TIDMFNX
RNS Number : 7354M
Fonix Mobile PLC
23 September 2021
23 September 2021
Fonix Mobile plc
("Fonix" or the "Company")
Final Results for the year ended 30 June 2021
Strong earnings growth and momentum
Financial Highlights
FY21 FY20 Change
==================================== ========= ========= =======
TPV GBP233.4m GBP211.7m +10.3%
Revenue GBP47.7m GBP40.1m +19.0%
Gross profit GBP11.3m GBP10.0m +13.6%
Adjusted EBITDA(1) GBP8.8m GBP7.7m +15.1%
Adjusted PBT(2) GBP8.3m GBP7.3m +14.6%
Adjusted EPS(3) 7.0p 6.1p(4)
Proposed Final DPS 3.53p n/a
Underlying cash(5) GBP5.0m GBP2.0m +158.1%
Underlying cash inflow/(outflow)(5) GBP3.1m GBP(0.3)m
Operational Highlights
-- Fonix's three business segments of payments, messaging and
managed services have each continued to grow comfortably in line
with management's expectations since Fonix's admission to trading
on the AIM in October 2020
-- 34 new customer contracts signed in period, with the active
customer count increasing by 13% to 111 active customers at the
year end(6)
-- 18m unique mobile users made 628m interactions with Fonix's services in the year(7)
-- Record GBP32m Total Payment Volume (TPV) processed in a single month
-- 50% increase in the number of charity clients using Fonix's payment services
-- Fonix continues to maintain 100% client retention, with over
99% of income of a repeating nature
-- 100% platform uptime in the period
-- New connectivity in international markets
The Board expects to publish its Annual Report for the year
ending 30 June 2021 on the company's website on Thursday 21 October
2021. The Annual General Meeting is scheduled to take place on
Thursday 11 November 2021.
Outlook
-- Positive start to FY22, with trading in line with the Board's expectations
-- With a strong entry run-rate, along with new client wins, a
key new technology partnership and new market connectivity, the
Board continues to be confident in the business' growth potential
and increasing profitability
Notes
(1) Adjusted EBITDA excludes share-based payment charges and AIM
admission costs along with depreciation, amortisation, interest and
tax from the measure of profit.
(2) Adjusted PBT is profit after tax excluding share-based
payment charges and AIM admission costs.
(3) Adjusted EPS is earnings per share excluding share-based
payment charges and AIM admission costs.
(4) The weighted average number of shares in issue has been
recalculated to take into account the share reorganisation that was
implemented in September and October 2020, whereby the ordinary
shares in issue was increased from 4,476,466 ordinary shares of
GBP0.00001 each to 100,000,000 ordinary shares of GBP0.001
each.
(5) Underlying cash is actual cash excluding cash held on behalf
of customers.
(6) Active customers are those generating more than GBP500 in
gross profit in the previous 12-months.
(7) 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 and have finished the year with a really solid set of
results. The team has responded very well to all the challenges put
in front of them and I am assured we have the foundations in place
for many years of continued growth.
We will continue to invest in growth in the year ahead,
increasing our spend as planned on sales and marketing along with
investing in new product features as we look to continue to deliver
sustainable, highly profitable growth for our shareholders, expand
into new markets, continue to evolve our product set and further
advance our competitive advantage.
The first few months of the new financial year have started
strongly, with a robust run-rate coming into the year and we
continue to make great progress on our strategic goals. "
Enquiries
Fonix Mobile plc Tel: +44 20 8114 7000
Robert Weisz, CEO
Michael Foulkes, CFO
finnCap Ltd (Nomad and Broker) Tel: +44 20 7220 0500
Jonny Franklin-Adams / Seamus Fricker (Corporate Finance)
Alice Lane / 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.
Chairman's Review
It's a testament to the strength and determination of the Fonix
management team, that the business has transitioned seamlessly to
becoming a public company in the midst of a global pandemic. All
whilst achieving double digit year-on-year growth in income and
profitability, onboarding many new customers and laying the
foundations for future growth into new markets.
As the pandemic has accelerated decades of digital
transformation, some industries have declined whilst other emerging
technologies have flourished. I'm pleased to say Fonix fits into
the latter category, with total consumer payments processed through
the Fonix platform increasing by over 10% to over GBP233m in the
year (2020: GBP212m).
