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PCIP Pci-pal Plc

56.00
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Pci-pal Plc LSE:PCIP London Ordinary Share GB0009737155 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 56.00 55.00 57.00 56.00 56.00 56.00 5,473 08:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Business Services, Nec 14.95M -4.89M -0.0747 -7.50 36.66M

PCI-PAL PLC Interim Results, Analyst Briefing & Investor Pres (8180S)

14/03/2023 7:00am

UK Regulatory


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TIDMPCIP

RNS Number : 8180S

PCI-PAL PLC

14 March 2023

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the company's obligations under Article 17 of MAR.

14 March 2023

PCI-PAL PLC

("PCI Pal" or "the Group" or "the Company")

Interim Results, Analyst Briefing & Details of Investor Presentation

PCI-PAL PLC (AIM: PCIP), the global cloud provider of secure payment solutions for business communications , is pleased to announce its unaudited interim results for the six months to 31 December 2022.

Financial highlights for the period

 
                                                            H1 FY23                 H1 FY22 
                                                          ending 31               ending 31 
                                                           December                December                change 
                                                               2022                    2021 
 
            Revenue                                        GBP7.26m                GBP5.47m                  +33% 
                                             ----------------------  ----------------------  -------------------- 
            Gross Margin %                                      87%                     81% 
                                             ----------------------  ----------------------  -------------------- 
            % of revenues from recurring 
             contracts                                          85%                     90% 
                                             ----------------------  ----------------------  -------------------- 
            Adjusted EBITDA(1) loss                      (GBP0.57m)              (GBP0.58m)                   +2% 
                                             ----------------------  ----------------------  -------------------- 
            Loss from operating activities               (GBP1.88m)              (GBP1.10m)                  -71% 
                                             ----------------------  ----------------------  -------------------- 
 
            New ACV(2) contract sales 
             in period                                     GBP1.47m                GBP1.76m                  -16% 
                                             ----------------------  ----------------------  -------------------- 
            TACV(3)                                       GBP14.74m               GBP11.34m                  +30% 
                                             ----------------------  ----------------------  -------------------- 
            ARR(4)                                        GBP11.92m                GBP8.96m                  +33% 
                                             ----------------------  ----------------------  -------------------- 
 
            NRR(5)                                             106%                    120% 
                                             ----------------------  ----------------------  -------------------- 
            Customer retention(6)                               95%                     97% 
                                             ----------------------  ----------------------  -------------------- 
 
            Cash                                           GBP1.88m                GBP5.53m 
                                             ----------------------  ----------------------  -------------------- 
 

Operating highlights in the period

   --      On-going accumulation of TACV driving continued strong increase in revenue 

-- Successfully balancing drive to near-term profitability whilst investing in continued strong growth

   --      Further increase in gross margin to 87% driven by customer demand for true cloud services 
   --      Partner eco-system performing well with 87% of contracts in period signed through resellers 
   --      77 new logo customers signed in the period, a record. 39 upsell contracts were also signed. 

-- Launched Open Banking product, the first in series of new features adding to the existing value proposition of the Group's cloud platform

   --      Strong customer retention of 95% including positive net retention of 106% 

Current trading

-- The Board is confident of making further strong progress in the second half as PCI Pal continues to execute against its near-term plans. Trading in the first two months of H2 is in line with management's expectations and revenue momentum continues with strong visibility of the full year number.

-- Given the trading momentum being demonstrated by the Group, the Board reiterates the outlook set out in its trading update on 2 February 2023 and that it remains firmly on track to deliver monthly cashflow breakeven in this financial year, in line with the Board's expectations.

(1) Adjusted EBITDA is the loss on Operating Activities before depreciation and amortisation, exchange movements charged to the profit and loss, exceptional items and expenses relating to share option charges

(2) ACV is the annual recurring revenue generated from a contract.

(3) TACV is the total annual recurring revenue of all signed contracts, whether invoiced and included in deferred revenue or s till to be deployed and/or not yet invoiced.

(4) ARR is the Annual Recurring Revenue of all the deployed contracts.

(5) NRR is the net retention rate of the contracts that are live on the AWS platform rate and is calculated using the opening total value of deployed contracts 12 months ago less the ACV of lost deployed contracts in the last 12 months plus the ACV of upsold contracts signed in the last 12 months all divided by the opening total value of deployed contracts at the start of the 12 month period.

(6) Customer retention is calculated using the formula 1 minus (the ACV of lost deployed contracts on the AWS platform in the last 12 months divided by the opening total value of deployed contracts 12 months ago).

Commenting on the results for the period, James Barham, Chief Executive Officer said:

"We have delivered another strong period of growth at PCI Pal. It's been a period that has emphasised the strength of our business model given the backdrop of increased global economic challenges. As the market-leaders in cloud solutions in our space, with our patented cloud capabilities, we continue to see the benefits of the focus on our partner eco-system and our capability to deliver our services in a light-touch way, anywhere in the world.

"As previously announced, we enter H2 confident of delivering monthly cashflow breakeven in the current financial year. This financial progress is balanced with the investment required to continue to realise the opportunities in front of us; further growing our addressable market through the expansion of our product suite; which in turn will not only drive sales, but also support us to maintain high levels of customer retention."

Analyst Briefing: 9.30am today, Tuesday 14 March 2023

An online briefing for Analysts will be hosted by James Barham, Chief Executive, and William Good, Chief Financial Officer, at 9.30am today Tuesday 14 March 2023 to review the results and prospects. Analysts wishing to attend should contact Walbrook PR on pcipal@walbrookpr.com or 020 7933 8780.

Investor Presentation: 3.00pm on Thursday 16 March 2023 (UK time)

The Directors will hold an investor presentation to cover the results and prospects at 3.00pm on Thursday 16 March 2023 (UK time).

