TIDMSKL
RNS Number : 8631K
Skillcast Group PLC
10 May 2022
The information contained within this announcement is deemed by
the Company to constitute inside information pursuant to Article 7
of EU Regulation 596/2014 as it forms part of UK domestic law by
virtue of the European Union (Withdrawal) Act 2018 as amended.
10 May 2022
Skillcast Group PLC
("Skillcast", the "Group" or the "Company")
Results for the year ended 31 December 2021
Skillcast Group (AIM: SKL), the provider of content and
technology for digital compliance transformation, is pleased to
announce its audited results for the year ended 31 December
2021.
Financial and operating highlights
2021 2020
GBP million GBP million
Revenue 8.4 7.3
Revenue growth 15% 8%
Gross Margin 71% 69%
Annualised recurring revenue* 5.8 4.5
Adjusted EBITDA* 1.1 1.1
Cash in bank 7.9 3.8
-- Revenue growth of 15% (2020: 8%) driven by increased subscription revenue
o Second half recovery also in professional services
revenues
-- H1 2021 total revenue 4% higher than H1 2020
-- H2 2021 total revenue 27% higher than H2 2020
-- Cash in bank of GBP7.9 million (31 December 2020: GBP3.8
million) due to GBP3.5 million placing, higher revenues and
improved debt collections
-- Proposed final dividend of 0.279p per share to give total
dividend for year of GBP400k or 0.447p per share, based upon the
number of shares currently in issue, in line with previous year
Total revenue growth driven by recurring revenues from
subscriptions
-- 62% of total revenues were recurring (2020: 56%)
-- Recurring revenues from subscriptions grew by 28% to GBP5.2 million (2020: GBP4.1 million)
-- Non-recurring revenues from professional services steady at
GBP3.2 million (2020: GBP3.2 million)
Current trading and outlook
-- Strong start with first quarter client acquisitions higher than first quarter of 2021
-- Continued growth expected in recurring revenues from
subscriptions, while professional services remains steady
Vivek Dodd, Chief Executive Officer of Skillcast, said:
"We are pleased with how the increase in our subscription
revenue helped accelerate total revenue growth from 8% in 2020 to
15% in 2021. We help our clients build more ethical, inclusive and
resilient workplaces in an increasingly hybrid and fluid work
environment. Companies face increasing regulations and societal
demands which, along with cost pressures, are causing them to
rethink and transform their staff compliance. Skillcast is helping
them to educate employees, and record, monitor, analyse and
evidence their activities for legal, regulatory and standards
compliance with our e-learning content and compliance
technology.
"Over the next two years we intend to use the funds we raised in
December to build on our leadership position through investments in
our technology and content IP and through promoting our solutions
to a wider market. The cost of these investments will impact profit
margins in the short term but is designed to drive future growth.
Our focus is on building ARR to enhance the sustainable recurring
nature of our business.
"Trading in the early part of the year has started well, in line
with our expectations, with continued year on year growth in
subscription related revenue. We have made material progress on
hiring the new talent needed to achieve our technology development
plans and our new business development team has gained early
successes with new client acquisitions in the first quarter up on
the same period last year.
"With a strong balance sheet, an excellent set of products and
an enthusiastic and well-motivated team, we believe we are well
placed to deliver on the growth plans we have set out to build a
substantial and sustainable digital compliance transformation
business."
*Further details on the calculation of adjusted EBITDA and ARR
are set out in the Financial Review below
Enquiries:
Skillcast Group plc +44 (0)20 7929 5000
Richard Amos, Chairman
Vivek Dodd, Chief Executive Officer
Chris Backhouse, Chief Financial Officer
Allenby Capital Limited (Nominated Adviser
& Broker) +44 (0)20 3328 5656
James Reeve, Piers Shimwell (Corporate Finance)
Tony Quirke (Sales and broking)
Chairman's Statement
I would like to take this opportunity to thank shareholders who
supported our flotation in December and the associated fund-raise
that we undertook at the same time. That process was the
culmination of several years of preparation by the executive team
and marks a pivotal moment in the growth aspirations of the
business. We are very excited to be entering this new investment
phase for the Company.
Results and Dividend
Financial results for the year ended 31 December 2021 were
encouraging. Revenue of GBP8.4 million was some 15% up on the prior
year overall (2020: GBP7.3 million) and within that the
strategically important software-as-a-service ("SaaS") subscription
revenue was up 28%. Annual recurring revenue ("ARR"), our key
performance indicator to measure subscription sales progress, grew
by 29% to GBP5.8 million in December 2021. As anticipated,
consistent with the investment we are making, despite the growth in
revenue, adjusted EBITDA of GBP1.1 million was similar to the prior
year (2020: GBP1.1 million). This profit performance reflected the
start of the investment programme which is supported by the recent
fund raise. Our stated plan is to expand our sales and marketing
capability and to enhance our technology. The cost of both of these
will impact profit margins in the short term but is designed to
drive future growth.
With a business that is backed by recurring revenues that
provide strong cash generation, the Board is committed to paying
dividends. At the AGM on 22 June, the Board will propose a final
dividend of 0.279p per ordinary share. Taken in combination with an
interim dividend of 0.188p per share that was paid in November
2021, this takes the full year dividend to GBP400,000 (2020:
GBP400,000) or an equivalent of 0.447p per share based upon the
number of shares currently in issue. It is the Board's stated
policy to maintain the full year dividend at least at this level
for the foreseeable future.
S tr a t egy
Skillcast exists to enable companies of all sizes and markets to
address in a digital format their need to ensure that their
workforces are compliant with an ever-increasing range of
regulatory requirements. To do this we provide an easy to integrate
to RegTech platform which incorporates engaging, company-specific,
tailored e-learning based training content, policy attestation
hubs, registers for recording activities like continuing
professional development ("CPD") undertaken or gifts and
hospitality received and the tools to monitor and administer all of
the above.
