TIDMWAND

RNS Number : 2338Z

WANdisco Plc

17 September 2020

17 September 2020

WANdisco plc

("WANdisco", the "Company" or the "Group")

Interim unaudited results for the six months ended 30 June 2020

WANdisco announces the launch of LiveData Migrator on the AWS platform

WANdisco launches deeply embedded service into Microsoft Azure

Strong balance sheet provides platform to accelerate conversion of cloud opportunity

WANdisco (LSE: WAND), the LiveData company, announces interim unaudited results for the six months ended 30 June 2020.

Financial summary

 
      --   Revenue for the period $3.6 million (H1 2019: $6.0 million) 
      --   Cash overheads(1) of $17.9 million (H1 2019: $15.5 million) 
      --   Adjusted EBITDA(2) loss of $11.9 million (H1 2019: $7.6 million) 
      --   Operating loss of $17.7 million (H1 2019: $16.5 million) 
      --   Cash at 30 June 2020 of $33.6 million (31 December 2019: $23.4 
            million) 
      --   Debt of $1.4 million (31 December 2019: $2.2 million) 
      --   Raised gross proceeds of $25 million through an oversubscribed 
            placing to accelerate the Company's growth ambitions and to 
            pursue near term opportunities with channel partners 
 

Operational and strategic highlights

 
      --   Announced the limited public preview of WANdisco LiveData Platform 
            for Azure: 
 
 
      o   Providing seamless customer experience and appearing as 
           a native, first-party Azure service 
      o   Delivering tight integration, reducing deployment complexities 
           through eliminating the customer need to plan data deployment 
           or accommodate networking and storage options 
      o   Billing to be delivered through existing Azure billing 
           service ensures customers do not require additional vendor 
           approval 
 
 
      --   Data and Cloud capabilities driving meaningful commercial interest 
            and momentum: 
 
 
      o   Contract worth $1 million won with a division of one of 
           the world's largest media and telecommunications companies 
           to migrate data into the Microsoft Azure cloud 
      o   Secured a reseller agreement with a large global systems 
           integrator to support growth across all major cloud platforms 
      o   Secured a contract with one of the world's largest airlines 
           to migrate analytical data to the Microsoft Azure cloud 
      o   Signed a contract worth up to $1 million with a major British 
           supermarket for both on-premises and migration to the Microsoft 
           Azure cloud 
 

Post period end

 
      --   Strong uptake for the Company's Azure Cloud platform, with 46 
            organizations registered. Open Public preview is scheduled to 
            commence over the coming weeks 
      --   Became the first independent software vendor ("ISV") to achieve 
            AWS Competency Status in the area of data migration 
      --   Launched the new LiveData Migrator, the next generation data 
            lake migration product that enables data to begin migration 
            within minutes and manages data changes during the migration 
            regardless of scale 
      --   LiveData Migrator launched on the AWS platform, securing GoDaddy 
            as the first customer representing a highly complex on-premises 
            Hadoop environment migrating to S3. Please see separate release 
            for more details 
 

David Richards, Chief Executive Officer and Chairman of WANdisco, commented:

"Today, we proudly announced the launch of LiveData Migrator on the AWS platform and as the business alluded to in our recent fundraise, we have strengthened our strategic relationship with AWS and see a building pipeline of customers on the platform. With the formal launch of our new LiveData Migrator product, we became the only ISV to achieve competency status in the revamped migration category and have already secured GoDaddy as the first customer. The business remains focused on capitalising on opportunities with AWS, Microsoft and other Tier 1 partners as our relationships continue to deepen.

"In H1 we have continued to fortify our partnership with Microsoft through the creation of a new core service, the LiveData Platform for Azure. Deepening these relationships with cloud partners remains our primary strategic goal, positioning the Group for significant scalable growth. The Board expects the LiveData Platform to become publicly available as a metered service over the next few weeks.

"In the period the Group secured a significant reseller agreement with a large global systems integrator who has relationships with many Global 200 companies as a provider of cloud integration services. We have also signed significant initial contracts with a large media company and British supermarket chain.

"With the backdrop of the COVID-19 pandemic, we have seen an accelerated business shift towards cloud as companies look to take advantage of the agility and scalability that cloud provides. The Board remains confident that while revenue in FY2020 will be below expectations, the combination of our market opportunity, product readiness, and deepening commitments from cloud partners provides a strong platform to deliver significant revenue growth in FY2021 with the Board expecting a minimum revenue of $35 million."

 
(1)  Operating expenses adjusted for: depreciation, amortisation, capitalisation 
      of development expenditure and equity-settled share-based payment. 
      See Note 5 to the condensed consolidated interim financial statements 
      for a reconciliation. 
(2)  Operating loss adjusted for: depreciation, amortisation and equity-settled 
      share-based payment. See Note 5 to the condensed consolidated interim 
      financial statements for a reconciliation. 
 

For further information, please contact:

WANdisco plc via FTI Consulting

David Richards, Chief Executive Officer and Chairman

Erik Miller, Chief Financial Officer

FTI Consulting +44 (0)20 3727 1137

Matt Dixon / Chris Birt / Kwaku Aning

Stifel (Nomad and Broker) +44 (0)20 7710 7600

Fred Walsh / Richard Short

About WANdisco

WANdisco is the LiveData company. WANdisco solutions enable enterprises to create an environment where data is always available, accurate and protected, creating a strong backbone for their IT infrastructure and a bedrock for running consistent, accurate machine learning applications. With zero downtime and zero data loss, WANdisco's LiveData Platform keeps geographically dispersed data at any scale consistent between on-premises and cloud environments allowing businesses to operate seamlessly in a hybrid or multi-cloud environment. WANdisco has over a hundred customers and significant go-to-market partnerships with Microsoft Azure, Amazon Web Services, Google Cloud, Oracle, and others as well as OEM relationships with IBM and Alibaba. For more information on WANdisco, visit http://www.wandisco.com. www.wandisco.com

BUSINESS REVIEW

In H1 2020, we delivered on our primary strategic goal of cementing our partnership with Microsoft to create a new core Azure service, the LiveData Platform for Azure, which allows customers to use our software as if it were a native Azure offering. As an Azure core service, customers can deploy WANdisco's LiveData products by selecting it from the same Azure menu used for native Microsoft services such as compute and storage, and the charges added on their monthly Azure bill. No software to install, no new contracts to sign. The new service is close to open preview, meaning that our Azure service will be available to all customers. As a result we anticipate this to facilitate a greater volume and velocity of deals than we have experienced in prior years.

