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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Essensys Plc | LSE:ESYS | London | Ordinary Share | GB00BJL1ZF49 | ORD 0.25P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 18.25 | 18.00 | 18.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Cmp Facilities Mgmt Service | 25.25M | -15.71M | -0.2429 | -0.75 | 11.8M |
From Apr 2019 to Apr 2024
TIDMESYS
RNS Number : 3419H
essensys PLC
24 March 2020
24 March 2020
essensys plc
("essensys" or the "Group")
Market and trading update
The Board of essensys plc (AIM:ESYS), the leading global provider of mission critical software-as-a-service (SaaS) platforms and on-demand cloud services to the flexible workspace industry, has decided to voluntarily comply with the recommendation from the Financial Reporting Council (FRC) to all listed companies to delay the publication of interim financial statements for at least two weeks. This follows a similar request from the FCA on 21 March 2020 relating to companies listed on the Main Market of the London Stock Exchange.
essensys was one of a number of companies alerted to the FRC recommendation on Monday 23 March 2020, ahead of the planned announcement of its half year financial statements for the six months ended 31 January 2020, which until the events of yesterday evening the Group had intended to release as planned.
Given the advice from the FRC, we are providing a market and trading update which includes unaudited highlights and commentary on trading performance for the half year ended 31 January 2020 , current trading and the impact of Covid-19.
Further updates will be given as to the timing of the publication of our half year results, as soon as we are advised by the relevant regulators.
Unaudited financial summary:
Hot Features
Premium
GBPm unless otherwise stated Six months Six months Change
to January to January
2020 2019
Revenue 11.4 9.6 +19%
Recurring revenue 1 9.7 7.5 +29%
Run Rate Annual Recurring Revenue(1) 19.7 15.4 +28%
Statutory (loss) before tax (0.1) (0.4)
Adjusted EBITDA 2 1.9 2.1 -10%
Adjusted EBITDA margin 16.7% 21.9%
Profit before tax (pre-IPO costs
& share based payment expenses)
3 0.2 0.6 -67%
(Loss) per share (pence) (0.2)p (1.0)p
Cash 1.7 2.7
Operational highlights:
-- Strong Group performance; US remains major growth driver
o Customers continue to grow site numbers in existing and new geographies
o Increased demand within our target market resulting in addition of 23 new customers so far
o 400 Connect sites live at January 2020, up 32% year on year
-- Continued investment to support long-term growth
o Development of new products, services and unified platform to drive increased cross and up-sell
o Increased reach, capacity and capability of essensysCloud
o Expansion activity within North America & Europe continues
-- Scale up of UK based R&D team to accelerate delivery of product roadmap -- Strengthened board with appointment of global real estate leaders
-- Structural drivers and growing occupier awareness have led to an increasing number of global landlords and commercial real-estate (CRE) companies entering the market
1 See CFO Review below for description and breakdown
2 Profit before tax adding back IPO related costs and share based payment expenses
3 As at 31 July 2019
Financial highlights:
-- Revenue and underlying profits in line with management expectations
o Revenue up 19% year on year
o Recurring revenue up 29% representing 85% of total revenue (H1 2019: 78%)
o Group Annual Recurring Revenue ("ARR") gross margin of 70% (H1 2019: 69%)
-- US recurring revenues up 52% and continue to grow strongly; US business now larger than the UK in Connect site numbers
-- As planned and previously reported lower Adjusted EBITDA than H1 2019 reflects investment in sales and marketing, product development and geographic expansion to support long term growth
-- Strong cash generation; debt-free; undrawn revolving credit facility
Current trading and outlook:
-- Sales pipeline includes a number of significant future opportunities; this and the high proportion of contracted recurring revenues underpins the Board's confidence in the long-term growth of the business
-- The second half of the year has started well with trading in line with expectations as customers continue to deliver contracted Connect sites as planned
-- Good pipeline visibility - 51 new Connect sites contracted for delivery post half year end
-- Whilst there has been limited direct impact to date from the Covid-19 virus outbreak, the government restrictions on movement globally lead us to expect an increased level of uncertainty relating to the timing of delivery of these sites
-- Strong liquidity with GBP1.7m of cash reserves, an undrawn revolving credit facility of GBP1.0m and capacity to cope with macroeconomic instability, if required
-- The Board continues to monitor developments with, and potential impact of, Covid-19 in the short and medium term and is in particular focussed on the key risks of: delays by customers in activation of existing contracted sites; near term delays in customer contracting decisions in respect of new sites; potential reduction in marketplace service utilisation; and the impact of the current situation on the financial stability of customers
Mark Furness, CEO of essensys, said:
"It has been a good six months for essensys, as we build on our ambition to power the world's largest community of tech-driven flexible workspaces. We have successfully delivered strong sales momentum and continued to expand our US business.
