QUARTERLY REPORT - beQuoted logue and digital advertising places such as blacklight, web banners,...

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QUARTERLY REPORTJANUARY - MARCH 2018ADCITYMEDIA AB (PUBL)

INCREASED TURNOVER +23 % TAKES MARKET SHARESORGANIC GROWTH +22 %IMPROVED CASH FLOW

NETFLIX “THE RAIN”PAINTING ON BUILDING IN HORNSTULL, STOCK-

HOLM

2

JANUARY - MARCH 2018

• The net turnover increased by 23.2% to 34,198 (27,760) TSEK

• The profit / loss for the period amounted to 2,148 (2,743) TSEK

• EBITDA amounted to 4,105 (4,448) TSEK and the EBITDA margin amounted to 12.0 % (16.0)

• The cash flow from the ongoing operation amounted to 1,847 (824) TSEK

• Operating profit / loss amounted to 2 647 (3 229) TSEK

• Earnings per share before dilution amounted to 1.21 (1.59) SEK

• Earnings per share after dilution amounted to 1.21 (1.57) SEK

(Amounts in TSEK if not indicated otherwise)2018

3 MonthsJan-March

20173 Months

Jan-March

201712 Months

Jan-Dec

Net turnover 34,198 27,760 122,115

Contribution margin (%) 64.8 68.5 68.2

EBITDA 4,105 4,448 22,644

EBITDA margin (%) 12.0 16.0 18.5

Operating profit / loss 2,647 3,229 17,449

Profit / loss for the period 2,148 2,743 13,846

Basic earnings per share before dilution (SEK) 1.21 1.59 7.95

Basic earnings per share after dilution (SEK) 1.21 1.57 7.90

Cash flow from the ongoing operation 1,847 824 13,868

FINANCIAL SUMMARY

SIGNIFICANT EVENTS

During the period, the Company has transitioned from the "K3” legal framework to IFRS with the transition date of 1

January 2017. The effect of the transition means that the corresponding figures for each quarter 2017 as well as the

annual 2017 has been recalculated to IFRS. For the annual 2017 the transition means that the net result has increased

from 2,211 TSEK to 13,846 TSEK and the equity / asset ratio has increased from 36 to 42 %. A description and quan-

tification of the transition effect can be found in note 9.

The turnover for the period amounted to 34,198 TSEK (27,760) which is an increase of 23 % compared to the same

period previous year, the turnover increasing organically by 22 %. Earnings per share after dilution amount to 1.21

(1.57) SEK.

The previously acquired system development company Bitlogic Media AB started operation during January. During the

period we have also entered into a acquisition agreement with the Norwegian OOH media company Prego Media AS.

NET TURNOVER DURING Q1 2018 INCREASED

ORGANICALLY BY 22 % COMPARED TO THE COR-

RESPONDING PERIOD

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“organic company growth of 22 %”

CEO COMMENTIt is now more than a year since we started the work of

creating a more scalable sales structure which has been

a driving factor in the organic growth and the order book

we have today, which is significantly larger compared to

the same period previous year.

During the period the company presents a revenue

growth of 23 % compared to the previous year, 34,198

TSEK to 27,760 TSEK, organic company growth of 22 %.

3.5 people were employed during the second half of the

fourth quarter of 2017 which increased costs but also

gradually strengthens the order book, which we are

happy about. Further, we welcome the two programmers

that were hired through the acquisition of Bitlogic Media

AB who started during the period. Due to the endeavours

that have been made it is my current assessment that the

second quarter will show strong sales.

The effect of the additions in staff as well as the costs

affecting comparability assignable to the conversion

to IFRS during the period, as well as other fees to i.a.

consultants, has meant an increase in costs during the

quarter. This in combination with the fact that projects

within Retail Tech have had slightly lower margins than

historically, has meant that the EBITDA decreased with

-8 % to 4,105 TSEK from 4,448 TSEK compared to the

corresponding period last year.

The cash flow from the ongoing operation increase from

824 TSEK to 1,847 TSEK. We continue to invest in our

in-house developed software Starcorp during the period,

that I foresee becoming a game changer for the company

in the future.

During the quarter the company has switched to IFRS

which means that we have recalculated the comparative

periods. The effects on the profit / loss during the annual

2017 means an increase in profit of 11,635 TSEK and

for Q1 2017 of 2,766 TSEK. This means that the Com-

pany goes from the net result of 2,211 TSEK to 13,847

TSEK, per share this means a change from 1.26 SEK to

7.90 SEK.

Media

Sales in the business area Media increase during the

period by 25 % compared to the same period previous

year, the equivalent of 23,756 TSEK to 19,100 TSEK. The

organic growth within the business area amount to 25 %,

while concurrently the media agency barometer (Medie-

byråbarometern) for the period January to March show

an increase in investments in outdoor advertising by 18

%, which means that AdCityMedia continues to expand

market shares.

Media has during the year’s first quarter, under the new

Head of Sales and the newly appointed Yield Manager,

started working on reviewing the sales potential further.

ACM is today the leading operator in Sweden in the num-

ber of large format surfaces in outdoor environments,

which we want utilise to a greater extent by focusing sales

on package selling and broader initiatives.

Retail Tech

Retail Tech has during the first quarter increased sales

by 18 % compared to last year, all of which is organic

growth.

During the period, the business area has won an impor-

tant procurement with regards to Skruf's new snuff

concept for trade in convenience goods worth 8.8 MSEK,

and won the procurement as Digital Signage partner for

AMF Fastigheter’s forward-thinking retail concept “The

Lobby”. Further, a deal was made with the gym chains

Puls & Training.

4

Acquisitions

On the 21 December 2017 we acquired the system

development company Bitlogic Media AB that started

during the quarter which activated 800 TSEK in software,

which will be written-off in a five-year period. Further,

the acquisition has meant that goodwill has increased by

3,012 TSEK. The acquisition means that we now own all

rights to the global software that was developed since

2006: Starcorp. During the quarter we obtained our first

external license order for the media booking software

Starcorp Media Hub from a Danish media company. I

view the fact that we have obtained our first order even

before the release date as very positive and an indication

that there is demand for it on the market.

We signed an acquisition agreement during the period

with Norway’s third largest outdoor media company

Prego Media. As mentioned in earlier CEO comments,

Prego was founded 2013, has 8 employees and is today

the third largest operator within OOH in Norway. The

company’s offer consists of, among other things, ana-

logue and digital advertising places such as blacklight,

web banners, billboards and signs in convenience stores.

The people behind the company have experience from

prominent operators in the media industry such as Clear

Channel and Moveboards Media (which later became

Nova Vista).

During 2017 Prego’s turnover amounted to 31.1 MNOK

with a EBITDA of 3.4 MNOK. Prego reported during

the first quarter 2018 a turnover of 5.9 MNOK, which

means that the turnover for Q1 2018 at one point would

have amounted to approximately 41.0 MSEK proforma.

The aim is to start work with the company during the

month of June.

More information about the acquisition can be found

described in the press release on the 20th of February

2018 on our website.

I wish to take this opportunity to give a few thoughts of

what I see as the company’s potential moving forward:

• The outdoor market for advertising is in an expan-

sive phase where we continually take market shares.

The market is even starting to see the value in the

surfaces, which means potential for price increases

in the long term.

• We have been able to create synergies from previ-

ous acquisitions. I think the last acquisition, Prego

Media AS,to be in the same position that ACM was

in 10 years ago and that they have large potential

through digitising surfaces and utilising the expertise

within Retail Tech that is available to the group.

• We have invested in sales staff in both business

areas as well as staff to streamline the organisation,

such as in yield management and establishment.

• The in-house developed software Starcorp Media

and Retail Hub has the potential to bring in new

media layers and new streams of income in the form

of licenses. Further, this means that together with the

acquired Bitlogic we now have our own program-

mers and software that can tailor solutions to our

clients.

• The media layer totalling +600 MSEK gives us room

for organic growth. We have during Q4 internally

recruited an establisher within the group whose job

is to work with the establishment of new surfaces

and to make existing ones more effective. Acquisi-

tions and software are assessed to help us increase

the existing media layer further.

• The gross margin continues to be high which means

that we, in combination with the aim of continually

increasing the revenue growth organically without

staff or fixed costs increasing at the same rate, have

large potential of receiving high margin measures.

Due to the above and because AdCityMedia is the out-

door media company that has the most large format

surfaces in outdoor environments in Sweden, it is my

assessment that AdCityMedia is in a better position to

meet the future than ever. From the pipe and order book

we currently have, it is with great enthusiasm that I look

forward to next quarter.

Anders Axelsson,

CEO, AdCityMedia AB (publ)

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1 January 2018 – 31 March 2018

Net turnover

The net turnover for the quarter amounted to 34,198

(27,760) TSEK, which is an increase of 23.2 % compared

to the corresponding quarter last year. The turnover grows

organically by 22.2 % compared to corresponding quar-

ter last year, the acquired turnover pertains to the system

development company Bitlogic Media AB acquired dur-

ing the period and pertains to consultant incomes. The

turnover for the business area Media increases by 24.5

% to 23,756 (19,100) TSEK, while Retail Tech increases

by 17.5 % equivalent of 10,172 (8,660) TSEK.

