23rd Jun 2008 12:15
Monday 23 June 2008
Monitise plc
Monitise announces proposed ₤11.8 million Subscription for new ordinary shares at 15 pence per share
Pre-close trading update for the 12 months to 30 June 2008
Monitise plc ("Monitise" or the "Company"; LSE: MONI.L), the leaders in mobile banking & payments in the UK, announces a proposed Subscription for new ordinary shares and provides an update on trading for the 12 months ending 30 June 2008, as set out below.
Subscription
Monitise has signed agreements with investors to subscribe for 78.6 million new ordinary shares in Monitise;
£11.8 million gross subscription proceeds to be used to drive the continued development of its business;
Subscription Shares represent 23.6% of the issued ordinary share capital of Monitise immediately following completion of the Subscription;
New investors comprise:
Standard Chartered Bank, a subsidiary of Standard Chartered PLC the FTSE 100 UK bank, subscribing for 33.3 million Subscription Shares, representing 10.0% *of the issued share capital of Monitise immediately following completion of the Subscription;
A subsidiary of PCCW Limited, the premier telecommunications provider in Hong Kong and a world-class player in information & communications technologies, subscribing for 20.0 million Subscription Shares representing 6.0%*;
Lochside (International) Ltd, an investment company associated with the Fleming family, subscribing for 6.7 million Subscription Shares, representing 2.0%*
Existing shareholders comprise
UBS is subscribing for 10.0 million Subscription Shares, representing 3.0%*
Harris Associates is subscribing for 8.6 million Subscription Shares representing 2.6%*
The Monitise Board (accounting for 8.5% of the current issued ordinary share capital of Monitise immediately prior to the Subscription and 6.5% immediately following completion of the Subscription) unanimously recommends the Subscription;
Monitise has also received expressions of support for the Subscription from shareholders, which taken together with the Monitise Board, represent in excess of 50% of the current issued ordinary share capital of Monitise; and
The Subscription is conditional (inter alia) on Monitise shareholder approval and the admission of the Subscription Shares to trading on AIM.
Result of Subscription
The £11.8 million (before expenses) to be raised via the Subscription together with current cash balances across the Group in excess of £9.5 million will provide Monitise with total cash of approximately £21 million immediately following completion. Monitise currently anticipates that, before taking into account any group revenues, its cash costs for the year to 30 June 2009 will be approximately £13-£14 million;
The Subscription will provide sufficient flexibility for Monitise to continue to implement its development strategy; and
The Directors of Monitise believe that the New Investors can assist Monitise in the development of its business in a number of new territories
Pre Close Trading Update
Results for the year ending 30 June 2008 anticipated to be broadly in line with expectations; continued positive progress with the development of the business;
Revenues for the full year anticipated to end close to market expectations, reflecting a significant half on half improvement, with second half revenues approximately two and a half times that recognised in the first half of the year;
Operating loss anticipated to be marginally favourable to market expectations;
Focus on our preferred joint venture model as the Group expands into other strategic markets; and
Confident that the momentum built up in expanding Monitise's product offering, partnerships and joint venture relationships can continue as the Group moves forward
Alastair Lukies, CEO of Monitise, said:
"We are delighted to announce this Subscription which will provide Monitise with the financial strength and flexibility to implement its growth plans in a timely way, continuing to take advantage of the increasing demand for mobile banking & payment services worldwide.
"We anticipate reporting results for the year broadly in line with expectations and have continued to make positive progress developing the business in the second half of the year. Our ongoing cash spend is beginning to plateau, as we anticipated at the half year, and we remain focused on our preferred joint venture model as we expand into other strategic geographic markets.
"We have built real momentum in expanding Monitise's product offering, partnerships and joint venture relationships and are confident that this can continue as we move forward, supported by our new investors whom we believe can assist us in the further development of our business in a number of new territories."
Duncan McIntyre, Chairman of Monitise, said:
"We have been very encouraged by the response to this process and we very much look forward to welcoming our new investors. The strength of our technology, the understanding of the mobile banking & payments market, our development of a industry leading road-map and the knowledge, experience and empathy of the broad management team have been acknowledged by numerous leading organisations worldwide. This has created additional momentum not only within the business but also in the market in general."
Jan Verplancke of Standard Chartered Bank, added:
"We see this as a very attractive opportunity to participate in a dynamic growth company operating in a rapidly developing global market. Monitise is a leader in the mobile banking & payments market and our commitment to the continued development of Monitise reflects our enthusiasm for this opportunity. It is exciting to find an innovative, fast growth company that combines so intuitively bank grade processes & security with mobile technology innovation."
