TIDMIMO
RNS Number : 8339H
IMImobile PLC
20 November 2018
IMIMOBILE PLC
("IMImobile", "the Group" or "the Company")
Unaudited interim results for the
six months ended 30 September 2018
"Continued growth and strategic progress"
IMImobile PLC, a cloud communications software and solutions
provider, today announces its consolidated interim results for the
six months ended 30 September 2018.
The Company is pleased to report it has continued to maintain
strong momentum and has now achieved a three-year gross profit CAGR
of 21% and a five-year gross profit CAGR of 18%.
Key financial highlights
-- Revenue up 26% to GBP67.2m (2017: GBP53.1m) (15% organic1)
-- Gross profit up 18% to GBP29.2m (2017: GBP24.7m) (3% organic1
or 10% organic excluding impact of MTN)
o Strong organic1 gross profit growth from monthly recurring
revenues of 18% (excluding impact of MTN)
-- Adjusted EBITDA2 up 35% to GBP7.7m (2017: GBP5.7m)
-- Adjusted profit after tax2 up 40% to GBP4.7m (2017: GBP3.3m)
-- Loss after tax on a statutory basis of GBP0.1m3 (2017: profit of GBP1.0m)
-- Diluted adjusted EPS2 up 35% to 6.6p (2017: 4.8p)
-- Adjusted cash generated from operating activities of GBP6.1m
representing operating cash conversion4 of 80% (2017: 100%)
-- Cash and cash equivalents at 30 September 2018 of GBP12.0m (31 March 2018: GBP15.7m)
-- Net debt5 at 30 September 2018 of GBP9.3m (31 March 2018: net cash of GBP4.3m)
Operational highlights
-- Strong period of new client wins in UK: numerous multi-year
new contract wins with large enterprise clients in the banking,
utilities, retail and logistics sectors
-- Enhanced operating leverage: benefitting from past investment
in partnerships and R&D - EBITDA margin (adjusted EBITDA /
gross profit) up to 26.4% from 23.1%
-- Partnership momentum: significant client wins through major
partnerships; recognition and deployment in the second half of the
year
-- Continued investment in innovation: helping businesses
explore opportunities with new messaging channels
-- Strengthened position in North America: acquisition of Impact
Mobile expands operational footprint in the region
-- Post period end acquisition: completed acquisition of Express
Pigeon, a US-based email marketing platform provider
Jay Patel, Chief Executive Officer of IMImobile PLC,
commented:
"The Group has continued to perform well, both on a financial
and operational basis. We have a strong position as market leader
in the UK, Canadian and South African markets and have seen
numerous, multi-year new contract wins in the UK across our core
sectors. We are pleased that we have seen 18% organic growth in
gross profit from monthly recurring revenues, excluding the known
headwinds created by MTN. I am also pleased with the improved
operating leverage from past investments made in partnerships and
R&D.
The technology and consumer landscapes are evolving as
anticipated and given our leading positions in certain markets and
sectors, we expect to continue to benefit from these changes in the
near-medium term. We have had a strong start to the second half and
remain confident about the Group's prospects for the full year. We
expect full year results to be in line with management
expectations."
1 Excluding acquired business of Sumotext, Healthcare
Communications and Impact Mobile.
2 See note 5 for details of adjusted performance measures,
adjusting items and a reconciliation of statutory results to
adjusted results.
3 Profit after tax on a statutory basis increased by 37%
excluding share based payment charges on contingent considerations
and put options relating to acquisitions (see the consolidated
income statement).
4 Cash conversion is defined as adjusted cash generated from
operations (see note 5) as a percentage of adjusted EBITDA
5 Net (debt) / cash is defined as cash and cash equivalents less
bank borrowings and reflects cash paid to acquire Impact Mobile in
July 2018.
An analyst meeting will be held at 9.30am today at the offices
of Newgate Communications, Sky Light City Tower, 50 Basinghall
Street, London EC2V 5DE. To attend please contact Newgate
Communications.
