TIDMEYE
RNS Number : 3317S
Eagle Eye Solutions Group PLC
16 March 2021
16 March 2021
Eagle Eye Solutions Group plc
("Eagle Eye", the "Group", or the "Company")
Interim Results for the six months ended 31 December 2020
Strong profit growth underpinned by new domestic and
international customer wins
Eagle Eye, a leading SaaS technology company that creates
digital connections enabling personalised, real-time marketing
through coupons, loyalty, apps, subscriptions and gift services, is
pleased to announce its results for the six months ended 31
December 2020 ("the Period").
Financial highlights
H1 2021 H1 2020 Change
------------------------------ --------- ---------- -------
Group revenue GBP10.8m GBP10.1m +8%
Recurring subscription and
transaction revenue GBP8.0m GBP7.3m +9%
Recurring revenue % of Group
revenue 73% 73% -
Adjusted EBITDA* GBP2.1m GBP1.3m +64%
Operating profit/ (loss) GBP0.2m GBP(0.5)m n/a
Net cash/ (debt)** at 31 GBP0.1m GBP(2.2)m n/a
December
Operational highlights:
-- Strong new business 'Win' performance in the UK and
Internationally, securing Woolworths Group in Australia, Pret a
Manger and Liberty Retail Limited in the UK and a leading
speciality office and home products & services retailer in the
US
-- New customers go live during the period including Virgin Red,
Virgin's game-changing reward club test launched in November
2020
-- Continued enhancements to the Eagle Eye AIR platform ("Eagle
Eye AIR"), including enhanced Promotions and Loyalty capabilities
together with the launch of Message at Till, opening up further
opportunities in the US market
-- Expansion of our partnership & collaboration network,
including integrations with Salesforce Commerce Cloud, Oracle
MICROS Simphony POS System, Outra, Chargebee and Peak
-- Continued low levels of customer churn at 0.2% (H1 2020: 0.3%)
Outlook
-- New business pipeline continues to grow at record levels
internationally including multiple enterprise level opportunities,
providing the Board with confidence in the ongoing success of the
business
-- COVID-19-related UK lockdown continues to negatively impact
the Group's Food & Beverage, Non-Grocery retail and Brand
customer revenue streams (c.10% of Group revenue pre-COVID-19)
-- Current funding position is comfortable and sufficient
headroom of GBP5.1m (Period-end net cash, together with Group's
GBP5m banking facility) to support the Group's existing growth
plans
-- Trading for the financial year ending 30 June 2021 remains in
line with the Board's expectations
Notes
* Adjusted EBITDA has been adjusted for the exclusion of
share-based payment charges along with depreciation, amortisation,
interest and tax from the measure of profit and is reconciled to
the GAAP measure of profit/(loss) before tax in note 5 to the
financial statements below.
** Net cash/(debt) is cash and cash equivalents less borrowings.
Tim Mason, Chief Executive of Eagle Eye , said: " With our
growing number of enterprise customers, around the world we are now
recognised as the business which can enable personalised marketing
in real-time. Eagle Eye has a proven technology platform that
connects a retailer's entire marketing eco-system and we sit at the
heart of the digital transformation of the retail sector.
"While COVID-19 has impacted an element of our customer base and
hence our growth rate in the short-term, it has highlighted the
need for retailers to digitally engage with their customers . We
are confident in our offering, excited by our increased opportunity
a nd believe there is considerable potential for expansion ."
For further information, please contact:
Eagle Eye Tel: 0844 824 3686
Tim Mason, Chief Executive Officer
Lucy Sharman-Munday, Chief Financial
Officer
Investec (Nominated Advisor and Joint Tel: 020 7597 5970
Broker)
Corporate Finance: David Anderson/ Sebastian
Lawrence
Corporate Broking: Sara Hale/ Toba Fatimilehin
Shore Capital (Joint Broker) Tel: 020 7408 4090
Corporate Finance: Hugh Morgan/ Daniel
Bush/ Sarah Mather
Corporate Broking: Henry Willcocks
Alma PR
Caroline Forde, Robyn Fisher, Molly Gretton Tel: 020 3405 0205
About Eagle Eye
Eagle Eye is a leading SaaS technology company transforming
marketing by creating digital connections that enable personalised
performance marketing in real time through coupons, loyalty, apps,
subscriptions and gift services.
Eagle Eye AIR enables the secure issuance and redemption of
digital offers and rewards at scale, across multiple channels,
enabling a single customer view. We create a network between
merchants, brands and audiences to enable customer acquisition,
interaction and retention at lower cost whilst driving marketing
innovation.
The Company's current customer base comprises leading names in
UK Grocery, Retail, Leisure and Food & Beverage sectors,
including Asda, Sainsbury's, Tesco, Waitrose and John Lewis &
Partners, Virgin Red, JD Sports, Pret a Manger, Greggs, Mitchells
& Butlers, Pizza Express; in North America, Loblaws, Shoppers
Drug Mart, Esso and Southeastern Grocers and in Australia & New
Zealand, Woolworths Group and The Warehouse Group.
For more information, please visit www.eagleeye.com
Chairman's Review
Against the ongoing backdrop of the COVID-19 pandemic, the Group
has delivered a strong performance, continuing to support and win
new enterprise customers, both at home and internationally, while
further expanding the capabilities of Eagle Eye AIR to increase its
attractiveness to the global retail market.
Once again, the strong management of the business is evident in
the excellent profit performance, delivering 64% growth in adjusted
EBITDA to GBP2.1m (H1 2020: GBP1.3m), on revenue growth of 8% to
GBP10.8m (H1 2020: GBP10.1m). The Group delivered another healthy
cash performance and closed the Period with net cash of GBP0.1m,
ahead of the Board's expectations.
Our growing number of enterprise customers provide further proof
of Eagle Eye AIR's capabilities and are opening doors to additional
customer discussions. While COVID-19 continues to impact sales
cycles, the business continues to secure new customers and the
number of opportunities in our pipeline is considerably higher than
at any other time in the business' history, providing the Board
with confidence in the Group's ability to deliver accelerated
growth rates in future periods.
