REG - Cirata PLC - Interim results
04/09/2024 07:00
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RNS Number : 7860C Cirata PLC 04 September 2024
4 September 2024
Cirata plc
("Cirata" or the "Company" or the "Group")
Interim unaudited results for the six months ended 30 June 2024
Cirata (LSE: CRTA), announces its interim unaudited results for the six months
ended 30 June 2024 ("H1 FY24" or the "Period"). A supporting pre-recorded
video presentation with Q&A will be available shortly after the release of
this RNS at Cirata Interims
(https://stream.brrmedia.co.uk/broadcast/66c5e2a630fe8b66d4962f27) or can be
accessed through the company website at Investor relations
(https://cirata.com/investors/reports-and-presentations) .
Financial Headlines
· Revenue for the Period $3.4m (H1 FY23: $3.0m)
· Bookings 1 (#_ftn1) of $2.4m (H1 FY23: $2.8m)
· Cash overheads 2 (#_ftn2) of $11.8m (H1 FY23: $17.6m)
· Adjusted EBITDA 3 (#_ftn3) loss of $8.6m (H1 FY23: $14.8m, loss)
· Statutory loss from operations of $9.6m (H1 FY23: $18.8m, loss)
· Cash at 30 June 2024 of $9.1m (31 December 2023: $18.2m)
· Outlook: The Board is retaining its FY24 booking guidance of $13-15m
as, with strong execution, it remains achievable although demanding with
expected bookings Q4 FY24 weighted
Bookings
Bookings in H1 FY24 were $2.4m (H1 FY23: $2.8m), with the business mix driven
by DevOps software, accounting for 59% of bookings and Data Integration ("DI")
software accounting for 41% of bookings (H1 FY23: DevOps software 81%, DI
19%). New and growth contracts represented 43% of the mix by value (H1 FY23:
15% of the mix). The improvement in mix to new and growth contracts represents
a YoY improvement in the new contract acquisition and expansion of existing
contracts.
In total, 31 contracts were signed in H1 FY24 (H1 FY23: 33 contracts) of which
16 were new and growth contracts (H1 FY23:13 contracts). DI new and growth
contracts for the Period totalled 7, including the second phase to the
previously announced deal with a large automotive manufacturer, (H1 FY23: 4
contracts). DI represented 85% of the value of all new and growth contracts.
Significant renewals secured in H1 FY24 included the previously announced
$592,000 3-year maintenance and support renewal by Oppo for Cirata's MultiSite
Gerrit product 4 (#_ftn4) .
Deal slippage remained a feature of H1 FY24 performance. As disclosed in the
Q2 FY24 trading update, published on 16 July 2024, some of the significant
potential deals in Q2 FY24 slipped. We continue to expect that these will
conclude in the latter part of H2 FY24 matching customer critical timelines.
During H1 FY24 the team delivered some improvement on closing smaller deals,
which is encouraging, but challenges remain around the complex nature of
larger enterprise sales for DI, with complexity from customer and partner
procurement processes. Establishing greater sales cycle predictability with
better sales execution, therefore, remains a key priority for Management to
enable Cirata to move beyond its current non-linear growth trajectory. Today,
the sales team is more established which provides greater confidence in sales
cycle management and deal closure predictability.
Key Performance Indicators ("KPIs")
Bookings have lagged the overall improvement in the business since the
implementation of the Turnaround plan prompted by the March 2023 disclosures.
However, KPIs point to the ongoing recovery taking place in the business.
1. Exiting H1 bookings pipeline at all stages amounted to greater than 110
opportunities.
2. Within the pipeline the product mix is 31% DevOps, 69% DI. The
geographic mix is 34% International, 66% North America.
3. 70% of lead generation has come through partners.
4. Within DI, we have won 6 new logos including 2 major Automotive
companies, and 4 global financial institutions. Returning customers in DI
include a global retailer, global IT services company, Telecoms company,
global automotive company, and a global insurer,
5. Within DI we have implemented all three target use cases (migration,
disaster recovery, and continuous use case) using the Live Data Migrator
("LDM") product. These have been contracted to both returning and new
customers.
6. Returning customers are an important metric for the business, not only
from a booking's perspective but also an indication of trust in both the
product and the Cirata brand. In total since the rescue of the business in
March 23 we have 47 renewals, 6 of which have been for DI. In addition, New
and Growth contracts totaled 33, of which DI totaled 15.
7. In DevOps Cirata launched the first product release since 2021 to
support Geritt 3.7. Work is underway to support 3.9. Customer feedback is
positive including Proof of Concepts ("POC").
