REG - Aferian PLC - Half-Year Results
01/08/2024 07:00
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RNS Number : 6729Y Aferian PLC 01 August 2024
01 August 2024
AFERIAN PLC
("Aferian", the "Company" or the "Group")
HALF YEAR RESULTS
Aferian plc (LSE AIM: AFRN), the B2B video streaming solutions company,
announces its unaudited results for the six months ended 31 May 2024 ("H1
2024").
Financial Highlights
· Revenue for the period decreased as expected by 48% to $12.2 million (H1
2023: $23.4 million) and adjusted EBITDA((1)) for the six months ended 31 May
2024 was a loss of $2.4 million (H1 2023: $0.1 million).
· Exit run rate Annual Recurring Revenue ("ARR")((2)) decreased by 25%
to $14.1million (31 May 2023: $18.8 million) as a result of two significant
customer contracts ending towards the end of FY2023.
· Adjusted operating cash flow before tax((3)) was an outflow of
$5.0 million (H1 2023: $7.0 million outflow).
· The Group's inventory balance at 31 May 2024 was $4.0m, down from
$8.6m at 31 May 2023 and $5.1m at 30 November 2023. This is expected to
decrease further in the second half of the financial year.
· Net debt((4)) at 31 May 2024 was $14.9 million (30 November 2023 $6.1
million). This is expected to decrease by circa $1 million during the second
half of the financial year.
Notes
1. Adjusted EBITDA is calculated as operating loss before depreciation,
interest, tax, amortisation, exceptional items and employee share-based
payment charges.
2. Exit run rate ARR is annual run-rate recurring revenue as at 31 May
2024.
3. Adjusted operating cash flow before tax is a non-GAAP measure and
excludes cash paid/received in respect of exceptional items.
4. Net debt is a non-GAAP measure and is calculated as loans and
borrowings net of cash and cash equivalents and excluding capitalised
refinancing costs.
Operational Highlights
· Management actions have now reduced the Group's cost base in line
with the expected reduction in revenues and our teams are aligned behind the
Group's strategic goals. Since 31 May 2023 these actions have reduced
annualised operating costs by $14.5 million and annualised capital expenditure
by $5.0 million.
· Following the cost reduction actions taken 24i is making progress
in line with its focus on improving cash flow. It has also seen new customer
deployments and multiple contract extensions being delivered in the first half
of the year.
· Positively, Amino has seen an increase in sales order intake for
video streaming devices in the first half and gross profit margin has improved
to 55%. Although devices revenue has decreased by 74% year on year, volumes of
higher margin Digital Signage and Enterprise device sales and sales orders in
H1 2024 have exceeded management expectations.
Current Trading and Outlook
Trading remains in line with the trading and outlook communicated in FY2023
full year results on 31 May 2024. Although we have taken management actions to
further reduce the Group's cost base in the first half of FY2024, we expect
Group adjusted EBITDA for FY2024 to be lower than the FY2023 adjusted EBITDA
of $1.6m (though still positive), and for this delivery to be weighted towards
the second half of the financial year. Net debt is expected to reduce by
approximately $1 million by year end as the cost reduction and working capital
measures taken in the first half improve free cash flow in the second half.
For further information please contact:
Aferian plc +44 (0)1954 234100
Mark Wells, Chairman
Mark Carlisle, Chief Executive Officer
Investec plc (NOMAD and Broker) +44 (0)20 7597 5970
David Anderson / Patrick Robb / Nick Prowting
About Aferian plc
Aferian plc (AIM: AFRN) is a B2B video streaming solutions company. Our
end-to-end solutions bring live and on-demand video to every kind of screen.
We create the forward-thinking solutions that our customers need to drive
subscriber engagement, audience satisfaction, and revenue growth.
It is our belief that successful media companies and services will be those
that are most consumer-centric, data driven and flexible to change. We focus
on innovating technologies that enable our customers stay ahead of evolving
viewer demand by providing smarter, more cost-effective ways of delivering
end-to-end modern TV and video experiences to consumers. By anticipating
technological and behavioural audience trends, our software solutions empower
our customers to heighten viewer enjoyment, drive growth in audience share and
ultimately their profitability.
Aferian plc is traded on the London Stock Exchange's AIM stock market (AIM:
symbol AFRN). Headquartered in Cambridge, UK, the Company operates across the
USA, Europe and Asia. For more information, please visit www.aferian.com
(http://www.aferian.com/) .
