TIDMPCIP
RNS Number : 8180S
PCI-PAL PLC
14 March 2023
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the company's obligations under Article 17 of MAR.
14 March 2023
PCI-PAL PLC
("PCI Pal" or "the Group" or "the Company")
Interim Results, Analyst Briefing & Details of Investor
Presentation
PCI-PAL PLC (AIM: PCIP), the global cloud provider of secure
payment solutions for business communications , is pleased to
announce its unaudited interim results for the six months to 31
December 2022.
Financial highlights for the period
H1 FY23 H1 FY22
ending 31 ending 31
December December change
2022 2021
Revenue GBP7.26m GBP5.47m +33%
---------------------- ---------------------- --------------------
Gross Margin % 87% 81%
---------------------- ---------------------- --------------------
% of revenues from recurring
contracts 85% 90%
---------------------- ---------------------- --------------------
Adjusted EBITDA(1) loss (GBP0.57m) (GBP0.58m) +2%
---------------------- ---------------------- --------------------
Loss from operating activities (GBP1.88m) (GBP1.10m) -71%
---------------------- ---------------------- --------------------
New ACV(2) contract sales
in period GBP1.47m GBP1.76m -16%
---------------------- ---------------------- --------------------
TACV(3) GBP14.74m GBP11.34m +30%
---------------------- ---------------------- --------------------
ARR(4) GBP11.92m GBP8.96m +33%
---------------------- ---------------------- --------------------
NRR(5) 106% 120%
---------------------- ---------------------- --------------------
Customer retention(6) 95% 97%
---------------------- ---------------------- --------------------
Cash GBP1.88m GBP5.53m
---------------------- ---------------------- --------------------
Operating highlights in the period
-- On-going accumulation of TACV driving continued strong increase in revenue
-- Successfully balancing drive to near-term profitability
whilst investing in continued strong growth
-- Further increase in gross margin to 87% driven by customer demand for true cloud services
-- Partner eco-system performing well with 87% of contracts in period signed through resellers
-- 77 new logo customers signed in the period, a record. 39 upsell contracts were also signed.
-- Launched Open Banking product, the first in series of new
features adding to the existing value proposition of the Group's
cloud platform
-- Strong customer retention of 95% including positive net retention of 106%
Current trading
-- The Board is confident of making further strong progress in
the second half as PCI Pal continues to execute against its
near-term plans. Trading in the first two months of H2 is in line
with management's expectations and revenue momentum continues with
strong visibility of the full year number.
-- Given the trading momentum being demonstrated by the Group,
the Board reiterates the outlook set out in its trading update on 2
February 2023 and that it remains firmly on track to deliver
monthly cashflow breakeven in this financial year, in line with the
Board's expectations.
(1) Adjusted EBITDA is the loss on Operating Activities before
depreciation and amortisation, exchange movements charged to the
profit and loss, exceptional items and expenses relating to share
option charges
(2) ACV is the annual recurring revenue generated from a
contract.
(3) TACV is the total annual recurring revenue of all signed
contracts, whether invoiced and included in deferred revenue or s
till to be deployed and/or not yet invoiced.
(4) ARR is the Annual Recurring Revenue of all the deployed
contracts.
(5) NRR is the net retention rate of the contracts that are live
on the AWS platform rate and is calculated using the opening total
value of deployed contracts 12 months ago less the ACV of lost
deployed contracts in the last 12 months plus the ACV of upsold
contracts signed in the last 12 months all divided by the opening
total value of deployed contracts at the start of the 12 month
period.
(6) Customer retention is calculated using the formula 1 minus
(the ACV of lost deployed contracts on the AWS platform in the last
12 months divided by the opening total value of deployed contracts
12 months ago).
Commenting on the results for the period, James Barham, Chief
Executive Officer said:
"We have delivered another strong period of growth at PCI Pal.
It's been a period that has emphasised the strength of our business
model given the backdrop of increased global economic challenges.
As the market-leaders in cloud solutions in our space, with our
patented cloud capabilities, we continue to see the benefits of the
focus on our partner eco-system and our capability to deliver our
services in a light-touch way, anywhere in the world.
"As previously announced, we enter H2 confident of delivering
monthly cashflow breakeven in the current financial year. This
financial progress is balanced with the investment required to
continue to realise the opportunities in front of us; further
growing our addressable market through the expansion of our product
suite; which in turn will not only drive sales, but also support us
to maintain high levels of customer retention."
Analyst Briefing: 9.30am today, Tuesday 14 March 2023
An online briefing for Analysts will be hosted by James Barham,
Chief Executive, and William Good, Chief Financial Officer, at
9.30am today Tuesday 14 March 2023 to review the results and
prospects. Analysts wishing to attend should contact Walbrook PR on
pcipal@walbrookpr.com or 020 7933 8780.
Investor Presentation: 3.00pm on Thursday 16 March 2023 (UK
time)
The Directors will hold an investor presentation to cover the
results and prospects at 3.00pm on Thursday 16 March 2023 (UK
time).
The presentation will be hosted through the digital platform
Investor Meet Company. Investors can sign up to Investor Meet
Company and add to meet PCI-PAL PLC via the following link
https://www.investormeetcompany.com/pci-pal-plc/register-investor .
