REG - Fonix Mobile PLC - Interim Results
14/03/2022 07:01
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RNS Number : 5359E Fonix Mobile PLC 14 March 2022
14 March 2022
Fonix Mobile plc
("Fonix" or the "Company")
Interim Results for the six months ended 31 December 2021
Strong gross profit and earnings growth, in line with recently upgraded
expectations
Fonix, the UK focused mobile payments and messaging company, is pleased to
announce its unaudited interim results for the six months to 31 December 2021
(the "Period").
Financial Highlights
H1 2022 H1 2021 Change
Revenue £28.6m £24.6m +16.2%
Gross profit £7.0m £5.8m +19.9%
Adjusted EBITDA(1) £5.5m £4.6m +20.4%
Adjusted PBT(2) £5.2m £4.4m +20.3%
Adjusted EPS(3) 4.4p 3.6p +21.4%
Underlying cash(4) £6.3m £3.6m +73.3%
Net underlying free cash flows from operating activities(4) £5.2m £3.6m +42.5%
Operational Highlights
· Total payment value ("TPV") of mobile payments grew strongly by 12%
to £138m (H1 FY21: £123m)
· 12 new customer contracts signed in period, including BOTB and The
Ruth Strauss Foundation, as well as several gaming clients connected to our
new partnership with a global payments platform provider. The active customer
count also continued to grow strongly by 10% YoY to 116 active customers at
the period end(5)
· Double-digit growth in gross profits from existing customers
· Record levels of business were achieved in November and December,
including 84m SMS Messages processed in a single month
· Doubled the size of the commercial team in the period, with focus
on the transport & ticketing sector
· Fonix continues to maintain high client retention, with over 99% of
income of a repeating nature
· Several innovative new product features added including
multi-currency reporting in Campaign Manager to support overseas clients, as
well as direct-to-consumer refunds, a market first for UK carrier billing
· 100% platform uptime in the period
· Fonix's three service lines of payments, messaging and managed
services have each grown in the Period and the business retains a growing
pipeline of significant prospects going into H2 FY22
· The business continues to make good progress on international
expansion and broadening its product suite to enhance its competitive
advantage and increase its serviceable addressable market
Dividend
We are pleased to declare an increased interim dividend of 2.00p per share
(FY21: 1.70p), in line with the company's policy to pay out 75% of adjusted
earnings over the year to shareholders in the form of an ordinary dividend.
The interim dividend will be paid on 31 March 2022 to shareholders on the
register on 25 March 2022, with an ex-dividend date of 24 March 2022.
Outlook
We have continued to make great progress on our strategic goals in the period,
with growth ahead of management's initial expectations and the business is
showing strong momentum going into the second half of the year. As was the
case last year, we're expecting the first half of the financial year to be
slightly larger due to some seasonality in the trade of our customers, however
the underlying run-rate remains strong.
In line with our growth strategy, we continue to invest more in future growth,
with increased spend on sales and marketing, along with further investment in
both product and international reach, as we look to deliver sustainable,
highly profitable growth for our shareholders.
The company's new business pipeline continues to grow strongly, including
several significant enterprise deals in the UK and internationally, which
provide the Board with confidence in the ongoing success of the business.
Eastern European conflict
Having assessed the economic sanctions emerging from the conflict in Ukraine,
we do not foresee any risk of the business being directly impacted either now
or in the future, other than the potential for impacts on the UK economy.
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 before 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.
Rob Weisz, CEO, commented:
"We have continued to make excellent progress on our strategic goals in the
period and decisions taken in the last financial year have, as expected,
started to deliver improved margins for us.
As planned, we have invested more in sales and marketing, and we will be
scaling our product team in the second half of the year 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.
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.
CEO's review
The business has had a strong start to the new financial year and has
continued to deliver on its strategy of achieving double-digit
period-on-period growth in existing client margins and winning new clients
across its core sectors, whilst making targeted new investments in future
growth.
