Christopher Adams

The Business Herald’s markets and banking reporter.

Lateral shares debut on NZAX

Lateral Corporation's chairman Dene Biddlecombe (l) and chief executive Roger Grice. Photo / Richard Robinson
Lateral Corporation's chairman Dene Biddlecombe (l) and chief executive Roger Grice. Photo / Richard Robinson

Shares in mobile technology developer Lateral Corporation opened at 20c today, valuing the business at $4.1 million, following the company's compliance listing on the NZAX alternative market this morning.

There have been just three trades, worth $4350, since the 11am float, which was the 10th listing to take place on the local sharemarket this year.

Shares jumped 75 per cent to 35c shortly after the listing, before slipping back to the 20c issue price.

The Auckland-based company has provided paid text voting systems for local television shows including New Zealand's Got Talent and has developed mobile applications including OZChat, an anonymous social network, and Qikflirt, a dating service, which operate on smartphones.

Lateral's listing, which did not raise cash from the public, will be followed by a $1.5 million capital raising from eligible investors.

The company will also carry out a share purchase plan with six months of its listing, according to the disclosure document.

Lateral, which has roughly 460 shareholders and 20.7 million shares on issue, said the new capital would be used to fund growth across markets including Australia, Britain and the United States.

The firm earns revenue through subscriptions and customers pay for its services through direct carrier billing - charging to phone bills - rather than credit cards.

OZChat has been sold via telecommunications providers Vodafone, Telecom, Optus, Telstra, Bell Canada and several other networks.

Lateral's operating revenue fell from $2.2 million in 2010 to $745,561 in 2014, according to the disclosure document.

The company had earnings before interest, tax, depreciation and amortisation (ebitda) of $150,833 in 2010, but has reported losses ever since. The firm reported a $15,460 ebitda loss for 2014, which includes a write-down of an investment loan.

Lateral said costs had been trimmed during the period of falling revenue, but losses had accumulated as a result of investment into products and market development.

Explaining the revenue decline, the company said it had previously distributed its products through mobile carriers -- which had been an effective -- but that distribution channel had since declined "markedly".

Lateral said its revenue from large-scale television participation projects had also been affected by reduced frequency of such programmes.

Changes to carrier billing had also impacted revenue, the company said.

Lateral said: "Mobile carriers have invested in new and more robust carrier billing systems, but the change was highly disruptive and compromised the method of billing for extended periods."

The company said carrier billing had recently become an "effective, robust and sustainable payment method" and advances in the technology meant the company could reach and transact with large numbers of consumers using mobile devices.

The company now uses affiliate marketing -- a network of websites and applications where advertising is placed -- to distribute its products.

Lateral said its "Viaduct" platform, designed for smartphone market, created and hosted cloud-based, digital products, services and applications. The platform also managed sales and distribution, as well as customer billing.

"The convergence of technology that combines smarter mobile interfaces with an increased ability to monetise transactions, puts us ahead of the game," said chief executive Roger Grice. "We have spent the past five years developing our Viaduct platform, which not only develops applications, but can host other applications, enabling us to distribute and bill for third party digital products."

Chairman Dene Biddlecombe said it was the right time for Lateral to push into new markets.

"The NZAX gives us the flexibility to manage the capital raising process, based on the speed of growth in our revenue and customer base," he said.

The company's two largest shareholders are Grice and co-founder Bob McAuley, with holdings of 31.4 per cent each, according to the disclosure document.

- NZ Herald

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