With the growing burden of compliance that all companies are
experiencing we believe that this is a key moment in the
development of the digital compliance transformation market to help
companies deal with this challenge. With Skillcast's history in
producing engaging customisable e-learning content and by
harnessing that with our internally developed Regtech platform, we
believe we are uniquely placed to offer companies an easy to adopt,
low-cost solution to something that is currently causing
considerable challenges and concern.
Our strategy is to grow our recurring subscription-based
revenues through a focus on supporting existing clients and
acquiring similar new customers. Naturally we will primarily target
new clients in regulated industries where the burden of compliance
is at its highest although our services are equally applicable to
all companies that have a need for efficient workplace compliance
solutions. Whilst we are equally able to support companies of all
sizes, our 'sweet spot' is medium sized enterprises for whom
compliance requirements are increasingly complex but who are not
large enough to warrant full bespoke solutions.
The recent fund-raise that we completed will allow us to invest
in accelerating planned enhancements to our technology platform to
make it more scalable and easier for customers to access and
integrate with. It is also allowing us to expand our sales and
marketing capability which in turn will allow us to build market
share more rapidly as the market which we serve grows.
P eople and Board
I would like to thank and congratulate Vivek and the entire
Skillcast team for all that they have achieved over the last twelve
months. Their achievements in continuing to develop and grow the
business despite the considerable distraction of the flotation
process is something for which they should be rightly proud.
I also want to recognise my fellow Non-Executive Directors,
Sally Tilleray who chairs the Audit Committee and Isabel Napper who
chairs the Remuneration Committee. I've enjoyed working alongside
them as we have helped the executive team to transition Skillcast
to life as a public Company and develop the governance structures
that are now required.
And I would also like to welcome the eighteen new members of the
team who have joined us since the flotation. As we embark on our
new growth journey their contribution will be vital and I look
forward to working with them all.
Current Trading and Outlook
We believe that Skillcast faces a timely opportunity in a
digital compliance transformation market that offers potential for
significant growth with targeted and appropriate investment. That
is why we undertook the fund- raise in December. Investment in the
technology enhancements and marketing expansion, which that cash
allows us to undertake, will impact profits in the short term, as
we explained at the time of the fund-raise, but will ultimately
allow the business to accelerate top-line growth and capture share
as the market develops.
Trading in the early part of the year has started well, in line
with our expectations, with continued year on year growth in
subscription related revenue. We have made material progress on
hiring the new talent needed to achieve our technology development
plans and our new business development team has gained early
successes with new client acquisitions in the first quarter up on
the same period last year.
With a strong balance sheet, an excellent set of products and an
enthusiastic and well-motivated team, we believe we are well placed
to deliver on the growth plans we have set out to build a
substantial and sustainable digital compliance transformation
business.
Richard Amos
Non-Executive Chairman
Chief Executive Officer's Review
Skillcast's off-the-shelf ("OTS") e-learning courses,
technology, and award-winning customer service help our customers
achieve their compliance objectives.
Our courses are organised into libraries, which we provide to
customers on annual subscriptions. This model simplifies their
procurement process and enables them to deliver high- quality
training on key compliance topics at short notice and with minimal
effort. They can readily customise our OTS courses, or take
advantage of our customisation service if they don't have the
resource, or otherwise wish to delegate the task.
Key Products
Courses are delivered via our technology platform, which
comprises the following products, also available on annual
subscriptions:
-- Learning management system ("LMS") - for managing and
recording compliance and other mandatory training initiatives
-- Policy Hub - for authoring policies and obtaining employee attestations
-- Anonymous surveys - for obtaining honest and unreserved
employee feedback on critical environmental, social and governance
("ESG") topics
-- Staff declarations - for collecting disclosures and self-assessments from employees
-- Compliance registers - for recording activities that impact
individual and corporate compliance, such as gifts, hospitality,
personal account dealing, whistleblowing
-- Training 360 - for recording in-person training, mentoring and consultations
-- Events management - for managing live training events
-- SMCR 360 - to help financial firms manage all aspects of
compliance with the Senior Managers and Certification Regime
("SM&CR")
-- Data integration options with customers' Human Resource or
Enterprise Resource Planning ("ERP") systems
The combination of the customisable content and the
functionality of the integrated platform allows our customers to
manage their staff compliance burden efficiently and helps them to
reduce significantly their cost per employee and regulatory
compliance risk, when compared to traditional methods.
All Skillcast subscriptions are backed by highly responsive
customer service. We designate a dedicated Customer Success Manager
("CSM") for each customer. The CSMs are organised into small groups
led by a team leader to ensure quality and continuity of service.
In 2021, we received the Feefo Platinum Trusted Service Award and
e-learning Industry's Customer and User Experience awards. We are
proud of these since they are based on verified ratings and reviews
by current customers.
In addition to subscriptions, we provide a bespoke e-learning
development service. This work builds domain expertise and brand
and complements our content and technology subscriptions.
Market Opportunity
Skillcast operates in a $10 billion market for governance, risk
and compliance software. A structural shift is underway to digital
compliance transformation as companies increasingly use cloud-based
platforms for staff training and compliance processes. With this
helpful backdrop, we are investing in our people, content,
technology, and processes to stay ahead of the competition.
Our admission to trading on AIM is helping us to attract talent,
win customers and strengthen our leadership in the field of digital
compliance transformation.
Organic Growth
Our recurring content and technology (SaaS) subscriptions give
us consistent, compounding revenues and high- quality earnings. We
recognise annual recurring revenue ("ARR") as the key driver of
long-term shareholder value. The ARR grew entirely organically at
29% per annum from GBP4.5 million in December 2020 to GBP5.8
million in December 2021.
Additional sales to existing customers during the year
("upsells"), more than offset any contracts that were not renewed
("churn"), or which were renewed at a lower level ("downsells").
The upsells were driven by our customers increasing their user
numbers and by demand for our policy management system, hybrid DSE
self-assessment and SMCR 360 toolkit. We acquired over 200 new
customers during the year, which lifted our ARR further.
