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Good morning. On behalf of Montega, welcome to the Earnings Call of CENIT AG regarding the publication of the Q1 figures of 2023. The CEO, Peter Schneck, and the CFO, Axelle Maze, will give you a presentation on the results in a moment. [Operator Instructions]We're looking forward to the results, and I hand over to Mr. Schneck.
Yes. Thank you very much, and a very warm welcome to our CENIT earnings call for the first quarter 2023. As you all know already from the last sessions, we're having this in English language. I've seen one of the remarks that -- it would have been also preferred in German, but we have also a lot of English-speaking investors in this call, but of course, also in our shareholder structure. So that's why I kindly ask for you understanding that we're going to run this in English. And then, of course, later on when we come to the question session, please feel free to ask in your language, either French, English or German your questions. And then of course, I will translate and respond to them in English and, if necessary, also in your local language.So, since all of you are very familiar with our company and our portfolio, I would like immediately to jump into our financial figures for the first quarter, because this is what you're interested in. I hope that you've seen our press release already this morning and, of course, also the report for the first quarter. So that then later on, we can immediately jump into the question session where you are all invited to come up with a lot of questions after my brief review of the figures.Now, if we start looking at the figures, you see that our first quarter has been very successful. Our sales went up by 22.7%, so from EUR35 million now to EUR43 million compared to last year's quarter. There are, of course, 2 effects. Effect #1 is definitely the first time consolidation of our acquisition, ISR, which we did last year in June, we started the consolidation and the acquisition was done in May. So this is, of course, the first time that they are now consolidated also in the first quarter.The second impact is, of course, there is also the consolidation of MIP, an acquisition that we have done by the beginning of this year. So, they're now included with 2 months only. But -- and I think this is also very important to mention, and I will come to this later on also when we look into the percentage for the organic figures, there is also a nice organic growth in those 22.7% sales increase. And I think, our measures on cross-sell and some other measures that we have taken, reorganizations or organizations, are paying off at this time and, of course, also in the first quarter.So, what I would also like to mention, to give you a little bit an idea of how the sales went up, I know that -- and you also recall that last year, we had a kind of backup also in the industry where a lot of our customers were not sure whether to maybe place the order still before year-end as we all use. As you all know, we have this very strong fourth quarter, and some of the customers the latest to the first quarter. So this is, of course, also part of this organic growth. And just to give you also an idea, our French entity, KEONYS, they had in the Q1, 25% increase of order intake compared to the year before. So this gives you a certain feeling on how the industry is catching up and that if there were any frames in the orders that they are released, and we see a lot of movements and a lot of interest, which is, of course, also based on the, I think, strategy of some of the companies to automize and, before you can automize the first half, to digitalize. So that's why they're spending more in our solutions.What is also included in especially the French increase of order intake and also partly already in Q1 revenue figures and the sales figures as you see here, it's also some defense. There's a large defense order that we received in the first quarter of EUR800,000 in the French market, still up until today, there are no spending from the German government to any of our customers. So, we're still waiting for this, but we see that at least the other European countries are spending money on defense. So you see here now in total, there is quite some movement. And we are very optimistic that also the second quarter will continue on the organic side with this kind of movement. Of course, in the second quarter, we will not have -- or at least we're not expecting such a big jump in sales revenue since we have already some portions of consolidation when we compare this, so you will see.Now, on the EBITDA side, as you can see, there's also a major increase, more than doubled, again, based, of course, on the consolidation of those acquired companies as well as the increased sales in organic growth, which then also allows us on the EBIT side, after a long period also to be positive already in the first quarter. On the EBIT side, what also pays off already, and I will come to this later on when we talk about also the employee numbers. But apart from this, we have a cost structure and tightening up a little bit, losing fed, how I always call this, as you all know, CENIT over the past years was moving slowly and maybe took on some fat. So we had a project called SIRIUS where we introduced some measures, did also some reorganizations. And you can see this already that this pays off also in the EBIT side.What you also please have to bear in mind is, on the EBIT side, of course, we are continuing our activities on the M&A side. So there is, of course, also expenses already included in this. So, if you would do no M&A activities, then of course, our EBIT would even be better and we would have saved those expenses for external consultants, lawyers and all these kind of things. So, it's our daily operations, but I just want to mention this. And then, of course, the EPS is a consequence of what we just said.Now if we go on the different figures, we spoke already about the nice increase in sales. There's a 37% increase in gross profit, as you can see here, mainly driven by the factors, as I mentioned already, the same also on the EBIT then, of course, as a result. So, project SIRIUS already paying off in this, but of course, also the other portion of consolidation of our newly acquired companies.On the dividend level, you see a minus figure. This is, of course, just because we are proposing now the EUR0.50 and our shareholder meeting that will be held next week on Wednesday coming from the 75% that we had since that we had the year before, so for 2021 based on this onetime effect that we had there and will be adjusted our dividend. So, I think that with EUR0.50, we're in a pretty normal and good range.If you look at the KPIs on the bottom line, what I would like to point out is, of course, the order backlog. There you can also see a 23% increase overall the whole group. So there, again, taking a part, of course, also ISR and MAP effects, but also, as you've heard in our existing teams and former organizations like KEONYS as well also in Germany, we see an increase -- a major increase in orders. And that's what we