REG - Fonix Mobile PLC - Final Results
22/09/2022 07:01
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RNS Number : 1861A Fonix Mobile PLC 22 September 2022
22 September 2022
Fonix Mobile plc
("Fonix" or the "Company")
Final Results for the year ended 30 June 2022 (the "Year")
Strong momentum with new revenues in the Republic of Ireland
Financial Highlights
FY22 FY21 Change
TPV £258.6m £233.4m +10.8%
Revenue £53.6m £47.7m +12.5%
Gross profit £13.2m £11.3m +16.6%
Adjusted EBITDA(1) £10.3m £8.8m +16.5%
Adjusted PBT(2) £9.7m £8.3m +16.3%
Adjusted EPS(3) 8.1p 7.0p +16.4%
Proposed Final DPS 4.50p 3.53p +27.5%
Underlying cash(4) £7.8m £5.0m +54.2%
Underlying cash inflow/(outflow)(4) £2.7m £3.1m
Operational Highlights
· Fonix launched interactive services with a significant media
broadcaster in the Republic of Ireland in the final few weeks of the Year. In
doing so, Fonix has contracted directly with all major mobile operators in
Ireland and has a number of clients planned to go live in FY23
· Fonix's three business segments of payments, messaging and managed
services have each grown profitability by at least 14% in the Year, in line
with expectations and the business retains a robust pipeline of prospects
going into the next financial year
· 20 new customer contracts signed in the Year, with the active
customer count increasing by 10.8% to 123 active customers at the Year end(5)
· 18m unique mobile users made 718m interactions with Fonix's
services in the Year(6)
· Record £35m Total Payment Volume (TPV) processed in a single month
· Fonix continues to maintain high client retention, with over 99% of
income of a repeating nature
· 100% platform uptime in the Year
· Increased dividend, and new progressive dividend policy going
forward
The Board expects to publish its Annual Report for the year ending 30 June
2022 on the company's website on Friday 21 October 2022. The Annual General
Meeting is scheduled to take place on Tuesday 22 November 2022.
Outlook
· Positive start to FY23, with trading in line with the Board's
expectations
· With a strong financial resilience, along with new client wins and
new international 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) Underlying cash is actual cash excluding cash held on behalf of customers.
(5) Active customers are those generating more than £500 in gross profit in
the previous 12-months.
(6) Unique users are calculated as the number of unique Mobile Station
International Subscriber Directory Numbers (MSISDNs) processed through Fonix
services.
Rob Weisz, CEO, commented:
"We have continued to make great progress on our strategic goals this year and
once again finished the year in a much stronger position than we started. Our
team is now stronger than ever, with more senior depth in our engineering
team, as well as an expanded sales and marketing function. Our serviceable
market is significantly expanded with new direct network connectivity across
the whole of Ireland, and established indirect connectivity in a couple of
other European territories.
The new financial year has started positively. Whilst a number of our media
clients halted campaigns as a result of the sad passing of Her Majesty The
Queen, which consequently impacts our revenue, we believe this will just
impact the timing of certain broadcast schedules and remain confident that we
are trading in line with market expectations over the year and have a strong
pipeline of opportunities across our target sectors and markets. We look to
the future with confidence."
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
I am pleased to update shareholders on a year of international expansion and
double-digit growth in profitability and cash generation. Whilst the economy
has shown increasing signs of weakness through the year, Fonix hit record
levels of profitability, upgraded management expectations, successfully
expanded outside the UK, strengthened its sales and product teams, increased
its dividend distributions to shareholders and significantly increased its
underlying cash reserves.
The Fonix management team continues to deliver organic growth with
profitability and cash generation, achieving growth in both gross profits and
adjusted EBITDA of over 16%. Given the strong performance of the business, and
the confidence with which we consider the future prospects for Fonix, we have
reviewed our dividend policy this year. The board has resolved to propose an
increase in the final dividend this year to 4.50p (2021: 3.53p), giving a
total dividend of 6.50p for the year, an increase of 24% on 2021.
Going forward, the board proposes a progressive dividend policy, with an
expectation that not less than 75% adjusted after tax earnings will be
distributed each year.