We continue to focus our development efforts on products that provide customers with simple, robust transition paths as an ever greater number of companies are looking for solutions to move their on-premises Hadoop data to the cloud. Our LiveData Migrator product launched alongside AWS and GoDaddy as the launch customer, coupled with our LiveData platform, will allow customers to make the transition from on-premises to cloud computing as easy and as seamless as possible.

We have signed a reseller contract with a major global systems integrator with a significant cloud migration practice . Our new LiveData Migrator product will unlock a previously difficult to service market for them for large, on-premises to cloud migrations as well as our LiveData Platform providing hybrid and inter cloud data consistency solutions. We have also secured contracts with a large media company and a British supermarket chain.

The Company has continued to see growing need for data consistency and data availability across the world, and WANdisco's ability to facilitate cloud migration at scale without business interruption is becoming a key factor for organisations and their systems integrator partners as they accelerate their journey to the cloud.

COVID-19 update

The COVID-19 pandemic has led to the implementation of long-standing business continuity measures, with staff working from home across the globe. As a predominantly distributed organization, working remotely for most employees is normal, and to date, we have not seen any negative impact on our productivity. The business remains well placed to weather a prolonged period of self-isolation with good teamwork and employee morale. We also believe that the improvements made to how we operate will continue and evolve further when the COVID-19 crisis ends.

The global nature of the COVID-19 virus since the fiscal year end has resulted in macroeconomic uncertainty. Whilst there has been no material impact on the Group as at the date of this report, it is difficult to assess the short to longer-term impact of that uncertainty on the Group's operations. Nonetheless, we are moving forward this year with continued business momentum as evidenced by our landmark agreement with Microsoft announced in June 2020 . Management expects that the potential of the agreement with Microsoft will overcome any short-term headwinds from the economic uncertainty surrounding the impact of COVID-19. To date, we have experienced minimal effects to our customer base and order flow, and have not reduced employee-based costs.

Outlook

Our cloud platform, System Integrator, and ISV partners have recognised the huge opportunity of moving Hadoop data into the cloud. With the changing dynamics in the Hadoop on-premises market, and companies seeking to leverage cloud economics and scalability, the time to capitalise on this opportunity is now. The creation of a native Azure service with our technology provides a platform to capitalise on that opportunity, taking advantage of billing and technical integrations. With the LiveData Platform for Azure close to open preview, we can execute against the growing pipeline of opportunities to move data at scale into the cloud without an interruption to service.

Outside of Azure, we are also seeing growing demand from our other cloud partners, in particular AWS, as the need to capitalise on the cloud and move on-premises workloads becomes a business imperative. The Board's confidence in our outlook is built upon the convergence of the market opportunity, product readiness, and deepening commitments from our partners.

With the imminent launch of metered billing on the Azure platform, we have seen an increasing number of customers waiting on its availability before concluding their purchasing decision. While the company remains confident that these deals will be concluded successfully, there will be an impact on revenue recognition vs. our traditional subscription licence, where the majority of revenue is recognised on delivery under IFRS 15, versus a SAAS revenue model where revenue will be recognised over time, shifting recognition of a greater proportion of the Company's expected revenue into 2021. As a result, we expect FY20 revenues to be lower than current market estimates.

For FY21, we expect to migrate in excess of 100PB of data to the Azure cloud (with more than 50 customers signed over the year) and greater than 30PB into the AWS cloud. Combined with the flow of metered billing from Q4 this year we expect a minimum revenue of $35m in FY21.

KPIs

As our business continues to evolve, the metrics we use to measure our success also need to change. As we enter into 2021, we expect to provide additional metrics that best represent our business progress. These KPIs include the number of customers, the volume of data being migrated, the attach rate to migration and hybrid cloud and eventually the amount of metered revenue vs. subscription revenue.

FINANCIAL REVIEW

Revenue for the period ended 30 June 2020 was $3.6 million (H1 2019: $6.0 million).

Adjusted EBITDA(2) loss was $11.9 million (H1 2019: $7.6 million), primarily due to lower revenue and the strategic investments we made to strengthen our channel partner relationships to drive future growth.

Revenue

Revenue was $3.6 million (H1 2019: $6.0 million). The business continues to achieve a significant proportion of contracted revenue through direct sales. In most cases, these direct sales are only achievable through the close partnerships held with major cloud vendors. The group expects over time to increase the contribution of partner channel sales to direct sales, as the partnerships with cloud vendors and ISV begin to bear fruit.

As we continue to transition to a recurring revenue model, the variability in near term revenue decreases as the one-off perpetual licenses decrease in volume and size, being replaced by smaller but more repeatable revenue streams with greater forward visibility.

Deferred revenue from sales booked during the first half of 2020 and in previous years, and not yet recognised as revenue, is $3.2 million at 30 June 2020 (H1 2019: $4.7 million). Our deferred revenue represents future revenue from new and renewed contracts, many of them spanning multiple years. Given our impending shift towards metered billing, deferred revenue will no longer be a relevant KPI. As described above the company will present new KPIs to measure the success of the business.

