TIDMPTRO
RNS Number : 7032N
Pelatro PLC
26 September 2019
Pelatro Plc
("Pelatro" or the "Group")
Interim results
Pelatro Plc (AIM: PTRO), the precision marketing software
specialist, is pleased to announce today its interim results for
the 6 months ended 30 June 2019.
Financial highlights
-- Revenue increased 14% to $2.71 million (H1 2018: $2.38m)
-- Repeat revenue increased 145% to $1.96m (H1 2018: $0.80m), 72% of revenue
-- Adjusted EBITDA(*) decreased 46% to $0.8m (H1 2018: $1.47m),
largely due to increased expansion for growth
-- Adjusted earnings per share 0.5c (H1 2018: 4.4c)
-- Gross cash as at 30 June 2019 $1.12m (at 31 December 2018:
$2.22m); approximately $0.9m received from debtors since period
end
-- Current revenue visibility of $6.3m, including additional
revenue of $2.5m booked post period end
-- In addition to the visibility of $6.3m, the Group has a
near-term pipeline of $9.2m of which $5.5m is from existing
customers
Operational highlights
-- Significant investment in expanded work force and improved
infrastructure to deliver best in class service and capture wider
range of opportunities
-- Sales efforts in Latin America are starting to generate a
healthy pipeline (currently some $3.5m)
-- Cross-selling and up-selling of Pelatro's products within
customer telco groups like Telenor is progressing successfully
Post period end highlights
-- Gross cash at 31 August $1.07m
-- Trade receivables at 31 August $3.34m (H1 2019: $4.27m)
Outlook
-- Management expectations for the year underpinned by:
- revenue visibility of $6.3m, of which $5.2m has been booked to
date
- 2019 pipeline of $9.2m, of which $5.5m is from existing
customers for various new modules and/or products, i.e.
cross-selling opportunities where Pelatro is the only contender in
most cases
- $3.7m is from potential new customers and comprises three
opportunities where we are in the final shortlist with commercial
negotiations in progress
- a medium term pipeline of c.$19m (inclusive of the $9.2m near
term pipeline) comprised of over 40 live opportunities
Richard Day, Non-executive Chairman of Pelatro commented:
"The development in our business continues. As we win more new
customers we are also expanding our product line and services while
continuing to deepen our engagement and cross-sell our offering our
existing customer base of global telecom groups, as shown by our
contract win with the large telco in Thailand, a part of a global
telco group, announced earlier this year.
"Alongside this we have been confidently investing in our prime
asset - our people. Already this year, we have taken on almost as
many staff as we did over the whole of last year to ensure we are
well able to manage and maintain new clients, as well as ensuring
all our existing clients are well served and supported across our
offering.
"We have also increased our sales effort, with new colleagues
targeting opportunities in Latin America and Africa, and I am
pleased to say we are already seeing tangible benefits to our
visibility of our ongoing pipeline from them for these areas.
"Revenue visibility currently still stands at $6.3m, as
development over the traditionally quieter summer months being
slightly slower than expected, resulting in a more pronounced H2
weighting this year. Despite management seeing some extended sales
cycles, we have booked $5.23m of revenue to date (and $2.52m post
period end); this is supported by an encouraging near term pipeline
of $9.2m, a significant proportion of which the Board is expecting
to close before the year end. We are increasingly seeing
opportunities to align our interests more with those of our
customers through gain share arrangements rather than one off
licenses, providing us with potentially fuller returns though the
life of the contract and also greater visibility over the medium
and longer term as well. The Board therefore remains confident,
based on current visibility and the encouraging pipeline described
above, of delivering full year results in line with
expectations.
"With our increasing spread of business we are working towards
the next phase in our development, as we aim to develop more
revenue sharing opportunities, as well as our licence offering. We
are seeing plenty of opportunities and look forward to keeping
investors informed on progress."
Presentation and analyst presentation
A copy of the results presentation provided to analysts will be
available on Pelatro's website later today (www.pelatro.com).
Management will be hosting a presentation for analysts today at
9.30am at the office of Walbrook PR, 4 Lombard Street, London, EC3V
9HD. Analysts wishing to attend the presentation should register
their interest by e-mailing pelatro@walbrookpr.com or telephoning
020 7933 8780.
For further information contact:
Pelatro Plc
Subash Menon, Managing Director c/o Walbrook
Nic Hellyer, Finance Director
finnCap Limited (Nominated Adviser and
Broker) +44 (0)20 7220 0500
Carl Holmes/Kate Bannatyne/Matthew Radley
Tim Redfern / Camille Gochez - ECM
Walbrook (Financial PR and IR) +44 (0)20 7933 8780
Paul Cornelius/Nick Rome
* earnings before interest, tax, depreciation, amortisation,
exceptional items and share-based payments
This announcement is released by Pelatro Plc and, prior to
publication, the information contained herein was deemed to
constitute inside information under the Market Abuse Regulations
(EU) No. 596/2014. Such information is disclosed in accordance with
the Company's obligations under Article 17 of MAR. The person who
arranged for the release of this announcement on behalf of Pelatro
Plc was Nic Hellyer, Finance Director.
Notes to editors
The Pelatro Group was founded in March 2013 by Subash Menon and
Sudeesh Yezhuvath with the objective of offering specialised,
enterprise class software solutions for customer engagement
principally to telcos who face a series of challenges including
market maturity, saturation and customer churn.
