23rd Feb 2017 07:00
23 February 2017
Monitise plc
Interim Results for the six months to 31 December 2016
Substantially reduced losses and continued positive EBITDA
Market for FINkit continues to grow
London - 23 February 2017 - Monitise plc (LSE: MONI) ("Monitise" or the "Company"), the digital technology group specialising in financial services, announces its unaudited interim results for the six months ended 31 December 2016.
FY17 | FY16 | FY16 | FY16 | |
£m | H1 | H2 | H1 | Total |
Revenue | 28.2 | 34.2 | 33.4 | 67.6 |
EBITDA1 | 0.3 | 0.6 | -20.2 | -19.6 |
Loss before tax | -7.5 | -32.6 | -210.5 | -243.1 |
Cash from operations | -4.7 | 0.4 | -22.3 | -21.9 |
Exceptional & other cash usage2 | -10.0 | -11.7 | -13.1 | -24.8 |
Cash balance | 27.3 | 42.1 | 53.4 | 42.1 |
Headcount (period end) | 420 | 500 | 627 | 500 |
Highlights
· Transformation initiated a year ago delivers EBITDA profitability for the second consecutive six month period, with a significant reduction in reported loss
· 50% revenue growth from the Content business unit
· Relaunch of Create as Big Radical, led by industry heavyweight
· New president of Americas business unit appointed to drive business development
· Continuing strong interest from financial institutions in FINkit® platform
· FINkit partnership programme launched
· FINkit agreements under active discussion
Monitise's Chief Executive, Lee Cameron said - 'Our transformation programme is nearing completion, and continued half on half EBITDA profitability demonstrates that it is working. Having successfully stabilised and simplified the Group, the challenge now is to grow our revenue. To help us achieve that we have recently appointed new senior management to two of our business units, and we remain fully committed to, and optimistic about, the potential of our FINkit platform.
'Deadlines in 2017/18 for the implementation of regulatory initiatives that focus on increasing competition and opening up banking in both Europe and the UK are now imminent. These continue to ensure that delivering on digital transformation remains top of the retail banks' agendas.
'Mandates from both the UK's Competition and Markets Authority and the European Commission's Payments Services Directive (PSD2) are driving demand from retail banks for the type of faster technology change enabled by FINkit. We believe that the market for our products and services is increasingly moving in our direction, and I remain positive about the future of our business.
'FINkit solves the challenge banks face when seeking to accelerate the delivery of compliant digital services to their customers. We will continue to focus our efforts on serving the needs of our existing and prospective financial services clients, whilst exploring other opportunities with interested parties who also see the value in what we have built. Calendar year 2017 will be a pivotal year for Monitise.'
Outlook
As previously stated, Group revenue is expected to decline in the financial year to 30 June 2017, but the year will benefit from the full year impact of cost-savings already achieved in the interim results to 31 December 2016.
FINkit represents a real opportunity for Monitise to establish long-term sustainable growth, and we will continue to invest in developing that part of our business throughout the current financial year.
FY17 capital spending will be materially lower than FY16, and cash outflows relating to onerous contracts will fall from £6.7m in H1 FY17 to approximately £1m in H2 FY17. Given this reduction and the stabilisation of the Group, we are confident that we have sufficient funding in place to execute on our plans. We will continue to evaluate all the Group's assets to make sure they remain relevant to our strategy and add to our value.
This announcement contains inside information.
(1) EBITDA is defined as operating loss before exceptional items, depreciation, amortisation, impairments and share-based payments charge.
(2) Exceptional & other cash usage does not include the impact of foreign exchange movements.
FINkit® is a registered trademark in the UK.
For further information:
Monitise plc Lee Cameron, Chief Executive OfficerGavin James, Chief Operating Officer | Tel: +44(0)20 3657 0900 |
Canaccord Genuity (NOMAD) Simon Bridges, Andrew Buchanan | Tel: +44(0)20 7523 8000 |
Attila Consultants Charles Cook, Nita Shah | Tel: +44(0)20 7947 4489Tel: +44(0)7710 910 563 |
About Monitise
Monitise plc is a specialist in financial services technology focused on accelerating the digital transformation of banks and financial institutions.
Monitise FINkit platform and associated capabilities builds upon over a decade of experience in delivering digital services to banks and financial services partners. Whether it is augmenting legacy systems with minimal impact on those systems, a greenfield project, or strategic digital transformation, FINkit delivers innovation at speed, safely and securely.
Monitise management will present the results at 9.00 am today 23 February 2017 at the London offices of their NOMAD and broker Canaccord Genuity. A recording of the meeting will be made available on the investor relations section of the Monitise website.
Find out more at www.monitise.com
Six-month review 2017
Overview
In the first half of financial year 2017 we continued to see the benefits from the substantial transformation put in place in financial year 2016.
First-half operating expenses fell 20% and the number of employees reduced by 16% compared to the second half of 2016.
The transformation programme has delivered a shift from a fixed to a variable cost structure that has enabled us to retain a positive EBITDA in the face of the expected decline in revenues as we transition the business.
As expected, revenue decline came from our Americas and Europe businesses, which also impacted our Big Radical and MEA business units. Throughout the period there have been a number of new customer wins, particularly in our Big Radical and MEA business units. We also saw strong growth in the Content business which is highly profitable and benefiting not only from growth in site visits, but also in revenue per visit.
FINkit will be a major driver of future growth for the Group and we will continue to invest in the development of this business unit, in its people, technology and sales channels. We remain confident in the value of FINkit and the long-term opportunity that exists. Financial institutions are coming under increased pressure from regulators and their customers to deliver more digital engagement and are under threat from competitors, including FinTechs, who will seek to benefit from this change. As we have experienced with prior product launches, the sales cycle to financial institutions involves rigorous procurement processes including extensive technical diligence. It is this barrier that often presents too high a hurdle for FinTechs to achieve but one that Monitise has excelled at and welcomes.
Business unit and financial review
H1 FY17 | H1 FY16 | |||||||
£m | External | Internal | Total revenue | EBITDA | External | Internal | Total revenue | EBITDA |
FINkit | - | - | - | -2.7 | - | - | - | -1.3 |
Europe | 9.8 | 0.1 | 9.9 | 1.3 | 15.2 | 0.4 | 15.6 | -7.1 |
Americas | 6.3 | - | 6.3 | 0.1 | 10.0 | - | 10.0 | -3.4 |
Big Radical | 1.9 | 0.1 | 2.0 | -0.8 | 1.5 | 1.0 | 2.5 | -0.9 |
MEA | 3.2 | 0.5 | 3.7 | 0.3 | 2.2 | 2.1 | 4.3 | 1.0 |
Content | 7.0 | - | 7.0 | 3.2 | 4.5 | 0.2 | 4.7 | 0.9 |
Unallocated | -0.7 | -1.1 | -3.7 | -9.4 | ||||
Group | 28.2 | -0.7 | 28.2 | 0.3 | 33.4 | -3.7 | 33.4 | -20.2 |
As anticipated in previous announcements, revenues fell to £28.2m but it was pleasing to see that we were able to maintain a positive profit at the EBITDA level of £0.3m.
The significant reduction in the loss before tax from £210.5m in H1 FY16 to £7.5m in H1 FY17 reflects the non-recurrence of the impairment charges taken in H1 FY16 and a net exceptional credit of £7.4m in H1 FY17 as we settled the majority of our onerous contracts at a cost within the levels provided.
