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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| I-nexus Global Plc | LSE:INX | London | Ordinary Share | GB00BDFDLT01 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 3.25 | 3.00 | 3.50 | 3.25 | 3.25 | 3.25 | 0.00 | 08:00:19 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Prepackaged Software | 3.53M | -756k | -0.0256 | -1.27 | 961.08k |
From Apr 2022 to Apr 2024
TIDMINX
RNS Number : 2392K
i-nexus Global PLC
20 December 2022
20 December 2022
i-nexus Global plc
("i-nexus", the "Company" or the "Group")
Final Results
i-nexus Global plc (AIM: INX), a leading provider of cloud-based Strategy software solutions designed for the Global 5000, today provides its audited results for the year ended 30 September 2022 ("FY22").
Financial Highlights
-- Year on year growth in Underlying Monthly Recurring Revenue(1) ("MRR") of 12% to GBP250k (FY21: GBP223k) driven by a record number of new business wins and the expansion of existing customer relationships; equivalent Reported MRR(1) was GBP250k (FY21: GBP235k)
-- Highlighting both the increasing strength of our client relationships and the release of enterprise software budgets, net retention(2) in the year was 98% (2021: 74%)
-- Total revenue, 90% of which is recurring, reduced despite a record number of sales to GBP3,127k (FY21: GBP3,639k) due to the lagged impact of the exceptional levels of non-renewing contracts in the prior year
-- Cost control initiatives provided a loss before tax for the year in line with FY21 at GBP1,105k (FY21: GBP1,133k) despite the movement in revenue
-- Cash & cash equivalents at the period end of GBP99k (FY21: GBP575k), with the end of the financial year representing a low cash flow point given the seasonality in recurring revenue collection
Operational Highlights
-- Marketing initiatives resulted in record levels of engagement, reach and therefore leads, confirming our ability to rebuild our prospect pipeline
-- Record number of new customers secured in the year, winning nine new logos (FY21: four) and delivering GBP30k of additional MRR
-- Smaller initial deals have already seen expansion in the year, providing the foundation for a strong existing account growth rate in FY23
Post Period End Highlights & Outlook
-- Sales momentum continuing in FY23, with a further three logos signed and one account expansion, producing net MRR growth of GBP12k
-- Primed to again deliver double-digit net Monthly Recurring Revenue (MRR) growth in FY23, capitalising on the strong prospect pipeline and increased opportunities within our base
Commenting on the results, Simon Crowther, Chief Executive, said: -
"I am pleased to report on a year of solid progress at i-nexus, in which we delivered on all three areas of our strategic plan, resulting in growth in new business wins, a more stable cash runway, and greater clarity on our future direction. The sales successes in the year combined with the significant improvement in customer renewals enabled us to achieve our target of double-digit underlying MRR growth in the year.
The growing interest in strategy software, the relaxation of enterprise software budgets, the enhancements we have made to our products and our increased sales and marketing skills, all combine to provide us with confidence in our outlook and ability to deliver another year of double digit MRR growth."
For further information please contact:
i-nexus Global plc Via: Alma PR Simon Crowther, Chief Executive Officer Drew Whibley, Chief Financial Officer Singer Capital Markets (Nominated Tel: +44 (0)207 496 Adviser and Broker) 3000 Sandy Fraser / Alaina Wong (Corporate Finance) Tom Salvesen (Corporate Broking) Alma PR Tel: +44 (0) 203 405 Caroline Forde 0205
About i-nexus Global plc
i-nexus Global plc ("i-nexus") helps organisations achieve their goals. Whether executing a strategy, driving operational excellence and continuous performance improvement, or coordinating portfolios and programs to transform results, i-nexus strategy software underpins success.
Today, we support organisations in managing over 200,000 strategic programmes around the world.
i-nexus transforms how organisations plan, execute, and track goals. We inspire the confidence to leave behind the spreadsheets, presentations and reports those organisations rely on, replacing it with a cloud-based, collaborative solution.
Throughout this announcement:
(1) Underlying MRR excludes MRR movements related to IFRS adjustments and Foreign Exchange variances, these items are included within the Reported MRR value.
(2) Net Retention is measured by the total of on-going MRR at the year-end from clients in place at the start of the year as a percentage of the opening MRR from those clients.
Chairman's Statement
In my 2020/21 Chairman's Report I commented on the immediate challenges that i-nexus faced delivering its Business Improvement and Strategy Deployment software to large enterprises beginning to recover from the global pandemic. Few commentators predicted that 2021/22 would be characterised by even greater economic and political uncertainty. Businesses such as ours benefit from our customers looking forward with optimism and implementing clear long-term strategies across complex organisations. To do so successfully requires certainty and stability which are not conditions which currently prevail across the global economy. Nonetheless, against this challenging sales environment, the team delivered a record number of new logo wins and closed the year with a clear cash runway.
While creating a challenging sales environment in the short-term, these macro-economic changes have highlighted the need for global strategy solutions across large enterprises. Issues such as faltering supply chains, changing distribution models, price inflation, social and environmental factors, and changing working practices are just a few examples of factors influencing large enterprise strategies.
Enterprises have learnt quickly that uncertainty is the new normal and that to succeed their strategies must be deployed faster, with more agility and that tools such as i-nexus can help them to do so.
Last year our three strategic objectives were to manage our cash resources as effectively as possible, while continuing to develop our i-nexus platform and drive our developing sales pipeline as hard as possible with our limited resources. We have not needed further working capital support from our shareholders and, although cash is tighter than we originally forecast, we remain confident given our current projections for FY23 that we will not require further working capital to deliver on our growth plans. If our ambitions change through accelerating sales or unequivocal demand for new product the Board will of course consider all options to fund such growth. It is the Board's responsibility to ensure that i-nexus takes full advantage of the opportunities available to it. It is also incumbent upon the Board to ensure that i-nexus remains at the forefront of its chosen market. We will find the necessary resources, within our limited overhead, to ensure we are looking forward with our customers and market analysts to ensure we can provide broader capability, unlocking a larger and potentially more dynamic market.
