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RNS Number : 0260Y Datalex PLC 02 September 2022
Datalex plc
H1 2022 Interim Financial Report
Continued progress and ready for the next phase of growth
Dublin, Ireland - 2 September 2022: Datalex plc (the "Company" or the "Group")
(Euronext Growth Dublin: DLE), a market leader in digital retail technology
focused on the airline market, today announces its results for the six months
ended 30 June 2022 ("H1 2022").
Significant developments
· In H1 2022, the Group's total revenues declined by 17% during the
period (in comparison to H1 2021). This year-on-year variance is primarily
attributable to a reduction in transaction volumes in China, where air travel
remains heavily impacted by COVID-19, and a decrease in services projects
during the period (in comparison to the same period in the prior year).
· The Group's commercial model delivers revenue and profit growth
over the lifetime of a contract, following initial investment in the
deployment of our product suite. That dynamic will be evident as we add new
customers to the business.
· Cost of Sales has increased when compared to the same period in the
prior year. However, when allowing for the impact of Covid-19 wages subsidies
and a one-off supplier credit in the prior year, Cost of Sales has reduced
year-on-year. Headcount costs, contractor costs, and other spending areas were
carefully managed while key priorities were funded.
· Investment in product development has continued. A new product,
Datalex Pricing AI, was launched to the market on 31 May 2022. This product is
an entry into a new business segment for Datalex within airline retail and
expands the Group's total addressable market. The product has been trialled
with two airlines to date and we are confident that it will drive material
benefits for the airline industry.
· The Virgin Australia implementation is progressing as expected and
an NDC project has recommenced.
· Sales and marketing spend has increased in response to a strong
rise in RFP and general sales activity. We exit the first half of 2022 with a
robust pipeline of opportunities to progress over the coming months.
Financial highlights
· Total revenue for the six-month period ending 30 June 2022 was
$10.4 million, a 17% decline versus the same period in 2021 (H1 2021: $12.6
million).
· Platform revenue of $5.9 million declined by 21% in comparison to
H1 2021 (H1 2021: $7.5 million).
· Total operating costs before exceptional items in the first half of
2022 increased by 13% to $13.8 million (H1 2021: $12.2 million).
· Adjusted EBITDA loss of $2.1 million in H2 2022, a decrease of $3.9
million versus the same period in 2021 (H1 2020: EBITDA $1.8 million).
Customer acquisition
An important strategic milestone announced on 1 September 2022 was the signing
of easyJet as a new customer. It is significant that one of the world's
leading low-cost airlines has chosen Datalex and its technology to enhance
their retailing and digital experience. It is also significant for Datalex to
win a major European low-cost carrier airline, as the low-cost carrier segment
is the fastest growing segment within the airline market. This follows the
addition of Virgin Australia, a key Asia Pacific carrier, to Datalex's
customer base over the past nine months.
Commenting on today's announcement, Sean Corkery, CEO of Datalex, said:
"Despite the lower than expected activity levels in certain areas in H1 2022,
I believe significant progress has been made in 2022 so far. In particular,
the signing of easyJet as a new customer on 1 September is a significant
milestone for the Group and a strong affirmation of the value that our
products provide to airlines that want to accelerate their digital retail
roadmap. In addition to the first eight months of 2022 being a period of
strong sales activity, we have also continued progress across our product
strategy. Looking forward, I expect that the positive momentum in sales
activity experienced in the first eight months of 2022 will continue. However,
as outlined in the guidance issued today, it will take time for this progress
to be reflected in our financial performance. As I look beyond 2022, I am
encouraged by the strong signs of industry recovery in H1 2022. We remain
confident in the ability of our business to grow in the medium to long term."
Trading update & outlook
The first half of 2022 has seen strong increases in demand for travel across
the world. However, airports and airlines have faced challenges due to the
unprecedented scaling up of operations resulting in capacity constraints and
intermittent flight cancellations. Datalex H1 2022 services activity levels
were reduced as airlines focused on core operational priorities. Additionally,
we have seen continued travel restrictions in some regions such as China,
where they follow a zero-Covid policy, which affected Datalex transaction
volumes.
However, it is anticipated that there will be a continued recovery in H2 2022,
and that the China market will experience a material recovery in the second
half of the year versus H1 2022. Based on current assumptions, and absent any
major dislocations in the macro-environment, the Company expects to report
Revenue of $25 million to $27 million and Adjusted EBITDA of -$3 million to
-$4.5 million for the 2022 full financial year (see notes below regarding
basis of preparation).
Currently the Group has drawn down €2.5m of the €10m available under the
existing debt facility ("Facility B"). Any amounts drawn under this facility
are required to be repaid by 30 June 2023. The latest Group's cash flow
forecasts indicate that refinancing or alternative funding will be required to
repay the loan facility as it falls due and to fund the working capital needs
of the Group in 2023 and beyond. The Board will evaluate funding options
available to the Group over the coming months, update shareholders as
appropriate and seek necessary approval if required.
H1 2022 results presentation
Management will review the H1 2022 results on a conference call at 1pm Dublin
time today. A copy of the presentation will be available on our website at
investors.datalex.com (https://investors.datalex.com/) and the call details
are provided below:
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Notes
The financial information in this announcement is not audited and does not
constitute statutory financial statements of Datalex plc.
IFRS 15 recognition rules specify that timing of revenue recognition may be
affected by factors outside our control, for example, including the credit
rating of our customers. This may impact on the timing of recognition of
forecast revenues and costs, as included in this guidance statement.
Adjusted EBITDA (Note 4) is defined as earnings from operations before (i)
interest income and interest expense, (ii) tax expense, (iii) depreciation and
amortisation expense, (iv) share-based payments cost and (v) exceptional items
(see Note 7).
This announcement contains certain forward-looking statements. Actual results
may differ materially from those projected or implied in such forward-looking
statements. Such forward-looking information involves risks and uncertainties
that could significantly affect expected results. Those forward-looking and
other statements speak only as at the date of this announcement. Datalex
undertakes no obligation to update any forward-looking statements. No
statement in this document is intended as a profit forecast or a profit
estimate and no statement in this document should be interpreted to mean that
earnings per share for the current or future financial years would necessarily
match or exceed the historical published earnings per share.
Statements contained in this announcement are based on the knowledge and
information available to the Board at the date it was prepared and therefore
facts stated, and views expressed may change after that date. Nothing in this
announcement is intended to constitute an invitation or inducement to engage
in investment activity. This announcement does not constitute or form part of
any offer for sale or subscription of, or any solicitation of any offer to
purchase or subscribe for, any securities nor shall it or any part of it nor
the fact of its distribution form the basis of, or be relied on in connection
with, any contract, commitment or investment decision in relation thereto.
This announcement does not constitute a recommendation regarding any
securities.
Contact information
Investor Enquiries
Neil McLoughlin, Datalex plc
+353 1 806 3500
neil.mcloughlin (mailto:neil.mcloughlin@datalex.com) @
(mailto:neil.mcloughlin@datalex.com) datalex.com
(mailto:neil.mcloughlin@datalex.com)
Media Enquiries
Michael Moriarty, FleishmanHillard
+353 87 243 2550
michael.moriarty (mailto:michael.moriarty@fleishmaneurope.com) @
(mailto:michael.moriarty@fleishmaneurope.com) fleishmaneurope.com
(mailto:michael.moriarty@fleishmaneurope.com)
About Datalex
Datalex's purpose is to transform airline retail. Datalex is a market leader
in airline retail technology, offering unique products that enable airlines to
drive revenue and profit as digital retailers. Datalex has a strong track
record of delivering digital retail transformation for progressive airline
brands worldwide.
The Group is headquartered in Dublin, Ireland, and maintains offices across
Europe, the USA, China and Australia.
In 2022, Datalex was awarded the 'Great Place to Work®' and 'Best Workplaces
in Tech™' certifications.
Datalex plc is a publicly listed company, on Euronext Growth, Dublin.
Learn more at www.datalex.com (http://www.datalex.com)
Datalex PLC
Interim Financial Report
For the six months ended 30 June 2022
Chief Executive Officer's Review
H1 macro-economic conditions & impact on Datalex's H1 2022 performance
2022 began with an outspread of the Omicron COVID-19 variant, which had a
large impact on air travel as further travel restrictions were imposed in many
regions. However, once restrictions were lifted, demand for air travel was
strong with most markets experiencing significant pent-up demand in Q2 2022.
