Final Results
22 March 2022
Kape Technologies plc
("Kape," the "Company," or the "Group")
FULL YEAR RESULTS FOR THE TWELVE MONTHS ENDED 31 DECEMBER 2021
Kape Technologies plc (AIM: KAPE), the digital security and privacy software business, announces its audited results for the twelve months ended 31 December 2021.
Financial highlights
· A strong financial performance driven by positive market dynamics coupled with Kape's market-leading product stack and organic user acquisition expertise
o Revenues exceeded management expectations1, increasing 89.0% to $230.7 million (2020: $122.2 million), or 20.7% on a proforma basis
o Significant growth in recurring revenue contribution to 92% of total revenue on a proforma basis (2020: c. 87%)
o Pro Forma Adjusted EBITDA2, 3 up 100% to $78.0 million (2020: $39.0 million) with Adjusted EBITDA margin increasing to 33.8% (2020: 31.9%)
o Increase of 71.1% in Fully Diluted Adjusted Earnings Per Share4 to 23.1 cents (2020: 13.5 cents)
o Strong cash generation; adjusted operating cashflow increased by 116% to $44.1 million (2020: $20.4 million)
· Raised $351.0 million (£258.3 million), before transactions costs, in additional growth capital through an oversubscribed placing and retail offer in October 2021 to finance the acquisition of ExpressVPN.
· Entered into a new senior secured debt facility agreement in December 2021 of up to $290 million, comprising a $120 million senior secured term facility, a $80 million revolving credit facility and a $90 million uncommitted acquisition facility
Operational highlights
· In December 2021, completed the acquisition of ExpressVPN, one of the world's most recognised brands in the digital privacy space, for a total consideration of $925.8 million, the Group's largest acquisition to date
o Acquisition has created a premium digital privacy and security player best positioned to capitalise on the growth in the digital privacy market and is already providing significant operational benefits to Kape, as well as earnings accretion, cost savings and ongoing synergies
· In March 2021, acquired Webselenese, the digital platform which provides independent and highly valued consumer privacy and security content, for $155.1 million , the integration of which has bolstered Kape's go-to-market and product development strategy
o Highly strategic, providing Kape with one of the broadest audiences for consumer digital privacy and security, with over 100 million readers
· Significant increase of 161% in subscriber base to 6.5 million (2020: 2.5 million) whilst maintaining a high retention rate of 81% (31 December 2020: 83%)
o 3 million subscribers were acquired as part of the ExpressVPN acquisition with an organic increase of 20%
· Delivered on the Group's product development roadmap launching a Privacy First Anti-Virus solution for PC as well as a password manager and improving server reach and infrastructure
Post period-end and Outlook
· In January 2022, announced the appointment of Oded Baskind, who has today joined the board as Chief Financial Officer
· The Group has extremely limited exposure operationally to Russia and Ukraine with under 1% of revenues generated in these countries
· Ongoing global uncertainty continues to result in an increasing awareness from individuals of the requirement to protect their digital profiles
· The Group has traded strongly in the year to-date and management is confident that the Group will achieve revenues of between $610-624 million and Adjusted EBITDA of between $166-172 million in the year-ending 31 December 2022, the forecasts outlined at the time of the ExpressVPN acquisition
· Operationally, the focus for 2022 will be on the ongoing integration of ExpressVPN, including fully realising potential cost-savings initiatives, as well as executing on a number of material opportunities
Ido Erlichman, Chief Executive Officer of Kape, commented:
"We are immensely proud of our progress in 2021, having delivered both a record financial performance and completed the most ambitious acquisition programme in our history. The culmination of these collective efforts has been the creation of a truly market leading global digital security and privacy enterprise that is now a trailblazer in how consumers protect their digital lives. I would personally like to thank our outstanding and highly talented team who continue to deliver exceptional results across our business.
"In 2021, we achieved record customer growth, providing further evidence that our products remain both compelling and highly innovative, and, more importantly, our customers continue to utilise our services for many years.
"Pleasingly, we have carried this positive momentum into 2022 and remain extremely positive about Kape's prospects. Whilst we remain ever vigilant of the broader macro-economic outlook, we firmly believe our products fit at the heart of the broader cybersecurity arena, which has increased importance to the global community."
Kape's management team will be hosting a live webcast today at 1.00 p.m., which can be joined as follows:
To register and to join the stream on the day, please click the link below:
https://webcasting.brrmedia.co.uk/broadcast/622f60a061bd9a4d102904ea
1 Previous guidance given was for expectations of revenues between US$197-202 million and Adjusted EBITDA of between US$73-$76 million for the year ended 31 December 2021
2 Adjusted EBITDA is a non GAAP measure and a company specific measure which excludes other operating income and expenses which are considered to be one off and non-recurring in nature.
3 Proforma Adjusted EBITDA is a non GAAP measure, it's the Company Adjusted EBITDA after adding back deferred contracts costs fair value accounting adjustment following ExpressVPN consolidation.
4 Adjusted EPS is calculated from earnings per share adding back, share-based payments and non-recurring costs
Enquiries:
|
Kape Technologies plc Ido Erlichman, Chief Executive Officer Oded Baskind, Chief Financial Officer |
via Vigo Consulting |
|
Shore Capital (Nominated Adviser & Broker) Toby Gibbs / Mark Percy / James Thomas / Michael McGloin |
+44 (0)20 7408 4090 |
|
Stifel Nicolaus Europe Limited (Joint Broker) Alex Price / Brad Topchik / Alain Dobkin / Richard Short |
+44 (0) 20 7710 7600 |
|
Vigo Consulting (Financial Public Relations) Jeremy Garcia / Antonia Pollock/ Kendall Hill kape@vigoconsulting.com |
+44 (0)20 7390 0237 |
About Kape
Kape is a leading 'privacy-first' digital security software provider to consumers. Through its range of privacy and security products, Kape focusses on protecting consumers and their personal data as they go about their daily digital lives.
Kape has over 6.5 million paying subscribers, supported by a team of over 850 people across ten locations worldwide. Kape has a proven track record of revenue and EBITDA growth, underpinned by a strong business model which leverages our digital marketing expertise.
Through its subscription-based platform, Kape has fast established a highly scalable SaaS-based operating model, geared towards capitalising on the vast global consumer digital privacy market.
www.kape.com
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Chairman's statement
The progress that Kape has achieved across 2021 has transformed the Group into a truly global leader in the digital privacy and security space. Our management have successfully delivered against the Group's mission to not only create a business capable of capitalising on an ever-growing digital privacy and security market opportunity but to now shape our own industry. This is a significant achievement and provides further validation that Kape is ideally positioned for the future.
In addition to significant operational momentum, the Group delivered substantial financial progress, underpinned by both organic and acquisitive growth. In the year ended 31 December 2021, Kape generated revenues of $230.7 million (2020: $122.2 million). Pro Forma Adjusted EBITDA2 increased 100% to $78.0 million (2020: $39.0 million), with Pro Forma Adjusted EBITDA2 margin growing to 33.8% (2020: 31.9%).
Notably, the Group completed two sizable acquisitions during the year, building on its strong M&A track record. In March 2021, the Group acquired Webselenese, the consumer privacy and security content platform, the integration of which has underpinned Kape's go-to-market strategy and therefore its customer acquisition roadmap. In December 2021, Kape completed the acquisition of ExpressVPN for $925.8 million, the Group's largest transaction to-date. ExpressVPN is one of the world's most reputable VPN brands and is already providing significant operational benefits to Kape, as well as earnings accretion, cost savings and ongoing synergies.
Environmental Social and Governance
Corporate responsibility has always been a strong guiding value at Kape. We believe that businesses hold responsibility to the communities in which they operate, and to the health and sustainability of the planet. We also hold ourselves accountable to our broad stakeholder base, to build a strong, profitable, and sustainable business.
We are pleased to launch our corporate environmental, social, and governance ('ESG') framework, which follows a transformational period for the Group, as we have significantly increased our scale and global reach.
Our first step in this process was an assessment to identify critical ESG priorities, opportunities, and risks and we will seek to replicate this process on a bi-annual basis.
This year we have formed an ESG board committee and created an internal ESG task force. We have also contracted an external party to conduct an ESG overview to identify and establish programmes and develop policies to support the effective management of the risks to, and opportunities for, our business which emerge. We are also launching our inaugural ESG report with a section to appear in the Group's 2021 Annual Report.
Kape's corporate responsibility strategy is based on our values, convictions and a high level of commitment across the Group. We are keen to be a responsible company that mobilises all its stakeholders to help create a more sustainable world.
As part of our review, we have conducted a materiality assessment and we have identified the following key areas where we will focus our efforts: data privacy and cybersecurity; human capital management; diversity, equity and inclusion; and energy management and usage.
Board changes
Post period-end, in January 2022, the Company announced that, following nine years with Kape, five as Group CFO during what was a transformational period for the Group, Moran Laufer was stepping down from the board to pursue other interests as part of an anticipated relocation to Israel. Oded Baskind has been appointed Chief Financial Officer and joined the Board of Kape. Oded has been Kape's VP of Finance since January 2019 and has held numerous key finance roles since joining Kape in 2014, including supporting the Group's admission to AIM in September 2014 and its six subsequent acquisitions.
Retention of key team members
The Company's previous long term incentive award programme for executive directors expired at the end of 2020. Since that time, the Company has completed the major acquisitions of Webselenese and Express VPN, substantially increasing the Company's scale. More recently, Moran Laufer stepped down as CFO of the Company after 5 years in that role and Oded Baskind has been appointed as CFO in his place. In light of the above, the Remuneration Committee has determined that new long term incentive awards should be made to the senior executive management team of the Company, including both executive directors, to incentivise them in delivering the next phase of long-term value creation for shareholders. The Remuneration Committee has consulted the Company's largest shareholder, who is supportive of the share awards. The awards will take the form of jointly owned equity awards, similar in form to those made by the Company in 2018 ("JOE Awards"). Share awards of 3.4 million shares will be made to Ido Erlichman and 600,000 to Oded Baskind. The share awards will vest equally over a period of four years, subject to the achievement of detailed performance conditions covering the same criteria as the original JOE awards (Adjusted EPS, SaaS Revenue & G&A). It anticipated that the grant of the share awards, when made, will constitute a related party transaction.
Summary & Outlook
The Group has made a strong start to 2022 and the board and management team are confident of the Group achieving the forecasts as announced at the time of the ExpressVPN acquisition of 2022 revenues of between $610-624 million and Pro Forma Adjusted EBITDA of between $166-172 million, supported by Kape's operational scale and a proven track record of delivering growth.
The Group has limited operational and financial exposure to both Ukraine and Russia and despite the uncertain macroeconomic backdrop which the ongoing conflict is creating, the board believes it is unlikely to have a negative impact on Group performance.
Operationally, the focus for 2022 will be on the ongoing integration of ExpressVPN including fully realising potential cost-savings initiatives as well as executing on several go-to-market opportunities. Product development remains a key focus area with management keen to ensure Kape remains at the forefront of the digital privacy and security arena.
On behalf of the board of directors of Kape, I would like to thank every Kape employee across the Group for their unwavering commitment during 2021, which was a year not without challenges at a macro level. The significant progress that was delivered during 2021 has provided Kape with the solid foundations to further extend our reach across the digital privacy and security market in 2022 and beyond.
Don Elgie
Non-Executive Chair
21 March 2022
1 Adjusted EBITDA is a company-specific measure which is calculated as operating profit before depreciation (including right-to-use assets amortisation), amortisation, exceptional or non-recurring costs, other operating income/(expense) and employee share-based payment charges.
2 Proforma Adjusted EBITDA is a non GAAP measure, it's the Company Adjusted EBITDA after adding back deferred contracts costs fair value accounting adjustment following ExpressVPN consolidation.
Chief Executive Officer's review
Introduction
2021 was a monumental year for our business, culminating in over 6.5 million customers globally now customers of Kape's brands, an increase of c.161%. Pleasingly, we generated revenues of $230.7 million in the year, which was significantly ahead of management expectations, and in 2022 this is expected to reach between $610-624 million. We also transformed our operations, expanding to 10 locations globally with over 850 employees. We achieved all of this progress through a combination of organic growth and two pivotal acquisitions.
Kape is now one of the most prominent platforms in digital security and privacy globally and this has been achieved in a period where new digital threats continue to emerge and the demand for reliable mitigation solutions has never been higher.
Across 2021, management remained focused on scaling the business, facilitated by the highly strategic acquisitions of Webselenese and, more recently, ExpressVPN. Concurrently, we continued to expand our marketing channels, as well as ramping-up our cross-sell and up-sell activities across Kape's existing user base, with R&D a focus to ensure the development of our industry-leading products. Our digital privacy segment continued to deliver consistent growth with our digital security segment returning to double digit growth in the year, following the Group's concerted focus in the category and management now have a refreshed vision for this business segment.
In the year ended 31 December 2021, Kape delivered an excellent performance, generating revenue of $230.7 million (2020: $122.2 million), up 89% year-on-year with recurring revenue contributing 92% (2020: c. 87%) on a proforma basis. Pro Forma Adjusted EBITDA2 increased by 100% to $78.0 million (2020: $39.0 million), whilst Pro Forma Adjusted EBITDA2 margin grew to 33.8% (2020: 31.9%).
We have seen significant growth in demand for our solutions with organic customer growth of 20% and an overall 260% increase in paying subscribers during the year to 6.5 million (2020: 2.5 million). Kape now has a significant presence across the digital privacy arena, supported by a number of strong brands including Private Internet Access, CyberGhost, ExpressVPN and Intego. As one of the sole players wholly focused on digital privacy, and without any monetisation from any customer data, Kape remains ideally placed to maintain its outstanding track record of growth.
Despite the resurgence of Covid-19 globally in the last year, at Kape we have been able to support business as usual with a mix of remote working and selected office attendance across our various locations. The effect on the business was minimal with a slight uptick in demand for Kape's products as a result.
With regards to the effect of recent events in the Ukraine on Kape's business, in the last year Kape had less than 1% of its business generated from Russia and has no operations. In addition, in Ukraine, Kape has a handful of contractors all of which we have offered to relocate.
Market dynamics
The demand for privacy is growing at c. 17% per annum6 with this demand mainly driven by the ongoing increasing awareness of digital privacy concerns, as well a willingness of consumers to pay for more premium software services. The number of devices per person has also increased, as well as the proliferation in use of IOT devices, further supporting the growth in the market.
Alongside this growth in demand, individuals are increasingly looking for a higher quality of service with brand equity and brand trust providing a competitive advantage for Kape, as its premium brands are well-placed within the market. The privacy market is also driven primarily by young consumers with 70% of the market under the age of 45.
Acquisition and integration of Webselenese
In March 2021, Kape completed the acquisition of Webselenese, an independent consumer digital privacy and security content provider, that has transformed Kape's go-to-market and product development capabilities.
Webselenese has already significantly contributed to Kape's organic growth not only in accelerating customer acquisition but also enabling the ongoing reduction of the Group's average Customer Acquisition Cost ('CAC') by increasing the visibility of Kape's brands. In addition, Webselenese has provided the wider group with a 'brain trust' from which knowledge transfer has already begun to support Kape's ongoing product development initiatives, with team members contributing across the business to optimise Kape's global digital operations.
Furthermore, in 2021 while Webselenese was under Kape's ownership, its revenues increased 52.5% on a yearly proforma basis, as it benefitted from Kape's infrastructure and central functions with traction also being seen in additional verticals beyond digital privacy, providing a further potential growth strand for the Group going forward.
