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TradeDoubler

Quarterly Report Nov 3, 2009

3209_10-q_2009-11-03_95f3b217-3f11-4ed6-9206-24e9194986ef.pdf

Quarterly Report

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Planned rights issue, lower costs and increased control strengthens TradeDoubler

July - September 2009

  • Revenue amounted to SEK 710.7 (788.5) million.
  • Gross profit (GP) amounted to SEK 143.4 (180.8) million and gross margin amounted to 20.2 (22.9) per cent.
  • Gross profit (GP) adjusted for non-recurring items and exchange rate differences amounted to SEK 158.3 (180.8) million. Adjusted gross margin amounted to 22.3 (22.9) per cent.
  • Operating profit (EBIT) amounted to SEK -185.9 (48.0) million and EBIT-margin amounted to -26.2 (6.1) per cent.
  • Operating profit (EBIT) adjusted for non-recurring items and exchange rate differences amounted to SEK 24.8 (29.3) million. Adjusted EBIT-margin amounted to 3.5 (3.7) per cent.
  • As an effect of a weak development and a more conservative view of the future development, the goodwill value, relating to the 2007 acquisition of the IMW Group in the UK, has been written down by SEK 152.4 million.
  • In connection to the goodwill write-down, a write-down of SEK 13.5 million was done for deferred tax assets relating to the IMW Group in the UK.
  • The Board of Directors will within short propose a rights issue with preferential rights for existing shareholders amounting to SEK 350 million.
  • Net profit amounted to SEK -237.1 (34.7) million.
  • Earnings per share after dilution amounted to SEK -8.29 (1.22).
  • Cash flow from operating activities was SEK -53.2 (102.6) million.
  • The Board of Directors has, during the third quarter, initiated a process to strengthen the internal guidelines and control of the operations and processes including financial reporting.

January – September 2009

  • Total revenue amounted to SEK 2 289.0 (2 642.5) million.
  • Gross profit (GP) amounted to SEK 517.6 (552.1) million and gross margin amounted to 22.6 (20.9) per cent.
  • Operating profit (EBIT) amounted to SEK -125.7 (141.2) million and EBIT-margin amounted to -5.5 (5.3) per cent.
  • Net profit amounted to SEK -183.7 (90.7) million.
  • Earnings per share after dilution amounted to SEK -6.43 (3.18).
  • Cash flow from operating activities was SEK -42.5 (130.2) million.

Group summary

Jul-Sep Jul-Sep Jan-Sep Jan-Sep Full year
SEK 000s 2009 2008 2009 2008 2008
Rev enue 710 694 788 527 2 288 952 2 642 457 3 456 696
Gross profit 143 375 180 805 517 635 552 052 747 085
Operating profit -185 855 47 985 -125 661 141 185 149 941
Profit before tax -224 920 46 934 -150 482 125 460 128 976
Net profit -237 071 34 745 -183 745 90 725 94 404

CEO's comments

"The result for the third quarter is weaker than expected, partly as a result of lower sales as the company is affected by a weakened advertising climate, and also due to significant non-recurring costs. We are continuing the effort to improve our processes and financial reporting as well as lowering our costs. We are also working on strengthening our sales offering. The integration of td Search is starting to show result in the European markets. Despite a weak result in the third quarter, TradeDoubler maintains a very strong position and all our regions are generating a positive operating profit. We are the market leader in performance-based digital marketing in all European markets except Germany. With our broad market offering, our expertise and our market position, combined with the planned capital injection that will create further competitive advantages, I see great opportunities to continue to develop the company and its offerings going forward"

Örjan Frid, President and CEO

Europe's leading partner within performance-based digital marketing

TradeDoubler AB (publ), Sveavägen 20, SE-111 57 Stockholm, Sweden Telephone +46 8 40 50 800, [email protected], www.tradedoubler.com, Corp. reg. no. 556575-7423. Registered offices in Stockholm Municipality. TradeDoubler Q3 2009 - 1 (12)

Consolidated revenue for the third quarter amounted to SEK 710.7 (788.5) million, a decline of 9.9 per cent compared to the same quarter in 2008.

Gross profit amounted to SEK 143.4 (180.8) million, a decline by 20.7 per cent compared to the same quarter in 2008. The gross margin amounted to 20.2 (22.9) per cent. Gross profit adjusted for non-recurring items and exchange rate differences amounted to SEK 158.3 (180.8) million, a decline of 12.4 per cent compared to the same quarter 2008. The adjusted gross margin amounted to 22.3 (22.9) per cent.

During the third quarter 2009, a project was initiated to enhance quality and automation of the reconciliation procedure between the Enterprise Resource Planning (ERP) system and the general ledger. In connection with this project reconciliation differences were identified that resulted in non-recurring items of SEK 16.1 million affecting the gross profit in the third quarter 2009.

Depreciation amounted to SEK -9.4 (-8.6) million, of which SEK -6.1 (-5.4) million related to intangible assets and SEK -3.3 (-3.2) million to tangible assets.

The remaining accrual for cost savings was SEK 2.0 million as of September 30 2009.

Operating profit amounted to SEK -185.9 (48.0) million. EBIT-margin amounted to -26.2 (6.1) per cent and the EBIT/GP margin was -129.6 (26.5) per cent. Operating profit excluding non-recurring items and exchange rate differences amounted SEK 24.8 (29.3) million, a decline by 15.2 per cent compared to the third quarter 2008. The adjusted operating margin amounted to 3.5 (3.7) per cent.

