TIDMWAND
RNS Number : 8059Y
WANdisco Plc
08 March 2017
8 March 2017
WANdisco plc
("WANdisco", the "Company" or the "Group")
Preliminary unaudited results for the year ended 31 December
2016
WANdisco (LSE: WAND), the world leader in Active Data
Replication(TM) announces preliminary unaudited results for the
year ended 31 December 2016.
Financial highlights
-- Total bookings for the year increased 72% to $15.5m (2015: $9.0m)
o Big Data and Cloud bookings rose 184% to $7.1m (2015:
$2.5m)
o ALM bookings rose 29% to $8.4m (2015: $6.5m)
-- Revenue for the year rose 4% to $11.4m (2015: $11.0m)
-- Cash overheads(1) were reduced by $11.2m to $23.4m (2015: $34.6m)
-- Adjusted EBITDA(2) loss was more than halved to $7.5m (2015: $16.0m loss)
-- Cash at year-end of $7.6m (31 December 2015: $2.6m)
-- Cash burn reduced to $0.2m in Q4 2016 (Q4 2015: $6.9m)
-- Debt-free as at 31 December 2016
Operational and strategic highlights
-- Added 15 new Big Data and Cloud Fusion customers for our
patented WANdisco Fusion ('Fusion') technology
-- Significant progress achieved in developing our channel partner network
o Strategic partnership agreements now in place with IBM, Amazon
and Oracle, and seeing good contract momentum as a result of these
channel partners
o Secured landmark IBM OEM agreement for WANdisco Fusion
-- WANdisco Fusion is now ideally positioned to leverage the
rapid growth in the Big Data and Cloud markets
-- Major contract wins include:
o $1m order for Fusion to be deployed as part of Dubai's Smart
City Project through partnership with Hewlett Packard
Enterprise
o $1.5m order for Fusion from a major US Bank in association
with Oracle
o $1m order for Fusion from a major multinational automobile
manufacturer in association with IBM
-- Renewed sales focus generating positive margin contribution
from ALM product set (ALM now referred to as Source Code
Management)
-- Filed 8 new patents (both US and foreign) and had 6 US patents issued in 2016
-- Strong order book and sales pipeline going into 2017
(1) Operating expenses, excluding amortisation and
depreciation, exceptional items, equity-settled
share-based payment and capitalised product development
costs - see note 5
(2) EBITDA loss excluding exceptional items, equity-settled
share-based payment, capitalised product development
costs and acquisition-related items - see note
5
David Richards, Chief Executive Officer and Interim Chairman of
WANdisco, commented:
"Over the past year, as the Big Data and Cloud markets have
continued to expand, we have seen global enterprises increasingly
require the ability to move large volumes of data at speed across
both on-premises and cloud environments. WANdisco Fusion is the
only solution available in the world that enables the replication
of continuously changing data, whilst guaranteeing this data is
continuously available, consistent and delivered with zero business
disruption.
"As a result of this significant expansion in our core Cloud
markets, our total bookings increased by 72% during 2016 and 97% in
Q4 2016. Our OEM with IBM, as well as our other channel
relationships, have been central in driving new business, by
enabling us to take advantage of this market opportunity whilst
reducing our operational cost base throughout the year. This has
resulted in a $11.2m reduction in overheads and a halving of the
EBITDA loss from 2015 to 2016 bringing us much closer to cash flow
breakeven.
"We continue to build on this momentum with a strong new
business pipeline which, combined with a significantly reduced cost
base together will further underpin our progress towards
profitability."
A webcast of our results presentation will be available on our
website later this morning: https://www.wandisco.com/investors
WANdisco will also be holding a presentation for private and
retail investors at 4.00pm on Thursday 9 March 2017 at No.1
Cornhill, London EC3V 3ND. Admittance for the event is strictly
limited to those who register their attendance in advance. For
further information and to register attendance, please contact Vigo
Communications via email on wandisco@vigocomms.com.
For further information, please contact:
WANdisco plc via Vigo Communications
David Richards, Chief Executive
Officer and Interim Chairman
Erik Miller, Chief Financial
Officer
+44 (0)207 830
Vigo Communications 9707
Jeremy Garcia / Fiona Henson
/ Antonia Pollock
www.vigocomms.com
+44 (0)207 710
Stifel (Joint Broker and Nomad) 7600
Fred Walsh / Neil Shah / Ben
Maddison / Rajpal Padam
UBS (Joint Broker) +44 (0)207 567
Rahul Luthra / Sandip Dhillon 8000
About WANdisco
WANdisco is the world leader in Active Data Replication(TM). Its
patented WANdisco Fusion technology enables the replication of
continuously changing data to the cloud and on-premises data
centers with guaranteed consistency, no downtime and no business
disruption. It also allows distributed development teams to
collaborate as if they are all working in one location. WANdisco
has an OEM with IBM as well as partnerships with Amazon Web
Services, Cisco, Google Cloud, Hewlett Packard Enterprise,
Microsoft Azure, and Oracle to resell its patented technology.
WANdisco also works directly with Fortune 1000 companies around the
world to ensure their data gives them the real insight they
need.
For additional information, please visit www.wandisco.com.
BUSINESS REVIEW
2016 has been a year of financial transformation and operational
progress. We have realigned our cost base, which we now believe is
at an appropriate level to deliver cash flow breakeven and EBITDA
positivity. We continue to focus on the following strategic
priorities:
-- To capitalise on the significant growth in the Cloud and Big
Data markets to ensure the transfer of data is consistent,
continuously available and delivered with zero business
disruption
-- Continue to develop key channel partners in order to
capitalise on the significant market opportunity
-- Invest in and support the Company's profitable Source Code Management product
One of the Group's key focuses for 2016 was to establish our
partner network and during the year we successfully secured our IBM
OEM agreement, as well as two significant channel partnerships with
Oracle and Amazon. These partnerships are strategically important
to WANdisco as they accelerate Fusion's access to blue chip
customers whilst leveraging global sales channel networks. Through
the partnership with IBM, and the white labelling of Fusion as IBM
Big Replicate, we are confident we will be able to achieve
accelerated market penetration with the support of the IBM sales
team.
