Sword Group S.E. (9RS.F) Earnings Call Transcript & Summary

[Interpreted] A very warm welcome to you today. I hope it's going to be the last one of [indiscernible] will be listening. Nevertheless, today, we've chosen, just for reasons of safety, to have a physical entity here where we're bringing together all of the speakers but at the same time, we'll be talking via the Internet. And I very much look forward to all of the questions that we'll be very pleased to answer. I'd like to start out by introducing to you the different people present here around the table. They are all CEOs. I'd like to stress the importance of this point because very often, I've been told that I'm a jack of all trades, that I do everything in this company but that's not true at all. I am the Chairman and we have CEOs who are all full-time CEOs, henceforth. So a very warm welcome to Dave Bruce. Dave Bruce, who is our CEO in charge of the Services sector in the U.K., and Dave Bruce, who is also beginning to work now on United States with a base in Houston. Next, you've known him for quite some time. I'd like to wish a very warm welcome also to Phil Norgate, who is in charge of our merger and acquisitions policies. Phil has worked a great deal -- he worked a great deal last year with the disposal of France. And this year, he's resumed with acquisitions, and we have the acquisition of AiM. Next, we also have Dieter Rogiers, who is hesitating between Flemish and Walloon. So to stay neutral, he's going to speak in English and he's in charge of Belgium, Luxembourg and Greece. But in fact, his market is a lot more wide-ranging. His market is mainly the European Union. Next we have Nick Scully, who is 100% worldwide because Nick is the boss of the GRC activity, GRC meaning governance, risk and compliance. And GRC, it corresponds to products that you are already well familiar with. And he will go into detail on those today. So to get started, let me stress that I've had a certain number of questions concerning the disposal of France, and let's say, concerning the impact as well on our product and service offerings. The impact on our product and service offering is very limited because we actually have exactly the same offering, but we do not deploy it in France in terms of services. However, you have Naval Group, Nick signed a contract with this year. And so henceforth, we will continue to work in France in terms of software and also in terms of GRC software venue management. So we have a leading position everywhere where we're present on the market and notably in terms of risk management, where we are the leader, the global leader in the defense sector. In terms of oil and gas in Scotland, you are the global leader for oil and R&D or rather the Scottish leader. For Belux, you've now become the leader for sizable calls for tender, the bids. We could refer here to the bit that you won with the European Patent Office, for example, with very good illustrations. And last but not least, we're not going to say we're a leader in terms of merger and acquisitions. However, we are successful when it comes to valorizing exactly what we buy. So very briefly that's what I wanted to say by way of the introduction. And without further ado, let me pass the floor over to Nick Scully, who's going to present GRC to you.

So thank you very much, Jacques, and good morning to everybody, ladies and gentlemen. I'm just going to start here on the first slide. And I guess the very good news for us here in 2021 is that we're enjoying a very successful year. I would caveat that slightly, of course, by saying that as a product company, there was no question that we were impacted in 2020. Our 2020 result was reasonable from a revenue perspective, very strong from an EBITDA perspective. But we are, as I say, bouncing back here now in 2021 and very pleased with that. So I'll just have a look here at some of the key issues for us in 2021. You'll see that we are, as I said, in this very strong revenue position, very good growth with EBITDA and revenue. But I suppose the thing that's given me the most pleasure at the minute is the success, Jacques mentioned it, around our global presence, and we are genuinely enjoying global success at the moment. So I've just got a little list here of some of the major opportunities that we've recently secured and it really is following the global map. We had a very significant win up in Quebec in Canada, which I'll touch on in a few minutes, a big win in Connecticut in the U.S., a very important win for us in Santiago, in Chile, and I'll touch upon that in a second because that also then brings into play the investment that we have received from Sword. A big win in Denmark obviously here in Europe, and a nice opportunity in Manila, in the Philippines. And perhaps amongst the best success that we're enjoying this year is actually in ANZ. And we're about to win, he says, tempting fate, a very significant opportunity in Brisbane. We've been very successful already in Sydney as well as down in Wellington in New Zealand. So for me, whilst this year has been very successful, I think the thing that's probably given us the biggest boost is the fact that this success is well and truly global. So very pleased about that. Where are we in the market as a whole? Well obviously now we're enjoying this strong growth. We can see global recovery, clearly along the lines that I've just mentioned. And I think we are in a prime position to capitalize now upon the investment that we've placed from an R&D perspective into the GRC business. We set ourselves a target of taking on extra 50 development staff at the start of the year. And we're in very good shape in terms of that. We're at about 95% of staff on board now. So hiring is pretty close to completion. And we're actually now starting to build some of the new products that we indicated that we would do. And throughout 2022 and 2023, we expect to bring a whole series of new products to the market. Some of these will be an extension of what we already offer. As Jacques says, we are the #1 in project risk management. We'll now move into enterprise risk management, and that's where an organization looks at their entirety of risks and not just the projects that they're involved with. And also, we're moving into a discipline very closely aligned to GRC, which is a health and safety arena. And we are doing this very closely with a very significant mining company in Chile, which is proving to be very successful for us. The ambition and the aim is still on track to be doubling revenues by 2025. And I think that we are in a firm position to not only capitalize on the increasing global opportunity that we all face with the recovery, but also the fact, of course, that there's now an increased focus on risk management naturally. We continue to win blue-chip names. And I'd just like to highlight one of those there just above the bottom left logo, which is Pratt & Whitney. Above that is a company called the Canadian Space Agency. And the significant reason for why I'd like to highlight that is because the reference they took was from NASA. And that remains one of the key abilities that we have as a business, is the reputation that we have with our software. We've had our software in NASA for over 15 years, and we continue, therefore, to grow success on the back of the references we have with our existing customers. So to summarize, I feel that we're in a strong shape, not only for 2021, but to move forward into 2022 and beyond. Thank you, Jacques.

