TIDMAOM
RNS Number : 8209E
ActiveOps PLC
04 July 2023
4 July 2023
ActiveOps Plc
("ActiveOps", the "Company, "the Group")
Results for the year ended 31 March 2023
ActiveOps plc (AIM: AOM), a leading provider of Management
Process Automation (MPA) software for running hybrid and global
back-office operations, is pleased to announce its unaudited
results for the year ended 31 March 2023.
Financial Highlights:
Year ended 31 March 2023 2022 Change
-------------------------------------------------------- ---------- ---------- -------
Annual recurring revenue "ARR"(1) GBP22.6m GBP20.1m +13%
Revenue GBP25.5m GBP22.9m +11%
Software & Subscription revenue GBP22.1m GBP19.6m +13%
Training & implementation "T&I" revenue GBP3.4m GBP3.4m -
Gross margin 82% 81% +1ppt
Adjusted EBITDA(2) GBP0.7m GBP(0.3m)
Profit/(loss) before tax GBP(0.2)m GBP(2.6)m
Earnings/(loss) per share on continuing
operations (0.70)p (3.83)p
Net cash and cash equivalents GBP15.4m GBP13.8m +12%
-------------------------------------------------------- ---------- ---------- -------
-- ARR growth of 13% (11% constant currency) above prior year
-- Total Revenue growth of 11% driven primarily by increased
recurring SaaS revenues
-- Gross Margins remain healthy at 82%, (2022: 81%) supported
by improved T&I margins
-- Adjusted EBITDA moves to profitability at GBP0.7m (2022
Loss: GBP0.3m), ahead of management expectations, reflecting
operational leverage in the business and forex gain of GBP0.7m
(FY22: GBP0.3m)
-- Strong EBITDA cash conversion of 505% (2022: 673%) arising
from annual-in-advance billing
-- Balance sheet remains strong with GBP15.4m cash (2022: GBP13.8m)
being approximately 26% of the Company's current market
capitalisation and no debt
Operational Highlights
-- Significant expansion of existing customer relationships
resulting in Net Revenue Retention (NRR) of 110% (2022:
102%)
-- 20% increase in ARR from the ten largest customers. 60%
of customers globally increased ARR, including 28% who increased
ARR by 20% or more
-- Added new customers in each of our three regional business
units
-- Double digit SaaS revenue growth in each of our regional
business units
-- New CaseworkiQ product, launched in June 2022, in use by
7 of the 10 largest existing customers, proving its ability
to create new opportunities with existing customers
-- First enterprise customer using all three ActiveOps software
products (ControliQ, WorkiQ and CaseworkiQ), demonstrating
considerable up-sell opportunities within the existing customer
base
-- Currently developing a series of major software enhancements
for release in the current financial year utilising Artificial
Intelligence (AI) and Machine Learning (ML) to provide customers
with new opportunities to optimise operational performance
Outlook
-- Trading in the first few months of the year in line with
Board expectations, driven by customer expansions and addition
of two new customers with significant expansion potential.
-- Continued healthy sales pipeline and positive outlook.
Footnote to Financial highlights
The above non-GAAP measures are unaudited
(1) Annual Recurring Revenue
(2) Adjusted EBITDA is used by management to assess the trading
performance of the business. Defined as Operating loss (GBP0.217m)
before depreciation & amortisation (GBP1.035m), share-based
payment charges (GBP0.027m) and includes FX differences (Loss:
GBP0.181m).
Richard Jeffery, Chief Executive Officer of ActiveOps plc,
commented:
"This has been a year of significant progress for ActiveOps, in
which we have won new customers across all regions, grown our
existing customer accounts, and launched new products which
materially expand our addressable market. Importantly, we achieved
this alongside accelerating our shift to positive adjusted EBITDA,
well ahead of the timeline initially set at the time of our
IPO.
Trading in the first few months of the year has been steady,
driven by expansions at existing accounts and the addition of two
new customers with significant expansion potential. The sales
pipeline remains healthy and the progression of sales opportunities
is increasingly well supported by our marketing efforts and the
significant interest in the new software capabilities we are
releasing this year.
In the longer-term, the enhancements we are making in our
offering in the areas of Artificial Intelligence (AI) and Machine
Learning (ML) are increasing the value of our solutions to our
customers. With an extensive customer base, international
footprint, and growing offering, we are excited by the long-term
potential for ActiveOps."
For more information, please contact:
ActiveOps Via Alma PR
Richard Jeffery, Chief Executive www.activeops.com
Officer
Ken Smith, Chief Financial Officer
Investec Bank plc +44 (0)20 7597 5970
Corporate Broking & PLC Advisory
Patrick Robb / David Anderson
Alma PR + 44(0) 203 405 0205
Caroline Forde / Will Ellis Hancock
About ActiveOps
ActiveOps is a leader in Management Process Automation (MPA),
providing a SaaS platform to large enterprises with complex and
often global back-offices. The Group's software and embedded
back-office operations management methodology enables enterprises
to adopt a data-driven, scientific approach to organising work and
managing capacity.
The Group's enterprise platform comprises its MPA software
products and AOM, the Group's operations methodology and framework
for effective back-office management. Together, this combination of
software and embedded methodology enables operations managers to
balance the competing priorities of meeting service and quality
standards while improving productivity and reducing cost.
As at 31 March 2023, the Group had 179 employees, serving its
global customer base of over 80 enterprise customers from offices
in the UK, Ireland, USA, Australia, India and South Africa. The
Group's customers are predominantly in the banking, insurance and
business process outsourcing (BPO) sectors, including Nationwide,
TD Bank, Anthem Inc and DXC Technology.
CHAIr's Statement
Introduction
ActiveOps has once again delivered on, or beaten, the
commitments laid out at IPO, making steady progress across all
areas of the Group in a more typical year, one without the
distractions of either an IPO or the management of the COVID
pandemic.
With double-digit SaaS revenue growth, a transition to adjusted
EBITDA profitability and exciting developments within our core
product set, we are firmly delivering on strategy and set to
maintain our growth trajectory. While cognisant of the wider
macroeconomic environment, we look to the future with
confidence.
Financial Performance
Our revenue performance this year has been particularly
pleasing, reaching the milestone of GBP25m, the vast majority of
which is recurring revenue. I am pleased that all three regions
have continued to perform well. EMEIA in particular has delivered a
strong sales year, whilst growth was good in both APAC and North
America.
The continued improvements in running the business, ranging from
the stability of operations, approaches to governance and global
finance systems transformation, completed in recent years, have
streamlined our approach to running our own back office and a
well-managed cost base. This, helped by a positive foreign exchange
contribution, has led to profitability and cash generation ahead of
our initial expectations. Achieving full year EBITDA profitability
reflects the hard work that has been completed by our team. This
EBITDA profit coupled with a year-end cash position of GBP15.4m
demonstrates the very firm foundations upon which this business
stands.
Overview of the year
The solid ARR growth we have achieved has been delivered by
signing new customers and expanding existing customer revenues
through continued user growth and up-sell of additional products.
This gives us optimism for the coming year and stands us in good
stead as we have moved into positive EBITDA.
The investments made into the development of the CaseworkiQ
product are delivering results, whilst significant excitement is
being generated amongst customers and prospects by our release,
later this year, of AI-based enhancements to ControliQ. We
anticipate that we will maintain our current levels of product
investment, proportionate to revenue.
The investment in our marketing function, including the
appointment of an experienced CMO has led to record attendance by
customers at our conferences, which continue to drive excellent
levels of customer engagement. The feedback we receive from these
events is fed back to our product teams, to help guide our product
roadmap. Our new quarterly OpsTracker report has been very
well-received, reflecting the unique level of insight it delivers
to Operations executives worldwide. There is no doubt that
executives managing complex back offices are under greater pressure
to deliver ever higher standards which increases the need for
operations management excellence. The ActiveOps suite of products
is designed to meet these challenges and produce a demonstrable
return for our customers.
Governance / Diversity / ESG
ActiveOps has always been proud to be a diverse, global business
with a sound governance structures in place. Since our IPO in March
2021 we have adopted a more structured approach to managing and
developing our ESG agenda with the implementation of a formal
framework, and ongoing work to embed appropriate policies and
practices across the ESG framework into the business.
We use the Global Reporting Initiative ("GRI") framework to
monitor our impact on the environment, the satisfaction, equality
and diversity of our staff as well as a clearly-defined and strong
corporate governance foundation, based on the Quoted Companies
Alliance ("QCA") code.
Our environmental impact remains small, with data centres and
travel remaining as the two main contributors to our carbon
footprint. We aim to ensure that the Group can grow sustainably,
while minimising the environmental impacts of not just our
products, but also in how we operate as a business. We intend to
set carbon emissions reduction targets next year, once we have
greater data available to us in order to do so in a meaningful
manner.
