TIDMATQT
RNS Number : 6855M
ATTRAQT Group PLC
18 September 2019
18 September 2019
Attraqt Group plc
("Attraqt", the "Group" or the "Company")
Half Year results
Transformational acquisition completed adding powerful
competencies
Attraqt Group plc (AIM:ATQT), the provider of SaaS solutions
that power exceptional online shopping experiences, is pleased to
announce its unaudited results for the six months ended 30 June
2019.
GROUP FINANCIAL HIGHLIGHTS
-- Revenue increased 7% to GBP9.0m (HY2018: GBP8.4m)
-- Gross profit increased by 35% to GBP6.6m (HY2018: GBP4.9m)
-- Adjusted EBITDA(1) profit was GBP0.3m (HY2018: GBP0.2m loss)
-- Loss before tax was GBP1.9m (HY2018: GBP1.8m)
-- Basic EPS loss 1.4p per share (HY2018: 1.7p loss per share)
-- Operating cashflow of GBP0.6m (HY2018: GBP0.4m)
-- Cash at the period end was GBP6.3m (FY2018: GBP0.5m)
OPERATING HIGHLIGHTS
-- Transformational acquisition of Personalisation Platform
provider, Early Birds SAS, completed on 29 May 2019
-- 11 multi-year contracts with a total renewal value of GBP3.9m
in H1 2019 (HY 2018: 4 contracts worth GBP0.3m)
-- Annual Recurring Revenue increased to GBP18.9m (HY2018: GBP15.2m)
-- A number of new logos were signed including Joules, a
worldwide soft drink manufacturer and a French multinational
telecommunications corporation
-- A number of new brands have gone live in the UK, Nordics, France and Australia.
COMMENT FROM LUKE MCKEEVER, CHIEF EXECUTIVE OFFICER OF ATTRAQT
GROUP
"The past six months have been a milestone period for the Group.
We have made great strides in the implementation of our refreshed
strategy and it has been pleasing to see that all of the hard work
we have undertaken operationally can be seen through the
improvement in our financial performance.
The acquisition of Early Birds, completed in May this year, was
a transformational step and immediately accelerated our strategy by
several means. The addition of its algorithm orchestration
capabilities underpin and accelerate our roadmap, its additional
real-time data-capture capability expands our data-led approach,
and it has opened up a key new geography by providing a strong
foothold in the French market. More importantly, it has enhanced
our capability in the key area of Artificial Intelligence, and
Attraqt is now poised to provide our clients with a truly
innovative offering.
Current trading is in line to meet full year expectations and we
continue to be excited by the prospects for the Group. We believe
we now have the fundamentals in place to deliver improved
growth."
A video overview of the results from the CEO, Luke McKeever is
available to watch here: http://bit.ly/ATQT_H119
FOR FURTHER INFORMATION, PLEASE CONTACT:
Attraqt Group plc Tel: 020 3675
7800
Luke McKeever, Chief Executive Officer
Eric Dodd, Chief Financial Officer
Canaccord Genuity Tel: 020 7523
8000
Simon Bridges, Adam James
Alma PR Tel: 020 3405
0205
Rebecca Sanders-Hewett, Susie Hudson, Sam
Modlin
(1. Adjusted EBITDA refers to earnings before interest, tax,
depreciation, amortisation, share based payments and exceptional
items.)
REGISTERED OFFICE AND HEAD OFFICE
Attraqt Group plc
7(th) Floor
222-236 Grays Inn Road
London
WC1X 8HB
Registered Number: 08904529
ABOUT ATTRAQT GROUP
Attraqt powers exceptional shopping experiences for over 300 of
the world's leading retail brands. The Company delivers omnichannel
search, merchandising, and product & content personalization
for retailers and brands. Simple-to-use interfaces and efficient
workflows enable Merchandisers to take full control and enhance the
value of smart automation with their own strategic expertise and
creativity.
In 2019, Attraqt acquired Early Birds, the award-winning
AI-driven personalization software provider. Together, the two
companies combine Attraqt's pedigree in data-led search and
merchandising capabilities to optimize product discovery and visual
curation, with Early Birds' award-winning ability to empower
learning algorithms to orchestrate and personalize the entire
shopper journey. The benefits to retailers and brands will be the
ability to orchestrate enhanced shopper journeys that also deliver
superior commercial returns.
For more information visit www.attraqt.com
CAUTIONARY STATEMENT
This interim announcement contains certain forward-looking
statements relating to the business of Attraqt Group plc (the
"Company") and its subsidiaries (collectively, the "Group"). They
relate to events and trends that are subject to risk and
uncertainty that may cause actual results and the financial
performance of the Group to differ materially from those contained
in any forward-looking statement. These statements are made by the
directors in good faith based on information available to them and
such statements should be treated with caution due to the inherent
uncertainties, including both economic and business risk factors,
underlying any such forward-looking information.
