TIDMCALL
RNS Number : 0343U
Cloudcall Group PLC
31 March 2021
CloudCall Group plc
("CloudCall", "The Group" or the "Company")
Final Results for the Year Ended 31 December 2020
A YEAR OF TWO HALVES WITH STRENGTHENING PRODUCT MARKET FIT
UNDERPINNING A RETURN TO GROWTH IN H2
CloudCall (AIM: CALL), a leading cloud-based software business
that integrates communications technology into Customer
Relationship Management (CRM) platforms, is pleased to announce its
full year results for the year ended 31 December 2020.
Financial highlights
-- Total recurring revenues* up 13% compared to 2019 including
growth in US recurring revenues of 25%
-- Total revenues up 4% to GBP11.8m (2019: GBP11.4m) with
recurring and repeating revenues* representing 95% of total
revenues (2019: 89%)
-- Total number of end-users up 14% to 48,255 (2019: 42,348)
-- Gross margin increased to 81% (2019: 79%)
-- Adjusted EBITDA** loss of GBP4.4m (2019: GBP2.2m)
-- Loss after tax of GBP5.7m (2019: GBP2.9m)
-- R&D tax credit received during the year of GBP811k (2019: GBP621k)
-- Available gross cash of GBP5.7m as at 31 December 2020 (2019: GBP13.1m)
-- Post the period-end, the Group raised gross proceeds of
GBP7.5m via a share placing and secured an updated GBP5m debt
facility with Shawbrook
Operational highlights
-- Growth post initial COVID-19 impact restored, with many KPIs
now back to or above pre-COVID-19 levels
-- Successful launch of Cloudcall services in Australia
-- Launch of Microsoft Teams integration & 'Property and Real Estate' vertical
-- 8 new or refreshed CRM integrations, including 3 CRMs in the
new 'Property & Real Estate vertical' significantly expanding
the number of companies able to benefit from CloudCall's deeply
integrated communications
-- Executive management team strengthened to execute the Group's growth strategy
-- Strong recovery in H2 2020 has continued into 2021 with
performance since the end of the year in line with management
expectations
*Recurring revenue is derived from contracted subscription-based
products. Repeating revenue is related to pay-as-you-go telephony
and SMS revenue which, whilst not directly contracted, has a high
degree of visibility and predictability.
** Adjusted EBITDA represents operating loss before interest,
tax, depreciation, amortisation and share based payment
expenses.
Simon Cleaver, Chief Executive Officer of CloudCall
commented;
"Despite the challenges we faced in 2020 as the ramifications of
COVID-19 became clear, I am delighted to report that the recovery
from the initial impact to our customers and prospects was strong,
effectively giving us a "deep V" shape to the year. Indeed, I was
particularly pleased to note that many of our sales KPIs were
stronger post-COVID than they were pre-COVID, demonstrating the
effectiveness of CloudCall's CRM-based go-to-market strategy and
increasing product market fit as the pandemic accelerates the trend
towards remote working.
Whilst COVID-19 continues to impact the broader global economic
environment, I am pleased to report that we have been hard at work
strengthening the business with considerable investments in sales
and marketing, our senior management team and our internal tools
and processes, all of which improve our scalability and readiness
to drive forward as the markets return. We have already seen the
benefits of these investments in H2 2020 and the Group has made an
encouraging start to 2021.
The Board is prudently optimistic for the future of CloudCall,
given its compelling and relevant offering for dispersed
workforces, and the relatively limited impact that the most recent
UK lockdowns have had on the business thus far. The improved
performance during H2 2020 with its 12% growth in monthly recurring
revenue and a robust pipeline of new sales opportunities reinforces
this optimism, however, the Board is mindful that the lost momentum
from the first half of 2020 does mean that CloudCall's growth
strategy has essentially been delayed by approximately one
year.
Given the growth momentum generated in H2 2020, the Board is
confident that the Group will be able to deliver revenue of GBP14m
in 2021 representing growth of 18%. This return to stronger growth,
together with a strengthened balance sheet as a result of the
recently completed placing, means that the Board also remains
confident in its ambition to now reach monthly EBITDA breakeven by
mid-2023 and achieve a GBP50m revenue run-rate during 2026."
This announcement contains inside information for the purposes
of article 7 of the Market Abuse Regulation (EU) 596/2014 as
amended by regulation 11 of the Market Abuse (Amendment) (EU Exit)
Regulations 2019/310. Upon the publication of this announcement,
this inside information is now considered to be in the public
domain.
For further information, please contact:
CloudCall Group plc
Simon Cleaver, Chief Executive
Officer Tel: +44 (0)20 3587 7188
Paul Williams, Chief Financial
Officer
Canaccord Genuity Limited Tel: +44 (0)20 7523 8000
Simon Bridges
Richard Andrews
Thomas Diehl
Investor presentation webcast
Further to the completion of its recent placing on 29 March
2021, U.S. regulations prevent the Company from undertaking any
marketing to US investors for a period of 40 days from completion
of the placing. The Company therefore plans to host a live
presentation for investors to discuss the 2020 results, and to
provide a brief 2021 trading update in late May via the Investor
Meet Company communications platform.
Investors can sign up to Investor Meet Company for free. Simply
register using the link below and add a request to meet Cloudcall
to be invited to the next meeting.
https://www.investormeetcompany.com/register
Investors that have already registered and added to meet the
Company, will be automatically invited. There will be an
opportunity to ask questions directly to the team.
Annual Report
The Annual Report for the year ended 31 December 2020 will be
published on 31 March 2021, via the Company's website at
www.cloudcall.com . The Annual Report will be posted to
shareholders that have requested hard copies in due course and the
Company will notify its shareholders once this has occurred.
Annual General Meeting
These accounts will be tabled for approval at the forthcoming
Annual General Meeting of the Group. Details of the date, location
and time of the AGM, together with instructions on how to attend,
vote and participate in any Q&A will be announced in
advance.
Chairman's Statement
As with many businesses the global pandemic has had a
significant impact on the results for 2020. Thanks to decisive
leadership, resilient systems and highly committed staff around the
world, the business was able to switch quickly and effectively to
home working with minimal disruption to customer service and
project delivery.
One short term impact of the lockdowns and working from home
guidance imposed around the world was a slowdown in new customer
opportunities as businesses focussed on cash preservation and
effectively parked most new initiatives. We also saw, particularly
amongst the recruitment vertical (which accounts for over half of
the CloudCall customer base), requests for reductions in user
numbers and/or temporary billing relief as some of our clients
adjusted rapidly to reflect lower demand for new hiring in their
own markets.
The leadership team of CloudCall quickly reviewed the options
for reducing cash burn and implemented a significant cost reduction
programme of around GBP1.3m, focussing on the areas that could be
impactful quickly without damaging long term growth prospects.
As we moved into the latter part of the year, we saw our
customers and prospects adapting to the realities of the
post-pandemic world and user numbers and revenues once again began
to grow. With apologies for borrowing every football commentator's
favourite cliché it was definitely a year of two halves.
I am pleased to report therefore that, despite the significant
macroeconomic uncertainty and unexpected challenges experienced as
a result of COVID-19, the Group has managed to effectively weather
this storm, continuing to grow revenues (albeit slower than
originally expected) and, following the recent share placing and
refinancing of debt facilities, is well placed to pursue its growth
strategy into 2021 and beyond.
Key performance indicators
-- Adjusted EBITDA losses widened during the year from GBP2.2m in 2019 to GBP4.4m
-- Loss after tax increased to GBP5.7m (2019: GBP2.9m)
-- Total revenues up by 4% to GBP11.8m compared to GBP11.4m in FY 2019
-- Monthly recurring revenues up by 13% compared to FY 2019
-- Total users increased by 14% since 31 December 2019
-- Underlying SaaS metrics, particularly cost of customer
acquisition versus lifetime value continue to be highly
attractive
Working Capital
At the end of 2019, the Company announced it had raised gross
proceeds of GBP12.1m via a placing and open offer to fund future
growth. At the time, the Board were confident that this provided
adequate working capital to fund an investment programme that
included investing in customer led growth initiatives, product
enhancements, internal systems, strengthening of the executive
management team and other expansion opportunities.
