TIDMFNX
RNS Number : 8049P
Fonix Mobile PLC
22 February 2021
22 February 2021
Fonix Mobile plc
("Fonix" or the "Company")
Interim results
Strong growth in both revenue and profitability
Fonix, the UK focused mobile payments and messaging company, is
pleased to announce its interim results for the six months to 31
December 2020, which show continued strong revenue and profit
growth across all business segments.
Financial highlights
-- Revenue of GBP24.6m up by 25% (H1 2019: GBP19.7m).
-- Gross profit of GBP5.8m up by 22% (H1 2019: GBP4.8m).
-- Adjusted EBITDA ([1]) of GBP4.6m up by 28% (H1 2019: GBP3.6m).
-- Profit after tax of GBP2.7m (H1 2019: GBP2.8m).
-- Adjusted basic and diluted earnings per share for the period ([2]) of 3.6p (H1 2019: 2.9p).
-- Underlying operating cash inflow ([3]) for the period of GBP3.6m (H1 2019: GBP3.1m).
-- Underlying cash and cash equivalents at the period end of
GBP3.6m (30 June 2020: GBP2.3m) ([4]) .
-- Maiden interim dividend of 1.7p per share, amounting to GBP1.7m, to be paid in March 2021.
All financials are based on unaudited numbers.
Operational highlights
-- Fonix's three business segments of payments, messaging and
managed services have each grown during the period, in line with
expectations.
-- Fonix has continued to attract new customers during the
period across the media, charity, gaming and digital services
sectors and retains a robust pipeline of prospects, with over 20
customers added and no customers lost in the period.
-- A highlight of the period was the successful BBC Children in
Need campaign in November which raised GBP13.9m in donations using
our platform. The event was also the first in the UK where a GBP40
single donation was permitted by the mobile network operators.
Outlook
-- Fonix expects continued growth through 2021 from both
existing clients and a strong pipeline of new business
opportunities.
-- Despite the difficulties of the pandemic the business
continues to operate remotely with no adverse effect on operational
or technical planning.
-- The technical delivery team continues to focus efforts in a
dual stream of platform resilience and performance combined with
innovation and feature development. This ensures the business
maintains the operational requirements to deliver some of the most
high profile interactive campaigns and services in the UK as well
as continuous cycles of feature development to enable revenue
growth.
Rob Weisz, CEO, commented: "This has been an exciting period for
Fonix with the IPO raising our profile, benefiting shareholders,
partners and staff. We remain confident, through both our existing
clients and pipeline of new clients, in the future success and
growth of Fonix."
For further information please contact
Fonix Mobile plc Tel: +44 20 8114 7000
Robert Weisz, CEO
Rupert Horner, CFO
finnCap Ltd (NOMAD and broker) Tel: +44 20 7220 0500
Jonny Franklin-Adams, Giles Rolls (Corporate Finance)
Alice Lane, Sunila de Silva (ECM)
About Fonix Mobile plc
Fonix is a UK focused mobile payments and messaging company,
enabling businesses to charge users' mobile bills and send users
SMSs via their mobile carrier.
Founded in 2006, Fonix allows mobile carriers to provide
additional services in the form of carrier billing, SMS billing,
messaging and voice shortcodes. Fonix has over 120 clients
including ITV, Bauer Media, BT, Global Radio and BBC Children in
Need across a range of multi-billion pound sectors such as media,
gaming, charity, ticketing and digital services. Fonix offers
clients access to the customer base of the mobile carriers.
Fonix is headquartered in London and currently has a UK focused
strategy, differentiating it from its competitors by allowing it to
focus on high quality revenues in mature and highly regulated
market sectors. It is a tier 1 aggregator with direct technical
connections to all of the major UK MNOs, some of whose contracts
have been in place for over 10 years. The long-term nature of these
contracts has resulted in Fonix gaining access to over 95 per cent.
of the UK mobile consumer audience and a strong reputation in the
market.
Chief Executive's review
We are delighted to be reporting our first set of interim
results since our admission to AIM in October 2020.
Operational highlights
Fonix has delivered a strong performance in this period, with
continued growth across all our business segments. This growth has
resulted in significant improvements on all our key financial
metrics on a year on year basis. In particular, it is worth noting
the gross profit growth of 22% to GBP5.8 million (H1 2019: GBP4.8
million) and the adjusted EBITDA growth of 28% to GBP4.6 million
(H1 2019: GBP3.6 million).
