TIDMTENG
RNS Number : 0213L
Ten Lifestyle Group PLC
11 May 2022
11 May 2022
Ten Lifestyle Group plc
("Ten", the "Company" or the "Group")
Interim results for the six months ended 28 February 2022
Ten Lifestyle Group plc (AIM: TENG), a leading
technology-enabled global concierge platform for the world's
wealthy and mass affluent, announces its unaudited Interim Results
for the six months ended 28 February 2022 ("H1 2022", or "the
period").
Financial
-- Net Revenue (1) increased 21% to GBP20.8m (H1 2021: GBP17.2m)
with growth in all three global regions (EMEA, Americas, APAC)
o Corporate revenue of GBP18.4m (13% higher than H1 2021:
GBP16.3m)
o Supplier revenue of GBP2.4m (167% higher than H1 2021: GBP0.9m
and back to pre-COVID levels )
-- Operating expenses increased to GBP19.9m (H1 2021: GBP15.5m
after GBP2.1m benefit of payroll assistance (2) ) due to an
increase in employees during the period to support a recovery in
demand
-- Adjusted EBITDA (3) fell to GBP0.9m (H1 2022: GBP1.7m) due to
the higher cost base and the impact of Omicron (4) in Q2
-- Loss before tax improved to GBP(2.8)m (H1 2021: GBP(3.6)m)
largely due to a reduction in the share option charge and lower
depreciation
-- Cash and cash equivalents of GBP5.1m (H1 2021: GBP9.2m, FY 2021: GBP6.7m)
Operational
-- 100% retention of Material Contracts (5) with some key
contract renewals and contract extensions signed, including with
Barclays Bank, DNB Bank and St James's Place
-- High conversion rate of the new business pipeline has seen
new contract wins with market leading wealth managers in each of
EMEA, the Americas and APAC
-- Continued investment in proprietary digital platforms,
communications, and technologies to improve service quality and
efficiencies, GBP6.5m (H1 2021: GBP5.5m)
-- 9% increase in total Active Members (6) during the period to
221k (FY 2021: 203k (7) ), with growth in all regions
-- Recovery of high member satisfaction levels (8) following a
temporary decline at the start of the period due to an increase in
service demands while staff were recruited and trained
CURRENT TRADING AND OUTLOOK
In the two months since the end of February, monthly request
numbers have increased in all regions, with Net Revenue now above
pre-COVID levels (H1 2020: GBP 23.8 m) and travel bookings
increasing Supplier revenue above pre-COVID levels (H1 2020:
GBP2.5m). This is despite travel remaining subdued in parts of the
Americas and APAC and the closure of our Moscow office from 9
March.
Further easing of worldwide travel restrictions and concerns are
expected to result in further organic growth in request numbers and
related revenue. In addition, three previously announced new
Material Contracts are expected to launch in the second half of the
year and drive further growth across the rest of this financial
year.
We continue to make improvements to servicing, content, digital
and operational efficiencies, including the productive deployment
of new staff recruited before Omicron, to deliver improved
profitability in the second half and achieve full year Adjusted
EBITDA in line with the Board's expectations. We also continue to
invest in technology to further drive the growth engine whilst
maintaining a positive net cash position.
Alex Cheatle, CEO of Ten Lifestyle Group, said;
"As we anticipated, revenue from corporate clients grew at the
start of the period as we accelerated out of the pandemic. The
arrival of Omicron at the end of November then stalled growth.
However, we have now returned to growth and since February, Net
Revenue is tracking above levels last seen in the period before
COVID emerged (H1 2020: GBP23.8m).
In order to manage the increased level of demand, we recruited
new staff at the start of the period and retained them despite the
temporary fall in demand caused by Omicron, to support new contract
launches and the recovery in demand we are now seeing. This
increase in cost base, combined with the nonrecurrence of payroll
assistance, caused a short-term fall in profitability during the
period .
We believe the improvements made to our member proposition and
operational efficiencies, along with contracted launches in the
coming months, our strong pipeline of new business opportunities
and the gradual return of demand for our core services, means we
are well positioned to continue to drive our growth engine."