2020 began well, with key elements of these strategic
initiatives making a very positive impact, resulting in additional
lead generation and a strengthening sales pipeline in the first two
months. This was then followed by the uncertainty created by the
COVID-19 pandemic, leading to a sharp reduction in new customer
signings which, when combined with existing customer user
reductions and billing relief requests, led to Monthly Recurring
Revenue (MRR) at the half year dropping by 7% compared to the start
of the year.
The rapidly implemented cost reduction measures, along with
employee retention grant funding received in both the UK and the
US, helped to reduce operating costs by approximately GBP1.3m from
previously planned levels. However, despite these savings, adjusted
EBITDA losses widened during the year from GBP2.2m in 2019 to
GBP4.4m in 2020.
Although more severe cost reductions were contemplated and
assessed, the Board ultimately considered that these other measures
were not required given they could impact the ability of the
business to regain its growth momentum once the world emerged from
the initial shock of COVID-19 lockdowns.
The loss of approximately GBP3m in forecast recurring revenue in
2020 not only weakened the year-end balance sheet position but will
also have a compounding effect on future years thus extending the
timescale to achieve monthly EBITDA breakeven. It was therefore
clear to the Board that additional funding would be required for
the Group to continue investing in its growth strategy. Following a
review of the options available, the Board concluded that a further
equity fundraise to strengthen the balance sheet was necessary. The
leadership team successfully completed an equity fundraise in March
2021 raising net proceeds of approximately GBP7m alongside
increasing the debt facility with Shawbrook Bank to GBP5m. The
Group will use these resources for general working capital purposes
and to deliver its near-term growth plan.
Growth Strategy
During 2020 the business continued to focus on four key growth
initiatives:
-- To continue developing relevant new products, cross platform
integrations, services and features that will attract new customers
and enhance our offering to existing customers;
-- To deepen relationships with existing partners, while
integrating with more recruitment CRMs to become the "go-to"
integrated communications provider for the sector;
-- To expand geographical coverage and add additional industry
verticals where the CloudCall proposition adds value; and
-- To improve our internal systems and organisational
capabilities to more effectively support and onboard larger
customers.
More details about the progress against each of these objectives
are described in the CEO's report. These strategic growth
objectives are reviewed regularly by the Board, and as we emerge
from the impact of COVID-19, these will continue to be the areas of
focus for 2021.
Product Strategy
One of the keys to long term success in an annuity revenue
business is maintaining a high Lifetime Value: Customer Acquisition
Cost ratio, which clearly requires effective sales and marketing,
client satisfaction and ongoing client revenue growth. The
Cloudcall LTV:CAC ratio is estimated to be over 5, with the
potential for this to improve over time as we see continued high
net renewal rates and low churn.
During 2020, the Group made good progress with its strategy to
expand its addressable market and broaden its customer base by
adding 8 new or refreshed CRM integrations, including 3 CRMs in the
new 'Property & Real Estate vertical'.
New features have been developed within the CloudCall platform
that are beneficial for businesses employing home or remote
workers. It is looking increasingly likely that this will become
the new normal for at least part of the working week for many
employees, and the Board is confident that this increases the
relevance and value of the platform going forward.
People
Following the Autumn 2019 fund raise, and in line with the
growth plans, a number of key senior hires were made. Paul Clark
(Chief Technology Officer), Abigail Wilkinson (Chief People
Officer) and James Maloney, a new US based Chief Revenue Officer,
joined the Executive Management Team at the beginning of 2020.
Despite this new leadership team having to operate virtually for
much of the year, these individuals have all made strong
contributions to the Group, including significant improvements to
our staff culture and welfare, our IT systems and our customers'
experience. Many of these initial improvements are already making a
difference and the plans for 2021, when fully implemented, will
further improve these areas and will play an important and pivotal
role in helping the Group to achieve its growth ambitions.
There have been no changes to the PLC Board in the year,
however, as part of the annual Board effectiveness process, it is
planned that during 2021 the Board will consider appointing an
additional Non-Executive Director to further strengthen the team
with the interests of shareholders and key stakeholders in
mind.
In what has been an exceedingly difficult year, I would like to
take this opportunity to thank all our staff and their families for
their dedication and commitment and achievements in a period that
will have been personally challenging for everyone. The Board also
acknowledges the salary sacrifice made by the staff during the year
as part of the cost reduction initiative. I thank everyone for this
personal sacrifice to help ensure the continued success of the
business.
Outlook
The Board believes COVID-19 will have long lasting effects on
how many businesses operate, where staff are based and what they
require from their communications partner. The influx of new
customer signups in the second half of the year clearly signposts
that location flexibility, productivity monitoring and improvement
tools and communications data capture for improved decision making
will become must-haves for technology stacks to support new ways of
working.
CloudCall, with its call recordings, supervisor tools and
expertise in syncing communications with third-party systems has a
head start in this area. The Group has already returned to monthly
recurring revenue growth, and as market conditions continue to
improve, the Board fully expects the Group to return to its
previous levels of growth.
Peter Simmonds
Non-executive Chairman
CloudCall Group plc
Chief Executive's review
2020 has seen a year of significant uncertainty and challenge,
with the effects from the outbreak of COVID-19 and the resulting
lockdown having a considerable impact on businesses operations and
sales. Despite these circumstances, I have been hugely impressed by
the resilience of both the Group and its customers with the true
story of 2020 being undoubtedly a year of two halves.
In September and October 2019, the Company announced it had
raised gross proceeds of GBP12.1 million via a placing and open
offer to fund future growth, with the Directors outlining an
investment programme that included investing into customer led
growth initiatives, product enhancements, internal systems,
strengthening of the executive management team and other expansion
opportunities.
With a significantly strengthened balance sheet and a focussed
and effective growth strategy, the Group began 2020 well, with key
elements of its strategic initiatives making a very positive
impact, resulting in additional lead generation and a strengthening
sales pipeline. However, in mid-March 2020, the UK government
implemented a stringent national lockdown in response to the rising
effects from the global COVID-19 pandemic. This compulsory national
lockdown forced many businesses across the UK to temporarily shut
or move to a working-from-home environment.
With the significant macroeconomic uncertainty created by the
COVID-19 pandemic, CloudCall experienced a sharp reduction in new
customer signings which, when combined with existing customer user
reductions and billing relief requests, led to a fall in the
recurring revenue base. This was due in part to approximately 66%
of CloudCall's customer base being in the recruitment sector, which
can often be one of the first industries that is negatively
impacted during economic uncertainty. At that time the Directors
put in place a cost management programme, including but not limited
to: reducing marketing and travel budget, employee salaries, as
well as a number of other cost cutting initiatives.
As the longevity of the lockdown restrictions became more
apparent into Q2 2020, many of the Group's customers sought to
utilise CloudCall's products and services to fulfil the new
working-from home need. As a result, the Group experienced a
'V-shaped' recovery in recurring revenue growth from June 2020. The
recovery trend continued throughout the second half of 2020, with
many of the Group's key performance indicators back near or
surpassing the pre-COVID-19 levels by the end of 2020.
Whilst COVID-19 continues to impact the broader global economic
environment, I am pleased to report that despite these challenges,
we have been hard at work strengthening the business with
considerable investments in sales and marketing, our senior
management team and our internal tools and processes, all of which
improve our scalability and readiness to drive forward as the
markets return. We are already seeing the benefits of these
investments in H2 2020 and we look forward with confidence to a
return towards higher growth levels in 2021 and beyond.
