TIDMPTRO
RNS Number : 2052A
Pelatro PLC
22 September 2022
22 September 2022
Pelatro Plc
("Pelatro" or the "Group")
Interim results
Pelatro Plc (AIM: PTRO), the precision marketing software
specialist, is pleased to announce today its results for the 6
months ended 30 June 2022.
Financial highlights
-- Revenue $4.19m (H1 2021: $3.46m), an increase of 21%
-- Recurring revenue $2.41m (H1 2021: $2.43m), 58% of revenue
-- Adjusted EBITDA(*) $1.87m (H1 2021: $1.61m)
-- Adjusted EBITDA(*) margin 45% (FY 2021 39%)
-- Adjusted earnings per share 0.2c (H1 2021: 0.9c)
Operational highlights
-- 3 new customers won this year to date
-- Entry into financial services sector with a significant win
Post period end highlights
-- Further contract wins and change requests give visibility
over at least c. $8.5m revenue for the full year
-- FY23 building steadily with over $6m of revenue already visible
-- Cash receipts in July and August of c. $1.6m
Outlook
Management expectations for the year underpinned by:
-- Strong revenue visibility for full year and diversification
into non telco verticals
-- Current pipeline ** of c.$19m, of which c. $3m is from existing customers
Richard Day, Non-executive Chairman of Pelatro commented:
"It is a measure of the progress we have made in implementing
our strategy of moving from a licence fee model to being more a
recurring revenues service provider that, with three months still
to go this year, we already have visibility over 95% of our
expected full year revenue. We have already announced the winning
of two new telco customers plus one in financial services, and our
cost base is now increasingly stable. We are picking up new
business and are looking forward with every confidence."
For further information contact:
Pelatro Plc
Subash Menon, Managing Director c/o finnCap
Nic Hellyer, Chief Financial Officer
finnCap Limited (Nominated Adviser and
joint broker) +44 (0)20 7220 0500
Carl Holmes/Milesh Hindocha (Corporate
Finance)
Dowgate Capital Limited (joint broker) +44 (0)20 3903 7715
Stephen Norcross
* earnings before interest, tax, depreciation, amortisation,
exceptional items and share-based payments
** "pipeline" is defined as opportunities where an RFI or RFP
has been received and recurring revenue contracts are included as
the sum of the likely revenue over 3 years in order to provide
comparability with one-off license fee income
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014.
Notes to editors
The Pelatro Group was founded in March 2013 by Subash Menon and
Sudeesh Yezhuvath with the objective of offering specialised,
enterprise class software solutions for customer engagement
principally to telcos who face a series of challenges including
market maturity, saturation and customer churn.
Pelatro provides its "mViva" platform for use by customers in
B2C and B2B applications, and is well positioned in the Customer
Engagement space. Our technology orchestrates the digital journey
of the customers of the telcos through contextual, relevant and
real time offers and loyalty programs across multiple channels
including websites, social media, apps and others.
For more information about Pelatro, visit www.pelatro.com
Managing Director's statement
Our results in the first half of 2022 and trading to date
reflect both the consolidation of our existing customer base as
well as a healthy flow of new business which will ensure growth in
the coming years. Given that our first customer was secured in
2016, a number of our typically five year contracts have been
coming up for renewal in the last 12-18 months, and it is extremely
pleasing to note that not one of our existing customers has sought
to replace us, and in fact have sought to strengthen their
relationship with us by requesting upgrades and change requests
and/or additional software modules or services. All of these
produce valuable income for us and embed Pelatro at the very heart
of the customers' operations. The success of our mViva software in
enabling users to increase their revenue; this is further
demonstrated by the consistency of income from contracts where we
take a share of the resulting gain by the customer. Additionally we
regularly see mViva enabling significant reductions in subscriber
churn.
We have also been expanding the range of industries we cover:
having started serving solely the telecommunications sector, we
have now secured contracts in the financial services sector and are
closely tracking opportunities in retail, all data rich sectors
where our powerful data analytics capabilities with advanced
features like AI/machine learning technologies and real time
engagement enable our customers to enhance, enrich and extend their
relationships with their consumers.