Thank you. [Interpreted] I was going to speak in English. I apologize. Dave, I know you're going to talk about the U.K. but can you talk about United States as well, please?

Yes, I'll be okay to do that. Good morning, everyone. As Jacques mentioned, I'm Dave Bruce, I look after the business in the U.K. And we continue to build what I believe is a very strong profitable services business in the U.K. There is an international element to that now, and I'll mention a little bit more about that in a second. So we're on track. We're trending towards EUR 75 million turnover this year and 13% EBITDA. So I'm very proud of what we've managed to achieve. That's 20% growth on last year. So a really good achievement for us. We continue to lead the way in oil and gas in the U.K. But as I talked about last time we were at this meeting, we're keen to reduce our reliance on the energy market by expanding into other vertical markets and we wanted to move into the public and the finance sectors. And over the next couple of slides, I'm just going to give you a very brief update as to where we've got to with that. So I think our diversification is really well underway. If you look at where we are now, we've had some real success and you can see on the chart there in the financial services sector. So we've really increased almost by 90% the amount of business that we do in that sector over '21. In the public sector, we've managed to maintain our position in public sector on the backdrop of the COVID-19 pandemic, which has really put a lot of projects on hold in the public sector because they've been focused elsewhere, so we've had to really fight hard to maintain our position there. And as you'll see, we are still growing our energy business. We continue to grow in the energy market. There's still lots of opportunity there, but the aim for us was just to reduce our reliance on it. What we're doing with our customers in there is helping them very much on the digital journey, but also their journey to now provide renewable energy because all of the clients that we have today are going through that transformation for the future. So one of the other things that I said last time that we were keen to do was to take advantage of the market in London. And I'm pleased to see if you look there now, you can see that we've got 40% of our business coming from either the London market or international. And the international piece that Jacques talked about is Houston, we opened an office in Houston less than a year ago. And we're now going to see us turning over about $2 million in Houston this year. By the end of the year, we'll have 15 staff in that office, and our plan is to deliver $4 million from that business next year. So our plan is on track. We've now got 30% of our business that is nonenergy. That's up from 25% last year. We've got 40% of our business coming from the London/international market. So we're on track and we're doing well. If I just move on. So the summary is we've got a strong business. It's dependent and reliable. We have a team that has demonstrated it can deliver double-digit growth, which is important because we want to continue to grow. Obviously, our stated objective is to be twice the size in the next few years. We are -- our derisking is in progress and moving well. And I guess what's important is that we deal with some really, really large international organizations. The opportunity for our business within those customers is huge. But if I focus now on what we're doing around organic growth, and we are very much focused on organic growth, we will always be on the lookout for acquisition targets, but our key driver is organic growth. And I talked about this the last time, to keep it, grow it, to win more. So we have a strategic account management process whereby we make sure we keep the business by doing the right things with the customer. We expand our footprint with those customers and more importantly, we win more customers. And I'm convinced that -- so we've seen a shift in the amount of non-energy business that we've got. I'm convinced that will just continue because we've now won, as you can see from the right-hand side of the slide, many new customers over the last 6 months in the financial and public sector. And our process now will help us just develop those customer relationships in those businesses. So I see a real shift coming for us in terms of that balance. We will continue to focus on Houston. And we see it as a real growth market for us, Houston. As I say, we're up to $2 million this year. We're planning on $4 million next year. We've invested in sales capacity in Houston. We think it's very important that you have the boots on the ground in the States when it comes to selling and relationships. And finally, one of the other things that we've done is we have created a number of what I call proprietary solutions, solutions that we have developed for a customer. However, we're able to then sell it to multiple customers. So that's something that we see more and more happening these days. So within the solutions we have, we have several solution sets that we can sell multiple times. So in summary, Jacques, we're on course to hit our 2025 objectives. We want to be focused in 3 sectors in energy, finance and public. We want to deliver recurring revenues, both internationally and through our proprietary solutions. And we will deliver our EUR 120 million by 2025 turnover business. So a very strong year for us, I believe, on the backdrop of a tough market. All right. Thank you.