Non-recurring items and exchange rate differences that affected operating profit amounted to SEK -210.7 million during the third quarter 2009. Non-recurring items include a goodwill write-down relating to the 2007 acquisition of the IMW Group in the UK of SEK -152.4 million, provisions for unutilized office space in London amounting to SEK -30 million, adjustments regarding reconciliation differences between the Enterprise Resource Planning (ERP) system and the general ledger of SEK -16.1 million, bad debt of SEK -7 million and other items of SEK -8.5 million.

Exchange rate differences, i.e. effects of recalculating the results from foreign operations with updated exchange rates, affected operating profit positively by SEK 3.3 million.

Europe's leading partner within performance-based digital marketing

TradeDoubler AB (publ), Sveavägen 20, SE-111 57 Stockholm, Sweden Telephone +46 8 40 50 800, [email protected], www.tradedoubler.com, Corp. reg. no. 556575-7423. Registered offices in Stockholm Municipality. TradeDoubler Q3 2009 - 2 (12)

The operating profit for the third quarter 2008 amounted to SEK 48.0 million. To allow comparisons with the third quarter 2009, the gross profit for the third quarter 2008 should be adjusted for the reversal of an earlier provision of SEK 18.7 million made and communicated in the third quarter 2008 relating to outstanding employee stock option programmes. The comparable operating result for the third quarter 2008 amounted to SEK 29.3 million.

Consolidated income statement adjusted for nonrecurring items and exchange rate differences in the third quarter 2009

Jul-Sep
SEK 000s 2009
Rev enue 710 694
Gross profit 143 375
Adjusted gross profit 158 339
Operating profit -185 855
Adjusted operating profit 24 839
Profit before tax -224 920
Net profit -237 071

TradeDoubler's policy is to only hedge against currency fluctuations relating to confirmed cash flows from a third party. Of the Group's gross profit currency exposure during the quarter EUR accounted for 58.5 per cent and GBP for 26.2 per cent.

Compared to the same quarter 2008, the differences in currency fluctuation had a positive effect of SEK 8.1 million on consolidated gross profit and a negative effect on costs by SEK 4.8 million. The net effect on operating profit was an increase of SEK 3.3 million.

The corresponding comparison to the second quarter 2009 was a negative effect of SEK 5.7 million on consolidated gross profit and a positive effect on costs by SEK 4.2 million. The net effect on operating profit was a decrease of SEK 1.5 million.

Consolidated net financial items amounted to SEK -39.1 (-1.1) million, and consisting mainly of unrealized exchange rate losses for liabilities and receivables in other currencies, SEK -35.5 (1.6) million. Net interest amounted to SEK -3.6 (-2.7) million. Thus, profit before tax amounted to -224.9 (46.9) million. Net profit amounted to SEK -237.1 (34.7) million, resulting in a net margin of -33.4 (4.4) per cent. Net profit was affected negatively by SEK 13.5 million due to a write-down of deferred tax assets in relation to the IMW Group in the UK.

Consolidated revenue and earnings for the period January – September 2009

Consolidated revenue for the period January – September 2009 amounted to SEK 2 289.0 (2 642.5) million, a decline of 13.4 per cent compared to the same period in 2008. Gross profit amounted to SEK 517.6

(552.1) million, a decline of 6.2 per cent compared to the same period 2008. The gross margin amounted to 22.6 (20.9) per cent. Operating profit amounted to SEK -125.7 (141.2 million). EBIT-margin amounted to -5.5 (5.3) per cent. EBIT/GP margin was thus -24.3 (25.6) per cent.

Earnings per region Adjustments for
non-recurring
items and
exchange rate
differences
SEK 000s Jul-Sep Jul-Sep Q3 vs Q3 Jan-Sep Jan-Sep Full year Jul-Sep
Gross profit (GP) 2009 2008 % 2009 2008 2008 2009
Central Europe 31 600 35 924 -12.0 106 794 99 384 134 516 34 979
Northern and Eastern Europe + Japan 17 562 25 372 -30.8 69 423 75 484 97 270 19 439
UK and Ireland 33 810 58 411 -42.1 121 248 187 934 251 483 38 192
Southern Europe 60 403 61 098 -1.1 220 170 189 250 263 816 65 728
Total 143 375 180 805 -20.7 517 635 552 052 747 085 158 339
Operating profit (EBIT)
Central Europe 15 422 21 518 -28.3 60 635 56 284 76 408 18 801
Northern and Eastern Europe + Japan 5 763 14 237 -59.5 33 767 37 426 43 597 7 641
UK and Ireland -168 517 25 939 n/a -121 809 89 496 122 180 18 265
Southern Europe 37 728 38 313 -1.5 146 884 123 116 174 122 43 054
Parent Company and eliminations -76 251 -52 022 46.6 -245 139 -165 137 -266 366 -62 921
Total -185 855 47 985 n/a -125 661 141 185 149 941 24 839

Regional development adjusted for non-recurring items and exchange rate differences in the third quarter

TradeDoubler's operations in Central Europe continue to develop according to plan. The German business is continuing to perform well and is increasing its market share. Denmark turned a corner and is performing better. Austria and Switzerland continue to deliver stable results. The adjusted EBIT/GP margin in Central Europe was 53.7 (59.9) per cent.

