03:00 Thu 19 Mar 2020
LoopUp Group PLC - Preliminary results for the year ended 31 Dec 2019
("
Preliminary results for the year ended
Financial Highlights
£ million |
FY2019 (unaudited) |
FY2018 (audited) |
Year-on-year growth |
Revenue |
42.5 |
34.2 |
24% |
Gross profit |
28.2 |
23.9 |
18% |
Adjusted EBITDA (1) |
6.4 |
7.7 |
(16%) |
Adjusted operating profit (2) |
1.2 |
4.5 |
(74%) |
Operating profit / (loss) |
(2.1) |
0.9 |
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Adjusted diluted EPS (pence) (2) |
2.2 |
9.3 |
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Cash at 31 December |
3.0 |
5.6 |
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Net debt at 31 December |
11.4 |
10.6 |
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1. Earnings before interest, taxation, depreciation and amortisation, adjusted to exclude non-recurring transaction costs, exceptional reorganisation costs and share-based payments charges
2. Adjusted to exclude non-recurring transaction costs, exceptional reorganisation costs, amortisation of acquired intangibles and share-based payments charges
Operating Highlights
· Results in line with market expectations for FY2019, ending year with solid cash position
· Group FY2019 revenue of
̶ Core LoopUp product ("
̶ Event by
̶ MeetingZone Audio:
̶ Enablit:
̶ Cisco resale:
· Continued strong demand for
̶ World's largest private dispute resolution provider
̶ Regional operations of a global top-6 accounting firm
̶ Six of the world's top-200 law firms
·
̶ Active users grew 24% from 33,356 in FY2018 to 41,209 in FY2019 (overall growth of 10% from 55,995 to 61,580)
̶ Meeting minutes grew 19% from 199 million in FY2018 to 237 million in FY2019 (overall growth of 1% from 385 million to 388 million)
̶ Revenue grew 12% from
1 Law, investment banking and corporate finance; private equity and venture capital, asset and fund management, consulting, accounting, insurance, marketing and advertising, PR and media, recruiting, and property
2 At FY2019 constant currency
· Key
̶ Gross Revenue Churn of 5.6% (FY2018: 6.2%), compared with 9.0% overall (FY2018: 7.4%; SaaS benchmark: 12.7%)
̶ Net Revenue Retention of 106.7% (FY2018: 110.3%), compared with 95.5% overall (FY2018: 101.8%; SaaS benchmark: 102.7%)
̶ New Customer CAC Ratio - the cost to acquire
· During FY2019, there was a behavioural 8.8% year-on-year decline in minutes per active
· Transition of MeetingZone Audio customers over to the
· Continued investment and innovation to enhance the
̶ Introduction of video
̶ Software extended into German, French, Spanish, Swedish and Chinese
· Launched 'Event by
Post Period Highlights
· Material increase in volumes across our global
̶ Closely monitoring this fluid and fast-moving situation
̶ Working hard to help our employees, customers and users stay connected and safe
̶ At this stage, it's too early to predict how usage levels will develop in the short term and settle once the outbreak subsides
̶ Focused on ensuring global platform capacity remains comfortably above demand level
̶ Amplified inbound approaches from companies that are struggling with VoIP-based conferencing solutions, but currently unclear how many will switch to
· Reallocated approximately
̶ 12 sales pods in FY2020
̶ Product development spend of approximately
Outlook
· We are confident in our ability to achieve continued strong growth in our core professional services target market, driven by our differentiated competitive strategy and product positioning
· We are also confident at this point in our ability to meet market expectations for FY2020
· There are many dimensions of uncertainty at this early stage of the year that could impact full year FY2020 results and we will keep the market updated accordingly
3 Please note: in this financial year, we have evolved our key unit economics metrics to align closer with SaaS norms. All evolved metrics are provided for FY2017 and FY2018 also to provide comparability with previous metrics
4 Gross Revenue Churn measures the full-year revenue in year X-1 that is deemed lost from accounts that fall to less than 5% of historic levels in year X, divided by the revenue in year X-1
5
6 Net Revenue Retention measures month-on-month revenue changes in accounts that are more than 4 months old, compounded to form an annualised number
7 New Customer CAC Ratio measures the fully-loaded sales and marketing cost to acquire
"It has been an important year in the evolution of our business. The progression of key business metrics has led us to sharpen our focus on serving and further strengthening our position within the Professional Services market. We have taken decisive action by reallocating cost in a way that will allow us to accelerate our product roadmap for the Professional Services market while retaining a strong and focused commercial team.
