REG - Aptitude Software - Interim Results
28/07/2022 07:00
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RNS Number : 9802T Aptitude Software Group PLC 28 July 2022
28 July 2022
APTITUDE SOFTWARE GROUP plc
('Aptitude Software' or 'the Group')
Interim Results for the six months ended
30 June 2022
Aptitude Software Group plc (LSE: APTD), the specialist provider of finance
digitalization and subscription management software, reports its unaudited
results for the six months ended 30 June 2022.
Financial Highlights
Six months ended 30 June 2022 2021 % Change
Annual Recurring Revenue(1) ('ARR') at 30 June £49.1m £35.5m +38%
- Year-on-Year ARR Growth 38% 5% +33%
- Year-on-Year ARR Growth (Constant Currency(2)) 28% 12% +16%
- Year-on-Year ARR Growth (Organic(3) and Constant Currency(2)) 10% 12% -2%
Total Revenue £36.1m £27.6m +31%
- Recurring Revenue(4) £24.4m £18.3m +33%
- Implementation Revenue £11.7m £9.3m +26%
Cash and Cash Equivalents £23.6m £46.8m -50%
Net Funds(6) £10.7m £45.4m -76%
Adjusted Operating Margin(5) 11.1% 18.5% -7.4%
Adjusted Operating Profit(5) £4.0m £5.1m -22%
Statutory Operating Profit £2.1m £4.7m -55%
Interim Ordinary Dividend per Share 1.8p 1.8p -
· Year-on-year growth in Annual Recurring Revenue ('ARR') of 38%,
benefiting from Organic Growth(3) of 10% on a Constant Currency(2) basis, the
acquisition of MPP Global in October 2021 and foreign exchange movements
· Recurring Revenue, the strategic focus of the Group, grew 33%
to £24.4 million (H1 2021: £18.3 million), Organic Growth of 10%,
representing 68% of total revenue (H1 2021: 66%)
· Increased investment in the Group's two strategic pillars has led
to Adjusted Operating Profit reducing to £4.0 million (H1 2021: £5.1
million), in line with the investment plan described in the results in March
2022
· Continued balance sheet strength with cash of £23.6 million (30
June 2021: £46.8 million) and Net Funds(5) of £10.7 million (30 June 2021:
£45.4 million), reduced following the acquisition of MPP Global in October
2021
Strategic Progress:
· Aptitude Software is well positioned with its developing suite of
products to benefit from the two recognised strategic growth drivers of
finance digitalization and subscription management
· These long-term and non-cyclical strategic drivers are expected
to lead to an acceleration in the growth of both the Group's ARR and
margin in the medium term
· Fynapse, the Group's next generation strategic digital
finance platform, successfully launched in March 2022 with strong positive
interest in this new higher margin offering from existing clients, prospects
and partners
· First release of Fynapse solution successfully provided to
the Group's charter client in the North American telco market
· Fynapse provides users with lower total cost of ownership and
significantly increased performance whilst opening new markets
for Aptitude Software and our partners
· Continued integration of MPP Global, at the product level,
organisationally and with a new group-wide brand launch positioning
Aptitude Software to fully realise the opportunity within the growing
subscription management market
· Further development of the partner network highlighted by the new
strategic agreement to provide finance automation solutions to a Big-4
accountancy firm's mergers and acquisitions practice
Operational Highlights:
· Landmark win for eSuite, the platform brought into the Group
as part of the acquisition of MPP Global, to provide subscription management
capability to one of the largest global broadcasters and media content owners
with potential for considerable scale once the offering is launched in 2023
· First sale in Asia of AREV, our leading revenue management
product, demonstrating the growing market need for this product beyond North
America and the scale of the opportunity
· Further sale of Aptitude Accounting Hub to a North American
payments technology provider reinforcing the continuing opportunity with this
established product outside of any compliance market demand
· Further software sales across all regions of a number of the
Group's applications
· Increasing demand from insurance market clients for new multi-year
solution management services agreements with further sales of this recurring
service progressing well as the implementation date of IFRS 17 in 2023
approaches
· Strengthening pipeline of opportunities following the launch of
Fynapse and an end-to-end revenue automation marketing campaign in the first
half of the year
· Continued organisational strengthening with key new senior hires
in technology and human resources positioning the Group for the increasing
opportunities ahead
Commenting on the results, Jeremy Suddards, Chief Executive Officer, said: -
'Aptitude Software has demonstrated that it is well positioned to realise the
significant opportunity from the two strategic growth drivers of finance
digitalization and subscription management, providing the Group with long
term, non-cyclical growth opportunities.
Development continues in Fynapse with strong market feedback, in particular
from our partners, providing positive support for our investment in this next
generation strategic digital finance platform.
Additionally, the Group continues to progress the integration of the recently
acquired eSuite product with our revenue management capability to unlock the
end-to-end revenue automation opportunity within subscription management.
During a transitional year in which the Group is progressing well with its
strategic investments, we achieved a good level of new sales success and
up-lifts and add-ons in our prestigious existing client base.
We are pleased with both the operational and strategic progress achieved in
the first half of the year and the Board is confident that the Group's
performance for 2022 will be in line with its expectations.'
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 / Hilary
Buchanan
020-3405-0205
About Aptitude Software
Aptitude Software helps complex organizations automate and transform their
financial business models. Our core areas of focus are the accelerating
digitalization of the finance function, and the global drive to deploy and
manage subscription offerings. Aptitude Software also continues to support
clients through complex regulations which often form the catalyst for broader
finance transformation.
Finance digitalization enables finance leaders to improve the speed of their
function, enhance the quality of its outcomes, and do so at a lower cost.
Aptitude Software's products draw data from complex, often siloed systems,
automate its processing through complex accounting calculations, and create a
unified view of finance. Businesses are left with a transparent view of their
data, delivered at extreme performance and at a lower cost of ownership
improving their finance functions' ability to support their business
objectives.
Subscription management is a rapidly increasingly critical driver for new and
traditional businesses alike, who need to launch new offerings frequently, in
ways which appeal to their customers and allow them to outperform their peers.
Aptitude Software's products power the acquisition, monetization, and
retention of subscribers straight through to revenue reporting. With Aptitude
Software, businesses can take new subscriptions to market quickly, retain
their high-value recurring revenue, and stay one step ahead of the
competition. Whilst business to consumer (B2C) subscription models are
increasing all the time, Aptitude Software also specialises in business to
business (B2B) subscriptions which are undergoing significant business model
shifts post pandemic, increasing volume and complexity to manage.