In Northern and Eastern Europe as well as in Japan the transaction volumes are increasing, but the average 'customer basket' is decreasing, resulting in a negative impact on gross profit. The Swedish market performed somewhat worse than expected and was negatively affected by cost of provisions for bad debts.

Russia continues to perform according to plan with regards to both gross profit and operating profit, but has to date only made a marginal contribution to the region's overall result. The adjusted EBIT/GP margin was 39.3 (56.1) per cent.

UK and Ireland showed a weak market development. Renegotiation of existing customer contracts has resulted in lower margins. At the same time, however, new customer contracts have been won, such as Vodafone and Aer Lingus. Transaction volumes are increasing, but the average 'customer basket' is

Europe's leading partner within performance-based digital marketing

TradeDoubler AB (publ), Sveavägen 20, SE-111 57 Stockholm, Sweden Telephone +46 8 40 50 800, [email protected], www.tradedoubler.com, Corp. reg. no. 556575-7423. Registered offices in Stockholm Municipality. TradeDoubler Q3 2009 - 3 (12)

decreasing, with a resulting negative effect on gross profit. The UK business is under new management since October 2009 and the integration of the former TSW and TradeDoubler is beginning to deliver results. Operating profit amounted to SEK -168.5 million and was affected by non-recurring items of SEK 182.4 million.

Due to weaker results and a more conservative view of the future performance, a goodwill write-down of SEK 152.4 million for the IMW Group in the UK, which was acquired in 2007, was made following an impairment test. Furthermore, a provision for unutilized office space in London, amounting to SEK 30 million, was made.

The change of book value of intangible assets in relation to the goodwill write-down including currency differences amounted to SEK -141.5 million. The opening balance for intangible assets relating to goodwill for the IMW Group as of January 1, 2009 amounted to SEK 532.0 million and the closing balance amounted as of September 30, 2009 to SEK 390.5 million. The EBIT/GP margin adjusted for non-recurring items was 47.8 (44.4) per cent.

The Group's largest region, Southern Europe, continues to perform well. The Italian market is delivering good results in all product areas. Spain is developing positively, despite a generally weak market. Growth in France was weaker than previously. The renegotiation of existing contracts is squeezing margins somewhat,

while at the same time new customer sales are developing well. The region has the Group's highest adjusted EBIT/GP margin at 65.5 per cent (62.7).

Parent company and eliminations

Parent company costs and eliminations during the third quarter 2009 consist of salary related costs of SEK -37.7 (-44.2) million, costs for IT and telecom of SEK -6.1 (-7.6) million, other costs of SEK -23.8 (6.5) and depreciation of SEK -8.7 (-6.7) million. To enable a year on year comparison, other costs should be adjusted for costs relating to employee stock option programs of SEK 18.7 million. Adjusted other costs for the third quarter 2008 thus amounts to SEK -12.2 million and adjusted parent company costs and eliminations to SEK -70.7 million.

Consolidated cash flow and financing

Cash flow from operating activities before changes in working capital amounted to SEK -19.7 (31.2) million for the quarter. The change in working capital for the quarter was SEK -33.5 (71.4) million. Cash flow from operating activities amounted to SEK -53.2 (102.6) million and as earlier in the year, the Group's cash flow was affected by longer payment periods from customers, increased accounts payables and payments of provisional taxes.

Net investments in intangible assets amounted to SEK 0.0 (1.7) million. Net investments in tangible assets during the quarter amounted to SEK 1.4 (0.5) million and related mainly to office equipment and network and server equipment.

The Group's cash flow from financing activities amounted to SEK 20.0 (-71.1) million and consisted of amortization of loans of SEK -10 million and a bridge loan of SEK 30 million. The SEK -34.9 (29.2) million reduction in liquidity during the quarter is mainly due to changes in working capital and tax payments. During the period January-September 2009, loans were net amortized by SEK 39.3 million.

On September 30, 2009 cash and cash equivalents amounted to SEK 40.5 (82.6) million.

The Group's net debt amounted to SEK 207.5 (242.2) million as of September 30, 2009.

The Board of Directors continually evaluates that conditions prevail for continued operations. As a consequence of the need for financing, the Company's debt facilities were expanded by a bridge loan of SEK 30 million during September 2009. One condition for this bridge financing is that the company's long-term financing is resolved no later than January

Europe's leading partner within performance-based digital marketing

TradeDoubler AB (publ), Sveavägen 20, SE-111 57 Stockholm, Sweden Telephone +46 8 40 50 800, [email protected], www.tradedoubler.com, Corp. reg. no. 556575-7423. Registered offices in Stockholm Municipality. TradeDoubler Q3 2009 - 4 (12)

31, 2010. Moreover, the Company has renegotiated the terms of conditions of this loan agreement.

The planned rights issue is expected to solve the Company's long financial requirements. See below headline "Events after the end of the period".

Advertisers and publishers

TradeDoubler's advertisers are primarily found in the travel, retail and finance sectors. At the end of the quarter, the company had 1 711 (1 730) advertisers. The number of active publishers amounted to 130 618 (128 589). TradeDoubler actively recruits new publishers. Quality, a high conversion rate and clear return requirements on traffic are prioritized above brand and ad hoc-based advertising.

The 25 largest advertisers generated 30.1 (29.8) per cent of the quarter's gross profit. The company's 25 largest publishers accounted for 16.1 (16.4) per cent of the company's gross profit in the quarter.

