TIDMPROX
RNS Number : 5860Z
Proxama PLC
21 September 2015
PROXAMA PLC
Half-Yearly Results
For the six months to 30 June 2015
Proxama plc (AIM: PROX, "Proxama" or the "Company"), the
international mobile proximity commerce company, announces its half
year results for the six months ended 30 June 2015
Highlights
-- Generated revenues and other income of GBP1.0 million (2014: GBP0.35 million)
-- EBITDA before exceptional items loss of GBP3.48m (2014: GBP2.52million)
-- Cash as at 30 June 2015: GBP1.6m
-- Loss per share 0.44p (H1 2014 0.32p)
-- New GBP2.5 million debt facility agreed with Barclays Bank
Technology, Media & Telecoms, to support the Company in
achieving its commercial objectives
-- Good progress by Proximity Marketing Division signing 9 new strategic contracts during 2015
-- On target to establish the largest beacon infrastructure
network in the UK with currently over 10,000 locations exclusively
under contract
-- Digital Payments Division have signed 4 material long term
contracts and 3 partnership agreements so far during 2015. Further
significant new contracts wins expected in H2
-- Significant advancement in Technology development across both Divisions
-- Market trends across the globe for both divisions are favourable
David Bailey, Chairman of Proxama, said, "Proxama continues to
make significant investment across both divisions, delivering
infrastructure and technology to facilitate the delivery of
proximity marketing campaigns via mobile phones, and enable card
issuers to migrate customers from magnetic stripe credit and debit
cards to contactless mobile payments. Marketing engagement via
mobile phones and mobile phone payments are now everyday
occurrences demonstrating that the Business is in a rapidly growing
space. In addition, our belief is that the Company's infrastructure
and technology will form an invaluable part of the emerging
'internet of things' (IoT).
Reflecting this, the Company has won key contracts with market
leaders in their respective sectors and geographies, however,
revenues from these and other potential contracts have been slower
to materialise than hoped at the outset of the year.
Managing the Group's costbase whilst supporting further
investment was a primary focus during the first six months. The
significant overhaul reduced Group overheads by GBP1.7 million on
an annualised basis. Having now secured the new debt facility, this
will help support the Group in achieving its future commercial
objectives. "
Enquiries:
Proxama PLC
John Kennedy, Chief Executive 020 3668 2888
Peel Hunt LLP
(Nominated Adviser and Broker)
Richard Kauffer 020 7418 8900
Euan Brown
Novella PR
Tim Robertson 020 7630 3843
Ben Heath
About Proxama
-- Proxama is an international mobile commerce Company operating
across two divisions specialising in proximity marketing via mobile
and providing end-to-end solutions for card issuers to migrate
customers from magnetic stripe credit and debit cards to
contactless mobile payments.
-- The technology to support mobile payments is now in place.
90% of the world's smartphones have technology to make mobile
payments and in 2015 30 million contactless mobile payments are
expected to be made compared to 3 million in 2014.
-- Proxama has been at the forefront of this market for the last
10 years. Today, Proxama's solutions are used by banks, financial
institutions, loyalty companies, media owners, stadium owners,
retailers and brands. Current clients include: Diners Club, Navy
Credit Union, Fiserv, Nets, Exterion Media, Harrods, O2 and
Ubiquitous.
-- The Proximity Marketing Division:
o focuses on connecting consumers to brands and retailers via
Bluetooth Low Energy (BLE) beacon technology and Near Field
Communication (NFC). Proxama establishes and owns beacon
infrastructure networks in high footfall locations such as City
Centres, transport networks, stadia, shopping malls, entertainment
hubs and retail outlets, which are then able to communicate to
consumers via messages to mobiles when the consumer is in close
proximity to a beacon. The technology platform at the heart of this
division is TapPoint(R).
-- The Payments Division:
o manages end-to-end credit and debit cards solutions on behalf
of financial institutions in the United States, Europe, Africa and
the Middle East and specialises in enabling the migration of cards
from magnetic stripe cards, to chip and pin cards and from
contactless chip cards to mobile devices. The technology behind
this division is Proxama's Digital Enablement Platform.
Chairman's Statement
The level of interest from existing and potential customers in
both Proximity Marketing and the Payments Division is high, as the
market trends in the UK and abroad are favourable. There is no
doubt all mobile phones around the world will increasingly be used
for receiving marketing information on a location basis and Proxama
are a UK leader in this field with the largest infrastructure
network being established, driven by our award winning technology.
