TIDMIMO
RNS Number : 2142D
IMImobile PLC
05 July 2016
IMIMOBILE PLC
("IMI" or "the Company" or "the Group")
Audited Preliminary Results for the year ended 31 March 2016
IMImobile PLC, a London based global provider of cloud software
and solutions that help companies use mobile technologies to
communicate and engage with customers today announces its Audited
Preliminary Results for the year ended 31 March 2016.
Key financial highlights of the Group
-- Revenue up 26% to GBP61.6m (2015: GBP48.9m) of which 11% is organic(1) growth.
-- Gross profit up 22% to GBP36.5m (2015: GBP30.0m) of which 10% is organic(1) growth.
-- EBITDA(2) up 17% to GBP10.7m (2015: GBP9.2m)
-- Adjusted profit after tax(3) up 21% to GBP6.8m (2015: GBP5.6m)
-- Profit after tax on a statutory basis of GBP2.2m (2015:
GBP3.4m loss) reflecting share-based payments, impairment charges
and costs in relation to acquisition activities
-- Good contribution from Europe and Americas with gross profit growth of 21%
-- Organic(4) recurring revenue growth in MEA of 58%
-- Diluted adjusted EPS growth of 13% to 10.4p (2015: 9.2p(5) )
-- Cash generated from operations of GBP10.6m (2015: GBP8.8m)
with strong cash conversion of 99% (2015: 96%)
-- Cash and cash equivalents at 31 March 2016 of GBP15.0m (2015: GBP14.6m)
Operational highlights of the Group
-- Organic growth from all regions and business units
-- New major client wins in all regions
-- Renewal of all major contracts falling due in the period
-- Textlocal launched in India with over 1,500 paying customers within the first 6 months
-- Rebranding and simplification of product suite completed with
new version releases of core products
-- Acquisition and successful integration of Archer Digital
("Archer"), trading well since acquisition in September 2015
1 Excluding the impact of the Archer acquisition and adjusting
for the full year impact of Textlocal.
2 EBITDA is defined as operating profit/(loss) before
depreciation, amortisation, fees incurred in relation to IPO and
acquisition activities, impairment charges and share-based
compensation. See note 6 for a reconciliation.
3 Adjusted profit after tax is defined by the Group as
profit/(loss) after tax before fees incurred in relation to IPO and
acquisition activities, impairment charges, share-based
compensation, de-recognition of deferred tax assets and
amortisation of acquired intangibles. See note 6 for a
reconciliation.
4 Excluding the impact of the Archer acquisition.
5 Restated - see note 6
Outlook
The 2017 financial year has started well with many opportunities
for growth across all regions and business units. As a result of
our stable client relationships, pipeline of new deployments and
high mix of recurring, repeating and transactional revenues we have
good visibility of future performance. We will continue to invest
in more sales and marketing activities and product development to
establish a leading position in growth markets, and we are
confident of our prospects for the year ahead.
Jay Patel, Chief Executive Officer of IMImobile PLC,
commented:
"We are pleased to announce that we have had a year of
operational, financial and strategic progress across all business
units of the Group. We have significantly grown our recurring
revenue base and again achieved profitable cash generative growth,
whilst continuing to invest in product development.
We have also executed an acquisition in South Africa and
delivered on our objective to roll out Textlocal, our previous
acquisition, into new geographic markets.
The 2017 financial year has started well with trading in line
with expectations and we will continue to invest in more sales and
marketing activities and product development to establish a leading
position in growth markets and we are confident of our prospects
for the year ahead."
An analyst meeting will be held at 10.30am today at the offices
of Redleaf Communications, 1st Floor, 4 London Wall Buildings,
Blomfield Street, EC2M 5NT. To attend please contact Redleaf
Communications.
Cautionary statement
This announcement contains forward-looking statements that are
based on current expectations or beliefs, as well as assumptions
about future events. These forward-looking statements can be
identified by the fact that they do not relate only to historical
or current facts. Forward-looking statements often use words such
as anticipate, target, expect, estimate, intend, plan, goal,
believe, will, may, should, would, could, is confident, or other
words of similar meaning. Undue reliance should not be placed on
any such statements because they speak only as at the date of this
document and, by their very nature, they are subject to known and
unknown risks and uncertainties and can be affected by other
factors that could cause actual results, and IMImobile's plans and
objectives, to differ materially from those expressed or implied in
the forward-looking statements.
There are a number of factors which could cause actual results
to differ materially from those expressed or implied in
forward-looking statements. Among the factors that could cause
actual results to differ materially from those described in the
forward-looking statements are; increased competition, the loss of
or damage to one or more key customer relationships, the outcome of
business or industry restructuring, changes in economic conditions,
currency fluctuations, changes in laws, regulations or regulatory
policies, developments in legal or public policy doctrines,
technological developments, the failure to retain key management,
or the key timing and success of future acquisition opportunities
or major investment projects.
IMImobile undertakes no obligation to revise or update any
forward-looking statement contained within this announcement,
regardless of whether those statements are affected as a result of
new information, future events or otherwise, save as required by
law and regulations.
For further information please contact:
IMImobile PLC c/o Redleaf Communications
Jay Patel, Chief Executive Officer Tel: +44 (0)20 7382 4769
Michael Jefferies, Group Finance Director
Redleaf Communications - PR adviser Tel: +44 (0)20 7382 4769
Charlie Geller imimobile@redleafpr.com
Susie Hudson
Investec Bank - Nominated Adviser and Broker Tel: +44 (0)207 597 4000
Dominic Emery
Henry Reast
Whitman Howard - Broker Tel: +44 (0) 207 659 1234
Ranald McGregor-Smith
About IMImobile PLC
IMImobile enables organisations to maximise the potential of
mobile technologies to improve customer engagement. We believe that
mobile will sit at the heart of customer engagement strategies for
many years to come.
We help remove the barriers and complexities faced by
organisations by providing a cloud based communications platform
and a suite of software products to help our customers rapidly
create and deploy mobile user journeys that enable them to reduce
service delivery costs, improve marketing and customer service
effectiveness and generate revenues.
Our technologies act as an intelligent software layer between
existing IT systems, complex business processes and customer touch
points across mobile, digital and social media channels.
Organisations that trust us to deliver smarter customer
engagement include Vodafone, O2, Aircel, Airtel, EE, BSNL,
AT&T, MTN, France Telecom, Centrica, Betfair, Universal Music,
Tata, the AA, the BBC and major financial institutions.
IMImobile is headquartered in London with offices in Hyderabad,
Atlanta, Dubai and Johannesburg, with over 780 employees worldwide.
IMImobile is quoted on the London Stock Exchange's AIM market with
the TIDM code IMO.
Chairman's Statement
It is my pleasure to introduce this year's preliminary results,
the first since I took over as Chairman.
It is yet again hugely satisfying for the Board to present a
year of strong, profitable and cash-generative growth for the
Group.
The year has seen further development of our product offering,
investment in sales and marketing and the completion of the
acquisition of Archer Digital which joined the IMI family in
September 2015.
IMImobile helps organisations to address the changing demands of
consumers. Their customers increasingly expect communication via
their preferred mobile channels, and we help companies to manage
the complexity that this creates. We have been through another year
of significant change in all markets and our software and solutions
are vital to organisations looking to undertake any form of digital
transformation. According to Gartner's 2016 CEO survey 50% of CEOs
expect digitalisation to transform their industries by 2020.
In the year to 31 March 2016 revenue grew by 26% to GBP62m and
gross profit grew by 22% to GBP37m. It has been particularly
satisfying to have achieved growth in all regions and business
units of the Group during the year. We have continued to make
controlled investment in product, and sales and marketing
activities, which we expect to deliver further profitable growth in
future years.
The acquisition of Archer Digital consolidates our position in
Africa and provides a platform to develop our Enterprise business
in the region. It offers access to key customer sectors beyond
existing mobile operator clients to our portfolio of software
products and solutions. The acquisition has bedded in well and the
early signs are positive.
The acquisition of Textlocal in October 2014 has also continued
to deliver against expectations with good growth in the core UK
business and international expansion into the Indian market during
the year.
The executive team continue to review potential acquisition
targets and the Board is confident that the executive team have the
requisite track record and experience in executing an acquisition
growth strategy as opportunities arise.
Cash generation has been strong during the year, with cash
generated from operations of more than GBP10m. The Group remains
debt free, having settled the consideration for Archer Digital from
existing resources.
Our balance sheet is strong with net cash of GBP15m, providing
the Board with the flexibility to invest in the business as well as
return capital to shareholders via on market purchases of IMImobile
shares. Over the last six months there has been a lot of M&A
activity in our sector and we believe that the landscape will
continue to evolve in the next 12 months. We have, and will
continue to, review acquisition opportunities to optimise value for
shareholders but only if they deliver superior and sustainable
long-term returns which are in keeping with our acquisition
parameters.
In the absence of significant acquisition opportunities and in
accordance with our own strict return parameters, the Board will
review all the options available to it, including a return of
capital, taking into account the financial resources of the
Company, the Company's share price and future funding requirements
in order to provide the best possible returns for our
shareholders.
Our strategy of creating intellectual property in software and
mobile technologies which can be deployed in global markets is
unchanged, and the executive and management teams continue to
successfully execute against this. Our people are one of our
greatest assets and I would like to thank the entire IMI team for
their continued dedication and hard work, and to congratulate them
on yet another successful year. The strategy relies on keeping and
attracting talented executives and it is incumbent upon me to
ensure we have the appropriate rewards and incentives in place for
executives and employees to share in the success of the Company.
This will be reviewed over the coming months.
In summary, our core product offering and associated services
are better than ever and position the Group well for continued
growth in all of the regions in which we operate.
I also would like to take this opportunity to thank Vish,
founder of the Company, who has stepped aside as Chairman. He
provided a true long-term vision for the management of the Company
and I am grateful that Vish remains very much involved with
IMImobile in the role of Non-Executive Director. As a result, we
will continue to receive the benefit of his strategic and
management guidance as and when necessary.
