REG - Fonix PLC - Final Results
24/09/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240924:nRSX3219Fa&default-theme=true
RNS Number : 3219F Fonix PLC 24 September 2024
24 September 2024
Fonix plc
("Fonix" or the "Company")
Final Results for the year ended 30 June 2024 (the "Year")
Strong trading momentum continues with significant growth in key markets and
an expanded commercial offering
Financial Highlights
2024 2023 Change
TPV £303.3m £268.1m +13.1%
Revenue £76.1m £64.9m +17.3%
Gross profit £17.9m £15.1m +18.5%
Adjusted EBITDA(1) £13.7m £11.6m +18.1%
Adjusted PBT(2) £14.0m £11.0m +27.3%
Adjusted EPS(3) 10.8p 8.9p +21.3%
Proposed Final DPS 5.70p 4.89p +16.6%
Underlying cash(4) £11.3m £9.4m +20.2%
Operational Highlights
· Strong growth in gross profits of 18.5%, which management considers
to be the business' most important performance metric, driven by growth in the
media sector and increases in enterprise messaging.
· The total payment volume ("TPV") processed in the Year grew by
13.1% to £303.3m (FY23: £268.1m).
· For the first time, the Company facilitated payment transactions
via Apple Pay, Google Pay, PayPal and bank card as part of an expanded
business strategy including the development of online payment portals.
· Fonix's commercial business segments of payments and messaging have
each grown by at least 16% in the Year, in line with expectations. The
business maintains a robust pipeline of prospects going into the next
financial year.
· Overseas markets represented approximately 12% of gross profits for
the year.
· Significant investment in new product features in the Year,
including live broadcaster voting, online payment portals, new payment
integrations, new mobile network operator connections and advanced campaign
scheduling.
· Selected to support Eurovision as voting partner for the first
time, managing voting for Eurovision 2024 across two territories - the UK and
Republic of Ireland.
· Robust, scalable platform with 23m (FY23: 19m) unique mobile users
interactions with Fonix's services in the Year, with 100% platform uptime as
in previous years.(5)
· Fonix continues to maintain high client retention.
· Increased dividend inline with progressive dividend policy.
The Board expects to publish its Annual Report for the year ending 30 June
2024 on the Company's website on Friday 25 October 2024. The Annual General
Meeting is scheduled to take place on Tuesday 19 November 2024.
Outlook
The Board remains confident in Fonix's growth potential for FY25 and beyond,
supported by high levels of recurring revenue with a strong run-rate, an
expanded commercial offering, and significant opportunities for further
international expansion.
Notes
(1) Adjusted EBITDA excludes share-based payment charges along with
depreciation, amortisation, interest, R&D tax credits and tax from the
measure of profit.
(2) Adjusted PBT is profit before tax excluding share-based payment charges
and R&D tax credits.
(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) Unique users are calculated as the number of unique Mobile Station
International Subscriber Directory Numbers (MSISDNs) processed through Fonix
services.
This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014.
Rob Weisz, CEO, commented:
"We have made significant strides in our growth strategy this year, expanding
our commercial offering and capitalising on a client-driven opportunity to
build a substantial sales pipeline in a third geographical market, together
underpinning our growth expectations for the year ahead.
In the next 12 months, we plan to further enhance our products, building on
the strong progress achieved in FY24. Our serviceable market is expanding
significantly with new direct network connectivity in Portugal, and we will
explore additional direct connectivity opportunities in other territories in
FY25 as we determine the most effective routes to market.
With a fair wind, we hope to begin transacting in Portugal before the
Christmas trading period commences. By achieving this and continuing to
nurture growth from our existing clients, we believe we have a strong
opportunity to further build on our outstanding record since IPO."
Enquiries
Fonix plc
Tel: +44 20 8114 7000
Robert Weisz, CEO
Michael Foulkes, CFO
Cavendish (Nomad and
Broker)
Tel: +44 20 7220 0500
Jonny Franklin-Adams / Seamus Fricker (Corporate Finance)
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 driven by blue chip clients
such as ITV, Bauer Media, RTÉ, Global Media, Comic Relief and BBC Children in
Need to name a few.
