TIDMTENG
RNS Number : 8375M
Ten Lifestyle Group PLC
14 May 2020
14 May 2020
Ten Lifestyle Group plc
("Ten", the "Company" or the "Group")
Interim results for the six months ended 29 February 2020
Ten Lifestyle Group plc (AIM: TENG), a leading
technology-enabled, global concierge platform for the world's
wealthy and mass affluent, announces its unaudited Interim Results
for the six months ended 29 February 2020 ("H1 2020", or "the
period").
Financial Highlights
-- Net Revenue [1] of GBP23.8m up 11% (H1 2019: GBP21.5m) with
particularly strong growth (+25%) in EMEA [2]
-- Adjusted EBITDA [3] profit of GBP2.1m (H1 2019: loss of
GBP(2.4)m) driven by improved operational efficiencies and IFRS 16
implementation
-- Operating loss of GBP(2.1)m (H1 2019: GBP(4.7)m)
-- Operating expenses reduced to GBP21.7m (H1 2019: GBP23.9m)
-- Cash at GBP9.6m (FY 2019: GBP12.3m) and no debt
Operational Highlights
-- Successfully implemented the expansion of an existing Large
contract in the Americas into an Extra Large [4] contract by adding
digital and high-touch concierge services in mid-January 2020
[5]
-- Launched a Large contract in September 2019
-- Operating efficiency continues to improve due to technology
improvements as well as growing maturity in operations and supplier
base
-- Member satisfaction [6] has been maintained at high levels, on a global basis
-- GBP6.3m (H1 2019: GBP5.7m) spent on proprietary digital
platform, communications and technologies to enhance client
experience and create competitive advantage
Current Trading & Outlook
Ten's business model derives its revenue substantially from
service delivery rather than conversion of bookings, as outlined in
the Group's trading updates announced on 6 and 30 March 2020. Ten
continues to generate revenue by delivering services relevant to
its members and corporate clients throughout this period of
uncertainty.
Effective communication and dynamic campaigns leverage Ten's
continued relevance with both corporate clients and their
customers. Feedback from many corporate clients is that they
believe the impact from COVID-19 will create additional retention
risks and acquisition opportunities with respect to their most
valuable customers. This supports our justification for, and our
corporate clients' continued investment in, our services.
However, supplier revenue, primarily from Travel bookings, has
significantly reduced since March 2020, as previously indicated,
resulting in very low revenue from commission payments [7] until
global travel begins to recover (H1 2020: GBP 2.5m, FY 2019:
GBP5.5m) .
We have taken prudent steps to reduce cost in the business.
These actions included, but are not limited to, successful
renegotiation with suppliers; a review of projects to focus on the
most strategic core investments (including development of our
technology platform, where we continue to invest); a freeze on
employee bonuses and salary increases; and voluntary salary
sacrifice in exchange for share options. Where it has made
commercial and operational sense, the Group has also participated
in available government funded coronavirus initiatives across all
regions. These actions are expected to deliver at least GBP5m of
cost savings in H2 2020 alone.
The flexibility of our service model has allowed us to deliver
high service levels in March and April 2020 by offering services
relevant to the current conditions in each market. The volume of
service requests in March and April 2020 are 17% higher than last
year and 13% higher than the H1 2020 average run rate. This has in
turn increased corporate revenue in March and April 2020, compared
to the same prior year period and the average H1 2020 run rate.
Cash at the end of February 2020 was GBP 9.6m. Cost saving
actions taken, increased corporate revenue and prudent cash
management have enabled us to broadly maintain cash at this level
at the end of March and April 2020. This has been achieved despite
very low levels of commission from suppliers([) 7] .
We have responded effectively to the COVID-19 pandemic, to date,
although there is no certainty when or how this will end, which
creates uncertainty when assessing the outlook. In the months
ahead, we will continue to develop relevant service offers for our
members, the customers of our contracted corporate clients. In the
circumstances, there are likely to be delays to new contract
launches but we continue to have positive conversations with many
companies who recognise that customer loyalty and acquisition
strategies will be vital as the pandemic enters new phases.
Commissions are expected to remain low for the rest of 2020 and
into 2021. We will continue to drive efficiencies and adjust costs
to maintain a robust cash position, whilst continuing investment in
the technology platform.
The Board will provide further updates, as necessary in a
changing environment.
Alex Cheatle, CEO of Ten Lifestyle Group, said;
"Since the outbreak of COVID-19 in our APAC region in January
2020, Ten has been supporting its members throughout the crisis,
adapting to their changing needs.