Chief Executive's Report
We are pleased to report that we have recorded a year of
operational, financial and strategic progress across all business
units of the Group. We have significantly grown our recurring
revenue base and achieved profitable cash generative growth, whilst
continuing to invest in product development. We have also executed
an acquisition in South Africa and delivered on our objective to
roll out Textlocal, our previous acquisition, into new geographic
markets.
Market overview
As I stated last year, we are living in a period of great change
driven by technology, the ubiquity of mobile networks, increasing
processing power of mobile devices and the falling costs of cloud
computing. These themes are disrupting many industries and
providing tremendous opportunities for value creation. This
disruption is continuing and arguably accelerating with the launch
of new technologies and initiatives around artificial intelligence,
voice recognition and interactive messaging channels by the large
global technology businesses such as Facebook and Apple.
These changes are revolutionising consumer behaviour across the
world as the proliferation of connected devices transforms the
relationships between consumers and service providers. There is an
overwhelming need for companies like banks, mobile operators,
retailers, brands and utilities to focus on improving customer
experience, particularly through digital channels. We are focused
on helping clients to fully utilise mobile and digital technologies
to improve customer engagement.
Our strategy has been to ensure that our software products and
solutions are network, channel and device agnostic so that our
clients have a partner that is able to deliver the right experience
for their customers across a customer base that maybe highly
fragmented in its use and adoption of technologies. We also believe
that as consumers adopt the new technologies they won't necessarily
discard old technologies and channels of communication and our
clients will need software and solutions that adapt to this
fragmentation.
Our addressable market is fragmented, highly competitive and
fast changing with IT and Communication vendors of all sizes
looking to offer services for mobile and digital transformation.
According to Forrester's Market estimates, organisations will spend
GBP90 billion on systems and processes for mobile engagement in
2017 and, according to Gartner, global IT spend will reach $3.5
trillion, 42% of this is being spent on communications. Spend on
software is a small fraction of these totals but all reports
suggest that the amounts spent on our specific area of expertise,
cloud software for customer engagement, will increase substantially
over the next few years.
We also expect to benefit from the increasing penetration of
smartphones and data coverage in the emerging markets, particularly
across India and Africa. An additional 1.3 billion smartphones
subscribers are expected in India and the MEA region over the
period from 2015 to 2021 and we believe that as a trusted vendor to
the mobile operators in these regions we will be at the forefront
of their customer engagement and new business activities.
As an organisation we started in the pre-smartphone age of 2G
networks and we have established a strong track record of
delivering innovation to blue-chip enterprises around the world and
we believe that our continued growth is supported by market trends
in all regions.
Software and solutions offering
A key initiative over the last year has been to simplify and
reposition our technology and product offering to enhance the
go-to-market strategy and to make it easier to sell and roll-out
our platform and applications. The product portfolio is delivered
from our global cloud infrastructure and offers a suite of end user
business applications and a core platform-as-a-service
offering.
IMIconnect
IMIconnect is a cloud-based platform that helps time and
resource constrained IT teams to quickly and easily automate
customer interactions across communication channels such as SMS,
Voice, Social Media and Facebook. Using visual drag-and-drop tools
to automate messages and responses, for example, reduces the time
and complexities inherent in a programming-intensive approach.
We have invested considerable resources into this platform over
the year adding additional communication channels and developer
tools and we believe this platform can be a key enabler of future
growth as an increasing number of businesses across all sectors
adopt digital transformation agendas.
Case Study - Helping to digitise key customer journeys to
improve the retail banking experience.
What we do:
IMImobile has been working with a number of retail banks
worldwide. Initially being selected as a global messaging partner,
IMImobile is now helping retail banks with key strategic digital
transformation initiatives using its IMIconnect digital customer
engagement platform including:
-- Embedding digital customer communication to improve existing
business processes (such as automated balance notifications and
application status alerts).
-- Deployment of real-time fraud prevention solutions.
-- Improvement of contact centre efficiency with two-way interactive messaging.
IMIcampaign
IMIcampaign is a cloud campaign management application designed
for multi-channel communication. It allows marketing departments to
create, manage, deploy, monitor and adapt marketing campaigns
targeted at a customer's mobile device. Channels supported include
SMS, MMS, email, social media, mobile internet and USSD. The
product supports different types of campaigns such as promotional,
event-triggered, targeted, interactive, progressive and multi-wave
campaigns.
IMIcampaign is fully integrated within the internal processes
and systems of a client and provides a real-time snapshot of
customer behaviour using the campaign dashboard which allows
businesses to track campaign activity at all times. The product is
used by mobile operators, retailers and gaming companies.
Case study - O2 UK - Helping to deliver personal and contextual
marketing
What we do:
O2 is the commercial brand of Telefónica UK Limited and is a
leading digital communications company with the highest customer
satisfaction of any mobile provider according to Ofcom. IMImobile
delivers more than 600 million customer interactions across 700
multi-channel campaigns a year using IMIcampaign. By creating and
managing the delivery of campaigns across SMS, MMS, and email,
IMImobile enables O2 to deliver personalised communication to their
customers, helping the company provide better services, enhance
customer satisfaction and increase revenue.
Customer Quote:
"O2's goals are to enhance its market position and retain its
reputation for customer satisfaction. IMImobile is an essential
part of the team that makes that happen."
Head of Marketing Operations at Telefónica UK Ltd (O2).
IMIdigital
IMIdigital helps organisations to offer mobile content services
such as video and audio to different devices across multiple
channels. The products reduce the time to market and ensure cross
border consistency through the end-to-end service delivery platform
including content licensing web-portal, as well as app
development.
IMIdigital powers more than 350 international content services
and 14 billion billing transactions across the globe for trusted
and recognised brands such as Universal Music Group, MTN, Aircel,
Airtel and Orange across multiple international territories. We
have continued to develop this set of products and during the last
year we have added and deployed video and audio streaming
capabilities.
Case Study - Warner Music International - Enabling the
end-to-end delivery of digital content services.
What we do:
IMIdigital has been designed to support the management and
delivery of digital content to the complete universe of mobile and
desktop devices. It provides content management, billing solutions
and marketing tools which enable service providers to merchandise
and monetise digital content utilising a single platform. Many
leading content publishers, brands and retailers have chosen
IMIdigital to provide a range of revenue generation and customer
loyalty solutions. For example, IMImobile have worked in
partnership with Warner Music International who utilise IMIdigital
for the distribution and merchandising of Warner's extensive
digital catalogue across international territories.
Customer Quote:
"We value the flexibility, reliability and scalability of the
IMIdigital solution and have partnered to deliver some innovative
projects. The platform allows us to distribute our music in all
digital formats to consumers around the globe and is supported by
reliable reporting and accounting capabilities. "
VP, Artist Services, Warner Music International
IMIchat
IMIchat is a cloud application that enables contact centres to
improve their customer interactions whilst optimising their
operational costs and efficiency. This product allows for real-time
agent interactions for either customer support or sales across
multiple message channels including SMS, Facebook Messenger and
In-app chat channels.
Contact centre specific functionality includes message templates
where contact centre agents can choose pre-configured messages to
improve the speed of interactions and ensure consistency.
Additional capabilities include a queue management system,
management of permitted discourse and the ability to tag
conversations with keywords to enable efficient tracking of
conversations. Over the last year we have added new channel
capabilities, an enhanced user interface and adapters for
integrating into other contact centre applications. The application
is now used by leading retail banks, insurers and utilities.
Case study - Using two-way mobile chat to transform the customer
service experience.
What we do:
IMImobile has been working with one of the UK's leading
providers of breakdown and home insurance services, helping the
business to connect with their growing customer base and manage
their field force employees.
IMImobile provides IMIchat, interactive messaging software, to
enable contact centre agents to have a real-time conversation with
customers using two-way SMS. From the IMIchat dashboard, agents can
manage multiple SMS conversations, send real-time updates and
answer any customer enquiries.
Customer Quote:
"It's not just a faster service for customers and agents; it's a
messaging solution that allows a great deal of
personalisation."
Service Delivery Manager of a leading UK Home Insurance Services
Group
IMIsocial
IMIsocial is a cloud application that centrally collates high
volumes of inbound customer audience messages from multiple social
channels such as Facebook, Twitter, SMS, YouTube and Instagram,
allowing broadcasters to use audience generated content in their
programming. This allows for real-time audience interaction as well
as premium rate services such as competitions and voting, therefore
transforming audience engagement into improved ratings and
revenue.
The product gives editors, producers, and presenters real-time
feedback on audience reactions, comments and sentiment in one
accessible, easy-to use dashboard with an auto filter on content
preferences. Over the last year the latest version of IMIsocial has
been rolled out to leading broadcasters such as the BBC and other
major media houses powering their audience engagement
programmes.
Textlocal
Textlocal is a cloud-based, self-serve platform that allows SMEs
to gain instant, affordable access to SMS messaging capabilities.
The platform simplifies the creation, deployment and management of
mobile messaging campaigns and services.
Textlocal is a Software-as-a-Service business messaging tool
that enables businesses of any size to harness SMS messaging
capabilities to increase customer engagement and marketing ROI. The
product was acquired in October 2014 and since then we have
invested in adding sophisticated data import capabilities, target
group definition, audit logs and role-based access control which
make the product ideally suited for enterprise usage whilst also
providing an extremely intuitive yet simple to operate interface.
The Textlocal product is being used across a range of industries by
companies like Makro, Pizza Hut, Costcutter, Tastecard and
Lottoland.
All the key products support multi-tenancy and are hosted and
managed within the IMIcloud which provides highly available and
scalable data centre and network infrastructure including industry
leading levels of availability and disaster recovery. The IMIcloud
supports our integrations and connectivity with mobile network
operators, device environments (such as Apple and Google), payment
gateways and other third party service providers.
We operate a private cloud co-located in five data centres
across the UK, US and India and our platform modules have been
deployed with geo-redundancy to offer 99.99% service availability.
We have also supported certain clients and applications on a public
cloud infrastructure.
