Asseco South Eastern Europe Stock

Good afternoon, everybody. [Operator Instructions]. Okay. Good. Welcome on our call after Q3 filing. As always, we will start with a few comments, highlights after Q3. So a very good quarter showing 77% growth on operating profit level. Of course, this is also thanks to weak base, weak 2025 during which we have those write-offs or one-off bookings related to India and Dubai operation. Excluding this, growth on operating profit is still there, but it's on level of 4%.

Another quarter of good cost control, and this is another first quarter when we see that there is no big growth on net revenues level rather on good cost control. Payments are the key growth engine after slower first half of the year. EBIT growth is by EUR 3.2 million, one-offs adjusted, so without effect of previous year ones. Another good quarter, but flattish for banking and slight growth of revenues and operating profit.

But to recall, last year, Q3 was this first quarter when we significantly improved performance of banking segment. For Dedicated Solutions, this was not spectacular quarter declining year-over-year, mostly due to missing projects in Bosnia and Herzegovina in this area of utility solutions and growth.

To recall last year, we had an output year, so the one which was based for calculations and payments during 2026. And we had many spectacular projects realized during Q3 and even more during Q4 2025. When talking about operating cash flow, very good. We are very satisfied from the amount of operating cash generated as well as conversion of operating profit or EBITDA to operating cash flow, what I will comment in more details a bit later.

And traditionally, some statistics about transactionality of payment business. As for IPD and this process of physical cards, it is very good, 37% growth in IPD, 11% growth on classic card payment processing. But we have decline in eCommerce, which is due to those banks in Turkey who decided to go to in-source payment gateway and to use their own solution. But we've talked about this on our previous conferences for a few time already. So let's move to results. So Q3 numbers as they are in financial statements, excluding hyperinflation effect show 7% growth of operating profit.

And as I said, 77% growth of operating profit. This is, of course, including weak base, so one-offs in India and Dubai. If we look excluding this, we have growth of revenue by 3% and growth of operating profit by 4%. So those one-offs in 2025 Q3 were EUR 4.1 million on revenues and then operating profit 7.5%. When we look below at net profit growth is slightly higher, 9% year-over-year. And this is mainly thanks to financial activity. We have the growth year-over-year by EUR 1.7 million. And there are 3 major reasons of this change year-over-year. Two negative ones. One is 30% interest, which balance is lower by EUR 300,000. Then we have positive impact of lower cost of put liabilities revaluation. It is EUR 3.8 million positive effect. But we have higher cost of dividends paid to noncontrolling interest in case of those entities which are consolidated using present ownership method.

And the cost of those dividends are higher by EUR 1.8 million. We have higher taxes, income taxes and this is related with both capital gains, so those intragroup dividends which we distributed during Q3 and regular operating profit and distribution of the results between geographies, those with higher interest rate tax rate versus lower. When we look at those one-off adjusted results by segments, you can see that payment shows growth, EUR 3 million growth and almost EUR 2.7 million growth of operating profit with increased profitability from 17% to 21%. If you look at total numbers in financial statement, excluding with everything included, no adjustments.

Here, we have growth in payment by EUR 7 million and operating profit by EUR 10 million. So from where it comes in payments, we have 3 business lines with growing revenues, ECRs and IPDs, so those lines where we sell directly to merchants and eCommerce and processing showing growth of EUR 4.3 million higher revenues in ATM and flat in POS. As for ECRs and IPD, this growth is mostly in Slovenia and Croatia, this is the biggest contributor, both on revenues and on operating profit. When you look at the eCommerce and processing, with EUR 4.3 million higher revenues out of which EUR 4.1 million is effect of one-off in 2025.

So we can say that excluding this one-off effect, the growth of revenues is EUR 0.2 million, which is mostly in Portugal and Egypt with slight decrease in Serbia. But when we look at operating profit eCommerce, it is higher by EUR 8.6 million, whereas the effect of one-offs was EUR 7.5 million. It means that organically on the current business, the growth is EUR 1.1 million despite revenues growth only by EUR 200,000. So it means improved cost control and profitability in eCommerce.

In case of ATM growth is mainly related to equipment deliveries, ATM deliveries, which were higher this year in Serbia, Macedonia, Slovenia and Bulgaria and was partially compensated by lower deliveries in Romania. This translated to growth of operating profit by EUR 600,000 in ATMs business line.

In case of POSs, we have flat revenues, but looking a bit more deeper, there is a drop in Spain, Croatia and LatAm, which was compensated by higher revenues in Serbia, Czechia, Slovakia and Albania. Looking at operating profit despite flat revenues, some improvement of efficiency and higher EBIT by EUR 300,000.

Coming back to other segments. As I mentioned, banking, another good quarter, growing revenues, EUR 1.4 million and higher operating profit by EUR 400,000. This is mostly thanks to core banking solutions in Southeastern Europe in Serbia, Macedonia and Montenegro, with slight decline in security portfolio mostly in Turkey where we have InACT for this anti-fraud solution.

And dedicated solutions, the worst business line in terms of performance in Q3, we have a drop of revenues by EUR 1.4 million this is composed of 2 effects. One is drop on own solutions by EUR 3.5 million, partially compensated by resale of the third-party solutions. This drop of own solutions is Bosnia, what I already mentioned. So the lack of those big projects for utilities or intelligent traffic solutions, partially compensated on top line level by third-party deliveries, deliveries of third-party solutions, equipment or software, but such revenues does not transport into net revenues and operating profit because of COGS, what is natural in this business.

So the drop of operating profit is even higher than drop of revenues. Okay. So this was by segment and how it look by geography, Southeastern Europe, flattish. There is this drop of result in Bosnia and Herzegovina, what I already mentioned two-time. And -- but this was compensated by different other geographies like Croatia where dedicated solutions and Payment was better. Macedonia, thanks to banking or Serbia, thanks to banking payment and dedicated solution.

In Central Europe, we have a nice increase of revenues and also increase of operating profit. This is thanks to banking, mostly in area of core banking solutions, but also thanks to dedicated solutions, which was a bit better than last year. In Western Europe, another quarter when results are flattish, but there is different structure of those revenues growing eCommerce and ECRs in Spain in Portugal and Spain respectively and drop in this more tradition POS business or BPO services. Turkey. On revenue, it is almost flat, but pretty big drop of operating profit. This is not due to payment, yes.

So in payment, we have drop in this business line responsible for payment gateway for big banks. Here we have drop as we mentioned and due to clients who in-sourced. But this drop was compensated pretty much by 2 things. One is directly to smaller clients, merchants and second serious cost optimization.

So on operating profit, it is flat in payment. Problematic is dedicated solutions where we have leasing and spend management solutions and those units have weak performance in Q3. LatAm, rather flat. And India, Dubai this effect of one-offs from last year, but okay, they continue to generate losses. So this Q3 and how it look accumulated after 3 quarters. I would say the picture is pretty similar and probably you remember our results from H1.

So revenue grew by 5% and operating profit by 38%. So really nice improvement. Even if we exclude one-offs related to India and Dubai, which are both '25 and '26, because to recall you, in Q3 this year, we have written off remaining part of assets recognized during purchase price allocation software and also remaining part of goodwill. And so the growth is 38%, including all this. On net profit slightly lower, 11%, but it is not due to any write-offs because they are pretty comparable both years. It's mostly due to dividends paid to non-controlling interests, to minority shareholders. As you remember, in Bosnia last year, we had spectacular results during 2026, those results are distributed in form of dividends to shareholder. We have there minorities, so part of those dividends runs in our P&L. And increase of dividends in 2026 versus '25 is EUR 4.5 million.

Of course, taxes are also higher, but this is more or less in line with growing operating profit without effective tax rate. Looking by segments, two main drivers, so payments, growing payments and banking while dedicated solutions is dropping year-over-year. So in payment, we have growth in those 2 lines delivering solutions to merchants. We have also growth in eCommerce and processing, but slightly lower revenues in more classical lines of delivering and servicing ATMs and POS. But despite this drop revenues in ATM, POS, we have growth of -- and drop of operating profits in both lines in POS by EUR 600,000 and in ATM by EUR 300, 000 on cumulative numbers.

In case of banking, after this spectacular H1, also Q3 contributed a bit positively. So we have here growth almost EUR 8 million on revenues and EUR 6 million on operating profit, with significantly improved profitability.

Majority of this growth on core banking solutions, mostly Serbia, Macedonia and Romania plus on other solutions in Croatia. And dedicated solutions, it's very similar to Q3 comments. So Bosnia is the major driver for drop, plus issues in Turkey, which I mentioned Q3 results by geographies. And how it looks by countries for 3 quarters accumulated growing Southeastern Europe, but dropping Bosnia, what I already commented. Other countries, very good, growing year-over-year, similar in Central Europe. Slightly dropping operating profit in Western Europe, still valid this comment about change of structure.

So more eCommerce and ECR business with bigger results dropping those traditional lines. And improvement on Dubai due to write-offs from and one-off bookings from previous AM. So this is about results by countries and cash flow. So I mentioned that we are very satisfied with cash flow generated this year. So after 3 quarters, more than EUR 61 million of operating profit generated. It means 91% of EBITDA to cash flow -- operating cash flow conversion, so very, very solid.

Of course, part of this generating cash flow we invested, yes. When talking about CapEx, it is slightly lower than last year, especially the one for projects or equipment for outsourcing or own networks, but we spent more on M&A. These are not new acquisitions, not new companies, but we have bought out a minority stake in one entity in Bosnia, in Albania, one in Portugal.

So we reached 100% sales plus on top of the small earnouts for controlling stakes acquired in previous years. And what has increased is dividends paid to minorities. I commented this from P&L side that we have more costs is, of course, also visible on cash flow level. When we look at last 12 months amount of operating cash flow is almost EUR 100 million, EUR 97 million cash generated during the last 12 months with conversion rate from EBITDA 95%. Of course, this leads to very strong liquidity situation, EUR 70 million of cash in group end of September, lower short-term loans than end of last year, also lower liabilities related to M&As. Despite payment of those things, net cash higher by EUR 20 million than end of last year.

So we feel very strong here, and we are very satisfied from the level of cash generation in last quarters. As for outlook, traditionally, we present backlog. So this time there was backlogs for Q4 are slightly lower than it was in 2025, 3% on Margin I level. This drop is mostly due to ASEE parts of this banking and dedicated solutions.

Here we have backlog lower by 13%, whereas in Payten, it improved and is 9% higher than last year. Why like this? And again, I will mention Bosnia and those big projects we had during Q3, Q4 last years. As those projects were delivered in Q3, Q4, obviously, they were already in backlog.

So backlog only due to those projects was higher by EUR 6.4 million in Bosnia. So excluding this effect, backlog is slightly growing in this banking and dedicated solutions. Okay. So this is how it looks. So despite this backlog, which is not very high, we are optimistic. We see Q4 positive and there is nothing that would worry us seeing analyst consensus for this year, how they see us on full year numbers. Having said that, I'm open for any questions. If you have, you can drop message on chat I try to answer or maybe you can raise hand and ask questions.

So before waiting for questions, with M&As, we are looking for targets, but I think we are more selective, let's say. We implemented more conditions which need to be fulfilled to decide for transaction with very deep going into understanding of how many clients targets have, if there is big concentration and we want to avoid this type of entities, not to generate.

Anyway, we have a few processes open. I don't think any of them will be completed still this year, but beginning of next year, it might happen. We have, of course, still some open M&A liabilities that you saw on this liquidity slide. So this short-term part for next 12 months is more than EUR 10 million. And there is a high probability that some part of this will be still realized this year.

Okay. So if there are no questions because I don't see any questions, then thank you for joining. I invite you to one-on-one communication. You can contact us, and we'll be happy to discuss. Thank you, and goodbye.

So guys, preliminary results. Usually, they are the same or always the same as we published so far. A quick summary, and I will deep dive into details in a second, but we have a very -- not very, but we are quite satisfied with profitability, but that we don't expect to grow more but the profits go up despite pretty modest growth in revenues, and this is something we did say in the beginning of the year that this year, we expect slower, slower dynamics on the net revenues, but we hope to optimize the profits, which is already visible, yes.

