TIDMSMRT
RNS Number : 6939L
Smartspace Software PLC
17 May 2022
17 May 2022
SmartSpace Software Plc
("SmartSpace", the "Group" or the "Company")
Preliminary Results for the Twelve Months Ended 31 January
2022
SmartSpace Software Plc, (AIM:SMRT) the leading provider of
'Integrated Space Management Software' for smart buildings and
commercial spaces 'visitor reception, desks and meeting rooms',
announces its unaudited Preliminary Results for the twelve months
ended 31 January 2022.
Financial Highlights:
-- Total Group revenues up 11% to GBP5.14m* (FY21: GBP4.63m)
-- Annual recurring revenue ("ARR") up 64% year on year to GBP4.94m (FY21: GBP3.02m) (1)
-- Recurring revenues up 43% to GBP3.42m (FY21: GBP2.39m)
-- Gross margin on continuing operations strong at 71% (FY21: 72%)
-- Group Adjusted LBITDA of GBP2.49m (FY21: GBP2.12m)
-- Loss per share 8.91p (FY21: 7.54p)
-- Cash balance at the period end of GBP2.76m (FY21: GBP4.52m)
and a net cash position of GBP2.38m (FY21: GBP4.10m)
Operational Highlights
SwipedOn
-- SwipedOn ARR increased by 57% year-on-year to GBP4.23m
(NZ$8.67m) at 31 January 2022 (FY21: GBP2.70m)(1)
-- Monthly average revenue per user ("ARPU") increased by 58%
year on year to GBP75 (NZ$ 154) at 31 January 2022 (FY21:
GBP48)(1)
-- SwipedOn locations increased to 7,076 at end 31 January 2022 (FY21: 6,741)
-- Net revenue retention increased to 130% (2021: 105%) as price increase implemented
-- Revenue churn at expected levels of 10.9% (FY21: 6.8%) mainly
from single site customers with lower value price plans and limited
scope for upsell
-- SwipedOn Desks now available to entire customer base with
positive feedback received to date
Space Connect
-- Space Connect ARR increased by 291% year-on-year to GBP0.61m
at 31 January 2022 (FY21: GBP0.16m)
-- At 31 January 2022, Space Connect had 69 customers, an
increase of 56 new customers in the twelve month period
-- New partners signed during the year in key geographies
including Poland, The Philippines, India, Ireland, Belgium, Canada
and the USA
-- Sales of Evoko Naso below management expectations; primarily
impacted by Covid-19 due to offices in Evoko's key markets and
territories not yet fully back to normal working capacity, leading
to delayed investment decision making - we remain convinced of
medium-term growth opportunity
Anders & Kern (A+K)
-- A+K revenue for the twelve months to 31 January 2022 down 24%
to GBP1.73m (FY21: GBP2.27m) due to the continued impact of the UK
lockdown during the period, resulting in a hesitation in returning
to the office
-- New complementary workspace technology product lines added to the portfolio
Post period end highlights
-- The Group had cash of GBP2.28m at 30 April 2022
-- Group ARR GBP5.50m at 30 April 2022 up 59% year-on-year,
restated to the prevailing exchange rate at 30 April 2022
-- Group ARPU GBP93 at 30 April 2022 up 62% year-on-year
-- SwipedOn ARR GBP4.79m (NZ$9.33m) at 30 April 2022 up 56% year
on year, restated to the prevailing exchange rate at 30 April
2022
-- SwipedOn ARPU GBP85 (NZ$165) at 30 April 2022 up 58% year-on-year
-- Space Connect ARR GBP0.61m at 30 April 2022 up 156% year on year
-- SwipedOn locations 7,471 at 30 April 2022
-- Recent launch of Korean language variant of SwipedOn visitor management platform
-- SwipedOn agreement with Thermo Fisher Scientific to support
its US school Covid testing program in 570 locations (2)
(1) on a constant currency basis, restated to the prevailing
exchange rate at 31 January 2022
(2) revenue and locations from 5 month Thermo Fisher Scientific
agreement are not included in ARR of GBP4.79m or locations of
7,471
Commenting on outlook, Frank Beechinor, CEO of SmartSpace,
said:
"We have planned for a year of further strong growth in FY23
whilst ensuring our costs are tightly controlled. Expansion into
non-English speaking markets has already begun, as per our recent
Korean launch for SwipedOn and will be a key area of focus
throughout the coming year. We see opportunity for growth from
SwipedOn Desks which was launched in Autumn 2021 and has already
attracted 30+ customers. Multi-location deals such as the one
recently announced with ThermoFisher also provides further
opportunity for growth.
As we aim to return A&K to its pre Covid-19 revenue levels,
we see good opportunities in the pipeline for the new workspace
technology lines.
Space Connect is ideally placed to capitalise on the opportunity
presented by hybrid working fast becoming the expected norm in many
parts of the world. We will continue to develop unique features
that allow us to increase our market share.
With such a large addressable market and well placed product
set, we are confident in our strategy to grow our high margin
recurring revenues and maximise value for shareholders."
A copy of these Preliminary results together with a results
presentation with further information on the Company will be posted
on the Company's website at: www.smartspaceplc.com .
Investor Meet Company Presentation
Frank Beechinor, CEO and Kris Shaw, CFO will provide a live
presentation on the 'Investor Meet Company' ("IMC") platform at
12.00 midday on 19 May 2022.
Investors can sign up for free via:
https://www.investormeetcompany.com/smartspace-software-plc/register-investor
Questions can be submitted pre-event through the platform or at
any time during the live presentation. Management may not be in a
position to answer every question it receives but will address
those it can while remaining within the confines of information
already disclosed to the market.
Those who have already registered and requested to meet
SmartSpace will be automatically invited.
Enquiries:
SmartSpace Plc via Lisa Baderoon
Frank Beechinor (CEO)
Kris Shaw (CFO)
Lisa Baderoon (Head of Investor Relations) +44 (0) 7721 413
lbaderoon@smartspaceplc.com 496
Singer Capital Markets (NOMAD and Joint
Broker)
Shaun Dobson
Jen Boorer + 44 (0) 20 7496
Alex Bond 3000
Canaccord Genuity (Joint Broker)
Adam James +44 (0) 20 7523
Georgina McCooke 8000
Chairman's statement
Overview
I am pleased to report a period of strong organic revenue
growth, especially when taking into account another year of
challenging trading conditions for many businesses. Despite the
considerable disruption caused by Covid-19, Group recurring revenue
grew by 43% year on year, to GBP3.42m and contributed towards a
total Group revenue of GBP5.14m, up 11% from the prior year.
Growing recurring revenue is one of our key objectives and now
accounts for 66% of Group revenue (2021: 52%). Our LBITDA has
increased by 18% to GBP2.49m as a result of higher staff costs as
we establish the team needed for our growth plans.
Growth in Average Revenue Per User ("ARPU") has contributed
significantly towards an overall growth in Annual Recurring Revenue
("ARR") of 64% to GBP4.94m at 31 January 2022. With lockdowns and
'work from home' ("WFH") mandates in place our focus has been
concentrated on expanding revenue from existing clients. By growing
the value of each customer, with more customers on higher tier
plans, more locations, and more 'add-on' software sales, we were
able to achieve many of our key financial objectives for the
year.
The overall growth in Group revenue was achieved despite Anders
& Kern ("A&K") being severely impacted by ongoing Covid-19
restrictions in its UK customer base. This led to a fall in
hardware revenues for A&K which was mitigated to the extent
possible by utilising the UK Government Job Retention Scheme. Sales
of our strategic partner's meeting room panel (the "Evoko Naso")
were impacted by Covid-19 as businesses across multiple markets in
the US and Europe delayed hardware investment decisions, leading to
significantly lower than expected revenues for this product.
