REG - essensys PLC - Half year results
28/03/2023 07:15
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RNS Number : 3865U essensys PLC 28 March 2023
28 March 2023
essensys plc
("essensys", the "Company" or the "Group")
Half year results
Revenue up 18%, accelerated strategy to drive profit and cash generation
essensys plc (AIM:ESYS), the leading global provider of software and
technology to the flexible workspace industry, announces its unaudited results
for the six months ended 31 January 2023 ("H1 23"). All information relates
to this period, unless otherwise specified.
Financial summary:
£m unless otherwise stated Six months to January Six months to January Change
2023 2022
Revenue 12.9 10.9 +18%
Recurring revenue(1) 10.6 9.9 +8%
Run Rate Annual Recurring Revenue (ARR)(1) 21.0 20.3 +3%
Revenue at constant currency(2) 11.8 10.9 +8%
Recurring revenue at constant currency(1,2) 9.8 9.9 -1%
Statutory loss before tax (7.7) (4.7) -64%
Adjusted EBITDA(3) (4.2) (2.9) -45%
Loss per share (pence) (11.89)p (7.63)p
Net Cash 12.6 30.5
Financial highlights:
* Trading during H1 23 was in line with management’s expectations
* Group total revenues up 18%, driven by strong growth in North America
* North American total revenues up 36% to £8.1m (up 18% in USD terms to $9.5m
(H1 22 $8.0m)
* High level of non-recurring revenue driven by new site activity
* Adjusted EBITDA loss of £4.2m in line with management’s expectations
* Net cash of £12.6m with the Company remaining debt free
Strategic highlights:
* Accelerated strategy to drive profit and cash generation – as announced in
February 2023
1. Reorganisation of global operations expected to deliver £7.5m annualised cost
savings
1. Move from regional to centralised leadership model to deliver improved
customer journey and operating efficiencies
1. New Chief Revenue Officer to drive global Go-To-Market strategy
* Growing demand from new and existing strategic customers(4)
1. 89% of new sites signed with strategic customers
1. US revenues continue to grow strongly, driven by new logo wins and customer
expansion
1. Strategic customers now represent 70% of revenue
1. Strategic customer Net Revenue Retention 109%, total customer Net Revenue
Retention 97%
1. Six new logos signed, of which four live in H1 23, with further future
expansion potential
1. Connect / essensys Platform total sites of 459, a return to net growth with
higher new sites than closed (FY22: 458)
Current trading and outlook:
* Trading during H1 23 was in line with management’s expectations
* Cash burn in the second half is expected to normalise following one-off
impacts in H1 23 (including payments for strategic inventory build which will
continue to unwind and payments for APAC data centres)
* Positive momentum continues in the beginning of the second half:
1. The Group has 39 new Connect/essensys Platform sites in delivery but not live
at the end of H1 23 which will deliver contracted ARR of £1.5m
1. Sales pipeline remains strong; currently in late-stage conversations with a
number of large high quality landlords and operators who would become
strategic customers
* The Group continues to manage its cost base proactively to accelerate its
return to profitability and mitigate cost inflation with the reorganisation
announced in February 2023
* The Group continues to expect to meet FY23 market forecasts and remains
confident in the longer-term structural growth opportunity
Mark Furness, CEO of essensys, said:
"essensys delivered a strong performance during the first half of the
financial year, with Group revenues up 18% against a backdrop of continued
macroeconomic uncertainty. At the same time we have accelerated our plans to
return to profitability and cash generation, taking significant measures to
align our cost base and investments to current revenues and the near-term
market opportunity.
Our focus on strategic customers is delivering strong results and as these
customers grow to meet the increasing demand for premium flexible workspace
products we remain well positioned to support their expansion plans. Our
opportunity pipeline with these customers, both new and existing, is strong
and growing with large landlords and operators at the late stages of the sales
process, particularly in North America which remains our primary growth
market.
The global real-estate market is still in the early stages of flex adoption as
it adapts to hybrid/flexible working requirements that are now embedded
post-pandemic. With 30% of all office space expected to be flexible by 2030,
compared with less than 2% today, the market opportunity remains sizeable. We
remain confident in meeting market expectations for FY23 and we continue to be
excited by the long-term global growth opportunity for essensys."