Analyst Presentation
An online analyst presentation will be held by video link today
at 9:00am.
The Group will also be presenting an Investor Webinar for
current and prospective investors on Tuesday 17 May 2022 at 5:30pm
BST .
To attend either the Analyst Presentation or the Investor
Webinar, please email investorrelations@tengroup.com .
For further information please visit www.tenlifestylegroup.com
or call:
Ten Lifestyle Group plc
Alex Cheatle, Chief Executive Officer +44 (0)20 7850
Alan Donald, Chief Financial Officer 2796
Peel Hunt LLP, Nominated Advisor and Broker
Edward Knight
Paul Gillam +44 (0) 20 7418
James Smith 8900
(1) Net Revenue excludes the direct cost of sales relating to
certain member transactions managed by the Group.
(2) During the COVID pandemic, Ten Group benefited from various
forms of payroll assistance from governments in countries where it
operated (i.e. furlough) and operated a voluntary Salary Sacrifice
Scheme in exchange for share options, as described on pages 52 and
53 of the 2021 Annual Report & Accounts.
(3) Adjusted EBITDA is operating profit/(loss) before interest,
taxation, amortisation, depreciation, share-based payment expense
and exceptional items.
(4) The Omicron variant of COVID-19 was first reported to the
World Health Organization on 24 November 2021 and quickly spread
around the world, causing countries to re-imposed lockdown
measures.
(5) Ten categorises its corporate client contracts based on the
annualised value paid, or expected to be paid, by the corporate
client for the provision of concierge and related services by Ten
as: Small contracts (below GBP0.25m); Medium contracts (between
GBP0.25m and GBP2m); Large contracts (between GBP2m and GBP5m); and
Extra Large contracts (over GBP5m). This does not include the
revenue generated from suppliers through the provision of concierge
services. Medium, Large and Extra Large contracts are collectively
Ten's "Material Contracts".
(6) Active Members are members eligible to use Ten's services by
virtue of them holding an account, card, employment or other such
position or product linked to a corporate client programme who have
used Ten's services at least once in the 12 months prior.
(7) The number of Active Members in the prior year has been
recalculated using a more accurate measure of member eligibility,
consistent with the definition of Active Members, which has
resulted in the figure for FY 2021 being revised from 210k to
203k.
(8) Ten measures member satisfaction using the Net Promoter
Score management tool, which gauges the loyalty of a firm's
customer relationships ( https://en.wikipedia.org/wiki/Net_Promoter
).
OPERATING AND FINANCIAL REVIEW
CHIEF EXECUTIVE'S STATEMENT
We started the financial year strongly with the launch of a
Large contract with Credit Saison, a leading premium credit card
issuer in Japan and expansion of an Extra Large contract with a
corporate client in EMEA. These, alongside the lifting of pandemic
restrictions in EMEA and the USA, resulted in the return to
pre-COVID levels of global travel bookings. Additional staff were
recruited in response to the growth in order to service increased
demand.
The Group's cost base increased as a result of this recruitment
and nonrecurrence of payroll assistance received in H1 2021, before
Omicron reduced member activity and revenue in the second half of
the period . The additional headcount was largely retained to
support the forecast expansion of existing contracts and new
contract launches. We saw this anticipated recovery in demand at
the end of the period and it has accelerated since the end of the
period.
Despite disruption to the recovery in levels of member activity
caused by Omicron, Net Revenue increased by 21% compared to prior
year.
The impact of lower demand due to Omicron, after the recruitment
of staff reduced Adjusted EBITDA to GBP0.9m compared to prior year
(H1 2021: GBP1.7m). Loss before tax fell to GBP(2.8)m compared to
the prior year (H1 2021: GBP(3.6)m), largely due to the absence of
a salary sacrifice scheme and a reduction in depreciation from
lower office costs.