Our global client base includes some of the world's largest companies,
typically organisations with complex business models, large volumes of data,
and numerous internal systems. Aptitude Software is headquartered in London,
has a strong and growing North American presence, and is powered by Global
Innovation Centres in Poland and the North West of England. Sales, support and
implementation services are provided from offices in the United States, the
United Kingdom, Canada, and Singapore. www.aptitudesoftware.com
(http://www.aptitudesoftware.com)
Throughout this announcement:
(1) Annual Recurring Revenue ('ARR') is the value of Aptitude Software's
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. Included in ARR, for the first time, are
recurring revenues from the Group's solution management services, comparatives
have been adjusted to include such recurring revenue contracts.
(2) Constant Currency is calculated by comparing the H1 2022 results with H1
2021 results retranslated at the rates of exchange prevailing during H1 2022.
(3) Organic Growth excludes the contribution from the acquisition of MPP
Global in October 2021.
(4) Recurring Revenue includes, for the first time, revenues from the Group's
solution management services, comparatives have been adjusted accordingly.
(5) Adjusted Operating Profit and Adjusted Operating Margin 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 6.
(6) Net Funds represents cash and cash equivalents less finance obligations,
which includes capital lease obligations and a loan.
Certain non-IFRS financial measures (e.g. Adjusted Operating Profit) are
included which assist management in comparing performance on a consistent
basis.
Overview
Aptitude Software achieved a number of new business successes in the first
half of 2022 whilst continuing to build out its customer pipeline and progress
with its investments in the Group's two strategic pillars of finance
digitalization and subscription management.
The new business successes across the Group's core product suite and regions
contributed to year-on-year Annual Recurring Revenue ('ARR') Organic Growth of
10% on a Constant Currency basis. In addition, a key highlight for the eSuite
platform brought into the Group with the acquisition of MPP Global, was the
landmark win to provide subscription management capability to one of the
largest leading global broadcasters and media content owners with potential
for considerable scale once the offering is launched in 2023. This leading
global broadcaster represents a significant new client win for the eSuite
platform.
Overall, including the benefits of the MPP Global acquisition and favourable
foreign exchange movements, ARR increased year-on-year by 38% to £49.1
million on 30 June 2022 (31 December 2021: £45.0 million, 30 June 2021:
£35.5 million). Included for the first time within ARR is the value of the
Group's recurring solution management services contracts (30 June 2022: £3.9
million, 31 December 2021: £3.2 million, 30 June 2021: £3.3 million) with
comparatives updated to reflect their inclusion.
A key strategic highlight in the first half of 2022 was the launch of Fynapse,
the Group's next generation digital finance platform. The first release of
Fynapse has now been successfully provided to Aptitude Software's charter
client in the North American telco market, an important milestone for the
Group.
The Group is confident that Fynapse will accelerate the Group's growth in the
medium and long term whilst also generating higher gross margins due to the
cloud native technologies on which the platform is built. Fynapse provides
differentiated finance digitalization capability to a market in which the
Group already has outstanding credentials with the successful Aptitude
Accounting Hub. The Group continues to expand the capabilities of the product
whilst in parallel receiving strong interest from clients, prospects and
partners resulting in a strengthening of Aptitude Software's overall pipeline
of new business opportunities.
Integration of eSuite and the MPP Global team into the wider business
continues to plan. In addition to the continued integration of eSuite with
Aptitude Software's revenue management capability to provide end-to-end
revenue automation, the Group has recently launched new joint branding for
which very positive market feedback has been received. The new branding
reflects the shared values and attributes of the enlarged Group, in particular
the capability of our team and applications to solve the most complex
requirements more successfully than our competitors, an ability that allows us
to charge a premium for our software and services.
The partnership programme continues to develop. In addition to a new agreement
to provide finance automation to a Big-4 accountancy firm's mergers and
acquisitions practice, the eSuite partnership network continues to be a source
of opportunity. There are also a series of promising opportunities being
explored for Fynapse with both the Big-4 accountancy firms as well as
technology focused businesses. The partnerships are providing access to new
sectors for Aptitude Software as well as providing greater access to
geographies such as Germany and Japan.
The increased investment in the Group's two strategic pillars has seen
expenditure on product management, research and development in the six months
ended 30 June 2022 increase to £7.9 million (H1 2021: £4.4 million), an
increase of 80%. Adjusting for the investment in eSuite the increase is 41%
with the increase principally attributable to the accelerated investment in
Fynapse. This increased expenditure has led to the planned reduction in the
Group's profit in the first half of 2022 with the benefit resulting from these
investments expected to accelerate growth in ARR and margins in the medium
term.
In a period where the Group is progressing its investment in finance
digitalization and subscription management, the Board is pleased with both the
strategic and operational progress achieved in the first half of the year and
is confident that the performance in 2022 will be in line with its
expectations.
Corporate Strategy
Aptitude Software's strategy is focused on providing innovative finance
digitalization and subscription management software serving a growing number
of C-suite stakeholders. The Group has undergone a re-branding exercise as
part of the integration of MPP Global. The re-branding emphasises the shared
qualities and characteristics of the wider business, these are the ability of
our technology and people to handle the complexity other solutions are unable
to, put simply "where others see complexity, we see opportunity". The
re-branding has been very positively received by our employees, clients,
partners and prospects.
Finance digitalization allows finance leaders to improve the speed of their
function, enhance the quality of outcomes, and do so at a dramatically lower
total cost of ownership for a modern finance function. Aptitude Software's
products receive data from complex, often siloed systems, automate its
processing through complex accounting calculations, and create a unified view
of business performance. Businesses are left with a transparent view of their
finance data, delivered in a near real time basis and at a lower cost of
ownership.
Subscription management is an increasingly critical driver for new economy and
traditional businesses alike. Aptitude Software's products now power the
acquisition, billing, and retention of subscribers straight through to revenue
reporting. With Aptitude Software, businesses can take new subscriptions to
market quickly, retain their high-value recurring revenue, and stay ahead of
the competition.
Our global client base includes some of the world's largest companies,
typically organisations with complex business models, large volumes of data,
and numerous internal systems. 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 new advanced industries.
The business generates revenue from its software through a combination of
licence fees (all 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. The eSuite product also generates incremental revenue through
charging volume-based usage and financial transaction fees.
Software development, together with a growing number of other services,
continues to be performed at the Aptitude Global Innovation Centres in Poland
and in the North West of England. Sales, support and implementation services
are provided from Aptitude Software's offices in London, North West England,
North America and Singapore.
Finance Digitalization
Market Drivers
Quality of data, speed of reporting and cost continue to be the top drivers on
the CFO's agenda as they are increasingly 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 as opposed to simply report on a
previous period's business performance. Aptitude Software's product set is
well positioned to address these requirements.
Finance Digitalization Products
Fynapse, the Group's next generation digital finance platform, was launched in
March 2022 with strong interest received from clients, prospects and partners
for this new application. With investment continuing in the capabilities of
Fynapse, new business success continues to be achieved with the established
Aptitude Accounting Hub and Aptitude Insurance Calculation Engine
applications.