The presentation will be hosted through the digital platform Investor Meet Company. Investors can sign up to Investor Meet Company and add to meet PCI-PAL PLC via the following link https://www.investormeetcompany.com/pci-pal-plc/register-investor . For those investors who have already registered and added to meet the Company, they will automatically be invited.

Questions can be submitted pre-event to pcipal@walbrookpr.com or in real time during the presentation via the "Ask a Question" function.

For further information, please contact:

 
 PCI-PAL PLC                             Via Walbrook PR 
 James Barham - Chief Executive 
  Officer 
  William Good - Chief Financial 
  Officer 
 finnCap (Nominated Adviser and 
  Broker)                                +44 (0) 20 7227 0500 
 Marc Milmo/Simon Hicks (Corporate 
  Finance) 
  Sunila De Silva (Corporate Broking) 
 Walbrook PR                             +44 (0) 20 7933 8780 
 Tom Cooper/Nick Rome/Joe Walker         +44 (0) 797 122 1972 
                                         PCIPAL@walbrookpr.com 
 

About PCI Pal:

PCI Pal is a leading provider of Software-as-a-Service ("SaaS") solutions that empower companies to take payments from their customers securely, adhere to strict industry governance, and remove their business from the significant risks posed by non-compliance and data loss. Our products secure payments and data in any business communications environment including voice, chat, social, email, and contact centre. We are integrated to, and resold by, some of the worlds' leading business communications vendors, as well as major payment service providers.

The entirety of our product-base is available from our global cloud platform hosted in Amazon Web Services ("AWS"), with regional instances across EMEA, North America, and ANZ.

For more information visit www.pcipal.com or follow the team on Linkedin: https://www.linkedin.com/company/pci-pal/

Chief Executive Officer's Business Review

Overview

I am pleased to report a strong first half of growth for PCI Pal. Revenue increased 33% to GBP7.3 million (2021: GBP5.5 million). PCI Pal's early adoption of true cloud solutions continues to benefit the financial health of the business, with gross margins growing further to 87% (2021: 81%). This increase in margins reflects the continued accumulation of license based income generated by the business across its globally available AWS-hosted secure payments platform.

Adjusted EBITDA for the period was in line with the prior year loss of c.GBP0.6 million, which, given the substantial additional investments in new employees and technology developments over the last 12 months, highlights the further progress of the business. Furthermore, having ended H1 in a strong position, the Board has confidence of meeting management expectations for FY23, as well as hitting sustained monthly cashflow positivity in the second half of the current financial year.

PCI Pal's sales model is partner-first and, as a result, we have built a robust partner program supported by a commitment to channel across our entire organisation. This approach is at the core of everything we do. The strategy continues to pay off with a record number of new customer contracts signed in the period and 87% of these signed through resellers. ACV for the period was below the same period last year at GBP1.5 million (2021: GBP1.8 million), however, as commented at the time, the prior year included several large expansion upsells to our largest customers. The sales outlook for H2 remains strong. Supporting this strong outlook is the continued accumulation of TACV, a key indicator of future recurring revenues, which increased 30% to GBP14.7 million (2021: GBP11.3 million).

Sales highlights in H1 include good progress in our plans to increase our enterprise customer-base, particularly in the US where we have achieved strong pipeline momentum in the period. This was evidenced by two of the larger deals signed in H1; the first with one of the largest clothing retailers in the world; the second with a large US-headquartered energy company. The clothing retailer is now live across more than 2,500 contact centre agents in the US; and the energy company signed at the end of the second quarter is going through deployment across over 1,200 agents in the US and Canada.

Supporting our sustained strong revenue growth is the continued low churn rates of existing customers. Churn in the period was just 5% (2021: 3%). Additionally, NRR was 106% which was ahead of management expectations for the period. The prior year (2021: 120%) benefitted significantly from the large expansion upsells to existing customers, as mentioned above.

PCI Pal's continued progress has always been underpinned by an excellent scale up working culture. Highlighting this in the period we achieved employee retention of 93%. It is our people that support this business to successfully balance the execution of our strategic initiatives; driving further strong revenue growth and near term month to month profitability; and supporting the continued investment to expand our addressable market opportunity.

Further Global Expansion

Having launched our operations in Australia and Canada last year, we can report good progress: providing on-the-ground support to our global partners; as well as enabling regional expertise in those local markets. We have strong teams in place in both regions and we can see early benefits of this coming through in our sales pipelines, as well as positive engagement and feedback from partners' teams locally.

As reported at the last full year, at PCI Pal today we are taking a more holistic view of the global addressable market opportunity available to us, particularly as our products have relevance to any contact centre, anywhere in the world. With the strongholds we have established in the UK and US, and the new presence in Canada and Australia, we have a solid foundation from which to press on cost-efficiently into other corners of the globe leveraging our major partner relationships and current cloud technology stack.

Product

PCI Pal was the first to launch a true cloud solution to the market in early 2017, and as a result has the most mature, and most utilised platform. PCI Pal's patented approach disrupted a market that was previously burdened by hardware-led, on-premise solutions, and as a result we have empowered our customers to secure consumer's data through the use of our highly flexible, light-touch, and easy-to-integrate cloud solutions.

Amazon Web Services is our chosen provider of virtualised cloud services where our platform is hosted today. AWS is also the most commonly used cloud hosting provider across all our partners, making it easier to integrate our solutions with theirs. Furthermore, our platform has been designed to be agnostic to any third party environments it operates with so as to not limit who we can work with. This cloud strategy has been a key factor in our capability to partner with some of the world's leading technology companies in the business communications (CCaaS, UCaaS, CPaaS) and payments markets, including Genesys, 8x8, Vonage, Talkdesk, Worldpay, and Amazon Connect.

