TIDMAPTD
RNS Number : 3891U
Aptitude Software Group PLC
29 July 2020
29 July 2020
APTITUDE SOFTWARE GROUP plc ('Aptitude Software' or the
'Group')
INTERIM RESULTS
FOR THE SIX MONTHSED 30 JUNE 2020
Aptitude Software Group plc (LSE: APTD), a specialist provider
of powerful financial management software to large global
businesses, reports its unaudited results for the six months ended
30 June 2020.
Financial Highlights
Six months ended 30 June 2020 2019(1) % Change
Annual Recurring Revenue ("ARR") (2)
at 30 June GBP30.9m GBP27.9m(3) +11%
--------- ------------ ---------
Revenue GBP29.1m GBP28.8m +1%
--------- ------------ ---------
* Software and subscription revenue GBP14.7m GBP14.1m +4%
--------- ------------ ---------
* Implementation and solution management services
revenue GBP14.4m GBP14.7m -2%
--------- ------------ ---------
Adjusted Operating Profit(4) GBP5.1m GBP5.1m -
--------- ------------ ---------
Statutory operating profit GBP4.5m GBP4.6m -2%
--------- ------------ ---------
Cash and cash equivalents(5) GBP30.9m GBP23.5m +31%
--------- ------------ ---------
Adjusted Basic Earnings per Share(4) 6.7p 6.0p +12%
--------- ------------ ---------
Basic Earnings per Share 6.0p 5.5p +9%
--------- ------------ ---------
Interim ordinary dividend per share 1.8p 1.8p -
--------- ------------ ---------
-- Year on year growth in ARR of 11% on a constant currency3 basis driven by new business wins and add-on sales to
existing clients
-- In line with the Group's strategic focus, software and subscription revenue now represents 51% of total revenue
(H1 2019: 49%) with growth of 4% to GBP14.7 million for the six months ended 30 June 2020 (H1 2019: GBP14.1
million)
-- Strong balance sheet with cash of GBP30.9 million (H1 2019: GBP23.5 million 5 ), net funds6 of GBP29.2 million
(H1 2019: GBP21.0 million 5 ) and no bank loans. This financial strength provides confidence to our clients and
prospects whilst positioning the business well for potential acquisition opportunities
-- Based on the Group's solid financial and operational performance in the period and the expectation that the
business will remain comfortably profitable and cash generative in the period expected to be impacted by
COVID-19, the Board maintains its interim dividend at 1.8 pence per share (H1 2019: 1.8 pence per share)
Strategic and Operational Highlights:
-- Continued progress with the strategic Aptitude Accounting Hub application, which provides our clients with the
foundation for their digital finance transformation, including a new sale to the retail arm of a leading European
bank
-- Significant Software-as-a-Service ('SaaS') subscription sale for Aptitude Revenue Management to a North American
technology company
-- Launch of Aptitude RevStream, one of the Group's two Aptitude Revenue Management applications, to meet demand in
the APAC and European regions. This launch provides the Group with a further growth opportunity as the
application had previously only been focused on the North American market
-- Strengthening of the go-to-market and global partner network, most notably with the expansion of the partner
network into Japan providing access to tier one prospects in the region. This new partner will be initially
responsible for the sale and implementation of Aptitude RevStream in Japan, a new market for the Group.
-- Sales cycles in the insurance sector remain extended in line with the Board's previously revised expectations as
prospects continue to focus on short term priorities and manage their capital prudently as a response to the
impact of COVID-19, coupled with the confirmed delay to the introduction of IFRS 17. Activity with these
prospects is expected to increase as the revised regulatory deadline of 1 January 2023 approaches
-- Investment continues across a number of functions including in those products which support clients as they
undertake their digital finance transformation, a significant growth opportunity for the Group
Response to COVID-19:
-- Successful implementation of business continuity plans in response to the threat of COVID-19 with all business
functions, including those directly servicing our diverse client base, being provided without disruption
-- As a result of the challenges presented by COVID-19, the Group's pre-existing focus on cost control tightened
further with all discretionary expenditure closely reviewed and a number of savings already actioned
Commenting on the Interim Results, Jeremy Suddards, Chief
Executive Officer, said: -
'The Group continued to make strategic and operational progress
in the first half of 2020 with a number of new business wins across
the globe despite the challenges arising from COVID-19.
Aptitude Software benefits from a focused portfolio of product
and service offerings, a growing SaaS capability, increasing
worldwide presence and a strengthening partner network. These
assets and capabilities position the Group to be able to fully
realise the significant opportunity ahead, particularly as the
impact of COVID-19 has reinforced the need for clients to drive
further automation in their finance functions.'
Contacts
Aptitude Software Group plc
Ivan Martin, Chairman 020-3687-3200
Jeremy Suddards, Chief Executive Officer
Philip Wood, Deputy Chief Executive Officer and Chief Financial
Officer
Alma PR
Caroline Forde, Sam Modlin 020-3405-0205
About Aptitude Software
Aptitude Software's innovative solutions address the growing
trend for digital finance transformation complemented by
regulatory-focused applications. Our various products take data
from complex systems, typically with multiple siloed data sources
across multiple business entities, to create a unified view of
finance. Our unique combination of deep finance expertise and IP
rich technology allows our clients to reap significant benefits
including business insights, enhanced control and regulatory
compliance.
Our clients include some of the world's largest companies,
typically organisations with complex financial data and technology
landscapes. Development, together with a growing number of other
services, continues to be performed at the Aptitude Innovation
Centre in Poland with sales, support and implementation services
provided from Aptitude Software's London headquarters and the North
American and Singaporean regional businesses.
Aptitude Software has six office locations around the world,
with clients across four continents.
www.aptitudesoftware.com
Throughout this announcement:
(1) H1 2019 numbers presented in the table exclude the results
of the Microgen Financial Systems business which was disposed of on
28 June 2019 and presented as a discontinued operation
(2) Annual Recurring Revenue ('ARR') is the value of Aptitude
Software's software and subscription recurring revenue at a
specific point in time, normalised to a one-year period. ARR
includes recurring revenues contracted but yet to commence and
excludes recurring revenues which are currently being received but
are known to be terminating in the future.
(3) Constant currency is calculated by comparing the 2020
results with 2019 results retranslated at the rates of exchange
prevailing during 2020. Items within the Financial Highlights table
indicated by this superscript reference are calculated on a
constant currency basis.
(4) Adjusted Operating Profit, Adjusted Operating Margin and
Adjusted Basic Earnings per Share excludes non-underlying operating
items, unless stated to the contrary. Further detail in respect of
the non-underlying operating items can be found within Note 6.
(5) Cash and cash equivalents at 30 June 2019 is net of the
proposed return of cash to shareholders of GBP46.4 million as part
of the disposal of the Microgen Financial Systems business. The
return was completed in September 2019.
(6) Net funds represents cash and cash equivalents less finance
obligations, which are currently limited to capital lease
obligations
Certain non-IFRS financial measures (e.g. Adjusted Operating
Profit) are included which assist management in comparing
performance on a consistent basis
Overview
Aptitude Software has continued to make strategic and
operational progress in the first half of the year.
