RNS Number : 6750M

itim Group PLC

23 September 2021

itim Group plc

("itim" or the "Company and with its subsidiaries the Group")


ITIM Group plc (AIM:ITIM), the provider of an Omni channel platform for retailers, is pleased to report its unaudited results for the 6 months ended 30 June 2021.


   --    Successful IPO in June 2021 raising GBP6.9m net to support the Group's long-term growth 
   --    Revenue increased 16% to GBP6.4m (30 June 2020 (HY2020): GBP5.5m) 
   --    Gross profit increased by 29% to GBP2.7m (HY2020: GBP2.1m) 
   --    Adjusted EBITDA(1) increased by 200% to GBP1.2m (HY2020: GBP0.4m) 
   --    Operating profit GBP0.6m up from a loss of GBP0.1m at HY2020 
   --    Normalised Basic EPS(2) 2.24p per share 
   --    Cash at the period end was GBP9.6m (HY 2020: GBP1.3m) 


-- Appointment of Justin King, Lee Williams and Frank Lewis to our board as Non-Executive Directors

-- Annual recurring revenue contract value in the 6 month period increased 9% to GBP10.5m from GBP9.6m at 31 December 2020

Ali Athar, CEO of itim Group plc, said:

"2021 has been a transformational year for itim during which we have delivered strong growth and strategic process and completed a successful IPO and admission to AIM.

We have maintained positive trading momentum through the early part of H2 2021 and the board anticipates full year results in line with market expectations.

We continue to make good progress against our strategic objectives and we are seeing an increasing number of opportunities as the retail sector continues to experience considerable structural change.

I would like to express my thanks to our colleagues, customers and our shareholders for their support of itim. I am confident we are very well placed to continue to build on our momentum and achieve our significant growth ambitions."


                      Ali Athar, CEO 
 Itim Group plc        Ian Hayes CFO    0207 598 7700 
 WH Ireland (NOMAD    Katy Mitchell 
  & Broker)            Harry Ansell     0207 220 1666 
                      Dan de Belder 
 Hudson Sandler        Jake Brown       0207 710 8944 


itim was established in 1993 by its founder, and current Chief Executive Officer, Ali Athar. itim was initially formed as a consulting business, helping retailers effect operational improvement. From 1999 the Company began to expand into the provision of proprietary software solutions and by 2004 the Company was focused exclusively on digital technology. itim has grown both organically and through a series of acquisitions of small, legacy retail software systems and associated applications which itim has redeveloped to create a fully integrated end to end Omni-channel platform.

1. Adjusted EBITDA refers to earnings before interest, tax, depreciation, amortisation, share based payments and exceptional items

2. Normalised EPS - after stripping out exceptional IPO costs

CEO's Statement

The period ended 30 June 2021 saw an outstanding performance from itim with 16% revenue growth to GBP6.4m (HY2020: GBP5.5m) with adjusted EBITDA increasing by 200% to GBP1.2m (HY2020 GBP0.4m).

For itim, as with so many businesses, the pandemic over the last 15 months has presented significant challenges especially as itim serves bricks and mortar retailers who have been closed due to COVID restrictions.

However, we understand that what has come to the forefront in many retailers' minds is the need for an Omni-channel offering to join up both online and the store estate where there is a single view of stock which can be fulfilled from the warehouse or the local store using dynamic order routing, with click and collect and despatch from store becoming more prevalent using local stores as mini warehouses.

Whilst many outsiders may see store closures as headlines, surprisingly we are seeing our retail customers still opening more stores with evidence suggesting that significant proportion of customers live within close proximity to their local stores. This can present a real challenge of whether home delivery economics and the desire for convenience is better served through local distribution than through trying to distribute product from central/regional warehouses.

Despite the pandemic we have seen the Group's KPI's improving in a challenging environment, culminating in a successful IPO in June 2021 which gives me reason to be optimistic going forward. I am also delighted to welcome Justin King, the former long-standing chief executive of Sainsbury's; Lee Williams, the current CFO at French Connection and Frank Lewis, a Corporate Governance expert to our board to guide us in public life.

At an operational level we continue to build our platform capability, and as already reported, in July 2020 we acquired EDI Plus, a business that enables retailers to electronically integrate backwards into their supply chain, enabling stock to be held with and fulfilled by the supplier, effectively increasing the retailer's product offering without compromising warehouse space.

The Group's focus is on multi year subscription contracts generally between 3 and 5 years which has provided resilience in an uncertain world. Our objectives are to continue to increase our annual recurring revenues ("ARR") based on subscription contracts.

