TIDMCBUY
RNS Number : 7810Y
Cloudbuy PLC
11 September 2015
Embargoed for 7:00am release 11 September 2015
cloudBuy plc
("cloudBuy" or the "Company")
Interim Results for the six months ended 30 June 2015
cloudBuy plc (AIM: CBUY), the global provider of cloud-based
e-commerce marketplaces and B2B buyer and supplier solutions, today
announces its unaudited interim results for the six months ended 30
June 2015.
Key Points
Financial
-- Turnover decreased by 40% from H1 2014 to GBP0.887m (2014:
GBP1.467m) due to the transition from a flat fee to a transactional
model
-- Turnover increased by 32% from H2 2014 reflecting initial growth in new model
-- Administrative expenses, excluding share based payments,
increased to GBP3.658m H1 2014: GBP2.681m), reflecting continued
investment in sales and technology to exploit the market
opportunities
-- Cash and cash equivalents as at 30 June of GBP1.917m (30 June
2014: GBP2.3m) which increased by GBP1.0m post period end (see
below)
-- Post period end, raised GBP1.0m by way of a placing of new shares for working capital
Operational
-- Strong international progress supported by global team
o Pipeline of major opportunities with potential value at 30
June 2015 of GBP51m over 3 years
o Contract win in Singapore for marketplace and up to 7,000
websites
o Contract win for Middle East Ajman Free Zone
o Partnered with EASi, a major US cloud based provider of
procurement services, and secured purchasing portal contract with
the Ohio Schools Council
o Launch of Confederation of Indian Industry (CII) e-commerce
marketplace
o Signed agreement with the Ministry of Economy of a Middle
Eastern state to provide a cloudBuy investor website and
marketplace
o Signed MoU with Yiwu Gov China's model city for ecommerce, and
the world's largest physical marketplace
o Entered into a strategic deal with Saudi Arabia's Bin Shamikh
Group to promote CloudBuy's products in the Middle East and
Africa
-- Renewed Oracle Gold Partner status, accelerating our
opportunities with those organisations using Oracle (and providing
an Oracle-cloudBuy equivalent to SAP-Ariba)
-- UK progress
o Social care marketplace offering via a partnership with
Lancashire-based social enterprise Salvere
o Completed the build of NHS Care Marketplace potentially worth
in the Directors' opinion GBP 30 million per year at a 10% take
up
o Company formations passed 300,000 companies registered
Ronald Duncan, Executive Chairman of cloudBuy, commented,
"During 2014, we successfully completed the transition from a flat
fee revenue model to a marketplace transactional activity model and
32% growth in revenue in H1 2015 from H2 2014 demonstrates our
underlying progress.
Our pipeline of major opportunities has a potential value of
GBP51m over 3 years while the close strategic relationship with
Visa is continuing to open up further global opportunities.
Unfortunately, and beyond our the control, some of the more
advanced marketplace opportunities have been delayed and will now
only contribute a small amount of revenue in the current year,
which means the Company may undershoot market expectations for the
year ending 31 December 2015. Our quick and effective entry into
North America, China and Saudi shows that we are able to execute
projects globally and provides confidence in our pipeline.
The Company has a strong and professional team who are quickly
acquiring and converting the growing numbers of commercial
opportunities that will generate rapid and sustained long-term
revenue growth."
For further information, please contact:
cloudBuy plc
Ronald Duncan, Chairman
David Gibbon, Finance
Director Tel: 0118 963 7000
Westhouse Securities
Limited
Tom Griffiths/ Richard
Johnson Tel: 020 7601 6100
Alma PR
Josh Royston / Hilary
Buchanan Tel 020 7796 9083
About cloudBuy PLC
cloudBuy provides cloud solutions for buyers and sellers - and
brings them together to trade securely and ethically via an
increasing number of public e-marketplaces and
private purchasing portals that are powered by cloudBuy
technology.
-- cloudBuy solutions for buyers help B2B purchasers understand
and control their spend, to reduce costs and increase value.
-- Our cloudSell solutions enable sellers of all sizes, from
start-ups to corporates, reach new customers and grow their
business.
