TIDMAPTD
RNS Number : 7076R
Aptitude Software Group PLC
10 March 2021
10 March 2021
APTITUDE SOFTWARE GROUP plc
('Aptitude Software' or 'the Group')
Audited Preliminary Results for the Year Ended
31 December 2020
Aptitude Software Group plc (LSE: APTD), a specialist provider
of powerful financial management software to large global
businesses, reports its Audited Preliminary Results for the year
ended 31 December 2020.
Financial Highlights
Year ended 31 December 2020 2019(1) % Change
Annual Recurring Revenue (2) at year end GBP31.2m GBP28.1m(3) 11%
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* Software and subscription revenue GBP30.5m GBP28.5m 7%
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* Implementation and solution management services
revenue GBP26.8m GBP31.2m (14%)
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Total Revenue GBP57.3m GBP59.7m (4%)
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Cash and cash equivalents at year end GBP44.8m GBP33.0m 36%
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Adjusted Operating Profit(4) GBP9.1m GBP10.5m (13%)
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Statutory operating profit GBP8.1m GBP8.9m (9%)
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Adjusted Basic Earnings per Share(4) 13.2p 12.8p 3%
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Basic Earnings per Share 12.5p 11.2p 12%
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-- The Group has remained agile and resilient to the impact of
the pandemic despite the initial disruption to a number of our key
markets in the second and third quarter of 2020
-- Year on year growth in Annual Recurring Revenue ('ARR') of
11% on a constant currency(3) basis driven by new business wins and
the expansion of existing customer relationships
-- Highlighting both the strength of our client relationships
and quality of product suite, net retention(5) in the year despite
the impact of Covid was 102% (2019: 98%)
-- Software and subscription revenue, the strategic focus of the
Group, now represents 53% of total revenue (2019: 48%) with growth
of 7% to GBP30.5 million for the year ended 31 December 2020 (2019:
GBP28.5 million)
-- Strong balance sheet with cash of GBP44.8 million (2019:
GBP33.0 million), net funds(6) of GBP42.9 million (2019: GBP30.8
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
Strategic and Operational Highlights:
-- Launch of Aptitude Accounting Hub and Aptitude Insurance
Calculation Engine as Software-as-a-Service ('SaaS') offerings,
multi-year SaaS agreements signed with two North American
insurers
-- Multiple sales of Aptitude Revenue Management to North
American technology and telecommunication companies
-- First SaaS agreement for the use of both Aptitude Revenue
Management and Aptitude Lease Accounting Engine with a leading
global medical technology company. This success further
demonstrates the additional capabilities realisable by clients from
combining more than one of the Group's tightly integrated and
complementary applications
-- Expansion of the use of our products in several existing
clients including a North American telecommunications company
licencing its fourth application and a significant Aptitude
Accounting Hub sale to a European bank
-- Strengthening of the global partner network with new
propositions developed in 2020 providing access to new markets
-- Implementation services capacity reduced following market
disruption, future growth in demand for services expected to be
increasingly fulfilled by the Group's strengthening partner
network
-- The pandemic is expected to accelerate the stimulus for
organisations to undertake greater finance automation in the medium
term supporting the Group's investment in the products which
address these requirements
Commenting on the results, Jeremy Suddards, Chief Executive
Officer, said: -
'The Group continued to make good progress in 2020 despite the
challenges arising from the pandemic, with a number of new business
wins in our strategic industries and new adjacent ones,
complemented by an expansion in the use of our applications in
several of our largest existing clients across the globe. With a
strong sales performance in the final quarter of the year and a
growing pipeline, Aptitude Software looks forward to 2021 with
confidence and anticipates a financial outcome at least consistent
with 2020.
Aptitude Software benefits from a focused portfolio of product
and service offerings, an established SaaS capability, increasing
worldwide presence and a strengthening partner network. With Covid
expected to accelerate the drive for greater automation in our
clients' finance functions, these assets and capabilities position
the Group to be able to fully realise the significant opportunity
ahead.'
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 finance automation, whether part of a broad finance
transformation by a client or to address specific regulatory
requirements. Our various products take data from complex systems,
typically with multiple siloed data sources across multiple
business entities, perform complex accounting calculations and
create a unified view of finance. This allows our clients to reap
numerous benefits including significant efficiencies, 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.
www.aptitudesoftware.com
Throughout this announcement:
1 Amounts represent continuing operations which exclude the
results of the Microgen Financial Systems business 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 exclude non-underlying operating
items, unless stated to the contrary. Further detail in respect of
the non-underlying operating items can be found within Note 2 of
the notes to the Financial Statements.
(5) Net retention is the total value of on-going Annual
Recurring Revenue at the year-end from clients in place at the
start of the year as a percentage of the opening Annual Recurring
Revenue from those clients on a constant currency basis
(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
Chairman's Statement
Overview
Aptitude Software made strategic and operational progress in a
year in which the Group's key markets were disrupted by the onset
of the pandemic.
In the initial months of Covid, a number of sales and
implementations were slowed as organisations focused on other
priorities, however, a more typical business environment returned
in the final quarter of the year with several new business
contracts completed. Whilst below the pre-pandemic new business
expectations for 2020, overall the Group achieved a good number of
new business wins and contract expansions in the banking, insurance
and technology, media and telecom ('TMT') sectors demonstrating the
strength of the Group's product portfolio and sector diversity.
These additions led to Annual Recurring Revenue increasing to
GBP31.2 million as at 31 December 2020, representing year on year
growth of 11% on a constant currency basis (31 December 2019:
GBP28.1 million, 30 June 2020: GBP29.3 million, both restated for
the prevailing exchange rates at 31 December 2020).
From the onset of the pandemic the Group remained both agile and
resilient with all business functions, including those servicing
our diverse client base, operating seamlessly. This would not have
been possible without the exceptional quality of our people and the
Board wishes to thank our employees for their adaptability,
commitment and the excellent support and dedication they provided,
and continue to provide, to the business and to our clients whilst
working remotely.
Benefitting from the previously planned investment, the Group
launched the Aptitude Accounting Hub and Aptitude Insurance
Calculation Engine as SaaS offerings allowing the business to
capitalise on the accelerated move to cloud experienced in the year
with all key products now available as SaaS. Following this launch
the Group entered into multi-year SaaS agreements with two North
American insurers helping drive the strong final quarter's sales
performance.
Strengthening the Group's high-quality partner network, a
strategic focus, has also been achieved with a number of joint
propositions established in the year providing the business with
access either to new geographies for specific products or to
segments of existing markets not previously accessible.
