Eagle Eye Solutions Group PLC Preliminary Results (3775K)

TIDMEYE

RNS Number : 3775K

Eagle Eye Solutions Group PLC

21 September 2016

21 September 2016

Eagle Eye Solutions Group plc

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

Results for the year ended 30 June 2016

Momentum building as UK and international Tier 1 grocers sign up to the Eagle Eye vision

Eagle Eye, the SaaS technology company that validates and redeems digital promotions in real-time for the grocery, retail and hospitality industries, today announces its audited results for the financial year ended 30 June 2016 (the "Period").

Financial highlights:

   --      Group revenue increased 33% to GBP6.5m (FY15: GBP4.9m) 
   --      AIR platform revenue increased by 70% to GBP4.6m (FY15: GBP2.7m) 

-- Recurring subscription and transactional AIR platform revenues up 84% year-on-year at GBP3.5m (FY15: GBP1.9m)

   --      Gross margin up 8ppts to 79% (FY15: 71%) 

-- Subscription and transactional revenues represented 80% of total revenues (FY15: 80%), demonstrating the sustained recurring business model

-- Cash position of GBP1.3m (2015: GBP4.3m) and new bank facility of GBP1.5m secured with Barclays Bank Plc

Tier 1 contract success and delivery:

-- Significant contract win with Sainsbury's for the deployment of Eagle Eye AIR taking our UK market coverage(1) to more than 30%

-- Major international contract with Loblaws Inc. ("Loblaw"), Canada's largest retailer, to deploy the Eagle Eye AIR platform

   --      Nationwide rollout of the AIR platform across all Asda stores complete 

Operational highlights:

   --      Total customer count at 219 (2015: 156) including over 70 FMCG brands (2015: 17) 
   --      Redemption volumes up 121% in the Period to 38.4m (2015: 17.4m) 
   --      Messaging volumes maintained at 40.3m (2015: 40.1m) 

-- Investment in new product developments, including digital wallet capability, enable Eagle Eye to access the loyalty programme market, worth $100 bn(2) worldwide

Post Period strategic board changes:

   --      Tim Mason, previously Non-Executive Chairman, appointed as Chief Executive 

-- Phill Blundell, previously Chief Executive, becomes Deputy Chief Executive to strengthen Eagle Eye's operational capability and to deliver its international growth strategy

   --      Malcolm Wall, previously a Non-Executive Director, appointed as Non-Executive Chairman 

Tim Mason, Chief Executive of Eagle Eye, said:

"I see significant strategic progress from Eagle Eye in the past year. We have won two tier 1 grocers, one overseas; the platform has been extended to support loyalty; all Asda stores have gone live showing the scalability and robustness of the platform; more brands are using the platform.

"I am confident there is significant opportunity for Eagle Eye and as the incoming CEO I look forward to helping the business become Better, Bigger, Faster. I am encouraged that this year's trading has started ahead of management's expectations."

 
 For further information, please contact: Eagle Eye 
 Tim Mason, Chief Executive Officer                 Tel: [phone] 
  Lucy Sharman-Munday, Chief Financial Officer 
 Investec (Nominated Advisor and Broker) 
 Dominic Emery/ David Anderson, Corporate Finance   Tel: [phone] 
 Matt Lewis, Corporate Broking 
  Hudson Sandler 
 Nick Lyon/Alex Brennan                             Tel: [phone] 
 
   Information on Eagle Eye 
   www.eagleeye.com 
 

Eagle Eye is a leading SaaS technology company that securely validates and redeems digital promotions in real-time for the grocery, retail and hospitality industries.

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 UK promotions market is currently transitioning through substantial change as both retailers and consumers are moving away from paper and plastic to digital. In 2014 there were in excess of 730 million coupons redeemed in the UK3, and 16 billion digital coupons redeemed worldwide4.

