Eagle Eye Solutions Group PLC Final Results (0933R)

TIDMEYE

RNS Number : 0933R

Eagle Eye Solutions Group PLC

19 September 2017

19 September 2017

Eagle Eye Solutions Group plc

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

Results for the year ended 30 June 2017

Strong momentum built to capitalise on the significant market opportunity

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

Financial and corporate highlights:

   --      Group revenue increased by 71% to GBP11.1m (FY16: GBP6.5m) 

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

   --      Gross margin up 9ppts to 88% (FY16 79%) 
   --      Cash position of GBP3.7m (FY16: GBP1.3m) at 30 June 2017 
   --      Successful placing in June 2017 raising net proceeds of GBP5.8m 

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

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

-- Q1 FY18 revenue expected to be at least GBP3m, 32% growth on prior year, with growth anticipated to accelerate in future periods as our significant clients begin to transact through the platform at scale and from the impact of new strategic partnerships that drive increased transactions *

Operational highlights:

   --      Redemption volumes increased by 58% to 60.4m (FY16: 38.4m) 
   --      SMS volumes of 44.4m, an increase of 10% (FY16: 40.3m) 
   --      Total number of customers 233; 74 brands (FY16: 219;70) 

-- Deepening tier 1 client relationships representing 53% of revenue, GBP5.9m (FY16: 33%, GBP2.1m)

-- Revenue from the Food and Beverage ("F&B") sector increased by 20% to GBP1.8m (FY16: GBP1.5m).

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

*Post Period

Tim Mason, Chief Executive of Eagle Eye, said:

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

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

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

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

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

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

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

Chairman's statement

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

Better, Bigger, Faster

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

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

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

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

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

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

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

A year of strategic and operational progress

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

Off the back of this increased momentum the Company successfully completed a placing of new equity in June 2017. This raised net proceeds of GBP5.8m which will be used to accelerate investments in product development, infrastructure and marketing resources to take advantage of the market opportunity and drive international expansion. As demonstrated above, the Company has already begun to invest these funds in the core areas for growth.

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

Outlook

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

This momentum gives visibility of revenue for the first quarter for the financial year ending 30 June 2018 to be at least 32% up on prior year comparative period at approximately GBP3.0m. Most importantly, there is an expectation that a higher proportion of revenue will be generated from recurring subscriptions and transaction revenue expected to be approximately GBP2.2m, 73% (Q1 FY17: GBP1.6m, 71%). Transaction volumes are expected to be in the region of 30.0m (Q1 FY17: 11.7m) which would represent growth of 157%. This first quarter has seen early benefits from the favourable renewal with Asda, John Lewis going live on the AIR platform within 2 months of contract signature and an increased number of transactions from our F&B clients due to exciting issuance partner relationships.

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

From the position of strength having raised net proceeds of GBP5.8m to invest in the marketing and operational capabilities that support our growth plans, the Board is excited and confident in Eagle Eye's capabilities to exploit the considerable global market opportunities in 2018.

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

Malcolm Wall, Non-Executive Chairman

CEO's statement

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

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

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

Growing market opportunity

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

Loyalty and the need for real-time engagement

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

Large retailers can't shift the dial

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

Measuring the effect of social media

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

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

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

Win, Transact, Deepen

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

   1.   Win 

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

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

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

   2.   Transact 

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

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

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

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

   3.   Deepen 

We have made significant progress in deepening our tier 1 client relationships during the Year with 53% of revenue, GBP5.9m (2016: 33%, GBP2.1m) the result of an extension of our service offering with major clients. The embedding of Eagle Eye's technology within these clients is a clear demonstration of the capability and reliability of our technology as a digital marketing platform.

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

Further progress in the established food and beverage ("F&B") sector increased revenue by 20% to GBP1.8m (2016: GBP1.5m). This increase has been driven as existing clients onboarded additional brands (including Las Iguanas & La Tasca along with new M&B concepts, Chicken Society and Son of Steak) to the AIR platform as well as utilising more of our services.

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

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

Product development

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

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

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

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

Financial results

Group revenue increased by 71% to GBP11.1m (2016: GBP6.5m) for the Year. Of total revenue, 85% (GBP9.4m) was contributed from the core AIR platform (2016: 72%, GBP4.6million).

