REG - Crimson Tide PLC - Preliminary Results to 31 December 2023
17/04/2024 07:01
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RNS Number : 8726K Crimson Tide PLC 17 April 2024
Crimson Tide plc
("Crimson Tide" or "the Company")
Preliminary Announcement of Results to 31 December 2023
Crimson Tide plc ("TIDE"), the provider of mpro5, the process management app,
is pleased to announce its unaudited preliminary results for the year ended 31
December 2023.
Financial Highlights
· Revenue growth of 15% to £6.2m (2022: £5.4m)
· Operating profit increased by £0.8m to £0.4m (2022: £0.4m loss)
returning to operational profitability
· Annual Recurring Revenue (ARR) stable at £5.8m, despite unavoidable
churn
· Cash at year-end amounted to £3.3m (2022: £3.6m)
Operational Highlights
· Sensor-driven IoT contracts in US and NHS
· Expansion into utilities sector
· Significant technology upgrade completed
· Upsells and extensions strong
· Share consolidation
Barrie Whipp, Executive Chairman of Crimson Tide, commented:
"In a year with some unexpected challenges, our robust long-term contracted
revenue and high margin helped us grow by 15% and return to operating
profitability. We are well positioned to leverage top line growth with a
steady operating base and mpro5 is in great shape to present to our pipeline
and partners."
About the Company
Crimson Tide plc is the provider of mpro5, the process management app. mpro5
is delivered on all modern devices and enables organisations to digitally
transform their business and strengthen their workforce by smart mobile
working. mpro5 is hosted in the cloud on Microsoft Azure. The Company's
contracts are provided on a long term, contracted subscription basis and
clients can immediately experience a return on their investment.
Crimson Tide's Annual Recurring Revenue (ARR) contracts are typically on an
initial 36-month subscription basis, with many extending and expanding
significantly beyond the initial contracted date. For further information, see
mpro5.com and on Crimson Tide plc, crimsontide.co.uk.
For further information, please contact:
Crimson Tide plc +44 1892 542444
Barrie Whipp / Jacqueline Daniell/ Shaun Mullen
Cavendish Capital Markets (Nominated Adviser and Broker) +44 20 7220 0500
Julian Blunt / Dan Hodkinson - Corporate Finance
Andrew Burdis - Corporate Broking
Alma PR (Financial PR) +44 7780 901979
Josh Royston
Chairman's Statement
The financial year to 31 December 2023 saw our robust long-term contracted
revenue support us in a year that presented some unexpected financial
challenges. Our mpro5 app has been significantly enhanced and is ready for
further upgrade in the first half of 2024, whilst we have committed more to
marketing and expanded our pipeline, alongside the implementation of a partner
acquisition strategy.
Dealing first with the unexpected challenges, a large retail customer went
into administration costing us some £360k in ARR. Secondly, a contract with a
rail organisation came to an unexpected conclusion through a commercial
cost-cutting exercise that we could not avoid. This led to churn being
completely outside our norm of less than 5% and dented our ARR. The impact on
full-year revenue was c£0.5m and there has been some impact on our forecasts.
Despite this, the company increased revenue by some 15%, a creditable
performance, and we returned to operating profitability, as planned. Cash was
strong, ending the year at £3.3m and we have decided to invest approximately
£1.25m in additional marketing and our mpro5 product within this year, with
the goal of growing ARR, revenues and operating profit alike. We have seen a
significant increase in our marketing "share of voice" already with leads
being generated from this strategy for the first time.
mpro5 now has an upgraded front- and back-end, which should complete their
rollout in Q3, 2024. We believe that our back-end investment will result in a
more efficient use of data and compute time which should lower hosting costs
and improve gross margin.
One significant element of mpro5's evolution has come with the contract with
Cadent, one of the UK's largest utilities companies which, with a significant
SAP integration, has taken 6 months to implement. The benefit of this is
twofold; we can now access the utilities sector with a lighthouse client and
our ability to offer full SAP integration has significant market opportunity.
A contract win in the NHS has yet to be rolled out, however as a major user of
sensor devices and with a complex array of internal process we believe this
could provide a rich seam for us and highly additive to our existing
healthcare proposition.
