UMT — Update 2 December 2016

UMT — Update 2 December 2016

UMT

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UMT

Accounts transparency a positive step forward

H116 consolidated profit

Software & comp services

2 December 2016

Price

€1.29

Market cap

€22m

Unconsolidated net debt (€m) at 30 June 2016

2.0

Shares in issue
(excluding 75,922 own shares)

17.4m

Free float

40%

Code

UMD

Primary exchange

Frankfurt (Xetra)

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(6.4)

14.3

(7.2)

Rel (local)

(6.5)

14.3

(0.8)

52-week high/low

€1.58

€1.02

Business description

UMT is a technology company engaged in developing and operating highly scalable technology solutions. Its main focuses are a technology-agnostic mobile payment and loyalty platform, which is offered as white-label solution, as well as consulting services to large enterprises.

Next events

FY16 results

Q217

Analysts

Anna Bossong

+44 (0)20 3077 5737

Katherine Thompson

+44 (0)20 3077 5730

UMT is a research client of Edison Investment Research Limited

UMT has shown substantial progress in hitting key milestones since our initiation on the stock in May of this year. The launch of white-label mobile payments for Germany’s largest loyalty scheme, Payback, commenced smoothly in June and six major German retail groups are now using UMT’s system to provide mobile payments services to their Payback customers. The recent publication of key consolidated earnings data for H116 shows 34% EPS uplift from the unconsolidated figures for the same period, while management’s plans to publish consolidated financial statements for FY16 and IFRS standards for FY17 should improve reporting transparency and boost investor confidence.

Year
end

Gross profit (€000s)

PBT
(€000s)

EPS
(c)

DPS
(c)

P/E*
(x)

Yield
(%)

12/12

822

174

2.88

0.0

44.8

N/A

12/13

1,304

486

4.08

0.0

31.6

N/A

12/14

1,278

133

0.89

0.0

145.4

N/A

12/15

1,645

951

6.29

0.0

20.5

N/A

H116

1,251

993

5.96

0.0

10.8

N/A

H116 cons.

2,701

N/A

7.99

0.0

8.1

N/A

Note: Based on unconsolidated accounts. *H116 P/E figures calculated using annualised EPS data.

Initial H116 consolidated data brings 34% EPS uplift

For its H116 results, UMT has for the first time released selected consolidated earnings data based on German GAAP. The H116 numbers show group revenues of €2.8m,120% higher than the unconsolidated figure and net income of €1.32m, 34% higher than the unconsolidated result. Simple annualisation of the group H116 EPS of 8.0 cents puts UMT on a P/E of 8.1x. Nevertheless, assuming the same seasonality seen in the 2015 unconsolidated accounts would give rise to a P/E of 10.3x (see Exhibit 1, which contains an explanation of the calculation).

Strong pipeline of new prospects

UMT continues to report that it has good new client prospects, with its pipeline of prospects including fashion retailers, social media sites, port authorities, retail associations and hotel developers. A recent partnership with mobile loyalty plan specialist Points4More has expanded the addressable market for UMT’s services.

Valuation: Payback milestone first in value chain

Management has reported to shareholders that it plans to publish consolidated financial statements under German GAAP for the first time in FY16 and to move to IFRS group accounting in 2017. We expect this will enable us to create earnings forecasts for the group for the first time as well as DCF and peer group valuations. In terms of valuation milestones, with the already successful launch of mobile payments for Payback we are also looking for new client wins and the start of big data operations to provide catalysts for the share price. In the longer term we see the potential for UMT to participate in the fintech sector consolidation. Nevertheless, we also believe it likely that UMT will seek additional equity funding over the next 12-18 months, leading to some risk of share dilution.

Consolidated H116 key earnings summary

UMT has recently released key consolidated earnings data for H116 applying German GAAP. The group generated H116 output to the value of €2.76m, including €450,000 revenue recognised from the capitalisation of its own software development. Reported gross profit of €2.70m translates to a gross margin of 98% (showing a low level of allocation of cost to specific jobs under German GAAP), while the net income of €1.32m resulted in a net margin of 48%.

H116 group revenue was 120% higher than that of the parent company and net income was 34% higher than the unconsolidated figure of €0.99m. Simply annualising the group H116 EPS of 8.0 cents (to 16.0c) puts UMT on a P/E of 8.1x. Assuming the same seasonality seen in the 2015 unconsolidated figures, where full year net profit was only 57% greater than the H1 level, would give rise to an EPS of 12.5 cents and a P/E of 10.3x (see Exhibit 1).

The group earnings are underpinned by revenues from the rollout of the mobile payment system for the Payback group in Germany, which is dominated at present by set-up charges. These results are reflected in the unconsolidated results. The group results represent principally the addition of earnings from the group’s key operations in Turkey (UMT Turkey Mobil Anonim Sirketi, Istanbul), Spain (Mobile Payment System Espana S.L. Barcelona), Latvia (iPAYst LLC, Riga) and Austria (Delinski GmbH, Vienna).

The company also recently opened a subsidiary in the US, which should drive the growth of its mobile payment services into that region. UMT’s successful launch of mobile payment services in Germany for Amex-owned Payback could help the group to establish itself in North America, particularly if Plenti, Amex’s US-based loyalty scheme, appoints UMT to create its mobile payments system.