The exception to this recovery in Q2 2022 was the China market, where there
was a sharp fall in travel compared to the previous year as a result of its
zero-COVID policy measures. Domestic revenue passenger kilometres ("RPKs") in
the domestic China market were down -80.8% in April 2022, -73.2% in May 2022,
and -45.0% in June 2022 versus the same months in 2021(( 1 (#_ftn1) ))(.)
While demand overall was very positive in the first half of 2022, and in Q2 in
particular, most airlines faced other challenges during the period. These
challenges included having to manage rising inflation rates and costs (energy
and fuel prices in particular), having to adopt network plans in a period of
increasing global instability, needing to recruit and train staff in a time of
labour market shortages, in addition to having to manage airports and other
service providers who also experienced recruiting and capacity constraints.
Despite all of this complexity, many airlines still prioritised and progressed
their digital retail plans during the period.
In terms of Datalex's H1 2022 revenue performance, Datalex was impacted by the
decreased travel volumes in the China market. We do expect that there will be
some recovery in this market in H2 2022. Secondly, the Group also didn't
benefit from the full Q2 volume recovery as some existing customer contracts
do not have a variable structure. Thirdly, the Group had delayed services
revenue in H1 2022 versus the same period in the prior year.
Business development momentum
During the period, the Group experienced a significant increase in business
development activity. As airlines transition from recovery mode to growth
mode, we have seen an acceleration in airlines prioritising investment in
digital retail as a key enabler for their growth.
Whilst the importance of digital investment to drive future growth for
airlines was never in question, many airlines put digital investment projects
on hold during 2020 and 2021 while their business and operations were heavily
impacted by COVID-19.
The Group increased investment in sales and marketing during the period in
response to this increase in demand and increase in RFP and general sales
activity. However, airline retail technology RFP processes can typically range
from 6 - 18 months, so it does takes time before this return on investment
materialises.
One outcome of Datalex's investment in business development materialised in
the Group announcing on 1 September that it has signed easyJet as its' newest
customer. easyJet is one of the world's leading low-cost airlines carrying
over 96 million passengers in 2019. It is significant that easyJet has
chosen Datalex's technology to enhance their retailing and booking experience
and is a strong affirmation of our product proposition. It is also significant
for Datalex to win a low-cost carrier airline, as this is the fastest growing
segment of Datalex's target addressable market.
The Group exits the first half of 2022 with a strong pipeline of opportunities
to progress.
Customer developments & implementation projects
The Group invested in customer implementation projects during the period.
As announced in December 2021, Virgin Australia selected Datalex to implement
its' digital retail products to deliver on the retail-focused elements of
their technology roadmap. This implementation is now well underway and
progressing well.
A large NDC project that was paused in 2020 as a result of COVID-19 impacts,
also resumed during the period.
These implementation projects will bode well for future transaction revenue
growth for the Group once they go-live. However, it can take up to 18 months
for multi-product implementations to fully complete, as airlines often choose
to a introduce new technology into their digital eco-systems in phases over a
steady period of time.
Chief Executive Officer's Review (continued)
Continued investment in our product
The Group continued to invest during the period across all product areas.
Datalex's newest product, Datalex Pricing AI, was launched to the market on 31
May 2022. This product, which can be implemented in 12 weeks, is an entry into
a new market segment of airline retail for Datalex and expands the Group's
total addressable market.
The product has been trialled with two airlines to date and we are confident
that it will drive material benefits to airlines.
This product is for airlines who wish to leverage data and AI technology to
inform their pricing decisions so that they can achieve the highest possible
price for the air fares, without causing a negative impact on their conversion
rates and load factors. The product enables airlines to forego the legacy
practices of filing fares and enable them to price in real-time.
Summary
As outlined in the guidance issued today, our financial results are expected
to improve in the second half of 2022, and we expect that the Group will
report revenue of $25 million to $27 million for FY 2022. Achieving this
revenue in 2022 however, is dependent on there being some recovery in travel
volumes in the China market.
Despite the short-term financial results, I am satisfied with the progress
made in the first half of 2022 and in particular with the progress made in
terms of business development. The Group has signed two new airlines in the
past 9 months - easyJet in September 2022 and Virgin Australia in December
2021. Both of these airlines are well-established leading airlines in their
respective markets and their selection of Datalex as their digital retail
technology partner of choice is affirmation of the strength of Datalex's
capability.
The Group has invested during the period to secure new customer growth, and we
will continue to invest where we see strong signs of return.
Sean Corkery
Chief Executive Officer
02 September 2022
Financial summary
· Total revenue for the six-month period ending 30 June 2022 was
$10.4 million, a 17% decline versus the same period in 2021 (H1 2021: $12.6
million)
· Platform revenue of $5.9 million declined by 21% in comparison to
H1 2021 (H1 2021: $7.5 million). This reduction was driven by decreased travel
volumes in the China market.
· Services revenue of $3.8 million declined by 12% in comparison to
H1 2021 (H1 2021: $4.3 million). Some service projects were delayed as
airlines focused attention on other operational challenges within the
industry.
· Total operating costs before exceptional items in the first half of
2022 increased by 13% to $13.8 million (H1 2021: $12.2 million). This
highlights the Group's investment in future growth.
· Adjusted EBITDA loss of $2.1 million in H2 2022, a decrease of $3.9
million versus the same period in 2021 (H1 2020: EBITDA $1.8 million).
· Loss after tax for the period of $3.1 million (H1 2021: Loss of
$3.8million). Net exceptional gain of $0.3 million (H1 2021: cost of
$1.5million) primarily related to remeasurement of regulatory provision.
· Cash balance as at 30 June 2022 amounted to US $2.7 million,
decreasing from $8.3 million on 31 December 2021 ($2.4 million cash balances
at 30 June 2021).
2022 half year results summary
Unaudited Unaudited Audited
For the six months ended 30 June 2022 30 June 2021 31 December 2021
As As Period on As
reported reported period change reported
US$'M US$'M % US$'M
Platform revenue ((1)) 5.9 7.5 -21% 13.3
Services revenue 3.8 4.3 -12% 8.5
Consultancy revenue 0.7 0.8 -13% 1.5
Other revenue - - - 2.2
Total revenue 10.4 12.6 -17% 25.5
Operating costs ((2)) 13.8 12.2 13% 27.3
Exceptional (income)/costs (0.3) 1.5 0.3
Adjusted EBITDA ((3)) (2.1) 1.8 2.4
Foreign Exchange adjusted EBITDA ((4)) (2.5) 1.1 1.4
Loss after tax for the period (3.1) (3.8) (4.9)
Cash and cash equivalents 2.7 2.4 8.3
Debt (leases and secured related party loan) (1.3) (20.2) (1.8)
Net debt 1.4 (17.8) 6.5
Cash (used)/generated in operations
(2.9) 1.3 0.4
EPS - basic and diluted (US cent) (2.4) (4.6) (4.7)
((1)) Platform revenue is earned from the use of the Group's Digital Products
by our customers.
((2)) Operating costs are as stated in Note 5. Amounts are stated before
separately disclosed exceptional items.
((3)) Adjusted EBITDA (Note 4) is defined as earnings from operations before
(i) interest income and interest expense, (ii) tax expense, (iii) depreciation
and amortisation expense with the exception of deferred commission costs per
Note 4, (iv) share-based payments cost and (v) exceptional items (see Note 7).
((4)) Foreign currency adjusted EBITDA (Note 4) is a KPI introduced during
2020. Our functional currency is US$. In the prior year the Group loan funding
was denominated in Euro as a result the adjusted EBITDA (Note 4) results of
the group were subject to movements beyond management's control arising from
movements in foreign exchange rates. The foreign exchange input into the
foreign currency adjusted EBITDA (Note 4) KPI is arrived at by combining the
foreign exchange movements per Note 8 and the additional foreign exchange
movements (Loss of: US$288k) on those Euro denominated Trade Debtor balances
fully provided at the end of 30 June 2022 and 30 June 2021.
Forward Looking Statements
Certain statements made in this document are forward‐looking. These
represent expectations for the Group's business, and involve known and unknown
risks and uncertainties, many of which are beyond the Group's control. The
Group has based these forward‐looking statements on current expectations and
projections about future events. These forward-looking statements may
generally, but not always, be identified by the use of words such as 'will',
'aims', 'anticipates', 'continue', 'could', 'should', 'expects', 'is expected
to', 'may', 'estimates', 'believes', 'intends', 'projects', 'targets', or the
negative thereof, or similar expressions. By their nature, forward-looking
statements involve risk and uncertainty because they relate to events and
depend on circumstances that may or may not occur in the future and reflect
the Group's current expectations and assumptions as to such future events and
circumstances that may not prove accurate. A number of material factors could
cause actual results and developments to differ materially from those
expressed or implied by forward-looking statements. You should not place undue
reliance on any forward-looking statements. These forward-looking statements
are made as of the date of this announcement. The Group expressly disclaims
any obligation to publicly update or review these forward-looking statements
other than as required by law. This announcement contains inside information
for the purposes of the Market Abuse Regulation.
