REG - ActiveOps PLC - Results for the year ended 31 March 2022
06/07/2022 07:00
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RNS Number : 4372R ActiveOps PLC 06 July 2022
6 July 2022
ActiveOps Plc
("ActiveOps", the "Company, "the Group")
Results for the year ended 31 March 2022
ActiveOps plc (AIM: AOM), a leading provider of Management Process Automation
(MPA) software for running complex and global back-offices, is pleased to
announce its unaudited results for the financial year ended 31 March 2022.
Financial Highlights
Years ended 31 March 2022 2021 Change
Annual recurring revenue "ARR"(1) £20.1m £18.3m +10%
Revenue £22.9m £20.4m +12%
Software & Subscription revenue £19.6m £17.8m +10%
Training & implementation "T&I" revenue £3.4m £2.6m +31%
Gross margin 81% 82% -1ppt
Adjusted EBITDA(2) £(0.3m) £0.4m -
Profit/(loss) before tax £(2.6)m £(2.0)m -30%
Earnings per share on continuing operations (3.83)p (4.83)p +21%
Net cash and cash equivalents £13.8m £16.6m -17%
· ARR growth of 10%, above prior year growth (7%)
· Total revenue growth of 12%. T&I revenues recovered to
pre-pandemic levels with 31% growth year over year
· Gross margins remain strong at 81%, supported by implementations
being predominantly remotely delivered
· Adjusted EBITDA marginally loss making (£0.3m) (FY2021 Profit
£0.4m) reflecting additional investment in sales and R&D
· Strong EBITDA cash conversion of 698% (FY21: 350%) continues with
annual in advance billing(3)
· Balance sheet remains strong with no debt and £13.8m cash in the
bank (FY2021: £13.1m adjusted(3))
Operational Highlights
· Added 9 new customers globally, including wins within each of the
Group's key industry verticals and geographic regions
· Significant product enhancement, including launch of a unique task
mining technology that expands the capabilities for the Group's software and
CaseworkiQ (launched in June 2022), which extends usage of the Group's
software into complex case-management and regulated operations
· Grew SaaS revenues by 20% in the important North American market,
making it the highest growth region despite US businesses having been subject
to greater Covid-19 pandemic related disruptions than our other regions
· First enterprise level up-sell of WorkiQ to an existing ControliQ
customer demonstrating incremental performance improvement through WorkiQ
· Expanded software engineering capabilities, doubling capacity in
order to support delivery of product vision
· Established a data science function and developed new product
capabilities to be released in FY23 which extend the software's automation
capabilities via Machine Learning
· Extended key partner relationship with Microsoft to enable the
Group's solutions to be purchased via Microsoft and soon to be released
integration with Microsoft Teams
Outlook
· Trading in the new financial year has begun in line with management
expectations
· Q1 has seen strong renewals, a new banking customer in the APAC
region and significant expansions in several existing customers
· Trading is on target to generate a positive run-rate EBITDA at the
end of the current financial year
Footnote to Financial highlights
The above non-GAAP measures are unaudited
1. Annual Recurring Revenue - unaudited
2. Adjusted EBITDA is used by management to assess the trading
performance of the business. Defined as Operating profit before depreciation,
amortisation, share-based payment charges and exceptional items and includes
FX differences.
3. Adjusted FY2021 cash and EBITDA Cash Conversion % excludes a
tax payment in April 2021 of £3.5m relating to employee share options
exercised at IPO
Richard Jeffery, Chief Executive Officer of ActiveOps plc, commented:
"This was a transformative year for ActiveOps, against a complex market
backdrop. Alongside establishing the processes required of a publicly listed
company, we successfully deployed our leading-edge technology to solve the new
problems and challenges being faced by our customers as they adapt to hybrid
working in response to the Covid-19 pandemic. As interest in workforce
management solutions continues to grow, our market-leading offering continues
to resonate with our growing global blue-chip customer base.
"We continue to benefit from a strong balance sheet and high levels of
recurring revenues. This provides us with a strong basis to move towards
profitability whilst continuing to carefully invest and manage the impact of
inflationary pressures. Through the investments we have made, we have an
enhanced offering and enlarged team with which to address our considerable
target market. While conscious of the ongoing challenging macro-economic
picture, we are confident in our ability to continue to deliver against our
growth plan."
For more information, please contact:
ActiveOps Via Alma PR
Richard Jeffery, Chief Executive Officer www.activeops.com (http://www.activeops.com/)
Patrick Deller, Chief Financial Officer
Investec Bank plc +44 (0)20 7597 5970
Corporate Broking & PLC Advisory
Patrick Robb / David Anderson
Alma PR + 44(0) 203 405 0205
Caroline Forde / Sam Modlin / Will Ellis Hancock
About ActiveOps
ActiveOps is a leader in Management Process Automation (MPA), providing a SaaS
platform to large enterprises with complex and often global back-offices. The
Group's software and embedded back-office operations management methodology
enables enterprises to adopt a data-driven, scientific approach to organising
work and managing capacity.
The Group's enterprise platform comprises Workware+, its MPA software
platform, and AOM, the Group's operations methodology and framework for
effective back-office management. Together, this combination of software and
embedded methodology enables operations managers to balance the competing
priorities of meeting service and quality standards while improving
productivity and reducing cost.
As at 31 March 2022, the Group has over 190 employees, serving its global
customer base of approximately 80 enterprise customers from offices in the UK,
Ireland, USA, Australia, India and South Africa. The Group's customers are
predominantly in the banking, insurance and business process outsourcing (BPO)
sectors, including Nationwide, TD Bank, Anthem Inc and DXC Technology.
Chair's Statement
A strong first year as a PUBLIC COMPANY
Last year was a transitional year in many ways for ActiveOps, one in which we
embraced life as a PLC, while ensuring our offerings adapted to new ways of
working in response to the Covid-19 pandemic. We are now witnessing another
terrible crisis following Russia's invasion of Ukraine and our thoughts go out
to all those impacted.
The resilience of the Group, with high levels of recurring revenues, a
blue-chip customer base and high gross margins, created a strong foundation
for us to deal with these transitional events and continue to grow. The
business delivered a financial performance for the year ahead of the targets
set at the time of IPO, with performance in EMEIA particularly strong. In
the US the market for our offerings is still emerging, but the new ways of
working being adopted as a result of the Covid-19 pandemic created many new
opportunities and the US was our fastest growing region.
Financial performance
We have continued to deliver a strong financial performance with growth across
all revenue metrics. The quality of the Group's recurring revenue business
model is evident in the growth in SaaS revenues, reaching £19.6m (FY21:
£17.8m).
In line with our stated strategy, we continued to invest in sales, marketing
and research & development to drive future growth which resulted in a loss
after tax for continuing operations for the year of £2.6m (FY21: Loss
£2.7m). We remain on course to achieve operational profit in FY24.
We remain well funded, finishing the period with a cash balance of £13.8m,
which provides us with the capabilities to execute our growth strategy.
Operational achievements
The business continues to successfully execute our strategy: to expand
globally, focussing on our large target markets in Banking, Insurance and BPO,
while growing our footprint in our existing client base. Through the year the
continued success of our stated Land & Expand strategy was reflected in
the number of contract renewals and expansions secured, alongside nine new
logo wins with blue-chip organisations, all of which provide considerable
future expansion opportunities.
The development of our offering continued to accelerate, with this increased
innovation providing our customers with more sophisticated tools and further
differentiating us from our competitors. The insight and improvement that we
can deliver with a product that manages 100 million hours of work per annum
and continues to receive excellent customer feedback is very significant
indeed. We believe that there are very few alternative products that deliver
such a swift return on investment and broad range of other benefits to
customers after adoption.
The executive team navigated the complexities of the past year well, with the
IPO and Covid-19 requiring additional management focus. Now, with these
matters largely resolved, we look to the year ahead with a renewed vigour and
focus.
Governance
I am pleased with the way we have established a new Board and the impact my
fellow Directors have had so far. The creation of the new audit, nominations,
and ESG governance approaches has already yielded progress, and we expect to
continue to keep ourselves to high standards going forward.
We have always been a company of 'concerned citizens' but the structure
brought by the needs of ESG reporting as a PLC has been a welcome opportunity
for us to assess where we are and highlight opportunities for continued
improvement. I wish to personally thank my Board colleague Hilary Wright for
her involvement with the executive team in guiding this activity.
The interaction and approach to the management of finance and Audit has gone
from strength to strength under the leadership of our CFO Paddy Deller. He has
been ably guided by the chair of the Audit committee, Michael McLaren, whose
insight and experience has proved to be greatly helpful.
Unfortunately, circumstances in the world have led to the stock markets taking
defensive actions but we are thrilled to have a strong investor base for whom
we fully expect to deliver well in the coming years.
Looking ahead
After a transitional year the Group is focused and well set up to seize
opportunity in front of it. Our strategy, target market, financial strength
and team are all aligned to deliver on the aspirations laid out at IPO. The
Board and I remain confident that this is a very scalable business which is
strongly cash generative, backed by high gross margins and well positioned to
execute its growth strategy.
For the year ahead we see continued opportunity in our regional expansion
plans. Our existing customers in all of our regions continue to expand their
use of our software, which is a testament to its effectiveness in driving
operational gain in terms of cost and control, as well as giving customers an
ability to meet governance and regulatory requirements in previously
unforeseen ways. We remain dedicated to expanding our footprint in our
existing customer base, which itself provides more than enough opportunity to
meet our growth ambitions. This coupled with our focused effort to acquire new
customers leaves me optimistic about continued growth. Our latest software
enhancements are being very positively received by our customers and partners.
The market dynamics that impact our business remain favourable as the
requirement for organisations to manage costs, enhance employee experience and
meet new regulatory demands continues to increase. As a result of this, we
have continued to build our sales pipeline very effectively and expect this to
yield results in the coming year. We have a motivated team, a product that is
market leading, an enviable customer care process, delivering fantastic
expansion opportunities and a well invested go-to-market approach. All these
ingredients provide confidence that the Group will continue to deliver on the
established plan.
I would like to end by congratulating the whole team for navigating their
first year as a public company on the London Stock Exchange and the work done
to meet the subsequent requirements. I am always impressed by the enthusiasm
and excitement I see across all our departments for the offering and how it
helps our customers change the way they do business, such that the customer
can transform their worlds of work.
We remain focused on delivering results for our shareholders and driving the
expansion of the business.