"Despite short-term challenges to the business in 2019, the landscape has changed dramatically with the recent migration towards large-scale working from home. We are working intently to support our customers and helping to keep them connected during this uncharted period, as well as ensuring that our platform capacity remains comfortably ahead of very fluid demand.
"We continue to monitor the situation closely and are well positioned to make a difference to the business community we serve, responding to both the immediate challenges presented by Covid-19, as well as our longer term objectives to provide a product experience that encourages more effective remote communications and responsible corporate travel."
For further information, please contact:
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via FTI |
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+44 (0) 207 886 2500 |
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+44 (0) 207 260 1000 |
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+44 (0) 203 727 1000 |
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About
Notes:
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.
Chief Executive Officers' Business Review
This review of the business:
· Puts a spotlight on the underlying strategic direction of the business
· Discusses some of the more immediate-term factors impacting the business
Increasing strategic focus on Professional Services segments
FY2019 throws a spotlight on the Professional Services market for remote meetings, where
Professional Services sectors represent approximately
Organic
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LoopUp Active User 9 ('000) |
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LoopUp Minutes (millions) |
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LoopUp Revenue 10 (£ million) |
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|
2017 |
2018 |
2019 |
|
2017 |
2018 |
2019 |
|
2017 |
2018 |
2019 |
Professional Services |
25.6 |
33.4 |
41.2 |
|
156 |
199 |
237 |
|
9.1 |
12.1 |
13.6 |
Other |
21.2 |
22.5 |
20.4 |
|
180 |
186 |
154 |
|
8.7 |
9.2 |
7.6 |
Total |
46.8 |
55.9 |
61.6 |
|
336 |
385 |
391 |
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17.8 |
21.4 |
21.2 |
Active users grew by 24% in Professional Services versus 10% overall; minutes grew by 19% in Professional Services versus 1% overall; and revenue grew by 12% in professional services versus a 1% decline overall.
The Professional Services market has distinctly different needs and priorities from the remote meetings market as a whole. The main factor is the prevalence and importance of external guests on their meetings, often the most important participants on the call. Conference calls and remote meetings have become the lifeblood of critical day-to-day client and adviser-to-adviser communications.
A best-in-class product for the Professional Services market, therefore, looks quite different to a leading product for the broader enterprise market, where internal team calls are far more dominant:
· VoIP audio is less reliable for external guests over the public internet than for internal guests over well-managed corporate networks. Reliable audio quality is paramount for most Professional Services firms and so
· Software downloads/installs can be problematic for external guests due to security permissions, whereas IT teams can pre-install the software for internal users. Given the importance of the external guest experience for Professional Services firms,
· External guests will often be unfamiliar with the product versus internal users who use it every day.
8 Source:
9 A user who has used the
10 At FY2019 constant currency
In summary,
Key
We have evolved our key
1) Gross Revenue Churn - measuring the lost revenue impact of customers that move away from
2) Net Revenue Retention - measuring all revenue changes, both positive and negative, in accounts that are more than 4 months' old
3) New Customer CAC Ratio - measuring the fully-loaded sales and marketing cost to acquire
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Gross Revenue Churn (%) 11 |
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Net Revenue Retention (%) 12 |
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New Customer |
||||||
|
2017 |
2018 |
2019 |
|
2017 |
2018 |
2019 |
|
2017 |
2018 |
2019 |
Professional Services |
6.8 |
6.2 |
5.6 |
|
112 |
107 |
103 |
|
N/A |
N/A |
0.96 |
Other |
11.5 |
8.6 |
14.4 |
|
101 |
96 |
74 |
|
N/A |
N/A |
2.43 |
Total |
8.3 |
7.4 |
9.0 |
|
107 |
103 |
93 |
|
1.02 |
1.08 |
1.38 |
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SaaS Benchmark 13 |
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12.7 |
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103 |
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1.34 |
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This data further emphasises our stronger performance in the Professional Services market, where all three metrics compare favourably with SaaS benchmarks, notwithstanding the macro headwinds that the business faced in FY2019.
