REG - Crimson Tide PLC - Preliminary Results to 31 December 2017

Crimson TideAnnouncement

13/04/2018 07:00

RNS Number : 7776K
Crimson Tide PLC
13 April 2018
 

Crimson Tide plc
 
Preliminary Announcement of Results to 31 December 2017
 
Crimson Tide plc ("Crimson Tide" or "the Company"), a leading service provider of mobility solutions for business, is pleased to announce its unaudited preliminary results for the year ended 31 December 2017.
 
 
Financial Highlights
 
·      Turnover up 22% to £2.28m (2016: £1.86m)
 
·      Profit Before Tax before exceptional item £359k (2016: £352k) after significant investments in future growth
 
·      Strong cash position
 
 
Operational Highlights
 
·        mpro5 in use in over 200,000 locations
 
·        Geographic expansion underway
 
·        Internet of Things (IoT) now incorporated into mpro5
 
 
 
Barrie Whipp, Executive Chairman of Crimson Tide, commented:
 
"We are very excited by the early results of our continuing growth strategy. In 2017 profitability was carefully maintained as we invested £350k in new staff and marketing, where we believe we will start to see benefits this year. Consequently it is not unreasonable to say that profits would have almost doubled if we had maintained our previous strategy and not invested in our future expansion. This, however, was not the best course to plot for shareholders as we see much larger opportunities ahead.  We will continue to invest in 2018, allowing us to be more ambitious for future growth in our core markets but also in new geographic locations. Our aim is to grow the Company more significantly in the coming years and we are establishing a base to manage that expansion"
 
 
About the Company
Founded in 1996 and quoted on the AIM market of the London Stock Exchange since 2006, Crimson Tide plc is the provider of mpro5 - smart mobility.  mpro5 is delivered entirely cross platform (Android, IOS, Windows) on smartphones, tablets and PDAs, and enables organisations to transform their business and strengthen their workforce by smart mobile working. mpro5 is a full mobility service hosted in the cloud. The Company's contracts are provided on a long term, contracted subscription basis and clients can immediately see a return on their investment.
 
mpro5 has a growing healthcare division and helps people with haemophilia, cholesterol issues and autism as well as new uses of the platform to assist in the detection of counterfeit medicines. There are a myriad of areas where mpro5 can be used to improve healthcare practices.
 
Based in Royal Tunbridge Wells, the Company has expanded its footprint and now has representation in Ireland, The Netherlands and the United Arab Emirates as well as associated partnerships in the United States and Australia.
 
 
Enquiries:
 




Crimson Tide plc
Barrie Whipp / Steve Goodwin


  01892 542444




 
W.H. Ireland Limited
James Joyce / Alex Bond


                           
020 7220 1666




 




 
Chairman's Statement
 
A year of investment in 2017, carrying on into 2018, has represented a transformation in Crimson Tide in all areas of the business. Over an eighteen-month period our headcount has doubled and our investment in Sales and Marketing resource has increased our visibility of opportunities, improved our brand and sees the Company well placed for more aggressive growth. We aim to be bold and to invest the cash that we have generated from top line growth in expanding the business further.
 
Last year I reported that mpro5 was in use in over 100,000 locations in the UK & Ireland. This number has now doubled and we have expanded into the Netherlands, where we have signed our first subscriber transaction, and we have a formative sales presence in the Middle East, United States and Australia. We will continue to seek further geographic opportunities as appropriate, without constructing large scale infrastructure. Our new investments will be in sales and marketing, not bricks and mortar.
 
Our inbound lead generation has increased dramatically as mpro5 becomes more widely known. Our word of mouth success has now been augmented by new branding, visuals, case studies and videos. I recommend viewing our YouTube channel to see the breadth of how mpro5 is helping mobile work forces, healthcare professionals and even patients through our range of workflow based platform.
 
Our Angular and Ionic framework implementation rolled out in 2017. The sheer scale of the implementation should not be underestimated. mpro5 has never looked better or been easier to use. Hosted in Microsoft Azure, our scalability and internationalisation means that we can leverage our partner's investment in infrastructure as well as security and data management. We continue to invest in mpro5 and our focus now turns to automated testing and further modules to support payment processing. We will also be moving the outlying instances of mpro5 where a version has been produced for a specific client into the main app store version of the mobile application.
 