The Group has enjoyed a good number of new customer wins and
contract expansions in the Banking and Technology, Media and
Telecom ('TMT') sectors demonstrating the strength of the Group's
product portfolio and sector diversity. These additions have led to
Annual Recurring Revenue increasing to GBP30.9 million representing
year on year growth of 11% on a constant currency basis (31
December 2019: GBP29.5 million, 30 June 2019: GBP27.9 million, both
restated for the prevailing exchange rates at 30 June 2020).
Aptitude Software successfully implemented its business
continuity plans in response to COVID-19. All business functions,
including those servicing our diverse client base, have operated
without disruption during the period. As described in the Group's
Trading Update in April 2020, the impact of COVID-19 has resulted
in sales cycles in the insurance sector being extended lowering the
Board's original new business sales performance expectations for
the year. As a result, the Group has moderated and re-phased its
investment plans in the business and is applying a greater focus on
costs to mitigate the financial impact of COVID-19 to the
business.
In the medium term, the Board considers that the impact of
COVID-19 will result in increased demand for Aptitude Software's
technologies as organisations seek further automation of their
finance functions and greater data-led insight into their
businesses. This dynamic further underpins the investment being
made in those products and services that support a client
undertaking a transformation of their finance function, frequently
referred to as a digital finance transformation.
Outlook
Aptitude Software continues to benefit from a focused portfolio
of product and service offerings, a growing SaaS capability,
increasing worldwide presence and a strengthening partner network.
These assets and capabilities, together with the Group's robust set
of financials, provide the Board with confidence in Aptitude
Software's prospects once the short-term impact of COVID-19 has
passed.
Corporate Strategy
Aptitude Software's strategy is focused on providing powerful
financial management software to large global businesses.
The Group executed on a number of strategic activities during
the first half of 2020 which are expected to drive an acceleration
of growth in its software and subscription revenues which now
represent 51% of overall revenue (H1 2019: 49%). The growth in the
proportion of such revenues in the business will, in due course,
lead to an increase in operating margins given the higher margins
achievable from these recurring revenues.
Global Partner Network
A strategic priority for the Group continues to be the growth
and development of Aptitude Software's high-quality partner network
as highlighted by our deepening relationships with the Big 4
accounting firms. Whilst many prospects are sourced directly by the
Group's own sales and marketing teams, the global reach of partners
and the depth of their relationships with large global businesses
provide Aptitude Software with an increasing number of
opportunities and market intelligence. In addition to the new
business benefits provided by the partner network, the
implementation expertise and capabilities of our partners supports
the Group's drive to increase the proportion of software and
subscription revenues. Our partner management teams in North
America, Europe and APAC have been strengthened with a number of
senior appointments. A highlight in the year to date has been the
expansion of the partner network into Japan, focused initially on
Aptitude RevStream.
Investment in Digital Finance Opportunity
Investment is also increasing in the Group's applications and
services focused on digital finance transformation.
What is digital finance?
Finance functions of large global organisations are increasingly
being challenged by the demands of operating in a more digital
world whilst continuing to address ever growing regulatory
pressures and the need to reduce costs. The digital era has seen an
increase in the complexity, volume and number of sources of finance
data, and the growing requirement for decision making to move at
the pace of the business. These growing pressures and demands
present finance functions with both an opportunity and a challenge,
which they can address by digitising and transforming the
organisations' accounting processes.
The demands of digital finance will see new and emerging
technologies being used to maximise the efficiency of the finance
team, give greater financial agility and control, provide improved
operational intelligence and enable strategic foresight. In this
way, digital finance will empower organisations to drive
competitive differentiation, increase market value and deliver
sustainable growth.
Digital finance transformations are expected to accelerate due
to the impact of COVID-19 as finance functions seek further
automation to remove manual dependencies in their organisations
highlighted by the lockdown whilst also addressing the increased
demand for advanced visibility into revenue and cost performance,
increased levels of financial scenario simulation and a move to
higher frequency reporting.
Delivering digital finance
The Aptitude Accounting Hub ('AAH') with its ability to handle
data at a highly granular level is increasingly being considered a
strategic foundation for finance organisations as they undertake
the necessary transformation to meet these new challenges. AAH,
with its highly functional accounting rules engine and sub-ledger,
centralises and automates finance, accounting and reporting. It
delivers a consolidated, yet highly granular, single view of
financial data. With the Aptitude Accounting Hub at its core, a
finance function can progressively transform and be simplified.
To fully realise the opportunity for AAH, investment is
accelerating in the product with several areas of enhanced
functionality and capability identified for future development.
These include the development of new modules to extend AAH's
capabilities and the incorporation of modern technologies. We will
also utilise the flexibility of cloud architectures to facilitate
increased ease of initial deployment and future upgrades to the
platform.
This evolution of AAH's functionality and capability in the
coming years is designed to ensure that Aptitude Software
capitalises on the future needs of the finance market. Digital
finance provides Aptitude Software with a larger market opportunity
which is continuing and non-cyclical in nature and is expected to
strengthen software revenue growth. This growth, combined with an
increased ease and speed of deployment and the continued deepening
of our partner relationships, is expected to lead to software
revenues growing as a proportion of overall revenue and lead to
higher margins.
Potential for Acquisitions
Whilst our focus is currently the organic growth of software and
subscription revenues, the Group's robust financial position
provides the Board with confidence to continue to progress with the
analysis of potential acquisitions. Any acquisition will need to
meet our strict criteria of comprising complementary technologies
focused on Aptitude Software's product suite.
Key Product Overview
Aptitude Accounting Hub
A key highlight in the first six months of the year has been the
entry into a strategic contract to licence AAH to the retail arm of
an existing large European banking client. Our technology will be a
core component of a five-year finance transformation programme
automating the bank's finance processes, demonstrating once again
Aptitude Software's capabilities over and above smart compliance.
The contract provides for future growth in ARR as AAH is deployed
to countries beyond the initial deployment.
The opportunity for AAH remains significant across all our key
industries and is central to Aptitude Software's approach to
addressing the digital finance opportunity as previously
outlined.
Aptitude Revenue Management
The Group's two revenue management applications, collectively
Aptitude Revenue Management ('ARM'), have continued to make
progress in the first half of the year. Included within the new
business contracts signed in the first half of the year was a
material subscription agreement for Aptitude RevStream with a large
North American technology business. Complementing these new
business successes was the expansion of an agreement with a North
American telco for the use of the Aptitude Revenue Recognition
Engine in a previously un-licenced division of their wider group,
demonstrating our ability to sell and implement additional software
to existing clients.
A further highlight in the year to date has been the launch of
Aptitude RevStream ('AREV') into the APAC and European market, with
the product previously being focused on North America. As part of
the launch of AREV into these new markets we have signed our first
software reseller agreement with a partner targeting the Japanese
market.
The two applications within ARM enables finance teams to
automate and simplify the whole revenue lifecycle, from contract
order to revenue recognition, reporting and forecasting. The
applications go significantly beyond core IFRS 15 / ASC 606
compliance to allow total control over complex revenue management
for all contract types ranging from subscription-based revenue
models to complex multi-part or bundled contracts. This capability
allows businesses to understand and control centrally the financial
impact of all their commercial propositions, the quality of their
revenue types as well as providing new and valuable insights to
support future business decision making.