So operating profit is 30% here, growing year-on-year. And 1 of the key drivers is banking. So banking revenues, in this case, grow also, and operating profit more than doubled. And we think it's not the end. This can continue in terms of a very good banking performance, and we want to keep it up that way.

Payments, excluding PPA write-offs slightly growing. Yes, we had some write-off cleanup of the past investments finally, but the revenue slows down in traditional old-school business like POS and ATM. But it's offset by independent POS networks sold to the merchants and ECR businesses. As for e-commerce and processing, we have some write-offs which hit and slowed down the dynamics.

But overall, we are pretty happy with the organic growth over there. And in Turkey, where we had a huge pressure, as we mentioned, because of 2 customers going in-house. One is finalizing this second big customers. Second 1 is in process. We managed to compensate this very much by cost cutting, yes as we had acquired a big team there, and we successfully are performing this exercise, which turns into a reasonably good effect on that market.

Dedicated Solutions is absolutely not satisfactory yet. We have a slowdown on some of the tunnel road monitoring projects and shift to Q3, Q4 of these projects. So this is impacting the operating profit. The PPM goodwill write-offs, Michal mentioned more about it, but this is between operating profit and net profits affecting net profit on EUR 3 million. So that's why the discrepancy in the dynamics between the 2 lines. Cash flow excellent, we don't expect this to get worse, maybe only better. So cash conversion is very good and significantly improved to last 12 months, yes.

And transactional business, this e-com drop that I mentioned also resulting from Turkey and some of the recognition from Middle East and India last year, which we reversed later on in following quarters last year, but this is cleaned and very nice dynamics of independent POS and processing of physical transactions. This is nicely growing. And let's look at the numbers. Michal, please.

Yes. Let's go to numbers. So our traditional view on numbers, first two columns, and full numbers, including hyperinflation, then third and fourth, excluding hyperinflation reporting. And here, as we already mentioned, flat on top line, but with change of structure of revenues, growth of own activities by around EUR 8 million and with a decline of third-party.

Operating profit, excluding hyperinflation, and it's 27%, 30% with high penetration as we commented. And net profit here, it's slightly lower than last year, 4% below. And this is mostly due to financial activities. So in balance of financial activity is change of balance of financial activity year-over-year is minus EUR 3.2 million. Out of this EUR 2.1 million is write-off of remaining part of goodwill on Indian operations, so now good will is at zero net value. And plus restatements of put call liabilities and earnouts.

Here, we positive impact last year, around EUR 1.9 million. This was first type of restating liabilities related to India and Dubai. Now this year, we don't have this. So net, there is EUR 1.4 million lower result. From positive ones in financial activity, it's EUR 300,000 lower cost of dividends rate to noncontrolling interest in case of present ownership method. This is mostly related to Eastern pay, which paid dividend earlier this year in Q1. So on accumulated numbers, there is no -- the drop in difference between quarters.

Taxes, Taxes are slightly higher, around EUR 400,000 more taxes simply because of higher operating profit and profit before tax. But when we look at results adjusted for those items, which are, by definition, not related with tax like goodwill write-off and so on. Effective tax rate is slightly lower than in previous year.

So let's have a look at results by business wins by segment, so banking. Here, we have the biggest growth or only growth. So top line, EUR 4 million bigger than in 2020 and '25, and it was delivered by all 3 business lines, which we have in banking core solutions, multichannel solutions and security portfolio. The growth is mostly like 65%, more or less on services, implementation and modifications.

And the remaining part is recurring SaaS and maintenance revenues. Geographically speaking, growth is mostly in Southeastern Europe, in Serbia and Croatia is the leading ones plus in smaller values in Bosnia and Herzegovina, plus in Central Europe, in Romania. This growth of revenues was 1:1 transformed to operating profit, which increased EUR 4.1 million previous year and reached almost EUR 8 million with profitability of 35%.

Dedicated Solutions, here flattish revenues, but as already mentioned, we have some cases in road projects where -- and the work was done, but we are not able to recognize or to create some allowances due to some external factors and delays we've approved for some sections of tunnels or highways, but with our strict policies we would prefer to do this way. So operating profit slightly lower than in the previous year in Dedicated Solutions.

And the last line, Payment, here we have drop off revenues by almost EUR 4 million. In a moment, few words more on which product lines and operating profit, which is slightly lower, EUR 600,000 than previous year, but this includes write-off of assets recognized during purchase price allocation or PPA for Indian operations. If we exclude this noncash write-off, which was EUR 1.23 million, there is a growth of operating profit by around EUR 700,000.

So in Payment, a very good quarter, as already mentioned, for ECRs and IPD, we have growth of revenues by million. And this is mostly Western Europe, Spain plus in Southeastern Europe, Croatia and Slovenia. E-commerce and processing flat year-over-year. However, here, we have a drop of revenues in India and Dubai, around EUR 1.4 million, which was compensated by increase in Turkey, Portugal and Spain.

For ATMs and POS related with lower deliveries -- in case of ATM business line, it's mostly Southeastern Europe, only Southeastern Europe Croatia, half of this drop and also Montenegro and Bosnia. And in case of POS, this traditional POS line drop of revenues is mostly related with Western Europe, Spain with deliveries of Android POS terminals were small.

And let's have a look at geography, Southeastern Europe, the strongest one, almost EUR 3 million growth of operating profit, mostly in Serbia and Croatia. And as I have mentioned, Serbia mostly banking, core banking, but also in payment ECR, IPD business press in this case, also the Dedicated Solutions was better than in previous year.

Smaller growth in Macedonia, in banking and in the Dedicated Solutions, and some slowdown both on revenues and operating profit in Bosnia, and this is related with road projects, which I already mentioned as in previous year, this entity, which is responsible for utilities business, they had some projects already in Q2.

And this year, there was no such product Central Europe in growth of revenues and operating profit. This is mostly Romanian banking as the biggest contributor. Western Europe, we have a drop of revenues due to lower deliveries of POS terminals and also drop of operating profit, which was partially compensated by growth of e-commerce, which what I already commented before.

Turkey, pretty good growth of revenues and growth of our operating projects, so visible cost reduction actions, which we took in Q4 last year and beginning of this year to address the loss of 2 clients or maybe not us, but the fact that they switched transactions to their own payment gateways.

And in Dubai, the drop of revenues quite significant. I commented this on e-com, but flat result. If we look at the PPA start from the bottom, we have a drop of result by EUR 7000 and this is related with those write-offs of PPA assets, which I described. So if we exclude this cost like regular depreciation cost would be around EUR 1 million, so lower than in previous year. This is something what we should expect for the coming quarters. So this is -- this was about Q2. And now cumulative view for 2 quarters is very similar to the one for Q2. As you see slight growth on 3% year-over-year. EBIT growth 20%. The difference is that there is also growth on net profit. Here, thanks to 21, there was a loss recognized on sale of subsidiary in Turkey. This year, there is no such event it affects year-over-year dynamics. So this -- I think this is the biggest effect. Taxes, of course, on cumulated data also are higher by EUR 13 million, but the same or similar comment as for Q2 only growth of effective tax rate. When we look at segments, again, very similar picture. So big growth of revenues in banking, EUR 6.3 million and EBIT higher by EUR 5.5 million, also improved profitability from 22% to 32%. And about contribution by business lines or geographies, exactly the same comment as for Q2 numbers.

The Dedicated Solutions here, we have a growth of revenues. So a bit different than Q2. And slide very minor, but increase of operating profit. Impairments, drop of revenues and drop of operating profit by EUR 600,000. But if we are to adjust for write-off, it will be also slight increase.

And when talking about drops off revenues in payment, ATMs and POS deliveries, exactly the same as in Q2. Okay, drop on ATMs is lower than in Q2 due to some deliveries which happened in Q1. E-commerce, here we have dropped on cumulated data, and this is due to things. One is India and Dubai Q1 2025 was last quarter of high results. So there is a drop in year-over-year plus in Turkey, Q1 2025, it was also before clients switched transaction. One client already started to switch transactions partially, but then the second 1 started this switch later. So this is why we had this drop year-over-year. ECR IT, very strong and growing for 2 quarters.

And short view on countries. Again, very similar picture. So the strongest Southeastern Europe, more than EUR 5 million higher operating profit the growth mostly Serbia, Croatia and Macedonia, so exactly the same as Q2, a slight decline in Bosnia. Central Europe, EUR 1 million higher result and thanks -- and it's the same in Q2, thanks to Romania and banking. Western Europe, slightly lower also the same common growing e-com and shrinking traditional POS business.

Turkey, flattish revenues, but increase of results, thanks to those restructuring actions we've taken. Yes. And Middle East and India clearly visible what I commented. So a huge drop of revenues due to Q1, Q1 2025 and the drop of operating profit by EUR 1.6 million. So this is about result. And let's move to cash flow . It's very good. As it already got mentioned, EUR 38 million operating cash flow for 2 quarters. This is EUR 13.5 million more than for the -- in the same period of 2025, so significant improvement with lower investments in infrastructure for outsourcing and own networks.

Slightly higher expenditures on M&A. But these are not new entities. And these are managers for put call options, and now it's mostly put call on BS Telecom in Bosnia Road business plus other in Slovenia, which is in payments. When we look at operating cash flow EBITDA conversion rate last 12 months or first call 91% of EBITDA converted to net operating cash flow. So we believe it's a very good level, and we are satisfied.

Current balance sheet, EUR 61 million cash at the end of June. So EUR 30 million lower than end of last year. But we need to remember that end of June on 30th of June, we paid a dividend for 2025 plus, of course, we had those investments in M&As, which we have done during this period. Net cash or slightly higher than the end of last year and significantly better than the end of Q2 2020.

As you see below in working capital, a drop of receivables, bigger drop of receivables than drop of liabilities. Of course, good, slightly increased POC valuation assets this is related to status of projects and realization. We expect more to be closely invoiced in the second half of the year. Okay. So this is about the balance sheet, and let's move to outlook for '26 and backlog. Piotr, do you want to take this?

Yes. Yes. So backlog, guys, is improving slightly. As mentioned, we do expect a slowdown on the revenue side this year versus past couple of years. Even though you can see slight acceleration compared to previous conferences or previous outlooks that we have performed -- it's been patent, the growth and then the banking and Dedicated Solutions, so 8% roughly in patent, slightly below that in the other ones, but we do expect this to grow a little bit still in the second half of the year.

In terms of outlook, we do focus on efficiency, on profitability. And we were asking in the morning on the [ Polish ]conference where the biggest upsides are, well, I would say, the quick ones, the biggest ones are on the loss bringing units, which we try to eliminate on the last year loss bringing units business units generated about EUR 12.5 million losses. So I cannot tell you that we will have no loss bringing units at all because some of them are on the early-stage investment phases where we want to develop the business and deliberately, we subsidize it in the initial phase.

But overall, we do expect a big improvement on that side as well as on not the best contracts that we try to restructure, renegotiate and improve years. People efficiency, observing this, their workload and time tracked is another area which we try to squeeze and improve. So we are pretty positive about the second half of the year. Yes, the outlook is positive as before with less risk of negative outturn.

And also for '27, we have pretty positive initial views, but this -- we will comment later in the future. And having said that, I'm open with Michal to your questions. So please you can write them on chat, or you can voice them out. Let us know if you have any requirements for additional explanations clarifications or anything else that you would like to know. I think we can unmute so people can talk to us. Monica, I hope you can do that. Yes.

Yes, it's unmuted.

Guys, any questions? I was asked is profitability of 20% on EBITDA level of moving from about 20% to 30% is possible in the near future. I think it is possible. I'm not saying this year, but 27% should be achievable, yes. Or at least moving very much north in terms of this target. Listen, if there's no more questions, we are inviting you to direct contact -- beyond the new compensation scheme that is currently discussed at ACP level.

Well, I'd love to, actually, yes, I mean, I was hoping this would happen in '25 already, but this was a bit delayed by us as a component in a discussion. So we are sort of prepared and ready to do it from 26%, yes, unless our supervisors or whatever will stop this. We are very much happy to have ROIC based and net revenue growth-based compensation as management. People know about it. It was announced. Everybody knows we are moving into this direction. So it's more in that formal decision and approval for this decision than the organizational readiness.

