Final Results

RNS Number : 0933R

Eagle Eye Solutions Group PLC

19 September 2017

 

19 September 2017

Eagle Eye Solutions Group plc

("Eagle Eye", the "Company" or the "Group")

Results for the year ended 30 June 2017

Strong momentum built to capitalise on the significant market opportunity

Eagle Eye, the SaaS technology company that allows businesses to create a real-time connection with their customers, today announces its results for the financial year ended 30 June 2017 (the "Year").

Financial and corporate highlights:

·      Group revenue increased by 71% to £11.1m (FY16: £6.5m)

·      Revenue from subscription fees and transactions over the network represented 68% of total revenue (FY16: 80%)

·      Gross margin up 9ppts to 88% (FY16 79%)

·      Cash position of £3.7m (FY16: £1.3m) at 30 June 2017

·      Successful placing in June 2017 raising net proceeds of £5.8m

·      3 year contract signed with John Lewis PLC in May 2017 for the deployment of the AIR platform

·      2 year contract renewal was signed with Toshiba Global Commerce Solutions for Asda Stores Limited*

·      Q1 FY18 revenue expected to be at least £3m, 32% growth on prior year, with growth anticipated to accelerate in future periods as our significant clients begin to transact through the platform at scale and from the impact of new strategic partnerships that drive increased transactions *

 Operational highlights:

·      Redemption volumes increased by 58% to 60.4m (FY16: 38.4m)

·      SMS volumes of 44.4m, an increase of 10% (FY16: 40.3m)

·      Total number of customers 233; 74 brands (FY16: 219;70)

·      Deepening tier 1 client relationships representing 53% of revenue, £5.9m (FY16: 33%, £2.1m)

·      Revenue from the Food and Beverage ("F&B") sector increased by 20% to £1.8m (FY16: £1.5m).

·      Investment in product development in loyalty, brands and connections to social platforms

*Post Period

Tim Mason, Chief Executive of Eagle Eye, said:

"2017 has been a transformational year for Eagle Eye. We've successfully delivered on our strategy of winning new customers, increasing transactions through our platform and deepening existing customer relationships. As a result we exceeded our expectations during the Year, strengthened our platform and are poised for accelerated progress in 2018.

"Retailers and brands are looking for more innovative and cost effective ways to engage with consumers, and we have the proven and scalable technology to power their digital marketing capabilities and support their commercial requirements.   

"Renewing and winning new contracts with major retailers such as John Lewis and Asda demonstrates the relevance of our offering to tier 1 retailers, and we are excited about continuing on our journey to be a leading global digital marketing platform."

For further information, please contact: Eagle Eye Tim Mason, Chief Executive Officer Lucy Sharman-Munday, Chief Financial Officer Tel: [phone] Investec (Nominated Adviser and Broker) Corporate Finance: David Anderson / Sebastian Lawrence Tel: [phone] Corporate Broking: Matt Lewis / Rob Baker Hudson Sandler Nick Lyon/Hattie O'Reilly Tel: [phone] Information on Eagle Eye  www.eagleeye.com

Eagle Eye is a leading SaaS technology company that allows businesses to create a real-time connection with their customers.

The Company's digital marketing platform, Eagle Eye AIR, enables the secure, real-time, multi-channel issuance, management and redemption of digital promotions and rewards, replacing previously used paper-based methods. Our Eagle Eye platform creates a network effect between merchants, distributors and brands enabling stronger connections and value to all parties. Through our four products we enable brands and merchants to reduce cost, improve their customer offer and accelerate their innovation.

The Company's current customer base comprises leading names in UK grocery, retail and hospitality including John Lewis, Asda, J Sainsbury, Greggs, JD Sports, Ladbrokes, Marks & Spencer, Mitchells & Butlers, Pizza Express, Tesco and Thomas Pink.

Chairman's statement

In September 2016, I was delighted to accept the position of Non-Executive Chairman of Eagle Eye, with Tim Mason appointed as our new Chief Executive. It was the Board's belief that Tim would drive the business to become 'Better, Bigger and Faster' as we entered the next stage of Eagle Eye's development. I am very pleased to report that under Tim's leadership the Company has excelled, with a clear strategy in place, accelerated growth, and in a strengthened position to capitalise on the sizeable market opportunity.

