REG - essensys PLC - Half-year Report
21/04/2022 07:00
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RNS Number : 8226I essensys PLC 21 April 2022
21 April 2022
essensys plc
("essensys" or the "Group")
Half year results for the six months ended 31 January 2022
Resilient performance and continued growth in challenging market; strong
pipeline for FY23 and FY24
essensys plc (AIM:ESYS), the leading global provider of mission critical
software-as-a-service (SaaS) and technology platforms to the flexible
workspace and commercial real estate industries, announces unaudited results
for the six months ended 31 January 2022. All information relates to this
period, unless otherwise specified.
Financial summary:
£m unless otherwise stated Six months to January Six months to January Change
2022 2021
Revenue 10.9 10.6 +2.8%
Recurring revenue(1) 9.9 9.6 +3.1%
Run Rate Annual Recurring Revenue (ARR)(1, 2) 20.3 19.9 +2.0%
Revenue at constant currency(2) 11.0 10.6 +3.8%
Recurring revenue at constant currency(1,2) 10.0 9.6 +4.2%
Statutory loss before tax 4.7 1.7
Adjusted EBITDA(3) (2.9) 0.7
Loss before tax (prior to share based payment expenses)(3) 4.5 1.4
Loss per share (pence) 7.63p 3.27p
Net Cash 30.5 5.9
Strategic highlights:
· Growing demand from existing and new customers underpins
future growth
o US recurring revenues grew strongly once again, up 20% in USD terms to
$7.1m (H1 FY21 $5.9m)
o Nine new customers added, including significant long term strategic
opportunities
o Connect/Flex Services Platform sites up 9% year on year to 470; US
site numbers increased by 23%
· Long term growth plan to capture expanding market
opportunity
o Senior executive team strengthened with new Regional CEOs appointed in
Asia Pacific and UK/Europe; new CFO joining on 16 May 2022 and existing CFO
moving to full time COO role
o Asia Pacific operation now fully established with regional sales
pipeline growing rapidly
o Group personnel numbers increased 20% to 159 (H1 FY21: 133) to support
expansion and growth plans
o Strong balance sheet with £33m equity raise in July 2021 providing
capital to fund expansion
· Continued investment in our market leading products
o Evolution of Flex Services Platform continues with new Hub & Halo
smart access solution now in beta test with customers
o Continued expansion of UK based development capability
Financial highlights:
· Group revenues up 3% in challenging Covid-19 effected
environment
· Strong growth in the US, our largest market opportunity
· UK performance impacted by a single customer insolvency
· Continued high levels of recurring revenue - 91% of total
(H1 FY21 91%)
· Adjusted EBITDA loss slightly less than management
expectations
· Net cash of £30.5m and debt free
Current trading and outlook:
· As outlined in March 2022, sales team expansion and sales
cycles temporarily delayed by further Covid related uncertainty
· Sales activity increasing since the start of second half
of FY22:
o The Group has a further 53 Flex Services Platform sites contracted for
delivery (up from 28 at Feb 22)
o Since January 2022 overall customer pipeline value has grown by 23%
and existing customer pipeline grown by 31%, supporting confidence in longer
term site and revenue growth
o Larger flexible workspace operators and existing landlord customers
starting to expand
· Strategic inventory purchase made to ensure continuity of
supply in FY23 and mitigate potential cost increases
· Whilst the conflict in Ukraine has no direct impact on
the Group's activities the Board remains cautious about its indirect impact
together with the potential for general inflationary cost pressures
· The Group continues to expect to meet FY22 consensus
market expectations and remains confident in the longer-term structural growth
opportunity
Mark Furness, CEO of essensys, said:
"essensys performed resiliently in the first half of our financial year with
3% revenue growth driven by continued strong growth in the US. As outlined
in March, whilst Covid-19 temporarily slowed our hiring plans, sales cycles
and our accelerated growth plans we've made excellent progress in product and
development and in the strengthening of the senior executive team. We have
seen customer activity begin to increase in the second half of the year and
remain confident of meeting FY22 consensus market expectations. I am also
pleased to report excellent progress in APAC following the establishment of
our regional operations at the start of FY22 with sales pipeline now building
strongly.
As the impacts from Covid-19 begin to subside working patterns are starting to
settle and our flexible workspace operator customers are reporting increased
demand. Consequently, larger flexible operators are starting to focus on
expansion again, driven by positive long-term market dynamics. Landlord
business plans around the provision of flexible space are becoming more
visible and corporate use of more flexible workspace is becoming increasingly
evident. These structural drivers underpin our strong pipeline for FY23 and
FY24 and the Board's confidence in essensys' plan to capture its expanding
market opportunity."
Notes
1. See CFO Review below for description and breakdown
2. Current period revenue and/or costs translated into GBP using the average
exchange rate for the comparative prior period
3. Adjusted for share option charges
4. essensys believes that current consensus market expectations for the year
ended 31 July 2022 are revenues of £23.7m
For further information, please contact:
essensys plc +44 (0)20 3102 5252
Mark Furness, Chief Executive Officer
Alan Pepper, Chief Financial Officer & Chief Operating Officer
Singer Capital Markets (Nominated Adviser and Joint Broker) +44 (0)20 7496 3000
Peter Steel / Harry Gooden / George Tzimas
Berenberg (Joint Broker) +44 (0)20 3207 7800
Ben Wright / Mark Whitmore / Richard Andrews
FTI Consulting
Jamie Ricketts / Eve Kirmatzis / Talia Jessener / Victoria Caton +44 (0)20 3727 1000
About essensys plc
essensys is the leading global provider of mission-critical SaaS platforms and
technology platforms to the flexible workspace and commercial real estate
industries. essensys' software is specifically designed and developed to
help solve the complex operational challenges faced by landlords and
multi-site flexible workspace operators as they grow and scale their
operations. The Group's technology allows operators to deliver a range of
differentiated, flexible and customer-specific services to a broad base of
tenants across multiple locations and helps operators to manage the cost,
operational and technological challenges they typically encounter.
essensys' Flex Services Platform addresses these significant operational pain
points head on and reduces costs by simplifying the day-to-day management of
flexible workspaces and the provision of on-demand technology and
infrastructure services to tenants. essensys technology delivers secure
digital infrastructure, effective space setup, seamless operations, and
mobile-first occupier interactions. It automates key tasks and processes and
helps flexible workspace providers deliver highly efficient, customer-centric
workspace solutions and in-building experiences with enterprise class
services.
