TIDMIMO
RNS Number : 6121U
IMImobile PLC
26 November 2019
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the
publication of this announcement via Regulatory Information Service
("RIS"), this inside information is now considered to be in the
public domain.
26 November 2019
IMIMOBILE PLC
("IMImobile" or "the Group")
Interim results for the
six months ended 30 September 2019
"Strong organic growth and strategic progress in North
America"
IMImobile PLC, a cloud communications software and solutions
provider, today announces its consolidated unaudited interim
results for the six months ended 30 September 2019.
The Group is pleased to report it has continued to maintain
strong momentum and has now achieved a five-year gross profit
compound annual growth rate (CAGR) of 21%.
Key financial highlights
-- Performance in line with Board expectations, with on-going positive momentum
-- Revenue up 24% to GBP83.0m (2018: GBP67.2m)
o Organic(1) revenue growth of 18%
-- Gross profit up 21% to GBP35.2m (2018: GBP29.2m)
o Organic(1) gross profit growth of 12%
-- Adjusted EBITDA(2) up 27% to GBP9.8m (2018: GBP7.7m)
-- Adjusted profit after tax(2) up 12% to GBP5.2m (2018: GBP4.7m)
-- Profit after tax on a statutory basis of GBP0.7m (2018: loss of GBP0.1m)
-- Adjusted diluted EPS(2) up 5% to 6.9p (2018: 6.6p)
-- Adjusted cash generated from operating activities(2) of
GBP12.5m representing operating cash conversion(3) of 127% (2018:
80%)
-- Net debt(4) at 30 September 2019 of GBP21.8m (31 March 2019:
GBP7.5m) following the increase of debt facilities by cGBP15m to
fund the acquisition of 3Cinteractive for initial consideration of
$43.2m
Operational highlights
-- Organic growth in all regions and business units
-- Milestone strategic acquisition of 3Cinteractive Corp.
("3Cinteractive") being integrated, strengthening position in North
America and establishing a global leadership position in Rich
Communications Services ("RCS") Business Messaging
-- Strong period of new client wins - multiple new contract wins
across all regions, renewals of all major contracts falling due in
the period with strong pipeline of new opportunities
-- Various new launches utilising new richer messaging channels,
Apple Business Chat, RCS and WhatsApp Business
Subsequent events
-- Post period end acquisition of Rostrvm, a UK-based contact
centre software provider, for up to GBP3.5m to provide the Group
with additional voice channel and contact centre capabilities
(1) Excluding acquired business of Impact Mobile and 3C.
(2) See note 5 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 5) as a percentage of adjusted EBITDA
(4) Net debt is defined as cash and cash equivalents less bank
borrowings and reflects cash paid to acquire Impact Mobile in July
2018.
Jay Patel, Chief Executive Officer of IMImobile PLC,
commented:
"89% of companies are now competing primarily on the basis of
customer experience(1) , meaning demand for customer communication
software has never been greater. Our enterprise-grade offering, and
comprehensive set of applications addresses the needs of the
largest complex global organisations. With the introduction of new,
richer communication channels, we are excited about the
possibilities for dramatically improving customer experience."
"We have made strong organic progress throughout the first half
of the year and expect the positive momentum to continue through to
the year end and beyond. The acquisition of 3Cinteractive provides
a solid foundation in the US and we are very confident of success
in this market. The outlook for the year is positive and we are
trading in line with Board expectations."
[1] Gartner, Importance of Customer Experience Is on the Rise;
Marketing Is on the Hook.
An analyst meeting will be held at 11:00am today at the offices
of Investec Bank plc, 30 Gresham Street, London, EC2V 7QP. To
attend please contact Alma PR.
A video of the Company's results is available here:
http://bit.ly/IMOh1_30_9_19
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
Rebecca Sanders-Hewett IMImobile@almapr.co.uk
Hilary Buchanan
Susie Hudson
Kieran Breheny
Investec Bank - Nominated Adviser Tel: +44 (0)20 7597 5970
and Joint Broker
Henry Reast
Andrew Pinder
Tejas Padalkar
N+1 Singer - Joint Broker Tel: +44 (0)20 7496 3000
Justin McKeegan
Jonathan Dighe
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.
