CEO quits. PPS down -36.66% in London 3.68p or $0.06
Monitise announces 2015 results, board changes and progress on transition to cloud
LONDON - Monitise plc (LSE: MONI) ("Monitise", the "Company" or the "Group") announces its audited preliminary results for the year ended 30 June 2015.
FY 2015 Financial Summary
· FY 2015 revenue declined 6% to £89.7m (FY 2014: £95.1m).
· Group EBITDA(1) loss was £41.8m, at the lower end of the Company's guidance range of a £40-50m loss (FY 2014: £31.4m loss). H2 FY 2015 EBITDA loss of £11.0m was materially smaller than H1 FY 2015 loss of £30.8m.
· Operating costs were £88.3m (FY 2014: £93.1m(2)), with materially improving underlying cost disciplines reflected in a 32% half-on-half reduction to £35.8m in H2 FY 2015 from £52.5m in H1 FY 2015. Excluding the effect of non-recurring accrual reversals in H2 FY 2015, the half-on-half reduction was 18%.
· Adjusted(3) loss after tax for the year was £55.3m (FY 2014: £43.7m) and adjusted(3) loss per share was 2.7p (FY 2014: 2.6p).
· Goodwill, capitalised development costs and other intangible and fixed assets impairments of £94.3m were recognised where technologies or geographies are no longer core to strategy or where the carrying values of technologies are not supported in the short term by market readiness.
· With the changing shape of the business and focus on the cloud, an onerous contract provision of £30.3m was recognised in respect of a small number of contracts as an exceptional expense.
· The above factors, together with share-based payment charges of £28.0m (FY 2014: £9.8m) largely in relation to acquisitions, led to a statutory loss after tax in the year of £223.6m (FY 2014: £60.1m), equating to a loss per share of 10.8p (FY 2014: 3.6p).
· Cash capex was at the upper end of the Company's guidance range at £45.0m (FY 2014: £26.1m), reflecting investment in the productisation and development of Monitise technology platforms. H2 FY 2015 capex was £19.1m, compared to a peak of £25.9m in H1 FY 2015.
· Gross cash of £88.8m as at 30 June 2015 provides balance sheet strength to see Monitise through to break-even and beyond.
(1) EBITDA is defined as operating loss before exceptional items, depreciation, amortisation, impairments and share-based payment charges.
(2) Prior year cost of sales, gross profit and operating costs have been restated due to a reclassification of certain service delivery costs from operating costs to cost of sales. There was no impact to EBITDA from this adjustment.
(3) Adjustments comprise share-based payments, exceptional items, impairments and acquisition related amortisation. A reconciliation is provided in note 9.
Board Changes
· Elizabeth Buse to step down as CEO and from the Board, effective 9 September 2015, due to her desire for personal reasons to return to the United States. Deputy CEO and Chief Commercial Officer Lee Cameron appointed CEO, effective 9 September 2015.
· Elizabeth will remain with the business until the end of October to ensure an orderly transition and handover of responsibilities.
Strategy Update
· Monitise provides specialised technology and associated services that help clients, particularly financial institutions, deliver innovative digital experiences to their customers.
· The Company is transitioning to become a cloud business to meet the evolving needs of the industries and clients it serves. As previously communicated, going forward the company will focus on Europe, the Middle East and North America.
· Monitise's new cloud platform is at the core of its strategy. The platform provides 'ready-made' products (Software as a Service/SaaS) as well as a 'build your own' (Platform as a Service/PaaS) capability, with bank-grade security and compliance for financial institutions and beyond.
· This is complemented by a dedicated on-premise platform that supports businesses that want to leverage Monitise products behind their firewall, together with the digital agency based in London, Istanbul and San Francisco, and the London-based content business.
· Existing customised solutions will continue to be supported, but Monitise will not be entering into any new arrangements of this type. The Company's sales efforts with these clients are focussed on the cloud platform.
Operational Update
· During the period, Monitise welcomed deeper partnerships with Santander, Telefónica and MasterCard with the three companies investing in the business. The Group's multi-faceted relationship with IBM also developed further through the year.
· Monitise's cloud platform launched in April 2015. It is a private cloud running on IBM's Bluemix scalable infrastructure. It provides API-based delivery of Monitise SaaS products, as well as through the Company's new PaaS offering, giving financial institutions a secure environment where they or other fintech developers can develop and operate their own applications.
Outlook
· Revenue growth not expected in FY 2016.
· Operating costs expected to continue declining in FY 2016 through a combination of headcount rationalisation, lower IT costs, the exit of non-core geographies and further property rationalisation.
· Expectation of EBITDA profitability in H2 FY 2016, and still targeting EBITDA profitability for full year.
· Cash position expected to be in excess of £45m throughout FY 2016.
Monitise Chairman Peter Ayliffe said:
"Monitise has made substantial progress during the year in moving the business to the cloud. We are well aware that our transformation of the business, while absolutely necessary, has been slower and more challenging than expected and has significantly impacted our financial performance, which we recognise has been disappointing and led to us having to revise some of the financial targets we had set for the year.
We have improved our cost disciplines and the fundamental drivers underlying our business remain strong. The Board and leadership team continue to take the necessary tough decisions and we are confident that Monitise is well placed to deliver value for shareholders as we serve our clients and partners.
The Board is pleased to announce the appointment of Lee Cameron as CEO. Lee has been on the Monitise Board since 2008, held a number of senior executive roles within the Company, is well respected by clients and has led the evolution of Monitise's PaaS offering. I would like to thank Elizabeth Buse for capably taking on the role of sole CEO earlier this year and setting in place many important changes that have helped to reposition the business for the future."
Monitise Chief Executive Elizabeth Buse said:
"Since becoming sole CEO of Monitise, I have focussed on the transition of our business towards the cloud model, while reducing costs and increasing flexibility and discipline. Our move to become a cloud business reflects our drive to adapt to the evolving needs of the industries and clients we serve. A consequence of reshaping Monitise for growth and profitability is that we have had to recognise significant non-cash impairments and exceptional one-off costs.
I have been delighted with client reaction to our cloud platform and, given Monitise's healthy cash balance and the tough decisions we continue to take, I am confident that Monitise is now better positioned for profitability and future growth.
Against this backdrop, I recently informed the Board of my desire, for personal reasons, to return to the United States. Consequently, the Board has appointed Deputy CEO, Lee Cameron, to take over as CEO with immediate effect. Lee has worked alongside me as we have been repositioning Monitise for the future, is well respected by clients, and is the right person to lead the business going forward."
Commenting on his CEO appointment, Lee Cameron said:
"At the heart of Monitise are excellent people and technologies. It is vital that we build on these strengths as we become a cloud company. My immediate priority will be to continue to execute the strategy we have put in place and to ensure that we both serve our clients and create value for our shareholders. We have the assets, clients and skills to succeed and I am determined that we build from here and that Monitise delivers on its potential."
An analyst presentation will be held on Wednesday 9 September 2015 at 9.00am BST at the London Stock Exchange, London, EC4M 7LS. A live webcast of the presentation will be available to view online via investor relations on www.monitise.com. A replay facility will be accessible via www.monitise.com/investor_relations within 24 hours of the results presentation.
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