Interim Report Nepa AB (publ) Q1 2017
TWENTY-SIX PERCENT GROWTH IN REVENUES AND GROSS PROFIT
This is a translation of the Swedish interim report. If there should be any discrepancies, the Swedish language version governs.
FIRST QUARTER, JANUARY – MARCH 2017
- Net sales increased by 25.9% to MSEK 51.1 (40.5)
- Gross profit increased by 25.7% to MSEK 38.3 (30.5)
- EBIT amounted to MSEK -4.6 (-2.0)
- Earnings after tax amounted to MSEK -5.5 (-3.2)
- Earnings per share amounted to SEK -0.77 (-0.69)
IMPORTANT EVENTS
DURING THE PERIOD
- Nepa has acquired all outstanding shares (20 percent) in sales subsidiary Nepa India.
- Since founding of Nepa in Finland, the MD for the subsidiary has owned an option for seven percent of the outstanding shares of Nepa Finland. Nepa has acquired the option and the profitable subsidiary remains wholly owned.
AFTER THE PERIOD ENDED
- Nepa was selected to become partner in Facebook MMM Partner Program as one of the first companies globally and the first one outside of the USA. The partnership gives Nepa direct access to detailed data of all advertising campaigns on Facebook, Instagram and Audience Networks and will further strengthen Nepa’s ability to help clients increase return on media investments.
- Simon Hay, former CEO of dunnhumby and Anne Roggeveen, professor of marketing at Babson College, Boston, USA, nominated as board members of Nepa.
- Ken Peterson hired as MD for Nepa USA. Ken is formerly COO for Ipsos Loyalty North America and has a wide network in the important retail industry.
A WORD FROM OUR CEO
In the first quarter of 2017, Nepa has taken several important steps towards reaching our goals of developing ActionHub and intensifying our expansion in the UK and the USA.
In April, Nepa was selected to become the first official Facebook partner outside of the USA to work with marketing mix modelling. This is proof that our investments in our products are strengthening our competitiveness. The partnership means that Nepa gets continuous access to unique and detailed data that will help our clients optimize their investments in Facebook, Instagram, Messenger and Audience Network. It also opens doors to new clients, strengthens our brand, and creates a sense of pride within our company. We are currently working to implement and launch this product update for our current clients.
Last fall, we established an office in New York to best meet our global clients’ needs within the US market. By recruiting an American MD, we are now approaching American clients. Our new MD in the US is Ken Peterson. He was formerly COO at Ipsos Loyalty, in North America, and has an extensive network in the important retail vertical. Ken has a unique experience from selling competing SaaS-platforms like InMotion, Medallia, and Foresee. He truly understands the differentiation and value of Nepa’s ActionHub®, though the combination of behavior data (what clients do in store or online) with feedback data (why clients behave as they do and what their future plans are). We are excited to welcome Ken and look forward to start approaching American companies.
With the aim to strengthen our internationalization in our two most important markets, the UK and the USA, Simon Hay and Anne Roggeveen are nominated to be elected onto the board of Nepa today. Simon has been global CEO of dunnhumby and started dunnhumby in the USA. Simon has a broad network both in the UK and the USA and has extensive experience that will help us guide the future expansion of Nepa. Anne Roggeveen is professor of retailing & marketing at Babson College in Boston, USA. With an academic background and wide network in the USA, Anne will contribute with innovation and expertise within our primary segment retail. We are hoping to welcome both Simon and Anne to Nepa during the annual general meeting this afternoon.
In the first three quarters of the year, Nepa’s net sales increased for the 44thconsecutive quarter and the growth rate increased for the fifth quarter in a row. Nepa’s growth rate in Q1 was 25.9%, which can be compared to last year’s Q1 growth of 14.4%. The gross profit increased by 25.7%. EBIT for the period was SEK -4.6 million, slightly better than expected given the seasonally weaker first quarter. Compared to 2016, Nepa currently has significantly higher personnel costs due to planned investments in our product organization and expansion in the USA and the UK. In Sweden, our largest market, Nepa shows continued growth as well as stronger net margins. This provides us with a strong base as we now take the next step in the internationalization of Nepa.
Fredrik Östgren
CEO
THE GROUP
THE BUSINESS
VISION
”We change the way decisions are made”.
The digital transformation of our society is pushing companies to become more customer centric. The need to listen to and to understand customers has never been more important for business success. Through innovative solutions and software, Nepa facilitates customer oriented decision making in all parts of Nepa’s clients’ organizations.
BUSINESS CONCEPT
Nepa’s business concept is to help companies become more customer oriented, by bringing the voice of the consumer into companies’ business development and daily decision-making. Nepa combines consumer feedback data with actual behavior data in order to transform traditional insights into financially quantifiable actions.
