TIDMATQT
RNS Number : 8020V
ATTRAQT Group PLC
26 July 2018
26 July 2018
ATTRAQT Group plc
("ATTRAQT", the "Group" or the "Company")
Half year results
ATTRAQT Group plc (AIM: ATQT), a leading provider of online
merchandising, onsite search and eCommerce personalisation,
announces its unaudited results for the six months ended 30 June
2018.
Highlights of the period:
-- Revenue increased 11% to GBP8.4m on a like-for-like basis*
-- Revenue increased 53% to GBP8.4m on a statutory basis (H1 2017: GBP5.5m)
-- Gross profit increased by 15% to GBP4.9m on a like-for-like basis*
-- Gross profit increased 27% to GBP4.9m (H1 2017: GBP3.9m)
-- Gross profit margin for the Group increased by 2% to 59% on a like-for-like basis*
-- Adjusted EBITDA losses were GBP0.2m (H1 2017: GBP0.5m losses)
-- Losses before tax were GBP1.8m (H1 2017: GBP3.1m losses)
-- Adjusted basic EPS loss 1.7p per share (H1 2017: 4.0p loss per share)
-- Cash at period end of GBP1.6m (FY 2017: GBP1.6m)
-- Average SaaS revenue per logo up 17% to GBP83k (2017: GBP71k)
-- Launched two new products: personalised recommendations and visual recommendations
-- 89 client renewals including two-year renewal for the Group's largest customer
* 2017 like-for-like figures include Fredhopper contribution as
if it had formed part of the Group during that period.
Post-period highlights:
-- One new logo signed with two global brands in early July
Nick Habgood, Chairman, commented,
"Over the period we have taken significant steps to drive the
underlying operational effectiveness and performance of the
business. We have continued to build upon our strong product set,
with further product innovation and platform integration to serve a
blue-chip client base in an exciting and growing market place.
We were very pleased to have Luke join the business in May and
are confident that, amongst his wider skill set, his sales and
marketing expertise will have a positive impact going forward. The
Board is confident that trading for the full year will be in line
with current market expectations and with a new management team in
place, process improvement initiatives rolling out, and a clear
strategy we have the right component to deliver strong profitable
growth and returns for all of the Company's stakeholders."
For further information, please contact:
ATTRAQT Group plc Tel: 020 3675
7800
Luke McKeever, Chief Executive Officer
Eric Dodd, Chief Financial Officer
N+1 Singer Tel: 020 7496
3000
Shaun Dobson, Lauren Kettle
Alma PR Tel: 020 3865
9668
Rebecca Sanders-Hewett, Susie Hudson, Sam Modlin
About ATTRAQT
ATTRAQT provides cloud-based SaaS solutions that maximize the
conversion of shoppers into buyers via onsite search, online
merchandising and eCommerce personalization for online
retailers.
ATTRAQT's customer base is predominantly enterprise to mid-size
clients, with clients in the UK, Europe, North America and ANZ. For
more information, please visit: www.attraqt.com.
Chairman's Statement
Our focus over the period has been consistent with what we
communicated at the time of our full year results in March 2018;
continuing to lay the groundwork for driving the underlying
operational effectiveness and performance of the business. We have
taken significant steps along this path and it has been an
intensive period for the whole team; however we know this must
remain an ongoing process.
There is no doubt that ATTRAQT has fantastic products, a
blue-chip client base and is operating in a large and attractive
market. ATTRAQT has a number of unique strengths and we are
confident our technology continues to deliver best-in-class results
for some of the world's most powerful online retailers. However,
working within the rapidly changing environment of today it is not
enough to have great technology alone. ATTRAQT's aim is to deliver
exceptional execution, customer service and brand awareness. We
know what we need to do to achieve this, we have a committed and
capable team and a significant amount of positive change has been
implemented over the period in pursuit of these goals.
The Company has been promoting new offerings in the period and
we are also looking to further increase the pace of innovation
going forward.
Ultimately, we have a first-class client base, quality products,
a growing market opportunity and an engaged team in place to drive
the business forward.
MANAGEMENT
We were very pleased to have Luke McKeever join the business in
May. Luke's sales and marketing experience, knowledge of the
sector, transaction experience, and expertise in growing software
businesses is exceptional. It is clearly a benefit that Luke has
previously worked with more than one member of the ATTRAQT Board.
Luke has spent his time since appointment immersing himself in the
business, meeting the teams, customers and partners and has set out
his focus for the period ahead and beyond.
