TIDMWAND
RNS Number : 2338Z
WANdisco Plc
17 September 2020
17 September 2020
WANdisco plc
("WANdisco", the "Company" or the "Group")
Interim unaudited results for the six months ended 30 June
2020
WANdisco announces the launch of LiveData Migrator on the AWS
platform
WANdisco launches deeply embedded service into Microsoft
Azure
Strong balance sheet provides platform to accelerate conversion
of cloud opportunity
WANdisco (LSE: WAND), the LiveData company, announces interim
unaudited results for the six months ended 30 June 2020.
Financial summary
-- Revenue for the period $3.6 million (H1 2019: $6.0 million)
-- Cash overheads(1) of $17.9 million (H1 2019: $15.5 million)
-- Adjusted EBITDA(2) loss of $11.9 million (H1 2019: $7.6 million)
-- Operating loss of $17.7 million (H1 2019: $16.5 million)
-- Cash at 30 June 2020 of $33.6 million (31 December 2019: $23.4
million)
-- Debt of $1.4 million (31 December 2019: $2.2 million)
-- Raised gross proceeds of $25 million through an oversubscribed
placing to accelerate the Company's growth ambitions and to
pursue near term opportunities with channel partners
Operational and strategic highlights
-- Announced the limited public preview of WANdisco LiveData Platform
for Azure:
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 to be delivered through existing Azure billing
service ensures customers do not require additional vendor
approval
-- Data and Cloud capabilities driving meaningful commercial interest
and momentum:
o Contract worth $1 million won with a division of one of
the world's largest media and telecommunications companies
to migrate data into the Microsoft Azure cloud
o Secured a reseller agreement with a large global systems
integrator to support growth across all major cloud platforms
o Secured a contract with one of the world's largest airlines
to migrate analytical data to the Microsoft Azure cloud
o Signed a contract worth up to $1 million with a major British
supermarket for both on-premises and migration to the Microsoft
Azure cloud
Post period end
-- Strong uptake for the Company's Azure Cloud platform, with 46
organizations registered. Open Public preview is scheduled to
commence over the coming weeks
-- Became the first independent software vendor ("ISV") to achieve
AWS Competency Status in the area of data migration
-- Launched the new LiveData Migrator, the next generation data
lake migration product that enables data to begin migration
within minutes and manages data changes during the migration
regardless of scale
-- LiveData Migrator launched on the AWS platform, securing GoDaddy
as the first customer representing a highly complex on-premises
Hadoop environment migrating to S3. Please see separate release
for more details
David Richards, Chief Executive Officer and Chairman of
WANdisco, commented:
"Today, we proudly announced the launch of LiveData Migrator on
the AWS platform and as the business alluded to in our recent
fundraise, we have strengthened our strategic relationship with AWS
and see a building pipeline of customers on the platform. With the
formal launch of our new LiveData Migrator product, we became the
only ISV to achieve competency status in the revamped migration
category and have already secured GoDaddy as the first customer.
The business remains focused on capitalising on opportunities with
AWS, Microsoft and other Tier 1 partners as our relationships
continue to deepen.
"In H1 we have continued to fortify our partnership with
Microsoft through the creation of a new core service, the LiveData
Platform for Azure. Deepening these relationships with cloud
partners remains our primary strategic goal, positioning the Group
for significant scalable growth. The Board expects the LiveData
Platform to become publicly available as a metered service over the
next few weeks.
"In the period the Group secured a significant reseller
agreement with a large global systems integrator who has
relationships with many Global 200 companies as a provider of cloud
integration services. We have also signed significant initial
contracts with a large media company and British supermarket
chain.
"With the backdrop of the COVID-19 pandemic, we have seen an
accelerated business shift towards cloud as companies look to take
advantage of the agility and scalability that cloud provides. The
Board remains confident that while revenue in FY2020 will be below
expectations, the combination of our market opportunity, product
readiness, and deepening commitments from cloud partners provides a
strong platform to deliver significant revenue growth in FY2021
with the Board expecting a minimum revenue of $35 million."
(1) Operating expenses adjusted for: depreciation, amortisation, capitalisation
of development expenditure and equity-settled share-based payment.
See Note 5 to the condensed consolidated interim financial statements
for a reconciliation.