Better, Bigger, Faster

During the Year there have been fundamental changes made to ensure that the Company is best placed to capitalise on the market's shift to digital, where there are clear indicators that the consumer now expects real time and personalised reward.    

There has been a significant emphasis on people during 2017, ensuring that the leadership team is geared for scale and the culture resonates with both our people and our customers. In addition to the strengthened Board, the executive team has been joined by David Aylmer as Chief Operating Officer to provide particular focus on client delivery, security and scalability of our operational capabilities.

During the Year we expanded internationally in North America with Loblaw Inc ("Loblaw"), the Canadian food retailer, and Europe through the partnership with TCC, a global retail marketing company, both of which we have continued to develop.

The North American focus is gaining momentum with the Loblaw implementation of Eagle Eye AIR now underway and the opening of Eagle Eye's first overseas office in Toronto, Canada. The new office and operational team supports the Loblaw project and will act as a hub to capitalise on the significant North American market opportunity estimated to be worth over $84bn (Cadent Consulting Group 2015 and Raymond James 2016).

Our work with TCC Global ("TCC") supports our move into the previously unaddressed European market, providing even greater international reach. Since signing the partnership, we have implemented the core foundations for a solid working relationship and most importantly recruited an international team to work solely with TCC. The joint proposition is now being actively marketed 'TCC Digital Connect' and taken into TCC's European clients. Excitingly, we are engaged and in discussions with multiple retailers through the partnership and expect to accelerate win ratios across Europe. We expect to see this partnership develop throughout 2018 and beyond.

We are continuing to explore strategic alliances and partnerships that either allow us to expedite our win ratio or extend our reach in the value chain. This is particularly relevant for our mid-tier customers who increasingly want an end to end solution.

Since Tim's appointment we have reviewed our external messaging to put the consumer at the heart of what we do. With the benefit of his retail and consumer experience, our product marketing has shifted from being solely focused on our technology to articulating what we do from the consumer's perspective. A project was kicked off in June 2017 to build on the work done so far and the new product marketing positioning is expected to launch in financial H1 2018.

A year of strategic and operational progress

The Board is delighted with the significant strategic and operational progress made during the Year. As announced in May 2017, revenues in the Year exceeded our expectations, increasing by 71%. This positive outcome has been driven by the successful execution of our strategy to win new customers, increase transactions from existing customers and deepen our customer relationships. 

Off the back of this increased momentum the Company successfully completed a placing of new equity in June 2017. This raised net proceeds of £5.8m which will be used to accelerate investments in product development, infrastructure and marketing resources to take advantage of the market opportunity and drive international expansion. As demonstrated above, the Company has already begun to invest these funds in the core areas for growth.  

On behalf of the Board, I want to thank the team for their commitment, hard work and major steps forward this Year in terms of contract wins, further developing the platform and enhancing internal processes to support the next stage of growth.

Outlook

2017 saw us exceed against management's original revenue expectations, put in the foundations for scale and execute against our growth strategy. In the Year, we experienced increased demand from all sectors, resulting in significant new customer wins, such as John Lewis. We have seen this momentum continue post Year-end, as demonstrated by the two-year contract renewal with Asda, announced in July 2017.

This momentum gives visibility of revenue for the first quarter for the financial year ending 30 June 2018 to be at least 32% up on prior year comparative period at approximately £3.0m. Most importantly, there is an expectation that a higher proportion of revenue will be generated from recurring subscriptions and transaction revenue expected to be approximately £2.2m, 73% (Q1 FY17: £1.6m, 71%). Transaction volumes are expected to be in the region of 30.0m (Q1 FY17: 11.7m) which would represent growth of 157%. This first quarter has seen early benefits from the favourable renewal with Asda, John Lewis going live on the AIR platform within 2 months of contract signature and an increased number of transactions from our F&B clients due to exciting issuance partner relationships.

Looking further ahead, there is an expectation that revenue growth will accelerate and the percentage of revenue from recurring subscriptions and transactions will continue to improve as our significant clients begin to transact through the platform at scale and the impact of new strategic partnerships that drive increased transactions.

From the position of strength having raised net proceeds of £5.8m to invest in the marketing and operational capabilities that support our growth plans, the Board is excited and confident in Eagle Eye's capabilities to exploit the considerable global market opportunities in 2018.