Once again, I would like to extend my thanks to our much-valued
employees, partners and customers for their extraordinary work and
support over the past twelve months. Whilst it has been a
challenging year for many, we remain collectively focused on
achieving our goal and growing CloudCall into the go-to integrated
communications company for CRMs.
Performance overview and financial highlights
During the year total revenues increased by 4% to GBP11.8m and
recurring revenues increased by 13% to GBP10.3m when compared to
the previous year. However, these annual figures mask the true
story of 2020 which was a year of two halves.
In the first half of 2020, following a positive start to the
year, the initial shock waves of the global COVID-19 pandemic
materially slowed sales to larger prospects and increased churn
levels, resulting in Monthly Recurring Revenue (MRR) at the half
year dropping by 7% compared to the start of the year. Since then,
churn rates have reduced, new business sales have materially
increased and temporary customer reductions have begun to reverse,
resulting in a 12% growth in MRR (measured on a constant currency
basis) across the second half of 2020.
During the year, the Group increased its number of end users by
+5,900 or 14% to 48,255 users. However, once again, there was a
marked difference between the two halves of the year, with H1
average monthly net user growth at 245 users compared to H2 which
saw a threefold increase to 740 users. The final month of the year
saw continued progress on this front, with December's monthly net
user growth increasing to an encouraging 881 users.
Across the second half of the year, performance steadily
improved in all areas and we are pleased to report that the ongoing
pandemic had a limited negative impact in the final quarter of the
financial year. The below table demonstrates this 'year of two
halves', setting out a number of KPIs for each of the six-months
performance from H2 2019 to H2 2020:
H2 2019 H1 2020 H2 2020 H2 2020 Vs
H1 2020
Average monthly net new
users 902 245 740 Up 202%
-------- -------- -------- -----------
Net retention rate (NRR) 105% 85% 100% Up 18%
-------- -------- -------- -----------
LTV:CAC* 5.4 1.5 5.3 Up 253%
-------- -------- -------- -----------
Closing monthly recurring GBP877k GBP813k GBP885k Up 9%
revenue (MRR)
-------- -------- -------- -----------
MRR half on half movement
(Constant currency) +18.5% -7.5% +12.2%
-------- -------- -------- -----------
* The ratio of Lifetime Value (LTV) derived from each new user,
to acquisition cost (CAC) of that user.
Total operating costs excluding depreciation, amortisation,
share based payments and exceptional costs increased by 25% during
the year to GBP13.9m (2019: GBP11.1m). As well as entering 2020
with a higher cost base off the back of investment within 2019, in
line with our stated strategy when we successfully raised capital
at the end of 2019, the beginning of 2020 saw significant further
investment in new products, an expansion of our sales and marketing
capabilities, including investment within our Australian
operations, and a strengthening of the executive and senior
management team.
When the scale of the pandemic became clear the Group took a
number of cost-cutting actions including reducing marketing and
travel budget, voluntary salary reductions, use of the UK
government Furlough Scheme as well as a number of other
cost-cutting initiatives. These measures, along with employee
retention grant funding received in the US helped to reduce
operating costs by approximately GBP1.3m from previously planned
levels. However, despite these savings, given the significant
impact COVID-19 had on 2020 revenue performance, adjusted EBITDA
losses widened during the year from GBP2.2m in 2019 to GBP4.4m with
overall net assets reducing to GBP9.9m (2019: GBP15.3m) including
available cash resources of GBP5.7m (2019: GBP13.1m).
Given the weakened balance sheet position, as well as the
compounding impact from the lost revenue in future years and the
extended time to achieve monthly EBITDA breakeven, it was clear
that additional funding would be required for the group to continue
its growth strategy. As a response to this, management successfully
completed an equity fundraise in March 2021 raising net proceeds of
approximately GBP7m alongside increasing the debt facility with
Shawbrook Bank to GBP5m. The Group will use these resources for
general working capital purposes and to deliver its near-term
growth plan.
Our ongoing growth strategy
Developing relevant new products, features and services for our
existing and future customers
The CloudCall service has several features that are beneficial
for home or remote workers, making it highly relevant in today's
distributed working environment. These include being cloud-based,
recording and logging calls inside the customer's CRM, and the
ability for managers to remotely see which staff members are on a
call and to listen-in or even join that call if required -
particularly beneficial when remotely training new starters. As a
result, new business sales delivered a strong improvement during
the second half of the year.
The Board believes that the headwind experienced at the
beginning of the COVID-19 pandemic is now beginning to reverse into
a tailwind as the CloudCall product grows in relevance given the
anticipated permanent shift in working patterns towards a more
distributed workforce. This, combined with the ongoing improvements
in sales and marketing processes being driven by the strengthened
Executive team, led to many of the Group's sales performance
indicators such as leads generated, demos completed and converted,
value of new business signed, numbers of new customers and users
signed up and value signed per sales representative recovering to
above pre-COVID-19 levels in H2. Whilst not considered to be key
performance indicators for the Group as a whole, this impact can be
demonstrated via an analysis of certain sales metrics as displayed
within the table below:
-- -- H2 2019 -- H1 2020 -- H2 2020 -- H2 2020 -- Back
Vs H1 2020 above
pre-COVID
-- Leads generated -- 634 -- 893 -- 1,398 -- Up 57% -- P
----------- ----------- ----------- ------------ -----------
-- Demos completed* -- 203 -- 263 -- 361 -- Up 37% -- P
----------- ----------- ----------- ------------ -----------
-- New customers signed -- 147 -- 181 -- 279 -- Up 54% -- P
----------- ----------- ----------- ------------ -----------
-- New users added -- 3,303 -- 2,423 -- 4,135 -- Up 71% -- P
----------- ----------- ----------- ------------ -----------
-- New business sales
(Y1 value GBPk) -- 1,456 -- 1,030 -- 1,611 -- Up 56% -- P
----------- ----------- ----------- ------------ -----------
-- Y1 value / sales
rep / month (GBPk) -- 17.7 -- 15.4 -- 22.2 -- Up 44% -- P
----------- ----------- ----------- ------------ -----------
* Demo numbers are from leads generated per half and should
continue to grow as those leads are worked on. The above metrics
have been disclosed for illustrative purposes to provide further
context to the narrative. The Company does not propose to provide
all of these performance metrics in future periods.
To further strengthen the Group's product offering and take
advantage of the recent changes in global working practices, which
has seen exponential growth in the use of collaboration platforms
such as Microsoft Teams and Zoom, on the 25 November 2020, the
Group launched an integration with Microsoft Teams. Since the
integration was launched with the capability to make calls and
share CRM contacts via Teams, we have added SMS capabilities via
our Microsoft Teams App. Whilst still early into the rollout,
initial response rates have been encouraging and the Group is
looking to add more flexibility and improve the Teams user
experience over the coming months. More and more of our customers
are finding themselves living within Teams and we are working hard
to ensure that CloudCall is right there at their fingertips
allowing them to work.
Deepening relationships with existing partners and adding more
CRM integrations and verticals
CloudCall's go-to-market strategy has robustly weathered the
COVID-19 related economic events and the strength of the Group's
platform was well demonstrated during the second half of the year
where the Group witnessed continuing improvement in 'Lead to Close'
and 'Demo to Close' ratios, which the Directors partly attribute to
the increasing relevance and product market fit of CloudCall's
services in a work-from-home environment. This was one of the
primary drivers for a 44% half-on-half increase in sales value per
sales head (see table above) - further increasing efficiency.
During 2020, the Group made good progress with its strategy to
expand its addressable market and broaden its customer base by
adding 8 new or refreshed CRM integrations, including 3 CRMs in the
new 'Property & Real Estate vertical'.
The strategy is working well with these new CRMs already
contributing approximately 20% of the total number of new customers
won by the Group in the year. Furthermore, despite the Property
& Real Estate vertical only formally launching on 22 October
2020, 18 of these new customers are from that vertical. This
strategy will allow the Group to reduce its reliance upon any one
large CRM partner or vertical.
