RNS Number:3809S
MonsterMob Group PLC
24 November 2003
MONSTERMOB GROUP PLC
ADMISSION TO THE ALTERNATIVE INVESTMENT MARKET
Key Highlights
*Monstermob Group plc ("Monstermob" or the "Company"), a UK mobile phone
entertainment content provider, announces its Ordinary shares have been
admitted to trading on the Alternative Investment Market (AIM) of the London
Stock Exchange with effect from 8am this morning.
Placing Price 135p
Number of Placing Shares being issued or sold pursuant
to the Placing 5,970,368
Number of Placing Shares being sold by the Sellers 2,044,442
Number of Ordinary Shares in issue on Admission 23,762,416
Market capitalisation of Company following the Placing #32.1 million
at Placing Price
Percentage of enlarged issued Ordinary Share capital
being placed 25.1%
Estimated net proceeds of the Placing receivable by the #4.8 million
Company
*Teather & Greenwood on behalf of the Company and certain of its
shareholders has successfully placed 5,970,368 million new and existing
Ordinary shares with a range of institutional investors at 135p per share,
raising #5.3 million for the Company and #2.76 million for such shareholders
(gross of expenses). The fund-raising values Monstermob at #32 million.
*Since incorporation in 2000, the Company's subsidiary, Monstermob
Limited, has built a profitable business and is building recurring revenue
streams. It generated revenue of #6.6 million and operating profit of
#910,000 in H1 2003 (FY2002 revenue #7.9 million, operating profit
#310,000).
*Monstermob has a strong management team led by founder Martin Higginson.
Martin has successfully founded and sold two businesses and recently floated
Cityblock plc where he remains Non-executive Chairman. Martin was also a
member of the management team instrumental in the flotation of Thus plc
where he was Director of Internet and Interactive Services with
responsibility for the company's Internet offerings, which included Demon
Internet.
*Monstermob markets differentiated and easily accessed mobile phone
content, such as ringtones, competitions, wallpapers, voicemails, logos,
alerts and games. The Company focuses on entertainment and personalisation
products that appeal to the most prolific adopters of mobile content - the
14-30 age group.
*Monstermob uses a proprietary content management and delivery platform
which is at the hub of the business. This helps to build recurring
(including subscription) revenues with a view to delivering a high quality
revenue stream and the ability to market new products and services quickly
to likely consumers as well as its database of 3 million mobile telephone
numbers of customers.
*Monstermob has developed a promotional pack called "Monstermob NOW!" that
provides free trial content to customers of partners. Partners include The
Link and Dialaphone as well as certain mass-circulation magazines and web
partners. This introductory offer converts into a subscription service after
the first month provided the user does not unsubscribe.
*The net proceeds of the placing of new shares in the Company will
initially be used to facilitate Monstermob's expansion overseas, principally
in Continental Europe. The Placing will also provide funds for Monstermob to
invest in new marketing initiatives and the development of its existing
business. The Company aims to generate additional revenues not only through
launching services overseas but the creation of affinity group services such
as chat and dating services (both via WAP and SMS) using subscription based
mobile billing with a view to providing recurring revenue streams.
*Monstermob is in an immature and rapidly growing market in which it is an
early entrant. The Directors expect that the portion of total youth spending
on leisure products through mobile phones will continue to increase
substantially in the medium term. For example, the global market for
ringtones alone is projected to grow from Euro1.3 billion in 2003 to Euro2.3
billion in 2006. (Source: Mobile Youth Report 2003 (c) W2F Limited.)
*Teather & Greenwood Limited is appointed Nominated Adviser and Broker.
Martin Higginson, Managing Director, Monstermob, said:
"We believe that the mobile content market is set for rapid growth and this
flotation will cement our position in the vanguard of this new industry. We will
use the funds to further develop and expand our offering in the UK and to
initiate activity overseas, capitalising where we see substantial opportunities
for growth."
- ENDS -
For further information contact:
Charles Reynolds / Charlotte Lambkin
Bell Pottinger Financial 020 7861 3232
Christopher Hardie / Stephen Austin
Teather & Greenwood Limited 020 7426 9000
High resolution images are available for the media to view and download free of
charge from http://www.vismedia.co.uk
Words and expressions defined in the prospectus of Monstermob dated 21 November
2003 shall have the same meanings in this announcement unless the context
otherwise requires.