Pelatro provides its "mViva" platform for use by customers in
B2C applications, and is well positioned in the Multichannel
Marketing Hub space (MMH) - this is technology that orchestrates a
customer's communications and offers to customer segments across
multiple channels to include websites, social media, apps, SMS,
USSD and others.
For more information about Pelatro, visit www.pelatro.com
Managing Director's statement
We have been building on the foundation laid over the past few
years, having won five new contracts and added four new customers
in the first half of 2019. However, continuous innovation is key to
sustain the growth momentum. In addition, it is essential to
explore new avenues and models keeping long term challenges and
prospects in mind.
Strategic Shift
Building a self-sustaining business should be the key objective
of the senior management of every company. The team at Pelatro is
committed to this key objective. The main pillars of such a
business would be annuity business, a strong portfolio of world
class products, a growing market and healthy margin. In its initial
years, Pelatro focused on entering an expanding market and carving
out a position for itself on the strength of its offerings and
referenceable customers, while structuring a profitable business
model. While ensuring the superiority of our products and
maintaining profitability will be an ongoing task, the fundamentals
are in place and we can now work towards the next phase of our
growth. This phase is about our revenue model. Recurring and repeat
revenue is an essential foundation to build the future on. It is
pertinent to note here that four out of six contracts won in 2019
are for revenue share models, and several of our new opportunities
too are similar in nature. This will better align revenue
milestones and invoicing milestones thereby reducing Unbilled
Revenue and Accounts Receivables on the one hand and provide higher
visibility and stability to the business in the medium and long
term.
Bandwidth
In keeping with our continuing growth led by addition of more
customers, we have been expanding our teams handling sales,
development, implementation and support. The total strength of the
organisation at the end of the first half of 2019 stands at 145.
While we added 48 people in the whole of 2018, we added 37 people
in the first half of 2019, including 1 sales person, 15 in
development and testing, 20 in support and implementation, and the
balance in administrative functions. A further sales person was
added to the team in August.
Acquisition Update
The business assets that were acquired from Danateq have been
fully integrated and we are gaining significantly from the wider
portfolio of customers. The expected cross-selling opportunities
have been identified and are in various stages of progress.
Further, the new relationships are being leveraged to extract more
value from the acquisition. All these efforts will bear fruit in
the years to come. As we expected at the time of the AGM update,
certain contracts within the acquired pipeline have taken slightly
longer to complete than originally forecast; as a result their
revenue, when recognised, will not fall within the first year earn
out period (the 12 months to end July 2019) but are likely to be
recognised instead in the second. As a result the contingent cash
payment of $2m pursuant to the terms of the acquisition is not
payable in respect of the first earnout period.
Financial review
Revenue and profitability
In the six months to 30 June 2019 revenue increased by 14% over
the comparable period to $2.71m (H1 2018: $2.38m). Of this,
approximately $1.96m (H1 2018: $0.80m) was repeating revenue
comprising gain share, change requests and other services of $1.32m
and post-contract support ("PCS") of around $0.64m. The growth in
repeating revenue continues to be driven by the installed customer
base as well as additional demand from customers for gain share and
similar contracts.
Underlying operating profit (excluding the impact of non-cash
share-based payments, amortisation of customer-related intangible
assets) was $0.20m (H1 2018: $1.23m) reflecting a period of
continued investment, principally in headcount but also a
much-needed increase office space as the operations have grown to
deliver our growth expectations (with some $0.1m of additional
lease expenses taken on in the last year). We expect H2 costs to be
stable or marginally lower, partly reflecting the ending of the
consultancy contract with Tele2 and the associated provision of
consultants.
Net cash and trade receivables
Cash generated from operating activities was approximately
$0.34m after working capital movements. After net financing
payments of $0.15m (including approximately $88,000 relating to the
reclassification of lease payments under IFRS 16) and capital
expenditure of around $1.20m (including capitalised development
expenditure of $1.11m) gross cash at 30 June 2019 was approximately
$1.12m. Financial debt (excluding IFRS 16 liabilities) was
approximately $0.43m, giving net cash of approximately $0.69m (FY
2018: $1.77m).
Short-term trade receivables (including unbilled revenue but
excluding contract assets) as at 30 June 2019 were $4.27m compared
to $3.78m at 31 December 2018 (and at 31 August were $3.34m). Of
the balance outstanding at 31 December 2018, some $2.59m has been
collected to date.
The trade receivables balance at the period end is analysed as
follows:
H1 2019 H1 2019 H1 2019 FY 2018 FY 2018 FY 2018
$'000 $'000 $'000 $'000
Receivables Associated "Debtor Receivables Associated "Debtor
revenue days" revenue days"
Gross trade receivables 4,272 6,813 229 3,778 6,019 229
Trade receivables
excluding UBR 1,453 5,622 94 1,453 3,694 144
Trade receivables above exclude contract assets and the
associated revenue is the relevant contractual revenue excluding
any adjustment for IFRS 15. Given the wide variety and bespoke
nature of the Group's contracts, figures shown for debtor days are
illustrative only. Unbilled Revenue ("UBR") of $1.58m (H1 2018:
$1.38m) arises principally from contractual revenue milestones
being reached earlier than invoicing milestones.