We have recently developed two significant opportunities in the healthcare sector. Firstly, our initial contract with the National Health Service was signed during the year where we assist in estate management at Addenbrookes Hospital. We are now engaged with an NHS Trust where we will be providing mpro5 with time and attendance for hospital staff. Large, strategic software sales to such huge public bodies is fraught with danger. mpro5 provides a very tactical solution which can assist in solving day to day issues with clear ROI. Secondly, our success with a Global Health Organisation in providing pilots in Tanzania and Indonesia provides huge excitement for the use of mpro5 in a wider range of healthcare scenarios.
 
Perhaps the most exciting technical development has been the implementation of our first Internet of Things (IOT) sensors reporting on temperature, humidity and motion. Sensors are continuously being improved and new types of sensor introduced. We have chosen to be sensor agnostic and can move with this ever-expanding market. The use of sensors to initiate and improve workflows is of clear benefit to our existing client base and also gives us new opportunities in the vertical markets we serve.
 
Financially, Crimson Tide has continued to increase turnover, whilst managing our profitability carefully. In 2017, we chose to target the maintenance of profitability and cash at a similar level to the previous year and this was achieved on the back of growth of 22% at the turnover line. We had a small exceptional item in respect of professional fees incurred on an aborted acquisition of a business in a similar field to ourselves. The Directors believe that this performance was very creditable, notwithstanding the fact that a number of larger opportunities remain in the pipeline. The Company is often underestimated in that its contracts are long term and the gross margin is in excess of 90%.
 
Last year, we moved premises to accommodate our expansion and now have a home at Oakhurst House, one of the premier business addresses in Royal Tunbridge Wells. In 2018, we have decided to invest even more in mpro5 and the opportunities in front of us. These investments will, in the main, be in sales and marketing, to take advantage of these opportunities.
 
There will be changes in focus this year where our branding will start to eliminate references to Crimson Tide and focus on mpro5, reducing any confusion between the corporate and commercial branding. We are also reviewing our cadre of advisors and 2018 will be a year of positive change in some structural parts of our organisation.
 
Part of our organisational change in 2017 was the appointment of Toby Hawkins as Sales and Marketing Director. Toby now leads a team of 10 and is implementing our increased budget to generate new leads. We have also formed a customer excellence team to assist with onboarding and ensuring excellent relationships with new and existing clients. I was delighted to recently announce the promotion of Luke Jeffrey to Chief Executive Officer and Luke will now be responsible for managing the day to day operations of the business, giving me the opportunity to focus on business expansion and seeking further opportunities for mpro5 in my position as Executive Chairman.
 
In closing, I must say that our Company is, in many respects, "below the radar" in that it has been quite conservatively run over many years, ensuring that growth has been maintained, profitability ensured and cash generated. It is time for Crimson Tide, through mpro5, to take advantage of the clear opportunities in front of us. The Directors are determined to invest in our platform and sales and marketing to ensure that we take the Company to the next level. We have the base and the people to do so and my thanks as ever go out to our fantastic team who are passionate about our Company and its future.
 
Barrie R. J. Whipp
Executive Chairman
13 April 2018




 
 
Financial Review
 
I am very pleased to comment on our results for the year to 31 December 2017.
 
Turnover increased by 22% from £1.86m in 2016 to £2.28m for the twelve months to 31 December 2017. The vast majority of our income continues to come from long-term subscriber agreements for mpro5 and in 2017 included increased revenues from customers based in mainland Europe and the US. Gross margin from subscription business has been maintained at over 90%.
 
Operating costs have steadily increased but in a very planned manner as previously communicated.  Additional sales and marketing staff costs and a significant increase in marketing spend are investments in future growth.  We have already seen an exciting increase in sales opportunities as a result and expect growth in long term subscription revenues to accelerate.  Our business model is highly operationally geared such that increases in sales revenues are not matched by a proportionate increase in operating costs.
 
Shareholders will be aware that we have doubled profits in each of the previous four years but in 2016 took the strategic decision to re-invest for faster growth in the medium term.  Our 2017 results include an exceptional item of £44k being legal and accounting costs incurred on an aborted acquisition.  Excluding this, 2017 profit before tax totalled £359k, a small increase on £352k achieved in 2016.  Capital allowances and tax losses brought forward have kept the tax charge at a very low level.
 
