Telelink Business Services Group AD (TBS) Earnings Call Transcript & Summary

Hello, everyone, and welcome to our regular financial overview, the first one for 2025. As some of the regulators are aware, we have switched to a different platform right now with Microsoft teams for technical reasons, but more or less everything is the same. You can still find the Q&A section in the top ribbon above. We will hold a short Q&A session after the presentation. And today's focus will be the preliminary consolidated results of the full financial year of 2024. My name is Faris Abbas, and I will be moderating the session. And with no further delay, I give the floor to Mr. Zhitiyanov to present the financial review.

Thanks, Faris, and hello, everybody. So yes, as Faris outlined, we're going to focus on 2024. I presume that the slides are not that much. So I'm going to spend some time explaining some specifics on different slides about what happened and what are our plans and I believe we'll have a little bit more time for Q&A session this time. So yes, any questions are more than welcome. Without going into detail, so we are currently presenting 2024. There are no changes currently in our projection for 2025 and in that respect for the next 4 years. So whatever we presented, I don't know when that is maybe November, October, November time frame. So for 5 months ago, there are no significant or no changes, at least from where we stand right now, according to what we believe we can achieve in the next years to come. That's why we are not putting that in those slides. But anyhow, if you have some questions on '25 and above definitely we can speak in more details about that as well. So anyhow going into the slides. So the first slide is, actually, we're using the structure that we have been using in the past sessions that we have, the webinars that we have. So we have on the first line, we have the Q4 of the last 4 years, plus the current Q4 in our particular example, Q4 of 2024. So as you can see, for those of us who are listening or watching, as you can see that the last quarter was the best quarter that we have during our whole history. So we achieved EUR 52 million of revenue with a gross profit of 17.5%. And respectfully, we have EBITDA margin of 9.9% and a net profit of 6.9%. And in real numbers, the last quarter gave us EUR 52 million of revenue, EUR 9.1 million as the gross profit, EUR 5.1 million is EBITDA and EUR 3.6 million of net profit. So this is much -- and again, I'm making the comment here that still, a lot of our business around yes, 70%, maybe -- yes little bit less than 70%. But a lot of our business is project-based business. And looking just 1Q, 1 quarter is not enough to get an understanding of the full year and what exactly we're doing over that year. So anyhow, this is -- you can see that last year, we've made EUR 37.8 million, EUR 38 million in the last quarter. So we have extended 37% of the revenue part and the EBITDA and the net profit, we've doubled actually what we've done in the last quarter. Again, for historical purposes, how we are presenting the data here, I didn't want to change it anyhow. This is consecutive quarters for Q1 to Q4 of 2024, yes, you can see that we have, again, more or less doubled the revenue of the Q3. So you can see that the -- again, the gross profit margin, which is higher in the first month and lower in the second month. Again, this -- let's say that this is something normal. In the last quarter of the year, we closed a lot of the projects. We -- first, we have this kind of a strive to close as much as possible in the year. Clients on the other side have the idea to close whatever they have started, if possible until the end of the year. Some of our budgetary related customers, both in the government and in the corporate sector, again, are pushing to close as much as possible in the last quarter and respectfully in the year. And that's why we have this kind of a huge revenue and a little bit lower gross profit just because of the mix of the revenue. There is no specific reason for the gross profit. So this slide is giving the past 12 months on a trailing 12-month basis. So this is showing a little bit growing on the revenue side, growing most of the things. But let's jump to the final year conclusion and not to look only on the quarter base. So yes, this slide is giving -- so on the left side, you have dotted lines, dotted -- the picture is not blurred but phased out to put it transparent, yes. You see what was our budget. And this was the budget that we have made in the beginning, end of 2023, beginning of 2024. So we were expecting to make EUR 125 million with EUR 8.8 million EBITDA and EUR 4.9 million of net profit. Actually maybe 2x through the year, we have updated that budget. Last time, most probably was November, but we decided to show comparison to what was our initial budget in the beginning of the year and when we ended up the whole year. So the whole year ended of around EUR 100 million, not around exactly EUR 114 million. So for our first year, we are bridging the barrier of EUR 100 million. It's more or less a logical barrier, but yes, it's something to celebrate. So on the revenue side, we're making 21% year-over-year growth. You can see that we have moved it around 20% growth for the past 4, 5, 6 years already. We are growing between 17%, 18% and 25% year-over-year. This particular year, 21% on the revenue side. The gross profit side, we are growing 31% from the last year. We've been able to achieve EUR 24.4 million gross profit. Last year, we've made 19.8% of gross profit margin. This year, we're looking at 21.4% of gross profit margin. So we have improved a little bit the gross profitable through the whole year with 1.6% which is normal, let's say, for the type of business that we currently have to have a gross profit percentage of around 20% plus minus a percent or so. On the EBITDA side, we're growing 34%. On the net profit side, we're growing 23%. So yes, we are improving the margin, EBITDA margin with 0.9%, close to 1% better than last year. Last year, we had 8.4%. This year, we have 9.3% EBITDA margin. So comparing that to maybe the budget side, on the budget, we were expecting to have EUR 125 million. So we are missing EUR 10 million on the budget side. The gross profit side, we're targeting 25.3% so we achieved 24.4%. So we are diminishing that revenue, let's call it, gap on the gross profit side by better gross profit. We were expecting 20.3% on the gross profit, we achieved 21.4%. And then on the EBITDA and the net profit side, obviously, our sales and marketing and general and administrative expenses, we have, let's say, handled better that part. So we have compensated the drop in the revenue and the slight drop in the gross profit and actually made a better result, much better result close to EUR 2 million more EBITDA. We were targeting EUR 8.8 million, and we have achieved EUR 10.5 million on EBITDA side. So yes, it was like that. And on this slide, you're seeing a little bit more actually what I have been talking about -- but actually, you see the sales and marketing, general and administrative, net financing expenses and operating profit. So a little bit more detail than the last slide, looking only into 2024 as a year. So currently, you see that we have more or less achieved what we have perceived on general and administrative expenses. So we have expanded EUR 7.7 million. We were expecting EUR 7.9 million. Still, this is a huge growth from last year, which is -- yes, we can discuss that further why is that? And it's around 7% of the revenue on the general administrative part. On the sales and marketing, we were expecting to have 11.3%, we ended up with -- sorry percent, EUR 11.3 million of cost over there, and we