Edited Transcript of TTK.DE earnings conference call or presentation 1-Apr-20 1:00pm GMT

Now on the next slide, you see somehow unchanged to the slides you might know from previous analyst conference that we do concentrate on — as I’ve mentioned that already, on specialties and equipment with a comparable high average order value of around EUR 460. And you see on that slide some examples of the products we are offering across our different business units.

In the omnichannel commerce segment, we have so far combined the activities of KAISER+ KRAFT, being a specialist for plant, warehouse and office equipment in Europe; and ratioform, being a specialist in packaging material and packaging solutions; as well as NBF, Hubert and Central U.S. activities, covering the office equipment by NBF; merchandising and food service equipment by Hubert; as well as restaurant equipment with Central.

And then within the web-focused commerce business, we have combined the activities of Newport and Displays2go. And from the financial year 2020 onwards, we will report in those 2 different segments and give up the reporting along the regional, let me say, segmentation as we have had done that in the past with TAKKT America and TAKKT Europe.

Now why have we changed the group structure? You see on the left side on Slide #6 the old structure, the TAKKT AG as kind of holding, having the 2 segments, TAKKT Europe and TAKKT America, and within those segments, the combination of the 7 business units. We have organized the group at that point in time as a portfolio of independent business units. And we have learned, especially during the digital transformation phase, that we have seen a kind of lack here of operational excellence, but also we have identified that we have lost some speed with our digital transformation because the independent business units acted in their relevant markets. And we are not open enough, let me put it this way, for group-wide activities like the digital transformation. That was one reason why we have considered to change the organization.

The other point was that, from our perspective, that portfolio approach was not, let me say, clearly representing the need of having a customer-centric organization, means organize the businesses along the customer needs to make sure that in a new org or a new organization, the customer centricity is the key leading, let me say, organizational structure and indicator rather than the regions like we’ve had in the past.

And that’s the reason why we have then decided within our TAKKT 4.0 initiative to restructure the group into 2 business segments: omnichannel commerce and web-focused commerce. Those segments are addressing clearly different customer needs. And with that, we believe we need a different management and working culture in those 2 different segments. We need different, let me say, speed in making decisions and also different approach for our customers. And I come later on a little more in detail about the things we expect and the benefits we’re expecting from that new organization.

Within omnichannel, as I have described it already, we have combined KAISER+ KRAFT, ratioform, NBF as well as Hubert and Central. But as we have mentioned it already in earlier calls, we are currently reviewing strategic options for our activities at Hubert and Central. And within the web-focused commerce, we have combined Displays2go and Newport, both clearly web-focused activities addressing different customer needs.

And by saying that, let’s see on Page #7 the main characteristics of the omnichannel commerce segment, serving more the quality- and service-oriented B2B customer with complex requirements, so really large corporates and large accounts with a professional need. And they expect from us a professional preselection that we help them really to reduce their procurement and transaction costs. They have a comparable high expectation when it comes to additional value-add services. They’re expecting personal advice, so someone to whom they can talk. They’re expecting premium quality in terms of the products we are offering. They’re also expecting and asking us for e-procurement solutions, means integrated solutions into their e-procurement systems. And they’re also looking for individual solutions. So they need advice and, let me say, support from our sales team, from our sales force. And last but not least, they are also focusing on suppliers that are taking sustainability as a serious topic. And I will talk about that later on how we can make sure that we are providing all those services for our large and our professional, let me say, customers in the omnichannel commerce segment. And the companies I have mentioned, the business units I have mentioned within the omnichannel commerce are offering all those services and, therefore, I think, right positioned in that segment.

At the same time, within the web-focused commerce segment on Slide #8, those customers are more these smaller businesses, maybe with less than 50 employees, just to mention a kind of hurdle rate here, with less complex requirements, maybe more transaction-oriented, more looking for an attractive price level, not that much looking at additional and professional, let me say, services. They’re expecting a broad product range so that they can make their own choice and selection, what they would like to buy. And of course, they’re also expecting personal advice since we are still dealing also in the web-focused commerce with equipment, and people would like to make sure that they are picking the right equipment for their business needs. And therefore, even in the web-focused commerce, we are seeing the customers are calling us, placing orders via the phone just to make sure that they are picking the right product and making the right selection here.

So the 2 segments are covering different customer needs. And I think with the implementation of those 2 segments, I think we have reorganized and we have set up the TAKKT organization according to different customer needs. And I think that’s more than appropriate in the current time.

Now with that new structure of the omnichannel — or with the focus on omnichannel commercial and web-focused commerce, we have also adjusted a little bit our strategy. And on the next few slides, I would like to give you an update here. The goals are more or less, let me say, unchanged. Of course, we want to go for profitable growth, and the long-term organic sales growth should be in the range of around 5% for the group. And I come later on to the, let me say, different expectations or the individual expectation for the 2 different segments. And of course, we will continue to do acquisitions and expect additional growth through acquisitions. And last but not least, it’s also very important for us that we are able to increase our EBITDA — our absolute EBITDA in a sustainable way.

Now transforming the business model is also an important part of our strategy and our goals to implement the new organizational approach with the focus on the 2 different business models, and with that again, on the 2 different customer types and customer groups and customer needs. And we also want to continue to focus on the digital transformation of the old, let me say, business of TAKKT because we have seen there very nice results and also nice improvements over the last couple of years. And you can see that also in the significant increase in our e-commerce business, and Claude will talk about that later on how that is also helping our growth.

And then last but not least, acting in a sustainable way. That’s something we are not giving up here. Even on the given circumstances, we believe that organization — that a group like TAKKT should focus activities also on sustainability. And we have, I think, worked hard over the last couple of years in achieving the role model in our industry. We got a couple of rewards for that. And that is encouraging us to move on here and understand sustainability as a built-in in our business model rather than an add-on. And we are seeing also that more and more, especially larger accounts and larger customers, are expecting from us that we have a clear position here, a clear strategy and also a clear value-add for them.

Now going along those 3 main, let me say, dimension of our strategy, let me start with the profitable growth and the explanation of the, let me say, individual targets per business model and segment. On Page #11, you see, starting with the omnichannel commerce, that we’re expecting here long-term organic growth of around 3% to 5%. That is our target, and that is an average number over the cycles and is clearly indicating that we want to grow here with a higher growth rate than the comparable market and the GDP. The EBITDA margin should be here at around 15%, so at the upper end of our current, let me say, group target. 15% because we believe in that business, we should generate a higher gross profit margin because of the value-add we’re offering here to our customers. And then with the given structure of marketing costs, personnel costs and other costs, we should be able to achieve here profitability of around 15%.