"The second half of the year has started well, supported by contracted new Connect sites in delivery and a healthy pipeline. Whilst we have seen only limited direct impact of Covid-19 on the business to date, there will undoubtedly be more; and we are focussed on preparing for and minimising that impact where possible. Our sales pipeline includes a number of significant future opportunities; this and the high proportion of contracted recurring revenues underpins the Board's confidence in the long-term growth opportunity ahead, in spite of near-term macroeconomic uncertainty."
For further information, please contact:
+44 (0)20 3102
essensys plc 5252
Mark Furness, Chief Executive Officer
Alan Pepper, Chief Financial Officer
+44 (0)20 7496
N+1 Singer (Nominated Adviser and Broker) 3000
Peter Steel / Harry Gooden / George Tzimas
/ Harry Mills
FTI Consulting
Jamie Ricketts / Ellie Sweeney / Debbie +44 (0)20 3727
Oluwaseyi Sonaike / Talia Jessener 1000
About essensys plc
essensys is the leading global provider of mission-critical SaaS platforms and on-demand cloud services to the high growth flexible workspace industry. essensys' software is specifically designed and developed to help solve the complex operational challenges faced by multi-site flexible workspace operators as they grow and scale their operations. The Group's technology allows operators to deliver a range of differentiated, flexible and customer-specific services to a broad base of tenants across multiple locations and helps operators to manage the cost, operational and technological challenges they typically encounter.
essensys' two SaaS platforms, Connect and Operate, address these complex operational challenges, and reduce costs by simplifying the day-to-day management of flexible workspaces and the provision of on-demand IT, technology and infrastructure services to tenants. essensys' platforms automate key tasks and processes and help flexible workspace providers deliver highly efficient, customer-centric workspace solutions and member experiences with enterprise class services.
Chief Executive Officer's Report
Following our successful listing on AIM in May 2019 and the Group's maiden results for its 2019 financial year I am pleased to report continued growth and performance in line with our expectations in the half year to January 2020. The first half of the year has delivered growth from existing customers, new customers, new product feature launches and further geographical expansion.
Covid-19
Whilst there has been limited direct impact to date from the Covid-19 virus outbreak, and we have 51 new sites contracted for delivery, the government restrictions on movement globally lead us to expect an increased level of uncertainty relating to timing of the delivery of these sites. We have implemented our business continuity plan and all Group employees now are primarily working remotely (wherever they are based in the world). We saw the potential for supply chain issues from Covid-19 earlier in 2020 and have secured our supply chain to ensure that, where still possible given restrictions on movement, we can deliver on our contracted commitments and anticipated future demand.
To date, our customers have confirmed that they intend to continue with existing site opening plans that relate to our current contracted Connect sites. In the short term we do, however, expect to see some disruption to sites going live, and delays in additional new site commitments. There is no doubt that there will be some impact on our customers' own occupiers and we are starting to see that now. The direct impact of that on the Group should, however, be limited in the short-term with most of our income fixed and contracted. We are monitoring customer performance closely to ensure that any impact is as limited as possible.
We have cash reserves and have "stress-tested" the business to ensure that we will be able to deal with any significant impact on both our existing business and to our future growth over the next twelve to eighteen months should that become necessary. Notwithstanding the current situation we remain convinced of the long term structural move to a more flexible and "amenity-rich" working environment, continue to see significant large enterprise adoption and landlord market entry and expect that to continue once the current, highly unusual, situation is resolved.
