TIDMFNX
RNS Number : 1108N
Fonix Mobile PLC
21 September 2023
21 September 2023
Fonix Mobile plc
("Fonix" or the "Company")
Final Results for the year ended 30 June 2023 (the "Year")
Strong trading momentum continues with significant organic
growth in international markets
Financial Highlights
2023 2022 Change
=================== ========== ========== ======
TPV GBP268.1m GBP258.6m +3.7%
Revenue GBP64,916k GBP53,649k +21.0%
Gross profit GBP15,075k GBP13,232k +13.9%
Adjusted EBITDA(1) GBP11,567k GBP10,265k +12.7%
Adjusted PBT(2) GBP10,979k GBP9,671k +13.5%
Adjusted EPS(3) 8.9p 8.1p +9.9%
Proposed Final DPS 4.89p 4.50p +8.7%
Underlying cash(4) GBP9,446k GBP7,786k +21.3%
Operational Highlights
-- Strong growth in gross profits of 13.9%, which management
considers to be the business' most important performance metric,
driven by international expansion and strong H2 growth in the
UK.
-- Total payment volume ("TPV") of mobile payments was GBP268.1m
(FY22: GBP258.6m) in the Year, with double digit percentage growth
in TPV from commercial clients offset by a reduction in charity
related TPV, which is less correlated to gross profit
performance.
-- Fonix's key business segments of payments and messaging have
each grown profitability by at least 15% in the Year, in line with
expectations and significant wins in the second half of the Year
underpin growth expectations for the year ahead.
-- Launch into Republic of Ireland - a third tier 1 media client
has recently launched services with Fonix in Ireland, on a
multi-year contract, making Fonix the leading provider of
Interactive Services to media customers in the country.
-- Active customer count at 122 customers at the Year end with
additional newly transacting customers, including C4, RTÉ and
Wireless Ireland offset by the loss of some small bulk messaging
and charity clients. 23 new customer contracts signed in the Year,
many of which will start transacting in the year ahead.(5)
-- Robust, scalable platform with 18.9m unique mobile users
making 844m interactions with Fonix's services in the Year, with
100% platform uptime as in previous years.(6)
-- Significant investment in new product features in the Year
including real-time campaign data filters, automated bundle offers
and a new subscription management product.
-- Fonix continues to maintain high client retention, with over
99% of income of a repeating nature.
-- Increased dividend in line with progressive dividend policy.
The Board expects to publish its Annual Report for the year
ending 30 June 2023 on the Company's website on Friday 20 October
2023. The Annual General Meeting is scheduled to take place on
Tuesday 14 November 2023.
The Company announces that its nominated adviser and broker
finnCap Ltd, has changed its name to Cavendish Capital Markets
Limited, following a merger.
Outlook
-- Strong start to FY24, with trading in line with the Board's expectations
-- With high levels of repeating revenue, a strong run-rate
entering the new financial year, and recent tier 1 client wins in
the UK and Ireland, the Board continues to be confident in the
business' growth potential and increasing profitability
Notes
(1) Adjusted EBITDA excludes share-based payment charges along
with depreciation, amortisation, interest and tax from the measure
of profit.
(2) Adjusted PBT is profit before tax excluding share-based
payment charges.
(3) Adjusted EPS is earnings per share excluding share-based
payment charges.
(4) Underlying cash is actual cash excluding cash held on behalf
of customers.
(5) Active customers are those generating more than GBP500 in
gross profit in the previous 12-months.
(6) Unique users are calculated as the number of unique Mobile
Station International Subscriber Directory Numbers (MSISDNs)
processed through Fonix services.
Rob Weisz, CEO, commented:
"We have continued to make great progress on our strategic goals
this year, seizing an initial client-led opportunity in Ireland to
become the leading provider of interactive services for media
customers in a second geographical market. New client wins from
ITV, RTÉ, Channel 4 and Wireless Radio Ireland significantly
underpin our growth expectations in the year ahead whilst at the
same time creating high barriers to entry to prospective
competitors.
This year we have added more depth to our team and products,
with an eye on further international growth and broadening the
services we can offer to clients in the future. Our serviceable
market has expanded significantly in the last 12 months through
direct network connectivity in Ireland, and we will continue to
consider establishing further direct connectivity in other
territories in FY24 and beyond.
The first few months of the new financial year have started
strongly, with a robust run-rate of consumer activity with our key
customers. We continue to make great progress on our strategic
goals and recognise that by delivering on these objectives and
nurturing recent client wins we have a great opportunity to exceed
expectations."
Enquiries
Fonix Mobile plc Tel: +44 20 8114 7000
Robert Weisz, CEO
Michael Foulkes, CFO
Cavendish (Nomad and Broker) Tel: +44 20 7220 0500
Jonny Franklin-Adams / Seamus Fricker (Corporate Finance)
Sunila de Silva (ECM)
About Fonix
Founded in 2006, Fonix provides mobile payments and messaging
services for clients across media, telecoms, entertainment,
enterprise and commerce.