The revenue from professional services, mainly from bespoke
e-learning development for customers and customisation of OTS
courses, was steady at GBP3.2 million (2020: GBP3.2 million). We
reiterate our aim to hold this revenue stream at this level as we
focus our resources on growing ARR. The total revenue was up 15% at
GBP8.4 million (2020: GBP7.3 million), and adjusted EBITDA was
GBP1.1 million (2020: GBP1.1 million). The adjusted EBITDA is
expected to lag revenue growth as we have accelerated hiring to
achieve faster growth in future periods.
Our SaaS model gives us high revenue visibility, which together
with the funds raised upon admission to AIM, adds to our confidence
in making this investment. It also gives us positive cash flows as
we typically contract with clients annually and invoice the
subscription cost upfront. Our operating cash flow was up at GBP1.5
million (2020: GBP1.4 million) despite the substantial payments to
cover the IPO costs.
In 2021, we launched our new Training 360 product on the
Skillcast Portal that enables customers to record all types of
training, mentoring and consultancy and measure their progress
against CPD targets. We also unveiled a new modern scrolling
presentation for our e-learning courses and additional gamification
features. Other notable improvements included automated assignments
for annual refreshers and contingent training, a new, visual
reporting dashboard with interactive drill-down, and several
third-party integrations.
We will add more third-party integrations and the ability for
customers to self-manage their portals, and scale up our IT
infrastructure with MS Azure to support our ARR growth in 2022. We
have enhanced the policy attestation product on the Skillcast
Portal to support policy update/approval workflow this year and
plan to make improvements to other products in addition.
COVID Disruption
The impact of COVID-19 related disruption in 2021 was less
severe than the previous year. Our teams showed flexibility and
resilience when asked to return to the office and later, when asked
to go back to full-time working from home, when the restrictions
returned. We are immensely proud and grateful for how our
colleagues managed to keep up productivity, innovation and customer
service through these disruptions. Our teams have now settled into
a hybrid model of working from office and home.
As in previous years, we did not draw upon any government
support in the UK, Malta, or any other jurisdiction.
Environmental Performance
Environmental Social and Governance (ESG) is the purpose at the
core of what we offer and what we stand for. Our content and
technology are designed to support the ESG goals of our customers.
We help them build a culture of respect, inclusivity, integrity and
compliance with laws, regulations and standards. We also help them
reduce energy consumption and CO2 emissions by digitising many
activities that previously required travel.
We have substantially reduced our carbon footprint due to
travel, by moving to a hybrid working model and switching in-person
events to webinars. We are aiming to be climate neutral by the end
of 2022.
Vivek Dodd
Chief Executive Officer
Financial Review
Revenues for the year ended 31 December 2021 increased by 15% to
GBP8.4 million (2020: GBP7.3 million) which resulted in an adjusted
EBITDA* of GBP1.1 million (2020: GBP1.1 million) and after
exceptional items of GBP0.9 million, a profit after tax of GBP0.4
million (2020: GBP1.0 million).
Software-as-a-service (SaaS) subscription revenue continued to
grow during the year, up 28% to GBP5.2 million (2020: GBP4.1
million), whilst Professional Services revenue closed at a similar
level to last year at GBP3.2 million (2020: GBP3.2 million).
Gross Margin grew to 71% (2020: 69%), with SaaS revenue, which
typically commands a higher gross margin, making up 62% of total
revenues (2020: 56%).
Overheads, before depreciation, interest, and the exceptional
costs relating to the admission of the Company to AIM, increased
from GBP3.7 million to GBP4.7 million (up 25%) as the business
accelerated its investment in its sales and technology teams, with
a view to sustaining and accelerating the Company's growth.
Headcount increased by nineteen to 86, as new employees were
welcomed. Staff costs comprised 79% of these overheads (2020: 76%)
and 66% of total costs (2020:62%), with payroll costs (of both
direct and indirect staff) up GBP1.0m on the prior year.
Alternative Performance Measures
*Adjusted EBITDA
During the year the Group incurred certain administrative
expenses in anticipation of the placing and admission of the
business to AIM, so as to deliver the anticipated growth in the
business post-admission. Had the decision to undertake the placing
and admission not been taken by the Group, then such expenditure
would not have been incurred.
The Group also incurred leasehold costs on the rental of office
space which under IFRS 16 is reflected by way of the capitalisation
of the lease and a related depreciation charge.
The Directors consider Adjusted EBITDA to be a more appropriate
measure of profitability than EBITDA (Earnings before interest, tax
depreciation and amortisation) being defined as EBITDA, less the
additional administrative expenses incurred in anticipation of the
placing and admission, share-based payments and after adding back
leasehold depreciation and reinstating the related rental charge
(thereby reversing the IFRS16 leasehold property treatment).
2021 2020
GBP'000 GBP'000
EBITDA from continuing operations 361 1,253
Costs incurred in progressing the Company's
admission to AIM 876 25
Reversal of IFRS treatment of depreciation
on treatment of property lease (198) (209)
Share-based payment 17 -
Adjusted EBITDA for the year from continuing
operations 1,056 1,069
Annual Recurring Revenue (ARR)
ARR is also used to assess the performance and the trend of
subscription revenue. ARR is calculated by multiplying the Monthly
Recurring Revenue ("MRR") by twelve. MRR is defined as the
subscription revenue that was recognised in a month, excluding any
retrospective upward adjustments that arise at the end of the
contract where there have been more subscribers than a client
originally contracted for, less any contract losses (Churn), or
downward adjustments arising on contract renewal. The Directors
consider that the ARR, derived from software-as-a-service (SaaS)
sales is a key measure of the performance of the business. The ARR
increased 29% to GBP5.8 million by December 2021.
Key Performance Indicators ('KPIs')
The following KPIs are used to track the trading performance and
position of the business.
