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APTD - Aptitude Software News Story

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Sector
Technology
Size
Mid Cap
Market Cap £376.7m
Enterprise Value £333.7m
Revenue £57.3m
Position in Universe 674th / 1821

Aptitude Software - Audited Preliminary Results

Wed 10th March, 2021 7:00am
RNS Number : 7076R
Aptitude Software Group PLC
10 March 2021
 

10 March 2021

APTITUDE SOFTWARE GROUP plc

('Aptitude Software' or 'the Group')

Audited Preliminary Results for the Year Ended

31 December 2020

Aptitude Software Group plc (LSE: APTD), a specialist provider of powerful financial management software to large global businesses, reports its Audited Preliminary Results for the year ended 31 December 2020.

Financial Highlights

Year ended 31 December

2020

20191

% Change

Annual Recurring Revenue2 at year end

£31.2m

£28.1m3

11%

-     Software and subscription revenue

£30.5m

£28.5m

7%

-    Implementation and solution management services revenue

£26.8m

£31.2m

(14%)

Total Revenue

£57.3m

£59.7m

(4%)

Cash and cash equivalents at year end

£44.8m

£33.0m

36%

Adjusted Operating Profit4

£9.1m

£10.5m

(13%)

Statutory operating profit

£8.1m

£8.9m

(9%)

Adjusted Basic Earnings per Share4

13.2p

12.8p

3%

Basic Earnings per Share

12.5p

11.2p

12%

 

·     The Group has remained agile and resilient to the impact of the pandemic despite the initial disruption to a number of our key markets in the second and third quarter of 2020

·     Year on year growth in Annual Recurring Revenue ('ARR') of 11% on a constant currency3 basis driven by new business wins and the expansion of existing customer relationships

·      Highlighting both the strength of our client relationships and quality of product suite, net retention5 in the year despite the impact of Covid was 102% (2019: 98%)

·       Software and subscription revenue, the strategic focus of the Group, now represents 53% of total revenue (2019: 48%) with growth of 7% to £30.5 million for the year ended 31 December 2020 (2019: £28.5 million)

·     Strong balance sheet with cash of £44.8 million (2019: £33.0 million), net funds6 of £42.9 million (2019: £30.8 million5) and no bank loans. This financial strength provides confidence to our clients and prospects whilst positioning the business well for potential acquisition opportunities

Strategic and Operational Highlights:

·       Launch of Aptitude Accounting Hub and Aptitude Insurance Calculation Engine as Software-as-a-Service ('SaaS') offerings, multi-year SaaS agreements signed with two North American insurers

·   Multiple sales of Aptitude Revenue Management to North American technology and telecommunication companies

·       First SaaS agreement for the use of both Aptitude Revenue Management and Aptitude Lease Accounting Engine with a leading global medical technology company. This success further demonstrates the additional capabilities realisable by clients from combining more than one of the Group's tightly integrated and complementary applications

·       Expansion of the use of our products in several existing clients including a North American telecommunications company licencing its fourth application and a significant Aptitude Accounting Hub sale to a European bank

·       Strengthening of the global partner network with new propositions developed in 2020 providing access to new markets

·     Implementation services capacity reduced following market disruption, future growth in demand for services expected to be increasingly fulfilled by the Group's strengthening partner network

·       The pandemic is expected to accelerate the stimulus for organisations to undertake greater finance automation in the medium term supporting the Group's investment in the products which address these requirements

 

Commenting on the results, Jeremy Suddards, Chief Executive Officer, said: -

'The Group continued to make good progress in 2020 despite the challenges arising from the pandemic, with a number of new business wins in our strategic industries and new adjacent ones, complemented by an expansion in the use of our applications in several of our largest existing clients across the globe. With a strong sales performance in the final quarter of the year and a growing pipeline, Aptitude Software looks forward to 2021 with confidence and anticipates a financial outcome at least consistent with 2020.

Aptitude Software benefits from a focused portfolio of product and service offerings, an established SaaS capability, increasing worldwide presence and a strengthening partner network. With Covid expected to accelerate the drive for greater automation in our clients' finance functions, these assets and capabilities position the Group to be able to fully realise the significant opportunity ahead.'

 

 

Contacts

Aptitude Software Group plc

Ivan Martin, Chairman                                                                                   020-3687-3200

Jeremy Suddards, Chief Executive Officer

Philip Wood, Deputy Chief Executive Officer and Chief Financial Officer   

Alma PR

Caroline Forde, Sam Modlin                                                                          020-3405-0205

 

About Aptitude Software

Aptitude Software's innovative solutions address the growing trend for finance automation, whether part of a broad finance transformation by a client or to address specific regulatory requirements. Our various products take data from complex systems, typically with multiple siloed data sources across multiple business entities, perform complex accounting calculations and create a unified view of finance. This allows our clients to reap numerous benefits including significant efficiencies, business insights, enhanced control and regulatory compliance.

Our clients include some of the world's largest companies, typically organisations with complex financial data and technology landscapes. Development, together with a growing number of other services, continues to be performed at the Aptitude Innovation Centre in Poland with sales, support and implementation services provided from Aptitude Software's London headquarters and the North American and Singaporean regional businesses.

www.aptitudesoftware.com

Throughout this announcement:

1 Amounts represent continuing operations which exclude the results of the Microgen Financial Systems business disposed of on 28 June 2019 and presented as a discontinued operation

2 Annual Recurring Revenue ('ARR') is the value of Aptitude Software's software and subscription recurring revenue at a specific point in time, normalised to a one-year period. ARR includes recurring revenues contracted but yet to commence and excludes recurring revenues which are currently being received but are known to be terminating in the future.

3 Constant currency is calculated by comparing the 2020 results with 2019 results retranslated at the rates of exchange prevailing during 2020. Items within the Financial Highlights table indicated by this superscript reference are calculated on a constant currency basis.

4 Adjusted Operating Profit, Adjusted Operating Margin and Adjusted Basic Earnings per Share exclude non-underlying operating items, unless stated to the contrary. Further detail in respect of the non-underlying operating items can be found within Note 2 of the notes to the Financial Statements.

5 Net retention is the total value of on-going Annual Recurring Revenue at the year-end from clients in place at the start of the year as a percentage of the opening Annual Recurring Revenue from those clients on a constant currency basis

6 Net funds represents cash and cash equivalents less finance obligations, which are currently limited to capital lease obligations

Certain non-IFRS financial measures (e.g. Adjusted Operating Profit) are included which assist management in comparing performance on a consistent basis

 

 

Chairman's Statement

Overview

Aptitude Software made strategic and operational progress in a year in which the Group's key markets were disrupted by the onset of the pandemic.