For example, we have been sourcing the best grocery deliveries,
providing offers, content and 'things to do' during lockdown, gifts
for loved ones and delivering virtual events and webinars. This
allows us to remain relevant to our corporate clients because we
deliver valued services to their most valuable customers. We have
proven to be a robust and reliable partner during the migration of
most of our staff to homeworking with no service interruption and
continued PCI DSS Level 1 compliance.
Until there is more clarity on when and how restrictions will be
lifted and how consumer behaviour will develop, we'll continue to
adopt a prudent approach to manage costs and preserve cash.
I would like to extend a huge thanks to Ten's employees
worldwide, who are working tirelessly to deliver and enhance our
proposition during this challenging time, as well as our corporate
clients for their continuing support."
Analyst Presentation
An online analyst presentation will be held by video link at
9:00am on 14 May 2020. To attend, please RSVP
investorrelations@tengroup.com .
Dial-in details for the presentation are also available:
Dial-in number: +44 (0) 20 3481 5240
Meeting ID: 821 7156 6045
For further information please visit www.tenlifestylegroup.com
or call:
Ten Lifestyle Group plc
Alex Cheatle, Chief Executive Officer +44 (0)20 7850
Alan Donald, Chief Financial Officer 2796
Peel Hunt LLP, Nominated Advisor and Broker
Edward Knight
George Sellar +44 (0) 20 7418
Nick Prowting 8900
Notes to Editors:
About Ten Lifestyle Group Plc
Ten Lifestyle Group plc is a leading technology-enabled, global
concierge platform, helping wealthy and mass affluent individuals
and their families to discover, organise, and enjoy dining, live
entertainment, travel and premium retail (and other relevant
services) with better results and quicker than they could
themselves.
Underpinned by industry-first technology, Ten provides its
trusted travel and lifestyle service to its more than 2 million
members, 24/7, 365 days a year, wherever they are in the world.
Founded in 1998, the business listed on the AIM market of the
London Stock Exchange in November 2017 (AIM: TENG). Ten Lifestyle
Group's objective is to become the most trusted service platform in
the world.
For further information about Ten Lifestyle Group Plc, please go
to: www.tenlifestylegroup.com
Operating and Financial Review
GBPm H1 2020 H1 2019
Revenue 25.6 22.6
-------- --------
Net Revenue 23.8 21.5
-------- --------
Operating expenses & other income (excluding depreciation,
amortisation, share based payments) (21.7) (23.9)
-------- --------
(2.4
Adjusted EBITDA* 2.1 )
-------- --------
Adjusted EBITDA % of Net Revenue 8.7% (11.3)%
-------- --------
Depreciation (2.3) (0.4)
-------- --------
Amortisation (1.4) (1.6)
-------- --------
Share-based payments charge (0.5) (0.2)
-------- --------
Operating loss before interest and tax (2.1) (4.7)
-------- --------
*Adjusted EBITDA in H1 2020 includes the Groups implementation
of IFRS 16 Lease accounting standard. The Group transitioned using
the modified retrospective method and therefore comparatives have
not been restated.
IFRS 16 Implementation
The Group adopted IFRS 16 - Leases for the financial year ending
31 August 2020, and chose to use the modified retrospective
approach to adoption, which means there are no restatements to the
prior year figures.
IFRS 16 introduces a single lessee accounting model, where by
the Group will recognise a lease liability and a Right of use asset
at 1 September 2019 for leases previously classified as operating
leases. Within the income statement rent expense is replaced by
depreciation and interest expense.
The adoption of IFRS 16 has resulted in a Right of use asset of
GBP6.8m, with a corresponding Lease Liability of GBP7.4m as at 29
February 2020.
In order to allow users of this report to see how IFRS 16 has
affected Adjusted EBITDA, we present a reconciliation below.
Adjusted EBITDA GBPm 6 months to 6 months to
29 February 2020 28 February
2019
EBITDA before IFRS 16 transition - (2.4)
------------------ -------------
Changes due to accounting policy 2.1 -
- IFRS 16
------------------ -------------
EBITDA as reported 2.1 (2.4)
------------------ -------------
The changes to accounting policy have improved adjusted EBITDA
from an underlying breakeven position to a profit of GBP2.1m. As
stated, the prior year figures have not been restated.
Revenue
Revenue for the six months to 29 February 2020 was GBP25.6m, up
13% on the six months to 29 February 2019. Net Revenue was
GBP23.8m, up 11% compared to the prior period.