When consumers make payments, they are charged to their mobile
phone bill. This service can be used for ticketing, content, cash
deposits and donations. Fonix's service works by charging digital
payments to the mobile phone bill, either via carrier billing or
SMS billing. Fonix also offers messaging solutions.
Based in London, Fonix is a fast growth business used by blue
chip clients such as ITV, Bauer Media, BT, Global Media, Comic
Relief and Children in Need to name a few.
Chair's Review
I am pleased to update shareholders on another strong year of
double-digit growth in profitability and cash generation. Once
again Fonix has achieved record levels of profitability and
underlying cash, whilst delivering on all its strategic goals laid
out in the previous year. As well as a successful overseas
expansion, the business has continued to win significant new
contracts in the UK which will underpin its growth in the years
ahead as the business looks to nurture those new customer
relationships to their full potential.
The Fonix management team has continued to deliver another
period of strong organic growth, with gross profits and adjusted
EBITDA both increasing by over 12% year on year. At the same time,
the business remains highly cash generative, with underlying cash
increasing 12% over the same period. Given the strong trading
performance and cash generation of the business, along with the
confidence with which we consider the prospects for Fonix, I am
pleased to announce that we will once again be increasing our final
dividend for the year, in line with our progressive dividend policy
to pay out at least 75% of adjusted earnings. The board has
resolved to propose a final dividend of 4.89p, giving a total
dividend for the year of 7.25p (FY22: 6.50p), an increase of 11.5%
year on year.
The business' expansion into international markets has proven to
be a huge success, with international transactions accounting for
over 10% of gross profits in the year. Fonix is a market leader for
interactive services in both the UK and Republic of Ireland, a feat
achieved in Ireland within 12 months of launching there. As well as
generating immediate financial returns for the business, the launch
in Ireland has provided the team with a blueprint for further
geographical expansion, which the board will update shareholders on
as and when new regions are making a meaningful contribution to the
business' growth.
Growth in the UK was strong in the second half of the year, with
Fonix's larger media customers making up ground after the death of
Her Majesty The Queen led to a slight decline year on year in H1
gross profits whilst services were suspended for several weeks as a
mark of respect.
Financial results
Gross profit, which the board considers to be the business' most
important financial metric, increased 13.9% to GBP15.1m (FY22:
GBP13.2m) in the year. As was the case in the previous financial
year, due to the seasonal nature of certain media clients, gross
profit in the first half of the year was higher than the second.
Adjusted EBITDA increased 12.7% to GBP11.6m (FY22: GBP10.3m),
reflecting the business' high operating leverage and the management
team's continued ability to control operating costs without
compromising on top-line growth.
The company closed the year with GBP9.4m in underlying free cash
(FY22: GBP7.8m). Actual cash, which includes money held on behalf
of customers, closed the year at GBP20.6m (FY22: GBP17.0m).
The board recommends that the company pays a final dividend of
4.89p per share in November, bringing the total dividend for the
year to 81% of adjusted earnings per share. If approved, the total
distribution of dividends for the year ended 30 June 2023 will be
GBP7.24m (FY22: GBP6.50m).
Product
As well as onboarding and integrating services for several large
new customers in the UK and Ireland, the business has continued to
invest in new product innovations, including developing a new
subscription engine for charity clients to be launched this autumn
and intelligent dynamic filtering for users of our Campaign Manager
product. At the same time, our dedicated in-house development team
has continued to ensure platform resilience, scalability and cyber
security remain fundamental to everything we do. Looking ahead, the
business is in the early stages of broadening the suite of payment
options integrated with its Campaign Manager and Checkout products,
creating even greater growth opportunities with its key clients and
new prospective customers.
ESG
Throughout the period, the business has continued to maintain a
strong focus on environmental, social and governance (ESG)
excellence, building on our existing foundation of responsible
business and industry practice. ESG considerations are put at the
forefront of all the business' key decision making processes.
During the year, Fonix's entire senior leadership team undertook
Carbon Literacy Training and have committed to make meaningful
changes to both their personal and working practices with the aim
of further limiting the business' impact on the environment.
In recognising the feedback from some shareholders for greater
independent representation on the board and its committees, William
Neale resigned from both the remuneration and audit committees
during the year and the board has committed to consider appointing
a third non-executive director, providing the candidate can add
meaningful strategic or commercial value, as well as fulfil
governance functions.
Finally, I would like to say a thank you to all Fonix's staff,
customers, partners, suppliers and shareholders for their continued
support throughout the year. I look forward to achieving further
successes together in the future.
Conclusion
Fonix has entered the new financial year with an encouraging
run-rate from its key clients and with the opportunity to nurture
several recent client wins into top 5 customers. Fonix's highly
operationally leveraged business model has proven to have solid
resilience against a squeeze on consumer spending and rising
interest rates, with only clients in the charity sector
experiencing a drop-off in consumer activity. The business remains
highly cash generative, with no debt and will continue to reward
shareholders with a progressive dividend policy this year and
beyond. With a growing customer base, significant new customer
wins, extended market reach and increased dominance in the markets
it operates, the board looks to the future with much
confidence.