This level of growth, momentum and capital gives the Board confidence early in the financial year on delivering against management's expectations. 

Malcolm Wall, Non-Executive Chairman

CEO's statement

I was delighted to take the opportunity to become the Company's CEO in September 2016. I had already spent a significant part of my career looking at how data can change consumer marketing, and immediately recognised the great potential for Eagle Eye to revolutionise the way that businesses engage with consumers.

Traditional and analogue forms of promotions, rewards and loyalty programmes have lost their lustre with consumers who are increasingly looking for relevant, timely and personalised rewards that offer genuine value. It is Eagle Eye's mission to meet this changing consumer demand, and I believe the Company has the proven, scalable technology to transform an industry.

In this past year, we have established a new structure and ways of working internally to ensure we can deliver optimum results for both the Company and our customers. We have gained significant momentum, driven by our ambition to be 'Better, Bigger, Faster.' We now have a clear vision and strategy in place and delivered results ahead of our expectations during the Year.

Growing market opportunity

There are three critical themes currently affecting the marketplace which present a significant opportunity for Eagle Eye.

Loyalty and the need for real-time engagement

We are seeing a transition from the classic plastic card to digital distribution. Traditional methods which give 1% discounts and a 'rear view' perspective on purchase behaviour are being replaced by digital alternatives. Real-time offers enable highly relevant targeting, giving customers much more value and offering retailers the chance to truly understand their customers, rewarding them whilst they are still in store, thereby maximising engagement.

Large retailers can't shift the dial

The big retailers have substantial analogue schemes which are so imbedded in the organisation that it is a challenge to upgrade and innovate their systems. However, with the growing importance of digital channels, in order to meet consumers' expectations and utilise digital, they must look outside of their core schemes to remain competitive. This means they are looking for alternative routes to get new schemes to market quicker presenting a sizeable market opportunity for Eagle Eye's innovative loyalty offering.

Measuring the effect of social media

There is increased pressure for businesses to measure marketing ROI across social media channels and prove that it's a valuable revenue stream. This can be solved through real-time redemption capability, linking online to offline. Brands using Eagle Eye can send personalised offers to consumers and track redemptions in real-time, enabling businesses to invest back into the consumer's social media channels. This real-time element ensures campaigns can be tracked and optimised to maximise success rates, whilst delivering genuine value to consumers.

Through bridging online to offline creating digital connections to track behaviour, eventually retailers can augment the shopping trip beyond the internet, and build a richer single view of the customer.

We are uniquely placed to address these global issues which retailers are facing today by helping them create an intelligent real-time connection with their customers.

Win, Transact, Deepen

Following my appointment in September 2016 our focus has been on building on our strategy to become a global digital marketing leader. To achieve this we aspire to be Better, Bigger and Faster by improving in three core areas of customer interaction: 'Win' (bringing more customers on to the Eagle Eye AIR platform); 'Transact' (driving higher redemption volumes through the platform) and; 'Deepen' (building relationships with customers as the breadth of our product portfolio becomes more developed).

1.   Win

We made continued progress  adding new retailers and brands to the AIR platform in the Year. At the end of the Year, Eagle Eye had 233 live users, including 74 FMCG brands, up from 219 users with 70 brands at the end of 2016. At the start of the Year we set out to increase the number of redemption points to the network; new retailer signings included the Society of London Theatres, English Heritage and additional Mitchells & Butlers "M&B" brands: Chicken Society, Son of Steak and Stonehouse.

In addition, in May 2017, the Company signed a three-year contract with John Lewis PLC ("John Lewis") for the deployment of AIR to deliver improved digital customer marketing. Since the financial Year end the Company announced the 2-year renewal of its contract with Toshiba Global Commerce Solutions for the use of the AIR platform within Asda that integrates with existing ASDA-Walmart POS solutions across Asda stores. Both these UK contract announcements reinforce the clear competitive benefits our solutions deliver to leading retailers.

In March 2017, the Company signed a strategic partnership with TCC Global, a world leader in creating retail marketing programmes and long-term loyalty schemes, allowing Eagle Eye to extend its digital promotions offer into the European loyalty market. TCC Global works with many of Europe's largest retailers, making them a valuable partner, and  enabling the Company to accelerate growth outside the UK.

