zamano plc , a leading European provider of interactive applications and services to mobile devices, provides a trading update following the introduction of Payforit in the UK and the possible implementation of regulatory change in Ireland.
As previously notified, Payforit is a joint initiative of mobile network operators (“MNOs”) in the UK to regulate mobile payments and its implementation represented a significant regulatory change in the operating environment in the UK. Since it became effective for the company during November 2016, Payforit, as expected and communicated previously, is having an on-going and significant impact on the Company’s business performance.
In this regard, zamano has seen a reduction in performance across all its business lines and, to date, the Company has not been able to secure any replacement revenue through new subscribers since this time.
In Ireland, certain MNOs are also now requiring all service and payment flows to use similar rules to Payforit in the UK. The Company anticipates that these changes, when implemented over the next month, will also significantly impact the Company’s ability to acquire new customers in Ireland.
On 25 November 2016 the Company announced that, as a result of the Payforit implementation in the UK, the Board had taken steps to reduce the cost base of the business, cease all ongoing M&A discussions and focus on maximising cashflow from the Company’s existing business in the UK, Irish and International markets.
The above actions were taken to maintain a cash generative and profitable business whilst also protecting the Company’s existing cash position and shareholder value. Despite taking these actions, which have achieved material cost reductions, it is now increasingly likely that the impact of regulatory changes across zamano’s business lines will prevent the Company from maintaining a cashflow positive trading position going forward.
In light of this the Board believes that it is necessary for the Company to take the decision to formally wind down the existing business lines in order to protect the cash position on the balance sheet. The Board is also currently considering alternative strategic options that are being assessed. It is anticipated that such options would require shareholder approval and, accordingly, the Company will update the market in due course on the alternative options. In the absence of a timely strategic alternative, the Company will look to monetise its UK/Irish listing and make a distribution back to shareholders.
Colin Tucker, Acting Chairman of zamano commented:
“The Zamano Board is focused on conserving the company’s strong cash position by optimising our withdrawal from our existing business lines. The on-going regulatory changes in our industry have forced our hand earlier than anticipated. We are hopeful in relation to our strategic discussions, however in the absence of concluding a transaction which shareholders approve, we will focus on how best to return the maximum amount of cash possible to shareholders.”