The success of our business is founded in our people and our
culture, and we are committed to fostering an environment of
diversity and inclusion. Following the success of the annual
employee engagement survey that was conducted in FY22 with an
overall engagement score of 4.0 out of 5.0, the business conducted
a Culture and Diversity and Inclusion survey in FY23 with a
response rate of 79% and an overall engagement score of 72% across
the business with a breakdown by age, gender and ethnicity. This
has created an improved understanding across the business's
different demographics which we can use as a basis for
decision-making and helping improve the lives of our employees.
The strong corporate governance foundation we have is hugely
important and underpins everything we do from the Board down to our
most junior employees. Through the QCA code we have a
clearly-defined framework for governing the business that ensures
any activity across the Group is done to ensure the betterment of
others, whether that be customers, colleagues or charitable
partners. This year I am delighted to report on the successful
completion of our SOC 2 compliance audit, which only further
underscores our commitment to transparency and accountability.
Looking Ahead
My fellow Directors and I feel very positive about the year
ahead. After two years of solid progress following our IPO, our
focus remains on the continued delivery of our plan, and there
remains significant opportunity within our well-defined target
market. Whilst Covid-19 has ceased to be a distraction for our
customers, the increased appreciation of the need to run
data-driven operations is driving greater market interest.
We have an excellent base of customers, many of whom are
passionate advocates of the benefits that our products deliver. We
continue to add new customers with whom we are developing similarly
strong relationships.
We have an experienced sales team, a very stable and effective
product set, and new offerings that are generating increased levels
of interest. Our customer care and marketing teams are working hard
to extend our existing relationships, to add new operations
environments and drive additional product usage. We have seen
strong improvement in revenues from our existing customer base
supported by an account management approach that helps our
customers get the best from the products they have bought from
us.
While we are aware of differing pressures in the wider economy,
in our core financial services sector we see the increased need for
cost efficiencies, greater governance and productivity, all
representing opportunity for ActiveOps and the products it
provides. We believe we are well-placed to further consolidate our
position in the market and continue to deliver value for our
customers and shareholders.
I feel the Board formed at IPO has now established a very
effective working pattern between the Non-Executive Directors and
the Executives of the firm. I wish to particularly thank Hilary
Wright and Mike McLaren for their excellent leadership of the
Remuneration and Audit committees, respectively. In December 2022
we announced that Paddy Deller would be leaving his role as CFO and
in March 2023 we announced Ken Smith as his successor. We feel that
Ken's broad commercial experience, on top of his CFO skill, will be
a real benefit to the Board and the Company. I would like to
sincerely acknowledge Paddy's outstanding track record in the
financial leadership of the Group during his seven years as CFO.
His dedication and commitment have supported the Group's growth and
smooth progression through major corporate events such our IPO.
We will continue to excite and surprise our customers with the
benefits we deliver and the reliability of our software. Our
go-to-market function will continue to generate business in our
target markets. This consistency of strategy, coupled with our
strong cash generation and balance sheet, means we can approach the
future with optimism.
Sean Finnan
Non-executive Chair
CEO Statement
This has been a year of significant progress for ActiveOps, in
which we have won new customers across all regions, grown our
existing customer accounts, and launched new products which
materially expand our addressable market.
Importantly, we achieved this alongside accelerating our shift
to positive adjusted EBITDA, well ahead of the timeline initially
set at IPO.
Our range of software offerings are powering demonstrable levels
of return on investment (ROI) for our customers, helping them
create tangible efficiencies across their back-office
organisations, which in turn provides them with improved resilience
through challenging economic times. These ROI metrics combined with
the exciting roadmap of new functionality are driving revenue
expansion within our customers. We believe we are still very much
at the start of that journey.
The consistent rate of new wins we are achieving, the blue-chip
nature of our customers, and the stickiness of our software, means
we have a consistently-growing, valuable base of high-margin
recurring revenue. This provides us with the visibility to invest
and remain at the forefront of the growing workforce optimisation
market and generate increasing levels of profitability.
Strong financial performance
After another year in which we continued to win new customers
and execute our land and expand sales strategy, we achieved a
near-record SaaS sales year, with SaaS revenues growing by 13% to
GBP22.1m (FY22: GBP19.6m), supported by a 13% increase in Annual
Recurring Revenue (ARR) at March 2023 to GBP22.6m (March 2022:
GBP20.1m).
The growth of overall Group revenue by 11% to GBP25.5m (FY22:
GBP22.9m), underpinned by very low levels of churn, demonstrates
the underlying momentum of the business as it continues to deliver
its long-term growth ambitions. This notably low churn rate, even
by ActiveOps' strong track record of customer retention, can be
attributed to the excellent work being done by our customer
relationship managers. The Board is confident that the investments
we have made in this area of the business will continue to have a
positive impact on the overall performance of the Company. ARR from
our ten largest customers increased by more than 20%. Across the
whole customer base more than a quarter of our customer
relationships increased ARR by 20% or more.
T&I revenues of GBP3.4m (FY22: GBP3.4m) were particularly
strong in the second half of the year, including a record T&I
sale to one of our longstanding customers, demonstrating the
continued value this area of the business provides. This aspect of
our revenue continues to deliver strong gross margin at 63% (FY22:
58%) and continues to be part of our growth strategy as it ensures
customers achieve their desired outcomes from deploying our
technology and provides opportunities to increase the value
delivered over the lifetime of the relationship.
Continuing our year-on-year growth in cash, the business remains
well-funded with a closing balance of GBP15.4m (2022: GBP13.8m) and
no debt, providing a strong base to fund future investment
opportunities.
Evolving market opportunity
The current economic climate is creating a very positive
environment for our software and services. The practicalities of
hybrid-working have seen unprecedented levels of attention to
managing productivity, the challenges of managing workload and
capacity, and the need for data to inform the operation of complex
business processes. The current challenging economic conditions
mean organisations are seeking to achieve more with their current
or reduced scale of operations, as well as respond quickly to
unusual fluctuations in customer demand and behaviour.
Our solutions have a demonstrable track record of delivering
rapid, sustainable performance improvements for our customers.
Customers typically achieve an initial productivity improvement of
15% or higher, which for an enterprise with 20,000 staff in
back-office roles, represents creation of capacity equivalent to
2,600 full-time equivalent (FTE) staff members. Our software also
increases agility and resilience of our customers' operations.
These capabilities are crucial in the maintenance of exceptional
customer service during turbulent periods.
Unlike many of the initiatives that organisations can undertake
to increase efficiency and release capacity, deployment of
ActiveOps solutions is quick and low-risk as it does not require
modification of existing business processes or major technology
change. Adoption rates of Management Process Automation technology
continue to be relatively low in operations today, meaning many
organisations still have this rapid and safe means of efficiency
gains available to them.
Awareness of the potential efficiency gains from the
implementation of AI is growing and it is a technology we have
already been able to successfully incorporate within our product
set. Once implemented, our solutions ensure a customer's vast
wealth of operations data becomes not only visible, but structured,
ready for the application of AI tools either from within our own
solutions, or available to other AI applications, underscoring the
market leading position of our technologies.
Further to this, the current year will see the launch of our
first two Machine Learning (ML) powered capabilities, Smart
Planning and Smart Skills, made possible by the wealth of data
captured within our systems and our Knowledge Transfer Partnership
with Henley Business School. Prototypes of both have been tested
with existing customers, which confirms the ability of these
features to support further improvements in performance. The
incorporation of AI and ML technologies within our technology
demonstrates both the skill of our product team and our commitment
to innovation and how this materially benefits our customers.
Our experience during the last economic downturn was that demand
for our offering increased significantly as organisations sought
solutions which offered rapid and sustainable performance
improvements. From January 2008 through to December 2010 the number
of paying users of our software grew sixfold as we signed major new
customers in both APAC and EMEIA and landed our first North
American customers, which have now expanded to be enterprise scale
users.
While we know that our offering resonates in turbulent times, we
are also aware of the impact an economic downturn might have on the
buying processes of our customers, which will likely become more
protracted. However, based on our historical performance, the
proven track record of our offering and the growing interest we are
seeing across our products, we firmly believe our solutions will
play an integral role in helping new and existing customers deal
with the challenges posed by an economic downturn.
Software development and innovation
The development of our product offering has continued in line
with our stated product road map. The innovations we have made
across the product suite will provide customers with increasingly
sophisticated tools and cutting-edge technologies. These make
managing the growing complexity of the back-office easier, and
further differentiate us from our competitors.
As a technology-led organisation we strive, with every
improvement we make to our software, to enable our customers to do
more with less. The incremental additions made this year were
designed to create a stickier, smarter and more intelligent
platform, that exposes the value of our data to our customers, in a
more accessible and valuable way.
Reflecting the broader market interest in managing work and
capacity, we are seeing greater levels of senior manager engagement
in the roadmap across our new and existing customer base. This
heightened interest in the products we are developing is testament
to the work of our development teams, and the strong relationships
that have been built between our customers and relationship
managers.
ControliQ
As stated in our product roadmap the team has been focused on
delivering our latest enhancement, Smart Planning, which will be
made available to ControliQ customers in the second quarter of
FY24.