The Group is providing the information in this interim
announcement as of this date, and we disclaim any intention or
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
CHIEF EXECUTIVE STATEMENT
I am very pleased to report on a busy period for the Group,
where we have achieved robust financial results alongside
significant operational progress. Our team has been hard at work
continuing to put into effect our refreshed strategy, which as
announced in February 2019 focuses on leveraging our strengths as
well as driving a client-centric approach, a culture of
idea-sharing and innovation, and on using data to drive every
decision that we take. I am delighted to say that we have already
delivered demonstrable progress against these goals.
The operational progress we have made has flowed through into
improvements in our financial KPIs. Revenue was up 7%, with 4% of
that being organic, to GBP9m. The organic growth was driven by
significant upsells into our existing customer base. Gross profit
increased 35% to GBP6.6m, and gross margin improved across both
SaaS and Services, by three percentage points and 14 percentage
points respectively.
Alongside this, several of our operational KPIs have advanced,
demonstrating our continued focus on operational excellence. Our
Net Promoter Score, for example, is steadily increasing, with us
now consistently receiving scores which are widely accepted as
between 'good' and 'excellent'. Our ambition is to move into a
market leading position in the near term. Through tracking progress
using data at every stage of the journey, we underpin our ability
to drive sales and marketing execution.
Our acquisition of Early Birds, the artificial intelligence
powered SaaS personalisation platform, completed in May, was a
transformational step for the Group. Early Birds brings: A powerful
and contemporary underlying technical architecture; the addition of
an Artificial Intelligence competence; increased scale in France, a
key European eCommerce market; and increases the total addressable
market by enabling us to serve more online retailers profitably.
Although it is at an early stage, we are delighted with the
progress so far. The Early Birds and Attraqt teams have come
together and are fully engaged at all levels. The integration of
Early Birds and the hiring of new talent to support the business'
growth is also proceeding in line with plans. We are pressing
forward with common systems and reporting and have found the
innovation offering already assisting with renewals. Most
importantly, we have two clients going live with the unified
Attraqt and Early Birds solution, with a strong pipeline of
opportunities for our unique joint proposition and additional
clients anticipated in the second half.
REVIEW OF SALES AND OPERATIONS
Attraqt grew revenues by 7% to GBP9m over the period, driven
largely by an improvement in the number of higher value renewals
secured. This focus on multi-year renewals provides greater
visibility of future revenues and highlights the strengthening of
several of our client relationships.
A number of new logos were signed during the period, including
with a worldwide soft drink manufacturer, a French multinational
telecommunications corporation and Joules. Despite the broader
market conditions in UK retail, we were pleased to grow our
relative market share* from 29% to 31% in our key verticals over
the period, with the loss of clients offset by new logo wins and
account growth with existing customers.
The Company continued to experience attrition in line with
management's expectations. Some client attrition continued to occur
as a result of external factors, including the challenges faced on
the UK high street, and the pervasive threat of e-commerce software
re-platforming. We expect that attrition will continue to play a
factor in the short term, before declining in FY20 and beyond. Net
retention for the period was 95%. Initiatives implemented to
mitigate client attrition include the introduction of enhanced
reporting to help brands to calculate value, extending our customer
success and advisory functions, refreshing our underlying data
architecture to expedite new product development, and a number of
key strategic appointments. We believe these initiatives, alongside
the acquisition of Early Birds and what it has brought to the
Group, are key to the effective mitigation of manageable attrition
going forward.
The new client on-boarding process is now running smoothly, with
all new logos the Group signs going live on plan and in a timely
manner.
Newly introduced sales tools have also increased our account
intelligence and contact coverage. These tools are enabling the
team to deliver a personalised engagement strategy per target
account. Other sales initiatives recently undertaken, including the
introduction of account-based marketing and a more prescriptive
sales approach are showing early signs that support improved sales
execution going forward.
MARKET DEVELOPMENTS
Retailers' margins continue to be squeezed by external cost
pressures, and as such we have seen increasing scrutiny put onto
their spending, of which software vendors are a part. This means
that it has never been more crucial for vendors, such as Attraqt to
provide a clear return on investment with an offering that cannot
be economically replicated internally. Attraqt delivers on each of
these factors, with a team steeped in industry experience and
trusted by the world's leading brands, robust technology and a
proven ability to increase conversion rates.
The Attraqt offering is one that works for leading international
brands, manufacturers and retailers facing complex challenges, who
wish to create exceptional shopping experiences from discovery
through to inspiration and purchase, and beyond - recognizing and
reacting to each shoppers' individual shopping moments.
Attraqt has a limited exposure to 'classic' retailers, with 24%
of our existing ARR generated by customers with a retail store
footprint. Within this we are increasingly working with the
retailers that are outperforming the market, or with international
retailers. Three out of the top ten brands that consumers have
stated are their favourite luxury fashion brands(+) are also
currently Attraqt customers.
We are mindful that the macro-economic environment remains
uncertain, thereby continuing to put decision makers in businesses
under pressure, and that this can sometimes result in an increased
length of the sales process. However, in this sector, the brands
who embrace change are winning, and as such we are confident that
we will continue to deliver.