8. The scope of the LDM target integrations include, Hadoop Distributed
file system (HDFS), Amazon S3, Azure Data Lake storage (ADLS) Gen 2, Google
Cloud
Storage, IBM Object Storage, Oracle Object Storage and, Alibaba Cloud Object
Storage Service.
9. For DI, the recent release of LDM 2.5 continues to improve the scope of
both source and target implementations, aligning with our partners and
customers immediate needs and further expanding the opportunities for lead
generation. Recent examples of expanding partnership include announcements
with both DataBricks 5 (#_ftn5) and IBM 6 (#_ftn6) . LDM 2.5 provides
support for DataBricks Unity catalog, and live support for IBM GPFS a cluster
file system used as storage for the IBM Spectrum Scale data lake. We are
seeing a strong cadence to our release planning and scheduling.
10. The upcoming release of LDM 2.6 will provide support for Apache Iceberg 7
(#_ftn7) . This is an open standard that will allow for broader data lake
interoperability, an important hybrid cloud enabler.
11. We recently announced that LDM is available on Google Cloud Marketplace 8
(#_ftn8) . With the addition of Google LDM is now available on all three of
the major cloud vendors marketplaces.
Cost realignment programme
Realistic growth targets must be aligned to the appropriate cost base to
deliver on the current plan and provide operating leverage as we move beyond
targeted breakeven. During Q2 FY24 as part of our ongoing efficiency and
effectiveness drive, we initiated a fresh cost realignment programme to
further reduce annualised costs from $23m to circa $20m as we exit FY24. This
compares to the overall annualised cost base of $45m at the end of March FY23.
This will have the effect of significantly improving the operational leverage
of the Company as we continue to execute towards our growth goals for FY24 and
beyond.
Equity fundraise
The Company recently completed its equity fundraise raising gross proceeds of
$7.2m (£5.6m), announced on 17 July 2024, the use of proceeds are as follows:
· Take the business through to cash flow break-even, which the Company
aspires to as it exits FY24;
· Underpin all stakeholders', including customers' confidence
· To allow the business to capitalize on its potential through
investment in sales, marketing and products.
Outlook
As outlined in the Company's trading update on 16 July 2024, with the current
pipeline, prospects in progress (including those delayed from Q2 FY24) and
four months of the year remaining, the Board is retaining its FY24 booking
guidance of $13-15m as, with strong execution, it remains achievable although
demanding with expected bookings Q4 FY24 weighted. We believe we will
continue to see improving levels of sales activity, both direct and through
partners as we trade through H2 FY24 and our Go-To-Market ("GTM") continues to
mature.
Relative to prior periods this level of bookings would represent:
- Sequential progression on FY23, with 81% bookings growth at the low
end and 108% at the high end
The FY24 cash overhead cost base is expected to be c.$23m and is expected to
be at $20m annualized as we exit FY24.
The Board believes that the current levels of lead generation and early-stage
pipeline support the medium-term ambition of the Company.
Current Trading
The Company has continued to make progress closing nine deals so far in Q3.
Further information will be provided in the Q3 IMS in October.
Stephen Kelly, Chief Executive Officer, commented:
"Whilst we are making progress rebuilding the Company, we knew the rebuild
would take time and we are yet to see the fruits of our labour in terms of the
headline numbers. However, there are plenty of positives that give us
confidence as we navigate the second half of the year.
"On our scorecard, both customer and partner re-engagement is progressing
well, our product positioning has improved clarity, our product roadmap is
aligned and driving our pipeline build and we have positioned the Company for
maximum operational leverage when we hit our growth targets. Our goal is to
deliver sustainable levels of high growth with a fraction of the previous cost
base as we improve GTM productivity and market alignment across the Company.
Deal slippage continues to mask other improvement taking hold across the
business and although some initial improvements have been made on closing
smaller deals sales execution continues to require focus and attention.
Management remains laser focused on reducing the Company's exposure to
slippage risk.
"Building a growth company from the wreckage of a broken business places
special demands on the colleagues tasked to accelerate the growth journey. I
am particularly proud of the response from our colleagues to the challenges we
have faced, and I know we are collectively looking to the future with renewed
energy, focus and optimism. To our customers and investors, we thank you for
your continued patience and support."
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
Daniel 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 / Ben Good / Sarah Wong
Panmure Liberum (Joint Broker) +44 (0)20 3100 2000
Max Jones / John More
About Cirata
Cirata, accelerates data-driven revenue growth by automating data transfer and
integration to modern cloud analytics and 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
At the start of H1 FY24 the Company began its Business-as-Usual phase of its
Turnaround plan, having undergone a major reorganization in terms of both the
Company's structure and strategic focus. During the first quarter of this
financial year, we implemented the final changes made to the Company's sales
organization structure. The sales kickoff early in the year embedded sales
training, processes, and targets for the FY24 plan. Pipeline opportunities
have continued to build throughout H1 FY24 with improved partner and direct
customer engagement.
