Wirecard AG's (WRCDF) CEO Markus Braun on Q4 2015 Results - Earnings Call Transcript

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Wirecard AG (OTCPK:WRCDF) Q4 2015 Earnings Conference Call April 7, 2016 7:00 AM ET

Executives

Iris Stoeckl - Vice President, Investor Relations and Press Relations

Markus Braun - Chief Executive Officer and Chief Technololgy Officer

Burkhard Ley - Chief Financial Officer

Analysts

Gerardus Vos - Barclays

Andrew Humphrey - Morgan Stanley

Alex Faure - Exane BNP Paribas

Edward Donohue - One Investments

Gianmarco Bonacina - Equita Sim SpA

Adithya Metuku - Bank of America Merril Lynch

Gautam Pillai - Goldman Sachs

Operator

Good afternoon, ladies and gentlemen, and welcome to the Wirecard Earnings Call regarding Full-Year Results 2015. At this time all participants have to place on a listen-only mode. The floor will be opened for question following the presentation.

Let me now turn the floor over to your host, Iris Stoeckl.

Iris Stoeckl

Yes, welcome everyone to the presentation of the final figures for the fiscal year 2015 of Wirecard. With me are, as you may expected, Dr. Markus Braun, CEO; Burkhard Ley, CFO. They will both share to present the – part of the presentation, which might be of interest for you. After that we will step immediately into the Q&A session. So the floor goes over to Markus.

Markus Braun

Hello, ladies and gentlemen. We want to keep our presentation today as brief as possible to give you, of course, the maximum time to ask questions. We try to come forward with a strong presentation that is also self-explaining, so I will just highlight some elements of this presentation.

Let me start with key figures. I think we can report here very strong year and all key fundamentals we’re able to increase the key numbers at around 30%. And I think we can also show very strong operating cash flow and free cash flow, and of course, also a strong earnings per share growth.

On Page 6, we give a brief overview what is organic, what is inorganic the companies that I included here on the inorganic side of the transactions that we did in 2014 and beginning of 2015, mainly 3pay, GFG, Amara Tech and Visa processing, which – from which three are allocated to the area outside Europe and one 3pay is allocated to Europe. And here you see exactly what we are – what those was coming from the organic development and from these four transactions.

You know that Wirecard is driven by four megatrends, the substitution of POS transactions, but online mobile transactions, we are very much benefiting from the convergence from cash to electronic transactions, and of course, which is not so obvious also from the convergence from non real-time transactions to real-time transactions in terms of, for example, a transfer or a convergence from invoicing cash on delivery, cash in advance to real-time transactions. And the fourth megatrend is, of course, that we see Internet technology of the key convergence trial in all sales channels not only online mobile, but in the future also at the point of sale. This is what we call omnichannels.

Against these four megatrends, we’re developing our strategies that is basically driven by three core detailed strategic approaches. One is, of course, the constant expansion of value chain. We probably in the industry coming from PSP have today, the product value chain in terms of not only providing technical payment services, but also Internet trading acquiring a fine processing – issuing processing services, risk management, currency conversion services, et cetera, and a lot of value-added services is, of course, a key architectural point of our strategy.

The second element is the constant going forward with globalization. It is our clear goal to become one of the first players that really to global clients can provide all those single interface and global service in all key countries and key geographies.

And the third element of our strategy is using very much Internet technology as the convergence trailer between the sales channels on the front-end, so beside of a very strong back-end. We’re constantly bringing innovations on the front-end side to use Internet driven devices to better transactions from all sales channels online mobile or every point of sale.

We had a tremendous new sales pipe in the second-half of the year of 2015. The total amount of additionally signed contracts amounts to €7.4 billion. And we always give as a guidance that in the next 12 months, two-thirds of this amount will be executed in real transaction volume.

Coming a little bit to development, the development in the different – for industries, we can say that basically in all industries, we saw a growth between 29% and 32%. So all three core industries basically growing around 30%.

On Page 12, we’re showing that development of the average volume per merchant, which is, of course, an important indicators for economies of scale. And we had again between 2014 and 2015 an increase of the volume per merchant, the volume per merchant went up from €1.8 million for an average of over €2 million.

On Page 13, we’re providing a transaction breakdown in geographic terms, and we’re additionally providing key performance indicators about gross margin and the average transaction margin. Let me start with the geographic breakdown. So in total, we had a transaction volume of €45 billion from which we had €34 billion in Europe, of which, again, Germany was providing around €14 million, [ph] the rest of EU without Germany a little bit over €17 million, [ph] and the rest of Europe without EU €2.8 million. [ph]

Outside Europe, we had a transaction volume of €11.2 billion from which €2.2 billion were in Singapore, €2.1 billion in Indonesia, €3.6 billion for the rest of Asia Pacific without Singapore and Indonesia, in the Americas we did €1.6 billion, and in the Middle East, Africa €1.7 billion. This shows today our truly global footprint in the excel sheet on the right side, you will see exactly the part of our revenue was triggered by transaction oriented fees.

And you will see how much of that was triggered the hardware on non-transaction related fees. And then you’ll see a breakdown exactly how this translate into an average margin in Europe versus outside Europe. And, of course, this average margin 1.4% in Europe and 2.1% outside Europe is – outside Europe, of course, we’re still coming from a much lower volume per merchant, that’s one reason for the differences.

Second reason, of course, more complex risk management. Overall, of course, and countries outside Europe, especially in emerging countries, we find higher margin situations, but we also see there’s not such a huge difference. There’s already some convergence between the markets. In total, the average volume – the average margin lies currently at 1.6% after taking out full effect from hardware and license fees.

On Page 14, we go more into detail in terms of geographic breakdown, Europe versus outside Europe and the key core industries. Also, the key message here is, there’s quite a convergence between the different industry channels, differences are coming from different risk profiles and different interchanges, but basically beside of that, we find already acquired convergence development.

Coming to some to three core technical developments, we successfully launched last year, the Wirecard Checkout Portal, which is a new tool for small and medium-sized merchants in terms of a self-service checkup, checkout, where the merchant in a very easy straightforward process can sign up for his final checkout payment functions. This product will take strong boost now in 2016, it’s a product that is indirect competition, for example, to somebody like Stripe.