FURTHER INFORMATION:
Introduction
Monstermob was formed in 2000 to take advantage of the growing demand for mobile
phone content. Monstermob primarily markets to 14 to 30 year olds mobile phone
content such as ringtones, competitions, wallpapers, voicemails, logos, alerts
and games, under the "Monstermob" brand.
Income is derived from the sale of content which is ordered by customers sending
an SMS (text message) or ringing a PRS (premium rate service). The customer is
charged for the cost of the premium rate SMS or PRS call by their network
operator. Monstermob receives a majority of these revenues.
Monstermob has built a profitable business with growing recurring revenues and
has generated a database of over 3 million customers. The Directors believe that
the market in which the Company operates is poised for significant growth in the
next few years from which the Company is well positioned to benefit.
Mobile Content
Mobile content refers to the various types of data and services that a consumer
may receive onto their mobile phone including:
*ringtones - initially monophonic and now more sophisticated polyphonic
ringtones;
*logos - displayed on the mobile phone screen in a prominent position;
*picture messages - picture and symbol based products that can be sent and
received as an SMS;
*voicemails - personalised greeting messages often performed by celebrity
impersonators;
*competitions - users can enter through text messaging or a premium rate
service;
*wallpapers - provide a background pattern or image to mobile phone
screens;
*multimedia messaging - audio clips and photographs;
*JAVA based games; and
*video clips - short clips of motion pictures which may be animated or
live action.
Mobile Content Market
The development of the mobile content market originated from the growth of
person to person text messaging. The identification that mobile phones could be
used for more than voice communication stimulated the sale by independent
service providers of basic ringtones and logos to 2G phone users in 2000.
Initially the services were sold through fixed line premium rate numbers as
there was no mechanism to order products directly through text messages.
More recently, the market for mobile content has been stimulated by the
following factors:
*the rapid adoption of technologically sophisticated mobile handsets which
can receive greater quantities of data, run JAVA based applications, have
colour screens and integrated devices such as cameras;
*the introduction of SMS billing whereby the user's MNO account is charged
for a premium SMS; and
*agreements between the MNOs permitting data to be transmitted across the
various mobile networks ("interoperability") which it is expected will be
extended to MMS.
The Directors believe that the portion of total youth spending on leisure
through mobile phones will continue to increase substantially throughout the
next three years. It is estimated that the global market for mobile content
amongst young people consists of the following elements:
*ringtones - estimated to be worth Euro 1.3 billion in 2003 increasing to Euro
2.3 billion in 2006;
*multimedia messaging (including picture messaging) - estimated to be
worth Euro 65.7 million in 2003 increasing to Euro 427 million in 2006; and
*JAVA games - estimated to be worth Euro 101.6 million in 2003 increasing to
Euro 321.6 million in 2006.
(Source: Mobile Youth Report 2003 (c) W2F Limited.)
These estimates are supported by data from the MNOs that indicate that mobile
data (being SMS text messages and mobile data) comprises an increasing
proportion of consumer spending. The Directors believe that the Company is well
placed to capitalise on the strong growth in spending on mobile content in the
coming years.
Monstermob's Content
The Directors believe an important element of Monstermob's strategy is its
ability to generate content and applications and take them to market rapidly.
Monstermob offers a range of content from ringtones, celebrity photos and
voicemails to JAVA games and competitions. Monstermob's database offers
approximately 36,000 products which can be obtained by customers. Content is
developed in-house and by purchase from third parties, who together produce on
average 230 new products every month for Monstermob.
Monstermob also licences a number of products, most notably JAVA games. Normally
the licences are taken on a non-exclusive basis but Monstermob will look to
negotiate exclusivity if justified by sales volumes.
Monstermob makes royalty payments to certain bodies (including the Performing
Rights Society and Mechanical Copyright Protection Society) for intellectual
property used in products it develops and markets (such as the original music
score in the case of ringtones).
Marketing Strategy
The majority of revenue is generated from advertisements and inserts in mass
circulation newspapers and a range of youth-orientated magazines. As well as
offering specific content, the advertising carries details of the Monstermob web
and WAP sites, encouraging potential visitors to these sites.
