REG - Crimson Tide PLC - Preliminary Results
07/04/2022 07:00
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RNS Number : 5408H Crimson Tide PLC 07 April 2022
Crimson Tide plc
Preliminary Announcement of Results to 31 December 2021
Crimson Tide plc ("Crimson Tide" or "the Company"), the provider of the mpro5
solution, is pleased to announce its unaudited preliminary results for the
year ended 31 December 2021.
Financial Highlights
· Revenue increased by £0.6m to £4.1m (2020: £3.5m)
· Annual Recurring Revenue (ARR) increased by 24% to £3.8m (2020:
£3.1m)
· EBITDA break-even (2020: £0.9m) following investment in platform
and marketing
· Capital fund raise yielded net £5.6m
· Cash at year-end amounted to £5.7m (2020: £1.2m)
Operational Highlights
· Continued sector expansion for mpro5
· Master Services Agreement with Compass Group
· Cisco Meraki partnership
· Project wrkrz development
· Talent acquisition in development, marketing and international
Barrie Whipp, Executive Chairman of Crimson Tide, commented:
"The year was transformational for Crimson Tide as, for the first time in our
history, we completed an institutional and private investor fund raise to
support the next chapter in our growth. mpro5 continued to perform well with
strong revenue growth, and we reached annualised recurring revenue of c£4m
just after year-end. Our focus is now on sector and international growth,
particularly in the United States and Northern Europe. The new versions of
mpro5 for tradespeople and healthcare will certainly expand our market and we
are excited to develop our "one platform, many apps" strategy with the new
hires and investments afforded by the fresh capital. Our key target is to
double Annual Recurring Revenue in the medium term. Partnerships with
organisations such as Cisco will assist us domestically and internationally to
achieve our goal."
About the Company
Crimson Tide plc is the provider of the full-service mobility platform mpro5.
mpro5 is delivered on smartphones, tablets, and PDAs, 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.
mpro5 is used in over 260,000 sites in logistics, transportation, healthcare
& retail.
Enquiries:
Crimson Tide plc +441892 542444
Barrie Whipp / Luke Jeffrey
finnCap Ltd (Nominated Adviser and Broker) +4420 7220 0500
Julian Blunt / James Thompson - Corporate Finance
Andrew Burdis - Corporate Broking
Alma PR (Financial PR) +44 7780 901979
Josh Royston
Chairman's Statement
The year saw a fundraise of £5.6m net of expenses which was transformational
for the Company. It has provided us with the ability to invest in human
resources, to continue with tech development plans and marketing activity as
well as allowing us the freedom to add tradespeople (project wrkrz) and
healthcare (mpro5rx) to our offering. We are refining and upgrading our mpro5
platform to deal with the requirements of our existing and potential clients.
We have also been able to add appropriate marketing activities for the first
time in our history which the team is confident will add to our exposure, both
nationally and internationally.
Our annual recurring revenue (ARR) has increased to over £4m post year-end
and this KPI is our focus to drive the business forward. Our aim is to grow
ARR through a range of methods: -
· Increasing our footprint in existing verticals
· Introducing our trade version of mpro5
· Monetising our patient healthcare version of mpro5
· International expansion
· Future vertical market versions of mpro5
As can be implied from the above we have ambitious targets through which we
are looking to grow this key metric and we are targeting an overall doubling
in ARR over the medium term. Our market knowledge and research tell us the
above mechanisms are available to us and underpin our confidence in the
achievability of this target.
Margin remains at c80% and churn has been low. Diversification of the revenue
model across our three brands will accommodate more dynamic growth as we also
look to cement our traditional long-term enterprise revenue. mpro5's cash
generation tempered our cash burn, however larger investments in software and
marketing are planned during 2022. Our Balance sheet is strong, and we have
taken the decision to shorten our amortisation profile on Intangible software
assets to seven years.
Current expenditure is focused on development (£2m in the coming months on
platform and apps) and a further £1m on marketing in the UK and US.
Development expenditure will vary later in the year as we balance the
requirements for apps and the platform, however the single platform upgrade
should be largely complete by the end of 2022. We aim to invest in the
opportunity with our new Cisco Meraki partnership, however our planned spend
of c£1m is dependent on a reliably functioning sensor supply chain.