Edward Spurrier, Non-Executive Chairman
CEO's Statement
This has been another fantastic year for Fonix, in line with
management expectations. The business' strong performance was
driven by significant overseas growth, key client wins in the UK
and continued growth from our existing client base. As well as
double-digit growth in commercial TPV, gross profits, and adjusted
EBITDA, this year saw Fonix further strengthen its market lead in
the UK and establish a similar position of dominance in the
Republic of Ireland.
Commercially, Fonix's share of a transaction ('take-rate') in
Ireland is broadly consistent with the UK, however the gross profit
percentage reported is considerably lower due to a much higher
take-rate commanded by mobile network operators in Ireland, which
is reflected in the company reporting higher revenue and cost of
sales under IFRS 15.
Throughout the year we've stayed true to our mantra of only
working with high quality clients with the potential for enterprise
scale revenues in our core sectors, a strategy that often means we
only focus on a handful of sales opportunities at a time and invest
as much time in optimising existing client relationships as we do
in winning new ones. Through this approach, Fonix has never lost a
significant customer to a competitor and is able to invest in
developing sector specific product features that create substantial
tangible value for our clients.
Market opportunity
The majority of Fonix's growth this year has come from growth in
international markets, which has seen us launch new services with
Bauer Ireland, RTÉ (Ireland's National Television and Radio
Broadcaster) and Wireless Radio Ireland, along with several smaller
new clients in the Republic of Ireland. All have been delivered
with minimal customisation of our cloud platform, which was
connected to five new international mobile network operators and
transacted with 16% of the adult population in Ireland during the
year.
The success in Ireland has clearly demonstrated the business's
ability to scale internationally, with minimal incremental cost.
Beyond Ireland, we have already started to build relationships in
other international markets with similar characteristics, which we
believe present good opportunities for further international growth
in the years ahead.
Along with opportunities in new geographical markets, this year
has seen us win notable new contracts in the UK to run interactive
services for the leading TV broadcasters ITV Plc and Channel 4.
Both accounts represent significant growth opportunities in FY24
and beyond. In addition, we continue to identify other UK
broadcasters currently not harnessing the power of interactive
services, which we hope to win as customers in the years ahead.
The market for frictionless mobile payments remains significant
and continues to grow year-on-year despite the expansion in
alternative payment options such as Apple Pay and Google Pay. For
the majority of our customers, adding carrier billing as a payment
option is largely shown to reduce checkout abandonment and increase
sales, rather than cannibalising existing transactions with
alternative payment methods.
Delivering against our growth strategy
Fonix continues to take a balanced approach to sustainable
growth, looking to achieve a material percentage growth in gross
profits and shareholder income year-on-year. There are five clear
elements to our growth strategy set out below, which continue to
guide our decision making and how we invest:
1. Grow & deepen existing client relationships
Our ability to nurture and scale clients' accounts in ways
unmatched by our competitors is one of the key drivers behind
Fonix's high client retention rate and reasons we have been able to
continuously increase our market share in our core sectors and
markets. Our existing clients have continued to grow strongly in
the year, despite a temporary suspension of services in the first
half of the year following the death of HM The Queen, narrowing the
growth below what we would normally expect to see.
As it can often take years for clients to reach their peak
transacting level, we continue to see significant growth
opportunities from our existing customer base through optimisation
of campaigns, new interactive products which will drive more
participation and possibly increased tariffs in the future. In
particular, we recognise that our relatively new Irish customer
base and recent media customer wins in the UK are still in the
process of maximising what they can do with Fonix.
2. Take a disciplined sector focus
We continue to take a disciplined sector focused approach to
growth, targeting large enterprise clients and key partnerships
across our core markets and geographies. Media continues to be our
biggest sector, representing over 75% of gross profits in the year,
with strong growth in both the UK and Ireland, including launching
new services with ITV, Channel 4, RTÉ and Wireless Radio Ireland as
well as some smaller regional radio stations. Our Campaign Manager
product continues to advance significantly beyond the capabilities
of any other providers in the market and we continue to see
broadcasters seeking to diversify revenue away from a purely
advertising funded business model. Media has been our entry sector
in expanding services in Ireland, but we also see plenty of
opportunity to win deals across our other target sectors in Ireland
over time.
FY23 provided a challenging time for charities, with consumer
donations down around 30% year on year. There were also fewer
charitable campaigns in the year due to a change in the timing of
some annual telethons, resulting in a reduction in managed service
fees in the year. Coming into FY24 we expect a return to growth in
the charity sector, with new campaigns such as the Game4Ukraine
event broadcast on Sky in August, alongside a normalised schedule
of activity from existing customers. In addition, Fonix is close to
launching a new subscription product for our charity clients,
allowing them to engage and collect donations from consumers
throughout the year.