Corporate client developments
Total Material Contracts Held by Size
Contract size Launched by 28 Signed and expected
February 2022 to be launched
by 31 August
2022
--------------- --------------------
Extra Large 3 3
--------------- --------------------
Large 6 6
--------------- --------------------
Medium 17 20
--------------- --------------------
Total 26 29
--------------- --------------------
During the period three new Material Contracts have been won as
well as multiple Small contract wins; all expected to launch by the
end of the financial year. These include a Medium contract with one
of Japan's largest wealth management businesses, a Medium contract
to initially launch in the USA with one of the world's largest
private banks and a Medium contract with one of the UK's largest
wealth managers.
The Group retained all its Material Contracts in the period,
securing contract renewals and extensions with existing corporate
clients, including Barclays Bank, DNB Bank and St James's Place.
This demonstrates the competitive resilience of Ten's competitive
position and the apparent value of our concierge service to our
clients as a customer retention tool.
Ten has been engaged by certain existing clients to deliver
bespoke, paid-for digital projects to develop and enhance the Ten's
proprietary digital platform and content to increase their customer
metrics.
Members
As the world progressively emerges from the pandemic, we are
seeing a gradual increase (+9%) in the number of Active Members
using the service in all regions, which generally results in
increased Net Revenue from corporate accounts.
Member satisfaction levels dipped in the Autumn due to increase
in demand and lag between hiring new staff and them becoming fully
trained, effective, and efficient. Service levels have recovered
during the second half of the period.
FINANCIAL REVIEW
Results
GBPm H1 2022 H1 2021
Revenue 21.3 17.5
-------- --------
Net Revenue 20.8 17.2
-------- --------
Operating expenses and Other income (19.9) (15.5)
-------- --------
Adjusted EBITDA 0.9 1.7
-------- --------
Adjusted EBITDA % of Net Revenue 4.3% 9.8%
-------- --------
Depreciation (1.3) (1.8)
-------- --------
Amortisation (2.2) (1.9)
-------- --------
Share-based payments and exceptional items charge (0.3) (1.2)
-------- --------
Operating loss before interest and tax (2.9) (3.2)
-------- --------
Net finance income/(expense) 0.1 (0.4)
-------- --------
Loss before taxation (2.8) (3.6)
-------- --------
Taxation charge (0.4) (0.3)
-------- --------
Loss for the period (3.2) (3.9)
-------- --------
Revenue
Revenue for the period was GBP21.3m, a 22% increase on H1 2021
(GBP17.5m). Net Revenue (which is our key revenue measure) for the
period was GBP20.8m, a 21% increase on the same period of the prior
year (H1 2021: GBP17.2m) and a 19% increase on the previous period
(H2 2021: GBP17.5m), however it remained 13% lower than H1 2020:
GBP23.8m, which was the last period before international lockdowns
took effect.
This revenue improvement was driven primarily by recovery in the
business at the start of the period offset by lower demand due to
the impact of the Omicron on member activity.
Corporate revenue was GBP18.4m, (paid by our corporate clients
to service their customers) compared to the prior year (H1 2021:
GBP16.3m) but remains 14% below pre-COVID levels (H1 2020:
GBP21.3m). Supplier revenue (predominantly travel related) was
GBP2.4m, an 167% increase compared to the prior year (H1 2021:
GBP0.9m) and a return to pre-COVID levels (H1 2020: GBP2.5m),
despite Omicron affecting global travel during the period.
Operating expenses & other income excluding depreciation,
amortisation, share based payments and exceptional items
Operating expenses increased to GBP19.9m (H1 2021: GBP15.5m
after benefit of GBP1.4m of government salary subsidies and GBP0.7m
salary sacrifice savings), driven by increased activity in the
period, particularly at the start of the period as we recruited
staff to service increases in requests alongside nonrecurrence of
payroll assistance from the previous year. Operating expenses
remain 8% lower than pre-COVID levels ( H1 2020: GBP21.7m ) due to
improved efficiencies.
When the impact of Omicron reduced activity, a decision was made
to retain staff as we saw Omicron as having a short-term impact on
the business and it was more efficient to retain staff rather than
reduce and then rehire.
