REG - Big Technologies PLC - Half-year Report
25/09/2024 07:00
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RNS Number : 5066F Big Technologies PLC 25 September 2024
This announcement contains inside information for the purposes of Article 7
of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic
law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.
Big Technologies PLC
("the Company" or "the Group")
Unaudited interim results for the six months ended 30 June 2024
Big Technologies PLC (AIM: BIG), the leading, integrated technology platform
for the remote monitoring of individuals, is pleased to announce its interim
results for the six-month period to 30 June 2024 (the "period").
£m (unless otherwise stated) H1 2024 H1 2023 FY 2023
Revenue 26.5 27.3 55.2
Gross margin (%) 70.0% 73.3% 70.7%
Statutory operating profit 2.4 8.2 16.8
Adjusted operating profit(*) 11.5 13.9 28.2
Adjusted EBITDA(*) 14.3 16.1 33.0
Adjusted EBITDA(*) margin (%) 54.0% 59.1% 59.8%
Cash generated from operating activities 11.2 12.4 31.7
Net cash 92.9 75.4 85.9
Pence Pence Pence
Adjusted diluted earnings per share(*) 3.9p 4.3p 8.6p
Adjusted basic earnings per share(*) 4.1p 4.6p 9.2p
Statutory diluted earnings per share 1.3p 2.9p 5.7p
Statutory basic earnings per share 1.4p 3.1p 6.1p
(*)Before adjusting items and share-based payments.
A reconciliation to statutory measures is presented in the notes to the
unaudited interim results.
Financial highlights
· A small revenue reduction of 3% in H1 2024 as a result of lower
revenues in the Americas region due to the ending of a criminal justice
contract in Colombia which had been subject to short-term renewals for a
number of years. At constant currency, revenue would have reduced by only 1%
versus H1 2023;
· High gross margin of 70.0% in H1 2024, but down by 330bps due to the
revenue decline, increased depreciation as we roll-out the latest 4G
technology and increased operational costs;
· Adjusted EBITDA of £14.3m in H1 2024 with adjusted EBITDA margin
of 54.0%;
· Cash generated from operating activities of £11.2m in H1 2024,
delivered by the robust trading performance in the period;
· Significant net cash balance of £92.9m (£94.8 million pre-lease
liabilities) at 30 June 2024, underpinning a very strong balance sheet.
Operational highlights
· Early successes as a result of the Group's expanded US business
development efforts starting to gain traction;
· Release of the Buddi AlcoTag, the Group's first body-worn alcohol
detection technology combining proven Smart Tag technology with transdermal
alcohol sensing.
· Good progress in migrating our existing installed base of
electronic monitoring equipment to the latest 4G technology.
Summary and outlook
· The Group has delivered a robust financial and operational
performance in the first half of the year;
· 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;
· Assuming no further adverse impacts caused by foreign currency
fluctuations in the second half and delivering full-year revenues of circa
£50 million, the Board anticipates results at the lower end of current market
expectations for 2024((1));
· The electronic monitoring market remains supported by favourable
tailwinds and with the Group's clear strategy and market-leading products, a
return to growth is still expected in 2025 and beyond.
(1) Latest company compiled view of market expectations show adjusted
EBITDA of £27.0 million to £28.3 million (stated before share-based payments
and one-off legal expenses).
Commenting on the results, Sara Murray OBE, Chief Executive Officer said:
"We have continued to deliver high levels of profitability and strong cash
generation despite the ending of a contract with one of our larger customers
based in Colombia, which had been subject to short-term renewals for a number
of years. Our expanded business development efforts in the US are starting to
gain traction and will help replace the revenue from Colombia over time. We
have been encouraged with the news that one of our largest US customers has
entered into a new contract through until November 2030. We have also seen the
return of a former customer in Latin America. We remain well-positioned, with
the financial flexibility to invest in target markets where we are currently
under-represented and continue to pursue value-enhancing acquisitions and
partnerships. The demand for our products remains strong and we see a pipeline
of attractive organic opportunities across the world which we are working hard
towards securing."