For those investors who have already registered and added to meet
the Company, they will automatically be invited.
Questions can be submitted pre-event to pcipal@walbrookpr.com or
in real time during the presentation via the "Ask a Question"
function.
For further information, please contact:
PCI-PAL PLC Via Walbrook PR
James Barham - Chief Executive
Officer
William Good - Chief Financial
Officer
finnCap (Nominated Adviser and
Broker) +44 (0) 20 7227 0500
Marc Milmo/Simon Hicks (Corporate
Finance)
Sunila De Silva (Corporate Broking)
Walbrook PR +44 (0) 20 7933 8780
Tom Cooper/Nick Rome/Joe Walker +44 (0) 797 122 1972
PCIPAL@walbrookpr.com
About PCI Pal:
PCI Pal is a leading provider of Software-as-a-Service ("SaaS")
solutions that empower companies to take payments from their
customers securely, adhere to strict industry governance, and
remove their business from the significant risks posed by
non-compliance and data loss. Our products secure payments and data
in any business communications environment including voice, chat,
social, email, and contact centre. We are integrated to, and resold
by, some of the worlds' leading business communications vendors, as
well as major payment service providers.
The entirety of our product-base is available from our global
cloud platform hosted in Amazon Web Services ("AWS"), with regional
instances across EMEA, North America, and ANZ.
For more information visit www.pcipal.com or follow the team on
Linkedin: https://www.linkedin.com/company/pci-pal/
Chief Executive Officer's Business Review
Overview
I am pleased to report a strong first half of growth for PCI
Pal. Revenue increased 33% to GBP7.3 million (2021: GBP5.5
million). PCI Pal's early adoption of true cloud solutions
continues to benefit the financial health of the business, with
gross margins growing further to 87% (2021: 81%). This increase in
margins reflects the continued accumulation of license based income
generated by the business across its globally available AWS-hosted
secure payments platform.
Adjusted EBITDA for the period was in line with the prior year
loss of c.GBP0.6 million, which, given the substantial additional
investments in new employees and technology developments over the
last 12 months, highlights the further progress of the business.
Furthermore, having ended H1 in a strong position, the Board has
confidence of meeting management expectations for FY23, as well as
hitting sustained monthly cashflow positivity in the second half of
the current financial year.
PCI Pal's sales model is partner-first and, as a result, we have
built a robust partner program supported by a commitment to channel
across our entire organisation. This approach is at the core of
everything we do. The strategy continues to pay off with a record
number of new customer contracts signed in the period and 87% of
these signed through resellers. ACV for the period was below the
same period last year at GBP1.5 million (2021: GBP1.8 million),
however, as commented at the time, the prior year included several
large expansion upsells to our largest customers. The sales outlook
for H2 remains strong. Supporting this strong outlook is the
continued accumulation of TACV, a key indicator of future recurring
revenues, which increased 30% to GBP14.7 million (2021: GBP11.3
million).
Sales highlights in H1 include good progress in our plans to
increase our enterprise customer-base, particularly in the US where
we have achieved strong pipeline momentum in the period. This was
evidenced by two of the larger deals signed in H1; the first with
one of the largest clothing retailers in the world; the second with
a large US-headquartered energy company. The clothing retailer is
now live across more than 2,500 contact centre agents in the US;
and the energy company signed at the end of the second quarter is
going through deployment across over 1,200 agents in the US and
Canada.
Supporting our sustained strong revenue growth is the continued
low churn rates of existing customers. Churn in the period was just
5% (2021: 3%). Additionally, NRR was 106% which was ahead of
management expectations for the period. The prior year (2021: 120%)
benefitted significantly from the large expansion upsells to
existing customers, as mentioned above.
PCI Pal's continued progress has always been underpinned by an
excellent scale up working culture. Highlighting this in the period
we achieved employee retention of 93%. It is our people that
support this business to successfully balance the execution of our
strategic initiatives; driving further strong revenue growth and
near term month to month profitability; and supporting the
continued investment to expand our addressable market
opportunity.
Further Global Expansion
Having launched our operations in Australia and Canada last
year, we can report good progress: providing on-the-ground support
to our global partners; as well as enabling regional expertise in
those local markets. We have strong teams in place in both regions
and we can see early benefits of this coming through in our sales
pipelines, as well as positive engagement and feedback from
partners' teams locally.
As reported at the last full year, at PCI Pal today we are
taking a more holistic view of the global addressable market
opportunity available to us, particularly as our products have
relevance to any contact centre, anywhere in the world. With the
strongholds we have established in the UK and US, and the new
presence in Canada and Australia, we have a solid foundation from
which to press on cost-efficiently into other corners of the globe
leveraging our major partner relationships and current cloud
technology stack.
Product
PCI Pal was the first to launch a true cloud solution to the
market in early 2017, and as a result has the most mature, and most
utilised platform. PCI Pal's patented approach disrupted a market
that was previously burdened by hardware-led, on-premise solutions,
and as a result we have empowered our customers to secure
consumer's data through the use of our highly flexible,
light-touch, and easy-to-integrate cloud solutions.