CloudCall's efficient and effective go-to-market strategy has
classically led to strong 'Lead to Close' and 'Demo to Close'
ratios, particularly where there is a strong existing relationship
with an integrated CRM partner. However, it was especially pleasing
to see a strong lead to close ratio for the new Group of CRM
integrations and we expect this to improve as those partnerships
deepen.
Whilst not considered to be key performance indicators for the
Group, the below table provides a snapshot of the strong conversion
metrics experienced during 2020 and how they are improved by the
strength of the CRM relationship:
Lead to Close Demo to Close New customers Year 1 Revenue
% % (1) Closed (2)
All CRMs 14% 52% 459 GBP2.8m
-------------- -------------- -------------- ---------------
Large Recruitment CRM 28% 63% 195 GBP1.6m
-------------- -------------- -------------- ---------------
New CRMs in 2020 27% 43% 91 GBP0.4m
-------------- -------------- -------------- ---------------
Conversion metrics from leads generated in 2020 should continue
to grow as those leads continue to be worked on.
(1) New customers signed up in 2020
(2) Year 1 revenue refers to the first year of revenue expected
from customers signed. Depending upon signing date, this revenue
will potentially be delivered across more than one financial
period.
(3) The above metrics have been disclosed for illustrative purposes
to provide further context to the narrative. The Company does
not propose to provide all of these performance metrics in future
periods.
The Group is continuing to invest in deepening its existing CRM
partner relationships and increasing its addressable market by
growing the number of CRM integrations with a further 12 new or
refreshed partnerships planned during 2021.
Expanding geographic reach
The Australian operation is now up and running, generating
customer revenues and beginning its growth journey. The 5-strong
team in Australia is already looking after 18 customers with a
combined annual recurring revenue of GBP175k coming on stream. We
are excited to see this team drive further growth in the coming
years, as this business begins to scale.
Engaging with and serving larger customers
Engaging with and serving larger prospects and customers brings
with it many challenges and requires investment to build
appropriate capabilities. It is crucially important to approach the
opportunity to partner with larger customers appropriately
resourced to execute effectively and provide the high levels of
technical and service support required. This is one of the reasons
that we raised funds in October 2019, and with the additional funds
raised in March 2021, we are delighted to be able to continue
building our capabilities whilst already making strong progress via
investment within our internal systems and processes; this is
already improving efficiency, scalability, and customer
experience.
Our decision to build a presence in Australia was in part due to
the requirement from some of our enterprise prospects to have a
global solution. There are also a number of our existing larger
customers that have openly expressed a desire to expand their
CloudCall user base once we are able to serve their global
requirements. Now that our Australian operations are up and
running, we are starting to see traction with some of these
prospects.
Our customers
Our strategy is based around a desire to help customers get more
from their commercial data by providing easy to use and powerful
communications tools that are deeply integrated into their CRM
systems. To that end, we work hard to ensure that we take the time
to understand our customers' businesses and pride ourselves on
being able to react quickly and effectively to all their needs.
Despite being a technology company, CloudCall prides itself on
being a caring, customer-focused services company first and
foremost, and our staff are encouraged and trained to act
accordingly.
Customer case studies
Huffmaster - US
As the nation's first single-source strike services agency,
Huffmaster has earned its reputation on the front lines of some of
the nation's most difficult and high-profile labour disputes since
1963. Based out of Clawson, Michigan, Huffmaster assists with all
aspects of workforce management, including contingency planning,
replacement personnel and security.
Huffmaster wanted to increase accountability and enhance
reporting. Unfortunately, Huffmaster did not have the capabilities
necessary to hold their recruiters accountable for what they said
to customers and candidates. If certain promises were made and
disputed, there was no way to confirm the conversation details.
Huffmaster needed a solution that included Call Recordings to drive
accountability across the company. Huffmaster also lacked the
reporting and performance tracking necessary for their recruiters.
They required technology that would give them greater visibility
into workflows, so they could react and improve accordingly. Other
challenges they faced included manually dialling their contacts and
leaving voicemails one at a time. These previous methods were
simply not fast enough.
The solution - A seamless unified communication solution,
powered by CloudCall. Huffmaster upgraded from their previous phone
platform to CloudCall. With this integrated solution, Huffmaster
has been able to increase mobility, accountability, and insight.
Many of Huffmaster's full-time staff work from home where
CloudCall's mobile application, CloudCall Go!, allows people to
take calls after hours utilising the company phone system without
giving out their personal number. This keeps the conversation data
in Bullhorn - allowing Huffmaster to gain insight from it.
Huffmaster uses Call Recordings via CloudCall to reference
previous conversations. As a result, nothing on the record is
disputed - which makes holding recruiters accountable as easy as
pressing "play" on the recording. With CloudCall's analytics,
Huffmaster can see who is picking up the phone, how many calls are
made, the duration of each call, and more. Any team member,
including temporary workers, are held accountable to meeting
metrics such as number of outbound calls per day.
After an incredibly smooth implementation, the team started
using their phones effortlessly, giving everyone confidence that
Huffmaster partnered with the right provider.
Moving to CloudCall has given Huffmaster's recruiters the
freedom to recruit on the go, whether at home, in the car, or in
the office. Kevin McNally, Director of IT at Huffmaster, says that
CloudCall's unified communications increased their recruiters'
ability to reach out to people by at least 150%.
By providing replacement personnel quickly during a strike,
Huffmaster's clients can continue their vital operations in the
healthcare industry. Huffmaster's healthcare staffing division is
responsible for building contact lists of Registered Nurses and
Certified Nursing Assistants. Recruiters quickly call hundreds of
contacts in short periods of time. Thanks to the Progressive Dialer
and Voicemail Drop features of CloudCall, Huffmaster recruiters can
dial through pre-defined lists and leave voicemails to increase the
callback rate and ensure that hospitals, nursing homes and assisted
living facilities get the support they need during labor
disputes.
Kevin McNally, Director of IT at Huffmaster - "Switching over to
CloudCall has given us more insight and given us the ability to
better manage our people.... Now our recruiters don't have to sit
there and get that voicemail fatigue and say the same thing over
and over and over again. They can just hit go on the dialer, if
that person doesn't answer they get a voicemail by the press of a
button and they're on to the next call. That has increased our
productivity significantly".
Kevin also commented that "Cloudcall Go! Is huge for us. We
never had a mobile application with our prior PBX. We do work quite
a bit from home, especially when things are busy, it's not uncommon
for people to make or take calls on the weekend or even after
hours. So the ability to do it all from one phone number and not
having to hand out people's cell numbers - just having that
mobility, we never had that before and that has been a huge benefit
for us"
e-Careers - UK
In 2011, e-Careers launched into the online learning market with
the mission to develop and deliver industry-recognised courses that
can be fitted around busy lifestyles. Fast forward a few years and
over half a million learners have enrolled from over fifty
countries, e-Careers has not only become a pioneer in its sector,
but it has assembled a team of fellow enthusiasts who drive the
business forward based around a firm set of core values and
principles.
e-Careers worked with technology consultancy firm, Spartafish,
to source a vendor that could accommodate their tender criteria.
They wanted a flexible and agile solution that integrated with
Salesforce, which would continue to develop alongside their
company. After putting together a list of over 60 'must-haves' and
a few 'nice to have' features, they searched for a suitable
vendor.
CloudCall demonstrated that they could meet e-Careers business
requirements, above and beyond the competition, to deliver their
desired outcomes. In being a completely proprietary solution,
CloudCall provided the flexibility that was needed to tailor the
solution to e-Careers' specific requirements.
