TIDMEYE
RNS Number : 0933R
Eagle Eye Solutions Group PLC
19 September 2017
19 September 2017
Eagle Eye Solutions Group plc
("Eagle Eye", the "Company" or the "Group")
Results for the year ended 30 June 2017
Strong momentum built to capitalise on the significant market
opportunity
Eagle Eye, the SaaS technology company that allows businesses to
create a real-time connection with their customers, today announces
its results for the financial year ended 30 June 2017 (the
"Year").
Financial and corporate highlights:
-- Group revenue increased by 71% to GBP11.1m (FY16: GBP6.5m)
-- Revenue from subscription fees and transactions over the
network represented 68% of total revenue (FY16: 80%)
-- Gross margin up 9ppts to 88% (FY16 79%)
-- Cash position of GBP3.7m (FY16: GBP1.3m) at 30 June 2017
-- Successful placing in June 2017 raising net proceeds of GBP5.8m
-- 3 year contract signed with John Lewis PLC in May 2017 for
the deployment of the AIR platform
-- 2 year contract renewal was signed with Toshiba Global
Commerce Solutions for Asda Stores Limited*
-- Q1 FY18 revenue expected to be at least GBP3m, 32% growth on
prior year, with growth anticipated to accelerate in future periods
as our significant clients begin to transact through the platform
at scale and from the impact of new strategic partnerships that
drive increased transactions *
Operational highlights:
-- Redemption volumes increased by 58% to 60.4m (FY16: 38.4m)
-- SMS volumes of 44.4m, an increase of 10% (FY16: 40.3m)
-- Total number of customers 233; 74 brands (FY16: 219;70)
-- Deepening tier 1 client relationships representing 53% of
revenue, GBP5.9m (FY16: 33%, GBP2.1m)
-- Revenue from the Food and Beverage ("F&B") sector
increased by 20% to GBP1.8m (FY16: GBP1.5m).
-- Investment in product development in loyalty, brands and connections to social platforms
*Post Period
Tim Mason, Chief Executive of Eagle Eye, said:
"2017 has been a transformational year for Eagle Eye. We've
successfully delivered on our strategy of winning new customers,
increasing transactions through our platform and deepening existing
customer relationships. As a result we exceeded our expectations
during the Year, strengthened our platform and are poised for
accelerated progress in 2018.
"Retailers and brands are looking for more innovative and cost
effective ways to engage with consumers, and we have the proven and
scalable technology to power their digital marketing capabilities
and support their commercial requirements.
"Renewing and winning new contracts with major retailers such as
John Lewis and Asda demonstrates the relevance of our offering to
tier 1 retailers, and we are excited about continuing on our
journey to be a leading global digital marketing platform."
For further information, please contact: Eagle Eye
Tim Mason, Chief Executive Officer Tel: 0844 824 3686
Lucy Sharman-Munday, Chief Financial
Officer
Investec (Nominated Adviser and Broker)
Corporate Finance: David Anderson Tel: 020 7597 5970
/ Sebastian Lawrence
Corporate Broking: Matt Lewis / Rob Baker
Hudson Sandler
Nick Lyon/Hattie O'Reilly Tel: 020 7796 4133
Information on Eagle Eye
www.eagleeye.com
Eagle Eye is a leading SaaS technology company that allows
businesses to create a real-time connection with their
customers.
The Company's digital marketing platform, Eagle Eye AIR, enables
the secure, real-time, multi-channel issuance, management and
redemption of digital promotions and rewards, replacing previously
used paper-based methods. Our Eagle Eye platform creates a network
effect between merchants, distributors and brands enabling stronger
connections and value to all parties. Through our four products we
enable brands and merchants to reduce cost, improve their customer
offer and accelerate their innovation.
The Company's current customer base comprises leading names in
UK grocery, retail and hospitality including John Lewis, Asda, J
Sainsbury, Greggs, JD Sports, Ladbrokes, Marks & Spencer,
Mitchells & Butlers, Pizza Express, Tesco and Thomas Pink.
Chairman's statement
In September 2016, I was delighted to accept the position of
Non-Executive Chairman of Eagle Eye, with Tim Mason appointed as
our new Chief Executive. It was the Board's belief that Tim would
drive the business to become 'Better, Bigger and Faster' as we
entered the next stage of Eagle Eye's development. I am very
pleased to report that under Tim's leadership the Company has
excelled, with a clear strategy in place, accelerated growth, and
in a strengthened position to capitalise on the sizeable market
opportunity.
Better, Bigger, Faster
During the Year there have been fundamental changes made to
ensure that the Company is best placed to capitalise on the
market's shift to digital, where there are clear indicators that
the consumer now expects real time and personalised reward.