Exhibit 1: Interim earnings summary

€000s

H116

H116

H116

H115

2015

H115

German GAAP

Consolidated

Unconsolidated

Unconsolidated as % of consolidated (%)

Unconsolidated

Unconsolidated

Unconsolidated % of FY
(%)

Revenue and operating income

2,305.0

1,251.2

54.3

1,097.5

3,044.5

36.0

Capitalised own software development

450.0

0.0

0.0

0.0

0.0

N/A

Total output

2,755.0

1,251.2

45.4

1,097.5

3,044.5

36.0

Cost of services

(54.0)

(0.0)

0.0

0.0

(1,399.9)

0.0

Gross profit

2,701.0

1,251.2

46.3

1,097.5

1,644.5

66.7

Gross margin (%)

98.0

100.0

N/A

100.0

54.0

N/A

EBITDA

N/A

796.0

N/A

462.7

625.5

74.0

EBITDA margin (%)

N/A

63.6

N/A

42.2

20.5

N/A

D&A

N/A

(4.0)

N/A

(2.8)

(6.1)

45.0

Operating profit

N/A

792.0

N/A

460.0

619.4

74.3

Net income

1,324.0

987.0

74.5

605.2

950.5

63.7

Net income margin (%)

48.1

78.9

164.1

55.1

31.2

N/A

Shares in issue average (m)

16.6

16.6

100.0

15.0

15.1

N/A

Earnings per share (c)

8.0

6.0

74.5

4.0

6.3

64.1

EPS annualised (c)

16.0

11.9

74.5

8.1

6.3

N/A

P/E (annualised)

8.1

10.8

N/A

16.0

20.5

N/A

EPS applying seasonality unconsolidated 2015 (c)*

12.5

9.3

P/E applying seasonality unconsolidated 2015* (x)

10.3

13.9

Source: UMT, Edison Investment Research. Note: *Calculated by grossing up the H116 consolidated EPS to reflect between the unconsolidated H115 and FY15 EPS.


Exhibit 2: Financial summary

Unconsolidated

€000s

2012

2013

2014

2015

Year end 31 December

German GAAP

German GAAP

German GAAP

German GAAP

PROFIT & LOSS

Revenue

 

 

N/A

N/A

1,278

3,045

Cost of Sales

N/A

N/A

0

(1,400)

Gross Profit

822

1,304

1,278

1,645

EBITDA

 

 

399

529

102

626

Operating Profit (before amort. and except.)

397

527

100

619

Intangible Amortisation

0

0

0

0

Exceptionals

0

0

0

0

Other

0

0

0

0

Operating Profit

397

527

100

619

Net Interest

(223)

(41)

33

331

Profit Before Tax (norm)

 

 

174

486

133

951

Profit Before Tax (FRS 3)

 

 

174

486

133

951

Tax

133

(9)

(12)

(0)

Profit After Tax (norm)

307

478

121

951

Profit After Tax (FRS 3)

307

478

121

951

Average Number of Shares Outstanding (m)

10.7

11.7

13.6

15.1

EPS - normalised (c)

 

 

2.9

4.1

0.9

6.3

EPS - normalised and fully diluted (c)

 

2.9

4.1

0.9

6.3

EPS - (IFRS) (c)

 

 

2.9

4.1

0.9

6.3

Dividend per share (c)

0.0

0.0

0.0

0.0

Gross Margin (%)

N/A

N/A

100.0

54.0

EBITDA Margin (%)

N/A

N/A

8.0

20.5

Operating Margin (before GW and except.) (%)

N/A

N/A

7.8

20.3

BALANCE SHEET

Fixed Assets

 

 

8,506

9,586

10,211

10,062

Intangible Assets

0

0

0

0

Tangible Assets

7

8

10

17

Investments

8,499

9,578

10,201

10,045

Current Assets

 

 

798

3,548

5,744

8,438

Stocks

15

15

0

0

Debtors

601

1,589

4,399

6,697

Cash

19

1,841

1,331

1,717

Other

163

103

14

24

Current Liabilities

 

 

(1,712)

(2,248)

(2,372)

(2,415)

Creditors

(128)

(266)

(214)

(169)

Short term borrowings

(1,584)

(1,982)

(2,158)

(2,246)

Long Term Liabilities

 

 

0

0

(3)

(3)

Long term borrowings

0

0

(3)

(3)

Other long term liabilities

0

0

0

0

Net Assets

 

 

7,592

10,885

13,580

16,082

CASH FLOW

Operating Cash Flow

 

 

1,025

(1,199)

(2,665)

(1,676)

Net Interest

(223)

(41)

33

331

Tax

0

0

0

0

Capex

1

(182)

(6)

(15)

Acquisitions/disposals

0

0

(623)

156

Financing

(800)

2,845

2,571

1,502

Dividends

0

0

0

0

Net Cash Flow

3

1,423

(689)

299

Opening net debt/(cash)

 

 

1,561

1,564

141

831

HP finance leases initiated

0

0

0

0

Other

(6)

0

0

0

Closing net debt/(cash)

 

 

1,564

141

831

532

Source: UMT United Mobile Technology accounts: Note: Per-share data calculated excluding treasury shares.

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2016 Edison Investment Research Limited. All rights reserved. This report has been commissioned by UMT and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2016. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2016 Edison Investment Research Limited. All rights reserved. This report has been commissioned by UMT and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2016. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

QinetiQ Group — Update 2 December 2016

QinetiQ Group

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