Fynapse
Fynapse is a modular, cloud native, high performance platform addressing an
organisations' need to drive finance digitalization to continue the
transformation of their wider businesses. The application builds on the
successful Aptitude Accounting Hub, centralising and automating finance,
accounting and reporting processes, creating a deep level of operational
intelligence for our clients. It delivers a brand-new user centric interface
with a consolidated, yet highly granular, view of financial data which
enhances business insights to assist decision making. The capabilities of the
product enable even greater automation of manual accounting processes,
reducing on-going operational costs and driving an improved total cost of
ownership for the office of finance.
The modular design and ease of integration also allows the market opportunity
to extend beyond our current industries into adjacent verticals, shortening
typically long implementation cycles and allowing our partner network to
implement efficiently, with minimal risk, short time-to-benefit and at a
competitive total cost of ownership.
The platform is also designed to be "open" offering partners the opportunity
to co-create and license their own IP, further accelerating and
differentiating their services. This capability is proving an attractive
proposition for the Big-4 accountancy firms and is highly differentiated from
the more generalist providers in the market. In addition to the interest from
consultancy focused partnerships there are also promising exploratory early
discussions with global technology partners who can see the benefit our
capability will bring to their own offering.
The strategic investment continues in growing the capabilities of Fynapse with
development performed at the Aptitude Innovation Centre in Wroclaw, Poland.
The Group has been successful in onboarding the required talent, including the
appointment of a SVP of Engineering to lead the development, increasing
investment in Fynapse to planned levels. The modern cloud native technology on
which Fynapse is built allows higher gross margins to be generated from this
application in comparison to the Group's existing SaaS offerings within
Finance Digitalization.
The timely release of future versions of Fynapse, bringing new and additional
capabilities to address the requirements of different markets, is a key
enabler to the Group's future ARR growth and the deployment of its
implementation teams. It is therefore particularly pleasing that an important
key milestone has been achieved with the successful first release of Fynapse
to our charter client in the North American telco market.
Fynapse is expected to be a material growth driver and margin enhancer for the
business in future years. The Group has already received strong interest from
clients, prospects and partners in this new platform to strengthen Aptitude
Software's overall pipeline of new business opportunities.
Aptitude Insurance Calculation Engine
Aptitude Insurance Calculation Engine ('AICE') is a strategic,
transformational application providing value to an insurer beyond addressing
the requirements of IFRS 17 (effective for accounting periods commencing 1
January 2023). Beyond compliance the application enables data insights and
decision support delivering long-term business benefits.
Whilst AICE clients are well progressed in their preparation for the
introduction of IFRS 17, new business opportunities continue to arise for this
application as demonstrated by the contract secured in the first half of 2022
with an Asian-based insurer. This demand is expected to continue beyond 2022
as insurers seek to address the requirements of IFRS 17 before their first
reporting period, furthermore, there are expected to be insurers who will need
to adopt a more robust approach to compliance having initially reported using
alternative or manual solutions. Additionally, there are several jurisdictions
which have a delayed introduction of IFRS 17 extending further the opportunity
for AICE beyond 2023.
There is also a growing opportunity for the Group's solution management
services with AICE clients. In the first half of 2022 a number of insurers
contracted for solution management services on a recurring multi-year basis.
Aptitude Accounting Hub
The Group continued to achieve new business success in the first half of 2022
with the Aptitude Accounting Hub ('AAH'), both on a standalone basis as well
as in conjunction with the sale of the Aptitude Insurance Calculation Engine.
A material new contract with a North American headquartered gift and payments
company was successfully signed in the period. Working closely with one of our
partners, the opportunity was secured by demonstrating a more configurable and
finance enabled solution than our competitors, while also conveying our strong
expertise and proven track record at scale in the accounting hub space. We
expect further sales of AAH will be achieved, particularly when used in
conjunction with our other regulatory focused applications.
Subscription Management
Market Drivers
The subscription economy is continuing to expand into new sectors as the
benefits of subscription income are increasingly valued more than traditional
non-recurring revenues. The Group has seen this phenomenon in broader sectors
such as high-tech advanced industries, medical devices and automotive. As
organisations move to these business models they require new systems to manage
these subscriptions and require new capabilities to address the complexities
of revenue recognition inherent with subscriptions.
Aptitude Software's products are focused on the needs of the world's largest
companies, organisations with highly complex business models and data
processing requirements which generalist providers are unable to address.
Subscription Management Products
eSuite
eSuite is a modular, cloud based end-to-end SaaS solution for large,
international, enterprise customers across the media and publishing sector as
well as a growing number of other verticals.
The application is focused on the subscription economy and provides identity
management, CRM, automated billing, payment processing, and churn management
capabilities, enabling businesses to acquire, monetize and optimise customers
subscriptions. Once integrated with the Group's revenue management offering,
scheduled for completion in the second half of the year, Aptitude Software
will be able to offer an end-to-end subscription, billing, and revenue
automation solution which is expected to provide further opportunities for
automation and growth within the existing customer base while also supporting
new business opportunities.
A key highlight for eSuite in the period was the landmark win to provide
subscription management capability to one of the largest global broadcaster
and media content owners with potential for considerable expansion in ARR once
the offering is launched in 2023. Contributing to securing this new business
contract was the earlier success achieved with a leading broadcaster and media
content owner in the United Kingdom, a project that successfully went live in
the first half of the year.
In addition to the above success, good progress continues to be achieved with
publishers currently utilising a competing product that is being de-supported.
A project with a major German publisher to replace this competing solution is
approaching its go live. The success of this project, together with the strong
relationship formed with a German focused implementation partner as part of
the engagement, has generated very well progressed additional opportunities.
Another project is also approaching its conclusion in Japan with a leading car
manufacturer, once again working closely with an implementation partner.
eSuite has the capabilities to provide car manufacturers with subscription
management capability as they seek to monitise additional in-car services.
Aptitude Software continues to work closely with the Japanese-focused partner
on several other exciting opportunities in this growing market.
The majority of our clients' subscription bases are very resilient and
confidence remains high in the opportunity with eSuite. Nevertheless, a small
number of clients have seen their businesses negatively impacted by the
post-pandemic current economic challenges leading to a small but temporary
contraction in the Annual Recurring Revenue of eSuite in the period. We expect
this trend to be reversed in the second half of the year.
Aptitude Revenue Management
The Group's first sale of AREV, our leading Aptitude Revenue Management
('ARM') application, outside North America was achieved in the period to a
Singaporean telco provider. This success in Asia is expected to lead to
further opportunities in the region. In addition to this sale, a new business
contract was secured with a further telco provider in North America.
The ARM applications enable finance teams to automate their revenue management
functions to address the demands of the subscription economy, with the market
opportunity now extending beyond our current industries into adjacent
verticals including high-tech advanced industries and medical devices.