Operating profit / loss

The operating profit / loss for the quarter amounted to

2,647 (3,229) TSEK, which is a decrease of -582 TSEK

compared to the corresponding quarter last year. The

decrease is mostly due to large investments in staff during

the last two quarters and deprecations have increased

(239 TSEK) as a result of the software being activated as

well as investments in new screens.

Financial items

Financial items for the quarter amounted to 99 (217)

TSEK, which is a decrease of 118 TSEK compared to the

corresponding quarter last year.

Tax

The group’s tax expense amounted to -599 (-703) TSEK.

FINANCIAL DEVELOPMENT DURING QUARTER 1

Profit / loss for the period

The profit / loss for the period amounted to 2,148

(2,743) TSEK. Earnings per share before and after dilu-

tion amounted to 1.21 (1.57) SEK.

Acquisitions

Bitlogic Media AB has started during the quarter which

has brought with it an increased goodwill of 3,012

TSEK. At the acquisition we also activated software of

800 TSEK that is written-off in a five-year period. Of

the total purchase price of 4,000 TSEK, 2,000 TSEK has

been paid via non-cash issue of which the share capital

has increased by 7,519 shares during the period. More

information about the acquisition can be found in a press

release on the Company’s website on the 21st of Decem-

ber 2017, as well as in note 8.

Omsättning & EBITDA rullande 12 månader

-

35 000

70 000

105 000

140 000

Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18

Omsättning EBITDA

Omsättning & EBITDA rullande 12 månader

-

35 000

70 000

105 000

140 000

Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18

Omsättning EBITDA

Turnover & EBITDA rolling 12 months

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Liquidity and cash flow

The cash flow from the ongoing operation amounted to

1,847 (824) TSEK.

The cash flow from the investment operation amounted

to -1,503 (-967) TSEK. 1,373 has been invested during

the period in intangible fixed assets where the main part

of the investments pertains to the in-house developed

software Starcorp. 194 TSEK has during the month of

January been added to the company’s fund and with the

acquisition of Bitlogic Media AB. The effect is positive due

to the liquid purchase price being paid during the second

quarter of the year.

The cash flow from the financial operation amounted to

-546 (-202) TSEK. The funding refers in full to the amor-

tisation of debt.

The profit / loss for the quarter amounted to -203 (-346)

TSEK. The group's bank overdraft facilities for 7,850

TSEK is unused on the 31 March 2018.

The group’s liquid assets amounted to 13,662 (9,136)

TSEK at the end of the period.

Financial position

The equity / asset ratio amounted to 42.2 (42.2) % on 31

March 2018 and the equity capital to 55,406 (42,061)

TSEK. Total assets on 31 March 2018 amounted to

131,392 (99,662) TSEK.

Paid tax is under the period positive due to the final tax

being settled, and the company receiving class F tax

back.

GINA TRICOTBANNER STUREPLAN 2, STOCKHOLM

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MEDIA

The company mediates advertisements that generally

generate a high impact on the viewer. AdCityMedia’s

media area consists of the digital displays and banners

that the Company offers clients to advertise on.

RETAIL TECH

In the core area of Retail Tech, AdCityMedia help busi-

nesses assess and build their own media channels. It

has mainly two areas of focus, “Digital signage” and

“Production”.

DIGITAL SIGNAGE

Digital displays that are mainly placed in stores, restau-

rants and cafés. AdCityMedia can as a turnkey supplier

offer a complete range of hardware, software, content,

operation, service and support in conjunction with and

after the establishment of the digital displays. In conjunc-

tion with support and operational services AdCityMedia

can also offer upselling which means service missions

often are combined with pure sales.

PRODUCTION

AdCityMedia offers advice to owners of facilities and

help them research the income potential in advertising.

It is not uncommon for the owners to be oblivious to the

potential and AdCityMedia can then supplement the offer

with guidance about everything from building permits to

the assemblage of printed matter and signs. In a similar

way to Digital Signage, guidance is a natural starting

point for AdCityMedia to additionally solidify sales con-

tracts with facility owners.

BUSINESS IDEA

To help businesses and brands be seen.

VISION & GOAL

To be the media company of the future.

OPERATION

AdCityMedia helps businesses and brands be seen. With their two business areas, Media and Retail Tech, AdCityMedia

creates visibility for messages in both outdoor and indoor environments that reach hundreds of thousands of people

daily.

With 17 years experience in the business area of Media, the company is today market-leading within the segment of dig-

ital large format outdoor advertising. We have tripled the marketable media surfaces on digital media surfaces in cities

since 2015. The market for outdoor advertisements is growing and the transition from analogue to digital is happening

very rapidly, where AdCityMedia has been a driving force behind digitalisation for a number of years.

AdCityMedia’s mission in the business area of Retail Tech is to strengthen the life force within retail when the market

undergoes big changes. By helping shopkeepers assess their own media opportunities, both shop front as well as

in-store, visibility can be increased, new revenue opportunities can be created and the business can develop. Retail

Tech has two main focuses: “Digital Signage” (digital displays in store environments) and “Production” (analogue large

format advertising).

The future is digital and AdCityMedia currently has approximately 1,500 of their own media surfaces as well as over

4,500 digital displays where the company creates strategies and drives content and support for their clients. The com-

pany is innovative and has the technology and the expertise needed to be cutting edge, which creates good conditions

for taking advantage of market growth.

ADCITYMEDIA IN SUMMARY

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SEGMENT OVERVIEW

The segment report is divided due to the operation’s two business areas: “Media” and “Retail Tech”.

Incomes and profit / loss segment

The net turnover and contribution margin (“gross margin”) are the end points that is reported to the chief operating

decision maker as grounds for distribution of resources and assessment of segment profit / loss.

Below is an analysis of the group’s incomes and profit / loss for every reportable operating segment.

1 January 2018 – 31 March 2018 Media Retail Tech Compa-ny-wide

Total in the group

Net turnover 23,756 10,172 270 34,198

Other income - 47 42 89

Commodities -5,056 -7,012 - -12,068

Contribution margin 18,700 3,208 312 22,219

Contribution margin (%) 78.7 % 31.4 % 100 % 64.8 %

Other external costs (excluding activated work) - - -7,908 -7,908

Staff costs - - -10,206 -10,206

Deprecations of tangible and intangible assets - - -1,457 -1,457

Operating profit / loss excluding acquisi-tion costs and revaluation of contingent consideration

- - -19,259 2,647

Financial income - - 249 249

Financial expenses - - -150 -150

Profit / loss before tax - - -19,160 2,746

DIGITAL SIGNAGEURBAN DELI SVEAVÄGEN, STOCKHOLM

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Staff:

The number of employees in the group amounted to 64

people at the end of the period, 25 of which are women.

7 people of the staff are employed through consultant

contracts.

The parent company:

During quarter 1 of 2018 the net turnover amounted to

24,699 TSEK, with a profit / loss before tax of -4,972

TSEK. The decrease in profit / loss is mainly due to the

purchases of digital signage the parent company made

which previously was made by the subsidiary company

Sign & Image Sweden AB.

Significant risks and uncertainties in opera-

tions:

The AdCityMedia group’s operation is exposed to risks

and uncertainties of both an operational and financial

nature. Risks of a operational nature mainly consists of

government decisions, procurements, research, develop-

ment, acquisitions and integration. Risks of a financial

nature mainly consists of a potential shortage of liquidity

in the Company’s shares.

Further informations can be found published in the 2017

annual report that is available on http://investor.adcity-

media.com/finansiella-rapporter/

Seasonal variations:

AdCityMedia’s aim is to have a product portfolio that

is in high demand with clients throughout the entire fis-

cal year. Because the Company has high exposure to

the advertising market, the profit / loss fluctuates some

months where there are a larger number of events which

strengthens the profit / loss. Order delivery from the busi-

ness area of Retail Tech also has a significant effect on the

fluctuations in the Company’s different quarters.

Historically, AdCityMedia has observed that the first and

third quarter generally are the weaker periods, both spe-

cifically for the Company and the industry as a whole.

Sales get harder and harder to predict with the effects of

the quarter variances, due to client’s irregular purchasing

behaviours.

Disputes:

In May 2016 the Swedish Gambling Authority (Lotteri-

inspektionen) announced that the company is obliged to

pay a penalty on injunctions of branding exposure that

according to the Swedish Gambling Authority has posed

an encouragement of participation in non-state lottery.

The company has appealed the penalty payment of 250

TSEK to “Förvaltningsrätten” in Lidköping where the mat-

ter is waiting to be processed. The company has not been

involved in any legal proceedings or arbitrations during

the last twelve months. No other known circumstances

that could lead to such legal proceedings or arbitrations

are known to the company’s management.

Significant events during the period:

• Acquired the system development company Bitlogic

Media AB.

• Signed agreement with the gym chain Puls & Träning.

• Signed an exclusive deal with Stockholmsmässan.