The Group's gross profit was GBP9.8m, representing a gross margin of 88% (2016: GBP5.1m, 79%). The increased gross profits were reinvested to drive future growth, meaning that adjusted EBITDA loss was held at GBP1.8m (2016: GBP1.8m loss). To provide a better guide to the underlying business performance, adjusted EBITDA excludes share-based payment charges along with depreciation, amortisation, interest and tax from the measure of profit.

Following the successful placing completed in June 2017 which raised GBP5.8m (net of costs), the Group had net assets of GBP8.9m as at 30 June 2017 (2016: GBP5.9m) including cash and cash equivalents of GBP3.7m (2016: GBP1.3m). During the Year the Group extended its currently unutilised three year revolving loan facility with Barclays Bank PLC to GBP3.0m (2016: GBP1.5m) which together with the funds raised in the placing strengthens the Group's balance sheet.

People

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

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

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

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

Looking ahead

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

Tim Mason, Chief Executive Officer

Financial Review 2017

Group Results

Key Performance Indicators

 
                                     2017      2016 
                                   GBP000    GBP000 
-------------------------------  --------  -------- 
 Financial 
-------------------------------  --------  -------- 
 Revenue                           11,058     6,458 
-------------------------------  --------  -------- 
 Adjusted EBITDA loss(1)          (1,769)   (1,823) 
-------------------------------  --------  -------- 
 Loss before interest 
  and tax                         (3,843)   (4,100) 
-------------------------------  --------  -------- 
 Cash and cash equivalents          3,724     1,322 
-------------------------------  --------  -------- 
 
                                     2017      2016 
-------------------------------  --------  -------- 
 Non-Financial 
-------------------------------  --------  -------- 
 Number of redemptions              60.4m     38.4m 
-------------------------------  --------  -------- 
 Messaging volumes                  44.4m     40.3m 
-------------------------------  --------  -------- 
 % of subscription transaction 
  revenue                             68%       80% 
-------------------------------  --------  -------- 
 Customers and brands 
  on the platform                     233       219 
-------------------------------  --------  -------- 
 

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

Group results

Revenue

Revenue growth for the Group was up 38ppts to 71% for the Year (2016: 33%), with revenue increasing to GBP11.1m (2016: GBP6.5m). The Group is continuing to grow half- by-half and H2 2017 revenue accounted for GBP6.0m (H1 2017: GBP5.1m), representing growth of 18% on H1 2017 (H1 2016 to H2 2016: 19%).

This growth has been driven by increased revenue from the AIR platform which now represents 85% of total revenue, GBP9.4m (2016: 72%, GBP4.6m). This increase was largely as a result of the Group's success with Tier 1 grocer clients Asda, Sainsbury's and Loblaw. Revenue from Tier 1 clients in the UK increased by 92% to GBP3.3m (2016: GBP1.7m). This growth was also supported by new business wins such as John Lewis and Society of London Theatres and deepening relationships with existing clients, thus increasing redemption volumes.

Of the AIR platform revenue stream, the element specifically linked to recurring subscriptions and transactions saw a 69% increase to GBP5.9m (2016: GBP3.5m), aided specifically by increased licence fees for the Tier 1 clients and the full year effect on transactions of the national roll out of the AIR platform across all Asda stores. This Tier 1 AIR revenue growth is also supported by growth from F&B clients (20%) and other retail clients (69%) in the Year.

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

Overall, GBP7.5m of revenue generated from subscription fees and transactions over the network represented 68% of total revenue (2016: 80%, GBP5.2m). The balance, GBP3.5m, relates to implementation fees for new customers and new services and represents 32% of total revenue (2016: 20%, GBP1.3m). This increase in value and share for implementation fees reflects the progress made in deepening the Group's product offering within major accounts, particularly for our UK and International Tier 1 grocer clients where implementation fees were GBP2.8m (2016: GBP0.7m). These implementations open up recurring transactional revenues which benefit future periods.

Although message volumes increased 10% in the Year to 44.4m (2016: 40.3m), messaging revenue fell to GBP1.6m for the Year (2016: GBP1.8m). This reduction reflects the increasingly competitive messaging market. The Group renewed two key contracts during and after the Year, for UK Power Networks and Paragon, and has seen increases in transactional volumes following those renewals.

