12 Feb 2016 07:00
12 February 2016
MONITISE plc
Interim results for the six months to 31 December 2015
LONDON ‐ 12 February 2016 ‐ Monitise plc (LSE: MONI) ("Monitise" or the "Company") announces its unaudited interim results for the six months ended 31 December 2015, with results in line with the trading update given on 21 January 2016.
Financial Summary and Outlook
· H1 FY 2016 revenue of £33.4m (H1 FY 2015: £42.4m), with revenue in the second half anticipated to be broadly similar
· EBITDA losses reduced to £20.2m (H1 FY 2015: £30.8m loss), with existing businesses generating positive EBITDA going forward
· Targeted investment in developing our new cloud-based offering, FINkit®
· Decisive action on costs has been taken and a further material reduction in total costs is expected in H2 FY 2016
o Total costs of £53.6m in H1 FY 2016 (H1 FY 2015: £69.4m) projected to reduce by approximately £3m per month in second half
· Monitise is projecting H2 FY 2016 to be EBITDA positive
· Gross cash at 31 December 2015 of £53.4m and prospective EBITDA positive trading for H2 FY 2016 means the business is sufficiently well funded to meet its future plans
Exceptional Items
· A non-cash impairment charge in relation to non-cloud intangible assets of £166.8m was made
· During the period exceptional costs of £8.4m have been recognised as part of the business restructuring. Offsetting exceptional credits of £7.4m have been recognised, including £5m following a restructuring of customer contracts
Operational Highlights
· Our customer relationships have remained strong during this period, our pipeline is robust and continues to develop, we are well progressed with a number of our existing and prospective customers who are interested in using our cloud-based offering through FINkit®, and we have successfully proven the capabilities of FINkit® through a customer proof of concept
· Tighter cost discipline will be maintained throughout FY 2016 and beyond whilst we continue to invest in our cloud business, making sure such investment is proportionate to the size and timing of customer contracts
· Ongoing cost disciplines have improved transparency and accountability enabling each business unit to have full ownership of their respective P&Ls
· We continue to evaluate all assets within the Monitise group to ensure they remain core to our proposition
Monitise Chairman Peter Ayliffe said: "The essential transition to cloud-based services and sustainable recurring revenues, continues to be very challenging. However, the focus on ensuring we have developed a relevant, market leading proposition whilst also achieving EBITDA profitability for the second half of FY16, means that we enter this next phase in our transition with optimism. We are all now focused on executing our plans with successful delivery of our cloud-based services at the heart of our future."
Monitise CEO Lee Cameron said: "Having taken the tough decisions and defined a clear path to take the business forward, Monitise is not just a leaner business; it is stronger and healthier. We are proud of our market leading technology assets, world class digital experts across our businesses, a strong history and heritage of being trusted to deliver bank grade services to highly regulated organisations and an enviable client list who remain supportive of our strategy.
We have faced many challenges during the last six months, and have further work to do to restore investor confidence in our business, but we are adequately funded and I am confident we will be EBITDA positive in the second half of FY16. Investment in FINkit® will be proportionate to the timing and scale of contracts signed and we will continue to evaluate all assets in order to preserve and maximise value for all stakeholders. Our mission is to become the global toolkit that enables smarter and faster innovation for our clients where security, compliance and performance are mandatory."
About Monitise
Monitise plc (LSE: MONI) is a leader in enabling accelerated digital innovation within industries where security, compliance and scalability are mandated. Our platforms, toolkits, products and ideas draw upon over a decade of experience of building and operating world class digital banking, and support all stages of a digital solution from strategy to concept design, development and operations. Find out more at www.monitise.com.
FINkit® is designed specifically for financial institutions. It lets customers build and run secure and compliant products and services faster than ever. FINkit® is a unique combination of a cloud-based environment, pre-built API-based financial components, and use of the latest secure and agile continuous development methodologies.
For further information:
Monitise plc
Lee Cameron, Chief Executive Officer Tel: +44(0)20 3657 0056
Canaccord Genuity (NOMAD)
Simon Bridges, Cameron Duncan, Emma Gabriel Tel: +44(0)20 7523 8000
Brunswick
Jonathan Glass, Jon Drage Tel: +44(0)20 7404 5959
Chief Executive's Statement
Overview
The six months to 31 December 2015 saw Monitise undergo significant change. There were changes in the management team, a comprehensive restructuring and cost reduction plan, but also a clear and transparent focus on the key drivers of the business going forward. Throughout this period of transition, we have delivered for our existing clients whilst commencing the marketing of FINkit®, which is at the heart of our strategy going forward. FINkit® is our platform designed to enable financial services organisations to increase their pace of innovation in a secure and compliant way. I absolutely recognise that we have some way to go in order to restore investor confidence, but I am encouraged that our clients remain supportive and we are confident that we will be able to successfully deliver our FINkit® capabilities to a wide range of customers. As part of the cost reduction measures, we have had to reduce roles across the organisation. This period has been unsettling for the Company as colleagues depart and some people within the organisation sought new opportunities elsewhere. It is important that we have been able to put measures in place to retain and incentivise key personnel. I believe we now have the operational team and stable base to ensure that the Company can capture the opportunities ahead.
