Seamless Distribution AB: Quarerly report October 1 - December 31, 2014

STOCKHOLM--()--Regulatory News:

Fourth Quarter 2014 – Summary

  • Net revenues on an annualized basis increased by 6% in comparison with the previous year.
  • For the fourth quarter, sales declined in comparison with the same quarter last year by 17%.
  • The launch of SEQR Shop Spot – where all advertising surfaces will become direct sales channels.
  • Seamless receives a new order for the distribution of prepaid airtime and data via stored value cards and vouchers for top-up payments. The contract is initially worth over USD 1 million and comprises ERS distribution of eProducts and management of loading of stored value top-up cards and vouchers.
  • The launch of direct access to bank accounts in Sweden was initiated – enabling all Swedes with a bank account to be SEQR customers, irrespective of bank.
Revenues amounted to SEK 43,214 thousand (52,369)
Operating Profit amounted to SEK -51,312 thousand (-29,605)
Operating Margin Neg (Neg)
The after-tax financial results amounted to SEK -50,812 thousand (-24,113)
Earnings per share before and after dilution SEK -1.21 (-0.64)

CEO's comment

Dear Shareholders,

As I write this, we are just about to launch a direct connection to consumer bank accounts in Sweden. Until now, SEQR has been a revolving credit for the consumers that use it. This fact has been seen as the single most important hurdle in achieving larger consumer adaption in the Swedish market by observers.

In the other markets where we are currently present, this direct debit link to the consumer bank accounts already exists, and in those markets we are working on adding the revolving credit as an alternative product. We believe that our product offering has to consist of Direct Debit, Revolving Credit and Prepaid solutions in every market where we are present. There is a demand for all these products in various degrees in all the markets.

Our competitive advantage over most other players in the mobile payment market is our independence from using the card “railroad tracks” which gives us a significant technological and cost advantage. However for certain markets, where the revenue stream is sufficiently profitable, we may also add the normal Visa/Mastercard as an option.

Our strategy has been clear from the start; create a large enough geographical footprint in order to be able to reach a positive cash flow even at an extremely low early consumer adaption rate.

We are today in live production in five markets with the SEQR product. These markets together represent around 30 million inhabitants and potential users of SEQR, assuming that everyone with a bank account can use our service. In this estimation we do not count Romania because our ability to reach consumers are limited to Garanti Bank’s current client base.

After the first quarter 2015 and in the beginning of the second quarter, we will be live in production in eleven markets that represent approximately 600 million potential users of SEQR assuming that everybody with a bank account can use our service. This is very far ahead of any global competitor. We currently don’t see any mobile payment service in live production in more than one country.

Our goals in 2013 and 2014 have been to build the ability to launch in these markets with a full product suite that is also portable across borders ( i.e. a consumer in one country can also use our service in any other country) and the ability to launch quickly in new markets.) This has been a big project and has taken most of the company’s development resources both in man-hours and in capital. The money that we raised in 2013 was, in fact, targeted for this goal.

I am pleased to say that this work is now done and this has a few important effects for our company. First, all the resources that have been used in this heavy build-up period are now unnecessary. Therefore, the large production team has been laid off and various other costs associated with the build-up have been discontinued. This has a profound positive effect on the cost base of the company. Second, the company can now focus fully on the third step in our strategy, which is to increase consumer adaption and conversion rates in the markets that we are present, as well as expand easily into further markets.

If we look at our competitive situation, it is clear that we currently enjoy a significant advantage on a global basis. There is no other company in our sector globally who has achieved the breadth and depth of our offering with SEQR. This is where we wanted to be and what we planned for. Now is the time to convert this advantage into tangible results in the form of earnings. Although earnings obviously lag the geographical expansion, we believe that we will see significant effect of our increased footprint during 2015.

For the uninitiated, or as simplification, one can describe it that we have managed to create a new "card" network that performs many more functions than the VISA / MasterCard network does. This accomplishment has not been easy and has been an extremely complex operation. We did this due to that we very early realized that the old VISA and MasterCard networks did not meet the requirements one need to have when launching an international mobile payment service, with all the opportunities that mobile payments provides.

A special mention of the new product “Shop Spot” or “Active Media” as we call it internally.

This Service/product changes everything in both the media landscape as well as for the traditional sales channels I.e. Physical, and online stores. We have turned media itself into a sales channel. We can achieve very high margins in this segment since we currently are the only ones in the world that can use this channel.