Net retention is of course central to the success of any subscription business and we are pleased that this has seen a marked improvement in the year to 98% (FY21: 74%) (measured by the total of on-going MRR at the year-end from clients in place at the start of the year as a percentage of the opening MRR from those clients). We are confident that this positive increase is sustainable over the next 12 months. Importantly we are back winning new customers and although initial engagements are deliberately smaller, the opportunities to grow these accounts following successful initial deployments is, in many cases, contractually assured. New customers, growth from existing customers and improving partner sales all underpin our growth aspirations for 2022/23. In challenging market conditions we have broadly achieved our aims for 2021/22 and look forward with optimism for the current year.
As we look forward it is clear that our current market capitalisation has little or no relationship to the underlying value of the business, its customer base, its well established technology or its financial position. It is a reflection of the challenges that many small businesses quoted on AIM currently have. The Board will seek ways to reengage with the market to help awaken a greater appreciation of the value of the business, while considering all options in the best interest of all stakeholders.
The management team has faced tough times over the last few years and have remained at the helm throughout, never faltering in the most harsh circumstances. During the year, Alyson Levett, our CFO, decided to step down to pursue her career as a pluralist non-executive director. She has been an outstandingly committed executive director, steering the business through its IPO and subsequent challenging economic times. I would like to thank Alyson for her contribution to the business and wish her well with her future endeavors.
We are delighted to have found an exceptional CFO to take up the role, Drew Whibley, joining us from his role as Group Finance Manager at LSE listed software business Aptitude Software Group plc. Drew has fitted into the management team with ease and has already proven a fantastic asset to us and we are delighted to have him on board. In addition I'd like to thank all our employees for their continued commitment to the business, their hard work and dedication.
Without downplaying the obvious challenges ahead in any way, I look forward to the coming years with increased optimism underpinned by a small but exquisitely formed team, a growing market, a sound product, blue chip customers and "baked in" account growth.
Richard Cunningham
Chairman
Chief Executive Officer's Report
Overview
I am pleased to report on a year of solid progress at i-nexus, in which we delivered on all three areas of our strategic plan, resulting in growth in new business wins, a more stable cash runway, and greater clarity on our future direction. The sales successes in the year combined with the significant improvement in customer renewals enabled us to achieve our target of double-digit Underlying MRR growth in the year.
The successful reignition of our marketing activities was key to building a strong sales pipe which we are confident will continue to deliver. We proved during the year we could convert these deals into new wins, and quickly demonstrate value to our customers, ensuring higher levels of renewals and expansion deals. The efforts we made to re-build our sales momentum mean we are continuing to deliver a consistent volume of well verified leads each month and currently have a further fifteen trial implementations in progress, providing visibility on the pipeline into the new year.
For the i-nexus workbench product, we invested heavily in those areas that simplify use for quicker and easier adoption which has provided much deeper engagement during both the sales journey and customer deployment.
Trading
We secured a record number of new customers in the year, winning nine new logos (FY21: four), which along with the existing account upsells and lower levels of churn, delivered an exit Underlying MRR for the year uplift of 12% to GBP250k MRR (FY21: GBP223k, Reported MRR GBP235k). As is typical with our new customers, each of these wins services limited business areas or teams within the customer and so each presents considerable expansion opportunities.
We renewed over 90% of our customers, a considerable improvement on the prior year, and expanded the use of our software within four existing accounts (FY21: two). The improvement in renewal rates reflects the rigour and routine we have brought to the review of accounts with our customer stakeholders, and the release of enterprise software budgets following the freeze experienced during Covid times.
Fundamental to these successes has been our increased understanding of where we sit within the competitive market landscape. We are now clearer on our differentiators and confident our platform is the best in class to support enterprise level strategy execution - a view confirmed to us by our prospects.
We continue to refine our sales approach to ensure we are best placed to capture this growing market. Areas of improvement include streamlining the onboarding process to under 30 days, ensuring ROI and customer value are front and centre of the sales discussion and simplification of our initial product demonstrations, particularly around our key differentiator: our ability to deliver Hoshin Kanri methodology.
We continue to be approached by a range of potential partners and will consider ways to capitalise on this interest in the year ahead.
Market opportunity
All businesses set goals, plan how to deliver them and track performance. The challenge is if they can do this at pace, with insight and high levels of visibility across their complex ecosystems where i-nexus' software delivers considerable value.
Our software category - Strategy Execution Management (SEM) - continues to evolve and gain momentum as companies accelerate digitalising mission-critical processes in this post pandemic world. Faced with market uncertainty, this "new normal" future requires companies to increase responsiveness by dynamically managing their strategic plan; something that we believe simply cannot be achieved on spreadsheets and other conventional productivity tools.
The growing importance of the SEM market has been acknowledged by leading analysts including Gartner Research, with SEM now considered an integral part of the new Strategy Portfolio Management (SPM) software category. We have seen greater demand for strategy execution post-Covid, in response to the "no normal" business environment. And while we have seen a higher level of smaller software providers entering the market, with SME targeted offerings, we continue to dominate the enterprise level part of the market.
Our competitive strength
We are seeing an increased sophistication in our market, with prospects frequently now coming to us with very well thought through capability requirements, having pre-evaluated i-nexus against the competition on a matrix of criteria.
We continue to see that i-nexus has several clear advantages in strategy execution against SPM vendors: the market leading Hoshin Kanri capabilities built into our platform, including our X-Matrix; the configurability and flexibility of the platform; the depth of functionality including powerful strategic planning and performance management capabilities that complement portfolio management features; and proven enterprise readiness.
In addition to the above, i-nexus' customers benefit from insight gained from over fifteen years of market experience in strategy execution. Our experience and long-standing in the industry also mean our software is calibrated to integrate smoothly into an enterprise's existing strategy processes.
People
We have a talented, committed team at i-nexus, all pulling in the same direction and now delivering better results. The results this year are even more impressive when taking into account the considerably reduced size of the team. Each person has gone above and beyond to grow sales momentum, develop our products and deepen customer relationships, and the Board would like to once again thank them all for their commitment.
