REG - Big Technologies PLC - 2023 Preliminary audited results
26/03/2024 07:00
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RNS Number : 2215I Big Technologies PLC 26 March 2024
Big Technologies plc
("the Company" or "the Group")
Preliminary announcement of the Group's audited results for the year ended 31
December 2023
"Continued growth and strong cash generation"
Big Technologies plc (AIM: BIG), the leading, integrated technology platform
for the remote monitoring of individuals, is pleased to announce its
preliminary audited results for the year ended 31 December 2023.
Audited Audited
£m (unless otherwise stated) 2023 2022
Revenue 55.2 50.2
Gross margin (%) 70.7% 72.5%
Statutory operating profit 16.8 20.6
Adjusted operating profit* 28.2 27.1
Adjusted EBITDA* 33.0 30.5
Adjusted EBITDA* margin (%) 59.8% 60.7%
Cash generated from operating activities 31.7 25.7
Net cash 85.9 66.8
Pence Pence
Adjusted diluted earnings per share* 8.6p 8.1p
Adjusted basic earnings per share* 9.2p 8.6p
Statutory diluted earnings per share 5.7p 6.5p
Statutory basic earnings per share 6.1p 6.9p
*Before adjusting items and share-based payments
Financial performance
· Double-digit organic revenue growth of 10% driven by both new
contract wins and an increase in revenues earned from existing customers;
· Gross margin of 70.7%, a decrease of 180 bps versus prior year as
a result of one-off charges for higher inventory provisioning and an
impairment loss recognised against other fixed assets;
· Adjusted EBITDA of £33.0 million with adjusted EBITDA margin of
59.8%;
· Cash generated from operating activities of £31.7 million,
delivered by the strong trading performance during the year. The Group has a
significant net cash balance of £85.9 million at the end of the year
underpinning a very strong balance sheet. Net cash is stated after deducting
£1.9 million of lease liabilities.
Operational and strategic performance
· Established an additional office in Latin America to support a
new customer in the region;
· Mobilised equipment and a team of people at very short notice to
support a new customer in the Asia-Pacific region;
· Significantly expanded business development efforts in the United
States, building a new team of sales executives and support staff to drive
growth in the country;
· Launched Buddi substance detection technologies and finalised
development of our first body-worn alcohol detection technology, the Buddi
AlcoTag.
Current trading and outlook
· The Group has started the new financial year in line with the
Board's expectations;
· The Group remains well-positioned with the financial flexibility to
invest in new technologies and has a clear strategy for business development
and investment in target markets where it is currently under-represented;
· Future prospects remain supported by long-term growth drivers in
criminal justice, where electronic monitoring offers a viable alternative to
incarceration;
· Despite some short-term headwinds to sales and profits expected in
2024 as a result of the ending of a contract in Colombia, the Group expects to
remain highly profitable and cash-generative and there is a solid pipeline of
future opportunities. The Board is confident of a return to growth in 2025 and
beyond.
Commenting on the results, Sara Murray OBE, Chief Executive Officer said:
"In difficult market conditions, 2023 has seen the Group deliver a strong
performance with continued growth in sales, profits and our cash reserves. We
continue to invest in the business and in our market-leading suite of
monitoring products and expect to see growth in the coming years. We are
obviously disappointed with the outcome in Colombia, with a customer that we
have served well for a number of years. We see a pipeline of attractive
business opportunities around the globe and will continue to work diligently
to grow, and decrease concentration in, our revenue stream."
For further information please contact:
Big Technologies +44 (0) 1923 601910
Sara Murray (Chief Executive Officer)
Daren Morris (Chief Financial Officer)
Zeus (Nominated Adviser and Sole Broker) +44 (0) 2038 295000
Dan Bate / Kieran Russell (Investment Banking)
Benjamin Robertson (Equity Capital Markets)
The person responsible for arranging the release of this information is Daren
Morris, Chief Financial Officer and Company Secretary.
CEO's review
Overview
I am pleased to report that we have delivered another strong set of results,
in line with market expectations for 2023. There was continued growth in
revenues, adjusted profits and net cash. This performance shows the strength
and resilience of our cash-generative business model against a backdrop of
persisting uncertainty in global macroeconomic conditions. I would like to
thank our teams across the globe for their contribution to these results and
their continued commitment to our strategy of delivering innovative remote
people monitoring solutions to improve people's quality of life and make
societies safer.
Financial performance
The Group continued to deliver double-digit organic revenue growth in the year
of 10%, to £55.2m (2022: £50.2m). The second half of the year saw revenues
increase to £27.9m for the most recent six-month period (H1 2023: £27.3m),
reflecting the contribution of new contract wins and an increase in revenues
earned from existing customers. The growth in full year revenue was delivered
by growth from customers in the criminal justice sector, in particular those
in the European and Asia-Pacific regions.
The 2023 year saw the Group maintain consistently strong levels of
profitability from the revenue growth demonstrating our scalable operating
model. Gross margins fell by 180 bps to 70.7% (2022: 72.5%) as a result of
one-off charges in cost of sales for higher inventory provisioning for
previous generation components and an impairment loss recognised against other
fixed assets held by Buddi Colombia, linked to the ending of a customer
contract.
