01 August 2024
AFERIAN PLC
("Aferian", the "Company" or
the "Group")
HALF
YEAR RESULTS
Aferian plc (LSE AIM: AFRN), the B2B
video streaming solutions company, announces its unaudited results
for the six months ended 31 May 2024 ("H1 2024").
Financial Highlights
· Revenue for the period decreased as expected by 48% to $12.2
million (H1 2023: $23.4 million) and adjusted EBITDA(1) for the six months ended 31 May
2024 was a loss of $2.4 million (H1 2023: $0.1 million).
· Exit run rate Annual Recurring Revenue ("ARR")(2)
decreased by 25% to $14.1million (31 May 2023: $18.8
million) as a result of two significant
customer contracts ending towards the end of FY2023.
· Adjusted operating cash flow before tax(3) was an
outflow of $5.0 million (H1 2023: $7.0 million outflow).
· The Group's inventory balance at 31 May 2024 was $4.0m, down
from $8.6m at 31 May 2023 and $5.1m at 30 November 2023. This is
expected to decrease further in the second half of the financial
year.
· Net
debt(4) at 31 May 2024 was $14.9 million (30 November
2023 $6.1 million). This is expected to decrease by circa $1
million during the second half of the financial year.
Notes
1. Adjusted EBITDA
is calculated as operating loss before depreciation, interest, tax,
amortisation, exceptional items and employee share-based payment
charges.
2. Exit run rate
ARR is annual run-rate recurring revenue as at 31 May
2024.
3. Adjusted
operating cash flow before tax is a non-GAAP measure and excludes
cash paid/received in respect of exceptional items.
4. Net debt is a
non-GAAP measure and is calculated as loans and borrowings net of
cash and cash equivalents and excluding capitalised refinancing
costs.
Operational Highlights
· Management actions have now reduced the Group's cost base in
line with the expected reduction in revenues and our teams are
aligned behind the Group's strategic goals. Since 31 May 2023 these
actions have reduced annualised operating costs by $14.5 million
and annualised capital expenditure by $5.0 million.
· Following the cost reduction actions taken 24i is making
progress in line with its focus on improving cash flow. It has also
seen new customer deployments and multiple contract extensions
being delivered in the first half of the year.
· Positively, Amino has seen an increase in sales order intake for video streaming
devices in the first half and gross profit margin has improved to
55%. Although devices revenue has decreased by 74% year on year,
volumes of higher margin Digital Signage and Enterprise device
sales and sales orders in H1 2024 have exceeded management
expectations.
Current Trading and Outlook
Trading remains in line with the
trading and outlook communicated in FY2023 full year results on 31
May 2024. Although we have taken management actions to further
reduce the Group's cost base in the first half of FY2024, we expect
Group adjusted EBITDA for FY2024 to be lower than the FY2023
adjusted EBITDA of $1.6m (though still positive), and for this
delivery to be weighted towards the second half of the financial
year. Net debt is expected to reduce by approximately $1 million by
year end as the cost reduction and working capital measures taken
in the first half improve free cash flow in the second
half.
For
further information please contact:
|
Aferian plc
|
+44 (0)1954 234100
|
|
Mark Wells, Chairman
Mark Carlisle, Chief Executive
Officer
|
|
|
|
|
|
|
Investec plc (NOMAD and Broker)
|
+44 (0)20 7597 5970
|
|
David Anderson / Patrick Robb / Nick
Prowting
|
|
About Aferian plc
Aferian plc (AIM: AFRN) is a
B2B video streaming solutions company. Our end-to-end solutions
bring live and on-demand video to every kind of screen. We create
the forward-thinking solutions that our customers need to drive
subscriber engagement, audience satisfaction, and revenue
growth.
It is our belief that successful
media companies and services will be those that are most
consumer-centric, data driven and flexible to change. We focus on
innovating technologies that enable our customers stay ahead of
evolving viewer demand by providing smarter, more cost-effective
ways of delivering end-to-end modern TV and video experiences to
consumers. By anticipating technological and behavioural audience
trends, our software solutions empower our customers to heighten
viewer enjoyment, drive growth in audience share and ultimately
their profitability.
Aferian plc is traded on the London
Stock Exchange's AIM stock market (AIM: symbol AFRN). Headquartered
in Cambridge, UK, the Company operates across the USA, Europe and
Asia. For more information, please
visit www.aferian.com.
