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Cloudcall Group Plc LSE:CALL London Ordinary Share GB00B4XS5145 ORD 20P
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Electronic & Electrical Equipment 9.6 -3.1 -8.7 - 31

Cloudcall Group PLC Final Results for the Year Ended 31 December 2019

08/04/2020 7:00am

UK Regulatory (RNS & others)


TIDMCALL

RNS Number : 1344J

Cloudcall Group PLC

08 April 2020

 
                                              8 April 2020 
 
                                          CloudCall Group plc 
                              ("CloudCall", "The Group" or the "Company") 
 
                           Final Results for the Year Ended 31 December 2019 
 
                            INVESTMENTS DRIVING ACCELERATION IN USER GROWTH 
 
             CloudCall (AIM: CALL), a leading cloud-based software business that integrates 
            communications technology into Customer Relationship Management (CRM) platforms, 
           is pleased to announce its full year results for the year ended 31 December 2019. 
 
                                        Key financial highlights 
 
                             *    Recurring revenues up 33% compared to 2018 
 
 
                         *    Total revenues up 30% to GBP11.4m (2018: GBP8.8m) 
 
 
                                o US revenues increased 56% year-on-year 
                            *    Annualised revenue run-rate surpasses GBP13m 
 
 
                        *    Total number of end-users up 35% to 42,348 as at 31 
                                         December 2019 (2018: 31,343) 
 
 
                       *    Net new monthly users added in H2 2019 accelerated to 
                              902 on average (of which Q3 = 643 and Q4 = 1,162) 
 
 
                        *    Gross margin increased from 78.4% in 2018 to 78.9%, 
                             with gross profit up 31% to GBP9.0m (2018: GBP6.9m). 
 
 
                            *    EBITDA loss (excl. share-based payments and 
                            exceptional items) reduces to GBP2.2m (2018: GBP2.5m) 
 
 
                          *    Loss per share reduces to 10.3 pence (2018: 12.9 
                                            pence loss per share) 
 
 
                            *    GBP13.1 m available cash (including the debt 
                                   facilities) at year-end (2018: GBP0.9m) 
 
 
                          *    Successful October placing raised GBP11.3m (net 
                                                  proceeds) 
 
 
                        *    Net cash absorbed by operating activities down by 8% 
                                           year on year to GBP1.9m 
 
 
 
                                       Key operational highlights 
 
                         *    The Group continues to make strong progress on its 
                                strategy based around 4 key pillars of growth 
 
 
             o To continue developing relevant new products, services and features for our 
                                               customers 
             o To deepen relationships with existing partners, while integrating with more 
             recruitment CRMs and become the "go-to" integrated communications provider for 
                                               the sector 
                            o To expand both our geographic and sector reach 
                              o To engage with larger enterprise customers 
                         *    Average customer size increases by 22% to 33 users 
 
 
                       *    Record breaking Q4 2019 sales performance assisted by 
                                2 enterprise deals expected to go live in 2020 
 
 
                        *    Greater collaboration with key partners is improving 
                                   large and enterprise customers pipeline 
 
 
                        *    4 new CRM integrations added in 2019, significantly 
                              expanding the number of companies able to benefit 
                              from CloudCall's deeply integrated communications 
 
 
                       *    Broadcast and template SMS capabilities rolled out to 
                                           all our CRM integrations 
 
 
                       *    First CRM integration delivered using CloudCall's new 
                                          rapid integration toolkit 
 
 
 
 
                                         Coronavirus Statement 
                     Simon Cleaver, Chief Executive Officer of CloudCall commented; 
 
            "During the first two months of 2020, trading was in-line with expectations, but 
             with the escalation of the coronavirus crisis in March and particularly since 
       countries have been going into lockdown, we've started to see some new sales opportunities 
            postponing decisions. This has been partially offset by a flurry of orders from 
             existing customers preparing for their staff to work from home, but we expect 
                                   this to be relatively short lived. 
 
           In comparison to many companies CloudCall is well placed to weather this pandemic. 
         Our products and services are extremely relevant in the current climate, particularly 
            as they allow customers' staff to work remotely with full access to systems that 
                             they would use in their normal place of work. 
 
          Furthermore, as a SaaS company, a significant proportion our revenue is contracted, 
          recurring or repeatable in nature, thereby providing us with strong forward revenue 
           visibility. SaaS businesses incur the cost of development and acquisition upfront, 
            but income is spread over the customers' lifetime. There is therefore a balance 
             between investing for further customer acquisition, investment in the product, 
                                 and managing cash generation or burn. 
 
           So, whilst income is relatively predictable, costs, are more flexible. Investment 
            for growth can be slowed or accelerated relatively quickly as market conditions 
            dictate. This can serve to reduce cash burn as needed and could be used to push 
             a company to break-even ahead of forecasts. All options, of course, would have 
                                     impact on future growth rates. 
 
             In the current medical crisis and with our strong balance sheet, the Board is 
           keen to stand by our excellent staff as much as possible, however we have already 
            taken numerous decisive measures to significantly reduce current operating cash 
           burn down to around GBP250k per month by May 2020 based on current activity levels 
             and will continue to keep our operating costs under close review in the coming 
                                                months. 
 
          CloudCall is well capitalised and has the ability to reduce its cash burn relatively 
         quickly. As the length of the current crisis is unknown, it's impossible to accurately 
            predict what the impact on our 2020 and 2021 revenues will be, but the Board is 
           confident that CloudCall has sufficient cash to enable it to trade its way through 
                                  this period of global uncertainty." 
 
 
                For further information, please contact:            CloudCall Group plc 
                                           Simon Cleaver, Chief Executive 
                        Officer                                      Tel: +44 (0)20 3587 7188 
                                           Paul Williams, Chief Financial 
                                                       Officer 
 
            Canaccord Genuity Limited                                Tel: +44 (0)20 7523 8000 
                                              Simon Bridges 
                                             Richard Andrews 
 
 
 
                                     Investor presentation webcast 
             In addition, the Company will host a live presentation for investors at 2.00pm 
            on Tuesday 14 April 2020 via the Investor Meet Company communications platform. 
 
             Investors can sign up to Investor Meet Company for free. Simply register using 
         the link below and add a request to meet Cloudcall to be invited to the next meeting. 
 
                              https://www.investormeetcompany.com/register 
 
             Investors that have already registered and added to meet the Company, will be 
             automatically invited. There will be an opportunity to ask questions directly 
                                              to the team. 
 
                                             Annual Report 
             The Annual Report for the year ended 31 December 2019 will be published on the 
             Company's website at www.cloudcall.com on April 8(th) 2020. The Annual Report 
            will be posted to shareholders that have requested hard copies in due course and 
                    the Company will notify its shareholders once this has occurred. 
 
                                         Annual General Meeting 
          These accounts will be tabled for approval at the forthcoming Annual General Meeting 
             of the Group. Details of the date, location and time of the AGM, together with 
            instructions on how to attend, vote and participate in any Q&A will be announced 
                                              in advance. 
 