[Interpreted] So over to you now. Over to you to speak to us about the fact that above and beyond Belgium and Luxembourg, let me remind everybody that your targets are European, generally speaking.

[Interpreted] Thank you very much, Jacques. Thank you, Dave. Hello, ladies and gentlemen. My name is Dieter Rogiers. I'm in charge of the Sword's offices in Belgium, Brussels, in Luxembourg and Athens, Greece. With more than 600 enthusiastic colleagues, we serve today almost 50 customers in more than 15 European member states. We are focused on growth, and we continue to build a strong, profitable business. Year-to-date, we are more than 25% ahead of business figure in 2020, and we expect to realize EUR 60 million by end of year. And finally, I'm proud to say that Sword is one of the top performers within the European institutions and also one of the fastest-growing companies within the application development field. Some highlights and also where we stand today. Despite the continuation of the COVID period, we continue to make a massive growth, massive organic growth with multiple customers in multiple activity fields. 80% of recurrent business is -- or 80% of our business is recurrent due to our multimillion and multiyear framework contracts. And because of that, we have also a massive backlog of more than EUR 200 million. We have won quite a number of new businesses, which we started recently. We continue to bid and so we're pretty sure that we will continue to win, which makes us believe that we will create also massive growth in the future. And well, we're still on track to make EUR 100 million by end of 2025. Some key points on Sword Greece, our near-shore operation. Although all the business units within our operation or within my operation are showing growth figures, the operation in Greece, the software factory is the biggest growth engine. We have recruited more than 50 people over last 2 months and we're still looking for more than 50 people. Why Greece very profitable? High margins, low operational costs. A lot of qualified personnel focused mainly on service delivery excellence and customer satisfaction. So we have everything on hand to be successful over there as well. We recently moved into new offices to map with our ambitious plans. And we will continue to serve our excellence from there in an excellent way. We are also trying to build on new expertise in new markets like artificial intelligence, like Internet of Things, robot process automation. I'm pretty confident that we are on the good track and that by end of 2025, we will be at EUR 100 million.