Alongside the Board, ATTRAQT benefits from an experienced senior
management team, supported by a capable group of middle managers. I
am confident that as I now step back into a Non-Executive role, the
businesses is in strong and capable hands.
REVIEW OF SALES AND OPERATIONS
ATTRAQT achieved 89 client renewals during the period. Six new
logos were also signed during the first half, bringing the total
number of client logos to 171 by the end of June 2018 with average
contract values continuing to increase. In addition, the order book
of professional services work remains solid.
As expected, the Company continued to experience attrition
levels in line with the prior period whilst the initiatives to
mitigate client attrition and to improve client on-boarding were
implemented. Customer Success Management (CSM) and customer
retention projects are well underway, with changes to the
onboarding process beginning to take effect, and as an initial
indicator of success, all logos won in 2017 were live by the end of
April 2018.
Alongside this, we are focusing our platform to enable us to
extend the market opportunity, ensuring that clients are targeted
with a proposition that is appropriate for the size, scale and
needs. Part of this is utilising the Group's platforms and
capabilities to their strengths, but at the same time refining our
marketing and sales efforts to ensure that we are well positioned
to effectively target high value potential markets where we have
reference-ability.
It is pleasing to have seen the initiatives be rolled out across
the Group. The team has performed extremely well, implementing
these projects whilst working to refine our messaging to highlight
our unique and valuable capabilities. We are very proud of the team
for the work they have put in and thank all our shareholders for
their support.
INTERNATIONAL
Over the period the Company has been successful in building its
position in several of its key target regions, with new client wins
globally.
ATTRAQT recognises that there is a sizeable, long-term
opportunity for the Group to expand in both North America and
Continental Europe and we remain committed to expanding our client
base in both territories.
MARKET DEVELOPMENTS
Online retail is a highly competitive industry that is
constantly evolving as retailers continue to develop their digital
propositions, looking for new ways to drive conversion rates and
increase customer loyalty. Ultimately, retailers know they have to
have a robust digital strategy and we are well placed to benefit
from that trend.
One of the challenges for global retailers is ensuring
consistency of merchandising across channels and countries -
something that ATTRAQT successfully achieves through its platforms
and that is illustrated by its global client wins.
AI is starting to play a vital role in the shopping experience
as consumers expect to find the right item for them based on their
interests through automation, customisation and recommendation.
ATTRAQT has further enhanced its use of machine learning and this
is expected to become a key component and value driver.
PLATFORM DEVELOPMENTS AND PRODUCT DEVELOPMENT
We continue to strive to ensure that our product offerings are
the best in the market and that our customers will continue to see
the value in choosing ATTRAQT as a technology partner.
As previously announced, we have begun to converge some of our
products' underlying technology, for example enhancing the
Fredhopper reporting capability by utilising existing Freestyle
Merchandising functionality and improving the Freestyle
Merchandising data importing by employing the Fredhopper data
services platform.
During the period ATTRAQT began to promote two new offerings:
personalised recommendations and visual recommendations. ATTRAQT's
Visual Recommendations uses artificial intelligence to identify
products within imagery. This automates the previously manual and
time-consuming tasks, freeing up retailers to focus on other areas.
ATTRAQT's Personalized Recommendations utilise Machine Learning to
provide not only known users, but also anonymous users with truly
relevant recommendations based on their browsing behaviour.
OUTLOOK
The Board's focus remains the same: building on our strong
product set, with further product innovation and platform
integration a priority, enabling better connectivity. Driving the
underlying operational effectiveness and performance of the
business through greater utilisation of data and by putting the
customer at the heart of every decision we take. Ensuring our
implementation and onboarding process is exceptional is key and at
the same time, we will continue to bolster our sales operation,
marketing messages, and develop our customer success management
team to drive further customer wins and levels of retention. We
have made significant steps in the right direction, but there is
still work to do and our teams are motivated to do it.
There remain opportunities for the Group to grow: both
organically and through acquisition. We are well positioned to
drive organic growth by growing average revenue per account through
the addition of new targeted accounts, driving customer upsell and
extending the capabilities of the platform. At the same, the Group
continues to review M&A opportunities with the potential to
provide strategic enhancements as they arise, whether by geography,
scale or innovation.
eCommerce sales continue to grow both in quantum and in
strategic importance - presenting ATTRAQT with an attractive,
growing market opportunity. The Company has an excellent technology
set which we will continue to enhance and innovate in the coming
months and years. Our customer base - including many of the leading
eCommerce players - provides us with a strong platform to build
from and I am confident that with a new management team in place,
process improvement initiatives rolling out, and a clear strategy
we have the right component to deliver strong profitable growth and
returns for all of the company's stakeholders. The Board is
confident that trading for the full year will be in line with
current market expectations.