 
                                          Chairman's Statement 
 
           In more normal circumstances I would be pleased to report on another year of solid 
            progress for the business which saw strong performance across the essential KPIs 
            set by the board and financial results for the year ended 31 December 2019 which 
            show excellent progress towards the focussed strategic objectives agreed in the 
                                            five year plan. 
 
             Obviously, the world situation has changed due to the Covid-19 pandemic and as 
             a business our immediate thoughts are focused on the safety and welfare of our 
           staff, partners and clients. The Board has reacted swiftly to ensure all our staff 
            are able to work remotely to continue to provide an uninterrupted service to our 
                                         clients and partners. 
 
                                          Financial highlights 
                          *    Total revenues up by 30% to GBP11.4m compared to 
                                              GBP8.8m in FY 2018 
 
 
                        *    Monthly recurring revenues up by 33% compared to FY 
                                                     2018 
 
 
                        *    Total users increased by 35% since 31 December 2018 
 
 
                        *    Annualised revenue run rate through GBP13m based on 
                                               Q4 2019 revenues 
 
 
                                        *    Strong SaaS metrics 
 
 
 
                                         Four Pillars of Growth 
             During 2019 the business continued to focus its growth objectives concentrated 
                                      around four growth pillars: 
                           *    To continue developing relevant new products, 
                                   services and features for our customers 
 
 
                       *    To deepen relationships with existing partners, while 
                            integrating with more recruitment CRMs and become the 
                              "go-to" integrated communications provider for the 
                                                    sector 
 
 
                           *    To expand both our geographic and sector reach 
 
 
                             *    To engage with larger enterprise customers 
 
 
 
             Good progress was made against each of these growth objectives during the year 
                        and will continue to be the focus as we move into 2019. 
 
                        Product Development, Scalability and Customer Retention 
           The key to long term success in an annuity revenue business is maintaining a high 
           Lifetime Value: Customer Acquisition Cost ratio, which clearly requires effective 
             sales and marketing, client satisfaction and ongoing client revenue growth in 
           order to be achieved and maintained. Our own figure of just over 6, together with 
            our high net renewal rates demonstrates that we are successfully delivering high 
                value, adding new clients at an effective cost of customer acquisition. 
 
            I am pleased to report that the relationship with our key strategic partners has 
         deepened globally during 2019 and is now providing a much higher quality of qualified 
            lead flow. Focus on client satisfaction and client retention has seen improving 
            metrics in this area and the introduction of new messaging functionality should 
             provide even more opportunities for enhancing average revenues per user as we 
             move forward. Significant progress has been made in encouraging key strategic 
         Account Managers and Sales Executives to identify potential leads from their existing 
                                            and new clients. 
 
             2019 also saw a more collaborative approach with our leading partners starting 
             to proactively build opportunities from their own customer base as confidence 
                              in the partnership and the platform builds. 
 
             In 2019 the board identified that the strategy of expanding globally, working 
           with key strategic partners and moving the target customer towards the enterprise 
             level would bring the business to an important strategic crossroads. Following 
             intensive discussions with advisers and shareholders the decision was taken to 
             raise significant additional equity capital by way of a placing. This placing 
             raised GBP11.3m net of fees and was completed in October 2019. This new equity 
            meant the business finished the year with a significantly stronger balance sheet 
                    with cash of GBP11.1m and an ongoing credit facility of GBP3.0m. 
 
                                                 People 
 
             2019 saw few changes at senior management or board level however the planning 
             exercise that preceded the equity fund raising identified a number of gaps in 
          the management structure and part of the use of funds from the placing was utilised 
            to make some key hires to strengthen the executive team to provide the capacity 
                           and experience to drive the next level of growth. 
 
             Early in 2020 a number of key hires have been announced including a new Chief 
            Technology Officer, a new Chief People Officer and a new US based Chief Revenue 
                    Officer to drive our US revenues and customer service offering. 
 
            I would like to take this opportunity to thank all our staff for their drive and 
                                    commitment throughout the year. 
 
                                                Outlook 
 
         With a significantly stronger balance sheet and a focussed and demonstrably effective 
         growth strategy, the business ended 2019 in very good shape and the board is confident 
            that the business is well placed to deliver long term shareholder value. At the 
          time of writing the Global Coronavirus is spreading rapidly across the world forcing 
             governments and business to take unprecedented action to contain the spread of 
                                               infection. 
 
             This is resulting in curtailing of international travel, cancellation of trade 
            shows, conferences and large customer events. The full impact of these measures 
         on new business leads and the subsequent wider impact, particularly on the recruitment 
          sector if companies slow or freeze hiring of staff are not yet possible to quantify. 
 
             Although the business benefits from strong recurring revenues, high levels of 
           user satisfaction and providing a product that supports remote working and working 
           from home, it is inevitable that there will be some as yet unquantifiable impacts 
                         as the Coronavirus contagion spreads across the globe. 
 
         Through recent reviews of investment plans and operating costs, the Board is confident 
           that the business is comparatively well placed, supported by the successful recent 
             fund raise, to get back on track when the current uncertain market conditions 
                                                 abate. 
 
                                             Peter Simmonds 
                                         Non-executive Chairman 
                                          CloudCall Group plc 
 
 
                                        Chief Executive's review 
 
             I wrote in my review last year, that 2018 was a year of significant investment 
            in new product and expanding our sales and marketing capabilities to lay strong 
             foundations for growth in 2019 and beyond, and I plan to use this opportunity 
         to present the 2019 results which show the results of that investment coming through. 
             I also wish to discuss how we are planning to use the proceeds of our October 
             2019 fund raise to capitalise on the exciting opportunities opening before us. 
 
             However, I also feel it is worth noting that this review needs to be put into 
            context with the evolving coronavirus pandemic and the uncertainty that this is 
             causing to many businesses in the early part of 2020. The specific impacts to 
            CloudCall and its outlook for 2020 and 2021 have been set out in greater detail 
                   in both the coronavirus section and the Chairman's outlook above. 
 
 
                             Performance overview and financial highlights 
            The performance of the Group in 2019 demonstrates that our "4 pillars of growth" 
          strategy to become the leading provider of 'integrated communications' by continuing 
             to enhance our product, integrate with more CRMs, expand our geographic reach 
           and engage with ever larger customers is beginning to deliver success as evidenced 
                                   by further strong revenue growth. 
 
             In numerical terms, growth continues strongly with an overall 30% increase in 
          revenue compared to the prior year. Behind this headline growth, our core recurring 
           revenue streams grew by 33%, and our US operation performed strongly, contributing 
          a 50%+ increase in revenue. North America now contributes around 40% of our overall 
                                               revenues. 
 
             The Company is also pleased to report that our net renewal rate from existing 
            customers remains over 100%, and this continues to be demonstrably higher where 
            those customers are from the recruitment and staffing sector, which remains one 
               of several key strategic focus area for CloudCall's products and services. 
 
           The average recurring revenue per user (ARPU) remained constant during the period 
            at approximately GBP28 per user per month, as discounts on larger customer wins 
                were offset by cross selling additional chargeable products or services. 
 