Aptitude Insurance Calculation Engine
The Aptitude Insurance Calculation Engine ('AICE') allows an
insurer to make strategic, transformational investment providing
value beyond compliance, enabling data insights and decision
support delivering long-term business benefits. Demonstrating the
capabilities of AICE, during the first half of the year Aptitude
Software was recognised as a category leader in "IFRS 17 Technology
Solutions: Market and Vendor Landscape 2020", a Chartis Research
report that assesses leading vendors of IFRS 17 and LDTI
solutions.
As previously announced, during the first half of the year the
Group has seen sales cycles lengthening with a number of its
insurance prospects as organisations focus on new short-term
priorities arising from COVID-19. This has been made possible for
insurers as a result of the now-confirmed delay to the introduction
of IFRS 17 (which will now become effective for accounting periods
commencing 1 January 2023). The Group remains confident that these
opportunities will be realised in the medium term as the effective
date of IFRS 17 adoption moves closer.
Whilst all existing client implementations of AICE are
continuing successfully, the Group has seen a small number of
clients seek to reduce their professional services expenditure in
response to both the impact of COVID-19 and the one-year delay of
the implementation of IFRS 17. Whilst reducing professional
services revenue in the short-term, this is expected to result in
increased revenue from these clients in future years as a number of
the projects are now expected to extend until 2023 following the
delay to the effective date of the accounting standard.
Our services
Implementation Services
Aptitude Software provides implementation services to its
clients, with the scale of such services depending on the nature of
the application, the size of the opportunity and the division of
responsibilities between Aptitude Software and its partners. It is
not a strategic priority of the Group to grow its implementation
services revenues, with the business instead focused on making sure
that its software is implemented efficiently, with minimal risk,
short time-to-benefit and at a competitive total cost of ownership.
Investment continues to be made in its products to facilitate
lighter more repeatable implementations and the Group continues to
invest in the enablement of its partner network to facilitate their
ability to implement Aptitude Software's product suite reliably and
efficiently.
Whilst utilisation has been resilient in the first half of the
year, as flagged in our April 2020 Trading Update the impact of
COVID-19 on sales opportunities in the insurance sector is expected
to have a significant impact on 2021 services revenue, due to the
time lag between the signing of new business contracts and the
resulting projects reaching peak levels of activity. The Group
benefits from some flexibility in its resourcing model in APAC and
Europe through its balance of employee and contractor
consultants.
Solution Management Services
Whilst the majority of overall services revenue is associated
with the implementation of Aptitude Software's applications, there
is a growing percentage of revenues derived from Solution
Management Services, with two Aptitude Accounting Hub clients
contracting for this service in the first half of the year. This
service is expected to further enhance the operation and longevity
of applications within major clients and extends the
responsibilities of Aptitude Software beyond traditional software
maintenance services to include services that have typically been
performed by the clients' own IT teams. These include, the
monitoring of system performance, user administration, release
management and functional enhancements. In turn, clients benefit
from the reduced requirement to establish internal technical teams
focused on our applications, providing clients with efficiencies
and allowing them to focus on their core activities. The long term
and recurring nature of solution management services is expected to
provide greater certainty and visibility to the Group's services
revenues and continues to be a focus of investment in the
business.
Adoption of Solution Management Services is now expected to
accelerate following the first half appointment of an experienced
leader to drive the go-to-market strategy for this offering.
COVID-19 update
Aptitude Software successfully implemented its business
continuity plans in response to COVID-19. All business functions,
including those servicing our diverse client base, have operated
without disruption during the period.
The Group has taken several actions to protect the business.
These actions include an increased focus on discretionary
expenditure, the cancellation of 2020 pay rises and the moderation
and re-phasing of investment plans, in addition to material travel
cost savings. The business has not utilised the furlough scheme in
the United Kingdom or other equivalent schemes in countries where
it operates.
People and Organisation
Our People
The exceptional quality of our people has ensured all business
functions have continued successfully despite the impact of
COVID-19. The team is very talented, committed and works incredibly
hard. The Board wishes to thank its employees in these difficult
and unprecedented times both for their outstanding commitment and
the excellent support and dedication they are providing to the
business and to our clients whilst working remotely and supporting
their families.
Aptitude Innovation Centre
The Aptitude Innovation Centre, our long-established integrated
centre of excellence in Poland, at which a growing number of
activities are performed, continues to be a material differentiator
for the Group. The Aptitude Innovation Centre encompasses the
development of the Group's entire product suite whilst also
becoming an increasing focal point for the Group's cloud operations
and support activities. This single integrated centre improves the
collaboration between our teams as they provide software or
associated services to our clients. The migration of activities,
previously performed in the Group's higher cost locations, to the
Aptitude Innovation Centre is increasing the efficiency of our
business providing Aptitude Software with a competitive
advantage.
Financial performance
Revenue
Aptitude Software's overall revenue for the six months ended 30
June 2020 has increased to GBP29.1 million (H1 2019: GBP28.8
million).
Software and Subscription Revenues
Aptitude Software's ARR at 30 June 2020 totalled GBP30.9 million
(31 December 2019: GBP29.5 million, 30 June 2019: GBP27.9 million,
both restated for the prevailing exchange rates at 30 June 2020),
representing year on year growth of 11% on a constant currency
basis.
ARR is the key financial metric for the Group. Included within
ARR are Aptitude Software's annual licence fees or maintenance for
its on-premise clients and subscription fees for the Group's SaaS
clients.
Software and subscription revenues recognised in the first half
of 2020 increased by 4% to GBP14.7 million (H1 2019: GBP14.1
million). Software and subscription revenues now represent 51% of
overall revenue (H1 2019: 49%). It is a key part of the Group's
strategy to increase this percentage whilst maximising the growth
rate of Aptitude Software's ARR, a strategy which in due course
will lead to growth in operating margin percentage given the higher
margins achievable from software and subscriptions revenues.
Implementation and Solution Management Services
Implementation and solution management services revenue totalled
GBP14.4 million for the six months ended 30 June 2020 (H1 2019:
GBP14.7 million) with the reduction consistent with the Group's
strategic focus of growing software and subscription revenues.
Additionally, a small number of clients have chosen to adjust the
current rate of their services expenditure to allow them to deal
with other short-term business priorities arising from
COVID-19.
Operating Profit and Margins
Adjusted Operating Profit for the six months ended 30 June 2020
was in line with the prior period at GBP5.1 million (H1 2019:
GBP5.1 million on a constant currency basis and as reported).
Operating profit on a statutory basis was GBP4.5 million (H1 2019:
GBP4.6 million). Adjusted Operating Margin for the six month period
to 30 June 2020 was therefore aligned with the prior year at 18%
(H1 2019: 18%) despite the Group continuing to prioritise essential
investment across a number of functions including in our products
which support clients as they address the requirements of digital
finance transformation. The Group continues to monitor the balance
between investment in the opportunity facing the business and the
growth in Aptitude Software's operating margins.
Foreign Exchange
With 53% (H1 2019: 52%) of the Group's revenues being generated
from North American clients, the majority of which are invoiced in
US Dollars, the business is impacted by changes in the US dollar
exchange rate. Aptitude Software's H1 2019 revenue and Adjusted
Operating Profit would have been reported at GBP29.0 million and
GBP5.1 million respectively on a constant currency basis (compared
to actual result of GBP28.8 million and GBP5.1 million). Constant
currency is calculated by comparing the 2020 results with 2019
results retranslated at the rates of exchange prevailing during
2020.