Statement of Directors' Responsibilities
The Directors of Datalex plc are responsible for preparing this interim
management report and the Half-Yearly Financial Report in accordance with IAS
34, Interim Financial Reporting, as adopted by the European Union.
Each of the Directors listed on page 42 and 43 of the 2021 annual report
confirm that, to the best of their knowledge:
· The Directors of Datalex plc are responsible for preparing this
interim management report and the Half-Yearly Financial Report in accordance
with IAS34, Interim Financial Reporting, as adopted by the European Union.
· The Interim Management Report includes a fair review of the
important events that have occurred during the first six months of the
financial year and their impact on the Half-Yearly Financial Report for the
half year ended 30 June 2022 and a description of the principal risks and
uncertainties for the remaining six months which has been provided in Note 24
of the Half-Yearly Financial Report.
· The Half-Yearly Financial Report includes a fair review of related
party transactions that have occurred during the first six months of the
current financial year and that have materially affected the financial
position or the performance of the Group during that period, and any changes
in the related party transactions described in the last Annual Report that
could have a material effect on the financial position or performance of the
Group in the first six months of the current financial year.
On behalf of the Board
Sean Corkery
Dan Creedon
Director
Director
02 September 2022
02 September 2022
Condensed Consolidated Interim Statement of Financial Position as at 30 June
2022 (unaudited)
Notes 30 June 31 December
2022 2021
Unaudited Audited
US$'000 US$'000
ASSETS
Non-current assets
Property, plant and equipment 215 249
Intangible assets 16 5,281 3,669
Right-of-use assets 17 891 1,187
Deferred contract fulfilment costs 18 1,970 2,867
Trade and other receivables 9 112 319
Total non-current assets 8,469 8,291
Current assets
Deferred contract fulfilment costs 18 1,182 -
Trade and other receivables 9 4,476 3,951
Contract assets 9 1,187 722
Cash and cash equivalents 2,725 8,251
Total current assets 9,570 12,924
TOTAL ASSETS 18,039 21,215
EQUITY
Capital and reserves attributable to the equity holders of the Company
Issued ordinary share capital 19 13,267 13,215
Other issued equity share capital 262 262
Other reserves 37,857 37,604
Retained loss (53,272) (50,189)
TOTAL EQUITY (1,886) 892
LIABILITIES
Non-current liabilities
Borrowings 10 726 895
Provisions 11 282 663
Trade and other payables 12 5,871 5,332
Contract liabilities 13 2,772 4,419
Total non-current liabilities 9,651 11,309
Current liabilities
Borrowings 10 550 891
Provisions 11 225 569
Trade and other payables 12 4,400 3,953
Contract liabilities 13 4,948 3,414
Current income tax liabilities 151 187
Total current liabilities 10,274 9,014
TOTAL EQUITY AND LIABILITIES 18,039 21,215
Condensed Consolidated Interim Income Statement
For the six months ended 30 June 2022 (unaudited)
Notes Six months ended 30 June Year ended 31 December
2022 2022 2022 2021 2021 2021 2021 2021 2021
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Audited Audited Audited
Before Exceptional Total Before Exceptional Total Before Exceptional Total
exceptional items exceptional items exceptional items
items (Note 7) items (Note 7) items (Note 7)
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Continuing operations
Revenue from contracts with customers 4 10,367 - 10,367 12,593 - 12,593 25,473 - 25,473
Cost of sales 5 (7,251) - (7,251) (5,894) - (5,894) (13,256) - (13,256)
GROSS PROFIT 3,116 - 3,116 6,699 - 6,699 12,217 - 12,217
Selling and marketing costs 5 (334) - (334) (149) - (149) (417) - (417)
Administrative expenses 5 (7,301) 325 (6,976) (7,121) (1,541) (8,662) (15,093) (268) (15,361)
Net impairment writeback on financial and contract assets 5 311 - 311 515 - 515 744 - 744
Impairment of intangible assets - - - - - - (106) - (106)
Other income 215 - 215 106 - 106 1,760 - 1,760
Other gains 8 732 - 732 445 445 716 - 716
OPERATING (LOSS)/PROFIT (3,261) 325 (2,936) 495 (1,541) (1,046) (179) (268) (447)
Finance costs (119) - (119) (2,696) - (2,696) (4,350) - (4,350)
LOSS BEFORE INCOME TAX (3,380) 325 (3,055) (2,201) (1,541) (3,742) (4,529) (268) (4,797)
Income tax charge 14 (28) - (28) (36) - (36) (77) - (77)
LOSS FOR THE PERIOD (3,408) 325 (3,083) (2,237) (1,541) (3,778) (4,606) (268) (4,874)
LOSS PER SHARE (in US$ cents per share)
Basic and diluted 15 (2.4) (4.6) (4.7)
Condensed Consolidated Interim Statement of Comprehensive Income
For the six months ended 30 June 2022 (unaudited)
Six months ended Year ended
30 June 30 June 31 December 2021
2022 2021
Unaudited Unaudited Audited
US$'000 US$'000 US$'000
Loss for the period (3,083) (3,778) (4,874)
Other comprehensive income:
Items that may subsequently be reclassified to profit or loss:
Foreign currency translation adjustments
- Arising in the period (238) 145 (142)
Total items that may be subsequently reclassified to profit or loss (238) 145 (142)
Comprehensive income for the period (3,321) (3,633) (5,016)
Condensed Consolidated Interim Statement of Changes in Equity
For the six months ended 30 June 2022 (unaudited)
Other issued equity share capital
Issued ordinary share capital
Retained (loss)/ earnings
Other reserves Total equity
US$'000 US$'000 US$'000 US$'000 US$'000
Unaudited
Balance at 1 January 2021 8,215 262 11,777 (43,952) (23,698)
Loss for the period - - - (3,778) (3,778)
Other comprehensive income - - 145 - 145
Total comprehensive income for the period - - 145 (3,778) (3,633)
Share-based payments charge - - 450 - 450
Balance at 30 June 2021 8,215 262 12,372 (47,730) (26,881)
Audited
Balance at 1 January 2021 8,215 262 11,777 (43,952) (23,698)
Loss for the year - - - (4,874) (4,874)
Other comprehensive income - - (141) - (141)
Total comprehensive income for the year - - (141) (4,874) (5,015)
Share-based payments charge - - 983 - 983
Issue of ordinary shares on capital raise 5,000 - - - 5,000
Premium on shares issued - - 24,710 - 24,710
Share issuance costs - - - (1,363) (1,363)
Disposal of Trust shares - - 275 - 275
Balance at 31 December 2021 13,215 262 37,604 (50,189) 892
Unaudited
Balance at 1 January 2022 13,215 262 37,604 (50,189) 892
Loss for the period - - - (3,083) (3,083)
Other comprehensive income - - (238) - (238)
Total comprehensive income for the period - - (238) (3,083) (3,321)
Share-based payments charge - - 228 - 228
Issue of ordinary shares on exercise of options 52 - 263 - 315
Balance at 30 June 2022 13,267 262 37,857 (53,272) (1,886)
Condensed Consolidated Interim Cash Flow Statement
For the six months ended 30 June 2022 (unaudited)
Notes Six months ended Year ended
30 June 2022 30 June 2021 31 December
2021
Unaudited Unaudited Audited
US$'000 US$'000 US$'000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash (used in)/generated from operations 20 (2,926) 1,263 447
Income tax paid (64) (75) (5)
NET CASH IN OPERATING ACTIVITIES (2,990) 1,188 442
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to intangible assets 16 (2,101) (855) (2,448)
Proceeds from sales of property, plant and equipment - - 23
Purchase of property, plant and equipment (73) - (119)
NET CASH USED IN INVESTING ACTIVITIES (2,174) (855) (2,544)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares (including share premium) 315 - 29,710
Costs of share placing paid - - (1,363)
Proceeds from disposal of trust shares - - 275
Repayment of borrowings - - (19,134)
Amounts paid associated with lease amendments - - (278)
Payment of interest on lease liabilities (79) (228) (343)
Payment of capital on lease liabilities (433) (664) (1,177)
Interest paid (40) - (46)
NET CASH (USED IN)/GENERATED FROM FINANCING ACTIVITIES (237) (892) 7,644
Net (decrease)/increase in cash and cash equivalents (5,401) (559) 5,542
Foreign exchange loss on cash and cash equivalents (125) (21) (316)
Cash and cash equivalents at beginning of period 8,251 3,025 3,025
CASH AND CASH EQUIVALENTS AT END OF PERIOD 2,725 2,445 8,251
Notes to the Interim Financial Report
1. General information
The principal activity of the Group is the development and sale of digital
retail products and solutions to the airline industry.