Our core businesses
Fonix's main business is its mobile payments service that
enables merchants to charge their customers' mobile phone bills for
products or services. This accounted for 85% of gross profit in the
period. The other two operating segments are mobile messaging,
which allows our customers to communicate, notify and market to
consumers, and managed services which represent fees charged and
non-transactional revenue. These other two operating segments
continue to be an important source of revenue in their own right,
whilst also offering complementary ancillary services to payments
customers. As described further in the financial review below, all
three business segments saw growth in the period, with our core
payments showing the strongest growth with an increased gross
profit contribution of 23% on the corresponding period in the prior
year.
We provide our services to a wide range of industry sectors with
specific focus on media, gaming, charity and digital merchants. Our
largest sector is media businesses in the UK, where we saw
particularly strong growth during the period, partly as a result of
the services provided being unaffected by COVID-19. We are also
pleased with our continued success in running charity campaigns,
where some of the initiatives that we have enabled contributed to
increased donations.
Our clients
We have secured a further 21 new clients in the period and now
have over 120 active clients, including ITV, Bauer and Global in
our media division, Children in Need and Cancer Research in our
charity division and Intouch Games in our gaming division. It is a
key part of our business philosophy to work closely with our
clients to continue to improve the range and quality of services
that we provide. It is pleasing to note that this has contributed
to no contracts being lost in the period. The majority of the
growth experienced during the period came from existing customers.
We saw longer sales cycles resulting from our sales team being
unable to attend the usual face-to-face sales, conferencing and
networking event, so whilst we have secured new contracts in the
period, the monetary contribution from them in the current period
has been modest and they should begin to make a more meaningful
contribution towards the end of the current financial year.
Strategy for growth and market opportunity
We have continued to refine our growth strategy. Fonix's success
is built on focus - a deep product knowledge of both the mobile
operator payments and messaging landscape, coupled with thorough
insight into our key client sectors. This focus ensures alignment
across all partners in the value chain, with high throughput
transactional performance and optimising payment conversion
ingrained in our technology, operational and commercial
culture.
Each of our target sectors are multi-billion pound markets in
their own right. For example, the UK broadcast market delivered
$6.3bn ([5]) in pay TV revenues in 2020 and the UK charity sector
received over GBP5.4bn ([6]) in donations in the first half of
2020, with a noticeable move to alternative payment strategies due
to COVID-19 preventing traditional fundraising.
It therefore makes sense for us to continue to focus on these
sectors, particularly given our expertise within them:
-- Media. This is Fonix's largest market consisting primarily of
TV, radio, print and digital publishers. The growth strategy is to
improve upon Fonix's position in the SMS billing market, increase
market share by focusing on carrier billing into TV, print and
radio paywalls and support clients moving into international
markets. We have continued to see strong growth from our existing
clients and we would expect this to continue, whilst we also
continue to work to win significant new clients.
-- Charity. We have won new charity clients in the period and
our focus will be to continue to drive Fonix's market leading 'text
to donate' and 'click to donate' products in the UK.
-- Gaming. This is a large market which is underserved by
carrier billing and where we see the opportunity to win new clients
as well as work on an international roll out of existing
clients.
-- Digital services. This covers growing markets including
dating, memberships, fitness/diets, content and ticketing. This is
currently a relatively small part of the Fonix business but has the
potential to grow significantly, as carrier billing is an obvious
and convenient payment method, particularly when combined with the
ability to use the mobile channel to communicate with customers. We
won a number of new business contracts in this sector during the
period.
-- Technical service providers (TSPs). Fonix remains positioned
to be the 'go to' direct carrier billing and SMS billing partner
for the reseller market in the UK, demonstrated through the success
of the contracts it has with a number of TSPs. Fonix continues to
identify global TSPs looking for UK connectivity and support their
growth.
-- Telecoms. Fonix continues to deliver its telecoms services
through channel sales partners, direct sales through mobile network
operator (MNO) relationships and extending to other telecoms
partners and opportunities.
International
Whilst Fonix is currently predominantly UK focused, we have
started our planned expansion into new jurisdictions and regions
and expect to be operating in at least one mainland European market
in 2021. We are adopting a targeted client led approach to
expansion, with a focus on mature Carrier Billing markets with
robust regulatory frameworks.
Acquisitions
Whilst no acquisition targets have been identified to date, we
will continue to keep acquisition opportunities under review and
remain receptive to the right value accretive or strategic
opportunities should they arise.
Technology and platform
Fonix's platform is a critical part of the business. It is a
scalable and agile proprietary platform that has been built
in-house by industry experts with Fonix retaining full ownership of
all intellectual property. We have a team of 14 developers who work
full time on improving and servicing the platform to ensure it is
best in class. The platform is able to achieve high transaction
processing speeds in excess of 2,000 transactions per second,
providing significant capacity headroom above the current
requirements. We continue to invest in our development roadmap and
technology team, with particular focus on platform resilience and
feature improvements to drive improved performance and optimisation
for our clients. This continued development is important in our
ability to retain existing clients and win new business.