COVID-19 lockdowns continue to impact on our Food &
Beverage, Non-Grocery retail and Brand customers. We stand ready to
support their recovery once lockdown ends and they are able to
re-connect with their customers.
Growing market opportunity
"Winning businesses" are those who can build deep, one-to-one
relationships with their customers, personalising every
interaction. To achieve this, such companies have to transform
their marketing for the always-on, omnichannel world, connecting
all aspects of the customer journey in real time. The two key
themes of omnichannel marketing and personalisation are
increasingly coming to the fore.
The potential upsides to personalisation are vast as McKinsey's
recent report, Personalising the Customer Experience, makes
abundantly clear. " Personalisation at scale often delivers a 1 to
2 percent lift in total sales for grocery companies and an even
higher lift for other retailers, typically by driving up loyalty
and share-of-wallet among already-loyal customers. These programs
can also reduce marketing and sales costs by around 10 to 20
percent. Not only that, successful personalisation programs yield
more engaged customers and drive up the top line."
In addition to personalisation, the COVID-19 pandemic has
highlighted just how crucial an omnichannel offering is in
providing retailers with the means to survive and thrive. Retailers
need the agility to switch between channels, and market to their
customers, no matter how they connect. In the UK, for example, data
from the IMRG Capgemini Sales Index in January 2021 revealed that
the rate of sales growth for multi-channel retailers exceeded
online only for the first time since 2017, up 57% year-on-year vs.
9%.
The relevance of Eagle Eye AIR to retailers is increasingly
clear. Through integration with Eagle Eye AIR, a retailer can
deliver a personalised marketing message to any customer, in real
time, at any point in the customer's journey with them, securely
and at scale. We are currently delivering this for leading
retailers across sectors and geographies. In this way, Eagle Eye
enables companies to unlock the capability to deliver
personalisation, to streamline marketing execution and to open up
new revenue streams by enabling FMCG brand partners to fund direct
marketing to their end customers.
Delivering on all elements of our growth strategy
I am pleased to report the following progress across all four
elements of our growth strategy.
1."Win, Transact and Deepen"
Our customer strategy is to:
-- 'Win': bring more customers on to the Eagle Eye AIR platform;
-- 'Transact': drive higher redemption and interaction volumes through the platform; and
-- 'Deepen': encourage our customers to adopt more of our
product portfolio as they become more adept at digital
marketing.
Win
During the Period we saw an increase in win rate, both in the UK
and internationally, resulting in an uplift in "Win" related
revenue. New customers secured in the Period included a five-year
contract with Woolworths Group in Australia & New Zealand; a
three-year contract with a leading speciality office and home
products & services retailer in North America, and in the UK, a
three-year contract with Liberty Retail Limited, the luxury
department store, to support their omnichannel gift programme.
We were pleased to recently confirm our role as a key technology
provider for Virgin Red, Virgin's new rewards club, which launched
on an invite-only basis in November 2020 before opening up to
everyone from 8 February 2021. The Eagle Eye platform was chosen
earlier in 2020 for its ability to process and manage the billions
of points flowing across the platform, being earnt and spent across
multiple organisations globally, bringing together the Virgin
companies and beyond, across multiple sectors.
We have been delighted by the success of Pret a Manger's
'YourPret Barista' programme, launched in September 2020. This is
the first in-shop, flat subscription service to be launched by a
hospitality operator in the UK. Subscribers are able to enjoy up to
five barista-prepared drinks per day for a fixed monthly price of
GBP20. The Service was built on the Eagle Eye AIR platform as part
of Pret's new digital infrastructure. This new in-shop digital
service capability will allow Pret to launch insight-led customer
propositions more quickly and at scale.
These new wins demonstrate the much needed capabilities of Eagle
Eye AIR. By deploying Eagle Eye AIR and utilising our Wallet
capability, Enterprise businesses can gain an omnichannel, single
view of the customer, the primary requirement to set the
foundations for personalisation. Through our deep integrations to
all points of sale and the rest of the marketing stack, we enable
businesses to act on their leading data science capabilities,
moving from manual and cumbersome promotions and loyalty management
across multiple systems to zero-touch personalisation, all
delivered via API. Not only does Eagle Eye AIR streamline
efficiency, moving businesses from batch to real-time marketing,
but it also unlocks the capability to create new and innovative
ways to engage customers through the ability to deploy any
promotional or marketing tactic required, from points to money off,
gamification, subscription services, charity donations and more.
The ways in which businesses are using Eagle Eye AIR is increasing
at pace, providing us with a strong base for future expected
growth.
Strategic Partnerships and Collaborations
Eagle Eye AIR has the ability to sit across the entire marketing
ecosystem, connecting all the elements required to deliver
personalised marketing at scale. As part of our growth strategy, we
will continue to create partnerships and collaborations with other
businesses in the industry, using their expertise to strengthen our
offering and leveraging their marketing reach.
Combining these relationships with our own, direct marketing
activities, we believe provides us with the right mix to capture
more of the promotions and loyalty markets and we are encouraged by
the increasing number of opportunities entering our sales
pipeline.
New partnerships include: Oracle MICROS Simphony POS System (to
deliver YourPret Barista); Outra, a predictive data science
business, to help retailers, hospitality operators and branded CPG
(Consumer Packaged Goods) to enhance the effectiveness of their
promotional marketing investments; revenue management platform,
Chargebee, to help retail and hospitality operators drive customer
engagement and recurring revenue through subscription services; and
Artificial Intelligence provider Peak to help retailers leverage
customer data for loyalty and promotional campaigns.
The Liberty omnichannel gift programme was enabled through our
integration with Salesforce Commerce Cloud. Salesforce Commerce
Cloud is a powerful ecommerce solution from the world's largest CRM
provider and as an accredited Salesforce partner we are able to
deploy our solutions quickly to the wider Salesforce customer
base.