In the initial months of Covid, a number of sales and implementations were slowed as organisations focused on other priorities, however, a more typical business environment returned in the final quarter of the year with several new business contracts completed. Whilst below the pre-pandemic new business expectations for 2020, overall the Group achieved a good number of new business wins and contract expansions in the banking, insurance and technology, media and telecom ('TMT') sectors demonstrating the strength of the Group's product portfolio and sector diversity. These additions led to Annual Recurring Revenue increasing to £31.2 million as at 31 December 2020, representing year on year growth of 11% on a constant currency basis (31 December 2019: £28.1 million, 30 June 2020: £29.3 million, both restated for the prevailing exchange rates at 31 December 2020).

From the onset of the pandemic the Group remained both agile and resilient with all business functions, including those servicing our diverse client base, operating seamlessly. This would not have been possible without the exceptional quality of our people and the Board wishes to thank our employees for their adaptability, commitment and the excellent support and dedication they provided, and continue to provide, to the business and to our clients whilst working remotely.

Benefitting from the previously planned investment, the Group launched the Aptitude Accounting Hub and Aptitude Insurance Calculation Engine as SaaS offerings allowing the business to capitalise on the accelerated move to cloud experienced in the year with all key products now available as SaaS. Following this launch the Group entered into multi-year SaaS agreements with two North American insurers helping drive the strong final quarter's sales performance.

Strengthening the Group's high-quality partner network, a strategic focus, has also been achieved with a number of joint propositions established in the year providing the business with access either to new geographies for specific products or to segments of existing markets not previously accessible.

The Board believes the pandemic will accelerate the stimulus for organisations to undertake finance automation to further transform their finance functions, removing manual processes and improving the quality and regularity of their financial analysis and planning, a capability which is central to our product strategy.

Dividend

Having considered the Group's progress and financial performance in 2020, the Board has proposed to maintain dividend levels. As a result, a final dividend of 3.60 pence per share is proposed (2019: 3.60 pence), making a total ordinary dividend of 5.40 pence per share for the year (2019: 5.40 pence). Subject to shareholder approval at the Group's Annual General Meeting in April 2021, the proposed final dividend will be paid on 28 May 2021 to shareholders on the register at 7 May 2021.

The business has not utilised the furlough scheme nor received any other government support in the United Kingdom nor in any other country where it operates.

Outlook

Aptitude Software continues to benefit from a focused portfolio of product and service offerings, an established SaaS capability, increasing worldwide presence and a strengthening partner network. The Group's robust set of financials complemented by a strong new business performance across the final quarter of 2020 provide the Board with confidence for the year ahead.

 

Ivan Martin

Chairman

9 March 2021

 

 

Chief Executive Officer's Report

 

Introduction

Aptitude Software is a specialist provider of powerful financial management software to large global businesses.

Our applications provide data and business insight to our worldwide client base enabling them to achieve significant benefits such as automation of their finance function, enhanced financial control, deeper operational intelligence and regulatory compliance. Our markets are underpinned by strong fundamentals as technology advancement both drives and facilitates an increasingly automated approach to finance operations, augmented by the continuing impetus of regulatory requirements. Our clients include some of the world's largest companies, typically organisations with complex financial data and technology landscapes. Whilst our products are relevant for all sectors, the Group has established a strong presence in banking, insurance and technology, media and telecom ('TMT') complemented by clients in a series of other advanced industries.

The business generates revenue from its software through a combination of licence fees (primarily annual recurring licences), software maintenance/support, software subscriptions for its cloud-based offerings and implementation and other recurring support services including the growing solution management service. Development, together with an increasing number of other client focused services, continues to be performed at the Aptitude Innovation Centre in Wroclaw, Poland, with sales, support and implementation services provided from Aptitude Software's London headquarters and the North American and Singaporean regional businesses.

Corporate Strategy

Aptitude Software's strategy is focused on providing powerful financial management software to large international businesses. 

The Group executed on a number of strategic activities during 2020, with details of these provided in the sections below. These activities are focused on driving an acceleration of growth in the software and subscription revenues which now represent 53% of overall revenue (2019: 48%). The growth in the proportion of such revenues in the business will, in due course, lead to both an increase in operating margins, given the higher margins achievable from these recurring revenues, and even greater future revenue visibility. 

Software-as-a-Service ('SaaS') Progression

A key strategic highlight in the year has been the launch of Aptitude Accounting Hub ('AAH') and Aptitude Insurance Calculation Engine ('AICE') as SaaS offerings and the subsequent entry into multi-year SaaS agreements with two North American insurers for this new service. The launch expands the Group's existing SaaS capabilities and allows the business to deploy all its key products using this service, capitalising on the accelerated move to the cloud that the industry has experienced in 2020. The availability of these solutions as SaaS, reducing the demands on clients' internal capabilities and reducing implementation times and costs, is also expected to facilitate the greater use of our technology by more organisations smaller in size than the Group's current client profile,  thereby expanding our market opportunity.

Most new clients are expected to deploy the Group's software through our SaaS offering, (though an acceleration in the migration of existing on-premise clients to SaaS is not anticipated in the short term given the investment in clients' infrastructure supporting our technology). This dynamic will lead to further growth in SaaS subscription fees as a proportion of Annual Recurring Revenue which had increased to 23% as at 31 December 2020 (2019: 17%).

Whilst the revenue model for Aptitude Software's SaaS agreements is aligned with the existing licencing of our on-premise software sales, the margins generated by SaaS deployments are lower than on-premise software as a result of incurring third-party technology costs and the provision of a level of embedded technical services within the SaaS offering. Cost efficiencies are expected to be realised in the medium term as the Group progresses with its planned investment in both its cloud infrastructure and the technical evolution of its products.

Partner Network 

A strategic priority for the Group continues to be the growth and development of Aptitude Software's high-quality partner network with a number of joint new propositions developed in the year. These propositions have further strengthened our partner programme which includes deepening relationships with the Big 4 accounting firms and provides the business either with access to new geographies for specific products or with the targeting of segments of existing markets not previously accessible by the Group.

Whilst many prospects are sourced directly by the Group's own sales and marketing teams, the global reach of our partners and the depth of their relationships with large businesses provide Aptitude Software with an increasing number of opportunities, enhanced market coverage and intelligence. In addition to the new business benefits provided by the partner network, the implementation expertise and capabilities of our partners supports the Group's strategic drive to increase the proportion of software and subscription revenues.

Investment has increased in the year in both the partner management team and the education and enablement of our partners to sell, implement and support our products. We expect this enablement to facilitate an uplift in the level of services being performed by partners leading to a richer revenue mix for the business through an increased weighting towards software revenue.

Expanding Client Presence

As the number of both our clients and products increases there is a growing opportunity for add-on sales to existing users. These sales may consist of either increasing the footprint of products already in use by clients or the cross-sell of other Aptitude Software products to an existing user.

