Monitise General Discussion

Hi Gradders73,

Agree with all you say re African banking.  The lack of a branch network but phenomenal take-up in mobile telephones means mobile payment wallets is absolutely the best solution for these countries.  A decent article has been published on the Guardian website tonight regarding this story...

http://www.guardian.co.uk/business/2009/aug/13/african-mobile-banking-launch

There is a new research note out from Edison: http://www.edisoninvestmentresearch.co.uk/?ACT=18&ID=2171 updating on the acquisition of Vocalink by Monitise.

http://www.thedeal.com/corporatedealmaker/2009/09/roamware_wanders_into_mobile_f.php

Mobile finance, which has been called the next "killer app," is booming. Berg Insight reports the number of people transacting with their wireless devices will grow to 913 million in 2014 from just 20 million last year.

This 45-fold increase matches that produced in Post #5 above, where Monitise (via the Edison note) anticipate increasing the number of active users from 0.6m to 27m by 2014.  This would only represent 3% of the market if both growth targets are met.

And a bit more on the Berg Insight research http://www.mobiletechnews.com/info/2009/03/13/101828.html

Short piece on Growth Company Investor site on Monitise, rating it a 'Speculative Buy' at 15.75p.

CEO Alastair Lukies insists there is a ‘growing inevitability’ that the world is moving towards using mobile phones as the chief method of financial transactions.

Monitise has 60% market ‘penetration’ in the UK, with banks such as RBS, Lloyds and Nationwide its primary customers, has five of the world’s largest mobile networks as clients and is well ensconced in the US. Partnerships in India, the Middle East and Asia Pacific were joined by a new joint venture in Canada this year, and a new board appointment brings expertise and extra focus on African and other international opportunities.

Lukies is most excited by the ‘endorsement’ and opportunity inherent in the global alliance with Visa, saying ‘the deal is worth a minimum of $13m but we think it will be a lot larger’. There are over 2bn Visa cards in the world and Visa accounts for over 60% of electronic payments, each of which will now receive a text message via Monitise, which is also providing an overseas cash transfer service.

I'm not sure Nationwide is signed-up though - perhaps they mean Natwest?

Covered briefly on Alphaville today...FWIW:

NH
back to small cap corner
NH
another stock to look at
NH
Monitise
NH
which is a mobile banking and payments services company
BE
yeah, think I have heard of it
NH
well, rumours in the market of a deal with Visa in China
NH
could be pretty significant, or so I hear
BE
Shares are moving
BE
Ahead 1.5p at 14.25p

And a little bit of news from yesterday of a partnership with T-Mobile:

http://uk.news.yahoo.com/16/20090929/ttc-t-mobile-and-monitise-hook-up-6315470.html

Following Monitise's announcement that it has registered its 1 millionth customer, ahead of schedule, I see that Edison have released an update. No change to estimates, but Edison see this as supportive of their forecasts, which lead to a DCF valuation of 24p, unchaged from their figure relased after the Monitise's results. Whilst a high discount rate of 15% has been used, IMV substantial uncertainty remains concerning Monitise's prospects, as it remains early stage.

Mildly encouraging that non-exec Peter Radcliffe bought around £10K's worth of shares after the announcent, taking his total investment up to ~£60K and David Dey, another NED, added ~£7.5K's worth, taking his investment to ~£50K a couple of days before.

Regards,

Mark

African Enterprise Challenge Fund (AECF) invests $1.5m in Monitise’s new platform

November 9, 2009 – Monitise, the UK firm leading the field in international mobile banking and payments and now pioneering mobile banking in developing countries, is poised to help millions of Africans after successfully developing and testing appropriate technology for Uganda.

It will now extend its proven mobile banking and payments infrastructure and its considerable experience in its deployment to Africa in a regulatory compliant way. Most importantly this means that Monitise will support initiatives for unbanked people with a clear bridge to future banking services.

Hugh Scott, Director of AECF, said: “We very much believe that our investment of $1.5m in Monitise’s system will, in the near future, bear fruit for huge numbers of people in Africa who will gain the opportunity to unleash their saving and spending power through mobile money.”

Recent research shows that 80 per cent of people in Africa do not have a bank account but that half have a mobile phone.

Just resurrecting the thread after neglecting it for a while! 

Monitise announced two strategic relationships in this press release before Christmas:

Two new strategic relationships are today announced by Monitise, the leading international mobile banking and payments company, to develop its Mobile Money services in Asia Pacific and to extend mobile banking and payments into the world of retail. 

Monitise has reached an agreement with First Eastern, a leading Hong Kong based direct investment firm, to roll out its Mobile Money network across Hong Kong, China and other territories in the Asia Pacific region, enabling people to use Monitise’s cutting-edge mobile banking and payments services.

