Mobile Loyalty

Mobile Loyalty: Third quarter 2013 update November 29, 2013

Press Release   •   Dec 03, 2013 10:18 GMT

Financial Highlights
• Group revenue for the quarter of EUR 1,053,000 (3Q12: EUR 817,000), an increase by 28.8% compared to the same period last year, and following the seasonality cycles expected for the period.
• The Group has a quarterly revenue growth of a quarterly 66.7% compound average growth rate over the last 10 quarters, including the revenue from Scandvision up to 11 September 2013. 
• The operating result before exceptional items improved compared to the same period last year, and was for the quarter EUR -46,000 (3Q12: EUR -1,013,000). 
• The Group reported a loss for the period of EUR -2,500,000 (3Q12: -1,209,000), including one-off items related to the divesting of Scandvision of net -2,390,000 EUR.

(Please see chart of Quarterly Revenue in attached pdf document)

Third quarter in short

• The Group signed the first international agreements with Madiva Editorial in Spain, followed by agreements in Germany and Lichtenstein. Expected commercial launch in beginning of 2014.

• ADONnews, the mobile and online advertising service, is being rolled-out according to plan. Together with our commercially launched newspaper clients, ADONnews is generating >140,000 visits, and >400,000 page views per week. Click through rates are in average 2.8% compared to market average of 0.1%, showing that relevant and local integrated ads generates more clicks and a higher revenue.

• ADONcity version 2.0 is ready and fully integrated in ADONnews, as the local ad- and search engine.

• The Group divested Scandvision AB through its fully owned subsidiary Scandvision Holding AB in order to focus on the mobile and online advertising segment. 


Significant events after the period

• In November, Mobile Loyalty signed an agreement and successfully launched the service with Norra Halland, a newspaper within the Riksmedia partnership. Norra Halland has during the first two weeks since commercial launch, had more than 50,000 in-screen ad exposures and a click-through rate well above our average of 2.8% as mentioned above. 

• All proposed resolutions were duly and unanimously approved at the EGM, held in London 23 October 2013, giving the Board of Directors a mandate to allot new shares in the publicly listed holding company, or in the subsidiary Mobile Loyalty Europe AB to raise additional funds for continuous investment.

• Sterner de la Mau was elected Chairman of the Board and Nicklas Gerhardsson was re-elected as Director. 

• The Groups financial position was strengthened, through a transfer of 632 shares of the wholly owned subsidiary Mobile Loyalty Europe AB in exchange of cash and debt forgiveness amounting to EUR 600,000.

• 180 new shares were issued in the wholly owned subsidiary Mobile Loyalty Europe AB in exchange of EUR 170,732.

• In October, as part of the financial consolidation and the transfer to a more focused strategy, Mobile Loyalty converted EUR 382,935 in debt into shares in Mobile Loyalty Plc at 0.1 EUR per share. 

• Mobile Loyalty Plc issued 1,500,000 new shares as part of the agreement of the acquisition of the Scandvision Group in 2012.


Other

• The number of shares outstanding on 30 September 2013 was 61,889,957 and with activities performed after the balance the total number of shares outstanding on 28 November 2013 is 67,219,315. 

• The next report will be published on or before 28 February 2014.


Comments by the CEO

The third quarter has been a very intense period for the Group. As projected in the Q2 report, we managed to sign several international agreements in very interesting markets, such as Germany and Spain. The international interest in Mobile Loyalty´s advertising solutions is a good sign and a proof-point of our assessment of a global need for local search and targeted advertising. 

With Madiva Media Group (Spain), with about 100 independent papers, we are in the final phase of testing and expect full commercial launch in January 2014. Being the first international customer to be launched we are looking very much forward to verify the performance indicators from our Swedish clients. Looking at comparable figures on page views and digital publishing exposure we believe in high growth over time. The market maturity in combination with our clients’ ability to scale up the digital ad sales will have an impact on the commercial growth rate. One thing is however very clear, the consumer is ready and is waiting for a solution that combines ease of use with local and relevant advertising, ADONnews.

In order to leverage the full potential of our service, we have since late spring changed focus from short-term revenue generation, to continuous investment in building up a larger reach of customers and consumers. (Reach defined as the critical mass of consumers that can /or will be exposed to ads through ADONnews.) The strategic focus continues to be the newspaper segment for two reasons; they have an already existing consumer base as well as an imminent need to create new online revenues to compensate for the loss in paper editions. 

As stated above, we are now well into the integration of our advertising solution, ADONnews, also into our international clients digital environment, with commercial launch set to first quarter 2014. Dependant on the level of maturity of our customers we will integrate either our advertising solution, ADONnews, as a plug-in or SDK in the customers existing digital environment, or; for a digitally less advanced customer, combined with our complete publishing module, to give the customer a head start into the mobile and online advertising environment.

Parallel to the technical integration, there is a joint activity, with the clients, to package the commercial offering, as a traditional mix of price, product and promotion, as well as how to bundle the online ad with a traditional print ad, to enhance and extend the effect of the marketing spend of an advertiser. With the commercial offering comes sales training and sales control. All supported by our staff that has a unique competence in mobile and online advertising for the local market, that is offered to our customers as part of the agreement. 

Given the increase in interest from existing and new customers for our mobile and online advertising solution, management decided during late spring to consolidate and focus on this growing market. As always, a market expansion requires increased investments and even if our solution is fully scalable with very little investments, the cash-flow exposure will inevitably be more constraint in a rapid expansion. Due to the financial situation of the company going into the second half of 2013, with a high debt ratio, management took action for a financial consolidation and restructuring. 

Combining the activities during Q3 and Q4 we have so far lowered the consolidated debt with about 2,000,000 EUR and expect that the activity will be concluded and fully visible in Q4 2013. The objective will be to enter 2014, more agile to take every opportunity to grow with our customers and partners and better positioned in the challenge of being early out in one of the most interesting and fast growing segments in the world. 

As part of the financial re-structuring, management have also decided to write down high-value assets to a more situational level. Even if it has had an impact on the bottom line result of the third quarter, as well as for the year-end, the measures taken will secure a better position of the company over the coming 12 months.

The focus on the core business of mobile and online advertising solutions and the divesting of Scandvision, will have a negative impact on the Group revenue short term, but will on the other hand give us full focus on the high growth areas. This will increase our ability to move fast and with accuracy to meet the demands from existing and new customers, who want to take part in the mobile and online advertising revenue creation. 
We are looking very much forward to continuing this journey, and are confident that we will present, not only new customer wins, but also some interesting growth figures during the coming year.


On behalf of the Board of Directors

Nicklas Gerhardsson
CEO