consider as a very positive sign from the industry, knowing that the German sometimes bad mouth their own industry. We cannot confirm this, and we see very positive signs in the market.Now, if you look at the overdraft in this case, these are the liabilities versus the banks that we paid off a little, so that's why it went down. And what -- especially on the balance sheet, I would just like to point out is the 2022 figure, here is, of course, the 31st of December. So it's not really a comparable number, but of course, the starting base, and this also explains why the equity ratio goes down a little, which is pretty normal, I think, during the year structure.Yes. And on the cash flow side, what I also would like to point out, and then I'm sure that you've seen this, the operative cash flow went down. And this is due, of course, to working capital that came down, also project driven. We have some larger projects where some of those steps or milestones that we have included in here have to be achieved, will be paid now in Q2. So there's nothing to worry about. There's nothing that is exceptional. It's mainly driven by, I would say, normal effects, the seasonal effect, if you want to say so. So that's why we're not concerned about this.On the CapEx side, you see, of course, the investment that we have done for MIP, partly is MIP. So that's why this also went up a little bit, basically negatively went up. And that's why then, of course, also the free cash flow went down compared to last year.Now if we look at the sales by revenue type, as you all can see, consulting and services went up by 72.8%. Again, here, we have with ISR a company that is mainly doing consulting. MIP also goes in this direction. So this is one of the explanations for this major jump. But the second one is also, and that's very nice to mention, our services teams, especially the area of digital business services, which is providing mainly substance for Airbus, increased their service activities and could book quite some nice revenues, and we hope that this will continue also for the full year.And our French entity, KEONYS, also increased the utilization rate and service activities in the French market. So, this is not only ISR and MIP, but the main portion, no doubt about this one. But again, I would like to point out that this is a real organic jump that we see here. Percentage-wise, 7.6% decrease on the CENIT proprietary software. If you look at the figures, this is less dramatic than, I think, the percentage is, so the [ 300,000 ]. This is mainly driven by also an order that has been delayed, which already has been placed, which we will see now in Q2. We've received 2 very large orders for Q2 then only both on the proprietary software. So, one is on the DFS side and one is on the SAP side from 2 large automotive companies. And of course, here you see the delay of 1 project that has shifted now to Q2. So again, nothing to worry about the percentages, of course, and not in line with what we are targeting for. As you all know, we are targeting for 20% proprietary software in year 2025. And any decrease, of course, would be a slash back in our activities. But again, not to worry that we're still in line, and we're following our track to achieve those 20%.On the third-party software, you also see a slight increase. This is mainly IBM for the AM sector and, of course, Dassault software. So, again, also here, we see nice increases. And if we then jump on the sales by segment, then you even see that there's a lot of services, especially attached to Dassault software. There you see the PLM increase by 6%. So, this is mainly organic growth by ServiceNow and, of course, the licenses, as you've seen here by a third-party software. So, again, this is picking up, and we're very optimistic to keep, as we said, 4% or 5% overall organic growth. So this goes in the right direction.On the AM side, this major jump, again, of course, based on the consolidation of ISR and MIP, which we acquired at the beginning of this year. One thing that I would like to mention once was still in the financial figures before I then jump to another topic. But what I would like to point out, when you look into our Q1 reporting that has been detailed, you will also see that the number of employees went down. And if you calculate this right, by end of 2022, we had in our statement 861 employees. We then acquired MIP. So we should be at 891. By end of Q1, we were at 854. So it means 37 employees less, if you just do the math. And this is why, to compare to the 891 that we should be including MIP.And the reason for this is, of course, in my statement -- my last statement for 2022, I already mentioned that we have this project SIRIUS, where there's some reorganization, of course, also losing, as I call it, always losing some fat. So, we are reviewing some positions. We are reviewing the performance. And of course, we are also reviewing the utilization rates of all of our employees. And one of the consequences is that in some areas, we're getting a little similar and smarter and become a little bit more supportive, if you want to say so. So that's part of it. Some of the positions, of course, have to be refilled. But mainly, this will be something that we will continue in future also and keep this on a high utilization rate is we're targeting.Coming to my last topic that I would like to raise today in preparation for our shareholder meeting next week, we have launched last week or 2 weeks ago, sorry, our new sustainability reports of those who are also investing in ESG companies and that require some of our ESG statements. Please check on our website. There it's available or otherwise contact us and we'll forward you one of those printed versions. What is included now for the first time in our report are some targets. As you can see here, these are our main targets where the Board is committed to, the whole team is committed to, and this is what we would like to achieve in few future. In the coming years, as you can see here, in some areas, we're even not too far away from those targets. So I hope that we can even achieve that much earlier than what you can see here.And one point that I would like to raise is on the third column on improving ESG ratio. We have been rated by EcoVadis silver and dismissed -- this was in 2022. So we just missed by 4 points, the gold status. And of course, our target is to achieve those 70% already this year. So we're working hard on this to achieve this. But for those who are looking at this, of course, this would be an area that I hope that we can disclose very soon some positive messages.If you need any of those information, if you have your own ESG companies that do the rating like MSCI, ISS or any others, please feel free to contact us or to download on our site some of the information that we provide already in the right mode. So it's prepared. All the information is available in a mode that all those companies can download this information and then easily do their rating. So that's the view on sustainability.And I think now I would like to leave it up to you and to respond to your questions. Thank you very much.
