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Escher Group Hldgs (ESCH)

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Tuesday 19 September, 2017

Escher Group Hldgs

Half Year Results

RNS Number : 0931R
Escher Group Holdings PLC
19 September 2017
 

19 September 2017

 

Escher Group Holdings plc

 

Half year results

 

Escher Group Holdings plc (AIM: ESCH, 'Escher' or 'the Group'), a world leading provider of point-of-service software for use in the postal, retail and financial industries, has published its results for the six months ended 30 June 2017.

 

Financial highlights  

·      Revenue US$9.39m (H1 2016: US$12.34m)

Software licence sales US$0.84m (H1 2016 $3.62m)

·      Adjusted EBITDA* of US$1.36m (H1 2016: US$3.35m)

·      Loss before tax US$0.03m (H1 2016: Profit before tax US$1.81m)

·      Basic loss per share US$0.5 cents per share (H1 2016: earnings of US$7.0 cents per share)

·      Operating expenses US$5.83m (H1 2016: US$6.39m)

·      Net cash at 30 June 2017 was US$0.1m (31 December 2016: US$0.1m)

 

Operational highlights

·      New licence sale of Escher's mobile platform and associated services to world's largest postal organisation

·      Expansion of existing mobile solution for world-leading e-Commerce and Logistics company

·      Launch of Riposte platform on Android and iOS devices

·      Escher engaged by Middle-Eastern post-office to carry-out major implementation project on the Riposte platform

·      Continued exploration of paths to market for Escher's Licensing and Permitting technology, particularly in US

 

Liam Church, Chief Executive, said:

 

"Our licence sales in the first half were modest as compared to those of H1 2016. Nevertheless, we were able to deliver US$1.4m in adjusted EBITDA.

 

"Our customers' spending patterns mean that our traditional business model remains inherently volatile. To meet our full-year expectations, we will need to sign additional licence sales in H2 from our pipeline of opportunities.  

 

"The investment in moving our Riposte platform to Android and IOS devices has been keenly received by our customers, as evidenced by the sale of the mobile licence in H1."

 

*Operating profit before, depreciation, amortisation, and share based charge

 

Enquiries:

 

Escher www.eschergroupholdings.com

+353 (0)1 254 5400

Liam Church, Chief Executive Officer

Clem Garvey, Chief Financial Officer

Fionnuala Higgins, Chief Commercial Officer

 

 

 

Panmure Gordon

+44 (0)20 7886 2500

Andrew Godber / Alina Vaskina, Corporate Finance

 

Erik Anderson, Corporate Broking

 

 

 

Instinctif Partners

+44 (0)20 7457 2020

Adrian Duffield / Chris Birt

 

 

The half year results announcement is available on the Group's website: www.eschergroup.com.

 

About Escher

 

Escher is a world-leading provider of outsourced point-of-service software for use in the worldwide postal, retail and government sectors. Its core software, Riposte®, a Digital Transaction Platform enables its customers to expand their offerings, providing new services, reducing costs and increasing efficiency.

 

The Riposte® Platform securely extends the retail branch network. Escher's technology creates new revenue opportunities, it streamlines operations and its flexibility allows it to be deployed across multiple platforms and devices, giving the ultimate freedom of choice when it comes to channel and hardware selection.

 

Escher's focus is to ensure the success of its customers by delivering the very best in innovative technology for their business.

 

Overview

 

Escher's first half results in 2017 were impacted by the lower level of new software licence sales, as compared with H1 2016. Revenue totalled US$9.39m (H1 2016: US$12.34m). Software licence revenue totalled US$0.84m (H1 2016: US$3.62m). In 2016, 78% of the year's licence revenue was realised in the first half of the year.

 

Maintenance contracts grew to US$4.07m (H1 2016: US$4.05m). Software Development and Consulting Services also posted growth at US$3.06m (H1 2016 US$2.95m).

 

Support revenue in H1 2017 was US$1.42m (H1 2016: US$1.72m).

 

In H2 2016, the company carried out a restructuring to realign its cost base with the changing nature of the business. This permitted the company to achieve savings in cost of sales and in operating expenses in H1 2017. Cumulatively, operating expenses and cost of sales were US$9.19m (H1 2016 US$10.30m), decreasing by 11%. Operating expenses were US$5.83m (H1 2016: US$6.39m).

