Stockholm, 2014-07-29 07:50 CEST (GLOBE NEWSWIRE) --
Second Quarter 2014 – Summary
During the second quarter, as the first operator in the world, SEQR has enabled the possibility of mobile payments via SEPA (Single Euro Payment Area) in Belgium, providing customers throughout the Eurozone the possibility to connect SEQR directly to their bank account for payment. A series of important agreements in two key markets for Seamless for SEQR, the United States and the United Kingdom, have been entered into during the quarter with i.a. InComm, PCMS, Optimal Payments and Contis, all leading players within different areas related to payments and to loyalty, gift and stored value cards.
The rollout and expansion into new markets continues at a fast pace, and this is the explanation for the fact that the group continues to show a negative financial result as the costs for the establishment and expansion into these markets must be reported before there is an opportunity for income to be generated. At the same time we see that the transaction revenues and the transaction volumes for SEQR are increasing substantially while non-recurring income decreases. This is positive and lays the foundation for a stable recurring revenue base for SEQR.
| Net sales increased by 67% to | SEK 44,104 thousand (26,424) |
| Operating Profit amounted to | SEK -39,502 thousand (-20,906) |
| The Operating Margin remained negative | Neg (Neg) |
| The after-tax financial results amounted to | SEK -39,631 thousand (-17,480) |
| Earnings per share before and after dilution | SEK -0.95 (-0.53) |
A few words from the CEO
Seamess continues to break new ground in mobile payments. The second quarter saw us successfully roll out the carpet for the expansion of SEQR in a number of key markets, enter into several strategic agreements with major retailers in Sweden, and that saw a substantial increase in payments using SEQR. During Q2, Seamless has reached and continued moving beyond several important international milestones. As the first operator in the world, SEQR has enabled the possibility of mobile payments via Single Euro Payment Area (SEPA) in Belgium, providing customers throughout the Eurozone the possibility to connect SEQR directly to their bank account to make a payment. The gateway to the North American market has opened in earnest via the signing of a global agreement with InComm, which distributes gift and loyalty cards to more than 500 partners Seamless now provides InComm’s customers the possibility, via SEQR, to move their existing loyalty cards to the mobile device, in a market with sales of billions of dollars.
The rollout on the new markets is occurring as planned with a continued rapid pace. During Q2, we launched SEQR in Finland via a partnership with the nation’s largest hamburger chain, Hesburger, and strengthened its presence in Romania via a strategic partnership with EuroGSM. A new global agreement with the world’s leading cash register and EPoS solutions provider, PCMS, who counts such retailers as Marks & Spencer and Walgreens among its customers, provides us with additional access to the British and North American markets. At the same time, new opportunities in e-commerce have arrived as a result of our working relationship with Ingenico Payment Services, a world leading global provider of digital service platforms. In June, SEQR for Windows Phone was launched, which is a prerequisite for global establishment.
On the Swedish market at home, we have consolidated our position as a market leader via two strong framework agreements. This concerns the Swedish trade organization Svensk Handel, with its 12,000 member companies, and the cooperative partner organization Butikerna, who, with the newly signed framework agreement, joins the ranks of national stakeholders who are taking an active stand for a change in the payment market.
An important agreement was also concluded with restaurant operator Sodexo, who is moving in into SEQR with its 80,000 users of the Rikslunchen Pass. In combination with increased investment advertising and a growing interest in “Ads & Offers” this has led to a sharp increase in SEQR transactions in the second quarter.
We are still in the development and establishment phase with SEQR, a job that involves teaching consumers a new behavior and changing an entire industry from the ground up. But we are already approaching a situation where we have acquired the customer base that is needed in order to make this possible. Of the five revenue streams that we envision for SEQR, as of yet we have only activated two – transaction fees and digital offerings from merchants and producers. Held back in readiness, what remains is an activation of brokerage fees when mediating invoice customers to our account providers, fee outtake from retailers and producers for offers they want to promote, i.e. digital coupons, and “big data.” Thus, there is room for new sources of revenue as the product becomes more widely established and the offers increase.
Finally, the results from the Swedish Data Inspection Board’s security audit of the largest Swedish payment services companies put a feather in our cap. This is particularly pleasing as security and user integrity have been the two of the primary focuses in the development of SEQR. Our payment app was ranked the best in security, and was the only service that was approved without negative comments or reservations!
In summary, I can say that we have had a very eventful second quarter. Our expansion and investments in the North American and European markets require a great deal of resources, but we have however been able to stay within our financial plan for Q2 and are one big step closer to broad implementation in key markets. With great confidence, I look forward over the remaining part of the year to an interesting continuation of the progress we have been making.
Peter Fredell
CEO
The Group
Revenues
Seamless’ revenues for the second quarter totaled SEK 44,104 thousand (26,424), which is a 67 percent increase over the same quarter last year. The sales are distributed between the various business segments, with 25 (34) percent from the Transaction Switch business segment, with 71 percent (58) from the Distribution business segment, and 4 (8) percent from the SEQR business segment.
Financial Results
• The consolidated operating loss amounted to SEK -39,502 thousand (-20,906) in the second quarter.
• Net losses from financial items for the second quarter amounted to SEK -129 thousand (16).
• Earnings per share amounted to SEK -0.95 (-0.53) for the quarter.
Employees
We had a total of 160 (120) employees at conclusion of the quarter. In addition to this, Seamless has retained approximately 35 consultants – primarily in India, Ghana and Pakistan.
Investments
During the quarter, investments have been made in an amount of SEK 1,107 thousand (11,245). Product development costs have been capitalized at a value of SEK 5,514 thousand (6,530), while depreciation taken amounted to SEK -4,138 thousand (-2,135).
Cash Flow and Financial Position
For the second quarter, the cash flow from operating activities amounted to SEK -27,822 thousand (-26,633). Bank deposits and cash on hand at the end of the quarter amounted to SEK 224,807 thousand (44,092).
The Group has interest-bearing liabilities in the form of leases for hardware amounting to SEK -3,152 thousand (-2,868), divided into long-term debt of SEK -1,231 thousand (-1,582) and short-term debt of SEK -1,921 thousand (-1,286). The Company has no interest-bearing liabilities to banks or other credit institutions.
Other than the above, the Group has no borrowings. Seamless continues to maintain a strong financial position with an equity ratio of 84 percent (66).
Parent company
The parent company’s net sales for the quarter amounted to SEK 0 (-2) thousand and net financial results amounted to a loss of SEK -6,270 thousand (-5,399). Net financial gains/losses in the parent company was SEK -52 thousand (1) and bank deposits/cash on hand amounted to SEK 198,758 thousand (19,417) at the end of the quarter. The parent company had 5 (9) employees at end of the quarter.
This information is such information that Seamless Distribution AB (publ) is required to disclose pursuant to the Swedish Securities Market Act and/or the Swedish Financial Instrument Trading Act. The information was released for publication on July 29th, 2014 at 07.50 am (CET).