Fonix's core business lines have each grown strongly in the period, with
Mobile Payments and Managed Service gross profits both increasing by 18% and
Mobile Messaging gross profit up 42% year-on-year. Mobile Payments remains the
business's core focus and represented 83% (H1 FY21: 85%) of gross profits.
Growth in Mobile Messaging grew strongly due to increased demand from existing
customers, as well as higher inbound demand from new messaging clients,
looking to leverage Fonix's market leading wholesale rates and high quality,
direct to network operator connectivity.
Market opportunity
The market for frictionless mobile payments in Fonix's core sectors continues
to be significant and grows year-on-year with the rise in consumer demand for
TV and radio engagement, entertainment and gaming services (Phone-Paid
Services Authority Annual Market Review, 2020/21
(https://psauthority.org.uk/research-and-consultations/research-articles/2021/september/annual-market-review-2020-2021)
). Fonix is also leading the way in growing the serviceable addressable market
for phone-paid payments, by creating new solutions for more traditional
industries, such as the public transportation sector, where large established
and incumbent providers look to reduce their dependence on cash and provide
greater accessibility to consumers.
The Total Payment Value (TPV) of transactions processed by Fonix on services
increased by 12% year-on-year to £138m in the period, with all the growth
coming in the UK market. Once again, this is an endorsement of our strategy to
focus on key sectors and markets where we see sustainable growth opportunities
and illustrates our ability to nurture and scale client's accounts in ways
unmatched by our competitors.
For the majority of our customers, deploying Fonix's payment solutions has
largely been shown to reduce checkout abandonment and provide incremental
revenues rather than cannibalising their existing transactions, as
demonstrated by Venntro (https://www.venntro.com/) and its partners seeing a
huge 28% growth in new same-day subscribers (users that upgrade on the day
they join a dating site) within the first few weeks of launching carrier
billing. 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 may otherwise forgo purchasing.
Growth strategy
Fonix continues to take a balanced approach to sustainable growth, looking to
achieve a material percentage growth in gross profits, whilst at least
maintaining shareholder income growth in parallel. Guided by this strategy,
the business increased its investment in sales and marketing in the period in
line with the percentage increase in gross profits.
The business has made good progress with each of its growth strategy pillars,
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.
We are also pleased to report that in the period we have continued to see
gross profits from existing customers grow by double-digit percentages, as key
customers expanded their use of Fonix's services.
2. Take a disciplined sector focus
We continue to take a sector focused approach to growth, targeting significant
reference clients and key partnerships across our core markets.
In addition to a number of prospective customer contracts that we will
continue to look to win away from competitors, particularly in the media
segment, where there remains significant opportunity to establish new
contracts with businesses in our core sectors currently not harnessing the
power of mobile payments and interactivity.
We doubled the size of our sales team in the period, hiring sector experts
with a deep understanding of the transport and mobility sectors and who bring
an immediate pipeline of new prospects. In the mobility and ticketing sector,
there is a clear greenfield opportunity to offer consumers frictionless
payments on-the-move as an alternative to traditional cash transactions with a
high processing cost. We are only at the beginning of our 'journey' in this
sector, but as new forms of consumer mobility emerge and more traditional
forms of transport seek to digitise rapidly and provide their users with
improved accessibly, Fonix remains well placed to capitalise on the emerging
market.
In the media segment, we continue to see major broadcasters looking to shift
away from a dependency on an advertising funded business model and seeking
revenue diversification. Fonix continues to strengthen its position as market
leader in this sector, with exceptional reference clients and an exemplary
reputation with regulators and mobile operators alike.
We continue to win significant greenfield opportunities in the gaming sector
and online services as we can clearly demonstrate the reduction in basket
abandonment achieved by incorporating carrier billing as an alternative
payment option in a consumer's checkout flow. In addition, we are only just
beginning to unlock the benefit of our new technology partnership with a
global payments platform provider announced earlier in the period and expect
to see new revenues from this collaboration now the technical integration is
complete.