Monitise plc
Monitise announces proposed ₤11.8 million Subscription for new ordinary shares at 15 pence per share
Pre-close trading update for the 12 months ending 30 June 2008
Monitise plc ("Monitise" or the "Company"; LSE: MONI.L), the leaders in mobile banking & payments in the UK, announces that on 23 June 2008 it entered into agreements with a number of investors to subscribe for in aggregate 78.6 million new ordinary shares in Monitise ("the Subscription Shares"). The new shares will be issued at a price of 15p per share (a 36% premium to the closing share price on Friday 20 June 2008) (the "Subscription"). The Subscription Shares will represent 23.6% of the issued ordinary share capital of Monitise immediately following completion of the Subscription.
Details of the Subscription
The group of new investors (the "Investors") comprises Standard Chartered Bank, a subsidiary of Standard Chartered PLC ("Standard Chartered"), the FTSE 100 UK bank, a subsidiary of PCCW Limited ("PCCW"), the premier telecommunications provider in Hong Kong and a world-class player in information and communications technologies, and Lochside (International) Ltd ("Lochside"), an investment company associated with the Fleming family.
Standard Chartered is subscribing for 33.3 million Subscription Shares, representing 10.0% of the issued share capital of Monitise immediately following completion of the Subscription. In connection with the Subscription, Standard Chartered has agreed not to sell its Subscription Shares for 12 months following the Subscription and, in addition, has agreed to consult with Monitise's broker prior to any sale of the Subscription Shares for a further six months thereafter. Monitise has agreed to provide Standard Chartered with a limited number of warranties in connection with the Subscription.
PCCW is subscribing for 20.0 million Subscription Shares, representing 6.0% of the issued share capital of Monitise immediately following completion of the Subscription, and Lochside is subscribing for 6.7 million Subscription Shares, (2.0%).
In addition, two existing shareholders are subscribing for shares, UBS Global Asset Management ("UBS") is subscribing for 10 million Subscription Shares (3.0%), and Harris Associates L.P. ("Harris") is subscribing for 8.6 million Subscription Shares (2.6%).
The Subscription is conditional, inter alia, on Monitise shareholder approval and the admission of the Subscription Shares to trading on AIM. The Board unanimously recommends the Subscription and intends to vote in favour of the resolutions in connection with the Subscription in respect of their aggregate shareholdings which represent 8.5% of the current issued ordinary share capital of Monitise immediately prior to the Subscription and 6.5% immediately following completion of the Subscription. Furthermore, Monitise has received expressions of support for the Subscription from major shareholders, which, when taken together with the shareholdings of the Monitise directors, represent in excess of 50% of the current issued ordinary share capital of Monitise.
A letter from the Chairman of Monitise regarding the Subscription, including a notice of general meeting to approve the Subscription, will be circulated to shareholders shortly
Anticipated benefits of the Subscription
The Company's growth strategy includes ongoing product developments and enhancements, alongside continued expansion into strategic international markets. The directors of Monitise believe that the new Investors can assist Monitise in the development of its business in a number of new territories.
The Subscription will provide additional funding for Monitise to underpin the continued development of its business. Taking current cash balances across the group together with the additional funds to be raised by the Subscription, the Company's total cash is anticipated to be approximately £21m.
In its interim results announced on 8 February 2008, Monitise stated that its annualised cash costs of approximately £15 million were beginning to plateau. Monitise currently anticipates that, before taking into account any group revenues, its cash costs for the year to 30 June 2009 will be approximately £13-£14 million.
The directors of Monitise consider that, following the Subscription, Monitise will be well funded with sufficient flexibility to continue to implement its development strategy.
Board Director
In accordance with the terms of the Subscription, Monitise proposes to appoint Jan Verplancke, Chief Information Officer of Standard Chartered, to the Board as a non-executive director.
We welcome the experience of Jan Verplancke to the Board, offering support in extending our lead in this fast developing market alongside our existing Advisory board. As Chief Information Officer for Standard Chartered Jan is responsible for all systems development, technology support and banking operations across their group. Prior to joining Standard Chartered Jan was Chief Information Officer for the EMEA region at DELL Inc and Chief Architect at Levi Strauss where he was responsible for setting global technology standards and contracts.
Advisers
Monitise has appointed FF&P Advisory Limited ("FF&P"), a subsidiary of Fleming Family & Partners Limited, to provide strategic financial advisory services on a non-exclusive basis to the Company for a period of three years. Pursuant to this appointment Monitise will issue to FF&P, upon completion of the Subscription, warrants in respect of 5,745,025 Monitise shares exercisable at a 10% discount to the Subscription price, such warrants not to be exercised before the second anniversary of their issue, and which expire on the third anniversary of issue.