More immediate-term factors impacting the business
During FY2019, there was a behavioural 8.8% year-on-year decline in minutes per active
The
However, both of the above effects are now being overshadowed by the material increase in volumes across our global platform during
11 Gross Revenue Churn measures the full-year revenue in year X-1 that is deemed lost from accounts that fall to less than 5% of historic levels in year X, divided by the revenue in year X-1
12 Net Revenue Retention measures month-on-month revenue changes in accounts that are more than 4 months old, compounded to form an annualised number
13
Other business units
In Q2 2019, we relaunched 'Event by
In Q4 2019, we essentially completed the transition of MeetingZone Audio conferencing customers over to the
In Q2 2019, we rebranded
Our
co-CEO co-CEO
Chief Financial Officer's Review
The Group's results for FY2019 include a full year of activity from the acquired
Operating results
Group revenues increased by 24% year on year to
The Group's blended gross margin reduced from 69.9% in FY2018 to 66.4% in FY2019, as a result of having the full year of non-core revenues that operate at a lower gross margins. Core
The Group's overhead base increased by 34% over the prior year. This was due to a combination of a full year of
Group EBITDA (before exceptional non-recurring items) was
In order to reinforce the
The implementation of the new leasing standard, IFRS 16 has resulted in an increased depreciation charge of
The Group has recognised a further exceptional charge of
A full year of amortisation of the intangible assets acquired with
The Group continues to receive a tax benefit from its product development activities, and we expect to submit a claim for approximately
Assets and cash flows
The implementation of IFRS 16 has resulted in a grossing up of the group balance sheet of
The Group's operating cash flow (after capital expenditure and product development spend) was a positive
Management has conducted detailed scenario modelling and we are comfortable with respect to both the Group's near-term cash requirements and our ability to operate well within lending covenants, even in a downside scenario. We also note the availability of our
The Group has over
CFO
Unaudited Consolidated Statement of Comprehensive income |
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For the year ended |
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2019 |
2018 |
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Note |
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Revenue |
|
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42,541 |
34,213 |
|
Cost of sales |
|
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(14,304) |
(10,314) |
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Gross profit |
|
2 |
|
28,237 |
23,899 |
|
Adjusted administrative expenses(i) |
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(21,825) |
(16.246) |
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Adjusted EBITDA(ii) |
|
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|
6,412 |
7,653 |
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Depreciation |
|
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(1,475) |
(546) |
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Amortisation of development costs |
|
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(3,777) |
(2,558) |
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Adjusted operating profit (iii) |
|
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1,160 |
4,549 |
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Non-recurring transaction costs |
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- |
(994) |
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Exceptional reorganisation costs |
|
|
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(509) |
(1,223) |
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Amortisation of acquired intangibles |
|
|
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(2,210) |
(1,289) |
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Share-based payments charges |
|
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(588) |
(191) |
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Operating profit / (loss) |
|
|
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(2,147) |
852 |
|
Finance costs |
|
|
|
(647) |
(467) |
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Profit / (loss) before income tax |
|
|
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(2,794) |
385 |
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Income tax |
|
|
|
789 |
857 |
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Profit / (loss) for the year |
|
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(2,005) |
1,242 |
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Currency translation gain / (loss) |
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(397) |
48 |
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Total comprehensive income / (loss) for the year attributable to the equity holders of the parent |
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(2,402) |
1,290 |
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Earnings / (loss) per share (pence): |
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3 |
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Basic |
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(3.6) |
2.5 |
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Diluted |
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(3.3) |
2.4 |
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(i) Total administrative expenses excluding depreciation, amortisation of development costs and acquired intangibles, non-recurring transaction costs, exceptional reorganisation costs and share-based payments charges.