There has been a significant emphasis on people during 2017,
ensuring that the leadership team is geared for scale and the
culture resonates with both our people and our customers. In
addition to the strengthened Board, the executive team has been
joined by David Aylmer as Chief Operating Officer to provide
particular focus on client delivery, security and scalability of
our operational capabilities.
During the Year we expanded internationally in North America
with Loblaw Inc ("Loblaw"), the Canadian food retailer, and Europe
through the partnership with TCC, a global retail marketing
company, both of which we have continued to develop.
The North American focus is gaining momentum with the Loblaw
implementation of Eagle Eye AIR now underway and the opening of
Eagle Eye's first overseas office in Toronto, Canada. The new
office and operational team supports the Loblaw project and will
act as a hub to capitalise on the significant North American market
opportunity estimated to be worth over $84bn (Cadent Consulting
Group 2015 and Raymond James 2016).
Our work with TCC Global ("TCC") supports our move into the
previously unaddressed European market, providing even greater
international reach. Since signing the partnership, we have
implemented the core foundations for a solid working relationship
and most importantly recruited an international team to work solely
with TCC. The joint proposition is now being actively marketed 'TCC
Digital Connect' and taken into TCC's European clients. Excitingly,
we are engaged and in discussions with multiple retailers through
the partnership and expect to accelerate win ratios across Europe.
We expect to see this partnership develop throughout 2018 and
beyond.
We are continuing to explore strategic alliances and
partnerships that either allow us to expedite our win ratio or
extend our reach in the value chain. This is particularly relevant
for our mid-tier customers who increasingly want an end to end
solution.
Since Tim's appointment we have reviewed our external messaging
to put the consumer at the heart of what we do. With the benefit of
his retail and consumer experience, our product marketing has
shifted from being solely focused on our technology to articulating
what we do from the consumer's perspective. A project was kicked
off in June 2017 to build on the work done so far and the new
product marketing positioning is expected to launch in financial H1
2018.
A year of strategic and operational progress
The Board is delighted with the significant strategic and
operational progress made during the Year. As announced in May
2017, revenues in the Year exceeded our expectations, increasing by
71%. This positive outcome has been driven by the successful
execution of our strategy to win new customers, increase
transactions from existing customers and deepen our customer
relationships.
Off the back of this increased momentum the Company successfully
completed a placing of new equity in June 2017. This raised net
proceeds of GBP5.8m which will be used to accelerate investments in
product development, infrastructure and marketing resources to take
advantage of the market opportunity and drive international
expansion. As demonstrated above, the Company has already begun to
invest these funds in the core areas for growth.
On behalf of the Board, I want to thank the team for their
commitment, hard work and major steps forward this Year in terms of
contract wins, further developing the platform and enhancing
internal processes to support the next stage of growth.
Outlook
2017 saw us exceed against management's original revenue
expectations, put in the foundations for scale and execute against
our growth strategy. In the Year, we experienced increased demand
from all sectors, resulting in significant new customer wins, such
as John Lewis. We have seen this momentum continue post Year-end,
as demonstrated by the two-year contract renewal with Asda,
announced in July 2017.
This momentum gives visibility of revenue for the first quarter
for the financial year ending 30 June 2018 to be at least 32% up on
prior year comparative period at approximately GBP3.0m. Most
importantly, there is an expectation that a higher proportion of
revenue will be generated from recurring subscriptions and
transaction revenue expected to be approximately GBP2.2m, 73% (Q1
FY17: GBP1.6m, 71%). Transaction volumes are expected to be in the
region of 30.0m (Q1 FY17: 11.7m) which would represent growth of
157%. This first quarter has seen early benefits from the
favourable renewal with Asda, John Lewis going live on the AIR
platform within 2 months of contract signature and an increased
number of transactions from our F&B clients due to exciting
issuance partner relationships.
Looking further ahead, there is an expectation that revenue
growth will accelerate and the percentage of revenue from recurring
subscriptions and transactions will continue to improve as our
significant clients begin to transact through the platform at scale
and the impact of new strategic partnerships that drive increased
transactions.
From the position of strength having raised net proceeds of
GBP5.8m to invest in the marketing and operational capabilities
that support our growth plans, the Board is excited and confident
in Eagle Eye's capabilities to exploit the considerable global
market opportunities in 2018.
This level of growth, momentum and capital gives the Board
confidence early in the financial year on delivering against
management's expectations.
Malcolm Wall, Non-Executive Chairman
CEO's statement
I was delighted to take the opportunity to become the Company's
CEO in September 2016. I had already spent a significant part of my
career looking at how data can change consumer marketing, and
immediately recognised the great potential for Eagle Eye to
revolutionise the way that businesses engage with consumers.