We have worked hard to enhance the quality of our earnings such
that the significant majority of our revenue is now recurring in
nature and, whilst license sales are still an important contributor
to revenue, even these are often structured on the basis of regular
monthly payments (for example, the recent contract won with a
Middle East telco with an initial value of around $1m payable over
three years). This contract also demonstrates our strategy of
securing relationships with members of large international telco
groups where we can leverage off the success of initial
implementations to enable us to market powerfully from "reference"
customers.
Financial review
Revenue and profitability
In the six months to 30 June 2022 revenue increased by 21% over
the comparable period to $4.19m (H1 2021: $3.46m). Of the total
revenue, approximately $2.41m (H1 2021: $2.43m) was recurring
revenue, comprising managed services, post contract support and
gain share revenue, the slight fall being due to currency effects
on INR-denominated revenue, the timing of certain services in one
of our larger contracts, and recent recurring revenue contract wins
coming onstream only in H2. Taking change requests of just under
$1m into account some 81% of H1 revenue was repeating revenue, with
the balance relating to license and other revenue.
Underlying operating profit (excluding the impact of non-cash
share-based payments, amortisation of customer-related intangible
assets) was $0.27m (H1 2021: $0.48m). Within this, underlying
"cash" costs rose only marginally from $3.3m to $3.7m, reflecting
both relatively stable staff numbers compared to the growth of
previous years as well as some benefit of the strength of the US
dollar (only around 10% of the Group's costs are incurred directly
in USD with some 70% in INR, around 10% in GBP and the rest in
other currencies). However, we recognised an increased amortisation
charge on our capitalised development costs, where amortisation of
c. $1.3m is now ahead of the capitalised spend of c. $1.2m.
Cash flow and trade receivables
Cash generated from operating activities was approximately
$0.15m after working capital movements (H1 2021: $0.52m). This
reduction compared to the prior period resulted from an increase in
trade receivables to $5.59m (31 December 2021 $4.96m). Whilst part
of this increase was due to increased revenue, some is also due to
delays in payment arising from routine foreign exchange approvals
needed by certain customers. These approvals usually take a
considerable period of time, and such delays are not unexpected and
always resolved in due course. We expect the majority of these
receivables to unwind in H2 and hence the H1 cash flow is not
representative of our expectations for the year as a whole: cash of
$1.6m has been received in the months of July and August and a
further $0.3m to date.
Capitalised development expenditure was $1.22m (H1 2021:
$1.19m), again reflecting the relative stability in underlying
numbers of the development team.
Current trading and outlook
Business has been improving significantly throughout the year
with several new customers signing up for our products; in
particular entry into the financial services sector has been a
major step for us during the past few months. Our efforts in this
sector have resulted in a strong pipeline getting built and we
expect to win several new customers in the financial services
sector in the coming quarters.
Revenue visibility for the full year reached around 95% of
market forecasts earlier this month, which we view as a good
measure of the momentum in the business. Given this traction, we
expect to end 2022 with a strong base of recurring revenue and to
start 2023 with excellent visibility for that year in turn. As in
previous years, existing customers continue to take more products
and services from us thereby increasing the annual revenue from
them. Accordingly, we view our prospects for 2022 positively and
look forward to further growth in years to come.