Chair's Review
I am pleased to inform shareholders that we have achieved another strong year
of double-digit growth in income, profitability, and cash generation. This
year, Fonix has delivered record cash returns to shareholders while
successfully executing its strategic objectives, positioning the company for
further long-term sustainable growth. Alongside further investments in
overseas expansion, the business has continued to broaden its commercial
offerings, creating new opportunities from existing customers and positioning
itself to become a global leader in interactive services.
The Fonix management team has continued to drive robust organic growth, with
gross profit and adjusted EBITDA both rising over 18% year-on-year. We have
also capitalised on favourable interest rates, repurchased £2 million worth
of shares in April and increased underlying cash by 20% over the year. In
light of our strong performance, I am pleased to announce that we will once
again be increasing our final dividend for the year, in line with our
progressive dividend policy to pay out at least 75% of adjusted earnings. The
board has resolved to propose a final dividend of 5.70p, giving a total
dividend for the year of 8.30p (FY23: 7.25p), an increase of 14.5% year on
year.
The business's expansion into international markets to date has proven highly
successful, with international transactions now representing over 12% of gross
profit for the year and Fonix has solidified its position as a market leader
in interactive services across the UK and the Republic of Ireland. Looking
ahead, we anticipate building on this success with the expected launch of
services with several broadcasters in Portugal in FY25. This has once again
been customer led, reducing the associated risks with entering a new
territory.
Financial results
Gross profit, our key financial metric, increased by 18.5% to £17.9 million
(FY23: £15.1 million) for the year. Consistent with previous years, gross
profit was higher in the first half due to the seasonal nature of some media
clients. Adjusted EBITDA increased 18.1% to £13.7m (FY23: £11.6m),
reflecting the business' continued success at maintaining high operating
leverage.
The company ended the year with £11.3m in underlying cash (FY23: £9.4m).
Actual cash, which also includes money held on behalf of customers, closed the
year at £26.5m (FY23: £20.6m).
The board recommends that the company pays a final dividend of 5.7p per share
in November, bringing the total dividend for the year to 77% of adjusted
earnings per share. If approved, the total distribution of dividends for the
year ended 30 June 2024 will be £8.24m (FY23: £7.24m).
Product
In parallel to our international expansion efforts, the company is pursuing
growth opportunities through an enhanced product suite incorporating new
payment and messaging channels. This year, the business launched its first
online payment portal, facilitating nearly £1 million in transactions via
bank cards, Apple Pay, Google Pay, and PayPal. Rather than cannibalising
existing mobile payment transactions, such initiatives will allow the business
to increase its market share in interactive services. Additionally, the
company introduced new support for live broadcaster voting, leading to its
selection as the official Eurovision 2024 voting partner for both the UK and
Ireland. Once again, these successes can be attributed to the business's
outstanding industry reputation and the seamless integration of new features
into its core product, Campaign Manager.
ESG
Throughout this period, the business has remained committed to environmental,
social, and governance (ESG) excellence, reinforcing its foundation of
responsible business and industry practices. ESG considerations remain central
to all key decision-making processes within the company.
In response to shareholder feedback requesting more independent representation
on the board, the company continues to actively consider the appointment of a
third independent non-executive director. While the board continues to
interview experienced candidates, it has not yet identified a candidate who
meets the criteria for adding significant strategic or commercial value,
whilst also fulfilling governance responsibilities and ensuring adequate
independence.
Recognising the importance of good corporate governance, and in accordance
with the Quoted Companies Alliance (QCA) Corporate Governance Code 2023,
directors' remuneration will be put to advisory shareholder vote and all
directors will be put forward for re-appointment at the company's AGM in
November.
Finally, I would like to extend my heartfelt thanks to all Fonix's staff,
customers, partners, suppliers, and shareholders for their unwavering support
over the past year. I look forward to achieving even greater successes
together in the future.
Conclusion
Fonix has entered the new financial year with a broadened product offering,
and with the opportunity to significantly expand its international footprint
through several enterprise scale prospects in Portugal. The management team
remains confident this growth can be achieved whilst maintaining the company's
highly operationally leveraged business model and with modest incremental
capital investment.
