REG - Cirata PLC - Final Results
04/04/2024 07:00
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RNS Number : 2393J Cirata PLC 04 April 2024
04 April 2024
Cirata plc
("Cirata"
or the "Company")
Preliminary results for the year ended 31 December 2023
Cirata plc (LSE: CRTA), announces preliminary results for the year ended 31
December 2023.
Financial headlines
- Bookings for the year $7.2m (FY22: $11.5m)
- Revenue for the year $6.7m (FY22: $9.7m)
- Cash overheads 1 of $30.3m (FY22: $39.7m)
- Adjusted EBITDA 2 loss of $24.2m (FY22: loss of $30.7m)
- Statutory loss from operations of $36.5m (FY22: loss of $29.6m)
- Cash at 31 December 2023 of $18.2m (FY22: $19.1m)
Bookings
Bookings in FY23 were $7.2m (FY22: $11.5m), with the business mix driven by
DevOps/Application Lifecycle Management ("DevOps") software, comprising 64% of
bookings, and Data Integration ("DI") software comprising 36% of bookings.
Within DevOps, renewals included BMW AG Group. There were seven new DI
contracts in FY23 including General Motors as a new customer win. The
expansion of the scale of the NatWest contract is early validation of the
"land and expand" strategy. Contract renewals included HCSC and Tesco,
with both implementations part of their business continuity solution. Also of
note was the implementation of a DI contract through our partner Accenture for
a large Australian Bank.
Current trading
The foundations for growth were rolled out across the Company in January 2024
- sales kick-off meetings and training, incentives, Company kick-offs, FY24
plan details; changes in the sales team, establishing a DevOps business unit,
and reshaping the Go-To-Market ("GTM"). The engagement we are seeing with both
customers and partners following the disruptions to FY23 trading is
encouraging with the pipeline and sales activity gradually building.
Some of the orders that slipped from FY23 Q4 closed in early FY24. However,
deal slippage is again a feature of Q1 FY24. We will provide a Q1 trading
update during the week commencing 8 April 2024.
Management is expecting that bookings will be H2 weighted in FY24 as the
pipeline builds and the sales team become more proven. The growth trajectory
is likely to be non-linear and establishing sales cycle predictability remains
a key priority for management.
1. Operating expenses adjusted for: depreciation, amortisation,
equity-settled share-based payment and other one-off non recurring items
disclosed separately. See Note 4 for a reconciliation.
2. Operating loss adjusted for: impairment loss, depreciation,
amortisation, equity-settled share-based payment, other (expense)/income and
other one-off non recurring items disclosed separately. See Note 4 for a
reconciliation.
FY24 Guidance
Management expects to deliver FY24 bookings performance within the range of:
- $13m to $15m
Relative to prior periods this would represent:
- Sequential progression on FY23, with 81% bookings growth at the low
end and 108% at the high end
FY24 cash cost base to be circa $23m
Management maintains its aspiration to exit FY24 at cashflow breakeven.
Stephen Kelly, Chief Executive Officer, commented:
"As I reflect on the past year, it is clear that we have navigated through the
most challenging period in our Company's history. Our collective efforts have
yielded good progress, particularly in the rescue and initial phases of
recovery. However, it is important to acknowledge that there is still much
work ahead of us and the speed of the recovery is slower than we anticipated.
Cirata is currently undergoing a comprehensive rebuild from the ground up. The
Company faced challenges in terms of governance, a GTM strategy that failed to
deliver sustainable growth, and a prevailing corporate culture at odds with
the Company's commercial reality. FY24 needs to evidence a transition to
growth. The guidance provided by management indicates improving pipeline and
visibility. We thank shareholders, customers and colleagues for their patience
and support".
This announcement contains information that qualifies or may qualify as 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.
The person responsible for arranging the release of this announcement on
behalf of Cirata plc is Larry Webster, Company Secretary.
For further information, please contact:
Cirata Via FTI Consulting
Stephen Kelly, Chief Executive Officer
Ijoma Maluza, Chief Financial Officer
Dan Hayes, Investor Relations
FTI Consulting +44 (0)20 3727 1137
Matt Dixon / Kwaku Aning / Usama Ali
Stifel (Nomad and Joint Broker) +44 (0)20 7710 7600
Fred Walsh / Richard Short / Tom Marsh
Liberum (Joint Broker) +44 (0)20 3100 2000
Max Jones / Edward Mansfield / Nikhil Varghese
About Cirata
Cirata, accelerates data-driven revenue growth by automating data transfer and
integration to modern cloud analytics and Artificial Intelligence ("AI")
platforms without downtime or disruption. With Cirata, data leaders can
leverage the power of AI and analytics across their entire enterprise data
estate to freely choose analytics technologies, avoid vendor, platform, or
cloud lock-in while making AI and analytics faster, cheaper, and more
flexible. Cirata's portfolio of products and technology solutions make
strategic adoption of modern data analytics efficient and automated. For more
information about Cirata, visit www.cirata.com (http://www.cirata.com) .
Business review
Adapting Dickens's famous prose from "A Tale of Two Cities" to encapsulate the
Company crisis in FY23.
"It was the worst of times, it could be the best of times, it was the season
of light after the season of darkness, it had been the winter of despair, it
could be the spring of hope."
Following the release of the 9 March 2023 RNS, the Company transitioned almost
instantly from being celebrated as a "Tech Darling" to, hitting rock bottom.