3. Create sustainable, long-term profitability for shareholders
The company's underlying cash balances have continued to grow
strongly, as the company has continued to deliver on its strategy
of achieving sustainable, long-term growth in profitability with
limited incremental capital and operational investment. With only a
modest expansion in commercial resources, Fonix has been able to
win significant new customer relationships in both the UK and
overseas during the year. This is a testament to the company's
reputation for having the best talent in the industry along with an
exemplary track record of compliance and reliability.
Fonix's highly operationally leveraged business model has
translated seamlessly into operations in Ireland and we see no
reason why Fonix will not continue to see further economies of
scale as it expands into other markets as well.
4. Be client led with international expansion
Our approach to international expansion continues to be client
led, through our network of tier 1 multinational clients. Following
our initial launch into Ireland through a referral from a UK
customer, we have since added several new customers in Ireland and
are now the master aggregator for all third-party aggregators
looking to provide services to Virgin Media Ireland mobile
consumers.
Outside of Ireland, further international growth remains a
priority for the business, although it still forms a relatively
small part of our short term forecasts. We are already making good
progress in exploring other potential international markets and
will discuss the specifics of new territories with shareholders
once they are making a meaningful contribution to the business'
growth.
5. Widen our technological and operational advantage
Targeting a limited number of sectors with large underlying
markets has enabled Fonix to focus on building new innovative
product features which create real tangible value for our clients
and significant barriers to entry for any prospective
competition.
During the year, the company made enhancements to our technical
infrastructure to double the peak load capacity of our core
products, allowing us to support significantly more and larger
client campaigns in parallel.
Campaign Manager continues to be a market leading hybrid CPaaS
and payments product, allowing our clients to optimise and increase
the monetisation of their audience, to an extent unmatched by our
competitors or alternative payment providers. This year we have
added dynamic filtering of large data sets, new third-party
integrations, international IVR votes and competition entries, and
a subscription engine for key charity clients to fundraise all year
round.
We have now migrated the vast majority of our customers to our
new Checkout product, in preparation for introducing support for
additional alternative payments in the year ahead. We strongly
believe combining our phone-paid billing solutions with more
traditional alternative payment methods, along with our sector
specific intelligent payment routing will provide us with a unique
value proposition when entering new markets that will enable us to
displace even the most long standing incumbent providers.
We are confident these technological advantages will not only
ensure retention of our existing customers, but also help us win
significant new business from our competitors and allow us to
target greenfield opportunities in new emerging sectors and
markets.
We have now mirrored the trusted relationship we hold with both
regulators and mobile operators in the UK with the equivalent
stakeholder counterparts in Ireland, as demonstrated by our
appointment in the year as master aggregator for Virgin Media
Ireland. These key partnerships have not only proven invaluable
when winning new customers, but have also been fundamental in
discussing new direct connectivity with mobile operators in markets
where there have been no new connections authorised in decades. In
addition, we find these relationships have further reinforced the
barriers to entry against other providers looking to form direct
network operator connectivity in our core markets.
People
Fonix prides itself on being a great place to work and having a
culture where our team can thrive. Our average headcount grew over
13% to 43 employees over the year. Whilst inflation has remained
persistently high throughout the period, leading to above average
pay rises in January, I am pleased to say that we have been able to
keep cost growth within our existing plans and offset any unplanned
increases with savings elsewhere. Looking ahead, Fonix's highly
operationally leveraged business model means we expect to be able
to manage the wider inflationary pressures within our existing
growth projections and there is no immediate need to significantly
change the size of the team in order to hit our growth targets.
Product
We continued to make good progress on our product roadmap with
our dedicated in-house development team focusing on platform
scalability, resilience, security and customer usability, coupled
with releasing several new features as mentioned in the 'Widen our
technological and operational advantage' section above.
Outlook
We have continued to make great progress on our strategic goals
this year, seizing an initial client-led opportunity in Ireland to
become the leading provider of interactive services for media
customers in a second geographical market. New client wins from
ITV, RTÉ, Channel 4 and Wireless Radio Ireland significantly
underpin our growth expectations in the year ahead whilst at the
same time creating high barriers to entry to prospective
competitors.
This year we have added more depth to our team and products,
with an eye on further international growth and broadening the
services we can offer to clients in the future. Our serviceable
market has expanded significantly in the last 12 months through
direct network connectivity in Ireland, and we will continue to
consider establishing further direct connectivity in other
territories in FY24 and beyond.
The first few months of the new financial year have started
strongly, with a robust run-rate of consumer activity with our key
customers. We continue to make great progress on our strategic
goals and recognise that by delivering on these objectives and
nurturing recent client wins we have a great opportunity to exceed
expectations.
