A Work Project, presented as part of the requirements for the Award of a Master’s Degree in Finance from the NOVA – School of Business and Economics.
WISHLIST:
E-COMMERCE AND REWARDS OUTSOURCING
Ana Rita Beato Brites No. 870
A Project carried out on the Master’s in Finance and CEMS MIM, under the supervision of: Prof. Dr. Stefano Alberti
WISHLIST:
E-COMMERCE AND REWARDS OUTSOURCING
Ana Rita Beato Brites
Abstract
The B2B division of WishList has just completed a new service called the “API web service” that enables the display, sale and request of products on third party’s websites. The service goes beyond the concept of gift voucher, the normal offering of the firm, and opens a new line of business to WishList, allowing the access to different sales channels. This paper analyses the three potential markets for the service and concludes on the attractiveness of the e-commerce sector for the company’s new proposition, to which a list of companies to target is presented.
TABLE OF CONTENTS
I. BRIEF CONTEXT ... 1
A. Client ... 1
B. Market overview ... 2
C. Current client situation ... 3
D. The Business Project challenge ... 4
II. REFLECTION ON THE WORK DONE AND INDIVIDUAL CONTRIBUTION ... 5
A. Problem definition ... 5 B. Methodology ... 5 C. Research Question ... 6 D. Analysis ... 6 1. E-commerce ... 6 2. Loyalty rewards ... 10 3. HR rewards ... 13
E. Recommendations to the company ... 15
F. Concerns ... 18
G. Individual contribution ... 18
III. ACADEMIC DISCUSSION ... 19
A. Possible links with Master’s degree in Finance ... 19
B. Relevant theories and empirical studies ... 19
C. Implications for theory and future research ... 23
IV. PERSONAL REFLECTION ... 24
A. Personal experience ... 24
1. Key strengths & weaknesses observable during the project ... 25
2. Plan to develop of your areas of improvement ... 25
B. Benefit of hindsight ... 25
V. APPENDIX ... 26
VI. REFERENCES ... 63
A. Literature ... 63
I. BRIEF CONTEXT A. Client
WishList is an Italy-based start-up company operating in the gift box retail market since 2010. The company is the creator of the brand WishList™, the first European concept of Gift Box and Digital Gift Voucher of physical products, and it operates both in the B2C and B2B segments, to which the former contributes with roughly 80% of the revenues.
At the centre of its early operations and on the basis of its B2C segment, the company develops physical gift boxes1 that are available in supermarkets and large retailers in which catalogues of products, differentiated by prices and categories, are sold to customers. The business idea behind it entails WishList’s customers purchasing the gift box in order to subsequently give it to someone to whom they did not know what to offer in the first place for an anniversary or some other type of special event. The final consumer then choses the right gift and redeems it on the company’s online platform. At that point, WishList is in charge of the shipment of the product to the final consumer’s desired address.
On top of its physical presence, the company also markets its offerings on its e-commerce platform (www.wishlist.it), through which customers can similarly purchase the gift box following the same logic. The only difference lies on the fact that the product catalogue does not have any physical support, thus being solely consulted online by the final consumer of the product. In any case, such approach of showcasing products from the catalogues on its website has led the company to develop an extensive online database with detailed characterisations of the goods that are continuously being updated.
With regard to the offering to the rather small B2B segment, WishList currently offers customised physical gift boxes for client companies that want to award the most loyal customers in special times of the year, as in Christmas or for anniversaries. Among its numerous clients is
the Asset and Wealth Management division of Deutsche Bank, for which WishList has developed a small catalogue of high-end products for the most affluent customers of the bank2. As part of WishList’s supply model, once the final consumer places her order on the company’s website, the latter automatically redirects each order to the correct supplier which is in charge of the organization of the packaging. A pick-up order and respective instructions are then sent to the couriers and packages are ultimately delivered within two to three working days. The company fully carries on its activity on a drop shipment scheme, that is, it does not keep any goods in stock. Instead, as soon as a good is requested on its website, WishList transfers the order and shipment details to the manufacturer who is then responsible for the direct shipment of the goods to the end customer.
Under its portfolio, WishList currently offers an array of more than 10,000 products and services from more than 500 top brands divided into eight main categories3 and 15 unit prices, thus highly leveraging its already existent, strong relationships with several suppliers throughout Italy. Moreover, the business model until now followed generates profit from the difference between the wholesale and the retail price to which it sells its customers.
B. Market overview
In its B2C segment, WishList offers an elegant gift box, both online and offline, that is fully customisable and consequently it highly differentiates it from the remaining competitors in the market. Furthermore, the competition’s offering is more in the experiential segment, whereas the gift boxes of WishList mostly include products only. Among the top players there are Smart Box, which comprehends the biggest share of the market and that has recently acquired one top competitor (Emozione3 from Wishdays), and Move Group (with Regal ONE and Move Box). The B2C gift box market is valued at 25 billion euros and its success has been mainly caused by virality. Nevertheless, even though it saw an exponential boost in its early stages,
2 The offering to Deutsche Asset & Wealth Management can be seen in Appendix 2, even though in the front part of the box the name of WishList is substituted by the client company’s brand.
competition has increased significantly and so as the number of complaints on the malfunctioning of these products. As such, coupled with the recent increase in regulation, the market has lost some of its initial brightness.
On the other hand, the B2B market for gift boxes is considerably smaller, being currently valued at six billion euros. Furthermore, when it comes to competitors, some of the B2C players also offer a similar service for this segment, nevertheless, the market is more fragmented and populated by some other smaller players.
C. Current client situation
Since 2015 WishList is an innovative start-up in the digital projects incubator Digital Magics (quoted on Aim Italia) and it was able to raise, in the same year, 500,000 euros from several investors and business angels. The capital was raised in two tranches and, among the investors, were Atlante Seed, the Venture Capital fund of Intesa Sanpaolo, and Digital Magics that now owns 7.89% of the capital.
Such financing operation has enabled the company to develop a new B2B service that aims to leverage its already existent online product database, the so-called WishList API web service. The latter comprises an Application Programming Interface (API) that allows the company to insert its online product catalogue into third-party websites so as to provision them with a simple, inexpensive platform for e-commerce, loyalty programmes or HR rewards purposes. It is therefore the company’s wish to become amongst the biggest players in the market for product outsourcing as well as to grow into one of the main partners of marketing and consulting agencies developing these company-wide loyalty and HR programmes.
On top of the new service, WishList has already innovated in its B2C segment by offering its customers the ability to personalise their gift box in terms of products being included, the box itself as well as the message portrayed on it, and to similarly send it either in a physical form or via e-mail to the final receiver of the product.
As it is common for start-ups, the company has achieved incredible growth rates since the beginning of its operations. Indeed, between 2014 and 2015, WishList grew its sales by 140%, having reached a turnover of roughly one million euros by the end of the year. The company’s key financial statements can be found in Appendixes 4 and 5, although information was only made available until 2014.
