TIDMGETB
RNS Number : 3319G
GetBusy PLC
23 July 2019
23 July 2019
GetBusy plc
2019 Half-year Results
20% recurring revenue growth
GetBusy plc ("GetBusy", the "Company" or the "Group") (AIM:
GETB), a developer of document management and communication
software products, announces its unaudited results for the six
months ended 30 June 2019.
H1 2019 H1 2018 Change
GBP'000 GBP'000 Reported currency Constant currency(+)
------------------
Group recurring revenue 5,386 4,496 20% 19%
------------------ ---------------------
Group total revenue 6,151 5,156 19% 18%
-------- -------- ------------------ ---------------------
Group adjusted loss before tax* (284) (492) 42% n/a
-------- -------- ------------------ ---------------------
Net cash 1,946 2,357 n/a n/a
-------- -------- ------------------ ---------------------
Group loss before tax (571) (666) 14% n/a
-------- -------- ------------------ ---------------------
SmartVault revenue 2,034 1,576 29% 22%
-------- -------- ------------------ ---------------------
Virtual Cabinet revenue 4,117 3,580 15% 16%
-------- -------- ------------------ ---------------------
Virtual Cabinet adjusted profit 1,546 934 65% n/a
-------- -------- ------------------ ---------------------
Financial highlights
-- Recurring revenue up 20% in reported currency and 19% at constant currency
-- 29% total revenue growth in SmartVault (22% at constant currency)
-- 65% growth in adjusted profit before tax for Virtual Cabinet
with substantial operating margin improvement to 37%
-- Adjusted loss before tax improvement of 42% to GBP(284)k
-- Statutory loss before tax reduced by 14% to GBP(572)k
Operational highlights
-- SmartVault AWS migration successfully completed
-- SmartVault customer acquisition model showing significant scaling potential
-- Low net MRR churn rates in Virtual Cabinet and SmartVault
-- Full SmartVault sales and marketing function now in UK
-- First active users for GetBusy productivity communication app
-- GetBusy positioned for monetisation within 12 months
Daniel Rabie, CEO of GetBusy, comments:
"I am delighted with what our team has achieved in H1. Recurring
revenue has increased 20% and our adjusted loss before tax reduced
by 42%. Virtual Cabinet is demonstrating good profit and cash
generation through strong operating leverage. SmartVault is scaling
rapidly. GetBusy has a growing base of active users and we are
positioning it for monetisation.
"We have consistently acquired new users across our products and
have monetised our existing customer base better by delivering more
valuable product features.
"The strong start to the year and the momentum that we have
built has given us confidence that revenue for 2019 will be ahead
of current market expectations."
* Adjusted Profit / (Loss) before Tax has replaced Adjusted
EBITDA as our headline financial performance metric. Adjusted
Profit / (Loss) before Tax is Profit / Loss before share option
costs, net capitalised development costs, finance costs that are
not related to leases, and non-underlying items. A full list of
alternative performance measures can be found in note 2.
(+) Changes at constant currency are calculated by retranslating
the comparative period at the current period's prevailing rate of
exchange.
A glossary of certain terms can be found in Note 2.
Ahead of today's presentations to investors, a copy of the
presentation to investors is now available on the Company's
website, at www.getbusy.com/about/investors
Enquiries:
GetBusy plc
Daniel Rabie (Chief Executive Officer) +44 (0) 845 166 1165
Paul Haworth (Chief Financial Officer) +44 (0) 845 166 1165
investors@getbusy.com
Grant Thornton UK LLP (Nomad)
Philip Secrett / Jamie Barklem / Seamus Fricker +44 (0)20 7383 5100
Liberum Capital Limited (Broker)
Bidhi Bhoma / Cameron Duncan +44 (0)20 3100 2000
Walbrook PR (UK PR & IR adviser)
Paul Cornelius / Nick Rome / Sam Allen +44(0)20 7933 8780
getbusy@walbrookpr.com
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014. THE
PERSON RESPONSIBLE FOR MAKING THIS ANNOUNCEMENT ON BEHALF OF THE
COMPANY IS PAUL HAWORTH.