[Interpreted] Thank you very much. Phil, I think that you will respond to the questions, won't you? Because this year, when it comes to the last 6 months, there haven't been any significant acquisition, although you managed AiM. As of the moment, what I'd like to do is give you a brief presentation on Switzerland and offshore. Now in Switzerland, something that's very, very interesting is the fact that thanks to the acquisition of AiM, we have a good level of internal or organic growth. And we're the third company in French-speaking Switzerland, in terms of size. The top company is Swisscom. So of course, we will never be #1 in Switzerland. This being said, we are a vital player. And as a result, we have 3 sectors. They are the public sector. Next, the international organization sector and also the luxury industry. So in the public sector, we've been extremely flexible in the cantons of Geneva, the canton of Vaud and in the Valais and even in Freiburg. And at the current time, we are making a massive amount of headway in the public sector. Let me just say something that's important to everybody here. We are all in the process of wanting to grow, thanks to this future sector that would be very beneficial to us, is local governments and international organizations. In the future years, there will be major investments in our sectors with a lot of public money that is already there or maybe it's not already there, but it will exist and there will be lots of major investment. If I focus on the luxury industry, in Switzerland, it's a market that has done very well during this crisis. All of the luxury brands have done very well. And as a result, we are also doing well in Switzerland. Next, when it comes to the international organizations, I particularly have in mind the United Nations organizations. There are 11 of them located in Geneva. But you've also got all the NGOs. The Red Cross, for example, is an NGO and is a massive client for us. So there are lots and lots of potential clients in the international organizations sector in Switzerland. And of course, you have the richest one, which is the global office for patents, WIPO. So that's what I wanted to say about Switzerland. AiM is the acquisition that we mentioned. It makes us stronger. And as a result, we have the ambition of gradually ramping up our activity -- I'm changing slides -- moving up to EUR 70 million in revenue for 2025. That's in terms of organic growth. But if we add Switzerland, it will be EUR 90 million that we're aiming to achieve in 2025 in Switzerland. And I stress the fact that this is the case in French-speaking Switzerland. We'll see where our strategy will take us in terms of German-speaking Switzerland. I think it's as if it's a second country, but we will be assisted, thanks to the fact that we're already present in the French-speaking Switzerland. That's what I want to say for Switzerland. So more specifically now on offshore. Nasser, who is not with us today, is responsible for managing out of Beirut. He does the split every day and manages India, Beirut and Dubai and also the United Nations in New York. He has a lot to do. But what's actually happening is that we have 2 major offshore centers. One, we have Chennai, that focuses on Canada and the U.K. for the most part. We also have a French-speaking center. And this French-speaking center is located in Beirut. And out of Beirut, they focus on Switzerland and France. And then we have part of this sector that also deals with North Africa. We are in a position today to take care of work across the 5 continents and that's actually what we already do. So here on the screen, you have the distribution or breakdown rather. And when I talk about Australia, I'm also thinking of the Australian clients. And if I talk about ANZ specifically, the big Australian bank that has purchased our BEAM product. This is a product for Internet banking and we thought there wasn't much to be taken out of this. And then we invested a small amount of money, and ANZ was willing to make all of the investments for us, investments that we have since made in order to upgrade the specific product. So that's what I wanted to say from this perspective. We have EUR 10 million in revenue for this sector, and we believe we'll achieve EUR 20 million in offshore business activity in 2025. And as far as I'm concerned, this is a figure that is actually not very difficult to achieve. And I'm very much looking forward to see an outperformance in this sector. Nasser would like to hear me say this, but we are ready. We are ready to outperform. So that's what I want to say regarding the different entity and the operational aspects with my colleagues. And of course, we'll be delighted to answer any questions you might have on the latest news following on from Brexit, from the pandemic, et cetera. Please feel free to put your questions to Stéphanie, who is currently preparing all of the questions. Next, if I move on to the first half of 2021. Here, we're talking about a growth rate of 20%, an organic growth rate of 20%. And this is something that is difficult to manage in terms of profitability. And we have succeeded. We've managed to remain above 13% in terms of our profitability ratio. Next, we are talking here about growth that is still ongoing. In other words, you have the first quarter with 17%, 1-7, in organic growth and the second quarter with almost 25% in organic growth, and you can see the issue. If you take a look at the top line figures, when you've got organic growth that is very, very high, well, necessarily, you also have profitability that drops slightly. And the one challenge I do have this year is to be very cautious and to ensure that I maintain a level of profitability. So that's what I wanted to say in terms of the breakdown per quarter. Next, as per usual, we'd like to present a breakdown based on each operation or based on each division. And in other words, governance, Nick; BeLux, Dieter; Switzerland, that's me; the U.K., that's Dave; and the Middle East, that's me. When I say it's me, please be careful. I actually have 3 relay staff who have virtually reached the level of CEO and we have the capacity together to delegate many, many things now to Beirut, to Geneva and [ Tulle in France ]. The figures, I would say, are quite easy to forecast in relation to what is globalized. Please take note simply that the GRC that had a performance rate that was down 6% last year is up 24.7% this year. So there's something absolutely magic that is happening in the services sector. It's the fact that, generally speaking, the figures are recurring figures. But the money that you invest in the services is money that goes into it and is gone forever. But in the licenses sector that you manage, Nick, we've been able to recuperate what we didn't earn previous years, and we're going to continue to do so. So we're looking forward to a lot of good news. I know you don't want me to say this, but we're looking forward to good news and what wasn't achieved last year will be achieved this year or in 2022, naturally. Now I'd like to start going into detail on the general accounting information. I simply stress that there were no exceptional losses. In other words, our profit and loss account is extremely healthy, and we have exceptional profits. Part of these exceptional profits come from the first earnout that we're looking forward to seeing with the disposal of France. The second earnout -- and thank you, thank you really, thank you, Phil. It was all very, very well negotiated. This will take place at the end of this year, and it will be payable in 2022. So we're going to calculate this, but I believe that there will be a second or positive result for the second half of the year. That's what I wanted to say. It's -- obviously, it's quite normal to have negatives in terms of the corporate tax. When it comes to the general accounting, the first slide I'd like to show you, the balance sheet shows you all of the long-term commitments that we have and the short-term commitments. When you move from more than a year to less than a year, of course, you have short-term and longer-term information. And on the next page, you have further details on this. On