 

Adjusted EBITDA for the first half of the year 2017 was US$1.36m (H1 2016: US$3.35m), resulting in a small loss before income tax of US$0.03m (H1 2016: profit before income tax US$1.81m).

 

Escher's strategy continues to be one of broadening its software range and enhancing its customer offering by investing in its existing software portfolio and new software ranges including Digital (Licensing and Permitting), Interactive Services and Enterprise Mobile software.

 

Current trading and outlook

 

The Company has a good pipeline of business. Maintenance, Services and Support revenues remain strong.

 

While there is an adequate pipeline of opportunities to deliver a material licence sale in H2, the spending patterns of our traditional customer base are such that the timing of these sales remains difficult to predict and can therefore impact the Company's earnings in the short-term. 

 

Operational review

 

 Organisation

 

In the second half of 2016, the Group merged its Interactive Services business with its Retail Services business to consolidate these activities under a Postal and Retail Services unit and decided that the focus of its Digital Services unit should primarily be on developing licensing and permitting management solutions, for which an attractive opportunity in the North Americas was identified.

 

Postal and Retail Services

 

Opportunities in 2017 to achieve new, major licence sales of the Riposte digital transaction management software are concentrated in the second half. 

 

Maintenance revenues continue to increase and constitute more than $4m of the Company's revenues. This is the main constituent of the recurring revenue which has brought more balance to the business model.

 

The broadening of Escher's technological offerings to its postal customers continued with new sales of its mobile platform and with the expansion of its existing mobile deployments for one of the world's largest logistics and e-commerce companies.

 

The need of Postal Organisations to enter into direct relationships with e-Commerce end-users and improve consumer experience has resulted in a significant increase in interest in Escher's Loyalty platforms.

  

Digital Services - Licensing and Permitting

 

Escher's flagship deployment of its Licensing and Permitting platform, the Irish national licensing platform "Licences.ie", continues to gradually add government departments and other licensing authorities to its client base.

 

Meanwhile, ongoing study of this activity in the US confirms the pertinence of Escher's offer and the continuing growth of opportunities in this market. 

 

Financial review

Revenue

Overall revenue was down 24% to US$9.39m for the first half of 2017 (H1 2016: US$12.34m).

 

Licence revenue in H1 2017 was US$0.84m (H1 2016: US$3.62m).

 

Maintenance revenue has improved on the prior year at US$4.07m (H1 2016: US$4.05m), which was due to a high level of maintenance contract renewals.

 

Software development and consulting revenue increased by 4% to US$3.06m (H1 2016: US$2.95m) with continuing high levels of service provision to North American customers and growth in services provided to Middle Eastern customers.

 

Support revenue decreased by 17% to US$1.42m (US$1.72m in H1 2016).

 

There were no significant impacts on the group's results in H1 2017 arising from fluctuations in exchange rates.

 

Revenue breakdown

 

US$'m

H1 2017

H1 2016

Change %

H1 2017 Contribution to Group Revenue

H1 2016 Contribution to Group Revenue

Once-off

 

 

 

 

 

Software Licenses

0.84

3.62

-77%

9%

29%

Software development and consulting services

3.06

2.95

4%

33%

24%

Recurring

 

 

 

 

 

Maintenance

4.07

4.05

0%

43%

33%

Support 

1.42

1.72

-17%

15%

14%

Total Revenue

9.39

12.34

-24%

100%

100%

 

Gross profit

Gross profit for H1 2017 decreased by 28% to US$6.03m compared to US$8.43m for H1 2016. The decrease of US$2.4m was mainly due to reduction in high margin licence sales. This also impacted the gross margin rate, which decreased to 64% for the six months to 30 June 2017 (H1 2016: 68%), with a lesser proportion of licence revenue and more development and consulting revenue. 

 

Operating expenses

Operating expenses decreased by 9% to US$5.83m (H1 2016: US$6.39m) arising from restructuring undertaken in H2 2016.