About GetBusy
GetBusy is a global Document Management and Communication
software business that provides highly secure forms of digital
document distribution, workflows and client chat. 1.5 million users
are now registered to share information through GetBusy's
award-winning online client portals.
Further information on the Group is available at
www.getbusy.com/about/investors
H1 2019 Group performance
Group recurring revenue increased by 20% (19% at constant
currency) to GBP5.4m (H1 2018: GBP4.5m) and now comprises 88% of
our total revenue. This increase largely reflects continued
customer growth in both our Virtual Cabinet and SmartVault
products, with paid users increasing by 12% to 65,589 (30 June
2018: 58,666). Total revenue of GBP6.2m was 19% ahead of H1 2018
(18% at constant currency), reflecting the ongoing switch to a pure
subscription model in Virtual Cabinet.
Annualised monthly recurring revenue at 30 June 2019 was
GBP11.4m, an increase of 20% compared to 30 June 2018 at constant
currency. We expect continued growth over H2 through a combination
of new customer acquisition and better monetisation of existing
customers through upsell and plan enhancements.
Adjusted loss before tax decreased by 42% to GBP(0.3m), a
reflection of the increase in revenue offset by higher costs
including investment in customer acquisition and channel expansion
for SmartVault together with the build-out of operational
infrastructure and early marketing campaigns for GetBusy. Statutory
loss before tax decreased by 14% to GBP0.6m. At 30 June 2019 the
Group's net cash remained healthy at GBP1.9m (31 December 2018:
GBP2.4m).
Virtual Cabinet
Virtual Cabinet is a leading desktop document management,
workflow and cloud portal tool targeted at a variety of medium to
large professional services businesses. 62% of Virtual Cabinet's
paying users are in the accounting, bookkeeping and tax industries,
with significant concentrations also in financial services,
insurance and insolvency.
Virtual Cabinet's financial objective is sustained growth in
profit and cash generation.
Virtual Cabinet recurring revenue increased by 16% to GBP3.4m, a
reflection of continued new customer wins together with additional
revenue from the existing client base. The number of paid users
increased over the half-year period by 7% to 45,423, ARPU increased
by 1.6% to GBP158 and net MRR churn was 0.2%, compared with 0.3%
for the year ended 31 December 2018. Annualised monthly recurring
revenue at 30 June was GBP7.2m, an increase of 9% compared to 31
December 2018.
During H1, we delivered two of the largest deals in Virtual
Cabinet's history. The first was to a leading UK insolvency
services provider, which demonstrates our ability to grow outside
of the core accounting vertical. The other was to a member firm of
the BDO Alliance in the US. Virtual Cabinet's integrations with
popular practice management systems in the US present an attractive
value proposition to the larger end of the accounting market,
complementing the coverage of SmartVault in the small and medium
accounting and bookkeeping space. We will continue cautiously to
explore opportunities for geographic growth for Virtual Cabinet in
the US.
Non-recurring revenue, which includes consulting and perpetual
licence sales, grew 7% to GBP0.7m. There remains strong demand for
routine consulting services from our growing customer base, while
perpetual licence revenue is expected to be replaced by higher
value recurring subscription revenue as the UK Virtual Cabinet
model continues its transition.
Total revenue of GBP4.1m was a 15% increase (16% at constant
currency) compared to H1 2018 with the proportion of recurring
revenue increasing from 83% to 84%, a trend we expect to continue.
Gross margin remained reasonably consistent at 98%.
Development spend remained reasonably stable at GBP0.4m (H1
2018: GBP0.4m). However the key focus area of development was our
suite of mobility products, collectively known as Virtual Cabinet
Go; these products will augment the core Virtual Cabinet and portal
applications, providing intuitive, secure on-demand access to
documents from anywhere and without the time and hassle of
negotiating local VPNs. This allows our customers to spend more
time out of the office and face-to-face with their clients, without
losing access to critical information.
