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Loopup Group Plc LSE:LOOP London Ordinary Share GB00BYQP6S60 ORD 0.5P
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LoopUp Group PLC Half-year Report

23/09/2020 7:00am

UK Regulatory (RNS & others)


Loopup (LSE:LOOP)
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TIDMLOOP

RNS Number : 8041Z

LoopUp Group PLC

23 September 2020

23 September 2020

LOOPUP GROUP PLC

("LoopUp Group" or the "Group")

Interim results for the period ended 30 June 2020

Resilient performance delivering strong revenue growth, profitability and cash generation

LoopUp Group plc (AIM: LOOP), the premium cloud communications provider, is pleased to announce its unaudited interim results for the period ended 30 June 2020.

The results demonstrate six months of strong financial performance, with significant revenue growth, margin expansion and high cash flow conversion. This performance has been driven primarily by the large-scale migration towards working from home due to Covid-19. The Group enters the second half of the year with major new customer wins set to roll out, a healthy new business pipeline, and a strong balance sheet. This will enable investment in sustainable growth of our recently augmented product offering, which now also enables our customers to make and receive external calls via Microsoft Teams and provides LoopUp with a significantly expanded addressable market opportunity.

Financial highlights:

   --   Revenue growth of 43% to GBP31.9 million at a gross margin of 71.4% 
   --   EBITDA growth of 247% to GBP12.2 million at an EBITDA margin of 38.2% 
   --   Adjusted operating profit growth of 664% to GBP9.2 million 
   --   EPS growth of 1,164% to 13.9 pence 
   --   Strong cash position as at 30 June 2020 improved to GBP8.3 million 
   --   Materially-reduced net debt to GBP5.3 million 
 
                                       Six months       Six months 
                                               to               to 
                                     30 June 2020     30 June 2019 
                                                                     Year-on-year 
 GBP million                          (unaudited)      (unaudited)         growth 
---------------------------------  --------------  ---------------  ------------- 
 Revenue                                     31.9             22.4            43% 
 Revenue from Core LoopUp 
  Products(1)                                27.9             18.1            54% 
 Gross profit                                22.8             15.0            52% 
 Gross profit from Core LoopUp 
  Products(1)                                21.7             13.9            56% 
 Gross margin                               71.4%            66.9%       +4.5 PPS 
 Gross margin from Core LoopUp 
  Products(1)                               77.8%            76.9%       +0.9 PPS 
 Adjusted EBITDA(2)                          12.2              3.5           247% 
 Adjusted EBITDA margin(2)                  38.2%            15.7%      +22.5 PPS 
 Adjusted operating profit(3)                 9.2              1.2           664% 
 Operating profit / (loss)                    7.8            (0.2) 
 Cash                                         8.3              3.8 
 Net debt                                     5.3             11.5 
 Adjusted diluted EPS (pence)(3)            13.9p             1.1p         1,164% 
---------------------------------  --------------  ---------------  ------------- 
 

(1.) Includes LoopUp (now comprising both remote meetings and cloud telephony) and Event by LoopUp, and excludes Cisco resale

(2.) Earnings before interest, tax, depreciation and amortisation, excluding share-based payments charges

(3.) Adjusted to exclude amortisation of acquired intangibles and share-based payment charges

 
 Operating highlights: 
      --   Material increase in demand for Core LoopUp Products, 
            especially in the Group's primary Professional Services 
            ("PS") (4) target market where: 
                -   PS volume grew 90% to 335 million minutes (58% 
                     overall to 617 million minutes) 
                -   Net Revenue Retention (5) - measuring overall impact 
                     of churn, growth and shrinkage in established accounts 
                     - improved to 132% for PS customers (114% overall) 
                -   PS revenue grew 81% to approximately GBP16.1 million 
                     (54% overall to GBP27.9 million) 
 --        'Event by LoopUp' volume grew 88% to 3,596 events 
 --        Sales momentum acceleration driven by Covid-19 for 
            strongest ever new business performance 
                -   Continued success growing market share in PS, with 
                     numerous landmark customers won across legal, corporate 
                     finance, investment banking and consulting sectors 
                -   New Customer CAC Ratio - the fully-loaded cost 
                     to acquire GBP1 of new ARR - of GBP0.40, comparing 
                     favourably with 2020 SaaS benchmark (6) of GBP1.60 
                -   New pods now active in the French and German markets 
 --        Enhanced forward revenue visibility following material 
            migration to committed term contracts (subscriptions 
            and minimum spend) from rolling monthly pay-as-you-go. 
            As at end H1 2020: 
                -   30% of LoopUp business came from committed term 
                     contracts (13% at the start of the year) 
                -   Average committed term duration: 24 months 
 --        Broad platform scaling to contend with materially higher 
            work-from-home load, successfully resulting in zero 
            core platform downtime year-to-date 
 --        LoopUp Meetings video capabilities augmented to facilitate 
            20 concurrent cameras 
 