Now looking at the web-focused commerce. Here, we’re expecting a higher long-term organic growth rate of around 6% to 8%, again, an average over the cycles. And with that, clearly indicating above the comparable market, above GDP, above other business models because we believe that the web-focused model overall will gain more market share. And with that, we should be in a position. We should benefit from that by generating higher growth now here in that range of 6% to 8%. And at the same time, since that business model is a little bit more transaction-oriented, a little bit less offering value-add services, the P&L looks a little bit different. So the gross profit margin will be a little bit lower. The cost structure within the common positions like marketing, personnel costs and other costs will be a little bit different so that at the very end, we’re expecting here to be in a position to achieve an EBITDA margin of around 10%.

For the group, that’s, of course, dependent on the different growth rate and the weight of the 2 different segments. But for the group, we are expecting around 5% organic — long-term organic growth rate here and a sustainable increase in EBITDA, and we don’t want a guidance anymore in margin here. We want to make sure that we increase our EBITDA here — over here and again, dependent on the growth of the 2 different business segments.

So with saying that, just one slide you might recall and might remember that we have put that out there several times but still valid and I think important to understand that the distance selling business model is gaining market share versus local businesses and local dealers. And by looking at different market research and different market, let me say, studies, we have identified that the distance selling or the direct marketing market share varies between 10% and 30%, depending on the different products, depending on the different regions. But I think it’s fair to say it is roughly 10% to 30%. And the distance sellers or direct marketing models are covering their omnichannel models as well as web-focused models and also platform models.

And TAKKT will concentrate the activities and we will concentrate our activities either on the omnichannel and also on the web-focused model, so means on the first 2 ones. And we are participating also in the third one, the platform model where we offer our products on different marketplaces in order to test things but also in order to generate additional sales. But we are not running a platform model. So therefore, we think with our positioning in that market environment, we are positioned in an attractive market niche that should grow above market and above the comparable GDP.

Now on the next slide, on Slide #13, a few words about our M&A strategy. As you know, M&A is an important part of our growth strategy, and we have been successful in the past in doing attractive acquisitions in order to extend our activities, in order to also keep our profitability or even extend our profitability with attractive acquisitions. And we will continue to do so in 2 areas. One area is strengthening of our existing businesses. So really looking for additional product specialists in our range of equipment and also specialties, serving attractive market niches and integrate them into our new segments. And we believe with the new organizational structure with the 2 segments, we have a better, let me say, precondition to integrate those acquisitions into our organization and with that also realizing and exploring synergies in order to improve also the group’s market position. So the acquisitions we are intending to do here in those — in this area of strengthening our existing businesses, they will be integrated in those 2 segments and with that, become a vital part of the segment rather than being an independent member of a portfolio.

The primary goal is to have a positive development of the business-specific value and growth drivers, and you know them from TAKKT. It is about the gross profit margin. It’s about the average order value. It’s about the opportunity to attract and to acquire new customers, reactivate existing customers, sell them more products and try to increase their order frequency.

Now a second pillar of our M&A strategy is to try to expand the value proposition, means with the acquisition of smaller companies that are offering products and services that are expanding our existing range of products and services, we hope and we believe we could become and will become more relevant for our customers because we can offer a better value proposition rather than just offering a product or just offering one service. And there, we believe there are opportunities out there. For example, solutions for manufacturing or refining or adapting products or enhancing service offerings. And I think there are a couple of value-add services we could imagine for our existing businesses where we believe an attractive adjacent acquisition could create value here for the group. The primary goal here is to improve the customer experience before, during and also after the sale.

So 2 different directions here. One is strengthening of our existing businesses and focusing on omnichannel commerce and web-focused commerce businesses, and the other one is the expansion of our value proposition. And as I’ve mentioned, I think the new organizational setup with a stronger integration of the functions should help us and will lead to an increased benefit for acquired companies but then also for higher value generation for us as a group.

Now moving on into the transformation of the business model. And as I’ve said, we have, I think, made a very nice progress here with our digital transformation. And one KPI we are looking at in order to see whether the digital transformation is creating positive results is the e-commerce and order intake. And I think it’s a pretty nice result that we were able to achieve in the year 2019 an e-commerce share of order intake of 55%. And I think that is a major step here in our digital transformation. And therefore, I think it’s fair to say that we have made a good progress with the implementation of our digital agenda, which we have started already 2016. The significant investment into competencies and also in changing the corporate culture, I think, have strengthened our organization in all crucial areas like online marketing, like web shop development and data analytics. I think that we have made major steps, and that is really good to see. And I think that is something that is a strength of the TAKKT organization today that we have started the transformation early enough and in a very consequent and clear structured way and now seeing nice results. And we will continue with that. So digitalization and the digital transformation is not stopping now with the implementation of TAKKT 4.0. Now it’s also happening within the TAKKT 4.0 initiative, a high priority. And therefore, the whole digital transformation agenda will be somehow merged into our TAKKT 4.0 activities in 2020.

Now looking at the new organizational approach. As I’ve mentioned at the very beginning, it’s, I think, helpful to structure the key targets here in 3 elements. The first one, I think I have described already, 2 business models for 2 different customer types. It is more compact for us now, the new organizational setup. It’s less complex in terms of the organizational structure and the management structures because we have now a clear responsibility also on the Board level. So one Board member is responsible for omnichannel commerce, another one for the web-focused commerce. And Claude and myself are responsible for group functions. I think that is allocating the responsibilities also on the Board level in a clearer way than we have had that before.

Then we have within the organization now the — we can call it 3, I shouldn’t say levels or layers, but it is on the one hand, the group perspective mainly represented by activities of the TAKKT AG. Then we have the segment activities, and then last but not least, the business unit activities. And I will explain that in a minute what that means. We have with that new structure, I think, a clearer position of our — positioning of our business units in the market because they are now already addressing the customer needs and can react on any changes we might see there and adapt to those changes quicker than we were able to do that in the past.

And since we believe that those 2 business models are needing a different management of working culture, we believe that keeping those 2 segments separate is the right step in order to foster and to encourage the organizations to develop the culture and the management of working cultures they need in order to be successful in their relevant markets.

Now as I’ve mentioned, the reallocation of the functions and responsibilities along the 3 different levels, so I think also benefit of that new organization. So the business units can really concentrate on functions that help them to interact closely and directly with the customers and with that, addressing the customer needs in a better way than we were able to do that in the past. Then on the segment level, we believe that the integration and the provision of the business model-specific functions like IT, purchasing, logistics will help us to generate economies of scale but also economies of scope because we can learn from each other and short cut one or the other learning curve. And instead of doing a digital transformation in 7, let me say, independent business units, it might be a better setup to concentrate the activities on those 2 segments’ development. Segment level, the right strategy, for example, for the digital transformation and then roll it out within the business segment, again, instead of doing that 7 times in the former portfolio approach.

