REG - Checkit PLC - Final Results
24/04/2025 07:02
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RNS Number : 9444F Checkit PLC 24 April 2025
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF UK MARKET
ABUSE REGULATION. UPON THE PUBLICATION OF THIS ANNOUNCEMENT THIS INSIDE
INFORMATION IS NOW CONSIDERED TO BE WITHIN THE PUBLIC DOMAIN.
24 April 2025
Checkit plc
("Checkit", the "Company" or the "Group")
Final results for the Year Ended 31 January 2025
Checkit plc (AIM: CKT), the automated monitoring platform for operational
leaders, is pleased to report its audited results for the year ended 31
January 2025 ("FY25"). The annual report for FY25 will be sent to shareholders
ahead of the Company's Annual General Meeting, which is expected to take place
on 5 June 2025.
The Group's management team will host a live webinar including an opportunity
for questions at 14:00 (BST) today. The webinar can be accessed via the news
area of the website at https://www.checkit.net/news/
(https://www.checkit.net/news/) or by using this link:
https://www.investormeetcompany.com/checkit-plc/register-investor
(https://gbr01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.investormeetcompany.com%2Fcheckit-plc%2Fregister-investor&data=05%7C01%7CHugh.Wooster%40checkit.net%7Cdd2fb3d65ff9412a06c708dae1a815bb%7Cc766b9048fbf43bea8450cab82a691e9%7C1%7C0%7C638070409271004915%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=utsFc9ht3y2TWaqsmaiiF6tmf%2F2JUOBjGHoyFJy0O1A%3D&reserved=0)
FY25 HIGHLIGHTS
· 33% increase in new recurring revenue bookings* to £2.1m (FY24:
£1.6m)
· 8% increase in Annual Recurring Revenue ("ARR")** to £14.4m (FY24:
£13.3m)
· 17% increase in total revenue to £14.1m (FY24: £12.0m)
· 33% improvement in adjusted LBITDA*** to £2.3m (FY24: £3.4m)
· 40% reduction in overall cash consumption; net cash at year end of
£5.1m (FY24: £9.0m)
· Launch of new revenue generating product features including Asset
Intelligence, based on Artificial Intelligence and Machine Learning
Outlook
· Revenue growth is now expected to be lower in the near term than
previously guided, at between 2% and 5% for the current year. This reflects
expected challenging market conditions and increased customer caution.
Customer retention is expected to stabilise at FY25 levels of 92% for the
coming year. As a result, the Board has taken the strategic decision to focus
on improving the Company's profitability.
· The cost reduction programme announced on 8 April 2025 is underway
and is expected to deliver annualised savings of £3 million, driving a
meaningful improvement in FY26 LBITDA - ahead of previous market guidance of a
£0.7 million loss, though not quite into positive territory. These actions
are also expected to accelerate the Company's transition to cash generation.
· The Company continues to expect to achieve EBITDA profitability and
cash flow breakeven, within its existing cash resources, during calendar year
2026.
Kit Kyte, CEO of Checkit, commented:
"Checkit delivered a strong performance in FY25, achieving 17% revenue growth
to £14.1m and a significant reduction in operational cash consumption. Our
disciplined strategy, focused on AI-driven innovation and a 'land and expand'
model, has supported growth in key markets, particularly the US, where revenue
increased by 20% to £3.7m.
With 70% gross margins and ARR expansion, we are strengthening our competitive
advantage through data and automation. Our commitment to operational
efficiency, and technological advancements positions us for sustained growth
and long-term value creation for both customers and shareholders."
NOTES
* Bookings are defined as the committed Annual Recurring Revenue ("ARR") of
new sales wins contracted during the period.
** Annual Recurring Revenue ("ARR") is defined as the annualised value of
contracted recurring revenue from subscription services as at the period end,
including committed annual recurring revenue from new wins.
*** Adjusted LBITDA is the loss on operating activities before depreciation
and amortisation, share based payment charges and non-recurring or special
items.
The person responsible for releasing this announcement is Kris Shaw, Chief
Financial Officer of Checkit.
Checkit plc +44 (0) 1223 643 313
www.checkit.net
Kit Kyte (Chief Executive Officer)
Kris Shaw (Chief Financial Officer)
Singer Capital Markets (Nominated Adviser and Broker) +44 (0) 207 496 3000
Shaun Dobson / James Fischer
CHAIRMAN'S STATEMENT
On behalf of the Board, I should like to thank Chief Executive Officer Kit
Kyte, Chief Financial Officer Kris Shaw, the rest of the senior management
team and indeed all staff in the UK and US who have contributed to the
performance of Checkit.