2.   Transact

Redemption volumes, which are a key measure of usage of the AIR platform and of the success of our 'transact' strategy, have grown by 58% year-on-year to 60.4m (2016: 38.4m). Volume growth was primarily driven by the full year benefit of Asda volumes, the first phase roll-out for Sainsbury's in the fourth quarter of 2017 and increased brand activity through redemption outlets.

Using Asda as a nationwide redemption channel, from July 2016 to October 2016, Coke Zero Sugar ran a promotional campaign across the AIR platform that generated a redemption rate of over 10%, compared to the typical redemption rate of a traditional analogue campaign of 0.5% - 2% (Shopper Technology Institute/Juniper Research)¹. This meaningful uplift in redemptions is proof that Eagle Eye can successfully drive higher redemption rates through the power of digital.  As part of this campaign, Eagle Eye formed a new partnership with the lifecycle social advertising company, Driftrock. This unique partnership now enables the success rate of advertising on social media channels to be measured through to redemption. 

During the Year we have successfully powered digital campaigns for leading drinks brands through the food and beverage network. These brands include Diageo, AB InBev, Pernod Ricard, Heineken and Suntory. Working with each brand and their media agency the Company has coordinated a number of promotions targeted by region using a combination of web landing pages, programmatic display, traditional advertising, game and dating apps plus social media lead ads. The redemption outlets benefited from the increased footfall and spend per head and fraud is reduced as all the campaigns have used unique "one use only" codes.  Real-time results have given the brand owners a previously unknown insight into which media, types of visuals and offers give the best ROI/ROS across any given campaign, allowing the brand owner to "dial up" or "dial down" on media and change or adapt the campaign accordingly.

In messaging services, despite the Public Health England Stoptober campaign not including an SMS element this Year, SMS volumes still increased 10% to 44.4m (2016: 40.3m), as a result of messaging for Asurion and the cross selling of messaging services to the existing client base.

3.   Deepen

We have made significant progress in deepening our tier 1 client relationships during the Year with 53% of revenue, £5.9m (2016: 33%, £2.1m) the result of an extension of our service offering with major clients. The embedding of Eagle Eye's technology within these clients is a clear demonstration of the capability and reliability of our technology as a digital marketing platform.

During the Year our tier 1 customers further adopted our range of products to drive their customer focused agendas and accelerate their digital ambitions in order to gain competitive advantage. This will help to drive meaningful transactional revenue growth in future periods.

Further progress in the established food and beverage ("F&B") sector increased revenue by 20% to £1.8m (2016: £1.5m). This increase has been driven as existing clients onboarded additional brands (including Las Iguanas & La Tasca along with new M&B concepts, Chicken Society and Son of Steak) to the AIR platform as well as utilising more of our services.

Casual Dining Group and Prezzo have expanded their capabilities through the implementation of staff discount schemes and we also enriched our white label mobile app across the M&B estate through the integration of Flypay to enable pay at table. Our relationship with Tesco Clubcard was also enhanced through the addition of English Heritage and RAC to the platform to allow customers to part pay for membership in points and top up with cash. Furthermore, we've also added The AA as an issuance partner to deliver offers to their customers for redemption in M&B outlets.

Revenue generated from client subscription fees and transactions over the network represented 68% of total revenue (2016: 80%). This reflects the progress we are making in deepening Eagle Eye's system capability within major accounts, which will open up recurring transactional revenues in future periods.

Product development

In 2017 we continued to innovate and enhance our software platform to meet the demands of our customers and evolving consumer trends. Performance improvements were made to support our growing tier 1 grocery volumes, while we extended reporting and relationship management capabilities for issuance partners.

With the addition of supplier funding functionality, we have created the ability for brands to interact with retailers' loyalty schemes through holding buckets of points or value for discount that can be used in targeted promotions to end consumers, all redeemable in store or online through direct integration with the point of sale.

Our enhanced wallet capabilities add flexibility to retailers' loyalty offering, allowing consumers to be targeted with specific promotions. AIR has now been integrated to both Android and Apple Pay to enable payments, offers and rewards to be saved directly.  

We also invested in the integration of AIR with social platforms including Facebook, Instagram and Twitter, through partners such as Driftrock to drive audience numbers for brands and retailers. The partnership with Driftrock allows Eagle Eye to track promotional activity from social media to store redemptions and extends the Company's offering along the value chain.

