Earnings Release • May 8, 2008
Earnings Release
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"In this quarter I am pleased with the development of our pilot program pipeline expanding with pilots in Europe and the US, in food retail and more significantly, in non-grocery retail which is showing an interest in our new Dot Matrix displays. The revenue for the quarter was low but I know that the first quarter is usually weak and that a few projects have been deferred to the second quarter". Charles Jackson, CEO Pricer Group
Orders received in the quarter amounted to SEK 98 M (91), an increase of 8 percent. The order back log at the end of March amounted to approximately SEK 95 M (102).
Net sales mainly to customers in Germany, Japan and France amounting to SEK 75.4 M (64.1) during the quarter, equivalent to an increase of 18 percent, compensated for continued general slowness in Europe and the US market. Revenue amounted to SEK 75.4 M as compared to SEK 133.4 M in the fourth quarter 2007. First quarter is usually slow with lower sales and revenue was also negatively affected by deferrals until later in the year for some installation projects. Pricer installed 170 new stores in the quarter not including the continued Metro migration of its German Cash & Carry-chain.
Gross profit increased to SEK 27.0 M (17.3) and the gross margin improved to 36 (27) percent for the quarter. The stronger gross margin continues mainly to be attributable to an improved market mix of sales and reduced unit costs but also to the weaker US-dollar as all purchases are made in US-dollars.
Other operating income of SEK 6.2 M in the quarter is the second payment from the license agreement with Ishida. This agreement was signed in 2007 for development, marketing and sales of wireless graphic display labels mainly for the Japanese market. Pricer will also receive volume-based royalties for these products, expected as from the end of 2008.
Operating expenses decreased to SEK 27.0 M (34.5) for the
The operating result amounted to SEK 6.2 M (-3.2) for the quarter. Without the license fee from Ishida operating result would have been a break even result.
Net financial items amounted to SEK -7.0 M (-0.1) for the quarter and consisted of negative currency effects from revaluations of cash positions and loans to subsidiaries in foreign currencies and interest expense on convertible debentures and bank loans.
The net result was SEK -0.2 M (-2.7) for the quarter.
At the end of the first quarter, Pricer had installed nearly 4,000 stores in over 30 countries.
Metro Cash & Carry Germany accelerated the deployment of its ESL upgrade program in Germany. Orders have been placed for the replacement of all labels in the last Cash & Carry stores with a total value of over SEK 20 M with deliveries taking place during the first half of 2008.
Sweden's largest retail cooperative, Konsum Nord, has placed an additional order for ESL-installations in four hypermarkets.
Spain shows signs of entering into a growth phase and Pricer is especially positioned for this market with the deployment of Carrefour hypermarkets and Cepsa gas stations. The second largest retailer in that market, Eroski, placed an initial order for several pilot hypermarkets in order to evaluate the entire roll out in 2009 – 2010.
Pricer also launched a complete line of electronic paper displays, branded DotMatrix, to complement its electronic shelf label ("ESL") offering. This will serve to expand food retail, but also to establish a firm foothold in non-grocery retail, specifically specialty and big box retail.
Pricer announced in the period a system breakthrough which vastly increases its existing infrastructure communication speed. The Pricer platform, based on diffused infrared light, delivers a speed of more than 50,000 full ESL updates per hour as measured by industry standards, making it by far the industry leader compared to radio solutions. The new speed will ensure a minimum of 200,000 information updates per hour, bringing increased flexibility to retailers for price optimization and inventory information updates, as well as supporting Pricer's new product offering DotMatrix, wireless pixel-based graphical displays, also termed bi-stable or electronic paper.
Pricer launched the DM trolley, a DotMatrix integrated in the trolley handle to enable easy store communication with customers and supported by the same platform. Several retailers have requested pilot programs.