Similarly, there is a global move for card issuers to migrate
customers from magnetic stripe credit and debit cards to
contactless mobile payments and Proxama has a leading position in
this market too.
Revenues achieved in the first 6 months reflected the increased
size of the business and were up on the same period last year. The
second half of this financial year has seen the Company announce
important new contracts with Ubiquitous, another leading media
owner partnership and a leading Middle Eastern bank and we expect
to announce further deal flow during the current period, however, a
number of potential contracts have taken longer to complete and
revenues from existing agreements have been slower to generate
revenues than anticipated.
Whilst slightly disappointing to announce the slower than
expected conversion rate, I would emphasise that the fundamentals
for the business remain strong and the rails have been laid for the
future. Consequently we are confident the take-up of our products
in market will reflect this in time.
Results
The financial performance of the Group reflected the increased
size of the business following the acquisition of Aconite in
December 2014 with revenues increasing to GBP1.0 million and the
increased overhead of the enlarged business resulting in a pre-tax
loss before exceptional items for the period of GBP3.8 million.
Looking ahead, the Company has reduced costs on an annualised
basis by approximately GBP1.7m principally through the reduction of
staff numbers. Overall expenditure increased due to the costs
associated with the integration of the Aconite acquisition,
investment in the technology build out across both divisions and
associated infrastructure build.
As at 30 June 2015, the Company has a net cash balance of GBP1.6
million and has today announced a new GBP2.5 million debt facility
with Barclays Bank Technology, Media & Telecoms for 2
years.
As announced in May 2015, the Company secured a second grant for
GBP1 million from Innovate UK as part their aim to strengthen the
UK's high streets.
The Board is not recommending the payment of an Interim
dividend.
Operating Review
Proximity, or location based marketing as it is known in the
United States, is growing rapidly. Globally the trends are
favourable, today on average 68 percent of consumers who have
downloaded a brand's app have enabled push notifications. (Source:
Responsys). Similarly, mobile offers are now redeemed 10x more
frequently than print offers. (Source: eMarketer). These types of
trends are indicative of the way consumers are seeking and
obtaining information and offers on brands they are interested
in.
Today, Proxama has the largest beacon infrastructure network in
the UK with over 10,000 locations exclusively 'owned' currently
significantly ahead of our 10,000 target by the end of 2015.
Establishing this infrastructure network in key places,
complimented by our award winning technology, represents the
backbone of this division with the potential to reach tens of
thousands of people every day in a highly targeted manner.
In 2015, we have signed agreements with leading media owner
partners Exterion Media, Eye Airports and Ubiquitous which has
allowed us to create this network of beacons across the airports,
London buses and black cabs. Our partners are all leaders in their
target markets and have existing corporate clients seeking to
connect with their potential customers who from now can be offered
a proximity marketing programme alongside their more traditional
advertising campaigns.
In the second half of this financial year, the Proximity
division expects to sign further key contracts with media owners
and looks forward to announcing the commercial advertising
campaigns to be run through our technology, on our networks.
The Digital Payments division has announced four new long term
clients during the period, the largest of which is Navy Federal who
Proxama has the responsibility to migrate to EMV, the international
standard for chip and PIN cards, and on-going lifecycle management
of Navy Federal's portfolio of approximately four million debit
cards. The division also won contracts with Diners Club (South
Africa), a large European processor and a leading middle-eastern
bank taking the company into another new geographic territory and
providing a range of services. To support the Division's
international capabilities the Company signed three strategic deals
with Sygnity, Stanchion and Reward Technology all leaders in their
respective fields and with close ties to the Company.
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In the second half of the current financial year, we anticipate
announcing further contracts with financial institutions. In the
US, card issuers are now required to migrate their customers to
chip and PIN and so there is likely to be growing pressure on them
to do so. Proxama is a proven player in this market and is well
placed to benefit.
Product development
Our product development platform is perfectly aligned with what
the industry needs to support global deployment of mobile wallets,
the ultimate aim of the Company. Market opportunity is even greater
now Android Pay and Samsung Pay are launched although it takes time
for Companies to understand the options and make long term
decisions. Demand for our Digital Enablement Platform(TM) (DEP) is
building especially for processors who need an in-house solution
for tokenisation and maintain low cost 'on-us' transactions.