Traditional and analogue forms of promotions, rewards and
loyalty programmes have lost their lustre with consumers who are
increasingly looking for relevant, timely and personalised rewards
that offer genuine value. It is Eagle Eye's mission to meet this
changing consumer demand, and I believe the Company has the proven,
scalable technology to transform an industry.
In this past year, we have established a new structure and ways
of working internally to ensure we can deliver optimum results for
both the Company and our customers. We have gained significant
momentum, driven by our ambition to be 'Better, Bigger, Faster.' We
now have a clear vision and strategy in place and delivered results
ahead of our expectations during the Year.
Growing market opportunity
There are three critical themes currently affecting the
marketplace which present a significant opportunity for Eagle
Eye.
Loyalty and the need for real-time engagement
We are seeing a transition from the classic plastic card to
digital distribution. Traditional methods which give 1% discounts
and a 'rear view' perspective on purchase behaviour are being
replaced by digital alternatives. Real-time offers enable highly
relevant targeting, giving customers much more value and offering
retailers the chance to truly understand their customers, rewarding
them whilst they are still in store, thereby maximising
engagement.
Large retailers can't shift the dial
The big retailers have substantial analogue schemes which are so
imbedded in the organisation that it is a challenge to upgrade and
innovate their systems. However, with the growing importance of
digital channels, in order to meet consumers' expectations and
utilise digital, they must look outside of their core schemes to
remain competitive. This means they are looking for alternative
routes to get new schemes to market quicker presenting a sizeable
market opportunity for Eagle Eye's innovative loyalty offering.
Measuring the effect of social media
There is increased pressure for businesses to measure marketing
ROI across social media channels and prove that it's a valuable
revenue stream. This can be solved through real-time redemption
capability, linking online to offline. Brands using Eagle Eye can
send personalised offers to consumers and track redemptions in
real-time, enabling businesses to invest back into the consumer's
social media channels. This real-time element ensures campaigns can
be tracked and optimised to maximise success rates, whilst
delivering genuine value to consumers.
Through bridging online to offline creating digital connections
to track behaviour, eventually retailers can augment the shopping
trip beyond the internet, and build a richer single view of the
customer.
We are uniquely placed to address these global issues which
retailers are facing today by helping them create an intelligent
real-time connection with their customers.
Win, Transact, Deepen
Following my appointment in September 2016 our focus has been on
building on our strategy to become a global digital marketing
leader. To achieve this we aspire to be Better, Bigger and Faster
by improving in three core areas of customer interaction: 'Win'
(bringing more customers on to the Eagle Eye AIR platform);
'Transact' (driving higher redemption volumes through the platform)
and; 'Deepen' (building relationships with customers as the breadth
of our product portfolio becomes more developed).
1. Win
We made continued progress adding new retailers and brands to
the AIR platform in the Year. At the end of the Year, Eagle Eye had
233 live users, including 74 FMCG brands, up from 219 users with 70
brands at the end of 2016. At the start of the Year we set out to
increase the number of redemption points to the network; new
retailer signings included the Society of London Theatres, English
Heritage and additional Mitchells & Butlers "M&B" brands:
Chicken Society, Son of Steak and Stonehouse.
In addition, in May 2017, the Company signed a three-year
contract with John Lewis PLC ("John Lewis") for the deployment of
AIR to deliver improved digital customer marketing. Since the
financial Year end the Company announced the 2-year renewal of its
contract with Toshiba Global Commerce Solutions for the use of the
AIR platform within Asda that integrates with existing ASDA-Walmart
POS solutions across Asda stores. Both these UK contract
announcements reinforce the clear competitive benefits our
solutions deliver to leading retailers.
In March 2017, the Company signed a strategic partnership with
TCC Global, a world leader in creating retail marketing programmes
and long-term loyalty schemes, allowing Eagle Eye to extend its
digital promotions offer into the European loyalty market. TCC
Global works with many of Europe's largest retailers, making them a
valuable partner, and enabling the Company to accelerate growth
outside the UK.
2. Transact
Redemption volumes, which are a key measure of usage of the AIR
platform and of the success of our 'transact' strategy, have grown
by 58% year-on-year to 60.4m (2016: 38.4m). Volume growth was
primarily driven by the full year benefit of Asda volumes, the
first phase roll-out for Sainsbury's in the fourth quarter of 2017
and increased brand activity through redemption outlets.
Using Asda as a nationwide redemption channel, from July 2016 to
October 2016, Coke Zero Sugar ran a promotional campaign across the
AIR platform that generated a redemption rate of over 10%, compared
to the typical redemption rate of a traditional analogue campaign
of 0.5% - 2% (Shopper Technology Institute/Juniper Research)(1) .
