Year-End Report 2015
Fourth quarter 2015 in summary
- A total of 26,061 new registered subscribers (Q3: 13 340) of which 34% were paying
- The number of subscriptions sold during the period amounted to 106,236 (Q3: 7757)
- Net sales for the quarter increased to SEK 3.9 million (18.1) of which SEK 3.1 million (0) attributable to the consolidation of Ambient Media. Sales from media platform continued to grow during the fourth quarter
- Net profit amounted to SEK -5.8 million (-4.3). Adjusted for non-recurring effects and Ambient Media reported the profit amounted to -6.9 million during the quarter, an improvement in comparable earnings from -7.4 million for the previous quarter.
- Renegotiation of content agreements affect earnings in the fourth quarter with 3 million and resulting in significantly lower costs for content.
- Utilizes a third of the underwriting guarantee from Abara Equity Ltd. in a directed share issue (10 million)
- The Parent Company writes down the value of subsidiaries by SEK 57 million under the precautionary principle.
- Started the reporting of sales figures on a monthly basis
- The launch of the download feature, film Felix Manalo became the first pilot project
- Launch of children bet
Since I took over as CEO in May 2015 we have transformed the company and managed to create positive sales growth. In this report I want to take the opportunity to reflect back on the year 2015 and look ahead to an exciting expansion phase.
Before I took over as CEO the company began a comprehensive review of its operating structure. The review resulted in that all tech resources and the marketing department were concentrated to Stockholm. One of the most important decisions taken as a result of the review was to replace the company's partners in the Philippines with Ambientmedia, the company which now is a Mavshack subsidiary. Mavshack also streamlined the company's Indian organization by reducing the size of its operations. Several contracts and partners were also reviewed and those deemed unfavorable for the company's development were terminated.
In connection with our review of the company we changed our overall sales strategy, which ultimately resulted in the positive sales trend we now have entered in. The sales figures, which we at the end of the year began reporting on a monthly basis, as shown in the table below, has had a positive sales growth.
Our main target audience was strategically concentrated to address the Filipino diaspora in accordance with the new sales strategy. This audience, along with the Indian equivalent, is mostly based in the same geographical locations. We have therefore chosen to primarily focus our activities to the Middle East and North America. Mavshack launched its streaming service in the United Arab Emirates as our first Middle East market.
The company's sales channels in the Middle East are the leading mobile operators Etisalat and du. Focus has been to target the Filipino diaspora living in the country. Sales consist mainly of daily passes that are purchased and renewed automatically via the customer's mobile phone subscriptions. We will continue to expand in during 2016. Our next launch is aimed to take place in Saudi Arabia, a country with even more Filipinos living there than in the United Arab Emirates. We also plan to launch in Bahrain and Kuwait. In these three markets we started conducting talks after the fiscal year with telecom operators to replicate the success we have had with Etisalat and du.
Mavshack has also been working hard to develop our product. Investments have been made to improve the product in terms of performance, support for new platforms, user experience and integration to mobile operators. Furthermore we launched a new website in the spring with improved visual design and user experience. The company's streaming services also became available on new platforms through newly developed apps for Google Chromecast, Amazon Fire TV, and Humax. At first it was planned that our agreement with 1Mainstream would take us faster to market on several new platforms. Unfortunately, as we reported in the second quarterly report of 2015, 1Mainstream could not deliver according to their commitments, which forced us to terminate their contract and instead develop these apps in-house.
The content available on the service is crucial to both recruiting new customers and retaining existing ones. A major step in enhancing the company's offering to the Filipino diaspora was taken in connection with the acquisition of a majority shareholding in Ambientmedia during the summer. Ambientmedia has its own production capacity in terms of animation, subtitling/voice over and commercial video productions. Furthermore, we became more connected within the Filipino content industry. The acquisition provides Mavshack with better access to new content, while at the same time gaining a greater knowledge of which content is relevant and appealing to our target audience. Ambientmedia also gives Mavshack the capacity to produce its own content.
During the year the company completed several new share issues and has been forced into taking short-term loans with high interest rates, which has taken a lot of time and energy from the management team. After evaluating various options, a long-term financing agreement was reached with Abara Equities in the form of an underwriting guarantee. The agreement allows the company until the fall of 2016 to issue shares for a total of MSEK 30, of which MSEK 10 were issued during 2015.
During the year I have more and more recognized the importance of greater local engagement for our operations. This in order to obtain and offer the best and most relevant content to our main target audience. It is about understanding what content is relevant, to understand the payment/consumption behavior, implementing appropriate pricing levels and how to most effectively reach the target audience.
Given the importance of local knowledge and interaction, we have come to the conclusion that the leadership of Mavshack is in need for better cultural understanding and stronger presence in the Philippines. Since we have this expertise within our organization we see great value in having the President of our Philippine subsidiary, Rainier David, take over as CEO for the Mavshack group. This is a step that both I and the board deems being the best course to take the company forward.
With this leadership change we believe that the company can further strengthen Mavshack's offering and better utilize the various skill sets in our group. The Philippine organization will be responsible for the supply of Filipino content, customer knowledge etc. The Swedish organization will be responsible for the overall strategies, technology and digital marketing.
In 2016 Mavshack will continue even more vigorously to improve its offering by increasing the supply of relevant content to the service. Further improvements in relevant content and product features are expected to be launched shortly. The launch of the download feature, which is gradually being implemented, is a sought after feature among the target audience and will also strengthen Mavshacks competitiveness.
Working to build a long term profitable business by developing the offering and invest in new selected markets will be key going forward. The digital value chain for streaming accommodate new business opportunities which the company will always explore how to the best capitalize on.
I thank my colleagues and our shareholders for this eventful time and look forward to follow Mavshacks future development.
Anders Lindén, CEO
Interim Report 1 for the financial year 2016 will be published on May 4th 2016.
Stockholm February 26, 2016
Mavshack AB (publ)
Board of Directors
For more information contact:
CEO Anders Lindén
CFO Per-Olov Östberg
Phone: +46 8 124 517 90
About Mavshack AB
Mavshack operates a global Internet TV services with Asian entertainment. The service, which is available through Internet connected devices, is genuinely global with users in over 80 countries. With the largest library of Filipino and Indian titles, as well as agreements with Asia's leading content providers, Mavshack is the obvious choice for Asian entertainment around the world. The company operates its business on a proprietary technology platform
Mavshack AB (publ) is a traded company listed on Nasdaq First North under the ticker MAV. Certified adviser is Erik Penser Limited. More information about the company is available at www.mavshack.se