Crimson Tide's balance sheet and operating cashflows remain healthy.  Cash generated from operating activities of £559k improved in 2017 (2016: £491k) with the funds re-invested in mpro5 and smartphone and tablet devices for subscribers.  Funds were also utilised to reduce debt used to fund these devices.  We finished the year with cash balances of £757k (2016: £878k) and net funds have continued to increase since the year end. 
 
There have been no changes to Crimson Tide's accounting policies which can be found in the notes to the published 2016 Consolidated Financial Statements available on our website, www.crimsontide.co.uk.
 
Future Prospects
 
Over the course of 2018, the Company will continue to invest in growth and target increased sales outside the UK.  mpro5's capabilities to increase efficiency and productivity apply equally well in many other geographic areas and the Board are excited by the opportunities to widen the Company's reach.  We continue to work hard on behalf of all stakeholders to drive growth and achieve the targets we have set ourselves.
 
Stephen Goodwin
Finance Director
13 April 2018
 
 
 




 
Crimson Tide plc
 
Unaudited Consolidated Income Statement












Group












Year ended December 2017






Year ended December 2016












£000






£000




Revenue






2,275






1,860




Cost of Sales






(231)






(159)


























Gross Profit






2,044






1,701




Administration expenses






(1,240)







(1,009)



























Earnings before interest, tax, depreciation & amortisation






804






692




Depreciation & amortisation






(394)






(303)


























Profit from continuing operations






410






389




Finance costs






(51)






(37)


























Profit before taxation






359






352




Tax (note B)






(5)






(4)
















































Net profit from continuing operations






354






348




Exceptional item (note C)






(44)






-




Profit for the year attributable to equity holders of the parent






310






348


























Earnings per share (note D)




















Basic and diluted earnings per Ordinary share (pence)






0.07






0.08




 
 
Unaudited Consolidated Statement of Comprehensive Income








Group








Year ended December 2017






Year ended December 2016








£000






£000




Profit for the year


310






348




Other comprehensive income/(loss) for the year:
















Exchange differences on translating foreign operations


(1)






1






















Total comprehensive profit for the year


309
 






349
 








Crimson Tide plc
 
Unaudited Statement of Financial Position








Group








As at 31 December 2017






As at 31 December 2016












£000






£000








Fixed Assets




















Intangible assets


1,698






1,522








Equipment, fixtures & fittings


611






750












2,309






2,272








Current Assets




















Inventories


8






7








Trade and other receivables


974






636








Cash and cash equivalents


757






878












1,739






1,521






























Total Assets


4,048






3,793






























Equity and liabilities




















Equity attributable to equity holders of the parent




















Share capital


454






453








Capital redemption reserve


-






-








Share premium


121






112








Other reserves


421






422








Reverse acquisition reserve


(5,244)






(5,244)








Retained earnings


7,069






6,759












2,821






2,502








Liabilities




















Amounts falling due within one year


868






769








Amounts falling due after more than one year


359






522








Total liabilities


1,227






1,291






























Total equity and liabilities


4,048






3,793












     






     












Crimson Tide plc
 
Unaudited Statement Of Changes In Equity
 




Group


Share capital


Capital redemption reserve


Share premium


Other reserves


Reverse acquisition reserve


Retained earnings


Total








£000


£000


£000


£000


£000


£000


£000




Balance as at 1 January 2016


 
7,335


 
49


 
1,090


 
421


 
(5,244)


 
(1,618)


 
2,033




Retained profit for the year
 






















348


348




Capital reconstruction (*)


(6,890)


(49)


(1,090)










8,029


-




Share options exercised


8






112














120




Translation movement














1










1




Balance as at 31 December 2016


 
453


 
-


 
112


 
422


 
(5,244)


 
6,759


 
2,502




 
Retained profit for the year
 






















 
310


 
310




Share options exercised


1






9














10




Translation movement














(1)
 










(1)




Balance as at 31 December 2017


 
454


 
-


 
121


 
421


 
(5,244)


 
7,069


 
2,821




 
 
 
(*)  At the Company's General Meeting on 26 January 2016 shareholders approved plans to undertake a capital reconstruction, the purpose of which was to create positive retained earnings in the Balance Sheet to allow the Company to, if appropriate, pay dividends in the future. Shareholders also approved future share buy-backs. Following a court hearing on 24 February 2016 the court confirmed the reduction of capital of the Company. The nominal value of each Ordinary Share in the Company reduced from one penny to 0.1 pence per share and the Company's Deferred Shares of 19 pence each, Share Premium Account and Capital Redemption Reserve were cancelled. Trading in the shares with a nominal value of 0.1 pence commenced on 25 February 2016.