Adjusted EBITDA
Adjusted EBITDA, as reported, takes into account all Group
operating costs, other than depreciation of GBP1.3m (H1 2021:
GBP1.8m), amortisation of GBP2.2m (H1 2021: GBP1.9m), share-based
payment expenses of GBP0.3m (H1 2021: GBP0.8m) and exceptional
charges of GBP0.0m (H1 2021: GBP0.4m). On this basis, Adjusted
EBITDA was a profit of GBP0.9m (H1 2021: GBP1.7m).
Depreciation has declined by GBP0.5m, primarily due to a
reduction in Right-of-use Asset (lower lease costs). Amortisation
increased by GBP0.3m, reflecting our continued technology
investment. Share-based payment expenses decreased by GBP0.5m as
the number of options granted in the period was lower than in the
prior year.
As a result of the above, Loss before tax has improved by 22% to
GBP(2.8)m (H1 2021: GBP(3.6)m).
Regional performance
Segmental Net Revenue reporting reflects our servicing location
rather than the location of our corporate clients. This allows us
to understand and track the efficiency and profitability of our
operations around the world.
GBPm H1 2022 H1 2021 % change
EMEA 10.0 8.7 +15%
-------- -------- ---------
Americas 6.5 5.0 +30%
-------- -------- ---------
APAC 4.3 3.5 +23%
-------- -------- ---------
Total 20.8 17.2 +21%
-------- -------- ---------
After fully allocating our indirect central costs including IT,
platform support, non-lease costs and management across the
regions, the Adjusted EBITDA profitability of each regional segment
is:
GBPm H1 2022 H1 2021
EMEA 1.8 3.0
-------- --------
Americas (1.1) (1.7)
-------- --------
APAC 0.2 0.4
-------- --------
Total 0.9 1.7
-------- --------
Adjusted EBITDA % of
Net Revenue 4.3% 9.8%
-------- --------
EMEA
Net Revenue in the region increased by 15% to GBP10.0m (H1 2021:
GBP8.7m). The increase in Net Revenue of GBP1.3m is primarily
driven by recovery of base business and higher supplier revenue due
to increased demand primarily at the start of the period offset by
slowing of activity in the second half of the period due to the
Omicron variant. Adjusted EBITDA of GBP1.8m is lower than prior
year of GBP3.0m due to additional staff and nonrecurrence of
payroll assistance, as previously explained.
AMERICAS
Net Revenue from the region increased by 30% to GBP6.5m (H1
2021: GBP5.0m). The GBP1.5m increase in revenue in the region also
reflected the recovery in base business activity and increase in
Supplier revenue as travel restrictions started to ease. As a
result, the Adjusted EBITDA loss of GBP(1.1)m is lower than prior
year of GBP(1.7)m.
APAC
Net Revenue increased by 23% to GBP4.3m (H1 2021: GBP3.5m). This
increase is primarily due to the new Large contract with Credit
Saison that launched in September 2021. The region remains
relatively subdued from an activity perspective as the impact of
various lockdowns have further delayed recovery in the region in
the period. Further revenue recovery is dependent on the timing on
international travel and domestic activity fully opening up again
in the region. Adjusted EBITDA profit of GBP0.2m compared to an
Adjusted EBITDA profit of GBP0.4m in the prior period.
Cash flow
H1 2022
GBPm
Loss before tax (2.8)
Movement in working capital 0.5
Non-cash items (share-based payments, depreciation,
amortisation charges and exceptional items) 3.7
--------
Pre-tax operating cash in flows 1.4
Capital expenditure (0.5)
Investment in intangibles (2.9)
Taxation (0.2)
--------
Cash outflow (2.2)
--------
Cash receipts from issue of new shares and sale
of treasury shares 1.8
Repayment of leases and net interest (1.2)
--------
Net Financing activities 0.6
Foreign currency movements 0.1
--------
Reduction in cash (1.5)
--------
Cash and cash equivalents balance 5.1
========
Pre-tax operating cash inflows of GBP1.4m, reflected a loss
before tax of GBP2.8m, increased net working capital of GBP0.5m,
and add back of non-cash items of GBP3.7m, as highlighted
above.