Group statement of comprehensive income
6 months 6 months Year to
to to December
30 June 30 June 2021
2022 2021
Note $'000 $'000 $'000
(unaudited) (restated) (audited)
Revenue 1 4,189 3,460 7,266
Cost of sales and provision
of services (991) (968) (2,206)
_______ _______ _______
Gross profit 3,198 2,492 5,060
Adjusted administrative expenses (2,926) (2,010) (4,831)
_______ _______ _______
Adjusted operating profit 272 482 229
Amortisation of acquisition-related
intangibles (343) (342) (686)
Share-based payments (3) (15) (32)
_______ _______ _______
Operating profit/(loss) (74) 125 (489)
Finance income 3 17 23 44
Finance expense 4 (84) (110) (221)
_______ _______ _______
Profit/(loss) before taxation (141) 38 (666)
Income tax (expense) (134) (42) (181)
_______ _______ _______
(LOSS) FOR THE PERIOD (275) (4) (847)
Other comprehensive income/(expense):
Items that may be reclassified
subsequently to profit or loss:
Exchange differences on translation
of foreign operations (126) (53) (82)
Items that may be reclassified
subsequently to profit or loss:
Exchange differences on translation
of equity balances (80) (26) (15)
_______ _______ _______
Other comprehensive income,
net of tax (206) (79) (97)
TOTAL COMPREHENSIVE (LOSS)
FOR THE PERIOD (481) (30) (944)
Earnings/(loss) per share
Reported
Basic and diluted 5 (0.6)c 0.0c (2.1)c
Adjusted
Basic and diluted 5 0.2c 0.9c (0.4)c
Group statement of financial position
As at As at As at 31
30 June 30 June December
2022 2021 2021
Note $'000 $'000 $'000
(unaudited) (restated) (audited)
Assets
Non-current assets
Intangible assets 6 10,999 11,777 11,453
Tangible assets 811 1,095 982
Right-of-use assets 147 238 240
Deferred tax assets 16 16 14
Contract assets 7 1,257 461 606
Trade and other receivables 41 91 163
_______ _______ _______
13,271 13,678 13,458
Current assets
Contract assets 7 569 733 555
Trade receivables 5,550 3,716 4,793
Other assets 443 387 315
Cash and cash equivalents 1,647 784 3,331
_______ _______ _______
8,209 5,620 8,994
Total assets 21,480 19,298 22,452
Liabilities
Non-current liabilities
Borrowings 8 396 1,031 608
Lease liabilities 12 117 80
Contract liabilities 211 139 278
Long-term provisions 10 178 149 202
_______ _______ _______
797 1,436 1,168
Current liabilities
Short-term borrowings 8 250 504 136
Lease liabilities 160 139 188
Trade and other payables 9 329 356 603
Contract liabilities 431 289 469
Provisions 10 168 198 72
_______ _______ _______
1,338 1,486 1,468
Total liabilities 2,135 2,922 2,636
NET ASSETS 19,345 16,376 19,816
Issued share capital and reserves
Share capital 1,501 1,212 1,501
Share premium 18,046 14,045 18,046
Other reserves (835) (611) (639)
Retained earnings 633 1,730 908
_______ _______ _______
TOTAL EQUITY 19,345 16,376 19,816
Group statement of cash flows
6 months 6 months Year to
to to 31
30 June 30 June December
2022 2021 2021
$'000 $'000 $'000
(unaudited) (restated) (audited)
Cash flows from operating activities
Profit/(loss) for the period (275) (182) (847)
Adjustments for:
Income tax expense/(credit) recognised
in profit or loss 134 42 181
Finance income (17) (4) (44)
Finance costs 84 107 221
Depreciation of tangible non-current
assets 254 210 467
Profit on disposal of fixed assets - - (10)
Amortisation of intangible non-current
assets 1,677 1,266 2,814
Share-based payments 3 15 32
Realised foreign exchange (gains)/losses 15 10 9
_______ _______ _______
Operating cash flows before movements
in working capital 1,875 1,464 2,823
(Increase)/decrease in trade and
other receivables (732) (199) (1,271)
(Increase)/decrease in contract assets (652) 173 206
Increase/(decrease) in trade and
other payables (235) (623) (532)
Increase in contract liabilities
and other deferred income (104) (293) 45
_______ _______ _______
Cash generated from operating activities 152 522 1,271
Income tax paid (188) (191) (258)
_______ _______ _______
Net cash generated from operating
activities (36) 331 1,013
Cash flows from investing activities
Development of intangible assets (1,220) (1,176) (2,540)
Purchase of intangible assets - (3) (42)
Acquisition of property, plant and