The trust in the Company evaporated. The new management team operates now to
a guiding commitment of re-establishing and rebuilding that trust with all
stakeholders, through focused delivery, transparent communication, and
tangible results.
Within a couple of weeks of that first announcement, Ken Lever joined the
Board as Interim Chair and led both the internal investigation and the search
for a new executive team. Ijoma Maluza, Chief Financial Officer joined shortly
thereafter on an interim basis, and I joined the rescue team on 10 May 2023
also on an interim basis.
A challenging year
As I will turn to highlight later in this section, we are in a stronger and
more stable position today than those days of March 2023.
FY23 delivered bookings for the year of $7.2m (FY22: $11.5m), revenue of $6.7m
(FY22: $9.7m) and an adjusted EBITDA loss of $24.2m (FY22: loss of $30.7m).
The first half of FY23 revealed a business at a standstill. A necessary cost
realignment, a capital raise and a" root & branch" restructuring and
refocusing of the Company sees the business exiting 2023 with its customers
and partners re-engaging.
FY24 needs to evidence a transition to growth. The platform and team that we
have in place now have been set the challenge of delivering on that
transition. Arriving to this point has not been easy and there is a lot more
work to do. If only to express gratitude to everyone on the Cirata team who
has worked tirelessly to put us on this better trajectory, I want to give some
sense of the work that FY23 required.
Internally, the post 9 March 2023 announcement (the "Irregularities")
discovery period extending into late 2023 resembled the laborious task of
Sisyphus. Reactive surprises, rear-guard activities and unexpected challenges
occupied late nights and weekends. The situation demanded continuous
firefighting. We were experiencing a seemingly endless series of
"whack-a-mole" challenges.
Soon after 9 March 2023, some customers and partners placed the Company on
their "watchlist", leading to a pause in activities and the then embryonic
sales pipeline coming to a standstill. For a period, the only substantial
executive interaction with certain customers and partners involved reassuring
their compliance teams. It wasn't until post-October 2023 that any semblance
of normality returned, with Q4 2023 providing an opportunity for management to
proactively plan for FY24.
Despite good technology, talented colleagues, and marquee customers, the
Company struggled to grow sustainably. The reality is that, since its IPO in
2012, the Company has raised $270m but without delivering consistent sales
momentum.
Several fundamental elements of a scalable growth company seemed to be
lacking:
- GTM: Operationally within sales and marketing, many fundamental
components crucial for a growth scale-up tech company were absent. As
examples, by mid Q2 FY23, there were no sales compensation plans, territory
plans, or account reviews, which are key for a professional sales
organisation. In March 2023 upon Ken Lever's appointment as Interim Chair,
initial projections provided by the Company at that time suggested a
significant 12-month pipeline. However, upon closer scrutiny the reality
emerged. The reassessed pipeline was around 20% of the original figure and
some of the "deal values" overestimated. This reality within the GTM
presented a scenario akin to starting from scratch.
- Sadly, over the preceding 12 months, a significant portion of the
engineering schedule and product roadmap was anchored in customer requirements
that did not exist.
- Company-wide, essential elements of governance, training and
certification were missing. Good corporate governance would favour a
separation of roles between the Board and Executive, where in fact, there was
a combined role of Chair and CEO.
- The working culture mainly characterised by a 4-day week, unlimited
vacation, and working-from-home, failed to align with the operational reality
of a loss-making business.
Actions taken to move forwards
The rescue plan, initiated by Ken Lever, encompassed workstreams focused on;
the investigation, restructuring (reducing the cost base from $41m to $25m per
annum), implementing new governance policies and controls, conducting a $30.3m
equity fundraise, completing the FY22 audit, renewing the Board, and
ultimately readmitting the Company's suspended shares to trading on AIM.
The $30.3m equity fundraising was accomplished after extensive investor
engagement, marking a crucial step in securing the necessary financial support
for the Company. The execution of the plan culminated in the Company's
re-admission to AIM at the end of July 2023.
In H2 FY23, when the first 90-day plan was largely completed, management was
able to launch a more forward-focused "Turnaround Plan" - a comprehensive set
of eight workstreams covering; Branding and Value Proposition, transition to a
more Sustainable Business with higher recurring revenues, Winning with
Partners, Organisation Alignment, Customer Orientation, Revitalising DevOps,
Retention of Colleagues, and Aligning for Success. The "Turnaround Plan" was
completed in FY23 and is embedded in "Business as Usual".
The new management team faced additional challenges as they began their
tenure, discovering that some customers and strategic partners had legacy
contracts featuring uncapped licencing and partner agreements with unconsumed
"pre-paids".
Further restructuring efforts were undertaken in August 2023, establishing the
FY24 cost base at around $23m. Simultaneously, management actively worked on
re-engaging with customers and partners to stabilise relationships in the
aftermath of the crisis.
During FY23, notable enhancements were made in governance, through the launch
of a "Code of Business Conduct and Ethics", involving the introduction of nine
new policies, and the initiation of training and certification for all
colleagues. Management, aiming for a standard comparable to the Sarbanes-Oxley
404 environment, implemented rigorous measures to ensure transparency.
The persistence of legacy issues continued to be a distraction for management,
taking the focus away from ongoing business priorities. As an example, and
partly in response to shareholder concerns, the new management requested that
former executives return the bonuses that were paid on the misplaced
assumption of FY22 performance. The FY22 bonuses were approved and paid in
January 2023 ahead of the annual FY22 audit completion. To date no monies
have been returned.