This year has seen the management team deliver on its commitment to achieve
international growth, establishing direct network operator connectivity with
all significant mobile carriers in the Republic of Ireland, along with
indirect network operator connectivity in Austria and Germany. We are
confident international markets will provide a meaningful contribution to
growth in the year ahead and it is the management team's belief that Fonix
will become the market leader for media and broadcast clients in Ireland
within the coming years.
Throughout the year, the business has continued to make good progress on its
strategic goals. By continuing to increase its share of the UK market for
phone-paid payments to over a third and winning a direct contract with a
significant new client in the Republic of Ireland, the company has also
continued to deliver on its vision to be the leading provider of mobile
payments in all its core markets and geographies.
The business has continued to invest in new product innovations and finished
the year with a larger and more senior development team. This year saw Fonix
refresh its marketing website in parallel with relaunching its core carrier
billing product "FPay" under the new brand "Checkout". Along with Campaign
Manager, Checkout will form a core part of Fonix's product development roadmap
in the years ahead.
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 remain at the forefront of all the
business' key decision making processes.
Financial results
Gross profit increased to £13.2m (2021: £11.3m). As was the case in the
previous financial year, due to the seasonal nature of certain media clients,
year-on-year growth in the first half of the year was higher than the second.
Gross margin as a share of total payment values (TPV) also improved during the
year as the management team executed on their plan to grow more profitable
product lines. Adjusted EBITDA increased 16% to £10.3m (2021: £8.8m),
reflecting the business' high operating leverage and the management team's
continued ability to control operating costs without compromising on top-line
growth.
The company closed the year with £7.8m in underlying free cash (2021:
£5.0m), giving it more than sufficient cover for the final dividend payment
expected in November. Actual cash, which includes money held on behalf of
customers, closed the year at £17.0m (2021: £17.3m), marginally down on the
prior year due to the timing differences on outpayments from certain mobile
network operators, but this had no impact on the business' trading performance
or liquidity.
The board recommends that the company pay a final dividend of 4.50p per share
in November, bringing the total dividend for the year to 80% of adjusted
earnings per share. If approved, the total distribution of dividends for the
year ended 30 June 2022 will be £6.50m (2021: £5.23m).
Board update
We were pleased to welcome Carmel Warren, who joined the Board as a
non-executive officer in March 2022. Carmel has significant board level
experience, which will prove invaluable as we continue to execute our growth
strategy. Carmel succeeded Lucinda Sharman-Munday as a member of the Board and
chair of the Audit Committee, with Lucinda stepping down from her role at
Fonix to focus more on other interests. On behalf of the board, I would like
to thank Lucinda for all her efforts.
Finally, I would like to say a thank you to all Fonix's staff, customers,
partners, suppliers and shareholders for their continued support throughout
the year. I look forward to achieving further successes together in the
future.
Conclusion
Fonix enters the new financial year in a strong position and its highly
operationally leveraged business model provides it with good resilience
against the combined threats of recession, rising interest rates and an energy
cost of living crisis. The business remains highly cash generative, with no
debt and minimal business risk from customer failure, and will continue to
reward shareholders with a move to a progressive dividend policy in FY23. With
a growing customer base, including a significant new overseas contract, and
with increased dominance in the markets it operates, the Board looks to the
future with much confidence.
Edward Spurrier, Non-Executive Chairman
CEO's Statement
I am delighted with the outstanding performance achieved by our team this
year, in line with management expectations, which were upgraded earlier in the
year. As well as double-digit growth in TPV, gross profits, and adjusted
EBITDA, this year saw Fonix successfully deliver new income outside the UK and
expand revenues across all our core sectors.
Throughout the year, we've stayed true to our mantra of only working with high
quality merchants in our core sectors, a strategy that often means we turn
away more prospective business than we win. Through this approach Fonix
remains to be the only SMS billing provider in the UK market never to receive
a regulatory fine, a reputational achievement that has undoubtedly helped us
become the first aggregator in many years to establish new direct connectivity
with the mobile carriers in Ireland.
Market opportunity
The Total Payment Value (TPV) of transactions processed by Fonix increased by
11% to £258.6m in the year. The majority of this growth has come from an
expansion in existing customer revenues, as well as new greenfield
opportunities from businesses in our target sectors previously not utilising
the power of mobile payments. We are also continuing to see a gradual and
stable expansion in revenues from new emerging sectors, such as e-scooter
hiring.