Continued revenue growth
The growth in the number of Connect sites and in Operate pricing reported at the year end to July 2019 continued into FY20 with recurring revenue for the half year up 29% on H1 19 to GBP9.7m. Run rate Annual Recurring Revenue (ARR) was GBP19.7m at January 2020, up 28% from H1 19. Operate revenue also grew 29% year on year.
FY19 was our best year for the expansion of the Group's customer base with 39 new customers added and this momentum has continued into FY20 with contracts signed already this year with another 23 new customers. Our pipeline of potential new customers in both the UK and the US continues to grow and we see increasing numbers of traditional real estate investors, landlords and commercial real-estate (CRE) companies actively looking to enter the flexible workspace market. Engagement with larger, established, multi-site flexible workspace operators has also increased following our accelerated investment into product development and our go-to-market strategy, post IPO.
Connect sites grew to 400 at the half year, an increase of 97 from January 2019 (32%), of which 38% came from new customers. Growth in North America continues to be strong with the site numbers in the US now exceeding those in the UK.
Continued progress with Operate and cross sell opportunity
Our repositioning of Operate towards our core target market of multi-site operators during FY19 continued into the early part of H1 and is now close to being complete. That strategy has continued to deliver results with a 29% year on year increase in Operate revenue and a 6% net increase in number of customer locations. Particularly pleasing is the expansion of this side of the business internationally which is now c. 9% in the non-UK EMEA area - most notably in France. This is adding to the impetus of our mainland Europe expansion strategy, particularly with Connect, subject to the impact of Covid-19.
Geographical expansion
Following the establishment of our West Coast USA operation in the latter half of FY19, the first half of FY20 saw the expansion of the essensysCloud private network to better serve the Canadian market with new datacentre locations added in Seattle and Toronto. We are now in the process of formally establishing a Canadian business to support a growing customer base and continue to assess our geographic reach capabilities within the US market. We anticipate further expansion into the southern US within the next 12 months as we support customer growth and increased demand.
Our pipeline of potential customers in mainland Europe continues to grow, particularly with large real estate companies. As reported at the last full year-end we have the technical capability to service these markets from the UK and anticipate seeing significant movement in this area over the next twelve months.
Further afield, we are undertaking initial due diligence for entry into the Asia Pacific market; however, recent developments regarding the Covid-19 virus outbreak have delayed activity here and we would anticipate returning to this when conditions permit. That said, we have existing customer demand for the APAC region and have plans in place to support their growth and will react to this demand as and when opportunities arise and markets stabilise.
Product development
Our investment in product development is delivering increasing returns and customer value with new product feature launches to support occupier mobile experiences, complex business models (e.g. franchising), and general performance improvements all taking place in the first half of the year. In addition to increasing its capacity and geographic reach, we have further extended the essensysCloud capability to directly link to the major global cloud service providers (including Dropbox, Amazon, Microsoft and Google), providing faster, secure, "on-net" access to a significant number of hosted software platforms.
We are currently in the final testing phase, prior to "beta" customer launch, of our new Smart Access module of Connect. Designed and developed from the ground up to meet the complex and specific requirements of the flexible workspace industry, essensys Smart Access will eliminate significant friction in many parts of the occupier experience. Whether unlocking doors, tapping to book and access meeting rooms, or providing a seamless book/pay/use experience for a wide range of services, Smart Access will support millions of dynamic access rules for any type of occupier - be they member, tenant, or visitor - in real-time and securely delivered via essensysCloud. General release of Smart Access is expected for Connect customers in Q4 FY20.
Following on from the launch of Smart Access, we are in the final stages of localisation of both Connect and Operate which will primarily support our expansion into mainland Europe. Additional modules are also in development, in particular digital signage and secure print management solutions. Development of the unified essensys software platform is progressing well and this is expected to be launched in the second quarter of calendar year 2021.
In the past year we have increasingly noted that traditional landlords are trying to respond to occupier demand for more flexible, responsive and agile real-estate solutions without the technology or software in place to enable or manage this. To support this growing part of the industry we have developed a specific solution - essensys Landlord Edition - which provides a suite of software and easily scalable technology (from our existing Operate and Connect platforms) that landlords can use to enable more flexible use of their buildings. We anticipate launching this new, targeted, proposition within the next month.