Amazon Web Services is our chosen provider of virtualised cloud
services where our platform is hosted today. AWS is also the most
commonly used cloud hosting provider across all our partners,
making it easier to integrate our solutions with theirs.
Furthermore, our platform has been designed to be agnostic to any
third party environments it operates with so as to not limit who we
can work with. This cloud strategy has been a key factor in our
capability to partner with some of the world's leading technology
companies in the business communications (CCaaS, UCaaS, CPaaS) and
payments markets, including Genesys, 8x8, Vonage, Talkdesk,
Worldpay, and Amazon Connect.
Having successfully established this core cloud technology
platform, combined with a strong partner eco-system, we are
beginning to increase the breadth of our product offering to best
capitalise on our investments to date. As a result, PCI Pal's
product vision is evolving to incorporate many of the digital
payment methods available to merchants across e-commerce
environments and bringing those capabilities to the contact
centre.
PCI Pal's near term product roadmap includes further features
incorporating modern-day digital payment methods, such as Buy Now
Pay Later and e-Wallets, as well as enhancements to its user
interfaces and data analytics capabilities. The majority of these
enhancements and new features, over time, will not only drive
further demand and retention in our core licenses today, but also
help to drive incremental transactional revenue as PCI Pal benefits
from more involvement in the individual payments being
processed.
One of the first of the new payment methods was launched in the
period. The digitally-native Open Banking product, allows consumers
to pay merchants using our services directly from their bank
account rather than using a credit or debit card. PCI Pal's
offering can facilitate payments from virtually all banks in the
UK, where the product has been first launched. This enhancement
adds both fraud risk mitigation and transaction processing cost
reduction to the existing PCI Pal security value proposition. Open
Banking is one of the fastest growing payment methods in the UK and
is taking hold across the globe.
Update on the unfounded claims of patent infringement
It is nearly 18 months since the Company became subject to
unfounded claims of patent infringement in both the UK and US by
one of its competitors, Semafone Ltd (now renamed Sycurio Ltd). The
action was brought against PCI Pal shortly after Sycurio was
acquired by the investment firm Livingbridge. It is our belief that
the claims have been made in an attempt to disrupt our momentum and
gain a commercial advantage given PCI Pal is the fastest growing
provider in the space, with the most extensive partner eco-system,
and the most mature public cloud offering.
The Directors continue to strongly refute the claims being made
and as a result we have both defended our position on infringement,
as well as made a number of counterclaims against Sycurio whose
patents we believe to be invalid. We have worked closely with our
legal advisors both in the UK and the US and remain confident in
being successful across the breadth of our case. The court hearing
in the UK is scheduled for mid-June 2023, with the US court dates
yet to be set but expected late 2024.
Our counterclaims of invalidity are independent claims to those
made by Sycurio, and therefore fully within our control. It is well
known that patents are not properly tested until they are
litigated. We have pursued invalidity in considerable depth, and as
such intend to see through invalidating Sycurio's patents.
PCI Pal has its own patents for the way in which its Agent
Assist services integrate with third party environments in the
cloud and how card data is captured. In FY22, we reported that we
had been granted a patent for these methods in the US following a
4-year application process. This grant was preceded by a review
undertaken by the US Patent Office against a number of competitor
patents, including the patents Sycurio has asserted against PCI
Pal. Since then, PCI Pal's patent has been granted in the EU, UK,
Australia and New Zealand.
For completeness, and in keeping with the prudent and thorough
way that we run this business, we have also made plans in the
unlikely scenario that all proceedings go against us, with various
options for product adjustments and enhancements that should ensure
our ability to continue operating in a non-infringing manner. As is
normal in patent cases of this nature, we have filed a number of
these product variants with the courts already.
Given the confidence levels and proximity to the UK trial in
June 2023, the Company is fully prepared for court, both defending
its position on infringement as well as being successful in its own
suit to invalidate Sycurio's patents.
Outlook
Following the strong financial performance in H1 we are seeing
the revenue momentum continue into H2. This revenue momentum is
supported by the continued strength of our sales pipeline which
combined gives the Board confidence that the Company will meet
management expectations for the full year to end June 2023.
Additionally, our positive cash momentum is evidenced by the
recent improvement in just the first two months of H2 and now
stands at the end of February 2023 at GBP3.4 million (end December
2022: GBP1.9 million).
The new business sales outlook remains strong. This is
underpinned by high levels of engagement and activity with our key
partners, as well as the enablement of new partners further adding
to the strength of our market-leading partner eco-system.
I look forward to updating you with further progress later in
the year.
James Barham
Chief Executive Officer
14 March 2023
CFO's Financial Review
The Group's financial performance for the six months to December
2022 has continued to be very good. The Company is delivering
strong growth and continues to move towards sustained monthly cash
breakeven, expected in H2FY23.
Revenue and gross margin
The Group continues to focus on signing and delivering
high-quality recurring revenues from its growing customer base.
Group revenue grew by 33% in the period to GBP7.26 million (2021:
GBP5.47 million). This high-quality revenue, paired with the
operational efficiency of its true cloud platform hosted on AWS,
has allowed the Group to continue to improve Gross Margin to 87% in
the period (2021: 81%). Of the revenue recorded in the period, 85%
(2021: 90%) has come from annually recurring licences or equivalent
transactions. The decline in the comparative percentage is due to
us taking on a short-term contract, in the last 12 month, with one
of our major customers in the UK, the revenue for which we are not
treating as recurring.