Smart Planning, the first of several Machine Learning (ML)
powered capabilities, eliminates the time and thought required by
team leaders to build their plans, and increases the accuracy of
the plans produced. This leads to further increases in team
performance and greater release of team leader time for value
adding activities.
Smart Planning will be quickly followed by Smart Skills, a
product that will allow for the automatic determination of
available skill levels across the back office. This will make it
simple to identify training requirements and utilise shared skills
across departments. Prototypes of both have been tested with
existing customers with positive results. A focus for the first
part of the new financial year is making these features ready for
go-live.
CaseWorkiQ
Following the successful launch of CaseworkiQ in the first half
of the year, we are delighted that 7 of our top 10 customers are
now using the product, with a total of 12 customers using or
trialling the solution to date. CaseworkiQ already contributed 4%
of 31 March 2023 ARR with a growing pipeline of future
opportunities.
This year, we also began the process of improving integration
between CaseworkiQ and ControliQ which will make it easier for
customers to manage operations which are a mixture of transactional
and case-based work. This integration will be completed early in
the current financial year and gives us the opportunity to
accelerate upgrades to the platform in the future.
WorkiQ
This year we commenced development of a cloud-based version of
WorkiQ to offer an alternative to the existing on-premise solution
which will enable more rapid roll-out, lower cost of ownership and
support future integration with other ActiveOps products. The new
version will be available to customers in the second half of FY24
and we anticipate it will encourage more ControliQ customers to
adopt WorkiQ to take advantage of the additional insight it
provides.
Growth of our customer base: land & expand
Our customer acquisition activity is focused on a tightly
defined set of banks, insurers and BPOs in our target geographies,
representing a significant Annual Recurring Revenue (ARR)
opportunity. The opportunity for ActiveOps continues to be large
due to the scale of operations in these target markets, and we
continue to see demand for our products reflected in our growing
annual revenue performance.
We made solid progress in the year, securing new logo wins and
significant expansion sales across all target regions and sectors,
in line with our land and expand growth strategy. We secured six
new logo accounts, including two major financial services
organisations with significant opportunity for future growth. We
have also achieved significant new product upsells in the year. A
top 10 existing banking customer and ControliQ user since 2019
added WorkiQ in FY22 and CaseworkiQ this year. This is a primary
example of the significant up-sell opportunity offered by our
expanded product set.
We were delighted to secure a 3-year combined ControliQ and
CaseworkiQ contract win with a major investment management firm,
which will lead to both products being rolled out across the
customer's operations in the UK, India and Germany, to increase
efficiencies and improve employee and customer experience, by
growing the capacity of skilled team members on a global scale.
We saw strong profitable performance across all regions, with
double digit growth in SaaS revenues in each.
Sales and Marketing
Our marketing function has developed significantly since Bhavesh
Vaghela's appointment as CMO in the first half of the year. The
marketing team has been working hard on various projects to raise
brand awareness and generate sales leads. Our annual customer
conferences held in London and Melbourne were a particular success,
attracting record audiences and fantastic engagement between
customers, partners and the ActiveOps team. The positive impact of
the conferences on deal progression was felt in the second half of
the year.
This year, our partnership with Microsoft took another step
forwards as ActiveOps was named as one of its top-10 independent
software vendors (ISVs) in the UK. This close working relationship
has accelerated numerous sales discussions and is creating a
growing pipeline of new opportunities.
This year saw the launch of OpsTracker, a quarterly report which
utilises the benchmarking data drawn from our anonymised customer
data to highlight trends in the performance of operations around
the world. This builds on the successful OpsIndex capability which
allows our customers to compare their performance against their
industry peers. OpsTracker highlights the data and metrics which
organisations who do not use ActiveOps solutions are unable to
access and the consequent potential to improve business outcomes
through optimising operations performance. The OpsTracker reports
provide powerful marketing content which we are distributing
globally through digital marketing campaigns, helping to grow our
sales pipeline, while reinforcing our thought leadership position
in our industry.
Focus for the year ahead
Looking to the year ahead, the business has a well-defined and
resourced set of priorities to maintain the excellent progress of
last year.
We will be continuing our improvement in profitability by
maintaining strong control over operating costs and allowing the
gross margin on new sales to flow to the bottom line.
We will be focusing on expanding the products used by our
existing customers and releasing a steady stream of enhancements,
further improving ROI for our customers and the range of issues our
software resolves, to increase total revenue and profit for the
Group.
We will be capitalising on our investment in marketing to drive
new customer acquisition and secure expansion opportunities for the
coming years.
Confident Outlook
Trading in the first few months of the year has been in line
with the Board's expectations, driven by expansions at existing
accounts and the addition of two new customers with significant
expansion potential.
Our marketing efforts and the significant interest in the new
software capabilities we are releasing this year continue to
support the sales pipeline, which remains healthy. This, combined
with our proven ability to efficiently invest in the business and
grow bottom line profits, provides the Board with confidence in the
year ahead.
In the longer-term, the enhancements we are making in our
offering in the areas of Artificial Intelligence (AI) and Machine
Learning (ML) are increasing the value of our solutions to our
customers.
With an extensive customer base, global footprint and an ever
expanding offering of cutting edge products, we are excited by the
long-term potential for ActiveOps and look to the future with
confidence.
Richard Jeffery
Group Chief Executive Officer
Chief Financial Officer's Report
I am pleased to report on a robust year for the group with 11%
organic revenue growth to GBP25.5m. With incremental investment
lower than in the prior year, the Group is beginning to benefit
from the operational leverage in the business model, delivering a
positive Adjusted EBITDA for the year.
Annual Recurring Revenue
Annual Recurring Revenue of GBP22.6m at 31 March 2023 has grown
13% versus the prior year (31 March 2022 GBP20.1m) as a result of
sales to existing customers, and the addition of 6 new customers
generating ARR of GBP0.6m at the year end, with the opportunity to
contribute further in FY24. NRR of existing customers improved to
110% (FY22: 102%) with customer logo churn increasing slightly to
5.2% (FY22: 3.8%).
Revenue
Total revenue at GBP25.5m was 11% ahead of prior year (8% ahead
on constant currency), with software and subscription revenues
increasing 13% to GBP22.1m (FY22: GBP19.6m) arising from both new
and existing customers. Revenue growth was strong in all regions
with EMEIA growing Total Revenues by 12% to GBP14.0m (FY22:
GBP12.5m), North America by 11% to GBP6.0m (FY22: GBP5.4m) and Asia
Pacific by 9% to GBP5.5m (FY22: GBP5.0m).
Training and Implementation (T&I) revenues have remained
flat at GBP3.4m (FY22: GBP3.4m) with a significant refresh
programme at a major customer demonstrating ongoing customer
commitment to keeping their teams' skills refreshed. T&I
revenues continue to vary by product and region depending on the
mix of customer implementation requirements as well as the timing
of implementations dictated by customer plans. T&I revenues in
the second half of the year performed strongly following a slow
start to the year.
Margins and Operating Profit
Gross margins at 82% (FY22: 81%) have improved marginally
primarily due to a higher mix of SaaS revenues versus prior year.
SaaS revenue margins have been maintained at 85% (FY22: 85%).
Margins for T&I revenues have improved to 63% (FY22: 58%), due
to strong T&I sales in high margin jurisdictions and for high
margin products.
Operating expenses (excluding share-based payments,
depreciation, amortisation and exceptional items) increased to
GBP19.9m (FY22: GBP19.0m) following our increased investment in
people in the previous year adding a full year of cost. Whilst
investment will continue to support growth, the rate of required
investment has slowed versus prior years and the business has
started to see the benefits of the operational leverage inherent in
the business model. The North America region has seen a reduction
in operating costs following a move to a more focussed, Enterprise
customer strategy. The Group has also benefitted from positive
movements on foreign exchange balances held in the company's bank
accounts and other balance sheet items which has benefitted
operating costs by GBP0.7m (FY22: GBP0.3m) in the year.
Following the expansion of the Group's R&D capabilities in
prior years, the team has focussed on enhancing ControliQ and
CaseworkiQ, adding new features which exploit AI and Machine
Learning technology. The Group capitalised internal labour of
GBP0.9m (FY22: GBP0.4m).
Continued investment in account management and further
investment in Marketing, with the addition of a Chief Marketing
Officer to the management team is expected to develop a value-based
customer proposition. This, coupled with a focussed project to
revise the tiering of current and future features within the
licensing structure, is expected to deliver increased ARR in the
current financial year and beyond.
Travel costs broadly returned to pre-pandemic levels with wage
inflation managed to circa 5% in an unusually high inflationary
environment. ActiveOps is committed to ensuring that it supports
employees appropriately through the current cost of living crisis
and will take action where necessary to support individuals.
Adjusted EBITDA moved to a profitable position of GBP0.7m (FY22:
loss GBP0.3m) excluding the costs associated with share-based
payments at GBP0.0m (FY22: GBP0.6m), translation reserve loss of
(GBP0.2m) (FY22: gain GBP0.2) and M&A activities which were
zero in the year (FY22: GBP0.5m).