Robert Weisz, Chief Executive Officer
Financial Review
Key performance indicators
Financial 2023 2022 Change
=========================== ========== ========== ======
Gross profit GBP15,075k GBP13,232k 13.9%
Adjusted EBITDA(1) GBP11,567k GBP10,265k 12.7%
Adjusted PBT(2) GBP10,979k GBP9,671k 13.5%
Underlying cash(3) GBP9,446k GBP7,786k 21.3%
Adjusted EPS(4) 8.9p 8.1p 9.9%
Adjusted ROCE(5) 111.50% 120.95%
Non-financial 2023 2022 Change
=========================== ========== ========== ======
Total payments value (TPV) GBP268.1m GBP258.6m 3.7%
Active customer count(6) 122 123 -0.8%
(1) Adjusted EBITDA excludes share-based payment charges along
with depreciation, amortisation, interest and tax from the measure
of profit.
(2) Adjusted PBT is profit after tax excluding share-based
payment charges
(3) Underlying cash is actual cash excluding cash held on behalf
of customers.
(4) Adjusted EPS is earnings per share excluding share-based
payment charges
(5) Adjusted ROCE is return on capital employed calculated as
adjusted EBIT (being earnings before interest and tax excluding
share-based payment charges) divided by capital employed (total
assets less total current liabilities).
(6) Active customers are those that generated more than GBP500
in gross margin in the previous 12-months
Financial Results
Total payments volume (TPV)
TPV represents the cash payments processed by Fonix on behalf of
customers. TPV grew 3.5% to GBP268m (2022: GBP259m) in the year,
with particularly strong growth in the value of SMS billing
transactions, offset by a 30% decline in charity related TPV.
Revenue and other income
Company revenues for the year increased to GBP64.9m (2022:
GBP53.6m), driven by strong growth in the mobile payments and
messaging service lines. Revenues recognised for mobile payments
relate to the total commission charged to customers, including the
mobile network operator (MNO) share of a transaction, with the MNO
commission also recognised within cost of sales. The directors
therefore monitor results and performance of the company based upon
the gross profit generated, which is considered the more meaningful
measure of performance.
Gross profit
Gross profit is the business' most important financial indicator
as this represents the company's share of revenue for processing
mobile payments and SMS messages.
Gross profit for the year increased to GBP15.1m (2022: GBP13.2m)
growing 14% on the previous year, with mobile payments growing 16%
(2022: 14%), mobile messaging growing 20% (2022: 30%) and managed
services declining 18% (2022: growing 28%). The decline in managed
service fees, which makes up a relatively small amount of gross
profit was attributable to a reduction in the number and size of
charity campaigns in the period. As was the case in FY22, growth
was skewed slightly to the first half of the year due to the
seasonality in the trade of media related clients.
Blended gross profit margins declined slightly to 23.2% (2022:
24.7%) attributable to falls in charity related managed services
fees as well as changes in the product and client mix affecting the
mobile payments and mobile messaging gross margin percentage. In
particular, mobile payments in the Republic of Ireland are at a
significantly lower margin percentage than those in the UK, due to
the higher revenue share taken by mobile carriers in the Irish
market.
Adjusted operating expenses
Operating costs continue to have been kept firmly under control,
with costs generally only increasing where the business has
invested more in future growth. Adjusted operating costs increased
16% in the year to GBP3.5m (2022: GBP3.0m). The majority of the
increase related to additional staff costs and incentives as the
business has continued to invest more in growth, along with an
increased spend on IT infrastructure costs.
Staff related costs and incentives increased to GBP3.5m (2022:
GBP3.0m) in the year reflecting an increase in commercial and
engineering headcount, as well as above average inflationary pay
increases, offset by some efficiency savings. Average headcount for
the year was 43 (2022: 38).
IT hosting costs increased to GBP205k (2022: GBP175k) in the
year as the company upgraded its platform infrastructure.
Software development costs of GBP804k (2022: GBP608k) were
capitalised in the year, representing 62% (2022: 60%) of
development costs in the year. The increase reflects increases in
the size of the development team and additional investment in the
Fonix platform. The capitalisation of current year development
spend was offset by an amortisation charge of GBP560k (2022:
GBP462k). Development costs are amortised on a straight-line basis
over 3-years.
Adjusted EBITDA
The growth in gross profit and continued control of costs have
resulted in a significant increase in adjusted EBITDA which is up
13% at GBP11.6m (2022: GBP10.3m) for the year. To provide a better
guide to the underlying business performance, adjusted EBITDA
excludes share-based payment charges along with depreciation,
amortisation, interest and tax from the measure of profit.
Finance income and expenses
Finance expense, which relates to the unwinding of the
discounted lease liability, decreased marginally to GBP4k (2022:
GBP10k) as the company's current office lease expires in November
2023. Management expects to renew the lease in the next financial
year.
Interest on bank deposits increased to GBP341k (2022: GBP8k) due
to the increase in bank interest rates.
EPS and dividends
Given the company's strong performance, cash resources and
distributable reserves, as well as the confidence in the company's
prospects, the board recommends to pay out 81% of adjusted EPS to
shareholders in the form of an ordinary dividend, which is in line
with the company's progressive dividend policy to pay out at least
75% of adjusted earnings per share each year.. The board therefore
intends to recommend a final dividend of 4.89p (2022: 4.50p) per
share to be approved at the AGM in November.