Operating costs

Cash overheads(1) increased in the period as we made modest investments in Sales and Engineering to capitalise on the opportunities with our cloud partners, rising to $17.9 million from $15.5 million in the first half of 2019.

Product development expenditure capitalised in the period was $2.6 million (H1 2019: $2.3 million). All of this expenditure was associated with new product features and was capitalised.

Our headcount was 174 as at 30 June 2020 (December 2019: 162, June 2019: 152). Headcount increases in the period were principally in Sales and Marketing and Engineering as we added capacity to develop new products and service our partner channel.

Profit and loss

Adjusted EBITDA(2) loss for the period was $11.9 million (H1 2019: $7.6 million).

The loss after tax for the period decreased to $14.0 million (H1 2019: $16.7 million), due to an exceptional finance gain of $3.9 million and decreased share-based payment charge, offset by increased overheads. The exceptional finance gain of $3.9 million (H1 2019: $0.1 million loss) arose from the retranslation of intercompany balances at 30 June 2020, reflecting the decrease in Sterling against the US dollar. The impact of FX rates changes on the financial statements should be restricted to the retranslation of US dollar denominated intercompany loans, as opposed to the operating activities of the business. An equal and opposite translation gain on the net assets of overseas net assets in reserves result in no impact on the Group net assets.

Balance sheet and cash flow

Trade and other receivables at 30 June 2020 were $6.6 million (31 December 2019: $8.5 million). This includes $0.7 million of trade receivables (31 December 2019: $2.8 million) and $5.9 million related to non-trade receivables (31 December 2019: $5.7 million).

Net consumption of cash was $12.5 million before financing (H1 2019: $9.5 million), resulting in a closing cash balance of $33.6 million at 30 June 2020. The consumption of cash was due primarily to an increase in cash overheads. For the full year cash consumption will be a function of the level of revenues achieved and collection of customer receivables in the period. At 30 June 2020 we had drawings under our revolving credit facility with Silicon Valley Bank of $1.4 million (31 December 2019: $2.2 million).

Consolidated statement of profit or loss and other comprehensive income

For the six months ended 30 June 2020

 
                            Six months ended                        Six months ended                           Year ended 
                              30 June 2020                            30 June 2019                           31 December 2019 
                               (Unaudited)                             (Unaudited)                              (Audited) 
                                Exceptional                             Exceptional                              Exceptional 
                                      items                                   items                                    items 
                          Pre-        (Note                       Pre-        (Note                        Pre-        (Note 
                   exceptional           4)     Total      exceptional           4)     Total       exceptional           4)     Total 
Continuing 
operations   Note        $'000        $'000     $'000            $'000        $'000     $'000             $'000        $'000     $'000 
-----------  ----  -----------  -----------  --------      -----------  -----------  --------      ------------  -----------  -------- 
Revenue         3        3,625            -     3,625            5,966            -     5,966            16,155            -    16,155 
Cost of 
 sales                   (322)            -     (322)            (376)            -     (376)           (1,186)            -   (1,186) 
-----------  ----  -----------  -----------  --------      -----------  -----------  --------      ------------  -----------  -------- 
Gross 
 profit                  3,303            -     3,303            5,590            -     5,590            14,969            -    14,969 
Operating 
 expenses       5     (21,043)            -  (21,043)         (22,127)            -  (22,127)          (42,148)            -  (42,148) 
-----------  ----  -----------  -----------  --------      -----------  -----------  --------      ------------  -----------  -------- 
Operating 
 loss           5     (17,740)            -  (17,740)         (16,537)            -  (16,537)          (27,179)            -  (27,179) 
-----------  ----  -----------  -----------  --------      -----------  -----------  --------      ------------  -----------  -------- 
Finance 
 income                     32        3,939     3,971              240            -       240               604            -       604 
Finance 
 costs                   (180)            -     (180)            (278)         (78)     (356)             (527)      (2,047)   (2,574) 
-----------  ----  -----------  -----------  --------      -----------  -----------  --------      ------------  -----------  -------- 
Net finance 
 (costs)/income          (148)        3,939     3,791             (38)         (78)     (116)                77      (2,047)   (1,970) 
-----------------  -----------  -----------  --------      -----------  -----------  --------      ------------  -----------  -------- 
(Loss)/profit 
 before 
 tax                  (17,888)        3,939  (13,949)         (16,575)         (78)  (16,653)          (27,102)      (2,047)  (29,149) 
Income tax                (30)            -      (30)              (8)            -       (8)               885            -       885 
-----------  ----  -----------  -----------  --------      -----------  -----------  --------      ------------  -----------  -------- 
(Loss)/profit for 
 the period           (17,918)        3,939  (13,979)         (16,583)         (78)  (16,661)          (26,217)      (2,047)  (28,264) 
-----------------  -----------  -----------  --------      ===========  ===========  ========      ============  ===========  ======== 
 
  Other comprehensive income 
  Items that are or may be reclassified to profit or loss: 
Foreign 
 operations 
 - foreign 
 currency 
 translation 
 differences              (30)      (3,939)   (3,969)            (201)           78     (123)             (282)        2,047     1,765 
-----------------  -----------  -----------  --------      -----------  -----------  --------      ------------  -----------  -------- 
Other 
 comprehensive 
 income for the 
 period, net of 
 tax                      (30)      (3,939)   (3,969)            (201)           78     (123)             (282)        2,047     1,765 
-----------------  -----------  -----------  --------      -----------  -----------  --------      ------------  -----------  -------- 
Total 
 comprehensive 
 income for the 
 period               (17,948)            -  (17,948)         (16,784)            -  (16,784)          (26,499)            -  (26,499) 
=================  ===========  ===========  ========      ===========  ===========  ========      ============  ===========  ======== 
 
 Loss per 
 share 
Basic and 
 diluted 
 loss per 
 share          6                             ($0.29)                                 ($0.38)                                  ($0.63) 
===========  ====  ===========  ===========  ========      ===========  ===========  ========      ============  ===========  ======== 
 
 

The notes form an integral part of these condensed consolidated interim financial statements.