the next page, what I ask you to note is that when you have a growth rate -- an organic growth rate of 25% and the work in progress includes this, of course, that's totally normal. And it doesn't generate as much cash on a short-term basis, that's totally normal. And all of this is fully funded, and we would not have any surprises in terms of our cash management. Next. On the following page, you're able to see these corollaries, naturally speaking, in terms of our cash management and what results we're producing. And you can see that we have the short-term and long-term figures. We do have deadlines, of course, in terms of the schedules at the end of the year, at the end of 2021. And these have been switched to short-term liabilities rather than long-term liabilities. It's very important to look at what we've provisioned for in our balance sheet. It's not automatically what will be paid out because we always have a high cautious approach. We always enter as many provisions as possible. Next, when it comes to the cash flow. Here, you can see that our operate -- the cash from our operating activity is switched from EUR 40 million for the first half of 2020 to EUR 1.8 million the first half of 2021. As I said, this is totally normal, and we have growth. That means that we've reduced the amount of cash incoming. And as I say, this is fully funded by our acquisition. Next. When it comes to our cash position, naturally speaking, let me please say what I always say. It's the fact that our cash position is not IFRS 16, and I'm very proud to be able to present to you a true net cash position and not a false one. In IFRS 16, we should have put as a debt the provisions that we have set out for the gains in terms of a sure deal and these will be acquired only if you double the profits. The profits have not yet been doubled, so I consider that there is no debt. In any case, the financial reports will mention a net cash position that will be a lot lower. And that's not the way it should be. The backlog. The backlog is excellent. We've had cycles for years whereby the backlog on the 31st of December at the end of the year has been higher than the backlog on the 30th of June. For sales reasons, the salespeople are maybe more active at the end of the year in certain countries. But this is not true in all countries now because I believe that your end of the year is on the 31st of March. And in the U.S., I think it's under the 30th of September. That being said, we do have cycles. And here, what's wonderful is there are no cycles. We always have a backlog, above 20 months, I believe, and that is enormous. Next, we've reduced our exposure to the euro. And when I talk about the exposure, I shouldn't really talk about the exposure because we don't consolidate in euros. It's important to note that we are active and we operate mainly in pound sterling even if a percentage of these pound sterling, in fact, do correspond to exports to certain countries. Nick, when you export to certain countries, for example, you enter the reporting sometimes in sterling. Next, we have a top 10 in terms of our clients, and this gives an excellent illustration of our strategy and what you've already described. Now instead of going into detail on this, which is what I generally do, I would rather home in on another point and going to detail on the analysis that we've performed on our clients. Now very I've been asked to talk in terms of figures in relation to our clients. And the GRC product is a product that is often sold for EUR 300,000 per client, even if we do have exceptional clients, Lockheed Martin, Naval Group, Pratt & Whitney, that, for example, generate a revenue of EUR 1 million. But the rest of the time, it's approximately EUR 300,000 per client. And then we have a maintenance contract, of course, further down the line that is very much a recurring contract. So this means that at the current time, if we analyzing things, 95% of our clientele corresponds to EUR 300,000 per client. However, in the BeLux countries, if we analyze roughly 80% of your clientele, we have EUR 4.8 million or EUR 5 million per client. And in the U.K., you have EUR 2 million per client on average. The Switzerland is about EUR 1.5 million. So as you can see, our configuration is such that we really do look after individual clients. We work on bids with them and pray -- presales. And we don't reach out to clients to sell them -- to knock on the door and sell them small contracts, no. For the most part, we sign large contracts, and that's one of our group's strengths. I'm not criticizing in the work that our sales staff do. They do an excellent job. But fundamentally speaking, we have engineering. We have teams that are capable of compiling bids and offers, and that's what France was all about. Next, let's look at the staff. Here, we have virtually the same level of staff prior to the disposal of France. We sold a unit of 700 person and we now have an organic growth rate that mean that we've approximately the same number. Let me now say just a few words about the business plan. We have produced a business plan, and this business plan had a deadline of 2024. Now I actually wanted to give ourselves an additional challenge, a much more difficult challenge because 2024, I'm sure, we'll achieve what we laid out to achieve. So I then looked at the figures for 2025, by simply applying a growth rate, an organic growth rate of 10%, which is pretty conservative. Then after that, I resumed all of your commitment with what we call your boosters. And I calculated the revenue and also the EBITDA, the EBITDA margin that, that would eventually generate. And as you can see, this means that we're almost able to double the revenue for 2020. And in particular, we have an EBITDA that is absolutely enormous. This comes from the growth, of course. It also comes from the increase in the EBITDA margin. And this EBITDA margin will be generated by the [ Gemini ] project that you are managing today, the project where we've accepted to invest GBP 10 million, and this is a project where we will absolutely not hesitate to continue to invest if it proves to be profitable. So I'm taking a risk with 2025 and with the boosters, our firm commitment that you are authorized to sack me over is 2024 and I intend to stay here. Next, we've given you a certain amount of information concerning the competitors. I'm not going to go into detail on this. But there is one point that is very interesting, nevertheless, concerning the GRC sector. We performed an analysis or had an analysis performed recently, a quadrant analysis, and they came up with 7 companies in the world that are the technological leaders in the GRC sector. And when you see the valorization, the valuation of GRC companies in the United States and in Canada, and these are companies that are absolutely not part of the Magic Quadrant and these are companies that sometimes don't even make a profit, well, in that case, I think like us, you should be able to say that we are very much undervalued, the share price is far lower than it should be. The last point. I don't pay a great deal of attention to the year, but it's an accumulated result. Based on our profits per share, I accumulate the dividends and the increase in the value of our shares. And if we perform this exercise one year to the next, the average of the valuation, the increase in valuation amounts to 22%. And look at this, if we manage to achieve a growth rate of 20% each year, 20% in terms of organic growth, well, we will have acquisitions in addition to this. And in that case, it will be totally normal for us to continue to increase the value of the share by approximately 20% per year, naturally including dividends. So our objective is that we will be able to find ourselves in a situation in 2025, whereby we have proposed interest, up 25%, up 25% and so on and so forth until 2024. So that's what I wanted to say regarding the presentation. I wanted to make the presentation as short as possible in order to set aside plenty of time for questions. Questions are always very interesting. Stéphanie, I don't know whether you can see here on the screen. She's going to put to us the questions that have been asked.