Chief Executive's Report
We are delighted with the progress we have achieved in the last
six months, having delivered organic growth across all the regions
in which we operate, with overall gross profit growth of 21%, of
which 12% was organic. This was driven by both winning new customer
contracts and increasing our share of interactions within existing
customers. Significant new customers typically procure through
competitive tender processes and our success in these demonstrates
the strength of our technology offering. We have won significant
competitive tenders in all regions in the period and these provide
the foundations and confidence for future success.
Technology will continue to fundamentally change how businesses
engage with their customers. A generation of new digital first
businesses such as Uber and Amazon have played a significant role
in reshaping consumer expectations for business interactions. We
continue to see many traditional large consumer-facing enterprises
face significant challenges in delivering great customer
experiences. Common challenges across sectors include difficulty
integrating new communication channels, inability to automate
customer interactions , data being spread across legacy systems and
departments as well as increasing regulatory requirements. These
common challenges underpin the need for technology solutions that
can bridge the needs of consumers and complexities of enterprise IT
systems.
Our core platform, IMIconnect, bridges the gap between business
systems and existing and new communications channels to deliver
mission-critical communications for large enterprises. We are
pleased that the core capabilities of the Group have increasingly
been recognised by leading analysts such as Gartner and IDC, most
recently being named as a major player in the 2019 IDC Worldwide
Cloud Communications Platform-as-a-Service Marketscape(1) .
With the acquisition of US-based company, 3Cinteractive, we have
greatly increased our North American footprint and have become the
global market leader for RCS Business Messaging. There is a now a
significant opportunity to leverage our core technologies in the
US, the largest addressable market for our product set, and to
leverage the expected growth in the RCS market, which is expected
to grow to GBP16.2 billion in 2023(2) .
[1]
http://ahoy-temp.twilio.com/idc-communications-platform-marketscape
[1]
https://www.gsma.com/futurenetworks/wp-content/uploads/2019/04/RCS-KL-Lab-Mobilesquared-Final.pdf
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 growth in share of interactions and customer journeys
continues within existing customers; we are currently projected to
have 376 customers over GBP25k p.a. revenue and 52 over GBP500k
p.a. revenue at full year, up from 316 and 43 respectively. Our
technology offering includes various applications for different
business functions, and we are making good progress selling
multiple products into the same organisation.
Partnership programme
The partnership programme continues to gain momentum with our
first client wins originated through new relationships with Telia
in Scandinavia and a major cloud contact centre software provider
in the US. We also announced a new RCS-based partnership with the
US-based leading network software provider, Mavenir. We have
developed a strong pipeline of further partnership opportunities
and we expect to have significant client wins in the second half of
the year.
Innovation
In the period, we launched a virtual clinic solution (branded
eClinic) for the NHS in the UK, which allows healthcare
professionals to conduct video consultations with patients as an
alternative to face-to-face appointments without the need to
download any additional applications or technology. This solution
will enable the NHS to operate in a more effective and
cost-efficient way. We also incorporated new communications
channels such as Apple Business Chat, RCS and WhatsApp Business
into many of our products and successfully launched live services
for nPower, Vodafone, EE and Vauxhall. We are one of only a few
official technology providers approved by Google, Apple and
Facebook to provide blue-chip companies with these channels.
Acquisitions
The acquisition of 3Cinteractive has consolidated our position
in the North American market and provides a great platform for
significant growth. In the first couple of months since the
acquisition was completed, we have had several workshops with the
customers of 3Cinteractive and are encouraged by the pipeline of
opportunities already developing to cross-sell and up-sell the core
product set. We have a successful track record with our previous
acquisitions in delivering revenue synergies and continue to review
acquisition opportunities on a regular basis.
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. Given
the growing proportion of our business now in North America,
IMImobile will report Europe and the Americas separately going
forward.
Europe - Revenue up 23% to GBP57.2m (2018: GBP46.6m); Gross
profit up 10% to GBP19.1m (2018: GBP17.3m)
54% of Group gross profit in the period
Continued momentum was delivered in Europe, with organic gross
profit growth of 10%. We are pleased to have delivered MRR (monthly
recurring revenue) growth in each of our key business units, namely
operators, enterprise, public sector and SMB. We have cemented our
market leading position in the UK and are confident of additional
budgets being made available for digital transformation. In the
period, we have also started delivering services in Scandinavia and
developing opportunities across Europe.