Nick Habgood
Chairman
25 July 2018
CHIEF FINANCIAL OFFICER'S STATEMENT
Total revenue increased by 53% to GBP8.4m (2017: GBP5.5m)
reflecting the full period impact of the Fredhopper acquisition
completed in March 2017. If contribution from Fredhopper is
included, on a like-for-like basis, Group revenue increased by 11%
when compared to the first half of 2017.
On a similarly comparable basis, SaaS revenues increased by 10%
to GBP7.5m and services revenue increased by 24% to GBP0.9m. The
exit rate (period-end monthly revenue annualised) for SaaS revenue
was GBP14.9m.
Gross margin increased by 27% to GBP4.9m (2017 GBP3.9m). On the
same comparable basis, gross profit increased by 15% to GBP4.9m, a
gross margin of 59%. The SaaS gross margin increased by 2% points
to 67% and the services gross margin increased by 12% points to
-6%. The negative services margin is caused by legacy pricing. As
these legacy projects are completed, management expects that the
services business will begin operating on a profitable basis in the
second half of the current financial year.
Comparable operating expenses increased by 16% to GBP5.1m (2017:
GBP4.4m) reflecting the hiring of 18 heads including a Customer
Success team.
Adjusted EBITDA (pre-exceptional) losses of GBP0.2m (2017:
GBP0.5m loss) were in line with management expectations.
The exceptional costs of GBP0.5m in the period relate to the
change in CEO.
Depreciation and amortisation totalled GBP0.9m (2017: GBP0.5m)
and increased due to the full period charge for the amortisation of
intangibles that were created on the Fredhopper acquisition. There
was a share-based payment charge of GBP0.2m (2017: GBP0.1m).
Loss before tax was GBP1.7m (2017: GBP3.2m loss), with the tax
charge in the period GBP0.1m (2017: GBP0.1m credit). Therefore,
loss for the half year was GBP1.8m (2017: GBP3.1m loss).
The cash balance at the end of the period was GBP1.6m. The cash
balance as of 31st December 2017 was GBP1.6m.
Eric Dodd
Chief Financial Officer
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHSED 30 JUNE 2018
Note H1 2018 H1 2017 FY 2017
Unaudited Unaudited
Total Total Total
GBP'000 GBP'000 GBP'000
Revenue 3 8,357 5,453 13,615
Cost of Sales (3,431) (1,586) (4,169)
-------------------------------------------------- ----------- ---------- ---------- --------
Gross profit 4,926 3,867 9,446
Administration expenses (6,181) (5,007) (11,116)
Exceptional administrative expense 4 (464) (2,095) (2,382)
Total administrative expenses (6,645) (7,102) (13,498)
Loss from operations (1,719) (3,235) (4,052)
Loss before tax (1,719) (3,235) (4,052)
Taxation / (Credit) 5 (77) 136 (18)
-------------------------------------------------- ----------- ---------- ---------- --------
Loss for the period (1,796) (3,099) (4,070)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 JUNE 2018
H1 2018 H1 2017 FY 2017
GBP'000 GBP'000 GBP'000
-------------------------------------------------- ----------- ---------- --------------------
(Loss) for the period (1,796) (3,099) (4,070)
-------------------------------------------------- ----------- ---------- --------------------
Foreign exchange translation differences 28 (94) (239)
-------------------------------------------------- ----------- ---------- --------------------
Total comprehensive (loss) for the period,
attributable to shareholders of the parent (1,768) (3,193) (4,309)
-------------------------------------------------- ----------- ---------- --------------------
Loss per share attributable to the ordinary
equity holders of the company.