The onerous contract provisions were significantly reduced as we exited these contracts and sublet or assigned all of our space at our previous head office at Gresham Street, London. The provisions at the end of the prior year of £18.8m have been reduced to £3.7m with the bulk of the residual being the remaining property obligations, principally the customary run off of rent free periods.
Business segments
FINkit
The six months to 31 December 2016 saw an enormous amount of activity for the FINkit business unit. Whilst the lack of a signed contract reflects the long and complex sales cycle when engaging with large financial institutions, our sales team are very actively engaged with potential clients with agreements under active discussion. Banks who have had an opportunity to test FINkit, review the technology and meet our people, have been unanimously complimentary and pleased with what they have witnessed.
Banks understand the challenge they face and whilst some will choose to solve the problem by utilising internal resources, hiring digital leaders from other industries and engage in innovation theatre, others will look to partner with businesses who can offer an alternate approach.
We are very encouraged by the response we have received and the level of interest for FINkit enabled services from both existing and prospective customers. It is with this background that we remain confident that FINkit will gain its first customer and then enjoy further traction in providing financial institutions with a platform that is fit for purpose, scalable, compliant and flexible.
FINkit is not a major re-platforming project for a bank nor does it come at great expense. FINkit can be implemented simply and cost effectively giving the bank an accelerated time to value and a platform upon which they can build, launch and run successive digital propositions that deliver more value to their customers and can be consumed on an 'as needed' basis both commercially and operationally.
A perfect storm now exists where banks are rethinking the way they serve their customers. PSD2 and the open banking initiative are providing the regulatory impetus for banks to digitally engage and allow greater competition from FinTechs and others who see an opportunity to use the banks' constraints to their advantage. Customers demand more from their bank and often expect a digital-native experience from the financial services provider regardless of the compliance that a bank must ensure is an integral part of their offering.
FINkit is purpose-built to help banks and financial institutions level the playing field by enabling rapid development and deployment of compliant services to meet the demands of regulators and customers whilst defending their business from the threat of disruptors and non-regulated enterprises. We also enable financial institutions to benefit from collaboration with FinTechs with whom we are curating capability.
Until we are able to evidence our first operational contract, we will continue to tightly control our cost base including deferring certain spend until demand requires it. Where we consider it important to invest in the on-going development of FINkit to enhance its capabilities, we will do so and in line with this we have recorded development capital expenditure of £2.0m in the period.
Europe
The revenues in our Europe business are derived from our Monitise Enterprise Platform (MEP).
As previously guided, the Europe business saw a reduction in revenues from £15.6m in H1 FY16 to £9.9m in H1 FY17. The reduction in revenue results from the Visa Europe contract ending on 30 June 2016 and reduced activity levels with a significant customer, ahead of them taking the hosting of the platform in-house.
The Europe business has significantly reduced its cost base from £22.7m in H1 FY16 to £8.6m in H1 FY17. This reduced cost base has also been structured to be more variable with business activity. Whilst the Europe business achieved an EBITDA profit of £1.3m for the last six months (H1 FY16 loss £7.1m), we expect to see its revenue further decline as we transition from providing hosted services and MEP customers migrate their services to the FINkit platform.
Americas
The Americas business now comprises the Monitise Vantage Platform which powers mobile banking and messaging services for banks and credit unions across the Americas.
The business has seen a reduction in revenues driven by the Visa Inc contract ending at the end of the last financial year, as previously announced, and a significant customer taking their activity in-house.
The business has been through a significant change to its cost base, with the level of cost being reduced significantly from £13.4m in H1 FY16 to £6.2m in H1 FY 17, as well as the cost base being restructured to ensure it is more variable with business activity. The business reported an EBITDA profit of £0.1m for the six months benefiting from revenues on the final legacy contract in this region and the settlement of claims provided for in the financial year to 30 June 2016.
Growth in our Americas business will be driven by the sale of additional products, including FINkit. As the emphasis of the business changes from cost reduction to customer management and new business development, a new management team is being put in place. This management team is being led by Fatih Isbecer, previously CEO and founder of our MEA business, who has a wealth of experience in building businesses and delighting customers with faultless delivery. He and his team will focus on product development, customer satisfaction and new wins.
Big Radical
In December, Scott Ewings joined us as Managing Director of Monitise Create, having led significant growth and transformation at leading design houses. Under his leadership we relaunched the business in January 2017 as Big Radical. There is a clear market appetite for Big Radical's expertise.
Big Radical delivers a highly regarded full digital agency capability which provides market leading strategy consultancy, human first digital design and UI/UX expertise to its clients which are from a variety of industries including financial services, leisure, automotive and services.
Whilst we do not expect an immediate revenue impact from the relaunch, the initial feedback on the proposition has been very positive and we look forward to improving results from the business.
The business continued to win new clients in the period and we are confident that this trend will continue throughout 2017 returning the business to growth and profitability. However, the nature of the business means the timing of projects and revenue is lumpy.
Despite a reduction in the cost base of the business from £3.4m in H1 FY 16 to £2.8m in H1 FY17, we incurred an EBITDA loss of £0.8m (£0.9m H1 FY16).
MEA
The MEA business provides digital design and engineering expertise to a range of customers, both in financial services and other industries in its regional market of Turkey and the Middle East.
The MEA business has continued to perform well despite the reduction in the level of Group-derived revenue noted in previous reports. MEA reported revenues of £3.7m (£4.3m H1 FY16) which is consistent with the level of activity in the second half of FY16. External revenue grew 44% compared to H1 FY16 and 6% compared to H2 FY16.
The business continues to manage its cost base tightly and reported EBITDA of £0.3m (£1.0m H1 FY16). The business will also increasingly provide these services to the broader Monitise group as it supports the capability and resource requirements of both the FINkit and Americas businesses.
Content
The Content business, utilising its network of retailers, affiliates and ticket agencies, provides offers to consumers which generate revenue for the business when they are redeemed.
The Content business continues its growth with revenues in the seasonally strong first half of £7.0m (£4.7m H1 FY16). The growth continues to be driven by increasing visits to the UK voucher business myvouchercodes.co.uk and by growth in revenue per visit. The strong revenue performance produced EBITDA of £3.2m (£0.9m H1 FY16).
The business is investing in a number of initiatives that expand the proposition, increase the user base and revenue per visit. The business also continues to invest in its international sites in France, USA, Germany and Australia where revenues have increased 143% versus H1 FY16, albeit from a low base, and in adjacent offerings that enhance the content and benefits to both retailers and consumers.
Central cost
The Group central cost base has remained consistent with the second half of FY16 at £1.1m, following a material reduction from the first half of FY16 when the cost-base was £9.4m.
Income statement
Depreciation and amortisation
Depreciation in the period was £0.9m (£2.8m H1 FY16). Amortisation for the period was £10.0m (£7.2m H1 FY16) which includes amortisation of acquired intangibles of £5.8m, capitalised development costs of £3.2m, and purchased software licences of £1.0m. The increase in amortisation in the period was due to the commencement of amortisation of capitalised development costs relating to the FINkit platform and the reduction in useful economic life estimates reported at last year end.
Share based payments
The share based payments charge of £4.4m (£10.4m H1 FY16), comprises £2.8m in relation to earn out share based payments and £1.6m related to employee share option grants. The charge for the period is the last charge in relation to earn out share based payments as all such arrangements ended as at 31 December 2016.