(ii) Adjusted EBITDA is operating profit stated before depreciation, amortisation of development costs and acquired intangibles, non-recurring transaction costs, exceptional reorganisation costs and share-based payments charges.
(iii) Before amortisation of other intangible assets, non-recurring transaction costs, exceptional reorganisation costs and share-based payments charges.
Unaudited Consolidated Statement of Financial Position
As at |
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2019 |
2018 |
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Assets: |
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Property, plant and equipment |
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2,737 |
2,168 |
Right of use assets |
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3,228 |
- |
Development costs |
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9,104 |
7,880 |
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60,604 |
62,816 |
Total non-current assets |
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75,673 |
72,864 |
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Trade and other receivables |
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9,321 |
9,326 |
Cash and cash equivalents |
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3,000 |
5,581 |
Current tax |
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1,631 |
1,153 |
Total current assets |
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13,952 |
16,060 |
Total assets |
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89,625 |
88,924 |
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Liabilities: |
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Trade and other payables |
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(5,409) |
(4,487) |
Accruals and deferred income |
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(2,686) |
(2,709) |
Lease liabilities |
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(862) |
- |
Borrowings |
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(1,700) |
(1,700) |
Total current liabilities |
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(10,657) |
(8,896) |
Net current assets |
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|
3,295 |
7,164 |
Non-current liabilities: |
|
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Borrowings |
|
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(12,750) |
(14,450) |
Lease liabilities |
|
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(2,366) |
- |
Deferred tax liability |
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(5,713) |
(5,709) |
Total non-current liabilities |
|
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(20,829) |
(20,159) |
Total liabilities |
|
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(31,486) |
(29,055) |
Net assets |
|
|
58,139 |
59,869 |
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Equity |
|
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Share capital |
|
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276 |
276 |
Share premium |
|
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60,588 |
60,504 |
Other reserve |
|
|
12,691 |
12,691 |
Foreign currency translation reserve |
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(2,332) |
(1,935) |
Retained loss |
|
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(13,084) |
(11,667) |
Shareholders' funds attributable to equity owners of parent |
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58,139 |
59,869 |
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Unaudited Consolidated Statement of Changes in Equity
For the year ended
|
Share capital |
Share premium |
Other reserve |
Foreign currency translation reserve |
Retained profit / (loss) |
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Shareholders funds/ (deficit) attributable to equity owners of parent |
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As at |
210 |
12,637 |
12,691 |
(1,983) |
(13,100) |
|
10,455 |
|
Profit for the year |
- |
- |
- |
- |
1,242 |
|
1,242 |
|
Other comprehensive income |
- |
- |
- |
48 |
- |
|
48 |
|
Total comprehensive profit / (loss) for the year |
- |
- |
- |
48 |
1,242 |
|
1,290 |
|
Transactions with owners of parent in their capacity as owners: |
|
|
|
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Equity share-based payment compensation |
- |
- |
- |
- |
191 |
|
191 |
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Share issues |
66 |
47,867 |
- |
- |
- |
|
47,933 |
|
As at |
276 |
60,504 |
12,691 |
(1,935) |
(11,667) |
|
59,869 |
|
As at |
276 |
60,504 |
12,691 |
(1,935) |
(11,667) |
|
59,869 |
|
Loss for the year |
- |
- |
- |
- |
(2,005) |
|
(2,005) |
|
Other comprehensive income |
- |
- |
- |
(397) |
- |
|
(397) |
|