 Post period highlights: 
 --        Announced major extension to LoopUp flagship product 
            to include global cloud telephony via 'Direct Routing' 
            integration with Microsoft Teams 
                -   A five-fold increase in our addressable market 
                     by 2024 to more than $10 billion (7) 
                -   Rapidly developing pipeline - 219 live opportunities 
                     have potential Total Contract Value of approximately 
                     GBP50 million 
                -   Recruitment of 10 industry-recognised pre-sales 
                     consultants and project managers 
 --        Major new contract win with one of the world's top-5 
            law firms and two top-100 law firms 
 --        Expanded distribution partnership with C&W Communications 
            in the Caribbean and Latin America to FY2022 
 --        Launch of promotional LoopUp Meetings 'freemium' plan 
            to drive lead generation 
 --        Continued migration momentum towards committed term 
            contracts 
 --        R&D tax credit for GBP1.3 million received in August 
            2020 
                -   Cash balance at 31 August 2020: GBP10.6 million 
                -   Net Debt at 31 August 2020: GBP3.0 million 
 
   Outlook and guidance: 
 --        Overall macro conditions continue to be marked by a 
            high degree of instability relating to the societal 
            and economic effects of the Covid-19 pandemic. 
 --        This instability makes it difficult to provide more 
            specific guidance on near-term market expectations 
            beyond our July trading update, other than noting recent 
            forex changes and continued momentum towards committed 
            term contracts. 
 --        Into 2021 and beyond, the increasing prevalence of 
            Microsoft Teams for internal collaboration, landscape-changing 
            analyst projections for the extension of Teams into 
            'Direct Routing' cloud telephony, and initial market 
            reaction to our differentiated implementation of Direct 
            Routing, all combine to makes us very optimistic about 
            the future prospects of our flagship LoopUp product. 
 --        The Group is confident in its ability to drive attractive, 
            sustainable and profitable growth, and intends to invest 
            from its cash balance to maximise shareholder value 
            creation. 
 
 
 (4)   Law, investment banking and corporate finance; private 
        equity and venture capital, asset and fund management, 
        consulting, accounting, marketing and advertising, PR, 
        recruiting, and property 
 (5)   Net Revenue Retention measures the year-on-year percentage 
        revenue change in all accounts that were at least 4 months 
        old one-year prior, averaged over the trailing 12-month 
        period 
 (6)   KBCM Technology Group (formerly Pacific Crest Securities) 
        SaaS survey 
 (7)   Source: Wainhouse Research 
 

Steve Flavell and Michael Hughes, co-CEOs of LoopUp Group, commented,

"It has been a strong and incredibly busy first half for our business as Covid-19 has accelerated changes in working habits. We're proud to be helping our customers with their business-critical communications in these challenging times, by providing simple, reliable and secure products that are diligently operated and supported. We would like to thank our team for their tremendous and ongoing efforts.

With change comes opportunity, and we're embracing this opportunity with our recent product expansion into global cloud telephony integration for Microsoft Teams. Early market reactions to our differentiated implementation have been highly encouraging, and we're confident in our ability to generate strong, profitable growth in this vibrant market that is set to grow from $3.5 billion to $10.4 billion over the next four years. We have a balance sheet that enables us to invest for growth and we're excited and focussed."

Market abuse regulation:

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

 
LoopUp Group plc                                  via FTI 
Steve Flavell, co-CEO 
 
                                                    +44 (0) 20 7886 
  Panmure Gordon (UK) Limited                       2500 
Dominic Morley / Alina Vaskina (Corporate 
 Finance) 
Erik Anderson (Corporate Broking) 
 
                                                  +44 (0) 20 7260 
Numis Securities Limited                           1000 
Simon Willis / Jonny Abbott (Corporate Finance) 
 
                                                  +44 (0) 20 3727 
FTI Consulting, LLP                                1000 
Matt Dixon / Emma Hall / Jamille Smith / Shamma 
 Kelly 
 

About LoopUp Group plc:

LoopUp (LSE AIM: LOOP) is a premium cloud communications solution for business-critical external communications. The solution combines premium remote meetings with inbound and outbound cloud voice services via Direct Routing integration with Microsoft Teams. Our customers benefit from a global fully-managed service, and an emphasis on security, reliability and simplicity, delivered with deep domain expertise and caring customer support. We're proud to be trusted provider to over 5,000 organisations worldwide, including more than 20 of both the world's top-100 law firms and top-100 private equity firms, as well as enterprises such as Travelex, Kia Motors, Planet Hollywood and National Geographic. The Group is headquartered in London, with offices in San Francisco, New York, Boston, Chicago, Dallas, Los Angeles, Denver, Cardiff, Milton Keynes, Madrid, Berlin, Malmo, Hong Kong, Sydney and Barbados, and is listed on the AIM market of the London Stock Exchange (LOOP). For further information, please visit: www.loopup.com .