ended up with EUR 9.7 million of final cost. You can see that the percentage-wise, it's pretty much the same. There is a roundup here rounding. And so we were expecting a little bit more than 9%, and we have a little bit less than 9% from a revenue perspective. Combining -- so the same percentage more or less that we are expecting. Combining, we have around between 15-something to 16% currently of our revenue is going to sales and marketing and general and administrative expenses. This is something that with the growth of the business, we expect actually our investments that we are making in S&M and G&A to start to pay off and we do have economy of scale. And those numbers, although they are not going to shrink in terms of absolute numbers to shrink the percentage of the revenue. So we're expecting in the future on the top of my head to end up to 13%, 13.5%. So with 3% down to lower this combined SG&A in the long run. Nothing interesting. So we are calling that an investment, and that's why -- that's -- but it is with this -- kind of star over there because it's not exactly investment from a financial point of view. But still, those are things that we're putting -- on a P&L level, we're putting those things in order to monitoring them quite thoroughly about the things that we're investing and we're actually dividing that into the new business and market investments that we are making and the functional investments. So this is -- yes, I'm going to explain what it is in a while. So on these slides, you can see 2023 and 2024. So on the new market investment this year, you had the most right, which is grayed out is, we were expecting to invest in new business, in new markets EUR 2.5 million, actually. And we ended up the year with EUR 1.7 million, which is around EUR 300,000 more investment in new market and business as we were actually -- that we've made in 2023. So drilling down a little bit here, what we have. So the full -- the major squeeze in terms of investment actually and here is where the saving in terms of sales and marketing and G&A come from in order to get a better EBITDA is in the West. So you see that we were expecting to spend around EUR 1 million with sales force, presales force, and marketing and some general and administrative expenses for maintaining offices in Germany, U.K., U.S. and things like that. And we ended up spending around EUR 0.5 million. It is actually a combination of two or three things. The first thing is that we started the year with a specific set of guys in U.S. and Germany, we decided somewhere in April time frame, actually to -- that it's not going to work for us together. So we departed with them our ways which created some gap. We reinvented our strategy, took a guy here in Bulgaria that's going to develop the West market for us, start searching for partners and emerging acquisitions or potential targets to buy in the west. We can speak about that later if you want and sales guys. So we acquired some -- so we had some expenses in the first 4 months of the year. And then we have to restructure, to pivot the whole way. And actually, this is why we actually didn't spend that much amount of money that we were expecting in the beginning. Of course, this is projected on the revenue side and the gross profit side. You're going to see what we've made out of West Europe. So I think that it's on the next slide. Then the East. So this is the investment that some of you that are following us know that back in the days, we started doing our expansion in our -- in Eastern Europe, Southeast Europe, firstly, very deliberately to organic growth. So we were investing in sales guys, sales team in Croatia in Romania, in Albania, but yes. And then you know that we've changed our more or less structure and we are more focused on M&A currently. We're going to speak about that as well. But anyhow, this is the net loss that we are making out of this organically based operation. So still in 2024, we have something we -- in 2023, we have around EUR 600,000 to 2024 we have around EUR 340,000. We are not -- we actually -- the ones of you who know what we're doing, they invested our investment in Albania. We sold the company to the guy who we hire to manage it. We decided that Albania is not the market for us to be and to develop further. So we have 3 or 4 months actually of expenses over there around EUR 60,000, EUR 70,000 on top of my mind. So it's not a big number. Then we're not counting Croatia anymore because in Croatia you know that we've acquired the business. So we're not categorizing Croatia of a new market already. We believe that we are -- we have our strong foothold already in Croatia. And we have Romania, where we still have some operation in Romania to those of you who are following us knows that we decided to stop the business organic growth business in Romania. We have been looking through the past year-and-a-half for potential M&A target in Romania. Unfortunately, at least for the time being, there is no such a target that we can go and merge with in Romania. So for the time being, we are more or less, how to say, phasing out our presence on the Romanian market but it still requires some money. Actually, we took that decision somewhere in October last year finally. So all the costs that has been incurred pre or prior to that you see that number. Okay. Going forward, EUR 630,000 for center of excellence, we're actually expecting to spend around EUR 900,000, we spent around EUR 600,000. So this is actually, we're developing in data and AI, cybersecurity, public cloud productivity and IT automation. If you have more questions about that and where we are with that, I can spend a lot of time talking about that. So you can ask a question. And last but not least, definitely, we have around EUR 260,000 on M&A. So this is actually lawyers, due diligence, a couple of people that we have are actually a few people that we have focused on the M&A part, both on a pre-M&A and both on post-M&A phase. We have a separate department for post M&A, that department currently is around 4 people. And in the pre-M&A, we have another -- a lot of people actually supporting the pre-M&A currently. But yes, if you have more question on how we envision, how we do M&A part, we can spend some time talking about that if you have more questions, of course. Functional investments in brackets. So we have around EUR 900,000 of functional investments. So one of the investments, maybe the biggest portion of that investment are around EUR 400,000 are going to TBS Academy. So yes, those of you who know where we are with the academy, we are producing our own people especially, obviously, junior engineers are coming from the academy. We have 5 or 6 dedicated full-time employees in the Academy plus in next year, we're going to change a little bit the structure of the Academy, but yes, let's focus on 2024. So this is more or less the salary of those guys who are those 5, 6 guys who are dedicated to Academy plus because the Academy is a 6 months time frame and 3 of those months, we are paying to the participants in the Academy, so we have the salaries of those guys here. Digital transformation in 2024, actually a little bit early in 2023, we have incorporated, I cannot recall the better word for that. But yes, we have 4, maybe the -- is better word, a team that is dedicated to digital transformation. We believe that the modern company, especially with those M&As that we're doing, it's quite important for us to have a proper digital infrastructure and digitalized processes and controlling mechanisms. So that's why we have heavily invested in this digital transformation team. In 2025, we'll continue that investment even growing a little bit further. I can spend some time on that, if we have time later on. Then