The Board believes the pandemic will accelerate the stimulus for
organisations to undertake finance automation to further transform
their finance functions, removing manual processes and improving
the quality and regularity of their financial analysis and
planning, a capability which is central to our product
strategy.
Dividend
Having considered the Group's progress and financial performance
in 2020, the Board has proposed to maintain dividend levels. As a
result, a final dividend of 3.60 pence per share is proposed (2019:
3.60 pence), making a total ordinary dividend of 5.40 pence per
share for the year (2019: 5.40 pence). Subject to shareholder
approval at the Group's Annual General Meeting in April 2021, the
proposed final dividend will be paid on 28 May 2021 to shareholders
on the register at 7 May 2021.
The business has not utilised the furlough scheme nor received
any other government support in the United Kingdom nor in any other
country where it operates.
Outlook
Aptitude Software continues to benefit from a focused portfolio
of product and service offerings, an established SaaS capability,
increasing worldwide presence and a strengthening partner network.
The Group's robust set of financials complemented by a strong new
business performance across the final quarter of 2020 provide the
Board with confidence for the year ahead.
Ivan Martin
Chairman
9 March 2021
Chief Executive Officer's Report
Introduction
Aptitude Software is a specialist provider of powerful financial
management software to large global businesses .
Our applications provide data and business insight to our
worldwide client base enabling them to achieve significant benefits
such as automation of their finance function, enhanced financial
control, deeper operational intelligence and regulatory compliance.
Our markets are underpinned by strong fundamentals as technology
advancement both drives and facilitates an increasingly automated
approach to finance operations, augmented by the continuing impetus
of regulatory requirements. Our clients include some of the world's
largest companies, typically organisations with complex financial
data and technology landscapes. Whilst our products are relevant
for all sectors, the Group has established a strong presence in
banking, insurance and technology, media and telecom ('TMT')
complemented by clients in a series of other advanced
industries.
The business generates revenue from its software through a
combination of licence fees (primarily annual recurring licences),
software maintenance/support, software subscriptions for its
cloud-based offerings and implementation and other recurring
support services including the growing solution management service.
Development, together with an increasing number of other client
focused services, continues to be performed at the Aptitude
Innovation Centre in Wroclaw, Poland, with sales, support and
implementation services provided from Aptitude Software's London
headquarters and the North American and Singaporean regional
businesses.
Corporate Strategy
Aptitude Software's strategy is focused on providing powerful
financial management software to large international
businesses.
The Group executed on a number of strategic activities during
2020, with details of these provided in the sections below. These
activities are focused on driving an acceleration of growth in the
software and subscription revenues which now represent 53% of
overall revenue (2019: 48%). The growth in the proportion of such
revenues in the business will, in due course, lead to both an
increase in operating margins, given the higher margins achievable
from these recurring revenues, and even greater future revenue
visibility.
Software-as-a-Service ('SaaS') Progression
A key strategic highlight in the year has been the launch of
Aptitude Accounting Hub ('AAH') and Aptitude Insurance Calculation
Engine ('AICE') as SaaS offerings and the subsequent entry into
multi-year SaaS agreements with two North American insurers for
this new service. The launch expands the Group's existing SaaS
capabilities and allows the business to deploy all its key products
using this service, capitalising on the accelerated move to the
cloud that the industry has experienced in 2020. T he availability
of these solutions as SaaS, reducing the demands on clients'
internal capabilities and reducing implementation times and costs,
is also expected to facilitate the greater use of our technology by
more organisations smaller in size than the Group's current client
profile, thereby expanding our market opportunity.
Most new clients are expected to deploy the Group's software
through our SaaS offering, (though an acceleration in the migration
of existing on-premise clients to SaaS is not anticipated in the
short term given the investment in clients' infrastructure
supporting our technology). This dynamic will lead to further
growth in SaaS subscription fees as a proportion of Annual
Recurring Revenue which had increased to 23% as at 31 December 2020
(2019: 17%).
Whilst the revenue model for Aptitude Software's SaaS agreements
is aligned with the existing licencing of our on-premise software
sales, the margins generated by SaaS deployments are lower than
on-premise software as a result of incurring third-party technology
costs and the provision of a level of embedded technical services
within the SaaS offering. Cost efficiencies are expected to be
realised in the medium term as the Group progresses with its
planned investment in both its cloud infrastructure and the
technical evolution of its products.
Partner Network
A strategic priority for the Group continues to be the growth
and development of Aptitude Software's high-quality partner network
with a number of joint new propositions developed in the year.
These propositions have further strengthened our partner programme
which includes deepening relationships with the Big 4 accounting
firms and provides the business either with access to new
geographies for specific products or with the targeting of segments
of existing markets not previously accessible by the Group.
Whilst many prospects are sourced directly by the Group's own
sales and marketing teams, the global reach of our partners and the
depth of their relationships with large businesses provide Aptitude
Software with an increasing number of opportunities, enhanced
market coverage and 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
strategic drive to increase the proportion of software and
subscription revenues.
Investment has increased in the year in both the partner
management team and the education and enablement of our partners to
sell, implement and support our products. We expect this enablement
to facilitate an uplift in the level of services being performed by
partners leading to a richer revenue mix for the business through
an increased weighting towards software revenue.
Expanding Client Presence
As the number of both our clients and products increases there
is a growing opportunity for add-on sales to existing users. These
sales may consist of either increasing the footprint of products
already in use by clients or the cross-sell of other Aptitude
Software products to an existing user.
Investments in strategic account management teams in each of our
regions has resulted in a number of successes in 2020 including the
entry into a SaaS subscription agreement with an existing client (a
leading North American telecommunications company) for the use of
Aptitude Lease Accounting Engine ('ALAE'). ALAE is the fourth of
Aptitude Software's products licenced by the client and further
demonstrates the additional capabilities realisable by using more
than one of Aptitude Software's tightly integrated and
complementary applications. A further success was the licencing in
the first half of 2020 of Aptitude Accounting Hub ('AAH') to an
existing leading European banking client as a key component of
their finance transformation to support the increased reporting
requirements of up to 18 countries. Sales to existing clients
represented approximately one third of new contract additions to
ARR in 2020.
Product Evolution
The Group continues to evolve its product set to address the
requirements of finance functions that are increasingly being
challenged by the demands of operating in a digital world with
growing regulatory and cost pressures. These demands result in an
increase in the complexity, volume and number of sources of finance
data, and the increasing requirement for decision making to move at
the pace of the business in real time.
