TIDMIMO
RNS Number : 6791H
IMImobile PLC
07 December 2020
7 December 2020
IMIMOBILE PLC
("IMImobile" or "the Group")
Interim results for the
six months ended 30 September 2020
"Strong gross profit growth in cloud communication products;
momentum building in North America "
IMImobile PLC, a cloud communications software and solutions
provider , announces its consolidated unaudited interim results for
the six months ended 30 September 2020.
The Group is pleased to report it has delivered strong momentum
in gross profit and particularly encouraging progress in North
America. It has now achieved a five-year gross profit compound
annual growth rate (CAGR) of 19%.
Key financial highlights
-- Performance in line with Board expectations
-- Revenue down 9% to GBP75.9m, (2019: GBP83.0m) driven by
a change in the business model with one customer, which
has had a significant positive impact on gross profit margin,
increasing to 51.3% (2019: 42.4%)
-- Gross profit up 11% to GBP39.0m (2019: GBP35.2m)
o Gross profit growth of 24% in cloud communication products,
organic(1) growth flat. This division now accounts for c.90%
of Group gross profit
o Strong performance in the Americas with organic(1) cloud
communications gross profit growth of 16% in the region
-- Adjusted EBITDA(2) up 26% to GBP12.4m (2019: GBP9.8m)
-- Adjusted profit after tax(2) up 30% to GBP6.8m (2019: GBP5.2m)
-- Profit after tax on a statutory basis up 301% to GBP2.8m
(2019: GBP0.7m)
-- Adjusted diluted EPS(2) up 12% to 7.7p (2019: 6.9p)
-- Adjusted 'cash generated from operating activities'(2) of
GBP8.4m representing operating cash conversion(3) of 68%
(2019: 127%) due to a change in timing of collection from
a major client
-- Net cash(4) of GBP2.0m as at 30 September 2020, following
the Group's share placing in April which raised gross proceeds
of GBP22.2m.
Operational highlights
-- Maintained organic performance in the core cloud communications
product division
-- Strong organic growth delivered in the Americas:
o 30 new customer logos
o Expansion of work with current clients
o Very healthy pipeline of opportunities across multiple
sectors
-- Significant recovery in the UK Healthcare and small and
medium-size business (SMB) divisions in Q2, following earlier
COVID-19 related decline
-- Innovation delivered through launch of Business Messages
and Verified Calls by Google and new communication channels
being adopted by a number of major clients
-- Partnership programme continues to build momentum with agreements
signed with two leading, global mobile operators
-- 26 clients projected to provide gross profit of above GBP500k
per annum (full year to 31 March 2020: 24 clients)
-- Continued headwinds in the Operator VAS & Payments division
as expected. The Board is implementing a strategic review
of these activities.
Current trading and Outlook
-- The Group has delivered a resilient performance in the period
with recovery in Q2 in areas impacted by the COVID-19 pandemic
and the outlook for the current full year remains in-line
with the Board's expectations.
-- Increasing momentum from digital transformation trends,
the full year impact of deployments this year combined with
new client wins in the North American market and an exciting
pipeline of opportunities, mean that the Group is well positioned
to deliver an acceleration of growth and the Board expects
the trading performance for FY22 to be materially ahead
of its previous expectations.
(1) Excluding acquired business of 3Cinteractive and Rostrvm in
the current and prior years
(2) Adjusted for costs which management do not consider reflect
underlying business performance - see note 6 for details of
adjusted performance measures, adjusting items and a reconciliation
of statutory results to adjusted results
(3) Cash conversion is defined as adjusted cash generated from
operations (see note 6) as a percentage of adjusted EBITDA
(4) Cash and cash equivalents net of bank borrowings (excluding
capitalised borrowing costs)
Jay Patel, Chief Executive Officer of IMImobile PLC,
commented:
"We are very pleased with the resilience of the business during
the past six months, despite the current external circumstances.
This resilience is testament to our staff, technologies, and the
mission-critical nature of the interactions we deliver for our
clients. Continued growth has been driven by strategic execution
against our objective to enter the North American market. We are
particularly pleased with progress in new logo acquisition in the
US and in Europe. The Board remains confident for the future and
that the Group is well positioned for an acceleration of
growth."
For further information please contact:
IMImobile PLC c/o Alma PR
Jay Patel, Chief Executive Officer Tel: +44(0) 20 3405 0209
Mike Jefferies, Chief Financial
Officer
Alma PR Tel: +44(0) 20 3405 0205
Susie Hudson IMImobile@almapr.co.uk
Rebecca Sanders-Hewett
Kieran Breheny
Investec Bank - Nominated Adviser Tel: +44 (0)20 7597 5970
and Joint Broker
Henry Reast
Virginia Bull
N+1 Singer - Joint Broker Tel: +44 (0)20 7496 3000
Tom Salvesen
Justin McKeegan
About IMImobile PLC
imi mobile provides cloud communications software and services
that manage business-critical customer interactions at scale.
