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Big Sofa Tech. Grp. (BST)

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Wednesday 28 June, 2017

Big Sofa Tech. Grp.

Final Results

RNS Number : 3567J
Big Sofa Technologies Group PLC
28 June 2017
 

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

28 June 2017

 

Big Sofa Technologies Group plc

 

("Big Sofa", the "Group" or the "Company")

 

Final Results for the Year Ended 31 December 2016

 

Big Sofa (AIM: BST), a fast-growing international video analytics provider to consumer brands and market research agencies, announces final results for the year ended 31 December 2016.

 

These results cover a period during the Company's development phase when Big Sofa was constrained by limited cash resources, prior to its admission to the AIM market on 19 December 2016 and associated fundraising of £6.1 million which has enabled the Company to accelerate growth.

 

2016 highlights

 

·     Successful listing on AIM on 19 December 2016

·     Raised £6.1 million by way of a placing of and subscription for new ordinary shares at 17 pence per share

·     Key benefits of the listing included:

o Expansion of US operations to target large market opportunity

o Accelerating near-term growth opportunities with key customers to develop a significant new business pipeline

o Strengthening management's ability to recruit, retain and incentivise employees

o Providing currency for selective bolt-on acquisitions

·     Revenues grew to £757,000 in 2016, with average monthly revenue approximately double that in 2015

·     Positioned the Company for growth, including hiring a new experienced senior management team, taking the total number of employees to 23 people as at 31 December 2016

 

Post year-end highlights

 

·     Strong start to 2017, with revenues in June more than three times greater than January

·     Secured several significant contracts which underpin a substantial new business pipeline, which are expected to contribute material revenues during the current year, including:

o Formally appointed as a global partner to Procter & Gamble (P&G) to facilitate the acquisition and analysis of both new and existing video content on projects across the global business

o A three-year Master Service Agreement signed with Ipsos which is delivering strong revenue growth

o Secured a Supplier Service Agreement with Survey Sampling International (SSI)

·     Big Sofa's software platform is now generating monthly recurring income

·     Expanded the Group's operational team to 34 across UK and US offices

·     Continued to focus on and invest in product development, recruiting a specialist product team to scope and specify new features that drive greater client value

 

Simon Lidington, Chief Executive Officer of Big Sofa, commented:

"The year culminated in our listing on AIM and the fundraising that enabled us to accelerate the commercialisation of our technology and the development of a material pipeline of business.

 

"With an even stronger foundation of blue-chip customers to build-upon, I am pleased to say that we are making excellent progress against our strategic objectives and signs of this are beginning to be reflected in current trading.

 

"I believe that the outlook for Big Sofa is extremely positive and anticipate that our existing partnerships with P&G, Unilever, Ipsos, SC Johnson and SSI will deliver material revenue during the current financial year.

 

"Big Sofa is exceptionally well-placed to capitalise on the vast opportunity that exists to help consumer brands and research agencies make genuine use of the large quantities of video content they are generating. We have received significant industry validation in a short space of time, as reflected in the three-year Master Service Agreement with Ipsos, a global partnership with P&G, a continuing global partnership with Unilever and the numerous relationships developing with new global clients.

 

"I look forward to reporting on further milestones as we work to build a profitable business of scale."

 

Enquiries

 

Big Sofa Technologies Group plc

via Vigo Communications

Simon Lidington, CEO

 

Matt Lynch, CSO

 

Joe MacCarthy, CFO

 

 

 

SPARK Advisory Partners (NOMAD)

+44 (0)20 3368 3554

Neil Baldwin / Mark Brady

 

 

 

Hobart Capital Markets (Broker)

+44 (0) 20 7070 5656

Lee Richardson / Raju Haldankar

 

 

 

Vigo Communications (Financial Public Relations)

+44 (0) 20 7830 9700

Jeremy Garcia / Ben Simons / Antonia Pollock


 

About Big Sofa Technologies Group plc

 

Big Sofa is a B2B technology business servicing the marketing and consumer insight industries with video analytics.