Exceptional costs
A net credit of £7.4m for exceptional items has been taken in the period compared with net charges of £1.0m for the 6 months to 31 December 2015 and £3.5m for the year to 30 June 2016. The make-up of the net credit is as follows.
£m | H1 FY17 | H1 FY16 | FY 2016 |
Exceptional income | - | (5.0) | (6.9) |
Onerous contracts | (7.2) | (2.4) | (3.2) |
Surplus property costs | (1.0) | 2.3 | 4.4 |
Restructuring costs | - | 6.0 | 8.7 |
Other | 0.8 | 0.1 | 0.4 |
Total | (7.4) | 1.0 | 3.5 |
Other costs relate to corporate development costs.
Loss before tax
The Group reported a loss before tax of £7.5m (£210.5m H1 FY16).
Tax
A tax credit of £0.5m (£5.1m H1 FY 16) was recorded in the period. This principally related to non-cash movements on the unwinding of deferred tax recognised in relation to acquired intangible assets. The Group has gross tax losses of £320m which are available for offset against future profits in the companies in which these arose.
Attributable loss
The reported loss after tax for the period was £7.0m (£205.4m H1 FY16).
Cash flow and funds
The Group ended the half with cash balances of £27.3m as at 31 December 2016 compared to £42.1m at 30 June 2016, and no bank debt. The main areas of cash usage in the period were the restructuring of the business and the settlement of onerous contracts of £6.8m, capital expenditure of £2.7m and cash from operations of £4.7m.
The settlement of the majority of the onerous contracts leaves the business in a stronger position enabling a focus on operations. The remaining onerous contract and restructuring provisions of £3.7m will be spread over a number of years with the anticipation that £1m will be paid in the second half of the financial year.
Cash from operations in H1 FY17 is impacted by reductions in deferred income of £1.5m as large customer contracts reduce or end, and by £2.5m from the timing of our payment runs at the period end when compared to the year-end timing.
Condensed Consolidated Statement of Comprehensive Income | |||||||
6 months | 6 months | Year | |||||
ended | ended | ended | |||||
31 December | 31 December | 30 June | |||||
2016 | 2015 | 2016 | |||||
(unaudited) | (unaudited) | (audited) | |||||
Note | £'000 | £'000 | £'000 | ||||
Revenue | 4 | 28,158 | 33,359 | 67,565 | |||
Cost of sales | (11,242) | (15,846) | (28,706) | ||||
Gross profit | 16,916 | 17,513 | 38,859 | ||||
Operating costs before depreciation, amortisation, impairments and share-based payments | (16,567) | (37,707) | (58,482) | ||||
EBITDA | 6 | 349 | (20,194) | (19,623) | |||
Depreciation, amortisation and impairments | (10,854) | (179,986) | (205,216) | ||||
Operating loss before share-based payments and exceptional items | (10,505) | (200,180) | (224,839) | ||||
Share-based payments | (4,440) | (10,407) | (16,468) | ||||
Exceptional items | 6 | 7,381 | (980) | (3,492) | |||
Operating loss | 5 | (7,564) | (211,567) | (244,799) | |||
Finance income | 162 | 1,147 | 1,975 | ||||
Finance costs | (66) | (92) | (200) | ||||
Share of post-tax profit/(loss) of joint ventures | - | (29) | (58) | ||||
Loss before income tax | (7,468) | (210,541) | (243,082) | ||||
Income tax | 465 | 5,133 | 9,711 | ||||
Loss for the period/year attributable to the owners of the parent | (7,003) | (205,408) | (233,371) | ||||
Other comprehensive (expense)/income that may be reclassified subsequently to profit or loss: | |||||||
Currency translation differences on consolidation | (1,734) | 7,585 | 8,889 | ||||
Total comprehensive expense for the period/year attributable to the owners of the parent | (8,737) | (197,823) | (224,482) | ||||
Loss per share attributable to owners of the parent during the period/year (expressed in pence per share): | |||||||
- basic and diluted | 7 | (0.3p) | (9.3p) | (10.5p) | |||
The comparative figures include a reclassification of marketing costs from operating expenses to cost of sales (see note 2.1). | |||||||
Condensed Consolidated Statement of Financial Position | |||||
As at | As at | As at | |||
31 December | 31 December | 30 June | |||
2016 | 2015 | 2016 | |||
(unaudited) | (unaudited) | (audited) | |||
Note | £'000 | £'000 | £'000 | ||
ASSETS | |||||
Non-current assets | |||||
Property, plant and equipment | 2,674 | 3,780 | 3,338 | ||
Intangible assets | 8 | 28,263 | 57,126 | 36,155 | |
Investments in joint ventures | - | 471 | - | ||
Other receivables | 649 | - | 370 | ||
31,586 | 61,377 | 39,863 | |||
Current assets | |||||
Trade and other receivables | 16,215 | 23,064 | 15,970 | ||
Current tax assets | 3 | - | 12 | ||
Cash and cash equivalents | 9 | 27,325 | 53,367 | 42,089 | |
43,543 | 76,431 | 58,071 | |||
Total assets | 75,129 | 137,808 | 97,934 | ||
LIABILITIES | |||||
Current liabilities | |||||
Trade and other payables | (19,221) | (28,030) | (21,627) | ||
Current tax liabilities | - | (11) | - | ||
Provisions | 10 | (1,227) | (16,341) | (10,864) | |
Financial liabilities | 11 | (613) | (1,023) | (1,002) | |
(21,061) | (45,405) | (33,493) | |||
Non-current liabilities | |||||
Deferred income and other payables | (1,171) | (3,499) | (950) | ||
Provisions | 10 | (2,470) | (8,002) | (8,016) | |
Financial liabilities | 11 | (560) | (1,625) | (807) | |
Deferred tax liabilities | (509) | (5,073) | (1,021) | ||
(4,710) | (18,199) | (10,794) | |||
Total liabilities | (25,771) | (63,604) | (44,287) | ||
Net assets | 49,358 | 74,204 | 53,647 | ||
EQUITY | |||||
Capital and reserves attributable to owners of the parent | |||||
Ordinary shares | 12 | 22,961 | 22,044 | 22,519 | |
Ordinary shares to be issued | 12 | - | 2,511 | 2,511 | |
Share premium | 12 | 383,725 | 383,721 | 383,721 | |
Foreign exchange translation reserve | 4,643 | 5,073 | 6,377 | ||
Other reserves | 276,355 | 262,034 | 269,449 | ||
Accumulated losses | (638,326) | (601,179) | (630,930) | ||
Total equity | 49,358 | 74,204 | 53,647 | ||
Condensed Consolidated Statement of Changes in Equity | ||||||||||