 

The Group continued to focus on cost control, which resulted in reduced administrative expenses to US$2.24m (H1 2016: US$2.34m).

 

Research & development (R&D) decreased to US$1.61m in 2017 (H1 2016: US$2.23m). As a percentage of revenue, R&D spend decreased to 17% (H1 2016: 18%). This decrease in R&D is due to reduction in R&D staff levels following restructuring and with developments moved to commercialisation stages.

 

Increases in sales and marketing expenses to US$1.98m (H1 2016: US$1.82m) were also seen, linked to increased investment in generating our revenue pipeline.

 

US$'m

H1 2017

H1 2016

Movement

2017 % of Revenue

2016 % of Revenue

Research and development

1.61

2.23

-28%

17%

18%

Sales and marketing

1.98

1.82

9%

21%

15%

Administrative expenses

2.24

2.34

-4%

24%

19%

Total

5.83

6.39

-9%

62%

52%

 

 

Capitalisation and amortisation movements

The Group capitalised US$0.56m (H1 2016: US$0.66m) of R&D costs in H1 2017. As core work on platform technology development progresses, Escher is capitalising less of its R&D costs and expects this trend to continue in H2 2017 and 2018.

 

Amortisation of US$0.98m was charged in H1 2017 (H1 2016: US$0.98m). The net impact on the income statement of capitalisation and amortisation was a charge of US$0.42m (H1 2016: US$0.32m). R&D tax credits recognised in the first half of 2017 were US$0.09m (H1 2016: US$0.15).

 

 

US$'m

H1 2017

H1 2016

% change

Additions

 

 

 

RiposteTrEx

0.26

0.17

52%

Riposte

0.30

0.49

-39%

Total capitalisation

0.56

0.66

-16%

Amortisation

 

 

 

RiposteTrEx

(0.32)

(0.32)

1%

Riposte

(0.66)

(0.66)

0%

Total amortisation

(0.98)

(0.98)

0%

Net charge on the income statement

(0.42)

(0.32)

33%

 

Reconciliation of operating profit to Adjusted EBITDA

Adjusted EBITDA was down 59% to US$1.36m (H1 2016: US$3.35m). Adjusted EBITDA represents operating profit before depreciation, amortisation and share based charges. The decrease was mainly due to the decrease in licence revenue partially offset by cost savings.

 

US$'m

H1 2017

H1 2016

Change

% change

Operating profit

0.20

2.04

-1.84

-90%

Depreciation

0.09

0.15

-0.06

-40%

Amortisation

0.98

0.98

-

0%

EBITDA

1.27

3.17

-1.90

-60%

Share based payment

0.09

0.18

-0.09

-53%

Adjusted EBITDA

1.36

3.35

-1.99

-59%

 

Net finance costs

The continued reduction in bank debt was offset by increasing interest rates, which resulted in net finance costs largely unchanged at US$0.23m (H1 2016: US$0.23m). The amortisation of the finance costs related to the Bank of Ireland (BOI) loan facility remained at US$0.07m.

 

(Loss)/profit before income tax

Loss before income tax was US$0.03m (H1 2016: profit before income tax US$1.81m). Adjusted profit before income tax, excluding share based payments was US$0.06m (H1 2016: US$1.99m).

 

Income tax expense

Irrecoverable withholding taxes gave rise to a charge of US$0.06m in H1 2017.

 

Earnings per share

Basic loss per share was US$0.5 cents per share (H1 2016: earnings per share US$7.0 cents). Diluted loss per share was US$0.5 cents per share (H1 2016: Diluted earnings per share US$6.7 cents).

 

Dividend

The Group is not paying a half year dividend.

 

Cash flow

Net cash at the end of June 2017 was US$0.05m (December 2016: US$0.06m). Cash at the end of June 2017 was US$5.55m (December 2016: US$6.06m) and borrowings were US$5.50m (December 2016: US$6.00m).

 

Net cash at the end of H1 2017 improved over H1 2016 (net debt US$2.68m), with strong cash conversion and the timing of customer receipts.