And then last but not least, on the group level, there’s a clear responsibility for functional activities that apply to the entire company. For example, strategy, M&A, HR and finance. So besides the clear structure along and according to the different customer needs to those 2 different business models, also a clear allocation and reallocation of functionalities across the 3 new levels within the TAKKT organization.

And then last but not least, that should help us to strengthen our operational excellence. And with the development and the introduction of new management methods and processes, I think we have now a better and a more direct access to our businesses that should help us to make quicker decisions and to implement new things in a quicker way and with a higher speed than we were able to do that before. And also with the promotion of best practice solutions within the group and the implementation of continuous improvement activities, I think we have now a clearer, a leaner organization order to implement those things in a quicker way.

Now to put it in kind of a nutshell here, we believe that the transformation of the business models and the clear new structure together with the strategy should help us to have a clearer market positioning, make faster decision-making processes, having a clearer responsibility also within the organization, and that should help us to accelerate growth. And therefore, we believe that the new TAKKT 4.0 organizational structure, the transformation of the organization is a very important precondition for us to continue with the success we have seen in the past.

And last but not least, I would like to comment on our sustainability activities. And we have published with our annual report last week also our sustainability report for the year 2019. And you find the full version on our website. And there, we have clearly stated that sustainability and corporate responsibility are becoming more and more important factors in the competition. And we believe it will develop from a hygienic factor where people might say, that’s nice that you’re offering it more really into a hard decision-making factor. So especially large accounts are asking for that, and they want to tick their box also in their own organization that they are working together with companies that are taking corporate responsibility and sustainability seriously. And there, TAKKT and our business units can provide a lot of high-standard solutions.

So we, as an organization, we have set goals for the expansion and the positioning of our different businesses within their relevant markets. And I think we have achieved the role model already over the last couple of years or we have developed the role model in sustainability, and we would like to protect that positioning and that leading position. And therefore, we are more than ready to also invest in that area of sustainability.

The group is now supporting also the United Nations Sustainable Development Goals, and you might know them. There are quite a couple of them out there, and we would like to concentrate our activities on gender equality, on responsible consumption and production, on climate protection measures and on partnership for the goals. And you’ll find more details about our activities and measures in order to support those SDGs in our sustainability report. And I’m also more than happy and ready to answer questions you might have later on.

And in 2020, just to give you kind of an outlook, we will hold another stakeholder dialogue after a couple of years. I think that’s important in order to understand the needs of our stakeholders and the wishes and the preferences of our stakeholders in order to adapt our strategy to those new and maybe adapted and changed needs. And where it’s necessary, we will certainly review and amend our activities and also the measures we have put in place in order to support the Sustainable Development Goals.

With saying that, I think it was a pretty intense year 2019 for TAKKT from a strategic perspective. I think with the implementation of TAKKT 4.0, we have a clear agenda for the upcoming quarters and maybe years. We are much better positioned now with our new organizational structure to also benefit from the expected higher growth rate of the markets where we’re active in, means the direct marketing for business equipment and supplies in the B2B environment.

And with saying that, I would like to hand over to Claude, who will give us more insights for the financial year 2019. Thank you very much so far. And Claude, the floor is yours.

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Claude Tomaszewski, TAKKT AG – CFO & Member of Management Board [3]

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Thank you, Felix. Good afternoon, everybody. Before we’re going to talk about the latest news and how we deal with the corona crisis, I would like to give you an update on the key financials in 2019, the annual report we have published today. And some slides, some of you might recognize because we have already used them mid in February when we published our preliminary results. I will be very quick on those and then be possibly a bit more specific on some more details, which we have published today.

If we look into the year 2019, we have increased our reported sales by 2.8%. That was helped from acquisition and also a little bit help from positive currency effects. Organically, the sales, the top line decreased by 1.4%. And that was in line with our latest forecast, which was published in October.

Gross profit margin was stable at 41.3%. So only a slight decrease compared to previous years mainly due to structural impact from acquisitions. We can conclude here for the full year ’19, the business was on a very similar gross margin than in the year 2018.

EBITDA margin came in at 12.4%, slightly below the previous year, and that was a little better than what we had published in October, we said around 12%. So we finalized the year at 12.4% on EBITDA margin.

Overall, we have seen an increase in the reported financial debt figure, which now stands at the year-end ’19 at EUR 190 million. And that was mainly due to the first-time adoption of IFRS 16, so the financial leases now being shown as a financial liability. And here, we have seen an impact of almost EUR 60 million, EUR 58 million precisely. And that has led to that increase in the reported net financial debt.

Equity ratio is almost close to 60%, so finance and the balance sheet structure, which remains very solid at the year-end ’19.

Moving on to the TAKKT Group, reporting about sales and EBITDA. I talked about the sales already. Concluding organic sales decreased by 1.4%. Here, we had to digest a 1.5% impact due to the expected termination with a major customer in our Hubert business. So if we look at it from a like-for-like perspective, it’s fair to say that we can conclude the top line has been pretty flat in ’19 compared to the year ’18.

Looking at profit EBITDA. Reported EBITDA figure is, what, almost the same compared to the year 2018, EUR 150 million. And here, we had the help of the first-time application of IFRS 16 in the range of EUR 12 million because now the rent out from leases is now shown predominantly in the depreciation line and then also a little bit in the financial result in the interest expense. And so here, the EBITDA had a help of EUR 12 million because of that first-time application of IFRS 16.

If we then look at the onetime expenses we had to digest in the year ’19 and also the onetime gains we were given, that we can see here that there was a net of EUR 8 million cost, which was sitting in ’19. And in ’18, we had a EUR 3 million gain. And again, if we correct for the first-time application of IFRS 16 and the onetime expenses and the gains, we can conclude here that the adjusted margin for the full group declined about less than 0.5 percentage point. Then I come back on that topic in a different chart again.

Moving on to Europe. Similar development in sales, 2.6% reported increase, organically decreased at 1.4%. And if you look at profit here and adjust again for the same at least items, we’ve talked first-time application IFRS 16, onetime expenses, onetime gains, we can conclude here that Europe had an adjusted margin that was flat compared to previous year. And this was, of course, due to a very disciplined cost management, which then have led to that similar result, although the top line was slightly decreasing.

Moving on to the U.S., the States. Here also, sales, very, very similar. Reported sales increase of 2.9%. Organically, there was a sale decrease of 1.4%. However, here, we had to digest also that — the impact from the large customer not doing business anymore with Hubert. And that was now based on the figures for the State, not just the group, a 3 percentage decline. So here, if we put that into comparison, the sales were even a little bit up compared to the year ’18.