Immediately prior to our IPO we established an outsourced external offshore development centre in Vietnam to accelerate software development. Having made good progress on our short-term goals with that facility, we have reviewed our development capability and made the decision to relocate the research, development and prototyping element of that team back to the UK. This will increase the speed and efficacy with which we can design and develop new product. That decision has been aided by the increased profile of the business since IPO, the increasing developer awareness of "proptech" and the ongoing expansion and opportunities afforded by the continued growth of the Group globally. We will continue to maintain an element of the offshore facility to undertake routine, programmed development work.
Market overview and outlook
We continue to see expansion in the market as the long-term structural drivers behind the growth in the overall flexible workspace sector continue to develop and take effect.
Recent industry commentary now suggests that the US is the largest market for flexible workspace globally, albeit still at less than 1% of the total commercial office space market. 4 When compared to 7% market penetration in the UK this supports our view that the US market, and our opportunity there, still has very significant potential for long-term growth. Expansion in the UK also continues with 10.5% growth in flexible workspace providers in 2019 5 as does that in the wider EMEA region; the latter from a much lower base - underlying another area of market opportunity.
As highlighted above, we continue to see mainstream real estate companies enter the market as well as growth in larger, established, operators both within their existing markets and, increasingly, internationally.
It is challenging to assess the long-term impact of the Covid-19 virus on the flexible workspace sector. Our immediate view is that the medium-term impact will be neutral and in the long term it may result in accelerated enterprise adoption of flexible workspace solutions which will, in turn, lead to further opportunity for the Group, however we do expect uncertainty within the flexible workspace market in the short term.
Current trading and outlook
Whilst there has been limited direct impact to date from the Covid-19 virus outbreak, government restrictions on movement globally lead us to expect an increased level of uncertainty relating to the timing of delivery of future contracted sites.
At this stage it is difficult to assess the impact of the Covid-19 virus on the Group, including on the final months of the current financial year. We have a robust business continuity plan in place, secured our supply chain in the short to medium term and have a contracted customer base with high recurring revenues. Our customers are continuing to grow and the underlying structural drivers behind the growth in the market have not altered. Our pipeline of activity, continued market developments and customer reaction to our product developments mean that the Board and management remain confident for the long-term growth prospect for the Group.
Mark Furness
Chief Executive Officer
23 March 2020
3 Instant Offices, US Market Report, 2019
4 Instant Offices UK Market Report, 2019
Chief Financial Officer's Report
This trading update provides unaudited financial information on the Group's financial performance for the six months to 31 January 2020. The comparative period to 31 January 2019 is for the Group prior to the corporate reorganisation undertaken as part of the preparations for the IPO. Following a minor change in accounting treatment for the full year to July 2019 in accordance with the requirements of IFRS15, comparatives for the period to January 2019 have been adjusted accordingly and therefore differ slightly from those published in the Group's Admission Document related to the IPO (total impact GBP0.1m reduction in Administrative Expenses and consequent reduction in Loss before taxation).
Unaudited Financial Key Performance Indicators
GBP'm unless otherwise stated Six months Six months Change
to January to January
2020 2019
Group Total Revenue 11.4 9.6 +19%
UK 6.6 6.3 +5%
USA 4.8 3.3 +45%
Recurring Revenue 6 9.7 7.5 +29%
UK 5.9 5.0 +18%
USA 3.8 2.5 +52%
Recurring Revenue %age of Total 85% 79%
Run Rate Annual Recurring Revenue
(1) 19.7 15.4 +28%
Non-recurring revenue 1.7 1.9 -11%
Product Revenue
Connect 10.5 8.9 +18%
Operate 0.9 0.7 +29%
Gross Profit 7.2 5.9 +22%
Gross Profit percentage 63% 61%
Recurring Revenue margin %age 70% 69%
Statutory (loss) before tax (0.1) (0.4)
Adjusted EBITDA 7 1.9 2.1 -10%
Adjusted EBITDA margin 17% 22%
Profit/(loss) before tax (pre
IPO costs & share based payments) 0.2 0.6 -67%
Cash 1.7 2.7 8
Revenue
Group total revenue grew by 19% from H1 FY19 to GBP11.4m in the year primarily as a result of continued growth in Connect sites mostly in the US where sites grew by 55% to 199 (from 128 at 31 January 2019). Following the reduction in overall site numbers during FY19 as the product was repositioned, overall Operate site numbers grew 6% and revenue grew 29% year on year.