The initial opportunity for RCS has been in helping mobile
operators use the channel for communication with their own
customers and we have been working with the three major UK
operators in launching specific use cases to test and learn. We
have also worked with them to develop the commercial strategy for
enterprises and expect A2P ("application to person") RCS
functionality to be available for enterprises in the coming months.
This will be a good opportunity for the business to demonstrate its
technology leadership. Post period end, we also renewed and
enhanced the scope of a major long-term contract with a leading
operator for messaging gateway services.
We have had multiple contract wins within the enterprise sector.
In the banking sector, our growth has been driven by fraud
prevention use cases and regulatory requirements for notifications.
We have also had good traction within the utilities and gambling
and gaming sectors and have a healthy pipeline of new business
opportunities.
Our UK Healthcare division continues to perform well with
communication volumes up by over 20% and services launched with
four new NHS Trusts. The "patient portal" proposition that delivers
digital letters to replace physical letters where possible, has
good momentum and has been recognised within the industry, winning
multiple awards including 'Best Digital Solution' at the Public
Sector Paperless awards and 'Best Time Administration Savings' at
the Health Tech awards.
Our product in the SMB segment, Textlocal, continues to grow
strongly with record trading months in the period. The product has
over 14,500 active customers with growth being driven by the higher
spend customers that have the potential to be up-sold additional
services.
We are also pleased with the momentum gained through established
partnerships. We have secured our first client through our Telia
partnership and have a good pipeline of other partner-led
opportunities.
Post period end, on 25 November, we completed the acquisition of
Rostrvm Solutions Limited, a UK-based contact centre software
provider, for a consideration of up to GBP3.5 million. This
acquisition will provide us with additional voice channel and
contact centre capabilities to enhance our customer service
offering. The Group has successfully worked with Rostrvm previously
on cloud contact centre opportunities. For more information on this
acquisition, please see Note 9.
Americas - Revenue up 87% to GBP8.3m (2018: GBP4.4m); Gross
profit up 97% to GBP5.8m (2018: GBP3.0m)
17% of Group gross profit in the period
Following a successful round of equity fundraising of GBP20
million in July 2019 and increased debt facilities of GBP42 million
the Group completed the milestone strategic acquisition of US-based
mobile engagement platform company, 3Cinteractive, in August 2019.
As previously highlighted, this acquisition considerably
strengthened our operational capabilities in the region and
established the group as a global leader for RCS Business
Messaging. The acquisition has significantly strengthened the
regional management team and we are now confident that we have the
necessary experience, scale and strength of offering to drive
significant growth in the largest addressable market for the
Group's products. Since the acquisition completed in late August,
we have consolidated all the North American operations into one
team, realigned reporting structures and targets and put in place a
Group management structure that prioritises this region.
The existing Americas business continued to perform well, with
organic growth of 4% driven by increasing messaging volume in the
Canadian market where we have a leadership position in aggregation
services. The increasing volume was from existing customers and a
broad spread of new aggregation customers.
With the enhanced teams in the region, we have now been able to
make available the core technologies of the Group in both the US
and Canada and expect new clients signed in the first half to go
live in the second half of the year. We also engaged in a series of
workshops with existing clients and the initial feedback has been
very positive.
Middle East and Africa ("MEA") - Revenue up 3% to GBP7.9m (2018:
GBP7.7m); Gross profit up 10% to GBP5.0m (2018: GBP4.6m)
14% of Group gross profit in the period
The MEA region achieved 10% organic gross profit growth with
growth both in the enterprise and mobile operator segments.
After a period of headwinds, the operator segment has
stabilised, and we expect new customers that have been developed in
the first half to contribute to the second half performance.
We have been successful in developing new business in the UAE
for our core technology capabilities. This includes a new
multi-country contract with one of the largest banks in the Middle
East for IMIchat and we have also launched a chatbot solution for
the Dubai Electricity and Water Authority (DEWA).
In South Africa, we continue to experience strong growth in the
financial services sector with additional long-term contracts
secured including a new multi-year contract with one of the largest
banks in the region.