PERFORMANCE AGAINST GROWTH STRATEGY
In February this year we announced our refreshed growth
strategy, which leverages the Group's strengths and leave us in a
good position to address the future needs of e-commerce. We believe
this approach allows us to strengthen relationships with current
clients, win new clients, and increase efficiencies in the
business. By focusing on the six key strategic priorities outlined
below, we will ultimately create value for all our
stakeholders.
-- Evolving our data-led approach
-- Increasing the speed of our innovation
-- Driving customer success and optimising the customer experience
-- Enhancing our partnership strategy
-- Concentrating our effort on key verticals
-- Replicating our UK success in other geographies
Great strides have been made in a short time in the
implementation of our strategy, particularly in regard to
optimising the customer experience. David Newberry has been
appointed as Chief Customer Officer and Jon Stephens as Director of
Customer Experience, focusing on delivering an informative and
seamless end-to-end customer experience. We are also now collecting
data on customer health through the use of Gainsight and are
pleased to have seen our scores increasing over the period.
In order to take full advantage of the Early Birds integration
and further increase our innovation speed we have created a new
Product Office. Roger Brown, founder and CEO of leading
personalization vendor Peerius, which was sold to Episerver in 2016
has recently joined to establish and lead this new function.
A new partnership manager was also hired shortly after period
end, whose role is to explore potential additional partnerships
with complementary vendors which we believe will help to extend our
reach, increase win rates, and support our ability to execute on
new innovation. We look forward to updating shareholders further on
this in due course.
A key part of evolving the data led approach has been the
development of an insights tool that measures the return on
investment of our product and services. Once live on client sites
this will provide valuable insights internally and for our
clients.
PRODUCT DEVELOPMENT AND EXPANSION OF SERVICE OFFERING
Technology
Data and feature integration work has continued to consolidate
the Attraqt and Fredhopper capabilities inside the Fredhopper
Discovery Platform. The next step in the journey is to also fully
integrate the Early Birds technology into our offering. Thus far,
we have already implemented a connected data pipeline and enabled
AI-driven product rankings inside the Fredhopper Discovery Platform
so that clients can begin to compare their creative rankings with
algorithmically generated rankings. Going forward the focus will be
on progressing our joint innovation to launch a unified front-end
user experience.
We continue to explore all opportunities to enhance our
technology stack, both organically, and through M&A.
Services
We believe that automated technology works best when combined
with human ingenuity. This is because shoppers buy on the basis of
a combination of logical consideration and emotional connection, so
retailers must cater for both.
Our decision to package our deep industry experience and
insights as ongoing, short advisory engagements has come to
fruition through our experience consulting and technical consulting
offerings. This has resulted in an improved services gross
margin.
PEOPLE AND VALUES
Since defining our values earlier this year: better together,
pioneering and data-led, they have truly become integral to the way
we do business, and feed into everything we do. We are confident
they will drive our shared success.
Attraqt's people are one of our key competitive advantages. We
have built a team which is focused, experienced and working towards
a shared goal; to achieve our vision of becoming integral to the
world's best shopping experiences. There is a palpable feeling of
optimism and vitality in the team, and the Board and I would like
to thank them all for their continued hard work.
OUTLOOK
We have mapped out our road to success and have seen the
fundamentals of the business shifting positively over the period in
a way which we believe will deliver improved long-term growth and
future-proof the business.
Trading post period has been encouraging, with contract wins
including Helly Hansen and Galeries Lafayette. Between Attraqt and
Early Birds a significant sales pipeline has been built and
Management's focus is increasingly on the effective conversion of
this pipeline. Current trading is in line to meet full year
expectations.
We have a great, aligned team, powerful and increasingly
innovative technology, fantastic customers and unrivalled industry
experience to drive our long-term success. We are confident that
the Group can continue to drive growth and deliver for shareholders
in the period ahead and beyond.
Luke McKeever
Chief Executive
18 September 2019
(*) Customer ARR key verticals / Market ARR opportunity key
verticals
(+) Consumer research carried out by Attraqt on 3000 UK, France
and UAE luxury shoppers in July and August 2019.
FINANCIAL REVIEW
Total revenue increased by 7% to GBP9.0m (2018: GBP8.4m)
including the impact of one month's revenue of the Early Birds
acquisition completed on 29 May 2019.
SaaS revenues increased by 8% to GBP8.1m and services revenue
decreased by 1% to GBP0.9m. The ARR rate for SaaS revenue was
GBP18.9m.
Gross margin increased by 14% to GBP6.6m (2018: GBP5.8m^), with
a gross margin of 73%. The SaaS gross margin increased by 2% points
to 79% and this was achieved by finding efficiencies in the costs
base and the services gross margin increased by 14% points to 20%
due to improved control of existing contracts and more diligent
scoping of new projects.
Operating expenses increased by 6% to GBP6.3m (2018: GBP5.9m^)
driven by increased spend in the cloud operations team to improve
Amazon Web Services performance and key hires including mentioned
in the Operating Review.