Our products are moving towards a deeper focus on user
experience as clients increase their expectations of the
operational intelligence and insights required to support more
forward-looking scenario planning. Investment is being increased to
ensure the Group retains its advantages over its competition, both
in the technology architecture and functionality of existing
products as well as the development of new capability to meet the
evolving market requirements.
Acquisitions
Aptitude Software's corporate strategy is focused on organic
growth, however, the Group's strong financial position, together
with its experience of successfully identifying and integrating
acquisitions, provides the Board with the opportunity to accelerate
growth. Any acquisition will be expected to focus on the
acceleration of the product strategy and / or entry into new
markets for Aptitude Software.
Aptitude Innovation Centre
Investment continues in the team at the Aptitude Innovation
Centre, our long-established integrated centre of excellence in
Poland which continues to be a material differentiator for the
Group. The Aptitude Innovation Centre encompasses the development
of the Group's entire product suite and is also increasingly
becoming a 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.
Headcount at the Aptitude Innovation Centre increased by 18% in
the year to 162. In addition to recruitment for activities such as
cloud operations and support, growth continued in both new and
existing product development teams as investment in the evolution
of our technology increased.
Our People
The exceptional quality and adaptability of our people has
ensured all business functions have continued successfully despite
the impact of the pandemic. The team is very talented, committed
and works incredibly hard. The Board wishes to thank its employees
in these difficult times both for their outstanding commitment and
the excellent support they are providing to the business and to our
clients and partners whilst working remotely.
During the year a number of investments in our team were
initiated. Aptitude Software's training and enablement function has
been strengthened whilst a number of initiatives focused on
individuals' career development across the business are progressing
well. The Group will continue to develop its internal talent as
well as recruiting the best external skills to help us capitalise
on the market opportunity
Our Products
Aptitude Accounting Hub
The Group continues to leverage the capabilities of the Aptitude
Accounting Hub ('AAH'), securing new agreements with a number of
organisations as they seek to automate and transform their finance
functions. These successes included subscription agreements with
leading North American insurers
Supplementing this new business growth was the entry into a
strategic contract to licence AAH to the retail arm of an existing
major European banking client. Our technology will be a core
component of a five-year finance transformation programme
automating the bank's finance & reporting processes,
demonstrating once again Aptitude Software's capabilities in
finance automation over and above smart compliance. The contract
provides for increased future growth in Annual Recurring Revenue as
AAH is deployed to countries beyond the initial deployment
scope.
The opportunity for AAH remains significant across all our key
industries and is central to Aptitude Software's approach in
addressing organisations' need to drive finance automation to
continue the transformation of their finance functions . This is
supported by recent publications from industry analysts who have
recognised the increasing importance of an accounting hub in modern
finance architecture. The application centralises and automates
finance, accounting and reporting processes, creating a deep level
of operational intelligence for our clients. It also delivers a
consolidated, yet highly granular, single view of financial data
which enhances business insights to assist decision making. AAH can
be used on a standalone basis or in conjunction with other Aptitude
Software applications. Clients can, and do, choose to implement AAH
either before, at the same time, or after the implementation of a
specialised accounting calculation engine such as Aptitude Revenue
Management.
Aptitude Revenue Management
The Group's two revenue management applications, Aptitude
Revenue Recognition Engine and Aptitude RevStream, collectively
Aptitude Revenue Management ('ARM'), have continued to make good
progress in the year. Included within the new business contracts
signed in the year were material subscription agreements for
Aptitude RevStream with a large North American technology business
and a leading medical technology company who subscribed for the use
of the Aptitude RevStream application concurrently with the
Aptitude Lease Accounting Engine, the first combined SaaS agreement
of its kind . A significant sale of the telco-focused Aptitude
Revenue Recognition Engine into North America was also
achieved.
The two applications within ARM enable 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 such as the introduction of new products
in different markets.
Aptitude Insurance Calculation Engine
Further progress with the Aptitude Insurance Calculation Engine
('AICE') has been achieved in 2020 following the previously
outlined delay to the introduction of IFRS 17 (which will now
become effective for accounting periods commencing 1 January 2023).
In addition to the SaaS agreements signed with North American
insurers in the final quarter of 2020, a further significant sale
was made to a European insurer in the opening months of 2021.
AICE is a strategic, transformational investment providing value
to an insurer beyond compliance. It enables data insights and
decision support delivering long-term business benefits.
Demonstrating the capabilities of AICE, during 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 Long Duration
Targeted Improvement ('LDTI') solutions.
The compliance-focused elements of the application mean that
opportunities remain for this application as the effective date of
IFRS 17 adoption moves closer, not only in the large insurer market
where successes to date have been achieved but also across small
and mid-sized participants who have yet to finalise their
plans.
AptConnect 2020
After a successful inaugural AptConnect in 2019, the business
hosted the second annual event in November 2020. The event was
hosted via a market-leading virtual event platform, which enabled
the business to welcome guests from 4 continents and some 14
countries, bringing together over 500 people representing our
clients, partners and prospects. The conference covered a range of
topics from the digitisation of the finance department to the
launch of Aptitude Accounting Hub and Aptitude Insurance
Calculation Engine as SaaS. The agenda included speakers from our
existing client base detailing their own successful implementation
journeys of the Aptitude Software product suite along with talks
from our partners covering the post-pandemic need to automate
finance.
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 balance of
responsibilities between Aptitude Software and its partners.
Following on from the investment made in 2020, the business
continues to invest in the expansion and enablement of its partner
network to facilitate their ability to implement Aptitude
Software's product suite reliably and efficiently. Whilst this
enablement will lead to a greater proportion of services being
provided by partners, it remains important to maintain a high
quality delivery capability to ensure that the Group can continue
to provide its expertise to both support partners and to those
clients who wish to receive our services directly.
Whilst utilisation has been resilient, Covid disrupted a number
of sales opportunities during the middle quarters of 2020. Due to
the Group's long implementation cycles, services revenue will be
most impacted by this disruption in 2021 and this has in turn
resulted in a reduction in the Group's implementation services
capacity. The investment in our partner strategy means that we
expect future growth in demand for services to be increasingly
fulfilled by the Group's strengthening partner network. This in
turn will allow the Group to drive future margin progression and
revenue visibility by improving the percentage of revenues from
software and subscription fees.