Those projects in early 2020 that we believed were cancelled are now slowly being put back on the table as retailers become more confident but also understand the need and importance of an Omni-channel offering which gives us increasing confidence as we continue to build up a strong future revenue pipeline.

People at itim never cease to amaze me and I would like to thank every member of the team for their hard work and commitment in a challenging environment, continually meeting our customers' needs and going the extra mile.

Since our IPO in June we have been focussing on 3 things across the business:

1) We needed to increase headcount, and we have already recruited 25 people across the Group. This was critical to being able to service new contracts, and one of the reasons we were raising funds. This process is on-going, and of course everyone is aware there is a growing skills shortage exacerbated by Brexit, as access to European engineers is blocked which we continue to keep under review.

2) We are continuing to invest in innovation. We are launching a significant number of new applications that will make our product portfolio more attractive.

3) We have increased our investment in sales and marketing, to allow us to reach out to the market more broadly. We will be increasing our advisory board, to bring more senior retailers into the fold to act as brand ambassadors for the business.

Overall I am very pleased with these results. Our key metrics are improving and our adjusted EBITDA increasing 200% continues to demonstrate the strengthening of our product offering and business as a whole. The new investment from our successful float strengthens our Balance Sheet, enabling the Group to execute its strategy.

Ali Athar

Chief Executive Officer

Financial Review

I am pleased to announce our first set of results since becoming a public company in June 2021. The Group benefits from having long term contracted recurring revenues which has provided some insulation from the pandemic since the country first went into lockdown in March 2020. In addition, as customers came to terms with the impacts of COVID 19 on their businesses, new focus emerged on Omni-channel retailing which has seen customers once again opening conversations on projects that had been postponed which is encouraging for the Group as a sense of normality returns.

Total revenue increased by 16% to GBP6.4m (HY20:GBP5.5m) which includes a full six month contribution from the EDI Plus acquisition which was completed on 1 July 2020. The underlying revenue of the business increased by 4%.

Booked SaaS revenues increased 26% to 4.9m with the acquisition subscription revenues representing 13% of the increase. Annual recurring revenue ("ARR") at 30 June 2021 was GBP10.5m. It is worth noting that significant revenues are generated in Brazil for our Portuguese subsidiary. With the weakness of the Brazilian Real against the Euro and the strengthening of Sterling against the Euro the Group is exposed to foreign exchange risk both at an invoicing and reporting currency level. Despite the degradation of foreign exchange on our Brazilian contracts, ARR increased 9% over the 6 month period from the full year at the 31(st) December 2020.

Gross profit increased 29% to GBP2.7m with a gross margin of 41% (HY 2020: 37%). There are two main factors affecting our margins. Firstly implementation costs of new subscription deals in our LATAM business are fully expensed in the period in which they occur. Secondly the EDI Plus acquisition has lower subscription margins to the underlying Group which has led to the subscription gross margin decreasing by 8% to 65%. But the Directors consider the acquisition to be essential as we extend the platform capabilities and view the reduction in subscription margin as a short term issue.

Operating expenses (defined as administrative expenses excluding exceptional items, depreciation, amortisation and interest) decreased 22% to GBP1.4m from GBP1.8m despite the inclusion of the EDI Plus operating expenses predominantly due to lower headcount, with staff not travelling on customer projects and office costs being substantially reduced.

Adjusted EBITDA(1) increased 200% showing a profit for HY21 of GBP1.2m (HY2020: GBP0.4m) which was in line with management's expectations.

Exceptional costs are the IPO costs when the Group was admitted to AIM in June 2021. In accordance with IAS32, an assessment of the IPO costs was undertaken with GBP0.5m being written off against share premium as direct costs of the new share issuance.

The loss before tax was GBP0.1m which was after expensing GBP0.6m of exceptional IPO costs. Adjusting for exceptional costs the Group made a profit of GBP0.5m for HY21 compared to a loss in HY20 of GBP0.2m.

Basic EPS for HY21 was a loss of 0.2p per share (HY20: 0.27p per share). However, normalised(2) EPS for HY21 which strips out the exceptional one-off float costs, is 2.24p per share.

