Interim Results

RNS Number : 7257F

Cerillion PLC

22 May 2017

 

22 May 2017

AIM: CER

Cerillion plc

("Cerillion" or "the Company" or "the Group")

Interim results for the six months ended 31 March 2017

Cerillion, the billing, charging and customer relationship management software solutions provider, today issues its interim results for the six months ended 31 March 2017¹.

Highlights

·     Continuing encouraging progress

·     Revenue up by 10% to £7.5m (2016: £6.9m)

-    helped by strong growth in software revenue², up 47% to £4.1m

-    services revenue contributed £3.1m

·     Recurring revenue³ accounted for 29% of total revenues at £2.2m (2016: £2.2m)

·     Strong level of new orders, up by 37% to £9.4m (2016: £6.9m) - a record for any six-month period

·     Back order book⁴ up by 11% to £14.7m (2016: £13.3m) - a record level

·     Adjusted profit before tax up by 31% to £0.9m¹ (2016: £0.7m)

·     Adjusted earnings per share up by 25% to 2.8p⁵ (2016: 2.3p)

·     Net cash as at 31 March 2017 stood at £1.1m 

·     Interim dividend increased by 8% to 1.4p (2016: 1.3p)

·     Major new contracts included:

-     $2.8m follow-on contract with major customer in the Americas

-     €3.3m contract with a new, quad-play customer in Europe

-     €2.4m contract with a new, wholesale customer in Europe

·     Group remains well positioned for further progress

Louis Hall, CEO of Cerillion, commented:

"We have made pleasing progress over the period, delivering increased profitability, in line with management expectations. Our core enterprise software business secured significant new orders, including two new customer wins, as well as a major follow-on contract with an existing customer. These new wins, combined with our back order book which stands at a record high, will help to underpin the Group's ongoing performance.

With a strong level of contracted sales in place, the Board anticipates further progress over the second half and believes that Cerillion remains well positioned to meet its expectations for the full year."

Notes

¹ Cerillion plc acquired Cerillion Technologies Limited on 18 March 2016 in conjunction with the completion of its IPO on AIM.  Prior to 18 March 2016, Cerillion plc had no trading activity.  Consequently, the results referred to in these highlights and in the Chairman and Chief Executive Officer's Report are based on the consolidated figures for the Cerillion Technologies Limited Group, prepared under United Kingdom Generally Accepted Accounting Principles, which includes Cerillion Technologies Limited and its subsidiaries (Cerillion (India) pvt and Cerillion Inc). Interim Financial Information for Cerillion plc is included in Appendix 1.

2 Revenue derived from software licence, support and maintenance sales.

³ Recurring revenue includes annualised support and maintenance, managed service and Skyline revenue.

⁴ Back order book consists of £10.4m of sales contracted but not yet recognised at the end of the reporting period plus £4.3m of annualised support and maintenance revenue.  It is anticipated that 70% of the £10.4m of sales contracted but not yet recognised as at the end of the reporting period will be recognised within the next 4 to 5 quarters.

⁵ Based on earnings for Cerillion Technologies Limited for the reporting period and the total number of Cerillion plc shares in issue as at 31 March 2017.

For further information please contact:

Cerillion plc Louis Hall, CEO Oliver Gilchrist, CFO		c/o KTZ Communications T: 020 3178 6378
Shore Capital (Nomad and Broker)		T: 020 7408 4090
Bidhi Bhoma Toby Gibbs
KTZ Communications		T: 020 3178 6378
Katie Tzouliadis Emma Pearson

About Cerillion

Cerillion is a leading provider of mission critical software for billing, charging and CRM, with a 17 year track record in providing comprehensive revenue and customer management solutions. The Company has 80 customer installations across 42 countries, principally serving the telecommunications market.

The Company is headquartered in London and also has operations in Pune, India, Miami and Sydney.

 

CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S REPORT

Overview

Cerillion continues to make very encouraging progress and the financial results for the six months ended 31 March 2017 reflect this.  Revenue is up by 10% to £7.5m, helped by strong software revenue sales, and adjusted profit before tax is up by 31% to £0.9m, in line with management expectations. New orders secured in the period were also strong, rising by 37% to £9.4m, a new high for a six month period.

The Company remains well positioned for the second half of the year and we continue to work on a strong pipeline of new customer opportunities. 