Chief Executive Officers' Business Review

Strong, profitable and cash-generative growth

We are delighted to announce strong trading for the first half of FY2020, with business performance accelerated by a material increase in demand for our premium remote meetings products - both LoopUp and 'Event by LoopUp' - in response to the widespread migration towards working from home associated with the Covid-19 pandemic. This strong first half performance owes much to the hard work of our people, who have adapted brilliantly to this new working environment and we would like to thank them for their ongoing efforts.

We are incredibly proud to be helping our customers stay securely and reliably connected on their business-critical client communications during these difficult times. We have added capacity across our global platform and are pleased to report zero primary outages during the period, in our determination to ensure reliable service for our customers.

The Group has delivered strong, profitable growth and enhanced cash generation during the period. Revenue grew by 43% to GBP31.9 million at an improved gross margin of 71.4%, and EBITDA grew by 247% at a materially improved margin of 38.2%. Adjusted operating profit increased 664% to GBP9.2 million, and earnings per share (4) increased 1,164% to 13.9 pence. We have strengthened our balance sheet, finishing the period with a healthy cash balance of GBP8.3 million and materially-reduced net debt of GBP5.3 million.

Once again, performance was superior in our core Professional Services (PS) target market, where minute volumes grew by 90% and revenue grew by 81%. Similarly, our key Net Revenue Retention KPI, which measures the overall impact of churn, growth and shrinkage in established accounts, was also stronger in PS verticals at 132%, versus 114% across all verticals.

We have worked collaboratively with our customers on pricing and have seen a positive migration towards committed term contracts - a mix of subscription contracts and minimum spend contracts. Over 30% of LoopUp business now comes from such committed term contracts by the end of the period versus 13% at the start. While these contracts clearly come at a cost of reduced effective pricing, we benefit from the forward-looking revenue visibility given the average initial term duration of approximately 24-months.

(4) Adjusted to exclude amortisation of acquired intangibles and share-based payment charges, and calculated on a diluted shares basis

Strongest ever new business performance

Great communications have always been at the heart of successful organisations and now more so than ever . Covid-19 has accelerated the need for our services and we are delighted to report our strongest ever period of new business wins, with continued success at growing our market share within our core PS target market. Our New Customer CAC Ratio - the fully-loaded cost to acquire GBP1 of new ARR - improved markedly to GBP0.40 (FY2019: GBP1.38), comparing highly favourably with the 2020 year-to-date SaaS benchmark of GBP1.60. There was a particularly strong influx of new customers in March and April, often after having experienced reliability and security issues with their incumbent provider.

Post period end, landmark customer wins have continued into the second half, with the Group closing a significant new contract with one of the world's top-5 law firms. Following a successful pilot with 300 users, LoopUp Meetings will now be rolled out globally with the potential to become one of the Group's largest accounts. This contract follows two other top-100 global law firm wins secured during July and August.

We have expanded our existing partnership with C&W Communications in a new contract through to the end of FY2022. A white-labelled version of LoopUp Meetings will now be included in C&W's core Unified Communications and Collaboration portfolio of products, with expanded distribution across 16 Caribbean and Latin America country markets.

To drive forward and promote lead generation, the Group has also launched two new online plans for LoopUp Meetings. These new offerings, aimed at individual users within target market professional services firms, enable prospect LoopUp customers to experience the product as guests of existing customers and try out the product for hosting their own online meetings.

Strategic product expansion in cloud telephony

In late July, we announced a major extension of our flagship product, LoopUp, by adding global cloud telephony services via 'Direct Routing' integration with Microsoft Teams, to complement our existing best-in-class remote meetings capability. This enables users to make and receive outbound and inbound phone calls directly from their Teams user interface on any device, irrespective of geographic location, and with differentiated audio quality, reliability and security.