The business has experienced remarkable success since its IPO in October 2020,
with management consistently surpassing expectations and fulfilling the
strategic objectives set during its market debut. Over the past few years, the
business has consistently improved its product offerings, keeping its
technology at the cutting edge of innovation, expanding its customer base, and
maintaining a competitive edge. The business remains highly cash-generative
and debt-free, and will continue to reward shareholders with a progressive
dividend policy this year and into the future.
With imminent new network operator connectivity in Portugal, significant new
customer prospects and increased dominance in the markets it operates, the
board looks to the future with much confidence.
Edward Spurrier, Non-Executive Chairman
CEO's Statement
This has been another outstanding year for Fonix, with significant growth from
both new and existing customers across the UK and overseas. We have achieved
double-digit growth in gross profit and adjusted EBITDA, whilst enhancing our
commercial offering and investing in the foundations for further international
expansion.
Throughout the year we've remained committed to our mantra of focusing on high
quality sectors with enterprise scale customers and significant growth
potential. Through this approach, Fonix has never lost a significant customer
to a competitor and over many years has been able to establish a substantial
competitive advantage. We will continue to adopt this strategy as we expand
into adjacent markets.
Market opportunity
The market for Fonix's services is significant and growing. International
markets now represent over 12% of the company's gross profit and we see
significant opportunity for further overseas expansion across Europe. In the
media sector, which represents nearly 80% of the company's gross profit, we
have identified a number of markets in Europe alone that have the ingredients
for Fonix to expand into. These markets, along with a gradual expansion in the
company's commercial offering to include additional payment and messaging
channels, will form the basis of the company's core growth strategy over the
next 3-5 years. We remain confident that this strategy can be delivered whilst
maintaining our highly operationally leveraged business model.
As well as establishing a pipeline of enterprise opportunities in Portugal,
this year has seen us expand our product suite for interactive services,
opening up significant new revenue opportunities from our existing customers.
Notably, we introduced live broadcaster voting services, supporting Eurovision
voting across both the UK and Ireland, along with all of RTÉ's telephony
voting services. Additionally, we developed our first online payment portal,
facilitating payments via Apple Pay, Google Pay, PayPal, and bank cards.
Delivering against our growth strategy
We continue to take a balanced approach to growth, primarily looking to
achieve a material percentage growth in gross profit and shareholder income
every year, but without compromising on strategic initiatives we believe will
provide long term, sustainable growth. There are five clear elements to our
growth strategy set out below, which continue to guide our decision making and
how we invest:
1. Grow & deepen existing client relationships
We have supported our existing clients with product enhancements that have
helped them enjoy strong growth in our services this year and we continue to
identify additional opportunities for expansion within our current client
base. This is especially true in the media sector, where we are gradually
extending our interactive services offering to include complementary services,
such as online payment portals, alternative messaging channels, and live
broadcaster voting services. Integrating these additional services natively
with our Campaign Manager product gives us a substantial competitive edge, as
it allows us to offer consumers a seamless, real-time experience with minimal
latency. Moreover, as we scale these services for specific clients and within
core sectors, we achieve greater economies of scale, benefiting both Fonix and
our customers.
We have further deepened our relationship with media customers in the Republic
of Ireland where we have continued to help coordinate the industry response to
the proposed new gambling regulation bill. Whilst the proposed legislation
poses a risk to the operation of prize draw competition services in Ireland
(as described in more detail in principal risks and uncertainties section of
our Annual report and Accounts), our experience of working with regulators in
the UK has shown us that broadcaster prize draw competitions are generally
acknowledged to be well regulated, do not pose a harm to consumers and
therefore do not need to be subject to the same treatment as gambling
services.
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 and geographies. Media continues to be our biggest sector,
representing almost 80% of gross profit in the year, with strong growth in
both the UK and Ireland, particularly from those clients onboarded midway
through the previous year. We see the media sector as the most promising
catalyst for our international growth, and we continue to position it as the
key entry point for extending our services into identified overseas markets.