Datalex plc ("the Company") is a public limited company incorporated and
domiciled in Ireland and listed on the Euronext Growth market. The company
registration number is 329175, and the registered office is Block V,
EastPoint, Clontarf, Dublin 3, D03 H704, Ireland.
This Half-Yearly Financial Report was authorised for issue by the Board of
Directors on 1 September 2022.
2. Basis of preparation
The Half-Yearly Financial Report ("Interim financial statements") of Datalex
plc (the 'Group'), which is presented in US Dollars (denoted as "US$") and
expressed in thousands, has been prepared as at, and for the period ended 30
June 2022, in accordance with Central Bank (Investment Market Conduct) Rules
2019 and with International Accounting Standard 34, Interim Financial
Reporting, ("IAS 34") as adopted by the European Union.
The Half-Yearly Financial Report does not include all information required for
full annual financial statements and should be read in conjunction with the
consolidated financial statements for the year ended 31 December 2021 included
in the Datalex plc 2021 Annual Report which is available on the Group's
website www.datalex.com.
The Half-Yearly Financial Report is unaudited and has not been reviewed by
auditor pursuant to the Financial Reporting Council guidance on Review of
Interim Financial Information.
Statutory information
The interim financial statements are considered non-statutory financial
statements for the purposes of the Companies Act 2014 and in compliance with
section 340(4) of that Act we state that:
· the interim financial statements as at, and for the period
commencing 1 January 2022 and ended 30 June 2022 have been prepared to meet
our obligations under the Central Bank (Investment Market Conduct) Rules 2019;
· the interim financial statements as at, and for the period
commencing 1 January 2022 and ended 30 June 2022 do not constitute the
statutory financial statements of the Group and are unaudited;
· the statutory financial statements as at, and for the financial
year ended 31 December 2021 will be annexed to the 2022 annual return and
filed with the Companies Registration Office;
· the statutory auditor of the Group has made a report under section
391 in the form required by section 336 Companies Act 2014 in respect of the
statutory financial statements of the Group;
· whether any matters referred to in the statutory auditors' report
were qualified or unqualified, or whether the statutory auditors' report
included a reference to any matters to which the statutory auditors drew
attention by way of emphasis without qualifying the report.
2. Basis of preparation (continued)
Going concern
The Half-Yearly Financial Report has been prepared on the going concern basis,
which assumes that the Group will be able to continue in operational existence
for the foreseeable future. The time period that the Board has considered in
evaluating the appropriateness of the going concern basis in preparing the
Half-Yearly Financial Report for 2022 is a period of twelve months from the
date of approval of this report.
The Group incurred a loss of US$3.1m in the six months to 30 June 2022 (2021
financial year: loss of US$4.9m). At 30 June 2022, the Group had net
liabilities of US$1.9m (31 December 2021: net assets of US$0.9m) and net
current liabilities of US$0.7m (31 December 2021: net current assets of
US$3.9mm). The total decrease in cash in the six months to 30 June 2022 was
US$5.5m (2021 financial year: US$5.2m increase).
In adopting the going concern basis in preparing the financial statements, the
Directors have considered the Group's available sources of finance including
access to the equity markets, the credit facility available as part of the
Second Amendment and Restatement Agreement with Tireragh Limited ("Facility
B"), the Group's cash-on-hand, cash generation and preservation projections,
together with factors likely to affect its future performance, as well as the
Group's principal risks and uncertainties. In evaluating our cash flow needs,
we have taken into account our commitments to customers in both deployment and
ongoing services commitments, the working capital requirements for recent
customer wins and also of potential new customers. To prepare financial
forecasts for the business is challenging as the Group operates in a
competitive environment which continues to be impacted by macro-economic
matters, which are outside the control of the Group. Those risks and
uncertainties include but are not limited to:
· Conflict in Ukraine: While the majority of Datalex's customers do
not fly into the directly affected areas there may be adverse impacts on the
expected recovery of travel volumes across Europe and on Transatlantic routes
after the pandemic.
· Oil Prices: Higher oil prices may adversely impact the airline
industry. Fuel surcharges and hedging may mitigate those impacts in the short
term but the impact on Datalex's customers is uncertain.
· COVID-19 pandemic: Recovery from the pandemic is evident across the
markets that Datalex's customers serve but the emergence of new variants and
potential future localised lockdowns would have adverse impacts on travel.
· Inflationary pressures: A continuation of increasing rates of
inflation globally may have an adverse impact on travel as consumers
disposable incomes reduce.
· Customer contract renewals: Key customer contracts are scheduled
for renewal by the end of 2022. The Board notes that renewal discussions are
ongoing and progressing as expected. One new customer has been secured in
2022.
While the above matters give rise to material uncertainties for the business,
the Board are satisfied that it remains appropriate to adopt the going concern
basis of preparation. In arriving at this decision, the Board considered,
among other things:
· The Group's access to Facility B for an amount of €7.5m which is
available for drawdown until 31 December 2022 (a €10m facility of which
€2.5m was drawn down on 2 Aug 2022).
· The Group's flexibility to react quickly to negative external
factors as illustrated during COVID-19 when the Group took decisive action by
reducing operating expenses and improving cash flows.
· Assessment of our commitments to customers in both deployment and
ongoing service commitments.
· Datalex's ability to win new customers such as shown by the
contract signings of Virgin Australia in December 2021 and easyJet in
September 2022 for all four Datalex flagship products - Datalex Direct,
Datalex NDC, Datalex Merchandiser and Datalex Dynamic - as well as the Digital
Configurator.
2. Basis of preparation (continued)
The Group is currently required to repay all outstanding principal amounts and
associated accrued interest then outstanding under Facility B by 30 June 2023,
which is within twelve months of the approval of these interim financial
statements. At the approval date of the interim financial statements the
Group had drawn down €2.5m of the €10m available under the facility. The
latest Group's cash flow forecasts indicate that refinancing or alternative
funding will be required to repay the loan facility as it falls due and to
fund the working capital needs of the Group in 2023 and beyond. The Board will
evaluate funding options available to the Group over the coming months, update
shareholders as appropriate and seek necessary approval if required. These
alternatives may include but are not limited to the following:
· Refinancing of the Facility B agreement or alternative debt
financing: Such financing could be subject to interest rate uncertainty or
fluctuation given recent global inflationary trends.
· Equity financing: An equity fundraising, depending on its
structure, may require the convening of an extraordinary general meeting at
which shareholder approval of the arrangements would be sought.
The successful completion of a refinancing or alternative fundraising
nevertheless remains subject to third party, internal and external risks.
The Directors believe, however, that in light of the progress of the
business over the previous 12 months, including new customer wins, that the
risk of not successfully completing a refinancing or alternative fundraising
prior to the date of repayment of Facility B is low.
The Directors recognise that there are material uncertainties, as stated
above, which may cast significant doubt as to the Group's ability to continue
as a going concern. Nevertheless, based on the assessment of the adequacy of
the financial forecasts, the current funding facilities outlined, and the
alternatives available to the Group, the Directors have formed a judgement, at
the time of approving the financial statements, that there is a reasonable
expectation that the Group has adequate resources to continue in operational
existence for a period of at least twelve months from the date of approval of
this report. For this reason, they continue to adopt the going concern basis
in preparing the financial statements and the financial statements do not
include any adjustments that would be required if the Group was unable to
continue as a going concern.
3. Accounting policies
The accounting policies and methods of computation applied by the Group in the
Half-Yearly Financial Report are the same as those applied by the Group in its
consolidated financial statements for the year ended 31 December 2021. There
have been no changes to significant judgements in applying the Group's
accounting policies and/or the key sources of estimation uncertainties for the
Half-Yearly Financial Report since the 2021 Annual Report. The 2021 Annual
Report was published on the 28 April 2022.
