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Company Presentation Mensch und Maschine Software SE July 2010 Business model Mensch und Maschine Software SE (M+M) is a leading vendor of CAD/CAM solutions in Europe (CAD/CAM = Computer Aided Design/Manufacturing) European CAD/CAM Market: M+M Market share ~7%

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CompanyPresentation

Mensch und Maschine Software SE

July 2010


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Business model

  • Mensch und Maschine Software SE (M+M) is a leading vendor of CAD/CAM solutions in Europe(CAD/CAM = Computer Aided Design/Manufacturing)

    • European CAD/CAM Market: M+M Market share ~7%

  • Founded 1984 – 26 years market presence

    • Leading Value-Added Reseller/Distributor in Europe for global CAD market leader Autodesk

      • M+M share in Adsk sales: Europe 20-25% / global ~9%

    • M+M’s own CAD/CAM Software development for differentiation and profile in the market

      • Open Mind (CAM) & Dataflor (Gardening/Landscaping)


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M+MSoftware

Development of CAD/CAM Software Worldwide sales

Autodesk

M+M VAR D/A/CH

Value Added Reselling of CAD Software / Service

M+M Distribution Europe

Resellers

End customers

Business model

SegmentM+M Software

Low volume / High margin

Sales 2009: EUR 21.8 mln

Gross margin ~90%

EBITDA margin 2009: 7.1%

2007/08 (=potential): 15-25%

SegmentDistribution

High volume / Low margin

Sales 2009: EUR 106.2 mln

Grossmargin ~17%

EBITDA margin 2009: 0.8%

2007/08 (=potential): 3-4%

SegmentVAR (new in 2009)

Medium volume & margin

Sales 2009: EUR 35.3 mln

Grossmargin ~38%

EBITDA margin 2009: -2.9% (Startup)

Mid term potential: up to 10%


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Business model

  • Market Offensive 2009: Extensive change from Distribution (indirect) to VAR (Value-Added Reselling) in D/A/CH

  • Acquisitions of key VAR partners

    • Germany: Haberzettl, LeyCAD, AtWork, Dressler, BenCon 3D, customX, integra

    • Austria: IT Consulting, Personal-Entwicklung

    • Switzerland: CAD-LAN, CADiWare

    • Additional acquisitions in 2010: Zuberbuehler (CH), CAD-praxis (D), Scholle (D)

    • Share swap (founders become co-entrepreneurs, low cash requirement). Two step takeover, performance dependent valuation over 2-4 years

    • With 35 locations, M+M has approached full area coverage (Exception: Eastern Germany)

    • Added Value (=Gross Margin) ~50/50% from Service / CAD software sales


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Business model

  • Segmentation (group level):

Distribution dominating sales, Added Value (Gross Margin) breakdown close to 50/50%

2008:

Distribution still largest sales area, but Added Value (Gross Margin) breakdown evenly balanced over the three Segments

1-6/2010:


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Business model

  • Geographical markets:

    • Distribution & M+M Software in 16 European countries

    • D/A/CH: VAR Business

    • Sales offices in Japan, APAC and USA (M+M Software only)

  • Headcount:

    • June 30, 2010: 597 (PY: 503)

      • 110 / 18% Distribution

      • 292 / 49% VAR Business

      • 195 / 33% Software


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CAD/CAM in practice

  • Example Mechanical Engineering: Cheese manufacturing facility

Customer: Kalt Maschinenbau AG, Luetisburg, Switzerland


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CAD/CAM in practice

Custumor: Genesis-design GmbH, Munich, Germany

  • Example Industrial Design


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CAD/CAM in practice

  • Architecture: Klimahaus in Bremerhaven/Germany

Customer: agn Niederberghaus und Partner GmbH,Ibbenbueren


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CAD/CAM in practice

  • Example Mechanical Engineering: Filling/sealing facilities for the food and cosmetic industry

Customer: ROBOT FOOD Technologies GmbH, Wietze, Germany


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CAD/CAM in practice

  • Electrical Engineering

    • Product AutoCAD ecscad

    • Price region: approx. EUR 5,000 per seat

    • Technology sold to Autodesk on October 15, 2008

Project: Groupwide unique electrical documentation for INA-Schaeffler group, Herzogenaurach


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CAD/CAM in practice

  • Example parametric design: Customer specific configuration of heat exchangers with customX

Customer:GEA Happel Klimatechnik Produktions- und Service gesellschaft mbH, Obershausen, Germany


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CAD/CAM in practice

  • Gardening and Landscaping

    • Subsidiary DATAflor

    • Price region: approx. EUR 5,000 per seat

    • Design and maintenance of GaLa Projects

Project: Revitalizationof Waldsiedlung, Hanau-Grossauheim


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CAD/CAM in practice

  • CAM – Computer Aided Manufacturing

    • Subsidiary Open Mind – Product family hyperMill

    • Price range: EUR 15,000 to >100,000 per seat

    • Nearly 10% of group revenue / >30% of gross margin

Project: CNC programming for the manufacturing of motorsport prototypes by Japanese DAISHIN SEIKI CORPORATION


