TIDMWAND
RNS Number : 7234P
WANdisco Plc
11 June 2020
11 June 2020
WANdisco plc
("WANdisco", the "Company" or the "Group")
Preliminary unaudited results for the year ended 31 December
2019
- WANdisco products deeply embedded in Microsoft Azure
- Microsoft relationship to drive significant expansion
WANdisco (LSE: WAND), the LiveData company announces preliminary
unaudited results for the year ended 31 December 2019.
Financial highlights
-- Revenue for the year $16.2 million (2018: $17.0 million)
-- Cash overheads(1) of $31.7 million (2018: $29.8 million)
-- Adjusted EBITDA(2) loss of $11.7 million (2018: $9.4 million)
-- Statutory loss from operations $28.3 million (2018: $19.7 million)
-- Cash at 31 December 2019 of $23.4 million (2018: $10.8 million)
-- Debt of $2.2 million (2018: $3.9 million)
-- Significant progress with Microsoft and other Tier 1
partnerships underpin the Board's confidence in
our strategy and product focus
-- Proposed placing to raise at least $25 million, see separate announcement
Operational and strategic highlights
-- WANdisco Fusion deeply embedded in Microsoft's Azure cloud:
o A native Azure offering, providing a fast and easy way to
establish data connectivity from on-premises to cloud storage.
o Providing seamless customer experience and appearing as a
native first party Azure service.
o Delivering tight integration, reducing deployment complexities
through eliminating the customer need to plan data deployment or
accommodate networking and storage options.
o Billing delivered through existing Azure billing service
ensures customers do not require additionalvendor approval.
-- LiveMigrator launched enabling uninterrupted petabyte scale data migration to the cloud
-- LiveAnalytics launched providing access to Spark-based analytics in the cloud
-- Partnered with Databricks to provide rapid data migration to Azure Databricks
-- Achieved Advanced Technology Partner status with Amazon Web Services
-- Secured c.$5 million in contract renewals and expansions in China
-- Raised $34 million in two share placings completed at a premium to market at the time
-- Appointed Micro-D Master Distributor for Africa
Post period end
-- Microsoft Azure LiveData Platform public preview with
expectation to sign over 50 new customers on the
Azure platform over the next 12 months
-- Secured first global reseller agreement with a large global systems integrator
-- Implemented business continuity measures in response to COVID-19
David Richards, Chief Executive Officer and Chairman of
WANdisco, commented:
"In 2019 we delivered on our primary strategic goal of cementing
our partnership with Microsoft to embed Fusion into Azure which
positions the Group for significant scalable growth. With the
Microsoft Azure LiveData Platform becoming publicly available post
period end as a paid service within Azure, we expect to facilitate
a greater volume and velocity of deals.
"The future of analytics and in particular machine learning and
Artificial Intelligence ("AI") is in the cloud. Our partnership
with Databricks highlights the growing demand for non-disruptive
solutions for bringing data to the cloud. In this regard we are
uniquely positioned.
"In 2020, the business is focused upon capitalising on growing
opportunities as our relationship with Microsoft and other Tier 1
partners continue to expand. With the backdrop of the COVID-19
pandemic, business is increasingly based in the cloud and the Board
remains confident that our product direction and strategic progress
provides a strong platform to deliver growth in 2020."
1 Operating expenses adjusted for: depreciation, amortisation, capitalisation
of development expenditure and equity-settled share-based payment. See
Note 6 to the condensed consolidated financial statements for a reconciliation.
2 Operating loss adjusted for: depreciation, amortisation and equity-settled
share-based payment. See Note 6 to the condensed consolidated financial
statements for a reconciliation.
3 Effective 1 January 2019, the company adopted a new accounting standard
("IFRS 16 - Leases"), which impacted the company's treatment of operating
leases. The company adopted IFRS 16 using the cumulative effect method
with the effect of initially applying this standard recognised at the
date of initial application (i.e. 1 January 2019). Accordingly, the
information presented for 2018 has not been restated - i.e. it is presented,
as previously reported, under IAS 17 and IFRIC 4. In the interest of
comparability during the transition year to IFRS 16, the company has
provided adjusted EBITDA and operating loss information in accordance
with both IFRS 16 and under the previous lease accounting standard in
effect prior to the adoption of IFRS 16 ("IAS 17 - Leases"). See Note
3 to the condensed consolidated financial statements for a reconciliation.
For further information, please contact:
WANdisco plc via FTI Consulting
David Richards, Chief Executive Officer and Chairman
Erik Miller, Chief Financial Officer
FTI Consulting +44 (0)20 3727 1137
Matt Dixon / Chris Birt / Kwaku Aning
Stifel (Sole Broker and Nomad) +44 (0)20 7710 7600
Fred Walsh / Rajpal Padam
About WANdisco
WANdisco is the LiveData company for machine learning and AI.
WANdisco solutions enable enterprises to create an environment
where data is always available, accurate and protected, creating a
strong backbone for their IT infrastructure and a bedrock for
running consistent, accurate machine learning applications. With
zero downtime and zero data loss, WANdisco Fusion keeps
geographically dispersed data at any scale consistent between
on-premises and cloud environments allowing businesses to operate
seamlessly in a hybrid or multi-cloud environment. WANdisco has
over a hundred customers and significant go-to-market partnerships
with Microsoft Azure, Amazon Web Services, Google Cloud, Oracle,
and others as well as OEM relationships with IBM and Alibaba.
For more information on WANdisco, visit
http://www.wandisco.com.
BUSINESS REVIEW
2019 was a significant year for WANdisco. We delivered on our
primary strategic goal, cementing our partnership with Microsoft to
embed Fusion into Azure, allowing customers to use Fusion as if it
was a native Azure offering. As an Azure embedded product,
customers can deploy WANdisco Fusion just by selecting it from the
same Azure menu they use for native Microsoft products, and the
charges added on their monthly Azure bill. No software to install,
no new contracts to sign. Post period end, the product became
publicly available as a paid service which we expect to facilitate
a greater volume and velocity of deals than we have experienced in
prior years.
