Interim Results

RNS Number : 9802T

Aptitude Software Group PLC

28 July 2022

 

28 July 2022

APTITUDE SOFTWARE GROUP plc

('Aptitude Software' or 'the Group')

Interim Results for the six months ended

30 June 2022

Aptitude Software Group plc (LSE: APTD), the specialist provider of finance digitalization and subscription management software, reports its unaudited results for the six months ended 30 June 2022.

Financial Highlights

Six months ended 30 June	2022	2021	% Change
Annual Recurring Revenue 1 ('ARR') at 30 June	£49.1m	£35.5m	+38%
-  Year-on-Year ARR Growth	38%	5%	+33%
-  Year-on-Year ARR Growth (Constant Currency 2 )	28%	12%	+16%
-  Year-on-Year ARR Growth (Organic 3 and Constant Currency 2 )	10%	12%	-2%
Total Revenue	£36.1m	£27.6m	+31%
-  Recurring Revenue 4	£24.4m	£18.3m	+33%
-  Implementation Revenue	£11.7m	£9.3m	+26%
Cash and Cash Equivalents	£23.6m	£46.8m	-50%
Net Funds 6	£10.7m	£45.4m	-76%
Adjusted Operating Margin5	11.1%	18.5%	-7.4%
Adjusted Operating Profit5	£4.0m	£5.1m	-22%
Statutory Operating Profit	£2.1m	£4.7m	-55%
Interim Ordinary Dividend per Share	1.8p	1.8p	-

· Year-on-year growth in Annual Recurring Revenue ('ARR') of 38%, benefiting from Organic Growth³ of 10% on a Constant Currency² basis, the acquisition of MPP Global in October 2021 and foreign exchange movements

· Recurring Revenue, the strategic focus of the Group, grew 33% to £24.4 million (H1 2021: £18.3 million), Organic Growth of 10%, representing 68% of total revenue (H1 2021: 66%)

· Increased investment in the Group's two strategic pillars has led to Adjusted Operating Profit reducing to £4.0 million (H1 2021: £5.1 million), in line with the investment plan described in the results in March 2022

·     Continued balance sheet strength with cash of £23.6 million (30 June 2021: £46.8 million) and Net Funds⁵ of £10.7 million (30 June 2021: £45.4 million), reduced following the acquisition of MPP Global in October 2021

Strategic Progress:

·       Aptitude Software is well positioned with its developing suite of products to benefit from the     two recognised strategic growth drivers of finance digitalization and subscription management

·       These long-term and non-cyclical strategic drivers are expected to lead to an acceleration in     the growth of both the Group's ARR and margin in the medium term

· Fynapse, the Group's next generation strategic digital finance platform, successfully launched in March 2022 with strong positive interest in this new higher margin offering from existing clients, prospects and partners

· First release of Fynapse solution successfully provided to the Group's charter client in the North American telco market

·     Fynapse provides users with lower total cost of ownership and significantly increased         performance whilst opening new markets for Aptitude Software and our partners

· Continued integration of MPP Global, at the product level, organisationally and with a new        group-wide brand launch positioning Aptitude Software to fully realise the opportunity within the growing subscription management market

· Further development of the partner network highlighted by the new strategic agreement to provide finance automation solutions to a Big-4 accountancy firm's mergers and acquisitions practice

Operational Highlights:

· Landmark win for eSuite, the platform brought into the Group as part of the acquisition of MPP Global, to provide subscription management capability to one of the largest global broadcasters and media content owners with potential for considerable scale once the offering is launched in 2023

·     First sale in Asia of AREV, our leading revenue management product, demonstrating the growing market need for this product beyond North America and the scale of the opportunity 

· Further sale of Aptitude Accounting Hub to a North American payments technology provider reinforcing the continuing opportunity with this established product outside of any compliance market demand

· Further software sales across all regions of a number of the Group's applications

· Increasing demand from insurance market clients for new multi-year solution management services agreements with further sales of this recurring service progressing well as the implementation date of IFRS 17 in 2023 approaches

·     Strengthening pipeline of opportunities following the launch of Fynapse and an end-to-end revenue automation marketing campaign in the first half of the year

· Continued organisational strengthening with key new senior hires in technology and human resources positioning the Group for the increasing opportunities ahead

Commenting on the results, Jeremy Suddards, Chief Executive Officer, said: -

'Aptitude Software has demonstrated that it is well positioned to realise the significant opportunity from the two strategic growth drivers of finance digitalization and subscription management, providing the Group with long term, non-cyclical growth opportunities.

Development continues in Fynapse with strong market feedback, in particular from our partners, providing positive support for our investment in this next generation strategic digital finance platform.

Additionally, the Group continues to progress the integration of the recently acquired eSuite product with our revenue management capability to unlock the end-to-end revenue automation opportunity within subscription management. During a transitional year in which the Group is progressing well with its strategic investments, we achieved a good level of new sales success and up-lifts and add-ons in our prestigious existing client base.

We are pleased with both the operational and strategic progress achieved in the first half of the year and the Board is confident that the Group's performance for 2022 will be in line with its expectations. '

Contacts

Aptitude Software Group plc

Ivan Martin, Chairman  020-3687-3200

Jeremy Suddards, Chief Executive Officer

Philip Wood, Deputy Chief Executive Officer and Chief Financial Officer 

Alma PR

Caroline Forde / Hilary Buchanan    020-3405-0205

About Aptitude Software

Aptitude Software helps complex organizations automate and transform their financial business models. Our core areas of focus are the accelerating digitalization of the finance function, and the global drive to deploy and manage subscription offerings. Aptitude Software also continues to support clients through complex regulations which often form the catalyst for broader finance transformation.

Finance digitalization enables finance leaders to improve the speed of their function, enhance the quality of its outcomes, and do so at a lower cost. Aptitude Software's products draw data from complex, often siloed systems, automate its processing through complex accounting calculations, and create a unified view of finance. Businesses are left with a transparent view of their data, delivered at extreme performance and at a lower cost of ownership improving their finance functions' ability to support their business objectives.

Subscription management is a rapidly increasingly critical driver for new and traditional businesses alike, who need to launch new offerings frequently, in ways which appeal to their customers and allow them to outperform their peers. Aptitude Software's products power the acquisition, monetization, and retention of subscribers straight through to revenue reporting. With Aptitude Software, businesses can take new subscriptions to market quickly, retain their high-value recurring revenue, and stay one step ahead of the competition. Whilst business to consumer (B2C) subscription models are increasing all the time, Aptitude Software also specialises in business to business (B2B) subscriptions which are undergoing significant business model shifts post pandemic, increasing volume and complexity to manage.