Chief Executive Officer's Report
Resilient performance
essensys grew recurring revenues by 3% in challenging conditions. Continued
strong performance in our primary growth market, the United States, where
recurring revenues increased by 20%, was offset by the unexpected insolvency
of a longstanding UK customer as a result of Covid-19's impact on the London
office market. Continued growth and the resilience of our performance
despite these challenges, as evidenced by 99% net retention within our core
Connect business, is testament to the quality of our team, high-quality
customer base and our offering.
Market overview
Our confidence in the market opportunity for essensys is growing. As the
Covid-19 pandemic is subsiding we are seeing the key elements of the future
way of working become more evident. Hybrid working practices are becoming
the norm and corporates are adjusting their approach to meet that
requirement. 79% of occupiers now expect to be office based at least half of
the time with a number of companies expecting flexible workspace solutions to
account for the majority of their office portfolio in due course.
The larger flexible workspace operators are reporting increasing demand - at
pre-pandemic levels in some cases. Enterprise occupiers are accounting for a
larger proportion of their revenue and demand and there have been a number of
recent examples of major corporates moving to flexible workspace for their
office requirements (e.g. Currys).
Colliers predicts that flexible workspaces and traditional offices will blend
and we are already seeing that as traditional landlords look to us to solve
their emerging technology requirements as they look to the future. Landlords
are also moving forward with establishing their own flexible workspace
offerings (e.g. Canary Wharf Group). At the same time, we are starting to
see transactional activity in the broader sector with Blackstone backed TOG
and Fora proposing a merger, IWG's recent investment in The Instant Group and
the latter's recent merger with Davinci Virtual.
These recent developments provide confidence that the growing market
opportunity we saw prior to the Covid-19 pandemic is accelerating and that
essensys is well placed to capitalise on the opportunities presented by the
expansion of existing operators and landlords moving to support the hybrid
working requirements of their occupiers.
Progressing our strategy to capture the expanding market opportunity
We continue to make strong progress in the execution of our growth plan and
towards our longer-term strategic goals and revenue target of achieving £100m
in Annual Recurring Revenue (ARR).
As reported in March, the expansion of our go-to-market activities was delayed
during the first half of our financial year, with further Covid-19
restrictions slowing sales cycles and the expansion of our sales teams whilst
reducing office attendance and resulting in a number of geographically
specific 'lockdowns'. We are confident that this is a temporary restriction
on the implementation of our plans to accelerate growth and is supported by
the acceleration of our sales pipeline since the beginning of Q3 FY22.
We continue to see strong customer demand and added new customers across all
regions, with nine new customer wins in the period and 18 in the last twelve
months. The most recent new customers include a number of strategically
important landlord customers in Sweden and the USA with whom we expect to
expand our business over the next year and beyond. Our existing customer
base, particularly in the US, is indicating significant growth plans over the
next few years and we are increasingly engaged at senior levels with large
property organisations in assisting them with their technology requirements.
These types of strategic customers continue to provide the Group with
significant long term expansion opportunities.
Our active Connect/Flex Services Platform sites grew year on year - increasing
9% to 470 at January 2022 (January 2021: 431). A number of our existing
landlord customers are expanding their flexible offerings whilst a number of
our operator customers are also growing. While this was slightly lower than
at July 2021, our last financial year end, we continued to add new locations
in the period and now have contracted commitments for a further 53 sites (up
from 28 at Feb 22).
Following our £33m fundraise in July 2021, we have made great progress
towards capturing our expanding market opportunity. We have strengthened our
global leadership team, with new CEOs appointed in Asia Pacific and UK &
Europe and our new CFO, Sarah Harvey, joins on 16 May 2022 when Alan Pepper,
our current CFO, will move into a full time COO role. Our APAC business is
fully operational with customer locations live, in delivery and under
negotiation. Development of our product continues with enhancements to
existing capability and new modules and functionality being released. Whilst
slower than anticipated, the expansion of our go to market capability
continues and we expect to have caught up delayed investment by full year
end. If anything, we consider that our market opportunity is growing more
rapidly than previously anticipated. Whilst the first half of the year was
more challenging than we expected the medium to long term outlook for the
business remains very positive. We believe Covid-19 has fundamentally
changed the way in which people work and the Group's technology is perfectly
positioned to assist this transition.
Continued growth in the US
The US market continues to be the most significant driver of Group growth with
site numbers growing year on year by 23% over the prior period to 296 (H1 FY21
240) in turn leading to a 20% increase in US recurring revenue (in USD)
compared to the prior period. We are starting to see this growth in the US
market accelerating with a number of customers setting out ambitious expansion
plans for the rest of this calendar year and beyond. Evidence of the
structural shift to a more flexible way of working continues to grow with an
increasing number of landlords engaging with us on technology solutions to
support their repurposing of traditional office environments. Those
engagements involve a number of globally recognisable real estate operators
which each individually provide the opportunity for significant long term
account growth.
Our largest customer has set out significant plans for growth in 2022 and
2023. We are already seeing evidence of this in our pipeline and expect this
to support our growth in FY23, given the exclusive nature of our
partnership. Other well-established customers are also forecasting growth
and our newer customers are also expected to expand their business with us.
APAC establishment
I am pleased with the progress we have made in establishing our APAC business
despite the challenges that Covid-19 has presented (not least most recently in
Hong Kong). We now have personnel across the region in Hong Kong, Singapore
and Australia with go to market capability now fully established in all three
locations. Business development activity and pipeline is increasing in all
markets.
Australia in particular is expected to be a major opportunity for the Group.
Existing customer pull from the US led to the establishment of our first new
location in Sydney during the period and has resulted in a further two
locations in Australia. We anticipate that this customer alone will add a
further 6 to 8 locations in FY23. We are also well engaged with a number of
Australia's largest property companies.
UK & Europe
Having shown resilience through the more active periods of the Covid-19
pandemic the gradual unwinding of the pandemic restrictions and associated
government support impacted us in the period with the unexpected insolvency of
a long-standing flexible operator customer who could not renegotiate lease
arrangements with its landlords. This led to a reduction in both Connect and
Operate sites which, ordinarily, we would have expected to replace with new
business in a more normal trading environment.