Against the backdrop of COVID-19, the decline in traditional
advertising revenues for many broadcast clients has cemented
Fonix's mobile payments platform as a core part of their long term
commercial strategy and elevated our services to board level
attention. As a result, Fonix's Campaign Manager platform is now
widely recognised as a market leader in helping media and charity
clients monetize their audience and provides Fonix with a
significant competitive advantage.
This year has seen the business build solid foundations for
international growth, establishing new supply-chain connectivity
and winning its first international payments contract. As several
of Fonix's multinational customers look to expand our services
overseas, we're confident international markets will provide a
meaningful contribution to growth in the years ahead and the highly
operationally leveraged nature of Fonix's business means this can
all be achieved with minimal increases in operating costs or
overheads. It remains our strategy with regard to international
expansion to be customer led.
Throughout the year, the business has continued to make good
progress on its strategic goals (as set out in the CEO review
below), helping it to comfortably meet its baseline growth target
of achieving at least 10% growth in income and adjusted earnings.
By increasing its share of the UK market for phone-paid payments to
over 30% and significantly outgrowing other UK providers in the
year, the company has also continued to deliver on its vision to be
the leading provider of mobile payments in its core markets and
geographies.
Throughout the period, the business has continued to maintain a
strong focus on environmental, social and governance (ESG)
excellence, by ensuring our operations remain best-in-class and
that our customers' services are of the highest quality. ESG
considerations are put at the forefront of all the business' key
decision making processes.
Financial results
Gross Profit increased in line with market expectations to
GBP11.3m (2020: GBP10.0m) despite the impact of the COVID-19
pandemic creating additional hurdles in the commercial sales cycle.
Year-on-year growth in the first half of the year was higher than
the second as clients in the media segment had a strong end to H1
followed by an intentionally softer start to H2, but this was just
a timing issue, in line with the management's expectations and the
overall trading direction remains very positive. Adjusted EBITDA
increased to GBP8.8m (2020: GBP7.6m), reflecting the business' high
operating leverage and the management team's continued ability to
control operating costs after becoming a public company.
The company closed the year with GBP5.0m in underlying free cash
(2020: GBP2.0m), giving more than sufficient cover for the final
dividend payment expected in November. Underlying cash at the end
of September will be approximately GBP7.0m. Actual cash, which
includes money held on behalf of customers, closed the year at
GBP17.3m (2020: GBP28.6m), down on the prior year due to the timing
differences on outpayments for some significant client charity
campaigns, but this had no impact on the business' trading
performance or liquidity.
The board recommends that the company pay a final dividend of
3.53p per share in November, in line with the Company policy of
paying out 75% of adjusted earnings per share. If approved, the
total distribution of dividends for the year ended 30 June 2021
will be GBP5.234m (2020: GBP5.179m).
Board update
We were pleased to welcome Michael Foulkes, who joined the Board
and business as CFO in March 2021. Michael has significant sector
and international experience, which will prove invaluable as we
continue to execute our growth strategy. Michael succeeded Rupert
Horner, who was appointed to assist with the Company's admission to
the AIM in October 2020. On behalf of the board I would like to
thank Rupert for all his efforts and we are pleased he remains a
very supportive shareholder in the Company.
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
Looking ahead to our priorities for 2022 and beyond, a key focus
for the business will be scaling up commercial resources, further
optimising margins across the product range and increasing the
business' presence in new and neighbouring markets. We have made a
promising start to the new financial year with a clear plan to
double the size of the sales team, and a number of multinational
clients are already looking to use Fonix's services in new
territories. Fonix is well positioned to leverage these
opportunities and build out strong reference clients in new markets
in the same way as we have done in the UK.
Edward Spurrier, Non-Executive Chairman
CEO's Statement
Our success in UK mobile operator payments for media, charity
and gaming providers demonstrates our continued ability to deliver
frictionless payments in our target verticals above and beyond, not
only our direct competitors, but also major alternative payment
solutions. This year we saw gross profits from media, charity and
gaming clients grow an average of 22% year-on-year as we added new
clients and continued to support our existing clients to better
engage with their audiences. Taking a disciplined sector focus
allows us to take a more consultative approach to customer
relationships, helping us better understand and address their
needs, and create products that truly deliver results. This in
turn, allowed us to build deeper, meaningful partnerships with each
of our clients, helping them acquire more customers and optimise
their consumer checkout journeys in ways unmatched by our
competitors.
We delivered a strong financial performance during the period
with gross profits and adjusted earnings per share growing in line
with expectations. Over the year our underlying cash position grew
158% and I am pleased to be able to recommend a final dividend in
line with our policy to distribute 75% of adjusted earnings per
share.