Total comprehensive profit for the year |
- |
- |
- |
(397) |
(2,005) |
|
(2,402) |
|
Transactions with owners of parent in their capacity as owners: |
|
|
|
|
|
|
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Equity share-based payment compensation |
- |
- |
- |
- |
588 |
|
588 |
|
Share issues |
- |
84 |
- |
- |
- |
|
84 |
|
As at |
276 |
60,588 |
12,691 |
(2,332) |
(13,084) |
|
58,139 |
|
Unaudited Consolidated Statement of Cash Flows |
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For the year ended |
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2019 |
2018 |
|
|
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|
|
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|
|
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|
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Net cash flows from operating activities |
|
|
|
|
|
|
|
Profit / (loss) before income tax |
|
|
(2,794) |
385 |
|
|
|
Non-cash adjustments |
|
|
|
|
|
|
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Depreciation and amortisation |
|
|
7,464 |
4,393 |
|
|
|
Impairment of intangible fixed assets |
|
|
- |
- |
|
|
|
Share-based payments charges |
|
|
588 |
191 |
|
|
|
Interest payable |
|
|
647 |
467 |
|
|
|
Working capital adjustments |
|
|
|
|
|
|
|
(Increase) / decrease in trade and other receivables |
|
|
80 |
(651) |
|
|
|
Increase / (decrease) in trade and other payables |
|
|
737 |
(359) |
|
|
|
Tax received |
|
|
401 |
836 |
|
|
|
Net cash generated by operations |
|
|
7,123 |
5,262 |
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
|
(2,043) |
(354) |
|
|
|
Addition of intangible assets |
|
|
(5,001) |
(4,296) |
|
|
|
Payment for acquisition of subsidiary, net of cash acquired |
|
|
- |
(61,579) |
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|
Net cash used in investing activities |
|
|
(7,044) |
(66,229) |
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|
Cash flows from financing activities |
|
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|
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|
|
Proceeds of borrowings |
|
|
- |
17,000 |
|
|
|
Proceeds from share issue net of issue costs |
|
|
84 |
47,933 |
|
|
|
Repayment of loans |
|
|
(1,700) |
(850) |
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|
|
Interest and finance fees paid |
|
|
(647) |
(467) |
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|
|
Net cash generated from financing activities |
|
|
(2,263) |
63,616 |
|
|
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Net increase in cash and equivalents |
|
|
(2,184) |
2,649 |
|
|
|
Cash and cash equivalents brought forward |
|
|
5,581 |
2,902 |
|
|
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Effect of foreign exchange rate changes |
|
|
(397) |
30 |
|
|
|
Cash and cash equivalents carried forward |
|
|
3,000 |
5,581 |
|
|
|
Notes to the Financial Statements
1. Background and basis of preparation
The principal activity of the Group is the provision of a software-as-a-service (SaaS) solution for remote business meetings.
The unaudited summary financial information set out in this announcement does not constitute the Group's consolidated statutory accounts for the years ended
The statutory accounts for the Group for the year ended
The preliminary announcement for the year ended
Impact of IFRS 16: Leases
The new leasing standard came into effect on
The standard allows for different transition options and the Group has adopted the Modified Retrospective: Asset equals liability approach, resulting in the Group adopting the standard from
For the year to
The adoption of this new Standard has resulted in the Group recognising a right-of-use asset and related lease liability in connection with all former operating leases except for those identified as low-value or having a remaining lease term of less than 12 months from the date of initial application.
The following is a reconciliation of total operating lease commitments at
|
|
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Total operating lease commitments disclosed at |
2,560 |
Less: leases with remaining lease terms less than 12 months |
(61) |
Less: exchange and other adjustments |
(100) |
Add: new leases entered into in the current period |
2,082 |
Operating leases before discounting |
4,481 |
Discounted using incremental borrowing rate |
(458) |
Depreciation in the period |
(795) |
Total lease liability recognised under IFRS 16 at |
3,228 |
Of which
2. Revenue and segmental reporting
The Directors have identified the segments by reference to the principal groups of services offered and the geographical organisation of the business as reported to the chief operating decision-maker (CODM). The main segment is
Segmental revenues are external and there are no material transactions between segments.