Market

Forecasts for investments in internet marketing and Ecommerce show a continued long-term growth. In addition the demand for cost-effective and measurable marketing activities increases in an economic down-turn which corresponds very well to TradeDoubler's offering.

TradeDoubler is a leading player with presence in 18 European countries and Japan. The combination of geographical presence, long experience, cutting edge competence and a broad product portfolio create strong prerequisites for continued development of markets as well as services.

Employees

At the end of the period TradeDoubler had 580 (638) employees. 38.6 (36.0) per cent were women. During the quarter, the average number of employees was 578 (642).

Strategic priorities

Efforts in respect of strategic priorities are continuing:

- Secure continued good margins

The focus on improvement of cost control is continuing throughout the Group. As previously communicated, reductions in work force have been implemented. At the end of the quarter the Group employed 580 (638) people, compared to 582 at the end of the second quarter 2009.

- Leverage the potential from the IMW Group acquisition

TradeDoubler and TSW in the UK and France have now been fully integrated. Simon Burgess was appointed as

- Establish a solutions-oriented model in the market

TradeDoubler is continuing its integrated sales model by offering the complete product portfolio that exists within the Group, i.e. search, campaign/display and affiliate. Several countries are offering this, with good results. Among other things, TradeDoubler has won integrated contracts for companies such as ICA, Silvan and Magasin.

-Financial strength increases operational freedom

With the planned rights issue TradeDoubler increases its financial flexibility. The improved financial position enhances competitiveness, enables further geographical expansion and increases the confidence in TradeDoubler among clients and suppliers.

The TradeDoubler share

On September 30, 2009 TradeDoubler had a share capital of SEK 11.4 million distributed among 28 581 633 shares, each with a par value of SEK 0.40. The average number of shares after dilution was 28 581 633 during the quarter, resulting in a result per share after dilution of SEK -8.29 (1.22).

Parent Company TradeDoubler AB (publ)

The Parent Company's total revenue during the quarter declined by 32.5 per cent to SEK 56.0 (83.0) million. Sales consist primarily of licence revenue from subsidiaries. Earnings after tax for the quarter amounted to SEK 18.1 (43.8) million. The Parent Company had an average of 81 (83) employees during the period. The Parent Company's receivables on Group companies amounted to SEK 1 019.0 (643.7) million and include financing related to the acquisition of the IMW Group. The Parent Company's liabilities to Group companies amounted to SEK 515.6 (75.3) million.

Transactions between Group companies

Transactions between companies within the TradeDoubler Group consist primarily of license fees and delivery of central services. Transactions with related parties are priced on commercial terms.

Events after the end of the period

As the business has performed below expectations in combination with a tight debt amortisation schedule, the financial position has become increasingly constrained during the autumn of 2009.

The Board of Directors will within short propose a rights

Europe's leading partner within performance-based digital marketing

TradeDoubler AB (publ), Sveavägen 20, SE-111 57 Stockholm, Sweden Telephone +46 8 40 50 800, [email protected], www.tradedoubler.com, Corp. reg. no. 556575-7423. Registered offices in Stockholm Municipality. TradeDoubler Q3 2009 - 5 (12)

issue with preferential rights for existing shareholders amounting to SEK 350 million. Three of the largest shareholders, Alecta, the Fourth Swedish National Pension Fund and AMF have each declared their intention to subscribe for at least their pro rata share, in total equivalent to just above 30 percent. The ambition is that the rights issue will be completed before the end of January 2010. SEB Enskilda has been appointed as financial advisor and Hannes Snellman as legal advisor in relation to the planned rights issue.

After the end of the period, TradeDoubler rebranded The Search Works (TSW) as td Search in the UK and France.

Review of the interim report

This interim report has been reviewed by the company's auditors Ernst & Young AB.

Significant risks and uncertainties

TradeDoubler divides risks into market-related risks, operational and financial risks. These risks, together with sensitivity analysis are described in detail in the 2008 Annual Report, pages 42-43. As an addition to the Annual Report descriptions in respect of operational risks the following risks are added: the internal guidelines and control of TradeDoubler's operations and processes including the financial reporting, IT security risks in the Group's systems and actual value of intangible assets. As an addition to financial risks, the Group's cash position and financing, the fulfillment of the planned SEK 350 million rights issue and client's payment times, are added.

Apart from these risks, no other significant risks or uncertainties are deemed to have arisen.

Several of the risks stated, among them the internal guidelines and control, actual value of intangible assets and the Group's cash position and financing, have materialized during the third quarter 2009.

The Board of Directors has initiated a process to strengthen the internal guidelines and control of TradeDoubler's operations and processes including financial reporting. This project has resulted in nonrecurring costs relating to reconciliation differences between the Enterprise Resource Planning (ERP) system and the general ledger. The Board of Directors and the management have made the assessment that the reconciliation differences are substantially reflected in the interim report for the period January to September 2009. However, it cannot be ruled out that the ongoing project could incur further non-recurring items and costs for additional investigational work on the result going forward.

A write-down of goodwill of SEK 152.4 million has been made due to weaker performance and a more conservative view on the future development of IMW Group in the UK, acquired in 2007. In connection with the write-down of goodwill, a write-down of SEK 13.5 million in respect of deferred tax assets was done relating to the IMW Group in the UK.