These strategic partnerships are already significantly
contributing to our strong bookings performance, with customers
secured through all three key partnerships with IBM, Amazon and
Oracle in the year.
Big Data - WANdisco Fusion
2016 was the year that WANdisco Fusion gained significant
traction in the market adding 15 new customers.
WANdisco Fusion, our Big Data replication product developed in
2015, uniquely addresses the need for replication of large amounts
of constantly changing data both between the cloud and on-premises,
and is increasingly seen by our customers as a "must have" as they
adopt cloud computing solutions. No other solution in the world can
achieve consistent replication, whilst the data is constantly
changing, with no down-time. We believe the increasing adoption of
Fusion by customers, both direct and through our strategic
partnerships, will be a significant driver of our revenue growth
for years to come.
We secured a number of major contracts for Fusion in the year:
Hewlett Packard Enterprise selected us to be part of the platform
underpinning Dubai's Smart City Project; Oracle chose us for work
with a large commercial bank; we secured a contract with a
multinational automotive manufacturer via our OEM Partnership with
IBM, and with a global online gambling company, Playtika to use our
Amazon S3 Cloud solution, available on Amazon's AWS
Marketplace.
In addition, many of our existing Big Data customers have
expressed their intent to significantly scale up their use of
WANdisco solutions. During the year we also secured five contract
expansions with existing customers, some of them even before our
product went live.
Source Code Management
In 2016 we renewed our sales emphasis for our Source Code
Management products and we continue to see an opportunity in the
segment of the ALM market that we focus on. This is evident as
customers continue to move from legacy proprietary platforms to
modern, agile, open source platforms. Software development
continues to become more geographically and organisationally
distributed, bringing greater challenges in control and efficiency,
both amongst software publishers and in industry more generally
driving the greater need for Source Code Management products.
Our ongoing success in the Source Code Management market
confirms that we have the right products for the market at this
stage in its evolution. Our Subversion MultiSite and GIT MultiSite
products fit with customers' needs in replicated open source
version control and we believe there are further growth
opportunities in traditional industries developing internal
software as well as with newer software vendors developing gaming,
media and mobile applications for consumers.
We have chosen to direct our sales efforts towards traditional
industry segments where open source adoption is strong, and have
renewed our focus on up-selling and renewals for our installed base
of over 200 customers. During the year we received a $0.8m order
for Subversion from a major European bank, along with significant
renewal and expansion orders from our existing customers.
People
Our people are key to our success. We endeavour to recruit,
develop and maintain the best people across our organisation. We
believe in creating an environment of trust, and giving people
access to learning opportunities and challenging work assignments,
so they can realise their true potential as individuals as well as
contribute to the Company's progress.
We are only able to deliver our innovative products because of
the efforts of all the people at WANdisco, from the development
staff, to customer support, marketing and sales, and those in
finance and administration.
The Board
The Board has been significantly strengthened over the period,
with the appointment of both Grant Dollens and Karl Monaghan as
Non-executive Directors, and Erik Miller as Chief Financial
Officer. In addition, post year-end, Dr Yeturu Aahlad, who is part
of the team that founded WANdisco, was appointed to the Board.
Co-founder, David Richards, Interim Chairman and Chief Executive
Officer also remains on the Board. James Campigli, Chief Operating
Officer, Co-Founder and member of the Board has stepped down from
the board to pursue other business interests.
WANdisco continues to explore the opportunity to further
strengthen the Board, in particular to appoint a Chairman with
experience in working with both UK and US listed technology
businesses.
Big Data and Cloud marketplace
The amount of data being produced daily is growing
exponentially. As the amount of data produced grows more quickly
than the budgets of enterprises looking to store it, businesses are
increasingly shifting a proportion of their data processing
workloads to the cloud. In 2015 the market for Big Data in the
cloud was $1.1bn (5% of all Big Data revenues), with this number
expected to grow to $21.8bn by 2026 (24% of all Big Data
revenues)(3) .
Migrating data to the cloud is challenging, particularly when
the data set is active and constantly being changed. WANdisco's
Fusion technology is the only solution able to address this
challenge and is enabling enterprises to move to a cloud-based
model with guaranteed consistency, no downtime and no business
disruption.
Royalties received from IBM
In February 2017, the Group received $1.1m from IBM,
representing their Q4 2016 sales of WANdisco Fusion branded as 'IBM
Big Replicate'. These amounts will flow through to revenue in H1
2017.
Second line of stock
At the time of the Company's placing in July 2016 a second line
of stock was created due to United States Securities regulations.
This line of stock, WAN2 is required to remain in place until July
2017, however it is the intention of the Board to revert to a
single line of stock as soon as is practical within the regulatory
restrictions.
Outlook
As the Big Data market evolves we continue to see a significant
market opportunity unfold as the full impact of Cloud migration
materialises. Our Fusion product is fast establishing itself as a
crucial technology enabling customers to migrate onto our partners'
emerging Cloud data platforms. With partners such as IBM, Amazon
and Microsoft, we are working increasingly closely on data
migration offerings and go-to-market activities.
In our Source Code Management business, we are pleased with our
improved sales bookings towards the end of the year, responding to
our increased focus on this market. Our offering remains well
suited to today's increasingly distributed software development
operations, and our live customer base of over 200 corporations
offers ample sales opportunities.
The establishment of our partner network enabled us to
significantly realign our cost base, which we now believe is at an
appropriate level to deliver on our strategic ambitions. Whilst the
timing of contract wins remains variable, we are confident that
WANdisco enters 2017 on a strengthened operational footing and is
moving closer to cash flow break-even. With a compelling product
for Big Data in the Cloud, increasing engagement of our channel
partners and a well-established Source Code Management product, we
expect continued improvement in our results for 2017.