Recurring revenue grew by 29% driven by the increase in the number of sites (both Connect & Operate) and continued pricing increases in the Operate business and grew as an overall percentage of revenue. Run Rate ARR grew 28% year on year to GBP19.7m again driven primarily by the overall increase in Connect sites by 32% to 400 at 31 January 2020 (2018: 303).
6 See Revenue section for explanation
7 See Adjusted EBITDA explanation below
8 As at 31 July 2019
Gross margins
Gross margins increased slightly year on year primarily as a result of increased recurring revenue margin in both the UK and the US and in both Connect and Operate. We continue to see cost reductions in the UK resulting in recurring revenue margin growth and continue to see increases in margins on recurring revenue in the US.
Administrative expenses
Excluding depreciation charges administrative expenses grew by GBP1.7m year on year in line with the Group's strategic plans and management expectations. This was primarily driven by increases in staff costs resulting from increases in overall headcount, and the strengthening of the senior management team that took place during the latter part of 2019, in part immediately prior to the IPO. In addition, the Group increased marketing expenditure in the latter part of 2019 and this continued into the first half of 2020.
Adjusted EBITDA
As previously reported, adjusted results are prepared to provide a more comparable indication of the Group's core business performance by removing the impact of certain items including pre-IPO costs and share based payment expenses (material and non-recurring), and other, non-trading, items that are reported separately. In addition, the Group also measures and presents performance in relation to various other non-GAAP measures, such as recurring revenue, run-rate annual recurring revenue and revenue growth. Adjusted results are not intended to replace statutory results. These have been presented to provide users with additional information and analysis of the Group's performance, consistent with how the Board monitors results.
Adjusted EBITDA (being EBITDA prior to IPO costs and share based payment expenses) is calculated as follows:
GBP'm H1 FY20 H1 FY19
Operating Profit / (loss) 0.0 (0.2)
Add back:
Depreciation & Amortisation 1.6 1.3
EBITDA 1.6 1.0
Add back:
Share Option Charge 0.3 0.7
IPO related costs - 0.3
Adjusted EBITDA 1.9 2.1
======== ========
Adjusted EBITDA for the half year was down from FY19 by 0.2m due to the full period effect of increased investment in sales and marketing, product development, the expansion of the Group's US operations together with the strengthening of the Group's management and functional leaders in advance of the IPO.
Cash
Net cash at half year end was GBP1.7m, in line with management expectations. The Group continues to maintain sufficient cash reserves to fund its working capital requirements, planned product and software development together with any expected short-term geographic expansion. In addition, the Group maintains an existing standby revolving credit facility that it is in the process of increasing in the event any particular opportunity arises that would require additional funding.
In light of the current, Covid-19, situation the Board has considered a number of different scenarios regarding trading and financial performance over the balance of this financial year and into FY21 and is confident that it maintains sufficient cash resources in the event of a significant, long term, impact on the Group.