In the US, our partnerships and collaborations with Neptune
Retail Solutions (previously News America Marketing) the premier
marketing services company in the US and Canada, E crebo, the
receipt marketing technology provider and dunnhumby, a global
leader in customer data analytics, are progressing well. These
represent powerful, relevant relationships to continue to optimise
our expansion into the US.
Transact
Chargeable AIR redemption and interaction volumes, a key measure
of usage of Eagle Eye AIR , fell by 5% to 452.2m (H1 2020: 476.8m),
primarily reflecting the impact of COVID-19, offset by an increased
number of loyalty transactions following the successful launch of
new customer programmes, including for Southeastern Grocers ("SEG")
and the full period effect of Sainsbury's.
The Period saw an increase in SMS volumes driven by the growth
of Click & Collect offerings at certain of our high-street
retail customers during the COVID-19 pandemic and also from
supporting clients following the UK Government's Test and Trace
guidelines.
Brands & Audiences
Eagle Eye AIR is also used by brands to run campaign activations
across our growing Retailer, Operator and Audience Network. This
was one of the key areas of the business impacted by the COVID-19
lockdown. Overall, t he revenue from branded drinks campaigns
decreased to GBP0.1m (H1 2020: GBP0.3m), which was effectively
delivered during the three heavily restricted summer months.
Affiliate revenue held steady at GBP0.2m (H1 2020: GBP0.2m),
bringing total brand and audience revenue to GBP0.3m (H1 2020:
GBP0.5m).
We now have over 7,000 hospitality venues on Eagle Eye AIR,
creating an attractive platform for Brands to exploit once lockdown
restrictions are lifted, as they seek the means to recapture lost
revenue and strengthen their businesses.
Deepen
We have seen continued deepening across our customer base, as
they grow their use of Eagle Eye AIR. While COVID-19 has caused
some contract expansion to be delayed, we continue to have a wide
range of discussions across our customer base as they consider how
to continue on their journey towards personalised multi-channel
loyalty, promotion and gift offerings. With several new customers
having commenced transacting in the Period, including Pret a Manger
and Virgin Red in the UK, and our international customers
continuing with their roll-outs, we anticipate our recurring,
transactional revenues to increase in future periods.
Pleasingly, our long-term contract customer churn rate by value
remains very low at 0.2% (H1 2020: 0.3%), with good levels of
renewals, including multi-year contracts with IMO, the world's
largest dedicated car wash company, leisure operator Azzurri Group
and the restaurant group, Giggling Squid.
Our high level of customer retention means that each new
customer win significantly adds to our growth prospects, with
revenue from our largest revenue-generating customers typically
increasing by a multiple of over three times by the end of their
third year on Eagle Eye AIR, through both use of the platform and
the addition of new services.
2. Innovation
Innovation continues to lie at the heart of our proposition,
investing in the capabilities of Eagle Eye AIR to ensure that our
technology continues to benefit our customers, and their consumers.
In the Period, we have invested in new core functionality
continuing to increase the attractiveness of the platform for
enterprise customers, providing them with new means of digitally
engaging with their customers.
In the Period we launched our new, personalised Message At Till
capability which we believe will soon have many innovative use
cases associated to it, based on the different ways in which
businesses will deploy the technology. AIR connects with the
retailer's till system to enable real-time, relevant and targeted
promotions, through physical coupons at the till or digital
coupons, SMS and in-app push notifications following a transaction,
based on their customers' basket content and buying behaviour.
Customers will feel valued as they are engaged by compelling timely
and tailored offers based on what they have just or not bought, or
profile or purchasing history, while enabling the retailer to
connect with previously anonymous customers, providing a means to
drive customer retention, increase redemption rates and increase
frequency and average spend.
This functionality is particularly important in the US, acting
as a digital replacement for the widely prevalent receipt-based
couponing market, adding further capability for our US enterprise
customers while opening-up a new segment of the US retail market. A
digital message at till enables retailers to connect with
previously anonymised customers, encouraging them to digitally
connect and form a digital identity with the retailer, through
which future marketing messages can flow.
In the Period, we also launched our Load to Card function
allowing retailers to leverage data analytics and artificial
intelligence ("AI") to recommend and issue personalised digital
rewards via digital channels such as a website or an app. A
consumer is able to select the offers they wish to redeem and load
them to their digital loyalty card. Both of these features are
already in use at Southeastern Grocers, driving customer engagement
through curated promotions and offers based on their shopping
patterns.
We have also taken advantage of the additional computing power
of the cloud to provide an enhanced version of our POS Connect
loyalty feature, to provide retailers with more flexibility in the
numbers, personalisation for types of offers, points and discounts
they can give to their customers. We have enabled this through the
launch of a powerful new application programming interface ("API")
that sets retailers free from the constraints of their existing POS
system, with AIR performing all of the complex calculations
relating to promotional offer adjudication and basket adjustments
such as discounts or point allocations. All of these calculations
take place in the cloud and in real time. Linking a consumer's
identity to the items in their shopping basket, gives the retailer
the capability to offer truly personalised promotions without being
restricted by how many the POS can handle.
The performance of Eagle Eye AIR continues to benefit from our
move to the Google Cloud, increasing our scalability and
flexibility, being able to grow compute power as we sign up new
customers and as our existing customers require it. As planned, we
have now introduced site reliability engineering in order to be
more scalable, automated, reliable, standardised and secure.
3. International Growth
We have continued to prosecute our international growth strategy
in the Period, winning new customers, and strengthening our
positions in our new territories. We are particularly pleased to
have added these customers during this COVID-disrupted period. Our
new agile methodologies have enabled us to supplement our local
teams by our global resource pool, enabling us to open up these
geographies in a cost-efficient and scalable manner.
North America
In December 2020, we were pleased to secure our second US
customer. A leading speciality office and home products and
services retailer in North America signed a three-year agreement to
use Eagle Eye AIR for its Digital Wallet and promotional
capabilities. This retailer has over 1,000 stores across the United
States. This win, coupled with Eagle Eye's first US win in December
2019 with SEG, further strengthens our position in North America
and demonstrates the applicability of AIR in sectors outside of
grocery.
