|ATM S.A. is exiting mobile payment services|
Following the current report published by mPay S.A. regarding the change in ownership of a significant package of mPay shares , the Management Board of ATM S.A. explains that yesterday, 20,160,000 shares in mPay S.A. (45% of the share capital) was transferred from ATM S.A. to the LEW S.A. Group, an operator in the online sales business with the status of a National Payment Institution and a large network of partner sales establishments. The remaining shares in mPay S.A. owned by ATM to date will be transferred in the next few days to Arbux Investments Ltd., a fund that invests in the payment market. This makes ATM ultimately exit from its investment in mPay S.A.
The decision to exit from this investment was foreshadowed in periodic reports and the assets associated with this investment had been presented in ATMs financial statements as assets held for sale.
The exit from this investment is taking place as ATM resigns from further capital expenditure for the development of mPay S.A. This is substantiated by the fact that the mPay business is not associated with the core business of ATM, that is data center services and data transmission. mPay needs to be financially supported by the principal owner to further grow in the mobile payment services market, and the owner should be a company that specializes in services in this market.
ATMs investment in mPay as commenced in 2006 was unsuccessful for ATM, as it has brought a loss to ATM since then. The scale of investment and the costs associated with this were premature in relation to the development of the market, and the optimism as to the rate of dissemination of mobile payment technology was inflated. The current market situation makes it possible to believe that now is the correct time to build a mobile payment business, however this requires further expenditure, which in the opinion of the Management Board of ATM would not be of benefit either for the company or for its shareholders as the mobile payment business is significantly distant from the core activities of ATM. LEW Group, who has purchased a significant portion of shares in mPay S.A. already operates a large network of partner merchants. This may assist mPay to be successful with less capital outlay, as it has the competence and significant experience in this sector.
The decision made 8 years ago to get involved in this investment is now, with the perspective of time, perceived by the Management Board of ATM as unsuccessful. At the time it seemed to be an opportunity as the company had a strategy of investing in a promising start-ups in the IT and system integration sector. And even though such strategy provides the opportunity to be very successful, it also carries a significant risk of failure.Since the separation and transfer of ATMs IT business to a separate, non-associated company in 2012, these types of ventures have no longer been undertaken by ATM.
The sale of the shares in mPay S.A. will affect the financial results of ATM S.A. in Q4 of 2013, in the part that pertains to discontinued activities. In the consolidated statements, the net profit will go down by approx. PLN 3.4 million, and in the separate statements by about PLN 5.0 million due to this. These losses are not associated with any expenditure made by the Company during this reporting period and do not affect the Companys financial standing.