The infrastructure, platform and software applications are all
supported by our Virtual Network Operations Centre ("VNOC")
operating 24/7 across support centres in the UK and India. The VNOC
teams in India are ITIL certified and aligned to ITIL best practice
guidelines. We are ISO 9000 and 27001 accredited and operate
several services within a PCI DSS compliant environment.
Our cloud infrastructure and applications today process over 13
billion SMS messages per year, 15 billion voice flows, and 14
billion commerce transactions.
Regional performance
The Group is managed commercially and strategically on a
regional basis with centralised resources for software development,
finance and general management. A key operating metric for each
region is gross profit as there are considerable differences in
gross margins across regions, product lines and revenue models.
Gross profit additionally measures most directly the value of the
software and associated services delivered by the Group which
excludes the impact of network infrastructure, third party hardware
and content costs.
Europe and Americas
Gross profit GBP19.9m (2015: GBP16.4m)
Gross profits in this region have risen strongly by 21% year on
year. Organic growth accounted for 9% of this. Like for like(1)
gross profit growth from Textlocal was above 10%.
Growth in the region came from a number of new significant
contract wins with a mobile operator, an electronics retailer and a
gaming business as well as additional business from existing
financial services clients. We also renewed all significant
contracts falling due in the year including a two year extension
with the region's largest customer, a tier-one high street bank,
and a three year renewal with a leading utility provider.
Mobile operators remain our largest customer sector, and we are
currently positioned as a trusted, integrated and reliable partner
to all the major UK operators. We have also retained our position
as one of the leading providers of carrier billing products in the
UK market. Furthermore, we have made progress in the financial
services sector, which is undergoing rapid change due to mobile and
digital technologies.
There are live deployments of all of our products and platforms
in the Europe and Americas region with new versions of IMIcampaign,
IMIconnect, IMIchat, IMIsocial and Textlocal launched and deployed
in the year. We have successfully upsold new deployments of our
products to existing clients, and on the back of these successes we
have also started to invest in a reseller and partnership strategy
through which we hope to build greater distribution.
A number of our deployments have also been recognised by
industry during the year; including the 'Best Use of Social Media
in Telecom Industry' at the Youth Marketing Awards 2016 as well as
being shortlisted as a finalist for the 'Best Loyalty Programme
within the Telecoms sector' category, along with O2, for the
Priority GBP1 lunch campaign.
We continue to invest in establishing our operations in the
Americas and have significantly grown gross profit in the region.
We now have contracts with Cricket and GoPhone as well as early
pilots with other major operator groups. We will continue to invest
in the region, as it is the largest single addressable market for
our product set.
(1) Defined as the full year to 31 March 2016 compared with the
full year to 31 March 2015.
Middle East and Africa
Gross profit GBP11.4m (2015: GBP8.6m)
Our business performed well this year driven by an increase of
58% in our recurring revenue from our existing and new contracts
with mobile operators in the region. Overall organic(1) year on
year gross profit growth was 15% and this lower figure reflects the
expected fall in license revenues from the exceptionally high level
of non-repeating license revenues recognised in the previous year.
The acquisition of Archer Digital in September 2015 contributed to
32% gross profit growth in the Middle East and Africa.
IMImobile has long-term contracts with the leading mobile
operator groups for deployments of IMIdigital and IMIcampaign in
multiple countries. We work with mobile operators that serve nearly
500 million customers representing 40% of all mobile subscribers in
the region.
Our clients' significant investment in increasing mobile
coverage across Africa is providing opportunities for people to
consume more content and we work closely with our clients to
create, deliver and operate these content services across different
mobile channels. We believe there are strong foundations for
growth. The number of smartphone connections is expected to
increase from 245 million today to over 585 million by 2020. There
is also a strong pipeline of operator contracts in deployment which
will contribute to profit in the coming years in the region.
The acquisition of Archer Digital ("Archer") for a cash
consideration of $5.6m was a major highlight during the year.
Archer was founded in 2005 and provides a feature-rich suite of
mobile engagement products to clients across banking, satellite
television services, mobile operators, retailers and municipalities
in South Africa. The company has experienced year on year growth
since its inception in 2005, has 50 employees and is based in
Johannesburg. This acquisition supports the Group's international
growth plans, as well as providing access to customers in key
target sectors.
The Group continues to see numerous opportunities in Africa for
enterprises to use mobile as an engagement channel driven by the
explosion of mobile devices and better networks as well as the
limitations of physical infrastructure. We intend to utilise
Archer's existing infrastructure and market presence to cross-sell
IMI's product suite and to offer Archer's technology and products
to new international markets outside of South Africa. Trading since
September has been in line with our expectations.
Currency volatility in South Africa and Nigeria, as well
political and regulatory uncertainty, could create short term
obstacles. However we remain very positive about opportunities in
the region and our proven ability to deliver solutions for the
leading blue chip companies operating in this region.
1Excluding the impact of the Archer Digital acquisition
India and SE Asia
Gross profit GBP5.3m (2015: GBP5.0m)
We are pleased to report that after a strong second half we have
returned to growth in India with an overall gross profit increase
of 4%.
This growth reflects a significant increase in new sales with a
new voice services contract signed with a major operator in Myanmar
and a major deployment of IMIcampaign in a license deal in Nepal as
well as various smaller wins with leading ecommerce businesses,
FMCG brands and financial services clients. There continued to be a
decline in the monthly recurring revenue from certain operator
customers. However we now believe this has stabilised.
During the year, we have also successfully renewed a number of
multi-year contracts with four of the major operators in India that
serve over 350 million customers. We also won a three year contract
to provide services on a pan-India basis, previously having only
provided coverage in part of the country.
We have also successfully launched the Textlocal platform in
India with over 1,500 paying customers in the first six months and
we believe that the market for cloud communications software will
grow rapidly in the region. We are well placed to leverage this
trend with our suite of cloud applications.
IMImobile is proud to have been selected as a partner of BBC
Media Action and The Gates Foundation to provide free mobile health
education services to nearly 10 million families and one million
community health workers across India, facilitated through the
Government of India's Ministry of Health and Family Welfare
Department. This programme was developed by BBC Action Media and
powered by our IMIconnect platform nationwide, ensuring that
pre-recorded audio health messages became available to millions of
women and expectant mothers throughout India.
Growth strategy and outlook
Our growth strategy has remained consistent over a number of
years.
There are structural growth trends from which we benefit,
particularly the movement towards the use of cloud software and
infrastructure for enhancing customer experience. We also operate
in highly competitive markets with technology vendors of all sizes
competing for the attention of enterprises as they pursue the
benefits of digital and mobile transformation.
We are confident that we can grow organically in these markets
on the basis of strong existing customer relationships and an
innovative culture that will help us to secure new relationships.
We currently have over 70 clients with revenues over GBP0.1m p.a.
of which 20 have revenues over GBP0.5m p.a. and 11 clients with
over GBP1m p.a. We believe that we can steadily grow the number of
clients and the average size of the contracts as mobile and digital
engagement strategies become a business imperative.
In order to develop our relationships we need to continually
innovate and we believe that our track record of delivering
innovation over the last fifteen years has underpinned our growth
to date. We have committed technical resources in India and the UK
and believe that we can cost-effectively continue to commit R&D
resources to innovate. We are encouraged by the progress we have
made with the latest versions of our cloud product suite and we
hope to create additional growth opportunities through a
partnership and channel strategy for greater distribution.
We also believe that selective geographic expansion can enhance
organic growth and we have invested in establishing operations in
the USA and Myanmar, in the USA because we see large opportunities
for our core product set and in Myanmar there is substantial
greenfield opportunity for our core products and solutions.
We continue to look for acquisitions that can accelerate growth
and have clear criteria for selection in what is a very fragmented
market. Our primary objective is to look for organisations that
have close, recurring and substantial relationships with large blue
chip corporates delivering mobile and digital strategies or
technologies. We believe that over time we should be able to
increase the scale of the client relationships. We also consider
companies with complementary products that can be delivered to our
major customer groups.
We aim to maintain a strong balance sheet as there are many
acquisition and consolidation opportunities. However we are
confident in our organic growth and strategic position and believe
it is important to wait for the right opportunity, particularly
when valuations look stretched for many small privately owned
companies. We are pleased with all the material acquisitions we
have made in the Group since foundation (WIN plc, Textlocal and
Archer) and will continue to consider selective opportunities.
The 2017 financial year has started well with many opportunities
for growth across all regions and business units. As a result of
our stable client relationships, pipeline of new deployments and
high mix of recurring, repeating and transactional revenues we have
good visibility of future performance. We will continue to invest
in more sales and marketing activities and product development to
establish a leading position in growth markets, and we are
confident of our prospects for the year ahead.
Financial Review
Group performance at a glance
Year ended 31 March 2016 2015 Growth
GBPm GBPm / (decline)
Revenue 61.6 48.9 26%
------------------------------------- ------ -------- -------------
Gross Profit 36.5 30.0 22%
Gross Margin 59.3% 61.4%
------------------------------------- ------ -------- -------------
EBITDA 10.7 9.2 17%
EBITDA Margin 17.3% 18.7%
------------------------------------- ------ -------- -------------
Operating profit before share-based
payments and exceptional items 8.4 6.7 25%
------------------------------------- ------ -------- -------------
Profit / (loss) before tax 4.2 (2.3) (282%)
------------------------------------- ------ -------- -------------
Adjusted profit before tax(1) 8.5 6.7 26%
------------------------------------- ------ -------- -------------
Profit / (loss) after tax 2.2 (3.4) (167%)
------------------------------------- ------ -------- -------------
Adjusted profit after tax(2) 6.8 5.6 21%
------------------------------------- ------ -------- -------------
Diluted EPS 5.2p (13.5p) (139%)
------------------------------------- ------ -------- -------------
Diluted adjusted EPS(3) 10.4p 9.2p 13%
------------------------------------- ------ -------- -------------
Cash at period end 15.0 14.6 3%
------------------------------------- ------ -------- -------------
1 Adjusted profit before tax is defined by the Group as
profit/(loss) before tax before fees incurred in relation to IPO
and acquisition activities, impairment charges, share-based
compensation and amortisation of acquired intangibles. See note 6
for a reconciliation.