Market opportunity
The market for frictionless mobile payments is significant and
continues to grow year-on-year with the rise in consumer demand for
services in online gaming, digital publishing, streaming and other
digital services. We are also seeing new emerging sectors, such as
e-scooter hiring and new forms of mobility and transportation.
The Total Payment Values (TPV) of transactions processed by
Fonix on UK services increased by 10% to GBP233m in the year,
significantly ahead of the rest of the UK market (Phone-paid
Services Authority Annual Market Research, 2021). This reinforces
our strategy to focus on key sectors where we see sustained growth
and demonstrates our ability to nurture and scale clients' accounts
in ways unmatched by our competitors in the UK, all being a
testament to our consultative sales approach.
For the majority of our customers, deploying Fonix's payment
solutions has largely shown to reduce checkout abandonment and
provide incremental revenues rather than cannibalizing existing
transactions, as demonstrated by the box office pay-per-view
payment solution used for BT Sport. For this reason we do not
consider ourselves to be in direct competition with traditional
payment methods, such as credit card or ApplePay, but offering an
alternative to consumers who would otherwise forgo purchasing.
Growth strategy
Fonix takes a balanced approach to sustainable growth, looking
to achieve a material percentage growth in gross profits and
shareholder income year-on-year. Driven by this approach, Fonix has
achieved compound annual growth rates (CAGR) in gross profit and
profit before tax of 33% and 48% respectively over the last
4-years.
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
A key part of our commercial strategy continues to be the 'land
and expand' approach to growth, focusing on enterprise scale
opportunities and innovating on our product suite in partnership
with key reference clients.
Through 2021, we continued to scale existing customer revenues
with double-digit growth and see clear opportunities for additional
double-digit growth in these clients in the year ahead.
2. Take a disciplined sector focus
We continue to take a sector focused approach to growth,
targeting large enterprise clients and key partnerships across our
core markets.
In addition to a number of prospective customer contracts we
will continue to look to win away from competitors, there remains
significant opportunity to establish new contracts with businesses
in our core sectors currently not harnessing the power of mobile
payments and interactivity. Particularly for those businesses that
continue to see a shift away from an advertising funded business
model and seeking revenue diversification.
The power of frictionless mobile payments for television and
radio broadcasts was perfectly articulated by the fact that Fonix's
payment solution accounted for over 81% of the individual donations
made to Comic Relief on-the-night this year. With the market for
charity donations being worth over GBP10bn annually in the UK
alone, carrier mobile payments providing a 'near-free' commission
model and with Fonix's exceptional reference clients, there remains
much greenfield opportunity for expansion in this market.
In the gaming sector, we continue to support our core client
base who have continued to grow in transactions and revenues over
the last year. Shortly after the year end we agreed a significant
partnership deal with a leading technology provider. We believe it
will open up a considerable pipeline of opportunities in the UK and
overseas in the next few years.
In online services, we recently launched services with a
leading, multinational technology company operating thousands of
online dating sites across the globe. Again this will sit alongside
their traditional payment solutions as they look to increase their
overall checkout conversion rates.
We will be making the planned investment in growth in the year
ahead, allowing us to leverage these partnerships and also target
the substantial greenfield opportunities we see in particular
across mobility, ticketing, sports as well as a range of other
emerging digital merchants.
A number of our core sectors grew significantly in the year,
with particularly strong growth in media, charity and gaming
sectors that together grew more than 22% in the year.
3. Create sustainable, long-term profitability for shareholders
We are clear in our strategy to continue to achieve material
growth in gross profit and adjusted earnings year-on-year. With our
commercial focus on large, multinational clients with relatively
long sales cycles and our priority on growing new clients to ensure
that they are transacting to their full potential we therefore take
a considered approach to growth by balancing new business wins with
driving transactions with existing clients.
We already have a strong pipeline of identifiable opportunities
across all of our target sectors and will double the size of the
sales team in the year ahead as we look to capitalise on new
industry targets identified, particularly in mobility and
ticketing. We believe this is the best approach for providing a
long-term return to shareholders.
4. Be client led with international expansion
In the last few years, Fonix has consistently outstripped growth
in the rest of the UK market for phone-paid payments (Phone-paid
Services Authority Annual Market Research) and will look to repeat
this success in new neighbouring territories.