Additionally, as planned, there was GBP2.9m (H1 2021: GBP2.5m)
of capital investment in the period in both our global content, our
internal CRM platform (TenMAID) and the continued development of
our digital platform.
Cash receipts from issue of new shares of GBP1.3m, primarily
from exercising of salary sacrifice options and some CSOP options,
sale of treasury shares of GBP0.5m offset by Repayment of leases
and net interest of GBP1.2m has resulted in a cash outflow in the
period of GBP1.5m.
Balance sheet
GBP'm H1 2022 FY 2021
Intangible assets 12.3 11.6
-------- --------
Property, plant and equipment 0.7 0.6
-------- --------
Right-of-use assets 2.7 2.6
-------- --------
Cash 5.1 6.7
-------- --------
Other current assets 8.4 5.8
-------- --------
Current liabilities (17.2) (13.7)
-------- --------
Other non-current liabilities (1.3) (1.7)
-------- --------
Net assets 10.7 11.9
-------- --------
Share capital/Share premium 30.7 29.4
-------- --------
Reserves (20.0) (17.5)
-------- --------
Total equity 10.7 11.9
-------- --------
With the increase in business activity, other current assets
grew by GBP2.6m primarily due to trade receivables and current
liabilities, increased by GBP3.5m as deferred income increased. Net
assets of GBP10.7m includes cash of GBP5.1m as at 28 February
2022.
Principle Risks and Uncertainties
The principle risks and uncertainties facing the Group remain
broadly consistent with the Principle Risks and Uncertainties
reported in Ten's 2021 Annual Report. The conflict in Ukraine has
had limited macroeconomic impact on Ten's core service categories
in the affected region and the impact of the closure of the Group's
Moscow office from 9 March 2022 is expected to be limited (the
Russia business contributed <1.5% of the Group's Net Revenue in
the period). Additional steps have been taken to ensure the Group's
continued compliance with international sanctions.
Alex Cheatle Alan Donald
Chief Executive Officer Chief Finance Officer
10 May 2022 10 May 2022
Consolidated statement of comprehensive income
Note 6 months 6 months
to 28 Feb to 28 Feb
2022 2021
Unaudited Unaudited
GBP'000 GBP'000
Revenue 2 21,326 17,484
Cost of sales on principal member transactions (574) (318)
----------- -----------
Net Revenue 2 20,752 17,166
Other cost of sales (638) (328)
Gross profit 20,114 16,838
Administrative expenses (23,139) (20,202)
Other income 150 150
Operating profit before amortisation, depreciation,
interest, share based payments, exceptional
items and taxation ("Adjusted EBITDA") 886 1,689
Depreciation (1,305) (1,765)
Amortisation 3 (2,156) (1,877)
Share-based payment expense (300) (816)
Exceptional items - (445)
----------------------------------------------------- ----- ----------- -----------
Operating loss (2,875) (3,214)
Net Finance Income/(expenses) 36 (365)
----------- -----------
Loss before taxation (2,839) (3,579)
Taxation expense 4 (316) (351)
----------- -----------
Loss for the period (3,155) (3,930)
=========== ===========
Other comprehensive expense:
Foreign currency translation differences (174) (135)
Total comprehensive loss for the period (3,329) (4,065)
=========== ===========
Basic and diluted loss per ordinary share 5 (3.8)p (4.9)p
The consolidated statement of comprehensive income has been
prepared on the basis that all operations are continuing
operations.