KPIs
2021 2020
GBP'000 GBP'000
Revenue 8,408 7,293
Software-as-a-service revenue (SaaS revenue) 5,227 4,088
Gross Margin 71% 69%
Adjusted EBITDA 1,057 1,069
Annualised recurring revenue (ARR) as at
31 December 5,775 4,468
Churn (as a percentage of ARR) 7% 11%
Number of employees at 31 December 86 67
Revenue
As noted above, the main driver for growth is the development of
the Group's SaaS revenues. These increased by 28% in the year,
whilst Professional Services revenues remained steady, as
summarised below.
Revenue by Service 2021 2020
GBP'000 GBP'000
Software-as-a-Service (SaaS) 5,227 4,088
Professional Services 3,181 3,205
Total 8,408 7,293
Gross Profit
The gross profit generated in the period was GBP5.9 million
(2020: GBP5.0 million), with gross margin increasing to 70.5%
(2020: 68.9%) on the back of higher SaaS revenues and despite
increasing staff costs.
Overheads
Overheads were GBP5.8 million (2020: GBP4.0 million) increasing
by GBP1.8m, including c.GBP0.9 million of costs relating to the
Company's admission to AIM in December 2021 and as summarised
below.
In June 2021 the business relocated its London offices to
Leadenhall Street under a five-year lease dated 25 May 2021 that
expires in June 2026. The capitalised value of this lease is
GBP517,284. The Company spent GBP124,447 on leasehold improvements
(2020: GBP Nil).
2021 2020
GBP'000 GBP'000
Staff costs 3,738 2,823
Professional fees 229 259
Advertising and Marketing 84 240
Office accommodation 158 73
Depreciation and amortisation 283 220
Other expenses 452 337
Total Overheads before exceptional costs 4,944 3,952
Costs relating to the Company's admission to AIM 876 25
Share-based payments 17 0
Foreign exchange losses 1 7
Interest 16 11
Total Overhead costs 5,854 3,995
Adjusted Operating Profit before Tax
Adjusted operating profit from operations before tax,
exceptional costs and share-based payments, but including
depreciation and interest amounted to GBP1.0 million (2020: GBP1.0
million).
Taxation
As a result of research and development tax credits, the Company
is not liable for any UK corporation tax for 2021 and as a result
the Group had unutilised tax losses carried forward of
approximately GBP0.7 million (2020: GBP0.6 million) as at 31
December 2021. Given the varying degrees of uncertainty as to the
timescale of utilisation of these losses, the Group has not
recognised the potential deferred tax assets associated with these
losses.
In Malta, a withholding tax rebate of GBP487,149, due to
Inmarkets Group Ltd with regards to dividends declared by Inmarket
International Ltd for 2019 and 2020, is netted against a total
income tax expense of GBP177,963 to leave a credit of GBP309,188
(2020: Liability of GBP118,630). The rebate is based upon dividends
declared by the Inmarkets International Ltd and paid to Inmarkets
Group Ltd during 2021 and its recognition is dependent upon all
necessary tax returns having been filed and accepted by the
relevant authorities.
A rebate of GBP355,178 was paid to Inmarkets Group Ltd during
2021 in relation to dividends declared by Inmarkets International
Ltd in 2014, 2015 and 2016. The balance due to the Inmarkets Group
Ltd as at the year-end, of GBP825,213, includes GBP338,062 in
respect of the year ended 31 December 2018.
Cash and working capital
The Group cash and cash equivalents at 31 December 2021 were
GBP7.9 million (2020: GBP3.8 million), boosted by a net GBP3.5
million of proceeds from the Company's admission to AIM in December
2021, making the net cash increase for the year, after dividend
payments of GBP0.6 million, GBP4.1 million (2020: GBP0.4
million).
Cash generated from operations was GBP1.5 million (2020: GBP1.4
million).
Working capital, excluding cash balances (current assets less
current liabilities before corporate taxes and capitalised lease
premises) reduced by GBP1.1 million and by GBP0.4 million, if the
growth in deferred revenues is also excluded.
Despite an increase in revenues of 15%, this reduction in
working capital was assisted by the close control of debtor
balances, which remained in line with 2020 at GBP2.5 million as
debtor days were reduced.
Deferred revenue
Deferred revenue increased by 30% from GBP2.3 million as at 31
December 2020 to GBP3.0 million at 31 December 2021. This was as a
result of continuing SaaS client acquisitions and professional
service projects in progress over the year end.
Dividends
The Board has become aware of a breach of procedure concerning
compliance with the Companies Act 2006 in relation to the payment
of the interim dividend of GBP150,000 for 2021 financial year of
the Company that was paid in October 2021.
This dividend was paid to Shareholders when the Company had
sufficient reserves. However, the Company's relevant accounts for
the purposes of the Companies Act 2006 in relation to namely those
filed for the year ended 31 December 2020, did not show sufficient
distributable reserves and no interim accounts had been filed at
Companies House to confirm the adequacy of reserves at the time of
the declaration and as required by the Act.
To satisfy the steps required to rectify this breach of
procedure, a resolution will be proposed at the Company's
forthcoming Annual General Meeting ('AGM'). The Company has put in
place the necessary controls and processes to ensure that a similar
issue will not recur.
The Board is proposing a final dividend of 0.279p per share. In
combination with the interim dividend, if confirmed by the
shareholders at the AGM, this will represent a total dividend for
the year of GBP400,000 (2020: GBP400,000) or 0.447p per share based
upon the number of shares currently in issue. If further approved
by shareholders at the AGM on 22 June 2022, the final dividend will
be paid on 21 July 2022 to shareholders on the register at the
close of business on 1 July 2022.