Chief Executive Officer's Review
Operational Review
Although this has been another challenging 6 months for the Group, the
strategic goals of the Group remain clear:
· To improve the video entertainment experience for consumers by
aggregating the video discovery experience; and
· To make it easy for our customers to deliver the most compelling
digital signage and enterprise video solutions.
Under the leadership of Sebastian Braun, who was appointed as CEO of 24i on
3rd July 2024, 24i is focussed on improving the video entertainment experience
for consumers by delivering its next generation 24i Video Cloud to its
customers. 24i's H1 2024 revenue and exit ARR has declined year on year by 33%
and 32% respectively as a result of two significant customer contracts ending
at the back end of FY2023. However, following the cost reduction actions
taken, 24i is making progress in line with its focus on improving cash flow.
Importantly, it has also seen new customer deployments and multiple contract
extensions delivered in the year's first half.
Amino's managed video streaming devices and SaaS platform enable Pay TV and
Digital Signage & Enterprise video operators to deliver high-quality live,
scheduled, and on-demand content for big-screen viewing. H1 2024 revenue
declined by 40% year-over-year due to lower Pay TV device sales, as customers
delayed purchases. However, following a focussed period of investment in sales
and marketing, Amino has now received higher-than-expected sales orders for
Digital Signage and Enterprise devices for 2024 as well as first orders for
the next generation PayTV devices in the North American market which will be
delivered in Q3 2024. Consequently, further gross margin improvements are
expected in the second half of the year.
Operationally, management actions have successfully reduced the Group's cost
base following the further decline in revenues. Since 31 May 2023 these
actions have reduced annualised operating costs by $14.5 million and
annualised capital expenditure by $5.0 million.
Financial Review
H1 2024 Key Performance Indicators
H1 2024 H1 2023 Change
$m $m %
Devices revenues 2.4 9.4 (74%)
Software & services revenues 9.8 14.0 (30%)
Total revenue 12.2 23.4 (48%)
Exit run rate Annual Recurring Revenue ("ARR") at 31 May 14.1 18.8 (25%)
Adjusted operating cashflow before tax (4.3) (7.0) 39%
High margin software & services revenues decreased by 30% to $9.8 million
(H1 2023: $14.0 million). Device revenues in the first half are $2.4 million
(H1 2023: $9.4 million), representing a decrease of 74% year-on-year due to
the reduction in the number of PayTV video streaming devices sold as customers
have delayed purchasing decisions. Consequently, Group revenue for the period
is $12.2 million (H1 2023: $23.4 million). At 31 May 2024, exit run rate ARR
decreased to $14.1 million (H1 2023: $18.8 million).
Revenue, adjusted EBITDA and capitalised development costs by segment
Revenue Adjusted EBITDA Capitalised Development Costs
H1 2024 H1 2023 H1 2024 H1 2023 H1 2024 H1 2023
$m
$m
$m
$m
$m
$m
24i 7.4 11.3 (0.5) 1.4 0.3 2.6
Amino 4.8 12.1 (0.8) (0.5) 0.4 0.7
Central costs - - (1.1) (1.0) - -
Total 12.2 23.4 (2.4) (0.1) 0.7 3.3
Adjusted EBITDA for the six months ended 31 May 2024 was a loss of $2.4
million (H1 2023: $0.1 million). Adjusted EBITDA is reconciled below and is
calculated as operating profit before depreciation, interest, tax,
amortisation, impairment of goodwill, exceptional items and employee
share-based payment charges. This is consistent with the way the financial
performance of the Group is presented to the Board.