FY25 was a challenging year for our customers. The containment of costs, in
the context of dramatic increases in pay-related overheads in our UK target
markets, has become paramount for all businesses and Checkit is well placed to
help achieve the productivity improvements our customers seek.
Against the backdrop of macroeconomic constraints, Checkit's operating
performance was in line with Board and market expectations. Our goal is to
achieve profitability and cash generation through revenue growth and cost
control. Growth will be achieved organically and through acquisitions if
suitable targets present themselves.
Finally, I should like to take the opportunity to state that the Board is
fully aware of the disparity between our improving performance and the share
price on AIM. Over the next 12 months the Board will be focused on addressing
this problem.
Keith Daley
Chair
CEO'S STATEMENT
Expediting profitability has become the main effort for the Company in the
near term. To that end, we recently announced a strategic plan to deliver
accelerated profitability and sustainable growth. This plan reflects the
evolving economic landscape in our key markets, with the UK National Insurance
increase and the introduction of US trade tariffs contributing to uncertainty
and caution among customers. In light of these challenges, the Company has
taken proactive steps to strengthen its financial position.
A review of Checkit's operations and cost base has resulted in the
identification and implementation of measures expected to deliver annualised
cash savings of approximately £3 million from quarter two of the current
financial year, with the full benefit to be realised in the subsequent
financial year. The implementation of these measures is expected to bring
forward the point at which the Company starts to generate net cash inflows.
Strategy and Ambitions
We fulfill market needs with a comprehensive solution that excels in the
gathering of data for analytics, offering insights that empower our customers
to make informed decisions, implement cost efficiencies, and secure compliance
with their policies. Our goal is to be a leader in augmented workflow
management for the frontline workforce.
We secure initial wins in discrete customer locations or functions and then
build deeper customer relationships that drive long-term growth. Our ability
to drive growth this way is demonstrated in our strong net revenue retention
rate of 107%, providing visibility of future ARR expansion. We have made
significant strides in transforming Checkit into a predominantly
subscription-based model, with non-recurring revenues in FY25 constituting
only 6% of total revenue. This shift enhances our revenue predictability and
strengthens customer engagement, paving the way for additional business.
As part of the recently announced strategic plan the Checkit management team
has undertaken a comprehensive evaluation of the entire business. This
in-depth review generated valuable insights that have now been embedded into
our FY26 strategy and longer-term planning:
· Our Go-to-Market (GTM) approach is designed to drive strong
commercial performance while maintaining a disciplined investment profile. We
aim to deliver healthy revenue retention in line with top-quartile industry
benchmarks as demonstrated by our 3-year average net revenue retention rate
("NRR") of 111% and gross revenue retention rate ("GRR") of 97%.
· The US remains the priority region responsible for driving new
customer acquisition, supported by its broad range of target enterprises. In
FY25 23% of US bookings came from new customers. While recent US trade tariffs
contribute to economic uncertainty, based on our current understanding, they
are not expected to have a material impact on Checkit's revenue or cost base.
· The successful launch of Asset Intelligence, a new machine
learning ("ML") / AI data module, that optimizes asset availability, reduces
operating costs and delivers ROI, differentiates Checkit as a data
orchestration platform for operational leaders. Future product innovation
will focus on further monetization of data "at ground level" as a source of
high margin growth.
The Group's focus is on building a sustainable and higher conversion rate
pipeline across the retail, healthcare, facilities management, franchise, and
biopharma verticals. We are increasing customer loyalty by continuously
investing in our platform, including its capacity to incorporate external
technologies, positioning us at the forefront of the market.
Our sales and marketing efforts are geared towards generating high-quality
leads with improved conversion rates, especially in our key sectors and
expanding further into the US market. Checkit's new customer pipeline in the
US includes several multi-site organizations across the healthcare, food
retail, hospitality, and biopharma sectors. The US remains on course to be the
largest contributor to Group revenues and remains a key growth driver. US
revenue increased by 20% year-on-year to £3.7m, highlighting continued demand
for our solutions in a high-potential market.