Deal slippage remained a feature in H1 FY24 and has led to a delay in pipeline
conversion. Enterprise sales cycles are 6-12 months in duration and
procurement cycles for both partners and direct customer engagement can be
complex. Management remains focussed on reducing the Company's exposure to
slippage risk, establishing greater sales cycle predictability, therefore,
this remains a key priority for Management.
Combined with the substantial gains in operating leverage achieved through our
cost realignment program, this will pave the way for Cirata to reach
profitability and transition to sustainable growth.
During the past six months, the marketing function has 'test driven' various
elements of the marketing mix and there is growing evidence that digital
marketing and account-based marketing efforts are starting to deliver
meaningful inbound leads. The marketing team is now doubling down on certain
activities that are yielding improved lead generation metrics such as a 200%
increase in Q2 FY24 over Q1 FY24 LinkedIn add performance and an 80% increase
in organic search traffic. Further improvements on the website Cirata.com have
been made. A simplified user experience, and an improved clarity on product
positioning and value proposition.
The new GTM organization is bedding down with leads from partners and customer
activity levels increasing and contributing to pipeline growth.
Whilst the first two quarters have been slower than expected or desired, the
January 1 reconfiguration of the GTM approach accompanied by greater clarity
around Cirata's product offerings have served to improve momentum, which is
encouraging. The pipeline is higher quality, better qualified and more robust
compared to this point last year or indeed 6 months ago.
Separately following a review of the strategy completed in April 2024, several
strategic decisions were validated with primary data input from customers,
partners and market data, namely:
1. Grow and invest in the two product lines - Data Integration (potential
triple digit annual growth) & DevOps (potential double digit annual
growth). Functionally, there is a separation between DI and DevOps sales &
Product/Engineering teams to execute for growth;
2. Establish two Data Integration sales geographies (Americas &
International) and a dedicated global DevOps focus; and
3. Continue the tactical 8-12 quarters growth plans whilst developing
long-term strategic growth plans in growth markets based on our core
competencies of DI/DevOps towards Hybrid Cloud & AI.
Within DI the establishment of a beach head market for data lake migration
underpins the near-term growth opportunities for the LDM. The messaging and
positioning of LDM has been clarified and simplified seeking to provide a
clear value proposition to our customers[ (#_ftn9) 9] (#_ftn9) . In DevOps
niche opportunities exist within development environments that have assets
with high levels of intellectual property and that require fault tolerant
solutions. In particular, we see opportunities within the Gerrit code review
market.
The Company's recent product releases and future technology road map align
with both the current tactical pipeline opportunities and medium-term adjacent
growth opportunities. With the release of LDM 2.5 important enhancements to
both source and target environment support has been achieved. Native
integration with DataBricks Unity catalog allows users of LDM to take full
advantage of the unified governance features of the Databricks platform. In
addition, live support for IBM General Parallel File System adds another
important source environment to the LDM capabilities. With the 2.5 release
not only is migration scale and performance improved but also fine-grained
control and audit logging is supported, an increasingly important feature in a
multicloud data management environment. The upcoming release of LDM 2.6 will
provide support for Apache Iceberg 10 (#_ftn10) . This is an open standard
that will allow for broader data lake interoperability, an important hybrid
cloud enabler. LDM is also now available on the Google Cloud Marketplace, this
will make it easier for joint customers to acquire the technology they need to
migrate Hadoop data lakes across multi-cloud environments that include Google
Cloud while helping to optimize cloud spend.
In DevOps we released Gerrit Multisite 3.7 which closes a significant version
gap in the code review offering that will allow both existing and new
customers to enjoy simplified scalability, communication and collaboration
features.
The validation of the strategic direction, the ongoing development of the
product roadmap with our GTM, the improving cadence to pipeline build, and a
significantly improved operating leverage through a realigned cost structure
point to progress towards a sustainable growth model.
Financial Review
Revenue for the period ended 30 June 2024 was $3.4m (H1 FY23: $3.0m).
Deferred revenue from sales booked during H1 FY24 and in previous years, and
not yet recognised as revenue, is $2.3m at 30 June 2024 (H1 FY23: $1.9m). Our
deferred revenue represents future revenue from new and renewed contracts,
many of them spanning multiple years.
