TIDMPTRO
RNS Number : 7254A
Pelatro PLC
26 May 2023
26 May 2023
Pelatro Plc
("Pelatro" or the "Group")
Final Audited Results for the Year ended 31 December 2022
Pelatro Plc (AIM: PTRO), the precision marketing software
specialist, today announces today results for the year ended 31
December 2022.
Financial highlights
-- Decrease in revenue to $5.4m (2021: $7.3m)
-- Recurring revenue of $4.3m (2021: $4.8m)
-- Adjusted EBITDA(*) of $0.6m (2021: $2.8m)
-- Adjusted loss per share of (27.3)c (2021: (0.4)c)
-- Trade receivables of $3.5m (2021: $5.0m)
-- Exceptional costs incurred of $1.1m, relating primarily to
write off of one trade receivable and one contract asset, together
with staff retention share issue
-- Impairment charges of $9.3m incurred, primarily relating to
intangible assets as a result of reduction in revenue in 2022
Operational highlights
-- Three new customers added during the year, bringing total to
26, increased presence in Africa and the Middle East
-- Continuing to retain customers at end of initial contracts
-- Shortlisted by an increasing number of banks, demonstrating
the validity of our product for non-telcos
Outlook
-- Substantial order book with a number of new contracts won
since the year end, including a good level of repeat activity from
change requests, and a large number of significant contracts in
advanced stages of negotiation, including banks
-- New customer wins for the year expected to be in double figures
-- Excellent visibility over revenues for the current year, currently around $8m
-- ARR now c.$7m
-- New business pipeline (#) of c. $23m, including some $5m of non telco business
Harry Berry, non-executive Chairman of Pelatro commented:
"Despite a disappointing 2022, I look forward with cautious
optimism to 2023 as the efforts put in to date, particularly our
diversification into non-telco customers, begin to pay off. Our new
business pipeline is at its highest ever level and I am confident
that this will produce results in the coming months and years."
Presentation
A copy of the results presentation to be provided to investors
and analysts will be available on Pelatro's website in due course (
www.pelatro.com ).
For further information contact:
Pelatro Plc
Subash Menon, Managing Director c/o finnCap
Nic Hellyer, Chief Financial Officer
finnCap Limited (Nominated Adviser and
Joint Broker) +44 (0)20 7220 0500
Carl Holmes/Milesh Hindocha (Corporate
Finance)
Dowgate Capital Limited (Joint Broker) +44 (0)20 3903 7715
Stephen Norcross
* earnings before interest, tax, depreciation, amortisation,
exceptional items and share-based payments
** ARR is calculated by reference to the full annualised value
of a contract; the total ARR thus calculated may not all accrue in
the 12 months following due to (for example) implementation periods
and other timing differences between signing a contract and the "Go
Live" or similar date
# Pipeline value is defined as expected license revenue or 3 x
ARR, depending on the nature of the contract
This announcement is released by Pelatro Plc and, prior to
publication, the information contained herein was deemed to
constitute inside information under the Market Abuse Regulations
(EU) No. 596/2014. Such information is disclosed in accordance with
the Company's obligations under Article 17 of MAR. The person who
arranged for the release of this announcement on behalf of Pelatro
Plc was Nic Hellyer, CFO.
Notes to editors
The Pelatro Group was founded in March 2013 by Subash Menon and
Sudeesh Yezhuvath with the objective of offering specialised,
enterprise class software solutions for customer engagement
principally to telcos who face a series of challenges including
market maturity, saturation and customer churn.
Pelatro provides its "mViva" platform for use by customers in
B2C and B2B applications and is well positioned in the Customer
Engagement space. Our technology orchestrates the digital journey
of the customers of the telcos through contextual, relevant and
real time offers and loyalty programs across multiple channels
including websites, social media, apps and others.
For more information about Pelatro, visit www.pelatro.com
Chairman's statement
I joined the Group in December 2022 at the end of a mixed year
in which we had consolidated our position with existing customers
and continued to win new ones, in particular in the non-telco
space. However, a number of these wins will only produce revenue in
2023 or later and hence did not contribute to the 2022 results.
Unusually, we also renegotiated contracts with a small number of
customers, in particular a Middle East telco (part of a wider
international group) with which we had originally agreed a license
contract (worth around $1m in total). The value of this contract
was recognised in the interim results for the 6 months to 30 June
2022; however, based on mutually beneficial discussions, we agreed
to convert this to a managed services contract which, whilst
overall better for the Group in economic terms, resulted in a
deferral of the revenue to following years.
Also unusually for the Group, we recognised two write offs of
trade receivables or contract assets, the former a long-standing
debtor of around $0.2m where a change of ownership of the customer
meant that the new management refused to recognise the validity of
certain products and services provided by Pelatro on its usual
commercial terms. Despite protracted negotiations the Directors are
now of the view that this debt is unlikely to be recovered and
hence we have written it off. Contract assets of around $0.3m
arising from the sale of a license (and where there is no trade
receivable as the revenue was recognised on an IFRS 15 basis on
transfer of the license) have also been written off where it has
not been possible to agree the detailed technical terms of
implementation with the customer concerned.
More positively our mViva product was selected by Orea Money and
Banque Nationale d'investissement in Africa to provide its
Contextual Campaign Management in a SaaS model to analyse user
behaviour, generate predictions using AI/ML based models and
increase revenue, with a. contract value of around US$ 1.5 million
for an initial period of three years.
Also we were selected by a large global telco to provide our
mViva Campaign Management Solution to provide a Proof of Concept
(POC) prior to the telco choosing a service provider. We have done
well at this POC stage; however, the telco finally progressed with
two telcos and so the opportunity is smaller than initially
thought. Notwithstanding this, the contract is likely to produce an
attractive revenue stream from 2023 onwards and leaves us well
positioned to expand within the customer group in due course.
Outlook
Since the year end we have continued to add new customers and
additional product contracts, with wins across the range of
licenses, managed services and change requests. We therefore have
confidence in 2023 being a better year for the Group overall.
Harry Berry
Chairman
CEO's statement
Our results for 2022 reflect a year of both progress and some
setbacks as already announced. We added 5 new customers, including
an entry into the financial services sector with a significant win.
We therefore closed the year with 26 customers, of which 9 are on
contracts which mostly recurring revenue in nature. However, the
global macro-economic environment has not left our customer base
(both current and prospective) untouched. Consequently certain
customers cut back on their demand for our services, in one case
significantly, although it is pleasing to note that there has been
no indication that they would consider alternative suppliers.
Similarly, depending on their particular circumstances, certain
customers may lean more towards license contracts or recurring
revenue contracts, reflecting changing "capex v. opex" budget
requirements. Over the past few years w e have worked hard to
enhance the quality of our earnings such that the significant
majority of our revenue is now recurring in nature; however, we
will always seek to accommodate the wishes of customers, even to
the extent of renegotiating the terms of existing, signed
contracts. This was particularly relevant this year where one
customer in particular agreed to transition from a license contract
to a managed service contract, which is more beneficial for both
the customer and Pelatro, as we will benefit from an addition to
recurring revenue and the termination of the contract (in this case
after 3 years) and prospective renewal on revised terms thereafter,
rather than a perpetual license.
Existing customers
Existing customer relationships continue to be "sticky" - given
that our first customer was secured in 2016, a number of our
typically three to five year contracts have been coming up for
renewal in the last 12-18 months, and it is extremely pleasing to
note that not one of our existing customers has sought to replace
us. We pro-actively chose to terminate two relatively small
contracts as the economic return did not match the effort involved.
Most customers have sought to strengthen their relationship with us
by requesting upgrades and change requests and/or additional
software modules or services. All of these activities produce
valuable income for us and embed Pelatro at the very heart of the
customers' operations. The success of our mViva software in
enabling users to increase their revenue; this is further
demonstrated by the consistency of income from contracts where we
take a share of the resulting gain by the customer. Additionally we
regularly see mViva enabling significant reductions in subscriber
churn.