A condition for TradeDoubler's existing financing is that long term financing is secured by the company at the latest 31 January, 2010. The Board of Directors have decided to within short propose a SEK 350 million rights issue with the ambition of completion before the end of January 2010.

Accounting principles

TradeDoubler applies the International Financial Reporting Standards ("IFRS") as adopted by the EU. This interim report was prepared in accordance with the Swedish Annual Accounts Act and IAS 34 Interim Financial Reporting. A number of amendments of existing standards, new interpretations and a new standard (IFRS 8) took effect on January 1, 2009. As far as TradeDoubler is concerned, only IFRS 8 Operating Segments and the amendments to IAS 1 Preparation of Financial Statements were deemed relevant. The application of IFRS 8 did not result in any changes in the Group's reporting segments, and the accounting principles applied to segment reporting thus agree with those described in the 2008 Annual Report. The amendment of IAS 1 resulted in a change in how financial statements are presented. In accordance with IAS 1, TradeDoubler elected to present the Group's comprehensive income divided into two reports, an income statement and a statement of other comprehensive income. During the first quarter of 2009, TradeDoubler reviewed its lending to subsidiaries and thus established that portions of this lending were to be considered net investments in accordance with IAS 21 item 15. Currency effects of these net investments are recognized in equity.

In other respects, the same accounting principles and calculation methods were applied as in the most recent annual report.

As an effect of a weaker performance in the UK an impairment test was made in September 2009. The test resulted in a goodwill write-down of SEK152.4 million due to a weaker performance and a more conservative view of the future development of the IMW Group in the UK which was acquired in 2007.

This report was prepared in both a Swedish and an English version. In cases of variation between the two, the Swedish version shall apply.

Nomination Committee

The Annual General Meeting on 6 May 2009 adopted principles for appointing a new Nomination Committee. The Committee shall be composed of representatives from the three largest shareholders (by number of votes) wishing to appoint a representative as well as the chairman of the Board of Directors. The basis for appointment is the shareholder statistics available on 30 June 2009 including other shareholder information available to the company at this time.

A new Nomination Committee has been appointed and consists of Ramsay Brufer (chairman), representing Alecta, Jan Andersson, representing Swedbank Robur Fonder, Annika Andersson, representing the Fourth Swedish National Pension Fund, and Mats Sundström, chairman of the Board of Directors.

Annual General Meeting

The Annual General Meeting will be held at 17.00 CET May 6, 2010 at TradeDoubler's office Sveavägen 20 in Stockholm. The Annual Report for 2009 will be published April 20 on TradeDoubler's website and will be on hand at TradeDoubler's head office in Stockholm. In addition, printed versions will be distributed by post to shareholders approximately two weeks before the Annual General Meeting upon request.

Publication of the interim report

This information is such that TradeDoubler must publish it pursuant to the Securities Market Act. The information was published on November 3, 2009 at 08:00 CET.

Presentation of the interim report

A meeting for analysts and the media will be held at 10:00 CET on November 3 in TradeDoubler's offices at Sveavägen 20, Stockholm. Registration is done by emailing [email protected]. The presentation can also be followed by telephone.

Call +46 (0)8 5051 3791 or +44 (0)20 7806 1968. Presentation material will be published simultaneously with the interim report and made available on the Investors section of TradeDoubler's website.

Financial information dates 2010

Year-end report 2009 – February 9, 2010 2009 Annual Report – April 20, 2010 Interim report Jan-March 2010 – May 6, 2010 Annual General Meeting – May 6, 2010 Interim report Jan-June 2010 – July 27, 2010 Interim report Jan-Sep 2010 – November 3, 2010

Contact information:

Örjan Frid, President and CEO Tel. +46 8 405 08 00 [email protected]

Thord Norberg, CFO Tel. +46 8 405 08 27 [email protected]

Address

TradeDoubler AB (publ), Sveavägen 20, SE-111 57 Stockholm, Sweden. Telephone +46 8 405 08 00. [email protected], www.tradedoubler.com Corp. reg. no. 556575-7423 Registered offices in Stockholm Municipality

On behalf of the Board of Directors

Stockholm, November 3, 2009 Örjan Frid President and CEO

Auditor's Review Report on condensed interim financial statements prepared in accordance with IAS 34 and Chapter 9 of the Swedish Annual Accounts Act (SFS 1995:1554)

Introduction

We have performed a review of the condensed interim financial statements for TradeDoubler AB at 30 September 2009 and the nine-month period then ended. The Board of Directors and the Managing Director are responsible for the preparation and presentation of these Interim financial statements in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express an opinion on the condensed interim financial statements based on our review.

Scope of Review

We have conducted our review in accordance with the Standard on Review Engagements, SÖG 2410, "Review of Interim Financial Statements Performed by the Independent Auditor of the Entity", issued by the Swedish Federation of Authorized Public Accountants. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review has a different purpose and a substantially less scope than an audit conducted in accordance with the Standards on Auditing in Sweden (RS) and other generally accepted auditing practices. The procedures performed in a review do not enable us to obtain such a level of assurance that would make us aware of all significant matters that might be identified in an audit. Accordingly, an opinion based on a review does not constitute the same level of assurance as an opinion based on an audit.

Opinion

Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material aspects, for the group in accordance with IAS 34 and the Swedish Annual Accounts Act and for the parent company in accordance with the Swedish Annual Accounts Act.