Acquisition of ExpressVPN and financing
In December 2021, we completed the acquisition of ExpressVPN, one of the world's leading brands in the digital privacy space. The transaction was transformational for Kape, positioning the Group at the forefront of the digital privacy space, adding the premium brand in the space, a robust infrastructure, an incredible international team, and the addition of over three million customers in our key markets.
The transaction also provided Kape with a number of strategic benefits, including access to ExpressVPN's extensive distribution network, which includes HP and Philips. Kape's management team believes that both significant go to market synergies, as well as cross sell revenue opportunities exist across the Group's enlarged platform, with an improvement in lifetime value ("LTV") versus customer acquisition cost ("CAC") ratios anticipated in the future.
The acquisition provides a number of potential synergies with c. $30 million expected to be realised on an annualised basis by 2023. With the process now well underway we have been able to progress the integration faster than anticipated with the Group already benefiting from significant economies of scale, and we expect operational cost savings to exceed expectations for the year.
To fund the acquisition, Kape raised $351.0 million (£258.3 million), before transactions costs, in fresh equity through a multiple-times oversubscribed placing and retail offer, a clear indication of the market's confidence in the rationale behind the transaction and further reinforcing Kape's overarching future growth strategy. In addition, Kape's lender group, comprised of Bank of Ireland, Barclays Bank PLC, Citi Bank, Citizens Bank, BNP Paribas and Leumi Bank, gave its consent to the acquisition, extending their revolving credit facility to Kape from $10 million to $80 million, providing the Group with debt facilities in aggregate of up to $220 million.
Key Performance Indicators
Kape once again delivered very strongly across its KPIs during 2021, which the Group reports against to track the ongoing progress of its SaaS business model, which in-turn underpins the profitability, earnings predictability and growth potential of the Group.
| 31 Dec 2021 '000 | 31 Dec 2020 '000 |
Subscribers (thousands) | 6,573 | 2,519 |
Retention rate3 | 81% | 83% |
Deferred income ($'000) | 155,856 | 36,594 |
Revenue ($'000) | 230,665 | 122,212 |
|
|
|
| Year ended 30 Dec 2021
| Year ended 30 Dec 2020 |
Adjusted EBITDA1 | 86,042 | 38,973 |
Proforma Deferred Contract expenses adjustment | (8,016) | - |
Proforma Adjusted EBITDA2 | 78,026 | 38,973 |
Adjusted operating cash flow4: |
|
|
Attributable to current year ($'000) | 78,080 | 43,594 |
Investment in growth | (33,955) | (23,194) |
Adjusted operating cash flow ($'000) | 44,125 | 20,400 |
Product development and cross-promotion
R&D continues to be a key growth initiative to ensure Kape remains at the forefront of the digital-privacy sphere by both augmenting existing services and launching additional products, alongside adding products through M&A. Development highlights during the year included the launch in May 2021 of a privacy-first antivirus solution, an all-encompassing security coverage product, one of the first of its kind; and a B2B2C agreement secured in July 2021 for Kape to provide 'Three Hong Kong' customers with the opportunity to purchase the Private Internet Access VPN.
Kape also significantly expanded its R&D capabilities with 49% of Kape's core employees5 in R&D functions, which, in the medium- to long-term, will ensure Kape will be able to continue to innovate in developing the best-in-class products to provide enhanced digital privacy and security to consumers globally.
In addition, Kape is increasingly focusing resources on cross-promotion, investing in targeted campaigns to engage existing customers who already trust Kape. As of 31 December 2021, 20% of new Intego users and 12% of new CyberGhost customers purchased more than one product from the Group, signposting great potential to grow that uplift as well as offering further complementary products across the ExpressVPN user base. With the significant expansion of the Group's user base during 2021, management believes that cross-promotion will become an ever more important growth driver for Kape.
Growth drivers
Following the significant strategic progress that Kape has delivered in recent years, we have established a tier one global premium digital privacy player, providing us with a significant opportunity to leverage the following and capitalise on the market opportunity to deliver future growth:
· Reach: over 6.5 million subscribers globally provide significant leverage to realise cross-sell initiatives
· Go-to-market capabilities: with the leading brands in the space and multiple channels including Webselenese, this provides Kape with a strong network to optimise CAC and retention rates
· Strong product portfolio: trusted solutions with high levels of recurring revenues alongside potential to accelerate product development potential
· M&A: building on its strong track-record, management continues to selectively evaluate certain strategic opportunities
Outlook
2021 was another landmark year for our business and we look forward to further expanding our offering, continuously improving our products and growing our reach to serve more people around the world. Looking ahead, Kape is focused on harnessing its operational footprint as well as its world-class go-to-market capabilities, deepened by the acquisitions of ExpressVPN and Webselenese, to capitalise on strong market tailwinds.
Despite the ongoing global macroeconomic uncertainty, largely as a result of the ongoing conflict in Ukraine, management is very confident in achieving revenues for the year ending 31 December 2022 of between $610- 624 million and Proforma Adjusted EBITDA2 of between $166-172 million.
I would like to thank all of our team for their sustained efforts and achievements throughout the year. Kape's employees are the backbone of our business, and the loyalty of our fast-growing customer base speaks volumes to the first-rate service and advanced digital protection Kape's dedicated workforce and solutions continue to provide.
We have ambitious plans for 2022, but based on our success to-date, the board and management team of Kape are highly optimistic for Kape's growth prospects in the current year and beyond.
Ido Erlichman
Chief Executive Officer
21 March 2022
1 Adjusted EBITDA is a company-specific measure which is calculated as operating profit before depreciation (including right-to-use assets amortisation), amortisation, exceptional or non-recurring costs, other operating income/(expense) and employee share-based payment charges.
2Proforma Adjusted EBITDA is a non GAAP measure, it's the Company Adjusted EBITDA after adding back deferred contracts costs fair value accounting adjustment following ExpressVPN consolidation.
3 Retention rates are calculated on a six-month basis.
4Adjusted operating cash flow attributable to current year is calculated as Adjusted operating cash flow excluding change in deferred contract costs.
5Excluding support functions
6Based on study commissioned by Kape in March 2022
Chief Financial Officer's review
Overview
Revenues for the year to 31 December 2021 increased by 89% to $230.7 million (2020: $122.2 million), or 20.7% on a proforma basis. The increase in revenues is a result of an increase in Kape's legacy subscriptions revenue of 21.2% to $128.9 million (2020: $106.4 million), as well ten months' contribution from Webselenese. Pro Forma Adjusted EBITDA increased by 100% to $78.0 million (2020: $39.0 million). Operating profit increased by 257% to $38.2 million (2020: $10.7 million).
Adjusted cash flow from operations attributable to the current financial period was $78.1 million (2020: $43.6 million), which represents cash conversion of 91% (2020: 112%). In addition, during the period, $33.9 million was reinvested in user acquisition costs that will be expensed in future periods (2020: $23.2 million). After including this investment, adjusted cash flow from operations was $44.1 million (2020: $20.4 million). As 31 December 2021, the Group's cash balance was $27.0 million (31 December 2020: $49.9 million) and net debt was $457.5 million.
On 5 March 2021, the Group acquired 100% of the share capital of Uma Capital Ltd and Ani Ariel Ltd, the owners of Webselenese, a digital platform which provides independent and highly valued consumer privacy and security content to millions of users globally via market leading review sites. The total consideration was $155.1 million (the "Consideration") satisfied by a combination of $119.2 million in cash and $28.6 million in new shares, amounting to 12.1 million Kape Ordinary Shares and deferred and contingent consideration of $7.4 million.
To fund the transaction, the Group drew down $85 million from a $120 million Bridge Loan by TS Next Level Investments Limited ("TSNLI"). The Bridge Loan carried a fixed coupon of 6.0% per annum payable on funds drawn and an arrangement fee of 1.0%. TSNLI is an affiliated company of Unikmind Holdings Limited, Kape's largest shareholder.
On 28 May 2021, the Company agreed with Bank of Ireland, Barclays Bank PLC, Citi Bank, Citizens Bank, BNP Paribas and Leumi Bank (together, "the Banks"), to repay the TSNLI bridge loan in full and replace its existing term facility and RCF with new senior secured bank facilities of up to $220 million ("New Debt Facilities"). The New Debt Facilities comprise a $120 million senior secured term facility, a $10 million revolving credit facility and a $90 million uncommitted acquisition facility.
On 15 December 2021, the Group acquired certain assets, liabilities and service entities together comprising the ExpressVPN business ("ExpressVPN") from Access Global Limited and its subsidiaries ("Access Global"), ExpressVPN is one of the most recognised brands in the digital privacy space and its acquisition created a premium digital privacy and security player best-positioned to serve the growing demand for digital privacy. The total consideration was $925.8 million (the "Consideration") to be satisfied by a combination of $334.5 million in cash upon closing, $20 million in cash on the six months anniversary, two deferred cash consideration of $172.5 million (fair value of $339.2 million) to be satisfied on the 1st and 2nd anniversaries and $232.1 million in new shares, amounting to 47.8 million Kape Ordinary Shares.
The initial cash consideration was funded through an equity placing of $351.0 million (£258.3 million), before transactions costs, which completed on 1 October 2021. To secure the USD value of the equity placing, the Group entered into a forward sale of the GBP receipts from the placement. On 15 December 2021 the Banks, gave their consent to the ExpressVPN Acquisition and increased their committed facilities to Kape to $290 million, including an $80 million RCF.
It is the Board's intention that the Deferred Consideration will be funded from its operational cashflow and by using the extended revolving credit facility provided to Kape by the existing lender group. TS Next Level Investments Limited, has entered into binding commitment letters with the Group, subject to limited conditions, to make available to the Group, if required, loan facilities of up to $345 million in aggregate in connection with Kape's obligation to pay ExpressVPN's deferred consideration.
Segment Result
|
| Revenue |
| Segment result | ||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
| $'000 |
| $'000 |
| $'000 |
| $'000 |
Digital Security |
| 38,042 |
| 32,368 |
| 14,609 |
| 13,346 |
Digital Privacy |
| 117,042 |
| 89,844 |
| 74,450 |
| 52,835 |
Digital Content |
| 75,581 |
| - |
| 38,271 |
| - |
Revenue |
| 230,665 |
| 122,212 |
| 127,330 |
| 66,181 |
The segment result has been calculated using revenue less costs directly attributable to that segment. Cost of sales comprises payment processing fees and infrastructure costs of the Group's privacy products. Direct sales and marketing costs are mainly user acquisition costs.
Digital Privacy |
|
|
|
|
| |
|
|
| 2021 |
| 2020 | |
|
|
| $'000 |
| $'000 | |
Revenue |
|
| 117,042 |
| 89,844 | |
Cost of sales |
|
| (13,370) |
| (14,127) | |
Direct sales and marketing costs |
|
| (29,222) |
| (22,882) | |
Segment result |
|
| 74,450 |
| 52,835 | |
Segment margin (%) |
|
| 63.6 |
| 58.8 | |
During the period, the Digital Privacy segment saw continued growth with a 30.3% increase in revenue to $117.0 million (2020: $89.8 million) and a 40.9% increase in segment result to $74.5 million (2020: $52.8 million). Following the acquisition of ExpressVPN in December 2021, ExpressVPN contributed $20.5 million to revenues and $18.9 million to segment results. Revenue growth was driven by Kape's legacy subscriber base growth of 14.3%.
Digital Security |
|
|
|
|
|
|
|
| 2021 |
| 2020 |
|
|
| $'000 |
| $'000 |
Revenue |
|
| 38,042 |
| 32,368 |
Cost of sales |
|
| (2,602) |
| (2,045) |
Direct sales and marketing costs |
|
| (20,831) |
| (16,977) |
Segment result |
|
| 14,609 |
| 13,346 |
Segment margin (%) |
|
| 38.4 |
| 41.2 |
During the year, revenue from the Digital Security segment returned to growth with an increase of 17.5% to $38.0 million (2020: $32.4 million). The increase was driven by a 20.0% growth in revenue from Intego's Endpoint security products. In addition, revenue from the Company's PC performance products has increased by 16.8% but with a lower margin of 25.9% (2020: 29.4%) following an increase in advertising cost.
Digital Content |
|
|
|
|
|
|
|
| 2021 |
| 2020 |
|
|
| $'000 |
| $'000 |
Revenue |
|
| 75,581 |
| - |
Cost of sales |
|
| - |
| - |
Direct sales and marketing costs |
|
| (37,310) |
| - |
Segment result |
|
| 38,271 |
| - |
Segment margin (%) |
|
| 50.6 |
| - |
Digital Content represents Webselenese which was acquired on 5 March 2021. From the acquisition date to year end the digital content segment revenue was $75.6 million and segment results were $38.2 million. On a proforma basis, excluding revenue that was generated from Kape, revenue year over year grew significantly by 52.5% to $88.3 million (2020: $57.9 million). The growth has been driven by an increase in traffic from both organic and acquired sources.
Adjusted EBITDA
Adjusted EBITDA for the year to 31 December 2021 was $86.0 million (2020: $39.0 million). Adjusted EBITDA is a non-GAAP company specific measure which is considered to be a key performance indicator of the Group's financial performance. Adjusted EBITDA is calculated as operating profit before depreciation (including right-to-use assets amortisation), amortisation, exceptional or non-recurring costs, other operating expenses, deferred contracts fair value adjustment and employee share-based payment. Proforma Adjusted EBITDA is calculated by adding the Proforma Deferred contract costs expenses adjustment related to ExpressVPN acquisition. As these are non-GAAP measures, they should not be considered as replacements for IFRS measures. The Group's definition of these non-GAAP measures may not be comparable to other similarly titled measures reported by other companies. Such amounts are excluded from the following analysis:
|
|
|
|
|
|
|
|
|
|
| 2021 |
| 2020 |
|
|
|
| $'000 |
| $'000 |
Revenue |
|
|
| 230,665 |
| 122,212 |
Cost of sales |
|
|
| (15,972) |
| (16,172) |
Direct sales and marketing costs |
|
|
| (87,363) |
| (39,859) |
Segment result |
|
|
| 127,330 |
| 66,181 |
|
|
|
|
|
|
|
Indirect sales and marketing costs |
|
|
| (19,687) |
| (9,192) |
Research and development costs |
|
|
| (8,176) |
| (6,194) |
Management, general and administrative cost |
|
|
| (13,425) |
| (11,822) |
Adjusted EBITDA |
|
|
| 86,042 |
| 38,973 |
Proforma Deferred Contract expenses adjustment |
|
|
| (8,016) |
| - |
Proforma Adjusted EBITDA |
|
|
| 78,026 |
| 38,973 |
The Increase in Direct and Indirect sales and marketing costs is mainly due to a respective $37.3 million and $8.5 million contribution from Webselenese in the period.
Operating profit
A reconciliation of Adjusted EBITDA to operating profit is provided as follows:
|
|
|
|
|
|
|
|
| 2021 |
| 2020 |
|
|
| $'000 |
| $'000 |
Adjusted EBITDA |
|
| 86,042 |
| 38,973 |
Employee share-based payment charge |
|
| (5,224) |
| (1,232) |
Other operating income/ (expenses) |
|
| 947 |
| (313) |
Exceptional and non-recurring costs |
|
| (9,850) |
| (6,623) |
Depreciation and amortisation |
|
| (33,764) |
| (20,097) |
Operating profit |
|
| 38,151 |
| 10,708 |
Increase in Depreciation and amortisation is driven by a $11.2 million (2020: $Nil) amortisation charge of Webselenese and ExpressVPN acquired intangibles assets.
Exceptional or non-recurring costs in 2021 are comprised of non-recurring staff costs of $6.0 million which comprise of $4.4 million one-off bonus award to the management team for the acquisition of ExpressVPN, $0.9 million employer cost related to management share options exercise, $0.6 million employees onerous contract termination costs and $3.9 million (2020: $0.2 million) professional services and other business combinations related costs.