D. The Business Project challenge
WishList API web service comprises a simple plug and play e-commerce outsourcing model that enables the visibility and ordering of WishList’s products on third-party websites or intranets. The main characteristics of the integrated B2B offering include the access to a wide variety of products that WishList already contains on its portfolio as well as the supply of logistics and customer service typical of a common e-commerce platform. As such, WishList will be leveraging its massive online product database, taking advantage of its existent and strong relationships with suppliers.
The development of the API opens WishList’s activity to new business segments and unveils the potential of new sales targets that ought to be analysed. The purpose of the present Business Project is therefore to analyse the prospective markets for the newly created service and to accordingly develop possible target lists of companies that may be interested in resorting to the innovative offering.
II. REFLECTION ON THE WORK DONE AND INDIVIDUAL CONTRIBUTION A. Problem definition
The business opportunities for the company’s new offering entail three new possible segments: the E-commerce, the Loyalty rewards as well as the HR rewards markets. Regarding the former, the company wants to make the most out of high traffic websites, that do not possess an e-commerce platform, which may be seeking an alternative source of revenues at a relatively low cost. On what concerns loyalty programmes, it is WishList’s desire to supply clients with a product catalogue that can be used as part of the company’s marketing efforts to retain customers. Lastly, the HR rewards segment assumes great potential when considering the wide spectrum of companies, namely multinationals, running incentive programmes for the human resources they employ, for which WishList would supply these clients’ intranet with its products catalogue. In the last two segments, the API could alternatively be provided to the marketing agencies managing these companies’ programmes instead of direct selling to the companies themselves.
Given the numerous uses of the company’s recently developed B2B service, the objective of the Business Project was to assist the company on its implementation by means of undertaking an in-depth analysis of the market potential of each of the segments identified so as to assess their value, the main market players and the future trends. Furthermore, separate target lists for the most attractive sales channels would have to be created in order to convey WishList with the companies that could build in potentially interesting clients.
B. Methodology
The present work entails a ground-field study on each of the clusters, by way of undertaking a market analysis, assessing the market insights and conclude on each’s market attractiveness. The analysis herein undertaken was based on online research, interviews to several companies operating in the markets as well as general information received from WishList’s different stakeholders, as it was the case of investors, managers and employees. The interviews to the
companies comprised both written correspondence through e-mail and LinkedIn as well as phone interviews when such was preferred by the company.
C. Research Question
The work here carried out aims to answer the following question. Is any of the E-commerce, Loyalty rewards and HR rewards clusters an attractive market for WishList’s API web service?
D. Analysis
1. E-commerce
a) Market Analysis
In Italy, internet retailing has recorded 17% value growth in 2015, having reached a business volume of roughly €7.5 billion by the end of the year and comprising one of the highest rates of expansion in Western Europe. The sector’s double-digit growth is expected to continue its growth path as an increasing number of consumers have access to the internet alongside a relatively fast connection. It is therefore forecasted that the online channel will continue to be progressively preferred for the purchases of Italian consumers.
When considering product and service categories4, it can be pointed that consumer electronics and apparel and footwear documented the fastest value growth in 2015 (21.1% and 19.5% respectively). Apparel and footwear comprises the biggest category in terms of business volume (€1.6 billion) and has increased mostly due to a growing disposal of brands which have leveraged easier shipping and logistics of these types of products.
The sector has continued to be characterised by the fear of online fraud, comprising one of the most important constraints for online purchases. As such, payments through PayPal continue to be the norm, as well as through the resource to pre-paid credit cards like PostePay, the one offered by the Italian postal company Poste Italiane. Furthermore, even though mobile usage has been rising in the country, the preferred device when making online purchases continues to be the normal computer, namely the desktop one. The average value of the online purchase is
roughly 89 euros and the usual profile of the Italian buyer is Italian women between 25 and 34 years old resident in big cities such as Milan and Rome.
The main e-commerce operators in Italy are eBay and Amazon, with 24% and 14% respectively of market share, and the top Italian players in the market comprise Yoox Net-à-Porter Group, Esselunga, Banzai, Emmelibri and GRE. The key success factors of these marketplaces mostly have to do with product presentation, delivery service and price management.
Economic recession has led consumers to seek the lowest cost products through the online channel. However, the sector has been valued more for its convenience of use and time, as consumers can easily review and compare the prices of a wide number of products without ever needing to visit the physical store. In any case, the Italian consumer is still highly characterised by a touchy-feely approach to its purchases, therefore entailing that e-commerce players ought to resemble online the same purchasing experience they do in physical stores.
Internet retailing in Italy is forecasted to grow at 14% CAGR until 2020, year in which it is expected to reach a business volume of approximately €14 billion. The latter will be made possible by increased consumer access to internet connections through desktop and mobile devices, to which payment security and transparent and inexpensive return policies will be detrimental. The biggest contributions to such growth will be made by traditional toys and games, other internet retailing, food and drink, and media products, namely because of increasing availability of products and preference over other traditional store channels.
Among the 100 most visited Italian websites5, 25 have an e-commerce section, either because they are the core business of the company or because they are supplied through cookies or APIs as an additional revenue stream. From this list, UniCredit is among the ones having an e-commerce platform with products supplied by a third party. This is the service WishList aspires to provide and the third parties that supply such services are therefore among its competitors.
b) Market Insights
The e-commerce segment is undoubtedly one of the main segments for the use of product APIs, namely in the form of product advertising APIs. The latter comprises a new form of digital marketing called affiliated marketing. That means e-commerce and other players with an online product portfolio are able to advertise or to supply its products by providing its catalogue in third party’s websites. The latter, the so-called affiliated websites or just affiliates, are in such a manner supplied an e-commerce platform through which they can generate a new stream of revenues by charging a percentage on the margin of the products sold on their webpage, as in a pay per sale (PPS) fashion. As the implementation and development costs of such a platform are typically borne by the company providing the online product catalogue, this service does not require sizeable investments from affiliated websites.
Other reasons for websites to outsource an e-commerce platform through a product API is to position the business as an innovator and, most importantly, to enable a detailed customisation of the webpage. The latter entails a better engagement with customers as, by understanding what visitors are buying on the webpage, the website is able to develop content and other offerings according to its visitors’ preferences. That is for instance the case of UniCredit, whose website has an e-commerce section provided by Seri Jakala in which customers can purchase directly several types of goods and, with such customer information, the bank can later on provide financial services in accordance to what consumers purchase the most.
When compared to other forms of generating money on a website, as it is the case of advertising banners and cookies, product APIs do not deviate traffic to other websites. Furthermore, the affiliate does not have to worry about customer support, book keeping, logistics or any other e-commerce related issues.
On the other hand, the e-commerce provider benefits from the fact that it is able to access high traffic webpages, thus accessing audiences and potential consumers that otherwise would have never been reached. Furthermore, the company is leveraging its existing product database in
new markets by using free advertising space while only paying for proven results, that is, the sale of a product. Likewise, the company can engage in activities of co-marketing and therefore take advantage of networks if maintaining its brand on the e-commerce platform. And finally, the company will not face problems regarding the tracking of payments, as it normally happens with other types of advertising such as cookies.
