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Monitise subscribes to growth

Monitise has suffered a short-term hit to earnings from its transition to a subscription-based model
September 15, 2014

Monitise 's (MONI) operating costs climbed 30 per cent last year, as it scaled up its business and shifted towards selling products and subscriptions rather than integrating systems. That meant the group, which provides mobile banking technology to banks, retailers and mobile operators, widened its cash losses by two-thirds to £31m.

IC TIP: Buy at 45p

Monitise did grow its registered user base by 30 per cent to 30m. It also inked a global partnership with IBM, teamed up with Telefónica to launch a mobile shopping platform in Spain and acquired mobile banking specialist Pozitron, widening its footprint in Turkey and the Middle East. Moreover, it created a new content division to source discounts and offers for its 'Buy Anything' mobile commerce platform, which features brands such as Sky, iTunes and Tesco.

The group continues to expect sales growth of 25 per cent this financial year and to have 200m registered users generating an average of £2.50 in revenue each by 2018. But that will require substantial investment - Monitise forecasts up to £45m in annual capital spending, up from the previous £40m target.

Broker Canaccord Genuity expects adjusted pre-tax losses of £51.8m this financial year, giving a loss per share of 2.5p, compared with losses of £47.1m and 2.6p last year.

MONITISE (MONI)
ORD PRICE:45pMARKET VALUE:£883m
TOUCH:44-45p12-MONTH HIGH:83pLOW: 38p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:20p*NET CASH:£146m

Year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20106.0-17.0-3.7nil
201115.317.2-2.1nil
201236.1-16.9-2.1nil
201372.8-51.1-3.8nil
201495.1-63.4-3.6nil
% change+31---

*Includes intangible assets of £287m, or 15p a share