For further information please contact:
Big Technologies +44 (0) 19 2360 1910
Sara Murray (Chief Executive Officer)
Daren Morris (Chief Financial Officer)
Zeus (Nominated Adviser and Sole Broker) +44 (0) 20 3829 5000
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.
Half Year Review
Overview
The Group has continued to deliver high levels of profitability and strong
cash generation despite a small decline in revenues during the first half of
2024. The Group ended the period with a significant net cash balance of
£92.9m, underpinning a very strong balance sheet.
Financial Performance
Revenue
Revenue in the first half of 2024 declined by 3% to £26.5m (H1 2023:
£27.3m), driven by reduced revenues in the Americas region primarily
attributable to the ending of a criminal justice contract in Colombia which
had been subject to short-term renewals for a number of years. Revenues
declined by 2% in the Asia-Pacific region due to adverse foreign currency
movements which saw sterling strengthening against the Australian and New
Zealand dollar compared with the same period in 2023. Revenues in Europe grew
by 9%, reflecting an increase in revenues earned from new and existing
customers in the criminal justice sector.
The majority of the Group's revenues continue to be derived from customers in
the criminal justice sector, which accounts for 99% of reported revenue (H1
2023: 99%).
The Group has been impacted by adverse foreign currency movements in the
period with sterling strengthening against the US dollar, Australian dollar
and New Zealand dollar, some of the Group's main sales currencies. On a
constant currency basis, revenue in the first half of 2024 would have been
£0.6m higher than reported if exchange rates had remained the same as H1
2023.
Monthly Recurring Revenue (MRR), which is the exit run rate of monthly
recuring revenue in the last month of the reporting period, was £3.9m (H1
2023: £4.4m), a decrease of 11%. The MRR figure gives the Group visibility
over its future revenues derived from its long-term contracts.
Profitability
Gross profit decreased by 7% to £18.5m (H1 2023: £20.0m), with gross margin
down by 330 bps to 70.0% (H1 2023: 73.3%) in most part due to the revenue
decline and customer mix change, coupled with increases to operational labour
costs and depreciation as the latest 4G technology is deployed.
Adjustments made to the interim financial results before tax were £9.1m (H1
2023: £5.7m) and are for the amortisation of acquired intangible assets,
share-based payments and legal costs. See note 3 for further details.
Adjusted administrative expenses (defined as administrative expenses before
share-based payments, amortisation of acquired intangible assets and one-off
legal costs) increased from £6.1m in H1 2023 to £7.1m in H1 2024. This
increase was primarily due to increased business development costs to support
future growth and adverse foreign currency movements recorded on the
revaluation of cash and cash equivalents held in non-sterling currencies.
Adjusted operating profit of £11.5m decreased by 18% against H1 2023, with a
decrease in adjusted operating margin to 43.4% (H1 2023: 51.1%).
Finance income was £1.7m (H1 2023 £0.9m) 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 period due to interest
recognised for newly capitalised lease liabilities.
EBITDA
Adjusted EBITDA, which provides a more consistent comparison of trading
between financial periods, decreased by 11% to £14.3m (H1 2023: £16.1m),
with adjusted EBITDA margin remaining strong but decreasing by 510 bps to
54.0% (H1 2023: 59.1%).
Taxation
The Group's total tax charge for the period (including deferred taxes) was
£0.1m (H1 2023: £0.1m), an effective tax rate of 2.6% (H1 2023: 0.6%). 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.
Current tax is charged at 29.8% for the period (H1 2023: 16.6%) representing
the best estimate of the average annual effective current tax rate expected to
apply for the full year, applied to the pre-tax income of the current period.
The effective current tax rate is now higher (H1 2023: lower) than the current
UK corporation tax rate, primarily due to the increase in legal costs which
are not expected to be tax deductible.
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 3.9p (H1 2023: 4.3p), reflecting the underlying
profitability of the Group. Adjusted basic EPS, which excludes adjusting items
and their associated tax effect was 4.1p (H1 2023: 4.6p). Diluted EPS, which
includes the dilutive impact of shares issuable in the future, was 1.3p (H1
2023: 2.9p). Basic EPS was 1.4p (H1 2023: 3.1p). 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 £92.9m (H1 2023: £75.4m) at 30 June
2024.