Another example occurred in the third quarter of 2023, where advisors had
submitted fees totalling c.$8m for the crisis management and fundraising
efforts. The decision to raise c.$30m only to see it diminished to $22m due to
external fees compounded our problems. In response, management appealed to the
advisory companies to share the responsibility and reduce their fees charged
to the Company. Some of the advisory firms demonstrated support for the
Company by voluntarily reducing their fees. This gesture underscored the
importance of collaborative efforts in overcoming challenges.
A focused reshaping of Cirata
Starting in September 2023, the management team convened and planned FY24.
This planning process encompassed vision, values and culture, strategies for
growth, measurable metrics and anticipated challenges. The planning process
was thorough, creating the content for FY24 plans and processes on a scalable
foundation, including quarterly business reviews, territory plans/reviews,
account reviews and planning, sales training & role plays of customer
scenarios, sales methodology (MEDPICC), and win/loss reviews, with a renewed
focus on DevOps. Some of the key achievements against this methodology are
outlined below:
GTM - streamlined and focused
The reality within the GTM presented a scenario akin to starting from scratch.
To streamline operations, a new GTM organisation was devised to reduce
management layers and intensify engagement with prospective customers and
partners. The GTM organisation, established in January 2024, in addition to
the core DI product, placed a renewed emphasis on DevOps and a dedicated team
was formed to concentrate on growing this business. This marked the first
concerted effort in some time towards new customer acquisition in DevOps.
Justin Holtzinger took charge of this DevOps team. For DI solutions, Chris
Cochran was appointed to lead North America and Rich Baker to lead
International.
Brand and team - revitalised
As of 1 October 2023, the new brand was adopted with Cirata selected as the
Company name. It was only at this point, could marketing restart against the
new branding. The management team was strengthened with Helen Carroll in
Marketing (interim), Hayley Fisher leading People, Dan Hayes in Investor
Relations and Frank van Baar responsible for Strategy and Operations.
Financial and operational discipline
The FY23 results, marked by declines in bookings and revenue, were anticipated
by the Company. Despite this, the Company did meet its H2 guidance for
bookings and cash. However, the bookings, were at the lower end of the
guidance range. The cash outcome surpassed expectations. Preservation of cash
is one of the top priorities of management as we progress through FY24.
Winning trust, winning business
Amid the challenges, there were notable successes, including wins at General
Motors and validation of the "land and expand" strategy through repeat
business from NatWest. The Company experienced minimal customer losses, a
testament to the resilience of its technology and products. We are proud to
report that our blue-chip clients include Allianz, Apple, BMW, Continental,
Huawei, Manulife and Tesco across our DI and DevOps products. We also continue
to support strong working relationships with our partners including AWS, IBM,
Oracle and Microsoft.
Accountability and alignment on FY24 goals
Management has laid the groundwork for future growth with the implementation
of FY24 plans, extensively communicated to all colleagues through sales and
companywide "Kick-Off" sessions. These sessions included the clarification of
team objectives, with expected outcomes clearly explained. Comprehensive sales
training took place during sales "Kick-Offs," accompanied by the signing of
all sales FY24 compensation plans in January 2024. Territory plans and
compliance training, including certification, were also integral components of
this rollout.
Despite these efforts, there's recognition that more work is needed to refine
sales cycles, especially in understanding the expectations of close cycles.
Notably, although it is fair to represent that DI customers remain in the
pipeline, the predictability of customer deal closure has been challenging,
with a tendency for slippage from quarter to quarter. DI solutions are sold
into large, complex enterprises and the sales cycle can be longer and
unpredictable. A key focus of the new management team is to enhance the
pipeline, improve predictability, and elevate overall sales performance.
Stepping forward into our transition to growth
A significant portion of the commentary in the FY23 Annual Report and Accounts
has been dedicated to explaining the many structural issues that needed to be
addressed and the internal building blocks put in place to rectify them.
Challenges and uncertainty remain. FY24 represents a transition year to growth
and our path to cash-flow positive in FY25.
There has been a deliberate shift towards external focus, actively engaging
with customers and partners. Efforts are underway to objectively examine the
market opportunity and assess optimal growth prospects within a data-driven
framework. Cirata technology holds an important position in the market,
offering solutions for providing and manoeuvering large datasets to support
ambitions in analytics and AI.
Further work is continuing on the market needs, product positioning and
differentiation to validate the attractiveness and competitive positioning of
the offering. As we accelerate our growth and win new customers, other growth
pains including product scaling may need careful management. However, by
proactively addressing these growth pains, we can effectively manage and
resolve them, ultimately enhancing our overall performance and success. As we
have said, there is more work to do, and the forward projection is likely to
be non-linear. The management team, is actively engaged in Cirata's day-to-day
execution, adopting a hands-on approach to reboot the Company, setting the
trajectory for recovery and growth in FY24. As we moved into FY24, we are
focusing externally on prospective and existing customers, strategic partners
and colleagues to execute on the strategy. Proactive customer dialogue is
directly shaping Cirata's ongoing strategy, and an inaugural Customer
Innovation Board is planned for early summer 2024.
Rebuilding trust and fulfilling the potential for shareholders remain our top
priorities. The management team would like to express gratitude to
shareholders and colleagues, especially for their unwavering support,
patience, and commitment.