Sean Finnan
Non-executive Chair
CEO Statement
The opportunity for ActiveOps has NEVER BEEN GREATER
The year to 31 March 2022 was a transformative year at ActiveOps against a
complex market backdrop. Alongside establishing the processes of a publicly
listed company, we successfully deployed our leading-edge technology to solve
the new problems and challengers being faced by our customers as they adapt to
hybrid working in response to the Covid-19 pandemic. These new challenges, in
addition to the ever-growing requirements for transparency and compliance,
meant the market need for our technology was clear and reflected by our record
levels of pipeline opportunities. More prosaically, sales cycles remain
extended as the practicalities of approval and procurement processes in large
enterprises continue to change and evolve.
We have delivered a year of growth, winning customers in all territories and
sectors that we address, while expanding our existing customer base.
Encouragingly, growth was most rapid in North America and although bookings
have been more impacted in this region by Covid-related uncertainty than our
other geographies, the US remains a key focus for the group. Elsewhere the
EMEIA region performed well with historic highs in terms of Training and
Implementation profitability, and Asia Pacific made a strong and profitable
contribution.
Importantly, the investments we have made to expand our team provided us with
the capability to execute against our product roadmap, making considerable
advances in areas of artificial intelligence (AI) and automation. We are
particularly excited by the potential for the newly launched CaseworkiQ
product, which offers the opportunity to move into new regulated areas
within our existing customer base and target marketing upon some specific,
high-profile issues in target customers. We believe these new capabilities
will add further differentiation to our offering, unlock greater value for our
customers and provide a pathway to growth acceleration.
The successful expansion deals secured during the year, including the first
enterprise level up-sale of WorkiQ into an existing ControliQ customer,
combined with our growing pipeline of opportunities, provide us with
confidence as we look ahead.
While we are conscious of the ongoing economic and social challenges being
faced across the world, our high levels of penetration across three geographic
regions, our blue-chip customer base and expanding offering stand us in good
stead to continue our growth, as we strive to help large organisations adapt
to increasingly complex hybrid working models.
Robust financial performance
The robust financial performance of the Group is underpinned by the strong
fundamentals of our business model, characterised by a highly scalable
platform, delivering high gross margins and strong cash generation.
We are pleased to report growth across all revenue metrics, with a
particularly strong return of Training & Implementation revenues, up 31%
following the impact of Covid-19 lockdowns in FY21. The strength of the
Group's recurring revenue business model is evident in the growth in SaaS
revenues, reaching £19.6m FY21: £17.8m).
New customer wins coupled with expansions at existing customers have resulted
in Annual Recurring Revenue increasing 10% to £20.1m in the year, and
recognised revenue increased 12% to £22.9m (FY21: £20.4m). Our Net Revenue
Retention (NRR) rates dipped slightly in the year to 102% (FY21: 104%),
reflecting the offsetting of some strong expansion sales with reductions at
other customers as a result of reconfiguration of their operations. We are
confident that the investments we have made in our account management teams
during this year, combined with a return to a more proactive approach to
improvement projects by our customers post-pandemic, will see us return to
historic high levels of growth.
In line with the growth strategy outlined at the time of IPO the Group
increased investment in sales, marketing and research & development in the
year, resulting in a loss after tax for continuing operations for the year of
£2.6m (FY21: Loss £2.7m). We remain on track to achieve operational profit
by FY24.
The business remains well funded with a closing cash balance of £13.8m,
providing us with the financial strength to execute our investment roadmap.
Evolving market
We see four key factors in the evolving world of work driving the underlying
need for the better data and operational control our technology provides.
These are: the still evolving requirements for hybrid working; the ongoing
transition towards agile operating models; growing regulatory pressures; and
the growing focus on delivering positive employee experience.
The adoption of a well-functioning hybrid approach is proving simpler and more
secure for those operations who benefit from the rich data and consistent,
digitally enabled operations management processes provided by our solutions.
The established approaches to managing capacity are becoming obsolete by the
new complexities of hybrid working, and require organisations to increase
their use of data and digital solutions to secure performance and meet the
needs of stakeholders.
Many organisations are finding that these legacy management processes, which
relied on the physical presence and technical experience of managers, are
constraining performance and introducing significant risk. In addition, we are
beginning to see regulators requiring that organisations be able to
demonstrate the availability of adequate skills and capacity to maintain key
services. Our solutions ensure organisations can demonstrate these
requirements whilst still running as lean as possible.
The pandemic has also caused many organisations to re-double their digital
transformation efforts, with greater process automation being the most
significant focus within our operating environment. Automation brings
efficiency but also creates silos of both data and resources within
operations, meaning the full benefit of automation is often not delivered. Our
Management Process Automation solutions break down these silos and ensure
investments in process automation deliver their full potential.
The growth in the regulatory environment is creating a need for an increased
ability to audit a wider range of workflows, which we are addressing through
our newly launched CaseworkiQ offering.
Meanwhile a focus on providing a positive employee experience is rising to the
fore, as businesses around the world grapple with the issues of wage inflation
and increased staff attrition, while also seeking to fulfil their ESG
commitments. Our software provides operational managers with the insight and
control needed to confidently operate hybrid office/home environments and
offer employees much valued flexibility over when and where they work.
In the short-term, procurement processes continue to be protracted as a result
of a profound period of change and uncertainty. However, the factors described
above are increasing awareness of the need for better information and
processes for managing work and capacity.
ActiveOps' world-leading MPA product suite and its embedded methodology are
designed to deliver the control required to address the challenges of
back-office complexity, by collating and standardising disparate data into a
set of digital tools. This helps managers make better and quicker decisions,
thereby enabling organisations to optimise their operational performance.
Product enhancements and team expansion
One of the key successes of the year is the advancements we have made in our
product offering. With a firmly established blue chip customer base, across
three key geographic regions, we made the decision prior to IPO to increase
investment in R&D to further exploit the considerable Land and Expand
opportunity we see within our customer base. Through this innovation we will
provide our customers with increasingly sophisticated management process
automation tools to address the evolution of the back office, increase the
attractiveness of our offering to our target customers and further
differentiate us from competitors.
Collector
Developments in the year include the launch of Collector, a component
available to both WorkiQ and ControliQ customers, which uses task mining
technology to automate the enumeration of completed work, providing an
accurate picture of productivity whilst reducing the overhead expended in data
collection. This enhancement makes WorkiQ the only desktop analytics solution
able to meaningfully connect activity time tracking to completed work output.
ControliQ
Enhancements were also made to ControliQ in the year, with the launch of a new
functionality that enables businesses to plan the optimal use of resources
more easily in a hybrid work environment, as well as new reporting
capabilities for senior managers.
WorkiQ
We have developed a new WorkiQ extension to meet the specific needs of hybrid
working in the US. This enhancement includes functionality to help customers
better manage their employees in line with the challenging vaccine mandate
legislation introduced by the US Government.
Launch of CaseworkiQ
We were delighted to launch CaseworkiQ post year end in response to the
increasing process complexity and regulatory pressure in back-office
operations. CaseworkiQ addresses the need for smarter management of capacity
and performance in relation to case work related workflows. These are
typically tasks with multiple stages, which might take weeks or months to
complete, such as the completion of Know Your Customer (KYC) checks by banks,
or high value claims in the insurance sector. Automation, regulation and
product innovation in our target markets are all driving increased process
complexity, meaning the market for CaseworkiQ is well established and growing.
The complexity of these types of workflows makes them challenging for
operations teams to measure, forecast and plan capacity. Such workflows are
often subject to high levels of regulatory scrutiny and, if completed
incorrectly, can expose organisations to risk of fines. Therefore these are
areas in which organisations are increasingly investing.
Through the implementation of CaseworkiQ, organisations can expect to make
productivity gains, optimise planning and ultimately complete more cases
within defined SLAs, which often have externally visibility. This will
increase surety of performance and importantly will give companies complete
compliance audit threads, helping them to demonstrate control and resilience
to the Regulator, while simultaneously reducing the risk of financial
penalties.
The offering is highly applicable across our existing customer base, widening
the addressable customer population. The module will be sold on a per user
annual licence, adding to our levels of recurring revenue.
The first customer on the offering is a UK high street bank and existing
ControliQ customer. Implementation of CaseworkiQ increased service level
agreement achievement whilst simultaneously increasing productivity by more
than 20%.
Data science roadmap
We continued investment in our data science function to accelerate our use of
artificial intelligence (AI) and machine learning (ML) techniques which, when
paired with our existing dataset, present significant opportunities to further
automate management decision making.
Capabilities we will be adding to our offering include the following:
• Automated AI-driven forecasting and planning, significantly increasing
efficiency and accuracy, which in turn lead to performance improvement and
released capacity.
• AI driven performance optimisation - intelligent, real-time prompts
highlighting performance issues and potential corrective actions.
• Automated skills management - automatic determination of available skill
levels across the back office making it simple to identify training
requirements and, where shared skills exist across departments, allowing for
the transfer of workflows when required.
Growth of our customer base: Land & expand
Our new customer acquisition activity is focused on a tightly defined set of
banks, insurers and BPOs in our target geographies, representing a significant
Annual Recurring Revenue (ARR) opportunity.
We made good progress in the year, securing new logo wins or significant
expansion sales across all target regions and sectors. Nine new customers were
secured in the year, including a large insurer and a healthcare payer in the
US, a major BPO, an investment management firm and a global consulting and
services group.
We saw a good number of contract renewals and expansions in the period,
including the transition of three major banking customers from an annual
licence to a multi-year contract for ControliQ, both increasing revenue
visibility from the customer and evidencing the central role of the software
within the bank's back-office operations. Expanded use of ControliQ was seen
across many of ActiveOps' customers, including three of the UK's leading high
street banks.
The year also saw the first enterprise level up-sell of WorkiQ into an
existing ControliQ customer; a leading North American bank was the first of
ActiveOps' top ten customers to take a WorkiQ contract at scale, a key
ambition of the Land & Expand strategy. An example of the value we can
provide can be seen in the results delivered for a South African bank where
the introduction of WorkiQ alongside established ControliQ deployments has
shown a 12% incremental increase in productivity levels. We are expecting that
more enterprise-level ControliQ customers will take advantage of the increased
productivity gains provided by the implementation of WorkiQ and likewise, we
anticipate existing WorkiQ customers extending their usage to include
ControliQ as they seek higher levels
of operations management maturity.
Sales pipeline
We have invested in our team throughout the year, hiring experienced
enterprise sales executives, commercial account managers and business
development resources, meaning we enter FY23 with a considerably enhanced
sales operation. Whilst we saw a slight elevation in customer churn levels
during the year, these investments in our team are already delivering results
in higher levels of in-account opportunities in the pipeline.