equipment (16) (42) (88)
_______ _______ _______
Net cash used in investing activities (1,236) (1,221) (2,670)
Cash flows from financing activities
Proceeds from issue of ordinary shares,
net of issue costs - - 4,290
Proceeds from borrowings 2 226 70
Repayment of borrowings (62) (81) (748)
Repayments of principal on lease
liabilities (118) (85) (173)
Interest received 17 4 44
Interest paid (69) (125) (203)
Interest expense on lease liabilities (16) (9) (25)
_______ _______ _______
Net cash generated by/(used in)
financing activities (246) (70) 3,255
Net increase/(decrease) in cash
and cash equivalents (1,518) (960) 1,598
Net foreign exchange differences (166) (61) (72)
Cash and cash equivalents at beginning
of period 3,331 1,805 1,805
_______ _______ _______
Cash and cash equivalents at end
of period 1,647 784 3,331
Group statement of changes in equity
Share Share Exchange Merger Share-based Retained Total
capital premium reserve reserve payments profits
reserve
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Balance at 1 January
2021 1,212 14,045 (240) (527) 184 1,734 16,408
(Loss) after taxation
for the period - - - - - (4) (4)
Share-based payments - - - - 51 - 51
Other comprehensive
income:
Exchange differences - - (79) - - - (79)
_____ _____ _____ _____ _____ _____ _____
Balance at 30 June
2021 1,212 14,045 (319) (527) 235 1,730 16,376
(Loss) after taxation
for the period - - - - - (843) (843)
Share-based payments - - - - 11 - 11
Transfer on lapse of
share options (21) 21 -
Other comprehensive
income:
Exchange differences - - (18) - - - (18)
Transactions with
owners:
Shares issued by Pelatro
Plc for cash 289 4,334 - - - - 4,623
Issue costs - (333) - - - - (333)
_____ _____ _____ _____ _____ _____ _____
Balance at 31 December
2021 1,501 18,046 (337) (527) 225 908 19,816
(Loss) after taxation
for the period - - - - - (275) (275)
Share-based payments - - - - 10 - 10
Other comprehensive
income:
Exchange differences - - (206) - - - (206)
_____ _____ _____ _____ _____ _____ _____
Balance at 30 June
2022 1,501 18,046 (543) (527) 235 633 19,345
Notes to the Group financial statements
1 Segmental analysis
Revenue by type
6 months 6 months Year to
to to 31 December
30 June 30 June 2021
2022 2021
$'000 $'000 $'000
Recurring software sales and
services 1,775 1,922 3,456
Maintenance and support 630 506 1,334
_______ _______ _______
Total recurring revenues 2,405 2,428 4,790
Change requests 978 1,009 1,958
_______ _______ _______
Total repeating revenues 3,383 3,437 6,748
Licence related income 798 23 498
Other income 8 - 20
_______ _______ _______
4,189 3,460 7,266
Revenue by geography
The Group recognises revenue in seven geographical regions based
on the location of customers, as set out in the following
table:
6 months 6 months Year to
to to 31 December
30 June 30 June 2021
2022 2021
$'000 $'000 $'000
Caribbean 79 64 130
Central Asia 280 287 443
Eastern Europe 230 75 426
Middle East and North Africa 893 152 104
South Asia 1,552 1,102 2,656
South East Asia 1,147 1,780 3,407
Sub-Saharan Africa 8 - 100
_______ _______ _______
4,189 3,460 7,266
2 Non-GAAP profit measures and exceptional items
Reconciliation of operating profit to earnings before interest,
taxation, depreciation and amortisation ("EBITDA"):
6 months 6 months Year to
to to 31 December
30 June 30 June 2021
2022 2021
$'000 $'000 $'000
Operating profit/(loss) (74) 125 (489)
Adjusted for:
- amortisation and depreciation 1,926 1,450 3,227
_______ _______ _______
EBITDA 1,852 1,575 2,738
Other adjustments:
- revenue recognised as interest
under IFRS 15 17 19 38
Expensed share-based payments 3 15 32
_______ _______ _______
Adjusted EBITDA 1,872 1,609 2,808
The criteria for adjusting operating income or expenses in the
calculation of adjusted EBITDA are that they are material and
either (i) arise from an irregular and significant event or (ii)
are such that the income/cost is recognised in a pattern that is
unrelated to the resulting operational performance. Materiality is
defined as an amount which, to a user, would influence
decision-making based on, and understandability of, the financial
statements.