Market dynamics
The global mobile payments market continues to evolve and grow
with direct carrier billing demonstrating, for many brands, that it
can form a key part of their payments strategy. Adoption from some
of the largest brands in the world, including Apple, Google,
Netflix and Spotify to name but a few, only adds support to the
prospect that delivering convenience, reduced friction and
ultimately choice to consumers can be a hugely powerful piece of
the payments landscape. As carrier billing becomes more accepted as
a payment mechanism, this will help Fonix grow in its target
sectors.
Financial review
We are pleased to report strong growth in all key financial
metrics:
-- Total payments volume. TPV represents the cash payments
processed by Fonix on behalf of clients. TPV grew 18% to GBP123m
(H1 2019: GBP104 million). There is an element of seasonality to
the business and Fonix saw the normal uplift in the Christmas
period, with a record total payment volume (TPV) month in
December.
-- Revenue. Revenue increased in the period to GBP24.6m (H1
2019: GBP19.7m), representing the total amount charged to consumers
on behalf of merchants, including mobile network operators'
charges.
-- Gross profit. As a business, the most important number is
gross profit as this represents the amount we charge for processing
the services we provide. Gross profit grew 22% in the period to
GBP5.8m (H1 2019: GBP4.8m), with mobile payment payments growing
23%, mobile messaging 13% and managed services 16%. Gross profit
margins have remained largely unchanged with small variations being
attributable to changes in product and client mix. The gross profit
to TPV margin has improved to 4.7% during the period (H1 2019:
4.6%), whilst the gross profit to revenue margin has reduced to 23%
(H1 2019: 24.3%).
-- Costs. Operating costs have been kept firmly under control.
Removing AIM admission costs of GBP844k and share based payment
expenses of GBP22k, our administrative costs were GBP1.49 (H1 2019:
GBP1.44m), representing a 3% increase. Our largest expense is
payroll which accounted for 75% of our total costs. This includes
the technology department which has 14 employees. We capitalised
GBP255k of development costs in the period (H1 2019: GBP193k) and
had an amortisation charge of GBP178k (H1 2019: GBP153k). We do not
anticipate any significant increases in costs in the near term but
will continue to ensure we commit resources to development and
sales.
-- Adjusted EBITDA. Our ability to increase the volume of
transactions and clients without having to increase our overhead
costs significantly is an important characteristic of our business,
providing significant operational gearing. We have therefore been
able to increase our adjusted EBITDA by 27% to GBP4.6 million (H1
2019: GBP3.6 million), excluding the costs of our AIM admission and
share based expenses.
-- Earnings per share. Adjusted EPS for the period increased to
3.6p per share (H1 2019: 2.9p per share).
-- Cash generation. Fonix receives cash collected from the
mobile operators (who have in turn collected the cash from the end
users on the mobile phone bill), before paying it on to our
clients. The cash balance therefore fluctuates depending on the
timing of "pass through" cash received and paid. We monitor the
underlying cash which effectively unwinds these timing differences
and shows the underlying cash from trading activities. The
underlying cash is derived from total cash by adjusting for trade
and other receivables, less trade and other payables excluding
corporation tax liabilities. On this basis, we have continued to be
strongly cash generative with free underlying cash generated from
operations of GBP3.6m for the period (H1 2019: GBP3.1m).
-- Balance sheet. We continue to have a strong balance sheet
with no debt. This is important as we are a payment business and
our clients need to maintain confidence in our ability to handle
the cash payments on their behalf.
COVID-19
Whilst we continue to monitor the evolving situation with
COVID-19 closely, we have now demonstrated a clear ability for the
business to run remotely from a technical, operational and
administrative standpoint. As noted above, we have seen some
slowdown in our ability to bring new clients on board but
fortunately this has not had a material impact on our financial
performance.
Dividend
We are pleased to declare our maiden interim dividend of 1.7p
per share, which is in line with our stated policy of paying out
75% of adjusted EPS, with one third paid as an interim dividend and
two thirds paid as a final dividend. The interim dividend will be
paid on 19 March 2021 to shareholders on the register on 5 March
2021, with an ex-dividend date of 4 March 2021.
Outlook
This has been an exciting period for Fonix with the IPO raising
our profile, benefiting shareholders, partners and staff. We remain
confident, through both our existing clients and pipeline of new
clients, in the future success and growth of Fonix.
