REG - Fonix Mobile PLC - Interim Results
13/03/2023 07:00
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RNS Number : 6208S Fonix Mobile PLC 13 March 2023
13 March 2023
Fonix Mobile plc
("Fonix" or the "Company")
Interim Results for the six months ended 31 December 2022
Strong earnings growth and expanded partnership with ITV Plc
Fonix, the UK focused mobile payments and messaging company, is pleased to
announce its unaudited interim results for the six months to 31 December 2022
(the "Period").
Financial Highlights
H1 FY23 H1 FY22 Change
Revenue £32.8m £28.6m +14.7%
Gross profit £7.8m £7.0m +11.4%
Adjusted EBITDA(1) £6.2m £5.5m +12.7%
Interim DPS 2.36p 2.00p +18.0%
Adjusted PBT(2) £5.9m £5.2m +13.5%
Adjusted EPS(3) 4.9p 4.4p +11.4%
Underlying cash(4) £8.4m £6.3m +33.3%
Net underlying free cash flows from operating activities(4) £5.5m £5.2m +5.8%
Operational Highlights
· Record levels of commercial trade were achieved in December,
including 85 million SMS messages processed in a single month.
· A second, tier 1 media went client live in the Republic of Ireland,
our first international market.
· Significant upgrade of technical infrastructure, doubling the peak
capacity of key Fonix products.
· Fonix continues to maintain high client retention, with over 99% of
income of a repeating nature.
· 100% platform uptime in the period.
· Fonix's key service lines of payments and messaging have each grown
in the Period and the business retained a growing pipeline of enterprise
prospects going into H2 FY23.
Post Period End
· ITV Plc, the leading UK TV broadcaster, has agreed to gradually
extend its commercial partnership with Fonix to include SMS billing payments,
alongside the existing relationship for carrier billing and charity services.
Outlook
We have continued to make great progress on our growth strategy in the period,
with performance comfortably in line with expectations and the business has a
strong pipeline of opportunities going into the second half of the year. As
was the case in previous years, we are expecting gross profit to be slightly
weighted towards the first half of the financial year, due to some seasonality
in the trade of our significant media customers.
In line with our growth plans, we will continue to invest more in future
growth, with further investment into product as well as making new investments
in organic international growth, as we look to deliver sustainable, highly
profitable growth for our shareholders.
The Company has a strong new business pipeline, including several significant
enterprise deals in the UK and Ireland, 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.
Notes
(1) Adjusted EBITDA excludes share-based payment charges along with
depreciation, amortisation, interest and tax from the measure of profit.
(2) Adjusted PBT is profit before tax excluding share-based payment charges.
(3) Adjusted EPS is earnings per share excluding share-based payment charges.
(4) Underlying cash is actual cash excluding cash held on behalf of customers.
(5) Active customers are those generating more than £500 in gross profit in
the previous 12 months.
Rob Weisz, CEO, commented:
"Our long term investment in pursuing some large enterprise deals has begun to
pay off and we have an exciting pipeline of new opportunities commencing in
the coming period, including a significant expansion of our partnership with
ITV post period end.
As planned, we have invested more in sales and product in the period, and we
will be scaling our investment in international growth 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, 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
Fonix has continued to make strong progress on its strategic and financial
goals in the first six months of the financial year, once again achieving
double-digit period-on-period growth in gross margins and profitability,
whilst winning new clients across our core sectors, and establishing an
impressive pipeline of prospects.
In expanding our commercial partnership with ITV shortly after the period
ended, Fonix has become the de facto SMS interactive services partner for
broadcasters in the UK, and in launching services with a second leading media
organisation in Ireland, we are on a similar path to success in that market
also.
Fonix's two core business lines of mobile payments and mobile messaging have
each grown strongly in the period, increasing by 13% and 18% year-on-year
respectively. Mobile payments remains the business's primary commercial focus
and represented 84% (H1 FY22: 83%) of gross profits. Mobile messaging
continued to grow strongly due to increased demand from existing customers, as
well as strong adoption by new clients onboarded in the period.