In addition to driving organic growth, we continue to see acquisitions as a
route to scale and an enhanced market position. While the proposed merger with
Crimson Tide plc did not proceed, we remain committed to exploring other
opportunities that strengthen our capabilities, expand our customer offering,
and create value for shareholders. We will maintain a disciplined approach to
acquisitions, ensuring they align with our strategic plan and long-term
vision. At the same time, we remain focused on balancing organic growth
initiatives with operational efficiency to sustain a high-performance culture
within Checkit.
Innovation and Competitive Advantage
Innovation remains the cornerstone of Checkit's strategy, driving us to
continually enhance our offerings and deliver exceptional value to our
clients. In FY25, we have made significant strides in integrating advanced
technologies, particularly AI and data analytics, into our platform.
Our approach centres on the intelligent orchestration of integrated sensors,
digital workflows, and AI. This integration enables us to transform
traditional data collection methods into continuous, automated processes that
provide real-time, actionable insights. By leveraging AI, we can analyse vast
datasets to identify patterns, predict potential operational challenges, and
recommend proactive solutions, thereby enhancing our clients' operational
efficiency and decision-making capabilities.
During FY25 we launched our Asset Intelligence module, marking a significant
advancement in our AI and ML capabilities. This module applies advanced
analytics and machine learning to sensor data, enabling clients to enhance
sustainability, reduce costs, and improve revenue streams. The successful
deployment of this module with our first five clients during H2 underscores
its potential to revolutionise asset management across various industries.
We are dedicated to exploring emerging technological opportunities that align
with our mission to reshape business performance. Our focus will remain on
integrating cutting-edge technologies into our unified platform, ensuring that
we continue to meet the dynamic needs of our clients and maintain our
competitive edge in the market.
Positive Outlook
As we look ahead, Checkit is well-positioned to capitalise on emerging
opportunities in the workflow management sector. The successful execution of
our profitability and growth strategies, combined with strategic M&A and
our commitment to innovation, provides a strong foundation for continued
success. We remain dedicated to delivering exceptional value to our customers
and shareholders, driving sustainable growth in the years to come.
Kit Kyte
CEO
FINANCIAL REVIEW
Continued drive to profitability
Financial results in FY25 demonstrate Checkit's continued trajectory of
growth, operational improvement and drive towards profitability, building upon
the momentum established in previous years.
Total Group revenue for FY25 reached £14.1 million, representing a 17%
increase from £12.0 million in FY24. This growth was driven by both new
customer acquisition and the successful expansion within existing accounts,
underscoring the effectiveness of Checkit's 'land and expand' strategy.
Adjusted LBITDA of £2.3m (FY24: £3.4m), continues the Group's strategic
priority to balance growth with improved operational efficiencies resulting in
reduced losses year-on-year.
ARR grew by 8% to £14.4 million (FY24: £13.3 million), reflecting continued
progress in driving subscription-based revenue. During the year, we secured
£2.1 million in new bookings and achieved a NRR of 107%, demonstrating strong
customer engagement and upsell momentum. While total contraction and churn in
the period amounted to £1.0m, approximately £0.3m related to low-value,
low-margin customers, where the associated delivery costs were also
removed-limiting the impact on contribution. A further £0.4m resulted from a
tidy-up of prior period accounts, often where closed bookings did not
ultimately convert to revenue and are therefore classified as churn. The
remaining £0.4m came from our core customers.
Our business model remains firmly subscription based, with recurring revenues
representing 94% of total revenue. Land and expand wins through the
introduction of Checkit products into an integrated energy company's dealer
sites to provide real time operations management capabilities to 200
franchisees in the UK and the agreement with Octapharma in the US integrating
TTMUs (Tactical Temperature Monitoring Units) into their existing monitoring
system, supported the growth of recurring revenue by 17% and NRR of 107%.
(£'m) Reported Twelve months to
31 January 2025 31 January 2024 % Change
ARR(1) 14.4 13.3 +8%
Revenue
Recurring 13.1 11.2 +17 %
Non-recurring 1.0 0.8 +14 %
Total revenue 14.1 12.0 +17 %
We continue to see growth opportunities in the US, with ARR increasing +12%
year-on-year. New customer signings have strengthened our growing care home
use-case, while additional wins in the blood plasma vertical offer further
land and expand opportunities. Overall North America revenues increased by 20%
during FY25, highlighting our continued penetration into the US market and
growing international presence.