           The Group also completed an equity fundraise in October 2019, raising net proceeds 
             of GBP11.3m. As at 31 December 2019, the Group held available cash reserves of 
            GBP11.1m with a further GBP2.0m of headroom on its debt facility still available 
                                              to be drawn. 
 
                                         Strong growth metrics 
 
            As discussed in previous reports, two of the key metrics that we monitor closely 
        are 'Total Users' and 'Net New User Growth' which is the number of new users signed-up, 
           less any lost or 'churned' users within that same period. We believe these metrics 
             give a more appropriate basis for calculating future growth and revenues than 
             simply using an extrapolation of historical income, which can give a distorted 
                                          view due to timings. 
 
            The total number of users grew 35% to just over 42,300, representing an average 
             net new user growth of 917 per month over the year, a 41% increase over 2018. 
             During H2, an average of 902 monthly net new users were added compared to 932 
             in H1. The slightly lower number in H2 was due to no enterprise deals closing 
             in Q3. However, Q4 recovered strongly and was a record quarter in terms of new 
                   orders received and average monthly net new user growth of 1,162. 
 
             It is pleasing to see the further acceleration in Net New User Growth over the 
         course of 2019 and I firmly believe that this level of acceleration clearly validates 
          our strategy and demonstrates that the investments we have been making are starting 
                                             to bear fruit. 
 
             However, the investments being made are targeted to impact growth not just in 
             2019, but for the years ahead, and notwithstanding current market uncertainty, 
            I hope to see further acceleration in net user growth being driven from the four 
                           key strands of our growth strategy set out below. 
 
                Total users                      2018     2018     2019     2019     2019 
                                                  H1       H2       H1       Q3       Q4 
                                        Monthly average net user 
                 growth                          580      724      932      643     1,162 
                                              -------  -------  -------  -------  ------- 
               Total users at end of period    27,000   31,343   36,936   38,864   42,348 
                                              -------  -------  -------  -------  ------- 
 
 
 
                                      Our ongoing growth strategy 
 
              1. Developing relevant new products, features and services for our customers 
         I previously highlighted the growing importance of messaging within the communications 
             mix and how it was essential that we developed a messaging service to maintain 
             our competitive advantage. Following the 2018 launch of our Version 1 internal 
           messaging (IM) and SMS services, I was delighted that our product and development 
            teams were able to exceed expectations by quickly following that with the launch 
         of our 2nd generation messaging services. This significantly improved user experience 
           by adding new functionality including the capability for customers to use message 
         templates and to simultaneously send SMS messages to multiple end users from targeted 
            contact lists built within our partner CRMs and for all messages to synchronise 
                                  with CloudCall Go! - our mobile app. 
 
           By the end of the period, our messaging services had achieved penetration of just 
          under 8% of our customer base. Within this, we have seen mixed results by geography 
             with UK uptake lower than expected at 6.6% due to a general move away from SMS 
            towards other social media channels such as Facebook and WhatsApp. US uptake on 
           the other hand has exceeded expectations with over 10% uptake by the end of 2019. 
 
            In 2020 or early 2021 we plan to significantly strengthen our messaging services 
           with the addition of a number of social media channels to complement the existing 
         IM and SMS capabilities for true omni-channel messaging capability. It is anticipated 
                       that this will boost penetration, particularly in the UK. 
 
        We are also now in the early stages of research and design around work-flow automation, 
            that would allow customers to build automated massaging and call flows based on 
                              triggers and actions from within their CRM. 
 
           2. Deepening relationships with existing partners and adding more CRM integrations 
           In H2 2019, the Company announced several new integrations with other recruitment 
          and staffing CRMs and is now pleased to see lead-flow and new customer acquisitions 
           from these new partners contributing towards Q4's excellent new business bookings. 
           These new CRM partnerships are still in a relatively early stage and Board expects 
          they will have a greater contribution in 2020 as the relationships develop. Further 
          CRM integrations and partnerships continue to be actively worked on, and in February 
            2020, we were delighted to announce a new integration partnership with Vincere, 
             a recruitment CRM with more than 1,000 customers from 50+ countries, including 
                               a significant presence in the APAC region. 
 
                                3. Expanding geographic and sector reach 
            Following the October 2019 fundraise, the Company has invested in the extension 
            of its platform into the Asia Pacific (APAC) region, further enhancement of its 
           products and services and significant additional sales and marketing capabilities 
            from which it expects to deliver considerable revenue growth in the years ahead. 
 
            We are delighted to report that since the year end, thanks to the excellent work 
           of our engineering teams enabling our services to be delivered in Australia. Since 
             the year end, our Sydney office is now open for business and we are pleased to 
          confirm that CloudCall Australia signed its first customer within weeks of opening. 
            We are really excited by the opportunity that Australia and, in due course, the 
          wider-APAC region presents and look forward to giving further updates in the future. 
 
                        4. Engaging with and serving larger enterprise customers 
             2019 saw a tangible increase in interest in CloudCall's products and services 
            from large enterprise level customers with potential user bases ranging from 250 
         users to multiple thousands. This has been primarily driven by our growing reputation 
             in the recruitment sector, and our ongoing relationship with our key partners. 
 
            Our decision to open an office in Sydney was in part due to the requirement from 
             some of these enterprise prospects to have a global solution. There are also a 
             number of our existing large customers that have openly expressed a desire to 
         expand their CloudCall user base once we are able to serve their global requirements. 
 
             During H1 2019, we were delighted to announce our first major 1,000 users plus 
             win with ACS (American Cyber Systems). Their 1,850-user deal is now well into 
             the roll-out phase having commenced a little later than initially planned and 
             is expected to make a significant contribution to revenues in the coming year. 
             Furthermore, as they have been working through deployment, the opportunity has 
            grown to potentially add a significant number of additional users and services. 
 
             In February 2020, we announced a second major win with Vaco, a global talent & 
             solutions firm with annual revenues of more than $750 million. The three-year 
            contract will see CloudCall providing its integrated telephony service to Vaco's 
         thousand plus employees in quarterly tranches over the coming 18 months. The extended 
             implementation period for this contract means that the resulting revenues will 
                                be spread throughout 2020 and into 2021. 
 
             Engaging with and serving Enterprise level prospects and customers brings with 
         it many challenges and requires time and patience to build. It is crucially important 
            to approach this opportunity appropriately resourced to execute effectively and 
            provide appropriate levels of technical and service support. This is one of the 
             reasons that we raised further funds in October 2019, and we are delighted to 
            be able to continue investing in building our capabilities whilst already making 
                                            strong progress. 
 
                                              Our culture 
 
             CloudCall's core values place our staff, customers and local community at the 
             heart of what we do. We strongly believe that looking after and supporting our 
            staff and the communities that we work in, creates a strong platform from which 
           to delight our customers. Our strategy is based around a desire to help customers 
        get more from their commercial data by providing easy to use and powerful communications 
             tools that are deeply integrated into their CRM systems. To that end, we work 
            hard to ensure that we take the time to understand our customers' businesses and 
           pride ourselves on being able to react quickly and effectively to all their needs. 
             Despite being a technology company, CloudCall prides itself on being a caring, 
           customer-focused services company first and foremost, and our staff are encouraged 
                                    and trained to act accordingly. 
 