Newly adopted Standard or amendments
No IFRSs or IFRIC interpretations are effective for the first time for the
financial period beginning on 1 January 2022 that have a material impact on
the Group.
4. Segmental information
The Group is organised into two operating segments. This section provides
information on the financial performance for the period on a segmental basis.
The Group's reportable operating segments are based on the reports reviewed by
the chief operating decision makers (Executive Leadership Team, the "ELT")
which are used to make strategic decisions. The ELT assesses the performance
of the operating segments based on the Adjusted EBITDA measure, in conjunction
with reviewing other metrics such as Revenue.
4. Segmental information (continued)
The ELT reviews business performance from a product and service perspective.
In 2021 and 2020, TPF Consulting (Transaction Processing Facility) did not
meet the quantitative thresholds for mandatory disclosure under IFRS 8
Operating Segments (IFRS 8 para 13). However, the executive management team
have opted to continue to disclose this segment separately on the basis that
TPF Consulting is managed independently, and that the executive management
team review the performance of the segment separately. The TPF Consulting
business has different characteristics and business challenges compared to the
E-Business reporting segment. Throughout the year, management considers the
performance of E-Business and TPF Consulting on a separate basis.
The reportable operating segments derive their revenue primarily from the sale
of products and services associated with the Group's suite of travel related
technology and TPF Consulting revenue. Segment profit is measured using
Adjusted EBITDA, which is defined as earnings before interest, tax,
depreciation, amortisation (with the exception of deferred commission costs),
exceptional costs and the costs of share options and interests granted to
Executive Directors and employees. Sales between segments are carried out at
arm's length. The revenue from external parties reported to the executive
management team is measured in a manner consistent with that in the
Consolidated Statement of Profit and Loss.
The E-Business segment consists of the development and sale of a variety of
direct distribution software products and solutions to the Airline and Travel
industry. The TPF consulting segment provides IT consultancy services to a
number of major airlines. The segment information provided to the executive
management team for the reportable segments for the period ended 30 June 2022
is as follows:
30 June 2022 30 June 2021
Unaudited Unaudited
E- Business US$000 TFP Consulting US$000 Total US$000 E- Business US$000 TFP Consulting US$000 Total US$000
Revenue from contracts with customers 9,710 657 10,367 11,760 1,222 12,982
Inter-segment revenue - - - - (389) (389)
External revenue 9,710 657 10,367 11,760 833 12,593
Adjusted EBITDA (2,391) 247 (2,144) 1,566 199 1,765
Share-based payments charge (228) - (228) (450) - (450)
EBITDA (2,619) 247 (2,372) 1,116 199 1,315
Depreciation (394) (6) (400) (583) (13) (596)
Amortisation (489) - (489) (224) - (224)
Operating (loss)/profit before exceptional items (3,502) 241 (3,261) 309 186 495
Exceptional items (Note 7) 325 - 325 (1,541) - (1,541)
Operating (loss)/ profit after exceptional items (3,177) 241 (2,936) (1,232) 186 (1,046)
Finance costs (121) 2 (119) (2,696) - (2,696)
Loss before income tax (3,055) (3,742)
Income tax expense (28) (36)
Loss for the period (3,083) (3,778)
4. Segmental information (continued)
A reconciliation of Adjusted EBITDA to Loss before income tax is provided as
follows:
Unaudited Audited
Six months ended Year ended
30 June 30 June 31 December
2022 2021 2021
US$'000 US$'000 US$'000
Adjusted EBITDA (2,144) 1,765 2,435
Depreciation (400) (596) (1,098)
Amortisation - Development costs (366) (118) (224)
Amortisation - Software (123) (65) (247)
Amortisation - Contract acquisition costs - (41) (62)
Finance costs (119) (2,696) (4,350)
Share-based payments cost (228) (450) (983)
Exceptional items (Note 7) 325 (1,541) (268)
Loss before income tax (3,055) (3,742) (4,797)
Unaudited Audited
Six months ended Year ended
30 June 30 June 31 December
2022 2021 2021
US$'000 US$'000 US$'000
Adjusted EBITDA (2,144) 1,765 2,435
Foreign Exchange (394) (634) (1,046)
Foreign currency adjusted EBITDA (2,538) 1,131 1,389
Foreign currency adjusted EBITDA was a KPI introduced during H2 2020. Refer to
Note 18 of the Group's 2021 Annual Report for the definition of foreign
currency adjusted EBITDA.
The amounts provided to the executive management team with respect to total
assets are measured in a manner consistent with that of the financial
statements. These assets are allocated based on operations of the segment and
the physical location of the asset.
Total segment assets and liabilities are as follows:
Unaudited Audited
30 June 2022 31 December 2021
E-business TPF Consulting Total E-business TPF Consulting Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Total segment assets 15,231 2,808 18,039 18,454 2,761 21,215
Total segment liabilities (19,546) (379) (19,925) (19,988) (335) (20,323)
4. Segmental information (continued)
Analysis of revenue by category Unaudited Audited
Six months ended Year ended
30 June 30 June 31 December
2022 2021 2021
US$'000 US$'000 US$'000
Platform revenue 5,900 7,496 13,288
Services revenue 3,810 4,264 8,477
Consultancy revenue 657 833 1,533
Other revenue - - 2,175
Revenue from contracts with customers 10,367 12,593 25,473
Revenue from external customers is derived from the sales of E-business
products and services associated with the Group's suite of travel related
technology and TPF Consulting revenue.
The Group has a number of customers whom the collectability criteria under
IFRS 15.9 is not met. There are no remaining performance obligations
associated with contracts with such customers. Consequently, revenue is only
recognised when consideration is received in accordance with IFRS15.15.
5. Expenses by nature
Unaudited Unaudited Audited
Six months ended Six months ended Year Ended 31 December
2022 2022 2022 2021 2021 2021 2021 2021 2021
Before exceptional items Exceptional items Total Before exceptional items Exceptional items Total Before exceptional items Exceptional items Total
(Note 7) (Note 7) (Note 7)
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Employee benefit expense (Note 6) - net of capitalisation 7,782 - 7,782 7,233 - 7,233 17,467 - 17,467
Consultant and contractor costs - net of capitalisation 2,404 - 2,404 1,074 - 1,074 3,062 - 3,062
Amortisation - development cost 366 - 366 118 - 118 224 - 224
Amortisation - software 123 - 123 65 - 65 247 - 247
Deferred commission amortisation - - - 41 - 41 62 - 62
Establishment costs 406 - 406 410 - 410 741 - 741
Hosting 581 - 581 723 - 723 1,429 - 1,429
Professional fees 356 (325) 31 463 1,628 2,091 683 301 984
Travel 143 - 143 35 - 35 87 - 87
Depreciation - PP&E 104 - 104 183 - 183 326 - 326
Depreciation - Right-of-use Assets 296 - 296 413 - 413 772 - 772
Net impairment writeback on financial and contract assets (311) - (311) (515) - (515) (744) - (744)
Third party services 417 - 417 231 - 231 175 - 175
Impairment of non-current assets - - - - - - 106 - 106
Share option expense/(credit) 228 - 228 450 - 450 983 - 983
Communication 60 - 60 73 - 73 122 - 122
Software maintenance and other online charges 410 - 410 389 - 389 831 - 831
Other 1,210 - 1,210 1,263 (87) 1,176 1,555 (33) 1,522
Total cost of sales, selling and marketing costs, administrative expenses and 14,575 (325) 14,250 12,649 1,541 14,190 28,128 268 28,396
net impairment losses on financial and contract assets
Other gains (Note 8) (732) - (732) (445) - (445) (716) - (716)
Total operating costs 13,843 (325) 13,518 12,204 1,541 13,745 27,412 268 27,680
Disclosed as:
- Cost of sales 7,251 - 7,251 5,894 - 5,894 13,256 - 13,256
- Selling and marketing costs 334 - 334 149 - 149 417 - 417
- Administrative expenses 7,301 (325) 6,976 7,121 1,541 8,662 15,093 268 15,361
- Net impairment (writeback)/losses on financial and contract assets (311) - (311) (515) - (515) (744) - (744)
- Impairment of non-current assets - - - - - - 106 - 106
- Other gains (Note 8) (732) - (732) (445) - (445) (716) - (716)
Total operating costs 13,843 (325) 13,518 12,204 1,541 13,745 27,412 268 27,680
6. Employee benefit expense
Unaudited Audited
Six months ended Year ended
30 June 30 June 31 December 2021
2022 2021
US$'000 US$'000 US$'000
Wages and salaries 7,562 7,178 17,458
Social security costs 760 792 1,493
Pension costs - defined contribution schemes 337 339 666
Employee benefit expense before capitalisation 8,659 8,309 19,617
Capitalised labour((i)) (649) (626) (1,167)
Employee benefit expense after capitalisation 8,010 7,683 18,450
Share based payments charge (228) (450) (983)
Total 7,782 7,233 17,467
Total employee expense before capitalisation 8,431 7,859 18,634
Capitalisation ((i)) (649) (626) (1,167)
Total employee benefit expense 7,782 7,233 17,467
(i) The capitalised employee costs are included in Capitalised Development
costs (Note 16) together with relevant contractor costs.