-------------------------------------------------- ----------- ---------- --------------------
Basic and diluted EPS 6 (1.7p) (4.0p) (4.4p)
-------------------------------------------------- ----------- ---------- --------------------
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
Notes H1 2018 H1 2017 FY 2017
Unaudited Unaudited
GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 7 25,803 26,860 26,256
Plant and equipment 176 123 157
Total non-current assets 25,979 26,983 26,413
--------------------------------- ------ ---------- ---------- -------
Current assets
Trade and other receivables 3,488 3,364 4,543
Cash and cash equivalents 1,645 2,682 1,636
Corporation tax recoverable - 195 9
--------------------------------- ------ ---------- ---------- -------
Total current assets 5,133 6,241 6,188
--------------------------------- ------ ---------- ---------- -------
Total assets 31,112 33,224 32,601
--------------------------------- ------ ---------- ---------- -------
Current Liabilities
Trade and other payables 6,767 6,489 7,223
Corporation tax 356 - -
Total current liabilities 7,123 6,489 7,223
--------------------------------- ------ ---------- ---------- -------
Non-current liabilities
Other payables 58 58 58
Deferred tax liability 1,587 1,528 1,404
Total non-current liabilities 1,645 1,586 1,462
--------------------------------- ------ ---------- ---------- -------
Net Assets 22,344 25,149 23,916
Equity
Issued capital 1,063 1,063 1,063
Share premium 30,108 30,108 30,108
Merger reserve 1,457 1,457 1,457
Share based payment 999 732 803
Forex reserve (229) 76 (257)
Retained earnings (11,054) (8,287) (9,258)
--------------------------------- ------ ---------- ---------- -------
Total equity attributable
to equity holders of the parent 22,344 25,149 23,916
CONDENSED CONSOLIDATED STATEMENT OF CHANGES OF EQUITY
FOR THE SIX MONTHSED 30 JUNE 2018
Share Share Merger Share Foreign Retained Total
capital premium reserve based exchange earnings
payment reserve
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January 2017 269 4,253 1,457 647 (18) (5,188) 1,420
Loss for the period - - - - - (3,099) (3,099)
Foreign currency translation
differences - - - - 94 94
----------------------------------------------------- ----------------------------- ---------- -------- -------- --------- ---------- -------
Total comprehensive loss for
the period - - - - 94 (3,099) (3,005)
Contributions by and distributions
to owners
Share based payment charge - - - 85 - - 85
Shares issued 794 27,005 - - - - 27,799
Issue costs - (1,150) - - - - (1,150)
Total contributions by and
distributions to owners 794 25,855 - 85 - - 26,734
----------------------------------------------------- ----------------------------- ---------- -------- -------- --------- ---------- -------
Balance at 30 June 2017 1,063 30,108 1,457 732 76 (8,287) 25,149
----------------------------------------------------- ----------------------------- ---------- -------- -------- --------- ---------- -------
Loss for the period - - - - - (971) (971)
Foreign currency translation
differences - - - - (333) (333)
----------------------------------------------------- ----------------------------- ---------- -------- -------- --------- ---------- -------
Total comprehensive loss for
the year - - - - (239) (4,070) (4,309)
----------------------------------------------------- ----------------------------- ---------- -------- -------- --------- ---------- -------
Contributions by and distributions
to owners
Share based payment charge - - - 71 - - 71
Total contributions by and distributions
to owners - - - 71 - - 71
----------------------------------------------------- ----------------------------- ---------- -------- -------- --------- ---------- -------
Balance at 31 December 2017 1,063 30,108 1,457 803 (257) (9,258) 23,916
----------------------------------------------------- ----------------------------- ---------- -------- -------- --------- ---------- -------
Loss for the period - - - - - (1,796) (1,796)
Foreign currency translation
differences - - - - 28 28
----------------------------------------------------- ----------------------------- ---------- -------- -------- --------- ---------- -------
Total comprehensive loss for
the period - - - - 28 (1,796) (1,768)
----------------------------------------------------- ----------------------------- ---------- -------- -------- --------- ---------- -------
Contributions by and distributions
to owners
Share based payment charge - - - 196 - - 196
----------------------------------------------------- ----------------------------- ---------- -------- -------- --------- ---------- -------
Total contributions by and
distributions to owners - - - 196 - - 196
----------------------------------------------------- ----------------------------- ---------- -------- -------- --------- ---------- -------
Balance at 30 June 2018 1,063 30,108 1,457 999 (229) (11,054) 22,344
----------------------------------------------------- ----------------------------- ---------- -------- -------- --------- ---------- -------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 30 JUNE 2018
H1 2018 H1 2017 FY 2017
Unaudited Unaudited
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Loss for the period (1,796) (3,099) (4,070)
Adjustments for:
Depreciation of property, plant and
equipment 30 22 51
Amortisation of intangible fixed assets 831 498 1,227
Loss / (Profit) on disposals - - 10
Income tax charge / (credit) 77 (136) 18