2 Adjusted profit after tax is defined by the Group as
profit/(loss) after tax before fees incurred in relation to IPO and
acquisition activities, impairment charges, share-based
compensation and amortisation of acquired intangibles. See note 6
for a reconciliation.
3 Adjusted EPS uses adjusted profit after tax as defined
above.
Key performance indicators (KPIs)
This section sets out the KPIs for the Group during the year
ended 31 March 2016.
Group revenue and gross profit
For the year to 31 March 2016 total revenue increased by 26% to
GBP61.6m (2015: GBP48.9m) and gross profit increased by 22% to
GBP36.5m (2015: GBP30.0m). The Board considers that gross profit is
the key operational measure of performance in the business.
Group geographical split of revenues and gross profit is as
follows:
Revenue
Year ended 31 March 2016 2015 Growth
GBPm GBPm
Europe and Americas 34.5 28.0 23%
---------------------- ------ ------ -------
Middle East & Africa 17.0 11.3 50%
---------------------- ------ ------ -------
India & South East
Asia 10.1 9.6 5%
---------------------- ------ ------ -------
Total 61.6 48.9 26%
---------------------- ------ ------ -------
Gross profit
Year ended 31 March 2016 2015 Growth
GBPm GBPm
Europe and Americas 19.9 16.4 21%
---------------------- ------ ------ -------
Middle East & Africa 11.3 8.6 32%
---------------------- ------ ------ -------
India & South East
Asia 5.3 5.0 4%
---------------------- ------ ------ -------
Total 36.5 30.0 22%
---------------------- ------ ------ -------
The Europe and Americas region gross profit grew by 21% in the
year. Gross margin in Europe and Americas in the year was 57.6%,
down slightly from 58.5% in 2015 in part as a consequence of the
inclusion of full year results of the lower margin Textlocal
business.
Excluding the impact of the Archer acquisition gross profit in
the Middle East & Africa (MEA) region grew by 15% to GBP9.9m
(2015: GBP8.6m). Gross profit from recurring revenue contracts in
MEA increased by 58% year on year. This growth was partially offset
by a decline in non-repeating license fee income recognised in the
prior year which was not repeated to the same extent this year.
When including the post-acquisition gross profit generated by
Archer the regional gross profit grew by 32% to GBP11.4m. Gross
margin in MEA reduced to 67.0% from 76.2%, reflecting the decreased
proportion of license fees recognised during the period and the
inclusion of the lower margin Archer business.
The Indian and SEA region gross profit increased in the year by
4% to GBP5.3m (2015: GBP5.0m). Gross margin declined slightly to
51.9% compared with 52.5% from the previous year as a result of the
increase in the lower margin sales to non-operator customers who
typically have a lower gross margin because of the cost of third
party mobile infrastructure.
Operating costs before amortisation, depreciation, impairment
costs, share-based payments and exceptional items
Operating costs before amortisation, depreciation, impairment
costs, share-based payments and exceptional items in the year were
GBP25.8m (2015: GBP20.9m). This reflects the full year inclusion of
Textlocal and the post-acquisition costs of Archer as well as
additional investment in sales and marketing across the Group.
EBITDA(1) and operating profit before share-based payments and
exceptional items
EBITDA for the year to 31 March 2016 was GBP10.7m (2015:
GBP9.2m) and operating profit before share-based payments and
exceptional items was GBP8.4m (2015: GBP6.7m) representing an
increase of 25% against the prior year.
1 EBITDA is defined as operating profit/(loss) before
depreciation, amortisation, fees incurred in relation to IPO and
acquisition activities, impairment charges and share-based
compensation. See note 6 for the reconciling items.
Group cash flow and working capital
Year end cash and cash equivalents were GBP15.0m (2015:
GBP14.6m). There were no bank borrowings at 31 March 2016 (2015:
GBPnil). Cash generated from operations was GBP10.6m (2015:
GBP8.8m) and represents an operating cash flow conversion of 99% of
EBITDA (2015: 96%).
Group working capital is made up as follows:
As at 31 March 2016 2015
GBPm GBPm
------------------------------------- ------- -------
Cash and cash equivalents 15.0 14.6
Trade and other receivables 24.3 19.7
Trade and other payables (excluding
deferred income) (22.6) (18.3)
------------------------------------- ------- -------
Net working capital 16.7 16.0
------------------------------------- ------- -------
Trade receivables and payables include "pass through" amounts
generated from mobile payment transactions. The receivables are
from mobile operators and payables to customers who use IMImobile's
payment APIs. The gross value of these transactions is excluded
from revenues and cost of sales as the Group accounts only for the
commission earned on such transactions within revenue as it is not
the principal obligor in the arrangement. The value of pass through
transactions included in trade and other receivables at 31 March
2016 is GBP3.1m (2015: GBP3.2m) and GBP6.3m (2015: GBP5.2m) in
trade and other payables.
Trade and other receivables has increased during the year as a
result of the inclusion of Archer Digital. The value of trade and
other receivables included from Archer Digital at 31 March 2016 is
GBP1.5m (2015: GBPnil), the additional increase is mainly
attributable to the increase in monthly run rate revenues compared
to the previous year.
Trade and other payables has increased during the year as a
result of the inclusion of Archer Digital. The value of trade and
other payables included from Archer Digital at 31 March 2016 is
GBP1.6m (2015: GBPnil). An increase of pass through transactions of
GBP1.1m referred to above as well as an increase in cost of sales
as a result of higher revenues compared to the previous year have
also contributed to the overall increase.
Group profit after tax
Profit after tax was GBP2.2m (2015: loss of GBP3.4m) after the
impact of exceptional costs of GBP0.6m (2015: GBP1.7m), share-based
payment charges net of deferred tax of GBP3.7m (2015: GBP6.7m),
amortisation of acquired intangibles of GBP0.3m (2015: GBPnil) and
de-recognition of deferred tax assets of GBPnil (2015: GBP0.5m).
Adjusted profit after tax was GBP6.8m (2015: GBP5.6m) representing
an increase of 21% against the prior year.
Earnings per share
Diluted earnings per share was 5.2p (2015: loss 13.5p). Diluted
adjusted EPS grew by 13% to 10.4p (2015: 9.2p).
Group taxation
The tax charge for the year was GBP1.9m (2015: GBP1.1m). The
adjusted effective rate of tax(1) for the year was 19.9% (2015:
16.7%).
1 Adjusted tax as a proportion of adjusted profit before tax, as
reconciled in note 6.
Other intangible assets
During the year to 31 March 2016 the Group capitalised GBP1.0m
of development costs (2015: GBP0.2m) and acquired GBP2.1m of
intangible assets as a result of the acquisition of Archer Digital.
In addition to this, expenditure during the year on software and
trademarks and licences was GBP0.6m (2015: GBP0.5m).
Property, plant and equipment
Capital expenditure on property, plant and equipment during the
year was GBP2.0m (2015: GBP1.0m) and acquired GBP0.2m of property,
plant and equipment as a result of the acquisition of Archer
Digital.
Goodwill
Goodwill held at 31 March 2016 was GBP19.8m (2015: GBP17.9m)
following the acquisition of Archer Digital. There were no other
changes to the carrying amount of goodwill in the year.
Deferred tax
Deferred tax assets at 31 March 2016 were GBP0.5m (2015:
GBP0.9m) following the write-off of deferred tax on the flowering
share plan recognised in the prior year.
Deferred tax liabilities at 31 March 2016 were GBP0.4m (2015:
GBPnil) recognised on identifiable intangible assets acquired in
Archer, which do not offset with deferred tax assets held by the
Group.
Available-for-sale financial assets
During the year the Group increased its holding in the
available-for-sale financial asset held at the start of the year by
GBP0.1m which also resulted in an impairment of the existing
holding by GBP0.2m.
Non-current liabilities
As well as the deferred tax liabilities above, the provision for
defined benefit gratuity increased to GBP0.5m (2015: GBP0.4m).
IMIMOBILE PLC CONSOLIDATED FINANCIAL RESULTS
Consolidated Income Statement For the year ended
31 March 2016
Year ended Year ended
31 March 31 March
Notes 2016 2015
GBP000 GBP000
Revenue 2, 4 61,630 48,876
Cost of sales (25,108) (18,848)
Gross profit 4 36,522 30,028
Operating costs:
Other operating costs (25,833) (20,872)
Depreciation and amortisation (2,692) (2,442)
Share-based payment charge 12 (3,362) (7,294)
IPO and acquisition related
costs (376) (1,575)
Impairment of available-for-sale
financial assets (176) (145)
Operating profit / (loss) 4,083 (2,300)
Investment income 81 13
Profit / (loss) before tax 4,164 (2,287)
Tax 5 (1,923) (1,076)
Profit / (loss) for the year 2,241 (3,363)
Profit / (loss) for the year
attributable to:
Equity holders of the company 3,410 (5,975)
Non-controlling interest (1,169) 2,612
Profit / (loss) for the year 2,241 (3,363)
EBITDA(1) 10,689 9,156
Basic earnings / (loss) per
share 6 7.1p (13.5p)
Adjusted basic earnings per
share 6 14.1p 12.6p
Diluted earnings / (loss) per
share 6 5.2p (13.5p)
Adjusted diluted earnings per
share 6 10.4p 9.2p
1 EBITDA is defined as operating profit / (loss) before
depreciation, amortisation, fees incurred in relation to IPO and
acquisition activities, impairment charges and share-based
compensation.