Financial Overview

For the six months to 31 March 2017, the Group's total revenue rose by 10% to £7.5m (2016: £6.9m), helped by strong growth in software revenues², which increased by 47% to £4.1m (2016: £2.8m) and accounted for 54% of total revenue (2016: 41%).  This significant increase reflected both the level of new software licence sales as well as the growth in the customer base.

Services revenue contributed £3.1m (2016: £3.7m) and made up 41% of total revenue (2016: 53%). Third party income was stable at £0.4m (2016: £0.4m) and accounted for 5% of total revenue (2016: 6%).

Established customers (those acquired at least 12 months before the beginning of the reporting period) typically generate a high proportion of the Group's income and, in the first half, established customers generated 79% of total revenue (2016: 78%). Recurring revenue, from support and maintenance and managed service contracts, was broadly flat at £2.2m (2016: £2.2m) and accounted for 29% of the Group's income (2016: 32%). 

As expected, overhead costs increased to £4.1m (2016: £3.8m), reflecting the expansion in resource, with personnel costs higher at £2.5m (2016: £2.3m).

Increased revenues largely drove the significant rise in adjusted operating profit, which was 40% higher at £1.0m (2016: £0.7m). The charge for amortisation of R&D costs was £0.4m (2016: £0.2m).

Adjusted profit before tax rose by 31% to £0.9m (2016: £0.7m) and adjusted earnings per share increased by 25% to 2.8p⁵ (2016: 2.3p).

The Group ended the period with increased net assets of £12.9m (2015: £12.1m) of which £5.3m was cash (2016: £6.5m).

Cash Flow and Banking

Net cash as at 31 March 2017 stood at £1.11m, reflecting cash at £5.25m and debt at £4.14m (2016: £5m).  The Company generated net cash from operations of £1.825m in the six month period to 31 March 2017.

Expenditure on capitalised R&D was in line with the prior period at £0.3m as we continued to invest in product development to enhance our intellectual property. Expenditure on fixed assets was £0.075m (2016: £0.1m), resulting in free cash generation of £1.45m in the period.  This was utilised to pay the final dividend of £0.8m declared in respect of the year ended 31 December 2016 and to repay £0.4m of the £5m term loan taken up in conjunction with the AIM IPO, £0.9m has now been repaid since the IPO (2016: nil).  

Dividend

 

The Board is pleased to declare an interim dividend of 1.4p per share.  This represents an 8% increase on the prior year's interim dividend of 1.3p per share.  The interim dividend will become payable on 22 June 2017 to those shareholders on the Company's register as at the close of business on the record date of 2 June 2017.  The ex-dividend date is 1 June 2017.

As previously stated, the Board intends to pay out between a third to a half of the Group's free cash flow as dividends each year, subject to the Group's performance. 

Operational Overview

The Company's admission to AIM in March 2016 has enhanced Cerillion's market positioning and, later in the year, in November 2016, we were also pleased to see Cerillion designated in the "Visionaries" quadrant of Gartner's report*, "Magic Quadrant for Integrated Revenue and Customer Management (IRCM) for CSPs".  In the prior year, in 2015, Cerillion was positioned in the "Niche Players" quadrant.  Gartner evaluated both our core Cerillion Enterprise suite, the Company's pre-integrated BSS/OSS solution, as well as Cerillion Skyline, our Software-as-a-Service (SaaS) billing and subscription management solution. 

We were pleased with the progress the Group made over the first half.  We secured new orders worth a total of £9.4m (2016: £6.9m) for our enterprise CRM and billing platform.  This included the three major wins we previously announced, which were: a $2.8m contract with an existing customer in the Americas; a €3.3m agreement with new customer, Scarlet, a  Belgian virtual network operator, owned by Proximus, which provides fixed and mobile telephony services to the residential market; and a €2.4m contract with a new wholesale customer in Europe. 

It is worth highlighting that our real-time Convergent Charging System ("CCS") helped to secure these major wins.  CCS is a key differentiator as it enables telecoms operators and service providers to converge prepaid and postpaid billing for fixed and mobile services on a single platform, a key goal. The solution extends our coverage into prepaid as well as postpaid applications and is particularly relevant to the faster growing mobile and mobile data sectors.

The new order wins resulted in an 11% (or £1.4m) increase in our back order book⁴ to a record high of £14.7m (2016: £13.3m) and will help to drive implementation projects over the coming quarters.  In addition to this, we are currently bidding on a range of strong opportunities and hope to convert a number of these.