During the period the Group successfully raised GBP6.9m (net after expenses) and was admitted to AIM on 28(th) June 2021. As a result the cash balance at HY21 was GBP9.6m (HY20: GBP1.3m)

Ian Hayes

Chief Financial Officer

Consolidated Statement of Comprehensive Income

                                                          Six month       Six month             Year ended 
                                                       period ended    period ended            31 December 
                                                       30 June 2021    30 June 2020                   2020 
                                                          Unaudited       Unaudited                Audited 
                                              Notes          GBP000          GBP000                 GBP000 
 Continuing operations 
 Revenue                                                      6,366           5,467                 11,820 
 Cost of sales                                              (3,704)         (3,414)                (7,114) 
                                                     --------------  --------------  --------------------- 
 Gross profit                                                 2,662           2,053                  4,706 
 Other income                                                     -             170                    202 
 Administrative expenses                                    (1,433)         (1,845)                (3,374) 
                                                     --------------  --------------  --------------------- 
 Profit before interest, tax, depreciation 
  and amortisation                                            1,229             378                  1,534 
 Amortisation of intangible assets                            (378)           (226)                  (515) 
 Share option charge                                           (91)            (91)                   (91) 
 Depreciation                                                  (17)            (24)                   (45) 
 Depreciation of right of use asset                           (122)           (102)                  (231) 
 Loss on disposal of right of use 
  assets                                                          -               -                    (9) 
                                                     --------------  --------------  --------------------- 
 Operating profit/(loss)                                        621            (65)                    643 
 Exceptional IPO costs                                        (630)               -                      - 
 Finance costs                                                 (48)            (57)                  (114) 
 Other interest - right of use assets                          (51)            (32)                   (67) 
 Finance income                                                   -               -                      - 
                                                     --------------  --------------  --------------------- 
 (Loss)/Profit before taxation                                (108)           (154)                    462 
 Income tax                                                      56             222                    494 
                                                     --------------  --------------  --------------------- 
 (Loss)/Profit for the period/year                             (52)              68                    956 
 Other comprehensive income 
 Exchange differences on retranslation 
  of foreign operations                                        (74)              73                     63 
 Total comprehensive income for 
  the year attributable to the equity 
  shareholders of the parent company                          (126)             141                  1,019 
                                                     ==============  ==============  ===================== 
 Earnings (loss) per share 
 Basic - pence                                2              (0.20)            0.27                   3.74 
 Diluted - pence                              2              (0.20)            0.24                   3.31 
                                                     --------------  --------------  --------------------- 

Consolidated Statement of Financial Position

                                                  As at           As at           As at 
                                                   30 June 2021    30 June 2020    31 December 
                                                  Unaudited       Unaudited       Audited 
                                         Notes    GBP000          GBP000          GBP000 
 Non-current assets 
 Intangible assets                                8,391           5,852           8,206 
 Property, plant and equipment                    54              73              53 
 Right of use asset                               795             1,675           897 
 Deferred tax                                     205             229             298 
                                                 ==============  ==============  ============= 
                                                  9,445           7,829           9,454 
                                                 ==============  ==============  ============= 
 Current assets 
 Trade and other receivables                      3,361           2,783           3,492 
 Cash and cash equivalents                        9,567           1,335           2,127 
                                                 --------------  --------------  ------------- 
 Total current assets                             12,928          4,118           5,619 
 Total assets                                     22,373          11,947          15,073 
 Current liabilities 
 Trade and other payables                         (1,976)         (2,546)         (2,057) 
 Right of Use liability                           (297)           (370)           (248) 
 Total current liabilities                        (2,273)         (2,916)         (2,305) 
 Non-current liabilities 
 Loans and borrowings                             (3,727)         (1,319)         (4,011) 
 Right of Use liability                           (578)           (1,172)         (729) 
 Deferred tax                                     (496)           (180)           (501) 
 Total non-current liabilities                    (4,801)         (2,671)         (5,241) 
 Total liabilities excluding accruals 
  and deferred income                             (7,074)         (5,587)         (7,546) 
 Total net assets before accruals 
  and deferred income                             15,299          6,360           7,527 
                                                 ==============  ==============  ============= 
 Accruals and deferred income                     2,637           2,224           2,513 
 Capital and reserves attributable 
  shareholders of the parent company 
 Share capital                                    1,561           2.379           2,379 
 Capital redemption reserve                       1,103           -               - 
 Share premium account                            7,398           10,469          10,469 
 Share options reserve                            395             304             304 
 Foreign exchange reserve                         71              155             145 
 Retained profit/(losses)                         2,134           (9,171)         (8,283) 
                                                 --------------  --------------  ------------- 
 Shareholders' funds                              12,662          4,136           5,014 
 Shareholders' funds plus accruals 
  and deferred income                             15,299          6,360           7,527 
                                                 ==============  ==============  ============= 

