Earnings Release • Aug 17, 2015
Earnings Release
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Corporate | 17 August 2015 10:57
German Startups Group Increases Profitability and Performance in the First Half of 2015
DGAP-News: German Startups Group Berlin GmbH & Co. KGaA / Key word(s):
Half Year Results
2015-08-17 / 10:57
Not to be distributed, published or forwarded in the United States, Canada,
Australia or Japan
+++ Corporate News +++
for immediate publication
German Startups Group Increases Profitability and Performance in the First
Half of 2015
Berlin, 17 August 2015: German Startups Group, the second most active
venture capital investor in Germany since 2012 (CB Insights, 2015),
continued its positive trend in the first half of 2015 by increasing both
its profitability and its performance.
According to its figures, German Startups Group achieved net profit of EUR
2.0 million (IFRS consolidated financial statements) during the reporting
period. With an average number of 6,566,882 shares, this equates to net
profit of EUR 0.30 per share. The annualized return on equity amounted to
25.1% p.a. (2014: 15.7% p.a.). The gross performance of the average amount
of capital employed in shareholdings also rose from 34.5% p.a. in fiscal
2014 to an annualized 53.4% p.a. in the first half of 2015.
Christoph Gerlinger, founder and CEO of German Startups Group, expressed
his great satisfaction with how business developed: "With the net profit of
EUR 2.0 million that we generated, we already achieved more profit in the
first half of the year than the EUR 1.4 million we achieved in all of 2014.
The profitability and even further increase in profit demonstrates the very
positive development of our portfolio companies and thus the success of our
investment strategy and our company structure." German Startups Group has
been increasingly profitable since its first full year of business and has
now achieved gross annual performance of its average capital invested in
shareholdings of 32.7% p.a. on a long-term average since it commenced with
investing activities in July 2012.
The positive performance was driven by broad segments of the portfolio. Of
the 24 minority stake holdings in operationally active companies
significant to German Startups Group, which together account for 94.3% of
the value of all 41 active minority stake holdings, 14 recorded an increase
in value in the first half 2015. To value the Group's investments as of 30
June 2015, 21 of the 24 minority stake holdings in active portfolio
companies significant to German Startups Group were recognized at
third-party objectivized share prices, in other words at the prices that
third parties have recently paid for the same type of or similar shares. In
two cases, the company assessed the fair value of its holdings by use of
third-party objectivized prices and acquisition prices regarded by the
company to be fair, while no third-party objectification was available in
one case; therefore, another recognized valuation method was applied. The
value of the majority stake in Exozet Group is not assessed in the
consolidated financial statements, but rather fully consolidated.
German Startups Group to consistently continue with its successful
investment strategy
The key to the positive business development lies in the consistent
execution of the strategy: Unlike typical closed-end VC funds of limited
duration and restricted investment time frames, German Startups Group can
finance and support its portfolio companies over the long term even for
years and through several rounds of financing. In addition, German Startups
Group can invest in startups in all stages of maturity, in other words
during their entire life cycle, and also acquire so-called secondary
shares, i.e. the existing shares in startups held by entrepreneurs and
business angels.
German Startups Group was thus able to achieve the increase in value from
different categories of investments in the first half of 2015:
On the one hand from the increase in value of shares in already advanced
and some very well-known German startups that were often purchased as
secondary shares. "Successful startups in advanced growth stages sometimes
have company valuations in the triple-digit millions or even billions of
euros. Although we, as German Startups Group, have only comparatively low
stakes of less than 1% in these companies due to our small size, these make
a substantial contribution to our profits," Christoph Gerlinger explains.
Secondly, the increase in value of investments was achieved with young
startups in the seed and early stage. These investments were mainly
acquired in several tranches through staggered purchases of primary shares.
German Startups Group typically holds the usual share quotas of between 1%
and 10% in these startups as VC investments.
German Startups Group also intends to generate other income from majority
stakes in the future. With the acquisition of additional shares in Exozet
Group, German Startups Group acquired its first majority stake in June
2015. Over the long term, the company plans to acquire additional
controlling interests and retain ownership of them.
Christoph Gerlinger explains the benefits of this strategy as follows:
"With respect to the absolute number of our holdings, they spread almost
evenly across the seed and early stage on the one hand and the growth stage
on the other. The breadth of the seed and early stage portfolio not only
allows for risk diversification, but also early follow-up investments once
these companies have achieved relevant business success and accelerated
their growth." Today, however, the company's assets are strongly influenced
by startups in the growth stage. "Companies that have made the leap into
the growth phase are, in our estimation, less speculative in nature and are
usually not that far from an exit, in other words from being sold to an
interested buyer." The five most valuable of the 41 active investments, all
except for one are in the growth stage, make up a 44.9% share of the value
of the investment portfolio as of 30 June 2015.