7. Exceptional items
Unaudited Audited
Six months ended Year ended
30 June 30 June 31 December 2021
2022 2021
US$'000 US$'000 US$'000
Exceptional Gains
Termination notice issued on UK office - Right-of-use asset - - (198)
Termination notice issued on Dublin office - Right-of-use asset - (87) (91)
- (87) (289)
Exceptional Costs
Professional fees in relation to investigations, business transformation 95 260 395
programme and litigation procedures
(Utilisation/release) of Provision for costs associated with complying with (443) - (94)
regulatory investigations
Provision for dilapidation costs associated with the termination of Dublin - - 256
office lease
Professional fees associated with termination of Dublin office lease 23 - -
Costs associated with Capital Raise - 1,368 -
(325) 1,628 557
Net exceptional items (325) 1,541 268
7. Exceptional items (continued)
The exceptional items that arose in respect of the year ended 31 December 2021
are described in Note 23 of the Group's 2021 Annual Report. The exceptional
items incurred in respect of the six months ended 30 June 2022 are outlined
below:
Provision for dilapidation costs associated with the Termination of Dublin
office lease
In accordance with the termination notice of the Datalex Ireland Limited lease
agreement, a dilapidations provision was recognised at 31 December 2021. The
execution of the early termination notice trigged the requirement for a
dilapidations provision. During H1 2022 costs were incurred in regard to the
early termination notice.
Professional fees
During H1 2022 the Group incurred additional professional fees relating to
previously disclosed exceptional items. The costs incurred in H1 2022
primarily relate to professional legal fees relating to the ongoing Lufthansa
and Swiss Airlines contractual dispute.
Costs associated with complying with regulatory investigation
The Group historically recognised a provision which relates to legal and
compliance costs of ongoing regulatory investigations and the necessary
requirements to obtain an end to the suspension order on the trading of the
Group's shares on the Euronext Dublin exchange. The regulatory investigation
and suspension of trading of the Group's shares arose following the
significant breakdown in internal financial controls as disclosed in the 2018
Annual Report. The movement in the current year relates to the release of
those parts of the provision no longer required since the Company's relisting
on the Euronext Growth Dublin exchange, the discharge of associated costs and
a release upon review of the provision assumptions by management.
8. Other gains
Unaudited Audited
Six months ended Year ended
30 June 30 June 31 December 2021
2022 2021
US$'000 US$'000 US$'000
Net foreign exchange gains 732 445 716
Net total 732 445 716
9. Trade and other receivables and contract assets
Unaudited Audited
30 June 31 December 2021
2022
US$'000 US$'000
Current trade and other receivables and contract assets
Trade receivables 5,693 6,051
Less: allowance for expected credit losses on trade receivables (2,956) (3,287)
Trade receivables - net 2,737 2,764
Contract assets 1,221 763
Less: allowance for expected credit losses on contract assets (34) (41)
Contract assets - net 1,187 722
Prepayments 1,017 542
Research and development tax credits 180 302
VAT receivable 385 132
Other receivables 157 211
Total other receivables 1,739 1,187
Total current trade and other receivables - net 4,476 3,951
Total current contract assets - net 1,187 722
Non-current trade and other receivables
Research and development tax credit 112 319
Total non-current trade and other receivables 112 319
Total trade and other receivables and contract assets 5,775 4,992
The gross amounts of the Group's trade receivables and contract assets are
denominated in the following currencies:
Unaudited Audited
30 June 31 December 2021
2022
US$'000 US$'000
US dollar 2,624 2,718
Euro 3,780 4,070
Pound Sterling 112 26
Swedish Krona 15 -
Australian Dollar 383 -
Total 6,914 6,814
The fair value of trade receivables and contract assets approximate to the
values shown above. The maximum exposure to credit risk at the reporting date
is the carrying value of each class of receivable mentioned above. The Group
does not hold collateral as security.
10. Borrowings
Unaudited Audited
30 June 31 December 2021
2022
US$'000 US$'000
Lease liabilities (Note 17) 1,276 1,786
Total borrowings 1,276 1,786
Disclosed as
Current 550 891
Non-current 726 895
Total borrowings 1,276 1,786
Unaudited Audited
Lease liabilities 30 June 31 December 2021
2022
US$'000 US$'000
Current 550 891
Non-current 726 895
Total lease liabilities 1,276 1,786
The carrying amounts of the Group's lease liabilities are denominated in the
following currencies:
Unaudited Audited
30 June 31 December 2021
2022
US$'000 US$'000
US dollar 558 669
Euro 213 457
Pound Sterling 456 560
Chinese renminbi 49 100
Total 1,276 1,786
11. Provisions
Unaudited Audited
30 June 31 December
2022 2021
US$'000 US$'000
Current
Regulatory Costs Compliance 39 267
Uncertain Tax Positions 62 46
Dilapidation Costs - 256
Onerous Contract 124 -
Total Current 225 569
Non-current
Regulatory Costs Compliance 176 464
Uncertain Tax Positions 106 199
Total Non-current 282 663
Total Provisions 507 1,232
A. REGULATORY COSTS COMPLIANCE
As a result of the events that occurred in 2018, the Group is subject to a
number of regulatory investigations that are likely to continue into the
future.
The Group has estimated the costs associated with responding to and addressing
the requirements of the Regulators, including the Corporate Enforcement
Authority, the Central Bank of Ireland and the Gardai.
Unaudited Audited
30 June 31 December
2022 2021
US$'000 US$'000
At start of period 731 1,023
Released to the income statement (443) (120)
FX movement on provision (73) 26
Utilised in the period - (198)
At the end of period 215 731
11. Provisions (continued)
B. UNCERTAIN TAX POSITIONS
As a result of a review of tax compliance across the Group, which was
performed in consultation with external professional advisors, the Group has
provided for its best estimate of taxes, interest and penalties due to various
tax authorities. The amount to be settled is subject to ongoing discussion and
agreement with the related tax authorities.
Unaudited Audited
30 June 31 December
2022 2021
US$'000 US$'000
At start of period 245 417
Released to the income statement (77) (2)
Paid during the period - (16)
Reclassified to accruals during the period - (154)
At the end of period 168 245
C. DILAPIDATION PROVISION
In accordance with the termination notice of a lease agreement in H2 of 2021 a
dilapidations provision was recognised. The execution of the early termination
notice triggered the requirement for a dilapidations provision.
Unaudited Audited
30 June 31 December
2022 2021
US$'000 US$'000
At start of period 256 -
Charged to the income statement 23 256
Paid during the period (279) -
Unused amounts reversed - -
At the end of period - 256
D. ONEROUS CONTRACT
An onerous contract provision was created in H1 2022 for a loss-making
contract with a customer.
Unaudited Audited
30 June 31 December
2022 2021
US$'000 US$'000
At start of period - -
Charged to the income statement 124 -
Paid during the period - -
Unwind of discount on provision - -
At the end of period 124 -
12. Trade and other payables
Unaudited Audited
30 June 31 December
2022 2021
US$'000 US$'000
Trade payables 1,760 632
Accruals 1,540 2,848
Pension contributions 137 146
Social security and other taxes 926 233
VAT payable 6 67
Other payables 31 27
Total current trade and other payables 4,400 3,953
5,871 5,332
Social security and other taxes
Total non-current trade and other payables 5,871 5,332
Total trade and other payables 10,271 9,285
The fair values of trade and other payables approximate to the values shown
above.
Trade Payables
The period-on-period variance in trade payables is as a result of the timing
of payments for various vendors. Amounts payable for contractors, hosting
partners & professional services have all increased since 31 December
2021.
Accruals
The period-on-period variance in accruals is as a result of the release of
accruals for Audit fees and other professional services for which invoices
were received post 31 December 2021.
