TIDMKAPE
RNS Number : 5207M
Kape Technologies PLC
17 September 2019
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014
17 September 2019
Kape Technologies plc
("Kape," the "Company," or the "Group")
HALF YEAR RESULTS FOR SIX MONTHSED 30 JUNE 2019
Kape Technologies plc (AIM: KAPE), a global cybersecurity and
malware protection SaaS business, announces its unaudited results
for the six months ended 30 June 2019.
Financial highlights
-- Another strong period marked by international expansion and organic growth driving a rise in profitability:
o Revenues(1) increased 24.2% to $29.9 million (H1 2018: $24.1
million)
o Strong growth in recurring revenues to $21.2 million, an
increase of 301.5% (H1 2018: $5.3 million)
o Adjusted EBITDA(2) up 21.3% to $5.8 million (H1 2018: $4.7
million)
o Robust balance sheet with cash of $36.4 million as at 30 June
2019 and no debt
o Increase of 14.9% in Adjusted Earnings Per Share(3) to 2.5
cents (H1 2018: 2.2 cents)
o Deferred income increased to $10.9 million (December 2018:
$9.5 million)
-- On track to meet full-year expectations
Operational highlights
-- Strong progress in transitioning to a SaaS revenue model:
o Significant improvement in customer retention ratio to 82%
(December 2018: 74%)
o Over one million subscribers, up 24% on prior year, supported
by continued investment in direct sales and marketing
o Expect to deliver $38 million in revenues from existing
customers in future financial years, up 27% (December 2018: $30
million)
-- Strategic acquisitions enhancing global capabilities:
o Intego materially strengthened the Company's position in the
North American market and expands Kape's internet security software
capability
o ZenMate is highly complementary to CyberGhost, Kape's existing
VPN solution, and has strengthened the Company's presence in the
German market
o $1.7 million in annualised cost savings identified relating to
ZenMate
-- Both acquisitions are performing in line with expectations
Outlook
-- Significant long-term growth opportunities across target markets
-- Clear delivery plans for organic growth
-- Successful integration of acquisitions has accelerated
implementation of the Group's strategy
-- The board remains confident in delivering year on year growth
for the current financial year, in line with market
expectations
Ido Erlichman, Chief Executive Officer of Kape, commented:
"We are pleased to report another period of earnings growth.
This performance, coupled with the continued expansion of both our
user base and SaaS-based model, provides Kape with a strong
foundation from which to drive forward. Our results demonstrate the
power of our business model as we head into the second half of the
year having generated strong momentum.
"We have significant ambitions for Kape and having now reached
over one million subscribers and increased our retention rate to
82% - one of the highest in the consumer SaaS space, we firmly
believe much more is possible.
"In the near-term, we plan to further drive sustainable growth
and profitability through ongoing investment in R&D, ensuring
we remain at the forefront of the digital privacy arena and address
consumers' ever-increasing concerns. The progress that Kape has
demonstrated in the first six months of 2019 has been key in
underpinning its ongoing investment proposition."
An audio webcast of Kape's results presentation is now available
via the following link: http://bit.ly/KAPEH119webcast
(1) Revenues from continuing operations only
(2) Adjusted EBITDA from continuing operations only. Adjusted
EBITDA is a non GAAP measure and a company specific measure which
excludes other operating income and expenses which are considered
to be one off and non-recurring in nature.
(3) Adjusted EPS was calculated from the earnings per share from
continuing operations adding back interest, depreciation,
share-based payments and non-recurring costs
Enquiries:
Kape Technologies plc via Vigo Communications
Ido Erlichman, Chief Executive Officer
Moran Laufer, Chief Financial Officer
Shore Capital (Nominated Adviser & Broker) +44 (0)20 7408
Mark Percy / Toby Gibbs / James Thomas 4090
N+1 Singer (Joint Broker) +44 (0) 20 7496
Harry Gooden / George Tzimas 3000
Vigo Communications (Financial Public Relations)
Jeremy Garcia / Antonia Pollock +44 (0)20 7390
kape@vigocomms.com 0237
About Kape
Kape is a leading 'privacy-first' digital security software
provider to consumers. Through its range of privacy and security
products, Kape focusses on protecting consumers and their personal
data as they go about their daily digital lives.