we have the GRC and ESG. So we have a separate department, those of you again who are following us know, we have a separate department with 5 or 6 people over there that are doing governance risk and compliance. So we have a separate governance that are doing the processes. They're following the compliance with different ISO standards and things like that plus they have a separate risk people over there who are having an enterprise risk evaluation and things like that plus they're taking care of all the ESG. We are undertaking, on an ESG level, we are undertaking EcoVadis actually, are auditing us on the ESG part. We have a bronze medal. We have 85 points out of 100, if I'm not mistaken. So we are trying to do whatever we can and it's possible for us on the ESG front as well. So yes, I think that this is enough for the investment. And we came back here, we can go back here if there is a need. So rushing out to the next slide. So this is the revenue by invoicing region for the whole financial year, of course. And you can see Bulgaria is generating, yes, a significant portion of our revenue. In that example, we have generated around 71% of our revenue from Bulgaria or this equivalent to around EUR 81 million with a gross profit of around 23% in Bulgaria. This is what we have been expecting. We're expecting a little bit more from Bulgaria, around EUR 1 million to EUR 2 million more but yes, we're EUR 2 million short, but still 26% growth year-over-year. This is something CBP. This is more or less an internal thing for us. This is a Comutel business pool. This is company that we have acquired back in the days more or less 10 plus years in East Serbia and the name of the company was Comutel. That's why we are using Comutel business pool. The main business of Comutel is working with telecoms in ex-Yugoslavia. So the Adriatic region, let's call it like that. So that's why -- yes. That's why the gross profit margin is, as you can see, around 15%. So we have generated EUR 14.1 million. We were expecting EUR 14.4 million. We are expecting a decline of the government business due to many factors. Again, we can discuss it further if needed. You can see that we have a slight increase from 11% to 15%. We have actually quite a restructuring event beginning of 2024. That's why we have actually put a little bit better gross profitability in that market. And yes, I think that it's about Comutel business pool. Overall, we are decreasing the revenue from there, we're on 15%. And again, the gross profit is 15%, something that we have been expecting. Croatia, this is HR according to the international standards of naming conventions of countries anyhow. So this combined business of our organic, because our organic business last year made around EUR 10 million. This year, the organic part, we really cut a lot of the business that was not generating profitability. We left at around EUR 4 million which was our organic growth business. And we have around EUR 10 million that we can consolidate. So this is actually after we signed and took ownership of the company, which was, I believe, end of March, if I'm not mistaken. We're consolidating 3 quarters with the company that we bought 7IT” and yes, you can see that last year, we have around 5% of gross profit margin, which obviously was quite low. The organic kind of businesses you fight and a lot of the fight is going on, on the profitability side, so price wars. Obviously, not something that we want to be honestly speaking. Anyhow, we achieved 23% of gross profit margin, which is pretty much the same that we do in Bulgaria. So this is more or less than the expected gross profit margin. We were expecting 16%. Actually, this is the moment we were making those projections beginning of 2024. We're still not in the company, and there were a lot of how to say misplaced spendings. So what is in the cost of sales, what's in sales? What's in marketing? What's in presales? What in G&A? And so on and so forth. After almost a year after that, we have a much better understanding and alignment with our internal accounting and finance structure and reporting and things like that. And that's why we have so big difference between what we were expecting and what really happened. Anyhow, yes, a significant growth in the business, 57% due to the acquisition, but not only. North Macedonia, the business actually shrinked to around EUR 2.9 million, a 16% decrease, 11% gross profit, something that we have been expecting more or less. Romanian market, as I told you, it's something that we're not going to proceed developing in the future. Still, it's making around EUR 0.5 million over there. We managed to -- we have 2 or 3 contracts over there. But yes, no further things that are going to happen in the future there, at least if we don't find a proper target. In West, we have 100%. So we've doubled the business in the West. We have EUR 1.6 million coming from the West with 21% of our gross profit margin. We were expecting a little bit more, but that's because we're expecting a difference to have a more business coming out of those sales guys that we hired back in middle of 2023. But anyhow, things changed a lot there. Still, we make EUR 1.6 million and yes, we can spend a little bit more time on the West in a while. Revenue by sector identified by end client, as we call it. So the telecom sector is shrinking 12% decrease. I told you that's something that we have been expecting but still, we make EUR 18 million out of the telecom sector. The public sector is growing with 13%. We were expecting actually to have a better public sector business, but still, we end up with EUR 63 million in the public sector. 55% of our business comes from the public sector, we were expecting EUR 67 million, so most of the revenue that we lost is coming from the unrealized business and opportunities in the public sector. The enterprise sector grew 80%. So we created EUR 33.1 million, or EUR 33 million out of the enterprise sector, compromising around 29% of our revenue. Yes, the enterprise sector, we actually had -- with a few of our clients, several of our clients, they had 2024 was a year that they have postponed a lot of investments during the past years and have made a really big project, we have 4, 5 clients, really big project. It's not -- most probably, it is like that you have seasonality in the enterprise business. And it's going to be shrinking a little bit in 2025, of course, we're fighting to grow that. But anyhow, a very good 2024 from the enterprise, 30% of our business. If we add on top of the telecom, it's getting to 45%, 46% of the business. This is by product family. So yes, the most of our business, 79% to 80% of our business is coming from IT infrastructure. For those of you who are following us, yes, I will not go into detail what IT infrastructure, its going to be lengthy right now, but it's a very broad understanding of the IT infrastructure. So we're growing 40% in the IT infrastructure. The digital transformation is around -- we're actually going to introduce in 2025 a little bit more different, let's call it, a product family structure. We have changed a lot of things in the past 6 months. But anyhow, currently digital transformation is software development, what we are calling application services, in general, plus data and AI, we have a very small business with data and AI, we've started pretty much the data and AI business or to classify it and to have a streamlined opportunity somewhere in May last year in 2024. We're expecting some different numbers in 2025. The security business is around EUR 8 million. It's decreasing 25 year -- 25%. Yes, the truth is that most of our customers decreased spending in security. There was kind of a big type with Ukrainian war and things like that. And