We have focused our development efforts on products that provide
customers with simple, robust transition paths as more and more
companies are looking for solutions to move their on-premises
Hadoop data to the cloud. Our LiveMigrator product, coupled with
our Fusion product, will allow customers to make the transition
from on-premises to cloud computing as easy and as seamless as
possible.
In June 2019, we introduced LiveMigrator , a solution enabling
the migration of petabyte scale live data to the cloud.
LiveMigrator's automated process enables enterprises' on-premises
data to be seamlessly migrated to the cloud and WANdisco's core
Fusion technology keeps the migrated data consistent with
on-premises data. WANdisco LiveMigrator enables for the first time
the migration of petabyte scale data to the cloud without
interruption to service. Working in harmony with WANdisco Fusion,
the Company can now support businesses through their entire live
data journey from on-premises to multi-cloud.
In September 2019, we introduced LiveAnalytics to provide live
business insights when migrating Hadoop analytic workloads from
on-premises to Spark-based analytics in the cloud. This solution
allows both migrated and migrating data to be immediately available
for analysis. LiveAnalytics works in tandem with WANdisco's
LiveMigrator, its petabyte scale, non-blocking, single scan data
migration technology.
The launch of these solutions further advances WANdisco's
complementary suite of scalable LiveData solutions for cloud.
WANdisco's technology covers the entire data journey from
on-premises to cloud through LiveMigrator (enabling single scan,
non-blocking movement to the cloud), LiveAnalytics (continuous data
analytics during cloud migration) and WANdisco's LiveData for
Hybrid and Multi-cloud solution.
With WANdisco's suite of complementary technologies, enterprises
are now truly free to choose the analytics platform they want in
the cloud and make the best decision for the business as a
whole.
We have also partnered with Databricks, the leader in unified
analytics and founded by the original creators of Apache Spark(TM)
, to accelerate and dramatically simplify the migration of
on-premises Hadoop analytics workloads to Azure Databricks. In
combination with our LiveAnalytics solution, enterprises get the
best of both worlds - seamless and secure migration of
petabyte-sized data to the cloud and the power of strong,
cloud-based analytics. With this partnership, enterprises have a
powerful option to quickly and painlessly move their organisation
to the cloud and take advantage of increased productivity, security
and insightful data analytics available to employees anywhere at
any time.
We had significant success with new and expansion orders from
our customers in China, and have also secured a contract with
Micro-D, one of Africa's most established IT companies. Through its
network of resellers and partners, Micro-D will deploy WANdisco's
suite of products to enable cloud migration alongside continuous
data availability and consistency for customers. This contract
marks a significant entry for WANdisco into the high growth African
market, with Fusion to be implemented across major enterprises in
Africa.
COVID-19 update
The COVID-19 pandemic has led to the implementation of
long-standing business continuity measures, with staff working from
home across the globe. As a predominantly distributed organization
working remotely for most employees is normal, and to date, we have
not seen any negative impact on our productivity. The business
remains well placed to weather a prolonged period of self-isolation
with good teamwork and employee morale. We also believe that the
improvements made to how we operate will continue and evolve
further when the COVID-19 crisis ends. To date, we have experienced
minimal effects to our customer base and order flow, and have not
reduced employee based costs.
Whilst the impact of COVID-19 is still uncertain, we are moving
forward this year with continued business momentum as evidenced by
our landmark agreement with Microsoft announced in June 2020.
Outlook
Our cloud platform partners, and our ISV partner Databricks have
recognised the huge opportunity of moving Hadoop data into the
cloud. With the changing dynamics in the Hadoop on-premises market,
and companies seeking to leverage cloud economics and scalability,
the time to capitalise on this opportunity is now. The embedding of
our technology into Azure provides a platform to capitalise on that
opportunity with an Azure native service taking advantage of
billing and technical integrations. With LiveData Platform for
Azure now publicly available we can execute against the growing
pipeline of opportunities to move data at scale into the cloud
without an interruption to service. Outside of Azure, we are also
seeing growing demand from our other cloud partners as the need to
capitalise on the cloud and move on-premises workloads becomes a
business imperative. The Board's confidence in our outlook is built
upon the convergence of the market opportunity, product readiness,
and the commitments from our partners.
FINANCIAL REVIEW
Revenue for the year ended 31 December 2019 was $16.2 million
(2018: $17.0 million).
Deferred revenue from sales booked during 2019 and in previous
years, and not yet recognised as revenue, is $3.8 million at 31
December 2019, at 31 December 2018 this stood at $4.3 million. Our
deferred revenue represents future revenue from new and renewed
contracts, many of them spanning multiple years.
Adjusted EBITDA loss(2) was $11.7 million (2018: $9.4 million),
due primarily to the slight reduction in revenue and continued
investments in the business.
Revenue
Revenue was $16.2 million (2018: $17.0 million), reflecting an
increasing shift to cloud-based revenues with recurring annual
revenues and some deals that were delayed to future years. The
small decrease in revenue included strong renewals and new contract
growth offset by some deals that were delayed into a future
period.
Contract wins continue to exhibit variability in the timing of
their completion.
Operating costs
Cash overheads (1) increased in the year as we made investments
in go-to-market resources and engineering, rising to $31.7 million
from $29.8 million in 2018. As we implemented IFRS 16(3) there was
a small reduction in operating costs from the removal of $632,000
property rent and lease costs, which was offset by $573,000
depreciation expense on the right of use assets.
Product development expenditure capitalised was $5.1 million in
the year (2018: $4.9 million). All of this expenditure was
associated with new product features.
Our headcount was 162 as at 31 December 2019 (31 December 2018:
148). Headcount increases in the year were principally in sales and
marketing and engineering as we added capacity to service our new
and expanded channel partner relationships and develop new
cloud-focused products.
Profit and loss
Adjusted EBITDA(2) loss for the year was $11.7 million (2018:
$9.4 million).
The loss after tax for the year increased to $28.3 million
(2018: $19.7 million), as a result of the lower revenue and
increased overheads and share-based payment charge. The exceptional
finance loss of $2.0 million (2018: $2.8 million gain) arose from
the retranslation of intercompany balances at 31 December 2019,
reflecting the increase in Sterling against the US dollar. The
impact of FX rates changes on the financial statements should be
restricted to the retranslation of US dollar denominated
intercompany loans, as opposed to the operating activities of the
business. A translation gain arising on the net assets of overseas
subsidiaries reported in reserves results in a minimal impact on
the group net assets.