Stockholm November 3, 2009

Ernst & Young AB

Att: Thomas Forslund Box 7350 SE-103 99 Stockholm

Financial Accounts

Europe's leading partner within performance-based digital marketing

TradeDoubler AB (publ), Sveavägen 20, SE-111 57 Stockholm, Sweden Telephone +46 8 40 50 800, [email protected], www.tradedoubler.com, Corp. reg. no. 556575-7423. Registered offices in Stockholm Municipality. TradeDoubler Q3 2009 - 7 (12)

TRADEDOUBLER AB (PUBL) INTERIM REPORT JANUARY – SEPTEMBER 2009 Consolidated income statement

Jul-Sep Jul-Sep Jan-Sep Jan-Sep Full year
SEK 000s 2009 2008 2009 2008 2008
Rev enue 710 694 788 527 2 288 952 2 642 457 3 456 696
Cost of goods sold -567 319 -607 722 -1 771 318 -2 090 405 -2 709 611
Gross profit 143 375 180 805 517 635 552 052 747 085
Selling expenses -89 171 -98 309 -280 539 -292 870 -420 315
Administrativ e expenses -78 764 -21 626 -178 245 -78 986 -122 278
Dev elopment expenses -8 895 -12 885 -32 112 -39 011 -54 551
Goodwill write-down -152 400 - -152 400 - -
Operating profit -185 855 47 985 -125 661 141 185 149 941
Net financial items -39 066 -1 051 -24 820 -15 725 -20 965
Profit before tax -224 920 46 934 -150 482 125 460 128 976
Tax -12 151 -12 189 -33 263 -34 735 -34 572
Net profit -237 071 34 745 -183 745 90 725 94 404
Profit after tax attributable to:
Equity holders of the Parent Company -237 071 34 745 -183 745 90 725 94 404

Statement of comprehensive income

Jul-Sep Jul-Sep Jan-Sep Jan-Sep Full year
SEK 000s 2009 2008 2009 2008 2008
Profit for the period, after tax -237 071 34 745 -183 745 90 725 94 404
Other comprehensive income
Exchange-rate differences -26 083 6 805 26 227 -30 668 -62 550
Total comprehensive income for the period, after tax -263 154 41 550 -157 518 60 057 31 854
Comprehensive income attributable to
Parent company shareholders -263 154 41 550 -157 518 60 057 31 854

Profit per share

Jul-Sep Jul-Sep Jan-Sep Jan-Sep Full year
SEK 2009 2008 2009 2008 2008
Profit per share -8.29 1.22 -6.43 3.18 3.31
Profit per share after dilution -8.29 1.22 -6.43 3.18 3.31
Number of Shares
Weighted av erage before dilution 28 581 633 28 497 839 28 581 633 28 547 330 28 532 275
Weighted av erage after dilution 28 581 633 28 497 839 28 581 633 28 547 330 28 532 275

Key data - Group

Jul-Sep Jul-Sep Jan-Sep Jan-Sep Full year
2009 2008 2009 2008 2008
Gross profit (GP) / rev enue (%) 20.2 22.9 22.6 20.9 21.6
Operating profit (EBIT ) / rev enue (%) -26.2 6.1 -5.5 5.3 4.3
Operating profit (EBIT) / gross profit (GP) (%) -129.6 26.5 -24.3 25.6 20.1
Net profit/gross profit (GP) (%) -165.4 19.2 -35.5 16.4 12.6
Equity/assets ratio (%) 10.5 20.2 10.5 20.2 18.8
Return on equity (%) -79.4 44.1 -79.4 44.1 28.9
Av erage number of employees 578 642 595 619 624
Margin td Affiliate + td Campaign
(Transaction margin) (%) * 21.1 21.5 21.2 21.7 21.9
Margin td Search (Search margin) (%) * 9.9 9.8 9.1 7.2 7.6

* Transaction margin calculated without fixed and setup fees for all periods (not valid for Search margin)

Consolidated balance sheet

30 Sep 30 Sep 31 Dec
SEK 000s 2009 2008 2008
Assets
Intangible fixed assets 474 221 691 894 631 657
Tangible fixed assets 23 762 20 437 22 675
Financial fixed assets 3 652 967 1 475
Deferred tax assets 46 488 55 679 45 829
Total fixed assets 548 123 768 977 701 636
Accounts receiv ables 650 708 671 836 673 948
Tax assets 4 011
Other current receiv ables 37 816 54 571 42 312
Cash & cash equiv alents 40 505 82 605 133 389
Total current assets 733 040 809 012 849 650
Total assets 1 281 163 1 577 989 1 551 286

Shareholders' equity and liabilities

Shareholders' equity 134 396 319 312 291 914
Subordinated loan 50 000 - -
Deferred tax liabilities 19 840 19 995 17 232
Other prov isions - 44 -
Total long-term liabilities 69 840 20 039 17 232
Current interest-bearing liabilities 197 961 324 769 286 827
Current liabilities to publishers 374 249 343 279 396 707
Tax liabilities - 34 818 24 497
Accounts payable 86 381 229 123 186 698
Other current liabilities 418 336 306 648 347 411
Total current liabilities 1 076 928 1 238 638 1 242 140
Total shareholder´s equity and liabilities 1 281 163 1 577 989 1 551 286