We believe that customer experience is the key competitive
advantage for consumer businesses. So, we're creating a world where
enterprises can stay constantly connected to their customers. A
world where every touchpoint, on every channel, is an opportunity
to deliver rich, engaging, intuitive experiences.
Our Customer Interaction Management (CIM) suite automates,
orchestrates and monitors interactions with disparate back-end
systems. This saves time and cuts costs for businesses, while
seamlessly connecting to customers on the devices they choose. We
deliver innovative, on-brand, business-critical customer
interactions for blue-chip global enterprises and leading
public-sector organizations including AA, Best Buy, BT, Capitec
Bank, Centrica, EE, Hermes, IHG, Mercedes, Orange, O2, Vodafone and
Walgreens.
imi mobile is a global business with offices across the UK, USA,
Canada, India, South Africa and UAE. With over 1,100 employees,
imimobile is quoted on the London Stock Exchange with the TIDM code
IMO.
Chief Executive's Report
We are very pleased with what we have achieved in the first half
of the year. We have maintained our organic performance in the core
cloud communications product division, despite the previously
communicated headwinds for healthcare and SMB sectors, and made
great strides in our largest growth market, North America. Together
with the impact of acquisitions made in the prior year, this
resulted in gross profit growth of 11% and an increase in our
adjusted EBITDA of 26%.
For many years, we have talked about how the adoption of new
digital communication channels and automation will transform
business to consumer interactions; improving customer experience
and reducing costs for businesses. The pandemic has brought this
more into focus for large enterprises and, over the last six
months, we have seen this become even more of a business
imperative. Businesses have quickly adapted their working processes
and how they communicate with their customers and we anticipate
this will continue moving forward.
Our vision is to revolutionise customer experience by creating
dynamic, always-on connections between global businesses and their
customers. Our mission is to orchestrate billions of the world's
best customer experiences (powered by the best software and
people).
COVID-19 update
COVID-19 has driven an acceleration in the digital communication
strategies of large enterprises and, although it has undoubtedly
created challenges, it has also demonstrated the mission-critical
nature of the interactions we deliver for our customers. We have
helped businesses rapidly transition their contact centres to
remote working with our contact centre application, imiengage. We
have also delivered emergency communications for our clients across
all sectors, including working with the major mobile operators in
the UK to send 'Stay at home' communications on behalf of the
government.
Our team have been exceptional throughout. As ever, they are at
the core of our success. Showing our appreciation for their efforts
has been at the front of my mind, and I am pleased to report that,
we have repaid half of the salary reductions implemented in March
and will repay the other half in December. All salaries were
returned to normal levels from 1 July, except those of the
Board.
Introduction of a new brand narrative
Alongside the delivery of this strong performance, we have also
introduced a new brand narrative and positioning. With our
customers in mind, the brand refresh was undertaken in order to
simplify the language around who we are and what we do, to clearly
define our products and services, and to unify all our operating
companies under one brand. This allows customers, partners, and
prospects to easily understand our core message and how the
different products and services we offer work and evolve together.
We feel this is particularly important when catering to the large
North American marketplace and will help promote brand awareness in
the region.
Our new narrative includes the introduction of one overarching
purpose: to make every interaction matter more. This is at the core
of everything we do. We now position our complete offering as the
'Customer Interaction Management' (CIM) suite, which helps
businesses to embrace new communication channels and enhance
customer experience without re-engineering existing systems.
Progress made against all 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 customer interactions within existing clients;
2. To accelerate market penetration of our technologies through partnerships;
3. To be at the forefront of introducing new innovative customer engagement technologies; and
4. To leverage acquisitions for market distribution.
Interactions
The continued growth in our share of customer interactions has
been driven by several factors, including the selling of our core
cloud product set to existing 3Cinteractive ("3C") clients. In FY21
to-date, we had 26 clients projected to provide gross profit of
above GBP500k per annum (FY20: 24 clients).
For example, we have now grown our share of interactions by 60%
for a major US 'Big Box' retailer (previously a 3C client) which is
now using imiconnect. The growth has been due to the launch of new
channels including Rich Communication Services ("RCS") as well as
new services such as curbside pickup and click and collect. In
another case, we have grown our share of interactions by 90% for a
major US automotive retailer (previously a 3C client) which is now
using imiconnect and imicampaign. This growth has been due to the
expansion of existing SMS marketing programmes and the launch of
new services such as click and collect, internal communications
with employees, and recruitment journeys.