Charity and Gaming follow as our next largest sectors, collectively
contributing around 10% to gross profit. Our experience so far indicates that
SMS charity donations remain a relatively untapped market outside the UK, and
we believe that Fonix is well-positioned to foster growth in the charity
sector as we achieve market scale in specific geographies. We have recently
won our first charity customer in Ireland and we hope to leverage our strong
relationships with mobile network operators to help nurture growth in the
market over the years ahead.
This year we have seen a slight resurgence in Telecoms and Enterprise sectors
with demand for support services from overseas mobile network operators, as
well as increased demand for Fonix's wholesale SMS messaging connectivity.
Both have largely emerged from inbound opportunities and can be attributed to
our strong reputation in the industry.
3. Create sustainable, long-term profitability for shareholders
The company's underlying cash balances have continued to grow strongly in the
year, which has enabled us to continue to increase our annual dividend, as
well as return an additional £2m to shareholders in the year through a share
buy-back. This strong financial performance reflects our disciplined,
sector-focused approach to growth and our commitment to partnering only with
merchants who offer high-quality, sustainable services to their consumers.
By focusing on our core sectors and product offerings, we remain confident
that our expansion strategy can continue to be executed with only a modest
expansion in commercial and operational resources, allowing us to continue to
deliver on our strategy of achieving sustainable, long-term growth in income
to our shareholders for years to come.
4. Client and sector led with international expansion
As our business increasingly focuses on international markets, we expect a
larger portion of our future growth to come from overseas. Our strategy for
international expansion remains client-driven, as demonstrated by our imminent
expansion into the Portuguese market, which was initiated following a request
from one of our multinational media clients with a strong presence there. By
collaborating with local partners, we have subsequently successfully developed
a robust pipeline of potential clients in Portugal across both TV and radio
broadcasters. We are confident that this market offers significant growth
potential for the business in the coming years and our current expectation is
a similar growth trajectory to our Irish business.
Direct connectivity with mobile network operators (MNOs) is crucial for
minimising latency in our products and optimising our interactive services to
meet the specific nuances of individual MNO systems. Our experiences in
Ireland and now Portugal, where we expect to finalise a contract with the
final Portuguese MNO in the coming weeks, have shown that dealing with the
internal bureaucracy of large MNOs can be time-consuming. However, as our
reputation grows across neighbouring European countries and our product suite
becomes less reliant on MNO supply chains, we are optimistic that this will
lead to quicker adoption of our services in new European markets in the
future. Beyond Ireland and Portugal, international expansion remains a key
priority for the business. We have already made strong progress in identifying
several promising international markets, which we are now beginning to explore
further.
5. Widen our technological and operational advantage
Focusing primarily on opportunities in the media and charity sectors, both of
which have sizable underlying markets, has allowed Fonix to develop innovative
product features that provide real, tangible value to our clients, while
establishing significant barriers to entry for potential competitors. This
focus has also empowered our highly skilled team to become domain experts,
further strengthening our relationship with customers and partners in the
industry.
Our Campaign Manager product continues to be a market-leading interactive
services platform, with a depth of features unmatched by competition. This
year we have expanded our interactive services feature set, developing our
first online payment portal, with a long-term vision of creating an
increasingly seamless user experience between messaging and online channels.
In doing this, we have also expanded our Checkout payment solution to support
additional payment options including Apple Pay, Google Pay, PayPal and bank
card, which were all utilised in our first online portal build. This
additional functionality not only increases revenue opportunities, by
capturing payment transactions that might have otherwise failed (due to mobile
network operator bars or caps), but also provides further opportunities to
make real-time upsells to consumers at the point of purchase and optimise
transaction costs for our merchants (customers), in ways unmatched by any
other provider in the market.
In addition, Campaign Manager has been enhanced to support live broadcaster
voting, most notably for Eurovision 2024 and all of RTÉ's live viewer voting.
Unlike in the UK, in many European territories, such voting is priced as a
revenue-generating service for media broadcasters, therefore offering
additional payment and revenue generating opportunities for Fonix and its
clients. This is the case in both the Republic of Ireland and Portugal, as
well as in several other European markets that Fonix has identified for
potential future expansion.