New sectors
We have also been expanding the range of industries we cover:
having started serving solely the telecommunications sector, we
have now secured contracts in the financial services sector and are
closely tracking opportunities in banking, all data rich sectors
where our powerful data analytics capabilities with advanced
features like AI/Machine Learning technologies and real time
engagement enable our customers to enhance, enrich and extend their
relationships with their consumers. By analysing customer behaviour
data, such as purchase history, spending patterns, and product
feedback, fintech companies for example can identify trends and
preferences that can help them tailor their services and offerings
to meet their customers' needs. This can lead to increased customer
loyalty, retention, and engagement. Data analytics is also crucial
for the efficient and effective management of operations - by
analysing operational data, such as transaction processing times,
customer support response times, and system performance metrics,
fintech firms can identify areas for improvement and optimize their
processes. This can help to reduce costs, improve operational
efficiency, and increase customer satisfaction.
Ukraine
We of course continue to closely monitor the situation in
Ukraine. Pelatro has a small development and support team in
Russia, representing around 10% of the Group's cash cost base. This
team can and does operate remotely with no requirement for travel,
and remains currently fully operational, with support services and
similar being reallocated to other jurisdictions where appropriate
for the relevant customer. The Group has no revenue from Russia or
any other related sanctioned jurisdiction.
Conclusion
We continue to focus on recurring revenue while building a
strong pipeline in the telecom space. Entering the banking sector
is also a key area of focus.
Subash Menon
Managing Director, CEO and Co-Founder
Financial review
Overview
The financial results for the year reflect a consolidation of
our existing customer base and the loss of some business from
long-standing customers as a result of underlying economic
pressures. Limited revenue was recognised from new customers; those
customers won in the year will generate revenue in 2023 onwards (as
noted above certain prospective customers were slower than expected
to commit to contracts and/or renegotiated their terms from license
to recurring revenue, with the result that income originally
expected in 2022 will now be recognised later). Currency headwinds
due to the strength of the dollar (USD) against the Indian Rupee
(INR) also contributed to the reduction in total revenue from
$7.27m in 2021 to $5.38m in 2022.
On the cost side, in addition to the operating cost base, the
Group also incurred a number of exceptional costs, including a
retention payment made to a small number of key staff, in shares in
lieu of cash but with the same effect on the profit and loss
account. Highly unusually for the Group, we also provided an amount
against a trade receivable which, due to a very specific set of
circumstances (largely deriving from the change of ownership of the
customer) is now considered unlikely to be received. Similarly we
wrote off a contract asset initially recognised on the sale of a
low value license where, following the sale, we could not agree on
the detailed technical terms of installation and operation and
hence, by mutual agreement, took the decision to withdraw.
Largely due to a reduction in activity levels in one particular
customer group, but also due to the overall reduction in revenue
for the Group, we also recognised a significant impairment charge
against our customer relationship assets (which arose on the
acquisition of the Danateq assets in 2018). Given the reduction in
revenue in the year and the short-term outlook, we also recognised
a wider impairment of tangible and intangible assets across the
Group, including a specific charge against the computer hardware
assets relating to one specific managed services contract.
Income Statement
Revenue
Out of our total revenue of $5.38m, approximately $4.27m (79%)
arose from recurring revenue (2021: $4.79m), comprising some $3.11m
from managed service and gain share contracts and the balance from
post-contract support. A further $1.11m came from change requests
(2021: $1.96m) and thus all of our revenue was "repeating" in
nature, compared to just over 90% in 2021. We had recognised some
$0.85m of license revenue in the first half of the year (as
reported in the interim results for the 6 months to 30 June 2022);
however, as noted above, during the year negotiations commenced to
convert this license contract to a managed services contract and,
whilst the revised agreement was not finally formally signed until
February 2023, in order to give a true and fair view of the results
for the year this revenue has not been recognised in 2022.
With a significant proportion of the Group's revenue denominated
in Indian Rupees ("INR") rather than US Dollars ("USD"), and a
small but significant amount in other currencies, the Group is
exposed to currency fluctuations on revenue as well as costs. 2022
was a year of exceptional volatility in global currency markets
and, whilst a depreciation of INR against USD is normal (in the
last few years averaging around 2-3%), in 2022 the INR weakened by
around 10%.
Cost of sales and overheads
Cost of sales decreased slightly to $2.09m (2021: $2.21m). These
costs comprise principally (i) the direct salary costs of providing
software support and maintenance, professional services and
consultancy; (ii) third-party software maintenance and licensing
costs; and (iii) sales commissions. The decrease reflected mainly a
reduction in sales commission accruing over the term of contracts
for which revenue was recognised in the year and other
software-related purchases, offset by an increase in support staff
salary costs.
Pre-exceptional overheads (excluding depreciation and
amortisation) increased to $2.69m (2021: $2.27m), reflecting some
increase in overall staff costs, additional efforts in sales and
marketing and the cost of travel compared to the restricted travel
in previous years.
Exceptional items and impairments
During the year the Group was unable to agree on the technical
terms of implementation of a license contract entered into in 2021
with a small customer. The Group has now formally withdrawn from
this contract and accordingly the Group has provided $0.3m against
the carrying value of the contract on the statement of financial
position (shown in contract assets). This amount is reflected in
exceptional items for the year.
Unusually for the Group, we also wrote off a receivables balance
with a long-standing debtor of around $0.2m where a change of
ownership of the customer meant that the new management refused to
recognise the validity of certain products and services provided by
Pelatro on its usual commercial terms. The group concerned
continues to be a customer with contracts entered into by new
management which recoverability is not impaired.
During the year it became clear that the activity level of one
particular customer (which the Group had acquired as a result of
the Danateq acquisition in 2018) was reducing considerably. As a
result the value of the "customer relationships" asset recognised
at the time of that acquisition was considered impaired and an
impairment charge of $3.83m taken against this (and the
corresponding goodwill was also written off). Given the effect of
the wider downturn and volatility in global markets and the demand
for Pelatro's products, we also recognised a further impairment
charge of $5.48m against the Group's other non-current assets,
resulting in a total impairment charge of $9.31m.
Profitability
Adjusted EBITDA (earnings before interest, tax, depreciation,
amortisation and exceptional items, as adjusted for the effect of
certain non-recurring or exceptional items) fell to $0.61m (2021:
$2.81m).
After taking into account net finance costs, depreciation and
amortisation (including c. $0.7m of acquisition-related
amortisation) and impairment, loss before tax was $(13.86)m (2021:
loss of $(0.67)m) before impairment and exceptional items.
Comprehensive Loss for the year was $(14.54)m (2021: $(0.94)m).
Taxation
The net taxation charge was $0.51m (2021: $0.18m) comprising
some $0.54m relating to current tax offset by a credit of $27,000
relating to a deferred tax asset recognised in one of the Group's
subsidiaries. The higher level of current tax arises due to
increased profitability in the Group's Indian subsidiary as well as
the continuing impact of withholding tax charges which are an
unavoidable feature of our global business.
Loss per share
Adjusted loss per share was (27.3)c (2021: loss of (0.4)c), and
reported loss per share was (31.5)c (2021: loss (2.1)c). No
dividend is proposed for the year (2021: nil).
Statement of Financial Position
Intangible assets
Capitalised development costs and patents
Approximately $2.78m (including $29,000 spent on patent
protection) was capitalised in the year in respect of software
development, offset by amortisation of $2.61m. As noted above an
impairment charge of $4.69m was recognised, resulting in a carrying
value of $1.94m at the balance sheet date.
Property, plant and equipment
Expenditure on property, plant and equipment was minimal at
$49,000, principally relating to IT and peripheral equipment (2021:
$88,000). The Group recognised $0.12m in impairment charges against
the Group's IT and other equipment.
Depreciation in the year amounted to $0.28m (excluding amounts
relating to Right-of-Use assets now recognised under IFRS 16, and
gross of amounts capitalised as intangible assets) (2021: $0.30m).
The aggregate net book value of property, plant and equipment fell
accordingly from $0.98m to $0.55m.