Balance sheet and cash flow
Trade and other receivables at 31 December 2019 were $8.5
million (31 December 2018: $7.4 million). This includes $2.8
million of trade receivables (31 December 2018: $1.8 million) and
$5.7 million related to non-trade receivables (31 December 2018:
$5.6 million).
Net consumption of cash was $19.4 million before financing
(2018: $16.7 million), resulting in a closing cash balance of $23.4
million at 31 December 2019. The consumption of cash was due
primarily to lower revenues and a modest increase in cash
overheads. At 31 December 2019, we had drawings under our revolving
credit facility with Silicon Valley Bank of $2.2 million.
Subsequent events
The global expansion of the COVID-19 virus since the fiscal year
end has resulted in macroeconomic uncertainty. Whilst there has
been no material impact on the Group as at the date of this report,
it is difficult to assess the short to longer-term impact of that
uncertainty on the Group's operations.
As at 31 May 2020 the Group had cash reserves of $11.6
million.
Whilst the impact of COVID-19 is still uncertain, we are moving
forward this year with continued business momentum as evidenced by
our landmark agreement with Microsoft announced in June 2020 .
Management expects that the potential of the agreement with
Microsoft will overcome any short-term headwinds from the economic
uncertainty surrounding the impact of COVID-19.
IFRS 16 "Leases"
Like all companies, as required by the International Accounting
Standards Board "IASB" the Group has initially adopted IFRS 16,
"Leases" effective 1 January 2019. The effect of initially applying
IFRS 16 is mainly attributed to the following:
- Recognition of a right of use asset on the balance sheet;
- Removal of the related rent expense and an increase in depreciation and interest expense;
- Recognition of a liability for the present value of lease payments; and
- Change to operating ratios in comparison to prior periods.
IFRS 16 establishes a comprehensive framework for accounting for
leases. It replaced IAS 17, "Leases", the previous reporting
standard. The Group has adopted IFRS 16 using the cumulative effect
method, with the effect of initially applying this standard
recognised at the date of initial application (i.e. 1 January
2019). Accordingly, the information presented for 2018 has not been
restated - i.e. it is presented, as previously reported, under IAS
17, and related interpretations.
Consolidated statement of profit or loss and other comprehensive
income
For the year ended 31 December 2019
As restated
Year ended Year ended
31 December 2019 31 December 2018
(Unaudited) (Audited)
Exceptional Exceptional
items items
Pre- (Note Pre- (Note
exceptional 5) Total exceptional 5) Total
Continuing
operations Note $'000 $'000 $'000 $'000 $'000 $'000
------------- ---- ---- ------------ ----------- -------- ------------- ----------- --------
Revenue 4 16,155 - 16,155 17,019 - 17,019
Cost of sales (1,186) - (1,186) (1,544) - (1,544)
--------------------- ---- ------------ ----------- -------- ------------- ----------- --------
Gross profit 14,969 - 14,969 15,475 - 15,475
Operating expenses 6 (42,148) - (42,148) (38,712) - (38,712)
--------------------- ---- ------------ ----------- -------- ------------- ----------- --------
Operating loss 6 (27,179) - (27,179) (23,237) - (23,237)
-------------------- ---- ------------ ----------- -------- ------------- ----------- --------
Finance income 604 - 604 443 2,793 3,236
Finance costs (527) (2,047) (2,574) (514) - (514)
--------------------- ---- ------------ ----------- -------- ------------- ----------- --------
Net finance
income/(costs) 77 (2,047) (1,970) (71) 2,793 2,722
-------------------- ---- ------------ ----------- -------- ------------- ----------- --------
(Loss)/profit before
tax (27,102) (2,047) (29,149) (23,308) 2,793 (20,515)
Income tax 885 - 885 802 - 802
--------------------- ---- ------------ ----------- -------- ------------- ----------- --------
(Loss)/profit for
the
year (26,217) (2,047) (28,264) (22,506) 2,793 (19,713)
-------------------- ---- ============ =========== ======== ============= =========== ========
Other comprehensive income
Items that are or may be reclassified to profit or loss:
Foreign operations - foreign
currency
translation differences (282) 2,047 1,765 (81) (2,793) (2,874)
---------------------------- ------------ ----------- -------- ------------- ----------- --------
Other comprehensive income
for
the year, net of tax (282) 2,047 1,765 (81) (2,793) (2,874)
---------------------------- ------------ ----------- -------- ------------- ----------- --------
Total comprehensive income
for
the year (26,499) - (26,499) (22,587) - (22,587)
============================ ============ =========== ======== ============= =========== ========
Loss per
share
Basic and diluted
loss per
share 7 ($0.63) ($0.47)
===================== ===== ============ =========== ======== ============= =========== ========
The notes form an integral part of these condensed consolidated
financial statements.
Consolidated statement of financial position
At 31 December 2019
31 December
31 December
2019 2018
(Unaudited) (Audited)
Note $'000 $'000
------------------------------ --- ---- ------------ -----------
Assets
Property, plant and equipment 3,735 828
Intangible assets 4,877 5,516
Other non-current assets 8 3,016 2,580
----------------------------------- ---- ------------ -----------
Non-current assets 11,628 8,924
----------------------------------- ---- ------------ -----------
Trade and other receivables 9 8,545 7,399
Cash and cash equivalents 23,354 10,757
----------------------------------- ---- ------------ -----------
Current assets 31,899 18,156
----------------------------------- ---- ------------ -----------
Total assets 43,527 27,080
=================================== ==== ============ ===========
Equity
Share capital 7,097 6,361
Share premium 149,336 115,909
Translation reserve (5,583) (7,348)
Merger reserve 1,247 1,247
Retained earnings (121,922) (102,365)
----------------------------------- ---- ------------ -----------
Total equity 30,175 13,804
----------------------------------- ---- ------------ -----------
Liabilities
Loans and borrowings 10 2,889 98
Deferred income 11 1,188 1,277
Deferred tax liabilities 4 3
----------------------------------- ---- ------------ -----------
Non-current liabilities 4,081 1,378
----------------------------------- ---- ------------ -----------
Current tax liabilities 66 7
Loans and borrowings 10 2,212 3,990
Trade and other payables 4,371 4,860
Deferred income 11 2,622 3,041
Current liabilities 9,271 11,898
----------------------------------- ---- ------------ -----------
Total liabilities 13,352 13,276
----------------------------------- ---- ------------ -----------
Total equity and liabilities 43,527 27,080
=================================== ==== ============ ===========
The notes form an integral part of these condensed consolidated
financial statements.