Market Review
Monitise has always retained its platform agnostic and interoperable status and we continue to serve a wide range of banks, financial services businesses and other organisations that need to extend their digital reach. The world is moving ever faster to an API economy where collaboration and the value of data are critically important to any successful business. Monitise's experience in delivering bank grade services over the past decade puts us in a strong position from which we can market our cloud-based FINkit® business and our existing businesses in order to support and enable our clients' digital strategies.
The drive to open API standards and regulatory changes such as Payment Services Directive 2 ("PSD2") require our clients to increase the pace of innovation in order to defend their position as the trusted source of FinTech services to their customers as well as develop new business models that use digital capability to drive down costs and increase revenues.
Operational Review
Monitise is organised around six key areas, five existing units and our cloud-based FINkit® business. Each area is headed up by a key executive responsible and accountable for the performance of the unit. I lead the FINkit® business alongside my duties as the Group's CEO. My leadership team is comprised of the other functional unit heads, each of whom is an experienced executive within Monitise. Each business operates both as a single business unit but also works in close collaboration with other units to deliver for clients.
FINkit®
This business will be at the heart of Monitise going forward. It leverages the cloud to deliver platform capabilities that have been designed and built to enable our financial services clients to launch FinTech innovation securely with speed. The platform is being marketed to our existing and prospective clients, in partnership with IBM. Feedback from existing clients has been very encouraging and we are in discussions with the majority of our MEP clients with a view to transition to FINkit®.
IBM continues to work closely with Monitise across its business and, in particular, in joint business development activity to market Monitise's FINkit® which was built with the assistance of IBM and resides on IBM's Bluemix solution. Going forward, IBM and Monitise will continue to develop capabilities that are intended to deliver the ability for banks and financial services organisations to benefit from a range of digital services as part of the joint IBM and Monitise offering.
RBS continues to work closely with Monitise exploring opportunities that will ensure their customers have the very best banking experience. Santander continues to support Monitise and is currently evaluating how to leverage the capability of FINkit® to enable customers to benefit from a range of digital services as part of the Monitise offering. In addition, we are also exploring ways of embedding MasterCard's market leading APIs within FINkit® to enable payments capability and other digital services as part of Monitise's offering to banks and their customers.
Europe
Our original Enterprise Platform ("MEP") comprises the bulk of our current revenues in our European business. MEP continues to power the mobile banking and other digital services of many UK banks. Our leadership position as an independent business providing bank grade digital services was forged in this unit and it continues to represent a sizeable part of the overall business. Over time, we anticipate that these clients will migrate to our FINkit® platform in order to augment the services we currently provide and these new deals will generate new ongoing revenue streams. As some existing MEP contracts come to an end, and while we seek to transition these clients to FINkit®, we have plans in place to manage the cost base and the potential impact on EBITDA. We continue to work with Visa Europe under the current three-year commercial agreement which runs until 31 March 2016. Our relationship with RBS remains very strong and we continue to support their use of MEP including any change in how their MEP solution is hosted.
Americas
The acquisition of Clairmail in 2012 brought the Vantage Platform to Monitise. Similar to MEP, this powers mobile banking and messaging services for over 40 banks and credit unions across the US and Canada. Headquartered in San Francisco, our team continue to develop the Vantage Platform and support existing clients with associated annuity revenues, while signing new clients. The current Visa Inc contract, as previously announced, will terminate in June 2016 and plans have been implemented to ensure the business is structured appropriately going forward. We expect FINkit® sales in North America to follow European contracts, and are developing services today that will leverage the cloud in order to deliver bank grade capability in this market.
MEA
Pozitron was acquired to accelerate geographic expansion into a region bringing many existing bank client relationships and digital capability as a provider of mobile banking services and design and engineering expertise. In H1 FY 2016 MEA launched six new products and signed two new clients including lastminute.com. Whilst our MEA business continues to serve these clients and pursue new ones, they also provide a cost effective, near shore development and engineering resources centre for other business units who require a flexible solution to scaling resources on an as required basis.
Create
The award winning Grapple business provided Monitise with a ready-made and highly regarded full service digital agency capability which continues to provide market leading strategy consultancy, human first digital design and UI/UX expertise to its clients, some of whom are banks and financial services businesses. Following the conclusion of the earn out period, the new management team are focused on sustainably rebuilding momentum with new client wins. So far this year five new client wins have been added.
Content
Markco Media was brought into the group to be the content engine, utilising its network of relationships with retailers, affiliates and ticket agencies in order to provide vouchers, coupons and exclusive ticket offers to mobile banking users which they could redeem at the point of sale online or in store which would generate a commission for Monitise. The business continues to perform well and is showing growth, albeit that it is clearly distinguished from the other units and operates as a standalone business. Content now serves white label solutions to four B2B clients including EE and Nectar. Myvouchercodes.co.uk, the consumer-facing brand of Content, had a strong trading performance over Christmas and finished ahead of target for January, it currently has over 7 million members.
Outlook
Having taken the tough decisions and defined a clear path to take the business forward, Monitise is not just a leaner business; it is stronger and healthier. We are proud of our market leading technology assets and digital expertise, our strong history and heritage of being trusted to deliver bank grade services to highly regulated organisations and our enviable list of clients who are supportive of our strategy.