then we see kind of a decline currently in the cybersecurity space, at least from the customers that we are seeing. The end user hardware and software, and this is some occasional laptop sale that we make, PCs sale that we make, we don't make this device and peripheral sales. And the software part is more or less productivity. So this is Office 365, maybe some Google suit and things like that. The IoT, we've made around EUR 1.1 million on the IoT. We -- actually, most of the money in the IoT are coming from STEM, STEM equipment that we are providing here in Bulgaria. So again, most of you that are familiar with us know that we're very active in the educational vertical. So we are quite active. We are designing, producing our own STEM equipment with all the tutorials and guides and step-by-step for laboratory and things like that. So it is generating a small revenue around EUR 1 million, but with a very good profitability. The profitability there is better than the average profitability that we have. Personnel by invoicing region or the person. So we grew 127 employees last year. 112 people were actually from the acquisition of 7IT. So we ended up with 475 employees, 324 of them in Bulgaria, 120 in Croatia and the less small numbers in the other countries that we have operational capacity. Then a couple of financial slides that are more or less -- we will focus on the last slide. But more or less, we ended up in a net positive net cash position with net cash of around EUR 3.3 million in the end of the year. So we -- again, those of you who are following us, there was -- in the beginning of the year, we had a kind of a pretty high working capital of around 12%, 13% working capital and this is due to some specific contracts that we have. And yes, we were -- there is a seasonality in our business that the first half of the year, we have a bigger demand in terms of financing demands, cash demands. And then the second half of the year, we are lowering down the working capital requirements and, of course, are making some money at the end of the day. And this is what happened last year as well. It is a little bit worse than what was prior years because of the long-term loan for bank's 7IT which is EUR 3.4 million. Other than that, we are more or less moving to what was in the years prior to that. So yes and that was more or less a presentation that we have prepared. And yes, I can speak a lot of topics. But maybe to start with the Q&A, and I can make more extensive answer to the questions and give more details around the topics that are interesting for the audience, not to speak something that may be completely not interesting for the audience. So Faris back to you.

Thank you, Mr. Zhitiyanov. Thank you for your presentation. So yes, we can officially kick off the Q&A session. [Operator Instructions]

While waiting for the Q&A, we can speak a little bit about the M&A part. So I told you we currently don't have a target in Romania. So we have -- in the past year-and-a-half we've met with more than 20 -- or more than 15 companies, we shortlisted two companies. We try to make a deal with those two companies. Unfortunately, for many reasons, we didn't succeed, so we don't see a potential target over there. In Slovenia, you know that we are in advanced negotiations with a company in Slovenia, the company in Slovenia is quite big. It's around EUR 4 million in terms of revenue and around EUR 4 million in terms of EBITDA. We are in a, let's say, a very, very advanced stage. I feel positive about we merge with that company. I believe that in the next month or so, there will be some news about that, but still let's not speak before the things are official and can be spoken about. We looked over two companies in Germany. Unfortunately, we get the wrong size of the companies, they are actually small companies around 20 people and around EUR 20 million to EUR 25 million. But unfortunately, we realize that this size of a company is not okay for us and we should not go into that small companies. So currently, we have updated and we are searching for a company that are at least 50-plus employees and more or less EUR 35 million to EUR 40 million. Basically, the reason is that if you go below that in the West, you get up with so small companies that are not mature in any kind of a way, and it's very hard to integrate them into let's say, a quasi corporation that we are starting to become with those 500 people. And if the Slovenia acquisition is achieved, we're going to be around 800 people, so a lot of people. In France, we did quite -- yes, we did an extensive due diligence to a company in France. We've learned our lessons as well over there. It was more like a staff augmentation company because markets there are working in staff augmentation kind of a manner. But yes, the company was generating around EUR 25 million, there are around 200 people but very questionable financial results, very questionable possibility to synergies and growth. So a question about -- a lot of questions over there. So we dropped that opportunity as well. . During the past year, we'd be looking into 3 or 4 companies in Lithuania and Latvia. But again, too small companies, too hard to integrate them into a little bit bigger entity. And yes, we continue to look for companies, our strategy in the West, more or less is -- yes, we have a sales guy in Germany. We have a sales guy in U.K. In U.S.A., we're going to postpone all the operations, and we have contractors over there, but we are ending that in 2025, actually, yesterday, we sent a notice to terminate it. So the U.S. is going to be out of reach at least for 2025. We are exploring Germany, Nordics. We have a lady on a contractual base in Sweden, and we have a guy in U.K. as well. So we have 3 sales guys in West Europe. Yes, honestly speaking with a question of results, we can speak a little to why but it's very hard to find a good sales guys in those regions. So if we're going -- we want to extend our operation in West Europe because we want to -- we believe that this is the Holy Grail for us and for our growth and profitability and will continue, but we're currently exploring much harder M&A. So that's why we were looking to companies into Germany and France but we're actually extending our look. We have reached a lot of, I don't know how to call them consultants and I don't know advisers that can support us in finding such company in those markets. We are doing cold calling as well in those markets with specific companies. We have a very clear target already what we want and we are very hard looking into M&A with the sales guys that we have with maybe the exception in Sweden, we can -- the sales acquisition cost is so hard that it cannot cover the profit that we're making not only in the short but in the middle term as well. So partnerships, which is something that we currently explore with 3 or 4 very big partners over there in the West and doing M&A. Plus we are extending our business that is related to NATO. In West Europe, we want another contract, service contract, kind of a big contract in Belgium. We are participating very strongly. We are very competitive over there for another 4 or 5 tenders. We're exploring tenders in U.K., in Ireland, and we're expanding actually that search into -- especially countries that are more welcoming English-speaking services. There is definitely potential and this is actually the fact our more or less strategy for the West that we do their managed services and time and material business for highly qualified experts. So yes we -- I don't know if there are questions, we can go into more details about our strategy for the West. So yes, I think -- I feel the time while we're waiting for the question with this M&A strategy a little bit about the West.