Looking at profit. Profit here, the adjusted margin came in slightly lower. When we adjust for all the impacts, which are shown here on the Page 22, adjusted margin came in with a decline of 0.5 percentage point.

If I move on to the next slide, you can see there that now graphically, what happened to our EBITDA margin, you see that help from the IFRS 16 first-time application of 1 percentage point. And then you see almost 1 percentage points have been adjustments of cost structure, which means we have adjusted our cost structure in a way that we had to pay severances in the year ’19. And then also, we have started to have first steps into the TAKKT 4.0, the new organizational setup, the transformation. And also that has led to one of the other costs. And this is in a similar magnitude, the costs here compared to what the IFRS 16 has helped to the EBITDA margin.

Gross margin, already I said in the key highlights, 20 basis points lower. And that leaves us with a 20 basis points lower overall in the P&L here in the structure, which mainly comes from the fact that we haven’t grown the sales. And at the same time, of course, one of the other costs, for example, the staff costs, salaries are going up. So there’s a bit of a little deleverage here due to the fact that the top line hasn’t grown. And the costs — the fixed costs are, of course, developing in a way we would all expect it to develop.

Moving on to the profit after taxes, the so-called profit for the period. You can see here that this has been in decline, reported minus EUR 13 million, mainly coming from the fact now that as EBITDA was on a similar level, however, helped by the IFRS 16 adjustment, now we can see here that the depreciation is now, of course, here in that figure with a minus EUR 12 million. And then you see the other components here, which is depreciation, the regular one, so not the one which has come from IFRS 16. The financial result and tax, which are on a — in total, on a similar level, so we have less taxes. We have had a few more interest expense also again due to the IFRS 16 impact and a little bit more depreciation. And that has been — flattened out the 3 together, so now we can conclude here a profit after taxes of EUR 75 million for the year 2019.

Moving on to cash flow insights. TAKKT cash flow reported also coming in on the same level than previous year, similar to EBITDA. And then if you look here at, again, the interest expense, already said, a bit more interest expense, a bit less taxes. This has led then to a very similar TAKKT cash flow of EUR 120 million.

Cash flow generation, starting from that figure of EUR 120 million. We have seen a cash inflow from the change in net working capital. That was different to the year before, where we had seen a EUR 21 million cash outflow change in net working capital. And the biggest difference here is the release of inventory in ’19 after we had built up inventory in late ’18 due to the fact that we were expecting, of course, higher tariffs from China. And that was the big change here, which happened here from 1 year to the other.

This has led to a very nice cash from operating activities of EUR 131 million, a similar CapEx figure to previous year. And this overall has then left with the proceeds from disposal of noncurrent assets to a free TAKKT cash flow, a quite strong free TAKKT cash flow of EUR 107 million in the year 2019.

What have we done with the EUR 107 million? On the next page, you can see that we have financed the XXLhoreca acquisition, which happened in May, EUR 19 million. Then we had — we have paid a dividend of EUR 56 million in May, and we have paid back financial debt of EUR 30 million. That’s the 3 major items to explain what we have done with the EUR 107 million free cash flow generated in the year 2019. And then you can see here that, despite the fact that we had a debt repayment of EUR 30 million due to the fact that, from an accounting perspective, we applied IFRS 16 for the first time, our reported financial debt goes up by almost EUR 40 million to now a figure of EUR 190 million.

Talking briefly about the tax dividend policy and the decision we have done recently, before I then hand over back to Felix. The dividend policy for TAKKT is unchanged. In principle, we would like to pay out a ratio a corridor of 35% to 45% of the profit after taxes. We still aim for consistent and reliable dividend stream. And we are still willing to return funds to shareholders via special dividend, if we cannot invest the money on our end in a wise way, and of course, if equity ratio is high.

Now in the view of the exceptional crisis situation we are facing due to that pandemic, TAKKT places — the TAKKT management team places a high priority on financial stability and flexibility. And as a consequence, the Management Board and the Supervisory Board have proposed to suspend the payment of the dividend for the year 2019, for that financial year, which would have been paid out now in May. That is the proposal now to suspend the dividend and to have the priority and be at any point of time during the crisis, flexible and independent as a company.

With having said that, I would love to hand over back to Felix, talking about the update in that crisis and our expectation for the year 2020.

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Felix A. Zimmermann, TAKKT AG – Chairman of the Management Board & CEO [4]

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Claude, thank you very much. And yes, I’m happy to give you an update here on the corona crisis and what that means for us. And on Page #30, you see a kind of an overview structured in 2, let me say, segments, markets, operations and suppliers. And I think it’s fair to say, and that’s, to be honest, for me, now the third crisis, I’m seeing here with TAKKT. First one was in 2000-2001 and was September 11. The second one was the financial crisis in 2008 and ’09 and now the corona crises. And every crisis is, of course, showing different characteristics. But at some point in time, I think our business model is reacting in a, yes, more or less predictable way. And we will talk about later on what we have seen in the 2 other crises before and what we’re expecting from this crisis here and why we are managing the corona crisis and why we are navigating our business through the crisis as we have, let me say, developed in our crisis plan.

So let me start with the development we are seeing out there in the market. Comparable shop declined over the weekend, more or less, instead of the last crisis where we had 6 months’ time. Actually, where we have seen that drop over 6 months. We have seen it now, from Friday to Monday, a decline of between 30% and 50%, depending on the business units. We’re also having some activities showing a pretty stable development, but I think it’s fair to say for the main part of our equipment business, we have seen here a sharp decline.

And if we look at the different markets, I think it’s pretty obvious that markets in Southern Europe, whether it’s Italy or Spain, or businesses that are dealing with event or trade show equipment have suffered more than others. And looking at the different business units, I think Ratioform with packaging material, whether it’s food packaging or other packaging, is showing a pretty sustainable and robust development. While other companies, as I’ve mentioned, are suffering more. And therefore, the business units have adjusted their marketing activities and they focus their activities on product ranges and services that are being now requested and required by our customers. And there, we are seeing good performance and good growth rates, while other things, at the same time, are not that attractive anymore. And I think it’s pretty obvious that right now, an automotive manufacturer or supplier is certainly not investing in workbenches and steel lockers. But at the same time, they are looking for cleaning and sanitary products, and they’re looking for things that are helping us to organize their businesses along also new legal requirements. And there, we are thinking of also attractive products. So we have seen a kind of a shift there of products and also of, let me say, customers, where, for example, hospitals, government and military are pretty active as customers, while manufacturers, for example, are less active. No surprise, to be honest.

