Deepening commercial partnerships support Monitise’s guidance for 2018
£49.2m investment by Santander, Telefónica and MasterCard to accelerate growth in Mobile Money ecosystem
Deployment of IBM cognitive computing technology to enhance Monitise platform capabilities
Monitise plc (“Monitise”, the “Company” or the “Group”) (LSE: MONI) announced it is in discussions to expand its commercial relationships with the Santander Group (“Santander”), the Telefónica Group (“Telefónica”) and MasterCard Inc. (“MasterCard”) (together, the “Strategic Partners”), to support the development and accelerated rollout of its global platform capabilities. Alongside this, IBM has agreed to deploy its cognitive computing engine, Watson, in support of Monitise’s new technology platform. Monitise reiterates its current financial year and longer-term guidance as detailed below.
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Monitise also announces an agreed £49.2 million in aggregate investment by the Strategic Partners. Pursuant to a binding subscription agreement, the Strategic Partners have agreed to subscribe, subject to Admission, for a total of 161,327,150 new ordinary shares of one pence each (the “New Shares”) at 30.5 pence per share, the closing price per share on 26 November 2014. The New Shares represent 8.2% of the existing issued ordinary share capital and will be issued by the Company pursuant to existing authorities granted to the Directors.
In connection with their subscription, Telefónica and Santander will have the right, acting jointly, to nominate a single Non-Executive Director to be appointed by the Monitise Board.
The investment proceeds will be used for business development activities and further acceleration of investment in the Group’s technology and working capital – ultimately increasing momentum for the on-boarding of partners and end-user adoption.
The commercial collaborations being discussed with the Strategic Partners include (subject to final agreement):
- Santander: An accelerated pipeline of opportunities leveraging Santander’s expertise and scale together with Monitise’s technology to build new Mobile Money capabilities for Santander, the largest Eurozone bank by market capitalisation.
- Telefónica: Developing new products and services, leveraging Telefónica’s expertise and Monitise’s capabilities. Telefónica, one of the largest mobile network operators in the world, has recently finalised an agreement to further such cooperation with two country roll-outs in Latin-America during 2015, including Brazil.
- MasterCard: Working on joint development and deployment of new digital payments services. These include cross-border mobile remittance capabilities, mobile transfer solutions and cloud-based payments services for businesses globally such as financial institutions, merchants, digital service providers and public sector organisations. These services will be available as configurable components of the Monitise platform in future.
In addition, Monitise is delighted to announce a deepening collaboration with IBM:
- IBM: the Group’s alliance and resourcing partner, delivering cloud-based mobile commerce solutions to businesses globally, intends to contribute additional technology services and resources to augment the Monitise platform – this will include the deployment of Watson, IBM’s cognitive computing and machine-learning technology.
The strengthening of Monitise’s relationships with Santander, Telefónica, MasterCard and IBM will serve to accelerate the take-up and roll-out of Monitise-enabled products and services. Monitise and each of Santander, Telefónica, MasterCard and IBM are looking to enter into binding agreements to reflect the expansion of these commercial relationships.
Monitise reiterates its guidance for this financial year of: at least 25% revenue growth year-on-year; continued investment in the Group’s global infrastructure with FY 2015 capex estimated at £35-45m; its expectation to be EBITDA profitable in FY 2016; its longer-term guidance for FY 2018 of 200m registered users at £2.50 average revenue per user; an EBITDA margin of at least 30%; and a sustainable gross margin above 70%.
Monitise co-CEO Alastair Lukies said:
“The Mobile Money industry is now a global phenomenon. In developed markets it is fundamentally changing the way we bank, pay and buy. In emerging markets it is the foundation of new economic systems. There are two clear and distinct approaches appearing in this industry: disruptors looking for control and collaborators working together to share in a very big and sustainable opportunity. With our partners, we are delighted to be playing our role as an enabler to the Mobile Money collaborators. Via deepening partnerships, our increasingly connected mobile commerce services can become even smarter and more engaging for the businesses we work with.”
Monitise co-CEO Elizabeth Buse said:
“In order to succeed, organisations increasingly realise that partnerships without frontiers are critical to enabling them to engage with and serve their customers in an evolving digitally-connected world. Our approach to open collaboration across industries supports this by simplifying access to a common mobile network for partners via our cost-effective, subscription-based, flexible technology products and services. The next phase of our strategy sees Monitise, in collaboration with its partners, accelerating on its strategy to be the world’s leading enabler of digital commerce services.”
Details of the Strategic Partners’ investment
The Strategic Partners have agreed to subscribe, subject to Admission, for a total of 161,327,150 new ordinary shares of one pence each (the “New Shares”) at 30.5 pence per share raising gross proceeds of approximately £49.2 million, in the following manner:
- Santander: 108,196,721 New Shares, representing 5.5% of the Company’s existing share capital and 5.1% of the enlarged share capital.
- Telefónica: 42,630,429 New Shares, representing 2.2% of the Company’s existing share capital and 2.0% of the enlarged share capital.
- MasterCard: 10,500,000 New Shares, representing 0.5% of the Company’s existing share capital and 0.5% of the Company’s enlarged share capital (MasterCard will now hold 32,661,765 ordinary shares in total, representing 1.5% of the Company’s enlarged share capital).
The New Shares issued to each Strategic Partner will be subject to lock-up provisions for a period of six months from the date of issue, subject to customary exceptions. The Strategic Partners shall also be released from the lock-up if the Company issues shares for cash consideration on a non-pre-emptive basis in excess of the Company’s existing shareholder authorities (other than in relation to the operation of the Company’s employee share schemes). However, the Company has no present intention of issuing any further shares for cash on a non-pre-emptive basis in excess of existing shareholder authorities. Following the six-month lock-up period the Strategic Partners will be subject to orderly market provisions for a period of 12 months, during which the Strategic Partners are obliged to consult with the Group’s broker prior to any disposal.
In connection with the binding subscription agreement, Monitise has agreed that, for so long as Santander and Telefónica together hold at least 5.0% of the Company’s share capital, they will have the right, acting jointly, to nominate a single representative to serve as a Non-Executive Director to be appointed by the Monitise Board.
The New Shares, when issued, will be credited as fully paid and will rank pari passu with the existing issued ordinary shares, including the right to receive all dividends and other distributions declared, made or paid on or in respect of the ordinary shares after the date of issue of the New Shares. The New Shares represent 8.2% of the Company’s existing issued ordinary share capital, and will be issued by the Company pursuant to existing authorities granted to the Directors.
The allotment and issue of shares pursuant to the subscription agreement is conditional upon the New Shares being admitted to trading on AIM. Application has been made for the New Shares to be admitted to trading on AIM (“Admission”), and it is expected that Admission will become effective, and trading in the New Shares (subject to lock-up arrangements) will commence on 1 December 2014.
Following the issue of the New Shares, Monitise will have 2,131,521,497 ordinary shares in issue. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Group under the FCA’s Disclosure and Transparency Rules.
Capital Markets Days
As a result of today’s announcement, the Capital Markets Days previously scheduled for institutional investors and analysts in December 2014 in New York and London will be hosted after the Group’s interim results in February 2015, in order to better discuss the Strategic Partners’ involvement.