According to the interviews, available in Appendix 9, undertaken to three companies from both the e-commerce provider and user sides, it can be concluded that such e-commerce platforms are typically outsourced through a partner that is in charge of all the product API’s implementation and maintenance expenses, which can be relatively high. Furthermore, the service provider must bear the costs of the database, technical support, customer service, logistics, order and management, payment services, legal issues and taxation.
APIs may be slower than data feed marketing and, depending on the type of website, it may be the case that payments cannot occur on the website itself, thus making the API solution more difficult to implement. In any case, product advertising APIs should be easy and quick to manage so as to enable a rapid implementation and reach of new potential websites where it can be implemented. As such, its provision must entail a plug and play solution.
c) Market Attractiveness
The e-commerce market is growing and there is an increasing awareness of the capability of websites to be monetized, namely in lucrative and popular market niches. Nonetheless, suppliers of e-commerce platforms, WishList’s competitors, seem not to have yet realized the full potential of this market. The latter are divided into typical e-commerce players, such as Amazon, and marketing agencies offering these services, as it is the case of Seri Jakala. The former have had slow responses and continue to resort to old-fashioned tools of affiliated marketing, such as banners and links to products, whereas the latter have been able to somehow leverage its offering to clients from other clusters like the loyalty and HR rewards.
Even though some Italian websites already incorporate e-commerce sections, it is not completely clear whether consumers will respond favourably to this new type of e-commerce. Furthermore, normal digital marketing continues to exist as a substitute for websites’ generation of money. Regarding the potential entrants, as soon as big, established e-tailers enter the market, it will become increasingly more difficult for marketing agencies or any smaller players to compete. Suppliers of the products typically do not have much power and therefore are assumed not to be relevant in the present analysis. Ultimately, complementers to the market include these websites’ ability to run payments and online networks of both advertisers and publishers that convey ways on how the latter can monetize their websites.
2. Loyalty rewards
a) Market Analysis
A proxy for the overall value of the Italian market was taken from the UK market, positioning it slightly below 8 billion euros. In addition, the Italian paradigm is characterised by either subscription-based or fee-based schemes that comprise the loyalty programs of both retailers, brands and e-commerce websites themselves. Coalitions assume a great relevance in the market; these are companies that create and manage a loyalty programme including multiple partner companies from different sectors and not in competition. Consumers who join these programmes are able to collect points and redeem rewards at any of the business partners using a single loyalty card and point balance. An example of this is Payback.
The companies that invest the most in loyalty marketing are the ones from the services sector and these have been responsible for moving loyalty programmes into digital. Nonetheless, the market is characterized by a multichannel approach in which a mix of physical and digital instruments are used for the programmes. Indeed, the presence of loyalty cards is widespread, though its use is no longer to merely provide promotions. Instead, the cards comprise a marketing instrument in which the clients’ data is registered. This database is then used to
understand consumers’ consumption behaviours, forecast and anticipate tastes, create personalised communication channels and therefore optimise the investments in marketing. Among the top 20 loyalty makers in the country (available in Appendix 12), that is, companies with the highest amount of expenses in loyalty marketing, the utilities sector is clearly the most active. The latter is followed by the banking, retail, transports and telecom sectors. The majority of these companies have a product API in their website where loyalty points can be redeemed. Out of these, 65% outsource the loyalty programme to a marketing agency which is responsible for the programme’s development and management. In addition, among those resorting to a marketing agency, in 69% of the cases they are supplied by Seri Jakala and 15% by Promarsa, thus resulting in a very concentrated market.
Loyalty programmes are still considered very effective in the country. The latter are a tool of marketing personalisation and actions of targeted CRM are therefore undertaken using direct media. Furthermore, Italian consumers prefer experiential rewards and in-store discounts to redemption of points in other products. The latter are also becoming professional shoppers resorting more and more to social and mobile platforms.
In the future, it is expected that loyalty programmes move towards digital, offering immediate convenience to consumers. Furthermore, it is likely that companies forge partnerships with the new players in the market, of which a list is presented in the Appendix 13. Ultimately, loyalty points will be gradually more used to make purchases in e-commerce websites.
b) Market Insights
The loyalty programmes undertaken in the Italian market can take a variety of forms. Firstly, there are companies that outsource the entire programme, in which case there is a marketing company in charge of managing it entirely. Secondly, there are companies that develop the programme internally but that partially outsource it. And finally, some companies fully develop and manage the programmes internally.
For the case in which the programme is of the entire responsibility of a marketing agency, the latter is responsible for the programme development and management, CRM and marketing activities, as well as for the selection of the product portfolio in which the loyalty points may be discounted and the logistic services associated to it. When a product API exists, it is developed by the marketing agency and the latter is similarly in charge of customer service and technical support. There are several marketing companies6 providing these types of services and inclusively having the entire range of internal resources and capabilities to supply them without resource to external providers.
When the loyalty programme is not fully outsourced, the most common activities to be managed externally are the ones WishList has the capabilities to provide. These include product selection, logistic services and the provision of a product API to be included in companies’ websites so as for loyalty points to be redeemed online by the consumers. Also in this case, there are marketing and consulting agencies that provide these services. Finally, there are companies, as it is the case of Esselunga, which manage their own loyalty programmes internally.
In light of the interviews with two marketing agencies developing these programmes and a company having the loyalty programme outsourced to a similar company, it is clear that the product API is an advantage in terms of service-oriented architecture. Also, the main companies outsourcing the programme are retailers. In addition, the key disadvantage of the APIs are development costs. The maintenance costs are typically around 20% of the former and the implementation costs are marginal, even though they may depend on the age and fragmentation of the companies’ IT systems. The APIs are typically developed internally and, to this point, marketing companies have experienced a slow response from its clients to these services. Whatever the case may be, the budget for the digitalisation of loyalty programmes in Italy is still very low. Therefore, marketing agencies seem to view the product APIs as part of a long-term strategy. Also, the impact of the APIs on the success of the programmes seems not to have
been fully measured yet. Furthermore, it is suggested that Italian companies are still very conservative when it comes to using customers’ data for marketing purposes and that may be the case why these types of services still do not have a widespread use in the country.
c) Market Attractiveness
The loyalty cluster in Italy is a very big market in terms of revenues. Nevertheless, it is characterised by a relatively mature structure where less than 20% of the loyalty providers, that is, the marketing agencies, provide more than 80% of the top companies with loyalty programmes. WishList’s competitors comprise the marketing agencies providing the integrated offering the company as well supplies. These have entered the market early enough to now have a big market share, providing highly developed loyalty programmes and having achieved tremendous economies of scale. The customers, instead, consist of the companies that have loyalty programmes as well as the marketing agencies that outsource the services offered by WishList, to which the company could become a partner.