During the year we spent time on various activities to help strengthen our team and ensure we have the right qualities and shared purpose to take us forward. These included defining our Vision and Values, introducing improvements to our employment packages, even more rigorous hiring processes and the select expansion of our teams to ensure we had sufficient depth to properly service our existing customer base. As a result of these measures, we have a strong, cohesive team, working together to deliver on our growth plan.
Strategic focus for the year ahead
Our strategy for the current year is focused on three main programs of work:
1. To accelerate the landing of new logos - which we will achieve though continuing to reduce friction in buying i-nexus and enhancing the trial experience.
2. Prove our ability to expand within accounts - with nine new logos secured in FY22, proving we can grow these accounts is key. We are launching an updated set of value measures and increased customer marketing and forums.
3. Improve the customer experience within our Workbench product - developing key insights and output screens as requested by customers.
We believe through continued focus on these programs, we will drive the success of the business.
Innovation
This year and next year we will continue to focus our innovation efforts on increasing the usability of our platform and the delivery of valuable insights. Through this we intend to increase growth from existing customers which is a key component to our land and expand sales model; providing focus on giving the best user experience, eliminating waste and delivering valuable insight.
Being a software/product company, we continually look at product innovations in our space. This last year and next year are no different. We have a number of potential product candidates, currently being assessed for customer validation, that we hope to take through to a minimal viable product in the year ahead.
Current Trading and Outlook
Following the growth in MRR and our careful management of the impacts of cost inflation on the business, we continue to have clear visibility of our cash runway.
The growing interest in strategy software, the relaxation of enterprise software budgets, the enhancements we have made to our products and our increased sales and marketing skills, all combine to provide us with confidence in our outlook and ability to deliver another year of double digit MRR growth.
Simon Crowther
Chief Executive Officer
Chief Financial Officer's Report
Revenue
Licence revenues
Monthly recurring revenue ('MRR'), the key financial metric for the Group, grew by 12% in the year to GBP250k at 30 September 2022 (30 September 2021: GBP223k after adjusting for foreign exchange and IFRS adjustments, Reported MRR GBP235k) as the business secured a record nine new logos (FY21: four) alongside continuing to expand the use of our software in a growing number of accounts. These results represent a significant turnaround from both 2021 and 2020 (reduction in MRR of 23% and 10% respectively) as the Group's key markets were disrupted by the onset of the pandemic.
Highlighting both the increasing strength of our client relationships and the release of enterprise software budgets following the freeze experienced during the last two years, net retention in the year was 98% (FY21: 74%). As expected, software revenues recognised in 2022 reduced to GBP2,857k (FY21: GBP3,333k) due to the lagged impact of the exceptional levels of non-renewing contracts the business experienced in the prior year.
As a consequence of our subscription revenue model, the new customer successes achieved in the year and growing expansion opportunities in our base set the business up well to return to software revenue growth in FY23. This view is further supported by the business securing three new logos and one account expansion in Q1 2023 delivering GBP12k of net MRR growth.
Services revenues
Revenue from associated professional services was broadly in line with prior-year levels at GBP270k (FY21: GBP306k) despite the 40% reduction cited at the half year against H1 2021. The uplift in H2 reflects the timing of delivering new customer deployments and existing change orders, a trend expected to continue into H1 FY23 underpinned by the deferred revenue balance related to services at 30 September 2022 being three times higher than at 30 September 2021.
Gross Margin
Gross Margin in the year remained stable at 79% (FY21: 83%) with the reduction in revenue driving the fall from GBP3,004k to GBP2,461k.
Reported Gross Margin is the combined gross margin over both recurring software subscriptions and professional services.
Adjusted EBITDA
Adjusted EBITDA (EBITDA excluding the impact of impairment, loss on disposal of assets, share-based payments and non-underlying items) totalled a loss of GBP552k for the period (FY21: loss of GBP257k), with the fall in gross margin of GBP542k being constrained by a drop in overhead costs of GBP247k reflecting the full impact of the cost control initiatives undertaken last year.
Whilst the Group's continuing focus is to return to EBITDA breakeven, during the second half of 2022 the business decided to accelerate a select number of investments both in its existing employee base to preserve retention and in additional resource needed for operational delivery. The strengthening of the team was considered fundamental to the Group realising the market opportunity and delivering on the next stage of its growth strategy.
There are currently no plans to make further investments in FY23 until such time as revenue growth is delivering a positive Adjusted EBITDA.
Depreciation, amortisation and impairment
Total costs in respect of depreciation, amortisation, and impairment were GBP385k in FY22 (FY21: GBP552k). With the business having low capital expenditure requirements, the value is principally made up of amortisation on intangible assets, being capitalised development costs, (GBP165k, FY21: GBP79k) and any subsequent impairment charges (GBP155k, FY21: GBP294k).
These costs are re ective of the continual evolution of the market in which the Group operates, the needs of its customers, both present and prospective, and the Group's agile approach to continually developing and improving its o ering.
Non-underlying items
Non-underlying items in the prior year totalling GBP144k comprise redundancy costs and professional and consultancy fees relating to the raising of finance. No such costs were incurred in FY22.
Statutory results
The Group reported a loss before taxation for the year of GBP1,105k (FY21: GBP1,133k).
Cash and cash equivalents
The Group had cash & cash equivalents at 30 September 2022 of GBP99k (FY21: GBP575k), with the end of the financial year representing a cash low point for the business given the seasonality in cash flows arising from the timing of the invoicing and collection of the Group's recurring revenue, the majority of which is billed during Q1 and Q2.
During the year, we delivered on a key financial objective during FY22, to become self-su cient in working capital terms. This enabled us to complete a select number of additional one-off strategic investments from within our own cash resources, strengthening our team as we head into FY23. Driving this outcome was a GBP725k reduction in the net outflow of funds from operating activities (FY22: (GBP237k, FY21: GBP962k) reflecting the impact of new business successes, improved service billing and a strong renewal performance.
Careful cash management will continue to be a priority focus for the Board. As previously outlined, there are currently no plans to increase the existing cost base in the coming year until such time that revenue growth delivers a position of at least Adjusted EBITDA breakeven.
