TIDMEUSP
RNS Number : 3349A
EU Supply PLC
11 September 2018
11 September 2018
EU Supply Plc
("EU Supply", the "Company" or the "Group")
Interim results for the six months ended 30 June 2018
EU Supply (AIM:EUS), the e-procurement SaaS provider, is pleased
to announce its unaudited interim results for the six months ended
30 June 2018, which are reported for the first time under IFRS15
unless otherwise stated. Comparative numbers have not been adjusted
and are disclosed as initially reported under IAS18 unless
otherwise stated.
Financial highlights:
-- Revenue grew by 15% to GBP2.45m (H1 2017: GBP2.13m, adjusted
for IFRS15) (15% growth also on a constant currency basis)
-- Revenues of a recurring or repeated nature up 26% at 71% (H1 2017 65%, adjusted for IFRS15)
-- Operating profit increased to GBP45k (H1 2017: profit of
GBP9k and a loss of GBP30k adjusted for IFRS15)
-- Positive operating cash flow generated after interest expense
-- Cash balance of GBP1.13m at 30 June 2018 (30 June 2017:
GBP1.04m; 31 December 2017: GBP0.65m)
Operational highlights:
-- Equity placing raised GBP600k before expenses to invest in
the development of micro-procurement solution services to existing
and new customers
-- Considerable development resources were re-allocated in Q2
2018 to build modules and services to generate high growth of
recurring revenues in the mid to longer term
-- Large number of smaller contracts signed with new customers,
notably in Denmark and Norway, with more than 120 new names
combined during H1 2018, increasing the recurring revenue base
Post-period end:
-- New service offering launched to suppliers on the Group's
CTM(TM) platform opening a new revenue stream. More than 100 new
subscribers achieved in the first month of operation in the pilot
market. The Board expects this to add further recurring revenue at
a high margin and in time targeting a significant share of the
500,000+ suppliers active on the platform
-- Additional SaaS modules are being negotiated with existing
customers for launch at the end of 2018
-- Work has continued under the grant announced in 3 July 2018,
expected to be worth up to EUR240,000, and to be received in late
2018 or early 2019
Commenting on the results, Thomas Beergrehn, CEO of EU Supply,
said:
"I am pleased to announce continued profitable growth,
especially on the back of enhanced recurring revenue, which is
despite a net deferral of approximately GBP206k of income in
accordance with IFRS15.
The increased recurring revenue base was achieved with
contributions from both new customer contracts and licensing of
additional modules to existing customers. Post-period end, we also
successfully launched additional services to suppliers on a
subscription basis at an attractive margin.
The Group expects continued revenue growth in 2018 and beyond
driven by the requirements for mandatory EU e-tendering provisions
and increasing demand for additional CTM(TM) modules to existing
customers and new services to their suppliers. Over 500,000
suppliers are currently using our platforms or services, and the
Group is developing and launching additional services for them,
which can generate additional recurring revenues at a high
margin.
The Board anticipates continued growth during the second half of
2018 and expects to report a second successive annual operating
profit and results for the year ending 31 December 2018 in line
with market expectations."
FURTHER ENQUIRIES
EU Supply PLC Tel: 020 7127 4545
Thomas Beergrehn, CEO
Fredrik Wallmark, CFO
Stockdale Securities Tel: 020 7601 6100
Tom Griffiths, Ed Thomas
Newgate Communications Tel: 020 7680 6550
Adam Lloyd, James Brown
A copy of this announcement is available at
www.eu-supply.com.
Notes to Editors
EU Supply is the UK holding company of the EU Supply Group, a
Sweden-based e-commerce business, which has an established,
market-leading, multilingual e-procurement platform for e-sourcing,
e-tendering and contract management, tailored for the highly
regulated European public sector market.
Since 2006, the Group has invested heavily in employing
specialist programmers to add functionality, legal compliance as
required and security features to its Complete Tender
Management(TM) ("CTM(TM)") platform to ensure that it is ideally
placed to secure new contracts with EU Member States and their
contracting authorities. The platform is available in 16 different
languages.
The Directors believe that the Group's CTM(TM) platform is one
of the easiest to use and most functionally advanced solutions
available in the market. The CTM(TM) platform is used by over 8,000
European public sector bodies in 9 EU/EEC Member States and has
National Procurement System status in four Member States (the UK,
Ireland, Norway and Lithuania).