Once again Fonix has seen transaction growth significantly ahead of the rest
of the UK market (Phone-paid Services Authority Annual Market Research, 2022),
and we are already starting to see similar patterns of unrivalled growth in
the Republic of Ireland within a few months of launching services there. This
clear demonstration of our ability to nurture and scale clients' accounts in
ways unmatched by our competitors is one of the key drivers behind Fonix's
high client retention rate. We continue to explore expanding into other
geographies where we feel the ecosystem has the right dynamics to adopt our
product offering.
The market for frictionless mobile payments remains significant and continues
to grow year-on-year despite the expansion in alternative payment options such
as ApplePay and GooglePay. It continues to be the case that for the majority
of our merchants deploying Fonix's payment solutions is largely shown to
reduce checkout abandonment and provide them with incremental revenues rather
than cannibalising existing transactions from alternative payment methods.
Delivering against our growth strategy
Fonix continues to take a balanced approach to sustainable growth, looking to
achieve a material percentage growth in gross profits and shareholder income
year-on-year. There are five clear elements to our growth strategy, and I'm
pleased to share that we have continued to deliver against every element in
the new financial year:
1. Grow & deepen existing client relationships
Throughout the year we've continued to innovate on our product suite in
partnership with our key reference clients, allowing us to once again scale
existing customer revenues with double-digit growth year-on-year. As it can
often take years for clients to reach their peak transacting level, we
continue to see further growth opportunities across our existing client base
in the year ahead, particularly from our newly launched international
customers.
2. Take a disciplined sector focus
We continue to take a disciplined sector focused approach to growth, targeting
large enterprise clients and key partnerships across our core markets. All our
target sectors have grown strongly in the period, with particularly strong
growth from Media, Charity and Digital Services segments, which have grown an
average of 23% year-on-year. Media has been our entry sector in expanding
services in Ireland, but we also see plenty of opportunity to win deals across
all our target sectors in Ireland over time.
Despite Fonix servicing a significant share of the phone-paid services market
in our primary territories, there remain a number of large prospective
customer contracts in both the UK and Ireland that we will look to win away
from our competitors, as well as some significant opportunities to establish
new contracts with businesses in our core sectors currently not harnessing the
power of mobile payments and interactivity.
In media, there are multiple national broadcasters in both the UK and Ireland
that we are targeting as new customers in the years ahead, particularly as our
Campaign Manager product continues to advance significantly beyond the
capabilities of any other providers in the market and a number of broadcasters
seek to diversify revenue away from a purely advertising funded business
model.
This year we saw a significant increase in the number of charity campaigns
including supporting a number of events in aid of the humanitarian disaster in
Ukraine. This followed successful campaigns earlier in the financial year for
both The Ruth Strauss Foundation and Bob Willis Foundation.
In gaming, we have started to capitalise on our partnership with Nuvei, the
leading payments technology provider for international gaming companies, by
launching carrier billing payments with EYAS Gaming. EYAS is our first Fonix
client using carrier billing through the Nuvei payments platform, and being
live opens up significantly more opportunities for us to work with other Nuvei
customers.
Transport and ticketing continues to represent a significant greenfield of
opportunities to us. This year, we began to provide carrier billing payments
to our first e-scooter customers and whilst still relatively small, there is a
clear trajectory of month-on-month growth as the industry expands.
3. Create sustainable, long-term profitability for shareholders
The company's underlying cash balances have grown strongly throughout the last
2 years since IPO, as the company has continued to deliver on its strategy of
achieving sustainable, long-term growth in profitability with limited
incremental capital and operational investment. The Board also remains
confident of the company's resilience in the face of the pending global
recession. As such, we have determined now is the time to reward shareholders
for the secure underlying cash position of the business with a move to a
progressive dividend policy from FY23.
4. Be client led with international expansion
Our approach to international expansion continues to be client led, through
our network of tier 1 multinational clients. This year saw us deliver on this
commitment, by signing our first major contract with an overseas media
broadcaster following a referral from their UK counterparts. In addition,
references from our UK clients and partners allowed Fonix to establish direct
carrier connectivity in Ireland as well as indirect connectivity in a couple
of other European markets.