The Group delivered solid cash flow from operations (before the payment of
taxes) of £11.2m (H1 2023: £12.4m) which includes an improvement in the net
working capital position compared with 30 June 2023 partly offset by reduced
profits for the period. Taxation payments for the period were £1.6m (H1 2023:
£1.9m).
The cash conversion rate (defined as percentage of adjusted EBITDA converted
to cash from operations) improved from 77.0% to 78.0% of adjusted EBITDA.
Net cash utilised in investing activities of £0.8m (H1 2023: £1.8m) reduced
due to an increase in interest received by the Group on its cash balances
compared with the same period last year. The Group continued to manufacture
electronic monitoring devices and invest in research and development at
similar levels to the same period last year.
Cash outflows from financing activities of £1.5m (H1 2023: £0.1m) includes
purchases of own shares by the Big Technologies PLC Employee Benefit Trust.
Operational performance
The Group significantly expanded its business development efforts in the US
market during 2023 and begins to see early successes as a result. A number of
customer accounts have been added during the first half of 2024 as the Group's
efforts start to gain traction. The US market is the largest market in the
world for electronic monitoring and the Group has historically been
under-represented locally.
The Group remains committed to ensuring that its products maintain their
competitive advantage in the criminal justice sector and continues to invest
in research and development to support the future product roadmap. This
roadmap includes the development of a range of technologies, which meet the
growing needs of current and potential customers. Recent focus has been in the
area of substance detection technologies, as well as improving and extending
the range of location solutions. This has enabled the Group to provide an
integrated monitoring offering for customers and future customers, which meets
the majority of their current needs and requirements.
The development of the Group's first real-time alcohol detection technology,
the Buddi AlcoTag, is now complete and the product is generating revenue from
customers. The AlcoTag is Buddi's proven Smart Tag with the addition of
transdermal alcohol sensing.
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 EBITDA and adjusted earnings per share. See notes 3 and 5 for further
details.
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 £0.5m (H1 2023: £0.5m) have been capitalised. Total R&D costs
(including those charged as an expense) expressed as a percentage of adjusted
administrative expenses were 21% (H1 2023: 26%).
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 headwind for revenue and profit
during the period (H1 2023: lesser headwind), with sterling strengthening
further against the Group's main sales currencies compared with comparative
periods. The Group's forward currency exposure is currently unhedged.
Management considers that the most significant short-term foreign exchange
risk for the second half of the year is to US Dollars. During July 2024, the
Group exchanged a significant proportion of its existing cash and cash
equivalents into US Dollars. At 31 July 2024, the Group held £74.6m worth of
US Dollars.
Legal costs
The Group continues to incur costs to defend a claim filed with the High Court
of Justice in England and Wales in 2023. The claim, brought by a small number
of former shareholders of Buddi Limited, a subsidiary of the Company, relates
to 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 will continue to defend its
position robustly.
During the first half of the year, the Group incurred significant costs to
file a detailed defence to the claim which was filed with the court on 28 June
2024. The increase in provision and the charge for legal costs shown
separately in the profit and loss account represents management's estimate of
additional legal costs expected to be incurred up until 31 December 2024.
The Group continues to pursue acquisitions and partnerships in the Americas
region to help accelerate its route to market and incurred costs during the
period exploring possible value-enhancing opportunities.
The total charge for legal costs was £3.1m including certain costs in
relation to work on potential M&A together with additional provision for
the legal costs expected to be incurred up until 31 December 2024. The
majority of the charge for legal costs relates to the claim.
Summary and outlook
The Group has delivered a robust financial and operational performance in the
first half of the year despite the ending of a criminal justice contract in
Colombia and further headwinds to revenue and adjusted profits caused by
fluctuations in currency exchange rates. As stated previously in the Group's
AGM Statement in May 2024, revenue is expected to be lower in the second half
of the year, versus the first half of the year. 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. Assuming no further adverse
impacts caused by foreign currency fluctuations in the second half, the Board
anticipates delivering results at the lower end of current market expectations
for 2024((1)). The electronic monitoring market remains supported by
favourable tailwinds and with the Group's clear strategy and market-leading
products, a return to growth is still expected in 2025 and beyond.