LBITDA
Checkit continues its progress towards profitability with adjusted LBITDA for
the year of £2.3m (FY24: £3.4m), an improvement of 33%. Gross margin
improved to 70% (FY24: 67%).
Operating expenses increased by 5%, as the benefits of cost efficiency
programs were offset by inflationary pressures and targeted sales &
marketing investment to support revenue growth and pipeline development.
Overall product spend has been maintained at £4.4m (FY24: £4.3m) to support
the development of AI and ML product offerings. These products include the
recently launched Asset Intelligence module which applies advanced analytics
and machine learning to sensor data to enhance customer sustainability.
Revenue generation from these products commenced quickly after launch.
Capitalised development was £2.4m (FY24: £2.0m), which includes spend to
bring these improved product offerings to the market.
Non-recurring or special items
Non-recurring or special items in the year of £0.5m related to restructuring
costs, specialist tax advice for the resolution of the HMRC disagreement
relating to input tax, and the initial costs associated with the proposed
merger with Crimson Tide PLC which did not proceed.
FY25 £m
Restructuring costs 0.2
HMRC specialist tax advice 0.2
Crimson Tide merger 0.1
Total non-recurring or special items 0.5
Taxation
The Group is currently loss making and therefore no corporate tax charge is
reported for the year. There remains approximately £29m in Group carried
forward taxable losses and there is no expectation of tax payments in the
short to medium term. With the support of a new R&D tax adviser the FY24
and FY23 claims were submitted, resulting in a combined claim of £0.7m, which
is expected to be received in FY26.
Contingent liability
Checkit and HMRC had been in correspondence since early 2022 regarding matters
of input tax recoverability. The review of the case has now been completed and
HMRC has recognised that Checkit was entitled to input VAT recovery throughout
the period under review. Therefore, the contingent liability has been removed
from the financial statements and withheld cash received, albeit partially
offset by specialist tax advice fees.
EPS - continuing operations
The weighted average number of shares in issue in FY25 was 108.0m. Loss per
share (basic and diluted) was 3.3 pence (FY24: 4.2 pence).
Cash
As of 31 January 2025, the Group's cash position was £5.1m (FY24: £9.0m),
reflecting a 40% reduction in overall cash consumption, driven by revenue
growth and improved LBITDA. The reduced cash consumption highlights the
business's continued progress in executing its strategic objectives.
Kris Shaw
CFO
Consolidated statement of comprehensive income
Year ended 31 January 2025
Notes 2025 2024
£m £m
Revenue 2 14.1 12.0
Cost of sales (4.3) (4.0)
Gross profit 9.8 8.0
Operating expenses 3 (12.1) (11.4)
Adjusted LBITDA* (2.3) (3.4)
Depreciation and amortisation (1.5) (1.3)
Share-based payment charge (0.1) (0.2)
Non-recurring or special items (0.5) (0.2)
Operating loss (4.4) (5.1)
Finance income - 0.5
Loss before taxation (4.4) (4.6)
Taxation 5 0.8 0.1
Loss for the year attributable to equity shareholders (3.6) (4.5)
Other comprehensive income/(expense)
Exchange differences on translation of foreign operations - -
Total comprehensive loss for the year attributable to equity shareholders (3.6) (4.5)
Loss per share
Basic EPS 6 (3.3)p (4.2)p
Diluted EPS 6 (3.3)p (4.2)p
*Adjusted loss before interest, tax, depreciation and amortisation ("LBITDA")
is calculated by taking operating profit and adding back depreciation &
amortisation, share-based payment charge and non-recurring or special items
Consolidated balance sheet
As at 31 January 2025
Notes 2025 2024
£m £m
Assets
Non-current assets
Goodwill arising on acquisition 7 0.2 0.2
Other intangible assets 7 6.1 4.8
Property, plant and equipment 0.9 0.8
Total non-current assets 7.2 5.8
Current assets
Inventories 3.9 3.8
Trade and other receivables 3.7 4.5
Cash and cash equivalents 5.1 9.0
Total current assets 12.7 17.3
Total assets 19.9 23.1
Current liabilities
Trade and other payables 7.9 7.8
Contract lease liabilities 0.2 0.2
Total current liabilities 8.1 8.0
Non-current liabilities
Long-term contract lease liabilities 0.4 0.3
Long-term provisions 0.3 0.2
Total non-current liabilities 0.7 0.5
Total liabilities 8.8 8.5
Net assets 11.1 14.6
Equity attributable to the owners of the Company