Skillcast Group PLC
Consolidated statement of profit or loss and other comprehensive
income
For the year ended 31 December
Note 2021 2020
GBP GBP
Revenue 4 8,408,056 7,292,685
Cost of sales (2,476,708) (2,264,608)
Gross profit 5,931,348 5,028,077
Administrative expenses (5,853,792) (3,995,031)
Operating
profit 77,556 1,033,046
EBITDA 3 360,345 1,253,425
Adjustment
items 3 695,472 (184,397)
Adjusted
EBITDA 3 1,055,817 1,069,028
Other Income 1,650 -
Finance income 393 392
Finance expense (18,953) (10,690)
Profit before
tax 5 60,646 1,022,748
Income tax
expense 6 316,984 (118,630)
Profit after tax and
total comprehensive
income 377,630 904,118
Earnings
per share:
Basic 11 0.467p 1.130p
Diluted 11 0.465p 1.130p
Skillcast Group PLC
Consolidated statement of financial position
As at 31 December
Note 2021 2020
GBP GBP
Assets
Non-current
assets
Property, plant and equipment 276,697 118,753
Right-of-use
assets 582,517 263,353
Deferred tax
assets 4,745 5,112
863,959 387,218
Current assets
Trade and other receivables 7 3,798,823 3,474,349
Cash and cash equivalents 7,856,126 3,799,804
11,654,949 7,274,153
TOTAL ASSETS 12,518,908 7,661,371
Issued capital and reserves
attributable
to owners
Share capital 10 89,459 2,000
Share Premium 3,490,541 -
Share Option
Reserve 17,000 -
Retained earnings 3,624,369 3,874,738
Total equity 7,221,369 3,876,738
Liabilities
Trade and other payables 8 1,440,550 728,178
Contract liability 9 3,037,184 2,292,947
Current lease
liabilities 182,366 123,620
Income tax
payable 176,134 504,114
4,836,234 3,648,859
Non-current
liabilities
Long-term lease liabilities 461,305 135,774
461,305 135,774
Total liabilities 5,297,539 3,784,633
TOTAL EQUITY AND LIABILITIES 12,518,908 7,661,371
Skillcast Group PLC
Consolidated statement of changes in equity
For period ended 31 December 2021
Share Share
Share Premium Option Retained Total
capital Paid Reserve earnings equity
GBP GBP GBP GBP GBP
01 January 2020 2,000 - - 2,970,620 2,972,620
Comprehensive
Income
for the period
Profit - - - 904,118 904,118
Total
comprehensive
Income for the
period - - - 904,118 904,118
31 December 2020 2,000 - - 3,874,738 3,876,738
01 January 2021 2,000 - - 3,874,738 3,876,738
Comprehensive
Income
for the period
Profit - - - 377,630 377,630
Total
comprehensive
Income for the
period - - - 377,630 377,630
Total
contributions
by and
distributions
to owners
Capitalisation
of Profit and
Loss 78,000 - - (78,000) -
Shares issued on
admission
to AIM 9,459 3,490,541 - - 3,500,000
Share Option
Reserve - - 17,000 - 17,000
Dividends - - - (550,000) (550,000)
Total
contributions
by and
distributions
to owners 87,459 3,490,541 17,000 (628,000) 2,967,000
31 December 2021 89,459 3,490,541 17,000 3,624,369 7,221,369
Skillcast Group PLC
Consolidated statement of cash flows
For the year ended 31 December
2021 2020
GBP GBP
Cash flows
from
operating
activities
Profit before
tax 60,646 1,022,748
Adjustments for:
Depreciation of
property,
plant
and equipment 84,668 48,039
Amortisation
of
right-of-use
assets 198,121 172,340
Finance income (393) (392)
Share based
payment 17,000 -
Finance expense 18,953 10,690
Income tax
expense - -
377,345 1,253,425
Increase in
trade and
other
receivables (324,474) (688,628)
Increase in
trade and other
payables,
including
contract
liabilities 1,456,609 876,365
Cash generated
from operations 1,509,480 1,441,162
Income taxes paid (10,629) (323,542)
Net cash flows
from
operating
activities 1,498,851 1,117,620
Investing
activities
Purchases of
property,
plant and
equipment (242,612) (75,307)
Interest received 393 392
Net cash used
in investing
activities (240,569) (74,915)
Financing
activities
Principal paid
on lease
liabilities (133,007) (190,413)
Dividends paid (550,000) (400,000)
Share Issued 3,500,000 -
Interest paid
on lease
liabilities (18,953) (10,690)
Net cash
from/(used)
in financing
activities 2,798,040 (601,103)
Net increase
in cash
and cash
equivalents 4,056,322 441,602
Cash and cash
equivalents
at beginning
of period 3,799,804 3,358,202
Cash and cash
equivalents
at end of
period 7,856,126 3,799,804
Skillcast Group PLC - Notes to the consolidated financial
statements
1 General Information
Skillcast Group PLC ('Company') is registered in the United
Kingdom with registration number 12305914 and is limited by shares.
Its registered office is at 80 Leadenhall Street, London, England,
EC3A 3DH. The Company is the ultimate parent of Inmarkets Ltd,
Inmarkets Group Ltd and Inmarkets International Ltd.
This report and financial statements reflect the consolidated
activities and transactions of the Company and other group
companies ('Group').
Up to the 28 July 2021 the Company was a private limited
Company. On the 28 July 2021 the Company re-registered as a public
Company as Skillcast Group PLC. The Company did this in preparation
of admission to the AIM market of the London Stock Exchange. On 1
December 2021 the Company's ordinary shares were admitted to
trading on AIM.
The Company is primarily involved in providing management
services to other entities in the group. The Group provides
software and content subscriptions and related professional
services to enable companies to transform their staff compliance.
Operating from its two bases, in London and Malta, the Group helps
companies across a broad spectrum of industry sectors in the UK, EU
and in the rest of the world, to train their staff and demonstrate
compliance with various laws, regulations, and standards that are
relevant for their business.
2.1 Basis of preparation and statement of compliance
The Financial information set out in this announcement does not
constitute the Company's statutory accounts for the years ended 31
December 2021 or 2020 but is derived from the 2021 accounts.