Implementation of IFRS 16
Pelatro has adopted IFRS 16 Leases for the financial year ending
31 December 2019 and has chosen to use the modified retrospective
approach to adoption which means there are no restatements to the
prior year figures. IFRS 16 introduces a single lessee accounting
model, whereby the Group will recognise lease liabilities and
"right of use" assets at 1 January 2019 for leases previously
classified as operating leases. Within the income statement rental
expense is replaced by depreciation and interest expense. The
adoption of IFRS 16 has resulted in aggregate right of use assets
of $420,000 with corresponding liabilities of $484,000 being
recognised as at 30 June 2019
In order to allow users of the accounts to see how the impact of
IFRS 16 has affected adjusted EBITDA, we present a reconciliation
below:
Adjusted Adjusted
EBITDA EBITDA
6 months 6 months
to to
30 June 2019 30 June 2018
$'000 $'000
Consistent with 2018 presentation and
accounting policy 682 1,474
Changes due to IFRS 16 111 -
_______ _______
Consistent with 2019 presentation and
accounting policy 793 1,474
Expenditure on non-current assets
Expenditure on non-current assets of $1.20m (2018: $1.07m)
comprises principally capitalised development costs of $1.1m plus
minor expenditure on third party software and licenses, plus
expenditure on tangible assets of $78,000. Capitalisation of
intangibles as a percentage of the underlying costs in the Group's
software development operation was approximately 55% (H1 2018:
68%). The capitalisation of development costs has resulted in an
intangible asset in the statement of financial position of $3.87m
(net of amortisation; H1 2018: $1.45m).
Share option scheme
The Company established a share option plan on 14 January 2019
in order to align the longer-term interests of senior employees
with those of shareholders and incentivise the creation of
shareholder value. The initial award of options was for a total of
1,640,000 Ordinary Shares at an exercise price of 73p per share
(representing approximately 5 per cent. of the Company's issued
share capital). The Options are exercisable, subject to the grantee
remaining in employment with a member of the Pelatro Group, over 4
years and their exercise on vesting is not dependent upon any
performance criteria.
Current trading and outlook
Revenue visibility is a key element of our business - the longer
the visibility, the greater the stability and predictability.
Revenue visibility is currently $6.3m and despite not having full
visibility on 2019 revenue at this stage, the near term sales
pipeline gives the Board confidence in the outturn for the year.
This healthy sales pipeline is a crucial aspect of our business and
we are currently tracking more than 40 opportunities across a range
of products worth over $19m in aggregate from existing and
potential customers. Of this, some $9.2m represents a broad spread
of some 20+ pipeline opportunities that are being actively managed
and that could close before the year end including some of
significant size; of this $9.2m, some $5.5m is from existing
customers. Given the size and quality of this pipeline we remain
confident in the outturn for the year and of achieving market
expectations.
Group statement of comprehensive income
6 months 6 months Year to
to to December
30 June 30 June 2018
2019 2018
Note $'000 $'000 $'000
(unaudited) (unaudited) (audited)
Revenue 2 2,714 2,376 6,123
Cost of sales and provision
of services (634) (361) (555)
_______ _______ _______
Gross profit 2,080 2,015 5,568
Administrative expenses (1,879) (781) (2,421)
_______ _______ _______
Adjusted operating profit 201 1,234 3,147
Exceptional items 3 - - (310)
Amortisation of acquisition-related
intangibles 3 (349) - (286)
Share-based payments 3 (49) - -
------------ ------------ ----------
_______ _______ _______
Operating profit (197) 1,234 2,551
Finance income 4 20 9 33
Finance expense 5 (85) (37) (71)
_______ _______ _______
Profit/(loss) before taxation (262) 1,206 2,513
Income tax credit/(expense) 4 (145) (334)
_______ _______ _______
PROFIT/(LOSS) FOR THE PERIOD
ATTRIBUTABLE TO OWNERS OF THE
PARENT (258) 1,061 2,179
Other comprehensive income/(expense):
Items that may be reclassified
subsequently to profit or loss:
Exchange differences 1 (60) 78
_______ _______ _______
Other comprehensive income,
net of tax (1) (60) 78
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD (257) 1,001 2,257
Earnings per share
Reported
Attributable to the owners
of the parent (basic and diluted) 6 (0.8)c 4.4c 8.0c
Adjusted
Basic 6 0.5c 4.4c 10.1c
Diluted 6 0.5c 4.4c 10.1c
Group statement of financial position
As at As at As at 31
30 June 30 June December
2019 2018 2018
Note $'000 $'000 $'000
(unaudited) (unaudited) (audited)
Assets
Non-current assets
Intangible assets 7 10,648 1,865 10,609
Property, plant and equipment 408 302 362
Right-of-use assets 8 420 - -
Trade and other receivables 306 414 360
Contract assets 117 127 303
_______ _______ _______
11,899 2,708 11,634
Current assets
Trade receivables 9 4,272 2,263 3,778
Contract assets 304 516 81
Other assets 425 356 382
Cash and cash equivalents 1,118 2,096 2,224
_______ _______ _______
6,119 5,231 6,465
Total assets 18,018 7,939 18,099
Liabilities
Non-current liabilities
Borrowings 10 359 420 382
Lease liabilities 11 260 - -
Contract liabilities 202 - 67
Other financial liabilities 13 1,187 - 1,141
_______ _______ _______
2,008 420 1,590