'Direct Routing' refers to the interconnection between Microsoft Teams cloud PBX ('Phone System') and a third-party voice provider's network. In LoopUp's case, this interconnection is implemented 'cloud-to-cloud' to LoopUp's secure, enterprise grade, multi-tenancy global platform, avoiding the need for equipment at the customer premises. The solution replaces incumbent voice providers, potentially on a global basis, and is presented as a fully-managed service, with premium 24/7 global support, global telephone number management, and extensive Microsoft Teams and Voice expertise.

Customer benefits include: global service provision from a single, trusted provider; differentiated voice quality, reliability and security on all business-critical, external communications; and a smooth, compliant managed transition process from disparate legacy systems. Our remote meetings proposition is also enhanced due to cost savings achieved by internal call legs now being on-network for the customer, as well as our Microsoft Teams add-on application with schedule and join LoopUp meetings.

The extended LoopUp solution is priced on a monthly user subscription basis, which includes bundled domestic calls, meetings access, screen sharing and video. Additional per-minute surcharges apply for international meetings access and voice calls.

A $10 billion addressable market by 2024

Covid-19 has precipitated a paradigm shift in remote working and intensified the spotlight on best-in-class solutions that drive business continuity and productive collaboration.

Adjacent to LoopUp's focus on business-critical external client communications, Microsoft Teams has grown incredibly strongly in the market for channelised chat and internal collaboration. Daily active Teams users increased by 70% to 75 million in just a seven-week period during lockdown.

As yet, relatively few larger enterprises have extended Teams into business telephony. However, Gartner projects that 90% of larger enterprises that use Teams will adopt Direct Routing telephony by 2022, a landscape-changing shift from just 10% in 2019.

Wainhouse Research sizes the 2019 cloud telephony market at $13.7 billion, and projects growth to $25.8 billion by 2024. The addressable segment of particular relevance to LoopUp is cloud telephony integrated with 'Teams' UC platforms. This is forecast to grow from $1.5 billion in 2019 to $7.6 billion in 2024, a 38% CAGR. When combined with our existing professional services remote meetings market (approximately $2 billion in 2019 and $2.8 billion in 2024), this leads to a total addressable market of $3.5 billion in 2019 and $10.4 billion in 2024.

Business priorities

The Group is focused on the following priorities:

   --   Growing pipeline for the expanded LoopUp product 

We are investing in lead generation and running hard to build pipeline for our newly-expanded LoopUp product, and we have had a very encouraging start. In addition to the existing pipeline for LoopUp Meetings, we have generated 251 qualified opportunities, of which 219 remain live at various stages of the sales cycle and with potential Total Contract Value in excess of GBP50 million.

   --   Augmenting our operations for broader international service provision 

A core theme to our differentiated value proposition - particularly in the Direct Routing market - is its international availability as a premium fully-managed service. As such, we are interconnecting with additional tier-1 carrier partners (beyond our existing 13), as well as adding numerous virtual Direct Routing points of presence in Azure as satellites to our six primary global data centres.

   --   Continuing to innovate in our core remote meetings capabilities 

We are continuing to innovate to make sure our remote meetings capabilities remain best-in-class for professional services external client communications. In the first half, we added resilient scale to a broad array of platform components to contend with the material increases in demand, and we also extended our video capabilities to support 20 concurrent cameras in response to customer demand. We expect to launch additional significant feature upgrades during H2 2020.

Chairman, Lady Barbara Judge CBE

We are deeply saddened by the loss of our Chairman, Lady Barbara Judge, who died from pancreatic cancer earlier this month. On behalf of the Board and everyone at LoopUp, we extend our thoughts and sympathies to Barbara's family. The Group benefitted hugely from her stewardship, her wealth of experience and the calm guidance she brought to us, and she is sadly missed by all of us.

Mike Reynolds, Non-Executive Director and previously Chairman of the Group prior to our 2016 IPO, has assumed the role of acting Non-Executive Chairman while the Board gives due consideration to appointing a new Chairman. An update on succession planning will be made as appropriate in due course.

Outlook

Our ability to provide more specific guidance than already presented in our July trading update is hampered by the high degree of instability around overall macro conditions, business climate and working practices. We do note, however, that the dollar has weakened against the pound since the end of the first half, and we continue to see momentum in customer migrations to committed term contracts, which while clearly beneficial in terms of revenue visibility and retention, also naturally lead to effective pricing reductions.

Looking further ahead, we are very confident in our ability to drive attractive, sustainable and profitable growth, and we intend to invest from our strengthened balance sheet to maximise shareholder value creation. The market opportunity for 'Direct Routing' cloud telephony for Microsoft Teams is clear, and the speed and success of early pipeline build since late July launch makes us very optimistic about our differentiated implementation and future prospects for the Group.