A reconciliation of Adjusted EBITDA to operating loss is provided as follows:
H1 2024 H1 2023
$m $m
Adjusted EBITDA (2.4) (0.1)
Exceptional items within operating expenses (2.7) (1.2)
Employee share-based payment charge (0.1) (0.3)
Depreciation and amortisation (5.0) (6.4)
Operating loss (10.2) (8.0)
Exceptional items
Exceptional items for the period comprised:
· $1.0 million (H1 2023: $1.2 million) redundancy and associated
restructuring costs; and
· $1.4 million (H1 2023: $nil) impairment of trade receivables and
inventory balances; and
· $0.3 million (H1 2023: $nil) refinancing and other costs
Cash flow and net debt
A reconciliation of adjusted operating cash flow before tax to cash generated
from operations before tax is provided as follows:
H1 2024 H1 2023
$m
$m
Adjusted operating cashflow before tax (5.0) (7.0)
Post-acquisition integration and associated restructuring costs - (1.2)
One-off refinancing costs (0.3) -
Redundancy and associated costs (1.0) -
Acquisition costs for the aborted acquisition in prior year - (4.1)
Cash used in operations before tax (6.3) (12.3)
Adjusted operating cash flow before tax was a $5.0 million outflow (H1 2023:
$7.0 million outflow), a decrease of 39% due to a reduced working capital
outflow of $0.6 million (H1 2023: $11.0 million outflow) offset by higher
losses and the impact of acquisition and aborted acquisition costs in H1 2023.
Cash used in operations before tax was $6.3 million outflow (H1 2023: $12.3
million outflow) including $0.3 million payments for the refinancing of the
bank loan and $1.0 million restructuring and associated costs relating to the
cost reduction actions taken by management in the period.
Tax payments, principally in respect of corporation tax, totalled $0.2 million
during the period (H1 2023: $0.3 million). Post period end the Group received
a corporation tax refund of $1.1 million in July 2024 and has applied for a
further $0.6 million refund in respect of FY23 losses which it expects to
receive in the second half of the financial year.
During the period, the Group capitalised $0.7 million of development costs (H1
2023: $3.3 million). The decrease of $2.6 million was driven by the cost
reduction actions taken in 2023 and the first half of 2024.
Interest paid in the period of $0.8 million (H1 2023: $0.5 million) comprises
bank loan and overdraft interest.
Net debt at 31 May 2024 was $14.9 million (30 November 2023 $6.1 million).
This is expected to decrease by circa $1 million during the second half of the
financial year.
Financial position
The Group had net debt of $14.9 million as at 31 May 2024 (30 November 2023:
$6.1 million).
At 31 May 2024, the Group had total equity of $12.2 million (30 November 2023:
$22.3 million) and net current liabilities of $1.4 million (30 November 2023:
$1.4 million). Net current liabilities includes a $2.3m overdraft drawn under
the Group's $16.5 million multicurrency working capital facility which runs to
September 2025
Going concern
The Directors have considered it appropriate to prepare these consolidated
interim financial statements on a going concern basis. The Directors
assessment of going concern including is set out in note 2.
Principal risks and uncertainties
The principal risks and uncertainties facing the Group remain consistent with
the principal risks and uncertainties reported in Aferian Plc's 2023 Annual
Report.
Current Trading and Outlook
Trading remains in line with the trading and outlook communicated in FY2023
full year results on 31 May 2024. Although we have taken management actions to
further reduce the Group's cost base in the first half of FY2024, we expect
Group adjusted EBITDA for FY2024 to be lower than the FY2023 adjusted EBITDA
of $1.6m (though still positive), and for this to be weighted into the second
half of the financial year. Net debt is expected to decrease by circa $1
million during the second half of the financial year.