We see particularly encouraging opportunities in our EMEIA and Australian
pipeline, with strong representation from existing and new customers. Within
the US we are refocusing our sales efforts on a smaller group of defined
targets, who we believe are best placed to take advantage of the benefits of
our offering. As a result of the above initiatives, combined with a more
stable market backdrop post-pandemic, we have seen the value of sales
opportunities in our pipeline at formal proposal stage or later increase by
60% compared to this time last year, providing us with confidence as we move
into FY23.
Focus for FY23
Our focus for the year ahead is to capitalise on the investments we have made
in our team and offering, and to accelerate both the growth and conversion of
our growing sales pipeline. With multiple product enhancements being released
through the year we are providing our sales teams with compelling tools to
engage with existing and potential customers.
Areas showing particular interest are the use of CaseworkiQ for supporting the
needs of banks processing financial crime related activities and the use of
new automated planning in ControliQ. This is potentially a game changer for
many operations since it eliminates the time and thought required by team
leaders to build their plans, and increases the accuracy of the plans
produced, leading to even more effective use of capacity. This takes away
another cause of uncertainty and volatility in operational performance since
we are reducing time to act and providing better actions to take.
Confident Outlook
Trading in the new year has begun in line with management expectations, with
strong renewals, an additional new banking customer in the APAC region and
significant expansions in several existing customers.
We continue to benefit from a strong balance sheet, with cash comfortably
ahead of management expectations and high levels of recurring revenues. This
provides the business with a strong basis from which it can continue to
carefully invest in its expansion, whilst managing the impact of inflationary
pressures. We are trading on target to generate a positive run-rate EBITDA at
the end of the current financial year.
As interest in workforce management solutions continues to grow, our
market-leading offering continues to resonate with our growing global
blue-chip customer base. Through the investments we have made in our
technology we have an enhanced offering with which to target our considerable
target market and an enlarged sales team with which to do so. While conscious
of the ongoing challenging macro-economic picture, we are confident in our
ability to continue to execute our growth plans and look to the future with
confidence.
Richard Jeffery
Group Chief Executive Officer
Group Financial Performance and Chief Financial Officer's Report
Investment TO GROW
I am pleased to report on a robust year for the group with 12% organic revenue
growth to £23m and the delivery of investment plans to enable the business to
scale effectively as we move forward. This investment generated a loss for the
year of £2.6m and builds a solid platform to enable the group to execute
against its strategy. We have commenced the new financial year well, and
trading is on target to generate a positive run-rate EBITDA at the end of the
current financial year.
Year ended 31 March 2022 Year ended 31 March 2021
SaaS T&I Total SaaS T&I Total
£000 £000 £000 £000 £000 £000
Revenue 19,564 3,353 22,917 17,794 2,600 20,394
Cost of sales (2,974) (1,423) (4,397) (2,364) (1,361) (3,725)
Gross Margin 16,590 1,930 18,520 15,430 1,239 16,669
Revenue
Annual Recurring Revenue of £20.1m at 31 March 2022 has grown 10% versus the
prior year (31 March 2021: £18.3m) as a result of sales to nine new customers
generating new ARR of £1.3m, and ARR from existing customers, increasing by
2% (2% constant currency). These significant sales successes have been
offset by structural changes to the operations of several customers, including
operations having been moved to lower cost jurisdictions (leading to lower
license fees) and certain lines of business having been closed.
Total revenue at £22.9m was 12% ahead of prior year, with software and
subscription revenues increasing 10% to £19.6m (FY21: £17.8m) with increased
revenues generated from both new and existing customers.
Training and Implementation (T&I) revenues have increased to £3.4m (FY21:
£2.6m) following low levels of implementations in the first half of FY21 due
to the Covid-19 pandemic. T&I revenues continue to vary by product and
region depending on the mix of customer implementation requirements, with YE22
seeing proportionately higher levels of WorkiQ sales through both cross sell
and new customer wins, versus prior periods with a lower mix of implementation
requirements.
Margins and Operating Profit
Gross margins have reduced slightly to 81% (FY21: 82%). SaaS revenue margins
have decreased to 85% (FY21: 87%) as a result of stepped investment in
helpdesk activities to support further growth in the business. This has been
offset by a larger proportion of T&I revenues, which have a higher margin,
compared with the prior year. T&I revenues and margins vary according to
the product mix (WorkiQ versus ControliQ), the location of implementations
(higher cost jurisdictions delivering higher margins) and level of support
required by ActiveOps coaches on each delivery. FY22 saw a higher mix of
ActiveOps led implementations in high-cost jurisdictions.
Operating expenses (excluding share based payments, depreciation, amortisation
and exceptional items) increased to £19.0m (FY21: £16.4m) following the
investment ActiveOps has made in people with year-end headcount increasing by
26 heads. The research & development capabilities of the business have
been significantly expanded to enhance the speed of deployment of updates to
the technology platform. We have also continued to expand sales and account
management teams in all regions. Travel costs have increased over prior years,
particularly in the second half of the year as the impact of the Covid-19
pandemic diminished. Costs associated with managing a PLC also increased
following the company's IPO in March 2021.
Adjusted EBITDA moved to a loss-making position of £0.3m (FY21: profit
£0.4m) excluding the costs associated with share-based payments (FY22:
£0.6m; FY21 de minimus) and M&A activities (FY22: £0.5m; FY21: £0.9m).
Product and Technology Expenditure
Total expenditure on product management, research, maintenance and support in
the year increased to £4.0m (2021: £3.4m) following investment in all areas.
This investment increased the software engineering headcount, providing vital
capability and capacity to deliver our exciting roadmap of new features. We
also expanded our data science capability which will result in increased use
of Artificial Intelligence and Machine Learning within our products. Research
& development costs of £0.4m were also capitalised during the year
relating to new features incorporated into ControliQ. Costs incurred
relating to the simplification of the underlying software architecture are not
able to be reliably measured and have therefore been expensed through the
P&L.
Exceptional Items & Long-Term Incentive Plan (LTIP) charges
During the year the income statement charge for the LTIP incentives issued at
IPO was £0.6m (FY21: de minimus). There were also exceptional charges of
£0.5m relating to an acquisition that did not complete as a result of funding
from the stockmarkets being unavailable following the Russian invasion of
Ukraine.
Foreign Exchange
The Group has 54% (2021: 50%) of revenues invoiced in currencies other than
GBP, with the group's cost base predominantly located in the same currency
jurisdictions, providing a natural hedge to currency exchange risk. Movements
on exchange rates throughout the year represent a movement of less than 1% in
either revenues or costs. [to be verified]
Depreciation and Amortisation
Depreciation and amortisation of £1.0m (FY21: £1.1m) principally comprised
intangible amortisation following the acquisition of the OpenConnect entity in
2019 and the Australian entities in 2017.
Taxation
The Group had a tax charge in the year of £0.1m (FY21: £0.7m). The group
operates a transfer pricing policy to ensure that profits are correctly
recorded in each of the jurisdictions in which it operates. ActiveOps has
brought forward tax losses in the UK and Irish legal entities that currently
reduce the overall tax rate of the business.
Statutory Results
The Group reported a loss of £(2.6m) (FY21: profit £9.1m, operating loss
from continuing operations of £2.7m).
Earnings per Share
As a result of the Group's investments in research, development, sales and
marketing, the loss attributable to equity shareholders per share for
continuing operations was 3.83p (FY21: 4.83p).
Dividend
The Board has determined that no dividend will be paid in the year. The Group
is primarily seeking to achieve capital growth for shareholders. It is the
Board's intention during the current phase of the Group's development to
retain distributable profits from the business to the extent they are
generated.
Balance Sheet
The Group has retained a strong balance sheet position with no debt and net
assets at 31 March 2022 of £8.5m (FY21: £10.5m) including cash of £13.8m at
the end of the year (FY21: £16.6m).
Goodwill and intangible assets
The carrying value of the Group's goodwill of £1.2m (FY21: £1.1m) was
reviewed by the Board with no indications of impairment. The intangible assets
at £4.3m (FY21: £4.5m) arising from business combinations for customer
relationships, purchased software and capitalised development costs are
amortised over an appropriate period.
Working Capital
The Group continues to generate positive working capital with the ratio of
Operating cashflow to EBITDA at 698% for the year (FY21: 350%) excluding the
impact of £3.5m paid to tax authorities at the beginning of the year,
relating to employment taxes due from the exercise of share options and sale
of shares at the IPO on 29 March 2021.
The Group continued to bill customers annually in advance for software
revenues with deferred income increasing to £12.0m (2021: £11.5m). The
seasonality of existing contract customer renewals in the second half of the
year delivered a strong increase in cash over that period.
Paddy Deller
Chief Financial Officer
Environmental, Social and Governance Report
ActiveOps has always been proud to be a diverse, global business and has
sought to adopt sound governance structures through its development. Since our
listing in March 2021 we have taken steps to adopt a more formal approach to
managing and developing our ESG agenda.
Simplifying how organisation's control operational performance has a
transformative impact on organisational success, the wellbeing of employees
and the outcomes for customers. The Group's ESG agenda supports this goal by
delivering positive impacts for our employees, the environment and our wider
stakeholders.
This report represents the Environmental, Social and Governance information
and metrics which have been adopted by ActiveOps in the first year of being
quoted on the AIM market of the London Stock Exchange, and includes details of
the process used by the Group to select an appropriate framework to support
future development of the Group's ESG focus.
Context and framework selection
Prior to becoming a public company, ActiveOps managed its Environmental,
Social and Governance impacts through a framework of practices, policies and
processes that ensured the business was taking appropriate steps in these
important areas. Since the IPO, the Board has put in place a more formal
framework in line with ESG reporting requirements, enabling a more structured
approach to be taken.
The Board has established an ESG committee led by Hilary Wright (independent
Non-Executive Director) with appropriate representation from within the
business. This committee led the work to recommend to the Board a relevant
framework and the subsequent development and implementation of appropriate
actions, to ensure a robust ESG agenda is in place for the business. The
committee has also put in place appropriate reporting structures and developed
policies and procedures which support the Company's ESG goal of making a
positive impact for our employees, customers and wider stakeholders to deliver
our strategic vision.