This revenue growth reflects organic growth in existing
contracts, supported by a series of new contract launches in H1
2020, partly offset by the loss of a Large contract in June
2019.
Development of corporate contracts
Contract Category Launched by 29 Launched by 31
[8] February 2020 August 2019
Extra Large 3 2
--------------- ---------------
Large 6 5
--------------- ---------------
Medium 17 17
--------------- ---------------
Total 26 24
--------------- ---------------
Operating expenses
Operating expenses decreased to GBP21.7m (H1 2019: GBP23.9m)
primarily due to the impact of IFRS 16 adjustments moving GBP2.1m
of operating cost to both Depreciation (GBP1.9m) and Interest
(GBP0.2m). Excluding this adjustment, the underlying operating cost
base was flat year on year as the business leveraged its scale and
continued to deliver improved operational efficiencies offsetting
one off set up costs (GBP0.8m) for the expansion of an existing
Extra Large contract in Americas and continued investment in our
product, content and technology teams.
Adjusted EBITDA
Adjusted EBITDA, as reported, takes into account all Group
operating costs, other than depreciation of GBP2.3m (H1 2019:
GBP0.4m), amortisation of GBP1.4m (H1 2019: GBP1.6m) and
share-based payment expenses of GBP0.5m (H1 2019: GBP0.2m). On this
basis, Adjusted EBITDA was a profit of GBP2.1m (H1 2019: loss of
GBP2.4m).
Regional performance
Segmental Net Revenue reporting reflects our servicing location
rather than the location of our corporate clients. This allows us
to understand and track the efficiency and profitability of our
operations around the world.
GBPm H1 2020 H1 2019 % change
EMEA 11.9 9.5 25%
-------- -------- ---------
Americas 7.7 7.3 5%
-------- -------- ---------
APAC 4.2 4.7 (11%)
-------- -------- ---------
Total 23.8 21.5 11%
-------- -------- ---------
After fully allocating our indirect central costs including IT,
platform support, non-lease costs and management across the
regions, together with deducting the GBP2.1m credit in respect of
IFRS 16 in H1 2020 to ensure a like for like comparison, the
underlying Adjusted EBITDA profitability of each regional segment
is:
GBPm H1 2020 H1 2020 H1 2019
(IFRS 16) (Pre IFRS
16)
EMEA 3.9 3.2 0.6
----------- ----------- --------
Americas (1.5) (2.5) (2.1)
----------- ----------- --------
APAC (0.3) (0.7) (0.9)
----------- ----------- --------
Total 2.1 0.0 (2.4)
----------- ----------- --------
Adjusted EBITDA % of Net
Revenue 8.7% 0.0% (11.3%)
----------- ----------- --------
EMEA
Net Revenue in the region increased by 25% to GBP11.9m (H1 2019:
GBP9.5m) . The increase in Net Revenue has been driven primarily by
the launch of a Large contract in September as well as strong
organic growth in our existing base business across a number of our
clients. Overall Adjusted EBITDA margin of 27% for the region is
approaching the mature margins we would expect after a period of
investment. The continued improvement of operational efficiencies
has meant that we managed to increase revenue and activity with a
lower headcount and cost requirement.
AMERICAS
Net Revenue from the region increased by 5% to GBP7.7m (H1 2019:
GBP7.3m). The growth in revenue was driven by organic growth as
well as 6 weeks of contribution from the extension of the Extra
Large contract which commenced in mid-January. Adjusted EBITDA was
impacted by set up costs of approximately GBP0.8m in relation to
this Extra Large contract, partly offset by operational
efficiencies across the region.
APAC
Net Revenue decreased by 11% to GBP4.2m (H1 2019: GBP4.7m) . The
reduction in revenue is primarily due to the loss of a Large
contract in June 2019 which reduced annualised revenue by GBP1.7m.
Excluding this loss underlying organic growth was strong across the
region and the overall Adjusted EBITDA margin improved by
GBP0.2m.