Consolidated statement of changes in equity
For the year ended 31 December 2019
Attributable to owners of the Company
--------------------------------------------------------------
Share Share Translation Merger Retained Total
capital premium reserve reserve earnings equity
Audited $'000 $'000 $'000 $'000 $'000 $'000
----------------------------------- -------- -------- ----------- -------- --------- --------
Balance at 31 December 2017 6,156 115,196 (4,474) 1,247 (100,658) 17,467
Adjustment on application of
IFRS 15 - - - - 11,029 11,029
----------------------------------- -------- -------- ----------- -------- --------- --------
Adjusted balance at 1 January
2018 6,156 115,196 (4,474) 1,247 (89,629) 28,496
Total comprehensive income for
the year
Loss for the year - - - - (19,713) (19,713)
Other comprehensive income for
the year - - (2,874) - - (2,874)
----------------------------------- -------- -------- ----------- -------- --------- --------
Total comprehensive income for
the year - - (2,874) - (19,713) (22,587)
----------------------------------- -------- -------- ----------- -------- --------- --------
Transactions with owners of
the Company
Contributions and distributions
Equity-settled share-based payment - - - - 6,977 6,977
Share options exercised 205 713 - - - 918
Total transactions with owners
of the Company 205 713 - - 6,977 7,895
----------------------------------- -------- -------- ----------- -------- --------- --------
Balance at 31 December 2018
- As restated 6,361 115,909 (7,348) 1,247 (102,365) 13,804
=================================== ======== ======== =========== ======== ========= ========
Unaudited
Total comprehensive income for
the year
Loss for the year - - - - (28,264) (28,264)
Other comprehensive income for
the year - - 1,765 - - 1,765
----------------------------------- -------- -------- ----------- -------- --------- --------
Total comprehensive income for
the year - - 1,765 - (28,264) (26,499)
----------------------------------- -------- -------- ----------- -------- --------- --------
Transactions with owners of
the Company
Contributions and distributions
Equity-settled share-based payment - - - - 8,707 8,707
Proceeds from share placing 706 33,085 - - - 33,791
Share options exercised 30 342 - - - 372
Total transactions with owners
of the Company 736 33,427 - - 8,707 42,870
----------------------------------- -------- -------- ----------- -------- --------- --------
Balance at 31 December 2019 7,097 149,336 (5,583) 1,247 (121,922) 30,175
=================================== ======== ======== =========== ======== ========= ========
The notes form an integral part of these condensed consolidated
financial statements.
Consolidated statement of cash flows
For the year ended 31 December 2019
Year ended As restated
31 December Year ended
31 December
2019 2018
(Unaudited) (Audited)
Note $'000 $'000
--------------------------------------------------------- --- ---- ------------ ------------
Cash flows from operating activities
Loss for the year (28,264) (19,713)
Adjustments for:
* Depreciation of property, plant and equipment 1,101 388
* Amortisation of intangible assets 5,701 6,475
* Loss on disposal of property, plant and equipment - 3
* Net finance costs (77) 71
* Income tax (885) (802)
* Foreign exchange 1,869 (2,517)
* Equity-settled share-based payment 12 8,707 6,977
-------------------------------------------------------------- ---- ------------ ------------
(11,848) (9,118)
------------------------------------------------------------- ---- ------------ ------------
Changes in:
* Trade and other receivables (1,203) 281
* Trade and other payables (562) (925)
* Deferred income (508) (1,230)
* Deferred government grant - (2)
Net working capital change (2,273) (1,876)
-------------------------------------------------------------- ---- ------------ ------------
Cash used in operating activities (14,121) (10,994)
Interest paid (446) (399)
Income tax received 807 51
-------------------------------------------------------------- ---- ------------ ------------
Net cash used in operating activities (13,760) (11,342)
-------------------------------------------------------------- ---- ------------ ------------
Cash flows from investing activities
Interest received 258 213
Proceeds from sale of property, plant and
equipment - 5
Acquisition of property, plant and equipment (841) (677)
Development expenditure (5,062) (4,910)
Net cash used in investing activities (5,645) (5,369)
-------------------------------------------------------------- ---- ------------ ------------
Cash flows from financing activities
Proceeds from issue of share capital 34,163 918
Net repayment of bank loan (1,667) (111)
Payment of lease liabilities (2018: Payment
of finance lease liabilities) (502) (95)
-------------------------------------------------------------- ---- ------------ ------------
Net cash from financing activities 31,994 712
-------------------------------------------------------------- ---- ------------ ------------
Net increase/(decrease) in cash and cash
equivalents 12,589 (15,999)
Cash and cash equivalents at 1 January 10,757 27,396
Effect of movements in exchange rates on
cash and cash equivalents 8 (640)
-------------------------------------------------------------- ---- ------------ ------------
Cash and cash equivalents at 31 December 23,354 10,757
============================================================== ==== ============ ============
The notes form an integral part of these condensed consolidated
financial statements.
Notes to the condensed consolidated financial statements
For the year ended 31 December 2019
1. Reporting entity
WANdisco plc (the "Company") is a public limited company
incorporated and domiciled in Jersey. The Company's ordinary shares
are traded on AIM. These condensed consolidated financial
statements ("Financial statements") as at and for the year ended 31
December 2019 comprise the Company and its subsidiaries (together
referred to as the "Group"). The Group is primarily involved in the
development and provision of global collaboration software.