Robert Weisz
Chief Executive Officer
22 February 2021
Statement of comprehensive income
For the half-year ended 31 December 2020
Half year Half year Year to
to 31 December to 31 December 30 June
2020 2019 2020 (Restated)
Note GBP'000 GBP'000 GBP'000
Revenue 3 24,608 19,733 40,061
Cost of sales (18,776) (14,934) (30,073)
------------------------------- ---- --------------- --------------- ----------------
Gross profit 2 5,832 4,800 9,988
Administrative costs (2,353) (1,438) (2,810)
Other operating income 0 16 31
------------------------------- ---- --------------- --------------- ----------------
Operating profit 3,479 3,378 7,209
Financial expense (2) (2) (4)
Financial income 13 21 49
------------------------------- ---- --------------- --------------- ----------------
Profit before tax expense 3,490 3,397 7,254
Income tax expense (760) (596) (1,235)
------------------------------- ---- --------------- --------------- ----------------
Profit and total comprehensive
income 2,730 2,801 6,019
------------------------------- ---- --------------- --------------- ----------------
Adjusted EBITDA
Operating profit - as above 3,479 3,378 7,209
Add back:
Amortisation 178 153 311
Right of use amortisation 60 61 122
Depreciation 8 5 13
------------------------------- ---- --------------- --------------- ----------------
EBITDA 3,725 3,597 7,655
Share-based payments expense 4 22 0 0
AIM admission costs 844 0 0
------------------------------- ---- --------------- --------------- ----------------
Adjusted EBITDA 4,591 3,597 7,655
Earnings per share Half year Half-year Year to
to 31 December to 31 December 30 June
2020 2019 2020
(Restated)
Weighted average number of
shares in issue 5 100,000,000 97,417,025 98,712,690
Basic and diluted earnings
per share 5 2.7p 2.9p 6.1p
Adjusted basic and diluted
earnings per share 5 3.6p 2.9p 6.1p
------------------------------- ---- --------------- --------------- ----------------
The profit for the year has been generated from continuing
operations.
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.
Statement of financial position
At 31 December 2020
Half year to Half year to Year to 30
31 December 31 December June 2020 (Restated)
2020 2019
Note GBP'000 GBP'000 GBP'000
Non-current assets
Intangible asset 761 581 684
Right of use asset 324 102 41
Tangible assets 28 38 33
---------------------------- ---- ------------ ------------ ---------------------
Total non-current
assets 1,113 721 758
---------------------------- ---- ------------ ------------ ---------------------
Current assets
Trade and other receivables 30,729 35,719 21,148
Cash and cash equivalent 28,570 15,107 28,618
---------------------------- ---- ------------ ------------ ---------------------
Total current assets 59,299 50,826 49,766
---------------------------- ---- ------------ ------------ ---------------------
Total assets 60,412 51,547 50,524
---------------------------- ---- ------------ ------------ ---------------------
Equity and liabilities
Equity
Share capital 7 100 0 0
Share premium account 679 779 779
Share option reserves 22 0 0
Retained earnings 2,740 1,971 1,654
---------------------------- ---- ------------ ------------ ---------------------
Total equity 3,541 2,750 2,433
---------------------------- ---- ------------ ------------ ---------------------
Liabilities
Non-current liabilities
Deferred tax liabilities 88 72 92
Lease liabilities 216 0 0
---------------------------- ---- ------------ ------------ ---------------------
Total non-current
liabilities 304 72 92
---------------------------- ---- ------------ ------------ ---------------------
Current liabilities
Trade and other payables 56,445 48,623 47,958
Lease liabilities 122 102 41
---------------------------- ---- ------------ ------------ ---------------------
Total current liabilities 56,567 48,725 47,999
---------------------------- ---- ------------ ------------ ---------------------
Total liabilities 56,871 48,797 48,091
---------------------------- ---- ------------ ------------ ---------------------
Total equity and
liabilities 60,412 51,547 50,524
---------------------------- ---- ------------ ------------ ---------------------
Statement of changes in equity
For the half-year ended 31 December 2020
Share capital Share premium Share option Distributable Total equity
reserves reserves
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 July 2020 0 779 1,654 2,433
Total comprehensive
income 2,730 2,730
Transactions with
shareholders:
Dividend 6 (1,643) (1,643)
Share-based payments 22 22
Capital issued 7 100 (100) 0
--------------------- ---- ------------- ------------- ------------ ------------- ------------
As at 31 December
2020 100 679 22 2,741 3,542
As at 1 July 2019 0 505 1,687 2,192
Total comprehensive
income 2,801 2,801
Transactions with
shareholders:
Dividend 6 (2,517) (2,517)
Capital issued 7 274 274
--------------------- ---- ------------- ------------- ------------ ------------- ------------
As at 31 December
2019 0 779 0 1,971 2,750
As at 1 July 2019 0 505 1,687 2,192
Total comprehensive