People
The continued strength of the Group is due to the hard work and
resilience of all the people who work for SmartSpace. I would like
to thank the team for their contribution, especially for the
commitment and focus they have shown throughout this year. We have
continued to invest in employees who are being supported through
professional training relevant to their functional areas, as well
as other relevant role-specific training. We recognise the
importance of the right people to our business and therefore are
pro-actively monitoring salary levels to ensure staff retention is
managed.
Our priority during the Covid-19 pandemic has been the health
and safety of our employees. We minimised the risk of infection in
our offices and worked from home when necessary. Our staff showed
great flexibility and patience in dealing with these
challenges.
Last year we decided to re-locate all our software development
to New Zealand, centralising development for the Group under the
management of Matt Cooney, Group Chief Technology Officer (" CTO").
This task was completed by Autumn 2021. Whilst we do not expect to
see financial synergies from this change the operational benefit
will be significant.
Board changes
In May 2021 Bruce Morrison and Diana Dyer Bartlett stepped down
as directors of the Company to be replaced by Kris Shaw as Chief
Financial Officer ("CFO") and Philip Wood as non-executive director
("NED"). Kris had been with SmartSpace for over two years before
his appointment as CFO having worked closely with Bruce on both the
acquisition of Space Connect and disposal of SmartSpace Global. The
experience of working with both Bruce and Diana has provided Kris
with the core foundations to be an excellent CFO.
With our increased focus on software offerings, there was a
requirement that the role of the NED has direct experience of
building fast growing international software businesses. We
therefore appointed Philip Wood as an independent NED and Chair of
the Audit Committee. Philip is the Deputy Chief Executive Officer
and Chief Financial Officer of Aptitude Software Group plc, a
specialist provider of powerful financial management software to
large global businesses. The experience Philip brings in growing
software businesses and mentoring finance teams is being hugely
helpful to SmartSpace, as we move through our next phase of
development as a global SaaS business.
Annual General Meeting
The Board will shortly be sending out a notice of the Annual
General Meeting which once again will be fully open to all
shareholders to attend. For those unable to attend I would urge
shareholders to email any questions they may have to
investors@smartspaceplc.com and to send in proxies so their votes
on the resolutions contained in the notice of meeting will be
counted.
Future developments and outlook
Our intention is to become a profitable business and we have
plans in place to transition SmartSpace through to cash generation.
The board believes the Company has sufficient liquidity to complete
this transition to cash generation towards the end of FY23.
The global economy has entered a period of higher inflation with
raised living costs and consequently higher wage expectations for
both existing staff members and new hires. The majority of our
customers are on contracts of one year or less allowing us to
factor inflation into our price plans upon renewal.
Recent investment activity within our sector values our SaaS
peers on higher multiples than that commanded by SmartSpace. We
intend to close this gap and build shareholder value by growing
recurring revenues and delivering high quality cash generative
earnings. With such a large addressable market for our products
globally we are confident in our ability to capitalise on the
opportunities open to us.
As we target strong revenue growth in all three divisions we
intend to:
-- Focus on entering new geographies, with a view to building
our customer base in non-English speaking markets. Our recent
launch into South Korea is a first step in this process.
-- We will continue to prioritise revenue expansion
opportunities from existing customers by growing customer accounts
to include more locations. A key focus for growth will be to
continue to build ARPU by selling SwipedOn Desks and other add-ons
to new and existing customers.
-- Build on the momentum achieved so far with the now well
established Space Connect indirect partner network.
-- Seek new technology offerings in the area of workplace
optimisation for A&K to sell to its established channel partner
customers.
These actions combined with the already strong growth in
recurring revenues are key to achieving our financial plans,
allowing us to transition SmartSpace through to cash
generation.
Whilst Covid-19 has hampered sales of Evoko Naso to date, we
remain optimistic about the prospects of this product, especially
as customers return to the office and WFH mandates are lifted. The
feedback on Naso from the Evoko partner network around the globe is
very positive.
Our ambition and confidence for the year ahead remains high
following a good start to the year. Our revenue, profitability and
cash generation targets remain unchanged. As we continue to grow
our high margin recurring revenues, we add financial strength to
the business, and with such a large addressable market and well
placed product set, we believe this can continue for the
foreseeable future.
Guy van Zwanenberg
Chairman
16 May 2022
Strategic report: Strategy and operational review
The Directors present their strategic report for the year ended
31 January 2022:
Business model, purpose and strategy
The Group's business model is to provide Software as a Service
("SaaS") workspace solutions including desk, meeting room, and
visitor management products for small and medium sized enterprises
("SME") and mid-market, enabling our international client base to
optimise the use of their corporate real estate. The Group's
products are fast to deploy, easy to implement and configure making
them ideally suited to SMEs but also larger companies in the market
for simple but effective solutions for their space management. The
Group also provides complementary hardware solutions which
integrate with the Group's software solutions.
The Board believes that technology driven changes in working
practices continues to generate demand from all industry sectors.
Covid-19 has accelerated the move towards hybrid working further
increasing the need for technology to enable companies to control
the use of meeting rooms and desks more effectively as well as
manage visitors to their premises. The Board has set the following
strategic priorities:
-- to focus on delivering pure SaaS revenues where the Group is
not overly exposed to one market or a particular customer;
-- to develop technology-led intellectual property to help
businesses optimise use of their corporate real estate focussing on
rooms, desks and visitors ;
-- to develop new sales channels to market our software
solutions by establishing a global network of channel partners;
-- to bring together the technologies of Space Connect and
SwipedOn in order to offer a complete solution to both customer
bases and therefore maximise revenue per user;
-- to continue with a strategy of both organic and acquisitive
growth both in our domestic market and overseas; and
-- to deliver higher quality earnings which will, in turn, improve cash generation.
We believe as working practices change and businesses
reconfigure their office real estate the market will gravitate
towards greater use of technology to optimise how businesses
operate. As employees demand hybrid working arrangements, and
remote working becomes more prevalent, businesses will look for
real estate efficiencies which will need technological solutions.
Many businesses have indicated that they plan to reduce their real
estate footprint whilst maintaining headcount. This change will
stimulate demand for SmartSpace solutions which will allow
employees to book desks for times they are in the office and to
coordinate meetings between participants in the office and those
working remotely. The strategy is to focus on developing our
software to take advantage of the opportunities afforded by this
fast-growing market.
Review of the business
SwipedOn
We have continued our approach of growing revenue from existing
customers by increasing ARPU, focusing on clients with the
potential to use more of our products across multiple locations.
Our sales team are incentivised to attract high value, multi-site
customers who comprise an increasing proportion of our customer
base and represent a higher proportion of our revenues.
From February 2021 all new customers have been moved to our new
price plans, and, progressively, we have implemented the price
increase across our existing customer base. These new price plans
reflect the investment we have made in the platform enhancing
functionality over the last 18 months. Despite the increased
prices, we maintain a significant price advantage over our
competitors, and SwipedOn remains one of the most cost effective
offerings in the market. The average ARPU of new customers for the
year has been GBP90 (2021: GBP72).
In implementing the price increase we anticipated an increase in
customer churn. Encouragingly this was at levels lower than
forecast and mainly occurred amongst our smaller, lower value,
single site customers, who are often on the lowest value starter
plans. Customer churn for the year averaged 15.6% whilst revenue
churn was 10.9%. The average ARPU of churning customers was GBP51,
significantly less than our new customer ARPU of GBP90.