TACV at the half year has grown to GBP14.74 million (2021:
GBP11.34 million), which provides the Group with a high visibility
of revenue for the remainder of the financial year, and beyond. Run
rate ARR of "live" contracts has increased by 33% at period end to
GBP11.92 million (2021: GBP8.96 million).
Currency
Since 31 December 2021 the US dollar exchange rate has changed
from $1.32 to $1.24. This 6% exchange rate swing has accounted for
approximately GBP0.13 million of the revenue growth or 2.3% of the
reported growth. On the converse side, our US dollar expenses which
mainly relate to staffing in the US have increased by a similar
number and so the net difference to the Group's reported losses is
not material.
Churn and Net Retention
In line with its expectations for the year, the Directors are
pleased to report that the Group has continued to up-sell more
contracts to its existing customer base than it loses, and as a
result Net Revenue Retention ("NRR") for its AWS platform, remains
positive at 106% (30 June 2022: 120%). The year on year decrease in
NRR was expected as H1FY22 included a number of large expansion
sales to several enterprise-sized customers.
Contributing to the positive NRR, customer churn rates remain on
target at 5% (30 June 2022: 3%). The churn accounts for GBP0.32m of
lost ARR, of which the largest single customer churned accounted
for GBP0.09m (28%). This customer ceased using services after they
were acquired by another company who was using an in-house
compliance capability.
Given the growing TACV and low churn levels, revenues are
expected to grow in line with management expectations.
Administrative expenses
Total administrative expenses were GBP8.19 million (2021:
GBP5.54 million), an increase of 48%.
As planned following the fundraising in April 2021, the Group
has continued to hire new headcount to support its international
growth and product development plans with the number of employees
increasing to 108 (2021: 86) at the period end. Reflecting this
growth in head count, personnel costs charged to the Statement of
Comprehensive Income (including commission, bonuses and travel and
subsistence expenses) grew to GBP5.85 million (2021: GBP4.02
million), of which GBP0.70 million (2021: GBP0.47 million) were
capitalised as Software Development costs. Personnel costs make up
79% (2021: 73%) of the adjusted administrative costs (excluding
exchange movements, share option charges and exceptional items) of
the business.
The expense of running our AWS global platform and associated
software was GBP0.46 million in the period (2021: GBP0.45
million).
Included in the administrative expenses is a charge for foreign
exchange movements of GBP0.18 million (2021: credit of GBP0.33
million) which has been caused by the strengthening of the US
dollar from $1.3215 (31 December 2021) to $1.2309 (30 June 2022) to
$1.2406 (31 December 2022).
Depreciation/amortisation of GBP0.57 million (2021: GBP0.45
million) has also been charged as part of the administrative
expenses.
Exceptional costs
As explained in the CEO's review, we have been building both a
strong defence against the unfounded patent infringement claims
made against the Company in the UK and US by Sycurio Ltd, as well
as strong counter-claims of invalidity against the patents in
question. In H1 FY23, the Group incurred GBP0.43 million of legal
fees relating to the patent claim, bringing the total expenditure
to GBP1.23 million since the claim was made in September 2021.
These expenses have been treated as an exceptional item in the
Group's Statement of Comprehensive Income.
Adjusted operating loss
The regional operating results and underlying performance
analysis used within the Group are shown in Notes 4 & 5 below.
These adjusted figures are the Company's preferred performance
measures as it more accurately reflects the underlying performance
of the Group's operations.
Adjusted operating losses, excluding the charges resulting from
the Group's share option scheme, exceptional costs and any exchange
gains and losses charged to the Statement of Comprehensive Income,
increased by 10% to a loss of GBP1.14 million (2021: GBP1.04
million). The performance was better than the Board's expectations
and reflects the resilience of the business model having taken on
22 additional employees in the last 12 months.
Adjusted EBITDA losses have remained stable at a loss of GBP0.57
million (2021: GBP0.58 million).
Key financial performance indicators
The Directors use several Key Financial Performance Indicators
(KPIs) to monitor the progress and performance of the Group, its
subsidiaries and targets. All the core KPIs continue to show
performance better than expectations.