Current liabilities
Trade and other payables 12 356 362 609
Borrowings 10 73 69 69
Lease liabilities 11 224 - -
Contract liabilities and deferred
revenue 257 106 171
Other financial liabilities 13 - - 298
_______ _______ _______
910 537 1,147
Total liabilities 2,918 957 2,737
NET ASSETS 15,100 6,982 15,362
Issued share capital and reserves
Share capital 1,065 801 1,065
Share premium 11,603 4,472 11,603
Other reserves (668) (587) (721)
Retained earnings 3,100 2,296 3,415
_______ _______ _______
TOTAL EQUITY 15,100 6,982 15,362
Group statement of cash flows
6 months 6 months Year to
to to December
30 June 30 June 2018
2019 2018
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
Cash flows from operating activities
Profit/(loss) for the period (258) 1,061 2,179
Adjustments for:
Income tax expense recognised in
profit or loss (8) 145 342
Interest income (20) (4) (33)
Finance costs 85 37 71
Depreciation of tangible non-current
assets 132 20 46
Amortisation of intangible non-current
assets 809 220 843
Provision for/(benefit of) deferred
taxes 4 - (8)
Share-based payments 49 - -
Foreign exchange (gains)/losses (6) 18 (69)
_______ _______ _______
Operating cash flows before movements
in working capital 787 1,497 3,371
(Increase)/decrease in trade and
other receivables (402) (1,022) (2,438)
(Increase)/decrease in contract
assets (38) (505) (273)
Increase/(decrease) in trade and
other payables (230) (9) 57
Increase in contract liabilities
and other deferred income 220 (13) 146
_______ _______ _______
Cash generated from operating activities 337 (52) 863
Income tax paid (96) (263) (292)
_______ _______ _______
Net cash generated from operating
activities 241 (315) 571
Cash flows from investing activities
Acquisition of property, plant
and equipment (78) (305) (384)
Development of intangible assets (1,111) (763) (1,604)
Acquisition of intangible assets (12) - (69)
Cash (out)/inflow on acquisition
of subsidiaries net of cash acquired - (14) (7,035)
_______ _______ _______
Net cash used in investing activities (1,201) (1,082) (9,092)
Cash flows from financing activities
Proceeds from issue of ordinary
shares, net of issue costs - - 7,395
Repayments to related parties - (407) (436)
Proceeds from borrowings 276 254 394
Repayment of borrowings (300) (339) (513)
Repayments of principal on lease (88) - -
liabilities
Interest income 20 4 33
Finance costs (40) (37) (62)
Less interest accrued but not paid 1 1 3
Interest expense on lease liabilities (22) - -
_______ _______ _______
Net cash generated by/(used in)
financing activities (153) (524) 6,814
Net increase/(decrease) in cash
and cash equivalents (1,113) (1,921) (1,707)
Net foreign exchange differences 7 (109) (195)
Cash and equivalent at beginning
of period 2,224 4,126 4,126
_______ _______ _______
Cash and cash equivalents at end
of period 1,118 2,096 2,224
Group statement of changes in equity
Share Share Exchange Merger Share-based Retained Total
capital premium reserve reserve payments profits
reserve
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Balance at 31 December
2017 as previously
reported 801 4,472 (2) (527) - 1,217 5,961
Effect of change of
accounting policy (IFRS
15) - - - - - 18 18
_____ _____ _____ _____ _____ _____ _____
Balance at 31 December
2017 as restated 801 4,472 (2) (527) - 1,235 5,979
Profit after taxation
for the period - - - - - 1,061 1,061
Other comprehensive
income:
Exchange differences
on translation of overseas
subsidiaries - - (58) - - - (58)
_____ _____ _____ _____ _____ _____ _____
Balance at 30 June
2018 801 4,472 (60) (527) - 2,296 6,982
Profit after taxation
for the period - - - - - 1,118 1,118
Other comprehensive
income:
Exchange differences - - (133) - - (133)
Transactions with owners:
Shares issued by Pelatro
Plc for cash 264 7,450 - - - - 7,714
Issue costs - (319) (319)
_____ _____ _____ _____ _____ _____ _____
Balance at 31 December
2018 1,065 11,603 (193) (527) - 3,414 15,362
Effect of change of
accounting policy (IFRS
16) - - - - - (57) (57)
_____ _____ _____ _____ _____ _____ _____
Balance at 31 December
2018 as restated 1,065 11,603 (193) (527) - 3,357 15,305
Profit/(loss) after
taxation for the period - - - - - (258) (258)
Share-based payments - - - - 49 - 49
Other comprehensive
income:
Exchange differences - - 4 - - - 4
Transactions with owners:
_____ _____ _____ _____ _____ _____ _____
Balance at 30 June
2019 1,065 11,603 (189) (527) 49 3,099 15,100
Notes to the Group financial statements
1 Basis of preparation
The Group has prepared its interim financial statements for the
6 months ended 30 June 2019 (the "interim results") in accordance
with the recognition and measurement principles of International
Financial Reporting Standards ("IFRS") as adopted by the European
Union and also in accordance with the recognition and measurement
principles of IFRS issued by the International Accounting Standards
Board, but do not include all the disclosures that would otherwise
be required. They have been prepared under the historical cost
convention as modified to include the revaluation of certain
non-current assets. Other than the adoption of IFRS 16 Leases the
accounting policies adopted in the interim financial statements are
consistent with those adopted in the Group's Annual Report and
Financial Statements for the year ended 31 December 2018 and those
which will be adopted in the preparation of the annual report for
the year ending 31 December 2019.