Adjusted EBITDA increased by 8% to £33.0m (2022: £30.5m) with Adjusted
EBITDA margin falling slightly by 90bps to 59.8% (2022: 60.7%).
The Group generated £31.7m in cash from operations, with the net cash
position at the end of the year being £85.9m, underpinning a very strong
balance sheet.
Operations and product development
We continued to increase our international footprint and global presence in
the criminal justice sector, with new contract wins and more feet on the
ground in new countries, whilst delivering more for existing customers,
resulting in increased revenues.
We established an additional office in Latin America to support a new
customer, which was won and onboarded during the second half of the year and
is now contributing revenue.
We mobilised equipment and a team of people, at very short notice, to support
a new customer in the Asia-Pacific region with a critical new programme.
We significantly expanded our business development resources in the United
States, building a new team of sales executives and support staff, to enable
engagement with new customers in the country. The US market is the largest
market in the world for electronic monitoring and we have historically been
under-represented locally.
We were disappointed not to be selected by the UK Ministry of Justice for the
national contract to supply electronic monitoring services in England and
Wales. In this instance, the customer chose to remain with their existing
long-term supplier primarily due to up-front cost considerations, despite
their admission of over-charging in a previous contract and fine following
investigation by the Serious Fraud Office. We will continue to work hard to
educate potential customers on the benefits that our leading-edge technology
brings.
We remain committed to ensuring that our products maintain their competitive
advantage in the criminal justice sector and continue to invest in research
and development to support our future product roadmap. This roadmap includes
the development of a range of technologies, which meet the growing needs of
our current and potential customers. Our recent focus has been in the area
of substance detection technologies, as well as improving and extending our
range of location solutions. This has enabled us to provide an integrated
monitoring offering for our customers and future customers, which meets the
majority of their current needs and requirements. We finalised the
development of our first real-time alcohol detection technology, the Buddi
AlcoTag, which has now entered production and is being offered to priority
customers.
Strategic priorities
Big Technologies remains focused on its robust and stable business model, with
the Board and senior management team prioritising three key strategic
imperatives for the year ahead. These priorities will enable us to deliver
long-term value for all our stakeholders.
1) Increase US market presence
We have historically been under-represented in the United States, which is the
largest market in the world for electronic monitoring and substance detection
technologies. We have significantly expanded our business development efforts
in the country, with additional sales executives and support staff in place
and a clear strategy to educate customers in the benefits of newer
technologies.
2) Launch Buddi substance detection technologies
We have finalised the development of our first body-worn alcohol detection
technology, the Buddi AlcoTag, and its supporting software. This solution is
now being offered to priority customers. It combines our proven Smart Tag®
location and communication technologies with real-time alcohol detection,
delivering the world's first combined tag. The subject of a number of
patents, it has several advanced features, improving upon industry standard
devices, which only provide location or alcohol detection. It is no longer
necessary for any individual to wear a tag on each leg, when subject to both
alcohol abstinence and location monitoring court orders.
3) Pursue acquisitions and partnerships
We are well positioned, with the financial resources in place, to invest in
the right value-enhancing acquisitive growth opportunities. We will continue
to actively seek partners in the Americas region, who can help us access these
promising markets. We believe that enhancing our local presence, and routes to
market, will enable us to scale the business more quickly and provide further
efficiency savings to our customers.
Summary and outlook
A contract in Colombia, which has been subject to short-term renewals for a
number of years, is expected to end during the first half of 2024. Although we
are disappointed with this outcome, we continue to see a strong pipeline of
opportunities across our many geographies, which will help to replace this
revenue stream in due course. The electronic monitoring market remains
supported by favourable tailwinds and a continued global shift towards
community-based sentencing.
The Group is well-positioned, with the financial flexibility to invest in new
technologies, and has a clear strategy for business development and investment
in target markets, where it is currently under-represented. Despite some
short-term headwinds to sales and profits in 2024, as a result of the ending
of the contract in Colombia, the Group expects to remain highly profitable and
cash-generative and we are excited about the pipeline of future opportunities.
The Board is confident of a return to growth in 2025 and beyond.
Financial review
Revenue
Revenue increased by 10% to £55.2m (2022: £50.2m) on an organic basis,
driven by both new contract wins and an increase in revenues earned from
existing customers. The second half of the year saw revenues increase to
£27.9m for the most recent six-month period (H1 2023: £27.3m) with the
majority of revenues continuing to be derived from customers in the criminal
justice sector, which accounts for more than 98% of reported revenue (2022:
98%).
Revenue growth was driven by the European and Asia-Pacific regions, which grew
at 50% and 11% respectively. Growth in Europe was primarily delivered by a new
government contract in the UK criminal justice sector awarded in 2022 which
increased in volume during the year. The Group's eight-year national
monitoring contract with the New Zealand Department of Corrections has now
achieved its full run-rate and was a key growth driver in Asia-Pacific.