A copy of the statutory accounts for the year to 31 December
2020 has been delivered to the Registrar of Companies and is also
available on the Company's website. Statutory accounts for 2021
will be delivered in due course. The auditors have reported on
those accounts, their report was (i) Unqualified, (ii) did not
include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006 in respect of the accounts for 2019 nor
2020.
Whilst the financial statements from which this preliminary
announcement is derived have been prepared in accordance with
International Financial Reporting Standards ("IFRS") and applicable
law, this announcement does not itself contain sufficient
information to comply with IFRS. The Annual Report, containing full
financial statements that comply with IFRS, will be sent to
shareholders later in May 2022.
The Directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for the
foreseeable future. Therefore, in the preparation of the 2021
financial statements they continue to adopt the going concern
basis.
2.2 Summary of significant accounting policies
Revenue recognition
Software as a Service (SaaS) subscriptions
The Group provides right of access of content to clients for
subscription periods ranging from six to twelve months.
Revenue is recognised evenly over the contractual period of the
subscription as the client simultaneously receives and consumes the
benefits of the Group's services.
The balance of the revenue which has not been recognised at the
reporting date is deferred as a contract liability in current
liabilities, until it is due to be recognised as revenue.
Where a contract includes multiple performance obligations, the
transaction price is allocated to each performance obligation based
on the stand-alone selling prices.
Professional services
The Group provides customised and standard content to its
clients provided under fixed-price contracts which is generally
non-recurring revenue.
Fixed price contracts are recognised on the percentage of
completion method unless the outcome of the contract cannot be
reliably determined, in which case contract revenue is only
recognised to the extent of contract costs incurred that are
recoverable. This is because either the Group is creating an asset
with no alternative use to it and the contract contains the right
to payment for work completed to date, or the client is
simultaneously receiving and consuming the benefits of the Group's
services as it performs.
Business development costs incurred as part of a bid or tender
process are expensed as incurred. There are no material costs
incurred during the period between the contract being awarded and
service delivery commencing.
For fixed-price contracts, the client pays the fixed amount
based on a payment schedule. If the services rendered by the Group
exceed the payment, an amount recoverable on contracts asset is
recognised. Conversely, if the payments exceed the services
rendered, a liability is recognised.
Amounts recoverable on contracts are included in current assets
and represent revenue recognised on account.
Segmentation
IFRS 8 requires operating segments to be identified on the basis
of internal reports about components of the Group that are
regularly reviewed by the chief operating decision-maker (which
takes the form of the Board of Directors of the Group), in order to
allocate resources to the segment and to assess its performance.
The Directors of the Group consider the Group is organised as one
business unit and all assets, liabilities, revenues and expenditure
are retained and recorded as such. However, the Group does segment
revenue by type of revenue, namely SaaS subscriptions and
Professional Services, and on a geographic basis .
Taxes
Current and deferred tax is recognised in profit or loss, except
when it relates to items recognised in other comprehensive income
or directly in equity, in which case the current and deferred tax
is also dealt with in other comprehensive income or in equity, as
appropriate.
Current tax is based on the taxable result for the period. The
taxable result for the period differs from the result as reported
in profit or loss because it excludes items which are
non-assessable or disallowed and it further excludes items that are
taxable or deductible in other periods. It is calculated using tax
rates that have been enacted or substantively enacted by the end of
the reporting period.
Deferred tax is accounted for using the balance sheet liability
method in respect of temporary differences arising from differences
between the carrying amount of assets and liabilities in the
financial statements and the corresponding tax bases used in the
computation of taxable profit.
Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised.
Deferred tax is calculated at the tax rates that are expected to
apply to the period when the asset is realised or the liability is
settled, based on tax rates that have been enacted or substantively
enacted by the end of the reporting period.
Current tax assets and liabilities are offset when the Group has
a legally enforceable right to set off the recognised amounts and
intends either to settle on a net basis, or to realise the asset
and settle the liability simultaneously.
Deferred tax assets and liabilities are offset when the Group
has a legally enforceable right to set off its current tax assets
and liabilities and the deferred tax assets and liabilities relate
to income taxes levied by the same taxation authority on either the
same taxable entity or different taxable entities which intend
either to settle current tax liabilities and assets on a net basis,
or to realise the assets and settle the liabilities simultaneously,
in each future period in which significant amounts of deferred tax
liabilities or assets are expected to be settled or recovered.
In Malta, Inmarkets Group Ltd is able to reclaim a proportion of
the corporation tax paid by its subsidiary, Inmarkets International
Ltd, as long as it meets certain criteria laid down by the Maltese
tax authorities. The criteria include that the relevant corporation
tax has been paid by Inmarkets International Ltd and that dividends
to Inmarkets Group Ltd have been declared by Inmarkets
International and are payable to non-Maltese tax resident
shareholders. It is Group policy to reclaim Maltese corporation tax
to the fullest extent permissible and to recognise this income in
Inmarkets Group Ltd based upon dividends declared, or that will be
declared once tax returns are completed, for the financial year.
The reclaimed corporation tax is presented as netted off with the
income tax expense and in other receivables.
3 EBITDA and adjusted EBITDA
EBITDA is not defined or recognised under IAS. EBITDA is defined
by the Group as 'earnings before interest, tax, depreciation and
amortisation'. EBITDA is presented below as 'operating profit' plus
all depreciation added back.
The Group also presents 'adjusted EBITDA' as the directors
believe it presents a more meaningful measure of performance. The
Group incurred leasehold depreciation in 2020 and 2021. In
calculating 'adjusted EBITDA' an amount equivalent to the rent of
the leased items has been deducted from EBITDA in 2020 and 2021.