Developments internationally included new contracts in Scandinavia as part of
our Master Services Agreement with Compass Group. Food quality is at the heart
of Compass' offering, and we are pleased to continue to expand across their
international footprint. Compass trades in forty-five countries and mpro5 is
only currently used in four of them; it is pleasing to note that mpro5 now
processes school meal data and advises Compass on performance across the UK.
We continued to expand our contracted revenues further with existing
customers, thanks to our excellent service and relationships. Our office in
Raleigh, North Carolina is operational, and we are building a pipeline
including the World Federation of Haemophilia in Canada for our healthcare
version of mpro5.
Project wrkrz has made progress and we have a working app with many of the
features we designed, with further versions to come. Our branding and go to
market campaigns are undergoing their final iterations and we will announce a
new brand for the application in the coming weeks. Market research has helped
us refine the application and we are combining the engine of this product with
mpro5's existing technologies.
10% of UK employment is provided in the trades and increasingly this skill
base is become smarter and more professional in terms of the use of
technology. Of course, our tradespeople application will evolve
internationally, however our focus is currently only on the UK & Ireland.
Our partnership ambitions have expanded due to our nascent relationship with
Cisco Meraki. We are the solution to the "what happens now?" data endpoints of
Meraki cameras and sensors and this gives us the opportunity to attach
ourselves to Cisco's global name and marketing engine. Our IoT offering
continues to be piloted in rail and it is only the speed of client decision
making that is holding us up. We are developing our sensor offering further in
anticipation of demand from the Cisco Meraki community. Cisco has over 270
locations in eighty-eight countries.
From our group marketing efforts, we are seeing wider demand for our core
mpro5 solutions. With an expanded marketing team and budget, we are optimistic
that more MQLs (marketing qualified leads) will convert to SQLs (sales
qualified leads).
Challenges have included recruitment and we are not alone in seeing the
effects of competition for technical staff and wage inflation. As expected, in
seeing our team grow to forty-eight staff members we have been bedding in new
staff as well as tasking external contractors and outsource firms. In summary
we are extremely busy with development and marketing, while our operational
infrastructure is well set, save for a few extra hires. Our product focus has
aided us in a "one platform, many apps" strategy and we are pursuing this with
optimism and determination. Underpinning our ambition is a growing and stable
customer base which provides high levels of profitable, recurring revenue. Our
goals and investment decisions are based on areas where we know there is
demand for our solutions and feedback to date supports this. We are expanding
marketing and deploying capital and 2022 will see a full year of a Company
accelerating its growth. The Board looks to the future with confidence.
Barrie RJ Whipp
Founder & Chairman
Chief Executive Officer's Statement
Fresh capital allowed us to proceed with investments in our technical,
marketing, and international departments. We have remained pragmatic in an
ever-changing talent acquisition landscape, attracting the right talent to
deliver our three-year strategy and beyond. We have also leveraged our partner
and contractor networks to accelerate the implementation of our strategic
objectives - namely investing in new product offerings, partner marketing, and
growing internationally.
With user testing of our new consumer (Project Wrkrz) & healthcare
(mpro5rx) offerings complete and third-party research positioning us as a
disruptor in these spaces we begin to target the new revenue streams they
offer. These opportunities, coupled with the growing mpro5 enterprise pipeline
gives the Board reason for optimism.
Our partner strategy with Cisco places us uniquely within their Meraki
marketplace, and I believe mpro5's unrivalled ability to provide digital
workflow and a "single pane of glass" will lead to exciting opportunities in
the coming months across Europe and the Americas.
Our international revenue acquisition is underpinned by our Master Service
Agreement with Compass Group leading to a number of mpro5 rollouts across
Northern Europe. Having provided mpro5 to Compass UK for many years
culminating in them becoming the largest mpro5 customer, we remain excited as
these opportunities mature and subscriptions grow.