The Company's shares were admitted to trading on AIM in November
2013. In August and September 2015, the Company raised a total of
GBP2.061m (before expenses) through a placing of new shares and the
issue of first and second tranches of Convertible Loan Notes to
institutional and other investors. On 25 May 2018, the Company
announced that it had raised a further GBP600k (before expenses)
through a placing and subscription of new shares.
CEO Statement
I am pleased to report EU Supply's unaudited interim results for
the six months ended 30 June 2018.
EU Supply has achieved continued strong growth during the first
six months of 2018 with revenues up by 15 per cent. to GBP2.45m (H1
2017: GBP2.13m, adjusted for IFRS15). The revenue growth was
underpinned by a 26% increase in recurring or repeatable revenue.
This revenue growth was achieved despite an increase in deferred
income of approximately GBP206k as a result of the application of
IFRS15 for the first time. All of the deferred income accrued
during the period, and the vast majority of the Company's total
balance of deferred income of approximately GBP1.05m will be
recognised in the Company's income statement within the next nine
months. Further details are set out in Note 2 below.
At 30 June 2018, EU Supply's recurring revenue represented
approximately 71 per cent. of the H1 2018 revenue (H1 2017:
approximately 65 per cent., adjusted for IFRS15). This high
recurring revenue level provides a solid platform for further
growth in future years.
The Group is still experiencing similar levels of pricing
pressure in most markets to those seen historically. The Group
therefore continues to be selective on competitive contracts and
only focuses on profitable sub-sectors and niches within its
existing markets.
In May 2018, the Company raised GBP600k (before expenses) by way
of a placing of new shares, the proceeds of which will be used to
develop a micro-procurement module/services within the Groups
CTM(TM) software platform. Work has commenced on the project and
several meetings have been held with potential pilot customers.
First revenues, which are expected primarily to be of recurring or
repeat nature, are anticipated in 2019.
Cash and cash management
The Group closed H1 2018 with cash of GBP1.13m (31 December 2017
GBP0.65m; 30 June 2017 GBP1.04m) and has sufficient cash for both
its short and long term needs. A tax credit claim has been filed in
respect of 2017 with approximately GBP0.1m in cash expected to be
received during H2 2018 (the equivalent payment last year was
received during H1 2017). In addition, a receivable of
approximately GBP0.4m, that was anticipated to be received during
the period, was not received until July 2018, meaning that cash at
the period end was approximately GBP0.5m lower than expected.
The Group's policy to keep the majority of its cash in the
currencies where it foresees net cash outflows (primarily operating
costs denominated in EUR and SEK) partly hedges the potential
currency exchange fluctuations, including any such changes due to
Brexit. However, any strengthening (or weakening) of Sterling,
mainly against the Swedish Krona, could have a positive (or
negative) effect on the Group's underlying profit for the year
ending 31 December 2018. The sensitivity to such a scenario has
been reduced since the Company reached profitability and should be
further reduced over time as the Group's revenues continue to grow
in non-Sterling currencies.
Selective recruitment
As previously announced, the Group is selectively recruiting in
order to satisfy demand and to accelerate development of the
micro-procurement project and value added services to suppliers on
its platforms, which, as set out above, are both expected to
increase the Company's recurring and repeatable revenues.
At 30 June 2018, the Group employed 49 (full-time equivalent)
employees (30 June 2016: 47), including four Directors.
Brexit and regulatory changes
The Board's assessment of the impact of Brexit on the Company,
as announced on 29 June 2016, has not changed. It expects that the
long-term effect of Brexit on the Group's underlying business will
be limited, as the need for effective competition of contracts in
the UK should remain irrespective of EU membership. Public sector
cost reduction is also expected to be required irrespective of any
Brexit effect on growth in Europe. Any tariffs, if introduced,
would not be expected to apply to the Group's services. Any effect
of currency fluctuations is partly hedged by the Company's cash
management approach as described above. The Board will keep this
matter under review as more information becomes available.
During the period, the Group has implemented changes to comply
with GDPR (European General Data Protection Regulation).
Outlook
The Company continues to focus on those existing market segments
where it has a unique or strong position and expects to win
additional business on its CTM(TM) services and generate a higher
rate of recurring revenues, both from contracting authorities and
companies as well as their suppliers.
Additional business may also be generated from its first
customers and reference cases in Germany, and negotiations are
ongoing for the Company's first project in the oil and gas sector
subject to the specific project obtaining the necessary
financing.
The Board anticipates continued growth during the second half of
2018 and expects to report a second successive annual operating
profit and results for the year ending 31 December 2018 to be in
line with market expectations.