2. Basis of preparation
a Basis of accounting
Whilst the financial information included in this preliminary
announcement has been prepared on the basis of the requirements of
International Financial Reporting Standards ("IFRSs") in issue, as
adopted by the European Union ("EU") and effective at 31 December
2019, this announcement does not itself contain sufficient
information to comply with IFRS.
The Group expects to publish full Consolidated financial
statements in June 2020. The financial information set out in this
preliminary announcement does not constitute the Group's
Consolidated financial statements for the years ended 31 December
2019 or 31 December 2018.
The financial information for 2018 is derived from the
consolidated accounts for the year ended 31 December 2018 which
have been audited and delivered to the registrar of companies with
the Jersey Financial Services Commission ("JFSC"). The auditor has
reported on those accounts; the audit reports were (i) unqualified,
(ii) did not include a reference to any matters to which the
auditor drew attention by way of emphasis without qualifying their
report and (iii) did not contain a statement under section 113B (3)
or (6) of the Companies (Jersey) Law 1991. The financial
information for 2019 is derived from the consolidated accounts for
the year ended 31 December 2019, which have not yet been reported
on by the Independent Auditors. Given the facts set out in Note
2(b), it is possible that the audit report for the year ended 31
December 2019 will contain a material uncertainty over the ability
of the Group to continue as a going concern.
The Consolidated financial statements have been prepared in
accordance with IFRSs as adopted for use in the EU. The Group has
applied all accounting standards and interpretations issued by the
IASB and International Financial Reporting Committee relevant to
its operations and which are effective in respect of these
Financial statements.
The preliminary announcement has been prepared using the
accounting policies published in the Group's accounts for the year
ended 31 December 2018, which are available on the Company's
website. From 1 January 2019 the new standards set out below were
adopted by the Group.
(i) New and amended standards adopted by the Group
The following new standards and amendments to standards that are
effective for the first time for the financial year beginning 1
January 2019 have been adopted:
- IFRS 16 "Leases"
- IFRIC 23 "Uncertainty over Income Tax Treatments"
- Annual Improvements to IFRS Standards 2015-2017 Cycle
- Long-term Interests in Associates and Joint Ventures (Amendment to IAS 28)
- Prepayment Features with Negative Compensation (Amendments to IFRS 9)
- Plan Amendment, Curtailment or Settlement (Amendments to IAS 19)
Apart from IFRS 16 "Leases" where the impact is detailed in Note
3 below, these standards and amendments to standards have not had a
material impact on these Financial statements.
This is the first set of the Group's financial statements where
IFRS 16 "Leases" has been applied. Changes to significant
accounting policies are described in Note 3.
(ii) New and amended standards and interpretations issued but
not effective for the financial year beginning 1 January 2019 and
not early adopted
A number of new standards are effective for annual periods
beginning after 1 January 2019 and earlier application is
permitted; however, the Group has not early adopted the new or
amended standards in preparing these Financial statements.
The amended standards and interpretations are not expected to
have a significant impact on the Group's consolidated financial
statements.
b Going concern
These Financial statements have been prepared on a going concern
basis, which assumes that the Group will be able to meet the
mandatory repayment terms of the banking facilities as disclosed in
Note 10.
As at 31 December 2019 the Group had net assets of $30.2m (31
December 2018: $13.8m), including cash of $23.4m (2018: $10.8m) as
set out in the consolidated statement of financial position, with a
debt facility drawn of $2.2m (2018: debt facility drawn of $3.9m).
In the year ended 31 December 2019, the Group incurred a loss
before tax of $29.1m (2018: $20.5m) and net cash outflows before
financing of $19.4m (2018: $16.7m).
During 2019, the performance of the Group declined, with
revenues reducing by 5% to $16.2m (2018: $17.0m) and operating loss
increasing to $27.2m (2018: $23.2m).
The Directors have prepared a detailed budget and forecast of
the Group's expected performance over a period covering at least
the next twelve months from the expected date of the approval of
the 2019 financial statements. As well as modelling the realisation
of the sales pipeline, these forecasts also cover a number of
scenarios and sensitivities in order for the Board to satisfy
itself that the Group remains within its current cash facilities,
details of which are included in Note 10. The cash flow model
includes the injection of at least $20m from the proposed share
placing expected following the year end. This funding is subject to
the successful completion of the share placing, including
shareholder approval. Neither of which are confirmed at the date of
this announcement.
Whilst the Directors are confident in the Group's ability to
grow revenue, the Board's sensitivity modelling (which considered
the impact of Brexit and COVID-19) shows that following the
proceeds from the proposed share placing, the Group will have
sufficient cash to remain within its facilities , in the event that
revenue growth is delayed (i.e. revenue does not increase from the
level reported in 2019) for a period in excess of twelve months.
The Directors' financial forecasts and operational planning and
modelling also include the actions, under the control of the Group,
that they could take to further significantly reduce the cost base
during the coming year in the event that longer-term revenue were
set to remain consistent with the level reported in 2019. On the
basis of this financial and operational modelling, the Directors
believe that the Group has the capability and the operational
agility to react quickly, cut further costs from the business and
ensure that the cost base of the business is aligned with its
revenue and funding scale.
As a consequence, the Directors have a reasonable expectation
that the Group can continue to operate and to operate within its
existing facilities and be able to meet its commitments and
discharge its liabilities in the normal course of business for a
period not less than twelve months from the expected date of
approval of these financial statements. Accordingly, they continue
to adopt the going concern basis in preparing the Group financial
statements. However, the events noted above indicate that a
material uncertainty exists that may cast significant doubt over
the Company's ability to continue as a going concern.
These results do not include any adjustments should the going
concern basis of preparation be inappropriate.
c Functional and presentational currency
The consolidated financial statements are presented in US
dollars, as the revenue for the Group is predominately derived in
this currency. Billings to the Group's customers during the year by
WANdisco, Inc. were all in US dollars with certain costs being
incurred by WANdisco International Limited in sterling and
WANdisco, Pty Ltd in Australian dollars. All financial information
has been rounded to the nearest thousand US dollars unless
otherwise stated.
d Alternative performance measures
The Group uses a number of alternative performance measures
("APMs") which are non-IFRS measures to monitor the performance of
its operations. The Group believes these APMs provide useful
historical financial information to help investors and other
stakeholders evaluate the performance of the business and are
measures commonly used by certain investors for evaluating the
performance of the Group. In particular, the Group uses APMs which
reflect the underlying performance on the basis that this provides
a more relevant focus on the core business performance of the Group
and aligns with our KPIs. Adjusted results exclude certain items
because if included, these items could distort the understanding of
our performance for the year and the comparability between periods.