Consolidated statement of financial position
Note 6 months to 31 August
28 Feb 2022 2021
Unaudited Audited
GBP'000 GBP'000
Non-current assets
Intangible assets 3 12,329 11,555
Property, plant and equipment 719 561
Right of use assets 2,674 2,601
----------
Total non-current assets 15,722 14,717
------------- ----------
Current assets
Inventories 70 98
Trade and other receivables 8,358 5,707
Cash and cash equivalents 5,122 6,662
----------
Total current assets 13,550 12,467
------------- ----------
Total assets 29,272 27,184
============= ==========
Current liabilities
Trade and other payables (14,761) (11,487)
Provisions (596) (568)
Lease Liabilities (1,819) (1,504)
Total current liabilities (17,176) (13,559)
------------- ----------
Net current liabilities (3,626) (1,092)
============= ==========
Non-current liabilities
Lease Liabilities (1,356) (1,678)
Total non-current liabilities (1,356) (1,678)
------------- ----------
Total liabilities (18,532) (15,237)
============= ==========
Net assets 10,740 11,947
============= ==========
Equity
Called up share capital 84 82
Share premium account 30,658 29,356
Merger relief reserve 1,993 1,993
Treasury reserve 523 5
Foreign exchange reserve (584) (410)
Retained deficit (21,934) (19,079)
Total equity 10,740 11,947
============= ==========
Consolidated statement of changes in equity
Share Merger Foreign
Share premium relief exchange Treasury Retained
capital account reserve reserve reserve deficit Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 September
2020 (Audited) 81 28,480 1,993 (405) 15 (14,931) 15,233
--------- --------- --------- ---------- --------- --------- --------
Loss for the year - - - - - (5,774) (5,774)
Foreign exchange - - - (5) - - (5)
Total comprehensive
income for the year - - - (5) - (5,774) (5,779)
Shares purchased by
Employee Benefit Trust
(EBT) - - - - (10) - (10)
Issue of share capital 1 876 877
Equity-settled share-based
payments charge - - - - - 1,626 1,626
Balance at 31 August
2021 82 29,356 1,993 (410) 5 (19,079) 11,947
Period ended 28 February
2022
Loss for the year (3,155) (3,155)
Foreign exchange - - - (174) - - (174)
Total comprehensive
income for the year - - - (174) - (3,155) (3,329)
Equity-settled share-based
payments charge - - - - - 300 300
Shares sold by Employee
Benefit Trust (EBT) 518 - 518
Issue of new share
capital 2 1,302 - - - - 1,304
Balance at 28 February
2022 (Unaudited) 84 30,658 1,993 (684) 523 (21,934) 10,740
========= ========= ========= ========== ========= ========= ========
Condensed consolidated statement of cash flows
Note 6 months 6 months
to 28 Feb to 28 Feb
2022 2021
GBP'000 GBP'000
Cash flows from operating activities
Loss for the year, after tax (3,155) (3,930)
Adjustments for:
Taxation expense 4 316 351
Net Finance Income (36) 173
Amortisation of intangible assets 3 2,156 1,877
Depreciation of property, plant and
equipment 229 376
Depreciation of right-of-use asset 1,076 1,389
Equity-settled share based payment expense 300 816
Impairment - 445
Movement in working capital:
Decrease in inventories 28 5
(Increase)/Decrease in trade and other
receivables (2,723) 1,698
Increase/(Decrease) in trade and other
payables 3,201 (786)
Cash from by operations 1,392 2,414
Tax paid (236) (227)
Net cash from operating activities 1,156 2,187
----------- -----------
Cashflows from Investing activities
Purchase of intangible assets 3 (2,927) (2,525)
Purchase of property, plant and equipment (457) (49)
Net cash used by investing activities (3,384) (2,574)
----------- -----------
Cash flows from financing activities
Lease Liability repayments (1,093) (1,544)
Sale of treasury shares 518 -
Interest paid on IFRS16 lease liabilities (93) (167)
Cash receipts from issue of share capital 1,302 597
Net cash used by financing activities 634 (1,114)
----------- -----------
Foreign currency movements 54 (284)
Net decrease in cash and cash equivalents (1,540) (1,785)
Cash and cash equivalents at beginning
of period 6,662 10,957
Cash and cash equivalents at end of
period
Cash at bank and in hand 5,122 9,172
Cash and cash equivalents 5,122 9,172
=========== ===========
Notes to the Interim Financial Information
1. Basis of preparation
These interim consolidated financial statements have been
prepared using accounting policies based on International Financial
Reporting Standards (IFRS and IFRIC Interpretations) issued by the
International Accounting Standards Board ("IASB") as adopted for
use in the EU. They do not include all disclosures that would
otherwise be required in a complete set of financial statements and
should be read in conjunction with the 31 August 2021 Annual
Report. The financial information for the half years ended 28
February 2022 and 28 February 2021 does not constitute statutory
accounts within the meaning of Section 434 (3) of the Companies Act
2006 and both periods are unaudited.