            Like all businesses, CloudCall operates in an environment that is not free from 
             risks or uncertainties. The nature and complexity of the services it provides 
           can present technical challenges that carry a certain element of commercial risk, 
         and the company is naturally exposed to external market, geo-political and compliance 
         related risks that are not necessarily within its control. CloudCall works diligently 
            to identify, monitor and mitigate all risks and uncertainties and there is more 
           information about how this is achieved within the Director's risk report contained 
                                    within the Report and Accounts. 
 
            The Board is committed to promoting a healthy corporate culture that ensures its 
           staff are motivated, challenged and happy working together for the mutual benefit 
          of all the Company's stakeholders. Staff engagement and ongoing satisfaction levels 
          are routinely monitored through a series of regular one-to-one meetings and regular 
         company meetings held on a quarterly basis to help to ensure inclusivity and awareness 
                   of company-wide strategy and objectives and our ongoing progress. 
 
          Over the year, staff numbers increased from 147 to 160, reflective of the investment 
             we are making in our product and sales and marketing capabilities and ensuring 
            our back-office processes are improved to support the business as it scales up. 
          As mentioned above, we continue to focus on creating a caring and inclusive culture 
           and improvements we have made, and continue to make, in staff mentoring, training 
            and ongoing support mechanisms are contributory to improved skill levels, higher 
             staff satisfaction levels and good staff retention. Our charity and community 
            initiatives continue to be highly valued and well supported by our staff and we 
             remain keen to ensure all staff have equal opportunity to participate in these 
                                         worthwhile activities. 
 
          As the global climate emergency continues to develop, in 2019, the Group set itself 
            the target of being carbon neutral within 2 years. Whilst this project is in its 
             infancy, we have already appointed an internal project manager and identified 
            several staff that are keen to help take this initiative forward. A study of our 
            current carbon footprint and ways in which this can be improved towards eventual 
           carbon neutrality has been commissioned and the management team is keen to commit 
                             to adopting its recommendations going forward. 
 
         We remain focused on our objective to ensure CloudCall remains a responsible employer, 
         partner and supplier, creating valuable and skilled jobs and being a caring neighbour 
             and considerate user of resources wherever it is represented around the world. 
            We continue to believe that success in this area generates significant benefits 
             for employees, customers, partners and members of our local communities alike. 
 
                                                Outlook 
 
            The Group began 2020 well, with key elements of its strategic initiatives making 
            a very positive impact, resulting in additional lead generation, a strengthening 
          sales pipeline and important investment being made to strengthen CloudCall's senior 
                                            management team. 
 
           The Covid-19 pandemic is expected to slow new orders received and inevitably some 
          of our customers will cease to trade. However, CloudCall's product is fundamentally 
            suited to the current requirement for home working and, as a SaaS business with 
             recurring revenues and the ability to flex costs, the Board is confident that 
                 The Group's strong balance sheet is sufficient to weather this storm. 
 
                                             Simon Cleaver 
                                        Chief Executive Officer 
                                          Cloudcall Group plc 
 
 
                                            Financial review 
 
                                                Revenue 
                         Revenues grew by 30% from GBP8.8m to GBP11.4m in 2019 
           The Group derives all its revenues from the provision of integrated communications 
            software and services to customers in the UK, mainland Europe and North America. 
          In 2019, the Group's North American operation delivered strong growth with revenues 
             up 56% to GBP4.5m (from GBP2.9m in 2018). The UK and mainland Europe operation 
             grew by 18% to GBP6.9m (from GBP5.9m in 2018). The Group's recently announced 
          new operations in APAC will begin to contribute revenues in 2020. Recurring revenue 
             from subscription-based software services grew by 33% in 2019 compared to the 
            prior year. Based on an extrapolation of Q4 revenues, the annualised revenue run 
                                       rate is now around GBP13m. 
 
         During 2019, the Group was able to grow recurring revenues from its existing customer 
          base by 19%, which when offset by customer cancellations and user reductions yielded 
             a net renewal rate of 102%. Strong recurring revenue growth from new customers 
             during 2019, underpinned by this net revenue growth from the existing customer 
            base supports the Board's ongoing view that its strategy to focus on several key 
            CRM partnerships, as well as investing for growth from both its US new business 
             sales operations, large and enterprise customers and the ongoing focus on its 
                     existing customer base continues to deliver positive results. 
 
                                              Gross margin 
                       Gross margin increased from 78.4% in 2018 to 78.9% in 2019 
           Gross margin increased slightly year on year driven by three key factors. Firstly, 
          customer set-up fees, one-off fees and professional services, which are effectively 
            reported at 100% gross margin, increased year on year in absolute terms and are 
             the main contributing factors for the overall gross margin increase. Secondly, 
         hardware sales margins reduced slightly in the year as they continue to be undertaken 
            on an "at cost" basis. CloudCall is not a pure-play hardware vendor, and for the 
           most part simply looks to use its buying power to source and supply cost effective 
             hardware on behalf of its customers. Although customers that require hardware 
            are increasingly able to source that equipment at competitive prices elsewhere, 
             purchasing their hardware from CloudCall enables it to be configured correctly 
            by CloudCall engineers on installation, and returned in the event of any issues. 
         Finally, partner commissions are slightly higher as an overall percentage of recurring 
         revenues compared to last year as we continue to grow business from our core partner, 
             Bullhorn, and as the new referral partner program began to establish itself in 
                                        the latter part of 2018. 
 
                         Operating costs grew from GBP9.3m to GBP11.1m in 2019 
           Growth in operating expenditure of 19% year-on-year in the context of a 30% growth 
        in revenues for the same period is the result of continued investment in infrastructure 
           and resources deployed to generate accelerated revenue growth in the future. From 
         the successful fundraise in late 2019, it was clearly signalled that fresh investment 
          would lead to greater operating expenditure and operating losses in the short-term, 
                   as the investment took time to flow through to increased revenue. 
 
           Reported operating costs should be read in the context of a further GBP1.4m (2018: 
             GBP1.1m) of costs incurred in the development of new products and services and 
          capitalised to the balance sheet under IAS 38. The adjusted operating cost including 
             this expenditure would have been GBP12.6m (2018: GBP10.5m), an increase of 20% 
          against the IAS 38 adjusted operating spend in 2018. The increased IAS 38 qualifying 
         expenditure is reflective of ongoing investment being made in new product development. 
 
             Loss from operating activities before depreciation, amortisation, share based 
             payment charges and exceptional items was GBP2.2m, down by 13% from GBP2.5m in 
                                                 2018. 
 
                                     Research and development costs 
                        Development costs capitalised GBP1.43m (2018: GBP1.12m) 
         Investment in the development of new and improved products, features and applications 
             and the integral intellectual property of such development work is considered 
                      key to the preservation of CloudCall's competitive position. 
 
            To that end, the Group continues to invest in product development and continued 
            to adopt the accounting treatment set out in IAS 38 (Intangible Assets) for the 
                 ongoing capitalisation of research and development costs through 2018. 
 