Cash flow
GBPm H1 2020
Loss before tax (3.3)
--------
Net finance expense 0.2
--------
Movement in working capital 1.8
--------
Non-cash items (share-based payments, depreciation
and amortisation charges) 4.1
--------
Pre tax operating cash inflow 2.8
--------
Capital expenditure (0.6)
--------
Investment in intangible assets (2.7)
--------
Tax paid (0.2)
--------
Cash outflow before financing activities (0.7)
--------
Financing activities
--------
Repayment of lease liabilities and net interest (2.1)
--------
Cash outflow from financing activities (2.1)
--------
Net decrease in cash (2.8)
--------
Cash balance 9.6
--------
Pre tax operating cash inflows were GBP2.8m, reflecting the loss
before tax of GBP3.3m, as well as a reduction in net working
capital of GBP1.8m due to improved debtor collection, and add back
of non-cash items of GBP4.1m (see above) including GBP1.9m relating
to depreciation of Right of use assets regarding IFRS 16 lease
accounting.
Additionally, as planned, there was GBP2.7m (H1 2019: GBP2.1m)
capital investment in the period in global content, and the
internal CRM platform (Ten Maid) together with continued
development of the digital platform. GBP0.6m capital expenditure
for IT infrastructure, included one off expenditure of GBP0.4m
relating to new telephony technology. Repayment of lease
liabilities and net interest of GBP2.1m has resulted in a cash
outflow in the period of GBP2.8m.
Balance sheet
GBPm As at 29 February As at 31 August
2020 2019
Intangible assets 10.4 9.0
------------------ ----------------
Property, plant and equipment 1.9 1.8
------------------ ----------------
Right of use asset 6.8 -
------------------ ----------------
Cash 9.6 12.3
------------------ ----------------
Other Assets 9.1 11.1
------------------ ----------------
Lease Liabilities (7.4) -
------------------ ----------------
Other Liabilities (12.6) (13.3)
------------------ ----------------
Net assets 17.8 20.9
------------------ ----------------
Share capital/Share premium 28.6 28.6
------------------ ----------------
Reserves (10.8) (7.7)
------------------ ----------------
Total equity 17.8 20.9
------------------ ----------------
Net assets remain strong with a significant cash position of
GBP9.6m after capital investment. With transition to IFRS 16,
Assets now include a Right of use asset of GBP 6.8m and Liabilities
include GBP 7.4m of Lease liabilities. The Group is debt free at
the end of the period.
Principle Risks and Uncertainties
The principle risks and uncertainties facing the Group remain
broadly consistent with the Principle Risks and Uncertainties
reported in Ten's 2019 Annual Report. Since the 2019 Annual Report,
the Board have been monitoring and mitigating the effects of the
following international events on the Group's business:
COVID-19
In March 2020, the World Health Organisation declared a global
pandemic due to the COVID-19 virus that has spread across the
globe, causing different governments and countries to enforce
restrictions on people movements, a stop to international travel,
and other precautionary measures. This has had a widespread impact
economically and a number of industries have been heavily impacted.
This has resulted in impacts on certain industries and a more
general need to consider whether budgets and targets previously set
are realistic in light of these events
As described in Current Trading & Outlook above, the
COVID-19 pandemic has impacted our business but the Board believes
that the business is well positioned to be able to navigate through
the impact of COVID-19 due to the strength and flexibility of its
service proposition, its strong balance sheet and cash
position.
Brexit
The United Kingdom ('UK') formally left the European Union
('EU') on 30 January 2020. The period of time from when the UK
voted to exit the EU on 23 June 2016 and the formal process
initiated by the UK government to withdraw from the EU, or Brexit,
created volatility in the global financial markets. The UK now
enters a transition period, being an intermediary arrangement
covering matters like trade and border arrangements, citizens'
rights and jurisdiction on matters including dispute resolution,
taking account of The EU (Withdrawal Agreement) Act 2020, which
ratified the Withdrawal Agreement, as agreed between the UK and the
EU. The transition period is currently due to end on 31 December
2020 and ahead of this date, negotiations are ongoing to determine
and conclude a formal agreement between the UK and EU on the
aforementioned matters.
As the Group operates subsidiaries in many countries, there are
several channels available to us to continue business with the same
customers, should the need arise, with little to no effect from
Brexit changes. As such, the Directors currently deem that the
effects of the UK's current transitional period outside the EU and
the impact of ongoing discussions with the EU will not have a
significant impact on the Group's operations due to the global
geographical footprint of the business and the nature of is
operations. However, the Directors and Senior Leadership Team are
closely monitoring the situation to be in a position to manage the
risk of any volatility in global financial markets and impact on
global economic performance due to Brexit.