• Won procurement worth 8.8 MSEK for Skruf's new

snuff concept for trade in convenience goods.

• Obtained their first external license order for the media

booking software Starcorp Media Hub.

• Change to IFRS and increase the profit / loss for year

2017 by 11.6 MSEK.

• Changed company name to AdCityMedia AB.

Significant events after the end of the period:

No significant events after the end of the period.

AUDIBANNER HAMNGATAN/REGERINGSGATAN, STOCKHOLM

10

EBITDA:

Operating profit / loss before deprecations and write-

offs.

EBITDA margin:

EBITDA in percent of net turnover.

Average number of employees:

Average number of employees calculated from those

who have worked full time during the period.

Financial measures not defined according to IFRS The Company presents some financial measures in the quarterly report that are not defined according to IFRS or the

annual accounting act. The Company believes these measures give valuable supplementary information for investors

and the company’s management since it enables the company’s performance to be assessed. Because not all companies

calculate financial measures in the same way, not all of these measures are comparable to those used by other compa-

nies. These financial measures should therefore not be seen as a replacement for measures that are defined according

to IFRS.

Gross margin:

Gross margin (EBIT) in percent of net turnover.

Equity / asset ratio:

Equity capital in percent of balance sheet total.

Basic earnings per share before/after dilu-

tion:

Basic earnings per share before/after dilution is cal-

culated by dividing the parent company’s share of the

year’s distribution by the weighted average number of

ordinary shares outstanding during the period.

FINANCIAL RATIOS

Thousands of SEK 2018Jan-Mar

2017Jan-Mar

2017Jan-Dec

Net turnover 34,198 27,760 122,115

EBITDA 4,105 4,448 22,644

EBITDA margin (%) 12.0 16.0 18.5

Operating profit / loss (EBIT) 2,647 3,229 17,449

Gross margin (%) 7.7 11.6 14.3

Profit / loss after financial items (EBT) 2,746 3,446 17,637

Basic earnings per share before dilution (SEK) 1.21 1.59 7.94

Basic earnings per share after dilution (SEK) 1.21 1.57 7.90

Dividends per share - - 2.75

Equity / asset ratio (%) 42.2 42.2 42.4

Amount of shares at the end of the period 1,779,232 1,723,569 1,760,434

Average amount of shares, before dilution 1,774,846 1,723,569 1,743,622

Average amount of shares, after dilution 1,774,846 1,745,622 1,751,717

Average number of employees (including contracts with consultants) 64 52 55

Definition of financial measures

Basic earnings per share before dilution:

Basic earnings per share before dilution is calculated

by dividing the parent company’s share of the period’s

profit / loss by the weighted average number of ordinary

shares outstanding.

Basic earnings per share after dilution:

Basic earnings per share after dilution is calculated by

dividing the parent company’s share of the period’s profit

/ loss by the weighted average number of ordinary

shares outstanding after dilution.

11

This quarterly report is established in accordance with IAS 34 Interim Financial Reporting.

This is AdCityMedia AB’s first consolidated financial statement that has been established in accordance with the EU

approved International Financial Reporting Standards (IFRS). Further, the group applies the Annual Accounts Act and

the Recommendations of the Swedish Financial Reporting Board RFR 1, Supplementary Accounting Rules for Groups.

The group previously applied the Swedish Accounting Standards Board's accounting principles BFNAR 2012:1 Annual

Report and Consolidated Accounts (“K3”).

FINANCIAL OVERVIEW

NOCCOBANNER ODENPLAN, STOCKHOLM

12

PROFIT / LOSS ACCOUNT IN SUMMARY,THE GROUP


2017Jan-Mar

2017Jan-Dec

Net turnover 34,198 27,760 122,115

Other operating income 89 - -

34,287 27,760 122,115

Activated work for own account 1,373 57 797

Commodities -12,068 -8,743 -38,711

Other external costs -9,281 -6,525 -28,184

Staff costs -10,206 -8,101 -33,372

EBITDA 4,105 4,448 22,644

Deprecations -1,457 -1,219 -5,195


Financial items

Financial income 249 293 584

Financial expenses -150 -76 -396

Profit / loss before tax 2,746 3,446 17,637

Tax on the profit / loss for the year -599 -703 -3,790


Other comprehensive income

Items that might be reclassified as profit / loss

Conversion effects -3 -174 -

The period’s comprehensive income 2,145 2,569 13,846

Attributable to the parent company’s shareholders 2,148 2,569 13,846

Holdings without determining influence - - -

Basic earnings per share (SEK)

Basic earnings per share before dilution 1.21 1.59 7.94

Basic earnings per share after dilution 1.21 1.57 7.90

FINANCIAL OVERVIEW

13

BALANCE SHEET IN SUMMARY, THE GROUP

Thousands of SEK 31 Mar 2018 31 Mar 2017 31 Dec 2017

ASSETS

Tangible assets

Goodwill 54,708 47,273 51,658

Other intangible assets 3,930 1,656 1,940

Tangible fixed assets 18,226 14,175 17,519

Other long-term holdings 5,356 3,784 4,652

Total tangible assets 82,221 66,888 75,769

Current assets

Inventory 1,346 2,123 1,268

Accounts receivables 23,078 11,465 13,104

Other receivables 807 3,407 6,533

Prepaid costs and accrued incomes 10,278 6,644 10,789

Liquid assets 13,662 9,136 13,915

Total current assets 49,171 32,774 45,608

TOTAL ASSETS 131,392 99,662 121,376

FINANCIAL OVERVIEW

14

BALANCE SHEET IN SUMMARY,THE GROUP


EQUITY CAPITAL AND DEBTS

Equity capital

Share capital 712 689 704

Other capital contributions 32,102 27,544 30,110

Reserves -177 - -174

Balanced report including the profit / loss for the period 22,769 13,826 20,621

Total equity capital 55,406 42,061 51,262

Long-term debts

Long-term interest-bearing debts 11,205 10,252 10,565

Deferred tax assets - 552 552

Other provisions 18,510 15,585 18,510

Total long-term debts 29,715 26,388 29,626

Short-term debts

Short-term interest-bearing debts 4,215 1,774 3,779

Accounts payable 9,977 3,806 9,136

Tax assets 2,810 971 3,733

Other debts 11,212 9,069 7,901

Accrued cost and prepaid income 18,057 15,592 15,938

Total short-term debts 46,271 31,212 40,487

TOTAL EQUITY CAPITAL AND DEBTS 131,392 99,662 121,376

FINANCIAL OVERVIEW

15FINANCIAL OVERVIEW

THE GROUP’S REPORT OFCHANGES IN EQUITY CAPITAL

Sharecapital

Othercapital contri-

butions

Conversion reserves

Balanced reportincluding the profit

/ loss

Totalequity capital

Opening balance2017-01-01

689 27,544 0 11,084 39,317

Profit / loss for the period - - - 2,743 2,743

Closing balance2017-03-31

689 27,544 - 13,827 42,061


689 27,544 - 13,827 42,061


Distribution - - - -4,309 -4,309

New issue of shares 15 2,566 - - 2,581

Conversion effects - - -174 - -174


704 30,110 -174 20,621 51,262


704 30,110 -174 20,621 51,262


Non-cash issue 8 1,992 - - 2,000

Conversion effects - - -3 - -3


712 32,102 -177 22,769 55,406

16

CASH FLOW ANALYSIS,THE GROUP

FINANCIAL OVERVIEW

Thousands of SEK Note 2018Jan-Mar

2017Jan-Mar

2017Jan-Dec


Adjustments for items not included in the cash flow

4 1,190 1,241 5,348

Paid tax 405 -3,475 -8,457

The cash flow from the operation of the company before changes to operating capital