We also saw an encouraging uptick in the Cerillion Skyline's pipeline.  This still nascent part of the business leverages Cerillion's sophisticated billing capability - developed for the telecoms market place - to open up opportunities in other sectors.  Our solution is a completely new cloud billing application which enables service providers of all sizes to access the same powerful billing capabilities that could previously only be afforded by large companies with significant resources.

Our new operations, in Miami and Australia, support our existing activities in these regions and are helping to drive new customer opportunities. 

Outlook

The strong level of new orders won in the first half is very encouraging and will help to underpin ongoing growth in the second half of the year and beyond.  Accordingly, the Board looks forward to reporting on further progress and believes that Cerillion remains well positioned to meet its expectations for the full year.

Louis Hall, Chief Executive Officer

Alan Howarth, Chairman

Notes:

¹ Cerillion plc acquired Cerillion Technologies Limited on 18 March 2016 in conjunction with the completion of its IPO on AIM.  Prior to 18 March 2016, Cerillion plc had no trading activity.  Consequently, the results referred to in these highlights and in the Chairman and Chief Executive Officer's Report are based on the consolidated figures for the Cerillion Technologies Limited Group, prepared under United Kingdom Generally Accepted Accounting Principles, which includes Cerillion Technologies Limited and its subsidiaries (Cerillion (India) pvt and Cerillion Inc).  Interim Financial Information for Cerillion plc is included in Appendix 1.

2 Revenue derived from software licence, support and maintenance sales.

³ Recurring revenue includes annualised support and maintenance, managed service and Skyline revenue.

⁴ Back order book consists of £10.4m of sales contracted but not yet recognised at the end of the reporting period plus £4.3m of annualised support and maintenance revenue.  It is anticipated that 70% of the £10.4m of sales contracted but not yet recognised as at the end of the reporting period will be recognised within the next 4 to 5 quarters.

⁵ Based on earnings for Cerillion Technologies Limited for the reporting period and the total number of Cerillion plc shares in issue as at 31 March 2017.

*Gartner Report

Gartner Magic Quadrant for Integrated Revenue and Customer Management for CSPs by Norbert J Scholz, Jouni Forsman, Amresh Nandan, 17 October 2016.  Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.  The Gartner Report(s) described herein, (the "Gartner Report(s)") represent(s) research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), and are not representations of fact. Each Gartner Report speaks as of its original publication date (and not as of the date of these Accounts) and the opinions expressed in the Gartner Report(s) are subject to change without notice.
 

Proforma Consolidated Income Statement*

for the six months ended 31 March 2017

				2017		2016
				£		£
Revenue				7,544,199		6,853,228
Cost of sales				(1,921,620)		(1,897,375)
Gross profit				5,622,579		4,955,853
Admin expenses				(4,119,064)		(3,827,182)
EBITDA				1,503,515		1,128,671
Depreciation & amortisation				(518,838)		(427,166)
Operating profit				984,677		701,505
Financial expenses				(61,585)		(1,198)
Financial income				1,523		3,167
Profit before tax				924,615		703,474
Tax				(95,807)		(38,716)
Profit for period				828,808		664,758

*Cerillion plc acquired Cerillion Technologies Ltd on 18 March 2016 in conjunction with the completion of its IPO on AIM.  Prior to 18 March 2016, Cerillion plc had no trading activity.  Consequently, this Pro-Forma Consolidated Income Statement is based on the consolidated figures for the Cerillion Technologies Limited Group, which includes Cerillion Technologies Ltd and its subsidiaries (Cerillion (India) pvt and Cerillion Inc). 

 

Appendix 1:  Cerillion plc Interim Financial Information

Unaudited Consolidated Statement of Comprehensive Income⁸

for the six months ended 31 March 2017

£	Consolidated Unaudited half year to 31 Mar 2017	Consolidated Unaudited half year to 31 Mar 2016	Consolidated Audited year to 30 Sep 2016
Continuing operations
Revenue	7,544,199	411,117	8,364,774
Cost of sales	(1,921,620)	(141,461)	(2,262,699)
Gross profit	5,622,579	269,656	6,102,075
Operating expenses	(4,837,357)	(266,683)	(4,923,584)
Operating profit before exceptional transaction costs	785,222	2,973	1,178,491
Exceptional transaction costs	-	(826,783)	(746,055)
Operating profit/(loss)	785,222	(823,810)	432,436
Finance costs	(61,584)	(57)	(199,559)
Finance income	1,523	3,728	6,059
Profit/(loss) before tax	725,161	(820,139)	238,936
Taxation	(1,488)	-	68,032
Profit/(loss) for the period	723,673	(820,139)	306,968
Other comprehensive income
Exchange differences on translating foreign operations	5,203	-	145,913
Total comprehensive profit/(loss) for the period	728,876	(820,139)	452,881
All transactions are attributable to the owners of the parent.
Basic and diluted profit/(loss)  per share
from continuing operations	2.45 pence	(6.2) pence	1.3 pence