After launching the first phase of SEG's omni-channel strategy
in July 2020 to enable coupons-at-receipt, Eagle Eye has partnered
with Neptune Retail Solutions to create a personalised digital
coupon experience for SEG's customers. Neptune Retail Solutions
partners with leading CPG brands and uses 1st, 2nd and 3rd party
customer data to identify and target relevant offers &
promotions. For SEG, those offers will be further personalised
through Eagle Eye and automatically loaded-to-card directly into
customers' SEG Rewards loyalty accounts and are redeemable at
checkout.
Eagle Eye and dunnhumby are collaborating to enable the
personalisation of promotions for SEG, and to provide the retailer
with a deeper understanding of its customers' behaviours and
preferences. This collaboration will see accelerated execution on
SEG's retail vision and we are on track to deliver a complete
omni-channel strategy in record time.
In Canada, our relationship with Loblaw Companies Ltd ("Loblaw")
goes from strength to strength as we supported the launch of their
PC Health app which provides live chat to members with registered
nurses and dietitians, plus the opportunity to earn PC Optimum(TM)
rewards through custom digital health programs. We also supported
the re-launch of PC Insiders subscription service, now PC Optimum
Insiders(TM) subscription which provides members the opportunity to
earn more PC Optimum(TM) points and promotional rewards. Each year
we manage the load of promotional offers for their PC Optimum
Points Days which is Loblaws' biggest points-earning event of the
year, taking place in January and February.
Australasia
In November 2020, we secured a five-year agreement with
Woolworths Group where they will use Eagle Eye AIR to support their
personalised real-time digital marketing programme. Woolworths is
Australia's largest retailer; the group operates 3,000 stores in
Australia and New Zealand and serves more than 29 million customers
across its brands every week. Eagle Eye's services will allow
Woolworths Group to enable the end-to-end management of real-time
personalised digital promotions and support its transition to a
digitally led rewards program. Woolworths will deploy the
proposition across touchpoints including its app, its eCommerce
business and various other digital media. Eagle Eye AIR will also
be used to enable a real-time integration with a network of
partners. Implementation commenced on contract signature.
We continued our work with The Warehouse Group, one of the
largest retailing groups in New Zealand, supporting the pilot of
its digital customer engagement and community give back
programme.
With two of the largest retailers in the Australasia region now
as customers, we believe we have a strong position to use this
region as a base for further expansion. We have begun investment in
the Australia market in line with the Group's growing revenue
profile in the region and will continue to do so.
This growing range of international enterprise level customers
are opening up new conversations with other Tier 1 retailers and
our new business pipeline continues to grow at record levels
internationally.
4. "Better, Simpler, Cheaper"
While investing in innovation and growing the business, we
simultaneously look for inherent productivity
and efficiencies coming from the scale of what we do. The
relevance of this ethos came to the fore at the time of the
COVID-19 pandemic when the agility of the organisation enabled us
to swiftly implement home working and the change of working
practices required to ensure its successful execution. The proof of
this can be seen both in the continued successes with our Tier 1
customer implementations as well as the strong financials we have
reported throughout the COVID-19 affected period.
In August 2020 we were re-certified for the International
Standard ISO27001:2013 which provides the framework for an
effective Information Security Management System (ISMS). It sets
out the policies and procedures needed for robust IT security
management. We also completed our Soc Type 2 report after being
audited by an independent service auditor.
We are implementing automation tools across the Delivery and
Compliance teams to drive efficiencies in process and
reporting.
Our platform continued to operate and perform within all the
contracted SLAs across all our geographies 24/7 - through a busy
Black Friday and Christmas period.
Our People
We remain committed to our goal of being a great place to work
and to create an environment where our people can flourish.
Investment in our people to be the best they can be through
training and tools has never been as important, given the
unsettling nature of the COVID-19 crisis. This has been a period of
building on the successes of our past and adapting as appropriate.
We passionately believe that our values and the culture we have
created sets us apart.
We have been able to continue to deliver for all our clients
successfully, including international enterprise wins, by utilising
existing technologies for collaboration to deliver effective remote
working of the entire workforce. These technology platforms in
parallel with increased and frequent feedback loops will continue
to drive remote ways of working whilst enabling the business to
power through the recovery. We plan to continue with these improved
global operational mechanics when life returns to normal, to
continue to drive efficiencies in the business.
Early in the Period, we took a temperature gauge on the ability
of our people to deal with the stress that had been heightened due
to these unforeseen circumstances. These results were remarkable
and demonstrated our people's commitment to the business during
these challenging times. There were three clear actions that arose:
1. Continue the increased level of honest communication with all
staff, 2. Strengthen and empower the management team to give more
support to the employees, 3. Continue to measure employee
satisfaction.
Increased level of honest communication
Since the start of the pandemic, increased communication has
been vital. We have put in place our "Tea with Teams" weekly
company updates, daily Stand Ups at a department level, Sales &
Operations meetings to streamline the hand off between the two
functions and senior leadership meetings to align and empower the
senior team on the strategy of the business. We have moved the
whole business to a quarterly cadence where objectives are set at
the top of the business and rolled down to controllables and
deliverables for every employee so that we are all aligned. We have
moved from an annual company update to quarterly, so the business
understands the output of their contributions and can be proud of
working for Eagle Eye.
Developing the Senior Management Team
It was evident that we needed to strengthen the skills of our
Senior Management Team to better equip them to deliver on the
overall strategy and culture of the business but also for the
Executive and Senior Management Team to be better connected to
allow a quicker response to the evolving climate. We created a
'Weekly Club' for this group of people to self-educate, learn and
understand each other better, whilst staying abreast of topics
impacting the business. On top of quarterly business performance
reviews, we have so far studied 'Will it make the Boat Go Faster?',
'The Chimp Paradox' and Agile Methodology for application across
the broader business.