To date, Kape has over 1 million paying subscribers, supported
by a team of over 300 people across eight locations worldwide. Kape
has a proven track record of revenue and EBITDA growth, underpinned
by a strong business model which leverages our digital marketing
expertise.
Through our subscription-based platform, Kape has fast
established a highly scalable SaaS-based operating model, geared
towards capitalising on the vast global consumer digital privacy
market.
www.kape.com
Twitter LinkedIn
Chief Executive Officer's review
Overview
In the first half of 2019, we have seen strong demand for our
core software products, demonstrated by the 24.2% increase in the
Group's revenue to $29.9 million (H1 2018: $24.1 million from
continued operations), as well as a 21.3% increase in Adjusted
EBITDA to $5.8 million (H1 2018: $4.7 million from continued
operations).
With the growing need for consumers globally to control and
protect their information online, Kape continues to capitalise on
the increasing demand for privacy-first online security products.
The scope and quality of our software suite, our ability to drive
individuals to our products and our capability to retain users, has
resulted in Kape securing a growing proportion of what is a
relatively nascent market.
The Group's performance continues to benefit from our digital
marketing expertise and technologies, which sets us apart from many
of our peers. Notably, the performance of both Intego and ZenMate
has improved in the first half, following completion of their
integration, which we expect to continue as we further accelerate
our digital marketing efforts for these solutions. Additionally,
CyberGhost and ZenMate are experiencing increased brand awareness,
which is driving organic user acquisition, providing a
complementary growth engine.
Our growth is testament to our ability to identify, acquire and
then integrate acquisition targets in order to generate heightened
performance from these businesses, with $1.7 million in annualised
cost savings also achieved in relation to ZenMate since its
acquisition.
Key Performance Indicators
In the first six months of the year, Kape has achieved
significant growth against its KPIs, which we set out last year in
order to focus the Group on profitability, growth and earnings
predictability.
30 Jun 31 Dec
2019 2018
Paying users (thousands) 1,215 1,101
Subscriptions (thousands) 1,027 830
Retention rate 82% 74%
Deferred income ($'000) 10,931 9,514
Six months Six months
ended 30 ended 30
June 2019 June 2018
(unaudited) (unaudited)
Adjusted operating cash flow:
Attributable to current year
($'000) 7,297 6,359
Investment in growth (7,094) (3,427)
---------------------------------------- ------------ ------------
Adjusted operating cash flow
($'000) 203 2,932
The stand-out achievement for the Group in this period has been
the significant improvement in our user retention rate to 82%,
which is a key focus for Kape for 2019, as it underpins the quality
of our earnings and the Group's ability to generate revenues for
future periods. We believe the improvement in retention is largely
as a result of our constant focus on R&D and product
development, ensuring our solutions are the best available, and we
are proud that our customers are choosing to consistently renew our
products year after year. Our retention rate is now one of the
highest amongst consumer-focused SaaS providers.
The first six months of 2019 also saw a 23.7% increase in our
subscription user base, which, alongside our improving retention
rate, means the Group is very well-placed to achieve sustained
growth in the years to come. This has already been evidenced by the
Group generating over $10.9 million in deferred income in the
period as we continue to enhance Kape's ongoing revenue
visibility.
Product development
We continue to invest in R&D, with 44% of our workforce
(excluding staff in our customer support centre in the Philippines)
allocated to R&D and the Group's malware detection
capabilities, to ensure that our solutions are consistently at the
forefront of the digital privacy space. This enables us to fully
capitalise on the significant and growing market opportunity that
exists.
As consumers' digital lives continue to expand, and their online
privacy needs as a result, it is critical that our products'
capabilities broaden simultaneously.
Development of our existing product stack has been key in the
first half of 2019. Most notable is the significant progress we
have made with ZenMate, which the Group acquired in October 2018.