Our approach to international expansion continues to be client
led, through our network of tier-1 multinational clients. With the
recent signing of significant new partnerships with international
technology providers in gaming and online dating, as well as our
existing multinational customer base, we are in a strong position
to leverage these relationships to spearhead our growth into
international markets in the coming years.
This year saw the business establish new connectivity for our
gaming clients in Austria, harnessing customers' deep understanding
of the improved regulatory framework in the region. We anticipate
additional neighbouring territories opening up in the years ahead
also.
In addition, we are in advanced discussions to launch services
with a key client in another European market, which we hope to
announce in the coming months.
5. Widen our technological and operational advantage
Through our consultative led approach with customers and with
years of investment, Fonix has been able to build new innovative
technologies which create real tangible added value for our clients
and provide Fonix with a significant competitive advantage.
With Fonix's Campaign Manager product, clients are able to
optimise and increase the monetisation of their audience, to an
extent unmatched by our competitors or alternative payment
providers. We are confident this technological advantage will not
only ensure retention of our existing customers, but help us win
significant new business in the years to come.
By focusing on quality payment services and having a strong
relationship with network operators and regulators, Fonix has been
able to establish an exemplary reputation in the market for
compliance. This trusted relationship with partners has proved to
be invaluable when winning new business and attracting the best
talent, and reinforces the barriers to entry in other providers
looking to establish direct network operator connectivity.
Our gradual and balanced approach to growth has allowed the
business to achieve exceptional and increasing economies of scale
from our operations, with the business achieving an adjusted
operating margin of over 73% in the year when comparing operating
profit to gross profits.
People
Attracting, retaining and inspiring industry leading talent
remains a priority to drive future growth and success. Fonix prides
itself on being a great place to work and having a culture where
our team can thrive. Fonix is also proud to boast a diverse
workforce with 46% of staff being female and over 25% being from a
black, Asian and minority ethnic (BAME) background.
Our team grew 23% over the year to 38 employees by the year end.
Michael Foulkes joined as CFO in March, bringing a wealth of
experience in the mobile payments sector and scaling businesses
internationally. Edward Spurrier and Lucinda Sharman-Munday also
joined the board as non-executives, both with significant
experience at similar AIM listed companies.
Next year we will make a substantial investment in our sales
team and have already hired industry experts with specialist
knowledge in travel, ticketing and gaming sectors, as we look to
invest in growth.
Product
We continued to make good progress on our product roadmap with
our dedicated in-house development team focusing on platform
resilience and security, coupled with releasing several new
features for the interactive services and payments platforms.
As Fonix continues to scale and support more clients in the UK
and internationally, with broader use-cases, we are also expanding
our product and technology teams in the year ahead. This will allow
us to connect to more markets whilst exploiting new revenue
opportunities with existing clients and maintaining our competitive
advantage.
COVID-19
We are proud of how our team responded to COVID-19, continuing
to deliver valuable features for our customers and support the
business' IPO process, even with our people moving to work
remotely. Whilst new business sales cycles have been elongated by
the pandemic, our business model has proven to be highly resilient
throughout and we ended the year with a strong exit run-rate across
all our key clients and sectors.
Outlook
In spite of fundamental changes to the way we work, we have
continued to make great progress on our strategic goals this year
and finished the year in a much stronger position than we started.
The team has responded very well to all the challenges put in front
of them and I am assured we have the foundations in place for many
years of continued growth.
In line with our growth strategy, we will continue to invest in
growth in the year ahead, spending more on sales and marketing
along with a significant investment in product as we look to
deliver sustainable, highly profitable growth for our shareholders
and expand into new markets.
The first few months of the new financial year have started
strongly, with a robust run-rate coming into the year and we
continue to make great progress on our strategic goals. We
recognise that by delivering on these objectives and potentially
winning some flagship clients from our competitors we have a great
opportunity to exceed expectations.
Robert Weisz, Chief Executive Officer
Financial Review
Key performance indicators
2021 2020
Financial GBP'000 GBP'000 Change
=========================== ========= ========= ======
Gross profit 11,347 9,988 13.6%
Adjusted EBITDA(1) 8,812 7,656 15.1%
Adjusted PBT(2) 8,312 7,255 14.6%
Underlying cash(3) 5,048 1,956 158.1%
Adjusted EPS(4) 7.0p 6.1p 14.2%
Adjusted ROCE(5) 150.85% 285.51%
Non-financial 2021 2020 2020
=========================== ========= ========= ======
Total payments value (TPV) GBP233.4m GBP211.7m 10.3%
Active customer count(6) 111 98 13.3%
The definition of active customers was changed in the second
half of the year to only include customers generating more than
GBP500 in gross margin in the previous 12-month period. Previously
this was based on the number of customers integrated to the Fonix
platform. On a like for like basis, the number of active customers
at 31 December 2020 was 105 active customers.