Stephen Kelly
Chief Executive Officer
Financial review
Revenue for the year ended 31 December 2023 was $6.7m (FY22: $9.7m).
Deferred revenue from sales booked during 2023 and in previous years, and not
yet recognised as revenue, is $2.7m at 31 December 2023. At 31 December FY22
this stood at $2.3m. Our deferred revenue represents future revenue from new
and renewed contracts, many of them spanning multiple years.
Adjusted EBITDA loss(2) was $24.2m excluding advisor costs relating to the
Irregularities of $4.2m (FY22 EBITDA loss: $30.7m).
Revenue
Revenue was $6.7m (FY22: $9.7m). Revenue from deals closed in the current year
was $4.4m (FY22: $8.3m) and revenue from deals closed in the prior years
(deferred income unwinding) was $2.3m (FY22: $1.4m). The revenue from deals
closed in the year was primarily driven by contract renewals in our DevOps
business. The DevOps business contributed $3.7m (FY22: $5.4m) to the full year
revenues with the DI business contributing $3.0m (FY22: $4.3m). Services
revenues for both DevOps and DI business were $0.2m (FY22: $0.2m) and continue
to contribute a modest amount of revenue. We believe that this is an area that
should provide opportunity for incremental contribution to revenues going
forward.
From a geographical perspective, we saw an increased contribution to revenues
from North America which accounted for $4.6m (FY22: $5.5m). The contribution
from Europe and the Rest of the world segments were $1.4m and $0.7m
respectively, against $2.1m and $2.1m, respectively, in the prior year.
Overall, during 2023, contract wins continued to be lumpy with the sales
execution challenges outlined in the Business review a major challenge for the
business and its ability to deliver consistent and predictable sales bookings.
Operating costs
Cash overheads(1) decreased by $9.4m to $30.3m (excluding advisor costs
relating to the Irregularities of $4.2m) from $39.7m in FY22. The decline was
driven by a reduction in employee costs primarily from a restructuring of
headcount following the discovery of the Irregularities in March 2023. Our
headcount was 112 as at 31 December 2023 from a high in February 2023 of 193
(31 December 2022: 177). Management continues to focus on ensuring that the
cost base is appropriate for the current size and prospects of the business
with an expected annual overhead cost of c.$23m for the 2024 financial year.
Profit and loss
Adjusted EBITDA(2) loss for the year was $24.2m (excluding advisor costs
relating to the Irregularities of $4.2m). (FY22: $30.7m loss). The loss after
tax for the year increased to $36.5m (FY22: $29.6m), due to exchange loss of
$4.2m (FY22: gain $11.3m), advisor costs relating to the Irregularities of
$4.2m (FY22: $0.9m) offset by a lower impairment charge of $0.8m (FY22:
$2.2m).
The foreign exchange loss of $4.2m (FY22: $11.3m gain), reported within
finance (costs)/income, arose from the retranslation of Intercompany balances
at 31 December 2023, reflecting the appreciation of sterling against the US
dollar.
A translation gain of $4.5m (FY22: $10.8m loss) arising on the net assets of
overseas subsidiaries reported in reserves results in a minimal net impact on
the Group net assets.
Consolidated statement of financial position
Property, plant and equipment at 31 December 2023 reduced to $0.2m (31
December 2022: $0.7m) due to an impairment charge on the right of use assets.
Trade and other receivables at 31 December 2023 were $4.4m (31 December 2022:
$4.9m). This includes $1.8m of trade receivables (31 December 2022: $1.0m) and
$2.6m related to non-trade receivables (31 December 2022: $3.9m). Trade
receivables increased at 31 December 2023 due to the higher amount of bookings
invoiced in the fourth quarter of FY23 compared to FY22. Other receivables
reduced mainly due to a lower corporation tax receivable from R&D tax
credit claims and reduced prepayments and other receivables.
Trade and other payables reduced to $3.0m (31 December 2022: $6.2m). The
reduction mainly related to a reduction in bonus and audit fee accruals in
FY23 compared to FY22.
Deferred income from sales booked during FY23 and in previous years, and not
yet recognised as revenue, is $2.7m at 31 December 2023. At 31 December 2022
this stood at $2.3m. Deferred income increased due to a number of licence
renewals on which the revenue is recognised in FY24.
Share capital and share premium increased to $271.9m at 31 December 2023 (31
December 2022: $242.4m) due to the proceeds from the fundraise in the year of
$28.4m and proceeds from share options exercised of $1.1m.
Cash flow
Net consumption of cash was $30.6m before financing (FY22: $27.7m), of which
$6.8m related to exceptional costs associated with the Irregularities and the
cost of equity raising. The net consumption was partly offset by the
contribution of $29.5m from the issue of share capital, net of exchange rate
movements of $0.7m and payment of lease liabilities of $0.4m resulting in a
closing cash balance of $18.2m at 31 December 2023 (31 December 2022: $19.1m).
For FY24, the key to a sustainable cash generation is our ability to create
and convert pipeline opportunities into contracted bookings with a high level
of predictability and regularity. Historically, the Company has not managed to
achieve this enduring predictability which creates a degree of uncertainty in
forecasting future cash generation. Further details are included in Note 2(b)
of the financial statements.
Subsequent events
There are no subsequent events to report.
Ijoma Maluza
Chief Financial Officer
1. Operating expenses adjusted for: depreciation, amortisation,
equity-settled share-based payment and other one-off non recurring items
disclosed separately. See Note 4 for a reconciliation.
