Dear Readers,

Aareon continued on its growth trajectory in what proved to be an extraordinary business year. It was extraordinary for two main reasons: firstly, for the advent of the Covid-19 pandemic – a previously unimaginable event – to which our employees adjusted rapidly, mobilising as OneAareon to help our customers continue their business operations. And secondly, we embarked on a new chapter in our successful history when Advent International acquired a 30 % stake in Aareon as a new minority investor. We intend to accelerate our growth trajectory significantly in the years to come with a view to creating more added value for customers, investors and employees.

New minority investor – a milestone in the company’s history

In August, our parent company, Aareal Bank, completed the sale, announced in mid-May, of a minority 30 % share of its 100 % stake in Aareon to the private equity investor Advent International as part of a long-term partnership. This partnership is a great opportunity for us to significantly accelerate our growth trajectory by implementing a Value Creation Program, thereby embarking on the next chapter in the Aareon success story:

Aareon Smart World – new technologies for ERP systems and expansion of the range of digital solutions

For years, our Aareon Smart World portfolio has been a benchmark when it comes to the digital networking of market players in the property industry. At the core of this portfolio are the ERP systems, which interact optimally and can be individually linked up to other digital solutions.

The scheduled phasing out of the tried-and-tested ERP system GES and the discontinuation of operations at the Aareon data centre at the end of the year marked an historic milestone. The final migration projects had been completed at the end of June 2020. Even when GES was being developed in the 1950s, Aareon was focussing on state-of-the-art technology to help customers automate their processes. So, pioneering work has been part of Aareon’s DNA from the outset.

As part of our start-up programme, we have founded two more ventures with our subsidiary Ampolon Ventures (AV Management GmbH), which fosters close ties with the start-up scene. Refurbio GmbH, Berlin, is offering foxxbee, a digital interior design consultancy, while Ecaria GmbH, Berlin, has developed a digital solution called Ecaria that helps family carers plan and organise care services digitally. Aareon is thus in a position to tap into new market potential.

Mergers & acquisitions (M&A) – successful takeovers

In addition to the organic growth described above, inorganic growth plays an important role in the expansion of our product portfolio and development of additional markets. We have already successfully realised acquisitions of a similar nature in the past. In order to promote this growth pillar even further, we expanded capacities and established a dedicated division in the past fiscal year. Our acquisition of CalCon, Munich, Germany, was effective as of 1 January 2020 and has enabled us to add building relationship management solutions to Aareon Smart World. In December, we also signed a contract to purchase a 100 % stake in Arthur Online Ltd. (“Arthur”), London, UK. Arthur offers a best-in-class SaaS solution for property management that brings together property managers, owners, tenants and contractors on a single platform. In particular, the deal will enable us to develop the market for small and medium-sized property managers in the UK.

On a growth trajectory – increase in revenues even during the pandemic

In what was a challenging 2020, we succeeded in increasing our consolidated revenues by 2 % to € 258 million. International business accounted for 36 % (previous year: 37 %). As part of our international growth strategy, we established a branch office in Switzerland with a view to further promoting market penetration throughout Germany, Austria and Switzerland. Revenues from ERP solutions (excluding consulting) rose by 3 %. The ERP systems make for stable, recurring revenues and are the starting point for cross-selling activities involving our digital solutions. In this product segment, the year-on-year increase in revenues amounted to 19 %. Only in the area of consulting were we unable to fully compensate for the effects of the pandemic with our “Green Consulting” offering, resulting in a decline in revenues. Overall, the adjusted EBITDA² of € 62 million fell just short of the prior-year level (−3 %).

Outlook – further expansion and creation of added value

We intend to press ahead with our international growth strategy. We will continue to expand the Aareon Smart World portfolio for the benefit of our customers and their stakeholders. We will create added value for our customers so that they can exploit additional value creation potential. In doing so, we will rely on our own research and development activities, while eyeing further company acquisitions. Our M&A pipeline is already well stocked and the requisite financial resources are available. This means that we will be able to further increase our market shares in the relevant markets.

Although the effects of the Covid-19 pandemic are set to continue for some time to come, signs of a digitalisation push are emerging. We will endeavour to support our customers in their digital transformation with the ultimate aim of advancing the entire industry in this sphere.

In a challenging fiscal year, we are particularly proud of the excellent cooperation we have enjoyed with our customers, partners, employees and investors. Together, we have achieved success through courage and innovation – the very essence of “pioneering work”. We would like to thank everyone sincerely for all their efforts, and look forward to developing further future potential with all of them.

Best regards

¹ The Rule of 40 metric is calculated as the sum of revenue growth and EBITDA margin (Earnings Before Interest, Taxes, Depreciation and Amortisation); this figure should be 40 % to reflect a compromise between growth and profitability.

² Adjusted EBITDA: Earnings before Interest, Taxes, Depreciation and Amortisation before strategic investments