The applications simplify the whole revenue lifecycle, from contract order to
revenue recognition, reporting and forecasting and 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.
Solution Management Services ("Aptitude Assure")
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. The team providing these remote services to our clients is now
of critical mass and able to provide efficiencies to our clients across the
majority of the Group's applications.
During the first half of the year a number of Aptitude Insurance Calculation
Engine clients contracted for this service in advance of their approaching
go-live dates. These contracts contributed to the year-on-year growth of 18%
in the Annual Recurring Revenue derived from solution management services to
£3.9 million (30 June 2021: £3.3 million).
For the first time the value of the multi-year recurring solution management
services contracts is included in overall Annual Recurring Revenue with
comparatives restated accordingly.
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. The Group's services are provided by a significant pool of
highly skilled individuals, providing deep domain and technical expertise
which is highly valued by our clients and provide a differentiator compared to
our competitors. Demand for implementation services from the Group's on-going
projects has been strong in the first half of the year, with clients
frequently requesting additional services. This dynamic is expected to
continue into early 2023 when a number of the projects to implement the
Aptitude Insurance Calculation Engine are expected to complete.
Partner Network
The growth and development of Aptitude Software's high-quality partner network
continues to be a strategic priority. 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 advanced 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
software fees faster than its services, leading to a richer revenue mix.
With a Big-4 accountancy firm appointed as charter partner for Fynapse in the
first half of the year, a series of well received meetings were held with
additional partners to showcase the capabilities of Fynapse as part of the
launch of the application. A further highlight has been the new agreement to
provide finance automation to a Big-4 accountancy firm's mergers and
acquisitions practice enabling them to accelerate the post-acquisition
integration of their clients' finance functions.
Whilst the Big-4 accounting firms have global reach, for specific applications
in specific jurisdictions it can be beneficial to work closely with more
specialised partner organisations. The benefits of this approach are
demonstrated by the success the Group is having with eSuite in the German
publishing and Japanese motor manufacturing markets, two markets which would
be challenging to unlock without the assistance of our partners. We are
engaged with these partners on both on-going projects as well as several
additional new business opportunities.
Aptitude Innovation Centres
Investment continues in the Group's two innovation centres in Poland and the
North West of England. Overall there were 212 employees at the Innovation
Centre in Poland at 30 June 2022 (30 June 2021: 172) with a further 47
employees focused on design, development, implementation and support based in
the North West of England. Investment remains focused on both Fynapse and
eSuite in these two centres.
The strengthening of the Group's talent acquisition team is allowing the Group
to continue to attract new talent to the business despite increased
competition for technologists in both locations. In the current competitive
talent market the Group continues to invest in its people, including the
initiatives described below.
Our People
The Board wishes to thank its employees for the excellent support and
commitment they are providing to the business and to our clients and partners.
In the first half of the year a key focus has been the continued integration
of the team brought into the Group with the MPP Global acquisition.
Collaboration continues to increase with the wider business and all key talent
has been successfully retained. As part of the integration the Group's wider
career management programme has now been implemented together with a number of
other training initiatives.
In May 2022 a new Chief People Officer joined the Group bringing new
approaches and initiatives to our people strategy as we continue to focus on
attracting and retaining the most talented of individuals. This senior
appointment builds on the strengthening of the team supporting our team at the
Group's two innovation centres.
Aptitude Software continues to progress its approach to diversity and
inclusion with its established advocacy group with representation from across
our global team. The business is committed to creating a working environment
that recognises diversity, supporting everyone to thrive.
Overall Group headcount has increased to 477 (31 December 2021: 476, 30 June
2021: 351) as the business continues to invest in the evolution of our
technology and strengthen a number of other teams. In addition to the Group's
permanent headcount, since 31 December 2021 the number of contractors within
the Group has increased to 54 (31 December 2021: 39).
Focus areas
The Group is focused on delivery of the opportunity within finance
digitalization and subscription management.
The focus within finance digitalization is the continued development of the
additional capabilities of Fynapse to address the wider market opportunity,
both directly and through our Tier 1 partners, whilst continuing to develop
and progress demand for our new application.
For subscription management the focus is the continued integration of Aptitude
Software's state of the art, multi-tenanted eSuite SaaS platform and
successfully taking our new end-to-end revenue automation product to existing
and new markets.
Financial Performance
The Group delivered a solid financial performance in the period with continued
growth of its recurring revenues.
The strength of the Group's balance sheet, high levels of recurring revenue
and strong cash generation provide the Group with considerable financial
strength with which to execute on its growth strategy.
Revenue
Recurring Revenues
Aptitude Software's Annual Recurring Revenue ('ARR') at 30 June 2022 totalled
£49.1 million (31 December 2021: £45.0 million, 30 June 2021: £35.5
million) representing overall year-on-year growth of 38% with benefit from
both the acquisition of MPP Global in October 2021 and favourable exchange
rate movements. On a Constant Currency basis, overall year-on-year ARR growth
was 28% (31 December 2021: £47.5 million, 30 June 2021: £38.4 million).
Removing the impact of the acquisition of MPP Global the year-on-year ARR
Organic Growth on a Constant Currency basis was 10% (12 months to 30 June
2021: 12%).
For the first time the value of recurring contracts for the Group's solution
management service is included within ARR (30 June 2022: £3.9 million, 31
December 2021: £3.2 million, 30 June 2021: £3.3 million).
Whilst the Group is satisfied with the year-on-year Organic Growth rate of
10%, the business is confident that the investments in both finance
digitalization and subscription management will lead to a return to Aptitude
Software's historically higher growth rates.
Net retention in the 12 months to 30 June 2022, excluding eSuite, was 103% (H1
2021: 102%) (measured by the total value of on-going ARR at the period-end
from clients in place 12 months earlier as a percentage of the opening ARR
from those clients on a constant currency basis).
A significant majority of the Group's recurring revenue contracts include the
ability to increase ARR for clients by relevant consumer price index rises
('CPI'). There are a number of contracts with variations to this mechanism
which may delay the ability to pass on the full impact of CPI to clients in
the short term. Additionally, there is a significant weighting of contractual
renewals in the second half of the year which have yet to receive an increase
at the current elevated levels of CPI.
Recurring revenues recognised in the six months ended 30 June 2022 increased
by 33% to £24.4 million (H1 2021: £18.3 million), 10% on an organic basis.
These now represent 68% of overall revenue (H1 2021: 66%). 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, the
largest element of recurring revenue, and implementation services.
Implementation Services
Services revenue totalled £11.7 million for the six months ended 30 June 2022
(H1 2021: £9.3 million) Implementation services revenues continued to benefit
from the strong demand from the Group's existing client base.