Chief Executive Officer's Review
Operational Review
Although this has been another
challenging 6 months for the Group, the strategic goals of the
Group remain clear:
· To
improve the video entertainment experience for consumers by
aggregating the video discovery experience; and
· To
make it easy for our customers to deliver the most compelling
digital signage and enterprise video solutions.
Under the leadership of Sebastian
Braun, who was appointed as CEO of 24i on 3rd July 2024, 24i is
focussed on improving the video entertainment experience for
consumers by delivering its next generation 24i Video Cloud to its
customers. 24i's H1 2024 revenue and exit ARR has declined year on
year by 33% and 32% respectively as a result of two significant
customer contracts ending at the back end of FY2023. However,
following the cost reduction actions taken, 24i is making progress
in line with its focus on improving cash flow. Importantly, it has
also seen new customer deployments and multiple contract extensions
delivered in the year's first half.
Amino's managed video
streaming devices and SaaS platform enable Pay TV and Digital
Signage & Enterprise video operators to deliver high-quality
live, scheduled, and on-demand content for big-screen viewing. H1
2024 revenue declined by 40% year-over-year due to lower Pay TV
device sales, as customers delayed purchases. However, following a
focussed period of investment in sales and marketing, Amino has now
received higher-than-expected sales orders for Digital Signage and
Enterprise devices for 2024 as well as first orders for the next
generation PayTV devices in the North American market which will be
delivered in Q3 2024. Consequently, further gross margin
improvements are expected in the second half of the
year.
Operationally, management actions
have successfully reduced the Group's cost base following the
further decline in revenues. Since 31 May 2023 these actions have
reduced annualised operating costs by $14.5 million and annualised
capital expenditure by $5.0 million.
Financial Review
H1
2024 Key Performance Indicators
|
|
H1 2024
$m
|
H1
2023
$m
|
Change
%
|
|
Devices revenues
|
2.4
|
9.4
|
(74%)
|
|
Software & services
revenues
|
9.8
|
14.0
|
(30%)
|
|
Total revenue
|
12.2
|
23.4
|
(48%)
|
|
Exit run rate Annual Recurring
Revenue ("ARR") at 31 May
|
14.1
|
18.8
|
(25%)
|
|
Adjusted operating cashflow before
tax
|
(4.3)
|
(7.0)
|
39%
|
High margin software & services
revenues decreased by 30% to $9.8 million (H1 2023: $14.0 million).
Device revenues in the first half are $2.4 million (H1 2023: $9.4
million), representing a decrease of 74% year-on-year due to the
reduction in the number of PayTV video streaming devices sold as
customers have delayed purchasing decisions. Consequently, Group
revenue for the period is $12.2 million (H1 2023: $23.4 million).
At 31 May 2024, exit run rate ARR decreased to $14.1 million (H1
2023: $18.8 million).
Revenue, adjusted EBITDA and capitalised development costs by
segment
|
|
Revenue
|
|
Adjusted
EBITDA
|
|
Capitalised Development
Costs
|
|
|
H1 2024
$m
|
H1
2023
$m
|
|
H1 2024
$m
|
H1
2023
$m
|
|
H1 2024
$m
|
H1
2023
$m
|
|
24i
|
7.4
|
11.3
|
|
(0.5)
|
1.4
|
|
0.3
|
2.6
|
|
Amino
|
4.8
|
12.1
|
|
(0.8)
|
(0.5)
|
|
0.4
|
0.7
|
|
Central costs
|
-
|
-
|
|
(1.1)
|
(1.0)
|
|
-
|
-
|
|
Total
|
12.2
|
23.4
|
|
(2.4)
|
(0.1)
|
|
0.7
|
3.3
|
Adjusted EBITDA for the six months
ended 31 May 2024 was a loss of $2.4 million (H1 2023: $0.1
million). Adjusted EBITDA is reconciled
below and is calculated as operating profit before depreciation,
interest, tax, amortisation, impairment of goodwill, exceptional
items and employee share-based payment charges. This is consistent
with the way the financial performance of the Group is presented to
the Board.