Investments in strategic account management teams in each of our regions has resulted in a number of successes in 2020 including the entry into a SaaS subscription agreement with an existing client (a leading North American telecommunications company) for the use of Aptitude Lease Accounting Engine ('ALAE'). ALAE is the fourth of Aptitude Software's products licenced by the client and further demonstrates the additional capabilities realisable by using more than one of Aptitude Software's tightly integrated and complementary applications. A further success was the licencing in the first half of 2020 of Aptitude Accounting Hub ('AAH') to an existing leading European banking client as a key component of their finance transformation to support the increased reporting requirements of up to 18 countries. Sales to existing clients represented approximately one third of new contract additions to ARR in 2020.

Product Evolution

The Group continues to evolve its product set to address the requirements of finance functions that are increasingly being challenged by the demands of operating in a digital world with growing regulatory and cost pressures. These demands result in an increase in the complexity, volume and number of sources of finance data, and the increasing requirement for decision making to move at the pace of the business in real time. 

Our products are moving towards a deeper focus on user experience as clients increase their expectations of the operational intelligence and insights required to support more forward-looking scenario planning. Investment is being increased to ensure the Group retains its advantages over its competition, both in the technology architecture and functionality of existing products as well as the development of new capability to meet the evolving market requirements.

Acquisitions

Aptitude Software's corporate strategy is focused on organic growth, however, the Group's strong financial position, together with its experience of successfully identifying and integrating acquisitions, provides the Board with the opportunity to accelerate growth. Any acquisition will be expected to focus on the acceleration of the product strategy and / or entry into new markets for Aptitude Software.

Aptitude Innovation Centre

Investment continues in the team at the Aptitude Innovation Centre, our long-established integrated centre of excellence in Poland which continues to be a material differentiator for the Group. The Aptitude Innovation Centre encompasses the development of the Group's entire product suite and is also increasingly becoming a focal point for the Group's cloud operations and support activities. This single integrated centre improves the collaboration between our teams as they provide software or associated services to our clients.

Headcount at the Aptitude Innovation Centre increased by 18% in the year to 162. In addition to recruitment for activities such as cloud operations and support, growth continued in both new and existing product development teams as investment in the evolution of our technology increased.

Our People

The exceptional quality and adaptability of our people has ensured all business functions have continued successfully despite the impact of the pandemic. The team is very talented, committed and works incredibly hard. The Board wishes to thank its employees in these difficult times both for their outstanding commitment and the excellent support they are providing to the business and to our clients and partners whilst working remotely.

During the year a number of investments in our team were initiated. Aptitude Software's training and enablement function has been strengthened whilst a number of initiatives focused on individuals' career development across the business are progressing well. The Group will continue to develop its internal talent as well as recruiting the best external skills to help us capitalise on the market opportunity

Our Products

Aptitude Accounting Hub

The Group continues to leverage the capabilities of the Aptitude Accounting Hub ('AAH'), securing new agreements with a number of organisations as they seek to automate and transform their finance functions. These successes included subscription agreements with leading North American insurers

Supplementing this new business growth was the entry into a strategic contract to licence AAH to the retail arm of an existing major European banking client. Our technology will be a core component of a five-year finance transformation programme automating the bank's finance & reporting processes, demonstrating once again Aptitude Software's capabilities in finance automation over and above smart compliance. The contract provides for increased future growth in Annual Recurring Revenue as AAH is deployed to countries beyond the initial deployment scope.

The opportunity for AAH remains significant across all our key industries and is central to Aptitude Software's approach in addressing organisations' need to drive finance automation to continue the transformation of their finance functions. This is supported by recent publications from industry analysts who have recognised the increasing importance of an accounting hub in modern finance architecture. The application centralises and automates finance, accounting and reporting processes, creating a deep level of operational intelligence for our clients. It also delivers a consolidated, yet highly granular, single view of financial data which enhances business insights to assist decision making. AAH can be used on a standalone basis or in conjunction with other Aptitude Software applications. Clients can, and do, choose to implement AAH either before, at the same time, or after the implementation of a specialised accounting calculation engine such as Aptitude Revenue Management.

Aptitude Revenue Management

The Group's two revenue management applications, Aptitude Revenue Recognition Engine and Aptitude RevStream, collectively Aptitude Revenue Management ('ARM'), have continued to make good progress in the year. Included within the new business contracts signed in the year were material subscription agreements for Aptitude RevStream with a large North American technology business and a leading medical technology company who subscribed for the use of the Aptitude RevStream application concurrently with the Aptitude Lease Accounting Engine, the first combined SaaS agreement of its kind. A significant sale of the telco-focused Aptitude Revenue Recognition Engine into North America was also achieved.

The two applications within ARM enable finance teams to automate and simplify the whole revenue lifecycle, from contract order to revenue recognition, reporting and forecasting. The applications go significantly beyond core IFRS 15 / ASC 606 compliance to allow total control over complex revenue management for all contract types ranging from subscription-based revenue models to complex multi-part or bundled contracts. This capability allows businesses to understand and control centrally the financial impact of all their commercial propositions, the quality of their revenue types as well as providing new and valuable insights to support future business decision making such as the introduction of new products in different markets.

Aptitude Insurance Calculation Engine

Further progress with the Aptitude Insurance Calculation Engine ('AICE') has been achieved in 2020 following the previously outlined delay to the introduction of IFRS 17 (which will now become effective for accounting periods commencing 1 January 2023). In addition to the SaaS agreements signed with North American insurers in the final quarter of 2020, a further significant sale was made to a European insurer in the opening months of 2021.

AICE is a strategic, transformational investment providing value to an insurer beyond compliance. It enables data insights and decision support delivering long-term business benefits. Demonstrating the capabilities of AICE, during the year Aptitude Software was recognised as a category leader in "IFRS 17 Technology Solutions: Market and Vendor Landscape 2020", a Chartis Research report that assesses leading vendors of IFRS 17 and Long Duration Targeted Improvement ('LDTI') solutions.

The compliance-focused elements of the application mean that opportunities remain for this application as the effective date of IFRS 17 adoption moves closer, not only in the large insurer market where successes to date have been achieved but also across small and mid-sized participants who have yet to finalise their plans.

AptConnect 2020

After a successful inaugural AptConnect in 2019, the business hosted the second annual event in November 2020. The event was hosted via a market-leading virtual event platform, which enabled the business to welcome guests from 4 continents and some 14 countries, bringing together over 500 people representing our clients, partners and prospects. The conference covered a range of topics from the digitisation of the finance department to the launch of Aptitude Accounting Hub and Aptitude Insurance Calculation Engine as SaaS. The agenda included speakers from our existing client base detailing their own successful implementation journeys of the Aptitude Software product suite along with talks from our partners covering the post-pandemic need to automate finance.

