Seamless Distribution AB: Interim Report, Third Quarter of 2016

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Seamless Distribution AB (STO:SEAM)

Third quarter (July – September 2016)

· Net sales was unchanged compared to the same period last year and amounted to SEK 73.9 million (74.0)

· Operating loss for the period SEK -21.1 million (-27.8), an improvement of 24 percent

· Loss after tax for the period SEK -21.0 million (-29.4)

· Earnings per share SEK -0.38 (-0.70)

· Cash flow before changes in working capital improved with SEK 3.4 million to -22.4 (-25.8), an improvement of 13 percent

January – September 2016

· Net sales improved with 2% compared to the same period last year and amounted to SEK 206.1 million (201.1)

· Operating loss for the period SEK -62.4 million (-83.8), an improvement of 26 percent

· Loss after tax for the period SEK -63.9 million (-85.7)

· Earnings per share SEK -1.28 (-2.04)

· Cash flow before changes in working capital improved with SEK 12.7 million to -58.3 (-71.0), an improvement of 18 percent

Overview   Jul-Sept   Jul-Sept   Jan-Sept   Jan-Sept   Full-Year
SEK thousand 2016 2015 2016 2015 2015
Net sales 73 888 74 034 206 096 201 123 279 997
Operating result -21 074 -27 775 -62 412 -83 848 -116 637
Financial net and taxes 38 -1 617 -1 500 -1 840 -2 671
Loss for the period -21 036 -29 392 -63 912 -85 688 -119 308
Balance sheet total 262 472 205 421 262 472 205 421 205 332
Earnings per share, basic and diluted -0.38 -0.70 -1.28 -2.72 -2.84
Operating margin neg neg neg neg neg
Equity ratio 59% 51% 59% 51% 50%
Capitalized development costs 6 173 4 393 19 246 12 280 18 244
Depreciation -5 107 -3 983 -13 231 -16 069 -20 780

Significant events during the period July – September 2016

· All European Seqr users can now use Seqr to pay all over the world. Contactless payment technology today allows for payments in approximately 30 million point-of-sales globally.

· The board of directors’ of Seamless has resolved on a directed issue of convertible debentures of SEK 42 million to private and institutional investors.

· Seamless has received its first order in the Americas. A telecommunications operator has placed an order to purchase the ERS360 transaction platform, which handles the electronic top-up of prepaid accounts for mobile phones. In the first phase, the order value will correspond to MSEK 5. · Seamless acquires MeaWallet AS through an issue in kind of new shares and simultaneously carries out a private placement. Through the acquisition Seamless controls important technology in the rapidly growing field of contactless payments. At the same time the company has carried out a direct issue of new shares in a private placement of approximately SEK 50 million to private and institutional investors.

· Seqr is launching contactless payments in Sweden using NFC technology (Near Field Communication). Contactless makes it possible to pay with SEQR at point of sale (POS) terminals that support NFC which is featured on almost all modern terminals, consequently it is now possible to pay with SEQR in any store that supports the functionality in Sweden or abroad, even if a retailer has no private agreement with Seqr.

· Seqr payment solution launches its recently announced international remittance service. Seqr users can now make international money transfers – or “remittances” – to non-SEQR users. Transfers from Sweden directly to India and Thailand will be the first deployment of the service.

· Seqr launches in Austria, Ireland, Malta and Luxembourg. The company’s rapid expansion means that consumers can now use SEQR to make payments in 16 countries.

Significant events after the close of the reporting period

· Seqr is launching a peer-to-peer money transfer solution that enables users to instantly transfer money to each other regardless of where they are in the world. The service is now being rolled out for SEQR users in 14 countries.

· Seamless has obtained a Notice of Allowance (patent application no. 14/347,742) from the United States Patent and Trademark Office (USPTO) for its Seqr mobile payment solution. This implies that USPTO intends to announce the approval of the patent within three months following the payment of all fees.