Measuring Employee Satisfaction
Following the initial gauge, it was important to take a regular
measure of employee satisfaction and hence we introduced employee
NPS that we now measure quarterly. We use NPS to measure both our
employees' assessment of our product and whether they would
recommend Eagle Eye as a place to work. We have seen these scores
improve during the pandemic. The latest scores were over +50 which
is an encouraging achievement.
Employee Resource Groups
Eagle Eye has always prided itself on fostering a diverse and
inclusive workplace and culture in line with its strong and clearly
defined values. Last year we encouraged employees to create
Employee Resource Groups and established two, one for mental health
and another for racial diversity. This Period the Committee has
developed the concept further and each month take a topical subject
that showcases the lives and beliefs of our people.
Our people have demonstrated great resilience over the last 6
months, delivering for some of the biggest retailers in the world
whilst managing their own personal circumstances. I would like to
thank the team for their individual contributions.
Financial Review
Key performance indicators H1 2021 H1 2020
Financial GBP000 GBP000
----------- -----------
Revenue 10,829 10,072
----------- -----------
Recurring revenue 7,959 7,313
----------- -----------
Adjusted EBITDA(1) 2,095 1,280
----------- -----------
Operating profit/(loss) before interest
and tax 236 (473)
----------- -----------
Net cash/(debt)(2) 81 (2,161)
----------- -----------
Cash and cash equivalents 1,181 1,239
----------- -----------
Short term borrowings (1,100) (3,400)
----------- -----------
Non-financial
----------- -----------
Chargeable AIR redemption and interaction
volumes 452.2m 476.8m
----------- -----------
Recurring revenue:
----------- -----------
Percentage of licence revenue 3,799; 35% 3,850; 38%
----------- -----------
Percentage of AIR transaction revenue 3,037; 28% 2,999; 30%
----------- -----------
Percentage of SMS transaction revenue 1,123; 10% 464; 5%
----------- -----------
Total recurring revenue 73% 73%
----------- -----------
Long term contract customer churn by
value 0.2% 0.3%
----------- -----------
(1) Adjusted EBITDA excludes share-based payment charges along
with depreciation, amortisation, interest and tax from the measure
of profit
(2) Net cash/(debt) is cash and cash equivalents less
borrowings
Revenue and gross profit
During the Period, the Group delivered a revenue increase of 8%
to GBP10.8m (H1 2020: GBP10.1m). In addition, half-on-half growth
continued to be delivered with H1 2021 growing 5% over H2 2020.
These growth metrics have been achieved despite the impact of
lockdowns (most notably on our F&B and non-Grocery customer
segment) and other restrictions, which has been mitigated by
increased SMS messaging revenue. This is both from clients where
the Group is integrated, not only for their High Street stores, but
also for their e-commerce offering and also from supporting clients
following the UK Government's Test and Trace guidelines. This
change in product mix demonstrates the diversity and breadth of the
platform offering.
Revenue generated from recurring subscription fees and
transactions over the network represented 73% (H1 2020: 73%) of
total revenue for the Period. Reflecting the COVID-19 impact, AIR
recurring revenues were flat against the prior year at GBP6.8m (H1
2020: GBP6.8m) . However, international revenue grew 17% to GBP3.9m
(H1 2020: GBP3.4m) reflecting new wins in Australia and the US and
existing clients moving to the run time phase of their
contracts.
Chargeable AIR redemption and interaction volumes, a key measure
of usage of Eagle Eye AIR, fell by 5% to 452.2m (H1 2020: 476.8m),
primarily reflecting the impact of COVID-19, offset by an increased
number of loyalty transactions following the successful launch of
new customer programmes, including for SEG and the full period
effect of Sainsbury's. Gift transactional volumes over the Black
Friday and Christmas period were up 6% on the same period in H1
2020, driven by e-commerce sales.
Gross profit grew 4% to GBP9.8m (H1 2020: GBP9.4m) with gross
margin of 91% (H1 2020: 94%). The change in gross margin reflects
the impact of the growth in the lower margin SMS business. AIR
margin grew to 98% (H1 2020: 97%). Cost of sales includes the cost
of sending SMS messages, revenue share agreements and outsourced
bespoke development work. All internal resource costs are
recognised within operating costs, net of capitalised development
and contract costs.
Adjusted operating costs and EBITDA
Reflecting uncertainties in revenue created by COVID-19, the
cost base has been carefully managed whilst ensuring the necessary
investment in the business continues linked to new wins, which,
along with the full period benefits of moving our infrastructure to
Google Cloud, resulted in a reduction in adjusted operating costs
to GBP7.7m (H1 2020: GBP8.2m). Adjusted operating costs represents
sales and marketing, product development (net of capitalised
costs), project delivery (net of capitalised implementation costs),
operational IT, general and administration costs.
Net staff costs, which represent 62% of adjusted operating costs
(H1 2020: 59%), were held at GBP4.8m (H1 2020: GBP4.8m). Average
headcount for the Period was 140 (H1 2020: 140 ). Infrastructure
costs decreased 3% to GBP2.1m (H1 2020: GBP2.2m) reflecting the
full period impact of the transition to Google Cloud and certain
rent-free periods agreed with landlords, offset by increased costs
for higher transactional capacity. Other operating costs, which are
either discretionary or are not correlated to changes in revenue,
were 28% lower at GBP0.8m (H1 2020: GBP1.1m), primarily as a result
of minimal travel due to COVID-19.
We have continued to invest in our Product where total spend in
the Period was GBP2.2m (H1 2020: GBP2.2m). Capitalised product
development costs were GBP1.0m (H1 2020: GBP1.2m) whilst
amortisation of capitalised development costs was GBP1.1m (H1 2020:
GBP1.0m). Contract costs (including costs to obtain contracts and
contract fulfilment costs), recognised as assets under IFRS 15,
were GBP0.2m (H1 2020: GBP0.2m) and amortisation of contract costs
was GBP0.2m (H1 2020: GBP0.2m).