The substitutes to the product API continue to be a less digitalised redemption of loyalty points, as it is the case for the leaflets still used by several companies. Again, suppliers of WishList are assumed not to be relevant in the present analysis. When it comes to potential entrants, several of the new players are considered a great threat, namely e-commerce websites. Ultimately, complementers to the provision of product API services in the loyalty market undoubtedly entail that companies have a website on which the API can be placed.
3. HR rewards
a) Market Analysis
The analysis of the UK market suggests a growing trend towards employee engagement since 2008, even though employers typically search for a low cost service. The HR programmes are characterised by the accumulation of points based on employees repeating desired behaviours or achieving predefined objectives. The latter points are then redeemed on internet platforms or through a printed catalogue of products. In addition, vouchers, e-vouchers and gift cards are the
most used tools when providing incentive and recognition rewards throughout Europe. In addition, expectations have been changing as millennials have a preference for instant gratification and that is the main reason why virtual gift cards will eventually dominate the HR gifting landscape.
The Italian market is nonetheless dominated by an extensive network of CRALs7, which are employees’ associations that have a relevant role in companies’ welfare programmes, namely when it comes to recreational purposes. Several of them have partnerships with other companies in which employees are then awarded discounts in partners’ products and services. In addition, a number of them also have a website in which promotions can be visualised. There are 863 CRALs in Italy with 1,018 agreements with brands and stores as well as its websites have roughly 143,000 visits per month. Furthermore, the CRALs are placed fifth in Google’s page ranking, therefore entailing these comprise websites with very high traffic.
b) Market Insights
The HR market in Italy is characterised by companies that either run HR reward programmes within their HR departments or that instead outsource the development and management of the programme to a specialized company for the purpose, the so-called HR provider. The extent to which a product API is used for the redemption of points in the company’s website or intranet is unknown, as this is private information that cannot be accessed by mere online research. In any case, according to an interview to a company providing a welfare system to its employees, the latter did not include a web platform to manage a product portfolio for points’ redemption. In the same interview, it was pointed an on-going cost-cutting situation in which money is preferred to be allocated to the employee benefits themselves rather than to a platform to manage part of them. Such a paradigm of limited resources to invest in HR incentives may be the norm in the Italian market which, despite some big multinationals, comprises mainly SMEs that may not have the scalability to fully take advantage of a product API on its intranet.
As far as the providers of HR reward programmes are concerned, the interview undertaken with Easy Welfare suggests that the selection and update of the product portfolio, the design and development of a dedicated website to the HR programme as well as the marketing services are managed internally. However, the selection and shipment of the products is managed by partners that mainly provide the delivery of products in digital format, thus enabling savings in shipping costs. Concerning the API, the company is already using it with companies that are more advanced from a technological point of view, thus contributing to the long-term management of the product portfolio that no longer needs to be updated manually.
Regarding the companies’ CRALs, the large majority has a website where the benefits are showed to the member employees. Furthermore, an internal repository, through which communication with employees takes place and in which existing conventions with partners are showcased, is common practice. Also, such welfare platforms and intranets are mostly managed internally, even though 75% of the respondents suggest that they are already externalising the product API services to a third party or that they would be willing to do so.
c) Market Attractiveness
Even though relatively small in terms of revenues, the HR rewards cluster is considered a developing market with digitalization trends, in which younger employees are becoming more demanding and in which virtual gift cards play an important role for such a movement. Furthermore, companies specialised in providing HR programmes seem to be more willing to pay for the product API than HR departments of companies, as outsourcing this service would help them save costs and focus on their core business. Even though seen as an investment, HR providers have the ability to create economies of scale in the usage of the API since they can supply this service to several clients and therefore being more advantageous for them.
E. Recommendations to the company
WishList’s recent investment in the product API solution will enable it to provide clients with an e-commerce platform on their websites with a product portfolio that will be updated
regularly. WishList will be in charge of the selection of the products from different suppliers, the management of the API, the logistics and shipment of the products, customer service and any technical support client companies may need. These are the capabilities the company currently encompasses and that its resources are able to accommodate. In addition, it is important to notice that the company incorporates a relatively small salesforce.
The key success factors of the company, nonetheless, and its main source of sustainable competitive advantage is that it can provide an integrated offering of product selection, logistics and API web service that can be valued by companies that want to focus on their core activities. In this sense, WishList cannot compare nor should transform itself into a marketing company providing services for companies in each of the clusters previously analysed. To do so, the company would have to enlarge its resources and capabilities to activities that are not related to its main business, when it should instead try to consolidate its core operations.
These strengths are common to the three clusters, as detailed in the SWOT analysis undertaken for each and as available in Appendix 15. The company further benefits from existing relationships with suppliers that enable a diversified product portfolio. Furthermore, the fact that the company is already developing a plug and play solution that facilitates the implementation of the product API in any website contributes to WishList’s core strengths. Regarding the main weaknesses of the company, these have mostly to do with the fact that WishList is a minor player, thus lacking the scale to compete with the biggest companies and having a smaller salesforce to reach new clients. Also, the company faces a lack of brand recognition as a player in the B2B segment. In the e-commerce cluster, the company may find it hard to compete with big e-commerce players that may enter the market. Another big threat is that this cluster has so far no track-record and therefore there is ignorance on whether consumers will indeed respond positively to this type of e-commerce. Nevertheless, the company may take advantage of a growing market by eventually providing a product API that enables payment services on third party’s websites, by engaging in activities of co-marketing
with online networks of publishers and advertisers, by using WishList’s brand on the websites and by enabling the shipment of products abroad, a thing that has becoming more recurrent. In the Loyalty and HR clusters, on the other hand, the company cannot compete with the marketing and HR agencies that provide complete reward programmes for its clients and employees respectively, as it does not have the necessary expertise to fully compete with their offerings. In addition, even if WishList operates as a partner to these providers, it may be the case that its service cannibalises some of these companies’ own services. Also, WishList may lack the contacts and market knowledge necessary to penetrate, given that one is dealing with private information that is not easily accessible. The company can nevertheless exploit the opportunity of two clusters that will continue a digitalisation process and to which WishList may offer a service at a relatively lower cost when compared to competitors.
Based on the latter, the answer to the research question is that only the e-commerce segment is an attractive market for WishList, where the company may profit from still low competition and extremely high growth expectations. By analysing the most visited websites in Italy and using a set of criteria developed for the case, a list of potential websites WishList could offer its service was created (Appendix 16). The criteria, shown in Appendix 17, was based on the typical user of e-commerce in Italy and of WishList, the presence of a user account and a payment system, a qualitative assessment on the complementarity to a new revenue stream and a category match to those that are and will be the most sold categories in e-commerce.
WishList should hence target the news and banking sectors, dating and betting websites, wedding and event planners with a website, and blogs. The former have already some examples of product APIs, as it is the case of both Unicredit and Corriere della Sera, and WishList should target similar companies that do not have this service yet. As to the dating and betting websites, these are companies that have an account login and associated payment services and are therefore potentially interesting targets. Wedding and event planners could scale the product API to several of its clients as an ancillary service.