FINANCIAL REVIEW
Revenue for the year ended 31 December 2016 was $11.4m (2015:
$11.0m), driven by an increase in new sales bookings to $15.5m in
2016 compared with $9.0m in 2015.
Deferred revenue from sales booked during 2016 and in previous
years, and not yet recognised as revenue, was $12.5m at 31 December
2016 (31 December 2015: $9.8m). Our deferred revenues represent
future revenue from new and renewed contracts, many of them
spanning multiple years.
We delivered significant improvements in cost control over the
year, with cash overheads materially below the prior year,
resulting in the Adjusted EBITDA(2) loss narrowing to $7.5m (2015:
$16.0m loss).
Big Data - WANdisco Fusion
Big Data revenue was $3.2m (2015: $1.8m), showing strong growth
on the prior year and a consistent revenue stream from our new and
existing contracts.
In Q2 2016, we signed an OEM agreement with IBM for WANdisco
Fusion to be sold as IBM Big Replicate, a significant milestone in
establishing the credibility of our products in the large
enterprise market. IBM, along with our other channel partners
Amazon and Oracle have increased the leverage in our distribution
channel and increased our sales reach in a very cost effective
manner.
Average deal size continues to increase, and we received two
bookings via our channel partners in 2016 in excess of $1.0m.
Contract wins continue to exhibit variability in the timing of
their completion, but as demand for WANdisco Fusion continues to
grow, we are seeing an increasing number of contract wins, with new
sales bookings from initial and expanded contracts of $7.1m (2015:
$2.5m).
Application Lifecycle Management - Source Code Management
Source Code Management (previously known under the umbrella term
Application Lifecycle Management) revenue for the year was $8.2m
(2015: $9.2m). The revenue contraction arose due to lower deferred
revenue on prior year new sales bookings being recognised in the
year, following a contraction in new sales bookings in 2015. This
trend should reverse in future years following strong new sales
bookings in 2016.
Steps were taken early in the year to sharpen our focus on the
Source Code Management market and increase the productivity of our
sales operations. New sales bookings improved between the first and
second half of the year, and totalled $8.4m for the year (2015:
$6.5m).
New customers during the year include corporations developing
applications for automotive manufacturing, banking, and air
transport communications. Renewals have continued to contribute a
substantial proportion of sales, including a significant renewal
from a communication technology business.
During 2015 the Source Code Management product line began
generating positive margin contribution a trend which continued
through 2016 due to its product maturity, growing revenue base and
the inherent operating leverage in the business.
Operating costs
We reduced operating costs significantly throughout the year,
resulting in lower cash overheads in the second half of the year
than in the first half. We have gained operating leverage via our
channel partner strategy, driving more bookings with less cost. Our
strong cost disciplines across all areas of the business have
resulted in an efficient cost structure that can scale into future
periods with minimal incremental increases in operating costs.
Product development expenditure was $5.9m (2015: $8.4m). All of
this expenditure was associated with new product features and was
capitalised.
Total cash overheads(1) (excluding cost of sales and including
capitalised product development) of $23.4m were significantly below
the prior year (2015: $34.6m). These lower total cash overheads(1)
are expected to continue into 2017, with the current annualised run
rate of cash overheads at approximately $23m.
Our headcount was 118 as at 31 December 2016 (31 December 2015:
143). Headcount reductions in the year resulted from efficiencies
in finance and administration, and the leverage gained by our
channel partners strategy in sales and marketing.
Profit and loss
The adjusted EBITDA(2) loss for the year was $7.5m (2015: $16.0m
loss), representing an improvement of 53%.
The loss after tax for the year narrowed to $9.3m (2015:
$29.9m), as a result of the reduced loss from operations and
exceptional finance income of $8.1m. This arose from the
retranslation of intercompany balances at 31 December 2016,
reflecting the post-Brexit depreciation of Sterling against the US
dollar. There is uncertainty around the effect of Brexit on future
FX rates, but the impact of this on the financial statements should
be restricted to the retranslation of non-USD denominated loans, as
opposed to the operating activities of the business.
Balance sheet and cash flow
Trade and other receivables at 31 December 2016 were $6.1m
(2015: $6.7m). This includes $3.9m of trade receivables (2015:
$3.5m) and $2.2m related to non-trade receivables (2015: $3.2m). In
addition to this, not included on the balance sheet are receivables
not billed by the year-end of $6.6m (2015: $6.5m) largely from
multi-year contracts.
Principally as a result of improved bookings performance and the
reductions in cash overheads, our net consumption of cash was
significantly reduced during the course of the year, resulting in a
net cash balance of $7.6m at the close of the year (2015: $2.6m).
This includes the benefit of $13.6m of new equity funds (net of
fees) closed on 6 July 2016. In addition, we retain a revolving
credit facility with HSBC Bank plc which was undrawn as at 31
December 2016.
With strong cash collection, a significant increase in bookings
and billings in advance of revenue recognition and cost reductions
throughout the year, we have moved significantly closer to our goal
of becoming cash flow break-even.