(2) Operating loss adjusted for: depreciation, amortisation and equity-settled
share-based payment. See Note 5 to the condensed consolidated interim
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 (Nomad and Broker) +44 (0)20 7710 7600
Fred Walsh / Richard Short
About WANdisco
WANdisco is the LiveData company. 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's LiveData Platform 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.
www.wandisco.com
BUSINESS REVIEW
In H1 2020, we delivered on our primary strategic goal of
cementing our partnership with Microsoft to create a new core Azure
service, the LiveData Platform for Azure, which allows customers to
use our software as if it were a native Azure offering. As an Azure
core service, customers can deploy WANdisco's LiveData products by
selecting it from the same Azure menu used for native Microsoft
services such as compute and storage, and the charges added on
their monthly Azure bill. No software to install, no new contracts
to sign. The new service is close to open preview, meaning that our
Azure service will be available to all customers. As a result we
anticipate this to facilitate a greater volume and velocity of
deals than we have experienced in prior years.
We continue to focus our development efforts on products that
provide customers with simple, robust transition paths as an ever
greater number of companies are looking for solutions to move their
on-premises Hadoop data to the cloud. Our LiveData Migrator product
launched alongside AWS and GoDaddy as the launch customer, coupled
with our LiveData platform, will allow customers to make the
transition from on-premises to cloud computing as easy and as
seamless as possible.
We have signed a reseller contract with a major global systems
integrator with a significant cloud migration practice . Our new
LiveData Migrator product will unlock a previously difficult to
service market for them for large, on-premises to cloud migrations
as well as our LiveData Platform providing hybrid and inter cloud
data consistency solutions. We have also secured contracts with a
large media company and a British supermarket chain.
The Company has continued to see growing need for data
consistency and data availability across the world, and WANdisco's
ability to facilitate cloud migration at scale without business
interruption is becoming a key factor for organisations and their
systems integrator partners as they accelerate their journey to the
cloud.
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.
The global nature 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. Nonetheless, 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. To date, we have
experienced minimal effects to our customer base and order flow,
and have not reduced employee-based costs.
Outlook
Our cloud platform, System Integrator, and ISV partners 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 creation of
a native Azure service with our technology provides a platform to
capitalise on that opportunity, taking advantage of billing and
technical integrations. With the LiveData Platform for Azure close
to open preview, 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, in particular AWS, 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
deepening commitments from our partners.
With the imminent launch of metered billing on the Azure
platform, we have seen an increasing number of customers waiting on
its availability before concluding their purchasing decision. While
the company remains confident that these deals will be concluded
successfully, there will be an impact on revenue recognition vs.
our traditional subscription licence, where the majority of revenue
is recognised on delivery under IFRS 15, versus a SAAS revenue
model where revenue will be recognised over time, shifting
recognition of a greater proportion of the Company's expected
revenue into 2021. As a result, we expect FY20 revenues to be lower
than current market estimates.
For FY21, we expect to migrate in excess of 100PB of data to the
Azure cloud (with more than 50 customers signed over the year) and
greater than 30PB into the AWS cloud. Combined with the flow of
metered billing from Q4 this year we expect a minimum revenue of
$35m in FY21.
KPIs
As our business continues to evolve, the metrics we use to
measure our success also need to change. As we enter into 2021, we
expect to provide additional metrics that best represent our
business progress. These KPIs include the number of customers, the
volume of data being migrated, the attach rate to migration and
hybrid cloud and eventually the amount of metered revenue vs.
subscription revenue.
FINANCIAL REVIEW
Revenue for the period ended 30 June 2020 was $3.6 million (H1
2019: $6.0 million).
Adjusted EBITDA(2) loss was $11.9 million (H1 2019: $7.6
million), primarily due to lower revenue and the strategic
investments we made to strengthen our channel partner relationships
to drive future growth.
Revenue
Revenue was $3.6 million (H1 2019: $6.0 million). The business
continues to achieve a significant proportion of contracted revenue
through direct sales. In most cases, these direct sales are only
achievable through the close partnerships held with major cloud
vendors. The group expects over time to increase the contribution
of partner channel sales to direct sales, as the partnerships with
cloud vendors and ISV begin to bear fruit.
