TIDMIMO
RNS Number : 3378J
IMImobile PLC
09 April 2020
9 April 2020
This announcement contains inside information as stipulated
under the Market Abuse Regulation (EU No 596/2014).
IMImobile PLC
("IMImobile", the "Company" or "Group")
Trading & COVID-19 Update and Equity Placing
IMImobile (AIM: IMO), a leading cloud communications software
and solutions provider, today provides an update on trading amid
the evolving COVID-19 situation and ahead of announcing its full
year results for the year ended 31 March 2020. The Company has also
separately announced its intention to launch a non-pre-emptive
placing of new ordinary shares.
Financial highlights
-- Strong trading performance continued in the second half of
the year with growth in all regions
-- Revenue up approximately 17% to at least GBP167.0m (FY19: GBP142.7m)
o Organic revenue growth of approximately 7%
-- Gross profit up approximately 26% to at least GBP79.0m (FY19: GBP62.6m)
o Organic growth of cloud communication products of
approximately 15%, now representing over 80% of gross profit
o Overall, organic gross profit growth of approximately 8%
-- Adjusted EBITDA(1) up approximately 20% to at least GBP21.0m (FY19: 18.0m)
-- Net debt of GBP22.3m with gross cash converted from operations of over 90%
(1) Adjusted EBITDA is defined as operating profit/(loss) before
depreciation, amortisation, acquisition related expenditure,
impairment charges and share-based compensation.
Operational highlights
-- Growth across all sectors and regions for cloud communication
platform, products and services
-- Strong momentum in North America having signed a significant
new client, one of the world's largest retailers, for low-code
CPaaS (Communications Platform as a Service) offering
-- Integration substantially completed for milestone acquisition of 3Cinteractive Corp ("3C")
-- Strong period of new client wins, partner acquisition and
renewal of all major contracts falling during the period
-- Growing adoption of new richer messaging channels including
RCS (Rich Communications Services), WhatsApp Business and Apple
Business Chat
-- Continued product innovation by launching and taking live of
new healthcare video consultation product, eClinic, for the NHS
-- Decline in Operator VAS and mobile payments in line with management expectations
COVID-19 update
The Company continues to monitor the situation closely and
review the impact of COVID-19 across the business. In order to
protect the health and safety of its team, clients and the
communities it operates in, over 1,100 global employees have been
transitioned to remote working. Business continuity has been
unaffected with the Group continuing to provide a full service to
clients.
Whilst there has been little impact to date, the Board
appreciates the global severity of the pandemic and associated
prevention measures, making the short-term outlook significantly
more uncertain with its ultimate effect on the business and end
customers yet to materialise. Notwithstanding the current lack of
material impact, management have taken rapid steps to reduce costs
in order to help offset reductions in messaging volumes and delayed
projects. As a precautionary measure, the Company has introduced a
hiring freeze and imposed early restrictions on travel. Temporary
three-month employee salary reductions have also been introduced,
including a 33% reduction for the Board, as well as arrangements
for the furlough of certain UK employees. In addition,
discretionary spend has been curtailed and all capital expenditure
is being managed prudently. All management decisions are undertaken
with a view to securing the financial strength of the Group whilst
also ensuring the Company is in a strong position once conditions
begin to normalise.
The Company is also involved with enabling additional emergency
communications for customers, which should help to mitigate any
negative impact. In addition, the Company has adapted its offering
to provide customers with specific solutions such as video
assistance for healthcare appointments or engineer call outs and
enabling the setup of remote contact centres to support
homeworking.
The Board believes that COVID-19 will have a limited impact on
the business in the medium to long term due to the fundamental need
for its customers to communicate and use digital channels for
customer interaction. The Group's client base is well diversified
across geographies and sectors and the long-term consequences may
expand the demand for its services if, subsequently, there is an
acceleration in digital transformation initiatives.
Equity placing - background to and reasons for
The last 12 months have been a period of significant investment
and strategic progress for the Group. In August 2019, the Group
completed the milestone strategic acquisition of 3C, which
strengthened its position in North America and established a global
leadership position in RCS Business Messaging. Apart from an
increase in cross and up-sell opportunities, management have seen
strong client wins across all regions, new product launches
utilising new richer messaging channels, including Apple Business
Chat, RCS and WhatsApp Business and have a strong pipeline of
organic and inorganic growth opportunities.
Against this backdrop however, given the uncertainty surrounding
the duration and impact of COVID-19, management have modelled
scenarios on differing degrees of revenue impact, duration and
periods of recovery reflecting a range of gross profit for FY21 of
between GBP90m and a prudent downside scenario of GBP70m (FY20:
c.GBP79.0m). Accordingly, the Board determined that in order to
provide maximum financial flexibility to the Group, the Company
should take proactive action and consult with major shareholders to
raise a minimum of GBP15m of additional headroom. Whilst there has
been little impact to date, should a material deterioration in
trading occur over a prolonged period, the funds raised will
provide sufficient flexibility to allow the Group to maintain an
appropriate cost base to capitalise on future commercial
opportunities, as well as ensuring the Group stays within its
banking covenants. This proactive action will safeguard the
investments and progress made to date and best position the Group
for the future. Subject to demand the Company also intends to use
additional funds raised within its existing 10 per cent. authority
to take advantage of future growth opportunities.
IMImobile has therefore today separately announced its intention
to conduct a non-pre-emptive placing of up to a maximum of
7,415,575 new ordinary shares of 10p each in the capital of the
Company, representing approximately 10 per cent. of the existing
issued share capital of the Company, at a price of 300p per share.