Adjusted EBITDA loss was $8.6m (H1 FY23: $14.8m, loss). The reduction in the
loss position has been primarily driven by a materially lower cost base than
the prior period following cost reduction efforts undertaken following the
discovery of the Irregularities announced on 9 March 2023.
Revenue
Revenue was $3.4m (H1 FY23: $3.0m). Revenue performance is driven by Bookings
in the Period and the movement in deferred revenue balance. Of the $3.4m of
revenue for the Period, $1.0m came from Bookings and $2.4m from deferred
revenue movement.
The Company has two main products: Data Integration (DI) and DevOps. The Data
Integration revenues were $1.3m (H1 FY23: $0.7m) with DevOps revenues making
up $2.1m (H1 FY23: $2.3m) during the period. The DI business continues to be
lumpy in nature reflecting the non-linear timing of bookings as well as the
accounting of booked business where most of the revenue from a booking is
recognized as license at a point in time on delivery with the remainder
allocated to support and maintenance which is spread over the life of the
underlying contract. The DevOps business is mainly driven by renewals with
revenues primarily coming from maintenance and support and recognized pro rata
over the period of the underlying contract: the exception, historically, has
been for perpetual license income as was the case in H1 FY23.
As we continue to re-build the business and our commercial model, we aim to
transition to greater recurring revenue over time, to reduce the volatility of
our revenue base and provide greater forward visibility. A combination of
increasing visibility of Bookings (through growth in the pipeline and
reduction in slippage) and moving DI customers to a "platform fee and
subscription model" should, over time, increase the level of recurring
revenues.
Operating costs
Cash overheads decreased in the period primarily reflecting the impact of the
restructuring undertaken by the business, falling to $11.8m in H1 FY24 (H1
FY23: $17.6m). The Company began FY23 with an elevated cost base, reaching
$45m annualized run-rate in Q1 FY23, as it anticipated significant new
business from commit-to-consume contracts which turned out to be non-existent
and fraudulent. The actions taken by Management during FY23 significantly
reduced the cost base with the full year impact coming through in 2024. The
cost reductions were realized across the business with reductions in both
headcount: 108 as at 30 June 2024 (31 December 2023: 112, and 30 June 2023:
127); and non-headcount costs. At the start of 2024, Management expected the
annualized run-rate for 2024 to be c.$23m.
Management have continued to rationalize the cost base after H1 FY24 and now
expect the overhead cost base for FY25 to be c.$20m. We believe that this cost
base provides the capacity for the business to deliver on its bookings growth
objectives and thus creates significant operating leverage.
Profit and loss
Adjusted EBITDA loss for the period was $8.6m (H1 FY23: $14.8m, loss).
The loss after tax for the period decreased to $8.9m (H1 FY23: $22.5m),
principally because of lower cost base and net foreign exchange gain of $0.7m
(H1 FY23: $3.9m loss), reported within finance income/(costs). The net foreign
exchange gain arose from the retranslation of intercompany balances at 30 June
2024, reflecting the weakening of sterling against the US dollar. The impact
of FX rates changes on the financial statements should be restricted to the
retranslation of US dollar denominated intercompany loans, as opposed to the
operating activities of the business. A translation (loss)/gain on the net
assets of overseas subsidiaries reported in reserves results in a minimal
impact on the Group net assets.
Balance sheet and cash flow
Trade and other receivables at 30 June 2024 were $4.4m (31 December 2023:
$4.4m). This includes $1.9m of trade receivables (31 December 2023: $1.8m) and
$2.5m related to non-trade receivables (31 December 2023: $2.6m).
Net consumption of cash was $9.0m before financing (H1 FY23: $16.1m),
resulting in a closing cash balance of $9.1m as at 30 June 2024. The lower
cash burn was driven by lower costs compared to the prior period.
Management continues to focus on driving the business to a cash flow
break-even position as the Company exits 2024.
Subsequent events
On 16 July 2024 the Company announced a fundraise to raise gross proceeds of
approximately $7.2m (£5.4m) at a price of 55 pence per share which it
successfully completed
Ijoma Maluza
Chief Financial Officer
Condensed consolidated statement of profit or loss and other comprehensive
income
For the six months ended 30 June 2024
Six months ended Six months ended
30 June 30 June Year ended
2024 2023 31 December 2023
(Unaudited) (Unaudited) (Audited)
Note $'000 $'000 $'000
Revenue 3 3,434 2,992 6,695
Cost of sales (273) (277) (633)
Gross profit 3,161 2,715 6,062
Operating expenses 4 (12,738) (21,477) (37,625)
Other expense - - (46)
Impairment loss - - (815)
Operating loss 4 (9,577) (18,762) (32,424)
Finance income 5 715 122 164
Finance costs 5 (39) (3,892) (4,227)
Net finance income/(costs) 5 676 (3,770) (4,063)
Loss before tax (8,901) (22,532) (36,487)
Income tax (charge)/credit - (3) 8
Loss for the period (8,901) (22,535) (36,479)
Other comprehensive (loss)/income
Items that are or may be reclassified subsequently to profit or loss:
Foreign operations - foreign currency translation differences (697) 4,193 4,489
Other comprehensive (loss)/income for the period, net of tax (697) 4,193 4,489
Total comprehensive loss for the period attributable to owners of the parent (9,598) (18,342) (31,990)
Loss per share
Basic and diluted loss per share (cent) 6 (8) (34) (41)
The notes form an integral part of these condensed consolidated interim
financial statements.