Adjusted EBITDA (pre-exceptional) profit of GBP0.3m (2018:
GBP0.2m loss) were in line with management expectations.
The exceptional costs of GBP0.9m in the period relate to costs
associated with the acquisition (GBP0.6m) and restructuring costs
(GBP0.3m).
Depreciation and amortisation totalled GBP1.3m (2018: GBP0.9m)
and increased due to the adoption of the new leasing standard IFRS
16 and the acquisition of Early Birds with amortisation recognised
on intangibles that were created on the acquisition. There was a
share-based payment charge of GBP0.2m (2018: GBP0.2m).
Loss before tax was GBP1.9m (2018: GBP1.7m loss), with the tax
credit in the period GBP0.2m (2018: GBP0.1m charge). Therefore,
loss for the half year was GBP1.7m (2018: GBP1.8m loss).
The cash balance at the end of the period was GBP6.3m. The cash
balance as of 31st December 2018 was GBP0.5m.
Eric Dodd
Chief Financial Officer
^In 2019, the Board have reviewed how the costs for 2018 were
allocated and have decided to reclassify Cloud costs GBP720k and
Support development GBP113k from costs of sales to administrative
expenses.
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED INTERIM INCOME STATEMENT FOR THE SIX MONTHSED 30
JUNE 2019
Note HY2019 HY2018 FY2018
(unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
Revenue 6 8,965 8,357 17,144
Cost of Sales 6 (2,411) (3,431) (5,614)
----------------------------------- ---- ------------ ------------ --------
Gross profit 6,554 4,926 11,530
Administration expenses (7,546) (6,181) (13,680)
Exceptional administrative expense 7 (870) (464) (563)
----------------------------------- ---- ------------ ------------ --------
Total administrative expenses (8,416) (6,645) (14,243)
Loss from operations (1,862) (1,719) (2,713)
Finance costs (22) - -
Loss before tax (1,884) (1,719) (2,713)
Taxation credit/(charge) 8 165 (77) (49)
----------------------------------- ---- ------------ ------------ --------
Loss for the period/year (1,719) (1,796) (2,762)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX
MONTHSED 30 JUNE 2019
Note HY2019 HY2018 FY2018
(unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
---------------------------------------------- ---- ------------ ------------ -------
Loss for the period/year (1,719) (1,796) (2,762)
---------------------------------------------- ---- ------------ ------------ -------
Foreign exchange translation differences (21) 28 (8)
---------------------------------------------- ---- ------------ ------------ -------
Total comprehensive loss for the period/year,
attributable to shareholders of the
parent (1,740) (1,768) (2,770)
---------------------------------------------- ---- ------------ ------------ -------
Loss per share attributable to the
ordinary equity holders of the company
---------------------------------------------- ---- ------------ ------------ -------
Basic and diluted EPS 9 (1.4p) (1.7p) (2.6p)
---------------------------------------------- ---- ------------ ------------ -------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Notes HY2019 HY2018 FY2018
(unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 10,11 40,998 25,803 25,432
Right of use assets 1,222 - -
Plant and equipment 12 345 176 168
Total non-current assets 42,565 25,979 25,600
------------------------------------ ------ ------------ ------------ ---------------------------------
Current assets
Trade and other receivables 4,339 3,488 4,936
Cash and cash equivalents 6,291 1,645 509
Corporation tax recoverable 114 - -
------------------------------------ ------ ------------ ------------ ---------------------------------
Total current assets 10,744 5,133 5,445
------------------------------------ ------ ------------ ------------ ---------------------------------
Total assets 53,309 31,112 31,045
------------------------------------ ------ ------------ ------------ ---------------------------------
Current Liabilities
Trade and other payables 9,465 6,767 8,186
Lease liability 520 - -
Corporation tax - 356 24
Total current liabilities 9,985 7,123 8,210
------------------------------------ ------ ------------ ------------ ---------------------------------
Non-current liabilities
Other payables - 58 -
Lease liability 711 - -
Deferred tax liability 3,375 1,587 1,254
Total non-current liabilities 4,086 1,645 1,254
------------------------------------ ------ ------------ ------------ ---------------------------------
Net Assets 39,238 22,344 21,581
------------------------------------ ------ ------------ ------------ ---------------------------------
Equity
Issued capital 13 1,800 1,063 1,063
Share premium 13 48,516 30,108 30,108
Merger reserve 1,511 1,457 1,457
Share based payment 1,436 999 1,238
Forex reserve (286) (229) (265)
Retained earnings (13,739) (11,054) (12,020)
------------------------------------ ------ ------------ ------------ ---------------------------------
Total equity attributable to equity
holders of the parent 39,238 22,344 21,581
------------------------------------ ------ ------------ ------------ ---------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHSED
30 JUNE 2019
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 2018 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 1,063 30,108 1,457 803 (229) (11,054) 22,344
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
----------------------------------------- -------- ------- ----------------- -------- -------- -------- -------
Loss for the period - - - - - (966) (966)