 

Consolidated Income Statement

For the six months ended 30 June 2017

 

 

Six months ended 30 June 2017

 

Six months ended 30 June 2016

Year ended 31 December 2016

 

 

US$'000

 

US$'000

 

US$'000

 

Notes

(Unaudited)

 

(Unaudited)

 

(Audited)

 

 

 

 

 

 

Revenue

5

9,390

 

12,340

 

22,411

Cost of sales

(3,365)

 

(3,913)

 

(7,436)

Gross profit

 

6,025

 

8,427

 

14,975

Operating expenses

 

(5,827)

 

(6,388)

 

(12,109)

Operating profit

 

198

 

2,039

 

2,866

Finance income

 

3

 

1

 

2

Finance costs

 

(228)

 

(233)

 

(490)

Net finance costs

 

(225)

 

(232)

 

(488)

(Loss)/profit before income tax

 

(27)

 

1,807

 

2,378

Income tax expense

 

(75)

 

(491)

 

(511)

(Loss)/profit for the period

 

(102)

 

1,316

 

1,867

 

 

 

 

 

 

 

(Loss)/earnings per share (US$ cent per share)

 

 

 

 

 

Basic                       

(0.5)

 

7.0

 

10.0

Diluted

(0.5)

 

6.7

 

9.8

 

 

 

 

 

 

 

 

Reconciliation of EBITDA and adjusted

 

 

 

Six months ended 30 June 2016

 

Six months ended 30 June 2015

 

Year ended 31 December 2015

EBITDA

 

ended 30

 

ended 30

 

31 December

 

 

June 2017

 

June 2016

 

2016

 

 

US$'000

 

US$'000

 

US$'000

 

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

 

 

 

 

 

 

Operating Profit

 

198

 

2,039

 

2,866

Depreciation

7

93

 

150

 

282

Amortisation

8

982

 

982

 

1,941

EBITDA

 

1,273

 

3,171

 

5,089

Share options expense

 

85

 

180

 

281

Exceptional items

 

-

 

-

 

287

Adjusted EBITDA

 

1,358

 

3.351

 

5,657

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2017

 

 

Six months ended 30 June 2017

 

Six months ended 30 June 2016

 

Year ended 31 December 2016

 

 

US$'000

 

US$'000

 

US$'000

 

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

 

 

 

 

 

 

(Loss)/profit for the period

 

(102)

 

1,316

 

1,867

Other comprehensive income:

 

 

 

 

 

 

Items that may subsequently be reclassified to the Income Statement:

 

 

 

 

 

 

Currency translation differences

 

56

 

97

 

(348)

Total other comprehensive income

 

56

 

97

 

(348)

Total comprehensive income for the period

                          

 

(46)

 

1,413

 

1,519

 

The notes form an integral part of these condensed consolidated interim financial statements

 

Consolidated Statement of Financial Position

As at 30 June 2017

 

 

 

30 June 2017

 

30 June 2016

 

31 December 2016

 

 

US$'000

 

US$'000

 

US$'000

 

Notes

(Unaudited)

 

(Unaudited)

 

(Audited)

Assets

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

Property, plant and equipment

7

194

 

344

 

218

Intangible assets

8

34,595

 

35,808

 

35,020

Deferred income tax assets

 

549

 

724

 

534

Investments in equity instruments

10

747

 

521

 

746

Total non-current assets

 

36,085

 

37,397

 

36,518

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

9

5,554

 

3,816

 

6,712

Trade and other receivables

 

7,103

 

9,248

 

6,055

Current income tax receivable

 

-

 

-

 

-

Total current assets

 

12,657

 

13,064

 

12,767

 

 

 

 

 

 

 

Total assets

 

48,742

 

50,461

 

49,285

 

 

 

 

 

 

 

Equity and liabilities

 

 

 

 

 

 

 

 

 

 

 

Issued capital

 

129

 

128

 

128

Other reserves

 

884

 

1,086

 

743

Retained earnings

 

9,317

 

8,868

 

9,419

Share premium

 

26,909

 

26,909

 

26,909

Total equity

 

37,239

 

36,991

 

37,199

 

 

 

 

 

 

 

Non-current Liabilities

 

 

 

 

 

 

Borrowings

9

4,500

 

5,388

 

4,954

Deferred income tax liabilities

 

-

 

-

 

-

Provisions for other liabilities and charges

 

22

 

22

 

21

Total non-current liabilities

 

4,522

 

5,410

 

4,975

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Borrowings

9

962

 

936

 

939

Trade and other payables

 

5,903

 

6,658

 

5,960

Current income tax payable

 

116

 

466

 

212

Total current liabilities

 

6,981

 

8,060

 

7,111

Total liabilities

 

11,503

 

13,470

 

12,086

Total equity and liabilities

 

48,742

 

50,461

 

49,285

 

The notes form an integral part of these condensed consolidated interim financial statements.