Similarly, local debit schemes are a key target market as they will
need DEP to support their own domestic mobile payment solutions.
The long-term pipeline for the business is healthy, technology is
advanced and these represent a significant barrier to entry for
newcomers to our marketplace.
Outlook
Proxama's divisions are well placed across two growth markets
and have made good progress in establishing a commercial position
in both. The Board is confident that, with the cost reductions
made, debt facility in place and contract wins and pipeline of
opportunities, the Group will achieve cashflow breakeven by
mid-2016.
That the world is moving towards mobile payments and receiving
marketing messages via mobile is a given, our role is to use the
infrastructure we are establishing to take advantage of the
opportunities these trends offer.
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2015
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
Unaudited Unaudited Audited
GBP GBP GBP
Revenue 964,033 350,420 650,978
Cost of sales (49,612) (178,855) (741,489)
------------- ------------ -------------
Gross profit 914,421 171,565 (90,511)
Administrative expenses (4,829,266) (2,805,908) (5,806,178)
Administrative expenses
- exceptional item (656,250) - (109,375)
Other operating income 35,527 26,091 147,296
------------- ------------ -------------
Operating loss (4,535,568) (2,608,252) (5,858,768)
Finance income 9,515 19,133 31,261
Finance expense (72,781) (34,588) (72,121)
Loss on ordinary activities
before taxation (4,598,834) (2,623,707) (5,899,268)
Taxation 113,879 69,588 275,291
Loss for the period (4,484,955) (2,554,119) (5,623,977)
============= ============ =============
Loss per share - basic
and fully diluted (0.44p) (0.32p) (0.68p)
The accompanying notes are an integral part of these interim
financial statements
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2015
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
Unaudited Unaudited Audited
GBP GBP GBP
Loss for the period (4,484,955) (2,554,119) (5,623,977)
Foreign exchange difference
arising on consolidation
Other comprehensive income/(expense) (14,964) - 8,162
------------- ------------- -------------
Total comprehensive loss
for the period
attributable to equity
holders (4,499,919) (2,554,119) (5,615,815)
============= ============= =============
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2015
As at As at As at
30 June 30 June 31 December
2015 2014 2014
Unaudited Unaudited Audited
GBP GBP GBP
Assets
Non-current Assets
Intangible assets 4,634,819 677,855 4,921,777
Property, plant
and equipment 183,674 184,860 199,729
-------------
4,818,493 862,715 5,121,506
Current Assets
Trade and other
receivables 793,622 459,785 959,962
Current tax receivable 519,923 242,311 649,087
Cash and cash equivalents 1,610,371 5,326,656 5,503,567
------------- ------------- -------------
2,923,916 6,028,752 7,112,616
Current Liabilities
Trade and other
payables (2,070,111) (515,800) (1,976,627)
Current portion
of long-term borrowings (964,149) (10,887) (563,676)
-------------
(3,034,260) (526,687) (2,540,303)
Net Current Assets (110,344) 5,502,065 4,572,313
------------- ------------- -------------
4,708,149 6,364,780 9,693,819
Non-current liabilities
Non-current borrowings (8,403) (528,466) (560,194)
Deferred Tax liabilities (553,600) (624,000)
-------------
Net Assets 4,146,146 5,836,314 8,509,625
============= ============= =============
Equity
Share capital 10,194,393 8,092,336 10,187,672
Share premium account 8,703,332 6,338,332 8,703,332
Share based payment
reserve 729,169 460,705 599,449
Merger relief reserve 11,605,556 10,960,607 11,605,556
Translation Reserve (6,802) 8,162
Capital reserve 209,791 209,791 209,791
Equity reserve 546,178 55,200 546,178
Other reserve (9,225,108) (9,225,108) (9,225,108)
Retained earnings (18,610,363) (11,055,549) (14,125,407)
------------- ------------- -------------
Total Equity 4,146,146 5,836,314 8,509,625
============= ============= =============
CONSOLIDATED CASH FLOW STATEMENT
AS AT 30 JUNE 2015
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
Unaudited Unaudited Audited
GBP GBP GBP
Cash flows from operating
activities
Loss before taxation (4,598,834) (2,623,707) (5,899,268)
Adjustments for:
Depreciation of property,
plant and equipment 51,964 37,882 93,183
Amortisation of intangible
assets 418,763 52,081 42,520
Profit on disposal of
assets - (5,129) (5,129)
Loss on disposal of intangibles - - 53,361
Financial income (9,515) (19,133) (31,621)
Financial expense 72,781 34,588 72,121
Share-based payments 129,720 128,382 267,126
(3,935,121) (2,395,036) (5,407,707)
Decrease/(Increase) in
trade and other receivables 166,340 8,487 (168,180)
Increase/(Decrease) in
trade and other payables 93,483 (223,233) (207,902)
---------------
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Cash used in operations (3,675,298) (2,609,782) (5,783,789)