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 ('SMS'), with multiple Aptitude Accounting Hub,
Aptitude Insurance Calculation Engine and Aptitude Revenue
Management clients contracting for this service across the Group's
key sectors and geographies in 2020.
This service extends the responsibilities of Aptitude Software
beyond traditional software maintenance services to include those
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
them with efficiencies and allowing them to focus on their core
business activities. We expect the service (which continues to be a
focus of investment in the business) to enhance the operation and
longevity of applications within major clients, while the long term
and recurring nature of the associated income is expected to
provide greater certainty and visibility to the Group's services
revenues.
Global Presence
Aptitude Software's opportunity is worldwide with an established
presence in APAC, Europe and its largest market, North America,
which represents 59% of Annual Recurring Revenue ('ARR'). This
global reach is supported by the Group's principal offices in
London, Poland, Boston and Singapore.
Whilst activities in APAC, non-EU European states and North
America are unlikely to be impacted by the United Kingdom's
withdrawal from the European Union, Aptitude Software performs its
development at the Aptitude Innovation Centre in Poland and has a
number of on-going implementation projects within European Union
states (2020 revenue from European Union states excluding the
United Kingdom was GBP8.6 million). Whilst travel requirements have
been limited during 2020 due to Covid, prior to this, certain
employees travelled frequently between these countries.
New country by country guidance took effect from 1 January 2021
and it is our expectation that our travel requirements remain
viable but will necessitate some additional planning and
administration. The business has considerable experience in
obtaining work permits to deploy its highly skilled consultants
across the world, and benefits from the flexibility provided by its
partner network. The remote working arrangements put in place as
part of the pandemic continuity plan will also be of benefit,
providing an alternative to physical travel where appropriate. The
business is continuing to clarify the situation; however, the Group
is well-placed to identify and react quickly to further changes in
the operating conditions. The Group also has the option of
expanding the consulting capability of the Aptitude Innovation
Centre, which is located within the European Union.
Outlook
Benefitting from a strong new business performance in the final
quarter of 2020 and a good pipeline, Aptitude Software looks
forward to 2021 with confidence and anticipates a financial outcome
at least consistent with 2020.
Jeremy Suddards
Chief Executive Officer
9 March 2021
Group Financial Performance and Chief Financial Officer's
Report
Revenue
Software and Subscription Revenues
Aptitude Software's Annual Recurring Revenue ('ARR') at 31
December 2020 totalled GBP31.2 million (31 December 2019: GBP28.1
million, 30 June 2020: GBP29.3 million, both restated for the
prevailing exchange rates at 31 December 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 and maintenance for
its on-premise clients and subscription fees for the Group's SaaS
clients. The proportion of clients deploying software using SaaS
has continued to grow with SaaS subscription fees accounting for
23% of the total ARR at 31 December 2020 (2019: 17%).
Highlighting both the strength of our client relationships and
the quality of our product suite, net retention in the year despite
the impact of the pandemic was 102% (2019: 98%) (measured by the
total value of on-going ARR at the year-end from clients in place
at the start of the year as a percentage of the opening ARR from
those clients on a constant currency basis).
Software and subscription revenues recognised in 2020 increased
by 7% to GBP30.5 million (2019: GBP28.5 million). These now
represent 53% of overall revenue (2019: 48%). 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 given the margin
differential between software and services revenues.
Implementation and Solution Management Services
Services revenue totalled GBP26.8 million for the year ended 31
December 2020 (2019: GBP31.2 million) of which 89% is attributable
to the implementation of our software with the balance of 11%
generated from solution management services which, whilst not
included in the Group's Annual Recurring Revenue, are recurring in
nature. Implementation services revenue reduced in the year due to
the disruption to our key markets related to the pandemic. Due to
the Group's long implementation cycles, some further reduction is
anticipated in 2021.
Research and Development Expenditure
Total expenditure on product management, research and
development in the year ended 31 December 2020 was GBP8.5 million
(2019: GBP9.3 million). Despite an 18% overall headcount increase
at the Aptitude Innovation Centre in 2020, the above costs were
lower than 2019 due to the material savings from relocating
development activities for the Aptitude RevStream product from
California to Poland as well as a reduction in travel costs as a
result of Covid. Investment will continue as previously planned in
2021 with costs expected to increase by approximately 20%.
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.
Operating Profit and Margins
Adjusted Operating Profit and operating profit on a statutory
basis for the year ended 31 December 2020 were in line with
management expectations at GBP9.1 million and GBP8.1 million
respectively (2019: GBP10.5 million and GBP8.9 million). Adjusted
Operating Margin for the period remained resilient at 16% (2019:
18%) despite the Group continuing to prioritise essential
investment across a number of functions.
Foreign Exchange
With 52% (2019: 53%) 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 2019 revenue and Adjusted
Operating Profit would have been reported at GBP59.1 million and
GBP10.3 million respectively on a constant currency basis (compared
to actual result of GBP59.7 million and GBP10.5 million). Constant
currency is calculated by comparing the 2020 results with 2019
results retranslated at the rates of exchange prevailing during
2020.
Whilst the Group's exposure to volatility in the US Dollar
exchange rate in the short term is limited, in the medium term the
impact becomes more material, notwithstanding the Group's
significant US cost base, as the proportion of both fixed US Dollar
software revenue (translated at the point of invoicing) and hedged
US Dollar service revenues reduce. From 30 June 2020 to 9 March
2021, the US Dollar has weakened by 13% against the pound reducing
the value of Aptitude Software's ARR reported at 30 June 2020 by
GBP1.8 million.
Due to the benefits of the Group's US cost base, the policy of
translating software revenue at the point of invoice and hedging
services revenue, the profit impact for 2020 was minimal with 2021
only partially impacted.
Non-Underlying Items
Non-underlying items of GBP1.0 million (2019: GBP1.6 million)
principally comprise intangible amortisation (GBP0.8 million), with
the remaining amount in relation to the final separation costs
incurred as part of the disposal of the Microgen Financial Systems
business in 2019.
Taxation
The total tax charge after adjusting for the impact of
non-underlying items of GBP1.6 million (2019: GBP3.3 million)
represents 18.1% of the Group's profit before tax (2019: 24.2%),
with the reduction against the United Kingdom corporate tax rate of
19% and 2019 levels due to the Group's ability to receive
additional tax relief on its research and development expenditure.
This additional relief is expected to continue into future
years.
Statutory Results
The Group reported a profit for the period attributable to
equity shareholders of GBP7.0 million (2019: GBP29.2 million). The
profit in 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 13.2 pence and 12.5 pence (2019: 12.8 pence and 11.2 pence),
growth of 3% and 12% respectively.