(1) Adjusted EBITDA excludes share-based payment charges and AIM
admission costs along with depreciation, amortisation, interest and
tax from the measure of profit.
(2) Adjusted PBT is profit after tax excluding share-based
payment charges and AIM admission costs
(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 and AIM admission costs
(5) Adjusted ROCE is return on capital employed calculated as
adjusted EBIT (being earnings before interest and tax excluding
share-based payment charges and AIM admission costs) divided by
capital employed (total assets less total current liabilities).
(5) Active customers are those that generated more than GBP500
in gross margin in the previous 12-months
Financial Results
Total payments value (TPV)
TPV represents the cash payments processed by Fonix on behalf of
merchants. TPV grew 10.3% to GBP233m (2020: GBP212m) in the year,
with particularly strong growth in the value of carrier billing and
SMS billing transactions.
Revenue and other income
Company revenues for the year were GBP47.7m (2020: GBP40.1m)
growing 19% on the previous year, driven by strong growth in the
mobile payments service line. 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.
Included in other income was GBP62k of one-off COVID-19 related
rental concessions, provided as relief for periods where access to
our office was restricted.
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 GBP11.3m (2020: GBP10.0m)
growing 14% on the previous year, with mobile payments growing
15.4%, mobile messaging growing 1.7% and managed services 9.2%.
Growth was skewed to the first half of the year as the media
segment had a very strong end to H1 and as a result a number of
media clients intentionally slowed down activity at the start of H2
in order to balance their own targets for the year, as customers
generally work to an annual revenue target. The business tends to
have good visibility of customer targets. These targets usually
have strong alignment with actual results, with a tendency to
overperform.
Blended gross profit margins decreased slightly to 23.8% (2020:
24.9%) attributable to changes in the product and client mix. In
particular, increases in carrier billing and SMS billing margins
were partially offset by declines in premium voice services, which
have a different revenue profile. We however, anticipate the gross
profit margins to increase in the year ahead as we look to optimise
our margins further.
Adjusted Operating Expenses
Operating costs have been kept firmly under control since the
business' IPO, with costs generally only increasing where the
business has invested more in future growth. Adjusted operating
costs increased 12% in the year to GBP2.6m (2020: GBP2.3m). The
majority of the increase related to additional staff costs and
incentives as the business invested more in growth with new product
and commercial hires.
Staff related costs and incentives increased to GBP2.6m (2020:
GBP2.2m) in the year reflecting the additional investment in
corporate governance with new board members, increases in
commission/bonus for strong business performance, increases in
product investment and standard annual pay increases. Average
headcount for the year was 36 (2020: 32). We continue to invest in
sales with two new commercials hires starting shortly after the
year end.
As well as the rent concessions recorded in other income, other
general office and travel related expenses were estimated to be
approximately GBP60k down year-on-year as result of changes in the
'ways of working' due to the COVID-19 pandemic. We anticipate a
slow recovery in these costs to normalised levels in the year
ahead, although the impact will be insignificant to the business'
future cost base.
Professional fees and other public limited company associated
costs increased to GBP65k (2020: GBPnil) in the year as the company
became listed on the AIM in October 2020.
Software development costs of GBP540k (2020: GBP454k) were
capitalised in the year, representing 56% (2020: 54%) 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 GBP375k (2020:
GBP311k). Development costs are amortised on a straight-line basis
over 3-years.
Adjusted EBITDA
The growth in gross profit and continued control of costs,
particularly following the company's IPO has resulted in a
significant increase in adjusted EBITDA which is up 15% at GBP8.8m
(2020: GBP7.7m) for the year. To provide a better guide to the
underlying business performance, adjusted EBITDA excludes
share-based payment charges and AIM admission costs along with
depreciation, amortisation, interest and tax from the measure of
profit.
Finance income and expenses
Finance expense which relates to the underwinding of the
discounted lease liability increased marginally to GBP9k (2020:
GBP4k) following the signing of a new lease agreement in November
2020, but remains negligible overall.
Interest on bank deposits fell to GBP17k (2020: GBP49k) due to
the sharp decline in bank interest rates.