Research and Development Expenditure
Total expenditure on product management, research and development in the six
months ended 30 June 2022 increased to £7.9 million (H1 2021: £4.4 million),
an increase of 80%. Adjusting for the investment in eSuite the increase is 41%
with the increase principally attributable to the accelerated investment in
Fynapse.
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 for the six months ended 30 June 2022 was £4.0
million. Operating profit on a statutory basis was £2.1 million (H1 2021:
£4.7 million). Investment in the continued development of Fynapse and
integration of eSuite has led to a reduction in Adjusted Operating Margin to
11.1% (H1 2021: 18.5%), in line with the Board's expectations.
Foreign Exchange
With 51% (H1 2021: 55%) of the Group's revenues being generated from North
American clients, the majority of which are invoiced in US Dollars, the
financial results are impacted by changes in the US dollar exchange rate. The
Group's Annual Recurring Revenue at 30 June 2022 increased in the preceding 12
months by £2.9 million as a result of favourable exchange rate movements.
Aptitude Software's H1 2021 revenue and Adjusted Operating Profit would have
been reported at £28.1 million and £5.1 million respectively on a Constant
Currency basis (compared to actual result of £27.6 million and £5.1
million). Constant Currency is calculated by comparing the H2 2022 results
with H2 2021 results retranslated at the rates of exchange prevailing during
H2 2022.
Non-Underlying Items
Non-underlying items of £1.9 million (H1 2021: £0.4 million) comprises
principally of intangible amortisation.
Taxation
The total tax charge of £0.4 million (H1 2021: £0.8 million) represents 19%
of the Group's profit before tax (H1 2021: 17%).
Statutory Results
The Group reported a profit for the period attributable to equity shareholders
of £1.5 million (H1 2021: £3.9 million).
Earnings per Share
Increased investment in the business led to Adjusted Basic Earnings per Share
and Basic Earnings per Share reducing to 5.2 pence and 2.6 pence (H1 2021: 7.3
pence and 6.8 pence).
Dividend
An interim dividend of 1.8 pence per share is proposed (2021: 1.8 pence). The
interim dividend will be payable on 26 August 2022 to shareholders on the
register at the close of business on 5 August 2022.
Balance Sheet
The Group continues to have a strong balance sheet with net assets at 30 June
2022 of £58.7 million (H1 2021: £53.0 million), including cash of £23.6
million (H1 2021: £46.8 million) and net funds of £10.7 million (H1 2021:
£45.4 million). Trade receivables (net) have increased to £14.9 million (H1
2021: £6.3 million), an increase attributable to the MPP Global acquisition
in October 2021, growth in the core business and a change in timing of the
invoicing of a number of recurring fees to ensure CPI growth is maximised. Of
the balance of £14.9 million, collections following the period end have
totalled £5.0 million. The growth in the Group's recurring revenues resulted
in deferred income increasing to £30.1 million at 30 June 2022 (H1 2021:
£24.1 million).
The Group's cash flow is seasonal due to the timing of the invoicing and
collection of the Group's recurring revenue which, together with a weighting
of a number of other payments in the first half of the year (e.g. bonus),
contribute to a weaker cash performance in the first half of any year. This
dynamic, accentuated by over performance of collections in December 2021 and
adjustment of the timing of the invoicing of a number of recurring fees as
outlined above, has led to a cash outflow from operating activities in the
first half of the year of £3.5 million (H1 2021: £4.5 million inflow).
The Group is confident that full year cash flow conversion for 2022 will be in
line with historical levels.
Statement on Principal Risks and Uncertainties
Pursuant to the requirements of the Disclosure and Transparency Rules the
Group provides the following information on its principal risks and
uncertainties. The Group considers strategic, operational and financial risks
and identifies actions to mitigate those risks. These risk profiles are
updated at least annually. The principal risks and uncertainties detailed
within the Group's 2021 Annual Report remain applicable for the first six
months of the financial year. The Group's 2021 Annual Report is available from
the Aptitude Software website: www.aptitudesoftware.com/investor-relations/
(http://www.aptitudesoftware.com/investor-relations/)
Related party transactions during the period are disclosed in Note 18.
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT
For the six months ended 30 June 2022
Unaudited six months ended 30 Jun 2022 Unaudited six months ended 30 Jun 2021 Audited year ended 31 Dec 2021
Note Before Non-underlying items Total Before Non-underlying items Total Before Non-underlying items Total
Non-underlying items Non-underlying items Non-underlying items
£000 £000 £000 £000 £000 £000 £000 £000 £000
Revenue 5 36,123 - 36,123 27,635 - 27,635 59,330 - 59,330
Operating costs 5/6 (32,121) (1,883) (34,004) (22,520) (423) (22,943) (49,430) (3,439) (52,869)
Operating profit 5/6 4,002 (1,883) 2,119 5,115 (423) 4,692 9,900 (3,439) 6,461
Finance income 3 - 3 5 - 5 6 - 6
Finance costs (247) - (247) (44) - (44) (238) - (238)
Profit before income tax 3,758 (1,883) 1,875 5,076 (423) 4,653 9,668 (3,439) 6,229
Income tax expense 7 (754) 400 (354) (914) 123 (791) (1,634) 479 (1,155)
Profit for the period 3,004 (1,483) 1,521 4,162 (300) 3,862 8,034 (2,960) 5,074
Earnings per share
Basic 8 2.6p 6.8p 9.0p
Diluted 8 2.6p 6.8p 8.9p
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2022
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 Jun 30 Jun 31 Dec
2022 2021 2021
£000 £000 £000
Profit for the period 1,521 3,862 5,074
Other comprehensive income/(expense)
Items that may subsequently be reclassified to profit or loss:
Fair value gain/(loss) on hedged financial instruments 267 (141) (222)
Currency translation difference 1,334 (219) (225)
Other comprehensive income/(expense) for the period, net of tax 1,601 (360) (447)
3,122 3,502 4,627
Total comprehensive income for the period
CONDENSED CONSOLIDATED INTERIM BALANCE SHEET
As at 30 June 2022
Unaudited Unaudited Audited
as at as at as at
30 Jun 2022 30 Jun 2021 31 Dec 2021
Note
ASSETS £000 £000 £000
Non-current assets
Property, plant and equipment including right-of-use assets
11 4,250 1,902 4,261
Goodwill 46,006 23,787 46,006
Intangible assets 22,812 5,217 24,502
Other long-term assets 1,451 1,644 1,354
Deferred tax assets 115 448 115
74,634 32,998 76,238
Current assets
Trade and other receivables 12 16,740 8,606 10,775
Financial assets
- derivative financial instruments 150 37 -
Current income tax assets 1,189 898 1,168
Cash and cash equivalents 23,611 46,759 29,064
Total current assets 41,690 56,300 41,007
Total assets 116,324 89,298 117,245
LIABILITIES
Current liabilities
Financial liabilities
- borrowings 14 (938) - (313)
- derivative financial instruments (177) (250) (293)