Yes. So we had 1 question. I am not sure I know what you mean by EBIT floor for ASE. The floor is the lowest level we can have because do I know the EBIT floor for ASE? Can you specify more by what floor you mean? You can do it on chat or the lowest EBIT expected, but if it's the lowest EBIT expected, I wouldn't go there, but definitely, we expect growth compared to last year, as mentioned before, yes.

So I think you unmuted me, right? Just a quick question on that one. First of all, congratulations on good numbers and definitely very nice to see how the business is improving on the profitability side. I'm just quite curious about -- if you think about the current compensation scheme that's now coming as this passed at ACP, I was wondering, I know there is some EBIT floor in terms of margin that the business has to achieve.

So you receive the majority of your bonus -- so I was wondering, I know that the bonus scheme is not in place yet. That's something to discuss in AGM, I mean, in the general meeting next month. So I was wondering if you already know what's the target for Asseco South Eastern Europe when it comes to EBITDA, EBIT margin floor that the parent companies are expecting you to be at.

First, I'm not aware. And second, to be honest, I don't think this is being even discussed because I never heard about a floor level or something like this, yes. I mean I can say, internally, we are probably overperforming the numbers compared to what we said most probably will do, and I never heard any disappointment or a concern of it is, yes. So basically, for us, the major driver is willingness to do more, get higher and better. And we want to do it actually a bit quicker than may be assumed.

So let's see how it goes. But we are undergoing a major transformation this year, and I hope will continue next year, but it will be much more visible in the next year, yes. But we didn't get any floor on EBIT level, yes, nothing like this was mentioned.

And there's no EBIT thresholds, right?

No. No. No, no, no. Now there isn't actually the thing which is being disputed is that our variables are much bigger than for example, TSS or CSI standard, yes, in proportion of the total compensation as the question is how to address this, yes. So whether to increase the fixes or to have a different split of share-based payments and cash-based payment in existing variables something like this, yes. But this is 1 of the topics being discussed and disputed, yes. And yes, that's it. I hope I answered you, roughly, yes. Have I?

I appreciate it. I would just send you the component that I've seen and maybe that helps a little bit what I'm talking about.

we have a formula that is used in TSS and it's been discussed in Asseco Poland, and we have tested it, looked at it so there's nothing that I think would surprise us, but I don't remember any floor topics there, no.

Yes. I mean, adjusted EBITDA. There's something that's called minimum EBIT threshold, so that's what I was relating to. And I know that's the reason why TSS is doing that is usually because they want to make sure that the businesses are not doing everything to just keep growing recurring revenues, but as well to maintain some minimum profitability, and that's why they usually have this EBIT threshold. And, I mean, that's -- maybe you have a differently source [indiscernible].

I think maybe this is a nuance just to control because in the formula you have a formula of net revenue growth and also the return on invested capital. So they don't want this to be compensated by pure revenue growth without having the ROIC in place. So maybe this is about having this minimum return on invested capital or proportion of EBITDA to the capital invested to make sure that we don't have units, business units or operations, which just focus on growth and they are notoriously losing money or they are inefficient, yes. So probably this is some safety valve or something like this for this purpose. This is what I would imagine.

Yes. I have much more questions, if you want to say, because I see they just popped up. So any change your process for building the M&A pipeline in the past year? If so, how has the pace of signing NDAs or nonbinding letters of intent changed. Well, actually, look, we focus slightly more. We didn't stop building the pipeline and looking at the M&A. So we continue -- actually, we are strengthening the M&A team now as we talk, and this is in progress.

But to be honest, we are putting much more focus on our current operations, current businesses to clean to give us a clean slate, not to lose loss bringing business needs and to have managers, operating managers, who can take assume responsibility for the future M&As.

Because 1 of the things -- major changes which we introduced is that we don't do M&As which would not have an owner of an operating manager who would later assume for restructuring or ongoing business personal portfolio responsibility for this case. -- independent, yes. And we want them to have a proper track record of being able to do this, yes, even with their current businesses.

So we are making sure on the training on the education on the transformation of their existing business that they are prepared for this task. Having said that, it doesn't slow us to build the pipeline or even discuss with some new targets that fulfill these conditions that I just mentioned that have the owner Where is the complexity, or where might be a slight slowdown?

Actually, we are benefiting from some of the framework of TSS for M&As to review the targets and to analyze them with quite detailed scenario analysis and plans forward with executive plans how to do the transformation with these units. And what if what type of actions you take if it doesn't go the way you really want or what evidence you have you can do what you plan or evidence from the past? And preparing this is excellent exercise. We are very happy with this.

It helps us a lot, but it's also very labor-intensive and requires from us a lot of preparation and education and preparation. So this slowed down the process a little bit. But I think very good, yes. So we have a couple of companies in the pipeline. I think we might acquire 2 to 3 companies this year still.

None of them very big. Okay, 1 of them is bigger, but let's see if this can happen this year. And we are going -- undergoing this process I just described. But we plan to accelerate actually in, for sure, '27 and onwards, yes. Can you give a rough sense of how your process of changes in receivables by contract have changed from what to what and how much further can that go?

Well, Michal will give you more details, but we are very carefully tracking more carefully to cash flow and the -- of course, when you discuss the capital engagement and working capital, we try to minimize working capital and try to have as much prepayments as possible for our contracts or payments as we go into actually eliminate if possible post contract payments after finishing the contract that we get only paid, yes. Both because of cash flow reasons and operating reasons, yes. But Michal, would you add anything to this?

No, the policies for write-offs and so on, there are no changes. We were very strict, and we keep to be strict here. So no changes, just pushing through what you said earlier to prepayments and so on and correct themselves.

And Michal introduced tools for people to track it to evidence it here. So now it's more about education and ability to transform this or translate to renegotiate the relationship with the customers. As for the conservative approach to receivables and recognition, I mean there is conservative, and there is hyper conservative. I think Michal is on this hyper side. I'm on a conservative side, but he's deciding here. So that's why we have a bit of lumping up in the Q3 and Q4.

But I appreciate the conservative because it doesn't run away and we want to put pressure on our managers, not to recognize too quickly and to be happy without having the cash and actually closure of the project following, yes.

Deferred revenues, it looks like it has improved. Actually, we have not disclosed this data. But I can tell you that like my question, what do you mean by improved? They increased a bit yes. But it's somehow, I think, related with Flexibles, where we say, let's get upfront money prepayments, then it becomes deferred revenues, yes. So yes, they are slightly higher.

Look, the next question is the slowdown in revenues, a result of cutting or trimming unprofitable areas, business units, products or regions, and can we give examples? I mean, definitely, India, Dubai, I mean, it's a cut. I mean we said it's a waste of our management efforts to try to put -- we have much bigger leverage elsewhere and much more probability to get the cash out there.

But I don't think it had this big impact in the scale of our operations, yes. So I would say this is something visible slowdown after big growth overall. One of them is, for sure, POS and ATM business, which is lower value added, but this is slowing down and it had quite big revenues in margin one dynamics, yes.

So in Spain, we had a couple of years of notorious replacement of the fleet of terminals by our customers to Android terminals, and this has kind of been this phase has been finalized or slowdown, yes, what else, big projects, we had a wave of big core banking replacements and others in the region.

So now we do more site projects, modifications, improvements, change requests and channel solutions development, which also grow as you see in banking, but probably the big project type of things has declined a bit.

We see in public administration -- we have a big market in Serbia and probably elections this year. They plan elections every year. There is kind of a political turmoil and in the public, there is definitely a slowdown over there. So we don't see much happening in this domain.

So it's pretty much organically slowdown, not as resigning from participating, but also these projects not popping up that much. But the long story short, I wouldn't say this is an effect of us resigning from some opportunities or being much more cautious with that. We are cautious, but this would not be that scale. Michal, do you have any?

I agree. It's mostly drop is POS and ATM deliveries plus a bit in dedicated solutions where we have this road business, which was pretty strong last year. Some projects were on the phases when equipment was delivered. This year, we have dropping this. Yes.

We will see in the second half year of the year, we expect, as I mentioned, very good, but for example, for comparable numbers, we had the utilities billing company and utilities company having an amazing year where they grew from $0.5 million to $30 million EBITDA last from $24 million to $25 million. And this year, we have very nice results, but significantly lower than EUR 30 million. So you can see there is some wave. The recurring revenue for them is growing, but this professional services business has dropped in this case.

But it's -- I would say it's -- it's a result of more economic, regional cycle, not something happening in the downturn, and it's more customer-related cycle or kind of a political cycle locally, but not something I would say that the macroeconomics or something resulting from our policy directly. In Turkey, a bit slow down with this payment e-commerce because of these customers going in-house. But there's a lot of small things, but not something that is an effect of us slowing the market expansion because of nonprofitable approach.

Can you give a broader sense of why you had success with the financial software, new customers, high prices, new modules? Good question. Tough one. Yes. But I think all of this all of this. So we are expanding the portfolio into channel solutions and trying to push these challenged solutions and trying to have a more quality discussion where the value creation is for the customer, not where we imagine, but where the customer sees it.

And I can tell you there's an ocean of opportunities here and there because the approach of ours to the customer is still very much responsive, not proactive. And I'm absolutely not happy with this, yes. But we are pushing that direction.

Second thing is on prices, we are looking at maintenance. It's a work in progress. Yes, we haven't -- we started a little bit. I don't think this is finalized. We have a lot of support maintenance contracts, which were not index or inflation index only.

Our customers are 2, 3x bigger and our maintenance is 20% bigger than 10 years ago, yes. So we see that some of the very important critical solutions for our customers were not -- didn't get the proper price carrier to show the weight of the services we provide and the service we provide for the customer reflect this in the pricing. So that's the second aspect.

There's a cost aspect, which also we've started, but it's just the beginning. I think the team has grew in many cases, have grown tremendously, and we are losing some of the efficiency as the time tracking, the efficiency tracking within the team.

Utilization is -- leaves a lot to wish for, and some measures were already taken, but I said it's initial measures, and I think we can squeeze out much more efficiency, especially with application of AI tools, there is, again, a lot of opportunities to increase our internal efficiency and profitability on these, yes.

A lot of our financial products are very mature products. We are going with new portfolios, new things that are less profitable, but the old ones should be more profitable than they are today. They are very well tested, matured solutions, which deserve higher profitability than we have today. Can you please help us to understand the extent to which code is being produced now with AI coding tools?

And is the pace of new models different than, say, 18 months ago. And is the price of these new models different, the same, higher or lower. Well, I wish to say yes. I would say we are not -- we are pushing very much very aggressively AI adoption in different areas. We see this is happening in kind of individual mode, including the teams and people are helping themselves, but still the effect of AI usage is consumed mostly by the users not by the company.

So we want to take it over, yes. I think in many instances, the employees are taking benefit of releasing themselves from pressure and time, having more free time, thanks to the usage of these tools, yes. So now we have different programs and tracking and initiatives how to how to monetize these initiatives, either on the cost side or extra revenue side? Yes, but 1 of the very visible aspects, nobody is asking for extra employment anymore.

So I mean this is -- new employment has stopped and replacement of leaving employees also pretty much stopped on engineering side. So this is the side effect, but not monetizing of we are starting to deploy agents to optimize some of the things we are doing, again, beginning of the road. So I'm pretty optimistic in the next year what we can squeeze out of this. But this will require a very big discipline on our side and pressure also from the management to achieve this.

So to cut the long story short, we are in the beginning of the road, many par using it, many people are deploying AI tools. We are not yet efficient in monetizing this ourselves, and this is our target. Are you thinking exactly the same of the ATM leasing hardware business that you were 18 months ago, is there a world, where you would no longer have any of the hardware at all on your balance sheet. Well, look, first of all, we will be more disciplined, not that we were not, but we were trying -- if we had hardware on our balance sheet, we were financing it will get, okay, not all of it.

Now we will finance all of the outsourced things with debt. So we don't want -- this is back to back, like it's on the balance sheet, but it's leverage, yes. So that's how we want to offload the capital deployment or kind of pressure on capital utilization unnecessary on us, yes.