With boon, we’re going into the next-generation of mobile payment, using Host Card Emulation technology, where we basically implement mobile payment in an NFC version that is completely software. So we’re not any longer burdened by a property or hardware element that has to be integrated on SIM cards, et cetera. So we see these as next-generation development in the era of mobile payment. Let me give you here also the number we had in 2015, overall EBITDA mobile payment of around €4 million, but I’ll see if we can like also give a little bit more detail there.

Connected Point of Sale is a technology, with which we can transform a Point of Sale desktop into an Internet-enabled desktop without the desktop having to change much. So, basically, it takes the merchant from where he stands to-date and brings in over digitalization, the possibility to run Internet on mobile driven payment technology, as well as value-added services. This technology were example – for example using now further roll out of added pay [ph] in Europe, where we have one of – one strategic partner further roll out also at the Point of Sale.

Mergers and acquisitions, of course, you’ll know the strategy, let’s say rationale about our geographic expansion is, we’re investing into Internet-driven companies that either at the Point of Sale, or online, or mobile already using like Wirecard’s Internet technology. It has been a very successful technology. We’re showing here on the example of Malaysia, what we do. We normally find a company that’s already focusing on one part of the value chain.

We are bringing the other part of the value chain that we also cover, and of course, by this approach, we have then the benefit of a strong local service, as well as being able to serve large Internet clients – large international clients from the region to give one example today from our 65 airlines that we’re already processing. 30 to 35 are already from outside Europe, and of course, also these international merchants can only be addressed. If we have both, we have a strong international platform as well as a strong local service.

On Page 23, we’re giving details about the deals that we did in 2014 and beginning of 2015. I think the page is self-explaining, if there are questions afterwards to this page is closed. So I’m with them and on Page 24, we’re giving an overall view of the – a detailed development of these five companies in relation to what we announced as a plan. And here we can see that we had a strong operative outperformance in relation to that we announced.

A short overview about recent M&A activities. Let me start with the Indian transaction. India – the Indian transaction is a good example, how we are, let’s say, finding absent at what we looking for and to repeat the Indian acquisitions is focusing today on two kinds of business models, both are trading by Internet technology. We’re a leading provider of domestic money remittance and we’re providing a network of retail assisted e-commerce at the point of sale merchants that are able of an Internet device to transform basically cash into electronic money either to send it out on a peer-to-peer basis to another accounts or to use interactive for an e-commerce transaction, especially in the area of airline travel, which is 85% of their business also use it to load a prepaid wallet called iCashcard.

And on this basis, GI Retail already have first instance of a bank license, so they’re not only the technique to provide of this card, but they’re also the issuer, because they have similar open-book prepaid issuing license. Additionally, we have money remittance licenses and some big ops lately an additional license not only to handle domestic peer to group transactions, but also to handle for an peer to peer transactions.

The transaction in Brazil is basically a company that that’s very much the same as the Wirecard Checkout Portal we’re focusing on small to medium-sized merchants. They have developed a strong e-commerce platform, where such small merchants can very easily sign up. We have signed all 100,000 small merchants. We had in Brazil, and of course, we’re looking forward to a strong development of this company. Of course, we will bring additional services from Wirecard and they will also focus their sales approach on larger merchants in the future.

Provus in Romania is the market leader in the whole electronic payment processing market of Romania. They have a market share of about 60% of all their electronic transactions. They had both point of sale and e-commerce. Of course, we will bring in additional services for international merchants and we will develop together with them a stronger footprint also on the acquiring side, because we have to gain mainly on the technical side.

On Page 26, you will find again a lot of details about the Indian acquisition that the major part of the Indian companies or mainly firms, the Philippine division and Park Global are consolidated since December 30. GI Technology that’s the company that is holding the license has now consolidated since March 2016.

The actuals for 2015 for this company lies for the group lie at €45.7 million of revenue and €7.3 million of EBITDA. For 2016, we’re expecting revenue of over €75 million and we have now in our guidance an EBITDA of €16 million for GI Retail in our guidance of €290 million to €310 million.

Coming through the outlook, where we think that we will have a very strong year before us. On Page 29, you will find a breakdown what is behind the median of our guidance, which lies at €300 million, behind that is the assumption of an organic growth of 23%, which we definitely consider to be more on the conservative side.

For India, as already pointed out, we anticipate an EBITDA of €16 million for the two other acquisitions that are consolidated since March 2016, mainly the Brazilian and the Romanian acquisition we anticipate an EBITDA of €4 million. And I would like to emphasize in this guidance, of course, a fact from the sales of Retail Europe are not included.

And with that, I would like to come to an end. I would like to hand over to Burkhard Ley, our CFO.

Burkhard Ley

Yes. Good afternoon, ladies and gentlemen. Following Markus explanations and projections, and so you’ve got a lot of figures from Markus. And so far I would think that this quarter now on a rough basis around the figures, and we are happy, of course, to answer more details questions afterwards.

And beginning on Page 31 of the presentation you might have in your hands. I think there’s a first six positions on that page, you don’t need any substantial comments. You see growth anywhere around 30% in all the relevant positions plus, minus, which was without any spectacular upwards or downwards. I would begin on the seventh line, operating cash flow upwards more than the 30%, which we have in the other positoins on average.

We are and again recommending to focus your view on the adjusted cash flow why our business model means, we have substantial upswings and downswings in the balance sheet because of our transaction oriented business model with a vast transaction volume goes through the balance sheet, specifically the positions, which are acquiring receivables, acquiring tables, and as well cash positions, and so far the comparison with P&L figures, not beginning with a gross transaction volume, but beginning with a commissions on that, which is a small percentage on the gross transaction volume makes comparisons always difficult.

And the second reason for my recommendation is the fact that seasonal effects have substantial impact on those gross transaction volume oriented figures is specifically in Q4, and is so far concentrating on the adjusted cash flow you see an upswing of 39%. Nevertheless, you find the IFRS confirm cash flow statement in our annual report and the increase of that one would give you a similar increase which you might find there.

Balance sheet, I’ll give in some more details in a minute, first look here. You will see increase of nearly €1 billion in the total assets. Nevertheless, we still can – I think told about a very comfortable balance sheet situation. We have €1.3 billion of shareholders equity. And if you in addition to that consider the fact, I come to that in a minute, that we have a gross cash position of €1.2 billion which, of course, can be considered in a different way in comparison to other parts of the assets than I would repeat. We stay very comfortable position in continuing our organic as well as potentially our inorganic development of the company.