Profit before tax from continuing operations
Profit before tax from continuing operations was $32.6 million (2020: $7.3 million). Finance costs of $11.2 million comprised mainly of $4.9 million of interest on debt facilities (2020: $2.0 million), $3.6 million of commitment fees on the TSNLI revolving facility related to the ExpressVPN acquisition. Finance income of $5.6 million comprised from currency exchange forward deal placed to hedge the proceeds from the share issuance executed in October.
Profit after tax from continuing operations
Profit from continuing operations was $23.3 million (2020: $29.7 million). Tax expenses of $9.2 million comprised from $4.9 million current tax expenses, $5.0 million deferred tax expenses and previous year's tax income of $0.7 million. The increase of tax expenses is attributable mainly to reversal of $25.8 million deferred tax liability in the year ended 31 December 2020 following a share buy back from the PIA's founders that changed the tax structure of the acquisition and increased the tax basis of the acquired intangible assets.
The Group recognised a deferred tax asset of $0.8 million (2020: $6.2 million) in respect of tax losses accumulated in previous years.
Cash flow
|
|
| 2021 |
| 2020 |
|
|
| $'000 |
| $'000 |
Cash flow from operations |
|
| 35,489 |
| 15,244 |
Exceptional and non-recurring payments |
|
| 8,636 |
| 5,156 |
Adjusted cash flow from operations |
|
| 44,125 |
| 20,400 |
Adjusted EBITDA |
|
| 86,042 |
| 38,973 |
% of Adjusted EBITDA |
|
| 51% |
| 52% |
|
|
|
|
|
|
Excluding increase of deferred contract costs |
|
| 33,955 |
| 23,194 |
Adjusted Cash flow from operations attributable to current year |
|
| 78,080 |
| 43,594 |
% of Adjusted EBITDA |
|
| 91% |
| 112% |
Cash flow from operations was $35.5 million (2020: $15.2 million). Adjusted cash flows from operations, after adding back payments that are one-off in nature was $44.1 million (2020: $20.4 million). This represents a cash conversion of 51% of Adjusted EBITDA (2020: 52%). The increase in operating cash flow is due to an increase in revenues from renewals of existing subscribers and Webselenese acquisition. The Company invested $33.9 million (2020: $23.2 million) in user acquisition that is attributable to revenue that will be expensed in future periods. Excluding this investment, adjusted operating cash flow attributable to the current financial period increased to $78.1 million (2020: $43.6 million), which represents a cash conversion of 91% (2020: 112%).
Tax paid net of refunds in the period was $3.3 million (2020: $0.7 million). The increase was mainly due to tax refunds receipts in 2020 and prepayments that were paid in 2021 Israel by Group subsidiaries.
Cash outflow from investing activities of $465.9 million (2020: $9.1 million) mainly comprises $334 million for the acquisition of ExpressVPN, $119.5 million for the acquisition of Webselenese, $10.7 million for the acquisition of PIA (2020: $5.8 million), $5.3 million (2020: $2.5 million) capitalised development costs and $2.4 million (2020: $0.5 million) purchase of fixed assets.
Cash outflow from financing activities of $410.7 million (2020: $35.8 million outflow) included a drawdown of $85 million shareholder bridging loan and full repayment of the principal, and $2.1 million interest and arrangement fees related to the that loan. The repayment was funded by a $87.9 million increase of long-term bank debt and RCF, net of issuance costs. In addition, $11.8 million (2020: $3.6 million) has been paid for long term loan principal and $1.9 million for interest (2020: 0.7 million), see Note 7. Arrangement fees of $7.1 million paid to the company main shareholder for Facility revolver of $345 million, see Note 12.
In October, the Group raised a net amount of $348.4 million by a way of share placing used for the initial cash consideration for the acquisition of ExpressVPN. In addition, $0.9 million (2020: $2.4 million) has been received following the exercise of employee share options and $3.9 million (2020: $19.8 million) has been paid for purchase of treasury shares in the period.
Financial position
At 31 December 2021, the Company had cash of $27.0 million (31 December 2020: $49.9 million), net assets of $863.1 million (31 December 2020: $228.8 million) and net debt of $457.5 million (2020: net cash of $11.1 million). At 31 December 2021, trade receivables were $42.1 million (31 December 2020: $4.0 million).
In December, the club of banks extended their revolving credit facility to Kape from $10 million to $80 million.
Following the acquisition of Webselenese, ExpressVPN and an increase of the bank loan, the adjusted leverage (as defined in Note 12) of the group is c. x2.88. It is our intention to further decrease the leverage by the end of 2022 and maintain a moderate level of financial indebtedness going forward. It is Kape's intention to use the expected cash flow from operation and the bank facility revolver to pay the deferred cash consideration related to ExpressVPN acquisition.
Oded Baskind
Chief Financial Officer
21 March 2022
Consolidated statement of comprehensive income
For the year ended 31 December 2021
|
|
|
|
2021 |
|
2020 |
|
|
Note |
|
$'000 |
|
$'000 |
|
|
|
|
|
|
|
|
Revenue |
2,3 |
|
230,665 |
|
122 ,212 |
|
Cost of sales |
|
|
(15,972) |
|
(16,172) |
|
Gross profit |
|
|
214,693 |
|
106,040 |
|
|
|
|
|
|
|
|
Selling and marketing costs |
2c |
|
(108,580) |
|
(49,112) |
|
Research and development costs |
|
|
(10,865) |
|
(6,332) |
|
Management, general and administrative costs |
|
|
(24,280) |
|
(19,478) |
|
Depreciation and amortisation |
6 |
|
(33,764) |
|
(20,097) |
|
Other operating income (expenses) |
|
|
947 |
|
(313) |
|
Total operating costs |
|
|
(176,542) |
|
(95,332) |
|
|
|
|
|
|
|
|
Operating profit |
4 |
|
38,151 |
|
10,708 |
|
|
|
|
|
|
|
|
Adjusted EBITDA |
4 |
|
86,042 |
|
38,973 |
|
|
|
|
|
|
|
|
Employee share-based payment charge |
8 |
|
(5,224) |
|
(1,232) |
|
Other operating income (expenses) |
|
|
947 |
|
(313) |
|
Exceptional or non-recurring costs |
4 |
|
(9,850) |
|
(6,623) |
|
Depreciation and amortisation |
6 |
|
(33,764) |
|
(20,097) |
|
Operating profit |
|
|
38,151 |
|
10,708 |
|
|
|
|
|
|
|
|
Finance income |
|
|
5,580 |
|
- |
|
Finance costs |
|
|
(11,179) |
|
(3,382) |
|
Profit before taxation |
|
|
32, 552 |
|
7,326 |
|
Tax charge |
5 |
|
(9,214) |
|
22,343 |
|
Profit from continuing operations |
|
|
23,338 |
|
29,669 |
|
|
|
|
|
|
|
|
Loss from discontinued operations (attributable to equity holders of the company) |
|
|
- |
|
(792) |
|
Profit for the year |
|
|
23,338 |
|
28,877 |
|
Other comprehensive income: |
|
|
|
|
|
|
Items that may be reclassified to profit and loss: |
|
|
|
|
|
|
Foreign exchange differences on translation of foreign operations |
|
|
1 |
|
(6) |
|
Total comprehensive Income for the year |
|
|
23,339 |
|
28,871 |
|
Total profit/(loss) for the year attributable to Owners of the parent: |
|
|
|
|
|
|
Continuing operations |
|
|
23,338 |
|
29,669 |
|
Discontinuing operations |
|
|
- |
|
(792) |
|
|
|
|
23,338 |
|
28,877 |
|
Earnings per share attributable to the ordinary equity holders of the company: |
|
|
|
|
|
|
Basic earnings per share (cents) |
9 |
|
9.6 |
|
15.0 |
|
Diluted earnings per share (cents) |
9 |
|
9.4 |
|
14.4 |
|
|
|
|
|
|
|
|
Earnings per share from continuing operations attributable to the ordinary equity holders of the company:
|
|
|
|
|
|
|
Basic earnings per share (cents) |
9 |
|
9.6 |
|
15.4 |
|
Diluted earnings per share (cents) |
9 |
|
9.4 |
|
14.8 |
|
|
|
|
|
|
|
|
Earnings per share from discontinued operations attributable to the ordinary equity holders of the company:
|
|
|
|
|
|
|
Basic earnings per share (cents) |
9 |
|
- |
|
(0.4) |
|
Diluted earnings per share (cents) |
9 |
|
- |
|
(0.4) |
Consolidated statement of financial position
As of 31 December 2021
|
|
|
|
2021 |
|
2020 |
|
|
Note |
|
$'000 |
|
$'000 |
|
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
Intangible assets |
6 |
|
1,4 85 ,608 |
|
227,949 |
|
Property, plant and equipment |
|
|
5,794 |
|
1,375 |
|
Right-of-use assets |
|
|
21,880 |
|
4,006 |
|
Deferred contract costs |
2c |
|
50,698 |
|
31,080 |
|
Deferred tax asset |
5 |
|
2,466 |
|
6,282 |
|
|
|
|
1,566,446 |
|
270,692 |
|
Current assets |
|
|
|
|
|
|
Software license inventory |
|
|
70 |
|
128 |
|
Deferred contract costs |
2c |
|
35,791 |
|
21,454 |
|
Trade and other receivables |
|
|
57,980 |
|
8,884 |
|
Cash and cash equivalents |
|
|
26,984 |
|
49,912 |
|
|
|
|
1 20, 825 |
|
80,378 |
|
Total assets |
|
|
1,687,271 |
|
351,070 |
|
|
|
|
|
|
|
|
Equity |
7,8 |
|
|
|
|
|
Share capital |
|
|
36 |
|
22 |
|
Additional paid in capital |
|
|
883,337 |
|
273,358 |
|
Share to be issued |
|
|
1,350 |
|
1,350 |
|
Foreign exchange differences on translation of foreign operations |
|
|
773 |
|
772 |
|
Retained earnings |
|
|
(22,051) |
|
(46,746) |
|
Total equity |
|
|
8 63 , 445 |
|
228,756 |
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
Contract liabilities |
2b |
|
10,885 |
|
7,463 |
|
Deferred tax liabilities |
5 |
|
69,761 |
|
2,640 |
|
Long term lease liabilities |
|
|
16,079 |
|
1,975 |
|
Deferred and contingent consideration |
14 |
|
168,950 |
|
407 |
|
Onerous contract liability |
13 |
|
- |
|
679 |
|
Loans and Borrowings |
12 |
|
97,830 |
|
29,619 |
|
|
|
|
363,505 |
|
42,783 |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Trade and other payables |
|
|
84,264 |
|
22,468 |
|
Contract liabilities |
2b |
|
144,971 |
|
29,131 |
|
Short term lease liabilities |
|
|
6,940 |
|
2,572 |
|
Deferred and contingent consideration |
14 |
|
199,337 |
|
14,334 |
|
Onerous contract liability |
13 |
|
741 |
|
721 |
|
Loans and Borrowings |
12 |
|
19,554 |
|
7,117 |
|
Current tax liability |
5 |
|
4,514 |
|
3,188 |
|
|
|
|
460,321 |
|
79,531 |
|
Total equity and liabilities |
|
|
1,687,271 |
|
351,070 |
The financial statements were approved by the Board and authorised for issue on 21 March 2022.
|
|
|
|
Ido Erlichman |
Oded Baskind |
|
Chief Executive Officer |
Chief Financial Officer |
Consolidated statement of changes in equity
For the year ended 31 December 2021
|
|
Share capital |
Additional paid in capital |
Share to be issued |
Foreign exchange differences on translation of foreign operations |
Retained earnings |
Total |
|
|
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
At 1 January 2020 |
16 |
153,002 |
56,499 |
778 |
(55,291) |
155,004 |
|
|
|
|
|
|
|
|
|
Profit for the year |
- |
- |
- |
- |
28,877 |
28,877 |
|
Other comprehensive income: |
|
|
|
|
|
|
|
Foreign exchange differences on translation of foreign operations |
- |
- |
- |
(6) |
- |
(6) |
|
Total comprehensive profit for the year |
- |
- |
- |
(6) |
28,877 |
28,871 |
|
Transactions with owners: |
|
|
|
|
|
|
|
Share based payments |
- |
- |
- |
- |
1,232 |
1,232 |
|
Exercise of employee options (note 7) |
* |
2,952 |
- |
- |
- |
2,952 |
|
Issue of equity share capital (note 7) |
6 |
113,213 |
- |
- |
- |
113,219 |
|
Issue of equity share capital of deferred share consideration (note 14) |
- |
4,191 |
(4,191) |
- |
- |
- |
|
Buy-back of deferred share consideration (note 7) |
- |
- |
(50,958) |
- |
(1,730) |
(52,688) |
|
Share buy-back (note 7) |
- |
- |
- |
- |
(19,834) |
(19,834) |
|
At 31 December 2020 |
22 |
273,358 |
1,350 |
772 |
(46,746) |
228,756 |
|
At 1 January 2021 |
22 |
273,358 |
1,350 |
772 |
(46,746) |
228,756 |
|
|
|
|
|
|
|
|
|
Profit for the year |
- |
- |
- |
- |
23,338 |
23,338 |
|
Other comprehensive income: |
|
|
|
|
|
|
|
Foreign exchange differences on translation of foreign operations |
- |
- |
- |
1 |
- |
1 |
|
Total comprehensive profit for the year |
- |
- |
- |
1 |
23,338 |
23,339 |
|
Transactions with owners: |
|
|
|
|
|
|
|
Share based payments |
- |
- |
- |
- |
5,224 |
5,224 |
|
Exercise of employee options (note 7) |
- |
939 |
- |
- |
- |
939 |
|
Contributions of equity net of transaction cost (note 7) |
8 |
348,382 |
- |
- |
- |
348,390 |
|
Issue of equity share capital (note 7) |
6 |
260,658 |
- |
- |
- |
260,664 |
|
Acquisition of treasury shares (note 7) |
- |
- |
- |
- |
(3,867) |
(3,867) |
|
At 31 December 2021 |
36 |
883,337 |
1,350 |
773 |
(22,051) |
8 63 , 445 |
* Amounts below 1 thousand
Consolidated statement of cash flows
For the year ended 31 December 2021
|
|
|
|
2021 |
|
2020 |
|
|
Note |
|
$'000 |
|
$'000 |
|
Cash flow from operating activities |
|
|
|
|
|
|
Profit for the year after taxation |
|
|
23,338 |
|
28,877 |
|
Adjustments for: |
|
|
|
|
|
|
Amortisation of intangible assets |
6 |
|
29,173 |
|
17,730 |
|
Amortisation of right-to-use assets |
|
|
3,895 |
|
1,707 |
|
Depreciation of property, plant and equipment |
|
|
696 |
|
660 |
|
Loss on sale of property, plant and equipment |
|
|
378 |
|
271 |
|
Loss on sale of right-to-use assets |
|
|
- |
|
53 |
|
Profit on sale of intangible assets |
6 |
|
(485) |
|
(27) |
|
Profit from lease modification |
|
|
(848) |
|
- |
|
Tax Expenses/(income) |
5 |
|
9,214 |
|
(22,343) |
|
Profit from Forward contract |
|
|
(5,580) |
|
- |
|
Interest expenses, fair value movements on deferred consideration |
12,14 |
|
10,331 |
|
3,997 |
|
Share based payment charge |
8 |
|
5,224 |
|
1,232 |
|
Unrealised foreign exchange differences |
|
|
(269) |
|
(114) |
|
Operating cash flow before movement in working capital |
|
|
75,067 |
|
32,043 |
|
Increase in trade and other receivables |
|
|
(13,784) |
|
(1,734) |
|
(Decrease)/Increase in software licenses inventory |
|
|
54 |
|
(32) |
|
Increase in trade and other payables |
|
|
12,246 |
|
5,483 |
|
(Decrease)/Increase in onerous contract liability |
13 |
|
(688) |
|
1,396 |
|
Increase in deferred contract costs |
|
|
(33,955) |
|
(23,194) |
|
(Decrease)/Increase in contract liabilities |
|
|
(3,451) |
|
1,282 |
|
Cash Inflow from operations |
|
|
35,489 |
|
15,244 |
|
Tax paid net of refunds |
|
|
(3,345) |
|
(712) |
|
Cash generated from operations |
|
|
32,144 |
|
14,532 |
|
|
|
|
|
|
|
|
Cash flow from investing activities |
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
|
(2,444) |
|
(536) |
|
Proceeds from sale of property, plant and equipment |
|
|
2 |
|
11 |
|
Intangible assets acquired |
6 |
|
(794) |
|
(376) |
|
Disposal of intangible assets |
6 |
|
1,261 |
|
132 |
|
Cash paid on business combination, net of cash acquired |
10 |
|
(464,149) |
|
(5,777) |
|
Proceeds from Forward contract, net |
|
|
5,580 |
|
- |
|
Capitalisation of development costs |
6 |
|
(5,326) |
|
(2,544) |
|
Net cash used in investing activities |
|
|
(465,870) |
|
(9,090) |
|
|
|
|
|
|
|
|
Cash flow from financing activities |
|
|
|
|
|
|
Payment of leases |
|
|
(2,839) |
|
(1,836) |
|
Proceeds from Shareholder loan |
11,12 |
|
85,000 |
|
- |
|
Proceeds from loans |
12 |
|
85,000 |
|
40,000 |
|
Proceeds from RCF |
12 |
|
8,207 |
|
1,654 |
|
Debt issuance costs |
12 |
|
(2,690) |
|
(1,723) |
|
Shareholder facility revolver issuance cost |
12 |
|
(7,125) |
|
- |
|
Repayment of interest on Shareholder loan |
12 |
|
(1,275) |
|
(1,155) |
|
Repayment of Shareholder loan |
12 |
|
(85,000) |
|
(40,000) |
|
Repayment of interest on loan |
12 |
|
(1,934) |
|
(658) |
|
Repayments of long-term loan |
12 |
|
(11,818) |
|
(3,636) |
|
Payment of deferred shares consideration |
7 |
|
- |
|
(52,688) |
|
Payment of purchase of own shares |
7 |
|
(3,867) |
|
(19,834) |
|
Proceeds from issuance of shares, net of transaction costs |
7 |
|
348,390 |
|
113,219 |
|
Proceeds from exercise of options by employees |
7 |
|
939 |
|
2,431 |
|
Net cash generated from financing activities |
|
|
410,988 |
|
35,774 |
|
Net (decrease)/increase in cash and cash equivalents |
|
|
(22,738) |
|
41,216 |
|
Revaluation of cash due to changes in foreign exchange rates |
|
|
(190) |
|
485 |
|
Cash and cash equivalents at beginning of year |
|
|
49,912 |
|
8,211 |
|
Cash and cash equivalents at end of year |
|
|
26,984 |
|
49,912 |
Notes to the consolidated financial statements
1 Basis of preparation
The financial information provided is for Kape Technologies Plc and its subsidiary undertakings (together the "Group", "the Company" or "Kape") in respect of the financial years ended 31 December 2021 and 2020. The Company is incorporated in the Isle of Man.