4,342 1,212 14,527

Changes in inventory -79 479 562

Changes in short-term receivables -9,692 -1,116 -8,039

Changes in short-term debts 7,277 249 6,818

Cash flow from changes in operating capital -2,494 -388 -659

Cash flow from the ongoing operation 1,847 824 13,867

Acquisition of subsidiary company 194 - -4,000

Acquisition of intangible fixed assets -1,373 -150 -847

Acquisition of tangible fixed assets -25 -58 -3,099

Acquisition of tangible financial assets -300 -759 -1,200

Cash flow from the investment operation -1,503 -967 -9,146

Borrowings - - 4,000

Amortisation of debts -546 - -2,560

Payment of distribution - - -4,309

New issue of shares - - 2,581

Changes in long-term debts - -202 -

Cash flow from the financing operation -546 -202 -288

Cash flow during the period -203 -346 4,434

Liquid assets at the start of the period 13,915 9,482 9,482

Exchanges differences in liquid assets -51 - -

Liquid assets at the end of the period 13,662 9,136 13,915

17

PROFIT / LOSS ACCOUNT IN SUMMARY,THE PARENT COMPANY


2017Jan-Mar

2017Jan-Dec

Net turnover 24,699 18,537 90,117

Activated work for own account 1,029 58 797

Other operating income 75 - -

25,803 18,595 90,914

Operating expenses

Commodities -20,521 -9,978 -65,028

Other external costs -6,626 -2,735 -15,668

Staff costs -3,284 -2,915 -12,246

Deprecations -293 -110 -772

Operating profit / loss -4,920 2,856 -2,799

Financial items

Interest incomes and similar incomes - 2 139

Interest costs and similar costs -52 -17 -128

Profit/loss after financial items -4,972 2,842 -2,788

Appropriations

Received group contributions - - 3,200

Profit / loss before tax -4,972 2,842 412

Tax on the profit / loss for the year - -628 -200

Profit / loss for the period -4,972 2,213 212

FINANCIAL OVERVIEW

18

BALANCE SHEET IN SUMMARY,THE PARENT COMPANY

FINANCIAL OVERVIEW


ASSETS

Tangible assets

Intangible fixed assets

Capital expenditures 2,827 1,634 1,926

Tangible fixed assets

Inventory, tools and installations 1,026 166 1,152

Tangible financial assets

Shares in group companies 75,920 69,000 71,920

Other long-term holdings 4,050 2,850 3,750


Current assets

Inventory 990 459 909

Short-term receivables

Accounts receivables 16,754 5,879 8,347

Receivables in group companies 3,381 2,205 3,759

Other receivables 475 2,399 4,018

Prepaid costs and accrued incomes 8,544 4,842 8,308

Liquid assets 2,721 3,533 2,371

Total current assets 32,864 19,318 27,713

TOTAL ASSETS 116,688 92,968 106,461

19

BALANCE SHEET IN SUMMARY,THE PARENT COMPANY

FINANCIAL OVERVIEW



Equity capital

Share capital 712 689 704

Fund for development expenditures 2,105 784 1,076

Share premium reserve 50,126 45,567 48,133

Retained earnings, including profit / loss for the year -9,664 2,940 -3,663


Untaxed reserves

Periodisation reserve 1,232 1,232 1,232

Total untaxed reserves 1,232 1,232 1,232

Provisions

Other provisions 18,510 15,590 18,510

Total provisions 18,510 15,590 18,510

Long-term debts

Debts to financial institutions 2,250 3,563 2,500

Total long-term debts 2,250 3,563 2,500

Short-term debts

Debts to financial institutions 1,750 750 1,750

Accounts payable 6,017 1,613 3,761

Debts to group companies 29,489 10,280 23,449

Tax assets - 628 -

Other debts 6,744 5,449 4,139

Accrued cost and prepaid income 7,415 3,881 4,869

Total short-term debts 51,416 22,602 37,968


20FINANCIAL OVERVIEW

THE PARENT COMPANY’S REPORT OFCHANGES IN EQUITY CAPITAL

Thousands of SEK Share capital

Fund for developmentexpenditures

Share premium

reserve

Profit/loss carried

forward

Profit / loss

for the

Total equity

capital


689 726 45,567 -5,113 5,897 47,767

Disposition of the previous period’s profit / loss

- - - 5,897 -5,897 -

Profit / loss for the period - - - - 2,213 2,213

Activation of development expenditures- 58 - -58 - -


689 784 45,567 726 2,213 49,981


689 784 45,567 726 2,213 49,981

Profit / loss for the period - - - - -2,001 -2,001

Activation of development expenditures - 292 - -292 - -

Distribution - - - -4,309 - -4,309

New issue of shares 15 - 2,566 - - 2,581

Closing balance31/12/2017

704 1,076 48,133 -3,875 212 46,251


704 1,076 48,133 -3,875 212 46,251

Disposition of the previous period’s profit / loss

- - - 212 -212 -

Profit / loss for the period - - - - -4,972 -4,972

Activation of development expenditures - 1,029 - -1,029 - -

Non-cash issue 8 - 1,993 - 2,000

Closing balance31/03/2018

712 2,105 50,126 -4,692 -4,972 43,279

21

Note 1 Accounting principles

This quarterly report is established in accordance with

IAS 34 Interim Financial Reporting.

This is AdCityMedia AB’s first consolidated financial

statement that has been established in accordance

with the EU approved International Financial Reporting

Standards (IFRS). Further, the group applies the Annual

Accounts Act and the Swedish Financial Reporting

Board’s recommendation RFR 1, Supplementary Account-

ing Rules for Groups. The group previously applied the

Swedish Accounting Standards Board's accounting prin-

ciples BFNAR 2012:1 Annual Report and Consolidated

Accounts (“K3”).

The transition date to IFRS has been determined as the

1st of January 2017, which means that the correspond-

ing figures for the fiscal year 2017 are recalculated

according to IFRS. A description and quantification of the

transition effect can be found in note 9.

Information according to IAS 34 Interim Financial Report-

ing can be found in notes as well as in other places in the

quarterly report.

New and changed standards and interpreta-

tions that has not yet come into effect

IFRS 16 Leases replaces the current IAS 17 Leases and

its associated interpretations. The standard is in effect

from the 1st of January 2019. IFRS 16 applies a control

model during the identification of a leasing agreement

where a differentiation of leasing agreements and ser-

vice agreements is made based on if the client controls

an identified asset. The new standard removes the classi-

fication of leasing agreements as operational or financial

as required in IAS 17 and instead introduces a separate

model for accounting. According to the new model, all

leasing agreements result in the lessee being given the

right to dispose of an asset at the start of the leasing

agreement and, if payments are made over time, also

acquire financing. The lessee shall present a) assets and

debts for all leasing agreements with contract time longer

than

NOTES TO THE FINANCIAL REPORT

12 months, unless if the underlying asset is of negligible

value; and b) deprecations of leased assets separately

from interest costs and leasing liabilities in the profit /

loss account. The new standard does not contain any

significant changes in the accounting obligations for les-

sors. The company’s management has not yet executed a

detailed analysis of the effects of the application of IFRS

16, and therefore the effects cannot be quantified.

The company’s management assess that other new and

changed standards and interpretations that have not yet

come into effect will not have a significant effect on the

group’s financial reports when they are applied for the

first time.

Significant accounting principles

The valuation of items in the consolidated financial state-

ment has been made to acquisition value, except for a

few financial instruments valued at fair value. The signifi-

cant accounting principles that have been applied can be

found described below.

Consolidated financial statement

The consolidated financial statement covers the parent

company AdCityMedia AB and those companies where

the parent company has determining influence. A deter-

mining influence exist when the group is exposed to, or

has right to variable-yield from their involvement in a

company and can use their influence in the company to

affect their own yield. Determining influence is normally

when the parent company directly or indirectly holding

shares that represent more than 50 % of the votes.

A subsidiary companies are included in the consolidated

financial statement from the time of the acquisition to the

time that the parent company no longer has determin-

ing influence over the subsidiary company. The accounts

principles for the subsidiary company has been adjusted

when necessary to conform with the group’s account-

ing principles. All intra-group transactions, dealings as

well as unrealised gains and losses assignable to the

intra-group transactions have been eliminated by the

establishment of the consolidated financial statement.

22

Changes in the parent company’s share in a subsidiary

company that does not lead to the loss of determining

influence is presented as an equity transaction (that is to

say, transactions with the group’s owner). Potential dif-

ferences between the amount with which holding without

determining influence is adjusted and the fair value on

the paid or received remuneration is presented directly in

equity capital and is distributed to the parent company’s

owners.

When the parent company loses determining influence

over a subsidiary, the profit or loss at the disposal is cal-

culated between

i) the amount of the fair value for the received remunera-

tion and the fair value of potential retained holdings and

ii) the previously carrying amount for the subsidiary

company’s assets (including goodwill), and debts and

potential holdings without determining influence.

The fair value on residual holdings in the previous subsid-

iary company at the time the determining influence was

lost is considered as the true value at the first account-

ing opportunity for a financial asset according to IFRS 9

Financial Instruments: The presentation and assessment

or, where applicable, the acquisition value at the first

accounting opportunity for an investment in an associate

or jointly controlled company.

Business combination

Business combinations are presented according to the

acquisition method. The purchase price for the business

combination is assessed to fair value at the acquisi-

tion date, which is estimated as the amount of the fair

value at the acquisition date for the actual assets, debts

incurred or taken over as well as issued equity interests in

exchange for control of the acquired operation. Expendi-

tures related to acquisitions are presented in the profit /

loss account for when they incur.

Fair value is also included in the purchase price at the

acquisition date for the assets or debts that are due to

a contingent consideration arrangement. Changes in the

fair value of a contingent consideration that are incurred

due to further information being obtained after the acqui-

sition date regarding facts and conditions that pertained

to the acquisition date, qualifies as adjustments during

the assessment period and are adjusted retroactively,

with goodwill adjusted correspondingly.

Contingent considerations that are classified as equity

capital are not re-assessed and subsequent adjustments

are presented as equity capital. All other changes in the

fair value of a contingent consideration are presented in

the profit / loss.

The identifiable acquired assets and debts taken over are

presented to fair value per the acquisition date with the

following exceptions:

• Deferred tax claim or tax assets or debts or assets

assignable to the acquired business’s agreement of

remunerations to employees is presented and valued in

accordance with IAS 12 Income Taxes as well as IAS 19

Employee Benefits.