In the charity segment, Fonix once again demonstrated the power of blending
sport, media broadcast and mobile payments, in powering donations for The Ruth
Strauss Foundation, during the Lord's Test between England and India. In
total, over £1.2m was raised for the cause during the event. Similarly,
Fonix's SMS donations formed a central part of ITV's Soccer Aid Campaign in
September, with mobile billing representing the largest part of the £13m
raised across all payment methods. With the market for charity donations being
worth over £10bn annually in the UK alone, carrier billing payments providing
a 'near-free' commission model and with Fonix's exceptional reference clients,
there remains much greenfield opportunity for expansion in this market.
3. Create sustainable, long-term profitability for
shareholders
Fonix continues to achieve material growth in gross profit and adjusted
EBITDA, with both growing circa 20% year-on-year in the period. With our core
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 continue to take a considered approach
to growth by balancing new business wins with driving transactions with
existing clients. We believe this remains the best approach for providing a
long-term return to shareholders.
4. Be client led with international expansion
Our approach to international expansion remains client led, through our
network of tier-1 multinational clients. We have made good progress in
broadening our addressable market in the period, establishing new connectivity
in well regulated, neighbouring Western European territories in anticipation
of existing customers adopting mobile billing in these markets in the years
ahead. We believe this is the best strategy for achieving sustainable, highly
valued, organic growth, where our domain expertise can be expanded into new
markets.
International growth is a long-term investment strategy for the business, and
therefore forms a relatively small part of our short and medium term
forecasts. As such, going forward we plan to only mention new territories once
they are generating meaningful revenues.
5. Widen our technological and operational advantage
Targeting a relatively small number of large sectors has enabled Fonix to
build cutting edge innovative technologies, which create real tangible added
value for our clients and provide the business with a significant competitive
advantage.
For our Interactive Services clients, particularly in the media and charity
segments, Fonix has developed a market leading Campaign Manager product, which
enables clients to engage, market to and monetise their audience, to an extent
unmatched by our competitors or alternative payment providers. Fonix continued
to develop new features for Campaign Manager in the period, including
multi-currency support for clients in new geographies and integrating online
entries from third parties.
For our Payment Services clients, Fonix continues to invest in its proprietary
carrier billing platform, FPay, which allows businesses to provide a complete
carrier billing solution to their end consumers. During the period, Fonix
added market leading direct-to-consumer refunds to its payments offering,
saving merchants significant time and addressing an important use-case for
e-mobility clients in the transport and ticketing sector.
We are confident these technological advantages will not only ensure retention
of our existing customers, but also help us win significant new business from
our competitors and greenfield opportunities in new emerging sectors.
By focusing on quality payment services and having a strong relationship with
network operators and regulators, Fonix retains an exemplary reputation in the
market for compliance. This trusted relationship with partners continues to
prove invaluable when winning new business and attracting the best talent,
which in turn reinforces the barriers to entry for other providers looking to
establish direct network operator connectivity.
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.
Whilst many businesses in the technology sector have experienced significant
wage inflation and turnover of staff, I'm pleased to say the company's cost
base remains largely unimpacted and we have been able to offset any cost
increases with savings elsewhere.
Our team remained stable at 38 employees by period end, with new commercial
hires offset by some small reductions in administrative and operational
personnel. We anticipate our headcount growing in the second half of the year
as we invest further resources in product development and look to support new
territories in line with our plans.
Product
We continued to make good progress on our product roadmap with our dedicated
in-house development team focusing on platform resilience, security, and
market reach, coupled with releasing several new features as mentioned in the
'Widen our technological and operational advantage' section above.
Financial Review
Key performance indicators
H1 2022 H1 2021
Financial £'000 £'000 Change
Gross profit 6,992 5,832 19.9%
Adjusted EBITDA(1) 5,528 4,591 20.4%
Adjusted PBT(2) 5,240 4,356 20.3%
Underlying cash(3) 6,305 3,638 73.3%
Adjusted EPS(4) 4.4p 3.6p 21.4%
Non-financial H1 2022 H1 2021 Change
Total payments value (TPV) £138.0m £123.0m 12.2%
Active customer count(5) 116 105 10.5%
( )
( )
(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 before 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 )Active customers are those that generated more than £500 in gross margin
in the previous 12-months
Revenue and other income
Company revenues for the period were £28.6m (H1 FY21: £40.1m) growing 16% on
the previous year, driven by strong growth across all 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.