             The Group confirms that, as a result of new products coming into service since 
          the policy was implemented, IAS 38 related amortisation charged in 2019 was GBP338k 
                                            (2018: GBP241k). 
 
                                      Debt and financing expenses 
           The Group has outstanding debt of GBP2.4m (2018: GBP1.6m) and a financing expense 
             of GBP274k (2018: GBP227k). Included in the debt position, is the recognition 
                            of a capitalised lease liability worth GBP1.4m. 
            During September 2019, the Group replaced its previous revolving credit facility 
             with Barclays with a term credit facility (the "Facility) with Shawbrook Bank 
             which provides borrowing facilities of up to GBP3 million for a 3.5-year term 
               set to expire in March 2023. Interest is set out below as the aggregate of 
                                       *    the margin of 9% plus 
 
 
                                 *    higher of LIBOR or 0.5% per annum. 
 
 
          Funds can be drawn in pre-defined tranches as set out by the agreement with interest 
           payable monthly in arrears. The facility is secured over the assets of the Group. 
           As at 31 December 2019 the Group utilised GBP1million of the GBP3million Facility. 
           The Board remains committed to maintaining its borrowing facilities going forward 
            and will review the existing arrangements with a view to renewal or replacement 
                   at an appropriate point before the expiry of the current facility. 
             As a result of the change in the debt position during 2019 due to the drawing 
           against the Facility and the effects of IFRS 16, the Group's net financing expense 
                           increased to GBP274k compared to GBP227k in 2018. 
 
                                        Cash and working capital 
                 The Group had GBP11.1m net cash at the end of the year (2018: GBP0.9m) 
           Available cash, including the Shawbrook Bank facility, was GBP13.1m on 31 December 
                                                 2019. 
           The Group's balance sheet also includes an R&D tax credit receivable of GBP0.76m. 
             As has been the case in recent years, this is expected to be received in cash 
                                         in June or July 2020. 
           Net cash absorbed by operating activities was GBP1.9m, down from GBP2.1m in 2018. 
          This decrease in cash absorption is attributed to the slight reduction in Operating 
                                   Loss performance during the year. 
         During 2019, the Group incurred GBP573k of capital expenditure other than intangibles, 
             up from GBP880k in 2018. With the adoption of IFRS 16, GBP124k (2018: GBP460k) 
           of additions are associated with 'Right of Use' assets. Whilst the Group continues 
             to leverage a greater proportion of web-based service providers such as AWS to 
             host some of its core technology services, planned capital expenditure climbed 
             significantly during 2018 due to the fit-out costs for a new larger office in 
            Minsk, Belarus, and successful hardware refreshes carried out to both our UK and 
                                        US technology platforms. 
          In February 2019, the Company successfully raised GBP2.4m in new capital, fulfilled 
           by the issue of 2,400,000 new ordinary shares in the Company, at a price of 100.0 
                                            pence per share. 
          In October 2019, the Company successfully raised GBP12.1m of additional new capital 
             (before fees and expenses), fulfilled by the issue of 12,081,685 new ordinary 
                       shares in the Company at a price of 100.0 pence per share. 
                                             Share capital 
            Total issued share capital at the year-end comprised 38,755,839 ordinary shares 
                                            of 20 pence each 
            During the year, the Company received GBP68k gross proceeds from exercised share 
                                                options. 
 
          In February 2019, the Company successfully raised GBP2.4m in new capital, fulfilled 
            by the issue of 2,400,000 new ordinary share in the Company, at a price of 100.0 
                                            pence per share. 
 
          In October 2019, the Company successfully raised GBP12.1m of additional new capital 
           (before fees and expenses), fulfilled by the issue of 12,081,685,000 new ordinary 
          shares in the Company at a price of 100.0 pence per share. The fundraise is required 
          to best position the company to exploit and deliver on future revenue growth through 
            the enhancement of platforms, products & services and greater sales & marketing 
                                             capabilities. 
 
                                      Loss per share and dividends 
                     Loss per share for the year was 10.3 pence (2018: 12.9 pence ) 
            As the business continues to be in a pre-profit, high-growth, investment phase, 
                  the Board does not recommend the payment of a dividend (2017: nil). 
 
 
 
                                             Going concern 
            The Directors confirm that they have a reasonable expectation that the Group has 
          adequate resources to continue in operational existence for the foreseeable future. 
            For this reason, they continue to adopt the going concern basis in preparing the 
                                         financial statements. 
 
                                             Paul Williams 
                                        Chief Financial Officer 
                                          Cloudcall Group plc 
 

Financial Statements

Consolidated Statement of Comprehensive Income

For year ended 31 December 2019

 
                                                                2019               2018 
                                         Notes                               (restated) 
                                                              GBP000             GBP000 
 
 Revenue                                     4                11,396              8,751 
 Cost of sales                                               (2,406)            (1,889) 
                                                          ----------       ------------ 
 Gross profit                                                  8,990              6,862 
 Operating costs                             5              (11,146)            (9,347) 
                                                          ----------  ---  ------------ 
 Loss from operating activities 
  before depreciation, amortisation, 
  share based payment charges 
  and exceptional items                                      (2,156)            (2,485) 
 Depreciation and amortisation                                 (930)              (816) 
 Share based payment charges                                   (171)              (224) 
 Exceptional items                                             (145)                  - 
 Operating loss                                              (3,402)            (3,525) 
 Finance expense                                               (274)              (227) 
                                                          ----------       ------------ 
 Loss before tax                                             (3,676)            (3,752) 
 Taxation                                    6                   731                630 
                                                          ----------       ------------ 
 Loss for the year attributable 
  to owners of the parent                                    (2,945)            (3,122) 
 
 Other comprehensive income 
 Exchange differences on translation 
  of foreign operations                                           65               (50) 
                                                          ----------       ------------ 
 Other comprehensive income                                       65               (50) 
 Total comprehensive income 
  for the year attributable 
  to owners of the parent                                    (2,880)            (3,172) 
                                                          ----------       ------------ 
 
 Loss per share                                                Pence              Pence 
 Basic and fully diluted loss 
  per share                                 11                (10.3)             (12.9) 
-------------------------------------  -------  ---  ---  ----------  ---  ------------ 
 

Consolidated Statement of Financial Position

At 31 December 2019

 
                                                          2019               2018 
                                         Notes                         (restated) 
                                                        GBP000             GBP000 
 
 Non-current assets 
 Property, plant and equipment               7           1,854              1,897 
 Goodwill                                    8             339                339 
 Other intangible assets                     8           2,992              1,897 
                                                     ---------       ------------ 
                                                         5,185              4,133 
 
 Current assets 
 Trade and other receivables                             2,760              1,857 
 Research & development tax 
  credit receivable                                        760                640 
 Cash and cash equivalents                              11,101                927 
                                                     ---------       ------------ 
                                                        14,621              3,424 
                                                     ---------       ------------ 
 Total assets                                           19,806              7,557 
                                                     ---------       ------------ 
 Current liabilities 
 Borrowings                                  9           (517)              (265) 
 Trade and other payables                              (2,162)            (1,602) 
                                                       (2,679)            (1,867) 
 Non-current liabilities 
 Borrowings                                  9         (1,862)            (1,332) 
 