This meaningful uplift in redemptions is proof that Eagle Eye can
successfully drive higher redemption rates through the power of
digital. As part of this campaign, Eagle Eye formed a new
partnership with the lifecycle social advertising company,
Driftrock. This unique partnership now enables the success rate of
advertising on social media channels to be measured through to
redemption.
During the Year we have successfully powered digital campaigns
for leading drinks brands through the food and beverage network.
These brands include Diageo, AB InBev, Pernod Ricard, Heineken and
Suntory. Working with each brand and their media agency the Company
has coordinated a number of promotions targeted by region using a
combination of web landing pages, programmatic display, traditional
advertising, game and dating apps plus social media lead ads. The
redemption outlets benefited from the increased footfall and spend
per head and fraud is reduced as all the campaigns have used unique
"one use only" codes. Real-time results have given the brand owners
a previously unknown insight into which media, types of visuals and
offers give the best ROI/ROS across any given campaign, allowing
the brand owner to "dial up" or "dial down" on media and change or
adapt the campaign accordingly.
In messaging services, despite the Public Health England
Stoptober campaign not including an SMS element this Year, SMS
volumes still increased 10% to 44.4m (2016: 40.3m), as a result of
messaging for Asurion and the cross selling of messaging services
to the existing client base.
3. Deepen
We have made significant progress in deepening our tier 1 client
relationships during the Year with 53% of revenue, GBP5.9m (2016:
33%, GBP2.1m) the result of an extension of our service offering
with major clients. The embedding of Eagle Eye's technology within
these clients is a clear demonstration of the capability and
reliability of our technology as a digital marketing platform.
During the Year our tier 1 customers further adopted our range
of products to drive their customer focused agendas and accelerate
their digital ambitions in order to gain competitive advantage.
This will help to drive meaningful transactional revenue growth in
future periods.
Further progress in the established food and beverage
("F&B") sector increased revenue by 20% to GBP1.8m (2016:
GBP1.5m). This increase has been driven as existing clients
onboarded additional brands (including Las Iguanas & La Tasca
along with new M&B concepts, Chicken Society and Son of Steak)
to the AIR platform as well as utilising more of our services.
Casual Dining Group and Prezzo have expanded their capabilities
through the implementation of staff discount schemes and we also
enriched our white label mobile app across the M&B estate
through the integration of Flypay to enable pay at table. Our
relationship with Tesco Clubcard was also enhanced through the
addition of English Heritage and RAC to the platform to allow
customers to part pay for membership in points and top up with
cash. Furthermore, we've also added The AA as an issuance partner
to deliver offers to their customers for redemption in M&B
outlets.
Revenue generated from client subscription fees and transactions
over the network represented 68% of total revenue (2016: 80%). This
reflects the progress we are making in deepening Eagle Eye's system
capability within major accounts, which will open up recurring
transactional revenues in future periods.
Product development
In 2017 we continued to innovate and enhance our software
platform to meet the demands of our customers and evolving consumer
trends. Performance improvements were made to support our growing
tier 1 grocery volumes, while we extended reporting and
relationship management capabilities for issuance partners.
With the addition of supplier funding functionality, we have
created the ability for brands to interact with retailers' loyalty
schemes through holding buckets of points or value for discount
that can be used in targeted promotions to end consumers, all
redeemable in store or online through direct integration with the
point of sale.
Our enhanced wallet capabilities add flexibility to retailers'
loyalty offering, allowing consumers to be targeted with specific
promotions. AIR has now been integrated to both Android and Apple
Pay to enable payments, offers and rewards to be saved
directly.
We also invested in the integration of AIR with social platforms
including Facebook, Instagram and Twitter, through partners such as
Driftrock to drive audience numbers for brands and retailers. The
partnership with Driftrock allows Eagle Eye to track promotional
activity from social media to store redemptions and extends the
Company's offering along the value chain.
Financial results
Group revenue increased by 71% to GBP11.1m (2016: GBP6.5m) for
the Year. Of total revenue, 85% (GBP9.4m) was contributed from the
core AIR platform (2016: 72%, GBP4.6million).
The Group's gross profit was GBP9.8m, representing a gross
margin of 88% (2016: GBP5.1m, 79%). The increased gross profits
were reinvested to drive future growth, meaning that adjusted
EBITDA loss was held at GBP1.8m (2016: GBP1.8m loss). To provide a
better guide to the underlying business performance, adjusted
EBITDA excludes share-based payment charges along with
depreciation, amortisation, interest and tax from the measure of
profit.
Following the successful placing completed in June 2017 which
raised GBP5.8m (net of costs), the Group had net assets of GBP8.9m
as at 30 June 2017 (2016: GBP5.9m) including cash and cash
equivalents of GBP3.7m (2016: GBP1.3m). During the Year the Group
extended its currently unutilised three year revolving loan
facility with Barclays Bank PLC to GBP3.0m (2016: GBP1.5m) which
together with the funds raised in the placing strengthens the
Group's balance sheet.
