Monitise PLC (MONIF)

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Monitise announces conclusion of its Strategic Review, end of Offer Period and Board changes
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25 Mar 2015

Independent strategy to be pursued



FY 2016 EBITDA profitability target reiterated



25 March 2015, London, UK - Monitise plc (LSE: MONI) (“Monitise”, the “Company” or “Group”) announces that, further to the initiation on 22 January 2015 of a Strategic Review for the business, the Board has concluded that the best way of maximising long-term value for all stakeholders is to continue transforming and streamlining the business as an independent company. In addition, Monitise reiterates its FY 2016 EBITDA profitability target. Accordingly, the Formal Sale Process previously announced on 22 January 2015 has now ceased, and the Company is no longer in an “Offer Period” (as defined in the UK Takeover Code).



Strategic Review

As part of the Strategic Review initiated on 22 January 2015, the Board, supported by Moelis & Company as independent financial adviser, thoroughly explored all options open to the Company. In considering options for the business under the Strategic Review, the Board was cognisant of the value on a standalone basis of Monitise’s partnerships with strategic investors, channel partners and clients such as Santander, MasterCard, IBM, Visa Europe, and RBS among others. The Board received a number of expressions of interest from various parties. However, the Board concluded that none of these indicative and non-binding proposals fully recognised the longer-term value of Monitise. The expressions of interest were also structured in such a way that there was considerable uncertainty over their ultimate deliverability. The Board was also mindful that the Strategic Review should conclude within an acceptable timeframe; such that it did not interfere unduly with ongoing business opportunities, client services and discussions with partners and clients.



Board changes

· Co-CEO Elizabeth Buse becomes sole CEO of Monitise.

· Founder and co-CEO Alastair Lukies steps down from the Board with immediate effect and remains available to the business and key partners as Founder and Strategic Adviser to Elizabeth Buse.

· Stephen Shurrock, CEO of Consumer at Telefónica within the Commercial & Digital Unit, is appointed Non-Executive Director representing strategic shareholders Telefónica and Santander. An announcement regarding Stephen’s appointment, including details required under the AIM Rules, is being released separately this morning.



Standalone strategy and on-going business transformation

· Monitise’s focus will be on sales in Europe, the Middle East and North America. Additional market opportunities will be pursued where they directly support partner needs.

· Cost optimisation projects already announced, including the transition of UK professional services employees to IBM, and streamlining benefits from the shift to being a product-led business such as a narrowing of development focus to core products, to be supplemented by new initiatives, including centralising its R&D from a hub in Istanbul.

· Action underway to improve profitability of under-performing businesses and exit non-core business areas.

Initial Monitise Central Platform Bank and Pay capabilities launching in April with additional functionality to follow driven by customer demand.

· Transition to recurring-revenue driven business underway, building on strong client and partner relationships, internal expertise, and solid balance sheet, as outlined most recently at the 17 February 2015 Capital Markets Day.



“Santander believes that Monitise is uniquely well positioned as an independent player in the fast-growing digital money space. We have already through our partnership with Monitise developed some market-leading propositions for our customers and intend to continue doing so through what we expect to be a long and mutually beneficial collaboration.” - Senior Executive Vice-President and Corporate Director of Innovation at Banco Santander José María Fuster



Current trading and guidance

· Reiterate guidance for FY 2015 (revenue £90-100m and EBITDA loss £40-50m) and for EBITDA profitability in FY 2016.

· In addition to revenue growth, we continue to expect H2 2015 operating and capital expenses to be materially lower than H1 with a further improvement in FY 2016.

· Company’s cash position provides balance sheet strength to see Monitise through to break-even and beyond.

· Monitise continues to see 200m users / £2.50 ARPU as commensurate with the scale of its opportunity. Given the achievement of those targets will be driven by partner-led product and service roll outs we no longer think it appropriate to give guidance as to the timing of those targets.

· More than 30% EBITDA margins by end FY 2018, underpinned by high operational leverage in the business.



Monitise Chairman Peter Ayliffe said: “Following a thorough and disciplined Strategic Review, the Board has concluded that the best prospects for the business and shareholders are through remaining as an independent company. I am extremely confident that the business is at a point in its development where the prospects for delivering long-term value are excellent. The feedback from third parties re-affirms that we have a uniquely strong technology platform, a talented and highly respected management team, and a deep well of support among staff, partners and clients for what we are seeking to achieve.



Since joining Monitise, Elizabeth Buse has made a significant impact across the business and the Board is delighted that she will be leading the Company during the next phase of its development. We are delighted that Stephen Shurrock is joining us as Non-Executive Director. He brings invaluable experience from his time spearheading leading businesses in the telecoms and digital industries, and joins us at an important time for Monitise.



On behalf of the Board, I would like to thank Alastair Lukies as the founder of, and inspiration behind, Monitise. His vision, tireless hard work and energy have created a business that has delivered leadership in its space and given us the base from which we can build a long-term successful business. The Board is very pleased that Alastair will continue to work with us in his new role as Founder and Strategic Adviser.”



Monitise CEO Elizabeth Buse said: “Monitise is a great business with a unique offering. My priorities are centred on delivering value to all our stakeholders through the development and deployment of excellent products and services and to ensure that Monitise remains on track to become EBITDA profitable in FY 2016 and continues to be well positioned to deliver against its longer term goals.”



Monitise Founder and Strategic Adviser Alastair Lukies said: “Monitise is a unique business that set out a decade ago to be the leading, trusted enabler of mobile money services to some of the world's leading financial institutions. In achieving that goal, it has also positioned itself perfectly for the rising tide of digital commerce. As an agnostic, independent and self-sustaining business, led by an incredible leader in Elizabeth, employing some very talented people with a technology platform that is bank grade, scalable and steeped in innovation, Monitise is set to thrive.”



Chairman Peter Ayliffe, CEO Elizabeth Buse, and CFO Brad Petzer will host a conference call for investors and analysts today, WednesdayMarch 25 2015 at 9am GMT.

http://www.monitise.com/news/press_releases?id=1145