Right of use assets
The Group recognises certain long-term leases under IFRS 16 as
"right of use" assets. The reduction in the overall value of the
right of use assets from $0.24m in 2021 to $0.13m in 2022, is net
of depreciation of $0.17m and capital additions of $0.26m. These
additions do not reflect new leases but instead the capitalised
value of expected extensions to current leases. The right-of-use
assets were also impaired by $0.18m as part of the Group impairment
charge.
Trade receivables and contract assets
At 31 December 2022 total trade receivables (i.e. including
long-term receivables) stood at $3.45m (2021: $4.96m). The
reduction is largely due to the fall in related revenue.
Short-term contract assets relating to revenue (i.e. those which
are expected to reverse in less than one year) decreased to $0.08m
(2021: $0.38m), These relate entirely to the "run off" of pre-2022
contracts which have been recognised under IFRS 15 differently to
their invoicing profile. Likewise long-term contract assets
deriving from revenue decreased to $0.11m (2021: $0.23m).
Short-term fulfilment assets included in contract assets total
$0.30m (2021: $0.18m) (representing costs relating to certain
contracts to be recognised in profit and loss in the next 12
months); and $0.41m (2021: $0.38m) in respect of long-term assets
(representing costs directly relating to certain contracts to be
recognised in profit and loss after one year). This reflects the
charge to P&L in respect of sales commissions contracted in
previous years but recognised in the line with the life of the
related contract (therefore typically over 3 to 5 years)
Trade and other payables, provisions and contract
liabilities
Trade and other payables
At the year end, short-term trade payables stood at $0.53m
(2021: $0.15m), the increase being due principally to amounts due
in respect of sales commissions incurred in 2022 and payable during
2023. Other short-term payables of $0.36m (2021: $0.45m), comprise
principally amounts due in respect of staff bonuses and the balance
for sundry creditors.
Provisions
Under the Indian Payment of Gratuity Act 1972, employees i n the
Group's Indian subsidiary with more than 5 years' service are
eligible for the payment of a "gratuity" upon certain end of
employment events - short-term provisions include amounts estimated
in respect of such gratuity payments, as well as carried over leave
payments and sundry expense provisions, in total $52,000 (2021:
$37,000). The tax provision fell from $35,000 to $21,000 mainly due
to an increase in the amount of advance tax payable from our Indian
subsidiary which reduced the year end tax creditor.
Long-term provisions of $0.20m (2021: $0.20m) relate solely to
amounts estimated in respect of leave encashment and gratuity
payments. Further details of such provisions are given in Note
26.
Contract liabilities
Contract liabilities represent customer payments received in
advance of satisfying performance obligations, which are expected
to be recognised as revenue in 2023 and beyond. Short-term contract
liabilities fell to $0.17m (2021: $0.47m) along with long-term
contract liabilities to $0.18m (2021: $0.28m).
Statement of Cash Flows
Cash flow and financing
Cash generated by operations before tax payments amounted to
$1.64m (2021: $1.27m), the increase largely resulting from the
reduction in trade receivables. The Group had closing gross cash of
just under $1.0m (2021: $3.3m). Borrowings amounted to $0.59m
(2021: $0.75m) excluding amounts relating to lease liabilities.
These borrowings are to be repaid on an Equal Monthly Instalment
("EMI") basis over the next 2-5 years. In March 2023 the Group
concluded a $1.2m funding into one of its subsidiaries, to be used
for working capital and/or acquisition purposes.
Summary
Whilst the year was disappointing in revenue terms, a
significant portion of the revenue "lost" will now be recognised in
future years. The Group has continued to invest in its software
assets and this, together with targeted marketing and increasingly
successful sales efforts, has ensured an increasing stream of new
business for 2023 and beyond.
Nic Hellyer
Chief Financial Officer
Group Statement of Comprehensive Income
For the year ended 31 December 2022
2022 2021
Note $'000 $'000
Revenue 5 5,382 7,266
Cost of sales and provision of services (2,092) (2,206)
_______ _______
Gross profit 3,290 5,060
Operating expenses 6 (2,690) (2,290)
Depreciation and amortisation (3,068) (2,541)
_______ _______
Adjusted operating profit/(loss) (2,468) 229
Exceptional items 7 (1,152) -
Amortisation of acquisition-related intangibles 18 (686) (686)
Impairment of non-current assets 18 (9,305) -
--------- --------
Share-based payments 11 (45) (32)
--------- --------
_______ _______
Operating loss (13,656) (489)
Finance income 12 7 44
Finance expense 13 (212) (221)
_______ _______
Loss before taxation (13,861) (666)
Income tax expense 14 (509) (181)
_______ _______
LOSS FOR THE YEAR ATTRIBUTABLE TO OWNERS
OF THE PARENT (14,370) (847)
Other comprehensive income/(expense):
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translation of
foreign operations (134) (147)
Items that will not be reclassified subsequently
to profit or loss:
Exchange differences on translation of
equity balances (40) 50
_______ _______
Other comprehensive income, net of tax (174) (97)
TOTAL COMPREHENSIVE LOSS FOR THE YEAR (14,544) (944)
Earnings per share
Attributable to the owners of the Pelatro
Group ( basic and diluted) 15 (31.5)c (2.1)c
Group Statement of Financial Position
For the year ended 31 December 2022
2022 2021
Note $'000 $'000
Assets
Non-current assets
Intangible assets 18 1,952 11,453
Tangible assets 19 549 982
Right-of-use assets 20 132 240
Deferred tax assets 28 14
Contract assets 21 521 606
Trade receivables 21 - 163
_______ _______
3,182 13,458
Current assets
Contract assets 21 380 555
Trade receivables 21 3,450 4,793
Other assets 22 301 315
Cash and cash equivalents 987 3,331
_______ _______
5,118 8,994
TOTAL ASSETS 8,300 22,452
Liabilities
Non-current liabilities
Borrowings 23 429 608
Lease liabilities 24 130 80
Contract liabilities 25 181 278
Long-term provisions 26 199 202
_______ _______
939 1,168
Current liabilities
Short term borrowings 23 130 136
Lease liabilities 24 190 188
Trade and other payables 25 897 603
Contract liabilities 25 174 469
Provisions 26 73 72
_______ _______
1,464 1,468
TOTAL LIABILITIES 2,403 2,636
NET ASSETS 5,897 19,816
Issued share capital and reserves attributable
to owners of the parent
Share capital 27 1,606 1,501
Share premium 27 18,502 18,046
Other reserves (779) (639)
Retained earnings (13,432) 908
_______ _______
TOTAL EQUITY 5,897 19,816
Group Statement of Cash Flows
For the year ended 31 December 2022
2022 2021
$'000 $'000
Cash flows from operating activities
Profit/(loss) for the year (14,370) (847)
Adjustments for:
Income tax expense recognised in profit
or loss 509 181
Finance income (7) (44)
Finance costs 212 221
Depreciation and impairment of tangible
non-current assets 744 467
Amortisation and impairment of intangible
non-current assets 12,314 2,814
Profit on disposal of fixed assets - (10)
Share-based payments and shares issued
in lieu of cash 605 32
_______ _______
Operating cash flows before movements
in working capital 7 2,814
(Increase)/decrease in trade and other
receivables 1,690 (1,271)
Decrease in contract assets 273 206
Increase in trade and other payables 60 (532)
Increase/(decrease) in contract liabilities (392) 45
_______ _______
Cash generated from operating activities 1,638 1,262
Income tax paid (463) (258)
_______ _______
Net cash generated from operating activities 1,175 1,004
Cash flows from investing activities
Development of intangible assets (2,767) (2,540)
Purchase of intangible assets (29) (42)
Acquisition of property, plant and equipment (49) (88)
_______ _______
Net cash used in investing activities (2,845) (2,670)
Cash flows from financing activities
Proceeds from issue of ordinary shares,
net of issue costs - 4,290
Proceeds from borrowings - 70
Repayment of borrowings (122) (748)
Repayments of principal on lease liabilities (181) (173)
Interest received 7 44
Interest paid (197) (203)
Interest expense on lease liabilities (15) (25)
_______ _______
Net cash generated by/(used in) financing
activities (508) 3,255
Net increase/(decrease) in cash and cash
equivalents (2,178) 1,589
Foreign exchange differences (166) (63)
Cash and cash equivalents at beginning
of period 3,331 1,805
_______ _______
Cash and cash equivalents at end of period 987 3,331
Group Statement of Changes in Equity
For the year ended 31 December 2022
Share Share Exchange Merger Share-based Retained Total
capital premium reserve reserve payments profits
reserve
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Balance at 1 January
2021 1,212 14,045 (240) (527) 184 1,734 16,408
(Loss) after taxation
for the period - - - - - (847) (847)
Share-based payments - - - - 62 - 62
Transfer on forfeit
of share options (21) 21 -
Other comprehensive
income:
Exchange differences - - (97) - - - (97)
Transactions with owners:
Shares issued by Pelatro
Plc for cash 289 4,334 - - - - 4,623
Issue costs - (333) - - - - (333)
_____ _____ _____ _____ _____ _____ _____
Balance at 31 December
2021 1,501 18,046 (337) (527) 225 908 19,816
(Loss) after taxation
for the period - - - - - (14,370) (14,370)
Share-based payments - - - - 64 - 64
Transfer on forfeit
of share options (30) 30 -
Other comprehensive
income:
Exchange differences - - (174) - - - (174)
Transactions with owners:
Shares issued by Pelatro
Plc in lieu of cash 105 464 - - - - 569
Issue costs - (8) - - - - (8)
_____ _____ _____ _____ _____ _____ _____
Balance at 31 December
2022 1,606 18,502 (511) (527) 259 (13,432) 5,897
Notes to the Group Financial Statements
As at 31 December 2022
5 Revenue and segmental analysis
The Directors consider that the Group has a single business
segment, being the sale of information management software and
related services principally to providers of telecommunication
services ("telcos") but also to other producers and users of
significant quantities of consumer data, at present being one
customer in the financial services space. The operations of the
Group are managed centrally with Group-wide functions covering
sales and marketing, development, professional services, customer
support and finance and administration.