Consolidated statement of financial position

At 30 June 2020

 
                                           30 June       30 June  31 December 
                                              2020          2019         2019 
                                       (Unaudited)   (Unaudited)    (Audited) 
                                Note         $'000         $'000        $'000 
------------------------------  ----  ------------  ------------  ----------- 
Assets 
Property, plant and equipment                3,133         2,718        3,735 
Intangible assets                            4,962         4,870        4,877 
Other non-current assets           7         2,656         2,401        3,016 
------------------------------  ----  ------------  ------------  ----------- 
Non-current assets                          10,751         9,989       11,628 
------------------------------  ----  ------------  ------------  ----------- 
Trade and other receivables        8         6,593         6,087        8,545 
Cash and cash equivalents                   33,634        17,868       23,354 
------------------------------  ----  ------------  ------------  ----------- 
Current assets                              40,227        23,955       31,899 
------------------------------  ----  ------------  ------------  ----------- 
Total assets                                50,978        33,944       43,527 
==============================  ====  ============  ============  =========== 
 
Equity 
Share capital                                7,481         6,696        7,097 
Share premium                              172,897       133,288      149,336 
Translation reserve                        (9,552)       (7,471)      (5,583) 
Merger reserve                               1,247         1,247        1,247 
Retained earnings                        (133,237)     (113,587)    (121,922) 
------------------------------  ----  ------------  ------------  ----------- 
Total equity                                38,836        20,173       30,175 
------------------------------  ----  ------------  ------------  ----------- 
Liabilities 
Loans and borrowings               9         2,028         2,850        2,889 
Deferred income                   10         1,075         2,016        1,188 
Deferred tax liabilities                         3             3            4 
------------------------------  ----  ------------  ------------  ----------- 
Non-current liabilities                      3,106         4,869        4,081 
------------------------------  ----  ------------  ------------  ----------- 
Current tax liabilities                         58             7           66 
Loans and borrowings               9         1,907         2,195        2,212 
Trade and other payables                     4,934         3,997        4,371 
Deferred income                   10         2,137         2,703        2,622 
Current liabilities                          9,036         8,902        9,271 
------------------------------  ----  ------------  ------------  ----------- 
Total liabilities                           12,142        13,771       13,352 
------------------------------  ----  ------------  ------------  ----------- 
Total equity and liabilities                50,978        33,944       43,527 
==============================  ====  ============  ============  =========== 
 

The notes form an integral part of these condensed consolidated interim financial statements.

Consolidated statement of changes in equity

For the six months ended 30 June 2020

 
                                              Attributable to owners of the Company 
                                  -------------------------------------------------------------- 
                                     Share     Share  Translation    Merger   Retained     Total 
                                   capital   premium      reserve   reserve   earnings    equity 
Six months ended 30 June 2020 
 (Unaudited)                         $'000     $'000        $'000     $'000      $'000     $'000 
--------------------------------  --------  --------  -----------  --------  ---------  -------- 
Balance at 1 January 2020            7,097   149,336      (5,583)     1,247  (121,922)    30,175 
 
Total comprehensive income 
 for the period 
Loss for the period                      -         -            -         -   (13,979)  (13,979) 
Other comprehensive income 
 for the period                          -         -      (3,969)         -          -   (3,969) 
--------------------------------  --------  --------  -----------  --------  ---------  -------- 
Total comprehensive income 
 for the period                          -         -      (3,969)         -   (13,979)  (17,948) 
--------------------------------  --------  --------  -----------  --------  ---------  -------- 
 
Transactions with owners of 
 the Company 
Contributions and distributions 
Equity-settled share-based 
 payment                                 -         -            -         -      2,664     2,664 
Proceeds from share placing            383    23,510                                      23,893 
Share options exercised                  1        51            -         -          -        52 
Total transactions with owners 
 of the Company                        384    23,561            -         -      2,664    26,609 
--------------------------------  --------  --------  -----------  --------  ---------  -------- 
Balance at 30 June 2020              7,481   172,897      (9,552)     1,247  (133,237)    38,836 
================================  ========  ========  ===========  ========  =========  ======== 
 
Six months ended 30 June 2019 
 (Unaudited) 
--------------------------------  --------  --------  -----------  --------  ---------  -------- 
Balance at 1 January 2019            6,361   115,909      (7,348)     1,247  (102,365)    13,804 
 
Total comprehensive income 
 for the period 
Loss for the period                      -         -            -         -   (16,661)  (16,661) 
Other comprehensive income 
 for the period                          -         -        (123)         -          -     (123) 
--------------------------------  --------  --------  -----------  --------  ---------  -------- 
Total comprehensive income 
 for the period                          -         -        (123)         -   (16,661)  (16,784) 
--------------------------------  --------  --------  -----------  --------  ---------  -------- 
 
Transactions with owners of 
 the Company 
Contributions and distributions 
Equity-settled share-based 
 payment                                 -         -            -         -      5,439     5,439 
Proceeds from share placing            321    17,127            -         -          -    17,448 
Share options exercised                 14       252            -         -          -       266 
Total transactions with owners 
 of the Company                        335    17,379            -         -      5,439    23,153 
--------------------------------  --------  --------  -----------  --------  ---------  -------- 
Balance at 30 June 2019              6,696   133,288      (7,471)     1,247  (113,587)    20,173 
================================  ========  ========  ===========  ========  =========  ======== 
 

The notes form an integral part of these condensed consolidated interim financial statements.