Luke Jeffrey
CEO
Financial Review
Financial indicator Year ended December 2021 Year ended December 2020
£'000 £'000
Revenue 4,114 3,542
Gross profit margin 80.4% 80.9%
EBITDA 14 946
(Loss)/Profit before tax (575) 532
Annual recurring revenue (ARR) 3,804 3,060
Cash 5,737 1,175
Revenue
The Company's sustained focus of delivering long-term revenue at a high margin
contributed to revenue growth of 16% (2020: 21%) of which 85% was recurring
revenue. Annual recurring revenue (ARR) as at 31 December 2021 of £3.8
million (2020: £3.06 million) increased by 24%. During a challenging period
of national lockdowns, this was achieved by upselling additional modules to
existing customers, while also adding new clients at entry level price points.
Revenue churn during 2021 was negligible at 2.4% (2020: 4.9%), continuing the
trend of churn amongst small legacy customers. The gross profit margin of
80.4% (2020: 80.9%) remained above the Board's 80% target rate.
Cashflow and liquidity
Cash at year-end amounted to £5.74m (2020: £1.17m), following a fund raise
during April 2021 that yielded a net £5.64m. In the light of investments in
sales and marketing, platform improvements and establishing an office in the
USA, cash generated by operations remained positive at £0.17m (2020:
£1.39m).
Trade receivables
Trade receivables at year-end amounted to £899k (2020: £576k). The increase
predominantly relates to two large customers that migrated to new procurement
platforms during the year, which caused some delay in payment, which has
unwound since the year end. The Company did not experience a noticeable
increase in trade receivables or bad debt related to the pandemic.
Debt and finance costs
Loans and leases decreased to £103k (2019: £288k). Finance charges amounted
to £10k (2020: £29k).
Capitalisation of intangible asset
Software development costs of £485k (2020: £539k) relating to the core mpro5
product were capitalised during the year, while an additional £479k (2020:
£nil) were capitalised relating to the new project wrkrz product.
Amortisation during 2021 amounted to £388k (2020: £216k). The value of the
capitalised software intangible asset at year-end was £2.2m (2020: £1.64m).
The amortisation period of the mpro5 intangible asset will be reduced from 10
to 7 years in 2022.
Tax
A deferred tax asset of £32k (2020: £nil) was expensed due to timing
differences between the tax base and net book value of certain assets. No
corporation tax charge has been included (2020: £nil) due to the availability
of historic tax losses.
Earnings per share
The average number of ordinary shares in issue during the year was 596.1m
(2020 457.5m). Basic and diluted loss per share was 0.10p (2020: 0.16p -
earnings per share).
Crimson Tide plc
Unaudited Consolidated Statement of Profit or Loss
Year ended December 2021 Year ended December 2020
Notes £000 £000
Revenue 4,114 3,542
Cost of Sales (807) (677)
Gross Profit 3,307 2,865
Administrative expenses 2 (4,014) (2,309)
(Loss)/Profit from operations (707) 556
Other income 142 5
Finance costs (10) (29)
(Loss)/Profit before taxation (575) 532
Taxation 3 (32) 202
(Loss)/Profit for the year after taxation (607) 734
(Loss)/Earnings per share
Basic (pence) 4 (0.10) 0.16
Diluted (pence) 4 (0.10) 0.16
Unaudited Consolidated Statement of Comprehensive Income
Year ended December 2021 Year ended December 2020
£000 £000
(Loss)/Profit for the year after taxation (607) 734
Other comprehensive income/(loss) for the year:
Exchange differences on translating foreign operations 2 4
Total comprehensive (loss)/profit for the year (605) 738
Unaudited Consolidated Statement of Financial Position
As at 31 December 2021 As at 31 December 2020
£000 £000
Non-current assets
Capitalised development costs 2,219 1,642
Other intangible assets 817 799
Equipment, fixtures & fittings 167 235
Right-of-use asset 36 92
Deferred tax asset - 32
3,239 2,800
Current assets
Inventories - 6
Trade and other receivables 1,351 1,221
Cash and cash equivalents 5,737 1,175
7,088 2,402
Total assets 10,327 5,202
Current liabilities
Trade and other payables 1,180 907
Borrowings 5 8
Lease liabilities 98 181
1,283 1,096
Non-current liabilities
Borrowings - 5
Lease liabilities - 94
- 99
Total liabilities 1,283 1,195
Net assets 9,044 4,007
Equity
Share capital 657 457
Share premium 5,590 148
Other reserves 481 479
Reverse acquisition reserve (5,244) (5,244)
Retained earnings 7,560 8,167
Total equity 9,044 4,007