With CloudCall for Salesforce, e-Careers improved three
essential processes: the management and distribution of incoming
calls, the quality of the details entered into their CRM and the
follow up from their sales teams. The ease at which these processes
could be carried out streamlined their workflow and helped users to
utilise Salesforce to its full potential.
e-Careers increased their sales revenue by boosting productivity
through features including click-to-dial, call notes and call
categorisation. Using the Power Dialer, allowed them to speed
through calls and spend more time selling. Call categories, notes
and recordings enabled them to follow up with leads effectively and
to personalise each conversation to the prospect.
e-Careers also fully utilised call analytics and real-time
dashboards. These features increased the management team's
visibility into their users' activities and simplified the process
of setting KPIs. With quantifiable targets that can easily be
monitored on a daily basis, employees were more motivated and
efficient.
Managers can also remotely interact with live calls using
CloudCall's intuitive interface. 'Monitor' allows managers to
listen in on calls. They can provide the user with advice through
the 'Whisper' feature or even join the call if necessary, using
'Barge'. This helped managers teach a best practise approach on all
calls.
CloudCall exceeded e-Careers' expectations by drastically
reducing calls costs and improving their sales processes: helping
them to achieve productivity gains. Rather than their phone system
being a hinderance, CloudCall provided additional features that not
only fixed their existing problems but also helped them continue to
grow and increase revenue. With an integrated phone system such as
CloudCall, e-Careers can more easily work towards their goals of
providing learning opportunities and an excellent service to
everybody.
Jazz Sahota, MD at Spartafish - "e-Careers' experience with
CloudCall has been extremely positive. From quote, through to go
live; the process was well thought out, planned and implemented
with great professionalism."
Jazz also commented that "One of the major benefits of using
CloudCall has been, from a user perspective, the integration with
Salesforce(R) - it has been really simple and easy to use. By
providing such a reliable service, e-Careers have been able to
focus on their growth and are very excited about the future of
their business, with CloudCall."
Our culture
CloudCall's core values place our staff, customers and local
community at the heart of what we do. We strongly believe that
looking after and supporting our staff, and the communities that we
work in, creates a strong platform from which to delight our
customers.
During 2020 we have spent time developing our Vision 'To find
simple truths in communications complexity' and our Mission 'To
build an intelligent communications platform that captures the
value of business conversations' which has helped us to define our
culture and focus on our values. Our values set the tone for our
Company's culture and identify what we care about. When our Company
values and people values align our employees better understand one
another, everyone does the right things for the right reasons and
this common purpose and understanding helps our people build great
working relationships. Ultimately, it helps us achieve our vision
and mission. We recognise that culture drives people's behaviour,
innovation and customer service. Our values are our DNA, the
intrinsic elements that underpin the behaviour of our organisation,
and we use our values to inspire and motivate. Our values are:
-- We Work Together
-- We Play to Win
-- We are Change Makers
-- We Embrace Diversity
-- We Love our Customers
We use our values to underpin our processes from recruitment
practices to performance management to how we show up for work
every day and interact with our colleagues & customers.
The Board is committed to promoting a healthy corporate culture
that ensures its staff are motivated, challenged and happy working
together for the mutual benefit of all the Company's stakeholders.
Staff engagement and ongoing satisfaction levels are routinely
monitored through a series of regular one-to-one meetings and
company meetings are held on a weekly basis to help to ensure
inclusivity and awareness of company-wide strategy and objectives
and our ongoing progress.
We continue to focus on creating a caring and inclusive culture
and improvements we have made, and continue to make, in staff
mentoring, training and ongoing support mechanisms are contributory
to improved skill levels, higher staff satisfaction levels and good
staff retention. Our charity and community initiatives continue to
be highly valued and well supported by our staff and we remain keen
to ensure all staff have equal opportunity to participate in these
worthwhile activities.
As the global climate emergency continues to develop, the Group
has set itself the target of becoming carbon neutral. Whilst this
project is ongoing, we have already made some initial headway
including being given the "Green Economy Mark" by the London Stock
Exchange. The Group has designated a member of staff responsible
for leading this long-term project to a successful conclusion with
a number of additional staff members keen to help take this
initiative forward. A study of our current carbon footprint and
ways in which this can be improved towards eventual carbon
neutrality has been commissioned and the management team is keen to
commit to adopting its recommendations going forward.
We remain focused on our objective to ensure CloudCall remains a
responsible employer, partner and supplier, creating valuable and
skilled jobs and being a caring neighbour and considerate user of
resources wherever it is represented around the world. We continue
to believe that success in this area generates significant benefits
for employees, customers, partners and members of our local
communities alike.
Outlook
Whilst COVID-19 continues to impact the broader global economic
environment, I am pleased to report that despite these challenges,
we have been hard at work strengthening the business with
considerable investments in sales and marketing, our senior
management team and our internal tools and processes, all of which
improve our scalability and readiness to drive forward as the
markets return. We have already seen the benefits of these
investments in H2 2020 and the Group has made an encouraging start
to 2021.
The Board is prudently optimistic for the future of CloudCall,
given its compelling and relevant offering for dispersed
workforces, and the relatively limited impact that the most recent
UK lockdowns have had on the business thus far. The improved
performance during H2 2020 with its 12% growth in monthly recurring
revenue and a robust pipeline of new sales opportunities reinforces
this optimism, however, the Board is mindful that the lost momentum
from the first half of 2020 does mean that CloudCall's growth
strategy has essentially been delayed by approximately one
year.
Given the growth momentum generated in H2 2020, the Board is
confident that the Group will be able to deliver revenue of GBP14m
in 2021 representing growth of 18%. In addition, the Company has
provided guidance for 2021 operating expenditure which is expected
to be approximately GBP16.9m compared to 2020 which was GBP13.9
million (including GBP1.3m of one-time COVID-19 related savings).
The Board also remains confident in its ambition to now reach
monthly EBITDA breakeven by mid-2023 and achieve a GBP50 million
revenue run-rate during 2026.
Simon Cleaver
Chief Executive Officer
Cloudcall Group plc
Financial review
Revenue
Revenues grew by 4% from GBP11.4m to GBP11.8m in 2020
The Group started the year well with a significant sales
pipeline and momentum garnered from 2019 producing strong sales in
Q1. However, with the onset of COVID-19 in the UK and the global
lockdown, new customer signups and existing customer call and SMS
volumes reduced significantly in Q2 as businesses adjusted to the
challenging economic conditions. These conditions led to a
significant decline in net user growth which, in combination with
existing customer user reductions and billing relief requests, led
to a drop in Monthly Recurring Revenue (MRR) at the half year by 7%
compared to the start of the year.
The second half of the year saw a "V-shaped" recovery as home
working became more established and customers began to see the
importance and value of cloud-based communications in a remote
working environment. A rallying performance in H2 gave rise to a
12% growth in MRR (measured on a constant currency basis) across
the half resulting in overall recurring revenues for the year
increasing by 13% to GBP10,321k from GBP9,146k in 2019. The higher
relative increase in recurring revenue compared to total revenue
was due to lower non-recurring revenue (NRR) and pay-as-you-go
telephony revenues (call minutes and SMS) as a direct consequence
of COVID-19 and the related reduction in call volumes. These
revenue streams started to recover towards the end of H1 and are
now broadly in line with pre-COVID levels.
During the year, US operations continued to grow strongly
despite the difficult macro-economic backdrop with a 25% growth in
recurring revenue being achieved. The Group's Australian operation
is now up and running with 18 customers and a combined annual
recurring revenue of GBP175k coming on stream. These geographic
locations are expected to continue their strong growth trajectories
and contribute strongly to revenue performance in 2021 and
beyond.
Over the year, monthly net user growth averaged 492, taking the
total number of users to 48,255 (an increase of 14% compared to
2019). The onset of COVID-19 significantly impacted the Group's
ability to obtain new users in H1 2020, however, since May, sales
numbers have recovered with record customer sign-ups being
achieved. This recovery has been driven predominantly by smaller
businesses; however, the group is now receiving enquiries from more
sizeable organisations, including most of the large opportunities
our sales teams were already working with before the pandemic
started.