Monitise has also announced a strategic relationship with The Carphone Warehouse to create a ‘Mobile Money Network’, which will deliver shopping services for consumers via their mobile phones.

The ‘Mobile Money Network’ will initially be open to people in the UK in early 2010 from The Carphone Warehouse retail business in the UK, which has over 800 outlets, before being rolled out into Europe and the USA.

It aims to enable tens of millions of consumers to sign up to mobile banking services, buy goods and services, send money to their friends, top up their prepaid and loyalty cards and top up their mobile phone credit, all from a Mobile App. on their handset.

And even featured in The Sun today:

REMEMBER when a mobile phone was just a phone?

In the past few years, we've used mobiles to take photos, record videos, listen to music, surf the web and more.

But from 2010, experts say we could be using our phones as pocket-sized BANKS.

RICHARD JOHNSON, of mobile banking firm Monitise, says: "The banks have double-tested the security and in the coming year we will be texting money to each other and paying bills on our phones."

Here, he reveals ten ways we'll be ringing in the changes.

Read more: http://www.thesun.co.uk/sol/homepage/features/2787715/Get-ready-to-use-your-mobiles-for-banking.html#ixzz0bBqB6cG5

Is a cashless society on the cards?

In London, commuters are already familiar with the Oyster card, which is a pre-paid card that is swiped on entry/exit to tube stations/buses/trams (and now train stations since 1-Jan-10) with a corresponding debit being applied to your account.  There is a momentum towards this becoming the de facto way to pay in years to come to reduce the use of cash - whilst eliminating the cheque to history and perhaps even 'chip and pin' eventually.  Who might be the beneficiaries of this if (when?) it comes to pass? 

• In terms of mobile banking then I believe Monitise Plc and Billing Services Group are well placed, and are worthy of research.
• Re: contact-less payments, I'm less informed as to companies operating in this area.  The manufacturers of the chips to be inserted in mobile phones will benefit as will retailers adopting such payment methods.  The above article mentions that Barclaycard OnePulse is an early mover.

I would be interested to hear which companies other posters believe will benefit from this shift in the way we will be transacting in the future - any views?

SM

I really should create a 'Contactless Payments Technology' thread - but this will do for now !

Contactless bank cards 'to flood UK', says Visa

Speaking as the payments group unveiled its annual results, Peter Ayliffe, chief executive of Visa Europe, said 2010 would be “the tipping point” when the British consumer finally adopts the new technology, which it hopes will replace cash for small purchases.

“A number of banks want to issue contactless cards in the UK this year. We’re also seeing it across Europe,” he said.

If the roll-out is a success, Visa hopes to move contactless technology off cards and into mobile phones. Mr Ayliffe said: “This year is important as it gets the infrastructure in place for mobile payments.”

SM

Useful short interview with Monitise Americas Managing Director on the direction mobile payment platforms will take this year, with expectations of rapid adoption globally:

What are the three most important applications that you believe will be developed and deployed for mobile platforms in the US in the next year? In developing economies?

• Banks providing simple person-to-person payment capability, 'mobile checks'
• Use of mobile to authenticate online payments
• In developing markets, moving beyond mobile wallets and P2P to see truly interoperable ecosystems where payments can be made between bank accounts and mobile wallets and therefore the full gamut of mobile commerce can start to develop.

http://pymnts.com/5-burning-questions-on-mobile-platforms-monitise-america-s-soren-bested/

Useful website too for a glimpse into the world of 'Payments' !

SM

Davos Special Report: Africa rising

Far more visible, of course, is the cell phone. One person in three has one: in 2007 Africa had 270 million of them, according to industry association GSMA, up from 50 million in 2003. The uptake shows little sign of slowing as five years of annual growth above 5 percent swell the middle classes.

Mobile money transfer systems such as M-PESA from Kenya's Safaricom (SCOM.NR) have allowed people with no bank accounts -- still the vast majority -- to ping money to each other for a fraction of the cost of transfers or a bus ride to deliver cash.

The system has evolved to incorporate an array of payments from taxi fares to food, drinks and movie tickets, making it possible to spend a whole day in Nairobi without carrying cash. Cities, towns and villages are cluttered with billboards advertising the latest cell phone service or gimmick.

The macroeconomic effect is huge.

A World Bank study released in November suggested half the 5 percent growth Africa enjoyed from 2003-08 was due to improvements in infrastructure, mainly telecommunications.

"Cell phones have already transformed many economies in Africa," said Arthur Goldstuck, head of Johannesburg-based technology research firm World Wide Worx. "But the cell phone will become far more important than it is now."