Crimson Tide plc
Unaudited Consolidated Statement of Changes in Equity
Group Share capital Share premium Other reserves Reverse acquisition reserve Retained earnings Total
£000 £000 £000 £000 £000 £000
Balance as at 1 January 2020 457 148 475 (5,244) 7,433 3,269
Profit for the year 734 734
Translation movement 4 4
Balance as at 31 December 2020 457 148 479 (5,244) 8,167 4,007
Issue of shares 200 5,442 5,642
Loss for the year (607) (607)
Translation movement 2 2
Balance as at 31 December 2021
657 5,590 481 (5,244) 7,560 9,044
Crimson Tide plc
Unaudited Consolidated Statement of Cash Flows
Year ended Year
December ended
2021 December 2020
£000 £000
Cash flows from operating activities
(Loss)/Profit before taxation (575) 532
Adjustments for:
Amortisation of intangible assets 388 216
Depreciation of property, plant, and equipment 135 111
Depreciation of right-of-use assets 56 57
Unrealised currency translation gains 2 4
Finance costs 10 29
Operating cash flows before movements in working capital 16 949
Decrease in inventories 6 6
Increase in trade and other receivables (130) (1)
Increase in trade and other payables 273 433
Cash generated from operating activities 165 1,387
Taxes received - 202
Interest paid in cash (10) (27)
Net cash generated from operating activities 155 1,562
Cash flows used in investing activities
Purchases of fixed assets (67) (21)
Purchases of other intangible assets (18) -
Development expenditure capitalised (965) (539)
Net cash used in investing activities (1,050) (560)
Cash flows from financing activities
Net proceeds from share issue 5,642 -
Repayments of borrowings (8) (21)
Repayments of lease liability (177) (126)
Net cash from financing activities 5,457 (147)
Net increase/(decrease) in cash and cash equivalents 4,562 855
Net cash and cash equivalents at beginning of period 1,175 320
Net cash and cash equivalents at end of period 5,737 1,175
Notes to the Consolidated Financial Statements for the year ended 31 December
2021
1) Significant accounting policies
i. Basis of preparation
The preliminary results for the period to 31 December 2021 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.
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:
2021 2020
£000 £000
Depreciation
Equipment, fixtures, and fittings 135 111
Buildings right-of-use assets 56 57
Total depreciation 191 168
2021 2020
£000 £000
Amortisation
Development software 261 216
Development software - impairment 127 -
Total amortisation 388 216
Auditors remuneration for:
Audit services 14 12
Auditing of accounts of associate 14 14
Other services supplied pursuant to such legislation
6 6
34 32
3) Taxation
A deferred tax asset of £32k (2020: £nil) was expensed due to timing
differences between the tax base and net book value of certain assets. No
corporation tax charge has been included in the consolidated accounts for the
period ended 31 December 2021 (2020: £nil) due to the availability of tax
losses. For 2020 a research and development tax credit of £202k was
recognised in the Consolidated Statement of Profit or Loss.
4) (Loss) / Earnings per share
The basic (loss)/earnings 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)/earnings 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 2021 31 December
2020
(Loss) / Earnings per share
Reported (loss)/profit for the year (£000) (607) 734
Reported basic earnings per share (pence) (0.10) 0.16
Reported diluted earnings per share (pence) (0.10) 0.16
Year ended Year ended
31 December 31 December 2020
2021 No.
No.
Weighted average number of ordinary shares:
Opening balance 457,486,234 457,486,234
Weighted average number of ordinary shares for basic EPS
596,116,371 457,486,234
Dilutive effect of options outstanding - 2,938,478
Weighted average number of ordinary shares for diluted EPS
596,116,371 460,424,712
At 31 December 2021 there were 16,700,000 share options outstanding. These
share options were not included in the calculation of diluted earnings per
share because they are antidilutive in terms of IAS 33.
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 December 2021 or 31 December 2020.
Statutory accounts for 2020, which were prepared under IFRS, have been
delivered to the Registrar of Companies. The auditors have reported on the
2020 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 2021 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 June 2022.
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