Alex Cheatle Alan Donald
Chief Executive Officer Chief Finance Officer
13 May 2020 13 May 2020
Consolidated statement of comprehensive income
6 months to 6 months to
Note 29 February 28 February
2020 2019
Unaudited Unaudited
GBP'000 GBP'000
Revenue 2 25,570 22,592
Cost of sales on principal transactions (1,802) (1,134)
------------ ------------
Net Revenue 2 23,768 21,458
Other cost of sales (559) (406)
Gross profit 23,209 21,052
Administrative expenses & Other income (25,288) (25,709)
Operating profit/(loss) before amortisation,
depreciation, interest, share based payments
and taxation ("Adjusted EBITDA") 2,060 (2,430)
Depreciation (2,286) (428)
Amortisation 3 (1,355) (1,639)
Share-based payment expense (498) (160)
----------------------------------------------- ----- ------------ ------------
Operating loss (2,079) (4,657)
Net finance expense (1,244) (103)
------------ ------------
Loss before taxation (3,323) (4,760)
Taxation expense 4 (406) (395)
Loss for the period (3,729) (5,155)
============ ============
Other comprehensive Income:
Exchange differences on translation
of foreign operations 652 90
Total comprehensive loss for the period (3,077) (5,065)
============ ============
Basic and diluted loss per ordinary share 5 (4.6)p (6.4)p
The consolidated statement of comprehensive income has been
prepared on the basis that all operations are continuing
operations.
Consolidated statement of financial position
At At
Note 29 February 31 August 2019
2020
Unaudited Audited
GBP'000 GBP'000
Non-current assets
Intangible assets 3 10,403 9,009
Right of use assets 6,846 -
Property, plant and equipment 1,872 1,843
Total non-current assets 19,121 10,852
------------ ---------------
Current assets
Inventories 103 56
Trade and other receivables 8,997 11,069
Cash and cash equivalents 9,580 12,341
---------------
Total current assets 18,680 23,466
------------ ---------------
Total assets 37,801 34,318
============ ===============
Current liabilities
Trade and other payables (11,981) (12,745)
Lease Liabilities (4,213) -
Obligations under finance
leases - (30)
Overseas Tax Liabilities (617) (596)
Total current liabilities (16,811) (13,371)
------------ ---------------
Net current assets 1,869 10,095
============ ===============
Non-current liabilities
Lease Liabilities (3,226) -
Obligations under finance
leases - (2)
---------------
Total non-current liabilities (3,226) (2)
------------ ---------------
Total liabilities (20,037) (13,373)
============ ===============
Net assets 17,764 20,945
============ ===============
Equity
Called up share capital 81 81
Share premium account 28,480 28,480
Merger relief reserve 1,993 1,993
Treasury reserve (30) (30)
Foreign exchange reserve 307 (345)
Retained deficit (13,067) (9,234)
Total equity 17,764 20,945
============ ===============
Consolidated statement of changes in equity
Share Merger Foreign
Share premium relief exchange Treasury Retained
capital account reserve reserve reserve deficit Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 September 2018
(Audited) 81 28,480 1,993 (498) 77 (1,474) 28,659
-------- -------- -------- --------- -------------- --------- ------------------
Period ended 31 August 2019:
Loss for the year - - - - - (8,261) (8,261)
Foreign exchange - - - 153 - - 153
Total comprehensive income
for the year - - - 153 - (8,261) (8,108)
Shares purchased by Employee
Benefit Trust (EBT) - - - - (107) - 107
Equity-settled share-based
payments charge - - - - - 501 501
Balance at 31 August 2019
(Audited) (as previously
reported) 81 28,480 1,993 (345) (30) (9,234) 20,945
Change in accounting policy
(adoption of IFRS 16) (602) (602)
Balance at 31 August 2019
(as restated) (Unaudited) 81 28,480 1,993 (345) (30) (9,836) 20,343
======== ======== ======== ========= ============== ========= ==================
Period ended 29 February
2020
Loss for the period - - - - - (3,729) (3,729)
Foreign exchange - - - 652 - - 652
Total comprehensive income
for the period - - - 652 - (3,729) (3,077)
Equity-settled share-based
payments charge - - - - - 498 498
Balance at 29 February 2020
(Unaudited) 81 28,480 1,993 307 (30) (13,067) 17,764
======== ======== ======== ========= ============== ========= ==================
Condensed consolidated statement of cash flows
6 months to 6 months to
Note 29 February 28 February
2020 2019
Unaudited Unaudited
GBP'000 GBP'000
Cash flows from operating activities
Loss for the period, after tax (3,729) (5,155)
Adjustments for:
Taxation expense 4 406 395
Finance expense 241 146
Investment income (2) (43)