 

Our software platform collates, analyses and organises large volumes of raw/unstructured video content enabling companies to perform detailed and sophisticated consumer insight analysis; and make genuine use of their video content.

 

Until recently, video has been difficult and expensive to capture, upload, store, manage and analyse as a consumer insight tool. However, proliferation of smart phones has empowered consumers to speak directly to brands resulting in an evolution of consumer insight and data analytics techniques, with video emerging as a key platform in a massive $33 billion consumer research market.

 

Big Sofa's shares are admitted to trading on the London Stock Exchange's AIM market under the ticker BST.L.

 

To find out more, visit www.bigsofatech.com

 

Follow us on twitter at @bigsofatech

 

 

Chairman's Statement

 

I am pleased to present my first statement as chairman of Big Sofa.

 

While the period under review was itself largely irrelevant from a forward-looking perspective - in that it covers a period in which the Company was still in development mode - the year culminated in the transformational listing of Big Sofa's shares on AIM. The associated fundraising of £6.1 million would subsequently enable us to accelerate the commercialisation of our technology, open a US office, significantly increase our personnel and create a pipeline of new business opportunities which, I believe, will in due course underpin a step-change in revenues.

 

Subsequent to the year-end, I am delighted with the operational progress Big Sofa has made in its first six months since listing on AIM, in developing both the scope and scale of our software platform and a material new business pipeline.

 

Simon Lidington, our chief executive, elaborates on the commercial progress of the business in his operational review; however, notable achievements include a three-year Master Service Agreement signed with Ipsos, one of the top-five largest market research companies in the world; a global partnership with P&G; and a Supplier Service Agreement with Survey Sampling International, a leading global provider of data solutions and technology for consumer and business-to-business survey research.

 

Shareholders should be greatly encouraged by the third-party validation of our technology and services that the Company is receiving. The long-term strategic partnerships we have recently secured are with world-leading consumer brands and research companies, which we expect will become the backbone of the Company going forward, and a significant catalyst for growth. Our close client relationships define our business and distinguish Big Sofa from many of its peers, who continue to rely on short-term, low-value business.

 

Furthermore, the listing on AIM has provided the Company with an enhanced profile to attract and retain key staff alongside accelerating a number of key new business initiatives. The progress in building the teams both in the UK and the US is very promising.

I believe Big Sofa is exceptionally well-placed to capitalise on the significant demand for video analytics in the multi-billion dollar consumer insight sector and we look forward to reporting on further progress during 2017.

Nicholas Mustoe

27 June 2017

 

 

Operational Review

 

Introduction

 

Big Sofa is a B2B technology company that provides video analytics, with core customers including big brands and market research agencies who are increasingly using video as a key medium for conducting consumer insight in a multi-billion dollar a year global market.

 

Our scalable platform enables users to perform detailed analysis of video, images and audio content, by uploading unstructured video content to our proprietary, analytics platform, which then transcodes and, where appropriate, transcribes the data into a structured, downloadable archive of content.

 

Content can be uploaded from most current generation camera devices and the output translated from almost all spoken languages.

 

The proliferation of smartphones and tablets has transformed video into a fundamental means of communication between companies and consumers and between consumers themselves. By 2020, video is expected to account for 79 per cent. of all consumer internet traffic. As a result of this, the market for video analytics is anticipated to expand at a compound annual growth rate of 20.6 per cent to £7.19 billion between 2015 to 2023.

 

Over the last few months, Big Sofa has made significant progress converting customer relationships into formal agreements with a number of global clients.  This recent development not only allows the Company to establish clearly defined commercial parameters, but also confirms that the market research sector perceives Big Sofa's platform as the best-in-class for capturing, organising and analysing video to understand consumer behaviour.  This is fast becoming essential to clients with regards to their investment in R&D and marketing innovation.

