REG - Cloudcoco Group PLC - Year End Trading Update

CloudcocoAnnouncement

07/11/2023 07:00

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RNS Number : 5633S  Cloudcoco Group PLC  07 November 2023

The information contained within this announcement is deemed by CloudCoCo to
constitute inside information pursuant to Article 7 of EU Regulation 596/2014
as it forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 as amended.

 

7 November 2023

 

CloudCoCo Group plc

("CloudCoCo", the "Company" or the "Group")

 

Year End Trading Update

 

Performance in line with market expectations

 

CloudCoCo (AIM: CLCO), a leading UK provider of Managed IT services and
communications solutions to private and public sector organisations, is
pleased to provide an update on its trading for the year ended 30 September
2023 ("FY23").

 

Highlights:

 

 ·   Revenue expected to be no less than £26.0m (FY22: £24.2m)
 ·   Trading Group EBITDA(1) expected to be in the region of £1.9m (FY22: £1.6m)
 ·   Signed 42 new logo customers in the year (FY22: 39)
 ·   110% increase in MoreCoCo ecommerce sales to £4.2m following growth
     initiatives
 ·   Identified significant monthly cost savings and efficiencies in acquired
     businesses

 

(1) earnings before net finance costs, tax, depreciation, amortisation, plc
costs, exceptional costs and share-based
payments.

The Group delivered a solid performance in line with market expectations
against a backdrop of a challenging macroeconomic environment, with revenue
expected to have increased to at least £26.0 million (unaudited), growth of
7% over FY22. Trading Group EBITDA(1) is expected to have increased by at
least 18% to £1.9m (unaudited). The trading performance has been supported by
an increase in MoreCoCo ecommerce sales and further cost savings and
efficiencies.

 

With a number of the Group's business customers closing their operating
locations, consolidating operations and reducing their employee headcount, the
Group has exceeded its expectations in the number of customer contract
renewals signed in the year, alongside further growth in new customers. The
success of MoreCoCo, the Group's ecommerce website, is a particular highlight,
with the initiatives to increases visitors and conversions leading to a 110%
increase in sales to £4.2m (FY22: £2.0m) reflecting the global trend towards
a next-day ecommerce sales experience for technology goods.

 

Despite the global economic and political challenges, the Group continued to
make significant operational progress in preparation for an acceleration of
growth when conditions permit. The Group's sales and support functions have
been reorganised and optimised, enabling greater focus and collaboration
across the different parts of the business.

 

In line with long-term market trends, a key focus in the year has been on
strengthening the Group's Cybersecurity and Multi-cloud practices through the
addition of new talent and partners. The Board believes these to be
particularly attractive near-term growth opportunities and is investing the
Group's resources in order to capitalise on them. Underlining our confidence
in the opportunity ahead, independent sources estimate the UK's cybersecurity
market to reach a value of $23.4bn by 2028, registering a CAGR of over 10%(2).
Similarly, the UK's multi-cloud computing market is cited as the fastest
growing in Europe, with the worldwide market set to be worth $76.3bn by 2023,
registering a CAGR of 28.3%(3).

 

The Group's previously announced strategic partnership with Ingram Micro has
progressed well and is now contributing to the Group's pipeline of multi-cloud
opportunities.

 

Management continued to be proactive in reducing costs and improving
efficiency across the Group in the year. The newly formed commercial team has
reviewed all supplier relationships and successfully reduced the number of
suppliers from 450 to 220 while identifying over £50k of ongoing monthly
savings which will further enhance our profitability in FY24.

 

Outlook

 

While the current economic climate will continue to present near-term
challenges, the work that has been completed to streamline and focus the Group
positions it well for continued progress in FY24, particularly in the areas of
Cybersecurity and Multi-cloud.

 

In addition to strengthening our organic sales capabilities, the Group
continues to appraise opportunities to accelerate growth through acquisition.
The Directors are currently in discussion with several parties regarding
potential options to refinance or repay its loan notes, which currently sit at
£5.5m, ahead of the October 2024 repayment date.

Mark Halpin, CEO of CloudCoCo, commented:

"It's been a challenging year as anyone in the industry will tell you, so
we're pleased to have delivered a performance in line with market expectations
while continuing to lay the groundwork for our long-term success.

 

"We recognised the changing IT landscape was creating huge opportunities in
Cybersecurity and Multi-cloud and have responded by bolstering our capability
in these core pillars. Pipelines are growing at a healthy rate as a result and
we're confident in our ability to gain further traction in FY24.

 

"I would like to reassure investors that refinancing the debt is a key
priority for the Board allowing CloudCoCo to continue to make progress both
organically and through acquisition towards its ambition of becoming a £100m
revenue company."

 

References

(2)
https://www.mordorintelligence.com/industry-reports/uk-cybersecurity-market/market-size
(https://www.mordorintelligence.com/industry-reports/uk-cybersecurity-market/market-size)

 

(3)
https://www.marketresearchfuture.com/reports/multi-cloud-computing-market-12222
(https://www.marketresearchfuture.com/reports/multi-cloud-computing-market-12222)

 

Note: the figures for FY23 provided above are unaudited.  The Group expects
to announce full audited results for FY23 in February 2024.

Contacts:

 

 CloudCoCo Group plc                                          Via Alma

 Mark Halpin (CEO)

 Darron Giddens (CFO)

 Allenby Capital Limited - (Nominated Adviser & Broker)       Tel: +44 (0)20 3328 5656

 Jeremy Porter/Daniel Dearden-Williams (Corporate Finance)

 Tony Quirke/Amrit Nahal (Equity Sales)

 Alma - (Financial PR)                                        Tel: +44 (0)20 3405 0205

 David Ison                                                  cloudcoco@almastrategic.com

 Kieran Breheny

About CloudCoCo

 

Supported by a team of industry experts and harnessing a diverse ecosystem of
partnerships with blue-chip technology vendors, CloudCoCo makes it easy for
private and public sector organisations to work smarter, faster and more
securely by providing a single point of purchase for their Connectivity,
Multi-Cloud, Collaboration, Cyber Security, IT Hardware, Licencing, Support
and Professional Services.

 

CloudCoCo has headquarters in Leeds and regional offices in Warrington,
Sheffield and Bournemouth.

www.cloudcoco.co.uk (http://www.cloudcoco.co.uk)

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