The Group has been using the following APMs on a consistent basis
and they are defined and reconciled as follows:
- Cash overheads: Operating expenses adjusted for: depreciation,
amortisation, capitalisation of development expenditure and
equity-settled share-based payment.
- Adjusted EBITDA: Operating loss adjusted for: depreciation,
amortisation and equity-settled share-based payment.
e Use of judgements and estimates
In preparing these Financial statements, management has made
judgements and estimates that affect the application of the Group's
accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from
these estimates.
The significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation
uncertainty were the same as those described in the last annual
financial statements, except for new significant judgements and key
sources of estimation uncertainty related to the application of
IFRS 16, which are described in Note 3.
3. Changes in significant accounting policies - IFRS 16 "Leases"
Except for the changes below, the Group has consistently applied
the accounting policies to all periods presented in these
consolidated financial statements.
The Group applied IFRS 16 with a date of initial application of
1 January 2019. As a result, the Group has changed its accounting
policy for lease contracts as detailed below. The Group applied
IFRS 16 using the modified retrospective approach, under which the
cumulative effect of initial application is recognised in retained
earnings at 1 January 2019. As a result, the comparative
information has not been restated and continues to be reported
under IAS 17 and IFRIC 4.
a Impacts on financial statements
The effect of initially applying this standard is as
follows:
(i) recognition of a right of use asset and depreciation of this
asset;
(ii) removal of rent prepayment / accrual and charge to
Statement of profit or loss; and
(iii) recognition of lease liability non-current and current and
interest on this liability.
The following table summarises the impact of transition to IFRS
16 on retained earnings at 1 January 2019.
Impact
of adopting
IFRS 16
at
1 January
2019
(Unaudited)
Retained earnings Note $'000
---------------------------------------------------- --------- ------------
Property, plant and equipment: Recognition of right
of use asset 3(a)(i) 1,865
Trade and other receivables: Remove rent prepayment 3(a)(ii) (41)
Trade and other payables: Remove rent accrual 3(a)(ii) 57
Loans and borrowings - non-current: Lease liability
due in more than one year 3(a)(iii) (1,491)
Loans and borrowings - current: Lease liability due
in less than one year 3(a)(iii) (390)
----------------------------------------------------- --------- ------------
Impact at 1 January 2019 -
===================================================== ========= ============
The following tables summarise the impacts of adopting IFRS 16
on the Consolidated statement of profit or loss and other
comprehensive income for the year ended 31 December 2019 and the
Consolidated statement of financial position for each of the line
items affected. There was no material impact on the Consolidated
statement of cash flows for the year ended 31 December 2019.
As restated
Year ended
Year ended 31 December 31 December
2019 2018
b Impact on the consolidated statement
of profit or loss and other comprehensive
income (Unaudited) (Audited)
-----------------------------------
Amounts Amounts
without without
adoption adoption
As reported of IFRS of
(IFRS 16) Adjustments 16 IFRS 16
Continuing operations Note $'000 $'000 $'000 $'000
-------------------------------------- --------- ----------- ----------- --------- ------------
Revenue 16,155 - 16,155 17,019
Cost of sales (1,186) - (1,186) (1,544)
-------------------------------------- --------- ----------- ----------- --------- ------------
Gross profit 14,969 - 14,969 15,475
Cash overheads 3(a)(ii) (31,701) (632) (32,333) (29,782)
-------------------------------------- --------- ----------- ----------- --------- ------------
Adjusted EBITDA including development
expenditure (16,732) (632) (17,364) (14,307)
Development expenditure capitalised 5,062 - 5,062 4,910
-------------------------------------- --------- ----------- ----------- --------- ------------
Adjusted EBITDA (11,670) (632) (12,302) (9,397)
Amortisation and depreciation 3(a)(i) (6,802) 573 (6,229) (6,863)
Equity-settled share-based payment (8,707) - (8,707) (6,977)
Operating loss (27,179) (59) (27,238) (23,237)
Net finance (costs)/income 3(a)(iii) (1,970) 201 (1,769) 2,722
-------------------------------------- --------- ----------- ----------- --------- ------------
(Loss)/profit before tax (29,149) 142 (29,007) (20,515)
Income tax 885 - 885 802
-------------------------------------- --------- ----------- ----------- --------- ------------
(Loss)/profit for the year (28,264) 142 (28,122) (19,713)
Other comprehensive income for
the year, net of tax 1,765 - 1,765 (2,874)
-------------------------------------- --------- ----------- ----------- --------- ------------
Total comprehensive income for
the year (26,499) 142 (26,357) (22,587)
====================================== ========= =========== =========== ========= ============
31 December
31 December 2019 2018
c Impact on the consolidated statement (Audited)
of financial position (Unaudited)
-----------------------------------
Amounts Amounts
without without
adoption adoption
As reported of IFRS of IFRS
(IFRS 16) Adjustments 16 16
Note $'000 $'000 $'000 $'000
------------------------------ ---------- ----------- ----------- --------- -----------
Non-current assets 3(a)(i) 11,628 (2,591) 9,037 8,924
Current assets 3(a)(ii) 31,899 (48) 31,851 18,156
------------------------------ ---------- ----------- ----------- --------- -----------
Total assets 43,527 (2,639) 40,888 27,080
============================== ========== =========== =========== ========= ===========
Total equity 30,175 142 30,317 13,804
------------------------------ ---------- ----------- ----------- --------- -----------
Non-current liabilities 3(a)(iii) 4,081 (2,334) 1,747 1,378
3(a)(ii),
Current liabilities 3(a)(iii) 9,271 (447) 8,824 11,898
------------------------------ ---------- ----------- ----------- --------- -----------
Total liabilities 13,352 (2,781) 10,571 13,276
------------------------------ ---------- ----------- ----------- --------- -----------
Total equity and liabilities 43,527 (2,639) 40,888 27,080
============================== ========== =========== =========== ========= ===========
4. Revenue and segmental analysis
a Operating segments
The Directors consider there to be one operating segment, being
that of development and sale of licences for software and related
maintenance and support.