Condensed consolidated statement of financial position
At 30 June 2024
30 June 30 June 31 December
2024 2023 2023
(Unaudited) (Unaudited) (Audited)
Note $'000 $'000 $'000
Assets
Property, plant and equipment 121 442 151
Other non-current assets 7 258 391 278
Non-current assets 379 833 429
Trade and other receivables 8 4,397 4,275 4,439
Cash and cash equivalents 9,089 3,176 18,246
Current assets 13,486 7,451 22,685
Total assets 13,865 8,284 23,114
Equity
Share capital 15,744 9,546 15,634
Share premium 256,281 233,881 256,278
Translation reserve (9,781) (9,380) (9,084)
Merger reserve 1,247 1,247 1,247
Retained earnings (255,430) (235,264) (247,461)
Total equity 8,061 30 16,614
Liabilities
Loans and borrowings 9 120 - 359
Deferred income 10 594 223 129
Deferred tax liabilities 3 3 3
Non-current liabilities 717 226 491
Current tax liabilities - 9 -
Loans and borrowings 9 466 41 436
Trade and other payables 2,892 6,304 2,986
Deferred income 10 1,729 1,674 2,587
Current liabilities 5,087 8,028 6,009
Total liabilities 5,804 8,254 6,500
Total equity and liabilities 13,865 8,284 23,114
The notes form an integral part of these condensed consolidated interim
financial statements.
Condensed consolidated statement of changes in equity
For the six months ended 30 June 2024
Attributable to owners of the Company
Share Share premium Translation reserve Merger reserve Retained earnings Total
capital equity
Six months ended 30 June 2024 (Unaudited) $'000 $'000 $'000 $'000 $'000 $'000
Balance at 1 January 2024 15,634 256,278 (9,084) 1,247 (247,461) 16,614
Total comprehensive loss for the period
Loss for the period - - - - (8,901) (8,901)
Other comprehensive loss for the period - - (697) - - (697)
Total comprehensive loss for the period - - (697) - (8,901) (9,598)
Transactions with owners of the Company
Contributions and distributions
Equity-settled share-based payment - - - - 932 932
Share options exercised 110 3 - - - 113
Total transactions with owners of the Company 110 3 - - 932 1,045
Balance at 30 June 2024 15,744 256,281 (9,781) 1,247 (255,430) 8,061
Six months ended 30 June 2023 (Unaudited)
Balance at 1 January 2023 9,524 232,861 (13,573) 1,247 (213,496) 16,563
Total comprehensive (loss)/income for the period
Loss for the period - - - - (22,535) (22,535)
Other comprehensive income for the period - - 4,193 - - 4,193
Total comprehensive income/(loss) for the period - - 4,193 - (22,535) (18,342)
Transactions with owners of the Company
Contributions and distributions
Equity-settled share-based payment - - - - 767 767
Share options exercised 22 1,020 - - - 1,042
Total transactions with owners of the Company 22 1,020 - - 767 1,809
Balance at 30 June 2023 9,546 233,881 (9,380) 1,247 (235,264) 30
The notes form an integral part of these condensed consolidated interim
financial statements.