The number of new SwipedOn customers in the year has been lower
than historical rates. However as we target higher value customers
with more locations, and expand revenue from existing customers,
our recurring revenue has continued to grow. The average CAC
(Customer Acquisition Cost), which includes the costs of all sales
and marketing staff as well as direct marketing costs, has
increased due to digital marketing price inflation, in particular
Google Ad words. The Company continually reviews the effectiveness
of its marketing spend including the consideration of alternative
delivery channels in order to optimise CAC.
Net revenue retention measures revenue change from the customer
base over a set period of time and includes the impact of churn,
price increases, customer expansion and contraction, but does not
include growth from new customers. As a result of the price
increase SwipedOn's NRR at 31 January 2022 was a very strong 130%
(2021: 105%). Such a strong NRR is not expected in future periods
but we will continue to aim to maintain NRR above 100%.
Our recent launch into South Korea is our first step into new
non-English speaking geographical markets. With less competition in
these markets digital marketing costs are lower, therefore
rebalancing the cost of acquisition back to historical levels. The
launch into South Korea begins the process of broadening the
addressable market for SwipedOn allowing us to open in other Far
Eastern markets.
It has taken 18 months of development to ensure the
functionality in the SwipedOn platform is fully multi-language,
multi country and multi-location ready. To support the launch into
South Korea there is a localised website https://www.swipedon.kr ,
along with a range of localised marketing collateral. The launch is
supported by an in-country marketing agency with a digital
marketing campaign that will focus on Naver, the dominant search
engine in South Korea. Pre-sales and ongoing customer support will
be handled in local language.
SwipedOn key performance indicators 31 January 2022 31 January 2021
Annual recurring revenue (ARR) GBP4.23m GBP2.70m
Monthly average revenue per user (ARPU) GBP75 GBP48
Number of customers 4,700 4,735
Number of customer locations 7,076 6,741
Locations per customer 1.51 1.42
Net Revenue Retention (NRR) 130% 105%
Annual revenue churn 10.9% 6.9%
12 month average customer acquisition GBP1,730 GBP744
cost (CAC)
Space Connect
We have been focused on expanding our channel partner
distribution network for Space Connect with new partners signed
during the financial year in key geographies including Poland, The
Philippines, India, Ireland, Belgium, Canada and the USA. Through
these new partnerships, and our existing relationships with other
partners such as Softcat, we have increased our ARR by 291% to
GBP0.61m. The pipeline of new customer opportunities remains
strong, reinforcing the momentum seen in the business and
underpinning our confidence in the opportunity for Space Connect,
its product capabilities and the potential market.
During the past year we have invested in the Space Connect
platform including developing our own space mapping tool which
allows faster on-boarding of new customers. The mapping tool also
facilitates self-provisioning by customers and replaces a
third-party service provider, therefore reducing cost of sales.
Sales of our strategic partner's meeting room panel (the "Evoko
Naso") for which Space Connect receives both licence fees and SaaS
revenues were below our expectations. This is a continued result of
Covid-19, with offices in Evoko's key markets not fully back to
normal working capacity. As a result, many have delayed investment
decisions for new hardware. The Board remains convinced by the
medium-term growth opportunity for Naso and expects that once
businesses return to normal, sales will accelerate.
Space Connect key performance indicators 31 January 2022 31 January 2021
Annual recurring revenue (ARR) GBP0.61m GBP0.15m
Monthly average revenue per user (ARPU) 627 980
Number of customers 69 13
In order to meet our growth expectations for Space Connect we
have built a strong team of software developers, sales staff and
customer support. To maximise cost synergies we have created a
unified helpdesk providing 'follow the sun' support for both Space
Connect and SwipedOn customers. Whilst this has increased the
overhead for Space Connect, and therefore losses, we believe this
is the right foundation needed for future growth.
Anders & Kern
The third arm of the Group's business is Anders & Kern
("A&K"), our specialist distributor and integrator of AV
solutions such as meeting room booking solutions, workplace sensors
and digital signage. A&K operates solely in the UK. The closure
of offices and business premises during the various lockdowns and
WFH measures continued to impact order intake during FY22,
therefore resulting in an EBITDA loss for the year. A&K's
network of 200 resellers contributes to the development of the
market for both Evoko Naso and Space Connect in the UK. Our focus
in A&K has been to pivot from its traditional market of Audio
Visual to focus on workplace optimisation solutions. As a result,
A&K has continued to add to its offering with new workspace
technology product lines being added to its portfolio which often
complement the Group's software solutions.
Customer support for all three SmartSpace divisions is now being
led by our newly appointed Group Customer Services Manager who is
based in A&K's Mildenhall premises.
Anders & Kern key performance indicators 31 January 2022 31 January 2021
Revenue GBP1.73m GBP2.16m
Gross margin * 35% 38%
* FY21 figures have been adjusted for zero margin A&K sales
made to SmartSpace Global which was agreed as part of the disposal
process. These sales amounted to GBP0.93m in FY21.
Software development
The software development of Space Connect used to take place in
the Ukraine. During the year we made the decision to move all our
software development to New Zealand. Our last developer in the
Ukraine left us in October 2021 and all engineering of Space
Connect now takes place in New Zealand and a new offshoring base in
Vietnam. This provides us with a flexible development resource that
can be quickly stood-up for specific projects at a competitive
price.
With the centralisation of software development headed by our
Group CTO we are able to further converge the technologies of
SwipedOn and Space Connect, offer greater opportunities for our
staff to develop their skills, whilst also allowing the Group to
benefit from a consistent approach to software development. New
Zealand has had a strong focus on developing its software industry
and as a result has a great talent pool to draw upon. Employment
costs are competitive with other similarly developed
jurisdictions.
During the year we invested GBP1.56 million (2021: GBP1.30m) in
maintaining and further enhancing our software solutions. This
included the development of our mobile application for contactless
sign-in, regional cloud hosting facilities, vaccine pass
functionality, and internationalisation to allow full multi-lingual
services.
Space Connect completed the development of its in-house mapping
tool which streamlines customer onboarding and reduces external
costs. An updated version of Evoko Naso has been developed to
improve and add to the functionality offered to customers. SwipedOn
Desks was released during the year and is now generating new
revenue for the Group.
Outlook
We have planned for a year of further strong growth in FY23
whilst ensuring our costs are tightly controlled. On a constant
currency basis ARR has grown by a further 7% in the first quarter
of FY23. Growth in ARR has predominantly been driven by the
successful implementation of price increases in FY22, coupled with
the expansion of existing customers, cross selling and new customer
wins. We continue to see opportunities to make use of our products
in new ways as demonstrated by the agreement with Thermo Fisher
Scientific to support its school Covid-19 testing program in 570
locations.
As demonstrated by our recent launch into South Korea, expansion
into non-English speaking markets will be a key area of focus
throughout the coming year. We see opportunity for growth from
SwipedOn Desks which was launched in Autumn 2021 and has
progressively built customer numbers and ARR.
Hybrid working is fast becoming the expected norm in many parts
of the world. Space Connect is ideally placed to take advantage of
the technological demands of this change. We will continue to
develop unique features that allow us to target and attract a
greater share of the addressable market. We are encouraged by
Evoko's optimism in Naso and the feedback that has been received so
far. We are optimistic on the opportunities from this product as
workplaces reopen and businesses fit out new office spaces.