The Group also continues to apply treasury and foreign currency exposure management policies where possible to minimise both the cost of nance and our exposure to foreign currency exchange rate uctuations.
Net debt at 30 September 2022 was GBP1,710k (FY21: GBP1,321k). On 30 September 2022, the Company agreed with the holders of the GBP1,325k Convertible Loan Notes to extend the redemption date from 4 November 2023 to 4 November 2024, see note 7 for further details.
The Group prepares budgets, cash ow forecasts and undertakes scenario planning to ensure that the Group can meet its liabilities as they fall due. The Board's assessment in relation to going concern is included in note 2 of this report.
Balance sheet
Trade receivables (net) have increased to GBP604k due to the timing of receipt of annual licence fee and subscription invoices issued in the final months of the year (FY21: GBP557k).
The growth in the Group's MRR and accompanying services resulted in deferred revenue increasing to GBP1,320k at 30 September 2022 (FY21: GBP1,030k). The Group's cash collection disciplines remain strong with DSO (debtor days) at 30 September 2022 of 60 (2021: 70).
Principal risks and uncertainties
The Group's principal risks and uncertainties are set out in note 9 of this report.
Drew Whibley
Chief Financial O cer
Primary statements
Consolidated Statement of Comprehensive income
For the year ended 30 September 2022
Hot Features
Premium
2022 2021
GBP GBP
----------------------------------------------- ----------- -----------
Revenue 3,126,804 3,639,111
Cost of sales (666,280) (635,532)
----------------------------------------------- ----------- -----------
Gross profit 2,460,524 3,003,579
Other operating income - 88,316
Administrative expenses (3,408,424) (4,062,295)
----------------------------------------------- ----------- -----------
Operating loss (947,900) (970,400)
----------------------------------------------- ----------- -----------
Adjusted EBITDA (552,357) (256,873)
Depreciation, amortisation, impairment and
pro fi t/loss on disposal (384,975) (551,862)
Share based payment expense (10,568) (17,181)
Non-underlying items - (144,484)
----------------------------------------------- ----------- -----------
Investment revenues 68 65
Finance costs (231,288) (162,855)
Other gains and losses 73,845 -
----------------------------------------------- ----------- -----------
Loss before taxation (1,105,275) (1,133,190)
Income tax income 234,391 398,258
----------------------------------------------- ----------- -----------
Loss for the year (870,884) (734,932)
----------------------------------------------- ----------- -----------
Other comprehensive income:
Items that will not be reclassified to profit
or loss
Currency translation di ff erences (486) 17,346
----------------------------------------------- ----------- -----------
Total items that will not be reclassified
to profit or loss (486) 17,346
----------------------------------------------- ----------- -----------
Total other comprehensive income for the year (486) 17,346
----------------------------------------------- ----------- -----------
Total comprehensive income for the year (871,370) (717,586)
----------------------------------------------- ----------- -----------
2022 2021
GBP GBP
----------------------------------------------- ----------- -----------
Earnings per share
Basic (0.03) (0.02)
Diluted (0.03) (0.02)
----------------------------------------------- ----------- -----------
Consolidated Statement of Financial Position
As at 30 September 2022
2022 2021
GBP GBP
------------------------------ ------------ ------------
Non-current assets
Intangible assets 915,696 1,099,313
Property, plant and equipment 26,413 67,111
------------------------------ ------------ ------------
942,109 1,166,424
------------------------------ ------------ ------------
Current assets
Trade and other receivables 781,838 791,948
Current tax recoverable 224,000 275,000
Cash and cash equivalents 98,987 575,203
------------------------------ ------------ ------------
1,104,825 1,642,151
------------------------------ ------------ ------------
Total assets 2,046,934 2,808,575
------------------------------ ------------ ------------
Current liabilities
Trade and other payables 682,840 952,157
Borrowings 9,707 71,425
Deferred revenue 1,319,674 1,030,315
------------------------------ ------------ ------------
2,012,221 2,053,897
------------------------------ ------------ ------------
Net current liabilities (907,396) (411,746)
------------------------------ ------------ ------------
Non-current liabilities
Trade and other payables 254,407 88,330
Borrowings 32,387 42,094
Convertible loan notes 1,766,925 1,782,458
------------------------------ ------------ ------------
2,053,719 1,912,882
------------------------------ ------------ ------------
Total liabilities 4,065,940 3,966,779
------------------------------ ------------ ------------
Net liabilities (2,019,006) (1,158,204) ------------------------------ ------------ ------------ Equity Called up share capital 2,957,161 2,957,161 Share premium account 7,256,188 7,256,188 Foreign exchange reserve 1,390 1,876 Share option reserve 20,062 12,989 Equity reserve 231,851 231,851 Merger reserve 10,653,881 10,653,881 Retained earnings (23,139,539) (22,272,150) ------------------------------ ------------ ------------ Total equity (2,019,006) (1,158,204) ------------------------------ ------------ ------------
Consolidated Statement of Changes in Equity
For the year ended 30 September 2022
Share Foreign Share
Share premium Equity Merger exchange option Retained
capital account reserve reserve reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP GBP GBP
---------------------------- --------- ------------ -------------- -------------- ------------ --------------- ---------------- -----------
Balance at
1 October 2020 2,957,161 7,256,188 - 10,653,881 (15,470) - (21,541,410) (689,650)
---------------------------- --------- ------------ ------------------------------ ------------ --------------------------------- -----------
Year ended
30 September
2021:
Loss for the
year
Other comprehensive
income:
Exchange di ff
erences - - - - - - (734,932) (734,932)
on foreign operations - - - - 17,346 - - 17,346
---------------------------- --------- ------------ -------------- -------------- ------------ --------------- ---------------- -----------
Total comprehensive
income for the
year - - - - 17,346 - (734,932) (717,586)
---------------------------- --------- ------------ -------------- -------------- ------------ --------------- ---------------- -----------
Transactions
with owners
in their capacity
as owners
Issue of convertible
loan
Share option expense - - 231,851 - - - - 231,851
in the year - - - - - 17,181 - 17,181
Share options
cancelled - - - - - (4,192) 4,192 -
---------------------------- --------- ------------ -------------- -------------- ------------ --------------- ---------------- -----------
Total contributions
by and
distributions
to owners
of the Company
recognised directly