Having successfully established this core cloud technology platform, combined with a strong partner eco-system, we are beginning to increase the breadth of our product offering to best capitalise on our investments to date. As a result, PCI Pal's product vision is evolving to incorporate many of the digital payment methods available to merchants across e-commerce environments and bringing those capabilities to the contact centre.

PCI Pal's near term product roadmap includes further features incorporating modern-day digital payment methods, such as Buy Now Pay Later and e-Wallets, as well as enhancements to its user interfaces and data analytics capabilities. The majority of these enhancements and new features, over time, will not only drive further demand and retention in our core licenses today, but also help to drive incremental transactional revenue as PCI Pal benefits from more involvement in the individual payments being processed.

One of the first of the new payment methods was launched in the period. The digitally-native Open Banking product, allows consumers to pay merchants using our services directly from their bank account rather than using a credit or debit card. PCI Pal's offering can facilitate payments from virtually all banks in the UK, where the product has been first launched. This enhancement adds both fraud risk mitigation and transaction processing cost reduction to the existing PCI Pal security value proposition. Open Banking is one of the fastest growing payment methods in the UK and is taking hold across the globe.

Update on the unfounded claims of patent infringement

It is nearly 18 months since the Company became subject to unfounded claims of patent infringement in both the UK and US by one of its competitors, Semafone Ltd (now renamed Sycurio Ltd). The action was brought against PCI Pal shortly after Sycurio was acquired by the investment firm Livingbridge. It is our belief that the claims have been made in an attempt to disrupt our momentum and gain a commercial advantage given PCI Pal is the fastest growing provider in the space, with the most extensive partner eco-system, and the most mature public cloud offering.

The Directors continue to strongly refute the claims being made and as a result we have both defended our position on infringement, as well as made a number of counterclaims against Sycurio whose patents we believe to be invalid. We have worked closely with our legal advisors both in the UK and the US and remain confident in being successful across the breadth of our case. The court hearing in the UK is scheduled for mid-June 2023, with the US court dates yet to be set but expected late 2024.

Our counterclaims of invalidity are independent claims to those made by Sycurio, and therefore fully within our control. It is well known that patents are not properly tested until they are litigated. We have pursued invalidity in considerable depth, and as such intend to see through invalidating Sycurio's patents.

PCI Pal has its own patents for the way in which its Agent Assist services integrate with third party environments in the cloud and how card data is captured. In FY22, we reported that we had been granted a patent for these methods in the US following a 4-year application process. This grant was preceded by a review undertaken by the US Patent Office against a number of competitor patents, including the patents Sycurio has asserted against PCI Pal. Since then, PCI Pal's patent has been granted in the EU, UK, Australia and New Zealand.

For completeness, and in keeping with the prudent and thorough way that we run this business, we have also made plans in the unlikely scenario that all proceedings go against us, with various options for product adjustments and enhancements that should ensure our ability to continue operating in a non-infringing manner. As is normal in patent cases of this nature, we have filed a number of these product variants with the courts already.

Given the confidence levels and proximity to the UK trial in June 2023, the Company is fully prepared for court, both defending its position on infringement as well as being successful in its own suit to invalidate Sycurio's patents.

Outlook

Following the strong financial performance in H1 we are seeing the revenue momentum continue into H2. This revenue momentum is supported by the continued strength of our sales pipeline which combined gives the Board confidence that the Company will meet management expectations for the full year to end June 2023.

Additionally, our positive cash momentum is evidenced by the recent improvement in just the first two months of H2 and now stands at the end of February 2023 at GBP3.4 million (end December 2022: GBP1.9 million).

The new business sales outlook remains strong. This is underpinned by high levels of engagement and activity with our key partners, as well as the enablement of new partners further adding to the strength of our market-leading partner eco-system.

I look forward to updating you with further progress later in the year.

James Barham

Chief Executive Officer

14 March 2023

CFO's Financial Review

The Group's financial performance for the six months to December 2022 has continued to be very good. The Company is delivering strong growth and continues to move towards sustained monthly cash breakeven, expected in H2FY23.

Revenue and gross margin

The Group continues to focus on signing and delivering high-quality recurring revenues from its growing customer base. Group revenue grew by 33% in the period to GBP7.26 million (2021: GBP5.47 million). This high-quality revenue, paired with the operational efficiency of its true cloud platform hosted on AWS, has allowed the Group to continue to improve Gross Margin to 87% in the period (2021: 81%). Of the revenue recorded in the period, 85% (2021: 90%) has come from annually recurring licences or equivalent transactions. The decline in the comparative percentage is due to us taking on a short-term contract, in the last 12 month, with one of our major customers in the UK, the revenue for which we are not treating as recurring.

TACV at the half year has grown to GBP14.74 million (2021: GBP11.34 million), which provides the Group with a high visibility of revenue for the remainder of the financial year, and beyond. Run rate ARR of "live" contracts has increased by 33% at period end to GBP11.92 million (2021: GBP8.96 million).

Currency

Since 31 December 2021 the US dollar exchange rate has changed from $1.32 to $1.24. This 6% exchange rate swing has accounted for approximately GBP0.13 million of the revenue growth or 2.3% of the reported growth. On the converse side, our US dollar expenses which mainly relate to staffing in the US have increased by a similar number and so the net difference to the Group's reported losses is not material.

Churn and Net Retention

In line with its expectations for the year, the Directors are pleased to report that the Group has continued to up-sell more contracts to its existing customer base than it loses, and as a result Net Revenue Retention ("NRR") for its AWS platform, remains positive at 106% (30 June 2022: 120%). The year on year decrease in NRR was expected as H1FY22 included a number of large expansion sales to several enterprise-sized customers.