· Seqr has been elected as the payment solution on the international fair Web Summit, a fair which gathers 15 000 companies and 7 000 CEO’s. The fair was held in Lisbon on November 7 – 10, and approximately 50 000 participants will pay with Seqr.

· Seqr launches Contactless Payments and Gocardless Service in the UK. Seqr customers in the UK are now able to quickly and easily link their bank account to the Seqr app and make payments directly from their bank account.

CEO´s COMMENT

Dear Shareholders,

The third quarter of 2016 was a very active quarter for Seamless where we laid stepping stones in the development to strengthen our position as one of the world leaders in the mobile payment industry. Our acquisition of the Norwegian company MeaWallet is a central part of our strategy going forward. MeaWallet has developed the software and infrastructure which Seqr uses for NFC (contactless payments). Seqr launched this technology to its European users in September.

It is a large and important step that Seqr now works to pay with in all NFC enabled card terminals in the world. The technology has allowed Seqr to increase its acceptance network from approximately twenty thousand POS (Point-of-Sale) to somewhere around 30 million POS overnight. Within a few years, all card terminals in the world will be NFC enabled and accepting contactless payment.

The effect on Seqr as a business will be very profound. Seqr’s largest bottleneck up to now has been the slow uptake from merchants. Up to the moment we launched contactless, we had to sign individual and bilateral agreements with each and every merchant. Now, Seqr does not have to deal with the merchants at all. If they accept card payments, they accept Seqr. This means that we can focus our sales and marketing efforts on consumer acquisition instead.

After the end of the quarter, we also released another exiting product for our users: Real time global peer to peer transfers. Our users can now send money to each other in real time wherever they are in the world. This is a revolutionary product which we believe that our users will appreciate greatly.

The Seamless group reports strong figures for the quarter. Our daughter company SDS (Seamless Distribution Systems) is doing particularly well with a year on year revenue growth of 29 percent and a growth in profit of 174 percent to approximately 10 MSEK. We are very satisfied with this development and we see further strong growth potential in the core offering of this business as well as some exciting product development.

In the sub-group Seamless E-products, the revenue shrunk but the result improved greatly from a loss of in excess of 3 MSEK to a loss of only three hundred thousand SEK. In this business, we also expect a continued strong improvement in both revenue and results. Our sub-group Seqr increased its revenues from 1.8 MSEK to 2.6 MSEK, an increase of 45 percent. The result improved with 11 percent to a loss of 22.2 MSEK from a loss of 25.0 MSEK in 2015. We continue to see improvements going forward and expect that our contactless technology will accelerate the positive development further.

For our group as a whole, profit after tax improved with 28 percent and the trend toward total group profitability continues.

Today, the daughter companies and businesses of Seamless represent substantial values for our shareholders. As the stock market tends to adjust towards reasonable valuations over time, we are confident that these intrinsic values will be reflected in our share price.

Our company has only one goal: to create maximum value for our shareholders.

Best Regards,

Peter Fredell

This is the type of information that Seamless Distribution AB (publ) is required to disclose pursuant to the Securities Market Act and/or the Financial Instruments Trading Act. The information was submitted for publication on November 17, 2016 at 08:50 a.m. (CET).

ABOUT SEAMLESS

Seamless is one of the world’s largest suppliers of payment systems for mobile phones. Founded in 2001 and active in 39 countries, Seamless handles more than 4.3 billion transactions annually through 675 000 active sales outlets. Seamless has three main business areas including the SDS/transaction switch, the technology provider for the distribution of e-products and the mobile payment platform SEQR. Seamless shares are traded on NASDAQ OMX Stockholm www.seamless.se

The Seamless Interim Report 2016 for the period July– September 2016 has been approved for publication by the Board of Directors, by its decision on November 16, 2016. This financial report has been subjected to a review by the Company’s auditors.

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Contacts

Seamless Distribution AB
Peter Fredell, CEO
Peter.fredell@seamless.se
+46 8 564 878 00

Contacts

Seamless Distribution AB
Peter Fredell, CEO
Peter.fredell@seamless.se
+46 8 564 878 00