Thomas Beergrehn
Chief Executive Officer
11 September 2018
Condensed Consolidated Statement of
Comprehensive Income for the six months
ended 30 June 2018
6 months 6 months Year to
to to
30 June 30 June 31 December
2018 2017 2017
(unaudited)* (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Revenue - continuing operations 2,453 2,171 4,679
2,453 2,171 4,679
----------------- ---------------- -----------------
Administrative expenses (2,405) (2,162) (4,587)
Operating profit 48 9 92
Finance costs (139) (129) (264)
Loss before taxation (91) (120) (172)
Taxation (3) (13) 65
----------------- ---------------- -----------------
Loss for the period attributable to
owners of the parent (95) (133) (107)
Other comprehensive income:
Exchange differences arising on the
translation of foreign subsidiaries (29) 4 (1)
----------------- ---------------- -----------------
Total comprehensive loss for the period
attributable to owners of the parent (123) (129) (108)
================= ================ =================
Basic and diluted loss per share attributable
to owners of the parent (0.002) (0.002) (0.002)
* H1 2018 numbers are calculated in accordance with IFRS15 which
has reduced revenue by GBP49k compared to the application of the
prior period's accounting policies under IAS18.
Condensed Consolidated Statement of Financial
Position at 30 June 2018
As at As at As at
30 June 30 June 31 December
2018 2017 2017
(unaudited)* (unaudited) (audited)
GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 53 44 39
Intangible assets 60 - -
Other long term receivables 14 9 15
-------------
Total Non-current assets 128 53 54
-------------- ------------- -------------
Current assets
Trade and other receivables 1,569 1,067 1,154
Current tax assets 101 2 101
Cash and cash equivalents 1,130 1,035 650
-------------- ------------- -------------
Total current assets 2,800 2,104 1,905
-------------- ------------- -------------
Total assets 2,927 2,157 1,959
-------------- ------------- -------------
EQUITY AND LIABILITIES
Equity
Share Capital 72 68 68
Share premium 7,056 6,497 6,497
Merger reserve 2,676 2,676 2,676
Other reserves 515 512 521
Foreign exchange reserve (54) (20) (25)
Retained earnings (10,887) (10,663) (10,636)
-------------- ------------- -------------
Total equity (623) (930) (899)
-------------- ------------- -------------
Non-current liabilities
Deferred tax liability 28 28 30
Loans and other borrowings 1,328 1,219 1,271
Total Non-current liabilities 1,356 1,247 1,301
Current liabilities
Trade and other payables 2,194 1,840 1,558
Total current liabilities 2,194 1,840 1,558
-------------- ------------- -------------
Total liabilities 3,550 3,087 2,859
-------------- ------------- -------------
Total equity and liabilities 2,927 2,157 1,959
-------------- ------------- -------------
* H1 2018 numbers are calculated in accordance with IFRS15 which
has reduced profit by GBP49k and retained earnings by GBP157k and
increased deferred revenue by GBP206k compared to the application
of the prior period's accounting policies under IAS18.
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2018
6 months 6 months Year to
to to
30 June 30 June 31 December
2018 2017 2017
(unaudited)* (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Cash inflow from operating activities
Total comprehensive loss (123) (129) (108)
Adjustments for:
Interest expense (net) 139 129 264
Income tax (6) 146 62
Depreciation and amortisation 17 13 25
Net foreign exchange gain/(loss) 5 (7) (17)
Operating cash flows before movements
in working capital 32 152 227
Decrease in trade and other receivables (415) (491) (578)
Increase in trade and other payables 477 486 204
Cash generated from (used in) operations 93 147 (147)
Interest paid (82) (83) (165)
Net cash generated (used) in operating
activities 11 64 (312)
-------------- ------------- -------------
Cash flows from investing activities
Purchases of property, plant and equipment (27) (6) (14)
Generation of intangible assets (66) - -
Decrease in long term receivables 1 0 (6)
Net cash used in investing activities (93) (6) (20)
-------------- ------------- -------------
Financing activities
Proceeds from issue of share capital 600 - -
Costs relating to share issue (37) - -
Increase in borrowings - - -
Repayments of obligations under finance - - -
leases
Net cash generated from financing activities 563 - -
-------------- ------------- -------------
Net increase/(decrease) in cash and
cash equivalents 640 58 (333)
Cash and cash equivalents at beginning
of period 650 965 965
Effect of foreign exchange translation
on cash equivalents (2) 12 18
Cash and cash equivalents at end of
period 1,130 1,035 650
============== ============= =============
* H1 2018 numbers are calculated in accordance with IFRS15 which
has impacted the balances of trade and other payables at the
beginning and end of the period.