Research and Development Expenditure
Total expenditure on product management, research, development
and support in the six months ended 30 June 2020 was GBP4.2 million
(H1 2019: GBP4.4 million) of which GBP3.2 million (H1 2019: GBP3.0
million) was incurred at the Aptitude Innovation Centre. This
reduction in expenditure is in line with the Board's expectations
following the transfer of development activities from California to
Poland for the Aptitude RevStream product, improving cost
competitiveness along with providing a fully centralised centre of
excellence. The Board has continued to determine that none of the
internal research and development costs incurred during the first
half of the year meet the criteria for capitalisation.
Consequently, these have been expensed as incurred through the
income statement.
Non-Underlying Items
Non-underlying items of GBP0.6 million (H1 2019: GBP0.4 million)
principally comprise intangible amortisation (GBP0.4 million), with
the remaining amount in relation to the continued separation costs
incurred as part of the disposal of the Microgen Financial Systems
business in 2019.
Taxation
The total tax charge of GBP1.1 million (H1 2019: GBP1.1 million)
represents 24% of the Group's profit before tax (H1 2019: 24%),
with the increase against the United Kingdom corporate tax rate of
19% due to the proportion of profits generated in overseas
territories which have higher prevailing tax rates, principally the
USA.
Statutory Results
The Group reported a profit for the period attributable to
equity shareholders of GBP3.5 million (H1 2019: GBP25.8 million).
The profit in H1 2019 includes GBP22.4 million from discontinued
operations in respect of the Microgen Financial Systems business
disposed of on the 28 June 2019.
Earnings per Share
As a result of the return of capital in September 2019 and
accompanying share consolidation, Adjusted Basic Earnings per Share
and Basic Earnings per Share from continuing operations increased
to 6.7 pence and 6.0 pence (H1 2019: 6.0 pence and 5.5 pence),
growth of 12% and 9% respectively.
Dividend
An interim dividend of 1.80 pence per share is proposed (2019:
1.80 pence). The interim dividend will be payable on 28 August 2020
to shareholders on the register at the close of business on 7
August 2020.
Balance Sheet
The Group continues to have a strong balance sheet with net
assets at 30 June 2020 of GBP48.3 million (H1 2019: GBP88.4
million), including cash of GBP30.9 million (H1 2019: GBP23.5(5)
million), net funds of GBP29.2 million (H1 2019: GBP21.0(6)
million) and no bank loan. Trade receivables (net) have reduced to
GBP10.7 million (H1 2019: GBP12.3 million), a decrease of GBP1.6
million due to the timing of receipt of annual licence fee and
subscription invoices issued. The growth in the Group's recurring
revenues resulted in deferred income increasing to GBP22.2 million
at 30 June 2020 (H1 2019: GBP21.2 million). The Group's cash
collection disciplines remain strong with like for like DSO (debtor
days) at 30 June 2020 of 60 consistent with prior periods.
Statement on Principal Risks and Uncertainties
Pursuant to the requirements of the Disclosure Guidance and
Transparency Rules the Group provides the following information on
its principal risks and uncertainties. The Group considers
strategic, operational and financial risks and identifies actions
to mitigate those risks. These risk profiles are updated at least
annually. The Group's 2019 Annual Report did identify COVID-19 as a
principal risk, however the timing of the report being submitted in
early March 2020 meant that any impact of COVID-19 had not been
realised. Given the global impact since this date, the Group has
updated both the risks and mitigating actions surrounding COVID-19.
This is detailed in the table below.
Principal risks and Uncertainties Explanation Mitigating Action
The effect of COVID-19 The Group's existing The business continuity
impacts new business client base and sales plans have been successfully
activities, the implementation prospects could delay implemented with the
of our software and our sales cycles/ongoing necessary technology
support provision along implementations as clients and infrastructure in
with the collection of focus on short-term priorities place to facilitate home
client monies. arising from COVID-19. working for all employees
to allow all business
In addition, the global functions to be provided
travel restrictions in without disruption to
place may slow down the our clients.
agreement of new revenue
opportunities further The Group continues to
whilst the ongoing implementations monitor developments
are often completed through across its client base
our consultants' attendance and prospects through
at client sites around its various engagement
the world. These sites teams and partners. The
could be impacted in majority of our client
the short to medium term contracts include force
as clients and prospects majeure clauses which
work remotely as part should provide the Group
of their business continuity with protection if there
plans. is any contractual non-performance
due to the impact of
Furthermore, clients' COVID-19.
own cash flow positions
could become impacted The Group operates a
as a result of being closely controlled collection
negatively impacted from policy with constant
COVID-19 increasing the communication with engagement
risk around non-payment teams reducing any potential
of licence fees and services. exposure of non-payment.
The Group only has minimal
exposure to those industries
which were most affected
by COVID-19 such as travel,
retail and leisure.
------------------------------------ ------------------------------------
All other principal risks and uncertainties detailed within the
Group's 2019 Annual Report remain applicable for the first six
months of the financial year. The Group's 2019 Annual Report is
available from the Aptitude Software website:
https://www.aptitudesoftware.com/investor-relations/reports-presentations/
Related party transactions during the period are disclosed in
Note 18.