                      Consolidated Statement of Changes in Equity

 

 

Equity share capital

 

Share premium

 

Cumulative foreign currency  translation reserve

 

Other reserves

 

Retained earnings

 

Total equity

 

 

US$'000

 

US$'000

 

US$'000

 

US$'000

 

US$'000

 

US$'000

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 January 2017

 

128

 

26,909

 

(1,918)

 

2,661

 

9,419

 

37,199

Loss for the financial period

 

-

 

-

 

-

 

-

 

(102)

 

(102)

Other comprehensive income

 

-

 

-

 

56

 

-

 

-

 

56

Shares issued under options

 

1

 

-

 

-

 

-

 

-

 

1

Share based payments

 

-

 

-

 

-

 

85

 

-

 

85

Balance at 30 June 2017

 

129

 

26,909

 

(1,862)

 

2,746

 

9,317

 

37,239

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 January 2016

 

128

 

26,909

 

(1,570)

 

2,380

 

7,552

 

35,399

Profit for the financial period

 

-

 

-

 

-

 

-

 

1,316

 

1,316

Other comprehensive income

 

-

 

-

 

97

 

-

 

-

 

97

Share based payments

 

-

 

-

 

-

 

179

 

-

 

179

Balance at 30 June 2016

 

128

 

26,909

 

(1,473)

 

2,559

 

8,868

 

36,991

         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the financial period

 

-

 

-

 

-

 

-

 

551

 

1,867

Other comprehensive income

 

-

 

-

 

(445)

 

-

 

-

 

(348)

Total comprehensive income

 

-

 

-

 

(445)

 

-

 

551

 

1,519

Share based payments

 

-

 

-

 

-

 

102

 

-

 

281

Balance at 31 December 2016

 

128

 

26,909

 

(1,918)

 

2,661

 

9,419

 

37,199

 

The notes form an integral part of these condensed consolidated interim financial statements

 

Consolidated Statement of Cash Flows         

For the six months ended 30 June 2017

 

 

     

 

 

Six months ended 30 June 2017

 

Six months ended 30 June 2016

 

Year ended 31 December 2016

 

 

 

 

 

 

 

 

 

US$'000

 

US$'000

 

US$'000

 

 

(Unaudited)

 

(Unaudited))

 

(Audited)

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

Cash generated from operations

11

1,018

 

1,016

 

4,827

Interest received

 

3

 

1

 

2

Interest paid

 

(136)

 

(168)

 

(348)

Income taxes paid

 

(338)

 

(244)

 

(289)

R&D tax credit received

 

-

 

234

 

-

Net cash generated from operating activities

 

547

 

839

 

4,192

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Additions to intangible assets

 

(557)

 

(660)

 

(1,346)

Acquisition of investments

 

-

 

(139)

 

(251)

Government grant

 

-

 

-

 

254

Purchase of property, plant and equipment

 

(68)

 

(109)

 

(117)

Net cash used in investing activities

 

(625)

 

(908)

 

(1,460)

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Borrowing costs

 

-

 

-

 

(6)

Repayment of borrowings

 

(500)

 

(3,500)

 

(4,000)

Net cash(used in) financing activities

 

(500)

 

(3,500)

 

(4,006)

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

(578)

 

(3,569)

 

(1,274)

Cash and cash equivalents at beginning of period

 

6,055

 

7,346

 

7,346

Foreign exchange adjustments

 

77

 

39

 

(17)

Net decrease in cash and cash equivalents                    

 

(578)

 

(3,569)

 

(1,274)

Cash and cash equivalents at end of period

 

5,554

 

