FONIX PLC

Share Issue/Capital Change • Oct 7, 2020

National Storage Mechanism | Additional information

RNS Number : 3010B

Fonix Mobile PLC

07 October 2020

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD BE UNLAWFUL. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF THE SECURITIES LAWS OF THESE JURISDICTIONS.

This announcement is not an admission document or a prospectus and does not constitute or form part of an offer to sell or issue or a solicitation of an offer to subscribe for or buy any securities in any jurisdiction, including in or into the United States, Australia, Canada, Japan, the Republic of South Africa or any other jurisdiction where to do so might constitute a violation or breach of any applicable law nor should it be relied upon in connection with any contract or commitment.  Investors should not purchase any shares referred to in this announcement except on the basis of information in the admission document (the "Admission Document") to be published by Fonix Mobile plc on or around the date of this announcement in connection with the proposed admission of all of its issued ordinary shares of 0.1 pence each ("Ordinary Shares") to trading on AIM, a market operated by the London Stock Exchange plc ("AIM")("Admission").  Copies of the Admission Document will be available from the Company's website at www.fonix.com.

Please see the important notices at the end of this announcement.

Fonix Mobile plc

("Fonix" or the "Company")

Proposed Admission to trading on AIM

and

Successful £45 million Secondary Placing

Fonix, the UK focused mobile payments and messaging company enabling businesses to charge users' mobile bills and send users SMSs via their Carrier, is pleased to announce that it has sought admission of its entire issued ordinary share capital to trading on AIM, following a successful institutional placing of 50,000,000 existing Ordinary Shares (the "Placing").  Application has been made for Admission which is expected to occur at 8.00 a.m. on 12 October 2020 under the TIDM "FNX".

Key highlights

·      The Placing, which is conditional upon, amongst other things, Admission, comprises a placing of 50,000,000 existing Ordinary Shares (the "Placing Shares") in each case at 90 pence per Ordinary Share (the "Placing Price") with institutional and other investors

·      finnCap Ltd ("finnCap") is acting as Nominated Adviser and sole broker to the Company in relation to the Placing and Admission

·      As part of the Placing and in response to strong institutional demand for the Ordinary Shares, certain existing shareholders including directors and employees of the Company will receive gross proceeds of £45 million from the Placing through the sale of the Placing Shares at the Placing Price

·      On Admission, the Company will have 100,000,000 Ordinary Shares in issue and a market capitalisation of £90 million at the Placing Price

·      The Company's ISIN is GB00BN789668 and its SEDOL is BN78966.

Rob Weisz, Chief Executive of Fonix Mobile plc commented:

"We are delighted to announce the proposed Admission to AIM of Fonix. Admission to AIM will help raise the profile of the Company as we look to deliver on our growth ambitions.

The Company has had a strong start to the current financial year. We continue to deliver on our growth strategy by driving up the number of transactions that occur on the platform and expanding on the content and services provided from both existing and new Clients.

We would like to thank our existing shareholders for their ongoing support and welcome our new shareholders at this exciting time for the Company."

For further Information please contact:

Fonix Mobile plc Robert Weisz, CEO Rupert Horner, CFO	+44 (0)20 8114 7000
finnCap Ltd (Nominated Adviser & Sole Broker) Jonny Franklin Adams, Giles Rolls, Kate Washington (Corporate Finance) Alice Lane, Sunila de Silva (ECM)	+44 (0)20 7220 0500

Background to Fonix

Fonix is a UK focused mobile payments and messaging company, enabling businesses to charge users' mobile bills and send users SMSs via their Carrier.

Founded in 2006, Fonix allows mobile network operators ("MNOs") to provide additional services in the form of Carrier Billing, SMS Billing, Messaging and Voice Shortcodes. Fonix has over 100 Clients including ITV, Bauer Media, BT, Global Radio and BBC Children In Need across a range of multi-billion pound sectors such as media, gaming, charity, ticketing and digital services. Fonix offers its clients access to the customer base of the MNOs.

Performance highlights include:

·      £7.7m EBITDA (y/e 30 June 2020), representing 53% CAGR since FY18

·     Dividends of £6.053m paid in FY20 and £5.055m in FY19, with an intention to adopt a 75% of adjusted earnings per share dividend policy moving forwards

·      Total payment value growth to over £211.7m in FY20

Clients

Fonix has developed robust and high throughput technology and, through deep sector expertise across key verticals including media, gaming, charity, ticketing and digital services strong, lasting relationships with its Clients and MNOs. Fonix is focused on mature, highly regulated markets where Clients and MNOs require a reliable and bespoke service which Fonix is well placed to cater for with a team of highly experienced industry experts.