Consolidated Cash Flow

                                                     Six month       Six month       Year ended 
                                                      period ended    period ended    31 December 
                                                      30 June 2021    30 June 2020    2020 
                                                     Unaudited       Unaudited       Audited 
                                            Notes    GBP000          GBP000          GBP000 
 Cash flows from operating activities 
 Profit after taxation                               (52)            68              956 
 Adjustments for: 
 Taxation credit                                     (56)            (222)           (494) 
 Finance costs                                       48              57              114 
 Share option charge                                 91              91              91 
 Other interest on leases                            51              32              67 
 Finance income                                      -                               - 
 Exchange gain/ (loss)                               (73)            73              49 
 Amortisation and depreciation                       517             352             791 
 Exceptional - IPO costs                             630             - 
 Loss on disposal of right of use 
  asset                                              -               -               9 
                                                    --------------  --------------  ------------- 
 Cash flows from operations before 
  working capital changes                            1,156           451             1,583 
 Changes in trade and other receivables              275             320             275 
 Changes in trade and other payables                 43              759             60 
                                                    --------------  --------------  ------------- 
 Cash generated from operations                      1,474           1,530           1,918 
 Finance costs                                       (48)            (57)            (69) 
 Finance income                                      -               -               - 
 Taxation received                                   -               -               285 
                                                    --------------  --------------  ------------- 
 Net cash flow from operating activities             1,426           1,473           2,134 
 Cash flow from investing activities 
 Additions of intangible assets                      (619)           (862)           (1,227) 
 Purchase of property, plant and 
  equipment                                          (7)             (16)            (17) 
 Cash acquired with subsidiary                       -               -               277 
 Payment to acquire subsidiary                       -               -               (223) 
 Net cash flow from investing activities             (626)           (878)           (1,190) 
 Net cash flow before financing 
  activities                                         800             595             944 
                                                    --------------  --------------  ------------- 
 Cash flow from financing activities 
 Proceeds from ordinary share issue- 
  net of costs                                       6,872 
 Proceeds from exercise of share 
  options                                            180 
 Loan repayments                                     (284)           (308)           - 
 Payment of lease liabilities                        (128)           (342)           (457) 
 Bank loans received                                 -               -               250 
 Net cash flow from/(to) financing 
  activities                                         6,640           (650)           (207) 
                                                    --------------  --------------  ------------- 
 Net increase/(decrease) in cash 
  and cash equivalents                               7,440           (55)            737 
                                                    ==============  ==============  ============= 
 Opening cash and cash equivalents                   2,127           1,390           1,390 
                                                    --------------  --------------  ------------- 
 Closing cash and cash equivalents                   9,567           1,335           2,127 
                                                    ==============  ==============  ============= 

Consolidated Statement of Changes in Equity

                                Share      Capital       Share        Share      Foreign     Retained    Total 
                                 capital    Redemption    Premium      option     exchange    Earnings    Equity 
                                            Reserve                    reserve    reserve 
                                GBP000     GBP000        GBP000       GBP000     GBP000      GBP000      GBP000 
 At 1 January 2021              2,379      -             10,469       304        145         (8,283)     5,014 
 Profit for the period          -                        -            -          -           (52)        (52) 
 Exchange differences 
  on retranslation of 
  foreign operations            -                        -            -           (74)       -           (74) 
                               ---------  ------------  -----------  ---------  ----------  ----------  -------- 
 Total comprehensive 
  income                        -                        -            -          (74)        (52)        (126) 
  Issue of ordinary 
   Expenses relating 
   to ordinary share 
   Share buyback of deferred 
   Cancellation of share                                  -                                   -           - 
   premium                       (1,103)    1,103          (10,469)    -          -            10,469      - 
 Share issuance - IPO           260                      7,740                                           8,000 
 Option conversion 
  SR                            13                       8                                               21 
 Option conversion 
  JK                            12                       148                                             160 
 IPO expenses                                            -498                                            -498 
 Share based payment 
  charge                                   -             -            91         -           -           91 
                               ---------  ------------  -----------  ---------  ----------  ----------  -------- 
 At 30 June 2021 (unaudited)    1,561      1,103         7,398        395        71          2,134       12,662 
                               =========  ============  ===========  =========  ==========  ==========  ======== 
 At 1 January 2020              2,379      -             10,469       213        82          (9,239)     3,904 
 Profit for the year            -          -             -            -          -           68          68 
 Exchange differences 
  on retranslation of 
  foreign operations            -          -             -            -          73          -           73 
                               ---------  ------------  -----------  ---------  ----------  ----------  -------- 
 Total comprehensive 
  income                                                                                     68          141 
 Share based payment 
  charge                        -          -             -            91         -           -           91 
                               ---------  ------------  -----------  ---------  ----------  ----------  -------- 
 At 30 June 2020 (unaudited)    2,379      -             10,469       304        155         (9,171)     4,136 
                               =========  ============  ===========  =========  ==========  ==========  ======== 
 At 1 January 2020              2,379                    10,469       213        82          (9,239)     3,904 
 Profit for the year            -                        -            -          -           956         956 
 Exchange differences 
  on retranslation of 
  foreign operations            -                        -            -          63          -           63 
                               ---------  ------------  -----------  ---------  ----------  ----------  -------- 
 Total comprehensive 
  income                                                 -            -          63          956         1,019 
 Share based payments 
  charge                        -          -             -            91         -           -           91 
 At 31 December 2020 
  (audited)                     2.379      -             10,469       304        145         (8,283)     5,014 
                               =========  ============  ===========  =========  ==========  ==========  ======== 