Amortisation of intangible assets 3 1,355 1,639
Depreciation of property, plant and
equipment 452 428
Depreciation of Right of use asset 1,834 -
Equity-settled share based payment expense 498 160
Movement in working capital:
(Increase)/Decrease in inventories (47) 32
Decrease/(Increase) in trade and other
receivables 2,072 (1,161)
Decrease in trade and other payables (219) (566)
Cash generated from/(used by) operations 2,861 (4,125)
Tax paid (207) (395)
Net cash generated from/(used by) operating
activities 2,654 (4,520)
------------ ------------
Cashflows from Investing activities
Purchase of intangible assets (2,749) (2,104)
Purchase of property, plant and equipment (581) (712)
Finance income 2 41
Net cash used by investing activities (3,328) (2,775)
------------ ------------
Cash flows from financing activities
Lease Liability repayments (2,084) -
Proceeds from treasury shares - (107)
Payment of finance lease obligations - (39)
Interest paid (3) (10)
Finance lease interest paid - (4)
Net cash used by financing activities (2,087) (160)
------------ ------------
Net decrease in cash and cash equivalents (2,761) (7,455)
Cash and cash equivalents at beginning
of period 12,341 20,659
Cash and cash equivalents at end of
period
Cash at bank and in hand 9,580 13,204
Cash and cash equivalents 9,580 13,204
============ ============
Notes to the Interim unaudited condensed Financial
Information
1. Basis of preparation
These interim consolidated financial statements have been
prepared using accounting policies based on International Financial
Reporting Standards (IFRS and IFRIC Interpretations) issued by the
International Accounting Standards Board ("IASB") as adopted for
use in the EU. They do not include all disclosures that would
otherwise be required in a complete set of financial statements and
should be read in conjunction with the 31 August 2019 Annual
Report. The financial information for the half years ended 29
February 2020 and 28 February 2019 does not constitute statutory
accounts within the meaning of Section 434 (3) of the Companies Act
2006 and both periods are unaudited.
The annual financial statements of Ten Lifestyle Group plc ('the
Group') are prepared in accordance with IFRS as adopted by the
European Union. The comparative financial information for the year
ended 31 August 2019 included within this report does not
constitute the full statutory Annual Report for that period. The
statutory Annual Report and Financial Statements for year ended 31
August 2019 have been filed with the Registrar of Companies. The
Independent Auditors' Report in the Annual Report and Financial
Statements for the year ended 31 August 2019 was unqualified, did
not draw attention to any matters by way of emphasis and did not
contain a statement under 498(2)-(3) of the Companies Act 2006.
The Group has applied the same accounting policies and methods
of computation in its interim consolidated financial statements as
in its year ended 31 August 2019 annual financial statements,
except for those that relate to new standards and interpretations
effective for the first time for periods beginning on (or after) 1
January 2019, and will be adopted in the year ended 31 August 2020
financial statements. New standards impacting the Group that will
be adopted in the annual financial statements for the year ended 31
August 2020, and which have given rise to changes in the Group's
accounting policies is IFRS 16 Leases.
Details of the impact of this standard are provided below. Other
new and amended standards and interpretations issued by the IASB
that will apply for the first time in the next annual financial
statements are not expected to have a material impact on the
Group.
IFRS 16 leases
The Group adopted IFRS 16 from 1 September 2019, replacing the
existing guidance in IAS 17 - "Leases" (hereafter - "IAS 17"). IFRS
16 changes the existing guidance in IAS 17 and requires lessees to
recognise a lease liability that reflects future lease payments and
a "Right of use asset" in all lease contracts within scope, with no
distinction between financing and capital leases. IFRS 16 exempts
lessees in short-term leases or the when underlying asset has a low
value. The Group has elected to apply the practical expedients
permitted by the standard as follows:
-- Use of a single discount rate to all leases with reasonably similar characteristics.
-- Exclusion of initial direct costs for the measurement of Right of use asset.
-- The use of hindsight in determining the lease term where the
contract contains option to extend or terminate the lease.