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT
For the six months ended 30 June 2020
Unaudited six months ended Unaudited six months ended Audited year ended 31 Dec
30 Jun 2020 30 Jun 2019* 2019*
Before Before Before
Non-underlying Non-underlying Non-underlying Non-underlying Non-underlying Non-underlying
Note items items Total items items Total items items Total
Continuing
operations GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 5 29,129 - 29,129 28,831 - 28,831 59,652 - 59,652
Operating
costs 5/6 (24,034) (563) (24,597) (23,772) (423) (24,195) (49,150) (1,559) (50,709)
--------------- --------------- --------- --------------- --------------- --------- --------------- --------------- ---------
Operating
profit 5/6 5,095 (563) 4,532 5,059 (423) 4,636 10,502 (1,559) 8,943
Finance
income 50 - 50 55 - 55 158 - 158
Finance costs (42) - (42) (278) - (278) (326) - (326)
--------------- --------------- --------- --------------- --------------- --------- --------------- --------------- ---------
Profit before
income
tax 5,103 (563) 4,540 4,836 (423) 4,413 10,334 (1,559) 8,775
Income tax
expense 7 (1,225) 135 (1,090) (1,161) 102 (1,059) (2,403) 370 (2,033)
--------------- --------------- --------- --------------- --------------- --------- --------------- --------------- ---------
Profit from
continuing
operations 3,878 (428) 3,450 3,675 (321) 3,354 7,931 (1,189) 6,742
Profit from
discontinued
operations 17 - - - 2,664 19,769 22,433 2,549 19,881 22,430
Profit for
the period 3,878 (428) 3,450 6,339 19,448 25,787 10,480 18,692 29,172
=============== =============== ========= =============== =============== ========= =============== =============== =========
Earnings per share from continuing
operations
Basic 8 6.0p 5.5p 11.2p
--------- --------- ---------
Diluted 8 5.9p 5.2p 11.0p
--------- --------- ---------
Earnings per
share
Basic 8 6.0p 42.2p 48.4p
--------- --------- ---------
Diluted 8 5.9p 40.2p 47.7p
--------- --------- ---------
* Amounts displayed within the prior periods have been restated for the disposal of Microgen Financial
Systems on 28 June 2019 which met the criteria of being presented as a discontinued operation. See note
17 for details.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE
INCOME
For the six months ended 30 June 2020
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 Jun 30 Jun 31 Dec
2020 2019 2019
GBP000 GBP000 GBP000
Profit for the period 3,450 25,787 29,172
------------ ------------ --------
Other comprehensive income/(expense)
Items that may subsequently be reclassified
to profit or loss:
Fair value gain/(loss) on hedged
financial instruments 210 88 (186)
Currency translation difference 30 (167) (415)
Other comprehensive income from
discontinued operations - 22 22
------------ ------------ --------
Other comprehensive income/(expense)
for the period, net of tax 240 (57) (579)
------------ ------------ --------
Total comprehensive income for the
period 3,690 25,730 28,593
============ ============ ========
Total comprehensive income for the period
arises from:
Continuing operations 3,690 3,275 6,141
Discontinued operations - 22,455 22,452
------------ ------------ --------
3,690 25,730 28,593
============ ============ ========
CONDENSED CONSOLIDATED INTERIM BALANCE SHEET
As at 30 June 2020
Unaudited Unaudited Audited
as at as at as at
30 Jun 30 Jun 31 Dec
Note 2020 2019 2019
ASSETS GBP000 GBP000 GBP000
Non-current assets
Property, plant and equipment 11 2,558 3,653 3,207
Goodwill 23,787 23,787 23,787
Intangible assets 6,063 6,909 6,486
Other long-term assets 1,886 1,729 1,746
Income tax assets - - 944
Deferred tax assets 703 819 1,198
34,997 36,897 37,368
---------- ---------- ---------
Current assets
Trade and other receivables 12 13,031 15,404 9,659
Financial assets
- derivative financial instruments 121 176 4
Current income tax assets 1,555 980 1,155
Cash and cash equivalents 30,887 69,897 32,965
---------- ---------- ---------
Total current assets 45,594 86,457 43,783
---------- ---------- ---------
Total assets 80,591 123,354 81,151
---------- ---------- ---------
LIABILITIES
Current liabilities
Financial liabilities
- derivative financial instruments (28) (19) (120)
Trade and other payables 13 (28,641) (29,642) (30,122)
Capital lease obligations 14 (479) (865) (835)
Current income tax liabilities (206) (316) (485)
Provisions 15 (38) - (38)
(29,392) (30,842) (31,600)
---------- ---------- ---------
Net current assets 16,202 55,615 12,183
---------- ---------- ---------
Non-current liabilities
Capital lease obligations 14 (1,122) (1,676) (1,288)
Provisions 15 (404) (291) (337)
Deferred tax liabilities (1,358) (2,142) (1,502)
---------- ---------- ---------
(2,884) (4,109) (3,127)
---------- ---------- ---------
NET ASSETS 48,315 88,403 46,424
========== ========== =========
CONDENSED CONSOLIDATED INTERIM BALANCE SHEET
As at 30 June 2020
Unaudited Unaudited Audited
as at as at as at
30 Jun 30 Jun 31 Dec
Note 2020 2019 2019
GBP000 GBP000
SHAREHOLDERS' EQUITY GBP000
Share capital 16 4,140 3,994 4,128
Share premium account 16 7,720 6,492 7,660
Capital redemption reserve 12,372 12,372 12,372
Other reserves 34,289 34,353 34,079
(Accumulated losses)/retained
earnings (9,570) 31,610 (11,149)
Foreign currency translation
reserve (636) (418) (666)
-------- ------- ---------
TOTAL EQUITY 48,315 88,403 46,424
======== ======= =========
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN
EQUITY
For the six months ended 30 June 2020
Foreign
Share currency Capital
Share premium Accumulated translation redemption Other
capital account losses reserve reserve reserves Total
GBP000 GBP000 GBP000 GBP000 GBP'000 GBP000 GBP000
Total equity as at
1 January 2020 4,128 7,660 (11,149) (666) 12,372 34,079 46,424
----------- --------- ------------ ------------- ------------ ---------- --------
Comprehensive income
Profit for the period - - 3,450 - - - 3,450
Cash flow hedges
- net fair value
gains - - - - - 210 210
Exchange rate adjustments - - - 30 - - 30
----------- --------- ------------ ------------- ------------ ---------- --------
Total comprehensive
income for the period - - 3,450 30 - 210 3,690
----------- --------- ------------ ------------- ------------ ---------- --------
Shares issued under
share option schemes 12 60 - - - - 72
Share options - value
of employee service - - 159 - - - 159
Dividends to equity
holders of the company - - (2,030) - - - (2,030)
Total contributions
by and distributions
to owners of the company
recognised directly
into equity 12 60 (1,871) - - - (1,799)
----------- --------- ------------ ------------- ------------ ---------- --------
Balance at 30 June
2020 (unaudited) 4,140 7,720 (9,570) (636) 12,372 34,289 48,315
=========== ========= ============ ============= ============ ========== ========
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN
EQUITY
For the six months ended 30 June 2019
Foreign
Share currency Capital
Share premium Retained translation redemption Other
capital account earnings reserve reserve reserves Total
GBP000 GBP000 GBP000 GBP000 GBP'000 GBP000 GBP000
Total equity as at
1 January 2019 3,958 6,488 8,010 (273) 12,372 34,265 64,820
----------- --------- ---------- ------------- ------------ ---------- --------
Comprehensive income
Profit for the period - - 25,787 - - - 25,787
Cash flow hedges
- net fair value
gains - - - - - 88 88
Exchange rate adjustments - - - (145) - - (145)
----------- --------- ---------- ------------- ------------ ---------- --------
Total comprehensive
income for the period - - 25,787 (145) - 88 25,730
----------- --------- ---------- ------------- ------------ ---------- --------
Shares issued under
share option schemes 36 4 - - - - 40
Share options - value
of employee service - - 528 - - - 528
Dividends to equity
holders of the company - - (2,715) - - - (2,715)
Total contributions
by and distributions
to owners of the company
recognised directly
in equity 36 4 (2,187) - - - (2,147)
----------- --------- ---------- ------------- ------------ ---------- --------
Balance at 30 June
2019
(unaudited) 3,994 6,492 31,610 (418) 12,372 34,353 88,403
=========== ========= ========== ============= ============ ========== ========
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
For the six months ended 30 June 2020
Unaudited Unaudited Audited
year
six months ended six months ended ended
Note 30 Jun 2020 30 Jun 2019 31 Dec 2019
GBP000 GBP000 GBP000
Cash flows from operating activities
Cash generated from operations 9 925 6,992 18,420
Interest paid (42) (307) (326)
Income tax paid (439) (1,199) (2,077)
Net cash flows generated from operating activities 444 5,486 16,017
----------------- ----------------- ------------
Cash flows from investing activities
Purchase of property, plant and equipment (131) (429) (828)
Disposal of subsidiaries, net of cash disposed 17 - 47,152 47,152
Interest received 50 57 158
Net cash (used in)/generated from investing
activities (81) 46,780 46,482
----------------- ----------------- ------------
Cash flows from financing activities
Net proceeds from issuance of ordinary shares 16 72 40 1,368
Dividends paid to company's shareholders 10 (2,030) (2,715) (3,859)
Repayment of capital lease obligations (489) (607) (1,127)
Return of value to shareholders - - (46,420)
Expenses relating to return of value - - (600)
Repayment of loan - (8,000) (8,000)
Net cash used in financing activities (2,447) (11,282) (58,638)
----------------- ----------------- ------------
Net (decrease)/increase in cash and cash
equivalents (2,084) 40,984 3,861
Cash and cash equivalents at beginning of period 32,965 29,186 29,186
6 (273) (82)
Exchange rate gains/(losses) on cash and cash equivalents
Cash and cash equivalents at end of period 30,887 69,897 32,965
================= ================= ============
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
1. General information
Aptitude Software Group plc (the 'Company') and its subsidiaries
(together, the 'Group') is a specialist provider of powerful
financial management software to large global businesses.