The Group incurred administrative expenses in anticipation of the
Placing and Admission so as to deliver the anticipated growth in
the business post-Admission. Had the decision to undertake the
Placing and Admission not been taken by the Group, then such
expenditure would not have been incurred. In calculating 'adjusted
EBITDA' such 'non-recurring expenditure' has been added back to
EBITDA. Upon Admission to AIM the Company adopted a Share Option
Plan which incurred share-based payments. Had the decision to
undertake the Placing and Admission not been taken by the Group,
then such expenditure would not have been incurred. In calculating
'adjusted EBITDA' such 'share based payments' has been added back
to EBITDA.
2021 2020
GBP GBP
Operating profit 77,556 1,033,046
Depreciation 282,789 220,379
EBITDA 360,345 1,253,425
Rent equivalent - 198,005 - 208,897
Non-recurring expenditure 876,477 24,500
Share Based Payments 17,000 -
Adjusted EBITDA 1,055,817 1,069,028
Due to nature of calculation of EBITDA and adjusted EBITDA the
reported figures may not be comparable to other companies with
similar measures.
4 Revenue
2021 2020
GBP GBP
Major product lines
Software as a Service (SaaS)
subscriptions (i) 5,227,229 4,091,819
Professional services (ii) 3,180,827 3,200,866
8,408,056 7,292,685
(i) SaaS subscriptions - The Group provides right of access of
content to the customer over time for the subscription period
ranging from 6 to 12 months. The revenue recognition is deferred
for the remaining period of subscription. This revenue includes
subscriptions to: (a) Skillcast Portal - the Group's integrated
compliance management application that comes with a broad range of
tools, namely SELMS, Policy Hub, Compliance Declarations, Surveys,
Compliance Registers, Training 360, Events Management and SMCR 360;
and (b) the Skillcast OTS course libraries, namely Essentials, FCA
Compliance, Insurance Compliance and Risk.
(ii) Professional services - The Group provides customised and
standard content to its clients under fixed-price contracts. This
non-recurring revenue includes: (a) bespoke e-learning development
projects for large corporates; (b) translations of those bespoke
courses; (c) customisation of OTS courses for subscription clients;
and (d) other content and technology consultancy.
2021 2020
GBP GBP
Geographic split
UK 5,716,503 5,454,295
Europe 1,693,379 1,272,366
Rest of world 998,176 565,280
8,408,057 7,291,941
Non-current assets in which they are
based are shown below:
Property, plant and
equipment
UK 205,003 58,565
Malta 71,694 60,189
276,697 118,753
Right of use assets
UK 465,188 93,602
Malta 117,329 169,751
582,517 263,353
5 Profit before taxation
The profit before taxation is stated after charging the
following amounts:
2021 2020
GBP GBP
Staff cost (CoS) 1,536,011 1,346,602
Subcontracted services
(CoS) 865,251 875,157
Staff costs (Admin) 3,173,390 2,361,136
Directors' compensation 565,345 462,000
Professional fees 228,735 259,377
Depreciation and amortisation
expense 282,789 220,379
Fees payable to the Company's
auditor for the audit of Parent
and Subsidiaries 87,483 33,152
Expenses related to
the Admission into
AIM 830,620 24,500
Included in the expenses related to the admission into AIM was
payments made to Crowe UK LLP, who are engaged as the Company's
auditors, totalling GBP110,000 (2020: GBP0.00).
6 Income tax expense
2021 2020
GBP GBP
Current tax on profits
for the year 169,798 132,433
Deferred tax expense 367 - 13,803
Withholding taxes on intercompany
dividends - 487,149 -
- 316,984 118,630
A reconciliation of the current income tax expense applicable to
the profit before taxation at the statutory rate to the current
income tax expensed at the effective tax rate of the Company is as
follows:
2021 2020
GBP GBP
Profit before taxation 60,646 1,022,748
Tax calculated at applicable UK statutory
tax rate of 19% 11,523 194,322
Tax effects of:
-Expenses not deductible
for tax purposes 195,150 35,348
-Taxable losses carried
forward 234,361 49,267
-Withholding tax on intercompany (487,149)
dividends -
-Research and Development
Credits (112,691) (103,059)
-Differing rax rates due to trade in
different jurisdictions (125,230) (52,492)
-Other adjustments (32,948) (4,755)
Current income tax (316,984) 118,630
The Company provides for income taxes on the basis of its income
for financial reporting purposes, adjusted for items that are not
assessable or deductible for income tax purposes in accordance with
the regulation of domestic tax authorities.
The effective rate of tax for the year ended 31 December 2021
was -549% (2020: 11.6%). This effective tax rate is a combination
of the following items:
* the tax rates and tax regimes in the UK and Malta in which the
businesses of the Company operate;
* the diverse tax treatments of deferred consideration amounts
applied in each jurisdiction;
* the tax loss carry forward regulations in different
jurisdictions.
The tax rates applicable in the jurisdictions are:
* UK: The applicable statutory tax rate for 2021/20 is 19%
* Malta: Income taxes are due at 35% of taxable income.
In 2021 a withholding tax rebate of GBP487,149 (2020: GBP0) is
netted against the income tax expense. The rebate is the
withholding taxes on dividends declared by Inmarkets International
Limited to the Inmarkets Group Limited.
As of the end of the period the Post 1 April 2017 loss carry
forward was GBP639,719, and the Pre 1 April 2017 loss carry forward
was GBP69,877 for the Company.
7 Current assets - trade and other receivables
2021 2020
GBP GBP
Trade receivables 2,569,083 2,511,043
Less: Allowance for expected
credit losses - 125,286 - 67,800
2,443,797 2,443,243
Prepayments and contract
assets 415,073 242,664
Maltese withholding
tax 825,213 693,240
Other receivables 114,740 95,202
1,355,026 1,031,106
As of 31 December 2021, trade receivables totalled GBP2,569,083
(2020: GBP2,511,043) of which GBP739,745 were over 90 days (2020:
GBP321,174). These primarily relate to customers for whom there is
considered a low risk of default. An allowance of GBP125,286 (2020:
GBP67,800) have been set up to offset credit risks.