Financial results

Group revenue increased by 71% to £11.1m (2016: £6.5m) for the Year. Of total revenue, 85% (£9.4m) was contributed from the core AIR platform (2016: 72%, £4.6million). 

The Group's gross profit was £9.8m, representing a gross margin of 88% (2016: £5.1m, 79%). The increased gross profits were reinvested to drive future growth, meaning that adjusted EBITDA loss was held at £1.8m (2016: £1.8m loss). To provide a better guide to the underlying business performance, adjusted EBITDA excludes share-based payment charges along with depreciation, amortisation, interest and tax from the measure of profit.

Following the successful placing completed in June 2017 which raised £5.8m (net of costs), the Group had net assets of £8.9m as at 30 June 2017 (2016: £5.9m) including cash and cash equivalents of £3.7m (2016: £1.3m). During the Year the Group extended its currently unutilised three year revolving loan facility with Barclays Bank PLC to £3.0m (2016: £1.5m) which together with the funds raised in the placing strengthens the Group's balance sheet.  

People

In addition to the Board changes at the beginning of the Year, the management team has been further strengthened by the recruitment of a new Chief Operating Officer, David Aylmer, in May 2017. With extensive experience with system providers and clients, David has a thorough understanding of customer service and delivery. The Group will leverage his experience to ensure first class operations and delivery across Eagle Eye's network of customers. We have also seen significant development within the sales team and a clear focus on the sales process led by Helen Slaven, having joined as Sales Director in May 2016.

The past 12 months has seen rapid growth in our team. The average headcount increased from 73 to 100, as a new office was opened in Toronto, Canada and as there was further investment in people across the business. We have introduced a new life skills training workshop based on the fundamental philosophy that people can benefit from understanding more about themselves, how they perform at their best and what triggers sub optimal performance. A key way for us to be a stand out employer and a great place to work is to be able to provide benefits for our people benefitting them in all parts of their lives. Furthermore, our investment in people improves the capability and competency of the staff in the business.

The values that we have in place shape our behaviour, reinforce our culture and determine our approach to recruitment.  This is what we now call The Purple Standard.

The skill, dedication and talent of our people are fundamental to the continued success of our growing business. We have made great progress over the last 12 months and will continue to make improvements to ensure we attract and retain the best talent.

Looking ahead

This past year we have recorded great progress against our objectives. The business is now more nimble, robust and able to clearly engage with our customers and the market. We have successfully laid the foundations for a great year ahead. I am looking forward to this next stage of growth and the opportunity we have to be market leaders in the digital marketing space.

Tim Mason, Chief Executive Officer 

Financial Review 2017

Group Results

Key Performance Indicators

	2017 £000	2016 £000
Financial
Revenue	11,058	6,458
Adjusted EBITDA loss(1)	(1,769)	(1,823)
Loss before interest and tax	(3,843)	(4,100)
Cash and cash equivalents	3,724	1,322
	2017	2016
Non-Financial
Number of redemptions	60.4m	38.4m
Messaging volumes	44.4m	40.3m
% of subscription transaction revenue	68%	80%
Customers and brands on the platform	233	219

⁽¹⁾ Adjusted EBITDA loss excludes share-based payment charges along with depreciation, amortisation, interest and tax from the measure of profit.

Group results

Revenue

Revenue growth for the Group was up 38ppts to 71% for the Year (2016: 33%), with revenue increasing to £11.1m (2016: £6.5m). The Group is continuing to grow half- by-half and H2 2017 revenue accounted for £6.0m (H1 2017: £5.1m), representing growth of 18% on H1 2017 (H1 2016 to H2 2016: 19%).

This growth has been driven by increased revenue from the AIR platform which now represents 85% of total revenue, £9.4m (2016: 72%, £4.6m). This increase was largely as a result of the Group's success with Tier 1 grocer clients Asda, Sainsbury's and Loblaw. Revenue from Tier 1 clients in the UK increased by 92% to £3.3m (2016: £1.7m). This growth was also supported by new business wins such as John Lewis and Society of London Theatres and deepening relationships with existing clients, thus increasing redemption volumes.

Of the AIR platform revenue stream, the element specifically linked to recurring subscriptions and transactions saw a 69% increase to £5.9m (2016: £3.5m), aided specifically by increased licence fees for the Tier 1 clients and the full year effect on transactions of the national roll out of the AIR platform across all Asda stores. This Tier 1 AIR revenue growth is also supported by growth from F&B clients (20%) and other retail clients (69%) in the Year.