Alan Pepper
Chief Financial Officer
23 March 2020
Consolidated statement of comprehensive income for the six months ended 31 January 2020
Six months Six months
ended ended
31 January 31 January
2020 2019
GBP'000 GBP'000
Note (unaudited) (unaudited)
------------ ------------
Revenue 3 11,407 9,591
Cost of sales (4,195) (3,716)
------------ ------------
Gross profit 7,212 5,875
Administrative expenses (7,216) (6,126)
Other operating income 11 20
------------ ------------
Operating profit / (loss) 7 (231)
Operating profit/(loss) analysed by:
Operating profit before share based payments
and IPO costs 259 583
Share based payment expenses (252) (712)
IPO costs - (306)
--------------------------------------------- ---- ------------ ------------
Finance income 2 51
Finance expense (90) (234)
Loss before taxation (81) (414)
Taxation (12) 5
------------ ------------
Loss for the period (93) (409)
Other comprehensive loss
Exchange differences arising on translation
of foreign operations (184) (10)
------------ ------------
Total comprehensive loss for the period (277) (419)
============ ============
Loss per share
Basic and diluted loss per share (0.193p) (1.05p)
Consolidated statement of financial position as at 31 January 2020
As at As at
31 January 31 July
2020 2019
GBP'000 GBP'000
(unaudited) (audited)
------------ ----------
ASSETS
Non-current assets
Intangible assets 4,218 3,732
Property, plant and equipment 1,616 1,376
Right of use assets 2,456 3,119
------------ ----------
Total non-current assets 8,290 8,227
============ ==========
Current assets
Inventory 498 292
Trade and other receivables 6,521 5,727
Cash and cash equivalents 1,720 2,688
------------ ----------
Total current assets 8,739 8,707
============ ==========
Total assets 17,029 16,934
============ ==========
EQUITY AND LIABILITIES
Equity
Share capital 120 120
Share premium 13,184 13,184
Share based payment reserve 1,231 979
Merger reserve 28 28
Retained earnings (5,595) (5,318)
------------ ----------
Total equity 8,968 8,993
============ ==========
Non-current liabilities
Lease liability 1,281 1,637
Deferred tax liabilities 114 67
Total non- current liabilities 1,395 1,704
============ ==========
Current liabilities
Trade and other payables 4,266 3,382
Contract liabilities 1,014 1,044
Lease liabilities 1,383 1,811
Current tax liabilities 3 -
------------ ----------
Total current liabilities 6,666 6,237
============ ==========
Total equity and liabilities 17,029 16,934
============ ==========
Consolidated statement of changes in equity for the six months ended 31 January 2020
Share
based
payment Merger Retained
Share capital Share premium reserve Reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- ------------- --------- ---------- --------- --------
Balance at 1 August
2018 (audited) 97 - - 28 2,898 3,023
Comprehensive Income
Loss for the period - - - - (409) (409)
Currency translation
difference - - - - (10) (10)
Total comprehensive
loss - - - - (419) (419)
------------- ------------- --------- ---------- --------- --------
Transactions with
owners
Share based payment
expense - - 712 - - 712
Balance at 31 January
2019 97 - 712 28 2,479 3,316
(unaudited)
============= ============= ========= ========== ========= ========
Balance at 1 August
2019 120 13,184 979 28 (5,318) 8,993
(audited)
Comprehensive Income
Loss for the period - - - - (93) (93)
Currency translation
difference - - - - (184) (184)
------------- ------------- --------- ---------- --------- --------
Total comprehensive
loss - - - - (277) (277)
------------- ------------- --------- ---------- --------- --------
Transactions with
owners
Share based payment
expense - - 252 - - 252
Balance at 31 January
2020 120 13,184 1,231 28 (5,595) 8,968
(unaudited)
============= ============= ========= ========== ========= ========
Consolidated cash flow statements for the six months ended 31 January 2020
Six months Six months
ended ended
31 January 31 January
2020 2019
GBP'000 GBP'000
(unaudited) (unaudited)
------------ ------------
Cash flows from operating activities
Loss before taxation (93) (414)
Adjustments for non-cash/non-operating
items:
Amortisation of intangible assets 464 357
Depreciation of property, plant and equipment 299 163
Loss on sale of property, plant and equipment - 18
Amortisation of right-of-use assets 839 794
Share based payment expense 252 712
Finance income (2) (51)
Finance expense 90 234
------------ ------------
1,849 1,813
Changes in working capital:
Increase in inventory (206) -
Increase in trade and other receivables (794) (1,415)
Increase/(decrease) in trade and other
payables 826 (482)
Cash from/(used in) operations 1,675 (84)
Taxation received 31 10
Net cash from/(used in) operating activities 1,706 (74)
------------
Cash flows from investing activities
Purchase of intangible assets (950) (228)
Purchase of property, plant and equipment (591) (30)
Interest received 2 51
Net cash used in investing activities (1,539) (207)
------------ ------------
Cash flows from financing activities
Proceeds from bank loans - 9,770
Repayment of bank loans - (4,662)
Bank and other interest paid - (101)
Repayment of lease liabilities (1,057) (938)
Interest on lease liabilities (90) (92)
------------ ------------
Net cash (used in)/from financing activities (1,147) 3,977
------------ ------------
Net (decrease)/increase in cash and cash
equivalents (980) 3,696
Cash and cash equivalents beginning of
period 2,688 882
Effects of foreign exchange rate changes 12 (12)
------------ ------------
Cash and cash equivalents at end of period 1,720 4,566
============ ============
Notes to the unaudited financial information for the six months to 31 January 2020
1. Basis of preparation
The unaudited condensed financial information for the six-month period to 31 January 2020 presents the consolidated financial results of essensys plc and its wholly owned subsidiaries (together, "essensys plc Group" or "the Group") for that period. This financial information has been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards as adopted by the European Union ("IFRS"). This financial information does not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 31 July 2019 Annual Report. The financial information for the half year ended 31 January 2020 does not constitute statutory accounts within the meaning of Section 434 (3) of the Companies Act 2006 and both periods are unaudited.