income 0 0 6,019 6,019
Transactions with
shareholders:
Dividend 6 0 0 (6,052) (6,052)
Capital issued 7 0 274 0 274
--------------------- ---- ------------- ------------- ------------ ------------- ------------
As at 30 June 2020 0 779 0 1,654 2,433
Statement of cash flows
For the half-year ended 31 December 2020
Half year Half year Year to
to 31 December to 31 December 30 June
2020 2019 2020
(Restated)
Note GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit after tax 2,730 2,801 6,019
Taxation charge 760 596 1,235
Amortisation 178 153 311
Depreciation 8 5 13
Right of use amortisation 60 61 122
Share based payment expense 22 0 0
Profit on disposal of tangible
assets 0 (16) (16)
Interest receivable (13) (21) (49)
Interest payable 2 2 4
(Increase) / decrease in trade
and other receivables (9,876) (11,795) 2,775
Increase in trade and other payables 8,141 15,917 15,359
--------------------------------------- ---- --------------- --------------- -----------
Cash generated from / (used in)
operations 2,012 7,703 25,773
Corporation tax paid (446) (475) (1,200)
--------------------------------------- ---- --------------- --------------- -----------
Net cash generated from/(used
in) operating activities 1,566 7,228 24,573
--------------------------------------- ---- --------------- --------------- -----------
Cash flows from investing activities
Interest received 13 21 49
Purchase of intangible assets (255) (193) (454)
Proceeds from sale of tangible
assets 0 23 23
Purchase of tangible assets (3) (36) (39)
--------------------------------------- ---- --------------- --------------- -----------
Net cash used in investing activities (245) (185) (421)
--------------------------------------- ---- --------------- --------------- -----------
Cash flows from financing activities
Payment of principal lease liabilities 0 (61) (122)
Interest paid on lease liabilities 0 (2) (4)
Issue of shares 7 274 0 0
Dividends 6 (1,643) (2,517) (6,052)
--------------------------------------- ---- --------------- --------------- -----------
Net cash used in financing activities (1,369) (2,580) (6,178)
--------------------------------------- ---- --------------- --------------- -----------
Net (decrease) / increase in
cash and cash equivalents (48) 4,463 17,974
Cash at bank at beginning of
period 28,618 10,644 10,644
--------------------------------------- ---- --------------- --------------- -----------
Cash at bank at end of year 28,570 15,107 28,618
--------------------------------------- ---- --------------- --------------- -----------
Cash and cash equivalents at the end of each period comprises
balances held at the bank.
Statement of cash flows - continued
For the half-year ended 31 December 2020
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 underlying
cash in the analysis below has effectively unwound these timing
differences and shows the underlying cash from the Company's
trading activities. The underlying cash is derived from total cash
by adjusting for trade and other receivables less trade and other
payables excluding corporation tax liabilities.
Reconciliation of free underlying
cash flows
Half year Half year Year to
to 31 December to 31 December 30 June
2020 2019 2020
(Restated)
GBP000s GBP000s GBP000s
Net cash generated from operating
activities 1,566 7,228 24,573
Interest receivable 13 21 49
AIM admission costs 844 0 0
Purchase of fixed assets (258) (229) (493)
Sale of fixed assets 0 23 23
Lease liability payments 0 (65) (126)
Working capital adjustment 1,412 (3,848) (17,860)
--------------------------------------- --------------- --------------- -----------
Free underlying cash generated
from operations 3,577 3,130 6,166
AIM admission costs paid (844) 0 0
Issue of shares 274 0 0
Dividends (1,643) (2,515) (6,052)
--------------------------------------- --------------- --------------- -----------
Underlying cash movement 1,364 615 114
--------------------------------------- --------------- --------------- -----------
Statement of cash flows - continued
For the half-year ended 31 December 2020
Analysis of underlying cash balances
Half year Half year Year to
to 31 December to 31 December 30 June
2020 2019 2020
(Restated)
GBP000s GBP000s GBP000s
Cash at bank at end of period 28,570 15,107 28,618
------------------------------------------ --------------- --------------- -----------
Consisting of:
Underlying cash 3,618 2,755 2,254
Other cash 24,952 12,352 26,364
------------------------------------------ --------------- --------------- -----------
Total 28,570 15,107 28,618
------------------------------------------ --------------- --------------- -----------
Underlying cash at beginning of
period 2,254 2,140 2,140
Underlying cash movement (as above) 1,364 615 114
------------------------------------------ --------------- --------------- -----------
Underlying cash at end of period 3,618 2,755 2,254
------------------------------------------ --------------- --------------- -----------
Cash and cash equivalents at the end of each period comprises
balances held at the bank.