A reconciliation of Adjusted EBITDA
to operating loss is provided as follows:
|
|
H1 2024
$m
|
H1
2023
$m
|
|
Adjusted EBITDA
|
(2.4)
|
(0.1)
|
|
Exceptional items within operating
expenses
|
(2.7)
|
(1.2)
|
|
Employee share-based payment
charge
|
(0.1)
|
(0.3)
|
|
Depreciation and
amortisation
|
(5.0)
|
(6.4)
|
|
Operating loss
|
(10.2)
|
(8.0)
|
Exceptional items
Exceptional items for the period
comprised:
·
$1.0 million (H1 2023: $1.2 million) redundancy
and associated restructuring costs; and
·
$1.4 million (H1 2023: $nil) impairment of trade
receivables and inventory balances; and
·
$0.3 million (H1 2023: $nil) refinancing and other
costs
Cash flow and net debt
A reconciliation of adjusted
operating cash flow before tax to cash generated from operations
before tax is provided as follows:
|
|
H1 2024
$m
|
H1
2023
$m
|
|
Adjusted operating cashflow before
tax
|
(5.0)
|
(7.0)
|
|
Post-acquisition integration and
associated restructuring costs
|
-
|
(1.2)
|
|
One-off refinancing costs
|
(0.3)
|
-
|
|
Redundancy and associated
costs
|
(1.0)
|
-
|
|
Acquisition costs for the aborted
acquisition in prior year
|
-
|
(4.1)
|
|
Cash used in operations before
tax
|
(6.3)
|
(12.3)
|
Adjusted operating cash flow before
tax was a $5.0 million outflow (H1 2023: $7.0 million outflow), a
decrease of 39% due to a reduced working capital outflow of $0.6
million (H1 2023: $11.0 million outflow) offset by higher losses
and the impact of acquisition and aborted acquisition costs in H1
2023.
Cash used in operations before tax
was $6.3 million outflow (H1 2023: $12.3 million outflow) including
$0.3 million payments for the refinancing of the bank loan and $1.0
million restructuring and associated costs relating to the cost
reduction actions taken by management in the period.
Tax payments, principally in respect
of corporation tax, totalled $0.2 million during the period (H1
2023: $0.3 million). Post period end the Group received a
corporation tax refund of $1.1 million in July 2024 and has applied
for a further $0.6 million refund in respect of FY23 losses which
it expects to receive in the second half of the financial
year.
During the period, the Group
capitalised $0.7 million of development costs (H1 2023: $3.3
million). The decrease of $2.6 million was driven by the cost reduction actions taken in 2023 and the
first half of 2024.
Interest paid in the period of $0.8
million (H1 2023: $0.5 million) comprises bank loan and overdraft
interest.
Net debt at 31 May 2024 was $14.9
million (30 November 2023 $6.1 million). This is expected to
decrease by circa $1 million during the second half of the
financial year.
Financial position
The Group had net debt of $14.9
million as at 31 May 2024 (30 November 2023: $6.1
million).
At 31 May 2024, the Group had total
equity of $12.2 million (30 November 2023: $22.3 million) and net
current liabilities of $1.4 million (30 November 2023: $1.4
million). Net current liabilities includes a $2.3m overdraft drawn
under the Group's $16.5 million
multicurrency working capital facility which runs to September
2025
Going concern
The Directors have considered it
appropriate to prepare these consolidated interim financial
statements on a going concern basis. The Directors assessment of
going concern including is set out in note 2.
Principal risks and uncertainties
The principal risks and
uncertainties facing the Group remain consistent with the principal
risks and uncertainties reported in Aferian Plc's 2023 Annual
Report.
Current Trading and Outlook
Trading remains in line with the
trading and outlook communicated in FY2023 full year results on 31
May 2024. Although we have taken management actions to further
reduce the Group's cost base in the first half of FY2024, we expect
Group adjusted EBITDA for FY2024 to be lower than the FY2023
adjusted EBITDA of $1.6m (though still positive), and for this to
be weighted into the second half of the financial year. Net debt is
expected to decrease by circa $1 million
during the second half of the financial year.