Mark Carlisle
Chief Executive Officer
31 July 2024
Consolidated income statement
For the six months ended 31 May 2024
Six months ended Six months ended
31 May 2024 31 May 2023
Unaudited Unaudited
Notes $000s $000s
Revenue 3 12,173 23,348
Cost of sales (4,851) (10,332)
Gross profit 7,322 13,016
Operating expenses (17,567) (21,000)
Operating loss (10,245) (7,984)
Adjusted operating loss (5,669) (4,172)
Share based payment charge (78) (286)
Exceptional items 5 (2,682) (1,151)
Amortisation of acquired intangible assets (1,816) (2,375)
Operating loss (10,245) (7,984)
Finance expense (791) (1,199)
Finance income 89 534
Net finance expense (702) (665)
Loss before tax (10,947) (8,649)
Tax credit/(charge) 921 (43)
Loss after tax (10,026) (8,692)
Basic and Diluted earnings per share 6 (9.02c) (10.20c)
Consolidated statement of comprehensive income
For the six months ended 31 May 2024
Six months ended Six months ended
31 May 2024 31 May 2023
Unaudited Unaudited
$000s $000s
Loss for the period (10,026) (8,692)
Foreign exchange difference arising on consolidation (451) 1,960
Other comprehensive (loss)/income (451) 1,960
Total comprehensive loss for the period (10,477) (6,732)
Consolidated balance sheet
As at 31 May 2024 As at As at
31 May 2024 30 November 2023
Unaudited
Assets Notes $000s $000s
Non-current assets
Property, plant and equipment 210 239
Right of use assets 666 1,117
Intangible assets 25,205 29,273
Other receivables 184 184
Deferred tax assets 509 348
26,774 31,161
Current assets
Inventories 3,991 5,099
Trade and other receivables 5,443 9,127
Cash and cash equivalents 1,034 5,771
Corporation tax receivable 1,769 858
12,237 20,855
Total assets 39,011 52,016
Capital and reserves attributable to equity holders of the business
Called-up share capital 1,822 1,822
Share premium 43,425 43,425
Other equity (103) (103)
Capital redemption reserve 12 12
Foreign exchange reserves (6,421) (5,971)
Merger reserve 42,750 42,750
Retained earnings (69,258) (59,638)
Total equity 12,227 22,297
Liabilities
Current liabilities
Trade and other payables 10,566 15,518
Lease liabilities 198 634
Corporation tax payable 605 364
Loans and borrowings 2,248 10,607
13,617 27,123
Non-current liabilities
Trade and other payables 25 26
Lease liabilities 536 497
Loans and 4 12,525 1,496
borrowings
Provisions 81 81
Deferred tax liability - 496
13,167 2,596
Total liabilities 26,784 29,719
Total equity and liabilities 39,011 52,016
Consolidated Cash Flow Statement
For the six months ended 31 May 2024
Six months ended 31 May 2024 Six months ended 31 May 2023
Unaudited Unaudited
Notes $000s $000s
Cash flows from operating activities
Cash generated from operations 7 (6,273) (12,254)
Net corporation tax paid (210) (268)
Net cash used in operating activities (6,483) (12,522)
Cash flows from investing activities
Expenditure on intangible assets (680) (3,288)
Purchase of property, plant and equipment (5) (36)
Interest received 6 3
Net cash used in investing activities (679) (3,321)
Cash flows from financing activities
Interest paid (754) (464)
Lease liability repayments (372) (639)
Proceeds from borrowings 1,500 15,813
Repayment of borrowings - (4,500)
Net cash generated from financing activities 374 10,210
Net decrease in cash and cash equivalents (6,788) (5,633)
Cash and cash equivalents at start of the period 5,771 11,524
Effects of exchange rate fluctuations on cash held (197) 181
Cash and cash equivalents at end of period (1,214) 6,072
Notes to the interim condensed consolidated unaudited financial information
Six months ended 31 May 2024
1 General information
Aferian plc ('the Company') and its subsidiaries (together 'the Group')
specialise in the delivery of next generation video experiences over IP using
its end-to-end solution. This comprises the 24i online video solution and
Amino video streaming devices and associated operating and device management
software.
The Company is a public limited company which is listed on the AIM market of
the London Stock Exchange and is incorporated and domiciled in England and
Wales.
2 Basis of preparation
These interim consolidated financial statements have been prepared using
accounting policies based on United Kingdom adopted international accounting
standards ('IFRS'). The group has chosen not to adopt IAS 34 "Interim
Financial Statements" in preparing the interim financial information. They do
not include all disclosures that would otherwise be required in a complete set
of financial statements and should be read in conjunction with the 30 November
2023 Annual Report. The financial information for the six months ended 31 May
2024 and 31 May 2023 does not constitute statutory accounts within the meaning
of Section 434 (3) of the Companies Act 2006 and both periods are unaudited.
The annual financial statements of Aferian Plc ('the Group') were prepared in
accordance with United Kingdom adopted international accounting standards
('IFRS'). The statutory Annual Report and Financial Statements for 2023 have
been filed with the Registrar of Companies. The Independent Auditors' Report
on the Annual Report and Financial Statements for the year ended 30 November
2023 was unmodified, drew attention to a material uncertainty related to going
concern and did not contain a statement under 498(2) - (3) of the Companies
Act 2006.
The Group has applied the same accounting policies and methods of computation
in its interim consolidated financial statements as in its 2023 annual
financial statements, except for those that relate to new standards and
interpretations effective for the first time for periods beginning on (or
after) 1 January 2023 and will be adopted in the 2024 financial statements.