While we are still in the early stages of expanding into the Portuguese
market, we are already working to replicate the trusted relationships we have
built with regulators and mobile operators in the UK and Ireland with their
counterparts in Portugal. We consider this to be one of our most understated
competitive advantages and we look forward to sharing more updates on these
partnerships in the coming months. Across our existing markets these key
relationships have been crucial not only in acquiring new clients but also in
developing new commercial models and helping obtain referrals to mobile
operators in other international markets. We believe these connections will be
increasingly vital as we accelerate our international expansion efforts.
People
Fonix prides itself on being a great place to work and having a culture where
our team can thrive. Our average headcount grew 14% to 49 employees,
reflecting the addition of new staff to both our product team and our
international operations. We will continue to add to both teams this financial
year as we pursue our ambitious growth strategy.
Product
We have made good progress on our product roadmap in the year, with our
dedicated in-house development team focusing on new features that drive
revenue growth for us and our customers (as mentioned in the 'Widen our
technological and operational advantage' section above), coupled with always
ensuring our platform remains highly scalable, resilient and secure.
Outlook
We have made significant strides in our growth strategy this year, expanding
our commercial offering and capitalising on a client-driven opportunity to
build a substantial sales pipeline in a third geographical market, together
underpinning our growth expectations for the year ahead.
In the next 12 months, we plan to further enhance our products, building on
the strong progress achieved in FY24. Our serviceable market is expanding
significantly with new direct network connectivity in Portugal, and we will
explore additional direct connectivity opportunities in other territories in
FY25 as we determine the most effective routes to market.
With a fair wind, we hope to begin transacting in Portugal before the
Christmas trading period commences. By achieving this and continuing to
nurture growth from our existing clients, we believe we have a strong
opportunity to further build on our outstanding record since IPO.
Robert Weisz, Chief Executive Officer
Financial Review
Key performance indicators
Financial 2024 2023 Change
Gross profit £17.9m £15.1m 18.5%
Adjusted EBITDA(1) £13.7m £11.6m 18.1%
Adjusted PBT(2) £14.0m £11.0m 27.3%
Underlying cash(3) £11.3m £9.4m 20.2%
Adjusted EPS(4) 10.8p 8.9p 21.3%
Adjusted ROCE(5) 116% 112%
Non-financial 2024 2023 Change
Total payments volume (TPV)(6) £303.3m £268.1m 13.1%
( )
( )
(1) Adjusted EBITDA excludes share-based payment charges along with
depreciation, amortisation, interest, R&D tax credits and tax from the
measure of profit.
(2) Adjusted PBT is profit before tax excluding share-based payment charges
and R&D tax credits.
(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) Adjusted ROCE is return on capital employed calculated as adjusted EBIT
(being earnings before interest, R&D tax credits and tax excluding
share-based payment charges) divided by capital employed (total assets less
total current liabilities).
(6) Total payments volume is consumer spend inclusive of VAT processed via
carrier billing, SMS billing and voice, along with the total value of payments
facilitated through third-party payment service providers via Google Pay,
Apple Pay, PayPal and bank card.
Financial Review
Total payments volume (TPV)
TPV represents the cash payments processed or facilitated by Fonix on behalf
of customers. TPV grew 13% to £303m (2023: £268m) in the year, with
particularly strong growth in the value of SMS billing transactions. Charity
related TPV grew by 2% year-on-year, having declined in the previous financial
year.
Revenue and other income
Company revenues for the year increased to £76.1m (2023: £64.9m), driven by
strong growth in the mobile payments, messaging and managed services 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. As
mobile payments is the company's most significant service line, the directors
monitor results and performance of the company based upon the gross profit
generated, which is considered the more meaningful measure of performance.
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
messages.
Gross profit for the year increased to £17.9m (2023: £15.1m) growing 18.5%
on the previous year, with mobile payments growing 17% (2023: 16%), mobile
messaging growing 43% (2023: 20%) and managed services growing 2% (2023:
declining 18%). As was the case in previous years, 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 23.5% (2023: 23.2%)
attributable to changes in the product and client mix affecting the mobile
payments and mobile messaging gross margin percentages.
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 20% in the year to £4.2m (2023:
£3.5m). The majority of the increase related to additional staff costs and
incentives as the business has continued to invest more in growth, along with
an increased spend on international expansion efforts.