The appointment of James Lowery as CEO of UK & Europe immediately
following the half year end has completed the senior regional leadership
appointments and will allow the implementation of tailored growth strategies
around the Group's international operations. James brings significant
industry experience from his time at British Land where he led their flexible
workspace operation and this knowledge will be instrumental in opening up
opportunities for discussions with similar organisations across Europe.
In line with our experience in the US we are seeing signs of activity levels
picking up in both the UK and mainland Europe. Following the recent signing
of a new strategic customer in Sweden which originally resulted in two initial
locations we now have a further three in active engagement. A number of
other long-standing projects are nearing their conclusion. Further strategic
engagement with a number of large European property companies and managers
continues and whilst these are taking longer to conclude than originally
anticipated the opportunities with these customers are, in some cases,
significantly greater than we might have originally anticipated. As in the
US we are now seeing our existing operator customers expand their business
with our larger UK customers opening new locations and having expectations of
growing their portfolios over the next few years. Our largest European
Operate only customer is actively engaged on a move to the Flex Services
Platform.
Product development
We continue to make significant strides in product and software development
following the launch of the Flex Services Platform last year. A number of
enhancements to the core platform have been released recently and following
the fundraising in July 2021 that release schedule is accelerating. Feedback
from our customers influences our direction of travel and our continued focus
on delivering best-in-class solutions that are both commercially and
technically compelling is starting to pay dividends with new customers -
particularly those landlords with significant existing portfolios. The
migration of our existing customers onto the new Platform continues with a
target of having completed that by the end of the financial year.
The expansion of our Smart Access module with the addition of our first IoT
(Internet of Things) product 'Hub & Halo' is progressing well with
beta-trial versions now deployed in a number of customer locations. We are
well down the path of accreditation and integration of Hub and Halo and the
wider Smart Access solution with a major mobile device provider to deliver the
significant benefits of mobile access passes to our customers. The expansion
of our UK based development capability continues following the fundraise with
our offshore facility now reduced to a supporting function only.
Current trading and outlook
We have seen customer activity begin to increase in the second half of the
year. Our sales pipeline continues to grow and we are seeing evidence that
individual transactions are 'unsticking' following slower market conditions in
the first half of our financial year. Underlying customer occupancy appears
to have stabilised and both our operator and landlord customers are reporting
increased occupier demand. In order to mitigate possible risks regarding
equipment supply issues and mitigate potential cost increases we have made a
strategic acquisition of equipment inventory to support our growth plans for
FY23. Whilst the conflict in Ukraine has no direct impact on the Group's
activities we remain cautious about any indirect impact of that conflict. We
are also mindful of general inflationary cost pressures that may impact the
business and are keeping the Group's financial investment plans under constant
review. We remain confident of meeting consensus market expectations for
FY22.
Engagement with some significant potential customers continues and whilst
these have longer sales lead times the likely scale of business is more
significant.
The developments in our software platform are particularly exciting. Recent
enhancements and module launches have been well received by both existing and
potential new customers. We remain confident that the underlying structural
shift in real estate that has been accelerated by the Covid-19 pandemic is
here to stay. This makes us increasingly optimistic for the long-term global
opportunity for essensys. We are already seeing increasing pipeline activity
both with existing customers and new customers and expect to catch up with our
delayed investment in go to market capability in the next few months which is
expected to bring benefits in FY23 and beyond.
Mark Furness
Chief Executive Officer
21 April 2022
Chief Financial Officer's Report
This is the third interim report issued by essensys since its Admission to AIM
on May 2019 and covers the six months to 31 January 2022.
Financial Key Performance Indicators
£'m unless otherwise stated Six months to January Six months to January Change
2022 2021
Group Total Revenue 10.9 10.6 +2.8%
UK 4.8 5.4 -11.1%
USA 5.9 5.2 +13.5%
ROW 0.2 - -
Recurring Revenue(1) 9.9 9.6 +3.1%
UK 4.5 5.2 -13.5%
USA 5.2 4.4 +18.2%
ROW 0.2 - -
Recurring Revenue %age of Total 90.8% 90.6%
Run Rate Annual Recurring Revenue(1) 20.3 19.9 +2.0%
Recurring Revenue at constant currency 10.0 9.6 +4.2%
UK 4.5 5.2 -13.5%
USA 5.3 4.4 +20.5%
ROW 0.2 - -
Non-recurring revenue 1.0 1.0 0%
Product Revenue
Connect 10.0 9.6 +4.2%
Operate 0.9 1.0 -10%
Gross Profit 6.9 7.1 -2.8%
Gross Profit percentage 63.3% 66.9%
Recurring Revenue margin % age 65.2% 70.4%
Statutory loss before tax 4.7 1.7
Adjusted EBITDA(2) (2.9) 0.7
Loss before tax (prior to share based payments) 4.5 1.4
Cash 30.5 5.9
Notes
1. See Revenue section for explanation
2. See Adjusted EBITDA explanation below
Revenue
Group total revenue grew to £10.9m in H1 FY22 (H1 FY21 £10.6m). The
implementation of our globalisation strategy has started to show positive
signs with the first new customer site going live in Australia as well as new
Connect contracts signed just before the end of the first half of the year
with a Swedish customer. The UK market contraction was mainly due to the
loss of a multi-site customer that went into administration resulting in the
loss of 27 sites using Operate and 18 using Connect; however, this was
compounded in the period by the continuation of the Covid-19 pandemic leading
to the occupancy driven marketplace services revenue not yet recovering to
pre-pandemic levels. US recurring revenue has grown by 20% in local
currency.
Recurring revenue comprises income invoiced for services that are repeatable
and consumed and delivered on a monthly basis over the term of a customer
contract. Run Rate Annual Recurring Revenue (Run Rate ARR) is an
annualisation of the recurring revenue for the month identified (January
2022); this is used by management as an indication of the annual value of the
recurring revenue for that month and to monitor long term revenue growth of
the business.
On a constant currency basis Run Rate ARR grew by 2% compared to the prior
period as revenue per site increased as the new sites added were worth more
revenue per site than those that were lost.