We remain excited about our prospects in the MEA region and have
a good pipeline of opportunities across all the major sectors in
which we operate.
Asia Pacific ("APAC") - Revenue up 13% to GBP9.6m (2018:
GBP8.5m); Gross profit up 22% to GBP5.3m (2018: GBP4.3m)
15% of Group gross profit in the period
The APAC region delivered strong organic gross profit growth of
22%. Growth came from across the different business units.
The operator segment was robust as we continue to deliver
projects to Telenor under the multi-product framework established
over 2 years ago. We also have developed new promising operator
relationships in Indonesia and will be delivering solutions that
automate customer services in the second half. Enterprise momentum
has been accelerating and we have successfully onboarded several
new blue-chip, enterprise customers such as Hyundai, Britannia and
Skoda onto IMIconnect, enabling these major brands to communicate
with their customers using WhatsApp.
Textlocal India has also continued to perform very well; the
business experienced significant year on year growth and has
onboarded 6,000 new customers during the first six months of the
year. Over 120 million messages were sent using the platform in
September and there is a growing pipeline of customers wanting to
use WhatsApp as well.
Outlook
The Board has been encouraged by the strong first half of the
year having delivered growth in all regions in which the Group
operates. We remain excited by the structural growth opportunity in
customer communications and, with an experienced team established
in key geographic markets, the Board believes that the Group is
well positioned to continue to deliver on its strategic priorities
in the second half with current trading in line with
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 2019
Six months Six months
ended ended
30 September 30 September
Notes 2019 2018
GBP000 GBP000
Revenue 4 83,039 67,233
Cost of sales (47,843) (38,040)
Gross profit 4 35,196 29,193
Operating costs:
Other operating costs (25,353) (21,473)
Depreciation of PPE and amortisation of
internally generated intangibles (2,763) (2,010)
Amortisation of acquired intangibles (1,743) (1,119)
Share-based payment charge:
* employee share schemes (543) (497)
* contingent consideration on acquisitions (1,107) (2,294)
Acquisition costs (1,727) (652)
Exchange gains on the Nigerian Naira - 28
Operating profit 1,960 1,176
Finance income 29 254
Finance cost (694) (274)
Profit before tax 1,295 1,156
Tax (588) (1,248)
Profit / (loss) for the period 707 (92)
Profit / (loss) for the period attributable
to:
Equity holders of the parent company 687 (113)
Non-controlling interest 20 21
Profit / (loss) for the period 707 (92)
Adjusted EBITDA(1) 9,843 7,720
Basic earnings per share 5 1.0p (0.2p)
Adjusted basic earnings per share 5 7.5p 7.3p
Diluted earnings per share 5 0.9p (0.2p)
Adjusted diluted earnings per share 5 6.9p 6.6p
The accompanying notes are an integral part of the consolidated
interim financial statements and are all attributable to continuing
operations.
([1]) Adjusted EBITDA is operating profit plus depreciation and
amortisation, share based payment charges, acquisition related
costs and exchange gains on the Nigerian Naira. See note 5 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 2019
Six months Six months
ended ended
30 September 30 September
2019 2018
GBP000 GBP000
Profit / (loss) for the period 707 (92)
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translation of foreign
operations
Equity holders of the parent 1,202 (67)
Non-controlling interest 25 (14)
Other comprehensive income / (expense) for
the period 1,227 (81)
Total comprehensive income / (expense) for
the period 1,934 (173)
Total comprehensive income / (expense) for
the period attributable to:
Equity holders of the parent 1,889 (180)
Non-controlling interest 45 7
Total comprehensive income / (expense) for
the period 1,934 (173)
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 2019
Total equity
Capital attributable Non-controlling
Share-based restructuring Retained to interest
Share Share Translation payment reserve earnings/ shareholders Total
capital premium reserve reserve (deficit) of parent equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
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
Debit to share
based payment
reserve - - - (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
Loss for the
period - - - - - (1,142) (1,142) (78) (1,220)
Foreign exchange
differences - - (217) - - - (217) 83 (134)
Net actuarial
losses
recognised
on defined
gratuity plan - - - - - (9) (9) - (9)
Credit to equity
for share-based
payments - - - 3,989 - - 3,989 - 3,989
Deferred tax on
share-based
payments - - - - - (655) (655) - (655)
Proceeds from
share issue 14 199 - (127) - - 86 - 86
Debit to share
based payment
reserve - - - (1,547) - - (1,547) - (1,547)
Tax relief on
exercised
share-based
payments - - - - - 347 347 - 347
Issue of shares
as part of
acquisition 124 3,230 3,354 3,354
Subscription in
non-controlling
interest's
shares of
IMImobile
South Africa
Pty Limited - - - - - - - (311) (311)
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
Deferred tax on
share-based
payments - - - - - 46 46 - 46
Debit to share
based payment
reserve - - - (5,461) - - (5,461) - (5,461)
Proceeds from
share issue 754 20,626 - (533) - - 20,847 - 20,847
Cost of share
issue - (662) - - - - (662) - (662)
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
The accompanying notes are an integral part of the consolidated
interim financial statements.