The Committee reviewed six well recognised reporting frameworks to ascertain
the best fit for ActiveOps. These frameworks were selected based on the
Group's own research and input from advisors and investors. Three frameworks
were shortlisted for further review:
• UN Sustainable Development Goals
• Taskforce for climate related disclosures (TCFD)
• Global Reporting Initiative (GRI)
These frameworks were reviewed by the ESG Committee with consideration as to
whether the frameworks were appropriate for the industry and sector that
ActiveOps operates in, whether the framework listed specific measures or
provided more general guidance, and the stakeholders that might be impacted by
the selection of a specific framework. The output of this review was cross
referenced to the frameworks selected by other peer group companies, with
input from some shareholders, professional advisors and research analysts. The
Committee determined that the Global Reporting Initiative (GRI) was an
appropriate framework to be used for ActiveOps on the basis that it was the
most widely used standard for reporting on ESG impact globally and had been
developed over many years with multiple stakeholder contributions. GRI
Standards aim to meet the information needs of all stakeholders, and the
modular structure supports both comprehensive reports and selected
disclosures. The framework is industry agnostic and, given the breadth of
coverage across Environmental, Social and Governance areas, enables ActiveOps
to identify relevant material items to focus on. It was also recognised by
shareholders and professional advisors as being the most relevant for
ActiveOps. The ESG committee (on behalf of Group employees) determined the GRI
as the framework to deliver ongoing value and guidance in the development of
the organisation.
The GRI framework is comprised of three core standards and 33 individual
standards broken down between Environmental (eight standards), Social (18
standards) and Economic & Governance (seven standards) as noted below:
· Universal standards:
o GR101 - Foundation: Starting point for using the GRI standards
o GR102 - General disclosures: to report contextual information about the
organisation
o GR103 - Management approach: to report the management approach for each
material topic
· Topic specific standards (specific disclosures selected for each
material topic):
o GRI 200 - Economic
o GRI 300 - Environmental
o GRI 400 - Social
The ESG committee evaluated the standard reporting requirements in the GRI 100
series along with all 33 standards under GRI 200, GRI 300 and GRI 400 and
identified six material areas as noted below, for the first phase of review
completed in the year to March 2022. A further 11 standards were identified as
applicable with a medium or low impact for the Group, with these standards to
be evaluated in subsequent periods.
OVERVIEW OF THE SET OF GRI STANDARDS
Environmental (planet)
The Group recognises that its activities should be carried out in an
environmentally responsible manner where possible. We aim to ensure that we
can grow sustainably minimising the environmental impacts of not just of our
products, but also in how we operate as a business.
As a supplier of software solutions, we have no manufacturing facilities and
our premises exclusively comprise office space. The Group actively minimises
waste and has adopted recycling policies, for example in respect of our paper
consumption, as well as ensuring energy usage is efficiently managed both
inside and outside of office opening hours.
As a Group we are committed to proactively reducing our carbon footprint and
have put in place measures to assess the current position of the business.
The two biggest contributors to ActiveOps own carbon footprint are data
centres and travel. Our data centre provider, Microsoft Azure, is carbon
neutral as well as offering world class levels of security and service at a
competitive price as part of the Group's gold partner relationship with
Microsoft.
Travel to meet customers and to enable effective collaboration is an important
part of the Group's operations. During the Covid-19 pandemic travel reduced to
negligible levels. As travel restrictions have eased the levels of travel have
increased, however the overall levels of travel are lower than pre-pandemic
levels, with most implementations being carried out remotely, lower levels of
daily commuting to the office and lower levels of inter-office travel. The
Group has also moved its travel management to a system which provides real
time tracking of CO2 emissions for all travel, not just flights. The system is
required to be used for travel and accommodation bookings across the company,
so that the Group can measure and manage the CO2 impact of its travel
patterns.
Within the Global Reporting initiative, ActiveOps has identified four
environmental standards which are relevant to the business, including the
reporting of energy usage. We have introduced procedures to measure the
Group's Carbon Dioxide equivalent (CO2) emissions for those activities which
make a material contribution. Scope 1 & 2 emissions are calculated using
data from our offices across the world, reflecting how we heat and cool our
offices along with the electricity we use. Scope 3 emissions are predominantly
from travel, hotel stays, data centre energy use and outsourced support and
activities by key suppliers.
GRI 302 - Energy consumption
Scope Emissions in Emissions in % of CO(2)/FTE kWh/FTE
(Tonnes CO(2)) (kWh) total
Scope 2 - Indirect emissions from purchased electricity in our offices(1,2) 10,664 45,741 4% 57 244
Scope 3 - Other indirect emissions, primarily travel and hotel stays 229,010 982,285 96% 1,231 5,280
Total 239,674 1,028,026 100% 1,289 5,525
1 Calculated based on electricity consumption where available converted to
CO2 or cost incurred and converted to kWh at a rate of 0.23 kWh/Tonne CO2.
2 Hosting facilities are provided on the Microsoft Azure platform which is
a 100% carbon neutral platform - no CO2 consumption has therefore been
included.
Source
https://azure.microsoft.com/en-gb/global-infrastructure/sustainability/#resources
ActiveOps recognises that the first step to being able to reduce consumption
is the ability to measure current CO2 consumption. The Group will use FY22 and
FY23 data to establish a baseline for the Group's consumption of CO2. Once
captured, this data will enable targets to be set for reduction and mitigation
of CO2 emissions and action plans to deliver those targets and move towards
net-neutral carbon footprint.
The Group also evaluated all other areas covered by GRI 300 and concluded that
they were either not applicable or the impact was not material.
Social (community and people)
The success of our business is founded in our people and our culture - the way
we think, behave and act towards each other. Our culture is underpinned by our
values - 'global', 'expert', 'authentic' and 'collaborative', which support
our vision of simplifying the running of operations and reflect what the
company stands for. We celebrate these values by recognising role models in
the business and rewarding behaviours that are aligned with our values.
Our product professionalises and develops valuable and transferable skills and
use of our products enhances the working environment for our customers,
reducing stress and improving wellbeing. The transition to hybrid working
patterns for many has heightened the need for effective support in managing
work, which is provided by the solutions we deliver to our customers.
We are committed to giving back through engaging in charitable and volunteer
efforts within our local communities to enable individuals to flourish through
learning. We support our people to contribute one day per year to educational
volunteer programmes by sharing their knowledge, experience and enthusiasm.
Over the last year we have engaged with Brighter Tomorrow in Dallas, a charity
whose primary goal is to provide emergency safe shelter, where survivors of
domestic violence and sexual assault can begin healing. ActiveOps has put
together several donation drives, including 'PJs and Popcorn' donating 200
pairs of pyjamas, and 'I Wish' donating toiletries, bedding, and cleaning
supplies, to prepare their clients to move on with the next phase of a more
independent future. ActiveOps employees volunteered their time to help
Brighter Tomorrows assemble much-needed beds for incoming clients. In the UK
we have provided IT expertise and support to SOFEA, a charity which provide
education, employability and wellbeing programmes for vulnerable youngsters.
The Group also provided support to the families of employees in India and
Africa during periods when Covid-19 was having a significant impact.
The Group is committed to diversity and inclusion ("D&I") across gender,
sexual orientation, marital status, race, colour, nationality, ethnic or
national origin, education, religion, age and disability. It underpins the
results we achieve, our relevance across regions and cultures, and drives
innovation and long-term sustainability. In order to further progress
diversity the Group has implemented processes to capture the diversity of the
organisation to give an accurate picture of the diversity in the business. The
ActiveOps "Change Group" provides a forum for representatives from all areas
of the business to have input to proposed changes within the business and
updates to policies and practices which affect our customers and people.
An annual employee engagement survey seeks employee views on the diversity,
inclusivity and culture of ActiveOps as well as other aspects of the business.
The 2022 survey had a high completion level of 81% (FY21: 65%) and maintained
a high overall engagement score of 4.0 (2021: - 4.1) out of 5, with functional
and regional action plans developed to further enhance engagement across
teams.
Developing our people is important to the success of the Group with training
offered in support of this. ActiveOps rolled out a Global LinkedIn learning
platform in January 2021 which is available to all employees with appropriate
courses suggested for individuals to complete. In the first four months since
launch a total of 146 modules had been completed by 95 (49%) of team members.
ActiveOps has also implemented a comprehensive information security and data
protection training and assessment programme. This programme forms part of the
induction for new joiners and all employees undergo an annual refresher. Our
most recent programme featured data protection awareness including (GDPR
(EU/UK) and HIPAA (US Healthcare privacy laws)), avoiding dangerous
attachments and phishing attacks, data loss prevention, and working safely
from different locations. Employees and associates confirm and attest to their
understanding of company policies on information security, data protection as
well as general organisation policies available in the ActiveOps Employee
Handbook.
To further enhance the existing benefits available to employees, ActiveOps
launched a Global Share Purchase Plan in January 2021 which enables employees
to purchase ActiveOps shares directly from their salary, with ActiveOps
matching each share purchased with a free share after a three-year period (up
to a maximum amount).
The impacts of the Covid-19 pandemic have had a significant impact on our
customers and employees. Through the pandemic the Group has increased the
number of employees from 170 to 194 with increases predominantly in the UK and
USA. To enable a more flexible working place and to reflect the changes in
working practices as a result of the pandemic, ActiveOps has introduced a
flexible "Ways of Working" policy that enables all employees to work either
from home or an office environment. The Ways of Working policy recognises the
importance and value of collaboration as well as flexibility and encourages
all team members to collaborate effectively through regular gatherings in our
different jurisdictions.
The Group will continue to look at ways of further supporting our team members
and to increase the diversity of the business, with a number of areas being
developed in the upcoming year.
Within the GRI framework, ActiveOps has identified the relevant standards that
will help drive the people agenda for ActiveOps. These standards will further
promote the diversity that we enjoy across the employee base. The following
data forms the basis of the GRI reporting in this area:
GRI 401 & 405
Gender Women Men
2021 2022 2021 2022
Existing Workforce 38% 36% 62% 64%
New Hires 43% 27% 57% 73%
Leavers 31% 26% 69% 74%
Governance Board 25% 33% 75% 67%
Managers 39% 37% 61% 63%
Employees 38% 37% 62% 63%
Age Less than 30 years old 30 - 50 years Over 50 years old
2021 2022 2021 2022 2021 2022
Existing Workforce 19% 17% 60% 65% 21% 18%
New Hires 24% 24% 66% 65% 10% 11%
Leavers 12% 15% 44% 50% 44% 35%
Governance Board 0% 0% 50% 50% 50% 50%
Managers 13% 13% 77% 74% 10% 13%
Employees 22% 19% 57% 64% 21% 17%
GRI 401
ActiveOps is committed to treating its employees equally and has the same
benefits available to both full time and part time employees. ActiveOps seeks
to ensure that a competitive wage and benefits package appropriate to each
jurisdiction is available to all employees with a range of benefits and
initiatives in place to support each person.