As we continue to transition to a recurring revenue model, the
variability in near term revenue decreases as the one-off perpetual
licenses decrease in volume and size, being replaced by smaller but
more repeatable revenue streams with greater forward
visibility.
Deferred revenue from sales booked during the first half of 2020
and in previous years, and not yet recognised as revenue, is $3.2
million at 30 June 2020 (H1 2019: $4.7 million). Our deferred
revenue represents future revenue from new and renewed contracts,
many of them spanning multiple years. Given our impending shift
towards metered billing, deferred revenue will no longer be a
relevant KPI. As described above the company will present new KPIs
to measure the success of the business.
Operating costs
Cash overheads(1) increased in the period as we made modest
investments in Sales and Engineering to capitalise on the
opportunities with our cloud partners, rising to $17.9 million from
$15.5 million in the first half of 2019.
Product development expenditure capitalised in the period was
$2.6 million (H1 2019: $2.3 million). All of this expenditure was
associated with new product features and was capitalised.
Our headcount was 174 as at 30 June 2020 (December 2019: 162,
June 2019: 152). Headcount increases in the period were principally
in Sales and Marketing and Engineering as we added capacity to
develop new products and service our partner channel.
Profit and loss
Adjusted EBITDA(2) loss for the period was $11.9 million (H1
2019: $7.6 million).
The loss after tax for the period decreased to $14.0 million (H1
2019: $16.7 million), due to an exceptional finance gain of $3.9
million and decreased share-based payment charge, offset by
increased overheads. The exceptional finance gain of $3.9 million
(H1 2019: $0.1 million loss) arose from the retranslation of
intercompany balances at 30 June 2020, reflecting the decrease 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. An equal and opposite
translation gain on the net assets of overseas net assets in
reserves result in no impact on the Group net assets.
Balance sheet and cash flow
Trade and other receivables at 30 June 2020 were $6.6 million
(31 December 2019: $8.5 million). This includes $0.7 million of
trade receivables (31 December 2019: $2.8 million) and $5.9 million
related to non-trade receivables (31 December 2019: $5.7
million).
Net consumption of cash was $12.5 million before financing (H1
2019: $9.5 million), resulting in a closing cash balance of $33.6
million at 30 June 2020. The consumption of cash was due primarily
to an increase in cash overheads. For the full year cash
consumption will be a function of the level of revenues achieved
and collection of customer receivables in the period. At 30 June
2020 we had drawings under our revolving credit facility with
Silicon Valley Bank of $1.4 million (31 December 2019: $2.2
million).
Consolidated statement of profit or loss and other comprehensive
income
For the six months ended 30 June 2020
Six months ended Six months ended Year ended
30 June 2020 30 June 2019 31 December 2019
(Unaudited) (Unaudited) (Audited)
Exceptional Exceptional Exceptional
items items items
Pre- (Note Pre- (Note Pre- (Note
exceptional 4) Total exceptional 4) Total exceptional 4) Total
Continuing
operations Note $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
----------- ---- ----------- ----------- -------- ----------- ----------- -------- ------------ ----------- --------
Revenue 3 3,625 - 3,625 5,966 - 5,966 16,155 - 16,155
Cost of
sales (322) - (322) (376) - (376) (1,186) - (1,186)
----------- ---- ----------- ----------- -------- ----------- ----------- -------- ------------ ----------- --------
Gross
profit 3,303 - 3,303 5,590 - 5,590 14,969 - 14,969
Operating
expenses 5 (21,043) - (21,043) (22,127) - (22,127) (42,148) - (42,148)
----------- ---- ----------- ----------- -------- ----------- ----------- -------- ------------ ----------- --------
Operating
loss 5 (17,740) - (17,740) (16,537) - (16,537) (27,179) - (27,179)
----------- ---- ----------- ----------- -------- ----------- ----------- -------- ------------ ----------- --------
Finance