The Total Payment Value (TPV) growth from Fonix's commercial clients remained
strong in the period and at a consistent rate with previous periods. However,
Charity TPV fell 36% year-on-year, due to a change in the timing of certain
annual telethon events and some decline in consumer giving across the period.
As a result, overall TPV growth remained relatively flat year-on-year.
Market opportunity
The market for frictionless mobile payments in Fonix's core sectors continues
to be significant and growing. Fonix is now considered to be the leading
provider of mobile payments in Ireland, and by their own admission, since
connecting Fonix, Irish mobile network operators are experiencing levels of
growth never seen in the market before. Once again this is an endorsement of
our strategy to focus on sectors where we see sustainable growth opportunities
and illustrates our ability to scale clients' accounts in ways unmatched by
our competitors. We continue to see many opportunities to mirror this success
in other markets around the world, but will still approach this from a
customer led manner.
For the majority of our customers, deploying Fonix's payment solutions
continues to reduce checkout abandonment and provide incremental revenues
rather than cannibalising their existing transactions. For this reason we do
not consider ourselves to be in direct competition with traditional payment
methods, such as credit card or Apple Pay, 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 product 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 relationships
Fonix's revenue from key commercial customers has continued to grow solidly in
the period, demonstrating the resilience of Fonix's business model in a
challenging economic environment. The business continues to forge deeper
relationships with its biggest clients, and find new commercial opportunities
for growth from these accounts.
Our unique and influential customer and operator relationships have proven
vital in achieving early commercial successes in the Republic of Ireland and
we continue to work closely together to identify new opportunities for growth
in the region. These alliances remain one of Fonix's most understated
competitive advantages.
2. Take a disciplined sector focus
We continue to take a sector focused approach to growth, leveraging our
significant reference clients and key partnerships across our core markets.
The media sector continues to be the business' dominant vertical focus in both
the UK and now in overseas markets also. As well as recently expanding our
commercial partnership with ITV in the UK and winning a second broadcaster
contract in Ireland, we are in advanced discussions with other media
organisations in both regions looking to harness Fonix's mobile payments and
interactive technologies.
In the mobility and ticketing sector, whilst commercial progress is still in
the early stages, we are progressing several greenfield opportunities to offer
consumers frictionless payments for on-the-move services, as an alternative to
traditional cash transactions with a high processing cost and are evaluating a
trial with a transport opportunity. The potential scale and 'stickiness' of a
payment solution in this space continues to justify the modest investment in
commercial efforts in this area.
We continue to target a number of new opportunities in online services by
demonstrating the reduction in basket abandonment achieved by incorporating
carrier billing as an alternative payment option in a consumer's checkout
flow.
Following several periods of consecutive growth, revenues from the charity
segment declined in the period, with cost of living pressures leading to a
drop off in consumer giving. Income from charity clients was also impacted by
timing changes to some annual events. Whilst declining in the short term, the
market for charity donations continues to be significant and with carrier
billing payments providing a 'near free' commission model along with Fonix's
exceptional reference clients, there remains many more opportunities for
expansion in this market.
3. Create sustainable, long-term profitability for
shareholders
Fonix continues to achieve material growth in gross profits and adjusted
EBITDA, with both growing 11.4% and 12.7% respectively year-on-year in the
period. With our core commercial focus remaining on large, multinational
clients with relatively long sales cycles, and our priority on nurturing 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
In expanding to the Republic of Ireland, the business has delivered on its
commitment of organic international growth through its network of tier 1
multinational clients. Since initially launching services with Bauer Ireland,
we have added another tier 1 media client and have a clear strategy to become
the leading payments partner for all broadcasters in the region within the
next 18 months.
Beyond Ireland, we continue to make good progress in broadening our
addressable market, establishing new connectivity and mobile network operator
relationships in well regulated and mature neighbouring markets. We believe
this is the best strategy for achieving sustainable, highly valued, organic
growth, where our domain expertise can be expanded into new markets and this
strategy will continue to be customer led.