Whilst expansion into international markets is time consuming and at times
slow to progress, Fonix has made significant progress throughout the year,
particularly in Ireland, where we now expect new media clients to make a
meaningful contribution to our growth in FY23. Outside of Ireland,
international growth is a long-term investment strategy for the business, and
therefore forms a relatively small part of our short term forecasts.
Therefore, as mentioned in our interim results, going forward we plan to only
discuss new territories once they are generating meaningful revenues.
5. Widen our technological and operational advantage
Targeting a limited number of sectors with large underlying markets, has
enabled Fonix to focus on building new innovative product features which
create real tangible value for our clients and significant barriers to entry
for any prospective competition.
During the year, the company made enhancements to Campaign Manager to support
enhanced user data analytics, international market expansion, refunds and
third-party transactions, along with a rebuild and rebranding of Fonix's
carrier billing product suite 'FPay' to 'Checkout', allowing merchants to
customise branded checkout pages in a matter of minutes.
We saw a slight softening in the market for software developers in the second
half of the year, and despite initially losing some junior and mid-level
members to inflationary wage pressure in the first half of the year, we have
since increased the size of the development team, with a greater weighting to
more senior hires.
Campaign Manager continues to be a market leading hybrid CPaaS and payments
product, allowing our clients to optimise and increase the monetisation of
their audience, to an extent unmatched by our competitors or alternative
payment providers. This year saw us add support for new territories, including
multi-currency features, as well as market first, consumer refund
capabilities.
As well as rebranding our proprietary carrier billing product to 'Checkout',
we also rebuilt the underlying codebase in preparation for introducing support
for additional alternative payment options in future years.
Fonix has continued to maintain its exemplary reputation in the market for
compliance, which was clearly demonstrated by our close work with the
Phone-paid Services Authority in implementing the new code of practice in the
year. In comparison, this year saw a number of competitors terminating
contracts with clients they could no longer support due to the additional
regulatory obligations or incurring fines where they could not adhere to the
regulatory codes of practice. Our trusted relationship with both regulators
and mobile operators in the UK is a model we are already on a path to
mirroring in new key territories we are operating in. We find these key
partnerships are not only invaluable when winning new business, establishing
the best commercial relationships and attracting the best talent, but also
reinforce the barriers to entry against other providers looking to form direct
network operator connectivity in our core markets.
People
Attracting, retaining and inspiring industry leading talent remains a top
priority for the business. Fonix prides itself on being a great place to work
and having a culture where our team can thrive. Our average headcount grew 6%
to an average of 38 employees over the year. Whilst there was some initial
inflationary pressure with development salaries in the first half of the year,
I am pleased to say the company's cost base remains largely unimpacted and we
were able to offset any cost increases with savings elsewhere. Looking ahead,
Fonix's highly operationally leveraged business model means we expect to be
able to manage the wider inflationary pressures within our existing growth
projections as there is no immediate need to significantly increase the size
of the team in order to hit our growth targets.
Product
We continued to make good progress on our product roadmap with our dedicated
in-house development team focusing on platform resilience, security and
customer usability, coupled with releasing several new features as mentioned
in the 'Widen our technological and operational advantage' section above.
Economic climate
Whilst conscious of the looming recession and cost of living crisis, we are
confident Fonix remains highly resilient to the consequences of an economic
downturn. Although a significant proportion of Fonix's income comes from
discretionary consumer expenditure, the management team's experience of
previous recessions is that such transactions form an extremely small
proportion of the average household budget and as such are largely unaffected
by a squeeze on consumer spending.
Outlook
We have continued to make great progress on our strategic goals this year and
once again finished the year in a much stronger position than we started. Our
team is now stronger than ever, with more senior depth in our engineering
team, as well as an expanded sales and marketing function. Our serviceable
market is significantly expanded with new direct network connectivity across
the whole of Ireland, and established indirect connectivity in a couple of
other European territories.
The new financial year has started positively. Whilst a number of our media
clients halted campaigns as a result of the sad passing of Her Majesty The
Queen, which consequently impacts our revenue, we believe this will just
impact the timing of certain broadcast schedules and remain confident that we
are trading in line with market expectations over the year and have a strong
pipeline of opportunities across our target sectors and markets. We look to
the future with confidence.