Overall, recurring revenue per user ("RRPU") reduced by 5% to
GBP26.50 compared to the prior period. RRPU was adversely impacted
during the year by the onset of COVID-19 as some customers were
offered a short-term reduction in monthly fees. Prior to the onset
of COVID-19, RRPU was averaging around GBP28 per month and is
therefore expected to gradually recover as customer billing relief
continues to reverse and the Group is able to pursue its strategy
to expand the product offering and thus upsell capability to
existing customers.
Gross margin
Gross margin increased from 78.9% in 2019 to 80.7%
Gross margin increased during the year because of the higher
relative increase in recurring revenue compared to non-recurring
revenue streams. Non-recurring revenue from hardware reselling
continues to be highly competitive and thus attracts lower margins.
The subscription-based nature of the Group's product offering means
that recurring revenue will continue to represent a larger
proportion of overall revenue as time goes on thus minimising the
impact of low hardware margins.
Operating costs excluding depreciation, amortisation, share
based payments and exceptional items grew from GBP11.1m in 2019 to
GBP13.9m
Growth in operating expenditure of 25% year-on-year should be
viewed within the context of the Group's overall growth strategy
and the increased investment within sales, marketing, product
development, the new Australian operations and a bolstering of the
executive management team. From the successful fundraise in late
2019, it was clearly signalled that fresh investment would lead to
greater operating expenditure and operating losses in the
short-term, as the investment took time to flow through to
increased revenue. The Group therefore entered 2020 with a higher
cost base and further planned investment took place in Q1 to
support future growth.
In April 2020, when the impact of the growing COVID-19 pandemic
became clear, management implemented a number of cost-cutting
measures including but not limited to: Voluntary salary reductions,
redundancies, use of the UK Government Furlough Scheme and a
reduction in the marketing and travel budget. These measures, along
with additional expenditure grant funding received in the US of
GBP337k via the Paycheck Protection Program, helped to reduce
operating costs by approximately GBP1.3m from previously planned
levels. However, despite these savings, given the significant
impact COVID-19 had on 2020 revenue performance, EBITDA losses
widened during the year from GBP2.2m in 2019 to GBP4.4m with the
loss after tax increasing to GBP5.75m (2019: 2.95m).
Receipts from the UK government via the Furlough Scheme and from
the US government via the Paycheck Protection Program have been
offset against salary costs during the period.
Operating costs for the year can be further analysed as
follows:
Year-ended 31 December Year-ended 31 December
2020 (GBP'000) 2019 (GBP'000)
Sales & marketing
expenses 3,769 2,865
----------------------- -----------------------
Administrative expenses 8,552 6,899
----------------------- -----------------------
Research & development
expenses 1,578 1,382
----------------------- -----------------------
Total 13,899 11,146
----------------------- -----------------------
Research and development expenditure is shown in the financial
statements net of GBP1.85m (2019: GBP1.43m) qualifying for
re-classification to the balance sheet under IAS 38 (Capitalisation
of Software Development Costs). The increased IAS 38 qualifying
expenditure is reflective of ongoing investment being made in new
product development. Investment in the development of new and
improved products, features and applications and the integral
intellectual property of such development work is considered key to
the preservation of CloudCall's competitive position.
The Group confirms that, as a result of new products coming into
service since the policy was implemented, IAS 38 related
amortisation charged in 2020 was GBP766k (2019: GBP338k).
Debt and financing expenses
The Group had outstanding debt as at 31 December 2020 of GBP3.7m
(2019: GBP2.4m) and a financing expense of GBP325k (2019: GBP274k).
Included in the debt position is the recognition of capitalised
lease liabilities amounting to GBP1.6m (2019: GBP1.4m).
In September 2020 the Group drew down the remaining GBP1.5m of
available funds within the term credit facility (the "Facility)
with Shawbrook Bank which provided borrowing facilities for a
3.5-year term set to expire in March 2023. Interest is set out
below as the aggregate of:
-- the margin of 9% plus
-- higher of LIBOR or 0.5% per annum.
As at 31 December 2020 the Group owed GBP2.1m under this
facility and the additional drawdown during the year was the
predominant driver behind the increased net finance expense of
GBP325k.
Since the year-end, the Group has replaced the loan facility
with Shawbrook Bank with a new GBP5m facility. The Group is
committed to an initial drawdown of GBP3m in April 2021 having
repaid the previous facility balance of GBP1.9m in March 2021. The
facility has been negotiated on similar terms to the previous
facility with the GBP2m undrawn element available for draw down
before April 2022 subject to covenants adherence.
Cash and working capital
The Group had GBP5.7m net cash at the end of the year (2019:
GBP11.1m).
The Group's balance sheet also includes an R&D tax credit
receivable of GBP1m (2019: GBP0.8m). As has been the case in recent
years, this is expected to be received in cash in June 2021.
Net cash outflow from operating activities was GBP3.3m, up from
GBP1.9m in 2019. This increase in cash absorption is attributed to
a combination of the lower than anticipated revenue growth during
the year alongside continuing investment for growth as detailed
above.
In February 2020, the Group entered into a new 7-year lease for
additional office space within the head-office in Leicester which
led to an IFRS 16 right of use asset of GBP836k being recognised.
This transaction, combined with investment in the Group's
Australian operations saw an increase in capital expenditure from
GBP573k in 2019 to GBP1,498k in 2020.
Share capital
Total issued share capital at the year-end comprised 38,810,826
ordinary shares of 20 pence each.
During the year, the Company received GBP38k gross proceeds from
exercised share options.
Post year-end, the Company has allotted and issued 9,202,453 new
ordinary shares at a price 0f 81.5 pence raising gross proceeds of
GBP7.5m. The fundraise was required to recapitalise the Group's
balance sheet and provide the necessary funds to pursue the
near-term growth strategy.
Loss per share and dividends
Loss per share for the year was 14.8 pence (2019: 10.3
pence).
As the business continues to be in a pre-profit, high-growth,
investment phase, the Board does not recommend the payment of a
dividend (2019: nil).
Going concern
The Directors confirm that they have a reasonable expectation
that the Group has adequate resources to continue in operational
existence for the foreseeable future. For this reason, they
continue to adopt the going concern basis in preparing the
financial statements.