Exceptional items are treated as exceptional by reason of their
nature and are excluded from the calculation of adjusted EBITDA
(and adjusted earnings per share below) to allow a better
understanding of comparable year-on-year trading and thereby an
assessment of the underlying trends in the Group's financial
performance. These measures also provide consistency with the
Group's internal management reporting.
Adjustment for share-based payment expense is made because, once
the cost has been calculated for a given grant of options, the
Directors cannot influence the share-based payment charge incurred
in subsequent years relating to that grant; also the value of the
share option to the employee differs considerably in value and
timing from the actual cash cost to the Group.
3 Finance income
6 months 6 months Year to
to to 31 December
30 June 30 June 2021
2022 2021
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
Interest receivable on interest-bearing
deposits - 4 6
Notional interest accruing on
contracts with a significant
financing component 17 19 38
_______ _______ _______
Total finance income 17 23 44
4 Finance expense
6 months 6 months Year to
to to 31 December
30 June 30 June 2021
2022 2021
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
Interest and finance charges
paid or payable on borrowings 68 101 202
Interest on lease liabilities
under IFRS 16 16 13 25
Less: amounts capitalised as
intangible assets - (4) (6)
_______ _______ _______
Total finance expense 84 110 221
5 Earnings per share
Earnings per share - reported ("EPS")
The calculation of the basic and diluted EPS is based on the
following data:
6 months 6 months Year to
to to 31 December
30 June 30 June 2021
2022 2021
$'000 $'000 $'000
Earnings
Earnings for the purposes of
basic and diluted earnings per
share being net profit attributable
to equity holders of the parent (275) (4) (847)
Number of shares
Weighted average number of ordinary
shares for the purposes of basic
and diluted earnings per share 45,407,431 37,032,431 41,153,537
The weighted average number of shares and the loss for the year
for the purposes of calculating the fully diluted earnings per
share are the same as for the basic loss per share calculation.
This is because the outstanding share options would have the effect
of reducing the loss per ordinary share and would therefore not be
dilutive under IAS33.
Adjusted earnings per share
Adjusted EPS is calculated as follows:
6 months 6 months Year to
to to 31 December
30 June 30 June 2021
2022 2021
$'000 $'000 $'000
Earnings attributable to owners
of the Parent (275) (4) (847)
Adjusting items:
- expensed share-based payments 3 15 32
- amortisation of acquisition-related
intangibles 343 342 686
- prior year adjustments to
tax charge - (18) (42)
_______ _______ _______
Adjusted earnings attributable
to owners of the Parent 71 335 (171)
Weighted number of ordinary
shares in issue 45.407,431 37,032,431 41,153,537
Adjusted earnings per share
attributable to shareholders
(basic and diluted) 0.2c 0.9c (0.4)c
The criteria for inclusion of adjusting items in the calculation
of adjusted EPS are the same as those relating to the calculation
of adjusted EBITDA as set out in Note 3. Additionally, amortisation
of acquisition-related intangibles relates to the amortisation of
intangible assets in respect of customer relationships which are
recognised on a business combination and are non-cash in
nature.
The Group has one category of potentially dilutive ordinary
share, being those share options granted to employees where the
exercise price (plus the remaining expected charge to profit under
IFRS 2) is less than the average price of the Company's ordinary
shares during the period.
6 Intangible assets
Intangible assets comprise capitalised development costs,
acquired software, customer relationships and goodwill.