Continued control over costs along with revenue growth achieved
despite the impact of COVID-19 has seen adjusted EBITDA grow by 64%
to GBP2.1m (H1 2020: GBP1.3m). To provide a better guide to the
underlying business performance, adjusted EBITDA excludes
share-based payment charges along with depreciation, amortisation,
interest and tax from the measure of profit.
Maiden profit before tax
The GAAP measure of operating profit before interest and tax was
a maiden first half profit of GBP0.2m (H1 2020: loss of GBP0.5m),
reflecting the growth in EBITDA partially offset by higher
amortisation costs. The non-cash share-based payment charge
decreased to GBP0.3m (H1 2020: GBP0.4m), reflecting the impact of
COVID-19 on FY21 performance related vesting conditions.
Earnings per share
Net finance expenses reduced 75% to GBP0.04m (H1 2020: GBP0.16m)
reflecting the lower level of utilisation of the Group's revolving
credit facility.
The tax charge of GBP0.3m (H1 2020: GBP0.01m) reflects tax
payments for the Group's profitable operations in North America,
offset by the recognition of a deferred tax asset in the UK
reflecting the expected utilisation of a proportion of the historic
losses brought forward. Loss after taxation was GBP0.1m (H1 2020:
GBP0.6m) and reported basic and diluted loss per share improved by
86% to 0.36p (H1 2020: 2.51p) primarily reflecting the improvement
in adjusted EBITDA.
Cash and net debt
The Group ended the Period with net cash of GBP0.1m (H1 2020:
net debt of GBP2.2m) being better than the Board's expectations.
Cash consumption in the Period has followed the Group's usual
seasonal profile which sees higher cash consumption in the first
half of the year compared to the second half. In addition, in FY
2020 the Group made use of a number of COVID-19 linked schemes in
order to manage working capital, including the deferral of VAT and
PAYE in the UK. The outflow in H1 2021 of GBP1.4m (H1 2020:
GBP0.9m) included repayment of approximately GBP1.1m (H1 2020:
GBPnil) of these deferrals.
The Period end net cash, together with the unutilised portion of
the Group's GBP5m revolving credit facility with Barclays Bank plc,
means the Group has GBP5.1m available headroom (December 2019:
GBP2.8m) which the Directors are confident is sufficient to support
the Group's existing growth plans.
Statement of financial position
The Group had net assets of GBP4.4m at the end of the Period
(June 2020: GBP4.4m).
COVID-19
The impacts of COVID-19, and most recently the UK national
lockdown 3, continue to negatively impact the Group's UK Food &
Beverage and Non-Grocery customers, which accounted for
approximately 10% of Group revenue pre-COVID-19, while also
impacting the continued deepening of client accounts that we would
traditionally see and causing corporate decision-making to be
delayed.
Despite this, Eagle Eye has delivered targeted levels of revenue
growth, up 8% to GBP10.8m in the first half. Additionally, the cost
base has continued to be carefully managed whilst ensuring the
necessary investment in the business continues, as evidenced by the
strong growth in adjusted EBITDA.
Outlook
Against the ongoing challenging global outook, the careful
management of the business, successful new wins in the first half
of the year and continued growth of the existing customer base,
trading for the financial year ending 30 June 2021 remains in line
with the Board's expectations.
The growth of Eagle Eye's international customer base including
strengthened footholds in the US and Asia Pacific, alongside its
continued strong presence domestically in the UK, provide tangible
evidence of an expanding opportunity and these are expected to
drive accelerated growth in future periods. The Group will continue
to invest in its people, product development, sales and marketing,
and in new geographies in line with customer demand, whilst
carefully managing the business and cost-base, to capitalise on
this momentum.
Never has digital engagement with consumers been of more
relevance to the global retail sector. The Group's new business
pipeline continues to grow at record levels internationally,
including multiple enterprise level opportunities, providing the
Board with confidence in the ongoing success of the business.
Malcolm Wall, Non-Executive Chairman
Consolidated unaudited interim statement of total comprehensive
income for the six months ended 31 December 2020
Unaudited Unaudited Unaudited
6 months
to 6 months to Year to
31 December 31 December 30 June
2020 2019 2020
Note GBP000 GBP000 GBP000
Continuing operations
Revenue 3 10,829 10,072 20,421
Cost of sales (1,027) (636) (1,318)
------------------------------------ ---- ----------- ----------- ---------
Gross profit 9,802 9,436 19,103
Adjusted operating expenses(1) (7,707) (8,156) (15,825)
------------------------------------ ---- ----------- ----------- ---------
Profit before interest,
tax, depreciation, amortisation
and share-based payment
charge 2,095 1,280 3,278
Share-based payment
charge (252) (371) (464)
Depreciation and amortisation (1,607) (1,382) (2,856)
------------------------------------ ---- ----------- ----------- ---------
Operating profit/(loss) 236 (473) (42)
Finance income - 2 1
Finance expense (39) (161) (291)
------------------------------------ ---- ----------- ----------- ---------
Profit/(loss) before
taxation 197 (632) (332)
Taxation (290) (11) (122)
------------------------------------ ---- ----------- ----------- ---------
Loss after taxation for the
financial period (93) (643) (454)
Foreign exchange adjustments (199) (127) (98)
------------------------------------ ---- ----------- ----------- ---------
Total comprehensive loss attributable
to the owners of the parent
for the financial period (292) (770) (552)
------------------------------------------ ----------- ----------- ---------
(1) Adjusted operating expenses excludes share-based payment
charge, depreciation and amortisation
Loss per share
From continuing operations
Basic and diluted 4 (0.36)p (2.51)p (1.77)p
------------------------------------ ---- ----------- ----------- ---------
Consolidated unaudited interim statement of financial position
as at 31 December 2020
Unaudited Unaudited Unaudited
31 December 31 December 30 June
2020 2019 2020
GBP000 GBP000 GBP000
Non-current assets
Intangible assets 6,264 6,413 6,494
Contract fulfilment
costs 270 237 209
Property, plant and
equipment 865 1,048 903
Deferred taxation 212 - 121
7,611 7,698 7,727
------------------------------ ----------- ----------- ---------