Dividend
A final ordinary dividend of 3.60 pence per share is proposed
(2019: 3.60 pence), making a total ordinary dividend of 5.40 pence
per share for the year (2019: 5.40 pence). The business has not
utilised the furlough scheme nor received any other government
support in the United Kingdom nor in any other country where it
operates.
Balance Sheet
The Group continues to have a strong balance sheet with net
assets at 31 December 2020 of GBP50.6 million (2019: GBP46.4
million), including cash of GBP44.8 million (2019: GBP33.0
million), net funds of GBP42.9 million (2019: GBP30.8 million) and
no bank loan. Trade receivables (net) have reduced to GBP5.9
million (2019: GBP7.2 million), a reduction of GBP1.3 million due
to both strong year end cash collection and the reduction in
services invoicing in 2020. The growth in the Group's recurring
revenues resulted in deferred income increasing to GBP25.7 million
at 31 December 2020 (2019: GBP22.8 million). The Group's cash
collection disciplines remain strong with DSO (debtor days) at 31
December 2020 of 40 (2019: 60).
Cash Generation
Cash generated from continuing operations improved to GBP16.2
million (2019: GBP18.4 million, of which GBP15.3 million was in
relation to the continuing business), with the Group's overall cash
balance increasing by GBP11.9 million in the year. Whilst this
increase is principally due to the Group continuing to benefit from
a growing recurring revenue base with customers typically paying
annually in advance, the cash position has also improved through a
reduction in tax payments and improved working capital pursuant to
the lower services revenue in the year.
Philip Wood
Deputy Chief Executive Officer and Chief Financial Officer
9 March 2021
Group Income Statement
for the year ended 31 December 2020
Year Ended 31 Dec 2020 Year Ended 31 Dec 2019
Before Before
non-underlying Non-underlying non-underlying Non-underlying
Notes items items Total items items Total
Continuing GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
operations
Revenue 1 57,266 - 57,266 59,652 - 59,652
Operating
costs 2 (48,155) (964) (49,119) (49,150) (1,559) (50,709)
Operating
profit 9,111 (964) 8,147 10,502 (1,559) 8,943
--------------- --------------- ----------------- --------------- --------------- --------------
Finance
income 61 - 61 158 - 158
Finance costs (100) - (100) (326) - (326)
--------------- --------------- ----------------- --------------- --------------- --------------
Net finance
costs (39) - (39) (168) - (168)
--------------- --------------- ----------------- --------------- --------------- --------------
Profit before
income tax 9,072 (964) 8,108 10,334 (1,559) 8,775
Income tax
expense 3 (1,585) 514 (1,071) (2,403) 370 (2,033)
--------------- --------------- ----------------- --------------- --------------- --------------
Profit from
continuing
operations 7,487 (450) 7,037 7,931 (1,189) 6,742
Profit from
discontinued
operations 15 - - - 2,549 19,881 22,430
--------------- --------------- ----------------- --------------- --------------- --------------
Profit for
the
year 7,487 (450) 7,037 10,480 18,692 29,172
=============== =============== ================= =============== =============== ==============
Earnings per share from continuing
operations
Basic 4 12.5p 11.2p
----------------- --------------
Diluted 4 12.3p 11.0p
----------------- --------------
Earnings per
share
Basic 4 12.5p 48.4p
----------------- --------------
Diluted 4 12.3p 47.7p
----------------- --------------
group statement of comprehensive income
For the year ended 31 December 2020
Year ended Year ended
31 Dec 2020 31 Dec 2019
GBP000 GBP000
Profit for the year 7,037 29,172
------------- -------------
Other comprehensive income/(expense)
Items that will or may be reclassified to profit
or loss:
Fair value gain/(loss) on hedged instruments 45 (186)
Currency translation difference (988) (415)
Other comprehensive income from discontinued operations - 22
------------- -------------
Other comprehensive expense for the year, net of
tax (943) (579)
------------- -------------
Total comprehensive income for the year 6,094 28,593
============= =============
Total comprehensive income for the year arising
from:
Continuing operations 6,094 6,141
Discontinued operations - 22,452
------------- -------------
6,094 28,593
============= =============
Group Balance Sheet
For the year ended 31 December 2020
As at As at
31 Dec 2020 31 Dec 2019
Notes GBP000 GBP000
ASSETS
Non-current assets
Property, plant and equipment including right-of-use
assets 6 2,394 3,207
Goodwill 7 23,787 23,787
Intangible assets 8 5,640 6,486
Other long-term assets 1,472 1,746
Income tax assets 642 944
Deferred tax assets 448 1,198
34,383 37,368
------------------- -------------------
Current assets
Trade and other receivables 9 7,782 9,659
Financial assets - derivative financial instruments 62 4
Current income tax assets 1,161 1,155
Cash and cash equivalents 44,822 32,965
------------------- -------------------
53,827 43,783
Total assets 88,210 81,151
------------------- -------------------
LIABILITIES
Current liabilities
Financial liabilities
- derivative financial instruments (133) (120)
Trade and other payables 10 (33,652) (30,122)
Capital lease obligations 11 (881) (835)
Current income tax liabilities (247) (485)
Provisions 12 - (38)
(34,913) (31,600)
------------------- -------------------
Net current assets 18,914 12,183
------------------- -------------------
Non-current liabilities
Capital lease obligations 11 (972) (1,288)
Provisions 12 (441) (337)
Deferred tax liabilities (1,236) (1,502)
------------------- -------------------
(2,649) (3,127)
------------------- -------------------
NET ASSETS 50,648 46,424
=================== ===================
Group Balance Sheet
For the year ended 31 December 2020
As at As at
31 Dec 2020 31 Dec 2019
Notes GBP000 GBP000
SHAREHOLDERS' EQUITY
Share capital 13 4,143 4,128
Share premium account 7,828 7,660
Capital redemption reserve 12,372 12,372
Other reserves 34,124 34,079
Accumulated losses (6,165) (11,149)
Foreign currency translation reserve (1,654) (666)
TOTAL EQUITY 50,648 46,424
============================= ====================
Group Statement of changes in shareholders' equity
for the Year Ended 31 December 2020
Foreign
currency Capital
Share Share Accumulated translation redemption Total
capital premium losses reserve reserve Other Equity