Trade and other payables 13 (38,096) (32,800) (40,284)
Capital lease obligations 15 (329) (563) (273)
Current income tax liabilities (353) (245) (353)
Provisions 16 - (240) -
(39,893) (34,098) (41,516)
Net current assets 1,797 22,202 (509)
Non-current liabilities
Financial liabilities - borrowings 14 (8,959) - (9,573)
Capital lease obligations 15 (2,679) (786) (2,777)
Provisions 16 (300) (196) (379)
Deferred tax liabilities (5,811) (1,236) (5,811)
(17,749) (2,218) (18,540)
NET ASSETS 58,682 52,982 57,189
CONDENSED CONSOLIDATED INTERIM BALANCE SHEET
As at 30 June 2022
Unaudited Unaudited Audited
as at as at as at
30 Jun 2022 30 Jun 2021 31 Dec 2021
Note
£000 £000 £000
SHAREHOLDERS' EQUITY
Share capital 17 4,204 4,156 4,194
Share premium account 17 11,959 8,382 11,946
Capital redemption reserve 12,372 12,372 12,372
Other reserves 34,169 33,983 33,902
Accumulated losses (3,477) (4,038) (3,346)
Foreign currency translation reserve (545) (1,873) (1,879)
TOTAL EQUITY 58,682 52,982 57,189
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2022
Share capital Share Accumulated losses Foreign currency translation reserve Capital redemption reserve Other Total
premium account
reserves
£000 £000 £000 £000 £'000 £000 £000
Total equity as at 1 January 2022 4,194 11,946 (3,346) (1,879) 12,372 33,902 57,189
Comprehensive income
Profit for the period - - 1,521 - - - 1,521
Cash flow hedges
- net fair value gains - - - - - 267 267
Exchange rate adjustments - - - 1,334 - - 1,334
Total comprehensive income for the period - - 1,521 1,334 - 267 3,122
Shares issued under share option schemes 10 13 - - - - 23
Share options - value of employee service - - 409 - - - 409
Dividends to equity holders of the company - - (2,061) - - - (2,061)
Total contributions by and distributions to owners of the company recognised 10 13 (1,652) - - - (1,629)
directly into equity
Balance at 30 June 2022 (unaudited) 4,204 11,959 (3,477) (545) 12,372 34,169 58,682
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2021
Share capital Share Accumulated losses Foreign currency translation reserve Capital redemption reserve Other Total
premium account
reserves
£000 £000 £000 £000 £'000 £000 £000
Total equity as at 1 January 2021 4,143 7,828 (6,165) (1,654) 12,372 34,124 50,648
Comprehensive income
Profit for the period - - 3,862 - - - 3,862
Cash flow hedges
- net fair value losses - - - - - (141) (141)
Exchange rate adjustments - - - (219) - - (219)
Total comprehensive income for the period - - 3,862 (219) - (141) 3,502
Shares issued under share option schemes 13 554 - - - - 567
Share options - value of employee service - - 303 - - - 303
Dividends to equity holders of the company - - (2,038) - - - (2,038)
Total contributions by and distributions to owners of the company recognised 13 554 (1,735) - - - (1,168)
directly into equity
Balance at 30 June 2021 (unaudited) 4,156 8,382 (4,038) (1,873) 12,372 33,983 52,982
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
For the six months ended 30 June 2022
Unaudited Unaudited Audited
six months ended six months ended year ended
Note 30 Jun 2022 30 Jun 2021 31 Dec 2021
£000 £000 £000
Cash flows from operating activities
Cash (used in)/generated from operations 9 (2,995) 4,212 11,890
Interest paid (247) (44) (238)
Income tax (paid)/received (283) 346 262
Net cash flows (used in)/generated from operating activities (3,525) 4,514 11,914
Cash flows from investing activities
Purchase of property, plant and equipment (379) (194) (1,232)
Acquisition of subsidiary, net of cash acquired - - (33,112)
Interest received 3 5 6
Net cash used in investing activities (376) (189) (34,338)
Cash flows from financing activities
Net proceeds from issuance of ordinary shares 17 23 567 968
Dividends paid to company's shareholders 10 (2,061) (2,038) (3,057)
Repayment of capital lease obligations (181) (548) (756)
Drawdown of loan, net of arrangement fee - - 9,880
Net cash (used in)/generated from financing activities (2,219) (2,019) 7,035
Net (decrease)/increase in cash and cash equivalents (6,120) 2,306 (15,389)
Cash and cash equivalents at beginning of period 29,064 44,822 44,822
Exchange rate gains/(losses) on cash and cash equivalents 667 (369) (369)
Cash and cash equivalents at end of period 23,611 46,759 29,064
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. General information
Aptitude Software Group plc (the 'Company') and its subsidiaries (together,
the 'Group') is a specialist provider of finance digitalization and
subscription management software.
The Company is a public limited company incorporated and domiciled in England
and Wales with a primary listing on the London Stock Exchange. The address of
its registered office is 8(th) Floor, 138 Cheapside, London EC2V 6BJ.
These condensed consolidated interim financial statements were approved for
issue on 27 July 2022.
These condensed consolidated interim financial statements do not comprise
statutory accounts within the meaning of section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2021 were approved by
the Board of directors on 14 March 2022 and delivered to the Registrar of
Companies. The report of the auditors on those accounts was unqualified, did
not contain an emphasis of matter paragraph and did not contain any statement
under section 498 of the Companies Act 2006.
2. Basis of preparation
These condensed consolidated interim financial statements for the six months
ended 30 June 2022 have not been audited or reviewed by the auditors. The
interims have been prepared in accordance with the Disclosure and Transparency
Rules of the Financial Services Authority and with IAS 34, 'Interim financial
reporting'. These condensed consolidated interim financial statements should
be read in conjunction with the annual financial statements for the year ended
31 December 2021, which have been prepared in accordance with UK adopted
international accounting standards and company law.
3. Accounting policies
The accounting policies adopted are consistent with those of the previous
financial statements, except as described below.
Taxes on income in the interim periods are accrued using the tax rate that
would be applicable to expected total annual profits.
New and amended standards and interpretations need to be adopted in the first
interim financial statements issued after their effective date. There are no
new IFRSs or IFRICs that are effective for the first time for this interim
period that would be expected to have a material impact on the financial
statements.
4. Estimates
The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income
and expense. Actual results may differ from these estimates. In preparing
these condensed consolidated interim financial statements, the significant
judgements made by management in applying the Group's accounting policies and
the key sources of estimation uncertainty were the same as those that applied
to the consolidated financial statements for the year ended 31 December 2021,
with the exception of changes in estimates that are required in determining
the provision for income taxes.