Condensed consolidated statement of cash flows
For the six months ended 30 June 2024
Six months ended Six months ended
30 June 30 June Year ended
2024 2023 31 December 2023
(Unaudited) (Unaudited) (Audited)
Note $'000 $'000 $'000
Cash flows from operating activities
Loss for the period (8,901) (22,535) (36,479)
Adjustments for:
- Depreciation of property, plant and equipment 35 376 629
- Loss on disposal of property, plant and equipment - - 125
- Release of lease liability - - (216)
- Impairment of right of use asset - - 815
- Net finance income (excluding foreign exchange) (1) (122) (137)
- Income tax charge and other expense/(income) - 3 38
- Unrealised foreign exchange (gain)/loss (666) 4,181 3,952
- Equity-settled share-based payment 11 932 767 2,514
(8,601) (17,330) (28,759)
Changes in:
- Trade and other receivables 102 798 540
- Trade and other payables (90) 163 (3,451)
- Deferred income (393) (361) 447
Net working capital change (381) 600 (2,464)
Cash used in operating activities (8,982) (16,730) (31,223)
Interest paid (39) (2) (27)
Income tax received - 680 652
Net cash used in operating activities (9,021) (16,052) (30,598)
Cash flows from investing activities
Interest received - 2 33
Acquisition of property, plant and equipment (5) (90) (76)
Net cash used in investing activities (5) (88) (43)
Cash flows from financing activities
Proceeds from issue of share capital 113 1,042 31,362
Share issue costs - - (1,835)
Payment of lease liabilities (210) (499) (430)
Net cash (used in)/generated from financing activities (97) 543 29,097
Net decrease in cash and cash equivalents (9,123) (15,597) (1,544)
Cash and cash equivalents at 1 January 18,246 19,108 19,108
Effect of movements in exchange rates on cash held (34) (335) 682
Cash and cash equivalents at the end of the period 9,089 3,176 18,246
The notes form an integral part of these condensed consolidated interim
financial statements.
Notes to the condensed consolidated interim financial statements
For the six months ended 30 June 2024
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 interim financial statements ("Interim financial
statements") as at and for the six months ended 30 June 2024 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
These interim financial statements have been prepared in accordance with IAS
34 "Interim Financial Reporting" and should be read in conjunction with the
Group's last annual consolidated financial statements as at and for the year
ended 31 December 2023 ("last annual financial statements"). They do not
include all the information required for a complete set of IFRS financial
statements. 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 financial
statements. The accounting policies set out in the Group's statutory financial
statements for the year ended 31 December 2023 have been applied in the
preparation of the interim financial statements.
These interim financial statements were authorised for issue by the Company's
board of directors on 3 September 2024.
b Going concern
These interim financial statements have been prepared on a going concern
basis.
As at 30 June 2024 the Group had net assets of $8.1m (31 December 2023:
$16.6m), including cash of $9.1m (31 December 2023: $18.2m) as set out in the
interim condensed consolidated statement of financial position. In the six
months ended 30 June 2024, the Group incurred a loss before tax of $8.9m (H1
FY23: $22.5m) and net cash outflows before financing of $9.0m (H1 FY23:
$16.1m).
Revenue for H1 FY24 was $3.4m (H1 FY23: $3.0m), with an operating loss of
$9.6m (H1 FY23: $18.8m), mainly due to reduced operating expenses.
The Directors have prepared a detailed budget and forecast of the Group's
expected performance over a period covering at least the next twelve months
from the date of the approval of these unaudited interim financial
statements.
In performing its going concern assessment, the Directors are required to
consider a minimum period of twelve months from the date of approving the
interim financial statements. Scenario modelling has been undertaken over the
period to 30 September 2025. The assessment involved the preparation of a
'Base' case and a 'Downside' case.
The Base case scenario included assumptions for quarterly sales targets,
anticipated changes to the 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 in FY24 and c.$20m in
FY25. 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 lower sales bookings
during the period without any further cost reduction, which would be taken in
such a scenario. Under the Downside case the Group is forecasting a reduction
in cash resources to less than $5m by the end of September 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.
2. Basis of preparation (continued)
b Going concern (continued)
If, however, a scenario worse than 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 Interim 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 interim 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 period 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 period 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 Interim 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:
Revenue Six months ended Six months ended Year ended
30 June 30 June 31 December
2024 2023 2023
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
North America 2,069 1,658 4,603
Europe - Germany 449 783 896
Europe - Other 492 202 479
Rest of the world 424 349 717
3,434 2,992 6,695
3. Revenue and segmental analysis (continued)
b Geographical segments (continued)
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
Six months ended Six months ended Six months Six months Year ended Year ended
30 June 2024 30 June 2024 ended ended 31 December 2023 31 December 2023
(Unaudited) (Unaudited) 30 June 2023 30 June 2023 (Audited) (Audited)
(Unaudited) (Unaudited)
% of $'000 % of $'000 % of $'000
revenue revenue revenue revenue revenue Revenue
Customer 1 17% 597 3% 77 12% 832
Customer 2 4% 123 20% 603 11% 716
Customer 3 - 8 12% 358 5% 368
Customer 4 2% 81 3% 81 15% 984
No other single customers contributed 10% or more to the Group's revenue
(2023: $nil).
e Split of revenue by timing of revenue recognition
Revenue Six months ended Six months ended Year ended
30 June 30 June 31 December
2024 2023 2023
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
Licences and services transferred at a point in time 2,356 1,821 4,222
Maintenance and support services transferred over time 1,078 1,171 2,473
3,434 2,992 6,695
f Contract balances
The following table provides information about contract assets and liabilities
from contracts with customers.