We have faced many challenges during the last six months, and have further work to do to restore investor confidence in our business, but we are well funded and I am confident that we will be EBITDA positive in the second half of FY16. Investment in FINkit® will be proportionate to the timing and scale of contracts signed and we will continue to evaluate all assets in order to preserve and maximise value for all stakeholders. Our mission is to become the global toolkit that enables smarter and faster innovation for our clients where security, compliance and performance are mandatory.
Financial Review
The Group's performance for the six months ended 31 December 2015 reflects a continuation of the transition of our business, with the Group moving away from large upfront licence revenue and engagement in large scale development and integration led projects, but not yet benefiting from sales of the new cloud-based platform and associated revenues. As previously announced, Monitise is focusing on transitioning to a subscription based model and an evolved product architecture which will enable the Group to scale more rapidly.
Revenue
H1 FY 2016£m | % split | H2 FY 2015 £m | % split | H1 FY 2015£m | % split | |
Product Licences | 0.5 | 2 | 7.5 | 16 | 4.4 | 10 |
Platform Supply & Transaction fees* | 17.1 | 51 | 16.9 | 36 | 16.2 | 38 |
User Generated | 17.6 | 53 | 24.4 | 52 | 20.6 | 48 |
Development & Integration | 15.8 | 47 | 22.9 | 48 | 21.8 | 52 |
TOTAL | 33.4 | 100 | 47.3 | 100 | 42.4 | 100 |
*Previously named "Subscriptions & Transactions"
Group revenue fell 21% year-on-year to £33.4m in H1 FY 2016 from £42.4m in H1 FY 2015. The decline in licence revenue reflects the fact that Monitise is de-emphasising this line of business. Licence revenue will continue but will increasingly become part of our subscription pricing model, leading to it becoming a significantly lower proportion of the revenue mix than seen in prior periods. The decline in Development & Integration revenue from £22.9m in H2 2015 to £15.8m in H1 2016 was due to a combination of reduced activity in our Create business following management transition post earn-out completion and lower billings in North America whilst clearing historical contractual commitments. Prospectively the levels of Development & Integration revenues will reflect the ending of the current VISA contracts, offset in part by development work with clients in relation to products that will be provided on our cloud-based platform, FINkit®.
Gross Margins
% | H1 FY 2016 | H2 FY 2015 | H1 FY 2015 |
License | 100 | 100 | 100 |
Platform supply & transaction fees | 74 | 72 | 70 |
Development & Integration | 33 | 22 | 27 |
TOTAL | 55 | 52 | 51 |
Group gross margin improved to 55% (H1 FY 2015: 51%). The improving gross margin results from lower high margin licence revenues being offset by improving Development & Integration gross margins. The Development & Integration margins have improved as loss making contracts drop out of the revenue stream.
EBITDA and Operating Costs
The Group EBITDA loss was £20.2m in the period (H1 FY 2015: £30.8m). Operating costs were £38.7m (H1 FY 2015: £48.6m*) reflecting the cost reduction exercise undertaken during the period.
| H1 FY 2016 £m | H2 FY 2015 £m | H1 FY 2015 £m |
Staff costs and third party contract resource | 35.9 | 43.1 | 47.5 |
Property | 3.6 | 3.9 | 5.0 |
Technology and other | 14.1 | 15.2 | 16.9 |
Total costs* | 53.6 | 62.2 | 69.4 |
|
|
|
|
Headcount (permanent staff) - Average | 784 | 949 | 1059 |
Headcount (permanent staff) - Period End | 646 | 850 | 950 |
| H1 FY 2016 £m | H2 FY 2015 £m | H1 FY 2015 £m |
Cost of Sales | 14.9 | 22.5 | 20.8 |
Operating Costs | 38.7 | 39.7 | 48.6 |
Total costs* | 53.6 | 62.2 | 69.4 |
*In order to appropriately reflect the underlying movement in costs, H2 FY 2015 operating costs have been adjusted downwards by £3.9m and H1 FY 2015 increased by £3.9m in the table and narrative above. This is to remove the effect of non-recurring accrual reversals taken within FY 2015, as set out on page 9 of the 2015 Annual Report.
Two major rounds of restructuring have been undertaken during the six months ended 31 December 2015, with permanent headcount falling from 850 at 30 June 2015 to 545 in February 2016 and additionally a significant reduction in third party contract resource. As a result of this, a number of property leases have become surplus to requirements, which will result in future property cost savings. These changes in conjunction with the introduction of tighter cost controls mean that the cost base for the second half of this financial year is projected to be lower than the first half by approximately £3m per month.
Other Movements
Depreciation & Amortisation
Depreciation was £2.8m in the period (H1 FY 2015: £2.2m). Amortisation of £7.3m (H1 FY 2015: £10.7m) includes amortisation of acquired intangible assets of £5.0m and capitalised development costs of £1.0m.
Share-based Payments
The share-based payments charge of £10.4m in the period (H1 FY 2015: £12.1m) comprises an increase of £0.8m for prior business combinations, offset by a reduction of £2.5m in respect of the Group's share options. The reduction in relation to share options reflects the lower number of options that are expected to vest following the reduction in head count.