SG&A costs decreased slightly to GBP2.1m, primarily due to
lower staff costs. We have reduced the size of our consulting team
in Australia in order to match delivery capacity with expected
order intake. In addition, we have redeployed certain operational
staff to other areas of the business as our efforts to use
technology to automate internal processes bear fruit.
Adjusted Profit increased by 65% to GBP1.5m with operating
margin improving significantly from 26% to 37%.
SmartVault
SmartVault is a cloud document management platform and portal
for small and medium sized businesses. SmartVault's customer base
similarly comprises 62% from the accounting, bookkeeping and tax
markets, driven by very strong integrations with the leading SME
cloud accounting software providers.
Our financial objective for SmartVault is to drive sustained
growth in high quality recurring subscription revenue.
Continued new customer growth led to a 27% increase in recurring
revenue to GBP1.9m (22% increase at constant currency). The number
of paid users at the end of the period was 10.1% higher than 30
June 2018, at 20,166 and the average paid user base over the period
was 8.9% higher than in H1 2018.
SmartVault is increasingly selling to higher value customers on
premium plans. ARPU increased by 7.8% to GBP208 (7.3% increase at
constant currency); ARPU for new customers over the period was 26%
higher than for lost customers. Net MRR churn for the period was
0.2% per month (H1 2018: 0.2%), with upgrades, user expansion and
account management activity largely offsetting lost revenue from
churned customers and downgrades.
SmartVault's expansion into the UK is progressing well, with
in-country marketing, sales and consulting staff now in place. This
half has been about building brand presence and forging alliances
with industry bodies and potential channel partners. As expected at
such an early stage in the market, churn has been significantly
higher than for the US, where we have an established market
presence. However we are making new sales at an increasingly
predictable run rate and have been encouraged by the progress that
is being made.
Non-recurring revenue of GBP0.1m was double that of H1 2018,
largely due to digital signature sales. This was the first US tax
season with our integrated DocuSign digital signature solution. As
customers have a number of digital signature options available to
them, we regard this integration and reseller partnership as an
enhancement to our product offering rather than a substantial
revenue opportunity in its own right.
As expected, gross margin of 81% was lower than in H1 2018 due
to higher integration fees and cloud hosting costs for the product.
Early in H1 we migrated the SmartVault product from self-managed
servers to Amazon Web Services ("AWS"), which provides a more
secure, faster and highly scalable platform for growth. The
migration has been very successful, with no unplanned product
downtime during the key US tax season. Our priority has been to
ensure the product is stable and providing an excellent customer
experience in the new environment. We are now moving to the cost
optimisation phase and will work to reduce the ongoing operating
costs during the second half. It is our expectation that the
normalised cash costs of operating in AWS will be at least neutral,
however as a significant proportion of cost from the old
self-managed servers was depreciation (and therefore not included
in cost of sales), gross margin is unlikely to return to 2018
levels in the medium term.
Development costs of GBP0.4m were in line with H1 2018. Key
areas of development in the half have been around the AWS migration
and the development of functionality and customisation for our
entry into the UK market. We are expecting to increase our
SmartVault development resource over the coming months to support
the more rapid iteration of product improvements and new feature
sets as well as increasing our capacity to create new integrations
with partner apps, which can serve as channels.
SG&A costs increased GBP0.5m to GBP1.7m due to the
investments we have been making over the last year in customer
acquisition teams and technology to capitalise on strong LTV : CAC
ratios in the US and to establish our foothold in the UK. During
H1, our LTV : CAC ratio for SmartVault as a whole was 4:1, compared
to 5:1 in H1 2018, due to the drag caused by the relative
inefficiency of our less mature UK customer acquisition spend. Our
LTV : CAC for SmartVault in the US remains above 2018 levels. To
capitalise on this scaling opportunity, we plan to make further
customer acquisition investments in H2, which we expect to
contribute to growth meaningfully in 2020.
