3U HOLDING AG: High proceeds from divestment and strong organic growth

Marburg (pta007/09.11.2022/07:00 UTC+1)

• Other income of EUR 169.12 million from the divestment of shareholdings as a basis for bonus dividend and for the ongoing strategic development of the business models in megatrends
• Continuing operations raise revenue by 22.0% in the third quarter
• Significant upward revision of earnings forecast for the financial year in line with expectations

Marburg, 9 November 2022 – 3U HOLDING AG (ISIN DE0005167902) has brought the third quarter of 2022 to an extremely successful close. Two Group shareholdings, namely InnoHubs GmbH and weclapp SE, both of which have undergone extremely successful development in recent years, were divested at a profit, thereby achieving a considerable increase in value. These transactions generated a high cash inflow, reflected in an amount of EUR 189.61 million in cash and cash equivalents as of 30 September 2022 (31 December 2021: EUR 12.72 million). The Management Board and the Supervisory Board intend to put forward a proposal in the next Annual General Meeting to enable the shareholders to participate in this success by distributing appropriate dividend. At the same time, specific opportunities for reinforcing business activities and for determining the future direction of the Group are being identified and validated on this basis. In this context, 3U continues to pursue its corporate purpose of raising its value in the interest of all its stakeholders.

Business also developed well at the operational level. The consolidated revenue of 3U HOLDING AG stood at around EUR 49.95 million in the first nine months of 2022, marking growth of EUR 9.74 million (24.2%) compared with year-earlier figure of EUR 40.21 million. All three segments contributed to this growth: Revenue in the ITC segment climbed by 30.2%, in the Renewable Energies segment by 23.7% and in the SHAC segment by 17.9%.

Consolidated revenue comprises proceeds amounting to EUR 12.54 million (9M/2021: EUR 7.56 million) from the divestment of weclapp SE and its subsidiaries. Without the contribution of weclapp SE's companies, continuing operations would have achieved revenue growth of EUR 4.77 million (14.6%) in the first nine months of 2022.

Profitability strongly impacted by special effect

As a result of the sale of equity interests in particular, consolidated EBITDA of EUR 165.07 million was generated in the Group (9M/2021: EUR 5.56 million). The high level of other income from the divestment was offset by high one-off expenses which are reflected in particular in personnel expenses as well as in other expenses. An amount of EUR 2.35 million was set aside for performance-based remuneration for employees and management in connection with the sale of weclapp SE. Consultancy fees were incurred in an amount of EUR 2.32 million.

In this context, personnel expenses increased by an exceptional 72.7% to EUR 17.43 million (9M/2021: EUR 10.09 million). The hiring of new staff members in the subgroup of weclapp SE also contributed to this increase, however. The Group's personnel expenses ratio (personnel expenses as percentage of revenue) advanced accordingly to 34.9% in the first nine months of 2022 (9M/2021: 25.1%).

The share of other operating expenses in revenue came in at 25.9%, also representing a significant rise compared with the year-earlier level (9M/2021: 16.3%). This increase is especially attributable to the aforementioned non-recurrent expenses in connection with the disposal of the holdings.

Moreover, against the backdrop of limited personnel resources in the Renewable Energies segment, new priorities were set regarding projects to develop wind farms in Brandenburg to be continued if appropriate. In this context, project development costs of EUR 1.59 million reported under current assets were written down.

Adjusted for the one-off effects, EBITDA would have been generated in an amount of EUR 9.45 million. The adjusted EBITDA margin (EBITDA as a percentage of revenue) would have therefore stood at 18.9% in the first nine months of 2022 (9M/2021: 13.8%), thereby also improving compared with the figure of 17.4% posted at mid-year 2022.

The Group's depreciation and amortisation totalled EUR 3.63 million in the first nine months of 2022 (9M/2021: EUR 3.07 million). Tax expenses rose from EUR 0.87 million to EUR 1.81 million in the period under review, resulting in part from the restricted use of loss carry forwards in the context of so-called minimum taxation. A positive result for the period (net of minority interest) was delivered in an amount of EUR 158.83 million (9M/2021: EUR 0.94 million). This corresponds to earnings per share of EUR 4.50 (9M/2021: EUR 0.03).

Segment results

The ITC segment delivered further strong revenue growth. Segment revenue rose by 30.2% to EUR 21.57 million in the first three quarters of 2022 (9M/2021: EUR 16.56 million), bringing the share in overall revenues to 43.2% (9M/2021: 41.2%). EBITDA of EUR 2.88 million marked a significant decline in comparison with the previous year's period (9M/2021: EUR 3.57 million). The segment's EBITDA margin contracted accordingly, from 21.6% in the year-earlier period to 13.3% in the first nine months of 2022.

Segment revenue comprises revenue of EUR 12.59 million from weclapp SE and its subsidiaries now sold (9M/2021: EUR 7.59 million). Without this contribution, continuing operations would have recorded a slight decline in revenue; in the third quarter, however, revenue rose by 4.8%.