This included the launch of the ZenMate Ultimate app, the most
comprehensive update of ZenMate's VPN platform to-date, which
adopts a new infrastructure with central developments including
augmented location features, server security improvements, a mobile
connection checker and faster speeds. In addition, Kape launched
ZenMate Pulse, a comprehensive web firewall extension which
protects against pop-up ads, trackers, phishing schemes, malware
and malvertising. Not only does ZenMate Pulse protect against these
threats, it also enables the user to understand specifically what
the types of threats are.
In addition, Kape's macOS security analyst team discovered
number of important malware security threats for Apple users:
OSX/CrescentCore malware, which installs malicious Safari extension
software, and OSX/Linker, that seeks to capitalise on existing
macOS Gatekeeper security flaws. Kape's users are now fully
protected against both.
Outlook
We look forward to continuing to execute on the board's strategy
of leveraging Kape's key growth drivers:
-- High-growth target market: capturing a larger piece of the consumer digital privacy segment;
-- R&D capabilities: leveraging these and continuing to
invest to ensure Kape's products remain at the forefront of the
market;
-- Proprietary digital distribution and online marketing
expertise: helping maximise our product sales; and
-- Strong business model: giving us the ability to generate
high-quality recurring revenues by growing our user base and
bettering our user retention.
We remain focused on driving organic growth initiatives across
the business, as well as evaluating select earnings enhancing
acquisitions which either add product capabilities or extend our
market reach.
The board remains very confident in delivering growth in the
full year 2019 and in the years to come, in-line with market
expectations.
Ido Erlichman
Chief Executive Officer
16 September 2019
Chief Financial Officer's review
Overview
Total reported revenues from continued operations in the first
half of 2019 increased by 24.2% to $29.9 million (H1 2018: $24.1
million from continued activities). Segmental results increased by
28.2% to $14.7 million (H1 2018: $11.5 million from continued
activities) driven by an increase in direct marketing expenses of
$11.1 million (H1 2018: $9.8 million) and strong performance from
the Group's user acquisition campaigns. Adjusted EBITDA increased
by 21.3% to $5.8 million (H1 2018: $4.7 million).
Adjusted cash flow from operations attributable to the current
financial period was $7.3 million (H1 2018: $6.4 million), which
represents cash conversion of 127%. In addition, during the period
$7.1 million was reinvested in user acquisition costs that will be
expensed in future periods (H1 2018: $3.4 million). When including
this investment, adjusted cash flow from operations decreased to
$0.2 million (H1 2018: $2.9 million). The Group's balance sheet
remains strong with a cash balance of $36.4 million at 30 June 2019
(31 December 2018: $40.4 million) and no debt.
Segmental result
The segmental result has been calculated using revenue less
costs directly attributable to that segment. Cost of sales
comprises payment processing fees and infrastructure costs of the
Group's VPN products. Direct sales and marketing costs related to
user acquisition expenditure.
App distribution H1 2019 H1 2018
$'000 $'000
Revenue 29,933 24,108
Cost of sales (4,163) (2,812)
Direct sales and marketing
costs (11,071) (9,829)
-------- -------
Segment result 14,699 11,467
-------- -------
Segment margin % 49.1 47.6
On 26 July 2018, the Group disposed of its Media division, which
represented a separate reportable segment in the prior year and is
presented as a discontinued operation. As a result, the Group's
management reporting system includes one reportable segment during
the period ended 30 June 2019, which comprised the Group's own
software and SaaS products and distribution platform - App
distribution.