Underlying cash is derived from total cash by adjusting for
trade and other receivables less trade and other payables
(excluding corporation tax liabilities).
Notes to the financial information
For the half-year ended 31 December 2020
1. Basis of preparation and change in accounting policies
The financial information relating to the half year ended 31
December 2020 is unaudited and does not constitute statutory
financial statements as defined in section 434 of the Companies Act
2006.
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 European Union. The financial information in these
interim accounts have been prepared and presented on that
basis.
The comparative figures for the year ended 30 June 2020 included
in these interim accounts are therefore not consistent with the
annual report and accounts as filed at Companies House. A
reconciliation of the differences between the figures used in these
interim accounts and those that are filed at Companies House are
shown in note 8 below.
The financial information for the half year ended 31 December
2020 has been prepared in accordance with the accounting policies
the Company applied in the preparation of the audited accounts for
the year ended 30 June 2020 which were audited and included in the
Company's admission document and are expected to be applied in the
annual financial statements for the year ending 30 June 2021. These
accounting policies are based on the EU-adopted International
Financial Reporting Standards ("IFRS").
Whilst the financial information included in these interim
accounts has been prepared in accordance with IFRS, they do not
contain sufficient information to comply with IFRS. In addition,
this report is not prepared in accordance with IAS 34.
The Company's financial risk management objectives and policies
are consistent with those disclosed in the admission document.
This interim report was approved by the board of directors on 21
February 2021 and is available on the Company's website, fonix.com
.
Going concern
At the time of approving these interim accounts, the directors
have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable
future.
The Company 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 31 December 2020 the Company had cash and cash equivalents of
GBP28.6m and net current assets of GBP2.7m. The business model of
the Company 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 ahead of the forecasts.
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 the interim accounts.
2. 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:
Half year to Half year to Year to 30 June
31 December 31 December 2020
2020 2019
(Restated)
GBP'000 GBP'000 GBP'000
Mobile payments 4,944 4,023 8,297
Mobile messaging 508 449 1,027
Managed services 380 328 664
----------------- ------------ ------------ ---------------
Gross profit 5,832 4,800 9,988
----------------- ------------ ------------ ---------------
3. Revenue
The Company disaggregates revenue between the different streams
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:
Half year to Half-year to Year to 30 June
31 December 31 December 2020
2020 2019
(Restated)
GBP'000 GBP'000 GBP'000
Mobile payments 19,651 14,834 29,747
Mobile messaging 4,171 4,168 8,867
Managed services 786 731 1,447
----------------- ------------ ------------ ---------------
Total income 24,608 19,733 40,061
----------------- ------------ ------------ ---------------
In each of three periods, the number of customers that
represented more than 10% of revenue were as follows: Half year to
31 December 2020: 2, half year to 31 December 2019: 3 and year to
30 June 2020: 3.
4. Share options and share-based payment charge
The Company granted share options to Ed Spurrier and certain
employees on admission to AIM. In total, options have been granted
over 1,310,000 ordinary shares in the Company, representing 1.3% of
the existing share capital of the Company, with a strike price of
GBP0.90 per share, which corresponds to the price at which shares
were sold at the placing which coincided with the admission.
The share based payment charge has been calculated using the
Black-Scholes model and represents the charge for the period from
admission to 31st December 2020.
5. Earnings per share
The basic earnings per share calculation is the same as for the
fully diluted earnings per share position, as there are no
potentially dilutive instruments.
Half year Half year Year to 30
to 31 December to 31 December June 2020
2020 2019
(Restated)
GBP'000 GBP'000 GBP'000
Basic calculation
Earnings used in calculation of
earnings per share 2,730 2,801 6,019
------------------------------------ --------------- --------------- -----------
Number Number Number
Weighted average number of shares
in issue 100,000,000 97,417,025 98,712,690
------------------------------------ --------------- --------------- -----------
Basic and diluted earnings per
share 2.7p 2.9p 6.1p
------------------------------------ --------------- --------------- -----------
Adjusted basic and diluted earnings
per share 3.6p 2.9p 6.1p
------------------------------------ --------------- --------------- -----------
The adjusted basic and diluted earnings per share have been
calculated on the basis of excluding the costs involved in the AIM
admission and the share based payments expense.