The Company is a public limited company incorporated and
domiciled in England and Wales with a primary listing on the London
Stock Exchange. The address of its registered office is Old Change
House, 128 Queen Victoria Street, London, England, EC4V 4BJ.
These condensed consolidated interim financial statements were
approved for issue on 28 July 2020.
These condensed consolidated interim financial statements do not
comprise statutory accounts within the meaning of section 434 of
the Companies Act 2006. Statutory accounts for the year ended 31
December 2019 were approved by the Board of directors on 10 March
2020 and delivered to the Registrar of Companies. The report of the
auditors on those accounts was unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement
under section 498 of the Companies Act 2006.
The interim results for the six-month period ended 30 June 2020
and the comparatives for 30 June 2019 are unaudited, yet have been
reviewed by the independent auditors. A copy of the review report
is included at the end of this report.
2. Basis of preparation
These condensed consolidated interim financial statements for
the six months ended 30 June 2020 have been prepared in accordance
with the Disclosure and Transparency Rules of the Financial
Services Authority and with IAS 34, 'Interim financial reporting'
as adopted by the European Union. These condensed consolidated
interim financial statements should be read in conjunction with the
annual financial statements for the year ended 31 December 2019,
which have been prepared in accordance with IFRSs as adopted by the
European Union.
After reviewing the Company's forecasts and projections, the
Directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for the
foreseeable future. In particular, these forecasts considered the
future impact on Aptitude Software Limited of COVID-19. The Company
therefore continues to adopt the going concern basis in preparing
its financial statements.
A scenario testing exercise was also performed for the three
years 2020, 2021 and 2022, with several different sets of
assumptions modelled including some more pessimistic than current
indications may suggest. In all scenarios Aptitude Software remains
comfortably profitable and cash generative in the years under
review, although below the Director's expectations set prior to the
impact of COVID-19. Financial performance in 2020 is not expected
to be materially impacted due to the visibility over services
revenue from existing clients and the benefits of the Aptitude
Software Group's recurring revenue business model. The recurring
revenues, representing over 50% of total revenue, are resilient
given the nature of the Group's enterprise applications which are
typically heavily integrated and central to clients'
mission-critical long-term financial reporting processes,
underpinned by minimum contractual terms of up to six years at
inception.
The modelled lengthening of sales cycles, principally with
insurance prospects in 2020 is, however, expected to have a more
significant impact on 2021 services revenue due to the time lag
between the signing of new business contracts and the resulting
projects reaching peak levels of activity. Profitability is
expected to return towards earlier expectations in 2022 on the
assumption that a more normal business environment has returned in
2021.
At this time of economic uncertainty caused by COVID-19 the
Directors are reassured that the Aptitude Software Group is
financially robust benefitting from a cash balance at 30 June 2020
of GBP30.9 million and no bank loans. Additionally, the Group is
cash generative and profitable, reporting Adjusted Operating Profit
in the six months ended 30 June 2020 of GBP5.1 million.
The Group continues to monitor the collection of monies from
clients with no material delays in payment being cited.
3. Accounting policies
The accounting policies adopted are consistent with those of the
previous financial statements, except as described below.
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to expected total annual profits.
New and amended standards and interpretations need to be adopted
in the first interim financial statements issued after their
effective date. There are no new IFRSs or IFRICs that are effective
for the first time for this interim period that would be expected
to have a material impact on the financial statements.
4. Estimates
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expense. Actual results
may differ from these estimates. In preparing these condensed
consolidated interim financial statements, the significant
judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the
same as those that applied to the consolidated financial statements
for the year ended 31 December 2019, with the exception of changes
in estimates that are required in determining the provision for
income taxes.
Fair value estimation
Financial instruments not measured at fair value
Financial instruments not measured at fair value includes cash
and cash equivalents, trade and other receivables, trade and other
payables, and loans and borrowings. However, due to their
short-term nature and ability to be liquidated at short notice
their carrying value approximates to their fair value.
Financial instruments measured at fair value
The fair value hierarchy of the financial instruments measured
at fair value is provided below.
Level 2 inputs
Unaudited Unaudited
six months six months
ended ended
30 Jun 2020 30 Jun 2019
GBP'000 GBP'000
Financial assets
Derivative financial assets (designated hedge instruments) 121 176
121 176
============= =============
Financial liabilities
Derivative financial liabilities (designated hedge instruments) (28) (19)
(28) (19)
===== =====
The derivative financial assets and liabilities have been valued
using the market approach and are considered to be Level 2 inputs.
There were no changes to the valuation techniques used in the year.
There were no transfers between levels during the year.
5. Segmental information
Business segments
During the first half of 2019 Aptitude Software Group plc
operated two businesses, Aptitude Software and Microgen Financial
Systems, both of which were considered operating segments based on
the reports the Group received from management to make strategic
decisions. With the disposal of Microgen Financial Systems on 28
June 2019, the only continuing business segment was Aptitude
Software and therefore certain segmental analysis is no longer
required for either period.
Geographical segments
The Group has two geographical segments for reporting purposes,
the United Kingdom and the Rest of the World.
The following table provides an analysis of the Group's sales by
origin and by destination.
Sales revenue by origin Sales revenue by destination
Unaudited Unaudited Unaudited Unaudited
six months six months six months six months
ended ended ended ended
30 Jun 2020 30 Jun 2019 30 Jun 2020 30 Jun 2019
GBP000 GBP000 GBP000 GBP000
Continuing operations
United Kingdom 16,050 15,363 4,729 4,764
Rest of World 13,079 13,468 24,400 24,067
29,129 28,831 29,129 28,831
------------- ------------- --------------- --------------
5. Segmental information (continued)
The Group derives revenue from the transfer of goods and
services in the following major categories and geographical
regions, these being the United Kingdom ('UK') and Rest of the
World ('RoW'):
Continuing operations
Unaudited six months ended 30 June 2020
Software related
revenue Services related revenue
UK RoW Total UK RoW Total Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue from external
clients 2,615 12,080 14,695 2,114 12,320 14,434 29,129
======= ======= ======= ========= ======== ======== =======
Unaudited six months ended 30 June 2019
Software related
revenue Services related revenue
UK RoW Total UK RoW Total Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue from external
clients 2,444 11,688 14,132 2,320 12,379 14,699 28,831
======= ======= ======= ========= ======== ======== =======
All of the revenue displayed in the above table is recognised
over time in line with the Group's accounting policy detailed on
pages 78 to 80 of the Aptitude Software Group plc 2019 Annual
Report and has been generated from contracts with clients.