Six months ended Six months ended Year ended
30 June 30 June 31 December
2024 2023 2023
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
Contract assets, which are included in "Other non-current assets - accrued 242 381 265
income"
Contract assets, which are included in "Trade and other receivables - accrued 803 774 800
income"
Total contract assets 1,045 1,155 1,065
Contract liabilities, which are included in "Deferred income - non-current" (594) (223) (129)
Contract liabilities, which are included in "Deferred income - current " (1,729) (1,674) (2,587)
Total contract liabilities (2,323) (1,897) (2,716)
4. Cash overheads and Adjusted EBITDA loss
Six months ended Six months ended
30 June 30 June Year ended
2024 2023 31 December 2023
(Unaudited) (Unaudited) (Audited)
a Reconciliation of operating expenses to "Cash overheads": Note $'000 $'000 $'000
Operating expenses (12,738) (21,477) (37,625)
Adjusted for:
Adviser costs relating to the Irregularities - 2,781 4,175
Amortisation and depreciation 35 376 629
Equity-settled share-based payment 11 932 767 2,514
Cash overheads (11,771) (17,553) (30,307)
Six months ended Six months ended
30 June 30 June Year ended
2024 2023 31 December 2023
(Unaudited) (Unaudited) (Audited)
b Reconciliation of operating loss to "Adjusted EBITDA loss": Note $'000 $'000 $'000
Operating loss (9,577) (18,762) (32,424)
Adjusted for:
Other expense/(income) - - 46
Adviser costs relating to the Irregularities 11 (#_ftn11) - 2,781 4,175
Impairment loss - - 815
Amortisation and depreciation 35 376 629
Equity-settled share-based payment 11 932 767 2,514
Adjusted EBITDA loss (8,610) (14,838) (24,245)
5. Net finance income/(costs)
Six months ended Six months ended Year ended
30 June 30 June 31 December
2024 2023 2023
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
Interest income on cash and cash equivalents - 2 33
Interest income on non-current assets 40 120 131
Net foreign exchange gain 675 - -
Finance income 715 122 164
Net foreign exchange loss - (3,892) (4,200)
Leases (interest portion) (39) - (27)
Finance costs (39) (3,892) (4,227)
Net finance income/(costs) 676 (3,770) (4,063)
5. Net finance income/(costs) (continued)
The net foreign exchange gain (2023: loss, H1 FY23: loss) arose on
sterling-denominated intercompany balances in a US dollar denominated
subsidiary. These balances were retranslated at the closing exchange rate at
30 June 2024, which was 1.264, a 1% reduction compared to the rate of 1.27 at
31 December 2023. The gain on intercompany balances in the Condensed
consolidated statement of profit or loss is offset by an equivalent exchange
loss (2023: gain, H1 2023: gain) on the retranslation of the intercompany
balances, which is included in the retranslation of net assets of foreign
operations, included in the other comprehensive income.
6. 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:
Six months ended Six months ended Year ended
30 June 30 June 31 December
2024 2023 2023
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
Loss for the period attributable to ordinary shareholders 8,901 22,535 36,479
Weighted average number of ordinary shares Number of shares Number of shares
Number of shares '000s '000s
'000s
Issued ordinary shares at 1 January 114,963 67,015 67,015
Effect of shares issued in the period 379 162 20,934
Weighted average number of ordinary shares during the period 115,342 67,177 87,949
Basic loss per share (cent) 8 34 41
b Adjusted loss per share
Adjusted loss per share is calculated based on the loss attributable to
ordinary shareholders before one-off adviser costs relating to the
Irregularities, net foreign exchange gain/(loss), impairment loss and the cost
of equity-settled share-based payment, and the weighted average number of
ordinary shares outstanding:
Six months ended Six months ended Year ended
30 June 30 June 31 December
2024 2023 2023
(Unaudited) (Unaudited) (Audited)
Adjusted loss for the period: Note $'000 $'000 $'000
Loss for the period attributable to ordinary shareholders 8,901 22,535 36,479
Adjusted for:
Adviser costs relating to the Irregularities - (2,781) (4,175)
Impairment loss - - (815)
Net foreign exchange gain/(loss) 675 (3,892) (4,200)
Equity-settled share-based payment 11 (932) (767) (2,514)
Adjusted loss for the period 8,644 15,095 24,775
Adjusted loss per share (cent) 7 22 28
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.