-- cloudBuy's technology platform powers web sites, public
marketplaces and private purchasing portals that enable all types
of online interactions and relationships including, citizen and
business to government; consumer to business; and business to
business.
For more information, visit www.cloudbuy.com
CHAIRMAN'S STATEMENT
Introduction
I am delighted with the progress made in the first half of the
year in both international expansion and our work in social care.
These are two of the routes that I highlighted last year to us
achieving annual revenue of GBP 50 million at 90% gross margin and
both are still on track.
During the period, we have successfully entered the North
American and Chinese markets and are growing and converting the
Company's pipeline of opportunities. We have also completed the
build of our NHS Care Marketplace.
At a take up level of 10%, the NHS Care Marketplace could in the
Directors' opinion potentially generate GBP30 million of revenue to
the Company per year in 3 years' time from subscription fees,
clearly higher take up levels of 30% (GBP 90 million and 60% (GBP
180 million) would be more attractive. Having built the system, we
expect to launch the NHS Care marketplace in the next few weeks.
This, combined with our international pipeline with a potential
value of GBP51 million over 3 years means that we are confident in
our prospects.
Project delays have resulted in us not recognising any of the
GBP1.0 million that we carried forward from last year. The New
South Wales Service First project has stalled after acceptance due
to a change of management at the customer. The Singapore (ASME) and
India (CII) marketplaces are not yet contributing to revenue whilst
we wait for them to go live. The Hong Kong project has expanded
greatly in size into a regional marketplace which means that we
expect some revenue to move from the current year into subsequent
years, and additional set up fees to be charged for the expanded
scope
We have delivered some further cost efficiencies to reduce our
cash burn and the focus is on delivering our existing cash
generative contracts and focusing on converting the opportunities
in our pipeline that will quickly deliver cash. Our pipeline is now
significantly bigger and being converted, therefore we consider
that our prospects have improved giving us greater optimism for the
future.
Market Review
UK
Our primary focus in the UK has been the emerging care market
and the biggest opportunity in the NHS.
We have created mycaresupermarket with Salvere who will act as a
bridge between the NHS and local government since it provides
services to both.
We have invested in a new dedicated supplier adoption team for
the care market. We had managed last year to bring on over 1,000
suppliers for no revenue. This has changed post period end with the
new team which is bringing on suppliers with a minimum first year
charge of GBP660 per supplier.
While the current rate of sign up for the Salvere marketplace is
10% of suppliers, the rate increases to 60% where the supplier
contacts us directly. We believe that an effective NHS marketing
campaign will make a big difference to supplier adoption rates and
volumes, and this will occur post launch of the NHS Care
marketplace.
The NHS estimates are that 5 million people will be on personal
budgets, bringing about a major shift in the way that care is
delivered. The Directors believe that 10% of the potential
subscription fees could be worth GBP30 million per year in 3 years'
time to cloudBuy. In addition there are website and transactional
fees that should grow with time.
We expect to launch the NHS Care Marketplace in the next few
weeks and once launched we will be able to further assess the
figures and projections and provide shareholders with an update on
the rate of take up in terms of clinical commissioning groups'
individual care budgets, suppliers and revenue from the system.
Our focus in the local authority market has been with the
Breeze-e consortium. We are in discussions with the consortium
about its future, and the likelihood is that we will receive no
revenues from the consortium. If we are unable to achieve a
positive conclusion to the discussions, we will return to selling
directly to the local authority care market.
Our presence across health, education and local authorities
means that we are well placed when the Government autumn spending
review finally starts to bite.
We have a good sales pipeline of private sector multinational
opportunities in the USA and Canada, and are building our sales
pipeline in UK private sector.
Asia Pacific
cloudBuy's strategic partnership with Visa Asia Pacific (AP) was
boosted at events hosted by Visa AP in Singapore, Melbourne and
Mumbai in the first half of 2015. We have successfully entered the
Chinese market, the largest market in the region.
Our MOU with Yiwu Gov is an important step for us in China, at a
strategic location as China is the largest physical marketplace in
the world and Yiwu is the model city for ecommerce in China. The
Yiwu suppliers will enhance our system globally and they support
our trading hub strategy.