And still, I would think that this is being able to outsource putting it on the balance sheet is 1 of the more effective ways to increase the stickiness of that business. Yes. So we don't want to resign from that, not at all, but we want to be more disciplined in leveraging this business and which doesn't seem to be any issue. It's more about doing it in not partially or not in every second case, but in all the cases and fully. And I don't think we have any tool or available tools, all right? We had them in ways and we can use them. I help there is -- I think this is the approach. If I understood your question properly. Can I imagine there will be no hardware on your balance sheet?

Of course, I can imagine, lucky or unlucky, my imagination is pretty big, yes. So for good and bad. But I would say probably it will not be abrupt kind of immediate effect or something like this. I would expect it is to be a result of market trends. Yes. So we might see that some of these businesses are not attractive enough for us that we resigned from performing them. That's it. That's what is going to happen.

So we are tracking this to what extent we hit our profitability thresholds and others, and we're to diversifying, we have to use our resources elsewhere, yes. If this is stopping to be interesting, then we'll do it. This is a good example of this is infrastructure business that in 2010, 2012, this was a majority of the business performed by this company.

Today, this is absolutely minority, and it's dropping in these units, which we call advanced infrastructure services are in an accelerated mode moving to pure service units, not infrastructure user units. -- and more and more using subcontractors or some others to provide equipment, yes. So this might be the case also here and we are absolutely happy with this and even supporting this to focus on high value-added solutions.

Did you already find a solution how leads will be treated between Asseco and TSS? Or will you find you sort of competing with TSS on leads? I don't know if you talk about sales leads or M&A leads, yes, but I can answer both. In sales leads, absolutely, we have very little overlap, but also where there is some overlap. This is a competition.

On M&A, deals signed between Asseco Poland or actually, Adam Goral Foundation and TSS assumes competition on a M&A level, yes. So we don't share leads on M&A level. No, no, we don't. Does your ATM business clear a 20% hurdle rate on profitability? I assume this is Michal on profitability level no or?

I think this is a [indiscernible] kind of question.

If you talk about profitability on EBITDA level.

On ROIC.

On ROIC, you see, well, there is I wouldn't say a trick. I think it's very fair what we've done, but I need an explanation when we were allocating with Michal. We sat on this, the capital. We got a capital. We have to defend ASE, yes, on a group level, yes. We got a certain amount this is your capital. Now this is it, get the proper return out of it. And we didn't allocate it based on revenues or net revenues to business units. We allocated this based on, let's say, some valuations based on market comparables.

Stock market comparables for different business units. What does it mean? It means that high value-added businesses like banking or e-commerce, they got the biggest load of capital and their initial starting ROIC is the lowest.

Whereas businesses like ATM were treated very favorably because we don't believe their growth potential is so big. And the restructuring or value proposition we can build on top of it is huge. So we were much more modest with allocating capital to them. Well, does it mean that we are close? We are slightly below 20%, yes, Michal, from what I remember?

Yes. Slightly above.

So okay. It probably depends on which business unit, but this hurdle rate is not a lesson here. But to be very honest, this is the reason that I explained earlier. Yes, the starting point was pretty favorable for them. For POS, it was more ambitious in terms of they got a bigger allocation in the ATM business, yes. But the biggest was for software units and e-comm businesses. I hope I answered.

Can you give us a sense, cost-wise, how you are using and paying for the AI tools and cost savings, in particular, like always using the frontier models, using the older models to save the money using open-source model or something else? Good.

And look, basically, I will not say something you haven't read or heard, but now the common opinion is that open source models are a bit 6 months behind the frontier models. And if you see what frontier models could do half a year ago, the answer is pretty a lot pretty a lot, so there is no necessity to use stronger models unless very specialized and very sophisticated tools.

Of course, we are tracking the cost. This is completely insignificant for now in our case, the AI spending. So we don't see, but we are talking a lot about it, finalizing and training people to be aware because we know already cases from sister companies, other companies where this is going for the roof if uncontrolled, yes? So basically, we heavily promoted the AI usage.

On the other hand, we track the cost and more difficult it will be, but we put a lot of focus to track the impact of the effect on business of the AI application because cost is easy, but what about the basically 2 areas, new revenues or cost cuts, yes, more efficiency on the cost side. And this is something which we are unhappy with so far because we think this is not yet properly visualized and monetized by our group. But definitely, we are looking at platforms, which will help us to deploy with the use of open source some of the tools. This would be for more agentic AI and agents using us, and we have in discussion with them and already deploying some of the initiatives.

As for more software and coding we are looking at the conditions different group companies have different TSS, including and seeing if we can benefit of the wholesale pricing if we want to use the frontier models and open source, which type of gateways we can use for flexibility, elasticity and security, most importantly, in using them. I don't know if I answered the question. Partially, probably, partially, but that's AI. So it's difficult to answer precisely. Any more questions please? Well, anyhow, thanks a lot for them.

This was kind of fun and very much appreciated that you look at details of all this. Keep your fingers crossed for what we do and where we are heading. And yes, join us for the ride, if you wish to. We are inviting you for the direct calls or if we have new information - no, thank you. We invite you to direct contact if you wish to have a call with us or some additional one-to-one explanations, we are very much open to this. As you see, not many secrets unless something is secret, but we try to be pretty open on most of the things, yes. Thanks. Enjoy the -- I don't know, wherever you are, either afternoon or morning, and see you soon. Thank you. Bye-bye.

Thank you. Bye.

Welcome, everybody. We start traditional quarterly review. We'll be talking in our traditional template about Q1 results and business update, what do we see for the future.

So first summarizing the Q1, what we see. We see a very good performance in Banking continuously like last year. It's mostly in the core Banking Solutions, but not only also channels. And this contributes positively on EUR 1.4 million level on the operating level of the P&L.

Another thing which is a bit different from the history, what we can see as a trend, we see a slow down in the growth of net revenues. But on the other hand, we see even bigger slowdown in cost growth, yes. So cost growth quarter-by-quarter from Q1 last year to Q1 this year is slightly below 2%, which is a result of smaller salary pressure, but also some cost savings optimization actions already undertaken in some operations, and we do expect this to continue in the rest of the year.

Flattish payments, mostly due to the base effect of Q1 2025. In Q1 '25, we were not that conservative yet with the receivables write-offs in India and Dubai investment. So we have recognized then around EUR 1.1 million of positive results, which were later written off pretty much, yes, but this is comparable to slightly below 0 this year, gives a EUR 1.3 million difference, yes, in comparable numbers, yes. And in ECR and IPD, so electronic cash registers, fiscal registers, and independent POS deployment, we see a very nice growth, especially in Croatia and Spain. Good performance of traditional POS business line, also with a contribution growth of EUR 800,000 on operating level.

Dedicated Solutions, not that good, much better than last year. Still it's on the verge of breakeven in Q1. Like last year, we had an improvement in the following quarters. We expect the same this year. Still not that happy that it's so low and it should be higher, yes?

Cash flow, it's a huge improvement. You will see in details, Michal will be showing to you the cash conversion ratios and cash collection. I think this is slowly the effect of cash focus of the managers. We are putting much more emphasis on this and on paying this cash out in form of dividends. And I think this trend will continue because we see a lot of actions ahead, which are being undertaken by the business.

On transactional business, e-commerce is flattish, minus. But please bear in mind, I mentioned before in conferences, the loss of 2 major banks in Turkey, e-commerce customers who are going in-house. So this is the continuous effect from last year that will translate to this year as well, but we are trying to compensate with other e-commerce, smaller customers. IPD growing, as mentioned. And traditional physical card processing business also nicely growing.

And let's look at the numbers in details. Michal will show.

Yes. Welcome. So our traditional summary of results. First column, total numbers as we reported them in financial statement. And then following to adjusted by hyperinflation report. So I will concentrate on those excluding hyperinflation. So 6% growth on top line year-over-year, more in a moment when I will comment segments. As you see, operating profit grew even more, 15% year-over-year, what is EUR 1.8 million, similar amount on EBITDA. When we look at net profit, here, we have similar growth in absolute numbers and, of course, bigger percentage change, and towards what we have below EBIT.

On financial activity, the result is EUR 0.5 million better than previous year. But this is composed of a few items. Let's start with negative ones. The cost of dividends paid to noncontrolling shareholders in those entities, which we consolidate using present ownership method. Total costs related with those dividends is EUR 3.1 million in Q1 2026. And Q1 '25, we had 0.

Why it is like this? Dividend, partial dividend, and based on prior year result in Bosnia, in company, Dwelt, was distributed. As you remember, Dwelt had spectacular results last year and part of this was paid, and this generated EUR 2.7 million cost. And additionally, our subsidiary in Portugal, Ifthenpay this year paid dividend a bit earlier than in 2025, in Q1 versus Q2 in 2025, and this generated EUR 400,000 cost roughly. Then balance on financial foreign exchange recalculation and interest is EUR 0.5 million lower than in previous year.

But we have also positive ones. One is related with restatement of contingent liabilities for acquired entities and valuation of put/call options, actually put options. Actually, we have positive effect of EUR 2 million. Plus last year, we have disposed 1 subsidiary in Turkey, Mobven, and this generated EUR 1.6 million loss. So base effect caused growth year-over-year.

Additionally, this payment terms for this transaction sale of Mobven was recently updated. We have signed annex, which resulted in shorter payment terms. So we changed the discount included on receivables, and this has EUR 0.5 million positive impact. So overall, to summarize, EUR 0.5 million more positive result on financial activity.

When we move to taxes. Here, taxes are higher by EUR 0.5 million. And this is due to simply bigger scale of business and bigger operating profit. When we look at effective tax rate, it is very similar, it's higher by 0-point something percent. So no big difference.

Let's move to results by segment. In Banking, EUR 2.3 million growth of revenues, mostly generated by this line responsible for core banking solutions. We've diversified structure of growth by activities, more or less half by delivered implementation projects and change request and half by repetitive recurring SaaS and maintenance revenues. This growth in core was mainly in Southeastern Europe in Serbia and Macedonia, together EUR 1.6 million. And in Central Europe, EUR 0.7 million, mostly in Romania.

Two other lines in banking, so multichannel and security solutions, pretty stable revenues, slightly higher than previous year. When we look at operating profit in Banking, as Piotr already mentioned, EUR 1.4 million higher than in 2025 with a pretty big increase of profitability to 28% by 4 points.

In Dedicated Solutions, on top line, we have a pretty big growth, EUR 5 million year-over-year, but 95% of this growth was generated by third-party solutions, mostly equipment resell. And this resell didn't contribute much to net revenues or operating profit. Geographically speaking, this growth is again Southeastern Europe, Serbia and in smaller values in Central Europe in Romania. And yes, looking for operating profit, EUR 0.1 million positive. So a lot smaller than in Q3, Q4 previous year, but Piotr already commented.

And when we look in Payment, let's move to a separate slide. Here, we have revenues dropped by EUR 1.4 million. And this is mostly in this line which is responsible for e-commerce and processing, EUR 2.4 million revenues drop. And we have here effect of India and Emirates. As already commented, Q1 was the last strong quarter for those operations. This contributes EUR 1.3 million drop roughly on revenues only. And Turkey, yes, so the 2 clients last year have decided to move -- to in-source processing of the transaction. And one took this decision beginning of the year, beginning of second half of the year. So we have effect year-over-year on this. Those 2 drops I described were partially compensated by increase in Western Europe and Central Europe, mostly in Croatia on e-commerce solution.

In other lines, very good ECR and IPD growing revenues and growing operating profit, as Piotr already mentioned, mostly Western Europe and Southeastern Croatia. In POSs, we have drop of revenues, but this drop is mostly on resell and this resell, those deliveries of equipment we realized in 2026, where with bigger profitability and operating profit increased as we have mentioned already. And ATMs, slight increase of revenues, but no major change in operating profit.

When we move to countries or regions, structure by regions, so as you see, Southeastern Europe is the leading one in terms of growth of operating profit. It's mostly due to Croatia. So Payment, what I already mentioned in Macedonia and Serbia, this is mostly contribution of Banking. Southeast -- Central Eastern Europe, this is mostly banking in Romania. And as you see Middle East and India, we have a decline of revenues -- sorry, operating profit.

So let's move to cash flow and liquidity. So as already mentioned, very good operating cash flow, EUR 80 million operating cash flow for the last 12 months. So this is more than EUR 5 million more than during 2025 with very solid cash conversion. Operating cash flow to EBITDA, 88%, so by 5 points more than in 2025.