IMIMOBILE PLC CONSOLIDATED FINANCIAL RESULTS
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2016
Year ended Year ended
31 March 31 March
2016 2015
GBP000 GBP000
Profit / (loss) for the year 2,241 (3,363)
Items that may be reclassified
subsequently to profit or loss:
Exchange differences on translation
of foreign operations
Equity holders of the parent (79) 1,066
Non-controlling interest 33 352
Other comprehensive income for
the year (46) 1,418
Total comprehensive income /
(expense) for the year 2,195 (1,945)
Total comprehensive income /
(expense) for the year attributable
to:
Equity holders of the parent 3,331 (4,909)
Non-controlling interest (1,136) 2,964
Total comprehensive income /
(expense) for the year 2,195 (1,945)
IMIMOBILE PLC CONSOLIDATED FINANCIAL RESULTS
Statement of Changes in Equity
For the year ended 31 March 2016
Total
equity
Retained attributable
Share-based Capital Earnings to
Share Share Translation payment restructuring / shareholders Non-controlling Total
capital premium reserve reserve reserve (Deficit) of parent interest equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 31
March
2014 4,524 8,283 2,178 1,272 (8,538) 6,176 13,895 - 13,895
Capital
restructuring (2,295) 16,230 - - (20,502) (6,546) (13,113) 6,546 (6,567)
Profit /
(loss)
for the year - - - - - (5,975) (5,975) 2,612 (3,363)
Foreign
exchange
differences - - 1,066 - - - 1,066 352 1,418
Share-based
payment
charge - - - 7,294 - - 7,294 - 7,294
Proceeds from
share
issue 2,505 27,509 - - - - 30,014 - 30,014
Issue of
shares
as part of
acquisition 71 929 - - - - 1,000 - 1,000
Cost of share
issue - (2,055) - - - - (2,055) - (2,055)
Cancellation
of
share options - - - (2,697) - - (2,697) - (2,697)
Balance at 31
March
2015 4,805 50,896 3,244 5,869 (29,040) (6,345) 29,429 9,510 38,939
Profit /
(loss)
for the year - - - - - 3,410 3,410 (1,169) 2,241
Foreign
exchange
differences - - (79) - - - (79) 33 (46)
Share-based
payment
charge - - - 3,362 - - 3,362 - 3,362
Proceeds from
share
issue 113 1,488 - (1,570) - - 31 - 31
Deferred
consideration
as part of
acquisition - - - (1,000) - - (1,000) - (1,000)
Deferred tax
on
share-based
payments - - - - - 22 22 - 22
Balance at 31
March
2016 4,918 52,384 3,165 6,661 (29,040) (2,913) 35,175 8,374 43,549
IMIMOBILE PLC CONSOLIDATED FINANCIAL RESULTS
Consolidated Statement of Financial Position
As at 31 March 2016
As at As at
31 March 31 March
Notes 2016 2015
GBP000 GBP000
Non-current assets
Goodwill 7 19,770 17,934
Other intangible assets 4,355 1,678
Available-for-sale financial
assets 202 279
Property, plant and equipment 4,658 4,285
Deferred tax assets 499 911
Total non-current assets 29,484 25,087
Current assets
Cash and cash equivalents 8 15,039 14,617
Trade and other receivables 9 24,336 19,745
Total current assets 39,375 34,362
Current liabilities
Trade and other payables 10 (24,476) (20,104)
Total current liabilities (24,476) (20,104)
Net current assets 14,899 14,258
Non-current liabilities
Provision for defined benefit
gratuity (463) (406)
Deferred tax liabilities (371) -
Total non-current liabilities (834) (406)
Net assets 43,549 38,939
Equity attributable to the owners
of the parent
Share capital 11 4,918 4,805
Share premium 11 52,384 50,896
Translation reserve 3,165 3,244
Share-based payment reserve 6,661 5,869
Capital restructuring reserve 11 (29,040) (29,040)
Retained earnings (2,913) (6,345)
Equity attributable to shareholders
of the parent 35,175 29,429
Non-controlling interest 8,374 9,510
Total equity 43,549 38,939
IMIMOBILE PLC CONSOLIDATED FINANCIAL RESULTS
Consolidated Cash Flow Statement
For the year ended 31 March 2016
Year ended Year ended
31 March 31 March
Notes 2016 2015
GBP000 GBP000
Cash generated from operations 13 10,633 8,816
Tax paid (1,867) (582)
Net cash from operating activities 8,766 8,234
Investing activities
Interest received 81 13
Purchase of intangible assets (1,533) (672)
Purchase of property, plant
& equipment (2,006) (967)
Disposal of property, plant
& equipment 28 15
Purchase of share in available-for-sale
investment (99) -
Acquisition of subsidiary as
part of capital restructuring - (23,464)
Acquisition of subsidiary net
of cash acquired 14 (3,612) (6,395)
Deferred consideration as part
of acquisition (1,000) -
Acquisition related costs (376) (1,575)
Net cash used in investing activities (8,517) (33,045)
Financing activities
Proceeds from issuance of Ordinary
shares 31 30,000
Net cash generated by financing
activities 31 30,000
Net increase in cash and cash
equivalents 280 5,189
Cash and cash equivalents at
beginning of the year 14,617 9,305
Effect of foreign exchange rate
changes 142 123
Cash and cash equivalents at
end of the year 8 15,039 14,617
1. Basis of preparation
While the financial information included in this preliminary
announcement has been computed in accordance with International
Financial Reporting Standards as adopted for use by the EU (IFRS),
this announcement does not itself contain sufficient information to
comply with IFRS. The Company expects to publish full financial
statements that comply with IFRS in due course.
The financial information set out above does not constitute the
Company's statutory accounts for the period ended 31 March 2016,
but is derived from those accounts. Statutory accounts for 2015
have been delivered to the Registrar of Companies and those for
2016 will be delivered following the company's annual general
meeting.
The auditor has reported on those accounts; the auditor's report
was unqualified, did not draw attention to any matters by way of
emphasis without qualifying its report and did not contain
statements under s498(2) or (3) of the Companies Act 2006.
2. Basis of consolidation and accounting policies
The principal accounting policies set out below have been
applied consistently by the Group entities from which the
information contained in this preliminary announcement has been
extracted:
Basis of consolidation
The Group financial results incorporate the financial results of
the Company and entities controlled by the Company (its
subsidiaries) made up to 31 March each year. Control is achieved
when the Company:
-- has the power over the investee;
-- is exposed, or has rights, to variable return from its involvement with the investee; and
-- has the ability to use its power to affect its returns.
The results of subsidiaries acquired or disposed of in any year
are included in the consolidated income statement from the date of
acquisition or up to the date of disposal.
Goodwill is measured as the excess of the sum of consideration
transferred. Goodwill is stated at cost less any accumulated
impairment losses. Goodwill is allocated to cash-generating units
and is not amortised but is tested annually for impairment.
Where necessary, adjustments are made to the financial
information of subsidiaries to bring the accounting policies into
line with those used by the Group. Inter-company balances and
transactions, including inter-company profits and unrealised
profits and losses are eliminated on consolidation.
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair values of the assets transferred, the
liabilities incurred to the former owners of the acquiree and the
equity interests issued by the Group.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date. The Group
recognises any non-controlling interest in the acquiree on an
acquisition-by-acquisition basis. When the Group ceases to have
control, any retained interest in the entity is remeasured to its
fair value at the date when control is lost, with the change in
carrying amount recognised in the income statement.
Goodwill
Goodwill arises on the acquisition of subsidiaries and
represents the excess of the consideration transferred over the
Group's interest in the net fair value of the net identifiable
assets, liabilities and contingent liabilities of the acquiree and
the fair value of the non-controlling interest in the acquiree.
For the purpose of impairment testing, goodwill acquired in a
business combination is allocated to each cash generating unit
("CGU" or "unit"), or groups of CGUs, that is expected to benefit
from the synergies of the combination. Each unit or group of units
to which the goodwill is allocated represents the lowest level
within the entity at which the goodwill is monitored for internal
management purposes. Goodwill is monitored at the CGU level.
Goodwill impairment reviews are undertaken annually or more
frequently if events or changes in circumstances indicate a
potential impairment. The carrying value of goodwill is compared to
the recoverable amount, which is the higher of value in use and the
fair value less costs of disposal. Any impairment is recognised
immediately as an expense and is not subsequently reversed.
Employee benefits
Employee share-based payments
The Group operates a number of equity-settled, share-based
compensation plans, under which the entity receives services from
employees as consideration for equity instruments (options) of the
Group. The fair value of the employee services received in exchange
for the grant of the options is recognised as an expense. The total
amount to be expensed is determined by reference to the fair value
of the options granted:
-- including any market performance conditions (for example, an entity's share price);
-- excluding the impact of any service and non-market
performance vesting conditions (for example, profitability, sales
growth targets and remaining an employee of the entity over a
specified time period); and
-- including the impact of any non-vesting conditions (for
example, the requirement for employees to save).
Non-market performance and service conditions are included in
assumptions about the number of options that are expected to vest.
The total expense is recognised over the vesting period, which is
the period over which all of the specified vesting conditions are
to be satisfied. Where options are cancelled by the Group and
settled in cash the expense is accelerated in the period in which
the options are settled, with the cash payment recognised in the
share-based payment reserve.
At the end of each reporting period, the Group revises its
estimates of the number of options that are expected to vest based
on the non-market vesting conditions. It recognises the impact of
the revision to original estimates, if any, in the consolidated
income statement, with a corresponding adjustment to equity.
When the options are exercised, the Group issues new shares. The
proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share
premium.
The social security contributions payable in connection with the
grant of the share options are payable by the employee.
Fair value is measured by use of the Black-Scholes model. The
expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
performance conditions, exercise restrictions and behavioural
considerations.
For cash-settled share-based payments, a liability is recognised
for the goods or services acquired, measured initially at the fair
value of the liability. At each balance sheet date until the
liability is settled, and at the date of settlement, the fair value
of the liability is remeasured, with any changes in fair value
recognised in profit or loss for the year.
Company Share Capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new
ordinary shares or options are shown in equity as a deduction, net
of tax, from the proceeds.
Revenue recognition
Revenue comprises the fair value of the consideration received
or receivable for the sale of goods and services in the ordinary
course of the Group's activities. Revenue is shown net of rebates
and discounts and after eliminating sales within the Group.
The Group recognises revenue when the amount of revenue can be
reliably measured, it is probable that future economic benefits
will flow to the entity and specific criteria have been met for
each of the Group's activities as described below. The amount of
revenue is not considered to be reliably measurable until all
contingencies relating to the sale have been resolved. The Group
bases its estimates on historical results, taking into
consideration the type of customer, the type of transaction and the
specifics of each arrangement.