GRI 405
ActiveOps has a global diversity & inclusion charter and equal
opportunities policy which states that we treat all employees and applicants
fairly regardless of gender, sexual orientation, marital status, race, colour,
nationality, ethnic or national origin, age or disability. We are committed to
and proud of having a diverse and inclusive environment which has been central
to our success and growth, whilst ensuring our relevance across regions and
cultures.
GRI 406
ActiveOps has policies in place that cover the grievance procedure,
whistleblowing, anti-harassment and bullying, and an equal opportunities
policy is in development.
There have been no incidents of discrimination reported in the period.
Governance
A strong corporate governance foundation is important and the group has
adopted the Quoted Companies Alliance (QCA) code which is constructed around
ten broad governance principles. Further detail on how we comply with each
principle can be found in our Corporate Governance statement.
We carefully consider the Chartered Management Institute Code of Conduct and
aim to adopt the highest standards of ethics and conduct and align these with
our values, specifically:
• Behaving in an open, honest and trustworthy manner.
• Acting in the best interests of our organisation, customers, clients
and/or partners.
• Continually developing and maintaining professional knowledge and
competence.
• Creating a positive impact on society.
• Respecting the people with whom we work.
In addition to this alignment, we have reviewed the Global Reporting
Initiative standards within GRI 205 and GRI 207 and updated our policies and
procedures in the following areas:
• Anti-Bribery & corruption - full risk assessment and formal training
to be completed across the group in year-ending March 31(st) 2023.
• Company Code of conduct aligned to the Chartered Management Institute
Code of Conduct and Practice.
• Whistleblowing policy.
• The Groups approach to tax and an anti-evasion tax policy.
• Vendor management policy.
Consolidated statement of profit and loss and other comprehensive income
for the year ended 31 March 2022
2022 2021
Year ended 31 March Notes £000 £000
Revenue 3 22,917 20,394
Cost of sales 4 (4,397) (3,725)
Gross profit 18,520 16,669
Administrative expense excluding share option charges, depreciation, (18,959) (16,363)
amortisation and exceptional items
Administrative expenses - share option charges only (563) (42)
Administrative expense - depreciation and amortisation only 7-9 (1,009) (1,104)
Administrative expense - exceptional items only 5 (539) (927)
Operating loss (2,550) (1,767)
Finance income 3 8
Financing costs (65) (289)
Loss before taxation (2,612) (2,048)
Taxation 6 (119) (743)
Loss for the year from continuing activities (2,731) (2,791)
Profit for the year from discontinued activities, net of tax - 11,783
Profit / (loss) for the year (2,731) 8,992
Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translating foreign operations 161 113
Total comprehensive income / (loss) for the year attributable to the owners of (2,570) 9,105
the parent Company
Basic and diluted earnings / (loss) per share
Continuing operations (3.83p) (4.83p)
Discontinued operations - 20.37p
Total 3.83p 15.54p
The earnings per share for the year ended 31 March 2021 were misstated in the
2021 annual report and accounts as being a loss of (3.91p) per
share from continuing operations and a profit of 16.52p per share on
discontinued operations. This calculation was incorrectly based upon the year
end number of shares in issue, rather than the weighted average shares in
issue during the year.
The number of shares in issue at 31 March 2021 were 71,320,680. The weighted
average number of shares in issue for the year ended 31 March 2021 was
57,840,821. Using the weighted average number of shares in issue for the year
ended 31 March 2021 the loss from continuing operations is restated to be
(4.83p) per share and the profit from discontinued operations is restated to
be 20.37p per share.
Consolidated statement of financial position
at 31 March 2022
2022 2021
At 31 March Notes £000 £000
Non-current assets
Intangible assets 7 5,461 5,655
Property, plant and equipment 8 199 241
Right-of-use assets 9 564 736
Deferred tax assets 270 296
Total non-current assets 6,494 6,928
Current assets
Trade and other receivables 10 3,754 5,836
Corporation tax recoverable - 54
Cash and cash equivalents 13,753 16,617
Total current assets 17,507 22,507
Total assets 24,001 29,435
Equity
Share capital 71 71
Share premium account 6,444 6,430
Share option reserve 566 4
Foreign exchange reserve (43) (204)
Retained earnings 1,480 4,210
Total equity 8,518 10,511
Non-Current liabilities
Lease liabilities 9 501 655
Provisions 97 89
Deferred tax liabilities 1,049 1,210
Total non-current liabilities 1,647 1,954
Current liabilities
Trade and other payables 11 13,697 16,808
Lease liability 9 139 162
Total current liabilities 13,836 16,970
Total equity and liabilities 24,001 29,435
Consolidated statement of cash flows
for the year ended 31 March 2022
2022 2021
Year ended 31 March Notes £000 £000
Profit / (loss) after tax (2,731) 8,992
Taxation 119 745
Finance income (3) (8)
Financing costs 65 294
Operating profit / (loss) (2,550) 10,023
Adjustments for:
Depreciation property, plant and equipment 8 144 203
Depreciation right-of-use asset 9 165 242
Amortisation of intangible assets 7 700 744
Profit on sale of discontinued operations - (10,269)
Share option charge 563 42
(Profit) / loss on disposal of non-current assets - (3)
Direct costs incurred on sale of subsidiary - (469)
Change in trade and other receivables 2,082 (97)
Change in trade and other payables 11 (3,111) 4,342
Cash from operations (2,007) 4,578
Interest paid (65) (294)
Taxation paid (184) (253)
Net cash generated from operating activities (2,256) 4,211
Investing activities
Purchase of property, plant and equipment 8 (96) (68)
Purchase of software 7 (364) (30)
Interest received 3 8
Sale of subsidiary (net of cash included in disposal) - 14,654
Net cash generated from / (used in) investing activities (457) 14,564
Financing activities
Proceeds from issue of shares (14) 1,727
Repayment of related party loans - (999)
Repayment of lease liabilities (184) (250)
(Repayment) / proceeds of bank borrowings - (6,340)
Net cash (used in) / generated from financing activities (198) (5,862)
Net change in cash and cash equivalents (2,911) 12,913
Cash and cash equivalents at beginning of the year 16,617 4,093
Effect of foreign exchange on cash and cash equivalents 47 (389)
Cash and cash equivalents at end of the year 13,753 16,617
Consolidated statement of changes in equity
for the year ended 31 March 2022
Share capital Share premium Share option reserve Foreign exchange reserve Retained earnings Total
Year ended 31 March £000 £000 £000 £000 £000 £000
At 1 April 2020 19 4,755 221 (317) (5,041) (363)
Loss for the year - - - - 8,992 8,992
Exchange differences on translating foreign operations - - - 113 - 113
Total comprehensive loss for the year - - - 113 8,992 9,105
Transactions with owners, recorded directly in equity
Reserve transfer on exercising of share options - - (259) - 259 -
Share based payment charge - - 42 - - 42
Bonus issue of shares 39 (39) - - - -
Issue of shares 13 1,714 - - - 1,727
Total transactions with owners 52 1,675 (217) - 259 1,769
At 31 March 2021 71 6,430 4 (204) 4,210 10,511
Share capital Share premium Share option reserve Foreign exchange reserve Retained earnings Total
Year ended 31 March £000 £000 £000 £000 £000 £000
At 1 April 2021 71 6,430 4 (204) 4,210 10,511
Profit for the year - - - - (2,731) (2,731)
Exchange differences on translating foreign operations - - - 161 - 161
Total comprehensive income for the year - - - 161 (2,731) (2,570)
Transactions with owners, recorded directly in equity
Reserve transfer on exercising of share options - - (1) - 1 -
Share based payment charge - - 563 - - 563
Issue of shares - 14 - - - 14
Total transactions with owners - 14 562 - 1 577
At 31 March 2022 71 6,444 566 (43) 1,480 8,518
Notes forming part of the financial statements
for the year ended 31 March 2022
1. General information
ActiveOps plc (the 'Company') is a public company limited by shares
incorporated in England and Wales. The registered office and principal place
of business is One Valpy, 20 Valpy Street, Reading, Berkshire, RG1 1AR. On the
17 March 2021 the company became a public limited company, having formerly
been known as ActiveOps Ltd.
The Company, together with its subsidiary undertakings (the 'Group') is
principally engaged in the provision of hosted operations management Software
as a Service ('SaaS') solutions to industry leading companies around the
world.
The preliminary financial information presented in this report is unaudited
and has been prepared in accordance with the recognition and measurement
principles of International Accounting Standards in conformity with the
requirements of the Companies Act 2006 set out in the Group accounts for the
years ended 31 March 2021 and 31 March 2022, and does not contain all the
information to be disclosed in financial statements prepared in accordance
with IFRS.
The figures for the year ended and as at 31 March 2022 are unaudited. The
figures relating to 31 March 2021 have been extracted from the statutory
accounts for that year. The statutory accounts for the year ended 31 March
2022 have yet to be delivered to the Registrar of Companies and have been
prepared in accordance with UK-adopted International Accounting Standards.
The preliminary financial information does not constitute statutory accounts
within the meaning of Section 434 of the Companies Act 2006, and does not
contain all the information required to be disclosed in a full set of IFRS
financial statements.
Statutory accounts for the year ended 31 March 2022 will be delivered to the
Registrar of Companies and sent to Shareholders in due course.
Statutory accounts for the year ended 31 March 2021 have been filed with the
Registrar of Companies. The auditor's report on those accounts was
unqualified and did not include reference to any matters to which the auditor
drew attention by way of emphasis without qualifying the report and did not
contain a statement under section 498(2) and (3) of the Companies Act 2006.
2. Accounting policies
a) Basis of preparation
The principal accounting policies adopted in the preparation of the
consolidated financial statements are set out below. The policies have been
consistently applied to all the years presented, unless otherwise stated.
The financial statements of the Group have been prepared on a going concern
basis and in accordance with International Accounting Standards ('IAS') in
conformity with the requirements of the Companies Act 2006.
The preparation of financial statements in compliance with IFRS requires the
use of certain critical accounting estimates. It also requires Group
management to exercise judgment in applying the Group's accounting policies.
The areas where significant judgements and estimates have been made in
preparing the financial statements and their effect are disclosed in note 3.
b) Going Concern
The Directors have a reasonable expectation that there are no material
uncertainties that cast significant doubt about the Group's ability to
continue in operation and meet its liabilities as they fall due for the
foreseeable future, being a period of at least 12 months from the date of
approval of the financial statements.