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The marketplace in Hong Kong, in association with a global
financial institution, was ready for launch earlier this year. We
had completed acceptance testing, built sites for the 20 largest
suppliers and were moving down to the next 100 when a local
legislative change that required our customer to assess which
products required regulatory approval resulted in a period of
assessment. The marketplace will be going ahead as a regional
proposition and is now expected to launch at the end of this year.
This increases the scale by more than 10 times since it is now
expected to have over 100,000 suppliers and cover the entire
region. All our fees were paid and we are in discussions around
additional set up and service fees to cover the extra work.
The Singapore marketplace has had its launch delayed until the
autumn. There are a number of factors that have delayed the launch,
including syncing systems and personnel changes at the trade
association, as well as finalising the grant application process.
These are being resolved and the marketplace has good local support
and looks like it will be a success when it launches.
The Confederation of Indian Industry ("CII") marketplace has had
successful commercial pilots of the proposition in pre-launch,
delivering revenues in line with management's expectations, and the
CII has been creating a team to manage the supplier adoption. This
process is now in place and the CII expects to launch in the
autumn.
In Australia, we continue to work closely with Visa Australia
and three leading financial institutions. The first e-marketplace
contract in Australia was awarded by NSW Service First in July
2014, in conjunction with Visa. Service First has since been
out-sourced and all NSW Service First programs are under review, we
have not been informed of the progress or results of the review but
are assuming that it is not going ahead given the lack of feedback.
This is disappointing since the private purchasing portal had been
accepted and paid for and was at the point of going live and
generating ongoing revenues when Service First was outsourced.
We have completed the work to enhance the platform to support
these activities. To meet customer requirements, the marketplace
and supplier solutions have been translated into Hindi and
traditional and simplified Chinese.
Middle East, North Africa
The Middle East is an important region for cloudBuy as it is
moving forward with smart government initiatives. cloudBuy is
working with Visa MENA and Visa clients in the Middle East and
Pakistan.
In March 2015, we agreed to provide a portal to automate company
formations in the Ajman Free Trade Zone. In May 2015, we agreed
with the Ministry of Economy in a Middle Eastern state to provide
its investor website and marketplace. This has the potential to be
extended to 40 government agencies and 250,000 businesses.
On 21 May 2015cloudBuy's partner in the region, DUC
International Consulting, signed a strategic deal with Saudi
Arabia's Bin Shamikh Group to promote cloudBuy's products in the
Middle East and Africa. We now have 6 major opportunities in
progress in Saudi Arabia as a result of this agreement.
USA & Canada
In March 2015, we partnered with EASi, a major US cloud based
provider of procurement services, and secured our first USA
contract for a purchasing portal with the Ohio Schools Council. We
can now deliver an integrated suite of services covering all
aspects of procurement from sourcing to settlement. EASi's client
base represents over $3 billion in annual spend under management;
these client organisations will now have access to the spend
analysis, market intelligence and procure-to-pay services that
cloudBuy brings to the partnership.
The Ohio Schools Council system is live and transacting and
cloudBuy is receiving revenues. The volume will increase now the
schools have come back off holiday.
We have other school, university, government and private sector
customers in our pipeline at various stages from discussion,
through to tender and contract negotiations.
Financial Results
Turnover decreased by 40% from H1 2014 to GBP0.887m although
turnover increased by 32% from H2 2014.
Administrative expenses, excluding share based payments,
increased to GBP3.658m (2014: GBP2.681m), reflecting continued
investment in sales and technology to exploit market opportunities.
After a charge for share based payments of GBP0.217m (2014
GBP0.214m, the operating loss increased to GBP3.163m (2014
GBP1.621m).
Cash and cash equivalents as at 30 June 2015 were GBP1.917m (30
June 2014: GBP2.3m) reflecting the investment in capability
expansion and pipeline.
Net assets as at 30 June 2015 were GBP2.025m compared to
GBP3.452m at 30 June 2014.
Post period end, we raised GBP1.0 million by way of a placing of
new shares at 20p per share with a single investor to provide us
with additional working capital.
The Company had a potential sales pipeline of major
opportunities at 30 June 2015 with a value of GBP51m over 3 years
with projected revenues from set up fees, software licences and
annual maintenance and support.