Yes, there's been already a couple of questions, but thank you for saving the time a bit. So we have the first question from Mr. [indiscernible]. Hopefully, I am reading this right. I'm working in the Croatian business and what are your views? And how is that going to develop?

The Croatian business, how it's going to develop. So Look, it's -- so we are expecting this year, we expect -- so last year, we get around EUR 40 million. This year, we're expecting around in the vicinity of EUR 19 million. so a modest growth in our business in Croatia. Generally speaking, about not only about Croatian business but about all Eastern Europe business, our goal is like that. So we want to have a company and we have a company that is in Croatia, and most probably we have such in Slovenia that has a proper management team in place. We have a clear structure of responsibility to that team. We have -- we're measuring them on P&L, and we're giving them enough flexibility and independence in terms of their operation. And we have, let's say, a relatively good incentive scheme for them. So after that, we -- this is one of the pillars. So have a good, strong empowered team. Then the second pillar is on an operational level to have a proper functions on a group level, and we have done a lot of -- we have actually worked a lot of parts. And we have a proper people on a group level that are aligning and driving economy of knowledge and economy of scale and they're driving the proper process in place. So we can -- although they're empowered those people in the different countries, they should have the proper rules of the game and it's going to be rules for all locations, not only for Croatia, Slovenia and Bulgaria, but all location, one kind. So if you're still working with us in Croatia, its going to be the same way but different people than if you start working with us in Slovenia, in Bulgaria and so on and so forth. So this is the second pillar, plus they're making an alignment between different teams and things like that. And then comes the answer more or less to your question or at least my try. Then we -- because we -- I'm using that example. So for example, in Bulgaria, we have 100 capabilities, for example. And in Croatia, we have around 65. So one of the tasks that we have with all those alignment economy of knowledge is actually how we export those 35 capabilities that we have in Bulgaria, how to export them in Croatia and then give the team over there, the capability on, let's call, a much lower cost to utilize our capabilities and we do vice versa. Operations have, I don't know, 10, 15 capabilities that we don't have. We export them and import them in Bulgaria, Slovenia, Macedonia and so on and so forth and there is a kind of a framework, how this is working with the proper profitability for all the teams, proper rules, which is very important. But simply put, we want to have synergies of the business. For example, a quite concrete example. Our Croatian entity doesn't -- they haven't done cybersecurity and haven't done Microsoft to their inception. So -- and the Microsoft business, for example, because the Microsoft business is more or less services. That's what we are interested for. And so they can go to their existing clients and of course, to new clients and start providing those Microsoft capabilities that we have. . And the good thing about Microsoft is that we're not going to shift the balance of power, if you want in that market, which is we don't want to end up in a profit or in all of the markets that we're operating. We want to create more values. And we want -- if the customer wants to come with us because of our expertise, because of our capabilities, that's fine, that's perfect. But the price where it's not the best possible, not the best way I think in most of the cases, like 95% of the cases. And I don't know which pillar is that. So this is important. I think that you get the idea, we're not going to fight the whole market. That's -- in my opinion, that's not the right thing to do. But we're going to introduce more and more capabilities, and we're going to try to differentiate. And the example with Microsoft is services, so a small amount of money. So with Microsoft, you can do it for EUR 50,000, you can do miracles on the services part with a better profitability for us and see if you are not shifting the balance of power in that market. And last but not least is we want to create a kind of new and fancy things that are far to believe that we're going to introduce something that nobody is doing in the market. But we want to invest in some things that are not must. I mean they are not done by every system integrator, every digital transfer and matter every value-added seller like us. And this is what we are investing in the cyber -- in the center of excellence, excuse me. So this is cybersecurity, but in a very, very, very deep way, so things like identity and access management, governance management, data leakage prevention, specific Microsoft kind of services, specific services like detection and response, penetration testing, consultancy, emergency response team. So very specific, not like a general cybersecurity but very specific things. Those are productivity in public cloud and IT automation, some things that are not so well adopted, especially the public cloud and IT automation. Okay. There are reasons for public cloud not being adopted and I agree with that. So it's not the biggest growth potential in the East Europe, but very important for the West. But for example, IT automation, there is a necessity of each and every entity corporation that's investing more than, I don't know, EUR 250,000 of different IT assets per year. Anyhow, and the third pillar, the third center of excellence is around data and AI where we are currently more focused around data, ETO integration, visualizing that data, introducing some machine learning and AI system on top of that data. So very clear strategy there. So when I look at the -- when we are looking into -- and your question is very deep and important. That's why I'm answering in that way, and I'm going to summarize my answer. So no matter the entity we buy in Eastern Europe, we want to provide them enough independence. In the same time, we want to provide the common rules and a framework of sharing economy and knowledge economy of scale, alignment between different and the common portfolio. And this portfolio is part of the synergies. And last but not least, we want to create kind of a differentiator investing a lot in these three center of