3,816

 

6,055

 

The notes on pages 11 to 17 form an integral part of these condensed consolidated interim financial statements

 

 

NOTES TO THE INTERIM FINANCIAL INFORMATION

For the six months ended 30 June 2017

 

1. General information

 

Escher Group Holdings plc and its wholly-owned subsidiaries (collectively the "Group") are world-leading providers of retail and message-based software solutions and services.  The Group develops, markets, sells and supports enterprise-wide software applications for counter automation and distributed network communication.  The Group's principal customers are international postal services.  The Group services these customers from its offices in Ireland, the United States, Singapore, South Africa, and its branch in the United Kingdom.

 

The company was incorporated in the Republic of Ireland on 7 June 2007 as NG Postal Limited, a private company limited by shares.  On 14 September 2007, the company acquired the main operating subsidiaries giving rise to the goodwill asset.  The company re-registered as a public limited company on 14 July 2011 and changed its name to Escher Group Holdings plc on that date.  On 25 July 2011, the Group filed for an Initial Public Offering on the London Stock Exchange plc's AIM Market. Admission to AIM occurred on 8 August 2011.

 

The Company's registered office is 111 St Stephens Green, Dublin 2, Ireland.

 

2. Basis of preparation

 

The Group's condensed consolidated interim financial statements included in this report have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting ('IAS 34') as adopted by the European Union. These condensed statements do not include all information required for full annual financial statements and should be read in conjunction with the consolidated financial statements for the year ended 31 December 2016 included in the Group's 2016 Annual Report which is available on the Group website www.eschergroup.com. The condensed consolidated interim financial statements presented do not constitute full statutory accounts. Full statutory accounts for the year ended 31 December 2016 will be filed with the Irish Registrar of Companies in due course. The Audit Report on those statutory accounts was unqualified.

 

The Group's condensed interim financial information for the six months ended 30 June 2017 and the comparative figures for the six months ended 30 June 2016 are unaudited. The financial information presented for the year ended 31 December 2016 represents an abbreviated version of the Group's financial statements for that year.

 

The Group's condensed financial information is presented in US Dollars (US$), rounded to the nearest thousand, which is the functional currency of the Group.

 

A comprehensive review of the Group's performance for the six months ended 30 June 2017 is included on pages 4 to 7 of this document. 

 

3. Going concern basis

 

The Group's forecasts and projections, taking account of reasonable possible changes in trading performance, support the conclusion that there is a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future, a period of not less than twelve months from the date of this report.  The Group therefore continues to adopt the going concern basis in preparing its consolidated interim financial statements.

 

4. Accounting policies

 

The Group's condensed interim financial information has been prepared on the basis of the accounting policies, significant judgements, key assumptions and estimates as set out in the Group's annual report for the year ended 31 December 2016. The principal risks and uncertainties faced by the Group were outlined in our 2016 annual report. The annual report is available on Escher's website. The principal risks and uncertainties have remained substantially the same for the current period.

 

5. Segment information

 

In line with the requirements of IFRS 8, "Operating Segments", the Group has identified its Chief Operating Decision Maker (CODM) as the Board of the company. The Board reviews the Group's internal reporting in order to assess the performance of the Group and allocate resources. The Board considers the business from a product perspective and reviews working capital and overall statement of financial position performance on a Group wide basis. Consequently the Board determined there to be only one segment.  

The Board assess the performance of the segment based primarily on measures of revenues, adjusted EBITDA and profit before income tax. Adjusted EBITDA is used as it is an industry-wide standard and it is calculated using operating profit before non-cash share based charges, interest, tax, depreciation on property plant and equipment and amortisation of intangible assets. These revenues derive from the following main sources:

 

Analysis of revenue by category

 

 

 

 

Six months ended 30 June 2017

 

Six months ended 30 June 2016

 

Year ended 31 December 2016

 

US$'000

 

US$'000

 

US$'000

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

 

 

 

 

 

Software licenses

840

 

3,619

 

4,613

Software development and consulting services

3,064

 

2,953

 

6,209

Maintenance

4,069

 

4,053

 

8,222

Support

1,417

 

1,715

 

3,367

Revenue

9,390

 