Thank you very much. Mr. Schneck, for digital presentation. We will now move over to the Q&A session. [Operator Instructions] We already received the first questions via audio, and I would go ahead with Cosmin Filker. Please go ahead.
Just 2 or 3 questions. The first question would be regarding the personnel costs. From my feeling, they went up a little bit more than expected to EUR20 million around. Is this sharp increase? Does it include also any expenses from the SIRIUS project? Are there some expenses included are one-off expenses? And what does that mean for the next quarters? Is the expected to be less than EUR20 million per year. But okay, I expect also that the service revenues go through the personnel cost as well. And the other one, is it okay to expect an organic growth around 3% to 4% in the Q1? And the third question would be regarding the material expenses. I mean, okay, as I said, as the increasing service revenues go through the personnel costs and the proportion of software revenues decreased, is it to be understood that the material costs -- the proportion of material cost decreases because of the software cost. These are the 3 questions.
Yes. Thank you very much, Mr. Filker, for your questions. Coming to your question #1, related to the personnel costs. The increases that we had is, of course, we had 2 effects. One is we have a onetime payment that we have done to all our employees to catch up with the inflation rate. So this is something that we have agreed here with our team to have a kind of reasonable salary increases, if you want to say. So that's why we said part of our increases that we're managing this year is a onetime catch-up payment. And as you know, in Germany, there's also a kind of tax advantage by doing so. So that's why what you see in here.The second thing is we, of course, did some increases for our team members, which on average is 4% to 5%. And we kept it on this, I don't know, if I can say, lower range, but compared to some of the figures that are making it through the news. I think it's in a kind of reasonable area that we are and we cover this then by this onetime payment, which is also nothing high or very, very exceptional. But I think this is the increase that you see in here. And then, of course, there is a third part of this as well. Some of the increases that we had in utilization rate increases, that means bringing up a dose, of course, also ended up in some additional hours that our team members did, which, of course, were we had to pay something on top. But honestly, I would like to keep it at this level so that they have a full utilization.So these are the reasons for these increases. There is no serious impacts or, I would say, no exceptional one that we hadn't had also in the past years. So we have no social program. We have no payments for -- onetime payments. We did most of it last year for those who are especially on the management level and for the other team members, we either find with them agreements and they work until the last day. So we keep the notice period and, of course, then they also receive their normal money. And in many cases, we cannot show the decisions that fast. If somebody is leaving that we don't like to leave, so this helps us on one hand. And on the other side, if they have the normal notice period, and we're not replacing, it is what it is. But this we had also in the past, so I cannot refer this to project SIRIUS. So I hope that I answered your first question.The second one, regarding your idea of the organic growth. Yes, absolutely. You just said the 3% to 4%. This is exactly the range that we're in. So, I would say, more likely on the 4-plus range. This is what you can expect for the first quarter. And I hope that we will, of course, at least keep this or even increase than over the year. As I said, there's a lot of order intake. You've seen this. And of course, this should typically also allow us to have a nice organic growth that is in the range of 5%. So, your 3% to 4%, as you mentioned, is absolutely fine, would be on the lower range. And I think it's a conservative figure that we can use here.And now, your third question regarding the increase of materials. There is a special effect now due to the consolidation of ISR. ISR is also doing a little bit of hardware business. So other than what we typically have in CENIT, there is a slight increase because they do not only consult, they also bring in the heart where they do certain projects and then do the implementation of their solutions or even third-party software solutions on this hardware, which is a little different to what we do. And this is why we have an increase in material. And I expect this also to stay like this. So you will see this increase now over the whole year. And it's not related to services. In this context, it's more likely -- I mean, anyhow, of course, it is services, but services that is provided with hardware through ISR. So it's more likely in ISR.