Employees like you will hear, of course, this increase of 68% is reflecting our M&A activities, specifically the Indian one Markus mentioned consolidated since end of last year and so far the roughly in total 2,900 [ph] people we have now in India. I included here the organic growth of our staff in all the relevant subsidiaries as well, of course, as in our headquarter in Munich still is focusing on the one hand on highly sophisticated developers and software experts. We are a technology company. And secondly, on the efforts to increase the sales staff wherever possible and necessary to add additional services to existing customers.

The next page gives you an overview of the development in the last five years and the comparison between growth of revenue on the one hand and EBITDA on the other hand. And 2015 continues the path we had before. And this reflects the situation that although, Wirecard is in a highly competitive environment. We are able to add additional services to our existing customers.

We are able to generate a positive scalability effect, specifically with new customers on the platform and some – this takes place as well in Europe as in the other parts of the world. And so far we were again able to increase our EBITDA margin slightly, which gets confirmed on the next page, where you’ve see an increase of 28.8% to 29.5%, and for the future, I would repeat, our challenge stays to, at least, stay on the stable EBITDA basis and try what we expect – mentioned before to continue path of a slight, but continuous increase.

The cost of materials on this Page 33, is the only the substantial figure, because it’s an important figure in all P&L, I would like to mention specifically. This, of course, reflects again although the landscape is competitive that we were positive – we were able to add additional services and that the proportion of the business outside Europe, where the margin is, as Markus mentioned is slightly higher than in Europe has a positive contribution for that position as well.

Amortization, as you know, differed now between the M&A related one and the normal one, which is driven by continuous development, specifically in 2014 and 2015, mobile payment initiatives and in 2015 adding also additional modules to the core platform. Just for all of you in this, as you might know that financial results on the first looks a bit surprising. Somebody talks over billion of gross cash that the financial result is negative. The reason for that is twice the one, as we have substantial pause of the cash in all financial institution subsidiaries, Wirecard Bank and our Newcastle subsidiary. Their interest income has to be considered following IFRS as revenue and then so far it’s not in financial results.

And secondly, substantial part of this minus €7 million is IFRS necessities with regard to discounts or compounds of potential earn-out payments for the future, which are here just for accounting necessities.

The next page gives you more detailed view on our balance sheet’s development between end of 2014 and end of 2015. Altogether total assets plus roughly spoke €950 million. I think we can divide this plus €950 million easily and roughly spoken into four sub-components. The one is plus €400 million into gross cash. Gross cash from my point of view is on the one hand cash as a €1,060. Secondly the total interest-bearing securities €130, and in addition to that part of the financial assets, which is mid-term interest-bearing securities with around €50 million altogether €1,250.

The second reason for the increase of the total assets is M&A driven, that’s roughly spoken overall €350 million, which we partially find in the goodwill, partially in the customer relationships, and of course, also partially in some other positions. Goodwill is primarily driven by the Indian transaction and with a smaller amounts – much smaller amount by the Visa processing transaction at the beginning of 2015.

Customer relationships following the IFRS needs saying that in the purchase price allocation, we have to find out what’s this specific assets we acquire. And if this can be contributed through merchant or bank relationships, we have to put it through the customer relationships that afterwards we find an appropriate depreciation time. This figure includes roughly spoken plus €50 million from the Indian transaction and roughly spoken plus €10 million from the assets we have read on at the beginning of last year with Deutsche Lufthansa with regard to specifically two operator and airline oriented customer portfolio.

And the financial assets, as you see go up by roughly spoken €100 million. The core contribution of that derives from the Visa transaction, which I come to in a minute to give you a bit more details about that. And as you see, we began with this report to differentiate on both sides of the balance sheet between receivables, payables, with regard to our acquiring business and as a specific and different position we know, so the other receivables as well as the other payables to give you also in the balance sheet more information about the short-term assets and short-term liabilities, both positions reflect the organic growth of the company.

On the equity and liability side of a balance sheet you would see the shareholders’ equity going up on the one hand with the profit, and secondly, also impacted by the Visa transaction, I’d come back to that in a second again. Liabilities of acquiring business as well as trade payables reflecting the organic growth and slight impact from the M&A transactions. Interest-bearing bank loans, please have in mind, we always differ the short-term cash from the operational business from M&A oriented financing. And so if the increase in comparison to end of last year is nearly completely driven by our M&A transaction.

In India, the other non-current liabilities go up specifically, because of earn-out payments for the future. Our current liabilities – this increase is primarily driven by the fact that we paid a substantial part of the purchase price India at the beginning of 2016 and so far it’s still in the books for end of 2015, but today, of course, out. And you also see a sharp increase of the customer deposits that’s as well driven by our issuing business, primarily in our subsidiary in Newcastle, as from our corporate business, specifically in Wirecard Bank, both increased following operational businesses substantially.

Page 35, I think the calculation itself is self-explaining ending with a net cash position following this calculation of roughly spoken €500 million. In addition to that, per end of last year we had access to not drawn credit lines of €290 million, so nearly €300 million. You may have seen we increased the credits possibilities in the form of a consortium from banks in Q1. So that this figure actually increased substantially to an overall cash plus banking facility, which is substantially higher than at the end of last year. And this is, of course, basis to continue our organic and inorganic business also in future.

The tax situation in 2015 is not too different in comparison to the year before. And so far I wouldn’t focus too much on that 14% as an overall tax rate, which is nothing as an average between higher tax rates like the one in Germany 27%, 28%. The beginning higher tax rate in India, which we will see this year, because that figure is close to 35%, and of course, also substantially lower tax rate in some of our subsidiaries outside Germany.

The next page repeats what we began to integrate as additional information to all of you a few months ago in the Q3 report. Cash flow, the basis for all calculation is the close to €200 million cash flow of operating activities in the adjusted way then we deduct the operative CapEx and come to a free cash flow of €145 million. And if we compare that €145 million with our earnings after-tax, it’s nearly precisely 100%, which follows our anticipation and expectation for the future. I would expect to see us on a similar level. Of course, I’m not able to guarantee exactly 100% for each quarter. But over the time, we should see similar conversion rates in future as well.

The next page gives you a short overview about impairment test, you see the sort of calculation, which probably is not surprising for anybody of you. The core message here is to say with all the intangibles we do yearly impairment tests, we did not have a single euro of unexpected depreciation on that. This means goodwill stays on the position as the year before. And in the customer, sorry – the relationships, which all of them, of course, are linked to M&A transactions and not a single euro of that is linked to any organic one new customer they follow-up land depreciation period, which is anywhere between 10 and 20 years depending on the case.

