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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Monitise | LSE:MONI | London | Ordinary Share | GB00B1YMRB82 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 3.09 | 3.08 | 3.09 | 0.00 | 00:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Dec 2019 to Dec 2024
TIDMMONI
RNS Number : 5446X
Monitise PLC
11 February 2013
11 February 2013
Monitise plc
Interim results for the six months to 31 December 2012
H1 FY 2013 REVENUE OF GBP27.8M ($44.2M) (1) , UP 63% ON H1 FY 2012 WITH STRONG GROWTH IN USER GENERATED REVENUE
H1 FY 2013 GROSS MARGINS RISE TO 72% FROM 64% IN H1 FY 2012 AND 69% IN H2 FY 2012
MONITISE PROCESSING 2BN TRANSACTIONS, A FOUR-FOLD INCREASE ON A YEAR AGO
REGISTERED CUSTOMERS 20M, COMPARED WITH 6M A YEAR AGO
MONITISE, BLACKBERRY AND PERMATABANK TO LAUNCH BLACKBERRY MESSENGER MOBILE PAYMENTS SERVICE
IN INDONESIA
MONITISE ENTERS STRATEGIC PARTNERSHIP WITH VENDA
FULL-YEAR REVENUE ON TRACK TO REACH AT LEAST GBP70M ($110M)
LONDON - Monitise plc (LSE: MONI) ("Monitise", the "Company" or the "Group")announces its unaudited interim results for the six months ended 31 December 2012.
Financial Highlights
-- H1 FY 2013 revenue of GBP27.8m, up 63% on H1 FY 2012; up 22% on an organic basis(2) .
o Strong growth in user generated revenue on a reported and organic basis, up 164% and 70% respectively, rising on a reported basis to 51% of total revenues from 31% in H1 FY 2012 and 37% in H2 FY 2012.
-- Gross margins increased to 72% from 64% in H1 FY 2012, driven by a greater proportion of user generated revenue.
-- EBITDA(3) in Live Operations(4) of GBP5.3m (H1 FY 2012: GBP5.1m).
-- EBITDA loss of GBP14.7m (H1 FY 2012 loss: GBP4.2m), in line with management expectations, reflecting the acquisition of Clairmail Inc., continued investment in scaling of the Monitise Enterprise Platform and Group service delivery capabilities.
-- Group pre-tax loss of GBP24.4m (H1 FY 2012: profit GBP1.1m). -- Free cash outflow(5) was GBP21.6m in H1 FY 2013, compared to GBP22.6m in H2 FY 2012. -- Gross cash of GBP106.4m as at 31 December 2012.
(1) Foreign exchange rate for Sterling/US Dollar used in the interim results is $1.59.
(2) Assuming Clairmail Inc. had been owned for the full six months in H1 FY 2012.
(3) EBITDA is defined as operating profit/loss before exceptional items, depreciation, amortisation and share-based payment charges.
(4) Live operations comprise Monitise UK, Monitise US and Global Accounts (incl Visa Inc. and Visa Europe).
(5) Free cash flow comprises cash used in operating and investing activities, excluding exceptional items and net cash acquired on acquisitions of subsidiaries.
Outlook
-- Full-year revenue target of at least GBP70m ($110m) on track, underpinned by orderbook and strong sales pipeline.
-- Gross margin expectations of at least 70% maintained for full year.
-- More and more banks are seeing the inevitability of mobile becoming their most important customer engagement channel.
-- Group's strengthened balance sheet provides ability for Monitise to further scale its offerings and invest in its platform capabilities in line with market demand and to enable its clients' customers to bank, pay and buy through the mobile channel.
Business Highlights
-- Group
o Value of payments and transfers initiated via the Monitise Enterprise Platform (MEP) is more than $31bn on an annualised basis, compared with $10bn a year ago.
o Further growth in live transactions with 2bn transactions on an annualised basis, compared with 0.48bn in February 2012.
o Registered customers 20m, compared with 6m in January 2012.
o Acquisition of UK mobile commerce Joint Venture, the Mobile Money Network Ltd.
-- All-share deal allows Monitise to deploy the mobile checkout and marketplace technology across the Group's global mobile commerce platform for banks and payment partners.
o Acquisition of eMerit Solutions Ltd.
-- Acquisition extends mobile point of sale (mPOS) capabilities of the Monitise Enterprise Platform and enhances Monitise's international offering to SME banking customers. The Group already has a strong pipeline of mPOS opportunities in UK and Europe, with existing partners including O2 and HSBC Merchant Services LLP, a wholly-owned subsidiary of Global Payments Inc., and one of the largest independent payment processors in the UK.
o Global footprint broadened to help clients enable their customers to Bank Anywhere, Pay Anyone and Buy Anything:
-- Cognizant, a leading global provider of information technology and business process services, and Monitise announced an alliance to leverage the Group's Monitise Enterprise Platform.
-- On 23 January 2013, Monitise announced an alliance with CGI Group Inc., a leading global provider of information technology and business process services.
-- Intuit Inc. and Monitise working on delivery of new mobile solutions. The relationship is intended to be worldwide, with initial focus on Europe and United States.
-- Monitise announces today that it has formed a strategic partnership with Venda, the world's largest on-demand ecommerce provider. The partnership will fast track retailer adoption of Monitise's Instant Mobile Checkout by seamlessly integrating with Venda's commerce platform. More than 100 brands of all sizes use Venda's platform to handle millions of transactions each month. These include Universal Music, Fat Face, TK Maxx, Tate, Laura Ashley, Emma Bridgewater, Jimmy Choo, Paperchase, Royal Doulton, Wickes, Clothing at Tesco and Orange.
o Pipeline of more than 100 financial institutions via partners and direct sales teams looking to adopt mobile banking, payments and commerce services developed by Monitise.
-- UK and Europe
o Strategic partner Visa Europe has a strong pipeline of banks readying to launch person-to-person and alerts services developed in collaboration with Monitise.
o Android and BlackBerry Fast Balance services deployed for HSBC in the UK.
o Android service deployed for The Co-operative Bank following launch of iOS and BlackBerry services for the bank earlier in 2012.
o Monitise named 'Best Technology Supplier 2012' on 4 February 2013 by Royal Bank of Scotland Group.
-- Americas
o Monitise Americas Inc. (formerly Clairmail Inc.) cemented its position as the leading independent Mobile Money company in North America.
o A number of large issuers of both debit and prepaid cards are now live with Visa Inc.'s mobile Debit Processing Service (DPS) solution, which has been built and managed by Monitise. A growing number of US banks are preparing to launch services developed via Visa Inc.'s DPS, the largest issuer processor of Visa transactions in the US.
o Monitise expects to announce new initiatives, in collaboration with Visa Inc., over the coming months.
o Monitise Americas Inc. operations integration now complete.
-- International
o Via Monitise's Asia Pacific Joint Venture, BlackBerry Messenger's first mobile payments service will be commercially launched in Indonesia later in February having recently received regulatory approval from Bank Indonesia, the country's central bank. A pilot launch went live on 1 February 2013.
o In December 2012, mobile payment services in India went live via the Movida mobile payments Joint Venture between Visa Inc. and Monitise. The launch debuted with HDFC Bank, the second-largest private bank in the country. Over the coming months, Movida intends to announce further partner banks and services.
Alastair Lukies, Monitise Chief Executive Officer, said:
"Monitise's performance during the six months ended 31 December 2012 saw revenues continue to rise on the previous period with gross margins lifted by the ongoing shift towards growing user generated revenues. Monitise's overall performance during the period reflected the ongoing investment in scaling the business to meet the increasing global demand for Mobile Money and strategic moves taken to consolidate the Group's leadership position globally. Our vision is clear. As a result of our interoperable platform and ecosystem of customers and partners, consumers globally can bank anywhere, pay anyone and buy anything via their mobile.
As the only independent Mobile Money business with live services across Europe, America, India and the Far East, we have big aspirations and remain resolutely focused on our strategy to enable the world's leading financial institutions to make money mobile for everyone as money becomes digitised."