In constant currency terms recurring revenue increased slightly compared to H1
FY21. Operate revenue fell slightly in the period due to the aforementioned
loss of 27 sites from the single customer that went into administration. US
Connect recurring revenue grew 24% in US Dollar terms following an increase in
site numbers to 296 (from 240 at 31 January 2021). UK Connect recurring
revenue was also negatively impacted by the aforementioned customer, with the
loss of 18 sites.
Gross margins
Overall gross margins fell slightly in the period as a result of short term
reclassification of right of use asset charges into costs of sales together
with continued committed costs associated with the lost customer in the UK.
Both of these are expected to cease in the second half of the year. Removing
the impact of these, underlying gross margins are in line with previous years
and management expectations.
Administrative expenses
Excluding depreciation charges, administrative expenses grew by £3.3m (51%)
compared to the prior period, in line with the Group's expansion plans. This
growth was primarily driven by increases in staff costs both as a result of
planned increases in personnel in the year and the full year effect of growth
in FY21. In particular the growth in staff numbers in the period was due to
increases in software development personnel in the UK, go to market personnel
in the APAC region and the appointment of key strategic group executive
roles. Marketing expenditure in the period was greater in H1 FY21 in support
of the Group's expanding 'go to market' capability. The Group incurred
increased professional fees as it continues to grow, including establishing
its Asia Pacific businesses and made additional provision for estimated credit
losses following the Covid-19 pandemic.
Statutory loss for the half year
The Group incurred a £4.7m statutory loss for the half year to January 2021
(H1 FY21: loss of £1.7m), analysed as follows:
£'m H1 FY22 H1 FY21
UK (including non-capitalised R&D) (0.9) 0.0
US (0.3) 0.4
Canada - (0.1)
Europe (0.3) (0.1)
Asia Pacific (0.7) -
Central costs (2.3) (1.6)
(Loss) before tax (before share based payment expenses)
(4.5) (1.4)
Share based payment expense (0.2) (0.3)
(Loss) before tax for the period (4.7) (1.7)
The UK continues to bear the cost of the Group's product and software
development teams to the extent that these are not capitalised.
Adjusted EBITDA
As previously reported, adjusted results are presented to provide a more
comparable indication of the Group's core business performance by removing the
impact of share-based payment expenses, exceptional costs (where material and
non-recurring), and other, non-trading, items that are reported separately.
Adjusted results exclude adjusting items as set out in the consolidated
statement of comprehensive income and as below, with further details given in
the notes to the unaudited interim financial information below, where
applicable. In addition, the Group also measures and presents performance in
relation to various other non-GAAP measures, such as recurring revenue,
run-rate annual recurring revenue and revenue growth as shown and defined
above.
Adjusted results are not intended to replace statutory results. These have
been presented to provide users with additional information and analysis of
the Group's performance, consistent with how the Board monitors results on an
ongoing basis.
Adjusted EBITDA (being EBITDA prior to share based payment expenses and
exceptional items) is calculated as follows:
£'m H1 FY22 H1 FY21
Operating (loss) (4.7) (1.3)
Add back:
Depreciation & Amortisation 1.6 1.7
EBITDA (3.1) 0.4
Add back:
Share Option Charge 0.2 0.3
Adjusted EBITDA (2.9) 0.7
Adjusted EBITDA for the half year was down from H1 FY21 by £3.6m due to
continued investment in sales and marketing, product development and expansion
of the Group's Asia Pacific operations as reported above.
Taxation
The tax charge incurred by the Group in the period is in relation to
calculated income tax payable in the US and deferred tax in the UK. Group
expansion plans will lead to increased expenditure in the US that is expected
to reverse the current payable situation before the end of the financial year.
Cash
Following our equity fundraise in July 2021, net cash at the half year end was
£30.5m, slightly ahead of management expectations. The Group continues to
maintain sufficient cash reserves to fund its working capital requirements,
planned product and software development together with any expected short-term
geographic expansion. The Group has no debt.
In light of the continued impacts of Covid-19 and other geopolitical matters,
the Board has considered a number of different scenarios regarding trading and
financial performance over the balance of this financial year and into FY23
and is confident that, in the event of a significant long term downturn, the
Group maintains sufficient cash resources.
Capitalised Software Development Costs
As previously reported, the Group continues to invest heavily in product
development. Increasingly these costs are borne in the UK following a
decision to increase the UK based development team and reduce the size of the
Group's outsourced offshore development centre. Where such work is expected
to result in future revenue, costs incurred that meet the definition of
software development in accordance with IAS38, Intangible Assets, are
capitalised in the statement of financial position. During the half year the
Group capitalised £1.5m in respect of software development (H1 FY21: £1.0m).
Capital Expenditure
In addition to the capitalisation of software development costs noted above,
the Group continues to invest in expanding the capacity and capability of its
private network. Capital investment in the period was £0.3m (H1 FY21
£0.5m).