The comparative financial information presented herein for the year ended 31 July 2019 does not constitute full statutory accounts for that period. The statutory Annual Report and Financial Statements for the year ended 31 July 2019 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statements for the year ended 31 July 2019 was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
The Group has applied the same accounting policies and methods of computation in this unaudited condensed financial information as in its 2019 annual financial statements, except for those that relate to new standards and interpretations effective for the first time for periods beginning on (or after) 1 January 2019 and will be adopted in the 2020 financial statements. The new standard impacting the Group that will be adopted in the annual financial statements for the year ended 31 July 2020 is IFRIC 23 Uncertainty over Income Tax Treatments. This new standard is not expected to have a material impact on the Group.
essensys plc is the Group's ultimate parent company. It is a public listed company and is domiciled in the United Kingdom. The address of its registered office and principal place of business is Aldgate Tower 7th Floor, 2 Leman Street, London E1 8FA. essensys plc's shares are listed on the Alternative Investment Market (AIM) of the London Stock Exchange.
2. Going Concern
The unaudited condensed financial information has been prepared on a going concern basis. In reaching their assessment, the directors have considered a period extending at least twelve months from the date of approval of this market and trading update.
The directors continue to monitor developments with, and potential impact of, Covid-19 in the short and medium term and is in particular focussed on the key risks of: delays by customers in activation of existing contracted sites; near term delays in customer contracting decisions in respect of new sites; potential reduction in marketplace service utilisation; and the impact of the current situation on the financial stability of customers.
The directors have prepared cash flow forecasts covering a period of at least 12 months from the date of releasing this unaudited condensed financial information. This assessment has included consideration of the forecast performance of the business for the foreseeable future and the cash and financing facilities available to the Group. In preparing these forecasts, the directors have considered a number of sensitivities, including the potential impact of Covid-19. The Group has secured its supply chain in order to meet its contracted commitments and anticipated demand and at 31 January 2020 had cash reserves of GBP1.7m together with an undrawn revolving credit facility.
Given the factors noted above, the directors have prepared this unaudited condensed financial information on a going concern basis.
Notes to the unaudited financial information for the six months to 31 January 2020
3. Segmental reporting
The Group has one single business reportable segment and generates revenue largely in the UK and the US. The majority of the Group's customers provide flexible office facilities together with ancillary services (e.g. meeting rooms and virtual services) including technology connectivity.
The Group provides mission critical software-as-a-service ("SaaS") and Cloud services to the flexible workspace industry. The Group's software is designed specifically to serve the specific requirements of flexible workspace providers, removing operational complexity and enabling them to operate more efficient, tech-driven spaces and businesses.
The Connect software-enabled-services platform allows flexible workspace operators to provision, manage and monitor, in real-time, all of the critical infrastructure, IT and tech services that they provide to their customers. As part of providing this service, the Group also provides the technology infrastructure that supports these services.
The Group's Operate software platform is a comprehensive ERP platform for flexible workspace providers, allowing operators to more effectively and efficiently run their businesses day-to-day.
The Group generates revenue from the following activities:
- Establishing services at customer sites (e.g. providing and managing installation services, equipment and providing training on software and services)
- Recurring monthly fees for using the Group's platforms
- Revenue from usage of on demand services such as internet and telephone usage and other, on demand, variable services.