income 32 3,939 3,971 240 - 240 604 - 604
Finance
costs (180) - (180) (278) (78) (356) (527) (2,047) (2,574)
----------- ---- ----------- ----------- -------- ----------- ----------- -------- ------------ ----------- --------
Net finance
(costs)/income (148) 3,939 3,791 (38) (78) (116) 77 (2,047) (1,970)
----------------- ----------- ----------- -------- ----------- ----------- -------- ------------ ----------- --------
(Loss)/profit
before
tax (17,888) 3,939 (13,949) (16,575) (78) (16,653) (27,102) (2,047) (29,149)
Income tax (30) - (30) (8) - (8) 885 - 885
----------- ---- ----------- ----------- -------- ----------- ----------- -------- ------------ ----------- --------
(Loss)/profit for
the period (17,918) 3,939 (13,979) (16,583) (78) (16,661) (26,217) (2,047) (28,264)
----------------- ----------- ----------- -------- =========== =========== ======== ============ =========== ========
Other comprehensive income
Items that are or may be reclassified to profit or loss:
Foreign
operations
- foreign
currency
translation
differences (30) (3,939) (3,969) (201) 78 (123) (282) 2,047 1,765
----------------- ----------- ----------- -------- ----------- ----------- -------- ------------ ----------- --------
Other
comprehensive
income for the
period, net of
tax (30) (3,939) (3,969) (201) 78 (123) (282) 2,047 1,765
----------------- ----------- ----------- -------- ----------- ----------- -------- ------------ ----------- --------
Total
comprehensive
income for the
period (17,948) - (17,948) (16,784) - (16,784) (26,499) - (26,499)
================= =========== =========== ======== =========== =========== ======== ============ =========== ========
Loss per
share
Basic and
diluted
loss per
share 6 ($0.29) ($0.38) ($0.63)
=========== ==== =========== =========== ======== =========== =========== ======== ============ =========== ========
The notes form an integral part of these condensed consolidated
interim financial statements.
Consolidated statement of financial position
At 30 June 2020
30 June 30 June 31 December
2020 2019 2019
(Unaudited) (Unaudited) (Audited)
Note $'000 $'000 $'000
------------------------------ ---- ------------ ------------ -----------
Assets
Property, plant and equipment 3,133 2,718 3,735
Intangible assets 4,962 4,870 4,877
Other non-current assets 7 2,656 2,401 3,016
------------------------------ ---- ------------ ------------ -----------
Non-current assets 10,751 9,989 11,628
------------------------------ ---- ------------ ------------ -----------
Trade and other receivables 8 6,593 6,087 8,545
Cash and cash equivalents 33,634 17,868 23,354
------------------------------ ---- ------------ ------------ -----------
Current assets 40,227 23,955 31,899
------------------------------ ---- ------------ ------------ -----------
Total assets 50,978 33,944 43,527
============================== ==== ============ ============ ===========
Equity
Share capital 7,481 6,696 7,097
Share premium 172,897 133,288 149,336
Translation reserve (9,552) (7,471) (5,583)
Merger reserve 1,247 1,247 1,247
Retained earnings (133,237) (113,587) (121,922)
------------------------------ ---- ------------ ------------ -----------
Total equity 38,836 20,173 30,175
------------------------------ ---- ------------ ------------ -----------
Liabilities
Loans and borrowings 9 2,028 2,850 2,889
Deferred income 10 1,075 2,016 1,188
Deferred tax liabilities 3 3 4
------------------------------ ---- ------------ ------------ -----------
Non-current liabilities 3,106 4,869 4,081
------------------------------ ---- ------------ ------------ -----------
Current tax liabilities 58 7 66
Loans and borrowings 9 1,907 2,195 2,212
Trade and other payables 4,934 3,997 4,371
Deferred income 10 2,137 2,703 2,622
Current liabilities 9,036 8,902 9,271
------------------------------ ---- ------------ ------------ -----------
Total liabilities 12,142 13,771 13,352
------------------------------ ---- ------------ ------------ -----------
Total equity and liabilities 50,978 33,944 43,527
============================== ==== ============ ============ ===========
The notes form an integral part of these condensed consolidated
interim financial statements.