For further information please contact:
IMImobile PLC c/o Newgate Communications
Jay Patel, Chief Executive Officer Tel: +44 (0)20 3757 6880
Mike Jefferies, Chief Financial Officer
Newgate Communications - PR Adviser Tel: +44 (0)20 3757 6880
Bob Huxford imimobile@newgatecomms.com
Fiona Norman
Tom Carnegie
Investec Bank - Nominated Adviser and Broker Tel: +44 (0)207 597 5970
Andrew Pinder
Henry Reast
Whitman Howard - Broker Tel: +44 (0) 207 659 1234
Ranald McGregor-Smith
Niall Devins
About IMImobile PLC
IMImobile is a cloud communications software and solutions
provider that enables companies to use mobile and digital
technologies to improve and automate customer experience and
engagement.
IMImobile's cloud software platform manages over 42 billion
messages and 44 billion commerce transactions a year across the
world. Organisations that trust us to deliver smarter digital
customer engagement include Centrica, AA, O2, EE, BT, Foxtons,
Pizza Hut, Vodafone, AT&T, MTN, three of the major retail banks
in the UK and public-sector organisations in India, US and the
UK.
IMImobile is headquartered in London with offices in Hyderabad,
Little Rock, Toronto, Dubai and Johannesburg and has over 1,100
employees worldwide. IMImobile is quoted on the London Stock
Exchange's AIM market with the TIDM code IMO.
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.
Chief Executive's Report
We are pleased with the progress made in the last six months. We
have seen strong growth in Europe and the Americas and in our
enterprise business in the Middle East and Africa and India and
South East Asia. There is also a growing pipeline of opportunities
and deployments across all sectors which will begin to be
recognised from the second half of the year.
Although the technology trends impacting the business are
global, the market opportunities and business models reflect local
environments. As a result, the commercial activities of the
business are managed and best reviewed on a regional basis.
Regional Review
Europe and Americas - Gross profit GBP20.3m (2017: GBP13.8m)
Europe and Americas contributed 70% of Group gross profit in the
six months to 30 September 2018, representing year on year growth
of 48%. We experienced strong organic growth of 21% with additional
growth coming from the acquisitions of Impact Mobile in July 2018
and Sumotext and Healthcare Communications in the prior year.
It was a good period for blue chip UK client wins, notably in
the banking, utilities, retail and logistics sectors. This list
includes clients such as npower, our first client using Apple
Business Chat and logistics provider Hermes, who are using
IMIconnect to enhance its parcel delivery experience.
In addition to new client acquisitions a core objective
continues to be to enable a greater number of interactions for our
existing clients across multiple business functions. Success in
this effort was illustrated through an addition of IMIconnect to
the renewal of our IMIcampaign contract with one of the largest
mobile operators in the UK. This will significantly enhance the
number and complexity of customer journeys our platforms manage. In
the last six months, we have also successfully deployed major cloud
communications projects for two of the largest UK high street banks
which we expect to provide significant upsell opportunities going
forward.
There has also been growth in the SMB sector with initiatives to
upsell the Group product set to existing clients proving to be
successful. Textlocal continues to demonstrate year on year growth,
improving its market share within its core operating segments.
Our most recent UK acquisition, Healthcare Communications, has
to date met significant growth expectations. The launch of digital
patient letters is proving to be successful with 14 NHS Trusts and
Health Boards reporting cost savings of up to 51%, gaining
recognition at 'The NHS in the North - Excellence in Supply Awards'
in the Acute Hospital Sector and providing foundations for future
growth.
Our partner programme has also gained momentum in the region.
Through our relationship with BT, we have gained a new client in
the travel sector and signed an additional distribution contract
for our IMIchat, IMIbot.ai and IMIconnect products. There has also
been a significant client win in the banking sector through our
partnership with KCOM. We expect to deliver these solutions in the
second half of the year. In the US, we were recently recognised by
NICE inContact, a leading cloud contact centre vendor, as being an
innovative technology partner and we are receiving regular sales
opportunities from these partnerships.
The acquisition in July of Impact Mobile, Canada's leading
provider of end to end mobile engagement solutions, expands our
operational footprint in North America. At the time of acquisition,
we identified multiple revenue synergies between the businesses and
have initiated projects to combine technologies to deliver
additional capabilities for Impact Mobile's existing clients. We
are pleased with this earnings enhancing deal so far and hope to
see further progress in the coming months.