Adjusted loss before tax in H1 was GBP(0.4m), GBP0.2m higher
than in H1 2018 due to the additional customer acquisition
investments, but consistent with the H2 2018 run rate.
GetBusy
GetBusy is our new product designed for busy teams that want to
stay on task and get more done.
Our deep research around the way that teams work effectively has
identified a set of problem statements that GetBusy seeks to
address. These problems include challenges in keeping track of
tasks, communicating around tasks, clearly assigning tasks to team
members and clients, avoiding e-mail and chat-app clutter, having
multiple conflicting tools for team, client and personal
organisation, ineffective and inefficient communication and
information security and privacy.
Currently in public beta, it is available as an iOS app, macOS
app, Windows app and web app with a Rest API and is being rapidly
iterated in response to continual user feedback and behavioural
analysis.
During H1, we acquired our first active users. We have validated
that well-defined customer pain points exist and that there is
clear and strong demand for a solution. We have been encouraged by
the average cost per lead during our beta marketing, which compares
very favourably to our existing products and gives us confidence
that marketing efforts will scale well.
Based on user feedback and our analysis of the data gathered to
date, we will be positioning the product towards monetisation to
prove we have a viable, scalable business. This will involve
developing additional high-value feature sets, creating structured
pricing plans and a coherent revenue model as well as implementing
a scalable operational and customer acquisition infrastructure. In
addition, we will closely monitor progress towards internal goals
for lead-to-paid customer conversion, customer acquisition costs,
active users, paid users and average sale price.
Total spend on GetBusy in H1 2019 was GBP0.6m, a GBP0.1m
increase compared to H1 2018. The increase reflects the operational
infrastructure that we have started to build around the product as
well as spend on test marketing as we continue the journey to find
product market fit.
Cashflow and balance sheet
Total cash reduced over the period by GBP0.5m to GBP1.9m.
Adjusted loss before tax of GBP0.3m and a working capital outflow
of GBP0.2m were the main contributing factors, along with fixed
asset purchases of GBP0.1m, chiefly in the form of new ERP system
implementation capitalised costs.
Intangible assets reduced by GBP0.1m to GBP0.5m over H1 due to
capitalised development costs of GBP0.2m, offset by amortisation of
GBP0.3m. Trade and other receivables increased by GBP0.2m over the
period to GBP1.8m, largely due to the timing of annual renewal
billings for Virtual Cabinet in the UK. This was partially offset
by GBP0.1m increase in trade and other payables to GBP2.2m.
Deferred revenue was almost unchanged from 31 December 2018 at
GBP4.8m; the costs of "delivering" our deferred income include the
ongoing costs of hosting our cloud products in AWS and staffing our
phone and webchat customer support operations.
Potential share register rationalisation
The Company has almost 3,500 individual shareholders in
Australia and New Zealand that collectively hold approximately 15%
of the total share capital. Almost all these shareholders received
their shares as a dividend in specie following the Group's demerger
from Reckon Limited in 2017. The Board is aware of the very high
costs and logistical complications of buying and selling the
Company's shares for these overseas shareholders.
The Board is working with the Company's advisers to create a
solution to improve the liquidity of the Group's shares, which may
include a share consolidation and subsequent sub-division.
Update on long-term incentive arrangements
As disclosed in its 2018 report, the Remuneration Committee is
undertaking a review of the Group's long-term incentive
arrangements in order to better align the long-term interests of
all stakeholders of the business.
The Remuneration Committee has now largely completed its
deliberations and a proposed new scheme is in final draft. This
will be discussed with the company's major shareholders over the
coming weeks, prior to being put to a vote by the company's
independent shareholders.