in equity - - 231,851 - - 12,989 4,192 249,032
---------------------------- --------- ------------ -------------- -------------- ------------ --------------- ---------------- -----------
Balance at
30 September
2021 2,957,161 7,256,188 231,851 10,653,881 1,876 12,989 (22,272,150) (1,158,204)
---------------------------- --------- ------------ -------------- -------------- ------------ --------------- ---------------- -----------
Year ended
30 September
2022:
Loss for the
year
Other comprehensive
income:
Exchange di ff
erences - - - - - - (870,884) (870,884)
on foreign operations - - - - (486) - - (486)
---------------------------- --------- ------------ -------------- -------------- ------------ --------------- ---------------- -----------
Total comprehensive
income for the
year - - - - (486) - (870,884) (871,370)
---------------------------- --------- ------------ -------------- -------------- ------------ --------------- ---------------- -----------
Transactions
with owners
in their capacity
as owners
Share option expense
in the year - - - - - 10,568 - 10,568
Share options
cancelled - - - - - (3,495) 3,495 -
------------------------ --------- ------------ -------------- -------------- ------------ --------------- ---------------- -----------
Total contributions
by and
distributions
to owners
of the Company
recognised directly
in equity - - - - - 7,073 3,495 10,568
---------------------------- --------- ------------ -------------- -------------- ------------ --------------- ---------------- -----------
Balance at
30 September
2022 2,957,161 7,256,188 231,851 10,653,881 1,390 20,062 (23,139,539) (2,019,006)
---------------------------- --------- ------------ -------------- -------------- ------------ --------------- ---------------- -----------
Consolidated Statement of Cash Flows
For the year ended 30 September 2022
2022 2021
GBP GBP GBP GBP
------------------------------- --------- --------- --------- -----------
Operating activities
Loss after tax (870,884) (734,932)
Adjusted for non-cash items:
Taxation credit (234,391) (398,258)
Amortisation, depreciation,
and adjustments on disposal 384,975 551,862
Share-based payment expense 10,568 17,181
Finance income (68) (65)
Finance charges 231,288 162,855
Decrease in provisions - (80,702)
Other gains (73,845)
------------------------------- --------- --------- --------- -----------
(552,357) (482,059)
Decrease in trade and other
receivables 10,126 78,059
Increase/(decrease) in
trade
and other payables 20,043 (980,799)
------------------------------- --------- --------- --------- -----------
Cash used in operations (522,188) (1,384,799)
Income tax refunded 285,391 423,258
------------------------------- --------- --------- --------- -----------
Net cash outflow from
operating activities (236,797) (961,541)
Investing activities
Purchase of intangible
assets -
internally generated (136,234) (335,446)
Purchase of property, plant
and equipment (24,443) (1,171)
Proceeds on disposal of
property, plant and equipment - 1,180
Interest received 68 65
------------------------------- --------- --------- --------- -----------
Net cash used in investing
activities (160,609) (335,372)
Financing activities
Issue of convertible loans - 1,937,500
Repayment of borrowings (71,425) (179,981)
Proceeds of new bank loans - 50,000
Payment of lease liabilities - (37,467)
Interest paid (6,899) (35,216)
------------------------------- --------- --------- --------- -----------
Net cash (used in)/generated
from financing activities (78,324) 1,734,836
------------------------------- --------- --------- --------- -----------
Net (decrease)/increase
in cash and cash equivalents (475,730) 437,923
Cash and cash equivalents
at
beginning of year 575,203 120,011
E ff ect of foreign exchange
rates (486) 17,269
------------------------------- --------- --------- --------- -----------
Cash and cash equivalents
at end of year 98,987 575,203
------------------------------- --------- --------- --------- -----------
Notes to accounts
1. General information
i-nexus Global plc is a public company limited by shares incorporated in England and Wales (registration number 11321642). The registered office is 27-28 Eastcastle Street, London, W1W 8DH. The Group's principal activities and nature of its operations are disclosed on page 2 of this report.
The Group consists of i-nexus Global plc and all of its subsidiaries.
Significant accounting policies
The following principal accounting policies have been used consistently in the preparation of consolidated financial information for i-nexus Global plc and its subsidiaries (the 'Group').
Basis of preparation
The financial information has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The financial information is prepared in sterling, which is the functional currency of the Group. Monetary amounts in this financial information are rounded to the nearest GBP1.
This financial information has been prepared applying the accounting policies applied in the Group's most recent publicly available financial statements.
The financial information incorporates the results of i-nexus Global plc and all of its subsidiary undertakings as at 30 September 2022.
Going concern
After reviewing the Group's forecasts and projections, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, being a period of at least twelve months from the date of approval of these financial statements. The Group therefore continues to adopt the going concern basis in preparing its financial statements. Information used to make this decision is detailed below.
A scenario testing exercise, in which the Directors prepared detailed cash flow forecasts for the period covered by the going concern forecast, was performed. The forecasts take into account the Directors' views of current and future economic conditions that are expected to prevail over the period including assumptions regarding the sales pipeline, future revenues and costs with various scenarios which reflect growth plans, opportunities, risks and mitigating actions. Alongside managements base case forecast, the Group prepared an extreme downside scenario where, outside of the deals secured in Q1 2023, any growth in MRR across the period would be offset by non-renewals, reducing total billing across recurring and services revenue by GBP510k. Under this extreme scenario, the Group has given consideration to the potential actions available to management to mitigate the impact of these sensitivities, in particular the discretionary nature of costs incurred by the Group, in order to ensure the continued availability of funds. Financial performance in 2023 is not expected to be materially impacted from current year levels due to the long-range revenue visibility achieved through the recurring revenue business model. These recurring revenues, representing 90% of total revenue, are considered resilient given the majority are on multi-year terms. The forecast also assumed that the Group does not have access to any further external funding. Based on current trading, the stress test scenario is considered very unlikely.