Exceptional costs
Net exceptional charges of £1.0m were recorded in the period. This net charge includes credits of £7.4m and charges of £8.4m. The credits include exceptional income of £5.0m in respect of an amount received in relation to a revision to a customer contract and, as a result of successful negotiations, a reduction in the estimated costs in relation to onerous contracts taken in prior periods. The charges relate to the costs of the restructuring exercise comprising principally the cost of reducing headcount and a provision for surplus property arising as a result of the restructuring.
Impairment charges
Following a reassessment of the Group's strategic plan, a further review of intangible assets has been undertaken. The result of the review is a non-cash impairment of £166.8m against the value of non-Cloud intangible assets held, and a further £3.1m impairment of other assets.
Loss Before Tax
Group loss before tax was £210.5m, compared to a loss in H1 FY 2015 of £58.4m. The increased loss was driven by the non-cash impairment charge.
Tax
The Group has accounted for a deferred tax credit of £5.1m in the period (H1 FY 2014: £1.6m), principally relating to non-cash movements on the unwinding of deferred tax recognised on acquired intangible assets.
The Group has unrecognised tax losses of approximately £344m which are available for offset against future taxable profits of the companies in which the losses arose. Deferred tax assets have not been recognised in respect of these losses where it is the view of the Directors that future taxable profits are not deemed probable in the short-term to offset against these losses.
Attributable Loss
The reported loss after tax for H1 FY 2016 was £205.4m (H1 FY 2015: £56.8m).
Gain/Loss on Foreign Exchange
A £7.6m gain was recorded in other comprehensive income in the period (H1 FY 2015 gain: £14.8m). This is primarily driven by the translation of dollar assets including goodwill, other intangible assets and cash in overseas subsidiaries.
Loss Per Share
The basic and diluted loss per share was 9.3p (H1 FY 2015: 2.8p).
Cash Flow and Funds
The Group ended the half year with a strong balance sheet, holding £53.4m of gross cash at 31 December 2015 compared to £88.8m at 30 June 2015. Free cash outflow was £30.4m, compared to £63.5m in H1 FY 2015. The main components of adjusted free cash outflow were capex of £7.5m, EBITDA loss of £20.2m and a negative working capital movement of £2.4m.
In addition to the free cash outflow the Group had net expenditure on exceptional items and onerous contracts of £5.9m resulting in a total cash outflow for the period of £36.4m.
Capital spending decreased to £7.5m from £25.9m as the Group approached the conclusion of its investment in the productisation of its technology platform. Capital spending included £0.6m (H1 FY 2015: £2.6m) of tangible asset purchases, and £6.8m (H1 FY 2015: £23.3m) of intangible asset purchases and capitalisation.
Condensed Consolidated Statement of Comprehensive Income | ||||||
6 months | 6 months | Year | ||||
ended | ended | ended | ||||
31 December | 31 December | 30 June | ||||
2015 | 2014 | 2015 | ||||
(unaudited) | (unaudited) | (audited) | ||||
Note | £'000 | £'000 | £'000 | |||
Revenue | 4 | 33,359 | 42,402 | 89,700 | ||
Cost of sales | (14,854) | (20,768) | (43,227) | |||
Gross profit | 18,505 | 21,634 | 46,473 | |||
Operating costs before depreciation, amortisation, impairments and share-based payments | (38,699) | (52,457) | (88,273) | |||
EBITDA | 6 | (20,194) | (30,823) | (41,800) | ||
Depreciation, amortisation and impairments | (179,986) | (12,903) | (119,196) | |||
Operating loss before share-based payments and exceptional items | (200,180) | (43,726) | (160,996) | |||
Share-based payments | (10,407) | (12,057) | (27,977) | |||
Exceptional items | 6 | (980) | (2,289) | (34,151) | ||
Operating loss | 5 | (211,567) | (58,072) | (223,124) | ||
Finance income | 1,147 | 225 | 442 | |||
Finance costs | (92) | (315) | (963) | |||
Share of post-tax loss of joint ventures | (29) | (224) | (3,788) | |||
Loss before income tax | (210,541) | (58,386) | (227,433) | |||
Income tax | 5,133 | 1,600 | 3,882 | |||
Loss for the period/year attributable to the owners of the parent | (205,408) | (56,786) | (223,551) | |||
Other comprehensive income that may be reclassified subsequently to profit or loss: | ||||||
Currency translation differences on consolidation | 7,585 | 14,852 | 8,150 | |||
Total comprehensive expense for the period/year attributable to the owners of the parent | (197,823) | (41,934) | (215,401) | |||
Loss per share attributable to owners of the parent during the period/year (expressed in pence per share): | ||||||
- basic and diluted | 7 | (9.3p) | (2.8p) | (10.8p) | ||
The comparative figures include the effects of the finalisation of acquisition accounting relating to prior year acquisitions and a reclassification of service delivery costs from operating expenses to cost of sales. | ||||||
Condensed Consolidated Statement of Financial Position | ||||
As at | As at | As at | ||