The financial information has been prepared in accordance with UK adopted international accounting standards (collectively IFRS).
The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies.
Going concern
The Directors, having considered the Group's resources financially and the associated risks with doing business in the current economic and geo-political climate, believe the Group is capable of successfully managing these risks. The Board has reviewed the cash flow forecast and business plan as provided by management which includes the rate of revenue growth, EBITDA margins, costs, acquisition synergies, cash conversion ratio and capital expenditure. The cash flow forecast prepared by management for assessing going concern extends to 31 March 2023 ("the going concern period"). Management's base case forecast is aligned with the management's forecast for the year ending 31 December 2022.
The Group has in place debt facilities comprising a $120 million senior secured term facility, a $90 million revolving credit facility and a $80 million uncommitted acquisition facility. The term facility includes quarterly capital repayments of $5 million. The debt facilities expire in 2024. As at 31 December 2021, the Group had drawn down $10m on the revolving credit facility and $nil on the acquisition facility. The debt facilities are subject to the following financial covenants
· The ratio of EBITDA to Net Finance Charges ("Interest Cover") shall not be less than 4.0x in respect of any Relevant Period.
· The ratio of Total Net Debt on the last day of the relevant period to Adjusted EBITDA in respect of that Relevant period ("Adjusted Leverage"), shall not exceed 3.5x through each of quarters to and including 30 September 2022 and 2.5x from and including 31 December 2022 to and including 31 March 2023.
In addition to the debt facilities above, the Group has in place a Shareholder Deferred Consideration Facility from TS Next Level Investments Limited ("TSNLI"), an affiliate of Unikmind, the Group's largest shareholder. This facility makes available to Group, if required, loan facilities of up to $345 million in aggregate in connection with the Group's obligation to pay the ExpressVPN deferred consideration payments due in December 2022 and December 2023. This facility is available through to December 2023.
Based on management's base case forecast the Group is able to meet liabilities as they fall due and operate within financial covenants throughout the forecast period. The base case assumes the ExpressVPN deferred consideration payment of $172.5 million due in December 2022 is paid from cash from operations, including existing facilities, without the use of the Shareholder Deferred Consideration Facility.
In addition to the base case, management also considered sensitivities in respect of potential stress tests, a reverse stress test and the mitigating actions available to management. The modelling of the downside scenarios assessed if there was a significant risk to the Group's liquidity, covenant compliance position and need to access the Shareholder Deferred Consideration Facility. These scenarios make assumptions on revenue declines and costs saving from freezing planned recruitment.
Under the stress tests the Group is still able to meet liabilities as they fall due and operate within financial covenants throughout the forecast period. The ExpressVPN deferred consideration payment remains payable from cash from operations, including existing facilities, without the use of the Shareholder Deferred Consideration Facility in one of the scenarios. In the scenario that necessitates the use of the Shareholder Deferred Consideration Facility, the Directors assessed the liquidity of TS Next Level Investments Limited ("TSNLI"), an affiliate of Unikmind, the Group's largest shareholder to make such funds available on request and as per the legal terms of the agreement. The Directors are confident such funding would be available based on their knowledge of the lender, the historic loan facilities the lender has provided the Group for previous acquisitions and the commerciality of lending such funds in order to protect the shareholder's majority investment in the Group.
The reverse test was used to find what would be the level of EBITDA and consequently the cash burn that would lead to a breach in the Group's financial covenants before the end of the going concern period. The financial covenants would be breached only if revenues from new users declined more than 22% below management's base case. As a result of completing this assessment management considered the likelihood of the reverse stress test scenario arising to be remote. In reaching this conclusion management considered:
· Cash collection is strong and bad debt risk is limited as clients typically pay for services upfront.
· Flexible cost base - a significant portion of the Group's costs are discretionary in nature
· The contract liabilities balance is growing (contract liabilities +326% vs 31 December 2020) supporting attractive future revenue growth and good future revenue visibility. The contract liabilities balance as of 31 December 2021 of $155.9 million includes $144.9m to be released into revenue in the following 12 months.
· We continuously monitor and invest in market needs. In the year to 31 December 2021 the Group continued its strong investment in technology capability and innovation demonstrated by the increase of research and development expenses by 71% compared to the comparative period.
· The cash conversion of the Group is expected to increase due to the full year impact of the Webselenese and ExpressVPN businesses which due to their products and billing profile deliver higher net cash inflows at the point of sale.
The Directors continue to carefully monitor the impact of the COVID-19 pandemic, and its impact on the macroeconomic environment, on the operations of the Group and have a range of possible mitigating actions, which could be implemented in the event of a downturn of the business. However, with COVID-19 driving an increased requirement for workforces to shift to home working and heightened concerns relating to digital security and privacy the Group has benefited from favourable market tailwind.
The Directors have also considered the geo-political environment, including rising inflation in some of our key markets and the conflict in Ukraine, and whilst the impact on the Group is currently deemed minimal, the Directors remain vigilant and ready to implement mitigation action in the event of a downturn in demand or an impact on operations.
The Directors are also not aware of any significant matters that occur outside the going concern period that could reasonably possibly impact the going concern conclusion.
Have performed the assessments as detailed above, the Directors have a reasonable expectation that the Group will have adequate financial resources to continue in operational existence over the relevant going concern period and have therefore considered it appropriate to adopt the going concern basis of preparation in the consolidated financial statements.
Adoption of new and revised standards
New standards impacting the Group that were adopted in the annual financial statements for the year ended 31 December 2021, and which have given rise to changes in the Group's accounting policies are:
· Covid-19-related Rent Concessions - Amendments to IFRS 16 - As a result of the COVID-19 pandemic, rent concessions have been granted to lessees. Such concessions might take a variety of forms, including payment holidays and deferral of lease payments. In May 2020, the IASB made an amendment to IFRS 16 Leases which provides lessees with an option to treat qualifying rent concessions in the same way as they would if they were not lease modifications. In many cases, this will result in accounting for the concessions as variable lease payments in the period in which they are granted. The relief was originally limited to reduction in lease payments that were due on or before 30 June 2021. However, the IASB subsequently extended this date to 30 June 2022. The Group has elected to apply the practical expedients.
· Interest Rate Benchmark Reform - Phase 2 - In August 2020, amendments were issued to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 to address the issues that arise during the reform of an interest rate benchmark rate, including the replacement of one benchmark with an alternative one. The Phase 2 amendments provide the following reliefs:
o When changing the basis for determining contractual cash flows for financial assets and liabilities (including lease liabilities), the reliefs have the effect that the changes, that are necessary as a direct consequence of IBOR reform and which are considered economically equivalent, will not result in an immediate gain or loss in the income statement.
o The hedge accounting reliefs will allow most IAS 39 or IFRS 9 hedge relationships that are directly affected by IBOR reform to continue. However, additional ineffectiveness might need to be recorded.
The adoption of these standards did not have a material impact on the Group's financial statements.
2 Revenue
|
|
|
2021 |
|
2020 |
|
|
|
$'000 |
|
$'000 |
|
|
|
|
|
|
|
Sale of Digital Security, malware protection and PC performance products |
|
38,042 |
|
32,368 |
|
Sale of Digital Privacy software solutions |
|
117,042 |
|
89,844 |
|
Sale of Digital Content and software distribution services |
|
75,581 |
|
- |
|
|
|
230,665 |
|
122,212 |
Revenues from software and SAAS products offering security, malware protection and PC performance are generated from the Digital Security CGU, revenues from provision of Digital privacy software solutions are generated from the Digital Privacy CGU, revenues from Digital Content and software distribution services are generated from Digital Content CGU.
(a) Disaggregation of revenue
The following table presents our revenues disaggregated by the timing of revenue recognition in accordance with our reporting segments:
|
|
2021 (USD, in thousands) |
2020 (USD, in thousands) |
|||||
|
|
Digital Security |
Digital Privacy |
Digital Content |
Total |
Digital Security |
Digital Privacy |
Total |
|
Revenue recognised over a period |
5,375 |
80,180 |
- |
85,555 |
4,470 |
69,645 |
74,115 |
|
Revenue recognised at a point in time |
32,667 |
36,862 |
75,581 |
145,110 |
27,898 |
20,199 |
48,097 |
|
Total |
38,042 |
117,042 |
75,581 |
230,665 |
32,368 |
89,844 |
122,212 |
(b) Contract liabilities
The company has recognised the following revenue-related contract liabilities:
|
|
31 December 2021 (USD, in thousands) |
31 December 2020 (USD, in thousands) |
|
Contract liabilities |
155,856 |
36,594 |
Significant changes in relation to contract liabilities
The following table shows the significant changes in the current reporting period which relate to carried-forward contract liabilities.
|
Significant changes in the contract liabilities balances during the period are as follows: |
31 December 2021 (USD, in thousands) |
31 December 2020 (USD, in thousands) |
|
Contract liabilities balance at the beginning of the period |
(36,594) |
(35,312) |
|
Business combination |
(122,713) |
- |
|
Revenue recognised that was included in the contract liability balance from Business combination |
13,397 |
- |
|
Revenue recognised that was included in the contract liability balance at the beginning of the period |
29,095 |
29,298 |
|
Increase due to cash received, excluding amounts recognised as revenue during the period |
(39,041) |
(30,580) |
|
Contract liabilities balance at the end of the period |
(155,856) |
(36,594) |
Management expects that 93.0% of the transaction price allocated to the unsatisfied contracts (which represent the contract liabilities) as of 31 December 2021 will be recognised as revenue during the next annual reporting period ($144,971 thousands), 5.3% and 1.5% ($8,328 thousands and $2,400 thousands) will be recognised in 2022 and 2023 financial years, respectively. The remaining 0.2% ($157 thousand) will be recognised during the following financial years.
(c) Assets recognised from costs to obtain and fulfil a contract
Significant changes in relation to assets recognised from costs to obtain and fulfil a contract
|
|
31 December 2021 (USD, in thousands) |
31 December 2020 (USD, in thousands) |
|
Short term Asset recognised from marketing cost to obtain a contract |
33,618 |
19,784 |
|
Long term Asset recognised from marketing cost to obtain a contract |
50,201 |
30,726 |
|
Short term Asset recognised from fulfilment cost to fulfil a contract |
2,173 |
1,670 |
|
Long term Asset recognised from fulfilment cost to fulfil a contract |
497 |
354 |
|
Significant changes in the deferred contract costs balances during the period are as follows: |
|
|
|
Balance at the beginning of the period |
52,534 |
29,340 |
|
Amortization recognised during the period - marketing costs |
(38,853) |
(23,552) |
|
Amortization recognised during the period - fulfilment cost |
(5,631) |
(5,202) |
|
Increases due to cash paid - marketing costs |
72,161 |
45,681 |
|
Increases due to cash paid - fulfilment cost |
6,278 |
6,267 |
|
Balance at the end of the period |
86,48 9 |
52,534 |
3 Segmental information
Segments revenues and results
The Group's reportable segments are strategic business units that offer different products and services. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the management team including the Chief Executive Officer and the Chief Financial Officer. The Group operates three reportable segments:
· Digital Security - comprising software and SaaS products offering security, endpoint protection and PC performance.
· Digital Privacy - comprising virtual private network ("VPN") solutions and other privacy SaaS products.