Our global client base includes some of the world's largest companies, typically organisations with complex business models, large volumes of data, and numerous internal systems. Aptitude Software is headquartered in London, has a strong and growing North American presence, and is powered by Global Innovation Centres in Poland and the North West of England. Sales, support and implementation services are provided from offices in the United States, the United Kingdom, Canada, and Singapore. www.aptitudesoftware.com

Throughout this announcement:

¹ Annual Recurring Revenue ('ARR') is the value of Aptitude Software's recurring revenue at a specific point in time, normalised to a one-year period. ARR includes recurring revenues contracted but yet to commence and excludes recurring revenues which are currently being received but are known to be terminating in the future. Included in ARR, for the first time, are recurring revenues from the Group's solution management services, comparatives have been adjusted to include such recurring revenue contracts.

² Constant Currency is calculated by comparing the H1 2022 results with H1 2021 results retranslated at the rates of exchange prevailing during H1 2022.

³ Organic Growth excludes the contribution from the acquisition of MPP Global in October 2021.

⁴ Recurring Revenue includes, for the first time, revenues from the Group's solution management services, comparatives have been adjusted accordingly.

⁵ Adjusted Operating Profit and Adjusted Operating Margin exclude non-underlying operating items, unless stated to the contrary. Further detail in respect of the non-underlying operating items can be found within Note 6.

⁶ Net Funds represents cash and cash equivalents less finance obligations, which includes capital lease obligations and a loan.

Certain non-IFRS financial measures (e.g. Adjusted Operating Profit) are included which assist management in comparing performance on a consistent basis.

Overview

Aptitude Software achieved a number of new business successes in the first half of 2022 whilst continuing to build out its customer pipeline and progress with its investments in the Group's two strategic pillars of finance digitalization and subscription management.

The new business successes across the Group's core product suite and regions contributed to year-on-year Annual Recurring Revenue ('ARR') Organic Growth of 10% on a Constant Currency basis. In addition, a key highlight for the eSuite platform brought into the Group with the acquisition of MPP Global, was the landmark win to provide subscription management capability to one of the largest leading global broadcasters and media content owners with potential for considerable scale once the offering is launched in 2023. This leading global broadcaster represents a significant new client win for the eSuite platform.

Overall, including the benefits of the MPP Global acquisition and favourable foreign exchange movements, ARR increased year-on-year by 38% to £49.1 million on 30 June 2022 (31 December 2021: £45.0 million, 30 June 2021: £35.5 million). Included for the first time within ARR is the value of the Group's recurring solution management services contracts (30 June 2022: £3.9 million, 31 December 2021: £3.2 million, 30 June 2021: £3.3 million) with comparatives updated to reflect their inclusion.

A key strategic highlight in the first half of 2022 was the launch of Fynapse, the Group's next generation digital finance platform. The first release of Fynapse has now been successfully provided to Aptitude Software's charter client in the North American telco market, an important milestone for the Group.

The Group is confident that Fynapse will accelerate the Group's growth in the medium and long term whilst also generating higher gross margins due to the cloud native technologies on which the platform is built. Fynapse provides differentiated finance digitalization capability to a market in which the Group already has outstanding credentials with the successful Aptitude Accounting Hub. The Group continues to expand the capabilities of the product whilst in parallel receiving strong interest from clients, prospects and partners resulting in a strengthening of Aptitude Software's overall pipeline of new business opportunities. 

Integration of eSuite and the MPP Global team into the wider business continues to plan. In addition to the continued integration of eSuite with Aptitude Software's revenue management capability to provide end-to-end revenue automation, the Group has recently launched new joint branding for which very positive market feedback has been received. The new branding reflects the shared values and attributes of the enlarged Group, in particular the capability of our team and applications to solve the most complex requirements more successfully than our competitors, an ability that allows us to charge a premium for our software and services.

The partnership programme continues to develop. In addition to a new agreement to provide finance automation to a Big-4 accountancy firm's mergers and acquisitions practice, the eSuite partnership network continues to be a source of opportunity. There are also a series of promising opportunities being explored for Fynapse with both the Big-4 accountancy firms as well as technology focused businesses. The partnerships are providing access to new sectors for Aptitude Software as well as providing greater access to geographies such as Germany and Japan.

The increased investment in the Group's two strategic pillars has seen expenditure on product management, research and development in the six months ended 30 June 2022 increase to £7.9 million (H1 2021: £4.4 million), an increase of 80%. Adjusting for the investment in eSuite the increase is 41% with the increase principally attributable to the accelerated investment in Fynapse. This increased expenditure has led to the planned reduction in the Group's profit in the first half of 2022 with the benefit resulting from these investments expected to accelerate growth in ARR and margins in the medium term.

In a period where the Group is progressing its investment in finance digitalization and subscription management, the Board is pleased with both the strategic and operational progress achieved in the first half of the year and is confident that the performance in 2022 will be in line with its expectations.

Corporate Strategy

Aptitude Software's strategy is focused on providing innovative finance digitalization and subscription management software serving a growing number of C-suite stakeholders. The Group has undergone a re-branding exercise as part of the integration of MPP Global. The re-branding emphasises the shared qualities and characteristics of the wider business, these are the ability of our technology and people to handle the complexity other solutions are unable to, put simply "where others see complexity, we see opportunity". The re-branding has been very positively received by our employees, clients, partners and prospects.

Finance digitalization allows finance leaders to improve the speed of their function, enhance the quality of outcomes, and do so at a dramatically lower total cost of ownership for a modern finance function. Aptitude Software's products receive data from complex, often siloed systems, automate its processing through complex accounting calculations, and create a unified view of business performance. Businesses are left with a transparent view of their finance data, delivered in a near real time basis and at a lower cost of ownership.

Subscription management is an increasingly critical driver for new economy and traditional businesses alike. Aptitude Software's products now power the acquisition, billing, and retention of subscribers straight through to revenue reporting. With Aptitude Software, businesses can take new subscriptions to market quickly, retain their high-value recurring revenue, and stay ahead of the competition.

Our global client base includes some of the world's largest companies, typically organisations with complex business models, large volumes of data, and numerous internal systems. Whilst our products are relevant for all sectors, the Group has established a strong presence in banking, insurance and technology, media and telecom ('TMT') complemented by clients in a series of other new advanced industries.

The business generates revenue from its software through a combination of licence fees (all annual recurring licences), software maintenance/support, software subscriptions for its cloud-based offerings and implementation and other recurring support services including the growing solution management service. The eSuite product also generates incremental revenue through charging volume-based usage and financial transaction fees.

Software development, together with a growing number of other services, continues to be performed at the Aptitude Global Innovation Centres in Poland and in the North West of England. Sales, support and implementation services are provided from Aptitude Software's offices in London, North West England, North America and Singapore.

Finance Digitalization

Market Drivers

Quality of data, speed of reporting and cost continue to be the top drivers on the CFO's agenda as they are increasingly challenged by the demands of operating in a digital world with growing regulatory and cost pressures. These demands result in an increase in the complexity, volume and number of sources of finance data, and the increasing requirement for decision making to move at the pace of the business in real time as opposed to simply report on a previous period's business performance. Aptitude Software's product set is well positioned to address these requirements.