Partnership programme
Momentum has continued for partnerships across the globe. In the
UK, for example, we signed an agreement with Vodafone Global
Enterprise, meaning we now have a channel relationship with three
of the major telecommunication enterprise teams in the country, and
have also onboarded Communisis and Blue Prism. In the US, we have
partnered with major cloud communication providers. We were also
pleased to secure partnerships with two large international telco
groups and have a number of large global opportunities in the
pipeline.
Alongside the new agreements signed, we remain focused on and
have been successful in growing our business with existing
partners. This includes, for example, incorporating our complete
CIM suite with BT and supplying our SMB offering to existing
partner, Telia.
Innovation
Emergent communication channels continue to be adopted by our
customers, with a number of major telco companies now using Rich
Communication Services ("RCS") for multiple customer journeys and
seeing an increase in engagement rates in comparison to traditional
SMS. Apple Business Chat has been launched for a number of large
enterprise clients including Centrica, Barclays and EE, as well as
momentum growing for WhatsApp Business in the APAC region.
We were also pleased to launch Google's Business Messages, where
customers can offer the ability for consumers to message them
within organic Google search results - such as Search or Maps -
with just one click, and Verified Calls, where customers can
improve call answer rates and increase consumer trust by helping
people understand the identity of a business calling them. Both of
these channels are powerful new ways for enterprises to improve
customer engagement and are seeing encouraging signs of interest
across our client base.
In the period, we established a 'Future Messaging' team that
will focus on ensuring we continue to lead innovation in our sector
technically and commercially. They research and ensure our product
roadmaps incorporate new customer engagement channels, develop
early commercial opportunities and business models as well as
support the organisation on sales and thought leadership
activities.
In addition, eClinic, our virtual health consultation product,
is now deployed at seven NHS trusts and we are starting to see
signs of an acceleration in the adoption of this type of product by
healthcare professionals. An example of this is the recent
deployment of a suite of solutions for King's College Hospital NHS
Foundation Trust (KCHT), purpose-built to improve patient
experience and increase staff efficiency. The solutions enable
better engagement, through patient portals and video consultation
platforms, whilst also helping to r educe any backlogs caused by
the Coronavirus pandemic .
Acquisitions
The acquisition of 3Cinteractive continues to bring value to the
group, and we are pleased that it is providing a springboard for
growth in North America as expected. We are also pleased with the
progress made in integrating Rostrvm's technology into the product
suite. Our goal on acquisition was to enhance our customer service
offering and we have successfully completed that.
As part of the brand refresh, we have now integrated the
majority of previous acquisitions under the imimobile brand.
Regional Review
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.
Cloud Communications Products - c.90% Group gross profit in the
period
Europe - Revenue GBP43.2m (2019: GBP54.9m); Gross profit
GBP17.8m (2019: GBP17.9m)
We delivered a solid performance in Europe, with COVID-19
related headwinds in the SMB and Healthcare sectors mitigated by
growth in the rest of the business. The declines seen in the
impacted sectors largely occurred in Q1, and in Q2 we have seen a
significant recovery, providing optimism that this trajectory will
continue into the second half. Textlocal UK, our brand which caters
to the retail & SMB sector, saw 30% more messages being sent in
Q2 in comparison to Q1. Whilst volumes in Healthcare have not
recovered to quite the same extent, we have seen significant
strategic progress within this sector as it increasingly adopts
digital channels for patient communications and interactions. We
secured a contract with Kings College NHS Trust and were chosen as
supplier of choice to deliver COVID-19 test results for Public
Health Wales.
Revenue in the period declined, solely driven by a change in the
business model with one customer, which has had a significant
positive impact on gross profit margin with little impact on gross
profit.
Our work with telco companies remained strong and we now work
with all four major operators in the UK. At the start of the
pandemic, we worked with the operators to send significant volumes
of emergency communications on behalf of the UK government. We were
also proud to have worked with EE and Vodafone to launch programmes
allowing for NHS and care workers to claim unlimited data during
the COVID-19 pandemic. This campaign was recently recognised at the
UK Digital Experience Awards 2020. Across the rest of Europe, we
achieved good progress winning new clients and implementing new
communication channels with clients. We have started an initial
implementation for RCS in Spain with a leading mobile operator.
During the period, we have particularly strengthened our
relationship with banks, winning two new major UK high street banks
as clients. We now work with eight of the top ten banks in the
UK.
Other new client wins include a value-added telecom reseller, a
large UK entertainment group and a significant emergency public
sector service as well as clients across the insurance and
recruitment industries.
Americas - Revenue GBP18.0m (2019: GBP8.1m); Gross profit
GBP12.5m (2019: GBP5.6m)
Momentum in the Americas has accelerated in the period, with the
integration of 3Cinteractive bolstering our position and allowing
us to win several new clients. This resulted in organic cloud
communications gross profit growth of 16% in the region.