Alan Pepper
Chief Financial Officer
21 April 2022
UNAUDITED INTERIM FINANCIAL INFORMATION OF ESSENSYS PLC GROUP
Consolidated statement of comprehensive income
Note Six months Six months
ended ended
31 January 31 January
2022 2021
£'000 £'000
(unaudited) (unaudited)
Revenue 3 10,928 10,596
Cost of sales (4,068) (3,519)
Gross profit 6,860 7,077
Administrative expenses (11,220) (8,334)
Expected credit loss provision charge (324) (90)
Other operating income 4 34
Operating loss (4,680) (1,313)
Operating loss analysed by:
Operating loss before share based payments (4,479) (1,038)
Share based payment expenses (201) (275)
Finance income 9 -
Finance expense (49) (339)
Loss before taxation (4,720) (1,652)
Taxation (195) (70)
Loss for the period (4,915) (1,722)
Other comprehensive income/(loss)
Exchange differences arising on translation of foreign operations 197 (154)
Total comprehensive loss for the period (4,718) (1,876)
Loss per share
Basic and diluted loss per share 4 (7.63p) (3.27p)
UNAUDITED INTERIM FINANCIAL INFORMATION OF ESSENSYS PLC GROUP
Consolidated statement of financial position
Note As at As at
31 January 31 July
2022 2021
£'000 £'000
(unaudited) (audited)
ASSETS
Non-current assets
Intangible assets 5 7,010 6,198
Property, plant and equipment 6 1,738 1,471
Right of use assets 7 3,160 2,160
11,908 9,829
Current assets
Inventories 437 184
Trade and other receivables 6,068 5,279
Cash at bank and in hand 10 30,453 36,903
36,958 42,366
TOTAL ASSETS 48,866 52,195
EQUITY AND LIABILITIES
Equity
Shareholders' equity
Called up share capital 8 161 161
Share premium 51,660 51,660
Share based payment reserve 2,252 2,045
Merger reserve 28 28
Retained earnings (13,693) (8,969)
Total equity 40,408 44,925
Non-current liabilities
Lease liabilities 9 2,540 992
Deferred tax 791 779
Total non- current liabilities 3,331 1,771
Current liabilities
Trade and other payables 3,419 4,229
Contract liabilities 3 807 323
Lease liabilities 9 803 943
Current taxes 98 4
5,127 5,499
TOTAL LIABILITIES 8,458 7,270
TOTAL EQUITY AND LIABILITIES 48,866 52,195
UNAUDITED INTERIM FINANCIAL INFORMATION OF ESSENSYS PLC GROUP
Consolidated statement of changes in equity
Share capital Share premium Share based payment reserve Merger Reserve Retained Total
£'000 £'000 £'000 £'000 earnings £'000
£'000
Balance at 1 August 2021 (audited) 161 51,660 2,045 28 (8,969) 44,925
Comprehensive Income
Loss for the period - - - - (4,915) (4,915)
Currency translation differences - - 6 - 191 197
Total comprehensive loss - - 6 - (4,724) (4,718)
Transactions with owners
Currency translation differences - - - - - -
Share based payment expense - - 201 - - 201
Balance at 31 January 2022 161 51,660 2,252 28 (13,693) 40,408
(unaudited)
Balance at 1 August 2020 132 19,881 1,490 28 (5,435) 16,096
(audited)
Comprehensive Income
Loss for the period - - - - (1,722) (1,722)
Currency translation differences - - - - (154) (154)
Total comprehensive loss - - - (1,876) (1,876)
Transactions with owners
Currency translation differences - - (2) - - (2)
Share based payment expense - - 275 - - 275
Balance at 31 January 2021 132 19,881 1,763 28 (7,311) 14,493
(unaudited)
UNAUDITED INTERIM FINANCIAL INFORMATION OF ESSENSYS PLC GROUP
Consolidated cash flow statements
Six months ended Six months ended
31 January 2022 31 January 2021
£'000 £'000
(unaudited) (unaudited)
Cash flows from operating activities
Loss before taxation (4,720) (1,652)
Adjustments for non-cash/non-operating items:
Amortisation of intangible assets 701 588
Depreciation of property, plant and equipment 343 525
Amortisation of right-of-use assets 524 596
Share based payment expense 201 275
Finance income (9) -
Finance expense 49 339
Receipts from government grants treated as income (4) (34)
(2,915) 637
Changes in working capital:
(Increase) /decrease in inventory (253) 163
(Increase) /decrease in trade and other receivables (789) 47
Decrease in trade and other payables (326) (681)
Cash (used by)/from operations (4,283) 166
Taxation (paid)/received (90) 8
Net cash (used)/from operating activities (4,373) 174
Cash flows from investing activities
Purchase of intangible assets (1,513) (1,047)
Purchase of property, plant and equipment (332) (539)
Interest received 9 -
Net cash used in investing activities (1,836) (1,586)
Cash flows from financing activities
Receipts from government grants 4 34
Payment at termination of loan - (63)
Repayment of lease liabilities (413) (1,008)
Interest on lease liabilities (49) (86)
Net cash used in financing activities (458) (1,123)
Net decrease in cash and cash equivalents (6,667) (2,535)
Cash and cash equivalents beginning of period 36,903 8,496
Effects of foreign exchange rate changes 217 (24)
Cash and cash equivalents at end of period 30,453 5,937
UNAUDITED INTERIM FINANCIAL INFORMATION OF ESSENSYS PLC GROUP
Notes to the unaudited interim financial information
1. Basis of preparation
The unaudited condensed interim financial information presents the
consolidated financial results of essensys plc and its wholly owned
subsidiaries (together, "essensys plc Group" or "the Group") for the six-month
period to 31 January 2022. The annual financial statements of the Group are
prepared in accordance with the recognition and measurement requirements of
International Financial Reporting Standards and International Accounting
Standards Board (IASB) and interpretations (collectively "IFRS"). The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34 Interim Financial Reporting. This financial information does not include
all disclosures that would otherwise be required in a complete set of
financial statements and should be read in conjunction with the 31 July 2021
Annual Report. The financial information for the half year ended 31 January
2022 does not constitute statutory accounts within the meaning of Section 434
(3) of the Companies Act 2006 and both periods are unaudited.
The comparative financial information presented herein for the year ended 31
July 2021 does not constitute full statutory accounts for that period. The
statutory Annual Report and Financial Statements for the year ended 31 July
2021 have been filed with the Registrar of Companies. The Independent
Auditors' Report on the Annual Report and Financial Statements for the year
ended 31 July 2021 was unqualified, did not draw attention to any matters by
way of emphasis and did not contain a statement under 498(2) or 498(3) of the
Companies Act 2006.
The Group has applied the same accounting policies and methods of computation
in its interim consolidated financial statements as in its 2021 annual
financial statements, except for those that relate to new standards and
interpretations effective for the first time for periods beginning on (or
after) 1 January 2021 and will be adopted in the 2022 financial statements.
There were no new standards impacting the Group that will be adopted in the
annual financial statements for the year ended 31 July 2022.
essensys plc is the Group's ultimate parent company. It is a public listed
company and is domiciled in the United Kingdom. The address of its
registered office and principal place of business is Aldgate Tower 7th Floor,
2 Leman Street, London E1 8FA. essensys plc's shares are listed on the
Alternative Investment Market (AIM) of the London Stock Exchange.
2. Going Concern
The consolidated financial statements have been prepared on a going concern
basis. In reaching their assessment, the directors have considered a period
extending at least twelve months from the date of approval of this half yearly
financial report.