Duncan McIntyre, Monitise Chairman, said:
"This has been yet another successful period in the Monitise journey. We were delighted with the strong investment community interest and support shown for our business with the capital raise carried out in December 2012. The proceeds from this are being used to rapidly scale our business as we enhance our global Mobile Money leadership position, laying deeper foundations for future growth.
During the period, we were delighted to welcome Mike Keyworth and Ellen Richey to our Board. I am also looking forward to welcoming Brad Petzer, whose appointment as the Group's Chief Financial Officer was announced on 4 January 2013, to the Board from 1 April 2013. Our experienced and professional management team and staff continue to work effectively to drive the Group forward."
About Monitise
Monitise plc (LSE: MONI) is a leading technology and services company that delivers mobile banking, payments, and commerce networks worldwide. Monitise enables financial institutions and other payment companies to defend and extend their market position by protecting their existing customer relationships and transactions while enabling new forms of mobile commerce revenue.
Monitise powers bank-grade solutions that are delivered on premise, or via cloud services. The value of payments and transfers initiated via Monitise's platform technology is more than US$31bn on an annualised basis. Monitise has a global reach and unique set of partners and clients using its completely adaptable Monitise Enterprise Platform. More information is available at www.monitise.com
An analyst presentation will be held on Monday 11 February 2013 at 10.30am GMT at the London Stock Exchange, London, EC4M 7LS. A live webcast of the presentation will be available to view online via investor relations on www.monitise.com. A replay facility will be accessible via www.monitise.com/investor_relations within 24 hours of the results presentation.
For further information
Monitise plc Tel: +44(0)203 657 0900 Duncan McIntyre, Chairman Alastair Lukies, Chief Executive Officer Lee Cameron, Chief Commercial Officer Mike Keyworth, Chief Operating Officer Investor Relations Haya Herbert-Burns Tel: +44(0)203 657 0366 Haya.herbert-burns@monitise.com Media Relations Gavin Haycock Tel: +44(0)203 657 0362 Gavin.haycock@monitise.com Canaccord Genuity Simon Bridges Tel: +44(0)20 7523 8000 Cameron Duncan FTI Consulting Tel: +44(0)20 7831 3113 Charles Palmer Jon Snowball
Forward Looking Statements
This document includes forward looking statements. Whilst these forward looking statements are made in good faith they are based upon the information available to Monitise at the date of this document and upon current expectations, projections, market conditions and assumptions about future events. These forward looking statements are subject to risks, uncertainties and assumptions about the Group and should be treated with an appropriate degree of caution.
Business Review
Monitise sells a hosted or on-premise Mobile Money software platform, called the Monitise Enterprise Platform (MEP), largely to financial institutions to enable mobile banking, mobile payments, and mobile commerce. User generated revenue is driven by per-user based annual fees, overlaid with transaction revenues based on fixed or percentage-of-transaction fees. Today, the bulk of user generated revenue is based on the per-user fee but rising payments and commerce functionality will see this mix evolve in coming years. Monitise also generates development and integration revenues from the installation and customisation of its platform.
Monitise has continued to build its global leadership position in deploying Mobile Money platforms for financial and other institutions. Via the MEP, the Group simplifies the complexity of delivering secure Mobile Money services to embrace any device, payment network or operator. It is a secure, configurable bank-grade platform spanning banked and unbanked markets. Monitise connects to financial institutions' core banking systems either directly, or via an ATM switch such as Vocalink in the UK or via a third-party processor company such as Visa DPS or FIS in the Americas.
Our evolving MEP and associated products have been developed to deliver to consumers, services that are secure, accessible at all times and provide increasing opportunities for them to more readily control their money, pay and buy with their mobile devices. Monitise works with partner banks to deliver innovative Mobile Money services for multiple operating systems, allowing consumers to easily make instant payments and transfers, check their account balances and transaction history, find their nearest cash machine, set up alerts and top-up their mobile. The MEP is being expanded to incorporate mobile commerce features that will help banks retain customers, defend their position against non-bank competition, and generate new revenue streams. These could include targeted offers delivered to bank customers, one-touch mobile commerce shopping, and coupons and gift cards.
A unique feature of our platform, which we continue to focus on, is its ability to scale and deliver services in a cost-effective manner. The spend required to develop and maintain our platform is considerably less than for other banking channels and it is likely that mobile will be the dominant bank channel in a few years' time. As mobile is increasingly adopted by end consumers to bank, pay and buy, we will realise the substantial benefits arising from our platform investment.
The MEP is now processing 2bn transactions on an annualised basis, a four-fold increase on the 480m transactions processed a year ago. The platform is already handling 2.9m customer requests per hour at peak times. With the ongoing growth in our partner network and broadening connections to new services, Monitise has 20m registered customers, compared with 6m a year ago.
We were delighted with the strong interest from the investment community in our Mobile Money strategy update in December. New equity capital of GBP117m (net) was raised during the half year. Proceeds from the capital raised are being used to scale the Monitise business, further enhancing our platform capabilities. These enhancements include productising the capabilities of the platform to allow for the faster roll-out of services, expanding the data and analytics capabilities of the MEP and broadening the scale of the MEP to encompass country-specific functionality and language variants to increase connections to new merchants, brands, partners, payment and affiliate networks and other aggregators.
Monitise, which already works with more than 300 banks and financial institutions, was pleased to announce new relationships during the first half in the UK, Europe, the Americas and Asia that included BlackBerry, Cognizant, and Intuit Inc., among others.
Monitise has a pipeline of more than 100 financial institutions via its partners and direct sales teams looking to adopt mobile banking and payments applications developed by Monitise.
In December 2012 the Group acquired the Mobile Money Network, which sells instant mobile checkout technology to retailers and media owners in the UK. Partners now working with Monitise via its Mobile Commerce platform include Carphone Warehouse, Warner Brothers, Universal Music and Associated Newspapers.
Financial Review
In line with the Group's change in accounting policy for Joint Ventures from proportionate consolidation to equity accounting as of 30 June 2012, the comparative figures for H1 FY 2012 have been restated on the equity accounting basis, which shows the Group's share in Joint Ventures on one line. See note 2.3 for the rationale and impact of this change. The period includes the first six months trading results for Monitise Americas Inc. (formerly Clairmail Inc.) following its acquisition on 26 June 2012.
Revenue
Revenue grew by 63% from GBP17.1m in H1 FY 2012 to GBP27.8m ($44.2m) in H1 FY 2013. On an organic basis, assuming Clairmail had been owned for the full six months of H1 FY 2012, revenue grew by 22%. Revenue growth was driven by higher year-on-year growth in user generated revenues both on a reported and organic basis, up 164% and 70% respectively. As a significant milestone, the group reported user generated revenues of GBP14.2m, which represented over half (51%) of total Group revenues for the period, compared to 31% in H1 FY 2012. Development and integration revenue increased by 16% on a reported basis and declined 5% on an organic basis. We expect to see growth in development and integration revenue in the second half.
Gross Margins
Gross margin has increased to 72% (H1 FY 2012: 64%), ahead of target and driven by the improving mix in user generated revenue. Development and integration margins increased to 58% in H1 FY 2013 from 55% in H1 FY 2012. User generated margins have reached 86% from 82% in H1 FY 2012.
We expect gross margin for the Group to continue to track above 70% as an increasing number of services enabled by Monitise are deployed by our clients to their customers.
EBITDA
The Live Operations segment, which includes our Monitise UK, US and Global Accounts, generated EBITDA of GBP5.3m in the period, compared with GBP5.1m in H1 FY 2012. This category includes the acquired Monitise Americas Inc. business, excluding the acquired R&D development team, which now operates as an integrated part of the central technology team, and certain central costs. Live operations profitability has been maintained with timing of investment in operational costs made this half in anticipation of the next phase of growth and roll-out of services by our customers.
With the integration of the Monitise Americas Inc. R&D team, and continued development of products in line with the drive through banking to payments and commerce, technology costs of GBP9.7m were incurred in the period against GBP3.3m in the comparative period. Capitalised R&D costs for the period were GBP4.0m against GBP1.8m in the comparative period. The costs of significant scaling up in service delivery and overall operations have led to a rise in investment for future operations with an EBITDA loss of GBP4.5m against GBP2.9m in the comparative period.