The team at A&K are eager to make up for ground lost during
the pandemic. We have new products available to be sold and with
businesses gaining confidence that lockdown will not return, we aim
to return this business to pre Covid-19 revenue levels.
Frank Beechinor
Chief Executive Officer
16 May 2022
Financial review
Overview
The Group has made good progress during the year in growing its
recurring revenues by 43% to GBP3.42m (2021: GBP2.39m). Cash at 31
January 2022 was GBP2.76m (2021: GBP4.52m). As we progressed
through FY22 cash consumption reduced, and with further growth in
FY23, we aim to be cash generative by the end of the year. Revenue
growth for Space Connect and returning A&K to pre-Covid-19
revenue levels are key next steps in making the Group cashflow
positive. Despite increased revenue and gross profit, LBITDA
increased by 18% to GBP2.49m due to higher staff costs as we build
the team needed for our growth plans.
Revenue
Overall revenue for the Group increased by 11% to GBP5.14m
driven by a 43% increase in recurring revenues generated by the
Group's SwipedOn and Space Connect software products. Recurring
revenues increased as a result of higher ARPU and customer
locations. Revenue from the Group's A&K division decreased by
GBP0.55m as Covid-19 restrictions continued to impact this
division.
2022 2021
GBP'000 GBP'000
Recurring revenues
- SwipedOn 2,916 2,124
- Space Connect 373 119
- Anders & Kern 127 151
Total recurring revenue 3,416 2,394
Non-recurring revenue
- SwipedOn 37 37
- Space Connect 85 73
- Anders & Kern 1,602 2,125
Total non-recurring revenue 1,724 2,235
Total revenue 5,140 4,629
The growth in recurring revenues for SwipedOn was generated by a
58% increase in average revenue per user ("ARPU") to GBP75.
SwipedOn focussed on selling more to its existing customers with 7%
more customers on our highest priced tiers, and 6% increase in the
number of paying locations per customer. A number of feature
improvements also allowed us to apply a price increase to both new
and existing customers whilst still remaining competitively priced.
Covid-19 continued to impact the business with increased churn from
changing customer needs and business closures. Annual user churn
for the year was 15.6% (2021: 11.3%) and revenue churn 10.9% (2021:
6.9%). These factors all contribute towards net revenue retention
which increased to 130% for the year (2021: 105%).
Space Connect focussed on building its recurring revenues by
adding new customers through its partner network. Overall customer
numbers increased from 13 at the beginning of the year to 69 at the
end. Revenues from the sale of the white label version of Space
Connect through our partners meeting room booking panel were
impacted by Covid-19 reducing demand for new meeting room panels.
As businesses return to more normal routines we expect demand to
return and revenues from this product to grow.
A&K continued to see reduced revenues from the sale of its
hardware offerings. Our A&K customer base is UK orientated
selling workplace solutions and therefore the impact of lockdowns
and work from home mandates was significant. As we exit the
lockdown restrictions we expect normal level of sales for A&K
to return.
Gross profit
Gross profit margin was 71% (2021: 72% *) giving a total gross
profit of GBP3.65m (2021: GBP2.65m). Gross margins from our SaaS
business are 89% (2021: 91%) whilst A&K contributes a 35%
margin (2021: 38%*).
* FY21 figures have been adjusted for zero margin A&K sales
made to SmartSpace Global which was agreed as part of the disposal
process. These sales amounted to GBP0.93m in FY21.
Administrative expenses
Administrative expenses have increased by 35% to GBP7.32m (2021:
GBP5.42m) as detailed in the table below.
2022 2021
GBP'000 GBP'000
Research and development 1,563 1,319
Less capitalised development (340) (290)
Research and development costs not capitalised 1,223 1,029
Staff and contractor costs excluding those
relating to R&D 3,030 2,267
Sales, general and administrative expenses 1,921 1,605
Share based payment charge 288 150
Depreciation and amortisation 666 375
Reorganisation and transformation costs 192 -
Total 7,320 5,426
Excluding share based payments, depreciation and amortisation,
and reorganisation costs, administrative expenses have increased by
GBP1.27m. This increase arose from increased expenditure on staff
costs (GBP0.91m), marketing expenditure (GBP0.18m) and various
other increased costs (GBP0.18m). Increased staff costs are largely
contributed by the team we have put in place for Space Connect
which has increased from 3 at the beginning of FY21, to 18 at the
end of FY22. Inflation in digital advertising has led to the
increased marketing expenditure during the year.
Financial support amounting to GBP0.05m (FY21: GBP0.10m) from
the UK Government through wage subsidy schemes was offset against
staff costs.
In the coming year we anticipate inflationary pressure on our
cost base in all geographic regions. This is particularly strong in
areas where we see skills shortages such as software development.
The majority of our software contracts with customers are for a 12
months or less therefore we will have an opportunity to pass on
this inflationary burden when contracts are due for renewal.
Adjusted LBITDA
Adjusted LBITDA is the loss for the year before net finance
costs, tax, depreciation, amortisation, reorganisation and
transactional items, impairment charges and share based payment
charge. Adjusted LBITDA was GBP2.49m (FY21: GBP2.12m). Whilst
SwipedOn made a LBITDA loss for the year, as ARR grows and
customers pay annually in advance it is now consistently cashflow
positive and expected to breakeven at an EBITDA level in the coming
year. Space Connect remains loss making at an EBITDA level whilst
it continues to build its customer base. A&K was loss making
due to reduced sales as a result of Covid-19.
Taxation
The taxation credit of GBP1.11m results from the recognition of
tax assets relating to losses incurred in the current year which
will be utilised in future periods, together with a re-measurement
of losses recognised in prior periods to the new rate of
corporation tax. Due to a change in the main rate of UK corporation
tax from April 2023 onwards tax losses have been recognised at a
tax rate of 25% which is the rate expected to be in place when the
losses are utilised. Losses recognised as assets in prior years
have been re-measured based on this new rate of corporation tax
resulting in a credit of GBP0.46m.
Foreign Exchange
The Group sells its products throughout the world therefore
revenues are received in a number of currencies, with pounds
sterling (47%), US dollars (26%), Australian dollars (13%) and New
Zealand dollars (6%) being the most common. Our administration
costs are denominated in pounds sterling (40%), New Zealand Dollars
(37%) and US Dollars (22%). Overall foreign currency revenue is
closely matched to foreign currency costs therefore trading
exposure to fluctuations in exchange rates is reduced.
Assets and liabilities denominated in foreign currencies are
mostly limited to our operations in New Zealand where working
capital, deferred revenue, property plant and equipment, right of
use assets and liabilities, deferred tax assets, and intangible
assets are held in New Zealand Dollars. Net assets denominated in
foreign currencies amount to GBP4.52m. The Group does not hedge
this foreign currency exposure.
Foreign exchange movements in the period resulted in a charge of
GBP21,000 (2021: GBP13,000) to the profit and loss, and a charge of
GBP0.34m (2021: credit GBP0.64m) to other comprehensive income.
Earnings per share
The loss per share was 8.91p (FY21: loss per share 7.54p). The
adjusted loss per share which excludes the after-tax impact of
exceptional items, share-based payments and the amortisation of
intangible assets recognised on acquisition was 7.04p (FY21: loss
per share 6.59p).
Intangible assets and goodwill
Intangible assets comprise GBP8.37m of goodwill (2021:
GBP8.72m), GBP0.86m (2021: GBP0.88m) internally generated software,
and GBP1.39m (2021: GBP1.62m) of other intangibles acquired as part
of business combinations. Software development costs relating to
both SwipedOn and Space Connect products amounting to GBP0.34m were
capitalised. An amortisation charge of GBP0.55m was recorded
against intangible assets; internally generated software is
amortised over 3 years and intangible assets acquired through
business combinations are amortised over 10 years. Intangible
assets denominated in currencies other than pounds sterling
decreased in value by GBP0.39m due to movements in exchange
rates.