Contributing to the positive NRR, customer churn rates remain on target at 5% (30 June 2022: 3%). The churn accounts for GBP0.32m of lost ARR, of which the largest single customer churned accounted for GBP0.09m (28%). This customer ceased using services after they were acquired by another company who was using an in-house compliance capability.

Given the growing TACV and low churn levels, revenues are expected to grow in line with management expectations.

Administrative expenses

Total administrative expenses were GBP8.19 million (2021: GBP5.54 million), an increase of 48%.

As planned following the fundraising in April 2021, the Group has continued to hire new headcount to support its international growth and product development plans with the number of employees increasing to 108 (2021: 86) at the period end. Reflecting this growth in head count, personnel costs charged to the Statement of Comprehensive Income (including commission, bonuses and travel and subsistence expenses) grew to GBP5.85 million (2021: GBP4.02 million), of which GBP0.70 million (2021: GBP0.47 million) were capitalised as Software Development costs. Personnel costs make up 79% (2021: 73%) of the adjusted administrative costs (excluding exchange movements, share option charges and exceptional items) of the business.

The expense of running our AWS global platform and associated software was GBP0.46 million in the period (2021: GBP0.45 million).

Included in the administrative expenses is a charge for foreign exchange movements of GBP0.18 million (2021: credit of GBP0.33 million) which has been caused by the strengthening of the US dollar from $1.3215 (31 December 2021) to $1.2309 (30 June 2022) to $1.2406 (31 December 2022).

Depreciation/amortisation of GBP0.57 million (2021: GBP0.45 million) has also been charged as part of the administrative expenses.

Exceptional costs

As explained in the CEO's review, we have been building both a strong defence against the unfounded patent infringement claims made against the Company in the UK and US by Sycurio Ltd, as well as strong counter-claims of invalidity against the patents in question. In H1 FY23, the Group incurred GBP0.43 million of legal fees relating to the patent claim, bringing the total expenditure to GBP1.23 million since the claim was made in September 2021. These expenses have been treated as an exceptional item in the Group's Statement of Comprehensive Income.

Adjusted operating loss

The regional operating results and underlying performance analysis used within the Group are shown in Notes 4 & 5 below. These adjusted figures are the Company's preferred performance measures as it more accurately reflects the underlying performance of the Group's operations.

Adjusted operating losses, excluding the charges resulting from the Group's share option scheme, exceptional costs and any exchange gains and losses charged to the Statement of Comprehensive Income, increased by 10% to a loss of GBP1.14 million (2021: GBP1.04 million). The performance was better than the Board's expectations and reflects the resilience of the business model having taken on 22 additional employees in the last 12 months.

Adjusted EBITDA losses have remained stable at a loss of GBP0.57 million (2021: GBP0.58 million).

Key financial performance indicators

The Directors use several Key Financial Performance Indicators (KPIs) to monitor the progress and performance of the Group, its subsidiaries and targets. All the core KPIs continue to show performance better than expectations.

The principal financial KPIs are as follows:

 
                             Six months   Change    Six month   Change   six months 
                              to 31 Dec        %    to 30 Jun        %        to 31 
                                   2022                  2022              Dec 2021 
 
 Revenue in the six 
  month period                 GBP7.26m     +12%     GBP6.47m     +18%     GBP5.47m 
                            -----------  -------  -----------  -------  ----------- 
 Gross Margin in the 
  six month period                86.9%                 86.1%                 81.2% 
                            -----------  -------  -----------  -------  ----------- 
 Recurring Revenue(1) 
  in the six month period      GBP6.17m     +10%     GBP5.62m     +14%     GBP4.95m 
                            -----------  -------  -----------  -------  ----------- 
 Recurring Revenue as 
  % of Revenue in six 
  month period                      85%                   87%                   90% 
                            -----------  -------  -----------  -------  ----------- 
 
 Adjusted EBITDA(2) 
  in six month period        (GBP0.57m)     +56%   (GBP1.30m)    -124%   (GBP0.58m) 
                            -----------  -------  -----------  -------  ----------- 
 
 Cash                          GBP1.88m              GBP4.89m              GBP5.53m 
                            -----------  -------  -----------  -------  ----------- 
 
 Deferred Income              GBP11.53m             GBP10.62m              GBP8.75m 
                            -----------  -------  -----------  -------  ----------- 
 

(1) Recurring Revenue is the revenue generated from the recurring elements of the contracts held by the Group and recognised in the Statement of Comprehensive Income

(2) Adjusted EBITDA is the loss on Operating Activities before depreciation and amortisation, exchange movements charged to the profit and loss, exceptional items and expenses relating to share option charges

The principal operational KPIs are as follows:

 
                                      As at 31   Change    As at 30   Change    As at 31 
                                      Dec 2022        %    Jun 2022        %    Dec 2021 
 Contracted TACV(1) 
  deployed and live                  GBP11.92m      +8%   GBP11.05m     +23%    GBP8.96m 
                                    ----------  -------  ----------  -------  ---------- 
 Contracted TACV in 
  deployment                          GBP1.94m     +73%    GBP1.12m     -41%    GBP1.89m 
                                    ----------  -------  ----------  -------  ---------- 
 Contracted TACV - projects 
  on hold                             GBP0.88m     -26%    GBP1.19m    +143%    GBP0.49m 
                                    ----------  -------  ----------  -------  ---------- 
 Total Contracted TACV               GBP14.74m     +10%   GBP13.36m     +18%   GBP11.34m 
                                    ----------  -------  ----------  -------  ---------- 
 
 % of TACV derived from 
  variable transactions 
  deemed recurring                         18%                  22%                  23% 
                                    ----------  -------  ----------  -------  ---------- 
 
 ARR(2)                              GBP11.92m      +8%   GBP11.05m     +23%    GBP8.96m 
                                    ----------  -------  ----------  -------  ---------- 
 