Can I just -- just a last question is very important. Is there any reason why you made this lower your guidance a little bit, especially from this early point of the year because until now...
No, there's no reason. I think what we've done is, in German, I find it quite difficult because it says, which is the kind of circa. And I just wanted to make sure that we're not talking about your major differences. So that's why we, in my opinion, define this a little bit more. We're still keeping on the EUR180 million. And of course, this is then without further acquisitions. So, the upcoming acquisitions would be then on top. So this would be mainly what we have already in our basket and then, of course, some inorganic closing on top. So it basically is only organic the EUR180 million. And on the EBIT side, the 9-ish million that we have forecasted there. This is also our target line without further acquisitions. So the acquisitions, of course, can always come up.
Because until now, on the EBIT side, you were expecting more than 9.5%. And now it's more a range between 9% and 9.5.
Again, in some of the -- we're not lowering our guidance, not at all. I just have been in some of our conference or capital market conferences, there have been -- somebody pointed to this and said, well, what does it mean when you say circa around -- is EUR170 million still round o is it -- and I said, no, it's at least in this range. So, I'm targeting for the EUR180 million, and we're targeting for the 9.5-plus.
And we will move forward with Hannes Mueller.
I have 3 questions. The first 1 would be regarding proprietary software. You mentioned already that it decreased year-over-year. And you mentioned project deferrals. So, do you expect a similar effect as from Q4 versus Q1 on group level that these orders will come back to then at some point this year? Or where do you see proprietary software going forward this year? That will be the first one.Second one, maybe you could share your view on the business cycle or economic environment at the moment with -- for example, if you look at order intake in Germany, it's down 10% year-over-year in March, is quite a low level, but you mentioned that then you're not actually observing that. So, maybe you could share your take on the business cycle. And the third question would be, maybe you could elaborate a bit on the negative operating cash flow development. You already mentioned some factors, but maybe you could just add some color to that.
Yes. Okay. Coming to your first question, Mr. Mueller, regarding the proprietary software. We had -- and as you said, we see this decrease in the first quarter, which, as I mentioned, if you look at it percentage-wise, it's minus 7.4%. But if you look at it in the total figures, I think it's not that dramatic. And the reason has been, in this case, just one order. So if you would have had this order in Q1, we would have been at least in this range or even above. So, with the proprietary software, especially in the area of SAP as well as digital factory solutions, we have this kind of, I would say, project status. So, it's a onetime license sale hit. So that's why I'm not worried about it. And the order already came in. So the order that we planned for Q1 was -- or is a large automotive company in our area that place this order. And there's now the potential for us to equip their global sites. So this is just for one side, and there's quite some chance for us included in this one, which, of course, would boost in our proprietary software.The other thing that we, of course, also have to see is, there is a -- because of the consolidation of ISR, ISR has their own proprietary solution called [indiscernible]. At this moment, the contribution of the software is very little. We see a lot of potential in here, but it's very little. Now adding their software portion, which is mainly consulting and services then, of course, the percentage on our proprietary solutions goes sell. So, that's why we are not concerned. First of all, we believe that [indiscernible] is a software solution/platform solution that will boost over the next years our proprietary software sales.The second effect is, we expect also DFS to sell much more of our solution. And the third one is SAP. So, SAP also -- so SAP solutions, we're not selling SAP but SAP solutions, where we also received in the second quarter now an exceptionally nice and high order also. So this is already EUR1.2 million order just for proprietary software flash, some services, of course, added to this. So the pure software portion is in the range of about EUR600,000. So there you see, if you add this up, we're still targeting and we're not changing. I think we have just changed our target to 20%. We had in the past always the target to achieve 10% proprietary software, a target by 2025. And since we already last year on the consolidated level achieved around 11%, an unconsolidated view without ISR 14%. That's why we raised this up to 20%. So our target is clearly to push this forward and to go in the right direction. So that's -- again, we're not concerned about this. And again, I'm not expecting that in Q2 or Q3, this proportion will go back unless other sales are boosting. And then, of course, it's a percentage figure, but the total figure should go on.Coming to your second question. This was related to the economic situation. And yes, that's why I also mentioned this in my call before. Of course, I hear from all my peers in the market that they are struggling that they are a little bit concerned about the order intake and the economy in the German, but also in the French market. Don't forget that also in the French market now, we're facing a critical situation with the credit level of the French government. So, this, of course, also has an impact on some areas. We from CENIT, we cannot confirm this. As I just said, Q1, the 25% for KEONYS, which is mainly the sole sales and services. So, they don't do a lot of other stuff in France at the moment.And also in Germany, we still see a good order intake and some of the -- in 2022 delayed orders that we would have loved to book in Q4 are now coming in. And I cannot see at this point that there's a slowdown. The only thing that we see is that some of our customers, of course, but this was already also in Q4, they are much more investigating