The adoption of IFRS 16 has resulted in the Group recognising
Right of use assets and lease liabilities for all contracts of
GBP6.9 million and GBP7.5 million respectively that are, or
contain, a lease. The difference between the Right of use assets
and lease liabilities has been recognised as an adjustment to
retained earnings on 1 September, 2019. For leases historically
classified as operating leases, under legacy accounting
requirements the group does not recognise related assets or
liabilities, disclosing instead the total commitment in its annual
financial statements. The Group has elected to apply the modified
retrospective method. Therefore, there will be no impact on any
comparative accounting period (interim or annual), with any leases
recognised on the statement of financial position on the date of
initial application of IFRS 16, being 1 September 2019, as well as
any adjustment to the previously stated equity as a result of any
difference between the Right of use assets and related liabilities
recorded. Specifically, lease liabilities have been measured equal
to remaining lease payments discounted using the incremental
borrowing rate at the date of initial adoption. Right of use assets
have been measured as if IFRS 16 had always been applied but using
the incremental borrowing rate at the date of initial application.
The difference between the Right of use assets and lease
liabilities recognised upon adoption has been recognised as an
adjustment to retained earnings on 1 September 2019.
Finally, instead of recognising an operating expense for its
operating lease payments, the group now recognises interest on its
lease liabilities and depreciation on its Right of use assets. This
has increased the reported Adjusted EBITDA by the amount of its
current operating lease cost, which for 6 months ended 29 February
2020 was approximately GBP2.1 million.
Adjusted Measure of Performance
The Group considers Adjusted EBITDA, which is defined as
operating profit or loss before interest, tax, depreciation and
amortisation, share based payment expense and exceptional items as
the most appropriate measure of the Group's underlying performance.
For comparability, Adjusted EBITDA for the current period also
includes an adjustment for the impact of IFRS 16 of approximately
GBP2.1 million.
Going Concern
In March 2020, the World Health Organisation declared a global
pandemic due to the COVID-19 virus that has spread across the
globe, causing different governments and countries to enforce
restrictions on people movements, a stop to international travel,
and other precautionary measures. This has had a widespread impact
economically and a number of industries have been heavily impacted.
This has resulted in supply chain disruption in certain industries,
uncertainty over cash collection from certain suppliers, and a more
general need to consider whether budgets and targets previously set
are realistic in light of these events.
In carrying out the going concern assessment, the Directors have
considered a number of scenarios, taking account of the possible
impacts of the pandemic , in relation to revenue forecasts for the
next 12 months. A material downside scenario assumed that current
agreed contractual minimum revenues will be maintained over the
period, other variable revenue will reduce by 50%, no new contract
revenue, as well as no meaningful recovery in commissions earned
from suppliers. I n such a scenario, the Group has identified cost
reductions which could be implemented, to help mitigate the impact
on cash outflows.
In reaching their going concern assessment, the Directors have
considered the foreseeable future, a period extending 12 months
from the date of approval of this half-yearly financial report.
This assessment has included consideration of the forecast
performance of the business, as noted above, the cash and financing
facilities available to the Group.
I n light of all of this analysis, the Directors are satisfied
that, even if this downside scenario were to occur, the Group has
sufficient cash resources over the period. As such, the
consolidated financial statements have been prepared on a going
concern basis.
The Board of Directors approved this interim report on 13 May
2020.
2. Segmental Information
The total revenue for the Group has been derived from its
principal activity; the provision of concierge services.
6 months to 6 months to
29 February 28 February
2020 2019
Unaudited Unaudited
GBP'000 GBP'000
EMEA 11,908 9,398
Americas 7,674 7,318
Asia 4,186 4,742
Net Revenue 23,768 21,458
Add back: Cost of sales on principal transactions 1,802 1,134
Revenue 25,570 22,592
EMEA 3,868 559
Americas (1,533) (2,088)
Asia (275) (901)
Adjusted EBITDA 2,060 (2,430)
Depreciation (2,286) (428)
Amortisation (1,355) (1,639)
Share-based payment expense (498) (160)
Operating loss (2,079) (4,657)
Foreign exchange loss (1,005) (136)
Other net finance (expense)/income (239) 33
Loss before taxation (3,323) (4,760)
Taxation charge (406) (395)
Loss for the period (3,729) (5,155)
============================= =============================
Net Revenue is a non-GAAP Group measure that excludes the direct
cost of sales relating to member transactions managed by the Group,
such as the cost of airline tickets sold under the Group's ATOL
licences. Net Revenue is the measure of the Group's income on which
segmental performance is measured.
Adjusted EBITDA is a Group non-GAAP specific measure excluding
interest, taxation, depreciation, amortisation, share-based
payments and exceptional costs, the latter being expenses which are
considered to be one-off and non-recurring in nature (where
applicable).