An analysis of revenue by product or service and by geography is
given below.
Revenue by type
The Group has five principal revenue models, being:
(1) contracts for the use of the Group's software on a regular
(usually monthly) basis, which may also provide for Group employees
to provide related services the customer ("managed services")
and/or for the Group to take a share of the revenue gain achieved
through use of the software ("gain share");
(2) contracts based on the sale of perpetual licenses for use of
the Group's proprietary enterprise software;
(3) provision of specific customer-requested modifications to
Group software ("change requests");
(4) provision of maintenance and support for the software and
its users; and
(5) provision of consultancy services and/or training relating
to the use of the software
In addition, the Group may, if required by the customer, supply
appropriate hardware on which to host the software, either for the
account of the customer or (particularly in the case of managed
services) retained in the ownership of the Group.
An analysis of revenue by type is as follows:
At 31 December 2022 2021
$'000 $'000
Recurring software sales and services 3,112 3,456
Maintenance and support 1,160 1,334
_______ _______
Total recurring revenues 4,272 4,790
Change requests 1,110 1,958
_______ _______
Total repeating revenues 5,382 6,748
Software - new licenses - 498
Consulting - 20
_______ _______
5,382 7,266
Revenue by geography
The Group recognises revenue in seven geographical regions based
on the location of customers, as set out in the following
table:
At 31 December 2022 2021
$'000 $'000
Caribbean 175 130
Central Asia - 443
Eastern Europe 241 426
MENA 77 104
South Asia 3,012 2,656
South East Asia 1,817 3,407
Sub-Saharan Africa 60 100
_______ _______
5,382 7,266
Management makes no allocation of costs, assets or liabilities
between these segments since all trading activities are operated as
a single business unit.
Customer concentration
The Group has one customer representing over 10% of revenue
(being 34% of total revenue at $1.82m) (2021: two customers,
approximately 38% of total revenue at $2.73m).
Revenue recognition
License revenue
As explained in Note 3, the Group recognises revenue from the
sale of licenses and the implementation of the software so licensed
separately, as the two activities represent distinct performance
obligations. However, as implementation to date has always been
carried out by Group personnel and is usually viewed by the
customer as an integral part of the license purchase, the two
activities are reported as one.
Irrespective of the split between license and implementation
recognition, some contracts provide for fixed payments to be made
by customers (usually monthly) over a given term (e.g. three or
five years). Under IFRS 15, in order to reflect the time value of
money, such contracts are recognised (at the point of transfer of
the license) as the capitalised value of the income stream. In
addition, interest income accrues on the credit deemed to be
extended to the customer (on a reducing balance basis). For the
financial year 2022 this figure amounts to license revenue of $nil
and interest income (from pre 2022 contracts) of $7,000 (2021:
$0.50m and $38,000).
PCS
Ancillary to a license sale, the Group typically provides five
years of PCS but does not charge for the first year; similarly in
certain contracts the Group may provide PCS at other than a
standalone selling price ("SSP"). For revenue recognition purposes
PCS income is deemed to accrue over the full term of the service
provision (whether paid or otherwise) and, as far as is estimable,
at a deemed market rate (i.e. the SSP). Accordingly, the financial
statements reflect adjustments to income:
(i) to accelerate the recognition of revenue for initial years
for which no contractual payment is due (and consequent adjustments
to revenue to derecognise revenue in later years when contractual
payments exceed revenue to be recognised); and
(ii) to accelerate or defer the recognition of revenue in cases
where the contractual PCS charge is lower (or higher) than a market
rate (the difference being netted off or added to the revenue
recognised in respect of the license fee).
For the financial year 2022 revenue includes/(excludes) (i) a
net amount of $(64,000) representing income from PCS already
recognised ahead of its contractually due dates (2021: $(101,000)),
and (ii) an amount of nil (2021: $40,000) representing revenue
netted off license income allocated to PCS.
Remaining performance obligations
There are certain software support, professional service,
maintenance and licences contracts that have been entered into for
which both:
-- the original contract period was greater than 12 months; and
-- the Group's right to consideration does not correspond directly with performance.
The amount of revenue that will be recognised in future periods
on these contracts when those remaining performance obligations
will be satisfied is shown below.
Year to 31 December
2023 2024 2025-8
$'000 $'000 $'000
Revenue expected to be recognised
on software and service contracts 366 229 133
Comparative figures for the year ended 31 December 2021 were as
follows:
Year to 31 December
2022 2023 2024-7
$'000 $'000 $'000
Revenue expected to be recognised
on software and service contracts 449 314 320
Costs of obtaining and fulfilling contracts of $0.35m have been
capitalised in 2022 (net of amortisation against revenue recognised
in respect of those contracts) (2021: $0.12m).
6 Operating expenses
Profit for the year has been arrived at after charging:
2022 2021
$'000 $'000
Amortisation of intangible non-current assets 3,306 2,814
Impairment of intangible non-current assets 9,008 -
Depreciation of tangible non-current assets 448 413
Impairment of tangible non-current assets 122 -
(Profit)/loss on disposal of Right of Use
assets - (10)
Impairment of Right of Use assets 175 -
Staff costs (see note 9) 2,888 2,865
Auditor's remuneration (see note 8) 59 47
Short-term lease expenses 21 35
Realised foreign exchange (gains)/losses 64 17
7 Non-GAAP profit measures and exceptional items
Reconciliation of operating profit to adjusted earnings before
interest, taxation, depreciation and amortisation ("EBITDA")
Year to 31 December 2022 2021
$'000 $'000
Operating profit/(loss) (13,656) (489)
Adjusted for:
Amortisation, depreciation and impairment 13,059 3,227
_______ _______
EBITDA (597) 2,738
Revenue recognised as interest under IFRS
15 7 38
Expensed share-based payments 45 32
Exceptional items:
Write off of trade receivables and contract 493 -
assets
Expenses of aborted acquisition 90 -
Employee share issue 569 -
_______ _______
Adjusted EBITDA 607 2,808
Criteria for adjustments to operating profit or loss in the
calculation of adjusted EBITDA are that they (i) arise from an
irregular and significant event or (ii) are such that the
income/cost is recognised in a pattern that is unrelated to the
resulting operational performance.