For the blogs, WishList could create a communication strategy based on the premise “Your blog can also be your store”, in which it would segment the most influential ones into categories and market its offerings through newsletters. And finally, another strategy would be to engage with online networks of publishers and advertisers to advertise its service to reach new clients. As to the loyalty and HR segments, the company can continue to monitor them and eventually differentiate the offering between companies and marketing and HR agencies, as explained in Appendixes 18 and 19. For the loyalty cluster, a list of companies that do not have a product API in its website is presented in Appendix 20. As to the HR, a potential target list would be the top places to work in Italy8, as these are expected to invest the most in HR programmes.
F. Concerns
The main threats to the targeting of the product API in the aforementioned websites is that big e-commerce players may enter the market. The latter can start offering the same services as WishList and they will have an advantage in terms of brand, trust, price, volume and diversity. Another concern is that the market niche does not evolve in the expected way and consumers prefer instead regular e-commerce channels to purchase online. Also, WishList may find some difficulties when trying to access these partnering companies in order to offer them its services. Lastly, it may be the case that customer service and technical support provided by WishList may not be able to accompany the corresponding growth of sales.
G. Individual contribution
The individual contribution posited in this work covered the three clusters, either in terms of research and data collection but also regarding the interviews with the companies and the information gathering from WishList’s stakeholders. Furthermore, there was an individual effort so as to manage the group and the project in a way that work could be delivered in an organised, systematic and timely manner. Ultimately, the personal work contributed largely and almost singularly to the idea generation for the present project.
III. ACADEMIC DISCUSSION
A. Possible links with Master’s degree in Finance
WishList is a start-up that in the past year of 2015 was able to raise €500,000 of equity in two tranches from several investors. Given the issues revolving around the valuation of young companies, the present work delves into what the literature considers to be the best practices on the matter, namely on what concerns internet start-ups.
It is worth noting that WishList’s case was a scale-up operation, thus positioning the company in the early growth cluster for which early stage financing is available, as according to the life cycle of a company (Caselli, 2010). These companies are characterised by increasing revenues, but still low or negative income, very limited operating history, few comparable firms and the biggest source of value is yet mostly future growth. Indeed, even though the contribution of assets-in-place for the firm’s value is higher in relation to younger firms, growth opportunities still play a fundamental role and near-term financing requirements are crucial (Hand, 2005).
B. Relevant theories and empirical studies
According to Damodaran (2002), albeit the valuation of young firms is more demanding, the basic principles of valuation hold. As such, the value of a start-up is still the present value of the expected cash flows, even though estimations may be more troublesome. The Discounted Cash Flow Method (DCF) is therefore assumed to be the main valuation method for these cases, granting that estimation issues related to revenues and its growth rate, operating margins and costs, investment needs, risk parameters and discount rates, and survival are circumvented. On what revenues are concerned, Goldman (2008) suggests that information sources include the company’s business plans and prospects, empirical market-derived data and macroeconomic and industry evidence. The estimation of the revenues should follow a top-down or a bottom-up approach (Damodaran, 2009). In the former case, one first evaluates the potential market for the product or service, by defining it and estimating its total size and evolution over time, based upon trade publications and professional forecasting services.
Subsequently, an assessment of the target market share is done, taking into account the quality of the offering, how it compares to competitors, the capabilities of the management to achieve results and the resources it has available to do so.
On the other hand, the bottom-up approach builds on the start-up’s investment and size capacity and, based on this constraint, the amount of sales for each period as well as the price charged per unit can be assessed. The latter ultimately considers the potential market for the product as well as the competition faced. Many consider this approach to be easier to understand and therefore to cause more assurance to valuators, as advanced by Goldman (2008).
When estimating the growth rates of revenues, Damodaran (2002) suggests one should either extrapolate the past growth rate of the firm if existing, use the overall growth rate of the market, as made available from industry projections of security analysts, or look at any barriers to entry or competitive advantages the company may possess in order to sustain its positioning. The latter may derive from some sort of legal protection as a patent, a superior product or service, brand name and first mover advantages. Likewise, it can be based on a qualitative assessment of the company’s management, marketing skills and investments (Goldman, 2008).
Regarding the operating margin, one should explore the underlying business of the start-up and resonate that its margins will evolve to those of competitors. Furthermore, the income statement of the company should be deconstructed so as to better evaluate its true operating margin (Damodaran, 2002). Here, a careful analysis of costs should be done, as internet companies invest heavily on intangible assets, like expenses related to programming, development and marketing which are deducted as operating expenses and are therefore never capitalised. That is nonetheless the case of WishList with the development of the API web service.
The reinvestment needs will be very high at the beginning of operations and declining with time. Furthermore, the typical equation for assessing reinvestments (Expected growth = Reinvestment rate * Return on capital) is impracticable given the initial negative earnings of a start-up. As such, reinvestment should derive from the estimated revenues growth using the
formula: Expected Reinvestment = Expected change in Revenue
Sales Capital⁄ ratio . Nevertheless, once in steady state, the first formula can be finally utilised with the stable values (Damodaran, 2002).
With respect to the estimation of the discount rates, these are normally extracted from models used for publicly traded companies and therefore tend to underestimate the true risk of start-up companies which are generally privately held. As such, the cost of equity should be based on sector averages of public firms in different stages of the life cycle (Damodaran, 2009). Furthermore, given the high operating leverage of start-ups, it is further suggested that only small public companies are looked at or that, instead, the equity beta of comparables is adjusted to differences in fixed cost structures. The latter can be done by using the formula: Unlevered Beta = Business Beta (1 + (Fixed Costs/Variable Costs)).
If the start-up has debt, as it was the case of WishList at the time of the capital raise, the cost of debt can be estimated through an expected interest coverage ratio taking into account the future expected operating income of the company. The latter provides the rating of the company, enabling a yield for its debt (Damodaran, 2002). One final remark is that these inputs should be updated through time, thus the betas should ultimately move towards those of the typical firm in the segment and the cost of debt to the industry average.
In the income-based approach, nevertheless, it is important to acknowledge that the firm may not live on to be a going concern. As such, either one assigns the probability of unfavourable results to earnings or assign failure probabilities to a DCF value (Damodaran, 2002). In the latter case, the probability of failure can be reached through sector averages, statistical probits and Monte Carlo simulations, or the valuator can access services as BizMiner that provide such statistics for small businesses (Goldman, 2008). The calculation is: Expected Value = Value of going concern * (1 – Probability of failure) + Distress Sale value * (Probability of failure). When it comes to market-based valuation, it can be done through private transaction or public multiples. For start-ups, the former is the most typical and it entails finding comparable companies sold through private transactions that are in the same stage of the life cycle of a firm
and that operate in the same market. Even though such information can be found in press releases of acquisitions undertaken by publicly-held acquirers, comparability issues, differences in fair market value due to possible synergies, absence of disclosed information and the lack of earnings or revenues to apply pricing ratios to are major concerns (Goldman, 2008).