BUSINESS MODEL
Nepa is a groundbreaking growth company within the research industry that offers innovative solutions and software for delivering actionable insights to clients. Nepa has developed automated processed for continuous data gathering, data analysis and the distribution of actionable insights.
More than 65 percent of Nepa’s revenues stem from subscription revenues defined as agreements that last at least 12 months. Other revenues stem from solving client specific business challenges, always with the ambition to create a long-term subscription business model and/or to develop highly scalable products that can be applied to other clients and in other industry verticals.
The proprietary platform ActionHub® is sold as a combination of:
- A platform license for managing customer feedback with an interface that automatically enriches clients’ current IT infrastructure with behavior data.
- Standardized products – ActionHub® Applications Suite.
- Solving client specific business challenges.
Nepa’s sales strategy entails solving client specific business challenges by utilizing proprietary ready-made and scalable analytics modules, which results in cost effective customization.
DEVELOPMENT OF THE GROUP
REVENUES
Net sales increased in the first quarter by 25.9 percent to kSEK 51,063 (40,543) and gross profit increased by 25.7 percent to kSEK 38,263 (30,452).
EARNINGS
The group’s EBIT amounted in the first quarter to kSEK -4,640 (-2,013) and earnings after tax amounted to kSEK -5,539 (-3,167).
GROUP INCOME STATEMENTS
| kSEK | Jan-Mar 2017 | Jan-Mar 2016 | Full year 2016 | ||
| Net sales | 51 063 | 40 543 | 184 448 | ||
| Other external income | 833 | 204 | 2 970 | ||
| 51 896 | 40 747 | 187 417 | |||
| Direct costs | -12 800 | -10 091 | -47 702 | ||
| Other external costs | -5 796 | -5 950 | -20 663 | ||
| Personnel costs | -36 913 | -26 302 | -116 059 | ||
| Depreciations | -648 | -324 | -1 477 | ||
| Other operating costs | -378 | -94 | -1 009 | ||
| Earnings Before Interest and Tax |
-4 640 | -2 013 | 506 | ||
| Financial income | 63 | 11 | 896 | ||
| Financial costs | -513 | -133 | -363 | ||
| Earnings Before Tax | -5 089 | -2 134 | 1 039 | ||
| Tax | -450 | -1 032 | -2 073 | ||
| Earnings After Tax | -5 539 | -3 167 | -1 034 | ||
| Profit attributable to the parent company’s shareholders | -5 539 | -2 943 | -852 | ||
| Profit attributable to non-controlling interests | - | -224 | -182 | ||
| Number of shares, end of period (pcs.) | 7 148 351 | 5 500 000 | 7 148 351 | ||
| Average number of shares during the period (pcs.) | 7 148 351 | 4 242 857 | 6 313 355 | ||
| Basic and diluted earnings per share (SEK) | -0.77 | -0.69 | -0.13 |
GROUP BALANCE SHEETS
| ASSETS (kSEK) | March 31, 2017 | March 31, 2016 | December 31, 2016 |
| Intangible assets | 13 871 | 5 481 | 12 002 |
| Tangible assets | 1 369 | 1 003 | 1 197 |
| Financial assets | 1 734 | 3 050 | 1 560 |
| Sum non-current assets | 16 974 | 9 534 | 14 759 |
| Trade receivables | 31 537 | 21 511 | 32 711 |
| Tax receivables | - | 551 | - |
| Other current receivables | 2 648 | 614 | 2 452 |
| Prepayments and accrued income | 6 530 | 2 976 | 6 153 |
| Cash and cash equivalents | 49 847 | 4 529 | 54 514 |
| Sum current assets | 90 562 | 30 181 | 95 831 |
| TOTAL ASSETS | 107 536 | 39 716 | 110 590 |
| EQUITY (kSEK) | |||
| Shareholders’ equity | 1 430 | 1 100 | 1 430 |
| Development fund | 8 253 | - | 8 253 |
| Other capital contributions | 77 750 | 3 553 | 77 750 |
| Translation difference | -229 | -39 | 140 |
| Retained earnings incl. net profit for the period | -22 890 | -9 010 | -16 799 |
| Equity, parent company shareholder | 64 313 | -4 396 | 70 774 |
| Non-controlling interests | - | -741 | -714 |