Staff related costs and incentives, including remuneration, bonuses, benefits,
recruitment costs and training costs, but before capitalisation of software
development costs, increased to £4.3m (2023: £3.5m) in the year reflecting
an increase in engineering and operations headcount, and the introduction of a
new bonus scheme rewarding senior staff where the business outperforms
expectations. Average headcount for the year was 49 (2023: 43).
IT hosting costs increased to £217k (2023: £205k) in the year as the company
upgraded its platform infrastructure.
Software development costs of £1,061k (2023: £804k) were capitalised in the
year, representing 67% (2023: 62%) 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 £693k (2023:
£560k). Development costs are amortised on a straight-line basis over
3-years.
Adjusted EBITDA
The growth in gross profit and continued control of costs have resulted in a
significant increase in adjusted EBITDA which is up 18.1% at £13.7m (2023:
£11.6m) for the year. To provide a better guide to the underlying business
performance, adjusted EBITDA excludes share-based payment charges along with
depreciation, amortisation, interest, R&D tax credits and tax from the
measure of profit.
Finance income and expenses
Finance expense, which relates to the unwinding of the discounted lease
liability, increased to £18k (2023: £5k) as the company renewed its office
lease for a further three years in November 2023.
Finance income increased to £1.1m (2023: £0.3m) due to increases in the base
rate part way through the prior year.
Corporation tax
The company's effective corporate tax rate increased to 23% (FY23: 19%) during
the year, driven by increases in the headline rate of corporation tax and
changes to the UK's research and development tax credit scheme. Starting in
FY25, the company's effective tax rate on UK profits will rise again due to
additional changes to the research and development tax credit scheme,
effective from April 1, 2024. However, the company expects to mitigate this
impact by utilising a branch profits exemption for net profits generated by
branches located outside the UK.
EPS and Dividends
Given the company's strong performance, cash resources and distributable
reserves, as well as the confidence in the company's prospects, the board
recommends paying out 77% of adjusted EPS to shareholders in the form of an
ordinary dividend, which is in line with the company's progressive dividend
policy to pay out at least 75% of adjusted earnings per share each year. The
board therefore intends to recommend a final dividend of 5.70p (2023: 4.89p)
per share to be approved at the AGM in November.
Statement of Financial Position
The company had net assets of £10.7m (2023: £9.4m) at the year-end,
including capitalised software development costs with a carrying value of
£1.6m (2023: £1.2m). The movement in net assets reflects profit after tax
less dividend payments and share buy-backs.
Current assets increased to £62m (2023: £57m) as the company held greater
cash balances at the year end, due to the increase in trade year on year.
Current liabilities increased to £53m (2023: £48m) as the company owed more
trade payables at the year end, due to the increase in trade year on year.
Non-current liabilities increased to £0.4m (2023: £0.2m) as the company
renewed its office lease agreement for a further three years in November 2023.
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 cash flow available to the business.
Underlying cash increased to £11.3m (2023: £9.4m) due to additional retained
earnings less cash used in share buy-backs.
Actual cash, which includes cash held on behalf of customers, can vary
substantially from period to period and is particularly sensitive to the
timing of passthrough outpayments for customer charity campaigns. Actual cash
held increased to £26.5m (2023: £20.6m) in the year. The increase beyond the
increase in underlying cash is purely timing related and attributable to a
mobile network operator settling a trade receivable invoice a few days earlier
than the previous year.