• Debts or equity capital instruments assignable to the

acquired company’s share-based payment awards or to

the exchange of the acquired company’s share-based

payment awards against the acquirer’s share-based

payment awards, are assessed at the acquisition date in

accordance with IFRS 2 Share-based Payment.

• Assets (or disposal groups) are classified as if they

are held for sale according to IFRS 5 Non-current Assets

Held for Sale and discontinued operations are assessed

in accordance to that standard.

At business combinations where the total amount of the

purchase price, potentially holdings without determining

influence, and fair value at the acquisition date on ear-

lier shareholding exceed the fair value at the acquisition

date on identifiable acquired net assets, the difference is

presented as goodwill in the report of financial position.

If the difference is negative it is presented as a profit on

an acquisition to a low price, directly in the profit / loss

after a review of the difference.

Previous holdings for every business combination without

determining influence in the acquired business is valued

either to the fair value or to the value of the proportionate

share of the holding without determining influence in the

identifiable net assets in the acquired company.

Goodwill

The goodwill that arises during the establishment of the

consolidated financial statement is the difference between

the acquisition cost and the group’s share of the fair value

of an acquired subsidiary company’s identifiable assets

Notes to the financial report

23

At the acquisition date, goodwill is presented to the

acquisition cost and after the first accounting oppor-

tunity is valued to the acquisition cost after deductions

for possible accumulated write-offs. At the test of write-

off requirements, goodwill is distributed to the smallest

cash-generating units that are estimated to benefit from

the acquisition. The group has determined that these units

consist of the group’s Media and Retail segments. Poten-

tial write-offs are immediately presented as a cost and

are not reversed.

Segment reporting

An operating segment is a part of a company that oper-

ates a business from which it can receive income and

incur costs, whose contribution margin is regularly exam-

ined by the company’s chief operating decision maker,

and for which there is discrete financial information. The

company’s reporting of operating segments corresponds

with the internal reporting to the chief operating decision

maker. The chief operating decision maker is the function

that assesses the operating segment’s profit / loss and

decides on the distribution of resources. The CEO consti-

tutes the chief operating decision maker. The reportable

segments’ accounting principles correspond to the prin-

ciples that have been applied by the group as a whole.

Income from deals with cients

The incomes are valued from the agreed upon purchase

price, excluding VAT. AdCityMedia reports the income

when the company transfer control of a product or

service to a client. The segments are divided after the

business areas of Media and Retail tech, supported by

the streams of income below;

Advertising space

AdCityMedia delivers both digital and analogue adver-

tising space to clients. The client is considered to benefit

from the service over the entire contract time. The income

from sales of ad space are therefore presented over time,

linearly over the contract period.

Hardware

AdCityMedia sells hardware to clients in the form of dig-

ital screens. The hardware remains functional without

updates, technical support or software licenses and cli-

ents can take advantage of the software themselves. The

income from sales of hardware are presented at the time

the products are transferred to the client and therefore

when the client gains control over the hardware.

Services

AdCityMedia sells installation services as well as upload-

ing and adapting client specific ad content. The services

are normally sold together with hardware. The services

can easily be carried out by other companies. The con-

trol of the services are normally transferred to the client

when the service is completed. The income from the sale

of services are therefore presented at the time when the

services are completed.

Technical support, maintenance and software licenses.

Technical support can be supplied when necessary dur-

ing the contract period. Delivery of technical support is

largely associated with delivery of software licenses to

the end client. The license gives the client the right to use

the cloud-based software that controls the content on the

digital screens. The degree of utilisation does not vary

significantly differ between months and clients pay the

same amount regardless of how many times the service

is used.

The maintenance agreement (software updates) means

that AdCityMedia assures the client that they will obtain

all important updates that are developed during the con-

tract period. The number of updates can not be indicated

beforehand.

Technical support, maintenance and software licenses

are considered to follow the same pattern and transfer

control to the client. The client is considered to benefit

from the services over the entire contract period. The

income are therefore presented over time, linearly over

the contract period, usually 36 months.

Lease agreement

A financial leasing agreement is an agreement according

to which the economic risks and advantages associated

with the ownership of an asset in all material respects is

transferred from the lessor to the lessee. Other leasing

agreements are classified as operational leasing agree-

ments. AdCityMedia only has leasing agreements where

the group is lessee.

Assets that are held according to the financial leasing

agreement are presented as fixed assets in the group’s

balance sheet to the fair value at the start of the leasing

period or to the current value of the minimum leasing

expenditures if this is lower. Corresponding debt to the

lessor is presented in the balance sheet as a financial

leasing liability. Lease payments are distributed betweenNotes to the financial report

24

interest and amortisation of the debt. Interest is distrib-

uted over the leasing period so that every accounting

period has an amount corresponding to the fixed inter-

est rate during the respective accounting period that

accounts for the debt. Interest rates are accounted for

directly in the profit / loss account. If the interest rate

is directly assignable to the acquisition of an asset that

necessitates significant preparation time for its intended

use or sale, the interest rate shall instead be included in

the asset’s acquisition value in accordance to the group’s

borrowing cost principles (see below). The fixed assets

are written-off during the shorter period of the asset’s

useful life period and leasing period.

Lease payments under an operating lease shall be rec-

ognised as an expense on a straight-line basis over the

lease term unless another systematic basis is more repre-

sentative of the time pattern of the user's benefit.

Foreign currency

Items that are included in the financial reports for the

different entities in the group are reported in the cur-

rency that is used in the primary economic environment

where the respective entity primarily operates its business

(functional currency). In the consolidated financial state-

ment, all amounts are converted to Swedish kronor (SEK),

which is the parent company’s functional currency and

reporting currency.

Transactions in foreign currency are recalculated in their

respective entity to the entity’s functional currency accord-

ing to the currency exchanges in effect on the day of the

transaction. At every balance sheet date the monetary

items are calculated in foreign currency to the balance

sheet date’s exchange rate. Non-monetary items that are

valued to fair value in a foreign currency are recalcu-

lated to the exchange rate of the day the fair value was

determined. Non-monetary items, that are valued to a

historical acquisition date in a foreign currency are not

recalculated.

Exchange differences are presented in the profit / loss

account for the period in which they emerge, with excep-

tions for transactions that form a hedge that fulfils the

conditions for hedge accounting of cash flows or of net

investments, where profits or losses are presented in other

comprehensive income.

During the establishment of the consolidated financial

statement, foreign currencies are converted to assets and

debts in Swedish kronor according to the balance sheet

date’s exchange. Items of income and costs are recal-

culated to the period’s average exchange rate. If the

exchange rate varies significantly during the period, then

the exchange rate on the day of the transaction is used

instead. Potential conversion differences that emerge are

presented in other comprehensive income and is trans-

ferred to the group’s conversion reserve. On disposal of a

foreign subsidiary company such conversion differences

are presented in the profit / loss account as a part of the

capital gain / capital loss.

Goodwill and adjustments of fair value due to the acqui-

sition of a foreign operation are treated as assets and

debts in this operation and is converted to the balance

sheet date’s exchange.

Remuneration to employees

Remunerations to employees in the form of pay, bonus,

paid holidays, paid sick leave etc. as well as pensions are

presented in step with the earning. Concerning pensions

and other post-employment remunerations are classified

as defined contribution or defined-benefit pension plans.

The group has a few defined-benefit plans that pertain to

endowment insurance but has due to operative reasons

been presented as defined-contribution plans.

For defined contributed plans the group pays fixed

charges to a separate and independent judicial entity

and has no obligation to pay further expenditures. The

group’s profit / loss is responsible for costs in step with

the benefits being earned, which normally coincides with

the time that the premiums are paid.

Taxes

The tax cost consists of the amount of current tax and

deferred tax.

Current tax is calculated on the taxable profit / loss for

the period. Taxable profit / loss differs from the presented

profit / loss in the profit / loss account since it has been

adjusted for the non-taxable incomes and non-deductible

costs as well as for incomes and costs that are taxable or

deductible in other periods. The group’s current tax assets

are calculated according to the tax rates that are in effect

on the balance sheet date.


25

Deferred tax is presented on the temporary differences

between the book value for assets and debts in the finan-

cial reports and the value for tax purposes that is used

in the calculation of taxable profit / loss. Deferred tax

is presented according to the so called “balance sheet

method”. Deferred tax assets are presented for virtu-

ally all taxable temporary differences, and virtually all

deferred tax claims are presented for all taxable tem-

porary differences to the extent that it is probable that

the amounts can be used against future taxable surplus.

Deferred tax assets and tax claims are not presented if

the temporary difference is assignable to goodwill or if

it emerges due to a transaction that constitutes the first

account of an asset or debt (that is not a business combi-

nation) and which, at the time of the transaction, neither

affects presented profit / loss or profit / loss for tax pur-

poses.