Revenue and gross profit grew more strongly than TPV, as Voice related TPV,
which is a relatively low margin product, declined 15% year-on-year and was
offset by growth in more profitable payments products.
Included in other income was a further £23k 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 period increased to £7.0m (H1 FY21: £5.8m) growing
19.9% on the previous period, with mobile payments growing 17.6%, mobile
messaging growing 42.9% and managed services 18.4%.
Blended gross profit margins increased slightly to 24.5% (H1 FY21: 23.7%)
attributable to changes in the product and client mix. In particular, the
growth in carrier billing and SMS billing transactions offset declines in
premium voice services, which carry a lower gross margin profile. We
anticipate this trend to continue for the rest of the financial year, with
margins stabilising from FY23 onwards.
Adjusted Operating Expenses
Operating costs remain firmly under control, with costs generally only
increasing where the business has invested more in sales and marketing.
Adjusted operating costs increased 21.3% in the period to £1.51m (H1 FY21:
£1.24m). Excluding public limited company related costs incurred from
part-way through the previous financial year (following the company's
admission to the AIM), underlying adjusted operating costs only increased
14.3% in the period to £1.36m (H1 FY21: £1.19m). The majority of the
increase related to additional staff costs as the business has invested more
in growth with new commercial hires, along with an increase in marketing
spend.
Staff related costs and incentives increased to £1.4m (H1 FY21: £1.2m) in
the period reflecting the additional investment in sales and marketing hires.
Average headcount for the period was 38 (H1 FY21: 35).
As well as new commercial hires, we have also seen a gradual recovery in
general office, travel, sales and marketing related expenses to pre-pandemic
levels as staff gradually return to the office, and we're able to attend more
events and meet with clients more frequently.
Professional fees increased to £47k (H1 FY21: £18k) in the period as the
company became listed on the AIM part-way through the prior period.
Software development costs of £303k (H1 FY21: £255k) were capitalised in the
period, representing 59% (H1 FY21: 53%) of development costs in the period.
The slight increase in capitalised expenditure reflects the additional focus
on adding new product features and enhancements to the Fonix platform. The
capitalisation of current period development spend was offset by an
amortisation charge of £218k (H1 FY21: £178k). Development costs are
amortised on a straight-line basis over 3-periods.
Adjusted EBITDA
The growth in gross profit and the continued control of costs has resulted in
a significant increase in adjusted EBITDA, which is up 20% at £5.5m (H1 FY21:
£4.6m) for the period. 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 expenses which relate to the unwinding of the discounted lease
liability increased marginally to £6k (H1 FY21: £2k) following the signing
of a new lease agreement in November 2020 but remains negligible overall.
Interest on bank deposits fell to £1k (H1 FY21: £13k) due to the decline in
bank interest rates.
Statement of Financial Position
The company had net assets of £6.1m at the period end (H1 FY21: £3.5m),
including capitalised software development costs with a carrying value of
£933k (H1 FY21: £761k). The movement in net assets reflects profits after
tax less dividend payments.
The company pays out monies to customers (merchants) once reconciliations have
been completed and the equivalent monies have been received from mobile
network operators. As a result, the company often holds significant amounts of
customer related receivables, payables, and cash, which can vary substantially
from period to period, depending on timing of customer campaigns and mobile
operator outpayments.
Current assets increased to £66m (H1 HY21: 59m) in the period as Trade and
Other Receivables, which includes monies receivable on behalf of customers,
increased in the period. The increase related to the timing of operator
outpayments at the period end. Current liabilities also increased to £62m (H1
FY21: £57m) as the increase in customer related receivables mentioned above
was offset by an equivalent increase in amounts due to customers. The movement
of cash within this is described in more detail below.