· Digital Content - comprising digital platforms which provide reviews and content.
|
Year ended 31 December 2021
|
|
Digital Security |
|
Digital Privacy |
|
Digital Content |
Total |
|
|
|
2021 |
|
2021 |
|
2021 |
2021 |
|
|
|
$'000 |
|
$'000 |
|
$'000 |
$'000 |
|
Revenue |
|
38,042 |
|
117,042 |
|
75,581 |
230,665 |
|
Cost of sales |
|
(2,602) |
|
(13,370) |
|
- |
(15,972) |
|
Direct sales and marketing costs |
|
(20,831) |
|
(29,222) |
|
(37,310) |
(87,363) |
|
Segment result |
|
14,609 |
|
74,450 |
|
38,271 |
127,330 |
|
Central operating costs |
|
|
|
|
|
|
(41,288) |
|
Adjusted EBITDA(1) |
|
|
|
|
|
|
86,042 |
|
Other operating income/(expense) |
|
|
|
|
|
|
947 |
|
Depreciation and amortisation |
|
|
|
|
|
|
(33,764) |
|
Employee share-based payment charge |
|
|
|
|
|
|
(5,224) |
|
Exceptional or non-recurring costs |
|
|
|
|
|
|
(9,850) |
|
Operating profit |
|
|
|
|
|
|
38,151 |
|
Finance income |
|
|
|
|
|
|
5,580 |
|
Finance costs |
|
|
|
|
|
|
(11,179) |
|
Profit before tax |
|
|
|
|
|
|
32, 552 |
|
Taxation |
|
|
|
|
|
|
(9,214) |
|
Profit for the year |
|
|
|
|
|
|
23,338 |
Exceptional or non-recurring costs in 2021 are comprised of non-recurring staff costs of $6.0 million which comprise of $4.4 million one-off bonus award to the management team for the acquisition of ExpressVPN, $0.9 million employer cost related to management share option exercise, $0.6 million employees onerous contract termination costs and $3.9 million professional services and other business combinations related costs.
|
Year ended 31 December 2020
|
|
Digital Security |
|
|
Digital Privacy |
|
Total |
|
||||||||||
|
|
|
2020 |
|
|
2020 |
|
2020 |
|
||||||||||
|
|
|
$'000 |
|
|
$'000 |
|
$'000 |
|
||||||||||
|
Revenue |
|
32,368 |
|
|
89,844 |
|
122,212 |
|
||||||||||
|
Cost of sales |
|
(2,045) |
|
|
(14,127) |
|
(16,172) |
|
||||||||||
|
Direct sales and marketing costs |
|
(16,977) |
|
|
(22,882) |
|
(39,859) |
|
||||||||||
|
Segment result |
|
13,346 |
|
|
52,835 |
|
66,181 |
|
||||||||||
|
Central operating costs |
|
|
|
|
|
|
(27,208) |
|
||||||||||
|
Adjusted EBITDA(1) |
|
|
|
|
|
|
38,973 |
|
||||||||||
|
Other operating income/(expenses) |
|
|
|
|
|
|
(313) |
|
||||||||||
|
Depreciation and amortisation |
|
|
|
|
|
|
(20,097) |
|
||||||||||
|
Employee share-based payment charge |
|
|
|
|
|
|
(1,232) |
|
||||||||||
|
Exceptional or non-recurring costs |
|
|
|
|
|
|
(6,623) |
|
||||||||||
|
Operating profit |
|
|
|
|
|
|
10,708 |
|
||||||||||
|
Finance income |
|
|
|
|
|
|
- |
|
||||||||||
|
Finance costs |
|
|
|
|
|
|
(3,382) |
|
||||||||||
|
Profit before tax |
|
|
|
|
|
|
7,326 |
|
||||||||||
|
Taxation |
|
|
|
|
|
|
22,343 |
|
||||||||||
|
Profit from continuing operations |
|
|
|
|
|
|
29,669 |
|
||||||||||
|
Loss from discontinued operation (attributable to equity holders of the company) |
|
|
|
|
(792) |
|||||||||||||
|
Profit for the year |
|
|
|
|
|
28,877 |
|
|||||||||||
Exceptional or non-recurring costs in 2020 are comprised of non-recurring staff costs of $6.4 million which comprise of $4.9 million one-off bonus award to the management team for the successful integration of PIA, $1.5 million onerous contract cost relating to PIA's founder consulting agreement and $0.2 million professional services and other business combinations related costs.
(1) Adjusted EBITDA is a company-specific measure which is calculated as operating profit before depreciation (including right-to-use assets amortisation), amortisation, exceptional or non-recurring costs, other operating income/(expense) and employee share-based payment charges as set out in note 4.
Information about major customers
In 2021 and 2020 there were no customers contributing more than 10% of total revenue of the Group.
Geographical analysis of revenue
Revenue by residence of the recording subsidiary:
|
|
|
|
2021 |
|
2020 |
|
|
|
|
|
$'000 |
|
$'000 |
|
|
|
|
|
|
|
|
|
|
Europe |
|
|
143,965 |
|
61,395 |
|
|
Asia |
|
|
20,466 |
|
- |
|
|
US |
|
|
66,234 |
|
60,817 |
|
|
|
|
|
230,665 |
|
122,212 |
|
Geographical analysis of non-current assets
|
|
|
|
2021 |
|
2020 |
|
|
|
|
$'000 |
|
$'000 |
|
|
|
|
|
|
|
|
US |
|
|
198,864 |
|
210,521 |
|
Singapore |
|
|
1,127,380 |
|
- |
|
France |
|
|
5,690 |
|
6,215 |
|
Romania |
|
|
12,954 |
|
6,535 |
|
Germany |
|
|
5,904 |
|
7,406 |
|
Israel |
|
|
149,580 |
|
- |
|
UK |
|
|
154 |
|
139 |
|
Other |
|
|
12,756 |
|
2,514 |
|
Total intangible assets, right-to-use assets and property, plant and equipment |
|
|
1,513,282 |
|
233,330 |
4 Operating profit
Adjusted EBITDA
Adjusted EBITDA is a company-specific measure which is calculated as operating profit before depreciation (including right-to-use assets amortisation), amortisation, exceptional or non-recurring costs, other operating income/(expense) and employee share-based payment charges.
As these are non-GAAP measures, they should not be considered as replacements for IFRS measures. The Group's definition of these non-GAAP measures may not be comparable to other similarly titled measures reported by other companies.
Adjusted EBITDA is calculated as follows:
|
|
|
|
2021 |
|
|
2020 |
|
|
|
|
$'000 |
|
|
$'000 |
|
|
|
|
|
|
|
|
|
Operating profit |
|
|
38, 151 |
|
|
10,708 |
|
Depreciation and amortisation |
|
|
33,764 |
|
|
20,097 |
|
Other operating expenses/ (income) |
|
|
) 947( |
|
|
313 |
|
Employee share-based payment charge |
|
|
5,224 |
|
|
1,232 |
|
Non-recurring costs: |
|
|
|
|
|
|
|
Non-recurring staff costs |
|
|
5,969 |
|
|
6,405 |
|
Professional services related to business combination |
|
|
3,881 |
|
|
218 |
|
Adjusted EBITDA |
|
|
86,042 |
|
|
38,973 |
Other operating income in 2021 is comprised mainly of $0.8 million gain from termination and modification of leases accounted under IFRS 16, $0.5 million gain from disposals of Cryptocurrencies, $0.05 million of donation expenses, $0.2 million from deferred consideration Fair value movement through profit and loss and $0.1 million of other fixed assets disposals.
Operating profit has been arrived at after charging:
|
|
|
|
2021 |
|
2020 |
|
|
|
|
$'000 |
|
$'000 |
|
Exceptional or non-recurring operating costs |
|
|
|
|
|
|
Non-recurring staff costs |
|
|
5,969 |
|
6,405 |
|
Professional services related to business combination |
|
|
3,881 |
|
218 |
|
|
|
|
9,850 |
|
6,623 |
|
|
|
|
|
|
|
|
Auditor's remuneration: |
|
|
|
|
|
|
Audit |
|
|
574 |
|
273 |
|
Amortisation of intangible assets |
|
|
29,173 |
|
17,730 |
|
Depreciation |
|
|
696 |
|
660 |
|
Amortisation of Right-to-use assets |
|
|
3,895 |
|
1,707 |
|
Employee share-based payment charge (note 8) |
|
|
5,224 |
|
1,232 |
Operating costs
Operating costs are further analysed as follows:
|
|
|
2021 Adjusted $'000 |
2021 Total $'000 |
|
2020 Adjusted $'000 |
2020 Total $'000 |
|
|
|
|
|
|
|
|
|
Direct sales and marketing costs |
|
87,363 |
87,363 |
|
39,859 |
39,859 |
|
Indirect sales and marketing costs |
|
1 9 , 687 |
21,217 |
|
9,192 |
9,253 |
|
Selling and marketing costs |
|
107,050 |
108,580 |
|
49,051 |
49,112 |
|
Research and development costs |
|
8,176 |
10,865 |
|
6,194 |
6,332 |
|
Management, general and administrative cost |
|
13, 4 25 |
24,280 |
|
11,822 |
19,478 |
|
Other operating (income)/expenses |
|
- |
(947) |
|
- |
313 |
|
Depreciation and amortisation |
|
7,612 |
33,764 |
|
4,825 |
20,097 |
|
Total operating costs |
|
136,263 |
176,542 |
|
71,892 |
95,332 |
Adjusted operating costs exclude share-based payment charges, exceptional or non-recurring costs, other operating (income) /expenses and amortisation of acquired intangible assets. See note 3.
5 Taxation
The parent company is resident, for tax purposes in the UK. The final tax charge shown below arises partially from the difference in tax rates applied in the different jurisdictions in which the subsidiaries reside.
The Group recognised a deferred tax asset of $0.8 thousands (2020: $6,215 thousands) in respect of tax losses accumulated in previous years.
The total tax charge can be reconciled to the overall tax charge as follows:
|
|
|
|
2021 |
|
2020 |
|
|
|
|
$'000 |
|
$'000 |
|
|
|
|
|
|
|
|
Profit from continuing operations before income tax expense |
|
|
32,552 |
|
7,326 |
|
Loss from discontinuing operation before income tax expense |
|
|
- |
|
(792) |
|
|
|
|
32,552 |
|
6,534 |
|
|
|
|
|
|
|
|
Tax at the applicable tax rate of 19% (2020: 19%) |
|
|
6,185 |
|
1,241 |
|
Tax effect of |
|
|
|
|
|
|
Differences in overseas rates |
169 |
|
2,072 |
||
|
Expenses not deductible for tax purposes |
1,637 |
|
29 |
||
|
Previously unrecognised tax losses now recouped to reduce current tax expense |
314 |
|
(27) |
||
|
Deferred tax not recognised on losses carried forward |
768 |
|
587 |
||
|
Recognition of previously unrecognised deferred tax assets |
825 |
|
(261) |
||
|
Reversal of previously recognised deferred tax liability |
- |
|
(25,639) |
||
|
Tax expense for previous years |
(684) |
|
(345) |
||
|
Tax charge for the year |
|
|
9,214 |
|
(22,343) |
|
|
|
|
|
|
|
|
Income tax expenses is attributable to: |
|
|
|
|
|
|
Profit from continuing operations |
|
|
9,214 |
|
(22,343) |
|
Loss from discontinued operation |
|
|
- |
|
- |
|
|
|
|
9,214 |
|
(22,343) |
|
|
|
|
|
|
|
|
The tax expense/(credit) from continuing operations Analysed as: |
|
|
|
|
|
|
Deferred taxation in respect of the current year |
|
|
5,004 |
|
(23,419) |
|
Current tax charge |
|
|
4,210 |
|
1,076 |
|
Tax charge for the year |
|
|
9,214 |
|
(22,343) |
The Group maintained provisions for potential historic tax liabilities presented in income tax liabilities. In 2021 the Group decreased its provision by $0.7 million to $1.5 million (2020: $2.2 million) as a result of settling the provision. The increase in tax liabilities driven by the multi-national nature of the Company which give rise to uncertainty over the income tax treatment related to cross border services and transactions.
The group has maximum corporation tax losses carried forward at each period end as set out below:
|
|
|
|
2021 |
|
2020 |
|
|
|
|
$'000 |
|
$'000 |
|
|
|
|
|
|
|
|
Corporate tax losses carried forward |
|
|
34,350 |
|
46,037 |
Details of the deferred tax asset recognised arising in respect of losses and timing differences is set out below:
|
|
Capitalised Software Development Costs |
Losses caried forward |
Other temporary differences |
Total |
|
|
$'000 |
$'000 |
$'000 |
$'000 |
|
At 1 January 2020 |
- |
1,599 |
581 |
2,180 |
|
Foreign exchange differences |
- |
145 |
- |
145 |
|
Movement in the year due to temporary differences from continuing operations |
- |
4,471 |
(514) |
3,957 |
|
At 31 December 2020 |
- |
6,215 |
67 |
6,282 |
|
Acquisition through business combinations |
615 |
- |
- |
615 |
|
Foreign exchange differences |
25 |
(127) |
9 |
(93) |
|
Movement in the year due to temporary differences from continuing operations |
(452) |
(3,914) |
28 |
(4,338) |
|
At 31 December 202 1 |
188 |
2,174 |
104 |
2,466 |
Details of the deferred tax liability recognised arising from timing differences is set out below:
|
|
Business combination |
Intangible assets |
Deferred contract costs |
Capitalised Software Development Costs |
Other temporary differences |
Total |
|
|
|
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
|
At 1 January 2020 |
21,134 |
- |
359 |
609 |
- |
22,102 |
|
|
Arising from business combinations |
- |
- |
- |
- |
- |
- |
|
|
Foreign exchange differences |
- |
- |
- |
- |
- |
- |
|
|
Movement in the year due to temporary differences from continuing operations |
(19,674) |
376 |
(225) |
61 |
- |
(19,462) |
|
|
At 31 December 2020 |
1,460 |
376 |
134 |
670 |
- |
2,640 |
|
|
Arising from business combinations |
66,299 |
- |
- |
- |
156 |
66,455 |
|
|
Movement in the year due to temporary differences from continuing operations |
(1,885) |
(292) |
1,929 |
(76) |
990 |
666 |
|
|
At 31 December 2021 |
65,874 |
84 |
2,063 |
594 |
1,146 |
69,761 |
|
In addition, the Group has an unrecognised deferred tax asset in respect of the following:
|
|
|
|
2021 |
|
2020 |
|
|
|
|
$'000 |
|
$'000 |
|
|
|
|
|
|
|
|
Tax losses carried forward |
|
|
6,876 |
|
24,219 |
|
Unrecognised deferred tax assets due to tax losses carried forward |
|
|
1,320 |
|
3,447 |
6 Intangible assets
|
|
Intellectual Property |
Trademarks and Brand |
Customer Lists |
Goodwill |
Internet Domains |
Capitalised Software Development Costs |
Non-Compete |
Cryptocurrencies |
Total |
|
|
|
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
|
Cost |
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2020 |
72,264 |
46,897 |
31,302 |
133,181 |
325 |
9,156 |
- |
17 |
293,142 |
|
|
Additions |
- |
11 |
- |
- |
- |
2,544 |
- |
365 |
2,920 |
|
|
Disposals |
- |
- |
- |
- |
- |
- |
- |
(105) |
(105) |
|
|
At 31 December 2020 |
72,264 |
46,908 |
31,302 |
133,181 |
325 |
11,700 |
- |
277 |
295,957 |
|
|
Additions |
- |
- |
- |
- |
- |
5,326 |
- |
794 |
6,120 |
|
|
Disposals |
- |
- |
- |
- |
- |
- |
- |
(776) |
(776) |
|
|
Acquisition through business combination |
144,138 |
104 , 911 |
364,51 9 |
663,629 |
- |
- |
4,291 |
- |
1,281,488 |
|
|
At 31 December 2021 |
216,402 |
151,819 |
395,821 |
796,810 |
325 |
17,026 |
4,291 |
295 |
1,582,789 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortisation |
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2020 |
(35,257) |
(8,322) |
(1,993) |
- |
- |
(4,706) |
- |
- |
(50,278) |
|
|
Charge for the year |
(5,465) |
(3,447) |
(6,359) |
- |
- |
(2,459) |
- |
- |
(17,730) |
|
|
At 31 December 2020 |
(40,722) |
(11,769) |
(8,352) |
- |
- |
(7,165) |
- |
- |
(68,008) |
|
|
Charge for the period |
(8,218) |
(5,562) |
(11,492) |
- |
- |
(3,021) |
(880) |
- |
(29,173) |
|
|
At 31 December 2021 |
(48,940) |
(17,331) |
(19,844) |
- |
- |
(10,186) |
(880) |
- |
(97,181) |
|
|
Net book value |
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2020 |
37,007 |
38,575 |
29,309 |
133,181 |
325 |
4,450 |
- |
17 |
242,864 |
|
|
At 31 December 2020 |
31,542 |
35,139 |
22,950 |
133,181 |
325 |
4,535 |
- |
277 |
227,949 |
|
|
At 31 December 2021 |
167,462 |
134,488 |
375,977 |
796,810 |
325 |
6,840 |
3,411 |
295 |
1,485,608 |
|
On 5 March 2021, the Group acquired 100% of the share capital of Uma Capital Ltd and Ani Ariel Ltd, the owners of Webselenese Ltd ("Webselenese"), a digital platform which provides independent and highly valued consumer privacy and security content to millions of users globally via market leading review sites. As further discussed in Note 10.