(1) Operating expenses, excluding amortisation and
depreciation, exceptional items, equity-settled
share-based payment and capitalised product development
costs - see note 5
(2) EBITDA loss excluding exceptional items, equity-settled
share-based payment, capitalised product development
costs and acquisition-related items - see note
5
(3) 'Wikibon Big Data in the Public Cloud Forecast,
2016-2026', Ralph Finos, 31 May 2016
Condensed consolidated statement of profit and loss and other
comprehensive income
for the year ended 31 December 2016
Year ended Year ended
31 December 31 December
2016 2015
(Unaudited) (Audited)
Pre- Exceptional Pre- Exceptional
exceptional Items(4) Total exceptional items Total
Continuing
operations Note $'000 $'000 $'000 $'000 $'000 $'000
---------------- --- ---- ------------ ----------- -------- ------------- ----------- --------
Revenue 3 11,379 - 11,379 10,994 - 10,994
Cost of sales (1,349) - (1,349) (749) - (749)
----------------------- ---- ------------ ----------- -------- ------------- ----------- --------
Gross profit 10,030 - 10,030 10,245 - 10,245
Operating
expenses 5 (27,921) (32) (27,953) (40,160) (614) (40,774)
----------------------- ---- ------------ ----------- -------- ------------- ----------- --------
Loss from
operations 5 (17,891) (32) (17,923) (29,915) (614) (30,529)
Finance income 6 1 8,169 8,170 59 - 59
Finance costs 6 (269) (25) (294) (565) - (565)
----------------------- ---- ------------ ----------- -------- ------------- ----------- --------
Net finance
(costs)/income 6 (268) 8,144 7,876 (506) - (506)
---------------------- ---- ------------ ----------- -------- ------------- ----------- --------
Loss before
tax (18,159) 8,112 (10,047) (30,421) (614) (31,035)
Income tax 7 772 - 772 1,129 - 1,129
----------------------- ---- ------------ ----------- -------- ------------- ----------- --------
Loss for
the year (17,387) 8,112 (9,275) (29,292) (614) (29,906)
----------------------- ---- ============ =========== ======== ============= =========== ========
Other comprehensive income
Items that are or may be
reclassified to profit or
loss:
Foreign operations - foreign
currency translation
differences 107 (8,144) (8,037) 55 - 55
----------------------------- ------------ ----------- -------- ------------- ----------- --------
Other comprehensive income
for the year, net of tax 107 (8,144) (8,037) 55 - 55
----------------------------- ------------ ----------- -------- ------------- ----------- --------
Total comprehensive income
for the year (17,280) (32) (17,312) (29,237) (614) (29,851)
============================= ============ =========== ======== ============= =========== ========
Loss per
share
Basic and diluted loss
per share 8 $0.28 $1.04
======================= ==== ============ =========== ======== ============= =========== ========
Condensed consolidated balance sheet
as at 31 December 2016
31 December 31 December
2016 2015
(Unaudited) (Audited)
Note $'000 $'000
--------------------------------------- ---- ------------ -----------
Assets
Intangible assets 9 5,977 8,583
Property, plant and equipment 492 230
Non-current assets 6,469 8,813
------------------------------------------- ---- ------------ -----------
Trade and other receivables 10 6,145 6,728
Cash and cash equivalents 7,558 2,555
------------------------------------------- ---- ------------ -----------
Current assets 13,703 9,283
------------------------------------------- ---- ------------ -----------
Total assets 20,172 18,096
------------------------------------------- ---- ------------ -----------
Liabilities
Borrowings - finance lease liabilities (89) -
Trade and other payables (3,488) (2,714)
Deferred income 11 (5,809) (6,060))
Deferred government grant (12) (28)
Current tax liabilities (11) -
------------------------------------------- ---- ------------ -----------
Current liabilities (9,409) (8,802))
------------------------------------------- ---- ------------ -----------
Deferred income 11 (6,683) (3,697)
Borrowings - finance lease liabilities (294) -
Deferred income tax liabilities (3) (5)
------------------------------------------- ---- ------------ -----------
Non-current liabilities (6,980) (3,702))
------------------------------------------- ---- ------------ -----------
Total liabilities (16,389) (12,504)
------------------------------------------- ---- ------------ -----------
Net assets 3,783 5,592
=========================================== ==== ============ ===========
Equity
Share capital 5,638 4,667
Share premium 94,526 81,974
Translation reserve (8,284) (247)
Merger reserve 1,247 1,247
Retained earnings (89,344) (82,049)
------------------------------------------- ---- ------------ -----------
Total equity 3,783 5,592
=========================================== ==== ============ ===========
Condensed consolidated statement of changes in equity
for the year ended 31 December 2016
Share Share Translation Merger Retained
capital premium reserve reserve earnings Total
Year ended 31 December
2016 (Unaudited) $'000 $'000 $'000 $'000 $'000 $'000
------------------------------- -------- -------- ----------- -------- --------- --------
Balance at 1 January
2016 4,667 81,974 (247) 1,247 (82,049) 5,592
-------------------------------- -------- -------- ----------- -------- --------- --------
Total comprehensive
income for the year
Loss for the year - - - - (9,275) (9,275)
Other comprehensive
income - - (8,037) - - (8,037)
-------------------------------- -------- -------- ----------- -------- --------- --------
Total comprehensive
income for the year - - (8,037) - (9,275) (17,312)
-------------------------------- -------- -------- ----------- -------- --------- --------
Transactions with
owners of the Company
Contributions and
distributions
Equity-settled share-based
payment - - - - 1,819 1,819
Proceeds from share
placing 894 12,696 - - - 13,590
Share options exercised 77 (144) - - 161 94
Total transactions with owners
of the Company 971 12,552 - - 1,980 15,503
-------------------------------- -------- -------- ----------- -------- --------- --------
Balance at 31 December
2016 5,638 94,526 (8,284) 1,247 (89,344) 3,783
================================ ======== ======== =========== ======== ========= ========
Share Share Translation Merger Retained
capital premium reserve reserve earnings Total
Year ended 31 December
2015 (Audited) $'000 $'000 $'000 $'000 $'000 $'000
------------------------------- -------- -------- ----------- -------- --------- --------
Balance at 1 January
2015 3,879 56,587 (302) 1,247 (56,814) 4,597
-------------------------------- -------- -------- ----------- -------- --------- --------
Total comprehensive
income for the year
Loss for the year - - - - (29,906) (29,906)
Other comprehensive
income - - 55 - - 55
-------------------------------- -------- -------- ----------- -------- --------- --------
Total comprehensive
income for the year - - 55 - (29,906) (29,851)