Year ended 31 March Year ended 31 March
2023 2022
------------------------------------- ----------------------
SaaS T&I Total SaaS T&I Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------- -------- -------- -------- -------- -------- -----------
Revenue 22,058 3,401 25,459 19,564 3,353 22,917
Cost of
Sales (3,411) (1,268) (4,679) (2,974) (1,423) (4,397)
-------------- -------- -------- -------- -------- -------- -----------
Gross Margin 18,647 2,133 20,780 16,590 1,930 18,520
-------------- -------- -------- -------- -------- -------- -----------
Product and Technology Expenditure
Total expenditure on product management, research, development
and support in the year increased to GBP5.4m (FY22: GBP4.6m)
excluding capitalisation of labour, following investment in all
areas in the prior year, with a full year of costs now recognised.
This investment has enabled the group to deliver several new
features to the product set to provide additional benefit to
customers. R&D costs of GBP0.9m (FY22: GBP0.4m) were
capitalised during the year relating to new features incorporated
into ControliQ and CaseworkiQ.
Exceptional Items & Long-Term Incentive Plan (LTIP)
charges
During the year the income statement charge for the LTIP
incentives issued at IPO and in July 2022 was GBP0.03m (FY22:
GBP0.6m). Costs associated with the IPO grant of GBP0.4m were
reversed given that financial and share price targets associated
with the grant are unlikely to be met. There was also a reversal of
the charge related to options that were granted to individuals who
have subsequently left the company of GBP0.1m. There were no
exceptional charges in the year (FY22: GBP0.5m relating to
acquisition that did not complete).
Foreign Exchange
The Group has 48% (2022: 49%) of revenues invoiced in currencies
other than GBP, with the Group's cost base predominantly located in
the same base jurisdictions as revenues, providing a natural hedge
to currency exchange risk. Movements on exchange rates throughout
the year represent a positive movement of GBP0.8m relating to
revenue, an adverse impact of GBP0.7m relating to operating costs
and a positive impact of GBP0.7m relating to the translation of
foreign currencies held in bank accounts.
Depreciation and Amortisation
Depreciation and amortisation of GBP1.0m (FY22: GBP1.0m)
principally comprised intangible amortisation following the
acquisition of the OpenConnect entity in 2019 and the Australian
entities in 2017.
Taxation
The Group had a tax charge in the year of GBP0.3m (FY22:
GBP0.1m). The Group operates a transfer pricing policy to ensure
that profits are correctly recorded in each of the jurisdictions in
which it operates. ActiveOps has brought forward tax losses in the
UK and Irish legal entities that currently reduce the overall tax
rate of the business.
Statutory Results
The Group reported a loss of GBP0.7 m (FY22: loss GBP2.6m) for
the year.
Earnings per Share
Following the Group's move to adjusted EBITDA profitability, the
loss attributable to equity shareholders basic earnings per share
for continuing operations was a loss of 0.70p (FY22: loss
(3.83p))
Dividend
The Board has determined that no dividend will be paid in the
year. The Group is primarily seeking to achieve capital growth for
shareholders at this time. It is the Board's intention during the
current phase of the Group's development to retain distributable
profits from the business to the extent they are generated.
Balance Sheet
The Group has a strong balance sheet position with no debt and
net assets at 31 March 2023 of GBP7.9m (FY22: GBP8.5m) including
cash of GBP15.4m at the end of the year (March 2022 :
GBP13.8m).
Goodwill and intangible assets
The carrying value of the Group's goodwill of GBP1.2m (FY22:
GBP1.2m) was reviewed by the Board with no indications of
impairment. The intangible assets at GBP4.5m (FY22: GBP4.3m)
arising from business combinations for customer relationships,
purchased software and capitalised development costs are amortised
over an appropriate period.
Cash flow
The Group continues to generate positive working capital with
the ratio of operating cashflow to EBITDA at 505% for the year
(FY22: 673%).
The Group continued to bill most customers annually in advance
for software revenues with deferred income increasing to GBP13.5m
(2022: GBP8.3m). The seasonality of existing contract customer
renewals in the second half of the year delivered a strong increase
in cash over that period.
Ken Smith
Chief Financial Officer
Consolidated statement of profit and loss and other
comprehensive income for the year ended 31 March 2023
2023 2022
Year ended 31 March Notes GBP000 GBP000
====================================================== ======= ========= =========
Revenue 3 25,459 22,917
Cost of sales 4 (4,679) (4,397)
Gross profit 20,780 18,520
Administrative expense excluding share option
charges, depreciation, amortisation and exceptional
items (19,935) (18,959)
Administrative expenses - share option charges
only (27) (563)
Administrative expenses - depreciation and
amortisation only 7-9 (1,035) (1,009)
Administrative expenses - exceptional items
only 5 - (539)
Operating loss (217) (2,550)
Finance income 49 3
Financing cost (62) (65)
Loss before taxation (230) (2,612)
Taxation 6 (267) (119)
Loss for the year (497) (2,731)
Other comprehensive income
Items that may be subsequently reclassified
to profit or loss:
Exchange differences on translating foreign
operations (181) 161
Total comprehensive loss for the year attributable
to the owners of the parent company (678) (2,570)
====================================================== ======= ========= =========
Basic and diluted loss per share
Continuing operations (0.70p) (3.83p)
Total (0.70p) (3.83p)
====================================================== ======= ========= =========
ActiveOps plc
Consolidated statement of financial position
2023 2022
At 31 March Notes GBP000 GBP000
=============================== ====== ======= =======
Non-current assets
Intangible assets 7 5,735 5,461
Property, plant and equipment 8 162 199
Right of use assets 9 419 564
Deferred tax assets 217 270
Total non-current assets 6,533 6,494
=============================== ====== ======= =======
Current assets
Trade and other receivables 10 6,373 3,754
Corporation tax recoverable - -
Cash and cash equivalents 15,377 13,753
Total current assets 21,750 17,507
=============================== ====== ======= =======
Total assets 28,283 24,001
=============================== ====== ======= =======
Equity
Share capital 71 71
Share premium account 6,444 6,444
Share option reserve 593 566
Foreign exchange reserve (224) (43)
Retained earnings 983 1,480
Total equity 7,867 8,518
=============================== ====== ======= =======
Non-Current liabilities
Lease liabilities 9 364 501
Provisions 102 97
Deferred tax liabilities 889 1,049
Total non-current liabilities 1,355 1,647
=============================== ====== ======= =======
Current liabilities
Trade and other payables 11 18,860 13,697
Lease liabilities 9 100 139
Corporation tax payable 101 -
Total current liabilities 19,061 13,836
=============================== ====== ======= =======
Total equity and liabilities 28,283 24,001
=============================== ====== ======= =======
ActiveOps plc
Consolidated statement of cash flows
2023 2022
Year ended 31 March Notes GBP000 GBP000
=============================================== ======= ======== ========
Loss after tax (497) (2,731)
Taxation 267 119
Finance income (49) (3)
Finance expense 62 65
Operating loss (217) (2,550)
Adjustments for:
Depreciation of property, plant and equipment 8 127 144
Depreciation of right of use asset 9 142 165
Amortisation of intangible assets 7 766 700
Share option charge 27 563
Change in trade and other receivables 10 (2,619) 2,082
Change in trade and other payables and
provisions 11 5,168 (3,111)
Cash from / (used in) operations 3,394 (2,007)
Interest paid (62) (65)
Taxation paid (284) (184)
Net cash generated / (outflow) from
operating activities 3,048 (2,256)
=============================================== ======= ======== ========
Investing activities
Purchase of property, plant and equipment 8 (90) (96)
Purchase of software 7 (891) (364)
Interest received 49 3
Net cash used in investing activities (932) (457)
=============================================== ======= ======== ========
Financing activities
Proceeds from issue of shares - (14)
Repayment of lease liabilities (173) (184)
Net cash used in financing activities (173) (198)
=============================================== ======= ======== ========
Net change in cash and cash equivalents 1,943 (2,911)
Cash and cash equivalents at beginning
of the year 13,753 16,617
Effect of foreign exchange on cash and
cash equivalents (319) 47
Cash and cash equivalents at end of
the year 15,377 13,753
=============================================== ======= ======== ========
ActiveOps plc
Consolidated statement of changes in equity
Share Foreign
Share Share option exchange Retained
capital premium reserve reserve earnings Total
Year ended 31 March GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
================================= ========== ========== ========== =========== =========== ========
At 1 April 2021 71 6,430 4 ( 204) 4,210 10,511
================================= ========== ========== ========== =========== =========== ========
Loss for the year - - - - (2,731) (2,731)
Exchange differences on
translating foreign operations - - - 161 - 161
Total comprehensive loss
for the year - - - 161 (2,731) (2,570)
Transactions with owners,
recorded directly in equity
Reserve transfer on exercising
of share options - - (1) - 1 -
Share based payment charge
(note 21) - - 563 - - 563
Issue of shares - 14 - - - 14
Total transactions with
owners - 14 562 - 1 577
================================= ========== ========== ========== =========== =========== ========
At 31 March 2022 71 6 ,444 566 ( 43) 1,480 8,518
================================= ========== ========== ========== =========== =========== ========
Share Foreign
Share Share option exchange Retained
capital premium reserve reserve earnings Total
Year ended 31 March GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
================================= ========== ========== ========== =========== =========== ========
At 1 April 2022 71 6,444 566 (43) 1,480 8,518
================================= ========== ========== ========== =========== =========== ========
Loss for the year - - - - (497) (497)
Exchange differences on
translating foreign operations - - - (181) - (181)
Total comprehensive profit
for the year - - - (181) (497) (678)
Transactions with owners,
recorded directly in equity
Reserve transfer on exercising - - - - - -
of share options
Share based payment charge
(note 21) - - 27 - - 27
Issue of shares - - - - - -
Total transactions with
owners - - 27 - - 27
================================= ========== ========== ========== =========== =========== ========
At 31 March 2023 71 6,444 593 (224) 983 7,867
================================= ========== ========== ========== =========== =========== ========
Notes forming part of the financial statements
for the year ended 31 March 2023
1. General information
ActiveOps plc (the 'Company') is a public company limited by
shares incorporated in England and Wales. The registered office and
principal place of business is One Valpy, 20 Valpy Street, Reading,
Berkshire, RG1 1AR. On the 17 March 2021 the company became a
public limited company, having formerly been known as ActiveOps
Ltd.