On 15 December 2021, the Group acquired certain assets, liabilities and service entities together comprising the ExpressVPN business ("ExpressVPN") from Access Global Limited and its subsidiaries ("Access Global"), ExpressVPN is one of the most recognised brands in the digital privacy space and the Acquisition creates a premium digital privacy and security player best-positioned to serve the growing demand for digital privacy. As further discussed in Note 10.
Goodwill acquired in a business combination is allocated at acquisition to the cash generating units (CGUs), or group of units that are expected to benefit from that business combination.
The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. The recoverable amounts of the CGUs are determined from value in use calculations. Goodwill allocated to the Digital Security CGU has a carrying amount of $11.7 million (2020: $11.7 million), the Digital Privacy CGU has a carrying amount of $686.2 million (2020: $121.5 million) and the Digital Content CGU has a carrying amount of $98.9 million (2020: $N/A thousands).
The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period.
For the Digital Security CGU, the recoverable value has been determined from value in use calculations based on cash flow projections for the next five years from the most recent budgets approved by management and extrapolated cash flows beyond this period using an estimated growth rate of 3 per cent (2020: 3 per cent). This rate does not exceed the average long-term growth rate for the relevant markets. If the growth rate was decreased by 2 percentage point the effect would have been nil. The rate used to discount these forecast cash flows is 17 per cent (2020: 17 per cent).
If the discount rate was increased by 1 percentage point the effect on the recoverable value would have been nil . There is no reasonably possible change in assumption that would give rise to an impairment.
For the Digital Privacy CGU, the recoverable value has been determined from value in use calculations based on cash flow projections for the next five years from the most recent budgets approved by management and extrapolated cash flows beyond this period using an estimated growth rate of 3 per cent (2020: 1 per cent). This rate does not exceed the average long-term growth rate for the relevant markets. The rate used to discount these forecast cash flows is 14 per cent (2020: 15 per cent). The change with the estimated growth rate and discount rate is attributed to ExpressVPN acquisition.
If the discount rate was increased by 1 percentage point the effect on the recoverable value would have been nil. There is no reasonably possible change in assumption that would give rise to an impairment.
For the Digital Content CGU, the recoverable value has been determined from value in use calculations based on cash flow projections for the next five years from the most recent budgets approved by management and extrapolated cash flows beyond this period using an estimated growth rate of 3 per cent. This rate does not exceed the average long-term growth rate for the relevant markets. If the growth rate was decreased by 2 percentage point the effect on the recoverable value would have been nil. The rate used to discount these forecast cash flows is 15 per cent (2020: N/A).
If the discount rate was increased by 1 percentage point the effect would have been nil. There is no reasonably possible change in assumption that would give rise to an impairment.
7 Shareholder's equity
|
|
|
|
2021 |
|
2020 |
|
|
|
|
Number of Shares |
|
Number of Shares |
|
|
|
|
|
|
|
|
Issued and paid up ordinary shares of $0.0001 |
358,747,497 |
|
222,297,719 |
||
On 26 March 2021, the company issued total of 12,123,769 ordinary shares of $0.0001, as part of Webselenese acquisition to Webselenese's founders and two senior members of staff. Webselenese's founders share consideration is subject to lock-up periods, of which 50% until the first anniversary of closing, 25% until 18 months from closing and the remaining 25% until the second anniversary. As further disclosed in Note 10.
On 1 October 2021, the company issued a total of 76,543,209 new ordinary shares of US $0.0001 each were subscribed by investors, at an issue price of 3.375 pence per Placing Share. Total issue costs were amounted to $2,636 thousands. The Net amount proceeds after issue costs from the share issuance is $348.4 million.
On 16 December 2021, the company issued total of 47,782,800 ordinary shares of $0.0001, to Peter Burchhardt and Dan Pomerantz, ExpressVPN's co-founders, representing approximately 13.6% of the enlarged issued share capital of Kape. The share consideration is subject to lock-up periods, of which 50% until the first anniversary of closing, 25% until 18 months from closing and the remaining 25% until the second anniversary. As further disclosed in Note 10.
On 28 October 2020, the company issued a total of 59,230,769 new ordinary shares of US $0.0001 each ("Ordinary Shares") were subscribed for by investors, at an issue price of 150 pence per Placing Share. The Net amount proceeds after issue costs from the share issuance is $113.2 million.
As part of the LTMI Holdings acquisition on 2019, the Company undertook to issue 42,701,548 new ordinary shares ("Consideration Shares") to be paid in three phases. LTMI co-founders Andrew Lee and Steve DeProspero would each been entitled to be issued 19,247,723 Consideration Shares representing approximately 10.4% of the enlarged issued share capital of Kape, of which 5,250,363 were issued on completion, 10,498,020 were due to be issued on the first anniversary of completion and 3,499,340 would have been issued on the second anniversary of completion. The balance of the Consideration Shares, being 4,206,102 in aggregate, are to be issued to four senior executives of PIA, of which 1,147,333 were issued on completion, 2,294,077 were issued on the first anniversary of completion and 764,692 will be issued on January 2022 and is disclosed as shares to be issued.
On 28 October 2020, the Company and LTMI Co-founders have reached an agreement with respect to the repurchase of the Initial Consideration Shares and their right to receive the Deferred Consideration Shares by the Company, for a total consideration of approximately $72.5 million. Out of which, $52.7 million were paid for the deferred share consideration and $19.8 million paid for the Initial consideration shares and recognised as treasury. On 6 November 2020, the Company completed the transaction.
As at 31 December 2021, the Company holds in the treasury total of 9,800,809 of ordinary shares of $0.0001 par value (2020: 10,528,728) and company's Employee Benefit Trust holds Nil (2020: 1,200,000) ordinary shares. During 2021, 1,540,482 of ordinary shares of $0.0001 par value were transferred out of treasury to satisfy the exercise of options by the company employees (2020: 4,652,092), and 901,823 of ordinary shares of $0.0001 par value were transferred into treasury following surrendering of share by the Group's Executive directors when exercised while utilizing the net cashless exercise and indemnification from PIA share consideration ESCROW.
No dividend was declared in 2021 and 2020.
The following describes the nature and purpose of each reserve within owner's equity:
|
Reserve |
Description and purpose |
|
Additional paid in capital |
Share premium (i.e. amount subscribed or share capital in excess of nominal value) |
|
Retained earnings |
Cumulative net gains and losses recognised in the consolidated statement of comprehensive income |
|
Foreign exchange |
Cumulative foreign exchange differences of translation of foreign operations |
|
Shares to be issued |
Deferred share consideration |
In accordance with Isle of Man Company Law, all of the reserves with the exception of share capital are distributable.
8 Employee share-based payments
Options have been granted under the Group's share option scheme to subscribe for ordinary shares of the Company. At 31 December 2021, the following options were outstanding (2020: 9,302,613):
|
Group |
Grant date |
Number of shares under option |
Subscription price per share |
|
|
Group 1 |
29 May 2014 |
200,340 |
$0.538 |
|
|
Group 2 |
21 April 2015 |
148,062 |
$1.305 |
|
|
Group 3 |
5 January 2016 |
98,938 |
$0.710 |
|
|
Group 5 |
26 October 2016 |
1,249,660 |
$0.467 |
|
|
Group 6 |
3 April 2017 |
147,500 |
$0.0001 |
|
|
Group 7 |
15 June 2017 |
370,956 |
$0.845 |
|
|
Group 9 |
26 April 2018 |
227,625 |
$1.280 |
|
|
Group 10 |
13 July 2018 |
910,000 |
$1.437 |
|
|
Group 12 |
21 May 2019 |
283,125 |
$1.090 |
|
|
Group 13 |
20 November 2019 |
527,000 |
$1.040 |
|
|
Group 14 |
3 December 2019 |
634,375 |
$1.230 |
|
|
Group 15 |
21 May 2020 |
1,394,249 |
$2.050 |
|
|
Group 16 |
17 July 2020 |
25,000 |
$2.230 |
|
|
Group 17 |
26 November 2020 |
168,750 |
$2.400 |
|
|
Group 18 |
22 March 2021 |
4,112,995 |
$2.980 |
|
|
Group 19 |
11 October 2021 |
500,000 |
$4.379 |
|
|
Group 20 |
1 December 2021 |
1,132,500 |
$5.330 |
|
|
Group 21 |
15 December 2021 |
8,695,000 |
$5.428 |
|
|
Total |
|
20,826,075 |
|
|
Vesting conditions
Groups 1-3, 5, 7, 9-10 and 12-21 - 25% at the end of the first year following the grant date. 6.25% on a quarterly basis during 12 quarters period thereafter.
Group 6 - 50% at the end of the second year following the grant date and the remainder at the end of the third year following the grant.
The total number of shares exercisable as of 31 December 2021 was 4,120,019 (2020: 4,795,448).
The weighted average fair value of options granted in the year using the Cox, Ross and Rubinstein's Binomial Model (the "Binomial Model") was $2.431. The inputs into the Binomial model are as follows:
|
|
|
2021 |
|
2020 |
|
|
|
$'000 |
|
$'000 |
|
|
|
|
|
|
|
Early exercise factor |
|
100%-150% |
|
100% |
|
Fair value of Group's stock |
|
$4.00-$5.50 |
|
$2.31-$2.75 |
|
Expected Volatility |
|
39%-55% |
|
44.6%-59.6% |
|
Risk free interest rate |
|
(0.01%)-0.89% |
|
(0.79%) -(0.45%) |
|
Dividend yield |
|
- |
|
- |
|
Forfeiture rate |
|
0%-5% |
|
0%-20% |
|
|
|
|
|
|
We used the empirical observations for early exercise factor of public companies as an appropriate benchmark for the expected Early exercise factor.
Expected volatility was determined based on the historical volatility of comparable companies.
Forfeiture rate is assumed to be 0% for senior management and 5% for other employees.
The risk-free interest rate was estimated based on average yields of UK Government Bonds.
The Group recognised total share-based payments relating to equity-settled share-based payment transactions as follows:
|
|
|
|
2021 |
|
2020 |
|
|
|
|
$'000 |
|
$'000 |
|
|
|
|
|
|
|
|
Share-based payment charge |
|
|
5,224 |
|
1,232 |
Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:
|
|
|
2021 |
|
2020 |
||
|
|
|
Weighted |
Number |
|
Weighted |
Number |
|
|
|
|
|
|
|
|
|
At the beginning of the year |
|
$0.84 |
9,302,613 |
|
$0.66 |
13,018,231 |
|
Granted |
|
$4.67 |
14,529,245 |
|
$2.09 |
1,817,000 |
|
Lapsed |
|
$2.31 |
)265,301) |
|
$1.20 |
)372,647) |
|
Exercised |
|
$0.31 |
(2,740,482) |
|
$0.56 |
(5,159,971) |
|
At the end of the year |
|
$3.63 |
20,826,075 |
|
$0.84 |
9,302,613 |
The options outstanding at 31 December 2021 had a weighted average remaining contractual life of 8.78 years (2020: 7.34 years).
9 Earnings per share
Basic loss/earnings per share is calculated by dividing the loss /earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.
|
|
|
|
2021 |
|
2020 |
|
|
|
|
cents |
|
Cents |
|
|
|
|
|
|
|
|
Basic earnings per share: |
|
|
|
|
|
|
From continuing operations |
|
|
9.6 |
|
15.4 |
|
from discontinued operations |
|
|
- |
|
(0.4) |
|
Total basic earnings per share |
|
|
9.6 |
|
15.0 |
|
|
|
|
|
|
|
|
Diluted earnings per share: |
|
|
|
|
|
|
From continuing operations |
|
|
9.4 |
|
14.8 |
|
from discontinued operations |
|
|
- |
|
(0.4) |
|
Total diluted earnings per share |
|
|
9.4 |
|
14.4 |
|
|
|
|
|
|
|
|
Adjusted basic |
|
|
23.8 |
|
14.1 |
|
Adjusted diluted |
|
|
23.1 |
|
13.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per share is a non-GAAP measure and therefore the approach may differ between companies. Adjusted earnings have been calculated as follows:
|
|
|
|
2021 |
|
2020 |
|
|
|
|
$'000 |
|
$'000 |
|
|
|
|
|
|
|
|
Profit for the year |
|
|
23,338 |
|
28,877 |
|
|
|
|
|
|
|
|
Post tax adjustments: |
|
|
|
|
|
|
Employee share-based payment charge |
|
|
5,546 |
|
1,344 |
|
Exceptional or non-recurring costs |
|
|
8,968 |
|
5,630 |
|
Amortisation on acquired intangible assets |
|
|
24,265 |
|
14,652 |
|
Loss from discontinued operations |
|
|
- |
|
792 |
|
Other operating (income)/expense |
|
|
(852) |
|
371 |
|
Exceptional deferred tax charge |
|
|
- |
|
(25,639) |
|
Finance (income)/expenses on deferred consideration for business combination, lease liabilities and forward contract |
|
|
(3,640) |
|
1,157 |
|
Adjusted profit for the year |
|
|
57,625 |
|
27,184 |
|
|
|
|
Number |
|
Number |
|
Denominator - basic: |
|
|
|
|
|
|
Weighted average number of equity shares for the purpose of earnings per share |
|
|
241,960,504 |
|
192,596,652 |
|
|
|
|
|
|
|
|
Adjustments for calculation of diluted earnings per share: |
|
|
|
|
|
|
Impact of potentially dilutive shares related to employee options |
|
|
7,002,360 |
|
8,406,227 |
|
|
|
|
|
|
|
|
Denominator - diluted |
|
|
|
|
|
|
Weighted average number of equity shares for the purpose of diluted earnings per share |
|
|
248,962,864 |
|
201,002,879 |
|
|
|
|
|
|
|
The diluted denominator has not been used where this has anti-dilutive effect. Basic and diluted loss per share are therefore the same for reporting purposes.
The difference between weighted average number of Ordinary shares used for basic earnings per share and the diluted earnings per share 7,002,360 (2020: 8,406,227) being the effect of all potentially dilutive Ordinary shares derived from the number of share options granted to employees.
10. Business combinations
(a) Acquisition of Webselenese Ltd .
On 5 March 2021 (the "Closing date"), the Group acquired 100% of the share capital of Uma Capital Ltd and Ani Ariel Ltd, which are the owners of Webselenese Ltd ("Webselenese"), a digital platforms which provides independent and highly valued consumer privacy and security content to millions of users globally via market leading review sites, and Gclid Ltd ("GCLID") assets, owed reviews website.