Adjusted EBITDA from continued operations
Adjusted EBITDA for the six months to 30 June 2019 was $5.8
million (H1 2018: $4.7 million). Adjusted EBITDA is a non-GAAP
company specific measure which is considered to be a key
performance indicator for the Group. It excludes share-based
payment charges and expenses, which are considered to be one-off
and non-recurring in nature and are excluded from the following
analysis:
H1 2019 H1 2018
$'000 $'000
Revenue 29,933 24,108
Cost of sales (4,163) (2,812)
Direct sales and marketing
costs (11,071) (9,829)
-------- -------
Segment result 14,699 11,467
-------- -------
Indirect sales and marketing
costs (3,687) (2,507)
Research and development
costs (1,384) (803)
Management, general and administrative
cost (3,872) (3,411)
-------- -------
Adjusted EBITDA 5,756 4,746
-------- -------
EBITDA margin % 19.2 19.7
-------- -------
Operating profit
A reconciliation of Adjusted EBITDA to operating profit is
provided as follows:
H1 2019 H1 2018
$'000 $'000
Adjusted EBITDA 5,756 4,746
Employee share-based payment
charge (989) (187)
Exceptional and non-recurring
costs (519) (721)
Depreciation and amortisation (2,840) (1,696)
Operating profit 1,408 2,142
------- -------
Exceptional and non-recurring costs in H1 2019 comprised
non-recurring staff costs of $0.4 million (H1 2018: $0.5 million)
related to the restructuring of Intego and Zenmate, and $0.1
million (H1 2018: $0.1 million) for professional services for
acquisitions and restructuring expenses. The increase in employee
share-based payment charge is due to a share award grant made in
August 2018. The increase in depreciation and amortisation derives
from amortisation charges of acquired intangible assets that were
added through the acquisitions of Intego and Zenmate in July and
October 2018 respectively.
Profit before tax
Profit before tax was $1.3 million (H1 2018: $1.8 million).
Finance costs of $0.4 million comprise mainly of foreign exchange
differences derived from the Company's subsidiaries. The finance
costs are offset by $0.3 million interest income generated from
short-term deposits and deferred consideration assets.
Profit after tax
Profit after tax was $0.9 million (H1 2018: $1.5 million). The
tax charge derives mainly from Group subsidiaries' residual
profits.
Cash flow
H1 2019 H1 2018
$'000 $'000
Cash flow/(outflow) from
operations (350) 2,264
Exceptional and non-recurring
cash outflow 553 721
Net cash flow from discontinued
operating activities - (53)
Adjusted cash flow from operations 203 2,932
------- -------
% of Adjusted EBITDA 4% 62%
======= =======
Excluding increase of deferred
contract costs 7,094 3,427
Adjusted Cash flow from operations
attributable to current year 7,297 6,359
------- -------
% of Adjusted EBITDA 127% 134%
======= =======
Cash outflow from operations was $0.3 million (H1 2018: $2.3
million cash inflow). Adjusted cash flow from operations after
adding back one-off payments was $0.2 million (H1 2018: $2.9
million). The decrease in operating cash flow is due to an increase
in user acquisition investment attributable to future periods to
$7.1 million (H1 2018: $3.4 million). Excluding the investment,
adjusted operating cash flow attributable to the current financial
period increased to $7.3 million (H1 2018: $6.4 million), which
represents a cash conversion of 127%.
Net tax payments in the period were $0.8 million (H1 2018: $0.3
million). The increase was mainly due to prepayments in France and
the United States by Group subsidiaries related to Intego.
Cash spent in the period on capital expenditure of $1.4 million
(H1 2018: $0.9 million), comprises capitalised development costs
and fixed asset purchases.
Cash outflows from financing activities of $1.4 million (H1
2018: $7.7 million) included a final instalment of $0.9 million (H1
2018: $0.5 million) for the repurchase of CyberGhost's founder's
share-options, and payments of leases of $0.6 million (H1 2018:
$0.6 million). Cash inflows from financing activities included $0.1
million (H1 2018: $0.1 million) of proceeds from the exercise of
employee share options.
As a result, net cash outflow from investing and financing
activities was $2.8 million (H1 2018: $8.6 million).
Financial position
At 30 June 2019, the Group had cash of $36.4 million (31
December 2018: $40.4 million), net assets of $74.9 million (31
December 2018: $72.9 million) and is debt free. At 30 June 2019,
trade receivables and contract assets were $3.2 million (31
December 2018: $3.6 million) which represented 21 days outstanding
(31 December 2018: 13 days).