Unaudited Consolidated Statement of Financial Position
as at 30 September 2019
As at As at
30 September 31 March
Notes 2019 2019
GBP000 GBP000
Non-current assets
Goodwill 69,598 43,637
Other intangible assets 53,636 29,607
Property, plant and equipment ("PPE") 7,574 4,347
Deferred tax assets 1,948 550
Total non-current assets 132,756 78,141
Current assets
Cash and cash equivalents 16,410 13,247
Trade and other receivables 50,041 50,615
Total current assets 66,451 63,862
Current liabilities
Trade and other payables (62,965) (54,385)
Provision for deferred/contingent consideration (2,665) (1,806)
Bank borrowings 6 (3,486) (1,611)
Total current liabilities (69,116) (57,802)
Net current (liabilities) / assets (2,665) 6,060
Non-current liabilities
Provision for deferred/contingent consideration (5,001) (57)
Bank borrowings 6 (34,733) (19,120)
Provision for defined benefit gratuity (1,148) (1,032)
Deferred tax liabilities (8,952) (3,872)
Other provisions (1,342) -
Total non-current liabilities (51,176) (24,081)
Net assets 78,915 60,120
Equity attributable to the owners of the
parent
Share capital 7,441 6,671
Share premium 27,128 6,666
Translation reserve 2,674 1,475
Share-based payment reserve 8,124 12,540
Capital restructuring reserve (29,040) (29,040)
Retained earnings 62,735 62,000
Equity attributable to shareholders of the
parent 79,062 60,312
Non-controlling interest (147) (192)
Total equity 78,915 60,120
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 2019
Six months Six months
ended ended
30 September 30 September
Notes 2019 2018
GBP000 GBP000
Operating activities
Cash from operating activities 7 10,778 5,490
Tax paid (364) (520)
Net cash from operating activities 10,414 4,970
Investing activities
Interest received 29 254
Purchases of PPE and intangible assets (4,201) (3,467)
Acquisition of subsidiary net of cash
acquired 8 (33,153) (14,480)
Contingent consideration as part of Infracast
acquisition (4,947) (2,387)
Contingent consideration as part of Healthcare
acquisition (1,750) -
Net cash used in investing activities (44,022) (20,080)
Financing activities
Bank loan received 40,635 10,000
Repayment of bank loans (22,583) (163)
Bank loan fees (493) -
Interest paid (614) (274)
Loans issued to related parties (748) -
Proceeds from issuance of Ordinary shares 20,185 1,720
Net cash used in financing activities 36,382 11,283
Net increase in cash and cash equivalents 2,774 (3,827)
Cash and cash equivalents at beginning
of the period 13,247 15,743
Effect of foreign exchange rate changes 389 65
Cash and cash equivalents at end of the
period 16,410 11,981
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 2019
1. Basis of preparation
The condensed consolidated interim financial statements for the
six-month period ended 30 September 2019 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 2019 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 2019 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 2019.