Our Services

Implementation Services

Aptitude Software provides implementation services to its clients, with the scale of such services depending on the nature of the application, the size of the opportunity and the balance of responsibilities between Aptitude Software and its partners. Following on from the investment made in 2020, the business continues to invest in the expansion and enablement of its partner network to facilitate their ability to implement Aptitude Software's product suite reliably and efficiently. Whilst this enablement will lead to a greater proportion of services being provided by partners, it remains important to maintain a high quality delivery capability to ensure that the Group can continue to provide its expertise to both support partners and to those clients who wish to receive our services directly.

Whilst utilisation has been resilient, Covid disrupted a number of sales opportunities during the middle quarters of 2020. Due to the Group's long implementation cycles, services revenue will be most impacted by this disruption in 2021 and this has in turn resulted in a reduction in the Group's implementation services capacity. The investment in our partner strategy means that we expect future growth in demand for services to be increasingly fulfilled by the Group's strengthening partner network. This in turn will allow the Group to drive future margin progression and revenue visibility by improving the percentage of revenues from software and subscription fees.

Solution Management Services

Whilst the majority of overall services revenue is associated with the implementation of Aptitude Software's applications, there is a growing percentage of revenues derived from Solution Management Services ('SMS'), with multiple Aptitude Accounting Hub, Aptitude Insurance Calculation Engine and Aptitude Revenue Management clients contracting for this service across the Group's key sectors and geographies in 2020.

This service extends the responsibilities of Aptitude Software beyond traditional software maintenance services to include those that have typically been performed by the clients' own IT teams. These include the monitoring of system performance, user administration, release management and functional enhancements. In turn, clients benefit from the reduced requirement to establish internal technical teams focused on our applications, providing them with efficiencies and allowing them to focus on their core business activities. We expect the service (which continues to be a focus of investment in the business) to enhance the operation and longevity of applications within major clients, while the long term and recurring nature of the associated income is expected to provide greater certainty and visibility to the Group's services revenues.

Global Presence

Aptitude Software's opportunity is worldwide with an established presence in APAC, Europe and its largest market, North America, which represents 59% of Annual Recurring Revenue ('ARR'). This global reach is supported by the Group's principal offices in London, Poland, Boston and Singapore.

Whilst activities in APAC, non-EU European states and North America are unlikely to be impacted by the United Kingdom's withdrawal from the European Union, Aptitude Software performs its development at the Aptitude Innovation Centre in Poland and has a number of on-going implementation projects within European Union states (2020 revenue from European Union states excluding the United Kingdom was £8.6 million). Whilst travel requirements have been limited during 2020 due to Covid, prior to this, certain employees travelled frequently between these countries.

New country by country guidance took effect from 1 January 2021 and it is our expectation that our travel requirements remain viable but will necessitate some additional planning and administration. The business has considerable experience in obtaining work permits to deploy its highly skilled consultants across the world, and benefits from the flexibility provided by its partner network. The remote working arrangements put in place as part of the pandemic continuity plan will also be of benefit, providing an alternative to physical travel where appropriate. The business is continuing to clarify the situation; however, the Group is well-placed to identify and react quickly to further changes in the operating conditions. The Group also has the option of expanding the consulting capability of the Aptitude Innovation Centre, which is located within the European Union.

Outlook

Benefitting from a strong new business performance in the final quarter of 2020 and a good pipeline, Aptitude Software looks forward to 2021 with confidence and anticipates a financial outcome at least consistent with 2020.  

 

Jeremy Suddards

Chief Executive Officer                                                                                                                 

9 March 2021

 

 

Group Financial Performance and Chief Financial Officer's Report

 

Revenue

Software and Subscription Revenues

Aptitude Software's Annual Recurring Revenue ('ARR') at 31 December 2020 totalled £31.2 million (31 December 2019: £28.1 million, 30 June 2020: £29.3 million, both restated for the prevailing exchange rates at 31 December 2020), representing year on year growth of 11% on a constant currency basis.

ARR is the key financial metric for the Group. Included within ARR are Aptitude Software's annual licence fees and maintenance for its on-premise clients and subscription fees for the Group's SaaS clients. The proportion of clients deploying software using SaaS has continued to grow with SaaS subscription fees accounting for 23% of the total ARR at 31 December 2020 (2019: 17%).

Highlighting both the strength of our client relationships and the quality of our product suite, net retention in the year despite the impact of the pandemic was 102% (2019: 98%) (measured by the total value of on-going ARR at the year-end from clients in place at the start of the year as a percentage of the opening ARR from those clients on a constant currency basis).

Software and subscription revenues recognised in 2020 increased by 7% to £30.5 million (2019: £28.5 million). These now represent 53% of overall revenue (2019: 48%). It is a key part of the Group's strategy to increase this percentage whilst maximising the growth rate of Aptitude Software's ARR, a strategy which in due course will lead to growth in operating margin given the margin differential between software and services revenues.  

Implementation and Solution Management Services

Services revenue totalled £26.8 million for the year ended 31 December 2020 (2019: £31.2 million) of which 89% is attributable to the implementation of our software with the balance of 11% generated from solution management services which, whilst not included in the Group's Annual Recurring Revenue, are recurring in nature. Implementation services revenue reduced in the year due to the disruption to our key markets related to the pandemic. Due to the Group's long implementation cycles, some further reduction is anticipated in 2021.

Research and Development Expenditure

Total expenditure on product management, research and development in the year ended 31 December 2020 was £8.5 million (2019: £9.3 million). Despite an 18% overall headcount increase at the Aptitude Innovation Centre in 2020, the above costs were lower than 2019 due to the material savings from relocating development activities for the Aptitude RevStream product from California to Poland as well as a reduction in travel costs as a result of Covid. Investment will continue as previously planned in 2021 with costs expected to increase by approximately 20%.

The Board has continued to determine that none of the internal research and development costs incurred during the first half of the year meet the criteria for capitalisation. Consequently, these have been expensed as incurred through the income statement.

Operating Profit and Margins

Adjusted Operating Profit and operating profit on a statutory basis for the year ended 31 December 2020 were in line with management expectations at £9.1 million and £8.1 million respectively (2019: £10.5 million and £8.9 million). Adjusted Operating Margin for the period remained resilient at 16% (2019: 18%) despite the Group continuing to prioritise essential investment across a number of functions.

Foreign Exchange

With 52% (2019: 53%) of the Group's revenues being generated from North American clients, the majority of which are invoiced in US Dollars, the business is impacted by changes in the US dollar exchange rate. Aptitude Software's 2019 revenue and Adjusted Operating Profit would have been reported at £59.1 million and £10.3 million respectively on a constant currency basis (compared to actual result of £59.7 million and £10.5 million). Constant currency is calculated by comparing the 2020 results with 2019 results retranslated at the rates of exchange prevailing during 2020.