The existing scheme begins to accrue value to management at a
share price above 37.9 pence per share. It is intended that the
proposed new scheme, which would replace the existing scheme in its
entirety for the executive directors, would increase the initial
hurdle by over 21% but reward management more at higher share price
levels. The proposed scheme would accordingly have a higher hurdle
of 46 pence per share, some 67% above the three-month average
trailing share price and 58% above the closing share price on 22
July 2019.
Outlook
Virtual Cabinet is demonstrating good profit and cash generation
through strong operating leverage. SmartVault is scaling rapidly.
GetBusy has a growing base of active users and is moving towards
being a sellable product.
Our end markets remain strong and the security, efficiency and
regulatory growth drivers that make our products attractive to our
customers are more important than ever.
Our paid user base is growing. We are earning more revenue from
each paid user. Our churn rates remain low.
As we move into H2, Virtual Cabinet will focus on disciplined
investment and growth in recurring subscription revenues from new
customers. SmartVault will invest in additional sales, marketing
and development capability to support its scale-up in the US and
UK, as well as improving ARPU across the customer base. GetBusy
will continue to build out product functionality and build its base
of active users as we position it towards monetisation.
Our strong H1 performance and encouraging leading indicators
have given the Board confidence that, given the additional
investments being made, 2019 revenue will be ahead of current
market expectations.
Consolidated income statement
For the six months ended 30 June 2019
H1 2019 H1 2018
Note GBP'000 GBP'000
Revenue 3 6,151 5,156
Cost of sales (479) (287)
Gross profit 5,672 4,869
Operating costs (6,243) (5,535)
Net finance costs - -
Loss before tax 3 (571) (666)
Loss before tax (571) (666)
Capitalised development costs (224) (160)
Depreciation and amortisation on owned
assets 359 149
Share option costs 151 157
Demerger, flotation and other non-underlying
costs - 28
Finance costs / (income) not related 1 -
to leases
Adjusted loss before tax (284) (492)
---------------------------------------------- ----- -------- ---------------------
Tax - 179
Loss for the period attributable to owners
of the Company (571) (487)
======== =====================
Loss per share (pence)
Basic and diluted (1.18) (1.01)
======== =====================
Consolidated statement of comprehensive income
For the six months ended 30 June 2019
H1 2019 H1 2018
GBP'000 GBP'000
Loss for the period (571) (487)
--------- ---------
Other comprehensive income / (expense)
Items that may be reclassified subsequently
to profit or loss
Tax recognised in equity - (1)
Exchange differences on translation
of foreign operations (13) (24)
Other comprehensive income / (expense)
net of tax (13) (25)
--------- ---------
Total comprehensive income for the period (584) (512)
========= =========
Consolidated balance sheet
At 30 June 2019
30 June 31 December 30 June
2019 2018 2018
GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 505 569 427
Property, plant and equipment 223 218 249
Leases 418 - -
Deferred tax asset - - 2
---------
1,146 787 678
--------- ------------- ---------
Current assets
Trade and other receivables 1,820 1,606 1,677
Current tax receivable 74 74 66
Cash and bank balances 1,946 2,486 2,357
--------- ------------- ---------
3,840 4,166 4,100
--------- ------------- ---------
Total assets 4,986 4,953 4,778
--------- ------------- ---------
Current liabilities
Trade and other payables (2,167) (2,067) (1,650)
Deferred revenue (4,541) (4,382) (4,680)
Lease liabilities (328) - -
Current tax payable - - -
---------
(7,036) (6,449) (6,330)
--------- ------------- ---------
Non-current liabilities
Deferred revenue (251) (449) -
Deferred tax liabilities (6) (6) -
Lease liabilities (165) - -
---------
(422) (455) -
--------- ------------- ---------
Total liabilities (7,458) (6,904) (6,330)
--------- ------------- ---------
Net assets (2,472) (1,951) (1,552)
========= ============= =========
Equity
Share capital 73 73 73
Share premium account 2,756 2,756 2,756
Demerger reserve (3,085) (3,085) (3,085)