 

The Company's unique technology and hybrid-Artificial Intelligence systems enable our clients to see how consumers actually behave, rather than how they say they behave, which is invaluable to brands and consumer insight agencies.  The accelerating demand from clients is evidence of Big Sofa's ability to generate ground-breaking consumer insights and drive innovation faster and better.

 

Big Sofa's platform

 

The platform's core functionality enables the automatic upload of video, image and audio files. Our software then runs an automatic association of the data uploaded enabling a more accurate and detailed search of the content to be undertaken by the client. This process involves transcoding, transcribing and translating the dialogue, allowing the client to categorise their content by the key themes they require.

 

Investment in the technology has enabled easier ingestion of video content, faster processing and a greatly enhanced ability to load, protect and access large volumes of video content anywhere in the world with high levels of confidence. Substantial improvements have been made to the robustness, security and scalability of the Company's core analytics platform.

 

Access to the platform

 

The Big Sofa platform can be used on a SaaS basis or in conjunction with Big Sofa's insight team, enabling customers to choose to manage as much or as little of the end-to-end process as they like. In addition, Big Sofa offers a range of ancillary services that make it easier for brands, agencies and consumers to upload video into the core platform. These technologies enable:

·     integration with existing survey software to enable video capture in any survey;

·     extraction of video from surveys into the core platform;

·     images or videos to be sent out for testing and video feedback to be received in response;

·     capture of consumer behaviours using a range of camera devices and methods for detailed tagging and analysis on the platform;

·     use of a broad range of analysis tools including tagging, text, tone of voice, emotional response, sentiment, object recognition, with AI playing an ever-increasing role; and

·     the creation of professional video reports to tell the insight story and present the key data.

 

Customers

 

Big Sofa's core customers can be split into two main categories: major brands/international companies and market research agencies.

 

Current blue-chip brand customers include P&G, Unilever, SC Johnson, Pernod Ricard and AB World Foods.

 

Market research agencies have developed both online and mobile technology to conduct research with consumers. Big Sofa is engaging with major market research agencies and marketing consultancies including Ipsos, Morpace, GfK, Survey Sampling International, Schireson Associates, Touchstone Partners and Niche Consulting to provide visual data analytics that help them add greater value to their end clients.

 

Post year-end developments

Since listing the Company on AIM in December 2016, the business has enjoyed success in leveraging key relationships with existing customers, including:

·     increased revenues from Unilever in Europe, Asia Pacific and the US;

·     increased revenues from SC Johnson in the US and Europe; and

·     projects with Pernod Ricard, Morpace, Mizzouri, The FA, Touchstone Partners, Schireson Assocs., Compass, Waterson Garner, AB World Foods and GfK

 

Our US office was opened in Philadelphia, PA in March 2017 - with sub-offices in Chicago and Cincinnati - to accelerate customer traction in the region. This has led to growth in our interaction with potential blue-chip clients and has brought the Company strong capabilities in sales, account management and operations.

 

In April 2017, the Company signed a three-year Master Service Agreement with Ipsos. The MSA is a global licence for a SaaS agreement, for an initial period of three years. It sets out the terms upon which the entire market research organisation and its affiliates may engage Big Sofa to provide video analytics technology and services through a co-branded platform in support of their rapidly increasing use of video and images to help their clients better understand consumers and markets.

 

Since January 2017 - including the period leading up to signing the MSA - Big Sofa and Ipsos have submitted over 120 co-branded proposals to multiple global clients in the Consumer Packaged Goods, Pharmaceutical, Automotive, Alcoholic Beverages, and Beauty sectors.

 

In addition, a Supplier Service Agreement was signed with Survey Sampling International ("SSI") in April 2017. SSI is a leading global provider of data solutions and technology for consumer and business-to-business survey research. Under the Agreement, Big Sofa supplies SSI with sophisticated video capture and analytics technology and services for their digital surveys.

