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
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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