When talking about investments, those presented in second line, so CapEx, project related CapEx for outsourcing projects or on networks, it is slightly lower than in 2025 by EUR 2 million. And other investments are pretty similar, no big changes. So to summarize, very good cash conversion in Q1 2026.

And if we move to balance sheet position, cash increased by EUR 8 million comparing to year-end with parallel decrease of short-term loans, mostly credit lines and revolving by almost EUR 4 million. Other positions, no big changes, very, very similar to end of 2025.

M&A liabilities. We commented this in February that we expect a drop in this position due to a planned realization of put options. It will happen, but it's a matter of time. Part of this amount for sure will be realized during Q2 2026. And other positions like receivables, liabilities or inventory, pretty similar to last year, no big changes versus December. So this is about liquidity. And let's move to outlook.

So outlook for '26. The backlog growth is reasonable. It's a bit lower, as I mentioned, on margin 1 level, 4%, 5%, it's much better on the software part. On ASEE on payment, it's lower. You can see on -- if we show on the software part, it's in the levels of 10%, 7%. On payments, it's lower. We are expecting in payment a catch-up in the second half of the year and some acceleration of contracting in this period, so some improvement. But as mentioned, this a bit slower growth is compensated by a much smaller cost growth on the group level, which we expect to continue, including declines on employment costs because of the -- some restructuring measures and lower cost pressures, yes. We just initiated some actions on AI usage, the promotion of AI tools and application of this is now fully at work. We don't have yet clear monetizable effects that we could scale up or announce to the investors, but we do expect them to appear in this year quite soon looking at the initiatives undertaken.

On the business dynamics, nothing wrong is happening on the market. We don't see any negative scenarios. It's more like on the e-comm, as I mentioned, these 2 big customers going in-house in Turkey, but otherwise, it's business as usual and no negative downtrends or trends on the market. And overall outlook that we've given on last conference after the annual results, we still sustain that we expect something above 10% -- between 10% and 15% probably growth in 2026.

On M&A, the majority of the transactions in the near future will be on put calls of existing acquisitions, but we have a pipeline of discussions. We did discussions, M&A discussions, negotiations, you never how they will end up. But I would expect some of them to materialize in the second half of '26. So we'll be informing you about this duly.

Additionally, as mentioned in the beginning of this presentation, we have accelerated cash collections. We do think this trend will continue. And the surplus of cash, obviously, we plan to either pay out in form of dividends in the future or to allocate this capital into investments, either internal development investments, growth investments, market development or M&As. And we are very much expanding the portfolio of targets now in the regions where we operate to see where we can make such reasonable investments.

Having said that, we are open to any questions. Please, if you have them on chat or you can speak out on chat, if you have something. Yes, let me see.

Could you please share a few comments on the cost structure and any inefficiencies you have identified since TSS became a shareholder? Do you intend to maintain the current cost base? Or do you see potential to reduce expenses over the next 12 to 24 months? What EBITDA margin do you believe is achievable once all cost initiatives have been implemented? Could you please distinguish between Payten and Banking in your response?

Well, that's a couple of questions. Let's take it step by step. Cost structure inefficiencies, well, basically, we are running a program of simplifying how the business -- we are reviewing the KPIs we are implementing. There's much more capital efficiency ratios, yes, much more cash related to ratios, but also profitability, which is related to cash efficiency pressure, yes.

On average, for the business that we run, I would say we judge we have 10 percentage points profitability below the benchmarks we would like to achieve on a longer-term perspective. How much time it will take? It's hard to say, 2, 3 years would be a good period if you ask me to achieve this.

This should be achieved by 2 dimensional actions. One is cost consciousness and greater efficiency in the support activities and professional services implementation activities. But also, we do expect this efficiency for cost cutting, but we do expect also some value-based pricing exercises. So price renegotiations on some contracts where they were not properly indexed or priced or they don't reflect the proper value provided, and this should generate extra revenues, which also should lead to create profitability.

This effect can be much bigger in software units, in ASEE units, but proportionally, but in Payten part, including especially e-com, we do expect some elements of this as well in terms of division, but probably a bigger effect on ASEE than Payten in this particular case.

So cost base should reduce because of many measures, including pressure on efficiency, on activities, on maintenance and professional services and supporting professional services using AI tools, yes, and this should also help in that. If I have not answered the question fully, just please expand on chat or in person.

Capital-based KPIs, can you give us an idea?

Yes, it's ROIC-based. ROIC hurdle rates, I mean, look, we are using 25% as a growth of net revenues and return on invested capital. But actually, we would like and we are pushing the businesses to have around 20% to 25% on the return on invested capital and to top it up, this 25% to top it up with net revenue growth on top of it. So 25% would be the hurdle rate that we are pushing but we are still distant from this level in many, many business units, to be frank.

The big decline in infrastructure for outsourcing and own networks, a reflection of this or just a seasonal impact? I mean that decline...

Yes. Last year, we were pretty intensive in this CapEx. We had quite big number of ATMs and POS replaced on contracts, which we had with clients for 5, 7, 9 years. And simply, this is a seasonal effect. So this year, we expect based on forecast lower investment, this type of CapEx.

We have some more questions. Is it fair to assume that all incremental POS and ATM investment will be subject as well to ROIC of 25%?

Yes, we would like so, yes. That's our wish, yes. But there's a couple of actions we have to undertake to move in that direction. But the answer is yes. But you must bear in mind what we cannot share, the capital allocated into different business units differentiates in our group, yes. So the threshold, we have allocated bigger capital proportion to software business units than to ATM and POS ones. So reaching the threshold, the factor from the start is easier at the beginning, I mean, easier. The gap to cover is smaller than the software units internally.

Any more questions? You can also use the voice, if you wish. We love questions. We have some more coming. Just give us a second and we'll answer if it pops up on chat.

When you say you are targeting margins that are 10% higher, are you referring to EBITDA. Yes, EBITDA without D, EBITA is kind of our internal measure that we agreed. The difference to EBITDA is we have...

It's quite big because we have a lot of depreciation, in which we have those POS and ATM devices, yes. These are a few, yes.

But the impact on the profitability, probably you could translate EBITA and EBITDA similar, yes, the 10% shift, probably, yes. So the approximate answer is yes on EBITDA or EBITA level, yes.

Are we planning to pursue less M&As under the new ownership?

No, no, no. On contrary, probably more, but we have to get ready for this because the only thing that we are changing, and it's a good change, healthy change is more ownership for the M&As by existing management who will take it under the portfolio supervision. So for these M&As, not to be solely my or Michal's responsibility, but to assume management responsibility how to manage this post M&A transaction by the managers and we need some more training education along our managers. But overall, we plan to significantly, over the next 2, 3 years, accelerate the M&As.

You mentioned incentivizing managers to improve cash flow. Are there any further improvements resulting from changing the incentive structure?

Well, that's a complex one because actually, the incentive structure is pretty comparable, formal to the previous one for '26. We wanted to change it, but because of some technicality issues, we couldn't for '26, which will be changed in '27. But the changes are announced in which direction they will head, and that they will be very much cash impacted, yes. And I believe managers already are taking actions or preparing the actions to fulfill these criteria. So the answer is yes. It is -- they are very much incentivized. And this will, as I said before, we expect some more positive impact of this, for example, as prepayment of many contracts.

A new one is coming. What are your thoughts on capital allocation going forward? Does TSS expect ASEE to return the majority of cash via dividends or will you return cash in the business to fund future M&A opportunities?

Both are acceptable, both are good. Basically, we want to invest with a 25% ROI impact. If we cannot do this, better pay out dividends. If we can do this, then invest. But as I said, mentioned, we are preparing to do this in such a way, and we believe we can do it. So M&A will be fully accepted. But if we see we cannot do this amount of M&As, we don't have enough targets, then dividends. So both are good, acceptable option. And I think it will take some time until we can fully eat up our cash in form of investments in M&A because we don't have to take physical capacity to generate that amount of quality business to invest our full cash flows into such investments. I hope this time will come.

Of course, this year, we have pretty -- a lot of expenditures on put calls, which are not new M&As, but we need to allocate a lot of cash to this.

Yes. Please, any more questions? See, we are trying to answer as well as we can. Thanks. If there is no more questions, we invite you to direct contact. It will be a pleasure to talk to you, especially after the close period. And we are available for you. So reach out and we'll be in touch. And thanks for joining the conference. All the best. Bye-bye.

Thank you. Bye.

Welcome, everybody. Traditionally, Q4 and whole year results with some prospects and assumptions for 2026, as we'll mention by the end of the presentation, and we will present everything in traditional format as usually. So short summary or highlights for 2025, yes.

If we take away one-offs, we had quite solid operating profit growth, yes, adjusted by one-offs. The biggest growth has been seen in Dedicated Solutions, mostly in the energy sector, building solutions and utility sector as well as the highway tunnel software monitoring company. This was very, very big growth and very dynamic.

Banking has performed better than expected, and we are very happy from it, and we do expect similar performance in '26. So this contributed highly. In Payment, we had some slowdowns and disappointments because in Turkey, 2 of our big customers decided to go in-house with their gateway systems, which reduced the number of transactions. And this will impact also '26, even though we try to compensate this with other business to keep the results pretty flat in Turkey.

In India and UAE, as you are aware, we did not like the investment we've made. So we were performing some write-offs. A lot of things were written off still. There is some things on the balance sheet we will see in 2026 if there is any hope for these companies or not. The independent ATM network has been performing reasonably, but in Albania, where competition aggressively entered compared to '24, '25 was weaker by around EUR 800,000.

Direct merchant payment lines were performing much better. ECR business and independent POS business has grown by almost EUR 1 million as well as traditional POS ATM business also grew a bit by EUR 0.5 million. Cash generation very much improved compared to '24 when -- is back on track and the conversion of EBITDA to cash is good. Michal will show the details later.

In transactional business, as mentioned, eComm dropped mostly due to Turkey and IPD business grew by 53%, a big contributor from Romania and processing of physical cards also nicely grew by above 20%. And let's look at the numbers now.

Okay. So let's start with Q4 numbers. And for those who note, have you recall, for us will explain the slide. So for first 2 columns on the left are total numbers as they are reported in our financial statements. And then the following 2 are excluding hyperinflation reporting in Turkey. And we will focus on those excluding the hyperinflation effects.

So on top line, 13% growth, pretty nice, but a lot better on operating profit level, 62% growth year-over-year and 23% on net profit level. This difference between operating profit and net profit results mostly from 3 elements. One, EUR 3.7 million is goodwill write-off related to India and Dubai, what we just mentioned. We are not satisfied with performance, and we did additional write-offs in Q4.

Then we have EUR 3 million effect of restatement or recalculation of put option liabilities related mostly with the companies in Bosnia and Herzegovina. And as you will see on following slides, these are companies which generated huge growth year-over-year, and this is why we need to evaluate those liability.

And the last from those big impacts is around EUR 1 million increased taxes and -- but it's not like regular tax our subsidiaries pay, but additional tax related to Pillar 2 taxation.

Again, quite a big part of this value is related with Bosnian operations. And for you to understand, in Bosnia corporate income tax is 10% whereas this minimum requested by Pillar 2 is 15%. So of course, this is not that simple calculation, but some additional tax to Bosnian operations will be generated.

If we look at results excluding one-offs, in Q4 on operating profit level difference is not big, EUR 600,000 only, but on net profit is bigger, EUR 4.3 million. And this is mostly just write-off of goodwill, which I already mentioned. So if we exclude this write-off, year-over-year growth of net profit is pretty close to operating profit and is around 60%.

Okay. So let's move to results by segments, by business units. As already mentioned, Dedicated Solutions results are very good, EUR 11 million growth of revenues and EUR 9 million growth of operating profit. Mostly thanks to operations in Bosnia and Herzegovina in area of solutions for utilities billing and ERPs and intelligent traffic solutions. A bit weaker Serbia, Romania and Macedonia if we look at Q4 only.