Cash Flow from operating activities,
In Pricer's view, the market for ESL is showing sustained positive development. Competition is strong, but Pricer has the only ESL platform to support both segment based display and bi-stable display devices, and this will continue to expand market interest beyond the established markets. The signals from Pricer's prioritized geographical markets continue to be clear, and there is interest also outside established markets. The number of installations grows globally which influences also other retail chains to evaluate to include ESL as an operating tool in their processes to improve efficiency.
| SEK M | Jan - Mar 2008 | Jan - Mar 2007 |
|---|---|---|
| Net sales | 75.4 | 64.1 |
| Cost of goods sold | -48.4 | -46.8 |
| Gross profit | 27.0 | 17.3 |
| Gross margin, % | 36 | 27 |
| Other operating items | 6.2 | 14.0 |
| Expenses | -27.0 | -34.5 |
| Operating result | 6.2 | -3.2 |
Cash flow from operating activities amounted to SEK -7.5 M (4.6) for the quarter. Cash flow has been negatively affected by increased inventory levels (from low levels). Working capital amounted to SEK 99.1 M (96.2) at the end of the quarter. Liquid funds as of March 31, 2008 amounted to SEK 88.6 M (35.4).
Pricer issued convertible debentures of SEK 74.9 M in April 2007. The duration of the debentures is two years until March 2009 with approximately 9 percent annual interest (6 months STIBOR + 4.5 percent). The loans can be converted to shares in Pricer at a share price of SEK 0.70, corresponding to a dilution of about 9 percent. In line with IFRS a portion of the debenture loans is accounted as equity and, furthermore, an adjustment is being made to the interest expense during the duration of the loans.
Total net capital expenditure amounted to SEK 0.1 M (0.2) for the quarter.
The average number of employees during the quarter was 73 (102). The number of employees as of March 31, 2008 was 70 (102).
The parent company had net sales of SEK 61.7 M (45.8) and result before tax was SEK 2.4 M (9.2) for the quarter. The parent company had liquid funds of SEK 77.1 M (21.6) as of March 31, 2008.
Pricer follows the IFRS standards adopted by EU and interpretations thereof (IFRIC). This interim report is issued in accordance with IAS 34 Interim reporting. Accounting principles and accounting methods are unchanged as compared to the annual report. For the parent company Pricer follows RR32:6.
On April 1 Pricer held its Annual General Meeting and a new board was elected, among other items. Daniel Furman, Magnus Schmidt (vice chairman) and Akbar Seddigh (chairman) were reelected and Mikael Bragd, Peter Larsson and Bo Kastensson were elected new members of the board.
Pricer, having focused on immediate cost restructuring and now seeing gross margin improvements, expects continued strengthened profit during 2008 even with moderate volume growth.
The interim report for January-June 2008 will be published on August 21, 2008.
This report has not been subject to review by the auditor.
Sollentuna, May 8, 2008 Pricer AB (publ)
Charles Jackson CEO
In its capacity as issuer, Pricer AB is releasing the information in this interim report for January-March 2008 in accordance with the Swedish (2007:528) Securities Exchange Act. The information was distributed to the media for publication at 09.30 hrs CEST on Thursday May 8, 2008.
For further information, please contact: Charles Jackson, CEO, Pricer AB +46 8 505 582 00
| Q 1 | Q 1 | Full year | |
|---|---|---|---|
| Amounts in SEK M | 2008 | 2007 | 2007 |
| Net sales | 75.4 | 64.1 | 432.3 |
| Cost of goods sold | -48.4 | -46.8 | -300.3 |
| Gross profit | 27.0 | 17.3 | 132.0 |