The last page, which we have integrated because the accounting treatment of Visa Europe. We have integrated, because the accounting treatment of Visa Europe is something, which might be new for you as well. So, you know, Visa Europe is on the way to be sold to Visa Inc. the stock quoted Visa in the U.S. We have this – we have all the European banks who are members and partial owners of Visa Europe.

We have this as an financial asset with the euro in our books. And so far the sale, which dependent on the volume covered with Visa Europe in the years before and to mention it besides this shows we have a long and many years very positive relationship with Visa Europe. It leads to the fact that we get part of the overall purchase price for us. And what we have to do with regard to the accounting necessities and we increased this financial assets from the euro to the overall expected figure and the corresponding position on the equity and liability side is the so-called revaluation reserve, as part of our equity.

The overall proceeds we can expect is after closing of this transaction is, as you see €6 million to €7 million in cash, €24 million in preferred stock with some restrictions, for example, with regard to potential sale and up to €26 million over the next 12 years in potential earn-outs. We took the earn-out with zero to the books. The cash component completely and the preferred stock component with a discount, which overall means, we have this increase in 2015 without any P&L effect of roughly spoken €80 million in the financial assets in the equity.

In 2016, we have to wait for the closing of the transaction whenever this takes place. And Visa sales date expected for Q2 then we will release the revaluation reserve and take in the roughly spoken €80 million in Wirecard Bank and Wirecard card solutions as a financial result and coming back through the core message here, which Markus mentioned before, this is not in anyway included in our EBITDA figures, it’s below EBITDA and in so far neutral for the overall guidance.

With that, I would give back to Iris

Iris Stoeckl

Thank you, Burkhard, of course, thank you, Markus. We open immediately the Q&A session. Thanks.

Question-and-Answer Session

Operator

[Operator Instructions] The first question comes from Gerardus Vos, Barclays. Please go ahead with your question.

Gerardus Vos

Hi, good afternoon. Thanks for taking my questions. Just a couple, if I may? Just first of all on M&A, I think it was really helpful to show us the kind of transaction data by back on a region. The area which is clearly still fairly light there’s in the kind of U.S., so perhaps just give us an update on that?

And then secondly, on the pricing, obviously the business has benefited like all acquirers from interchange coming down over the last couple of years for cross-border and now for domestic as well. How do you see that margin development after this has washed out similar kind of the 2017 and beyond?

Thirdly, just a quick question on kind of a churn in the business in 2015, and how that compared to the past?

And then finally, I had a question on the kind of cash flow, the calculation on Page 37 you provided which I think was quite helpful. The question I had was, why is it divided over earnings after-tax, which includes quite a few non-cash elements, and shouldn’t we kind of adjust for that, which of course, brings the cash conversion down a bit? Thank you.

Markus Braun

Yes. Starting with your first question, overall, we think that interchange reductions on the B2B sides are normally neutral to positive. Neutral, because the worst case is always that they’re running through position becomes smaller. Yes, normally you have some windfall profits, the overall strategic positive is definitely that overall electronic transactions become cheaper. And as we have shown in the presentation, one of our drivers is, of course, the convergence of cash to electronic transactions. And on this level, of course, it is helpful that for the merchants overall electronic transactions become cheaper.

On the issuing side, we’re to be mainly positioned with issuing product that already anticipate this interchange. So there we see completely neutral. But, again, strategically also there we see there’s a positive because, of course, this Internet – this interchange reduction mainly effects charge cards that are still, let’s say, normally very high in terms of interchange. And we think there will be a new competition and for a new player like us, this is more on the positive side. So overall, we see it neutral to positive.

Burkhard Ley

If I may add a sentence to that. In our budget for 2016, we haven’t included a single euro from potential windfall profits we might have here. And I see this as well probably slightly positive, but that’s neither included in our original guidance at the beginning of the year nor in the one we gave that we increased two weeks ago to the €290 million to €310 million you might note.

Cash conversion, you asked for this calculation on Page 37, of course, there are many ways to do that sort of calculation. I saw your one, Gerardus, this morning, which is a fair calculation as well. And so far we could do other ways of calculating it’s – we follow one of the versions, which is a – is some many follow. But I think the core question is always, how does this cash conversion, however, you calculated develop? And so I think your calculation comes exactly to the same message we have here. We came up by roughly spoken 10 percentage points. And I repeat the intention is to stay more or less with perhaps single upswings or slight downswings in single quarters. But over the time, we – our intention is to stay on that level.

Gerardus Vos

Okay, thanks. And on the U.S. and now on the churn? Thanks.

Burkhard Ley

U.S., let me say, to give you a transparency, we’re very much still focusing on the U.S. We – I wouldn’t rule out but we’re also currently in negotiations and have been for a longer time in negotiation also on the M&A side couldn’t – so I cannot confirm today that this are already, let’s say, so far reaching advanced negotiation, so that we have to disclose that. But I definitely can say that in the next 12 to 16 months, we are expecting here a strong move.

I can also say that we had already – we have already implemented at first step. We have a very small operative starter company now in the U.S. and we definitely see the U.S. as the last remaining market, where we have to get a stronger footprint. And so it’s definitely the goal to close this gap in the next 12 to 16 months, and already today, we have a very strong multinational merchant basis, where we’re definitely anticipating also low-hanging fruits as far as we have there good operations and either by a strong organic move, or a strong M&A move, we will again definitely close this gap in the next 12 months.

Markus Braun

12 to 16 months.

Burkhard Ley

12 to 16 months, yes.

Markus Braun

Let’s say last one, Gerardus.

Gerardus Vos

Thanks. The churn in emergent book to fee.

Markus Braun

Pardon me?

Gerardus Vos

The churn in emergent book to fee.

Markus Braun

Churn?

Gerardus Vos

Churn rates.

Markus Braun

Churn rates. Okay, we have mentioned for many years, so that’s not a new sort of information that our churn rates in the last year was always substantially below 1%. When I say that we have not a single year where it was 0.99% or something like that. And this tendency continued in 2015. And so from today’s point of view after three months of 2016, I can repeat the same and so far it’s on the very low level.

Gerardus Vos

Okay, very clear. Thank you.

Markus Braun

Thank you.

Operator

The next question comes from Andrew Humphrey, Morgan Stanley. Please go ahead with your question.

