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Monitise maintains impressive growth

RESULTS: Demand for mobile banking software is growing fast and Monitise is at the forefront - indeed, it has boosted customer numbers more than threefold from last year.
February 11, 2013

Don't be fooled by the headline half-year loss from Monitise (MONI) - the real story is the group's outstanding growth rate. The core business provides a software platform for financial institutions to support mobile banking and payments and progress is impressive - transactions on an annualised basis rose from 480m a year ago to 2bn, while registered customers during that period grew from 6m to 20m.

IC TIP: Buy at 34p

The cost of rolling out its services through joint ventures, while extending its capabilities through acquisitions, explains the headline loss. But, even before acquisitions, user-generated organic growth reached an impressive 70 per cent, while the gross margin rose from 64 per cent to 72 per cent. Group finances were also boosted by two fundraising exercises totalling £117m, although development and technology costs resulted in a free cash outflow of £21.6m.

The rewards for all this investment are now expected to show through in 2014 and management has targeted a rise in full-year turnover in the current year from £36.1m to at least £70m. Moreover, on top of the 300 banks and financial institutions that Monitise already works with, there is a pipeline of a further 100 institutions looking to use its software platform.

Canaccord Genuity expects full-year adjusted pre-tax losses of £30.3m and a loss per share of 2p.

MONITISE (MONI)
ORD PRICE:34pMARKET VALUE:£525m
TOUCH:34-35p12-MONTH HIGH:41pLOW: 25p
DIVIDEND YIELD:nilPE RATIO:NA
NET ASSET VALUE:17p*NET CASH:£100m

Half-year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201117.11.050.10nil
201227.8-24.4-2.20nil
% change+63---

Ex-div: na

Payment: na

*Includes intangible assets of £191m, or 12p a share