Post period end, on the 19(th) November, we completed the
acquisition of Express Pigeon, a US-based, email marketing platform
provider to enhance our email capabilities for SMB clients. As a
result of this acquisition and that of Impact Mobile, we will be
looking to consolidate our activities across North America. On the
same date, we have also exercised our right to acquire the
remaining 20% share of IMImobile North America, Inc, an earnings
neutral transaction. In consideration of this, the Company will
issue 888,566 ordinary shares of IMImobile PLC to the management of
IMImobile North America, Inc, some of which are subject to clawback
based on the future performance of the entity and continuing
service within the Group.
Middle East and Africa ("MEA") - Gross profit GBP4.6m (2017:
GBP5.6m)
We have continued to experience headwinds as a result of trading
conditions in Nigeria and new group policies at MTN, our largest
client in the region, which have led to a decline in volumes. This
has contributed to an overall decline of 31% in gross profit from
mobile operators. However, we have expanded our footprint in the
region and deployed projects into new Middle Eastern markets
including Jordan and Palestine.
We are pleased with the progress of the enterprise division in
the region with 20% gross profit growth, increasing from GBP1.4m to
GBP1.7m. This was driven by a number of successful deployments and
new contract wins including one of the largest banks in South
Africa, Capitec, using IMIcampaign and IMIconnect to deliver a
centralised client communications hub across its base of more than
10 million clients. We have also seen good progress with other
banks in the region using our innovative messaging solutions to
send digital bank statements that are highly visual and
personalised.
India and South East Asia ("SEA") - Gross profit GBP4.3m (2017:
GBP5.3m)
The India and South East Asia region experienced a decline of
19%. This was predominantly due to the recognition of deployments
for our major contract with Telenor for IMIdigital. Last year, a
high proportion of the deployments were in the first half of the
year whereas this year the deployments are expected to be more
equally weighted throughout the second half of the year. We have
also expanded our telecom offering with new services deployed in
Myanmar and Sri Lanka.
The enterprise business in the region continued to grow with
Textlocal India onboarding more than 6,000 new customers and seeing
a 65% increase in SMS volumes.
Market, Technology and Products
The technological landscape in which we operate continues to be
characterised by rapid change, which is dramatically altering the
relationships between customers and service providers in all
sectors. The combination of faster networks, better devices and
more intelligent software has resulted in significant disruption to
the value chain in many sectors.
Driven by the changes in person to person communications,
consumers now expect interactions with businesses to be
personalised, relevant, contextual, interactive and conducted in
real time. However, the majority of large enterprises struggle to
keep pace with these demands due to the prevalence of existing
legacy systems, established contractual agreements, complex
integration points and frequent regulatory changes.
This creates a huge opportunity for a new generation of
technology vendors and a threat to more established vendors.
Consequently, we are seeing consolidation in the markets that we
operate in; particularly amongst vendors with a single channel or
on-premise solution that are acquiring cloud and multi-channel
capabilities. We see this as validation of our existing approach
and believe that we are well positioned to take advantage of the
market opportunity due to our long-term investment in building our
own intellectual property.
We are in a great position to benefit from the introduction of
new messaging channels for businesses and we recently announced
that we are one of a few software providers that can offer Apple
Business Chat to our customers. Apple Business Chat is a powerful
new way for consumers to communicate directly with businesses using
the Messages app on the iPhone or iPad. We launched this additional
channel capability with npower, one of the largest utility
providers in the UK, to improve its customer experience for
consumers looking to switch to a smart meter.
We also progressed several Rich Communication Services ("RCS")
messaging initiatives with global enterprises and
telecommunications providers. The business has been working in
collaboration with partners, including the GSMA, Google, Vodafone
and its customers to drive the awareness and adoption of RCS
business messaging in the market. We expect more RCS opportunities
to develop in the next year when it becomes more widely adopted as
a business messaging channel.