Finance Digitalization Products

Fynapse, the Group's next generation digital finance platform, was launched in March 2022 with strong interest received from clients, prospects and partners for this new application. With investment continuing in the capabilities of Fynapse, new business success continues to be achieved with the established Aptitude Accounting Hub and Aptitude Insurance Calculation Engine applications.

Fynapse

Fynapse is a modular, cloud native, high performance platform addressing an organisations' need to drive finance digitalization to continue the transformation of their wider businesses . The application builds on the successful Aptitude Accounting Hub, centralising and automating finance, accounting and reporting processes, creating a deep level of operational intelligence for our clients. It delivers a brand-new user centric interface with a consolidated, yet highly granular, view of financial data which enhances business insights to assist decision making. The capabilities of the product enable even greater automation of manual accounting processes, reducing on-going operational costs and driving an improved total cost of ownership for the office of finance.

The modular design and ease of integration also allows the market opportunity to extend beyond our current industries into adjacent verticals, shortening typically long implementation cycles and allowing our partner network to implement efficiently, with minimal risk, short time-to-benefit and at a competitive total cost of ownership.

The platform is also designed to be "open" offering partners the opportunity to co-create and license their own IP, further accelerating and differentiating their services. This capability is proving an attractive proposition for the Big-4 accountancy firms and is highly differentiated from the more generalist providers in the market. In addition to the interest from consultancy focused partnerships there are also promising exploratory early discussions with global technology partners who can see the benefit our capability will bring to their own offering. 

The strategic investment continues in growing the capabilities of Fynapse with development performed at the Aptitude Innovation Centre in Wroclaw, Poland. The Group has been successful in onboarding the required talent, including the appointment of a SVP of Engineering to lead the development, increasing investment in Fynapse to planned levels. The modern cloud native technology on which Fynapse is built allows higher gross margins to be generated from this application in comparison to the Group's existing SaaS offerings within Finance Digitalization.

The timely release of future versions of Fynapse, bringing new and additional capabilities to address the requirements of different markets, is a key enabler to the Group's future ARR growth and the deployment of its implementation teams. It is therefore particularly pleasing that an important key milestone has been achieved with the successful f irst release of Fynapse to our charter client in the North American telco market.

Fynapse is expected to be a material growth driver and margin enhancer for the business in future years. The Group has already received strong interest from clients, prospects and partners in this new platform to strengthen Aptitude Software's overall pipeline of new business opportunities.  

Aptitude Insurance Calculation Engine

Aptitude Insurance Calculation Engine ('AICE') is a strategic, transformational application providing value to an insurer beyond addressing the requirements of IFRS 17 (effective for accounting periods commencing 1 January 2023). Beyond compliance the application enables data insights and decision support delivering long-term business benefits.

Whilst AICE clients are well progressed in their preparation for the introduction of IFRS 17, new business opportunities continue to arise for this application as demonstrated by the contract secured in the first half of 2022 with an Asian-based insurer. This demand is expected to continue beyond 2022 as insurers seek to address the requirements of IFRS 17 before their first reporting period, furthermore, there are expected to be insurers who will need to adopt a more robust approach to compliance having initially reported using alternative or manual solutions. Additionally, there are several jurisdictions which have a delayed introduction of IFRS 17 extending further the opportunity for AICE beyond 2023.

There is also a growing opportunity for the Group's solution management services with AICE clients. In the first half of 2022 a number of insurers contracted for solution management services on a recurring multi-year basis.

Aptitude Accounting Hub

The Group continued to achieve new business success in the first half of 2022 with the Aptitude Accounting Hub ('AAH'), both on a standalone basis as well as in conjunction with the sale of the Aptitude Insurance Calculation Engine.

A material new contract with a North American headquartered gift and payments company was successfully signed in the period. Working closely with one of our partners, the opportunity was secured by demonstrating a more configurable and finance enabled solution than our competitors, while also conveying our strong expertise and proven track record at scale in the accounting hub space. We expect further sales of AAH will be achieved, particularly when used in conjunction with our other regulatory focused applications.

Subscription Management

Market Drivers

The subscription economy is continuing to expand into new sectors as the benefits of subscription income are increasingly valued more than traditional non-recurring revenues. The Group has seen this phenomenon in broader sectors such as high-tech advanced industries, medical devices and automotive. As organisations move to these business models they require new systems to manage these subscriptions and require new capabilities to address the complexities of revenue recognition inherent with subscriptions.

Aptitude Software's products are focused on the needs of the world's largest companies, organisations with highly complex business models and data processing requirements which generalist providers are unable to address.

Subscription Management Products

eSuite

eSuite is a modular, cloud based end-to-end SaaS solution for large, international, enterprise customers across the media and publishing sector as well as a growing number of other verticals.

The application is focused on the subscription economy and provides identity management, CRM, automated billing, payment processing, and churn management capabilities, enabling businesses to acquire, monetize and optimise customers subscriptions. Once integrated with the Group's revenue management offering, scheduled for completion in the second half of the year, Aptitude Software will be able to offer an end-to-end subscription, billing, and revenue automation solution which is expected to provide further opportunities for automation and growth within the existing customer base while also supporting new business opportunities.

A key highlight for eSuite in the period was the landmark win to provide subscription management capability to one of the largest global broadcaster and media content owners with potential for considerable expansion in ARR once the offering is launched in 2023. Contributing to securing this new business contract was the earlier success achieved with a leading broadcaster and media content owner in the United Kingdom, a project that successfully went live in the first half of the year.

In addition to the above success, good progress continues to be achieved with publishers currently utilising a competing product that is being de-supported. A project with a major German publisher to replace this competing solution is approaching its go live. The success of this project, together with the strong relationship formed with a German focused implementation partner as part of the engagement, has generated very well progressed additional opportunities.

Another project is also approaching its conclusion in Japan with a leading car manufacturer, once again working closely with an implementation partner. eSuite has the capabilities to provide car manufacturers with subscription management capability as they seek to monitise additional in-car services. Aptitude Software continues to work closely with the Japanese-focused partner on several other exciting opportunities in this growing market.

The majority of our clients' subscription bases are very resilient and confidence remains high in the opportunity with eSuite. Nevertheless, a small number of clients have seen their businesses negatively impacted by the post-pandemic current economic challenges leading to a small but temporary contraction in the Annual Recurring Revenue of eSuite in the period. We expect this trend to be reversed in the second half of the year.

Aptitude Revenue Management

The Group's first sale of AREV, our leading Aptitude Revenue Management ('ARM') application, outside North America was achieved in the period to a Singaporean telco provider. This success in Asia is expected to lead to further opportunities in the region. In addition to this sale, a new business contract was secured with a further telco provider in North America.

The ARM applications enable finance teams to automate their revenue management functions to address the demands of the subscription economy , with the market opportunity now extending beyond our current industries into adjacent verticals including high-tech advanced industries and medical devices.