- Other ad-hoc services
The Group has one single business reportable segment which is the provision of software and technology platforms that manage their critical infrastructure and business processes, primarily to the flexible workspace industry.
The Group has two main revenue streams, Operate and Connect. Given that support for both revenue streams is provided in such a way as to make cost and therefore operating performance impractical, the two revenue streams are combined into a single reportable segment. The essensys plc Group's revenue per revenue stream is as follows:
Six months Six months
ended ended
31 January 31 January
2020 2019
GBP'000 GBP'000
----------- -----------
Operate - workspace management software 943 670
Connect - software enabled infrastructure
platform 10,464 8,921
11,407 9,591
=========== ===========
Notes to the unaudited financial information for the six months to 31 January 2020
3. Segmental reporting (continued)
Revenue from customers greater than 10% in each reporting period is as follows:
Six months Six months
ended ended
31 January 31 January
2020 2019
GBP'000 GBP'000
----------- -----------
Customer 1 1,717 1,398
Customer 2 1,542 1,358
Customer 3 1,200 1,264
=========== ===========
The Group operates in two main geographic areas, the United Kingdom and the United States of America. The Group's revenue per geographical area is as follows:
Six months Six months
ended ended
31 January 31 January
2020 2019
GBP'000 GBP'000
----------- -----------
United Kingdom 6,621 6,338
United States of America 4,786 3,253
11,407 9,591
=========== ===========
Group revenue disaggregated between revenue recognised 'at a point in time' and 'over time' is as follows:
Six months Six months
ended ended
31 January 31 January
2020 2019
GBP'000 GBP'000
----------- -----------
Revenue recognised at a point in time 1,686 1,867
Revenue recognised over time 9,721 7,724
11,407 9,591
=========== ===========
Notes to the unaudited financial information for the six months to 31 January 2020
3. Segmental reporting (continued)
Contract asset movements were as follows:
GBP000
-------
At 1 August 2019 475
Transfers in the period from contract assets to
trade receivables (271)
Release of capitalised commission cost to the
statement of comprehensive income (55)
Excess of revenue recognised over cash (or rights
to cash) being recognised during the period 157
Commission costs capitalised on contracts 127
-------
At 31 January 2020 433
=======
GBP000
At 1 August 2019 1,044
Amounts included in contract liabilities that
was recognised as revenue during the period (843)
Cash received and receivables in advance of performance
and not recognised as revenue during the period 813
-------
At 31 July 1,014
=======
Contract assets are included within 'trade and other receivables' and contract liabilities are shown respectively on the face of the statement of financial position. Contract assets arise from the group's revenue contracts, where work is performed in advance of invoicing customers. Contract liabilities arise where revenue is received in advance of work performed. Cumulatively, payments received from customers at each balance sheet date do not necessarily equal the amount of revenue recognised on the contracts. Commission costs capitalised on contracts represents internal sales commission costs incurred on signing of customer contracts and, in line with the requirements of IFRS15, spread over the life of the customer contract.
4. Post balance sheet events
The global expansion of the Covid-19 virus since the half-year end has resulted in macroeconomic uncertainty, including in the Group's key markets of the UK and USA. Whilst there has been limited direct impact on the Group as at the date of this market and trading update it is difficult to assess the short or longer-term impact of that uncertainty on the Group's operations.
The Group has secured its supply chain in order to meet its contracted commitments and anticipated demand and, as at the date of this market and trading update, its customers have confirmed that they intend to continue with their existing site opening plans that relate to current contracted Connect sites. The most recent government restrictions on movement globally lead us, however, to expect an increased level of uncertainty relating to the timing of delivery of future contracted sites.
As at 31 January 2020 the Group had cash reserves of GBP1.7m together with an undrawn revolving credit facility. Given the mission-critical nature of the Group's software and services, the commitments that its customers have in terms of their own site delivery plans and the recurring and contracted nature of the majority of the Group's revenue, management continues to expect its customers to meet their financial commitments to the Group.
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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March 24, 2020 03:01 ET (07:01 GMT)
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