Another good quarter for Banking, EUR 1.7 million higher result year-over-year. And here, it is mostly thanks to operations in Serbia and Macedonia. And Payment, pretty flat in Q4, EUR 0.5 million higher revenues, EUR 600,000 lower in operating profit. If we look at by business lines, you can see this drop in eCommerce drop of revenues. Here, we have the effect of problematic India in Dubai and Turkey where we lost to clients, then they move to in-source solution.

If we go to geographies, as already mentioned, Bosnia very good performance and significant growth of result, more than EUR 10 million higher, mostly in Dedicated Solutions. In Macedonia, this increase is thanks to Banking mostly, and Central Europe decrease of result, it is in Banking and Dedicated Solutions.

Western Europe, good performance increased by EUR 1.2 million year-over-year in Payment, both in eCommerce payment gateway solutions and in more traditional POS-related business. Turkey dropped by EUR 1.5 million as already mentioned, related to eCommerce and lost clients and of course, problematic India and Middle East.

Okay. Let's move to results for whole 2025. This was good as quite similar to Q4 on the lower dynamics year-over-year, and revenues 9% growth, operating profit 16% growth and net profit a slight decline year-over-year for the past reasons I can say the same as for Q4. So we have goodwill write-offs which were netted by earnout reversal for India and Dubai, not big impact.

EUR 7.5 million effect of revaluation of put liabilities, mostly related to Bosnia and subsidiaries, Dwelt and BSTS. This tax impact of Pillar 2 exactly the same because we booked this in Q4. And additionally beginning of the year there, we sold one entity and generated some [indiscernible].

If we look at results by, first, one-offs, so what would be if we exclude those write-offs related to India and Dubai and some reversals. On operating profit, EUR 5.6 million of this total effect of one-offs booked mostly in Q4. And on net profit level, it is EUR 6 million and still it was partially booked in Q3 and as we already heard partially in Q4.

Okay. So let's move to segments. Banking, very good year for Banking. And despite beginning of the year, we were a bit more conservative. We didn't have huge projects as in previous years, but still we managed to deliver a lot of smaller projects, mostly in area of core banking. We generated a pretty nice increase of operating profit.

Spectacular Dedicated Solutions. Revenue grow with some EUR 10 million whereas operating profit EUR 15 million, but this is related to change of structure of business. This growth was generated on own solution, and we have a drop of third-party solutions where profitability is significantly lower, and we have this component of third-party COGS. So revenue drop does not translate that much into drop of operating profit.

In Payments, EUR 15 million drop of revenues, but drop of operating profit, EUR 5 million.

And if we look at structure business lines, all of them are growing. The biggest one is direct to merchant business in area of ECRs and IPDs, so that is in cash registered and independent POS network. It also translated in the growth of operating profit, as mentioned before.

In eComm, we did have growth of revenues, but quite significant drop of results. India and Dubai, which generated operating losses and this drop in Turkey by more than EUR 3 million, what you will see also in a moment on another geographies.

POS and ATM pretty stable, some growth of revenues and slight growth of operating profit.

If we look by countries, Bosnia again, the biggest growth, EUR 17 million, more than EUR 17 million year-over-year. As we already mentioned, mostly Dedicated Solutions and those products for utilities and related with intelligent traffic solutions, so tunnels and highways.

Good Macedonia and growth mostly in Banking. In Croatia, weaker Banking, but a lot stronger Payments in total growth. Slightly weaker Serbia, but with growing Banking and with the Dedicated Solutions.

Central Europe growth by EUR 600,000, mostly thanks to Banking. And in Western Europe, as you see result is pretty flat, but there is a change of structure, growing eCommerce and independent networks, mostly CRs and drop in the more traditional POS-related business. India and Dubai already mentioned the challenges we have there and drop in Turkey is mostly related with eCommerce.

Let's move to cash flow and liquidity position. So cash flow, as already mentioned, was good. It's almost EUR 75 million generated operating cash flow. This gives conversion of operating cash flow to EBITDA 83%. So we can say we are back on track after weak 2024.

Investments those related to fixed assets and intangible assets, project-related parts, so equipment for outsourcing mostly in Payment business unit and partially in Dedicated, very similar to the ones in 2024. And M&A expenditures, they are lower this year. They were lower this year, EUR 11 million, almost half of this or over half of this in Q4 when we acquired minority stake in that concludes operations in Western Europe, and now we have 100%.

And let's move to balance sheet position, pretty good cash, EUR 74 million cash in the group, EUR 10 million more than end of 2024. External debt from banks, short-term part is slightly lower by EUR 2.5 million. Leases and dividends standard changes, nothing spectacular. And M&A liabilities, we have growth, but this is mostly not due to new acquisitions, but just moving M&A, those liabilities, from long term to short term and the restatement based on better performance of subsidiaries, as I already mentioned when I was commenting P&L and FX impact on net profit.

So net cash, EUR 25 million. And when talking about other short-term assets, so receivables they increased a bit more than liabilities. And this is related with, again, operations in Bosnia and Herzegovina. Mostly at the end of the year, we received acceptances from clients. So invoices were issued but not collected before year-end.

Inventory in line with expectations. So balance decreased from this Q1 at the end of 2024 and now it's around EUR 60 million. And as usual, it's mostly related to this POS and ATM business.

Okay. So this is all and let's move to outlook for '26.

So for '26, the backlog dynamics for the whole group is 8% Q1, 6% for the whole year. It's bigger for asset part, Dedicated Solution and Banking and smaller for patent part, mostly Turkey probably being the reason with the issue that we had in '25. Overall, we have quite positive outlook.

We expect growth in operating profit, something in high low digits or low double-digit numbers. And so far, we don't have bad signals of this, but this growth in profit will come not only from organic growth, not only from -- it will come from organic growth, but not only from the net revenue growth, but also from the increase in efficiency and productivity of our teams, which we have many projects that were initiated in that area, and we expect some very positive effects in that scope.

And having said that, we are open to questions.

Anybody has any questions, please feel free. We'll unmute you and we can discuss.

There are questions always about acquisitions. We continue to do acquisitions. We have in the pipeline a couple of companies. But we cannot say until we finalize due diligence and go for the internal group approvals if we will pursue these acquisitions. But my personal judgment is these are small and midsized companies and probably 2, 3 companies might be acquired in '26.

You can ask on chat questions also, please feel free. What do we think about the interaction between AI and software? Well, AI is a tool. It's a very attractive tool. And like any tool, it helps to be better. Yes, but it's not a remedy to build, produce things. I've given earlier today an example on the Polish conference that you can compare to the construction segment and sector where many materials or processes were automized and improved and it being over time. It doesn't guarantee you build a good house or proper apartment house, thanks to these new materials. But if you don't use them, definitely, you will be too expensive and you'll fail or the quality will not be as good as it could be.

So AI is a must. It's one-way tickets to use it. It will reduce cost in many areas. It will increase efficiency in many, many areas. But it will not replace the whole development delivery process of the teams as our intelligence, not only artificial, but human will be desperately needed also to use in intelligent way the AI tools.

Any other? I think there's other chat questions. What are the reasons why some of our customers decided to do it in-house? What are usually the key considerations for customers in deciding to go in-house? Okay. This applies actually to the gateway, eComm gateway solution in Turkey. And these customers were very big banks, one of the biggest banks in Turkey. So we have here 2 aspects overlapping.

One is very specific to Turkey, culture of doing things in-house overall. It's -- I would say, it's overproportionate compared to other markets. And second, big institutions couldn't afford to do so and who can risk delays and bigger budgets in this type of projects. Smaller institutions would not do it or if they do, they cannot bear the failure, yes, and we have such cases also in Turkey. So this is only for the big customers in Turkey and the reason is as mentioned.

Any other questions, please? We have 4 such customers in Turkey, 2 of them are going in-house. It might be that 2 others will also go in-house like that, but we are getting prepared for that, and this is something we expect to happen within the next couple of years, to expand this answer.

If there is no more questions, we invite you to direct contact. We are very -- no? Is there anymore? No. There are. Would -- are you actively investing into agentic AI for bank indicated solutions? Yes, we have agentic AI tools our own, and we are selling them to the banks and not only banks offering them, yes. So this is something we are doing using or connecting it to our solutions.

Would AI lead to lower cost or hurdle in developing some good enough software in-house, or it's vice versa as our cost of providing services also gets lower? Well, AI helps us to develop things cheaper, quicker and in reasonable quality, not only develop but also test it and verify it, yes. But it requires good operators, yes. So it will lower the cost, yes. Or if not lower the cost, but this is the fact of the same, allow us to produce or deliver more. And we are in the process of doing it verifying.

What kind of identity AI tools do you use? Yes, we use Claude. We use many others, yes. So we are not restricting our people as to the tools. The only thing is restrictions we have as to the privacy policy, confidentiality to make sure we are not disclosing customer data or some sensitive information. But this is -- there's many tools that are being used.

What drove the strong expansion in gross margin in Q4 and the massive reduction in CapEx? As for margin expansion, it's mostly dedicated solution recognition in the energy sector that accelerated. So delivery was in course of the year, but because of accelerated acceptance by the customers of projects, mostly Bosnia and Herzegovina, wind and utility sector, energy sector, this has been the major impact.

Usually Q4 is stronger every year, but this one effect that I mentioned now, it was different than other years, and it contributed on top of the other traditional cumulative effects year-on-year.

As to the reduction in CapEx, Michal?

If we look the whole year and there is no big reduction of CapEx, yes. It's simply seasonality, yes.

Some seasonality, yes.

More things were bought earlier and nothing spectacular. If you think about this M&A CapEx, we simply didn't have new M&As.

M&A in Q4.

Yes, in or whole year.

Should we -- well, wait, wait. Do you think one of the keynote value of us in our deep understanding of clients' workflow. If not, what do you think is the key value added from us to our clients in the long term? From us, I mean this is probably from one of our employees.

Yes. I mean the answer is yes, understanding the customer business processes, if I understand the question rightly, and being able to tailor and translate not only solutions, but technology overall and cater the customer needs is something that is the huge value added on our side. But something where we can provide bigger value add is how to communicate to customers.

In other words, I think we are heavily undervaluing what we provide because we are -- and we are positioning ourselves as commodity providers very often instead of value providers and solution providers to the customers with more proactive approach problems.

I think we have to mute somebody. Somebody is not -- okay. Should we anticipate that segments to remain at elevated margin levels? Are these figures sustainable? Should we read this as a change in strategy or just a quarterly timing impact? When it comes to Dedicated Solutions and this utilities billing thing, it was a onetime effect. So this one company is very well, but they have in BH recorded a record of over EUR 12 million, EUR 13 million operating profit in euros, yes, where this year, we expect closer to EUR 5 million for them, yes, will be much lower. Whereas we -- other Dedicated Solution operations, we expect to grow significantly, yes. So this will compensate for this drop in this one company in business. But there was one big effect in Q4 '24, '25 and which I just described.

What are the thoughts on the ATM business? Would you sell any of your PP&E.

Fixed assets.

Okay. Fixed assets. It looks like gross margins went up at, Michal, if you can't answer this now, maybe we can hop on a call later.

Well, I can answer generally. Traditionally ATM business is more and more becoming competitive commodity business. The pressure on margins will be growing here, yes. So -- but again, as you see in many other industries, not this payment or other, the commodity business are phasing out much longer than others expect, yes. So we treat this as a cash cow, yes. We don't believe in dynamic growth here long term, yes. But we believe in protecting the position and generating value-added services around it using our market position.

As to the sale of the fixed assets, people in commerce say nothing is for sale until the price is right, yes. So we are not actively searching to sell it, and we are not thinking about it at all, yes, but never say never.

What kind of pricing framework are you using for agentic AI sales? That's a good question. Listen, we are looking for in all, not agentic AI. For all our business, we are looking and trying to redefine our price carriers, yes, because a lot of our business has had traditional price carriers or none of them actually, they were like fixed price with some indexation, yes, for a solution, yes.

Now we are looking how to connect it to the business process of the customer to grow together with the customer, providing value for the customer, but also benefiting from the growth. So it depends very much on the usage, but here we are very flexible, but we are also having internal exercises. We started how to redefine this not only for agentic AI, but for all the solutions.

Any other questions? If I missed some question, let me know. Looking, reading the chat. I think that's it. Let's give ourselves a few seconds if there's any more questions, and we really invite you to direct contact. So we -- the closed period is over, so we can be much more open and direct with you and discuss, and we are looking very forward to these contacts with you and to this year, hoping to perform well or make you happy.