The Eagle Eye AIR platform comprises four key products: Eagle Eye Promote - for the management of offers and promotions, Eagle Eye Gift - for gift cards and customer care, Eagle Eye Reward - for loyalty and reward schemes and Eagle Eye Engage - for digital messaging. These four products enable the Company's customers to deliver targeted promotions, gift vouchers and rewards to consumers in real time, in a simple and secure way, across multiple marketing communications channels including email, SMS messaging and loyalty apps. The promotions can be redeemed securely by the consumer through any enabled point of sale channel.

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

Notes:

1. Based on Kantar grocery market share

2. Source: AIMIA

3. Source: Valassis 2014

4. Source: Statista 2014

Chairman's statement

In September, post the Period end, I was delighted to accept the position of Non-Executive Chairman of Eagle Eye, with Tim Mason becoming our new Chief Executive. It is the Board's belief that Tim's appointment will drive the business bigger, better and faster as we enter the next stage of Eagle Eye's development. I am also delighted that Phill Blundell remains with the business to concentrate on delivering operational scale and accelerated execution, building on the foundations already in place.

Tim joined Eagle Eye in January 2016 as Non-Executive Chairman. Since that time he has gained a deep understanding of Eagle Eye's business, products, strategy and culture. Tim brings more than 30 years' experience within the grocery and retail industries, with a strong background in strategic marketing and customer loyalty. Tim's wealth of experience and network, both domestically and internationally, as well as his knowledge of Eagle Eye mean that he is uniquely placed to lead the Company into the next phase of its growth.

In his new role, Phill Blundell, previously Chief Executive Officer, now Deputy Chief Executive Officer will focus on bolstering the operational capability for scale, building on the UK business opportunity and developing an international growth strategy.

The international opportunity for Eagle Eye was opened up in North America following the significant contract win with Loblaw Inc ("Loblaw"), the Company's first overseas Tier 1 grocery customer, in February 2016. This contract is now underway with the implementation of Eagle Eye AIR within Loblaw and Phill's move strengthens Eagle Eye's capability to capitalise on the significant international market opportunity, of which the North American market is estimated to be worth over $84bn, according Cadent Consulting Group and Raymond James.

We are confident that these changes will deepen and strengthen the management team to deliver against our overall ambitions to be a leading global platform in digital marketing.

A year of strategic and operational progress

Overall the Board is pleased with the significant progress made during the year. Although revenues in the year have not matched expectations, the significant contracts won and the developments to our software platform mean that we have growth and momentum going into FY17.

The key highlights in the year included Asda rolling out our software platform across their entire retail estate, coupled with the contract with Sainsbury's announced at the beginning of the financial year which together extends our reach in the UK grocery industry to over 30%. February's contract win with Loblaw, the Canadian market leader with circa 40% of the grocery market, shows the international potential for Eagle Eye, with this prestigious client choosing us against global leading software businesses. Finally, increased transactions on our software platform in the Food and Beverage ("F&B") market further cements our position as market leader in this sector. These successes validate our belief that consumer marketing is transferring to digital channels and we are uniquely well placed to drive this transformation.

On behalf of the Board, I want to thank the team for their commitment, hard work and major steps forward this year both in terms of contractual wins and further developing the platform for the next stage of growth.

Outlook

Eagle Eye exited FY16 with growth and momentum from both its existing customer base and two new Tier 1 grocers. The new significant wins are a major endorsement of the benefits of the Eagle Eye AIR platform that is now proven and scalable.

This momentum gives visibility of revenue for the first quarter for the financial year ending 30 June 2017 to be at least 65% up on prior year at approximately GBP2.2m. This level of growth and momentum gives the Board confidence early in the financial year on delivering against management's expectations.

The year-end cash position, coupled with the GBP1.5m revolving loan facility agreed with Barclays Bank PLC in June 2016, provides the business with adequate funding to deliver against its current 2017 targets.

Malcolm Wall, Non-Executive Chairman

CEO's statement

When I joined the Board of Eagle Eye in January 2016 as Non-Executive Chairman, I saw the potential for this business to drive transformational change in an industry that I have worked in all my career. It is rare you come across a business that has both a vision and the technology to truly change the way a sector works, but Eagle Eye excited me on both counts. Given this, I was delighted to have the opportunity to become the Company's new CEO in September, post the Period end.