At EUR 8.41 million, the Telecommunications business line generated sales revenue at the year-earlier level in the first nine months of 2022, thereby meeting expectations (9M/2021: EUR 8.32 million). The decline in Voice Retail was offset by growth in data centre services. Management intends to continue its pursuit of the underlying strategy which is designed to compensate the declines anticipated in Voice Retail by generating growth in other parts of the Group's operations. The new Managed Services business model currently under development is successfully offering services for digitalising small and medium-sized businesses (SMBs), while aiming to deliver a significant increase in the proportion of recurrent revenue in this segment.

In the Renewable Energies segment revenue climbed 23.7%, from EUR 4.39 million to EUR 5.43 million in the first nine months of 2022, which corresponds to an unchanged share of 10.9% in overall revenue. The Renewable Energies segment registered lower wind yield in the third quarter of 2022 while solar irradiation was higher than expected measured against the long-term average. Better feed-in rates compared with the same period in 2021 also contributed to revenue growth. Owing to the one-off burden from the aforementioned provision and write-downs reported under other operating expenses, segment EBITDA came in at EUR 2.49 million (9M/2021: EUR 3.22 million. Adjusted for these effects, EBITDA would have amounted to EUR 4.57 million. Consequently, the Renewable Energies segment's EBITDA margin narrowed from 73.2% in the first nine months of 2021 to 45.8% in the reporting period. The segment result for this period came in at EUR 0.05 million (9M/2021: EUR 0.28 million).

In the first nine months of 2022, the SHAC segment's revenue rose by 17.9% to EUR 23.51 million, up from EUR 19.95 million (9M/2021), thereby achieving a share of 47.1% in overall revenue (9M/2021: 49.6%). The growth trend in 3U's e-commerce business not only continued in the reporting period, but even accelerated in the third quarter. Thanks to good supplier relationships and strong market position, the shortage of commodities and materials in the entire construction industry and the resulting delivery bottlenecks, along with drastic price hikes for commodities, components and systems were largely compensated. The SHAC segment's cost of materials ratio nevertheless rose slightly again in a nine monthly comparison, from 79.5 % in the year-earlier period to 81.4% in the first nine months of 2022. At the same time, the personnel expenses ratio (at 9.4 %, down from 10.8%) and the share of other operating expenses in segment revenue (at 9.9%, down from 12.1%) were lowered in the reporting period. A marginally positive EBITDA was generated, while the segment result also improved slightly by EUR 0.12 million to EUR -0.63 million (9M/2021: EUR –0.75 million). Measures to improve the segment's margins and performance are ongoing.

In the first nine months of 2022, revenue of EUR 1.43 million was reported under Other Activities (9M/2021: EUR 1.06 million). This revenue largely consists of income from management services. Personnel expenses of EUR 4.47 million therefore exceeded the year-earlier figure (9M/2021: EUR 2.26 million). As mentioned, this is set against the background of performance-based remuneration for management and employees in connection with the transactions concluded. Other expenses also increased to EUR 5.01 million due to the same exceptional reason (9M/2021: EUR 1.99 million). EBITDA from other activities climbed to EUR 159.28 million in the first nine months 2022, boosted by the higher level of other income (9M/2021: EUR –0.96 million).

Summary of third quarter results

In the third quarter of 2022, consolidated revenue rose by 28.6% to EUR 16.56 million year on year (Q3/2021: EUR 12.87 million).

The ITC segment raised its revenues considerably, by 28.0 % to EUR 7.34 million, compared with the previous year's quarter (Q3/2021: EUR 5.74 million) and, as in the year-earlier period, delivered a segment EBITDA of EUR 1.02 million (Q3/2021: EUR 1.02 million). Quarterly revenues in the segments of Renewable Energies and SHAC also increased. The Renewable Energies segment achieved revenue of EUR 1.29 million in the third quarter of 2022 (Q3/2021: EUR 1.27 million) and, following the establishing of a provision and write-downs on current assets, reported segment EBITDA of EUR –0.78 million (Q3/2021: EUR 0.77 million). The SHAC segment generated revenue of EUR 8.10 million in the third quarter of 2022 (Q3/2021: EUR 6.11 million), reflecting growth of 32.7%. Segment EBITDA rose to EUR 0.15 million in the third quarter of 2022, up from EUR –0.08 million in the previous year's period.

The Group's EBITDA came in at EUR 159.26 million in the third quarter of 2022 thanks to extraordinary income generated by the divestments, thus representing significant growth compared with the year-earlier figure of EUR 0.98 million. On the strength of this, a consolidated result of EUR 157.14 million was achieved in the third quarter of 2022 (Q3/2021: consolidated result of EUR 0.52 million).

Net assets and financial position

Total assets had risen to EUR 243.77 million by 30 September 2022 (31 December 2021: EUR 119.05 million). The main changes on the assets side pertain to the increase in cash and cash equivalents (including amounts subject to restriction) to EUR 189.61 million (31 December 2021: EUR 12.72 million). Running counter to the balance sheet extension, property, plant and equipment in particular declined by EUR 4.74 million due to the sale of the stake held in InnoHubs GmbH, along with current receivables by EUR 12.01 million (mainly in the context of buyers of office space in the InnoHubs building). The portfolio of intangible assets also dropped by EUR 28.21 million owing to the sale of weclapp SE.