In terms of the operations, I mean the TAKKT operations, we were able to really switch from, let me say, work in the office over the weekend into work-from-home mode. And most of the desk jobs have been reallocated to home offices. And I think that is a good sign for the organization that we were capable and able to do that over the weekend, and to be honest, without any major disruption. So the business continues to work, and we can run and steer it from home.

In our warehouses, we have seen a couple of, let me say, little disruptions. But overall, I think it’s fair to say that they’re up and running and able to receive and to distribute products. The issue is more that we cannot really deliver the product to our customers because the customers are just not there and are not willing to receive products. So right now, our internal logistics is working, but the delivering of the products is a challenge, especially in Southern Europe, in Italy as well as in Spain, very difficult and leading to some complications, but we will handle that.

A couple of locations in Europe and as well as in U.S. were affected by a temporary mandatory shutdown. So when the local government or the governor decided that, for whatever reason, we had to shut down our activities. One reason was, for example, that the service and the products we’re offering are not, let me say, critical right now in the corona crisis. But we were able, in most of the cases, to convince the local government or the governor that we are providing crucial products and services, especially to very important customer groups like the hospital, like the health care industry and also the government. And therefore, we were able to open up our activities after a short period of time. But we cannot exclude that we’re going to see further temporary shutdowns because the situation, as you can imagine, is pretty unclear and one governor in one state is doing that, and the other one is doing another thing in the following week. And so there, we need to stay flexible, and we need to be prepared. And we are prepared for that and for those situations because we have the right arguments, and we have a comparable, let me say, good advice and support here so that we are normally in a very short period of time back in business.

Now looking at the supplier side. Most local suppliers in Europe and the U.S. are able to produce and manufacture and distribute their products. The Asian suppliers are coming back. So the things we have ordered in China are on their way to the U.S. as well as to Europe. So China is back in business, and you have seen that — you have heard that I think also in other calls and other conferences, they are trying to go to back-to-normal. And we are receiving more and more products now from Asia and China and hope we can sell them in the foreseeable future now also in our markets.

Logistics, as I’ve mentioned, is becoming more and more difficult and it’s taking longer. It’s a little bit more complicated. And carriers are also deciding, for whatever reason, to reduce the capacity, to reduce the number of drivers they’re hiring or employing. And so that is making the world a little bit more cumbersome. But at the very end, I think the logistic networks we are using and where we are relying on are still working.

More straightforward and more stricter shutdown and additional regulations might lead to more suppliers having also to shut down or have to shut down their activities in a temporary way. And there, we have seen, for example, in Germany, a couple of announcements of companies that have decided to shut down the activities over Easter, so to make sure that they are using the holiday times. We don’t know what the impact on our business will be. So far, we have enough inventory in our warehouses to bridge that and to serve our customers in the expected and the usual, let me say, high service level way.

So that’s the kind of a short snapshot in our market now. What are we doing internally? What are our ideas? And what is our plan? And what are our priorities? You see it on Page #31. We have structured our crisis plan in 3 phases. The first one is the urgent phase. We call it now. We have started that mid of March and have clearly addressed there our priorities. The first one is protect our employees and make sure that they can work from home, that we do everything that the risk of infection will be and is being reduced. And I think there, the organization has done a great job.

Insuring business continuity, making sure that people are coming to work where we need them and making sure that we can receive orders, that we can fulfill orders, that we can receive products and that the business is up and running. And I think there, overall, we can report that the business continuity is in place, and our businesses are working, under the given circumstances, in a very good way.

And then last but not least, also very important, securing the financial stability. And so we have run the numbers here, and Claude will give you a little bit more insight later on. And I think it’s fair to say the TAKKT business model is, as you know, overall, pretty solid and also cash flow strong. It means in difficult times, our value and growth drivers are reacting a way that, for example, in a downturn, we are in a position to release working capital and with that, set some cash free. And that’s something we have seen over the last — or in the last 2 crises, and we expect also in that upcoming crisis that we are able to release some cash from reducing working capital. And since the working capital is showing a comparable high and good quality, we think that we will be able to do that in a comparable way, as we have done that during the last 2 crises. And Claude will give you a little bit more insight there in a few minutes.

So phase number two, near term, and don’t ask me when we’re going to start with it, but I think around Easter. So in a couple of weeks, then we have to change a little bit the mode from a more urgent now into a near term, get ready for the rebound. So think about how can we proactively generate more demand by approaching our customers and ask them for their needs and what we can do in order to help them. There we have seen first very encouraging results in one of the other business unit within the organization. They are already on that way.

Bringing the operations back on track. So try to bring the teams back when they are allowed to come back to work and make sure that we continue with our business. And also continue to deliver on agreed cost and cash management measures. And there, we have had over the last couple of weeks, a very intense and a very, I think, good and structured communication with our business units, how and what we want to do in order to get our costs under control and adapt them to the current business volume as well as managing our cash and also our working capital in an active way. And now, of course, we have to steer those activities and have to track whether we achieve the expected results.

And then last but not least, I would like to continue with the implementation of TAKKT 4.0. So after that, let me say, now phase of a couple of weeks where we had to really concentrate our activities on minimizing disruption, I would like to come back rather sooner than later into a situation where we are working on the implementation of TAKKT 4.0 because that is a vital part of our future. And we don’t see a reason to wait longer here, as long as we have the capacities and as long as the situation, of course, is allowing that.

And then last but not least, the Phase #3, more midterm, prepare for the future. And I think you have heard this several times, and we believe that as well, that every risk is also opening up new opportunities. And we want to be ready to take those opportunities. We have done that during the last crisis, and want to do that again during this crisis. And therefore, first of all, of course, we need to keep the business on track, but we want to proactively look and go for growth and acquisition opportunities. And there, the M&A department is now working on list and potential targets and trying to figure out who might be open for communications and discussions about M&A opportunities. And we want to be ready. We want to be in a position to do those acquisitions, and that is one other reason why we believe financial stability and flexibility is, especially during a crisis, very important.

On Page #32, a couple of measures we have implemented in Phase 1, in the now phase, and I don’t want to go through all the details. Here, we have structured them along 3 criteria: business continuity, financial stability as well as disciplined cost management. And you see in those different, let me say, pockets here the activities we have discussed with our business units. It’s from preserving top line where it’s possible, reinforcing the ability to supply and adapt to disruptions where possible down to ensuring business continuity by working from home, as I’ve mentioned that just on the previous slide.