On the other hand, market multiples should be used for start-ups that seek a bigger market share and that afterwards will be made public or acquired by a public company. In any case, given that one is comparing a young firm to more mature ones, Damoradan (2009) suggests using forward revenues and earnings when applying the ratios, so as to accommodate a farther point in the life cycle of the firm, or to adjust the multiple for the start-up’s characteristics.
Real options is another method that may prove useful when the start-up is considering to introduce a new product or to enter a new market (Damodaran, 2009). It is done by first estimating the expected value and cost of an expansion today. Second, one needs to assess the uncertainty of such cash flows using the standard deviation (SD) metric, which can be a market based proxy of the SD of the public firms in the business or, instead, can be found by running simulations on the investment and deriving the SD from that. What follows is the determination of the time when the choice will be made and the final valuation of the option through a binomial pricing method, typically the most effective, or the Black-Scholes model.
The venture capital method is yet another technique to value a start-up. It entails estimating the terminal value at time T through comparables’ ratios such as the P/E and calculating the future value of the investment based upon a target internal rate of return (IRR) and a predefined holding period. The share of the company gained is therefore the future value of the investment as a percentage of the terminal value and the number of new shares is calculated as in: Number of shares = Existing Shares x (% of shares)(1 - % shares) . The price of the new shares is then the value of the investment over the new number of shares and with such information one can assess the value of the company (Caselli, 2010). Two concerns nevertheless include comparability issues as well as unjustifiably high required IRRs (Goldman, 2008).
Finally, the price of a recent investment, taking into consideration the cost of a recent investment in the start-up excluding transaction costs (International Private Equity, 2015), or the customer lifetime value, in which the present value of a customer’s future profits throughout the relationship with the firm is calculated, are other mechanisms for valuing start-ups. The latter is especially useful for internet companies as it portrays how marketing actions influence customer behaviour in terms of acquisition, retention and cross-selling (Gupta et al., 2006).
C. Implications for theory and future research
As Damodaran (2002) puts it, “the valuation of a firm with negative earnings, high growth and limited information will always be noisy”, but that should not be an excuse for resorting to more simplistic and rather erroneous methods that merely use forward multiples and randomly high discount rates. Therefore, the DCF approach, with the necessary adjustments, seems to be the most correct method when valuing start-ups. According to an interview to Atlante Seed9, the valuation of WishList resorted mainly to a DCF approach through the APV method, given the existence of some debt. Revenues multiples based on comparable transactions of Banca IMI’s and other companies’ portfolios were also utilised. If the valuation had been undertaken today, using the sale of Emozione3 as a comparable could have been a wise choice.
At the time of the valuation nonetheless, it was expected that the company was going to focus on the gift box B2C operations, which seems not to be the case anymore. Even though a real options approach could be used today to value the three clusters in this paper studied, difficulties would arise on how to value an almost inexistent market as it is the case of the proposition for the e-commerce segment. Furthermore, even though the customer life cycle is a good method for B2C internet companies, the latter is not true for companies that provide online services for other web players despite not having any interaction with the end consumer. Literature for the latter two issues is yet missing and further research on the topic ought to be done given the evolution of the internet market.
IV. PERSONAL REFLECTION A. Personal experience
The Business Project entailed a very interesting experience for me, namely when it comes to having the opportunity to contact with a start-up company and provide them with information that may deem useful for its future growth. The fact that the company was trying to enter the B2B online segment further increased the difficulty of the job to be done, thus allowing for a more challenging work. In this regard, understanding the main struggles start-ups face have contributed positively to my learning. A clear example of the latter is the company’s need to explore new, even though information-poor, markets for its products, a task that may prove extremely hard to do. Likewise, the pressure entrepreneurs feel to make sure revenue targets are met so as to break-even the investor’s investment can as well be quite daunting.
On another level, and although put forward by my own will, I was put in contact with one of the investors in the start-up, which happened to be a Venture Capital fund of one the biggest Italian investment banks, Banca IMI of the group Intesa Sanpaolo. This experience enabled me to become familiar with the other side of the equation, that is, to see the business and the context of an investee from the perspective of a financial stakeholder.
Concerns of the investor included the holding period, exit possibilities and the operations of the invested company. With regard to the last two, it has been interesting to see the difficulties of an investor to control for the growth paths undertaken by the invested companies as, in the present case, the purpose of the investment had been to help the company scale its B2C operations yet now they are moving slightly away from that initial purpose. Furthermore, what I had been regarding as competitors of the firm were actually considered exit possibilities for the investor, which led to a positive change in the way I regarded them. Understanding the two sides, both that of the entrepreneur and the investor were therefore possibly the most important takeaways from my work with the company.
Nevertheless, the Business Project was as well an extenuating experience given a number of situations. First, having to work with a group of people who did not share the same incentives and objectives as I did was a particularly difficult situation to manage. Second, for all the three clusters information was extremely hard to find and the fact that the majority of it was in Italian did not enable us to fully enjoy the project at hand, despite having contributed to the development of my knowledge of the language. Third, also from the few interviews obtained, they were mainly undertaken in Italian thus aggravating the previous situation.
1. Key strengths & weaknesses observable during the project
Throughout the project, mainly my hard working and leadership capabilities stood out. My aim was always to do the best work possible to deliver to the company and, in order to so, I needed everyone to be aligned to the same goal. Therefore, I was the one going the extra-mile for the group and was responsible for everything from scheduling the meetings to being a bridge between the group and the company as well as the professor that supervised us. However, several times I found it quite difficult to align the goals within the team and incentivise them.
2. Plan to develop of your areas of improvement
Given the latter, I believe I have to lose the fear of confronting people on their performance and need to find better ways to incentivise others so as to achieve better levels of engagement.
B. Benefit of hindsight
Throughout the project, it was acknowledged that the most relevant information the company was looking for was the needs of the users in the different markets, information that was only accessible through the interviews with the companies. Given that only a very small number of them replied and that others were bound by confidentiality clauses, what could have potentially added the most value was not optimally included in the work. On the company’s side, given our struggle to contact the people, and given the existence of a book of contacts, the latter could have been given to us at the beginning rather than at the end of the project, so as for companies to have more time to reply to our requests.