b Geographical segments
The Group recognises revenue in three geographical regions based
on the location of customers, as set out in the following
table:
Year ended Year ended
31 December 31 December
2019 2018
(Unaudited) (Audited)
Revenue $'000 $'000
--------------------------------- --- ------------ ------------
North America - USA 6,551 13,864
North America - other 44 236
Europe 2,152 1,785
Rest of the world - China 5,036 821
Rest of the world - South Africa 2,088 -
Rest of the world - other 284 313
-------------------------------------- ------------ ------------
16,155 17,019
===================================== ============ ============
Management makes no allocation of costs, assets or liabilities
between these segments since all trading activities are operated as
a single business unit.
c Major products
The Group's core patented technology, Distributed Coordinated
Engine "DConE", enables the replication of data. This core
technology is contained in all the Group's products.
d Major customers
Year ended Year ended Year ended Year ended
31 December 31 December
2019
2019 (Unaudited) 31 December 31 December
2018 2018
(Unaudited) (Audited) (Audited)
% of Revenue % of Revenue
revenue $'000 revenue $'000
----------- ------------ ------------ ------------ ------------
Customer 1 19% 3,117 - -
Customer 2 13% 2,088 - -
Customer 3 11% 1,857 - -
Customer 4 - - 32% 5,459
Customer 5 - - 15% 2,471
=========== ============ ============ ============ ============
No other single customers contributed 10% or more to the Group's
revenue (2018: $nil).
e Split of revenue by timing of revenue recognition
Year ended Year ended
31 December 31 December
2019 2018
(Unaudited) (Audited)
Revenue $'000 $'000
------------------------------------------------ --- ------------ ------------
Licences and services transferred at a point in
time 12,596 13,472
Services transferred over time 3,559 3,547
----------------------------------------------------- ------------ ------------
16,155 17,019
==================================================== ============ ============
f Contract balances
The following table provides information about receivables and
contract assets and liabilities from contracts with customers.
31 December
31 December
2019 2018
(Unaudited) (Audited)
$'000 $'000
------------------------------------------------------ --- ------------ -----------
Receivables, which are included in "Other non-current
assets - Accrued income" 2,826 2,340
Receivables, which are included in "Trade and other
receivables - Accrued income" 2,964 2,654
Contract liabilities, which are included in "Deferred
income" - non-current (1,188) (1,277)
Contract liabilities, which are included in "Deferred
income" - current (2,622) (3,041)
=========================================================== ============ ===========
5. Exceptional items
Year ended Year ended
31 December 31 December
2019 2018
(Unaudited) (Audited)
$'000 $'000
---------------------------------------------- --- --- ------------ ------------
Exchange (loss)/gain on intercompany balances (2,047) 2,793
======================================================== ============ ============
The exceptional (loss)/gain arose on sterling-denominated
intercompany balances. These balances were retranslated at the
closing exchange rate at 31 December 2019, which was 1.31, a 3%
increase compared to the rate of 1.27 at 31 December 2018. Sterling
to US dollar exchange rates reduced during 2018 compared to 2017.
Due to the size and nature of the exchange (loss)/gain in both
years, it has been included as an exceptional item.
The exceptional (loss)/gain on intercompany balances in the
Consolidated statement of profit or loss is offset by an equivalent
exceptional exchange gain/(loss) on the retranslation of the
intercompany balances, which is included in the retranslation of
net assets of foreign operations, included in the other
comprehensive income.
6. Non-GAAP profit measures - "Cash overheads" and "Adjusted EBITDA"
As restated
Year ended Year ended
31 December 31 December
2019 2018
(Unaudited) (Audited)
a Reconciliation of operating expenses to "Cash Note
overheads": $'000 $'000
------------------------------------------------ --- ---- ------------ ------------
Operating expenses (42,148) (38,712)
Adjusted for:
Amortisation and depreciation 6,802 6,863
Equity-settled share-based payment 12 8,707 6,977
Development expenditure capitalised (5,062) (4,910)
----------------------------------------------------- ---- ------------ ------------
Cash overheads (31,701) (29,782)
===================================================== ==== ============ ============
As restated
Year ended Year ended
31 December 31 December
2019 2018
(Unaudited) (Audited)
b Reconciliation of operating loss to "Adjusted Note
EBITDA": $'000 $'000
-------------------------------------------------- --- ---- ------------ ------------
Operating loss (27,179) (23,237)
Adjusted for:
Amortisation and depreciation 6,802 6,863
Equity-settled share-based payment 12 8,707 6,977
------------------------------------------------------- ---- ------------ ------------
Adjusted EBITDA (11,670) (9,397)
Development expenditure capitalised (5,062) (4,910)
------------------------------------------------------- ---- ------------ ------------
Adjusted EBITDA including development expenditure (16,732) (14,307)
======================================================= ==== ============ ============
7. Loss per share
a Basic loss per share
The calculation of basic loss per share has been based on the
following loss attributable to ordinary shareholders and weighted
average number of ordinary shares outstanding:
As restated
Year ended Year ended
31 December 31 December
2019 2018
(Unaudited) (Audited)
$'000 $'000
-------------------------------------------------------- --- ------------ ------------
Loss for the year attributable to ordinary shareholders 28,264 19,713
============================================================= ============ ============
Number Number
of shares of shares
Weighted average number of ordinary shares '000 '000
-------------------------------------------------------- --- ------------ ------------
Issued ordinary shares at 1 January 42,523 40,904
Effect of shares issued in the year 2,608 828
------------------------------------------------------------- ------------ ------------
Weighted average number of ordinary shares at 31
December 45,131 41,732
============================================================= ============ ============
2019 2018
$ $
--------------------- --- ----- -----
Basic loss per share $0.63 $0.47
========================== ===== =====
b Adjusted loss per share
Adjusted loss per share is calculated based on the loss
attributable to ordinary shareholders before exceptional items,
acquisition-related items and the cost of equity-settled
share-based payment, and the weighted average number of ordinary
shares outstanding:
As restated
Year ended Year ended
31 December 31 December
2019 2018
(Unaudited) (Audited)
Adjusted loss for the year: Note $'000 $'000
------------------------------------------- --- ---- ------------ ------------
Loss for the year attributable to ordinary
shareholders 28,264 19,713
Adjusted for:
Exceptional items 5 (2,047) 2,793
Equity-settled share-based payment 12 (8,707) (6,977)
------------------------------------------------ ---- ------------ ------------
Adjusted loss for the year 17,510 15,529
================================================ ==== ============ ============
2019 2018
$ $
------------------------ --- ----- -----
Adjusted loss per share $0.39 $0.37
============================= ===== =====
c Diluted loss per share
Due to the Group having losses in all years presented, the fully
diluted loss per share for disclosure purposes, as shown in the
consolidated statement of profit or loss and other comprehensive
income, is the same as for the basic loss per share.