The annual financial statements of Ten Lifestyle Group plc ('the
Group') are prepared in accordance with International standards in
conformity with the requirements of the Companies Act 2006 ('IFRS')
and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS (except as otherwise stated). The
comparative financial information for the year ended 31 August 2021
included within this report does not constitute the full statutory
Annual Report for that period. The statutory Annual Report and
Financial Statements for year ended 31 August 2021 have been filed
with the Registrar of Companies. The Independent Auditors' Report
in the Annual Report and Financial Statements for the year ended 31
August 2021 was unqualified, did not draw attention to any matters
by way of emphasis and did not contain a statement under 498(2)-(3)
of the Companies Act 2006.
The Group has applied the same accounting policies and methods
of computation in its interim consolidated financial statements as
in its year ended 31 August 2021 annual financial statements. The
Groups tax charge is not accounted for under the same basis as IAS
34. The tax charge is calculated using the expected effective tax
rate at the reporting date. There are no new standards effective
yet and that would be expected to have a material impact on the
entity in the current period.
Going Concern
As at 28 February 2022, the date of the interim consolidated
financial statements, the Group had cash of GBP5.1m. Subsequent to
the period's end, as announced on 28 March 2022, the Group borrowed
GBP1.5m from a related party for 15 months to support the business'
normal working capital cycles, to allow the Group to continue to
invest in its technology platform and to support revenue growth, in
line with management's expectations.
As indicated in the Current Trading and Outlook above, in the
two months since the end of February monthly request numbers have
increased in all regions with Net Revenue now above pre-COVID
levels (H1 2020: GBP23.8m) and travel bookings driving Supplier
revenue above pre-COVID levels (H1 2020: GBP2.5m).
The Directors have taken account of this position when
considering forecasts to support their going concern conclusion.
The following has been considered:
-- Base Case cashflow forecast to 31 August 2023
-- Downside cashflow forecast to 31 August 2023
-- Mitigating actions available
Base Case Scenario
The Base Case forecast reviewed by the Directors is in line with
expectations for the current financial year and FY 2023. The Net
Revenue assumptions in the Base Case forecast are consistent with
growth trends around base business growth, net contract wins and
Supplier revenue growth. Cost assumptions reflect changes in Net
Revenue as well as continual improvements in operational
efficiencies.
Under this scenario, the Group will remain in a net cash
position during the forecasted period.
Downside scenario and mitigating actions
The Directors consider that the major risks in the Base Case
forecast is that our Net Revenue growth assumptions are not met and
remain flat during the period. If this scenario were to develop,
the Group has a number of mitigating actions available to it,
including reducing direct operating costs to align to Net Revenue
growth rates as well as reducing indirect costs supporting the
business.
The Directors are confident that the impact of these mitigating
actions would ensure the Group remains in a net cash position
during the forecasted period.
Conclusion
Having considered the forecast scenarios, including the main
risks within them and mitigating actions described, there is a
reasonable expectation that the Group has adequate financial
resources to continue to operate for at least the next twelve
months from the date of this interim report. Accordingly, the
consolidated financial statements have been prepared on a going
concern basis.
The Board of Directors approved this interim report on 10 May
2022.
2. Segmental Information
The total revenue for the Group has been derived from its
principal activity; the provision of concierge services.