The Board has concluded the Placing is in the best interests of
shareholders and wider stakeholders and will promote the success of
the Company. This conclusion has been endorsed by that consultation
with its major shareholders.
Financial position
As at 31 March 2020, the Company had net debt of GBP22.3m and
gross debt of GBP47.4m having fully drawn on its GBP20.0m revolving
credit facility, with a resultant net debt / adjusted EBITDA -
capitalised development ratio of approximately 1.4x which is well
below the covenant level of 2.75x. The Group's balance sheet is
robust, with a free cash position, after considering intra-month
movements in working capital.
Covenants are tested quarterly and test adjusted leverage being
less than 2.75x adjusted EBITDA - capitalised development and
cashflow cover being no more than 1.25x. The Group expects to be
able to meet all covenant tests in FY21.
Trading Update Year to 31 March 2020
Cloud Communication Products
It has been a good period of strategic and commercial progress
for the Group's cloud communication product set which now
represents over 80% of Group gross profit. The broader market for
cloud-based communication products (Communication Platform as a
Service - "CPaaS") continues to grow strongly, with the Group's
cloud communication platform, products and services business
growing organically by 15% during the period.
In Europe, the Group has seen gross profit growth driven by new
client wins and cross selling to existing accounts of additional
products. The business has also invested further in partnerships
and signed, through competitive tender processes, new partnerships
with telecom and business services companies. The Group has renewed
all major contracts falling during the year and there is good
momentum going into the new financial year with a strong pipeline
of new business. The acquisition of UK contact centre provider,
Rostrvm, completed in December 2019, is progressing very well with
initial integration work completed and the generation of early
sales for the enhanced cloud contact centre offering.
The MEA and APAC regions have also experienced a solid trading
performance enhanced by the growth of new messaging channels such
as RCS and WhatsApp Business and the implementation of automation
technologies for major utility companies and banks.
The Group's North American business continues to make strong
progress and the Board is significantly encouraged having been
selected by one of the world's largest retailers for its CPaaS
offering ('IMIconnect') following a competitive tender process.
This project is now in deployment and provides clear evidence of
the relevance of the product suite in North America, the largest
addressable market for the Group's product set. In August 2019, the
Company acquired 3C. and the integration of that acquisition is now
substantially complete with the consolidation of all North American
operations under one team and management structure as well as
common business systems and processes. The focus since acquisition
has been to introduce the Group's communication product set to 3C's
customers and several opportunities are now being progressed.
Management are very encouraged by the significant pipeline of
opportunities created across all regions of the Group and in
particular the progress made in the USA, the largest single
addressable market for the Group's product set.
Operator VAS (Value Added Service) and Mobile Payments
The Group's operator VAS and mobile payments business
experienced a decline of 13% in line with management expectations.
This is predominately due to structural changes in the market for
mobile operator value added services.
However, despite these headwinds, the business has seen new
demand from mobile operators to move existing telco VAS
infrastructure to the cloud.
Jay Patel, Group Chief Executive of IMImobile, commented: "We
are pleased to report that the positive trading momentum from the
first half continued through the remainder of the year, and that we
have delivered another year of good growth. Our enhanced
foundations in the US and consolidation of operations are now
delivering results, and the recent strategic client wins in that
market represents a significant step forward for the Group.
The COVID-19 situation is evolving rapidly. There is currently
no certainty regarding the impact and duration on our business and
our customers. We continue to monitor the situation and
macroeconomic climate closely. We are focussed on taking actions to
protect our people's health and to secure the strength of our
financial position and operations. The Group's recurring revenue
base from long-standing, blue-chip customers, strong pipeline and
healthy cash generation gives us confidence of the Group's
long-term prospects. I would like to thank employees, customers,
shareholders and partners for their support and commitment during
these uncertain times."
This announcement is released by IMImobile plc and contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) 596/2014 (MAR), and is disclosed in
accordance with the Company's obligations under Article 17 of
MAR.
For the purposes of MAR and Article 2 of Commission Implementing
Regulation (EU) 2016/1055, the person responsible for releasing
this announcement is Mike Jefferies , Group CFO .
- ENDS -
For further information, please contact:
IMImobile PLC c/o Alma PR
Jay Patel, Group Chief Executive Officer
Mike Jefferies, Group Chief Financial
Officer
Alma PR Tel: +44 (0)20 3405
0205
Hilary Buchanan IMImobile@almapr.co.uk
Rebecca Sanders-Hewett
Susie Hudson
Investec Bank - Nominated Adviser and Tel: +44 (0)20 7597
Joint Broker 5970
Henry Reast
Virginia Bull
Tejas Padalkar
N+1 Singer - Joint Broker Tel: +44 (0)20 7496
3000
Tom Salvesen
Justin McKeegan
Iqra Amin
About IMImobile PLC
IMImobile is a communications software provider whose solutions
enable enterprises to automate digital customer communications and
interactions to improve customer experience and reduce operating
costs.
IMImobile's enterprise cloud communications software platform
orchestrates customer interactions, connecting existing business
systems with digital communications channels. Organisations that
trust us to deliver smarter digital customer engagement include
Hermes, Centrica, AA, O2, EE, BT, Walgreens, Tracfone, Ooredoo,
Best Buy, Express, three of the major retail banks in the UK and
public-sector organisations globally.
IMImobile is headquartered in London with offices across the UK,
Hyderabad, Toronto, Boca Raton, 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.
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END
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