Moran Laufer
Chief Financial Officer
16 September 2019
Consolidated statement of comprehensive income
For the six months ended 30 June 2019
Six months Six months
ended 30 ended 30
June 2019 June 2018
(unaudited) (unaudited)
Note $'000 $'000
Revenue 3 29,933 24,108
Cost of sales (4,163) (2,812)
------------ ------------
Gross profit 25,770 21,296
Selling and marketing costs (14,827) (12,572)
Research and development
costs (1,547) (908)
Management, general and administrative
costs (5,148) (3,978)
Depreciation and amortisation (2,840) (1,696)
Total operating costs 5 (24,362) (19,154)
Operating profit 5 1,408 2,142
Adjusted EBITDA 5 5,756 4,746
------------ ------------
Employee share-based payment
charge (989) (187)
Exceptional and non-recurring
costs 5 (519) (721)
Depreciation and amortisation (2,840) (1,696)
Operating profit 5 1,408 2,142
--------------------------------------- ---- ------------
Finance income 317 355
Finance costs (420) (676)
------------ ------------
Profit before taxation 1,305 1,821
Tax charge (369) (313)
------------ ------------
Profit from continuing operations 936 1,508
Loss from discontinued operations
(attributable to equity holders
of the company) 9 - (245)
------------ ------------
Profit for the period 936 1,263
Other comprehensive income:
Items that may be reclassified
to profit and loss:
Foreign exchange differences
on translation of foreign
operations 6 84
------------ ------------
Total comprehensive profit
for the period 942 1,347
============ ============
Total profit for the period
attributable to:
Owners of the parent 936 1,209
Non-controlling interests - 54
------------ ------------
Total comprehensive income
attributable to:
Owners of the parent 942 1,293
Non-controlling interests - 54
------------ ------------
Total profit/ (loss) for
the period attributable to
Owners of the parent:
Continuing operations 936 1,508
Discontinuing operations - (299)
936 1,209
Earnings per share from continuing
operations attributable to
the ordinary equity holders
of the company:
Basic earnings per share
(cents) 7 0.7 1.1
Diluted earnings per share
(cents) 7 0.6 1.1
------------ ------------
Earnings per share attributable
to the ordinary equity holders
of the company:
Basic earnings per share
(cents) 7 0.7 0.9
Diluted earnings per share
(cents) 7 0.6 0.9
------------ ------------
*Adjusted EBITDA is a non GAAP measure and a company specific
measure which is earnings before interest, tax, depreciation,
amortisation share based payment charges and exceptional and
non-recurring costs.
Consolidated statement of financial position
As at 30 June 2019
30 June 31 December
2018
2019 (audited)
(unaudited)
Note $'000 $'000
Non-current assets
Intangible assets 35,301 36,265
Property, plant and equipment 810 713
Right-of-use assets 1,393 1,769
Deferred consideration 1,026 934
Deferred contract costs 13,185 7,196
Deferred tax asset 756 728
52,471 47,605
------------ -----------
Current assets
Software license inventory 112 52
Deferred contract costs 6,321 5,216
Deferred consideration 379 323
Trade and other receivables 5,777 6,101
Cash and cash equivalents 36,433 40,405
49,022 52,097
Total assets 101,493 99,702
============ ===========
Equity
Share capital 6 15 15
Additional paid in capital 131,165 131,091
Foreign exchange differences
on translation of foreign
operations 865 859
Retained earnings (57,066) (58,991)
Equity attributable to equity
holders of the parent 74,979 72,974
------------ -----------
Non-current liabilities
Contract liabilities 2,828 2,165
Deferred tax liabilities 3,019 3,125
Long term lease liabilities 685 816
Deferred consideration 160 143
6,692 6,249
------------ -----------
Current liabilities
Trade and other payables 10,760 11,131
Contract liabilities 8,103 7,349
Short term lease liabilities 927 1,103
Deferred consideration 32 896
19,822 20,479
------------ -----------
Total equity and liabilities 101,493 99,702
============ ===========
Consolidated statement of cash flows
For the six months ended 30 June 2019
Six months Six months
ended 30 June ended 30
2019 June 2018
(unaudited) (Unaudited)
$'000 $'000
Cash flow from operating activities
Profit for the period after taxation 936 1,263
Adjustments for:
Amortisation of intangible assets 2,049 1,088
Depreciation of Right-to-use assets 628 625
Depreciation of property, plant and
equipment 163 146
Loss on sale of property, plant and
equipment 37 40
Tax charge 369 444
Interest Income (317) (352)
Interest expenses 37 194
Share based payment charge 989 187
Interest received 169 352
Unrealised foreign exchange differences 39 75