The Company, together with its subsidiary undertakings (the
'Group') is principally engaged in the provision of hosted
operations management Software as a Service ('SaaS') solutions to
industry leading companies around the world.
The preliminary financial information presented in this report
is unaudited and has been prepared in accordance with the
recognition and measurement principles of International Accounting
Standards in conformity with the requirements of the Companies Act
2006 set out in the Group accounts for the years ended 31 March
2022 and 31 March 2023, and does not contain all the information to
be disclosed in financial statements prepared in accordance with
IFRS.
The figures for the year ended and as at 31 March 2023 are
unaudited. The figures relating to 31 March 2022 have been
extracted from the statutory accounts for that year. The statutory
accounts for the year ended 31 March 2023 have yet to be delivered
to the Registrar of Companies and have been prepared in accordance
with UK-adopted International Accounting Standards. The preliminary
financial information does not constitute statutory accounts within
the meaning of Section 434 of the Companies Act 2006, and does not
contain all the information required to be disclosed in a full set
of IFRS financial statements.
Statutory accounts for the year ended 31 March 2023 will be
delivered to the Registrar of Companies and sent to Shareholders in
due course. Statutory accounts for the year ended 31 March 2022
have been filed with the Registrar of Companies. The auditor's
report on those accounts was unqualified and did not include
reference to any matters to which the auditor drew attention by way
of emphasis without qualifying the report and did not contain a
statement under section 498(2) and (3) of the Companies Act
2006
2. Accounting policies
a) Basis of preparation
The principal accounting policies adopted in the preparation of
the consolidated financial statements are set out below. The
policies have been consistently applied to all the years presented,
unless otherwise stated.
The financial statements of the Group have been prepared on a
going concern basis and in accordance with UK-adopted International
Accounting Standards.
The preparation of financial statements in compliance with IFRS
requires the use of certain critical accounting estimates. It also
requires Group management to exercise judgment in applying the
Group's accounting policies.
b) Going Concern
The Directors have a reasonable expectation that there are no
material uncertainties that cast significant doubt about the
Group's ability to continue in operation and meet its liabilities
as they fall due for the foreseeable future, being a period of at
least 12 months from the date of approval of the financial
statements.
Whilst there can be no certainty due to the conditions across
the world at present, the Directors have reviewed cash flow
forecasts for the business covering a period of at least 12 months
from the date of approval of the financial statements, and together
with the projected revenue and available cash reserves, they are
confident that sufficient funding is available to support ongoing
trading activity and investment plans for the business. The
financial statements have therefore been prepared on a going
concern basis.
c) New accounting standards and interpretations not yet mandatory or early adopted
Accounting Standards that have recently been issued or amended
but are not yet mandatory, have not been early adopted by the Group
for the annual reporting period ended 31 March 2023. The assessment
of the impact of these new or amended accounting standards and
interpretations is ongoing.
d) Revenue
The Group's revenues consist primarily of SaaS solutions and
Training and Implementation revenues ('T&I').
SaaS solutions are sold as both a cloud IT environment or as an
on-premise solution which can be hosted within a customer's server.
Alongside the software, the Group provides ongoing management
services contracts which involves ongoing support of the software.
This support is typically achieved by accessing the software to
ensure it is operating efficiently and to make changes as requested
by the customer. The licence and associated management services
contract are considered to be a single performance obligation
because although the customer obtains possession of the software,
they are unable to benefit from the software solution without the
associated management services.
T&I relates to implementation of the SaaS solution and
training in the Group's methodology on how to use the solution to
the best effect. This is typically delivered at the start of a new
customer relationship, or when a customer expands the use of the
Group's software into other parts of their business. Ad-hoc
training is also provided to existing customers. T&I is a
single performance obligation.
Both SaaS performance obligations are provided under fixed-price
contracts, which is mainly contracted as a fixed price for a period
of time for up to a contractual number of users, but also can be
achieved via a price per user, where the number of actual users is
determined in arrears. SaaS contracts are typically for a period of
one year. Where the number of users is determined in arrears, a
best estimate of the expected revenue is accrued each month based
upon recent usage.
SaaS solutions, both hosted and on-premise, are recognised on a
straight-line basis over the length of the contract during which
the customer has daily access to these services.
T&I services are recognised over time based upon the
delivery of the service. Variable and contingent consideration
exists in T&I revenues for some customers typically dependent
on the customer achieving a level of efficiency due to the purchase
of the Group's software and methods. Management agrees with the
customer the expected amount of productivity gain and the
associated contingent revenue with the customer at the outset of
the contract, based upon an initial health check of the customers
operations. Management considers the likelihood of the efficiency
being achieved given what is discovered in the initial health check
and past performance of the Group's products with other customers,
and if the gain is considered to be probable the variable revenue
is recognised alongside the non-variable T&I revenue. If the
gain is not initially thought to be probable, then the revenue is
only recognised once the efficiency improvements demonstrate that
the targets are likely to be achieved. At present this isn't a
significant judgement as it applies to a relatively small amount of
revenues and the efficiency targets have, historically, been
achieved.
Revenue has been allocated between performance obligations using
stand-alone selling prices. Most sales are only for one performance
obligation, as customers who remain with the Group over many years
do not usually require additional T&I. Equally T&I is sold
at daily rates that are comparable to third party training
providers who run management courses or similar for organisations
that are comparable to the broad customer base of the Group. Any
non-trivial variation from the total cost of a sale of both
performance obligations when compared to standalone prices and
external providers prices are applied on a pro rata basis to the
agreed sales price with the customer to determine the split between
the two performance obligations.
The IFRS 15 practical expedient that an entity need not adjust
the promised amount of consideration for the effects of a
significant financing component if the entity expects, at contract
inception, that the period between when the entity transfers a
promised good or service to a customer and when the customer pays
for that good or service will be one year or less has been applied.
That an entity may recognise the incremental costs of obtaining a
contract as an expense when incurred if the amortisation period of
the asset that the entity otherwise would have recognised is one
year or less has also been applied.
No financing cost has been considered to be part of the revenue
due to the duration of the performance obligations lasting for one
year or less. Warranty fixes are provided as required within the
agreed services of the SaaS solutions performance obligations.
These are assurance-type warranties (i.e. a product guarantee) and
so are not separate performance obligations.
In the case of fixed-price contracts, the customer pays the
fixed amount based on a payment schedule. If the services rendered
by the Group exceed the payment, a contract asset is recognised. If
the payments exceed the services rendered, a contract liability is
recognised. Contract assets and liabilities are recognised within
'prepayments and accrued income' and 'accruals and deferred income'
respectively.
e) Basis of consolidation
Subsidiaries are entities controlled by the Group. The Group
controls a group when it is exposed to, or has rights to, variable
returns from its involvement with the subsidiary and has the
ability to affect those returns through its power over the
subsidiary. In assessing control, the Group takes into
consideration potential voting rights. The acquisition date is the
date on which control is transferred to the acquirer. The financial
statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the
date that control ceases.
Intra-Group balances and transactions, and any unrealised income
and expenses arising from intra-Group transactions, are eliminated.
Unrealised gains arising from transactions with equity-accounted
investees are eliminated against the investment to the extent of
the Group's interest in the investee. Unrealised losses are
eliminated in the same way as unrealised gains, but only to the
extent that there is no evidence of impairment.
f) Foreign currency
Transactions in foreign currencies are translated to the
respective functional currencies of Group entities at the foreign
exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the
balance sheet date are retranslated to the functional currency at
the foreign exchange rate ruling at that date. Foreign exchange
differences arising on translation are recognised in the Statement
of Comprehensive Income. Non-monetary assets and liabilities that
are measured in terms of historical cost in a foreign currency are
translated using the exchange rate at the date of the transaction.
Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are retranslated to the
functional currency at foreign exchange rates ruling at the dates
the fair value was determined.
The assets and liabilities of foreign operations, including
goodwill and fair value adjustments arising on consolidation, are
translated to the Group's presentational currency, sterling, at
foreign exchange rates ruling at the balance sheet date. The
revenues and expenses of foreign operations are translated at an
average rate for the period where this rate approximates to the
foreign exchange rates ruling at the dates of the transactions.
Exchange differences arising from this translation of foreign
operations are reported as an item of other comprehensive income
and accumulated in the translation reserve or non-controlling
interest, as the case may be. When a foreign operation is disposed
of, such that control, joint control or significant influence (as
the case may be) is lost, the entire accumulated amount in the
translation reserve, net of amounts previously attributed to
non-controlling interests, is recycled to the Statement of
Comprehensive Income as part of the gain or loss on disposal.
g) Classification of instruments issued by the Group
Instruments issued by the Group are treated as equity (i.e.,
forming part of shareholders' funds) only to the extent that they
meet the following two conditions:
-- They include no contractual obligations upon the Group to
deliver cash or other financial assets or to exchange financial
assets or financial liabilities with another party under conditions
that are potentially unfavourable to the Group; and
-- Where the instrument will or may be settled in the Company's
own equity instruments, it is either a non-derivative that includes
no obligation to deliver a variable number of the Company's own
equity instruments or is a derivative that will be settled by the
Company exchanging a fixed amount of cash or other financial assets
for a fixed number of its own equity instruments.
To the extent that this definition is not met, the items are
classified as a financial liability.
Finance payments associated with financial liabilities are dealt
with as part of finance expenses. Finance payments associated with
financial instruments that are classified in equity are dividends
and are recorded directly in equity.
Where a financial instrument that contains both equity and
financial liability components exists these components are
separated and accounted for individually under the above
policy.
h) Financial instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when
the Group becomes a party to the contractual provisions of the
financial instrument.
Financial assets are derecognised when the contractual rights to
the cash flows from the financial asset expire, or when the
financial asset and substantially all the risks and rewards are
transferred. A financial liability is derecognised when it is
extinguished, discharged, cancelled or expires.
A. Financial Assets
Classification and initial measurement of financial assets:
Financial assets, other than those designated and effective as
hedging instruments, are classified into the following
categories:
-- Amortised cost
-- Fair value through profit or loss ('FVTPL')
-- Fair value through other comprehensive income ('FVOCI').
All income and expenses relating to financial assets that are
recognised in profit or loss are presented within finance costs,
finance income or other financial items, except for impairment of
trade receivables which is presented within other expenses.
Subsequent measurement of financial assets
Financial assets are measured at amortised cost if the assets
meet the following conditions (and are not designated as
FVTPL):
-- They are held within a business model whose objective is to
hold the financial assets and collect its contractual cash
flows.
-- The contractual terms of the financial assets give rise to
cash flows that are solely payments of principal and interest on
the principal amount outstanding.
After initial recognition, these are measured at amortised cost
using the effective interest method. Discounting is omitted where
the effect of discounting is immaterial. The Group's cash and cash
equivalents, trade and most other receivables fall into this
category of financial instruments.
Impairment of financial assets
IFRS 9's impairment requirements use forward-looking information
to recognise expected credit losses - the 'expected credit loss
(ECL) model'.
The Group considers a broader range of information when
assessing credit risk and measuring expected credit losses,
including past events, current conditions, and reasonable and
supportable forecasts that affect the expected collectability of
the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made
between:
-- financial instruments that have not deteriorated
significantly in credit quality since initial recognition or that
have low credit risk ('Stage 1'); and
-- financial instruments that have deteriorated significantly in
credit quality since initial recognition and whose credit risk is
not low ('Stage 2').
-- 'Stage 3' would cover financial assets that have objective
evidence of impairment at the reporting date.
'12-month expected credit losses' are recognised for the first
category while 'lifetime expected credit losses' are recognised for
the second category.
Measurement of the expected credit losses is determined by a
probability-weighted estimate of credit losses over the expected
life of the financial instrument.
Trade and other receivables
The Group makes use of a simplified approach in accounting for
trade and other receivables and records the loss allowance as
lifetime expected credit losses. These are the expected shortfalls
in contractual cash flows, considering the potential for default at
any point during the life of the financial instrument. In
calculating, the Group uses its historical experience, external
indicators and forward-looking information to calculate the
expected credit losses.
The Group does not have a history of material credit losses on
its trade receivables and no change to this is expected when
considering forward looking information.
B. Financial Liabilities
Classification and measurement of financial liabilities
The Group's financial liabilities include trade payables and
other payables.
Financial liabilities are initially measured at fair value, and,
where applicable, adjusted for transaction costs unless the Group
designated a financial liability at fair value through profit or
loss.
Subsequently, financial liabilities are measured at amortised
cost using the effective interest method.
All interest-related charges and, if applicable, changes in an
instrument's fair value that are reported in profit or loss are
included within finance costs or finance income.
i) Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment losses.
Where parts of an item of property, plant and equipment have
different useful lives, they are accounted for as separate items of
property, plant and equipment.
Depreciation is charged to administrative expenses in the
Statement of Comprehensive Income. The principal annual rates used
for this purpose are:
-- Leasehold improvements - straight line over 3 years.
-- Plant and machinery - straight line over 3 years.
-- Furniture, fittings and equipment - straight line over 5 years.
-- Right of use assets - straight line over the earlier of
useful life of the right of use asset or the lease term.
Depreciation methods, useful lives and residual values are
reviewed at each balance sheet date.
j) Leases
The Group has applied IFRS 16 throughout the financial
statements. At inception of a contract, the Group assesses whether
a contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration.
The Group recognises a Right of Use (ROU) asset and a lease
liability at the lease commencement date. The ROU asset is
initially measured at cost, which comprises the initial amount of
the lease liability adjusted for any lease payments made at or
before the commencement date, plus any initial direct costs
incurred and an estimate of costs to restore the underlying asset,
less any lease incentives received.
The ROU asset is subsequently depreciated using the
straight-line method from the commencement date to the earlier of
the end of the useful life of the ROU asset or the end of the lease
term. In addition, the ROU asset is periodically reduced by
impairment losses, if any, and adjusted for certain remeasurements
of the lease liabilities. Depreciation is charged to administrative
expenses in the Statement of Comprehensive Income.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Group's incremental
borrowing rate. The Group uses its incremental borrowing rate as
the discount rate.
Lease payments included in the measurement of the lease
liability comprise:
-- Fixed payments, including in-substance fixed payments.
-- Variable lease payments that depend on an index or a rate,
initially measured using the index or rate as at the commencement
date.
-- Amounts expected to be payable under a residual value guarantee; and
-- The exercise price under a purchase option that the Group is
reasonably certain to exercise, lease payments in an optional
renewal period if the Group is reasonably certain to exercise an
extension option, and penalties for early termination of a lease
unless the Group is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is a change
in future lease payments arising from a change in an index or rate,
if there is a change in the Group's estimate of the amount expected
to be payable under a residual value guarantee or if the Group
changes its assessment of whether it will exercise a purchase,
extension or termination option.
When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount of the ROU
asset or is recorded in profit or loss if the carrying value of the
ROU asset has been reduced to zero.
The Group presents ROU assets and lease liabilities separately
from property, plant and equipment.
Short term leases and low value assets
The Group has elected not to recognise ROU assets and lease
liabilities for short-term leases of machinery that have a lease
term of 12 months or less and leases of low-value assets, including
IT equipment. The Group recognises the lease payments associated
with these leases as an expense on a straight-line basis over the
lease term. There are several property leases in the Group on a
one-month rolling contract. These are treated as short-life assets
and are recognised on a straight-line basis.
k) Intangible assets and goodwill
Goodwill
Goodwill is stated at cost less any accumulated impairment
losses. Goodwill is allocated to cash-generating units ('CGU') and
is not amortised but is tested annually for impairment.
Other intangible assets
Expenditure on internally generated goodwill and brands is
recognised in the Statement of Comprehensive Income as an expense
as incurred.
Other intangible assets that are acquired by the group are
stated at cost less accumulated amortisation and accumulated
impairment losses.
Amortisation is charged to the administrative expenses in the
Statement of Comprehensive Income on a straight-line basis over the
estimated useful lives of intangible assets unless such lives are
indefinite. Intangible assets with an indefinite useful life and
goodwill are systematically tested for impairment at each balance
sheet date. The Group has no assets with indefinite lives, other
than Goodwill, throughout the reporting periods.
Other intangible assets are amortised from the date they are
available for use. The estimated useful lives are as follows:
-- Customer relationships - 10 years straight line.
-- Purchased software - 3 years straight line.
-- Intellectual property rights acquired on acquisition - 3 years straight line.
-- Development costs - 5 years straight line.
The estimated useful lives are as estimated based upon
management's best estimate of the expected life of the asset.
