Focus on profitability yields results*

January 1 – March 31, 2023, Group

• Net sales for the period amounted to SEK 73,818 thousand (SEK 72,254 thousand), which corresponds to an increase of 2%.

• Gross profit (Agency income) increased by SEK 19,749 thousand (SEK 14,750 thousand), which corresponds to an increase of 34%.

• Gross profit margin (Agency revenue margin) increased to 26,8% (20,4%)

• Operating profit before depreciation EBITDA increased to SEK 3,852 thousand (SEK 966 thousand). The EBITDA margin for the period amounted to 5,2% (1,3%)

• Profit after net financial items for the period amounted to SEK 2,077 thousand (-702 thousand)

• Net earnings per share after tax amounted to SEK 0,01 (-SEK 0,01)

• Equity as of March 31, 2023 amounted to SEK 56,327 thousand (SEK 60,403 thousand)

• Cash and cash equivalents as of March 31, 2023 amounted to SEK 16,328 thousand (SEK 16,135 thousand)

*Compared with the corresponding period last year.

Important events January 1–March 31, 2023

• Context Media was nominated for Agency of the Year 2023 in the media and communications agency category

• Thinc Collective acquires 20% of the shares in Fabuleux AB with an option to acquire an additional 20%

• Nowa Kommunikation wins procurement for all government agencies again. The assignment is estimated by the Swedish Chamber of Commerce and Industry to be approximately SEK 170 million annually in sales value.

• Thinc Collective acquires 35% of the shares in Safir Communication AB and receives an option to acquire an additional 35%

Important events after the end of the reporting period

• Lena F Stenberg is proposed as a new member of the board of directors after Rune Nordström, who declined re-election.

• Nowa Kommunikation wins new procurement for Luleå University of Technology. The assignment is valued at 40 MSEK over four years

• Gothenburg City Purchasing chooses to sign a framework agreement with Thincbolaget Nowa Kommunikation regarding strategic communication and editorial communication services. Nowa Kommunikation, as one of several suppliers, estimates the value of the agreement for its part at SEK 20 million over the agreement period.

CEO has the floor

Focus on profitability has an impact on results

Thinc starts the year with continued revenue growth despite the uncertain market. Most importantly, however, profitability is increasing all the more thanks to our margin focus, which is reflected in increasing agency revenues and higher margins. We are very pleased that our margin work has yielded results so quickly, for which I would like to thank all employees.

Q1

The quarter ended with a turnover of SEK 73,8 million compared to SEK 72,3 million in the corresponding period in 2022. This corresponds to an increase of approximately 2% at a time when the entire market is currently declining. The fact that our Agency Income (Gross Profit) at the same time increased by 34% from SEK 14,7 million to SEK 19,7 million is incredibly strong and pleasing. Consequently, we can almost quadruple our EBITDA from approximately SEK 1 million to SEK 3,9 million!

So how do we make so much more money on lower sales growth?

The answer is twofold.

This is partly because the turnover in 2022 included large campaigns for government agencies that the subsidiary Nowa Kommunikation had: with high turnover but with a lower margin. Large TV purchases for the Armed Forces, the Employment Service and the Psychological Defense Agency are probably profitable per hour, but the large volumes in certain media still create a lower margin due to the high purchasing costs. During Q1 2023, the work has consisted of a more even distribution, both among subsidiaries but also in the balance of turnover versus fees.

But the answer can also be found in the fact that the group generally charges better for its services. A focus since the fall of 2022 that has begun to yield results. It is both price increases, work to really get all billable time out and new innovative services that have created the good profit increase. A big compliment to all the group's staff! It is truly teamwork that has led to the good result.

Recession and economic decisions.

The Group continues to notice that customers in certain areas are slowing down and that the time to make decisions is taking slightly longer. However, this is still compensated for by a large influx of new customers for other parts of the Group and a good development with existing customers in segments that have not yet been affected by the downturn. In addition to the security of working with different segments with different needs and business cycles in the Nordic region, the Group is now also more involved in global pitches, i.e. private procurements for international assignments. And we are winning more than our fair share. Our global network is functioning excellently and this also means that the risk of a downturn in a downturn is reduced.

We are particularly pleased that we have won our first public procurement contract in Norway for part of the Oslo municipality, which broadens the business and gives us a more stable base in the Norwegian market.

Our immediate future

As you know, we focus on three things as a common thread in our acquisition work and not least in all development work; our model, which involves connecting entrepreneurs to us, digitizing our work and that of our customers in order to also be able to demonstrate better benefits, and creating a financially sound group and future for customers, shareholders and employees. The three perspectives permeate our strategy, all our decisions, and I will more clearly link our work to them in my future CEO words.

In the near future, this means that we are focusing on acquiring more companies, primarily in the Stockholm area, and with the same model that has been so successful in the past. We are also packaging and developing internal digital tools and insights for better customer work and additional sales. And as can be seen in this, our Q1 report, work on margins has already started to have an effect. We have had a good start to 2023.

Our future in the longer term

Our vision; to lead communications in the Nordics means many things. It means becoming the biggest, to be “best in class” but also to challenge and question the limits of communication as a tool and what it can do for customers’ business benefits. It means that we must always have an alert mind and be open to development but at the same time be persistent in our strategy and always work for improvement. I think we are succeeding well!

Anders Wallqvist, CEO

Gothenburg in May 2023