 Total liabilities                                     (4,541)            (3,199) 
 
 Net assets                                             15,265              4,358 
                                                     ---------       ------------ 
 
 Equity attributable to shareholders 
 Share capital                              10           7,751              4,836 
 Share premium account                                  77,085             66,384 
 Translation reserve                                        38               (27) 
 Warrant reserve                                            29                 29 
 Retained earnings                                    (69,638)           (66,864) 
                                                     ---------       ------------ 
 Total equity attributable 
  to shareholders                                       15,265              4,358 
                                                     ---------       ------------ 
 
 

Consolidated Statement of Changes in Equity

 
 For year ended 31 December 2019 
                                   Share      Share   Translation    Warrant    Retained           Total 
                                 capital    premium       reserve    reserve    earnings          equity 
                                            account                                         attributable 
                                  GBP000     GBP000        GBP000     GBP000      GBP000              to 
                                                                                            shareholders 
                                                                                                  GBP000 
 
 Balance at 1 January 
  2018                             4,814     66,329            23         29    (63,939)           7,256 
 Restatement - IFRS 16                 -          -             -          -        (27)            (27) 
                               ---------  ---------  ------------  ---------  ----------  -------------- 
 Balance at 1 January 
  2018 (as restated)               4,814     66,329            23         29    (63,966)           7,229 
 Loss for the year (as 
  restated)                            -          -             -          -     (3,122)         (3,122) 
 Other comprehensive 
  income 
  Exchange differences 
   on translation of foreign 
   operations                          -          -          (50)          -           -            (50) 
                               ---------  ---------  ------------  ---------  ----------  -------------- 
 Total comprehensive 
  income for the year                  -          -          (50)          -     (3,122)         (3,172) 
 
 Transactions with owners 
  recognised in equity: 
  Equity settled share 
   based payments                      -          -             -          -         224             224 
  Issue of equity shares              22         69             -          -           -              91 
  Issue costs of equity 
   shares                              -       (14)             -          -           -            (14) 
                               ---------  ---------  ------------  ---------  ----------  -------------- 
 Total transactions with 
  owners recognised in 
  equity                              22         55             -          -         224             301 
                               ---------  ---------  ------------  ---------  ----------  -------------- 
 Balance at 31 December 
  2018 (as restated)               4,836     66,384          (27)         29    (66,864)           4,358 
                               ---------  ---------  ------------  ---------  ----------  -------------- 
 
 Loss for the year                     -          -             -          -     (2,945)         (2,945) 
 Other comprehensive 
  income 
  Exchange differences 
   on translation of foreign 
   operations                          -          -            65          -           -              65 
                               ---------  ---------  ------------  ---------  ----------  -------------- 
 Total comprehensive 
  income for the year                  -          -            65          -     (2,945)         (2,880) 
 Transactions with owners 
  recognised in equity: 
  Equity settled share 
   based payments                      -          -             -          -         171             171 
  Issue of equity shares           2,915     11,635             -          -           -          14,550 
  Issue costs of equity 
   shares                              -      (934)             -          -           -           (934) 
                               ---------  ---------  ------------  ---------  ----------  -------------- 
 Total transactions with 
  owners recognised in 
  equity                           2,915     10,701             -          -         171          13,787 
-----------------------------  ---------  ---------  ------------  ---------  ----------  -------------- 
 Balance at 31 December 
  2019                             7,751     77,085            38         29    (69,638)          15,265 
-----------------------------  ---------  ---------  ------------  ---------  ----------  -------------- 
 

Consolidated Cash Flow Statement

 
 For year ended 31 December 
  2019 
                                                    2019                2018 
                                                                  (restated) 
                                                  GBP000              GBP000 
 
 Cash flows from operating 
  activities 
 Loss for the year after tax                     (2,945)             (3,122) 
 Adjustments for: 
 Depreciation and amortisation                       930                 816 
 Foreign exchange losses/(gains) 
  on operating activities                             92                (67) 
 Financial expenses                                  274                 227 
 Equity settled share-based 
  payment expenses                                   171                 224 
 Taxation                                          (731)               (630) 
 
 Operating loss before changes 
  in working capital                             (2,209)             (2,552) 
 Increase in trade and other 
  receivables                                      (903)               (393) 
 Increase in trade and other 
  payables                                           591                 302 
                                              ----------       ------------- 
 Cash absorbed by operations                     (2,521)             (2,643) 
 Tax received                                        611                 570 
                                              ----------       ------------- 
 Net cash absorbed by operating 
  activities                                     (1,910)             (2,073) 
 
 Cash flows from investing 
  activities 
 Acquisition of property, plant 
  and equipment                                    (449)               (450) 
 Development expenditure capitalised             (1,433)             (1,118) 
 Net cash absorbed by investing 
  activities                                     (1,882)             (1,568) 
                                              ----------       ------------- 
 
 Cash flows from financing 
  activities 
 Repayment of lease liability                      (439)               (310) 
 Net interest paid                                 (150)                (88) 
 Net proceeds from the issue 
  of share capital                                13,616                  77 
 Proceeds from new loan                            1,500                   - 
 Repayment of new loan                             (527)                   - 
 Net cash from financing activities               14,000               (321) 
 
 Net increase in cash and cash 
  equivalents                                     10,208             (3,962) 
 Cash and cash equivalents 
  at start of year                                   927               4,872 
 Effect of exchange rate fluctuations 
  on cash held                                      (34)                  17 
 
 Cash and cash equivalents 
  at end of year                                  11,101                 927 
                                              ----------       ------------- 
 
 
 

Notes to the financial statements

1. Preliminary announcement

The preliminary announcement set out above does not constitute the Group's statutory financial statements for the years ended 31 December 2019 or 2018 within the meaning of section 434 of the Companies Act 2006 but is derived from those audited financial statements. The auditor's report on the consolidated financial statements for the year ended 31 December 2019 and 2018 is unqualified and does not contain statements under s498(2) or (3) of the Companies Act 2006.

Except as noted below, the accounting policies used for the year ended 31 December 2019 are unchanged from those used for the statutory financial statements for the year ended 31 December 2018. The Group has adopted IFRS 16 Leases. The effect of initially applying this standard is noted below. The 2019 statutory financial statements will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

2. Compliance with accounting standards

While the financial information included in this preliminary announcement has been computed in accordance with IFRSs as adopted by the EU, this announcement does not itself contain sufficient information to comply with IFRSs as adopted by the EU.

Accounting standards adopted in the year

IFRS 16 Leases

IFRS 16 replaces IAS 17 Leases. The group previously split leases between 'finance leases' that transferred substantially all the risks and rewards incidental to ownership of the asset to the group, and 'operating leases'. As a result of the adoption of IFRS 16 the Group has adopted consequential changes to IAS 1 Presentation of Financial Statements.

The main change on application of IFRS 16 is the accounting for 'operating leases' where rentals payable (as adjusted for lease incentives) were previously expensed under IAS 17 on a straight-line basis over the lease term.

Under IFRS 16 a right-of-use asset and a lease liability are recognised for all leases except 'low-value' and 'short' term leases where lease payments are recognised on a straight-line basis over the lease term.