before they spend. So this cycle is getting a little longer before they spend the money, and this is why we also see some of the shifts from one to another quarter as we had this now in the proprietary software. And we, of course, see this also in other areas.But at the moment, I can -- at least for CENIT, I cannot confirm this. I would even say, we're very highly active. We see a lot of potential, but please also bear in mind that we have done some reorganization. And this might also be a consequence of this that, of course, we are now much more effective than we've been before and that we increase our performance on this level. So, this can also be the reason for this why we don't see this, as I mentioned, in some of my calls before. We have 6,000 customers, and we haven't really worked on all those customers in a strategic cross-sales way, and now we started this.And also, to give you another -- for me at least very impressive figure, we have introduced a new team called business acceleration team, which is a team that basically does telemarketing and follows up on leads, even goes to customers. So it's not pure telemarketing. It's really generating leads and going through our customer base. And it is in France. And in the first quarter, they generated 6,000 leads. So, this is for new customers and, of course, existing customer base, and already converted some of those leads also in revenues. So this is highly impressive. That's why I, again, coming back to your question, cannot really confirm this negative view that we see -- or that we hear at least in the German market or in some of the German news. We also have to bear in mind that sometimes the Germans, they bad mouth themselves. And we're always very negative, maybe also in our views in our impressions of the market. So, again, I cannot confirm this for CENIT at this stage.Now, your last question regarding the negative working capital or the cash flow that went down that changes way. It's not a negative working capital, but a lower cash flow, as you've seen. And again, this is also more likely project driven. We have milestones in some of our projects, especially with the large customers. This is also something that we read that we see now. There's a shift in some of our divisions to more and more larger projects, which also requires some skill changes in our teams. So, we have won this very large automotive customer, which is a new customer for us in Europe. And there, we have now to start really with project management and with project managers that up until so far, CENIT did not have in their organization. And this includes also, of course, contract managers. This includes also a much better milestone management. And I think what you see here is now with those heavy installment payments, you see this kind of shift in our operating cash flow. So I hope that this answers your question.
And we'll move forward with [ Bestoff Hoffman ].
A couple of questions from my side. First one would be on the EIM segment. So, the earnings were disproportionately low compared to your revenue increase. So you mentioned this already a bit, but can you go a little more into detail about the negative effects here. And well, let me say it a different -- how high are the one-off costs in Q1 there. The second one will be on your utilization in the Consulting and Services segment. I'm wondering how high is the maximum you can achieve with the existing employee base? And you mentioned, which is already also -- I would like to know what the average order size of your customers is in the segments?
Okay. Coming to your first question, [ Mr. Hoffman ], regarding the EIM segment and some of the drop that you see here, if we compare like-for-like Q1 versus Q1. One of the reasons is, if you just recall last year, we had in the EIM segment a very large order with the Bausparkasse in the [ Siberian ] area. So it's very clear which one it was, which was a onetime hit, which we have every 5 years. So you have to bear this in mind when we look at the jumping board. So it's not actually that we are decreasing here. I think it's just in the like-for-like view.The overall view for EIM is that we achieved this year more than EUR40 million in revenues, of course, now including MLP and ISR, we're even targeting in this direction EUR40 million to EUR45 million. And I told you that we achieved -- we're trying to achieve the EUR50 million in 2025 with the segment. So, it looks like that we're going here in the very right direction. So there is no drop in this area. It's more likely the like-for-like comparison since we didn't had such a large order in Q1 for the segment. I think that's the explanation for this.Other than that, there's a lot of potential. The sales teams are doing a pretty good job, are getting nice order intakes. Of course, here, we have also the situation that these are now larger orders, and I will come to your third question later on when we look a little bit on the impact by the average order sizes. And then you would see that, of course, on a Q view, it is a shift, I think, there we should really have then an annual view to a comparison to say whether they did a good or bad job. So I hope that this answers your first question.The second question was regarding the utilization rate. Well, let me start this way. We have done in our so-called project SIRIUS kind of review on what the contribution is of every service manager as well as of every salesperson in our organization. And one of the findings was that some of our sales persons didn't even pay their own salary. So, this is where we definitely have to do something much better than have to push this. The second finding was that some of our service team members have peak situations where they work on a very high utilization rate and sometimes then also even with over time hours. But we also have downtime times over the year. So, it's related to project seasonality and these kind of things.So, one of the reorganizations that we did, especially for the sales -- sorry, for the service department is that now we have built a kind of matrix. So, to give you an idea, my division of digital business services, which has a pretty high utilization rate and what I consider to be high is always in the area of 80%, and then, of course, the application all these kind of things and