 Signed ACV in six month 
  period                              GBP1.47m     -14%    GBP1.70m      -4%    GBP1.76m 
                                    ----------  -------  ----------  -------  ---------- 
 
 Rolling value of ACV                 GBP0.11m             GBP0.18m             GBP0.12m 
  of contracts cancelled 
  before deployment in 
  last 12 months 
                                    ----------  -------  ----------  -------  ---------- 
 
 AWS Platform Churn(3)                    5.1%                 3.1%                 3.4% 
                                    ----------  -------  ----------  -------  ---------- 
 AWS Platform Net Retention 
  Rate(4)                               106.3%               117.7%               120.4% 
                                    ----------  -------  ----------  -------  ---------- 
 
 Headcount at end of 
  period (excluding non-executive 
  directors)                               108                  103                   86 
                                    ----------  -------  ----------  -------  ---------- 
 Ratio Personnel cost 
  to normalised administrative 
  expenses                                 79%                  74%                  73% 
                                    ----------  -------  ----------  -------  ---------- 
 

(1) TACV is the total annual recurring revenue of all signed contracts, whether invoiced and included in deferred revenue or still to be deployed and/or not yet invoiced

(2) ARR is the Annual Recurring Revenue of all the deployed contracts including an assessment of variable transactions deemed recurring

(3) AWS platform churn is calculated using the ACV of lost deployed contracts in the last twelve months divided by the opening total value of deployed contracts at the start of the twelve month period

(4) AWS platform net retention rate is calculated using the opening total value of deployed contracts at the start of the period less the ACV of lost deployed contracts in the period plus the ACV of upsold contracts signed in the period all divided by the opening total value of deployed contracts at the start of the period

Cashflow and liquidity

Cash as at the period end was GBP1.88 million (30 June 2022: GBP4.89 million).

The Directors, on a monthly basis, receive standard reports relating to cash forecasts and future cash burn to ensure that the Group's expansion plans can continue to be financed comfortably. The Group is on track to hit monthly cashflow breakeven in this financial year.

Since the period end, the cash balances have grown following the payment of two large licence renewals (one of which was a multi-year advance payment). As at the 28(th) February 2023 the cash balances of the Group stood at GBP3.41 million.

Capital expenditure

As required by IAS 38, we have capitalised a further GBP0.70 million (2021: GBP0.47 million) in software development expenditure as we continue to invest in our cloud platform and introduce new features and products.

The Group acquired GBP0.01 million of other intangible assets (2021: GBP0.09 million) and bought a negligible amount of new computer equipment in the period, mainly equipment for new starters. Being a cloud-based business, the Group has little demand for hardware.

Professional Services Fees

During the period the Group generated GBP0.73 million (2021: GBP0.50 million) of set-up and professional services sales value, in conjunction with the new ACV contracts reported above. Nearly all of these contracts are invoiced on signature and form part of the Group's cash generation. The contract amounts will be deferred and released as recognised revenue to the Income Statement over the length of the related contract, in accordance with IFRS 15.

Trade receivables

Trade receivables grew to GBP4.65 million (30 June 2022: GBP2.96 million) reflecting the increased scale of the growing business and the timing of annual renewals.

Financial Outlook

The Board continues to balance its continued short-term revenue growth and profitability plans against its long-term investment in the business. The Group remains firmly on track to hit monthly cashflow breakeven in this financial year and is continuing its strategic objective of delivering continued international growth and launching new complimentary products to our partners and customers. The Directors are pleased with the progress being made against this objective.

William Good

Chief Financial Officer

14 March 2023

Consolidated statement of comprehensive income

for the six months ended 31 December 2022

 
                                                  Six months        Six months  Twelve months 
                                                       ended             ended       ended 30 
                                                 31 December       31 December           June 
                                                        2022              2021           2022 
------------------------------------------ 
                                                     GBP'000           GBP'000        GBP'000 
------------------------------------------ 
                                                 (unaudited)       (unaudited)      (audited) 
------------------------------------------  ----------------  ----------------  ------------- 
 Revenue                                               7,259             5,472         11,937 
 Cost of sales                                         (950)           (1,029)        (1,924) 
------------------------------------------  ----------------  ----------------  ------------- 
 Gross profit                                          6,309             4,443         10,013 
 Administrative expenses                             (8,194)           (5,543)       (13,077) 
------------------------------------------  ----------------  ----------------  ------------- 
 Loss from operating activities                      (1,885)           (1,100)        (3,064) 
 
 Adjusted operating loss                             (1,324)             (707)        (2,021) 
 Expenses relating to share options                    (128)             (108)          (246) 
 Exceptional Items                                     (433)             (285)          (797) 
------------------------------------------  ----------------  ----------------  ------------- 
 Loss from operating activities                      (1,885)           (1,100)        (3,064) 
------------------------------------------  ----------------  ----------------  ------------- 
 
 Finance income                                            2                 -              1 
 Finance expenditure                                    (20)              (22)           (44) 
 Loss before taxation                                (1,903)           (1,122)        (3,107) 
 Taxation                                                  -                 -            164 
------------------------------------------  ----------------  ----------------  ------------- 
 Total comprehensive loss for the period             (1,903)           (1,122)        (2,943) 
------------------------------------------  ----------------  ----------------  ------------- 
 
 Other comprehensive expense: items 
  that will be classified subsequently 
  to profit and loss 
------------------------------------------  ----------------  ----------------  ------------- 
 Foreign exchange translation differences                113             (422)        (1,086) 
------------------------------------------  ----------------  ----------------  ------------- 
 Total comprehensive loss for the period             (1,790)           (1,544)        (4,029) 
==========================================  ================  ================  ============= 
 
 
 
   Loss per share expressed in pence 
------------------------------------------  ----------------  ----------------  ------------- 
 Basic and diluted                                    (2.91)            (1.72)         (4.50) 
------------------------------------------  ----------------  ----------------  ------------- 
 