(1) Latest company compiled view of market expectations show adjusted
EBITDA of £27.0 million to £28.3 million (stated before share-based payments
and one-off legal expenses).
Sara Murray Daren
OBE Morris
Chief Executive Officer Chief Financial Officer
24 September 2024 24 September 2024
Unaudited condensed consolidated statement of comprehensive income
for the six months ended 30 June 2024
Unaudited six months ended 30 June 2024 Unaudited six months ended 30 June 2023 Year ended 31 December 2023
£'000 £'000 £'000
Note
Revenue 2 26,484 27,261 55,223
Cost of sales (7,953) (7,270) (16,176)
Gross profit 18,531 19,991 39,047
Administrative expenses (16,126) (11,806) (22,246)
Other operating income 7 7 12
Operating profit 2,412 8,192 16,813
Analysed as:
Adjusted EBITDA 14,314 16,107 33,005
Amortisation of acquired intangibles (234) (234) (468)
Amortisation of development costs (617) (450) (921)
Depreciation (2,216) (1,740) (3,835)
Legal costs (3,097) - -
Share-based payments charge (5,738) (5,491) (10,968)
Operating profit 2,412 8,192 16,813
Finance income 1,702 881 2,656
Finance expenses (71) (25) (95)
Profit before taxation 4,043 9,048 19,374
Taxation 4 (106) (56) (1,792)
Profit for the period 3,937 8,992 17,582
Other comprehensive income / (expense):
Exchange differences on translation of foreign operations
52 (231) (663)
Total comprehensive income for the period
3,989 8,761 16,919
Basic earnings per share (pence) 5 1.4p 3.1p 6.1p
Diluted earnings per share (pence) 5 1.3p 2.9p 5.7p
Unaudited condensed consolidated statement of financial position
as at 30 June 2024
Unaudited 30 June 2024 Unaudited 30 June 2023 31 December 2023
£'000 £'000 £'000
Note
Assets
Goodwill 13,359 13,359 13,359
Acquired and other intangible assets 5,276 5,815 5,668
Property, plant and equipment 4,828 4,498 4,993
Right-of-use assets 1,772 597 1,782
Deferred tax assets 5,884 6,576 5,310
Other receivables 969 1,574 583
Non-current assets 32,088 32,419 31,695
Inventories 7,987 8,856 7,206
Trade and other receivables 9,150 9,192 8,328
Cash and cash equivalents 6 94,760 75,973 87,729
Current assets 111,897 94,021 103,263
Total assets 143,985 126,440 134,958
Liabilities
Lease liabilities 304 170 274
Trade and other payables 6,347 6,465 6,146
Provisions 7 1,877 539 664
Current liabilities 8,528 7,174 7,084
Lease liabilities 1,573 425 1,579
Deferred tax liabilities 260 368 302
Trade and other payables 173 280 259
Non-current liabilities 2,006 1,073 2,140
Total liabilities 10,534 8,247 9,224
Net assets 133,451 118,193 125,734
Equity
Share capital 8 2,907 2,905 2,907
Share premium 39,095 39,068 39,095
Employee Benefit Trust reserve (5,785) - (4,276)
Other reserves (197) 183 (249)
Retained earnings 97,431 76,037 88,257
Total equity 133,451 118,193 125,734
Unaudited condensed consolidated statement of changes in equity
for the six months ended 30 June 2024
Share capital Share premium EBT reserve Other reserves Retained earnings Total
£'000 £'000 £'000 £'000 £'000 equity
£'000
Balance at 1 January 2023 2,904 39,031 - 414 60,124 102,473
Profit for the year - - - - 17,582 17,582
Other comprehensive expense 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
Balance at 1 January 2023 2,904 39,031 - 414 60,124 102,473
Profit for the period - - - - 8,992 8,992
Other comprehensive expense for the period
- - - (231) - (231)
Total comprehensive
income for the period - - - (231) 8,992 8,761
Share-based payments - - - - 5,467 5,467
Deferred tax on share-based
payments - - - - 1,454 1,454
Issue of shares, net of share
issue costs 1 37 - - - 38
Balance at 30 June 2023 2,905 39,068 - 183 76,037 118,193
Balance at 1 January 2024 2,907 39,095 (4,276) (249) 88,257 125,734
Profit for the period - - - - 3,937 3,937
Other comprehensive income
for the period - - - 52 - 52
Total comprehensive
income for the period - - - 52 3,937 3,989
Share-based payments - - - - 5,720 5,720