Paul Williams
Chief Financial Officer
Cloudcall Group plc
Financial Statements
Consolidated Statement of Comprehensive Income
For year ended 31 December 2020
2020 2019
Notes GBP000 GBP000
Revenue 4 11,820 11,396
Cost of sales (2,279) (2,406)
--------------- ----------
Gross profit 9,541 8,990
Sales & marketing expenses 5 (3,769) (2,865)
Administrative expenses 5 (8,552) (6,899)
Research & development expenses 5 (1,578) (1,382)
------------------------------------- -------- --------------- ----------
Operating loss before depreciation,
amortisation, share based
payment charges and exceptional
items (4,358) (2,156)
Depreciation and amortisation (1,649) (930)
Share based payment charges (412) (171)
Exceptional items - (145)
------------------------------------- -------- --------------- ----------
Operating loss (6,419) (3,402)
Finance expense (325) (274)
--------------- ----------
Loss before tax (6,744) (3,676)
Taxation 6 998 731
--------------- ----------
Loss for the year attributable
to owners of the parent (5,746) (2,945)
Other comprehensive income
Items that may be subsequently
reclassified to profit or
loss:
Exchange differences on translation
of foreign operations (34) 65
--------------- ----------
Other comprehensive income (34) 65
Total comprehensive income
for the year attributable
to owners of the parent (5,780) (2,880)
--------------- ----------
Loss per share Pence Pence
Basic and fully diluted loss
per share 11 (14.8) (10.3)
------------------------------------- -------- --------------- ----------
Consolidated Statement of Financial Position
At 31 December 2020
2020 2019
Notes GBP000 GBP000
Non-current assets
Property, plant and equipment 7 2,274 1,854
Goodwill 8 339 339
Other intangible assets 8 4,076 2,992
--------- ---------
6,689 5,185
Current assets
Trade and other receivables 2,779 2,760
Research & development tax
credit receivable 1,000 760
Cash and cash equivalents 5,676 11,101
--------- ---------
9,455 14,621
--------- ---------
Total assets 16,144 19,806
--------- ---------
Current liabilities
Borrowings 9 (1,044) (517)
Trade and other payables (2,388) (2,162)
(3,432) (2,679)
Non-current liabilities
Borrowings 9 (2,696) (1,862)
Provision for liabilities (91) -
Total liabilities (6,219) (4,541)
Net assets 9,925 15,265
--------- ---------
Equity attributable to shareholders
Share capital 10 7,763 7,751
Share premium account 77,101 77,085
Translation reserve 4 38
Warrant reserve 29 29
Retained earnings (74,972) (69,638)
--------- ---------
Total equity attributable
to shareholders 9,925 15,265
--------- ---------
Consolidated Statement of Changes in Equity
For year ended 31 December 2020
Share Share Translation Warrant Retained Total
capital premium reserve reserve earnings equity
account attributable
GBP000 GBP000 GBP000 GBP000 GBP000 to
shareholders
GBP000
Balance at 1 January
2019 4,386 66,384 (27) 29 (66,864) 4,358
Loss for the year - - - - (2,945) (2,945)
Other comprehensive
income
Exchange differences
on translation of foreign
operations - - 65 - - 65
--------- --------- ------------ --------- ---------- --------------
Total comprehensive
income for the year - - 65 - (2,945) (2,880)
Transactions with owners
recognised in equity:
Equity settled share
based payments - - - - 171 171
Issue of equity shares 2,915 11,635 - - - 14,550
Issue costs of equity
shares - (934) - - - (934)
--------- --------- ------------ --------- ---------- --------------
Total transactions with
owners recognised in
equity 2,915 10,701 - - 171 13,787
--------- --------- ------------ --------- ---------- --------------
Balance at 31 December
2019 7,751 77,085 38 29 (69,638) 15,265
--------- --------- ------------ --------- ---------- --------------
Loss for the year - - - - (5,746) (5,746)
Other comprehensive
income
Exchange differences
on translation of foreign
operations - - (34) - - (34)
--------- --------- ------------ --------- ---------- --------------
Total comprehensive
income for the year - - (34) - (5,746) (5,780)
Transactions with owners
recognised in equity:
Equity settled share
based payments - - - - 412 412
Issue of equity shares 12 26 - - - 38
Issue costs of equity
shares - (10) - - - (10)
--------- --------- ------------ --------- ---------- --------------
Total transactions with
owners recognised in
equity 12 16 - - 412 440
----------------------------- --------- --------- ------------ --------- ---------- --------------
Balance at 31 December
2020 7,763 77,101 4 29 (74,972) 9,925
----------------------------- --------- --------- ------------ --------- ---------- --------------
Consolidated Cash Flow Statement
For year ended 31 December
2020
2020 2019
GBP000 GBP000
Cash flows from operating
activities
Loss for the year after tax (5,746) (2,945)
Adjustments for:
Depreciation and amortisation 1,649 930
Foreign exchange losses on
operating activities 8 92
Financial expenses 325 274
Equity settled share-based
payment expenses 412 171
Taxation (998) (731)
Operating loss before changes
in working capital (4,350) (2,209)
Decrease/(increase) in trade
and other receivables 17 (903)
Increase in trade and other
payables 202 591
--------------- ----------
Cash outflow from operations (4,131) (2,521)
Tax received 811 611
--------------- ----------
Net cash outflow from operating
activities (3,320) (1,910)
Cash flows from investing
activities
Acquisition of property, plant
and equipment (663) (449)
Development expenditure capitalised (1,850) (1,433)
Net cash outflow from investing
activities (2,513) (1,882)
--------------- ----------
Cash flows from financing
activities
Repayment of lease liability (542) (439)
Interest paid (161) (150)
Net proceeds from the issue
of share capital 28 13,616
Proceeds from new loans 1,609 1,500
Repayment of loans (441) (527)
Net cash inflow from financing
activities 493 14,000
Net (decrease)/increase in
cash and cash equivalents (5,340) 10,208
Cash and cash equivalents
at start of year 11,101 927
Effect of exchange rate fluctuations
on cash held (85) (34)
Cash and cash equivalents
at end of year 5,676 11,101
--------------- ----------
Notes to the financial statements
1. Preliminary announcement
The preliminary announcement set out above does not constitute
the Group's statutory financial statements for the years ended 31
December 2020 or 2019 within the meaning of section 434 of the
Companies Act 2006 but is derived from those audited financial
statements. The auditor's report on the consolidated financial
statements for the year ended 31 December 2020 and 2019 is
unqualified and does not contain statements under s498(2) or (3) of
the Companies Act 2006.
The accounting policies used for the year ended 31 December 2020
are unchanged from those used for the statutory financial
statements for the year ended 31 December 2019. The 2020 statutory
financial statements will be delivered to the Registrar of
Companies following the Company's Annual General Meeting.
2. Compliance with accounting standards
While the financial information included in this preliminary
announcement has been computed in accordance with IFRSs as adopted
by the EU, this announcement does not itself contain sufficient
information to comply with IFRSs as adopted by the EU.
No new standards, amendments or interpretations to existing
standards that have been published and that are mandatory for the
Group's accounting periods beginning on or after 1 January 2020, or
later periods, have been adopted early.
3. Critical accounting estimates and judgements
The following accounting judgements and estimates have been made
by the Directors in interpreting treatment of amounts included in
these financial statements in accordance with IFRSs.
Development costs
Management judgement is required in assessing the fair value of
development costs capitalised including the future economic benefit
expected to be generated by the assets and in calculating the
attributable costs. Management judgement is also required in
assessing the useful economic lives of these assets for the
purposes of amortisation. The carrying value of development costs
at the Statement of Financial Position date was GBP4,076,000 (2019:
GBP2,992,000).
Impairment
The requirement for the Directors to ensure that the Group's
non-current assets are not carried at more than their recoverable
amount (i.e. the higher of fair value less costs of disposal and
value in use) is covered by IAS 36 Impairment of Assets. The fair
values in respect of the valuation of the Group's assets in
relation to the future value of the returns those assets are
predicted to generate have been estimated using a discounted cash
flow model. The assumptions used as inputs to the model are by
their nature areas of judgement. Based on the historic sales
performance of the business and actions being taken to grow the
business further, the directors do not currently assess any of
these assets as impaired. The carrying value of the Group's
intangible assets and property, plant and equipment at the
Statement of Financial Position date was GBP4,415,000 and
GBP2,274,000 respectively (2019: GBP3,331,000 and GBP1,854,000
respectively).
Share based payments
The Group measures the cost of equity-settled transactions with
employees by reference to the fair value of the equity instruments
at the date at which they are granted. Judgement is required in
determining the most appropriate valuation model and the most
appropriate inputs into the model including the level of volatility
and the expected life of the option. Judgement is also required in
estimating the number of options that are expected to vest based on
the non-market conditions.
4. Revenue
The directors consider that the Group has a single business
segment, being the provision of hosted telecom solutions. The
operations of the Group are managed and reported centrally with
group-wide functions covering sales and marketing, development,
professional services, customer support and finance and
administration. An analysis of revenue by type is given below.