Consolidated statement of financial position

as at 31 December 2022

 
                                                31 December        31 December         30 June 
                                                       2022               2021            2022 
                                                    GBP'000            GBP'000         GBP'000 
                                                (unaudited)        (unaudited)       (audited) 
---------------------------------------------  ------------  -----------------  -------------- 
 Assets 
 Non-current assets 
 Plant and equipment                                    213                 87             238 
 Intangible assets                                    2,847              2,516           2,661 
 Trade & other receivables                              999                822             964 
---------------------------------------------  ------------  -----------------  -------------- 
 Non-current assets                                   4,059              3,425           3,863 
---------------------------------------------  ------------  -----------------  -------------- 
 
   Current assets 
 Trade and other receivables                          6,023              3,945           4,203 
 Cash and cash equivalents                            1,876              5,528           4,888 
---------------------------------------------  ------------  -----------------  -------------- 
 Current assets                                       7,899              9,473           9,091 
---------------------------------------------  ------------  -----------------  -------------- 
 
   Total assets                                      11,958             12,898          12,954 
 Liabilities 
 Current liabilities 
 Trade and other payables                           (1,862)            (1,625)         (2,086) 
 Deferred Income                                    (9,249)            (7,165)         (9,286) 
 Other interest-bearing loans and borrowings              -                  -               - 
---------------------------------------------  ------------  -----------------  -------------- 
 Current liabilities                               (11,111)            (8,790)        (11,372) 
---------------------------------------------  ------------  -----------------  -------------- 
 
   Non-current liabilities 
 Other payables                                        (46)                  -            (67) 
 Deferred Income                                    (2,278)            (1,587)         (1,330) 
 Long term borrowings                                     -                  -               - 
   Non-current liabilities                          (2,324)            (1,587)         (1,397) 
---------------------------------------------  ------------  -----------------  -------------- 
 Total liabilities                                 (13,435)           (10,377)        (12,769) 
---------------------------------------------  ------------  -----------------  -------------- 
 Net assets/(liabilities)                           (1,477)              2,521             185 
---------------------------------------------  ------------  -----------------  -------------- 
 
   Shareholders' equity 
 Share capital                                          656                656             656 
 Share premium                                       14,281             14,270          14,281 
 Other reserve                                          778                512             650 
 Currency reserve                                     (507)                 44           (620) 
 Profit and loss account                           (16,685)           (12,961)        (14,782) 
 Total shareholders' equity                         (1,477)              2,521             185 
---------------------------------------------  ------------  -----------------  -------------- 
 

Deferred income has been disclosed separately in these interim unaudited statements. This disclosure treatment differs from that in the audited accounts for the year ending 30 June 2022.

Consolidated interim statement of changes in equity

as at 31 December 2022 (unaudited)

 
                                                                                                   Total shareholders' 
                                    Share         Share        Other        Profit     Currency                 equity 
                                  capital       premium      reserve      and loss      reserve 
                                                                           account 
                                  GBP'000       GBP'000      GBP'000       GBP'000      GBP'000                GBP'000 
 Balance at 1 July 2021               655        14,243          404      (11,839)          466                  3,929 
-----------------------------  ----------  ------------  -----------  ------------  -----------  --------------------- 
 Share based payment charge             -             -          108             -            -                    108 
 New shares issued net 
  of costs                              1            27            -             -            -                     28 
 Dividend paid                          -             -            -             -            -                      - 
-----------------------------  ----------  ------------  -----------  ------------  -----------  --------------------- 
 Transactions with owners               1            27          108             -            -                    136 
 
 Foreign exchange translation 
  differences                           -             -            -             -        (422)                  (422) 
 Loss for the period                    -             -            -       (1,122)            -                (1,122) 
-----------------------------  ----------  ------------  -----------  ------------  -----------  --------------------- 
 Total comprehensive loss               -             -            -       (1,122)        (422)                (1,544) 
 
 Balance at 31 December 
  2021                                656        14,270          512      (12,961)           44                  2,521 
-----------------------------  ----------  ------------  -----------  ------------  -----------  --------------------- 
 
 Balance as at 1 January 
  2022                                656        14,270          512      (12,961)           44                  2,521 
-----------------------------  ----------  ------------  -----------  ------------  -----------  --------------------- 
 Share based payment charge             -             -          138             -            -                    138 
 New shares issued net 
  of costs                              -            11            -             -            -                     11 
 Dividend paid                          -             -            -             -            -                      - 
-----------------------------  ----------  ------------  -----------  ------------  -----------  --------------------- 
 Transactions with owners               -            11          138             -            -                    149 
 
 Foreign exchange translation 
  differences                           -             -            -             -        (664)                  (664) 
 Loss for the period                    -             -            -       (1,821)            -                (1,821) 
-----------------------------  ----------  ------------  -----------  ------------  -----------  --------------------- 
 Total comprehensive loss               -             -            -       (1,821)        (664)                (2,485) 
 
 Balance at 30 June 2022              656        14,281          650      (14,782)        (620)                    185 
-----------------------------  ----------  ------------  -----------  ------------  -----------  --------------------- 
 
 Balance at 1 July 2022               656        14,281          650      (14,782)        (620)                    185 
-----------------------------  ----------  ------------  -----------  ------------  -----------  --------------------- 
 Share based payment charge             -             -          128             -            -                    128 
 New shares issued net                  -             -            -             -            -                      - 
  of costs 
 Dividend paid                          -             -            -             -            -                      - 
-----------------------------  ----------  ------------  -----------  ------------  -----------  --------------------- 
 Transactions with owners               -             -          128             -            -                    128 
 