The Group has continued to invest in future operations, the Monitise Enterprise Platform, the scaling of its mobile commerce and service delivery capabilities in line with its strategy and the rapid growth being achieved in transactional volumes, resulting in a Group EBITDA loss of GBP14.7m compared to GBP4.2m in H1 FY 2012.
Other Movements
Exceptionals
The net exceptional gain for the period was GBP0.5m. This comprised a one-off net gain of GBP3.8m related to the acquisition of the remaining 56% of Mobile Money Network Limited, as announced on 3 December 2012, which reflects the fair value of Monitise's previously held 44% stake in the Mobile Money Network (see note 9). In addition, GBP3.3m of exceptional costs were recorded in the year, relating to one-off acquisition, property and restructuring expenses.
Depreciation and Amortisation
Depreciation was GBP1.5m in the period (H1 FY 2012: GBP0.6m). Amortisation of GBP4.0m (H1 FY 2012: GBP0.6m) includes amortisation of acquired intangible assets, largely relating to the Clairmail Inc. acquisition, of GBP2.3m.
Share-based Payments
The share-based payment charge of GBP2.1m in the period (H1 FY 2012: GBP1.0m) includes share-based remuneration components relating to the acquisition of Clairmail Inc.
Loss Before Tax
Group loss before tax was GBP24.4m, including a net exceptional gain of GBP0.5m, compared to a profit before tax of GBP1.1m in H1 FY 2012, which included an exceptional gain of GBP10.1m on the acquisition of the remaining 51% of the Monitise Americas Joint Venture, as announced in October 2011.
Tax
The tax charge reflects the movement in deferred tax assets due to the utilisation of brought forward losses, partially offset by unwinding of deferred tax liabilities recognised on acquisitions.
Loss Per Share
The basic and diluted loss per share was 2.2p (H1 FY 2012: earnings per share 0.1p). Details can be found in note 5.
Cash Flow and Funds
The Group ended the half year with a strong balance sheet, holding GBP100.4m of net funds at 31 December 2012. The overall cash increase in the half year reflects an outflow of GBP9.8m from operating activities, excluding GBP4.4m exceptional expenses, an outflow of GBP11.0m from investing activities covering both investment in our joint ventures and ongoing spend on capex and capitalised R&D, and GBP112.3m inflow from financing activites. The financing inflow was driven by two fund raises during the year, generating funds of GBP117.3m net of fees. A repayment of GBP5.4m debt acquired as part of the Clairmail acquisition was made at the start of the period, with the remaining GBP5.0m of debt present at 31 December 2012 repaid following the period end.
Cash used in operating and investing activities reflected the ongoing commitment to invest across the business, both raising capacity and continuing the development of our leading technology. Free cash outflow for the period was GBP21.6m, excluding exceptional expenses, cash acquired on acquisition and cash moved onto and out of short term deposits. This compares to a free cash outflow of GBP22.6m for the immediately preceding six month period.
Operational Review
Live operations
-- UK
In the UK, Monitise provides Mobile Money services to banks covering more than 60% of the UK retail banking population. During the period, the Group continued to deepen its relationship with existing banks and to target new opportunities across UK financial institutions.
RBS Technology Services and Monitise continued to drive mobile innovation during the period as consumer adoption grew for services spanning consumer and business banking applications and the 'Get Cash' service, which allows the bank's customers to get money out of ATMs without their debit cards. Monitise works with RBS to deliver secure and innovative Mobile Money services for multiple operating systems, allowing customers to easily make instant payments and transfers, check their account balances and transaction history, find their nearest cash machine, set up alerts and top-up their mobile. On 4 February 2013, Monitise was named 'Best Technology Supplier 2012' by Royal Bank of Scotland Group.
In July 2012 HSBC launched Fast Balance services for Android and BlackBerry devices following the rollout of services for the iPhone earlier in the year. The services across all three devices were developed by Monitise and HSBC as part of a three-year deal, announced in April 2012.
In November 2012 The Co-operative Bank's first mobile banking services for Android smartphones, developed by Monitise, were launched giving more of the bank's customers instant access to their bank accounts via mobile phone. Services developed for The Co-operative Bank for iOS and BlackBerry devices were launched earlier in 2012 as part of a three-year deal with Monitise.
-- Global Accounts
Global accounts represent the Group's products and services to Monitise's global cross-territory customers, including Visa Inc. and Visa Europe.
o Visa Inc.
Monitise and Visa Inc. have been working together since 2009. Monitise's expertise in customising mobile applications across a broad range of phone models and operating systems enables Visa to virtualise its existing accounts on mobile phones and offer Visa account holders globally a new array of payment types. During the first half, Monitise continued to align itself to support Visa's mobile strategies in terms of acquiring new accounts, activating existing accounts, protecting core revenue and accelerating the move towards digital payments.
A number of large issuers of both debit and prepaid cards are now live with Visa's Debit Processing Service (DPS) Mobile Card Services solution, which has been built and managed by Monitise. A growing number of additional US banks are preparing to launch services developed via Visa Inc.'s DPS, the largest issuer processor of Visa transactions in the US. Monitise expects to announce new initiatives, in collaboration with Visa Inc., over coming months, both in the Americas and in hybrid Mobile Money markets.
o Visa Europe
On August 24 2012, Monitise announced a strategic investment via a subscription of 45.25m shares in Monitise from Visa Europe, reflecting a further strengthening and deepening of the commercial relationship between the two companies that have been working together since February 2011. As at 1 February 2013, Visa Europe held 7.5% of Monitise's total voting rights. The investment forms part of Visa Europe's strategy to deliver increased value for financial institutions and consumers through enabling and supporting mobile payments.
Monitise works in partnership with Visa Europe to deploy mobile payments services for its 3,000+ member banks and financial institutions across 36 countries. Visa Europe noted in its latest annual report that a dozen of its members had signed up to launch Visa Personal Payments by the end of September 2012. Continued development of these services will bring enhanced functions, offering dynamic and innovative ways for bank customers to manage and move their money while mobile. Visa Europe, which predicts that by 2020 more than half of its transactions will be carried out on a mobile device, has a strong pipeline of banks readying to launch new person-to-person and alerts services developed in partnership with Monitise. Following the Group's acquisition of the Mobile Money Network mobile commerce platform in December 2012, Monitise expects to announce a number of new mobile commerce initiatives in collaboration with Visa Europe shortly.
-- US
o Monitise Americas Inc.
Monitise Americas Inc., with its 9.6m customers, is very encouraged by the pipeline of opportunities with existing and new customers following the acquisition of the US-based mobile banking and payments business Clairmail, which was completed in June 2012. Monitise's customers include five of the top 10 US banks with partnerships spanning Fifth Third Bank, U.S. Bank, Sallie Mae, PNC Bank and Frost National Bank, among others.
o FIS
The Group's strategic partnership with FIS, one of the world's largest global providers dedicated to banking and payments technologies, remains as strong as ever as FIS focuses on evolving its Mobile Money capabilities towards deeper payments and commerce expertise. In December 2011, Monitise signed a five-year strategic partnership agreement with FIS to create innovative Mobile Money services for existing and new clients.
Investments in Future Operations
-- Mobile Commerce
In December 2012, Monitise acquired control of the Mobile Money Network, a joint venture with Best Buy Europe and Carphone Warehouse founder Charles Dunstone. The MMN business launched in March 2011 with the vision of adding simplicity to the way people shop by putting the mobile at the heart of the shopping experience. MMN, which developed an instant mobile checkout service allowing both online and main-street goods to be bought with a one-touch application, collaborates with retailers, financial services organisations, operators and media owners to build the standard for mobile commerce. The mobile commerce platform provides consumers with a simple way to buy goods and services quickly, easily and securely anywhere, anytime via their mobile device.
MMN brings a new retail customer base to Monitise including publishing groups wanting to offer instant fulfilment to their shopping supplements, and retailers and brands. Partners already signed up to the network include Carphone Warehouse, Associated Newspapers, Universal Music, Thorntons, HMV, Thomas Pink, Warner Brothers and Pretty Green. Monitise is now working to integrate MMN into its existing services, allowing bank customers to instantly fulfil offers as they browse on the Monitise mobile banking app.