2. Operating loss adjusted for: impairment loss, depreciation,
amortisation, equity-settled share-based payment, other (expense)/income and
other one-off non recurring items disclosed separately. See Note 4 for a
reconciliation.
Consolidated statement of profit or loss and other comprehensive income
For the year ended 31 December 2023
Year ended Year ended
31 December 2023 31 December
(Audited) 2022
(Audited)
Note $'000 $'000
Revenue 3 6,695 9,685
Cost of sales (633) (695)
Gross profit 6,062 8,990
Operating expenses 4 (37,625) (47,926)
Other (expense)/income (46) 166
Impairment loss (815) (2,151)
Operating loss 4 (32,424) (40,921)
Finance income 164 11,423
Finance costs (4,227) (110)
Net finance (costs)/income (4,063) 11,313
Loss before tax (36,487) (29,608)
Income tax credit 8 3
Loss for the year (36,479) (29,605)
Other comprehensive income/(loss)
Items that are or may be reclassified subsequently to profit or loss:
Foreign operations - foreign currency translation differences 4,489 (10,821)
Other comprehensive income/(loss) for the year, net of tax 4,489 (10,821)
Total comprehensive loss for the year attributable to owners of the parent (31,990) (40,426)
Loss per share
Basic and diluted loss per share (cent) 5 (41) (47)
The notes form an integral part of these condensed consolidated financial
statements.
Consolidated statement of financial position
At 31 December 2023
31 December 2023 31 December
(Audited) 2022
(Audited)
Note $'000 $'000
Assets
Property, plant and equipment 151 727
Other non-current assets 6 278 864
Non-current assets 429 1,591
Trade and other receivables 7 4,439 4,900
Cash and cash equivalents 18,246 19,108
Current assets 22,685 24,008
Total assets 23,114 25,599
Equity
Share capital 15,634 9,524
Share premium 256,278 232,861
Translation reserve (9,084) (13,573)
Merger reserve 1,247 1,247
Retained earnings (247,461) (213,496)
Total equity 16,614 16,563
Liabilities
Loans and borrowings 8 359 119
Deferred income 9 129 220
Deferred tax liabilities 3 3
Non-current liabilities 491 342
Current tax liabilities - 11
Loans and borrowings 8 436 420
Trade and other payables 2,986 6,225
Deferred income 9 2,587 2,038
Current liabilities 6,009 8,694
Total liabilities 6,500 9,036
Total equity and liabilities 23,114 25,599
The notes form an integral part of these condensed consolidated financial
statements.
Consolidated statement of changes in equity
For the year ended 31 December 2023
Attributable to owners of the Company
Share Share Translation reserve Merger Retained earnings Total
capital premium reserve equity
Audited $'000 $'000 $'000 $'000 $'000 $'000
Balance at 31 December 2021 8,608 213,762 (2,752) 1,247 (186,442) 34,423
Total comprehensive loss for the year
Loss for the year - - - - (29,605) (29,605)
Other comprehensive loss for the year - - (10,821) - - (10,821)
Total comprehensive loss for the year - - (10,821) - (29,605) (40,426)
Transactions with owners of the Company
Contributions and distributions
Equity-settled share-based payment - - - - 2,551 2,551
Proceeds from share placing 728 18,627 - - - 19,355
Share options exercised 188 472 - - - 660
Total transactions with owners of the Company 916 19,099 - - 2,551 22,566
Balance at 31 December 2022 9,524 232,861 (13,573) 1,247 (213,496) 16,563
Audited
Total comprehensive income/(loss) for the year
Loss for the year - - - - (36,479) (36,479)
Other comprehensive income for the year - - 4,489 - - 4,489
Total comprehensive income/(loss) for the year - - 4,489 - (36,479) (31,990)
Transactions with owners of the Company
Contributions and distributions
Equity-settled share-based payment - - - - 2,514 2,514
Proceeds from share placing 6,059 22,400 - - - 28,459
Share options exercised 51 1,017 - - - 1,068
Total transactions with owners of the Company 6,110 23,417 - - 2,514 32,041
Balance at 31 December 2023 15,634 256,278 (9,084) 1,247 (247,461) 16,614
The notes form an integral part of these condensed consolidated financial
statements.
Consolidated statement of cash flows
For the year ended 31 December 2023
Year ended Year ended
31 December 31 December 2022
2023 (Audited)
(Audited)
Note $'000 $'000
Cash flows from operating activities
Loss for the year (36,479) (29,605)
Adjustments for:
- Depreciation of property, plant and equipment 629 870
- Amortisation of intangible assets - 3,903
- Loss on disposal of property, plant and equipment 125 -
- Release of lease liability (216) -
- Impairment of right of use asset 815 69
- Impairment of intangible assets - 1,349
- Net finance income (excluding foreign exchange) (137) (20)
- Income tax charge/(credit) and other expense/(Income) 38 (169)
- Unrealised foreign exchange loss/(gain) 3,952 (10,383)
- Equity-settled share-based payment 10 2,514 2,551
(28,759) (31,435)
Changes in:
- Trade and other receivables 540 43
- Trade and other payables (3,451) 2,288
- Deferred income 447 503
Net working capital change (2,464) 2,834
Cash used in operating activities (31,223) (28,601)
Interest paid (27) (110)
Income tax received 652 1,216
Net cash used in operating activities (30,598) (27,495)
Cash flows from investing activities
Interest received 33 48
Acquisition of property, plant and equipment (76) (206)
Net cash used in investing activities (43) (158)
Cash flows from financing activities
Proceeds from issue of share capital 31,362 20,307
Share issue costs (1,835) (292)
Payment of lease liabilities (430) (532)
Net cash generated from financing activities 29,097 19,483
Net decrease in cash and cash equivalents (1,544) (8,170)
Cash and cash equivalents at 1 January 19,108 27,759
Effect of movements in exchange rates on cash held 682 (481)
Cash and cash equivalents at 31 December 18,246 19,108
The notes form an integral part of these condensed consolidated financial
statements.
