Fonix Mobile : Final Results 2023

21 September 2023

Fonix Mobile plc

("Fonix" or the "Company")

Final Results for the year ended 30 June 2023 (the "Year")

Strong trading momentum continues with significant

organic growth in international markets

Financial Highlights
	2023	2022	Change
TPV	£268.1m	£258.6m	+3.7%
Revenue	£64,916k	£53,649k	+21.0%
Gross profit	£15,075k	£13,232k	+13.9%
Adjusted EBITDA1	£11,567k	£10,265k	+12.7%
Adjusted PBT2	£10,979k	£9,671k	+13.5%
Adjusted EPS3	8.9p	8.1p	+9.9%
Proposed Final DPS	4.89p	4.50p	+8.7%
Underlying cash4	£9,446k	£7,786k	+21.3%

Operational Highlights

• Strong growth in gross profits of 13.9%, which management considers to be the business' most important performance metric, driven by international expansion and strong H2 growth in the UK.
• Total payment volume ("TPV") of mobile payments was £268.1m (FY22: £258.6m) in the Year, with double digit percentage growth in TPV from commercial clients offset by a reduction in charity related TPV, which is less correlated to gross profit performance.
• Fonix's key business segments of payments and messaging have each grown profitability by at least 15% in the Year, in line with expectations and significant wins in the second half of the Year underpin growth expectations for the year ahead.
• Launch into Republic of Ireland - a third tier 1 media client has recently launched services with Fonix in Ireland, on a multi-year contract, making Fonix the leading provider of Interactive Services to media customers in the country.

• Active customer count at 122 customers at the Year end with additional newly transacting customers, including C4, RTÉ and Wireless Ireland offset by the loss of some small bulk messaging and charity clients. 23 new customer contracts signed in the Year, many of which will start transacting in the year ahead.5
• Robust, scalable platform with 18.9m unique mobile users making 844m interactions with Fonix's services in the Year, with 100% platform uptime as in previous years.6
• Significant investment in new product features in the Year including real-time campaign data filters, automated bundle offers and a new subscription management product.
• Fonix continues to maintain high client retention, with over 99% of income of a repeating nature.
• Increased dividend inline with progressive dividend policy.

The Board expects to publish its Annual Report for the year ending 30 June 2023 on the Company's website on Friday 20 October 2023. The Annual General Meeting is scheduled to take place on Tuesday 14 November 2023.

The Company announces that its nominated adviser and broker finnCap Ltd, has changed its name to Cavendish Capital Markets Limited, following a merger.

Outlook

• Strong start to FY24, with trading in line with the Board's expectations
• With high levels of repeating revenue, a strong run-rate entering the new financial year, and recent tier 1 client wins in the UK and Ireland, the Board continues to be confident in the business' growth potential and increasing profitability

Notes

1. Adjusted EBITDA excludes share-based payment charges along with depreciation, amortisation, interest and tax from the measure of profit.
2. Adjusted PBT is profit before tax excluding share-based payment charges.
3. Adjusted EPS is earnings per share excluding share-based payment charges.
4. Underlying cash is actual cash excluding cash held on behalf of customers.

1. Active customers are those generating more than £500 in gross profit in the previous 12-months.
2. Unique users are calculated as the number of unique Mobile Station International Subscriber Directory Numbers (MSISDNs) processed through Fonix services.

Rob Weisz, CEO, commented:

"We have continued to make great progress on our strategic goals this year, seizing an initial client-led opportunity in Ireland to become the leading provider of interactive services for media customers in a second geographical market. New client wins from ITV, RTÉ, Channel 4 and Wireless Radio Ireland significantly underpin our growth expectations in the year ahead whilst at the same time creating high barriers to entry to prospective competitors.

This year we have added more depth to our team and products, with an eye on further international growth and broadening the services we can offer to clients in the future. Our serviceable market has expanded significantly in the last 12 months through direct network connectivity in Ireland, and we will continue to consider establishing further direct connectivity in other territories in FY24 and beyond.

