windeln.de SE publishes positive adj. EBIT development in fourth quarter 2018 and resolves on subscription rights capital increase
• Preliminary adjusted EBIT of EUR -2.4 million (-9.0% margin) in Q4 2018 and EUR -18.4 million (-17.6% margin) in FY 2018; Improved operating contribution margin and lower adjusted selling and administrative expenses on a quarterly basis
• Preliminary revenues in Q4 2018 of EUR 26.3 million; expected increase in sales due to Christmas business and successful sales campaigns (+18% sales growth compared to Q3 2018); preliminary revenues in the 2018 financial year of EUR 104.8 million; available liquidity of EUR 11.1 million as of December 31, 2018; Cash burn of EUR -1.7 million in Q4 2018 lower than in Q3 2018
• Subscription rights capital increase of EUR 3,113,647 by up to EUR 6,850,023 to up to EUR 9,963,670 by issuing up to 6,850,023 New Shares; Subscription price EUR 1.48 per share; Subscription period 14 February to 28 February 2019; Gross proceeds expected in the high single-digit million euro range
• Commitments for capital increase already received in the amount of EUR 7.25 million; Management share to be increased via management incentive program
Munich, February 7, 2019: windeln.de SE ("windeln.de" or the "Company"), one of the leading online retailers for family products in Europe and for customers in China, now announces the preliminary operating results for the fourth quarter (Q4) and the full year (FY) 2018 following the publication of the preliminary sales figures and liquidity development on January 9, 2019 in connection with the capital increase. Based on preliminary figures, the Group generated an adjusted (ber.) EBIT of -2.4 million euros, which is a ber. EBIT margin of -9.0 %. For the same period, windeln.de was able to increase sales by 18% to EUR 26.3 million. In FY2018, windeln.de achieved a ber. EBIT of EUR -18.4 million (-17.6% ber. EBIT margin) and revenues of EUR 104.8 million (FY 2017: EUR 188.3 million excluding Feedo). The change in revenue of +0.1 million euros compared to the publication of 9 January 2019 results from income from advertising services, the calculation of which was only completed retrospectively.
In addition, with the approval of the Supervisory Board, the Management Board today resolved to increase the share capital from currently EUR 3,113,647, divided into 3,113,647 bearer shares, by up to EUR 6,850,023 to up to EUR 9,963,670 in the form of a capital increase with subscription rights.
Sales growth in China and DACH region, stabilization of sales at Bebitus shops
Business in China recovered in Q4 2018 after the challenging market environment in the first nine months of the year. As a result, preliminary sales in China in Q4 2018 amounted to EUR 15.8 million (FY 2018: EUR 56.7 million). This represents an increase of +33.8% compared to Q3 2018, which is due to strong sales promotions on Singles Day (11/11) and Black Friday.
Revenues in the DACH region (Germany, Austria, Switzerland) amounted to EUR 5.9 million on a preliminary basis in Q4 2018 (EUR 24.2 million in FY2018). This is an increase of +4.1% compared to Q3 2018 due to strong Christmas sales and promotions (e.B Black Friday), as well as the reduction in inventory.
In the "Rest of Europe" (RoE) outside DACH, mainly the countries covered by Bebitus Spain, Portugal and France, the Group generated sales of EUR 4.5 million in Q4 2018 (FY 2018: EUR 23.9 million). This is a -3.0% decrease from Q3 2018 due to the continued focus on margin improvements and a more profitable revenue mix.
Improved contribution margin and further cost reductions lead to better operating result in FY2018; reduced cash burn in Q4 2018
The efficiency and profitability measures initiated in February 2018, including the streamlining of international business and the focus of all European businesses on margin improvements and the reduction of overhead costs, are also reflected in the preliminary figures for Q4 2018. The operating contribution margin (difference between gross profit and expenses for ber. Marketing and fulfillment costs) amounted to EUR 2.4 million (9.3% of sales) in Q4 2018 and EUR 4.1 million (3.9% of sales) in FY2018. This corresponds to a significant improvement of EUR 2.0 million compared to Q3 2018 and is only slightly below the level of EUR 2.8 million in the same quarter of the previous year, despite a lower revenue base. This was due to an increased gross profit margin of 27.8% in Q4 2018 (Q4 2017: 25.8%), which resulted from a higher share of sales from China, the optimization of the product range and subsequently improved purchasing conditions. The ber. other selling and administrative expenses (F&A expenses) were further reduced and were significantly below the previous year in Q4 2018 at EUR -4.8 million (Q4 2017: EUR -8.1 million) and in FY 2018 at EUR -22.5 million (-21.6% of sales) (FY 2017: EUR -32.3 million;
-17.1% of sales).
The ber. Based on the preliminary figures, EBIT thus improved to EUR -2.4 million in Q4 2018 after EUR
-5.3 million in the same period of the previous year and EUR -4.9 million in Q3 2018. Also for the full year 2018, windeln.de reports an improvement in the ber. EBITs to EUR -18.4 million compared to EUR -21.3 million in the same period of the previous year.