Financial position
Current tax receivables of GBP0.07m (2021: GBP0.10m) relate to
tax credits which the Group receives for qualifying research and
development activities. Cash reimbursement of these tax credits was
received in February 2022.
Contract liabilities of GBP1.77m (2021 GBP1.13m) relate to SaaS
subscriptions received in advance by SwipedOn and Space Connect
which are spread over the period to which they relate.
Borrowings amount to GBP0.38m (2021: GBP0.40m) of which GBP0.36m
(2021: GBP0.38m) relate to a mortgage on the Group's freehold
property in Mildenhall where A&K are based, together with a
Covid-19 support loan provided by the New Zealand government of
GBP0.03m (2021: GBP0.03m). The mortgage is due for repayment in
January 2023 and therefore classified as a current liability.
Management intends to extend the mortgage period when it comes due
for repayment. The Covid-19 support loan is interest free and will
be repaid in FY23.
Cash flow
Cash and cash equivalents decreased during the year by GBP1.76m
(2021: increase GBP1.93m) due to a cash outflow from operating
activities of GBP1.61m (2021: GBP1.44m). As we move into FY23 cash
consumption is at lower levels than at the beginning of FY22 and
further growth in recurring revenues for SwipedOn and Space
Connect, combined with a return to profitability for A&K, is
expected to transition the business to being cashflow positive by
the end of the financial year.
The net cash outflow from investing activities of GBP48,000
(2021: inflow GBP3.44m) includes the final GBP327,000 of disposal
proceeds for SmartSpace Global Limited offset by investments in
software development and property plant and equipment. Cash outflow
from financing activities amounted to GBP79,000 (2021: outflow
GBP86,000) as payments were made against the finance leases and
property mortgage.
Our forecasts for revenue growth over the coming year mean that
the Group has sufficient cash flow resources to continue operations
until profitability is achieved.
Dividend policy
The Group reported a retained loss of GBP2.56m (FY21: loss of
GBP2.26m), which has been transferred to reserves. At 31 January
2022, the Group had retained earnings of GBP9.16m (FY21:
GBP11.70m). The Board considers that it is in shareholders' best
interests to retain resources in the Group.
Kristian Shaw
Chief Financial Officer
16 May 2022
Consolidated statement of comprehensive income for the year
ended 31 January 2022
Year ended Year ended
31 January 2022 31 January 2021
GBP'000 GBP'000
Continuing operations
Revenue from contracts with customers 5,140 4,629
Costs of sale of goods (1,068) (1,695)
Costs of providing services (427) (283)
Gross profit 3,645 2,651
Administrative expenses (7,320) (5,426)
Net impairment losses on financial
and contract assets (14) (72)
Other income 36 130
Operating loss (3,653) (2,717)
Adjusted LBITDA* (2,493) (2,120)
Reorganisation and transactional
items (192) -
Depreciation (114) (103)
Amortisation (552) (272)
Impairment of financial asset (14) (72)
Share based payment charge (288) (150)
Operating loss (3,653) (2,717)
Finance income 1 1
Finance costs (26) (27)
Loss before tax (3,678) (2,743)
Taxation 1,114 612
Loss for the year after tax (2,564) (2,131)
Loss for the year from discontinued
operations - (124)
Loss for the year (2,564) (2,255)
Other comprehensive income
Items that will not be reclassified
subsequently to profit or loss:
Revaluation of property, plant and
equipment 73 -
Items that will be reclassified
subsequently to profit or loss:
Exchange differences on translation
of foreign operations (339) 643
Total other comprehensive (loss)
/ income (266) 643
Total comprehensive loss attributable
to the owners of the group (2,830) (1,612)
Basic loss per share
Continuing operations (8.91p) (7.54p)
Discontinued operations 0.00p (0.44p)
Total (8.91p) (7.98p)
Diluted loss per share
Continuing operations (8.91p) (7.54p)
Discontinued operations 0.00p (0.44p)
Total (8.91p) (7.98p)
* Loss for the year from continuing operations before net
finance costs, tax, depreciation, amortisation, reorganisation and
transactional items, impairment charges and share based payment
charge.
Consolidated balance sheet at 31 January 2022
31 January 2022 31 January 2021
GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 751 683
Right-of-use assets 94 156
Intangible assets 10,619 11,222
Deferred tax assets 2,465 1,389
Total non-current assets 13,929 13,450
Current assets
Inventories 203 89
Contract assets 5 4
Trade and other receivables 399 550
Other financial assets at amortised cost - 328
Current tax receivable 70 101
Prepayments 163 114
Cash and cash equivalents 2,758 4,516
Total current assets 3,598 5,702
Total assets 17,527 19,152
LIABILITIES
Non-current liabilities
Borrowings - 355
Lease liabilities 41 110
Total non-current liabilities 41 465
Current liabilities
Trade and other payables 1,379 826
Contract liabilities 1,774 1,129
Other tax liabilities 127 341
Borrowings 383 58
Lease liabilities 67 63
Total current liabilities 3,730 2,417
Total liabilities 3,771 2,882
NET ASSETS 13,756 16,270
EQUITY
Capital and reserves attributable to
equity shareholders
Share capital 2,894 2,826
Share premium 3,839 3,830
Other reserves (2,133) (2,087)
Retained earnings 9,156 11,701
Total equity 13,756 16,270
Consolidated statement of changes in equity for the year ended
31 January 2022
Share capital Share premium Other reserves Retained earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 January 2020 2,826 3,830 (2,832) 13,956 17,780
Loss for the year - - - (2,255) (2,255)
Other comprehensive income for the year - - 643 - 643
Total comprehensive loss for the year - - 643 (2,255) (1,612)
Transactions with owners in their capacity
as owners:
Share-based payment expense
- continuing operations - - 150 - 150
Share-based payment expense
- discontinued operations - - (48) - (48)
At 31 January 2021 2,826 3,830 (2,087) 11,701 16,270
Loss for the year - - - (2,564) (2,564)
Other comprehensive loss for the year - - (266) - (266)
Total comprehensive loss for the year - - (266) (2,564) (2,830)
Transactions with owners in their capacity
as owners:
Issue of ordinary shares as consideration
for a business combination 67 - (67) - -
Issue of ordinary shares to option holders 1 9 (3) 3 10
Lapsed share options - - (16) 16 -
Exchange difference - - (4) - (4)
Share-based payment expense - - 310 - 310
At 31 January 2022 2,894 3,839 (2,133) 9,156 13,756
Consolidated statement of cash flows for the year ended 31
January 2022
Year ended 31 January 2022 Year ended 31 January 2021
GBP'000 GBP'000
Cash from operating activities
Cash consumed by operations (1,614) (1,791)
Interest received 1 1
Interest paid (26) (42)
Income taxes received 28 394
Net cash outflow from operating activities (1,611) (1,438)
Cash flows from investing activities
Payments for property, plant and equipment (36) (44)
Payment of software development costs (340) (682)
Proceeds from disposal of subsidiary (net
of cash disposed) 327 4,167
Net cash from investing activities (49) 3,441
Cash flows from financing activities
Proceeds from issues of share capital (net
of issue costs) 10 -
Proceeds from borrowings - 31
Repayment of borrowings (27) (19)
Principal elements of lease payments (62) (98)
Net cashflow from financing activities (79) (86)
Net change in cash and cash equivalents (1,739) 1,917
Cash and cash equivalents at the beginning
of the financial year 4,516 2,587
Effects of exchange rate changes on cash
and cash equivalents (19) 12
Cash and cash equivalents at the end of
the financial year 2,758 4,516
Cash and cash equivalents comprise cash at bank and other
short-term highly liquid investments with maturity of three months
or less, as adjusted for any bank overdrafts.