The directors have prepared cash flow forecasts covering a period of at least
12 months from the date of releasing these interim financial statements. As
well as modelling the realisation of the sales pipeline, these forecasts also
cover a number of scenarios and sensitivities in order for the Board to
satisfy itself that the Group remains within its current cash facilities. At
31 January 2022 the Group had cash reserves of £30.5m and no debt.
Whilst the Directors are confident in the Group's ability to grow revenue, the
Board's sensitivity modelling shows that the Group can remain within its cash
facilities in the event that revenue growth is delayed (i.e. new sales
bookings are not achieved) for a period in excess of twelve months. The
Directors' financial forecasts and operational planning and modelling also
include the actions, under the control of the Group, that they could take to
further significantly reduce the cash outflow expected as the Group expands
geographically. On the basis of this financial and operational modelling,
the Directors believe that the Group has the capability and the operational
agility to react quickly, cut further costs from the business and ensure that
the cost base of the business is aligned with its revenue and funding scale.
Whilst the conflict in Ukraine has no direct impact on the Group's activities
the Group remains cautious about any indirect impact of that conflict. The
Board is also mindful of general levels of inflation and cost increases that
may impact the business. The Group is confident that its capability to
adjust its future investment plans and reduce its cost base will sufficiently
mitigate any impact from cost inflation.
Based on the sensitised cash flow forecasts prepared, the directors are
confident that any funding needs required by the business will be sufficiently
covered by the existing cash reserves.
As a consequence, the Directors have a reasonable expectation that the Group
can continue to operate and be able to meet its commitments and discharge its
liabilities in the normal course of business for a period of not less than
twelve months from the date of release of these interim financial statements.
Accordingly, they continue to adopt the going concern basis in preparing the
interim financial statements.
Notes to the unaudited interim financial information
3. Segmental reporting
The Group has one single business reportable segment and generates revenue
largely in the UK and the US. The majority of the Group's customers provide
flexible office facilities together with ancillary services (e.g. meeting
rooms and virtual services) including technology connectivity.
The Group provides "mission critical" software to landlords and multi-site
flexible workspace providers. They use the software and technology to manage
and run their flexible workspace businesses. The newly launched Flex Services
Platform will in time replace our existing platforms, Connect and Operate,
providing an end-to-end capability for real estate operators to run flexible
workspaces ranging from the provision of digital infrastructure, through space
management and space operations to occupier experience. The platforms allow
operators to run their businesses in a more effective and efficient manner,
from initial customer engagement to cash collection.
The Connect software-enabled-services platform allows flexible workspace
operators to provision, manage and monitor, in real-time, all of the critical
infrastructure, IT and tech services that they provide to their customers.
As part of providing this service, the Group also provides the technology
infrastructure that supports these services.
The Group's Operate software platform is a comprehensive ERP platform for
flexible workspace providers, allowing operators to more effectively and
efficiently run their businesses day-to-day.
The Group generates revenue from the following activities:
- Establishing services at customer sites (e.g. providing
and managing installation services, equipment and providing training on
software and services)
- Recurring monthly fees for using the Group's platforms
- Revenue from usage of on demand services such as
internet and telephone usage and other, on demand, variable services.
- Other ad-hoc services
The Group has one single business reportable segment which is the provision of
software and technology platforms that manage their critical infrastructure
and business processes, primarily to the flexible workspace industry.
The Group has two main revenue streams, Operate and Connect. Given that
support for both revenue streams is provided in such a way as to make cost and
therefore operating performance impractical, the two revenue streams are
combined into a single reportable segment. The essensys plc Group's revenue
per revenue stream is as follows:
Six months ended Six months ended
31 January 2022 31 January 2021
unaudited unaudited
£'000 £'000
Operate - workspace management software 908 1,021
Connect - software enabled infrastructure platform 10,020 9,575
10,928 10,596
Revenue from customers greater than 10% in each reporting period is as
follows:
Six months ended Six months ended
31 January 2022 31 January 2021
unaudited unaudited
£'000 £'000
Customer 1 2,037 1,780
Customer 2 - 1,177
Notes to the unaudited interim financial information
3. Segmental reporting (continued)
The Group operates in two main geographic areas, the United Kingdom and the
United States of America. The Group's revenue per geographical area is as
follows:
Six months ended Six months ended
31 January 2022 31 January 2021
unaudited unaudited
£'000 £'000
United Kingdom 4,777 5,427
United States of America 5,873 5,169
Rest of world 278 -
10,928 10,596
Group revenue disaggregated between revenue recognised 'at a point in time'
and 'over time' is as follows:
Six months ended Six months ended
31 January 2022 31 January 2021
unaudited unaudited
£'000 £'000
Revenue recognised at a point in time 1,075 1,018
Revenue recognised over time 9,853 9,578
10,928 10,596
Contract assets and liabilities
Contract asset movements were as follows:
Unaudited £000
At 1 August 2021 345
Transfers in the period from contract assets to trade receivables (78)
Excess of revenue recognised over cash (or rights to cash) being recognised 181
during the period
Capital asset contract contributions capitalised 30
Capital asset contract contributions released as contract obligations are (25)
fulfilled
Capitalised commission cost released as contract obligations fulfilled (49)
Commission costs capitalised on contracts 98
At 31 January 2022 502
Audited £000
At 1 August 2020 420
Transfers in the period from contract assets to trade receivables (159)
Excess of revenue recognised over cash (or rights to cash) being recognised 75
during the period
Capital asset contract contributions capitalised 32
Capital asset contract contributions released as contract obligations are (19)
fulfilled
Capitalised commission cost released as contract obligations fulfilled (297)
Commission costs capitalised on contracts 293
At 31 July 2021 345
Notes to the unaudited interim financial information
3. Segmental reporting (continued)
Contract liability movements were as follows:
Unaudited £000
At 1 August 2021 323
Amounts included in contract liabilities that were recognised as revenue (323)
during the period
Cash received and receivables in advance of performance and not recognised as 807
revenue during the period
At 31 January 2022 807
Audited £000
At 1 August 2020 550
Amounts included in contract liabilities that were recognised as revenue (550)
during the period
Cash received and receivables in advance of performance and not recognised as 323
revenue during the period
At 31 July 2021 323
Contract assets are included within 'trade and other receivables' and contract
liabilities is shown separately on the face of the statement of financial
position. Contract assets arise from the group's revenue contracts, where work
is performed in advance of invoicing customers, and contract liabilities arise
where revenue is received in advance of work performed. Cumulatively, payments
received from customers at each balance sheet date do not necessarily equal
the amount of revenue recognised on the contracts. Capital asset contract
contributions represents costs incurred by the Group in the form of customer
incentives spread over the life of the customer contract. Commission costs
capitalised on contracts represents internal sales commission costs incurred
on signing of customer contracts and, in line with the requirements of IFRS15,
spread over the life of the customer contract.