As permitted, the interim results have been prepared in
accordance with the AIM Rules of the London Stock Exchange and not
in accordance with IAS34 Interim Financial Reporting. They do not
constitute full statutory accounts within the meaning of section
434 of the Companies Act 2006 and are unaudited.
Change in accounting policy - application of IFRS 16 Leases
(a) General
In the current period the Group has applied IFRS 16 Leases (as
issued by the IASB in January 2016) for the first time ("IFRS 16"
or the "Standard"). IFRS 16 introduces new or amended requirements
with respect to lease accounting, resulting in significant changes
to lessee accounting by removing the distinction between operating
and finance leases and requiring the recognition of a right-of-use
asset and a lease liability at the lease commencement for all
leases, except for short-term leases and leases of low value
assets.
The Group has applied the definition of a lease and related
guidance set out in the Standard to all lease contracts entered
into or modified on or after 1 January 2014, with the date of
initial application as 1 January 2019. The Group has applied IFRS
16 using the modified retrospective approach, with no restatement
of comparative information.
(b) Former operating leases
IFRS 16 changes how the Group accounts for leases previously
classified as operating leases under IAS 17, which were off balance
sheet. Applying IFRS 16, for all leases (except as noted below),
the Group:
(i) recognises right-of-use assets and lease liabilities in the
consolidated statement of financial position, initially measured at
the present value of future lease payments;
(ii) recognises depreciation of right-of-use assets, and
interest on lease liabilities, in the consolidated statement of
comprehensive income; and
(iii) separates the total amount of cash paid in respect of
lease obligations into a principal portion and interest (both
presented within financing activities) in the consolidated
statement of cash flows.
Lease payments under (i) are discounted using the interest rate
implicit in the lease, if that rate can be determined, or the
Group's estimated incremental borrowing rate. The finance cost is
charged to the Consolidated Statement of Comprehensive Income over
the lease period so as to produce a constant periodic rate of
interest on the remaining balance of the liability for each period.
The right-of-use asset is depreciated over the shorter of the
asset's useful life and the lease term on a straight-line basis.
Additionally under IFRS 16, right-of-use assets are tested for
impairment in accordance with IAS 36 Impairment of Assets. This
replaces the previous requirement to recognise a provision for
onerous lease contracts. For the leases taken on balance sheet at
30 June 2019 the Group has used a weighted average interest rate of
9.4%.
For short-term leases (lease term of 12 months or less) and
leases of low-value assets the Group has opted to recognise a lease
expense on a straight-line basis as permitted by the Standard. This
expense is presented within other expenses in the consolidated
statement of profit or loss.
(c) Financial effect of initial application of IFRS 16
The tables below show the amount of adjustment for each
financial statement line item affected by the application of IFRS
16 for the current period. As the Group has adopted the modified
retrospective approach the prior year and period are not restated
and hence there is no effect shown.
Impact on profit/(loss) for the period
6 months
to
30 June
2019
$'000
(unaudited)
Increase in depreciation 94
Increase in finance costs 22
Loss on foreign currency translation 2
Decrease in other expenses (111)
_______
Increase in profit for the period 7
Impact on earnings per share for the period
The impact on earnings per share is too small to be reflected in
disclosure to the nearest 0.1c
Impact on assets, liabilities and equity as at 1 January
2019
As previously IFRS 16 As restated
reported adjustments
$'000 $'000 $'000
(audited) (unaudited) (unaudited)
Right-of-use assets - 383 383
_______ _______ _______
Net impact on total assets - 383 383
Lease liabilities - (440) (440)
___________ _______ _______
Net impact on total liabilities - (440) (440)
Retained earnings - 57 57
_______ _______ _______
Net impact on total liabilities
and equity - 383 383
The recognised right-of-use assets relate to the following types
of assets:
As at As at
30 June 2019 1 January
2019
$'000 $'000
(unaudited) (unaudited)
Leasehold properties 401 383
Motor vehicles 19 -
_______ _______
Total right-of-use assets 420 383
The associated right-of-use assets for property leases were
measured on a retrospective basis as if the new rules had always
been applied. There were no onerous lease contracts that would have
required an adjustment to the right-of-use assets at the date of
initial application.
Impact on consolidated statement of cash flows
The application of IFRS 16 has an impact on the consolidated
statement of cash flows of the Group as under the Standard lessees
must present:
-- Short-term lease payments, payments for leases of low-value
assets and variable lease payments not included in the measurement
of the lease liability as part of operating activities (such
payments have no material effect on these financial
statements);
-- Cash paid for the interest portion of lease liabilities as
part of financing activities; and
-- Cash payments for the repayment of the principal portions of
leases liabilities as part of financing activities.
Under IAS 17, all lease payments on operating leases were
presented as part of cash flows from operating activities.