Revenue in the Americas region declined by 4%.
The Group has been impacted by adverse foreign currency movements in the year
with sterling strengthening against the US dollar, Australian dollar and New
Zealand dollar, the Group's main sales currencies. On a constant currency
basis, revenue would have been £1.6m higher than reported if exchange rates
had remained the same as the 2022 average. On a constant currency basis,
revenue increased by 13% versus last year.
Monthly Recurring Revenue (MRR), which is the exit run rate of monthly
recurring revenue in the last month of the financial year, was £4.1m (2022:
£4.6m), a decrease of 11% due to the anticipated ending of a contract in
South America during the first half of 2024 which has been excluded from the
MRR figure. The MRR figure gives the Group visibility over its future revenues
derived from its long-term contracts.
Profitability
Gross profit increased by 7% to £39.0m (2022: £36.4m), with gross margin
decreasing by 180bps to 70.7% (2022: 72.5%) as a result of one-off charges in
cost of sales for higher inventory provisioning for previous generation
components (£0.7m) and an impairment loss recognised against other fixed
assets held by Buddi Colombia linked to the ending of a customer contract in
the country (£0.4m). Gross margin excluding these one-off charges for higher
inventory provisioning and impairment of other fixed assets was 72.7%, up 20
bps on 2022.
The Group continues to report high levels of gross profitability due to its
scalable operating model, which allows for the deployment of additional
electronic monitoring devices to customers with increased efficiency. Gross
profits earned on incremental revenues were able to offset increases in
labour, freight and manufacturing costs caused by the current inflationary
environment.
Adjusted operating profit of £28.2m increased by 4% against 2022, with a
decrease in adjusted operating margin to 51.2% (2022: 54.1%). The largest
driver for the decrease was a less favourable foreign currency position
compared with last year when the Group benefitted from a one-off gain on the
revaluation of US Dollar denominated cash deposits. There were also increases
in labour costs during the year. Statutory operating profit (which includes
adjusting operating items and share-based payments) decreased by 18% to
£16.8m (2022: £20.6m).
Adjusted administrative expenses (defined as administrative expenses before
share-based payments and amortisation of acquired intangible assets) increased
by 17% from £9.3m in 2022 to £10.8m in 2023. The largest driver for the
increase was a less favourable foreign currency position compared with last
year when the Group benefitted from a one-off gain on the revaluation of US
Dollar denominated cash deposits. The benefit from foreign currency movements
in 2023 was £0.4m (2022: £1.0m). There were also increases in labour costs
during the year. Statutory administrative expenses (which includes adjusting
operating items and share-based payments) increased by 41% to £22.2m (2022:
£15.8m).
Finance income was £2.7m (2022: £0.4m) and reflects the interest earned by
the Group on its significant cash balances held in interest bearing deposit
accounts and in money-market instruments. Finance expenses increased slightly
during the year due to interest recognised on newly capitalised lease
liabilities.
EBITDA
Adjusted EBITDA, which provides a more consistent comparison of trading,
year-on-year, increased by 8% to £33.0m (2022: £30.5m), with adjusted EBITDA
margins falling slightly by 90 bps to 59.8% (2022: 60.7%). Statutory EBITDA
(which includes share-based payments) decreased by 10% to £22.0m (2022:
£24.4m).
Taxation
The Group's total tax charge for the year (including deferred taxes) was
£1.8m (2022: £1.0m), an effective tax rate of 9.2% (2022: 4.9%). The Group's
tax and the effective tax rate is affected by a number of factors including
the recognition of deferred tax assets in relation to share-based payments and
the tax deductibility of exercised employee share awards. The Group also
benefits from enhanced capital allowances, allowances for R&D expenditure
and the UK Patent Box. The effective tax rate is lower than the current UK
corporation tax rate, but is expected to increase in future years. Deferred
taxes debited directly in equity totalled £0.4m (2022: £1.6m credit).
Earnings per share
Adjusted diluted earnings per share (EPS), which excludes adjusting items and
their associated tax effect as well as the dilutive impact of shares issuable
in the future, was 8.6p (2022: 8.1p), reflecting the increase in underlying
profitability of the Group. Adjusted basic EPS, which excludes adjusting items
and their associated tax effect was 9.2p (2022: 8.6p). Diluted EPS, which
includes the dilutive impact of shares issuable in the future, was 5.7p (2022:
6.5p). Basic EPS was 6.1p (2022: 6.9p). The dilutive impact of shares issuable
in the future relates to the expected settlement of the Group's employee share
scheme obligations. Shares held by the Group's Employee Benefit Trust are
excluded on a weighted basis from the calculation of EPS.
Cash generation
The Group increased its net cash balances (defined as cash and cash
equivalents less lease liabilities) to £85.9m (2022: £66.8m) at 31 December
2023.
The Group delivered strong cash flow from operations (before the payment of
taxes) of £31.7m (2022: £25.7m) including a £1.6m (2022: £5.1m) net
working capital outflow. The cash conversion rate (defined as percentage of
adjusted EBITDA converted to cash from operations) increased from 84.4% to
96.2% of adjusted EBITDA. Taxation payments for the year totalled £3.7m
(2022: £1.8m).