The following is an analysis of the carrying amount of
non-current assets (excluding deferred and income tax assets), and
additions to property, plant and equipment and intangible assets
(excluding right-of-use asset additions resulting from property
lease agreements) and intangible assets, analysed by the
geographical area in which the assets are located.
Carrying amount of
non-current assets Capital expenditure
Unaudited Unaudited Unaudited Unaudited
six months six months six months six months
ended ended ended ended
30 Jun 2020 30 Jun 2019 30 Jun 2020 30 Jun 2019
GBP000 GBP000 GBP000 GBP000
United Kingdom 17,417 17,682 55 309
Rest of World 16,877 18,396 76 120
34,294 36,078 131 429
------------- ------------- ------------- -------------
The Company's business is to invest in its subsidiaries and,
therefore, it operates in a single segment.
6. Non-underlying items
Unaudited Unaudited Audited
six months six months year
ended 30 Jun 2020 ended 30 Jun 2019 ended 31 Dec 2019
GBP000 GBP000 GBP000
Continuing operations
Amortisation of acquired intangibles 423 423 846
Restructuring and separation costs 140 - -
Overseas taxation provision - - 713
563 423 1,559
7. Income tax expense
Income tax expense is recognised based on management's estimate
of the weighted average income tax rate expected for the full
financial year of 24% (the estimated tax rate for the six months
ended 30 June 2019 was 24%). The increase against the United
Kingdom corporation tax rate of 19% is due to the proportion of
profits in overseas territories with higher prevailing tax rates,
principally in the USA. The weighted average income tax rate
applied to discontinued operations for the six months ended 30 June
2019 was 20%.
8. Earnings per share Unaudited
Unaudited six six months Audited
months ended ended 30 Jun year ended
30 Jun 2020 2019 31 Dec 2019
pence pence pence
Earnings per share
Basic
From continuing operations 6.0 5.5 11.2
From discontinued operations - 36.7 37.2
-------------- -------------- -------------
6.0 42.2 48.4
Diluted
From continuing operations 5.9 5.2 11.0
From discontinued operations - 35.0 36.7
-------------- -------------- -------------
5.9 40.2 47.7
8. Earnings per share (continued)
Unaudited
Unaudited six six months Audited
months ended ended 30 Jun year ended
30 Jun 2020 2019 31 Dec 2019
Adjusted earnings per
share pence pence pence
Basic
From continuing operations 6.7 6.0 12.8
From discontinued operations - 4.1 4.2
-------------- -------------- -------------
6.7 10.1 17.0
Diluted
From continuing operations 6.6 5.7 12.5
From discontinued operations - 4.0 4.2
-------------- -------------- -------------
6.6 9.7 16.7
To provide an indication of the underlying operating performance
the adjusted earnings per share calculation above excludes
intangible amortisation and other non-underlying items and has a
tax charge based on the effective rate.
Unaudited
Unaudited six six months Audited
months ended ended 30 Jun year ended
30 Jun 2020 2019 31 Dec 2019
pence pence pence
Basic earnings per share 6.0 42.2 48.4
Non-underlying items 0.7 (32.1) (31.0)
Prior years' tax credit - - (0.4)
Adjusted earnings per share 6.7 10.1 17.0
-------------- -------------- -------------
9. Cash generated from operations
Unaudited Audited
Unaudited six months year
six months ended ended ended
30 Jun 2020 30 Jun 2019 31 Dec 2019
GBP000 GBP000 GBP000
Profit before tax for the period
from:
Continuing operations 4,540 4,413 8,775
Discontinued operations - 22,964 22,961
------------------ ------------- -------------
Profit before tax including discontinued
operations 4,540 27,377 31,736
Adjusted for:
Depreciation 823 1,012 1,844
Overseas taxation provision - - 713
Amortisation 423 963 1,392
Share-based payment expense 159 528 1,033
Gain on sale of subsidiary - (20,309) (23,657)
Finance income (50) (57) (158)
Finance costs 42 307 326
Changes in working capital:
(Increase)/decrease in receivables (3,512) (3,549) 1,493
(Decrease)/increase in payables (1,518) 721 3,900
Increase/(decrease) in provisions 18 (1) (202)
Cash generated from operations 925 6,992 18,420
================== ============= =============
10. Dividends
The interim dividend of 1.8 pence per share (2019: 1.8 pence per
share) was approved by the Board on 28 July 2020. It is payable on
28 August 2020 to shareholders on the register at 7 August 2020.
This interim dividend has not been included as a liability in this
interim financial information. It will be recognised in
shareholders' equity in the year to 31 December 2020. A final
dividend of GBP2,030,000 was paid in May 2020 and relates to the
year ending 31 December 2019 (2019: final dividend
GBP2,715,000).
11. Property, plant and equipment
Unaudited Unaudited
six months six months
ended ended
30 Jun 2020 30 Jun 2019
GBP000 GBP000
Opening net book amount 1 January 3,207 5,417
Additions 131 429
Disposal of subsidiary - (1,213)
Net disposals - (13)
Exchange movements 43 45
Depreciation (823) (1,012)
Closing net book amount 30 June (unaudited) 2,558 3,653
================== ======================
The Group has not placed any contracts for future capital
expenditure which have not been provided for in the financial
statements.
12. Trade and other receivables
Unaudited Unaudited
six months six months
ended ended
30 Jun 2020 30 Jun 2019
GBP000 GBP000
Trade receivables - net 10,724 12,331
Other receivables 672 1,012
Prepayments 1,171 656
Accrued income 464 1,405
Closing net book amount 30 June (unaudited) 13,031 15,404
================ ==================
Contract assets and contract liabilities only comprise accrued
and deferred income respectively.
Within the trade receivables balance of GBP10,724,000 (30 June
2019: GBP12,331,000) there are balances totalling GBP2,385,000 (30
June 2019: GBP2,217,000) which, at 30 June 2020 were overdue for
payment. During July 2020, significant receipts totalling
GBP3,900,000 have been collected against the total receivables
balance.
13. Trade and other payables
Unaudited Unaudited
six months six months
ended ended
30 Jun 2020 30 Jun 2019
GBP000 GBP000
Trade payables 620 941
Other tax and social security
payable 1,311 1,024
Other payables 128 882
Accruals 4,347 5,589
Deferred income 22,235 21,206
Closing net book amount 30 June (unaudited) 28,641 29,642
================== ==================
14. Capital lease obligations
Unaudited
Unaudited six months
six months ended
ended 30 Jun
30 Jun 2020 2019
GBP000 GBP000
Amounts payable under capital
lease arrangements:
Within one year 531 948
Within two to five years 1,096 1,473
After five years 114 344
Total 1,741 2,765
Less: future finance charges (140) (224)
------------- ------------
Present value of lease obligations 1,601 2,541
Less: Amount due for settlement within 12
months (shown under current liabilities (479) (865)
------------
As at 30 June 1,122 1,676
------------- ------------
Unaudited
Unaudited six months
six months ended
ended 30 Jun
30 Jun 2020 2019
The present value of financial lease liabilities
is split as follows: GBP000 GBP000
Within one year 479 865
Within two to five years 1,008 1,343
After five years 114 333
------------- ------------
1,601 2,541
============= ============
15. Provisions
Unaudited
Unaudited six months
six months ended ended
30 Jun 2020 30 Jun 2019
GBP000 GBP000
At 1 January 375 424
Charged to income statement 60 -
Disposal of subsidiary - (132)
Exchange movements 7 (1)
--------------------- ---------------------
At 30 June 442 291
===================== =====================
Provisions have been analysed between current and non-current as
follows:
Unaudited Unaudited
six months six months
ended ended
30 Jun 2020 30 Jun 2019
GBP000 GBP000
Current 38 -
Non-current 404 291
At 30 June 442 291
============= =============
GBP 377,000 of the total provision at 30 June 2020 of GBP
442,000 relates to the cost of dilapidations in respect of its
occupied leasehold premises (30 June 2019: GBP242,000).