| Total equity | 64 313 | -5 138 | 70 060 |
| LIABILITIES (kSEK) | |||
| Deferred Tax | 654 | - | 654 |
| Total Long term liabilities | 654 | - | 654 |
| Borrowings, current | - | 6 570 | - |
| Due to customers | 9 216 | 7 038 | 6 697 |
| Trade payables | 12 091 | 10 166 | 14 635 |
| Tax payables | 284 | - | 137 |
| Other current liabilities | 6 484 | 8 945 | 6 227 |
| Accrued expenses, deferred income | 14 494 | 12 135 | 12 181 |
| Total short term liabilities | 42 569 | 44 853 | 39 875 |
| Total liabilities | 43 223 | 44 853 | 40 529 |
| TOTAL EQUITY AND LIABILITIES | 107 536 | 39 716 | 110 590 |
| Pledged (kSEK) | |||
| Chattle | 12 000 | 14 500 | 12 000 |
| Bank guarantee | 3 283 | 3 050 | 3 110 |
| Total pledged | 15 283 | 17 550 | 15 110 |
GROUP CASH FLOW STATEMENTS
| kSEK | Jan-Mar 2017 | Jan-Mar 2016 | Full year 2016 |
| Operating activities | |||
| Profit before tax | -5 089 | -2 134 | 1 039 |
| Adjustment of items not included in the cash flow | 1 137 | 300 | 2 725 |
| Income tax paid | -303 | -736 | -434 |
| Cash flow from operating activities before adjustments of working capital | -4 255 | -2 570 | 3 330 |
| Cash flow from changes in working capital | |||
| Increase (-) / Decrease (+) of current receivables | 602 | 3 312 | -12 903 |
| Increase (+) / Decrease (-) of current liabilities | 2 546 | 7 314 | 8 769 |
| Cash flow from operating activities | -1 107 | 8 056 | -805 |
| Investing activities | |||
| Acquisitions/divestments, tangible assets | -329 | - | -592 |
| Acquisitions/divestments, intangible assets | -2 343 | -1 028 | -8 397 |
| Acquisitions/divestments, group companies | -714 | - | -46 |
| Acquisitions/divestments, financial assets | -174 | - | -43 |
| Cash flow from investing activities | -3 560 | -1 028 | -9 079 |
| Financing activities | |||
| Rights issue | - | -4 387 | 69 080 |
| Amortization of loans | - | -1 724 | -8 294 |
| Cash flow from financing activities | - | -6 111 | 60 785 |
| Net cash flow for the period | -4 667 | 917 | 50 902 |
| Cash and cash equivalents at the beginning of the period | 54 514 | 3 612 | 3 612 |
| Cash and cash equivalents at the end of the period | 49 847 | 4 529 | 54 514 |
GROUP KEY PERFORMANCE INDICATORS
| Jan-Mar 2017 | Jan-Mar 2016 | Full year 2016 | |||
| Net sales growth rate (%) | 25.9 | 14.4 | 19.4 | ||
| EBITDA (kSEK) | -3 991 | -1 689 | 1 983 | ||
| EBITDA margin (%) | Neg | Neg | 1.1 | ||
| EBIT margin (%) | Neg | Neg | 0.3 | ||
| Profit margin (%) | Neg | Neg | 0.6 | ||
| Total assets (kSEK) | 107 536 | 39 716 | 110 590 | ||
| Equity / Assets ratio (%) | 59.8 | Neg | 63.4 | ||
| No. of shares, end of period (pcs.) | 7 148 351 | 5 500 000 | 7 148 351 | ||
| No. of shares, average during period (pcs.) | 7 148 351 | 4 242 857 | 6 313 355 | ||
| Earnings per share (SEK) | -0.77 | -0.69 | -0.13 | ||
| Equity per share (SEK) | 9.00 | -0.80 | 9.90 | ||
| Dividend per share (SEK) | n/a | n/a | 0.00[1] | ||
| No. of employees, average (pcs.) | 220 | 166 | 187 |
Definitions
Growth rate: Percent of growth in net sales compared to a previous period.
EBITDA: Earnings before interest, taxes, depreciation and amortization.
EBITDA margin: EBITDA as a percentage of net sales.
EBIT margin: EBIT as a percentage of net sales.
Profit margin: Earnings before tax as a percent of net sales.
Equity / Assets ratio: Equity as a percentage of total assets.
Earnings per share:Profit attributable to the parent company’s shareholders divided by average number of outstanding shares.
Equity per share: Equity divided by number of outstanding shares.
Dividend per share: Dividend for the period divided by the number of outstanding shares at the time of dividend.
No. of employees, average: Number of FTE’s on average during the period.