A significant number of new contracts or upsells were signed in
the last six months, many with some of the largest and most
demanding businesses with the potential to grow into substantial
clients over time. Upsells include clients such as the largest
telco in Canada and a major US Big Box retailer as well as entirely
new client wins including for a Fortune 500 financial services
company and a public sector municipal organisation.
Importantly, we have also already expanded significantly the
scale of work we are executing for existing clients in North
America. An important example of this is with one of the world's
largest retailers, which we began working with earlier this
calendar year. We have now launched several new customer journeys
with this client, across several of its sub-divisions as well as in
Canada.
We completed our HIPAA assessment for several products during
the period, which ensures patient and health information are
processed in accordance with the privacy and security rules of the
HIPAA (Health Insurance Portability and Accountability Act of 1996)
legislation. This legislation is aimed at providing enhanced
security and data privacy around protected health information. Our
completion of the assessment means we have secured all the
necessary requirements to be able to provide business-critical
healthcare communications in the US and underpins further growth in
this sector there.
The pipeline of potential new business in our largest
addressable market has expanded significantly, and we are hiring in
the region to support this expansion. The growing value of our
customer relationships and momentum in our pipeline provide further
validation of the relevance of our evolving suite of products as
well as our strategic move in to the Americas.
Middle East and Africa ("MEA") - Revenue GBP3.9m (2019:
GBP4.5m); Gross profit GBP1.9m (2019: GBP2.0m)
In the Middle East, we have started deployment with one of the
major regional telco providers for our Communications Platform as a
Service (CPaaS) offering. This will provide us with a strategic
partner in the region for future growth.
In South Africa, highlights included securing a three-year
renewal with our largest client in the region, and signing a new
contract with leading financial services company, Old Mutual. We
have also upsold more of our CIM suite products to existing clients
in the region.
Asia Pacific ("APAC") - Revenue GBP3.7m (2019: GBP4.3m); Gross
profit GBP1.8m (2019: GBP1.9m)
The region has seen steady progress during the first half of the
year. We have seen a significant acceleration in the number of
customers wanting to use WhatsApp Business in the region due to the
reach and popularity of the channel in specific markets. We have
successfully onboarded a number of clients across the automotive
and retail sectors onto imiconnect to enable them to communicate
with their customers via WhatsApp.
Despite severe lockdown restrictions and business closures in
India, as well as increasing regulations around consumer contact,
the SMB business, Textlocal India, still grew by 4% year on year.
The platform now services over 26,000 active customers.
Operator VAS & Mobile Payments - c.10% Group gross profit in
the period
Revenue GBP7.0m (2019: GBP11.3m); Gross profit GBP4.9m (2019:
GBP7.8m)
As previously communicated and as expected, the Operator VAS
division continued to face headwinds in the period. The headwinds
were exacerbated by transaction volumes being impacted by the
pandemic. This has reduced the profitability of these
activities.
However, we have seen some client success during the period. We
have renewed a major contract with Orange group for services across
12 countries and helped mobile operators in Indonesia, Myanmar, and
Kuwait to enhance their offering with our Selfcare app during the
pandemic. Monthly active users have increased to over 11 million
(from 5 million) for one of the largest Indonesian mobile operators
using our platform and have established ourselves as a valued,
trusted technology partner.
Strategic Review of VAS and Payments
As stated in our full year accounts last year, we reorganised
the business into two separate business units based upon the
product set. This process reflected the fact that the 'Cloud
Communications Products' and 'Operator VAS and mobile payments'
business units operate independently with separate roadmaps and
management teams. This reorganisation enabled a greater focus on
product and service innovation and exploration of different market
opportunities in each unit.
Following the continuing headwinds in the VAS and Payments unit,
the Board has decided to conduct a strategic review of these
activities, which may include a sale to a third party, a sale to
the existing management team, or a reduction in its activities.
Outlook
We are excited by the scale of the future opportunity,
underpinned by the growing momentum in North America, the largest
addressable market for our product set, alongside the increasing
rate of adoption of our products worldwide. The outlook for the
full year remains in-line with the Board's expectations.
The Group expects that disruption caused by the pandemic will
accelerate demand from large enterprises for its Customer
Interaction Management suite as they focus more on large scale
digital transformation projects.
Increasing momentum from digital transformation trends, the full
year impact of deployments this year combined with new client wins
in the North American market and an exciting pipeline of
opportunities, mean that the Group is well positioned to deliver an
acceleration of growth and the Board expects the trading
performance for FY22 to be materially ahead of its previous
expectations.
Jay Patel
CEO
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.