-------------------------------- -------- -------- ----------- -------- --------- --------
Transactions with
owners of the Company
Contributions and
distributions
Equity-settled share-based
payment - - - - 4,671 4,671
Proceeds from share
placing 737 25,341 - - - 26,078
Share options exercised 51 46 - - - 97
Total transactions with owners
of the Company 788 25,387 - - 4,671 30,846
-------------------------------- -------- -------- ----------- -------- --------- --------
Balance at 31 December
2015 4,667 81,974 (247) 1,247 (82,049) 5,592
================================ ======== ======== =========== ======== ========= ========
Condensed consolidated statement of cash flows
for the year ended 31 December 2016
Year
ended
Year
ended
31 December 31 December
2016 2015
(Unaudited) (Audited)
$'000 $'000
--------------------------------------------------------- ------------ -------------
Cash flows from operating activities
Loss for the year (9,275) (29,906)
Adjustments for:
* Depreciation of property, plant and equipment 174 270
* Amortisation of intangible assets 8,466 9,600
* Loss on disposal of property, plant and equipment 4 -
* Net finance costs 268 133
* Income tax (772) (1,129)
* Foreign exchange (7,507) 42
* Equity-settled share-based payment 1,819 4,671
----------------------------------------------------------------- ------------ -------------
(6,823) (16,319)
--------------------------------------------------------------- ------------ -------------
Change in:
* Trade and other receivables 328 275
* Trade and other payables 827 (432)
* Deferred income 2,735 (1,507)
* Deferred government grant (11) (49)
Net working capital change 3,879 (1,713)
----------------------------------------------------------------- ------------ -------------
Cash used in operating activities (2,944) (18,032)
Interest paid (162) (192)
Income tax received 690 552
----------------------------------------------------------------- ------------ -------------
Net cash used in operating activities (2,416) (17,672)
----------------------------------------------------------------- ------------ -------------
Cash flows from investing activities
Purchase of property, plant and
equipment and computer software (64) (95)
Proceeds from sale of property,
plant and equipment 2 -
Development expenditure (5,860) (8,369)
Interest received 1 59
----------------------------------------------------------------- ------------ -------------
Net cash used in investing activities (5,921) (8,405)
----------------------------------------------------------------- ------------ -------------
Cash flows from financing activities
Net proceeds from share issues 13,523 26,175
Payment of finance lease liabilities (8) (8)
----------------------------------------------------------------- ------------ -------------
Net cash from financing activities 13,515 26,167
----------------------------------------------------------------- ------------ -------------
Net increase in cash and cash
equivalents 5,178 90
Cash and cash equivalents at the
start of the year 2,555 2,481
Effect of movements in exchange
rates on cash and cash equivalents (175) (16)
----------------------------------------------------------------- ------------ -------------
Cash and cash equivalents at the
end of the year 7,558 2,555
================================================================= ============ =============
Notes to the condensed consolidated financial report
for the year ended 31 December 2016
1. Reporting entity
WANdisco plc (the "Company") is a public limited company
incorporated and domiciled in Jersey. The Company's ordinary shares
are traded on AIM. These condensed consolidated financial
statements ("Financial statements") as at and for the year ended 31
December 2016 comprise the Company and its subsidiaries (together
referred to as the "Group"). The Group is primarily involved in the
development and provision of global collaboration software.
2. Basis of preparation
Basis of accounting
Whilst the financial information included in this preliminary
announcement has been prepared on the basis of the requirements of
International Financial Reporting Standards ("IFRSs") in issue, as
adopted by the European Union ("EU") and effective at 31 December
2016, this announcement does not itself contain sufficient
information to comply with IFRS.
The Group expects to publish full Consolidated Financial
Statements in April 2017. The financial information set out in this
preliminary announcement does not constitute the Group's
Consolidated financial statements for the years ended 31 December
2016 or 31 December 2015.
The financial information for 2015 is derived from the
consolidated accounts for the year ended 31 December 2015 which has
been delivered to the registrar of companies with the Jersey
Financial Services Commission ("JFSC"). The auditor has reported on
the year ended 31 December 2015 consolidated accounts; their report
was unqualified. It did not contain statements under section 113B
(3) or (6) of the Companies (Jersey) law 1991.
The consolidated accounts for the year ended 31 December 2016
will be finalised on the basis of the financial information
presented by the directors in this preliminary announcement and
will be delivered to the registrar of companies with the JFSC in
due course.
The Consolidated financial statements have been prepared in
accordance with IFRSs as adopted for use in the EU. The Group has
applied all accounting standards and interpretations issued by the
IASB and International Financial Reporting Committee relevant to
its operations and which are effective in respect of these
Financial Statements.
The accounting policies have been applied consistently to all
periods presented in the Group financial statements.
The following new standards and amendments to standards that are
effective for the first time for the financial year beginning 1
January 2016, have been adopted, but have not had a material impact
on the Consolidated financial statements:
-- IFRS 14 "Regulatory Deferral Accounts".
-- Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11).
-- Clarification of Acceptable Methods of Depreciation and
Amortisation (Amendments to IAS 16 and IAS 38).
-- Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41).
-- Equity Method in Separate Financial Statements (Amendments to IAS 27).
-- Annual Improvements 2012-2014 Cycle.
-- Disclosure Initiative (Amendments to IAS 1).
-- Investment Entities: Applying the Consolidation Exception
(Amendments to IFRS 10, IFRS 12 and IAS 28).
Going concern
As at 31 December 2016 the Group had net assets of $3.8m (31
December 2015: $5.6m), including cash of $7.6m (2015: $2.6m) as set
out in the Consolidated balance sheet above and an unused revolving
credit facility of $10.0m (2015: $10.0m). In the year ended 31
December 2016, the Group incurred a loss before tax of $10.0m
(2015: $31.0m) and net cash outflows before financing of $8.3m
(2015: $26.1m).