Notes to the condensed consolidated financial statements
For the year ended 31 December 2023
1. Reporting entity
Cirata plc (the "Company") is a public limited company incorporated and
domiciled in Jersey. The Company's ordinary shares are traded on AIM. These
condensed consolidated financial statements ("Financial statements") as at and
for the year ended 31 December 2023 comprise the Company and its subsidiaries
(together referred to as the "Group"). The Group is primarily involved in the
development and provision of global collaboration software.
2. Basis of preparation
a Basis of accounting
Whilst the financial information included in this audited preliminary
announcement has been prepared on the basis of the requirements of UK adopted
International Financial Reporting Standards ("IFRSs") in issue and effective
at 31 December 2023, this announcement does not itself contain sufficient
information to comply with IFRS.
The financial information set out in this preliminary announcement does not
constitute the Group's Consolidated financial statements for the years ended
31 December 2023 or 31 December 2022.
The financial information for 2022 is derived from the consolidated accounts
for the year ended 31 December 2022 which have been audited and delivered to
the registrar of companies with the Jersey Financial Services Commission
("JFSC"). The auditor has reported on those accounts; the audit report was (i)
unqualified, (ii) included a material uncertainty related to going concern due
to the requirement to obtain shareholder approval for an increase in the
authorised share capital to enable shares to be issued in settlement of the
$30.3m fundraise and (iii) did not contain a statement under section 113B (3)
or (6) of the Companies (Jersey) Law 1991. The financial information for 2023
is derived from the consolidated accounts for the year ended 31 December 2023.
The Consolidated financial statements have been prepared in accordance with
IFRSs as adopted for use in the UK.
The preliminary announcement has been prepared using the accounting policies
published in the Group's accounts for the year ended 31 December 2022, which
are available on the Company's website. From 1 January 2023 the new
standards set out below were adopted by the Group.
(i) New and amended standards adopted by the Group
The following new standards and amendments to standards that are effective for
the first time for the financial year beginning 1 January 2023 have been
adopted:
- Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS
Practice Statement 2).
- Deferred Tax related to Assets and Liabilities arising from a Single
Transaction (Amendments to IAS 12); and
- Definition of Accounting Estimates (Amendments to IAS 8).
These amendments to standards have not had a material impact on these
financial statements.
(ii) New and amended standards and interpretations issued but not effective
for the financial year beginning 1 January 2024 and not early adopted
A number of new standards are effective for annual periods beginning after 1
January 2024 and earlier application is permitted; however, the Group has not
early adopted the new or amended standards in preparing these financial
statements.
The amended standards and interpretations are not expected to have a
significant impact on the Group's consolidated financial statements.
b Going concern basis of accounting
To assess whether it is appropriate to prepare the financial statements on a
going concern basis the Directors have prepared forecasts and budgets. These
forecasts and budgets take into consideration the results of a robust
assessment of the principal risks facing the Group, including those risks that
would threaten the Group's business model, future performance and liquidity.
As has been well documented the Group continues to execute its turnaround plan
with the expectation of reaching a cash flow break-even position by the end of
the calendar year before achieving positive cash generation in FY25. In the
year ended 31 December 2023, the Group incurred a loss before tax of $36.5m
(2022: $29.6m) and experienced a net cash outflow before financing of $30.6m
(2022: $27.7m). During 2023, the performance of the Group declined, with
revenue decreasing by 31% to $6.7m (2022: $9.7m) and operating losses of
$32.4m (2022: $40.9m) were incurred. As at 31 December 2023 the Group had net
assets of $16.6m (2022: $16.6m), including cash of $18.2m (2022: $19.1m). As
at 31 December 2023 the Group had no debt facilities (2022: none).
2. Basis of preparation (continued)
b Going concern basis of accounting (continued)
In performing its going concern assessment, the Directors are required to
consider a minimum period of 12 months from the date of approving the
financial statements. Scenario modelling has been undertaken over the period
to 31 August 2025. The assessment involved the preparation of a 'Base' case
and a severe but plausible 'Downside' case.
The Base case scenario included assumptions for quarterly sales targets,
anticipated changes to Group's current contracting model, timeframes for new
sales personnel to convert sales pipelines, and cost assumptions reflecting an
overhead annualised cost base of c.$23m. Under the Base case the Group is
forecasting the ability to meet all financial obligations as and when they
fall due during the period forecast.
The Downside case sensitised the Base case and modelled materially lower sales
bookings during the period without any cost reduction, which would be taken in
such a scenario. Under the Downside case the Group is forecasting a reduction
in cash resources to effectively nil by end of June 2025. The Downside
scenario does not consider any readily available mitigating actions that
management could take. By their very nature forecasts and projections are
inherently uncertain. The biggest driver of the uncertainty continues to be
around the ability of the business to successfully close sales in a
predictable and sustainable way. Consequently, the loss-making position of the
Group and the low forecast cash balance sheet position heightens the
uncertainty such that circumstances could arise under which the downside
scenario may occur that would render the preparation of accounts based on the
assumption of a going concern inappropriate.