EPS and Dividends
The Company's policy is to pay out 75% of adjusted EPS to
shareholders in the form of an ordinary dividend each year. The
Company's cash resources and distributable reserves are both
considered more than adequate to cover a final dividend payment in
line with this policy. The board therefore intends to recommend a
final dividend of 3.53p per share to be approved at the AGM in
November.
Statement of Financial Position
The Company had net assets of GBP5.2m at the year end (2020:
GBP2.4m), including capitalised software development costs of with
a carrying value of GBP849k (2020: GBP684k). The movement in net
assets reflects profits after tax less dividend payments.
Current assets fell in the year as actual cash held, which
includes money held on behalf of customers fell in the year.
Movement in cash balances are described in further detail in the
'Cash and underlying cash' section below.
Current liabilities fell to GBP38m (2020: GBP48m) as the company
held less charity funds on behalf of customers at the year end.
Non-current liabilities increased to GBP0.3m (2020: GBP0.1m) as
the business signed a new 3-year lease agreement on its office in
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 158% to
GBP5.0m (2020: GBP2.0m) due to additional retained earnings and
working capital improvements.
Actual cash which includes cash held on behalf of customers
varies substantially from period to period and is particularly
sensitive to the timing of passthrough outpayments for customer
charity campaigns. Actual cash held fell to GBP17.3m (2020:
GBP28.6m) in the year. The decrease is purely a timing issue and is
largely attributed to holding fewer passthrough charity funds on
behalf of charity customers at the year end.
The company made use of the COVID-19 linked scheme to defer VAT
payments. At the year end, the company had deferred GBP578k of VAT
to be repaid over the 7-months to Jan-22. This deferral increased
actual cash held, but had no impact on underlying cash, which
excludes customer related VAT balances.
Michael Foulkes, Chief Finance Officer
Audited results for the year ended 30 June 2021
Statement of Comprehensive Income
For the year ended 30 June 2021
2021 2020
Note GBP'000 GBP'000
=========================================== ==== ======== ========
Continuing operations
Revenue 4 47,668 40,061
Cost of sales (36,321) (30,073)
============================================ ==== ======== ========
Gross profit 3 11,347 9,988
Other income 76 31
Adjusted operating expenses(1) (2,611) (2,363)
============================================ ==== ======== ========
Profit before interest, tax, depreciation,
amortisation, share-based payment
charge and exceptional costs 8,812 7,656
Share-based payment charge (72) -
AIM admission costs (844) -
Depreciation and amortisation (507) (446)
============================================ ==== ======== ========
Operating profit 7,389 7,210
Finance income 17 49
Finance expense (9) (4)
============================================ ==== ======== ========
Profit before taxation 7,397 7,255
Taxation (1,334) (1,235)
============================================ ==== ======== ========
Total comprehensive profit for the
financial year 6,063 6,020
============================================ ==== ======== ========
(1) Adjusted operating expenses excludes share-based payment
charge, AIM admission costs, depreciation and amortisation
Earnings per share 2021 2020
================================== ==== ====
Basic earnings per share 6.1p 6.1p
Diluted earnings per share 6.0p 6.1p
Adjusted basic earnings per share 7.0p 6.1p
===================================== ==== ====
The weighted average number of shares in issue for the year
ended 30 June 2020 has been restated to take into account the share
reorganisation that was implemented in September and October 2020,
whereby the ordinary shares in issue was increased from 4,476,466
ordinary shares of GBP0.00001 each to 100,000,000 ordinary shares
of GBP0.001 each.