People
In addition to the Board changes at the beginning of the Year,
the management team has been further strengthened by the
recruitment of a new Chief Operating Officer, David Aylmer, in May
2017. With extensive experience with system providers and clients,
David has a thorough understanding of customer service and
delivery. The Group will leverage his experience to ensure first
class operations and delivery across Eagle Eye's network of
customers. We have also seen significant development within the
sales team and a clear focus on the sales process led by Helen
Slaven, having joined as Sales Director in May 2016.
The past 12 months has seen rapid growth in our team. The
average headcount increased from 73 to 100, as a new office was
opened in Toronto, Canada and as there was further investment in
people across the business. We have introduced a new life skills
training workshop based on the fundamental philosophy that people
can benefit from understanding more about themselves, how they
perform at their best and what triggers sub optimal performance. A
key way for us to be a stand out employer and a great place to work
is to be able to provide benefits for our people benefitting them
in all parts of their lives. Furthermore, our investment in people
improves the capability and competency of the staff in the
business.
The values that we have in place shape our behaviour, reinforce
our culture and determine our approach to recruitment. This is what
we now call The Purple Standard.
The skill, dedication and talent of our people are fundamental
to the continued success of our growing business. We have made
great progress over the last 12 months and will continue to make
improvements to ensure we attract and retain the best talent.
Looking ahead
This past year we have recorded great progress against our
objectives. The business is now more nimble, robust and able to
clearly engage with our customers and the market. We have
successfully laid the foundations for a great year ahead. I am
looking forward to this next stage of growth and the opportunity we
have to be market leaders in the digital marketing space.
Tim Mason, Chief Executive Officer
Financial Review 2017
Group Results
Key Performance Indicators
2017 2016
GBP000 GBP000
------------------------------- -------- --------
Financial
------------------------------- -------- --------
Revenue 11,058 6,458
------------------------------- -------- --------
Adjusted EBITDA loss(1) (1,769) (1,823)
------------------------------- -------- --------
Loss before interest
and tax (3,843) (4,100)
------------------------------- -------- --------
Cash and cash equivalents 3,724 1,322
------------------------------- -------- --------
2017 2016
------------------------------- -------- --------
Non-Financial
------------------------------- -------- --------
Number of redemptions 60.4m 38.4m
------------------------------- -------- --------
Messaging volumes 44.4m 40.3m
------------------------------- -------- --------
% of subscription transaction
revenue 68% 80%
------------------------------- -------- --------
Customers and brands
on the platform 233 219
------------------------------- -------- --------
(1) Adjusted EBITDA loss excludes share-based payment charges
along with depreciation, amortisation, interest and tax from the
measure of profit.
Group results
Revenue
Revenue growth for the Group was up 38ppts to 71% for the Year
(2016: 33%), with revenue increasing to GBP11.1m (2016: GBP6.5m).
The Group is continuing to grow half- by-half and H2 2017 revenue
accounted for GBP6.0m (H1 2017: GBP5.1m), representing growth of
18% on H1 2017 (H1 2016 to H2 2016: 19%).
This growth has been driven by increased revenue from the AIR
platform which now represents 85% of total revenue, GBP9.4m (2016:
72%, GBP4.6m). This increase was largely as a result of the Group's
success with Tier 1 grocer clients Asda, Sainsbury's and Loblaw.
Revenue from Tier 1 clients in the UK increased by 92% to GBP3.3m
(2016: GBP1.7m). This growth was also supported by new business
wins such as John Lewis and Society of London Theatres and
deepening relationships with existing clients, thus increasing
redemption volumes.
Of the AIR platform revenue stream, the element specifically
linked to recurring subscriptions and transactions saw a 69%
increase to GBP5.9m (2016: GBP3.5m), aided specifically by
increased licence fees for the Tier 1 clients and the full year
effect on transactions of the national roll out of the AIR platform
across all Asda stores. This Tier 1 AIR revenue growth is also
supported by growth from F&B clients (20%) and other retail
clients (69%) in the Year.
Redemption volumes, a key measure of usage of the AIR platform,
grew by 58% year-on-year to 60.4m for the Year (2016: 38.4m) driven
by the full year impact of our solution for Asda's coupon counting
going fully live in the prior Year, initial Sainsbury's
transactions and increased volumes from existing F&B and other
retail clients. In addition, loyalty interactions totalled 1.1m
(2016 0.1m) reflecting the adoption of our loyalty solution by
Greggs and M&B during the year.