GBP000 GBP000 GBP000 GBP000 GBP000 reservesGBP000 GBP000
At 1 January
2020 4,128 7,660 (11,149) (666) 12,372 34,079 46,424
========== ========== ============== ============== ============= ================ =========
Profit for the
year - - 7,037 - - - 7,037
Cash flow
hedges
- net fair
value
gains in the
year - - - - - 45 45
Exchange rate
adjustments - - - (988) - - (988)
---------- ---------- -------------- -------------- ------------- ---------------- ---------
Total
comprehensive
income for the
year - - 7,037 (988) - 45 6,094
---------- ---------- -------------- -------------- ------------- ---------------- ---------
Shares issued
under
share option
schemes 15 168 - - - - 183
Share options -
value of
employee
service - - 337 - - - 337
Deferred tax on
financial
instruments - - 9 - - - 9
Deferred tax on
share options - - (118) - - - (118)
Corporation tax
on share
options - - 763 - - - 763
Dividends to
equity
holders of the
company - - (3,044) - - - (3,044)
Total
Contributions
by and
distributions
to owners of
the
company
recognised
directly in
equity
income 15 168 (2,053) - - - (1,870)
---------- ---------- -------------- -------------- ------------- ---------------- ---------
At 31 December
2020 4,143 7,828 (6,165) (1,654) 12,372 34,124 50,648
========== ========== ============== ============== ============= ================ =========
Group Cash Flow Statement
for the Year Ended 31 December 2020
Year ended Year ended
31 Dec 2020 31 Dec 2019
Notes GBP000 GBP000
Cash flows from operating activities
Cash generated from operations 14 16,238 18,420
Interest paid (100) (326)
Income tax received/(paid) 281 (2,077)
Net cash flows generated from operating activities 16,419 16,017
-------------- --------------
Cash flows from investing activities
Purchase of property, plant and equipment,
excluding right-of-use assets (232) (828)
Disposal of subsidiary, net of cash disposed - 47,152
Interest received 61 158
Net cash (used in)/generated from investing
activities (171) 46,482
-------------- --------------
Cash flows from financing activities
Net proceeds from issuance of ordinary share
capital 183 1,368
Dividends paid to company's shareholders 5 (3,044) (3,859)
Repayment of loan - (8,000)
Payment of capital lease obligations (924) (1,127)
Return of value to shareholders - (46,420)
Expenses relating to return of value - (600)
Net cash used in financing activities (3,785) (58,638)
-------------- --------------
Net increase in cash and cash equivalents 12,463 3,861
Cash, cash equivalents and bank overdrafts
at beginning of year 32,965 29,186
Exchange rate losses on cash and cash equivalents (606) (82)
Cash and cash equivalents at end of year 44,822 32,965
============== ==============
Notes to the Audited preliminary results for the year ended 31
December 2020
1. Segmental analysis
Business segments
The Board has determined the operating segments based on the
reports it receives from management to make strategic
decisions.
During the prior year 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 in the year ending 31 December
2020 was Aptitude Software and therefore certain segmental analysis
is no longer required to be provided for this period.
The principal activity of the Group throughout 2019 and 2020 was
the provision of business-critical software and services.
1(a) Geographical analysis
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
Year ended Year ended Year ended Year ended
31 Dec 2020 31 Dec 2019 31 Dec 2020 31 Dec 2019
Continuing operations GBP000 GBP000 GBP000 GBP000
United Kingdom 32,096 32,194 9,571 8,419
Rest of World 25,170 27,458 47,695 51,233
57,266 59,652 57,266 59,652
============= ============= =============== ==============
2. Non-underlying items
31 Dec 2020 31 Dec 2019
GBP000 GBP000
Continuing operations
Amortisation of intangibles 846 846
Overseas taxation - 713
Group reorganisation costs 118 -
964 1,559
============ ============
3. Income tax expense
Year ended Year ended
31 Dec 2020 31 Dec 2019
Analysis of charge in the year GBP000 GBP000
Current tax:
- tax charge on underlying items (1,114) (3,992)
- tax credit on non-underlying items 22 125
- adjustment to tax in respect of prior
periods 132 145
- adjustment to tax in respect of prior
periods on non-underlying items 255 -
Total current tax (705) (3,722)
------------- -------------
Deferred tax:
- tax (charge)/credit on underlying items (274) 722
- tax credit on non-underlying items 237 361
- adjustment to tax in respect of prior
periods (329) 75
Total deferred tax (366) 1,158
------------- -------------
Income tax expense (1,071) (2,564)
============= =============
Income tax expense is attributable to:
Profit from continuing operations (1,071) (2,033)
Profit from discontinued operations - (531)
------------- -------------
(1,071) (2,564)
============= =============
The adjustment to tax in respect of prior periods on
non-underlying items totalling GBP255,000 has been created through
the benefit from additional research and development relief. The
adjustment to tax in respect of prior periods on underlying items
totalling GBP329,000 relates to the reduction in the assumed
benefit from share option deductions.
The total tax charge of GBP1,071,000 (2019: GBP2,564,000)
represents 13.21% (2019: 8.08%) of the Group profit before tax of
GBP8,108,000 (2019: GBP31,736,000). The prior year reduction in
effective rate is due principally to the impact of the exempt gain
on disposal of Microgen Financial Systems Limited, see note 15 for
details.
After adjusting for the impact of non-underlying items, change
in tax rates, share based payment charge and prior year tax charge,
the tax charge for the year of GBP1,643,000 (2019: GBP3,270,000)
represents 18.11% (2019: 24.17%), which is the tax rate used for
calculating the adjusted earnings per share. The reduction in rate
against the prior year is due to the research and development tax
relief obtained in the year.
At 31 December 2019, the Group had unused tax losses totalling
GBP4,329,000 available for offset against future profits. A
deferred tax asset of GBP742,000 was recognised in respect of these
losses as the Group anticipated being able to utilise these in full
in the year ending 31 December 2020. In line with expectations,
during 2020 these losses were utilised in full. Consequently, no
unused tax losses at 31 December 2020 were available for
offset.