Consolidated statement of cash flows

For the six months ended 30 June 2020

 
                                                               Six months    Six months 
                                                                    ended         ended 
                                                                  30 June       30 June     Year ended 
                                                                                           31 December 
                                                                     2020          2019           2019 
                                                              (Unaudited)   (Unaudited)      (Audited) 
                                                       Note         $'000         $'000          $'000 
-----------------------------------------------------  ----  ------------  ------------  ------------- 
Cash flows from operating activities 
Loss for the period                                              (13,979)      (16,661)       (28,264) 
Adjustments for: 
 
  *    Depreciation of property, plant and equipment                  601           507          1,101 
 
  *    Amortisation of intangible assets                            2,531         2,953          5,701 
 
  *    Net finance costs                                              148            38           (77) 
 
  *    Income tax                                                      30             8          (885) 
 
  *    Foreign exchange                                           (3,870)         (205)          1,869 
 
  *    Equity-settled share-based payment                11         2,664         5,439          8,707 
-----------------------------------------------------  ----  ------------  ------------  ------------- 
                                                                 (11,875)       (7,921)       (11,848) 
-----------------------------------------------------  ----  ------------  ------------  ------------- 
Changes in: 
 
  *    Trade and other receivables                                  1,530           613        (1,203) 
 
  *    Trade and other payables                                       712         (851)          (562) 
 
  *    Deferred income                                              (598)           401          (508) 
Net working capital change                                          1,644           163        (2,273) 
-----------------------------------------------------  ----  ------------  ------------  ------------- 
 
Cash used in operating activities                                (10,231)       (7,758)       (14,121) 
Interest paid                                                       (157)         (232)          (446) 
Income tax received                                                   672           910            807 
-----------------------------------------------------  ----  ------------  ------------  ------------- 
Net cash used in operating activities                             (9,716)       (7,080)       (13,760) 
-----------------------------------------------------  ----  ------------  ------------  ------------- 
 
Cash flows from investing activities 
Interest received                                                      15           240            258 
Acquisition of property, plant and equipment                         (36)         (367)          (841) 
Development expenditure                                           (2,616)       (2,307)        (5,062) 
Net cash used in investing activities                             (2,637)       (2,434)        (5,645) 
-----------------------------------------------------  ----  ------------  ------------  ------------- 
 
Cash flows from financing activities 
Proceeds from issue of share capital                               23,945        17,714         34,163 
Net repayment of bank loan                                          (833)         (833)        (1,667) 
Payment of lease liabilities                                        (349)         (257)          (502) 
-----------------------------------------------------  ----  ------------  ------------  ------------- 
Net cash from financing activities                                 22,763        16,624         31,994 
-----------------------------------------------------  ----  ------------  ------------  ------------- 
 
Net increase in cash and cash equivalents                          10,410         7,110         12,589 
Cash and cash equivalents at 1 January                             23,354        10,757         10,757 
Effect of movements in exchange rates on 
 cash and cash equivalents                                          (130)             1              8 
-----------------------------------------------------  ----  ------------  ------------  ------------- 
Cash and cash equivalents at the end of 
 the period                                                        33,634        17,868         23,354 
=====================================================  ====  ============  ============  ============= 
 

The notes form an integral part of these condensed consolidated interim financial statements.

Notes to the condensed consolidated interim financial statements

For the six months ended 30 June 2020

   1.     Reporting entity 

WANdisco plc (the "Company") is a public limited company incorporated and domiciled in Jersey. The Company's ordinary shares are traded on AIM. These condensed consolidated interim financial statements ("Interim financial statements") as at and for the six months ended 30 June 2020 comprise the Company and its subsidiaries (together referred to as the "Group"). The Group is primarily involved in the development and provision of global collaboration software.

   2.     Basis of preparation 

a Basis of accounting

These interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting" and should be read in conjunction with the Group's last annual consolidated financial statements as at and for the year ended 31 December 2019 ("last annual financial statements"). They do not include all of the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual financial statements.

These interim financial statements were authorised for issue by the Company's board of directors on 16 September 2020.

b Going concern

These interim financial statements have been prepared on a going concern basis, which assumes that the Group will be able to meet the mandatory repayment terms of the banking facilities.

As at 30 June 2020 the Group had net assets of $38.8m (31 December 2019: $30.2m), including cash of $33.6m (31 December 2019: $23.4m) as set out in the interim consolidated statement of financial position, with a debt facility drawn of $1.4m (31 December 2019: $2.2m). In the six months ended 30 June 2020, the Group incurred a loss before tax of $13.9m (H1 2019: $16.7m) and net cash outflows before financing of $12.4m (H1 2019: $9.5m).

Revenue for H1 2020 was $3.6m (H1 2019: $6.0m), with an operating loss of $17.7m (H1 2019: $16.5m), mainly due to an investment in operating expenses and reduced revenue.

The Directors have prepared a detailed budget and forecasts of the Group's expected performance over a period covering at least the next twelve months from the date of the approval of these unaudited interim financial statements. As well as modelling the realisation of the sales pipeline, these forecasts also cover a number of scenarios and sensitivities in order for the Board to satisfy itself that the Group remains within its current cash facilities.

Whilst the Directors are confident in the Group's ability to grow revenues, the Board's sensitivity modelling (which considered the impact of Brexit) shows that the Group can remain within its facilities in the event that revenue growth is delayed for a period in excess of twelve months. The Directors' financial forecasts and operational planning and modelling also include the actions, under the control of the Group, that they could take to further significantly reduce the cost base during the coming year in the event that longer-term revenues were set to remain consistent with the level reported in 2019. On the basis of this financial and operational modelling, the Directors believe that the Group has the capability and the operational agility to react quickly, cut further costs from the business and ensure that the cost base of the business is aligned with its sales revenues, cash revenue and funding scale.