Mark
Carlisle
Chief Executive Officer
31 July 2024
Consolidated income statement
For the six months ended 31 May 2024
|
|
|
Six months
ended
31 May 2024
Unaudited
|
Six months
ended
31 May
2023
Unaudited
|
|
|
Notes
|
$000s
|
$000s
|
|
Revenue
|
3
|
12,173
|
23,348
|
|
Cost of sales
|
|
(4,851)
|
(10,332)
|
|
Gross profit
|
|
7,322
|
13,016
|
|
|
|
|
|
|
Operating expenses
|
|
(17,567)
|
(21,000)
|
|
Operating loss
|
|
(10,245)
|
(7,984)
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating loss
|
|
(5,669)
|
(4,172)
|
|
|
|
|
|
|
Share based payment
charge
|
|
(78)
|
(286)
|
|
Exceptional items
|
5
|
(2,682)
|
(1,151)
|
|
Amortisation of acquired intangible
assets
|
|
(1,816)
|
(2,375)
|
|
Operating loss
|
|
(10,245)
|
(7,984)
|
|
|
|
|
|
|
Finance expense
|
|
(791)
|
(1,199)
|
|
Finance income
|
|
89
|
534
|
|
Net
finance expense
|
|
(702)
|
(665)
|
|
Loss before tax
|
|
(10,947)
|
(8,649)
|
|
Tax credit/(charge)
|
|
921
|
(43)
|
|
Loss after tax
|
|
(10,026)
|
(8,692)
|
|
|
|
|
|
|
Basic and Diluted earnings per share
|
6
|
(9.02c)
|
(10.20c)
|
Consolidated statement of comprehensive
income
For the six months ended 31 May 2024
|
|
Six months
ended
31 May 2024
Unaudited
|
Six months
ended
31 May
2023
Unaudited
|
|
|
$000s
|
$000s
|
|
Loss for the period
|
(10,026)
|
(8,692)
|
|
Foreign exchange difference arising
on consolidation
|
(451)
|
1,960
|
|
Other comprehensive (loss)/income
|
(451)
|
1,960
|
|
Total comprehensive loss for the period
|
(10,477)
|
(6,732)
|
Consolidated balance sheet
|
As
at 31 May 2024
|
|
As at
31 May 2024
Unaudited
|
As
at
30
November 2023
|
|
Assets
|
Notes
|
$000s
|
$000s
|
|
Non-current assets
|
|
|
|
|
Property, plant and
equipment
|
|
210
|
239
|
|
Right of use assets
|
|
666
|
1,117
|
|
Intangible assets
|
|
25,205
|
29,273
|
|
Other receivables
|
|
184
|
184
|
|
Deferred tax assets
|
|
509
|
348
|
|
|
|
26,774
|
31,161
|
|
Current assets
|
|
|
|
|
Inventories
|
|
3,991
|
5,099
|
|
Trade and other
receivables
|
|
5,443
|
9,127
|
|
Cash and cash
equivalents
|
|
1,034
|
5,771
|
|
Corporation tax
receivable
|
|
1,769
|
858
|
|
|
|
12,237
|
20,855
|
|
Total assets
|
|
39,011
|
52,016
|
|
Capital and reserves attributable to equity holders of the
business
|
|
|
|
|
Called-up share capital
|
|
1,822
|
1,822
|
|
Share premium
|
|
43,425
|
43,425
|
|
Other equity
|
|
(103)
|
(103)
|
|
Capital redemption
reserve
|
|
12
|
12
|
|
Foreign exchange
reserves
|
|
(6,421)
|
(5,971)
|
|
Merger reserve
|
|
42,750
|
42,750
|
|
Retained earnings
|
|
(69,258)
|
(59,638)
|
|
Total equity
|
|
12,227
|
22,297
|
|
Liabilities
|
|
|
|
|
Current liabilities
|
|
|
|
|
Trade and other payables
|
|
10,566
|
15,518
|
|
Lease liabilities
|
|
198
|
634
|
|
Corporation tax payable
|
|
605
|
364
|
|
Loans and borrowings
|
|
2,248
|
10,607
|
|
|
|
13,617
|
27,123
|
|
Non-current liabilities
|
|
|
|
|
Trade and other payables
|
|
25
|
26
|
|
Lease liabilities
|
|
536
|
497
|
|
Loans and
borrowings
|
4
|
12,525
|
1,496
|
|
Provisions
|
|
81
|
81
|
|
Deferred tax liability
|
|
-
|
496
|
|
|
|
13,167
|
2,596
|
|
Total liabilities
|
|
26,784
|
29,719
|
|
Total equity and liabilities
|
|
39,011
|
52,016
|
Consolidated Cash Flow Statement
For the six months ended 31 May 2024
|
|
|
Six months ended 31 May
2024
Unaudited
|
Six
months ended 31 May 2023
Unaudited
|
|
|
Notes
|
$000s
|
$000s
|
|
Cash flows from operating activities
|
|
|
|
|
Cash generated from
operations
|
7
|
(6,273)
|
(12,254)
|
|
Net corporation tax paid
|
|
(210)
|
(268)
|
|
Net cash used in operating activities
|
|
(6,483)
|
(12,522)
|
|
Cash flows from investing activities
|
|
|
|
|
Expenditure on intangible
assets
|
|
(680)
|
(3,288)
|
|
Purchase of property, plant and
equipment
|
|
(5)
|
(36)
|
|
Interest received
|
|
6
|
3
|
|
Net cash used in investing activities
|
|
(679)
|
(3,321)
|
|
Cash flows from financing activities
|
|
|
|
|
Interest paid
|
|
(754)
|
(464)
|
|
Lease liability
repayments
|
|
(372)
|
(639)
|
|
Proceeds from borrowings
|
|
1,500
|
15,813
|
|
Repayment of borrowings
|
|
-
|
(4,500)
|
|
Net cash generated from financing activities
|
|
374
|
10,210
|
|
Net decrease in cash and cash equivalents
|
|
(6,788)
|
(5,633)
|
|
Cash and cash equivalents at start
of the period
|
|
5,771
|
11,524
|
|
Effects of exchange rate
fluctuations on cash held
|
|
(197)
|
181
|
|
Cash and cash equivalents at end of period