The Group continues to monitor the collection of monies from clients with no material delays in payment being cited. The business benefits from an Annual Licence Fee Model in which software Licence fees are received annually in advance.
Abridged financial information
This preliminary announcement has been prepared in accordance with the basis of preparation set out above. Whilst the financial information included in this preliminary announcement has been prepared in accordance with IFRS, this announcement does not itself contain sufficient information to comply with IFRS. This preliminary announcement constitutes a dissemination announcement in accordance with Section 6.3 of the Disclosures and Transparency Rules (DTR).
2. Revenue and segmental reporting
The Group has one single business segment and therefore all revenue is derived from the rendering of services as stated in the principal activity. The Group operates in six geographical segments, as set out below. This is consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance, has been identified as the management team comprising the executive directors who make strategic decisions.
Revenue analysed by class of business
Year ended Year ended
30 September 30 September
2022 2021
GBP GBP
Licence 2,856,720 3,333,407
Services 270,084 305,704
3,126,804 3,639,111
=============== ===============
Revenue analysed by geographical market
Year ended Year ended
30 September 30 September
2022 2021
GBP GBP
United Kingdom 716,295 853,663
United States 882,707 1,211,192
Switzerland 639,380 629,921
Germany 538,561 329,959
Rest of Europe 190,976 476,513
Rest of the World 158,885 137,863
3,126,804 3,639,111
=============== ===============
Other significant revenue Year ended Year ended
30 September 30 September
2022 2021
GBP GBP
Grant income - 88,316
=============== =================
Grants of GBP88,316 were received in the prior year as part of the Government's initiatives to provide immediate financial support as a result of the COVID-19 pandemic. There are no future related costs associated with these grants which were received solely as compensation for costs incurred in the year.
3. Adjusted EBITDA
The calculation of Adjusted Earnings is consistent with the presentation of Adjusted Earnings before Interest, Tax, Depreciation, and Amortisation, as presented on the face of the Statement of Comprehensive Income. This adjusted element also removes non-underlying items which, in the prior year, comprise COVID-19 related redundancy costs and professional and consultancy fees relating to the raising of finance. There were no such costs in the current year.
The Directors have presented this Alternative Performance Measure ("APM") because they feel it most suitably represents the underlying performance and cash generation of the business, and allows comparability between the current and comparative period in light of the rapid changes in the business, and will allow an ongoing trend analysis of this performance based on current plans for the business.
4. Earnings per share
The earnings per share has been calculated using the loss for the year and the weighted average number of ordinary shares outstanding during the year, as follows:
Year ended Year ended
30 September 30 September
2022 2021
GBP
Loss for the period attributable to equity
holders of the company (870,884) (734,932)
---------------- --------------
Weighted average number of ordinary shares
(for basic and diluted earnings per share 29,571,605 29,571,605
---------------- --------------
Earnings per share (basic and diluted) (0.03) (0.02)
================ ==============
The Diluted EPS is the same as the basic EPS in the current and comparative year as the Group has incurred losses in each of the periods concerned. The Group has a number of potentially dilutive share options and convertible redeemable loan stock that could dilute the earnings per share should the Group become profitable. As at 30 September 2022 both the share options and the convertible loan stock are out of the money.
5. Borrowings
At 30 September At 30 September
2022 2021
GBP GBP
Current
Bank loans 9,707 7,906
Other loans - 63,519
9,707 71,425
---------------- ----------------
Non-current
Bank loans 32,387 42,094
32,387 42,094
---------------- ----------------
Total borrowings 42,094 113,519
================ ================
The Group had the following borrowings at 30 September 2022:
-- A Bounce Back Loan Scheme loan within bank loans which has an interest rate of 2.5% payable from November 2021 when the government grant incentive period expires. The loan is carried at GBP42,094 in the financial statements. This loan is unsecured.
-- Venture debt, within other loans in the prior year, has a fixed interest rate of the higher of 11.5% per annum or LIBOR plus 8% per annum and is measured at amortised cost. The venture debt is secured by way of fixed and floating charges over the title of all assets held by the Group. The venture debt has been repaid in full during the current year.
The directors consider the value of all financial liabilities to be equivalent to their fair value.
7. Convertible Loan note
The convertible loan notes consist of two tranches issued during the prior year. The first tranche was issued on 4 November 2020 with total proceeds of GBP1,325,000 and the second tranche was issued on 29 September 2021 with total proceeds of GBP650,000.
When issued, both tranches had a redemption date 3 years following their date of issue. The loan note holders are entitled, before the redemption date, to convert all or part of their holding of loan notes into fully paid Ordinary Shares on the basis of 1 Ordinary Share for every 10p of principal nominal amount of loan notes held, or, convert all or part of their holding of loan notes into fully paid Ordinary Shares at the conversion rate; and/or redeem all or part of their holding of loan notes.
At the issue date the net proceeds received were split between the financial liability element of GBP1,743,149 and an equity component of GBP231,851, representing the fair value of the embedded option to convert the financial liability into equity. The equity component of the convertible loan notes has been credited to the equity reserve.
On 30 September 2022, the redemption date of the first tranche was extended by a further year, to give a revised redemption date of four years following the original date of issue, being November 2024. This modification was not considered to be substantial, as defined in IFRS 9, therefore the existing liability was re-calculated as the present value of the revised future cash flows discounted at the original effective interest rate. A gain of GBP73,845 on the modification of the liability has been recognised in other gains and losses.
The extension to the redemption date is a modification only of the existing convertible loan notes and therefore has no impact on the equity element.
The liability component is measured at amortised cost, and the difference between the carrying amount of the liability at the date of issue and the amount reported in the statement of financial position represents the effective interest rate less interest paid to that date.
The convertible loan notes carry a coupon rate of 8% and are recognised at their net present value using a discount rate of 12%.
Liability
GBP
Issue of convertible loan note 1,743,149
Interest charged 127,639
Interest accrued (88,330)
----------
Liability component at 30 September
2021 1,782,458
----------
Interest charged 224,389
Interest accrued (166,077)
Gain on modification (73,845)
----------
Liability component at 30 September
2022 1,766,925
----------
8. Share capital
At 30 September At 30 September
2022 2021
GBP GBP
Authorised, allotted, called
up and fully paid
29,571,605 (2020: 29,571,605)
Ordinary shares of GBP0.10
each 2,957,161 2,957,161
================ ================
Fully paid shares carry one vote per share and carry rights to a dividend.