-------------- ------------
Operating cash flow before movement
in working capital 5,099 4,062
Decrease in trade and other receivables 321 3,663
Increase in software licences inventory (60) (82)
Decrease in trade and other payables (33) (2,375)
Increase in deferred contract costs (7,094) (3,427)
Increase in contract liabilities 1,417 423
-------------- ------------
Cash flow from operations (350) 2,264
Tax paid net of refunds (839) (345)
-------------- ------------
Cash (used)/ generated from operations (1,189) 1,919
Cash flow from investing activities
Purchases of property, plant and
equipment (302) (99)
Sale of property, plant and equipment 6 -
Intangible assets acquired (1) (5)
Capitalisation of development costs (1,084) (772)
-------------- ------------
Net cash used in investing activities (1,381) (876)
Cash flow from financing activities
Repurchase of share-based consideration (880) (475)
Dividend paid - (6,763)
Payment of leases (591) (554)
Exercise of options by employees 74 49
-------------- ------------
Net cash used in financing activities (1,397) (7,743)
-------------- ------------
Net decrease in cash and cash equivalents (3,967) (6,700)
Revaluation of cash due to changes
in foreign exchange rates (5) (130)
Cash and cash equivalents at beginning
of year 40,405 69,502
-------------- ------------
Cash and cash equivalents at end
of year 36,433 62,672
============== ============
Notes
1. General information
The financial information set out in this document is for Kape
Technologies plc (the "Company") and its subsidiary undertakings
(together the "Group") in respect of the six months ended 30 June
2019.
Kape is a leading 'privacy-first' digital security software
provider to consumers. Through its range of privacy and security
products, Kape focusses on protecting consumers and their personal
data as they go about their daily digital lives.
To date, Kape has over one million paying subscribers, supported
by a team of over 300 people across eight locations worldwide. Kape
has a proven track record of revenue and EBITDA growth, underpinned
by a strong business model which leverages its digital marketing
expertise. Through its subscription based platform, Kape has fast
established a highly scalable SaaS-based operating model, geared
towards capitalising on the vast global consumer digital privacy
market.
The Board of Directors approved this interim financial
information on 16 September 2019.
2. Basis of preparation
This interim consolidated financial information has been
prepared in accordance with International Financial Reporting
Standards, International Accounting Standards and interpretations
(collectively IFRS) issued by the International Accounting
Standards Board (IASB) as adopted for use in the EU. They do not
include all disclosures that would otherwise be required in a
complete set of financial statements and should be read in
conjunction with the 31 December 2018 Annual Report. The financial
information for the half years ended 30 June 2019 and 30 June 2018
does not constitute statutory accounts.
The annual financial statements of Kape Technologies Plc ('the
group') are prepared in accordance with IFRS as adopted by the
European Union. The comparative financial information for the year
ended 31 December 2018 included within this report does not
constitute the full statutory Annual Report for that period. The
statutory Annual Report and Financial Statements for 2018 have been
filed with the Registrar of Companies. The Independent Auditors'
Report on the Annual Report and Financial Statements for the year
ended 31 December 2018 was unqualified and did not draw attention
to any matters by way of emphasis.
The Group has applied the same accounting policies and methods
of computation in its interim consolidated financial statements as
in its 2018 annual financial statements including the early
adoption of IFRS16, except for those that relate to new standards
and interpretations effective for the first time for periods
beginning on (or after) 1 January 2019, and are adopted in the 2019
financial statements.
IFRIC 23 'Uncertainty over Income Tax Positions' is effective
for annual periods beginning on or after 1 January 2019. IFRIC 23
clarifies how to recognise and measure current and deferred income
tax assets and liabilities when there is uncertainty over income
tax treatments. When there is uncertainty over income tax
treatments. IFRIC 23 does not have a significant impact on the
amounts recognised in the Group's consolidated financial
statements.