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 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, Americas, Asia-Pacific (APAC) 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 Americas MEA APAC Total
GBP000 GBP000 GBP000 GBP000 GBP000
Six months ended 30 September
2019
Revenue 57,196 8,291 7,939 9,613 83,039
Gross profit 19,085 5,801 5,051 5,259 35,196
Operating costs (33,236)
Operating profit 1,960
Net finance cost (665)
Profit before tax 1,295
Tax (588)
Profit after tax 707
Six months ended 30 September
2018
Revenue 46,611 4,430 7,687 8,505 67,233
Gross profit 17,348 2,951 4,576 4,318 29,193
Operating costs (28,017)
Operating profit 1,176
Net finance cost (20)
Profit before tax 1,156
Tax (1,248)
Profit after tax (92)
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.
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. Non-recurring revenue ("NRR") which is made up of 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:
MRR NRR Total
GBP000 GBP000 GBP000
Six months ended 30 September 2019
Revenue 78,240 4,799 83,039
Gross profit 31,011 4,185 35,196
Six months ended 30 September 2018
Revenue 62,733 4,500 67,233
Gross profit 25,564 3,629 29,193
5. Earnings per share ('EPS')
Six months Six months
ended ended
30 September 30 September
2019 2018
pence pence
Basic EPS 1.0 (0.2)
Adjusted basic EPS 7.5 7.3
Diluted EPS 0.9 (0.2)
Adjusted diluted EPS 6.9 6.6
Six months Six months
ended ended
30 September 30 September
2019 2018
million million
Weighted average number of ordinary shares
for the purpose of basic EPS 69.6 63.5
Effect of dilutive potential ordinary shares:
share options 6.2 7.8
Weighted average number of ordinary shares
for the purpose of diluted EPS 75.8 71.3
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 and facilitate the reader to compare
performance against prior years more easily. 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 results
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Six months ended
30 September 2019
Revenue 83,039 - - - - 83,039
Gross profit 35,196 - - - - 35,196
Operating costs (33,236) 1,650 1,727 1,743 - (28,116)
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 10,778 - 1,727 - - 12,505
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
Statutory Adjusted
results A B C D results
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
Adjustments for costs which management do not consider reflect
underlying business performance:
A Share-based payment charge net of tax
-- GBP1,107,000 (2018: GBP2,294,000) relates to contingent
consideration arising from acquisition activities
-- GBP547,000 (2018: GBP777,000) relates to 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.
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 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.
(1) Unadjusted EBITDA is operating profit plus depreciation and
amortisation.
6. Bank borrowings
As at As at
30 September 31 March
2019 2019
GBP000 GBP000
UK bank loans due in less than one year 3,252 1,392
South African bank loans due in less than one
year 234 219
Bank loans due in less than one year 3,486 1,611
UK bank loans due in more than one year 34,693 18,898
South African bank loans due in more than one
year 40 222
Bank loans due in more than one year 34,733 19,120
In August 2019 the UK bank loans outstanding at year end were
repaid in full in order to drawdown new debt facilities to fund the
acquisition of 3C. The new debt facilities include:
-- GBP14,395,000 with a five-year term and an annual interest
rate of between 1.65% and 2.35% plus LIBOR, based on the level of
net leverage.
-- GBP25,000,000 repayable over five years and bearing interest
at an annual rate of between 1.65% and 2.35% plus LIBOR, based on
the level of net leverage. Principal repayments of GBP837,500 were
made in the period.
-- Loan related costs of GBP493,000 have been capitalised and
amortised in line with the five-year term of the loans.
A South African bank loan of ZAR 15,000,000 was taken by Archer
Digital Limited in October 2016 and is repayable over four years.
The loan is secured by fixed assets and bears interest at South
Africa's prime rate plus 1%. Principal repayments of GBP103,000
were made in the period.