Deferred tax assets are presented for taxable tempo-

rary differences assignable to investments in subsidiary

companies, except in cases where the group can control

the time of the return of the temporary differences and it

is probable that such a return will not take place within

the foreseeable future. The deferred tax claims that are

assignable to the taxable temporary differences regard-

ing such investments shall only be presented to the extent

that it is probable that the amounts can be utilised against

future taxable surplus and it is probable that such a utili-

sation will occur within the foreseeable future.

The carrying amount on the deferred tax claims is

reviewed at every balance sheet date and are reduced

to the point where it is no longer probable that enough

taxable surplus will be available to be used, completely

or partially, against the deferred tax claim.

Deferred tax shall be calculated according to the tax rates

that are expected to apply in the period where the asset

is recovered or the debt is settled, based on the tax rates

(and tax laws) that have been decided or announced at

the balance sheet date.

Deferred tax claims and tax assets are set off when they

are attributed to income tax that is debited by the same

government agency and when the group has the inten-

tion to settle the tax with a net amount.

Current or deferred tax is presented as a cost or income

in the profit / loss account, except when the tax is

assignable to transactions that were presented in other

comprehensive income or directly against equity capital.

In such cases even the tax is presented in other compre-

hensive income or directly against equity capital. Current

or deferred tax that emerge at the presentation of busi-

ness combinations, the tax effect shall be presented in the

acquisition calculation.

Tangible fixed assets

Tangible fixed assets are presented to the acquisition

value after deductions for accumulated deprecations and

possible write-offs.

The acquisition price consists of the purchase price,

expenditures that are directly assignable to the asset to

bring it to the location and condition necessary to be used

as well as the estimated expenditures for the dismantling

and removal of the asset and the restoration of its loca-

tion. Additional expenditures are only included in the

asset or presented as a separate asset, when it is proba-

ble that future economic benefits that can be assigned to

the item can be of use to the group and that the acqui-

sition value for the same can be calculated in a reliable

way. All other costs for reparations and maintenance as

well as additional expenditures are presented in the profit

/ loss account in the period when they emerge.

Deprecations on tangible fixed assets are expensed so

that the asset’s acquisition value, potentially reduced with

the calculated residual value at the useful life period’s

end, is written-off linearly over their assessed useful life

period. Deprecations start when the tangible fixed asset

can be used. The useful life period is as follows:

Buildings 25 years

Ground facility 20 years

Improvement expenditures on other’s property 20 years

Inventory, tools and machines 5 years

The assessed useful life period, residual value and dep-

recation methods are reviewed at least at the end of

every reporting period, the effect of potential changes in

assessments are prospectively presented.

The book value for the tangible fixed asset is removed

from the balance sheet at retirement or disposal, or when

no future economic advantages


26

are expected from the use or retirement/disposal of the

asset. The profit or loss that arises through the retirement

or disposal of the asset is the difference between the

potential net revenue during the disposal, and its carry-

ing amount is presented in the profit / loss for the period

when the asset is removed from the balance sheet.

Intangible assets

Internally generated intangible assets - Activated

expenses for product development

Internally generated intangible assets that are derived

from the group’s product development are only presented

if the following conditions are met:

• it is technically possible to complete the intangible

asset for use or sale,

• it is the company’s intention to complete the intangible

asset for use or sale,

• there exists conditions where the intangible asset could

be used or sold,

• the company shows how the intangible asset will gen-

erate plausible future economic advantages,

• there are adequate technical, economical and other

resources for completing the development and to use or

sell the intangible asset, and

• the expenses that are assignable to the intangible asset

during its development can be reliably calculated.

If it is not possible to present any internally generated

intangible assets, the expenses for development are

instead presented as a cost in the period in which they

are incurred. The internally generated intangible asset

is presented after the first accounting opportunity to the

acquisition value after deductions for accumulated dep-

recations and potential accumulated write-offs. Assessed

useful life period amounts to 10 years. The assessed use-

ful life period and deprecation methods are reviewed at

least at the end of every fiscal year, the effect of potential

changes in assessments are presented prospectively.

Acquisition as part of a business combination

Intangible assets that are acquired through a business

combination are identified and presented separately

from goodwill when they fulfil the definition of an intan-

gible asset and their fair value can be calculated in a

reliable way. The acquisition value for such intangible

assets consists of their fair value at the acquisition date.

After the first accounting opportunity, intangible assets

acquired in a business combination are presented to

acquisition value with deductions for accumulated depre-

cations and potential accumulated write-offs in the same

way as separately acquired intangible assets.

Write-offs of tangible fixed assets and intan-

gible assets excluding goodwill

At every balance sheet date the group analyses the

carrying amounts for tangible and intangible assets, to

determine if there is any indication that these assets may

be impaired. If that is the case, then the asset’s recover-

able amount is calculated to be able to determine the

value of the potential write-off. Where it is not possible

to calculate the recoverable amount for an individual

asset, the group calculates the recoverable amount for

the cash-generating unit to which the asset belongs.

Intangible assets with indefinite useful lives and intangi-

ble assets that are not yet ready to be used shall be tested

annually for potential impairment, or when there is an

indication of impairment.

The recoverable amount is the higher value of the fair

value minus selling costs and their value in use. When

calculating the value in use the estimated future cash flow

is discounted to present value with a discount rate before

tax that reflects current market assessments of the time

value of money and the risks associated with the asset.

If the recovery amount for an asset (or cash-generating

unit) is established to a lower price than the carry-

ing amount, then the carrying amount of the asset (or

cash-generating unit) is reduced to recoverable amount.

A write-off shall immediately be recognised as an

expense in the profit / loss account.

When a write-off is then returned, the asset’s (the

cash-generating unit) carrying amount is increased to the

re-assessed recovery amount, but the elevated carrying

amount cannot exceed the carrying amount that would

have been determined if the asset (the cash-generating

unit) had not been written-off in a previous year. A rever-

sal of an impairment loss is presented directly in the profit

/ loss account.


27

Liquid assets

The liquid assets in the report of cash flow includes cash,

bank balances and other short-term placements. Other

short-term placements are classified as liquid assets when

their due date is within three months of the acquisition

date and can easily be converted to cash of a known

amount and are exposed to an insignificant risk of

changes in value.

Financial instruments

Financial instruments are presented in the report of finan-

cial position includes liquid assets on the asset page,

accounts receivables, and other short-term receivables

and other long-term holdings. Accounts payable, other

short-term debts and bank loans (including debts for

financial leasing agreements) can be found on the debt

page.

Reporting of and disposal from the report over financial

position.

A financial asset or financial debt is presented in the

report over financial position when the company becomes

party to the contractual provisions of the instrument. A

claim is presented when the company has performed and

a contractual obligation is to be paid by a counterpart,

even if an invoice has not yet been sent. Accounts receiv-

ables are presented in the report over financial position

when a invoice has been sent. A debt is presented when

the counterpart has performed and a contractual obli-

gation is to be paid, even if the invoice has not yet been

sent. Accounts payable are presented when the invoice

has been received. A financial asset is removed from the

report of financial position when the rights of the contract

are achieved, expires or the company lose control over

them. The same is true for a part of a financial asset.

A financial debt is removed from the report of financial

position when the contractual obligation is completed or

is otherwise achieved. The same is true for a part of a

financial debt. No financial assets or debts are offset in

the report of financial position, since the conditions of

offsetting are not met. Acquisition and disposal of finan-

cial assets are presented on the trade day. The trade day

is the day when the company undertakes to acquire or

dispose of the asset.

Classification and assessment

Financial assets are classified according to the business

model that has handled the asset and its cash flow char

acter. If the financial asset is held within the framework of

a business model whose aim is to collect contractual cash

flows and the agreed conditions for the financial asset

generates cash flows at determined times that purely are

payments of principle amounts and interest on the out-

standing principle amount, then the asset is presented to

the amortised cost. This business model is categorised as

“hold to collect".

If the financial asset is held in a business model whose

aim can be reached through collecting contractual cash

flows and sell financial assets and the agreed conditions

for the financial asset generates cash flows at determined

times that purely are payments of principle amounts and

interest on the outstanding principle amount, then the

asset is presented to the fair value via other comprehen-

sive income. This business model is categorised as “hold

to collect and sell".

All other business models with the purpose of specula-

tion, holdings for trade or where the cash flow character

excludes other business models entails fair value account-

ing through the profit / loss account. This business model

is categorised as “other”.

AdCityMedia employs two different business models. For

liquid assets, accounts receivables and other short-term

receivables, the company’s business model is “hold to

collect” which means that the asset is presented to the

amortised cost. Other long-term holdings consist of hold-

ings in shares and interest funds where AdCityMedia’s

business model is “other”, which means that the holdings

are presented to fair value in the profit / loss account.

Amortised cost and the effective interest method

Amortised cost for a financial asset is the amount with

which the financial asset is valued at the first accounting

opportunity minus the principle amount, plus the accu-

mulated deprecations with the effective interest method of

potential differences between the principle amount and

the outstanding principle amount, adjusted for potential

write-offs. Presented gross value of a financial asset is

amortised cost for the financial asset before adjustments

for potential loss provisions. Financial debts are pre-

sented to amortised cost by using the effective interest

method or to fair value through the profit / loss account.