International growth continues to be a core, medium term investment strategy
for the business, but forms a relatively small part of our short term
forecasts. As such, 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 and specialised sectors,
particularly in the media and charity space, Fonix has been able to establish
a cutting edge and highly differentiated product offering. With over 10 years
of investment in our Campaign Manager product, Fonix has built a platform
which creates real tangible added value for our clients and provides the
business with a significant competitive advantage, which over time we believe
can be applied in many markets across the globe. In onboarding new enterprise
media clients in the period, including some in an overseas market, Campaign
Manager is now able to support multiple currencies, as well as several
additional third party integrations.
The business has continued to build on its exemplary reputation for
compliance, and has already begun to establish excellent consultative
relationships with mobile operators and regulators in new markets, such as in
Ireland. We strongly believe this trusted relationship with our partners
continues to provide an immeasurable benefit when winning new business, as
well as attacking and retaining the best talent, which in turn reinforces the
barriers to entry for other providers that might look to enter the market.
People
Fonix prides itself on being a great place to work and having a culture where
our team can thrive. Attracting and retaining the best industry leading talent
continues to be a top priority for the business. Our average headcount grew 8%
year-on-year to an average of 41 in the period (H1 FY22: 38), including our
first commercial hire in the Republic of Ireland. As all businesses are
finding right now, it was necessary to give staff above (historic) average pay
rises in the latest pay review to help them cope with increases in the cost of
living. However, I am pleased to say we were able to manage any increases
within our existing growth projections and offset any additional cost with
savings elsewhere. We continue to be mindful of inflation moving forward, and
continue to be confident of managing additional costs within our existing
plans.
Product
During the period, we upgraded our technical infrastructure to double the peak
load capacity of our core products, allowing us to support significantly more
and larger client campaigns in parallel. 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.
Financial Review
Key performance indicators
Financial H1 FY23 H1 FY22 Change
Gross profit £7.8m £7.0m 11.4%
Adjusted EBITDA(1) £6.2m £5.5m 12.7%
Adjusted PBT(2) £5.9m £5.2m 13.5%
Underlying cash(3) £8.4m £6.3m 33.3%
Adjusted EPS(4) 4.9p 4.4p 11.4%
Non-financial H1 FY23 H1 FY22 Change
Total payments value (TPV) £137m £138m -0.7%
Active customer count(5) 121 116 4.3%
( )
( )
(1) Adjusted EBITDA excludes share-based payment charges along with
depreciation, amortisation, interest and tax from the measure of profit.
(2) Adjusted PBT is profit before tax excluding share-based payment charges.
(3) Underlying cash is actual cash excluding cash held on behalf of customers.
(4) Adjusted EPS is earnings per share excluding share-based payment charges.
(5) Active customers are those that generated more than £500 in gross margin
in the previous 12-months.
Revenue
Company revenues for the period were £32.8m (H1 FY22: £28.6m) growing 15% on
the previous year, driven by strong growth across mobile payments and mobile
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.
Revenue and gross profit grew more strongly than TPV, as charity related TPV,
which is a relatively low margin product, declined 36% year-on-year and was
offset by growth in more profitable payments products.
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 £7.8m (H1 FY22: £7.0m) growing
11.4% on the previous period, with mobile payments growing 13.3%, mobile
messaging growing 17.9% and managed services declining 19.8%. The decline in
managed service fees, which makes up a relatively small amount of gross profit
was attributable to a reduction in the number and size of charity campaigns in
the period.
Blended gross profit margins decreased slightly to 23.8% (H1 FY22: 24.5%)
attributable to falls in charity related managed services fees as well as
changes in the product and client mix affecting the mobile payments gross
margin percentage. In particular, mobile payments in the Republic of Ireland
are at a significantly lower margin percentage than those in the UK, due to
the higher revenue share taken by mobile carriers in the Irish market. We
anticipate this trend to continue for the rest of the financial year, with
margins stabilising from FY23 onwards.
Adjusted Operating Expenses
Operating costs have remained firmly under control as the business has
expanded internationally, with costs generally only increasing where the
business has invested more in sales and product. Adjusted operating costs
increased 8% in the period to £1.63m (H1 FY22: £1.51m). The majority of the
increase related to additional staff costs and annual pay rises as the
business has invested more in growth with new commercial hires, along with an
increased spend on IT infrastructure costs.