Consequently, for the 6 months ended 30 June 2019, the net cash
generated by operating activities has increased by $111,000 and net
cash used in financing activities increased by the same amount.
Extension and termination options
Extension and termination options are included in a number of
property leases across the Group. These terms are used to maximise
operational flexibility in terms of managing contracts. All of the
extension and termination options held are exercisable only by the
Group and not by the respective lessor. In determining the lease
term, management considers all facts and circumstances that create
an economic incentive to exercise an extension option, or not
exercise a termination option. Extension options (or periods after
termination options) are only included in the lease term if the
lease is reasonably certain to be extended (or not terminated).
Share-based payments
The Group has applied the requirements of IFRS 2 Share-based
payments in respect of options granted under the share option plan
for senior employees dated 15 January 2019 (the "Plan"). Under the
terms of the Plan, the Group is able to make equity-settled
share-based payments to certain employees and Directors by way of
issue of options over ordinary shares. Such equity-settled
share-based payments are measured at fair value at the date of
grant. This fair value is determined as at the grant date of the
options and is expensed on a straight-line basis over the vesting
period, based on the Group's estimate of the number of options that
will eventually vest. Fair value is measured by use of a
Black-Scholes model; the expected life value used in the model has
been adjusted, based on management's best estimates, for the
effects of non-transferability, exercise restrictions and
behavioural considerations.
IFRIC 23 Uncertainty over Income Tax Treatments
IFRIC 23 is effective for periods beginning on or after 1
January 2019 and requires:
-- The Group to determine whether uncertain tax treatments
should be considered separately, or together as a group, based on
which approach provides better predictions of the resolution;
-- The Group to consider if it is probable that the tax
authorities will accept the uncertain tax treatment; and
-- If it is not probable that the uncertain tax treatment will
be accepted, measure the tax uncertainty based on the most likely
amount or expected value, depending on whichever method better
predicts the resolution of the uncertainty
The Group does not believe that it is impacted by IFRIC 23 and
therefore opening retained earnings remain unaffected.
Going concern
The Directors have considered trading and cash flow forecasts
prepared for the Group, and based on these, and confirmed banking
facilities, are satisfied that the Group will continue to be able
to meet its liabilities as they fall due for at least one year from
the date of these results. On this basis, they consider it
appropriate to have adopted the going concern basis in the
preparation of the interim results, which were approved by the
Board of Directors on 25 September 2019.
Comparative financial information
The comparative financial information presented herein for the
year ended 31 December 2018 does not constitute full statutory
accounts for that period. Statutory accounts for the year ended 31
December 2018 have been filed with the Registrar of Companies.
These statutory accounts carried an unqualified Auditor's Report,
did not draw attention to any matters by way of emphasis and did
not contain a statement under Section 498(2) or 498(3) of the
Companies Act 2006.
2 Segmental analysis
Revenue by geography
The Group recognises revenue in seven geographical regions based
on the location of customers, as set out in the following
table:
6 months 6 months Year to
to to December
30 June 30 June 2018
2019 2018
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
Caribbean 243 189 357
Central Asia 206 987 1,653
Eastern Europe 56 - 380
North Africa 95 288 314
South Asia 1,088 542 819
South East Asia 561 - 2,207
Sub-Saharan Africa 465 370 393
_______ _______ _______
2,714 2,376 6,123
Management makes no allocation of costs, assets or liabilities
between these region since all trading activities are operated as a
single business unit.
Revenue by type
6 months 6 months Year to
to to 31 December
30 June 30 June
2019 2018 2018
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
Repeat software sales and services 1,316 575 2,288
Maintenance and support 645 228 809
_______ _______ _______
Total repeat revenues 1,961 803 3,097
Software - new licenses 498 1,568 2,511
Consulting 250 - 515
Resale of hardware 5 5 -
_______ _______ _______
2,714 2,376 6,123
An analysis of revenue by status of invoicing is as follows:
6 months 6 months Year to
to to 31 December
30 June 30 June
2019 2018 2018
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
(i) Revenue invoiced to customers
under contractual terms 1,076 488 3,694
(ii) Revenue due under terms
of contract but unbilled at period
end ("UBR") 1,582 1,376 2,325
(iii) Revenue recognised other
than (ii) (i.e. on the completion
of performance obligations but
before any billing milestone
is reached) 90 512 271
Less: net revenue deferred (under
IFRS 15 or otherwise) (20) - (80)
Less: revenue recognised or to
be recognised as interest under
IFRS 15 (14) - (87)
_______ _______ _______
Total revenue recognised in the
period 2,714 2,376 6,123
A broad analysis of Unbilled Revenue is as follows:
6 months
to
30 June
2019
$'000
(unaudited)
Gain share contracts awaiting administrative process 203
Other contracts awaiting administrative process 38
Annual contractual payment date not yet reached 181
Invoicing milestone not yet reached 1,160
_______
UBR 1,582
3 Non-GAAP profit measures and exceptional items
Reconciliation of operating profit to earnings before interest,
taxation, depreciation and amortisation ("EBITDA"):
6 months 6 months Year to
to to December
30 June 30 June 2018
2019 2018
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
Operating profit/(loss) (197) 1,234 2,551
Adjusted for:
Amortisation and depreciation 940 240 889
Exceptional items:
- acquisition expenses - - 310
Share-based payments 49 - -
_______ _______ _______
Adjusted EBITDA 792 1,474 3,750
The criterion for adjusting items in the calculation of adjusted
EBITDA is operating income or expenses that are material and either
(i) arise from an irregular and significant event or (ii) are such
that the income/cost is recognised in a pattern that is unrelated
to the resulting operational performance. Materiality is defined as
an amount which, to a user, would influence decision-making based
on, and understandability of, the financial statements. Adjustment
for share-based payment expense is made because, once the cost has
been calculated, the Directors cannot influence the share based
payment charge incurred in subsequent years, and the value of the
share option to the employee differs considerably in value and
timing from the actual cash cost to the Group.