PARENT COMPANY
INCOME STATEMENTS, PARENT COMPANY
| kSEK | Jan-Mar 2017 | Jan-Mar 2016 | Full year 2016 | |||||
| Net sales | 2 400 | 2 075 | 10 909 | |||||
| Other external income | 436 | 106 | 957 | |||||
| 2 836 | 2 181 | 11 866 | ||||||
| Direct costs | -832 | -5 | -2 398 | |||||
| Other external costs | -722 | -458 | -2 255 | |||||
| Personnel costs | -2 574 | -4 328 | -13 420 | |||||
| Depreciations | -4 | -4 | -16 | |||||
| Other operating costs | - | - | -3 | |||||
| Earnings Before Interest and Tax | -1 297 | -2 614 | -6 226 | |||||
| Results from shares in group companies | - | - | 818 | |||||
| Financial income | - | -0 | 50 | |||||
| Financial costs | - | -49 | -65 | |||||
| Earnings After Financial Items | - | -49 | -5 423 | |||||
| Group contributions received | - | - | 1 224 | |||||
| Earnings Before Tax | -1 297 | -2 663 | -4 199 | |||||
| Tax | - | -472 | -20 | |||||
| Earnings After Tax | -1 297 | -3 135 | -4 219 | |||||
BALANCE SHEETS, PARENT COMPANY
| ASSETS (kSEK) | March 31, 2017 | March 31, 2016 | December 31, 2016 |
| Tangible assets | 15 | 31 | 19 |
| Financial assets | 47 359 | 17 479 | 39 559 |
| Sum non-current assets | 47 374 | 17 510 | 39 578 |
| Trade receivables | 79 | 2 149 | 90 |
| Loans to Group companies | 4 633 | - | 4 865 |
| Tax receivables | 852 | 460 | 670 |
| Other current receivables | 336 | 21 | 217 |
| Prepayments and accrued income | 1 093 | 158 | 192 |
| Cash and cash equivalents | 27 526 | 1 | 37 285 |
| Sum current assets | 34 520 | 2 789 | 43 317 |
| TOTAL ASSETS | 81 894 | 20 299 | 82 896 |
| EQUITY (kSEK) | |||
| Shareholders’ equity | 1 430 | 1 100 | 1 430 |
| Share premium reserve | 77 750 | 4 613 | 77 750 |
| Retained earnings | -777 | 3 442 | 3 442 |
| Net profit for the period | -1 297 | -3 135 | -4 219 |
| Total equity | 77 105 | 6 020 | 78 403 |
| Tax allocation reserve | 200 | 200 | 200 |
| Untaxed reserves | 200 | 200 | 200 |
| LIABILITIES (kSEK) | |||
| Borrowings, current | - | 1 296 | - |
| Borrowings from credit institutions | - | 100 | - |
| Due to customers | - | 1 759 | - |
| Trade payables | 353 | 372 | 740 |
| Borrowings from Group companies | 1 863 | 3 398 | 1 416 |
| Other current liabilities | 1 072 | 1 774 | 289 |
| Accrued expenses, deferred income | 1 300 | 5 380 | 1 848 |
| Total liabilities | 4 589 | 14 079 | 4 293 |
| TOTAL EQUITY AND LIABILITIES | 81 894 | 20 299 | 82 896 |
| Pledged (kSEK) | |||
| Complementary for liabilities in BlueCarrot KB | - | 3 | - |
| Total pledged | - | 3 | - |
NOTE: Changes in equity in summary
| THE GROUP, kSEK | Share- holders’ equity |
Other capital contribu-tions | Develop-ment fund |
Transla-tion difference | Retained earnings incl. net profit of the period |
Non-controlling interests | Total equity | ||||
| THE GROUP 2016 | |||||||||||
| Opening balance of equity January 1, 2016 |
1 100 | 7 940 | - | -179 | -5 869 | -537 | 2 455 | ||||
| Net profit of the period | - | - | - | - | -2 943 | -224 | -3 167 | ||||
| Translation difference | - | - | - | 140 | -198 | 20 | -39 | ||||
| Rights issue | - | -4 387 | - | - | - | - | -4 387 | ||||
| Closing balance of equity March 31, 2016 | 1 100 | 3 553 | - | -39 | -9 010 | -741 | -5 138 | ||||
| THE GROUP 2017 | |||||||||||
| Opening balance of equity January 1, 2017 |
1 430 | 77 750 | 8 253 | 140 | -16 799 | -714 | 70 060 | ||||
| Change in share in subsidiary | - | - | - | - | -714 | 714 | - | ||||
| Net profit of the period | - | - | - | - | -5 539 | - | -5 539 | ||||
| Translation difference | - | - | - | -369 | 162 | - | -208 | ||||
| Closing balance of equity March 31, 2017 | 1 430 | 77 750 | 8 253 | -229 | -22 890 | - | 64 313 | ||||
| PARENT COMPANY, kSEK | Shareholders’ equity | Other capital contributions | Share premium reserve | Retained earnings incl. net profit of the period |
Total equity | ||||||
| PARENT COMPANY 2016 | |||||||||||
| Opening balance of equity January 1, 2016 |
1 100 | - | 9 000 | 3 442 | 13 542 | ||||||
| Net profit of the period | - | - | - | -3 135 | -3 135 | ||||||
| Rights issue | - | - | -4 387 | - | -4 387 | ||||||
| Closing balance of equity March 31, 2016 | 1 100 | - | 4 613 | 307 | 6 020 | ||||||
| PARENT COMPANY 2017 | |||||||||||
| Opening balance of equity January 1, 2017 |
1 430 | - | 77 750 | -777 | 78 403 | ||||||
| Net profit of the period | - | - | - | -1 297 | -1 297 | ||||||
| Closing balance of equity March 31, 2017 | 1 430 | - | 77 750 | 2 074 | 77 105 | ||||||
THE SHARE
The share capital of Nepa AB (publ) amounted, on March 31, 2016 to SEK 1,429,670.20 divided into 7,148,351 shares, each with a nominal value of SEK 0.20.