6. Dividends
Half year Half year Year to 30
to 31 December to 31 December June 2020
2020 2019
(Restated)
GBP'000 GBP'000 GBP'000
Interim paid 1,643 2,517 6,052
------------------- --------------- --------------- -----------
Dividend per share 1.6p 2.6p 6.1p
------------------- --------------- --------------- -----------
The interim dividend of GBP1,642,867 paid in the period ended 31
December 2020 was paid to shareholders on the register in August
2020 before the Company was admitted to AIM. A further interim
dividend for the current year, being the maiden dividend since
admission, of GBP1,700,000 (representing a payment of 1.7 pence per
share).
7. Share capital
31 December 31 December 30 June 2020
2020 2019
Number Number Number
Ordinary shares of GBP0.001
each 100,000,000
A Ordinary shares at 0.00001p
each 4,028,133 4,028,133
B Ordinary shares at 0.00001p
each 448,333 448,333
------------------------------ ----------- ----------- ------------
4,476,466 4,476,466
------------------------------ ----------- ----------- ------------
31 December 31 December 30 June 2020
2020 2019
GBP GBP GBP
Allotted, called up and
fully paid
Ordinary shares of GBP0.001
each 100,000
A Ordinary shares at 0.00001p
each 40 40
B Ordinary shares at 0.00001p
each 5 5
------------------------------ ----------- ----------- ------------
100,000 45 45
------------------------------ ----------- ----------- ------------
During the year ended 30 June 2020 301,300 B shares were issued
for a total consideration of GBP273,831.
As at the year ended 30 June 2020 GBP273,826 was unpaid in
respect of this share issue - which is included in trade and other
receivables. These monies were received in October 2020.
Share rights
The A Ordinary shares have attached to them full voting,
dividend and capital distribution rights - including on a winding
up. They do not confer any right of redemption.
The B Ordinary shares have attached to them full dividend and
capital distribution rights - including on a winding up. They do
not confer any voting rights or rights of redemption.
Share premium
The share premium reserve reflects the excess over nominal value
arising on the issue of B Ordinary shares.
Retained earnings reserve
The retained earnings reserve represents the accumulated profits
of the Company that are available for distribution to members.
IPO reorganisation
As at 30 June 2020 the issued share capital of the Company
comprised 4,028,133 A ordinary shares of GBP0.00001 each ("A
Shares") and 448,333 B ordinary shares of GBP0.0001 each ("B
Shares").
In connection with admission, the Company undertook a number of
steps to reorganise its share capital as follows:
1. On 23 September 2020, GBP99,955.24 of the available
GBP505,329.00 of the Company's share premium account was
capitalised through the issue of bonus A Shares and B Shares,
issued to existing shareholders pro rata to their holdings of A
Shares and/or B Shares. The capitalisation resulted in an issued
share capital of 8,998,466,648 A Shares and 1,001,533,352 B
Shares.
2. On 23 September 2020, the 8,998,466,648 A Shares and
1,001,533,352 B Shares in issue were consolidated into 89,984,666 A
ordinary shares of GBP0.001 each and 10,015,334 B ordinary shares
of GBP0.001 each in the capital of the Company.
3. Immediately prior to admission taking place, the A Shares and
B Shares were re-designated as Ordinary Shares on the basis of one
Ordinary Share per A Share or B Share then in issue.
4. Following the pre-IPO reorganisation, the issued share
capital of the Company as at 12th October 2020 comprised
100,000,000 ordinary shares of GBP0.001 each.