Useful lives are reconsidered if circumstances relating to the
asset change or if there is an indication that the initial estimate
requires revision.
l) Impairment
Financial assets (including receivables)
A financial asset not carried at fair value through profit or
loss is assessed at each reporting date to determine whether there
is objective evidence that it is impaired. A financial asset is
impaired if objective evidence indicates that a loss event has
occurred after the initial recognition of the asset, and that the
loss event had a negative effect on the estimated future cash flows
of that asset that can be estimated reliably.
An impairment loss in respect of a financial asset measured at
amortised cost is calculated as the difference between its carrying
amount and the present value of the estimated future cash flows
discounted at the asset's original effective interest rate.
Interest on the impaired asset continues to be recognised through
the unwinding of the discount. When a subsequent event causes the
amount of impairment loss to decrease, the decrease in impairment
loss is reversed through the Statement of Comprehensive Income.
Non-financial assets
The carrying amounts of the Group's non-financial assets are
reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, then the
asset's recoverable amount is estimated. For goodwill, and
intangible assets that have indefinite useful lives or that are not
yet available for use, the recoverable amount is estimated each
year at the same time.
The recoverable amount of an asset is the greater of its value
in use and its fair value less costs to sell. In assessing value in
use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks
specific to the asset. For the purpose of impairment testing,
assets that cannot be tested individually are grouped together into
the smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows of
other assets or groups of assets.
An impairment loss is recognised if the carrying amount of an
asset exceeds its estimated recoverable amount. Impairment losses
are recognised in the Statement of Comprehensive Income. Impairment
losses recognised in respect of CGUs are allocated first to reduce
the carrying amount of any goodwill allocated to the units, and
then to reduce the carrying amounts of the other assets in the unit
(group of units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In
respect of other assets, impairment losses recognised in prior
periods are assessed at each reporting date for any indications
that the loss has decreased or no longer exists. An impairment loss
is reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been
recognised.
m) Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan
under which the company pays fixed contributions into a separate
entity and will have no legal or constructive obligation to pay
further amounts. Obligations for contributions to defined
contribution pension plans are recognised as an expense in the
Statement of Comprehensive Income in the periods during which
services are rendered by employees.
Short term employee benefits
The costs of short-term employee benefits are recognised as a
liability and an expense. The cost of any unused holiday
entitlement is recognised in the period in which the employee's
services are rendered.
Termination benefits
Termination benefits are recognised immediately as an expense
when the Group is demonstrably committed to terminate the
employment of an employee or to provide termination benefits.
n) Share based payments
Employees of the Group receive remuneration in the form of
share-based payment transactions, whereby employees render services
as consideration for equity instruments, known as equity settled
transactions.
The Group records compensation expense for all share-based
compensation awards based on the grant date fair value, as adjusted
for estimated forfeitures over the requisite service period of the
award. The fair value determined on the grant date is expensed on a
straight-line basis over the term of the grant. A corresponding
adjustment is made to equity.
Modifications and cancellations
When the terms and conditions of equity settled share-based
payments at the time they were granted are subsequently modified,
the fair value of the share-based payment under the original terms
and conditions and under the modified terms is determined. Any
excess of the modified fair value is recognised over the remaining
vesting period in addition to the original grant date fair value.
The share-based payment is not adjusted if the modified fair value
is less than the original grant date fair value.
Cancellations or settlements, including those resulting from
employee redundancies, are treated as an acceleration of vesting
and the amount that would have been recognised over the remaining
vesting period is recognised immediately.
Valuation and Amortisation Method
The Company estimates the fair value of stock options granted
using the Black-Scholes option pricing formula or a Monte Carlo
simulation.
Provision is made for National Insurance Contributions (NICs) on
outstanding share options that are expected to be settled based
upon the latest enacted NIC rates.
o) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and deposits
held at call with banks.
p) Provisions
A provision is recognised in the balance sheet when the Group
has a present legal or constructive obligation as a result of a
past event, which can be reliably measured and it is probable that
an outflow of economic benefits will be required to settle the
obligation. Provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects risks specific to
the liability.
q) Net financing costs
Financing expenses comprise interest payable, finance charges on
finance leases recognised in the Statement of Comprehensive Income
using the effective interest method. Financing income comprise bank
interest receivable.
Interest income and interest payable is recognised in the
Statement of Comprehensive Income as it accrues, using the
effective interest method.
r) Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker
('CODM'). The CODM, who is responsible for allocating resources and
assessing performance of the operating segments, has been
identified as the Board of Directors of ActiveOps plc.
The Group will provide information to the CODM on the basis of
products and services, being SaaS and T&I services. The CODM
receives information for these two segments down to gross margin
level.
s) Taxation
Tax on the profit or loss for the period comprises current and
deferred tax. Tax is recognised in the Statement of Comprehensive
Income except to the extent that it relates to items recognised
directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable or receivable on the
taxable income or loss for the period, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment
to tax payable in respect of previous periods.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: the initial recognition
of goodwill; the initial recognition of assets or liabilities that
affect neither accounting nor taxable profit other than in a
business combination, and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in
the foreseeable future. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted
or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the temporary difference can be utilised.
t) Reserves
Share capital
Share capital represents the nominal value of shares that have
been issued.
Share premium account
Share premium includes any premiums received on issue of share
capital. Any transaction costs associated with the issuing of
shares are deducted from share premium, net of any related income
tax benefits.
Profit or loss reserves
Retained earnings includes all current and prior period retained
profits and losses.
Share option reserve
The share option reserve is used to recognise the grant date
fair value of options issued to employees but not exercised.
Foreign exchange reserve
The foreign exchange reserve includes all cumulative translation
differences on conversion of the Group's foreign operations from
their functional currencies to its presentation currency of
sterling.
3. Revenue
The Group derives all its revenue from the transfer of goods and
services over time.
A disaggregated geographical split of revenue by operating
segment is shown below between Europe, the Middle East, India and
Africa ('EMEIA'), North America and Australia. Europe, the Middle
East, India and Africa (EMEIA) are aggregated together as they
operate and are managed as one business. All revenue streams are
recognised over time.
SaaS T&I Total
Year ended 31 March 2023 GBP000 GBP000 GBP000
========================== ======== ======== ========
EMEIA 11,247 2,678 13,925
North America 5,863 175 6,038
Australia 4,948 548 5,496
22,058 3,401 25,459
========================== ======== ======== ========
SaaS T&I Total
Year ended 31 March 2022 GBP000 GBP000 GBP000
========================== ======== ======== ========
EMEIA 10,155 2,297 12,452
North America 5,147 288 5,435
Australia 4,262 768 5,030
19,564 3,353 22,917
========================== ======== ======== ========
4. Segmental analysis
The Group has two reporting segments, being SaaS and T&I.
The Group focuses its internal management reporting predominantly
on revenue and cost of sales. No non-GAAP reporting measures are
monitored. Total assets and liabilities are not provided to the
CODM in the Group's internal management reporting by segment and
therefore a split has not been presented below. Information about
geographical revenue by segment is disclosed in note 4.
During the year ended 31 March 2023 approximately GBP3,745k
(2022: GBP2,083k) of the groups external revenue was derived from
sales to a specific customer through SaaS and T&I operating
segments.
SaaS T&I Total
Year ended 31 March 2023 GBP000 GBP000 GBP000
========================== ======== ======== ========
Revenue 22,058 3,401 25,459
Cost of sales (3,411) (1,268) (4,679)
18,647 2,133 20,780
========================== ======== ======== ========
SaaS T&I Total
Year ended 31 March 2022 GBP000 GBP000 GBP000
========================== ======== ======== ========
Revenue 19,564 3,353 22,917
Cost of sales (2,974) (1,423) (4,397)
16,590 1,930 18,520
========================== ======== ======== ========
5. Exceptional items
2023 2022
For the year ended 31 March GBP000 GBP000
============================================ ======== =======
Costs associated with M&A aborted activity - 539
============================================= ======= =======
The above costs are fees paid to various external advisors. No
internal costs have been included.