Gross profit

The gross margin increased to 88% (2016: 79%) as gross profit grew to GBP9.8m (2016: GBP5.1m). The core AIR gross margin carries a significantly higher margin than the messaging business, and has continued to improve during the Year to 96% (2016: 92%). This increase, together with the increase in core AIR revenue which now accounts for 85% of total revenue, has driven the improved margin.

Adjusted operating costs

Adjusted operating costs of GBP11.5m (2016: GBP6.9m) represent sales and marketing, product development (net of capitalised costs), operational IT, general and administration costs. The overall increase was in line with management's expectations and plans for strategic growth, including supporting the international activity for Loblaw in Canada. The investment in people is the main driver of this growth, with the average headcount for the Year increasing to 100 (2016: 73). During the Year the Group's infrastructure was also enhanced with both an operational and a disaster recovery data centre in North America having been established, in addition to the existing facilities in the UK.

Within staff costs gross expenditure on product development increased 69% to GBP2.9m (2016: GBP1.7m) reflecting investment in enhancing the capacity, features and speed of the AIR platform. Capitalised product development costs were GBP1.5m (2016: GBP1.2m) whilst amortisation of capitalised development costs was GBP1.5m (2016: GBP1.6m).

EBITDA

Reflecting the strategic re-investment of increased gross profits, adjusted EBITDA loss for the Year was held at GBP1.8m (2016: loss GBP1.8m). To provide a better guide to the underlying business performance, adjusted EBITDA excludes share-based payment charges along with depreciation, amortisation, interest and tax from the measure of profit. The GAAP measure of loss before interest and tax improved to GBP3.8m (2016: GBP4.1m) reflecting a reduction in the non-cash share-based payment charge to GBP0.4m (2016: GBP0.6m).

EPS and dividend

Following receipt of GBP0.3m research and development tax credit (2016: GBP0.4m), reported basic and diluted loss per share was 15.73p (2016: loss per share 16.36p).

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

Group Statement of Financial Position

Following the successful placing completed in June 2017 which raised GBP5.8m (net of costs), the Group had net assets of GBP8.9m at 30 June 2017 (2016: GBP5.9m), including capitalised intellectual property of GBP2.2m (2016: GBP2.2m) and cash of GBP3.7m (2016: GBP1.3m). The increase in net assets reflects the proceeds of the placing offset by the loss made in the Year.

Cashflow and net cash

Cash at the end of the Year had increased to GBP3.7m (2016: GBP1.3m). The main components to the gross cash increase of GBP2.4m for the Year (2016: GBP3.0m decrease) were the proceeds from the placing of GBP5.8m, offset by an operating cash outflow of GBP2.0m (2016: GBP1.5m) and capital investment in the AIR platform of GBP1.5m (2016: GBP1.2m).

Banking facility

During the Year the Group extended its three year revolving loan facility with Barclays Bank plc (first arranged in June 2016) to GBP3.0m (2016: GBP1.5m) that is currently undrawn and together with the funds raised in the placing means that the Group is well positioned to capitalise on recent momentum in the business and to pursue identified growth opportunities.

Consolidated statement of total comprehensive income

for the year ended 30 June 2017

 
 
                                                              2017                 2016 
                                      Note                  GBP000               GBP000 
   Continuing operations 
 Revenue                              3                     11,058                6,458 
 Cost of sales                                             (1,297)              (1,369) 
-----------------------------------  -----  ----------------------  ------------------- 
 
 Gross profit                                                9,761                5,089 
 
 Adjusted operating expenses 
  (1)                                                     (11,530)              (6,912) 
-----------------------------------  -----  ----------------------  ------------------- 
 
   Loss before interest, 
   tax, depreciation, amortisation 
   and share based payment 
   charge                                                  (1,769)              (1,823) 
 
   Share based payment 
   charge                                                    (431)                (632) 
 Depreciation and amortisation                             (1,643)              (1,645) 
 
 Operating loss                                            (3,843)              (4,100) 
 
 Finance income                                                  -                    2 
 Finance expense                                              (67)                    - 
-----------------------------------  -----  ----------------------  ------------------- 
 
 Loss before taxation                                      (3,910)              (4,098) 
 
 Taxation                                                      391                  473 
-----------------------------------  -----  ----------------------  ------------------- 
 