Redemption volumes, a key measure of usage of the AIR platform, grew by 58% year-on-year to 60.4m for the Year (2016: 38.4m) driven by the full year impact of our solution for Asda's coupon counting going fully live in the prior Year, initial Sainsbury's transactions and increased volumes from existing F&B and other retail clients. In addition, loyalty interactions totalled 1.1m (2016 0.1m) reflecting the adoption of our loyalty solution by Greggs and M&B during the year.

Overall, £7.5m of revenue generated from subscription fees and transactions over the network represented 68% of total revenue (2016: 80%, £5.2m). The balance, £3.5m, relates to implementation fees for new customers and new services and represents 32% of total revenue (2016: 20%, £1.3m). This increase in value and share for implementation fees reflects the progress made in deepening the Group's product offering within major accounts, particularly for our UK and International Tier 1 grocer clients where implementation fees were £2.8m (2016: £0.7m). These implementations open up recurring transactional revenues which benefit future periods.

Although message volumes increased 10% in the Year to 44.4m (2016: 40.3m), messaging revenue fell to £1.6m for the Year (2016: £1.8m). This reduction reflects the increasingly competitive messaging market. The Group renewed two key contracts during and after the Year, for UK Power Networks and Paragon, and has seen increases in transactional volumes following those renewals. 

Gross profit

The gross margin increased to 88% (2016: 79%) as gross profit grew to £9.8m (2016: £5.1m). The core AIR gross margin carries a significantly higher margin than the messaging business, and has continued to improve during the Year to 96% (2016: 92%). This increase, together with the increase in core AIR revenue which now accounts for 85% of total revenue, has driven the improved margin.

Adjusted operating costs

Adjusted operating costs of £11.5m (2016: £6.9m) represent sales and marketing, product development (net of capitalised costs), operational IT, general and administration costs. The overall increase was in line with management's expectations and plans for strategic growth, including supporting the international activity for Loblaw in Canada. The investment in people is the main driver of this growth, with the average headcount for the Year increasing to 100 (2016: 73). During the Year the Group's infrastructure was also enhanced with both an operational and a disaster recovery data centre in North America having been established, in addition to the existing facilities in the UK.

Within staff costs gross expenditure on product development increased 69% to £2.9m (2016: £1.7m) reflecting investment in enhancing the capacity, features and speed of the AIR platform. Capitalised product development costs were £1.5m (2016: £1.2m) whilst amortisation of capitalised development costs was £1.5m (2016: £1.6m).

EBITDA

Reflecting the strategic re-investment of increased gross profits, adjusted EBITDA loss for the Year was held at £1.8m (2016: loss £1.8m). To provide a better guide to the underlying business performance, adjusted EBITDA excludes share-based payment charges along with depreciation, amortisation, interest and tax from the measure of profit. The GAAP measure of loss before interest and tax improved to £3.8m (2016: £4.1m) reflecting a reduction in the non-cash share-based payment charge to £0.4m (2016: £0.6m).

EPS and dividend

Following receipt of £0.3m research and development tax credit (2016: £0.4m), reported basic and diluted loss per share was 15.73p (2016: loss per share 16.36p).

The Board does not feel it appropriate at this time to commence paying dividends.

Group Statement of Financial Position

Following the successful placing completed in June 2017 which raised £5.8m (net of costs), the Group had net assets of £8.9m at 30 June 2017 (2016: £5.9m), including capitalised intellectual property of £2.2m (2016: £2.2m) and cash of £3.7m (2016: £1.3m). The increase in net assets reflects the proceeds of the placing offset by the loss made in the Year.

Cashflow and net cash

Cash at the end of the Year had increased to £3.7m (2016: £1.3m). The main components to the gross cash increase of £2.4m for the Year (2016: £3.0m decrease) were the proceeds from the placing of £5.8m, offset by an operating cash outflow of £2.0m (2016: £1.5m) and capital investment in the AIR platform of £1.5m (2016: £1.2m).

Banking facility

During the Year the Group extended its three year revolving loan facility with Barclays Bank plc (first arranged in June 2016) to £3.0m (2016: £1.5m) that is currently undrawn and together with the funds raised in the placing means that the Group is well positioned to capitalise on recent momentum in the business and to pursue identified growth opportunities.  