We are pleased with the successful deployments of our IMIbot.ai
product for businesses that want to utilise artificial intelligence
for customer interaction automation. A leading retailer in the UK
using our IMIbot.ai product to improve contact centre agent
efficiency has reported that, in the first three months, a third of
all inbound customer chats were answered and resolved by a virtual
agent. This has resulted in a reduction in the number of queries
handled by human agents by 50%.
Growth Initiatives
We have continued to deliver on our long-term growth strategy
which focuses on four clear objectives:
1. To grow our share of interactions and customer journeys within existing customer accounts;
2. To accelerate market penetration through partnerships;
3. To be at the forefront of introducing new innovative customer engagement technologies; and
4. To leverage acquisitions for market distribution.
We have consistently generated growth from existing and
established clients. We have several customers using more than one
product and now have growing list of over 40 customers generating
more than half a million pounds per annum.
We are starting to see some success from the initial efforts
that we put into establishing and growing our partner network. We
have had significant client wins through our BT and KCOM
partnerships and expect to announce more partnerships in the second
half.
We expect the use of new rich media interactive communication
channels and the use of artificial intelligence and machine
learning to accelerate and we are at the forefront of exploring and
delivering the benefits of such technologies to our clients.
We have been successful to date with all our acquisitions which
have provided revenue synergies and we continue to review
acquisition opportunities on a regular basis. The recent
acquisition of Express Pigeon provides additional email
capabilities into the Group and further opportunities to enhance
our offering in the US market.
Outlook
The business to consumer, digital customer engagement landscape
continues to move in the direction that we have long anticipated.
Given our leading position in certain markets and sectors, we
believe we are ideally positioned to continue to benefit from these
changes. We have had a strong start to the second half and remain
confident about the Group's prospects for the full year. We expect
full year results to be in line with management expectations.
Jay Patel
CEO
IMIMOBILE PLC CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Unaudited Consolidated Income Statement
for the six months ended 30 September 2018
Six months Six months
ended ended
30 September 30 September
Notes 2018 2017
GBP000 GBP000
Revenue 4 67,233 53,149
Cost of sales (38,040) (28,490)
Gross profit 4 29,193 24,659
Operating costs:
Other operating costs (21,473) (18,957)
Depreciation of PPE and amortisation of
internally generated intangibles (2,010) (1,552)
Amortisation of acquired intangibles (1,119) (561)
Share-based payment charge:
* employee share schemes (497) (842)
* contingent consideration and put options on
acquisitions (2,294) (574)
Acquisition costs (652) (39)
Exchange gains / (losses) on the Nigerian
Naira 28 (357)
Operating profit 1,176 1,777
Finance income 254 -
Finance cost (274) (63)
Profit before tax 1,156 1,714
Tax (1,248) (681)
(Loss) / profit for the period (92) 1,033
(Loss) / profit for the period attributable
to:
Equity holders of the parent company (113) 1,073
Non-controlling interest 21 (40)
(Loss) / profit for the period (92) 1,033
Adjusted EBITDA(1) 7,720 5,702
Basic earnings per share 5 (0.2p) 1.8p
Adjusted basic earnings per share 5 7.3p 5.5p
Diluted earnings per share 5 (0.2p) 1.6p
Adjusted diluted earnings per share 5 6.6p 4.8p
The accompanying notes are an integral part of the consolidated
interim financial statements and are all attributable to continuing
operations.
([1]) See note 5 for details of adjusted performance measures,
adjusting items and a reconciliation of statutory results to
adjusted results.
IMIMOBILE PLC CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Unaudited Consolidated Statement of Comprehensive Income
for the six months ended 30 September 2018
Six months Six months
ended ended
30 September 30 September
2018 2017
GBP000 GBP000
Profit for the period (92) 1,033
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translation of foreign
operations
Equity holders of the parent (67) (2,240)
Non-controlling interest (14) (8)
Other comprehensive income / (expense) for
the period (81) (2,248)
Total comprehensive income for the period (173) (1,215)
Total comprehensive income / (expense) for
the period attributable to:
Equity holders of the parent (180) (1,167)
Non-controlling interest 7 (48)
Other comprehensive income for the period (173) (1,215)
The accompanying notes are an integral part of the consolidated
interim financial statements.