Reconciliation of shareholders' equity

Jul-Sep Jul-Sep Jan-Sep Jan-Sep Full year
SEK 000s 2009 2008 2009 2008 2008
Opening balance 397 550 300 165 291 914 361 308 361 308
Comprehensiv e income for the period -263 154 41 550 -157 518 60 057 31 854
Share-related compensation settled
with equity instruments - -18 694 - -12 433 -11 628
Repurchase of shares - -3 758 - -11 070 -11 070
New share issues - 49 - 49 49
Div idend - - - -78 599 -78 599
Total shareholders equity 134 396 319 312 134 396 319 312 291 914

There are no minority interests in the shareholders' equity

Consolidated cash-flow statement

Jul-Sep Jul-Sep Jan-Sep Jan-Sep Full year
SEK 000s 2009 2008 2009 2008 2008
Operating activities
Profit before tax -224 921 46 935 -150 482 125 460 128 976
Adjustments for items not included in cash flow 223 411 -10 117 242 731 12 916 21 699
Income taxes paid -18 216 -5 605 -63 666 -52 127 -48 786
Cash flow from operating activities before changes in
working capital -19 726 31 213 28 583 86 249 101 889
Cash flow from changes in working capital
Changes in working capital -33 467 71 384 -71 085 43 931 116 090
Cash flow from operating activities -53 193 102 597 -42 502 130 180 217 979
Investing activities
Net inv estments in intangible assets
- -1 700 - -9 286 -10 106
Net inv estments in tangible assets -1 379 -517 -10 913 -8 498 -13 555
Net inv estments in financial assets -325 - -2 334 - -
Cash flow from investing activities -1 704 -2 217 -13 247 -17 784 -23 661
Financing activities
New share issues - 49 - 49 49
Purchase own shares - -3 758 - -11 070 -11 070
External loan 30 000 - 80 000 877 485 877 485 1
Amortisation -10 000 -67 429 -119 327 -1 039 938 -1 077 880
Div idend paid to parent company's shareholders - - - -78 599 -78 599
Cash flow from financing activities 20 000 -71 138 -39 327 -252 073 -290 015
Cash flow for the period -34 897 29 242 -95 076 -139 677 -95 697
Cash and cash equivalents
On the opening date 73 891 52 719 133 389 224 157 224 157
Translation difference in cash and cash equiv alents 1 511 644 2 192 -1 875 4 929
Cash and cash equivalens on the closing date 40 505 82 605 40 505 82 605 133 389
Adjustments for non-cash items
Depreciation 9 409 8 577 28 279 25 349 33 327
Write-downs 152 400 152 400
Non-recurring items 61 602 61 602
Expenses related to share-related compensation - -18 694 450 -12 433 -11 628
Total non-cash items 223 411 -10 117 242 731 12 916 21 699

1Including a short-term investment of SEK 477 million

Income statement - Parent company

Jul-Sep Jul-Sep Jan-Sep Jan-Sep Full year
SEK 000s 2009 2008 2009 2008 2008
Rev enue 56 008 82 952 194 352 245 819 270 100
Cost of goods sold -3 357 -2 595 -9 630 -7 113 -10 246
Gross profit 52 651 80 357 184 722 238 705 259 854
Selling expenses -1 130 -1 182 -4 088 -10 696 -16 794
Administrativ e expenses -29 680 -17 550 -85 598 -61 772 -98 327
Dev elopment expenses -6 317 -12 996 -22 329 -32 405 -46 170
Operating profit 15 524 48 627 72 708 133 832 98 563
Net financial items 10 203 12 169 20 003 -21 618 -5 682
Profit before tax 25 726 60 797 92 711 112 214 92 881
Tax -7 617 -16 979 -23 565 -31 501 -25 292
Net profit 18 109 43 818 69 147 80 713 67 589
Profit after tax attributable to:
Equity holders of the Parent Company 18 109 43 818 69 147 80 713 67 589

Balance sheet - Parent company

30 Sep 30 Sep 31 Dec
SEK 000s 2009 2008 2008
Assets
Intangible fixed assets - - -
Fixed tangible assets 14 468 6 362 8 181
Financial fixed assets 52 189 49 690 53 323
Deffered tax assets - - -
Total fixed assets 66 657 56 052 61 504
Accounts receiv ables 3 057 2 453 2 936
Receiv ables from Group companies 1 019 041 643 723 588 892
Tax assets 1 750 - -
Other current receiv ables 8 526 1 445 11 924
Cash & cash equiv alents - 6 965 2 612
Total current assets 1 032 373 654 587 606 364
Total assets 1 099 030 710 640 667 868

Shareholders' equity and liabilities

Shareholders equity 192 556 185 043 114 921
Subordinated loan 50 000 - -
Deferred tax liability 5 621
Total long-term liabilities 55 621 - -
Current interest-bearing liabilities 207 048 324 769 286 827
Accounts payable 7 990 7 705 15 070
Liabilities to Group companies 515 582 75 347 140 690
Tax liabilities - 38 908 3 132
Other liabilities 120 233 78 867 107 227
Total current liabilities 850 854 525 596 552 947
Total shareholder´s equity and liabilities 1 099 030 710 640 667 868

Pledged assets and contingent liabilities

30 Sep 30 Sep 31 Dec
SEK 000s 2009 2008 2008
Group
Pledged assets * 143 550 162 645 171 499
Rent deposits 3 652 967 1 475
Contingent liabilities - - -
Parent company
Pledged assets * 23 565 4 095 4 537
Rent deposits - 552 536
Contingent liabilities 30 662 24 042 13 440