⁸ Comparatives for FY2016 do not include a full year of results of the subsidiary companies as the Group was only formed from the date of acquisition, being 18 March 2016.
 

Unaudited Condensed Consolidated Statement of Changes in Equity

as at 31 March 2017

£	Share capital	Share premium	Foreign exchange reserve	Retained earnings	Total Equity
Balance at 1 October 2015	15,660	-	-	(580,500)	(564,840)
Loss for the period	-	-	-	(820,139)	(820,139)
Total comprehensive income	-	-	-	(820,139)	(820,139)
Shares issued	131,907	13,318,725	-	-	13,450,632
Balance at 31 March 2016	147,567	13,318,725	-	(1,400,639)	12,065,653
Profit for the period	-	-	-	1,127,107	1,127,107
Exchange difference on translating foreign operations	-	-	145,913	-	145,913
Total comprehensive income	-	-	145,913	1,127,107	1,273,020
Dividends	-	-	-	(383,675)	(383,675)
Balance at 30 September 2016	147,567	13,318,725	145,913	(657,207)	12,954,998
Profit for the period	-	-		723,673	723,673
Exchange difference on translating foreign operations	-	-	5,203	-	5,203
Total comprehensive income	-	-	5,203	723,673	728,876
Dividends	-	-	-	(767,349)	(767,349)
Balance at 31 March 2017	147,567	13,318,725	151,116	(700,883)	12,916,525

 

Unaudited Condensed Consolidated Balance Sheet⁸

as at 31 March 2017

£	Unaudited Note	Consolidated Unaudited 31 Mar 2017	Consolidated Unaudited 31 Mar 2016	Consolidated Audited 30 Sep 2016
Assets
Non-current
Goodwill		2,053,141	1,973,141	2,053,141
Intangible assets		6,689,066	6,949,814	6,979,370
Property, plant and equipment		363,584	400,799	411,505
Deferred tax		320,282	363,394	320,546
		9,426,073	9,687,148	9,764,562
Current assets
Trade receivables		3,245,899	2,927,708	2,894,015
Other receivables	4	6,342,830	4,426,179	6,270,857
Cash and cash equivalents		5,254,523	6,454,430	5,006,185
		14,843,252	13,808,317	14,171,057
Total assets		24,269,325	23,495,465	23,935,619
Equity and liabilities
Shareholders' equity
Called up share capital		147,567	147,567	147,567
Share premium account		13,318,725	13,318,725	13,318,725
Foreign exchange reserve		151,116	-	145,913
Retained loss		(700,883)	(1,400,639)	(657,207)
Total Equity		12,916,525	12,065,653	12,954,998
Liabilities
Non-current
Borrowings		3,138,111	4,000,000	3,572,602
Other non-current liabilities		1,186,486	1,440,465	1,400,805
		4,324,597	5,440,465	4,973,407
Current liabilities
Trade payables		651,254	919,162	336,684
Other payables	4	5,376,949	4,070,185	4,670,530
Borrowings - current		1,000,000	1,000,000	1,000,000
		7,028,203	5,989,347	6,007,214
Total equity and liabilities		24,269,325	23,495,465	23,935,619