The principal financial KPIs are as follows:
Six months Change Six month Change six months
to 31 Dec % to 30 Jun % to 31
2022 2022 Dec 2021
Revenue in the six
month period GBP7.26m +12% GBP6.47m +18% GBP5.47m
----------- ------- ----------- ------- -----------
Gross Margin in the
six month period 86.9% 86.1% 81.2%
----------- ------- ----------- ------- -----------
Recurring Revenue(1)
in the six month period GBP6.17m +10% GBP5.62m +14% GBP4.95m
----------- ------- ----------- ------- -----------
Recurring Revenue as
% of Revenue in six
month period 85% 87% 90%
----------- ------- ----------- ------- -----------
Adjusted EBITDA(2)
in six month period (GBP0.57m) +56% (GBP1.30m) -124% (GBP0.58m)
----------- ------- ----------- ------- -----------
Cash GBP1.88m GBP4.89m GBP5.53m
----------- ------- ----------- ------- -----------
Deferred Income GBP11.53m GBP10.62m GBP8.75m
----------- ------- ----------- ------- -----------
(1) Recurring Revenue is the revenue generated from the
recurring elements of the contracts held by the Group and
recognised in the Statement of Comprehensive Income
(2) Adjusted EBITDA is the loss on Operating Activities before
depreciation and amortisation, exchange movements charged to the
profit and loss, exceptional items and expenses relating to share
option charges
The principal operational KPIs are as follows:
As at 31 Change As at 30 Change As at 31
Dec 2022 % Jun 2022 % Dec 2021
Contracted TACV(1)
deployed and live GBP11.92m +8% GBP11.05m +23% GBP8.96m
---------- ------- ---------- ------- ----------
Contracted TACV in
deployment GBP1.94m +73% GBP1.12m -41% GBP1.89m
---------- ------- ---------- ------- ----------
Contracted TACV - projects
on hold GBP0.88m -26% GBP1.19m +143% GBP0.49m
---------- ------- ---------- ------- ----------
Total Contracted TACV GBP14.74m +10% GBP13.36m +18% GBP11.34m
---------- ------- ---------- ------- ----------
% of TACV derived from
variable transactions
deemed recurring 18% 22% 23%
---------- ------- ---------- ------- ----------
ARR(2) GBP11.92m +8% GBP11.05m +23% GBP8.96m
---------- ------- ---------- ------- ----------
Signed ACV in six month
period GBP1.47m -14% GBP1.70m -4% GBP1.76m
---------- ------- ---------- ------- ----------
Rolling value of ACV GBP0.11m GBP0.18m GBP0.12m
of contracts cancelled
before deployment in
last 12 months
---------- ------- ---------- ------- ----------
AWS Platform Churn(3) 5.1% 3.1% 3.4%
---------- ------- ---------- ------- ----------
AWS Platform Net Retention
Rate(4) 106.3% 117.7% 120.4%
---------- ------- ---------- ------- ----------
Headcount at end of
period (excluding non-executive
directors) 108 103 86
---------- ------- ---------- ------- ----------
Ratio Personnel cost
to normalised administrative
expenses 79% 74% 73%
---------- ------- ---------- ------- ----------
(1) TACV is the total annual recurring revenue of all signed
contracts, whether invoiced and included in deferred revenue or
still to be deployed and/or not yet invoiced
(2) ARR is the Annual Recurring Revenue of all the deployed
contracts including an assessment of variable transactions deemed
recurring
(3) AWS platform churn is calculated using the ACV of lost
deployed contracts in the last twelve months divided by the opening
total value of deployed contracts at the start of the twelve month
period
(4) AWS platform net retention rate is calculated using the
opening total value of deployed contracts at the start of the
period less the ACV of lost deployed contracts in the period plus
the ACV of upsold contracts signed in the period all divided by the
opening total value of deployed contracts at the start of the
period
Cashflow and liquidity
Cash as at the period end was GBP1.88 million (30 June 2022:
GBP4.89 million).
The Directors, on a monthly basis, receive standard reports
relating to cash forecasts and future cash burn to ensure that the
Group's expansion plans can continue to be financed comfortably.
The Group is on track to hit monthly cashflow breakeven in this
financial year.
Since the period end, the cash balances have grown following the
payment of two large licence renewals (one of which was a
multi-year advance payment). As at the 28(th) February 2023 the
cash balances of the Group stood at GBP3.41 million.
Capital expenditure
As required by IAS 38, we have capitalised a further GBP0.70
million (2021: GBP0.47 million) in software development expenditure
as we continue to invest in our cloud platform and introduce new
features and products.
The Group acquired GBP0.01 million of other intangible assets
(2021: GBP0.09 million) and bought a negligible amount of new
computer equipment in the period, mainly equipment for new
starters. Being a cloud-based business, the Group has little demand
for hardware.
Professional Services Fees
During the period the Group generated GBP0.73 million (2021:
GBP0.50 million) of set-up and professional services sales value,
in conjunction with the new ACV contracts reported above. Nearly
all of these contracts are invoiced on signature and form part of
the Group's cash generation. The contract amounts will be deferred
and released as recognised revenue to the Income Statement over the
length of the related contract, in accordance with IFRS 15.
Trade receivables
Trade receivables grew to GBP4.65 million (30 June 2022: GBP2.96
million) reflecting the increased scale of the growing business and
the timing of annual renewals.
Financial Outlook
The Board continues to balance its continued short-term revenue
growth and profitability plans against its long-term investment in
the business. The Group remains firmly on track to hit monthly
cashflow breakeven in this financial year and is continuing its
strategic objective of delivering continued international growth
and launching new complimentary products to our partners and
customers. The Directors are pleased with the progress being made
against this objective.