Revenue by location of customer
2020 2019
GBP000 GBP000
United Kingdom 5,936 5,961
North America 4,926 4,453
Europe 913 982
Rest of the World 45 -
Total revenues 11,820 11,396
-------- --------
Revenue by type
2020 2019
GBP000 GBP000
Recurring subscriptions 10,321 9,146
Pay As You Go Telephony 852 977
Non-recurring services and hardware 647 1,273
Total revenues 11,820 11,396
-------- --------
Timing of revenue recognition
2020 2019
GBP000 GBP000
Goods transferred at a point in time 192 347
Services transferred over time 11,628 11,049
Total revenues 11,820 11,396
-------- --------
Revenue by product
All revenue is attributable to the Group's main activity, the
provision of hosted telecoms solutions. All revenues recognised in
the year are generated from contracts with customers.
Information about major customers
The Group had no customers for continuing operations which
represented more than 10% of sales in the year to 31 December 2020.
There were no customers which represented more than 10% of sales in
the year to 31 December 2019.
5. Operating costs
2020 2019
GBP000 GBP000
Wages and salaries (*) 9,549 7,208
Foreign exchange (gains)/losses (63) 92
Expected credit losses 294 131
Low value and short-term leases 140 100
Other operating costs 3,979 3,615
13,899 11,146
-------- --------
(*) included in wages and salaries above is GBP1,111k (2019:
GBP956k) relating to research and development costs expensed.
6. Taxation
Recognised in the Consolidated Statement of Comprehensive
Income
2020 2019
GBP000 GBP000
Current tax income
Overseas income tax charge for the
current year (3) (10)
UK research and development tax credit 1,000 760
Adjustments in respect of prior year 1 (19)
-------- --------
998 731
Deferred tax for the current year - -
-------- --------
Total tax credit recognised in current
year 998 731
-------- --------
7. Property, plant and equipment
Technical plant and Office and business Right-of-use assets Total
equipment
GBP'000 GBP'000 GBP'000 GBP'000
Cost
Balance at 1 January 2019 1,020 662 1,887 3,569
Additions 239 210 124 573
Disposals - - - -
Exchange rate translation
difference - - (48) (48)
Balance as at 31 December
2019 1,259 872 1,963 4,094
----------------------------- -------------------- -------------------- ---------
Additions 337 325 836 1,498
Disposals - - (85) (85)
Remeasurements - - (161) (161)
Exchange rate translation
difference (7) (17) (2) (26)
Balance as at 31 December
2020 1,589 1,180 2,551 5,320
----------------------------- -------------------- -------------------- ---------
Depreciation
Balance at 1 January 2019 (762) (438) (472) (1,672)
Depreciation charge for the
year (125) (131) (336) (592)
Eliminated in respect of - - - -
disposals
Exchange rate translation
difference - - 24 24
Balance as at 31 December
2019 (887) (569) (784) (2,240)
----------------------------- -------------------- -------------------- ---------
Depreciation charge for the
year (244) (173) (465) (882)
Eliminated in respect of
disposals - - 30 30
Exchange rate translation
difference 12 5 29 46
Balance as at 31 December
2020 (1,119) (737) (1,190) (3,046)
----------------------------- -------------------- -------------------- ---------
Net Book Value
At 31 December 2019 372 303 1,179 1,854
----------------------------- -------------------- -------------------- ---------
At 31 December 2020 470 443 1,361 2,274
------------------------------ ----------------------------- -------------------- -------------------- ---------
8. Intangible assets
Goodwill Patents Acquired Software Total
& trademarks IPR development
costs
GBP000 GBP000 GBP000 GBP000 GBP000
Cost
Balance at 1 January
2019 339 12 1,448 2,208 4,007
Internally developed - - - 1,433 1,433
--------- -------------- --------- ------------- --------
Balance as at 31 December
2019 339 12 1,448 3,641 5,440
--------- -------------- --------- ------------- --------
Additions - - - 1,850 1,850
--------- -------------- --------- ------------- --------
Balance as at 31 December
2020 339 12 1,448 5,491 7,290
--------- -------------- --------- ------------- --------
Amortisation
Balance at 1 January
2019 - (12) (1,448) (311) (1,771)
Amortisation for the
year - - - (338) (338)
--------- -------------- --------- ------------- --------
Balance as at 31 December
2019 - (12) (1,448) (649) (2,109)
--------- -------------- --------- ------------- --------
Amortisation for the
year - - - (766) (766)
--------- -------------- --------- ------------- --------
Balance as at 31 December
2020 - (12) (1,448) (1,415) (2,875)
--------- -------------- --------- ------------- --------
Net Book Value
At 31 December 2019 339 - - 2,992 3,331
--------- -------------- --------- ------------- --------
At 31 December 2020 339 - - 4,076 4,415
--------- -------------- --------- ------------- --------
The acquired IPR arose on the acquisition of Cloudcall Limited
and represents the fair value of the proprietary software developed
within Cloudcall.
Amortisation on intangible assets has been separately disclosed
in combination with depreciation on the face of the Consolidated
Statement of Comprehensive Income. Amortisation is considered to be
part of research and development expenditure so would be included
within that expenditure category were it not separately
disclosed.
The carrying amount of ongoing development projects on which
amortisation has not yet commenced was GBP1,120k (2019: GBP1,480k).
The weighted average remaining amortisation period for software is
4.1 years (2019: 4.4 years).
9. Borrowings
Current borrowings
2020 2019
GBP000 GBP000
Bank loan 789 160
Lease liabilities 255 357
1,044 517
------- -------
Non-current borrowings
2020 2019
GBP000 GBP000
Bank loan 1,365 813
Lease liabilities 1,331 1,049
2,696 1,862
------- -------
The Group's Bank borrowings at 31 December 2020 included a term
facility with Shawbrook Bank with the amount repayable being
GBP2,063k (31 December 2019: GBP973k). The loan attracted interest
at a rate of 9.0% plus the higher of either LIBOR or 0.5% per annum
and was repayable in monthly instalments until March 2023. The
Facility was secured over the assets of the Group. Post year-end
the Group has replaced this facility with a new GBP5m facility with
Shawbrook Bank. The remaining borrowings constitute a motor vehicle
finance loan with Barclays Bank and amounted to GBP91k as at 31
December 2020 (31 December 2019: nil). The loan is secured against
the motor vehicles to which it relates, attracts interest at an
implicit rate of 4.9% and is repayable in monthly instalments until
June 2023.
10. Share capital
The issued, called up and fully paid share capital of the
Company at 31 December was as follows:
Number of shares 2020 2019 2020 2019
(000) (000) GBP000 GBP000
Allotted, called
up and fully paid
Ordinary shares of
GBP0.20 each 38,811 38,756 7,763 7,751
The movement in the issued share capital in the year was as
follows:
Number of shares Ordinary
Shares
(000)
In issue at 31 December 2019 - fully paid 38,756
Issued in respect of warrants and options 55
In issue at 31 December 2020 - fully paid 38,811
---------
11. Loss per share
Basic loss per share
The calculation of basic loss per share for the year ended 31
December 2020 of 14.8 pence (2019: 10.3 pence) was based on the
loss for the year attributable to owners of the parent of GBP5,746k
(2019: GBP2,945k) and a weighted average number of Ordinary Shares
outstanding during the period of 38,775,000 (2019: 28,632,000),
calculated as follows:
Number of shares 2020 2019
(000) (000)
Issued ordinary shares at start of
year 38,756 24,181
Issued for cash on 5 February 2019 - 2,163
Issued for cash on 23 October 2019 - 2,280
Issued in respect of warrants and
options 19 8
------- -------
Weighted average number of ordinary
shares 38,775 28,632
------- -------
Diluted loss per share
The weighted average number of shares and the loss for the year
for the purposes of calculating diluted loss per share are the same
as for the basic loss per share calculation. This is because the
outstanding share options would have the effect of reducing the
loss per share and would not, therefore, be dilutive under the
terms of IAS 33.
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END
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March 31, 2021 02:00 ET (06:00 GMT)
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