|
|
(1,214)
|
6,072
|
Notes to the interim condensed consolidated unaudited
financial information
Six months ended 31 May 2024
1 General
information
Aferian plc ('the Company') and its
subsidiaries (together 'the Group') specialise in the delivery of
next generation video experiences over IP using its end-to-end
solution. This comprises the 24i online video solution and Amino
video streaming devices and associated operating and device
management software.
The Company is a public limited
company which is listed on the AIM market of the London Stock
Exchange and is incorporated and domiciled in England and
Wales.
2 Basis of
preparation
These interim consolidated financial
statements have been prepared using accounting policies based
on United Kingdom adopted international
accounting standards ('IFRS'). The group
has chosen not to adopt IAS 34 "Interim Financial Statements" in
preparing the interim financial information. 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
30 November 2023 Annual Report. The financial information for the
six months ended 31 May 2024 and 31 May 2023 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
Aferian Plc ('the Group') were prepared in accordance with United
Kingdom adopted international accounting standards ('IFRS'). The
statutory Annual Report and Financial Statements for 2023 have been
filed with the Registrar of Companies. The Independent Auditors'
Report on the Annual Report and Financial Statements for the year
ended 30 November 2023 was unmodified, drew attention to a material
uncertainty related to going concern 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 2023 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 2023 and will be adopted in the 2024
financial statements. There are deemed to be no new and amended
standards and/or interpretations that will apply for the first time
in the next annual financial statements that are expected to have a
material impact on the Group.
Going Concern
The interim consolidated financial
statements have been prepared on a going concern basis
The Directors have reviewed the
Group's going concern position taking account of its current
business activities and their future forecast performance. The
directors have prepared a base case and severe but plausible
downside cashflow forecasts for the Group covering a period of at
least 12 months from the date of approval of the financial
statements (being to July 2025).
On 7 May 2024 Aferian Plc secured an
extension to its $16.5 million multicurrency working capital
facility, previously due to mature on 23 December 2024, to 30
September 2025. In conjunction with this extension, the interest
margin payable on the drawn amount of the facilities was increased
to between 3% to 4.5% over SONIA (dependent on net leverage). In
addition, the leverage, interest cover and fixed charge cover ratio
covenants were removed, and the available liquidity covenant was
relaxed. At the same time, the term of the Group's unsecured £1.3
million term loan facility provided by certain funds managed by
Kestrel Partners LLP was extended to 31 January 2026.
However, if the Group fails to
achieve its plausible downside cash flow forecast, it may be unable
to operate within the limits of its multicurrency working capital
facility due to non-compliance with the associated financial
covenants. Should the Group's performance fall below this severe
but plausible downside forecast, it could breach covenant
compliance, directly impacting the Parent Company's going concern
status. This scenario indicates the existence of material
uncertainty, casting significant doubt on the ability of both the
Group and the Parent Company to continue as going concerns. As a
result, the Directors may be unable to realize their assets and
discharge their liabilities in the normal course of
business.
Despite this uncertainty, the
Directors believe that the Group and Parent Company will trade in
line with at minimum the severe but plausible case and therefore,
they deem it appropriate to prepare the financial statements on a
going concern basis. Consequently, the financial statements do not
include the adjustments that would be necessary if the Group and
Parent Company were unable to continue as going
concerns.
The Board of Directors approved this
interim report on 31 July 2024.