Staff related costs and incentives increased to £1.6m (H1 FY22: £1.4m) in
the period reflecting the additional investment in sales and product hires.
Average headcount for the period was 41 (H1 FY22: 38).
Software development costs of £344k (H1 FY22: £303k) were capitalised in the
period, representing 56% (H1 FY22: 59%) of development costs in the period.
The slight decrease in capitalised expenditure reflects the additional focus
on onboarding and integrating new customers during the period. The
capitalisation of current period development spend was offset by an
amortisation charge of £267k (H1 FY22: £218k). Development costs are
amortised on a straight-line basis over 3-years.
Adjusted EBITDA
The growth in gross profit and the continued control of costs has resulted in
an equivalent increase in adjusted EBITDA, which is up 12.7% at £6.2m (H1
FY22: £5.5m) for the period. To provide a better guide to the underlying
business performance, adjusted EBITDA excludes share-based payment charges
along with depreciation, amortisation, interest and tax from the measure of
profit.
Finance income and expenses
Finance expenses which relate to the unwinding of the discounted lease
liability decreased marginally to £3k (H1 FY22: £6k).
Interest on bank deposits increased due to the increase in bank interest
rates.
Corporation tax
We have been closely following the government's evolving policy towards UK
corporation tax over recent months. Whilst we will be taxed more favourably on
our Irish profits, due to the increase in the headline rate of UK
corporation tax combined with some significant changes to the R&D tax
credit scheme, we are anticipating our effective rate of corporation tax to
increase by up to 6% in the next financial year (FY24), subject to there being
no further changes announced by HM Treasury.
Statement of Financial Position
The company had net assets of £8.2m at the period end (H1 FY22: £6.1m),
including capitalised software development costs with a carrying value of
£1,072k (H1 FY22: £933k). 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 remained unchanged at £67m (H1 HY22: £67m) at the period end.
Trade and Other Receivables, which includes monies receivable on behalf of
customers, increased in the period and was offset by an equivalent fall in
actual cash. This was purely due to the timing of some mobile network operator
outpayments at the period end, which were delayed by a matter of days, with no
impact on the business' trading. Current liabilities decreased marginally to
£60m (H1 FY22: £62m) as the business held fewer charity related customer
funds at the period end.
Non-current liabilities decreased to £0.1m (H1 FY22: £0.2m) 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 33.3% to £8.4m (H1 FY22: £6.3m) due to
additional retained earnings.
Actual cash, which includes cash held on behalf of customers, varies
substantially from period to period and is particularly sensitive to the
timing of mobile network operator payments at month end, as well as
pass-through outpayments for customer charity campaigns. Actual cash held at
the period end was £20.4m (H1 FY22: £23.6m) in the period. The decrease is
purely a timing issue and is wholly attributed to a mobile network operator
payment being delayed by a few days at the period end, which had no impact on
the business or our clients.
Dividends
We are pleased to declare our increased interim dividend of 2.36p per share,
in line with the company's progressive dividend policy to pay out at least 75%
of adjusted EPS to shareholders in the form of an ordinary dividend each
period. The interim dividend will be paid on 31 March 2023 to shareholders on
the register on 24 March 2023, with an ex-dividend date of 23 March 2023.
Outlook
We have continued to make great progress on our growth strategy in the period,
with performance comfortably in line with expectations and the business has a
strong pipeline of opportunities going into the second half of the year. As
was the case in previous years, we are expecting gross profit to be slightly
weighted towards the first half of the financial year, due to some seasonality
in the trade of our significant media customers.
In line with our growth plans, we will continue to invest more in future
growth, with further investment into product as well as making new investments
in organic international growth, as we look to deliver sustainable, highly
profitable growth for our shareholders.