IMIMOBILE PLC CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Unaudited Consolidated Income Statement
for the six months ended 30 September 2020
Six months Six months
ended ended
30 September 30 September
Notes 2020 2019
GBP000 GBP000
Revenue 4 75,897 83,039
Cost of sales (36,940) (47,843)
Gross profit 4 38,957 35,196
Operating costs:
Other operating costs (26,577) (25,353)
Depreciation of PPE and amortisation of
internally generated intangibles (3,344) (2,763)
Amortisation of acquired intangibles (3,360) (1,743)
Share-based payment charge:
* employee share schemes (489) (543)
* contingent consideration on acquisitions - (1,107)
Acquisition costs (1,102) (1,727)
Operating profit 4,085 1,960
Finance income 109 29
Finance cost (724) (694)
Profit before tax 3,470 1,295
Tax (636) (588)
Profit for the period 2,834 707
Profit / (loss) for the period attributable
to:
Equity holders of the parent company 2,790 687
Non-controlling interest 44 20
Profit for the period 2,834 707
Six months Six months
ended ended
30 September 30 September
Notes 2020 2019
5 /
Basic earnings per share 6 3.4p 1.0p
5 /
Diluted earnings per share 6 3.2p 0.9p
Six months Six months
ended ended
30 September 30 September
Notes 2020 2019
Adjusted EBITDA(1) 6 12,380 9,843
Six months Six months
ended ended
30 September 30 September
Notes 2020 2019
5 /
Adjusted basic earnings per share 6 8.3p 7.5p
5 /
Adjusted diluted earnings per share 6 7.7p 6.9p
The accompanying notes are an integral part of the consolidated
interim financial statements and are all attributable to continuing
operations.
([1]) Adjusted for costs which management do not consider
reflect underlying business performance - see note 6 for details of
adjusted performance measures, adjusting items and a reconciliation
of statutory results to adjusted results.
Unaudited Consolidated Statement of Comprehensive Income
for the six months ended 30 September 2020
Six months Six months
ended ended
30 September 30 September
2020 2019
GBP000 GBP000
Profit for the period 2,834 707
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translation of
foreign operations
Equity holders of the parent (2,167) 1,199
Non-controlling interest (22) 25
Other comprehensive (expense) / income
for the period (2,189) 1,224
Total comprehensive income for the period 645 1,931
Total comprehensive income for the period
attributable to:
Equity holders of the parent 623 1,886
Non-controlling interest 22 45
Total comprehensive income for the period 645 1,931
The accompanying notes are an integral part of the consolidated
interim financial statements.
Unaudited Consolidated Statement of Financial Position
as at 30 September 2020
As at As at
30 September 31 March
Notes 2020 2020
GBP000 GBP000
Non-current assets
Goodwill 69,352 70,028
Other intangible assets 49,957 53,398
Property, plant, equipment and right-of-use
assets 5,310 6,517
Deferred tax assets 1,436 724
Total non-current assets 126,055 130,667
Current assets
Cash and cash equivalents 46,711 25,089
Trade receivables and contract assets 37,972 40,238
Tax receivable 801 2,717
Withholding tax debtor 722 1,172
Other receivables 5,147 5,482
Total current assets 91,353 74,698
Current liabilities
Trade and other payables (42,239) (49,773)
Contract liabilities (10,340) (10,437)
Lease liabilities (1,248) (1,602)
Provision for contingent consideration (3,406) (3,500)
Bank borrowings 7 (3,903) (4,006)
Total current liabilities (61,136) (69,318)
Net current assets 30,217 5,380
Non-current liabilities
Lease liabilities (863) (1,231)
Provision for contingent consideration (4,745) (4,924)
Bank borrowings 7 (40,258) (42,741)
Provision for defined benefit gratuity (1,375) (1,299)
Deferred tax liabilities (6,516) (7,121)
Total non-current liabilities (53,757) (57,316)
Net assets 102,515 78,731
Equity attributable to the owners of the
parent company
Share capital 8,245 7,479
Share premium 48,897 27,555
Translation reserve (2,301) (134)
Share-based payment reserve 9,062 8,660
Capital restructuring reserve (29,040) (29,040)
Retained earnings 67,626 64,207
Equity attributable to the owners of the
parent company 102,489 78,727
Non-controlling interest 26 4
Total equity 102,515 78,731
The accompanying notes are an integral part of the consolidated
interim financial statements.