As a consequence, the Directors have a reasonable expectation that the Group can continue to operate within its existing facilities and be able to meet its commitments and discharge its liabilities in the normal course of business for a period not less than twelve months from the date of approval of these interim financial statements. Accordingly, they continue to adopt the going concern basis in preparing the Group financial statements.

c Functional and presentational currency

The interim consolidated financial statements are presented in US dollars, as the revenue for the Group is predominately derived in this currency. Billings to the Group's customers during the period by WANdisco, Inc. were all in US dollars with certain costs being incurred by WANdisco International Limited in sterling and WANdisco, Pty Ltd in Australian dollars. All financial information has been rounded to the nearest thousand US dollars unless otherwise stated.

d Alternative performance measures

The Group uses a number of alternative performance measures ("APMs") which are non-IFRS measures to monitor the performance of its operations. The Group believes these APMs provide useful historical financial information to help investors and other stakeholders evaluate the performance of the business and are measures commonly used by certain investors for evaluating the performance of the Group. In particular, the Group uses APMs which reflect the underlying performance on the basis that this provides a more relevant focus on the core business performance of the Group and aligns with our KPIs. Adjusted results exclude certain items because if included, these items could distort the understanding of our performance for the year and the comparability between periods. The Group has been using the following APMs on a consistent basis and they are defined and reconciled as follows:

   2.     Basis of preparation (continued) 

d Alternative performance measures (continued)

 
 -   Cash overheads: Operating expenses adjusted for: depreciation, 
      amortisation, capitalisation of development expenditure and 
      equity -- settled share-based payment. See Note 5 for a reconciliation. 
 -   Adjusted EBITDA: Operating loss adjusted for: depreciation, 
      amortisation and equity -- settled share-based payment. See 
      Note 5 for a reconciliation. 
 

e Use of judgements and estimates

In preparing these Financial statements, management has made judgements and estimates that affect the application of the Group's accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual financial statements.

   3.     Revenue and segmental analysis 

a Operating segments

The Directors consider there to be one operating segment, being that of development and sale of licences for software and related maintenance and support.

b Geographical segments

The Group recognises revenue in three geographical regions based on the location of customers, as set out in the following table:

 
                                     Six months    Six months 
                                          ended         ended    Year ended 
                                        30 June       30 June   31 December 
                                           2020          2019          2019 
                                    (Unaudited)   (Unaudited)     (Audited) 
Revenue                                   $'000         $'000         $'000 
North America - USA                       2,571         3,059         6,551 
North America - other                        36             3            44 
Europe                                      715           792         2,152 
Rest of the world - China                   201         1,925         5,036 
Rest of the world - South Africa             32             -         2,088 
Rest of the world - other                    70           187           284 
---------------------------------  ------------  ------------  ------------ 
                                          3,625         5,966        16,155 
=================================  ============  ============  ============ 
 

Management makes no allocation of costs, assets or liabilities between these segments since all trading activities are operated as a single business unit.

c Major products

The Group's core patented technology, Distributed Coordinated Engine "DConE", enables the replication of data. This core technology is contained in all the Group's products.

d Major customers

 
               Six months    Six months    Six months    Six months       Year ended       Year ended 
                    ended         ended                                  31 December      31 December 
                  30 June       30 June                               2019 (Audited)   2019 (Audited) 
                     2020          2020 
              (Unaudited)   (Unaudited)         ended         ended 
                                              30 June       30 June 
                                                 2019          2019 
                                          (Unaudited)   (Unaudited) 
                     % of       Revenue          % of       Revenue             % of          Revenue 
                  revenue         $'000       revenue         $'000          revenue            $'000 
-----------  ------------  ------------  ------------  ------------  ---------------  --------------- 
Customer 1            21%           770             -             -                -                - 
Customer 2            14%           508             -             -                -                - 
Customer 3             9%           323           11%           667               8%            1,227 
Customer 4             3%           124           27%         1,599              19%            3,117 
Customer 5             1%            31             -             -              13%            2,088 
Customer 6              -             -             -             -              11%            1,857 
===========  ============  ============  ============  ============  ===============  =============== 
 

No other single customers contributed 10% or more to the Group's revenue (2019: $nil).

   3.     Revenue and segmental analysis (continued) 

e Split of revenue by timing of revenue recognition

 
                                                Six months    Six months 
                                                     ended         ended    Year ended 
                                                   30 June       30 June   31 December 
                                                      2020          2019          2019 
                                               (Unaudited)   (Unaudited)     (Audited) 
Revenue                                              $'000         $'000         $'000 
Products transferred at a point in time              2,168         4,329        12,596 
Products and services transferred over time          1,457         1,637         3,559 
--------------------------------------------  ------------  ------------  ------------ 
                                                     3,625         5,966        16,155 
============================================  ============  ============  ============ 
 

f Contract balances

The following table provides information about receivables, contract assets and liabilities from contracts with customers:

 
                                                          Six months    Six months 
                                                               ended         ended    Year ended 
                                                             30 June       30 June   31 December 
                                                                2020          2019          2019 
                                                         (Unaudited)   (Unaudited)     (Audited) 
                                                               $'000         $'000         $'000 
Receivables, which are included in "Other non-current 
 assets - Accrued income"                                      2,508         2,173         2,826 
Receivables, which are included in "Trade and other 
 receivables - Accrued income"                                 3,172         2,863         2,964 
Contract liabilities, which are included in "Deferred 
 income" - non-current                                       (1,075)       (2,016)       (1,188) 
Contract liabilities, which are included in "Deferred 
 income" - current                                           (2,137)       (2,703)       (2,622) 
======================================================  ============  ============  ============ 
 