Ordinary | Share- | |||||||||
Ordinary | shares to be | Share | Merger | Reverse acquisition | based payment | Accumulated | Foreign exchange | |||
shares | issued | premium | reserve | reserve | reserve | losses | reserve | Total | ||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
Six months to 31 December 2015 | ||||||||||
Balance at 1 July 2015 | 21,682 | 2,511 | 383,721 | 228,672 | (25,321) | 40,863 | (397,833) | (2,512) | 251,783 | |
Loss for the period | - | - | - | - | - | - | (205,408) | - | (205,408) | |
Other comprehensive income | - | - | - | - | - | - | - | 7,585 | 7,585 | |
Total comprehensive (expense)/income | - | - | - | - | - | - | (205,408) | 7,585 | (197,823) | |
Issue of Ordinary shares relating to prior year business combinations | 357 | - | - | 9,511 | - | (36) | - | - | 9,832 | |
Share-based payments | - | - | - | - | - | 10,407 | - | - | 10,407 | |
Exercise of share options | 5 | - | - | - | - | (2,062) | 2,062 | - | 5 | |
Balance at 31 December 2015 | 22,044 | 2,511 | 383,721 | 238,183 | (25,321) | 49,172 | (601,179) | 5,073 | 74,204 | |
Twelve months to 30 June 2016 | ||||||||||
Balance at 1 July 2015 | 21,682 | 2,511 | 383,721 | 228,672 | (25,321) | 40,863 | (397,833) | (2,512) | 251,783 | |
Loss for the year | - | - | - | - | - | - | (233,371) | - | (233,371) | |
Other comprehensive income | - | - | - | - | - | - | - | 8,889 | 8,889 | |
Total comprehensive (expense)/income | - | - | - | - | - | - | (233,371) | 8,889 | (224,482) | |
Issue of Ordinary shares relating to prior year business combinations | 791 | - | - | 9,511 | - | (470) | - | - | 9,832 | |
Share-based payments | - | - | - | - | - | 16,468 | - | - | 16,468 | |
Exercise of share options | 46 | - | - | - | - | (274) | 274 | - | 46 | |
Balance at 30 June 2016 | 22,519 | 2,511 | 383,721 | 238,183 | (25,321) | 56,587 | (630,930) | 6,377 | 53,647 | |
Six months to 31 December 2016 | ||||||||||
Balance at 1 July 2016 | 22,519 | 2,511 | 383,721 | 238,183 | (25,321) | 56,587 | (630,930) | 6,377 | 53,647 | |
Loss for the period | - | - | - | - | - | - | (7,003) | - | (7,003) | |
Other comprehensive expense | - | - | - | - | - | - | - | (1,734) | (1,734) | |
Total comprehensive expense | - | - | - | - | - | - | (7,003) | (1,734) | (8,737) | |
Issue of Ordinary shares relating to prior year business combinations | 438 | (2,511) | - | 2,466 | - | - | (393) | - | - | |
Share-based payments | - | - | - | - | - | 4,440 | - | - | 4,440 | |
Exercise of share options | 4 | - | 4 | - | - | - | - | - | 8 | |
Balance at 31 December 2016 | 22,961 | - | 383,725 | 240,649 | (25,321) | 61,027 | (638,326) | 4,643 | 49,358 | |
Condensed Consolidated Cash Flow Statement | |||||
6 months | 6 months | Year | |||
ended | ended | ended | |||
31 December | 31 December | 30 June | |||
Note | 2016 | 2015 | 2016 | ||
(unaudited) | (unaudited) | (audited) | |||
£'000 | £'000 | £'000 | |||
Cash flows used in operating activities | |||||
Cash used by operations | 13 | (4,732) | (22,321) | (21,869) | |
Exceptional expenses (net) | (6,793) | (5,921) | (15,959) | ||
Net income tax paid | (35) | (29) | (80) | ||
Net cash used in operating activities | (11,560) | (28,271) | (37,908) | ||
Investing activities | |||||
Investments in joint ventures | - | (500) | (500) | ||
Interest received | 90 | 191 | 338 | ||
Proceeds on disposal of property, plant and equipment | (13) | - | 35 | ||
Purchases of property, plant and equipment | (291) | (649) | (894) | ||
Purchase and capitalisation of intangible assets | (2,420) | (6,803) | (8,238) | ||
Net cash used in investing activities | (2,634) | (7,761) | (9,259) | ||
Financing activities | |||||
Proceeds from issuance of ordinary shares (net of expenses) | - | 39 | - | ||
Share options and warrants exercised | 8 | 5 | 85 | ||
Interest paid | (30) | (67) | (122) | ||
Repayments of finance lease liabilities | (626) | (355) | (1,155) | ||
Net cash used in financing activities | (648) | (378) | (1,192) | ||
Net decrease in cash and cash equivalents | (14,842) | (36,410) | (48,359) | ||
Cash and cash equivalents at beginning of the period/year | 42,089 | 88,801 | 88,801 | ||
Effect of exchange rate changes | 78 | 976 | 1,647 | ||
Cash and cash equivalents at end of the period/year | 27,325 | 53,367 | 42,089 | ||
1. General information |
| |||||||||||||||
Monitise plc ('the Company'), and its subsidiaries (together 'the Group') is a specialist in financial services technology primarily focused on accelerating the digital transformation of banks and financial institutions. The Group is headquartered in the UK and operates ventures in the UK, US and Turkey. |
| |||||||||||||||
The Company is a public limited company incorporated and domiciled in England and Wales whose shares are publicly traded on the Alternative Investment Market ('AIM') of the London Stock Exchange. |
| |||||||||||||||
| ||||||||||||||||
The condensed consolidated interim financial information was approved for issue by the Board on 22 February 2017. |
| |||||||||||||||
This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 30 June 2016 were approved by the Board on 7 September 2016 and delivered to the Registrar of Companies. The Auditors' report on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006. |
| |||||||||||||||
| ||||||||||||||||
The condensed consolidated interim financial information is neither audited nor reviewed by the auditors and the results of the operations for the six months ended 31 December 2016 are not necessarily indicative of the operating results for future operating periods. |
| |||||||||||||||
2. Summary of significant accounting policies |
| |||||||||||||||
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. The policies have been applied consistently unless otherwise stated. They are the same as those used in preparing the consolidated financial statements at 30 June 2016.