There are deemed to be no new and amended standards and/or interpretations
that will apply for the first time in the next annual financial statements
that are expected to have a material impact on the Group.
Going Concern
The interim consolidated financial statements have been prepared on a going
concern basis
The Directors have reviewed the Group's going concern position taking account
of its current business activities and their future forecast performance. The
directors have prepared a base case and severe but plausible downside cashflow
forecasts for the Group covering a period of at least 12 months from the date
of approval of the financial statements (being to July 2025).
On 7 May 2024 Aferian Plc secured an extension to its $16.5 million
multicurrency working capital facility, previously due to mature on 23
December 2024, to 30 September 2025. In conjunction with this extension, the
interest margin payable on the drawn amount of the facilities was increased to
between 3% to 4.5% over SONIA (dependent on net leverage). In addition, the
leverage, interest cover and fixed charge cover ratio covenants were removed,
and the available liquidity covenant was relaxed. At the same time, the term
of the Group's unsecured £1.3 million term loan facility provided by certain
funds managed by Kestrel Partners LLP was extended to 31 January 2026.
However, if the Group fails to achieve its plausible downside cash flow
forecast, it may be unable to operate within the limits of its multicurrency
working capital facility due to non-compliance with the associated financial
covenants. Should the Group's performance fall below this severe but plausible
downside forecast, it could breach covenant compliance, directly impacting the
Parent Company's going concern status. This scenario indicates the existence
of material uncertainty, casting significant doubt on the ability of both the
Group and the Parent Company to continue as going concerns. As a result, the
Directors may be unable to realize their assets and discharge their
liabilities in the normal course of business.
Despite this uncertainty, the Directors believe that the Group and Parent
Company will trade in line with at minimum the severe but plausible case and
therefore, they deem it appropriate to prepare the financial statements on a
going concern basis. Consequently, the financial statements do not include the
adjustments that would be necessary if the Group and Parent Company were
unable to continue as going concerns.
The Board of Directors approved this interim report on 31 July 2024.
3 Segmental analysis
Operating segments are reported in a manner consistent with the internal
reporting provided to the Aferian plc Chief Operating Decision Maker ("CODM")
for the use in strategic decision making and monitoring of performance. The
CODM has been identified as the Group Chief Executive and the Chief Financial
Officer. The CODM reviews the Group's internal reporting in order to assess
performance and allocate resources. Performance of the operating segments is
based on adjusted EBITDA. Information provided to the CODM is measured in a
manner consistent with that in the Financial Statements.
The Group reports three operating segments to the CODM:
· the development and sale of video streaming devices and solutions, including
licensing and support services ("Amino");
· development and sale of the 24i end-to-end Video streaming platform and
associated services. This includes the results of 24iQ (formerly called the
Filter) and FokusOnTV (formerly called Nordija A/S); and
· central costs which comprise the costs of the Board, including the executive
directors as well as costs associated with the Company's listing on the London
Stock Exchange.
Revenues and costs by segment are shown below.
2024 Amino 24i Central costs Total
$000s
$000s
$000s
$000s
Revenue Software and services 2,382 7,401 - 9,783
Devices * 2,387 3 - 2,390
Total 4,769 7,404 - 12,173
% Recurring 48% 74% - 64%
Cost of sales (2,122) (2,729) - (4,851)
Gross profit 2,647 4,675 - 7,322
Operating expenses (3,429) (5,155) (1,074) (9,658)
Adjusted EBITDA (782) (480) (1,074) (2,336)
Exceptional items within operating expenses (2,682)
Share based payment charge (78)
Depreciation, amortisation, and loss on disposal of fixed assets (5,149)
Operating loss (10,245)
Net finance expense (702)
Loss before tax (10,947)
395 285 - 680
Additions to non-current assets:
Capitalised development costs
* incorporating integrated Amino software and associated accessories.