| Other operating items, net | 6.2 | 14.0 | 20.6 |
| Selling and administrative expenses | -22.2 | -26.2 | -114.7 |
| Research and development expenses | -4.8 | -8.3 | -31.9 |
| Operating result | 6.2 | -3.2 | 6.0 |
| Net financial items | -7.0 | -0.1 | -7.2 |
| Result before tax | -0.8 | -3.3 | -1.2 |
| Taxes | 0.6 | 0.6 | 2.2 |
| Net result for the period | -0.2 | -2.7 | 1.0 |
| Attributable to: | |||
| Equity holders of the Parent Company | -0.2 | -2.8 | 1.1 |
| Minority interest | 0.0 | 0.1 | -0.1 |
| Net result for the period | -0.2 | -2.7 | 1.0 |
| EARNINGS PER SHARE, NUMBER OF SHARES | Q 1 | Q 1 | Full year |
| 2008 | 2007 | 2007 | |
| Earnings per share before dilution, SEK | 0.00 | 0.00 | 0.00 |
| Earnings per share after dilution, SEK | 0.00 | 0.00 | 0.00 |
| Number of shares, millions | 1,016 | 1,016 | 1,016 |
| Number of shares after dilution, millions | 1,153 | 1,153 | 1,153 |
| NET SALES BY GEOGRAPHICAL MARKET | Q 1 | Q 1 | Full year |
| Amounts in SEK M | 2008 | 2007 | 2007 |
| Nordic Countries | 3.4 | 4.1 | 23.6 |
| Rest of Europe | 48.8 | 41.4 | 250.1 |
| Asia | 20.1 | 16.7 | 142.5 |
| Rest of the world | 3.1 | 1.9 | 16.1 |
| Total net sales | 75.4 | 64.1 | 432 .3 |
| Amounts in SEK M | 31/03/2008 | 31/03/2007 | 31/12/2007 |
|---|---|---|---|
| Intangible fixed assets | 263.0 | 279.6 | 265.8 |
| Tangible fixed assets | 4.6 | 7.5 | 5.6 |
| Financial assets | 0.1 | 0.3 | 0.1 |
| Total fixed assets | 267.7 | 287.4 | 271.5 |
| Inventories | 45.5 | 61.1 | 28.8 |
| Other receivables | 128.9 | 94.7 | 132.1 |
| Cash and cash equivalents | 88.6 | 35.8 | 100.1 |
| Total current assets | 263.0 | 191.6 | 261.0 |
| TOTAL ASSETS | 530.7 | 479.0 | 532.5 |
| Shareholders' equity | 358.4 | 351.3 | 356.4 |
| Equity, minority interest | 0.1 | 0.0 | 0.1 |
| Total equity | 358.5 | 351.3 | 356.5 |
| Long-term liabilities | 87.9 | 25.4 | 80.9 |
| Short-term liabilities | 84.3 | 102.3 | 95.1 |
| Total liabilities | 172.2 | 127.7 | 176.0 |
| TOTAL EQUITY AND LIABILITIES | 530.7 | 479.0 | 532.5 |
| Pledged assets | 293.6 | 63.6 | 310.9 |
| Contingent liabilities | 1.2 | 1.2 | 1.2 |
| Shareholders' equity per share, SEK | 0.35 | 0.35 | 0.35 |
| Shareholders' equity, SEK, after dilution | 0.31 | 0.30 | 0.31 |
| CHANGE IN EQUITY | |||
| Q1 | Q1 | Full year | |
| Amounts in SEK M | 2008 | 2007 | 2007 |
| Equity at start of period | 356.5 | 353.2 | 353.2 |
| Translation difference | 1.1 | 0.8 | -5.0 |
| Issued employee options | 0.4 | - | 2.8 |
| Additional interest on convertible | 0.6 | - | 4.5 |
| Net result for the period | -0.2 | -2.7 | 1.0 |
| Equity at end of period | 358.4 | 351.3 | 356.5 |
| Attributable to: | |||
| - Equity holders of the Parent Company | 358.4 | 351.3 | 356.4 |
| - Minority interest | 0.1 | 0.0 | 0.1 |
| Total | 358.5 | 351.3 | 356.5 |
| Q 1 | Q 1 | Full year | |
|---|---|---|---|
| Amounts in SEK M | 2008 | 2007 | 2007 |
| Net result after financial items | -0.8 | -3.2 | -1.2 |
| Adjustment for non-cash items | 6.7 | -2.0 | 12.3 |
| Paid tax | - | -0.3 | -0.1 |
| Change in working capital | -13.4 | 10.1 | 19.4 |
| Cash flow from operating activities | -7.5 | 4.6 | 30.4 |
| Cash flow from investing activities | -0.1 | -0.2 | 4.9 |
| Cash flow from financing activities | -0.6 | -1.1 | 34.3 |
| Cash flow for the period | -8.2 | 3.3 | 69.6 |
| Cash and cash equivalents at start of period | 100.1 | 31.5 | 31.5 |
| Exchange rate difference in cash and cash equivalents | -3.3 | 0.9 | -1.0 |
| Cash and cash equivalents at end of period 1) | 88.6 | 35.7 | 100.1 |
| Unutilised bank overdraft facilities | - | - | - |
| Disposable funds at end of period | 88.6 | 35.7 | 100.1 |