Net cash utilised in investing activities of £3.2m (2022: £5.1m) reflects
the continued expenditure on electronic monitoring devices, which are
manufactured in-house and leased to the Group's customers. The Group continued
to invest in research and development activities and also benefitted from
increased interest income, reflecting interest earned on its cash balances at
improving interest rates.
Net cash used / (generated) from financing activities of £4.5m (2022: £0.3m)
reflects the purchase of shares by the Employee Benefit Trust during the year
and the repayment of lease liabilities, offset by proceeds received from the
exercise of employee share options.
Research and development
Research and development (R&D) activities remain a priority for the Group
to ensure its products retain their competitive advantage. Development costs
of £1.1m (2022: £1.1m) have been capitalised. Total R&D costs (including
those charged as an expense) expressed as a percentage of adjusted
administrative expenses stood at 31% (2022: 31%).
Foreign currency exposure
The Group faces currency exposure on its foreign currency transactions and
translation exposure in relation to its overseas subsidiaries and foreign
currency sales. The Group maintains a natural hedge whenever possible to
transactional exposure by matching the cash inflows and outflows in the
respective currencies.
Foreign exchange translation has provided a slight headwind for revenue and
profit during the year (2022: tailwind), with sterling strengthening against
the Group's main sales currencies compared with last year.
The Group's most material exposures are to US dollars, Australian dollars and
New Zealand dollars. The sensitivity to a 10% weakening/strengthening of
sterling against these currencies in aggregate (excluding amounts held on the
balance sheet) equates to an annualised profit increase (or decrease) of
approximately £2.4m. The Group's forward currency exposure is currently
unhedged.
Alternative performance measures
In the analysis of the Group's financial performance and position, operating
results and cash flows, alternative performance measures are presented to
provide readers with additional information. The principal measures presented
are adjusted measures of earnings including adjusted operating profit,
adjusted operating margin, adjusted profit before tax, adjusted EBITDA and
adjusted earnings per share.
The Annual Report includes both statutory and adjusted non-GAAP financial
measures, the latter of which the Directors believe better reflect the
underlying performance of the business and provide a more meaningful
comparison of how the business is managed and measured on a day-to-day basis.
The Group's alternative performance measures and KPIs are aligned to the
Group's strategy and together are used to measure the performance of the
business and form the basis of the performance measures for remuneration.
Adjusted results exclude certain items because, if included, these items could
distort the understanding of the performance for the year and the
comparability between periods.
We provide comparatives alongside all current year figures. The term
'adjusted' is not defined under IFRS and may not be comparable with similarly
titled measures used by other companies. All profit and earnings per share
figures in this Annual Report relate to underlying business performance (as
defined above) unless otherwise stated.
A reconciliation of adjusted measures to statutory measures is provided below:
2023 2022
Statutory Adjustments Adjusted Statutory Adjustments Adjusted
Operating profit (£'000)
16,813 11,436 28,249 20,590 6,524 27,114
Operating margin (%) 30.4 20.8 51.2 41.0 13.1 54.1
Administrative expenses (£'000) 22,246 (11,436) 10,810
15,800 (6,524) 9,276
Profit before tax (£'000) 19,374 11,436 30,810
20,995 6,524 27,519
Taxation (£'000) 1,792 2,392 4,184 1,033 1,641 2,674
Profit after tax (£'000) 17,582 9,044 26,626 19,962 4,883 24,845
EBITDA (£'000) 22,037 10,968 33,005 24,409 6,056 30,465
EBITDA margin (%) 39.9 19.9 59.8 48.6 12.1 60.7
Cash generated from operating activities (£'000) 31,748 - 31,748
25,725 - 25,725
Basic earnings per share (pence) 6.1 3.1 9.2
6.9 1.7 8.6
Diluted earnings per share (pence) 5.7 2.9 8.6
6.5 1.6 8.1
The adjustments comprise:
2023 2022
£'000
£'000
Amortisation of acquired intangibles 468 468
Total adjusting operating items 468 468
Share-based payments expense 10,968 6,056
Total adjusting items and share-based payments before tax 11,436 6,524
Tax effect of adjusting items and share-based payments (2,392) (1,641)
Total adjusting items and share-based payments after tax 9,044 4,883
Amortisation of acquired intangibles
These costs are excluded from the adjusted results of the Group since the
costs are non-cash charges arising from investment activities. As such, they
are not considered reflective of the core trading performance of the Group.
Share-based payments expense
These costs are excluded from the adjusted results of the Group since the
costs are non-cash charges arising from recognition of the fair value of share
options and other share-based incentives granted to employees of the Group. As
such, they are not considered reflective of the core trading performance of
the Group.
Tax effect of adjusting items and share-based payments
The tax impact of these adjustments was as follows: amortisation of acquired
intangibles of £0.1m (2022: £0.1m) and share-based payments expense of
£2.3m (2022: £1.6m).