Social security and other taxes
During the period the Group availed of certain Government facilities in
response to the COVID-19 pandemic. This allowed the Group to warehouse
employment taxes for payment at a future date. The classification of
warehoused employment taxes within current and non-current liabilities
reflects the repayment schedule.
The carrying amounts of the Group's trade payables are denominated in the
following currencies:
Unaudited Audited
30 June 31 December
2022 2021
US$'000 US$'000
US dollar 912 267
Euro 574 302
Pound sterling 253 39
Other 21 24
Total 1,760 632
13. Contract Liabilities
Contract liabilities represent amounts received from customers in advance of
the contractual performance obligations being 'satisfied'.
Unaudited Audited
30 June 31 December
2022 2021
US$'000 US$'000
Advances for bundled performance obligations 4,435 4,419
Advances for service performance obligations 346 1,238
Advances for platform performance obligations 2,939 2,176
Total 7,720 7,833
Current 4,948 3,414
Non-current 2,772 4,419
The amount disclosed in "Advances for bundled performance obligations" in the
current period relates to an ongoing delivery contract where the customer is
estimated to go live in H2 2022. The balance will be unwound over the
remaining life of the commercial contract.
14. Income tax
Unaudited Audited
Six months ended Year ended
30 June 30 June 31 December 2021
2022 2021
US$'000 US$'000 US$'000
Current tax
Income tax charge 28 36 77
Current tax expense for the period 28 36 77
No deferred tax assets have been recognised in respect of the loss incurred in
the six months ended 30 June 2022 due to uncertainties surrounding the
utilisation of the assets against future taxable profits.
Further information on the income tax expense recorded in the year ended 31
December 2021 is set out in Note 9 to the Group's 2021 Annual Report.
15. Loss per share
Unaudited Audited
Six months ended Year ended
Basic 30 June 30 June 31 December
2022 2021 2021
Loss attributable to ordinary shareholders (US$'000) (3,083) (3,778) (4,874)
Weighted average number of ordinary shares outstanding 131,143,222 81,563,842 104,123,931
Basic loss per share (in US$ cents) (2.4) (4.6) (4.7)
Basic earnings per share is calculated by dividing the profit or loss
attributable to the ordinary shareholders by the weighted average number of
ordinary shares in issue during the period, excluding ordinary shares
purchased/ issued by the Company and held as treasury shares.
Unaudited Audited
Six months ended Year ended
Diluted 30 June 30 June 31 December 2021
2022 2021
Loss attributable to ordinary shareholders (US$'000) (3,083) (3,778) (4,874)
Weighted average number of ordinary shares outstanding - basic 131,143,222 81,563,842 104,123,931
Adjustment for share options and share awards - - -
Weighted average number of ordinary shares outstanding - diluted 131,143,222 81,563,842 104,123,931
Diluted loss per share (in US$ cents) (2.4) (4.6) (4.7)
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares. The categories of dilutive potential ordinary
shares of the Group are employee share options, the Joint Share Ownership Plan
('JSOP') awards and Deferred Share Scheme awards. A calculation is performed
to determine the number of shares that could have been acquired at fair value
(determined as the average annual market share price of the Company's shares)
based on the monetary value of subscription rights attached to outstanding
share options.
No share options have been included in the calculation of diluted earnings per
share because they are anti-dilutive for the six months ended 30 June 2022 and
30 June 2021, and for the year ended 31 December 2021 due to the loss recorded
by the Group in these periods. The share options could potentially dilute
basic earnings per share in the future. The weighted average potential
dilutive impact of share options at 30 June 2022 is $nil based on losses
incurred.
As noted in the prior year, the weighted average potential dilutive impact of
share options at 30 June 2021 could vary based on the average share price for
the reporting period, the potentially dilutive shares could have fallen within
the following range based on a share price upon relisting:
Average share price below US$50c: nil potentially dilutive shares
Average share price above US$50c and below US$70c: 2,718,976 potentially
dilutive shares
Average share price above US$70c and below US$90c: 4,340,083 potentially
dilutive shares
Average share price over US$90c: 266,450 potentially dilutive shares
No JSOP or Deferred Share Scheme share awards have been included in the
calculation of diluted earnings per share for the six months ended 30 June
2022 as all were disposed of during 2021.
16. Intangible assets
This note details the intangible assets utilised by the Group to generate
revenues and contribute to recorded results. The cost of software primarily
represents the amounts originally paid to bring the software into use. The
cost of product development primarily represents the direct labour costs
incurred. All intangible assets are amortised over their estimated useful
economic lives. Amortisation commences once the asset is available for use.
Software Product development Product development WIP Total
US$'000 US$'000 US$'000 US$'000
Unaudited
Six months ended 30 June 2021
Opening carrying amount 592 474 732 1,798
Additions - - 1,038 1,038
WIP transfer - 151 (151) -
Amortisation charge (65) (118) - (183)
Closing carrying amount 527 507 1,619 2,653
Audited
Year ended 31 December 2021
Opening carrying amount 592 474 732 1,798
Additions 178 - 2,270 2,448
WIP transfer - 845 (845) -
Amortisation charge (247) (224) - (471)
Impairment charge - (106) - (106)
Closing carrying amount 523 989 2,157 3,669
At 31 December 2021
Cost 909 1,240 2,157 4,306
Accumulated amortisation and impairment (386) (251) - (637)
Closing carrying amount 523 989 2,157 3,669
Unaudited
Six months ended 30 June 2022
Opening carrying amount 523 989 2,157 3,669
Additions - - 2,101 2,101
WIP transfer - 1,693 (1,693) -
Amortisation charge (123) (366) - (489)
Closing carrying amount 400 2,316 2,565 5,281
At 30 June 2022
Cost 909 2,933 2,565 6,407
Accumulated amortisation and impairment (509) (617) - (1,126)
Closing carrying amount 400 2,316 2,565 5,281
16. Intangible assets (continued)
Intangible assets consist of capitalised development costs and software. These
intangibles have finite useful lives and are valued based on actual costs
incurred. Capitalised development costs are amortised over a period of three
to five years (the majority being amortised over five years) commencing from
when the related product is generally available for use.
Work in Progress
During the latter part of 2019 the Group completed the review of its approach
to market and its product development activities. As a result of the review,
the management team developed a "Strategic Product Roadmap" that aligned with
the strategic objective of product first and future proofed platform. This
roadmap outlines the Group's focus on technology enhancements and developments
which represent distinct new capabilities. Work on these capabilities remains
active. Once the platform enhancements are made available to the business and
are available for use it will be moved out of work in progress into additions.
Amortisation commences once the asset is available for use. Work in progress
is review for impairment annually.
17. Right-of-use assets & lease liabilities
The movements in right-of-use assets in the period were as follows:
Office Buildings Computer Equipment Motor Vehicles Total
US$'000 US$'000 US$'000 US$'000
Leased right-of-use assets
Unaudited
At 30 June 2021
Cost 2,680 1,940 83 4,703
Accumulated depreciation (1,306) (1,808) (68) (3,182)
Net carrying amount 1,374 132 15 1,521
At 1 January 2021, net carrying amount 4,276 312 26 4,614
Disposals* (2,680) - - (2,680)
Depreciation charge for the period (222) (180) (11) (413)
At 30 June 2021, net carrying amount 1,374 132 15 1,521
Audited
At 31 December 2021
Cost 2,386 193 32 2,611
Accumulated depreciation (1,296) (103) (25) (1,424)
Net carrying amount 1,090 90 7 1,187
At 1 January 2021, net carrying amount 4,276 312 26 4,614
Additions 589 - - 589
Disposals* (3,244) - - (3,244)
Depreciation charge for year (531) (222) (19) (772)
At 31 December 2021, net carrying amount 1,090 90 7 1,187
Unaudited
At 30 June 2022
Cost 2,386 193 32 2,611
Accumulated depreciation (1,544) (145) (31) (1,720)
Net carrying amount 842 48 1 891
At 1 January 2022, net carrying amount 1,090 90 7 1,187
Depreciation charge for period (248) (42) (6) (296)
At 30 June 2022, net carrying amount 842 48 1 891
17. Right-of-use assets & lease liabilities (continued)
*During 2021, the group issued notice of termination on its head office in
Dublin. The result of the termination notice was a substantial reduction in
the lease term. The Group exited this lease during H1 2022. The reduction in
the lease liability was in excess of the net carrying amount of the associated
right-of-us assets. As a result, a credit was recorded in the prior year
income statement as an exceptional gain. Please see Note 7. Also, during 2021
the Group gave notice on the UK office lease as part of a cost reduction
measures. As the carrying value of the lease liability was greater than the
right-of-use asset value, the termination gave rise to an exceptional gain of
approximately $200k in the prior year.