4. Loss per share
The loss per share has been calculated using the loss for the period and the
weighted average number of ordinary shares outstanding during the period, as
follows:
Six months ended Six months ended
31 January 2022 31 January 2021
unaudited unaudited
£'000 £'000
Loss for the period attributable to equity holders of Essensys Group (4,915) (1,722)
Weighted average number of ordinary shares 64,385,219 52,743,329
Loss per share (7.63p) (3.27p)
As the Group is loss making in both periods presented, the share options over
ordinary shares have an anti-dilutive effect and therefore no dilutive loss
per share is disclosed.
Notes to the unaudited interim financial information
5. Intangible assets
Unaudited Assets in course Customer Internal software
of construction relationships development Software Goodwill Total
£000 £000 £000 £000 £000 £000
Cost
At 1 August 2021 1,412 335 7,832 280 1,263 11,122
Additions 1,100 - 413 - - 1,513
At 31 January 2022 2,512 335 8,245 280 1,263 12,635
Amortisation
At 1 August 2021 - 335 4,309 280 - 4,924
Charge for year - - 701 - - 701
At 31 January 2022 - 335 5,010 280 - 5,625
Net book value
At 31 January 2022 2,512 - 3,235 - 1,263 7,010
At 31 July 2021 1,412 - 3,523 - 1,263 6,198
Audited Assets in course Customer Internal software
of construction relationships development Software Goodwill Total
£000 £000 £000 £000 £000 £000
Cost
At 1 August 2020 - 335 6,751 280 1,263 8,629
Additions 1,412 - 1,081 - - 2,493
At 31 July 2021 1,412 335 7,832 280 1,263 11,122
Amortisation
At 1 August 2020 - 293 3,043 280 - 3,616
Charge for year - 42 1,266 - - 1,308
At 31 July 2021 - 335 4,309 280 - 4,924
Net book value
At 31 July 2021 1,412 - 3,523 - 1,263 6,198
At 31 July 2020 - 42 3,708 - 1,263 5,013
Notes to the unaudited interim financial information
6. Property, plant and equipment
Unaudited Assets in course of construction Fixtures and fittings Computer equipment Leasehold improvements Total
£000 £000 £000 £000 £000
Cost
At 1 August 2021 - 382 8,387 130 8,899
Additions 215 12 105 - 332
Transfers (note 7) - - 342 449 791
Exchange adjustments - 7 121 1 130
At 31 January 2022 215 401 8,955 580 10,151
Depreciation
At 1 August 2021 - 322 7,020 86 7,428
Charge for year - 15 322 6 343
Transfers (note 7) - - 286 235 521
Exchange adjustments - 5 115 1 121
At 31 January 2022 - 342 7,743 328 8,413
Net book value
At 31 January 2022 215 59 1,212 252 1,738
At 31 July 2021 - 60 1,367 44 1,471
Audited Assets in course of construction Fixtures and fittings Computer equipment Leasehold improvements Total
£000 £000 £000 £000 £000
Cost
At 1 August 2020 - 247 6,601 132 6,980
Additions - 3 783 - 786
Transfers (note 7) - 142 1,185 - 1,327
Exchange adjustments - (10) (182) (2) (194)
At 31 July 2021 - 382 8,387 130 8,899
Depreciation
At 1 August 2020 - 154 5,053 78 5,285
Charge for year - 33 926 10 969
Transfers (note 7) - 142 1,185 - 1,327
Exchange adjustments - (7) (144) (2) (153)
At 31 July 2021 - 322 7,020 86 7,428
Net book value
At 31 July 2021 - 60 1,367 44 1,471
At 31 July 2020 - 94 1,547 54 1,695
The transfers are assets that were classified as right of use assets (note 7)
where the lease term expired and the Group chose to purchase the assets at the
end of the lease term, as they were still in active use within the Group.
Notes to the unaudited interim financial information
7. Right of use assets
Unaudited Leasehold Computer Leasehold
property equipment improvements Total
£000 £000 £000 £000
Cost
At 1 August 2021 5,482 342 584 6,408
Additions 997 - - 997
Lease remeasurement 765 - - 765
Transfers (note 6) - (342) (449) (791)
Disposals (305) - - (305)
Exchange adjustments 60 - - 60
At 31 January 2022 6,999 - 135 7,134
Depreciation
At 1 August 2021 3,693 278 277 4,248
Charge for year 488 8 28 524
Transfers (note 6) - (286) (235) (521)
Disposals (305) - - (305)
Exchange adjustments 28 - - 28
At 31 January 2022 3,904 - 70 3,974
Net book value
At 31 January 2022 3,095 - 65 3,160
At 31 July 2021 1,789 64 307 2,160
Audited Leasehold Fixtures and Computer Leasehold
property fittings equipment improvements Total
£000 £000 £000 £000 £000
Cost
At 1 August 2020 4,204 142 1,527 584 6,457
Additions 1,237 - - - 1,237
Transfers (note 6) - (142) (1,185) - (1,327)
Exchange adjustments 41 - - - 41
At 31 July 2021 5,482 - 342 584 6,408
Depreciation
At 1 August 2020 2,609 134 1,440 219 4,402
Charge for year 1,116 8 23 58 1,205
Transfers (note 6) - (142) (1,185) - (1,327)
Exchange adjustments 32 - - (32)
At 31 July 2021 3,693 - 278 277 4,248
Net book value
At 31 July 2021 1,789 - 64 307 2,160
At 31 July 2020 1,595 8 87 365 2,055
The transfers are assets that were classified as right of use assets where the
lease term expired and the Group chose to purchase the assets at the end of
the lease term, as they were still in active use within the Group. The
assets are now listed within note 6.