|
| |||||||||||||||
2.1. Basis of preparation |
| |||||||||||||||
The condensed consolidated interim financial information has been prepared under the measurement principles of International Financial Reporting Standards ('IFRS') as adopted by the European Union ('IFRS as adopted by the EU'), using accounting policies and methods of computation consistent, except as noted below, with those set out in the Company's 2016 Annual Report and Accounts. The financial statements have been prepared under the historical cost convention, as modified, where applicable, by the revaluation of financial assets and financial liabilities (including derivatives) at fair value through profit or loss. As permitted by AIM rules, the Group has not applied IAS 34 'Interim reporting' in preparing this interim report. |
| |||||||||||||||
The Group changed the classification in the prior year of certain marketing costs from operating expenses to cost of sales to more appropriately reflect the relationship of these costs to the related revenue activity. The prior period comparatives have been restated by £991,289 to reflect the revised classification. |
| |||||||||||||||
Based on projections prepared of the Group's anticipated future results, the Directors have reasonable expectations that the Group will have adequate resources to continue in existence for the foreseeable future. Therefore, the Directors continue to adopt the going concern basis in preparing this financial information. |
| |||||||||||||||
2.2. Accounting policies |
| |||||||||||||||
The accounting policies applied are consistent with those of the annual financial statements for the year ended 30 June 2016, as described in those annual financial statements. |
| |||||||||||||||
The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 1 July 2016, but are not currently relevant to the Group, or have had no material impact: |
| |||||||||||||||
• | Amendments to IAS 1: "Presentation of financial statements" on the disclosure initiative | |||||||||||||||
• | Amendment to IAS 16 "Property, Plant and Equipment" and IAS 38 "Intangible assets" on depreciation and amortisation | |||||||||||||||
• | Amendments to IAS 27: Equity Method in Separate Financial Statements | |||||||||||||||
• | Amendment to IFRS 11 "Joint Arrangements on Acquisition of an Interest in a Joint Operation" | |||||||||||||||
• | IFRS 14 "Regulatory Deferral Accounts" | |||||||||||||||
• | Amendment to IFRS 10, IFRS 12 and IAS 28 "Investment Entities": Applying the Consolidation Exception | |||||||||||||||
• | Annual improvements to IFRSs 2012-2014 | |||||||||||||||
• | Amendments to IFRS 10 and IAS 28: Sale of Contribution of Assets between an Investor and its Associate or Joint Venture | |||||||||||||||
• | Amendments to IAS 16 and IAS 41: Bearer Plants | |||||||||||||||
| ||||||||||||||||
The following new standards, amendments to standards and interpretations have been issued but will not be effective until financial years beginning on or after 1 July 2017: |
| |||||||||||||||
Effective date |
| |||||||||||||||
(subject to EU endorsement) |
| |||||||||||||||
• | IFRS 15 "Revenue from Contracts with Customers" | 1 January 2018 |
| |||||||||||||
• | IFRS 9 "Financial Instruments" | 1 January 2018 |
| |||||||||||||
• | IFRS 16 "Leases" | 1 January 2019 |
| |||||||||||||
| ||||||||||||||||
The Group is currently assessing the impact of the other standards listed above on its results, financial position and cash flows. |
| |||||||||||||||
| ||||||||||||||||
The Group continues to monitor the potential impact of other new standards and interpretations which may be endorsed by the European Union and require adoption by the Group in future accounting periods. |
| |||||||||||||||
| ||||||||||||||||
3. Critical accounting estimates and judgements |
| |||||||||||||||
The preparation of the financial statements requires the Group to make estimates, judgements and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. The Directors base their estimates on historical experience and various other assumptions that they believe are reasonable under the circumstances, the results of which form the basis for making judgements about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. |
| |||||||||||||||
| ||||||||||||||||
In the process of applying the Group's accounting policies, management has made a number of judgements and estimations, which have been consistent with those set out in the Company's 2016 Annual Report and Accounts. |
| |||||||||||||||
| ||||||||||||||||
3.1. Revenue recognition |
| |||||||||||||||
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services provided within the Group's ordinary activities, net of discounts and sales taxes. It comprises user generated revenues, product licences and development and integration services. |
| |||||||||||||||
| ||||||||||||||||
User generated revenue relates to revenue generated from all types of end-user activity and may take various forms including per user fees, click fees, commissions and revenue share, and includes associated managed services. This revenue is recognised as the services are performed. |
| |||||||||||||||
| ||||||||||||||||
Product licences are sales where the customer has the ability to exploit the licenced functionality upon delivery and include both certain term-based and perpetual licences. These licence revenues are recognised as a sale of a good once all of the below recognition criteria have been met: |
| |||||||||||||||
• | the Group has transferred to the buyer the significant risks and rewards of ownership of the licence; |
| ||||||||||||||
• | the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; |
| ||||||||||||||
• | the amount of revenue can be measured reliably; |
| ||||||||||||||
• | it is probable that the economic benefits associated with the transaction will flow to the Group; and |
| ||||||||||||||
• | the costs incurred or to be incurred in respect of the transaction can be measured reliably. |
| ||||||||||||||
| ||||||||||||||||
Revenue relating to development and integration services contracted on a time and materials basis is recognised as the services are performed. Revenue relating to development and integration services identified as a service contract, provided over a specified time period, is recognised on a straight-line basis. Development and integration service revenue delivered under a fixed price contract is recognised on a percentage-of-completion basis, based on the extent of work completed as a percentage of overall estimated project cost, when the outcome of a contract can be estimated reliably. Determining whether a contract's outcome can be estimated reliably requires management to exercise judgement and estimates are continually reviewed as determined by events or circumstances. Provision is made as soon as a loss is foreseen. |
| |||||||||||||||
| ||||||||||||||||
Typically, a number of the above elements may be sold together as a bundled contract. Revenue is recognised separately for each component if it is considered to represent a separable good or service and a fair value can be reliably established. The Group may derive fair value for its services based on a reliable cost estimate plus an appropriate market-based margin. Where a product licence is included within a bundled arrangement, the residual value of the contract is ascribed to the product licence after a fair value has been allocated to all other components. |
| |||||||||||||||
| ||||||||||||||||