Balance sheet highlights
The Group has continued to strengthen its balance sheet during the year with
net assets increasing from £102.5m to £125.7m at the 31 December 2023.
Current assets increased by £19.7m to £103.3m, mainly due to a £20.3m
increase in cash and cash equivalents driven by the strong underlying trading
performance in the year and more favourable working capital movement. Trade
and other receivables decreased by £0.9m, driven by a reduction in trade
receivables due to quicker cash collection, with debtor days (calculated using
annualised December revenue) now at 44 days (2022: 50 days). Inventories
increased by £0.4m with the Group holding adequate levels of inventory to
support customers during 2024. Some previous generation components in
inventory were provided for during the year.
Non-current assets increased by £2.0m to £31.7m, mainly due to increases in
property, plant and equipment and deferred tax assets, offset by a reduction
in other receivables. Property, plant and equipment increased by £0.8m, due
to continued expenditure on electronic monitoring devices to support revenue
growth in the year, offset by depreciation and a one-off impairment charge.
Deferred tax assets increased by £1.6m, due to the continued recognition of
balances related to the share-based payment arrangements through the income
statement with a partial reversal in equity. Other receivables decreased by
£1.1m.
Current liabilities decreased by £2.1m to £7.1m, mainly due to a decrease in
trade payables and contract liabilities. Non-current liabilities increased by
£0.6m to £2.1m, mainly due to an increase in lease liabilities as a result
of new leases entered into during the year.
Litigation
During the year, legal proceedings have commenced against the Group, with an
amended claim being filed with the High Court of Justice in England and Wales
in November 2023. As set out within the admission document in July 2021 (the
"Admission Document"), a letter of potential claim had been received from a
small number of former shareholders of Buddi Limited, one of the subsidiaries
of the Group, in respect of the acquisition of Buddi Limited, dating back to
May 2018. The Group has taken advice from its lawyers and from King's Counsel
and remains of the view that the claim lacks legal and factual merit and
intends to defend its position robustly.
Financial outlook
The Group is well-positioned with the financial flexibility to invest in new
technologies and has a clear strategy for business development and investment
in target markets, where it is currently under-represented. Despite some
short-term headwinds to sales and profits in 2024 as a result of the ending of
the contract in Colombia, the Group expects to remain highly profitable and
cash-generative and we are excited about the pipeline of future opportunities.
The Board is confident of a return to growth in 2025 and beyond.
Directors' Responsibility Statement on the Annual Report and Accounts
The responsibility statement below has been prepared in connection with the
Group's full annual report and accounts for the year ended 31 December 2023.
Certain parts thereof are not included within this preliminary announcement.
The Directors are responsible for preparing the Strategic Report, the
Directors' Report, any other surrounding information and the Group and Parent
Company financial statements in accordance with applicable law and
regulations. Company law requires the Directors to prepare Group and Parent
Company financial statements for each financial year. Under that law, they
have elected to prepare the Group financial statements in accordance with UK
adopted International Accounting Standards and applicable law and have elected
to prepare the Parent Company financial statements in accordance with UK
Accounting Standards and applicable law (UK Generally Accepted Accounting
Practice). Under Company law, the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view of
the state of affairs of the Group and Parent Company and of their profit or
loss for that year. In preparing each of the Group and Parent Company
financial statements, the Directors are required to:
· select suitable accounting policies and apply them consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the financial
statements; and
· prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and the Parent Company
will continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Parent Company's transactions and disclose
with reasonable accuracy at any time the financial position of the Parent
Company and enable them to ensure that the financial statements comply with
the Companies Act 2006. They are also responsible for safeguarding the assets
of the Parent Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities. They are further responsible
for ensuring that the Strategic Report and the Report of the Directors and
other information included in the Annual Report and Accounts is prepared in
accordance with applicable law in the United Kingdom. The maintenance and
integrity of the Big Technologies plc website is the responsibility of the
Directors; the work carried out by the auditor does not involve the
consideration of these matters and, accordingly, the auditor accepts no
responsibility for any changes that may have occurred in the accounts since
they were initially presented on the website. Legislation in the United
Kingdom governing the preparation and dissemination of the accounts and the
other information included in Annual Reports may differ from legislation in
other jurisdictions.
This responsibility statement was approved by the Board of Directors on 25
March 2024 and is signed on its behalf by Sara Murray and Daren Morris.