Statement of Financial Position
The company had net assets of GBP9.4m (2022: GBP7.8m) at the
year-end, including capitalised software development costs with a
carrying value of GBP1.2m (2022: GBP1.0m). The movement in net
assets reflects profits after tax less dividend payments and share
buy-backs.
Current assets increased to GBP57m (2022: GBP49m) as the company
was owed more trade receivables and held greater cash balances at
the year end, due to the increase in trade year on year. Current
liabilities similarly increased to GBP48m (2022: GBP42m) as the
company owed more trade payables at the year end, due to the
increase in trade year on year. Non-current liabilities decreased
to GBP0.1m (2022: GBP0.2m) as the business is now in the final year
of its 3-year office lease agreement signed November 2020.
Cash and underlying cash
The board distinguishes between actual cash, which includes cash
held on behalf of customers, and underlying cash, which excludes
cash held on behalf of customers.
Underlying cash far better represents the free cash flow
available to the business. Underlying cash increased to GBP9.4m
(2022: GBP7.8m) due to additional retained earnings less cash used
in share buy-backs.
Actual cash, which includes cash held on behalf of customers,
can vary substantially from period to period and is particularly
sensitive to the timing of passthrough outpayments for customer
charity campaigns. Actual cash held increased to GBP20.6m (2022:
GBP17.0m) in the year. The increase beyond the increase in
underlying cash is purely timing related and attributable to a
mobile network operator settling a trade receivable invoice a few
days earlier than the previous year.
Michael Foulkes, Chief Finance Officer
Audited results for the year ended 30 June 2023
Statement of Comprehensive Income
For the year ended 30 June 2023
2023 2022
Note GBP'000 GBP'000
=========================================== ==== ======== ========
Continuing operations
Revenue 4 64,916 53,649
Cost of sales (49,841) (40,417)
============================================ ==== ======== ========
Gross profit 3 15,075 13,232
Other income - 51
Adjusted operating expenses(1) (3,508) (3,018)
============================================ ==== ======== ========
Profit before interest, tax, depreciation,
amortisation, share-based payment charge
and exceptional costs 11,567 10,265
Share-based payment charge (125) (100)
Depreciation and amortisation (924) (592)
============================================ ==== ======== ========
Operating profit 10,518 9,573
Finance income 341 8
Finance expense (5) (10)
============================================ ==== ======== ========
Profit before taxation 10,854 9,571
Taxation (2,057) (1,545)
============================================ ==== ======== ========
Total comprehensive profit for the
financial year 8,797 8,026
============================================ ==== ======== ========
(1) Adjusted operating expenses excludes share-based payment
charge, depreciation and amortisation
Earnings per share 2023 2022
===================================== ==== ====
Basic earnings per share 8.8p 8.0p
Diluted earnings per share 8.7p 8.0p
Adjusted basic earnings per share 8.9p 8.1p
===================================== ==== ====
Statement of Financial Position
As at 30 June 2023
2023 2022
GBP'000 GBP'000
============================= ======= =======
Non-current assets
Intangible asset 1,239 995
Right of use asset 42 155
Tangible assets 28 25
================================ ======= =======
1,309 1,175
============================= ======= =======
Current assets
Trade and other receivables 36,058 31,975
Cash and cash equivalent 20,648 16,992
================================ ======= =======
56,706 48,967
============================= ======= =======
Total assets 58,015 50,142
================================ ======= =======
Equity and liabilities
Equity
Share capital 100 100
Share premium account 679 679
Treasury shares (495) -
Share option reserves 297 172
Retained earnings 8,807 6,870
================================ ======= =======
9,388 7,821
============================= ======= =======
Liabilities
Non-current liabilities
Deferred tax liabilities 157 160
Lease liabilities - 17
================================ ======= =======
157 177
============================= ======= =======
Current liabilities
Trade and other payables 48,453 42,028
Lease liabilities 17 116
================================ ======= =======
48,470 42,144
============================= ======= =======
Total liabilities 48,627 42,321
================================ ======= =======
Total equity and liabilities 58,015 50,142
================================ ======= =======
Statement of Changes in Equity
For the year ended 30 June 2023
Share
Share Share option Treasury Retained
capital premium reserve shares earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=============================== ======== ======== ======== ======== ========= =======
Balance at 1 July 2021 100 679 72 - 4,374 5,225
=============================== ======== ======== ======== ======== ========= =======
Profit for the financial
year - - - - 8,026 8,026
=============================== ======== ======== ======== ======== ========= =======
- - - - 8,026 8,026
=============================== ======== ======== ======== ======== ========= =======
Transactions with shareholders
Dividends - - - - (5,530) (5,530)
Share-based payment charge - - 100 - - 100
Capital issued - - - - - -
=============================== ======== ======== ======== ======== ========= =======
- - 100 - (5,530) (5,430)
=============================== ======== ======== ======== ======== ========= =======
Balance at 30 June 2022 100 679 172 - 6,870 7,821
=============================== ======== ======== ======== ======== ========= =======
Profit for the financial
year - - - - 8,797 8,797
=============================== ======== ======== ======== ======== ========= =======