3
Segmental
analysis
Operating segments are reported in a
manner consistent with the internal reporting provided to the
Aferian plc Chief Operating Decision Maker ("CODM") for the use in
strategic decision making and monitoring of performance. The CODM
has been identified as the Group Chief Executive and the Chief
Financial Officer. The CODM reviews the Group's internal reporting
in order to assess performance and allocate resources. Performance
of the operating segments is based on adjusted EBITDA. Information
provided to the CODM is measured in a manner consistent with that
in the Financial Statements.
The Group reports three operating
segments to the CODM:
|
·
|
the development and sale of video
streaming devices and solutions, including licensing and support
services ("Amino");
|
|
·
|
development and sale of the 24i
end-to-end Video streaming platform and associated services. This
includes the results of 24iQ (formerly called the Filter) and
FokusOnTV (formerly called Nordija A/S); and
|
|
·
|
central costs which comprise the
costs of the Board, including the executive directors as well as
costs associated with the Company's listing
on the London Stock Exchange.
|
Revenues and costs by segment are
shown below.
|
2024
|
|
Amino
$000s
|
24i
$000s
|
Central costs
$000s
|
Total
$000s
|
|
Revenue
|
Software and services
|
2,382
|
7,401
|
-
|
9,783
|
|
|
Devices *
|
2,387
|
3
|
-
|
2,390
|
|
|
Total
|
4,769
|
7,404
|
-
|
12,173
|
|
|
% Recurring
|
48%
|
74%
|
-
|
64%
|
|
Cost of sales
|
|
(2,122)
|
(2,729)
|
-
|
(4,851)
|
|
Gross profit
|
|
2,647
|
4,675
|
-
|
7,322
|
|
Operating expenses
|
(3,429)
|
(5,155)
|
(1,074)
|
(9,658)
|
|
Adjusted EBITDA
|
|
(782)
|
(480)
|
(1,074)
|
(2,336)
|
|
Exceptional items within operating
expenses
|
|
|
|
(2,682)
|
|
Share based payment
charge
|
|
|
|
(78)
|
|
Depreciation, amortisation, and
loss on disposal of fixed assets
|
|
|
|
(5,149)
|
|
Operating loss
|
|
|
|
|
(10,245)
|
|
Net finance expense
|
|
|
|
|
(702)
|
|
Loss before tax
|
|
|
|
|
(10,947)
|
|
|
|
|
|
|
|
|
Additions to non-current
assets:
Capitalised development costs
|
395
|
285
|
-
|
680
|
* incorporating integrated Amino
software and associated accessories.
3 Segmental analysis
(continued)
|
2023
|
|
Amino
$000s
|
24i
$000s
|
Central costs
$000s
|
Total
$000s
|
|
Revenue
|
Software and services
|
2,884
|
11,071
|
-
|
13,955
|
|
|
Devices *
|
9,185
|
208
|
-
|
9,393
|
|
|
Total
|
12,069
|
11,279
|
-
|
23,348
|
|
|
% Recurring
|
20%
|
63%
|
-
|
41%
|
|
Cost of sales
|
|
(7,162)
|
(3,170)
|
-
|
(10,332)
|
|
Gross profit
|
|
4,907
|
8,109
|
-
|
13,016
|
|
Operating expenses
|
(5,477)
|
(6,693)
|
(957)
|
(13,127)
|
|
Adjusted EBITDA
|
|
(570)
|
1,416
|
(957)
|
(111)
|
|
Exceptional items within operating
expenses
|
|
|
|
(1,151)
|
|
Share based payment
charge
|
|
|
|
(286)
|
|
Depreciation, amortisation, and
loss on disposal of fixed assets
|
|
|
|
(6,436)
|
|
Operating loss
|
|
|
|
|
(7,984)
|
|
Net finance expense
|
|
|
|
|
(665)
|
|
Loss before tax
|
|
|
|
|
(8,649)
|
|
|
|
|
|
|
|
|
Additions to non-current
assets:
Capitalised development costs
|
675
|
2,571
|
-
|
3,246
|
* incorporating integrated Amino
software and associated accessories.