Amounts which meet the Group's revenue recognition policy which have not yet been invoiced are accounted for as accrued income whereas amounts invoiced which have not met the Group's revenue recognition criteria are deferred and are accounted for as deferred income until such time as the revenue can be recognised. Management makes an assessment of the certainty of any accrued revenue amounts in determining how much revenue to recognise. |
| |||||||||||||||
| ||||||||||||||||
3.2. Share-based payments |
| |||||||||||||||
Judgement and estimation is required in determining the fair value of shares at the date of award. The fair value is estimated using valuation techniques which take into account the award's term, the risk-free interest rate and the expected volatility of the market price of the Company's shares. Judgement and estimation is also required to assess the number of options expected to vest. |
| |||||||||||||||
| ||||||||||||||||
3.3. Going concern |
| |||||||||||||||
The Directors have prepared projections of the Group's anticipated future results based on their best estimate of likely future developments within the business and therefore believe that the assumption that the Group is a going concern is valid. The financial information has therefore been prepared on the 'going concern' basis. |
| |||||||||||||||
| ||||||||||||||||
3.4. Development costs |
| |||||||||||||||
The Group has capitalised internally generated intangible assets as required in accordance with IAS 38. Management have assessed expected contribution to be generated from these assets and deemed that no adjustment is required to the carrying value of the assets. The recoverable amount of the assets has been determined based on value in use calculations which require the use of estimates and judgements. Management reviews the assets for impairment on a regular basis. |
| |||||||||||||||
| ||||||||||||||||
3.5. Impairment of assets |
| |||||||||||||||
IFRS requires management to undertake an annual test for impairment of assets with indefinite lives, including goodwill and, for assets with finite lives, to test for impairment if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. |
| |||||||||||||||
| ||||||||||||||||
Impairment testing is an area involving management judgement, requiring assessment as to whether the carrying value of assets can be supported by the fair value less costs to sell or net present value of future cash flows derived from such assets using cash flow projections which have been discounted at an appropriate rate. In calculating the net present value of the future cash flows, certain assumptions are required to be made in respect of highly uncertain matters including management's expectations of growth and discount rates. Changing the assumptions selected by management could significantly affect the Group's impairment evaluation and, hence, results. The Group's review includes the key assumptions related to sensitivity in the cash flow projections. |
| |||||||||||||||
3.6. Deferred tax |
Deferred tax assets and liabilities require management judgement in determining the amounts to be recognised. In particular, judgement is used when assessing the extent to which deferred tax assets should be recognised, with consideration given to the timing and level of future taxable income. |
3.7. Provisions |
Management uses judgement to estimate the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Judgement has been exercised with regard to the length of period for which surplus properties remain vacant. Judgement has been exercised in respect of the expected settlement of other onerous contracts. |
4. Segmental information | ||||
Reportable segment | ||||
Monitise's operating segments are reported based on the information reviewed by the chief operating decision maker for the purposes of allocating resources and assessing performance. The Board of Directors is the Group's chief operating decision maker. | ||||
The Board of Directors considers revenue, cost of sales, operating costs, exceptional costs and EBITDA of the Group as a whole when assessing the performance of the business and making decisions about the allocation of resources. In addition, the Board reviews revenue split by business unit, products and geographies to assist with the allocation of resources. During the prior financial year the Group changed the internal reporting from one operating segment to six in order to more accurately reflect the way that the business now operates and to provide greater insight and focus on each type of activity. | ||||
Segment revenues and results | ||||
The following is an analysis of the Group's revenue and results by reportable segment for the period ended 31 December 2016: | ||||
FINkit | Europe | Americas | Big Radical | MEA | Content | Unallocated | Total | ||||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||
External revenue | - | 9,780 | 6,312 | 1,876 | 3,161 | 7,029 | - | 28,158 | |||
Inter-segment revenue | - | 95 | - | 87 | 551 | - | (733) | - | |||
Total revenue | - | 9,875 | 6,312 | 1,963 | 3,712 | 7,029 | (733) | 28,158 | |||
EBITDA | (2,693) | 1,314 | 107 | (802) | 275 | 3,193 | (1,045) | 349 | |||
Depreciation, amortisation and impairments | (10,854) | ||||||||||
Other exceptional items | 7,381 | ||||||||||
Share of loss of joint ventures | - | ||||||||||
Share-based payments | (4,440) | ||||||||||
Net finance income | 96 | ||||||||||
Loss before income tax |
| (7,468) | |||||||||
The following is an analysis of the Group's revenue and results by reportable segment for the period ended 31 December 2015: | |||||||||||
FINkit | Europe | Americas | Big Radical | MEA | Content | Unallocated | Total | ||||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||
External revenue | - | 15,210 | 9,962 | 1,465 | 2,188 | 4,534 | - | 33,359 | |||
Inter-segment revenue | - | 358 | - | 1,051 | 2,104 | 160 | (3,673) | - | |||
Total revenue | - | 15,568 | 9,962 | 2,516 | 4,292 | 4,694 | (3,673) | 33,359 | |||
EBITDA | (1,322) | (7,091) | (3,429) | (873) | 988 | 933 | (9,400) | (20,194) | |||
Depreciation, amortisation and impairments | (179,986) | ||||||||||
Other exceptional items | (980) | ||||||||||
Share of loss of joint ventures | (29) | ||||||||||
Share-based payments | (10,407) | ||||||||||
Net finance income | 1,055 | ||||||||||
Loss before income tax | (210,541) | ||||||||||
The following is an analysis of the Group's revenue and results by reportable segment for the period ended 30 June 2016: | |||||||||||
FINkit | Europe | Americas | Big Radical | MEA | Content | Unallocated | Total | ||||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||
External revenue | 463 | 29,001 | 19,088 | 4,218 | 5,160 | 9,635 | - | 67,565 | |||
Inter-segment revenue | - | 1,340 | - | 1,504 | 2,916 | 307 | (6,067) | - | |||
Total revenue | 463 | 30,341 | 19,088 | 5,722 | 8,076 | 9,942 | (6,067) | 67,565 | |||
EBITDA | (3,827) | (4,870) | (3,093) | (1,221) | 1,050 | 2,745 | (10,407) | (19,623) | |||
Depreciation, amortisation and impairments | (205,216) | ||||||||||
Other exceptional items | (3,492) | ||||||||||
Share of loss of joint ventures | (58) | ||||||||||
Share-based payments | (16,468) | ||||||||||
Net finance income | 1,775 | ||||||||||
Loss before income tax | (243,082) | ||||||||||
5. Operating loss |
| |||||||||||||||||||||||
This is stated after charging/(crediting): | ||||||||||||||||||||||||
6 months | 6 months | Year |
| |||||||||||||||||||||
ended | ended | ended |
| |||||||||||||||||||||
31 December | 31 December | 30 June |
| |||||||||||||||||||||
2016 | 2015 | 2016 |
| |||||||||||||||||||||
Note | £'000 | £'000 | £'000 |
| ||||||||||||||||||||
Depreciation | 866 | 2,784 | 2,814 |