The acquisition will support and improve the Group's organic growth prospects in the fast-growing consumer digital Privacy and Security markets through elevating Kape as a leading force across the global consumer privacy and security arena, supporting the Group's product and broader software portfolio development and retaining Webselenese's highly experienced management team.
Webselenese's results are reported as a new segment within the Group management reporting system, Digital Content.
Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill, are as follows:
|
|
Acquiree's carrying amount before combination |
|
Fair value |
|
|
$'000 |
|
$'000 |
|
|
|
|
|
|
Fixed assets, net |
255 |
|
255 |
|
Trade and other receivables |
7,257 |
|
7,257 |
|
Deferred tax asset |
615 |
|
615 |
|
Cash and Cash equivalents |
3,087 |
|
3,087 |
|
Right of use assets |
509 |
|
591 |
|
Brand |
- |
|
25,829 |
|
Customer lists |
- |
|
10,927 |
|
Non-compete |
- |
|
4,291 |
|
Technology |
1,224 |
|
12,993 |
|
Trade and other payables |
(2,887) |
|
(2,887) |
|
Lease liabilities |
(554) |
|
(591) |
|
Deferred tax liability |
- |
|
(6,185) |
|
|
9,506 |
|
56,182 |
|
Fair value of consideration |
|
|
|
|
Cash |
|
|
119,160 |
|
Shares |
|
|
28,548 |
|
Deferred and contingent cash considerations |
|
|
7,357 |
|
Goodwill |
|
|
98,883 |
Net cash outflow on acquisition of business
|
|
|
2021 |
|
|
|
|
$'000 |
|
|
|
|
|
|
|
Cash consideration |
|
119,160 |
|
|
Cash and cash equivalents acquired |
|
(3,087) |
|
|
|
|
116,073 |
|
Webselense was acquired for a total consideration of $155.1 million (including the acquisition of Gclid Ltd assets) to be satisfied by combination of:
· A payment upon closing of $119.2 million in cash.
· Issuance of 12,123,769 ordinary shares of $0.0001, to Webselenese's founders and two senior members of staff. Webselense's founders share consideration is subject to lock-up periods, of which 50% until the first anniversary of closing, 25% until 18 months from closing and the remaining 25% until the second anniversary.
· Deferred cash consideration of $2.99 million for the excess working capital of Webselenese at the closing date. The consideration was settled 90 days after closing.
· Contingent consideration of $2.6 million which depends on Gclid's assets performance.
· Deferred cash consideration of $1.76 million which represents the excess income tax advances that were paid by Webselenese before the acquisition date.
Webselenese's founders are subject to Non-Competition and Non-Solicitation agreement for the employment term and period of four years after the closing date.
The initial cash consideration founded through Kape's internal cash resources a $34.2 million and a $85.0 million bridge facility (the "Bridge Loan") from TS Next Level Investments Limited ("TSNLI"), an affiliate of Unikmind Holdings Limited, Kape's majority shareholder. The Group completed re-financing of the Bridge loan as of May 28, 2021. Further details of the Bridge Loan, which is a related party transaction, and the re-financing are set out on note 12.
Since the acquisition date, Webselenese has contributed $75.6 million to Group's revenues, profit of $9.5 million to Group profit. In addition, since the acquisition date Webselenese contributed $38.3 million to segment results of the Digital Content segment (as set out in note 3). If the acquisition had occurred on 1 January 2021, Group revenue would have been $243.4 million, Group income for the period would have been $18.0 million and the Digital Content result would have been $43.6 million. Acquisition costs of $0.5 million arose as a result of the transaction. These have been recognised as part of administrative expenses in the statement of comprehensive income.
(b) Acquisition of ExpressVPN
On 15 December 2021 (the "Closing date"), the Group acquired certain assets, liabilities and service entities together comprising the ExpressVPN business ("ExpressVPN") from Access Global Limited and its subsidiaries ("Access Global"), ExpressVPN is one of the most recognised brands in the digital privacy space and the acquisition creates a premium digital privacy and security player best-positioned to serve the growing demand for digital privacy.
The acquisition delivers substantial operational benefits to the Group. The enlarged group will have a significant scale, servicing over 6.5 million paying subscribers, presenting considerable cross-sell and additional revenue opportunities throughout the platform. In addition, ExpressVPN's first-rate management and team members joined Kape, bringing deep expertise in the digital privacy sphere. ExpressVPN also brings a robust network of channel partners, further strengthening the enlarged group's go-to-market capabilities.
ExpressVPN's results are reported as part of the Digital Privacy segment.
Details of the provisional fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill, are as follows:
|
|
Acquiree's carrying amount before combination |
|
Provisional Fair value |
|
|
$'000 |
|
$'000 |
|
|
|
|
|
|
Fixed assets, net |
2,214 |
|
2,214 |
|
Trade and other receivables |
20,747 |
|
20,747 |
|
Deferred Contract costs |
209,524 |
|
- |
|
Cash and Cash equivalents |
509 |
|
509 |
|
Right of use assets |
6,900 |
|
7,245 |
|
Trademark |
- |
|
79,082 |
|
Customer lists |
- |
|
353,592 |
|
Technology |
4,945 |
|
131,145 |
|
Trade and other payables |
(43,242) |
|
(43,242) |
|
Contract liabilities |
(122,713) |
|
(122,713) |
|
Lease liabilities |
(7,144) |
|
(7,245) |
|
Deferred tax liability |
(159) |
|
(60,270) |
|
|
71,581 |
|
361,064 |
|
Fair value of consideration |
|
|
|
|
Cash |
|
|
334,539 |
|
Shares |
|
|
232,115 |
|
Deferred cash consideration |
|
|
359,156 |
|
Goodwill |
|
|
564,746 |
Net cash outflow on acquisition of business
|
|
|
2021 |
|
|
|
$'000 |
|
|
|
|
|
Cash consideration |
|
334,539 |
|
Cash and cash equivalents acquired |
|
(509) |
|
|
|
334,030 |
ExpressVPN was acquired for a total consideration of $925.8 million to be satisfied by combination of:
· A payment upon closing of $334.5 million in cash ("Initial Consideration"). The cash element of the Initial Consideration is subject to adjustment for net cash or debt in the two corporate service entities being acquired as part of the hybrid asset and share acquisition.
· A payment on or before the six-month anniversary of completion, of $20.0 million.
· A payment on the first anniversary of completion of $172.5 million in cash and on the second anniversary of completion of $172.5 million in cash (the "Deferred Cash Consideration"). The Deferred Cash Consideration is not subject to performance or other conditions and its payment by Kape will be secured by way of a charge over the shares in the Buyer. The fair value of the Deferred Cash Consideration as of the acquisition date is $359.2 million.
· Issuance of 47,782,800 ordinary shares of $0.0001, to Peter Burchhardt and Dan Pomerantz, ExpressVPN's co-founders, representing approximately 13.6% of the enlarged issued share capital of Kape. The share consideration is subject to lock-up periods, of which 50% until the first anniversary of closing, 25% until 18 months from closing and the remaining 25% until the second anniversary.
The acquisition agreement contains customary warranties for a transaction of this nature, given by the selling entities in favour of the Buyer and certain limited warranties given by the Group. In addition, the Acquisition agreement contains certain indemnities to the Buyer in respect of a limited number of specific issues identified by the Group. The warranties and indemnities are each subject to certain limitations. The co-founders of ExpressVPN have personally guaranteed to the Buyer the performance by the selling entities of their obligations in respect of the Acquisition. The Group has guaranteed the performance by the Buyer of certain of its obligations in respect of the acquisition.
Peter Burchhardt will have the right to appoint one non-executive director to the Board of Kape. This right will continue for so long as the ExpressVPN co-founders, their close family members and their respective wholly owned companies, taken together, hold at least 5% of Kape's ordinary shares, subject to certain anti-dilution protections.
An amount of $10.8 million of the Consideration Shares will be held in escrow for 24 months from completion of the Acquisition to provide security for claims under the Acquisition documents which are agreed or determined in favor of the Buyer.
The initial cash consideration founded through placing of $351.0 million (£258.3 million) secured on 14 September 2021 and completed on 1 October 2021, as further described in Note 7. It is Kape's intention that the Deferred Consideration will be funded from its operational cashflow and by using the extended revolving credit facility provided to Kape's by the existing lender group, as further described in Note 12.
TS Next Level Investments Limited ("TSNLI"), an affiliate of Unikmind, has entered into binding commitment letters with the Group, subject to limited conditions, to make available to Group, if required, loan facilities of up to $345 million in aggregate in connection with Kape's obligation to pay the Deferred Cash Consideration. Furthermore, Refinancing Facility of up to $130 million provided until the Group achieved the club of banks consent to the acquisition, as further described in Note 11 and 12.
Since the acquisition date, ExpressVPN has contributed $18.2 million to Group's revenues, profit of $5.0 million to Group profit. In addition, since the acquisition date ExpressVPN contributed $18.9 million to segment results of the Digital Privacy segment (as set out in note 3). If the acquisition had occurred on 1 January 2021, Group revenue would have been $515.8 million, Group income for the period would have been $52.2 million and the Digital Privacy result would have been $306.2 million. Acquisition costs of $3.0 million arose as a result of the transaction. These have been recognised as part of Management, general and administrative costs in the statement of comprehensive income.
11 Related party transactions
The Group is controlled by Unikmind Holdings Limited ("Unikmind") incorporated in British Virgin Islands, which owns 53.7% of the Company's shares as at 31 December 2021. The controlling party, Unikmind Holdings Ltd, has redomiciled from the British Virgin Islands to the Isle of Man. Mr. Teddy Sagi is the sole ultimate beneficiary of Unikmind Holdings Ltd.
(a) Related party transactions
The following transactions were carried out with related parties:
|
|
2021 |
|
2020 |
|
|
$'000 |
|
$'000 |
|
|
|
|
|
|
Technical support services to end customers and administration services provided by common controlled company |
(271) |
|
(207) |
|
Office expenses to common controlled companies |
(44) |
|
(61) |
|
Amortisation of Right-to-use assets with common controlled companies |
(410) |
|
(1,069) |
|
Interest expenses from lease liabilities to common controlled companies |
(24) |
|
- |
|
Other operating income from lease modification to common controlled company |
38 |
|
- |
|
Software fees provided by common controlled company |
(32) |
|
- |
|
Issuance cost amortization for facility revolver provided by shareholder |
(144) |
|
- |
|
Shareholder facility revolver commitment fees |
(3,606) |
|
- |
|
Interest expenses from shareholder short-term loan and debt facility |
(2,125) |
|
(934) |
|
|
(6,618) |
|
(2,271) |
On 5 March 2021, Kape entered into a binding commitment letter with TS Next Level Investments Limited ("TSNLI") under which TSNLI committed, subject to limited conditions, to provide to Kape the Bridge Loan of up to $120 million in aggregate. The Bridge Loan carried a fixed coupon of 6.0% per annum payable on funds drawn and an arrangement fee of 1.0%. The Bridge Loan was subordinated to Kape's existing bank facilities and was repayable no later than 31 December 2021. The Bridge Loan also included certain customary obligations on Kape in relation to TSNLI's costs and expenses and in relation to taxes. On 2 June 2021, Kape repaid the Bridge Loan in full and accumulated interest following closing of a new bank debt facility, as further described in Note 12.
On 14 September 2021, TS Next Level Investments Limited ("TSNLI"), an affiliate of Unikmind, has entered into binding commitment letters with the Group ("Deferred Consideration Facility"), subject to limited conditions, to make available to Group, if required, loan facilities of up to $345 million in aggregate in connection with Kape's obligation to pay ExpressVPN's Deferred Consideration. Furthermore, Refinancing Facility of up to $130 million provided until the Group achieved the club of banks consent to the acquisition.
The Deferred Consideration Facility will carry a variable coupon, depending on the leverage ratio: if greater than or equal to 3:1 the coupon will be 4.75% per annum, if greater than or equal to 2:1 but less than 3:1, then the coupon will be 4.25% per annum and if less than 2:1 then the coupon will be 4.00% per annum, in each case, on funds drawn. The rates set out above will each increase by 1.00% per annum on and from the second anniversary of the completion of the Acquisition and will increase by a further 1.00% per annum on and from the third anniversary of the completion of the Acquisition.
The Deferred Consideration Facility also carried an arrangement fee of 1.5% of the total commitments, paid in December 2021 following the completion of ExpressVPN acquisition, and a commitment fee accruing at the rate of 3.50% per annum on undrawn commitments, payable on the earlier of the commitments being cancelled or utilised. Should Kape find an alternative source of financing to fund the payment of the Deferred Consideration or to refinance the Deferred Consideration Facility, the commitment fees will only be payable pro rata for the period during which the commitment under the Deferred Consideration Facility is in place.
The Deferred Consideration Facility also include certain customary obligations on Kape in relation to, inter alia, TSNLI's costs and expenses and in relation to taxes.
Unikmind has entered into the Subscription Agreement with the Company, details of which are set out above. No underwriting or other fees are payable to Unikmind under the Subscription Agreement.
On 6 December 2019, Kape entered into a $40.0 million short-term debt facility from Unikmind Holdings Limited ("Unikmind"), Kape's largest shareholder, and was also provided with an additional debt facility of $20.0 million, on similar terms. The Term Loan had a fixed interest rate of 5% above 6 months USD Libor. The Term debt facilities had a fixed interest of 1.5% upon availability, $5.0 million on the first anniversary and $15.0 million on the second anniversary.
In April 2020, Kape re-financed the Shareholder Term Loan with third party facilities and repaid the Shareholder Term loan in full, as further described in Note 12.
(b) Receivables owed by related parties
|
|
|
2021 |
|
2020 |
|
Name |
Nature of transaction |
$'000 |
|
$'000 |
|
|
|
|
|
|
|
Parent company |
Unpaid share capital |
10 |
|
10 |
|
Companies related by virtue of common control |
Other |
40 |
|
18 |
|
|
|
50 |
|
28 |
(c) Payables to related parties
|
|
|
2021 |
|
2020 |
|
Name |
Nature of transaction |
$'000 |
|
$'000 |
|
|
|
|
|
|
|
Companies related by virtue of common control |
Other |
74 |
|
6 |
|
Companies related by virtue of common control |
Accrued commitment fees |
3,606 |
|
- |
|
|
|
3,680 |
|
6 |
(d) Right-to-use assets and Lease liabilities to related parties
|
|
2021 |
|
2020 |
|
|
$'000 |
|
$'000 |
|
|
|
|
|
|
Right-to-use assets |
5,313 |
|
758 |
|
Lease liabilities |
(5,346) |
|
(932) |
12 Loans and Borrowings
|
|
|
|
Bank loan |
|
Shareholder loan |
|
|
|
|
|
|
$'000 |
|
$'000 |
|
|
|
At 1 January 2020 |
|
|
- |
|
40,221 |
|
|
|
Term Facility |
|
|
40,000 |
|
- |
|
|
|
Revolving credit facility |
|
|
1,654 |
|
- |
|
|
|
Debt issuance costs |
|
|
(1,730) |
|
- |
|
|
|
Interest expenses |
|
|
1,114 |
|
934 |
|
|
|
Interest paid |
|
|
(658) |
|
(1,155) |
|
|
|
Net foreign exchange |
|
|
(8) |
|
- |
|
|
|
Repayment of loan |
|
|
(3,636) |
|
(40,000) |
|
|
|
At 31 December 2020 |
|
|
36,736 |
|
- |
|
|
|
Bridge Loan |
|
|
- |
|
85,000 |
|
|
|
Term Facility |
|
|
85,000 |
|
- |
|
|
|
Revolving credit facility |
|
|
8,207 |
|
- |
|
|
|
Debt issuance costs |
|
|
(2,186) |
|
(850) |
|
|
|
Interest expenses |
|
|
3,321 |
|
2,125 |
|
|
|
Interest paid |
|
|
(1,934) |
|
(1,275) |
|
|
|
Net foreign exchange |
|
|
58 |
|
- |
|
|
|
Repayment of loan |
|
|
(11,818) |
|
(85,000) |
|
|
|
At 31 December 2021 |
|
|
117,384 |
|
- |
|
|
|
Current portion |
|
|
19,554 |
|
- |
|
|
|
Non-Current portion |
|
|
97,830 |
|
- |
|
|
Shareholder loan
On 5 March 2021, Kape has entered into a binding commitment letter with TS Next Level Investments Limited ("TSNLI") under which TSNLI committed, subject to limited conditions, to provide to Kape the Bridge Loan of up to $120 million in aggregate. The Bridge Loan carried a fixed coupon of 6.0% per annum payable on funds drawn and an arrangement fee of 1.0%. The Bridge Loan was subordinated to Kape's existing bank facilities and was repayable no later than 31 December 2021. The Bridge Loan also included certain customary obligations on Kape in relation to TSNLI's costs and expenses and in relation to taxes. On 2 June 2021, Kape repaid the Bridge Loan in full and accumulated interest following closing of a new bank debt facility as described below.
