INTERIM REPORT, 1 APRIL – 30 JUNE 2018
The numbers and key figures refer to the remaining operations
Second quarter 2018
- Net sales SEK 30.9 million (34.5)
- Operating loss (EBIT) improved by 38% to SEK -9.1 million (-14.6)
- Loss after tax SEK -30.4 million (-16.8)
- Earnings per share SEK -0.37 (-0.29)
- Cash flow before changes in working capital for the period SEK -28 million (-59)
- Net sales SEK 59.4 million (66.5)
- Operating loss SEK -18.7 million (-25.1)
- Loss after tax SEK -38.7 million (-28.3)
- Earnings per share SEK -0.47 (-0.48)
- Cash flow before changes in working capital for the period SEK -34 million (-64)
|Net sales||30 916||34 513||59 371||66 455||127 157|
|Operating result||-9 122||-14 565||-18 650||-25 055||-72 231|
|Loss for the period||-30 369||-16 758||-38 693||-28 299||-118 316|
|Balance sheet total||104 737||263 339||104 737||263 339||163 189|
|Earnings per share, basic and diluted*||-0.37||-0.29||-0.47||-0.48||-2.01|
|Cash flow from operating activities||-28 213||-65 477||-22 212||-72 406||-104 936|
|Capitalized development costs||4 454||-100||7 720||1 661||4 593|
|Depreciation/Write down||-3 695||-698||-7 007||-1 332||-14 037|
|Number of employees at end of period||47||45||47||45||39|
Q2 2018 was extremely challenging for Invuo Management and Board. The failure of AJ Group to deliver committed funds caused serious uncertainty and distress, as well as massive consumption of time resource. Fortunately, the sale of financial assets in May, raising Sek17.5m, bought the company critical breathing space.
In our operations, huge challenges were confronted. For e-Products, we were delighted to see the business move into EBIT profit during Q2, ahead of our most recent expectations. This has been due to a virtuous combination of tight cost control, alongside innovative revenue generation measures. It should be noted that this is the first time in the history of e-Products that it has made a profit. Our new strategy is yielding results. In addition, this performance includes the burden of a number of large expenses related to the restructuring of the Company which started a year ago. It has only been through outstanding Management and team spirit that so many challenges have been overcome.
Looking into H2 for e-Products, there are pluses and minuses. On the minus side, we still have one major legacy supply contract that might change in Q3, and this would lead to somewhat higher costs. In addition, years of under-investment in IT by previous management will have to be resolved. We must also erase long-standing creditor positions. On the plus side, numerous revenue enhancement initiatives are underway, and this is combined with continued removal of loss-making contracts. We are optimistic that e-Products can be profitable during much of H2.
MeaWallet faced much more challenging conditions in Q2 than we previously expected. First, Europe’s financial industry was more distracted by GDPR implementation than we expected, and many organisations pushed back mobile wallet investment until Q3/4. Second, key MeaWallet planned hires in marketing and sales were not possible due to AJ Group’s failure to deliver funds in April as promised. Another key factor in Q2, which will remain a factor in the period ahead, is that financial institutions across Europe, whether incumbents or dislocators, are all grappling with a marketplace that is evolving extremely rapidly.
Whilst we no longer forecast at least 20 signed contracts for 2018, MeaWallet still expects to sign around 15 contracts for the year as a whole. Based on the three orders signed to-date, this means we expect to sign around 12 additional orders by year-end. Fortunately for MeaWallet, its people have continued to keep it right at the cutting edge in the marketplace, and we believe this strength will bear fruit in Q3/4, not just in our core tokenisation products, but in a number of new revenue adjacencies.
Looking at the overall Company performance, cost reduction efforts continued across Invuo in Q2, especially in HQ, and we can say with confidence that the Company has never been as lean as it is today.
As we said in our Press Releases in May, our forecasted ability to internally fund operations until year-end 2018 has been based on an expectation of an acceleration of MeaWallet signed orders, and e-Products moving into profit. This remains the case. In the absence of both these factors, and particularly taking into consideration the slower than expected order-signing by MeaWallet in Q2, additional funds may be needed earlier than our previous forecast. To secure a stable financial situation for the Company the Board intends to call for an EGM to seek a mandate for further funding activities.
Significant events during the quarter
- Invuo informs about uncertainty about the agreement reached with AJ Group, where AJ Group would invest approximately SEK 52 million in shares and acquire SDS loans. Invuo confirmed on two occasions a new date for AJ Group's transaction and receipt of non-refundable security deposit. In addition, information from AJ Group received by Invuo showed that AJ Group would attempt to make the subscription agreement, signed in March 2018, subject to new requirements not covered by the current subscription agreement. The new information forced the management and the board to reconsider the probability that Invuo would actually receive funds in accordance with the terms of the subscription. As a result of the delays in connection with AJ Group's expected investment, Invuo's liquidity weakened sharply.
- On May 22, Invuo announces a decision to sell assets related to Seamless Distribution Systems AB ("SDS") for a total of SEK 17.5 million. The assets sold consisted of shares in SDS corresponding to 23.3% of SDS shares, a total of 1,610,618 shares, and loan commitments from SDS to Invuo (with a nominal value of SEK 35 million). This liquidity supply enables Invuo to continue its operations and invest in its two business areas, MeaWallet and eProducts, and the company expects to maintain sufficient liquidity to finance operations at least until the end of 2018.
- Invuo confirms that it will consider taking legal actions as a result of the non-executed transaction with AJ Group Holdings Ltd.
- Denny Sternad and Sheliza Jamal resign from the board on the 17th and 22nd of May.
Significant events after the end of the reporting period
- MeaWallet signs an agreement with a major mutual Portuguese savings bank, for delivery of MeaWallet’s technology for mobile contactless payments. Mea Token Platform will enable the bank´s clients to perform digital contactless card payments (tap & pay) through the bank´s existing mobile banking application. The order value of the contract is around €200 000 over a five-year period.
This is the type of information that Invuo Technologies 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 July 19, 2018 at 08:50 a.m. (CET).
For further information, please contact:
Martin Schedin, CFO/IR
+46 8 564 878 00
Invuo has two main business areas: Mobile payment solutions provided under the trademarks of MeaWallet™ and distribution of eProducts. www.Invuo.com
Invuo’s interim report for the period April – June 2018 has been approved for publication by the Board of Directors, by its decision on July 18, 2018. This financial report has not been subjected to a review by the Company’s auditors.