   Loss after taxation 
   for the financial year                                  (3,519)              (3,625) 
 
   Foreign exchange adjustments                                 33                   16 
-----------------------------------  -----  ----------------------  ------------------- 
 
 Total comprehensive 
  loss attributable to 
  the owners of the parent 
  for the financial year                                   (3,486)              (3,609) 
-----------------------------------  -----  ----------------------  ------------------- 
 
   (1) Adjusted operating expenses excludes share 
   based payment charge 
 Loss per share 
 
   From continuing operations 
 Basic and diluted                    4                   (15.73)p             (16.36)p 
-----------------------------------  -----  ----------------------  ------------------- 
 

Consolidated statement of financial position

as at 30 June 2017

 
 
                                    2017      2016 
                                  GBP000    GBP000 
 Non-current assets 
 Intangible assets                 4,838     4,838 
 Property, plant 
  and equipment                      246       243 
 
                                   5,084     5,081 
  ---------------------------  ---------  -------- 
 
   Current assets 
 Trade and other 
  receivables                      3,576     2,080 
 Cash and cash 
  equivalents                      3,724     1,322 
-----------------------------  ---------  -------- 
 
                                   7,300     3,402 
  ---------------------------  ---------  -------- 
 
 Total assets                     12,384     8,483 
-----------------------------  ---------  -------- 
 
 Current liabilities 
  Trade and other 
  payables                       (3,348)   (2,394) 
 
   Non-current liabilities 
 Deferred tax liability            (174)     (220) 
-----------------------------  ---------  -------- 
 
   Total liabilities             (3,522)   (2,614) 
-----------------------------  ---------  -------- 
 
 Net assets                        8,862     5,869 
-----------------------------  ---------  -------- 
 
 Equity attributable 
  to owners of the 
  parent 
 Share capital                       253       222 
 Share premium                    17,008    10,991 
 Merger reserve                    3,278     3,278 
 Share option reserve              1,303     1,230 
 Retained losses                (12,980)   (9,852) 
-----------------------------  ---------  -------- 
 
 Total equity                      8,862     5,869 
-----------------------------  ---------  -------- 
 
 

Consolidated statement of changes in equity

for the year ended 30 June 2017

 
                                                              Share 
                             Share      Share     Merger     option    Retained 
                           capital    premium    reserve    reserve      losses       Total 
                            GBP000     GBP000     GBP000     GBP000      GBP000        GBP000 
 Balance at 
  1 July 2015                  221     10,985      3,278        608     (6,253)         8,839 
-----------------------  ---------  ---------  ---------  ---------  ----------  ------------ 
 
 Loss for 
  the financial 
  year                           -          -          -          -     (3,625)       (3,625) 
 
   Other comprehensive 
   income 
   Foreign exchange 
   adjustments                   -          -          -          -          16            16 
-----------------------  ---------  ---------  ---------  ---------  ----------  ------------ 
 
                                 -          -          -          -     (3,609)       (3,609) 
-----------------------  ---------  ---------  ---------  ---------  ----------  ------------ 
 
   Transactions 
   with owners 
   recognised 
   in equity 
 Exercise 
  of share 
  options                        1          6          -          -           -             7 
 Fair value 
  of share 
  options exercised 
  in the year                    -          -          -       (10)          10             - 
 Share based 
  payment charge                 -          -          -        632           -           632 
                                 1          6          -        622          10           639 
-----------------------  ---------  ---------  ---------  ---------  ----------  ------------ 
 
   Balance at 
   30 June 2016                222     10,991      3,278      1,230     (9,852)         5,869 
-----------------------  ---------  ---------  ---------  ---------  ----------  ------------ 
 
 Loss for 
  the financial 
  year                           -          -          -          -     (3,519)       (3,519) 
 
   Other comprehensive 
   income 
 Foreign exchange 
  adjustments                    -          -          -          -          33            33 
-----------------------  ---------  ---------  ---------  ---------  ----------  ------------ 
 
                                 -          -          -          -     (3,486)       (3,486) 
-----------------------  ---------  ---------  ---------  ---------  ----------  ------------ 
 
