INTERIM REPORT JANUARY – JUNE 2009
(NGM: PAY)
JANUARY – JUNE 2009 IN SUMMARY
• The transaction volume for the first half of 2009
was SEK 1,120,225 thousand (301,725) 2009, an
increase of 271 per cent compared to the same
period of last year.
• Transaction-based revenue for the first half was
SEK 13,312 thousand (8,524), up by 56 per cent
over the same period of 2008.
• Compared to the same period of last year, operating
profit/loss before amortization/depreciation
for the first six months improved by SEK 7.0
million to SEK –12,014 thousand (-18,989).
APRIL – JUNE 2009 IN SUMMARY
• The transaction volume for the second quarter of
2009 increased by 515 per cent to SEK 936,742
thousand (152,390) compared to the same quarter
of 2008.
• Transaction-based revenue for the quarter was
SEK 8,551 thousand (3,921), an improvement of
118 per cent compared to the second quarter of
last year.
• Compared to the same period of last year, operating
profit/loss before amortization/depreciation
for the quarter rose by SEK 5.7 million to SEK
–5,047 thousand (-10,726).
SIGNIFICANT EVENT S IN
THE FIRST HALF OF 2009
• The Annual General Meeting on 14 May 2009
elected Björn Wahlgren, former CEO of Paynova,
as the new Board Chairman. Simon Thaning was
appointed CEO of Paynova and took up duties in
connection with the AGM. In addition, the AGM
voted to approve an incentive scheme consisting
of a maximum of 1,650,000 stock options.
• The launch of the new business model led to a
sharp increase in revenue starting in the second
quarter. The restructuring process was completed
and measures to cut costs started to emerge at end
of the six-month period. This, together with stable
growth in the e-retail market, clearly indicates that
Paynova will achieve a positive monthly operating
cash flow in the third quarter of 2009.
• During the six-month period, the issue of
38,865,573 new shares provided the company
with proceeds of SEK 25.3 million.
SIGNIFICANT EVENT S AFTER
THE EN D OF THE PER IOD
• Paynova’s employees acquired 1,530,000 share
options within the framework of an incentive
scheme that was approved by the AGM in the
second quarter, of which 820,000 were acquired
by the CEO and executive management.
• In July the county administrative court announced
its ruling regarding liability for value added
tax in accordance with the Swedish Tax Agency’s
decision. Through the court ruling, the Swedish Tax
Agency has demanded payment of the remaining
amount for the period through January 2006,
amounting to approximately SEK 1.5 million.
Paynova intends to appeal the decision to the
administrative court of appeal.
• Paynova is further developing and strengthening
its partnership with LeiXun and ChinaPay.
Following a pilot project with Gamersgate and
agreements with six additional customers, a more
offensive marketing strategy has been adopted.
The response to this has been positive.
• The Chinese partner CRD currently has six different
titles on its domain Dotgame.cn and will launch
the community “Living in Beijing” in the fourth
quarter of 2009. The volume targets are somewhat
uncertain due to new rules for virtual currency.
THE NEW PAYNOVA
The first half of 2009 marked a turning point for
the company. In light of our new business model,
restructuring of operations and ventures in
China, I see a very bright future for Paynova.
Although Paynova’s history has been lined
by issues to finance deficits in our operating activities,
we are now well on our way to achieving day-to-day
operations that are capable of standing on their own.
As I write these words, I am convinced that we will
have a positive monthly operating cash flow in the
third quarter.
Online retailing, Paynova’s underlying market, is
showing sustained powerful growth at the global
level. The ability to quickly and easily compare prices,
a generally lower price level and the worldwide economic
downturn are just a few of the factors fuelling
growth in e-commerce. The rising rate of card fraud
is also benefiting Paynova by further increasing the
dependency of online retailers on effective fraud
prevention, services that are part of our offering.
OPERATIONS IN CHINA
China is a prioritized market for Paynova. Parallel
to the partnership with CRD, we are now expanding
our operations in China through extended partnerships
with LeiXun and ChinaPay. Following a pilot
project with Gamersgate and agreements with six
additional customers, we have adopted a more offensive
marketing strategy toward online retailers in
Europe and the USA, and the response to this has
been positive. At the end of 2008 ChinaPay had 640
million unique customers that make online payments.
Through the partnership, Paynova is one of the first
foreign players in China to offer payment solutions
for e-commerce between China and other countries.
We have people in place and sales are up and rolling.
THE NEW PAYNOVA ON TRACK
The restructuring of Paynova began in 2008. At the
same time that I took over as CEO of Paynova in May,
Björn Wahlgren was elected by the AGM to serve as
the new Board Chairman. We began working according
to a new and more competitive business model,
streamlined our customer base and launched a costcutting
programme. Now that the fundamental
changes have been made, the focus will be on further
refining our sales process. Today Paynova has a stable
organization and a solid platform from which to
attain profitability and grow our business.
However, I would like to end by pointing out that
the results of our hard work are starting to become
clearly visible. The first quarter was fairly typical in
terms of both profit and volumes, but by the second
quarter we began to see the first signs of our forecasted
volume growth. Profit for May was burdened
with restructuring costs, but in June – as we previously
predicted – the earnings breakthrough arrived. Nearly
six of the seven million SEK in improved operating
profit are attributable to the second quarter, a definite
signal that we are on the right track!
(For complete report, see attached file)
About Paynova
Paynova offers international full-service solutions for payment via the Internet. With Paynova, e-retailers have access to 21 payment options with credit cards, debit cards and Internet banks, in 12 currencies and 12 languages in a security-certified interface (PCI). The majority of customers are found in the prioritized segments: travel, retailing and media/network games. The company has been listed on NGM Equity since February 2004.
FOR ADDITIONAL INFORMATION CINTACT
Björn Wahlgren, Chairman, +46 8-517 100 02
Simon Thaning, CEO, +46 8- 517 100 14
Robert Schönbeck, CFO, +46 8-517 100 27