8. Adoption of and conversion to IFRS
Impact on statement of comprehensive income
The impact of the adjustments on the statement of comprehensive
income is as follows:
FRS 102 year Revenue IFRS year
to 30 June recognition to 30 June
2020 adjustment 2020
GBP'000 GBP'000 GBP'000
Revenue 113,341 (73,280) 40,061
Cost of sales (103,353) 73,280 (30,073)
-------------------------------------- ------------ ------------ -----------
Gross profit 9,988 9,988
Administrative costs (2,783) (27) (2,810)
Other operating income 0 31 31
-------------------------------------- ------------ ------------ -----------
Operating profit 7,205 4 7,209
Financial expense 0 (4) (4)
Financial income 49 49
-------------------------------------- ------------ ------------ -----------
Profit before tax expense 7,254 7,254
Income tax expense (1,235) (1,235)
-------------------------------------- ------------ ------------ -----------
Profit and total comprehensive income 6,019 6,019
-------------------------------------- ------------ ------------ -----------
Impact on statement of financial position
The impact of adopting IFRS 16 on the statement of financial
position was to reflect the right of use asset and corresponding
liability as follows:
FRS 102 30 IFRS 16 IFRS at
June 2020 revision 30 June
2020
Statement of net assets GBP'000 GBP'000 GBP'000
Non-current assets
Intangible asset 684 684
Right to use asset 0 41 41
Tangible assets 33 33
------------------------------ ---------- --------- --------
Total non-current assets 717 41 758
------------------------------ ---------- --------- --------
Current assets
Trade and other receivables 21,148 21,148
Cash and cash equivalent 28,618 28,618
------------------------------ ---------- --------- --------
Total current assets 49,766 49,766
------------------------------ ---------- --------- --------
Total assets 50,483 41 50,524
------------------------------ ---------- --------- --------
Equity and liabilities
Equity
Share capital 0 0
Share premium account 779 779
Retained earnings 1,654 1,654
------------------------------ ---------- --------- --------
Total equity 2,433 2,433
------------------------------ ---------- --------- --------
Liabilities
Non-current liabilities
Deferred tax liabilities 92 92
Lease liabilities 0 0
------------------------------ ---------- --------- --------
Total non-current liabilities 92 92
------------------------------ ---------- --------- --------
Current liabilities
Trade and other payables 47,958 47,958
Lease liabilities 0 41 41
------------------------------ ---------- --------- --------
Total current liabilities 47,958 41 47,999
------------------------------ ---------- --------- --------
Total liabilities 48,050 41 48,091
------------------------------ ---------- --------- --------
Total equity and liabilities 50,483 41 50,524
------------------------------ ---------- --------- --------
Impact on statement of cash flows
The IFRS 16 impact on the statement of cash flows is the
reallocation and re-categorisation of expenditure that does not
impact on cash generated for any period. There is no impact on the
statement of cash flows for any period resulting from the revenue
recognition adjustment.
The impact on the statement of cash flows is as follows:
FRS 102 year IFRS 16 IFRS year
to 30 June revision to 30 June
2020 2020
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit after tax 6,019 6,019
Taxation charge 1,235 1,235
Amortisation 311 311
Depreciation 13 13
Right of use amortisation 0 122 122
Profit on disposal of tangible assets (16) (16)
Interest receivable (49) (49)
Interest payable 0 4 4
(Increase) / decrease in trade and
other receivables 2,775 2,775
Increase in trade and other payables 15,359 15,359
------------------------------------------- ------------ --------- -----------
Cash generated from / (used in) operations 25,647 126 25,773
Corporation tax paid (1,200) (1,200)
------------------------------------------- ------------ --------- -----------
Net cash generated from/(used in)
operating activities 24,447 126 24,573
------------------------------------------- ------------ --------- -----------
Cash flows from investing activities
Interest received 49 49
Purchase of intangible assets (454) (454)
Proceeds from sale of tangible assets 23 23
Purchase of tangible assets (39) (39)
------------------------------------------- ------------ --------- -----------
Net cash used in investing activities (421) (421)
------------------------------------------- ------------ --------- -----------
Cash flows from financing activities
Payment of principal lease liabilities 0 (122) (122)
Interest paid on lease liabilities 0 (4) (4)
Issue of shares 0 0
Dividends (6,052) (6,052)
------------------------------------------- ------------ --------- -----------
Net cash used in financing activities (6,052) (126) (6,178)
------------------------------------------- ------------ --------- -----------
Net (decrease) / increase in cash
and cash equivalents 17,974 17,974
Cash at bank at beginning of year 10,644 10,644
------------------------------------------- ------------ --------- -----------
Cash at bank at end of year 28,618 28,618
------------------------------------------- ------------ --------- -----------
([1]) Adjusted EBITDA excludes share based payment charges along
with depreciation, amortisation, depreciation, AIM admission costs
and tax.
([2]) Adjusted profit per share excludes share based payment
charges and AIM admission costs.
([3]) Underlying operating cash inflow excludes the fluctuations
arising from the timing of receipts and payments of pass through
cash collected on behalf of and paid onto clients.
([4]) Net cash and cash equivalents at the period end of
GBP28.6m (30 June 2020: GBP28.6m).
([5])
https://www.digitaltveurope.com/2020/10/09/pay-tv-revenues-to-decline-in-spite-of-increasing-subscriber-numbers/
([6])
https://www.cafonline.org/docs/default-source/about-us-publications/caf-uk-giving-2020-covid-19.pdf
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END
IR UKUWRARUUAAR
(END) Dow Jones Newswires
February 22, 2021 02:00 ET (07:00 GMT)
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