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STRATEGIC PARTNERS SUPPORT ACCELERATED ROLL-OUT OF MONITISE’S GLOBAL PLATFORM

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Elizabeth Buse

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

Alastair Lukies

Alastair Lukies

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.

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.
Elizabeth Buse

Elizabeth Buse

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.

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ECB launches small climate-change unit to lead Lagarde’s green push

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ECB launches small climate-change unit to lead Lagarde's green push 1

FRANKFURT (Reuters) – The European Central Bank is setting up a small team dedicated to climate change to spearhead its efforts to help the transition to a greener economy in the euro zone, ECB President Christine Lagarde said on Monday.

Lagarde has made the environment a priority since taking the helm at the ECB, taking a number of steps to include climate considerations in the central bank’s work as the euro zone’s banking watchdog and main financial institution.

She is now creating a team of around 10 ECB employees, reporting directly to her, to set the central bank’s agenda on climate-related topics.

“The climate change centre provides the structure we need to tackle the issue with the urgency and determination that it deserves,” Lagarde said in a speech.

She said that climate change belonged in the ECB’s remit as it could affect inflation and obstruct the flow of credit to the economy.

The ECB said earlier on Monday it would invest some of its own funds, which total 20.8 billion euros ($25.3 billion) and include capital paid in by euro zone countries, reserves and provisions, in a green bond fund run by the Bank for International Settlement.

More significantly, ECB policymakers are also debating what role climate considerations should play in the institution’s multi-trillion euro bond-buying programme.

So far the ECB has bought corporate bonds based on their outstanding amounts but Lagarde has said the bank might have to consider a more active approach to correct the market’s failure to price in climate risk.

“Our strategy review enables us to consider more deeply how we can continue to protect our mandate in the face of (climate) risks and, at the same time, strengthen the resilience of monetary policy and our balance sheet,” Lagarde said.

(Reporting by Balazs Koranyi; Editing by Francesco Canepa and Emelia Sithole-Matarise)

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What to expect in 2021: Top trends shaping the future of transportation

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What to expect in 2021: Top trends shaping the future of transportation 2

By Lee Jones, Director of Sales – Grocery, QSR and Selected Accounts for Northern Europe at Ingenico, a Worldline brand

The pandemic has reinforced the need for businesses to undergo digital transformation, which is pivotal in the digital economy. In 2020, we saw the shift to online and cashless payments accelerated as a result of increased social distancing and nationwide restrictions.

The biggest challenge on all businesses into 2021 will be how they continue to adapt and react to the ever changing new normal we are all experiencing. In this context, what should we expect this year and beyond, in terms of developments across key sectors, including transport, parking and electric vehicle (EV) charging?

Mobility as a service (MaaS) and the future of transportation

Social distancing and lockdown measures have brought about a real change in public habits when it comes to transportation. In the last three months alone, we have seen commuter journeys across the globe reduce by at least 70%, while longer-distance travel has fallen by up to 90%. With it, cash withdrawals for payment has drastically reduced by 60%.

Technological advancements, alongside open payments, have unlocked new possibilities across multiple industries and will continue to have a strong impact. Furthermore, travellers are expecting more as part of their basic service. Tap and pay is one of the biggest evolutions in consumer payments. Bringing ease and simplicity to everyday tasks, consumers have welcomed this development to the transport journey. In-app payments are also on the rise, offering customers the ability to plan ahead and remain assured that they have everything they need, in one place, for every leg of their journey. Many local transport networks now have their own apps with integrated timetables, payments, and ticket download capabilities. These capabilities are being enabled by smaller more portable terminals for transport staff, and self-scanning ticketing devices are streamlining the process even further.

Lee Jones

Lee Jones

Ultimately, the end goal for many transport providers is MaaS – providing an easy and frictionless all-encompassing transport system that guides consumers through the whole journey, no matter what mode of travel they choose. Additionally, payment will remain the key orchestrator that will drive further developments in the transportation and MaaS ecosystems in 2021. What remains critical is balancing the need for a fast and convenient payment with safety and data privacy in order to deliver superior customer experiences.

The EV charging market and the accelerating pace of change  

The EV charging market is moving quickly and represents a large opportunity for payments in the future. EVs are gradually becoming more popular, with registrations for EVs overtaking those of their diesel counterparts for the first time in European history this year. What’s more, forecasts indicate that by 2030, there will be almost 42 million public charging points deployed worldwide, as compared with 520,000 registered in 2019.

Our experience and expertise in this industry have enabled us to better understand but also address the challenges and complexities of fuel and EV payments. The current alternating current (AC) based chargers are set to be replaced by their direct charging (DC) counterparts, but merchants must still be able to guarantee payment for the charging provider. Power always needs to be converted from AC to DC when charging an electric vehicle, the technical difference between AC charging and DC charging is whether the power gets converted outside or inside the vehicle.

By offering innovative payment solutions to this market segment, we enable service operators to incorporate payments smoothly into their omnichannel customer experience that also allows businesses to easily develop acceptance and provide a unique omnichannel strategy for EV charging payments. From proximity to online payments, it will support businesses by offering a unique hardware solution optimized for PSD2 and SCA. It will manage both near field communication (NFC) cards and payments from cards/smartphones, as well as a single interface to manage all payments, after sales support and receipt with both ePortal and eReceipts.