Researchers of M-PESA's impact on Kenya say it is boosting rural incomes by as much as 30 percent, allowing small farmers to diversify out of subsistence agriculture.

http://www.reuters.com/article/idUSTRE60P04120100126

Moni issued interims yesterday with the following highlights:

Financial Highlights
o  57% growth in revenue to GBP1.7m (H1 2009: GBP1.1m)
o  Annualised run rate revenue grew to GBP5million in December 2009, a 66% increase on June 2009
o  Approximately 1.75 million registered customers today, more than one million up from 30 June 2009 and growing by over 150,000 per month
o  Improved mix of revenue, with transactional fees reflecting almost 50% of H1 revenues

o  Operating loss, before share based payments and exceptional item*, of GBP6.9m (H1 2009: GBP6.0m) reflecting:
o  Increased investment following the acquisition of the remaining 50% of Monilink (GBP6.0m operating loss excluding the impact of Monilink acquisition)
o  Continued investment in geographical expansion and product development

o  Financial position benefits from significantly strengthened cash resources:
o  Cash balance of GBP9.5m on 31 December 2009
o  Up to GBP15.8m additional funding in place post period end from a combination of new and existing investors:
* GBP7.4m subscription completed in January 2010
* GBP8.4m conditional subscription and warrant anticipated in first quarter 2010

Strategy Update
·      Investments
* Agreement with Travelex to provide services to 1.75m Cash Passport cardholders
* Heads of Terms announced for Asia Pacific joint venture with First Eastern
* Progressing with joint venture agreements in India and Africa
* Developing significant new retailer proposition with The Carphone Warehouse

Outlook
·      Strong growth in registered customers expected to continue throughout the year as new services are launched and new markets come on stream
·      Continuing increase in revenue driven by recurring fees from value added services
·      UK Operations on track to reach month-on-month cash breakeven this year
·      Continued investment in joint ventures and new initiatives to maximise growth in shareholder value

*Exceptional item relates to a one-off GBP1.0m profit from accounting treatment of Monilink acquisition

Alastair Lukies, Chief Executive Officer, Monitise, said:

"Mobile money has now taken off; it is no longer just an opportunity for the future. As of today 1.75 million people have registered for our services and we expect the rapid growth in customer registrations to continue.

"Our customers are moving up the value chain: using more of our services, more often as they upgrade to even more valued propositions. The launch of our portfolio of smartphone apps has taken the banking market by storm.

"I am equally excited by our international growth strategy and our excellent relationship with Visa. We look forward to swift completion of our ground breaking joint venture to develop the Asia Pacific market with First Eastern. We shall have true global reach in 2010.

"Add to this the enormous potential of our development of new retailer propositions with The Carphone Warehouse, enabling a wide range of mobile shopping services, and the geographical and service expansion arms of our strategy are in great shape."

Edison issued a new note yesterday afternoon, with lower revenue data in this year, and those following, but with profitability still forecast for mid-2012.

SM

MONI will have a new competitor in the field of mobile banking, as Intelligent Environments has this morning issued news of a move into the mobile banking space following a successful placing at 9p (closed at 8p yesterday).

http://www.investegate.co.uk/Article.aspx?id=201002170700042410H

Intelligent Environments Group plc (AIM Ticker: IEN), the online software provider for financial services, is pleased to announce that it has successfully raised £0.75m, gross, by way of a placing of 8,340,868 ordinary shares of 1p at a price of 9p. The new shares were placed with established institutional shareholders and the Company's Chairman also subscribed. 

The funds raised will be used to develop IE's NetFinance mobile banking platform in order to address the significant mobile banking opportunity in the UK as well as internationally.  

IE's planned mobile solution will service this demand and provide a comprehensive mobile banking service to bank customers which will supersede the current services on offer which are cut-down versions of internet banking services which focus on basic ATM transactions.  [is this a dig at MONI's text-based alert system that all UK banks have adopted?]

IE's offering will provide a secure, branded platform, enabling consumer banking customers to see their banking details across all of their accounts from current, saving to credit card as well as a complete summary of account activity which will include money in, money out , pending transactions, available balances as well as overdraft limits.  

IE is currently recruiting a development team, with a completed mobile banking solution scheduled for launch in April [wildly optimistic I'd have thought - else MONI have spent a fortune and have no first-mover advantage].  The lead platform will be the Apple iPhone, followed quickly by support for the Android, Blackberry and Windows mobile platforms.