   Steve Flavell                Michael Hughes 
   co-CEO                        co-CEO 

Unaudited consolidated statement of comprehensive income for the six months to 30 June 2020

 
                                           Six months   Six months 
                                                   to           to        Year to 
                                              30 June      30 June    31 December 
 GBP'000                                         2020         2019           2019 
---------------------------------------   -----------  -----------  ------------- 
 Revenue                                       31,897       22,350         42,541 
 Cost of sales                                (9,133)      (7,393)       (14,304) 
----------------------------------------  -----------  -----------  ------------- 
 Gross profit                                  22,764       14,957         28,237 
 
 Adjusted operating expenses 
  (1)                                        (10,587)     (11,445)       (21,825) 
----------------------------------------  -----------  -----------  ------------- 
 Adjusted EBITDA (2)                           12,177        3,512          6,412 
 
 Depreciation                                   (828)        (571)        (1,475) 
 Amortisation of development 
  costs                                       (2,164)      (1,738)        (3,777) 
 Adjusted operating profit 
  (3)                                           9,185        1,203          1,160 
 
 Exceptional reorganisation 
  costs                                             -            -          (509) 
 Amortisation of acquired intangibles         (1,105)      (1,105)        (2,210) 
 Share-based payment charges                    (298)        (262)          (588) 
----------------------------------------  -----------  -----------  ------------- 
 Operating profit / (loss)                      7,782        (164)        (2,147) 
 
 Finance costs                                  (299)        (314)          (647) 
 Profit / (loss) before income 
  tax                                           7,483        (478)        (2,794) 
 
 Income tax                                     (490)        (252)            789 
 Profit / (loss) for the period                 6,993        (730)        (2,005) 
 
 Other comprehensive income 
  and loss 
 Currency translation gain 
  / (loss)                                         70        (148)          (397) 
 
 Total comprehensive income 
  / (loss) for the period attributable 
  to the equity holders of the 
  parent                                        7,063        (878)        (2,402) 
========================================  ===========  ===========  ============= 
 
 Earnings / (loss) per share 
  (pence) - Note 4 
 
 
   *    Basic adjusted (4)                       15.1          1.2            2.4 
 
   *    Basic                                    12.7        (1.3)          (3.6) 
 
 
   *    Diluted adjusted (4)                     13.9          1.1            2.2 
 
   *    Diluted                                  11.6        (1.2)          (3.3) 
========================================  ===========  ===========  ============= 
 
 
      (1.)   Total administrative expenses excluding depreciation, 
              amortisation of development costs and acquired intangibles, 
              exceptional reorganisation costs and share-based payment 
              charges. 
      (2.)   Adjusted EBITDA is operating profit stated before depreciation, 
              amortisation of development costs and acquired intangibles, 
              exceptional reorganisation costs and share-based payment 
              charges. 
      (3.)   Adjusted operating profit is operating profit stated 
              before amortisation of acquired intangibles, exceptional 
              reorganisation costs and share-based payment charges. 
      (4.)   Basic adjusted and diluted adjusted earnings per share 
              are calculated using profit before tax adjusted for 
              exceptional reorganisation costs. 
 

Unaudited consolidated statement of financial position at 30 June 2020

 
                                       30 June    30 June   31 December 
 GBP'000                                  2020       2019          2019 
----------------------------------   ---------  ---------  ------------ 
 Assets 
 Non-current assets 
 Property, plant and equipment           2,748      2,393         2,737 
 Right of use assets                     2,785      1,879         3,228 
 Intangible assets: 
 
   *    Development costs               10,164      8,578         9,104 
 
   *    Other intangible assets         28,544     30,761        29,656 
 
   *    Goodwill                        30,951     30,951        30,950 
 Total non-current assets               75,192     74,562        75,675 
-----------------------------------  ---------  ---------  ------------ 
 Current assets 
 Trade and other receivables            15,239      9,584         9,321 
 Cash and cash equivalents               8,281      3,756         3,000 
 Current tax                             1,486      1,212         1,631 
-----------------------------------  ---------  ---------  ------------ 
 Total current assets                   25,006     14,552        13,952 
-----------------------------------  ---------  ---------  ------------ 
 Total assets                          100,198     89,114        89,627 
-----------------------------------  ---------  ---------  ------------ 
 