Adjusted EBITDA is the main measure of performance used by the
Group's Chief Executive Officer, who is considered to be the chief
operating decision maker. Adjusted EBITDA is the principal profit
measure for a segment.
The statement of financial position is not analysed between
reporting segment. Management and the chief operating
decision-maker consider the statement of financial position at
Group level.
3. Intangible Assets
The Group capitalised GBP2.7m (H1 2019: GBP2.1m, FY 2019:
GBP4.3m) of costs representing the development of Ten's global
digital platform, TenMAID (Ten's proprietary customer relationship
management system) and new data warehouse during the period,
resulting in a net book value of GBP10.4m (H1 2019: GBP8.2m, FY
2019: GBP9.0m) after an amortisation charge of GBP1.4m (H1 2019:
GBP1.6m, FY 2019: GBP3.0m).
No impairment charge was required in relation to intangible
assets in the period (H1 2019: GBPnil, FY 2019: GBPnil).
4. Taxation
The income tax expense has been recognised based on the best
estimate of the weighted average annual effective UK corporation
tax rate expected for the full financial year. The Group currently
forecasts a loss before tax for the financial year ending 31 August
2020 and therefore no charge has been recognised in regard to UK
corporation tax in the period.
The income tax expense of GBP0.4m (H1 2019: GBP0.4m) represents
foreign taxes recognised by overseas Group companies on a territory
by territory basis using the expected effective tax rate for the
full year.
5. Loss per Share
6 months to 6 months to
GBP'000 29 February 29 February
2020 2020
Unaudited Unaudited
Loss attributable to equity shareholders of
the parent (3,729) (5,155)
------------ ------------
Weighted average number of ordinary shares
in issue 80,650,049 80,650,049
Impact of bonus issue - -
Weighted average number of ordinary shares
in issue adjusted for bonus issue 80,650,049 80,650,049
------------ ------------
Basic and diluted loss per share (pence) (4.6)p (6.4)p
------------ ------------
Where the Group has incurred a loss in the six month period to
29 February 2020, the diluted earnings per share is the same as the
basic loss per share as the loss has an anti-dilutive effect.
6. Cautionary Statement
This document contains certain forward-looking statements
relating to Ten Lifestyle Group plc. The Company considers any
statements that are not historical facts as "forward-looking
statements". They relate to events and trends that are subject to
risk and uncertainty that may cause actual results and the
financial performance of the Company to differ materially from
those contained in any forward-looking statement. These statements
are made by the Directors in good faith based on information
available to them and such statements should be treated with
caution due to the inherent uncertainties, including both economic
and business risk factors, underlying any such forward-looking
information.
[1] Net Revenue excludes the direct cost of sales relating to
certain member transactions managed by the Group.
[2] The Europe, Middle East and Africa region.
[3] Adjusted EBITDA is operating (loss)/profit before interest,
taxation, depreciation, amortisation and share-based payments.
Adjusted EBITDA for current period includes implementation of the
new IFRS 16 Lease accounting standard. The transition method used
was the Modified Retrospective method therefore comparatives have
not been restated.
[4] Ten categorises its corporate client contracts based on the
annualised value paid, or expected to be paid, by the corporate
client for the provision of concierge and related services by Ten
as: Small contracts (below GBP0.25m); Medium contracts (between
GBP0.25m and GBP2m); Large contracts (over GBP2m); and Extra Large
contracts (over GBP5m). This does not include the revenue generated
from suppliers through the provision of concierge services.
[5] If the additional revenue from this expansion was a
standalone new contract win it would represent an Extra Large
contract by FY 2020/21 in its own right.
[6] Ten measures member satisfaction using the Net Promoter
Score management tool, which gauges the loyalty of a firm's
customer relationships
(https://en.wikipedia.org/wiki/Net_Promoter).
[7] Ten's revenue from its supplier base, such as hotels,
airlines, and event promoters which sometimes pay commission to Ten
constitute 12% of Net Revenue for the 2019 financial year, as
reported in the 2019 Annual Report and Accounts.
[8] Ten categorises its corporate client contracts based on the
annualised value paid, or expected to be paid, by the corporate
client for the provision of concierge and related services by Ten
as: Small contracts (below GBP0.25m); Medium contracts (between
GBP0.25m and GBP2 million); Large contracts (over GBP2 million);
and Extra Large contracts (over GBP5 million). This does not
include the revenue generated from suppliers through the provision
of concierge services.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR BXLLFBELLBBF
(END) Dow Jones Newswires
May 14, 2020 02:00 ET (06:00 GMT)
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