The difference between the total tax charge and the amount
calculated by applying the effective United Kingdom corporation tax
rate of 19.00% (2019: 19.00%) to the profit on ordinary activities
before tax is as follows:
Year ended Year ended
31 Dec 2020 31 Dec 2019
GBP000 GBP000
Profit from continuing operations before
tax 8,108 8,775
Profit from discontinued operations before
tax - 22,961
------------- -------------
8,108 31,736
Tax at the United Kingdom corporation tax
rate of 19.00% (2019: 19.00%) (1,540) (6,030)
Effects of:
Adjustment to tax in respect of prior periods 58 271
Adjustment in respect of foreign tax rates (138) (306)
Expenses not deductible for tax purposes (27) (186)
Exempt gain on disposal - 3,894
Other (29) (135)
Research and development tax relief 618 -
Recognition of tax losses - 25
Change in future tax rates (13) (97)
Total taxation (1,071) (2,564)
============= =============
United Kingdom corporation tax is calculated at 19.00% (2019:
19.00%) of the estimated assessable profit for the year. Taxation
for other jurisdictions is calculated at the rates prevailing in
the respective jurisdictions.
4. Earnings per share
To provide an indication of the underlying operating performance
per share, the adjusted profit after tax figure shown below
excludes non-underlying items and has a tax charge using the
effective rate of 18.11% (2019: 24.17%).
Year ended Year ended
31 Dec 2020 31 Dec 2019
GBP000 GBP000
Profit on continuing operations before tax
and non-underlying items 9,072 10,334
Profit on discontinued operations before
tax and non-underlying items - 3,196
------------- -------------
Profit on ordinary activities before tax
and non-underlying items 9,072 13,530
Tax charge at a rate of 18.11% (2019: 24.17%) (1,643) (3,270)
------------- -------------
7,429 10,260
Prior years' tax charge 58 220
Non-underlying items net of tax (450) 18,692
Profit on ordinary activities after tax 7,037 29,172
============= =============
2020 2019
Number Number
(thousands) (thousands)
Weighted average number of shares 56,339 60,280
Effect of dilutive share options 780 865
57,119 61,145
============= =============
2020 2020 2019 2019
Basic Diluted Basic Diluted
EPS EPS EPS EPS
Pence pence pence pence
Earnings per share 12.5 12.3 48.4 47.7
Non-underlying items net of tax 0.8 0.8 (31.0) (30.6)
Prior years' tax credit (0.1) (0.1) (0.4) (0.4)
Adjusted earnings per share 13.2 13.0 17.0 16.7
======= ========= ======= =========
Basic earnings per share
From continuing operations 12.5 12.3 11.2 11.0
From discontinued operations - - 37.2 36.7
------- --------- ------- ---------
12.5 12.3 48.4 47.7
======= ========= ======= =========
Adjusted earnings per share
From continuing operations 13.2 13.0 12.8 12.5
From discontinued operations - - 4.2 4.2
------- --------- ------- ---------
13.2 13.0 17.0 16.7
======= ========= ======= =========
Adjusted earnings per share are calculated using adjusted profit
after tax.
5. Dividends
2020 pence 2019 pence 2020 2019
per share per share GBP000 GBP000
Dividends paid:
Interim dividend 1.80 1.80 1,015 1,144
Final dividend (prior year) 3.60 4.40 2,029 2,715
5.40 6.20 3,044 3,859
=========== =========== ======== ========
Proposed but not recognised
as a liability:
Final dividend (current year) 3.60 3.60 2,031 2,024
=========== =========== ======== ========
The proposed final dividend for the current year was approved by
the Board on 9 March 2021 but was not included as a liability as at
31 December 2020, in accordance with IAS 10 'Events after the
Balance Sheet date'. If approved by the shareholders at the Annual
General Meeting this final dividend will be payable on 28 May 2021
to shareholders on the register at the close of business on 7 May
2021.
6. Property, plant and equipment including right-of-use
assets
31 Dec 2020 31 Dec
2019
GBP000 GBP000
Opening net book value 1 January 3,207 5,417
Additions 775 925
On disposal of subsidiary (note 15) - (1,213)
Net disposals (41) (67)
Exchange movements 26 (11)
Depreciation (1,573) (1,844)
2,394 3,207
============ ========
7. Goodwill
31 Dec 2020 31 Dec
2019
GBP000 GBP000
Opening net book value 1 January 23,787 48,793
On disposal of subsidiary (note 15) - (25,006)
------------ ---------
23,787 23,787
============ =========
8. Intangible assets
31 Dec 2020 31 Dec
2019
GBP000 GBP000
Opening net book value 1 January 6,486 14,186
On disposal of subsidiary (note 15) - (6,308)
Amortisation (846) (1,392)
------------ --------
5,640 6,486
============ ========
9. Trade and other receivables
31 Dec 2020 31 Dec
2019
GBP000 GBP000
Trade receivables 5,881 7,218
Less: provision for impairment of receivables - (19)
------------ -------
Trade receivables - net 5,881 7,199
Other receivables 499 1,127
Prepayments 791 795
Accrued income 611 538
7,782 9,659
============ =======
Within the trade receivables balance of GBP 5,881,000 (2019: GBP
7,218,000) there are balances totalling GBP 1,453,000 (2019: GBP
1,934,000) which, at 31 December 2020, were overdue for payment. Of
this balance GBP 1,433,000 (2019: GBP1,313,000) has been collected
at 9 March 2021 (2019: 10 March 2020).
10. Trade and other payables
31 Dec 2020 31 Dec
2019
GBP000 GBP000
Trade payables 600 1,509
Other tax and social security payable 2,020 1,549
Other payables 166 92
Accruals 5,163 4,130
Deferred income 25,703 22,842
33,652 30,122
============ =======
11. Capital lease obligations
The Group leases various offices which, following the adoption
of IFRS 16, met the criteria set out to be recognised as capital
lease agreements.
31 Dec 2020 31 Dec
2019
GBP000 GBP000
Amounts payable under capital lease agreements:
Within one year 908 901
Within two to five years 1,084 1,171
After five years - 229
------------ -------
Total 1,992 2,301
Less: future finance charges (139) (178)
------------ -------
Present value of lease obligations 1,853 2,123
Less: Amount due for settlement within 12 months
(shown under current liabilities) (881) (835)
972 1,288
============ =======
31 Dec 2020 31 Dec
2019
GBP000 GBP000
The present value of financial lease liabilities
is split as follows:
Within one year 881 835
Within two to five years 972 1,064
After five years - 224
1,853 2,123
============ =======
12. Provisions for other liabilities and charges
Provisions
31 Dec 2020 31 Dec 2019
GBP000 GBP000
At 1 January 375 424
Charged to income statement 69 90
On disposal of subsidiary - (132)
Foreign exchange movement (3) (7)
At 31 December 441 375
============ ============
Provisions have been analysed between current and non-current as
follows:
Provisions
31 Dec 2020 31 Dec 2019
GBP000 GBP000
Current - 38
Non-current 441 337
441 375
============ ============
GBP 386,000 (2019: GBP 317,000) of the total provision at 31
December 2020 of GBP 441,000 relates to the cost of dilapidations
in respect of its occupied leasehold premises. All of the
non-current provision is expected be utilised within 2 to 5 years
(2019: GBP 337,000).