William Good
Chief Financial Officer
14 March 2023
Consolidated statement of comprehensive income
for the six months ended 31 December 2022
Six months Six months Twelve months
ended ended ended 30
31 December 31 December June
2022 2021 2022
------------------------------------------
GBP'000 GBP'000 GBP'000
------------------------------------------
(unaudited) (unaudited) (audited)
------------------------------------------ ---------------- ---------------- -------------
Revenue 7,259 5,472 11,937
Cost of sales (950) (1,029) (1,924)
------------------------------------------ ---------------- ---------------- -------------
Gross profit 6,309 4,443 10,013
Administrative expenses (8,194) (5,543) (13,077)
------------------------------------------ ---------------- ---------------- -------------
Loss from operating activities (1,885) (1,100) (3,064)
Adjusted operating loss (1,324) (707) (2,021)
Expenses relating to share options (128) (108) (246)
Exceptional Items (433) (285) (797)
------------------------------------------ ---------------- ---------------- -------------
Loss from operating activities (1,885) (1,100) (3,064)
------------------------------------------ ---------------- ---------------- -------------
Finance income 2 - 1
Finance expenditure (20) (22) (44)
Loss before taxation (1,903) (1,122) (3,107)
Taxation - - 164
------------------------------------------ ---------------- ---------------- -------------
Total comprehensive loss for the period (1,903) (1,122) (2,943)
------------------------------------------ ---------------- ---------------- -------------
Other comprehensive expense: items
that will be classified subsequently
to profit and loss
------------------------------------------ ---------------- ---------------- -------------
Foreign exchange translation differences 113 (422) (1,086)
------------------------------------------ ---------------- ---------------- -------------
Total comprehensive loss for the period (1,790) (1,544) (4,029)
========================================== ================ ================ =============
Loss per share expressed in pence
------------------------------------------ ---------------- ---------------- -------------
Basic and diluted (2.91) (1.72) (4.50)
------------------------------------------ ---------------- ---------------- -------------
Consolidated statement of financial position
as at 31 December 2022
31 December 31 December 30 June
2022 2021 2022
GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited)
--------------------------------------------- ------------ ----------------- --------------
Assets
Non-current assets
Plant and equipment 213 87 238
Intangible assets 2,847 2,516 2,661
Trade & other receivables 999 822 964
--------------------------------------------- ------------ ----------------- --------------
Non-current assets 4,059 3,425 3,863
--------------------------------------------- ------------ ----------------- --------------
Current assets
Trade and other receivables 6,023 3,945 4,203
Cash and cash equivalents 1,876 5,528 4,888
--------------------------------------------- ------------ ----------------- --------------
Current assets 7,899 9,473 9,091
--------------------------------------------- ------------ ----------------- --------------
Total assets 11,958 12,898 12,954
Liabilities
Current liabilities
Trade and other payables (1,862) (1,625) (2,086)
Deferred Income (9,249) (7,165) (9,286)
Other interest-bearing loans and borrowings - - -
--------------------------------------------- ------------ ----------------- --------------
Current liabilities (11,111) (8,790) (11,372)
--------------------------------------------- ------------ ----------------- --------------
Non-current liabilities
Other payables (46) - (67)
Deferred Income (2,278) (1,587) (1,330)
Long term borrowings - - -
Non-current liabilities (2,324) (1,587) (1,397)
--------------------------------------------- ------------ ----------------- --------------
Total liabilities (13,435) (10,377) (12,769)
--------------------------------------------- ------------ ----------------- --------------
Net assets/(liabilities) (1,477) 2,521 185
--------------------------------------------- ------------ ----------------- --------------
Shareholders' equity
Share capital 656 656 656
Share premium 14,281 14,270 14,281
Other reserve 778 512 650
Currency reserve (507) 44 (620)
Profit and loss account (16,685) (12,961) (14,782)
Total shareholders' equity (1,477) 2,521 185
--------------------------------------------- ------------ ----------------- --------------
Deferred income has been disclosed separately in these interim
unaudited statements. This disclosure treatment differs from that
in the audited accounts for the year ending 30 June 2022.