The first few months of the new financial year have started strongly, with a robust run-rate of consumer activity with our key customers. We continue to make great progress on our strategic goals and recognise that by delivering on these objectives and nurturing recent client wins we have a great opportunity to exceed expectations."

Enquiries
Fonix Mobile plc	Tel: +44	20 8114 7000
Robert Weisz, CEO
Michael Foulkes, CFO
Cavendish (Nomad and Broker)	Tel: +44	20 7220 0500
Jonny Franklin-Adams / Seamus Fricker (Corporate Finance)
Sunila de Silva (ECM)

About Fonix

Founded in 2006, Fonix provides mobile payments and messaging services for clients across media, telecoms, entertainment, enterprise and commerce.

When consumers make payments, they are charged to their mobile phone bill. This service can be used for ticketing, content, cash deposits and donations. Fonix's service works by charging digital payments to the mobile phone bill, either via carrier billing or SMS billing. Fonix also offers messaging solutions.

Based in London, Fonix is a fast growth business used by blue chip clients such as ITV, Bauer Media, BT, Global Media, Comic Relief and Children in Need to name a few.

Chair's Review

I am pleased to update shareholders on another strong year of double-digit growth in profitability and cash generation. Once again Fonix has achieved record levels of profitability and underlying cash, whilst delivering on all its strategic goals laid out in the previous year. As well as a successful overseas expansion, the business has continued to win significant new contracts in the UK which will underpin its growth in the years ahead as the business looks to nurture those new customer relationships to their full potential.

The Fonix management team has continued to deliver another period of strong organic growth, with gross profits and adjusted EBITDA both increasing by over 12% year on year. At the same time, the business remains highly cash generative, with underlying cash increasing 12% over the same period. Given the strong trading performance and cash generation of the business, along with the confidence with which we consider the prospects for Fonix, I am pleased to announce that we will once again be increasing our final dividend for the year, in line with our progressive dividend policy to pay out at least 75% of adjusted earnings. The board has

resolved to propose a final dividend of 4.89p, giving a total dividend for the year of 7.25p (FY22: 6.50p), an increase of 11.5% year on year.

The business' expansion into international markets has proven to be a huge success, with international transactions accounting for over 10% of gross profits in the year. Fonix is a market leader for interactive services in both the UK and Republic of Ireland, a feat achieved in Ireland within 12 months of launching there. As well as generating immediate financial returns for the business, the launch in Ireland has provided the team with a blueprint for further geographical expansion, which the board will update shareholders on as and when new regions are making a meaningful contribution to the business' growth.

Growth in the UK was strong in the second half of the year, with Fonix's larger media customers making up ground after the death of Her Majesty The Queen led to a slight decline year on year in H1 gross profits whilst services were suspended for several weeks as a mark of respect.

Financial results

Gross profit, which the board considers to be the business' most important financial metric, increased 13.9% to £15.1m (FY22: £13.2m) in the year. As was the case in the previous financial year, due to the seasonal nature of certain media clients, gross profit in the first half of the year was higher than the second. Adjusted EBITDA increased 12.7% to £11.6m (FY22: £10.3m), reflecting the business' high operating leverage and the management team's continued ability to control operating costs without compromising on top-line growth.

The company closed the year with £9.4m in underlying free cash (FY22: £7.8m). Actual cash,

which includes money held on behalf of customers, closed the year at £20.6m (FY22: £17.0m).

The board recommends that the company pays a final dividend of 4.89p per share in November, bringing the total dividend for the year to 81% of adjusted earnings per share. If approved, the total distribution of dividends for the year ended 30 June 2023 will be £7.24m (FY22: £6.50m).

Product

As well as onboarding and integrating services for several large new customers in the UK and Ireland, the business has continued to invest in new product innovations, including developing a new subscription engine for charity clients to be launched this autumn and intelligent dynamic filtering for users of our Campaign Manager product. At the same time, our dedicated in-house development team has continued to ensure platform resilience, scalability and cyber security remain fundamental to everything we do. Looking ahead, the business is in the early stages of broadening the suite of payment options integrated with its Campaign Manager and