Development Third Patents Customer Goodwill Total
costs party relationships
software
$'000 $'000 $'000 $'000 $'000 $'000
Cost
At 1 January
2022 11,839 120 57 6,862 470 19,348
Additions 1,220 6 - - - 1,226
Foreign exchange - (4) - - - (4)
_______ _______ _______ _______ _______ _______
At 30 June
2022 13,059 122 57 6,862 470 20,570
Amortisation
or impairment
At 1 January
2022 (5,478) (71) (2) (2,344) - (7,895)
Charge for
the period (1,317) (9) (7) (343) - (1,676)
_______ _______ _______ _______ _______ _______
At 30 June
2022 (6,795) (80) (9) (2,687) - (9,571)
Net carrying
amount
At 30 June
2022 6,264 42 48 4,175 470 10,999
At 1 January
2022 6,361 49 55 4,518 470 11,453
7 Contract assets
Contract assets are comprised as follows:
As at As at As at 31
30 June 30 June December
2022 2021 2021
$'000 $'000 $'000
Due after one year
Contract assets relating to revenue 972 98 227
Contract fulfilment assets 285 363 379
_______ _______ _______
1,257 461 606
Due within one year
Contract assets relating to revenue 380 581 375
Contract fulfilment assets 189 152 180
_______ _______ _______
569 733 555
8 Loans and borrowings
As at As at As at 31
30 June 30 June December
2022 2021 2021
$'000 $'000 $'000
Non-current liabilities
Secured term loans 10 237 23
Unsecured borrowings 386 794 585
_______ _______ _______
396 1,031 608
Current liabilities
Current portion of term loans 15 138 11
Unsecured borrowings 235 366 125
_______ _______ _______
250 504 136
Total loans and borrowings 646 1,535 744
9 Trade and other payables
As at As at As at 31
30 June 30 June December
2022 2021 2021
$'000 $'000 $'000
Due within a year
Trade payables 151 30 152
Other payables 178 326 451
_______ _______ _______
Total trade and other payables 329 356 603
10 Provisions
Long-term As at As at As at 31
30 June 30 June December
2022 2021 2021
$'000 $'000 $'000
Employee gratuities 132 108 141
Leave encashment 46 41 61
_______ _______ _______
178 149 202
Short-term As at As at As at 31
30 June 30 June December
2022 2021 2021
$'000 $'000 $'000
Employee gratuities 7 12 7
Leave encashment 22 17 30
Other provisions (including tax) 139 169 35
_______ _______ _______
168 198 72
11 Post balance sheet events
Other than disclosed above there have been no events subsequent
to the reporting date which would have a material impact on these
interim financial results.
Basis of preparation
The Group has prepared its interim financial statements (the
"statements") for the 6 months ended 30 June 2022 (the "interim
results") in accordance with the AIM Rules of the London Stock
Exchange and not in accordance with IAS34 Interim Financial
Reporting; the statements are prepared in accordance with the
recognition and measurement principles of International Accounting
Standards in conformity with the requirements of the Companies Act
2006, but do not include all the disclosures that would otherwise
be required
The statements have been prepared under the historical cost
convention. The accounting policies adopted in the statements are
consistent with those adopted in the Group's Annual Report and
Financial Statements for the year ended 31 December 2021 and those
which will be adopted in the preparation of the annual report for
the year ending 31 December 2022. The statements do not constitute
full statutory accounts within the meaning of section 434 of the
Companies Act 2006 and are unaudited.
Going concern
The Directors have considered trading and cash flow forecasts
prepared for the Group, and based on these, and confirmed banking
facilities, are satisfied that the Group will continue to be able
to meet its liabilities as they fall due for at least one year from
the date of these results. On this basis, they consider it
appropriate to have adopted the going concern basis in the
preparation of the interim results, which were approved by the
Board of Directors on 21 September 2022.
Comparative financial information
The comparative financial information presented herein for the
year ended 31 December 2021 does not constitute full statutory
accounts for that period. Statutory accounts for the year ended 31
December 2021 have been filed with the Registrar of Companies.
These statutory accounts carried an unqualified Auditor's Report,
did not draw attention to any matters by way of emphasis and did
not contain a statement under Section 498(2) or 498(3) of the
Companies Act 2006. The accounts for the 6 months to 30 June 2021
have been restated to reflect a reallocation of amortisation
expense on capitalised development costs resulting from a revised
assessment of amortisation costs undertaken as part of the review
of the financial results for the year ended 31 December 2021. The
resulting adjustment to amortisation expense has not effected
either the 30 June 2021 cash position or the full year results.
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