Across the Group, Monitise is in the process of connecting to new merchants, retailers and loyalty networks. These commercial initiatives reflect Monitise's strategic focus on building and hosting high-traffic mobile banking platforms onto which will increasingly layer mobile-payment and mobile-commerce functions to leverage that traffic.
-- mPOS
On 3 December 2012, Monitise announced the acquisition of mobile payments acceptance business eMerit Solutions Limited. Adding eMerit's mobile point of sale (mPOS) technology and services to Monitise's technology platform significantly enhances the Group's ability to deliver end-to-end solutions across banking, payments and commerce to commercial banks, merchant acquiring banks and mobile network operators, both in the UK and internationally. The acquisition strengthens Monitise's bank-grade and secure offering to the small and medium-sized business customers of its partner banks and supports the Group's strategic vision to make money totally mobile across the world for everyone as cash becomes digitised. eMerit, which was one of the first companies to develop an accredited, chip-and-pin mobile card acceptance solution in Europe, develops solutions that are fully EMV, PCI DSS and major card scheme compliant, as well as a wide range of value-added services. Existing partners within the mPOS business include
communications company O2, the commercial brand of Telefonica UK Ltd and HSBC Merchant Services LLP, a wholly-owned subsidiary of Global Payments Inc., and one of the largest independent payment processors in the UK.
-- Monitise India
Mobile Money opportunities are increasing in India, a country where half the population do not bank and are under the age of 25. Given this, regulators and policy makers have been emphasising the importance of financial inclusion across all sections of Indian society, with the Reserve Bank of India promoting paperless payment channels such as mobile. Monitise's strategic focus in markets such as India, the second-largest mobile market in the world with more than 900m mobile subscriptions, is underpinned by the Group's belief that the proliferation of mobile services creates a unique opportunity to provide financial services via mobile.
Shortly before the period-end, mobile payment services went live via the Movida mobile payments joint venture between Visa Inc. and Monitise, enabling bank customers to recharge their mobile phone airtime, pay bills and book movie tickets from any mobile phone.
The new service is initially exclusively available to selected debit and credit card customers of HDFC Bank, India's second-largest private bank with more than 21m customers, although anyone with a mobile phone and a debit or credit card issued by a participating bank will be able to use Movida. The service is available in multiple local languages, from any ordinary phone on all mobile networks via an Interactive Voice Response Channel. A menu-based Unstructured Supplementary Service Data (USSD) service is also available for all GSM mobile phones on selected mobile operators. After linking their HDFC Bank Visa or non-Visa payment card to their mobile phone number, cardholders can access the service to make payments over Movida's secure connection. Over the coming months, Movida expects to announce further partner banks and services.
-- Monitise Asia Pacific
Monitise Asia Pacific is a joint venture between Monitise and First Eastern formed in April 2010. First Eastern is a leading Hong Kong-based investment group, pioneering in the field of direct investments in China and across Asia Pacific. Monitise's strategy is anchored on acting as an enabler at the heart of a rapidly-growing mobile ecosystem. Through the Asia Pacific joint venture, the Group is working with strong local partners to extend its trusted and secure mobile banking, payment and commerce services in the region.
During the period, Monitise Asia Pacific collaborated with its Joint Venture partner in Astra Group, the largest conglomerate in Indonesia, to establish a locally hosted instance of the Monitise Enterprise Platform to provide mobile services for the country's banked and unbanked population. The first of these services has been developed for PermataBank, one of the top 10 financial institutions in Indonesia, and BlackBerry. As a result, the world's first mobile payments service for BlackBerry(R) Messenger (BBM(TM)) will be launched in Indonesia later in February having recently received regulatory approval from Bank Indonesia, the country's central bank.
In Hong Kong, the integration of the Monitise platform to the Jetco ATM switch has been completed giving access to the bank accounts of over 30 member banks. The initial launch service developed with lead partner mobile operator, PCCW mobile, will provide a real-time air time top-up capability through the mobile and is scheduled to go live during the first half of 2013, subject to regulatory approval. Bank of China (Hong Kong) has committed to be the first bank to support the service and other Jetco member banks are expected to follow shortly.
In September 2012, Monitise Asia Pacific entered into a Memorandum of Understanding with Bank of China (Hong Kong) to form a partnership to provide new mobile payment services for its retail and corporate clients through leveraging the capabilities of the Monitise platform. Discussions are progressing towards the signing of a formal partnership agreement underpinned by a roadmap to develop innovative mobile payment and mobile commerce services for the Hong Kong market.
Outlook
-- Full-year revenue target of at least GBP70m ($110m) on track, underpinned by orderbook and strong sales pipeline.
-- Gross margin expectations of at least 70% maintained for full year.
-- More and more banks are seeing the inevitability of mobile becoming their most important customer engagement channel.
-- Group's strengthened balance sheet provides ability for Monitise to further scale its offerings and invest in its platform capabilities in line with market demand and to enable its clients' consumers to bank, pay and buy through the mobile channel.
Alastair Lukies
Monitise Group Chief Executive Officer
Consolidated Statement of Comprehensive Income
Hot Features
Premium
Notes Six months Six months Year
ended ended ended
31 December 31 December 30 June
2012 2011 2012
(unaudited) (unaudited, (audited)
restated)*
GBP'000 GBP'000 GBP'000
------------------------------------------ ------ ------------- ------------- -----------
Revenue 4 27,819 17,110 36,087
Cost of sales (7,773) (6,224) (12,132)
------------------------------------------ ------ ------------- ------------- -----------
Gross profit 20,046 10,886 23,955
Operating costs before depreciation,
amortisation, share-based payments
and exceptional items(1) (34,764) (15,064) (34,367)
EBITDA (2) (14,718) (4,178) (10,412)
Depreciation and amortisation(1) (5,460) (1,203) (3,271)
------------------------------------------ ------ ------------- ------------- -----------
Operating loss before share-based
payments and exceptional items (20,178) (5,381) (13,683)
Share-based payments(1) (2,140) (1,014) (2,707)
Exceptional gain on acquisition
of subsidiary(1) 9 3,785 10,095 10,095
Exceptional items(1,3) (3,317) - (4,995)
Operating (loss) / profit (21,850) 3,700 (11,290)
Net finance (expense) / income (381) 200 412
Share of post-tax loss of joint
ventures (2,190) (2,850) (6,034)
(Loss) / profit before income tax (24,421) 1,050 (16,912)
Income tax (854) 38 527
------------------------------------------ ------ ------------- ------------- -----------
(Loss) / profit for the period /
year attributable to owners of the
Company (25,275) 1,088 (16,385)
------------------------------------------ ------ ------------- ------------- -----------
Other comprehensive income that
may be reclassified subsequently
to profit or loss:
Currency translation differences
on consolidation (4,518) (147) 364
Total comprehensive (loss) / income
for the period / year attributable
to the owners of the Company (29,793) 941 (16,021)
------------------------------------------ ------ ------------- ------------- -----------
(Loss) / earnings per share attributable
to the equity holders of the Company
during the period / year (expressed
in pence per share):
- basic and diluted 5 (2.2) 0.1 (2.1)
------------------------------------------ ------ ------------- ------------- -----------
* Comparatives have been restated due to a change in accounting policy. See note 2.3 for further information.
(1) Total Operating costs after depreciation, amortisation, share-based payments and exceptional items (including one-off costs of GBP204,000 (31 December 2011: GBP135,000) included within Exceptional gain on acquisition of subsidiary) for the period ended 31 December 2012 are GBP45,885,000 (period ended 31 December 2011: GBP17,416,000; year ended 30 June 2012 GBP45,475,000).
(2) EBITDA is defined as Operating loss before exceptional items, depreciation, amortisation and share-based payments charge.
(3) Exceptional items comprise acquisition related expenses and one-off property and restructuring expenses.
All activities derive from continuing operations.