The accounting for leases previously accounted for as finance leases under IAS 17 has not changed substantially, except that residual value guarantees are recognised under IFRS 16 at amounts expected to be payable rather than the maximum amount guaranteed, as required by IAS 17.

A liability corresponding to the capitalised lease has been recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line operating lease expense recognition has also been replaced with a depreciation charge for the leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in finance expense).

In the earlier periods of the lease, the expenses associated with the lease under IFRS 16 will be higher when compared to lease expenses under IAS 17. However, results from operating activities before depreciation, amortisation and share-based payment charges have been improved as the operating expense is replaced by interest expense and depreciation in profit or loss under IFRS 16. For classification within the statement of cash flows, the lease payments will be separated into both a principal (financing activities) and interest (either operating or financing activities) component.

The group has elected to apply IFRS 16 retrospectively to all leases, subject to the transition provision set out below.

-- For all contracts that existed prior to 1 January 2019, the group has not applied IFRS 16 to reassess whether each contract is, or contains, a lease.

The financial impact of applying IFRS 16 on the year-ended 31 December 2018 and as at 1 January 2019 is set out below:

Group

Impact on the consolidated statement of financial position as at 31 December 2018

 
                                          2018                        2018 
                                      Reported     Adjustments    Restated 
                                        GBP000          GBP000      GBP000 
  Non-current assets 
  Property, plant and equipment            482           1,415       1,897 
                                    ----------  --------------  ---------- 
 
  Current liabilities 
  Borrowings                                 -           (265)       (265) 
  Trade and other payables             (1,697)              95     (1,602) 
                                    ----------  --------------  ---------- 
 
  Non-current liabilities 
  Borrowings                                 -         (1,332)     (1,332) 
                                    ----------  --------------  ---------- 
 
  Equity attributable to 
   shareholders 
  Retained earnings                   (66,777)            (87)    (66,864) 
                                    ----------  --------------  ---------- 
 

Impact on the consolidated statement of comprehensive income for the year ended 31 December 2018

 
                                           As                        2018 
                                     reported     Adjustments    Restated 
                                       GBP000          GBP000      GBP000 
 
 Operating costs                      (9,752)             405     (9,347) 
 Depreciation and amortisation          (490)           (326)       (816) 
 Financing expense                       (88)           (139)       (227) 
                                   ----------  --------------  ---------- 
 

Reconciliation of equity

 
                                      1 January   31 December 
                                           2018          2018 
                                         GBP000        GBP000 
 
 Equity as previously reported            7,256         4,445 
 
 IFRS 16 adjustment                        (27)          (87) 
 
 Equity as reported                       7,229         4,358 
 
 

Reconciliation of loss and basic and fully diluted loss per share for the financial year

 
                                            Year ended 
                                           31 December 
                                                  2018 
                                                GBP000 
 
 Loss for the year as previously 
  reported                                     (3,062) 
 
 IFRS 16 adjustment                               (60) 
 
 Loss for the period as 
  reported                                     (3,122) 
                                         ------------- 
 
 Basic and fully diluted 
  loss per share as previously 
  reported                                     (12.7)p 
 
 IFRS 16 adjustment                             (0.2)p 
 
 Basic and fully diluted 
  loss per share as reported                   (12.9)p 
                                         ------------- 
 

3. Critical accounting estimates and judgements

The following accounting judgements and estimates have been made by the Directors in interpreting treatment of amounts included in these financial statements in accordance with IFRSs.

Development costs

Management judgement is required in assessing the fair value of development costs capitalised including the future economic benefit expected to be generated by the assets and in calculating the attributable costs. Management judgement is also required in assessing the useful economic lives of these assets for the purposes of amortisation. The carrying value of development costs at the Statement of Financial Position date was GBP2,992,000.

Impairment

The requirement for the Directors to ensure that the Group's non-current assets are not carried at more than their recoverable amount (i.e. the higher of fair value less costs of disposal and value in use) is covered by IAS 36 Impairment of Assets. The fair values in respect of the valuation of the Group's assets in relation to the future value of the returns those assets are predicted to generate have been estimated using a discounted cash flow model. The assumptions used as inputs to the model are by their nature areas of judgement. Based on the historic sales performance of the business and actions being taken to grow the business further, the directors do not currently assess any of these assets as impaired. The carrying value of intangible assets and property, plant and equipment at the Statement of Financial Position date was GBP3,331,000 and GBP1,854,000 respectively.

Share based payments

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Judgement is required in determining the most appropriate valuation model and the most appropriate inputs into the model including the level of volatility and the expected life of the option. Judgement is also required in estimating the number of options that are expected to vest based on the non-market conditions.

4. Revenue

The directors consider that the Group has a single business segment, being the provision of hosted telecom solutions. The operations of the Group are managed and reported centrally with group-wide functions covering sales and marketing, development, professional services, customer support and finance and administration. An analysis of revenue by type is given below.

Revenue by location of customer

 
                      2019      2018 
                    GBP000    GBP000 
 
 UK                  5,961     5,211 
 USA                 4,453     2,860 
 Rest of Europe        982       680 
 
 Total revenues     11,396     8,751 
                  --------  -------- 
 

Revenue by type

 
                                           2019      2018 
                                         GBP000    GBP000 
 
 Recurring subscriptions                  9,146     6,888 
 Pay As You Go Telephony                    977       880 
 Non-recurring services and hardware      1,273       983 
 
 Total revenues                          11,396     8,751 
                                       --------  -------- 
 

Timing of revenue recognition

 
                                            2019      2018 
                                          GBP000    GBP000 
 
 Goods transferred at a point in time        347       421 
 Services transferred over time           11,049     8,330 
 
 Total revenues                           11,396     8,751 
                                        --------  -------- 
 

Revenue by product

All revenue is attributable to the Group's main activity, the provision of hosted telecoms solutions.

Information about major customers

The Group had no customers for continuing operations which represented more than 10% of sales in the year to 31 December 2019.

5. Operating costs

 
                                           2019        2018 
                                                   restated 
                                         GBP000      GBP000 
 
 Wages and salaries (*)                   7,208       6,565 
 Foreign exchange losses and (gains)         92        (67) 
 Expected credit losses                     131         115 
 Other operating costs                    3,715       2,734 
                                         11,146       9,347 
                                       --------  ---------- 
 

(*) included in wages and salaries above is GBP956k (2018: GBP830k) relating to research and development costs expensed.