The applications simplify the whole revenue lifecycle, from contract order to revenue recognition, reporting and forecasting and go significantly beyond core IFRS 15 / ASC 606 compliance to allow total control over complex revenue management for all contract types ranging from subscription-based revenue models to complex multi-part or bundled contracts. This capability allows businesses to understand and control centrally the financial impact of all their commercial propositions, the quality of their revenue types as well as providing new and valuable insights to support future business decision making such as the introduction of new products in different markets.

Solution Management Services ("Aptitude Assure")

This service extends the responsibilities of Aptitude Software beyond traditional software maintenance services to include those that have typically been performed by the clients' own IT teams. These include the monitoring of system performance, user administration, release management and functional enhancements. The team providing these remote services to our clients is now of critical mass and able to provide efficiencies to our clients across the majority of the Group's applications.

During the first half of the year a number of Aptitude Insurance Calculation Engine clients contracted for this service in advance of their approaching go-live dates. These contracts contributed to the year-on-year growth of 18% in the Annual Recurring Revenue derived from solution management services to £3.9 million (30 June 2021: £3.3 million).

For the first time the value of the multi-year recurring solution management services contracts is included in overall Annual Recurring Revenue with comparatives restated accordingly.

Implementation Services

Aptitude Software provides implementation services to its clients, with the scale of such services depending on the nature of the application, the size of the opportunity and the balance of responsibilities between Aptitude Software and its partners. The Group's services are provided by a significant pool of highly skilled individuals, providing deep domain and technical expertise which is highly valued by our clients and provide a differentiator compared to our competitors. Demand for implementation services from the Group's on-going projects has been strong in the first half of the year, with clients frequently requesting additional services. This dynamic is expected to continue into early 2023 when a number of the projects to implement the Aptitude Insurance Calculation Engine are expected to complete.

Partner Network 

The growth and development of Aptitude Software's high-quality partner network continues to be a strategic priority. Whilst many prospects are sourced directly by the Group's own sales and marketing teams, the global reach of our partners and the depth of their relationships with large businesses provide Aptitude Software with an increasing number of advanced opportunities, enhanced market coverage and intelligence. In addition to the new business benefits provided by the partner network, the implementation expertise and capabilities of our partners supports the Group's strategic drive to increase software fees faster than its services, leading to a richer revenue mix.

With a Big-4 accountancy firm appointed as charter partner for Fynapse in the first half of the year, a series of well received meetings were held with additional partners to showcase the capabilities of Fynapse as part of the launch of the application. A further highlight has been the new agreement to provide finance automation to a Big-4 accountancy firm's mergers and acquisitions practice enabling them to accelerate the post-acquisition integration of their clients' finance functions.

Whilst the Big-4 accounting firms have global reach, for specific applications in specific jurisdictions it can be beneficial to work closely with more specialised partner organisations. The benefits of this approach are demonstrated by the success the Group is having with eSuite in the German publishing and Japanese motor manufacturing markets, two markets which would be challenging to unlock without the assistance of our partners. We are engaged with these partners on both on-going projects as well as several additional new business opportunities.

Aptitude Innovation Centres

Investment continues in the Group's two innovation centres in Poland and the North West of England. Overall there were 212 employees at the Innovation Centre in Poland at 30 June 2022 (30 June 2021: 172) with a further 47 employees focused on design, development, implementation and support based in the North West of England. Investment remains focused on both Fynapse and eSuite in these two centres.

The strengthening of the Group's talent acquisition team is allowing the Group to continue to attract new talent to the business despite increased competition for technologists in both locations. In the current competitive talent market the Group continues to invest in its people, including the initiatives described below.

Our People

The Board wishes to thank its employees for the excellent support and commitment they are providing to the business and to our clients and partners.

In the first half of the year a key focus has been the continued integration of the team brought into the Group with the MPP Global acquisition. Collaboration continues to increase with the wider business and all key talent has been successfully retained. As part of the integration the Group's wider career management programme has now been implemented together with a number of other training initiatives.

In May 2022 a new Chief People Officer joined the Group bringing new approaches and initiatives to our people strategy as we continue to focus on attracting and retaining the most talented of individuals. This senior appointment builds on the strengthening of the team supporting our team at the Group's two innovation centres.

Aptitude Software continues to progress its approach to diversity and inclusion with its established advocacy group with representation from across our global team. The business is committed to creating a working environment that recognises diversity, supporting everyone to thrive.

Overall Group headcount has increased to 477 (31 December 2021: 476, 30 June 2021: 351) as the business continues to invest in the evolution of our technology and strengthen a number of other teams. In addition to the Group's permanent headcount, since 31 December 2021 the number of contractors within the Group has increased to 54 (31 December 2021: 39).

Focus areas

The Group is focused on delivery of the opportunity within finance digitalization and subscription management.

The focus within finance digitalization is the continued development of the additional capabilities of Fynapse to address the wider market opportunity, both directly and through our Tier 1 partners, whilst continuing to develop and progress demand for our new application.

For subscription management the focus is the continued integration of Aptitude Software's state of the art, multi-tenanted eSuite SaaS platform and successfully taking our new end-to-end revenue automation product to existing and new markets.

Financial Performance

The Group delivered a solid financial performance in the period with continued growth of its recurring revenues.

The strength of the Group's balance sheet, high levels of recurring revenue and strong cash generation provide the Group with considerable financial strength with which to execute on its growth strategy.

Revenue

Recurring Revenues

Aptitude Software's Annual Recurring Revenue ('ARR') at 30 June 2022 totalled £49.1 million (31 December 2021: £45.0 million, 30 June 2021: £35.5 million) representing overall year-on-year growth of 38% with benefit from both the acquisition of MPP Global in October 2021 and favourable exchange rate movements. On a Constant Currency basis, overall year-on-year ARR growth was 28% (31 December 2021: £47.5 million, 30 June 2021: £38.4 million). Removing the impact of the acquisition of MPP Global the year-on-year ARR Organic Growth on a Constant Currency basis was 10% (12 months to 30 June 2021: 12%).

For the first time the value of recurring contracts for the Group's solution management service is included within ARR (30 June 2022: £3.9 million, 31 December 2021: £3.2 million, 30 June 2021: £3.3 million).

Whilst the Group is satisfied with the year-on-year Organic Growth rate of 10%, the business is confident that the investments in both finance digitalization and subscription management will lead to a return to Aptitude Software's historically higher growth rates.

Net retention in the 12 months to 30 June 2022, excluding eSuite, was 103% (H1 2021: 102%) (measured by the total value of on-going ARR at the period-end from clients in place 12 months earlier as a percentage of the opening ARR from those clients on a constant currency basis ) .

A significant majority of the Group's recurring revenue contracts include the ability to increase ARR for clients by relevant consumer price index rises ('CPI'). There are a number of contracts with variations to this mechanism which may delay the ability to pass on the full impact of CPI to clients in the short term. Additionally, there is a significant weighting of contractual renewals in the second half of the year which have yet to receive an increase at the current elevated levels of CPI.