Foreign currency translation
differences - - - - (36) - (36)
----------------------------------------- -------- ------- ----------------- -------- -------- -------- -------
Total comprehensive loss for
the period - - - - (36) (966) (1,002)
----------------------------------------- -------- ------- ----------------- -------- -------- -------- -------
Contributions by and distributions
to owners
Share based payment charge - - - 239 - - 239
----------------------------------------- -------- ------- ----------------- -------- -------- -------- -------
Total contributions by and distributions
to owners - - - 239 - - 239
----------------------------------------- -------- ------- ----------------- -------- -------- -------- -------
Balance at 31 December 2018 1,063 30,108 1,457 1,238 (265) (12,020) 21,581
----------------------------------------- -------- ------- ----------------- -------- -------- -------- -------
Loss for the period - - - - - (1,719) (1,719)
Foreign currency translation
differences - - - - (21) - (21)
----------------------------------------- -------- ------- ----------------- -------- -------- -------- -------
Total comprehensive loss for
the period - - - - (21) (1,719) (1,740)
----------------------------------------- -------- ------- ----------------- -------- -------- -------- -------
Contributions by and distributions
to owners
Share based payment charge - - - 198 - - 198
Shares issued in the period 737 19,156 - - - - 19,893
Issue costs - (748) - - - - (748)
Merger reserve acquired - - 54 - - - 54
----------------------------------------- -------- ------- ----------------- -------- -------- -------- -------
Total contributions by and distributions
to owners 737 18,408 54 198 - - 19,397
----------------------------------------- -------- ------- ----------------- -------- -------- -------- -------
Balance at 30 June 2019 1,800 48,516 1,511 1,436 (286) (13,739) 39,238
----------------------------------------- -------- ------- ----------------- -------- -------- -------- -------
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHSED 30
JUNE 2019
Notes HY2019 HY2018 FY2018
(unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Loss for the period/year (1,719) (1,796) (2,762)
Adjustments for:
Depreciation of property, plant and
equipment 12 87 30 62
Amortisation of right of use assets 173 - -
Amortisation of intangible fixed assets 10 987 831 1,586
Income tax (credit)/charge (165) 77 49
Finance costs 22
Share based payment expense 198 195 435
Foreign exchange differences 131 8 104
------------------------------------------- ----- ------------ ------------ -------
(286) (655) (526)
Decrease/(increase) in trade and other
receivables 1,297 1,064 (384)
Increase/(decrease) in trade and other
payables (226) (39) 893
------------------------------------------- ----- ------------ ------------ -------
Cash generated/(used) from operating
activities before interest and tax 785 370 (17)
Taxation (paid)/received (99) (62) (278)
Net cash generated/(used) from operating
activities 686 308 (295)
Cash flows used in investing activities
Acquisition of subsidiaries net of
cash acquired 11 (10,459) - -
Purchases of Property, plant and equipment 12 (235) (48) (70)
Development of intangibles 10 (313) (305) (696)
Net cash used in investing activities (11,007) (353) (766)
Cash flows from financing activities
Lease payments (206) - -
Issue of ordinary shares, net of issue
costs 16,352 - -
Net cash generated/(used) from investing
and financing activities 5,139 (353) (766)
------------------------------------------- ----- ------------ ------------ -------
Net increase/(decrease) in cash and
cash equivalents 5,825 (45) (1,061)
------------------------------------------- ----- ------------ ------------ -------
Cash and cash equivalents at beginning
of period/year 509 1,636 1,636
Effect of foreign currency exchange
rate changes (43) 54 (66)
------------------------------------------- ----- ------------ ------------ -------
Cash and cash equivalents at end of
period/year 6,291 1,645 509
------------------------------------------- ----- ------------ ------------ -------
NOTES TO THE CONSOLIDTAED INTERIM FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Attraqt Group plc (the 'Company') and its subsidiaries'
(collectively, the 'Group') principal activity is the development
and provision of eCommerce site search, merchandising and
recommendation technology.
The Company is a public limited company, which is listed on the
London Stock Exchange, incorporated, registered and domiciled in
England (registered number: 08904529). The address of its
registered office is 7(th) Floor, 222-236 Grays Inn Road, London,
WC1X 8HB.
The condensed consolidated interim financial statements for the
six months ended 30 June 2019 was approved by the Board on 17
September 2019.
2. BASIS OF PREPERATION
BASIS OF PREPERATION OF INTERIM FINANCIAL STATEMENTS
The condensed consolidated interim financial information has
been prepared in accordance with the Disclosure and Transparency
Rules of the Financial Conduct Authority and with IAS 34 Interim
Financial Reporting, as adopted by the EU. They do not include all
the information required for full annual financial statements and
should be read in conjunction with information contained in the
Group's Annual Report and Accounts for the year ended 31 December
2018. The condensed consolidated interim financial information has
been reviewed, not audited.