Consolidated statement of total comprehensive income

for the year ended 30 June 2017

			2017	2016
Continuing operations	Note		£000	£000
Revenue	3		11,058	6,458
Cost of sales			(1,297)	(1,369)
Gross profit			9,761	5,089
Adjusted operating expenses (1)			(11,530)	(6,912)
Loss before interest, tax, depreciation, amortisation and share based payment charge			(1,769)	(1,823)
Share based payment charge			(431)	(632)
Depreciation and amortisation			(1,643)	(1,645)
Operating loss			(3,843)	(4,100)
Finance income			-	2
Finance expense			(67)	-
Loss before taxation			(3,910)	(4,098)
Taxation			391	473
Loss after taxation for the financial year			(3,519)	(3,625)
Foreign exchange adjustments			33	16
Total comprehensive loss attributable to the owners of the parent for the financial year			(3,486)	(3,609)
(1) Adjusted operating expenses excludes share based payment charge
Loss per share
From continuing operations
Basic and diluted	4		(15.73)p	(16.36)p

Consolidated statement of financial position

as at 30 June 2017

			2017	2016
			£000	£000
Non-current assets
Intangible assets			4,838	4,838
Property, plant and equipment			246	243
			5,084	5,081
Current assets
Trade and other receivables			3,576	2,080
Cash and cash equivalents			3,724	1,322
			7,300	3,402
Total assets			12,384	8,483
Current liabilities Trade and other payables			(3,348)	(2,394)
Non-current liabilities
Deferred tax liability			(174)	(220)
Total liabilities			(3,522)	(2,614)
Net assets			8,862	5,869
Equity attributable to owners of the parent
Share capital			253	222
Share premium			17,008	10,991
Merger reserve			3,278	3,278
Share option reserve			1,303	1,230
Retained losses			(12,980)	(9,852)
Total equity			8,862	5,869

Consolidated statement of changes in equity

for the year ended 30 June 2017

	Share capital	Share premium	Merger reserve		Share option reserve		Retained losses		Total
	£000	£000		£000		£000		£000		£000
Balance at 1 July 2015	221	10,985		3,278		608		(6,253)		8,839
Loss for the financial year	-	-		-		-		(3,625)		(3,625)
Other comprehensive income Foreign exchange adjustments	-	-		-		-		16		16
	-	-		-		-		(3,609)		(3,609)
Transactions with owners recognised in equity
Exercise of share options	1	6		-		-		-		7
Fair value of share options exercised in the year	-	-		-		(10)		10		-
Share based payment charge	-	-		-		632		-		632
	1	6		-		622		10		639
Balance at 30 June 2016	222	10,991		3,278		1,230		(9,852)		5,869
Loss for the financial year	-	-		-		-		(3,519)		(3,519)
Other comprehensive income
Foreign exchange adjustments	-	-		-		-		33		33
	-	-		-		-		(3,486)		(3,486)
Transactions with owners recognised in equity
Issue of share capital	27	5,973		-		-		-		6,000
Issue costs	-	(240)		-		-		-		(240)
Exercise of share options	4	284		-		-		-		288
Fair value of share options exercised in the year	-	-		-		(319)		319		-
Fair value of share options lapsed in the year	-	-		-		(39)		39		-
Share based payment charge	-	-		-		431		-		431
	31	6,017		-		73		358		6,479
Balance at 30 June 2017	253	17,008		3,278		1,303		(12,980)		8,862

Included in Retained losses is a cumulative foreign exchange balance of £49,000 (2016: £16,000) which could be recycled to profit and loss.