Wait, I heard a click. Is there anything else on there?

No.

No message. Okay. Thank you very much. All the best. Enjoy the afternoon. Bye-bye. Bye-bye.

Okay. Thanks. Bye.

Okay. Good afternoon. So welcome on presentation about Q3 results of ASEE, which were published yesterday. So let's traditionally go first to highlights what -- and I will comment in a few words what happened in Q3. Most of comments will be specifically about Q3 only.

So during Q3, we decided to book significant noncash write-offs and revenue reversals related to India and Emirates. It impacted operating profit, noncash, but operating profit minus EUR 7.5 million. And obviously, it affected also payment business unit. The reason for this is underperformance of operations. We already mentioned this after Q2 that we see some challenges and issues.

But in a moment, I will explain what exactly we have written off. When we exclude those one-off non-cash bookings, current business, current operations delivered solid EBIT growth year-over-year for Q3 only, it is 21% above 2024. Nevertheless, in payment, we have a slowdown, and it is driven by 3 major areas. First is slowdown in enterprise e-commerce business in Turkey.

We already mentioned to you after Q2 that one of our clients, enterprise clients switched the majority of transactions to his own payment gateway, in-house payment gateway. And it also started during Q3 to happen for another big client who -- it's not to the same extent, but he started to switch transactions in source.

And this directly hits revenues and impacts operating profit. After excluding one-offs, those write-offs I mentioned in India and Dubai, we have a weak performance and drop year-over-year. Last year, results generated contributed positively. And this year, we have a negative impact, which results in a decrease in payment.

And only in Q3, I'm not talking now about year-to-date figures, but in Q3, deliveries of POSs and ATMs, they were lower than previous year. But if we look accumulated, revenues are there, but we have pressure on margins, especially in POS-related services and on deliveries, which are done in Western Europe.

From positives for payment, it was a stronger quarter for direct-to-merchant clients like ECR and IPD. Here we have revenues growth, more I will show in a moment. Significant improvement we realized in dedicated solutions. EBIT is significantly higher, and this is thanks -- mostly thanks to deliveries of our own proprietary solutions and targeted to utilities, mostly in this area.

And it was another good, in fact, very good quarter for banking, especially for core and channels business lines, thanks to own services, which we delivered. And this was the best quarter for banking for the last few years. For cash year-over-year cash flow improved significantly. I would say it is back on track after 2024 issues we had. And the conversion of EBITDA to operating cash flow on last 12 months view is really on a good level.

And traditionally, we show some numbers about transactions, how many transactions we process in e-commerce, IPD and processing. For processing in IPD, it looks good for IPD, even very good. So growth year-over-year. we have slowdown in e-commerce, which is due to Turkey, yes. So those 2 banks which switched part one, in fact, majority of transactions to in-house solutions, it affected this year-over-year value.

On other markets, for other clients, we see some growth, but it cannot compensate those drops. Okay. So let's move to results. This slide, those of you who participated in previous calls or looked at our presentation probably know pretty well. This shows numbers as they were reported in financial statements.

So 2 first columns exactly what is there. And then another 2 is after excluding effect of IAS 29 bookings, so hyperinflation. And those numbers show a slight drop on revenues and pretty big drop on operating profit, almost 30% year-over-year.

But this drop, as I already mentioned, was generated by those write-offs and reversals. So if we look at them, we have revenue reversal in India, which relates to accrued but not invoiced revenues to merchants. And due to situation of those clients, the entity is not able to invoice those revenues as they will not be collected.

And so we decided to reverse those revenues. Then we have some write-off of assets, EUR 1.7 on operating level and additional EUR 1.4 million in financial activity. This is what was put through financial activity is write-off of deposits, which were frozen by enforcement director in India. And in operating profit, we have some write-off of some receivables plus blocked cash.

And then we have more accounting like on consolidation level, this I mean. So write-off of assets, which we have recognized during allocation of purchase price. So we recognized on that time 2, let's say, families of software, one for payouts and second for payment gateway. And the one for payouts we decided to cover with [indiscernible] and write-off to 0 as we don't see perspective for now for to recover this value.

And the last column is effect of goodwill write-off and reversal of earn-out for majority stake, which we -- looking at results, we don't expect to pay. Taking all those adjustments, one-off, I will underwrite noncash one-offs, adjusted figures are in this, let's say, second section of the slide.

And we can see here that on adjusted level, we have increase of revenues by 2% with some change in structure. You will see this on later slides. We have drop in POS and ATM on deliveries, so third parties. And also in dedicated solutions, we have a change of structure of drop in advanced infrastructure, so lower deliveries of third-party solutions and increase in own solutions.

On operating profit, 21% growth year-over-year, so pretty good. And on net profit, it is less only 1%. What is the reason for this gap between 2 levels? It's mainly due to effect of restatement of contingent considerations and put, mostly put liabilities other -- of course, other than India and Dubai.

So this year, our liability resulting from put of minority shareholder of [ DeWalt ] in Bosnia. The valuation of this liability increased by EUR 2.8 million. And this is related directly with better performance in Q3 and expected better performance for next quarters. You will see this in a moment on slides by geographies, how big improvement in Bosnia we have.

Additionally, last year, we had positive effect of revaluation of put options for BSDS and [ BFRAT ] which we don't have this year. So those 2 things in total is around EUR 5 million lower result or bigger costs. This was partially compensated by 2 items. One, interest. On interest, we have a better -- higher balance, positive EUR 200,000. And previous year, we had EUR 1 million of costs related with dividends declared for non-controlling interest, which did not happen this year.

To remind some of the entities are consolidated using present ownership method. And in this case, when this method is applied, dividends paid to minorities went in P&L of group. And as for taxes, securities positive, we have taxes lower by EUR 600,000 comparing to 2024 Q3. Two main reasons. One is tax benefits on R&D, which we accounted in Spain.

We submitted, of course, documentation to utilize them and lower tax on intra-group dividends. Those which we collected during third quarter, they were not covered by -- withholding tax or local taxes. And effectively, we don't have this in P&L.

For P&L figures, I will not go into details. The same picture, similar year-over-year differences. So no need to comment. Let's move to business lines, how this looks. So in Payten, we have drop of revenues year-over-year by EUR 3.3 million and drop of operating result. But a few words about revenues first.

So as I already mentioned, in ATM and POS, we have lower deliveries. And this is visible here. So on ATMs, we have dropped 3.4%. But when we look at year-to-date data, we have growth. And similarly with POS, but the difference is in POS margin on deliveries, especially in Western Europe, is shrinking.

Then for e-com and processing dropped by EUR 1 million, which is a mixture of 3 items. Slowdown in Turkey, I already commented transactions switched to in-house solutions by 2 banks. Significant drop in Dubai and India. Last year, in Dubai, we had some implementation projects to enterprises, to banks. And in India, we did have revenues to some merchants, but those for whom we later had to reverse revenues.

And in India, currently dropped to very low result, and we are rebuilding it again almost from scratch. Those things were compensated by increases in some other geographies. So net effect is dropped by EUR 1 million. And ECRs and IPD, I already mentioned that it's a pretty good quarter for those lines and growth EUR 1.8 million year-over-year, mostly in Southeastern Europe, Croatia, Serbia.

But in lower [ scale ] also Western Europe and Central Europe, specifically Romania. As for operating profit, as you see, more or less half of result was generated by e-com in processing and ECRs and we have drop of result in e-com in processing. It relates to Turkey, India and Middle East. So exactly the same geographies where we have drop of revenues.

In ATM, we have drop of operating profit a bit due to those deliveries. So EUR 3.4 million lower revenues also decreased margin and also weaker performance of independent ATM network money, especially in Albania. And in POS, also a small drop of EBIT, EUR 300,000 mostly related to lower deliveries.

Overall, coming back, EUR 2.7 million lower result in payment, of course, excluding one-offs. And then let's move to asset part. So banking, I already mentioned a spectacular quarter for banking, almost EUR 4 million higher revenues year-over-year and result higher by EUR 2 million, reaching more than EUR 5 million. So the best quarter since, I think, 5 years. And this is delivered mostly by Serbia, Macedonia and in a bit lower part by Romania.

And it's thanks to core solutions and channel solutions. And Dedicated Solutions only EUR 1.3 million increase of revenues, but we have this change of structure. So decrease of third-party revenues and increase of own revenues, so cost business line, where we have big operating leverage on this and result is transferring to operating profit.

As you can see, because we did have already resources available, and now we utilize them effectively on projects. So the base was not, let's say, ambitious and it was not easy to beat, but the increase is pretty nice, and it allowed us to reach this EUR 18.3 million operating profit.

As for the geographies, a few words. The biggest growth we have in Southeastern Europe, this is the strongest region, EUR 4.7 million higher operating profit, mostly Bosnia. So I already indicated this that this is related with this and valuation of put option. Also good Macedonia, thanks to our banking and Central Europe, also thanks to banking.

A bit of slowdown in Western Europe, but if we look a bit more into detail, we have growing e-commerce here and ECRs, but slowdown in traditional POS-related services, a part due to drop in deliveries and also those which happened there with lower profitability than previously.

And 3 geographies, let's say, problematic ones. So Turkey already said a few words. So we have drop of revenues due to transactions and which were switched to in-house solutions, and this is transferred to operating profit. Previous 2 years, we had a perfect example of positive operating leverage when transactions were growing, we could easily generate higher results.

And now with dropping one, it affects operating profit quite much. Okay. We initiated here process of cost optimization. We work how to adjust to new reality, but we need a moment to see results of those actions. At India and Dubai, I already mentioned that business shrink significantly. As you see, EUR 200,000 revenues only in both geographies. So this results in operating loss this year and even bigger drop year-over-year because last year, India and Dubai contributed around EUR 0.5 million positive together.

Okay. So this is about Q3. And moving to year-to-date figures. I will not go too much into details because picture is pretty similar. When we look at total year-to-date figures before one-off adjustment, we have growth of revenue by 7%, drop of EBIT by 4% and net profit by 15%.

And again, here, we have effect of those restatements on revaluation of put liabilities and contingent considerations. We have from Q1 one-off of loss generated non-sale of Moven and the differences on taxes, which were in -- on year-to-date numbers, they are higher than in previous year.

Looking at adjusted numbers, asset write-offs, PPA and goodwill adjustments for one-offs are exactly the same. The first one, revenue reversal is different. It's EUR 1.6 million, not EUR 4.1 million. And this is because the difference, so EUR 2.5 million was reversal of revenues recognized in Q1, Q2 this year, yes.

So on year-to-date figures, it has no impact. When we look at adjusted numbers, 7% top line growth and 10% on operating profit. So we have operational growth on current business. Net profit minus 9% and due to those reasons, which I mentioned a moment ago.

When we switch to results by operating segments, again, pretty similar picture, yes. So we have growing banking and dedicated solutions. In banking, H1 was slightly positive with small growth. Now we've added a spectacular Q3. It looks very good.

So accumulated EUR 2.4 million operating result growth on core banking and solutions and channels mostly, as I mentioned. And Dedicated Solutions here on accumulating data, we have on revenue even drop year-over-year due to third parties, again and increase in on and EUR 6 million higher result reaching more than EUR 4 million.

So it looks good this Q3 was really strong and contributed to accumulated numbers. And Payten last one. So on year-to-date figures, we have growth in revenues in payment, as I already highlighted before. And as you see, this growth is in all lines despite challenges we have, especially in e-commerce processing, where we have this drop in Turkey, India and Dubai.

Still, it contributed to the growth of overall Payten. When we talk about operating profit, in POS, we see this pressure, especially in Western Europe on margins, and we have drop of operating results. ATMs, we have drop on profitability of independent ATM deployment.

We can say it is the same, like 1:1 as in Q3 as most of results for this network is done during Q3. So here, we have a drop of around EUR 1 million, growing ECRs and IPD and big drop, most of the total drop of result is in e-com and processing. Why Turkey and India and Dubai?

So let's look at how it looks by geographies. Again, very similar. So strong Southern Europe with growing Bosnia, but also growth for Croatia, which was not the case only for Q3. Macedonia, the same trend, so growing on accumulated data and Central Europe as well.