 Foreign exchange translation 
  differences                           -             -            -             -          113                    113 
 Loss for the period                    -             -            -       (1,903)            -                (1,903) 
-----------------------------  ----------  ------------  -----------  ------------  -----------  --------------------- 
 Total comprehensive loss               -             -            -       (1,903)          113                (1,790) 
 
 Balance at 31 December 
  2022                                656        14,281          778      (16,685)        (507)                (1,477) 
-----------------------------  ----------  ------------  -----------  ------------  -----------  --------------------- 
 

Consolidated statement of cash flows

for the six months ended 31 December 2022

 
                                                          Six months     Six months  Twelve months 
                                                   ended 31 December       ended 31       ended 30 
                                                                2022       December           June 
                                                                               2021           2022 
                                                             GBP'000        GBP'000        GBP'000 
                                                         (unaudited)    (unaudited)      (audited) 
--------------------------------------------  ----------------------  -------------  ------------- 
 Cash flows from operating activities 
 Loss after taxation                                         (1,903)        (1,122)        (2,943) 
 Adjustments for: 
 Depreciation of equipment and fixtures                           53             36             85 
 Amortisation of intangible assets                                43             42             85 
 Amortisation of capitalised development                         473            374            803 
 Loss on disposal of equipment and fixtures                        -              -              3 
 Interest income                                                 (2)              -            (1) 
 Interest expense                                                  3              6             11 
 Exchange differences                                            148          (436)        (1,124) 
 Income taxes                                                      -              -          (164) 
 Share based payments                                            128            109            246 
 Increase in trade & other receivables                       (1,855)        (1,038)        (1,438) 
 Increase in trade &other payables                               687            633          2,918 
--------------------------------------------  ----------------------  -------------  ------------- 
 Cash used in operating activities                           (2,225)        (1,396)        (1,519) 
 Dividend paid                                                     -              -              - 
 Income taxes received                                             -              -            164 
 Interest paid                                                   (3)            (6)           (11) 
 Net cash used in operating activities                       (2,228)        (1,402)        (1,366) 
                                                                      -------------  ------------- 
 
 Cash flows from investing activities 
 Purchase of property, plant and equipment                      (29)           (47)          (124) 
 Purchase of intangible assets                                   (5)           (87)           (48) 
 Development expenditure capitalised                           (732)          (467)        (1,098) 
 Interest received                                                 2              -              1 
 Net cash used in investing activities                         (764)          (601)        (1,269) 
--------------------------------------------  ----------------------  -------------  ------------- 
 
   Cash flows from financing activities 
 Principal element of lease payments                            (20)           (15)           (34) 
 Issue of shares                                                   -             28             39 
 Net cash generated in financing activities                     (20)             13              5 
--------------------------------------------  ----------------------  -------------  ------------- 
 Net (decrease)/increase in cash                             (3,012)        (1,990)        (2,630) 
 Cash and cash equivalents at the start 
  of the period                                                4,888          7,518          7,518 
--------------------------------------------  ----------------------  -------------  ------------- 
 Net (decrease)/increase in cash                             (3,012)        (1,990)        (2,630) 
--------------------------------------------  ----------------------  -------------  ------------- 
 Cash and cash equivalents at the end 
  of the period                                                1,876          5,528          4,888 
--------------------------------------------  ----------------------  -------------  ------------- 
 

Notes to the interim financial statements for the six months ended 31 December 2022

   1.    Nature of activities and general information 

PCI-PAL PLC is the Group's ultimate parent company. It is a public limited company incorporated and domiciled in England and Wales (registration number 3869545). The company's registered office is Unit 7, Gamma Terrace, Ransomes Europark, Ipswich, Suffolk, IP3 9FF. The Company's ordinary shares are quoted and publicly traded on the AIM division of the London Stock Exchange. The Group's consolidated interim financial statements (the "interim financial statements") for the period ended 31 December 2022 comprise the Company and its subsidiaries (the "Group").

The Company operates principally as a holding company. The main subsidiaries provide organisations globally with secure cloud payment and data protection solutions for any business communications environment.

The interim financial statements are presented in pounds sterling (GBP000), which is also the functional currency of the parent company.

   2.    Basis of preparation 

These consolidated interim financial statements have been prepared in accordance with the UK adopted international accounting standards and the requirements of the Companies Act 2006, using the accounting policies which are consistent with those set out in the Group's annual report and accounts for the year ended 30 June 2022.

The unaudited interim financial information for the period ended 31 December 2022 does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. The comparative figures for the year ended 30 June 2022 are extracted from the statutory financial statements which have been filed with the Registrar of Companies and contain an unqualified audit report and did not contain statements under Section 498 to 502 of the Companies Act 2006.

   3.          Dividends 

Given the strategic growth plans of the Group it is not proposed to declare a dividend for the period.

   4.          Analysis of results 

The first half performance of the Group can be further analysed as follows:

 
                            Six months      Six months   Six months   Six months   Six months 
                                    to              to           to           to           to 
                                Dec 22          Dec 22       Dec 22       Dec 22       Dec 22 
                                  EMEA   North America          ANZ      Central        Total 
                                                                           costs 
                               GBP000s         GBP000s      GBP000s      GBP000s      GBP000s 
 Revenue 
 Revenue from 
  recurring contract 
  Fees                           4,115           1,970           87            -        6,172 
 Non recurring 
  transaction 
  fees                             355               -            -            -          355 
 Set up and Professional 
  Services Fees 
  (1)                              433             281           14            -          728 
 Other Sales                         4               -            -            -            4 
 Total                           4,907           2,251          101            -        7,259 
 
 Gross Profit                    4,007           2,202          100            -        6,309 
 Margin %                        81.7%           97.8%        99.2%            -        86.9% 
 
 Administrative 
  Expenses                     (3,710)         (3,369)        (246)        (869)      (8,194) 
 
