The Social Chain AG publishes 2022 Annual Financial Report – revenue increased by 52% to €367.9 million; EBITDA at €10.7 million; financing structure substantially improved.

2022 Results:

• Group revenue increased by 52% to €367.9 million (2021: €241.6 million)
• EBITDA increased by €34.4 million to €10.7 million (2021: -€23.7 million)
• Financing was successfully restructured, €36.4 million of bank loans repaid

2023 Outlook:

• Expected revenue: €270 to €290 million
• Expected EBITDA (excluding proceeds from M&A): €8 to €10 million
• Focus of the business model: Profitability before growth

 

Berlin, 27 April 2023. Social Chain AG publishes its annual financial report for the year 2022. The company was able to increase its revenue from €241.6 million (2021) to €367.9 million (2022). This corresponds to a growth of 52 percent, mainly due to the acquisition of the DS Group which, for the first time in 2022, was consolidated for the full financial year.

The Social Chain AG also reports a significant improvement in EBITDA of €34.4 million: from -€23.7 million in 2021 to €10.7 million in 2022. The partial sale and subsequent deconsolidation of KoRo GmbH and other smaller subsidiaries contributed €41.3 million to this result – a success of Social Chain AG's targeted buy-and-build strategy. Excluding these proceeds operating EBITDA would have been around -€31 million.

CEO Dr. Georg Kofler says: "The multiple crises of 2022 weighed heavily on consumer sentiment and retail sales, both off- and online. In this extraordinarily difficult market environment, Social Chain AG and most of its affiliates have not met their targets. With regards to revenues, they missed their targets by an average of 25 to 30 percent. We originally anticipated consolidated revenues to amount to €535 million. In the third quarter, we cut this forecast to €380 million, expecting a slightly positive EBITDA in the lower single-digit million range. We can now report that we missed our revenue forecast slightly. Nonetheless, our EBITDA turned out much better. We understand that we cannot be satisfied with these results. Hence, we have already initiated a comprehensive restructuring program of our company in the second half of 2022."

Restructuring: Focus on profitability and efficiency

The ongoing restructuring of Social Chain AG includes three key measures. Companies or business units that are not profitable will be sold or closed. With this step, Social Chain AG will part with €80 to €100 million of unprofitable revenue. The product range will be reduced by 25 to 30 percent, ensuring that the remaining product portfolio can be marketed with significantly higher margins in 2023/2024. Personnel and structural costs will be reduced by 30 percent. "We expect these measures to increase our operating EBITDA (excluding proceeds from asset sales) by €35 to €40 million, compared with the previous year. We are confident that we can accomplish this turnaround: from an organizational, operational, and strategic perspective,” says Dr. Kofler. The aforementioned steps shall be completed in the second quarter and will likely show an impact in the second half of the year.

Financing structure significantly improved

Social Chain AG has substantially improved its financing structure during the course of 2022. Bank loans amounting to €36.4 million were repaid. Moreover, DS Group, which is part of Social Chain AG, secured a syndicated loan to the amount of €125 million for three years, with an option to extend for another two years. This primarily finances the working capital of the DS Group. Overall, 84 percent of Social Chain AG's bank loans are now secured long term – compared to only 12 percent in the previous year.

Dr. Georg Kofler, CEO and main shareholder of Social Chain AG, strengthened the company’s economic equity by subordinating shareholder loans of around €37 million. Current financial liabilities were reduced from €197.5 million to €54.8 million. Non-current financial liabilities in accordance with IFRS increased accordingly, to a total of €218.0 million. In addition to the aforementioned syndicated loan, non-current financial liabilities also include lease liabilities (€54 million), loans, mainly comprised of shareholder loans (€41.7 million), and the existing convertible bond (€20.5 million).

Balance sheet cleanup:
Impairment on goodwill amounting to €98.7 million

With its 2022 balance sheet, Social Chain AG has written off €98.7 million of goodwill. Of this amount, around €81 million relate to the DS Group which, owing to the difficult market environment, adjusted its medium-term planning in line with the principles of commercial prudence. The impairments were also reinforced by higher interest rates and the resulting cost of capital in the usual impairment tests. These unscheduled impairment losses were the main driver that have led to a net loss of €106.8 million for the financial year from Social Chain AG’s continuing operations.

"The 2022 consolidated balance sheet reflects a business plan that is adapted to the current challenges. With an improved financing structure and conservative accounting procedures for our assets, we laid the foundation for a solid development of our company in 2023,” says CFO Andreas Schneider.

Focus of the business model:
Innovative trend products for the mass market.
Scaled by efficient omnichannel commerce.

The ongoing restructuring creates a fully integrated group of companies with a clearly formulated strategic focus. CEO Dr. Georg Kofler: "The new Social Chain AG will consistently focus on its core business: innovative trend products for the mass market. Problem solvers for the everyday life of their end users – from the fields of household, leisure, fitness, or entertainment – marketed and distributed via our modern omnichannel structure. We will refine this omnichannel commerce in all areas and coordinate it even more efficiently: local stores, digital marketplaces, proprietary digital flagship stores, social marketing, as well as future marketplaces in the virtual world of Web 3.0. We invest in ongoing product innovations, professional data management, and our proprietary powerful IT and logistics structure. In general, we do not stick to specific product categories. We sense and anticipate trends with broad sales potential. This is what we can do better than others. And we demonstrate this know-how year after year: with bestseller items that sell millions of times. We aim to be the top selling company for popular consumer products. Overall, I see four critical topics for the future growth of Social Chain AG: continuously innovating the product range, seizing all the opportunities that omnichannel commerce offers on analogue and digital marketplaces, consistently internationalizing our top seller strategy, and targeting acquisitions with obvious synergy potential that can be integrated into the existing structure of Social Chain AG.”

2023 Outlook

For the current financial year 2023, Social Chain AG forecasts revenue in the range of €270 to €290 million. EBITDA (excluding proceeds from M&A) is expected to range between €8 and €10 million.
 

From 27 April 23, you will be able to download the Social Chain AG 2022 Annual Report here.

Contact:
Sarah Pust | Investor Relations
press@socialchain.de


New company adress  April, 1st 2023:
Alte Jakobstraße 85/86
10179 Berlin
Germany

The content of this press release is for information purposes only and does not constitute investment advice or other recommendations pursuant to the German Securities Trading Act by The Social Chain AG or its affiliated companies. The information provided cannot replace investment advice. The information contained in this press release is not to be construed as an assurance of possible price developments and should not be construed as a request to enter into a transaction. The information contained herein does not constitute an offer to sell or the solicitation of an offer to sell securities or rights, or a solicitation to trade in securities or rights. Accordingly, The Social Chain AG and its affiliates make no representations or commitments as to the accuracy, completeness or correctness of the information or opinions contained herein. We assume no liability for direct or indirect damages caused by and/or in connection with the distribution and/or use of this document. The statements correspond to the status at the time of the preparation of this document. They may become obsolete due to future developments without the document being changed.