The Group's largest customer represented less than 5% of total revenue in all periods.
No segmental balance sheet was presented to the CODM.
The Group's revenue disaggregated by primary geographical markets is as follows:
£'000 |
|
Third party and other services |
Total |
|
|
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For the 12 months to |
|
|
|
|
16,233 |
6,311 |
22,544 |
Other EU |
4,046 |
1,728 |
5,774 |
|
10,800 |
2,853 |
13,653 |
Rest of world |
570 |
- |
570 |
|
31,649 |
10,892 |
42,541 |
|
|
|
|
For the 12 months to |
|
|
|
|
13,455 |
4,113 |
17,568 |
Other EU |
3,555 |
970 |
4,525 |
|
10,562 |
1,214 |
11,776 |
Rest of world |
344 |
- |
344 |
|
27,916 |
6,297 |
34,213 |
The Group's revenue disaggregated by pattern of revenue recognition is as follows:
£'000 |
|
Third party and other services |
Total |
|
|
|
|
For the 12 months to |
|
|
|
Services transferred at a point in time |
31,649 |
1,225 |
32,874 |
Services transferred over time |
- |
9,667 |
9,667 |
|
31,649 |
10,892 |
42,541 |
|
|
|
|
For the 12 months to |
|
|
|
Services transferred at a point in time |
27,916 |
920 |
28,836 |
Services transferred over time |
- |
5,377 |
5,377 |
|
27,916 |
6,297 |
34,213 |
The Group's gross profit disaggregated by segment is as follows:
£'000 |
|
12 months to |
12 months to |
|
|
|
|
LoopUp Group meetings services |
|
25,016 |
21,845 |
Third party and other services |
|
3,221 |
2,054 |
|
|
28,237 |
23,899 |
The Group's non-current assets disaggregated by primary geographical markets are as follows:
£'000 |
|
12 months to 31 December 2019 |
12 months to 31 December 2018 |
|
|
|
|
|
|
74,648 |
72,566 |
Other EU |
|
62 |
10 |
|
|
1,410 |
259 |
Rest of world |
|
11 |
29 |
|
|
76,131 |
72,864 |
3. Earnings per share
The basic earnings per share is calculated by dividing the net profit attributable to equity holders of the Group by the weighted average number of ordinary shares in issue during the year.
|
|
12 months to 31 December 2019 |
12 months to 31 December 2018 |
|
|
|
|
Profit / (loss) attributable to equity holders (£000) |
|
(2,005) |
1,242 |
Adjusted profit attributable to equity holders (£000) (1) |
|
1,302 |
4,939 |
Weighted average number of ordinary shares in issue (000) |
|
55,208 |
49,563 |
|
|
|
|
Basic earnings per share (pence): |
|
|
|
- Basic adjusted (1) |
|
2.4 |
10.0 |
- Basic |
|
(3.6) |
2.5 |
The diluted earnings per share has been calculated by dividing the above profit numbers by the weighted average number of shares in issue during the year, adjusted for potentially dilutive shares that are not anti-dilutive.
|
|
12 months to 31 December 2019 |
12 months to 31 December 2018 |
|
|
|
|
Weighted average number of ordinary shares in issue ('000) |
|
55,208 |
49,563 |
Adjustments for share options ('000) |
|
5,058 |
3,583 |
Weighted average number of potential ordinary shares in issue ('000) |
|
60,266 |
53,146 |
|
|
|
|
Diluted earnings per share (pence): |
|
|
|
- Diluted adjusted (1) |
|
2.2 |
9.3 |
- Diluted |
|
(3.3) |
2.4 |
(1) Calculated using profit attributed to equity holders adjusted for non-recurring transaction costs, exceptional reorganisation costs, amortisation of acquired intangibles and share based payment charges.
4. Dividends
The Directors do not recommend the payment of a dividend (2018: £nil).
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
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