IMIMOBILE PLC CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Unaudited Consolidated Statement of Changes in Equity
for the six months ended 30 September 2018
Total equity
attributable
Share-based Capital Retained to Non-controlling
Share Share Translation payment restructuring earnings/ shareholders interest Total
capital premium reserve reserve reserve (deficit) of parent equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 31
March 2017 6,102 69,754 4,374 7,505 (29,040) (7,901) 50,794 (8) 50,786
Profit / (loss)
for the period - - - - - 1,073 1,073 (40) 1,033
Foreign exchange
differences - - (2,240) - - - (2,240) (8) (2,248)
Credit to equity
for share-based
payments - - - 1,262 - - 1,262 - 1,262
Deferred tax on
share-based
payments - - - - - 80 80 - 80
Proceeds from
share issue 29 80 - (14) - - 95 - 95
Balance at 30
September 2017 6,131 69,834 2,134 8,753 (29,040) (6,748) 51,064 (56) 51,008
Loss for the
period - - - - - (171) (171) (19) (190)
Foreign exchange
differences - - (375) - - - (375) (129) (504)
Net actuarial
losses
recognised
on defined
gratuity plan - - - - - (191) (191) - (191)
Credit to equity
for share-based
payments - - - 2,740 - - 2,740 - 2,740
Deferred tax on
share-based
payments - - - - - 250 250 - 250
Proceeds from
share issue 73 1,220 - (711) - - 582 - 582
Tax relief on
exercised
share-based
payments - - - - - 156 156 - 156
Cancellation of
share premium
account - (69,808) - - - 69,808 - - -
Non-controlling
interest
subscription
in shares of
IMImobile South
Africa Pty
Limited - - - - - - - 311 311
Balance at 31
March 2018 6,204 1,246 1,759 10,782 (29,040) 63,104 54,055 107 54,162
(Loss) / profit
for the period - - - - - (113) (113) 21 (92)
Foreign exchange
differences - - (67) - - - (67) (14) (81)
Credit to equity
for share-based
payments - - - 2,430 - - 2,430 - 2,430
Deferred tax on
share-based
payments - - - - - 468 468 - 468
Contingent
consideration
as
part of
acquisition - - - (2,387) - - (2,387) - (2,387)
Proceeds from
share issue 329 1,991 - (600) - - 1,720 - 1,720
Balance at 30
September 2018 6,533 3,237 1,692 10,225 (29,040) 63,459 56,106 114 56,220
The accompanying notes are an integral part of the consolidated
interim financial statements.
IMIMOBILE PLC CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Unaudited Consolidated Statement of Financial Position
as at 30 September 2018
As at As at
30 September 31 March
Notes 2018 2018
GBP000 GBP000
Non-current assets
Goodwill 41,647 33,265
Other intangible assets 30,921 20,420
Property, plant and equipment ("PPE") 4,314 4,609
Deferred tax assets 561 484
Total non-current assets 77,443 58,778
Current assets
Cash and cash equivalents 11,981 15,743
Trade and other receivables 44,411 40,094
Total current assets 56,392 55,837
Current liabilities
Trade and other payables (48,872) (43,996)
Provision for contingent consideration (1,806) (1,806)
Bank borrowings (1,641) (223)
Total current liabilities (52,319) (46,025)
Net current assets 4,073 9,812
Non-current liabilities
Provision for contingent consideration (557) (557)
Bank borrowings (19,615) (11,196)
Provision for defined benefit gratuity (920) (912)
Deferred tax liabilities (3,946) (1,763)
Other provisions (258) -
Total non-current liabilities (25,296) (14,428)
Net assets 56,220 54,162
Equity attributable to the owners of the
parent
Share capital 6,533 6,204
Share premium 3,237 1,246
Translation reserve 1,692 1,759
Share-based payment reserve 10,225 10,782
Capital restructuring reserve (29,040) (29,040)
Retained earnings 63,459 63,104
Equity attributable to shareholders of the
parent 56,106 54,055
Non-controlling interest 114 107
Total equity 56,220 54,162
The accompanying notes are an integral part of the consolidated
interim financial statements.