*Pledged assets refers to shares in subsidiaries

Quarterly overview

Consolidated income statement

Jul-Sep Apr-Jun Jan-Mar Oct-Dec Jul-Sep Apr-Jun Jan-Mar
SEK 000s 2009 2009 2009 2008 2008 2008 2008
Rev enue 710 694 734 036 844 222 814 239 788 527 866 910 987 020
Cost of goods sold -567 319 -546 596 -657 402 -619 206 -607 722 -686 524 -796 159
Gross profit 143 375 187 440 186 820 195 033 180 805 180 386 190 861
Total costs -329 230 -153 951 -160 116 -186 276 -132 820 -139 687 -138 362
Operating profit -185 855 33 489 26 704 8 757 47 985 40 699 52 500
Net financial items -39 066 13 386 859 -5 240 -1 051 -11 765 -2 908
Profit before tax -224 920 46 875 27 564 3 517 46 934 28 934 49 592
Tax -12 151 -13 468 -7 644 163 -12 189 -11 759 -10 787
Net profit -237 071 33 407 19 920 3 680 34 745 17 175 38 805

Consolidated balance sheet

30 Sep 30 Jun 31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
SEK 000s 2009 2009 2009 2008 2008 2008 2008
Assets
Intangible fixed assets 474 221 706 120 657 664 631 657 691 894 678 807 664 460
Other fixed assets 73 902 93 105 77 383 69 979 77 083 68 095 66 730
Current receiv ables 692 535 710 668 737 552 716 261 726 407 846 749 884 240
Cash & cash equiv alents 40 505 73 891 151 088 133 389 82 605 52 719 188 653
Total assets 1 281 163 1 583 784 1 623 687 1 551 286 1 577 989 1 646 370 1 804 083
Shareholders' equity and liabilities
Shareholders' equity 134 396 397 550 333 907 291 914 319 312 300 166 339 905
Long-term interest bearing debt 50 000 50 000 50 000 - - - -
Long-term non-interest bearing debt 19 840 16 268 16 578 17 232 20 039 28 286 29 613
Current interest bearing debt 197 961 177 500 207 500 286 827 324 769 392 198 362 500
Current non-interest bearing debt 878 966 942 466 1 015 702 955 312 913 869 925 720 1 072 065
Total shareholder´s equity and liabilities 1 281 163 1 583 784 1 623 687 1 551 286 1 577 989 1 646 370 1 804 083

Consolidated cash flow statement

Jul-Sep Apr-Jun Jan-Mar Oct-Dec Jul-Sep Apr-Jun Jan-Mar
SEK 000s 2009 2009 2009 2008 2008 2008 2008
Operating activities
Profit before tax -224 921 46 875 27 564 3 516 46 935 28 933 49 592
Adjustments for items not included in cash flow 223 411 9 489 9 831 8 783 -10 117 9 784 13 249
Tax paid -18 216 -47 774 2 324 3 341 -5 605 -29 069 -17 453
Cash flow from operating activities -19 726 8 590 39 719 15 640 31 213 9 648 45 388
Cash flow from changes in working capital -33 467 -47 953 10 335 72 159 71 384 -80 324 52 871
Cash flow from inv esting activ ities -1 704 -8 348 -3 195 -5 877 -2 217 -15 464 -103
Cash flow from financing activ ities 20 000 -30 000 -29 327 -37 942 -71 138 -56 213 -124 722
Cash flow for the period -34 897 -77 711 17 532 43 980 29 242 -142 353 -26 566
Cash and cash equivalents
On the opening date 73 891 151 088 133 389 82 605 52 719 188 653 224 157
Translation difference 1 511 514 167 6 804 644 6 419 -8 938
Cash and cash equivalens on the closing date 40 505 73 891 151 088 133 389 82 605 52 719 188 653

Key data - Group

Jul-Sep Apr-Jun Jan-Mar Oct-Dec Jul-Sep Apr-Jun Jan-Mar
2009 2009 2009 2008 2008 2008 2008
Gross profit (GP) / rev enue (%) 20.2 25.5 22.1 24.0 22.9 20.8 19.3
Operating profit (EBIT ) / rev enue (%) -26.2 4.6 3.2 1.1 6.1 4.7 5.3
Operating profit (EBIT) / gross profit (GP) (%) -129.6 17.9 14.3 4.5 26.5 22.6 27.5
Net profit/gross profit (GP) (%) -165.4 17.8 10.7 1.9 19.2 9.5 20.3
Equity/assets ratio (%) 10.5 25.1 20.6 18.8 20.2 18.2 21.4
Return on equity (%) -79.4 26.3 22.4 30.9 44.1 47.4 44.3
Av erage number of employees 578 589 618 640 642 631 587
Margin td Affiliate + td Campaign
(Transaction margin) (%) * 21.1 21.3 21.3 22.5 21.5 22.2 21.4
Margin td Search (Search margin) (%) * 9.9 8.5 9.0 10.1 9.8 6.2 6.5

* Transaction margin calculated without fixed and setup fees for all periods (not valid for Search margin)

Europe's leading partner within performance-based digital marketing

TradeDoubler AB (publ), Sveavägen 20, SE-111 57 Stockholm, Sweden Telephone +46 8 40 50 800, [email protected], www.tradedoubler.com, Corp. reg. no. 556575-7423. Registered offices in Stockholm Municipality.

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