Exceptional items are treated as exceptional by reason of their
nature and are excluded from the calculation of adjusted EBITDA
(and adjusted earnings per share in Note 15) to allow a better
understanding of comparable year-on-year trading and thereby an
assessment of the underlying trends in the Group's financial
performance. These measures also provide consistency with the
Group's internal management reporting.
Adjustment for share-based payment expense is made because, once
the cost has been calculated for a given grant of options, the
Directors cannot influence the share-based payment charge incurred
in subsequent years relating to that grant; also the value of the
share option to the employee differs considerably in value and
timing from the actual cash cost to the Group.
Elements of depreciation on right-to-use assets recognised under
IFRS 16 and share-based payment expense are deemed to be directly
attributable overheads for the purposes of capitalising relevant
expenditure on developing intangible assets (see Note 18). The
figures above are shown net of amounts so capitalised.
EBITDA (and adjusted EPS) are financial measures that are not
defined or recognised under IFRS and should not be considered as an
alternative to other indicators of the Group's operating
performance, cash flows or any other measure of performance derived
in accordance with IFRS. Accordingly, these non-IFRS measures
should be viewed as supplemental to, but not as a substitute for,
measures presented in this Annual Report and Accounts. Information
regarding these measures is sometimes used by investors to evaluate
the efficiency of an entity's operations; however, there are no
generally accepted principles governing the calculation of these
measures and the criteria upon which these measures are based can
vary from company to company. These measures, by themselves, do not
provide a sufficient basis to compare the Group's performance with
that of other companies and should not be considered in isolation
or as a substitute for operating profit or any other measure as an
indicator of operating performance, or as an alternative to cash
generated from operating activities as a measure of liquidity.
Adjusted operating profit is calculated as reported operating
profit as adjusted for share-based payments, exceptional items,
impairment and acquisition-related amortisation.
The calculation of adjusted earnings per share is shown in Note
15.
9 Staff costs
Year to 31 December 2022 2021
$'000 $'000
Wages and salaries 5,611 5,256
Social security contributions 44 80
_______ _______
5,655 5,336
Less: amounts capitalised as intangible assets (2,767) (2,471)
_______ _______
2,888 2,865
The average number of persons employed by the Group during the
period was:
Year to 31 December 2022 2021
Sales 3 3
Software development 109 98
Support 130 113
Marketing 2 3
Administration 20 18
_______ _______
264 235
10 Directors' remuneration and transactions
The Directors' emoluments in the year ended 31 December 2022
were:
Basic Bonus Benefits Share-based Pension
salary in kind payments Total Total
2022 2022 2022 2022 2022 2022 2021
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Executive Directors
N. Hellyer 183 10 7 34 5 239 122
S. Menon 186 - 16 - - 202 279
S. Yezhuvath 164 - 12 - - 176 272
Non-Executive
Directors
R. Day (resigned
3 December 2022) 71 - - - 2 73 68
P. Verkade 37 - - - - 37 41
H . Berry (appointed
5 December 2022 5 - - - - 5 -
_______ ______ ______ ______ _______ _______ _______
646 10 35 34 7 732 782
11 Share-based payments
A charge of $45,000 (net of amounts capitalised of $34,000)
(2021: $32,000) has been recognised during the year for share-based
payments over the vesting period. This share-based payment expense
comprises the charge in the current period relating to the
expensing of the fair value of (a) 1,323,500 options granted under
the Plan (net of forfeited options) and (b) the 33,000 options (net
of forfeited options) issued at the time of the Company' IPO. The
options issued under the terms of the Plan were granted with an
exercise price of 73p, vesting in tranches as follows: 25% after
one year, 25% after two years and 50% after three years. There are
no conditions attaching to the vesting of the options other than
continued employment. Of this amount, $10,000 net (2021: $14,000)
relates to costs of share options issued to subsidiary
employees.
Movements in the number of share options outstanding and their
related weighted average exercise prices are as follows:
No. of options Weighted average
exercise price
2022 2021 2022 2021
Outstanding at the beginning of
the year 1,356,500 1,505,500 72.7p 72.7p
Granted during the year 250,000 - 2.5p -
Forfeited during the year (170,000) (149,000) 73.0p 73.0p
_______ _______
Outstanding at the end of the
year 1,436,500 1,356,500 60.8p 72.7p
Outstanding options are exercisable at prices between 2.5p and
73p and have a weighted average remaining contractual life of 7.4
years.
12 Finance income
2022 2021
$'000 $'000
Interest receivable on interest-bearing deposits - 6
Notional interest accruing on contracts with
a significant financing component 7 38
_______ _______
Total finance income 7 44
13 Finance expense
2022 2021
$'000 $'000
Interest and finance charges paid or payable
on borrowings 197 202
Interest on lease liabilities under IFRS
16 15 25
Less: amounts capitalised as intangible assets - (6)
_______ _______
Total finance expense 212 221
14 Taxation
Tax on profit on ordinary activities
Year to 31 December 2022 2021
$'000 $'000
Current tax
UK corporation tax charge/(credit) on profit - -
for the current year
Overseas income tax charge/(credit) 514 232
Adjustments in respect of prior periods 22 (42)
_______ _______
Total current income tax 536 190
Deferred tax
Reversal/(recognition) of deferred tax asset (27) (9)
_______ _______
Total deferred income tax (27) (9)
Total income tax expense recognised in the
year 509 181
Reconciliation of the total tax charge
The effective tax rate in the income statement for the year is
higher than the standard rate of corporation tax in the UK of 19%
(2021: higher). A reconciliation of income tax expense applicable
to the profit before taxation at the statutory tax rate to income
tax expense at the effective tax rate is as follows:
Year to 31 December 2022 2021
$'000 $'000
(Loss) before taxation (13,861) (666)
Tax charge/(credit) at the applicable rate
of 19% (2,634) (127)
Tax effect of amounts which are not deductible
(taxable) in calculating
taxable income:
Differences arising on capitalisation of
expenses (327) (275)
Fixed asset differences - impairment 1,768 -
Expenses not deductible for tax purposes
and other permanent items 467 244
Income not taxable and other permanent items 2 11
Tax exemptions, allowances and rebates (49) -
Foreign tax credits (53) -
Overseas taxation at different rates 69 12
Overseas withholding tax expenses 326 109
(De)recognition of deferred tax liability 12 (11)
(De)recognition of deferred tax asset (101) (2)
Loss carry back/tax repayable - (67)
Adjustments recognised in current year tax
in respect of prior years 29 13
Current tax (prior period) exchange difference - -
Deferred tax asset not recognised 999 274
_______ _______
Income tax expense recognised for the current
year 509 181
The Group had approximately $8.45m of tax losses carried forward
as at 31 December 2022 against which no deferred tax asset has been
recognised.
Deferred tax
Recognised deferred tax asset
2022 2021
$'000 $'000
At 1 January 2022 14 16
Recognised in profit and loss 14 (2)
_______ _______
At 31 December 2022 28 14
Comprising:
Tax losses 13 14
Timing differences 15 -
_______ _______
28 14
Deferred income tax assets have only been recognised to the
extent that it is considered probable that they can be recovered
against future taxable profits based on profit forecasts for the
foreseeable future. The deferred income tax assets at 31 December
2022 above are expected to be utilised in the next two years.
Recognised deferred tax liability
2022 2021
$'000 $'000
At 1 January 2022 13 24
Recognised in profit and loss (13) (11)
_______ _______
At 31 December 2022 - 13
Comprising:
Timing differences - 13
_______ _______
- 13
15 Earnings
Reported earnings per share
Basic earnings per share ("EPS") amounts are calculated by
dividing net profit or loss for the year attributable to owners of
the Company by the weighted average number of ordinary shares
outstanding during the year.