31 December | 31 December | 30 June | ||
2015 | 2014 | 2015 | ||
(unaudited) | (unaudited) | (audited) | ||
Note | £'000 | £'000 | £'000 | |
ASSETS | ||||
Non-current assets | ||||
Property, plant and equipment | 3,780 | 10,203 | 7,276 | |
Intangible assets | 8 | 57,126 | 307,027 | 216,273 |
Investments in joint ventures | 471 | 293 | 500 | |
61,377 | 317,523 | 224,049 | ||
Current assets | ||||
Trade and other receivables | 23,064 | 43,858 | 27,824 | |
Current tax assets | - | 59 | - | |
Cash and cash equivalents | 9 | 53,367 | 129,079 | 88,801 |
76,431 | 172,996 | 116,625 | ||
Total assets | 137,808 | 490,519 | 340,674 | |
LIABILITIES | ||||
Current liabilities | ||||
Trade and other payables | (28,030) | (55,235) | (34,494) | |
Current tax liabilities | (11) | (243) | (24) | |
Provisions | (16,341) | (313) | (14,658) | |
Financial liabilities | 10 | (1,023) | (8,297) | (10,036) |
(45,405) | (64,088) | (59,212) | ||
Non-current liabilities | ||||
Deferred income and other payables | (3,499) | (4,289) | (3,936) | |
Provisions | (8,002) | - | (15,200) | |
Financial liabilities | 10 | (1,625) | (501) | (335) |
Deferred tax liabilities | (5,073) | (12,688) | (10,208) | |
(18,199) | (17,478) | (29,679) | ||
Total liabilities | (63,604) | (81,566) | (88,891) | |
Net assets | 74,204 | 408,953 | 251,783 | |
EQUITY | ||||
Capital and reserves attributable to owners of the parent | ||||
Ordinary shares | 11 | 22,044 | 21,357 | 21,682 |
Ordinary shares to be issued | 11 | 2,511 | 2,511 | 2,511 |
Share premium | 11 | 383,721 | 383,505 | 383,721 |
Foreign exchange translation reserve | 5,073 | 4,190 | (2,512) | |
Other reserves | 262,034 | 235,661 | 244,214 | |
Accumulated losses | (601,179) | (238,271) | (397,833) | |
Total equity | 74,204 | 408,953 | 251,783 | |
The comparative figures include the effects of the finalisation of acquisition accounting relating to prior year acquisitions. | ||||
Condensed Consolidated Statement of Changes in Equity | |||||||||
Ordinary | Reverse | Share-based | Foreign | ||||||
Ordinary | shares to | Share | Merger | acquisition | payment | Accumulated | exchange | ||
shares | be issued | premium | reserve | reserve | reserve | losses | reserve | Total | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Six months to 31 December 2014
| |||||||||
Balance at 1 July 2014 | 19,448 | 2,511 | 336,990 | 221,539 | (25,321) | 20,823 | (182,019) | (10,662) | 383,309 |
Loss for the period | - | - | - | - | - | - | (56,786) | - | (56,786) |
Other comprehensive income | - | - | - | - | - | - | - | 14,852 | 14,852 |
Total comprehensive (expense)/income | - | - | - | - | - | - | (56,786) | 14,852 | (41,934) |
Issue of Ordinary shares (net of expenses) | 1,613 | - | 45,963 | - | - | - | - | - | 47,576 |
Issue of Ordinary shares relating to prior year business combinations | 214 | - | - | 8,026 | - | (929) | - | - | 7,311 |
Share-based payments | - | - | - | - | - | 12,057 | - | - | 12,057 |
Exercise of share options | 82 | - | 552 | - | - | (534) | 534 | - | 634 |
Balance at 31 December 2014 | 21,357 | 2,511 | 383,505 | 229,565 | (25,321) | 31,417 | (238,271) | 4,190 | 408,953 |
Twelve months to 30 June 2015 | |||||||||
Balance at 1 July 2014 | 19,448 | 2,511 | 336,990 | 221,539 | (25,321) | 20,823 | (182,019) | (10,662) | 383,309 |
Loss for the year | - | - | - | - | - | - | (223,551) | - | (223,551) |
Other comprehensive income | - | - | - | - | - | - | - | 8,150 | 8,150 |
Total comprehensive (expense)/income | - | - | - | - | - | - | (223,551) | 8,150 | (215,401) |
Issue of Ordinary shares (net of expenses) | 1,614 | - | 46,014 | - | - | - | - | - | 47,628 |
Issue of Ordinary shares relating to prior year business combinations | 458 | - | - | 7,133 | - | (151) | - | - | 7,440 |
Share-based payments | - | - | - | - | - | 27,928 | - | - | 27,928 |
Exercise of share options | 162 | - | 717 | - | - | (7,737) | 7,737 | - | 879 |
Balance at 30 June 2015 | 21,682 | 2,511 | 383,721 | 228,672 | (25,321) | 40,863 | (397,833) | (2,512) | 251,783 |
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 income/(expense) | - | - | - | - | - | - | (205,408) | 7,585 | (197,823) |
Issue of Ordinary shares (net of expenses) | - | - | - | - | - | - | - | - | - |
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 |
The comparative figures include the effects of the finalisation of acquisition accounting relating to prior year acquisitions. | |||||||||
Condensed Consolidated Cash Flow Statement | ||||
6 months | 6 months | Year | ||
ended | ended | ended | ||
31 December | 31 December | 30 June | ||
Note | 2015 | 2014 | 2015 | |
(unaudited) | (unaudited) | (audited) | ||
£'000 | £'000 | £'000 | ||
Cash flows used in operating activities | ||||
Cash used by operations | 12 | (22,321) | (38,012) | (50,345) |
Exceptional expenses (net) | (5,921) | (3,669) | (9,491) | |
Net income tax (paid)/received | (29) | 146 | (141) | |
Net cash used in operating activities | (28,271) | (41,535) | (59,977) | |
Investing activities | ||||
Investments in joint ventures | (500) | - | (1,244) | |