Cashless options for parking payments

The ‘new normal’ is now partly defined by a shift in consumer preference for cashless, contactless and mobile or embedded payments. These are now the preferred payment choices when it comes to completing the check-in and check-out process. They are a time-saver and a more seamless way to pay.

Drivers are more self-reliant and empowered than ever before, having adopted technologies that work to make their life increasingly efficient. COVID-19 has given rise to both ePayment and omnichannel solutions gaining in popularity. This has been due to ticketless access control based on license plate recognition or the tap-in/tap-out experience, as well as embedded payments or mobile solutions for street parking.

These smart solutions help consider parking services more broadly as a part of overall mobility or shopping experience. Therefore, operators must rapidly adapt and scale new operational practices; accept electronic payment, update new contactless limits, introduce additional payments means, refund the user or even to reflect changing customer expectations to keep pace.

2021: the journey ahead

This year,  we expect to see an even greater shift towards a cashless society across these key sectors, making the buying experience quicker and more convenient overall.

As a result, merchants and operators must make the consumer experience their top priority as trends shift towards simplicity and convenience, ensuring online and mobile payments processes are as secure as possible.

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Opportunities and challenges facing financial services firms in 2021

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Opportunities and challenges facing financial services firms in 2021 3

By Paul McCreadie, Partner at ECI Partners, the leading growth-focused mid-market private equity firm

Despite 2020 being an enormously disruptive year for businesses, our latest Growth Index research reveals that almost three quarters (74%) of mid-market financial services companies remained resilient throughout the pandemic.

This is positive news, especially when taking into account the economic disruption that financial services firms have had to go through since the crisis began. No doubt 2021 will also hold its own challenges – as well as opportunities – for firms in this sector.

Challenges outlook

Unsurprisingly, the biggest short-term concern for financial firms for the year ahead involved changing pandemic guidance, with 42% citing this as a top concern. With the UK currently experiencing a third lockdown many financial services businesses will have already had to adapt to rapidly changing guidance, even since being surveyed.

Businesses will also be considering the need to invest in working from home operations, and there may be uncertainty over re-opening offices on a permanent basis.  According to the research 30% of financial services firms are planning to adopt remote working on a permanent basis, so decisions need to be made now about whether they invest more in enabling staff to do this, or in their current office premises.

Due to Brexit, UK financial services firms are no longer able to passport their services into Europe, which may cause problems, particularly in the next 12 months as the Brexit deal is ironed out and the agreement is put into practice. Despite this, Brexit was only cited by 24% of financial firms as a short-term concern. While it’s comforting to see that UK financial firms aren’t hugely concerned about Brexit at this juncture, it is going to be vital for the ongoing success of the industry that the UK is able to get straightforward access to Europe and operate there without issue, otherwise we may see these concern levels rise.

Looking ahead to longer-term concerns for financial services businesses, the top concern was global economic downturn, of which 40% of firms cited this as a worry when looking beyond 2021.

Investing and adopting tech

Traditionally, the financial services sector has been slow to adopt digital transformation. Issues with legacy systems, coupled with often large amounts of data and a reluctance to undertake potentially risky change processes, have meant many firms are behind the curve when it comes to technology adoption. It’s therefore promising to see that so much has changed over the last year, with 45% of financial services firms having invested in AI and machine learning technology – making it the top sector to have invested in this space over the last 12 months.

One business that exemplifies the benefits of investing in machine learning is Avantia, the technology-enabled insurance provider behind HomeProtect. The business has undergone a large tech transformation in the last few years, investing in an underlying machine learning platform and an in-house data science team, which provides them with capabilities to return a quote to over 98% of applicants in under one second. This tech investment has allowed them to become more scalable, provide a more stable platform, improve customer service and consequently, grow significantly.

This demonstrates how this kind of tech can help businesses to leverage tech in order to offer a better customer experience, and retain and grow market share through winning new customers. This resilience should combat some of the concerns that firms will face in the next year.

Additionally, half (51%) of financial services firms have invested in cybersecurity tech over the last year, which allows them to protect the platforms on which they operate and ensure ongoing provision of solutions to their customers.

International resilience

Clearly, there is a benefit of international revenues and profits on business resilience. In practice, this meant that businesses that weren’t internationally diversified in 2020 struggled more during the pandemic. In fact, the businesses considered to be the least resilient through the 2020 crisis were three times more likely to only operate domestically.

Perhaps an attribute towards financial services firms’ resilience in 2020, therefore, was the fact that 53% already had a presence in Europe throughout 2020 and 38% had a presence in North America. This internationalisation gave them an advantage that allowed them to weather the many storms of 2020.

Looking at how to capitalise on this throughout the rest of 2021, half (51%) of are planning overseas growth in Europe over the next 12 months, and 43% in North America. Further plans to expand internationally is not only a good sign for growth, but should further increase resilience within the sector.

Conclusion

While there are many concerns, the fact that financial services businesses are investing in technology like AI and machine learning, as well as still planning to grow internationally, means that they are providing themselves with the best chances of dealing with any upcoming challenges effectively.

In order to maintain their growth and resilience throughout the next 12 months, it’s imperative that they continue to put their customers first, invest in technology and remain on the front foot of digital change.

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