Share based payment expense 195 85 156
Foreign exchange differences 8 - 33
--------------------------------------------- ---------- ---------- --------
(655) (2,630) (2,575)
Decrease / (increase) in trade and
other receivables 1,064 (325) (1,486)
(Decrease) / increase in trade and
other payables (39) 708 1,183
--------------------------------------------- ---------- ---------- --------
Cash generated from operating activities
before interest and tax 370 (2,247) (2,878)
Interest received - 60 8
Taxation paid (62) - -
Net cash generated from operating activities 308 (2,187) (2,870)
Cash flows from investing activities
Acquisition of subsidiaries - (22,536) (22,536)
Purchases of Property, plant and equipment (48) (45) (137)
Development of intangibles (305) (357) (672)
Net cash used in investing activities (353) (22,939) (23,345)
Cash flows from financing activities
Issue of ordinary shares, net of issue
costs - 26,649 26,649
Net cash (used) / generated from investing
and financing activities (353) 3,711 3,304
--------------------------------------------- ---------- ---------- --------
Net increase / (decrease) in cash and
cash equivalents (45) 1,524 434
--------------------------------------------- ---------- ---------- --------
Cash and cash equivalents at beginning
of period 1,636 1,157 1,157
Effect of foreign currency exchange
rate changes 54 - 45
Cash and cash equivalents at end of
period 1,645 2,681 1,636
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. General information
The principal activity of ATTRAQT Group PLC ("the Company") and
its subsidiaries (together "the Group") is the development and
provision of eCommerce site search, merchandising and
recommendation technology.
The principal trading subsidiaries are ATTRAQT Limited and
ATTRAQT Inc.
The Company is a public limited company which is quoted on the
Alternative Investment Market of the London Stock Exchange and is
incorporated and domiciled in the UK. The address of the registered
office is 3 Waterhouse Square, 138 Holborn, London, EC1N 2SW.
The registered number of the Company is 8904529.
The reporting currency of ATTRAQT Group PLC is GBP and has been
rounded to the nearest thousand GBP.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The financial information presented in this condensed
consolidated interim report for the half-year has been prepared in
accordance with the recognition and measurement requirements of
International Financial Reporting Standards issued by the
International Accounting Standards Board, as adopted by the
European Union. The principal accounting policies adopted in the
preparation of the financial information in this Interim Report are
unchanged from those used in the company's financial statements for
the year ended 31 December 2017 and are consistent with those that
the company expects to apply in its financial statements for the
year ended 31 December 2018.
The financial information for the year ended 31 December 2017
presented in this Interim Report does not constitute the company's
statutory accounts for that period but has been derived from them.
The Annual Report and Accounts for the year ended 31 December 2017
were audited and have been filed with the Registrar of Companies.
The Independent Auditors' Report on the Annual Report and Accounts
for the year ended 31 December 2017 was unqualified and did not
draw attention to any matters by way of emphasis and did not
contain statements under s498(2) or (3) of the Companies Act 2006.
The financial information for the periods ended 30 June 2017 and 30
June 2018 is unaudited.
The Board of Directors approved this interim report on the 24
July 2018.
Revenue
Revenue represents sales to external customers at invoiced
amounts less value added tax or local taxes on sales. Where work is
completed at the period end but not invoiced, the ATTRAQT Group
accrues for this income. The Group derives the majority of its
revenue from the provision of eCommerce services to online
retailers which includes site search, merchandising and product
recommendation technology. These are recurring revenues that are
recognised on a monthly basis.
Revenue from services provided by the ATTRAQT Group is
recognised when the ATTRAQT Group has performed its obligations and
in exchange obtained the right to consideration which can be
reliably measured and it is probable economic benefits will flow to
the entity. If amounts have been invoiced in advance for services,
these amounts are deferred until the service has been provided to
the client at which point the income is recognised. Within the
ATTRAQT Group income is recognised across two streams:
-- SaaS revenue - a monthly subscription fee is earned from
customers to the software as a service platform. Operation of the
service is provided for a fixed term.
-- Services revenue - revenue from consultancy services rendered
is recognised in income based on work completed at the balance
sheet date. No revenue is recognised if there are significant
uncertainties regarding recovery of the consideration due or
associated costs.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 was issued in May 2014, and amended in April 2016, and
establishes a five-step model to account for revenue arising from
contracts with customers. Under IFRS 15, an entity recognises
revenue when (or as) a performance obligation is satisfied, i.e.
when 'control' of the goods or services underlying the particular
performance obligation is transferred to the customer.