Earlier in my career I was instrumental in the change of consumer marketing through the use of data and now I see another opportunity for transformation through the use of real time digital capability.

The world of promotions and rewards has to date been driven by imperfect historical data using mechanics that are rarely consumer friendly. Eagle Eye has brought a clear vision that promotions and rewards will become digital, real time and personalised, bringing clear benefits to both retailers and their consumers. Our significant contract wins and increasing volumes through the platform during the Period, demonstrate that our network is driving this transformation.

Growing market opportunity

The market for digital coupons continues to grow with the latest figures from Juniper Research estimating that 31bn eCoupons will be redeemed worldwide in 2019, up from 16bn in 2014, and there will be 1.05bn mobile coupon users worldwide by 2019.

Further, during the Period we have extended our product offer to also support the loyalty market, an industry worth $100bn globally. Existing customers like Mitchells and Butlers ("M&B") and Greggs are already using this new capability and we expect other clients to follow.

It is our firm belief that traditional forms of loyalty have become tired as consumers become resistant to the same offers and rewards delivered after the event using analogue channels. Given the "always on" world of social media and mobile communications, consumers are looking for relevant, timely and personalised rewards that add real value to their lives. This is the view shared across Eagle Eye and the development of our software platform supports the new reality with us having the ability to close the loop, delivering the right offer to the right person at the right time, thereby maximising uptake from consumers and improving their loyalty to brands. Furthermore, we provide a data feed into our customers' big data bases.

Our first overseas Tier 1 grocery customer, Loblaw, gives us an entry to the lucrative North America market for both promotions and loyalty that is estimated to be worth in excess of $84bn. With a flagship client such as Loblaw, the opportunity to capitalise in this renowned international arena for our sector is significant.

Strong strategic momentum

Tier 1 grocers

At the start of the Period, the Company announced the Sainsbury's contract win which, further to the contract with Asda in the prior year cemented our market position in the UK with these two major customers accounting for more than 30% of the grocery market. The implementation phase with Sainsbury's is on track and we continue to deepen our relationship with this client.

In February 2016, Asda completed its nationwide rollout of the AIR platform. Redemption volumes across our network grew by 121% in the Period to 38.4 million (2015: 17.4 million), the rollout at Asda being the significant contributing factor to this growth.

Since the rollout of our technology at Asda, Eagle Eye have extended the use of the platform for other digital solutions, including digitising staff rewards. After the Period end, Asda Money also adopted our software platform to deliver enhanced loyalty points and cashback to credit card members.

In February 2016 the Company signed a multi-year contract with Loblaw, our first overseas Tier 1 grocery customer, covering more than 40% of the Canadian grocery market on its own. This project is fully underway and the relationship has deepened since the start of the engagement.

FMCG brands

As our reach into the Tier 1 grocery market grows, Eagle Eye's opportunity with FMCG brands now becomes a key area of strategic focus. These brands are the major contributors to the more than $540bn digital marketing spend worldwide, according to Carat. During the course of the Period the number of brands signed up to our platform increased significantly from 17 to 70. During the Period the Company also delivered several brand marketing campaigns through the network including those for Diageo, Heineken and Unilever, supported by new relationships with leading marketing agencies, Starcom, Mediacom and Mindshare. We are confident that this pillar of our strategy will be a major revenue generator in the coming year.

Food & Beverage ("F&B")

The year has seen good progress in our F&B client base with increased revenues driven by new solutions for existing clients such as Prezzo and M&B as well as new clients wins with The Restaurant Group and La Tasca. We are extending our issuance partners with new partnerships secured with WEVE, SAVOO and Nectar. These partners bring new customers to our F&B clients alongside our existing relationships with Tesco, Vouchercloud and Groupon, together demonstrating the power of a digitally connected network.