We were pleased to be able to announce our first client win by our US office
during the year though the US operation remains in its infancy. Our focus on
partner acquisition gives us optimism that our careful investment in the US
will be rewarded. We have relationships with Meraki and Cisco, who have global
footprints, and we are able to sell into their ecosystem through their partner
channel.
To me, 2023 felt like a very frustrating year; however, growth in revenue by
15%, preservation of cash, and turning a £0.4m loss at the operating level
into a £0.4m profit is a testament to how robust our revenue is, despite
unavoidable churn. We continue to work hard and 2024 should see software
upgrades that make mpro5 more saleable and efficient. We have enhanced our
Board and intend to appoint COO Phil Meyers to the role of Group CEO shortly.
Having been involved with process management and IoT at Inmarsat, Phil is
committed to driving the business forward in the coming years.
Barrie RJ Whipp
Founder & Chairman
Chief Executive Officer's Statement
The performance of Crimson Tide throughout 2023 has been the manifestation of
the strong foundations built for sustainable growth. The continued growth in
revenue is a result of the long-term commitment that we made to invest in the
mpro5 product and delight customers.
In parallel, the sales and marketing team has been reorganised and rejuvenated
to execute a more focused strategy based on the sectors where we have
experience. Customer success plans and operations have been redefined under
Phil Meyers' stewardship and this has elevated the "stickiness" of mpro5.
The improvement in revenue and a return to operating profit have validated our
investment and allowed us to structure the team more efficiently with more
objective-based outcomes. An increase in net revenue retention from 100% to
101% exemplifies our commitment to our current customer base and our strategy
of land-and-expand growth.
mpro5 is now a faster, more responsive mobile app with a rationalised
technology stack behind it. The result is an operational cost saving together
with an intuitive, flexible and accessible user experience. The next phase of
capital expenditure enables wider integration, enhanced usability and the
inclusion of limited AI to enable customers to benefit from additional
automated scheduling and notification.
With an enhanced and restructured sales team, including a new Head of Partner
Channel, we have been able to structure a partner channel including OEMs,
MSPs and VARs to be able to firstly introduce their clients with a view to
progressing to a channel-first strategy. In the future, specific packaged
versions of mpro5 with self-serve onboarding will remove barriers to entry and
streamline our route to market as well as shorten our sales cycle.
With an ever-growing pipeline, well-qualified deals, and products focused on
key capabilities and markets with realigned management teams, Crimson Tide is
now set on a very firm footing to achieve its growth targets.
Jacqueline Daniell
CEO
Financial Review
Financial indicator Year ended December 2023 Year ended December 2022
£'m £'m
Revenue 6.2 5.4
Gross profit margin 86.2% 83.5%
Operating profit/(loss) 0.4 (0.4)
Loss before tax (0.7) (1.7)
Annual recurring revenue (ARR) 5.8 5.8
Cash 3.3 3.6
Revenue
The Company's sustained focus on delivering long-term revenue at a high margin
contributed to revenue growth of 15% (2022: 30%) of which 91% was recurring
contracted revenue. Revenue churn of 16% (2022: 3.8%) was exceptional,
primarily due to McColls falling into administration. This led to Annual
Recurring Revenue (ARR) of £5.8m remaining flat when compared to the prior
year. We expect churn to normalise in 2024. Gross profit margin of 86.2%
(2023: 83.5%) remained well above the Board's 80% target rate and correlates
with its focus on cost efficiency.
Cashflow and liquidity
Cash at year-end amounted to £3.3m (2022: £3.6m). Operational software
efficiencies, a focus on working capital optimisation and streamlining of
people and processes led to operating cash generation of £0.8m (2022: £0.7m
cash outflow). This outlines management's commitment to creating a lean and
efficient cost base.
Trade receivables
Trade receivables at year-end amounted to £0.9m (2022: £1.2m). The Group has
a high-quality customer base with normally low delinquencies.
Debt and finance costs
Finance leases decreased to £0.7m (2022: £0.8m) in respect of the 5-year
office lease in Tunbridge Wells. Finance charges of £52k (2022: £54k)
primarily relate to the IFRS 16 recognition requirements of this lease.