- - - - 8,797 8,797
=============================== ======== ======== ======== ======== ========= =======
Transactions with shareholders
Dividends - - - - (6,860) (6,860)
Share-based payment charge - - 125 - - 125
Purchase of own shares - - - (495) - (495)
Capital issued - - - - - -
=============================== ======== ======== ======== ======== ========= =======
- - 125 (495) (6,860) (7,230)
=============================== ======== ======== ======== ======== ========= =======
Balance at 30 June 2023 100 679 297 (495) 8,807 9,388
=============================== ======== ======== ======== ======== ========= =======
Statement of Cash Flows
For the year ended 30 June 2023
2023 2022
GBP'000 GBP'000
========================================= ======= =======
Cash flows from operating activities
Profit before taxation 10,854 9,571
Adjustments for
Depreciation 16 15
Amortisation 908 575
Share-based payment charge 125 100
Finance income (341) (8)
Finance expense 5 10
(Increase)/decrease in trade and
other receivables (4,083) (7,095)
Increase/(decrease) in trade and
other payables 6,115 4,121
Income tax paid (1,750) (1,365)
========================================== ======= =======
Net cash flows from operating activities 11,849 5,924
========================================== ======= =======
Cash flows from investing activities
Interest received 341 8
Payments to acquire tangible assets (19) (17)
Payments to acquire intangible assets (1,040) (608)
========================================== ======= =======
Net cash flows from investing activities (718) (617)
========================================== ======= =======
Cash flows from financing activities
Dividends paid (6,860) (5,530)
Purchase of own shares (495) -
Capital payments in respect of leases (116) (111)
Interest paid in respect of leases (4) (10)
========================================== ======= =======
Net cash flows from financing activities (7,475) (5,651)
========================================== ======= =======
Net (decrease)/increase in cash and
cash equivalents for the period 3,656 (344)
Cash and cash equivalents at beginning
of period 16,992 17,336
========================================== ======= =======
Cash and cash equivalents at end
of period 20,648 16,992
========================================== ======= =======
Statement of Underlying Free Cash Flows
For the year ended 30 June 2023
The company's mobile payments segment involves collecting cash
on behalf of clients which is then paid to clients net of the
company's share of revenues or fees associated with collecting the
cash. The company's cash balance therefore fluctuates depending on
the timing of "pass through" cash received and paid.
The analysis below shows the movements in the company's free
underlying cash flow excluding the monies held on behalf of
customers. The underlying cash is derived from actual cash by
adjusting for customer related trade and other receivables less
customer related trade and other payables and customer related VAT
liabilities.
2023 2022
GBP'000 GBP'000
=================================================== ======= =======
Underlying free cash flows from operating
activities
Profit before taxation 10,854 9,571
Adjustments for
Depreciation 16 15
Amortisation 908 575
Share-based payment charge 125 100
Finance income (341) (8)
Finance expense 5 10
(Increase)/decrease in trade and other receivables 11 (31)
Increase/(decrease) in trade and other payables 24 139
Income tax paid (1,750) (1,365)
==================================================== ======= =======
Net underlying free cash flows from operating
activities 9,852 9,006
==================================================== ======= =======
Underlying free cash flows from investing
activities
Interest received 341 8
Payments to acquire tangible assets (19) (17)
Payments to acquire intangible assets (1,039) (608)
==================================================== ======= =======
Net underlying free cash flows from investing
activities (717) (617)
==================================================== ======= =======
Underlying free cash flows from financing
activities
Dividends paid (6,860) (5,530)
Purchase of own shares (495) -
Capital payments in respect of leases (116) (111)
Interest paid in respect of leases (4) (10)
==================================================== ======= =======
Net underlying free cash flows from financing
activities (7,475) (5,651)
==================================================== ======= =======
Net (decrease)/increase in underlying free
cash for the period 1,660 2,738
Underlying free cash at beginning of period 7,786 5,048
==================================================== ======= =======
Underlying free cash equivalents at end of
period 9,446 7,786
==================================================== ======= =======
Notes to the preliminary financial information
1. Basis of preparation
The financial information set out herein does not constitute
statutory accounts as defined in Section 434 of the Companies Act
2006. The financial information for the Year ended 30 June 2023 has
been extracted from the Company's audited financial statements
which were approved by the Board of Directors on 20 September 2023
and which, if adopted by the members at the Annual General Meeting,
will be delivered to the Registrar of Companies for England and
Wales.
The financial information for the Year ended 30 June 2022 has
been extracted from the Company's audited financial statements
which were approved by the Board of Directors on 21 September 2022
and which have been delivered to the Registrar of Companies for
England and Wales.
The reports of the auditor on both these financial statements
were unqualified, did not include any references to any matters to
which the auditors drew attention by way of emphasis without
qualifying their report and did not contain a statement under
Section 498(2) or Section 498(3) of the Companies Act 2006.