Market Overview

Research suggests significant global growth potential of Carrier Billing from $29.8bn in 2019 to $70bn by 2027. 

The market is characterised by three distinct sectors:

App stores and global players

The dominant global app stores, including the Apple App Store and Google Play, together with global brands such as Spotify and Netflix, continue to roll out Carrier Billing alongside traditional payment methods across the globe supported by a small number of service providers (sitting in a similar place to Fonix in the value chain). This is a high volume market with correspondingly low margins for service providers. Fonix does not currently focus on this market.

High value brands

High value, often regional services including broadcasters (such as BT Sport), sports rights holders and digital services (such as Bumble, Hopster). This is Fonix's area of focus.

Low-value content

Low value, high margin services, often targeted at emerging markets with low regulation, such as ringtones and wallpapers. Fonix does not currently focus on this market.

The Company's Growth Strategy

The level of interaction by the Consumer is critical to the future growth of Fonix. Fonix's growth strategy is therefore based on increasing the number of transactions that occur on the platform, with content and services provided from both existing and new Clients. The Fonix platform and products are highly scalable with significant capacity for expansion in growing markets, not just with new Client wins but also through upselling existing Clients and product development. Since FY2018, Fonix has achieved 53% CAGR organic growth in EBITDA.

Sector Focus

The Company has a sector focussed growth strategy as follows:

Media: consisting primarily of TV, radio, print and digital publishers, this is Fonix's largest market. The TV engagement market is estimated to be c.£146m  and the pay TV market c. £7bn . On a global basis the OTT market is thought to be $68bn. The growth strategy is to improve upon Fonix's position in the SMS Billing market, increase market share by focusing on Carrier Billing into TV, print and radio paywalls and support Clients moving into international markets. Fonix expects existing Clients to continue to offer significant growth opportunities.

Charity: this is a large market that is underdeveloped in terms of Carrier Billing. In the UK alone £10bn  was donated in 2019 of which only £40m was through Carrier Billing. The focus will be to continue to drive Fonix's market leading 'text to donate' and 'click to donate' products in the UK.

Gaming: a large market which is underserved by Carrier Billing. The UK online gaming industry is estimated to be worth £5.5bn of which only £43m uses Carrier Billing, with additional opportunities for international roll out of existing Clients.

Digital services: this covers growing markets including dating ($1.75bn), fitness/diets ($192bn) and car parking (£1.75bn).

Current trading and prospects

The Company continues to trade in line with management's expectations. Trading in the first two months of the year has been strong and the business remains resilient to the economic impact of the coronavirus pandemic.

The Company continues to deliver on the technical roadmap to support both its existing client needs as well as to attract new business opportunities.

Management team

Edward Spurrier - Non-executive Chairman

Edward currently holds a number of chairmanships in entrepreneurial technology companies. Edward joined Alternative Networks Limited as Finance Director, progressing to CFO, during which time he assisted in its successful AIM IPO. Subsequently he became CEO, prior to Alternative Networks plc's sale to Daisy Group in 2016. Edward has extensive experience in both the AIM market and technology sector. Edward successfully ran his own chartered accountancy firm, Spurrier & Co, where he had over 80 clients, some of which he acted for as quasi Financial Director. Edward qualified as a Chartered Accountant at Coopers Lybrand (now PWC).

Robert Weisz - Chief Executive Officer

Rob has held several senior positions in technology companies including Commercial Director at Mobile Interactive Group Ltd and most recently, Chief Executive Officer at Fonix. Prior to this, Rob was a Commercial Partnership Manager at O2 (UK) where he worked within Interactive Services, holding responsibility for new business and account management. Rob has had extensive experience working in both public and private companies within the telecoms and technology sectors. Rob began his career at Thus Plc, working in business development and account management where he was responsible for a number of key clients including the US Embassy and The Telegraph Group.

Rupert Horner - Chief Financial Officer

Rupert joined Thompson Investments (London) Limited ("Thompson Investments"), the family investment company of David Thompson, as an acquisitions manager. During his tenure at Thompson Investments, Rupert held directorships of several subsidiaries including a fully listed property company. Rupert has significant other public company experience, including having successfully helped both Secora plc and Gotech plc admit to trading on AIM. Rupert was introduced to Fonix during his time at Thompson Investments and became a founding shareholder in Fonix. Rupert began his career at Peat Marwick Mitchell (now KPMG) where he qualified as a Chartered Accountant.