Consolidated interim statement of changes in equity
as at 31 December 2022 (unaudited)
Total shareholders'
Share Share Other Profit Currency equity
capital premium reserve and loss reserve
account
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 July 2021 655 14,243 404 (11,839) 466 3,929
----------------------------- ---------- ------------ ----------- ------------ ----------- ---------------------
Share based payment charge - - 108 - - 108
New shares issued net
of costs 1 27 - - - 28
Dividend paid - - - - - -
----------------------------- ---------- ------------ ----------- ------------ ----------- ---------------------
Transactions with owners 1 27 108 - - 136
Foreign exchange translation
differences - - - - (422) (422)
Loss for the period - - - (1,122) - (1,122)
----------------------------- ---------- ------------ ----------- ------------ ----------- ---------------------
Total comprehensive loss - - - (1,122) (422) (1,544)
Balance at 31 December
2021 656 14,270 512 (12,961) 44 2,521
----------------------------- ---------- ------------ ----------- ------------ ----------- ---------------------
Balance as at 1 January
2022 656 14,270 512 (12,961) 44 2,521
----------------------------- ---------- ------------ ----------- ------------ ----------- ---------------------
Share based payment charge - - 138 - - 138
New shares issued net
of costs - 11 - - - 11
Dividend paid - - - - - -
----------------------------- ---------- ------------ ----------- ------------ ----------- ---------------------
Transactions with owners - 11 138 - - 149
Foreign exchange translation
differences - - - - (664) (664)
Loss for the period - - - (1,821) - (1,821)
----------------------------- ---------- ------------ ----------- ------------ ----------- ---------------------
Total comprehensive loss - - - (1,821) (664) (2,485)
Balance at 30 June 2022 656 14,281 650 (14,782) (620) 185
----------------------------- ---------- ------------ ----------- ------------ ----------- ---------------------
Balance at 1 July 2022 656 14,281 650 (14,782) (620) 185
----------------------------- ---------- ------------ ----------- ------------ ----------- ---------------------
Share based payment charge - - 128 - - 128
New shares issued net - - - - - -
of costs
Dividend paid - - - - - -
----------------------------- ---------- ------------ ----------- ------------ ----------- ---------------------
Transactions with owners - - 128 - - 128
Foreign exchange translation
differences - - - - 113 113
Loss for the period - - - (1,903) - (1,903)
----------------------------- ---------- ------------ ----------- ------------ ----------- ---------------------
Total comprehensive loss - - - (1,903) 113 (1,790)
Balance at 31 December
2022 656 14,281 778 (16,685) (507) (1,477)
----------------------------- ---------- ------------ ----------- ------------ ----------- ---------------------
Consolidated statement of cash flows
for the six months ended 31 December 2022
Six months Six months Twelve months
ended 31 December ended 31 ended 30
2022 December June
2021 2022
GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited)
-------------------------------------------- ---------------------- ------------- -------------
Cash flows from operating activities
Loss after taxation (1,903) (1,122) (2,943)
Adjustments for:
Depreciation of equipment and fixtures 53 36 85
Amortisation of intangible assets 43 42 85
Amortisation of capitalised development 473 374 803
Loss on disposal of equipment and fixtures - - 3
Interest income (2) - (1)
Interest expense 3 6 11
Exchange differences 148 (436) (1,124)
Income taxes - - (164)
Share based payments 128 109 246
Increase in trade & other receivables (1,855) (1,038) (1,438)
Increase in trade &other payables 687 633 2,918
-------------------------------------------- ---------------------- ------------- -------------
Cash used in operating activities (2,225) (1,396) (1,519)
Dividend paid - - -
Income taxes received - - 164
Interest paid (3) (6) (11)
Net cash used in operating activities (2,228) (1,402) (1,366)
------------- -------------
Cash flows from investing activities
Purchase of property, plant and equipment (29) (47) (124)
Purchase of intangible assets (5) (87) (48)
Development expenditure capitalised (732) (467) (1,098)
Interest received 2 - 1
Net cash used in investing activities (764) (601) (1,269)
-------------------------------------------- ---------------------- ------------- -------------
Cash flows from financing activities
Principal element of lease payments (20) (15) (34)
Issue of shares - 28 39
Net cash generated in financing activities (20) 13 5
-------------------------------------------- ---------------------- ------------- -------------
Net (decrease)/increase in cash (3,012) (1,990) (2,630)
Cash and cash equivalents at the start
of the period 4,888 7,518 7,518
-------------------------------------------- ---------------------- ------------- -------------
Net (decrease)/increase in cash (3,012) (1,990) (2,630)
-------------------------------------------- ---------------------- ------------- -------------
Cash and cash equivalents at the end
of the period 1,876 5,528 4,888
-------------------------------------------- ---------------------- ------------- -------------
Notes to the interim financial statements for the six months
ended 31 December 2022
1. Nature of activities and general information
PCI-PAL PLC is the Group's ultimate parent company. It is a
public limited company incorporated and domiciled in England and
Wales (registration number 3869545). The company's registered
office is Unit 7, Gamma Terrace, Ransomes Europark, Ipswich,
Suffolk, IP3 9FF. The Company's ordinary shares are quoted and
publicly traded on the AIM division of the London Stock Exchange.
The Group's consolidated interim financial statements (the "interim
financial statements") for the period ended 31 December 2022
comprise the Company and its subsidiaries (the "Group").
The Company operates principally as a holding company. The main
subsidiaries provide organisations globally with secure cloud
payment and data protection solutions for any business
communications environment.
The interim financial statements are presented in pounds
sterling (GBP000), which is also the functional currency of the
parent company.
2. Basis of preparation
These consolidated interim financial statements have been
prepared in accordance with the UK adopted international accounting
standards and the requirements of the Companies Act 2006, using the
accounting policies which are consistent with those set out in the
Group's annual report and accounts for the year ended 30 June
2022.
The unaudited interim financial information for the period ended
31 December 2022 does not constitute statutory accounts within the
meaning of Section 435 of the Companies Act 2006. The comparative
figures for the year ended 30 June 2022 are extracted from the
statutory financial statements which have been filed with the
Registrar of Companies and contain an unqualified audit report and
did not contain statements under Section 498 to 502 of the
Companies Act 2006.
3. Dividends
Given the strategic growth plans of the Group it is not proposed
to declare a dividend for the period.
