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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

business model
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)
business model3
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%

business model4
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
business model5
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:

business model6
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
cad cam in practice
CAD/CAM in practice
  • Example Mechanical Engineering: Cheese manufacturing facility

Customer: Kalt Maschinenbau AG, Luetisburg, Switzerland

cad cam in practice8
CAD/CAM in practice

Custumor: Genesis-design GmbH, Munich, Germany

  • Example Industrial Design
cad cam in practice9
CAD/CAM in practice
  • Architecture: Klimahaus in Bremerhaven/Germany

Customer: agn Niederberghaus und Partner GmbH,Ibbenbueren

cad cam in practice10
CAD/CAM in practice
  • Example Mechanical Engineering: Filling/sealing facilities for the food and cosmetic industry

Customer: ROBOT FOOD Technologies GmbH, Wietze, Germany

cad cam in practice11
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

cad cam in practice12
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

cad cam in practice13
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

cad cam in practice14
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

sales development
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%)
earnings development
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)
balance sheet development
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

shareholder structure
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
investor relations
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
change to m access mar 31 2010
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
outlook
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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