Notes to the unaudited interim financial information
8. Called up share capital
As at As at
31 January 31 July
2022 2021
unaudited audited
No. No.
Allotted, called up and fully paid
0.25p ordinary shares 64,385,219 64,385,219
31 January 31 July
2022 2021
unaudited audited
£'000 £'000
Allotted, called up and fully paid
0.25p ordinary shares 161 161
9. Lease liabilities
Unaudited Leasehold Fixtures and Computer Leasehold
Property fittings equipment improvements Total
£000 £000 £000 £000 £000
At 1 August 2021 1,841 29 20 45 1,935
Additions 994 - - - 994
Interest expense 47 1 - 1 49
Effect of modification to lease terms 738 - - - 738
Lease payments (326) (21) (20) (46) (413)
Foreign exchange movements 40 - - - 40
At 31 January 2022 3,334 9 - - 3,343
Analysis by current and non-current:
Unaudited
Leasehold Fixtures and Computer Leasehold
property Fittings equipment improvements Total
£000 £000 £000 £000 £000
Due within a year 794 9 - - 803
Due in more than one year 2,540 - - - 2,540
3,334 9 - - 3,343
Notes to the unaudited interim financial information
9. Lease liabilities (continued)
Audited Leasehold Fixtures and Computer Leasehold
property fittings equipment improvements Total
£000 £000 £000 £000 £000
At 1 August 2020 1,820 57 88 177 2,142
Additions 1,514 - - - 1,514
Interest expense 108 4 4 11 127
Effect of modifying lease term 79 - - - 79
Lease payments (1,616) (32) (72) (143) (1,863)
Foreign exchange movements (64) - - - (64)
At 31 July 2021 1,841 29 20 45 1,935
Analysis by current and non-current:
Audited
Leasehold Fixtures and Computer Leasehold
property fittings equipment improvements Total
£000 £000 £000 £000 £000
Due within a year 849 29 20 45 943
Due in more than one year 992 - - - 992
1,841 29 20 45 1,935
10. Financial instruments
Financial assets
Financial assets measured at amortised cost comprise trade receivables, other
receivables, accrued income and cash, as follows:
As at As at
31 January 31 July
2022 2021
unaudited audited
£'000 £'000
Cash and cash equivalents 30,453 36,903
Trade and other receivables 4,712 3,946
35,165 40,849
Financial liabilities
Financial liabilities measured at amortised cost comprise trade payables,
accruals, other payables and lease liabilities, as follows:
As at As at
31 January 31 July
2022 2021
unaudited audited
£'000 £'000
Trade and other payables 3,128 3,947
Lease liabilities 3,343 1,935
6,471 5,882
Notes to the unaudited interim financial information
11. Financial instruments
The Group's activities expose it to a variety of financial risks:
• Market risk (including foreign exchange risk, price risk
and interest rate risk)
• Credit risk
• Liquidity risk
The financial risks relate to the following financial instruments:
• Cash and cash equivalents
• Trade and other receivables
• Trade and other payables
Risk management is carried out by the directors. The directors identify and
evaluate financial risks and provide principals for overall risk management.
(a) Credit Risk
Credit risk is the risk of financial loss to the Group if a customer fails to
meet its contractual obligations. The Group is mainly exposed to credit risk
from credit sales. It is Group policy, implemented locally, to assess the
credit risk of new customers before entering contracts. There has been no
change to the credit risk in the period.
(b) Market risk
(i) Foreign exchange risk
Foreign exchange risk arises because the Group operates in the United Kingdom
and the United States of America, whose functional currency is not the same as
the presentational currency of the Group. Foreign exchange risk also arises
when individual companies within the group enter into transactions denominated
in currencies other than their functional currency. Such transactions are
kept to a minimum either through the choice of suppliers or presenting sales
invoices in the functional currency.
Certain assets of the group companies are denominated in foreign currencies.
Similarly, the Group has financial liabilities denominated in those same
currencies. In general, the Group seeks to maintain the financial assets and
financial liabilities in each of the foreign currencies at a reasonably
comparable level, thus providing a natural hedge against foreign exchange risk
and reducing foreign exchange exposure to a minimal level.
(ii) Interest rate risk
The Group's interest rate exposure arises mainly from the interest-bearing
borrowings. All the Group's facilities were floating rates excluding
interest from leases, which exposed the group to cash flow risk. As at 31
January 2022 there are no loans outstanding. Therefore, there is no material
exposure to interest rate risk.
(c) Liquidity Risk
Prudent liquidity risk management implies maintaining sufficient cash flows
for operations. The Group manages its risk to shortage of funds by
monitoring forecast and actual cash flows. The Group monitors its risk to a
shortage of funds using a recurring liquidity planning tool.
12. Post balance sheet events
The invasion of Ukraine by Russia has had a significant geopolitical impact on
many major economies. Since the Group does not focus its sales activities in
that region the directors do not consider there to be any major direct impacts
as a result of this incident.
Subsequent to period end the Group made a decision to acquire £2.3m of
inventory to ensure equipment supply to support its expansion expectations for
FY23 and mitigate expected price rises. This inventory is expected to be
used in its entirety during FY23.
UNAUDITED INTERIM FINANCIAL INFORMATION OF ESSENSYS PLC
INDEPENDENT REVIEW REPORT TO ESSENSYS PLC
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 31 January 2022 is not prepared, in
all material respects, in accordance with UK adopted International Accounting
Standard 34 and the London Stock Exchange AIM Rules for Companies.
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 31
January 2022 which comprises the consolidated statement of comprehensive
income, the consolidated statement of financial position, the consolidated
statement of changes in equity and the consolidated cash flow statement.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410, however future events or conditions may cause the group to
cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the London Stock Exchange AIM Rules for Companies.
In preparing the half-yearly financial report, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statement in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the Transparency (Directive
2004/109/EC) Regulations 2007 and for no other purpose. No person is
entitled to rely on this report unless such a person is a person entitled to
rely upon this report by virtue of and for the purpose of our terms of
engagement or has been expressly authorised to do so by our prior written
consent. Save as above, we do not accept responsibility for this report to
any other person or for any other purpose and we hereby expressly disclaim any
and all such liability.
BDO LLP
Chartered Accountants
London, UK
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
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