Andrew Humphrey

Hi, there. Thanks for taking my questions. I’ve got a couple, if I may? Firstly, on working capital, you’ve obviously split out acquiring working capital separate from the core business working capital with this set of results. I wonder, if you could give us a reminder of what the working capital items are in the core Wirecard business, and how you would expect those to develop?

Secondly, we had CapEx to sales I think around 9% in Q4, excluding customer relationships. If you could give a view of how you would expect that to trend and any reasons behind that again slightly higher level this quarter?

Thirdly, if you could talk about cash outflows around the acquisition. You obviously saw an outflow there in Q4, I think, around the Indian acquisition. That acquisition obviously didn’t close until the start of March. So just give us any information about, why you saw that cash flow – cash outflow earlier and what you would expect the timing of cash outflows this year to be?

And finally, on the transaction volume growth, I think Q4 saw a bit of a sort of flattish growth rate in the travel and mobility segment. I wonder, if you could talk around any issues you are encountering there, whether you’re seeing any competitors being particularly aggressive in that segment and you’re having kind of share a bit more volume than you might otherwise would? Thanks.

Burkhard Ley

Okay, thank you for your questions, and I think I’ll begin with a working capital question. So to begin with your last part generally spoken, I would expect on both sides of the balance sheet the relevant positions to follow more or less the organic growth of the company and that’s our medium-term view, which was reflected roughly spoken in the 2015 figures as well.

You saw that we now differ between the acquiring positions on both sides of the balance sheet and the our trade receivables and trade payables and we will continue that and the others to begin here we – and that’s what you also would see in our notes in detail. We, of course, include meanwhile the very relevant part of the business we have in relation to FinTech companies. We’re to say it clearly, we’re not financing FinTech companies. What we’re doing is, we’re financing single transactions done on marketplaces, done with companies like RatePAY to mention, an Otto subsidiary as a partner of ours, et cetera. So we’re focusing on the single consumer or small merchants transaction.

On the FinTech platforms and this was an increase if we take the fourth and mid-term view, as part of the financial assets, which was substantially more than €50 million last year. And in the normal acquiring business, we of course, as discussed many times in this sort of calls, we have different business models following the restrictions of the so-called payment service directive is our own bank or other banks are involved. But the some of that, which leads on the one hand to receivables to the card schemes.

Secondly, to receivables to other banks, and thirdly, to rolling reserves on both sides of the balance sheet are more or less linked to the development of the operational business and so far again as long as we talk about organic business of 20% plus, I would expect this figure to follow this 20% plus as well.

The next question was CapEx?

Andrew Humphrey

All right, CapEx yes.

Burkhard Ley

Yes, CapEx I would say there’s no specific aspect to expect in 2016 or as low from today’s point of view in the year – in the years afterwards, which is comparable to the situation we had in 2014 when we had this huge mobile payment initiative with investments of roughly spoken €30 million in the year, there’s nothing like that to be anticipated. And so far on the other hand, of course, we are more than state-of-the-art with our technology.

And so that’s what we will continue in 2016, 2017, and so far I would say, let’s follow the overall 2015 development with regard to CapEx also for the future. And in addition to that, we always have to see that we have a few integration costs, which we mentioned precisely with all specific M&A transactions and that’s of course something with regard to India to Brazil and with regard to Romania, I have to consider – it has to be considered separately.

Then you asked, I think for the payments India. And I think I mentioned before the core reason of these short-term liabilities is the outstanding purchase price for India, which was paid in Q1. This was a figure of close to €110 million, I think €105, yes, to confirm, so it was €105 million, which was paid in Q1. And in, so far the rest of the outstanding payments in the current liabilities, but as well in the mid-term liabilities is linked to the fact that we have to cover the potential earn-out payments in our balance sheet when the probability that we have to pay them is high. And that’s in midst of the historical cases – the case. And in so far that’s the still existing liabilities with regard to this sort of question we have in the books.

Andrew Humphrey

And the early payment therein, I mean, the Q4 payments around the acquisition was due to what sorry?

Burkhard Ley

Yes, this was linked to the fact that we took over control at the end of the year and so consolidated the company since 29th or 30th of December last year.

Andrew Humphrey

Okay. Thank you.

Markus Braun

With the exception of GI Technology…

Burkhard Ley

Oh, yes, correct.

Markus Braun

This took longer, because this has the license. So the other companies basically we’re taken over in December and GI Technology, because they’re the regulator…

Burkhard Ley

Yes.

Markus Braun

Had spent more time had to approve. This was in March.

Burkhard Ley

Exactly, this was in March. And to repeat that for all of you in this GI Technology, we just take a 60% share and bring in an amount of close to €15 million in the sense of a capital increase. And this, of course, was not part of the payments in 2015.

Andrew Humphrey

Understood. The completion press release came later, because GI Technology was part and you completed later?

Markus Braun

Exactly, exactly.

Andrew Humphrey

Okay. Very good. And finally on airlines?

Markus Braun

[Multiple Speakers] So I wouldn’t – we’re disclosing exactly what the growth is in Europe and outside Europe and also the invested growth. So we had overall over the year 29% or nearly 29% in airline travel. I think this is a very strong number. We always say one quarter is now so representative, so overall we’re expecting huge close also in airline travel.

We have today 65 airlines on the platform to give you a clear number already half of that is outside Europe. So this has been an extremely successful strategy and we actually think that we have very strong differentiators in all the industries, but also especially in airline travel. Is there competition, of course, is competition a good thing, yes, but we don’t see any reason that the strong performance also of our airline travel business shouldn’t go on.

Andrew Humphrey

Okay. Thanks very much.

Operator

The next question comes from Alex Faure, Exane. Please go ahead with your question.

Alex Faure

Hi, good afternoon. Thanks for taking my question. I just wanted to come back to this additional table you show on Slide 13, which is very useful, so thanks for that. And you’re basically showing us that your average transaction margin is quite a bit higher outside of Europe. And, Markus, you have commented in the prepared remarks, it had to do with the complexity of the risk management, the lower volumes per merchant.

I’ve got difficulties to reconcile with that because I had in mind that typically in Asia, you were selling, essentially gateway services and thereby not recognizing the interchange as revenue. So I would have expected actually the average transaction margins to be quite low, maybe much higher EBITDA, but a lower take rate. And so I’m just wondering what I’m missing here?

Markus Braun

Yes, first of all in airline travel, for example, we have a global license. So airline travel, we can completely address today over our European license globally. So for the whole airline travel business, we have a global license. In the other industries, we can address international merchants that have also truly European business also with our European license. So at a large part of the non-European business, we also have the possibility to address them with our European license.