During 2016, the performance of the Group improved, with
bookings growing by 72% to $15.5m (2015: $9.0m). Most of this
growth was achieved in H2 of 2016, which saw increased momentum in
bookings as a result of success from new partnerships and focus on
the Source Code Management business. In addition, the Group's cost
base was significantly reduced by $11.2m during 2016. In addition,
during 2016 the Group raised $13.6m, net of costs through an equity
raise, as a result of this, the Group had $7.6m (2015: $2.6m) of
cash at 31 December 2016. In H2 2016 the net cash outflow in cash
(before financing) reduced to $3.1m (H2 2015: $12.7m).
The Directors have prepared a detailed budget and forecasts of
the Group's expected performance over a period covering at least
the next twelve months from the date of these financial statements.
As well as modelling the realisation of the sales pipeline, these
forecasts also cover a number of scenarios and sensitivities in
order for the Board to satisfy itself that the Group remains within
its current cash facilities. At 31 December 2016, the Group has a
revolving credit facility of $10.0m, which is due to expire on 30
June 2017, in performing the sensitivity analysis, the Group has
assumed that this facility will not be renewed.
Whilst the Directors are confident in the Group's ability to
grow bookings, the Board's sensitivity modelling shows that the
Group can remain within its facilities in the event that bookings
growth is delayed (i.e. bookings do not increase from the level
reported in 2016) for a period in excess of twelve months. The
Directors' financial forecasts and operational planning and
modelling also include the actions that the Group could take to
further significantly reduce the cost base during the coming year
in the event that longer-term bookings was set to remain consistent
with the level reported in 2016. On the basis of this financial and
operational modelling, the Directors believe that the Group has the
capability and the operational agility to react quickly, cut
further costs from the business, and ensure that the cost base of
the business is aligned with its sales bookings, cash revenue and
funding scale.
As a consequence, the Directors have a reasonable expectation
that the Group can continue to operate and to be able to meet its
commitments and discharge its liabilities in the normal course of
business for a period not less than twelve months from the date of
these financial statements. Accordingly, they continue to adopt the
going concern basis in preparing the Group financial
statements.
Functional and presentational currency
The financial statements are presented in US dollars, which is
also the presentational currency of the Group. Billings to the
Group's customers during the year were all made in US dollars by
WANdisco, Inc. with certain costs being incurred by WANdisco
International Limited in Sterling and WANdisco, Pty Ltd in
Australian dollar. All financial information has been rounded to
the nearest thousand US dollars unless otherwise stated.
Use of judgements and estimates
The preparation of financial information in conformity with
adopted IFRSs requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.
The significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation
uncertainty were the same as those that applied to the Group's
consolidated financial statements as at and for the year ended 31
December 2015.
3. Segmental analysis
Operating segments
The Directors consider there to be one operating segment, being
that of development and sale of licences for software and related
maintenance.
Geographical segments
The Group recognises revenue in three geographical regions based
on the location of customers, as set out in the following
table:
Year
ended
31 December
Year
ended
31 December
2016 2015
(Unaudited) (Audited)
Revenue $'000 $'000
------------------ ------------ ------------
North America 8,192 7,255
Europe 2,476 2,983
Rest of the world 711 756
---------------------- ------------ ------------
Total revenue 11,379 10,994
====================== ============ ============
Management makes no allocation of costs, assets or liabilities
between these segments since all trading activities are operated as
a single business unit.
The Group has no customers representing individually over 10% of
revenue (2015: Nil).
The Group's core patented technology, Distributed Co-ordinated
Engine "DConE", enables the replication of data. The Group has
developed software based on this technology which is applied into
two key markets being the Big Data and Source Code Management
('SCM') markets:
Year
ended
31 December
Year
ended
31 December
2016 2015
(Unaudited) (Audited)
Revenue $'000 $'000
-------------- ------------ ------------
SCM 8,182 9,158
Big Data 3,197 1,836
Total revenue 11,379 10,994
================== ============ ============
4. Exceptional items
Year
ended
31 December
Year
ended
31 December
2016 2015
(Unaudited) (Audited)
Exceptional items comprise the following: Note $'000 $'000
------------------------------------------ ---- ------------ ------------
Exchange gain on intercompany balances 8,144 -
Equity-settled share-based payment
charge in relation to acquisitions
* OhmData, Inc. 12 - (241)
* AltoStor, Inc. 12 - (249)
* TortoiseSVN.net 12 (32) (124)
(32) (614)
------------------------------------------ ---- ------------ ------------
8,112 (614)
========================================== ==== ============ ============
The exceptional gain arose on Sterling denominated intercompany
balances. These balances were retranslated at the closing exchange
rate at 31 December 2016 which was 1.23 a 17% reduction compared to
the rate of 1.48 at 31 December 2015. Sterling to US$ exchange
rates declined following the Brexit vote on 23 June 2016. Due to
the size and nature of the exchange gain, it has been included as
an exceptional item.
The exceptional gain on intercompany balances in the
Consolidated statement of profit and loss, is offset by an
equivalent exceptional exchange loss on the retranslation of the
intercompany balances, which is included in the retranslation of
net assets of foreign operations, included in the other
comprehensive income.
The equity-settled share-based payment charge recognised in the
year in relation to the acquisitions of OhmData, Inc. and AltoStor,
Inc. and the purchase of the intellectual property of
TortoiseSVN.net has been classified as exceptional. See Note 12 for
further details.