Called up share capital 5.4 5.4
Share premium 23.3 23.3
Capital redemption reserve 6.4 6.4
Other reserves 0.6 0.5
Retained earnings (24.6) (21.0)
Total equity 11.1 14.6
Consolidated statement of changes in equity
Year ended 31 January 2025
Share Share Capital Other Translation Retained Total
capital premium redemption reserves reserve earnings £m
£m £m reserve £m £m £m
£m
At 31 January 2023 5.4 23.3 6.4 0.3 - (16.5) 18.9
Loss for the year - - - - - (4.5) (4.5)
Total comprehensive income for the year - - - - - (4.5) (4.5)
Share-based payments - - - 0.2 - - 0.2
At 31 January 2024 5.4 23.3 6.4 0.5 - (21.0) 14.6
Loss for the year - - - - - (3.6) (3.6)
Total comprehensive income for the year - - - - - (3.6) (3.6)
Share-based payments - - - 0.1 - - 0.1
At 31 January 2025 5.4 23.3 6.4 0.6 0.0 (24.6) 11.1
Consolidated statement of cash flows
Year ended 31 January 2025
Notes 2025 2024
£m £m
Net cash outflow from operating activities 4 (1.2) (4.7)
Investing activities
Interest received on bank deposits 0.1 0.5
Purchase of property, plant and equipment (0.2) (0.1)
Investment in product development projects (2.4) (2.0)
Net cash used in investing activities (2.5) (1.6)
Financing activities
Repayment of contract lease liabilities (0.2) (0.3)
Net cash utilised by financing activities (0.2) (0.3)
Net decrease in cash and cash equivalents (3.9) (6.6)
Cash and cash equivalents at the beginning of the year 9.0 15.6
Cash and cash equivalents at the end of the year 5.1 9.0
1. Basis of Preparation
The financial information set out in this announcement does not constitute
statutory accounts as defined in Section 434 of the Companies Act 2006. The
financial information for the Year ended 31 January 2025 has been extracted
from the Group's audited financial statements which were approved by the Board
of Directors on 23 April 2025 and which, if adopted by the members at the
Annual General Meeting, will be delivered to the Registrar of Companies for
England and Wales.
The financial information for the Year ended 31 January 2024 has been
extracted from the Group's audited financial statements which were approved by
the Board of Directors on 24 April 2024 and which have been delivered to the
Registrar of Companies for England and Wales.
The reports of the auditor on both these financial statements were
unqualified, did not include any references to any matters to which the
auditors drew attention by way of emphasis without qualifying their report and
did not contain a statement under Section 498(2) or Section 498(3) of the
Companies Act 2006.
The information included in this announcement has been prepared on a going
concern basis under the historical cost convention, and in accordance with
UK-adopted International Accounting Standards in conformity with the
requirements of the Companies Act 2006 and the International Financial
Reporting Interpretations Committee (IFRIC) interpretations issued by the
International Accounting Standards Board ("IASB") that are effective as at the
date of these financial statements.
The Company is a public limited Company incorporated and domiciled in England
& Wales and whose shares are quoted on AIM, a market operated by The
London Stock Exchange.
2. Segmental reporting
Management provides information reported to the Chief Operating Decision Maker
("CODM") as a single operating segment for the purpose of assessing
performance and allocating resources. The CODM is the Chief Executive Officer.
The Group's main activities are the supply of Connected Workflow Management,
automated monitoring, Internet of Things ("IoT"), and operational
insight-based products and services.
Revenue by type
The following table presents the different revenue streams of Checkit:
2025 2024
£m £m
Recurring revenues from subscription services 13.1 11.2
Consultancy and other services 1.0 0.8
Total 14.1 12.0
Geographical information
The Group considers its operations to be in the following geographical
regions:
Revenue from external customers
2025 2024
£m £m
United Kingdom 10.3 8.9
The Americas 3.8 3.1
Total 14.1 12.0
Information about major customers
During FY25, the Group had one customer who generated revenues of 13% of total
revenue (FY24: 17%).
Revenue expected to be recognised
The Group expects to recognise revenue amounting to £4.7m (2024: £4.6m) in
FY25 relating to performance obligations from existing contracts that are
unsatisfied or partially satisfied as at 31 January 2025.