Notes to the Financial Statements
1. Basis of preparation
The preliminary financial information does not constitute
statutory accounts within the meaning of Section 434 of the
Companies Act 2006 for the financial year ended 31 January 2022 but
has been derived from those accounts and is prepared on the same
basis as the accounting policies to be adopted in those accounts.
The financial information for the year ended 31 January 2022 is
unaudited.
The annual accounts for the year ended 31 January 2022 have been
prepared in accordance with UK adopted International Accounting
Standards using the historical cost convention except where the
measurement of balances at fair value is required. The financial
information included in this preliminary announcement does not
include all the disclosures required in accounts prepared in
accordance with UK adopted International Accounting Standards and
accordingly it does not itself comply with UK adopted International
Accounting Standards.
The audit of the statutory accounts for the year ended 31
January 2022 is not yet complete. These accounts will be finalised
on the basis of the financial information presented by the
directors in this preliminary announcement. The statutory accounts
for the year ended 31 January 2022 will be delivered to the
Registrar of Companies following the Company's annual general
meeting.
The financial information for the period ended 31 January 2021
is derived from the statutory accounts for that year which have
been delivered to the Registrar of Companies. The auditors have
reported on the accounts for the year ended 31 January 2021; their
reports was unqualified, did not include any matters to which the
auditor drew attention by way of emphasis and did not contain a
statement under s498(2) or s498(3) of the Companies Act 2006.
2. Changes to accounting policies
The Group changed its accounting policy for land and buildings
from being held at historical cost less accumulated depreciation to
a revaluation model. The impact of the change can be seen in note
7.
3. Operating segments
Description of segments and principal activities
The Group's operating board, consisting of the Chief Executive
Officer and Chief Financial Officer examines the Group's
performance from a product perspective and has identified three
reportable segments of its business:
SwipedOn - based in New Zealand provides the sale and support of
self-service visitor management software to customers throughout
the world.
Space Connect - based in the UK provides the sale and support of
self-service space management software through a network of
partners, distributors and resellers to customers throughout the
world
Anders & Kern - based in the UK makes sales of hardware and
related integration services to customers in the UK.
The operating board primarily uses an adjusted measure of
earnings before interest, tax, depreciation and amortisation
(EBITDA) to assess the performance of the operating segments.
However, the operating board also receives information about the
segments' revenues and assets on a monthly basis. Information about
segment revenue is disclosed in note 4.
3(b) Adjusted LBITDA
Adjusted LBITDA excludes discontinued operations and the effects
of significant items of income and expenditure which might have an
impact on the quality of earnings, such as reorganisation and
transactional costs and impairment of assets. It also excludes the
effects of equity-settled share-based payments.
Interest income and finance costs are not allocated to segments,
because this type of activity is driven by the central treasury
function which manages the cash position of the Group.
Year ended 31 January 2022 Year ended 31 January 2021
GBP'000 GBP'000
Software
Space Connect (1,082) (646)
SwipedOn (164) (195)
Hardware
Anders & Kern (118) (84)
Central operating costs (1,129) (1,195)
Total adjusted LBITDA (2,493) (2,120)
3(c) Segmental financial performance
Year ended 31 January 2022 Central
Space Connect Swiped Anders & Kern operating
On costs Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue from contracts with
customers 458 2,953 1,729 - 5,140
Costs of sale of goods (1) (18) (1,049) - (1,068)
Costs of providing services (64) (284) (79) - (427)
Gross profit 393 2,651 601 - 3,645
Administrative expenses (1,927) (3,134) (874) (1,385) (7,320)
Impairment losses on financial
and contract assets (3) (11) - - (14)
Other income - 36 - - 36
Operating loss (1,537) (458) (273) (1,385) (3,653)
Adjusted LBITDA* (1,082) (164) (118) (1,129) (2,493)
Reorganisation and transactional
items - - (83) (109) (192)
Depreciation (6) (79) (22) (7) (114)
Amortisation (431) (100) (21) - (552)
Impairment of financial assets (3) (11) - - (14)
Share based payment charge (15) (104) (29) (140) (288)
Operating loss (1,537) (458) (273) (1,385) (3,653)
Finance income - 1 - - 1
Finance costs - (11) (12) (3) (26)
Loss before tax (1,537) (468) (285) (1,388) (3,678)
Taxation 446 98 58 512 1,114
Loss after tax (1,091) (370) (227) (876) (2,564)
Year ended 31 January 2021 Central
Space Connect Swiped Anders & Kern operating
On costs Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue from contracts with
customers 192 2,161 2,271 5 4,629
Costs of sale of goods 1 (16) (1,680) - (1,695)
Costs of providing services (4) (196) (83) - (283)
Gross profit 189 1,949 508 5 2,651
Administrative expenses (1,011) (2,441) (648) (1,326) (5,426)
Impairment losses on financial
and contract assets - (18) - (54) (72)
Other income - 130 - - 130
Operating loss (822) (380) (140) (1,375) (2,717)
Adjusted LBITDA* (646) (195) (84) (1,195) (2,120)
Depreciation (3) (66) (22) (12) (103)
Amortisation (171) (80) (21) - (272)
Impairment of financial assets - (18) - (54) (72)
Share based payment charge (2) (21) (13) (114) (150)
Operating loss (822) (380) (140) (1,375) (2,717)
Finance income - 1 - - 1
Finance costs (102) (12) (12) 99 (27)
Loss before tax (924) (391) (152) (1,276) (2,743)
Taxation 832 16 46 (282) 612
Loss after tax (92) (375) (106) (1,558) (2,131)
* (Loss)/profit for the year from continuing operations before
net finance costs, tax, depreciation, amortisation, reorganisation
and transactional items, impairment charges and share based payment
charge.
3(d) Segment assets
31 January 2022 31 January 2021
Additions to non-current assets* Additions to non-current assets*
Segment Segment
assets assets
GBP'000 GBP'000 GBP'000 GBP'000
Space Connect 5,360 146 4,884 294
SwipedOn 6,533 224 6,687 64
Anders & Kern 2,653 32 2,640 12
Segment assets 14,546 402 14,211 370
Unallocated assets 2,981 - 4,941 7
Total assets 17,527 402 19,152 377
*Other than contract assets and deferred tax assets
For the purpose of monitoring segment performance and allocating
resource between segments, the Group's Chief Executive Officer
monitors the tangible, intangible and financial assets attributable
to each segment. All assets are allocated to reportable segments
with the exception of cash held by the Parent Company, other
financial assets (except for trade and other receivables) and tax
assets.
The total of non-current assets other than deferred tax assets
broken down by location of assets is shown as follows:
31 January 2022 31 January 2021
GBP'000 GBP'000
UK 5,878 6,124
Australia - 3
New Zealand 5,586 5,934
Total assets 11,464 12,061
3(e) Segment liabilities
Segment liabilities are measured in the same way as in the
financial statements. These liabilities are allocated based on the
operations of the segment.