Deferred tax on share-based
payments - - - - (483) (483)
Purchase of shares by the EBT
- - (1,509) - - (1,509)
Balance at 30 June 2024 2,907 39,095 (5,785) (197) 97,431 133,451
Unaudited condensed consolidated statement of cash flows
for the six months ended 30 June 2024
Unaudited six months ended 30 June 2024 Unaudited six months ended 30 June 2023 Year
ended 31 December 2023
£'000 £'000
£'000
Note
Cash flows from operating activities
Profit before tax 4,043 9,048 19,374
Adjustments for:
Depreciation of property, plant and equipment 3,595
2,099 1,633
Depreciation of right-of-use assets 117 107 240
Amortisation of intangible assets 851 684 1,389
Impairment charges on property, plant 392
and equipment - -
Share-based payments expense 9 5,720 5,467 10,951
Finance income (1,703) (881) (2,656)
Finance expenses 71 25 95
Changes in:
Inventories (781) (2,033) (383)
Trade and other receivables (1,264) 247 2,405
Trade and other payables 798 (1,626) (3,518)
Provisions 1,213 (261) (136)
Cash generated from operating activities 11,164 12,410 31,748
Taxes paid (1,635) (1,911) (3,739)
Net cash flows from operating activities 28,009
9,529 10,499
Cash flows from investing activities
Purchase of property, plant and equipment (508)
(86) (202)
Own work capitalised (1,915) (1,750) (4,303)
Capitalised development costs (458) (499) (1,057)
Interest received 1,703 604 2,569
Net cash used in investing activities (756) (1,847) (3,299)
Cash flows from financing activities
Proceeds from issues of shares 8 - 39 67
Purchase of own shares (1,509) - (4,276)
Repayment of lease liabilities (142) (125) (240)
Interest paid (11) (13) (35)
Cash flows from financing activities (1,662) (99) (4,484)
Net increase in cash and cash equivalents 7,111 8,553 20,226
Cash and cash equivalents at the beginning of the period 67,474
87,729 67,474
Effects of exchange rate changes on cash and cash equivalents 29
(80) (54)
Cash and cash equivalents at the end of the period
6 94,760 75,973 87,729
Notes to the unaudited condensed interim consolidated financial statements
For the six months ended 30 June 2024
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 unaudited interim 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 Directors confirm that, to the best of their knowledge, the interim
financial statements have been prepared in accordance with IAS 34 'Interim
Financial Reporting' as adopted by the United Kingdom and the AIM Rules for
Companies, and that the interim report includes a fair review of the
information required.
The condensed interim financial statements should be read in conjunction with
the Group's latest annual consolidated financial statements, for the year
ended 31 December 2023.
These interim financial statements do not include all of the information
required for a complete set of financial statements prepared in accordance
with IFRS Standards. However, selected explanatory notes are included to
explain events and transactions that are significant to an understanding of
the changes in the Group's financial position and performance since the last
annual consolidated financial statements.
The financial information provided for the six-month period ended 30 June 2024
is unaudited, however, the same accounting policies, presentation and methods
of computation have been followed in these interim financial statements as
those which were applied in the preparation of the Group's annual consolidated
financial statements for the year ended 31 December 2023.
These interim financial statements do not constitute statutory accounts as
defined in section 434 of the Companies Act 2006. A copy of the most recent
statutory accounts for the year ended 31 December 2023 has been delivered to
the Registrar of Companies. The auditor's report on these accounts was
unqualified and did not contain a statement under section 498 of the Companies
Act 2006.