Related Party Transaction
The existing shareholders who are taking part in the Subscription are both substantial shareholders in the Company and accordingly this subscription is classified as a related party transaction under the AIM Rules. Harris currently holds 37,056,005 ordinary shares in the Company, representing 14.6% of the current issued ordinary share capital. UBS, through a number of intermediaries, currently has an interest in 29,345,062 ordinary shares in the Company, representing 11.5% of the issued share capital. Harris is subscribing for 8,635,820 Subscription Shares and UBS is subscribing for 10,000,000 Subscription Shares. As a result of the Subscription, Harris will own an aggregate 13.7% and UBS 11.8% respectively of the issued ordinary share capital of Monitise immediately following completion of the Subscription.
The Directors consider, having consulted with Investec Bank (UK) Limited, the Company's nominated adviser, that the terms of the Subscription by the existing shareholders is fair and reasonable insofar as Shareholders are concerned.
Pre Close Trading Update
Monitise also announces a pre-close update on trading for the twelve months ending 30 June 2008.
Group
The trading performance of the Group during the year ending 30 June 2008 has been broadly in line with expectations.
Revenues are anticipated to end the year close to market expectations, reflecting a significant half on half improvement, with second half revenues approximately two and a half times that recognised in the first half of the year. The operating loss is expected to be marginally favourable to market expectations.
Cash balances are currently in excess of £9.5m. Current cash balances together with the additional funds to be raised by the Subscription will provide total cash immediately following completion of approximately £21m. Monitise currently anticipates that, before taking into account any group revenues, its cash costs for the year to 30 June 2009 will be approximately £13-£14 million.
Overview
There is an increasing acceptance of and excitement surrounding the inevitable convergence and logic between mobile technology and financial services. Already, in wide reaching parts of the world, consumers are benefiting from advances in banking and payments technology as mobile access changes the way we live and work.
Whether it is as simple as having 24x7 secure access to your bank account from the 'always with you device' right through to paying a market trader for goods in an African country with a basic mobile phone, the mobile banking & payments market is developing extremely rapidly. Independent industry analysts highlight the size and scale of the opportunity and Juniper Research estimates that the number of people accessing banking services via their mobile phones will be 816 million by 2011.
Increasingly as governments, banks, mobile operators, payment schemes and merchants are seeing the broad benefits associated with this technology and marketplace, it is clear that our expertise and experience is valuable in the management of multiple relationships, technology standards and protocols.
It is an encouraging validation of our strategy that so many world leading organisations have decided to work with, partner and invest in our development and the evolution of our business.
UK
We were pleased to announce on 9 June that MONILINK, our UK joint venture with VocaLink, signed a contract with another UK retail bank to offer mobile banking & payment services to it customers. This is in addition to services launched by Royal Bank of Scotland, Nat West, Ulster Bank, HSBC, first direct and Alliance & Leicester.
This latest signing increases our coverage to well in excess of 50% of the UK's current account cardholder base. We are now actively engaged in discussions with a number of substantial merchants to link them into the platform.
During the second half of the financial year, Alliance & Leicester has also chosen to extend the MONILINK service to its business customers through their Commercial Banking arm. In addition, Royal Bank of Scotland, NatWest and Ulster Bank announced that they will be the first participating banks to offer our new text alert service. The service enables consumers to set-up and receive text alerts informing them of the status of their accounts on a regular basis, as well as when their account is close to predefined limits or when payments are received.
USA
Our US joint venture with Metavante Inc., Monitise Americas, continues to make very rapid progress. It now has 32 financial institutions contracted to offer the service, achieved within only nine months of inception in September 2007.
Discussions are ongoing with key US processors to further increase the share of addressable market following Monitise Americas' integration with NYCE (New York Cash Exchange) and Metavante.
In the second half, a significant development was the text messaging service contract signed for H&R Block, the world's largest tax preparation business, whereby H&R Block Emerald Prepaid MasterCard® cardholders will begin to have access to mobile phone text messaging to check their balances and receive account reload mobile alerts. This will be piloted through the first half of our next financial year.
In Canada, a new market for us, our announcement of a partnership with Everlink puts us in position to offer the first commercially available mobile banking and payments service in that region. Everlink is a switch that provides access to a large number of card providers in Canada, including 375 credit unions, several domestic and foreign subsidiary banks and Independent Service Organisations.
Africa
Heads of terms have been signed for a joint venture in East Africa, partnering with Made In Africa, the organisation that is heading East African growth. An annual license fee of £0.8 million, plus volume based royalties, will be payable to Monitise plc from Monitise East Africa for the first five years, to be capped at £1.8 million per annum. This is a first step to taking the Monitise platform into a developing market, and addressing the potential that the African market offers.