Condensed Consolidated Statement of changes in equity
For the six months ended 30 June 2018
Share Share Retained Merger Foreign Other Total
capital premium earnings reserve exchange reserves
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
6 months ended 30 June
2017
As at 1 January 2017
(audited) 68 6,497 (10,530) 2,676 (24) 511 (802)
Loss for the period - - (133) - - - (133)
Other Comprehensive
losses:
Exchange differences
arising on translation
of foreign subsidiaries - - - - 4 - 4
Untaxed reserves
reclassified
to equity - - - - - 1 1
As at 30 June 2017
(unaudited) 68 6,497 (10,663) 2,676 (20) 512 (930)
---------- ---------- ----------- ---------- ----------- ----------- --------
6 months ended 30 June
2018*
As at 1 January 2018
(audited) 68 6,497 (10,636) 2,676 (25) 521 (899)
Adjustment on initial
application of IFRS15
(see Note 1) - - (157) - - - (157)
---------- ---------- ----------- ---------- ----------- ----------- --------
Adjusted balance at
1 January 2018 68 6,497 (10,793) 2,676 (25) 521 (1,056)
Loss for the period - - (94) - - - (94)
Other Comprehensive
losses:
Exchange differences
arising on translation
of foreign subsidiaries - - - - (29) - (29)
Untaxed reserves
reclassified
to equity - - - - - (6) (6)
Net placing and
subscription 4 559 - - - - 563
As at 30 June 2018
(unaudited) 71 7,056 (10,887) 2,676 (54) 515 (623)
---------- ---------- ----------- ---------- ----------- ----------- --------
* The Group has applied IFRS15 and IFRS9 from 1 January 2018.
Comparative information has not been restated.
Notes to the Condensed Consolidated Financial Statements
1. Basis of preparation
The condensed consolidated financial statements for the six
months ended 30 June 2018 have been prepared and presented in
accordance with IAS 34 'Interim Financial Reporting'. They have
been prepared on a going concern basis consistent with the
accounting policies and methods of computation and presentation set
out in the Group's consolidated financial statements for the year
ended 31 December 2017, except for the changes described in Note 2
below. The half yearly financial statements should be read in
conjunction with the Group's audited financial statements for the
year ended 31 December 2017, which have been prepared in accordance
with IFRS as adopted by the European Union.
The information in this announcement does not comprise statutory
accounts within the meaning of section 434 of the Companies Act
2006. The Group's accounts for the year ended 31 December 2017 have
been reported on by the Group's auditors and delivered to the
Registrar of Companies. The report of the auditors was unqualified
and did not draw attention to any matters by way of emphasis. It
contained no statement under section 498(2) or (3) of the Companies
Act 2006. The financial information for the six months ended 30
June 2018 is unaudited.
This is the first set of the Group's financial statements where
IFRS 15 and IFRS 9 have been applied. Changes to significant
accounting policies are described in Note 2.
2. Accounting policies
The preparation of the interim financial information for the six
months ended 30 June 2018 requires management to make estimates and
assumptions that affect the reported amounts of revenues, expenses,
assets and liabilities at the date of the report. If in the future
such estimates and assumptions, which are based on management's
best judgement at the date of the statement, deviate from the
actual circumstances, the original estimates and assumptions will
be modified as appropriate in the year in which the circumstances
change.
The significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation
uncertainty were the same as those described in the Group's last
annual financial statements, except for new significant judgements
and key sources of estimation and uncertainty related to the
application of IFRS 15 and IFRS 9, which are described below.
Changes in significant accounting policies
Except as described below, the accounting policies applied in
these interim financial statements are the same as those applied in
the Group's consolidated financial statements as at and for the
year ended 31 December 2017. The changes in accounting policies are
also expected to be reflected in the Group's consolidated financial
statements as at and for the year ending 31 December 2018.
The Group has initially adopted IFRS 15 "Revenue from Contracts
with Customers" and IFRS 9 "Financial Instruments" from 1 January
2018.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 establishes a comprehensive framework for determining
whether, how much and when revenue is recognised. It replaces IAS
18 "Revenue", IAS 11 "Construction Contracts" and related
interpretations.
The Group has applied IFRS 15 using the cumulative effect method
(adopting all practical expedients), therefore, comparative
information has not been restated and continues to be reported
under IAS 18 and IAS 11.