The financial information for the year ended 31 December 2018
does not comprise statutory accounts within the meaning of section
434 of the Companies Act 2006 for that year, but it is derived from
those accounts. Statutory accounts for the year ended 31 December
2018 were approved by the Board of Directors on 13 February 2019
and delivered to the Registrar of Companies. The report of the
auditor on those accounts was unqualified, did not draw attention
to any matters by way of emphasis and did not contain statements
under section s498 (2) or (3) of the Companies Act 2006.
GOING CONCERN
The financial statements have been prepared on a going concern
basis as the Directors have undertaken a review of the future
financing requirements of the ongoing operations 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 approval of these financial
statements. Accordingly, they have adopted the going concern basis
in preparing this condensed consolidated interim financial
information.
3. ACCOUNTING POLICIES
In preparing the condensed consolidated interim financial
information, the same accounting policies, methods of computation
and presentation have been applied as set out in the Group's Annual
Report and Accounts for the year ended 31 December 2018. The
accounting policies are consistent with those of the previous
financial year and corresponding interim reporting period with the
exception of the adoption of new and amended standards as set out
below.
The annual financial statements of the Group are prepared in
accordance with International Financial Reporting standards
('IFRS') as adopted by the EU.
The Group has not early adopted any standard, interpretation or
amendment that was issued but is not yet effective.
4. CHANGES IN ACCOUNTING POLICIES
IFRS 16 LEASES
This note explains the impact of the adoption of IFRS 16
'Leases' on the Group's condensed consolidated interim report and
discloses the new accounting policies that have been applied from 1
January 2019. The Group has adopted IFRS 16 under the modified
approach from 1 January 2019, but not restated comparatives for the
2018 reporting period, as permitted under the specific transitional
provisions in the standard. The reclassifications and adjustments
arising from the new leasing rules are therefore recognised in the
opening balance sheet on 1 January 2019.
Adjustments recognised on adoption of IFRS 16
On adoption of IFRS 16, the Group recognised lease liabilities
in relation to leases which had previously been classified as
'operating leases' under the principles of IAS 17 Leases. These
liabilities were measured at the present value of the remaining
lease payments, discounted using the Group's incremental borrowing
rate as of 1 January 2019. The weighted average Group's incremental
borrowing rate applied to the lease liabilities on 1 January 2019
was 6%.
2019
GBP'000
Operating lease commitments disclosed as at 31
December 2018 538
Less: short-term leases recognised on a straight-line
basis as expense (129)
Less: low-value leases recognised on a straight-line
basis as expense (58)
Discounted using the Group's incremental borrowing
rate of at the date of initial
application (21)
Lease liability recognised as at 1 January 2019 330
Of these which are:
Current lease liabilities 226
Non-current lease liabilities 103
330
The associated right-of-use assets for all leases were measured
at the amount equal to the lease liability, adjusted by the amount
of any prepaid or accrued lease payments related to that lease
recognised in the balance sheet as at 31 December 2018.
Practical expedients applied
In applying IFRS 16 for the first time, the group has used the
following practical expedients permitted by the standard:
-- the accounting for operating leases with a remaining lease
term of less than 12 months as at 1 January 2019 as short-term
leases
-- the accounting for operating leases with a low value
determined by the Group as low value leases
-- the use of hindsight in determining the lease term where the
contract contains options to extend or terminate the lease.
-- The group has also elected not to reassess whether a contract
is, or contains a lease at the date of initial application.
Instead, for contracts entered into before the transition date the
group relied on its assessment made applying IAS 17 and IFRIC 4
Determining whether an Arrangement contains a Lease.
Group lease accounting
The group leases various offices and equipment. Rental contracts
are typically made for fixed periods of 1 to 5 years but may have
extension options. Lease terms are negotiated on an individual
basis and contain a wide range of different terms and conditions.
The lease agreements do not impose any covenants, but leased assets
may not be used as security for borrowing purposes. Until the 2018
financial year, leases of property, plant and equipment were
classified as either finance or operating leases. Payments made
under operating leases (net of any incentives received from the
lessor) were charged to profit or loss on a straight-line basis
over the period of the lease.
From 1 January 2019, leases are recognised as a right-of-use
asset and a corresponding liability at the date at which the leased
asset is available for use by the group. Each lease payment is
allocated between the liability and finance cost. The finance cost
is charged to profit or loss over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of
the liability for each period. The right-of-use asset is
depreciated over the shorter of the asset's useful life and the
lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
-- fixed payments (including in-substance fixed payments), less
any lease incentives receivable
-- variable lease payment that are based on an index or a rate
-- amounts expected to be payable by the Group under residual value guarantees
-- the exercise price of a purchase option if the Group is
reasonably certain to exercise that option, and
-- payments of penalties for terminating the lease, if the lease
term reflects the Group exercising that option.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be determined, the
Group's incremental borrowing rate is used, being the rate that the
Group would have to pay to borrow the funds necessary to obtain an
asset of similar value in a similar economic environment with
similar terms and conditions.
Right-of-use assets are measured at cost comprising the
following:
-- the amount of the initial measurement of lease liability
-- any lease payments made at or before the commencement date
less any lease incentives received
-- any initial direct costs, and
-- restoration costs.