Income taxes received 172,643 - -
Net cash used in operating
activities (3,502,655) (2,609,782) (5,783,789)
Cash flows from investing
activities
Interest received 9,515 19,133 31,621
Purchase of intangible
assets (131,805) (309,280) (817,715)
Purchase of property,
plant and equipment (35,909) (127,620) (196,863)
Sale of property, plant
and equipment - 12,627 12,627
Cash on acquisition - - 18,178
Net cash used in investing
activities (158,199) (405,140) (952,152)
Cash flows from financing
activities
Interest paid (41,617) (2,633) (6,976)
Issue of share capital 6,721 920,000 4,937,596
Share issue costs - (25,463) (60,463)
Proceeds from issue of - - -
convertible notes
Repayment of borrowings (182,482) (19,144) (107,629)
--------------- ------------ -------------
Net cash from financing
activities (217,378) 872,760 4,762,528
Net decrease in cash and
cash equivalents (3,878,232) (306,660) (1,973,413)
Cash and cash equivalents
at beginning of period 5,503,567 361,379 7,468,818
Exchange differences on
cash and cash equivalents (14,964) - 8,162
=============== ============ =============
Cash and cash equivalents
at end of period 1,610,371 54,719 5,503,567
=============== ============ =============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 JUNE 2015
Share Share Capital Translation Merger Share Convertible Other Retained Total
capital premium reserve Reserve relief based loan reserve earnings
reserve payment
reserve
GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP
At 1 January
2014 7,724,336 5,811,795 209,791 - 10,960,607 332,323 55,200 (9,225,108) (8,501,430) 7,367,514
=========================== ===================== ======================== ====================== ============================ ========================= ========================= ======================== =========================== ========================
Income
statement
for the
period - - - - - - - - (2,554,119) (2,554,119)
Total
comprehensive
income
for the
period
attributable
to equity
holders - - - - - - - - (2,554,119) (2,554,119)
Issue
of shares 368,000 552,000 - - - - - - - 920,000
Share
based
payments - - - - - 128,382 - - - 128,382
Share
issue
costs - (25,463) - - - - - - - (25,463)
=========================== ===================== ======================== ====================== ============================ ========================= ========================= ======================== =========================== ========================
Total
transactions
with owners 368,000 526,537 - - - 128,382 - - - 1,022,919
Total
movement
in
shareholder's
equity 368,000 526,537 - - - 128,382 - - (2,554,119) (1,531,200)
At 30
June 2014 8,092,336 6,338,332 209,791 - 10,960,607 460,705 55,200 (9,225,108) (11,055,549) 5,836,314
=========================== ===================== ======================== ====================== ============================ ========================= ========================= ======================== =========================== ========================
At 1 July
2014 8,092,336 6,338,332 209,791 - 10,960,607 460,705 55,200 (9,225,108) (11,055,549) 5,836,314
=========================== ===================== ======================== ====================== ============================ ========================= ========================= ======================== =========================== ========================
Income
statement
for the
period - - - - - - - - (3,069,858) (3,069,858)
Other
comprehensive
Income - - - 8,162 - - - - - 8,162
Total
comprehensive
income
for the
period
attributable
to equity
holders - - - 8,162 - - - - (3,069,858) (3,061,696)
Cost of - - - - - - - - - -
acquisition
Issue
of shares 2,095,336 2,365,000 - - 644,949 - - - - 5,105,285
Equity
to be
Issued - - - - - - 490,978 - - 490,978
Share
based
payments - - - - - 138,744 - - - 138,744
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September 21, 2015 02:00 ET (06:00 GMT)
- - - - - - - - - -
Share
issue
costs
=========================== ===================== ======================== ====================== ============================ ========================= ========================= ======================== =========================== ========================
Total
transactions
with owners 2,095,336 2,365,000 - - 644,949 138,744 490,978 0 0 5,735,007
=========================== ===================== ======================== ====================== ============================ ========================= ========================= ======================== =========================== ========================
Total
movement
in
shareholder's
equity 2,095,336 2,365,000 - 8,162 644,949 138,744 490,978 0 (3,069,858) 2,673,311
=========================== ===================== ======================== ====================== ============================ ========================= ========================= ======================== =========================== ========================