IMIMOBILE PLC CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Unaudited Consolidated Cash Flow Statement
for the six months ended 30 September 2018
Six months Six months
ended ended
30 September 30 September
Notes 2018 2017
GBP000 GBP000
Operating activities
Cash from operating activities 6 5,490 5,675
Tax paid (520) (237)
Net cash from operating activities 4,970 5,438
Investing activities
Interest received 254 -
Purchases of PPE and intangible assets (3,467) (2,968)
Sale of available-for-sale financial
assets - 28
Acquisition of subsidiary net of cash
acquired 7 (14,480) -
Contingent consideration as part of acquisition (2,387) -
Net cash used in investing activities (20,080) (2,940)
Financing activities
Bank loan received 10,000 -
Repayment of bank loans (163) (153)
Interest paid (274) (63)
Proceeds from issuance of Ordinary shares 1,720 95
Net cash used in financing activities 11,283 (121)
Net increase in cash and cash equivalents (3,827) 2,377
Cash and cash equivalents at beginning
of the period 15,743 14,662
Effect of foreign exchange rate changes 65 (1,644)
Cash and cash equivalents at end of the
period 11,981 15,395
The accompanying notes are an integral part of the consolidated
interim financial statements.
IMIMOBILE PLC CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Notes to the unaudited consolidated interim financial
statements
for the six months ended 30 September 2018
1. Basis of preparation
The condensed consolidated interim financial statements for the
six-month period ended 30 September 2018 have been prepared under
the measurement principles of IFRS, using accounting policies and
methods of computation consistent with those set out in the
Company's 31 March 2018 financial statements. As permitted by AIM
rules the Group has not applied IAS 34 'Interim reporting' in
preparing these interim reports.
IMImobile PLC (the "Company") is a company domiciled in the UK.
The consolidated interim financial statements of the Company for
the six-month period ended 30 September 2018 comprise of the
Company and its subsidiaries (together referred to as "the
Group").
The consolidated interim financial statements are prepared under
the historical cost convention. A presentational currency of UK
Pound Sterling has been used and accounts have been translated from
other functional currencies into UK Pound Sterling.
The preparation of the consolidated interim financial statements
in conformity with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise its
judgement in the process of applying the Group's accounting
policies.
The preparation of the consolidated interim financial statements
in conformity with International Financial Reporting Standards
requires management to make judgements, estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
consolidated interim financial statements and the reported amounts
of revenue and expenses during the period. Actual results could
differ from the estimates.
2. Basis of consolidation
The Group interim financial statements incorporate the interim
financial statements of the Company and entities controlled by the
Company (its subsidiaries) made up to 30 September 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
period are included in the consolidated interim 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 re-measured to its
fair value at the date when control is lost, with the change in
carrying amount recognised in the income statement.
3. Accounting policies
The principal accounting policies adopted are consistent with
those of the consolidated financial statements of IMImobile PLC for
the year ended 31 March 2018.
The accounting policies have been applied consistently
throughout the Group for the purposes of preparation of these
consolidated interim financial statements.
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, 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 MEA and SEA Total
GBP000 GBP000 GBP000 GBP000
Six months ended 30 September
2018
Revenue 51,041 7,687 8,505 67,233
Gross profit 20,299 4,576 4,318 29,193
Other operating costs (21,473)
Depreciation and amortisation (3,129)
Share-based payment charge (2,791)
Acquisition and restructuring
related costs (652)
Exchange gains on the Nigerian
Naira 28
Operating profit 1,176
Finance income 254
Finance cost (274)
Profit before tax 1,156
Tax (1,248)
Profit after tax (92)
Non-current assets 71,072 4,000 2,371 77,443
Six months ended 30 September
2017
Revenue 35,185 9,145 8,819 53,149
Gross profit 13,740 5,615 5,304 24,659
Other operating costs (18,957)
Depreciation and amortisation (2,113)
Share-based payment expense (1,416)
Acquisition and restructuring
related costs (39)
Exchange losses on the Nigerian
Naira (357)
Operating profit 1,777
Finance cost (63)
Profit before tax 1,714
Tax (681)
Profit after tax 1,033
Non-current assets 26,813 8,745 6,330 41,888
The accounting policies of the reportable segments are the same
as the Group's accounting policies described in note 3 for each
period. The revenue from external parties reported is measured in a
manner consistent with that in the consolidated interim 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.