In the past the Group has managed to address such downside scenarios through a
combination of raising funds from shareholders and cost cutting measures. The
Directors believe both fund raising and cost cutting options remain available
to them for the current going concern period being assessed. Whilst trading
for the current year has started slower than expected, the Directors believe
the current sales pipeline is healthy, are confident that new revenue
contracts will be secured in line with those forecast, that appropriate
mitigating actions to the Group's cost base could be undertaken should the
need arise, and that these actions would be sufficient for the Group to meet
its financial obligations as and when they fall due over the forecast period.
If however the downside scenario were to occur and (a) the Company were unable
to anticipate and cut costs sufficiently to preserve the cash runway to a cash
break-even position and (b) the Company were unable to raise funds from
shareholders or other sources, this would indicate the existence of a material
uncertainty which would cast significant doubt over the Group's ability to
continue as a going concern.
Accepting the material uncertainty, the Directors have a reasonable
expectation that the Group has adequate resources to continue in operational
existence for the foreseeable future. For these reasons, they continue to
adopt the going concern basis in preparing these financial statements. No
adjustments have been made to the financial statements that would result if
the Group were unable to continue as a going concern.
c Functional and presentational currency
The consolidated financial statements are presented in US dollars, as the
revenue for the Group is predominately derived in this currency. Billings to
the Group's customers during the year by Cirata, Inc. were all in US dollars
with certain costs being incurred by Cirata Ltd in sterling and Cirata, Pty
Ltd in Australian dollars. All financial information has been rounded to the
nearest thousand US dollars unless otherwise stated.
d Alternative performance measures
The Group uses a number of alternative performance measures ("APMs") which are
non-IFRS measures to monitor the performance of its operations. The Group
believes these APMs provide useful information to help investors and other
stakeholders evaluate the performance of the business and are measures
commonly used by certain investors for evaluating the performance of the
Group. In particular, the Group uses APMs which reflect the underlying
performance on the basis that this provides a more relevant focus on the core
business performance of the Group and aligns with our KPIs. Adjusted results
exclude certain items because if included, these items could distort the
understanding of our performance for the year and the comparability between
periods. The Group has been using the following APMs on a consistent basis and
they are defined and reconciled as follows:
- Cash overheads: Operating expenses adjusted for: depreciation,
amortisation, equity-settled share-based payment and other one-off non
recurring items disclosed separately. See Note 4 for a reconciliation.
- Adjusted EBITDA: Operating loss adjusted for: impairment loss,
depreciation, amortisation, equity-settled share-based payment, other
(expense)/income and other one-off non recurring items disclosed separately.
See Note 4 for a reconciliation.
e Use of judgements and estimates
In preparing these financial statements, management has made judgements and
estimates that affect the application of the Group's accounting policies and
the reported amounts of assets and liabilities, income and expenses. Actual
results may differ from these estimates. The significant judgements made by
management in applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those described in the last annual
financial statements.
3. Revenue and segmental analysis
a Operating segments
The Directors consider there to be one operating segment, being that of
development and sale of licences for software, related maintenance and
support and professional services.
b Geographical segments
The Group recognises revenue in three geographical regions based on the
location of customers, as set out in the following table:
Year ended Year ended
31 December 31 December
2023 2022
(Audited) (Audited)
Revenue $'000 $'000
North America 4,603 5,504
Europe - Germany 896 733
Europe - Other 479 1,355
Rest of the world - China 478 1,894
Rest of the world - Other 239 199
6,695 9,685
Management makes no allocation of costs, assets or liabilities between these
segments since all trading activities are operated as a single business unit.
c Major products
The Group's core patented technology, Distributed Coordinated Engine "DConE",
enables the replication of data. This core technology is contained in the vast
majority of the Group's products.
d Major customers
Year ended 31 December Year ended 31 December Year ended Year ended
2023 2023 31 December 2022 31 December 2022
(Audited) (Audited) (Audited) (Audited)
% of Revenue % of Revenue
revenue $'000 revenue $'000
Customer 1 15% 984 9% 828
Customer 2 12% 832 0% 3
Customer 3 11% 716 5% 505
Customer 4 3% 174 10% 926
No other single customers contributed 10% or more to the Group's revenue
(2022: nil).
e Split of revenue by timing of revenue recognition
Year ended Year ended
31 December 31 December
2023 2022
(Audited) (Audited)
Revenue $'000 $'000
Licences and services transferred at a point in time 4,222 7,466
Maintenance and support services transferred over time 2,473 2,219
6,695 9,685
f Contract balances
The following table provides information about contract assets and liabilities
from contracts with customers.