V. APPENDIX
Appendix 1. WishList’s gift boxes for B2C segment
Appendix 2. Example of WishList’s customised gift boxes for B2B segment
Appendix 4. Income Statement
Profit and loss account
Unconsolidated 31/12/2014 31/12/2013 31/12/2012 31/12/2011 31/12/2010
EUR EUR EUR EUR EUR
12 months
12 months 12 months 12 months 12 months
Abbreviated Abbreviated Abbreviated (D)
Abbreviated (D)
Abbreviated (D)
ICS ICS ICS ICS ICS
A. TOTAL VALUE OF PRODUCTION 224,353 87,249 33,449 16,727 7,681
A.1. Revenues from sales and services 195,985 83,773 29,889 16,727 7,681
A.2. Changes in inventories 0 0 0 0 0
A.3. Changes in contract work in progress 0 0 0 0 0
A.2. + A.3. Total changes 0 0 0 0 0
A.4. Additions to fixed assets 0 0 0 0 0
A.5. Other revenue 28,368 3,476 3,560 0 0
operating grants 20,000 0 0 0 0
B. TOTAL PRODUCTION COSTS 553,194 463,406 160,802 55,101 13,352
B.6. Raw, consum. mat. and goods for resale 132,260 128,257 60,179 15,249 14,440
B.7. Services 212,053 190,754 55,841 35,462 7,298
B.8. Use of third parties assets 6,969 6,000 6,000 3,561 721
B.9. Total personnel costs 125,244 69,019 0 2,470 0
B.9.a. Wages and salaries 90,938 50,319 0 0 0
B.9.b. Social security charges 27,236 15,641 0 0 0
B.9.c. Severance indemnities 6,000 3,059 0 0 0
B.9.d. Pensions and similar obligations 0 0 0 0 0
B.9.f. Severance indemnity + Pension + Other costs 7,070 3,059 0 2,470 0
B.10. Total depreciation, amortization and writedowns 69,114 61,495 28,393 17,564 2,003
B.10.a. Amort. of intangible fixed assets 62,453 56,357 26,043 16,477 1,777
B.10.b. Depr. of tangible fixed assets 3,561 5,138 2,350 1,087 226
B.10.c. Writedown of fixed assets 0 0 0 0 0
B.10.a+b+c. Depreciation, amortization and writedowns of fixed assets
66,014 61,495 28,393 17,564 2,003
B.10.d. Writedown of receivables 3,100 0 0 0 0
B.11. Change in inventory of raw and consumable materials 614 4,994 -8,636 -21,480 -11,520
B.12. Provisions fo risks and charges 0 0 0 0 0
B.13. Other provisions 0 0 0 0 0
B.14. Other operating expenses 6,940 2,887 19,025 2,275 410
OPERATING MARGIN -328,841 -376,157 -127,353 -38,374 -5,671
Added Value -134,483 -245,643 -98,960 -18,340 -3,668
C. TOTAL FINANCIAL INCOME AND CHARGES -10,613 3,137 232 -1,234 -2
C.15. Total income from equity investments 0 0 0 0 0
Subsidiaries/Associated comp. n.a. n.a. n.a. n.a. n.a.
C.16. Total other financial income 388 4,198 1,980 260 0
C.16.a. From financial receivables 0 0 0 0 0
Subs. and assoc. Comp. n.a. n.a. n.a. n.a. n.a.
C.16.b. From securities held as fixed assets 0 0 0 0 0
C.16.c. From securities held as current assets 246 181 473 259 0
C.16.b+c. From securities 246 181 473 259 0
C.16.d. Income other than the above 142 4,017 1,507 1 0
Income other than the above (subsidiaries and associates companies)
n.a. n.a. n.a. n.a. n.a.
--> Financial charges from financial receivables subs and assoc. n.a. n.a. n.a. n.a. n.a.
C.17.bis Profit and Loss on Foreign Exchange 0 0 0 0 0
D. TOTAL FINANCIAL ASSETS ADJUSTMENTS 0 0 0 0 0
D.18. Total Revaluations 0 0 0 0 0
D.18.a. Reval. of equity investments 0 0 0 0 0
D.18.b. Reval. of other financial assets 0 0 0 0 0
D.18.c. Reval. of securities 0 0 0 0 0
D.19. Total Writedowns 0 0 0 0 0
D.19.a. Writedowns of equity invest. 0 0 0 0 0
D.19.b. Writedowns of other fin. Ass. 0 0 0 0 0
D.19.c. Writedowns of securities 0 0 0 0 0
E. TOTAL EXTRAORDINARY REVENUES AND CHARGES
0 2 -1 -1 1
E.20. Extraordinary revenues 0 2 0 0 1
Capital gains 0 0 0 0 n.a.
E.21. Extraordinary charges 0 0 1 1 0
Capital losses 0 0 0 0 0
Taxes previous period 0 0 0 0 0
PROFIT/LOSS BEFORE TAXATION -339,454 -373,018 -127,122 -39,609 -5,672
22. Total current, deferred and prepaid income taxes -81,293 -101,718 -41,551 0 0
22.a Current taxes 0 0 0 0 0
22.b Prepaid and deferred taxes -81,293 -101,718 -41,551 0 0
23. PROFIT (LOSS) -258,161 -271,300 -85,571 -39,609 -5,672
PROFIT (LOSS) THIRD PARTIES n.a. n.a. n.a. n.a. n.a.
Appendix 5. Balance Sheet Balance sheet Unconsolidated 31/12/2014 31/12/2013 31/12/2012 31/12/2011 31/12/2010
EUR EUR EUR EUR EUR
12 months
12 months 12 months 12 months 12 months
Abbreviated Abbreviated Abbreviated (D) Abbreviated (D) Abbreviated (D)
ICS ICS ICS ICS ICS
Assets
A. TOTAL receivables due from shareholders 0 0 0 0 0
Called share capital 0 0 0 0 n.a.
B. TOTAL FIXED ASSETS 156,965 189,997 97,794 62,861 16,953
B.I. TOTAL INTANGIBLE FIXED ASSETS 150,241 182,212 87,001 59,526 12,233
B.I.1. Start-up and expansion costs n.a. n.a. n.a. n.a. n.a.
B.I.2. Research and dev. exp. n.a. n.a. n.a. n.a. n.a.
B.I.3. Ind. patents and intellect. property rights n.a. n.a. n.a. n.a. n.a.
B.I.4. Concessions, licenses, trademarks and similar rights n.a. n.a. n.a. n.a. n.a.
B.I.5. Goodwill n.a. n.a. n.a. n.a. n.a.
B.I.6. Additions in progress and advances n.a. n.a. n.a. n.a. n.a.
B.I.7. Others n.a. n.a. n.a. n.a. n.a.
(Amortization provision) 163,107 100,654 44,297 18,254 1,777
B.II. TOTAL TANGIBLE FIXED ASSETS 4,224 7,785 10,793 3,033 4,120
B.II.1. Land and buildings n.a. n.a. n.a. n.a. n.a.
B.II.2. Plant and machinery n.a. n.a. n.a. n.a. n.a.
B.II.5. Additions in progress and advances n.a. n.a. n.a. n.a. n.a.
(Depreciation provision) 12,362 8,801 3,663 1,313 226
B.III. TOTAL FINANCIAL FIXED ASSETS 2,500 0 0 302 600
B.III.1. Total equity investments 0 0 0 n.a. 0
B.III.1.a. Subsidiary companies 0 0 0 n.a. 0
B.III.1.b. Associated companies 0 0 0 n.a. 0
B.III.1.c. Parent companies 0 0 0 n.a. 0
B.III.1.d. Other companies 0 0 0 n.a. 0
B.III.2. Total Receivables 2,500 0 0 0 600
B.III.2.a. Due from subsidiary comp. 0 0 0 0 0
B.III.2.a. Due from subs. comp. - beyond 12 months n.a. 0 0 0 n.a.
