential, which we are aiming to leverage in the first quarter 2021 will be additional 20% of the current head count in logistics. The question is, what did we reach so far in terms of profit? And you see on this slide, our EBITDA position 2019 was quite negative, minus EUR 4 million. Our forecast adjusted EBITDA until the end of the year will be plus EUR 3 million. The 3 main pillars, relocation of the production, OpEx reduction and also revenue growth. And I think this is really a good example that we managed it within less actually than 18 months to really reach the breakeven. Finally, I would like to give you some outlook of the upcoming months and the next year. As I mentioned before, keeeper is in a very fragmented industry. On the left-hand slide, you see actually our main competitors distributed across Europe. And they are, in a sales volume, lower or similar to our sales volume. During the last couple of months, we reached out to already 4 competitors based in Italy, France and Spain. And these competitors are in the markets where keeeper is not so strong. Our main sales volume is based in Germany, Austria, Switzerland, Eastern Europe and export to other parts of the world. And therefore, we are quite convinced that in next year, we will reach an additional add-on acquisition, expanding, of course, our ability to sell our products in the largest market for plastic products in France as well as in Italy and Spain. To summarize it, first point, keeeper is a leading company for high-quality day-to-day convenience products in and around the home, and our target is to become the benchmark in the industry in terms of productivity, by implementation of lean standards as well as a very advantageous footprint. Due to the fact that the main competitors have their productions invested in Europe and in Germany. The second point, keeeper met the Mutares acquisition criteria quite well, stable revenue streams, operational optimization and also opportunities for add-on acquisitions. Point number 3, we reached our breakeven within 18 months due to the fact that we were very quick in implementation by the support of our Mutares consulting colleagues. And finally, our target for 2021 is to really target for a new add-on acquisition in Europe. That's from my side. And I'm very glad to answer questions. Thank you.

Thank you very much, Richard. I think before we come to the first question, indeed, I can also confirm from a shareholder perspective, this gentleman was leading the transaction. This gentleman was involved in the acquisition of the add-on of keeeper tableware, and I think it was a great teamwork achievement, and that's why we also selected this company today to present on the capital market because it proves, again, the very, very good work our Mutares consulting does and the value creation we have with this business for the portfolio companies, but also at the end of the day for the shareholder.

I will repeat the question and you will answer.

All right. Thank you.

So my question is specifically on labor costs? You mentioned in [indiscernible] is there a very strong fight in your market with China?

So the question was on labor cost, if especially on the market keeeper is active, we heard about the relocation of production, if there is a very strong competitive advantage and a very strong fight, on labor cost, especially also with potential pressure from China.

Thanks God not, due to the fact that our products have not such a high value, and it would be too expensive to ship them from China to Western Europe or Central Europe. So therefore, the competition from China is quite low. There are some segments, for example, in the kits business. But in general, we don't face so many competition from Asia.

How's the overall market? Is it growing? Or is it fairly stable? What you mentioned, probably quite a stable market.

So the question was, for the people at home, if the market is rather stable or if it's a growing market.

Actually, in the segments of kitchen, storage, do-it-yourself market, it's growing by 2% until 3%. Kids market is bigger. So it's quite a broad range. But in general, we are stable, growing between 2% and 3%.

And as a father, I can tell you, you're less price-sensitive on the kids' products rather than on the kitchen and storage products.

Your turnaround EBITDA was very impressive from minus 4%, up to plus 3% in very short period of time. How high was the CapEx needed in order to reach that?

So to repeat the question quickly, the turnaround from negative EBITDA to the positive EBITDA was quite okay, and very nice. So the question was how much CapEx was needed in order to achieve those turnaround.

Actually, one of the main pillars was relocation of our production. So we transferred our old machines to -- from Stemwede to Bydgoszcz. This was with quite no CapEx. Of course, we had some spendings for the social plan, but this was limited and was being funded by our own.

So this brings us to the last agenda point, which you have already seen if you're following the whole presentation, but I would like to emphasize this again. So we as Mutares, we aim and we have already published that guidance as well. We aim for a revenue of EUR 3 billion until 2023, coming from EUR 1 billion last year, EUR 1.8 billion in the area this year, coming to EUR 3 billion consolidated revenue on group level. We as Mutares establish a base dividend of EUR 1 coming from the pure management fees, net of all the costs. Consulting fees, portfolio dividends are the driver of this, it's roughly 1% of the group revenues, which is needed here in order to support this base dividend, which we will also distribute -- half distributed last year -- last 3 years, and we will also exit. This we would like to guarantee with a performance dividend, based on the return of exits, which we done with successful -- after successful turnarounds with our portfolio companies. In a summary, we want to grow. We want to have very, very attractive returns on our investments, and we would like to have all of our shareholders participating in this. This was the last slide of the presentation today. If there are more questions, at least, we here in Frankfurt are happy to talk through that with a little bit of finger food here in the background. So we are, I think, delighted as a Board and as the Mutares workforce here to answer all your questions. In the name of Robin, Mark and also Kristian Schleede, the fourth member of the Board who can't be here today, we would like to thank you here in Frankfurt. We would like to thank you on the screen for participation on our second Capital Markets Day, and we all hope to welcome you next year in the same city, and hopefully, physical for our third Capital Markets Day. Stay safe, stay healthy, and we wish you all the best. Thank you very much.