Michael Foulkes, Chief Finance Officer
Audited results for the year ended 30 June 2024
Statement of Comprehensive Income
For the year ended 30 June 2024
2024 2023
Note £'000 £'000
Continuing operations
Revenue 4 76,089 64,916
Cost of sales (58,203) (49,841)
Gross profit 3 17,886 15,075
Other income - -
Adjusted operating expenses(1) (4,193) (3,508)
Profit before interest, tax, depreciation, amortisation, share-based payment 13,693 11,567
charge and exceptional costs
R&D tax credit 58 -
Share-based payment charge (100) (125)
Depreciation and amortisation (825) (924)
Operating profit 12,826 10,518
Finance income 1,127 341
Finance expense (19) (5)
Profit before taxation 13,934 10,854
Taxation (3,317) (2,057)
Total comprehensive profit for the financial year 10,617 8,797
(1) Adjusted operating expenses excludes R&D tax credits, share-based
payment charge, depreciation and amortisation
Earnings per share 2024 2023
Basic earnings per share 10.7p 8.8p
Diluted earnings per share 10.6p 8.7p
Adjusted basic earnings per share 10.8p 8.9p
Statement of Financial Position
As at 30 June 2024
2024 2023
£'000 £'000
Non-current assets
Intangible asset 1,606 1,239
Right of use asset 286 42
Tangible assets 30 28
1,922 1,309
Current assets
Trade and other receivables 35,947 36,058
Cash and cash equivalent 26,480 20,648
62,427 56,706
Total assets 64,349 58,015
Equity and liabilities
Equity
Share capital 100 100
Share premium account 679 679
Treasury shares (2,273) (495)
Share option reserves 362 297
Retained earnings 11,834 8,807
10,702 9,388
Liabilities
Non-current liabilities
Deferred tax liabilities 237 157
Lease liabilities 146 -
383 157
Current liabilities
Trade and other payables 53,148 48,453
Lease liabilities 116 17
53,264 48,470
Total liabilities 53,647 48,627
Total equity and liabilities 64,349 58,015
Statement of Changes in Equity
For the year ended 30 June 2024
Share capital Share premium Share option reserve Treasury shares Retained earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 July 2022 100 679 172 - 6,870 7,821
Profit for the financial year - - - - 8,797 8,797
- - - - 8,797 8,797
Transactions with shareholders
Dividends - - - - (6,860) (6,860)
Share-based payment charge - - 125 - - 125
Purchase of own shares - - - (495) - (495)
- - 125 (495) (6,860) (7,230)
Balance at 30 June 2023 100 679 297 (495) 8,807 9,388
Profit for the financial year - - - - 10,617 10,617
- - - - 10,617 10,617
Transactions with shareholders
Dividends - - - - (7,481) (7,481)
Share-based payment charge - - 100 - - 100
Purchase of own shares - - - (2,040) - (2,040)
Exercise of share options issued from treasury shares - - - 262 (144) 118
Fair value of options exercised in the period - - (35) - 35 -
- - 65 (1,778) (7,590) (9,303)
Balance at 30 June 2024 100 679 362 (2,273) 11,834 10,702
Statement of Cash Flows
For the year ended 30 June 2024
2024 2023
£'000 £'000
Cash flows from operating activities
Profit before taxation 13,934 10,854
Adjustments for
Depreciation 15 16
Amortisation 809 908
Share-based payment charge 100 125
Finance income (1,127) (341)
Finance expense 19 5
(Increase)/decrease in trade and other receivables 111 (4,083)
Increase/(decrease) in trade and other payables 4,297 6,115
Income tax paid (2,839) (1,750)
Net cash flows from operating activities 15,319 11,849
Cash flows from investing activities
Interest received 1,127 341
Payments to acquire tangible assets (18) (19)
Payments to acquire intangible assets (1,061) (1,040)
Net cash flows from investing activities 48 (718)
Cash flows from financing activities
Net proceeds from issue of equity 119 -
Dividends paid (7,481) (6,860)
Purchase of own shares (2,040) (495)
Capital payments in respect of leases (115) (116)
Interest paid in respect of leases (18) (4)
Net cash flows from financing activities (9,535) (7,475)
Net increase in cash and cash equivalents for the period 5,832 3,656
Cash and cash equivalents at beginning of period 20,648 16,992
Cash and cash equivalents at end of period 26,480 20,648
Statement of Underlying Cash Flows
For the year ended 30 June 2024
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 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.