12,340

 

22,411

 

The entity is domiciled in the Republic of Ireland. The Group's external revenues are derived from the following main geographic locations:         

 

 

     

 

Six months ended 30 June 2017

 

Six months ended 30 June 2016

 

Year ended 31 December 2016

 

US$'000

 

US$'000

 

US$'000

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

 

 

 

 

 

UK and Ireland

760

 

1,150

 

2,117

Other Europe

2,310

 

2,475

 

4,768

North & Latin America

4,023

 

3,948

 

7,769

Asia-Pacific region

677

 

3,513

 

4,570

Africa & Middle East

1,620

 

1,254

 

3,187

Revenue

9,390

 

12,340

 

22,411

 

During the period the Group derived revenues from the following external customers (reporting segment region in parenthesis) which individually represented 10% or more of total reported revenues for that period:

 

 

 

 

 

Six months ended 30 June 2017

 

Six months ended 30 June 2016

 

Year ended 31 December 2016

 

%

 

%

 

%

 

(Unaudited)

 

(Unaudited)

 

(Audited)

Customer A (North & Latin America)

40%

 

27%

 

30%

Customer B (Asia-Pacific Region)

0%

 

23%

 

13%

% of total reported revenues

40%

 

50%

 

43%

 

 

The total of non-current assets other than deferred income tax assets located in the Republic of Ireland at 30 June 2017 is US$3.8m (June 2016: US$5.1m), and the total of non-current assets located in other countries is US$31m (June 2016: US$31m).

 

6. Earnings per share

 

Basic (loss)/earnings per share amounts are calculated by dividing (loss)/profit for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period.

 

Diluted earnings per share amounts are calculated by dividing the profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

 

The following reflects the income and share data used in the basic and diluted (loss)/earnings per share computations.

 

 

Six Months ended 30 June 2017

 

Six Months ended 30 June 2016

 

Year ended 31 December 2016

 

US$'000

 

US$'000

 

US$'000

 

(Unaudited)

 

(Unaudited)

 

(Audited)

(Loss)/profit attributable to ordinary shareholders

(102)

 

1,316

 

1,867

Basic weighted number of shares

18,743,677

 

18,704,085

 

18,714,690

Dilutive potential ordinary shares:

 

 

 

 

 

Effects of employee share options

364,381

 

432,923

 

300,875

Diluted weighted number of ordinary shares

19,108,058

 

19,137,008

 

19,015,565

Basic (loss)/earnings per share (in US$ cents per share)

(0.5)

 

7.0

 

10.0

Diluted (loss)/earnings per share (in US$ cents per share)

(0.5)

 

6.9

 

9.8

 

7. Property, plant and equipment

 

 

30 June 2017

 

31 December 2016

 

US$'000

 

US$'000

 

(Unaudited)

 

(Audited)

 

 

 

 

Net book value at beginning of the period

218

 

383

Additions

68

 

117

Depreciation

 (93)

 

(282)

Exchange differences

1

 

-

Net book value at end of period

194

 

218

 

 

8. Intangible assets

 

At 30 June 2017

 

Goodwill

 

Other Intangible assets

 

Total Intangible assets

 

 

US$'000

 

US$'000

 

US$'000

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

Net book value at 1 January 2017

 

29,671

 

5,349

 

35,020

Additions

 

-

 

557

 

557

Amortisation charge

 

-

 

(982)

 

(982)

Net book value at 30 June 2017

 

29,671

 

4,924

 

34,595

 

 

At 31 December 2016

 

Goodwill

 

Other Intangible assets

 

Total Intangible assets

 

 

US$'000

 

US$'000

 

US$'000

 

 

(Audited)

 

(Audited)

 

(Audited)

 

 

 

 

 

 

 

Net book value at 1 January 2016

 

29,853

 

6,198

 

36,051

Additions

 

-

 

1,346

 

1,346

Government grants

 

-

 

(254)

 

(254)

Amortisation charge

 

-

 

(1,941)

 

(1,941)

Exchange differences

 

(182)

 

-

 

(182)

Net book value at 31 December 2016

 

29,671

 

5,349

 

35,020

 

9. Analysis of net cash

 