Statement of Financial Position
As at 30 June 2021
2021 2020
GBP'000 GBP'000
============================= ======= =======
Non-current assets
Intangible asset 849 684
Right of use asset 268 41
Tangible assets 23 33
================================ ======= =======
1,140 758
============================= ======= =======
Current assets
Trade and other receivables 24,880 21,148
Cash and cash equivalent 17,336 28,618
================================ ======= =======
42,216 49,766
============================= ======= =======
Total assets 43,356 50,524
================================ ======= =======
Equity and liabilities
Equity
Share capital 100 0
Share premium account 679 779
Share option reserves 72 -
Retained earnings 4,374 1,654
================================ ======= =======
5,225 2,433
============================= ======= =======
Liabilities
Non-current liabilities
Deferred tax liabilities 147 92
Lease liabilities 133 -
================================ ======= =======
280 92
============================= ======= =======
Current liabilities
Trade and other payables 37,740 47,958
Lease liabilities 111 41
================================ ======= =======
37,851 47,999
============================= ======= =======
Total liabilities 38,131 48,091
================================ ======= =======
Total equity and liabilities 43,356 50,524
================================ ======= =======
Statement of Changes in Equity
For the year ended 30 June 2021
Share
Share Share option Retained
capital premium reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=============================== ======== ======== ======== ========= =======
Balance at 1 July 2019 - 505 - 1,687 2,192
=============================== ======== ======== ======== ========= =======
Profit for the financial year - - - 6,020 6,020
=============================== ======== ======== ======== ========= =======
- - - 6,020 6,020
=============================== ======== ======== ======== ========= =======
Transactions with shareholders
Dividends - - - (6,053) (6,053)
Share-based payment charge - - - - -
Capital issued - 274 - - 274
=============================== ======== ======== ======== ========= =======
- 274 - (6,053) (5,779)
=============================== ======== ======== ======== ========= =======
Balance at 30 June 2020 - 779 - 1,654 2,433
=============================== ======== ======== ======== ========= =======
Profit for the financial year - - - 6,063 6,063
=============================== ======== ======== ======== ========= =======
- - - 6,063 6,063
=============================== ======== ======== ======== ========= =======
Transactions with shareholders
Dividends - - - (3,343) (3,343)
Share-based payment charge - - 72 - 72
Capital issued 100 (100) - - -
=============================== ======== ======== ======== ========= =======
100 (100) 72 (3,343) (3,271)
=============================== ======== ======== ======== ========= =======
Balance at 30 June 2021 100 679 72 4,374 5,225
=============================== ======== ======== ======== ========= =======
Statement of Cash Flows
For the year ended 30 June 2021
2021 2020
GBP'000 GBP'000
========================================= ======== =======
Cash flows from operating activities
Profit before taxation 7,397 7,254
Adjustments for
Depreciation 15 13
Amortisation 492 433
Profit on disposal of tangible
assets - (16)
Share-based payment charge 72 -
Finance income (17) (49)
Finance expense 9 4
(Increase)/decrease in trade and
other receivables (3,732) (3,380)
Increase/(decrease) in trade and
other payables (10,151) 21,240
Income tax paid (1,346) (1,200)
========================================== ======== =======
Net cash flows from operating activities (7,260) 24,300
========================================== ======== =======
Cash flows from investing activities
Interest received 17 49
Payments to acquire tangible assets (6) (39)
Proceeds from sale of tangible assets - 24
Payments to acquire intangible assets (540) (454)
========================================== ======== =======
Net cash flows from investing activities (529) (421)
========================================== ======== =======
Cash flows from financing activities
Net proceeds from issue of equity (0) 274
Dividends paid (3,343) (6,053)
Capital payments in respect of leases (141) (122)
Interest paid in respect of leases (9) (4)
Interest paid - -
========================================== ======== =======
Net cash flows from financing activities (3,493) (5,905)
========================================== ======== =======
Net (decrease)/increase in cash and
cash equivalents for the period (11,282) 17,974
Cash and cash equivalents at beginning
of period 28,618 10,645
========================================== ======== =======
Cash and cash equivalents at end
of period 17,336 28,618
========================================== ======== =======
Statement of Underlying Free Cash Flows
For the year ended 30 June 2021
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.
2021 2020
GBP'000 GBP'000
========================================== ======= =======
Underlying free cash flows from operating
activities
Profit before taxation 7,397 7,254
Adjustments for
Depreciation 15 13
Amortisation 492 433
Profit on disposal of tangible
assets - (16)
Share-based payment charge 72 -
Finance income (17) (49)
Finance expense 9 4
(Increase)/decrease in trade and
other receivables 244 (252)
Increase/(decrease) in trade and
other payables 247 (200)
Income tax paid (1,346) (1,200)
=========================================== ======= =======
Net underlying free cash flows from
operating activities 7,113 5,987
=========================================== ======= =======
Underlying free cash flows from investing
activities
Interest received 17 49
Payments to acquire tangible assets (6) (39)
Proceeds from sale of tangible assets - 24
Payments to acquire intangible assets (540) (454)
=========================================== ======= =======
Net underlying free cash flows from
investing activities (529) (421)
=========================================== ======= =======
Underlying free cash flows from financing
activities
Net proceeds from issue of equity (0) 274
Dividends paid (3,343) (6,053)
Capital payments in respect of leases (141) (122)
Interest paid in respect of leases (9) (4)
=========================================== ======= =======
Net underlying free cash flows from
financing activities (3,492) (5,905)
=========================================== ======= =======
Net (decrease)/increase in underlying
free cash for the period 3,092 (339)
Underlying free cash at beginning
of period 1,956 2,294
=========================================== ======= =======
Underlying free cash equivalents
at end of period 5,048 1,956
=========================================== ======= =======
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 2021 has
been extracted from the Company's audited financial statements
which were approved by the Board of Directors on 22 September 2021
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 comparative figures for the year ended 30 June 2020 have
been extracted from the financial statements prepared for the
Company's admission onto the Alternative Investment Market of the
London Stock Exchange ("AIM") and were included in the Company's
admission document.