Whilst the Group's exposure to volatility in the US Dollar exchange rate in the short term is limited, in the medium term the impact becomes more material, notwithstanding the Group's significant US cost base, as the proportion of both fixed US Dollar software revenue (translated at the point of invoicing) and hedged US Dollar service revenues reduce.  From 30 June 2020 to 9 March 2021, the US Dollar has weakened by 13% against the pound reducing the value of Aptitude Software's ARR reported at 30 June 2020 by £1.8 million.

Due to the benefits of the Group's US cost base, the policy of translating software revenue at the point of invoice and hedging services revenue, the profit impact for 2020 was minimal with 2021 only partially impacted.

Non-Underlying Items

Non-underlying items of £1.0 million (2019: £1.6 million) principally comprise intangible amortisation (£0.8 million), with the remaining amount in relation to the final separation costs incurred as part of the disposal of the Microgen Financial Systems business in 2019.

Taxation

The total tax charge after adjusting for the impact of non-underlying items of £1.6 million (2019: £3.3 million) represents 18.1% of the Group's profit before tax (2019: 24.2%), with the reduction against the United Kingdom corporate tax rate of 19% and 2019 levels due to the Group's ability to receive additional tax relief on its research and development expenditure. This additional relief is expected to continue into future years.

Statutory Results

The Group reported a profit for the period attributable to equity shareholders of £7.0 million (2019: £29.2 million). The profit in 2019 includes £22.4 million from discontinued operations in respect of the Microgen Financial Systems business disposed of on the 28 June 2019.

Earnings per Share

As a result of the return of capital in September 2019 and accompanying share consolidation, Adjusted Basic Earnings per Share and Basic Earnings per Share from continuing operations increased to 13.2 pence and 12.5 pence (2019: 12.8 pence and 11.2 pence), growth of 3% and 12% respectively.

Dividend

A final ordinary dividend of 3.60 pence per share is proposed (2019: 3.60 pence), making a total ordinary dividend of 5.40 pence per share for the year (2019: 5.40 pence). The business has not utilised the furlough scheme nor received any other government support in the United Kingdom nor in any other country where it operates.

Balance Sheet

The Group continues to have a strong balance sheet with net assets at 31 December 2020 of £50.6 million (2019: £46.4 million), including cash of £44.8 million (2019: £33.0 million), net funds of £42.9 million (2019: £30.8 million) and no bank loan. Trade receivables (net) have reduced to £5.9 million (2019: £7.2 million), a reduction of £1.3 million due to both strong year end cash collection and the reduction in services invoicing in 2020. The growth in the Group's recurring revenues resulted in deferred income increasing to £25.7 million at 31 December 2020 (2019: £22.8 million). The Group's cash collection disciplines remain strong with DSO (debtor days) at 31 December 2020 of 40 (2019: 60).

Cash Generation

Cash generated from continuing operations improved to £16.2 million (2019: £18.4 million, of which £15.3 million was in relation to the continuing business), with the Group's overall cash balance increasing by £11.9 million in the year. Whilst this increase is principally due to the Group continuing to benefit from a growing recurring revenue base with customers typically paying annually in advance, the cash position has also improved through a reduction in tax payments and improved working capital pursuant to the lower services revenue in the year.   

   

Philip Wood

Deputy Chief Executive Officer and Chief Financial Officer

9 March 2021

 

Group Income Statement

for the year ended 31 December 2020

 

 

 

Year Ended 31 Dec 2020

 

Year Ended 31 Dec 2019

 

 

Notes

Before

non-underlying

items

Non-underlying items

 

 

Total

Before non-underlying items

Non-underlying items

 

 

 

Total

 

Continuing operations

 

£000

£000

£000

£000

£000

£000

 

Revenue

1

57,266

-

57,266

59,652

-

59,652

 

Operating costs

2

(48,155)

(964)

         (49,119)

(49,150)

(1,559)

      (50,709)

 

Operating profit

 

9,111

(964)

8,147

10,502

(1,559)

8,943

 

Finance income

 

61

-

61

158

-

158

 

Finance costs

 

(100)

-

(100)

(326)

-

(326)

 

Net finance costs

 

(39)

-

(39)

(168)

-

(168)

 

Profit before income tax

 

9,072

(964)

8,108

10,334

(1,559)

8,775

 

Income tax expense

3

(1,585)

514

(1,071)

(2,403)

370

(2,033)

 

Profit from continuing operations

 

7,487

(450)

7,037

7,931

(1,189)

6,742

 

Profit from discontinued operations

15

-

-

-

2,549

19,881

22,430

 

Profit for the year

 

7,487

(450)

7,037

10,480

18,692

29,172

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations

 

 

 

 

 

Basic

4

 

 

12.5p

 

 

11.2p

 

Diluted

4

 

 

12.3p

 

 

11.0p

 

 

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

 

 

Basic

4

 

 

12.5p

 

 

48.4p

 

Diluted

4

 

 

12.3p

 

 

47.7p

 

 

 

 

 

 

 

 

 

 

 

 

 

group statement of comprehensive income

For the year ended 31 December 2020

 

 

Year ended

31 Dec 2020

Year ended

31 Dec 2019

 

£000

£000

Profit for the year

7,037

29,172

Other comprehensive income/(expense)

 

 

Items that will or may be reclassified to profit or loss:

 

 

Fair value gain/(loss) on hedged instruments

45

(186)

Currency translation difference

(988)

(415)

Other comprehensive income from discontinued operations

-

22

Other comprehensive expense for the year, net of tax

(943)

(579)

Total comprehensive income for the year

6,094

28,593

Total comprehensive income for the year arising from:

 

 

Continuing operations

6,094

6,141

Discontinued operations

-

22,452

 

6,094

28,593

 

 

Group Balance Sheet

For the year ended 31 December 2020

 

 

 

      As at

31 Dec 2020

As at

31 Dec 2019

 

Notes

£000

£000

ASSETS

 

 

 

Non-current assets

 

 

 

Property, plant and equipment including right-of-use assets

6

2,394

3,207

Goodwill

7

23,787

23,787

Intangible assets

8

             5,640

             6,486 

Other long-term assets

 

1,472

1,746

Income tax assets

 

642

944

Deferred tax assets

 

  448

  1,198

 

 

34,383

37,368

Current assets

 

 

 

Trade and other receivables

9

7,782

9,659

Financial assets - derivative financial instruments

 

62

4

Current income tax assets

 

1,161

1,155

Cash and cash equivalents

 

44,822

32,965

 

 

53,827

43,783

Total assets

 

88,210

81,151

 

 

 

 

LIABILITIES

 

 

 

Current liabilities

 

 

 

Financial liabilities

 

 

 

- derivative financial instruments

 

(133)

(120)

Trade and other payables

10

(33,652)

(30,122)

Capital lease obligations

11

(881)

(835)

Current income tax liabilities

 

(247)

(485)

Provisions

12

-

(38)