William Neale - Founder and Non-Executive Director

In 2006, Will founded Fonix Mobile Limited, which has grown to be a leading mobile payments and messaging company. In 2013, Will founded Grabyo, a cloud-based video production, editing and distribution company. Will is a serial investor having invested in over 40 early stage companies, including Revolut, Marshmallow and proSapient.

Will began his career at Accenture where he worked within technology consulting, specialising in mobile telecoms.

Lucinda Sharman-Munday - Non-executive Director

Lucinda is currently CFO of Eagle Eye Solutions Group Plc a role she has held since July 2014. Prior to this, she was the CFO of the 5one group, the global consultancy providing services, analysis and software to help retailers achieve a customer-centric strategy. The global role covered Europe, South Africa and setting up America. Prior to this she worked for Adapt Group Ltd, and in 2006 iSOFT plc as an integral part of the turn-around team that successfully sold the business to IBA Health Group at the end of 2007. Lucinda began her career at KPMG in 1999 where she qualified as a Chartered Accountant.

Important notices

Capitalised terms used in the Admission Document have the same meanings in this announcement.

Neither this announcement nor any copy of it may be taken or transmitted, published or distributed, directly or indirectly, in, into or from the United States of America (including its territories and possessions, any state of the United States and the District of Columbia (the "United States" or the "US")), Canada, Australia, the Republic of South Africa, the Republic of Ireland, Japan or to any persons in any of those jurisdictions or any other jurisdiction where to do so would constitute a violation of the relevant securities laws of such jurisdiction (each a "Restricted Jurisdiction").  Any failure to comply with this restriction may constitute a violation of United States, Canadian, South African, Irish or Japanese securities laws.

This announcement does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any shares or other securities in any Restricted Jurisdiction.  The Placing and the distribution of this announcement and other information in connection with the Placing and Admission in certain jurisdictions may be restricted by law and persons into whose possession this announcement, any document or other information referred to herein comes should inform themselves about and observe any such restrictions.  Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.  Neither this announcement nor any part of it nor the fact of its distribution shall form the basis of or be relied on in connection with or act as an inducement to enter into any contract or commitment whatsoever.

In connection with the Placing, finnCap and any of its affiliates, acting as investors for their own accounts, may subscribe for or purchase Ordinary Shares and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such Ordinary Shares and other securities of the Company or related investments in connection with the Placing or otherwise.  Accordingly, references in the Admission Document to the Ordinary Shares being offered, subscribed, acquired, placed or otherwise dealt in should be read as including any offer to, or subscription, acquisition, placing or dealing by finnCap and any of its affiliates acting as investors for their own accounts.  In addition, finnCap or its affiliates may enter into financing arrangements and swaps in connection with which it or its affiliates may from time to time acquire, hold or dispose of Ordinary Shares.  finnCap has no intention to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

finnCap which is authorised and regulated in the United Kingdom by the Financial Conduct Authority is acting exclusively for the Company and no one else in connection with Admission, and finnCap will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to Admission or any other matters referred to in this announcement.

Neither finnCap, nor any of its subsidiary undertakings, affiliates or any of its directors, officers, employees, advisers, agents or any other person accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to the truth, accuracy, completeness or fairness of the information or opinions contained in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection therewith and any liability therefore is expressly disclaimed.

This announcement may include statements that are, or may be deemed to be, "forward-looking statements".  These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will", or "should" or, in each case, their negative or other variations or comparable terminology.  These forward-looking statements include matters that are not historical facts.  They appear in a number of places throughout this announcement and include statements regarding the directors' current intentions, beliefs or expectations concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth, strategies and the Company's markets.  By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances.  Actual results and developments could differ materially from those expressed or implied by the forward-looking statements.  Forward-looking statements may and often do differ materially from actual results.  Any forward-looking statements in this announcement are based on certain factors and assumptions, including the directors' current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's operations, results of operations, growth strategy and liquidity.  Whilst the directors consider these assumptions to be reasonable based upon information currently available, they may prove to be incorrect.  Save as required by applicable law or regulation, the Company undertakes no obligation to release publicly the results of any revisions to any forward-looking statements in this announcement that may occur due to any change in the directors' expectations or to reflect events or circumstances after the date of this announcement.

The price of shares and any income expected from them may go down as well as up and investors may not get back the full amount invested upon disposal of the shares.  Past performance is no guide to future performance, and persons needing advice should consult an independent financial adviser.

Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this announcement.

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