| ||||||||||||||||||||
Impairment of property, plant and equipment | - | 2,630 | 3,268 |
| ||||||||||||||||||||
Amortisation | 8 | 9,988 | 7,274 | 25,465 |
| |||||||||||||||||||
Impairment of intangible assets | 8 | - | 166,798 | 172,728 |
| |||||||||||||||||||
Impairment of investment in joint venture | - | 500 | 941 |
| ||||||||||||||||||||
Share-based payments | 4,440 | 10,407 | 16,468 |
| ||||||||||||||||||||
Exceptional items | 6 | (7,381) | 980 | 3,492 |
| |||||||||||||||||||
| ||||||||||||||||||||||||
6. EBITDA |
| |||||||||||||||||||||||
EBITDA is defined as operating loss before exceptional items, depreciation, amortisation, impairments and share-based payments charge. |
| |||||||||||||||||||||||
| ||||||||||||||||||||||||
Exceptional items comprise: | 6 months | 6 months | Year |
| ||||||||||||||||||||
ended | ended | ended |
| |||||||||||||||||||||
31 December | 31 December | 30 June |
| |||||||||||||||||||||
2016 | 2015 | 2016 |
| |||||||||||||||||||||
£'000 | £'000 | £'000 |
| |||||||||||||||||||||
Exceptional income | - | (5,000) | (6,874) |
| ||||||||||||||||||||
Onerous contracts | (7,212) | (2,382) | (3,190) |
| ||||||||||||||||||||
Surplus property costs | (986) | 2,312 | 4,382 |
| ||||||||||||||||||||
Restructuring costs | - | 5,964 | 8,734 |
| ||||||||||||||||||||
Strategic Review and corporate development costs | 817 | 86 | 440 |
| ||||||||||||||||||||
Total exceptional items | (7,381) | 980 | 3,492 |
| ||||||||||||||||||||
| ||||||||||||||||||||||||
Onerous contracts relate to those contracts under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefit expected to be received under it. In particular, obligations associated with a number of contracts with a third party IT and business services provider were provided in prior periods. The credit for onerous contracts in the current period reflects the settlement of the remainder of these obligations at amounts less than previously provided. |
| |||||||||||||||||||||||
| ||||||||||||||||||||||||
Restructuring costs are associated with a number of restructuring activities undertaken and principally relate to redundancy and termination costs. There were no restructuring costs incurred in the period beyond what had already been provided for in the prior year. In addition, the associated property restructuring costs in the prior year resulted in a charge for several onerous property lease contracts. The credit for surplus property costs in the period reflects the successful assignment of the majority of the remaining surplus properties. |
| |||||||||||||||||||||||
| ||||||||||||||||||||||||
Strategic Review and corporate development costs related primarily to professional advisor fees incurred in respect of a number of corporate development projects. |
| |||||||||||||||||||||||
| ||||||||||||||||||||||||
7. Loss per share |
| |||||||||||||||||||||||
Basic and diluted |
| |||||||||||||||||||||||
Basic loss per share is calculated by dividing the loss attributable to owners of the parent by the weighted average number of Ordinary shares in issue during the year. As the Group is loss-making, any share options in issue are considered to be 'anti-dilutive'. As such, there is no separate calculation for diluted loss per share. |
| |||||||||||||||||||||||
| ||||||||||||||||||||||||
Reconciliations of the loss and weighted average number of shares used in the calculation are set out below: |
| |||||||||||||||||||||||
6 months | 6 months | Year |
| |||||||||||||||||||||
ended | ended | ended |
| |||||||||||||||||||||
31 December | 31 December | 30 June |
| |||||||||||||||||||||
2016 | 2015 | 2016 |
| |||||||||||||||||||||
Loss for the period/year (£'000) | (7,003) | (205,408) | (233,371) |
| ||||||||||||||||||||
Weighted average number of shares in issue ('000) | 2,294,308 | 2,199,414 | 2,215,733 |
| ||||||||||||||||||||
Basic and diluted loss per share (pence) | (0.3p) | (9.3p) | (10.5p) |
| ||||||||||||||||||||
8. Intangible assets |
| |||||||||||||||||||||||
Purchased |
| |||||||||||||||||||||||
Intellectual | and acquired | Capitalised |
| |||||||||||||||||||||
Customer | property | Acquired | software | development |
| |||||||||||||||||||
Goodwill | contracts | rights | technology | licences | costs | Total |
| |||||||||||||||||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| |||||||||||||||||
For the period ended 31 December 2015: |
| |||||||||||||||||||||||
Cost: |
| |||||||||||||||||||||||
As at 1 July 2015 | 204,930 | 46,167 | 277 | 27,077 | 17,883 | 66,173 | 362,507 |
| ||||||||||||||||
Exchange differences | 7,989 | 1,478 | - | 649 | 1 | 570 | 10,687 |
| ||||||||||||||||
Additions | - | - | - | - | 1,695 | 4,966 | 6,661 |
| ||||||||||||||||
Disposals | - | - | (13) | - | (1,517) | - | (1,530) |
| ||||||||||||||||
As at 31 December 2015 | 212,919 | 47,645 | 264 | 27,726 | 18,062 | 71,709 | 378,325 |
| ||||||||||||||||
| ||||||||||||||||||||||||
Accumulated amortisation and impairment: |
| |||||||||||||||||||||||
As at 1 July 2015 | 41,770 | 16,819 | 252 | 15,553 | 15,347 | 56,493 | 146,234 |
| ||||||||||||||||
Exchange differences | 1,066 | 747 | - | 458 | 11 | 141 | 2,423 |
| ||||||||||||||||
Charge | - | 2,906 | 8 | 2,082 | 1,282 | 996 | 7,274 |
| ||||||||||||||||
Impairment | 157,060 | 7,464 | - | 2,200 | 74 | - | 166,798 |
| ||||||||||||||||
Disposals | - | - | (13) | - | (1,517) | - | (1,530) |
| ||||||||||||||||
As at 31 December 2015 | 199,896 | 27,936 | 247 | 20,293 | 15,197 | 57,630 | 321,199 |
| ||||||||||||||||
| ||||||||||||||||||||||||
Net book value: |
| |||||||||||||||||||||||
As at 1 July 2015 | 163,160 | 29,348 | 25 | 11,524 | 2,536 | 9,680 | 216,273 |
| ||||||||||||||||
As at 31 December 2015 | 13,023 | 19,709 | 17 | 7,433 | 2,865 | 14,079 | 57,126 |
| ||||||||||||||||
| ||||||||||||||||||||||||
For the period ended 30 June 2016: |
| |||||||||||||||||||||||
Cost: |
| |||||||||||||||||||||||
As at 1 July 2015 | 204,930 | 46,167 | 277 | 27,077 | 17,883 | 66,173 | 362,507 |
| ||||||||||||||||
Exchange differences | 25,226 | 5,743 | - | 2,352 | 305 | 1,257 | 34,883 |
| ||||||||||||||||
Additions | - | - | - | - | 1,988 | 6,333 | 8,321 |
| ||||||||||||||||
Disposals | (183,230) | (8,595) | (277) | (6,422) | (11,525) | (4,262) | (214,311) |
| ||||||||||||||||
As at 30 June 2016 | 46,926 | 43,315 | - | 23,007 | 8,651 | 69,501 | 191,400 |
| ||||||||||||||||
| ||||||||||||||||||||||||
Accumulated amortisation and impairment: |
| |||||||||||||||||||||||
As at 1 July 2015 | 41,770 | 16,819 | 252 | 15,553 | 15,347 | 56,493 | 146,234 |
| ||||||||||||||||
Exchange differences | 18,208 | 4,096 | - | 1,963 | 335 | 527 | 25,129 |
| ||||||||||||||||
Charge | - | 15,162 | 15 | 6,017 | 2,253 | 2,018 | 25,465 |
| ||||||||||||||||
Impairment | 162,738 | 7,464 | 10 | 2,200 | 316 | - | 172,728 |
| ||||||||||||||||
Disposals | (183,230) | (8,595) | (277) | (6,422) | (11,525) | (4,262) | (214,311) |
| ||||||||||||||||
As at 30 June 2016 | 39,486 | 34,946 | - | 19,311 | 6,726 | 54,776 | 155,245 |
| ||||||||||||||||
| ||||||||||||||||||||||||
Net book value: | |||||||
As at 1 July 2015 | 163,160 | 29,348 | 25 | 11,524 | 2,536 | 9,680 | 216,273 |
As at 30 June 2016 | 7,440 | 8,369 | - | 3,696 | 1,925 | 14,725 | 36,155 |
For the period ended 31 December 2016: | |||||||
Cost: | |||||||
As at 1 July 2016 | 46,926 | 43,315 | - | 23,007 | 8,651 | 69,501 | 191,400 |
Exchange differences | (140) | (996) | - | (377) | (532) | 634 | (1,411) |
Additions | - | - | - | - | 352 | 1,967 | 2,319 |
Disposals | (30,647) | (25,853) | - | (13,855) | 83 | - | (70,272) |
As at 31 December 2016 | 16,139 | 16,466 | - | 8,775 | 8,554 | 72,102 | 122,036 |