Consolidated statement of cash flows

for the year ended 30 June 2017

		2017	2016
		£000	£000
Cash flows from operating activities
Loss before taxation		(3,910)	(4,098)
Adjustments for:
Depreciation		104	80
Amortisation		1,539	1,565
Share based payment charge		431	632
Finance income		-	(2)
Finance expense		67	-
Increase in trade and other receivables		(1,496)	(663)
Increase in trade and other payables		954	555
Income tax paid		(1)	-
Income tax received		346	403
Net cash flows from operating activities		(1,966)	(1,528)
Cash flows from investing activities
Payments to acquire property, plant and equipment		(107)	(270)
Payments to acquire intangible assets		(1,539)	(1,197)
Net cash flows used in investing activities		(1,646)	(1,467)
Cash flows from financing activities
Net proceeds from issue of equity		6,048	7
Proceeds from borrowings		5,600	-
Repayment of borrowings		(5,600)	-
Interest received		-	2
Interest paid		(67)	-
Net cash flows from financing activities		5,981	9
Net increase/(decrease) in cash and cash equivalents in the year		2,369	(2,986)
Foreign exchange adjustments		33	16
Cash and cash equivalents at beginning of year		1,322	4,292
Cash and cash equivalents at end of year		3,724	1,322

Notes to the consolidated preliminary financial information

1    Basis of preparation

The financial information set out herein does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.  The financial information for the Year ended 30 June 2017 has been extracted from the Group's audited financial statements which were approved by the Board of Directors on 18 September 2017 and which, if adopted by the members at the Annual General Meeting, will be delivered to the Registrar of Companies for England and Wales. 

The financial information for the year ended 30 June 2016 has been extracted from the Group's audited financial statements which were approved by the Board of Directors on 20 September 2016 and which have been delivered to the Registrar of Companies for England and Wales.

The reports of the auditor on both these financial statements were unqualified, did not include any references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under Section 498(2) or Section 498(3) of the Companies Act 2006.

The information included in this preliminary announcement has been prepared on a going concern basis under the historical cost convention, and in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and the International Financial Reporting Interpretations Committee (IFRIC) interpretations issued by the International Accounting Standards Board ("IASB") that are effective as at the date of these financial statements and in accordance with the provisions of the Companies Act 2006.

The company is a public limited company incorporated and domiciled in England & Wales and whose shares are quoted on AIM, a market operated by The London Stock Exchange.

2    Going concern

As part of their going concern review the Directors have followed the guidelines published by the Financial Reporting Council entitled "Guidance on Risk Management and Internal Control and Related Financial and Business Reporting".

The Directors have prepared detailed financial forecasts and cash flows looking beyond 12 months from the date of approval of these consolidated financial statements.  In developing these forecasts the Directors have made assumptions based upon their view of the current and future economic conditions that will prevail over the forecast period.

On the basis of the above projections, the Directors are confident that the Group has sufficient working capital to honour all of its obligations to creditors as and when they fall due. In reaching this conclusion, the Directors have considered the forecast cash headroom, the resources available to the Group and the potential impact of changes in forecast growth and other assumptions, including the potential to avoid or defer certain costs and to reduce discretionary spend as mitigating actions in the event of such changes. Accordingly, the Directors continue to adopt the going concern basis in preparing these consolidated financial statements.

3    Segmental analysis

The Group is organised into one principal operating division for management purposes. Therefore the Group is considered to have only one operating segment and further segmental information is not required to be disclosed. Revenue is analysed as follows:

		2017	2016
		£000	£000
Development and set up fees		3,512	1,275
Subscription and transaction fees		7,546	5,183
		11,058	6,458

		2017	2016
		£000	£000
AIR revenue		9,426	4,637
Messaging revenue		1,632	1,821
		11,058	6,458

Continuing revenues can be attributed to the following countries, based on the customers' location, as follows:

		2017	2016
		£000	£000
United Kingdom		8,249	5,871
North America		2,557	405
Rest of Europe		149	81
Asia Pacific		103	101
		11,058	6,458

4    Loss per share

The calculation of basic and diluted loss per share is based on the result attributable to ordinary shareholders divided by the weighted average number of ordinary shares in issue during the Year. The weighted average number of shares for the purpose of calculating the basic and diluted measures is the same. This is because the outstanding share options would have the effect of reducing the loss per ordinary share and therefore would be anti-dilutive. Basic and diluted loss per share from continuing operations is calculated as follows:

	Loss per share pence	Loss £000	2017 Weighted average number of ordinary shares	Loss per share pence	Loss £000	2016 Weighted average number of ordinary shares
Basic and diluted loss per share	(15.73)	(3,519)	22,373,645	(16.36)	(3,625)	22,155,260

5    Report and Accounts

A copy of the Annual Report and Accounts for the Year ended 30 June 2017 will be sent to all shareholders in due course together with notice of the Annual General Meeting.

 

END

 

 

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