Notes to the Financial Information

1. General information

itim Group plc is a public limited Company ("Company") incorporated in the United Kingdom under the Companies Act 2006 (registration number 03486926). The Company is domiciled in the United Kingdom and its registered address is 2(nd) Floor, Atlas House, 173 Victoria Street, London SW1E 5NH. The Company's ordinary shares are admitted to trading on the AIM market of the London Stock Exchange ("AIM").

The Group's principal activities have been the provision of technology solutions to help clients drive improvements in efficiency and effectiveness.

The Group's interim report and accounts for the six months ended 30 June 2021 have been prepared using the recognition and measurement principles of International Financial Reporting Standards and Interpretations as endorsed by the European Union (collectively "Adopted IFRS").

These interim financial statements for the six months ended 30 June 2021 have been prepared in accordance with the AIM Rules for Companies and should be read in conjunction with the financial statements for the year ended 31 December 2020, which have been prepared in accordance with IFRS as adopted by the European Union. The interim report and accounts do not include all the information and disclosures required in the annual financial statements.

The interim report and accounts have been prepared on the basis of the accounting policies, presentation and methods of computation as set out in the Group's December 2020 Annual Report and Accounts, except for those that relate to new standards and interpretations effective for the first time for periods beginning on (or after) 1 January 2021, and will be adopted in the 2021 annual financial statements.

The interim report and accounts do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. These interim financial statements were approved by the Board of Directors on 9(th) September 2021. The results for the six months to 30 June 2021 and the comparative results for the six months to 30 June 2020 are unaudited. The figures for the period ended 31 December 2020 are extracted from the audited statutory accounts of the Group for that period.

The Directors believe that a combination of the Group's current cash, projected revenues from existing and future contracts will enable the Group to meet its obligations and to implement its business plan in full. Inherently, there can be no certainty in these matters, but the Directors believe that the Group's internal trading forecasts are realistic and that the going concern basis of preparation continues to be appropriate

2. Earnings per share

Basic and diluted loss per share is calculated by dividing the loss attributable to owners of the parent by the weighted average number of ordinary shares in issue during the period. For the avoidance of doubt the deferred shares have been excluded as they have no rights to profits or capital. Additionally the Company's ordinary shares were subject to a share consolidation where 5 ordinary shares were converted into 1 ordinary share. The comparative period weighted average number of shares has been adjusted for this to aid comparison. The Company's share options have a dilutive effect over the three year period.

                                         6 months ended      6 months      Year ended 
                                           30 June 2021      ended 30     31 December 
                                              Unaudited     June 2020            2020 
                                                            Unaudited         Audited 
                                                 GBP000        GBP000          GBP000 
 Profit (loss) for the year/ period 
  attributable to owners of the 
  parent on continuing operations 
  - GBP000                                         (52)            68             956 
 Weighted average number of shares 
  - 000                                          25,817        25,534          25,534 
 Potentially dilutive share options 
  - 000                                           3,679         3,215           3,318 
 Basic earnings (loss) per share 
  - pence                                        (0.20)          0.27            3.74 
 on continuing operations 
                                      -----------------  ------------  -------------- 
 Diluted earnings (loss) per share 
  - pence                                        (0.20)          0.24            3.31 
 on continuing operations 
                                      -----------------  ------------  -------------- 

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September 23, 2021 01:59 ET (05:59 GMT)

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