The Group's available liquidity amounted to EUR 11.1 million as of December 31, 2018. The total change in available cash and cash equivalents amounted to EUR -1.7 million in Q4 2018. The quarter-on-quarter improvement is the result of higher operating performance and lower net working capital as of December 31, 2018, mainly due to a reduction in inventory and trade receivables.
Dr. Nikolaus Weinberger, CFO of windeln.de explains: In 2018, we worked margin and cost optimizations, which led to improvements in the earnings figures. The operating result and cash flow in the fourth quarter were also positively impacted by sales campaigns, the Christmas business and low net working capital."
For 2019, the Group is continuing on its restructuring path and expects significant year-on-year sales growth, a further improvement in adjusted EBIT and a moderate increase in net working capital to enable the growth of the China business. The Management Board also expects to be in the black at the beginning of 2020 on the basis of adjusted EBIT.
Matthias Peuckert, CEO of windeln.de comments on the outlook and strategic objectives for 2019: "After the restructuring year 2018, we are now focusing on the long-term performance of the company for the 2019 financial year and continue to focus on profitable sales growth and margin optimization. We are making targeted investments in the Chinese market and the development of further product categories in order to position windeln.de as a comprehensive "family business" in Europe and China."
The published figures are preliminary and unaudited. The final results for FY 2018 will be announced windeln.de with the publication of the consolidated financial statements on March 20, 2019.
windeln.de resolves rights capital increase to finance growth in China and complete restructuring
On the basis of the resolution of the Extraordinary General Meeting on January 9, 2019, the Management Board of windeln.de SE, with the consent of the Supervisory Board, resolved today to increase the share capital of currently EUR 3,113,647, divided into 3,113,647 no-par value bearer shares, by up to 6,850,023 shares to up to EUR 9,963,670 by issuing up to 6,850,023 New Shares, each representing a pro rata amount of EUR 1.00 per share of the share capital ("New Shares"), to increase. The New Shares are entitled to dividends from 1 January 2018. The New Shares will not be admitted to trading on the stock exchange immediately, but are expected to be admitted to trading during the second quarter of 2019.
Up to 3,369,298 New Shares will be offered as part of a subscription offer to the shareholders of the Company by way of indirect subscription rights at a subscription ratio of 1:2.2, i.e. 1 existing share entitles the user to receive 2.2 New Shares from the capital increase (the "Subscription Offer"). The subscription price was set at EUR 1.48 per New Share, resulting in gross proceeds from the subscription offer of up to EUR 4.99 million. The subscription right for fractional amounts was excluded. Organised trading in subscription rights does not take place. The subscription offer is expected to be published in the Federal Gazette on 12 February 2019. The subscription period begins on 14 February 2019 (0.00 CET) and ends on 28 February 2019 (24.00 CET). The record date for the allocation of subscription rights is expected to be February 13, 2019.
Remaining New Shares that have not been subscribed for by shareholders in the Subscription Offer and up to 3,480,725 New Shares for which existing shareholders have agreed not to exercise their subscription rights will be offered to interested investors in a private placement at a price of EUR 1.48 per share.
The Company has received binding commitments from several investors, including two new investors from the Asian region, to acquire New Shares for a maximum amount of EUR 7.25 million at the subscription price, which, however, are partly subject to the achievement of certain allocation ratios with regard to the New Shares.
In addition to the proposed capital increase, the Supervisory Board also approved a management incentive program for the Executive Board and executives of the Group, in which these persons can contribute part of their variable remuneration to the Company as part of a capital increase in kind in return for the issue of shares in the Company. This may result in a participation of the named persons in the company of approximately 4%.
Fintech Group Bank AG with its representative Office BankM is supporting the capital increase and will offer the New Shares to shareholders in accordance with the subscription offer.
Overall, gross proceeds in the high single-digit million euro range are expected as part of the capital measure. With the gross proceeds from the issue, windeln.de intends to realize projects for the announced growth course in China and complete the restructuring program. Further information can be found in the subscription offer. This is expected to be available from 12 February 2019 in the Federal Gazette and on the website of windeln.de (corporate.windeln.de).
Selected key figures based on preliminary figures for the fourth quarter of 2018 and the full year 2018
|Q4 2018||Q4 2017||2018||2017|
|Revenue (million euros)||26,3||46,2||104,8||188,3|
|Rest of Europe||4,5||8,3||23,9||28,5|
|Operating contribution margin (EUR million)||2,4||2,8||4,1||11,0|
|in % of turnover||9,3%||6,0%||3,9%||5,8%|
|Adjusted EBIT (EUR million)||-2,4||-5,3||-18,4||-21,3|
|in % of turnover||-9,0%||-11,4%||-17,6%||-11,3%|