trainings and all these things. But 80%, I think, is a figure that they should achieve. Interestingly, there are some team members that even achieve even more because, of course, they book with several customers in the same hour. So there's always potential to do better, but let's say we stay on this 80%. They couldn't fulfill other jobs.Airbus is providing us quite a lot of additional requests that we cannot respond or that will respond to by external. So we're hiring external companies to expand our service capacities on this hand. And then, I have 4 other divisions that what this explains seasonality over the year have some time, some down times where people are sitting on the bench and are not achieving the utilization rate of 50% or 60%. So, by the matrix that we have built now, my division manager for DBS is allowed to use all the other service team members as well and to make sure that they fill in wherever we have a need in bottleneck or, on the other side, to reduce the number of external hirings or external companies. So this is a little bit the idea on how we improve our utilization rate here. And I think that this will definitely pay off.And as you can imagine, whenever we have a third-party [ in years ] an external company, we were losing some of our margin and why not use our internal resources in a much more intelligent and better way. So this is what we're doing here. And I hope that this answers your question. And again, I think I'm not squeezing -- I'm not over-squeezing our team, but I think we can become a little bit more supportive, like I said before, and have to lose some fat.Coming to your last question, the third question regarding the average order size per segment. The typical order size in the 3DS segment is, the full segment, the first one ranges from about EUR300,000 to EUR2 million in this range. So that's why it's very difficult to say the average is now EUR1 million. It really depends on, if we have a onetime big hit or not, so it's large customers or a lot of smaller customers, that's very difficult to range. But if you want to say so, I think the average rate would be then EUR800,000 average for 3DS.In SAP, the range is more likely about EUR400,000, EUR500,000, so in this range, in average, again. The deal size goes up to EUR2 million. So like we had now with onetime hit, but the average would be in this range of EUR400,000 to EUR500,000. Totally different, since it's mainly licensed sale only and a little bit of implementation, but mainly it's just the license sales for the Digital Factory Solutions. Here, the team is having deal sizes from EUR100,000 to, I think, in exceptional cases, it can go up to EUR500,000, but there you see that the average is typically, I would say, EUR100,000, EUR150,000. That's more likely the average because EUR500,000 is the exception. And as you heard, the automotive company that just ordered now in Q2 is more likely on the [ upper end ].Then on the size of missing EM, in EM, the average size is, well, I would say, on ISR level, EUR200,000 on the CENIT EM level since there we do major insurance companies, the average range would be EUR400,000, EUR500,000 per deal. And the last one then, of course, is Services. So DBS, since there, we are mainly doing at the moment, at least, Airbus, of course, our framework contract. And the framework contract foresees an annual frame from EUR8 million to EUR10 million. So it's basically just, yes, the cutting of the cake.,So it's not really -- I cannot talk about average order because it's one customer and that's the size. I hope that this answers your question.
And we received another question from Yannik Siering.
I have 2 questions left. The first one would be on order backlog. You showed a nice increase here. Maybe you could talk about how reliable the order backlog is, maybe cancellation clauses, and if you have already noticed any hesitancy of customers here? And then, the second one, a little bit broader. Maybe you could provide an update on the internal efforts that you talked about in the past with respect to the new bonus system and generally the more intense cooperation between the segments. Maybe you could provide some update here.
Yes, of course, Mr. Siering. Coming to your first question, your order backlog. You've seen a very nice increase. I would say that this is a very consistent and, at least, like I say, at the moment, I see this happening also for the second quarter. So it's still ongoing. I see that my sales teams are working like hell. So, this is very, very positive. One of the drivers is definitely that we have changed our way on how to work on some of our customers. So, it's this cross-selling event or efforts that I will come to in your second part of your question, but that's one reason.The second reason is, there is a catch-up from last year, definitely. So, these are customers that we spoke already last year too and that we expected to place the order in Q4, which then resided in a shift now. And the third effect is, except of Germany, I must say that there's also a portion of defense included now. You just heard that in France, the major portion of this 25% order intake in the first quarter is a defense company. So, we see this in all countries, except for Germany, I would say. And as you all know, the German government is very hesitant in spending some money or placing the orders. So I don't want to comment too much on this, but we had CENIT, and I think also the defense industry in Germany is quite disappointed. But anyhow, we see this in other areas going up.And again, we have a lot of customers -- also larger customers now talking to us. And I think one of the reasons is also that we have changed our partner management. So, we're working closely with some of our larger partners. You've seen that we've become an IBM Platinum partner, which results in a situation that IBM is recommending us, going with us to customers. They also have changed their sales system. So they have basically stopped their direct sales in the German or in the European market, if you want to say so, we're working now through partners, which, of course, helps us on the EIM side. We work now closer also with Dassault in some of our activities where we go now together, which in the past was sometimes emotional, I want to say so.And then, of course, what we