Where the Group enters into arrangements to deliver multiple
elements (licensing, servicing and maintenance), such elements are
separated for recognition based on stand-alone value where sold and
delivered separately. If such elements cannot be separated they are
treated as a single deliverable and recognised over the period of
delivery when the criteria for recognition have been met and
customer acceptance received. Amounts incurred but not yet billed
are classified as unbilled amounts in work in progress. Where the
Group acts as principal in the sale of goods and content, revenue
is recognised on a gross basis.
Monthly recurring revenue
Revenues from monthly recurring revenue contracts are recognised
proportionally over the period during which the services are
rendered. Revenue from content related sales is recognised on
delivery of the content, when all significant contractual
obligations have been satisfied, the significant risks and rewards
of ownership have been transferred and no effective ownership
control is retained. Revenues are billed up to 60 days after month
end and classified as amounts billable not yet invoiced until this
point.
Billing revenues recognised within turnover relate only to the
commission earned on hosting each service and are recognised at the
point of delivery to the customer. Pass through revenues collected
on behalf of the customers are not recognised within turnover.
Licence, one-off and professional service revenue
Revenue from sale of end user licences is recognised at fair
value on customer acceptance following installation at the
customer's locations as per the terms of the contract.
Operating segments
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors that makes
strategic decisions.
3. Critical accounting judgements, estimates and assumptions
The preparation of financial results in conformity with IFRS
requires the use of estimates and assumptions that affects the
reported amounts of assets and liabilities at the date of the
financial results and the reported amounts of revenues and expenses
during the reported period. Although these estimates are based on
management's best knowledge of the amount, event or actions, actual
results may ultimately differ from those estimates. The key sources
of estimation uncertainty at the reporting date derive from
management assumptions in respect of:
Revenue recognition
Revenue is recognised to the extent it is probable that the
economic benefits will flow to the Group and the revenue can be
reliably measured. The determination of whether the revenue
recognition criteria as specified under IAS 18 are met requires
judgement. Where revenues are verified by third parties, revenues
are accrued based on platform data. Differences are adjusted for
upon receipt of third party reports.
Where contracts include more than one deliverable element, each
element and deliverables are assigned to one, or more, separate
units of accounting based on their fair value. Revenue is
recognised on a milestone basis, based on the judgement of
management, as each deliverable is met.
Goodwill and impairment reviews
The recognition of business combinations requires the excess of
the purchase price of acquisitions over the net book value of
assets acquired to be allocated to the assets and liabilities of
the acquired entity. The Group makes judgements and estimates in
relation to the fair value allocation of the purchase price. If any
unallocated portion is positive it is recognised as Goodwill and if
negative, it is recognised in the consolidated income
statement.
Judgement is required in determining the fair value of
identifiable assets, liabilities and contingent assets and
liabilities assumed in a business combination and the fair value of
the consideration payable. Calculating the fair values involves the
use of significant estimates and assumptions, including
expectations about future cash flows, discount rates and the lives
of assets following purchase.
Debtor recoverability
The Group's trade receivables are stated after allowances for
bad and doubtful debts based on management's judgement of
recoverability on an individual customer basis. The credit
worthiness of individual customers is assessed based on their
financial strength using available information, communication with
the customer and the historic trading relationship.
Cash generating units
Judgement is also required in identifying the cash generating
units to which goodwill is associated for the purpose of goodwill
impairment testing. Identification of cash generating units
involves an assessment of whether assets or groups of assets
generate cash flows that are largely independent. Goodwill is then
allocated to each identified cash generating unit that is expected
to benefit from the synergies of the business combinations from
which goodwill has arisen.
The Group tests annually whether goodwill has suffered any
impairment, in accordance with the accounting policy above. The
recoverable amounts of cash-generating units have been determined
based on value-in-use calculations. These calculations require the
use of estimates which have been detailed within the notes to the
consolidated financial results.
Research and development
IAS 38 requires the Group to capitalise and subsequently
amortise development costs when the requirements of an internally
generated intangible have been met and costs can be measured
reliably. The determination of whether costs incurred in the
development of software have met the criteria per IAS 38 requires
judgement. Following a review of the criteria the Directors have
concluded that expenditure on development has not met the criteria
for capitalisation as it is not possible to accurately distinguish
between the research and development phases of each project during
the periods covered by the consolidated financial results. As a
result all research and development expenditure has been treated as
an expense within the consolidated income statement of the period
incurred, except to the extent is has been capitalised in other
intangible assets.
Taxation including deferred taxation
The Group's tax charge is the sum of total current and deferred
tax charges. The calculation of the Group's total tax charge
necessarily involves a degree of estimation and judgement in
respect of certain items. Provisions for tax contingencies require
management to make judgements and estimates in relation to tax
audit issues and exposures. Tax benefits are not recognised unless
it is probable that the tax position will be sustained.
Share-based payments
The fair value is determined at grant date and expensed over the
vesting period based on the estimate of the proportion of the
shares which will vest. The schemes include performance conditions,
including achieving targets for the Group's EPS. The probability of
whether these performance targets will be met based on the latest
Group forecasts is re-assessed on a six monthly basis.
The accounting policies in relation to these items are disclosed
in note 2.
4. Business and geographical segments
The Group's operating segments are established on the basis of
those components of the Group that are evaluated regularly by the
Chief Operating Decision Maker in deciding how to allocate
resources and in assessing performance.
The Chief Operating Decision Maker considers results principally
by geographical region, which forms the Group's operating and
reporting segments. Geographically, the operating segments are
defined as Europe and Americas (Europe being substantially all to
the UK where revenue during the year was GBP33,474,277 (2015:
GBP27,243,754)), India and South East Asia (SEA) and Middle East
and Africa (MEA), which also represent the Group's reportable
segments.
The performance of the operating segments is assessed based on a
measure of revenue and gross profit (the result for the segment).
Any sales between segments are carried out at arm's length. As
costs are shared across geographies, results from gross profit to
profit after tax are assessed on a consolidated basis only. The
Group does not regularly provide information in relation to the
assets or liabilities of operating segments to management.
Geographical revenue and results
The following is an analysis of the Group's revenue and results
by geographical segment:
Europe India
and Americas and SEA MEA Total
GBP000 GBP000 GBP000 GBP000
Year ended 31 March 2016
Revenue from external
companies 34,525 10,134 16,971 61,630
Intersegment revenues - 79 - 79
Gross profit 19,896 5,264 11,362 36,522
Other operating costs (25,833)
Depreciation and amortisation (2,692)
Share-based payment charge (3,362)
IPO and acquisition related
costs (376)
Impairment of AFS financial
assets (176)
Operating profit 4,083
Investment income 81
Profit before tax 4,164
Tax (1,923)
Profit after tax 2,241
Non-current assets 21,527 2,792 5,165 29,484
Europe India
and Americas and SEA MEA Total
Year ended 31 March 2015
Revenue from external
companies 27,978 9,610 11,288 48,876
Intersegment revenues - 578 - 578
Gross profit 16,381 5,048 8,599 30,028
Other operating costs (20,872)
Depreciation and amortisation (2,442)
Share-based payment charge (7,294)
IPO and acquisition related
costs (1,575)
Impairment of AFS financial
assets (145)
Operating loss (2,300)
Investment income 13
Loss before tax (2,287)
Tax (1,076)
Loss after tax (3,363)
Non-current assets 20,596 3,565 926 25,087
During the year revenues from Customer A and Customer B
accounted for 12% (2015: 14%) and 16% (2015: 15%) of the Group's
revenue.
The accounting policies of the reportable segments are the same
as the Group's accounting policies described in note 2 for each
period. The revenue from external parties reported is measured in a
manner consistent with that in the consolidated income statement.
Revenues are attributed to countries on the basis of the customer's
location.
The Group measures segment profit and loss as gross profit as
reported. The Group does not allocate general administration,
marketing and sales expenses to segments.
Additional voluntary disclosures
Alternative revenue model and results
The following disclosures are provided for additional purposes
only and does not form part of the Group's segmental reporting
under IFRS 8. In addition to geographical performance, the Chief
Operating Decision Maker also considers the performance of the
Group in line with its revenue model, which has also been disclosed
below. The Group's revenue models are defined as:
1. Monthly recurring revenue which is made up of a combination of the following:
a. Contracted, recurring revenues;
b. Non-contracted, repeating revenues; and,
c. Transactional revenues, typically a share of consumer spend.
2. License, one-off and professional service revenues.
These alternative revenue models arise in all geographical
segments. The following is an analysis of the Group's revenue and
result by revenue model:
Licence,
one-off
Monthly and
recurring professional
revenue services Total
GBP000 GBP000 GBP000
Year ended 31 March 2016
Revenue from external companies 58,250 3,380 61,630
Intersegment revenues - 79 79
Gross profit 33,420 3,102 36,522
Year ended 31 March 2015
Revenue from external companies 43,601 5,275 48,876
Intersegment revenues - 578 578
Gross profit 25,068 4,960 30,028
5. Tax
Year ended Year ended
31 March 31 March
2016 2015
GBP000 GBP000
Current tax
India tax expense 13 (6)
UK tax expense 453 522
Other foreign tax expense 62 80
Withholding tax expense 969 592
Adjustments in respect of prior periods 33 13
1,530 1,201
Deferred tax
Current year (39) (125)
Adjustments in respect of prior periods 432 -
393 (125)
1,923 1,076
The deferred tax adjustment in respect of prior periods relates
to deferred tax recognised on the flowering share plan in the prior
year.
The total tax charge for the year can be reconciled to the
result per consolidated income statement as follows:
Year ended Year ended
31 March 31 March
2016 2015
GBP000 GBP000
Profit / (loss) before tax 4,164 (2,287)
Tax at the UK corporation tax rate
of 20% (2015: 21%) 833 (480)
Effect of overseas tax rates 66 (367)
Expenses not deductible for tax purposes 407 57
Tax losses on which deferred tax not
recognised 83 1,323
Temporary differences on which deferred 108 -
tax not recognised
Effect of change in UK tax rate 46 2
Utilisation of tax losses and other (15) -
deductions
Tax adjustments in respect of previous
years 465 13
De-recognition of deferred tax asset - 578
Enhanced tax relief on research and
development expenditure (70) (50)
Total tax charged in the income statement 1,923 1,076
Taxation for each region is calculated at the rates prevailing
in the respective jurisdictions. Prior year adjustments relate to
the routine confirmation and agreement of the final tax position in
local jurisdictions.