The annual report and accounts for the year ended 30 June 2020,
which received an unqualified audit opinion and did not include a
statement under section 498 (2) or (3) of the Companies Act 2006,
have been filed with the Registrar of Companies. The statutory
financial statements for the year ended 30 June 2020 were prepared
in accordance with FRS 102, the Financial Reporting Standard
applicable in the UK and the Republic of Ireland (United Kingdom
Generally Accepted Accounting Practice - "UK GAAP").
On admission to AIM, the Company adopted International Financial
Reporting Standards and interpretations (collectively "IFRS")
issued by the International Accounting Standards Board ("IASB") as
adopted by the United Kingdom ("UK"). The financial information in
these accounts have been prepared and presented on that basis.
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 Financial
Reporting Standards (IFRSs) as adopted by the UK 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 and in accordance with the provisions of the Companies
Act 2006.
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 2021 the Company had Cash and Cash Equivalents of
GBP17.3 million (2020; GBP28.6 million) and Net Current Assets of
GBP4.4 million (2020: GBP1.8 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 a commensurate level of 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.
There has been negligible impact of COVID-19 on the trading
position of the Company - and this is expected to continue in the
future. Employees are seamlessly working from home where required
and no staff have been furloughed.
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:
2021 2020
Gross Profit GBP'000 GBP'000
================= ======= =======
Mobile Payments 9,577 8,297
Mobile Messaging 1,045 1,027
Managed Services 725 664
==================== ======= =======
11,347 9,988
================= ======= =======
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.
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 wholly undertaken in the United Kingdom.
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:
2021 2020
Revenue by Service Line GBP'000 GBP'000
======================== ======= =======
Mobile Payments 37,169 29,747
Mobile Messaging 8,928 8,867
Managed Services 1,571 1,446
=========================== ======= =======
47,668 40,061
======================== ======= =======
The number of customers representing more than 10% of revenue in
year were 2 (2020: 3)
5. Earnings per share
The calculations of earnings per share are based on the
following profits and number of shares:
2021 2020
GBP'000 GBP'000
================================== =========== ==========
Retained profit for the financial
year 6,063 6,020
===================================== =========== ==========
2021 2020
Number of shares Number Number
================================== =========== ==========
Weighted average number of
shares in issue 100,000,000 98,509,808
Share options 465,475 -
===================================== =========== ==========
100,465,475 98,509,808
================================== =========== ==========
Earnings per ordinary share
Basic 6.1p 6.1p
Diluted 6.0p 6.1p
===================================== =========== ==========
The weighted average number of shares in issue for the year
ended 30 June 2020 has been restated to take into account the share
reorganisation that was implemented in September and October 2020,
whereby the ordinary shares in issue was increased from 4,476,466
ordinary shares of GBP0.00001 each to 100,000,000 ordinary shares
of GBP0.001 each. The weighted number of shares in issue for the
year ended 30 June 2020 before the share reorganisation was
4,409,758, which has then been multiplied by a factor of
100,000,000/4,476,466 to give a restated figure of 98,509,808
weighted shares.
The calculations of adjusted earnings per share are based on the
following adjusted profits and number of shares listed above:
2021 2020
Adjusted earnings per share GBP'000 GBP'000
================================== ======= =======
Retained profit for the financial
year 6,063 6,020
===================================== ======= =======
Adjustments
Share-based payment charge 72 -
AIM admission costs 844 -
===================================== ======= =======
Net adjustments 916 -
Adjusted earnings 6,979 6,020
===================================== ======= =======
Adjusted basic earnings per
ordinary share 7.0p 6.1p
===================================== ======= =======
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END
FR EASNDAESFEEA
(END) Dow Jones Newswires
September 23, 2021 02:00 ET (06:00 GMT)
Fonix Mobile (LSE:FNX)
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