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

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November 26, 2019 02:01 ET (07:01 GMT)

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