After making enquiries, the directors have concluded that the
Group has adequate resources to continue operational existence for
the foreseeable future. Accordingly, they continue to adopt the
going concern basis in preparing the half-yearly consolidated
unaudited financial statements.
3. Revenue disaggregation of revenue
The following table presents our revenues disaggregated by the
timing of revenue recognition in accordance with our reporting
segments:
Six months ended Six months ended
30 June 2019 30
(unaudited) June 2018
$'000 (Unaudited)
$'000
Revenue recognised
over a period 10,058 6,149
----------------- -----------------
Revenue recognised
at a point in
time 19,875 17,959
----------------- -----------------
Total 29,933 24,108
----------------- -----------------
4. Segmental information
Segment revenues and results
On 26 July 2018, the Group disposed of its Media division, which
represented a separate reportable segment in the prior year, and is
presented as a discontinued operation. As a result, the Group
management reporting system includes one reportable segment during
the period ended June 30, 2019 which comprised the Group's own
software and SaaS products and distribution platform.
Six months ended 30 June App distribution
2019 Total
$'000 $'000
Revenue 29,933 29,933
Cost of sales (4,163) (4,163)
Direct sales and marketing
costs (11,071) (11,071)
---------------- ---------
Segment result 14,699 14,699
Central operating costs (8,943)
---------
Adjusted EBITDA (note 5) 5,756
Depreciation and amortisation (2,840)
Employee share-based payment
charge (989)
Exceptional and non-recurring
costs (519)
---------
Operating profit 1,408
Finance income 317
Finance costs (420)
---------
Profit before tax 1,305
Taxation (369)
---------
Profit from continuing operations 936
Loss from discontinued operations -
(attributable to equity holders
of the company)
---------
Profit for the period 936
Six months ended 30 June App distribution Media
2018 Total
$'000 $'000 $'000
Revenue 24,108 - 24,108
Cost of sales (2,812) - (2,812)
Direct sales and marketing
costs (9,829) - (9,829)
---------------- ----- --------
Segment result 11,467 - 11,467
Central operating costs (6,721)
--------
Adjusted EBITDA (note 5) 4,746
Depreciation and amortisation (1,696)
Employee share-based payment
charge (187)
Exceptional and non-recurring
costs (721)
--------
Operating profit 2,142
Finance income 355
Finance costs (676)
--------
Profit before tax 1,821
Taxation (313)
--------
Profit from continuing operations 1,508
Loss from discontinued operations
(attributable to equity holders
of the company) (245) (245)
--------
Profit for the period 1,263
5. Operating Profit
Adjusted EBITDA
Adjusted EBITDA is calculated as follows:
Six months Six months
ended 30 ended 30
June 2019 June 2018
$'000 $'000
Operating profit 1,408 2,142
Depreciation and amortisation 2,840 1,696
Employee share-based payment
charge 989 187
Exceptional and non-recurring
costs:
Non-recurring staff and exceptional
costs 519 721
---------- ----------
Adjusted EBITDA 5,756 4,746
---------- ----------
Operating costs
Operating costs are further analysed as follows:
Six months Six months Six months Six months
ended 30 ended 30 ended 30 ended 30
June 2019 June 2019 June 2018 June 2018
Adjusted Total Adjusted Total
$'000 $'000 $'000 $'000
Direct sales and marketing
costs 11,071 11,071 9,829 9,829
Indirect sales and marketing
costs 3,687 3,756 2,507 2,743
---------- ---------- ---------- ----------
Selling and marketing costs 14,758 14,827 12,336 12,572
--------------------------------------- ---------- ---------- ---------- ----------
Research and development
costs 1,384 1,547 803 908
Management, general and administrative
cost 3,872 5,148 3,411 3,978
Depreciation and amortisation 1,281 2,840 976 1,696
---------- ---------- ---------- ----------
Total operating costs 21,295 24,362 17,526 19,154
========== ========== ========== ==========
Adjusted operating costs exclude share based payment charges,
exceptional and non-recurring costs, amortisation of acquired
intangible assets and other operational losses from the disposal of
fixed assets.