The Company has a strong new business pipeline, including several significant
enterprise deals in the UK and Ireland, 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 2022
Statement of Comprehensive Income
For the 6 months ended 31 December 2022
Unaudited Unaudited Audited
6 months to 31 December 2022 6 months to 31 December 2021 Year to 30 June 2022
Note £'000 £'000 £'000
Continuing operations
Revenue 4 32,815 28,597 53,649
Cost of sales (25,009) (21,605) (40,417)
Gross profit 3 7,806 6,992 13,232
Other income - 42 51
Adjusted operating expenses(1) (1,626) (1,506) (3,018)
Profit before interest, tax, depreciation, amortisation, share-based payment 6,180 5,528 10,265
charge and exceptional costs
Share-based payment charge (64) (52) (100)
Depreciation and amortisation (333) (283) (592)
Operating profit 5,783 5,193 9,573
Finance income 55 1 8
Finance expense (3) (6) (10)
Profit before taxation 5,835 5,188 9,571
Taxation (990) (874) (1,545)
Total comprehensive profit for the period 4,845 4,314 8,026
(1) Adjusted operating expenses excludes share-based payment charge,
depreciation and amortisation
Earnings per share Unaudited Unaudited Audited
6 months to 31 December 2022 6 months to 31 December 2021 Year to 30 June 2022
Basic earnings per share 4.8p 4.3p 8.0p
Diluted earnings per share 4.8p 4.3p 8.0p
Adjusted basic earnings per share 4.9p 4.4p 8.1p
Statement of Financial Position
As at 31 December 2022
Unaudited Unaudited Audited
31 December 2022 31 December 2021 30 June 2022
£'000 £'000 £'000
Non-current assets
Intangible asset 1,072 933 995
Right of use asset 99 211 155
Tangible assets 22 19 25
1,193 1,163 1,175
Current assets
Trade and other receivables 46,658 43,226 31,975
Cash and cash equivalent 20,438 23,630 16,992
67,096 66,856 48,967
Total assets 68,289 68,019 50,142
Equity and liabilities
Equity
Share capital 100 100 100
Share premium account 679 679 679
Share option reserves 236 124 172
Retained earnings 7,215 5,158 6,870
8,230 6,061 7,821
Liabilities
Non-current liabilities
Deferred tax liabilities 148 137 160
Lease liabilities - 76 17
148 213 177
Current liabilities
Trade and other payables 59,835 61,632 42,028
Lease liabilities 76 113 116
59,911 61,745 42,144
Total liabilities 60,059 61,958 42,321
Total equity and liabilities 68,289 68,019 50,142
Statement of Changes in Equity
For the 6 months ended 31 December 2022
Share capital Share premium Share option reserve Retained earnings Total
£'000 £'000 £'000 £'000 £'000
Balance at 1 July 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
Profit for the period - - - 3,712 3,712
- - - 3,712 3,712
Transactions with shareholders
Dividends - - - (2,000) (2,000)
Share-based payment charge - - 48 - 48
Capital issued - - - - -
- - 48 (2,000) (1,952)
Balance at 30 June 2022 100 679 172 6,870 7,821
Profit for the period - - - 4,845 4,845
- - - 4,845 4,845
Transactions with shareholders
Dividends - - - (4,500) (4,500)
Share-based payment charge - - 64 - 64
Capital issued - - - - -
- - 64 (4,500) (4,436)
Balance at 31 December 2022 100 679 236 7,215 8,230
Statement of Cash Flows
For the 6 months ended 31 December 2022
Unaudited Unaudited Audited
6 months to 31 December 2022 6 months to 31 December 2021 Year to 30 June 2022
£'000 £'000 £'000
Cash flows from operating activities
Profit before taxation 5,835 5,188 9,571
Adjustments for
Depreciation 10 8 15
Amortisation 323 275 575
Share-based payment charge 64 52 100
Finance income (55) (1) (8)
Finance expense 3 6 10
Increase in trade and other receivables (14,683) (18,346) (7,095)
Increase in trade and other payables 17,355 23,386 4,121
Income tax paid (550) (379) (1,365)
Net cash flows from operating activities 8,302 10,189 5,924
Cash flows from investing activities
Interest received 55 1 8
Payments to acquire tangible assets (7) (3) (17)
Payments to acquire intangible assets (344) (303) (608)
Net cash flows from investing activities (296) (305) (617)
Cash flows from financing activities
Dividends paid (4,500) (3,530) (5,530)
Capital payments in respect of leases (57) (54) (111)
Interest paid in respect of leases (3) (6) (10)
Net cash flows from financing activities (4,560) (3,590) (5,651)
Net (decrease)/increase in cash and cash equivalents for the period 3,446 6,294 (344)
Cash and cash equivalents at beginning of period 16,992 17,336 17,336
Cash and cash equivalents at end of period 20,438 23,630 16,992
Statement of Underlying Free Cash Flows
For the 6 months ended 31 December 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.