Current assets
Trade and other receivables 5,367 5,669 4,840
Current tax receivable - 407 -
Cash and cash equivalents 1,181 1,239 1,519
------------------------------- ----------- ----------- ---------
6,548 7,315 6,359
------------------------------ ----------- ----------- ---------
Total assets 14,159 15,013 14,086
------------------------------- ----------- ----------- ---------
Current liabilities
Trade and other payables (7,757) (6,749) (7,879)
Financial liabilities (1,100) (3,400) -
------------------------------- ----------- ----------- ---------
(8,857) (10,149) (7,879)
------------------------------ ----------- ----------- ---------
Non-current liabilities
Other payables (858) (817) (1,783)
------------------------------- ----------- ----------- ---------
Total liabilities (9,715) (10,966) (9,662)
------------------------------- ----------- ----------- ---------
Net assets 4,444 4,047 4,424
------------------------------- ----------- ----------- ---------
Equity attributable to owners
of the parent
Share capital 258 257 257
Share premium 17,315 17,190 17,256
Merger reserve 3,278 3,278 3,278
Share option reserve 3,762 3,456 3,525
Retained losses (20,169) (20,134) (19,892)
------------------------------- ----------- ----------- ---------
Total equity 4,444 4,047 4,424
------------------------------- ----------- ----------- ---------
Consolidated unaudited interim statement of changes in equity
for the six months ended 31 December 2020
Share Merger Share option Retained
capital Share premium reserve reserve losses Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 July
2019 255 17,066 3,278 3,236 (19,515) 4,320
Loss for the period - - - - (643) (643)
Other comprehensive
income
Foreign exchange adjustments - - - - (127) (127)
------------------------------- -------- ------------- -------- ------------ -------- ------
- - - - (770) (770)
------------------------------- -------- ------------- -------- ------------ -------- ------
Transactions with
owners
Exercise of share
options 2 124 - - - 126
Fair value of share
options exercised - - - (151) 151 -
Share-based payment
charge - - - 371 - 371
------------------------------- -------- ------------- -------- ------------ -------- ------
2 124 - 220 151 497
Balance at 31 December
2019 257 17,190 3,278 3,456 (20,134) 4,047
------------------------------- -------- ------------- -------- ------------ -------- ------
Profit for the period - - - - 189 189
Other comprehensive
income
Foreign exchange adjustments - - - - 29 29
------------------------------- -------- ------------- -------- ------------ -------- ------
- - - - 218 218
------------------------------- -------- ------------- -------- ------------ -------- ------
Transactions with
owners
Exercise of share
options - 66 - - - 66
Fair value of share
options exercised - - - (24) 24 -
Share-based payment
charge - - - 93 - 93
------------------------------- -------- ------------- -------- ------------ -------- ------
- 66 - 69 24 159
------------------------------- -------- ------------- -------- ------------ -------- ------
Balance at 30 June
2020 257 17,256 3,278 3,525 (19,892) 4,424
Loss for the period - - - - (93) (93)
Other comprehensive
income
Foreign exchange adjustments - - - - (199) (199)
------------------------------- -------- ------------- -------- ------------ -------- ------
- - - - (292) (292)
------------------------------- -------- ------------- -------- ------------ -------- ------
Transactions with
owners
Exercise of share
options 1 59 - - - 60
Fair value of share
options exercised - - - (15) 15 -
Share-based payment
charge - - - 252 - 252
------------------------------- -------- ------------- -------- ------------ -------- ------
1 59 - 237 15 312
Balance at 31 December
2020 258 17,315 3,278 3,762 (20,169) 4,444
------------------------------- -------- ------------- -------- ------------ -------- ------
Included in "retained losses" is a cumulative foreign exchange
balance of GBP(168,000) (June 2020: GBP31,000).
Consolidated unaudited interim statement of cash flows for the
six months ended 31 December 2020
Unaudited Unaudited Unaudited
6 months
6 months to to Year to
31 December 31 December 30 June
2020 2019 2020
GBP000 GBP000 GBP000
Cash flows from operating activities
Profit/(loss) before taxation 197 (632) (332)
Adjustments for:
Depreciation 149 205 370
Amortisation 1,458 1,178 2,487
Share-based payment charge 252 371 464
Finance income - (2) (1)
Finance expense 39 161 291
Increase in trade and other receivables (527) (2,052) (1,222)
(Decrease)/increase in trade and
other payables (1,072) 1,792 3,793
Income tax paid (344) (153) (180)
Income tax received - - 389
Net cash flows from operating activities 152 868 6,059
-------------------------------------------- ----------- ----------- ---------
Cash flows from investing activities
Payments to acquire property, plant
and equipment (111) (48) (68)
Payments to acquire intangible
assets (1,288) (1,452) (2,815)
Net cash flows used in investing
activities (1,399) (1,500) (2,883)
-------------------------------------------- ----------- ----------- ---------
Cash flows from financing activities
Net proceeds from issue of equity 60 126 192
Proceeds from borrowings 1,300 1,700 2,000
Repayment of borrowings (200) (900) (4,600)
Capital payments in respect of
leases (13) (133) (224)
Interest paid in respect of leases (20) (23) (44)
Interest paid (19) (137) (248)
Interest received - 2 2
-------------------------------------------- ----------- ----------- ---------
Net cash flows from financing activities 1,108 635 (2,922)
-------------------------------------------- ----------- ----------- ---------
Net (decrease)/increase in cash
and cash equivalents in the period (139) 3 254
Foreign exchange adjustments (199) (127) (98)
Cash and cash equivalents at beginning
of period 1,519 1,363 1,363
-------------------------------------------- ----------- ----------- ---------
Cash and cash equivalents at end
of period 1,181 1,239 1,519
-------------------------------------------- ----------- ----------- ---------
Notes to the consolidated unaudited interim financial
statements
1. Basis of preparation
The Group's half-yearly financial information, which is
unaudited, consolidates the results of Eagle Eye Solutions Group
plc and its subsidiary undertakings up to 31 December 2020. The
Group's accounting reference date is 30 June. Eagle Eye Solutions
Group plc's shares are listed on the Alternative Investment Market
of the London Stock Exchange (AIM).