Each customer order provides Monstermob with details of the customer's mobile
telephone number and the promotional medium that stimulated the order.
Monstermob has built up a database, for its exclusive use, of over 3 million
mobile telephone numbers of customers together with the products and services
purchased by each customer. For the first nine months of 2003, new customers
have been added at an average rate in excess of 120,000 per month. Additional
details, such as name and/or address and/or date of birth and/or sex and/or
handset type are known of approximately 250,000 of these customers. These
additional details are gathered by Monstermob through subsequent interactions
with the customer. Monstermob seeks to ensure that the database is comprised
only of active mobile numbers.
The Directors consider the database to be a valuable marketing tool that
provides Monstermob with an in-depth understanding of the purchasing patterns of
its customers. Through its database Monstermob is able to market specific
products directly to those customers whom it believes are most likely to be
receptive to those products. The effectiveness of this marketing is measured
accurately by Monstermob resulting in highly profitable direct marketing
campaigns. These direct marketing campaigns include the use of the following
channels:
*direct mail - approximately every two months Monstermob mails a catalogue
containing details of some 1,800 products to its customers (the last
catalogue having been sent to 245,000 customers). The circulation figure of
the catalogue has increased from 144,000 in June 2002 as Monstermob has
acquired details of the names and addresses of more of its customers; and
*text messaging - Monstermob sends text messages to customers on a regular
basis promoting products which the Directors believe will be attractive to
those customers.
Most recently Monstermob has pursued partnerships with businesses in
complementary markets. Monstermob has developed a promotional pack called
"Monstermob NOW!" that provides free trial content to customers of partners.
Partners include The Link and Dialaphone as well as certain mass-circulation
magazines and web partners. This introductory offer converts into a subscription
service after the first month provided the user does not unsubscribe. The
Monstermob brand is further promoted through the sponsorship of the Monstermob
Ducati team, winner of the British Superbike Championship in 2002 and 2003. The
Championship attracted over 125 hours of BBC and Sky television coverage.
Insert Competitions
Monstermob regularly places inserts in newspapers and magazines offering
competitions that may be entered by sending a premium rate SMS or dialling a
PRS. This activity has been successful in encouraging competition entrants to
use their mobile phones which helps Monstermob build data on these entrants.
Inserts offering competitions provide a cost effective form of advertising and
secure increased income from mobile and fixed line network operators through
greater traffic volumes.
At present, approximately 43 per cent. of the revenues of Monstermob are
generated from competitions. The Directors believe that this percentage is
likely to decline as the revenues from other areas grow at a faster rate.
H.M. Government has announced that it intends to propose new legislation
relating to prize competitions. It has indicated that whilst lotteries will be
prohibited (unless exclusively for good causes) promotional prize draws will be
permitted which are entirely by chance and which genuinely do not require
payment for entry. A scheme will not be regarded as requiring payment for entry
if, amongst other things, the means for doing so are displayed equally as
prominently as other means of entry and if the costs to be incurred are ordinary
costs (such as a standard rate telephone call or first class postage).
Monstermob now gives equal prominence to free entry mechanisms on its insert
competitions and if H.M. Government's proposals are implemented, Monstermob
would be required to give equal prominence to free entry mechanisms and
promotions for competitions on SMS, WAP and on the internet. Monstermob
considers that it will be able to comply with such requirements notwithstanding
difficulties that may arise in relation to SMS and WAP given the restrictive
format. Monstermob's insert competitions currently give equal prominence to a
free entry mechanism which generate responses of approximately 5 per cent. of
total responses. The Directors consider that these proposed changes to the law
are unlikely to have a significant effect on Monstermob.
The Transaction Process
Monstermob's customers purchase mobile phone content via a text message or a
phone call. Most products are priced between #3.00 and #4.50 - the cost of which
will appear on the customer's telephone bill (either fixed line or mobile).
Monstermob in turn receives a majority share of these revenues from the relevant
network operator. Monstermob has secured contracts for the direct payment by the
MNOs, resulting in reduced credit risk.
Monstermob's Competitive Advantages
The Directors believe that there are two broad categories of competitors, namely
the MNOs and third party service providers, such as Monstermob. As the market is
relatively new and growing rapidly there are no reliable statistics available as
to the market positions of the participants.