Consolidated statement of changes in equity
For the six months ended 30 June 2020
Attributable to owners of the Company
--------------------------------------------------------------
Share Share Translation Merger Retained Total
capital premium reserve reserve earnings equity
Six months ended 30 June 2020
(Unaudited) $'000 $'000 $'000 $'000 $'000 $'000
-------------------------------- -------- -------- ----------- -------- --------- --------
Balance at 1 January 2020 7,097 149,336 (5,583) 1,247 (121,922) 30,175
Total comprehensive income
for the period
Loss for the period - - - - (13,979) (13,979)
Other comprehensive income
for the period - - (3,969) - - (3,969)
-------------------------------- -------- -------- ----------- -------- --------- --------
Total comprehensive income
for the period - - (3,969) - (13,979) (17,948)
-------------------------------- -------- -------- ----------- -------- --------- --------
Transactions with owners of
the Company
Contributions and distributions
Equity-settled share-based
payment - - - - 2,664 2,664
Proceeds from share placing 383 23,510 23,893
Share options exercised 1 51 - - - 52
Total transactions with owners
of the Company 384 23,561 - - 2,664 26,609
-------------------------------- -------- -------- ----------- -------- --------- --------
Balance at 30 June 2020 7,481 172,897 (9,552) 1,247 (133,237) 38,836
================================ ======== ======== =========== ======== ========= ========
Six months ended 30 June 2019
(Unaudited)
-------------------------------- -------- -------- ----------- -------- --------- --------
Balance at 1 January 2019 6,361 115,909 (7,348) 1,247 (102,365) 13,804
Total comprehensive income
for the period
Loss for the period - - - - (16,661) (16,661)
Other comprehensive income
for the period - - (123) - - (123)
-------------------------------- -------- -------- ----------- -------- --------- --------
Total comprehensive income
for the period - - (123) - (16,661) (16,784)
-------------------------------- -------- -------- ----------- -------- --------- --------
Transactions with owners of
the Company
Contributions and distributions
Equity-settled share-based
payment - - - - 5,439 5,439
Proceeds from share placing 321 17,127 - - - 17,448
Share options exercised 14 252 - - - 266
Total transactions with owners
of the Company 335 17,379 - - 5,439 23,153
-------------------------------- -------- -------- ----------- -------- --------- --------
Balance at 30 June 2019 6,696 133,288 (7,471) 1,247 (113,587) 20,173
================================ ======== ======== =========== ======== ========= ========
The notes form an integral part of these condensed consolidated
interim financial statements.
Consolidated statement of cash flows
For the six months ended 30 June 2020
Six months Six months
ended ended
30 June 30 June Year ended
31 December
2020 2019 2019
(Unaudited) (Unaudited) (Audited)
Note $'000 $'000 $'000
----------------------------------------------------- ---- ------------ ------------ -------------
Cash flows from operating activities
Loss for the period (13,979) (16,661) (28,264)
Adjustments for:
* Depreciation of property, plant and equipment 601 507 1,101
* Amortisation of intangible assets 2,531 2,953 5,701
* Net finance costs 148 38 (77)
* Income tax 30 8 (885)
* Foreign exchange (3,870) (205) 1,869
* Equity-settled share-based payment 11 2,664 5,439 8,707
----------------------------------------------------- ---- ------------ ------------ -------------
(11,875) (7,921) (11,848)
----------------------------------------------------- ---- ------------ ------------ -------------
Changes in:
* Trade and other receivables 1,530 613 (1,203)
* Trade and other payables 712 (851) (562)
* Deferred income (598) 401 (508)
Net working capital change 1,644 163 (2,273)
----------------------------------------------------- ---- ------------ ------------ -------------
Cash used in operating activities (10,231) (7,758) (14,121)
Interest paid (157) (232) (446)
Income tax received 672 910 807
----------------------------------------------------- ---- ------------ ------------ -------------
Net cash used in operating activities (9,716) (7,080) (13,760)
----------------------------------------------------- ---- ------------ ------------ -------------
Cash flows from investing activities
Interest received 15 240 258
Acquisition of property, plant and equipment (36) (367) (841)
Development expenditure (2,616) (2,307) (5,062)
Net cash used in investing activities (2,637) (2,434) (5,645)
----------------------------------------------------- ---- ------------ ------------ -------------
Cash flows from financing activities
Proceeds from issue of share capital 23,945 17,714 34,163
Net repayment of bank loan (833) (833) (1,667)
Payment of lease liabilities (349) (257) (502)
----------------------------------------------------- ---- ------------ ------------ -------------
Net cash from financing activities 22,763 16,624 31,994
----------------------------------------------------- ---- ------------ ------------ -------------
Net increase in cash and cash equivalents 10,410 7,110 12,589
Cash and cash equivalents at 1 January 23,354 10,757 10,757
Effect of movements in exchange rates on
cash and cash equivalents (130) 1 8
----------------------------------------------------- ---- ------------ ------------ -------------
Cash and cash equivalents at the end of
the period 33,634 17,868 23,354
===================================================== ==== ============ ============ =============
The notes form an integral part of these condensed consolidated
interim financial statements.