3. Operating loss
2025 2024
£m £m
Operating loss is stated after charging:
Product development costs expensed 2.0 1.9
Depreciation on owned property, plant and equipment 0.2 0.1
Depreciation on right-of-use assets 0.2 0.3
Amortisation on development costs 0.9 0.7
Amortisation on computer software 0.2 0.2
Auditor's remuneration:
- fees payable to the Company's auditor for the audit of the Company's annual 0.1 0.1
accounts
- fees payable to the Company's auditor for the audit of the Company's 0.0 0.1
subsidiaries pursuant to legislation
Total audit fees for audit services 0.1 0.2
Tax services 0.0 -
Total auditor's remuneration 0.1 0.2
Non-recurring or special items:
- restructuring and integration costs 0.3 0.1
- HMRC investigation 0.2 -
- amortisation of acquired intangible assets - 0.1
Total non-recurring or special items 0.5 0.2
Cooper Parry Group Limited was paid £nil for tax advisory and compliance
services (2024: £nil).
4. Net cash flows from operating activities
Notes 2025 2024
£m £m
Loss before interest and taxation
- from continuing operations (4.4) (5.1)
Adjustments for:
Depreciation 0.4 0.4
Amortisation 1.1 1.0
Share-based payments 0.1 0.2
Operating cash flow before working capital changes (2.8) (3.5)
Decrease/(increase) in trade and other receivables 1.6 0.1
Increase in inventories (0.1) (1.4)
Increase/(decrease) in trade and other payables (0.1) 0.3
Operating cash flow after working capital changes (1.4) (4.5)
Increase/(Decrease) in provisions 0.1 (0.2)
Cash utilised by operations (1.3) (4.7)
Tax credit received 0.1 -
Net cash outflow from operating activities (1.2) (4.7)
5. Taxation
(a) Analysis of tax credit for the year
2025 2024
£m £m
Current taxation:
UK corporation tax (credit) on loss for the year (0.3) (0.1)
Adjustment in respect of prior periods (0.5) -
Total current taxation (0.8) (0.1)
Deferred tax:
On separately identifiable acquired intangibles (as a result of amortisation) - -
Total deferred taxation - -
Tax credit on continuing operations (0.8) (0.1)
(b) Factors affecting taxation credit for the year
The effective tax rate for the year was 25%.
2025 2024
Tax rate £m Tax rate £m
Loss on ordinary activities before taxation (4.4) (4.6)
Loss on ordinary activities multiplied by weighted average standard rate of 25.0% (1.1) 24.0% (1.1)
corporation tax
in the UK
Effects of:
Expenses not deductible for tax purposes (12.6%) 0.6 (3.2%) 0.2
Income not taxable 17.2% (0.8) 2.1% (0.1)
Temporary differences not recognised (13.1%) 0.6 18.7% 0.9
Prior year adjustments 12.7% (0.6) - -
R&D tax credit (10.3%) 0.5 (1.6%) 0.1
Surrender of losses to discontinued operations - - - -
18.9% (0.8) 2.2% (0.1)
(c) Factors that may affect future taxation charges
Deferred taxation assets amounting to £7.4m (2024: £7.7m) have not been
provided in respect of unutilised income tax losses of £29.5m (2024: £30.8m)
that can only be carried forward against future taxable income of that same
trade as there is currently insufficient evidence that these assets will be
recovered.
6. Earnings per share
Earnings per share (EPS) is the amount of post-tax profit attributable to each
share (excluding those held by the Company). Basic EPS measures are calculated
as the Group profit for the year attributable to equity shareholders divided
by the weighted average number of shares in issue during the year. Diluted EPS
takes into account the dilutive effect of all outstanding share options priced
below the market price, in arriving at the number of shares used in its
calculation.
Both of these measures are also presented on an adjusted basis, to remove the
effects of non-recurring or special items, being items of both income and
expense which are sufficiently large, volatile or one-off in nature, to assist
the reader of the financial statements to get a better understanding of the
underlying performance of the Group. The Note below demonstrates how this
calculation has been performed.