 

In late May 2017, following an extensive procurement procedure, Big Sofa became an approved supplier to P&G on their global technology and research rosters, able to undertake projects that facilitate the acquisition and analysis of both new and existing video content for P&G. Previously, P&G  had commissioned a number of projects through an approved agency, but the demand for Big Sofa's services across their global business reached a level which meant they wanted to commission multiple projects directly with Big Sofa.

 

This strategic partnership with P&G has already led to over £500,000 worth of proposals submitted with £190,000 already commissioned in Q2 2017. Big Sofa also expects P&G's level of engagement with our technology to grow significantly in the future.

 

Big Sofa has been Unilever's globally preferred video partner since January 2016, and the first six months of 2017 saw encouraging signs of a growing interest in Big Sofa's technology from Unilever Consumer Technology Insight division - especially the R&D teams in Europe, North America and the UK. Other parts of Unilever are also interested in using Big Sofa's platform to analyse the link between early innovation work and the successful launch of products and marketing communications, and for large-scale video data analytics.

 

The contract momentum across the business is a strong endorsement of Big Sofa's proprietary software platform's ability to appeal to the wider consumer insight market.

 

The Company was also pleased to retain its ISO27001 accreditation for our information security management system for the second year running.

 

Furthermore, following the appointment of a Chief Technical Officer in Q4 2016, significant developments have been made to Big Sofa's technology offering including increasing the ease with which the platform can be integrated into customers' own systems, which is a focal part of Big Sofa's strategy for deployment of its software.

 

Outlook

 

We have made significant operational and financial progress in the first half of the year, growing a substantial new business pipeline from just c.£100,000 at the outset of the year to over £1.35 million today. Big Sofa's business comprises a mix of enterprise level and ad hoc contracts with clients. Both involve a recurring flow of project briefs that has increased as clients re-commission Big Sofa on a continuing basis.  While we naturally do not expect all of that pipeline to convert into revenues, of the proposals decided upon so far this year, Big Sofa has converted 54% by value; and the average opportunity size has increased from c.£5,000 in January to c.£15,000 in June.

 

Market awareness of Big Sofa is rising fast, and our strategy of targeting the biggest global clients and global agencies is proving highly successful. Global clients see Big Sofa as a long term strategic partner, able to help them ingest, curate and analyse large volumes of video. Global agencies, and in particular Ipsos, are fast realising the value that video can add to their research offering and are keen to work in partnership with Big Sofa to deliver it. In so doing, they are exposing Big Sofa to multiple major clients at a much faster rate than the Company could do on its own.

 

The board therefore believes that the outlook for Big Sofa is extremely positive and anticipates our existing partnerships with P&G, Unilever, Ipsos, SC Johnson and SSI will deliver material revenue during the current financial year.

 

Our unique platform provides our clients with real insight into consumer behaviour and, combined with the rapid adoption of the utilisation of video as a key element in good consumer research, gives the Board confidence that Big Sofa has the ability to become a genuinely disruptive force in that sector.

 

Our strong new business pipeline, robust technology platform and clear strategic focus leave us well placed to capitalise on this significant market opportunity.

 

Simon Lidington

Chief Executive Officer

27 June 2017

 

 

Financial Review


FY 2016

FY 2015*

 Change %


£'000s

£'000s

Pro rata*

Revenues

757

172

183%

Gross Profit

379

97

163%

Gross Margin

50%

56%


Operating expenses

4,676

443

440%

Operating Loss

(4,297)

(346)

-517%

 *based on 5 months' performance in 2015

The year under review was dominated by the Company's admission to AIM in which we raised £6.1 million through a placing and subscription. This has helped provide the funding for the Company to accelerate its operational focus by both further developing our technology and expanding our offering to an increasingly international, blue-chip client base.

 

During the year, revenues grew organically to £757,000, a 183% pro-rata increase in revenue, despite the injection of capital from the fundraise only happening in late December 2016. Gross profit was up 163% to £379,000 as Big Sofa continued to establish a foothold in the marketplace - a strategy which is coming into fruition in the current year, with growth in revenues from customers which are now established clients of Big Sofa.