13. Share capital
Ordinary shares of 7 1/3p each Number GBP000
Issued and fully paid:
At 1 January 2020 56,217,970 4,128
Issued under share option schemes 210,997 15
At 31 December 2020 56,428,967 4,143
=========== =======
14. Cash flows from operating activities
Reconciliation of profit before tax to net cash generated from
operations:
Year ended Year ended
31 Dec 2020 31 Dec 2019
GBP000 GBP000
Profit before tax for the year from
Continuing operations 8,108 8,775
Discontinued operations - 22,961
------------- -------------
Profit before tax including discontinued operations 8,108 31,736
Adjustments for:
Depreciation 1,573 1,844
Amortisation 846 1,392
Overseas taxation provision - 713
Share-based payment expense 337 1,033
Gain on disposal of subsidiary, excluding
direct costs incurred - (23,657)
Finance income (61) (158)
Finance costs 100 326
Changes in working capital excluding the effects
of acquisition:
Decrease in receivables 1,917 1,493
Increase in payables 3,484 3,900
Decrease in provisions (66) (202)
Cash generated from operations 16,238 18,420
============= =============
Cash generated from operations is from:
Continuing operations 16,238 15,295
Discontinued operations - 3,125
------------- -------------
16,238 18,420
============= =============
15. Discontinued operations
15(a) Description
On 30 May 2019, the Group announced that it had entered into an
agreement to sell the entire issued share capital of Microgen
Financial Systems Limited, to Moscow Bidco Limited, a newly
incorporated private limited company controlled by Silverfleet
Capital Partners LLP, for consideration of GBP 51.4 million. The
disposal was approved by Aptitude Software Group plc's shareholders
at a General Meeting held on 24 June 2019, with completion of the
disposal effective on 28 June 2019 and is reported in the current
period as a discontinued operation. Financial information relating
to the discontinued operation for the period to the date of
disposal is set out below, with the gain on disposal being
presented within the profit from discontinued operation (see
analysis in 15(b) below).
15(b) Financial information and cash flow information
The financial performance and cash flow information presented
are for the period 1 January 2019 to 28 June 2019.
Period from
1 Jan 2019
to
28 June 2019
GBP000
Income statement
Revenue 8,089
Operating costs (4,866)
--------------
Adjusted Operating Profit 3,223
Non-underlying items (540)
Gain on disposal of subsidiary -
--------------
Operating profit 2,683
Finance income 2
Finance costs (29)
--------------
Profit before income tax 2,656
Income tax expense (531)
--------------
Profit after tax from discontinued operation 2,125
Gain on disposal of subsidiary after tax (see (c)) 20,305
--------------
Cash generated from operations 22,430
==============
Other comprehensive income
Items that will or may be reclassified to profit or
loss
Currency translation gain 22
--------------
Total comprehensive income for the year arising from
discontinued operations 22,452
--------------
Profit from non-underlying items is generated from:
Non-underlying operating costs (540)
Gain on disposal of subsidiary 20,305
Income tax credit 116
--------------
19,881
==============
Period from
1 Jan 2019
to
28 June 2019
Cash flow statement GBP000
Net cash from operating activities 3,125
Net cash generated from investing activities (includes an
inflow of GBP47,152,000 from the sale) 47,078
Net cash generated from financing activities 554
--------------------
Net increase in cash generated by the subsidiary 50,757
====================
15(c) Details of the sale of the subsidiary
Book value
GBP000
Net assets disposed
Property, plant and equipment 1,213
Goodwill 25,006
Intangible assets 6,308
Other long-term assets 257
Deferred income tax assets 302
Trade and other receivables 3,267
Cash and cash equivalents 4,259
Trade and other payables (9,299)
Capital lease obligations (815)
Current income tax liabilities (1,298)
Provisions for liabilities and charges (132)
Deferred tax liabilities (1,314)
-----------
NET ASSETS 27,754
===========
Consideration received
Proceeds received on completion 51,411
Less: direct costs incurred (3,352)
-----------
48,059
===========
Gain on disposal excluding direct costs incurred 23,657
===========
Gain on disposal 20,305
===========
16. Post balance sheet events
Since the year end, new country by country guidance took effect
in respect of the United Kingdom's withdrawal from the European
Union. The withdrawal represents a non-adjusting event for the
purposes of these financial statements and, even if it had
represented an adjusting event the Directors believe the impact of
this would have been immaterial. This is based on the conclusions
set out within the Chief Executive Officer's Report.
In addition, the Group continues to be affected by the global
restrictions implemented by governments in response to the COVID-19
outbreak detailed within the Chief Executive Officer's Report. This
impact remains unchanged since the year end.
17. Statement by the directors
The preliminary results for the year ended 31 December 2020 and
the results for the year ended 31 December 2019 are prepared under
International Financial Reporting Standards as adopted for use in
the EU ("IFRS"). The accounting policies adopted in this
preliminary announcement are consistent with the Annual Report for
the year ended 31 December 2020.
The financial information set out in this preliminary
announcement does not constitute the Company's statutory accounts
for the years ended 31 December 2020 or 31 December 2019. The
financial information for the year ended 31 December 2019 is
derived from the Annual Report delivered to the Registrar of
Companies. The Annual Report for 2020 will be delivered to the
Registrar of Companies in due course. The auditors' report on those
accounts was unqualified and neither drew attention to any matters
by way of emphasis nor contained a statement under either section
498(2) of Companies Act 2006 (accounting records or returns
inadequate or accounts not agreeing with records and returns), or
section 498(3) of Companies Act 2006 (failure to obtain necessary
information and explanations).
The Board of Aptitude Software Group plc approved the release of
this audited preliminary announcement on 10 March 2021.
The Annual Report for the year ended 31 December 2020 will be
posted to shareholders in due course and will be delivered to the
Registrar of Companies following the Annual General Meeting of the
Company. The report will also be available on the investor
relations page of our web site (www.aptitudesoftware.com). Further
copies will be available on request and free of charge from the
Company Secretary at Old Change House, 128 Queen Victoria Street,
London, EC4V 4BJ.
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END
FR FLFVDVRIAIIL
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March 10, 2021 02:00 ET (07:00 GMT)
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