Retained earnings (2,216) (1,695) (1,296)
--------- ------------- ---------
Equity attributable to shareholders
of the parent (2,472) (1,951) (1,552)
========= ============= =========
Consolidated statement of changes in equity
For the six months ended 30 June 2019
Share Share Demerger Retained Total
capital premium Reserve earnings
account
2019 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2019 as originally
stated 73 2,756 (3,085) (1,695) (1,951)
---------- --------- ---------- ----------- --------
Effect of first time adoption
of IFRS16 (88) (88)
As restated 73 2,756 (3,085) (1,783) (2,039)
Loss for the period - - - (571) (571)
Exchange differences on translation
of foreign operations, net
of tax - - - (13) (13)
---------- --------- ---------- ----------- --------
Total comprehensive loss attributable
to equity holders of the parent - - - (584) (584)
Share option costs - - - 151 151
---------- --------- ---------- ----------- --------
- - - 151 151
At 30 June 2019 73 2,756 (3,085) (2,216) (2,472)
========== ========= ========== =========== ========
Share Share Demerger Retained Total
capital premium Reserve earnings
account
2018 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2018 73 2,756 (3,085) (941) (1,197)
---------- --------- ---------- ----------- --------
Loss for the period - - - (487) (487)
Exchange differences on translation
of foreign operations, net
of tax - - - (24) (24)
Tax recognised in equity - - - (1) -
---------- --------- ---------- ----------- --------
Total comprehensive loss attributable
to equity holders of the parent - - - (512) (715)
Share option costs - - - 157 157
---------- --------- ---------- ----------- --------
- - - 157 157
At 30 June 2018 73 2,756 (3,085) (1,296) (1,552)
========== ========= ========== =========== ========
Share Share Demerger Retained Total
capital premium Reserve earnings
account
2018 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2018 73 2,756 (3,085) (941) (1,197)
---------- --------- ---------- ----------- --------
Loss for the period - - - (1,010) (1,010)
Exchange differences on translation
of foreign operations, net
of tax - - - (41) (41)
Total comprehensive loss attributable
to equity holders of the parent - - - (1,051) (1,051)
---------- --------- ---------- ----------- --------
Share option costs - - - 297 297
- - - 297 297
At 31 December 2018 73 2,756 (3,085) (1,695) (1,951)
========== ========= ========== =========== ========
Consolidated cash flow statement
For the six months ended 30 June 2019
H1 2019 H1 2018
GBP'000 GBP'000
Adjusted loss before tax (284) (492)
Increase in receivables (514) (124)
Increase in payables 381 (41)
(Decrease) / increase in deferred income (39) 318
Cash used in operations (456) (339)
Non-underlying costs - (28)
Income taxes received / (paid) - -
Interest received / (paid) - -
-------- --------
Net cash used in operating activities (456) (367)
-------- --------
Purchases of property, plant and equipment (27) (28)
Proceeds on disposal of property, plant - -
and equipment
Purchases of other intangible assets (49) (30)
-------- --------
Net cash used in investing activities (76) (58)
-------- --------
Proceeds on issue of shares - -
Net cash used in financing activities - -
-------- --------
Net decrease in cash (532) (425)
Cash and bank balances at beginning
of period 2,486 2,814
Effects of foreign exchange rates (8) (32)
-------- --------
Cash and bank balances at end of period 1,946 2,357
======== ========
Notes to the financial information
1. General information
These interim financial statements are for the six months ended
30 June 2019. They do not require all the information required for
full annual financial statements and should be read in conjunction
with the consolidated financial statements of the Group for the
year ended 31 December 2018.
These financial statements are presented in pounds sterling
because that is the currency of the primary economic environment in
which the group operates.
2. Basis of preparation and accounting policies
The financial information set out above does not constitute
statutory accounts within the meaning of section s434(3) of the
Companies Act 2006 or contain sufficient information to comply with
the disclosure requirements of EU adopted International Financial
Reporting Standards ("IFRS").