Consolidated statement of comprehensive income
For the year ended 31 December 2023
Note 2023 2022
£'000 £'000
Revenue 2 55,223 50,164
Cost of sales (16,176) (13,781)
Gross profit 39,047 36,383
Administrative expenses (22,246) (15,800)
Other operating income 12 7
Operating profit 16,813 20,590
Analysed as:
Adjusted EBITDA 33,005 30,465
Amortisation of acquired intangibles (468) (468)
Amortisation of development costs (921) (806)
Depreciation (3,835) (2,545)
Share-based payments expense 8 (10,968) (6,056)
Operating profit 16,813 20,590
Finance income 2,656 449
Finance expenses (95) (42)
Share of loss of joint venture - (2)
Profit before taxation 19,374 20,995
Taxation 4 (1,792) (1,033)
Profit for the year 17,582 19,962
Other comprehensive (expense) / income:
Exchange differences on translation of foreign operations (663) 139
Total comprehensive income for the year 16,919 20,101
Basic earnings per share (pence) 6.1p 6.9p
Diluted earnings per share (pence) 5.7p 6.5p
Consolidated statement of financial position
As at 31 December 2023
Note 2023 2022
£'000 £'000
Assets
Goodwill 13,359 13,359
Acquired and other intangible assets 5,668 6,000
Property, plant and equipment 4,993 4,178
Right-of-use assets 1,782 705
Deferred tax assets 5,310 3,725
Other receivables 583 1,684
Non-current assets 31,695 29,651
Inventories 7,206 6,823
Trade and other receivables 8,328 9,222
Cash and cash equivalents 6 87,729 67,474
Current assets 103,263 83,519
Total assets 134,958 113,170
Liabilities
Lease liabilities 274 247
Trade and other payables 6,146 8,153
Provisions 664 800
Current liabilities 7,084 9,200
Lease liabilities 1,579 460
Deferred tax liabilities 302 412
Trade and other payables 259 625
Non-current liabilities 2,140 1,497
Total liabilities 9,224 10,697
Net assets 125,734 102,473
Equity
Share capital 7 2,907 2,904
Share premium 7 39,095 39,031
Employee Benefit Trust reserve (4,276) -
Other reserves (249) 414
Retained earnings 88,257 60,124
Total equity 125,734 102,473
Consolidated statement of changes in equity
For the year ended 31 December 2023
Share capital Share premium EBT reserve Other reserves Retained earnings Total
£'000 £'000 £'000 £'000 £'000 equity
£'000
Balance at 1 January 2022 2,885 38,535 - 275 32,536 74,231
Profit for the year - - - - 19,962 19,962
Other comprehensive income for the year - - - 139 - 139
Total comprehensive income for the year - - - 139 19,962 20,101
Share-based payments - - - - 6,026 6,026
Deferred tax on share-based payments - - - - 1,600 1,600
Issue of shares, net of share issue costs 19 496 - - - 515
Balance at 31 December 2022 2,904 39,031 - 414 60,124 102,473
Balance at 1 January 2023 2,904 39,031 - 414 60,124 102,473
Profit for the year - - - - 17,582 17,582
Other comprehensive income for the year - - - (663) - (663)
Total comprehensive income for the year - - - (663) 17,582 16,919
Share-based payments - - - - 10,951 10,951
Deferred tax on share-based payments - - - - (400) (400)
Issue of shares, net of share issue costs 3 64 - - - 67
Purchase of shares by the EBT - - (4,276) - - (4,276)
Balance at 31 December 2023 2,907 39,095 (4,276) (249) 88,257 125,734
Consolidated statement of cash flows
For the year ended 31 December 2023
Note 2023 2022
£'000 £'000
Cash flows from operating activities
Profit before tax 19,374 20,995
Adjustments for:
Depreciation of property, plant and equipment 3,595 2,328
Depreciation of right-of-use assets 240 217
Amortisation of intangible assets 1,389 1,274
Impairment charges on property, plant and equipment 392 -
Share of loss of joint venture - 2
Investment write-down - 426
Share-based payments expense 8 10,951 6,026
Finance income (2,656) (449)
Finance expenses 95 42
Changes in:
Inventories (383) (3,744)
Trade and other receivables 2,405 (2,986)
Trade and other payables (3,518) 794
Provisions (136) 800
Cash generated from operating activities 31,748 25,725
Taxes paid (3,739) (1,801)
Net cash generated from operating activities 28,009 23,924
Cash flows from investing activities
Purchase of property, plant and equipment (508) (142)
Own work capitalised (4,303) (4,098)
Capitalised development costs (1,057) (1,132)
Interest received 2,569 295
Net cash used in investing activities (3,299) (5,077)
Cash flows from financing activities
Proceeds from issues of shares 67 515
Purchase of own shares (4,276) -
Repayment of lease liabilities (240) (238)
Interest paid (35) (25)
Net cash (used) / generated from financing activities (4,484) 252
Net increase in cash and cash equivalents 20,226 19,099
Cash and cash equivalents at the beginning of the year 67,474 48,317
Effects of exchange rate changes on cash and cash equivalents 29 58
Cash and cash equivalents at the end of the year 6 87,729 67,474
Notes to the consolidated financial statements
For the year ended 31 December 2023
1. General information and basis of preparation
Big Technologies plc is a public limited company incorporated in the United
Kingdom, listed on the Alternative Investment Market ('AIM') of the London
Stock Exchange. The Company is domiciled in the United Kingdom and its
registered office is Talbot House, 17 Church Street, Rickmansworth, WD3 1DE.
The consolidated financial statements comprise the Company and its
subsidiaries (together referred to as the 'Group').
The principal activity of the Group is the development and delivery of remote
monitoring technologies and services to a range of domestic and international
customers.