Recurring revenues recognised in the six months ended 30 June 2022 increased by 33% to £24.4 million (H1 2021: £18.3 million), 10% on an organic basis. These now represent 68% of overall revenue (H1 2021: 66%). It is a key part of the Group's strategy to increase this percentage whilst maximising the growth rate of Aptitude Software's ARR, a strategy which in due course will lead to growth in operating margin given the margin differential between software, the largest element of recurring revenue, and implementation services.  

Implementation Services

Services revenue totalled £11.7 million for the six months ended 30 June 2022 (H1 2021: £9.3 million) Implementation services revenues continued to benefit from the strong demand from the Group's existing client base.

Research and Development Expenditure

Total expenditure on product management, research and development in the six months ended 30 June 2022 increased to £7.9 million (H1 2021: £4.4 million), an increase of 80%. Adjusting for the investment in eSuite the increase is 41% with the increase principally attributable to the accelerated investment in Fynapse.

The Board has continued to determine that none of the internal research and development costs incurred during the first half of the year meet the criteria for capitalisation. Consequently, these have been expensed as incurred through the income statement.

Operating Profit and Margins

Adjusted Operating Profit for the six months ended 30 June 2022 was £4.0 million. Operating profit on a statutory basis was £2.1 million (H1 2021: £4.7 million). Investment in the continued development of Fynapse and integration of eSuite has led to a reduction in Adjusted Operating Margin to 11.1% (H1 2021: 18.5%), in line with the Board's expectations.

Foreign Exchange

With 51% (H1 2021: 55%) of the Group's revenues being generated from North American clients, the majority of which are invoiced in US Dollars, the financial results are impacted by changes in the US dollar exchange rate. The Group's Annual Recurring Revenue at 30 June 2022 increased in the preceding 12 months by £2.9 million as a result of favourable exchange rate movements. Aptitude Software's H1 2021 revenue and Adjusted Operating Profit would have been reported at £28.1 million and £5.1 million respectively on a Constant Currency basis (compared to actual result of £27.6 million and £5.1 million). Constant Currency is calculated by comparing the H2 2022 results with H2 2021 results retranslated at the rates of exchange prevailing during H2 2022.

Non-Underlying Items

Non-underlying items of £1.9 million (H1 2021: £0.4 million) comprises principally of intangible amortisation.

Taxation

The total tax charge of £0.4 million (H1 2021: £0.8 million) represents 19% of the Group's profit before tax (H1 2021: 17%).

Statutory Results

The Group reported a profit for the period attributable to equity shareholders of £1.5 million (H1 2021: £3.9 million).

Earnings per Share

Increased investment in the business led to Adjusted Basic Earnings per Share and Basic Earnings per Share reducing to 5.2 pence and 2.6 pence (H1 2021: 7.3 pence and 6.8 pence).

Dividend

An interim dividend of 1.8 pence per share is proposed (2021: 1.8 pence). The interim dividend will be payable on 26 August 2022 to shareholders on the register at the close of business on 5 August 2022.

Balance Sheet

The Group continues to have a strong balance sheet with net assets at 30 June 2022 of £58.7 million (H1 2021: £53.0 million), including cash of £23.6 million (H1 2021: £46.8 million) and net funds of £10.7 million (H1 2021: £45.4 million). Trade receivables (net) have increased to £14.9 million (H1 2021: £6.3 million), an increase attributable to the MPP Global acquisition in October 2021, growth in the core business and a change in timing of the invoicing of a number of recurring fees to ensure CPI growth is maximised. Of the balance of £14.9 million, collections following the period end have totalled £5.0 million. The growth in the Group's recurring revenues resulted in deferred income increasing to £30.1 million at 30 June 2022 (H1 2021: £24.1 million).

The Group's cash flow is seasonal due to the timing of the invoicing and collection of the Group's recurring revenue which, together with a weighting of a number of other payments in the first half of the year (e.g. bonus), contribute to a weaker cash performance in the first half of any year. This dynamic, accentuated by over performance of collections in December 2021 and adjustment of the timing of the invoicing of a number of recurring fees as outlined above, has led to a cash outflow from operating activities in the first half of the year of £3.5 million (H1 2021: £4.5 million inflow).

The Group is confident that full year cash flow conversion for 2022 will be in line with historical levels.

Statement on Principal Risks and Uncertainties

Pursuant to the requirements of the Disclosure and Transparency Rules the Group provides the following information on its principal risks and uncertainties. The Group considers strategic, operational and financial risks and identifies actions to mitigate those risks. These risk profiles are updated at least annually.  The principal risks and uncertainties detailed within the Group's 2021 Annual Report remain applicable for the first six months of the financial year. The Group's 2021 Annual Report is available from the Aptitude Software website: www.aptitudesoftware.com/investor-relations/

Related party transactions during the period are disclosed in Note 18.

CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT

For the six months ended 30 June 2022

		Unaudited six months ended 30 Jun 2022						Unaudited six months ended 30 Jun 2021						Audited year ended 31 Dec 2021
	Note	Before Non-underlying items		Non-underlying items		Total		Before Non-underlying items		Non-underlying items		Total		Before Non-underlying items		Non-underlying items		Total
		£000		£000		£000		£000		£000		£000		£000		£000		£000
Revenue	5	36,123		-		36,123		27,635		-		27,635		59,330		-		59,330
Operating costs	5/6	(32,121)		(1,883)		(34,004)		(22,520)		(423)		(22,943)		(49,430)		(3,439)		(52,869)
Operating profit	5/6	4,002		(1,883)		2,119		5,115		(423)		4,692		9,900		(3,439)		6,461
Finance income		3		-		3		5		-		5		6		-		6
Finance costs		(247)		-		(247)		(44)		-		(44)		(238)		-		(238)
Profit before income tax		3,758		(1,883)		1,875		5,076		(423)		4,653		9,668		(3,439)		6,229
Income tax expense	7	(754)		400		(354)		(914)		123		(791)		(1,634)		479		(1,155)
Profit for the period		3,004		(1,483)		1,521		4,162		(300)		3,862		8,034		(2,960)		5,074
Earnings per share
Basic	8					2.6p						6.8p						9.0p
Diluted	8					2.6p						6.8p						8.9p

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2022

		Unaudited six months ended		Unaudited six months ended		Audited year ended
		30 Jun  2022		30 Jun  2021		31 Dec 2021
		£000		£000		£000
Profit for the period		1,521		3,862		5,074
Other comprehensive income/(expense)
Items that may subsequently be reclassified to profit or loss:
Fair value gain/(loss) on hedged financial instruments		267		(141)		(222)
Currency translation difference		1,334		(219)		(225)
Other comprehensive income/(expense) for the period, net of tax		1,601		(360)		(447)
Total comprehensive income for the period		3,122		3,502		4,627