The financial statements of GetBusy plc for the year ended 31
December 2018 were authorised for issue by the Board of Directors
on 4 March 2019. The auditors have reported on these accounts and
their reports were unqualified, did not draw attention to any
matters by way of emphasis and did not contain any statements under
s498 (2) or (3) of the Companies Act 2006.
These interim financial statements are prepared on the same
basis as the financial statements for the year ended 31 December
2018, in which our full set of accounting policies, including
critical judgements and key sources of estimation uncertainty, can
be found. The exception to this is the adoption of IFRS16 Leases on
the modified retrospective basis from 1 January 2019.
The impact of the adoption of IFRS16 has been an GBP88,000
reduction to reserves at 1 January 2019 and the creation at 30 June
2019 of a lease asset of GBP418,000 and lease liabilities of
GBP493,000, split between current and non-current components.
Alternative performance measures
The Group uses a series of non-IFRS alternative performance
measures ("APMs") in its narrative and financial reporting. These
measures are used because we believe they provide additional
insight into the performance of the Group and are complementary to
our IFRS performance measures. This belief is supported by the
discussions that we have on a regular basis with a wide variety of
stakeholders, including shareholders, staff and advisers.
The APMs used by the Group, their definition and the reasons for
using them, are provided below:
Recurring revenue. This includes revenue from software
subscriptions and support contracts. A key part of our strategy is
to grow our high quality recurring revenue base. Reporting
recurring revenue allows shareholders to assess our progress in
executing our strategy.
Adjusted Profit / Loss before Tax. This is calculated as profit
/ loss before tax and before certain items, which are listed below
along with an explanation as to why they are excluded:
Depreciation and amortisation of owned assets. These non-cash
charges to the income statement are subject to significant
judgement. Excluding them from this measure removes the impact of
that judgement and provides a measure of profit that is more
closely aligned with operating cashflow. Only depreciation on owned
assets is excluded; depreciation on leased assets remains a
component of adjusted profit / loss because, combined with interest
expense on lease liabilities, it is a proxy for the cash cost of
the leases.
Share option costs. Significant judgement is applied in
calculating the fair value of share options and subsequent charge
to the income statement, which has no cash impact. The impact of
potentially dilutive share options is also considered in diluted
earnings per share. Therefore, excluding share option costs from
Adjusted Profit / Loss before Tax removes the impact of that
judgement and provides a measure of profit that is more closely
aligned with cashflow.
Capitalised development costs. There is a very broad range of
approaches across companies in applying IAS38 Intangible assets in
their financial statements. There are also many examples of
companies being criticised for using the capitalisation and
amortisation of development costs as a method of manipulating
profit, due to the substantial management judgement involved in
applying the standard. To assist transparency, we exclude the
impact of capitalising development costs from Adjusted Profit /
Loss before Tax in order that shareholders can more easily
determine the performance of the business before the application of
that significant judgement. The impact of development cost
capitalisation is recorded within operating costs. The cashflow
statement reconciles from Adjusted Profit / Loss before Tax, and so
there is no adjustment for development amortisation within
operating cashflows and no adjustment for development
capitalisation within cashflows from investing activities.
Non-underlying costs. Occasionally, we incur costs that are not
representative of the underlying performance of the business. In
such instances, those costs may be excluded from Adjusted Profit /
Loss before Tax and recorded separately. In all cases, a full
description of their nature is provided.
Finance costs / (income) not related to leases. These are
finance costs and income such as interest on bank balances. It
excludes the interest expense on lease liabilities under IFRS16
because, combined with depreciation on leased assets, it is a proxy
for the cash cost of the leases.
Constant currency measures. As a Group that operates in
different territories, we also measure our revenue performance
before the impact of changes in exchange rates.
Glossary of terms
The following terms are used within these interim financial
statements:
MRR. Monthly recurring revenue. That is, the monthly value of
subscription and support revenue, both of which are classified as
recurring revenue.