Exceptional items are treated as exceptional by reason of their
size or nature and are excluded from the calculation of adjusted
EBITDA (and adjusted earnings per ordinary share) to allow a better
understanding of comparable year-on-year trading and thereby an
assessment of the underlying trends in the Group's financial
performance. These measures also provide consistency with the
Group's internal management reporting. Exceptional items in 2018
comprise legal and other costs relating to the Danateq
Acquisition.
Share-based payments
Share-based payment expense comprises the charge in the current
period relating to the expensing of the fair value of (a) the
1,640,000 options granted under the share option plan for senior
employees dated 15 January 2019 (the "Plan") and (b) 74,000 options
issued at the time of the Company's IPO. The options issued under
the terms of the Plan were granted with an exercise price of 73p,
vesting in tranches as follows: 25% after one year, 25% after two
years and 50% after three years. There are no conditions attaching
to the vesting of the options other than continued employment.
Adjusted EPS
The calculation of adjusted EPS is shown in Note 5.
4 Finance income
6 months 6 months Year to
to to December
30 June 30 June 2018
2019 2018
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
Interest receivable on interest-bearing
deposits 6 9 10
Notional interest accruing on
contracts with a significant
financing component 14 - 23
_______ _______ _______
Total finance income 20 9 33
5 Finance expense
6 months 6 months Year to
to to December
30 June 30 June 2018
2019 2018
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
Interest and finance charges
paid or payable on borrowings 40 37 62
Acquisition-related financing
expense - unwinding of discount
on financial liabilities 23 - 9
Interest on lease liabilities 22 - -
under IFRS 16
_______ _______ _______
Total finance expense 85 37 71
6 Earnings per share
Earnings per share - reported ("EPS")
The calculation of the basic and diluted EPS is based on the
following data:
6 months 6 months Year to
to to December
30 June 30 June 2018
2019 2018
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
Earnings
Earnings for the purposes of
basic and diluted earnings per
share being net profit attributable
to equity holders of the parent (258) 1,061 2,179
Number of shares
Weighted average number of ordinary
shares for the purposes of basic
and diluted earnings per share 32,532,431 24,313,252 27,375,741
The weighted average number of shares and the loss for the year
for the purposes of calculating the fully diluted earnings per
share are the same as for the basic loss per share calculation.
This is because the outstanding share options would have the effect
of reducing the loss per ordinary share and would therefore not be
dilutive under IAS33.
Adjusted earnings per share
Adjusted EPS is calculated as follows:
6 months 6 months Year to
to to December
30 June 30 June 2018
2019 2018
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
Earnings attributable to owners
of the Parent (258) 1,061 2,179
Adjusting items:
- exceptional items (note 3) - - 310
- amortisation of acquisition-related
intangibles 349 - 286
- share-based payments 49 - -
Finance charge on liabilities
relating to contingent consideration 23 9
_______ _______ _______
Adjusted earnings attributable
to owners of the Parent 163 1,061 2,784
Adjusted earnings per share attributable
to shareholders (basic) 0.5c 4.4c 10.1c
Weighted number of ordinary shares
in issue 32,532,431 24,313,252 27,375,741
Effect of dilutive potential
ordinary shares:
- in-the-money share options 6,702 n/a n/a
________
Weighted average number of ordinary 32,539,133 n/a n/a
shares for the purposes of diluted
earnings per share
Adjusted earnings per share attributable
to shareholders (diluted) 0.5c 4.4c 10.1c
The Group has one category of potentially dilutive ordinary
share, being those share options granted to employees where the
exercise price (plus the remaining expected charge to profit under
IFRS 2) is less than the average price of the Company's ordinary
shares during the period. The weighted average number of shares for
the calculation of diluted earnings per share is computed using the
treasury share method.
7 Intangible assets
Intangible assets comprise capitalised development costs,
acquired software, customer relationships and goodwill.