4 Loans and
borrowings
|
|
As at
31 May 2024
Unaudited
|
|
As at 30
November 2023
|
|
|
$000s
|
|
$000s
|
|
|
|
|
|
|
Current
Loans and borrowings
Non-current
Bank loans (secured)
Shareholder loans
(unsecured)
|
2,248
11,021
1,504
|
|
10,607
-
1,496
|
|
Total borrowings
|
14,773
|
|
12,103
|
|
Less cash and cash
equivalents
|
1,034
|
|
6,072
|
|
Add back capitalised refinancing
costs
|
1,115
|
|
-
|
|
Net
debt(1)
|
14,854
|
|
6,031
|
1. Net debt
is a non-GAAP measure and is calculated as loans and borrowings net
of cash and cash equivalents and excluding capitalised refinancing
costs which have been netted against bank loans secured in the
table above
On 7 May 2024, the Company secured
an extension to its $16.5 million senior banking facilities,
previously due to mature on 23 December 2024, to 30 September 2025.
The interest margin payable on the drawn amount of the facilities
has been increased to between 3% to 4.5% over SONIA (dependent on
net leverage). The leverage, interest cover and fixed charge cover
ratio covenants have been removed and the available liquidity
covenant has been relaxed and the Group remains in compliance with
its loan facilities covenants. There is no difference between the
book value and the fair value of the bank loan. The bank overdraft
is drawn under the banking facilities and thus is not repayable on
demand. The bank loan is stated net of $1.1 million in capitalised
refinancing costs from extending the banking facilities.
In May 2023 certain funds managed by
Kestrel Partners LLP (together the "Kestrel Lenders") provided an
unsecured term loan facility of up to £3.25 million to the Company.
£1.125 million of this facility was drawn (the "loan arranged by
its largest shareholder") and the balance was cancelled on
completion of the placing of new ordinary shares in July 2023. In
connection with the drawing of the loan, the Company issued to the
Kestrel Lenders warrants ("Warrants") to subscribe for a total of
4.5 million ordinary shares at 17p per ordinary share.
The original maturity date of the
loan was approximately four months after the previous maturity date
of the Group's senior banking facilities. Therefore, and as
required by the Company's bank lenders in connection with the
extension and revisions to the Group's senior banking facilities as
set out above, the Company has agreed with the Kestrel Lenders an
extension to the maturity date by which the loan must be repaid,
from 31 March 2025 to 31 January 2026.
The principal terms of the loan
arranged by Kestrel and related warrants were also amended to
reflect a 5% increase in the annual coupon on the loan with
interest rolling up on a quarterly basis, paid in kind, to 15% and
a reduction in the strike price of the Warrants from 17p to 5p per
ordinary share.
The Shareholder loan constitutes a
form of convertible debt which is accounted for as a compound
instrument under IAS 32. The fair value of the shareholder loan
liability component is recognised as non-current liability as the
loan is repayable on 31 January 2026, and calculated based on the
present value of the contractual stream of future cash flows
discounted at the market rate of interest that would have been
applied to an instrument of comparable credit quality with
substantially the same cash flows, on the same terms, but without
the conversion option. The residual shareholder loan book value is
recognised as the equity component.
|
Reconciliation to cash and cash equivalents per consolidated
statement of cash flow
|
As at
31 May 2024
Unaudited
|
|
Current loans and borrowings
(overdraft facility)
|
(2,248)
|
|
Add cash and cash
equivalents
|
1,034
|
|
Cash and cash equivalents per consolidated statement of cash
flow
|
(1,214)
|
5 Exceptional
items
Exceptional items included in
operating loss comprise the following charges:
|
|
Six months ended
31 May 2024
Unaudited
|
|
Six
months ended
31 May 2023
Unaudited
|
|
|
$000s
|
|
$000s
|
|
Post-acquisition integration and
associated restructuring costs
|
-
|
|
1,151
|
|
Refinancing and other
costs
|
287
|
|
-
|
|
Impairment of trade receivables and
inventory balances
|
1,388
|
|
-
|
|
Redundancy and associated
costs
|
1,007
|
|
-
|
|
Total exceptional items
|
2,682
|
|
1,151
|
Impairment of trade receivables and
inventory balances comprise:
· a $1.0
million increase in the bad debt provision related to sales to a
single Amino customer in FY23, where the results of legal action
being taken to recover this debt are currently uncertain.
Management actions taken to recover the debt include the removal of
all support for devices sold under this contract.
· a $0.4
million increase in inventory provisions as a result of the sale of
Amino video streaming device raw materials at a discount to improve
operating cash flow in the second half of 2024.