Robert Weisz, Chief Executive Officer
Financial Review
Key performance indicators
2022 2021
Financial £'000 £'000 Change
Gross profit 13,232 11,347 16.6%
Adjusted EBITDA(1) 10,265 8,812 16.5%
Adjusted PBT(2) 9,671 8,313 16.3%
Underlying cash(3) 7,786 5,048 54.2%
Adjusted EPS(4) 8.1p 7.0p 16.4%
Adjusted ROCE(5) 120.95% 150.86%
Non-financial 2022 2021 Change
Total payments value (TPV) £258.6m £233.4m 10.8%
Active customer count(6) 123 111 10.8%
( )
( )
(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).
(6) Active customers are those that generated more than £500 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 £259m (2021: £233m) in the year, with particularly strong
growth in the value of SMS billing transactions, offset by falls in 'voice'
related TPV.
Revenue and other income
Company revenues for the year were £53.6m (2021: £47.7m) growing 12.6% on
the previous year, driven by strong growth in the mobile payments and
messaging service lines. Revenues recognised for mobile payments relate to the
total commission charged to customers, including the mobile network operator
(MNO) share of a transaction, with the MNO commission also recognised within
cost of sales. The Directors therefore monitor results and performance of the
company based upon the gross profit generated, which is considered the more
meaningful measure of performance.
Included in other income was £23k (2021 £62k) 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 £13.2m (2021: £11.3m) growing 16.7%
on the previous year, with mobile payments growing 14.4% (2021: 15.4%), mobile
messaging growing 29.8% (2021: 1.7%) and managed services 27.7% (2021: 9.2%).
As was the case in FY21, growth was skewed slightly to the first half of the
year due to the seasonality in the trade of media related clients.
Blended gross profit margins increased slightly to 24.7% (2021: 23.8%)
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
anticipate the gross profit margin percentages to stabilise in the year ahead
as the client and product mix is expected to be more consistent in FY23.
Adjusted operating expenses
Operating costs continue to have been kept firmly under control, with costs
generally only increasing where the business has invested more in future
growth. Adjusted operating costs increased 16% in the year to £3.0m (2021:
£2.6m). The majority of the increase related to additional staff costs and
incentives as the business invested more in growth with new commercial hires.
Staff related costs and incentives increased to £3.0m (2021: £2.6m) in the
year reflecting an increase in sales and marketing headcount, a full year of
post IPO governance costs, and standard annual pay increases, offset by some
efficiency savings. Average headcount for the year was 38 (2021: 36). We
continue to grow the size of our commercial teams both in the UK and Ireland.
Travel and client meeting related expenditure gradually increased through the
year to normalised levels following the underwinding of COVID related
restrictions in the previous financial year.
Professional fees and other public limited company associated costs increased
to £107k (2021: £65k) in the year as the company became listed partway
through the previous financial year.
Software development costs of £608k (2021: £540k) were capitalised in the
year, representing 60% (2021: 56%) 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 £462k (2021:
£375k). Development costs are amortised on a straight-line basis over
3-years.
Adjusted EBITDA
The growth in gross profit and continued control of costs has resulted in a
significant increase in adjusted EBITDA which is up 16.5% at £10.3m (2021:
£8.8m) 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 £10k (2021: £9k), but remains negligible
overall.
Interest on bank deposits fell to £8k (2021: £17k) due to the decline in
bank interest rates part way through the previous financial year.
EPS and Dividends
Given the company's strong performance of the business, cash resources and
distributable reserves, as well as the confidence in the company's future
prospects, the board has reviewed Fonix's dividend policy this year and
recommends to pay out 80% of adjusted EPS to shareholders in the form of an
ordinary dividend. The board therefore intends to recommend a final dividend
of 4.50p (2021: 3.53p) per share to be approved at the AGM in November.
Statement of Financial Position
The company had net assets of £7.8m (2021: £5.2m) at the year-end, including
capitalised software development costs of with a carrying value of £995k
(2021: £849k). The movement in net assets reflects profits after tax less
dividend payments.
Current assets increased to £49m (2021: £42m) as the company was owed more
trade receivables at the year end, due to a slightly later payment from a
mobile network operator in comparison to the prior year and additional
customer charity campaigns in the last quarter of the financial year.
Current liabilities increased to £42m (2021: £38m) due to additional
customer charity campaigns in the last quarter of the year, in comparison to
the previous financial year.