4. Analysis of results
The first half performance of the Group can be further analysed
as follows:
Six months Six months Six months Six months Six months
to to to to to
Dec 22 Dec 22 Dec 22 Dec 22 Dec 22
EMEA North America ANZ Central Total
costs
GBP000s GBP000s GBP000s GBP000s GBP000s
Revenue
Revenue from
recurring contract
Fees 4,115 1,970 87 - 6,172
Non recurring
transaction
fees 355 - - - 355
Set up and Professional
Services Fees
(1) 433 281 14 - 728
Other Sales 4 - - - 4
Total 4,907 2,251 101 - 7,259
Gross Profit 4,007 2,202 100 - 6,309
Margin % 81.7% 97.8% 99.2% - 86.9%
Administrative
Expenses (3,710) (3,369) (246) (869) (8,194)
Profit/(Loss)
from Operating
Activities 297 (1,167) (146) (869) (1,885)
Bank charges
and Interest
payable (14) (6) - - (20)
Finance Income - - - 2 2
Profit/ (Loss)
before Taxation 283 (1,173) (146) (867) (1,903)
(1) Set up and Professional Services Fees represents the
amortisation of set up fees and other professional services income
deferred under IFRS 15
Six months Six months Six months Six months Six months
to to to to to
Dec 21 Dec 21 Dec 21 Dec 21 Dec 21
EMEA North America ANZ Central Total
costs
GBP000s GBP000s GBP000s GBP000s GBP000s
Revenue
Revenue from
recurring contract
Fees 3,564 1,350 38 - 4,952
Non recurring - - - - -
transaction fees
Set up and Professional
Services Fees
(1) 310 178 15 - 503
Other Sales 17 - - - 17
Total 3,891 1,528 53 - 5,472
Gross Profit 2.950 1,441 52 - 4,443
Margin % 75.8% 94.3% 98.7% 81.2%
Administrative
Expenses (2,757) (1,913) (104) (769) (5,543)
Profit/(Loss)
from Operating
Activities 193 (472) (52) (769) (1,100)
Bank charges
and Interest
payable (18) (4) - - (22)
Finance Income - - - - -
Profit/ (Loss)
before Taxation 175 (476) (52) (769) (1,122)
(1) Set up and Professional Services Fees represents the
amortisation of set up fees and other professional services income
deferred under IFRS 15
5. Underlying financial performance analysis
The Group uses the following internal metric to calculate
Adjusted EBITDA:
Six months Six months Six months Six months Six months
to to to to to
Dec 22 Dec 22 Dec 22 Dec 22 Dec 22
EMEA North America ANZ Central Total
GBP000s GBP000s GBP000s GBP000s GBP000s
Profit/(Loss)
before Taxation 283 (1,173) (146) (867) (1,903)
Adjust for:
Expenses relating
to share options - - - 128 128
Exceptional Items - 187 - 246 433
Exchange Loss/(Gain) 48 120 8 6 182
Bank charges
and Interest
Payable 14 6 - - 20
Finance Income - - - (2) (2)
Adjusted Profit/(Loss)
from Operating
Activities 345 (860) (138) (489) (1,142)
Depreciation
& Amortisation 567 - 1 - 568
Adjusted EBITDA 912 (860) (137) (489) (574)
Six months Six months Six months Six months Six months
to to to to to
Dec 21 Dec 21 Dec 21 Dec 21 Dec 21
EMEA North America ANZ Central Total
GBP000s GBP000s GBP000s GBP000s GBP000s
Profit/(Loss)
before Taxation 175 (476) (52) (769) (1,122)
Adjust for:
Expenses relating
to share options - - - 108 108
Exceptional Items 34 46 - 205 285
Exchange Loss/(Gain) 45 (378) 3 - (330)
Bank charges
and Interest
Payable 18 4 - - 22
Finance Income - - - - -
Adjusted Profit/(Loss)
from Operating
Activities 272 (804) (49) (456) (1,037)
Depreciation
& Amortisation 417 35 - - 452
Adjusted EBITDA 689 (769) (49) (456) (585)
6. Earnings per share
The basic and diluted earnings per share are calculated on the
following profit and number of shares. Earnings for the calculation
of earnings per share is the net profit attributable to equity
holders of the parent.
Six months Six months Twelve months
ended 31 December ended 31 December ended 30 June
2022 2021 2022
GBP000 GBP000 GBP000
----------------------------- ----------------------------- ----------------------------- -------------------------
Earnings for the purposes
of basic
and diluted earnings per
share
Loss after taxation (1,903) (1,122) (2,943)
Denominator '000 '000 '000
----------------------------- ----------------------------- ----------------------------- -------------------------
Weighted average number
of shares
in issue in the period 65,453 65,328 65,369
Dilutive effect of
potential shares
and share options 8,143 6,150 6,879
----------------------------- ----------------------------- ----------------------------- -------------------------
Number of shares used in
calculating
diluted earnings per
share 73,596 71,478 72,248
----------------------------- ----------------------------- ----------------------------- -------------------------
Basic and diluted
earnings per share
expressed in pence (2.91) (1.72) (4.50)
There are no separate diluted earnings per share calculations
shown as it is considered to be anti-dilutive.
7. Subsequent events to 31 December 2022
There are no subsequent events to report.
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IR JJMLTMTJBBPJ
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