6. Taxation
2023 2022
For the year ended 31 March GBP000 GBP000
====================================================== ======= ========
Current income tax
Foreign current tax on profit for the current period 362 214
Foreign current tax on profit for the prior period 34 28
Deferred tax
Origination and reversal of timing differences (139) (128)
Adjustments in respect of prior periods 9 -
Effect of decrease tax rate on opening deferred
tax position 1 5
Total tax charge 267 119
======================================================= ======= ========
2023 2022
For the year ended 31 March GBP000 GBP000
====================================================== ======= ========
Loss before tax (230) (2,612)
Tax at domestic rate of 19% (2022: 19%) (44) (496)
======================================================= ======= ========
Effect of:
Expenses that are not deductible in determining
taxable profit (25) (19)
Differences in current and deferred tax rates 1 5
Deferred tax not recognised 180 494
Withholding taxes 7 4
Adjustments in respect of prior periods - current
tax 34 27
Adjustments in respect of prior periods - deferred
tax 9
Effect of other tax rates 105 104
Total tax charge / (credit) 267 119
======================================================= ======= ========
At 31 March 2023 the Company and its Group had tax losses of
approximately GBP19.5m (2022: GBP19.2m) to carry forward to offset
against future taxable profits
7. Intangible assets
Intellectual Capitalisation
Customer Purchased property of development
Goodwill relationships software rights costs Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
=============================== ========== ================ =========== ============== ================ ========
Cost
At 1 April 2021 1,128 6,210 845 125 - 8,308
Foreign exchange 26 79 22 - 127
Additions - - - - 364 364
Disposals - - - - -
At 31 March 2022 1,154 6,289 867 125 364 8,799
=============================== ========== ================ =========== ============== ================ ========
Foreign exchange 36 135 31 - - 202
Additions (purchases) - - 40 - - 40
Additions (internal
developments) - - - - 851 851
At 31 March 2023 1,190 6,424 938 125 1,215 9,892
=============================== ========== ================ =========== ============== ================ ========
Amortisation
At 1 April 2021 - 2,112 416 125 - 2,653
Foreign exchange - 7 (22) - (15)
Charge for the year - 614 86 - 700
Disposals - - - - -
At 31 March 2022 - 2,733 480 125 - 3,338
=============================== ========== ================ =========== ============== ================ ========
Foreign exchange - 45 8 - - 53
Charge for the year - 630 63 - 73 766
At 31 March 2023 - 3,408 551 125 73 4,157
=============================== ========== ================ =========== ============== ================ ========
Net book value
At 31 March 2023 1,190 3,016 387 - 1,142 5,735
=============================== ========== ================ =========== ============== ================ ========
At 31 March 2022 1,154 3,556 387 - 364 5,461
=============================== ========== ================ =========== ============== ================ ========
All amortisation and impairment charges are included within
depreciation and amortisation in the Statement of Comprehensive
Income.
There are two assets included in capitalised development costs
which are material to the financial statements.
Asset Description Carrying Amount Remaining Amortisation
GBP000 Period
------------------------- ---------------------------- ---------------- -----------------------
CiQ - Capex New features to the 291 4 years
ControliQ platform
that are expected to
further enhance the
proposition for the
customer
CaseWorkiQ redevelopment Replatforming CaseWorkiQ 288 5 years
into ControliQ data capture and reporting
onto the ControliQ
platform to enable
a more seamless platform
for customers who require
both products.
The aggregate research and development expenditure recognised as
an expense during the period is GBP4.5m.
Customer relationships consists of two individual assets: the
acquired relationships from the purchase of Open Connect on the 1
August 2019, which has a netbook value of GBP1.3m and is being
amortised until 31 July 2029; and the acquired relationships from
the purchase of ActiveOps Pty Ltd and Active Operations Management
Australia on the 1 April 2017, which has a netbook value of GBP1.7m
and is being amortised until 31 March 2027.
The carrying amount of goodwill relates to two cash generating
units and reflects the difference between the fair value of
consideration transferred and the fair value of assets and
liabilities purchased.
Goodwill has been allocated for impairment testing purposes to
the following cash generating units. The carrying values are as
follows:
2023 2022
At 31 March GBP000 GBP000
========================== ======= =======
Australia 577 577
United States of America 613 577
1,
190 1,154
========================== ======= =======
The Australian goodwill relates to the purchase of ActiveOps Pty
Limited and Active Operations Management Australia Pty Ltd on the 1
April 2017.
The United States of America goodwill relates to the purchase of
OpenConnect on the 1 August 2019. The residual amount relates to
the amount retained in ActiveOps USA Inc. on disposal of
OpenConnect on 19 October 2020.
The Group tests whether goodwill has suffered any impairment on
an annual basis, or more frequently where evidence of impairment
indicators exist, by comparing the value of the CGUs with their
value in use. Value in use is estimated based on expected future
cashflows discounted to present value using a post-tax discount
rate that reflects current market assumptions of the time value of
money. An impairment charge arises where the carrying value exceeds
the value in use.
The inputs into the expected cashflows are based on the most
recent forecasts approved and reviewed by the Directors for the
next three years based on expected growth within those CGU's over
that period.
The key inputs into the cashflow forecast are:
-- Revenue growth, based upon managements expected growth in the
Group's products. These are determined by understanding the needs
of current customers and expected number of license sales pipeline
to determine expected future sales volumes. These sales volumes are
coupled with the current pricing to determine the forecast
revenues. Considerations are also made for customer churn which is
based upon current churn rates. T&I revenues are derived from
forecast additional SaaS sales using historical customer behaviours
as a basis.
-- Cost of sales and any other direct costs based upon expected revenues.
-- Expected movements in the overhead costs of the business
given the need to indirectly service growth in revenue.
-- Future capital expenditure and other changes to working
capital as required to facilitate the forecast revenue growth.
In determining the potential for impairment of the intangible
assets the Group has discounted the cashflows using the three year
plan at 12.3% for the Australian CGU and 12.0% for the United
States of America CGU. Management have not identified any
reasonably possible changes in any key assumption that would lead
to the need for impairment of either CGU.
8. Property, plant and equipment
Fixtures,
Leasehold Plant fittings
improvements and machinery and equipment Total
GBP000 GBP000 GBP000 GBP000
============================ =============== ================ ================ ========
Cost
At 1 April 2021 199 353 551 1,103
Foreign exchange (28) (25) (101) (154)
Additions - 82 14 96
Disposals - - - -
At 31 March 2022 171 410 464 1,045
============================= =============== ================ ================ ========
Foreign exchange (4) (1) (5) (10)
Additions - 65 25 90
At 31 March 2023 167 474 484 1,125
============================= =============== ================ ================ ========
Accumulated depreciation
At 1 April 2021 193 250 419 862
Foreign exchange (28) (31) (101) (160)
Provided during the period 6 81 57 144
Disposals
At 31 March 2022 171 300 375 846
============================= =============== ================ ================ ========
Foreign exchange (4) (2) (4) (10)
Provided during the period - 71 56 127
At 31 March 2023 167 369 427 963
============================= =============== ================ ================ ========
Carrying amount
At 31 March 2023 - 105 57 162
============================= =============== ================ ================ ========
At 31 March 2022 - 110 89 199
============================= =============== ================ ================ ========
All depreciation and impairment charges are included within
depreciation and amortisation in the Statement of Comprehensive
Income.
9. Right of use assets
Buildings
GBP000
================================== ==========
Net book value
At 1 April 2021 736
Foreign exchange (7)
Depreciation charge for the year (165)
At 31 March 2022 564
Foreign exchange (3)
Depreciation charge for the year (142)
At 31 March 2023 419
==================================== ==========
The right of use asset relates to the property leases for
operating premises across the group.
Amounts recognised in the Statement of Financial Position
2023 2022
At 31 March GBP000 GBP000
=================== ======= =======
Lease liabilities
Current 100 139
Non-current 364 501
464 640
=================== ======= =======
Amounts recognised in the Statement of Profit or Loss
2023 2022
For the year ended 31 March GBP000 GBP000
========================================== ======= =======
Interest expense 37 45
Expense for short term leased properties 150 95
Depreciation of Right-of-use assets 142 165
=========================================== ======= =======
Amounts recognised in the Statement of Cashflows
2023 2022
For the year ended 31 March GBP000 GBP000
============================= ======= =========
Total cash outflows 360 324
============================== ======= =========
10. Trade and other receivables
2023 2022
At 31 March GBP000 GBP000
================================ ======= =======
Trade receivables 5,507 2,723
Prepayments and accrued income 675 953
Other receivables 191 78
6,373 3,754
================================ ======= =======
The Directors consider the carrying value of trade and other
receivables to be approximately equal to their fair value.
2023 2022
At 31 March GBP000 GBP000
================================================= ======= =======
Trade receivables from contracts with customers 5,563 2,770
Less loss allowance (56) (47)
5,507 2,723
================================================= ======= =======
Trade receivables are amounts due from customers for goods sold
or services performed in the ordinary course of business. They are
generally due for settlement within 30 days and are therefore all
classified as current. Trade receivables are recognised initially
at the amount of consideration that is unconditional. The group
holds the trade receivables with the objective of collecting the
contractual cash flows, and so it measures them subsequently at
amortised cost using the effective interest method. Details about
the group's impairment policies and the calculation of the loss
allowance are provided in note 2.
Information about the impairment of trade receivables and the
group's exposure to credit risk and foreign currency risk can be
found in note 22.
11. Trade and other payables
2023 2022
At 31 March GBP000 GBP000
==================================== ======= =======
Trade payables 167 1,326
Other taxation and social security 1,360 815
Other payables 5 3
Accruals and deferred income 17,328 11,553
18,860 13,697
==================================== ======= =======
Trade payables are unsecured and are usually paid within 30 days
of recognition. The carrying amounts of trade and other payables
are considered to be the same as their fair values, due to their
short-term nature.
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END
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July 04, 2023 02:00 ET (06:00 GMT)
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