Product development

As the market moves to digital delivery it is important that we continue to innovate and extend our software platform to meet the demands of our clients as well as developing consumer trends. During the year we introduced new functionality to fully support the promotional activity of our grocery customers, including expanding the range of coupon types supported; building functionality to manage loyalty points; adding continuity schemes such as stamp cards; and also incorporating "next best offer" schemes enabling real-time rewards at the point of sale. The platform has also been developed to support the creation, issuance and tracking of marketing campaigns by FMCG brands and offer full support for multi-language and multi-currency customers. In addition, we have made significant enhancements to our digital wallet capability, enabling clients to bring together all our services under a single view of the consumer.

As well as this expanding functionality, we have also invested in expanding and developing the scalability and infrastructure of the platform to exceed our customers' growing service level requirements. We are now the only proven platform that is capable of supporting full basket analysis and promotional validation in real time and at scale, through our reference case with Asda.

Financial results

Group revenue increased by 33% to GBP6.5 million (2015: GBP4.9 million) for the Period. Of total revenue, 72%, GBP4.6 million, was contributed from the core AIR platform (2015: 56%, GBP2.7million).

The Group's gross profit was GBP5.1 million, representing a gross margin of 79% (2015: GBP3.5 million, 71%). The increase from prior year was driven by a higher proportion of revenue generated from the AIR platform that carries a higher margin than the messaging business. The adjusted EBITDA loss was GBP1.8 million (2015: GBP1.5 million 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.

The Group had net assets of GBP5.9 million at 30 June 2016 (2015: GBP8.8 million) including cash and cash equivalents of GBP1.3 million (2015: GBP4.3 million). In June 2016 the Group arranged a new banking facility with Barclays Bank PLC for a three year GBP1.5 million revolving loan facility in order to strengthen the Company's balance sheet as it continues to deepen and broaden its customer relationships.

People

In addition to the strategic Board changes, the management team has been further strengthened by the recruitment of a new Sales Director, Helen Slaven, in May 2016. As a senior sales director in both the retail and technology sectors, Helen brings extensive experience and an international network of contacts necessary for us to deliver against our revenue targets.

The past 12 months has seen rapid growth in our team. We have seen the average headcount increase from 50 to 73, moved into a permanent office in Guildford with the right facilities to support the enhanced status of the business, and introduced HR systems to develop, measure, reward and motivate our growing headcount. More recently we have opened an operation in Toronto to support our services in Canada and with Phill Blundell leading the operation I expect there to be rapid growth over the next 12 months. The skill, dedication and talent of our people are fundamental to our growing business. We have made good progress over the last 12 months and will continue to make improvements to ensure we attract the best talent.

Looking ahead

The past year has seen good progress against our objective to make our mission possible and I believe that all the key components are now in place. We are well placed in terms of our management team, our client base and platform capability to take advantage of the significant and growing market opportunity. I have confidence that the coming year will see significant progress and value creation for our shareholders.

Tim Mason, Chief Executive Officer

Financial Review 2016

Group Results

Key Performance Indicators

 
                                       2016      2015 
                                     GBP000    GBP000 
---------------------------------  --------  -------- 
 Financial 
---------------------------------  --------  -------- 
 Revenue                              6,458     4,854 
---------------------------------  --------  -------- 
 Adjusted EBITDA loss(1)            (1,823)   (1,521) 
---------------------------------  --------  -------- 
 Cash and cash equivalents            1,322     4,292 
---------------------------------  --------  -------- 
 
                                       2016      2015 
---------------------------------  --------  -------- 
 Non-Financial 
---------------------------------  --------  -------- 
 Number of redemptions                38.4m     17.4m 
---------------------------------  --------  -------- 
 Like for like messaging volumes      40.3m     40.1m 
---------------------------------  --------  -------- 
 % of subscription transaction 
  revenue                               80%       80% 
---------------------------------  --------  -------- 
 Customers and brands on the 

  platform                              219       156 
---------------------------------  --------  -------- 
 

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

Group results

The Group generated solid revenue growth of 33% for the Period, with revenue increasing to GBP6.5 million (2015: GBP4.9 million). H2 FY16 revenue accounted for GBP3.5m (H1 FY16: GBP3.0million), representing growth of 36% year on year. Half by half growth rate, therefore, represents 19% (H2 FY15 to H1 FY16: 14%).