Non-current liabilities decreased to £0.2m (H1 FY21: £0.3m) as a result of
normal payments against the office lease liability offset by an increase in
deferred tax liabilities.
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 73% to £6.3m (H1 FY21: £3.6m) 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 £23.6m (H1 FY21: £28.6m) in the period. The decrease is purely
a timing issue and is wholly attributed to holding fewer customer related
passthrough funds at the period end.
The company made use of the COVID-19 linked scheme to defer VAT payments and
pay in instalments. At the period end, the company had deferred £83k of VAT
to be repaid in Jan-22. This deferral increased actual cash held, but had no
impact on underlying cash, which excludes customer related VAT balances.
Dividends
We are pleased to declare an increased interim dividend of 2.00p per share
(FY21: 1.70p), in line with the company's policy to pay out 75% of adjusted
earnings over the year to shareholders in the form of an ordinary dividend.
The interim dividend will be paid on 31 March 2022 to shareholders on the
register on 25 March 2022, with an ex-dividend date of 24 March 2022.
Outlook
We have continued to make great progress on our strategic goals in the period,
with growth ahead of management's initial expectations and the business is
showing strong momentum going into the second half of the year. As was the
case last year, we're expecting the first half of the financial year to be
slightly larger due to some seasonality in the trade of our customers, however
the underlying run-rate remains strong.
In line with our growth strategy, we continue to invest more in future growth,
with increased spend on sales and marketing along with further investment in
both product and international reach as we look to deliver sustainable, highly
profitable growth for our shareholders.
The company's new business pipeline continues to grow strongly, including
several significant enterprise deals in the UK and internationally, which
provide the Board with confidence in the ongoing success of the business. We
look forward to updating shareholders at the appropriate time as we progress
through the current financial year.
Robert Weisz
Chief Executive Officer
Unaudited interim results for the 6-months ended 31 December 2021
Statement of Comprehensive Income
For the 6-months ended 31 December 2021
Unaudited Unaudited Audited
6 months to 31 December 2021 6 months to 31 December 2020 Year to 30 June 2021
Note £'000 £'000 £'000
Continuing operations
Revenue 4 28,597 24,608 47,668
Cost of sales (21,605) (18,776) (36,321)
Gross profit 3 6,992 5,832 11,347
Other income 42 - 76
Adjusted operating expenses(1) (1,506) (1,241) (2,611)
Profit before interest, tax, depreciation, amortisation, share-based payment 5,528 4,591 8,812
charge and exceptional costs
Share-based payment charge (52) (22) (72)
AIM admission costs - (844) (844)
Depreciation and amortisation (283) (246) (507)
Operating profit 5,193 3,479 7,389
Finance income 1 13 17
Finance expense (6) (2) (9)
Profit before taxation 5,188 3,490 7,397
Taxation (874) (760) (1,334)
Total comprehensive profit for the period 4,314 2,730 6,063
(1)Adjusted operating expenses excludes share-based payment charge, AIM
admission costs, depreciation and amortisation
Earnings per share Unaudited Unaudited Audited
6 months to 31 December 2021 6 months to 31 December 2020 Year to 30 June 2021
Basic earnings per share 4.3p 2.7p 6.1p
Diluted earnings per share 4.3p 2.7p 6.0p
Adjusted basic earnings per share 4.4p 3.6p 7.0p
Statement of Financial Position
As at 31 December 2021
Unaudited Unaudited Audited
31 December 2021 31 December 2020 30 June 2021
£'000 £'000 £'000
Non-current assets
Intangible asset 933 761 849
Right of use asset 211 324 268
Tangible assets 19 28 23
1,163 1,113 1,140
Current assets
Trade and other receivables 43,226 30,729 24,880
Cash and cash equivalent 23,630 28,570 17,336
66,856 59,299 42,216
Total assets 68,019 60,412 43,356
Equity and liabilities
Equity
Share capital 100 100 100
Share premium account 679 679 679
Share option reserves 124 22 72
Retained earnings 5,158 2,740 4,374
6,061 3,541 5,225
Liabilities
Non-current liabilities
Deferred tax liabilities 137 88 147
Lease liabilities 76 218 133
213 306 280
Current liabilities