| 1) Whereof blocked accounts | 1.2 | 1.2 | 1.2 |
| Q 1 | Q 4 | Q 3 | Q 2 | Q 1 | |
|---|---|---|---|---|---|
| Amounts in SEK M | 2008 | 2007 | 2007 | 2007 | 2007 |
| Order entry | 98.1 | 89.3 | 115.0 | 145.3 | 91.1 |
| Order entry - moving 4 quarters | 447.7 | 440.7 | 421.9 | 350.3 | 234.6 |
| Net sales | 75.4 | 133.4 | 131.9 | 102.9 | 64.1 |
| Net sales - moving 4 quarters | 443.6 | 432.3 | 412.6 | 406.6 | 406.5 |
| Operating result | 6.2 | 20.7 | -0.8 | -10.7 | -3.2 |
| Operating result - moving 4 quarters | 15.4 | 6.0 | -22.9 | -19.4 | -23.0 |
| Result for the period | -0.2 | 21.3 | -5.4 | -12.2 | -2.7 |
| Cash flow from operating activities | -7.5 | 34.6 | -3.2 | -5.6 | 4.6 |
| Cash flow from op.activities - moving 4 quarters | 18.3 | 30.4 | -7.7 | -28.7 | -37.7 |
| Number of employees, end of period | 70 | 83 | 93 | 96 | 102 |
| Equity ratio | 67% | 65% | 65% | 67% | 73% |
| Q 1 | Q 1 | Full year | |
|---|---|---|---|
| Amounts in SEK M | 2008 | 2007 | 2007 |
| Net sales | 61.7 | 45.8 | 326.6 |
| Cost of goods sold | -46.7 | -34.5 | -241.2 |
| Gross profit | 15.0 | 11.3 | 85.4 |
| Other operating income | 6.1 | 14.0 | 17.9 |
| Selling and administrative expenses | -8.8 | -12.6 | -58.1 |
| Research and development expenses | -4.3 | -4.5 | -20.4 |
| Operating result | 8.0 | 8.2 | 24.8 |
| Result from participations in group companies | - | - | 5.9 |
| Net financial items | -5.6 | 1.0 | -0.5 |
| Result before tax | 2.4 | 9.2 | 30.2 |
| Tax on result for the period | - | - | - |
| Net result for the period | 2.4 | 9.2 | 30.2 |
| Amounts in SEK M | 31/03/2008 | 31/03/2007 | 31/12/2007 |
|---|---|---|---|
| Intangible fixed assets | 1.7 | 3.9 | 2.2 |
| Tangible fixed assets | 2.9 | 5.5 | 3.8 |
| Financial assets | 345.9 | 281.1 | 354.3 |
| Total fixed assets | 350.5 | 290.5 | 360.3 |
| Inventories | 37.3 | 41.7 | 22.0 |
| Current receivables | 70.9 | 76.6 | 61.0 |
| Cash and cash equivalents | 77.1 | 21.6 | 91.3 |
| Total current assets | 185.3 | 139.9 | 174.3 |
| TOTAL ASSETS | 535.8 | 430.4 | 534.6 |
| Shareholders' equity | 399.6 | 369.1 | 397.2 |
| Total equity | 399.6 | 369.1 | 397.2 |
| Long-term liabilities | 82.1 | 10.6 | 72.9 |
| Current liabilities | 54.1 | 50.7 | 64.5 |
| Total liabilities | 136.2 | 61.3 | 137.4 |
| TOTAL EQUITY AND LIABILITIES | 535.8 | 430.4 | 534.6 |
| Pledged assets | 131.9 | 34.8 | 131.9 |
| Contingent liabilities | 0.2 | 0.2 | 0.0 |
Pricer provides the retail industry's leading electronic display and Electronic Shelf Label (ESL) platform, solutions, and services for intelligently communicating, managing, and optimizing product information on the shop floor. The platform is based on a two-way communication protocol to ensure a complete traceability and management of resources. The Pricer system significantly improves consumer benefit and store productivity.
Pricer, founded in 1991 in Uppsala, Sweden, offers the most complete and scalable ESL solution. Pricer has close to 4,000 installations in over 30 countries with approximately 60 percent market share. Customers include many of the world's top retailers and some of the foremost retail chains in Europe, Japan and the USA. Pricer, in co-operation with qualified partners, offers a totally integrated solution together with supplementary products, applications and services.
Pricer AB (publ.) is quoted on the Nordic Small Cap list of OMX. For further information, please visit www.pricer.com
Pricer AB (publ.) Bergkällavägen 20-22 SE-192 79 Sollentuna Sweden
Website: www.pricer.com Telephone: +46 8 505 582 00 Corporate Identity number: 556427-7993
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