Operating expenses include £785,000 of AIM listing costs and £705,000 of deemed reverse acquisition costs, both of which are non-recurring. The increase in underlying administrative costs relates to a rise in staff costs due to an increase in headcount in order to drive sales and develop our proprietary platform, with a particular focus on the hiring of an experienced, senior global team.

 

Many of the expenses associated with growing the business were incurred in the second half, which led to a number of creditors being built-up prior to Admission to AIM in late December. The funds raised at Admission were used, in part, to pay these creditors and further invest in the business. Going forward as a public company, whilst we will maintain tight control of expenses, we anticipate these will further increase as we execute on our growth strategy; but we also expect revenues and gross profit to rise exponentially.

The Company's cashflow in the year was dominated by the Admission to AIM and associated fundraising. Cash generated from financing activities was £6.8 million; cash used in operating activities, including the expenses of the AIM admission, was £2.8 million, and capex and other activities was £1.4 million. The balance sheet at the end of 2016 remained strong with cash of £2.5 million and we are already seeing significant revenue growth in the current financial year. 

 

The position of the business at the end of the year is almost unrecognisable from the start of the 2016 - an experienced and expanded team, a further developed platform and product offering, a strong positive balance sheet and a considerable new business pipeline. The foundations have been laid for continued rapid growth for Big Sofa.

 

Joe MacCarthy

Chief Financial Officer

27 June 2017

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

Year ended

Year ended


 

31 December 2016

31 December 2015


Notes

£'000

£'000


 

 

 

Revenue

 

757

172

Cost of sales

 

(378)

(75)


 

 

 

Gross (loss)/profit

 

379

97


 

 

 

Deemed cost of reverse takeover

 

(705)

-

AIM Listing costs

 

(785)

-

Administrative expenses


(3,186)

(443)

Operating loss


(4,297)

(346)


 

 

 

Finance expenses


(123)

(20)

Loss before income tax


(4,420)

(366)


 

 

 

Tax credit


142

-





Loss for the period


(4,278)

(366)





Attributable to owners of the parent:


(4,278)

(366)





Loss per ordinary share - basic and diluted (£)

3

(82.58)p

(12.39)p





 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

 

31 December 2016

31 December 2015


Notes

£'000

£'000

Non-current assets


 

 

Property, plant and equipment


29

20

Intangible assets


483

1,007

Total non-current assets


512

1,027





Current assets


 

 

Trade and other receivables


523

47

Cash and cash equivalents


2,538

-

Total current assets


3,061

47


 

 

 

Total assets


3,573

1,074



 

 

Current liabilities


 

 

Trade and other payables


444

548

Loans and borrowings


599

397

Total current liabilities


1,043

945





Total liabilities


1,043

945





Net assets


2,530

129





Share capital


1,703

1

Share premium account


5,670

494

Reverse acquisition reserve  


(2,881)

-

Merger relief reserve


2,501

-

Other reserves


181

-

Accumulated deficit


(4,644)

(366)

Total equity


2,530

129

 

These financial statements were approved and authorised for issue by the board of directors on 27 June 2017 and were signed on its behalf by:

 

 

Joe MacCarthy

Chief Financial Officer

Company number 07847321

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 Share capital

 Share Premium

Reverse acquisition reserve

 

Merger relief reserve

Other

reserves

 Accumulated deficit

Total


£'000

£'000

 £'000

£'000

 £'000

£'000

£'000

Big Sofa Technologies  Limited

 

 

 

 

 

 


Equity as at

1 October 2014

-

-

-

-

-

-

-

Loss for the year

-

-

-

-

-

(366)

(366)

Total comprehensive loss

-

-

-

-

-

(366)

(366)

Issue of shares

1

494

-

-

-

-

495

Equity as at

31 December 2015

1

494

-

-

-

(366)

129

Big Sofa Technologies Group PLC

 