CONDENSED CONSOLIDATED INTERIM BALANCE SHEET

As at 30 June 2022

	Note	Unaudited as at 30 Jun 2022		Unaudited as at 30 Jun 2021		Audited as at 31 Dec 2021
ASSETS		£000		£000		£000
Non-current assets
Property, plant and equipment including right-of-use assets	11	4,250		1,902		4,261
Goodwill		46,006		23,787		46,006
Intangible assets		22,812		5,217		24,502
Other long-term assets		1,451		1,644		1,354
Deferred tax assets		115		448		115
		74,634		32,998		76,238
Current assets
Trade and other receivables	12	16,740		8,606		10,775
Financial assets
- derivative financial instruments		150		37		-
Current income tax assets		1,189		898		1,168
Cash and cash equivalents		23,611		46,759		29,064
Total current assets		41,690		56,300		41,007
Total assets		116,324		89,298		117,245
LIABILITIES
Current liabilities
Financial liabilities
- borrowings	14	(938)		-		(313)
- derivative financial instruments		(177)		(250)		(293)
Trade and other payables	13	(38,096)		(32,800)		(40,284)
Capital lease obligations	15	(329)		(563)		(273)
Current income tax liabilities		(353)		(245)		(353)
Provisions	16	-		(240)		-
		(39,893)		(34,098)		(41,516)
Net current assets		1,797		22,202		(509)
Non-current liabilities
Financial liabilities - borrowings	14	(8,959)		-		(9,573)
Capital lease obligations	15	(2,679)		(786)		(2,777)
Provisions	16	(300)		(196)		(379)
Deferred tax liabilities		(5,811)		(1,236)		(5,811)
		(17,749)		(2,218)		(18,540)
NET ASSETS		58,682		52,982		57,189

              CONDENSED CONSOLIDATED INTERIM BALANCE SHEET 

              As at 30 June 2022

	Note	Unaudited as at 30 Jun 2022		Unaudited as at 30 Jun 2021		Audited as at 31 Dec 2021
		£000		£000		£000

SHAREHOLDERS' EQUITY
Share capital	17	4,204		4,156		4,194
Share premium account	17	11,959		8,382		11,946
Capital redemption reserve		12,372		12,372		12,372
Other reserves		34,169		33,983		33,902
Accumulated losses		(3,477)		(4,038)		(3,346)
Foreign currency translation reserve		(545)		(1,873)		(1,879)
TOTAL EQUITY		58,682		52,982		57,189

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2022

		Share capital	Share premium account	Accumulated losses	Foreign currency translation reserve	Capital redemption reserve	Other reserves	Total
		£000	£000	£000	£000	£'000	£000	£000
Total equity as at 1 January 2022		4,194	11,946	(3,346)	(1,879)	12,372	33,902	57,189
Comprehensive income
Profit for the period		-	-	1,521	-	-	-	1,521
Cash flow hedges
- net fair value gains		-	-	-	-	-	267	267
Exchange rate adjustments		-	-	-	1,334	-	-	1,334
Total comprehensive income for the period		-	-	1,521	1,334	-	267	3,122
Shares issued under share option schemes		10	13	-	-	-	-	23
Share options - value of employee service		-	-	409	-	-	-	409
Dividends to equity holders of the company		-	-	(2,061)	-	-	-	(2,061)
Total contributions by and distributions to owners of the company recognised directly into equity		10	13	(1,652)	-	-	-	(1,629)
Balance at 30 June 2022 (unaudited)		4,204	11,959	(3,477)	(545)	12,372	34,169	58,682

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2021

		Share capital	Share premium account	Accumulated losses	Foreign currency translation reserve	Capital redemption reserve	Other reserves	Total
		£000	£000	£000	£000	£'000	£000	£000
Total equity as at 1 January 2021		4,143	7,828	(6,165)	(1,654)	12,372	34,124	50,648
Comprehensive income
Profit for the period		-	-	3,862	-	-	-	3,862
Cash flow hedges
- net fair value losses		-	-	-	-	-	(141)	(141)
Exchange rate adjustments		-	-	-	(219)	-	-	(219)
Total comprehensive income for the period		-	-	3,862	(219)	-	(141)	3,502
Shares issued under share option schemes		13	554	-	-	-	-	567
Share options - value of employee service		-	-	303	-	-	-	303
Dividends to equity holders of the company		-	-	(2,038)	-	-	-	(2,038)
Total contributions by and distributions to owners of the company recognised directly into equity		13	554	(1,735)	-	-	-	(1,168)
Balance at 30 June 2021 (unaudited)		4,156	8,382	(4,038)	(1,873)	12,372	33,983	52,982

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

For the six months ended 30 June 2022

			Unaudited		Unaudited		Audited
			six months ended		six months ended		year ended
	Note		30 Jun 2022		30 Jun 2021		31 Dec 2021
			£000		£000		£000
Cash flows from operating activities
Cash (used in)/generated from operations	9		(2,995)		4,212		11,890
Interest paid			(247)		(44)		(238)
Income tax (paid)/received			(283)		346		262
Net cash flows (used in)/generated from operating activities			(3,525)		4,514		11,914
Cash flows from investing activities
Purchase of property, plant and equipment			(379)		(194)		(1,232)
Acquisition of subsidiary, net of cash acquired			-		-		(33,112)
Interest received			3		5		6
Net cash used in investing activities			(376)		(189)		(34,338)
Cash flows from financing activities
Net proceeds from issuance of ordinary shares	17		23		567		968
Dividends paid to company's shareholders	10		(2,061)		(2,038)		(3,057)
Repayment of capital lease obligations			(181)		(548)		(756)
Drawdown of loan, net of arrangement fee			-		-		9,880
Net cash (used in)/generated from financing activities			(2,219)		(2,019)		7,035
Net (decrease)/increase in cash and cash equivalents			(6,120)		2,306		(15,389)
Cash and cash equivalents at beginning of period			29,064		44,822		44,822
Exchange rate gains/(losses) on cash and cash equivalents			667		(369)		(369)
Cash and cash equivalents at end of period			23,611		46,759		29,064

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1.  General information

Aptitude Software Group plc (the 'Company') and its subsidiaries (together, the 'Group') is a specialist provider of finance digitalization and subscription management software.

The Company is a public limited company incorporated and domiciled in England and Wales with a primary listing on the London Stock Exchange. The address of its registered office is 8^th Floor, 138 Cheapside, London EC2V 6BJ.

These condensed consolidated interim financial statements were approved for issue on 27 July 2022.

These condensed consolidated interim financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2021 were approved by the Board of directors on 14 March 2022 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.

2.  Basis of preparation

These condensed consolidated interim financial statements for the six months ended 30 June 2022 have not been audited or reviewed by the auditors. The interims have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, 'Interim financial reporting'. These condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2021, which have been prepared in accordance with UK adopted international accounting standards and company law.

3.  Accounting policies

The accounting policies adopted are consistent with those of the previous financial statements, except as described below.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profits.