Consolidated Statement of Financial Position
31 December 31 December 30 June
2012
(unaudited) 2011 2012
(unaudited, (audited)(1)
restated)*
Note GBP'000 GBP'000 GBP'000
-------------------------------------- ----- ------------- ------------- --------------
ASSETS
Non-current assets
Property, plant and equipment 8,490 3,013 5,621
Intangible assets 6 191,048 29,773 168,663
Investments in joint ventures 764 786 36
Other receivables - 1,085 1,479
Deferred tax asset 885 1,935 2,578
-------------------------------------- ----- ------------- ------------- --------------
201,187 36,592 178,377
Current assets
Trade and other receivables 11,404 9,756 14,908
Short-term investments - 30,500 -
Cash and cash equivalents 106,414 10,886 19,566
-------------------------------------- ----- ------------- ------------- --------------
117,818 51,142 34,474
Total assets 319,005 87,734 212,851
-------------------------------------- ----- ------------- ------------- --------------
LIABILITIES
Current liabilities
Trade and other payables (35,620) (16,070) (31,708)
Financial liabilities (1,380) - (9,690)
(37,000) (16,070) (41,398)
Non-current liabilities
Trade and other payables (2,803) (20) (4,719)
Financial liabilities (4,592) - -
Deferred tax liabilities (13,487) (1,285) (13,737)
-------------------------------------- ----- ------------- ------------- --------------
(20,882) (1,305) (18,456)
Total liabilities (57,882) (17,375) (59,854)
-------------------------------------- ----- ------------- ------------- --------------
Net assets 261,123 70,359 152,997
-------------------------------------- ----- ------------- ------------- --------------
EQUITY
Capital and reserves attributable
to equity holders of the Company
Ordinary shares 15,414 8,076 10,170
Ordinary shares to be issued 8,192 - 23,460
Share premium 214,753 100,977 101,336
Foreign exchange translation reserve (4,263) (256) 255
Other reserves 128,753 20,707 94,309
Retained loss (101,726) (59,145) (76,533)
-------------------------------------- ----- ------------- ------------- --------------
Total equity 261,123 70,359 152,997
-------------------------------------- ----- ------------- ------------- --------------
* Comparatives have been restated due to a change in accounting policy. See note 2.3 for further information.
(1) Comparatives for the year ended 30 June 2012 have been updated to include revised acquisition accounting and provisional fair values relating to the Monitise Americas Inc. acquisition.
Consolidated Statement of Changes in Equity
Ordinary
shares Reverse Share-based Foreign
Share to be Share Merger acquisition payments Retained exchange
capital issued premium reserve reserve reserve loss reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- -------- --------- -------- -------- ------------ ------------ ---------- --------- ---------
Six months to 31 December 2011
(unaudited, restated)
Balance at
1 July 2011 7,031 - 76,687 32,952 (25,321) 2,182 (60,635) (109) 32,787
Issue of
shares 1,009 - 24,138 10,379 - - - - 35,526
Recognition
of
share-based
payments - - - - - 917 - - 917
Profit for
the 6 months
ended 31
December
2011 - - - - - - 1,088 - 1,088
Other
comprehensive
loss for the
6 months
ended
31 December
2011 - - - - - - - (147) (147)
Exercise of
share options 36 - 152 - - (402) 402 - 188
Balance at
31 December
2011 8,076 - 100,977 43,331 (25,321) 2,697 (59,145) (256) 70,359
---------------- -------- --------- -------- -------- ------------ ------------ ---------- --------- ---------
Twelve months to 30 June
2012 (audited) (1)
Balance at
1 July 2011 7,031 - 76,687 32,952 (25,321) 2,182 (60,635) (109) 32,787
Issue of shares 3,033 - 23,700 76,220 - - - - 102,953
Shares to be
issued
on acquisition - 23,460 - - - 6,179 - - 29,639
Recognition
of
share-based
payments - - - - - 2,584 - - 2,584
Loss for the
year - - - - - - (16,385) - (16,385)
Other
comprehensive
income for
the year - - - - - - - 364 364
Exercise of
share options 106 - 949 - - (487) 487 - 1,055
Balance at
30 June 2012 10,170 23,460 101,336 109,172 (25,321) 10,458 (76,533) 255 152,997
---------------- -------- --------- -------- -------- ------------ ------------ ---------- --------- ---------
Six months to 31 December 2012
(unaudited)
Balance at
1 July 2012
(1) 10,170 23,460 101,336 109,172 (25,321) 10,458 (76,533) 255 152,997
Issue of
shares 5,210 (15,268) 113,142 32,405 - - - - 135,489
Recognition
of
share-based
payments - - - - - 2,121 - - 2,121
Loss for the
6 months
ended
31 December
2012 - - - - - - (25,275) - (25,275)
Other
comprehensive
loss for the
6 months
ended
31 December
2012 - - - - - - - (4,518) (4,518)
Exercise of
share options 34 - 275 - - (82) 82 - 309
Balance at
31 December
2012 15,414 8,192 214,753 141,577 (25,321) 12,497 (101,726) (4,263) 261,123
---------------- -------- --------- -------- -------- ------------ ------------ ---------- --------- ---------
(1) Comparatives for the year ended 30 June 2012 have been updated to include revised acquisition accounting and provisional fair values relating to the Monitise Americas Inc. acquisition.
Consolidated Cash Flow Statement
Six months Six months
ended ended Year ended
31 December 31 December
2012 2011 30 June 2012
(unaudited) (unaudited,
restated) (audited)
Note GBP'000 GBP'000 GBP'000
----------------------------------------- ----- ------------- ------------- --------------
Cash flows used in operating activities
Cash (used in) / generated from
operations 7 (9,628) 1,247 (10,391)
Exceptional expenses (4,371) - (1,214)
Net income tax paid (193) - -
----------------------------------------- ----- ------------- ------------- --------------
Net cash (used in) / generated
from operating activities (14,192) 1,247 (11,605)
----------------------------------------- ----- ------------- ------------- --------------
Cash flows used in investing activities
Cash acquired on acquisition of
subsidiary net of cash consideration
paid 9,10 749 - 1,556
Investments in joint ventures (1,533) (2,033) (2,654)
Loan to joint venture party (1,400) (2,267) (4,267)
Payment of deferred consideration - - (500)
Interest paid (299) (7) (10)
Interest received 33 166 385
Purchases of property, plant and
equipment (3,748) (752) (3,155)
Purchases and capitalisation of
intangible assets (4,807) (1,980) (7,647)
Investment in short-term investments - (20,500) 10,000
----------------------------------------- ----- ------------- ------------- --------------
Net cash used in investing activities (11,005) (27,373) (6,292)
----------------------------------------- ----- ------------- ------------- --------------
Cash flows from financing activities
Proceeds from issuance of ordinary
shares (net of expenses) 117,286 24,335 24,335
Share options exercised 309 654 1,055
Proceeds from long-term borrowings 139 - -
Repayments of long-term borrowings (5,443) - -
and finance leases
Net cash generated from financing
activities 112,291 24,989 25,390
----------------------------------------- ----- ------------- ------------- --------------
Net increase / (decrease) in cash
and cash equivalents 87,094 (1,137) 7,493
Cash and cash equivalents at beginning
of the period / year 19,566 12,167 12,167
Effect of exchange rate fluctuations
on cash held (246) (144) (94)
----------------------------------------- ----- ------------- ------------- --------------
Cash and cash equivalents at end
of the period / year * 106,414 10,886 19,566
----------------------------------------- ----- ------------- ------------- --------------
* The Group's total cash balance is GBP106.4 million (31 December 2011: GBP41.4 million including short term deposits; 30 June 2012:
GBP19.6 million). The Group's net funds balance is GBP100.4 million (31 December 2011: GBP41.4 million including short term deposits; 30 June 2012: GBP9.9 million).
Notes to the Consolidated Financial Statements for the six months ended 31 December 2012
1 General information
Monitise plc 'the Company' is a public limited company incorporated and domiciled in England and Wales, whose shares are publicly traded on the Alternative Investment Market (AIM) of the London Stock Exchange. The address of the registered office is provided at the end of this document. Monitise plc and its subsidiaries are together referred to as 'the Group' throughout this financial information.
The condensed consolidated interim financial information was approved for issue by the Board on 8 February 2013.