The Directors believe that Monstermob has a number of advantages over the MNOs,
despite their large databases of consumer information. The Directors believe
that the quality of Monstermob's database along with its marketing-led approach
give it an advantage in bringing the most attractive content to market rapidly.
In addition, the Monstermob brand is considered by the Directors to have greater
appeal to the target market of 14 to 30 year olds than the brands of the MNOs.
The Directors believe that Monstermob possesses the following competitive
advantages over other third party service providers:
*Monstermob achieves industry-leading times to market for topical and
trend-setting content;
*Monstermob preserves the exclusivity of its own content by not offering
it on a white label basis;
*the Monstermob customer database enables targeted advertising and
real-time campaign response analysis;
*the Monstermob technology platform allows Monstermob to monitor and
ensure a high quality of service as well as protect its margins by enabling
in-house delivery;
*Monstermob has built subscription-based premium rate SMS services giving
itself a first-mover advantage over its competitors;
*and Monstermob is well placed to exploit new handset technology.
Directors
The board currently consists of seven Directors whose brief biographies are set
out below.
The Right Honourable Lord Baker of Dorking CH, Non-executive Chairman, age 69
Lord Baker has served as Non-executive Chairman of Monstermob since 3 July 2001.
Lord Baker has been a Member of the House of Lords since 1997. He served as a
member of Parliament between 1968 and 1997, as Secretary of State for the
Environment from 1985 to 1986, as Secretary of State for Education and Science
from 1986 to 1989, as Chairman of the Conservative Party from 1989 to 1990 and
as Secretary of State for the Home Office from 1990 to 1992.
He is Chairman of Northern Edge Limited, Business Serve PLC and Belmont Press
(London) Limited. He is a Non-executive Director of Hanson PLC, Millennium
Chemicals Inc., Stanley Leisure PLC and Teather & Greenwood Holdings PLC. He
also serves as President of the Royal London Society for the Blind.
Martin J Higginson, Managing Director, age 40
Martin is the founder and principal shareholder in Monstermob. Martin sold his
first business to IPC Magazines Limited in 1984. In 1987 he founded Megafone
Limited, a company specialising in the delivery of premium rate competition
services. Martin grew the company's turnover to in excess of #6 million before
selling the business to Scottish Power PLC in 1997.
Within Scottish Power PLC, Martin initially oversaw the integration of six newly
acquired businesses into the interactive content business. Prior to the
company's flotation under the new name of Thus PLC, he was responsible for the
company's internet and interactive businesses (including Demon Internet) with a
turnover of #87 million and over 321 staff. He left Thus PLC in July 2000 when
he was Business Development Director responsible for mergers, acquisitions and
business development across the Thus PLC portfolio.
He is Non-executive Chairman of Cityblock PLC, a company providing student
accommodation and a Non-executive Director of Hay Carr Estates Limited, Northern
Edge Limited and Business Serve PLC.
Martin was voted North West Entrepreneur of the Year 2002.
Lee J Dudack ACA, Finance Director, age 39
Prior to Monstermob, Lee was Finance Director of M-Quest Limited, a start up
business specialising in the delivery of services to the mobile content sector.
M-Quest Limited was acquired by Monstermob in July 2001. Lee joined M-Quest
Limited from Interoute Telecommunications PLC ("Interoute") where he was Group
Finance Director. Interoute operated in 11 countries across Europe with a staff
of over 1,000. Before joining Interoute, Lee was a partner in Clark Whitehill,
Chartered Accountants, from 1995 to 1997.
Gavin R Whyte, Operations Director, age 34
Gavin joined Monstermob following the acquisition of M-Quest Limited. Prior to
this Gavin was employed by 3 Net Communications Limited, a subsidiary of Megatel
International Management B.V. Megatel was a provider of international and
domestic premium rate services. Gavin was responsible for establishing
operations in Sweden, the Philippines, Hawaii, Russia and Bulgaria. In his
current role Gavin is responsible for technical operations of Monstermob,
including the supervision and continued development of Mobserv. Gavin is also
responsible for the adoption and exploitation of new technologies.