Interest received | 191 | 239 | 447 | |
Purchases of property, plant and equipment | (649) | (2,639) | (4,135) | |
Purchase and capitalisation of intangible assets | (6,803) | (23,288) | (40,821) | |
Investment in short-term investments | (7,761) | (25,688) | (45,753) | |
Financing activities | ||||
Proceeds from issuance of ordinary shares (net of expenses) | 39 | 48,620 | 46,995 | |
Share options and warrants exercised | 5 | 634 | 879 | |
Interest paid | (67) | (110) | (164) | |
Repayments of finance lease liabilities | (355) | (138) | (277) | |
Net cash (used in)/from financing activities | (378) | 49,006 | 47,433 | |
Net decrease in cash and cash equivalents | (36,410) | (18,217) | (58,297) | |
Cash and cash equivalents at beginning of the period/year | 88,801 | 146,828 | 146,828 | |
Effect of exchange rate changes | 976 | 468 | 270 | |
Cash and cash equivalents at end of the period/year | 53,367 | 129,079 | 88,801 | |
Notes to the Condensed Consolidated Financial Statements |
1. General information |
Monitise plc ('the Company'), and its subsidiaries (together 'the Group') is a cloud and digital technology group enabling accelerated digital innovation within industries where security, compliance and scalability are mandated. 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 11 February 2016. |
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 2015 were approved by the Board on 8 September 2015 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 2015 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 2015. |
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 2015 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. |
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 2015, as described in those annual financial statements. | |||
There are currently no other new standards, amendments to standards and interpretations that are mandatory for the first time for the financial year beginning 1 July 2015. | |||
The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial year beginning 1 July 2016: | |||
Effective date | |||
• | Amendments to IAS 1: "Presentation of financial statements" on the disclosure initiative | 1 January 2016 | |
• | Amendment to IAS 16 "Property, Plant and Equipment" and IAS 38 "Intangible assets" on depreciation and amortisation | 1 January 2016 | |
• | Amendments to IAS 27: Equity Method in Separate Financial Statements | 1 January 2016 | |
• | Amendment to IFRS 11 "Joint Arrangements on Acquisition of an Interest in a Joint Operation" | 1 January 2016 | |
• | IFRS 14 "Regulatory Deferral Accounts" | 1 January 2016 | |
• | Amendment to IFRS 10, IFRS 12 and IAS 28 "Investment Entities": Applying the Consolidation Exception | 1 January 2016 | |
• | Annual improvements to IFRSs 2012-2014 | 1 January 2016 | |
• | Amendments to IFRS 10 and IAS 28: Sale of Contribution of Assets between an Investor and its Associate or Joint Venture | 1 January 2016 | |
• | Amendments to IAS 16 and IAS 41: Bearer Plants | 1 January 2016 | |
The Directors do not anticipate that the adoption of any of the above standards, amendments or interpretations will have a material impact on the Group's financial statements on initial application. | |||
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 2015 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. Further details are provided in note 8. | ||
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. Acquisition accounting and goodwill | - | |
Where the Group undertakes business combinations, the cost of acquisition is allocated to identifiable net assets and contingent liabilities acquired and assumed by reference to their estimated fair values at the time of acquisition. The remaining amount is recorded as goodwill. Identifiable net assets are valued using external valuation providers and involve an element of judgement related to projected results. Fair values that are stated as provisional are not finalised at the reporting date and final fair values may be determined that are materially different from the provisional values stated. | ||
3.8. Fair value estimation for financial instruments | ||
The fair value of financial instruments that are not traded in an active market, for example over-the-counter derivatives and contingent consideration liabilities, are estimated using valuation techniques. Management uses judgement to select a variety of methods and make assumptions that are based on market conditions existing at the end of the reporting period as well as internal information regarding a variety of probable outcomes. Holding trade receivables and payables at their amortised cost less impairment provision for trade receivables is deemed to approximate their fair values. | ||
3.9. 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. | ||
4. Segmental information |
Reportable segment |