Financial debts to amortised cost.


28

Borrowings and other financial debts, e.g. accounts pay-

able are included in this category. The debts are valued

to the amortised cost.

Write-offs

The group presents a loss provision for the expected

credit losses on a financial asset that is valued to amor-

tised cost or fair value via other comprehensive income,

for a leasing receivable or contractual asset. At each bal-

ance sheet date the group shall present in the profit /

loss the changes in expected credit losses since the first

accounting opportunity.

For accounts receivables, contractual assets and leasing

receivables there are simplifications that mean that the

group directly shall present expected credit losses for

assets with remaining maturity. The expected credit losses

for these financial assets are calculated with help from a

provision matrix that is based on previous events, current

conditions and forecasts for future economic conditions

and, if applicable, the time value of money.

For all other financial assets the group shall value the loss

provision to an amount equal to 12 months of expected

credit losses. For financial instruments for which there has

been a significant increase in credit risk since the first

accounting opportunity, a reserve is presented based on

credit losses for the asset’s whole maturity.

Equity capital instruments are not included in the impair-

ment rules.

Inventory

Inventory is valued to the lowest acquisition value and net

realisable value on the balance sheet date. The acquisi-

tion value is calculated through the application of the first

in, first out method (FIFO). The net realisable value is the

estimated selling price after deductions for the estimated

costs of completion and estimated necessary costs for

achieving a sale.

Provisions

Provisions are presented when the group has an exist-

ing obligation (legal or informal) as a consequence of

an occurred event, where it is likely that the outflow of

resources will be required to settle the obligation and a

reliable estimation of the amount can be made.

The amount allocated constitutes the best estimation of

the amount that is required to settle the existing obliga-

tion on the balance sheet date, with regard to the risks

and uncertainties associated with the obligation. When a

provision is calculated through estimated payments that

are expected to be needed to settle the obligation, the

carrying amount should correspond to the present value

of these payments.

Where in part or the whole amount required to settle a

provision is estimated to be supplied by a third party, the

reimbursement will be presented separately as an asset in

the report of financial position when it is virtually certain

that it will be received if the company settle the obligation

and the amount can be reliably calculated.

Cash Flow Analysis

The cash flow analysis is established according to the

indirect method. The presented cash flow only cover

transactions that accompany payments. This means that

deviations may occur compared to changes in individual

items in the balance sheet.

The Parent Company’s Accounting Principles

The parent company has established their annual report-

ing according to the Annual Accounts Act (1995:1554)

and the Swedish Financial Reporting Board's recom-

mendation RFR 2 Accounting for Legal Entities. Even the

Swedish Financial Reporting Board's announced state-

ments concerning publicly trading companies are applied.

IRFR 2 means that the parent company’s annual reporting

for the legal entity shall apply all EU adopted IFRS state-

ments as far as possible within the annual accounts act,

pension obligations vesting act (“Tryggandelagen”) and

with regard to the relation between accounting and tax-

ation. Recommendations indicate what exceptions and

additions to IFRS that shall be made.

This is the parent company’s first financial report estab-

lished in accordance with RFR 2 Accounting for Legal

Entities and the Annual Accounts Act. The parent com-

pany has previously applied the Swedish Accounting

Standards Board's accounting principles BFNAR 2012:1

Annual Report and Consolidated Accounts (“K3”) and

the Annual Accounts Act.


29

The transition took effect on the 1st of January 2017

which means that the corresponding figures for the fis-

cal year 2017 are recalculated according to IFRS. The

transition to RFR 2 has not had any significant effects on

the parent company’s financial position, profit / loss or

cash flow.

The differences between the parent company’s and the

group’s accounting principles are detailed below. The

stated accounts principles for the parent company have

been applied consistently throughout all periods that are

presented in the parent company’s financial reports.

Classification and formats

The parent company’s profit / loss account and balance

sheet are displayed according to Annual Accounts Act's

schedules. The difference in IAS 1 Presentation of Finan-

cial Statements that was applied during the founding of

the group’s financial reports is first and foremost reports

of financial income and cost, fixed assets, equity capital

and the occurrence of provisions under its own heading.

Subsidiary company

Shares in the subsidiary company are presented to

the acquisition value. Distribution from the subsidiary

company is presented as income when the right to get

distribution is assessed as secure and can be calculated

in a reliable way.

Financial instruments

The parent company applies the exception in RFR 2 why

the rules regarding financial instruments in IFRS 9 is not

applied for the parent company as a legal entity. Tangi-

ble financial assets in the parent company are valued to

the acquisition value with deductions for potential write-

off and current financial assets according to the principle

of the lower of cost and market method.

Group contributions and shareholder contributions

Group contributions are presented as appropriations.

Shareholder contributions are presented as an increase

for the item shares in group companies for the donor. The

shareholder contributions are presented for the recipient

directly against non-restricted equity.

2. Important estimations and assessments

Important sources of estimation uncertainty

The most important assumptions of the future are

described below, and other important sources of estima-

tion uncertainty on the balance sheet date, that mean a

significant risk for meaningful adjustments in carrying

amounts for assets and debts within the next fiscal year.

The estimations and assessments are regularly re-ex-

amined. Possible changes are presented in the period

that the change is made, if it only affects that period, or

the period the change is made and future periods if the

change affects both current and future periods.

Write-offs of goodwill are reviewed annually as well

as whenever events or changed circumstances indicate

that the amount of goodwill arising from an acquisition

has decreased. To determine if the amount of goodwill

has decreased, the cash-generating unit to which the

goodwill is attributable must be assessed, which is done

through a discounting of the unit’s cash flow. The com-

pany is relying on a number of factors when applying

this method, including previous achievements, business

plans, economic forecasts and market data. Changes in

conditions for these assumptions and estimations could

have a significant effect on the amount of goodwill.

Regarding potential contingent consideration, the man-

agement continually examine how provisions should be

made as well as how the company’s ability for liquidity

has coverage during an additional purchase. Results are

regularly followed up to be able to substantially assess

their positions in the case of overdelivery for set goals.

Important assessments during the application

of the group’s accounting principles

The most important assessments are described in this sec-

tion, except for those regarding estimations (see above)

that the company’s management have made during the

application of the group’s accounting principles and that

have had the most meaningful effect on the presented

amounts in the financial reports.

According to the company’s management, the significant

assessments regarding the application of the accounting

principles and sources of estimation uncertainty is first

and foremost associated with amortisation of the roll-out

of large projects. To minimise risks, checks are made to

make sure that recorded costs conform to the period’s

stage of completion, which also gives an accurate report

of income.


30

3. Debts and equity capital

The amount of shares amounted to 1,779,232

(1,723,569) shares at the end of the period.

4. Adjustments for items not included in the

cash flow

The items below are included in the group’s profit / loss

before tax but not in the cash flow:

2018

2017

3 Months 3

Months

Jan-March Jan-Mar

Deprecations 1,458 1,219

Unrealised

exchange differences - -11

Provisions for pensions 10 10

Other -277 23

5. Transactions with related parties

JMG North AB has during the first quarter 2018 invoiced

the Company 317 TSEK in consultation fees in regards to

work done for Jonas Glad, the operational manager.

The chairman of the board Patrik Mellin has invoiced 25

TSEK in consultation fees with AB Mansholmen.

There has not been any other transactions, other than

what is presented above, with related parties during

the fourth quarter 2017, except the customary pay and

remunerations to the board and the senior executive

management.

6. Contingent liabilities

No contingent liabilities are at hand at the end of the

period.

7. Fair value of financial instruments

The information of how the fair value is determined for

the financial instruments that are assessed to fair value in

the report of financial position, can be found below. The

division of how fair value is determined is made by the

following three levels.

Level 1: according to prices quoted on an active market

for the same instrument

Level 2: from directly or indirectly observable market

data not included in level 1

Level 3: from input data that is not observable on the

market

All assets that are recurrently valued to fair value are

included in other long-term holdings that consist of

quoted shares and funds whose fair value is determined

according to level 1. Other long-term holdings are val-

ued to fair value from the profit / loss account. Debts to

fair value are contingent considerations whose fair value

is determined according to level 3. There has been no

transfers between level 1 and level 2 for recurring valua-

tions to fair value during the year.

The following summarises the methods and assump-

tions that have been used to determine fair value for the

group’s financial instruments

• Accounts receivables and accounts payable matures

normally with a remaining economic life of less than

three months, hence why the carrying amount is a good

approximation of the fair value.

• Other long-term holdings that are associated with

acquisitions of funds or equity portfolios. These are val-

ued to the fair value, according to level 1 and according

to information from a bank or similar.

• Interest-bearing debts are presented to amortised cost.

The maturities are low hence why the carrying amount is

a good approximation of the fair value.

• Contingent considerations from company acquisitions

are valued to fair value, according to level 3.

8. Acquisition of subsidiary company

Bitlogic Media AB (556804-3912)

On the 22 January 2018 the group acquired 100 % of

the share capital of Bitlogic Media AB (556804-3912)

for 4 MSEK, 2 MSEK of which through new shares. The

acquisition of Bitlogic Media AB is a step in the group’s

strategic direction of securing the in-house developed

software Starcorp.