excellence and maybe we're going to expand that. So our entities over there can differentiate in maybe not a blue ocean kind of a market, but I don't know, something between blue and red because the IT infrastructure market that we are in is like a red ocean. There are a lot of sharks over there. So we want to move a little bit to the blue ocean by those center of excellences. And this is how I see the Croatian market. So other than that, if you ask me about my perception on the Croatian market, I think that it's better than the Bulgarian market in a lot of ways. I think the total Bulgaria is 3x bigger in terms of people. The Croatian market is more or less the same as the Bulgarian market. Yes, and I forgot something very important that maybe the fifth pillar of our strategy is that once we have Croatia, Slovenia and Bulgaria, we will continue to look in spending in Eastern Europe through M&As. We are starting to invest in a vertical from an industry perspective. So industry-specific knowledge. So once -- before it was impossible for us to, for example, hire a guy from the manufacturing in Bulgaria or mining in Bulgaria or energy sector in Bulgaria or whatever, and to invest the amount of money to create a solution to package what we are doing in the proper packaging for that specific industry and make us an industry solution. That was impossible before that because it doesn't make sense from a financial point of view. But right now, when we have Croatia, Slovenia and Bulgaria, we have actually tripled the size of our potential market. So we're going to start creating in parallel to the center of excellences, which are more or less technological kind of an innovation to put it like that. We will create this business -- vertical business solution verticals in our organization and again, give something more unique, like a unique approach to those specific verticals. So yes, I feel very positive about the Croatian and about the Slovenian market. And yes, I hope that I answered the question, and I'm sorry that it was a little bit longer. But, yes, okay, it's very important to understand what's our approach and why we bought those companies. And -- at least part of the reason, that's not the whole reason why we buy those companies, but that's the strategy for us growing those companies in the future.

Thank you for your extensive answer. We have a few more questions that have come in. The next question is by Mr. [indiscernible]. What affected the FY '24 EBITDA levels? And how do you see EBITDA levels going forward?

Yes. Again, a very good question. So let's again, it's going to be a little bit a long answer, but yes, I will try to make it simple. So look, we are -- I'm with the company for 20 years. The company is 22, 23 years, maybe 13 or 14 years of those 22 years, we're more or less focused around telecom. So we're not completely different from what we are right now. So actually, we have around 10 to 12 years, 13 years, that -- so we're a relatively young company. In the M&A part and actually not only the M&A part, excuse me, not the M&A part, but the expansion in the different countries outside of Bulgaria, we are doing that for the past 4 years. And so we are very young in that direction as well 4, 5 years. And we've learned a lot of lessons. So maybe before 5 years, we believe that we can go with organic growth in countries like Croatia and countries like Slovenia and Romania and all the region and we believe that actually as well for the West. But after those 4, 5 years, we have a very definite kind of an understanding and learned in the hard way that it is -- and I'm simplifying it, but it is practically impossible or very high risky because you need to hire a very big team and it's about finding the proper people and the proper people are with some companies. So it's better for you to buy the company. And with the company, you buy some -- your place on the table and sell market share and so on and so forth. So back in the days, in the past 3 or 4 years, we were heavily investing in those organic growth. You saw that we were losing -- last year, we were losing in 2023, we lost EUR 600,000 net loss for operation in only East. We -- in 2023, we lost EUR 600,000 in the West. So basically, in 2023, we lost EUR 1.2 million in such kind of an investment and in 2022, maybe the figure is pretty much the same. So we've learned a lot of lessons. I mean, so the biggest portion of our investments to call them like that because we cannot capitalize, those are sales representation of offices and things like that are going -- they're directly hitting the P&L, directly hitting the EBITDA. So yes, and this is why you see what happened in 2024. So we -- after we did the first acquisition in 7IT, this definitely gave -- and we are on a path to close the second acquisition in Slovenia. Then we much better understand, first we understood doing the acquisition in Croatia and getting it done was actually before more than two years, we understood that this kind of strategy for organic growth is wrong. And during the first acquisition, seeing how it is we understood that we get a much better idea what is the amount of companies that we can merge with, acquire and how to handle them, what to expect and things like that. So in 2024, we completely revisited our strategy. We stopped spending money for organic growth. This is part of the reason that we shrink the sales and marketing expense and things like that. And, yes, if you look in the future, we are not looking to make such kind of stupid investments that we've made in the past. And that's the real truth, and I'm speaking very honestly, and very bold here. So I believe that if you look at the -- again, a little bit more extensive answer to the question, but again, I think it's important. But if you look from -- if you look in 2022, if you look -- if you start looking at Telelink business services in 2020. In 2020, 2021, we were not having much of an investment outside of Bulgaria. So we were able to create and my colleagues will correct me, but we were able to create around 12% to 13% of EBITDA margin. And you see that we have this dip in 2023 because of those investments. 