Unaudited Consolidated Statement of Changes in Equity
for the six months ended 30 September 2020
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
2019 6,671 6,666 1,475 12,540 (29,040) 62,000 60,312 (192) 60,120
Profit for
the period - - - - - 687 687 20 707
Foreign
exchange
differences - - 1,199 - - - 1,199 25 1,224
Credit to
equity for
share-based
payments - - - 1,578 - - 1,578 - 1,578
Proceeds
from share
issue,
including
share
options
exercised,
net of
expenses 754 19,964 - (533) - - 20,185 - 20,185
Debit to
share based
payment
reserve - - - (5,461) - - (5,461) - (5,461)
Deferred tax
on
share-based
payments - - - - - 46 46 - 46
Issue of
shares as
part of
acquisition 16 498 - - - - 514 - 514
Adoption of
IFRS 16 - - - - - 2 2 - 2
Balance at
30
September
2019 7,441 27,128 2,674 8,124 (29,040) 62,735 79,062 (147) 78,915
Profit for
the period - - - - - 1,285 1,285 36 1,321
Foreign
exchange
differences - - (2,808) - - - (2,808) 115 (2,693)
Net
actuarial
losses
recognised
on defined
gratuity
plan - - - - - (145) (145) - (145)
Credit to
equity for
share-based
payments - - - 741 - - 741 - 741
Proceeds
from share
issue,
including
share
options
exercised,
net of
expenses 38 427 - (205) - - 260 - 260
Deferred tax
on
share-based
payments - - - - - (1) (1) - (1)
Tax relief
on
exercised
share-based
payments - - - - - 335 335 - 335
Adoption of
IFRS 16 - - - - - (2) (2) - (2)
Balance at
31 March
2020 7,479 27,555 (134) 8,660 (29,040) 64,207 78,727 4 78,731
Profit for
the period - - - - - 2,790 2,790 44 2,834
Foreign
exchange
differences - - (2,167) - - - (2,167) (22) (2,189)
Credit to
equity for
share-based
payments - - - 489 - - 489 - 489
Proceeds
from share
issue,
including
share
options
exercised,
net of
expenses 766 21,342 - (87) - - 22,021 - 22,021
Deferred tax
on
share-based
payments - - - - - 629 629 - 629
Balance at
30
September
2020 8,245 48,897 (2,301) 9,062 (29,040) 67,626 102,489 26 102,515
The accompanying notes are an integral part of the consolidated
interim financial statements.
Unaudited Consolidated Cash Flow Statement
for the six months ended 30 September 2020
Six months Six months
ended ended
30 September 30 September
Notes 2020 2019
GBP000 GBP000
Operating activities
Cash from operating activities 8 6,729 11,340
Tax paid (251) (364)
Net cash from operating activities 6,478 10,976
Investing activities
Interest received 96 29
Purchases of PPE and intangible assets (3,041) (4,201)
Acquisition of subsidiary net of cash
acquired - (33,153)
Contingent consideration as part of
Infracast acquisition - (4,947)
Contingent consideration as part of
Healthcare acquisition - (1,750)
Net cash used in investing activities (2,945) (44,022)
Financing activities
Principal element of lease payments (901) (562)
Bank loan received - 40,635
Repayment of bank loans (2,264) (22,583)
Bank loan fees (10) (493)
Interest paid (610) (614)
Loans issued to related parties - (748)
Proceeds from issuance of Ordinary
shares 22,021 20,185
Net cash used in financing activities 18,236 35,820
Net increase in cash and cash equivalents 21,769 2,774
Cash and cash equivalents at beginning
of the period 25,089 13,247
Effect of foreign exchange rate changes (147) 389
Cash and cash equivalents at end of
the period 46,711 16,410
The accompanying notes are an integral part of the consolidated
interim financial statements.
Notes to the unaudited consolidated interim financial
statements
for the six months ended 30 September 2020
1. Basis of preparation
The condensed consolidated interim financial statements for the
six-month period ended 30 September 2020 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 2020 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 2020 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 2020.
The accounting policies have been applied consistently
throughout the Group for the purposes of preparation of these
consolidated interim financial statements.
The intangible assets accounting policy states that software
development costs recognised as assets are amortised over their
estimated useful lives, which do not exceed 10 years. For clarity,
all software development costs recognised as assets have been
amortised over an estimated useful life of 7 years in the current
and previous periods.