 

 

(34,913)

(31,600)

Net current assets

 

18,914

12,183

 

 

 

 

Non-current liabilities

 

 

 

Capital lease obligations

11

(972)

(1,288)

Provisions

12

(441)

(337)

Deferred tax liabilities

 

(1,236)

(1,502)

 

 

(2,649)

(3,127)

NET ASSETS

 

50,648

46,424

 

 

 

Group Balance Sheet

For the year ended 31 December 2020

 

 

 

 

                

As at

31 Dec 2020

 

As at

31 Dec 2019

 

SHAREHOLDERS' EQUITY

Notes

£000

£000

Share capital

13

4,143

4,128

Share premium account

 

7,828

7,660

Capital redemption reserve

 

              12,372

              12,372

Other reserves

 

              34,124

              34,079

Accumulated losses

 

(6,165)

(11,149)

Foreign currency translation reserve

 

(1,654)

(666)

TOTAL EQUITY

 

50,648

46,424

 

 

 

Group Statement of changes in shareholders' equity

for the Year Ended 31 December 2020

 

 

 

 

 

Share capital

£000

 

 

Share premium

£000

 

 

Accumulated losses

 £000

 

 

Foreign currency translation reserve

£000

 

 

Capital redemption reserve

£000

 

 

Other reserves£000

 

 

Total

Equity

£000

 

At 1 January 2020

 

4,128

7,660

(11,149)

(666)

12,372

34,079

46,424

Profit for the year

 

-

-

7,037

-

-

-

7,037

Cash flow hedges - net fair value gains in the year

 

-

-

-

-

-

45

45

Exchange rate adjustments

 

-

-

-

(988)

-

-

(988)

Total comprehensive income for the year

 

-

-

7,037

(988)

-

45

6,094

Shares issued under share option schemes

 

15

168

-

-

-

-

183

Share options - value of employee service

 

-

-

337

-

-

-

337

Deferred tax on financial instruments

 

-

-

9

-

-

-

9

Deferred tax on share options

 

-

-

(118)

-

-

-

(118)

Corporation tax on share options

 

-

-

763

-

-

-

763

Dividends to equity holders of the company

 

-

-

(3,044)

-

-

-

(3,044)

Total Contributions by and distributions to owners of the company recognised directly in equity income

 

15

168

(2,053)

-

-

-

(1,870)

At 31 December 2020

 

4,143

7,828

(6,165)

(1,654)

12,372

34,124

50,648

 

 

Group Cash Flow Statement

for the Year Ended 31 December 2020

 

 

 

 

 

 

 

Year ended

31 Dec 2020

 

Year ended

31 Dec 2019

 

Notes

£000

£000

Cash flows from operating activities

 

 

 

Cash generated from operations

14

16,238

18,420

Interest paid

 

(100)

(326)

Income tax received/(paid)

 

281

(2,077)

Net cash flows generated from operating activities

 

16,017

 

 

 

 

Cash flows from investing activities

 

 

 

Purchase of property, plant and equipment, excluding right-of-use assets

 

(232)

(828)

Disposal of subsidiary, net of cash disposed

 

-

47,152

Interest received

 

61

158

Net cash (used in)/generated from investing activities

 

46,482

 

 

 

 

Cash flows from financing activities

 

 

 

Net proceeds from issuance of ordinary share capital

 

183

1,368

Dividends paid to company's shareholders

5

(3,044)

(3,859)

Repayment of loan

 

-

(8,000)

Payment of capital lease obligations

 

(924)

(1,127)

Return of value to shareholders

 

-

(46,420)

Expenses relating to return of value

 

-

(600)

Net cash used in financing activities

 

(58,638)

 

 

 

 

Net increase in cash and cash equivalents

 

12,463

3,861

Cash, cash equivalents and bank overdrafts at beginning of year

 

32,965

29,186

Exchange rate losses on cash and cash equivalents

 

(606)

(82)

Cash and cash equivalents at end of year

 

44,822

32,965

 

 

Notes to the Audited preliminary results for the year ended 31 December 2020

 

1.   Segmental analysis

 

Business segments

The Board has determined the operating segments based on the reports it receives from management to make strategic decisions.

During the prior year Aptitude Software Group plc operated two businesses, Aptitude Software and Microgen Financial Systems, both of which were considered operating segments based on the reports the Group received from management to make strategic decisions. With the disposal of Microgen Financial Systems on 28 June 2019, the only continuing business segment in the year ending 31 December 2020 was Aptitude Software and therefore certain segmental analysis is no longer required to be provided for this period.

The principal activity of the Group throughout 2019 and 2020 was the provision of business-critical software and services.

1(a) Geographical analysis

 

The Group has two geographical segments for reporting purposes, the United Kingdom and the Rest of the World.

 

The following table provides an analysis of the Group's sales by origin and by destination.

 

 

Sales revenue by origin

Sales revenue by destination

 

Year ended

31 Dec 2020

Year ended

31 Dec 2019

Year ended

31 Dec 2020

Year ended

31 Dec 2019

Continuing operations

£000

£000

£000

£000

United Kingdom

32,096

32,194

9,571

8,419

Rest of World

25,170

27,458

47,695

51,233

 

57,266

59,652

57,266

59,652

 

2.    Non-underlying items

 

31 Dec 2020

31 Dec 2019

 

£000

£000

Continuing operations

 

 

Amortisation of intangibles

846

846

Overseas taxation

-

713

Group reorganisation costs

118

-

 

964

1,559

 

 

 

3.  Income tax expense

 

Year ended

31 Dec 2020

Year ended

31 Dec 2019

Analysis of charge in the year

£000

£000

Current tax:

 

 

- tax charge on underlying items

(1,114)

(3,992)

- tax credit on non-underlying items

22

125

- adjustment to tax in respect of prior periods

132

145

- adjustment to tax in respect of prior periods on non-underlying items

255

-

Total current tax

(705)

(3,722)

Deferred tax:

 

 

- tax (charge)/credit on underlying items

(274)

722

- tax credit on non-underlying items

237

361

- adjustment to tax in respect of prior periods

(329)

75

Total deferred tax

(366)

1,158

Income tax expense

(1,071)

(2,564)

 

 

 

Income tax expense is attributable to:

 

 

Profit from continuing operations

(1,071)

(2,033)

Profit from discontinued operations

-

(531)

 

(1,071)

(2,564)

 

The adjustment to tax in respect of prior periods on non-underlying items totalling £255,000 has been created through the benefit from additional research and development relief. The adjustment to tax in respect of prior periods on underlying items totalling £329,000 relates to the reduction in the assumed benefit from share option deductions.

 

The total tax charge of £1,071,000 (2019: £2,564,000) represents 13.21% (2019: 8.08%) of the Group profit before tax of £8,108,000 (2019: £31,736,000). The prior year reduction in effective rate is due principally to the impact of the exempt gain on disposal of Microgen Financial Systems Limited, see note 15 for details.