 Liabilities 
 Trade and other payables              (7,671)    (4,619)       (5,415) 
 Accruals and deferred income          (4,897)    (2,268)       (2,686) 
 Lease liabilities                       (862)      (523)         (862) 
 Borrowings                            (1,700)    (1,700)       (1,700) 
 Total current liabilities            (15,130)    (9,110)      (10,663) 
-----------------------------------  ---------  ---------  ------------ 
 Net current assets                      9,876      5,442         3,289 
 Non-current liabilities 
 Borrowings                           (11,900)   (13,600)      (12,750) 
 Lease liabilities                     (1,923)    (1,356)       (2,366) 
 Deferred tax liability                (5,709)    (5,711)       (5,709) 
 Total non-current liabilities        (19,532)   (20,667)      (20,825) 
 Total liabilities                    (34,662)   (29,777)      (31,488) 
-----------------------------------  ---------  ---------  ------------ 
 Net assets                             65,536     59,337        58,139 
===================================  =========  =========  ============ 
 
 Equity 
 Share capital                             277        276           276 
 Share premium                          60,623     60,588        60,588 
 Other reserve                          12,691     12,691        12,691 
 Foreign currency translation 
  reserve                              (2,262)    (2,083)       (2,332) 
 Retained loss                         (5,793)   (12,135)      (13,084) 
 Shareholders' funds attributable 
  to equity owners of parent            65,536     59,337        58,139 
===================================  =========  =========  ============ 
 

Unaudited consolidated statement of changes in equity at 30 June 2020

 
                                                                                               Shareholders' 
                                                                                                     funds / 
                                                                                                   (deficit) 
                                                                 Foreign                        attributable 
                                                                currency                           to equity 
                              Share      Share      Other    translation            Retained       owners of 
 GBP'000                    capital    premium    reserve        reserve                loss          parent 
------------------------  ---------  ---------  ---------  -------------  ------------------  -------------- 
 
 Balance at 1 January 
  2019                          276     60,504     12,691        (1,935)            (11,667)          59,869 
 
 Profit and total 
  comprehensive income 
  / (loss)                        -          -          -          (148)               (730)           (878) 
 Equity share-based 
  payment compensation            -          -          -              -                 262             262 
 Proceeds from share 
  issues                          -         84          -              -                   -              84 
 
 Balance at 30 June 
  2019                          276     60,588     12,691        (2,083)            (12,135)          59,337 
 
 Profit and total 
  comprehensive income            -          -          -          (249)             (1,275)         (1,524) 
 Equity share-based 
  payment compensation            -          -          -              -                 326             326 
 Proceeds from share 
  issues                          -          -          -              -                   -               - 
 
 Balance at 31 December 
  2019                          276     60,588     12,691        (2,332)            (13,084)          58,139 
 
 Profit and total 
  comprehensive income 
  / (loss)                        -          -          -             70               6,993           7,063 
 Equity share-based 
  payment compensation            -          -          -              -                 298             298 
 Proceeds from share 
  issue                           1         35          -              -                   -              36 
 
 Balance at 30 June 
  2020                          277     60,623     12,691        (2,262)             (5,793)          65,536 
------------------------  ---------  ---------  ---------  -------------  ------------------  -------------- 
 

Unaudited consolidated statement of cash flows for the six months to 30 June 2020

 
                                         Six months   Six months 
                                                 to           to        Year to 
                                            30 June      30 June    31 December 
 GBP'000                                       2020         2019           2019 
--------------------------------------  -----------  -----------  ------------- 
 Operating activities 
   Profit / (loss) before tax                 7,483        (478)        (2,794) 
 Non-cash adjustments: 
   Depreciation and amortisation              3,654        3,414          6,671 
   Share based payment charge                   298          262            588 
   Interest payable                             299          294            647 
 Working capital adjustments: 
   (Increase) / decrease in trade 
    and other receivables                   (5,841)        (142)             80 
   Increase / (decrease) in trade 
    and other payables                        4,177        (545)            737 
   Income tax paid                            (124)        (428)              - 
   Income tax received                            -            -            401 
--------------------------------------  -----------  -----------  ------------- 
 Cash generated from operations               9,946        2,377          6,330 
 
 Cash flows from investing activities 
 Purchase of property, plant 
  and equipment                               (397)        (558)        (1,257) 
 Development expenditure                    (3,224)      (2,436)        (5,001) 
 Net cash used in investing 
  activities                                (3,621)      (2,994)        (6,258) 
--------------------------------------  -----------  -----------  ------------- 
 
 Cash flows from financing activities 
 Proceeds from share issues                      35           84             84 
 Repayment of loans                           (850)        (850)        (1,700) 
 Interest and finance fees paid               (299)        (294)          (647) 
 Net cash generated by financing 
  activities                                (1,114)      (1,060)        (2,263) 
--------------------------------------  -----------  -----------  ------------- 
 