German Startups Group believes it has access to a large portion of the
universe of participation opportunities involving German startups because,
unlike typical so-called company builders, it does not pose a competitive
threat. German Startups Group provides young German companies with venture
capital as "smart money" and supports its portfolio companies in various
areas, not just with financing. But German Startups Group only assumes the
role of lead investor in rare cases. Unlike many company builders, this
offers an advantage in that the company is not largely responsible for
raising capital to cover possible and often unpredictable funding gaps for
its portfolio companies to ensure the survival of the respective startups.
German Startups Group focuses on German startups because it can then better
judge the situation and establish trustful relationships with the
respective individuals than abroad, especially in distant countries and
emerging markets.
"Once we have gone public, we feel that this strategy coupled with the
knowledge, experience, and network that German Startups Group has will make
us even more attractive for private and institutional investors, who
otherwise would not be able to gain access to the asset class 'startups
made in Germany.' Because we will then enable our shareholders to
participate in the value increase of German startups that their founders
have generated through their ingenuity, know-how, and hard work against the
backdrop of the digital revolution," Christoph Gerlinger concludes.
For more information on German Startups Group, its business model,
portfolio, and management, please visit http://www.german-startups.com.
Press materials are available here
http://www.german-startups.com/index.php/presse.
Investor Relations Contact
cometis AG
Ulrich Wiehle / Mariana Kuhn
Phone: +49 611 20585561
Mail: [email protected]
Press Contact
German Startups Group Berlin GmbH & Co. KGaA
Theo Bonick
Phone: +49 174 7984135
Mail: [email protected]
About German Startups Group Berlin GmbH & Co. KGaA
German Startups Group is an investment company based in Berlin that focuses
on young, fast-growing companies, so-called startups. The company acquires
majority and minority shareholdings mainly by providing venture capital.
The portfolio companies that German Startups Group holds also stand to
benefit from German Startups Group's expertise, experience and network with
respect to strategy development, financing rounds, restructuring
necessities, M&A transactions or selling the company, including a possible
IPO. According to its own assessment, German Startups Group provides
startups with so-called "smart money" by acquiring a shareholding. Its
focus is on companies whose products or business models represent a
disruptive innovation, allow for a high degree of scalability to be
expected, and in which it has a great deal of trust in the entrepreneurial
abilities of the founders to whom it feels that it obtains early access to
due to its close relationships to relevant players in the German startup
scene. The geographical focus is on the German-speaking region. Since it
commenced with operations in 2012, German Startups Group has in its opinion
built up a diversified portfolio of investments in young companies and
become the second most active venture capital investor in Germany since
2012 (CB Insights, Germany Venture Capital Overview). 24 of the 41 minority
stake holdings in operationally active companies are of particular
significance to German Startups Group and together comprise 94.3% of the
total value of all 41 active minority stake holdings. According to German
Startups Group, its investment portfolio reflects a cross-section of
extremely promising German startups of various maturity stages ("Seed,"
"Early" and "Growth Stage," by German Startups Group's own definition) and
includes some of the most successful and best-known German startups.
More information is available on our website under
http://www.german-startups.com
Disclaimer:
This communication is not for publication or distribution, directly or
indirectly, in or into the United States. This communication does not
constitute or form part of an offer of securities for sale or solicitation
of an offer to purchase securities in the United States, Canada, Australia,
Japan or in any other jurisdiction where such offer may be restricted. The
securities must not be offered or sold in the United States unless they are
registered or exempted from registration requirement under US Securities
Act of 1933, as amended (the "Securities Act"). The securities referred to
in this communication have not been, and will not be, registered under the
Securities Act and have not been and will not be - without an applicable
exemption from the registration requirements - offered or sold in the
United States or to or for the account or benefit of US persons (as such
term is defined in Regulation S under the Securities Act). There will be no
public offering of securities in the United States or anywhere else, except
for Germany.
This publication constitutes neither an offer to sell nor a solicitation to
buy securities. In case of a public offer, it will be made solely by means
of, and on the basis of, a published securities prospectus. Investment
decisions with respect to the, in due time, possibly publicly offered
shares of German Startups Group Berlin GmbH & Co. KGaA should be made
solely on the basis of the securities prospectus. The securities prospectus
will be available from German Startups Group Berlin GmbH & Co. KGaA, Platz
der Luftbrücke 4-6, 12101 Berlin, and on the Internet under
www.german-startups.com free of charge.
This communication is directed only at persons who: (i) are qualified
investors within the meaning of the Financial Services and Markets Act 2000
(as amended) and any relevant implementing measures, and/or (ii) are
outside the United Kingdom, and/or (iii) have professional experience in
matters relating to investments who fall within the definition of
"investment professionals" contained in article 19(5) of the Financial
Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended)
(the "Order"), or are persons falling within article 49(2)(a) to (d) (high
net worth companies, unincorporated associations, etc.) of the Order, or
fall within another exemption to the Order (all such persons referred to in
(i) to (iii) above together being referred to as "Relevant Persons"). Any
person who is not a Relevant Person must not act or rely on this
communication or any of its contents. Any investment or investment activity
to which this communication relates is available only to Relevant Persons
and will be engaged in only with/via Relevant Persons.
2015-08-17 Dissemination of a Corporate News, transmitted by DGAP - a
service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
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