I do not wish to comment upon our fourth quarter results in detail, as we do not run this company with a quarterly focus. Rather, the management has a two-year planning cycle in terms of our cost and revenue structure, our product and development, and overall strategy. I can only conclude by saying that the figures speak for themselves and correspond largely to the management and board’s expectation.

Peter Fredell


The Group


On an annualized basis, Seamless’ revenue increased by 6%, however looking only at the fourth quarter it decreased by 17% to SEK 43,214 thousand (52,369) in comparison with the corresponding quarter the previous year. The decrease in revenue is due to, as mentioned in previous quarterly reports, foremost a decrease in the revenues from the Distribution business segment.

Seamless started up its own distribution network in Sweden in mid-2013, which resulted in an increase in revenues of 64% in comparison with the corresponding period the previous year. During the fourth quarter of that year, the largest customer of the Seamless subsidiary Lettel declared bankruptcy. Lettel was engaged exclusively with distribution, and the bankruptcy of this particular customer did not affect sales for the Distribution business segment during the fourth quarter of 2013 very much, but on the other hand, the full impact was felt in Q1 2014. Revenues between Q4 2013 and Q1 2014 decreased from SEK 52.4 million to SEK 40.7 million. If on the other hand, one compares Q1 2014 to Q1 2013, revenues have increased significantly due to that the revenues from Seamless’ Distribution operations in Sweden only commenced from Q3 2013 onwards, which is why the coresponding quarters for Q1 and Q2 2014 show an increase in revenues compared to Q1 and Q2 2013, while Q3 and Q4 2014 thus becomes the first quarters where both sales for Lettel and for Seamless’ Swedish part of Distribution are included, while the decline in revenues as a result of the bankruptcy of Lettel’s largest customer is reflected in the 2014 figures, which is why revenues have thus been reduced. Looking at the individual quarters of 2014, revenues for the Distribution business segment have remained at a consistent level throughout the year.

Revenues are distributed between the various business segments as follows: 27 percent (19) from the Transaction Switch business segment, 69 percent (76) from the Distribution business segment, and 4 percent (5) from the SEQR business segment.

Financial Results

  • The consolidated operating loss amounted to SEK -51,312 thousand (-29,605) in the forth quarter.
  • Net losses from financial items for the fourth quarter amounted to SEK 695 thousand (572).
  • Earnings per share amounted to SEK -1.21 (-0.64) for the quarter.


We had a total of 166 (143) employees at conclusion of the quarter. In addition to this, Seamless has retained approximately 35 consultants – primarily in India, Ghana and Pakistan.


During the quarter, investments have been implemented with a value of SEK 6,515 thousand (11,909). Product development costs have been capitalized at a value of SEK 5,869 thousand (7,523), while depreciation taken and amortization amounted to SEK -5,029 thousand (-5,676).

Cash Flow and Financial Position

For the fourth quarter, the cash flow from operating activities amounted to SEK -47,020 thousand (-11,351). Bank deposits and cash equivalents at the end of the quarter amounted to SEK 105,273 thousand (302,765).

The Group has interest-bearing liabilities in the form of leases for hardware amounting to SEK -2,030 thousand (-2,888), divided into long-term debt of SEK -423 thousand (-912) and short-term debt of SEK -1,607 thousand (-1,976). 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 74 percent (88).

As announced in press releases and in the previous quarterly report, savings measures has been taken during the third and fourth quarters, which will result in anticipated savings of about 80 million annually. The effects of these savings are expected to be seen during the first quarter of 2015 and onwards. Some of these savings measures has been to discontinue the Swedish part of Seamless development department, which resulted in that about 30 people had to leave the company.

The Board of Directors and senior management’s view is that the financial position and liquidity are sufficient to fund the business operations for the approaching twelve month period.

Parent company

The parent company’s net sales for the quarter amounted to SEK 13,056 thousand (59) and net financial results amounted to a profit of SEK -256,064 thousand (loss of -6,735). Net financial gains/losses in the parent company was SEK -270,160 thousand (-2,058) and bank deposits/cash on hand amounted to SEK 69,041 thousand (258,889) at the end of the quarter. The parent company had 4 (4) employees at the close 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 16 February 2015 at 07.50 am (CET).

This information was brought to you by Cision


Seamless Distribution AB
Daniel Hilmgård , press contact Seamless +46 70 996 83 33
Peter Fredell , CEO Seamless +46 8564878 00


Seamless Distribution AB
Daniel Hilmgård , press contact Seamless +46 70 996 83 33
Peter Fredell , CEO Seamless +46 8564878 00