Notes to the condensed consolidated interim financial
statements
For the six months ended 30 June 2020
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 interim financial
statements ("Interim financial statements") as at and for the six
months ended 30 June 2020 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
These interim financial statements have been prepared in
accordance with IAS 34 "Interim Financial Reporting" and should be
read in conjunction with the Group's last annual consolidated
financial statements as at and for the year ended 31 December 2019
("last annual financial statements"). They do not include all of
the information required for a complete set of IFRS financial
statements. However, selected explanatory notes are included to
explain events and transactions that are significant to an
understanding of the changes in the Group's financial position and
performance since the last annual financial statements.
These interim financial statements were authorised for issue by
the Company's board of directors on 16 September 2020.
b Going concern
These interim 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 at 30 June 2020 the Group had net assets of $38.8m (31
December 2019: $30.2m), including cash of $33.6m (31 December 2019:
$23.4m) as set out in the interim consolidated statement of
financial position, with a debt facility drawn of $1.4m (31
December 2019: $2.2m). In the six months ended 30 June 2020, the
Group incurred a loss before tax of $13.9m (H1 2019: $16.7m) and
net cash outflows before financing of $12.4m (H1 2019: $9.5m).
Revenue for H1 2020 was $3.6m (H1 2019: $6.0m), with an
operating loss of $17.7m (H1 2019: $16.5m), mainly due to an
investment in operating expenses and reduced revenue.
The Directors have prepared a detailed budget and forecasts of
the Group's expected performance over a period covering at least
the next twelve months from the date of the approval of these
unaudited interim 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.
Whilst the Directors are confident in the Group's ability to
grow revenues, the Board's sensitivity modelling (which considered
the impact of Brexit) shows that the Group can remain within its
facilities in the event that revenue growth is delayed 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 revenues 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 sales revenues, cash revenue and
funding scale.
As a consequence, the Directors have a reasonable expectation
that the Group can continue 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 date of approval of these interim
financial statements. Accordingly, they continue to adopt the going
concern basis in preparing the Group financial statements.
c Functional and presentational currency
The interim 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
period 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:
2. Basis of preparation (continued)
d Alternative performance measures (continued)
- Cash overheads: Operating expenses adjusted for: depreciation,
amortisation, capitalisation of development expenditure and
equity -- settled share-based payment. See Note 5 for a reconciliation.
- Adjusted EBITDA: Operating loss adjusted for: depreciation,
amortisation and equity -- settled share-based payment. See
Note 5 for a reconciliation.
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.
3. 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:
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2020 2019 2019
(Unaudited) (Unaudited) (Audited)
Revenue $'000 $'000 $'000
North America - USA 2,571 3,059 6,551
North America - other 36 3 44
Europe 715 792 2,152
Rest of the world - China 201 1,925 5,036
Rest of the world - South Africa 32 - 2,088
Rest of the world - other 70 187 284
--------------------------------- ------------ ------------ ------------
3,625 5,966 16,155
================================= ============ ============ ============
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
Six months Six months Six months Six months Year ended Year ended
ended ended 31 December 31 December
30 June 30 June 2019 (Audited) 2019 (Audited)
2020 2020
(Unaudited) (Unaudited) ended ended
30 June 30 June
2019 2019
(Unaudited) (Unaudited)
% of Revenue % of Revenue % of Revenue
revenue $'000 revenue $'000 revenue $'000
----------- ------------ ------------ ------------ ------------ --------------- ---------------
Customer 1 21% 770 - - - -
Customer 2 14% 508 - - - -
Customer 3 9% 323 11% 667 8% 1,227
Customer 4 3% 124 27% 1,599 19% 3,117
Customer 5 1% 31 - - 13% 2,088
Customer 6 - - - - 11% 1,857
=========== ============ ============ ============ ============ =============== ===============
No other single customers contributed 10% or more to the Group's
revenue (2019: $nil).