These interim financial statements were authorised for issue by the Company's
board of directors on 24 September 2024.
1.1 Going concern
The Directors have, at the time of approving these interim financial
statements, a reasonable expectation that the Company and the Group have
adequate resources to continue in operation for the foreseeable future. The
Group's forecasts and projections, taking into account reasonable possible
changes in trading performance, show that the Group has sufficient financial
resources, together with assets that are expected to generate cash flow in the
normal course of business. Accordingly, the Directors have adopted the going
concern basis in preparing these interim financial statements.
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 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:
H1 2024 H1 2023 FY 2023
£'000 £'000 £'000
Europe 3,950 3,576 7,555
Asia-Pacific 15,960 16,272 32,289
Americas 6,574 7,413 15,379
26,484 27,261 55,223
Assets and liabilities by segment are not regularly reviewed by the Board of
Directors on a monthly basis and, therefore, are not used as a key
decision-making tool and are not disclosed here.
Revenues are disaggregated as follows:
H1 2024 H1 2023 FY 2023
£'000 £'000 £'000
Sales of goods 67 38 97
Delivery of services 26,417 27,223 55,126
26,484 27,261 55,223
The nature of the Group's operations mean that recorded financial performance
is not seasonal or cyclical in nature. The majority of revenues are derived
from delivery of services to customers over time under long-term contracts.
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 period.
H1 2024 H1 2023 FY 2023
£'000 £'000 £'000
Amortisation of acquired intangibles 234 234 468
Legal costs 3,097 - -
Total adjusting operating items 3,331 234 468
Share-based payments expense 5,738 5,491 10,968
Total adjusting items and share-based payments before tax 9,069 5,725
11,436
Tax effect of adjusting items and share-based payments (1,099) (1,446)
(2,392)
Total adjusting items and share-based payments after tax 7,970 4,279
9,044
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.
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.
Legal costs
These costs are excluded from the adjusted results of the Group since the
costs are not considered reflective of the core trading performance of the
Group. Further details on the nature of legal costs are given in the half year
review commentary.
4. Taxation
Current tax is charged at 29.8% for the period (H1 2023: 16.6%) representing
the best estimate of the average annual effective current tax rate expected to
apply for the full year, applied to the pre-tax income of the current period.
Deferred tax recognised in the period relates to share-based payments,
acquired intangible assets and fixed asset timing differences.
H1 2024 H1 2023 FY 2023
£'000 £'000 £'000
Current tax
For the financial period 1,205 1,502 3,673
Adjustments in respect of prior periods - - 217
1,205 1,502 3,890
Deferred tax
Origination and reversal of temporary timing differences (44) (44) 184
Related to share-based payments (1,055) (1,402) (2,282)
(1,099) (1,446) (2,098)
Total taxation 106 56 1,792
In addition to taxation recognised in the consolidated income statement, the
following amounts relating to tax have been recognised directly in equity:
H1 2024 H1 2023 FY 2023
£'000 £'000 £'000
Deferred tax
Related to share-based payments 483 (1,454) 400
Total taxation recognised directly in equity 483 (1,454) 400
5. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
H1 2024 H1 2023 FY 2023
£'000 £'000 £'000
Profit for the purpose of basic and diluted earnings per share being net 3,937 8,992 17,582
profit attributable to equity holders of the parent
Adjustments for:
Adjusting items 3,331 234 468
Share-based payments expense 5,738 5,491 10,968
Tax effect of adjusting items and share-based payments (1,099) (1,446) (2,392)
Adjusted earnings 11,907 13,271 26,626
H1 2024 H1 2023 FY 2023
No. shares No. shares No. shares
Weighted average number of ordinary shares 290,650,082 290,430,303 290,531,356
Less shares held by the Employee Benefit Trust (weighted average) (3,462,221) - (416,300)
Weighted average number of Ordinary shares for the purpose of basic earnings 287,187,861 290,430,303 290,115,056
per share
Effect of dilutive potential Ordinary shares/share options 18,465,044 18,447,204 19,840,468
Weighted average number of Ordinary shares for the purpose of diluted earnings 305,652,905 308,877,507 309,955,524
per share
H1 2024 H1 2023 FY 2023
Basic earnings per share Pence Pence Pence
Basic earnings per share 1.4 3.1 6.1
Adjustments for:
Adjusting items 1.1 0.1 0.2
Share-based payments expense 2.0 1.9 3.8
Tax effect of adjusting items and share-based payments (0.4) (0.5) (0.9)
Adjusted basic earnings per share 4.1 4.6 9.2
H1 2024 H1 2023 FY 2023
Diluted earnings per share Pence Pence Pence
Diluted earnings per share 1.3 2.9 5.7
Adjustments for:
Adjusting items 1.1 0.1 0.2
Share-based payments expense 1.9 1.8 3.5
Tax effect of adjusting items and share-based payments (0.4) (0.5) (0.8)
Adjusted diluted earnings per share 3.9 4.3 8.6
The adjusted earnings per share has been calculated on the basis of profit
before adjusting items and share-based payments, net of tax. The Directors
consider that this calculation gives a better understanding of the Group's
earnings per share in the current and prior periods.