This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 30 June 2012 were approved by the Board on 3 September 2012 and delivered to the Registrar of Companies. The Auditors' report on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006.
The condensed consolidated interim financial information is neither audited nor reviewed and the results of operations for the six months ended 31 December 2012 are not necessarily indicative of the operating results for future operating periods.
2 Summary of significant accounting policies 2.1 Basis of preparation
The financial statements have been prepared under the measurement principles of IFRS, using accounting policies and methods of computation consistent, except as noted below, with those set out in the Company's 2012 Annual Report and Accounts. The financial statements have been prepared under the historical cost convention. As permitted by AIM rules, the Group has not applied IAS 34 'Interim Reporting' in preparing this interim report.
Based on projections prepared of the Group's anticipated future results, the Directors have reasonable expectations that the Group will have adequate resources to continue in existence for the foreseeable future. Therefore the Directors continue to adopt the going concern basis in preparing this financial information.
The comparatives for the year ended 30 June 2012 have been updated to include revised provisional valuations of intangible assets and goodwill arising on the Monitise Americas Inc. (formerly Clairmail Inc.) acquisition.
2.2 Accounting policies
The accounting policies applied are consistent with those of the annual financial statements for the year ended 30 June 2012, as described in those annual financial statements.
The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 1 July 2012, but are not currently relevant for the Group, or have had no impact:
-- Amendment to IAS 12 'Income Taxes' -- Amendments IAS 1 'Presentation of financial statements'
The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1 July 2012 and have not been early adopted:
Effective date (subject
to EU endorsement)
1 January 2013
* Annual improvements 2011
1 January 2014
* IFRS 10, 'Consolidated financial statements'
1 January 2014
* IFRS 11 'Joint arrangements'
1 January 2014
* IFRS 12 'Disclosure of interests in other entities'
1 January 2013
* IFRS 13 'Fair value measurements'
1 January 2013
* IAS 19 'Employee benefits' (revised 2011)
1 January 2014
* IAS 27 'Separate financial statements' (revised 2011)
1 January 2014
* IAS 28 'Investments in associates and joint ventures'
(revised 2011)
1 January 2013
* IFRS 1 'First-time adoption of IFRS' (amendments
2012)
1 January 2013
* IFRS 7 'Financial instruments: Disclosures'
(amendments 2011)
1 January 2014
* IAS 32 'Financial instruments: Presentation'
(amendments 2011)
1 January 2015
* IFRS 9 'Financial instruments'
1 January 2013
* Transition Guidance (Amendments to IFRS 10, IFRS 11
and IFRS 12)
1 January 2014
* Investment Entities (Amendments to IFRS 10, IFRS 12
and IAS 27)
The Directors do not believe that the adoption of IFRS 11, 'Joint arrangements' will have a material impact on the presentation of the Group's results due to the change in accounting policy in the prior year (note 2.3). The Group is currently assessing the impact on its results, financial position and cash flows of the other standards listed above.
The Group continues to monitor the potential impact of other new standards and interpretations which may be endorsed by the European Union and require adoption by the Group in future accounting periods.
2.3 Change of method: equity accounting of jointly controlled entities
To improve its financial information and to better reflect the current relationship with the joint venture entities, the Group elected to apply, from the year ended 30 June 2012, the option offered by IAS 31 'Interests in joint ventures', which enables jointly controlled entities to be consolidated using the equity method. This is a presentational change and has no effect on the profit and loss of the Group.
Under proportionate consolidation, the Group combined its share of the joint ventures' individual income and expenses, assets and liabilities and cash flows on a line-by-line basis with similar items in the Group's financial statements.
Under equity accounting, the Group initially recognises an investment in a joint venture at cost, including any goodwill arising. The carrying amount is then increased or decreased to recognise the Group's share of the joint venture's profits or losses after the date of acquisition. The Group's profit or loss includes the Group's share of the profit or loss of the joint ventures.
Equity accounting provides a better reflection of the Group's business model and distinction between its subsidiaries and its joint ventures, given the growing maturity of the joint ventures. This accounting policy election is consistent with IFRS 11 'Joint arrangements' which will apply for the Group for the year ended 30 June 2015.
The Group's share of the joint ventures' assets, liabilities and results have been removed from each line of the statement of financial position and statement of comprehensive income as described above.
In addition, the consolidated results show the revenue and costs of sales from transactions with joint ventures without consolidation adjustments.
Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group's interest in the joint ventures.
In accordance with IAS 8, the change in accounting policy was applied retrospectively from 1 July 2010. Equity at the beginning of the period as well as the comparative data presented has been restated.
The change in accounting policy resulted in an increase in reported revenue of GBP2,533,000 in the comparative year ended 30 June 2012 (31 December 2011: increase of GBP1,331,000), and an increase in reported EBITDA of GBP5,606,000 in the comparative year ended 30 June 2012 (31 December 2011: increase of GBP2,755,000). There has been no change to reported (loss) / profit after tax or reported net assets in either prior period. The change in accounting policy resulted in a decrease in reported cash of GBP1,180,000 at 30 June 2012 (31 December 2011: GBP1,760,000).
3 Critical accounting estimates and judgements
The preparation of the financial statements requires the Group to make estimates, judgements and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. The Directors base their estimates on historical experience and various other assumptions that they believe are reasonable under the circumstances, the results of which form the basis for making judgements about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
In the process of applying the Group's accounting policies, management has made a number of judgements and estimations, which have been consistent with those set out in the Company's 2012 Annual Report and Accounts.
a) Revenue recognition
Revenue for development and integration services is recognised when the right to consideration is earned as each project progresses. Provisions against accrued income are made as and when management become aware of objective evidence that the amount of time worked will not be recoverable in full.
b) Share-based payments
Judgement and estimation is required in determining the fair value of shares at the date of award. The fair value is estimated using valuation techniques which take into account the awards' term, the risk-free interest rate and the expected volatility of the market price of the Company's shares.
c) Going concern
The Directors have prepared projections of the Group's anticipated future results based on their best estimate of likely future developments within the business and therefore believe that the assumption that the Group is a going concern is valid. The financial information has therefore been prepared on the 'going concern' basis.
d) Development costs
The Group has capitalised internally generated intangible assets as required in accordance with IAS 38. Management has assessed expected contribution to be generated from these assets and deemed that no adjustment is required to the carrying value of the assets. The recoverable amount of the assets has been determined based on value in use calculations which require the use of estimates and judgements. Management has also reviewed the assets for impairment and deemed that no impairment is required.
e) Provisional acquisition accounting and goodwill
When the Group makes an acquisition, management reviews the business and assets acquired to determine whether any intangible assets should be recognised separately from goodwill. If such an asset is identified, then it is valued by discounting the probable future cash flows expected to be generated by the asset, over the estimated life of the asset. Where there is uncertainty over the amount of economic benefit and the useful life, this is factored into the calculation. Impairment reviews are performed annually at year end.
f) Impairment of assets
IFRS requires management to undertake an annual test for impairment of indefinite lived assets, including goodwill, and, for finite lived assets, to test for impairment if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Impairment testing is an area involving management judgment, requiring assessment as to whether the carrying value of assets can be supported by the net present value of future cash flows derived from such assets using cash flow projections which have been discounted at an appropriate rate. In calculating the net present value of the future cash flows, certain assumptions are required to be made in respect of highly uncertain matters including management's expectations of growth and discount rates. Changing the assumptions selected by management could significantly affect the Group's impairment evaluation and hence results. The Group's review includes the key assumptions related to sensitivity in the cash flow projections.
g) Deferred tax
Deferred tax assets and liabilities require management judgement in determining the amounts to be recognised. In particular, judgement is used when assessing the extent to which deferred tax assets should be recognised, with consideration given to the timing and level of future taxable income.
4 Segmental information
Monitise's operating segments are being reported based on how the Group is structured and the financial information provided to the chief operating decision maker. The Board of Directors is the Group's chief operating decision-maker. Management has determined the operating segments based on the information reviewed by the Board of Directors for the purposes of allocating resources and assessing performance. The Board of Directors assesses the performance of the operating segments based on a measure of revenue and adjusted EBITDA. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly share-based payment charges, cash, corporate expenses and assets, and tax (as described as 'Corporate' below).