The Finance Act 2015 reduced the UK standard rate of corporation
tax from 21% to 20% from 1 April 2015 and 20% to 18% from 1 April
2016. All UK deferred tax assets and liabilities have been
recognised at 18% (2015: 20%). A further reduction in the
corporation tax rate to 17%, rather than 18%, from 1 April 2020 was
announced in the 2016 Budget. However, this further rate change was
not substantively enacted at the balance sheet date, so its effect
is not reflected in these financial results.
6. Earnings per share ('EPS')
Year ended Year ended
31 March 31 March
2016 2015
(restated)
pence pence
Basic EPS 7.1p (13.5p)
Adjusted basic EPS 14.1p 12.6p
Diluted EPS 5.2p (13.5p)
Adjusted diluted EPS 10.4p 9.2p
Year ended Year ended
31 March 31 March
2016 2015
(restated)
Million Million
Weighted average number of ordinary
shares for the purpose of basic EPS 48.1 44.3
Effect of exchange of Ordinary B Shares
(see note 11) 11.3 11.3
Effect of dilutive potential ordinary
shares: share options 6.0 5.3
Weighted average number of ordinary
shares for the purpose of diluted
EPS 65.4 60.9
The comparative figures have been restated to exclude the
profits attributable to non-controlling interests when calculating
basic EPS. The diluted and adjusted diluted EPS comparative figures
have been restated to remove the effect of share options as they
are anti-dilutive at a statutory level, and include the impact of
the remaining IFRS 2 charge per option in the statutory and
adjusted result.
To provide more meaningful comparative information on the
Group's profitability, a number of non-GAAP adjusted profit
measures are used in these financial results. Summarised below is a
reconciliation between statutory results to adjusted results. The
adjusted profit after tax earnings measure is also used for the
purpose of calculating adjusted earnings per share.
Share-based IPO Impairment
payment and of AFS
charge acquisition financial Amortisation
Statutory related asset of acquired Adjusted
results costs intangibles Other* Results
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Year ended 31
March 2016
Revenue 61,630 - - - - - 61,630
Gross profit 36,522 - - - - - 36,522
Operating profit 4,083 3,362 376 176 416 - 8,413
Profit before
tax 4,164 3,362 376 176 416 - 8,494
Tax (1,923) 353 (40) - (83) - (1,693)
Profit after
tax 2,241 3,715 336 176 333 - 6,801
EBITDA 6,775 3,362 376 176 - - 10,689
Basic EPS (pence) 7.1 7.7 0.7 0.4 0.7 (2.5) 14.1
Diluted EPS
(pence) 5.2 5.7 0.5 0.3 0.5 (1.8) 10.4
Share-based IPO Impairment De-recognition Other*
payment and of AFS of deferred
charge acquisition financial tax asset
Statutory related asset Adjusted
results costs Results
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Year ended 31
March 2015
Revenue 48,876 - - - - - 48,876
Gross profit 30,028 - - - - - 30,028
Operating (loss)
/ profit (2,300) 7,294 1,575 145 - - 6,714
(Loss) / profit
before tax (2,287) 7,294 1,575 145 - - 6,727
Tax (1,076) (588) - - 537 - (1,127)
(Loss) / profit
after tax (3,363) 6,706 1,575 145 537 - 5,600
EBITDA 142 7,294 1,575 145 - - 9,156
Basic EPS (pence) (13.5) 15.1 3.6 0.3 1.2 5.9 12.6
Diluted EPS
(pence) (13.5) 11.0 2.6 0.2 0.9 8.0 9.2
* Other adjustments as follows:
-- Basic adjusted EPS and diluted adjusted EPS includes profit
attributable to non-controlling interests not included in the
calculation of statutory basic and diluted EPS.
-- Diluted adjusted EPS includes the dilutive effect of share
options not included in statutory diluted EPS when they have an
anti-dilutive effect.
7. Goodwill
Goodwill is monitored by management at the CGU level by delivery
model. The following is a summary of goodwill allocation for each
CGU:
Impairment Foreign Closing
Exchange
Opening Additions Movement
GBP000 GBP000 GBP000 GBP000 GBP000
31 March 2015
Managed solutions 4,716 - - - 4,716
Cloud based services
/ SaaS 3,145 - - - 3,145
TextLocal - 10,073 - - 10,073
Total 7,861 10,073 - - 17,934
31 March 2016
Managed solutions 4,716 - - - 4,716
Cloud based services
/ SaaS 3,145 - - - 3,145
TextLocal 10,073 - - - 10,073
Archer - 1,900 - (64) 1,836
Total 17,934 1,900 - (64) 19,770
The recoverable amount of all CGUs has been determined based on
value-in-use calculations. These calculations use pre-tax cash flow
projections based on financial budgets approved by management
covering a five-year period. Cash flows beyond the five-year period
are extrapolated using the estimated growth rates stated below. The
long-term growth rates are management's estimates. The discount
rates used are pre-tax and reflect specific risks relating to the
relevant CGU.
CGUs serve a common group of customers such that the key
assumptions used for value-in-use calculations for all CGUs are as
follows:
Managed Cloud TextLocal Archer
solutions based
services/SaaS
Budgeted EBITDA(1) growth
rate 38% 28% 24% 28%
Long-term growth rate: 3% 3% 3% 3%
Discount rate: 11% 11% 11% 11%
Value in use is calculated for the various CGUs based on
approved business plans and forecasts taking into account certain
variables for each CGU. Below is a description of the principal
variables that have been considered for each CGU with significant
goodwill.
Long-term growth rate
In all cases, impairment tests are performed using the projected
cash flows based on Board approved forecasts and strategic plans
over a five year period. Cash flow projections from the sixth year
are calculated using an expected constant growth rate.
Discount rate
The pre-tax discount rates used are disclosed above and take
into account the market risk rate associated with the company. A
discount factor is calculated using the discount rate and applied
to future projected cash flows.
[1] Budgeted EBITDA is expressed as the compound annual growth
rates in the initial five years for all cash-generating units of
the plans used for impairment testing.
8. Cash and cash equivalents
As at As at
31 March 31 March
2016 2015
GBP000 GBP000
Unrestricted
Cash on hand and at bank 14,980 14,570
Restricted
Short-term bank deposits 59 47
Cash and cash equivalents 15,039 14,617
Restricted short-term bank deposits represent cash balances
deposited in bank accounts attracting a preferential interest rate
and are typically deposited for a period of 90 to 180 days.
Preferential interest rates are agreed in advance of the deposit
being transferred and depend on the prevailing local rates and
market conditions at the time.
The Group at the year-end held cash at bank amounts as
follows:
As at As at
31 March 31 March
2016 2015
GBP000 GBP000
United Arab Emirates Dirham 120 131
Australian Dollar - -
Bangladeshi Taka 327 320
Euro 1,286 673
UK Pounds Sterling 6,919 8,113
Indian Rupee 478 899
Nigerian Naira 3,315 1,124
Sri-Lankan Rupee 50 55
US Dollar 2,326 3,302
South African Rand 218 -
15,039 14,617
9. Trade and other receivables
As at As at
31 March 31 March
2016 2015
GBP000 GBP000
Trade receivables
- revenue to be collected on behalf
of the Group 10,754 7,817
- pass through revenues to be collected
on behalf of billing customers 678 848
Other receivables 160 21
Refundable deposits 456 185
Prepayments 1,196 1,746
Amounts billable not yet invoiced
- revenue to be collected on behalf
of the Group 6,072 4,561
- pass through revenues collected
on behalf of billing customers 2,410 2,327
Withholding tax debtor 2,579 2,187
Due from related parties 31 53
24,336 19,745
The fair value receivables approximate their carrying values as
at 31 March 2016 and 31 March 2015.
10. Trade and other payables
As at As at
31 March 31 March
2016 2015
GBP000 GBP000
Trade payables
- cost of sales to be paid on behalf
of the Group 5,261 2,964
- pass through revenues to be paid
to billing customers 3,700 2,833
Other payables 589 855
Accrued expenses
- cost of sales to be paid on behalf
of the Group 9,063 8,296
- pass through revenues to be paid
to billing customers 2,611 2,319
Deferred income 1,856 1,734
VAT payable 1,256 617
Tax payable 140 486
24,476 20,104
Trade payables balances are non-interest bearing and are settled
within 30-60 days.
The fair value of accounts payable and other credit balances
approximate their carrying values as at each respective reporting
date.
11. Share Capital, Share Premium and Restructuring Reserve
Allotted, called up and fully Share Share Total
paid Capital Premium
GBP000 GBP000 GBP000
At 1 April 2015 4,805 50,896 55,701
Share options exercised 113 1,488 1,601
At 31 March 2016 4,918 52,384 57,302
As at
31 March
2016
Number
Ordinary shares as at 1 April
2015 48,038,862
Share options exercised 1,127,470
Ordinary shares as at 31 March
2016 49,166,332
Ordinary B shares as at 1 April
2015 and 31 March 2016 2
49,166,334
During the year 77,470 share options were exercised for a
consideration of GBP30,764. The exercise of 1,050,000 flowering
share options for nil consideration has been accounted for as a
reduction in the share-based payment reserve.
The Group's capital consists of two classes of equity share.
Ordinary shares
The amount classified as equity share capital represents the
nominal value of allotted, called up and fully paid ordinary shares
at a par value of GBP0.10. Each holder of ordinary shares is
entitled to one vote per share.
Ordinary B shares
The founders of the Group, and current directors Vish Alluri and
Shyam Bhat hold their investment in the Company via Ordinary B
Shares which give them the right to exchange their holdings in IMI
Mobile Private Limited, a subsidiary of the Company (which they
have held since the Group was founded) for a direct holding in the
Company. This structure was established on listing and was
necessary because of tax and foreign holding considerations in
India, the structure is detailed in the Company's Admission
document.