During the period revenues from three customers (Customer A,
Customer B, Customer C and Customer D) accounted for 19% (2017:
18%), 9% (2017: 11%), 3% (2017: 7%) and 2% (2017: 5%) of the
Group's revenue respectively.
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 ("MRR") which is made up of a mix
of contracted, usage-based and transactional revenues.
2. Licence, 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 delivery model:
Licence,
Monthly one-off
recurring and professional
revenue services Total
GBP000 GBP000 GBP000
Six months ended 30 September 2018
Revenue 62,733 4,500 67,233
Gross profit 25,564 3,629 29,193
Six months ended 30 September 2017
Revenue 47,718 5,431 53,149
Gross profit 20,171 4,488 24,659
5. Earnings per share ('EPS')
Six months Six months
ended ended
30 September 30 September
2018 2017
pence pence
Basic EPS (0.2) 1.8
Adjusted basic EPS 7.3 5.5
Diluted EPS (0.2) 1.6
Adjusted diluted EPS 6.6 4.8
Six months Six months
ended ended
30 September 30 September
2018 2017
million million
Weighted average number of ordinary shares
for the purpose of basic EPS 63.5 61.1
Effect of dilutive potential ordinary shares:
share options 7.8 7.8
Weighted average number of ordinary shares
for the purpose of diluted EPS 71.3 68.9
A number of non-GAAP adjusted profit measures are used in these
consolidated interim financial statements. Adjusting items are
excluded from our headline performance measures by virtue of their
size and nature, in order to reflect management's view of the
performance of the Group. Summarised below is a reconciliation
between statutory results to adjusted results. The Group believes
that alternative performance measures such as adjusted EBITDA are
commonly reported by companies in the markets in which it competes
and are widely used by investors in comparing performance on a
consistent basis without regard to factors such as depreciation and
amortisation, which can vary significantly depending upon
accounting methods (particularly when acquisitions have occurred),
or based on factors which do not reflect the underlying performance
of the business. The adjusted profit after tax earnings measure is
also used for the purpose of calculating adjusted earnings per
share.
Statutory Adjusted
results A B C D E results
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Six months ended
30 September 2018
Revenue 67,233 - - - - - 67,233
Gross profit 29,193 - - - - - 29,193
Operating costs (28,017) 2,791 652 1,119 (28) - (23,483)
Operating profit 1,176 2,791 652 1,119 (28) - 5,710
Profit before tax 1,156 2,791 842 1,119 (28) - 5,880
Tax (1,248) 280 (62) (182) - - (1,212)
Profit after tax (92) 3,071 780 937 (28) - 4,668
EBITDA(1) 4,305 2,791 652 - (28) - 7,720
Cash generated from
operations 5,490 - 652 - - - 6,142
Basic EPS (pence) (0.2) 4.8 1.2 1.5 - - 7.3
Diluted EPS (pence) (0.2) 4.3 1.1 1.4 - - 6.6
Statutory Adjusted
results A B C D E results
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Six months ended
30 September 2017
Revenue 53,149 - - - - - 53,149
Gross profit 24,659 - - - - - 24,659
Operating costs (22,882) 1,416 39 561 357 - (20,509)
Operating profit 1,777 1,416 39 561 357 - 4,150
Profit before tax 1,714 1,416 39 561 357 - 4,087
Tax (681) 80 (5) (143) - - (749)
Profit after tax 1,033 1,496 34 418 357 - 3,338
EBITDA(1) 3,890 1,416 39 - 357 - 5,702
Cash generated from
operations 5,675 - 39 - - - 5,714
Basic EPS (pence) 1.8 2.4 0.1 0.7 0.6 (0.1) 5.5
Diluted EPS (pence) 1.6 2.2 0.1 0.5 0.5 (0.1) 4.8
Adjustments for acquisition related costs which management do
not consider to reflect underlying business performance:
A Share-based payment charge, which predominantly relates to acquisition activities.