Additionally, and this is always a step and we showed this also in the Malaysian transaction, we are constantly building up in sponsorship relationships both to be able to address local portfolios, not only with the technical processing, but also with the acquiring and mainly with the acquiring running on a Wirecard platform.

So as a very large part, overall, we would estimate as in our overall portfolio and little bit under 90% of all transactions also have, at least, one part of a financial service included normally just quite acquiring. But it could also be the issuing and the acquiring, of course, is very often either address directly of our own license or of us in sponsorship relationships.

Why is overall the margin in outside Europe higher especially in emerging countries, of course, it is higher because also the risk profile is higher. We see those in airline travel where that margins around double, and we have, of course, a big advantage of having a very good risk management. So we have developed a lot a proprietary processes for these international markets, and therefore, we very quickly can also bring in acquiring services also outside Europe, and that’s definitely one of the advantages of Wirecard Group.

Alex Faure

That’s very clear. Thank you.

Operator

The next question comes from Edward Donohue, One Investment. Please go ahead with your question.

Edward Donohue

Good afternoon, everybody. Just a couple, if I may? The first one goes back to a question earlier with regard to the U.S., and Markus you guided on the 12 to 16 months here you have to be there. Is this where you’ve established the business in Delaware? And then also what will you have to go through on a regulatory basis to achieve what you want to make it viable to be in the U.S.? If you could just talk us through what regulatory requirements would be required there?

Markus Braun

Yes. You’re absolutely right. This first very small organic step is a first, let’s say, landing platforms so to say, or yes, activities. I said before it could either be an M&A step, an organic step, and of course, the regulatory requirements then depends very much on the assets, that we take over and I cannot give too much detail there. This depends, of course, whether we take over a bank, for example, or whether we take over a technical processing business. So this is very much dependent on what kind of asset it is.

If it is not an M&A transaction, it would probably be a step where we go into being positive relationship with local banks, and of course, to be excepted there, we also have to go through a sophisticated set of regulatory requirements, because basically then we take over the risk and their effort for the bin, and this basically follows all compliance that that also a normal bank would have to do the setup acquiring services.

So to put a long story short, you have to comply with both. You have to comply with local banking law, and of course, you have to comply with the local standards of the credit card organizations, while basically of all cards schemes that you’re processing and acquire, that’s the simple version.

Edward Donohue

Okay, great. And the second question?

Burkhard Ley

May I address, add one aspect. You may see in our historical transactions as well in East Asia, let’s say Singapore, Malaysia, as well as the most recent one in India, the general behavior we have. Very often the entry point is linked to any technology services in the process. And then the question is what happens afterwards? In the Indian example, you see, we directly have this sort of payment institute as a new subsidiary with our 60% stake. And then we try to address the next step of banking license, the possibility to get, for example, the possibility to be an issuer of credit cards like Visa, Mastercard, et cetera.

And so you also may have seen in Singapore, we’re on the way to establish a Visa license in Turkey, where we also acquired a fewer technology company from local regulatory reasons we will apply for sort of a payment institution license in near future as well. And so far, I think, it’s a typical process, of course, depending on the case, as Markus said to begin with a technology company and then apply over the time for the needed sort of licenses.

Markus Braun

And perhaps to add your one thing, we saw probably our ad-hoc statements two days ago. Even though you can expect through a bigger statement in the next two to four weeks, of course, that we have now – that we are now one of the first non-financial companies that will get the Visa license also in Singapore is also strong side, of course, for this strategy. So, again, coming back to the strategy of the company, we want to have from all core geographies not only the technical service, but also been able to provide a global acquiring service, that’s our strategic goal.

Edward Donohue

Thanks for that. And then just the last question. Just on India, when you gave your upgrade on the guidance for the full-year EBITDA, I mean, obviously part of that was driven by M&A, but you also pointed out that the Indian business seemed to be performing -- if I got the wrong interpretation, please correct, that seemed to be performing maybe stronger than it was anticipated. Was this driven by the India Visa assets you took over in the early part of 2015, and those finally coming through, or is this actually driven by GI Retail, just be interesting to know? And also, how GI Retail is tracking year-to-date because you’ve basically got a quarter under your belt now?

Markus Braun

Yes. No this was definitely a one reason for the guidance increase is definitely GI Retail. And we disclosed why they had a very strong performance, I think we disclosed a number, they had 110,000 retail-assisted agent when we took them over. We have now over 150,000.

So they’re definitely are showing very strong momentum in the last three months. This is exactly what we have pointed out. We also showed here in the numbers one other actuals for 2015, which are a little bit over over [indiscernible] revenue and so and a little bit over €7 million of EBITDA, and they are showing what we are guiding now for 2016. I can say that definitely also the €16 million that we are now guiding for 2016 is more on the conservative side. So, definitely, India has been showing strong momentum in the last three months.

Burkhard Ley

Additional number of outlook is the basis for high frequency of consumers and so far for an increase of the transaction volume and compare them to end of October or beginning of November when we signed the contract.

And to add one last sentence, because you mentioned it in your question this Visa processing business we took over at the beginning of 2015, but of course is substantially smaller than the one Markus just described that I would say exactly on track with in comparison to our expectations.

Edward Donohue

And then just looking at your headcount, you have 900 roughly in India. What level of growth will that allow you to fulfill, and what kind of cost do you anticipate putting into the business on level of headcount as a tracking KPI can we expect by the first-half, or the full year 2016??

Burkhard Ley

Yes. So this was really a very important question we talked about with the local management when we did the due diligence. And of course in situation, we have here in India is different to our transactions we had in the past, at least, from two reasons, perhaps even some more. The one is, we are talking about a business which top line and the number of outlets Markus mentioned is an example for that grows very substantially not by the typical 20% 25%, perhaps up to 30%, but by 60%, 65%.

And so – and secondly of course salary in India leads to different expenses in comparison to Germany and if you had been in this office, you would precisely get this document. And so far the question of one or 10 additional staff members, if you have 900 is not as relevant with regard to the cost that’s what I tried to say in comparison for example to continental Europe.

But what we clearly see is the potential that if we have this 60%, 65% top line at EBITDA growth, this is also driven that by the fact that we not at all need comparable growth in the number of staff, this figure will be substantially below without being able to give you a precise number now.

Edward Donohue

Excellent, thank you very much indeed.