Payments associated with short-term leases and leases of
low-value assets are recognised on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a
lease term of 12 months or less. Low-value assets comprise
IT-equipment and small office leases.
5. SIGNIFICANT JUDGEMENTS AND ESTIMATES
The preparation of the condensed interim financial information
requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported
amount of assets and liabilities, income and expense. Actual
results may differ from these estimates.
With the exception of the below all other significant judgements
and estimates used in the application of the Group's accounting
policies are the same as those described in the Group's Annual
Report and Accounts for the year ended 31 December 2018.
Critical judgements in determining the lease term
Extension and termination options are included in a number of
property leases across the Group. These terms are used to maximise
operational flexibility in terms of managing contracts. The
majority of extension and termination options held are exercisable
only by the Group and not by the respective lessor.
In determining the lease term, management considers all facts
and circumstances that create an economic incentive to exercise an
extension option, or not exercise a termination option. Extension
options (or periods after termination options) are only included in
the lease term if the lease is reasonably certain to be extended
(or not terminated).
The assessment is reviewed if a significant event or a
significant change in circumstances occurs which affects this
assessment and that it is within the control of the Group.
6. SEGMENTAL REPORTING
HY2019 HY2018 FY 2018
(unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
Revenue by type
SaaS 8,072 7,456 15,241
Services 893 901 1,903
Total Revenue 8,965 8,357 17,144
Cost of Sales by type
SaaS 1,698 2,474 3,660
Services 713 957 1,954
Total Cost of Sales 2,411 3,431 5,614
---------------------- ------------ ------------ -------
Gross profit 6,554 4,926 11,530
---------------------- ------------ ------------ -------
There is one customer which contributes more that 10%, which is
GBP1.2m of the Group's revenues (2018: 1 customer - contributing
GBP1.1m).
In 2019, the Board have reviewed how the costs for 2018 were
allocated and have decided to reclassify Cloud costs GBP720k and
Support development GBP113k from costs of sales to administrative
expenses.
The table below provides an analysis of the Group's revenue by
geographical market where the customer is based.
HY2019 HY2018 FY 2018
(unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
Geographical split of revenue
UK 5,005 4,886 9,840
Europe 3,584 3,061 6,317
Rest of the World 376 410 987
------------------------------ ------------ ------------ -------
Total Revenue 8,965 8,357 17,144
------------------------------ ------------ ------------ -------
7. EXCEPTIONAL ITEMS
The Group separately identifies those items which in managements
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 costs
of GBP870,000 (2018: GBP464,000) relate to costs associated with
the acquisition and restructuring costs. The exceptional costs in
2018 relate to the change in CEO.
8. TAXATION
The Group tax charge is based on the estimated annual effective
rate and for the half year is calculated at 19.00%, (HY2018:
19.25%) and applied to the loss before tax for the period.
9. LOSS PER SHARE
Basic Earnings per share is calculated by dividing the loss
attributable to the equity holders of the Company by the weighted
average number of ordinary shares outstanding in the period.
The calculation of continued earnings per share is based on the
following:
HY2019 HY2018 FY 2018
(unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
Numerator
Loss for the period/year and loss used
in basic and diluted EPS (1,719) (1,796) (2,762)
Denominator
Weighted average number of shares used
in basic and diluted EPS 119,467,188 106,368,589 106,368,589
Loss per share - basic and diluted (1.4p) (1.7p) (2.6p)
10. INTANGIBLE ASSETS
Goodwill Customer Existing Trademark Software Total
Relationships Technology Development
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January 2018 16,582 4,394 4,803 788 1,921 28,488
Additions - internally developed - - - - 305 305
At 30 June 2018 16,582 4,394 4,803 788 2,226 28,793
Additions - internally developed - - - - 391 391
Foreign Exchange 3 45 1 - 16 65
--------- -------------- ----------- ---------- ------------ -------
At 31 December 2018 16,585 4,439 4,804 788 2,633 29,249
Acquired through business
combinations 9,064 2,295 4,525 348 - 16,232
Additions - internally developed - - - - 313 313
Foreign Exchange - - - - 8 8
--------- -------------- ----------- ---------- ------------ -------
At 30 June 2019 25,649 6,734 9,329 1,136 2,954 45,802
--------- -------------- ----------- ---------- ------------ -------
Amortisation
At 1 January 2018 - 424 559 64 1,185 2,232
Charge for the period - 193 342 40 256 831
At 30 June 2018 - 617 901 104 1,441 3,063
Charge for the period - 125 344 39 247 755
Foreign Exchange - (10) - - 9 (1)
--------- -------------- ----------- ---------- ------------ -------
At 31 December 2018 - 732 1,245 143 1,697 3,817
Charge for the period - 222 376 42 347 987
--------- -------------- ----------- ---------- ------------ -------
At 30 June 2019 - 954 1,621 185 2,044 4,804
--------- -------------- ----------- ---------- ------------ -------
Net Book Value
At 30 June 2018 16,582 3,777 3,902 684 785 25,730
At 31 December 2018 16,585 3,707 3,559 645 936 25,432
--------- -------------- ----------- ---------- ------------ -------
At 30 June 2019 25,649 5,780 7,708 951 910 40,998
--------- -------------- ----------- ---------- ------------ -------
11. ACQUISITIONS
On 29 May 2019, the Company acquired 100% of the issued equity
instruments of Early Birds SAS from AB2 (Arts et Biens), EB Growth
and other minority shareholders. Early Birds SAS is a company whose
principal activity is to provide site personalisation software to a
variety of companies including Blue Chip Clients and online
retailers. The principal reason for this acquisition was to add new
capabilities to existing technology. The acquisition has provided a
strong presence in France.