Crimson Tide plc
 
Unaudited Consolidated Cash Flow Statement
















Group
















Year ended
31 December 2017






Year ended
31 December 2016
















£000






£000




Cash flows from operating activities
























Profit for the year










310






352




Add back:
























Amortisation of intangible assets










120






105




Depreciation of equipment, fixtures and fittings










274






198




Profit on sale of assets










-






-




Interest expense










51






37






























Operating cash flows before movements in working capital










755






692




(Increase)/decrease in inventories










(1)






8




Increase in trade and other receivables










(338)






(2)




Increase/(decrease) in trade and other payables










148






(203)






























Cash generated from operating activities










564






495






























Taxes paid










(5)






(4)






























Net cash generated from operating activities










559






491






























Cash flows used in investing activities
























Purchases of fixed assets










(431)






(675)




Sales of fixed assets










-






-






























Net cash used in investing activities










(431)






(675)






























Cash flows from financing activities
























Net proceeds from share issues










10






120




Interest paid










(51)






(37)




Net (decrease)/increase in borrowings










(189)






422






























Net cash from financing activities










(230)






505






























Net (decrease)/increase in cash and cash equivalents










(102)






321




Net cash and cash equivalents at beginning of period










859






538






























Net cash and cash equivalents at end of period










757






859






























Crimson Tide plc
 








Group








Year ended
31 December   2017










Year ended
31 December   2016








£000










£000




Analysis of net funds:




















Cash and cash equivalents


757










878




Bank overdraft


-










(19)






























757










859


























Other borrowing due within one year


(280)










(306)




Borrowings due after one year


(359)










(522)


























Net funds


118










31


























 
 
 
 
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
 
A)   Significant accounting policies
 
a.       Basis of preparation
 
The preliminary results for the period to 31 December 2017 are unaudited.  The consolidated financial statements of Crimson Tide plc will be prepared and approved by the Directors in accordance with applicable law and International Financial Reporting Standards, incorporating International Accounting Standards (IAS) and Interpretations (collectively IFRSs) as endorsed by the European Union.
 
b.      Basis of consolidation
 
The Group financial statements consolidate the financial statements of the Company and all of its subsidiaries.
 
On an acquisition, fair values are attributed to the Group's share of net assets.  Where the cost of acquisition exceeds the values attributable to such net assets, the difference is treated as purchased goodwill, which is capitalised and subjected to annual impairment reviews.  The results of acquired companies are brought in from the date of their acquisition.
 
 




 
c.       Changes in accounting policy
 
No changes in accounting policies, including new or amended IFRSs, are expected to have an impact on the Company's financial results.
 
d.      Revenue recognition
 
Subscription income and support income is credited to turnover in equal monthly instalments over the period of the agreement.  There is no recognition in the Consolidated Income Statement of the contracted value of future revenues.
 
B)   Taxation
A reduced corporation tax charge of £5,000 (2016: £4,000) has been included in the consolidated accounts for the period ended 31 December 2017 due to the availability of tax losses.
 
 
C)   Exceptional item
The Company incurred one-off legal fees of £37k and accounting due diligence costs of £7k in preparation of an acquisition that was subsequently aborted by the Company.                        
 
 
D)  Earnings per share








Group








Year ended
31 December 2017


Year  ended
31 December
2016




Basic and Diluted Earnings per share












Reported profit for the year (£000)


310


348




Reported earnings per share (pence)


0.07


0.08




 
The earnings per share has been calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of shares in issue calculated as follows:












 
Year ended
31 December
2017
No.






 
Year ended
31 December 2016
No.




Weighted average number of ordinary shares:




















Opening balance






453,486,234
 






445,486,234
 




Effect of 1m share options issued during the year






52,055






-




Effect of 8m share options issued during the year






-






1,945,205




Weighted average number of ordinary shares






453,538,289






447,431,439


























 
 
 
The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2017 or 31 December 2016.  Statutory accounts for 2016, which were prepared under IFRS, have been delivered to the Registrar of Companies.  The auditors have reported on the 2016 accounts; their report was unqualified and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.  The statutory accounts for 2017 which are prepared under accounting standards adopted by the EU will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's annual general meeting.  The audited statutory accounts will be published on the Company's website www.crimsontide.co.uk in May 2018.



This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR ZLLFFVZFEBBB