Development Third party Customer Goodwill Total
costs software relationships
$'000 $'000 $'000 $'000 $'000
Cost
At 1 January
2019 4,144 98 6,862 745 11,849
Additions 1,111 12 - - 1,123
Fair value adjustment - - - (275) (275)
_______ _______ _______ _______ _______
At 30 June 2019 5,255 110 6,862 470 12,697
Amortisation
or impairment
At 1 January
2019 (935) (19) (286) - (1,240)
Charge for the
period (450) (10) (349) - (809)
_______ _______ _______ _______ _______
At 30 June 2019 (1,385) (29) (635) - (2,049)
Net carrying
amount
At 30 June 2019 3,870 81 6,227 470 10,648
At 1 January
2019 3,209 79 6,576 745 10,609
Comparative figures for the prior period are as follows:
Development Third party Customer Goodwill Total
costs software relationships
$'000 $'000 $'000 $'000 $'000
Cost
At 1 January
2018 1,290 32 - 287 1,609
Additions 763 - - - 763
Fair value adjustment - - 113 113
Effect of foreign
exchange movements - (2) - - (2)
_______ _______ _______ _______ _______
At 30 June 2018 2,053 30 - 400 2,483
Amortisation
or impairment
At 1 January
2018 (382) (16) - - (398)
Charge for the
period (219) (1) - - (220)
Effect of foreign - - - - -
exchange movements
_______ _______ _______ _______ _______
At 30 June 2018 (601) (17) - - (618)
Net carrying
amount
At 30 June 2018 1,452 13 - 400 1,865
The Company and the Danateq Group entered into a sale and
purchase agreement ("SPA") on 30 July 2018 to acquire certain
assets of Danateq Pte and Danateq Limited. Further consideration
for the Danateq Acquisition of up to $5,000,000 was contingent on
the achievement of certain revenue targets in the two years
following the acquisition. Following the completion of the
measurement period at 31 December 2018 the contingent consideration
liability for payments potentially due in the period 2019 to 2020
was valued at $1.44m (as discounted to the then present value at an
imputed cost of funds). At 30 June 2019 the value of this liability
was revised downwards to $1.19m million, a $0.25m decrease (net of
the unwinding of the present value discount). This reduction
reflected revised expectations of sales from the acquired pipeline
(particularly those for the first earn out period to 31 July 2019)
based on the performance in the 6 month period and updated business
projections. Accordingly a contingent liability of $275,000 has
been adjusted (to nil) and a corresponding decrease has been made
to goodwill. The carrying value of this liability will continue to
be reassessed at future reporting dates.
8 Right-of-use assets
Right-of-use assets comprise leases over office buildings and
vehicles
Office Vehicles Total
buildings
$'000 $'000 $'000
Cost
At 1 January 2019 - - -
Effect of change of accounting policy
(IFRS 16) 603 - 603
Additions in the period 94 25 119
Effects of foreign exchange movements 17 (1) 16
_______ _______ _______
At 30 June 2019 714 24 738
Depreciation
At 1 January 2019 - - -
Effect of change of accounting policy (219) - (219)
Charge for the period (89) (5) (94)
Effects of foreign exchange movements 5 - 5
_______ _______ _______
At 30 June 2019 (313) (5) (318)
Net carrying amount
At 30 June 2019 401 19 420
At 1 January 2019 - - -
9 Trade and other receivables
Trade receivables
Trade receivables (due in less than one year) amounted to $4.27
million (at 31 December 2018: $3.78m), net of a provision of GBPnil
(as at 31 December 2018: GBPnil) for impairment. Trade receivables
analysed by age were as follows:
Carrying Neither Past due but not impaired
amount impaired
or past
due
61-90 days 91-120 More than
days 121 days
$'000 $'000 $'000 $'000 $'000
As at 30 June 2019
Trade receivables 4,272 2,820 145 84 1,223
As at 30 June 2018
Trade receivables 2,263 1,838 - - 425
As at 31 December
2018
Trade receivables 3,778 3,636 - - 142
In addition to the above, $306,000 (FY 2018: $360,000) is
included in trade receivables payable in more than one year.
10 Loans and borrowings
As at As at As at 31
30 June 30 June December
2019 2018 2018
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
Non-current liabilities
Secured term loans 359 420 382
_______ _______ _______
359 420 382
Current liabilities
Current portion of term loans 73 69 69
_______ _______ _______
73 69 69
Total loans and borrowings 432 489 451
11 Lease liabilities
Lease liabilities comprise liabilities arising from the
committed and expected payments on leases over office buildings and
vehicles .
Office Vehicles Total
equipment
$'000 $'000 $'000
At 1 January 2019 - - -
Effect of change of accounting policy 440 - 440
Leases taken on in the period 94 25 119
Repayments of principal (83) (5) (88)
Effects of foreign exchange movements 14 (1) 13
_______ _______ _______
At 30 June 2019 465 19 484
12 Trade and other payables
As at As at As at 31
30 June 30 June December
2019 2018 2018
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
Due within a year
Trade payables 12 63 118
Other payables 344 256 463
Amounts due to related parties - 43 28
_______ _______ _______
Total trade and other payables 356 362 609
Other payables principally comprise provisions for taxation
liabilities and other costs.
Contract liabilities represent liabilities resulting from
balance sheet reclassifications arising from the application of
IFRS 15.
13 Other financial liabilities
Other financial liabilities comprise the fair value of potential
liabilities for the contingent payments due in respect of the
Danateq acquisition.
As at As at As at 31
30 June 30 June December
2019 2018 2018
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
Contingent consideration on the
acquisition of Danateq assets
- potentially due within one
year - - 298
- potentially due after one year 1,187 - 1,141
_______ _______ _______
Total other financial liabilities 1,187 - 1,439
14 Post balance sheet events
There have been no events subsequent to the reporting date which
would have a material impact on these interim financial results
[END]
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END
IR KMGZLRKMGLZM
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