Other International Opportunities
The pipeline of opportunities across additional international territories remains strong.
In addition to discussions with other key partners, we will be assessing additional opportunities that have been generated through our relationships with our proposed Subscription Investors afforded by their leading positions in certain emerging markets.
Mobile Card Manager
Plastic cards are already a way of life for hundreds of millions of consumers worldwide. One of the key growth areas is the Prepaid Card market.
Monitise believes that the mobile phone is a natural way to manage all such cards - What's my balance? What can I spend? - through to reloads, loyalty points and vouchers. Hence we have launched our Mobile Card Manager service, reusing core architecture from the main bank grade application to bring our service swiftly to market.
We have recently announced landmark deals to provide mobile servicing of prepaid cards for household names in the UK (Carphone Warehouse) and US (H&R Block).
In the UK, we are working with Metavante and Carphone Warehouse to launch a 'mobile money' scheme. The launch will see the introduction of a Carphone Warehouse prepay card, managed directly from the mobile phone that can be used to shop in millions of outlets worldwide. This launch is in addition to the H&R Block Emerald Prepaid MasterCard® service described above.
Technology and Product Development
Our technology platform has been built for the evolution of mobile banking from basic mobile banking services, through mobile payments and ultimately, to a fully developed mobile commerce ecosystem.
It is important that our customers and partners have a clear line of sight to how this nascent but fast growing technology will evolve. Consumers demand increasingly intuitive, always on, mobile and trustworthy technology and innovation services. It is our key and passionate focus to ensure that our partners can fulfil this need.
The continued development of our product roadmap will remain a key focus for investment. During the second half, a number of new initiatives such as charitable giving, international remittances, inter-account transfers and bill payments have been launched and we anticipate this momentum continuing.
There is increasing use of mobile data and downloadable mobile applications, which is leading to a step change in the way that consumers interact with their mobile device. Financial Services is consistently recognised as the second most requested service, hence we are also now in discussions with handset manufacturers and mobile operators about pre-embedding our technology within the handset ("pre-seeding").
Outlook
Our results for the year are anticipated to be broadly in line with expectations and we continued to make positive progress in the second half. We remain focused on our preferred joint venture model as we expand into other strategic markets. The new funding secured by the Subscription will give us sufficient flexibility to continue our development strategy in a timely way and we are confident that the momentum we have built up in expanding our product offering, partnerships and joint venture relationships can continue as we move forward.
Forward Looking Statements
Statements contained in this announcement, particularly those regarding the possible or assumed future performance of the Company, industry growth or other trend projections and any estimated company earnings are or may be forward looking statements and as such involve risks and uncertainties. Any such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those expressed or implied by these statements.
US Securities Law
This announcement is not an offer of any securities for sale. The ordinary shares in the Company have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or under any applicable state securities laws, and may not be offered or sold in the United States absent registration or an exemption therefrom, or unless the offer and sale is made outside the United States in an offshore transaction meeting the requirements of Rule 903 or 904 of Regulation S.
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Contacts: |
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Monitise Group |
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Duncan McIntyre, Chairman |
Tel: 020 7868 5200 |
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Alastair Lukies, CEO |
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Ben Evetts, Head of Communications |
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Financial Dynamics |
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Harriet Keen |
Tel: 020 7831 3113 |
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Haya Chelhot |
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Investec |
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Patrick Robb |
Tel: 020 7597 4000 |
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Rowena Murray |
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FF&P Advisory Limited |
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Richard Hill |
Tel: 020 7036 5000 |
About Monitise plc
Monitise plc (MONI.L) is a specialist in mobile banking, payments and commerce technology. It has engineered the world's first mobile banking ecosystems, which allow customers of multiple banks and mobile operators to perform banking and payment transactions directly from their mobile handset.
With live services in the UK and the USA, where it has delivered the MONILINK and Monitise networks in partnership with VocaLink and Metavante Corporation respectively, the Company is currently working with international partners to deliver similar safe, secure mobile banking & payment services in territories worldwide. Current key partners include VocaLink, Metavante, HSBC, first direct, Alliance & Leicester, Royal Bank of Scotland, NatWest, Vodafone, Orange, O2, T-Mobile and Hutchison 3G.
Monitise was recognised as a 'Technology Pioneer' by the World Economic Forum in 2006; 'Mobile Innovation of the Year' by The Banker Magazine in 2007 and awarded the Innovation in Messaging Award 2007 by the Mobile Messaging Association.
www.monitisegroup.com
Related Shares:
MonitiseStandard Chartered