Shareholder Deferred Consideration Facility
On 14 September 2021, TS Next Level Investments Limited ("TSNLI"), an affiliate of Unikmind, has entered into binding commitment letters with the Group ("Deferred Consideration Facility"), subject to limited conditions, to make available to Group, if required, loan facilities of up to $345 million in aggregate in connection with Kape's obligation to pay ExpressVPN's Deferred Cash Consideration. Furthermore, Refinancing Facility of up to $130 million provided until the Group achieved the club of banks consent to the acquisition.
The Deferred Consideration Facility will carry a variable coupon, depending on the leverage ratio: if greater than or equal to 3:1 the coupon will be 4.75% per annum, if greater than or equal to 2:1 but less than 3:1, then the coupon will be 4.25% per annum and if less than 2:1 then the coupon will be 4.00% per annum, in each case, on funds drawn. The rates set out above will each increase by 1.00% per annum on and from the second anniversary of the completion of the Acquisition and will increase by a further 1.00% per annum on and from the third anniversary of the completion of the Acquisition.
The Deferred Consideration Facility also carried an arrangement fee of 1.5% of the total commitments, paid in December 2021 following the completion of ExpressVPN acquisition, and a commitment fee accruing at the rate of 3.50% per annum on undrawn commitments, payable on the earlier of the commitments being cancelled or utilised. Should Kape find an alternative source of financing to fund the payment of the Deferred Consideration or to refinance the Deferred Consideration Facility, the commitment fees will only be payable pro rata for the period during which the commitment under the Deferred Consideration Facility is in place.
The Deferred Consideration Facility also include certain customary obligations on Kape in relation to, inter alia, TSNLI's costs and expenses and in relation to taxes.
Bank loan
(a) General
On 28 April 2020, Kape agreed with Bank of Ireland, Barclays Bank, and Citi Bank (the "Banks"), to provide a senior secured term and revolving credit facilities of up to $70 million (the "New Debt Facilities"), the facility is a club of banks with Bank of Ireland acting as the agent bank.
The Old Debt Facilities comprise of a $40 million term facility (the "Term Facility"), a $10 million revolving credit facility (the "RCF"), and a $20 million uncommitted acquisition facility (the "Uncommitted Acquisition Facility"). The Old Debt Facilities have a three-year term with an option to extend by up to an additional two years.
On 28 May 2021 the Company agreed with Bank of Ireland, Barclays Bank PLC, Citi Bank, Citizens Bank, BNP Paribas and Leumi Bank (together, "the Banks"), to replace the Old Term Facility, RCF and Shareholder loan with a new senior secured bank facilities of up to $220 million ("New Debt Facilities"). The New Debt Facilities comprise a $120 million senior secured term facility (the "Term Facility"), a $10 million revolving credit facility (the "RCF") and a $90 million uncommitted acquisition facility (the "Uncommitted Acquisition Facility"). Bank of Ireland is the agent bank. The New Debt Facilities have a three-years term with an option to extend the term by up to an additional two years. 50% of the Term Facility will be amortised on a quarterly basis across 36 months starting September 2021. The New Debt Facilities carry an opening Margin of 2% above Applicable Reference Rate per annum.
On 15 December 2021 the Banks, have given its consent to the ExpressVPN Acquisition and extended their revolving credit facility to Kape from $10 million to $80 million. The revolving credit facility can be utilized according to Kape's needs.
Term Facility
The term facility comprised from $34.5 million remaining from the old term facility and net proceeds of the New Term Facility of $83.3 million after deducting commissions and other direct costs of the Term Facility. Commissions and other direct costs of the Term Facility have been offset against the principal balance and are amortised throughout the loan.
The Term Facility carries an interest rate of 3 months Applicable Reference Rate, which is USD or EUR EURIBOR or GBP SONIA, (as of the beginning of the relevant period) plus an opening Margin of 2% per annum.
The applicable Margin is linked to the Adjusted Leverage, tested at the end of each quarter for the preceding 12 months. Until 15 December 2021, in case the Adjusted Leverage will be greater than 2 or less than 1 the applicable margin will change to 2.25% or 1.85%, respectively. Following ExpressVPN Acquisition and the Banks consent, the applicable Margin range has modified. if greater than or equal to 3:1 the coupon will be 2.75% per annum, if greater than or equal to 2.5:1 but less than 3:1, then the coupon will be 2.5% per annum, if greater than or equal to 2.0:1 but less than 2.5:1, then the coupon will be 2.25% per annum, if greater than or equal to 1.0:1 but less than 2.0:1, then the coupon will be 2.0% per annum if less than 1:1 then the coupon will be 1.85% per annum, in each case, on funds drawn.
As The applicable margin as of 31 December 2021, is 2.75% (2020: 1.85%). The effective interest rate after considering debt issuance cost is 3.866% (2020: 3.975%).
RCF
A $80 million revolving credit facility, that carries a commitment fee for the unused facility of 35% of the applicable Margin and interest rate as of the Term Facility for the used facility. As of the reporting date the total credit facility drawn amount is $10.0 million. Arrangement Fee of 0.2% shall be paid upon the $70 million extended facility.
(b) Security
The New Debt Facilities are secured by first ranking security over all assets (including material Intellectual Property) of Kape Technologies Plc ("Parent") and her material subsidiaries ("Obligors") and over the shares in all Obligors (other than the Parent). The newly formed or acquired companies as part of the ExpressVPN acquisition were excluded as obligors, with the exception of charge over the shares of Kape Acquisition Pte. Ltd, the buyer of the ExpressVPN's business.
(c) Loan Covenants
The Group is required to comply with the following financial covenants:
· The ratio of EBITDA to Net Finance Charges ("Interest Cover") shall not be less than 4.0x in respect of any Relevant Period.
· The ratio of Total Net Debt on the last day of the relevant period to Adjusted EBITDA in respect of that Relevant period ("Adjusted Leverage"), shall not exceed 2.5x for the first 1 relevant period, From and including 30 June 2020 to and including 30 September 2021, 3.5x from and including 31 December 2021 to and including 30 September 2022, 2.5x from and including 31 December 2022 to and including 31 March 2023 , 2.0x from and including 30 June 2023 and each Relevant Period thereafter.
As of 31 December 2021, the Group has met the financial covenants as follows:
· Interest Cover: 10
· Adjusted Leverage: 2.88
Fair Value
As of December 31, 2021, the fair values are not materially different from the carrying amount of the Bank Loan, since the interest payable is deemed to be market rate.
13 Onerous contract liability
On 28 October 2020, as part of LTMI's founders buy-back transaction, the Company terminated the consultancy services arrangement provided to the Company by Andrew Lee through a services company. The remaining contract liability will be paid in monthly instalments, starting November 2020. As of December 31, 2021, the provision balance is $0.7 million (2020: $1.4 million). The remaining amount will be settled in 2022.
14 Deferred and contingent consideration
|
|
DriverAgent Acquisition |
Private Internet Access Inc acquisition - deferred cash consideration |
Private Internet Access Inc acquisition - deferred assets consideration |
Webselenese acquisition |
ExpressVPN acquisition |
Total |
|
|
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
At 1 January 2020 |
192 |
18,611 |
817 |
- |
- |
19,620 |
|
Deferred consideration payments |
- |
(5,257) |
- |
- |
- |
(5,257) |
|
Non-Cash deferred consideration proceeds |
- |
- |
(570) |
- |
- |
(570) |
|
Unwinding of discount |
- |
948 |
- |
- |
- |
948 |
|
At 31 December 2020 |
192 |
14,302 |
247 |
- |
- |
14,741 |
|
Deferred consideration payments |
- |
(10,714) |
- |
(3,332) |
- |
(14,046) |
|
Non-Cash deferred consideration proceeds |
- |
- |
(247) |
- |
- |
(247) |
|
Arising from business combination (see note 10) |
- |
- |
- |
7,357 |
359,156 |
366,513 |
|
Fair value movement through profit and loss |
(140) |
- |
- |
370 |
- |
230 |
|
Unwinding of discount |
- |
696 |
- |
42 |
170 |
908 |
|
Foreign Exchange movements |
- |
- |
- |
188 |
- |
188 |
|
At 31 December 2021 |
52 |
4,284 |
- |
4,625 |
359,326 |
368,287 |
|
Short term |
- |
4,284 |
- |
4,625 |
190,428 |
199 ,3 37 |
|
Long term |
52 |
- |
- |
- |
168,898 |
168,950 |
(a) Acquisition of DriverAgent intangibles
In October 2016, the Group acquired the intellectual property of PC maintenance software product, DriverAgent, from eSupport.com, Inc for a total consideration of $1.2 million. As for 31 December 2021, the consideration included $0.05 million of consideration (2020: $0.2 million) which is contingent on future results.
(b) Sale of the Media Division
On 26 July 2018, the Group sold the media division to Ecom Online Ltd. This sale is in-line with the Company's strategy to develop and distribute its own cybersecurity products. As agreed, the Group will receive a 50% share of EBITDA from the Media division for the next five years following the sale, which will be reinvested in the Group's core Digital Security and Digital Privacy segments. As at 31 December 2021, the consideration included $Nil million (2020: $nil million) of deferred consideration receivable.
(c) Acquisition of Private Internet Access Inc
On 13 December 2019, the Group acquired 100% of the share capital of LTMI Holdings ("PIA"). LTMI is the holding company for Private Internet Access Inc ("PIA"), a leading US-based digital privacy company with strong position in the data privacy services. PIA was acquired for a total consideration of $130.1 million (including the $5.7 million to PIA phantom shareholder) and an enterprise value of $162.3 (including $32.2 million for repayment of PIA's existing debt), to be satisfied by a combination of $85.0 million cash and issuance of 42,701,548 new Kape ordinary shares to be paid in three phases:
● A payment upon closing of $65.0 million in cash of which $27.1 million to PIA founders, $5.7 million to PIA phantom shareholder and $32.2 million for repayment of PIA's existing debt, and 11,648,059 Consideration shares.
● A payment on the first anniversary of completion of $5.0 million in cash ("Deferred cash consideration"), 23,290,117 Consideration shares and Company owned cars ("Deferred assets consideration").
● A payment on the second anniversary of completion of $15.0 million in cash ("Deferred cash consideration"), 7,763,372 Consideration shares and Company owned cars ("Deferred assets consideration").
On 28 October 2020, the Company and the LTMI Founders reached an agreement with respect to the sale and purchase of the Initial Consideration Shares and their right to receive the Deferred Consideration Shares, for a total consideration of approximately $72.5 million. On 6 November 2020, the Company completed the transaction. As of 31 December 2020, the Company holds the Initial Consideration Shares in Treasury.
As of 31 December 2021, the deferred consideration balance included $4.3 million (2020: $14.3 million) of deferred cash consideration, $1.35 million (2020: $1.35 million) of shares consideration.
(d) Acquisition of Webselenese
On 5 March 2021 (the "Closing date"), the Group acquired 100% of the share capital of Uma Capital Ltd and Ani Ariel Ltd, which are the owners of Webselenese Ltd ("Webselenese") and assets from Gclid Ltd, a digital platform which provides independent and highly valued consumer privacy and security content to millions of users globally via market leading review sites, as further described in Note 10. The acquisition consideration included the following deferred and contingent considerations:
● Deferred cash consideration of $2.99 million for the excess working capital of Webselenese at the closing date. The consideration was settled 90 days after closing.
● Gclid will receive 8% from EBITDA resulted from Gclid assets sold. The Company can acquire the royalties right at any point, in amount equal the last 12 months EBITDA multiple by 5.5. As of the acquisition date the fair value of the deferred consideration was $2.6 million. As of 31 December, the deferred consideration fair value is $2.7 million.
● Deferred cash consideration of $1.76 million which represents the excess income tax advances that were paid by Webselenese before the acquisition date.
(e) Acquisition of ExpressVPN
On 15 December 2021 (the "Closing date", "Completion"), the Group acquired certain assets, liabilities and service entities together comprising the ExpressVPN business ("ExpressVPN") from Access Global Limited and its subsidiaries ("Access Global"), ExpressVPN is one of the most recognised brands in the digital privacy space and the Acquisition creates a premium digital privacy and security player best positioned to serve the growing demand for digital privacy, as further described in Note 10.
ExpressVPN was acquired for a total consideration of $925.8 million to be satisfied by combination of:
· A payment upon closing of $334.5 million in cash ("Initial Consideration"). The cash element of the Initial Consideration is subject to adjustment for net cash or debt in the two corporate service entities being acquired as part of the hybrid asset and share acquisition.
· A payment on or before the six-month anniversary of Completion, of $20.0 million.
· A payment on the first anniversary of Completion of $172.5 million in cash and on the second anniversary of Completion of $172.5 million in cash ("Deferred Cash Consideration"). The Deferred Cash Consideration is not subject to performance or other conditions and its payment by Kape will be secured by way of a charge over the shares in Kape.
· Issuance of 47,782,800 ordinary shares of $0.0001, to Peter Burchhardt and Dan Pomerantz, ExpressVPN's co-founders, representing approximately 13.6% of the enlarged issued share capital of Kape. The share consideration is subject to lock-up periods, of which 50% until the first anniversary of closing, 25% until 18 months from closing and the remaining 25% until the second anniversary.
As of 31 December 2021, the deferred consideration balance included $359.3 million (2020: N/A) of deferred cash consideration.
Shareholder information and advisors
Shareholder information, including financial results, news and information on products and services, can be found at www.kape.com.
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Independent Auditor |
Corporate Legal Advisors |
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BDO LLP 55 Baker Street London W1U 7EU
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Bryan Cave Leighton Paisner LLP Adelaide House London Bridge London EC4R 9HA
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Nominated Advisor and Joint Broker |
Joint Broker |
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Shore Capital & Corporate Limited Shore Capital Stockbrokers Limited Cassini House 57 St James's Street London SW1A 1LD |
Stifel Nicolaus Europe Limited 150 Cheapside London EC2V6ET
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Investor Relations |
Registrars |
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Vigo Communications Sackville House 40 Piccadilly London W1J 0DR
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Computershare Investor Services (Jersey) Limited Queensway House Hilgrove Street St Helier Jersey JE1 1ES |
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Registered Office
Sovereign House
4 Christian Road
Douglas
Isle of Man IM1 2SD
Stock exchanges
The Company's ordinary shares are listed on the AIM market of the London Stock Exchange under the symbol "KAPE". The Company does not maintain listings on any other stock exchanges.
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