[Interpreted] So good morning, everybody. Yes, theoretically, everybody should be able to see me and hear me. So we've already received a certain number of questions that gradually came in during the course of the conference. The first question is what synergies do you believe you can set in place, thanks to AiM in Switzerland and also internationally speaking. Is there any -- are there any redundancies in terms of the top management and how are you go -- overlapping, how are you going to manage it?

[Interpreted] Well, all of the acquisitions that we enter into, as with AiM, they have to meet a certain number of targets. Now in relation to this Swiss acquisition, the main objectives are the consolidation of the market. In other words, we're present in Vaud, in the canton of Vaud, and so we absolutely wanted to reinforce our position from that perspective. We wanted to reinforce our position on the luxury market, see inked in the international organizations and in the public sector. And thanks to this AiM acquisition, it also enables us to diversify. They have excellent working relations with banks that work in the financial markets. And we're also going to try and make inroads in these markets. So basically, they ticked several of our boxes, several of our must-haves in terms of our objectives for synergies. We always look at companies that will guarantee synergies so that we can either sell more or either we -- so that we can spend less. I'm not going to say we're going to reduce all of the management team because this company that we've identified has a very strong management team. It's one of the strengths that we've identified. But of course, the shared services costs, we should be able to reduce them. That is not an issue.

[Interpreted] So the next question is you work a great deal on the oil market. How do you personally perceive the gradual introduction of green energy onto this market?

Now for the oil market, of course, I'm going to pass over to Dave. Dave is our specialist. And I know full well that this is a burning issue. It's a burning issue. Don't know how to translate that into English.

Exactly the same way, burning issue.

Yes.

To be honest, we are part of the transition here. So all of the clients that we deal with in the oil and gas sector today are on a journey themselves to the provision of renewable energies. And it is a journey, and I think it's going to take some time to deliver that change. I think it will take longer to deliver that change than many people think it will. The demand is still very high for hydrocarbons. So our clients will change, and we will change with them. We're part of that. The services that we provide are very, very much operationally focused. So they're services that are needed whether you're taking hydrocarbons out of the ground or you're running a wind turbine. So I'm actually -- I actually think there's real opportunity for us in the energy space as we move more to renewables. So I'm not worried by that at this stage. The demand for energy as a whole remains high. Obviously, there was a period during the COVID pandemic where that dropped, but we're now seeing it returning to normal levels. And we can see that in the prices at the moment. So I'm very much -- I very much feel that we're a part of that transition. We're part of the journey to the renewable energy piece.

[Interpreted] Thank you very much.

[Interpreted] We have a question about Tipik and its restructuring.

[Interpreted] So Tipik has been restructured, has been reorganized, hasn't it, by Dieter. Could you say a few words, please, Dieter?

Okay. Indeed, due to COVID, everything what has to do with physical events has been highly impacted. But already 6 months before COVID started, we were in a transition period between the physical events and the digital events. So we -- well, the transition went somewhat faster than initially foreseen. Secondly, we have been transferring social media expertise and also digital events, digital communication to our near-shore operation. And well, that is still on track. So it's now in -- well, ongoing, let's say.

[Interpreted] Thank you very much. Another question. What about the status of the health crisis? What about the state of the high -- health crisis in all the countries?

[Interpreted] Nick, given the fact that you haven't yet answered a question, maybe could you say a few words? You're the most global guy here. You must have a comment to make.

Yes. I think it's a -- it's got a fascinating thing to witness on a global stage. I talk to my Australian sales lead -- I'm sure it's his pleasure -- every day, I spoke to him this morning. He is in Melbourne, and they're on complete lockdown. So the state of the Australian vaccine rollout is 30%. They've got a crazy situation. They're talking about in Australia now that if you live in Sydney, you will be able to internationally travel but yet you can't travel across borders in Australia. So it's somewhat chaotic. Europe, of course, is in a much better position due to the vaccine rollout. And the U.S. is a bit more ambiguous. There are some nonbelievers in the U.S. And so that situation is perhaps a little more fluid. I think what's more interesting is how companies are reacting to the pandemic. So in America, it's interesting, for example, in the defense sector, they are used, as businesses, to not meeting face-to-face anyway often because the distance to travel is so huge. If a company is based in Washington and the opportunity is in Los Angeles, then that's a huge travel. So they are used to this concept of virtual meetings. Less so in Europe. And so what we are finding, for example, with the defense companies in Europe is that is a bit more turgid for us, stickier because people returning to work, it's not quite so easy. And the whole process around the Amazon guy then knocking at the door and people having more important things to do to pick up parcels frustrates my sales team, a big frustration for the sales team. But one thing I can say, I think the normality is just about beginning to return. And of course, for all of our sakes, we're all thoroughly looking forward to when that's the case.

[Interpreted] We have another question. This is a question concerning recruitment. We sense that the market in France when it -- for the sector is a very taut market. It's -- a lot of people talk about adjusting the wages, about wage increases in the sector. What's the situation like in Greece compared with France and Belgium, the U.K. and India?