8. Other non-current assets
31 December
31 December
2019 2018
(Unaudited) (Audited)
Due in more than a year: $'000 $'000
------------------------------- --- --- ------------ -----------
Other receivables 190 240
Accrued income 2,826 2,340
----------------------------------------- ------------ -----------
Total other non-current assets 3,016 2,580
========================================= ============ ===========
9. Trade and other receivables
31 December
31 December
2019 2018
(Unaudited) (Audited)
Due within a year: $'000 $'000
----------------------------------- --- --- ------------ -----------
Trade receivables 2,773 1,810
Other receivables 753 1,059
Accrued income 2,964 2,654
Corporation tax 1,441 1,304
Prepayments 614 572
----------------------------------- ------- ------------ -----------
Total trade and other receivables 8,545 7,399
=================================== ======= ============ ===========
10. Loans and borrowings
31 December 31 December
2019 2018
(Unaudited) (Audited)
$'000 $'000
---------------------------------------------------- --- --- ------------ -----------
Non-current liabilities
Secured bank loan 555 -
Lease liabilities (2018: Finance lease liabilities) 2,334 98
-------------------------------------------------------------- ------------ -----------
2,889 98
------------------------------------------------------------ ------------ -----------
Current liabilities
Current portion of secured bank loan 1,667 3,889
Current portion of lease liabilities (2018:
Finance lease liabilities) 545 101
-------------------------------------------------------------- ------------ -----------
2,212 3,990
------------------------------------------------------------ ------------ -----------
Total loans and borrowings 5,101 4,088
============================================================== ============ ===========
At 31 December 2019, the $2.2m of bank loan (2018: $3.9m)
represents term debt drawn down with Silicon Valley Bank. The
facility comprises $2.2m (2018 $3.9m) term debt, with an
interest-only period to 31 May 2018, followed by a three-year
maturity at a floating interest rate charged at 1.5% above the US
prime rate.
11. Deferred income
Deferred income represents contracted sales for which services
to customers will be provided in future periods.
31 December 31 December
2019 2018
(Unaudited) (Audited)
Deferred income which falls due: $'000 $'000
--------------------------------- --- --- ------------ -----------
Within a year 2,622 3,041
In more than a year 1,188 1,277
Total deferred income 3,810 4,318
=========================================== ============ ===========
12. Share-based payment
The Group operates share option plans for employees of the
Group. Options in the plans are settled in equity in the Company
and are normally subject to a vesting schedule but not conditional
on any performance criteria being achieved.
The terms and conditions of the share option grants are detailed
in the Group annual financial statements for the year ended 31
December 2019.
Year ended Restated
Year ended
31 December 31 December
2019 2018
(Unaudited) (Audited)
$'000 $'000
------------------------------------------------ --- --- ------------ -------------
Total equity-settled share-based payment charge 8,707 6,977
========================================================== ============ =============
a Prior year adjustment
The 2018 share-based payment charge has been adjusted to correct
the accounting for options with graded vesting on grants awarded
prior to 1 January 2018.
The impact of the prior year adjustment are:
- The 2018 share-based payment charge was increased by
$1,120,000 to $6,977,000, resulting in an increase in both
operating expenses and operating loss by the same amount in the
Consolidated statement of profit or loss and other comprehensive
income.
- The Consolidated statement of changes in equity for 2018 also
reflects the same increase in the share-based payment charge by
$1,120,000 to $6,977,000.
- Basic and diluted loss per share for 2018 was increased from $0.45 to $0.47.
- As a non-cash item, there is no impact on cash flow, retained
earnings, net assets or KPIs.
b Summary of share options outstanding
2019 2018
Number Number
of options of options
Number of share options outstanding: (Unaudited) (Audited)
------------------------------------- ------------ -----------
Outstanding at 1 January 4,662,070 4,901,699
Granted during the year 879,309 1,649,257
Forfeited during the year (283,257) (269,824)
Exercised during the year (229,965) (1,619,062)
-------------------------------------- ------------ -----------
Outstanding at 31 December 5,028,157 4,662,070
-------------------------------------- ------------ -----------
Exercisable at 31 December 2,983,106 1,823,334
-------------------------------------- ------------ -----------
Vested at the end of the year 2,983,106 1,823,334
====================================== ============ ===========
13. Contingent liabilities
The Group had no contingent liabilities at 31 December 2019 (31
December 2018: None).
14. Post balance sheet events
The global expansion of the COVID-19 virus since the fiscal year
end has resulted in macroeconomic uncertainty. Whilst there has
been no material impact on the Group as at the date of this report,
it is difficult to assess the short to longer-term impact of that
uncertainty on the Group's operations.
As at 31 May 2020 the Group had cash reserves of $11.6m.
Despite the significant challenge COVID-19 presents we are
moving forward this year with continued business momentum as
evidenced by our landmark agreement with Microsoft announced in
June 2020. Management expects that the potential of the agreement
with Microsoft will overcome any short-term headwinds from the
economic
uncertainty surrounding the impact of COVID-19.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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