   4.     Exceptional items 
 
                                                       Six months    Six months 
                                                            ended         ended    Year ended 
                                                          30 June       30 June   31 December 
                                                             2020          2019          2019 
                                                      (Unaudited)   (Unaudited)     (Audited) 
                                                            $'000         $'000         $'000 
----------------------------------------------  ---  ------------  ------------  ------------ 
Exchange gain/(loss) on intercompany balances               3,939          (78)       (2,047) 
===================================================  ============  ============  ============ 
 

The exceptional gain/(loss) arose on Sterling denominated intercompany balances. These balances were retranslated at the closing exchange rate at 30 June 2020 which was 1.23 (compared with 1.31 at the end of 31 December 2019). In the prior half year, rates were 1.27 (compared with 1.27 at the end of 31 December 2018). Due to the size and nature of the exchange gain(loss), they have been included as exceptional items.

The exceptional gain/(loss) on intercompany balances in the Consolidated statement of profit or loss is offset by an equivalent exceptional exchange (loss)/gain on the retranslation of the intercompany balances, which is included in the retranslation of net assets of foreign operations, included in the other comprehensive income.

   5.     Non-GAAP profit measures - Cash overheads and Adjusted EBITDA 
 
                                                          Six months    Six months 
                                                               ended         ended    Year ended 
                                                             30 June       30 June   31 December 
                                                                2020          2019          2019 
                                                         (Unaudited)   (Unaudited)     (Audited) 
a Reconciliation of operating expenses to "Cash   Note 
 overheads":                                                   $'000         $'000         $'000 
------------------------------------------------  ----  ------------  ------------  ------------ 
Operating expenses                                          (21,043)      (22,127)      (42,148) 
Adjusted for: 
Amortisation and depreciation                                  3,132         3,460         6,802 
Equity-settled share-based payment                  11         2,664         5,439         8,707 
Development expenditure capitalised                          (2,616)       (2,307)       (5,062) 
------------------------------------------------  ----  ------------  ------------  ------------ 
Cash overheads                                              (17,863)      (15,535)      (31,701) 
================================================  ====  ============  ============  ============ 
 
   5.     Non-GAAP profit measures - Cash overheads and Adjusted EBITDA (continued) 
 
                                                            Six months    Six months 
                                                                 ended         ended    Year ended 
                                                               30 June       30 June   31 December 
                                                                  2020          2019          2019 
                                                           (Unaudited)   (Unaudited)     (Audited) 
b Reconciliation of operating loss to "Adjusted     Note 
 EBITDA":                                                        $'000         $'000         $'000 
--------------------------------------------------  ----  ------------  ------------  ------------ 
Operating loss                                                (17,740)      (16,537)      (27,179) 
Adjusted for: 
Amortisation and depreciation                                    3,132         3,460         6,802 
Equity-settled share-based payment                    11         2,664         5,439         8,707 
--------------------------------------------------  ----  ------------  ------------  ------------ 
Adjusted EBITDA                                               (11,944)       (7,638)      (11,670) 
Development expenditure capitalised                            (2,616)       (2,307)       (5,062) 
--------------------------------------------------  ----  ------------  ------------  ------------ 
Adjusted EBITDA including development expenditure             (14,560)       (9,945)      (16,732) 
==================================================  ====  ============  ============  ============ 
 
   6.     Loss per share 

a Basic loss per share

The calculation of basic loss per share has been based on the following loss attributable to ordinary shareholders and weighted average number of ordinary shares outstanding:

 
                                                              Six months    Six months 
                                                                   ended         ended    Year ended 
                                                                 30 June       30 June   31 December 
                                                                    2020          2019          2019 
                                                             (Unaudited)   (Unaudited)     (Audited) 
                                                                   $'000         $'000         $'000 
----------------------------------------------------------  ------------  ------------  ------------ 
Loss for the period attributable to ordinary shareholders         13,979        16,661        28,264 
==========================================================  ============  ============  ============ 
 
                                                                  Number        Number        Number 
                                                               of shares     of shares     of shares 
Weighted average number of ordinary shares                         '000s         '000s         '000s 
----------------------------------------------------------  ------------  ------------  ------------ 
Issued ordinary shares at 1 January                               48,241        42,523        42,523 
Effect of shares issued in the period                                307         1,903         2,608 
----------------------------------------------------------  ------------  ------------  ------------ 
Weighted average number of ordinary shares during 
 the period                                                       48,548        44,426        45,131 
==========================================================  ============  ============  ============ 
 
 
Basic loss per share   $0.29  $0.38  $0.63 
=====================  =====  =====  ===== 
 

b Adjusted loss per share

Adjusted loss per share is calculated based on the loss attributable to ordinary shareholders before exceptional items, acquisition-related items and the cost of equity-settled share-based payment, and the weighted average number of ordinary shares outstanding:

 
                                                       Six months    Six months 
                                                            ended         ended    Year ended 
                                                          30 June       30 June   31 December 
                                                             2020          2019          2019 
                                                      (Unaudited)   (Unaudited)     (Audited) 
Adjusted loss for the period:                  Note         $'000         $'000         $'000 
---------------------------------------------  ----  ------------  ------------  ------------ 
Loss for the period attributable to ordinary 
 shareholders                                              13,979        16,661        28,264 
Adjusted for: 
Exceptional items                                           3,939          (78)       (2,047) 
Equity-settled share-based payment               11       (2,664)       (5,439)       (8,707) 
---------------------------------------------  ----  ------------  ------------  ------------ 
Adjusted basic loss for the period                         15,254        11,144        17,510 
=============================================  ====  ============  ============  ============ 
 
 
Adjusted loss per share   $0.31  $0.25  $0.39 
========================  =====  =====  ===== 
 

c Diluted loss per share

Due to the Group having losses in all years presented, the fully diluted loss per share for disclosure purposes, as shown in the consolidated statement of profit or loss and other comprehensive income, is the same as for the basic loss per share.