 Net increase / (decrease) in 
  cash and cash equivalents                   5,211      (1,677)        (2,191) 
 
 Cash and cash equivalents brought 
  forward                                     3,000        5,581          5,581 
 
 Effect of foreign exchange 
  rate changes                                   70        (148)          (390) 
 
 Cash and cash equivalents carried 
  forward                                     8,281        3,756          3,000 
--------------------------------------  -----------  -----------  ------------- 
 
 

Notes to the financial information for the six months ended 30 June 2020

1. General information

LoopUp Group plc (AIM: "LOOP", "LoopUp Group", or the "Group") is a global provider of cloud communication software and services. It is a public limited company incorporated and domiciled in England and Wales, with company number 09980752. Its registered office is The Tea Building, 56 Shoreditch High Street, London, E1 6JJ.

2. Basis of preparation and significant accounting policies

These consolidated interim financial statements have been prepared in accordance with those IFRS standards and IFRIC interpretations issued and effective or issued and early adopted as at the time of preparing these statements (September 2020). This results announcement does not constitute statutory accounts of the Group within the meaning of sections 434(3) and 435(3) of the Companies Act 2006. The balance sheet at 31 December 2019 has been derived from the full Group accounts published in the Annual Report and Accounts 2019, which has been delivered to the Registrar of Companies and on which the report of the independent auditors was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.

The results have been prepared in accordance with the accounting policies set out in the Group's 31 December 2019 statutory accounts, which are based on the recognition and measurement principles of IFRS in issue as adopted by the European Union ("EU"). The Group has changed its policy on segmental reporting as outlined in note 3 below.

These unaudited interim results have been prepared on a going concern basis. At the balance sheet date, the Group had net cash of GBP8.3m and net assets of GBP65.5m. The impacts of Covid-19 on the demand for LoopUp have resulted in significant improvements in profitability and cash generation in the period. The Group's cash position has increased to GBP10.6m at the end of August 2020, and as such, the Directors have a reasonable expectation that the Group has adequate resources to continue operations for the next twelve months.

The results for the six months ended 30 June 2020 were approved by the Board on 22 September 2020. A copy of these interim results will be available on the Group's web site www.loopup.com from 23 September 2020.

The principal risks and uncertainties faced by the Group have not changed from those set out in the Annual Report and Accounts 2018.

There are no post balance sheet events to report.

3. Revenue and segmental reporting

The Directors have identified the segments by reference to the principal groups of services offered and the geographical organisation of the business as reported to the chief operating decision-maker (CODM). In July 2020 the Group announced a major extension to the LoopUp proposition to include global cloud voice services via direct routing integration with Microsoft Teams. This capability will be marketed to customers alongside the existing premium remote meetings solution as part of a combined, core, LoopUp proposition. This new combined segment has been termed Core LoopUp Products below. Existing revenue from the voice proposition, which was previously categorised as part of the 'third party and other services' segment, has been added to this segment in the comparative information below. The remaining revenue previously categorised as 'third party and other services' revenue has now been categorised as 'third party resale services'.

Segmental revenues are external and there are no material transactions between segments.

The Group's largest customer represented less than 3% of total revenue in all periods reported above.

No segmental balance sheet was presented to the CODM.

The Group's revenue disaggregated by primary geographical markets is as follows:

 
                                     Core LoopUp        Third party 
 GBP'000                                Products    resale services    Total 
----------------------------------  ------------  -----------------  ------- 
 
 For the six months to 30 June 
  2020: 
 UK                                       14,844              1,739   16,583 
 Other EU                                  3,900                836    4,736 
 North America                             8,577              1,390    9,967 
 Rest of world                               611                  -      611 
----------------------------------  ------------  -----------------  ------- 
                                          27,932              3,965   31,897 
----------------------------------  ------------  -----------------  ------- 
 
 For the six months to 30 June 
  2019: 
 UK                                        9,965              1,963   11,928 
 Other EU                                  2,120                939    3,059 
 North America                             5,771              1,336    7,107 
 Rest of world                               256                  -      256 
----------------------------------  ------------  -----------------  ------- 
                                          18,112              4,238   22,350 
----------------------------------  ------------  -----------------  ------- 
 
 For the 12 months to 31 December 
  2019: 
 UK                                       19,007              3,537   22,544 
 Other EU                                  4,046              1,728    5,774 
 North America                            10,800              2,853   13,653 
 Rest of world                               570                  -      570 
----------------------------------  ------------  -----------------  ------- 
                                          34,423              8,118   42,541 
----------------------------------  ------------  -----------------  ------- 
 