Exceptional items within net finance
expense comprise the following charges/(credits):
|
|
Six months ended
31 May 2024
Unaudited
|
|
Six
months ended
31 May 2023
Unaudited
|
|
|
$000s
|
|
$000s
|
|
Credit in relation to movement in
contingent consideration
|
-
|
|
(530)
|
|
Unwinding discount on
contingent consideration
|
-
|
|
198
|
|
Total exceptional items
|
-
|
|
(332)
|
Exceptional items are items which
are material and non-recurring in nature, and which are therefore
presented separately from underlying operating expenses and income.
Material costs may include: release of contingent consideration no
longer payable, redundancy and associated costs and legal and
professional advisor fees in respect of refinancing. Material
income comprises amounts outside the course of normal trading
activities.
Furthermore, the Group considers the
fair value movement in contingent consideration and the unwinding
of the discount on contingent consideration to be adjusting items
within net finance expenses because they are non-cash and they do
not relate to the day-to-day trading activities of the Group. They
are treated as adjusting items below adjusted operating profit but
not presented on the face of the consolidated income
statement.
6 Earnings per
share
|
|
Six months
ended
31 May 2024
Unaudited
|
Six
months ended
31 May
2023
Unaudited
|
|
|
$000s
|
$000s
|
|
Loss attributable to
shareholders
|
(10,026)
|
(8,692)
|
|
Exceptional items
Share-based payment
charges
Finance income (see note
5)
Finance expense (see note
5)
Amortisation of acquired intangible
assets
|
2,682
78
89
(791)
1,816
|
1,151
286
(530)
198
2,375
|
|
Tax effect thereon
|
921
|
(243)
|
|
Loss attributable to shareholders
excluding exceptional items, share-based payments and amortisation
of acquired intangibles and associated taxation
|
(5,231)
|
(5,455)
|
|
|
Number
|
Number
|
|
Weighted average number of shares
(basic and diluted)
|
111,211,865
|
85,211,865
|
|
Basic and diluted earnings per
share (cents)
|
(9.02)
|
(10.20)
|
|
Adjusted basic and diluted earnings
per share (cents)
|
(4.7)
|
(6.40)
|
|
|
|
|
The calculation of basic earnings
per share is based on profit after taxation and the weighted
average number of ordinary shares of 1p each in issue during the
period. The Company holds 1,482,502 (H1 2023: 1,482,502) of its own
shares in treasury and these are excluded from the weighted average
above. The basic weighted average number of shares also excludes
242 (H1 2023: 242) being the weighted average shares held by the
EBT in the year.
As the group is currently loss
making there is no dilutive impact of share options.
7 Cash generated from
operations
|
|
Six months
ended
31 May 2024
Unaudited
|
Six
months ended
31 May
2023
Unaudited
|
|
|
$000s
|
$000s
|
|
Loss for the period
|
(10,026)
|
(8,692)
|
|
Tax (credit)/expense
|
(921)
|
43
|
|
Net finance expense
|
702
|
665
|
|
Capitalisation of refinancing
costs
|
(1,115)
|
-
|
|
Amortisation charge
|
5,116
|
5,658
|
|
Depreciation charge
|
34
|
778
|
|
Loss on disposal of property, plant
& equipment
|
-
|
-
|
|
Share based payment
charge
|
78
|
286
|
|
Exchange differences
|
19
|
10
|
|
Decrease in inventories
|
1,108
|
615
|
|
Decrease in trade and other
receivables
|
3,684
|
6,307
|
|
Decrease in provisions
|
-
|
-
|
|
Decrease in trade and other
payables
|
(4,952)
|
(17,924)
|
|
Cash used in operations before tax
|
(6,273)
|
(12,254)
|
Adjusted operating cash flow before
tax was a $5.0m outflow (H1 2023: $7.0m outflow) and is reconciled
to cash generated from operations before tax as follows:
|
|
Six months ended
31 May 2024
Unaudited
|
Six
months ended
31 May 2023
Unaudited
|
|
|
$000s
|
$000s
|
|
Adjusted operating cashflow before
tax
|
(4,979)
|
(7,003)
|
|
|
|
|
|
Redundancy and associated
costs
|
(1,007)
|
(1,151)
|
|
Refinancing and other
costs
|
(287)
|
-
|
|
Aborted acquisition
costs
|
-
|
(4,100)
|
|
Cash used in operations before tax
|
(6,273)
|
(12,254)
|
Adjusted cash generated from
operations before tax is a non-GAAP measure and excludes cash from
exceptional and one-off items relating to bank loan facility set up
costs that are considered non-trading in nature.
8 Cautionary
statement
This document contains certain
forward-looking statements relating to the Group. The Group
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 Group 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.