6 months 6 months
to 28 Feb to 28 Feb
2022 2021
(Unaudited) (Unaudited)
GBP'000 GBP'000
EMEA 10,014 8,735
Americas 6,483 4,997
APAC 4,255 3,434
------------ ------------
Net Revenue 20,752 17,166
Add back: Cost of sales on principal member transactions 574 318
------------ ------------
Revenue 21,326 17,484
EMEA 1,830 2,956
Americas (1,143) (1,653)
APAC 199 386
------------ ------------
Adjusted EBITDA 886 1,689
Amortisation (2,156) (1,877)
Depreciation (1,305) (1,765)
Share-based payment expense (300) (816)
Exceptional Items - (445)
------------ ------------
Operating loss (2,875) (3,214)
Foreign exchange gain/(loss) 129 (192)
Other net finance expense (93) (173)
------------ ------------
Loss before taxation (2,839) (3,579)
Taxation expense (316) (351)
------------ ------------
Loss for the year (3,155) (3,930)
============ ============
Net Revenue is a non-GAAP Group measure that excludes the direct
cost of sales relating to member transactions managed by the Group,
such as the cost of airline tickets sold under the Group's ATOL
licence's. Net Revenue is the measure of the Group's income on
which segmental performance is measured.
Adjusted EBITDA is a Group non-GAAP specific measure excluding
interest, taxation, depreciation, amortisation, share-based
payments and exceptional costs, the latter being expenses which are
considered to be one-off and non-recurring in nature (where
applicable).
Adjusted EBITDA is the main measure of performance used by the
Group's Chief Executive Officer, who is considered to be the chief
operating decision maker. Adjusted EBITDA is the principal profit
measure for a segment.
The statement of financial position is not analysed between
reporting segment. Management and the chief operating
decision-maker consider the statement of financial position at
Group level.
3. Intangible Assets
The Group capitalised GBP2.9m (H1 2021: GBP2.5m, FY 2021:
GBP5.4m) of costs representing the development of Ten's global
digital platform, TenMAID (Ten's proprietary customer relationship
management system) resulting in a net book value of GBP12.3m (H1
2021: GBP10.7m, FY 2021: GBP11.6m) after an amortisation charge of
GBP2.2m (H1 2021: GBP1.9m, FY 2021: GBP4.0m).
4. Taxation
The income tax expense has been recognised based on the best
estimate of the weighted average annual effective UK corporation
tax rate expected for the full financial year. The Group currently
forecasts a loss for the financial year ending 31 August 2021 and
therefore no charge has been recognised in regard to UK corporation
tax in the period.
The income tax expense of GBP0.4m (H1 2021: GBP0.4m) includes
foreign taxes recognised by overseas Group companies on a territory
by territory basis using the expected effective tax rate for the
full year.
5. Earnings Per Share
6 months 6 months
to 28 Feb to 28 Feb
2022 2021
GBP'000 GBP'000
Loss attributable to equity shareholders of the parent (3,155) (3,930)
----------- -----------
Weighted average number of ordinary shares in issue
(net of treasury) 83,195,255 80,302,498
Basic loss per share (pence) (3.8)p (4.9)p
----------- -----------
Where the Group has incurred a loss in the six-month period to
28 February 2022, the diluted earnings per share is the same as the
basic loss per share as the loss has an anti-dilutive effect.
6. Post-period events
As a result of the conflict in Ukraine, the Group ceased its
limited business activities in Russia (c. 1-2% of the Group's
annual Net Revenue) and closed its Moscow office from 9 March.
Additional steps have been taken to ensure compliance with
international sanctions.
As announced on 28 March 2022, the Group borrowed GBP1.5m from a
related party for a 15 month term to support the business' normal
working capital cycles, to allow the Group to continue to invest in
its technology platform and to support revenue growth, in line with
management's expectations.
7. Cautionary Statement
This document contains certain forward-looking statements
relating to Ten Lifestyle Group plc. The Company considers any
statements that are not historical facts as "forward-looking
statements". They relate to events and trends that are subject to
risk and uncertainty that may cause actual results and the
financial performance of the Company to differ materially from
those contained in any forward-looking statement. These statements
are made by the Directors in good faith based on information
available to them and such statements should be treated with
caution due to the inherent uncertainties, including both economic
and business risk factors, underlying any such forward-looking
information.
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END
IR BBLLFLELLBBE
(END) Dow Jones Newswires
May 11, 2022 02:01 ET (06:01 GMT)
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