Whilst there can be no certainty due to the conditions across the world at
present, the Directors have reviewed cash flow forecasts for the business
covering a period of at least 12 months from the date of approval of the
financial statements, and together with the projected revenue and available
cash reserves, they are confident that sufficient funding is available to
support ongoing trading activity and investment plans for the business. The
financial statements have therefore been prepared on a going concern basis.
c) New accounting standards and interpretations not yet mandatory or early
adopted
Accounting Standards that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the Group for the annual reporting
period ended 31 March 2022. The Group has not yet assessed the impact of these
new or amended accounting standards and interpretations.
d) Revenue
The Group sells SaaS solutions and Training & Implementation ('T&I').
SaaS solutions are sold as both a cloud IT environment or as an on-premise
solution which can be hosted within a customer's server. Alongside the
software, the Group provides ongoing management services contracts which
involves ongoing support of the software. This support is typically achieved
by accessing the software to ensure it is operating efficiently and to make
changes as requested by the customer. The licence and associated management
services contract are considered to be a single performance obligation because
although the customer obtains possession of the software, they are unable to
benefit from the software solution without the associated management services.
T&I relates to implementation of the SaaS solution and training in the
Group's methodology on how to use the solution to the best effect. This is
typically delivered at the start of a new customer relationship, or when a
customer expands the use of the Group's software into other parts of their
business. Ad-hoc training is also provided to existing customers. T&I is a
single performance obligation.
SaaS performance obligations are provided under fixed-price contracts, which
is mainly contracted as a fixed price for a period of time for up to a
contractual number of users, but also can be achieved via a price per user,
where the number of actual users is determined in arrears. SaaS contracts are
typically for a period of one year. Where the number of users is determined in
arrears, a best estimate of the expected revenue is accrued each month based
upon recent usage.
SaaS solutions, both hosted and on-premise, are recognised on a straight-line
basis over the length of the contract during which the customer has daily
access to these services.
T&I services are recognised over time based upon the delivery of the
service. Variable and contingent consideration exists in T&I revenues for
some customers typically dependent on the customer achieving a level of
efficiency due to the purchase of the Group's software and methods. Management
agrees with the customer the expected amount of productivity gain and the
associated contingent revenue with the customer at the outset of the contract,
based upon an initial health check of the customers operations. Management
considers the likelihood of the efficiency being achieved given what is
discovered in the initial health check and past performance of the Group's
products with other customers, and if the gain is considered to be probable
the variable revenue is recognised alongside the non-variable T&I revenue.
If the gain is not initially thought to be probable, then the revenue is only
recognised once the efficiency improvements demonstrate that the targets are
likely to be achieved.
At present this isn't a significant judgement as it applies to a relatively
small amount of revenues and the efficiency targets have, historically, been
achieved.
Revenue has been allocated between performance obligations using stand-alone
selling prices. Most sales are only for one performance obligation, as
customers who remain with the Group over many years do not usually require
additional T&I. Equally T&I is sold at daily rates that are comparable
to third party training providers who run management courses or similar for
organisations that are comparable to the broad customer base of the Group. Any
non-trivial variation from the total cost of a sale of both performance
obligations when compared to standalone prices and external providers prices
are applied on a pro rata basis to the agreed sales price with the customer to
determine the split between the two performance obligations.
The IFRS 15 practical expedient that an entity need not adjust the promised
amount of consideration for the effects of a significant financing component
if the entity expects, at contract inception, that the period between when the
entity transfers a promised good or service to a customer and when the
customer pays for that good or service will be one year or less has been
applied. That an entity may recognise the incremental costs of obtaining a
contract as an expense when incurred if the amortisation period of the asset
that the entity otherwise would have recognised is one year or less has also
been applied.
No financing cost has been considered to be part of the revenue due to the
duration of the performance obligations lasting for one year or less. Warranty
fixes are provided as required within the agreed services of the SaaS
solutions performance obligations. These are assurance-type warranties (i.e. a
product guarantee) and so are not separate performance obligations.
In the case of fixed-price contracts, the customer pays the fixed amount based
on a payment schedule. If the services rendered by the Group exceed the
payment, a contract asset is recognised. If the payments exceed the services
rendered, a contract liability is recognised. Contract assets and liabilities
are recognised within 'prepayments and accrued income' and 'accruals and
deferred income' respectively.
e) Basis of consolidation
Subsidiaries are entities controlled by the Group. The Group controls a
subsidiary when it is exposed to, or has rights to, variable returns from its
involvement with the subsidiary and has the ability to affect those returns
through its power over the subsidiary. In assessing control, the Group takes
into consideration potential voting rights. The acquisition date is the date
on which control is transferred to the acquirer. The financial statements of
subsidiaries are included in the consolidated financial statements from the
date that control commences until the date that control ceases.
Intra-Group balances and transactions, and any unrealised income and expenses
arising from intra-Group transactions, are eliminated. Unrealised gains
arising from transactions with equity-accounted investees are eliminated
against the investment to the extent of the Group's interest in the investee.
Unrealised losses are eliminated in the same way as unrealised gains, but only
to the extent that there is no evidence of impairment.
f) Foreign currency
Transactions in foreign currencies are translated to the respective functional
currencies of Group entities at the foreign exchange rate ruling at the date
of the transaction. Monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are retranslated to the functional
currency at the foreign exchange rate ruling at that date. Foreign exchange
differences arising on translation are recognised in the Statement of
Comprehensive Income. Non-monetary assets and liabilities that are measured in
terms of historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction. Non-monetary assets and
liabilities denominated in foreign currencies that are stated at fair value
are retranslated to the functional currency at foreign exchange rates ruling
at the dates the fair value was determined.
The assets and liabilities of foreign operations, including goodwill and fair
value adjustments arising on consolidation, are translated to the Group's
presentational currency, sterling, at foreign exchange rates ruling at the
balance sheet date. The revenues and expenses of foreign operations are
translated at an average rate for the period where this rate approximates to
the foreign exchange rates ruling at the dates of the transactions.
Exchange differences arising from this translation of foreign operations are
reported as an item of other comprehensive income and accumulated in the
translation reserve or non-controlling interest, as the case may be. When a
foreign operation is disposed of, such that control, joint control or
significant influence (as the case may be) is lost, the entire accumulated
amount in the translation reserve, net of amounts previously attributed to
non-controlling interests, is recycled to the Statement of Comprehensive
Income as part of the gain or loss on disposal.
g) Classification of instruments issued by the Group
Instruments issued by the Group are treated as equity (i.e., forming part of
shareholders' funds) only to the extent that they meet the following two
conditions:
· They include no contractual obligations upon the Group to deliver
cash or other financial assets or to exchange financial assets or financial
liabilities with another party under conditions that are potentially
unfavourable to the Group; and
· Where the instrument will or may be settled in the Company's own
equity instruments, it is either a non-derivative that includes no obligation
to deliver a variable number of the Company's own equity instruments or is a
derivative that will be settled by the Company exchanging a fixed amount of
cash or other financial assets for a fixed number of its own equity
instruments.
To the extent that this definition is not met, the items are classified as a
financial liability.
Finance payments associated with financial liabilities are dealt with as part
of finance expenses. Finance payments associated with financial instruments
that are classified in equity are dividends and are recorded directly in
equity.
Where a financial instrument that contains both equity and financial liability
components exists these components are separated and accounted for
individually under the above policy.
h) Financial instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group
becomes a party to the contractual provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash
flows from the financial asset expire, or when the financial asset and
substantially all the risks and rewards are transferred. A financial liability
is derecognised when it is extinguished, discharged, cancelled or expires.
A. Financial Assets
Classification and initial measurement of financial assets
Financial assets, other than those designated and effective as hedging
instruments, are classified into the following categories:
· amortised cost
· fair value through profit or loss ('FVTPL')
· fair value through other comprehensive income ('FVOCI').
All income and expenses relating to financial assets that are recognised in
profit or loss are presented within finance costs, finance income or other
financial items, except for impairment of trade receivables which is presented
within other expenses.
Subsequent measurement of financial assets
Financial assets are measured at amortised cost if the assets meet the
following conditions (and are not designated as FVTPL):
· they are held within a business model whose objective is to hold the
financial assets and collect its contractual cash flows; and
· the contractual terms of the financial assets give rise to cash flows
that are solely payments of principal and interest on the principal amount
outstanding.
After initial recognition, these are measured at amortised cost using the
effective interest method. Discounting is omitted where the effect of
discounting is immaterial. The Group's cash and cash equivalents, trade and
most other receivables fall into this category of financial instruments.
Impairment of financial assets
IFRS 9's impairment requirements use forward-looking information to recognise
expected credit losses - the 'expected credit loss (ECL) model'.
The Group considers a broader range of information when assessing credit risk
and measuring expected credit losses, including past events, current
conditions, and reasonable and supportable forecasts that affect the expected
collectability of the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
• Financial instruments that have not deteriorated significantly
in credit quality since initial recognition or that have low credit risk
('Stage 1'); and
• Financial instruments that have deteriorated significantly in
credit quality since initial recognition and whose credit risk is not low
('Stage 2').
'Stage 3' would cover financial assets that have objective evidence of
impairment at the reporting date.
'12-month expected credit losses' are recognised for the first category while
'lifetime expected credit losses' are recognised for the second category.
Measurement of the expected credit losses is determined by a
probability-weighted estimate of credit losses over the expected life of the
financial instrument.
Trade and other receivables
The Group makes use of a simplified approach in accounting for trade and other
receivables and records the loss allowance as lifetime expected credit losses.
These are the expected shortfalls in contractual cash flows, considering the
potential for default at any point during the life of the financial
instrument. In calculating, the Group uses its historical experience, external
indicators and forward-looking information to calculate the expected credit
losses.
The Group does not have a history of material credit losses on its trade
receivables and no change to this is expected when considering forward-looking
information.
B. Financial Liabilities
Classification and measurement of financial liabilities
The Group's financial liabilities include interest-bearing loans and
borrowings and trade payables and other payables.
Financial liabilities are initially measured at fair value, and, where
applicable, adjusted for transaction costs unless the Group designated a
financial liability at fair value through profit or loss.
Subsequently, financial liabilities are measured at amortised cost using the
effective interest method.
All interest-related charges and, if applicable, changes in an instrument's
fair value that are reported in profit or loss are included within finance
costs or finance income.
i) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and accumulated impairment losses.
Where parts of an item of property, plant and equipment have different useful
lives, they are accounted for as separate items of property, plant and
equipment.