Operating segments are as follows:
Live operations, including both territory deployments and development contracts, consist of:
Monitise UK which provides the Group's products and services to the UK.
Monitise US which represents the Group's products and services to its US clients, including FIS but excluding Visa Inc. which is disclosed within Global accounts. From 26 June 2012, it also includes the results of Monitise Americas Inc.
Global accounts which represents the Group's products and services to Monitise's global cross-territory clients, including Visa Inc. and Visa Europe.
Investment in future operations segment represents the Group's operations which are not yet live operations covering both the pre-sales and start-up period. The segment includes both revenues (e.g. initial licences and development and integration services prior to deployment) and costs. The segment includes investment to host new operational platforms, and new business development activity.
Investment in technology platform segment comprises the ongoing development, enhancement and maintenance costs of the core Monitise technology platform. The division is responsible for the continued availability and improvement of the product across all other segments.
6 months ended 31 December 2012
(unaudited)
Gross Operating
Revenue profit cost EBITDA
Statement of comprehensive income GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- ---------- ---------
Live operations:
Monitise UK 7,510 5,018 (2,544) 2,474
Monitise US 9,430 7,620 (6,432) 1,188
Global accounts 8,738 5,970 (4,367) 1,603
--------- --------- ---------- ---------
Total Live operations 25,678 18,608 (13,343) 5,265
Investment in future operations 2,141 1,438 (5,955) (4,517)
Investment in technology platform - - (9,685) (9,685)
--------- --------- ----------
Total 27,819 20,046 (28,983) (8,937)
--------- --------- ----------
Corporate costs (5,781)
---------
EBITDA (14,718)
---------
6 months ended 31 December 2011
(unaudited, restated)
Gross Operating
Revenue profit cost EBITDA
Statement of comprehensive income GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- ---------- ---------
Live operations:
Monitise UK 6,673 4,482 (1,949) 2,533
Monitise US 588 429 (142) 287
Global accounts 6,557 4,364 (2,076) 2,288
--------- --------- ---------- ---------
Total Live operations 13,818 9,275 (4,167) 5,108
Investment in future operations 3,292 1,611 (4,528) (2,917)
Investment in technology platform - - (3,296) (3,296)
--------- --------- ----------
Total 17,110 10,886 (11,991) (1,105)
--------- --------- ----------
Corporate costs (3,073)
---------
EBITDA (4,178)
---------
Year ended 30 June 2012 (audited)
Gross Operating
Revenue profit cost EBITDA
Statement of comprehensive income GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- ---------- ---------
Live operations:
Monitise UK 14,113 9,580 (4,217) 5,363
Monitise US 1,198 1,032 (516) 516
Global accounts 14,127 9,362 (4,659) 4,703
--------- --------- ---------- ---------
Total Live operations 29,438 19,974 (9,392) 10,582
Investment in future operations 6,649 3,981 (9,140) (5,159)
Investment in technology platform - - (8,779) (8,779)
--------- --------- ----------
Total 36,087 23,955 (27,311) (3,356)
--------- --------- ----------
Corporate costs (7,056)
---------
EBITDA (10,412)
---------
The results of each segment have been prepared using accounting policies consistent with those of the Group as a whole.
Entity-wide disclosures
Products and services: Revenues
-------------- ------------- ---------------
6 months to
6 months to 31 December Year ended
2011
31 December (unaudited, 30 June 2012
2012 restated)
(unaudited) GBP'000 (audited)
GBP'000 GBP'000
-------------- ------------- ---------------
Development and integration
services 13,603 11,725 23,592
User generated revenues 14,216 5,385 12,495
--------------
Total 27,819 17,110 36,087
-------------- ------------- ---------------
5 (Loss) / earnings per share
Basic & Diluted
Basic (loss) / earnings per share is calculated by dividing the (loss) / profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period. Reconciliations of the (loss) / profit and weighted average number of shares used in the calculation are set out below.
Six months
Six months ended Year ended
ended 31 December 31 December 30 June
2012 2011 2012
(unaudited,
(unaudited) restated) (audited)
(Loss) / profit for the period
/ year (GBP'000) (25,275) 1,088 (16,385)
Weighted average number of ordinary
shares in issue ('000) 1,152,882 738,969 775,823
Potential dilutive share options
('000) - 58,158 -
------------------- ------------- -----------
Diluted weighted average number
of ordinary shares in issue
('000) 1,152,882 797,127 775,823
------------------- ------------- -----------
Basic (loss) / earnings per
share (pence) (2.2) 0.1 (2.1)
Options - - -
------------------- ------------- -----------
Diluted (loss) / earnings per
share (pence) (2.2) 0.1 (2.1)
------------------- ------------- -----------
6 Intangible assets
As at 31 December 2012 (unaudited)
Purchased
Intellectual and acquired Capitalised
Customer property Acquired software development
Goodwill contracts rights technology licences costs Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- ----------- ------------- ------------ -------------- ------------- --------
Cost
As at 1 July 2012
(including revised
provisional fair
values) (1) 119,957 29,628 222 6,543 3,993 12,263 172,606
Additions - - - - 1,528 4,038 5,566
Acquisitions (notes
9,10) 21,089 - - 4,860 264 - 26,213
Exchange differences (4,262) (934) - (239) (5) (1) (5,441)
As at 31 December
2012 136,784 28,694 222 11,164 5,780 16,300 198,944
--------- ----------- ------------- ------------ -------------- ------------- --------
Accumulated
amortisation
As at 1 July 2012 - 737 183 - 1,184 1,839 3,943
Charge - 1,855 16 452 517 1,139 3,979
Exchange differences - (18) - (8) - - (26)
As at 31 December
2012 - 2,574 199 444 1,701 2,978 7,896
--------- ----------- ------------- ------------ -------------- ------------- --------
Net book value
--------- ----------- ------------- ------------ -------------- ------------- --------
As at 31 December
2012 136,784 26,120 23 10,720 4,079 13,322 191,048
--------- ----------- ------------- ------------ -------------- ------------- --------
(1) Comparatives for the year ended 30 June 2012 have been updated to include revised provisional valuations relating to the Monitise Americas Inc. acquisition.
As at 31 December 2011 (unaudited, restated)
Purchased
Intellectual and acquired Capitalised
Customer property Acquired software development
Goodwill contracts rights technology licences costs Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- ----------- ------------- ------------ -------------- ------------- --------
Cost
As at 1 July 2011 495 1,194 222 - 1,744 5,078 8,733
Additions - - - - 162 1,818 1,980
Acquisitions 18,265 3,530 - - - - 21,795
As at 31 December
2011 18,760 4,724 222 - 1,906 6,896 32,508
--------- ----------- ------------- ------------ -------------- ------------- --------
Accumulated
amortisation
As at 1 July 2011 - 314 151 - 801 831 2,097
Charge - 85 16 - 143 394 638
As at 31 December
2011 - 399 167 - 944 1,225 2,735
--------- ----------- ------------- ------------ -------------- ------------- --------
Net book value
--------- ----------- ------------- ------------ -------------- ------------- --------
As at 31 December
2011 18,760 4,325 55 - 962 5,671 29,773
--------- ----------- ------------- ------------ -------------- ------------- --------
As at 30 June 2012 (audited) (1)
Purchased
Intellectual and acquired Capitalised
Customer property Acquired software development
Goodwill contracts rights technology licences costs Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- ----------- ------------- ------------ -------------- ------------- --------
Cost
As at 1 July 2011 495 1,194 222 - 1,744 5,078 8,733
Additions - - - - 2,145 7,185 9,330
Acquisitions (including
revised provisional
fair values) 119,070 28,434 - 6,543 104 - 154,151
Exchange differences 392 - - - - - 392
As at 30 June 2012 119,957 29,628 222 6,543 3,993 12,263 172,606
--------- ----------- ------------- ------------ -------------- ------------- --------
Accumulated
amortisation
As at 1 July 2011 - 314 151 - 801 831 2,097
Charge - 423 32 - 383 1,008 1,846
As at 30 June 2012 - 737 183 - 1,184 1,839 3,943
--------- ----------- ------------- ------------ -------------- ------------- --------
Net book value
As at 30 June 2012 119,957 28,891 39 6,543 2,809 10,424 168,663
--------- ----------- ------------- ------------ -------------- ------------- --------
(1) Comparatives for the year ended 30 June 2012 have been updated to include revised provisional valuations relating to the Monitise Americas Inc. acquisition.