7. Other non-current assets
30 June 30 June 31 December 2023
2024 2023 (Audited)
(Unaudited) (Unaudited)
Due in more than a year: $'000 $'000 $'000
Other receivables 16 10 13
Accrued income 242 381 265
Total other non-current assets 258 391 278
8. Trade and other receivables
30 June 30 June 31 December 2023
2024 2023 (Audited)
(Unaudited) (Unaudited)
Due within a year: $'000 $'000 $'000
Trade receivables 1,932 1,046 1,775
Other receivables 365 650 515
Accrued income 803 774 800
Corporation tax 686 736 691
Prepayments 611 1,069 658
Total trade and other receivables 4,397 4,275 4,439
9. Loans and borrowings
30 June 30 June 31 December 2023
2024 2023 (Audited)
(Unaudited) (Unaudited)
$'000 $'000 $'000
Non-current lease liabilities 120 - 359
Current lease liabilities 466 41 436
Total loans and borrowings 586 41 795
At 30 June 2024, 30 June 2023 and 31 December 2023 there was no bank loan
debt.
10. Deferred income
Deferred income represents contracted sales for which services to customers
will be provided in future periods.
30 June 30 June 31 December 2023
2024 2023 (Audited)
(Unaudited) (Unaudited)
Deferred income which falls due: $'000 $'000 $'000
Within a year 1,729 1,674 2,587
In more than a year 594 223 129
Total deferred income 2,323 1,897 2,716
11. 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 financial statements for the year ended 31 December 2023.
a Expense recognised in profit or loss
Six months ended Six months ended Year ended
30 June 30 June 31 December
2024 2023 2023
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
Total equity-settled share-based payment charge 932 767 2,514
b Summary of share options outstanding
Six months ended Six months ended Year ended
30 June 30 June 31 December
2024 2023 2023
(Unaudited) (Unaudited) (Audited)
Number of share options outstanding: Number Number Number
Outstanding at the start of the period 4,984,365 5,449,095 5,449,095
Granted 117,000 343,347 4,451,702
Forfeited (116,378) (2,052,711) (4,062,030)
Exercised (20,837) (181,887) (419,116)
Cancelled - - (435,286)
Outstanding at the end of the period 4,964,150 3,557,844 4,984,365
Exercisable at the end of the period 977,310 2,122,687 421,944
Vested at the end of the period 977,310 2,122,687 421,944
12. Commitments and contingencies
The Group has no contingent liability at 30 June 2024. At 31 December 2023
and 30 June 2023 there was a contingent liability relating to a sponsorship
agreement whereby an additional $127,303 was to be paid under certain
conditions that were subject to post year end outcomes. This was a related
party transaction.
At 30 June 2024 the Group had no capital commitments (31 December 2023: $nil,
30 June 2023 $nil) and the Group had no other contingent liabilities at 30
June 2024 (31 December 2023: none, 30 June 2023: none).
13. Subsequent events
On 16 July 2024 the Group announced the subscription and placing of 10,103,328
new ordinary shares of 10 pence each in the Company by existing shareholders
at a price of 55 pence raising gross proceeds of $7.2m. The proceeds are being
used to provide growth working capital.
1 Total contract value of contracts signed during the period.
2 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.
3 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.
4 Renewal amount for the whole of the 3-year term
5 Cirata Expands Databricks Partnership | Cirata
(https://cirata.com/news/article/cirata-expands-databricks-partnership-with-native-unity-catalog-integration)
6 Cirata adds IBM® General Parallel File System | Cirata
(https://cirata.com/news/article/cirata-adds-support-ibm-general-parallel-file-system-gpfs)
7 Introduction - Apache Iceberg (https://iceberg.apache.org/docs/latest/)
8 (#_ftnref8) Cirata Data Migrator now available on Google Cloud Marketplace
| Cirata
(https://cirata.com/news/article/cirata-data-migrator-now-available-google-cloud-marketplace)
9 (#_ftnref9) LDM is a fully automated solution that moves on-premises HDFS
data, Hive metadata, local filesystem, or cloud data sources to any cloud or
on-premises environment, even while those datasets are under active change.
Ideally suited for cloud migrations, disaster recovery processes and
continuous data migration use case.
10 Introduction - Apache Iceberg (https://iceberg.apache.org/docs/latest/)
11 These are costs relating to the investigation of the significant,
sophisticated and potentially fraudulent irregularities which related to
received purchase orders and related revenue and bookings, as represented by
one senior sales employee which were uncovered in March 2023.
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