31 January 2022 31 January 2021
GBP'000 GBP'000
Space Connect 524 171
SwipedOn 2,018 1,460
Anders & Kern 865 996
Segment liabilities 3,407 2,627
Unallocated 364 255
Total liabilities 3,771 2,882
3(f) Revenue by customer geographical location
Year ended 31 January 2022 Space Connect Swiped Anders & Kern
On Central Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
UK 266 440 1,729 - 2,435
USA 2 1,340 - - 1,342
Australia 93 566 - - 659
New Zealand - 311 - - 311
Canada - 173 - - 173
Sweden 82 - - - 82
Rest of the world 15 123 - - 138
Total 458 2,953 1,729 - 5,140
Year ended 31 January 2021 Space Connect Swiped Anders & Kern
On Central Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
UK 34 304 2,213 5 2,556
USA - 974 - - 974
Australia 135 475 - - 610
New Zealand - 214 - - 214
Canada - 151 - - 151
Sweden 23 - - - 23
Rest of the world - 43 58 - 101
Total 192 2,161 2,271 5 4,629
4. Revenue from contracts with customers
Disaggregation of revenue from contracts with customers
The Group derives revenue from the transfer of goods and
services over time and at a point in time in the following major
product lines and geographical regions.
Year ended 31 January 2022 Space Connect SwipedOn Anders & Kern Central
UK New Zealand UK UK Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 458 2,953 1,729 - 5,140
Timing of revenue recognition
At a point in time 84 37 1,599 - 1,720
Over time 374 2,916 130 - 3,420
458 2,953 1,729 - 5,140
Year ended 31 January 2021 Space Connect SwipedOn Anders & Kern Central
Australia New Zealand UK UK Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 192 2,161 2,271 5 4,629
Timing of revenue recognition
At a point in time 74 36 2,120 5 2,235
Over time 118 2,125 151 - 2,394
192 2,161 2,271 5 4,629
Revenues from external customers come from the sale of software
as a service, the sale of software licences, the sale of
professional services and the sale of hardware. The revenue from
the sale of software as a service and software licences relates to
the Group's intellectual property owned by SwipedOn and Space
Connect. No single customer represents 10 per cent or more of the
Group's total revenues.
4(b) Assets and liabilities related to contracts with customers
The Group has recognised the following assets and liabilities
related to contracts with customers:
Current contract assets 31 January 31 January
2022 2021
GBP'000 GBP'000
Software 5 4
Loss allowance - -
Total current contract assets 5 4
Current contract liabilities 31 January 31 January
2022 2021
GBP'000 GBP'000
Software 1,774 1,055
Hardware - 74
Total contract liabilities 1,774 1,129
Contract liability movement
GBP'000
At 31 January 2020 641
Recognised as revenue in period (641)
New contract liabilities 1,129
At 31 January 2021 1,129
Recognised as revenue in period (1,129)
New contract liabilities 1,774
At 31 January 2022 1,774
The Group expects all of the deferred revenue as of 31 January
2022 to be recognised during the next reporting period.
Unsatisfied contracts
The following table shows unsatisfied performance obligations
resulting from fixed-price software as a service contracts and
software support agreements:
31 January 31 January
2022 2021
GBP'000 GBP'000
Aggregate amount of the transaction price allocated
to software as a service agreements and software
support agreements that are partially or fully
unsatisfied as at 31 January 1,774 1,055
4(c) Accounting policies
The Group has a number of different types of contractual
arrangements and consequently applies a variety of methods of
revenue recognition, based on the principles set out in IFRS 15
Revenue from Contracts with Customers. The revenue and profit in
any period are based on the delivery of performance obligations and
an assessment of when control is transferred to the customer.
Revenue is recognised when the performance obligation in a
contract has been performed (so 'point in time' recognition) or
over time as the performance obligation is transferred to the
customer.
For contracts where the Group does not provide the final
services judgement is applied as to whether the Group is acting as
a principal or agent. Where the Group controls the goods or
services before they are transferred to the customer a principal
relationship is considered to be in place, and revenue is
recognised gross. Where the Group arranges for the goods or
services to be provided by another party without the Group taking
control over those goods or services the relationship is considered
to be that of an agent, and the revenue is recognised net of cost
of sales.
The transaction price, being the amount to which the Group
expects to be entitled and has rights to under the contract, is
allocated to the identified performance obligations.
For each performance obligation, the Group determines if revenue
will be recognised over time or at a point in time. Where the Group
recognises revenue over time for long-term contracts, this is in
general due to the Group performing and the customer simultaneously
receiving and consuming the benefits provided over the life of the
contract. For each performance obligation to be recognised over
time, the Group applies a revenue recognition method that
faithfully depicts the Group's performance in transferring control
of the goods or services to the customer. This decision requires
assessment of the real nature of the goods or services that the
Group has promised to transfer to the customer. The Group applies
the relevant output or input method consistently to similar
performance obligations in other contracts .
If performance obligations in a contract do not meet the over
time criteria, the Group recognises revenue at a point in time (see
below for further details).
The Group disaggregates revenue from contracts with customers by
reporting segment and timing of transfer of goods and services as
management believe this best depicts how the nature, amount, timing
and uncertainty of the Group's revenue and cash flows are affected
by economic factors.
Sale of software as a service
The Group offers its software as a service hosted in the cloud.
Under terms of the contract, the customer receives the right to
access the software for an agreed period of time. To the extent
that the customer has been invoiced in excess of the value services
received to date a contract liability for the provision of the
software as a service is recognised at the time of sale. Management
considers that revenue is recognised over time as the service is
delivered until the point that the agreement expires.
Revenue invoiced during the reporting period which relates to
future periods is classified as deferred income contract
liabilities on the balance sheet.
The software comprises a number of different modules which can
be sold as a bundle at the outset or separately if a customer
chooses to take a subscription at a later date. Additional modules
will continue to be developed and offered as part of the initial
product offering or sold separately to existing customers who have
not subscribed to that module.
Sale of professional services
The Group sells professional services comprising implementation,
configuration and support services. These services can be purchased
in advance and used by customers when required and revenue is
recognised at a point in time when the service has been
provided.
Hardware and Systems Integration
The Group sells hardware through Anders & Kern or as part of
a contract for software through its software division. Revenue is
recognised at the point when the performance obligation is
fulfilled, usually when the hardware is delivered to the customer.
Where installation services are sold alongside the hardware,
revenue from those installation services is recognised when those
services are delivered. Customers have no right to return goods and
no warranties are issued to customers.
Contract assets and liabilities
Where the Group provides software as a service or software
support agreements, customers often pay in advance for a service to
be delivered over time. Where payments made are greater than the
revenue recognised at the period end date, the Group recognises a
deferred income contract liability for this difference. Where
payments made are less than the revenue recognised at the period
end date, the Group recognises an accrued income contract asset for
this difference.
At each reporting date, the Group assesses whether there is any
indication that accrued income contract assets may be impaired by
considering whether the revenue remains highly probable that no
revenue reversal will occur. Where an indicator of impairment
exists, the Group makes a formal estimate of the asset's
recoverable amount. Where the carrying amount of an asset exceeds
its recoverable amount, the asset is considered impaired and is
written down to its recoverable amount.