Monitise's operating segment is 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 a measure of adjusted 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 products and geographies to assist with the allocation of resources. Accordingly, the Group had one reportable operating segment for the year ended 30 June 2015. The operating segment derives revenues from delivering mobile banking, payments and commerce networks worldwide. Segmental reporting will be reviewed for the year ended 30 June 2016 in line with changes underway in the reporting of operating segments. |
Products and services | 6 months | 6 months | Year | |
ended | ended | ended | ||
31 December | 31 December | 30 June | ||
2015 | 2014 | 2015 | ||
£'000 | £'000 | £'000 | ||
Product licences | 468 | 4,356 | 11,875 | |
Product supply and transaction fees | 17,063 | 16,201 | 33,089 | |
User generated revenue | 17,531 | 20,557 | 44,964 | |
Development and integration services | 15,828 | 21,845 | 44,736 | |
Total Revenue | 33,359 | 42,402 | 89,700 | |
Product licences are sales where the customer has the ability to exploit the licensed functionality upon delivery and include certain term-based and perpetual licences. | ||||
5. Operating loss | ||||
This is stated after charging: | ||||
6 months | 6 months | Year | ||
ended | ended | ended | ||
31 December | 31 December | 30 June | ||
2015 | 2014 | 2015 | ||
Note | £'000 | £'000 | £'000 | |
Depreciation | 2,784 | 2,197 | 4,204 | |
Impairment of property, plant and equipment | 2,630 | - | 1,501 | |
Amortisation | 8 | 7,274 | 10,706 | 20,671 |
Impairment of intangible assets | 8 | 166,798 | - | 92,380 |
Impairment of investment in joint venture | 500 | - | 440 | |
Share based payments | 10,407 | 12,057 | 27,977 | |
Exceptional items | 6 | 980 | 2,289 | 34,151 |
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 | ||
2015 | 2014 | 2015 | ||
£'000 | £'000 | £'000 | ||
Exceptional income | (5,000) | - | - | |
Onerous contracts | (2,382) | - | 28,475 | |
Surplus property costs | 2,312 | - | 1,817 | |
Adjustment to contingent consideration | - | - | 1,314 | |
Restructuring costs | 5,964 | 2,610 | 4,485 | |
Strategic Review and corporate development costs | 86 | (321) | 1,945 | |
Release of acquisition-related liabilities | - | - | (3,885) | |
Total exceptional items | 980 | 2,289 | 34,151 | |
The exceptional income relates to an amount received in respect of a revision to a customer contract. | ||||
The charge for onerous contracts relates 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 have been provided and have been adjusted in the current period to reflect successful negotiation of the onerous obligations. Additionally, a number of restructuring activities were undertaken which resulted in several onerous property lease contracts. | ||||
Adjustments to contingent consideration reflect the recalculation of amounts owed to former shareholders of the acquired businesses based on performance related criteria in accordance with acquisition related contracts. | ||||
Restructuring costs are associated with a number of restructuring activities undertaken and principally relate to redundancy and termination costs. | ||||
Strategic Review and corporate development costs related primarily to professional advisor fees incurred in respect of Monitise's review of its strategy and ownership structure announced on 22 January 2015 and costs associated with a number of corporate development projects. | ||||
The release of acquisition-related acquired liabilities relates to the settlement of a number of historic patent claims associated with the previous acquisition of Monitise Americas, Inc. (formerly Clairmail, Inc.). | ||||
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 | ||
2015 | 2014 | 2015 | ||
Loss for the period/year (£'000) | (205,408) | (56,786) | (223,551) | |
Weighted average number of shares in issue ('000) | 2,199,414 | 1,993,438 | 2,069,164 | |
Basic and diluted loss per share (pence) | (9.3p) | (2.8p) | (10.8p) | |
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 | |
Cost: | |||||||
As at 1 July 2014 | 196,394 | 45,694 | 277 | 26,744 | 16,986 | 36,383 | 322,478 |
Exchange differences | 12,130 | 2,826 | - | 1,087 | (135) | 289 | 16,197 |
Additions | - | - | 30 | - | 2,317 | 12,708 | 15,055 |
Acquisitions | (4,642) | 3,447 | - | 1,269 | - | - | 74 |
Disposals | - | (2) | - | - | (773) | (3) | (778) |
As at 31 December 2014 | 203,882 | 51,965 | 307 | 29,100 | 18,395 | 49,377 | 353,026 |
Accumulated amortisation and impairment: | |||||||
As at 1 July 2014 | 1,546 | 7,997 | 222 | 6,936 | 4,164 | 13,846 | 34,711 |
Exchange differences | - | 688 | - | 741 | (139) | 67 | 1,357 |
Charge | - | 3,155 | 23 | 2,607 | 2,575 | 2,346 | 10,706 |
Disposals | - | (2) | - | - | (773) | - | (775) |
As at 31 December 2014 | 1,546 | 11,838 | 245 | 10,284 | 5,827 | 16,259 | 45,999 |
Net book value: | |||||||
As at 1 July 2014 | 194,848 | 37,697 | 55 | 19,808 | 12,822 | 22,537 | 287,767 |
As at 31 December 2014 | 202,336 | 40,127 | 62 | 18,816 | 12,568 | 33,118 | 307,027 |
Cost: | |||||||
As at 1 July 2014 | 196,394 | 45,694 | 277 | 26,744 | 16,986 | 36,383 | 322,478 |
Exchange differences | 8,536 | 473 | - | 333 | (147) | 179 | 9,374 |
Additions | - | - | - | - | 3,051 | 29,611 | 32,662 |
Disposals | - | - | - | - | (2,007) | - | (2,007) |