At 31
December
2014 10,187,672 8,703,332 209,791 8,162 11,605,556 599,449 546,178 (9,225,108) (14,125,407) 8,509,625
=========================== ===================== ======================== ====================== ============================ ========================= ========================= ======================== =========================== ========================
At 1 January
2015 10,187,672 8,703,332 209,791 8,162 11,605,556 599,449 546,178 (9,225,108) (14,125,407) 8,509,625
=========================== ===================== ======================== ====================== ============================ ========================= ========================= ======================== =========================== ========================
Income
statement
for the
period - - - - - - - - (4,484,955) (4,484,955)
Other
comprehensive
Income - - - (14,964) - - - - - (14,964)
=========================== ===================== ======================== ====================== ============================ ========================= ========================= ======================== =========================== ========================
Total
comprehensive
income
for the
period
attributable
to equity
holders - - - - 14,964 - - - - (4,484,955) (4,499,919)
Cost of - - - - - - - - -
acquisition -
Issue
of shares 6,721 - - - - - - - - 6,721
Equity - - - - - - - - - -
to be
Issued
Share
based
payments - - - - - 129,719 - - - 129,720
Share - - - - - - - - - -
issue
costs
Total
transactions
with owners 6,721 - - - - 129,719 - - - 136,441
Total
movement
in
shareholder's
equity 6,721 - - (14,964) - 129,719 - - (4,484,955) (4,363,478)
=========================== ===================== ======================== ====================== ============================ ========================= ========================= ======================== =========================== ========================
At 30
June 2015 10,194,393 8,703,332 209,791 (6,802) 11,605,556 729,168 546,178 (9,225,108) (18,610,363) 4,146,146
=========================== ===================== ======================== ====================== ============================ ========================= ========================= ======================== =========================== ========================
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2015
1. GENERAL INFORMATION
Proxama PLC ("the Company") and its subsidiaries are an
international mobile commerce Company operating across two
divisions specialising in proximity marketing via mobile and
providing end-to-end solutions for card issuers to migrate
customers from magnetic stripe credit and debit cards to
contactless mobile payments.
Proxama has been at the forefront of this market for the last 10
years. Today, Proxama's solutions are used by banks, financial
institutions, loyalty companies, media owners, stadium owners,
retailers and brands. Current clients include: Diners Club, Navy
Credit Union, Fiserv, Nets, Exterion Media, Harrods, O2 and
Ubiquitous.
The Proximity Marketing Division:
-- focuses on connecting consumers to brands and retailers via
Bluetooth Low Energy (BLE) beacon technology and Near Field
Communication (NFC). Proxama establishes and owns beacon
infrastructure networks in high footfall locations such as City
Centres, transport networks, stadia, shopping malls, entertainment
hubs and retail outlets, which are then able to communicate to
consumers via messages to mobiles when the consumer is in close
proximity to a beacon. The technology platform at the heart of this
division is TapPoint(R).
The Payments Division:
-- manages end-to-end credit and debit cards solutions on behalf
of financial institutions in the United States, Europe, Africa and
the Middle East and specialises in enabling the migration of cards
from magnetic stripe cards, to chip and pin cards and from
contactless chip cards to mobile devices. The technology behind
this division is Proxama's Digital Enablement Platform.
The Company is a public limited company which is listed on the
Alternative Investment Market of the London Stock Exchange and is
incorporated and domiciled in the United Kingdom. The address of
its registered office is given on the Company Information page.
2. BASIS OF PREPARATION
The financial information has been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the European Union, IFRIC interpretations and with those parts of
the Companies Act 2006 applicable to companies reporting under
IFRS. The accounting policies adopted are consistent with those of
the financial statements for the year ended 31 December 2014, as
described in those financial statements. In preparing these interim
financial statements the Board has not sought to adopt IAS 34
'interim financial reporting'.
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