5. Cash flow information
31 January 2022 31 January 2021
GBP'000 GBP'000
Loss before income tax from continuing
operations (3,678) (2,743)
Adjustments for:
Depreciation and amortisation 666 375
Non-cash employee benefit expense - share-based
payments 288 150
Net loss on sale of non-current assets - 2
Finance costs - net 25 25
Credit loss 14 72
Net exchange differences (9) 3
Change in operating assets and liabilities
of continuing operations
Decrease / (increase) in trade and other
receivables 114 (14)
Decrease / (increase) in contract assets - 29
Decrease / (increase) in inventories (113) 157
Decrease / (increase) in prepayments (53) (43)
Increase / (decrease) in trade creditors 123 (371)
Increase / (decrease) in other creditors 276 280
Increase / (decrease) in contract liabilities 733 439
Cash consumed by continuing operations (1,614) (1,639)
Cash consumed by discontinued operations - (152)
Cash consumed by operations (1,614) (1,791)
6. Loss per share
Basic loss per share
Year ended 31 January 2022 Year ended 31 January 2021
Pence Pence
Attributable to the ordinary equity
holders of the Company:
From continuing operations (8.91p) (7.54p)
From discontinued operations - (0.44p)
Total basic loss per share (8.91p) (7.98p)
6(b) Diluted loss per share
Year ended 31 January 2022 Year ended 31 January 2021
Pence Pence
Attributable to the ordinary equity
holders of the Company:
From continuing operations (8.91p) (7.54p)
From discontinued operations - (0.44p)
Total diluted loss per share (8.91p) (7.98p)
6(c) Reconciliation of earnings used in calculating earnings per share
Earnings per share data is based on the Group loss for the year
and the weighted average number of ordinary shares in issue.
Year ended 31 January 2022 Year ended 31 January 2021
GBP'000 GBP'000
Basic (loss) / earnings per share
Loss attributable to the ordinary equity holders
of the Company:
From continuing operations (2,564) (2,131)
From discontinued operations - (124)
(2,564) (2,255)
Diluted (loss) / earnings per shares
Loss attributable to the ordinary equity holders
of the Company:
From continuing operations (2,564) (2,131)
From discontinued operations - (124)
(2,564) (2,255)
6(d) Weighted average number of shares used as the denominator
Year ended 31 January 2022 Year ended 31 January 2021
Number Number
Weighted average number of shares used as the
denominator in calculating basic earnings per
share 28,780,768 28,255,823
Adjustments for calculation of diluted earnings
per share
Options - -
Weighted average number of shares and potential
ordinary shares used as the denominator in
calculating diluted earnings per share 28,780,768 28,255,823
6(e) Information concerning the classification of securities
Options
Options granted to employees under the Group's share option
schemes are considered to be potential ordinary shares. Whilst
options are never included in the determination of basic earnings
per share, they are included in the calculation of diluted earnings
per share if considered dilutive.
At 31 January 2022 options are considered antidilutive and
therefore not included in the calculation of diluted earnings per
share. These options could potentially be dilutive in the
future.
6(f) Alternative measure of earnings per share
Year ended 31 January 2022 Year ended 31 January 2021
GBP'000 GBP'000
Loss for the year from continuing operations (2,564) (2,131)
Adjustment to basic (loss)/earnings:
Reorganisation and transactional costs 192 -
Tax credit on reorganisation and transactional
costs (36) -
Amortisation of acquired intangibles 198 194
Deferred tax credit on amortisation of acquired
intangibles (49) (48)
Share based payment charge 288 150
Deferred tax credit on share-based payment
charge (55) (28)
Adjusted (loss)/earnings attributable to owners
of the Company (2,026) (1,863)
Number of shares No. No.
Weighted average ordinary shares in issue 28,780,768 28,255,823
Weighted average potential diluted shares in
issue 28,780,768 28,255,823
Adjusted (loss)/earnings per share
Basic (loss)/earnings per share (7.04p) (6.59p)
Diluted (loss)/earnings per share (7.04p) (6.59p)
7. Property plant and equipment
Freehold land &
buildings Fixtures & fittings Plant & machinery Office equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 January 2020
Cost 649 13 13 126 801
Accumulated depreciation (36) (10) (9) (53) (108)
Net book amount 613 3 4 73 693
Year ending 31 January
2021
Opening net book amount 613 3 4 73 693
Additions - - - 44 44
Disposals - - - (2) (2)
Depreciation charge (13) (2) (2) (37) (54)
Foreign exchange impact - - - 2 2
Closing net book amount 600 1 2 80 683
At 31 January 2021
Cost 649 13 13 154 829
Accumulated depreciation (49) (12) (11) (74) (146)
Net book amount 600 1 2 80 683
Year ending 31 January
2022
Opening net book amount 600 1 2 80 683
Additions - - - 36 36
Revaluation 90 - - - 90
Disposals - - - (2) (2)
Depreciation charge (13) (1) (2) (38) (54)
Foreign exchange impact - - - (2) (2)
Closing net book amount 677 - (0) 74 751
At 31 January 2022
Cost or valuation 680 13 13 179 885
Accumulated depreciation (3) (13) (13) (105) (134)
Net book amount 677 - - 74 751
Leased assets
Leased assets are presented as a separate line item in the
balance sheet.
Revaluation, depreciation methods and useful lives
The Group has changed its accounting policy for land and
buildings which are now recognised at fair value based on periodic
valuations by external independent valuers, less subsequent
depreciation for buildings. Previously land and buildings were
accounted for at historical cost less depreciation. A revaluation
surplus is credited to other reserves in shareholders' equity. All
other property, plant and equipment is recognised at historical
cost less depreciation.
Depreciation is provided so as to write off to the cost or
valuation of assets (other than freehold land) less their estimated
residual values over their expected useful economic lives using the
straight-line method on the following bases
-- Fixtures and fittings 4-5 years
-- Plant and machinery 4-5 years
-- Office equipment 3-4 years
-- Leasehold improvements 5 years
-- Freehold buildings 50 years
Revaluation of land and building
Land and buildings are comprised of a single detached industrial
building where the Group bases its UK operations. For the first
time in the group financial statements, freehold land and buildings
are stated at their revalued amounts, being the fair value at the
date of revaluation, less any subsequent accumulated depreciation
and subsequent accumulated impairment losses. The fair value
measurements of the Group's freehold land and buildings as at
October 2021 were performed by Arnolds Keys LLP, independent
valuers not related to the Group. Arnolds Keys LLP are members of
the Royal Institute Chartered Surveyors and they have appropriate
qualifications and recent experience in the fair value measurement
of properties in the relevant locations. The valuation conforms to
International Valuation Standards and was based on recent market
transactions on arm's length terms for similar properties. The
Group re-values its land and buildings with sufficient regularity
to ensure that the carrying amount does not differ materially from
that which would be determined using fair value at the end of the
reporting period. The Directors asses on an annual basis if there
has been any significant change in fair value. Where it is assessed
that there has been a significant change an independent revaluation
is made.
To provide an indication about the reliability of the inputs
used in determining fair value, the group classifies its
non-financial assets and liabilities into the three levels
prescribed under the accounting standards. The inputs used in the
valuation of land and buildings are based on similar observable
transactions in the market and have therefore been allocated to in
their entirety to level 2. When appropriate the group's policy is
to recognise transfers into and transfers out of fair value
hierarchy levels as at the end of the reporting period. There have
been no transfers between hierarchy levels during the year.
The valuation of the land and buildings has been made using
comparable rental transactions for properties in the local
area.
If freehold land and buildings were stated on the historical
cost basis, the amounts would be as follows:
31 January 2022 31 January 2021
GBP'000 GBP'000
Cost 649 649
Accumulated depreciation (62) (49)
Net book amount 587 600
8. Events occurring after the end of the reporting period
There are no subsequent events occurring after the reporting
date that require adjustment or disclosure.
9. Annual General Meeting
Further details in relation to the Annual General Meeting will
be provided in due course.
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