Key 2025 2024
m m
Weighted average number of shares for the purpose of basic earnings per share A 108.0 108.0
Dilutive effect of employee share options1 - -
Weighted average number of shares for the purpose of diluted earnings per B 108.0 108.0
share
Key £m £m
Loss for the year C (3.6) (4.5)
Total non-recurring or special items net of tax 0.4 0.1
Loss for adjusted EPS D (3.2) (4.4)
Key 2025 2024
EPS measures
Basic and diluted1 EPS C/A (3.3)p (4.2)p
Adjusted EPS measures
Adjusted basic and diluted1 EPS D/A (2.9)p (4.1)p
The adjusted EPS information is considered to provide a fairer representation
of the Group's trading performance.
Total earnings per share for the year attributable to equity shareholders
Key 2025 2024
EPS measures
Basic EPS C/A (3.3)p (4.2)p
Diluted EPS1 C/B (3.3)p (4.2)p
1 In the current and prior year, the dilutive impact of employee share
options is ignored since there is no dilutive impact on continuing operations
EPS measures given the continuing loss for the year.
7. Intangible assets
Development Computer Acquired Total
costs software intangible £m
£m £m assets Goodwill
£m £m
Cost
At 1 February 2023 9.8 1.0 4.3 4.5 19.6
Additions 2.0 - - - 2.0
Disposals - - - - -
At 31 January 2024 11.8 1.0 4.3 4.5 21.6
Additions 2.4 - - - 2.4
Disposals - - - - -
At 31 January 2025 14.2 1.0 4.3 4.5 24.0
Amortisation
At 1 February 2023 6.8 0.3 4.2 4.3 15.6
Charge for the year 0.7 0.2 0.1 - 1.0
Disposals - - - - -
At 31 January 2024 7.5 0.5 4.3 4.3 16.6
Charge for the year 0.9 0.2 0.0 0.0 1.1
Disposals - - - - -
At 31 January 2025 8.4 0.7 4.3 4.3 17.7
Carrying amount
At 1 February 2023 3.0 0.7 0.1 0.2 4.0
At 31 January 2024 4.3 0.5 - 0.2 5.0
At 31 January 2025 5.8 0.3 - 0.2 6.3
Acquired intangible assets are made up of the separately identified
intangibles acquired with the purchase of Next Control Systems in May 2019 and
those acquired with the purchase of Checkit LLC in February 2021.
Impairment testing for goodwill
The Group identifies cash-generating units (CGUs) at the operating company
level, as this represents the lowest level at which cash inflows are largely
independent of other cash inflows. Goodwill acquired in a business combination
is allocated, at acquisition, to the groups of CGUs that are expected to
benefit from that business combination.
Goodwill relates to the acquisition of Checkit UK Limited in May 2019 and of
Checkit LLC in February 2021.
Goodwill values have been tested for impairment by comparing them against the
"value in use" in perpetuity of the relevant CGU group. The value in use
calculations were based on projected cash flows, derived from the latest
forecasts prepared by management and budgets approved by the Board, discounted
at CGU specific, risk adjusted, discount rates to calculate their net present
value.
Key assumptions used in "value in use" calculations
The calculation of "value in use" is most sensitive to the CGU specific
operating and growth assumptions that are reflected in management forecasts
for the five years to January 2030. CGU specific operating assumptions are
applicable to the forecasted cash flows and relate to revenue forecasts and
forecast operating margins in each of the operating companies and are based on
the strategic plans for the Group. Long-term growth rates are capped at 1%.
The revenue growth rates used in the cash flow forecast are based on
management's expectations of the future opportunities for the Checkit platform
and the ability to upsell to existing customers on a global basis, including
the planned US expansion. The forecasts include the costs associated with
delivering the Checkit platforms, which are directly linked to the forecast
sales growth.
Discount rates are based on estimations of the assumptions that market
participants operating in similar sectors would make, using the Group's
economic profile as a starting point and adjusting appropriately. Sensitivity
to the discount rate has been applied to evaluate impairment testing using
discount rates ranging from 10% to 20%.
Following the decision to close the BEMS business unit, management has
assessed that the carrying value of the goodwill associated with the
acquisition of Checkit UK should be fully impaired.
The carrying value in relation to the acquisition of Checkit LLC has not
identified any impairment.
8. Non-GAAP performance measures
A reconciliation of non-GAAP performance measures to reported results is set
out below:
Profit measures - LBITDA
2025 2024
£m £m
LBITDA (2.3) (3.4)
Depreciation and amortisation (1.5) (1.3)
Share-based payment charge (0.1) (0.2)
Non-recurring or special items (0.5) (0.2)
Operating loss for the year (4.4) (5.1)
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