TIDMLSAI
RNS Number : 6873O
Location Sciences Group PLC
11 February 2021
11 February 2021
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Regulation 11 of the Market Abuse (Amendment) (EU Exit)
Regulations 2019/310 ("MAR"). With the publication of this
announcement via a Regulatory Information Service, this inside
information is now considered to be in the public domain.
Location Sciences Group PLC
("Location Sciences" or the "Company")
Trading Update and Directorate Changes
Location Sciences (AIM: LSAI), the leading location data insight
and verification company, provides the following trading update for
the year ended 31 December 2020.
Trading Performance
Unaudited revenues for the year ended 31 December 2020 are
expected to be approximately GBP1.07 million, a decrease of
approximately 12% on 2019 (2019: GBP1.21 million). The reduction in
revenue is due to the ongoing impact of the COVID-19 pandemic on
the location-based advertising industry.
Unaudited Verify revenues for the year to 31 December 2020 were
GBP0.32 million, compared to GBP0.50 million in 2019, a reduction
of 36%.
Unaudited Data & Insights revenues showed a modest
improvement, delivering GBP0.75 million for the year to 31 December
2020, a 6% increase on 2019 (2019: GBP0.71 million).
To mitigate the impact of COVID-19, the Company's directors
implemented a cost reduction programme in early 2020 which has led
to unaudited administrative expenses being reduced to approximately
GBP1.50 million for the year, a reduction of 41% on 2019 (2019:
GBP2.55 million).
The unaudited EBITDA loss is expected to be approximately
GBP0.77 million in the full year period, a decrease of
approximately 55% compared to 2019 (2019: EBITDA loss GBP1.71
million).
Impact of COVID-19
Verify revenues have continued to be adversely impacted by the
significantly reduced advertising spend caused by the pandemic. The
anticipated uplift in Verify revenues during Q4 2020 did not
materialise and there has been no improvement in the first part of
2021 due to the ongoing restrictions being imposed by governments
globally.
As reported during 2020, it has been a challenging time for
location-based advertising within sectors that rely on people's
movement, such as retail and QSR.
The outlook for location-based advertising is poor due to the
overall impact of the pandemic on the location-based advertising
industry, with mainstream media agencies now focused on media
delivery rather than adopting new technologies, especially those
which risk limiting delivery scale such as Verify.
Data & Insights
As reported in our interim results, the Company has sought to
mitigate the loss of Verify revenues by enlarging and broadening
its Data & Insights customer base, including helping to inform
the ongoing response to COVID-19. Through its long-term partnership
with CACI, Location Sciences is supplying data to support NHS
England and members of the Scientific Pandemic Influenza Group on
Modelling (SPI-M) in their analysis of how movement of individuals
is impacting the reproduction number (R) and growth rate of
COVID-19 in the UK.
These contract wins enabled the Data & Insights business to
grow modestly during 2020, despite the negative impact of the
pandemic on some of the business's existing customers.
During 2020, the Company developed a new product for the
financial services industry which it expects to launch on the
Bloomberg Enterprise Access point in the next few months. The
product will provide financial analysts with access to market
leading footfall data and insights for UK supermarkets to assist
them to better measure store performance. A further announcement
will be made upon launch of this new product.
Verify Status
The Company launched an updated version of its Verify Proximity
platform at the end of April 2020, providing customers with a
clearer picture of how to obtain better value from their location
spend and how to drive better performance. Following this in June
2020, Location Sciences launched its Verify Audience product
"GeoProtect" in the US. GeoProtect allows brands, agencies and
suppliers to check the validity of location-based derived audience
segments. It also enables a review of historical movements in
contrast to proximity which validates the real time locations as
digital advertising campaigns are delivered.
Since GeoProtect's launch, the Company has made two important
customer wins, both of which were announced in 2020. InMarket,
which is a leader in 360-degree consumer intelligence business in
the US, and The Spoken Thought, Inc. (trading as Mira), which is a
high value audience segment supplier to leading brands and media
agencies across the US. Both contracts have growth potential but
are facing headwinds in the US market due to the ongoing impact of
the pandemic.
Despite the product enhancements, the broadening of the product
offering with GeoProtect, and the key customer wins during 2020,
the performance of Verify has been severely hampered by the
restrictions imposed by governments globally to tackle the ongoing
pandemic.