The impact of the application of IFRS 15 has been in respect of
the period over which income is recognised in the Group's Business
Alert services segment. Whereas previously income was recognised in
full on a customer signing-up to the service, IFRS 15 requires that
income be spread over the course of the contract. The impact on the
Company's interim results for the six months ended 30 June 2018 has
been a decrease in the retained earnings by GBP157k, revenue (and
profit) lower by GBP49k for the period, but an increase in deferred
revenues by GBP206k.
IFRS 9 Financial Instruments
IFRS 9 "Financial Instruments" sets out requirements for
recognising and measuring financial assets, financial liabilities
and some contracts to buy or sell non-financial items. This
standard replaces IAS 39 "Financial Instruments: Recognition and
Measurement".
IFRS 9 largely retains the existing requirements in IAS 39 for
the classification and measurement of financial liabilities, and
the adoption of IFRS 9 has not had a significant effect on the
Group's accounting policies related to financial liabilities and
derivative financial instruments.
Other changes in accounting policies
A number of other new standards were effective from 1 January
2018, but they do not have a material effect on the Group's
financial statements.
The Group has adopted the following amendments to standards with
effect from 1 January 2018:
-- Amendments to IFRS 2 "Share Based Payments";
-- Annual Improvements to IFRSs - 2014-2016 Cycle (IAS 28
"Investments in Associates and Joint Ventures"); and
-- IFRIC 22 "Foreign Currency Transactions and Advance Consideration".
These standards have had no impact on the financial position or
performance of the Group. Consequently, no adjustment has been made
to the comparative financial information as at 31 December 2017 or
30 June 2017. The Group has not early adopted any standard,
interpretation or amendment that was issued, but is not yet
effective.
3. Segmental information
The Group currently has two reportable segments, Business Alert
services and services relating to the Group's CTM(TM) platform. The
Group categorises all revenue from operations to these two
segments. The Group currently does not allocate costs on a segment
basis and is therefore unable to report segment profit and loss.
Further, the Group does not allocate assets on a segment basis and
is therefore unable to report total assets per segment.
6 months 6 months Year to
to to 31 December
30 June 30 June 2017
2018* 2017
GBP'000 GBP'000 GBP'000
Revenue - Continuing operations arises
from:
Business Alert services 195 297 448
Services relating to the CTM(TM) platform 2,227 1,757 4,075
------------ ------------ ----------------
Total provision of services 2,422 2,054 4,523
Other income 31 117 157
Administrative expenses (2,405) (2,162) (4,587)
Operating profit 48 9 92
Finance charges (Net) (139) (129) (264)
------------ ------------ ----------------
Loss before taxation (91) (120) (172)
------------ ------------ ----------------
* H1 2018 numbers are calculated in accordance with IFRS15 which
has reduced Business Alerts revenue by GBP49k compared to under the
application of the previous period's accounting policies under
IAS18.
Other income for the 6 months to 30 June 2018 comprises a grant
received from a project under the European Commission agency INEA's
Connecting Europe Facility through a consortium led by a third
party for further development of modules integrated with the
Group's CTM(TM) System.
The Group operates in three main geographic areas: the UK,
European Union and Rest of the World. Revenue and non-current
assets by origin of geographical segment for all entities in the
Group is as follows:
Revenue* Non- current assets
-------------------- -----------------------
6 months 6 months 6 months Year
ended ended ended ended
30 June 30 June 30 June 31 December
2018 2017 2018 2017
GBP'000 GBP'000 GBP'000 GBP'000
--------------- --------- --------- --------- ------------
UK 448 469 60 -
European
Union 1358 1121 53 54
Rest of World 648 581 - -
---------
Total 2,453 2,171 113 54
--------- --------- --------- ------------
* H1 2018 numbers are calculated in accordance with IFRS15 which
has reduced revenue by GBP49k compared to under the application of
the previous period's accounting policies under IAS18.
4. Loss per share
The loss per ordinary share is based on the net loss for the
period attributable to ordinary equity holders divided by the
weighted average number of ordinary shares outstanding during the
period.
The basic loss per share has been calculated by dividing the
retained loss for the period of GBP0.001m by the weighted average
number of ordinary shares of 68,401,489 (2017 H1: 67,716,406) in
issue during the period.
The potential ordinary shares associated with share options and
convertible loan notes are anti-dilutive and are therefore excluded
from the weighted average number of ordinary shares for the purpose
of diluted earnings per share.
5. Dividends
No dividend is proposed to be declared for the six months ended
30 June 2018 (2017: nil).
6. Copies of Interim Results
Copies of this announcement are available on the Investor
Relations section of EU Supply's website, www.eu-supply.com.
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 GGUGWBUPRGMU
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