The Group has one category of security potentially dilutive to
ordinary shares in issue, being those share options granted to
employees where the exercise price (plus the remaining expected
charge to profit under IFRS 2) is less than the average price of
the Company's ordinary shares during the period in issue. No
dilution arose in the year as the exercise price was above the
average share price for the year.
The following reflects the earnings and share data used in the
basic earnings per share computations:
Year to 31 December 2022 2021
$'000 $'000
Profit/(loss) attributable to equity holders
of the parent:
Profit/(loss) attributable to ordinary equity
holders of the parent for basic earnings (14,370) (847)
Weighted average number of ordinary shares
in issue 45,644,075 41,153,537
Basic earnings/(loss) per share attributable
to shareholders (31.5)c (2.1)c
Adjusted earnings per share
Adjusted earnings per share is calculated as follows:
2022 2021
$'000 $'000
Profit/(loss) attributable to ordinary equity
holders of the parent for basic earnings (14,370) (847)
Adjusting items:
- exceptional items (see note 7} 1,152 -
- share-based payments 45 32
- amortisation of acquisition-related intangibles 686 686
- prior year adjustments to tax charge 22 (42)
_______ _______
Adjusted earnings attributable to owners
of the Parent (12,465) (171)
Weighted number of ordinary shares in issue 45,644,075 41,153,537
Adjusted earnings/(loss) per share attributable
to shareholders (27.3)c (0.4)c
The criteria for inclusion of adjusting items in the calculation
of adjusted EPS are the same as those relating to the calculation
of adjusted EBITDA as set out in Note 7. Additionally, finance
expense on liabilities relating to contingent consideration are
non-cash costs reflecting the time value of money in arriving at
the fair value of such liabilities and the effluxion of time over
the period for which they are outstanding; and amortisation of
acquisition-related intangibles relates to the amortisation of
intangible assets in respect of customer relationships and brands
which are recognised on a business combination and are non-cash in
nature.
18 Intangible assets
Intangible assets comprise capitalised development costs (in
relation to internally generated software and software acquired
through business combinations), software acquired from third
parties for use in the business, patents, customer relationships
and goodwill.
An analysis of goodwill and other intangible assets is as
follows:
2022 Development Third Patents Customer Goodwill Total
costs party relationships
software
$'000 $'000 $'000 $'000 $'000 $'000
Cost
At 1 January
2022 11,839 120 57 6,862 470 19,348
Additions 2,786 - 29 - - 2,815
Foreign exchange - (5) (1) - - (6)
_______ _______ _______ _______ _______ _______
At 31 December
2022 14,625 115 85 6,862 470 22,157
Amortisation
and impairment
At 1 January
2022 (5,478) (71) (2) (2,344) - (7,895)
Charge for the
year - amortisation (2,591) (23) (6) (686) - (3,306)
Charge for the
year - impairment (4,635) (18) (55) (3,832) (470) (9,010)
Foreign exchange 1 4 1 - - 6
_______ _______ _______ _______ _______ _______
At 31 December
2022 (12,703) (108) (62) (6,862) (470) (20,205)
Net carrying
amount
At 31 December
2022 1,922 7 23 - - 1,952
At 31 December
2021 6,361 49 55 4,518 470 11,453
2021 Development Third Patents Customer Goodwill Total
costs party relationships
software
$'000 $'000 $'000 $'000 $'000 $'000
Cost
At 1 January
2021 9,263 110 27 6,862 470 16,732
Additions 2,576 12 30 - - 2,618
Foreign exchange - (2) - - - (2)
_______ _______ _______ _______ _______ _______
At 31 December
2021 11,839 120 57 6,862 470 19,348
Amortisation
and impairment
At 1 January
2021 (3,373) (52) - (1,658) - (5,083)
Charge for the
year - amortisation (2,105) (21) (2) (686) - (2,814)
Charge for the - - - - - -
year - impairment
Foreign exchange - 2 - - - 2
_______ _______ _______ _______ _______ _______
At 31 December
2021 (5,478) (71) (2) (2,344) - (7,895)
Net carrying
amount
At 31 December
2021 6,361 49 55 4,518 470 11,453
Impairment of non-financial assets and goodwill
Goodwill arose on the acquisition of (i) the Danateq Assets and
(ii) PSPL. It is assessed as having an indefinite life but the
Group tests whether goodwill has suffered any impairment on an
annual basis.
Danateq
The Danateq Acquisition in 2018 (the "Acquisition") comprised
various contracts and customer relationships, certain enterprise
software and the related workforce (together the "Danateq Assets").
Given the opportunity to leverage this expertise across Pelatro's
existing business and the ability to exploit the Group's thus
enlarged customer base, the fair value of the Danateq Assets was
deemed to be greater than the assessed book value of the assets as
recognised in the financial statements of Pelatro, thus leading to
the recognition of an amount of goodwill (the "Danateq Goodwill").
Given that the software acquired has been subsumed into the Group's
mViva product suite, the contracts acquired have been transitioned
onto and/or are being fulfilled (for example in the case of the
Telenor framework agreement) by the mViva product, and the
workforce are employed by a branch of Pelatro in Singapore and work
across the product suite, the former Danateq cash-generating unit
("CGU") no longer has a separable identity. However, the customer
relationships asset which was recognised following the acquisition
is directly related to the Danateq Assets and accordingly, given
the impairment provision recognised in respect of that asset, it
was considered appropriate to write off the Danateq Goodwill in its
entirety.
Further details are given in "Customer Relationships" below.
PSPL
The PSPL CGU comprises the Group's software development and
administrative centre in Bangalore which was acquired in December
2017, and whose principal activity was at the time to develop the
Group's software and provide administrative support for the rest of
the Group. The fair value of the acquired assets was deemed to be
greater than the assessed book value of the assets as recognised in
the financial statements of Pelatro, thus leading to the
recognition of an amount of goodwill (the "PSPL Goodwill").
Subsequent to its acquisition, the activities of this subsidiary
have grown to include the provision of managed services,
post-contract support and other services to customers, using both
intangible assets (including developed software, patents and
third-party software) along with various tangible assets (in
particular on-premise hardware purchased to fulfil a significant
contract) and right-of use assets recognised under IFRS 16
(principally office leases).
The carrying value of these assets, including the associated
PSPL Goodwill, was assessed, individually where applicable, as part
of the impairment review carried out at 31 December 2022, and given
the impairment loss deemed appropriate for the related assets, the
PSPL Goodwill was written off in its entirety. Further details are
given in "Other intangible and tangible assets" below.
Other intangible and tangible assets
Other intangible and tangible assets comprise the development
costs, patents and third-party software referenced above, together
with customer relationships recognised on the Danateq Acquisition,
together with the Group's tangible assets (principally computer
hardware and office-related assets, referenced in Note 19 and
similar Right-of-Use assets recognised under IFRS 16.
Management reviews the carrying value of intangible and tangible
assets for impairment annually, or on the occurrence of an
impairment indicator. Some revenue streams in the group of assets
related to the Danateq Acquisition of 2018 have shown a steep
decline as one customer in particular has retrenched its operations
and withdrawn from taking the Group's managed service operations in
the short-term. More widely, given the downturn in Group revenue in
2022, the management have considered the value attributable to the
entirety of the Group's non-current tangible and intangible asset
base. Of this asset base, other than the Danateq assets referenced
above, individual cash-generating units ("CGUs") can be identified
as the hardware assets pertaining to one particular large managed
services contract (and certain related right-of-use lease assets)
and a small number of motor vehicles (whether owned outright or as
a right-of-use asset). In the latter case, due to the fair value
less costs of disposal no impairment has been recognised. The
remaining assets (comprising principally the capitalised value of
software developed for resale, associated patents and related third
party software), "administrative" assets such as office equipment
and leasehold improvement, along with similar right-of-use assets
have been assessed together by considering the profitability and
cash flows remaining to the Group once the specific assets referred
to above have been taken into account.