4. Business and geographical segments
The following is an analysis of the Group's revenue and results
by operating segment:
Europe Americas APAC MEA Total
GBP000 GBP000 GBP000 GBP000 GBP000
Six months ended 30 September 2020
Revenue
Cloud communication products 43,223 17,994 3,735 3,910 68,862
Operator VAS and mobile
payments 1,409 381 3,490 1,755 7,035
Total revenue 44,632 18,375 7,225 5,665 75,897
Gross profit
Cloud communication products 17,771 12,500 1,830 1,945 34,046
Operator VAS and mobile
payments 651 299 2,488 1,473 4,911
Total gross profit 18,422 12,799 4,318 3,418 38,957
Adjusted operating costs
(note 6)
Cloud communication products (21,607)
Operator VAS and mobile
payments (4,051)
Central (919)
Total adjusted operating
costs (26,577)
Adjusted EBITDA (note
6)
Cloud communication products 12,439
Operator VAS and mobile
payments 860
Central (919)
Total adjusted EBITDA 12,380
Depreciation and amortisation (6,704)
Share-based payment charge (489)
Acquisition costs (1,102)
Operating profit 4,085
Finance income 109
Finance cost (724)
Profit before tax 3,470
Tax (636)
Profit after tax 2,834
Europe Americas APAC MEA Total
GBP000 GBP000 GBP000 GBP000 GBP000
Six months ended 30 September
2019
Revenue
Cloud communication products 54,904 8,083 4,270 4,517 71,774
Operator VAS and mobile
payments 2,292 208 5,343 3,422 11,265
Total revenue 57,196 8,291 9,613 7,939 83,039
Gross profit
Cloud communication products 17,903 5,634 1,851 2,025 27,413
Operator VAS and mobile
payments 1,182 167 3,408 3,026 7,783
Total gross profit 19,085 5,801 5,259 5,051 35,196
Adjusted operating costs
(note 6)
Cloud communication products (18,133)
Operator VAS and mobile
payments (5,854)
Central (1,366)
Total adjusted operating
costs (25,353)
Adjusted EBITDA (note
6)
Cloud communication products 9,280
Operator VAS and mobile
payments 1,929
Central (1,366)
Total adjusted EBITDA 9,843
Depreciation and amortisation (4,506)
Share-based payment charge (1,650)
Acquisition costs (1,727)
Operating profit 1,960
Finance income 29
Finance cost (694)
Profit before tax 1,295
Tax (588)
Profit after tax 707
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.
Additional voluntary disclosures
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 reviewing operating division and
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 following is an analysis of the Group's revenue and result
by revenue model:
MRR NRR Total
GBP000 GBP000 GBP000
Six months ended 30 September 2020
Revenue
Cloud communication products 65,537 3,325 68,862
Operator VAS and mobile payments 6,516 519 7,035
Total revenue 72,053 3,844 75,897
Gross profit
Cloud communication products 30,851 3,195 34,046
Operator VAS and mobile payments 4,408 503 4,911
Total gross profit 35,259 3,698 38,957
Six months ended 30 September 2019
Revenue
Cloud communication products 68,741 3,050 71,791
Operator VAS and mobile payments 9,499 1,749 11,248
Total revenue 78,240 4,799 83,039
Gross profit
Cloud communication products 24,450 2,963 27,413
Operator VAS and mobile payments 6,561 1,222 7,783
Total gross profit 31,011 4,185 35,196
5. Earnings per share ('EPS')
Six months Six months
ended ended
30 September 30 September
2020 2019
pence pence
Basic EPS 3.4 1.0
Adjusted basic EPS 8.3 7.5
Diluted EPS 3.2 0.9
Adjusted diluted EPS 7.7 6.9
Six months Six months
ended ended
30 September 30 September
2020 2019
million million
Weighted average number of ordinary shares
for the purpose of basic EPS 81.9 69.6
Effect of dilutive potential ordinary shares:
share options 5.8 6.2
Weighted average number of ordinary shares
for the purpose of diluted EPS 87.7 75.8
See note 6 for a reconciliation of statutory results to adjusted
results. The adjusted profit after tax earnings measure is used for
the purpose of calculating adjusted earnings per share.
6. Adjusted performance measures
A number of adjusted performance measures are used in these
consolidated interim financial statements which are not defined or
specified under the requirements of International Financial
Reporting Standards (IFRS). 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 and facilitate the reader to compare performance against
prior years more easily.
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.
In particular, the Group presents on the face of the income
statement those material items of expenditure which, because of
their nature and/or expected infrequency of the events giving rise
to them, merit separate presentation to allow shareholders to
understand the elements of financial performance in the period. The
measures used are adjusted EBITDA, adjusted operating profit,
adjusted profit before tax, adjusted profit after tax, adjusted
diluted EPS and adjusted cash generated from operations.
Summarised below is a reconciliation from statutory results to
adjusted results.