Depreciation is charged to administrative expenses in the Statement of
Comprehensive Income. The principal annual rates used for this purpose are:
· Leasehold improvements - straight line over 3 years;
· Plant and machinery - straight line over 3 years;
· Furniture, fittings and equipment - straight line over 5 years;
· Right-of-use assets - straight line over the earlier of useful life
of the right-of-use asset or the lease term.
Depreciation methods, useful lives and residual values are reviewed at each
balance sheet date.
j) Leases
The Group has applied IFRS 16 throughout the financial statements. At
inception of a contract, the Group assesses whether a contract is, or
contains, a lease. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a period of time in
exchange for consideration.
The Group recognises a Right-of-use (ROU) asset and a lease liability at the
lease commencement date. The ROU asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct
costs incurred and an estimate of costs to restore the underlying asset, less
any lease incentives received.
The ROU asset is subsequently depreciated using the straight-line method from
the commencement date to the earlier of the end of the useful life of the ROU
asset or the end of the lease term. In addition, the ROU asset is periodically
reduced by impairment losses, if any, and adjusted for certain remeasurements
of the lease liabilities. Depreciation is charged to administrative expenses
in the Statement of Comprehensive Income.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group's incremental borrowing rate. The Group uses its
incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the lease liability comprise:
· Fixed payments, including in-substance fixed payments;
· Variable lease payments that depend on an index or a rate,
initially measured using the index or rate as at the commencement date.
· Amounts expected to be payable under a residual value guarantee;
and
· The exercise price under a purchase option that the Group is
reasonably certain to exercise, lease payments in an optional renewal period
if the Group is reasonably certain to exercise an extension option, and
penalties for early termination of a lease unless the Group is reasonably
certain not to terminate early.
The lease liability is measured at amortised cost using the effective interest
method. It is remeasured when there is a change in future lease payments
arising from a change in an index or rate, if there is a change in the Group's
estimate of the amount expected to be payable under a residual value guarantee
or if the Group changes its assessment of whether it will exercise a purchase,
extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment
is made to the carrying amount of the ROU asset or is recorded in profit or
loss if the carrying value of the ROU asset has been reduced to zero.
The Group presents ROU assets and lease liabilities separately from property,
plant and equipment.
Short-term leases and low value assets
The Group has elected not to recognise ROU assets and lease liabilities for
short-term leases of machinery that have a lease term of 12 months or less and
leases of low-value assets, including IT equipment. The Group recognises the
lease payments associated with these leases as an expense on a straight-line
basis over the lease term. There are several property leases in the Group on a
one-month rolling contract. These are treated as short-life assets and are
recognised on a straight-line basis.
k) Intangible assets and goodwill
Goodwill
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is
allocated to cash-generating units ('CGU') and is not amortised but is tested
annually for impairment.
Other intangible assets
Expenditure on internally generated goodwill and brands is recognised in the
Statement of Comprehensive Income as an expense as incurred.
The Group invests on a continual basis in the development of software for sale
to third parties. There is a continual process of enhancements to and
expansion of the software with judgement required in assessing whether the
development costs meet the criteria for capitalisation. In making this
judgement, the Group evaluates, amongst other factors, whether there are
future economic benefits beyond the current period and management's ability to
measure reliably the expenditure attributable to the project. Judgement is
therefore required in determining the practice for capitalising development
costs. During the year the group has capitalised development costs of £0.4m
associated with the delivery of new features to the ControliQ platform that
are expected to further enhance the proposition for the customer and drive
future economic benefit. The amount capitalised has been based on estimates
of the time spent by individual developers on these new features. The costs
are amortised using the straight-line method from the launch of the product
over the expected life cycle of the enhancements which is expected to be five
years. In line with prior years the group has not capitalised costs of £1.0m
associated with the ongoing maintenance of ControliQ and completion of the
ControliQ platform rewrite. Where the rewrite has delivered an improvement in
the underlying architecture of the code base which is therefore expected to
make it easier to work with in the future and consequently some economic
benefit, it has not been possible to separately identify the amount of time
and cost involved in simplifying the underlying architecture due to both of
these elements being intertwined in the code.
Other intangible assets that are acquired by the Group are stated at cost less
accumulated amortisation and accumulated impairment losses. Amortisation is
charged to the administrative expenses in the Statement of Comprehensive
Income on a straight-line basis over the estimated useful lives of intangible
assets unless such lives are indefinite. Intangible assets with an indefinite
useful life and goodwill are systematically tested for impairment at each
balance sheet date. The Group has no assets with indefinite lives, other than
Goodwill, throughout the reporting periods.
Other intangible assets are amortised from the date they are available for
use. The estimated useful lives are as follows:
· Customer relationships - straight line over 10 years.
· Purchased software - straight line over 3 years.
· Intellectual property rights acquired on acquisition - straight line
over 3 years.
· Development costs - straight line over 5 years.
The estimated useful lives are estimated based upon management's best estimate
of the expected life of the asset. Useful lives are reconsidered if
circumstances relating to the asset change or if there is an indication that
the initial estimate requires revision.
l) Impairment
Financial assets (including receivables)
A financial asset not carried at fair value through profit or loss is assessed
at each reporting date to determine whether there is objective evidence that
it is impaired. A financial asset is impaired if objective evidence indicates
that a loss event has occurred after the initial recognition of the asset, and
that the loss event had a negative effect on the estimated future cash flows
of that asset that can be estimated reliably.
An impairment loss in respect of a financial asset measured at amortised cost
is calculated as the difference between its carrying amount and the present
value of the estimated future cash flows discounted at the asset's original
effective interest rate. Interest on the impaired asset continues to be
recognised through the unwinding of the discount. When a subsequent event
causes the amount of impairment loss to decrease, the decrease in impairment
loss is reversed through the Statement of Comprehensive Income.
Non-financial assets
The carrying amounts of the Group's non-financial assets are reviewed at each
reporting date to determine whether there is any indication of impairment. If
any such indication exists, then the asset's recoverable amount is estimated.
For goodwill, and intangible assets that have indefinite useful lives or that
are not yet available for use, the recoverable amount is estimated each year
at the same time.
The recoverable amount of an asset is the greater of its value in use and its
fair value less costs to sell. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the
risks specific to the asset. For the purpose of impairment testing, assets
that cannot be tested individually are grouped together into the smallest
group of assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or groups of assets.
An impairment loss is recognised if the carrying amount of an asset exceeds
its estimated recoverable amount. Impairment losses are recognised in the
Statement of Comprehensive Income. Impairment losses recognised in respect of
CGUs are allocated first to reduce the carrying amount of any goodwill
allocated to the units, and then to reduce the carrying amounts of the other
assets in the unit (group of units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other
assets, impairment losses recognised in prior periods are assessed at each
reporting date for any indications that the loss has decreased or no longer
exists. An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss is
reversed only to the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised.
m) Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which the
company pays fixed contributions into a separate entity and will have no legal
or constructive obligation to pay further amounts. Obligations for
contributions to defined contribution pension plans are recognised as an
expense in the Statement of Comprehensive Income in the periods during which
services are rendered by employees.
Short term employee benefits
The costs of short-term employee benefits are recognised as a liability and an
expense. The cost of any unused holiday entitlement is recognised in the
period in which the employee's services are rendered.
Termination benefits
Termination benefits are recognised immediately as an expense when the Group
is demonstrably committed to terminate the employment of an employee or to
provide termination benefits.
n) Share based payments
Employees of the Group receive remuneration in the form of share-based payment
transactions, whereby employees render services as consideration for equity
instruments, known as equity settled transactions.
The Group records compensation expense for all share-based compensation awards
based on the grant date fair value, as adjusted for estimated forfeitures over
the requisite service period of the award. The fair value determined on the
grant date is expensed on a straight-line basis over the term of the grant. A
corresponding adjustment is made to equity.
Modifications and cancellations
When the terms and conditions of equity settled share-based payments at the
time they were granted are subsequently modified, the fair value of the
share-based payment under the original terms and conditions and under the
modified terms is determined. Any excess of the modified fair value is
recognised over the remaining vesting period in addition to the original grant
date fair value. The share-based payment is not adjusted if the modified fair
value is less than the original grant date fair value.
Cancellations or settlements, including those resulting from employee
redundancies, are treated as an acceleration of vesting and the amount that
would have been recognised over the remaining vesting period is recognised
immediately.
Valuation and Amortisation Method
The Company estimates the fair value of stock options granted using the
Black-Scholes option pricing formula or a Monte Carlo simulation.
Provision is made for National Insurance Contributions (NICs) on outstanding
share options that are expected to be settled based upon the latest enacted
NIC rates.
o) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and deposits held at call with
banks.
p) Provisions
A provision is recognised in the balance sheet when the Group has a present
legal or constructive obligation as a result of a past event, which can be
reliably measured and it is probable that an outflow of economic benefits will
be required to settle the obligation. Provisions are determined by discounting
the expected future cash flows at a pre-tax rate that reflects risks specific
to the liability.
q) Net financing costs
Financing expenses comprise interest payable and finance charges on finance
leases recognised in the Statement of Comprehensive Income using the effective
interest method. Financing income comprise bank interest receivable.
Interest income and interest payable is recognised in the Statement of
Comprehensive Income as it accrues, using the effective interest method.
r) Segmental reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker ('CODM'). The CODM,
who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the board of directors of ActiveOps
plc.
The Group will provide information to the CODM on the basis of products and
services, being SaaS and T&I services. The CODM receives information for
these two segments down to gross margin level.
s) Taxation
Tax on the profit or loss for the period comprises current and deferred tax.
Tax is recognised in the Statement of Comprehensive Income except to the
extent that it relates to items recognised directly in equity, in which case
it is recognised in equity.
Current tax is the expected tax payable or receivable on the taxable income or
loss for the period, using tax rates enacted or substantively enacted at the
balance sheet date, and any adjustment to tax payable in respect of previous
periods.
Deferred tax is provided on temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes. The following temporary differences are not
provided for: the initial recognition of goodwill; the initial recognition of
assets or liabilities that affect neither accounting nor taxable profit other
than in a business combination, and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in the
foreseeable future. The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying amount of assets
and liabilities, using tax rates enacted or substantively enacted at the
balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the temporary
difference can be utilised.
t) Reserves
Share capital
Share capital represents the nominal value of shares that have been issued.
Share premium account
Share premium includes any premiums received on issue of share capital. Any
transaction costs associated with the issuing of shares are deducted from
share premium, net of any related income tax benefits.
Profit or loss reserves
Retained earnings includes all current and prior period retained profits and
losses.
Share option reserve
The share option reserve is used to recognise the grant date fair value of
options issued to employees but not exercised.