Overall, GBP7.5m of revenue generated from subscription fees and
transactions over the network represented 68% of total revenue
(2016: 80%, GBP5.2m). The balance, GBP3.5m, relates to
implementation fees for new customers and new services and
represents 32% of total revenue (2016: 20%, GBP1.3m). This increase
in value and share for implementation fees reflects the progress
made in deepening the Group's product offering within major
accounts, particularly for our UK and International Tier 1 grocer
clients where implementation fees were GBP2.8m (2016: GBP0.7m).
These implementations open up recurring transactional revenues
which benefit future periods.
Although message volumes increased 10% in the Year to 44.4m
(2016: 40.3m), messaging revenue fell to GBP1.6m for the Year
(2016: GBP1.8m). This reduction reflects the increasingly
competitive messaging market. The Group renewed two key contracts
during and after the Year, for UK Power Networks and Paragon, and
has seen increases in transactional volumes following those
renewals.
Gross profit
The gross margin increased to 88% (2016: 79%) as gross profit
grew to GBP9.8m (2016: GBP5.1m). The core AIR gross margin carries
a significantly higher margin than the messaging business, and has
continued to improve during the Year to 96% (2016: 92%). This
increase, together with the increase in core AIR revenue which now
accounts for 85% of total revenue, has driven the improved
margin.
Adjusted operating costs
Adjusted operating costs of GBP11.5m (2016: GBP6.9m) represent
sales and marketing, product development (net of capitalised
costs), operational IT, general and administration costs. The
overall increase was in line with management's expectations and
plans for strategic growth, including supporting the international
activity for Loblaw in Canada. The investment in people is the main
driver of this growth, with the average headcount for the Year
increasing to 100 (2016: 73). During the Year the Group's
infrastructure was also enhanced with both an operational and a
disaster recovery data centre in North America having been
established, in addition to the existing facilities in the UK.
Within staff costs gross expenditure on product development
increased 69% to GBP2.9m (2016: GBP1.7m) reflecting investment in
enhancing the capacity, features and speed of the AIR platform.
Capitalised product development costs were GBP1.5m (2016: GBP1.2m)
whilst amortisation of capitalised development costs was GBP1.5m
(2016: GBP1.6m).
EBITDA
Reflecting the strategic re-investment of increased gross
profits, adjusted EBITDA loss for the Year was held at GBP1.8m
(2016: loss GBP1.8m). To provide a better guide to the underlying
business performance, adjusted EBITDA excludes share-based payment
charges along with depreciation, amortisation, interest and tax
from the measure of profit. The GAAP measure of loss before
interest and tax improved to GBP3.8m (2016: GBP4.1m) reflecting a
reduction in the non-cash share-based payment charge to GBP0.4m
(2016: GBP0.6m).
EPS and dividend
Following receipt of GBP0.3m research and development tax credit
(2016: GBP0.4m), reported basic and diluted loss per share was
15.73p (2016: loss per share 16.36p).
The Board does not feel it appropriate at this time to commence
paying dividends.
Group Statement of Financial Position
Following the successful placing completed in June 2017 which
raised GBP5.8m (net of costs), the Group had net assets of GBP8.9m
at 30 June 2017 (2016: GBP5.9m), including capitalised intellectual
property of GBP2.2m (2016: GBP2.2m) and cash of GBP3.7m (2016:
GBP1.3m). The increase in net assets reflects the proceeds of the
placing offset by the loss made in the Year.
Cashflow and net cash
Cash at the end of the Year had increased to GBP3.7m (2016:
GBP1.3m). The main components to the gross cash increase of GBP2.4m
for the Year (2016: GBP3.0m decrease) were the proceeds from the
placing of GBP5.8m, offset by an operating cash outflow of GBP2.0m
(2016: GBP1.5m) and capital investment in the AIR platform of
GBP1.5m (2016: GBP1.2m).
Banking facility
During the Year the Group extended its three year revolving loan
facility with Barclays Bank plc (first arranged in June 2016) to
GBP3.0m (2016: GBP1.5m) that is currently undrawn and together with
the funds raised in the placing means that the Group is well
positioned to capitalise on recent momentum in the business and to
pursue identified growth opportunities.