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Sales development

  • Sales 2009: EUR 163.3 mln / -27%

    • M+M Software: EUR 21.8 mln / -13%

    • VAR Business: EUR 35.3 mln (PY: 1.5)

    • Distribution: EUR 106.3 mln / -46%

      • Currency effects approx. EUR -6.2 mln

      • Transition to VAR Business in D/A/CH

      • Outside D/A/CH: -25% in local currencies

    • Seasonality: Q1-Q3 -29% / Q4 -19.5%

    • Gross margin EUR 51.0 mln / -8.7%

      • Gross yield 31.2% (PY: 25.1%)

  • Sales 1-6/2010: EUR 97.43 mln / +14.5%

    • M+M Software: EUR 12.18 mln / +8%

    • VAR Business: EUR 27.23 mln / +79%

    • Distribution: EUR 58.02 mln / -1%

  • Gross margin 1-6/10: EUR 31.93 mln / +22%

    • Gross yield 32.8% (PY: 30.7%)


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Earnings development

  • Operating profit EBITDA 2009 EUR 1.38 mln (PY: 13.04 / -89%)

    • EBITDA margin 0.8% (PY: 5.8%)

  • Segmentation

    • M+M Software: EUR +1.54 mln

    • Distribution: EUR +0.86 mln

    • VAR Business: EUR -1.01 mln (Ramp up)

  • Seasonality: Bottom in Q3

  • Net: EUR -4.78 mln (PY: +5.76)

    • Mainly from Depreciation/Amortization/Impairmt.

  • Cash flow: EUR +5.66 mln (PY: 9.32)

  • 1-6/2010: Positive development

    • EBITDA: EUR 2.90 mln / +21%

      • Software +1.44 / Distribution +1.83 / VAR Business -0.37

    • Cash flow: EUR +2.72 mln (PY: -0.89)


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    Balance sheet development

    • Total assets higher (market offensive):

      • Dec 31, 2009: EUR 101.15 mln (PY: 84.99)

        • June 30, 2010: EUR 103.92 mln

    Total assets

    • Net bank debt stays on low level:

      • Dec 31, 2009: EUR 12.39 mln (PY: 11.16)

        • June 30, 2010: EUR 10.47 mln

    • Shareholders‘ equity nominally lower:

      • Dec 31, 2009: EUR 24.22 mln (PY: 26.40)

        • Capital ratio 23.9% (PY: 31.1%)

        • June 30, 2010: EUR 25.18 mln / ratio 24.2%

        • IFRS special: Minority shares in VAR acquisitions have to be booked as non-current liabilities, though payable non-cash by share swaps

        • Adjusted Equity: EUR ~33.2 mln

        • Capital ratio ~32.0%

    Net bank debt


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    Shareholder structure

    • # of shares at June 30, 2010: approx. 14.6 mln

      • Shareholder structure:

        • 53.1% Free float

        • 46.9% Management

          • CEO / Chairman of the Board Adi Drotleff 41.2%

            Purchase since beginning of 2006:>800,000 shares / Invest >4.0 MEUR

          • CTO Werner Schwenkert 5.7%

    • M+M is both a public and private company


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    Investor Relations

    • Designated Sponsors:

      • LBBW, Stuttgart

      • Close Seydler, Frankfurt

    • Analyst coverage:

      • LBBW: „Buy“ - fair value EUR 4.50

      • Independent Research: „Buy“ - fair value EUR 5.90

      • SES Research: „Buy“ - fair value EUR 4.50

      • Performaxx: „Buy“ – fair value EUR 8.54

      • GSC Research: „Neutral“ – fair value EUR 3.90


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    Change to m:access (Mar 31, 2010)

    • Primary motivation:

      • Unification of “Geregelter Markt” and “Amtlicher Handel” resulted in a regulatory environment lifted to DAX level

      • Estimated increase of opportunity costs:~ 1 MEUR p.a. primarily for audit / legal advisory and additional internal costs in legal / finance departments

      • m:access offers optimal cost/performance ratio including full consideration of shareholders’ transparency interests

      • Tradability through Xetra fully guaranteed

      • M+M will overfulfill m:access rules

        • Continued full quarterly reports, including Q1 and Q3

        • German/English reporting und corporate news

        • Group financial statements according to IFRS


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    Outlook

    • 2010E: H2 approx. mirrored to H1

      • Sales: EUR 185-190 mln / +13-16%

      • EBITDA: EUR 4.5-6.5 mln / >+200%

        • Operating margin 2.5 to 3.5%

      • EPS: 3 to 14 Cents

      • Positive cash flows

      • If targets achieved: Dividend 10 Cents

    • Mid to long term targets:

      • Sales: Return to former CAGR path ~15% p.a.

      • 2011E: >200 mln / 2012E: >230 mln

      • More return from revenue due to higher margin in VAR business

      • EBITDA 2011E: >10 mln / Margin ~5.0%EBITDA 2012E: >15 mln / Margin ~6.5%

      • EPS 2011E: ~30 Cents / 2012E: >50 Cents


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    Thank you for your attention !


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