Underpinning this growth was the revenue from the AIR platform that represented 72% of total revenue, GBP4.6m (2015: 56%, GBP2.7m). This increase has been driven by increased redemption volumes through existing clients and the implementation of new major projects in the Period at Sainsbury's and Loblaw. Of this specific revenue stream the element specifically linked to strategic recurring subscription and transactions saw an 84% increase to GBP3.5m (FY15: GBP1.9m), aided specifically with the national roll out of the AIR platform across all Asda stores.

Redemption volumes, a key measure of usage of the AIR platform, were 38.4 million for the Period (2015: 17.4 million) a growth of 121% year-on-year driven by our solution for Asda's coupon counting going fully live in February 2016 and increased volumes from existing F&B clients.

Overall, GBP5.2 million of revenue generated from subscriptions fees and transactions over the network represented 80% of total revenue (2015: 80%, GBP3.9 million). The preservation of this share of revenue year-on-year illustrates the success of our recurring subscription business model with limited upfront licence fees. The balance, GBP1.3 million, relates to implementation fees for new customers and new services and represents 20% of total revenue (2015: 20%, GBP1.0 million).

Messaging revenue was GBP1.8 million for the Period (2015: GBP2.1m), despite maintaining similar message volumes year on year (c.40m). Revenue per message was impacted by a key contract renewal at the start of FY16 and reflects the competitive messaging market. The revenue represents a shortfall from management expectations due to both the volatility in messaging volumes of existing clients and the timing of implementation of new wins. The Company won several new contracts during the second half of the Period, including Swinton and Asurion, which will have a positive impact in FY17.

The gross margin increased from 71% to 79% in 2016 as gross profit grew to GBP5.1 million (2015: GBP3.5 million). The core AIR gross margin carries a significantly higher margin than the messaging business, increasing from 87% to 92% in 2016. This increase, together with core AIR revenue now accounting for 72% of total revenue, has driven the improved margin.

Operating costs

Operating costs of GBP7.5 million (2015: GBP5.6 million) represent sales and marketing, product development (net of capitalised costs), operational IT, general, administration and share based payment costs. The overall increase was in line with management expectations. Our investment in people for planned strategic activity is the main driver of this growth, with the average headcount for the year increasing to 73 (2015: 50).

Within staff costs gross expenditure on product development increased 43% to GBP1.7 million (2015: GBP1.2 million) reflecting our investment in enhancing the capabilities of our platform. Capitalised product development costs at GBP1.2 million (2015: GBP1.0 million) represented 69% of gross development spend whilst amortisation of capitalised development costs was GBP1.6 million (2015: GBP1.4 million).

EBITDA

Reflecting our planned investment, Group adjusted EBITDA loss for the Period was GBP1.8 million (2015: loss GBP1.5 million). 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.

EPS and dividend

Reported basic and diluted loss per share was 16.36p (2015: loss per share 16.17p).

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

Group Statement of Financial Position

The Group had net assets of GBP5.9 million at 30 June 2016 (2015: GBP8.8 million), the decrease in net assets reflects predominantly the cash movement explained below. Cash and cash equivalents of GBP1.3 million (2015: GBP4.3 million) was ahead of management expectations due to robust working capital management.

Cashflow and net cash

The main components to the gross cash decrease of GBP3.0 million for the Period (2015: GBP2.0 million increase) were operating cash outflow of GBP1.5 million (2015: GBP0.8 million) and capital investment in the AIR platform and tangible fixtures and fittings.

Aside from the investment in a permanent head office, the year was relatively modest in terms of investing activities, reflecting the typically low levels of capital expenditure required on tangible assets for the business. Capital expenditure on property, plant and equipment totalled GBP0.3 million (2015: GBP0.02 million) while capitalised intangible asset additions totalled GBP1.2 million (2015: GBP1.0 million), relating to the capitalisation of development cost for the AIR platform.

In 2015 net receipts included an inflow from a new share placing of GBP3.8 million.