Western Europe, you see here this drop of result by EUR 1.3 million, and this is related with POS and shrinking margins, what I already indicated a few times. And then the biggest drops year-over-year we have in Turkey due to the reason I already mentioned and also India and Dubai.

So this is about results. Now a few words about cash flow. I already mentioned that we are satisfied with cash flow. It looks good. So operating cash flow for 3 quarters is almost EUR 39 million, which is significantly better than previous year.

Okay. Last year was bad. We were struggling. So it looks we are back on track. When we look at last 12 months figures, EUR 74 million operating profit more than in '23. So looks good. When we calculate conversion of EBITDA to operating cash flow, but EBITDA, not the reported one, but adjusted for one-offs, the higher one, conversion is 93%, what seems to be very good.

We had a lot of investments, mostly in infrastructure for outsourcing and on networks. Last 12 months, we invested EUR 15 million, mostly for POSs and ATMs. For existing contracts, those which we signed a few years ago, 5, 7, 9, on which we reached the space of renewing the fleet and replacing with modern devices.

So as you see, comparing '23, '24, we had big investments. Now '25, we also have them big. What is lower our spending investments in M&A, we have significant drop. We bought only 2 small entities during this year so far. And as for other outflows like regular CapEx, it pretty stable and nothing surprising here.

When we look at liquidity situation, cash, EUR 53 million. This is a drop year-over-year, but we need to remember about those dividends. Okay. We had operating cash flow positive EUR 40 million, but we paid dividend to asset shareholders, but also to non-controlling interest of subsidiaries. It's like EUR 21 million roughly.

CapEx, EUR 15 million only this -- no, EUR 15 million total year-to-date M&A expenditures and servicing of debt. So this consumed some part of cash. Other positions like short-term debt, short-term leases, dividends, nothing spectacular here. It's pretty flat.

We have huge increase in short-term M&A liabilities, valuation of contingent considerations plus put options, mostly puts currently. And it's not that we have some new ones, simply those which were previously presented as long term, they are now falling into this 1-year gap and the biggest amounts or biggest options in this amount are this related to DeWalt, BSDS, [indiscernible]

This majority of this value with some other small. As for operating capital, I don't think there is much to comment. Okay. This is what we managed to do, what we were like, let's say, expecting and highlighting on previous calls is that we want to decrease a bit inventory, and we managed.

Okay. So this is it. And as for outlook for Q4 and the end of the year, backlogs look good. So we have a 20% increase of backlog on whole asset for Q4. For asset parts of banking and dedicated is 36% and lower for payment 6.

Probably if you remember previous year or last 2 years, it was rather opposite situation. We had more dynamic backlogs in Payten. Now it's changed. Quite a big impact on this is coming from Turkey and the switch of transaction, which we mentioned. And in the asset part, we have increased, which is mostly from the Dedicated Solutions.

Okay. Banking is growing as well, but the majority of growth is dedicated. Okay. So this is about results. Do you have any questions?

[Operator Instructions] As for this India and Dubai, so like answering one of questions we did have on our morning call in Polish. On level of entities, we don't have any more big exposure in assets. Most of things are already written off. Of course, some assets are, but not a major one.

We have still exposure on group level, but on noncash items, yes, like we have around EUR 6.8 million goodwill, which is still on our balance sheet and not written off. And we have EUR 1.8 million of recognized PPA, another software payment gateway.

Based on impairment tests, which we prepared, we still see potential to recover this value. So for now, it is left on balance sheet. And of course, we have this challenge to rebuild the business and to get new clients to first cover operating losses.

As you saw in Q3, it was minus EUR 900,000. Okay? I expect Q4, it will be lower, but we need to catch this to get new clients. For sure, what we changed in the approach is that we are now very strict in revenue recognition in India for merchant business.

We don't allow any literally any recognitions which are not invoiced to the client, and we have implemented very strict policy for writing off merchant receivables. This mostly relates to India, but for Dubai as well if we have this type. So after 90 days, such merchant receivable is fully written off, if not collected.

Monica, Charles want to ask a question, I think. Could you help?

It's Possible.

Okay.

Great. Just a follow-up on -- I don't -- really don't totally understand exactly what happened in Dubai and Turkey. Are we talking about the same -- is this the same thing as the Moven issue? And what was it, which is aggressive accounting? Was it more than that? Was it fraud?

Okay. So let me do one by one. So first, what happened? We have like 4 or 5 major clients in this enterprise direct enterprise part of payment gateway in Turkey. So our clients are big banks in Turkey for whom we process transactions. And 2 of those banks decided to build their own payment gateway solution in-house.

It's not that they switch to competition. They simply built in-house solution and switched transactions from us to their internal payment gateway. So we lost transactions which were processed by us, and we lost our commission, which we earn on each transaction processed. Is it clear?

Yes. That sounds like standard operational problems. It doesn't sound as write-offs.

Yes, we don't treat this as write-off. It's -- this explains operational drop of results in Turkey. So here, we are not adjusting anything. Just explanation why Turkey is lower. So if we look here, we have this drop on Turkey, this is due to this.

Okay. And now India and Dubai. So in India, we have different issue, which is also trust related. So as you remember, like previous quarters, I think since Q4 results, we were always mentioning collection of receivables is an issue. We are looking at this. We are worried, and we apply our policy, standard policy, and we did it.

But what we have figured out that -- and this is somehow touched trust, the manager and the seller, they run the business, which was very aggressive. So not direct clients of India operations, but indirect clients of clients were in -- were high-risk merchants.

And on India level, there is increased pressure on government level for limit to ban such things. And our clients fall in problems because they were hit by doing business in those areas, yes. They had -- they fall in problems and our India companies are not able to invoice those revenues to them. They were accrued only. So they were now reversed.

So this is what happened. So we don't have business with them anymore. And we try to rebuild. We rebuild sales organization, hired new sales and try to get new merchants from those non-high-risk sectors and step-by-step rebuild this.

But as you see in Q3 numbers, starting point is very low. And so this is about revenue drop. And for write-offs, yes, there was some -- again, it's like related with clients and there was some control and they blocked the funds.

Our managers says they should be recovered, but it's already a few months and they were not recovered. So we prefer to be on safe side and write them off. Based on information we gather through different sources, it can take years to recover them, yes. So we don't see such an asset as having value.

So we want to be conservative and we include write-offs.

Okay. And is this the same thing that happened in Dubai?

In Dubai, not. In Dubai, because in Dubai, majority of business is enterprise business, yes. And currently, we are struggling with lack of projects. There is no projects at all or very minor. So this is the main problem. And there is a problem, which we mentioned already a few times, collection of old projects from 2024 and end of '23, where we have open receivables.

All those things which are still not collected are covered with write-offs currently. And okay, we push them to collect. So if it will happen, if we manage to collect, it will have positive impact.

Got it. Okay. So this sounds like this will be lapping issues for next quarter as well. Is that right?

Okay. I expect next quarter to have operating loss on this, hope lower than in Q3, this excluding one-offs. But I hope there will be no one. But okay, I already like disclosed what is still exposure on goodwill and PPA.

So if there will be some thunderstorm scenario or something goes even worse, then we have still this exposure, yes. But for now, our best judgment is it will not happen. So we still left those assets.

Okay. That's helpful. And then maybe one more on a more positive note. The growth in free cash flow is really impressive. Can you talk a little bit about where that's coming from and whether that's a conscious new effort to improve cash generation or if that's maybe just a seasonal kind of thing that just happened by chance.

Always this mixture, let's be fair, yes. There is seasonality, there is lag and there is also this constant pressure on cash, which we implemented on reviewing exposures on projects and pushing for invoicing, closing them.

Also, we have -- we released EUR 10 million from inventories. So trying to keep more under control, buying upfront POSs and ATMs because it's mostly this part, yes, POS and ATM mostly. We always need to have some stock. It's necessary in this business. But yes, last year, it was a bit too much.

We have a few projects where we are currently in delivery with recognitions done, but not invoicing. I hope some of them will be closed and invoiced until end of the year. So Q4 should be good as well, I hope.

Great. Yes, it's great to see. I've got plenty of other questions, but I'll hop in the queue and let others ask.

Any other question? We have something on chat, I think constellation will this result in any changes, particularly the management compensation?

We are not aware about any changes right now. Of course, we know about the constellation and that it was closed, they have its cooperation agreement with Adam Góral Foundation. But for now, we are not aware of any specific changes and impact on management compensation model.

Key points raised during morning presentation in Polish. Okay. So let's say about India, Dubai, I shared. Okay, about Turkey, how we want to address Turkey and this drop.

So short term, like very short term, we are not able to match this, but we take 2 actions or 2 areas of actions. So on top of this enterprise business, which was so far the biggest in Turkey. We have also direct-to-merchant business in Turkey running 2 models, one under financial institution license, another without license. And we want to -- both are growing, and we want to push it even more to grow.

And so to grow with bigger amount, but of lower clients, smaller clients. So to have this bigger let's say, to have lower exposure on one big client. So this is one area. And second, we will -- we already started. We are working on cost optimization in Turkey, but effects of this cannot be expected in Q4.

It will take a few months to shrink the team and adjust to lower volume of transactions. So this is it. What else was asked for me to recall to? Okay. Growth of backlog in Dedicated Solutions. Can we expect this to continue next year?

So growth, yes. But the percentage-wise, it will be difficult because the base is growing. So we see projects for next year. This should generate some recurring revenues of maintenance once projects are completed, but we can not expect the same percentage dynamics as this year, yes.

As for profitability, so Q3, it looked already nice. So it is here, you see it was 12% year-to-date is 5%. So we see still some area for improvement of profitability and performance in dedicated, but we don't see area to reach levels as banking.

These are different type of softwares, very often offered to public where we have price pressure. So there is place for improvement from the 5%, which we have, but not to the -- it is from this file but not to the level of banking.

Okay. So this -- what else, how can I help? Any other question? Okay. We have a question. What do you expect to be your main growth driver of Banking Solutions in next year? Cost efficiency. Talking about operating profit, we really want to put bigger focus on efficiency and cost of teams. So we see here some potential for improvement.

As for projects top line, rather, we don't see big projects, big huge core banking implementations as we did have in 2023, '24. And this I don't think can happen, but small projects, different smaller models, yes. So but we see here area for cost optimization. And we also initiated works in this area.

We put this as a part of budgeting exercise, which was initiated recently, but we need a moment to complete this. And increasing sales in 1, 2 years, next year, I think we still have place in dedicated solutions to grow banking, some increase, but nothing major.

And with payment, okay, starting point for India Dubai is very low, but we don't build much on this. We will push, but let's see. In payment, we see potential for growth in those direct-to-merchant lines. So ECRs, IPD and e-com. And this is where we want to really to focus and try to add additional value-added services to our existing clients, so to utilize this clients base we have with adding additional service.

We are intensively working now on this and hope that some pilots will start soon in some new geographies. So this is like on existing cost base, adding additional services, what should be quite effective in terms of profitability of this additional service.

So yes, for this traditional POS and ATM business, here, we don't see like some big place for growth. But also we do not expect some huge drops, yes. Okay, pressures on margins is there, but we want to also look at costs and try to address this somehow.

So in overall, I like to summarize in dedicated solutions and direct to merchants lines in payment. These are those areas where we see the biggest price positive banking growing, but not very big growth.

Okay. Anything else? If not, then I invite you to one-on-one direct contacts. We are now after a closed period. Another close period will start. I don't know exactly when, but usually around 20th January. So we have pretty much time to talk in the next 2 months.

So whenever you have questions, you can reach Monica, Piotr, myself, and we'll be happy to have a one-on-one call and or meeting if you will be in Warsaw. We have one more question.

What do you expect the most transformative trend for the banking solutions? Tough one, honestly. But I think still all what is related to digitalization of relation with clients. This is where we see -- so this is what is presented in our casing channels business line. And this is the place where we see place for like replacing with new modern solutions.

We've embedded some AI functionalities which we -- for which we have competence in our group, and we try to combine this and sell together, new CRM, for example, for banks.

Good. So thank you a lot. One more time, if you have questions, please reach us. We'll be happy to meet and talk. And thank you for joining. Bye.