Strengthened Management Team
As previously announced we have had 3 new senior members of the
team during the period.
Al Powell joined as Vice President of North America Sales on 2
February, Al joined cloudBuy from Serus Corporation where his role
as Vice President Worldwide Sales provided him with extensive
experience in the supply chain and procurement business for G1000
companies. Al targeted some of the largest global manufacturers in
the world including AMD, Nvidia, Micron, and Qualcomm to assist
them in improving the visibility, quality, responsiveness, and
reducing the cost of their extensive supply chains. Previously, Al
was Vice President of Worldwide Sales for other enterprise software
and SaaS-based companies including Corticon (acquired by Progress
Software), Postini (acquired by Google) and Intershop
Communications, an ecommerce software company with HQ in SF, CA.
that Al helped become a public company with a very successful
IPO.
Peter Robertshaw joined as Marketing Director in February, Peter
has 20 years experience of both ERP and analytics software sectors.
Peter joined cloudBuy from leading analytics company SAS where he
was Marketing Director UK and Ireland. Prior to SAS he was SVP
Global Marketing for Active Risk, Global Marketing Director of IFS
World Operations, and Marketing Director SAP UK and Ireland where
Peter worked for 12 years with the last 5 years as Marketing
Director. Peter served with Ronald Duncan on the software
association board (BASDA).
David Gibbon joined as CFO on 11 June, David has 18 years'
experience as CFO for technology companies. Prior to joining
cloudBuy, he was briefly Chief Financial Officer of Allocate
Software plc, a provider of workforce and compliance optimisation
solutions, until its take private by Hg Capital. David had
previously been CFO of Omnico Groupwhich was formed through the
merger of Clarity Commerce Solutions plc, an AIM-quoted POS
software company, and Digipos, a POS hardware company. Prior to
joining Omnico Group, David was CFO of Kewill plc.
This gives us additional confidence that we have the people
required to deliver our key opportunities.
Outlook
With the projects that have been won and delivered in the first
half of the year we are confident that we are making good progress.
Once more of our existing contracts become operational, this should
lead to substantial cash generation.
Ronald Duncan
Executive Chairman
11 September 2015
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
6 months 6 months Year
to to ended
30 June 30 June 31 Dec
Notes 2015 2014 2014
GBP'000 GBP'000 GBP'000
Revenue 2 887 1,467 2,124
Cost of sales (175) (195) (397)
---------- ---------- ----------
Gross profit 712 1,272 1,727
Administrative expenses (3,658) (2,681) (5,866)
Share based payments (217) (214) (490)
---------- ---------- ----------
Operating loss (3,163) (1,623) (4,629)
Finance income/(costs) - 2 4
---------- ---------- ----------
Loss on ordinary activities
before taxation (3,163) (1,621) (4,625)
Income tax expense - - 59
---------- ---------- ----------
Loss for the year attributable
to equity shareholders
of the parent (3,163) (1,621) (4,566)
Other comprehensive income
- item which will or may
be reclassified to profit
and loss
Exchange gain arising on
translation of foreign
operations 60 (7) 18
Total comprehensive income (3,103) (1,628) (4,548)
Loss per share - basic
and diluted 3 (2.6)p (1.5)p (4.1)p
========== ========== ==========
Revenue and operating loss all derive from continuing
operations.