The recoverable amounts of assets have been determined from
value in use calculations based on cash flow projections covering
five years plus a terminal value. Based on these assessments, an
impairment loss has been recognised during the year totalling
$3.88m against the Danateq goodwill and related customer
relationship assets. Similarly an impairment loss has been
recognised during the year totalling $4.63m against capitalised
software and a further $55,000 and $18,000 respectively against
related patents and third party software. A specific impairment
charge of $52,000 has been made against the computer hardware
assets (and related right of use assets) associated with the
Group's significant managed services contract in India (the "MS
Contract"); for the rest of the Group, a total impairment loss of
$0.67m has been recognised against other intangible and tangible
assets, allocated as to $0.43m (goodwill), $44,000 leasehold
improvements, $13,000 office equipment and $0.17m against other
right-of-use assets. These provisions have resulted in the total
write down of all goodwill on the Group balance sheet.
With the exclusion of CGUs deemed particularly sensitive to
impairment from a reasonably possible change in key assumptions,
which have been reviewed in further detail below, management
forecasts for 2023 and 2024 anticipate revenue growth of between 8%
and 13% when compared to 2022 levels. In accordance with IAS 36
forecasts for the subsequent periods (years 3-5) assume nil real
growth in revenues, nil real growth in certain costs and a
reduction in certain growth-related "investment" costs in line with
the forecast of nil real growth. Management has applied pre-tax
discount rates to the cash flow projections between 29% and
33%.
Certain CGUs which are referred below are considered sensitive
to changes of assumptions used for the calculation of the value in
use.
The recoverable amount of the MS Contract CGU, with a net book
value of $0.49m, has been determined using cash flow forecasts that
include annual revenue growth rates (in real terms) of nil% over
the 2 year forecast period, nil% real long-term growth rate, growth
in associated costs of 5% over the 2 year forecast period and nil
thereafter (in real terms) and a pre-tax discount rate of 29%. The
recoverable amount would equal the carrying amount of the CGU if
the discount rate applied was lower by 5% or revenue growth was
higher by 3%.
The recoverable amount of the Customer Relationships asset, with
a net book value of $3.88m, has been determined using cash flow
forecasts that include annual revenue growth rates of nil% over the
2 year forecast period, nil% real long-term growth rate, growth in
associated costs of 5% over the 2 year forecast period and nil
thereafter (in real terms) and a pre-tax discount rate of 33%. The
recoverable amount is nil at any reasonable discount rate, and
would equal the carrying amount of the CGU if revenue growth was
higher by 80%.
Sensitivity to changes in assumptions
The key assumptions for the value in use calculations are those
regarding growth rates, discount rates and expected changes to
selling prices and direct costs during the period. Changes in
selling prices and direct costs, if any, are based on expectations
of future changes in the market. Management estimates discount
rates using pre-tax rates that reflect current market assessments
of the time value of money.
19 Tangible assets
2022 Leasehold Computer Office Vehicles Total
improvements equipment equipment
$'000 $'000 $'000 $'000 $'000
Cost
At 1 January 2022 129 1,151 58 299 1,637
Additions - 45 4 - 49
Foreign exchange differences (12) (113) (6) (30) (161)
_______ _______ _______ _______ _______
At 31 December 2022 117 1,083 56 269 1,525
Depreciation
At 1 January 2022 (41) (454) (31) (129) (655)
Charge for the year (18) (215) (11) (35) (279)
Impairment (44) (63) (13) - (120)
Foreign exchange differences 5 55 4 14 78
_______ _______ _______ _______ _______
At 31 December 2022 (98) (677) (51) (150) (976)
Net carrying amount
At 31 December 2022 19 406 5 119 549
At 31 December 2021 88 697 27 170 982
2021 Leasehold Computer Office Vehicles Total
improvements equipment equipment
$'000 $'000 $'000 $'000 $'000
Cost
At 1 January 2021 131 1,084 59 305 1,579
Additions - 88 - - 88
Foreign exchange differences (2) (21) (1) (6) (30)
_______ _______ _______ _______ _______
At 31 December 2021 129 1,151 58 299 1,637
Depreciation
At 1 January 2021 (24) (222) (20) (95) (361)
Charge for the year (18) (238) (11) (36) (303)
Foreign exchange differences 1 6 - 2 9
_______ _______ _______ _______ _______
At 31 December 2021 (41) (454) (31) (129) (655)
Net carrying amount
At 31 December 2021 88 697 27 170 982
As explained in Note 18, the carrying value of the Group's
non-financial assets was reviewed at 31 December 2022 and as a
result an impairment charge was recognised against all categories
of tangible assets.
20 Right-of-use assets
Right-of-use assets comprise leases over office buildings and
vehicles as follows:
2022 Office Vehicles Total
buildings
$'000 $'000 $'000
Cost
At 1 January 2022 750 - 750
Additions in respect of new or extended
leases 232 24 256
Effects of foreign exchange movements (70) - (70)
_______ _______ _______
At 31 December 2022 912 24 936
Depreciation
At 1 January 2022 (510) - (510)
Charge for the period (167) (2) (169)
Impairment recognised (175) - (175)
Effects of foreign exchange movements 50 - 50
_______ _______ _______
At 31 December 2022 (802) (2) (804)
Net carrying amount
At 31 December 2022 110 22 132
At 31 December 2021 240 - 240
2021 Office Vehicles Total
buildings
$'000 $'000 $'000
Cost
At 1 January 2021 661 32 693
Additions in respect of new or extended
leases 112 - 112
Disposals in respect of leases terminated (10) (32) (42)
Effects of foreign exchange movements (13) - (13)
_______ _______ _______
At 31 December 2021 750 - 750
Depreciation
At 1 January 2021 (355) (30) (385)
Charge for the period (164) (2) (166)
Eliminated on leases terminated - 32 32
Effects of foreign exchange movements 9 - 9
_______ _______ _______
At 31 December 2021 (510) - (510)
Net carrying amount
At 31 December 2021 240 - 240
At the end of 2021 the Group had had plans to relocate certain
office functions then spread over a number of offices in the
Bangalore area to one larger office. However, the Group was not
able to find a suitable space and accordingly no such relocation
was made. The relevant existing leases (all of which are on short
term notice periods) were deemed to have been extended
accordingly.
21 Trade and other receivables and contract assets
The timing of revenue recognition, invoicing and cash collection
results in the recognition of the following assets on the
Consolidated Statement of Financial Position:
(i) invoiced accounts receivable;
(ii) accounts invoiceable but uninvoiced at the period end (i.e.
"unbilled revenue" or UBR) (collectively with (i) recognised as
"trade receivables"); and
(iii) amounts relating to revenue recognised at the date of the
statement of financial position but not invoiceable under the terms
of the contract, or fulfilment assets ("contract assets")
In addition (iv) contract assets are recognised in respect of
certain trade-related liabilities (notably sales commissions
payable) where the full amount of such commission is payable within
one year but the revenue to which it relates is recognised over
several years (i.e. "contract fulfilment assets").
Contract assets
Due after one year 2022 2021
$'000 $'000
At 1 January 606 751
Contract assets recognised in the period 238 195
Contract assets impaired (56) -
Transfer to current contract assets (267) (340)
_______ _______
At 31 December 521 606
Due within one year 2022 2021
$'000 $'000
At 1 January 555 609
Contract assets recognised in the period,
net of releases to receivables or cash,
or amortisation to profit or loss (202) (394)
Contract assets impaired (234) -
Transfer from non-current contract assets 267 340
_______ _______
At 31 December 386 555
The Group was unable to agree on appropriate terms of
implementation of a license contract with a small customer entered
into in 2021 (and accordingly part-recognised as revenue under IFRS
15 in that year). The Group chose to withdraw from this contract
after the year end; accordingly management has impaired the entire
carrying value of this contract as it is unlikely that revenue will
arise from it. No amounts have been invoiced to the customer (and
hence there is no write-off of trade receivables) and no penalties
or similar costs would arise from such a withdrawal.