   Transactions 
   with owners 
   recognised 
   in equity 
 Issue of 

  share capital                 27      5,973          -          -           -         6,000 
 Issue costs                     -      (240)          -          -           -         (240) 
 Exercise 
  of share 
  options                        4        284          -          -           -           288 
 Fair value 
  of share 
  options exercised 
  in the year                    -          -          -      (319)         319             - 
 Fair value 
  of share 
  options lapsed 
  in the year                    -          -          -       (39)          39             - 
 Share based 
  payment charge                 -          -          -        431           -           431 
                                31      6,017          -         73         358         6,479 
-----------------------  ---------  ---------  ---------  ---------  ----------  ------------ 
 
   Balance at 
   30 June 2017                253     17,008      3,278      1,303    (12,980)         8,862 
-----------------------  ---------  ---------  ---------  ---------  ----------  ------------ 
 
 

Included in Retained losses is a cumulative foreign exchange balance of GBP49,000 (2016: GBP16,000) which could be recycled to profit and loss.

Consolidated statement of cash flows

for the year ended 30 June 2017

 
                                           2017      2016 
                                         GBP000    GBP000 
 Cash flows from operating 
  activities 
 Loss before taxation                   (3,910)   (4,098) 
 Adjustments for: 
            Depreciation                    104        80 
            Amortisation                  1,539     1,565 
            Share based payment 
             charge                         431       632 
            Finance income                    -       (2) 
            Finance expense                  67         - 
 Increase in trade and other 
  receivables                           (1,496)     (663) 
 Increase in trade and other 
  payables                                  954       555 
 Income tax paid                            (1)         - 
 Income tax received                        346       403 
 
   Net cash flows from operating 
   activities                           (1,966)   (1,528) 
-------------------------------------  --------  -------- 
 
 Cash flows from investing 
  activities 
 Payments to acquire property, 
  plant and equipment                     (107)     (270) 
 Payments to acquire 
  intangible assets                     (1,539)   (1,197) 
 
   Net cash flows used in investing 
   activities                           (1,646)   (1,467) 
-------------------------------------  --------  -------- 
 
 Cash flows from financing 
  activities 
 Net proceeds from issue 
  of equity                               6,048         7 
 Proceeds from borrowings                 5,600         - 
 Repayment of borrowings                (5,600)         - 
 Interest received                            -         2 
 Interest paid                             (67)         - 
 
   Net cash flows from 
   financing activities                   5,981         9 
                                       --------  -------- 
 
 Net increase/(decrease) in 
  cash and cash equivalents in 
  the year                                2,369   (2,986) 
 Foreign exchange adjustments                33        16 
 Cash and cash equivalents 
  at beginning of year                    1,322     4,292 
-------------------------------------  --------  -------- 
 
   Cash and cash equivalents 
   at end of year                         3,724     1,322 
-------------------------------------  --------  -------- 
 

Notes to the consolidated preliminary financial information

   1    Basis of preparation 

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

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

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

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

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

   2    Going concern 

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

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

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

   3    Segmental analysis 

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

 
                                    2017     2016 
                                  GBP000   GBP000 
 Development and set 
  up fees                          3,512    1,275 
 Subscription and transaction 
  fees                             7,546    5,183 
                                  11,058    6,458 
 ------------------------------  -------  ------- 
 
 
                         2017     2016 
                       GBP000   GBP000 
 AIR revenue            9,426    4,637 
 Messaging revenue      1,632    1,821 
                       11,058    6,458 
 -------------------  -------  ------- 
 

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

 
                      2017     2016 
                    GBP000   GBP000 
 United Kingdom      8,249    5,871 
 North America       2,557      405 
 Rest of Europe        149       81 
 Asia Pacific          103      101 
                    11,058    6,458 
 ----------------  -------  ------- 
 
   4    Loss per share 

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

 
                                        2017                               2016 
                                    Weighted                           Weighted 
                 Loss                average      Loss                  average 
                  per              number of       per                   number 
                share      Loss     ordinary     share      Loss    of ordinary 
                pence    GBP000       shares     pence    GBP000         shares 
 Basic and 
  diluted 
  loss per 
  share       (15.73)   (3,519)   22,373,645   (16.36)   (3,625)     22,155,260 
-----------  --------  --------  -----------  --------  --------  ------------- 
 
   5    Report and Accounts 

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

This information is provided by RNS

The company news service from the London Stock Exchange

END

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September 19, 2017 02:00 ET (06:00 GMT)