6. Cash and cash equivalents
The carrying amounts of the cash and cash equivalents are denominated in the
following currencies:
H1 2024 H1 2023 FY 2023
£'000 £'000 £'000
Pounds Sterling 47,705 58,353 53,831
US Dollar 9,736 4,321 6,105
Australian Dollar 21,097 6,780 13,760
New Zealand Dollar 14,113 5,250 11,420
Colombian Peso 1,017 879 1,627
Euro 252 195 438
Canadian Dollar 604 55 342
Other 236 140 206
94,760 75,973 87,729
Management considers that the most significant short-term foreign exchange
risk for the second half of the year is to US Dollars. During July 2024, the
Group exchanged a significant proportion of its existing cash and cash
equivalents into US Dollars. At 31 July 2024, the Group held £74,600,000
worth of US Dollars.
Net cash
Net cash comprises cash and cash equivalents and lease liabilities.
H1 2024 H1 2023 FY 2023
£'000 £'000 £'000
Cash and cash equivalents 94,760 75,973 87,729
Lease liabilities (1,877) (595) (1,853)
92,883 75,378 85,876
7. Provisions
The movements were as follows:
H1 2024 H1 2023 FY 2023
£'000 £'000 £'000
At the start of the period 664 800 800
Charged/(credited) to profit or loss 1,600 - 278
Utilised (387) (261) (414)
At the end of the period 1,877 539 664
8. Share capital
The allotted, called up and fully paid share capital is made up of 290,650,082
ordinary shares of £0.01 each.
Investment in own shares
At 30 June 2024, the Company held in the Employee Benefit Trust 3,478,654 (H1
2023: nil) of its own shares with a nominal value of £34,787 (H1 2023:
£nil). The Employee Benefit Trust has waived any entitlement to the receipt
of dividends in respect of its holding of the Company's ordinary shares. The
market value of these shares at 30 June 2024 was £5,409,307 (H1 2023: £nil).
In the current period, 1,500,000 (H1 2023: nil) were repurchased and
transferred into the Employee Benefit Trust, with 158,650 (H1 2023: nil)
reissued on exercise of share options.
9. Share-based payments
The Group has a number of equity-settled share-based payment arrangements in
operation, the details of which are disclosed in note 23 on pages 89-91 of the
2023 Annual Report and Accounts. 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:
H1 2024 H1 2023 FY 2023
£'000 £'000 £'000
Non-EMI Plan (Chair) - 25 51
LTIP 154 125 267
Growth Share Plan 5,566 5,317 10,633
Share-based payments charge (IFRS 2) 5,720 5,467 10,951
Employers' tax charge in relation to share awards 18 24 17
Total charge in respect of share-based payments 5,738 5,491 10,968
10. Principal risks and uncertainties
The principal risks and uncertainties impacting the Group are described on
pages 30-33 of the 2023 Annual Report and Accounts and remain unchanged at 30
June 2024.
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\key financial terms, cyber security/business interruption,
intellectual property/patents and operating in global markets.
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