Accumulated amortisation and impairment: | |||||||
As at 1 July 2016 | 39,486 | 34,946 | - | 19,311 | 6,726 | 54,776 | 155,245 |
Exchange differences | (139) | (508) | - | (348) | (620) | 427 | (1,188) |
Charge | - | 3,342 | - | 2,379 | 1,025 | 3,242 | 9,988 |
Impairment | - | - | - | - | - | - | - |
Disposals | (30,647) | (25,853) | - | (13,855) | 83 | - | (70,272) |
As at 31 December 2016 | 8,700 | 11,927 | - | 7,487 | 7,214 | 58,445 | 93,773 |
Net book value: | |||||||
As at 1 July 2016 | 7,440 | 8,369 | - | 3,696 | 1,925 | 14,725 | 36,155 |
As at 31 December 2016 | 7,439 | 4,539 | - | 1,288 | 1,340 | 13,657 | 28,263 |
9. Net funds | ||||
31 December | 31 December | 30 June | ||
2016 | 2015 | 2016 | ||
£'000 | £'000 | £'000 | ||
Cash at bank and in hand | 27,325 | 53,367 | 42,089 | |
Finance leases | (1,173) | (2,648) | (1,809) | |
Net funds | 26,152 | 50,719 | 40,280 | |
10. Provisions | |||||||||||||||
Onerous | |||||||||||||||
Re-organisation | contracts | Total | |||||||||||||
Group | £'000 | £'000 | £'000 | ||||||||||||
As at 1 July 2016 | 2,204 | 16,676 | 18,880 | ||||||||||||
Additional provisions in the year | 36 | 246 | 282 | ||||||||||||
Release of provision | (67) | (9,070) | (9,137) | ||||||||||||
Utilisation of provision | (588) | (5,878) | (6,466) | ||||||||||||
Exchange differences | 60 | 78 | 138 | ||||||||||||
As at 31 December 2016 | 1,645 | 2,052 | 3,697 | ||||||||||||
31 December | 31 December | 30 June | |||||||||||||
2016 | 2015 | 2016 | |||||||||||||
£'000 | £'000 | £'000 | |||||||||||||
Due within one year | 1,227 | 16,341 | 10,864 | ||||||||||||
Due after one year | 2,470 | 8,002 | 8,016 | ||||||||||||
Onerous contracts include provisions for surplus properties as a result of the reorganisations undertaken and obligations associated with a number of contracts with a third party IT and business services provider. Additionally, provision has been made for the ongoing costs of closing the Group's Far East investments and the finalisation of the restructuring activities. | |||||||||||||||
The release of provision related to both the successful renegotiation of the remaining onerous contracts with a third party IT and business services provider and also the successful assignment of the majority of the remaining surplus properties. | |||||||||||||||
11. Financial liabilities |
| |||||||||||||||||
31 December | 31 December | 30 June | ||||||||||||||||
2016 | 2015 | 2016 | ||||||||||||||||
£'000 | £'000 | £'000 | ||||||||||||||||
Due within one year | ||||||||||||||||||
Finance leases | 613 | 1,023 | 1,002 | |||||||||||||||
Financial liabilities due within one year | 613 | 1,023 | 1,002 | |||||||||||||||
Due after one year | ||||||||||||||||||
Finance leases | 560 | 1,625 | 807 | |||||||||||||||
Financial liabilities due after one year | 560 | 1,625 | 807 | |||||||||||||||
Total financial liabilities | 1,173 | 2,648 | 1,809 | |||||||||||||||
| ||||||||||||||||||
12. Ordinary shares, share premium and other reserves |
| |||||||||||||||||
Allotted and fully paid £0.01 nominal value shares |
| |||||||||||||||||
Ordinary | Share |
| ||||||||||||||||
Number | shares | premium |
| |||||||||||||||
of shares | £'000 | £'000 |
| |||||||||||||||
As at 1 July 2015 | 2,168,231,436 | 21,682 | 383,721 |
| ||||||||||||||
Issue of new shares | 79,091,540 | 791 | - |
| ||||||||||||||
Exercise of share options and warrants | 4,620,037 | 46 | - |
| ||||||||||||||
As at 1 July 2016 | 2,251,943,013 | 22,519 | 383,721 |
| ||||||||||||||
Issue of new shares | 43,770,351 | 438 | - |
| ||||||||||||||
Exercise of share options and warrants | 428,266 | 4 | 4 |
| ||||||||||||||
As at 31 December 2016 | 2,296,141,630 | 22,961 | 383,725 |
| ||||||||||||||
| ||||||||||||||||||
As at 1 July 2015 | 2,168,231,436 | 21,682 | 383,721 |
| ||||||||||||||
Issue of new shares | 35,629,905 | 357 | - |
| ||||||||||||||
Exercise of share options and warrants | 526,371 | 5 | - |
| ||||||||||||||
As at 31 December 2015 | 2,204,387,712 | 22,044 | 383,721 |
| ||||||||||||||
| ||||||||||||||||||
| ||||||||||||||||||
Reconciliation of shares issued |
| |||||||||||||||||
Ordinary |
| |||||||||||||||||
Number of | Ordinary | shares to be | Share | Merger |
| |||||||||||||
shares | shares | issued | premium | reserve | Total |
| ||||||||||||
£'000 | £'000 | £'000 | £'000 | £'000 |
| |||||||||||||
As at 1 July 2015 | 2,168,231,436 | 21,682 | 2,511 | 383,721 | 228,672 | 636,586 |
| |||||||||||
Employee share-based payment exercises | 4,620,037 | 46 | - | - | - | 46 |
| |||||||||||
Issue of shares relating to prior year business combinations | 79,091,540 | 791 | - | - | 9,511 | 10,302 |
| |||||||||||
As at 1 July 2016 | 2,251,943,013 | 22,519 | 2,511 | 383,721 | 238,183 | 646,934 |
| |||||||||||
Employee share-based payment exercises | 428,266 | 4 | - | 4 | - | 8 |
| |||||||||||
Issue of shares relating to prior year business combinations | 43,770,351 | 438 | (2,511) | - | 2,466 | 393 |
| |||||||||||
As at 31 December 2016 | 2,296,141,630 | 22,961 | - | 383,725 | 240,649 | 647,335 |
| |||||||||||
| ||||||||||||||||||
13. Reconciliation of net loss to net cash used in operating activities | ||||
6 months | 6 months | Year | ||
ended | ended | ended | ||
31 December | 31 December | 30 June | ||
2016 | 2015 | 2016 | ||
£'000 | £'000 | £'000 | ||
Loss before income tax | (7,468) | (210,541) | (243,082) | |
Adjustments for: | ||||
Depreciation and impairments to property, plant and equipment | 866 | 5,414 | 6,082 | |
Amortisation and impairments to intangible assets | 9,988 | 174,072 | 198,193 | |
Impairment to joint venture | - | 500 | 941 | |
Share-based payments | 4,440 | 10,407 | 16,468 | |
Profit on disposal of property, plant and equipment | - | - | (35) | |
Finance costs - net | (96) | (1,055) | (1,775) | |
Exceptional items (net) | (7,381) | 980 | 3,492 | |
Share of post-tax loss of joint ventures | - | 29 | 58 | |
Operating cash flows before movements in working capital | 349 | (20,194) | (19,658) | |
(Increase)/decrease in receivables | (710) | 4,411 | 15,292 | |
Decrease in payables | (3,927) | (5,216) | (19,100) | |
(Decrease)/increase in provisions | (444) | (1,322) | 1,597 | |
Cash used in operations | (4,732) | (22,321) | (21,869) | |
14. Commitments, contingencies and guarantees |
Legal contingencies |
No member of the Group is or has been involved in any governmental, legal or arbitration proceedings and the Directors are not aware of any such proceedings pending or threatened by or against the Group during the 12 months preceding the date of these financial statements which may have or have had, in the recent past, a significant effect on the financial position or profitability of the Group. |
Mobile VPT Limited has issued a UK patent infringement claim against Monitise International Limited (formerly known as Monitise Limited) and other related parties. Following advice from leading counsel, the Directors believe that Monitise's business activities in the UK do not infringe any valid claim of Mobile VPT's patent and that the Mobile VPT patent may be invalid. Monitise continues to monitor the status of the proceedings since they were stayed in October 2007 but to date, and in light of the advice received from leading counsel, no provision has been reflected in the financial statements. |
Guarantees |
There are a number of operational and financial guarantees given by the Company and certain subsidiary companies in each case on behalf of other subsidiary entities. |
The Company had no other commitments or contingencies at the end of the period. |
Related Shares:
Monitise