Fair value estimation
Financial instruments not measured at fair value
Financial instruments not measured at fair value includes cash and cash
equivalents, trade and other receivables, trade and other payables, and loans
and borrowings. However, due to their short-term nature and ability to be
liquidated at short notice their carrying value approximates to their fair
value.
Financial instruments measured at fair value
The fair value hierarchy of the financial instruments measured at fair value
is provided below.
Level 2 inputs
Unaudited Unaudited
six months six months
ended ended
30 Jun 2022
30 Jun 2021
£'000
£'000
Financial assets
Derivative financial assets (designated hedge instruments) 150 37
150 37
Financial liabilities
Derivative financial liabilities (designated hedge instruments) (177) (250)
(177) (250)
The derivative financial assets and liabilities have been valued using the
market approach and are considered to be Level 2 inputs. There were no changes
to the valuation techniques used in the year. There were no transfers between
levels during the year.
5. Segmental information
Business segments
The only business segment during both periods presented was Aptitude Software
and therefore certain segmental analysis is not required.
Geographical segments
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
Unaudited six months ended Unaudited six months ended Unaudited six months ended Unaudited six months ended
30 Jun 2022 30 Jun 2021 30 Jun 2022 30 Jun 2021
£000 £000 £000 £000
Continuing operations
United Kingdom 19,504 14,526 7,753 3,912
Rest of World 16,619 13,109 28,370 23,723
36,123 27,635 36,123 27,635
The Group derives revenue from the transfer of goods and services in the
following major categories and geographical regions, these being the United
Kingdom ('UK') and Rest of the World ('RoW'):
Unaudited six months ended 30 June 2022
Recurring revenue Implementation revenue
UK RoW Total UK RoW Total Total
£000 £000 £000 £000 £000 £000 £000
Revenue from external clients 5,728 18,695 24,423 2,025 9,675 11,700 36,123
Unaudited six months ended 30 June 2021
Recurring revenue Implementation revenue
UK RoW Total UK RoW Total Total
£000 £000 £000 £000 £000 £000 £000
Revenue from external clients 2,966 15,366 18,332 946 8,357 9,303 27,635
All of the revenue displayed in the above table is recognised over time in
line with the Group's accounting policy detailed on pages 89 to 93 of the
Aptitude Software Group plc 2021 Annual Report and has been generated from
contracts with clients.
Recurring revenue includes revenue from the Group's solution management
services for the first time. Comparatives have been adjusted accordingly.
The following is an analysis of the carrying amount of non-current assets
(excluding deferred tax assets), and additions to property, plant and
equipment and intangible assets (excluding right-of-use asset additions
resulting from property lease agreements) and intangible assets, analysed by
the geographical area in which the assets are located.
Carrying amount of Capital expenditure
non-current assets
Unaudited Unaudited Unaudited Unaudited
six months ended six months six months ended six months
30 Jun 2022 ended 30 Jun 2022 ended
30 Jun 2021 30 Jun 2021
£000 £000 £000 £000
United Kingdom 55,703 16,497 132 37
Rest of World 18,816 16,053 247 157
74,519 32,550 379 194
The Company's business is to invest in its subsidiaries and, therefore, it
operates in a single segment.
6. Non-underlying items
Unaudited Unaudited Audited
six months
six months year
ended 30 Jun 2022
ended 30 Jun 2021 ended 31 Dec 2021
£000 £000 £000
Continuing operations
Amortisation of acquired intangibles 1,883 423 1,418
Acquisition and associated reorganisation costs - - 2,021
1,883 423 3,439
7. Income tax expense
Income tax expense is recognised based on management's estimate of the
weighted average income tax rate expected for the full financial year of 19%
(the estimated tax rate for the six months ended 30 June 2021 was 17%). The
increase against H1 2021 levels is due to the Group's ability to receive
additional tax relief on its research and development expenditure in the
earlier period. During the six-month period to 30 June 2021, the Group
received refunds from the UK tax authority in respect of the benefit it
obtained from additional research and development relief and share option
deductions in prior periods driving the £346,000 net tax receipt for the
period.
8. Earnings per share Unaudited six months ended Unaudited six months ended 30 Jun 2021 Audited
30 Jun 2022 year ended
31 Dec 2021
pence pence pence
Earnings per share
Basic 2.6 6.8 9.0
Diluted 2.6 6.8 8.9
Unaudited six months ended Unaudited six months ended 30 Jun 2021 Audited
30 Jun 2022 year ended
31 Dec 2021
pence pence pence
Adjusted earnings per share
Basic 5.2 7.3 14.2
Diluted 5.2 7.3 14.0
To provide an indication of the underlying operating performance the adjusted
earnings per share calculation above excludes intangible amortisation and
other non-underlying items and has a tax charge based on the effective rate.
Unaudited six months ended Unaudited six months ended 30 Jun 2021 Audited
30 Jun 2022 year ended
31 Dec 2021
pence pence pence
Basic earnings per share 2.6 6.8 9.0
Non-underlying items 2.6 0.5 5.2
Prior years' tax credit - - 0.3
Recognition of tax losses - - (0.3)
Adjusted earnings per share 5.2 7.3 14.2
9. Cash generated from operations
Unaudited Unaudited Audited
six months ended six months ended year
30 Jun 2022 30 Jun 2021 ended
31 Dec 2021
£000 £000 £000
Profit before tax for the period 1,875 4,653 6,229
Adjusted for:
Depreciation 551 648 1,179
Amortisation 1,690 423 1,418
Share-based payment expense 409 303 612
Finance income (3) (5) (6)
Finance costs 247 44 238
Changes in working capital:
(Increase)/decrease in receivables (5,497) (997) (1,561)
(Decrease)/increase in payables (2,188) (852) 3,930
Decrease in provisions (79) (5) (149)
Cash (used in)/generated from operations (2,995) 4,212 11,890
10. Dividends
The interim dividend of 1.8 pence per share (2021: 1.8 pence per share) was
approved by the Board on 27 July 2022. It is payable on 26 August 2022 to
shareholders on the register at 5 August 2022. This interim dividend has not
been included as a liability in this interim financial information. It will
be recognised in shareholders' equity in the year to 31 December 2022. A final
dividend of £2,061,000 was paid in May 2022 and relates to the year ending 31
December 2021 (2021: final dividend £2,038,000).
11. Property, plant and equipment including right-of-use assets
Unaudited Unaudited
six months ended
six months ended
30 Jun 2022
30 Jun 2021
£000 £000
Opening net book amount 1 January 4,261 2,394
Additions 379 194
Exchange movements 161 (38)
Depreciation (551) (648)
Closing net book amount 30 June (unaudited) 4,250 1,902
The Group has not placed any contracts for future capital expenditure which
have not been provided for in the financial statements.