In terms of financial stability, making sure that we all understand that we have to manage cash and working capital and liquidity. And cash is king during those times. And I think that we’re in a pretty good shape. Make use of flexible regulations, whether it is adjustment or postponing of tax payments and see what the government is offering us to also, let me say, use those new regulations. And also short-time work, especially in Germany, is something we have implemented from 1st of April onwards. And so I think that we have been pretty quick in implementing those tools and making sure that we are adapting our capacities according to the current business volume.

And the insurance of the refinancing with the existing banks, Claude will talk about that in a minute. I think there, we have a very solid relationship with our banks, a very fragmented, let me say, pool of bank partners. And so there, I think we are well set up. And there, we have learned over the last 2 crises, the long-term relationships and reliability is becoming, especially in those crises, very important. And I’m glad that we have invested in those relationships and in those, let me say, reliable relationships over the last 20 years. So that’s now paying off.

And in terms of the disciplined cost management, reducing marketing costs. There, we have much more flexibility than we have had in the last crisis where we had almost, let me say, 80% up to 100% of our marketing costs spent for printed. And let me say advertising media was only with a time lag possible to react and to cut down circulations and mailings. Now we are spending 50% of our marketing budgets online. And that’s, shouldn’t say easier, but it’s more flexible to reduce cost there directly, and that’s something we have done immediately as well as we have reduced the personnel costs where possible other costs and implemented a general hiring freeze and also a CapEx freeze. And I think that is the normal 2 blocks in those crises.

So that’s kind of an update on where we are here. In terms of the corona crisis, I think we are coming more and more and closer to the end of Phase 1 now: protecting our people, protecting our businesses and do the urgent and immediate necessary, let me say, activities and measures. The organization has done a great job there. We will certainly continue to protect our people and our business. But our focus now, I think, should go also in the direction to get ready for the rebound, and there will be one, and we should be ready then to benefit from that. And based on that, we should also think about the future and be prepared for the future.

With saying that, I’d like to hand over back to Claude, who will give you little bit more details about our financing situation and the cash flow, let me say, part of our business model.

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Claude Tomaszewski, TAKKT AG – CFO & Member of Management Board [5]

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Thanks, Felix. Let’s have a look at our current financial debt situation. It’s very solid. And this is — these are now figures pro forma from, say, yesterday. The net financial debt is in the similar magnitude compared to the year-end 2019. This year it’s showing a figure between EUR 180 million and EUR 190 million, so EUR 185 million, let me say.

Net financial debt. Bank liabilities are almost EUR 100 million. And the other part here in orange, almost EUR 80 million, is lease liabilities. So the liability, which we have to pay back over the next years, even up to 10 years when it comes to financial leases, where we have committed contracts, is mainly warehouses and office buildings.

So a little bit less than EUR 100 million is our bank debt. And on the right-hand side, you see that we have credit facilities in place to a magnitude of even up to EUR 300 million. I will explain in a minute a little bit more detail how that adds up to EUR 300 million.

First of all, just to say we have a portfolio of 13 banks, bilateral revolving credit facilities. They are all without any financial covenants. So there are no financial covenants in the committed credit lines in the documentation in the contracts with the banks. And with all these banks, we’ve got in a well-established annual rollover process.

Today, as I said, we have used almost EUR 100 million of these credit lines with the bank debt of almost EUR 100 million. We’ve got unused committed credit lines of around EUR 130 million. So overall, gives us a figure of EUR 230 million, which is committed by the bank, contractually fixed. And then we’ve got at the moment in place an additional EUR 70 million in uncommitted lines by the banks. All have said that they’re going to stick to it. But of course, they could resort if they want here any day. And so it will be some work for us to be done in order to possibly even make these into committed lines. But even without the EUR 70 million, 230 million committed lines at the moment, EUR 100 million bank debt and lines drawn, you can see that we are in a very solid financing situation to this point of time.

And then if you look at the gray shades here besides the orange on the right-hand side, you see how these lines — the unused lines are — which duration they are coming in. And you see that in the long-term facilities, which last more than 4 years, there, we have a huge buffer of not used credit lines, which can, at any point of time, be drawn by us and should give us enough comfort going through that crisis.

The next page, which also gives us some comfort going to that crisis is the fact that the free cash flow in our business model remains positive in economic downturns. It has even been comparatively strong in the last crisis of 2008 and ’09. Here on that chart, you see here the patterns, the trend in EBITDA for that almost 20-year period. You see the free cash flow in a steady growth mode on that chart over that period. And you see that in crisis periods, be it the crisis in 2001, 2002, the recession that we had been in 2008, 2009, you can see there that the free cash flow figure remains positive and has even been quite strong in these crisis periods.

Why is that the case? Well, the reason is because we can release cash from net working capital. So our net working capital normally goes down when our top line goes down and also because we have in these periods of down, we had a CapEx freeze, and this has led to a severe CapEx reduction. We also haven’t spent a lot of CapEx during these periods.

Talking about trade receivables. In our business model, they are very fragmented. And they are generally — they come generally with a very low default probability. So that’s a good starting point. Having said this, we might have to expect that we prepare also foreseeing one of the other higher default coming through trade receivables but still if you look at the quality of these trade receivables, even if that becomes higher, that should still put us into a comfortable situation that with the lowering trade receivables happening during that crisis we’re going to set some cash free, so we get some release of cash here.

Stock inventory is always a question. What happens to your stock if you can’t sell it? If you look at our standard articles, they tend to have a very low risk of aging and also a low risk from technical changes. So these are articles which will be needed also in a couple of years down the road. They will not be out of date. They will not be out a fashion or something like that. So here also, this is quite good quality in our stock sitting there. And if [prints] will go down and stock we can’t sell can be sold later on.

Having said this, a few — inside the few items talking about our financing situation and about our positive free cash flow streams even in economic downturns, I would like to hand over to Felix talking about our expectation for the year 2020.

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Felix A. Zimmermann, TAKKT AG – Chairman of the Management Board & CEO [6]

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Thank you, Claude, and that is actually the last slide in our presentation, yes, Page #35. And I think we all know it’s pretty difficult to make a prediction or forecast for the year 2020 because it’s all depending on the intense, the length and also the consequences of the corona crisis. And there are a lot of speculation out there that after corona crisis, we’re going to see another financial crisis and what the impact might be. And I don’t want to discuss it here.

From today’s perspective, I think it’s pretty obvious, the environment will remain challenging for the rest of the year, and we’re expecting very negative development in GDP growth rates in 2020. I think it’s no surprise. It will be negative. And as you might recall, for us, as a supplier of equipment, the delta of the growth rates is a very important indicator. So it means that it’s going down from 1.2 or whatever the growth rate was in 2019, down to whatever, minus 5, 7 or even more, that is having a significant impact on the demand of equipment.