The Company is a public limited liability company incorporated
and domiciled in England & Wales. The presentational and
functional currency of the Group is Sterling. Results in this
consolidated financial information have been prepared to the
nearest GBP1,000.
Eagle Eye Solutions Group plc and its subsidiary undertakings
have not applied IAS 34, Interim Financial Reporting, which is not
mandatory for UK AIM listed groups, in the preparation of this
half-yearly financial report.
The accounting policies used in the preparation of the financial
information for the six months ended 31 December 2020 are in
accordance with the recognition and measurement criteria of
International Financial Reporting Standards ('IFRS') as adopted by
the European Union and are consistent with those which will be
adopted in the annual financial statements for the year ending 30
June 2021.
The profit before interest, tax, depreciation, amortisation and
share-based payment charge is presented in the statement of total
comprehensive income as the Directors consider this performance
measure provides a more accurate indication of the underlying
performance of the Group and is commonly used by City analysts and
investors.
While the financial information included has been prepared in
accordance with the recognition and measurement criteria of IFRS,
as adopted by the European Union, these interim financial
statements do not contain sufficient information to comply with
IFRS.
The comparative financial information for the year ended 30 June
2020 has been extracted from the annual financial statements of
Eagle Eye Solutions Group plc. These interim results for the period
ended 31 December 2020, which are not audited, do not comprise
statutory accounts within the meaning of section 434 of the
Companies Act 2006. The financial information does not therefore
include all of the information and disclosures required in the
annual financial statements.
Full audited accounts of the Group in respect of the year ended
30 June 2020, which received an unqualified audit opinion and did
not contain a statement under section 498(2) or (3) of the
Companies Act 2006, have been delivered to the Registrar of
Companies.
2. Going concern basis
As part of their going concern review the Directors have
followed the guidelines published by the Financial Reporting
Council entitled " Guidance on Risk Management and Internal Control
and Related Financial and Business Reporting" . The Directors have
prepared detailed financial forecasts and cash flows looking beyond
12 months from the date of this half-yearly financial information.
In developing these forecasts, the Directors have made assumptions
based upon their view of the current and future economic conditions
that will prevail over the forecast period.
On the basis of the above projections, the Directors are
confident that the Group has sufficient working capital to honour
all of its obligations to creditors as and when they fall due. In
reaching this conclusion, the Directors have considered the
forecast cash headroom, the resources available to the Group and
the potential impact of changes in forecast growth and other
assumptions, including the potential to avoid or defer certain
costs and to reduce discretionary spend as mitigating actions in
the event of such changes. Accordingly, the Directors continue to
adopt the going concern basis in preparing this half-yearly
financial information .
3. Segmental analysis
The Group is organised into one principal operating division for
management purposes. Revenue is analysed as follows:
Unaudited Unaudited Unaudited
6 months
to 6 months to Year to
31 December 31 December 30 June
2020 2019 2020
GBP000 GBP000 GBP000
Development and set
up fees 2,870 2,759 5,505
Subscription and transaction
fees 7,959 7,313 14,916
10,829 10,072 20,421
----------------------------- ----------- ----------- ---------
Unaudited Unaudited Unaudited
6 months
to 6 months to Year to
31 December 31 December 30 June
2020 2019 2020
GBP000 GBP000 GBP000
AIR revenue 9,659 9,564 19,165
Messaging revenue 1,170 508 1,256
10,829 10,072 20,421
------------------ ----------- ----------- ---------
The majority of the Group's revenue comes from services which
are transferred over time.
4. Loss per share
The calculation of basic and diluted loss per share is based on
the result attributable to ordinary shareholders divided by the
weighted average number of ordinary shares in issue during the
period. The weighted average number of shares for the purpose of
calculating the basic and diluted measures is the same. This is
because the outstanding share options would have the effect of
reducing the loss per ordinary share and therefore would not be
dilutive.
Unaudited Unaudited
H1 2021 H1 2020
Unaudited Weighted Unaudited Weighted
H1 2021 Unaudited average H1 2020 Unaudited average
Loss H1 2021 number Loss H1 2020 number
per share Loss of ordinary per share Loss of ordinary
pence GBP000 shares pence GBP000 shares
Basic and
diluted loss
per share (0.36) (93) 25,747,607 (2.51) (643) 25,593,503
-------------- ---------- --------- ------------ ---------- --------- ------------
5. Alternative performance measure
EBITDA is a key performance measure for the Group and is derived
as follows:
Unaudited Unaudited Unaudited
6 months to 6 months Year to
31 December to 31 December 30 June
2020 2019 2020
GBP000 GBP000 GBP000
Profit/(loss) before taxation
Add back: 197 (632) (332)
Finance income and expense 39 159 290
Share-based payments 252 371 464
Depreciation and amortisation 1,607 1,382 2,856
------------------------------------------ ----------------- ---------------- ----------
EBITDA 2,095 1,280 3,278
------------------------------------------ ----------------- ---------------- ----------
6. Net cash
Foreign
30 June exchange 31 December
2020 Cash flow adjustments 2020
GBP000 GBP000 GBP000 GBP000
Cash and cash equivalents 1,519 (139) (199) 1,181
Financial liabilities - (1,100) - (1,100)
Net cash 1,519 (1,239) (199) 81
---------------------------- -------- ---------- ------------- ------------
7. Availability of this Interim Announcement
Copies of this announcement are available on the Company's
website, www.eagleeye.com .
This information is provided by RNS, the news service of the
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END
IR FELLFFXLFBBZ
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March 16, 2021 03:00 ET (07:00 GMT)
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