On the liabilities side, equity rose to EUR 210.52 million (31 December 2021: EUR 62.11 million) on the back of the high level of retained profit. Following the departure of InnoHubs GmbH and weclapp SE from the Group, the share of minority interest amounts to only EUR 1.03 million (31 December 2021: EUR 6.87 million). The repayment of the loans for property development in this context made a major contribution to lowering non-current financial liabilities by EUR 13.80 million. As of the reporting date, the equity ratio amounted to 86.4 % (31 December 2020: 52.2%).

At the end of the third quarter, the key financials had greatly improved compared with 31 December 2021. Having reported net debt of EUR 18.16 million on the previous year's balance sheet date, 3U currently enjoys a net cash position of EUR 172.75 million (cash and cash equivalents minus current and non-current financial liabilities). The debt-to-equity ratio (borrowing as a percentage of equity) had fallen to 15.8% as of 30 September 2022 (31 December 2021: 91.7%). The Group reports positive working capital of EUR 196.04 million.

The cash inflow from operating activities totalled EUR 17.81 million in the first nine months of the financial year 2022 (9M/2021: cash outflow of EUR 3.43 million). Running counter to higher profit from the disposal of shareholdings, the decline in inventories and in current trade receivables in particular, along with write-downs and the tax provision, were factors contributing to the cash flow from operating activities. The Group disbursed EUR 12.38 million in investments in the first nine months of the financial year 2022 (9M/2021: EUR 11.66 million). These investments were offset in particular by payments received from the sale of consolidated companies.

Free cash flow stood at EUR 152.67 million in the reporting period essentially due to cash flows in connection with the transactions (9M/2021: EUR –15.08 million).

Compared with 31 December 2021, cash and cash equivalents had therefore increased to EUR 186.81 million as of 30 September 2022.

Earnings forecast for 2022 raised significantly

Based on the successful development of business in the first three quarters of 2022, the Management Board anticipates that the 3U Group's original revenue guidance for the financial year 2022 will be achieved – also after the sale of weclapp SE and its subsidiaries as of 30 September 2022 – and that revenues will be generated at the lower end of the corridor between EUR 65 million and EUR 70 million. Against the backdrop of the successful transactions in the third quarter, the Management Board now anticipates exceptionally high EBITDA of EUR 170 million to EUR 175 million. Profit of the 3U Group is therefore expected in a range of between EUR 165 million and EUR 170 million.

"The outstanding results of the third quarter have enabled us to demonstrate once more how successful we are in raising the value for our stakeholders," says Uwe Knoke, member of 3U HOLDING AG's Management Board responsible for strategy and business development. "Shareholders are to participate in the success through an appropriate dividend. At the same time, we will be very responsible in how we use the new financial headroom to invest in building up our business models in a targeted way and to leverage strategic opportunities when they arise. The strong organic growth of all the Group's continuing operations shows that we already have a sound basis for these endeavours. We will continue to drive growth in the future as well, to sustainably raise profitability and realise value.

Quarterly Announcement on the third quarter and the first nine months of the financial year 2022

The quarterly announcement on the first nine months of the 2022 financial year will be published today, 9 November 2022. It can be downloaded from the company's website (www.3U.net) under the "Investor Relations/Publications" heading.

Disclaimer The actual performance of business may be higher or lower than forecast here due to the acquisition of companies by 3U HOLDING AG or other Group companies, or from selling operating units of the Group. The resulting effects can only be planned for to limited extent, however.
Predicting with any degree of certainty to what extent the war in Ukraine, further potential interest rate hikes by central banks, or even recently more stringent economic restrictions imposed to combat the COVID-19 pandemic will impact on business activities is not possible.

For further information:
Dr. Joachim Fleïng
Investor Relations
3U HOLDING AG
Tel.: +49 (0)6421 999-1200
Fax: +49 (0)6421 999-1222
email: IR@3U.net

About 3U:
Founded in 1997, 3U HOLDING AG (www.3u.net) is based in Marburg, Germany. It heads up the 3U Group as the operating management and investment holding company. 3U HOLDING AG acquires, operates, and sells companies in its three segments of ITC (Information and Telecommunications Technology), Renewable Energies and SHAC (Sanitary, Heating and Air Conditioning Technology) for the purpose of increasing value for its shareholders, employees, customers, suppliers and all stakeholders. The 3U Group operates successful and profitable business models based on megatrends in all three segments and strives to achieve leading positions in the market, in particular through its e-commerce operations.
3U HOLDING AG shares are traded on XETRA, Tradegate and on German regional stock exchanges (ISIN: DE0005167902; identifier: UUU).

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Emitter:	3U HOLDING AG Frauenbergstraße 31-33 35039 Marburg Germany
Contact Person:	Dr. Joachim Fleing
Phone:	+49 6421 999-1200
E-Mail:	IR@3U.net
Website:	www.3u.net
ISIN(s):	DE0005167902 (Share)
Stock Exchange(s):	Regulated Market in Frankfurt; Free Market in Berlin, Dusseldorf, Hamburg, Munich, Stuttgart, Tradegate