No indicators of impairment have been identified in relation to the Group's
right-of-use assets. The Group continues to utilise its Office Buildings,
Computer Equipment and Motor Vehicles as of 30 June 2022.
The movements in lease liabilities in the period were as follows:
Office Buildings Computer Equipment Motor Vehicles Total
US$'000 US$'000 US$'000 US$'000
Lease liabilities
Unaudited
At 1 January 2021 (5,601) (461) (32) (6,094)
Settlement ** 2,841 - - 2,841
Translation adjustment 5 (1) - 4
Payments 787 90 15 892
Discount unwinding (218) (6) (5) (229)
At 30 June 2021 (2,186) (378) (22) (2,586)
Audited
At 1 January 2021 (5,601) (461) (32) (6,094)
Translation adjustment 196 12 2 210
Additions (589) - - (589)
Disposals 764 - - 764
Settlements 2,762 - - 2,762
Payments 1,344 139 24 1,507
Discount unwinding (331) (11) (4) (346)
At 31 December 2021 (1,455) (321) (10) (1,786)
Unaudited
At 1 January 2022 (1,455) (321) (10) (1,786)
Translation adjustment 72 6 1 79
Payments 460 46 6 512
Discount unwinding (78) (2) (1) (81)
At 30 June 2022 net carrying amount (1,001) (271) (4) (1,276)
** During 2021, the group issued notice of termination on its head office in
Dublin. The result of the termination notice was a substantial reduction in
the lease term. The Group exited the lease during H1 2022. The lease liability
has been amended to reflect the change in the lease term.
18. Deferred contract fulfilment costs
This note details the deferred contract fulfilment costs that arise from
customer service contracts and comprise of staff and contractor / outsourced
partner costs incurred. These costs are being deferred under IFRS 15 and will
be recognised as the related performance obligations are fulfilled.
The movements in the deferred contract fulfilment costs asset in the period
were as follows:
Unaudited Audited
30 June 31 December
2022 2021
US$'000 US$'000
At start of period 2,867 2,863
Costs incurred to fulfil the ongoing customer contracts in the period 285 4
At end of period 3,152 2,867
The deferred contract fulfilment cost assets at 30 June 2022 and 31 December
2021 are analysed as follows:
Unaudited Audited
30 June 31 December
2022 2021
US$'000 US$'000
Current
Costs incurred to fulfil customer contracts 1,182 -
Non-current
Costs incurred to fulfil customer contracts 1,970 2,867
Total 3,152 2,867
19. Share capital
There were 132,677,009 ordinary shares in issue at 30 June 2022 (31 December
2021: 132,153,843).
20. Cash (used in)/generated from operations
Unaudited Audited
Six months ended Year ended
30 June 30 June 31 December 2021
2022 2021
US$'000 US$'000 US$'000
Loss before income tax (3,055) (3,742) (4,797)
Adjustments for:
Finance costs - net 119 446 4,350
Depreciation 104 183 326
Depreciation of right-of-use assets 296 413 772
Amortisation 489 65 471
Deferred commission amortisation - 41 62
Impairment - - 106
Share-based payments cost 228 450 983
Exchange translation adjustment (187) - (900)
Loss on disposal of fixed assets - - 36
Contract fulfilment cost payments (285) (4)
(2,291) (2,144) 1,405
Changes in working capital:
Trade and other receivables (318) 1,459 3,189
Contract assets (465) (10) 131
Trade and other payables 986 2,421 (1,719)
Contract liabilities (113) (280) (2,352)
Provisions (725) (183) (207)
Cash (used in)/generated from operations (2,926) 1,263 447
21. Related party transactions
The Group's principal related parties are the Group's subsidiaries and key
management personnel of the Group.
The following transactions were entered with related parties during the
period:
A. KEY MANAGEMENT PERSONNEL
Key management personnel include the two Executive Directors who held office
during the period (six months ended 30 June 2021: two Executive Directors),
the five Non-Executive Directors (six months ended 30 June 2021: five
Non-Executive Directors) and eight members of the senior management team (six
months ended 30 June 2021: ten members).
Unaudited Unaudited
Six months ended Six months ended
30 June 2022 30 June 2021
US$'000 US$'000
Short term employee benefits ((1)) 1,219 1,907
Share-based payment charge ((2)) 230 434
Termination benefits - -
Retirement benefits expense ((3)) 57 79
Total 1,506 2,420
(1) Balance is made up of salaries, Directors' fees, and other short-term
employee benefits.
(2) The benefits included in this category relate to share option awards, JSOP
awards, Long Term Incentive Plans and deferred share awards
(3) Retirement benefits accrued in the period to two Executive Directors (six
months ended 30 June 2021: two Directors) and nine members of the senior
management team (six months ended 30 June 2021: ten members) under defined
contribution schemes.
The remuneration of, and transactions with, all Non-Executive Directors was as
follows:
Unaudited Unaudited
Six months ended Six months ended
30 June 2022 30 June 2021
US$'000 US$'000
Directors' fees 162 182
B. OTHER
Details of related party transactions in respect of the year ended 31 December
2021 are contained in Note 29 of the Datalex plc Annual Report 2021. The Group
continued to enter into transactions in the normal course of business with its
related parties during the period. There were no transactions with related
parties in the first half of 2022 or changes to transactions with related
parties disclosed in the 2021 Annual Report that had a material effect on the
financial position or performance of the Group.
22. Dividends
The Directors do not propose an interim dividend in respect of the six months
ended 30 June 2022 (six months ended 30 June 2021: US$nil).
Datalex plc paid a dividend to shareholders of US$3.8m on 5 September 2018. To
enable the dividend to be paid, Datalex plc received a dividend of US$4.0m
from its subsidiary, Datalex (Ireland) Limited ("Datalex Ireland") on 30 May
2018. This dividend was US$0.24 per share on the issued ordinary share capital
of 16,607,262 shares. The dividend payment by Datalex plc had been approved by
shareholders at the AGM on 18 June 2018 and interim financial statements to 31
May 2018 were filed at the Companies Registration Office to support this
payment.
Subsequent to the dividend payments, management identified that Datalex
Ireland would not have had sufficient retained earnings to support the
dividend payment to Datalex plc had there been appropriate recording of
revenue, which had been subsequently amended. As such, the 2018 dividend
payment by Datalex Ireland to Datalex plc of US$4.0m was an unlawful
distribution in contravention of the provisions of Section 117 of the
Companies Act 2014.
In accordance with applicable legislation, the dividend of US$4.0m paid by
Datalex Ireland to Datalex plc is repayable by Datalex plc.
Accordingly, an intercompany payable to Datalex Ireland has been recognised
for US$4.0m in the financial statements of Datalex plc and the dividend
received had been derecognised in the income statement for 2018. The amount
remains outstanding at 30 June 2022.
23. Events occurring after the statement of financial position date
On 1 September 2022 the Group signed a new customer contract with leading
global low-cost carrier easyJet.
On 2 August 2022 the Group drew down €2.5m of the €10m available under
Facility B.
There were no other events that would have impacted on the Half-Yearly
Financial Report for the six months ended 30 June 2022, up to the date of
issue.
24. Principal risks and uncertainties
The principal risks and uncertainties faced by the Group were last outlined on
pages 34 to 37 of the Group's 2021 Annual Report. The Annual Report is
available on our website https://investors.datalex.com.
The risks highlighted in the annual report remain relevant for the remaining
six month. Among other factors that are subject to change and could impact
expected results for the remainder of the year are:
· Inflationary pressures: A continuation of increasing inflation
rates globally may have an adverse impact on travel as consumers disposable
incomes reduce.
· ATC strikes and staffing related disruptions: Delays similar to
those that occurred over recent months in major European airports would have
an adverse impact on travel.
25. Litigation and Disputes
There has been no material change in the Group's legal dispute with Lufthansa
and its subsidiary airline, Swiss
International Airlines since the publication of the Datalex plc statutory
financial statements for the year ended 31
December 2021.
26. Distribution of interim report
This interim report is available on the Group's website www.datalex.com.
Copies are also available to the public from the Company's registered office
at Block V, EastPoint, Dublin, D03 AX24, Ireland.
(( 1 (#_ftnref1) )) IATA Air Passenger Market Analysis, June 2022
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