7. Notes to the Consolidated Cash Flow Statement
Six months Six months
ended ended
30 September 30 September
2019 2018
GBP000 GBP000
Cash flows from operating activities:
Profit before taxation 1,295 1,156
Adjustments:
Net interest cost 665 20
Share-based payments 1,650 2,791
Depreciation of PPE and amortisation of intangible
assets 4,506 3,129
Exchange (gains) / losses on the Nigerian
Naira - (28)
Operating cash flows before movements in
working capital: 8,116 7,068
Decrease / (increase) in receivables 4,839 (3,366)
(Decrease) / increase in payables (2,246) 1,638
Increase in provision for defined benefit
gratuity plan 69 21
Foreign exchange loss on working capital - 129
Cash generated from operations 10,778 5,490
8. Acquisition of 3CInteractive Corp ("3C")
On 26 August 2019 the Group acquired 3C for a total
consideration of $53.8 million ($53.2 million on a normalised
working capital basis) (GBP44.0 million) comprising:
-- initial consideration of $43.8 million (GBP35.8 million)
settled in cash, funded through the drawdown of new debt facilities
(see note 6) and the raising of GBP19.6 million from the placing of
6,533,422 new Ordinary shares in the Company net of the costs of
share issue; and
-- deferred payments of $10.0 million (GBP8.2 million) to be
partly settled in cash and partly through the issue of 1,937,146
new Ordinary shares in the Company deferred for up to two years.
These payments have been discounted to their net present value.
3C has direct relationships with US blue-chip enterprises and
all major US carriers and provides a number of mobile engagement
capabilities to enterprises, including mobile messaging, mobile
coupons, mobile wallet, mobile web, and more across the United
States. 3C is a pioneer in the Rich Communications Services (RCS)
Business Messaging market in North America and the acquisition will
see IMImobile establish a leadership position in deploying RCS
Business Messaging solutions for large consumer-facing brands and
enterprises globally.
The acquisition builds on the Group's position in North America
which is the largest addressable market for its cloud product set.
3C's entrenched relationships with their long-standing blue-chip
enterprise clients provides a market position that would have been
difficult to achieve organically, and the Group is confident this
will provide a solid foundation for up-sell and cross-sell of
IMImobile's cloud platform capability. There is also a considerable
opportunity to leverage 3C's direct connectivity with US mobile
operators to attract new customers. Significant cost synergies have
also been identified in technology development and central
management.
3C has a highly experienced management team and the founders and
existing management team will remain with the Group. Under
IMImobile employment they will be incentivised to receive a cash
bonus of up to $2m subject to continuous employment over a two-year
period post completion of the Acquisition and up to a maximum of a
further self-generating $4m subject to a combination of stretching
gross profit growth and EBITDA performance conditions over the same
period.
The results of the acquired entity which have been consolidated
in the income statement from 26 August 2019 contributed GBP1.9
million of revenue and a loss of GBP0.2 million to the profit
attributable to equity shareholders of the Group during the period.
Had 3C been acquired at the start of the period the contribution
would have been GBP12.9 million of revenue and a loss of GBP0.1
million after adjusting for acquisition related expenses.
The provisional purchase price allocation is set out in the
table below:
Fair value
GBP000
Net assets acquired:
Identifiable intangible assets:
Customer relationships 12,373
Technology 6,105
Trade name 1,447
Deferred tax recognised on identifiable intangible assets:
Customer relationships (3,341)
Technology (1,648)
Trade name (391)
Property, plant and equipment 714
Intangible assets 4,389
Deferred tax asset 1,234
Trade and other receivables 2,393
Cash and cash equivalents 2,651
Trade and other payables (7,228)
Net identifiable assets acquired 4,153
Goodwill 24,697
Total consideration 43,395
Cash consideration during the period 35,804
Cash acquired (2,651)
Consideration during the period net of cash acquired 33,153
Cash consideration during the period 35,804
Consideration due in less than one year 2,622
Consideration due in more than one year 4,969
Total consideration 43,395
9. Post balance sheet event
Acquisition of Rostrvm
On 25 November 2019 the Group acquired the entire share capital
of Rostrvm Solutions Limited ("Rostrvm"), a UK-based contact centre
software provider, to provide the Group with additional voice
channel and contact centre capabilities. The total consideration of
GBP3.5m will be satisfied through GBP2.0m in cash on completion and
GBP1.5m in cash deferred for up to two years, contingent on
successful integration of the Rostrvm voice capability with the
Group's platforms and achievement of revenue and gross profit
targets. For the year ended 31 December 2018 Rostrvm reported
revenue of GBP2.2m, EBITDA of GBP0.2m and net assets of
GBP0.8m.
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 PGGMAGUPBPGA
(END) Dow Jones Newswires
November 26, 2019 02:01 ET (07:01 GMT)
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