9. Principal risks and uncertainties
The Board of the Company regularly reviews business risk and the Group's appetite for risk relative to its goals. There are a number of potential risks and uncertainties, some of which could have a material impact on the Group's performance, and therefore could cause actual results to differ materially from those expected.
Set out below are the significant business risk areas identified, together with an overview of the mitigating factors considered by the Board. This is not an exhaustive list of the risks faced by the Group and is not necessarily presented in order of priority.
Risk Description Mitigation
Working capital Whilst the Directors believe Trend: Level risk
Vulnerability of that the improvement in sales The Group prepares regular
the Group's long conversion seen in FY22 is business forecasts and monitors
term working capital. sustainable, the Group's its projected cash flows,
working capital position which are reviewed by the
is still exposed should this Board.
weaken and/or its expected The scenarios and sensitivities
growth with existing accounts demonstrate that there are
be lower than planned in mitigating actions management
FY23. can implement should the
The Group's continuing viability plans not deliver the expected
in the longer term remains sales growth.
critically dependent on its
ability to secure new sales
and expand the use of the
software in existing accounts.
It is possible that the Group
will experience a slower
and/or lower sales conversion
rate than the Directors have
modelled within their base
case financial projections.
This could in turn have a
material adverse effect on
the Group's business, results
of operations, financial
condition and prospects.
---------------------------------------- -----------------------------------------
Risk Description Mitigation
---------------------------------------- -----------------------------------------
Market & product Whilst the Board believes Trend: Level risk
development that there is strong evidence The Group has internal sales
The strategy market of an increasing trend to and marketing functions,
may not evolve digitalise strategy by its which are also supported
as expected or target customers, a large by a network of consulting
our products fail proportion of the Group's partners, that work with
to meet the expectations target market continues to potential customers to educate
of the market. use traditional methods and them on the benefits of digitising
in-house developed systems. strategy and the associated
benefits the product can
Although the Group has achieved offer an organisation.
its market position through The rate of incoming enquiries
a deep understanding of the supports the view that recent
market, and the 10 years events appear to have made
of development of its i-nexus the need to digitise strategy
software, there is no guarantee more widely accepted.
that either our product continues The Board feels that recent
to meet customer expectations enhancements along with the
or that the Group's competitors Group's product strategy
and potential competitors and R&D focus mitigates this
(who may have significantly risk. The Board monitors
greater financial, marketing, user satisfaction and the
service, support, technical extent to which the software
and other resources than continues to meet customer
the Group) may be able to expectation through various
develop competing products, channels, including on the
respond more quickly to changes G2 platform.
in customer requirements
and devote greater resources
to the enhancement, promotion
and sale of their products,
which could have a negative
impact on the Group's business.
---------------------------------------- -----------------------------------------
Account Proliferation An important aspect of the Trend: Reducing risk
Failure of our Group's growth strategy is Many of the new logos signed
existing accounts to proliferate sales of its in FY22 were "Land and Expand"
to grow as planned, i-nexus software with existing opportunities with clear
resulting from customers as a result of intent, whereby a smaller
dissatisfaction the natural evolution of subset of a much larger future
with the product the software use over time. deployment have commenced
and/or deployment Although the Group has a using the product first.
issues. number of examples where The Board expect to see the
this has occurred in the beneficial impact of this
past, this is no guarantee strategy in FY23 and have
that it will continue to taken measures to increase
happen at the increasing the number of Success Managers
rate predicted. Any failure in the year. This team's
of this anticipated account efforts at growing our existing
proliferation occurring will accounts has been assisted
impact the Group's future by the recent product enhancements
success and adversely affect aimed at improving user experience.
its business, prospects and The Board continue to monitor
financial position. the efficacy and outcomes
of the Group's efforts in
growing existing accounts.
---------------------------------------- -----------------------------------------
Risk Description Mitigation
---------------------------------------- -----------------------------------------
Dependence on A small group of key customers Trend: Level risk
key Customers provide approximately half The majority of this small
Failure to retain of the Group's MRR, with group of customers are in
our larger key one representing nearly 20 contracts with a remaining
customers. per cent of closing MRR. term of more than one year
The Group's financial performance and all bar one of them have
is therefore partly dependent been longstanding clients
on the continued business for a period of at least
relationship with these key five years and, in the case
customers. of two of them, ten years.
Failure to manage the ongoing As previously reported, the
renewal of the contracts Group has a dedicated team
with these key customers of long-standing experienced
on a commercially acceptable professionals acting as Success
basis could materially affect Managers. They have well-established
the Group's operations and/or processes and reporting that
its financial condition. allow them to get early warning
of any issues.
Whilst this cannot guarantee
renewal of all customers
in the face of disruptive
external factors that we
cannot reasonably foresee
or manage, the overall risk
level is aligned with FY22
where the business achieved
its highest retention rates.
---------------------------------------- -----------------------------------------
Security Breaches The Group is a Data Processor Trend: Level risk
and Cyber Attacks for its customers' confidential The Group takes its Information
Vulnerability of data. Although the Group Security very seriously as
the Group's systems is ISO27001 accredited and demonstrated by its ISO27001
to security breaches therefore employs security accreditation. Employees
or cyber attacks. and testing measures for are trained in this area
the software it deploys and to ensure best practice measures
the broader security environment are followed for Information
is well documented, these Security.
measures may not protect The Group utilises the latest
it from all possible security security products such as
breaches that could harm end point security systems,
the Group or its customers' with staff receiving regular
business. Given the reliance security awareness training
of the business on its information and testing. The security
technology systems, the software regime is regularly reviewed,
is at risk from cyber attacks. and the Group invests in
Either of these security state-of-the-art systems
events may result in significant to keep both its cloud platform
costs being incurred and and office networks protected
other negative consequences against cyber-attack.
including reputational damage. In addition, our systems
are subjected to frequent
and rigorous third-party
penetration testing to help
ensure our system integrity.