6. Taxation

Recognised in the Consolidated Statement of Comprehensive Income

 
                                              2019        2018 
                                                      restated 
                                            GBP000      GBP000 
 
 Current tax income 
 
  Overseas income tax charge for the 
  current year                                (10)         (8) 
 UK research and development tax credit        760         640 
 Adjustments in respect of prior year         (19)         (2) 
                                          --------  ---------- 
                                               731         630 
 Deferred tax for the current year               -           - 
                                          --------  ---------- 
 Total tax credit recognised in current 
  year                                         731         630 
                                          --------  ---------- 
 
 

7. Property, plant and equipment

 
                                          Technical plant and   Office and business   Right-of-use assets      Total 
                                                    equipment 
                                                      GBP'000               GBP'000               GBP'000    GBP'000 
 Cost 
 Balance at 1 January 2018 
  (restated)                                              773                   469                 1,397      2,639 
 Additions                                                257                   193                   460        910 
 Disposals                                               (10)                     -                     -       (10) 
 Exchange rate translation 
  difference                                                -                     -                    30         30 
 Balance as at 31 December 
  2018 (restated)                                       1,020                   662                 1,887      3,569 
                                -----------------------------  --------------------  --------------------  --------- 
 
 Additions                                                239                   210                   124        573 
 Exchange rate translation 
  difference                                                -                     -                  (48)       (48) 
 Balance as at 31 December 
  2019                                                  1,259                   872                 1,963      4,094 
                                -----------------------------  --------------------  --------------------  --------- 
 
 Depreciation 
 Balance at 1 January 2018 
  (restated)                                            (618)                 (343)                 (148)    (1,109) 
 Depreciation charge for the 
  year                                                  (154)                  (95)                 (314)      (563) 
 Eliminated in respect of 
  disposals                                                10                     -                     -         10 
 Exchange rate translation 
  difference                                                -                     -                  (10)       (10) 
 Balance as at 31 December 
  2018 (restated)                                       (762)                 (438)                 (472)    (1,672) 
                                -----------------------------  --------------------  --------------------  --------- 
 
 Depreciation charge for the 
  year                                                  (125)                 (131)                 (336)      (592) 
 Exchange rate translation 
  difference                                                -                     -                    24         24 
 Balance as at 31 December 
  2019                                                  (887)                 (569)                 (784)    (2,240) 
                                -----------------------------  --------------------  --------------------  --------- 
 
 Net Book Value 
 At 31 December 2018                                      258                   224                 1,415      1,897 
                                -----------------------------  --------------------  --------------------  --------- 
 
 At 31 December 2019                                      372                   303                 1,179      1,854 
------------------------------  -----------------------------  --------------------  --------------------  --------- 
 

8. Intangible assets

 
                              Goodwill         Patents   Acquired       Software     Total 
                                          & trademarks        IPR    development 
                                                                           costs 
                                GBP000          GBP000     GBP000         GBP000    GBP000 
 Cost 
 Balance at 1 January 
  2018                             339              12      1,448          1,090     2,889 
 Internally developed                -               -          -          1,118     1,118 
                             ---------  --------------  ---------  -------------  -------- 
 Balance as at 31 December 
  2018                             339              12      1,448          2,208     4,007 
                             ---------  --------------  ---------  -------------  -------- 
 
 Internally developed                -               -          -          1,433     1,433 
                             ---------  --------------  ---------  -------------  -------- 
 Balance as at 31 December 
  2019                             339              12      1,448          3,641     5,440 
                             ---------  --------------  ---------  -------------  -------- 
 
 Amortisation 
 Balance at 1 January 
  2018                               -            (12)    (1,448)           (70)   (1,530) 
 Amortisation for the 
  year                               -               -          -          (241)     (241) 
                             ---------  --------------  ---------  -------------  -------- 
 Balance as at 31 December 
  2018                               -            (12)    (1,448)          (311)   (1,771) 
                             ---------  --------------  ---------  -------------  -------- 
 
 Amortisation for the 
  year                               -               -          -          (338)     (338) 
                             ---------  --------------  ---------  -------------  -------- 
 Balance as at 31 December 
  2019                               -            (12)    (1,448)          (649)   (2,109) 
                             ---------  --------------  ---------  -------------  -------- 
 
 Net Book Value 
 At 31 December 2018               339               -          -          1,897     2,236 
                             ---------  --------------  ---------  -------------  -------- 
 
 At 31 December 2019               339               -          -          2,992     3,331 
                             ---------  --------------  ---------  -------------  -------- 
 

The acquired IPR arose on the acquisition of Cloudcall Limited and represents the fair value of the proprietary software developed within Cloudcall.

The carrying amount of ongoing development projects on which amortisation has not yet commenced was GBP1,480k (2018: GBP639k). The weighted average remaining amortisation period for software is 4.4 years (2018: 4.4 years).

9. Borrowings

 
  Current borrowings      Group       Group 
                           2019        2018 
                                   restated 
                         GBP000      GBP000 
 
 
 Bank loan                  160           - 
 Lease liabilities          357         265 
 
                            517         265 
                        -------  ---------- 
 
 
  Non-current borrowings      Group       Group 
                               2019        2018 
                                       restated 
                             GBP000      GBP000 
 
 
 Bank loan                      813           - 
 Lease liabilities            1,049       1,332 
 
                              1,862       1,332 
                            -------  ---------- 
 

During September 2019, the Group replaced its previous revolving credit facility with Barclays with a new GBP3.0m term credit facility (the "Facility") with Shawbrook Bank. Interest on any funds drawn down from the Facility, which is for a 3.5 year term expiring in March 2023, is set at 9.0% plus the higher of either LIBOR or 0.5% per annum. At 31 December 2019, the Group has utilised GBP1million of the GBP3million Facility. The Facility is secured over the assets of the Group.

10. Share capital

The issued, called up and fully paid share capital of the Company at 31 December was as follows:

 
 Number of shares           2019            2018           2019           2018 
                           (000)           (000)         GBP000         GBP000 
 
 Allotted, called 
  up and fully paid 
  Ordinary shares of 
  GBP0.20 each            38,756          24,181          7,751          4,836 
 
 

The movement in the issued share capital in the year was as follows:

 
 Number of shares                                 Ordinary 
                                                    Shares 
                                                     (000) 
 
 In issue at 31 December 2018 - fully paid          24,181 
 Issued in consideration for additional shares 
  placed on 5 February 2019                          2,400 
 Issued in consideration for additional shares 
  placed on 23 October 2019                         12,082 
 Issued in respect of warrants and options              93 
 In issue at 31 December 2019 - fully paid          38,756 
                                                 --------- 
 

11. Loss per share

Basic loss per share

The calculation of basic loss per share for the year ended 31 December 2019 of 10.3 pence (2018: 12.9 pence restated) was based on the loss for the year attributable to owners of the parent of GBP2,945k (2018: GBP3,122k restated) and a weighted average number of Ordinary Shares outstanding during the period of 28,632,000 (2018: 24,131,000), calculated as follows:

 
 Number of shares                         2019     2018 
                                         (000)    (000) 
 Issued ordinary shares at start of 
  year                                  24,181   24,069 
 Issued for cash on 5 February 2019      2,163        - 
 Issued for cash on 23 October 2019      2,280        - 
 Issued in respect of warrants and 
  options                                    8       62 
                                       -------  ------- 
 Weighted average number of ordinary 
  shares                                28,632   24,131 
                                       -------  ------- 
 

Diluted loss per share

The weighted average number of shares and the loss for the year for the purposes of calculating diluted loss per share are the same as for the basic loss per share calculation. This is because the outstanding share options would have the effect of reducing the loss per share and would not, therefore, be dilutive under the terms of IAS 33.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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