The amount classified as equity share capital represents the
nominal value of allotted, called up and fully paid ordinary shares
at a par value of GBP0.10. Each holder of ordinary B shares is able
to exercise voting rights in respect of such shares equal to the
number of Ordinary Shares each of its nominees would receive if
they exchanged their holding in IMI Mobile Private Limited for
three ordinary shares in the Company.
In addition, each holder of ordinary B shares has the right (but
not the obligation) to swap all of their shares in IMI Mobile
Private Limited for ordinary shares in the Company on the basis of
one IMI Mobile Private Limited share for three ordinary shares in
the Company (subject to adjustment for any consolidation, sub
division or any other alteration of the share capital of either the
Company or IMI Mobile Private Limited). Such a share swap is
subject to all legal and regulatory consents and approvals being
obtained. If such a share swap occurred in full the holders of
ordinary B shares would be entitled to acquire 11,299,599 ordinary
shares. The holders of the ordinary B shares form the
non-controlling interest in the Group.
Restructuring Reserve
The restructuring reserve was created as part of the capital
restructuring of the Group following admission to AIM. The share
capital and share premium were restated based on the 3:1 conversion
of ordinary shares, with a corresponding entry in the restructuring
reserve. The restructuring reserve also reflects the conversion of
preference shares to ordinary shares and the creation of a
non-controlling interest in the Group as outlined above.
There were no movements in the restructuring reserve in the
current year.
12. Share-based payments
The fair value of options granted is recognised as an employee
expense in the income statement with a corresponding increase in
equity. The fair value is measured at the grant date and spread
over the period during which the employees become unconditionally
entitled to the options. The fair value of the options is measured
using the Black-Scholes option valuation model, taking into account
the terms and conditions upon which the options were granted. The
amount recognised in the income statement is adjusted at each
balance sheet date to reflect the number of share options that are
expected to vest revised for expected leavers and estimated
achievement for non-market based vesting conditions.
Prior to admission to AIM, options were issued to the Directors
and key employees. The Group operated the following schemes during
the year.
Flowering Share Plan
The plan was established on 16 May 2014. The options granted
vest over a period of 0-4 years and are dependent upon continued
employment, and meeting an objective Company hurdle and performance
targets for the Group's adjusted EPS. The options may be forfeited
if the employee leaves the Group and the rights of the participants
lapse if the award has not been exercised after a period of 10
years from the grant date.
Details of the share awards outstanding during the year are as
follows:
As at 31 March As at 31 March
2016 2015
Weighted Weighted
average average
exercise Number exercise Number
price of share price of share
(GBP) options (GBP) options
At 1 3,000,000 -
April
Granted - - 0.03 3,000,000
Exercised 0.03 (1,050,000) - -
Forfeited 0.03 (149,062) - -
At 31 March 1,800,938 3,000,000
The fair value at grant date has been determined using the
Black-Scholes valuation model. The significant inputs into the
model were a risk-free interest rate of 0.31% to 1.55%, exercise
price shown above, an expected option life of five years,
volatility of 22% to 70% depending on the vesting date of the
options and a dividend yield of nil.
2014 Unapproved Option Plan
The plan was established on 26 June 2014. The options granted
vest over a period of 0-4 years and are dependent upon continued
employment and meeting performance targets for the Group's adjusted
EPS. The options may be forfeited if the employee leaves the Group
and the rights of the participants lapse if the award has not been
exercised after a period of 10 years from the grant date.
Details of the share awards outstanding during the year are as
follows:
As at 31 March As at 31 March
2016 2015
Weighted Weighted
average average
exercise Number exercise Number
price of share price of share
(GBP) options (GBP) options
At 1 6,370,018 -
April
Granted 1.08 549,984 0.33 6,387,373
Forfeited 0.93 (265,308) 1.20 (17,355)
At 31
March 6,654,694 6,370,018
The fair value at grant date has been determined using the
Black-Scholes valuation model. The significant inputs into the
model were a risk-free interest rate of 0.42% to 1.72%, exercise
price shown above, an expected option life of five years,
volatility of 7% to 70% depending on the vesting date of the
options and a dividend yield of nil.
CSOP
The plan was established on 26 June 2014. The options granted
vest over a period of 0-4 years and are dependent upon continued
employment. The options may be forfeited if the employee leaves the
Group and the rights of the participants lapse if the award has not
been exercised after a period of 10 years from the grant date.
Details of the share awards outstanding during the year are as
follows:
As at 31 March As at 31 March
2016 2015
Weighted Weighted
average average
exercise Number exercise Number
price of share price of share
(GBP) options (GBP) options
At 1 993,938 -
April
Granted 1.51 73,666 1.24 1,051,580
Exercised 1.33 (8,970) - -
Forfeited 1.20 (70,703) 1.20 (57,642)
At 31
March 987,931 993,938
The fair value at grant date has been determined using the
Black-Scholes valuation model. The significant inputs into the
model were a risk-free interest rate of 0.42% to 1.72%, exercise
price shown above, an expected option life of five years,
volatility of 7% to 70% depending on the vesting date of the
options and a dividend yield of nil.
Rollover scheme
The plan was established on 27 June 2014. The options granted
vest over a period of 0-4 years and are dependent upon continued
employment. The options may be forfeited if the employee leaves the
Group and the rights of the participants lapse if the award has not
been exercised after a period of 10 years from the grant date.
Details of the share awards outstanding during the year are as
follows:
As at 31 March As at 31 March
2016 2015
Weighted Weighted
average average
exercise Number exercise Number
price of share price of share
(GBP) options (GBP) options
At 1 820,000 -
April
Converted
* - - 0.30 951,000
Exercised 0.29 (68,500) 0.29 (47,000)
Forfeited 0.32 (1,500) 0.31 (84,000)
At 31
March 750,000 820,000
* options converted from a share scheme closed in the year ended
31 March 2015.
The fair value at grant date has been determined using the
Black-Scholes valuation model. The significant inputs into the
model were a risk-free interest rate of 0.44% to 1.34%, exercise
price shown above, an expected option life of five years,
volatility of 9% to 41% depending on the vesting date of the
options and a dividend yield of nil.
TextLocal deferred consideration
The deferred consideration arising from the acquisition of
TextLocal is treated as remuneration rather than consideration as
one of the conditions of payment is continued employment of the
shareholders of the company post acquisition. As the Group has the
option to settle the deferred consideration in shares in the
Company or cash, it is included as a share-based payment. The
charge is taken to the consolidated income statement evenly over
the period from acquisition to the settlement date.
Archer put option
Archer management team's shareholding in Archer Digital Limited
includes a put option which enables them to sell their holding to
the Group after 5 years. The Group has valued this option and
accounted for the obligation to purchase the shares as a cash
settled share-based payment vesting over the 5 year period, with a
charge of GBP208,000 recorded in the year ended 31 March 2016.
The fair value at grant date has been determined using the
Black-Scholes valuation model. The significant inputs into the
model were a risk-free interest rate of 0.44% to 1.10%, an expected
option life of five years, volatility of 9% to 35% depending on the
vesting date of the options and a dividend yield of nil.
Share-based payment charge
The Group recognised the following expense related to
share-based payments:
31 March 31 March
2016 2015
GBP000 GBP000
Accelerated charge in lieu of
cancelled scheme - 35
Equity-settled share-based payment
plans 3,362 7,259
At 31 March 3,362 7,294
13. Notes to the Consolidated Cash Flow Statement
Year ended Year ended
31 March 31 March
2016 2015
GBP000 GBP000
Cash flows from operating activities:
Profit / (loss) before taxation 4,164 (2,287)
Adjustments:
Interest income (81) (13)
Share-based payments 3,362 7,294
Exceptional costs - IPO preparation
costs 376 1,575
Depreciation of property, plant
and equipment 1,910 2,219
Amortisation of intangible assets 782 223
Impairment of available-for-sale
financial assets 176 145
Operating cash flow before movements
in working capital: 10,689 9,156
(Increase) / decrease in receivables (3,863) 2,461
Increase / (decrease) in payables 3,789 (3,460)
Increase in provision for defined
benefit gratuity plan 60 161
Foreign exchange (gain) / loss
on working capital (42) 498
Cash generated from operations 10,633 8,816
14. Acquisition of Archer Digital Limited
On 16 September 2015 the Group acquired 89% of the share capital
of Archer Digital Limited ("Archer") for a maximum total
consideration of $5.6 million (GBP3.7 million) comprising an
initial consideration of $5.2 million (GBP3.4 million) payable in
cash with an additional deferred payment of up to a maximum of $0.4
million (GBP0.3 million). The primary reasons for acquiring the
business were to leverage the Group's African mobile operator and
operational footprint to expand into the wider African market. The
remaining 11% of Archer is owned by the Archer management team, who
will be able to earn up to 20% of the equity in Archer following
the acquisition.
The results of the acquired entity which have been consolidated
in the income statement from 16 September 2015 contributed GBP3.51
million of revenues and a profit of GBP0.21 million to the profit
attributable to equity shareholders of the Group during the year.
Had Archer been acquired at the start of the year the contribution
would have been GBP6.87 million of revenue and a profit of GBP0.42
million.
The provisional purchase price allocation is set out in the
table below:
Fair value
GBP000
Net assets acquired:
Identifiable intangible assets:
Customer relationships 1,725
Trade name 62
Technology 275
Deferred tax recognised on identifiable
intangible assets:
Customer relationships (345)
Trade name (12)
Technology (55)
Property, plant and equipment 211
Trade and other receivables 1,719
Cash and cash equivalents 42
Current taxation liabilities (86)
Trade and other payables (1,782)
Net identifiable assets acquired 1,754
Goodwill 1,900
Total consideration 3,654
Cash consideration 3,654
Cash acquired (42)
Consideration net of cash acquired 3,612
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR AKQDQNBKBQOK
(END) Dow Jones Newswires
July 05, 2016 02:00 ET (06:00 GMT)
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