 

 

31 December 2016

 

Movement

 

30 June 2017

 

 

US$'000

 

US$'000

 

US$'000

 

 

(Audited)

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

Cash and cash equivalents

 

6,055

 

(501)

 

5,554

 

 

 

 

 

 

 

Non-current borrowings

 

(4,954)

 

454

 

(4,500)

Deferred finance costs

 

(46)

 

46

 

-

Non-current borrowings

 

(5,000)

 

500

 

(4,500)

Current borrowings

 

(939)

 

(23)

 

(962)

Deferred finance costs

 

(61)

 

23

 

(38)

Current borrowings

 

(1,000)

 

-

 

(1,000)

Total borrowings

 

(6,000)

 

500

 

(5,500)

Net cash

 

55

 

(1)

 

54

 

 

Escher's long term debt has annual repayments of US$1m and expires in 2018.

 

10. Financial assets

 

Available-for-sale financial assets include the following classes of financial assets:

 

Six Months ended 30 June 2017

 

Six Months ended 30 June 2016

 

Year ended 31 December 2016

 

US$'000

 

US$'000

 

US$'000

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

Investments carried at cost

495

 

382

 

495

Convertible loan notes

251

 

139

 

251

 

746

 

521

 

746

 

In 2016, the Company made investments in the ordinary shares of two companies (Deposify Limited and Circit Limited) of US$495,000 in consideration for the provision of services and licence software. In addition to these investments, the Company invested in convertible loan notes in both these companies in amount of US$251,000. These loan notes will be convertible into Ordinary A shares when agreed conditions have been met. To determine if an available-for-sale financial asset is impaired, the Company evaluates the duration and extent to which the fair value of the asset is less than its cost, and the financial health of and short-term business outlook for the investee.

 

11. Cash generated from operations

 

 

Six Months ended 30 June 2017

 

Six Months ended 30 June 2016

 

Year ended 31 December 2016

 

US$'000

 

US$'000

 

US$'000

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

 

 

 

 

 

(Loss)/profit before income tax

(27)

 

1,807

 

2,378

Adjustments for:

 

 

 

 

 

Depreciation

93

 

150

 

282

Amortisation

982

 

982

 

1,941

Amortisation of deferred finance costs

69

 

69

 

138

Finance income

(3)

 

(1)

 

(2)

Finance expense

159

 

164

 

352

Foreign exchange translation

(69)

 

(15)

 

(11)

Employee share based payments

85

 

180

 

281

Non-cash revenue transactions

-

 

-

 

  (495)

 

 

 

 

 

(Increase)/decrease in trade and other receivables

(348)

 

(2,698)

 

342

Decrease in trade and other payables

77

 

378

 

(379)

Cash generated from operations

1,018

 

1,016

 

4,827

 

12. Post balance sheet events

 

There have been no material events subsequent to the period end, which have not been reflected in the interim financial information.

 

13. Contingent liabilities

 

The Group is not aware of any major changes with regard to contingent liabilities in comparison with the situation as of 31 December 2016.

 

14. Related party transactions

 

Details of related party transactions in respect of the year ended 31 December 2016 are contained in Note 26 to the consolidated financial statements of the Group's 2016 annual report. The Group continued to enter into transactions in the normal course of business with its associates and other related parties during the period. There were no transactions with related parties in the first half of 2017 or changes to transactions with related parties disclosed in the 2016 consolidated financial statements that had a material effect on the financial position or the performance of the Group.

 

15. Cautionary statement

 

This document contains certain forward-looking statements with respect of the financial condition, results, operations and businesses of Escher Group Holdings plc. These statements and forecasts involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause the actual results or developments to differ materially from those expressed or implied by these forward looking statements and forecasts. Nothing in this document should be construed as a profit forecast.

 

16. Copies of Interim Report

 

Copies of the interim financial statements are available from the Company at its office at 111 St Stephens Green, Dublin 2, Ireland. The interim financial information document will also be available on the Company's website www.eschergroup.com 

 

17. Release of half yearly condensed financial statements

 

The Group condensed financial information was approved for release by a subcommittee of the Board of directors on 19 September 2017.

 


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