3 Segmental analysis (continued)
2023 Amino 24i Central costs Total
$000s
$000s
$000s
$000s
Revenue Software and services 2,884 11,071 - 13,955
Devices * 9,185 208 - 9,393
Total 12,069 11,279 - 23,348
% Recurring 20% 63% - 41%
Cost of sales (7,162) (3,170) - (10,332)
Gross profit 4,907 8,109 - 13,016
Operating expenses (5,477) (6,693) (957) (13,127)
Adjusted EBITDA (570) 1,416 (957) (111)
Exceptional items within operating expenses (1,151)
Share based payment charge (286)
Depreciation, amortisation, and loss on disposal of fixed assets (6,436)
Operating loss (7,984)
Net finance expense (665)
Loss before tax (8,649)
675 2,571 - 3,246
Additions to non-current assets:
Capitalised development costs
* incorporating integrated Amino software and associated accessories.
4 Loans and borrowings
As at As at 30 November 2023
31 May 2024
Unaudited
$000s $000s
Current
Loans and borrowings 2,248 10,607
Non-current 11,021 -
1,504
1,496
Bank loans (secured)
Shareholder loans (unsecured)
Total borrowings 14,773 12,103
Less cash and cash equivalents 1,034 6,072
Add back capitalised refinancing costs 1,115 -
Net debt((1)) 14,854 6,031
1. Net debt is a non-GAAP measure and is calculated as loans and
borrowings net of cash and cash equivalents and excluding capitalised
refinancing costs which have been netted against bank loans secured in the
table above
On 7 May 2024, the Company secured an extension to its $16.5 million senior
banking facilities, previously due to mature on 23 December 2024, to 30
September 2025. The interest margin payable on the drawn amount of the
facilities has been increased to between 3% to 4.5% over SONIA (dependent on
net leverage). The leverage, interest cover and fixed charge cover ratio
covenants have been removed and the available liquidity covenant has been
relaxed and the Group remains in compliance with its loan facilities
covenants. There is no difference between the book value and the fair value of
the bank loan. The bank overdraft is drawn under the banking facilities and
thus is not repayable on demand. The bank loan is stated net of $1.1 million
in capitalised refinancing costs from extending the banking facilities.
In May 2023 certain funds managed by Kestrel Partners LLP (together the
"Kestrel Lenders") provided an unsecured term loan facility of up to £3.25
million to the Company. £1.125 million of this facility was drawn (the "loan
arranged by its largest shareholder") and the balance was cancelled on
completion of the placing of new ordinary shares in July 2023. In connection
with the drawing of the loan, the Company issued to the Kestrel Lenders
warrants ("Warrants") to subscribe for a total of 4.5 million ordinary shares
at 17p per ordinary share.
The original maturity date of the loan was approximately four months after the
previous maturity date of the Group's senior banking facilities. Therefore,
and as required by the Company's bank lenders in connection with the extension
and revisions to the Group's senior banking facilities as set out above, the
Company has agreed with the Kestrel Lenders an extension to the maturity date
by which the loan must be repaid, from 31 March 2025 to 31 January 2026.
The principal terms of the loan arranged by Kestrel and related warrants were
also amended to reflect a 5% increase in the annual coupon on the loan with
interest rolling up on a quarterly basis, paid in kind, to 15% and a reduction
in the strike price of the Warrants from 17p to 5p per ordinary share.
The Shareholder loan constitutes a form of convertible debt which is accounted
for as a compound instrument under IAS 32. The fair value of the shareholder
loan liability component is recognised as non-current liability as the loan is
repayable on 31 January 2026, and calculated based on the present value of the
contractual stream of future cash flows discounted at the market rate of
interest that would have been applied to an instrument of comparable credit
quality with substantially the same cash flows, on the same terms, but without
the conversion option. The residual shareholder loan book value is recognised
as the equity component.
Reconciliation to cash and cash equivalents per consolidated statement of cash As at
flow
31 May 2024
Unaudited
Current loans and borrowings (overdraft facility) (2,248)
Add cash and cash equivalents 1,034
Cash and cash equivalents per consolidated statement of cash flow (1,214)
5 Exceptional items
Exceptional items included in operating loss comprise the following charges:
Six months ended Six months ended
31 May 2024
31 May 2023
Unaudited Unaudited
$000s $000s
Post-acquisition integration and associated restructuring costs - 1,151
Refinancing and other costs 287 -
Impairment of trade receivables and inventory balances 1,388 -
Redundancy and associated costs 1,007 -
Total exceptional items 2,682 1,151
Impairment of trade receivables and inventory balances comprise:
· a $1.0 million increase in the bad debt provision related to
sales to a single Amino customer in FY23, where the results of legal action
being taken to recover this debt are currently uncertain. Management actions
taken to recover the debt include the removal of all support for devices sold
under this contract.