Trade and other payables 61,632 56,443 37,740
Lease liabilities 113 122 111
61,745 56,565 37,851
Total liabilities 61,958 56,871 38,131
Total equity and liabilities 68,019 60,412 43,356
Statement of Changes in Equity
For the 6-months ended 31 December 2021
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 period - - - 2,730 2,730
- - - 2,730 2,730
Transactions with shareholders
Dividends - - - (1,644) (1,644)
Share-based payment charge - - 22 - 22
Capital issued - - - - -
- - 22 (1,644) (1,622)
Balance at 31 December 2021 100 679 22 2,740 3,541
Profit for the period - - - 3,333 3,333
- - - 3,333 3,333
Transactions with shareholders
Dividends - - - (1,699) (1,699)
Share-based payment charge - - 50 - 50
Capital issued - - - - -
- - 50 (1,699) (1,649)
Balance at 30 June 2021 100 679 72 4,374 5,225
Profit for the period - - - 4,314 4,314
- - - 4,314 4,314
Transactions with shareholders
Dividends - - - (3,530) (3,530)
Share-based payment charge - - 52 - 52
Capital issued - - - - -
- - 52 (3,530) (3,478)
Balance at 31 December 2021 100 679 124 5,158 6,061
Statement of Cash Flows
For the 6-months ended 31 December 2021
Unaudited Unaudited Audited
6 months to 31 December 2021 6 months to 31 December 2020 Year to 30 June 2021
£'000 £'000 £'000
Cash flows from operating activities
Profit before taxation 5,188 3,490 7,397
Adjustments for
Depreciation 8 8 15
Amortisation 275 238 492
Share-based payment charge 52 22 72
Finance income (1) (13) (17)
Finance expense 6 2 9
(Increase)/decrease in trade and other receivables (18,346) (9,582) (3,732)
Increase/(decrease) in trade and other payables 23,386 8,166 (10,151)
Income tax paid (379) (445) (1,346)
Net cash flows from operating activities 10,189 1,886 (7,261)
Cash flows from investing activities
Interest received 1 13 17
Payments to acquire tangible assets (3) (3) (5)
Payments to acquire intangible assets (303) (255) (540)
Net cash flows from investing activities (305) (245) (528)
Cash flows from financing activities
Dividends paid (3,530) (1,643) (3,343)
Capital payments in respect of leases (54) (44) (141)
Interest paid in respect of leases (6) (2) (9)
Net cash flows from financing activities (3,590) (1,689) (3,493)
Net (decrease)/increase in cash and cash equivalents for the period 6,294 (48) (11,282)
Cash and cash equivalents at beginning of period 17,336 28,618 28,618
Cash and cash equivalents at end of period 23,630 28,570 17,336
Statement of Underlying Free Cash Flows
For the 6-months ended 31 December 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.
Unaudited Unaudited Audited
6 months to 31 December 2021 6 months to 31 December 2020 Year to 30 June 2021
£'000 £'000 £'000
Underlying free cash flows from operating activities
Profit before taxation 5,188 3,490 7,397
Adjustments for
Depreciation 8 8 15
Amortisation 275 238 492
Share-based payment charge 52 22 72
Finance income (1) (13) (17)
Finance expense 6 2 9
(Increase)/decrease in trade and other receivables 6 270 244
Increase/(decrease) in trade and other payables (3) 44 247
Income tax paid (379) (445) (1,346)
Net underlying free cash flows from operating activities 5,152 3,616 7,113
Underlying free cash flows from investing activities
Interest received 1 13 17
Payments to acquire tangible assets (3) (3) (5)
Payments to acquire intangible assets (303) (255) (540)
Net underlying free cash flows from investing activities (305) (245) (528)
Underlying free cash flows from financing activities
Dividends paid (3,530) (1,643) (3,343)
Capital payments in respect of leases (54) (44) (141)
Interest paid in respect of leases (6) (2) (9)
Net underlying free cash flows from financing activities (3,590) (1,689) (3,493)
Net (decrease)/increase in underlying free cash for the period 1,257 1,682 3,092
Underlying free cash at beginning of period 5,048 1,956 1,956
Underlying free cash equivalents at end of period 6,305 3,638 5,048
Notes to the preliminary financial information
1. Basis of preparation
The financial information relating to the half year ended 31 December 2021 is
unaudited and does not constitute statutory financial statements as defined in
section 434 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. The presentational and functional currency of the
Company is Sterling. Results in this financial information have been prepared
to the nearest £1,000.