also see is that the SAP is also recommending us some customer situations because we have there quite some special knowledge. And this will be also then the areas that you would see this year, we're pushing quite more also in M&A activities because these are our [ model next ]. So I think it's a summary all of this. And again, like I stated before, I don't see this economic downturn at least scenario, maybe it's because a lot of our customers want to automize more, which means you have to digitalize first and they do the investment to cut costs in a midterm view. So that's the order backlog out there.There was a question on the drawback clauses or anything like this. We don't have this in our contracts. So, if you place an order, you have to place the order. And by the way, also with Airbus, our framework contract, the minimum is this range of 8% and then there's on top. So, you cannot draw back, then you would have basically to pay without having services. So that's the situation. That's why I'm also not expecting that our order backlog that there will be any customers in pushing back. We don't also have customers -- we don't see any customers at the moment that are close to bankruptcy or Chapter 11. So also this is something that we don't expect, of course, cannot exclude. But at the moment, I would say the older backlog is pretty safe, and I would expect my team to deliver the same also in Q2. Not the same percentage, but very positive percentage. So don't stick on this one too much.Now, your second question, Mr. Siering, relating the internal efforts. Yes, as you know, we have done -- or we have started last year a lot of internal efforts to increase our performance and to start also the, yes, cross-selling efforts in a, I think, much better way. So, #1, since the beginning of this year, all our team members have a new KPI, which is the BQR, what we call the Business Quality Ratio. It's a combination of gross and EBIT, percentage-wise related 50% to the company achievements and 50% related to the business unit achievement. So what this does is that the mindset of our team members has shifted, especially the salespeople because in the past, of course, they were not interested in any cross sales because they didn't see any advantage of introducing another division to the customers. Now, by this new bonus system, I think everybody is gaining a certain mandate that's why everybody is supporting this, and we see the survey.The second thing is, we have implemented a so-called strategic sales director, which is my corporate strategy, gentlemen. Mr. Thiel, who's doing an outstanding job and is pushing the teams, and I'm participating in a biweekly call to find out where we are with our cross-sales activities. So we have targeted some companies where we see this potential. And myself, I'm dialing in to motivate the team, but also to check the team to see where we are and to push this. So, it's really a thing that I'm also pushing.The third thing that we have implemented is, we have, as you just heard, we have reorganized our marketing department. We had in the past in the total organization, 32 team members working in the marketing department out of 800-ish. So you can see that this is a quite high number. We have reduced this by 17 members in a friendly way and shifted them to open positions or some of them left and didn't wanted to take the challenge and the rest of the team, apart from my corporate marketing team, is now working in this so-called business acceleration team. So, now the marketing teams, they also see all their efforts and have to convert them into real orders. So it's not just generating a nice lead, it's also following up and making sure that it's converted into sales.Then we have changed, as you've heard this, so we have introduced the matrix for the services team to increase the utilization rate. So this is something that is also very important now that we have the full access and full view, transparency on all the different service members in our organization to reduce the externals and increase our EBIT, of course, then at the end. And then finally, what we also have done is I now have since 2 months, a full view on our CRM. So there's only one CM in place seen in 2022. We did some investments in the new IT infrastructure where we had 4 CMs in the past, and now we have 1, which gives me now the advantage to have a full view on our customers and the activities of our sales teams. And on the other side, of course, also to all our team members to see where they maybe have some potential to get into this one.So there's a lot of other things that we have done, but just in a nutshell to show you, 2022 has been a year of a lot of changes, a lot of things that we put on the right way. I think 2023 is still a year where we're -- I wouldn't say we're collecting the fruits, but there will be some fruits definitely. And I think that the mindset change will also happen this year. There is a performance increase already in our organization. But what is important for me is that the mindset change is happening and that the team realizes that we're not in a [ Disneyland ] mode and everybody has to contribute. And otherwise, they don't have the position in this organization. So that's the consequence of this. So I hope, Mr. Siering, I answered your question in a comprehensive way.
And we move forward with [ Lukas Frank ].
Some short financial questions. First of all, can you quantify the one-off costs you have mentioned in terms of personnel costs you paid as a onetime?
Yes. Onetime in 2022 because in 2023 Q1, we did not really had any onetime costs. So these were really the 2022 where we had -- or do you mean now the onetime amount for the inflation rate?
Yes.
Okay, sorry. Yes, for the inflation rate, the amount has been in the range of -- this was about EUR480,000 to be paid [Technical Difficulty] bonus. And it's affecting the German employees on the CENIT side. So, ISR is not included in this.
Yes. Then can you give us a number for revenue at ISR?
Now in total, because I can only tell you now in total, because I would have to check up the numbers now for Q1. So just I don't know of the hip. But in total, I can tell you that ISR is targeting this year in the range of EUR24 million and met this targeting for about EUR4 million in revenues for the total year.