Nepa AB (publ) is listed on the Nasdaq First North stock exchange since April 26th, 2016 under the ticker NEPA.
A trading unit consists of onehoundredandten (110) shares. All shares are of the same series and have the same voting rights and dividends rights.
Ten largest shareholders as of March 31, 2017 Number of shares Share/Votes
Ulrich Boyer 1,764,204 24.7%
Fredrik Östgren 950,895 13.3%
P-O Westerlund 675,765 9.5%
Niclas Öhman 441,236 6.2%
AMF Aktiefond Småbolag 313,736 4.4%
Handelsbanken Fonder AB 270,000 3.8%
Didner & Gerge Small and Microcap 270,000 3.8%
Hans Skruvfors 225,000 3.1%
Öhman Global Growth 219,780 3.1%
Björn Nordenborg 165,000 2.3%
Other shareholders 1,852,735 25.9%
Total number of shares 7,148,351 100.0%
ACCOUNTING PRINCIPLES
The Group accounts have been established according to Swedish GAAP (Årsredovisningslagen and Bokföringsnämndens allmänna råd 2012:1 Årsredovisning och koncernredovisning (K3)). The Group consists of the parent company Nepa AB (publ) and eight subsidiaries, six of which non-Swedish. Accounting principles and valuation principles correspond to the ones used in the latest annual report.
RISKS AND UNCERTAINCIES
Nepa faces a number of business risks and market risks, including the dependency of qualified personnel, the ability to handle growth and technological development.
AUDITING
This interim report has not been audited by the company’s auditors.
CERTIFIED ADVISER
Erik Penser Bank is Nepa’s Certified Adviser.
FINANCIAL CALENDAR
Annual general meeting 2017 31 May 2017
Interim report 1 April – 30 June 2017 31 August 2017
Interim report 1 July – 30 September 2017 30 November 2017
Year-end report 2017 28 March 2018
ANNUAL GENERAL MEETING AND DIVIDENDS
Annual general meeting will be held at the Groups head office in Stockholm on 31 May 2017 at 4pm.
The Board of Directors have decided to propose to the annual general meeting that no dividends will be paid for fiscal year 2016.
CERTIFICATION
The Board of Directors and the CEO certify that this interim report provides a correct depiction of the Group’s and parent company’s businesses, standings and results, and that it describes the relevant risk factors and uncertainties the company is facing.
Stockholm, 31 May 2017
The Board of Directors of Nepa AB (publ)
Ulrich Boyer Bo Mattsson P-O Westerlund
Chairman of the board Board member Board member
Niclas Öhman Fredrik Östgren
Board member CEO
For further information, please contact:
Fredrik Östgren, CEO P-O Westerlund, Deputy CEO and CFO
+46 733 345 069 +46 706 404 824
fredrik.ostgren@nepa.com p-o.westerlund@nepa.com
This is a translation of the Swedish interim report. If there should be any discrepancies, the Swedish language version governs.
[1] Suggested.
Nepa is one of the fastest growing companies in Swedish history, enabling organisations to improve their business performance by becoming customer centric at their fingertips. By merging behavioural data with customer feedback data in our ActionHub® platform, our clients can turn the voice and the footprints of the consumer into financial KPI’s and provide it to the right stakeholder in real-time.
Nepa serves some of the world’s most reputable brands in 50+ countries with local presence in China (rep), Denmark, Finland, India, Norway, Singapore (rep), Sweden, the UK and the US.
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