Consolidated statement of total comprehensive income
for the year ended 30 June 2017
2017 2016
Note GBP000 GBP000
Continuing operations
Revenue 3 11,058 6,458
Cost of sales (1,297) (1,369)
----------------------------------- ----- ---------------------- -------------------
Gross profit 9,761 5,089
Adjusted operating expenses
(1) (11,530) (6,912)
----------------------------------- ----- ---------------------- -------------------
Loss before interest,
tax, depreciation, amortisation
and share based payment
charge (1,769) (1,823)
Share based payment
charge (431) (632)
Depreciation and amortisation (1,643) (1,645)
Operating loss (3,843) (4,100)
Finance income - 2
Finance expense (67) -
----------------------------------- ----- ---------------------- -------------------
Loss before taxation (3,910) (4,098)
Taxation 391 473
----------------------------------- ----- ---------------------- -------------------
Loss after taxation
for the financial year (3,519) (3,625)
Foreign exchange adjustments 33 16
----------------------------------- ----- ---------------------- -------------------
Total comprehensive
loss attributable to
the owners of the parent
for the financial year (3,486) (3,609)
----------------------------------- ----- ---------------------- -------------------
(1) Adjusted operating expenses excludes share
based payment charge
Loss per share
From continuing operations
Basic and diluted 4 (15.73)p (16.36)p
----------------------------------- ----- ---------------------- -------------------
Consolidated statement of financial position
as at 30 June 2017
2017 2016
GBP000 GBP000
Non-current assets
Intangible assets 4,838 4,838
Property, plant
and equipment 246 243
5,084 5,081
--------------------------- --------- --------
Current assets
Trade and other
receivables 3,576 2,080
Cash and cash
equivalents 3,724 1,322
----------------------------- --------- --------
7,300 3,402
--------------------------- --------- --------
Total assets 12,384 8,483
----------------------------- --------- --------
Current liabilities
Trade and other
payables (3,348) (2,394)
Non-current liabilities
Deferred tax liability (174) (220)
----------------------------- --------- --------
Total liabilities (3,522) (2,614)
----------------------------- --------- --------
Net assets 8,862 5,869
----------------------------- --------- --------
Equity attributable
to owners of the
parent
Share capital 253 222
Share premium 17,008 10,991
Merger reserve 3,278 3,278
Share option reserve 1,303 1,230
Retained losses (12,980) (9,852)
----------------------------- --------- --------
Total equity 8,862 5,869
----------------------------- --------- --------
Consolidated statement of changes in equity
for the year ended 30 June 2017
Share
Share Share Merger option Retained
capital premium reserve reserve losses Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at
1 July 2015 221 10,985 3,278 608 (6,253) 8,839
----------------------- --------- --------- --------- --------- ---------- ------------
Loss for
the financial
year - - - - (3,625) (3,625)
Other comprehensive
income
Foreign exchange
adjustments - - - - 16 16
----------------------- --------- --------- --------- --------- ---------- ------------
- - - - (3,609) (3,609)
----------------------- --------- --------- --------- --------- ---------- ------------
Transactions
with owners
recognised
in equity
Exercise
of share
options 1 6 - - - 7
Fair value
of share
options exercised
in the year - - - (10) 10 -
Share based
payment charge - - - 632 - 632
1 6 - 622 10 639
----------------------- --------- --------- --------- --------- ---------- ------------
Balance at
30 June 2016 222 10,991 3,278 1,230 (9,852) 5,869
----------------------- --------- --------- --------- --------- ---------- ------------
Loss for
the financial
year - - - - (3,519) (3,519)
Other comprehensive
income
Foreign exchange
adjustments - - - - 33 33
----------------------- --------- --------- --------- --------- ---------- ------------
- - - - (3,486) (3,486)
----------------------- --------- --------- --------- --------- ---------- ------------
Transactions
with owners
recognised
in equity
Issue of
share capital 27 5,973 - - - 6,000
Issue costs - (240) - - - (240)
Exercise
of share
options 4 284 - - - 288
Fair value
of share
options exercised
in the year - - - (319) 319 -
Fair value
of share
options lapsed
in the year - - - (39) 39 -
Share based
payment charge - - - 431 - 431
31 6,017 - 73 358 6,479
----------------------- --------- --------- --------- --------- ---------- ------------
Balance at
30 June 2017 253 17,008 3,278 1,303 (12,980) 8,862
----------------------- --------- --------- --------- --------- ---------- ------------
Included in Retained losses is a cumulative foreign exchange
balance of GBP49,000 (2016: GBP16,000) which could be recycled to
profit and loss.