Contract assets are comprised as follows:
Due after one year 2022 2021
$'000 $'000
Contract assets relating to revenue 113 227
Contract fulfilment assets 408 379
_______ _______
521 606
Due within one year 2022 2021
$'000 $'000
Contract assets relating to revenue 80 375
Contract fulfilment assets 300 180
_______ _______
380 555
The largest individual counterparty to a receivable included in
trade and other receivables at 31 December 2022 was $0.69m (of
which some $0.24m related to unbilled revenue) (2021: $1.14m). This
customer was also the largest individual counterparty based on
invoiced receivables ($0.45m, 2021: $0.52m). The small increase in
loss allowance is due to a significant increase in a number of
country risks (driven partly by geo-political events) offset by the
reduction in the overall quantum of trade receivables. The Group's
customers are spread across a broad range of geographies.
22 Other assets
At 31 December 2022 2021
$'000 $'000
Prepayments 131 146
Deposits 70 77
Other assets (including withholding tax, GST
and VAT refunds) 101 92
_______ _______
Total other assets 302 315
23 Loans and borrowings
Loans and borrowings comprise:
At 31 December 2022 2021
$'000 $'000
Non-current liabilities
Secured term loans 10 23
Unsecured borrowings 419 585
_______ _______
429 608
Current liabilities
Current portion of term loans 11 11
Unsecured borrowings 119 125
_______ _______
130 136
Total loans and borrowings 559 744
At the reporting date the Group had two term loans, in its
operating subsidiary in India and denominated in INR, with interest
rates between 10% and 15.5% (in INR), repayable between 5 and 6
years from their inception, between June 2023 and September
2024.
24 Lease liabilities
Lease liabilities comprise liabilities arising from the
committed and expected payments on leases over office buildings and
vehicles.
2022
Amounts due in more than one year Office Vehicles Total
buildings
$'000 $'000 $'000
At 1 January 2022 80 - 80
Liabilities taken on in the period 102 12 114
Liabilities (disposed of) in the - - -
period
Transfer from long-term to short-term (53) (2) (55)
Effects of foreign exchange movements (9) - (9)
_______ _______ _______
At 31 December 2022 120 10 130
Amounts due in less than one year Office Vehicles Total
buildings
$'000 $'000 $'000
At 1 January 2022 188 - 188
Liabilities taken on in the period 130 12 142
Liabilities (disposed of) in the - - -
period
Repayments of principal (180) (2) (182)
Transfer to short-term from long-term 53 2 55
Effects of foreign exchange movements (13) - (13)
_______ _______ _______
At 31 December 2022 178 12 190
2021
Amounts due in more than one year Office Vehicles Total
buildings
$'000 $'000 $'000
At 1 January 2021 172 - 172
Liabilities taken on in the period 24 - 24
Liabilities (disposed of) in the
period (10) - (10)
Transfer from long-term to short-term (103) - (103)
Effects of foreign exchange movements (3) - (3)
_______ _______ _______
At 31 December 2021 80 - 80
Amounts due in less than one year Office Vehicles Total
buildings
$'000 $'000 $'000
At 1 January 2021 174 - 174
Liabilities taken on in the period 89 - 89
Liabilities (disposed of) in the
period (1) - (1)
Repayments of principal (171) - (171)
Transfer to short-term from long-term 103 - 103
Effects of foreign exchange movements (6) - (6)
_______ _______ _______
At 31 December 2021 188 - 188
As noted above, at the end of 2021 the Group had had plans to
relocate certain office functions spread over a number of offices
in the Bangalore area to one larger office. However, the Group was
not able to find a suitable space and accordingly no such
relocation was made. The relevant existing leases (all of which are
on short term notice periods) were deemed to have been extended
accordingly and additional lease liabilities recognised
accordingly.
25 Trade and other payables and contract liabilities
At 31 December 2022 2021
$'000 $'000
Due within one year
Trade payables 534 152
Other payables 363 451
_______ _______
Total trade and other payables 897 603
Trade payables include amounts due in respect of sales
commissions due to sales agents which is payable in less than one
year. Other payables comprise principally amounts due in respect of
staff bonuses declared for December and paid in January.
Contract liabilities
Contract liabilities represent consideration received in respect
of unsatisfied performance obligations. Changes to the Group's
contract liabilities are attributable solely to the satisfaction of
performance obligations.
At 31 December 2022 2021
$'000 $'000
Due after one year
Contract liabilities at 1 January 278 207
Contract liabilities recognised in the period - 152
Transfers to short-term liabilities (97) (81)
_______ _______
Contract liabilities at 31 December 181 278
At 31 December 2022 2021
$'000 $'000
Due within one year
Contract liabilities at 1 January 469 495
Contract liabilities recognised/(released to
revenue) in the period (392) (107)
Transfers from long-term liabilities 97 81
_______ _______
Contract liabilities at 31 December 174 469
26 Provisions
At 31 December 2022 2021
$'000 $'000
Due after one year
Employee gratuities 144 141
Leave encashment 55 61
_______ _______
199 202
At 31 December 2022 2021
$'000 $'000
Due within one year
Employee gratuities 8 7
Leave encashment 44 30
Other provisions (including tax) 21 35
_______ _______
73 72
Other provisions comprise tax and other expenses.
Under the Indian Payment of Gratuity Act 1972, employees with
more than 5 years' service are eligible for the payment of a
"gratuity" upon certain end of employment events, including
retirement, resignation, death and termination or redundancy. The
calculation of the gratuity due is based on the last drawn salary
and number of years of service. The potential liability arising
from these requirements is calculated by third party actuaries
based on employee profiles, their completed number of years in the
organization, their age, salary and also on the probability of
termination of employment, and a provision made accordingly.
Under the terms of their employment, employees are eligible to
carry forward 30 "earned leaves" (EL) to the next calendar year.
Any EL balance over and above this is paid in cash by March the
following year, hence resulting in a long-term provision.
27 Share capital and reserves
Share capital and share premium
Ordinary shares of 2.5p each (issued and fully $'000 Number
paid)
At 1 January 2021 1,212 37,032,431
Issued for cash during the year 289 8,375,000
_______ _______
At 31 December 2021 1,501 45,407,431
Issued in lieu of cash during the year 105 3,455,000
_______ _______
At 31 December 2022 1,606 48,862,431
General
Audited accounts
The financial information set out above does not comprise the
Group or the Company's statutory accounts. The Annual Report and
Financial Statements for the year ended 31 December 2021 have been
filed with the Registrar of Companies. The Independent Auditors'
Report on the Annual Report and Financial Statements ("Annual
Report") for the year ended 31 December 2021 was unqualified, did
not draw attention to any matters by way of emphasis, and did not
contain a statement under 498(2) or 498(3) of the Companies Act
2006.
The Independent Auditors' Report on the Annual Report for the
year ended 31 December 2022 is unqualified, does not draw attention
to any matters by way of emphasis, and does not contain a statement
under 498(2) or 498(3) of the Companies Act 2006. The Annual Report
will be filed with the Registrar of Companies following the annual
general meeting.
The Annual Report, together with a notice of the annual general
meeting, are expected to be made available to shareholders in May
2023. Copies will also be available on the Company's website
(www.pelatro.com) and from the Company's registered office at 49
Queen Victoria Street, London EC4N 4SA from that date.
As this summary announcement is extracted from the full
financial statements, certain references may refer to notes which
are not included herein, and the Notes section is not reproduced in
full.
Principal risks and uncertainties
The principal risks and uncertainties facing the Group together
with actions being taken to mitigate them and future potential
items for consideration will be set out in the Strategic Report
section of the Annual Financial Report 2022.
Presentation of figures
Figures are rounded to the nearest $0.1m, $0.01m or $'000 as the
case may be. Percentage increases or decreases stated above are
based on the figures as rounded. Minor differences may arise in
tabulation and figures presented elsewhere due to rounding
differences.
This announcement was approved by the Board of Directors on 25
May 2023.
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END
FR FLFVRELIEFIV
(END) Dow Jones Newswires
May 26, 2023 02:00 ET (06:00 GMT)
Pelatro (LSE:PTRO)
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