The assets and debts that are presented due to the acqui-

sition are as follows:

Acquisition analysis (abbreviated) TSEK

Transferred remuneration 4,000

Equity capital -188

Goodwill 3,012

Software 800


31

9. Transition to IFRS

AdCityMedia AB has previously applied the Annual Accounts Act and BFNAR 2012:1 Annual Report and Consolidated

Accounts (“K3”). Starting on 1 January 2018, AdCityMedia AB establish their annual reporting and consolidated

financial statement in accordance with the EU approved International Financial Reporting Standards (IFRS) and interpre-

tations from IFRS Interpretations Committee (IFRIC).

The transition date to K3 has been decided as the 1st of January 2017. The transition to IFRS is presented in accordance

with IFRS 1, the first time the International Financial Reporting Standards were applied. The main rule in IFRS 1 is that a

company shall apply all recommendations retroactively when establishing the opening balance. Though there are some

mandatory and optional exceptions from the retrospective application. The group has decided to apply the following

exceptions:

• IFRS 3 has not been applied to acquisition analyses made before the transition date.

• Accumulated conversion differences that existed during the transition date have been zeroed.

The management’s estimated effects on the group’s report of comprehensive income and financial position at the group’s

IFRS transition date is presented and quantified in the tables below. The transition is assessed to not have any significant

effect on the group’s report of cash flow other than the deprecations that are returned.

The ones that have influenced the reporting the most are:

• Return of previous year's deprecations of goodwill, see note A below

• Fair value valuation of financial instruments, see note B below

• Pension plans that are insured with endowment insurance are treated as defined-contribution pension plans,

see note C below


APOLLO - BLACK FRIDAY OFFERLED KORSVÄGEN SVENSKA MÄSSAN, GÖTEBORG

32

Thousands of SEK Note Previous accounting principles

2016-12-31

Effect of transition to IFRS

IFRS2017-01-01

ASSETS

Tangible assets

Goodwill 47,273 47,273

Other intangible assets 1,601 1,601

Tangible fixed assets 15,180 15,180

Other long-term holdings B, C 2,478 -225 2,253

Other long-term receivables 775 775

Total tangible assets 67,307 -225 67,082

Current assets

Inventory 2,601 2,601

Accounts receivables 11,793 11,793

Other receivables 3,303 3,303

Prepaid costs and accrued incomes 5,441 5,441

Liquid assets 9,482 9,482

Total current assets 32,620 32,620

TOTAL ASSETS 99,926 -225 99,702


33

Thousands of SEK Note Previous account-ing principles2016-12-31

Effect of transition to

IFRS

IFRS2017-01-

01


Equity capital

Share capital 689 689

Other capital contributions 27,544 27,544

Reserves - -

Balanced report including the profit / loss for the period B 11,084 98 11,182

Total equity capital 39,317 98 39,415

Long-term debts

Long-term interest-bearing debts 7,230 7,230

Other debts 3,225 3,225

Commitments with regard to remuneration to employees C 436 -436 -

Deferred tax assets B 533 28 561

Other provisions 15,590 15,590

Total long-term debts 27,014 -408 26,606

Short-term debts

Short-term interest-bearing debts 2,275 2,275

Accounts payable 9,414 9,414

Tax assets 3,761 3,761


Accrued cost and prepaid income C 10,418 85 10,503

Total short-term debts 33,596 85 33,681

TOTAL EQUITY CAPITAL AND DEBTS 99,926 -225 99,702


34


2017-03-31

Effect of transition to IFRS IFRS

ASSETS

Tangible assets

Goodwill A 44,729 2,544 47,273





Current assets







TOTAL ASSETS 97,346 2,316 99,662


35

Thousands of SEK Note Previous account-ing principles2017-03-31


IFRSIFRS


Equity capital



Reserves - -

Balanced report including the profit / loss for the period A, B 11,060 2,766 13,827


Long-term debts







Short-term debts



Tax assets 971 971






36

Thousands of SEK Note Previous accountingprinciples

2017-01-012017-03-31


IFRS

IFRS2017-01-012017-03-31

Net turnover 27,760 27,760

27,760 27,760

Activated work for own account D 57 57

Commodities -8,743 -8,743

Other external costs -6,525 -6,527

Staff costs -8,101 -8,101

Deprecations A -3,763 2,544 -1,219

Operating profit / loss 685 2,544 3,229

Financial items

Financial income B 8 285 293

Financial expenses -76 -76

Profit/loss before tax 617 2,829 3,446

Tax B -640 -63 -703

Profit / loss for the period -24 2,766 2,743

Attributable to the parent company’s shareholders -24 2,766 2,743

Holdings without determining influence - -


37


2017-12-31

Effect of transition to IFRS

IFRS2017-12-31

ASSETS

Tangible assets

Goodwill A 40,306 11,352 51,658




Other long-term receivables 539 539


Current assets







TOTAL ASSETS 110,174 11,202 121,376


38

Thousands of SEK Note Previous account-ing principles31/12/2017


IFRS

IFRS2017-12-

31


Equity capital



Reserves - -

Balanced report including the profit / loss for the period A, B 8,812 11,635 20,447


Long-term debts






Short-term debts



Tax assets 3,733 3,733






39

Thousands of SEK Note Previous accountingprinciples

2017-12-312017-12-31


IFRS

IFRS2017-01-012017-12-31

Net turnover 122,115 122,115

122,115 122,115

Activated work for own account D 797 797

Commodities -38,711 -38,711

Other external costs -28,184 -28,184

Staff costs -33,372 -33,372

Deprecations A -16,547 11,352 -5,195


Financial items

Financial income B 221 363 584

Financial expenses -396 -396


Tax B -3,710 -80 -3,790


Attributable to the parent company’s shareholders 2,211 11,635 13,846

Holdings without determining influence - -


40

Note A

The item goodwill is according to IFRS an intangible asset with an indefinite useful life, meaning that the item has not

reduced with yearly deprecations. This is different from previous accounting principles (K3) where an economic life of

5 years was applied. The transition to IAS 38 therefore means that deprecations of goodwill during 2017 are reversed

and returned to the balanced report in equity capital. Goodwill is not a deductible cost or taxable income, hence why

the adjustments do not have any tax effects with regard to items that are wholly assignable to acquired companies (and

not acquisition of assets and liabilities). The transition to IFRS includes a new obligation for ACM to test goodwill at least

annually for potential impairment. A potential write-off is presented in the operating profit / loss. The item has been

tested for impairment from the ratio that was in effect at the time of the transition to IFRS, and no impairments have

been identified on 31 December 2017. Even sensitivity analyses show that possible reasonable changes in significant

assumptions will not lead to impairment.

Note B

The group’s holdings in equity capital instruments are presented according to previous accounting principles to the

acquisition value with deductions for write-offs. Holdings in equity capital instruments are presented according to IFRS

to fair value via the profit / loss. The transition to IFRS means that the item “Other long-term holdings” is valued to fair

value with changes in value in the profit / loss with associated tax effect.

Note C

The group has a few defined-benefit plans that pertain to endowment insurance but are presented due to operative

reasons as defined-contribution plans in IFRS. The transition to IFRS therefore means that provisions for pension com-

mitments associated with endowment insurance are offset against insurance assets. The transition effect does not impact

presented profit / loss or equity capital. The transition does not affect accounted special payroll tax or deferred tax

other than that the special payroll tax is reclassified from “Commitments with regard to remuneration to employees” to

“Accrued costs and prepaid incomes”.

Note D

Aside from quantitative effects, the transition to IFRS also brings with it a changed format for the profit / loss account.

Activated work for own account was presented in a previous format as part of the operating income, which is different

from the format in accordance with IFRS where the item is presented separately from the operating income. The change

has no quantitative effect on the operating profit / loss.


AMF PENSIONSCANDINAVIUM (N), GÖTEBORG

41

CHRONOLOGY

THE BOARD

The report will be made available on investor.adcitymedia.com but can also be ordered from AdCityMedia AB

through the address below.

Patrik Mellin, Chairman

Anders Axelsson

Alexis Logothetis

Oskar Lindström

Jan Litborn

Michael Silfverberg

Niklas Von Sterneck

Björn Rosengren

Erik Penser Bank

Apelbergsgatan 27

Box 7405

103 91 Stockholm

INFORMATION SUBMITTED BY

Anders Axelsson, CEO and Board Member

Telephone +46 709 66 00 86

AdCityMedia AB (publ)

CIN 556584-8354

Magasin 3, Frihamnsgatan 22

115 56 Stockholm

Phone: +46 8 53 52 80 50

www.adcitymedia.com

Quarterly report April-June 27 August

Annual general meeting 30 May

This quarterly report has not been examined by the company’s accountants.

This information is such information that AdCityMedia AB is obligated to disclose according to EU regulation on market

abuse. The information was given by the above mentioned contact person for publication on the 28th of May 2018 at

08:30 CET.

CERTIFIED ADVISER

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