London, UK, 28 November 2017

Edison issues outlook on UMT (UMD)

As a result of its work with leading retailers in the Payback loyalty scheme, UMT is Germany's largest provider of white-label mPay services. Earlier this year the group took a decisive step into the B2C arena with the acquisition of prelado, an online German mobile phone top-up retailer. UMT plans to leverage its mPay know-how and retail contacts to drive an expansion of prelado's product range as well as to extend prelado's reach into other major EU countries. The group has also recently reached an agreement with solarisBank of Berlin to allow it to provide customers with full banking services as well as signing an MoU with blockchain specialist Coinsilium, to explore the use of blockchain technology in its service areas. UMT shares currently trade in line with the mPay small-cap sector on current year estimates. EV/revenues, and the current price implies free cash flow growth of 13.6% from 2021 in our reverse DCF analysis.

UMT shares have risen sharply on news of the Coinsilium MoU. They now trade in line with the mPay small-cap sector on current year forecast EV/revenues but at a 29% premium on the FY2 metric. The current price implies free cash flow growth of 13.6% from 2021 in our reverse DCF analysis. A recent equity issue and a planned debt for equity swap should result in 60% lower net debt of EUR2.9m by year end. We estimate that further equity funding of c EUR1.5m may be needed by YE20, depending on the sustainability of fee revenues for bringing companies onto mPay platforms.

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