 

After adjusting for the impact of non-underlying items, change in tax rates, share based payment charge and prior year tax charge, the tax charge for the year of £1,643,000 (2019: £3,270,000) represents 18.11% (2019: 24.17%), which is the tax rate used for calculating the adjusted earnings per share. The reduction in rate against the prior year is due to the research and development tax relief obtained in the year.

 

At 31 December 2019, the Group had unused tax losses totalling £4,329,000 available for offset against future profits. A deferred tax asset of £742,000 was recognised in respect of these losses as the Group anticipated being able to utilise these in full in the year ending 31 December 2020. In line with expectations, during 2020 these losses were utilised in full. Consequently, no unused tax losses at 31 December 2020 were available for offset.

The difference between the total tax charge and the amount calculated by applying the effective United Kingdom corporation tax rate of 19.00% (2019: 19.00%) to the profit on ordinary activities before tax is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

 

 

Year ended

31 Dec 2020

Year ended

31 Dec 2019

 

£000

£000

Profit from continuing operations before tax

8,108

8,775

Profit from discontinued operations before tax

-

22,961

 

8,108

31,736

 

 

 

Tax at the United Kingdom corporation tax rate of 19.00% (2019: 19.00%)

(1,540)

(6,030)

Effects of:

 

 

Adjustment to tax in respect of prior periods

58

271

Adjustment in respect of foreign tax rates

(138)

(306)

Expenses not deductible for tax purposes

(27)

(186)

Exempt gain on disposal

-

3,894

Other

(29)

(135)

Research and development tax relief

618

-

Recognition of tax losses

-

25

Change in future tax rates

(13)

(97)

Total taxation

(1,071)

(2,564)

           

United Kingdom corporation tax is calculated at 19.00% (2019: 19.00%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

 

4.       Earnings per share

 

To provide an indication of the underlying operating performance per share, the adjusted profit after tax figure shown below excludes non-underlying items and has a tax charge using the effective rate of 18.11% (2019: 24.17%).

 

 

Year ended

31 Dec 2020  

Year ended

31 Dec 2019

 

£000

£000

Profit on continuing operations before tax and non-underlying items

9,072

10,334

Profit on discontinued operations before tax and non-underlying items

-

3,196

Profit on ordinary activities before tax and non-underlying items

9,072

13,530

Tax charge at a rate of 18.11% (2019: 24.17%)

(1,643)

(3,270)

 

7,429

10,260

Prior years' tax charge

58

220

Non-underlying items net of tax

(450)

18,692

Profit on ordinary activities after tax

7,037

29,172

 

 

2020

Number

(thousands)

2019

Number

(thousands)

Weighted average number of shares

56,339

60,280

Effect of dilutive share options

780

865

 

57,119

61,145

 

 

2020

Basic

EPS

2020

Diluted

EPS

2019

Basic

EPS

2019

Diluted

EPS

 

Pence

pence

pence

pence

Earnings per share

12.5

12.3

48.4

47.7

Non-underlying items net of tax

0.8

0.8

(31.0)

(30.6)

Prior years' tax credit

(0.1)

(0.1)

(0.4)

(0.4)

Adjusted earnings per share

13.2

13.0

17.0

16.7

Basic earnings per share

 

 

 

 

From continuing operations

12.5

12.3

11.2

11.0

From discontinued operations

-

-

37.2

36.7

 

12.5

12.3

48.4

47.7

Adjusted earnings per share

 

 

 

 

From continuing operations

13.2

13.0

12.8

12.5

From discontinued operations

-

-

4.2

4.2

 

13.2

13.0

17.0

16.7

 

Adjusted earnings per share are calculated using adjusted profit after tax.

5.    Dividends

 

 

The proposed final dividend for the current year was approved by the Board on 9 March 2021 but was not included as a liability as at 31 December 2020, in accordance with IAS 10 'Events after the Balance Sheet date'. If approved by the shareholders at the Annual General Meeting this final dividend will be payable on 28 May 2021 to shareholders on the register at the close of business on 7 May 2021.

 

 

6.  Property, plant and equipment including right-of-use assets

 

 

31 Dec 2020

31 Dec 2019

 

£000

£000

Opening net book value 1 January

3,207

5,417

Additions

775

925

On disposal of subsidiary (note 15)

-

(1,213)

Net disposals

(41)

(67)

Exchange movements

26

(11)

Depreciation

(1,573)

(1,844)

 

2,394

3,207

 

 

7.  Goodwill

 

 

31 Dec 2020

31 Dec 2019

 

£000

£000

Opening net book value 1 January

23,787

48,793

On disposal of subsidiary (note 15)

-

(25,006)

 

23,787

23,787

 

 

8.  Intangible assets

 

 

31 Dec 2020

31 Dec 2019

 

£000

£000

Opening net book value 1 January

6,486

14,186

On disposal of subsidiary (note 15)

-

(6,308)

Amortisation

(846)

(1,392)

 

5,640

6,486

9.  Trade and other receivables

 

 

31 Dec 2020

31 Dec 2019

 

£000

£000

Trade receivables

5,881

7,218

Less: provision for impairment of receivables

-

(19)

Trade receivables - net

5,881

7,199

Other receivables

499

1,127

Prepayments

791

795

Accrued income

611

538

 

7,782

9,659

 

Within the trade receivables balance of £5,881,000 (2019: £7,218,000) there are balances totalling £1,453,000 (2019: £1,934,000) which, at 31 December 2020, were overdue for payment. Of this balance £1,433,000 (2019: £1,313,000) has been collected at 9 March 2021 (2019: 10 March 2020).

 

 

10. Trade and other payables

 

 

31 Dec 2020

31 Dec 2019

 

£000

£000

Trade payables

600

1,509

Other tax and social security payable

2,020

1,549

Other payables

166

92

Accruals

5,163

4,130

Deferred income

25,703

22,842

 

33,652

30,122

11.  Capital lease obligations

 

The Group leases various offices which, following the adoption of IFRS 16, met the criteria set out to be recognised as capital lease agreements.