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 profit before interest, tax, depreciation, amortisation and share-based
payment charge is presented in the statement of total comprehensive income as
the Directors consider this performance measure provides a more accurate
indication of the underlying performance of the Company and is commonly used
by City analysts and investors.
The comparative financial information for the year ended 30 June 2021 has been
extracted from the annual financial statements of Fonix Mobile plc. These
interim results for the period ended 31 December 2021, which are not audited,
do not comprise statutory accounts within the meaning of section 434 of the
Companies Act 2006. The financial information does not therefore include all
of the information and disclosures required in the annual financial
statements.
Full audited accounts of the Company in respect of the year ended 30 June
2021, which received an unqualified audit opinion and did not contain a
statement under section 498(2) or (3) of the Companies Act 2006, have been
delivered to the Registrar of Companies.
2. Going concern
At the time of approving the financial information, 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 31 December 2021 the Company had Cash and Cash Equivalents of £23.6
million (31 December 2020: £28.6 million) and Net Current Assets of £5.1
million (31 December 2020: £2.7 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.
Accordingly, the Directors continue to adopt the going concern basis of
accounting in preparing this financial information.
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:
Unaudited Unaudited Audited
6 months to 31 December 2021 6 months to 31 December 2020 Year to 30 June 2021
Gross Profit £'000 £'000 £'000
Mobile Payments 5,816 4,944 9,577
Mobile Messaging 726 508 1,045
Managed Services 450 380 725
6,992 5,832 11,347
Differences between the way in which the single operating segment is reported
in the financial information 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:
Unaudited Unaudited Audited
6 months to 31 December 2021 6 months to 31 December 2020 Year to 30 June 2021
Revenue by Service Line £'000 £'000 £'000
Mobile Payments 21,508 19,651 37,169
Mobile Messaging 6,155 4,171 8,928
Managed Services 934 786 1,571
28,597 24,608 47,668
The number of customers representing more than 10% of revenue in period were 2
(31 December 2020: 2)
5. Earnings per share
The calculations of earnings per share are based on the following profits and
number of shares:
Unaudited Unaudited Audited
6 months to 31 December 2021 6 months to 31 December 2020 Year to 30 June 2021
£'000 £'000 £'000
Retained profit for the period 4,314 2,730 6,063
Unaudited Unaudited Audited
6 months to 31 December 2021 6 months to 31 December 2020 Year to 30 June 2021
Number of shares Number Number Number
Weighted average number of shares in issue 100,000,000 100,000,000 100,000,000
Share options 521,392 232,684 465,475
100,521,392 100,232,684 100,465,475
Earnings per ordinary share
Basic 4.3p 2.7p 6.1p
Diluted 4.3p 2.7p 6.0p
The calculations of adjusted earnings per share are based on the following
adjusted profits and number of shares listed above:
Unaudited Unaudited Audited
6 months to 31 December 2021 6 months to 31 December 2020 Year to 30 June 2021
Adjusted earnings per share £'000 £'000 £'000
Retained profit for the period 4,314 2,730 6,063
Adjustments
Share-based payment charge 52 22 72
AIM admission costs - 844 844
Net adjustments 52 865 915
Adjusted earnings 4,366 3,595 6,978
Adjusted basic earnings per ordinary share 4.4p 3.6p 7.0p
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