New and amended standards and interpretations need to be adopted in the first interim financial statements issued after their effective date. There are no new IFRSs or IFRICs that are effective for the first time for this interim period that would be expected to have a material impact on the financial statements. 

4.  Estimates

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates. In preparing these condensed consolidated interim financial statements, 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 consolidated financial statements for the year ended 31 December 2021, with the exception of changes in estimates that are required in determining the provision for income taxes.

Fair value estimation

Financial instruments not measured at fair value

Financial instruments not measured at fair value includes cash and cash equivalents, trade and other receivables, trade and other payables, and loans and borrowings. However, due to their short-term nature and ability to be liquidated at short notice their carrying value approximates to their fair value.

Financial instruments measured at fair value

The fair value hierarchy of the financial instruments measured at fair value is provided below.

	Level 2 inputs
	Unaudited six months ended 30 Jun 2022 £'000	Unaudited six months ended 30 Jun 2021 £'000
Financial assets
Derivative financial assets (designated hedge instruments)	150	37
	150	37

Financial liabilities
Derivative financial liabilities (designated hedge instruments)	(177)	(250)
	(177)	(250)

The derivative financial assets and liabilities have been valued using the market approach and are considered to be Level 2 inputs. There were no changes to the valuation techniques used in the year. There were no transfers between levels during the year.

5.  Segmental information

Business segments

The only business segment during both periods presented was Aptitude Software and therefore certain segmental analysis is not required.

Geographical segments

The Group has two geographical segments for reporting purposes, the United Kingdom and the Rest of the World.

The following table provides an analysis of the Group's sales by origin and by destination.

		Sales revenue by origin				Sales revenue by destination
		Unaudited six months ended 30 Jun 2022		Unaudited six months ended 30 Jun 2021		Unaudited six months ended 30 Jun 2022		Unaudited six months ended 30 Jun 2021
		£000		£000		£000		£000
Continuing operations
United Kingdom		19,504		14,526		7,753		3,912
Rest of World		16,619		13,109		28,370		23,723
		36,123		27,635		36,123		27,635

The Group derives revenue from the transfer of goods and services in the following major categories and geographical regions, these being the United Kingdom ('UK') and Rest of the World ('RoW'):

Unaudited six months ended 30 June 2022
		Recurring revenue					Implementation revenue
		UK			RoW	Total	UK	RoW	Total	Total
		£000			£000	£000	£000	£000	£000	£000
Revenue from external clients		5,728			18,695	24,423	2,025	9,675	11,700	36,123
Unaudited six months ended 30 June 2021
		Recurring revenue					Implementation revenue
		UK			RoW	Total	UK	RoW	Total	Total
		£000			£000	£000	£000	£000	£000	£000
Revenue from external clients		2,966			15,366	18,332	946	8,357	9,303	27,635

All of the revenue displayed in the above table is recognised over time in line with the Group's accounting policy detailed on pages 89 to 93 of the Aptitude Software Group plc 2021 Annual Report and has been generated from contracts with clients.

Recurring revenue includes revenue from the Group's solution management services for the first time. Comparatives have been adjusted accordingly.

The following is an analysis of the carrying amount of non-current assets (excluding deferred tax assets), and additions to property, plant and equipment and intangible assets (excluding right-of-use asset additions resulting from property lease agreements) and intangible assets, analysed by the geographical area in which the assets are located.

		Carrying amount of non-current assets				Capital expenditure
		Unaudited six months ended 30 Jun 2022		Unaudited six months ended 30 Jun 2021		Unaudited six months ended 30 Jun 2022		Unaudited six months ended 30 Jun 2021
		£000		£000		£000		£000
United Kingdom		55,703		16,497		132		37
Rest of World		18,816		16,053		247		157
		74,519		32,550		379		194

The Company's business is to invest in its subsidiaries and, therefore, it operates in a single segment.

6.   Non-underlying items

		Unaudited six months ended 30 Jun 2022		Unaudited six months ended 30 Jun 2021		Audited year ended 31 Dec 2021
		£000		£000		£000
Continuing operations
Amortisation of acquired intangibles		1,883		423		1,418
Acquisition and associated reorganisation costs		-		-		2,021
		1,883		423		3,439

7.  Income tax expense

Income tax expense is recognised based on management's estimate of the weighted average income tax rate expected for the full financial year of 19% (the estimated tax rate for the six months ended 30 June 2021 was 17%). The increase against H1 2021 levels is due to the Group's ability to receive additional tax relief on its research and development expenditure in the earlier period. During the six-month period to 30 June 2021, the Group received refunds from the UK tax authority in respect of the benefit it obtained from additional research and development relief and share option deductions in prior periods driving the £346,000 net tax receipt for the period.

8.  Earnings per share		Unaudited six months ended 30 Jun 2022		Unaudited six months ended 30 Jun 2021		Audited year ended 31 Dec 2021
		pence		pence		pence
Earnings per share
Basic		2.6		6.8		9.0
Diluted		2.6		6.8		8.9
		Unaudited six months ended 30 Jun 2022		Unaudited six months ended 30 Jun 2021		Audited year ended 31 Dec 2021
		pence		pence		pence
Adjusted earnings per share
Basic		5.2		7.3		14.2
Diluted		5.2		7.3		14.0

To provide an indication of the underlying operating performance the adjusted earnings per share calculation above excludes intangible amortisation and other non-underlying items and has a tax charge based on the effective rate.

		Unaudited six months ended 30 Jun 2022		Unaudited six months ended 30 Jun 2021		Audited year ended 31 Dec 2021
		pence		pence		pence
Basic earnings per share		2.6		6.8		9.0
Non-underlying items		2.6		0.5		5.2
Prior years' tax credit		-		-		0.3
Recognition of tax losses		-		-		(0.3)
Adjusted earnings per share		5.2		7.3		14.2

9.  Cash generated from operations

		Unaudited six months ended 30 Jun 2022		Unaudited six months ended 30 Jun 2021		Audited year ended 31 Dec 2021
		£000		£000		£000
Profit before tax for the period		1,875		4,653		6,229
Adjusted for:
Depreciation		551		648		1,179
Amortisation		1,690		423		1,418
Share-based payment expense		409		303		612
Finance income		(3)		(5)		(6)
Finance costs		247		44		238
Changes in working capital:
(Increase)/decrease in receivables		(5,497)		(997)		(1,561)
(Decrease)/increase in payables		(2,188)		(852)		3,930
Decrease in provisions		(79)		(5)		(149)
Cash (used in)/generated from operations		(2,995)		4,212		11,890

10.   Dividends

The interim dividend of 1.8 pence per share (2021: 1.8 pence per share) was approved by the Board on 27 July 2022. It is payable on 26 August 2022 to shareholders on the register at 5 August 2022.  This interim dividend has not been included as a liability in this interim financial information.  It will be recognised in shareholders' equity in the year to 31 December 2022. A final dividend of £2,061,000 was paid in May 2022 and relates to the year ending 31 December 2021 (2021: final dividend £2,038,000).