3. Revenue and segmental analysis (continued)
e Split of revenue by timing of revenue recognition
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2020 2019 2019
(Unaudited) (Unaudited) (Audited)
Revenue $'000 $'000 $'000
Products transferred at a point in time 2,168 4,329 12,596
Products and services transferred over time 1,457 1,637 3,559
-------------------------------------------- ------------ ------------ ------------
3,625 5,966 16,155
============================================ ============ ============ ============
f Contract balances
The following table provides information about receivables,
contract assets and liabilities from contracts with customers:
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2020 2019 2019
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
Receivables, which are included in "Other non-current
assets - Accrued income" 2,508 2,173 2,826
Receivables, which are included in "Trade and other
receivables - Accrued income" 3,172 2,863 2,964
Contract liabilities, which are included in "Deferred
income" - non-current (1,075) (2,016) (1,188)
Contract liabilities, which are included in "Deferred
income" - current (2,137) (2,703) (2,622)
====================================================== ============ ============ ============
4. Exceptional items
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2020 2019 2019
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
---------------------------------------------- --- ------------ ------------ ------------
Exchange gain/(loss) on intercompany balances 3,939 (78) (2,047)
=================================================== ============ ============ ============
The exceptional gain/(loss) arose on Sterling denominated
intercompany balances. These balances were retranslated at the
closing exchange rate at 30 June 2020 which was 1.23 (compared with
1.31 at the end of 31 December 2019). In the prior half year, rates
were 1.27 (compared with 1.27 at the end of 31 December 2018). Due
to the size and nature of the exchange gain(loss), they have been
included as exceptional items.
The exceptional gain/(loss) on intercompany balances in the
Consolidated statement of profit or loss is offset by an equivalent
exceptional exchange (loss)/gain 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.
5. Non-GAAP profit measures - Cash overheads and Adjusted EBITDA
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2020 2019 2019
(Unaudited) (Unaudited) (Audited)
a Reconciliation of operating expenses to "Cash Note
overheads": $'000 $'000 $'000
------------------------------------------------ ---- ------------ ------------ ------------
Operating expenses (21,043) (22,127) (42,148)
Adjusted for:
Amortisation and depreciation 3,132 3,460 6,802
Equity-settled share-based payment 11 2,664 5,439 8,707
Development expenditure capitalised (2,616) (2,307) (5,062)
------------------------------------------------ ---- ------------ ------------ ------------
Cash overheads (17,863) (15,535) (31,701)
================================================ ==== ============ ============ ============
5. Non-GAAP profit measures - Cash overheads and Adjusted EBITDA (continued)
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2020 2019 2019
(Unaudited) (Unaudited) (Audited)
b Reconciliation of operating loss to "Adjusted Note
EBITDA": $'000 $'000 $'000
-------------------------------------------------- ---- ------------ ------------ ------------
Operating loss (17,740) (16,537) (27,179)
Adjusted for:
Amortisation and depreciation 3,132 3,460 6,802
Equity-settled share-based payment 11 2,664 5,439 8,707
-------------------------------------------------- ---- ------------ ------------ ------------
Adjusted EBITDA (11,944) (7,638) (11,670)
Development expenditure capitalised (2,616) (2,307) (5,062)
-------------------------------------------------- ---- ------------ ------------ ------------
Adjusted EBITDA including development expenditure (14,560) (9,945) (16,732)
================================================== ==== ============ ============ ============
6. 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:
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2020 2019 2019
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
---------------------------------------------------------- ------------ ------------ ------------
Loss for the period attributable to ordinary shareholders 13,979 16,661 28,264
========================================================== ============ ============ ============
Number Number Number
of shares of shares of shares
Weighted average number of ordinary shares '000s '000s '000s
---------------------------------------------------------- ------------ ------------ ------------
Issued ordinary shares at 1 January 48,241 42,523 42,523
Effect of shares issued in the period 307 1,903 2,608
---------------------------------------------------------- ------------ ------------ ------------
Weighted average number of ordinary shares during
the period 48,548 44,426 45,131
========================================================== ============ ============ ============
Basic loss per share $0.29 $0.38 $0.63
===================== ===== ===== =====
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:
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2020 2019 2019
(Unaudited) (Unaudited) (Audited)
Adjusted loss for the period: Note $'000 $'000 $'000
--------------------------------------------- ---- ------------ ------------ ------------
Loss for the period attributable to ordinary
shareholders 13,979 16,661 28,264
Adjusted for:
Exceptional items 3,939 (78) (2,047)
Equity-settled share-based payment 11 (2,664) (5,439) (8,707)
--------------------------------------------- ---- ------------ ------------ ------------
Adjusted basic loss for the period 15,254 11,144 17,510
============================================= ==== ============ ============ ============
Adjusted loss per share $0.31 $0.25 $0.39
======================== ===== ===== =====
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.