Banking facility

The Group arranged new banking facilities in June 2016. A three year GBP1.5 million revolving loan facility was agreed with Barclays Bank PLC to strengthen the Company's balance sheet as it continues to deepen and broaden its Tier 1 relationships with national and international customers. This facility was not drawn down during the Period.

Consolidated statement of total comprehensive income

for the year ended 30 June 2016

 
 
                                                                  2016                 2015 
                                          Note                  GBP000               GBP000 
   Continuing operations 
 Revenue                                  3                      6,458                4,854 
 Cost of sales                                                 (1,369)              (1,385) 
---------------------------------------  -----  ----------------------  ------------------- 
 
 Gross profit                                                    5,089                3,469 
 
 Adjusted operating expenses 
  (1)                                                          (6,912)              (4,990) 
---------------------------------------  -----  ----------------------  ------------------- 
 
   Loss before interest, tax, 
   depreciation, amortisation 
   and share based payment charge                              (1,823)              (1,521) 
---------------------------------------  -----  ----------------------  ------------------- 
 
   Share based payment charge                                    (632)                (593) 
 Depreciation and amortisation                                 (1,645)              (1,441) 
 
 Operating loss                                                (4,100)              (3,555) 
 
 Finance income                                                      2                    - 
---------------------------------------  -----  ----------------------  ------------------- 
 
 Loss before taxation                                          (4,098)              (3,555) 
 
 Taxation                                                          473                  203 
---------------------------------------  -----  ----------------------  ------------------- 
 
   Loss after taxation for the 
   financial year                                              (3,625)              (3,352) 
 
   Foreign exchange adjustments                                     16                    - 
---------------------------------------  -----  ----------------------  ------------------- 
 
 Total comprehensive loss attributable 
  to the owners of the parent 
  for the financial year                                       (3,609)              (3,352) 
---------------------------------------  -----  ----------------------  ------------------- 
 
   (1) Adjusted operating expenses excludes share based payment 
   charge 
 Loss per share 
 
   From continuing operations 
 Basic and diluted                        4                   (16.36)p             (16.17)p 
---------------------------------------  -----  ----------------------  ------------------- 
 

Consolidated statement of financial position

as at 30 June 2016

 
 
                                     2016      2015 
                                   GBP000    GBP000 
 Non-current assets 
 Intangible assets                  4,838     5,206 
 Property, plant and 
  equipment                           243        53 
 
                                    5,081     5,259 
  -----------------------------  --------  -------- 
 
   Current assets 
 Trade and other receivables        2,080     1,417 
 Cash and cash equivalents          1,322     4,292 
-------------------------------  --------  -------- 
 
                                    3,402     5,709 
  -----------------------------  --------  -------- 
 
 Total assets                       8,483    10,968 
-------------------------------  --------  -------- 
 
 Current liabilities 
  Trade and other payables        (2,394)   (1,839) 
 
   Non-current liabilities 
 Deferred tax liability             (220)     (290) 
-------------------------------  --------  -------- 
 
   Total liabilities              (2,614)   (2,129) 
-------------------------------  --------  -------- 
 
 Net assets                         5,869     8,839 
-------------------------------  --------  -------- 
 
 Equity attributable 
  to owners of the parent 
 Share capital                        222       221 
 Share premium                     10,991    10,985 
 Merger reserve                     3,278     3,278 
 Share option reserve               1,230       608 

 Retained losses                  (9,852)   (6,253) 
-------------------------------  --------  -------- 
 
 Total equity                       5,869     8,839 
-------------------------------  --------  -------- 
 
 

Consolidated statement of changes in equity

for the year ended 30 June 2016

 
                                                              Share 
                             Share      Share     Merger     option    Retained 
                           capital    premium    reserve    reserve      losses       Total 
                            GBP000     GBP000     GBP000     GBP000      GBP000        GBP000 
 Balance at 1 
  July 2014                    201      7,209      3,278        197     (3,083)         7,802 
-----------------------  ---------  ---------  ---------  ---------  ----------  ------------ 
 