Statutory Adjusted
results A B C D results
Six months ended: GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
30 September 2020
Revenue 75,897 - - - - 75,897
Gross profit 38,957 - - - - 38,957
Operating costs (34,872) 489 1,102 3,360 - (29,921)
Operating profit 4,085 489 1,102 3,360 - 9,036
Profit before tax 3,470 489 1,102 3,360 - 8,421
Tax (636) (83) (277) (658) - (1,654)
Profit after tax 2,834 406 825 2,702 - 6,767
EBITDA(1) 10,789 489 1,102 - - 12,380
Cash generated from
operations 6,729 - 1,635 - - 8,364
Basic EPS (pence) 3.4 0.5 1.0 3.3 0.1 8.3
Diluted EPS (pence) 3.2 0.5 0.9 3.1 - 7.7
Statutory Adjusted
results A B C D results
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
30 September 2019
Revenue 83,039 - - - - 83,039
Gross profit 35,196 - - - - 35,196
( 33,236 ( 28,116
Operating costs ) 1,650 1,727 1,743 - )
Operating profit 1,960 1,650 1,727 1,743 - 7,080
Profit before tax 1,295 1,650 1,832 1,743 - 6,520
Tax (588) 4 (217) (507) - (1,308)
Profit after tax 707 1,654 1,615 1,236 - 5,212
EBITDA(1) 6,466 1,650 1,727 - - 9,843
Cash generated from
operations 11,340 - 1,727 - - 13,067
Basic EPS (pence) 1.0 2.4 2.3 1.8 - 7.5
Diluted EPS (pence) 0.9 2.2 2.1 1.7 - 6.9
Adjustments for costs which management do not consider reflect
underlying business performance:
A Share-based payment charge net of tax
-- GBPnil (2019: GBP1,107,000) relates to contingent
consideration arising from acquisition activities
-- GBP13,000 credit (2019: GBP17,000 charge) relates to employee
share schemes granted as part of the Group's listing in June
2014
-- GBP87,000 (2019: GBP40,000) relates to employee share schemes
granted as a means of retention for key employees joining the Group
as a result of an acquisition
-- GBP332,000 (2019: GBP490,000) relates to on-going employee incentive share schemes
Share-based payment charges are commonly adjusted from headline
results by similar companies which operate in the same markets as
the Group. Management believe that share-based payments linked to
acquisitions and the Company's IPO should be considered one-off in
nature and do not reflect the underlying performance of the Group.
On-going employee incentive share schemes have not been
consistently granted to employees since IPO and the share-based
payment expense in the income statement has therefore not been
consistent over this period and the effect on profits do not
reflect the underlying performance of the Group.
B Costs directly relating to acquisitions including retention
bonuses payable to key management personnel of the acquired entity
agreed at the time of acquisition.
C Amortisation of acquired intangibles. The majority of
intangible assets acquired via acquisitions relate to value which
has been created prior to acquisition, the cost of which has been
expensed over time. Had the Group chosen to create these assets
instead of acquiring them the related costs would have been
expensed in prior periods. It is therefore considered appropriate
to exclude the amortisation of these historic expenses from the
adjusted results of the Group.
D 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 also includes the dilutive effect of share options not included
in statutory diluted EPS when they have an anti-dilutive
effect.
(1) Unadjusted EBITDA is operating profit plus depreciation and
amortisation.
7. Bank borrowings
As at As at
30 September 31 March
2020 2020
GBP000 GBP000
UK bank loans due in less than one year 4,000 4,000
Bank borrowing costs (131) (130)
3,869 3,870
South African bank loans due in less than one
year 34 136
Bank loans due in less than one year 3,903 4,006
UK bank loans due in more than one year 40,650 43,192
Bank borrowing costs (392) (451)
40,258 42,741
South African bank loans due in more than one - -
year
Bank loans due in more than one year 40,258 42,741
The Company agreed new UK bank loan facilities in August 2019
and amended in December 2019. The existing facilities were repaid
in full at the time the new facilities were agreed. The new
facility includes a GBP30,000,000 5-year term loan with annual
interest of between 1.65% and 2.35% plus LIBOR based on the level
of adjusted leverage, and a GBP20,000,000 revolving loan facility
repayable over 5 years and bearing interest at an annual rate of
between 1.65% and 2.35% plus LIBOR based on the level of adjusted
leverage.
A South African bank loan of ZAR 15,000,000 was taken by Archer
Digital Limited in October 2016, repayable over four years. The
loan is secured by fixed assets and bears interest at South
Africa's prime rate plus 1%.
The movements in bank borrowings over the six months were as
follows:
South
UK Africa
bank bank Subtotal Borrowing
loan loan costs Total
GBP000 GBP000 GBP000 GBP000 GBP000
At 31 March 2020 47,192 136 47,328 (581) 46,747
Principal repayments (2,163) (101) (2,264) - (2,264)
Capitalised bank borrowing
costs - - - (10) (10)
Amortisation of borrowing
costs - - - 68 68
Exchange differences (379) (1) (380) - (380)
At 30 September 2020 44,650 34 44,684 (523) 44,161
8. Notes to the Consolidated Cash Flow Statement
Six months Six months
ended ended
30 September 30 September
2020 2019
GBP000 GBP000
Cash flows from operating activities:
Profit before tax 3,470 1,295
Adjustments:
Net interest cost 615 665
Share-based payments 489 1,650
Depreciation of PPE and amortisation
of intangible assets 6,704 4,506
Operating cash flows before movements
in working capital: 11,278 8,116
Decrease in receivables 3,250 4,839
Decrease in payables (7,909) (1,684)
Increase in provision for defined benefit
gratuity plan 110 69
Cash generated from operations 6,729 11,340
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END
IR UPGCPPUPUPGQ
(END) Dow Jones Newswires
December 07, 2020 02:00 ET (07:00 GMT)
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