From the CEO

From the CEO - Q2 2019

We have had a very busy period during the second quarter and the time thereafter, with several new business contracts. I am especially proud that we signed new long-term contracts with two great customers; Max Burgers and Open (formerly known as OpenSolution).

With Open, we continue our long lasting business cooperation, by signing a new five year agreement. Open is the Nordic region's leading provider of point of sales solutions for the restaurant and service industries. We will continue to supply Open with state-of-the art payment solutions for cashless, so called card present, on-site transactions. The foundation for these payment solutions is Carbon, our new world class range of Android based payment terminals.
Our business journey also continues with Max Burgers AB, where we have signed a new three year agreement.

We have started up the delivery to Max of our next generation self service solutions for restaurants. Self service,
a.k.a. Express Kiosks, is an integral part of Max' digital strategy for creating a superior experience for the restaurant guest. The use of self service kiosks has been a success and a very large share of the guests are using these for orders and payment. In parallel, we are working with Max further helping them to improve the customer experience and increase sales. This work includes new innovative self­ service concepts for both outdoor and mobile use ("que busting"). The latter application is something Westpay can deliver due to our unique Oracle partnership.

In South Africa we have signed a contract with Micros (part of Adapt IT), the largest Oracle hospitality partner in the south African region. With a client list made up of more than 700 hotels, 3 500 restaurants, Micros is a truly international and leading provider of Hospitality Solutions in the region. Together with Micros we are working intensively preparing for their market launch later during this year.

As part of an ongoing strategic partnership, we have signed a new agreement with Rusta AB. They chose Westpay to be their continued Point of Sale (POS) hardware and services supplier for their European expansion and POS system upgrade. Rusta currently has 93 stores in Sweden, 30 in Norway and 2 in Germany. During 2018 Rusta acquired the Finnish retail chain Hong Kong, which means that Rusta now operates on four markets - Sweden, Norway, Finland and Germany.

These deals are just a few examples of what we have accomplished during the second quarter. Our high business activity level will remain and we will continue to establish new strong and long-term customer relationships within the fintech area. In order to satisfy existing and new needs of these present and future customers, we need to accelerate the development of additional innovative products in the payment area.
As part of strengthening our capabilities in this respect, our shareholders have issued an authorization supporting Westpay's plans to resolve on a rights issue of shares during the third quarter of 2019. The intention is that the rights issue, in the case of full subscription, will bring approximately SEK 30 millions to the company.

As additional support in our growth development, it is assuring to have strong financial partners. In the beginning of the summer we received an extended credit facility (+6 MSEK) from Danske Bank and EKN, The Swedish Export Credit Agency. By expanding the credit facility, greater financial flexibility is created to manage both international and major commitments in ongoing and future customer projects.

Starting from the very outset of our endeavours in the fintech area we have always believed in the emergence of contactless payments. Contactless cards are now the new mainstream in Europe. Among merchants, acceptance of contactless cards is becoming more common - 42 % of the worlds payment terminals accepted contactless payments in 2017. Visa and Mastercard European mandates require all payment terminals to be contactless by 2020. Merchants and consumers are also driving this growth; merchants welcome the reduction in queues which results from the speedier contactless payments, and consumers increasingly expect to be able to use contactless cards in most outlets. However there is still plenty of potential for further development. As an example, in the Middle East and Africa only 9 % of the payment terminals were found to accept contactless payments in 2017.
There is no reason why consumers and merchants in these regions wouldn't see the same benefits of the technology in terms of speed and convenience. I believe Westpay has a well-positioned product offering supporting this market development towards contactless payments.

We continue to improve our performance, however, a lot of hard work remain to be done. During the second quarter, sales increased 15 % compared to the previous quarter. The operating result is still negative but our spending is under tight control. Our gross margin remains at high levels, reaching 59 % for the first half of 2019. We have built a strong business model which the gross margin clearly demonstrates. We will continue with actions in order to improve Westpay's future performance. Because of this, I remain confident that we are well positioned with the right business focus, team size and technology offerings to extend our five-year historic growth journey well into the future. My ambition during 2019 and beyond is to continue the intensive work with technology investments and keep our sales activity at the highest level.


Published augusti 16, 2019

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