Unaudited Condensed Consolidated Cash Flow Statement

for the six months ended 31 March 2017

£	Consolidated Unaudited half year to 31 Mar 2017	Consolidated Unaudited half year to 31 Mar 2016	Consolidated Audited  year to 30 Sep 2016
Operating activities
Reconciliation of profit to operating cash flows
Profit/(loss) for the period	723,673	(820,139)	306,968
Add back:
Taxation	1,488	-	(68,032)
Depreciation	127,988	9,157	142,695
Amortisation and impairment	590,304	17,927	571,555
Finance costs	61,584	57	199,559
Finance income	(1,523)	(3,728)	(6,059)
	1,503,514	(796,726)	1,146,686
(Increase)/ decrease in trade and other receivables	(423,857)	45,119	(1,765,866)
Increase/ (decrease) in trade and other creditors	868,989	(106,823)	(101,524)
Cash from/(used in) operations	1,948,646	(858,430)	(720,704)
Finance costs	(61,584)	(57)	(72,981)
Finance income	1,523	3,728	6,059
Tax paid	(63,543)	-	(30,511)
Net cash flows generated from/(used in) operations activities	1,825,042	(854,759)	(818,137)
Investing activities
Acquisition of subsidiary undertakings, net of cash and overdrafts acquired	-	(11,129,200)	(11,129,200)
Capitalisation of development costs	(300,000)	-	(601,111)
Purchase of property, plant and equipment	(74,496)	(27,084)	(136,993)
Net cash flows used in investing activities	(374,496)	(11,156,284)	(11,867,304)
Financing activities
Issue of ordinary share capital	-	13,450,632	13,450,632
Borrowings repaid	(434,492)	-	(427,398)
Borrowings received	-	5,000,000	5,000,000
Dividends paid	(767,349)	-	(383,675)
Net cash flows (used in)/generated from financing activities	(1,201,841)	18,450,632	17,639,559
Net increase/ (decrease) in cash and cash equivalents	248,705	6,439,589	4,954,118
Translation differences	(367)	-	37,226
Cash and cash equivalents at beginning of period	5,006,185	14,841	14,841
Cash and cash equivalents at end of period	5,254,523	6,454,430	5,006,185

Unaudited Notes

1.   Basis of Preparation and Accounting Policies

The condensed financial information is unaudited and was approved by the Board of Directors on 19 May 2017.

The Company is a public limited company, which was incorporated in England and Wales on 5 March 2015. The address of its registered office is 125 Shaftesbury Avenue, London, WC2H 8AD. The interim financial information for the six months ended 31 March 2017 has been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations endorsed by the European Union (EU). The interim financial information for the six months ended 31 March 2017 has been prepared under the historical cost convention.

The interim financial information for the six months ended 31 March 2017 does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 and no statutory accounts have been prepared, audited or filed with the Registrar of Companies in England and Wales since incorporation.

The preparation of the interim financial information for the six months ended 31 March 2017 in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Statements and the reported amounts of revenues and expenses during the period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.

There is no material difference between the fair value of financial assets and liabilities and their carrying amount.

The functional and presentational currency is UK Sterling.

2.   Going concern

The Directors have assessed the current financial position of the Group, along with future cash flow requirements, to determine if the Group has the financial resources to continue as a going concern for the foreseeable future. The conclusion of this assessment is that it is appropriate that the Group be considered a going concern. For this reason the Directors continue to adopt the going concern basis in preparing the interim financial information for the six months ended 31 March 2017. The interim financial information does not include any adjustments that would result in the going concern basis of preparation being inappropriate.

3.   Basis of consolidation

The consolidated financial information incorporates the financial information of the Company and entities controlled by the Company (its subsidiaries) at 31 March 2017. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefit from its activities.

Except as noted below, the financial information of subsidiaries is included in the consolidated financial statements using the acquisition method of accounting.  On the date of acquisition the assets and liabilities of the relevant subsidiaries are measured at their fair values.

All intra-Group transactions, balances, income and expenses are eliminated on consolidation.

 

4.   Other receivables and other payables

		Unaudited 31 Mar 2017 £	Unaudited 31 Mar 2016 £	Audited 30 Sep 2016 £
Other receivables
Amounts recoverable on contracts Prepayments		5,756,101 128,620	3,768,810 154,195	5,565,952 240,405
Other receivables		458,109	503,174	464,500
		6,342,830	4,426,179	6,270,857
Other payables
Taxation		131,714	121,444	99,714
Other taxation and social security		195,150	462,880	255,876
Pension		39,262	41,493	38,653
Accruals Deferred income		1,168,903 3,173,884	820,909 2,055,623	1,729,473 1,972,192
Ubisense loan		240,000	240,000	120,000
Derivative financial instrument Other payables		- 428,036	- 327,836	121,410 333,212
		5,376,949	4,070,185	4,670,530

5.   Availability of this announcement

This announcement together with the financial statements herein and a presentation in respect of the interim financial results are available on the Group's website, www.cerillion.com.

 

END

 

 

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