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
30 June 30 June 31 Dec
2015 2014 2014
GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Other intangible assets 5 126 38
Property, plant and equipment 200 131 122
--------- --------- ---------
205 257 160
--------- --------- ---------
Current assets
Trade and other receivables 567 1,918 1,164
Taxes recoverable 60 61 119
Cash and cash equivalents 1,917 2,300 4,546
--------- --------- ---------
2,544 4,279 5,829
--------- --------- ---------
Total assets 2,749 4,536 5,989
--------- --------- ---------
Liabilities
Current liabilities
Trade and other payables (724) (1,084) (1,106)
(724) (1,084) (1,106)
--------- --------- ---------
Total liabilities (724) (1,084) (1,106)
--------- --------- ---------
Net Assets/(liabilities) 2,025 3,452 4,883
========= ========= =========
Shareholders' equity
Called up share capital 1,234 1,099 1,212
Share premium 4,472 10 3,972
Other reserve 630 630 630
Share based payment reserve (82) (82) 195
Currency translation 93 9 33
Accumulated profit/(losses) (4,322) 1,786 (1,159)
--------- --------- ---------
Total equity attributable
to equity shareholders
of the parent 2,025 3,452 4,883
========= ========= =========
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
6 months 6 months Year
to to ended
30 June 30 June 31 Dec
2015 2014 2014
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Loss before tax (3,163) (1,621) (4,625)
Adjustments for:
Finance (income)/cost - (2) (4)
Depreciation of property,
plant & equipment 42 38 82
Amortisation of other intangible
assets 38 82 164
Share based payments 217 214 490
Changes in working capital
Trade and other receivables 597 (920) (165)
Trade and other payables (382) 397 419
Currency translation 60 (7) 17
Net cash used by operations (2,591) (1,819) (3,622)
Tax received 59 - -
--------- --------- ---------
Net cash outflow from operating
activities (2,532) (1,819) (3,622)
Cash flows from investing
activities
Interest received/(paid) - 2 -
Purchase of other intangible
assets (5) (6) -
Purchase of property, plant
and equipment (120) (54) (88)
--------- --------- ---------
Net cash used in investing
activities (125) (58) (88)
--------- --------- ---------
Cash flows from financing
activities
Issue of ordinary shares 28 20 4,095
Interest received - - 4
Net cash generated from
financing 28 20 4,099
--------- --------- ---------
Net decrease/(increase)
in cash and cash equivalents (2,629) (1857) 389
Cash and cash equivalents
at beginning of period 4,546 4,157 4,157
--------- --------- ---------
Cash and cash equivalents
at end of period 1,917 2,300 4,546
========= ========= =========
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
Share Share Other Share Currency Accumul-ated Total
capital premium reserve based trans-lation profit
payment and
reserve GBP'000 loss
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at
1 January 2014 1,089 16,880 630 (296) 16 (13,473) 4,846
Shares issued
in the period 10 10 - - - - 20
Share premium
cancellation
(note 4) - (16,880) - - - 16,880 -
Share based payments - - - 214 - - 214
Exchange in period - - - - (7) - (7)
Loss for the
period - - - - - (1,621) (1,621)
Balance as at
30 June 2014 1,099 10 630 (82) 9 1,786 3,452
Shares issued
in the period 113 3,962 - - - - 4,075
Share based payments - - - 277 - - 277
Exchange in period - - - - 24 - 24
Loss for the
period - - - - - (2,945) (2,945)
Balance as at
31 December 2014 1,212 3,972 630 195 33 (1,159) 4,883
Shares issued
in the period 22 500 - - - - 522
Share based payments - - - (277) - - (277)
Exchange in period - - - - 60 - 60
Loss for the
period - - - - - (3,163) (3,163)
Balance as at
30 June 2015 1,234 4,472 630 (82) 93 (4,322) 2,025
========= =========== ========= ========= ============== ============= =========
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
These interim financial statements have been prepared in
accordance with the accounting policies set out in the Annual
Report and Accounts for the year ended 31 December 2014 and the
interpretation of those accounting standards underlying the
accounting policies. IAS 34, Interim Financial Reporting, has not
been applied. The interim financial statements have been issued in
accordance with the AIM Rules of the London Stock Exchange and are
unaudited. The financial information set out does not constitute
statutory accounts for the purposes of section 434 of the Companies
Act 2006. The auditors' report on the statutory accounts for the
year ended 31 December 2014 which have been filed with the
Registrar of Companies was unqualified, did not draw attention to
any matters by way of emphasis, and did not contain a statement
under 498(2) or 498(3) of the Companies Act 2006.
The preparation of financial statements requires estimates and
assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Although the estimates are based on management's best
knowledge of the amounts, events or actions, actual results may
differ from those estimates.
This announcement which was approved by the board of cloudBuy
plc on 10 September 2015 will be published on the company's website
at www.cloudbuy.com.
2. Revenue (unaudited)
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