The information included in this preliminary announcement has
been prepared on a going concern basis under the historical cost
convention, and in accordance with International Accounting
Standards in conformity with the requirements of the Companies Act
2006 and the International Financial Reporting Interpretations
Committee (IFRIC) interpretations issued by the International
Accounting Standards Board ("IASB") that are effective as at the
date of these financial statements.
The Company is a public limited company incorporated and
domiciled in England & Wales and whose shares are quoted on
AIM, a market operated by The London Stock Exchange.
2. Going concern
At the time of approving the financial statements, the directors
have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable
future. Fonix Mobile is not externally funded and accordingly is
not affected by borrowing covenants. In addition, the cost of
capital represents the dividend distributions - which are
discretionary.
At 30 June 2023 the company had Cash and Cash Equivalents of
GBP20.6 million (2022: GBP17.0 million) and Net Current Assets of
GBP8.2 million (2022: GBP6.8 million). The business model of Fonix
Mobile is cash generative - with increased sales impacting
positively on the working capital cycle and profits from trading
activities being rapidly reflected in cash at bank.
The Directors maintain sufficient net assets in the company by
moderating or increasing dividend distributions as necessary.
The Directors have prepared detailed cash flow forecasts for the
next 18 months that indicate the existing activities of the Company
do not require additional funding during that period. The forecasts
are challenged by various downside scenarios to stress test the
estimated future cash and net current asset position. The directors
are pleased to note that the stress tests did not have a
significant impact on the funding requirement. In addition, current
trading is in line with the forecast.
Accordingly, the Directors continue to adopt the going concern
basis of accounting in preparing these financial statements.
3. Segmental reporting
Management currently identifies one operating segment in the
Company under IFRS 8 - being the facilitating of mobile payments
and messaging. However, the Directors monitor results and
performance based upon the Gross Profit generated from the Service
lines as follows:
2023 2022
Gross profit GBP'000 GBP'000
==================== ======= =======
Mobile payments 12,689 10,951
Mobile messaging 1,626 1,355
Managed services 760 926
==================== ======= =======
15,075 13,232
================= ======= =======
Differences between the way in which the single operating
segment is reported in the financial statements and the internal
reporting to the Board for monitoring and strategic decisions,
relates to the recording of revenue in line with IFRS 15. The IFRS
adjustments do not impact on the calculation or reporting of Gross
Profit.
Gross profits can be attributed to the following geographical
locations, based on the end user and the associated mobile network
operators' location:
2023 2022
Gross profit by geography GBP'000 GBP'000
============================= ======= =======
United Kingdom 13,534 13,212
Rest of Europe 1,541 20
============================= ======= =======
15,075 13,232
========================== ======= =======
4. Revenue
The Company disaggregates revenue between the different streams
outlined as this is intended to show its nature and amount.
The total revenue of the Company has been derived from its
principal activity undertaken wholly in the United Kingdom and
EU.
Revenue is recognised at the point in time of each transaction
when the economic benefit is received. The total revenue of the
Company by Service Line is as follows:
2023 2022
Revenue by service line GBP'000 GBP'000
=========================== ======= =======
Mobile payments 47,607 40,129
Mobile messaging 15,513 11,673
Managed services 1,796 1,847
=========================== ======= =======
64,916 53,649
======================== ======= =======
Revenues can be attributed to the following geographical
locations, based on the end user and the associated mobile network
operators' location:
2023 2022
Revenue by geography GBP'000 GBP'000
======================== ======= =======
United Kingdom 55,352 53,442
Rest of Europe 9,564 207
======================== ======= =======
64,916 53,649
===================== ======= =======
The number of customers representing more than 10% of revenue in
year were 3 (2022: 2)
5. Earnings per share
The calculations of earnings per share are based on the
following profits and number of shares:
2023 2022
GBP'000 GBP'000
================================== =========== ===========
Retained profit for the financial
year 8,797 8,026
===================================== =========== ===========
2023 2022
Number of shares Number Number
===================================== =========== ===========
Weighted average number of
shares outstanding 99,970,504 100,000,000
Share options 760,799 510,056
===================================== =========== ===========
100,731,303 100,510,056
================================== =========== ===========
Earnings per ordinary share
Basic 8.8p 8.0p
Diluted 8.7p 8.0p
===================================== =========== ===========
The calculations of adjusted earnings per share are based on the
following adjusted profits and number of shares listed above:
2023 2022
Adjusted earnings per share GBP'000 GBP'000
===================================== ======= =======
Retained profit for the financial
year 8,797 8,026
===================================== ======= =======
Adjustments
Share-based payment charge 125 100
===================================== ======= =======
Net adjustments 125 100
Adjusted earnings 8,922 8,126
===================================== ======= =======
Adjusted basic earnings per
ordinary share 8.9p 8.1p
===================================== ======= =======
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END
FR EALNEAALDEFA
(END) Dow Jones Newswires
September 21, 2023 02:00 ET (06:00 GMT)
Fonix Mobile (LSE:FNX)
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