11.  Property, plant and equipment including right-of-use assets

				Unaudited six months ended 30 Jun 2022			Unaudited six months ended 30 Jun 2021
				£000		£000
Opening net book amount 1 January				4,261		2,394
Additions				379		194
Exchange movements				161		(38)
Depreciation				(551)		(648)
Closing net book amount 30 June (unaudited)				4,250		1,902

The Group has not placed any contracts for future capital expenditure which have not been provided for in the financial statements.

12.  Trade and other receivables 

				Unaudited six months ended 30 Jun 2022		Unaudited six months ended 30 Jun 2021
				£000		£000
Trade receivables - net				14,901		6,292
Other receivables				130		328
Prepayments				1,186		1,498
Accrued income				523		488
Closing net book amount 30 June (unaudited)				16,740		8,606

Contract assets and contract liabilities only comprise accrued and deferred income respectively. Within the trade receivables balance of £14,901,000 (30 June 2021: £6,292,000), there are balances totalling £3,191,000 (30 June 2021: £484,000) which, at 30 June 2022 were overdue for payment. The increase of £8,609,000 in trade receivables from prior period levels is due principally to the timing of receipt of recurring revenue invoices issued, organic growth in the business alongside £1,653,000 in relation to the MPP Global business acquired in H2 2021. During July 2022, significant receipts totalling £5.0 million were collected against the total receivables balance at 30 June 2022.  

13.  Trade and other payables

				Unaudited six months ended 30 Jun 2022		Unaudited six months ended 30 Jun 2021
				£000		£000
Trade payables				541		713
Other tax and social security payable				1,903		1,720
Other payables				-		128
Accruals				5,511		6,116
Deferred income				30,141		24,123
Closing net book amount 30 June (unaudited)				38,096		32,800

14.  Financial liabilities - borrowings

				Unaudited six months ended 30 Jun 2022		Unaudited six months ended 30 Jun 2021
				£000		£000
Bank Loan				9,897		-
The borrowings are repayable as follows:
Within one year				938		-
In the second year				1,250		-
In the third to fifth years inclusive				7,812		-
				10,000		-
Unamortised prepaid facility arrangement fees				(103)		-
As at 30 June (unaudited)				9,897		-

On 14 October 2021, the Group and Company entered into a loan agreement with Bank of Ireland Group plc consisting of a £10 million term loan in addition to a revolving credit facility of £10 million. The loan is secured on the assets of the Group. Operating covenants are limited to the Group's net debt leverage and interest cover. The term loan is repayable over five years with an initial 12-month repayment holiday followed by annual capital repayments of £1,250,000. At the end of the term, a bullet payment of £5 million is due. The loan is denominated in Pound Sterling and carries interest at SONIA plus 1.75%. The Group entered into an interest swap on 2 November 2021, effectively fixing the interest rate at 2.95% over a five-year period

15.  Capital lease obligations

				Unaudited six months ended 30 Jun 2022		Unaudited six months ended 30 Jun 2021
				£000		£000
Amounts payable under capital lease arrangements:
Within one year				440		606
Within two to five years				1,574		838
After five years				1,529		-
Total				3,543		1,444
Less: future finance charges				(535)		(95)
Present value of lease obligations				3,008		1,349
Less: Amount due for settlement within 12 months (shown under current liabilities				(329)		(563)
As at 30 June (unaudited)				2,679		786

		Unaudited six months ended 30 Jun 2022		Unaudited six months ended 30 Jun 2021
The present value of financial lease liabilities is split as follows:		£000		£000
Within one year		329		563
Within two to five years		1,263		786
After five years		1,416		-
		3,008		1,349

16.  Provisions

				Unaudited six months ended 30 Jun 2022		Unaudited six months ended 30 Jun 2021
				£000		£000
At 1 January				379		441
Credited to income statement				(80)		-
Exchange movements				1		(5)
As at 30 June (unaudited)				300		436

				Unaudited six months ended 30 Jun 2022		Unaudited six months ended 30 Jun 2021
				£000		£000
Current				-		240
Non-current				300		196
				300		436

£ 252,000 of the total provision at 30 June 2022 of £ 300,000 relates to the cost of dilapidations in respect of its occupied leasehold premises (30 June 2021: £382,000).

17.  Share capital

			Unaudited six months ended 30 Jun 2022				Unaudited six months ended 30 Jun 2021
Ordinary share capital at 7 1/3 pence each		Number of shares			Ordinary Shares		Number of shares		Ordinary Shares
		000			£000		000		£000
Issued and fully paid:
Opening balance as at 1 January		57,199			4,194		56,429		4,143
Shares issued under share option schemes		138			10		182		13
As at 30 June (unaudited)		57,337			4,204		56,611		4,156

Employee share option scheme options exercised during the period to 30 June 2022 resulted in 138,163 shares being issued (30 June 2021: 182,291). The total net proceeds from the issuance of shares during the period was £23,000 (30 June 2021: £567,000) with £10,000 (30 June 2021: £13,000) of this being recognised within share capital, being the nominal value of shares issued. The remaining amount represents the premium on issue which is detailed in the table below. The related weighted average share price at the time of exercise was £3.22 per share (30 June 2021: £6.74).  

Share premium  

		Unaudited six months ended 30 Jun 2022		Unaudited six months ended 30 Jun 2021
		£000		£000
Opening balance as at 1 January		11,946		7,828
Movement in relation to share options exercised		13		554
As at 30 June (unaudited)		11,959		8,382

18.  Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation.

During 2022, the Group entered into transactions with a subsidiary of FDM Group (Holdings) plc, a company for which Peter Whiting (non-executive Director of Aptitude Software Group plc up until resignation on 28 April 2022) was a non-executive Director. FDM Group (Holdings) plc provided consultancy services to the Group during the period 1 January 2022 to 28 April 2022 at a cost of £22,000. No such transactions have been entered into for the six-month period ended 30 June 2021.

There were no other related party transactions during the six-month period ended 30 June 2022 (30 June 2021: £nil), as defined by International Accounting Standard No 24 'Related Party Disclosures', except for key management compensation. The related party transactions for the year ended 31 December 2021 as defined by International Accounting Standard No 24 'Related Party Disclosures' are disclosed in note 32 of the Aptitude Software Group plc Annual Report for the year ended 31 December 2021.

19.  Statement of directors' responsibilities

The Directors confirm that these condensed interim financial statements have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

-  an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and 

-  material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.

The Directors of Aptitude Software Group plc are listed in the Aptitude Software Group plc Annual Report for 31 December 2021. A list of current directors is maintained on the Aptitude Software Group plc website: www.aptitudesoftware.com/investor-relations/

Copies of this statement are available on the investor relations page of our website ( www.aptitudesoftware.com/investor-relations/ ). 

By order of the Board

Philip Wood

27 July 2022 

Deputy Chief Executive Officer and Chief Financial Officer

 

END

 

 

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