During the year withholding tax rebates of GBP355,178 (2020:
GBP0.00) were received by the Company.
8 Current liabilities - trade and other payables
2021 2020
GBP GBP
Trade payables 180,452 165,130
Accruals 444,141 92,188
Amount due to shareholders 450 - 7,562
Sales and payroll
taxes 815,507 478,422
1,440,550 728,178
9 Current liabilities - Contract liability
2021 2020
GBP GBP
Deferred revenue 3,037,184 2,292,947
Contract liabilities represent subscription revenue that has not
been recognised at the reporting date, as performance obligations
remain. Revenue is recognised over the subscription period, which
is generally 12 months.
10 Equity - issued capital
2021 2020
GBP GBP
Number 89,459,460 20,000,000
Par value per share 0.10p 0.01p
Total 89,459 2,000
All the shares in the Company are fully paid up. On 28 July 2021
the Company re-registered as a public company. Prior to
re-registration the company's shares were reclassified as Ordinary
Shares, and the company capitalised GBP78,000 of retained profit in
order to meet the minimum capital value for these shares required
of a public company. The shares were also consolidated into 1 share
for every 10 in issue. On 1 December 2021 9,459,460 additional
shares were issued upon the Company's admission to the Alternative
Investment Market.
Ordinary shares entitle the holder to participate in dividends
and the proceeds on the winding up of the Company in proportion to
the number of, and amounts paid, on the shares held. On a show of
hands, every member present at a meeting in person or by proxy
shall have one vote and upon a poll, each share shall have one vote
.
11 Earnings per share
Earnings per share (EPS) is calculated on the basis of profit
attributable to equity shareholders divided by the weighted average
number of shares in issue for the year.
Diluted earnings per share have been calculated on the same
basis as above, except that the weighted average number of ordinary
shares that would be issued on the conversion of the dilutive
potential ordinary shares as calculated using the treasury stock
method (arising from the Company's share option scheme and
warrants) into ordinary shares has been added to the
denominator.
2021 2020
GBP GBP
Profit before tax 60,646 1,022,748
Tax 316,984 -118,630
Profit after tax 377,630 904,118
Non-recurring expenditure 876,477 24,500
Share based payments 17,000 -
Rent equivalent -198,005 -208,897
Adjusted earnings 1,073,102 719,721
Weighted average number
of ordinary shares
Basic 80,788,288 80,000,000
Effect of dilutive potential 402,500
ordinary shares -
Diluted average number
of shares 81,190,788 80,000,000
Earnings per share:
Basic 0.467p 1.130p
Diluted 0.465p 1.130p
Adjusted earnings
- Basic 1.328p 0.900p
Adjusted earnings
- Diluted 1.322p 0.900p
*For comparative purposes the earnings per share for 2020 as
stated above has been calculated after taking into account the
capitalisation of the reserves as set out in note 10.
Basic and diluted earnings per share of 0.467p (2020: 1.130p)
has been impacted by interest, tax, depreciation, amortisation,
non-core operating expenses. Tax on adjusted earnings is the same
figure as that shown on the consolidated statement of comprehensive
income given that the majority of the adjusting items in the
earnings per share calculation above are also adjusted for when
calculating the Company's tax expense.
12 Dividends
2021 2020
Pence GBP Pence GBP
per per
share share
Dividend declared
- Final 2020 0.500p 400,000 0.00p -
Dividend declared
- Interim 2021 0.188p 150,000 0.00p -
Dividend declared
- Final 2019 0.500p 400,000
During the period under review, the Group generated a profit
before tax of GBP60,644. A dividend of GBP400,000 (0.500p) was
declared and paid with regards to the year ended 2020 and
GBP150,000 (0.188p) interim dividend was declared and paid with
regards to the year ended 2021. A final dividend of GBP400,000 in
relation to 2019 was settled in 2020. The Group's policy is to at
least maintain dividend payments.
The Board has become aware of a breach of procedure concerning
compliance with the Companies Act 2006 ('Act') in relation to the
payment of the interim dividend of GBP150,000 for 2021 financial
year of the Company that was paid in October 2021. This dividend
was paid to Shareholders when the Company had sufficient reserves.
However, the Company's relevant accounts for the purposes of the
Act, namely those filed for the year ended 31 December 2020, did
not show sufficient distributable reserves and no interim accounts
had been filed at Companies House to confirm the adequacy of
reserves at the time of the declaration and as required by the
Act.
To satisfy the steps required to rectify this breach of
procedure, a resolution will be proposed at the Company's
forthcoming Annual General Meeting ('AGM'). The Company has put in
place the necessary controls and processes to ensure that a similar
issue will not recur.
The Board is proposing a final dividend of 0.279p per share,
totalling GBP250,000. In combination with the interim dividend, if
confirmed by the shareholders at the AGM, this will represent a
total dividend for the year of GBP400,000 or 0.447p per share based
upon the number of shares currently in issue. If further approved
by shareholders at the AGM on 22 June 2022, the final dividend will
be paid on 21 July 2022 to shareholders on the register at the
close of business on 1 July 2022.
13 Financing cash flows
A reconciliation of the financing cash flow is set out
below:
2021 2020
Lease liability GBP GBP
At 1 January 259,394 484,802
Additions 517,284 -
Interest expense 18,953 10,690
Lease payments -151,960 -201,103
Disposal - -34,995
At 31 December 643,671 259,394
Dividend liability
At 1 January - 400,000
Dividends declared 550,000 -
Dividend payments -550,000 -400,000
At 31 December 0 0
Admission into AIM
Capital Raised 3,500,000 -
Share Option Reserve 17,000 -
At 31 December 3,517,000 0
Net financing payments 2,815,040 -601,103
Financing per statement
of cash flows 2,798,040 -601,103
A dividend of GBP400,000 was declared and paid in 2021 with
regard to the year ended 2020 and a GBP150,000 interim dividend was
also declared and paid for the year ended 2021.
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