B Costs of acquisition activity.
C Amortisation of acquired intangibles.
Other adjusting items:
D Exchange losses incurred on the Nigerian Naira following its
unpegging against the US Dollar on 20 June 2016. Management
consider this to be an adjusting item until such time as the
currency can be freely traded on the exchange market due to the
lifting of restrictions imposed by the Central Bank of Nigeria.
E 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.
(1) Unadjusted EBITDA is operating profit plus depreciation and
amortisation.
6. Notes to the Consolidated Cash Flow Statement
Six months Six months
ended ended
30 September 30 September
2018 2017
GBP000 GBP000
Cash flows from operating activities:
Profit before taxation 1,156 1,714
Adjustments:
Net interest cost 20 63
Share-based payments 2,791 1,416
Depreciation of PPE and amortisation of intangible
assets 3,129 2,113
Exchange (gains) / losses on the Nigerian
Naira (28) 357
Operating cash flows before movements in
working capital: 7,068 5,663
(Increase) / decrease in receivables (3,366) (6,097)
Increase / (decrease) in payables 1,638 6,159
Increase / (decrease) in provision for defined
benefit gratuity plan 21 44
Foreign exchange loss / (gain) on working
capital 129 (94)
Cash generated from operations 5,490 5,675
7. Acquisition of Impact Mobile Inc ("Impact Mobile")
On 3 July 2018 the Group acquired Impact Mobile for a maximum
total consideration of C$27.5 million (GBP15.8 million) comprising
an initial consideration of C$25 million (GBP14.6 million) paid in
cash at the time of completion and a further C$2.5 million (GBP1.5
million) paid in cash six months after completion.
Impact Mobile provides a full range of software solutions and
services to mobile operators, retailers, SMS aggregators,
government agencies and major household brands across Canada and
the United States. In addition to a comprehensive range of mobile
solutions, Impact Mobile's JumpTXT platform adds significant value
to clients by helping them to meet regulatory compliance
requirements, providing mobile engagement capabilities and
supplying carrier grade messaging infrastructure.
The acquisition is highly complementary to IMImobile's product
set and customer base and is expected to be immediately
significantly earnings enhancing for the Group. Impact Mobile's
existing reach into the US market is also highly appealing and the
acquisition provides further opportunity to strengthen the Group's
position in this market.
The acquisition will also strengthen IMImobile's North American
management team with the Impact Mobile team being retained within
the business to oversee the integration and delivery of future
growth initiatives. The Impact Mobile JumpTXT platform will be
integrated into IMImobile's core cloud infrastructure with expected
operational benefits.
The results of the acquired entity which have been consolidated
in the income statement from 3 July 2018 contributed GBP2.0 million
of revenue and a profit of GBP0.8 million to the profit
attributable to equity shareholders of the Group during the period.
Had Impact Mobile been acquired at the start of the period the
contribution would have been GBP3.8 million of revenue and a profit
of GBP1.5 million.
The provisional purchase price allocation is set out in the
table below:
Fair value
GBP000
Net assets acquired:
Identifiable intangible assets:
Customer relationships 7,967
Technology 462
Trade name 387
Deferred tax recognised on identifiable intangible assets:
Customer relationships (2,151)
Technology (125)
Trade name (104)
Property, plant and equipment 636
Intangible assets 432
Trade and other receivables 1,297
Cash and cash equivalents 95
Trade and other payables (1,393)
Net identifiable assets acquired 7,503
Goodwill 8,622
Total consideration 16,125
Cash consideration during the period 14,575
Cash acquired (95)
Consideration during the period net of cash acquired 14,480
Cash consideration during the period 14,575
Consideration due in less than one year 1,550
Total consideration 16,125
8. Post balance sheet event
Acquisition of Express Pigeon
On 19 November 2018 the Company acquired the trade and assets of
Express Pigeon, a US-based email marketing platform provider. The
total consideration will be $1.5 million.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR GGGMPGUPRPPB
(END) Dow Jones Newswires
November 20, 2018 02:01 ET (07:01 GMT)
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