The accounts have been prepared in accordance with IFRS 15.
Intangible assets
Externally acquired intangible assets are initially recognised
at cost and subsequently amortised on a straight-line basis over
their useful economic lives.
Intangible assets are recognised on business combinations if
they are separable from the acquired entity or give rise to other
contractual/legal rights. The amounts ascribed to such intangibles
are arrived at by using appropriate valuation technique.
The significant intangibles recognised by the Group, their
useful economic lives and the methods used to determine the cost of
intangibles acquired in a business combination are as follows:
Intangible Asset Useful economic Valuation Method
life
Customer Relationships 11 years Excess Earnings Method -
the value of the intangible
asset is the present value
of the after-tax cash flows
potentially attributable
to it, net of the return
on fair value attributable
to tangible and other intangible
assets.
Existing Technology 7 years Relief from Royalty Method
- the value of intangible
assets are estimated by capitalising
the royalties saved because
the company owns the intangible
asset.
Trade Names 10 years Relief from Royalty Method
- the value of intangible
assets are estimated by capitalising
the royalties saved because
the company owns the intangible
asset.
Internally generated intangible assets (development costs)
Expenditure on internally developed products is capitalised if
it can be demonstrated that:
-- it is technically feasible to develop the product for it to be sold;
-- adequate resources are available to complete the development;
-- there is an intention to complete and sell the product;
-- the Group is able to sell the product;
-- sale of the product will generate future economic benefits; and
-- expenditure on the project can be measured reliably.
Capitalised development costs are amortised over three years.
The amortisation expense is included within administrative expenses
in the consolidated statement of comprehensive income.
Development expenditure not satisfying the above criteria and
expenditure on the research phase of internal projects are
recognised in the consolidated statement of comprehensive income as
incurred.
Where there is an event or change in circumstance in relation to
such judgement, the Group must make an estimate of the expected
future economic benefits to determine that assets are not
impaired.
Share based payments
The Group has issued share options to certain employees, in
return for which the Group receives services from those employees.
The fair value of the employee services received in exchange for
the grant of the options is recognised as an expense.
The total amount to be expensed is determined by reference to
the fair value of the options granted including any market
performance conditions (for example the Group's share price) but
excluding the impact of any service or non-market performance
vesting conditions (for example the requirement of the grantee to
remain an employee of the Group).
Non-market vesting conditions are included in the assumptions
regarding the number of options that are expected to vest. The
total expense is recognised over the vesting period. At the end of
each period the Group revises its estimates of the number of
options expected to vest based on the non-market vesting
conditions. It recognises the impact of any revision in the income
statement with a corresponding adjustment to equity.
Foreign currency translation
Transactions in foreign currencies are translated at the
exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are
retranslated at the rate of exchange ruling at the balance sheet
date. Exchange differences arising on the settlement of monetary
items and on the retranslation of monetary items are taken to the
profit and loss account.
For the purposes of preparing condensed consolidated interim
financial statements, the assets and liabilities of foreign
subsidiary undertakings are translated at the exchange rates ruling
at the balance sheet date. Profit and loss items are translated at
the exchange rate ruling at the date of the transaction. Exchange
differences arising are taken to the Group's foreign currency
translation reserve.
Going concern
The financial statements have been prepared under the going
concern basis as the directors have undertaken a review of the
future financing requirements of the ongoing operation of the group
and are satisfied that sufficient cash together with bank and other
facilities is available to meet its working capital requirements
for at least 12 months from the date of preparation of these
financial statements. The directors accordingly consider it
appropriate for the financial statements to be prepared on a going
concern basis.
Financial Instruments
The Group only enters into basic financial instruments
transactions that result in the recognition of financial assets and
liabilities like trade and other debtors and creditors.
Significant accounting judgements and estimates
The Group makes certain estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from
these estimates and assumptions. The estimates and assumptions that
have a significant risk of causing a material adjustment to the
reported results or the carrying amounts of assets and liabilities
within the next financial year are discussed below.
Taxation
Taxes on income for the interim periods are accrued using the
tax rate that would be applicable to expected total earnings. Tax
being shown in the Statement of Comprehensive Income is largely due
to tax credits and a deferred tax credit.