2024, we have still some investments over there and obviously, when we buy a company, we have a year or two that we need to -- there are hiccups when you buy a company, it's a long story. But you have in the beginning a little bit worse in terms of profitability and then you get it better. So what I'm trying to say is that operating a business in Eastern Europe -- from Eastern Europe, for Eastern Europe, you should be able to make a EBITDA margin of around -- between 12% and if you are very, very, very good and efficient, 15%. And I believe that in the next year, so we will start growing the EBITDA margin from the business that is coming from Eastern Europe. When you get better, you start doing business for worldwide companies outside of Eastern Europe. So this is what we do, for example, for -- I'm always using Lufthansa because it's the biggest thing that we do, but we have other clients as well. With Lufthansa, we have huge operations there. We have a little bit better profitability with them. So when you go west, you can move a little bit the EBITDA margin further when you start doing business in the West. . When you start doing managed services business, you can go a little bit higher. When you start doing recurring business, you can go a little bit higher or at least have consistency of the -- of your expectation and some more stability on a Q-over-Q basis, year-over-year basis and things like that. So I believe that the EBITDA margin, if we're executing our strategy properly, the EBITDA margin will grow bigger and bigger in the years to come. I mean, realistically, around 12% maybe in 2 years or something like that in terms of percentage. So yes, I wanted to add something more, but it escaped my mind. But yes, So maybe what will happen with our sobriety, about our expansion because in the beginning, we were very young and not so clever anyhow. But with the sobriety in our expansion plans, maybe the revenue part will suffer a little bit, but the profitability part will go better, which I believe is -- I mean, I like it better. Of course, I like a bigger revenue and the revenue will grow for sure, but maybe it will be a little bit slower in the beginning with a better profitability. Yes. Hope that answers the question.

The next question is by Mr. George [ Belikov ]. Public projects in Bulgaria clearly underperformed your expectations in 2024, which you previously connected with a difficult political situation. What is the outlook for this year? And do you expect a substantial pickup from the recently passed state budget bill?

That's more than a one million dollar question. In my view, there is still a political instability in the Bulgarian government. Plus there is even higher political instability on the European level and the geopolitical level, questions what is going to happen with the European funding, recovering resiliency funds and things like that. So a lot of uncertainty, honestly speaking, and I don't believe that I'm the person that can answer those questions meaningfully. But if I'm -- let's look at the short-term perspective. So I don't believe -- I believe that we can achieve our targets for 2025. Actually, next week, we have a Supervisory Board and I'm currently in the process of making an outturn and looking over our projections. So I believe that 2025 is doable. We have quite a strong -- we entered the year with quite a big portion of contracted contracts. And a lot of things that are more or less in the government sector close to contract. So we have a good backlog, for example, plus I believe that what we are leaving in the budget will happen in this year. So I believe that 2025 will be okay for us. Even though the stability of the Bulgarian government is not what we all hope for in Bulgaria without going into further details, and it's, again, questionable what will happen with recovering resiliency because I don't know, but maybe Bulgaria currently has around 10% to 12% utilization of recurrent resiliency fund and we have only 1 year. For this 1 year, Bulgaria should spend more than EUR 4 billion. Obviously, that's not impossible. So it's a complicated thing. And it's not so much of the instability currently because we have a stable government right now, but actually it's due to the instability of the past 2 years, unfortunately. What will happen in 2026 and 2027, it's -- the dependence, obviously, we need to have a stable government if we have a stable government and the current geopolitical situation or the past geopolitical situation, I believe that we have a very bright future. If something happens on the geopolitical scene and for example, Europe decided to cut the cohesion funds then the government in Bulgaria, Croatia, Slovenia, things like that start to look for investment in such kind of a project out of their own state budget and how the -- so a lot of questions. I believe that there is no person in the world that can predict what will happen. There are so many different versions of the reality in the future. But I'm looking on the positive side. The positive side is that we have a huge capacity that there are a lot of things to be done in the region and the West will -- and there will be most probably what we were speaking about that the Europe needs to nearshore some of their manufacturing facilities and not only manufacturing, but a lot of the business, Europe needs to restructure itself. And the logical part of Europe to build such kind of things is obviously Eastern Europe because of the cost of living. And the problem about Eastern Europe, which should be a positive from our side is that in Eastern Europe, there is not enough people, that's not India. So if you start moving manufacturing in different industries in Eastern Europe, you need to do it in a smart way. So actually you're relying a lot of digitalization and automation rather than people because there is no people here. And obviously, this is something that we do. This is why we're investing in IoT, for example. This is why we're investing in this data and AI, for example, and so on and so forth. Plus maybe some international companies from the West will come to Bulgaria, which again is an opportunity for us because that's an entry point for us in those companies because it's much easier to enter here. So yes, again a long answer to the question, but a lot of 2025, more or less, we can see, its okay, it's fine. We'll manage. 2026 it depends on what will happen with Europe. But again, I mean I should be looking positively and I see a lot of positive things that can happen. And I try to see the glass half empty than rather half -- half full than rather half empty.

Thank you for your questions since we're going over the allotted time, we're going to let one more question in, which is from Mr. Mark [indiscernible]. What is the outlook for employee numbers? It sounds like the number of new hires will slow down compared to the recent years. Is there still a desire to get to 1,000 employees?