Further to these developments, in December 2020 shareholders
were advised of potential defamation action against the Company
pursuant to data manipulation identified by Verify and the findings
being reported to its customers. While the threatened legal action
- which the Company believes is baseless - has not transpired, the
reaction from industry participants has been disappointing. The
reality being that the location-based advertising industry is
reluctant to adopt technologies which bring transparency to this
area, especially now, given the negative impact of the
pandemic.
The Company will continue to try and solve what it sees as an
industry problem. However, the directors believe that, as a
knock-on impact of the pandemic, it may now be some years before
the location-based advertising industry fully embraces
transparency.
Cash Resources
In March 2020, the Company raised approximately GBP0.975 million
(before expenses) through an equity placing comprising the issue
and allotment of 111,430,000 new ordinary shares. An additional
approximately GBP0.07 million was raised through the issue and
allotment of 74,057,996 new ordinary shares pursuant to the issue
of warrants.
In addition to the fundraising activities, the Board made swift
cost reductions to mitigate the impact of the downturn in revenues.
These included salary reductions for the Board and senior members
of the team, a hiring freeze, closure of the London office and
staff being furloughed. In addition, with the exception of product
development, all operational expenses were reduced to the minimal
viable levels from April 2020 following the downturn in the
location-based advertising industry caused by the restrictions
imposed by governments globally. These actions, together with the
data and insight customer wins during the year, have to a large
extent offset the impact of the lower Verify revenues on the cash
resources of the business.
As at 31 December 2020, the Company had cash reserves of
approximately GBP1.1 million (2019: GBP1.3 million), which the
directors believe will now be sufficient for the Company's
requirements until 2022.
Board Changes
In recognition of the need for a leaner business going forward,
the size of the Board has been reduced and the Company announces
that both Donald Williams and Niall Hogan are stepping down from
the Board with immediate effect.
The Board would like to thank both Donnie and Niall for their
valuable contributions and consider them friends of the Company
going forward.
Business Review
The Board believes that, in part as a consequence of COVID-19,
the Company and in particular, Verify, will continue to face a
number of trading challenges. This is despite the current relative
strength of the Company's working capital position. As a result,
the Board is now exploring a number of options for the Company and
its businesses and further announcements will be made as and when
appropriate.
Mark Slade, Chief Executive Officer of Location Sciences,
commented: "Like many businesses, 2020 has been an extremely
challenging year for Location Sciences and, disappointingly, has
halted the momentum we had gained in our verification business.
Embracing transparency, which has the side effect of limiting the
scale of media delivery, has simply fallen down the priority list
for many in the industry. On the positive side, we are encouraged
by the durability of our data and insight business and look forward
to launching our first product into the financial services
industry.
"As shown by our results, as a management team we have done
everything possible to reduce costs and conserve the cash resources
of the business.
"The announcement of a business review is the right thing for us
to do for shareholders given the ongoing uncertainty caused by the
global pandemic and the Board will be evaluating all options open
to it."
For further information please contact:
Location Sciences Group PLC via Milk & Honey PR
Mark Slade, Chief Executive Officer
David Rae, Chief Financial Officer
Allenby Capital Limited (Nominated Tel: +44 (0)20 3328
Adviser) 5656
David Hart
Peterhouse Capital (Broker) Tel: +44 (0) 20 7220
Charles Goodfellow 9791
Eran Zucker
Tel: +44 (0)20 3637
Milk & Honey PR 7310
Kirsty Leighton
Jessica Ballinger
About Location Sciences Group PLC:
Location Sciences is a leading independent location data insight
and verification company based in the UK.
Location Sciences has developed the world's first truly
independent location verification solutions, Verify and GeoProtect.
Working in partnership with brands, media agencies and suppliers,
Location Sciences helps to reduce ad-wastage and improve the
effectiveness of location-based advertising campaigns.
Location Sciences data and insights products assist companies
connecting the digital world with the physical world using mobile
location technology data. By combining cutting-edge mobile location
data with proprietary machine learning analytics Location Sciences
provides customers innovative and valuable insights from location
information.
Rule 26 website: www.locationsciencesgroup.ai
Verify website: www.locationsciences.ai
LinkedIn: https://www.linkedin.com/company/locationsciences
Twitter: @LocationSci
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