And then last time, we also talked about the topic of PPA, so purchase price location. And I missed this part now in your report and also in your presentation. So, can you give us a number for PPA in Q1 this year and also in Q1 last year to have a better feeling of what is the real operative EBIT?
Not off the hip, [ Mr. Frank ], so I cannot answer this immediately, but I will provide this information and maybe add this also in the presentation. This is my view. So we would, when we upload the presentation, then we would add this.
Yes, because I think it's very...
Yes, absolutely, absolutely. No problem. And of course, I will also send this to you separately also so that you see this and you don't have to check on our website, but for all the other team members here in this session, we will also provide this information. And [ Mr. Frank ] I still owe you the question on the '11 and '14, which you will receive today the proprietary software cost.
And we received another question from [indiscernible].
[indiscernible]. Just I might have missed this, but could you just clarify what the organic growth actually was in the first quarter? I think you gave a kind of range of what you would expect it to be. But just, yes, I wondered if you could clarify exactly what the organic growth was and which divisions you would -- what was driving that?
Yes, absolutely. [ Thomson ] no problem. So, if I just -- and this is why I was a little hesitant in providing the full number, and maybe can explain this to you a little better. The organic growth in the first quarter has been 3.9% without ISR. Now, I don't have the ISR figure yet, because they are not used to this kind of reporting. So we're still working on this and making sure that we get this added to this. So that's why I expect this to go a little bit up more like in the direction of 4-point-ish. But at this point, these are the figures that I have, and that's why I was a little reluctant in saying organic growth is definitely for that amount, but it will be in the area of 4-point-ish percent.
Okay. And then, just in terms of what you're adding into the revenue this year from the acquisitions which have not been fully consolidated, am I right in thinking that from ISR, we're talking about roughly EUR11 million for the full year -- sorry, for the half year? You only consolidated from June last year, and then about another EUR3 million from MIP for this year. Is that what we should add on to the EUR162 million to get the sort of inorganic growth that you've already got for this year?
For last year, there was, of course, no MIP included. So we will include this year out of this EUR4 million, 11 months only, because it started only in February. And for ISR, we had 7 months that we included since we started by the 1st of June last year since we acquired in May. So, 5 months are missing. So you would have to add now the 5 months of the -- well, last year, it was EUR22 million. So now it went up to EUR24 million to have a kind of idea in which direction we're heading.
Okay. So I think that was about EUR10 million then from ISR and around. So I think that means that your organic growth forecast for this year is about 4% for the full year?
Absolutely.
Yes.
That's what I said, [ Thomson ]. We always try to be in the range of 4% to 5%. I mean, the 5% is what we're targeting for. And again, like I said, we have to increase the performance of our teams. I'm not saying that we cannot achieve this 5% also this year. But I'm trying to stay on the conservative realistic levels for the organic growth since the team has to ramp up and has to get into this one. But definitely, this is also what in our 5-year business plan and our 5-year view, we always have as an assumption that it will be in the range of 4% to 5%. So I don't have every year 5% in there. What I did is, in my assumption, it's a 4%, 5%, always changing from year-to-year because you've seen also in our 5-year view, at least until 2025. And then, I think now '26 is not -- it's not distributed or not disclosed yet. But this is the organic phase that we have included and the rest is, of course, inorganic.
And before we come to the end, 1 last question from [ Mr. Vena Friedman ] regarding restructuring. Has there been restructuring charges in Q4 2022 of Q1 2023 from reducing the numbers of employees?
No. There have been no restructuring costs. We have -- well, let's say it this way. Of course, what we have done is, in our operational figures, what you see is, we have basically eaten up those costs. And this is also what we have shown. What we haven't done is, we haven't built a restructuring case or a restructuring budget if you want to say so, that we have included that we're running against, because this is for us. I mean, anyhow now in Q1, there hasn't been included anything anymore for this, this is finished for us. It has been all eaten up in 2022. And there's no budget and there's no decrease or anything like this.
Okay. Thank you very much. It seems that there are no further questions. Thank you for your questions, and thank you very much, Mr. Schneck and Mrs. Maze for the detailed presentation and your time answering all those questions. And for some final remarks, I hand over to Mr. Schneck.
Yes. Thank you very much, and thank you all for participating in this session here today. I hope to see some of you tomorrow on the conference in Frankfurt on the Capital Market conference or hopefully then all of you next week on our shareholder meeting here in [indiscernible] on May 17. And for those who cannot join, and I maybe also not joining today, please feel free to contact us directly. Axelle and myself are always available for any of your questions. Please shout an e-mail, call us or let us set up a team session. We'll try to be fully transparent to provide you as much information as we can. So, thank you very much and looking forward to seeing you soon.