The preliminary announcement for the year ended 31 December 2023 has been
prepared in accordance with the accounting policies as disclosed in the
Group's annual financial statements for the year ended 31 December 2022.
Information in this preliminary announcement does not constitute statutory
accounts of the Group within the meaning of section 434 of the Companies Act
2006.
The annual financial information presented in this preliminary announcement is
based on, and is consistent with, that in the Group's audited financial
statements for the year ended 31 December 2023, and those financial statements
will be delivered to the Registrar of Companies following the Company's Annual
General Meeting. The financial statements of the Group are prepared in
accordance with UK-adopted international accounting standards and applicable
law. The independent auditors' report on those financial statements is
unqualified and does not contain any statement under section 498 (2) or 498
(3) of the Companies Act 2006.
Going concern
The Group's financial statements have been prepared on the going concern
basis, which contemplates the continuity of normal business activity and the
realisation of assets and the settlement of liabilities in the normal course
of business.
The Directors have reviewed the forecasts for the Group for the period to 31
December 2026 and have a reasonable expectation that there are no material
uncertainties that cast significant doubt about the Group's ability to
continue in operational existence for at least 12 months from the date of
signing these financial statements. Accordingly, they continue to adopt the
going concern basis in preparing the consolidated financial statements.
This preliminary announcement was approved by the Board of Directors on 25
March 2024.
2. Segment reporting
The Group derives revenue from the delivery of remote monitoring technologies
and services to a range of domestic and international customers.
The income streams are all derived from the utilisation of these products and
services which, in all aspects except details of revenue, are reviewed and
managed together within the Group and as such are considered to be the only
segment. The Group operates across three regions: Europe, Asia-Pacific and the
Americas, and the Board of Directors monitors revenue on this basis.
Revenue for each of the geographical areas is as follows:
2023 2022
£'000 £'000
Europe 7,555 5,048
Asia-Pacific 32,289 29,165
Americas 15,379 15,951
55,223 50,164
Assets and liabilities by segment are not regularly reviewed by the Board of
Directors on a monthly basis and are not used as key decision-making tools and
are therefore not disclosed here.
Revenues are disaggregated as follows:
2023 2022
£'000 £'000
Sales of goods 97 97
Delivery of services 55,126 50,067
55,223 50,164
Information about major customers
Three (2022: three) of the Group's customers individually account for more
than 10% of total Group revenue. These customers operate in the criminal
justice sector and account for 55% (2022: 51%) of total Group revenue.
Future performance obligations
The amount of a customer contract's transaction price that is allocated to the
remaining performance obligations to provide electronic monitoring software,
hardware and related support services which has not yet been recognised.
Including amounts recognised as contract liabilities and amounts that are
contracted but not yet delivered. The transaction price allocated to these
performance obligations that are unsatisfied or partially unsatisfied as of 31
December 2023 is £12,166,000 (2022: £14,791,000).
Management expects that £7,791,000 in 2023 (2022: £6,125,000) of the amount
allocated to the future performance obligations as of 31 December 2023 will be
recognised during 2024. £4,375,000 (2022: £8,666,000) is expected to be
recognised as revenue within two to five years. The Group applies the
practical expedient in paragraph 121 of IFRS 15 and does not disclose
information about remaining performance obligations that have original
expected durations of one year or less.
3. Alternative performance measures
These items are included in normal operating costs of the business, but are
significant cash and non-cash expenses that are separately disclosed because
of their size, nature or incidence. It is the Group's view that excluding them
from operating profit gives a better representation of the underlying
performance of the business in the year.
2023 2022
£'000 £'000
Amortisation of acquired intangibles 468 468
Total adjusting operating items 468 468
Share-based payments expense 10,968 6,056
Total adjusting items and share-based payments before tax
11,436 6,524
Tax effect of adjusting items and share-based payments
(2,392) (1,641)
Total adjusting items and share-based payments after tax
9,044 4,883
Amortisation of acquired intangibles
These costs are excluded from the adjusted results of the Group since the
costs are non-cash charges arising from investment activities. As such, they
are not considered reflective of the core trading performance of the Group.
Share-based payments expense
These costs are excluded from the adjusted results of the Group since the
costs are non-cash charges arising from recognition of the fair value of share
options and other share-based incentives granted to employees of the Group. As
such, they are not considered reflective of the core trading performance of
the Group.
Tax effect of adjusting items and share-based payments
The tax impact of these adjustments was as follows: amortisation of acquired
intangibles of £110,000 (2022: £89,000) and share-based payments expense of
£2,282,000 (2022: £1,552,000).
4. Taxation
2023 2022
£'000 £'000
Current tax
For the financial year 3,673 2,218
Adjustments in respect of prior years 217 (13)
3,890 2,205
Deferred tax
Origination and reversal of temporary timing differences 184 389
Adjustments in respect of prior years - (9)
Related to share-based payments (2,282) (1,552)
(2,098) (1,172)
Total taxation for the year 1,792 1,033
UK corporation tax is calculated at 23.5% (2022: 19.0%) of the assessable
profit for the year. Taxation for other jurisdictions is calculated at the
rates prevailing in the respective jurisdictions.
5. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
2023 2022
£'000 £'000
Profit for the purpose of basic and diluted earnings per share
17,582 19,962
Adjustments for:
Adjusting items 468 468
Share-based payments expense 10,968 6,056
Tax effect of adjusting items and share-based payments (2,392) (1,641)
Adjusted earnings 26,626 24,845
2023 2022
No. shares No. shares
Weighted average number of ordinary shares 290,531,356 289,950,953
Less shares held by the Employee Benefit Trust (weighted average) (416,300) -
Weighted average number of ordinary shares for the purpose of basic earnings 290,115,056 289,950,953
per share
Effect of dilutive potential Ordinary shares/share options 19,840,468 16,800,389
Weighted average number of Ordinary shares for the purpose of diluted earnings 309,955,524 306,751,342
per share
2023 2022
Basic earnings per share Pence Pence
Basic earnings per share 6.1 6.9
Adjustments for:
Adjusting items 0.2 0.2
Share-based payments expense 3.8 2.1
Tax effect of adjusting items and share-based payments (0.9) (0.6)
Adjusted basic earnings per share 9.2 8.6
2023 2022
Diluted earnings per share Pence Pence
Diluted earnings per share 5.7 6.5
Adjustments for:
Adjusting items 0.2 0.2
Share-based payments expense 3.5 2.0
Tax effect of adjusting items and share-based payments (0.8) (0.6)
Adjusted diluted earnings per share 8.6 8.1
The adjusted earnings per share have been calculated on the basis of profit
before adjusting items and share-based payments, net of tax. The tax effect of
adjusting items and share-based payments is equal to the deferred tax charge
(or credit) recognised in the consolidated income statement for these items.
The Directors consider that this calculation gives a better understanding of
the Group's earnings per share in the current and prior year.
6. Cash and cash equivalents
The carrying amounts of the cash and cash equivalents are denominated in the
following currencies:
2023 2022
£'000 £'000
Pounds Sterling 53,831 58,386
US Dollar 6,105 3,389
Australian Dollar 13,760 2,480
New Zealand Dollar 11,420 2,674
Colombian Peso 1,627 318
Euro 438 20
Canadian Dollar 342 126
Other 206 81
87,729 67,474
£203,000 (2022: £nil) of the Group's cash and cash equivalents are held by
the trustees of the Big Technologies PLC Employee Benefit Trust in Pounds
Sterling.
Net cash
2023 2022
£'000 £'000
Cash and cash equivalents 87,729 67,474
Lease liabilities (1,853) (707)
85,876 66,767
7. Share capital
The allotted, called up and fully paid share capital is made up of 290,650,082
ordinary shares of £0.01 each.
Note Number Share Share Total
of shares capital premium
£'000 £'000 £'000
At 1 January 2022 288,505,082 2,885 38,535 41,420
Issue of shares (i) 1,895,000 19 496 515
At 31 December 2022 290,400,082 2,904 39,031 41,935
Issue of shares (ii) 250,000 3 64 67
At 31 December 2023 290,650,082 2,907 39,095 42,002
(i) During 2022, 1,795,000 EMI share options and 100,000 non-EMI share options
were exercised into shares with a nominal value of £0.01 each for £0.27 and
£0.34 respectively.
(ii) During 2023, 250,000 EMI share options were exercised into shares with a
nominal value of £0.01 each for £0.27.
8. Share-based payments
The Group has a number of equity-settled share-based payment arrangements in
operation, the details of which are disclosed in the 2023 Annual Report. The
schemes were established to reward and incentivise the senior management team
and employees to deliver share price growth.
The charge made in respect of share-based payments is as follows:
2023 2022
£'000 £'000
Non-EMI Plan (Chair) 51 112
LTIP 267 145
Growth Share Plan 10,633 5,769
Share-based payments expense (IFRS 2 charge) 10,951 6,026
Employers' tax charge in relation to share awards 17
30
Total charge in respect of share-based payments
10,968 6,056
9. Principal risks and uncertainties
The principal risks and uncertainties impacting the Group are described in the
2023 Annual Report. They include: reliance on key customers, failure to manage
growth, change in government policy, failure to develop new products,
competitor actions, reliance on third-party technology and communication
systems, reputational risk, dependence on partners, loss of key personnel,
supply chain, product liability, foreign exchange risk, credit risk, business
taxation, bid pricing, cyber security/business interruption, intellectual
property/patents and operating in global markets.
10. Related party transactions
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
section of the notes.
The Group's other related party transactions were the remuneration of key
management personnel. Details of Directors' remuneration for the year are
provided in the Remuneration Committee Report in the 2023 Annual Report.
In addition to these transactions, £100,000 (2022: £100,000) was paid to TFM
Developments Ltd, a company of which Sara Murray is a director. The
transaction relates to a licence fee paid in respect of a patent owned by the
company used by the Group as part of its continuing research and development
activities.
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