Unaudited Unaudited Audited
6 months to 31 December 2022 6 months to 31 December 2021 Year to 30 June 2022
£'000 £'000 £'000
Underlying free cash flows from operating activities
Profit before taxation 5,835 5,188 9,571
Adjustments for
Depreciation 10 8 15
Amortisation 323 275 575
Share-based payment charge 64 52 100
Finance income (55) (1) (8)
Finance expense 3 6 10
(Increase)/decrease in trade and other receivables (19) 6 (31)
Increase/(decrease) in trade and other payables (116) (3) 139
Income tax paid (550) (379) (1,365)
Net underlying free cash flows from operating activities 5,495 5,152 9,006
Underlying free cash flows from investing activities
Interest received 55 1 8
Payments to acquire tangible assets (7) (3) (17)
Payments to acquire intangible assets (344) (303) (608)
Net underlying free cash flows from investing activities (296) (305) (617)
Underlying free cash flows from financing activities
Dividends paid (4,500) (3,530) (5,530)
Capital payments in respect of leases (57) (54) (111)
Interest paid in respect of leases (3) (6) (10)
Net underlying free cash flows from financing activities (4,560) (3,590) (5,651)
Net (decrease)/increase in underlying free cash for the period 639 1,257 2,738
Underlying free cash at beginning of period 7,786 5,048 5,048
Underlying free cash equivalents at end of period 8,425 6,305 7,786
Notes to the preliminary financial information
1. Basis of preparation
The financial information relating to the half year ended 31 December 2022 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 2022 has been
extracted from the annual financial statements of Fonix Mobile plc. These
interim results for the period ended 31 December 2022, 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
2022, 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 2022 the Company had Cash and Cash Equivalents of £20.4
million (31 December 2021: £23.6 million) and Net Current Assets of £7.2
million (31 December 2021: £5.1 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.
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 2022 6 months to 31 December 2021 Year to 30 June 2022
Gross Profit £'000 £'000 £'000
Mobile Payments 6,589 5,816 10,951
Mobile Messaging 856 726 1,355
Managed Services 361 450 926
7,806 6,992 13,232
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
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:
Unaudited Unaudited Audited
6 months to 31 December 2022 6 months to 31 December 2021 Year to 30 June 2022
Revenue by Service Line £'000 £'000 £'000
Mobile Payments 24,633 21,508 40,129
Mobile Messaging 7,326 6,155 11,673
Managed Services 856 934 1,847
32,815 28,597 53,649
The number of customers representing more than 10% of revenue in period were 3
(31 December 2021: 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 2022 6 months to 31 December 2021 Year to 30 June 2022
£'000 £'000 £'000
Retained profit for the period 4,845 4,314 8,026
Unaudited Unaudited Audited
6 months to 31 December 2022 6 months to 31 December 2021 Year to 30 June 2022
Number of shares Number Number Number
Weighted average number of shares in issue 100,000,000 100,000,000 100,000,000
Share options 619,959 521,392 510,056
100,619,959 100,521,392 100,510,056
Earnings per ordinary share
Basic 4.8p 4.3p 8.0p
Diluted 4.8p 4.3p 8.0p
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 2022 6 months to 31 December 2021 Year to 30 June 2022
Adjusted earnings per share £'000 £'000 £'000
Retained profit for the period 4,845 4,314 8,026
Adjustments
Share-based payment charge 64 52 100
Net adjustments 64 52 100
Adjusted earnings 4,909 4,366 8,126
Adjusted basic earnings per ordinary share 4.9p 4.4p 8.1p
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