EQS-News: The Social Chain AG: Q1 2023 Report - revenue decreased due to restructuring, EBITDA improved, capital increase planned in the coming weeks

The Social Chain AG: Q1 2023 Report - revenue decreased due to restructuring, EBITDA improved, capital increase planned in the coming weeks

Results Q1 2023

• Restructuring takes effect: Group revenue at EUR 58.4 million (previous year: EUR 117.5 million) Decrease in revenue largely due to planned disposals of unprofitable companies Operating EBITDA (excluding M&A) improves by EUR 9.4 million to EUR -3.5 million (previous year excluding M&A EUR -12.9 million, previous year including M&A EUR 26.3 million)
• Total debt reduced by EUR 60.5 million, financing structure significantly improved

Outlook

• Capital increase planned: new equity in the low double-digit million range
• Forecast 2023 slightly corrected within the given range

Berlin, 25 May 2023. The Social Chain AG has published its report for the first quarter of 2023. The company generated consolidated revenue of EUR 58.4 million (same quarter of the previous year EUR 117.5 million). The reduction in revenue was largely driven by the scheduled divestment of unprofitable companies and portfolio streamlining. On the other hand, operating EBITDA (excluding M&A income) shows significant improvement of EUR 9.4 million: from EUR -12.9 million in Q1 2022 to EUR -3.5 million in Q1 2023.

The prior-year quarter was impacted by the partial sale and subsequent deconsolidation of KoRo Group, which resulted in a positive effect of EUR 39.2 million. As a result, EBITDA in Q1 2022 including M&A income amounted to EUR 26.3 million.

Dr. Georg Kofler, CEO: "We were succesfully able to implement large parts of our restructuring program in the first quarter of 2023. We have disposed of unprofitable companies and business units or those that are not part of our core business. In doing so, we have consciously accepted a significant reduction in revenue in order to structurally improve the profitability of the Social Chain AG. In addition, the consumer sentiment, which remained weak in many areas, weighed on the sales of some of our companies. However, today we can state that our ongoing restructuring program is showing a clear impact which is evidenced by the significant improvement in operating EBITDA."

The restructuring of Social Chain AG is characterized by three measures: Companies or business units that are not operating profitably are sold or closed. The product portfolio is being cleaned up by 25-30%. Staff and structural costs are being reduced by 30%.

Dr. Georg Kofler: "These measures are expected to be completed during the second quarter. We expect this to improve operating EBITDA (excluding M&A) for the full year 2023 by around EUR 38 million year-on-year."  

Financing structure significantly improved

The Social Chain AG was able to considerably improve its financing structure during the course of the year 2022. Bank loans amounting to EUR 36.4 million were repaid and the DS Group, which belongs to the Social Chain AG, entered into a syndicated loan of EUR 125 million for three years with an option to extend for a further two years. This will primarily finance the working capital of the DS Group. 

Overall, total debt decreased by EUR 60.5 million quarter-on-quarter to EUR 254.1 million. In addition to the above-mentioned syndicated loan (current drawdown EUR 103,2 million), total debt also includes lease liabilities (EUR 57.4 million), loans – mainly shareholder loans (EUR 54.0 million) – and the existing convertible bond (EUR 22.4 million).

Current net financial debt decreases by 77% to EUR 52 million at the end of the first quarter of 2023. 

Subscription rights capital increase against cash and non-cash contributions in the low double-digit millions range planned:

The Social Chain AG intends to implement a capital increase against cash and non-cash contributions by the end of July 2023. The structure and volume will be determined in due course. In total, the capital increase is expected to have a volume in the low double-digit millions range.

Outlook 2023  The Social Chain AG expects revenue of around EUR 270 million, with EBITDA of around EUR 8 million for the current financial year. This updated forecast is at the lower end of the range published in the annual report and reflects the persistently weak consumer sentiment.

Here you can find from 25 May 2023 the Q1 2023 Report.