6. Shareholder's equity
Ordinary share capital as at 30 June 2019 amounted to $14,850
(30 June 2018: $14,850; 31 December 2018: $14,850).
The number of shares in issue as at 30 June 2019 was 148,496,073
(30 June 2018: 148,496,073; 31 December 2018: 148,496,073).
As at 30 June 2019, the Company held in treasury a total of
4,390,442 ordinary shares of $0.0001 (30 June 2018: 6,561,685; 31
December 2018: 4,476,153). During the six months ended 30 June
2019, 85,111 ordinary shares of $0.0001 were transferred out of
treasury to satisfy the exercise of options by the Company
employees (30 June 2018: 88,563).
7. Earnings per share
Basic profit (loss) per share is calculated by dividing the
profit (loss) attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding during the
period.
Six months Six months
ended 30 ended 30
June 2019 June 2018
cents cents
Basic earnings per share:
From continuing operations 0.7 1.1
from discontinued operations - (0.2)
Total basic earnings per
share 0.7 0.9
Diluted earnings per share:
From continuing operations 0.6 1.1
from discontinued operations - (0.2)
Total diluted earnings per
share 0.6 0.9
Adjusted basic 2.6 2.2
Adjusted diluted 2.5 2.2
Adjusted earnings per share is a non-GAAP measure and therefore
the approach may differ between companies. Adjusted earnings have
been calculated as follows:
Six months Six months
ended 30 ended 30
June 2019 June 2018
$'000 $'000
Profit/(Loss) for the period 936 1,263
Post tax adjustments:
Employee share-based payment
charge 1,010 187
Exceptional and non-recurring
costs 416 662
Amortisation on acquired
intangible assets 1,244 774
Loss from discontinued operations - 245
Adjusted profit for the year 3,606 3,131
Number Number
Denominator - basic:
Weighted average number of
equity shares for the purpose
of earnings per share 142,285,061 141,869,089
Denominator - diluted
Weighted average number of
equity shares for the purpose
of diluted earnings per share 145,512,872 142,216,068
The diluted denominator has not been used where this has
anti-dilutive effect.
The difference between weighted average number of Ordinary
shares used for basic earnings per share and the diluted earnings
per share is 3,227,811 (H1 2018: 346,979) being the effect of all
potentially dilutive Ordinary shares derived from the number of
share options granted to employees.
8. Related party transactions
The Group is controlled by Unikmind Holdings Limited, registered
in Isle of Man, which owns 72.73% of the Company's shares. Mr.
Teddy Sagi is the sole ultimate beneficiary of Unikmind Holdings
Limited.
During the period the following transactions were carried out
with related parties:
Six months Six months
ended 30 ended 30
June 2019 June 2018
$'000 $'000
Revenue from common controlled company - 86
Technical support services to end customers
and Administration services provided by
common controlled company (165) (1,880)
Development services provided by common
controlled company (30) -
Payment processing services provided by
common controlled company (170) (170)
Amortisation of Right-to-use assets with
common controlled companies (414) (372)
Interest expenses from Lease liabilities
to common controlled companies (35) (39)
(814) (2,375)
========== ==========
9. Discontinued operation
On 26 July 2018, the Group sold the Media division to Ecom
Online Ltd. As at the sale date, the Media division included
Clearvelvet Trading Limited ("Clearvelvet") and Intangible assets
of the Media CGU. This sale is in-line with the Company's strategy
to develop and distribute its own cybersecurity products.
10. Cautionary statement
This document contains certain forward-looking statements
relating to Kape Technologies plc ('the Group'). The Group
considers any statements that are not historical facts as
"forward-looking statements". They relate to events and trends that
are subject to risk and uncertainty that may cause actual results
and the financial performance of the Group to differ materially
from those contained in any forward-looking statement. These
statements are made by the directors in good faith based on
information available to them and such statements should be treated
with caution due to the inherent uncertainties, including both
economic and business risk factors, underlying any such
forward-looking information.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR LLFSDADIRLIA
(END) Dow Jones Newswires
September 17, 2019 02:01 ET (06:01 GMT)
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