The Group's revenue disaggregated by pattern of revenue recognition is as follows:

 
                                     Core LoopUp        Third party 
 GBP'000                                Products    resale services    Total 
----------------------------------  ------------  -----------------  ------- 
 
 For the six months to 30 June 
  2020: 
 Services transferred at a point 
  in time                                 26,761                409   27,170 
 Services transferred over time            1,171              3,556    4,727 
----------------------------------  ------------  -----------------  ------- 
                                          27,932              3,965   31,897 
----------------------------------  ------------  -----------------  ------- 
 
 For the six months to 30 June 
  2019: 
 Services transferred at a point 
  in time                                 17,058                318   17,376 
 Services transferred over time            1,054              3,920    4,974 
----------------------------------  ------------  -----------------  ------- 
                                          18,112              4,238   22,350 
----------------------------------  ------------  -----------------  ------- 
 
 For the 12 months to 31 December 
  2019: 
 Services transferred at a point 
  in time                                 32,269                554   32,823 
 Services transferred over time            2,154              7,564    9,718 
----------------------------------  ------------  -----------------  ------- 
                                          34,423              8,118   42,541 
----------------------------------  ------------  -----------------  ------- 
 

The Group's gross profit disaggregated by segment is as follows:

 
                                 Six months    Six months         12 months 
                                 to 30 June    to 30 June    to 31 December 
 GBP'000                               2020          2019              2019 
-----------------------------  ------------  ------------  ---------------- 
 
 Core LoopUp Products                21,726        13,931            26,449 
 Third party resale services          1,038         1,026             1,788 
-----------------------------  ------------  ------------  ---------------- 
                                     22,764        14,957            28,237 
-----------------------------  ------------  ------------  ---------------- 
 

The Group's non-current assets disaggregated by primary geographical markets are as follows:

 
                   Six months    Six months         12 months 
                   to 30 June    to 30 June    to 31 December 
 GBP'000                 2020          2019              2019 
---------------  ------------  ------------  ---------------- 
 
 UK                    74,873        72,400            74,648 
 Other EU                   3             9                62 
 North America            311           255             1,410 
 Rest of world              5            19                11 
---------------  ------------  ------------  ---------------- 
                       75,192        72,683            76,131 
---------------  ------------  ------------  ---------------- 
 

4. Earnings per share

The basic earnings per share is calculated by dividing the net profit attributable to equity holders of the Group by the weighted average number of ordinary shares in issue during the year.

 
                                                        Six months      12 months 
                                           Six months           to             to 
                                                   to      30 June    31 December 
                                         30 June 2020         2019           2019 
-------------------------------------  --------------  -----------  ------------- 
 
 Profit / (loss) attributable 
  to equity holders (GBP000)                    6,993        (730)        (2,005) 
 Adjusted profit attributable 
  to equity holders (GBP000) (1)                8,396          637          1,302 
 Weighted average number of ordinary 
  shares in issue (000)                        55,265       55,170         55,208 
 
 Basic earnings per share (pence): 
 
   *    Basic adjusted (1)                       15.1          1.2            2.4 
  - Basic                                        12.7        (1.3)          (3.6) 
=====================================  ==============  ===========  ============= 
 

The diluted earnings per share has been calculated by dividing the above profit numbers by the weighted average number of shares in issue during the year, adjusted for potentially dilutive shares that are not anti-dilutive.

 
                                                         Six months      12 months 
                                            Six months           to             to 
                                                    to      30 June    31 December 
                                          30 June 2020         2019           2019 
--------------------------------------  --------------  -----------  ------------- 
 
 Weighted average number of ordinary 
  shares in issue ('000)                        55,265       55,170         55,208 
 Adjustments for share options 
  ('000)                                         4,961        4,737          5,058 
--------------------------------------  --------------  -----------  ------------- 
 Weighted average number of potential 
  ordinary shares in issue ('000)               60,266       59,907         60,266 
--------------------------------------  --------------  -----------  ------------- 
 
 Diluted earnings per share (pence): 
 
   *    Diluted adjusted (1)                      13.9          1.1            2.2 
  - Diluted                                       11.6        (1.2)          (3.3) 
======================================  ==============  ===========  ============= 
 

(1) Calculated using profit attributed to equity holders adjusted for exceptional reorganisation costs, amortisation of acquired intangibles and share based payment charges.

5. Dividends

The directors did not recommend the payment of a dividend for the years ended 31 December 2019 or 2018.

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END

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