5. Non-GAAP profit measures - Adjusted EBITDA and Cash overheads
Year
ended
31 December
Year
ended
31 December
2016 2015
(Unaudited) (Audited)
Reconciliation of loss from operations
to "Adjusted EBITDA": Note $'000 $'000
----------------------------------------- ---- ------------ ------------
Loss from operations (17,923) (30,529)
Adjusted for:
Amortisation and depreciation 8,640 9,870
Exceptional items within operating
expenses 4 32 614
----------------------------------------- ---- ------------ ------------
EBITDA before exceptional items (9,251) (20,045)
Equity-settled share-based payment
(excluding exceptional item) 12 1,787 4,057
----------------------------------------- ---- ------------ ------------
Adjusted EBITDA before exceptional
items (7,464) (15,988)
Development expenditure capitalised 9 (5,860) (8,369)
----------------------------------------- ---- ------------ ------------
Adjusted EBITDA before exceptional
items including development expenditure (13,324) (24,357)
========================================= ==== ============ ============
Year
ended
31 December
Year
ended
31 December
2016 2015
(Unaudited) (Audited)
Reconciliation of operating expenses
to "Cash overheads": Note $'000 $'000
------------------------------------- ---- ------------ ------------
Operating expenses (27,953) (40,774)
Remove:
Amortisation and depreciation 8,640 9,870
Exceptional items within operating
expenses 4 32 614
Equity-settled share-based payment
(excluding exceptional item) 12 1,787 4,057
Development expenditure capitalised 9 (5,860) (8,369)
------------------------------------- ---- ------------ ------------
Cash overheads (23,354) (34,602)
===================================== ==== ============ ============
6. Net finance (costs)/income
Year
ended
31 December
Year
ended
31 December
2016 2015
(Unaudited) (Audited)
$'000 $'000
------------------------------------- ------------ ------------
Interest receivable - bank 1 59
Exchange gain 8,169 -
----------------------------------------- ------------ ------------
Finance income 8,170 59
----------------------------------------- ------------ ------------
Unwind of discount on pledged shares - (16)
Exchange loss (25) (373)
Interest payable on bank borrowings (79) (48)
Finance charges (83) -
Amortisation of loan costs (107) (128)
----------------------------------------- ------------ ------------
Finance costs (294) (565)
----------------------------------------- ------------ ------------
Net finance (costs)/income 7,876 (506)
========================================= ============ ============
7. Taxation
Year
ended
31 December
Year
ended
31 December
2016 2015
(Unaudited) (Audited)
$'000 $'000
--------------------------- ------------ ------------
Current tax expense
Current year 542 739
Adjustment for prior years 230 390
------------------------------- ------------ ------------
Income tax 772 1,129
=============================== ============ ============
8. Loss per share
Basic loss per share
Basic loss per share is calculated based on the loss
attributable to ordinary shareholders and the weighted average
number of ordinary shares outstanding:
Year
ended
31 December
Year
ended
31 December
2016 2015
(Unaudited) (Audited)
$'000 $'000
------------------------------------------- ------------ ------------
Loss for the year attributable to ordinary
shareholders 9,275 29,906
=============================================== ============ ============
Number Number
Weighted average number of ordinary of shares of shares
shares '000 '000
------------------------------------ ---------- ----------
At the start of the year 29,564 24,018
Effect of shares issued in the year 3,727 4,765
------------------------------------- ---------- ----------
Weighted average number of ordinary
shares during the year 33,291 28,783
===================================== ========== ==========
Basic loss per share $0.28 $1.04
====================== ===== =====
Adjusted loss per share
Adjusted loss per share is calculated based on the loss
attributable to ordinary shareholders before exceptional items,
acquisition-related items and the cost of equity-settled
share-based payment, and the weighted average number of ordinary
shares outstanding:
Year
ended
31 December
Year
ended
31 December
2016 2015
(Unaudited) (Audited)
Adjusted loss for the year: $'000 $'000
------------------------------------------- ------------ ------------
Loss for the year attributable to ordinary
shareholders 9,275 29,906
Add back:
Exceptional items 8,112 (614)
Acquisition-related items - (16)
Equity-settled share-based payment
(excluding exceptional item) (1,787) (4,057)
----------------------------------------------- ------------ ------------
Adjusted basic loss for the year 15,600 25,219
=============================================== ============ ============
Adjusted loss per share $0.47 $0.88
========================= ===== =====
Diluted loss per share
Due to the Group having losses in all years presented, the fully
diluted loss per share for disclosure purposes, as shown in the
Condensed consolidated statement of profit and loss and other
comprehensive income, is the same as for the basic loss per
share.
9. Intangible assets
Other
Intangible Development Computer
assets costs software Total
At 31 December 2016
(Unaudited) $'000 $'000 $'000 $'000
---------------------- ----------- ----------- --------- --------
Cost
At 1 January 2016 3,154 31,156 189 34,499
Additions - own work
capitalised - 5,860 - 5,860
At 31 December 2016 3,154 37,016 189 40,359
----------------------- ----------- ----------- --------- --------
Amortisation
At 1 January 2016 (2,804) (22,923) (189) (25,916)
Amortisation charge
for the year (350) (8,116) - (8,466)
At 31 December 2016 (3,154) (31,039) (189) (34,382)
----------------------- ----------- ----------- --------- --------
Net book value - At
31 December 2016 - 5,977 - 5,977
======================= =========== =========== ========= ========
At 31 December 2015
(Audited)
---------------------- ----------- ----------- --------- --------
Cost
At 1 January 2015 3,154 22,787 1,189 27,130
Additions - own work
capitalised - 8,369 - 8,369
Disposals - - (1,000) (1,000)
At 31 December 2015 3,154 31,156 189 34,499
----------------------- ----------- ----------- --------- --------
Amortisation
At 1 January 2015 (1,795) (14,375) (1,146) (17,316)
Amortisation charge
for the year (1,009) (8,548) (43) (9,600)
Disposals - - 1,000 1,000
At 31 December 2015 (2,804) (22,923) (189) (25,916)
----------------------- ----------- ----------- --------- --------
Net book value - At
31 December 2015 350 8,233 - 8,583
======================= =========== =========== ========= ========
The carrying amount of the intangible assets is allocated across
cash-generating units ("CGUs"). A CGU is defined as the smallest
group of assets that generate cash inflows from continuing use that
are largely independent of the cash inflows of other assets or
groups thereof. The recoverable amount of the CGUs are determined
using value in use ("VIU") calculations. As at 31 December 2016 and
2015 the Group had one CGU, the DConE CGU, which represents the
Group's patented DConE replication technology, forming the basis of
products for both the SCM and Big Data markets, including the new
Fusion platform that was launched in 2015.