Foreign exchange reserve
The foreign exchange reserve includes all cumulative translation differences
on conversion of the Group's foreign operations from their functional
currencies to its presentation currency of sterling.
Events after the balance sheet date
Subsequent to the year end a claim for £0.4m has been made by an employee,
against ActiveOps USA Inc. The company is investigating the claim and
currently sees no merit in the basis for the claim.
3. Revenue
The Group derives all its revenue from the transfer of goods and services over
time.
A disaggregated geographical split of revenue by operating segment is shown
below between Europe, the Middle East, India and Africa ('EMEIA'), North
America and Australia. All revenue streams are recognised over time.
SaaS T&I Total
Year ended 31 March 2022 £000 £000 £000
EMEIA 10,155 2,297 12,452
North America 5,147 288 5,435
Australia 4,262 768 5,030
19,564 3,353 22,917
SaaS T&I Total
Year ended 31 March 2021 £000 £000 £000
EMEIA 9,295 1,671 10,966
North America 4,283 498 4,781
Australia 4,216 431 4,647
17,794 2,600 20,394
4. Segmental analysis
The Group has two reporting segments, being SaaS and T&I. The Group
focuses its internal management reporting predominantly on revenue and cost of
sales. No non-GAAP reporting measures are monitored. Total assets and
liabilities are not provided to the CODM in the Group's internal management
reporting by segment and therefore a split has not been presented below.
Information about geographical revenue by segment is disclosed in note 3.
No individual customer accounted for 10% or more of turnover during the
reporting period.
SaaS T&I Total
Year ended 31 March 2022 £000 £000 £000
Revenue 19,564 3,353 22,917
Cost of sales (2,974) (1,423) (4,397)
16,590 1,930 18,520
SaaS T&I Total
Year ended 31 March 2021 £000 £000 £000
Revenue 17,794 2,600 20,394
Cost of sales (2,364) (1,361) (3,725)
15,430 1,239 16,669
5. Exceptional items
2022 2021
Year ended 31 March £000 £000
Costs associated with M&A aborted activity 539 -
Costs associated with listing on the London Stock Exchange - 927
The above costs are fees paid to various external advisors. No internal costs
have been included.
6. Taxation
2022 2021
Year ended 31 March £000 £000
Current income tax
Foreign current tax on profit for the current period 214 211
Foreign current tax on profit for the prior period 28 105
Deferred tax
Origination and reversal of timing differences (128) 473
Adjustments in respect of prior periods - (53)
Effect of decrease tax rate on opening deferred tax position 5 7
Total tax charge / (credit) 119 743
2022 2021
Year ended 31 March £000 £000
Loss before tax (2,612) (2,048)
Tax at domestic rate of 19% (2021: 19%) (496) (389)
Effect of:
Expenses that are not deductible in determining taxable profit (19) 245
Income not subject to taxation - (7)
Differences in current and deferred tax rates 5 7
Exercising of share options and movement in share option provisions - (2,073)
Deferred tax not recognised 494 2,833
Withholding taxes 4 54
Adjustment in respect of prior periods 27 52
Effect of other tax rates 104 21
Total tax charge / (credit) 119 743
At 31 March 2022 the Company and its Group had tax losses of approximately
£19.2m (2021: £18.4m) to carry forward to offset against future taxable
profits.
7. Intangible assets
Goodwill Customer relationships Purchased software Intellectual property rights Capitalisation of development costs Total
£000 £000 £000 £000 £000 £000
Cost
At 1 April 2020 2,269 10,929 870 125 - 14,193
Foreign exchange (113) (431) (55) - - (599)
Additions - - 30 - - 30
Disposals (1,028) (4,288) - - - (5,316)
At 31 March 2021 1,128 6,210 845 125 - 8,308
Foreign exchange 26 79 22 - - 127
Additions - - - - 364 364
At 31 March 2022 1,154 6,289 867 125 364 8,799
Amortisation
At 1 April 2020 - 1,820 369 125 - 2,314
Foreign exchange - (30) (4) - - (34)
Charge for the year - 693 51 - - 744
Disposals - (371) - - - (371)
At 31 March 2021 - 2,112 416 125 - 2,653
Foreign exchange - 7 (22) - - (15)
Charge for the year - 614 86 - - 700
At 31 March 2022 - 2,733 480 125 - 3,338
Net book value
At 31 March 2022 1,154 3,556 387 - 364 5,461
At 31 March 2021 1,128 4,098 429 - - 5,655
All amortisation and impairment charges are included within depreciation and
amortisation in the Statement of Comprehensive Income.
The carrying amount of goodwill relates to two cash generating units and
reflects the difference between the fair value of consideration transferred
and the fair value of assets and liabilities purchased.
Customer relationships consists of two individual assets: the acquired
relationships from the purchase of OpenConnect on the 1 August 2019, which has
a netbook value of £1.5M and is being amortised until 31/07/2029; and the
acquired relationships from the purchase of ActiveOps Pty Ltd and Active
Operations Management Australia on the 1 April 2017, which has a netbook value
of £2.1M and is being amortised until 31/03/2027.
Goodwill has been allocated for impairment testing purposes to the following
cash generating units. The carrying values are as follows:
2022 2021
At 31 March £000 £000
Australia 577 577
United States of America 577 551
The Australian goodwill relates to the purchase of ActiveOps Pty Limited and
Active Operations Management Australia Pty Ltd on the 1 April 2017. The United
States of America goodwill relates to the purchase of OpenConnect on the 1
August 2019. The residual amount relates to the amount retained in ActiveOps
USA Inc. on disposal of OpenConnect on 19 October 2020.
The Group tests whether goodwill has suffered any impairment on an annual
basis, or more frequently where evidence of impairment indicators exist, by
comparing the value of the CGUs with their value in use. Value in use is
estimated based on expected future cashflows discounted to present value using
a post-tax discount rate that reflects current market assumptions of the time
value of money. An impairment charge arises where the carrying value exceeds
the value in use.
The inputs into the expected cashflows are based on the most recent forecasts
approved and reviewed by the Directors for the next three years based on
expected growth within those CGU's over that period.
The key inputs into the cashflow forecast are:
• Revenue growth, based upon managements expected growth in the
Group's products. These are determined by understanding the needs of current
customers and expected number of license sales pipeline to determine expected
future sales volumes. These sales volumes are coupled with the current pricing
to determine the forecast revenues. Considerations are also made for customer
churn which is based upon current churn rates. T&I revenues are derived
from forecast additional SaaS sales using historical customer behaviours as a
basis.
• Cost of sales and any other direct costs based upon expected
revenues.
• Expected movements in the overhead costs of the business given
the need to indirectly service growth in revenue.
• Future capital expenditure and other changes to working capital as
required to facilitate the forecast revenue growth.
In determining the potential for impairment of the intangible assets the Group
has discounted the cashflows using the three-year plan at 12.3% for the
Australian CGU and 12.0% for the United States of America CGU. Management have
not identified any reasonably possible changes in any key assumption that
would lead to the need for impairment of either CGU.
8. Property, plant and equipment
Leasehold improvements Plant and machinery Fixtures, fittings and equipment Total
£000 £000 £000 £000
Cost
At 1 April 2020 289 268 603 1,160
Foreign exchange (19) 44 3 28
Additions - 65 3 68
Disposals (71) (24) (58) (153)
At 31 March 2021 199 353 551 1,103
Foreign exchange (28) (25) (101) (154)
Additions - 82 14 96
At 31 March 2022 171 410 464 1,045
Accumulated depreciation
At 1 April 2020 209 185 378 772
Foreign exchange 5 10 18 33
Provided during the period 50 76 77 203
Disposals (71) (21) (54) (146)
At 31 March 2021 193 250 419 862
Foreign exchange (28) (31) (101) (160)
Provided during the period 6 81 57 144
At 31 March 2022 171 300 375 846
Carrying amount
At 31 March 2022 - 110 89 199
At 31 March 2021 6 103 132 241
All depreciation and impairment charges are included within depreciation and
amortisation in the Statement of Comprehensive Income.
9. Right-of-use assets
Buildings
£000
Net book value
At 1 April 2020 932
Foreign exchange 5
Additions 128
Disposals (87)
Depreciation charge for the year (242)
At 31 March 2021 736
Foreign exchange (7)
Depreciation charge for the year (165)
At 31 March 2022 564
The right-of-use asset relates to the property leases for operating premises
across the Group.
Amounts recognised in the statement of financial position:
2022 2021
At 31 March £000 £000
Lease liabilities
Current 139 162
Non-current 501 655
640 817
Amounts recognised in the statement of profit or loss:
2022 2021
Year ended 31 March £000 £000
Interest expense 45 59
Expense for short-term leased properties 95 29
Depreciation of right-of-use assets 165 242
Amounts recognised in the statement of cashflows:
2022 2021
Year ended 31 March £000 £000
Total cash outflows 324 338
There are several property leases in the Group on a one-month rolling
contract. These are treated as short-life assets and are recognised on a
straight-line basis.
10. Trade and other receivables
2022 2021
At 31 March £000 £000
Trade receivables 2,723 3,167
Prepayments and accrued income 953 1,046
Other receivables 78 1,623
3,754 5,836
The Directors consider the carrying value of trade and other receivables to be
approximately equal to their fair value.
2022 2021
At 31 March £000 £000
Trade receivables from contracts with customers 2,770 3,194
Less loss allowance (47) (27)
2,723 3,167
Trade receivables are amounts due from customers for services performed in the
ordinary course of business. They are generally due for settlement within 30
days and are therefore all classified as current. Trade receivables are
recognised initially at the amount of consideration that is unconditional. The
Group holds the trade receivables with the objective of collecting the
contractual cash flows, and so it measures them subsequently at amortised cost
using the effective interest method. Details about the group's impairment
policies and the calculation of the loss allowance are provided in note 2.
11. Trade and other payables
2022 2021
At 31 March £000 £000
Trade payables 1,326 689
Other taxation and social security 815 4,524
Other payables 3 101
Accruals and deferred income 11,553 11,494
13,697 16,808
Trade payables are unsecured and are usually paid within 30 days of
recognition. The carrying amounts of trade and other payables are considered
to be the same as their fair values, due to their short-term nature.
Included in the prior year other taxation and social security is £3,498k of
taxes payable on the share options that exercised as part of the listing of
the Company on 29 March 2021. According to the terms of the share options, all
option holders had an obligation to reimburse the Group for any taxes that
became payable on their options. These proceeds were recovered from the cash
generated from the shares being issued and sold into the market. The taxes
were paid to the relevant tax authorities in April 2022.
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