31 December 31 December 2022
2023 (Audited)
(Audited)
$'000 $'000
Contract assets, which are included in "Other non-current assets - accrued 265 843
income"
Contract assets, which are included in "Trade and other receivables - accrued 800 843
income"
Total contract assets 1,065 1,686
Contract liabilities, which are included in "Deferred income - non-current" (129) (220)
Contract liabilities, which are included in "Deferred income - current" (2,587) (2,038)
Total contract liabilities (2,716) (2,258)
4. Cash overheads and Adjusted EBITDA loss
Year ended Year ended
31 December 31 December
2023 2022
(Audited) (Audited)
a Reconciliation of operating expenses to "Cash overheads": Note $'000 $'000
Operating expenses (37,625) (47,926)
Adjusted for:
Advisor costs relating to the Irregularities 4,175 924
Amortisation and depreciation 629 4,773
Equity-settled share-based payment 10 2,514 2,551
Cash overheads (30,307) (39,678)
Year ended Year ended
31 December 31 December
2023 2022
(Audited) (Audited)
b Reconciliation of operating loss to "Adjusted EBITDA loss": Note $'000 $'000
Operating loss (32,424) (40,921)
Adjusted for:
Other expense/(income) 46 (166)
Advisor costs relating to the Irregularities 4,175 924
Impairment loss 815 2,151
Amortisation and depreciation 629 4,773
Equity-settled share-based payment 10 2,514 2,551
Adjusted EBITDA loss (24,245) (30,688)
5. Loss per share
a Basic loss per share
The calculation of basic loss per share has been based on the following loss
attributable to ordinary shareholders and weighted average number of ordinary
shares outstanding:
Year ended Year ended
31 December 31 December
2023 2022
(Audited) (Audited)
$'000 $'000
Loss for the year attributable to ordinary shareholders 36,479 29,605
Weighted average number of ordinary shares 2023 2022
Number of shares Number of shares
'000 '000
Issued ordinary shares at 1 January 67,015 59,612
Effect of shares issued in the year 20,934 3,850
Weighted average number of ordinary shares at 31 December 87,949 63,462
2023 2022
Basic loss per share (cent) 41 47
5. Loss per share (continued)
b Adjusted loss per share
Adjusted loss per share is calculated based on the loss attributable to
ordinary shareholders before one-off advisors costs relating to the
Irregularities, net foreign exchange loss/(gain), impairment loss and the cost
of equity-settled share-based payment, and the weighted average number of
ordinary shares outstanding:
Year ended Year ended
31 December 31 December
2023 2022
(Audited) (Audited)
Adjusted loss for the year: Note $'000 $'000
Loss for the year attributable to ordinary shareholders 36,479 29,605
Adjusted for:
Advisor costs relating to the Irregularities (4,175) (924)
Impairment loss (815) (2,151)
Net foreign exchange (loss)/gain (4,200) 11,293
Equity-settled share-based payment 10 (2,514) (2,551)
Adjusted loss for the year 24,775 35,272
2023 2022
Adjusted loss per share (cent) 28 56
c Diluted loss per share
Due to the Group having losses in all years presented, the fully diluted loss
per share for disclosure purposes, as shown in the Consolidated statement of
profit or loss and other comprehensive income, is the same as for the basic
loss per share.
6. Other non-current assets
31 December 2023 31 December
(Audited) 2022
(Audited)
Due in more than a year: $'000 $'000
Other receivables 13 21
Accrued income 265 843
Total other non-current assets 278 864
7. Trade and other receivables
31 December 2023 31 December
(Audited) 2022
(Audited)
Due within a year: $'000 $'000
Trade receivables 1,775 1,038
Other receivables 515 689
Accrued income 800 843
Corporation tax 691 1,371
Prepayments 658 959
Total trade and other receivables 4,439 4,900
8. Loans and borrowings
31 December 2023 31 December 2022
(Audited) (Audited)
$'000 $'000
Non-current liabilities
Lease liabilities 359 119
359 119
Current liabilities
Current portion of lease liabilities 436 420
436 420
Total loans and borrowings 795 539
At 31 December 2023 and 2022 there was no bank loan debt.
9. Deferred income
Deferred income represents contracted sales for which services to customers
will be provided in future years.
31 December 2023 31 December 2022
(Audited) (Audited)
Deferred income which falls due: $'000 $'000
Within a year 2,587 2,038
In more than a year 129 220
Total deferred income 2,716 2,258
10. Share-based payment
The Group operates share option plans for employees of the Group. Options in
the plans are settled in equity in the Company and are normally subject to a
vesting schedule but not conditional on any performance criteria being
achieved.
The terms and conditions of the share option grants are detailed in the Group
Annual Report and Accounts for the year ended 31 December 2023.
a Expense recognised in profit or loss
Year ended Year ended 31 December
31 December 2022
2023 (Audited)
(Audited)
$'000 $'000
Total equity-settled share-based payment charge 2,514 2,551
b Summary of share options outstanding
2023 2022
Number of share options outstanding: Number of options Number of options
(Audited) (Audited)
Outstanding at 1 January 5,449,095 3,834,400
Forfeited during the year (4,062,030) (344,852)
Exercised during the year (419,116) (1,544,523)
Cancelled during the year (435,286) -
Granted during the year 4,451,702 3,504,070
Outstanding at 31 December 4,984,365 5,449,095
Exercisable at 31 December 421,944 2,269,063
Vested at 31 December 421,944 2,269,063
11. Commitments and contingencies
The Group has a contingent liability at 31 December 2023 relating to a
sponsorship agreement whereby an additional $127,303 is to be paid under
certain conditions that were subject to post year end outcomes. This is a
related party transaction.
At 31 December 2023 the Group had no capital commitments (31 December 2022:
$nil) and the Group had no other contingent liabilities at 31 December 2023
(31 December 2022: none).
12. Subsequent events
There are no subsequent events to report.
1
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