16. Share capital
Unaudited Unaudited
six months ended six months ended
30 Jun 2020 30 Jun 2019
Ordinary share capital at
7 1/3 pence (30 June 2019: Number Ordinary Number Ordinary
6 3/7 pence) each of shares Shares of shares Shares
000 GBP000 000 GBP000
Issued and fully paid:
Opening balance as at 1 January 56,218 4,128 61,173 3,932
Shares issued under share
option schemes 160 12 555 36
At 30 June (unaudited) 56,378 4,140 61,728 3,968
----------- --------- ----------- ---------
Shares to be issued
Deferred equity consideration
on acquisition - - 399 26
----------- --------- ----------- ---------
Closing balance as at 30 June
(unaudited) 56,378 4,140 62,127 3,994
=========== ========= =========== =========
16. Share capital (continued)
During the second half of 2019, the Group announced a return of
value to shareholders of 73 pence per ordinary share amounting to
GBP 46.4 million in cash, by way of a 'B' share scheme, which gave
shareholders the ability to receive cash in the form of capital.
The return of value was approved by shareholders on 23 September
2019. The return of value was accompanied by a 7 for 8 share
consolidation to maintain broad comparability of the share price
before and after the creation of the 'B' shares. This consolidation
of shares resulted in a reduction of 7,948,799 to the number of
ordinary shares in issue.
Employee share option scheme options exercised during the period
to 30 June 2020 resulted in 159,992 shares being issued (30 June
2019: 554,710), with exercise proceeds of GBP72,000. The related
weight average share price at the time of exercise was GBP3.93 per
share.
Share premium
Unaudited
Unaudited six months
six months ended
ended 30 Jun
30 Jun 2020 2019
GBP000 GBP000
Opening balance as at 1 January 7,660 6,488
Movement in relation to share options exercised 60 4
Closing balance as at 30 June (unaudited) 7,720 6,492
============= ============
17. Discontinued operations
On 28 June 2019, the Group completed the disposal of Microgen
Financial Systems Limited and is reported in the prior year as a
discontinued operation. Financial information relating to the
discontinued operation for the period to the date of disposal along
with the gain on disposal are presented within note 28 of the
Aptitude Software Group plc 2019 Annual Report.
18. Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation.
During 2020, the Group entered into transactions with a
subsidiary of FDM Group (Holdings) plc, a company for which Peter
Whiting (non-executive Director of Aptitude Software Group plc) is
currently a non-executive Director. FDM Group (Holdings) plc
provided consultancy services to the Group during the six-month
period ended 30 June 2020 at a cost of GBP164,000 (Six months ended
30 June 2019: GBP219,000).
18. Related party transactions (continued)
During the prior year, the Group entered into transactions with
Phoenix Johnson Ltd, a company for which Naomi Johnson (an
experienced facility management professional), the wife of Tom
Crawford who was at that point a Director of Aptitude Software
Group plc, is both the sole shareholder and an employee. Phoenix
Johnson Ltd provided consultancy services to Aptitude Software
Group plc during the six-month period ended 30 June 2019 at a cost
of GBP28,000. These services ceased on 1 November 2019.
There were no other related party transactions during the
six-month period ended 30 June 2020 (30 June 2019: GBPnil), as
defined by International Accounting Standard No 24 'Related Party
Disclosures', except for key management compensation. The related
party transactions for the year ended 31 December 2019 as defined
by International Accounting Standard No 24 'Related Party
Disclosures' are disclosed in note 33 of the Aptitude Software
Group plc Annual Report for the year ended 31 December 2019.
19. Statement of directors' responsibilities
The Directors confirm that these condensed interim financial
statements have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and that the interim management report
includes a fair review of the information required by DTR 4.2.7 and
DTR 4.2.8, namely:
- an indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
- material related-party transactions in the first six months
and any material changes in the related-party transactions
described in the last annual report.
The Directors of Aptitude Software Group plc are listed in the
Aptitude Software Group plc Annual Report for 31 December 2019. A
list of current directors is maintained on the Aptitude Software
Group plc website: www.aptitudesoftware.com/investor-relations/
Copies of this statement are available on the investor relations
page of our website ( www.aptitudesoftware.com/investor-relations/
).
By order of the Board
P Wood
28 July 2020
Deputy Chief Executive Officer and Chief Financial Officer
Independent review report to Aptitude Software Group plc
Report on the condensed consolidated interim financial
statements
We have reviewed Aptitude Software Group plc's condensed
consolidated interim financial statements (the "interim financial
statements") in the Interim Results of Aptitude Software Group plc
for the 6 month period ended 30 June 2020 which comprises;
-- the condensed consolidated interim balance sheet as at 30 June 2020;
-- the condensed consolidated interim income statement and
condensed consolidated interim statement of comprehensive income
for the period then ended;
-- the condensed consolidated interim statement of cash flows for the period then ended;
-- the condensed consolidated interim statement of changes in
equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors.
The Directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with International Financial
Reporting Standards as adopted by the European Union. The condensed
set of financial statements included in this half-yearly financial
report has been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union.
Our responsibility
Our responsibility is to express a conclusion to the company on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity'. A review of interim financial information consists
of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK) and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
The impact of uncertainties arising from the UK exiting the
European Union on our review
Our review of the condensed set of financial statements in the
half-yearly financial report requires us to obtain an understanding
of all relevant uncertainties, including those arising as a
consequence of the effects of Brexit. Such reviews assess and
challenge the reasonableness of estimates made by the Directors and
the related disclosures and the appropriateness of the going
concern basis of preparation of the financial statements. All of
these depend on assessments of the future economic environment and
the company's future prospects and performance.
Brexit is one of the most significant economic events for the
UK, and at the date of this report its effects are subject to
unprecedented levels of uncertainty, with the full range of
possible outcomes and their impacts unknown. We applied a
standardised firm-wide approach in response to these uncertainties
when assessing the Company's future prospects and performance.
However, no review of interim financial information should be
expected to predict the unknowable factors or all possible future
implications for a company associated with a course of action such
as Brexit.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2020 is not prepared, in all material respects, in accordance
with International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
Use of our report
This report is made solely to the Company, as a body, in
accordance with International Standard on Review Engagements (UK
and Ireland) 2410, 'Review of Interim Financial Information
performed by the Independent Auditor of the Entity'. Our review
work has been undertaken so that we might state to the Company
those matters we are required to state to it in an independent
review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company as a body, for our review work, for
this report, or for the conclusion we have formed.
Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
28(th) July 2020
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR KKFBQABKDPOB
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