Operator

The next question comes from Gianmarco Bonacina, Equita. Please go ahead with your questions.

Gianmarco Bonacina

Yes good afternoon. Three questions, please. The first one is about mobile payment. You said that you will generate about €5 million of EBITDA in 2015, 2016; can you give us some idea for the mid-term, for the next two, three years, given all the projects that you have boon and also the others? Do you expect this contribution to be more meaningful, maybe double-digit in terms of EBITDA contribution, or it will be, let’s say, a growth from the €5 million at the rates of the Group? Then a question about the acquisition policy. If you can confirm that even if you do a big acquisition like in the case maybe you want to enter the U.S., that in any case, the acquisition would be, let’s say roughly speaking, less than 10% of your size, so like, for example, India was a big acquisition, but is less than 10% of your size? And the last question, if you can give us an update on the recent lawsuit, which you have initiated? Thank you very much.

Markus Braun

To mobile payment, you’re absolutely right. We have now mobile payment basically with the global support business in the guidance and that’s – let’s say our conservative starting point is the potential of our performance definitely. And let me say we always have stick to this conservative measures and approach, also at new products that address completely new markets to let’s say stay with one year guidance because it’s really tough to say how quickly it speeds up is the potential enormous of course.

We think that especially now with this next generation of this new possibilities of complete software solutions in the mobile payment area with some very big players from – basically operating system side, because we also see companies like Google or Android and companies like Apple with iOS as very strong operating system companies from the software side, also addressing now these areas and of course being interested in strong partnerships and bringing this products to the mainstream.

We see huge additional potential and that’s exactly the strategy of boon – boon in a very harmonic way integrate into today’s ecosystem and is able to partner basically with all or with a lot of big players that have future access to the accounts. So there is definitely some strong additional potential there. But for today, we stay with the guidance and that mobile payment should follow the overall market for us. To a second question…?

Burkhard Ley

Just to add, it was not your question. But I forgot to mention it before, because Markus had announced it, the precise mobile payment result in 2015 was €3.8 million.

Gianmarco Bonacina

On EBITDA level?

Burkhard Ley

On EBITDA level, which is more or less the €4 million we had expected, sorry for leaving this out before.

Markus Braun

To acquisitions in U.S. also very – absolutely right, we see always stick to our guidance that we are focusing on acquisitions that have a maximum size of 10% of our own market value. And I would also add – we also speak to the guidance that we pay rather conservative multiples. So also for the U.S., do not expect that we go into some, let’s say, crazy silicon valley multiple that this will not be our goal. We are definitely looking to an asset here where we have huge advantages and strategies and where we have from the first day on advantages that we’re also bringing in additional value chain elements to the market. But it could definitely be that you have transaction, if it happens, would be more in the size of India to give your first insight.

The last question was?

Gianmarco Bonacina

Was about the recent lawsuit that you have initiated, if you can provide some update, especially on the timing of the results of such a process? Thank you.

Markus Braun

You mean against research houses, is this your question?

Gianmarco Bonacina

Yes.

Markus Braun

Yes. Let me first say that from the lawsuit. We are leveraging all possibilities on legal terms that are possible for a company to find out exactly where from our point of view arbitrarily given wrong informations were coming from. The problem here is, until today there is no legal or juristic person that can be addressed. If such persons or legal entities are identified, of course, they will be addressed, but today there’s still a research process ongoing.

Let me say, it’s not important what we do that end of the day the important this year what the regulator is doing. And here you probably saw that BaFin started an investigation into this case. So I would say that’s exactly the right authority to address that. We are not an investigation company. We are concentrating on strong operative business. We are concentrating on constantly further increased transparency of the business and to develop the business. This is what we concentrate on as Wirecard and again we’re looking forward into a very successful year.

Burkhard Ley

To add one sentence in Germany, there are two sort of institutions for that you’re asking for, the one is BaFin with regard to analysis against market manipulation and similar aspects. The second institution is public prosecutors, and that’s exactly the ones being responsible.

Gianmarco Bonacina

Thank you.

Operator

The next question comes from Adithya Metuku, Bank of America. Please go ahead with your question.

Adithya Metuku

Yes. Good afternoon, gentlemen. Thank you for taking my questions. I had three. So firstly, can you talk a big about how you gained economic control of the Indian acquisition in 2015, before the transaction actually closed, can you…?

Markus Braun

Sorry, I mean to interrupt you. We haven’t got your question. It’s very difficult to understand you, sorry.

Adithya Metuku

Sorry. Can you hear me better now?

Markus Braun

Oh, yes, now it’s much better, yes.

Adithya Metuku

Yes, sorry. I have three, so first question was on the – on gaining economic control of the Indian acquisition in 2015, before the transaction closed. Can you talk a bit about what exactly happened here? How did you gain economic control before the transaction actually closed?

And secondly, on the earn-outs on the balance sheet, you have three acquisitions pending as at the end of the year. So for modeling purposes, could you talk a bit about how much you have in earn-outs for the Indian acquisitions and how much for the other acquisitions? And over what timeframe these amounts will be paid out?

And so maybe if you could summarize the key M&A related cash outflows in 1Q and 2Q, obviously, not for the Indian acquisition, you’ve given that, but for the other two, and then explain over what timeframe the earn-outs will be paid out? And finally, can you comment a little bit on the impact on the equity ratio, once these cash outflows happen? And will your capital ratio be above the levels required by your lenders? Thank you.

Markus Braun

Yes, certainly. So first question India. Signing end of October, beginning of November. One – there was two, three steps, three step closing mechanism, which included on the one hand in both transactions. The final day of legal transfer and between there was – as Marcus mentioned before there was the takeover of the controls, not of GI Technology, but of Hermes at the end of December.

And control means you are as the new owner, able to define all the relevant steps of a decision-making process, which we are able to do beginning – at the end of December to take simple example. At the beginning of January, we sent one of our top gentlemen from the second level of a company into the National Board of India. We could – you could decide for dividend policy for changing all the business model or whatever what we are, of course we’ve not done.

And but that’s exactly the things which are related to control. And this was the step after the signing, then at the beginning of 2016 because there was not this regulatory approval necessity as in the payments institution. There was the ultimate closing in Hermes, and then including the regulatory approval of the office in India with regard to GI Technology. There was a separate closing of GI Technology with regards to the 60% share. That’s an easy words, what happened.