 

 

 

 

 


Equity as at

1 January 2016

1

494

-

-

-

(366)

129

Loss for the period

-

-

-

-

-

(4,278)

(4,278)

Issue of shares

1,614

-

-

-

-

-

1,614

Reverse acquisition

88

5,176

(2,881)

2,501

-

 

4,884

Issue of share options

-

-

-

-

14

-

14

Issue of warrants

-

-

-

-

67

-

67

Issue of convertible loan notes

-

-

-

-

100

-

100

Equity as at

31 December 2016

1,703

5,670

(2,881)

2,501

181

(4,644)

 

2,530

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

Year ended

Year ended


 

31 December 2016

31 December 2015


 

£'000

£'000

Cash flows from operating activities




Loss before taxation

(4,420)

(366)

Adjustments for:

 

 

 

Deemed cost of reverse acquisition

705


 

Depreciation and amortisation

894

173


Finance expenses

123

20


Share-based payments

81

-

Operating loss before working capital changes

(2,617)

(173)

Changes in working capital

 

 


Increase in trade and other receivables

(334)

(47)


Increase in trade and other payables

164

843

Cash (used in) / generated by operations

(2,787)

623

 





Tax received

-

-

Net cash (outflow) / inflow from operating activities

(2,787)

623

 

Investing activities

 

 

 

Purchase of property, plant and equipment

(21)

(30)

 

Purchase of intangible assets

(358)

(1,170)

 

Acquisition, net of cash acquired

(1,013)

-

Net cash flows used in investing activities

(1,392)

(1,200)

 

Financing activities

 

 

 

Issue of ordinary shares

6,109

494

 

Interest paid on loans and borrowings

(123)

(20)

 

Repayment of loans

(291)


 

Net proceeds from issue of convertible loans

1,125

-

Net cash flows from financing activities

6,820

474


 

 

 

Net change in cash and cash equivalents

2,641

(103)

Cash and cash equivalents at the beginning of the period

(103)

-

Cash and cash equivalents at the end of the period

2,538

(103)

 

 

Notes to the preliminary financial results

1.    The figures for the years ended 31 December 2016 and 2015 do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The figures for the year ended 31 December 2016 have been extracted from the statutory accounts for that year on which the auditor has issued an unqualified audit report which have yet to be delivered to the Registrar of Companies. The figures for the year ended 31 December 2015 have been extracted from the statutory accounts for that year which have been delivered to the Registrar of Companies. This announcement was approved by the board of directors on 27 June 2017 and authorised for issue on 28 June 2017.

2.      The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards adopted by the International Accounting Standards Board ('IASB') and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB (together 'IFRS') as endorsed by the European Union. The information in this preliminary statement has been extracted from the audited financial statements for the year ended 31 December 2016 and as such, does not contain all the information required to be disclosed in the financial statements prepared in accordance with the International Financial Reporting Standards ('IFRS').

 

3.      Earnings per share

 


Year ended

31 December 2016

Year ended

31 December 2015

Basic and diluted



Loss for the period and earnings used in basic & diluted EPS (£)

 (4,278,403)

 (365,738)

Weighted average number of shares used in basic and diluted EPS

 5,180,697

 2,951,666

Loss per share (£)

(82.58)

(12.39)

 

Basic earnings per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.  The weighted average number of shares for the current and prior years included shares issued by Big Sofa Technologies Group PLC.

 

Due to the loss in the periods the effect of the share options was considered anti-dilutive and hence no diluted loss per share information has been provided.

 

Annual Report and Accounts

 

Copies of the Annual Report and Accounts, together with a notice convening an annual general meeting, are being posted to shareholders shortly and will be available within the Investors section of the Company's website at www.bigsofatech.com.

 

Annual General Meeting

 

The annual general meeting of the Company will be held at 9.30 a.m. on 25 July 2017 at Martin House, 5 Martin Lane, London, EC4R 0DP.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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