 Loss for the 
  financial year                 -          -          -          -     (3,352)       (3,352) 
-----------------------  ---------  ---------  ---------  ---------  ----------  ------------ 
 
   Transactions 
   with owners 
   recognised in 
   equity 
 Issue of share 
  capital                       20      4,006          -          -           -         4,026 
 Issue costs                     -      (230)          -          -           -         (230) 
 Fair value of 
  share options 
  lapsed in the 
  year                           -          -          -      (182)         182             - 
 Share based 
  payment charge                 -          -          -        593           -           593 
                                20      3,776          -        411         182         4,389 
-----------------------  ---------  ---------  ---------  ---------  ----------  ------------ 
 
   Balance at 30 
   June 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 
-----------------------  ---------  ---------  ---------  ---------  ----------  ------------ 
 
 

Consolidated statement of cash flows

for the year ended 30 June 2016

 
                                                      2016      2015 
                                                    GBP000    GBP000 
 Cash flows from operating 
  activities 
 Loss before taxation                              (4,098)   (3,555) 
 Adjustments for: 
            Depreciation                                80        42 
            Amortisation                             1,565     1,399 
            Share based payment charge                 632       593 
            Finance income                             (2)         - 
 Increase in trade and other receivables             (663)      (63) 
 Increase in trade and other payables                  555       418 
 Income tax received                                   403       362 
 
   Net cash flows from operating activities        (1,528)     (804) 
------------------------------------------------  --------  -------- 
 
 Cash flows from investing 
  activities 
 Payments to acquire property, plant and 
  equipment                                          (270)      (17) 
 Payments to acquire intangible 
  assets                                           (1,197)     (958) 
 
   Net cash flows used in investing activities     (1,467)     (975) 
------------------------------------------------  --------  -------- 
 
 Cash flows from financing 
  activities 
 Net proceeds from issue of 
  equity                                                 7     3,796 
 Interest received                                       2         - 
 
   Net cash flows from financing 
   activities                                            9     3,796 
                                                  --------  -------- 
 
 Net (decrease)/increase in cash and cash 
  equivalents in the year                          (2,986)     2,017 
 Foreign exchange adjustments                           16         - 
 Cash and cash equivalents 
  at beginning of year                               4,292     2,275 
------------------------------------------------  --------  -------- 
 
   Cash and cash equivalents 
   at end of year                                    1,322     4,292 
------------------------------------------------  --------  -------- 
 

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 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, 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 2015 has been extracted from the Group's audited financial statements which were approved by the Board of Directors on 15 September 2015 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 or issued and early adopted 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:

 
                                    2016     2015 
                                  GBP000   GBP000 
 Development and set up fees       1,275      992 
 Subscription and transaction 
  fees                             5,183    3,862 
                                   6,458    4,854 
 ------------------------------  -------  ------- 
 
 
                         2016     2015 
                       GBP000   GBP000 
 AIR revenue            4,637    2,733 
 Messaging revenue      1,821    2,121 
                        6,458    4,854 
 -------------------  -------  ------- 
 

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

 
                      2016     2015 
                    GBP000   GBP000 
 United Kingdom      5,871    4,515 
 North America         405        - 
 Rest of Europe         81      194 
 Asia                  101      145 
                     6,458    4,854 
 ----------------  -------  ------- 
 
   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:

 
                                                                                             2015 
                         Loss                          2016      Loss                    Weighted 
                          per              Weighted average       per              average number 
                        share      Loss           number of     share      Loss       of ordinary 
                        pence    GBP000     ordinary shares     pence    GBP000            shares 
 Basic and diluted 
  loss per share      (16.36)   (3,625)          22,155,260   (16.17)   (3,352)        20,721,298 
-------------------  --------  --------  ------------------  --------  --------  ---------------- 
 
   5    Report and Accounts 

A copy of the Annual Report and Accounts will be sent to all shareholders with notice of the Annual General Meeting.

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR EAKNEASDKEFF

(END) Dow Jones Newswires

September 21, 2016 02:00 ET (06:00 GMT)