Deferred tax
Deferred tax is recognised on differences between the carrying
amounts of assets and liabilities in the financial statements and
the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all
taxable temporary differences. Deferred tax assets are recognised
only to the extent that the level and timing of taxable profits can
be measured and it is probable that these will be available against
which deductible temporary differences can be utilized.
Deferred tax is calculated at tax rates that have been enacted
or substantively enacted at the balance sheet date, and that are
expected to apply in the period when the liability is settled or
the asset realised.
3. Segmental reporting
H1 2018 H1 2017 FY 2017
Unaudited Unaudited
GBP'000 GBP'000 GBP'000
Revenue by type
SaaS 7,456 4,986 12,307
Services 901 467 1,308
Total Revenue 8,357 5,453 13,615
Cost of Sales by type
SaaS 2,474 1,290 3,441
Services* 957 296 728
Total Cost of Sales 3,431 1,586 4,169
------------------------ ---------- ---------- -------
Gross profit 4,926 3,867 9,446
------------------------ ---------- ---------- -------
For the purpose of IFRS 8, the chief operating decision maker
takes the form of the Board of Directors. The Directors' opinion is
that the business of the group is to provide cloud-based e-commerce
solutions. Based on this, there is one reportable segment. The
internal and external reporting is on a consolidated basis with
transactions between group companies eliminated on
consolidation.
*During the period, the Board of Directors decided to
re-classify some headcount costs previously allocated to
administrative expenses to cost of sales. The Directors' believe
that this reclassification better matches the revenue of the
business with the associated direct costs. The impact of this
reclassification in H1 2017, would have been a GBP98,000 increase
in SaaS Cost of Sales and GBP363,000 increase in Services Cost of
Sales and a corresponding GBP461,000 reduction in Administration
expense.
The table below provides an analysis of the Group's revenue by
geographical market where the customer is based.
H1 2018 H1 2017 FY 2017
Unaudited Unaudited
GBP'000 GBP'000 GBP'000
Revenue by market
UK 4,886 3,616 8,702
Europe 3,061 1,477 4,093
Rest of the World 410 360 820
Total Revenue 8,357 5,453 13,615
4. Exceptional items
The Group separately identifies those items which in
management's judgement, need to be disclosed by virtue of their
nature, size or incidence in order for the user to obtain a proper
understanding of the underlying performance of the business. The
exceptional cost of GBP464,000 (2017: GBP2,095,000) relates to the
change in CEO. The exceptional costs for 2017 consist of
GBP1,655,000 relating to the legal and professional advisor's fees
in respect of acquisition costs and GBP440,000 of post-acquisition
integration activities.
5. Taxation
The Group tax charge is based on the estimated annual effective
rate and for the half year is calculated at 19.25%; H1 2017: 20.3%
and applied to the profit before tax for the period.
6. Loss per share
The calculation of continuing earnings per share is based on the
following:
H1 2018 H1 2017 FY 2017
Unaudited Unaudited
GBP'000 GBP'000 GBP'000
Numerator
Loss for the period and loss used in basic
and diluted EPS (1,796) (3,099) (4,070)
Denominator
Weighted average number of shares used
in basic & diluted EPS 106,368,589 77,406,531 92,006,582
Loss per share - basic & diluted (1.7p) (4.0p) (4.4p)
At the period end, the Group had 1,341,680 exercisable share
options (H1 2017: 1,341,680, FY 2017: 1,341,680). These options
were excluded from the diluted weighted number of ordinary shares
calculation because their effect would have been anti-dilutive.
7. Intangible assets
Additions to internally developed intangible assets during the
Period amounted to GBP305,000 (H1 2017: GBP357,000k, FY 2017:
GBP672,000). The associated amortisation charge for the period was
GBP256,000 (H1 2017: GBP67,000, FY 2017: GBP183,000) for the
Group's continuing operations.
Additions to acquired customer contracts and relationships and
goodwill during the Period amounted to GBPNil (H1 2017:
GBP26,754,000, FY 2017: GBP26,567,000). The associated amortisation
charge for the period was GBP575,000 (H1 2017: GBP431,000, FY 2017:
GBP1,047,000) for the Group's continuing operations.
8. Acquisitions
In the prior year, the group acquired Fredhopper BV. Details of
the acquisitions are included in the Annual Report and Accounts for
the year ended 31 December 2017. No acquisitions have been made in
the current financial period.
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 FKPDBDBKBPOB
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