Non-current liabilities decreased to £0.2m (2021: £0.3m) as the business is
now in the second year of its 3-year office lease agreement signed November
2020.
Cash and underlying cash
The board distinguishes between actual cash, which includes cash held on
behalf of customers; and underlying cash, which excludes cash held on behalf
of customers.
Underlying cash far better represents the free cash flow available to the
business. Underlying cash increased 54% to £7.8m (2021: £5.0m) 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 slightly to £17.0m (2021: £17.3m) in the year. The decrease is
purely timing related and attributable to a mobile network operator settling a
trade receivable invoice a few days later than the previous year.
Michael Foulkes, Chief Finance Officer
Audited results for the year ended 30 June 2022
Statement of Comprehensive Income
For the year ended 30 June 2022
2022 2021
Note £'000 £'000
Continuing operations
Revenue 4 53,649 47,668
Cost of sales (40,417) (36,321)
Gross profit 3 13,232 11,347
Other income 51 76
Adjusted operating expenses(1) (3,018) (2,611)
Profit before interest, tax, depreciation, amortisation, share-based payment 10,265 8,812
charge and exceptional costs
Share-based payment charge (100) (72)
AIM admission costs - (844)
Depreciation and amortisation (592) (507)
Operating profit 9,573 7,389
Finance income 8 17
Finance expense (10) (9)
Profit before taxation 9,571 7,397
Taxation (1,544) (1,334)
Total comprehensive profit for the financial year 8,026 6,063
(1) Adjusted operating expenses excludes share-based payment charge, AIM
admission costs, depreciation and amortisation
Earnings per share 2022 2021
Basic earnings per share 8.0p 6.1p
Diluted earnings per share 8.0p 6.0p
Adjusted basic earnings per share 8.1p 7.0p
Statement of Financial Position
As at 30 June 2022
2022 2021
£'000 £'000
Non-current assets
Intangible asset 995 849
Right of use asset 155 268
Tangible assets 25 23
1,175 1,140
Current assets
Trade and other receivables 31,975 24,880
Cash and cash equivalent 16,992 17,336
48,967 42,216
Total assets 50,142 43,356
Equity and liabilities
Equity
Share capital 100 100
Share premium account 679 679
Share option reserves 172 72
Retained earnings 6,870 4,374
7,821 5,225
Liabilities
Non-current liabilities
Deferred tax liabilities 160 147
Lease liabilities 17 133
177 280
Current liabilities
Trade and other payables 42,028 37,740
Lease liabilities 116 111
42,144 37,851
Total liabilities 42,321 38,131
Total equity and liabilities 50,142 43,356
Statement of Changes in Equity
For the year ended 30 June 2022
Share capital Share premium Share option reserve Retained earnings Total
£'000 £'000 £'000 £'000 £'000
Balance at 1 July 2020 100 679 - 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 - - - - -
- - 72 (3,343) (3,271)
Balance at 30 June 2021 100 679 72 4,374 5,225
Profit for the financial year - - - 8,026 8,026
- - - 8,026 8,026
Transactions with shareholders
Dividends - - - (5,530) (5,530)
Share-based payment charge - - 100 - 100
Capital issued - - - - -
- - 100 (5,530) (5,430)
Balance at 30 June 2022 100 679 172 6,870 7,821
Statement of Cash Flows
For the year ended 30 June 2022
2022 2021
£'000 £'000
Cash flows from operating activities
Profit before taxation 9,571 7,397
Adjustments for
Depreciation 15 15
Amortisation 575 492
Share-based payment charge 100 72
Finance income (8) (17)
Finance expense 10 9
(Increase)/decrease in trade and other receivables (7,095) (3,732)
Increase/(decrease) in trade and other payables 4,121 (10,151)
Income tax paid (1,365) (1,346)
Net cash flows from operating activities 5,924 (7,260)
Cash flows from investing activities
Interest received 8 17
Payments to acquire tangible assets (17) (6)
Payments to acquire intangible assets (608) (540)
Net cash flows from investing activities (617) (529)
Cash flows from financing activities
Dividends paid (5,530) (3,343)
Capital payments in respect of leases (111) (141)
Interest paid in respect of leases (10) (9)
Net cash flows from financing activities (5,651) (3,493)
Net (decrease)/increase in cash and cash equivalents for the period (344) (11,282)
Cash and cash equivalents at beginning of period 17,336 28,618
Cash and cash equivalents at end of period 16,992 17,336
Statement of Underlying Free Cash Flows
For the year ended 30 June 2022
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.