On the other hand, as we have mentioned that, we have also some businesses in our group that are not that much dependent on that, let me say, GDP growth rate offering, for example, packaging material. There, it’s too early to say from today’s perspective, whether they can weather the storm in a better way and generate a more sustainable and stable top line development. So far, we have seen that, but I think again it’s important to understand that’s too early to say because we don’t know what’s going to happen in the next few weeks.

The Purchasing Manager Indices, you might have seen that in the first, let me say, publications of the PMIs for Europe as well as for the U.S. showing a sharp decline, like we have seen that in the crisis 2008 and ’09 and even deeper, especially in the service sector, a very significant decrease. But at the same time, China published their PMI for the manufacturing, I think yesterday, was a pretty clear rebound. And so that will be interesting to see how that is developing in Europe as well as in the U.S. But I think the indication direction right now is that we’re going to see a difficult rest-of-the-year 2020.

The top priorities for us, as I’ve mentioned, that short-term focus on really protecting our people, our employees, ensuring the business continuity and securing financial stability. And I think there, we have done already really a good job in our organization. And I think it’s fair to say that we have accomplished it more or less. But certainly, there’s always something to do and to improve. And we should not become too, let me say, let’s say, [free here] because I think it’s important that we continue to protect our people and our business as well as having a clear eye on cash flow and liquidity management.

Midterm, we will certainly balance the cost discipline and preparing the organization for an upswing after the crisis. And as I’ve mentioned that I’ve been now twice through a crisis, and every crisis started more or less with the same, let me say, pattern that was negative, dark. And it was pretty tough to imagine that there would be a time after the crisis. But there has been now twice a positive time after the crisis. And therefore, I expect here also a rebound. We all don’t know when it would start, but I’m pretty sure there will be one. And we, as an organization, should be ready at the right point in time to benefit from that.

And therefore, the current expectation for the year 2020 is, yes, that we’re expecting for sales and EBITDA significantly lower level than we have seen in 2019. But at the same time, as Claude mentioned that, we are expecting that the organization, that the businesses will generate a positive free cash flow.

With that, I would like to hand over back to the moderator and open the Q&A session. Thank you again for your attention and your ongoing interest in TAKKT.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from Craig Abbott of Kepler Cheuvreux.

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Craig Abbott, Kepler Cheuvreux, Research Division – Head of Mid and Small Cap Research, Germany [2]

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Thank you for the very clear walkthrough on the measures you’re taking to deal with the crisis and all that. For me, I think that’s pretty clear at this stage. One technical question looking back now. Maybe I just haven’t found it yet, but I’m looking for the divisional key figures under the new reporting structure based on 2019, obviously. I mean, just very basic figures like the sales and EBITDA for each of those 2 new divisions. And again, maybe I just haven’t found it. But where do we find that, please?

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Felix A. Zimmermann, TAKKT AG – Chairman of the Management Board & CEO [3]

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Yes. I think Claude and the finance team can help you there. Claude, can you give us a kind of a first plans there?

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Claude Tomaszewski, TAKKT AG – CFO & Member of Management Board [4]

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Yes. I think it’s not totally wrong to assume that the omnichannel segment will be approaching 80% of the sales, whereas the web-focused segment will be approaching 20% of the sales roughly. More detailed figures, we’re going to then publish end of April with the first quarter, but I think that’s a fair assumption for the moment.

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Craig Abbott, Kepler Cheuvreux, Research Division – Head of Mid and Small Cap Research, Germany [5]

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Is there a way — and then — okay. Okay, I would have thought, because you have the historical numbers, I would have thought that it’s okay — split that up. Okay. But should we be thinking about the EBITDA split as being kind of along the lines of your target margins that you gave us for each division?

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Felix A. Zimmermann, TAKKT AG – Chairman of the Management Board & CEO [6]

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Claude, do you want to comment on that?

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Claude Tomaszewski, TAKKT AG – CFO & Member of Management Board [7]

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Sorry, Craig, can you just repeat the question?

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Craig Abbott, Kepler Cheuvreux, Research Division – Head of Mid and Small Cap Research, Germany [8]

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Well, I mean I hope we were to get actually historical EBITDA figures for each of the division. But I mean as we’re trying to work out where the starting base may have been until ’19, should we be assuming kind of like the indicated margin that you gave us for each of those 2 divisions in deriving the EBITDA in absolute terms for each division?

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Claude Tomaszewski, TAKKT AG – CFO & Member of Management Board [9]

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Okay. Let me briefly check. Can we just park the question and I’ll give you in a minute that figure?

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Craig Abbott, Kepler Cheuvreux, Research Division – Head of Mid and Small Cap Research, Germany [10]

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Yes. Sure. That’s it from my side. I think I’m pretty good on all the other measures.

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Claude Tomaszewski, TAKKT AG – CFO & Member of Management Board [11]

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Okay. Yes, I’ll come back on that.

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Operator [12]

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(Operator Instructions) There are currently no further questions in the queue. The next question is from Roland Könen of Value Holdings.

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Roland Könen, Value-Holdings Capital Partners Ag – Fund Advisor [13]

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Maybe 2 short questions. As you told us that your sales in March were down 30% to 50%, could you give us some rough numbers for the first 2 months, as you indicated in the beginning of the year that, especially the first half would be a very, very tough half. And second question would be on the restructuring cost for TAKKT 4.0. Do you have now an indication how much do you want to spend for this?

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Felix A. Zimmermann, TAKKT AG – Chairman of the Management Board & CEO [14]

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So I think you have asked 2 questions, right? First is whether we could give a kind of an indication about the performance overall in the first 2 months and then what we have seen, and you have mentioned it already in March. And the other one was the question about the expected one-offs. Is that right?

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Roland Könen, Value-Holdings Capital Partners Ag – Fund Advisor [15]

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That’s correct, yes.

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Felix A. Zimmermann, TAKKT AG – Chairman of the Management Board & CEO [16]

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Good. So Claude, I don’t know whether you’re ready to answer those questions.

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Claude Tomaszewski, TAKKT AG – CFO & Member of Management Board [17]

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Sorry, I’m just dealing with the first one at the moment.

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Felix A. Zimmermann, TAKKT AG – Chairman of the Management Board & CEO [18]

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Yes. So let me start with the answer of the — your first question here about the performance in the first quarter so far. I think we have in the appendix of our presentation the split of the performance along the different quarters. And there you can see the performance, and I’m just trying to go to that slide here. I think it’s on page — just a second. Christian, you know on which page that is the split of the quarters?

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Christian Warns, TAKKT AG – Head of IR [19]

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It’s not in this presentation.