Other intangible assets arose as part of the acquisitions of
OhmData, Inc. in June 2014 and AltoStor, Inc. in November 2012. The
intangibles arising as part of these acquisitions are allocated to
the DConE CGU. The recoverable amount of the DConE CGU has been
calculated on a VIU basis at both 31 December 2016 and 31 December
2015. These calculations use cash flow projections based on
financial forecasts and appropriate long-term growth rates. To
prepare VIU calculations, the cash flow forecasts are discounted
back to present value using a pre-tax discount rate of 10.0% (2015:
10.0%) and a terminal value growth rate of 2% from 2021. The
Directors have reviewed the recoverable amount of the CGU and do
not consider there to be any indication of impairment.
Development costs are predominantly capitalised staff costs
associated with new products and services. Development costs are
allocated to the DConE CGU, the recoverable amount of which has
been determined on a VIU basis as described above.
In February 2015 WANdisco International Limited sold the
software to SyntevoGmbH for consideration of EUR1. This software
became fully amortised during the year ended 31 December 2014 so
there was no material profit/(loss) on disposal in the prior
year.
The amortisation charge on intangible assets is included in
operating expenses in the Condensed consolidated statement of
profit and loss and other comprehensive income.
10. Trade and other receivables
31 December
31 December
2016 2015
(Unaudited) (Audited)
Due within a year: $'000 $'000
---------------------------------- ------------ ------------
Trade receivables 3,926 3,538
Other receivables 485 1,061
Corporation tax 1,446 1,631
Prepayments 288 498
-------------------------------------- ------------ ------------
Total trade and other receivables 6,145 6,728
====================================== ============ ============
11. Deferred income
Deferred income represents contracted sales for which services
to customers will be provided in future years.
31 December
31 December
2016 2015
(Unaudited) (Audited)
Deferred income which falls due: $'000 $'000
--------------------------------- ------------ -----------
Within a year 5,809 6,060
In more than a year 6,683 3,697
Total deferred income 12,492 9,757
===================================== ============ ===========
12. Share-based payment
WANdisco plc operates share option plans for qualifying
employees of the Group. Options in the plans are settled in equity
in the Company and are normally subject to a vesting schedule but
not conditional on any performance criteria being achieved.
The terms and conditions of the share option grants are detailed
in the Group annual financial statements for the year ended 31
December 2015.
Year Year
ended ended
31 December 31 December
2016 2015
(Unaudited) (Audited)
Analysis of equity-settled share-based
payment charge: Note $'000 $'000
------------------------------------------- ---- ------------ ------------
Total equity-settled share-based payment
charge in relation to acquisitions 4 32 614
Non-exceptional equity-settled share-based
payment charge 5 1,787 4,057
------------------------------------------- ---- ------------ ------------
Total equity-settled share-based payment
charge 1,819 4,671
=========================================== ==== ============ ============
Year Year
ended ended
31 December 31 December
2016 2015
(Unaudited) (Audited)
Exceptional equity-settled share-based
payment charge in relation to acquisitions: $'000 $'000
--------------------------------------------- ------------- ------------
OhmData, Inc. - 241
AltoStor, Inc. - 249
TortoiseSVN.net 32 124
------------------------------------------------- ------------- ------------
Total share-based payment charge 32 614
------------------------------------------------- ------------- ------------
Number of restricted shares - 41,990
================================================= ============= ============
As part of the acquisitions of OhmData, Inc. in June 2014,
AltoStor, Inc. in November 2012 and TortoiseSVN.net community
website in June 2013 restricted shares in WANdisco plc were issued
to former owners. These shares have been treated as contingent
payments and have been accounted for under IFRS 2 "Share-based
Payments" as employee benefit expenses.
Year Year
ended ended
31 December 31 December
2016 2015
(Unaudited) (Audited)
Number of share options outstanding: Number Number
------------------------------------- ------------ ------------
Balance at the start of the year 4,437,995 4,301,667
Granted 1,592,924 1,550,927
Forfeited (1,052,031) (1,086,309)
Exercised (659,989) (328,290)
----------------------------------------- ------------ ------------
Balance at the end of the year 4,318,899 4,437,995
Exercisable at the end of the year 2,733,488 1,435,100
Vested at the end of the year 2,733,488 1,856,870
========================================= ============ ============
Weighted average exercise price for: $ $
-------------------------------------------- ----- -----
Shares granted 2.15 0.69
Shares forfeited 3.40 6.75
Options exercised 0.18 0.19
--------------------------------------------- ----- -----
Exercise price in the range:
From 0.15 0.15
To 21.20 18.19
============================================= ===== =====
Years Years
-------------------------------------------- ----- -----
Weighted average contractual life remaining 7.8 6.2
============================================= ===== =====
The fair value of each option grant is estimated on the date of
grant using the Black-Scholes option-pricing model with the
following weighted average assumptions:
Year Year
ended ended
31 December 31 December
2016 2015
Fair value assumptions: (Unaudited) (Audited)
--------------------------------------- ------------ ------------
Dividend yield 0.00% 0.00%
Risk-free interest rate 1.05% 1.53%
Stock price volatility 30% 30%
Expected life (years) 7.0 3.8
Weighted average fair value of options
granted during the year $3.09 $2.76
=========================================== ============ ============
- The dividend yield is based on the Company's forecast dividend
rate and the current market price of the underlying common stock at
the date of grant.
- Expected life in years is determined from the average of the
time between the date of grant and the date on which the options
lapse.
- Expected volatility is based on the historical volatility of
shares of listed companies with a similar profile to the
Company.
- The risk-free interest rate is based on the treasury bond
rates for the expected life of the option.
13. Contingent liabilities
The Group had no contingent liabilities at 31 December 2016 (31
December 2015: None).
14. Post-balance sheet events
There are no significant or disclosable post-balance sheet
events.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UBSORBRAORUR
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