2022 2021
£'000 £'000
Underlying free cash flows from operating activities
Profit before taxation 9,571 7,397
Adjustments for
Depreciation 15 15
Amortisation 575 492
Share-based payment charge 100 72
Finance income (8) (17)
Finance expense 10 9
(Increase)/decrease in trade and other receivables (31) 245
Increase/(decrease) in trade and other payables 139 247
Income tax paid (1,365) (1,346)
Net underlying free cash flows from operating activities 9,006 7,114
Underlying free cash flows from investing activities
Interest received 8 17
Payments to acquire tangible assets (17) (6)
Payments to acquire intangible assets (608) (540)
Net underlying free cash flows from investing activities (617) (529)
Underlying free cash flows from financing activities
Dividends paid (5,530) (3,343)
Capital payments in respect of leases (111) (141)
Interest paid in respect of leases (10) (9)
Net underlying free cash flows from financing activities (5,651) (3,493)
Net (decrease)/increase in underlying free cash for the period 2,738 3,092
Underlying free cash at beginning of period 5,048 1,956
Underlying free cash equivalents at end of period 7,786 5,048
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 2022 has been extracted from the
Company's audited financial statements which were approved by the Board of
Directors on 21 September 2022 and which, if adopted by the members at the
Annual General Meeting, will be delivered to the Registrar of Companies for
England and Wales.
The financial information for the Year ended 30 June 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 have been delivered to the
Registrar of Companies for England and Wales.
The reports of the auditor on both these financial statements were
unqualified, did not include any references to any matters to which the
auditors drew attention by way of emphasis without qualifying their report and
did not contain a statement under Section 498(2) or Section 498(3) of the
Companies Act 2006.
The information included in this preliminary announcement has been prepared on
a going concern basis under the historical cost convention, and in accordance
with International Accounting Standards in conformity with the requirements of
the Companies Act 2006 and the International Financial Reporting
Interpretations Committee (IFRIC) interpretations issued by the International
Accounting Standards Board ("IASB") that are effective as at the date of these
financial statements.
The Company is a public limited Company incorporated and domiciled in England
& Wales and whose shares are quoted on AIM, a market operated by The
London Stock Exchange.
2. Going concern
At the time of approving the financial statements, the directors have a
reasonable expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future. Fonix Mobile is not
externally funded and accordingly is not affected by borrowing covenants. In
addition, the cost of capital represents the dividend distributions - which
are discretionary.
At 30 June 2022 the Company had Cash and Cash Equivalents of £17.0 million
(2021: £17.3 million) and Net Current Assets of £6.8 million (2021: £4.4
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.
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:
2022 2021
Gross Profit £'000 £'000
Mobile Payments 10,951 9,577
Mobile Messaging 1,355 1,045
Managed Services 926 725
13,232 11,347
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
undertaken wholly in the United Kingdom and EU.
Revenue is recognised at the point in time of each transaction when the
economic benefit is received. The total revenue of the Company by Service Line
is as follows:
2022 2021
Revenue by Service Line £'000 £'000
Mobile Payments 40,129 37,169
Mobile Messaging 11,673 8,928
Managed Services 1,847 1,571
53,649 47,668
The number of customers representing more than 10% of revenue in year were 2
(2021: 2)
5. Earnings per share
The calculations of earnings per share are based on the following profits and
number of shares:
2022 2021
£'000 £'000
Retained profit for the financial year 8,026 6,063
2022 2021
Number of shares Number Number
Weighted average number of shares in issue 100,000,000 100,000,000
Share options 510,056 465,475
100,510,056 100,465,475
Earnings per ordinary share
Basic 8.0p 6.1p
Diluted 8.0p 6.0p
The calculations of adjusted earnings per share are based on the following
adjusted profits and number of shares listed above:
2022 2021
Adjusted earnings per share £'000 £'000
Retained profit for the financial year 8,026 6,063
Adjustments
Share-based payment charge 100 72
AIM admission costs - 844
Net adjustments 100 915
Adjusted earnings 8,126 6,979
Adjusted basic earnings per ordinary share 8.1p 7.0p
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