And earn out – and so what you find in our liabilities is on the one hand earn outs with maturity in more than a year that’s part of a mid and long-term liabilities and the same one with below 12 months. They are part of the short-term liabilities. And with regard to the Indian transaction, we can say we agreed on overall earn out payments of – at maximum €110 million and they are dependent on the achievement of targets for the year 2015, for the year 2016 and for the year 2017.

And of course the maturity of the amount being dependent on the success in 2015 is Fortune one and two others have the maturity in more than a year and this of course is a midterm one that’s the general differentiation. And now I come to the precise figure, one second please. The Fortune one in 2016 is €50 million and the other ones insofar are midterm ones.

Adithya Metuku

€50 million in 2016, did you say?

Burkhard Ley

Exactly, exactly.

Adithya Metuku

50 or 15?

Burkhard Ley

50, sorry.

Adithya Metuku

And that as you go through the CapEx line – am I right in assuming that that you go the CapEx line or would that go to the financing cash flows?

Burkhard Ley

It’s a liability which will be paid. So we have included it in the short-term liabilities. And as I mentioned before, there is the call using for the increase of the short-term liabilities with that between end of 2014 and end of 2015. From €60 million to how much – €201 million is a fact on one hand at the end of 2015, outstanding ultimate payment for the purchase price, the €105 million as I mentioned before and in addition to that we expected earn out payment for the success in 2015.

Adithya Metuku

No, I understand that. My question is on the cash flow statement, you include earn outs within CapEx, but you also include some additional payments in the financing activities. My question was is the €50 million going to go through CapEx or will it go through financing activities?

Burkhard Ley

Yes, financing.

Adithya Metuku

Financing, okay.

Burkhard Ley

Yes, exactly.

Adithya Metuku

If you could summarize the key M&A related cash flows in 1Q and 2Q, other than for the Indian acquisition?

Burkhard Ley

There are the few outstanding earn-out payments for the acquisitions of the time before and I just have to look for the outstanding for 2015 success. What say I come back to the figure in the second? We can include your next question and then I give this figure to you in a second with just look for. What’s another question Adi?

Adithya Metuku

The last question was on the equity ratio. My question was, once you include all of these acquisitions you’ve done, and you’ve paid out the charges that are going to go out in 1Q and 2Q. What will be the impact on the equity ratio, and will that be…

Markus Braun

Yes, sorry for that, yes.

Adithya Metuku

…above the levels required by your lenders and you would need to do a capital raise?

Markus Braun

Yes, with that – yes.

Burkhard Ley

No, to begin with the end of your question, no, definitely not; we described this precisely in our report and what the ratios are we reached on with our banks and there of course the fact that we have net cash from the operative business. This considered in the way that the overall assets are reduced by specific amount.

And this means in other words, the existing equity is a higher proportion of this reduced figure of the overall assets and we have a very comfortable figure would be doing the minimum we have to achieve and the actual figure and then so far to say it very clear. Even if we might do and sort of transaction for example in North America in the next 12 to 16 months is not a single reason for any sort of capital increase or something like that.

Adithya Metuku

And just one modeling question of what tax rate do you expect for 2016 – profit?

Burkhard Ley

From the general purpose, I would always repeat, there is no reason to believe that there is a 14% we roughly had in 2015 should change in any substantial way, that see any changes in the relevant tax laws worldwide. Insofar with regard to the existing business I would repeat – the 14% and then if you want you would have know to model the effect that we expect the €16 million, as Marcus talked about for the Indian subsidiary. In India, the tax rate is slightly higher than on average in our business. It’s close to 35%. Insofar with regard to this €16 million, please take the 35% or above and then on the sales side.

Now I come back to your question before because the single terms that to be look for and there is outstanding as I mentioned the €50 million short-term for firms and then we are smaller amount for former and transactions with Indonesia, and Turkey, and in South Africa, and the some of that – one second. Yes, it is €20 million, so €20 million on top of the €50 million, so it takes a second to find it here and so it’s €20 million on top of the €50 million, so overall €70 million.

Adithya Metuku

Okay, thank you.

Operator

The last question comes from Gautam Pillai, Goldman Sachs. Please go ahead with your question.

Gautam Pillai

Thanks for taking my question. I’m following up from the earlier question. I had one on the acquisition spend in 2015. So the number €144 million, which you report for cash flow related to acquisitions. My question is, does the Indian acquisition spend reflect in that? If not, should we kind of assume the €230 million spend, which you had potentially anticipated as the cash up front to be paid out in 2016? After all the cash outflows related to announced acquisitions and unannounced, how would your net cash position look, the €533 million, which kind of reported today, how would that look if you – kind of consider all the announced deals?

Markus Braun

Yes, to give you clear transparency about this €144 million you mentioned is currently mentioned, that includes €13 million for the Visa processing transaction with the beginning of last year and the residual amounts were €131 million or €132 million is related to the Indian transaction. And then as I mentioned before, we would see if you wanted the Q1 result, you will see the €105 million as a payments for the Indian transaction in Q1. And this means in easy words, this is taken from existing cash and so far when I talked about gross cash of €1.25 million – billion before with of course be reduced by that.

Gautam Pillai

Understood, and just to follow-up on that. You also had a drawdown of €272 million in terms of borrowings in 2015. Was that – I mean if – can you just explain the purpose of that drawdown was related to this – to the acquisitions…

Markus Braun

Yes, it was related to the acquisition. So we were – it takes – if you want it includes their all financing including the financing of the one hand, €5 million, we paid at the beginning of 2016 because in comparison to the original plan to the few days longer until this transaction was completely finalized. And insofar it’s – refinancing of the Indian transaction and we have this surplus of €105 million I mentioned before. If you want on these sides of the balance sheet end of December as part of the short-term liabilities on the one hand and part of the gross cash on the others.

Gautam Pillai

So just to come back on the earlier question, so the €536 million, which had reported today so if keeping everything constant there’s no reason why that should go down because you’ve already accounted for all the payments related to announced deals. Is that correct?

Markus Braun

We have these outstanding €20 million roughly spoken for the earn-outs of the – of performance is smaller transactions, I mentioned in South Africa and Turkey and Indonesia and we have the maximum of €50 million for earn-out 2015 in Indian transaction and all the rest is related to 2016 or 2017.

Gautam Pillai

Great, understood. Thank you so much.

Markus Braun

Welcome.

Operator

Thank you all for taking the time to attend this road show conference, and please contact me in case of any further questions. Good afternoon.

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