Annualised MRR. For a given month, the MRR multiplied by 12.
CAC. Customer acquisition cost. This is the average cost to
acquire a customer account, including the costs of marketing staff,
content, advertising and other campaign costs, sales staff and
commissions.
LTV. Life time value, calculated as the average revenue per
account multiplied by the average gross margin and divided by gross
MRR churn.
MRR churn. The average percentage of MRR lost in a month due to
customers leaving our platforms.
Net MRR churn. The average percentage of MRR lost or gained (if
negative) in a month due to the combined impact of customers
leaving our platforms, customers upgrading or downgrading their
accounts and price increases or reductions.
ARPU. Annualised MRR per paid user at a point in time.
3. Revenue and operating segments
The Group's operating segments comprise its three software
products (Virtual Cabinet, SmartVault and GetBusy) and a corporate
and central segment. Our Chief Executive Officer assesses Group
performance on that basis.
H1 2019 Document Management Communication
---------------------------------- -------------- ----------- ----------
Virtual SmartVault GetBusy Corporate Total
Cabinet GBP'000 GBP'000 & central GBP'000
GBP'000 GBP'000
Recurring revenue 3,440 1,946 - - 5,386
Non-recurring
revenue 677 88 - - 765
-------------------- ------------ -------------- ----------- ----------
Revenue from
contracts with
customers 4,117 2,034 - - 6,151
Cost of sales (72) (407) - - (479)
-------------------- ------------ -------------- ----------- ----------
Gross profit 4,045 1,627 - - 5,672
Sales, general
and admin costs (2,148) (1,691) (184) (788) (4,811)
Development
costs (351) (385) (409) - (1,145)
-------------------- ------------ -------------- ----------- ----------
Adjusted profit
/ (loss) before
tax 1,546 (449) (593) (788) (284)
Capitalisation
of development
costs 224
Depreciation
and amortisation
on owned assets (359)
Share option
costs (151)
Demerger, flotation -
and other non-underlying
costs
Other finance
income / (costs) (1)
----------
Loss before
tax (571)
==========
H1 2018 Document Management Communication
---------------------------------- -------------- ----------- ----------
Virtual SmartVault GetBusy Corporate Total
Cabinet GBP'000 GBP'000 & central GBP'000
GBP'000 GBP'000
Recurring revenue 2,962 1,534 - - 4,496
Non-recurring
revenue 618 42 - - 660
-------------------- ------------ -------------- ----------- ----------
Revenue from
contracts with
customers 3,580 1,576 - - 5,156
Cost of sales (118) (170) - - (288)
-------------------- ------------ -------------- ----------- ----------
Gross profit 3,462 1,406 - - 4,868
Sales, general
and admin costs (2,183) (1,198) - (704) (4,085)
Development
costs (345) (430) (500) - (1,275)
-------------------- ------------ -------------- ----------- ----------
Adjusted profit
/ (loss) before
tax 934 (222) (500) (704) (492)
Capitalisation
of development
costs 160
Depreciation
and amortisation
on owned assets (149)
Share option
costs (157)
Demerger, flotation
and other non-underlying
costs (28)
Other finance -
income / (costs)
----------
Loss before
tax (666)
==========
4. Loss per share
The calculation of loss per share is based on the loss for the
period of GBP571k (H1 2018: GBP487k).
Weighted number of shares calculation H1 2019 H1 2018
'000 '000
Weighted average number of ordinary shares 48,400 48,400
Effect of potentially dilutive share
options in issue 5,674 5,177
-------- --------
Weighted average number of ordinary shares
(diluted) 54,074 53,577
======== ========
Loss per share H1 2019 H1 2018
pence pence
Basic and diluted (1.18) (1.01)
======== ========
As required by IAS33 (Earnings per Share), the impact of
potentially dilutive options has been disregarded for the purposes
of calculating diluted loss per share as the Group is currently
loss making.
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 GMGZNVZGGLZM
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