Details of the fair value of identifiable assets and liabilities
acquired, purchase consideration and goodwill as follows:
Book Value Adjustment Fair Value
GBP'000 GBP'000 GBP'000
Customer Relationships - 2,295 2,295
Technology 644 3,881 4,525
Trademark - 348 348
Property, plant and equipment 29 - 29
Trade Receivables 490 - 490
Other Debtors 271 - 271
Trade Creditors (270) - (270)
Other Current Liabilities (502) - (502)
Deferred Revenue (559) - (559)
Deferred tax liability - (2,022) (2,022)
---------- ---------- ----------
Total Net Assets 103 4,502 4,605
---------- ---------- ----------
On acquisition Early Birds SAS held trade receivables with a
book and fair value of GBP490,000 representing contractual
receivables of GBP505,000. Whilst the Group will make every effort
to collect all contractual receivables, it considers it unlikely
that GBP15,000 will ultimately be received.
Consideration GBP'000
Cash Transferred 11,257
Shares transferred at fair value (GBP0.27p per share, see
note 12) 2,794
Consideration to be transferred in H2 2019 59
-------
Total Consideration 14,110
-------
There is no contingent consideration on the Early Birds
acquisition.
Goodwill
GBP'000
Equity value 14,051
Cash received via acquisition (441)
-------
Consideration transferred 13,610
Fair value of identifiable net assets (4,605)
Consideration to be transferred in H2 2019 59
-------
Goodwill 9,064
-------
The main factors leading to the recognition of goodwill are as
follow:
-- Future customer relationships
-- Future technology
-- Assembled workforce of the acquired business, which do not
qualify for separate recognition.
The goodwill recognised will not be deductible for tax
purposes.
Since the acquisition date, Early Birds SAS has contributed
GBP266,000 to Group revenues and GBP139,000 losses.
12. PROPERTY, PLANT AND EQUIPMENT
Leasehold Plant and Fixtures Total
improvements Machinery and Fittings
GBP'000 GBP'000 GBP'000
Cost
At 1 January 2018 - 399 4 403
Additions - 50 - 50
At 30 June 2018 - 449 4 503
Additions - 20 - 20
Disposal - (207) (2) (209)
------------- ---------- ------------- -------
At 31 December 2018 - 262 2 264
Additions 118 52 65 231
Acquired through business combination - 33 - 33
Foreign Exchange - (4) - (4)
------------- ---------- ------------- -------
At 30 June 2019 118 343 67 528
Depreciation -
At 1 January 2018 - 244 2 246
Charge for the period - 30 - 30
At 30 June 2018 - 274 2 276
Charge for the period - 32 - 32
Disposal - (207) (1) (208)
Foreign Exchange - (4) - (4)
------------- ---------- ------------- -------
At 31 December 2018 - 95 1 96
Charge for the period 5 75 7 87
------------- ---------- ------------- -------
At 30 June 2019 5 170 8 183
Net Book Value -
30 June 2018 - 174 2 176
31 December 2018 - 167 1 168
------------- ---------- ------------- -------
30 June 2019 113 173 59 345
------------- ---------- ------------- -------
13. SHARE CAPITAL
Allocated, called up and fully paid
GBP'000 GBP'000
Number Share capital Share Premium
of Shares
Ordinary shares of GBP0.01 each
At 1 January 2017 26,942,340 269 4,253
Shares issued for cash during the period 79,426,249 794 25,855
----------- ------------- -------------
At 30 June 2018 106,368,589 1,063 30,108
----------- ------------- -------------
Shares issued for cash during the period - - -
----------- ------------- -------------
At 31 December 2018 106,368,589 1,063 30,108
----------- ------------- -------------
Shares issued for cash during the period 63,333,334 633 15,718
Shares issued to Early Birds sellers as part
of the acquisition during the period 10,346,284 104 2,690
----------- ------------- -------------
At 30 June 2019 180,048,207 1,800 48,516
=========== ============= =============
The company raised GBP17,100,000 before expenses, by a private
placing of 63,333,334 1p Ordinary shares at 27p on 29 May 2019.
10,346,284 Ordinary shares were issued to the sellers as
consideration for the acquisition of Early Birds SAS.
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 LLFVAATIDLIA
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