 Profit/(Loss) 
  from Operating 
  Activities                       297         (1,167)        (146)        (869)      (1,885) 
 
 Bank charges 
  and Interest 
  payable                         (14)             (6)            -            -         (20) 
 Finance Income                      -               -            -            2            2 
 
 Profit/ (Loss) 
  before Taxation                  283         (1,173)        (146)        (867)      (1,903) 
 

(1) Set up and Professional Services Fees represents the amortisation of set up fees and other professional services income deferred under IFRS 15

 
                            Six months      Six months   Six months   Six months   Six months 
                                    to              to           to           to           to 
                                Dec 21          Dec 21       Dec 21       Dec 21       Dec 21 
                                  EMEA   North America          ANZ      Central        Total 
                                                                           costs 
                               GBP000s         GBP000s      GBP000s      GBP000s      GBP000s 
 Revenue 
 Revenue from 
  recurring contract 
  Fees                           3,564           1,350           38            -        4,952 
 Non recurring                       -               -            -            -            - 
  transaction fees 
 Set up and Professional 
  Services Fees 
  (1)                              310             178           15            -          503 
 Other Sales                        17               -            -            -           17 
 Total                           3,891           1,528           53            -        5,472 
 
 Gross Profit                    2.950           1,441           52            -        4,443 
 Margin %                        75.8%           94.3%        98.7%                     81.2% 
 
 Administrative 
  Expenses                     (2,757)         (1,913)        (104)        (769)      (5,543) 
 
 Profit/(Loss) 
  from Operating 
  Activities                       193           (472)         (52)        (769)      (1,100) 
 
 Bank charges 
  and Interest 
  payable                         (18)             (4)            -            -         (22) 
 Finance Income                      -               -            -            -            - 
 
 Profit/ (Loss) 
  before Taxation                  175           (476)         (52)        (769)      (1,122) 
 

(1) Set up and Professional Services Fees represents the amortisation of set up fees and other professional services income deferred under IFRS 15

   5.          Underlying financial performance analysis 

The Group uses the following internal metric to calculate Adjusted EBITDA:

 
                           Six months      Six months   Six months   Six months   Six months 
                                   to              to           to           to           to 
                               Dec 22          Dec 22       Dec 22       Dec 22       Dec 22 
                                 EMEA   North America          ANZ      Central        Total 
                              GBP000s         GBP000s      GBP000s      GBP000s      GBP000s 
 
 Profit/(Loss) 
  before Taxation                 283         (1,173)        (146)        (867)      (1,903) 
 
 Adjust for: 
 
 Expenses relating 
  to share options                  -               -            -          128          128 
 Exceptional Items                  -             187            -          246          433 
 Exchange Loss/(Gain)              48             120            8            6          182 
 Bank charges 
  and Interest 
  Payable                          14               6            -            -           20 
 Finance Income                     -               -            -          (2)          (2) 
 
 Adjusted Profit/(Loss) 
  from Operating 
  Activities                      345           (860)        (138)        (489)      (1,142) 
 
 Depreciation 
  & Amortisation                  567               -            1            -          568 
 
 Adjusted EBITDA                  912           (860)        (137)        (489)        (574) 
 
 
                           Six months      Six months   Six months   Six months   Six months 
                                   to              to           to           to           to 
                               Dec 21          Dec 21       Dec 21       Dec 21       Dec 21 
                                 EMEA   North America          ANZ      Central        Total 
                              GBP000s         GBP000s      GBP000s      GBP000s      GBP000s 
 
 Profit/(Loss) 
  before Taxation                 175           (476)         (52)        (769)      (1,122) 
 
 Adjust for: 
 
 Expenses relating 
  to share options                  -               -            -          108          108 
 Exceptional Items                 34              46            -          205          285 
 Exchange Loss/(Gain)              45           (378)            3            -        (330) 
 Bank charges 
  and Interest 
  Payable                          18               4            -            -           22 
 Finance Income                     -               -            -            -            - 
 
 Adjusted Profit/(Loss) 
  from Operating 
  Activities                      272           (804)         (49)        (456)      (1,037) 
 
 Depreciation 
  & Amortisation                  417              35            -            -          452 
 
 Adjusted EBITDA                  689           (769)         (49)        (456)        (585) 
 
   6.          Earnings per share 

The basic and diluted earnings per share are calculated on the following profit and number of shares. Earnings for the calculation of earnings per share is the net profit attributable to equity holders of the parent.

 
                                                  Six months                     Six months              Twelve months 
                                           ended 31 December              ended 31 December              ended 30 June 
                                                        2022                           2021                       2022 
                                                      GBP000                         GBP000                     GBP000 
-----------------------------  -----------------------------  -----------------------------  ------------------------- 
    Earnings for the purposes 
    of basic 
    and diluted earnings per 
    share 
    Loss after taxation                              (1,903)                        (1,122)                    (2,943) 
 
    Denominator                                         '000                           '000                       '000 
-----------------------------  -----------------------------  -----------------------------  ------------------------- 
    Weighted average number 
     of shares 
     in issue in the period                           65,453                         65,328                     65,369 
 
    Dilutive effect of 
     potential shares 
     and share options                                 8,143                          6,150                      6,879 
-----------------------------  -----------------------------  -----------------------------  ------------------------- 
    Number of shares used in 
     calculating 
     diluted earnings per 
     share                                            73,596                         71,478                     72,248 
-----------------------------  -----------------------------  -----------------------------  ------------------------- 
 
    Basic and diluted 
     earnings per share 
     expressed in pence                               (2.91)                         (1.72)                     (4.50) 
 
 

There are no separate diluted earnings per share calculations shown as it is considered to be anti-dilutive.

   7.          Subsequent events to 31 December 2022 

There are no subsequent events to report.

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