2024 2023
£'000 £'000
Underlying cash flows from operating activities
Profit before taxation 13,934 10,854
Adjustments for
Depreciation 15 16
Amortisation 809 908
Share-based payment charge 100 125
Finance income (1,127) (341)
Finance expense 19 5
(Increase)/decrease in trade and other receivables (31) 11
Increase/(decrease) in trade and other payables 485 24
Income tax paid (2,839) (1,750)
Net underlying cash flows from operating activities 11,365 9,852
Underlying cash flows from investing activities
Interest received 1,127 341
Payments to acquire tangible assets (18) (19)
Payments to acquire intangible assets (1,061) (1,039)
Net underlying cash flows from investing activities 48 (717)
Underlying cash flows from financing activities
Net proceeds from issue of equity 119 -
Dividends paid (7,481) (6,860)
Purchase of own shares (2,040) (495)
Capital payments in respect of leases (115) (116)
Interest paid in respect of leases (18) (4)
Net underlying cash flows from financing activities (9,535) (7,475)
Net increase in underlying cash for the period 1,878 1,660
Underlying cash at beginning of period 9,446 7,786
Underlying cash equivalents at end of period 11,324 9,446
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 2024 has been extracted from the
company's audited financial statements which were approved by the Board of
Directors on 23 September 2024 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 2023 has been extracted
from the company's audited financial statements which were approved by the
Board of Directors on 20 September 2023 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 is not externally
funded and accordingly is not affected by borrowing covenants. In addition,
the cost of capital represents dividend distributions or share buy-backs -
which are discretionary.
At 30 June 2024 the company had cash and cash equivalents of £26.5 million
(2023: £20.6 million) and net current assets of £9.2 million (2023: £8.2
million). The business model of Fonix is cash generative - with increased
sales generally impacting positively on the working capital cycle and profits
from trading activities being rapidly reflected in cash at bank.
The directors maintain sufficient net assets in the company by moderating or
increasing dividend distributions or share buy-backs 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 broadly in line with the forecast for the year.
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:
2024 2023
Gross profit £'000 £'000
Mobile payments 14,782 12,689
Mobile messaging 2,332 1,626
Managed services 772 760
17,886 15,075
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.
Gross profits can be attributed to the following geographical locations, based
on the end user and the associated mobile network operators' location:
2024 2023
Gross profit by geography £'000 £'000
United Kingdom 15,691 13,534
Rest of Europe 2,195 1,541
17,886 15,075
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:
2024 2023
Revenue by service line £'000 £'000
Mobile payments 54,199 47,607
Mobile messaging 19,859 15,513
Managed services 2,031 1,796
76,089 64,916
Revenues can be attributed to the following geographical locations, based on
the end user and the associated mobile network operators' location:
2024 2023
Revenue by geography £'000 £'000
United Kingdom 63,915 55,352
Rest of Europe 12,174 9,564
76,089 64,916
The number of customers representing more than 10% of revenue or gross profit
in the year was 3 (2023: 3).
5. Earnings per share
The calculations of earnings per share are based on the following profits and
number of shares:
2024 2023
£'000 £'000
Retained profit for the financial year 10,617 8,797
2024 2023
Number of shares Number Number
Weighted average number of shares outstanding 99,651,884 99,970,504
Share options 803,079 760,799
100,454,963 100,731,303
Earnings per ordinary share
Basic 10.7p 8.8p
Diluted 10.6p 8.7p
The calculations of adjusted earnings per share are based on the following
adjusted profits and number of shares listed above:
2024 2023
Adjusted earnings per share £'000 £'000
Retained profit for the financial year 10,617 8,797
Adjustments
Share-based payment charge 100 125
Net adjustments 100 125
Adjusted earnings 10,717 8,922
Adjusted basic earnings per ordinary share 10.8p 8.9p
At 30 June 2024, the total number of ordinary shares of 0.1 pence each in the
capital of the Company, in issue was 100,000,000. The Company held 1,024,580
shares in treasury, and therefore the total number of ordinary shares
outstanding in the Company was 98,975,420.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR QKNBDOBKDPCBRecent news on Fonix
See all newsREG - Fonix PLC - Holding(s) in Company
AnnouncementREG - Fonix PLC - Grant of Market Price Options and PDMR Dealing
AnnouncementREG - Fonix PLC - Interim Results
AnnouncementREG - Fonix PLC - Trading Update and Special Dividend Declaration
AnnouncementREG - Fonix PLC - Total Voting Rights
Announcement