7 Reconciliation of net (loss) / profit to net cash (used in) / generated from operating activities
For the six months For the six
ended months ended For the year
31 December 2012 31 December
2011 ended
(unaudited) (unaudited,
restated) 30 June 2012
(audited)
GBP'000 GBP'000 GBP'000
--------------------------------- --------------------- -------------- --------------
(Loss) / profit before
income tax (24,421) 1,050 (16,912)
Adjustments for:
Depreciation 1,481 566 1,425
Amortisation 3,979 637 1,846
Exceptional items (468) (10,095) (5,100)
Share-based payments 2,140 1,014 2,707
Finance expense / (income)
- net 381 (200) (412)
Share of post-tax loss
of joint ventures 2,190 2,850 6,034
Changes in working capital (excluding
the effects of acquisition and
exchange differences on consolidation):
Trade and other receivables 3,174 (2,436) (5,779)
Trade and other payables 1,916 7,861 5,800
Cash (used in) / generated
from operations (9,628) 1,247 (10,391)
--------------------------------- --------------------- -------------- --------------
GBP22.5m (net of expenses) was raised from the issue of 81 million shares in August 2012, and GBP94.8m (net of expenses) was raised from the issue of 333 million shares in December 2012. The Group has a net funds balance at 31 December 2012 of GBP100.4m.
8 Contingencies
Legal Contingencies
Except as set out below, no member of the Group is or has been involved in any governmental, legal or arbitration proceedings and the Directors are not aware of any such proceedings pending or threatened by or against the Group during the 6 months preceding the date of these financial statements which may have or have had, in the recent past, a significant effect on the financial position or profitability of the Group.
Mobile VPT Limited has issued a UK patent infringement claim against Monitise International Limited (formerly known as Monitise Limited) (\"MIL") and other related parties. Following advice from leading counsel, the Directors believe that Monitise's business activities in the UK do not infringe any valid claim of Mobile VPT's Patent and that the Mobile VPT Patent may be invalid. Monitise continues to monitor the status of the proceedings since they were stayed in October 2007 but to date, and in light of the advice received from leading counsel, no provision has been reflected in the financial statements.
Monitise is currently defending five of its customers in the U.S. against claims for patent infringement arising out of its customers' use of Monitise's technology. Monitise has instructed leading U.S. counsel to defend Monitise's interests. On the basis of advice received from its U.S. counsel, the Directors believe that Monitise's business activities in the U.S. do not infringe any valid claim of any of the various patents which have been asserted against its customers and that each of these patents may be invalid. As a result, no provision in respect of any of these five cases has been reflected in the financial statements.
9 Acquisition of subsidiary - Mobile Money Network Limited
On 10 December 2012, the Group acquired the remaining 56% of the issued share capital in its joint venture, Mobile Money Network Limited (MMN), from its joint venture partners for a consideration of GBP16,831,000 paid by the issuance of 55,678,699 shares in Monitise plc. GBP4,155,000 of this consideration was deemed to be settlement of a pre-existing relationship and has not been included in the calculation of goodwill. The total consideration paid for 56% of MMN was therefore GBP12,676,000.
If the acquisition had occurred on 1 July 2012, combined Group revenue and loss for the period would have been GBP26,925,000 and GBP27,341,000.
The Group has made this acquisition in order to integrate MMN's technology and fully take advantage of the Mobile Commerce opportunity. This opportunity does not wholly translate into separately identifiable intangible assets, but represents much of the assessed value within Mobile Money Network and the opportunity in the Mobile Commerce market, supporting the recognised goodwill.
The amount of the equity interest held by the Group in Mobile Money Network Limited immediately before the acquisition had a provisional fair value of GBP10,091,000. The gain on such provisional fair valuation, net of the settlement of the pre-exising relationship, recognised in the Consolidated statement of comprehensive income as an 'exceptional gain' was GBP3,989,000. Offset against this was GBP204,000 of one-off costs.
The acquisition had the following effect on the Group's assets and liabilities:
Provisional
fair value Provisional
Book value adjustment fair value
GBP'000 GBP'000 GBP'000
----------- ------------ ------------
Property, plant and
equipment 71 - 71
Intangible assets 3,122 1,218 4,340
Cash 757 - 757
Trade and other receivables 438 - 438
Trade and other payables (1,444) - (1,444)
Deferred tax liability - (938) (938)
------------ ------------
2,944 280 3,224
----------- ------------ ------------
Provisional fair value of 44%
interest previously held 10,091
Provisional consideration 12,676
Provisional fair value of net
assets acquired (3,224)
------------
Provisional goodwill
recognised 19,543
------------
Provisional consideration
satisfied by:
Issuance of shares 12,548
Fair value of contingent
consideration 128
12,676
------------
No adjustments for accounting policy alignments were required.
A deferred tax liability of GBP938,000 on the capitalisation of the intangible assets has been created on acquisition.
The intangible assets capitalised as part of the acquisition of Mobile Money Network will be amortised over a period of six years and can be analysed as follows:
GBP'000
--------
Technology intangibles 4,080
--------
4,080
--------
The calculation of the provisional fair values of assets and liabilities such as goodwill and intangible assets as well as the assessment of any impairment to fair values generally, involve estimations of likely future cash flows deriving from or accruing to those assets and liabilities. Judgement is also involved in selecting appropriate discount rates for determining the present value of those future cash flows. Final fair values may differ materially from those provisional values stated.
10 Acquisition of subsidiary - eMerit Solutions Limited
On 11 December 2012, the Group acquired the entire issued share capital of eMerit Solutions Limited (eMerit) for a consideration of GBP1,992,000, paid by cash (GBP10,000) and the issuance of 4,724,409 shares in Monitise plc.
If the acquisition had occurred on 1 July 2012, combined Group revenue and loss for the period would not have been materially different.
The Group has made this acquisition in order to extend the capability of the Monitise Enterprise Platform by utilising eMerit's unique and secure point of sale technology. This opportunity does not wholly translate into separately identifiable intangible assets, but represents synergies expected from integrating eMerit's technology within the Monitise offering.
The acquisition had the following effect on the Group's assets and liabilities:
Provisional
fair value Provisional
Book value adjustment fair value
GBP'000 GBP'000 GBP'000
----------- ------------ ------------
Intangible assets 4 780 784
Cash 2 - 2
Other acquired net
liabilities (161) - (161)
Deferred tax liability - (179) (179)
------------
(155) 601 446
----------- ------------ ------------
Provisional consideration 1,992
Provisional fair value of net
liabilities acquired (446)
------------
Provisional goodwill
recognised 1,546
------------
Provisional consideration
satisfied by:
Issuance of shares 1,500
Fair value of contingent
consideration 482
Cash consideration 10
------------
1,992
------------
No adjustments for accounting policy alignments were required.
A deferred tax liability of GBP179,000 on the capitalisation of the intangible assets has been created on acquisition.
The intangible assets capitalised as part of the acquisition of eMerit will be amortised over a period of four years and can be analysed as follows:
GBP'000
--------
Technology intangibles 780
--------
780
--------
The calculation of the provisional fair values of assets and liabilities such as goodwill and intangible assets as well as the assessment of any impairment to fair values generally, involve estimations of likely future cash flows deriving from or accruing to those assets and liabilities. Judgement is also involved in selecting appropriate discount rates for determining the present value of those future cash flows. Final fair values may differ materially from those provisional values stated.
Company Information
Registered office 95 Gresham Street
London
EC2V 7NA
Broker & Nominated Canaccord Genuity Limited
advisor 88 Wood Street
London
EC2V 7QR
Independent auditors PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
1 Embankment Place
London
WC2N 6RH
Registrars Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GMGMZVGFGFZM
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