CHAPTERS Group AG finishes successful 2023 financial year; Strong momentum continues in 2024

2023 was a transformative year for CHAPTERS Group AG as the group made significant progress on several strategic initiatives in building the home for mission-critical businesses in Europe.

In 2023, 18 operating companies joined the group. mlog, a new VMS platform focusing on the French market was launched and CHAPTERS increased its ownership position in Fintiba.

The group also completed two successful funding rounds with strong support from its largest shareholders as well as a handful of new highly strategic world-class investors.

In 2024, the existing platforms already invested in three additional operating companies and CHAPTERS Group AG became a significant shareholder Software Circle, a UK based serial acquirer of vertical market software companies. In addition, CHAPTERS Group AG added several key hires to bolster the team at CHAPTERS Group AG for further growth.

CEO Jan-Hendrik Mohr comments:

“We’re thrilled with the progress we’ve made in 2023 and the start of 2024! In 2023, EBITDA has increased by c. 49% – and by c. 63% including the additional transactions in 2024. Over the course of the last 14 months, we’ve added two platforms and 21 companies to our group. Importantly, the additional talent we’ve brought in directly and through our acquisitions has solidified our position as the ideal place for operating and M&A professionals to call home.

In this new chapter, I’m thrilled that we’ve been able to double the total capital invested since December 2022. The pace and quality of M&A execution has been phenomenal, and we continue to witness many more value-accretive acquisition opportunities in the pipeline, in particular in the VMS segment. Our platforms are now active in seven countries. As importantly, we are seeing progress in organic growth across most operating companies, driven by our new operational initiatives and strong performance again by Bastian and his team at Fintiba in this period.

Overall, our vision of building the ideal home for mission-critical businesses took great steps this year.”

Strong Growth in 2023

In the 2023 fiscal year, the growth of the group continued again. The platforms belonging to the group have acquired majority stakes in 18 additional operating companies. In addition, CHAPTERS Group AG increased its ownership in Fintiba GmbH from 39.9% to 55% and spun-off the property services group of NGC Nachfolgekapital. At the end of 2023, the group encompassed a total of 41 operating companies, one of which was a minority holding.

Based on preliminary numbers, the group achieved c. Euro 93m in revenue in 2023, an increase of c. 39% to the comparable period in 2022. EBITDA (adjusted) for 2023 of all operating companies is expected to amount to c. Euro 25m, an increase of 49% over 2022.

In addition to very strong inorganic growth in 2023, the group also saw c. 30% organic growth in EBITDA. This performance was strongly driven by excellent results at Fintiba. Excluding Fintiba, organic EBITDA growth in 2023 was in the mid-single digits.

Continued Progress in 2024 Year to Date

In the first few months of the current fiscal year, three additional operating companies were added to the group contributing c. Euro 2.3m in adjusted EBITDA, thereof c. Euro 1.6 million attributable to CHAPTERS. Total capital invested in relation to those transactions amounts to Euro 15 million. CHAPTERS Group AG also increased its stake in Software Circle plc to c. 29.9%. Software Circle is a serial acquirer of great vertical market software business in the UK and Ireland and has invested in 6 business to date. CHAPTERS Group AG has been a minority shareholder since 2023.

In addition, CHAPTERS Group AG resolved a capital increase against contribution in kind in January 2024 issuing c. 1.4 million in new shares.

Team Additions

In March 2024, CHAPTERS Group AG brought three new professionals onto the team. Marc Maurer joined as Chief Operating Officer for Vertical Market Software. Marc brings two decades of experience in the software space, both as an investor and operator with companies like Constellation Software, SAP, and Nokia. To support him in his ambition to help our platforms and operating companies to scale and grow, Christian Kappes joined Marc’s team. Christian has successfully driven growth at three CHAPTERS subsidiaries in the last two years. Melissa Koenigsberg joined the Finance Team as Head of Finance. Having worked in a similar role at a fast-growing M&A aggregator holding before, she is well equipped to scale the Finance organization of the group.

2023 Financial Update

The company’s equity base grew by c. Euro 35m in the 2023 fiscal year at the level of the AG with two capital increases (in May and November) and the foundation for further growth was laid. The number of shares outstanding as of December 31, 2023, is 18,149,192.

The Base Value as of December 31, 2023, is around Euro 8.00 per share (2022: Euro 6.52 per share). For the Base Value, the companies belonging to the group are valued based on the adjusted EBITDA for the past fiscal year using the multiple used as a basis at the time of purchase, and the proportionate value attributable to CHAPTERS Group AG – less the relevant company’s net debt – is taken into account. In addition, parent company assets and liabilities of CHAPTERS Group AG are taken into account (primarily securities, cash and perpetual bonds)

The adjusted EBITDA 2023 of all operating companies in which CHAPTERS Group AG holds a majority interest as of December 31, 2023, amounts to around Euro 24.5 million. The proportion of this attributable to CHAPTERS Group AG is around Euro 15.0 million.

The financial debt at the level of the group companies as of December 31, 2023, amounts to around Euro 33 million, and the shareholder loans provided by CHAPTERS Group AG to around Euro 84.4 million.

The amount invested in minority interests was around Euro 15.5 million as of December 31, 2023. Liquid funds, including the securities portfolio at CHAPTERS Group AG level, amounted to around Euro 40 million as of December 31, 2023. The outstanding amount of the perpetual bond is around Euro 22 million.

For the parent company financial statements according to HGB for the 2023 fiscal year, the Management Board expects a result of around Euro 2.5 million before considering the results from the securities portfolio managed by the company and provisions for stock-based compensation (2022: Euro 0.2 million).

The realized loss from securities amounts to approx. Euro 3.2 million (previous year income of Euro 1.2 million). This is offset by release of previous years’ depreciation on securities of Euro 4.1 million so that a net income from the securities portfolio of Euro 0.9 million is expected (previous year net loss of 5.3 million). Taking into account the accounting loss resulting from the bond re-issuance and provisions for stock-based compensation, net income is expected to amount to 1.7 million (previous year net loss of 5.2 million). The balance sheet total is expected to be around Euro 163 million (previous year Euro 125 million), and equity under commercial law around Euro 137 million (previous year: Euro 100 million).

The company expects to publish its consolidated and separate financial statements in May 2023. The provisional figures are subject to the audit of the financial statements and the approval of the annual financial statements prepared in accordance with the provisions of the German Commercial Code by the Supervisory Board.