[Interpreted] I'll start to answer this question. And first and foremost, I'd like to say that obviously we have to link up all of the subjects: Working from home, the change in D&A, in terms of certain new generations, recruitment, wages. I would say they all need to have to go together. In summary, I would simply say that the younger generation is currently dreaming of working from home whilst being just as productive. I'm not saying that homeworking or teleworking isn't going to become an ongoing factor. But for as long as we have competitors who do not telework or work from home, we will not do 100% teleworking, unless there's a crisis, of course. Next, Google, for example, has tended to make people doubt to a certain extent. Sometimes, they've talked about 5 days of teleworking per week. But what they forgot to say was they signed a doc -- signed something like 2 weeks ago, which is that in the States, somebody who works from home will be paid 15% less, which corresponds to the drop in productivity. And also somebody who works from the home from another state, not another country, so from another state, they will receive 25% less. So I think this basically puts the church at the center of the village, as we say in French, it put things back on track. There is a recruitment issue across the board, it's true, because this is a -- we're in a market that is a wonderful market. But I think it's important to pay attention to the fact that working from home will potentially create more offshore. And before I pass the floor to you, Dieter, on Greece, I'd simply like to stress that we are considering the possibility at the current time of increasing the wages of our Indian staff by 30% this year. Why? Because all of the key players in the American market now recruit in India because they've understood that teleworking 5 days a week, if you're going to do it, if you're going to be pushed into it, then you might as well do it with a low-cost country. So this, I think, means that we'd need to think very carefully about our social model. I won't say any more about that, but you know exactly what I think about it. For Greece, Dieter, what do you think?

Of course, there is a war for talents and we're looking continuously to recruit good, qualified people. Today, we are still capable in finding good people at feasible pricing. So there is, of course, an increase as there is always an increase, but the increase is very, very slight, very limited as of today.

[Interpreted] I'd like to add a point, if you don't mind. I also think that these recruitments that we're talking about, it all depends on the level that you're talking about. For example, you do have a generation, a young generation who, at the beginning of their career, they jump from one company to the next. And then you've got other people who you're able to hire and bring into your staff who you really look after in terms of their career, you give them the right salary. So we're talking like a vital package, that's what's important. And in that case, there's less staff turnover.

Maybe I should add something more to what I've said before and to what Jacques said. We are mostly recruiting senior people in Belgium and in Greece. And the salary increases, most probably are especially open and very often asked for with younger people, with starters. So not that much with the senior people.

Yes. Okay.

[Interpreted] Please, can you remind us what percentage of subcontracting do you have at the current time?

[Interpreted] Well, in terms of subcontracting, of course, we subtract with staff, people who are usually -- mainly on a part-time basis. So from what I remember, I think we've got 700 or so subcontractors, but that's not 700 full-time people. So I would say that 1/4 of our staff, they're not subcontractors. They're freelancers because it's not the same thing. So let me repeat what I said. We tend to talk about freelancers, not subcontractors. So in other words, these are the people who sometimes work with us as if they were staff but there are certain flexible countries where freelancers are used for the labor contracts. I believe that you too don't use -- Dave, use quite a few freelancers.

Yes.

[Interpreted] One quarter, one quarter.

[Interpreted] Could we have an update, please, on R&D? Please, can you talk to us about the software GRC R&D?

Nick?

Yes, indeed. So I did touch upon that briefly in the presentation. We are in a strong position from the number of staff that we've now brought on board. You're quite right, Jacques, it is a very competitive market. So getting the right working environment, the right salary, the various things that you need to do to attract people has been challenging, but we're in a very strong position. We are now at a stage where, as I say, we're 95% complete in terms of the number of people that we've been able to bring on board. Development has started. And it's always a challenge when you bring a new product to market because to some degree, you roll the dice. Are you bringing a product to market where actually then that there is customer demand? That's always the key challenge. The way that you try to mitigate that, of course, is to work closely with existing customers, and that's what we're doing in a number of instances, and I mentioned the company in Chile that we're working very closely with. And we believe that the solution that we are building in conjunction with them will not just be suitable for them but for the industry as a whole. So we are pleased in terms of what we're doing there. So the other -- we also have this other sort of principle, which, in English, we refer to as one hand on the mothership. And what we mean by that is when we develop, we ensure that the development is very closely linked to what we already have expertise in because I think it would be easy to go off and chase something new and shiny that had nothing to do with risk management. But actually, I think that would be a fatal error to make in terms of focus. And so this combination of working closely with clients, the fact that we now have the team on board, combining it then with the fact that everything we're doing is very closely aligned to what we have, further strengthening our existing market by pushing in new markets, and with the economy we have, I think we're in good shape.

[Interpreted] Sorry, I have an additional question. Is it possible, please, to have the variation in cash for the first half of 2021?

[Interpreted] Okay. The variation for the cash, let me refer back to the true cash that I was referring to. I'd like to comment on it. It's important to note that the first half of the year, we paid out dividends. We paid out sizable dividends. And that is the main reason why you have this variation in the net cash position. Another reason is in our working capital requirement and between EUR 7 million to EUR 8 million for this. So this leaves us -- well, the reason for this increase in working capital requirement, mainly it's for the work in progress and the growth. So there are no major events, no exceptional events in relation to this variation in cash position. Dividends plus growth.