 

31 Dec 2020

31 Dec 2019

 

£000

£000

Amounts payable under capital lease agreements:

 

 

Within one year

908

901

Within two to five years

1,084

1,171

After five years

-

229

Total

1,992

2,301

Less: future finance charges

(139)

(178)

Present value of lease obligations

1,853

2,123

Less: Amount due for settlement within 12 months (shown under current liabilities)

(881)

(835)

 

972

1,288

 

 

31 Dec 2020

31 Dec 2019

 

£000

£000

The present value of financial lease liabilities is split as follows:

 

 

Within one year

881

835

Within two to five years

972

1,064

After five years

-

224

 

1,853

2,123

 

 

12. Provisions for other liabilities and charges

 

 

Provisions

 

31 Dec 2020

31 Dec 2019

 

£000

£000

At 1 January

375

424

Charged to income statement

69

90

On disposal of subsidiary

-

(132)

Foreign exchange movement

(3)

(7)

At 31 December

441

375

 

 

Provisions have been analysed between current and non-current as follows:

 

Provisions

 

31 Dec 2020

31 Dec 2019

 

£000

£000

Current

-

38

Non-current

441

337

 

441

375

 

£386,000 (2019: £317,000) of the total provision at 31 December 2020 of £441,000 relates to the cost of dilapidations in respect of its occupied leasehold premises. All of the non-current provision is expected be utilised within 2 to 5 years (2019: £337,000).

 

 

13. Share capital

 

     

Ordinary shares of 7 1/3p each

Number

£000

Issued and fully paid:

 

 

At 1 January 2020

56,217,970

4,128

Issued under share option schemes

210,997

15

At 31 December 2020

56,428,967

4,143

 

 

 

 

14.  Cash flows from operating activities

 

Reconciliation of profit before tax to net cash generated from operations:

 

 

Year ended

31 Dec 2020

Year ended

31 Dec 2019

 

£000

£000

Profit before tax for the year from

 

 

Continuing operations

8,108

8,775

Discontinued operations

-

22,961

Profit before tax including discontinued operations

8,108

31,736

Adjustments for:

 

 

   Depreciation

1,573

1,844

   Amortisation

846

1,392

   Overseas taxation provision

-

713

   Share-based payment expense

337

1,033

   Gain on disposal of subsidiary, excluding direct costs incurred

-

(23,657)

   Finance income

(61)

(158)

   Finance costs

100

326

Changes in working capital excluding the effects of acquisition:

 

 

   Decrease in receivables

1,917

1,493

   Increase in payables

3,484

3,900

   Decrease in provisions

(66)

(202)

Cash generated from operations

16,238

18,420

 

 

 

Cash generated from operations is from:

 

 

Continuing operations

16,238

15,295

Discontinued operations

-

3,125

 

16,238

18,420

15.   Discontinued operations

15(a) Description

On 30 May 2019, the Group announced that it had entered into an agreement to sell the entire issued share capital of Microgen Financial Systems Limited, to Moscow Bidco Limited, a newly incorporated private limited company controlled by Silverfleet Capital Partners LLP, for consideration of £51.4 million. The disposal was approved by Aptitude Software Group plc's shareholders at a General Meeting held on 24 June 2019, with completion of the disposal effective on 28 June 2019 and is reported in the current period as a discontinued operation. Financial information relating to the discontinued operation for the period to the date of disposal is set out below, with the gain on disposal being presented within the profit from discontinued operation (see analysis in 15(b) below).

15(b) Financial information and cash flow information

The financial performance and cash flow information presented are for the period 1 January 2019 to 28 June 2019.

 

 

Period from

1 Jan 2019 to

28 June 2019

 

£000

Income statement

 

Revenue

8,089

Operating costs

(4,866)

Adjusted Operating Profit

3,223

Non-underlying items

(540)

Gain on disposal of subsidiary

-

Operating profit

2,683

Finance income

2

Finance costs

(29)

Profit before income tax

2,656

Income tax expense

(531)

Profit after tax from discontinued operation

2,125

Gain on disposal of subsidiary after tax (see (c))

20,305

Cash generated from operations

22,430

 

 

Other comprehensive income

 

Items that will or may be reclassified to profit or loss

 

Currency translation gain

22

Total comprehensive income for the year arising from discontinued operations

22,452

 

 

Profit from non-underlying items is generated from:

 

Non-underlying operating costs

(540)

Gain on disposal of subsidiary

20,305

Income tax credit

116

 

19,881

 

 

Period from

1 Jan 2019 to

28 June 2019

Cash flow statement

£000

Net cash from operating activities

3,125

Net cash generated from investing activities (includes an inflow of £47,152,000 from the sale)

47,078

Net cash generated from financing activities

554

Net increase in cash generated by the subsidiary

50,757

     

 

 

15(c) Details of the sale of the subsidiary

 

Book value

 

£000

Net assets disposed

 

Property, plant and equipment

1,213

Goodwill

25,006

Intangible assets

6,308

Other long-term assets

257

Deferred income tax assets

302

Trade and other receivables

3,267

Cash and cash equivalents

4,259

Trade and other payables

(9,299)

Capital lease obligations

(815)

Current income tax liabilities

(1,298)

Provisions for liabilities and charges

(132)

Deferred tax liabilities

(1,314)

NET ASSETS

27,754

 

 

Consideration received

 

Proceeds received on completion

51,411

Less: direct costs incurred

(3,352)

 

48,059

 

 

Gain on disposal excluding direct costs incurred

23,657

 

 

Gain on disposal

20,305

 

16.   Post balance sheet events

Since the year end, new country by country guidance took effect in respect of the United Kingdom's withdrawal from the European Union. The withdrawal represents a non-adjusting event for the purposes of these financial statements and, even if it had represented an adjusting event the Directors believe the impact of this would have been immaterial. This is based on the conclusions set out within the Chief Executive Officer's Report.

In addition, the Group continues to be affected by the global restrictions implemented by governments in response to the COVID-19 outbreak detailed within the Chief Executive Officer's Report. This impact remains unchanged since the year end.

17. Statement by the directors

The preliminary results for the year ended 31 December 2020 and the results for the year ended 31 December 2019 are prepared under International Financial Reporting Standards as adopted for use in the EU ("IFRS").  The accounting policies adopted in this preliminary announcement are consistent with the Annual Report for the year ended 31 December 2020.

The financial information set out in this preliminary announcement does not constitute the Company's statutory accounts for the years ended 31 December 2020 or 31 December 2019.  The financial information for the year ended 31 December 2019 is derived from the Annual Report delivered to the Registrar of Companies.  The Annual Report for 2020 will be delivered to the Registrar of Companies in due course. The auditors' report on those accounts was unqualified and neither drew attention to any matters by way of emphasis nor contained a statement under either section 498(2) of Companies Act 2006 (accounting records or returns inadequate or accounts not agreeing with records and returns), or section 498(3) of Companies Act 2006 (failure to obtain necessary information and explanations).

The Board of Aptitude Software Group plc approved the release of this audited preliminary announcement on 10 March 2021.

The Annual Report for the year ended 31 December 2020 will be posted to shareholders in due course and will be delivered to the Registrar of Companies following the Annual General Meeting of the Company.  The report will also be available on the investor relations page of our web site (www.aptitudesoftware.com).  Further copies will be available on request and free of charge from the Company Secretary at Old Change House, 128 Queen Victoria Street, London, EC4V 4BJ.

 

 

 

 

 

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