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Felix A. Zimmermann, TAKKT AG – Chairman of the Management Board & CEO [20]

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Yes. It’s somewhere — I think I’ve seen in the backup. And you can see that we have in the year 2019, had a comparably good start to the year with positive growth rates in the first quarter and then an ongoing decline because the economy went down in the U.S. as well as in Europe. And so therefore, we have expected originally for the year 2020 that we’re going to see a kind of a challenging first half because the benchmark was certainly high last year in the first half, in the first 2 quarters and then came down. And at the same time, we have seen that the fourth quarter 2019 was comparably weak because of the weak economy. And therefore, we’ve expected and we have seen also so far in January and February, negative growth rates, but not that severe, of course, as we have seen it now with the corona crisis.

So overall, you can expect that the business in January and February expected along — or developed along our expectations. And then with the, let me say, second week of March, that picture changed. And we will publish the full set of numbers for the first quarter. And Christian will talk about that in a couple of days, and then we will give you certainly more detailed insight about the phasing of the top line development and the impact of the corona crisis because that is impacting the first quarter only by a couple of weeks.

So put in a nutshell, the performance in the first quarter was as expected in comparison to the comparable strong first quarter last year. And therefore, yes, as we have said, challenging, but of course, with the corona crisis now, becoming more challenging. And looking, let me say, forward, I think the base should help us the rest of the year because we have seen that comparable negative development in 2019. And therefore, in the third and fourth quarter, the comp with the last year should help us.

I think that is what we can say from today’s perspective without publishing our, let me say, first quarter numbers earlier than we have intended to do that.

Yes. And Claude, are you ready to answer the question of Craig?

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Claude Tomaszewski, TAKKT AG – CFO & Member of Management Board [21]

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Yes. I think it’s fair to say on the profit line that it’s more heavily going to the omnichannel. So that’s, at the moment, I’ve checked here, it’s more like an 88% profit share for the omnichannel and it’s 12% for the web focused. But to be honestly fair, we still have to do that exercise and consolidate the figures exactly for the full year 2019 according to the new segment. That was not yet done due to the priority of corona crisis in the last 3 weeks. So we will have to also come back to you at some point with some more precise figures.

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Felix A. Zimmermann, TAKKT AG – Chairman of the Management Board & CEO [22]

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And then the other question, you have had, Roland, about the one-offs, you want to say something about that, Claude, the expected one-offs for TAKKT 4.0 for the year 2020?

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Claude Tomaszewski, TAKKT AG – CFO & Member of Management Board [23]

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Yes. It’s fair to say that we had planned for the year 2020 one-offs and onetime expenses, which will be severance payments, I guess, to the vast majority of something between EUR 10 million and EUR 15 million. So we are expecting, in that ballpark, some one-off costs for the year 2020 to start our innovation and transformation. And they will be predominantly in our larger business unit, KAISER+ KRAFT, if that was the question, I do hope.

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Felix A. Zimmermann, TAKKT AG – Chairman of the Management Board & CEO [24]

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I think so.

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Operator [25]

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(Operator Instructions) The next question is from Roland Könen of Value-Holdings.

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Roland Könen, Value-Holdings Capital Partners Ag – Fund Advisor [26]

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It’s me again. Maybe one additional question, especially with regard to the dividend. I have to admit that the news of canceling the whole dividend was very disappointing for us. So I can understand your argument and the situation is very difficult. But as you — your dividend of EUR 1 was — we haven’t understand it really because you were in the front of a tough first half 2020, and we would like to have seen just the EUR 0.55. So maybe you could give some words why you just — it could be possible just to cancel the bonus, you would like to pay it and not just the whole dividend. So maybe some words on that.

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Felix A. Zimmermann, TAKKT AG – Chairman of the Management Board & CEO [27]

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Sure. Thank you for the question. A pretty obvious one, and you can imagine that we have discussed that in a very intensive way within the Board but also with our Supervisory Board. So when we made our proposal for dividend for the year 2019, at the beginning of the year, we were looking at a solid balance sheet of almost 6% equity ratio, a very strong operational cash flow we have generated in 2019. And the year 2020, where we have expected, let me say, some rough water in the first 2 quarters, but then also kind of a recovery in the second quarter. And we, as a Board, thought we could justify a base dividend plus a special dividend to make sure that the shareholders do participate from the strong cash flow generation. And since we haven’t made any major acquisitions, we thought and we, at that point in time, were the opinion that we can afford that.

Now a couple of weeks later, the situation was a complete different one. Corona crisis came in, a lot of uncertainty. And then, of course, the Board has started the discussion. Again, I’ve said, “Wait a minute. Given new circumstances, are we ready to pay out EUR 65 million in cash to our shareholders? If we have to, let me say, protect our organization, and have to make sure that we have enough cash to survive or to have that financial flexibility and stability to benefit from a recovery.” And there, we have discussed that internally but also with our Supervisory Board that we better, let me say, stop the dividend payment, make the recommendation that for the year 2019, we are not paying a dividend. And as Claude mentioned already, certainly in the year 2021, looking back then to the year 2020, and hopefully, have survived — not only survived, but also has come out of the crisis in a better way, then of course, we will reconsider again to pay that dividend.

It was more a decision of making sure that we protect your company and our company, where we feel responsible for and have enough cash to steer through the crisis. But I understand that it was disappointing and was also disappointing for us. But again, I think it is the right decision.

Any other questions?

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Operator [28]

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There are currently no further questions in the queue.

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Felix A. Zimmermann, TAKKT AG – Chairman of the Management Board & CEO [29]

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Okay. So Christian, you want to…

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Christian Warns, TAKKT AG – Head of IR [30]

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Yes. If there are no further questions, please note that we will publish our first quarter results on April 30, 3-0, so it’s the last day of April. And if there are any questions in the meantime, then please do not hesitate to contact us, me or the IR team. So thank you very much.

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Felix A. Zimmermann, TAKKT AG – Chairman of the Management Board & CEO [31]

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Yes. Thank you. And with saying that, I would like to thank you also in the name of Claude and Heiko, the other Board members, for your ongoing interest in TAKKT and be sure — and I hope and we hope we could make that clear today. We know what we need to do in the current crisis. We have weathered a couple of storms in the past, and we will do so again in this crisis. The TAKKT business model is pretty strong. And in terms of cash and cash generation, pretty, let me say, stable and resilient. And it’s up to us now to manage the company to steer the company through the crisis. And I think with the support of all of our stakeholders, we will do that in a successful way. And therefore, thank you very much again for your ongoing interest and the answers — or the questions you have asked where we were not able to give you precise answers, we will do so in the upcoming days, latest when we publish our first quarter figures.

Thank you very much again, and have a great day. Bye-bye.