   7.     Other non-current assets 
 
                                           30 June       30 June 
                                              2020          2019 
                                                                  31 December 
                                                                         2019 
                                       (Unaudited)   (Unaudited)    (Audited) 
Due in more than a year:                     $'000         $'000        $'000 
-------------------------------  ---  ------------  ------------  ----------- 
Other receivables                              148           228          190 
Accrued income                               2,508         2,173        2,826 
------------------------------------  ------------  ------------  ----------- 
Total other non-current assets               2,656         2,401        3,016 
====================================  ============  ============  =========== 
 
   8.     Trade and other receivables 
 
                                               30 June       30 June 
                                                  2020          2019 
                                                                      31 December 
                                                                             2019 
                                           (Unaudited)   (Unaudited)    (Audited) 
Due within a year:                               $'000         $'000        $'000 
-----------------------------------  ---  ------------  ------------  ----------- 
Trade receivables                                  741         1,092        2,773 
Other receivables                                1,160           716          753 
Accrued income                                   3,172         2,863        2,964 
Corporation tax                                    731           468        1,441 
Prepayments                                        789           948          614 
-----------------------------------  ---  ------------  ------------  ----------- 
Total trade and other receivables                6,593         6,087        8,545 
===================================  ===  ============  ============  =========== 
 
 
   9.     Loans and borrowings 
 
                                                         30 June       30 June 
                                                            2020          2019 
                                                                                31 December 
                                                                                       2019 
                                                     (Unaudited)   (Unaudited)    (Audited) 
                                                           $'000         $'000        $'000 
---------------------------------------------  ---  ------------  ------------  ----------- 
Non-current liabilities 
Secured bank loan                                              -         1,389          555 
Finance lease liabilities                                  2,028         1,461        2,334 
--------------------------------------------------  ------------  ------------  ----------- 
                                                           2,028         2,850        2,889 
 -------------------------------------------------  ------------  ------------  ----------- 
Current liabilities 
Current portion of secured bank loan                       1,389         1,667        1,667 
Current portion of finance lease liabilities                 518           528          545 
--------------------------------------------------  ------------  ------------  ----------- 
                                                           1,907         2,195        2,212 
 -------------------------------------------------  ------------  ------------  ----------- 
Total loans and borrowings                                 3,935         5,045        5,101 
==================================================  ============  ============  =========== 
 

At 30 June 2020, the $1.4m of bank loan (31 December 2019: $2.2m) represents term debt drawn down with Silicon Valley Bank. The facility comprised $1.4m term debt (31 December 2019: $2.2m), with an interest-only period to 31 May 2018, followed by a three-year maturity at a floating interest rate charged at 1.5% above the US prime rate.

10. Deferred income

Deferred income represents contracted sales for which services to customers will be provided in future periods.

 
                                             30 June       30 June 
                                                2020          2019 
                                                                    31 December 
                                                                           2019 
                                         (Unaudited)   (Unaudited)    (Audited) 
Deferred income which falls due:               $'000         $'000        $'000 
---------------------------------  ---  ------------  ------------  ----------- 
Within a year                                  2,137         2,703        2,622 
In more than a year                            1,075         2,016        1,188 
Total deferred income                          3,212         4,719        3,810 
======================================  ============  ============  =========== 
 

11. Share-based payment

The Group operates share option plans for employees of the Group. Options in the plans are settled in equity in the Company and are normally subject to a vesting schedule but not conditional on any performance criteria being achieved.

The terms and conditions of the share option grants are detailed in the Group annual financial statements for the year ended 31 December 2019.

 
                                                         Six months    Six months          Year 
                                                              ended         ended         ended 
                                                            30 June       30 June   31 December 
                                                               2020          2019          2019 
                                                        (Unaudited)   (Unaudited)     (Audited) 
                                                              $'000         $'000         $'000 
------------------------------------------------  ---  ------------  ------------  ------------ 
Total equity-settled share-based payment charge               2,664         5,439         8,707 
=====================================================  ============  ============  ============ 
 

Summary of share options outstanding

 
                                                 Six months    Six months 
                                                      ended         ended    Year ended 
                                                    30 June       30 June   31 December 
                                                       2020          2019          2019 
                                                (Unaudited)   (Unaudited)     (Audited) 
Number of share options outstanding:                 Number        Number        Number 
---------------------------------------------  ------------  ------------  ------------ 
Balance at the start of the period                5,028,157     4,662,070     4,662,070 
Granted                                                   -       834,216       879,309 
Forfeited                                          (68,566)      (91,779)     (283,257) 
Exercised                                           (1,444)     (112,187)     (229,965) 
---------------------------------------------  ------------  ------------  ------------ 
Outstanding balance at the end of the period      4,958,147     5,292,320     5,028,157 
---------------------------------------------  ------------  ------------  ------------ 
Exercisable at the end of the period              3,750,873     2,531,533     2,983,106 
---------------------------------------------  ------------  ------------  ------------ 
Vested at the end of the period                   3,750,873     2,531,533     2,983,106 
=============================================  ============  ============  ============ 
 

12. Contingent liabilities

The Group had no contingent liabilities at 30 June 2020 (30 June 2019: None, 31 December 2019: None).

13. Post-balance sheet events

There are no significant or disclosable post-balance sheet events.

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(END) Dow Jones Newswires

September 17, 2020 02:01 ET (06:01 GMT)