· a $0.4 million increase in inventory provisions as a result of
the sale of Amino video streaming device raw materials at a discount to
improve operating cash flow in the second half of 2024.
Exceptional items within net finance expense comprise the following
charges/(credits):
Six months ended Six months ended
31 May 2024
31 May 2023
Unaudited Unaudited
$000s $000s
Credit in relation to movement in contingent consideration - (530)
Unwinding discount on contingent consideration - 198
Total exceptional items - (332)
Exceptional items are items which are material and non-recurring in nature,
and which are therefore presented separately from underlying operating
expenses and income. Material costs may include: release of contingent
consideration no longer payable, redundancy and associated costs and legal and
professional advisor fees in respect of refinancing. Material income comprises
amounts outside the course of normal trading activities.
Furthermore, the Group considers the fair value movement in contingent
consideration and the unwinding of the discount on contingent consideration to
be adjusting items within net finance expenses because they are non-cash and
they do not relate to the day-to-day trading activities of the Group. They are
treated as adjusting items below adjusted operating profit but not presented
on the face of the consolidated income statement.
6 Earnings per share
Six months ended Six months ended
31 May 2024
31 May 2023
Unaudited
Unaudited
$000s $000s
Loss attributable to shareholders (10,026) (8,692)
Exceptional items 2,682 1,151
Share-based payment charges 78 286
Finance income (see note 5) 89 (530)
Finance expense (see note 5) (791) 198
Amortisation of acquired intangible assets 1,816 2,375
Tax effect thereon 921 (243)
Loss attributable to shareholders excluding exceptional items, share-based (5,231) (5,455)
payments and amortisation of acquired intangibles and associated taxation
Number Number
Weighted average number of shares (basic and diluted) 111,211,865 85,211,865
Basic and diluted earnings per share (cents) (9.02) (10.20)
Adjusted basic and diluted earnings per share (cents) (4.7) (6.40)
The calculation of basic earnings per share is based on profit after taxation
and the weighted average number of ordinary shares of 1p each in issue during
the period. The Company holds 1,482,502 (H1 2023: 1,482,502) of its own shares
in treasury and these are excluded from the weighted average above. The basic
weighted average number of shares also excludes 242 (H1 2023: 242) being the
weighted average shares held by the EBT in the year.
As the group is currently loss making there is no dilutive impact of share
options.
7 Cash generated from operations
Six months ended Six months ended
31 May 2024 31 May 2023
Unaudited Unaudited
$000s $000s
Loss for the period (10,026) (8,692)
Tax (credit)/expense (921) 43
Net finance expense 702 665
Capitalisation of refinancing costs (1,115) -
Amortisation charge 5,116 5,658
Depreciation charge 34 778
Loss on disposal of property, plant & equipment - -
Share based payment charge 78 286
Exchange differences 19 10
Decrease in inventories 1,108 615
Decrease in trade and other receivables 3,684 6,307
Decrease in provisions - -
Decrease in trade and other payables (4,952) (17,924)
Cash used in operations before tax (6,273) (12,254)
Adjusted operating cash flow before tax was a $5.0m outflow (H1 2023: $7.0m
outflow) and is reconciled to cash generated from operations before tax as
follows:
Six months ended Six months ended
31 May 2024
31 May 2023
Unaudited Unaudited
$000s $000s
Adjusted operating cashflow before tax (4,979) (7,003)
Redundancy and associated costs (1,007) (1,151)
Refinancing and other costs (287) -
Aborted acquisition costs - (4,100)
Cash used in operations before tax (6,273) (12,254)
Adjusted cash generated from operations before tax is a non-GAAP measure and
excludes cash from exceptional and one-off items relating to bank loan
facility set up costs that are considered non-trading in nature.
8 Cautionary statement
This document contains certain forward-looking statements relating to the
Group. The Group considers any statements that are not historical facts as
"forward-looking statements". They relate to events and trends that are
subject to risk and uncertainty that may cause actual results and the
financial performance of the Group to differ materially from those contained
in any forward-looking statement. These statements are made by the Directors
in good faith based on information available to them and such statements
should be treated with caution due to the inherent uncertainties, including
both economic and business risk factors, underlying any such forward-looking
information.
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