SM

Received the circular regarding MONI's "long term executive incentive scheme" today. Also available on their website: http://www.monitisegroup.com/pdf/217366_Monitise_Circular.pdf

I must say that I find it rather distasteful. From the last AR, I observe that Lukies received a salary + bonus package of £322K. AIUI The new proposal allows for awards of up to 3x base salary (base salary being close to £200K), as share awards.

Considering that MONI is still a long way from profitability, I find these awards excessive - and the existing salary quite large enough under the circumstances. It's time a stand was made against excessive awards.

Regards,

Mark

Prelims for the year to 30 June released this morning.

Still loss-making for the year, in part due to to acquiring 50% of Monilink it didn't own, but predicts becoming month-on-month break-even during FY12.  Valued at ~£150m, with £42m in cash following a post-year-end fundraising of £31m (taken up by large holders VISA and First Eastern), but still a lot of growth priced in.

FINANCIAL HIGHLIGHTS

·      Revenues of GBP6.0m
o  125% year on year growth (2009: GBP2.7m)
o  Significant increase across all revenue types, led by transactional revenues
o  Transactional revenues of GBP2.9m (2009: GBP0.5m), now nearly 50% of Group
revenues
o  Licence revenues GBP1.7m (2009: GBP1.1m), consultancy revenues GBP1.4m
(GBP1.1m)
o  H2 revenues of GBP4.3m, up 150% on first half (H1 2010: GBP1.7m)

·      Increased investment in H2 for future operations and technology platform
·      Adjusted* operating loss of GBP14.3m (2009: GBP12.0m)
·      Statutory operating loss of GBP17.1m (2009: GBP13.7m)

*(excluding share based payments and exceptional gain)


OPERATIONAL HIGHLIGHTS

·      Strong growth in core business:
o  100% ownership of UK joint venture, Monilink, renamed Monitise Europe, from
August 2009
o  Monitise Europe on track to reach month on month cash break-even by December
2010
o  Over 200 banks signed up in the US
o  Well over 2 million registered customers

·      Key partnerships broaden global footprint:
o  Global Alliance Agreement with Visa Inc extended through to 2015
* Visa smartphone app. ready for launch in the US, one of many services under
development between Visa and Monitise
* Minimum revenue commitment over new term increased from $13m to $16m
* JV formed in India to launch a wide range of services
o  Partnership with First Eastern, a leading Hong Kong based direct investment
firm
* JV formed to rollout Mobile Money across Asia Pacific region
* Initial deployment in Hong Kong planned for FY11

CNBC interview with CEO, Alistair Lukies from this morning, discussing the potential of mobile banking:

http://www.cnbc.com/id/15840232?video=1574265653&play=1

I touched upon "contactless payments" technology further up the thread, and see that Monitise Plc (LON:MONI) has today issued this announcement regarding the launch of a new service that will convert mobile phones into 'wave & go' mobile wallets.

MONITISE LAUNCHES ADVANCED CONTACTLESS PAYMENTS TECHNOLOGY FOR SMARTPHONES

 Monitise (LSE:MONI.L), the global leader in Mobile Money solutions, today announced a partnership with DeviceFidelity to launch the world's most advanced mobile payments technology that will allow mobile phone users to conduct Visa payWave transactions.

The new service uses Monitise's Mobile Money Manager technology platform , to which over 250 financial institutions are signed up globally, and will allow smartphone users to pay retailers simply by 'swiping' their handset over a pay point.

For me, this is the transformational product that will change the way customers conduct transactions in retailers, and takes Monitise to a new level beyond its mobile banking product applications.

I would not be surprised if VISA made a play for MONI in the medium-term, to gain control of the 85% of the company it does not already own.

This is the VISA payWave system that Monitise's solution will utilise.

Having been out of Moniise for a while, I used recent price weakness, combined with a very encouraging trading update on 14th December as an opportunity to retake a small initial position in this company. Today's announcement has prompted me to double up on that position this morning. Here's why (besides the exciting outlook promised by Visa!):

According to the 14th December announcement, for the 6month period to 31st December :

...Bank transfers and payments processed via the Monitise technology platform have risen to more than £1bn in the year to date. The corresponding figure for the whole of 2010 was £600,000....

Today's announcement says:

On a current weekly annualised basis, the value of mobile payments and transfers across the Monitise technology platform is over £6 billion and rising," said Monitise Group Chief Executive Alastair Lukies.

implying £3bn on a 6 month basis, i.e. 300% growth within one 6 month period. Now that's what I call explosive growth! This company does now seem to be delivering on its promise.

The shares aren't cheap, especially considering that Monitise hasn't turned a profit yet, but the potential here seems truly mind blowing. Also worth noting that Visa invested @ 35p per share last October - they clearly think it's worth more than the current SP suggests.

Cheers,

Mark