7. Other non-current assets
30 June 30 June
2020 2019
31 December
2019
(Unaudited) (Unaudited) (Audited)
Due in more than a year: $'000 $'000 $'000
------------------------------- --- ------------ ------------ -----------
Other receivables 148 228 190
Accrued income 2,508 2,173 2,826
------------------------------------ ------------ ------------ -----------
Total other non-current assets 2,656 2,401 3,016
==================================== ============ ============ ===========
8. Trade and other receivables
30 June 30 June
2020 2019
31 December
2019
(Unaudited) (Unaudited) (Audited)
Due within a year: $'000 $'000 $'000
----------------------------------- --- ------------ ------------ -----------
Trade receivables 741 1,092 2,773
Other receivables 1,160 716 753
Accrued income 3,172 2,863 2,964
Corporation tax 731 468 1,441
Prepayments 789 948 614
----------------------------------- --- ------------ ------------ -----------
Total trade and other receivables 6,593 6,087 8,545
=================================== === ============ ============ ===========
9. Loans and borrowings
30 June 30 June
2020 2019
31 December
2019
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
--------------------------------------------- --- ------------ ------------ -----------
Non-current liabilities
Secured bank loan - 1,389 555
Finance lease liabilities 2,028 1,461 2,334
-------------------------------------------------- ------------ ------------ -----------
2,028 2,850 2,889
------------------------------------------------- ------------ ------------ -----------
Current liabilities
Current portion of secured bank loan 1,389 1,667 1,667
Current portion of finance lease liabilities 518 528 545
-------------------------------------------------- ------------ ------------ -----------
1,907 2,195 2,212
------------------------------------------------- ------------ ------------ -----------
Total loans and borrowings 3,935 5,045 5,101
================================================== ============ ============ ===========
At 30 June 2020, the $1.4m of bank loan (31 December 2019:
$2.2m) represents term debt drawn down with Silicon Valley Bank.
The facility comprised $1.4m term debt (31 December 2019: $2.2m),
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.
10. Deferred income
Deferred income represents contracted sales for which services
to customers will be provided in future periods.
30 June 30 June
2020 2019
31 December
2019
(Unaudited) (Unaudited) (Audited)
Deferred income which falls due: $'000 $'000 $'000
--------------------------------- --- ------------ ------------ -----------
Within a year 2,137 2,703 2,622
In more than a year 1,075 2,016 1,188
Total deferred income 3,212 4,719 3,810
====================================== ============ ============ ===========
11. 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.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
------------------------------------------------ --- ------------ ------------ ------------
Total equity-settled share-based payment charge 2,664 5,439 8,707
===================================================== ============ ============ ============
Summary of share options outstanding
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2020 2019 2019
(Unaudited) (Unaudited) (Audited)
Number of share options outstanding: Number Number Number
--------------------------------------------- ------------ ------------ ------------
Balance at the start of the period 5,028,157 4,662,070 4,662,070
Granted - 834,216 879,309
Forfeited (68,566) (91,779) (283,257)
Exercised (1,444) (112,187) (229,965)
--------------------------------------------- ------------ ------------ ------------
Outstanding balance at the end of the period 4,958,147 5,292,320 5,028,157
--------------------------------------------- ------------ ------------ ------------
Exercisable at the end of the period 3,750,873 2,531,533 2,983,106
--------------------------------------------- ------------ ------------ ------------
Vested at the end of the period 3,750,873 2,531,533 2,983,106
============================================= ============ ============ ============
12. Contingent liabilities
The Group had no contingent liabilities at 30 June 2020 (30 June
2019: None, 31 December 2019: None).
13. Post-balance sheet events
There are no significant or disclosable post-balance sheet
events.
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