Capitalisation of intangible asset
Software development costs of £1.0m (2022: £1.3m) were capitalised during
the year. Software amortisation during 2023 amounted to £0.6m (2022: £0.8m).
The amortisation period of the mpro5 intangible asset was reduced from 10 to 7
years in 2022. The value of the capitalised software intangible asset at
year-end was £3.1m (2021: £2.7m).
Tax
No corporation tax charge has been included (2022: £nil) due to the tax loss
for the year. The Company received an R&D tax rebate of £0.4m (2022:
£0.4m).
Earnings per share
The average number of ordinary shares in issue during the year was 6,574,863
after a 100:1 share consolidation exercise in November 2023. Basic and diluted
loss per share was 4.49p (2022: 18.91p).
Crimson Tide plc
Unaudited Consolidated Statement of Profit or Loss
FOR THE YEAR ENDED 31 DECEMBER 2023
2023 2022
Note £000 £000
Revenue 6,155 5,351
Cost of Sales (849) (883)
Gross Profit 5,306 4,468
Administrative expenses 2 (5,932) (5,838)
Impairment of intangible asset 2 - (264)
Finance costs 2 (52) (54)
Loss before income tax expense (678) (1,688)
Income tax expense 3 383 445
Loss after income tax (295) (1,243)
Loss per share
Basic (pence) 4 (4.49) (18.91)
Diluted (pence) 4 (4.49) (18.91)
Unaudited Consolidated Statement of Comprehensive Income
FOR THE YEAR ENDED 31 DECEMBER 2023
2023 2022
£000 £000
Loss for the year (295) (1,243)
Items that may be classified subsequently to profit and loss
Exchange differences on translating foreign operations 3 (39)
Total comprehensive income/(loss) for the year (292) (1,282)
Unaudited Consolidated Statement of Financial Position
AT 31 DECEMBER 2023
2023 2022
£000 £000
Assets
Non-current assets
Intangible Assets 4,289 3,812
Property, plant and equipment 237 264
Right-of-use asset 571 703
Total non-current assets 5,097 4,779
Current assets
Trade and other receivables 1,250 1,646
Cash and cash equivalents 3,254 3,618
Total current assets 4,504 5,264
Total assets 9,601 10,043
Liabilities
Current liabilities
Trade and other payables 1,398 1,460
Lease liabilities 199 170
Total current liabilities 1,597 1,630
Non-current liabilities
Lease liabilities 468 607
Total non-current liabilities 468 607
Total liabilities 2,065 2,237
Net assets 7,536 7,806
Equity
Issued capital 657 657
Share premium 5,590 5,590
Other reserves 462 493
Reverse acquisition reserve (5,244) (5,244)
Retained profits 6,071 6,310
Total equity 7,536 7,806
Unaudited Consolidated Statement of Changes in Equity
AT 31 DECEMBER 2023
Reverse acquisition reserve
Issued capital Share premium Other reserves Retained earnings
Total
£000 £000 £000 £000 £000 £000
Consolidated
Balance as at 1 January 2022
657 5,590 481 (5,244) 7,553 9.037
Profit for the year (1,243) (1,243)
Share options expense 51 51
Translation movement (39) (39)
Balance as at 31 December 2022
657 5,590 493 (5,244) 6,310 7,806
Loss for the year (295) (295)
Share options cancelled (69) 69 -
Share options expense 22 22
Translation movement 16 (13) 3
Balance as at 31 December 2023
657 5,590 462 (5,244) 6,071 7,536
Unaudited Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 31 DECEMBER 2023
2023 2022
£000 £000
Proft/(loss) before taxation (678) (1,688)
Adjustments for:
Amortisation of intangibles 753 954
Depreciation of property, plant and equipment 74 149
Depreciation of right-of-use assets 206 112
Unrealised currency translation gains/(losses) 3 (39)
Interest paid 52 54
Share option expense 22 51
Operating cash flows before movements in working capital 432 (407)
Increase in trade and other receivables 396 (567)
Increase in trade and other payables (62) 300
Cash generated by operations 766 (674)
Income taxes received 383 445
Interest paid in cash (52) (54)
Net cash from operating activities 1,097 (283)
Cash flows from investing activities
Purchases of property, plant and equipment (47) (246)
Purchases of other intangible assets (194) (218)
Development of expenditure capitalised (1,036) (1,266)
Net cash used in investing activities (1,277) (1,730)
Cash flows from financing activities
Repayments of borrowings - (5)
Repayments of lease liability (184) (100)
Net cash used in financing activities (184) (105)
Net increase/(decrease) in cash and cash equivalents (364) (2,118)
Cash and cash equivalents at the beginning of the financial year 3,618 5,736
Cash and cash equivalents at the end of the financial year 3,254 3,618
Notes to the Consolidated Financial Statements for the year ended 31 December
2023
1) Significant accounting policies
i. Basis of preparation
The preliminary results for the period to 31 December 2023 are unaudited. The
consolidated financial statements of Crimson Tide plc will be prepared and
approved by the Directors in accordance with applicable law and UK adopted
International Accounting Standards.