Michael J Watt, Marketing Director, age 37
Michael joined Monstermob in May 2001. He is responsible for all creative and
marketing activities including consumer advertising, insert competitions, direct
marketing and sponsorship. In addition he has responsibility for Monstermob's
brand and creative direction across all activities.
Michael joined Monstermob from Thus PLC where he was Director of Interactive
Media and Content with responsibility for all premium rate services In addition
he had responsibility for the New Media Division and a division supplying
specialised marketing services to external brands. He was responsible for a
turnover of #35 million with 130 staff across three offices. Prior to joining
Thus PLC, Michael was Creative Director of Megafone Limited, a business sold to
Scottish Power PLC in 1997.
Alan W Denyer, Sales Director, age 39
Alan is one of the founder members of Monstermob with over 10 years' experience
in the telecoms industry. Prior to joining Monstermob Alan worked at Thus PLC as
a Business Development Manager. He was responsible for the launch and management
of Demon Internet's free ISP service In2Home. He was also responsible for
conception and launch of several other web-based entertainment content
initiatives. Alan joined Thus PLC from Cable & Wireless PLC.
John Boyle, Non-executive Director, age 50
John Boyle invested in Monstermob in January 2001 together with Northern Edge
Limited, an investment company of which he is a Director and one of the founder
shareholders. He was appointed a Non-executive Director of Monstermob at this
time. John was the majority shareholder of Direct Holidays Limited which was
sold in July 1998 to Airtours PLC (now known as MyTravel Group PLC). John is
currently Chairman of The Hamilton Portfolio Limited and has invested, via a
number of investment vehicles, in several private companies in Scotland and
England.
It is intended that a further Non-executive Director with a strong financial
management and public company background will be appointed following flotation.
Current Trading and Prospects
Monstermob's business has grown strongly in the six months to 30 June 2003, with
turnover at over 80 per cent of the previous year's turnover. As a result the
profits before tax have almost trebled to #926,000. The Directors ascribe this
to the effectiveness of Monstermob's marketing as well as the development and
adoption of new technically more advanced handsets. Since 30 June 2003, activity
levels have continued in line with those expressed in the first six months of
2003.
Monstermob aims to achieve additional revenues through the increased
distribution of the "Monstermob NOW!" product and the introduction of affinity
group services. Monstermob intends to offer these services through all channels
to market including WAP and traditional SMS services.
Monstermob has agreed terms in principle to form a joint venture with Coral to
market betting and gambling products for the mobile phone user. Monstermob is
currently marketing a fixed odds subscription betting service based upon the New
York lottery, playable directly from mobile phones.
In addition to the new initiatives outlined above, the Directors are convinced
of the strong growth prospects of the market in which Monstermob operates.
Moreover, Monstermob is focussed on converting a greater proportion of its
revenue to a subscription basis and the early results from "Monstermob NOW!" are
encouraging. For these reasons the Directors look forward to the future with
confidence.
The Placing
The Placing of 5,970,368 Ordinary Shares at 135p per share comprises the issue
of 3,925,926 new Ordinary Shares by the Company (representing 16.5 per cent. of
the enlarged issued ordinary share capital) and the sale of 2,044,442 Sale
Shares by the Sellers (representing 8.6 per cent. of the enlarged issued
ordinary share capital). The Placing will raise #5,300,000 for the Company
before expenses. At the Placing Price, the Company will have a market
capitalisation of #32.1 million.
Following the Placing, Martin Higginson's holding will represent approximately
49.81 per cent. of the enlarged issued share capital. The other Executive
Directors' holdings will in total represent approximately 10.35 per cent. of the
enlarged issued share capital.
Reasons for the Placing
The net proceeds of the Placing will initially be used to facilitate
Monstermob's expansion overseas, principally in Continental Europe. The Placing
will also provide funds for Monstermob to invest in new marketing initiatives
and the development of its existing business. The proceeds of the Placing and
the Admission will allow Monstermob to make acquisitions as part of its overall
expansion strategy.
The Directors believe that the profile of the Group will be significantly
enhanced by its position as a quoted company. Quoted shares will allow the
Company to incentivise management and employees through share option schemes and
provide a market for the Company's existing shareholders.
This information is provided by RNS
The company news service from the London Stock Exchange
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