As at 30 June 2015 | 204,930 | 46,167 | 277 | 27,077 | 17,883 | 66,173 | 362,507 |
Accumulated amortisation and impairment: | ||||||||
As at 1 July 2014 | 1,546 | 7,997 | 222 | 6,936 | 4,164 | 13,846 | 34,711 | |
Exchange differences | 1 | 368 | (1) | 226 | (146) | 31 | 479 | |
Charge | - | 6,601 | 31 | 5,026 | 3,803 | 5,210 | 20,671 | |
Impairment | 40,223 | 1,853 | - | 3,365 | 9,533 | 37,406 | 92,380 | |
Disposals | - | - | - | - | (2,007) | - | (2,007) | |
As at 30 June 2015 | 41,770 | 16,819 | 252 | 15,553 | 15,347 | 56,493 | 146,234 | |
Net book value: | ||||||||
As at 1 July 2014 | 194,848 | 37,697 | 55 | 19,808 | 12,822 | 22,537 | 287,767 | |
As at 30 June 2015 | 163,160 | 29,348 | 25 | 11,524 | 2,536 | 9,680 | 216,273 | |
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 | |
9. Net funds | ||||||||
31 December | 31 December | 30 June | ||||||
2015 | 2014 | 2015 | ||||||
£'000 | £'000 | £'000 | ||||||
Cash at bank and in hand | 53,367 | 129,079 | 88,801 | |||||
Finance leases | (2,648) | (740) | (596) | |||||
Net funds | 50,719 | 128,339 | 88,205 | |||||
10. Financial liabilities | ||||||||
31 December | 31 December | 30 June | ||||||
2015 | 2014 | 2015 | ||||||
£'000 | £'000 | £'000 | ||||||
Due within one year | ||||||||
Financial liabilities at fair value through profit or loss | - | 8,058 | 9,775 | |||||
Finance leases | 1,023 | 239 | 261 | |||||
Financial liabilities due within one year | 1,023 | 8,297 | 10,036 | |||||
Due after one year | ||||||||
Finance leases | 1,625 | 501 | 335 | |||||
Financial liabilities due after one year | 1,625 | 501 | 335 | |||||
Total financial liabilities | 2,648 | 8,798 | 10,371 | |||||
11. 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 2014 | 1,944,806,182 | 19,448 | 336,990 | |||||
Issue of new shares | 207,269,385 | 2,072 | 47,639 | |||||
Exercise of share options and warrants | 16,155,869 | 162 | 717 | |||||
Cost of share issue | - | - | (1,625) | |||||
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 | |||||
As at 1 July 2014 | 1,944,806,182 | 19,448 | 336,990 | |||||
Issue of new shares | 182,714,084 | 1,827 | 47,593 | |||||
Exercise of share options and warrants | 8,157,425 | 82 | 552 | |||||
Cost of share issue | - | - | (1,630) | |||||
As at 31 December 2014 | 2,135,677,691 | 21,357 | 383,505 | |||||
Reconciliation of shares issued | ||||||||
Ordinary | ||||||||
Number of | Ordinary | shares to | Share | Merger | ||||
shares | shares | be issued | premium | reserve | Total | |||
£'000 | £'000 | £'000 | £'000 | £'000 | ||||
As at 1 July 2014 | 1,944,806,182 | 19,448 | 2,511 | 336,990 | 221,539 | 580,488 | ||
December 2014 placing | 161,327,150 | 1,613 | - | 45,966 | - | 47,579 | ||
Employee share-based payment exercises | 16,155,869 | 162 | - | 717 | - | 879 | ||
Share-based payments to non-employees | 97,922 | 1 | - | 48 | - | 49 | ||
Issue of shares relating to prior year business combinations | 45,844,313 | 458 | - | - | 7,133 | 7,591 | ||
As at 1 July 2015 | 2,168,231,436 | 21,682 | 2,511 | 383,721 | 228,672 | 636,586 | ||
Employee share-based payment exercises | 526,371 | 5 | - | - | - | 5 | ||
Issue of shares relating to prior year business combinations | 35,629,905 | 357 | - | - | 9,511 | 9,868 | ||
As at 31 December 2015 | 2,204,387,712 | 22,044 | 2,511 | 383,721 | 238,183 | 646,459 | ||
12. 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 | ||
2015 | 2014 | 2015 | ||
£'000 | £'000 | £'000 | ||
Loss before income tax | (210,541) | (58,386) | (227,433) | |
Adjustments for: | ||||
Depreciation and impairments to property, plant and equipment | 5,414 | 2,197 | 5,705 | |
Amortisation and impairments to intangible assets | 174,072 | 10,706 | 113,051 | |
Impairment to joint venture | 500 | - | 440 | |
Share-based payments | 10,407 | 12,057 | 27,977 | |
Loss/(profit) on disposal of property, plant and equipment | - | (2) | 24 | |
Finance costs - net | (1,055) | 90 | 521 | |
Exceptional items (net) | 980 | 2,289 | 34,151 | |
Share of post-tax loss of joint ventures | 29 | 224 | 3,788 | |
Operating cash flows before movements in working capital | (20,194) | (30,825) | (41,776) | |
Decrease/(increase) in receivables | 4,411 | (5,651) | 9,055 | |
Decrease in payables | (5,216) | (1,536) | (16,968) | |
Decrease in provisions | (1,322) | - | (656) | |
Cash used in operations | (22,321) | (38,012) | (50,345) | |
13. Commitments, contingencies and guarantees |
Legal contingencies |
Except as set out below, 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) ("MIL") 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 and Commitments |
As part of the joint venture arrangements entered into by the Group and in other agreements, 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. As part of the joint venture arrangement for Syntheo Limited, the Group is also committed to provide further funding with the joint venture partner in line with the agreed business plans of up to £6,475,000 over two years. |
Certain guarantees have also been given by parent companies on behalf of subsidiaries as part of facility arrangements. |