Consolidated statement of cash flows
for the year ended 30 June 2017
2017 2016
GBP000 GBP000
Cash flows from operating
activities
Loss before taxation (3,910) (4,098)
Adjustments for:
Depreciation 104 80
Amortisation 1,539 1,565
Share based payment
charge 431 632
Finance income - (2)
Finance expense 67 -
Increase in trade and other
receivables (1,496) (663)
Increase in trade and other
payables 954 555
Income tax paid (1) -
Income tax received 346 403
Net cash flows from operating
activities (1,966) (1,528)
------------------------------------- -------- --------
Cash flows from investing
activities
Payments to acquire property,
plant and equipment (107) (270)
Payments to acquire
intangible assets (1,539) (1,197)
Net cash flows used in investing
activities (1,646) (1,467)
------------------------------------- -------- --------
Cash flows from financing
activities
Net proceeds from issue
of equity 6,048 7
Proceeds from borrowings 5,600 -
Repayment of borrowings (5,600) -
Interest received - 2
Interest paid (67) -
Net cash flows from
financing activities 5,981 9
-------- --------
Net increase/(decrease) in
cash and cash equivalents in
the year 2,369 (2,986)
Foreign exchange adjustments 33 16
Cash and cash equivalents
at beginning of year 1,322 4,292
------------------------------------- -------- --------
Cash and cash equivalents
at end of year 3,724 1,322
------------------------------------- -------- --------
Notes to the consolidated preliminary financial information
1 Basis of preparation
The financial information set out herein does not constitute
statutory accounts as defined in Section 434 of the Companies Act
2006. The financial information for the Year ended 30 June 2017 has
been extracted from the Group's audited financial statements which
were approved by the Board of Directors on 18 September 2017 and
which, if adopted by the members at the Annual General Meeting,
will be delivered to the Registrar of Companies for England and
Wales.
The financial information for the year ended 30 June 2016 has
been extracted from the Group's audited financial statements which
were approved by the Board of Directors on 20 September 2016 and
which have been delivered to the Registrar of Companies for England
and Wales.
The reports of the auditor on both these financial statements
were unqualified, did not include any references to any matters to
which the auditors drew attention by way of emphasis without
qualifying their report and did not contain a statement under
Section 498(2) or Section 498(3) of the Companies Act 2006.
The information included in this preliminary announcement has
been prepared on a going concern basis under the historical cost
convention, and in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the EU and the
International Financial Reporting Interpretations Committee (IFRIC)
interpretations issued by the International Accounting Standards
Board ("IASB") that are effective as at the date of these financial
statements and in accordance with the provisions of the Companies
Act 2006.
The company is a public limited company incorporated and
domiciled in England & Wales and whose shares are quoted on
AIM, a market operated by The London Stock Exchange.
2 Going concern
As part of their going concern review the Directors have
followed the guidelines published by the Financial Reporting
Council entitled "Guidance on Risk Management and Internal Control
and Related Financial and Business Reporting".
The Directors have prepared detailed financial forecasts and
cash flows looking beyond 12 months from the date of approval of
these consolidated financial statements. In developing these
forecasts the Directors have made assumptions based upon their view
of the current and future economic conditions that will prevail
over the forecast period.
On the basis of the above projections, the Directors are
confident that the Group has sufficient working capital to honour
all of its obligations to creditors as and when they fall due. In
reaching this conclusion, the Directors have considered the
forecast cash headroom, the resources available to the Group and
the potential impact of changes in forecast growth and other
assumptions, including the potential to avoid or defer certain
costs and to reduce discretionary spend as mitigating actions in
the event of such changes. Accordingly, the Directors continue to
adopt the going concern basis in preparing these consolidated
financial statements.
3 Segmental analysis
The Group is organised into one principal operating division for
management purposes. Therefore the Group is considered to have only
one operating segment and further segmental information is not
required to be disclosed. Revenue is analysed as follows:
2017 2016
GBP000 GBP000
Development and set
up fees 3,512 1,275
Subscription and transaction
fees 7,546 5,183
11,058 6,458
------------------------------ ------- -------
2017 2016
GBP000 GBP000
AIR revenue 9,426 4,637
Messaging revenue 1,632 1,821
11,058 6,458
------------------- ------- -------
Continuing revenues can be attributed to the following
countries, based on the customers' location, as follows:
2017 2016
GBP000 GBP000
United Kingdom 8,249 5,871
North America 2,557 405
Rest of Europe 149 81
Asia Pacific 103 101
11,058 6,458
---------------- ------- -------
4 Loss per share
The calculation of basic and diluted loss per share is based on
the result attributable to ordinary shareholders divided by the
weighted average number of ordinary shares in issue during the
Year. The weighted average number of shares for the purpose of
calculating the basic and diluted measures is the same. This is
because the outstanding share options would have the effect of
reducing the loss per ordinary share and therefore would be
anti-dilutive. Basic and diluted loss per share from continuing
operations is calculated as follows:
2017 2016
Weighted Weighted
Loss average Loss average
per number of per number
share Loss ordinary share Loss of ordinary
pence GBP000 shares pence GBP000 shares
Basic and
diluted
loss per
share (15.73) (3,519) 22,373,645 (16.36) (3,625) 22,155,260
----------- -------- -------- ----------- -------- -------- -------------
5 Report and Accounts
A copy of the Annual Report and Accounts for the Year ended 30
June 2017 will be sent to all shareholders in due course together
with notice of the Annual General Meeting.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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