ii. Basis of consolidation
The Group financial statements consolidate the financial statements of the
Company and all 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.
iii. Revenue recognition
Revenue is recognised at an amount that reflects the consideration to which
the consolidated entity is expected to be entitled in exchange for
transferring goods or services to a customer. For each contract with a
customer, the consolidated entity: identifies the contract with a customer;
identifies the performance obligations in the contract; determines the
transaction price which takes into account the time value of money; allocates
the transaction price to the separate performance obligations on the basis of
the relative stand-alone selling price of each distinct good or service to be
delivered; and recognises revenue when or as each performance obligation is
satisfied in a manner that depicts the transfer to the customer of the goods
or services promised. Revenue from a contract to provide services is
recognised over time as the services are rendered based on either a fixed
price or an hourly rate.
2) Expenses
Loss before income tax includes the following specific expenses:
2023 2022
£000 £000
Depreciation
Equipment, fixtures and fittings 74 149
Buildings right-of-use assets 206 112
Total depreciation 280 261
2023 2022
£000 £000
Amortisation
Development software 587 505
Development software - impairment - 264
Incremental contract costs 166 185
Total amortisation 753 954
Research & Development
Development software 62 62
Total Research & Development 62 62
Finance costs
Interest and finance costs paid on lease liabilities 52 54
52 54
Auditors remuneration for:
Audit services 50 45
Total Audit fees 50 45
3) Taxation
The Group received an R&D tax credit of £407,123 during the year (2022:
£445,534) and paid Corporation tax in Ireland of £11,350 and PSA tax in the
UK of £12,890.
4) Loss per share
The basic loss per share has been calculated by dividing the profit
attributable to ordinary shareholders by the weighted average number of shares
in issue during the period.
The diluted loss per share has been calculated by dividing the profit
attributable to ordinary shareholders by the weighted average number of shares
that would be in issue, assuming conversion of all dilutive potential ordinary
shares into ordinary shares.
Reconciliation of the weighted average number of shares used in the
calculations are set out below.
Group
Year ended Year ended
31 December 2023 31 December
2022
Loss per share
Reported loss for the year (£000) (295) (1,243)
Reported basic loss per share (pence) (4.49) (18.91)
Reported diluted loss per share (pence) (4.49) (18.91)
Year ended Year ended
31 December 31 December 2022
2023 No.
No.
Weighted average number of ordinary shares:
Opening balance 6,574,863 6,574,863
Weighted average number of ordinary shares for basic EPS
6,574,863 6,574,863
Dilutive effect of options outstanding - -
Weighted average number of ordinary shares for diluted EPS
6,574,863 6,574,863
On 31 October 2023 the Company completed a 100:1 share consolidation exercise.
Basic and diluted EPS were retrospectively adjusted in terms of the
requirements of IAS 33 to achieve comparability.
At 31 December 2023 there were 131,000 (2022: 243,000) share options
outstanding. These share options were not included in the calculation of
diluted earnings per share because they are anti-dilutive in terms of IAS 33.
The financial information set out above does not constitute the Company's
statutory accounts for the year ended 31 December 2023. The auditors have
reported on the 2022 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 2022 which are prepared in accordance with
International Financial Reporting Standards 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 June 2024.
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