Look, it's not a desire to get to 1,000 employees. It's -- I want to look at as a kind of -- to accommodate the business. So if you ask me what are the priorities for this year, it's a different angle. But if I wanted us to be a big organization, so I want us to grow, I want us to be efficient and effective organization. I want us to be decisive, I want to be fast. Efficiency is something that I've spent a lot of time in the past 4 or 5 months. So last week, we have refocused 27 managers into different roles in order to accommodate those 5 priorities that I've put on the table. We have let a lot of people actually in the past 4, 5 months, we've let around 25 to 30 people. So we are growing in a net. But -- so we are hiring a lot, but we are firing as well a lot. In the past months, we are firing more than we're hiring and this is part of we being efficient. It's not part of we trying to cut the corner and be more -- to make more money, that's not the case. The case -- when you're growing very fast and we have been growing very fast in the past 3 or 4 years and you're very focused on the growth potential. And you're trying to solve problems with the quantity rather than quality. And I think that is fine. I think that it serves the purpose because the big question is what is the first thing, the chicken or the egg? And what is the first thing you get the business and then you make the organization or vice versa, you make the organization and you get the business. And I believe that it is the first one. So you get first the business and then you start fixing the organization as much as possible and making it efficient and effective. Because other than that, you're going to spend a lot of money, most probably doing different things. And the size on the revenue side, will not allow you to actually proceed further, and you're just preparing for something that's never going to happen because you've misplaced your priorities. So yes, we have been very, very, very, very focused on the efficiency. And the next reason -- and the other reason is that if you are solving the problems with the quantity rather than quality, you have moral issues inside of the company. So you have a person that's not performing well and you're not firing him and the next 10 persons around him are performing well, and you're not doing anything and they feel, "why am I stupid or something while we're doing a lot of things and this guy is not doing anything". So yes, it's a little bit, again, a long answer, but I'm not striving for 1,000 people per se. I'm striving for efficient and effective organization that will grow in terms of revenue, and we have the biggest possible operating profit per employee. And during the past 3 or 4 years, operating profit per employee was struggling quite hard. And we are on the trajectory right now. We're seeing those investments on organic growth and things like that to improve the operating profit of employee. And this is how actually we want to grow the EBITDA in the future. So again, I believe that at least maybe it's ignorant, maybe it's stupid, but I believe that there are those stages inside of the company. And we're going to be 800 employees making this year, we're going to be targeting EUR 170 million, EUR 180 million. So this is a big company. And I believe that we should focus on the efficiency and effectiveness part as much as possible without leaving of course, the growth strategy that we have and things like that. So yes, I would love to have more size because it's important for the West. If we go to the west and we say we have 300 people, the best possible people, you can imagine they will not believe that we can do any kind of a job with those 300 people. It's just that the perception is different. So the size is important and we're going to continue growing, but it's going to be very precise for the amount of people that we want. And I'm finishing answering, sorry. And the Academy is very important for us. So the Academy, I'm not -- I mentioned about the Academy. So currently, we have 5, 6 or 7 full-time employees, sorry, a lot of people already I know most of them. But anyhow, so the Academy part is currently, we run every three months. We are producing -- on the final stage, we have the capacity to produce between 10 and 15 people every three months. And this is most of the people we hire. We want to extend the capacity of the Academy. So we want to be able to produce 20, 25, 30 people. In order to do that and maintain the cost, we're actually going to open the Academy a little bit to our competitors, first to our clients and partners and then to our competitors in order to share the cost. So basically, we want to have -- like every academy, there are around 200 applicants for the Academy. And we end up -- each Academy starts with around 20 people. So we cut 90% of the people, yes, 90% of the people we cut them over there. And then during the process, we cut another of those 20, we cut another, at least, 50% of those people and then what we are changing this year, we are creating an IT hub and actually, you're going to see in the next presentation that the Academy costs will grow a little bit because we're trying to fix an issue actually because if we put the people in our organization, the organization get acquainted to them somehow. And because at the end of the day the idea of the Academy is for us to train the best person, but on the other side to find the young stars. And if there are no stars and we don't need them, I need to get rid of them. So I don't have moral issues with them because we are paying for them between 3 and 9 months. We are paying for them to learn and we're giving them an extremely good foundation. And if they are not the brightest guys, I'm going to try to find them a place outside of our company, but I want in our company, only the best and the brightest guys of those. Many people are saying that the young guys are not -- this is a generational thing. My generation is my father and my mother is saying the same thing about myself and its generation, but I want really to get the best people over there. And this is the most -- but anyhow, I was saying that we're going to create an IT Hub. Currently, we're funding those people in operation. We're going to create an IT Hub, they're going to spend some time in each department and organization, we have a scheme, we have a framework for that. It's very comprehensive. And yes, but the idea is we -- the capacity of the academy to grow twice this year. Maybe in the future, we're going to expand the academy in some other countries. We want the Academy actually to start doing some specific trainings for our clients for the Academy team to grow. This will improve the quality of the -- and the topics that we're actually touching in the Academy. And but at the same time, we're trying to at least offset a little bit the cost by making some very specific tailored made trainings for the government or for specific clients that we have. So big plans for the Academy and the growth will come from there. Our strategy is hire the senior guys and period, don't hire anything else, develop all the other employees from the Academy. Of course, there are exceptions, but that's the whole logic. And funny enough, we started an Administrative Academy. So it is running right now because we want to have experts in internal services, project management, bid management, delivery management and so on so. A lot of people over there, which are not technical, we run an administrative academy currently. There are 8, 9 people that are currently 1-month Academy. So we will be not only -- yes, we will be developing the Academy not only in the technical way, but again, to develop with those kind of more organizational talent. So yes, I hope that I answered the question, sorry, about the -- there are a lot of things that I want to say.

Thank you for extending the answer. But yes, since we're also quite out of time I would like to thank you for answering the questions and for your presentation. Thanks to everyone for attending the session. Stay tuned for receiving a recording and transcription as well as receiving invitations for our next session. So once again, from my side, thank you for attending and for being with us and all the best.