12. Trade and other receivables
Unaudited Unaudited
six months ended
six months ended
30 Jun 2022
30 Jun 2021
£000 £000
Trade receivables - net 14,901 6,292
Other receivables 130 328
Prepayments 1,186 1,498
Accrued income 523 488
Closing net book amount 30 June (unaudited) 16,740 8,606
Contract assets and contract liabilities only comprise accrued and deferred
income respectively. Within the trade receivables balance of £14,901,000 (30
June 2021: £6,292,000), there are balances totalling £3,191,000 (30 June
2021: £484,000) which, at 30 June 2022 were overdue for payment. The increase
of £8,609,000 in trade receivables from prior period levels is due
principally to the timing of receipt of recurring revenue invoices issued,
organic growth in the business alongside £1,653,000 in relation to the MPP
Global business acquired in H2 2021. During July 2022, significant receipts
totalling £5.0 million were collected against the total receivables balance
at 30 June 2022.
13. Trade and other payables
Unaudited Unaudited
six months ended
six months ended
30 Jun 2022
30 Jun 2021
£000 £000
Trade payables 541 713
Other tax and social security payable 1,903 1,720
Other payables - 128
Accruals 5,511 6,116
Deferred income 30,141 24,123
Closing net book amount 30 June (unaudited) 38,096 32,800
14. Financial liabilities - borrowings
Unaudited Unaudited
six months ended
six months ended
30 Jun 2022
30 Jun 2021
£000 £000
Bank Loan 9,897 -
The borrowings are repayable as follows:
Within one year 938 -
In the second year 1,250 -
In the third to fifth years inclusive 7,812 -
10,000 -
Unamortised prepaid facility arrangement fees (103) -
As at 30 June (unaudited) 9,897 -
On 14 October 2021, the Group and Company entered into a loan agreement with
Bank of Ireland Group plc consisting of a £10 million term loan in addition
to a revolving credit facility of £10 million. The loan is secured on the
assets of the Group. Operating covenants are limited to the Group's net debt
leverage and interest cover. The term loan is repayable over five years with
an initial 12-month repayment holiday followed by annual capital repayments of
£1,250,000. At the end of the term, a bullet payment of £5 million is due.
The loan is denominated in Pound Sterling and carries interest at SONIA plus
1.75%. The Group entered into an interest swap on 2 November 2021, effectively
fixing the interest rate at 2.95% over a five-year period
15. Capital lease obligations
Unaudited Unaudited
six months ended
six months ended
30 Jun 2022
30 Jun 2021
£000 £000
Amounts payable under capital lease arrangements:
Within one year 440 606
Within two to five years 1,574 838
After five years 1,529 -
Total 3,543 1,444
Less: future finance charges (535) (95)
Present value of lease obligations 3,008 1,349
Less: Amount due for settlement within 12 months (shown under current (329) (563)
liabilities
As at 30 June (unaudited) 2,679 786
Unaudited Unaudited
six months ended
six months ended
30 Jun 2022
30 Jun 2021
The present value of financial lease liabilities is split as follows: £000 £000
Within one year 329 563
Within two to five years 1,263 786
After five years 1,416 -
3,008 1,349
16. Provisions
Unaudited Unaudited
six months
six months
ended ended
30 Jun 2022
30 Jun 2021
£000 £000
At 1 January 379 441
Credited to income statement (80) -
Exchange movements 1 (5)
As at 30 June (unaudited) 300 436
Unaudited Unaudited
six months
six months
ended ended
30 Jun 2022
30 Jun 2021
£000 £000
Current - 240
Non-current 300 196
300 436
£252,000 of the total provision at 30 June 2022 of £300,000 relates to the
cost of dilapidations in respect of its occupied leasehold premises (30 June
2021: £382,000).
17. Share capital
Unaudited Unaudited
six months ended
six months ended
30 Jun 2022
30 Jun 2021
Ordinary share capital at Number of shares Ordinary Shares Number Ordinary Shares
7 1/3 pence each of shares
000 £000 000 £000
Issued and fully paid:
Opening balance as at 1 January 57,199 4,194 56,429 4,143
Shares issued under share option schemes 138 10 182 13
As at 30 June (unaudited) 57,337 4,204 56,611 4,156
Employee share option scheme options exercised during the period to 30 June
2022 resulted in 138,163 shares being issued (30 June 2021: 182,291). The
total net proceeds from the issuance of shares during the period was £23,000
(30 June 2021: £567,000) with £10,000 (30 June 2021: £13,000) of this being
recognised within share capital, being the nominal value of shares issued. The
remaining amount represents the premium on issue which is detailed in the
table below. The related weighted average share price at the time of exercise
was £3.22 per share (30 June 2021: £6.74).
Share
premium
Unaudited Unaudited
six months ended
six months ended
30 Jun 2022
30 Jun 2021
£000 £000
Opening balance as at 1 January 11,946 7,828
Movement in relation to share options exercised 13 554
As at 30 June (unaudited) 11,959 8,382
18. Related party transactions
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation.
During 2022, the Group entered into transactions with a subsidiary of FDM
Group (Holdings) plc, a company for which Peter Whiting (non-executive
Director of Aptitude Software Group plc up until resignation on 28 April 2022)
was a non-executive Director. FDM Group (Holdings) plc provided consultancy
services to the Group during the period 1 January 2022 to 28 April 2022 at a
cost of £22,000. No such transactions have been entered into for the
six-month period ended 30 June 2021.
There were no other related party transactions during the six-month period
ended 30 June 2022 (30 June 2021: £nil), as defined by International
Accounting Standard No 24 'Related Party Disclosures', except for key
management compensation. The related party transactions for the year ended 31
December 2021 as defined by International Accounting Standard No 24 'Related
Party Disclosures' are disclosed in note 32 of the Aptitude Software Group plc
Annual Report for the year ended 31 December 2021.
19. Statement of directors' responsibilities
The Directors confirm that these condensed interim financial statements have
been prepared in accordance with International Accounting Standard 34,
'Interim Financial Reporting', as adopted by the European Union and that the
interim management report includes a fair review of the information required
by DTR 4.2.7 and DTR 4.2.8, namely:
- an indication of important events that have
occurred during the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year; and
- material related-party transactions in the first
six months and any material changes in the related-party transactions
described in the last annual report.
The Directors of Aptitude Software Group plc are listed in the Aptitude
Software Group plc Annual Report for 31 December 2021. A list of current
directors is maintained on the Aptitude Software Group plc website:
www.aptitudesoftware.com/investor-relations/
(http://www.aptitudesoftware.com/investor-relations/)
Copies of this statement are available on the investor relations page of our
website (www.aptitudesoftware.com/investor-relations/
(http://www.aptitudesoftware.com/investor-relations/) ).
By order of the Board
Philip Wood
27 July 2022
Deputy Chief Executive Officer and Chief Financial Officer
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