[Interpreted] Another question that is linked to the base. Can we expect an improvement in the working capital requirement between now and the end of the year?

[Interpreted] I do not want there to be an improvement between now and the end of the year because it's also very simple. If we want to improve it, then we reduce our growth. And well and truly, what I've wanted this meeting to illustrate is that we are just so determined to achieve organic growth. And if we haven't got enough cash, then I think it will be smart to limit growth, whereas we have the wherewithal, we can afford our growth, we have the cash available for our growth and so let's go for it.

[Interpreted] Very good. A few months ago, there was an opportunity for a merger and acquisition in Spain, you mentioned it. Is that still on the cards?

[Interpreted] Okay. For this, I'd like to pass the floor over to Phil Norgate.

[Interpreted] Well, we've noted that there are several international organizations that are currently in the process of relocating to Spain. So we were looking to study this trend very closely. We were looking at the possibility of locating geographically in Spain. We already have a joint venture with a Spanish company. We're in the process of learning more about their way of working locally. We're learning about the local culture. So for the moment, what we've decided is we're going to wait a bit in Spain. We're not as familiar with the market as we want to be. And what we want to do, above all, is follow our clients. If we've got sizable international clients who naturally take us to Spain, then we'll happily go there with them. And then depending on the demands that our clients place upon us, we start out either by working in-house or we'll start looking at companies that can provide us with what we need in our different business activities in relation to what our clients need. But we are not looking to actively make an acquisition necessarily in Spain. If we find a company that fully meets our criteria in Spain, that's a different matter. But we are not necessarily, I repeat, aiming specifically to make an acquisition and to expand into Spain.

[Interpreted] Spain could be a very interesting market for us occasionally. For example, we've just signed a contract with [ UNICEF ]. It's a 3-year contract for about $10 million a year. And [ UNICEF ] has in fact decided to make its IT services available out of Valens in Spain -- out of Valencia. So this might be an excellent way for us to grow organically speaking in Spain. It's another alternative to making an acquisition. And there's an organization called [indiscernible] in Alicante. And they might have needs as well that we could serve. So we need to be opportunistic in terms of organic growth with our clients. And we also need to look at the right targets potentially. But whatever happens, we would do it in a very opportunistic and not proactive way, if I've put it rightly.

[Interpreted] Very good. Another question concerning the dividend paid out. Can you give us a rough idea of the dividends that will be paid out in 2021 or 2022?

[Interpreted] Well, concerning the dividend. This is something that we have to be really cautious about. It's true that the dividend is generated by profits, but it's also generated by the amount of cash that is generated. And it's limited by our future and needs in relation to our organic growth or our acquisitions. From this point of view, I can give you, say, EUR 1.2, that's the minimum, EUR 1.2 per share. We have never paid out less than that. That being said, sometimes when we've made acquisitions, we've paid out a lot more. I think that in years where we outperform, that would be the case, a bit more than EUR 1.2. But this is a proposal we make to the Board, then for the general meeting so I can't anticipate on it.

[Interpreted] Another question, a brief question. What is the date for the consolidation of AiM?

[Interpreted] The consolidation date is 1st of July. So there's no impact, no impact of AiM on the first half of the year. AiM amounts to CHF 20 million, so EUR 18 million, 1-8, and there's a risk or rather the opportunity to reduce CHF 20 million by selling the small assets of AiM so it'll be between EUR 17 million and EUR 18 million of revenue per year.

[Interpreted] We have a question concerning the business plan. Are you confident over your business plan and that you will achieve your aim?

[Interpreted] If I was rigorous, I would ask for 4 answers. I'm not rigorous, so I'm going to say I am 100% sure that this business plan can be achieved by 2024, so for the column 2024, and it's challenging, of course, for the last column, which corresponds to 2025 with the business. There you have it. There are always a few risks, but yes, we are confident.

[Interpreted] At the moment, I don't have any further questions.

[Interpreted] Even the analysts are not putting precise questions to us on the figures?

[Interpreted] The question was on cash. Most of the questions were all about the cash position. That was what the analysts were interested in.

[Interpreted] Okay. Maybe we could wait for just 1 minute and after that, well, if our presentations were clear, then all well and good. I would just like to conclude by saying that the company is extremely well-organized now. We delegate a great deal. In other words, we have CEOs who then have their directors of the business units, who are doing an excellent job, who I'd like to thank, first and foremost, because obviously the success of the company comes from those people who are in the field, in contact with the clients and the staff, and I will never be able to thank them enough. And of course, ours is a company or rather this is a meeting where there are lots and lots investors, so I thank you, too. Thank you to you, the investors who believed in us and who've been willing to risk investing their money in us. Do you have one last question?

[Interpreted] No further questions.

[Interpreted] Well, in that case, in 6 months' time, I hope that we'll all be able to meet at the Trocadero with the present space meeting. Thank you, and goodbye. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]