The Group has cyber security
insurance in place and the
Group endeavors to secure
limitations of liability
clauses in its customer contracts.
---------------------------------------- -----------------------------------------
Risk Description Mitigation
---------------------------------------- -----------------------------------------
Recruitment & As the Group grows it has Trend: Level risk
retention a dependence on the recruitment The Group works closely with
Risk of failing and retention of highly skilled external parties to ensure
to attract and/or employees and an ongoing competitive pay and benefits
retain key personnel. reliance on a limited number are being offered to both
of key personnel, including attract and retain people.
the Directors and senior We continue to invest in
management, who have significant people development and training
sector experience. initiatives to provide opportunities
The job market is increasingly for career fulfillment and
competitive in the cloud progression. Wherever appropriate
technology sector, particularly we seek to develop and promote
following the pandemic and from within the existing
subsequent acceleration of staff pool.
cloud adoptions and digital The Group has invested heavily
transformation trends. in this area in FY22 and
The business requires specialist is a continuing area of focus
technical skills that can for FY23.
be scarce. Executive and staff remuneration
If members of the Group's plans, incorporating long-term
key senior team depart, the incentives, have been implemented
Group may not be able to to mitigate this risk.
find effective replacements
in a timely manner, or at
all, and its business may
be disrupted.
---------------------------------------- -----------------------------------------
Dependence on Part of the Group's strategy Trend: Level risk
Channel Partners is to increasingly sell its Renewed efforts in relation
Failure to develop software through channel to the evolution of this
this additional partners. There are no guarantees strategic theme will take
route to market that sufficient channel partners place in FY23 as investment
effectively. will be found to sell the in resource is unlocked by
Group's software at the rates growth. The Board will closely
planned. monitor progress.
The Directors are confident
that engagements to date
by existing and prospective
channel partners provide
strong evidence of the opportunity
available. However, unlocking
this potential has proven
to be difficult in recent
years and failing to have
productive channel partners
in the future could affect
the Group's future success.
---------------------------------------- -----------------------------------------
Risk Description Mitigation
---------------------------------------- -----------------------------------------
Financial risk Credit risk Trend: Level risk
management Credit risk is the risk of The Group is principally
The principal financial fi nancial loss to the Group exposed to credit risk from
instruments used if a partner or customer credit sales and/or bank
by the Group, from fails to meet its contractual default. It is Group policy
which financial obligations. to assess the credit risk
risk arises, are of new customers and partners
trade receivables, before entering new contracts
cash at bank, trade and it has a frequent and
and other payables. proactive collections process.
Under the terms of our contracts
many services are charged
for in advance of delivery,
thus mitigating the risk
further.
Liquidity risk
Liquidity risk arises from Trend: Level risk
the Group's management of On a monthly basis, the Directors
working capital. It is the review the Group's trading
risk that the Group will to date, the Group's full
encounter di ffi culty in year financial projections
meeting its fi nancial obligations as well as information regarding
as they fall due. cash balances, debtors, trading
and prospects. This allows
the Directors to form an
opinion as to the working
capital of the Group and
its likely future requirements
in order to plan accordingly.
Currency risk
As a consequence of the Group's
exposure transacting in foreign Trend: Level risk
currencies there are risks All geographies addressed
associated with changes in by the Group can be readily
foreign currency exchange serviced from the UK. The
rates. Group applies treasury and
The Group is based in the foreign currency exposure
United Kingdom and presents management policies to minimise
its consolidated financial both the cost of finance
statements in pounds Sterling. and our exposure to foreign
The Group's current revenues currency exchange rate fluctuations.
are generated primarily in Notwithstanding these hedging
Sterling, US dollar and Euros. arrangements, the Group
The Group also has some contractual does have exposure to translation
obligations that are denominated effects arising from movements
in US Dollars. in the relevant currency
exchange rates against sterling.
Therefore, there can be no
assurance that its future
results or resources will
not be significantly affected
by fluctuations in exchange
rates.
---------------------------------------- -----------------------------------------
Risk Description Mitigation
---------------------------------------- -----------------------------------------
Inflation risk Trend: Increasing risk
Inflation risk has been very The Board acknowledge that
limited for most of the last inflationary pressure is
decade. However, as with now mounting with certain
many technology businesses, vendors already applying
the Group is experiencing increases as a result. The
increased inflationary pressures Board have agreed that a
within its cost base. The review of the Group's vendor
timing of a customer's invoice base and accompanying pricing
for their typically annually model be undertaken as a
in advance software fee can potential countermeasure
also contribute to a delay to ensure margins are preserved.
in inflationary pressures
being passed to customers.
---------------------------------------- -----------------------------------------
10. Forward-looking Statements
This document contains forward-looking statements that involve risks and uncertainties. All statements, other than those of historical fact, contained in this document are forward-looking statements. The Group's actual results could differ materially from those anticipated in the forward-looking statements as a result of many factors. Investors are urged to read this entire document carefully before making an investment decision. The forward-looking statements in this document are based on the relevant Directors' beliefs and assumptions and information only as of the date of this document, and the forward-looking events discussed in this document might not occur. Therefore, Investors should not place any reliance on any forward-looking statements. Except as required by law or regulation, the Directors undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future earnings or otherwise.
It should be noted that the risk factors listed above are not intended to be exhaustive and do not necessarily comprise all of the risks to which the Group is or may be exposed or all those associated with an investment in the Group. In particular, the Group's performance is likely to be affected by changes in market and/or economic conditions, political, judicial, and administrative factors and in legal, accounting, regulatory and tax requirements in the areas in which it operates and holds its major assets. There may be additional risks and uncertainties that the Directors do not currently consider to be material or of which they are currently unaware, which may also have an adverse effect upon the Group.
11. Availability of Report and Accounts
The audited report and accounts for the year ended 30 September 2022 will be published and posted to shareholders in due course. Following this a soft copy of the report and accounts will also be available to download from the Group's website, www.i-nexus.com .
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.
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END
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