B.III.2.b. Due from assoc. comp. 0 0 0 0 0
B.III.2.b. Due from assoc. comp. - beyond 12 months n.a. 0 0 0 n.a.
B.III.2.c. Due from parent comp. 0 0 0 0 0
B.III.2.c. Due from parent comp. - beyond 12 months n.a. 0 0 0 n.a.
B.III.2.d. Due from other comp. 0 0 0 0 0
B.III.2.d. Due from other comp. - beyond 12 months n.a. 0 0 0 n.a.
B.III. FINANCIAL RECEIV. WITHIN 12 MONTHS 0 0 0 0 0
B.III. FINANCIAL RECEIV. BEYOND 12 MONTHS 2,500 0 0 0 600
B.III.3. Other securities 0 0 0 n.a. 0
B.III.4. Own shares 0 0 0 n.a. 0
Own shares: par value 0 0 0 n.a. n.a.
C. TOTAL CURRENT ASSETS 669,458 498,061 532,993 241,762 35,277
C.I. TOTAL INVENTORIES 36,028 36,642 41,636 33,000 11,520
C.I.2. Work in progress and semifinished products n.a. n.a. n.a. n.a. n.a.
C.I.3. Contract work in progress n.a. n.a. n.a. n.a. n.a.
C.I.4. Finished products and goods n.a. n.a. n.a. n.a. n.a.
C.I.5. Advances n.a. n.a. n.a. n.a. n.a.
C.II. TOTAL RECEIVABLES 568,465 329,283 135,879 30,506 13,392
C.II.1. Trade accounts n.a. n.a. n.a. 6,810 5,893
C.II.1. Trade accounts - beyond 12 months 0 0 0 0 0
C.II.2. Due from subs. comp. n.a. n.a. n.a. n.a. n.a.
C.II.2. Due from subs. comp. - beyond 12 months 0 0 0 0 0
C.II.3. Due from assoc. comp. n.a. n.a. n.a. 0 0
C.II.3. Due from assoc. comp. - beyond 12 months 0 0 0 0 0
C.II.4. Due from parent comp. n.a. n.a. n.a. 0 0
C.II.4. Due from parent comp. - beyond 12 months 0 0 0 0 0
C.II.4.bis Tax receivables n.a. n.a. n.a. 23,141 7,499
C.II.4.bis Tax receiv. - beyond 12 months 0 0 0 0 0
C.II.4.ter Tax receiv. for prepaid taxes n.a. n.a. n.a. 0 0
C.II.4.ter Tax receiv. for prepaid taxes - beyond 12 months 0 0 0 0 0
C.II.5. Receiv. due from others n.a. n.a. n.a. 555 0
C.II.5. Receiv. due from others - beyond 12 months 0 0 0 0 0
C.II. RECEIV. DUE WITHIN 12 MONTHS 568,465 329,283 135,879 30,506 13,392
C.II. RECEIV. DUE BEYOND 12 MONTHS 0 0 0 0 0
C.III. TOTAL FINANCIAL ASSETS 27,244 21,048 21,048 20,746 0
C.III.1. Invest. in subs. comp. n.a. n.a. n.a. n.a. 0
C.III.3. Invest. in parent comp. n.a. n.a. n.a. n.a. 0
C.III.4. Other investments n.a. n.a. n.a. n.a. 0
C.III.5. Own shares n.a. n.a. n.a. n.a. 0
C.III.5. Own shares: par value n.a. n.a. n.a. n.a. n.a.
C.III.6. Other securities n.a. n.a. n.a. n.a. 0
C.IV. TOTAL LIQUID FUNDS 37,721 111,088 334,430 157,510 10,365
C.IV.1. Bank and postal deposits n.a. n.a. n.a. n.a. n.a.
C.IV.2. Checks n.a. n.a. n.a. n.a. n.a.
C.IV.3. Cash and cash equivalents n.a. n.a. n.a. n.a. n.a.
D. TOTAL ACCRUED INCOME AND PREPAID EXPENSES
16,405 3,360 3,571 0 0
Accrued income and prepaid exp. n.a. n.a. n.a. 0 0
TOTAL ASSETS 842,828 691,418 634,358 304,623 52,230 Liabilities Shareholders' funds
A. TOTAL SHAREHOLDERS' FUNDS 53,512 311,676 441,211 208,256 44,979
A.I. Capital stock 180,000 46,000 37,300 26,100 10,000
A.II. Share premium reserve 0 0 0 0 0
A.III. Revaluation reserves 0 0 0 0 0
A.IV. Legal reserve 0 0 0 0 0
A.V. Statutory reserves 0 0 0 0 0
A.VI. Reserve for treasury stock 0 0 0 0 0
A.VII. Other reserves 131,673 536,976 489,482 221,765 40,651
A. GROUP consolidation reserve n.a. n.a. n.a. n.a. n.a.
A.VIII. Retained earnings (losses) 0 0 0 0 0
Group capital stock and reserves n.a. n.a. n.a. n.a. n.a.
Minority interests in cap. and reserves n.a. n.a. n.a. n.a. n.a.
Minority interests in profit (loss) for the year n.a. n.a. n.a. n.a. n.a.
MINORITY INTERESTS SHAREHOLDERS' FUNDS n.a. n.a. n.a. n.a. n.a.
B. TOTAL PROVISIONS FOR RISKS AND CHARGES 0 0 0 0 0
B.1. Employee pensions and similar obligations 0 0 0 0 0
B.2. Taxation (including deferred taxation) 0 0 0 0 0
B.3. Other provisions 0 0 0 0 0
Consolidation provision n.a. n.a. n.a. n.a. n.a.
C. SEVERANCE INDEMNITY RESERVE 8,626 2,786 0 0 0
Payables
D. TOTAL PAYABLES 780,615 376,752 192,335 96,367 7,142
D.1. Bonds n.a. n.a. n.a. 0 0
D.1. Bonds beyond 12 months n.a. n.a. n.a. 0 0
D.2. Convertible bonds n.a. n.a. n.a. 0 0
D.2. Convertible bonds - beyond 12 months n.a. n.a. n.a. 0 0
D.3. Due to shareholders for loans n.a. n.a. n.a. 0 0
D.3. Due to shareholders for loans - beyond 12 months n.a. n.a. n.a. 0 0
D.4. Due to banks n.a. n.a. n.a. 0 0
D.4. Due to banks - beyond 12 months n.a. n.a. n.a. 44,789 0
D.5. Due to other lenders n.a. n.a. n.a. 0 0
D.5. Due to other lenders - beyond 12 months n.a. n.a. n.a. 0 0
D.6. Advances n.a. n.a. n.a. 13,540 0
D.6. Advances - beyond 12 months n.a. n.a. n.a. 0 0
D.7. Due to suppliers n.a. n.a. n.a. 36,239 6,279