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 EBITDA is earnings before interest, tax, depreciation,
amortisation, exceptional costs and other non-trading items such as
impairment, exchange differences and share option charges
4. Strategic customers are those customers who have potential for at
least $1m ARR
For further information, please contact:
essensys plc +44 (0)20 3102 5252
Mark Furness, Chief Executive Officer
Sarah Harvey, Chief Financial Officer
Singer Capital Markets (Nominated Adviser and Broker) +44 (0)20 7496 3000
Peter Steel / Harry Gooden / George Tzimas
FTI Consulting
Jamie Ricketts / Eve Kirmatzis / Talia Shirion / Victoria Caton +44 (0)20 3727 1000
About essensys plc
essensys is the leading global provider of software and technology for
flexible, digitally-enabled spaces, buildings and portfolios. The essensys
Platform simplifies and automates the delivery and management of next
generation, flexible, multi-tenant real estate.
The real estate industry is transforming - it must be flexible to changing
market demands, accommodate hybrid working styles, provide move-in ready
spaces and deliver frictionless experiences and on-demand services. The office
sector is becoming an increasingly digital-first landscape - driven by
end-user demand and delivering digitally enabled spaces is key to success. The
essensys Platform has been designed and developed to help solve the complex
operational challenges faced by landlords and flexible workspace operators as
they grow and scale their operations. It helps our customers to deliver a
simple, secure and scalable proposition, respond to changing occupier demands,
provide seamless occupier experiences, and realise smart building and ESG
ambitions.
Founded in 2006 and listed on the AIM market of the London Stock Exchange
since 2019, essensys is active in the UK, Europe, North America and APAC
Chief Executive Officer's Report
Continued growth
We continue to see strong performance in North America, where total revenue
increased by 36% and recurring revenue by 23%. The US continues to be our key
growth market providing a significant market opportunity. We have a growing,
high-quality sales pipeline with new and existing strategic customers and many
of these also provide further international expansion opportunities.
The strong North American performance offset an 8% total revenue decline in
the UK which was driven primarily by the known site closures and customer
re-contracting announced in FY22, which had a full period impact H1 23
compared with H1 22. This caused UK recurring revenue to fall by 12%.
Across the Group we continued to see an increased level of churn across our
smaller, legacy customers, with 9 customers positioned at the low-value end of
the customer base leaving during the period. This is an expected consequence
of our focus on strategic customers with our value proposition and aligning
our product development efforts to the needs of large landlords and
real-estate operators. We had no strategic customers leave us in the same
period and we added 13 new customers with further expansion potential,
mitigating the loss of those smaller customers.
Active sites increased by 1 on FY22 closing at 459. This is a return to net
site growth in H1 23 after two consecutive reporting periods of net decline
(site count FY21: 474; H1 22: 470; FY22: 458).
Market opportunity and strategic customer focus
Our confidence in the market opportunity for essensys continues to be high. We
have a well-established and proven plan to Land, Expand and Grow to capture
the opportunity in the flexible workspace market. We continued to evolve that
plan in light of continuing macroeconomic uncertainty, to focus on efficient,
sustainable long-term growth.
We target new strategic customers that are key to our long-term ambition and
have the potential to deliver at least $1m ARR, whilst further expanding and
growing with our existing strategic customer base. Our strategic customers had
109% net revenue retention compared with 97% for the full customer base. As at
31 January 2023 strategic customers represented 70% of our total revenue in H1
23 (H1 22: 63%).
Our total sales pipeline with these strategic clients is strong, with some
exciting new large landlords and flexible workspace operators at advanced
stages in the sales process, particularly in the US.
Accelerated strategy to drive profit and cash generation
As announced in the recent trading update on 28 February, the Group has
commenced a reorganisation of its global operations to return it to
sustainable growth, profitability and cash generation whilst remaining within
its existing cash reserves.
The Covid pandemic led to fundamental changes in how and where we work, with
the move to flexible and hybrid working models accelerating long-term demand
for flexible workspaces. As a result, we significantly increased our
investment in product development, our global operations and our go-to-market
strategy as we sought to take advantage of this long-term secular growth
opportunity. This led to a major increase in headcount across all parts of the
business, the establishment of new regional headquarters and operations with
the appointment of CEOs for North America, UK & Europe and APAC.
The pandemic has now given way to a period of increased macro-economic
uncertainty with inflationary and market pressures forcing organisations of
all size to adapt. Our business is no different and so, whilst we remain
undeterred in our long-term ambition, we have taken the necessary steps to
align our cost structure with our current revenues and near-term customer
demand. The Board believes that accelerating its pathway to profitability is
critically important, and this has served as the primary motive behind the
reorganisation of the GroupÕs operations and personnel. This reorganisation
is expected to deliver a total of £7.5m annualised cost savings and is
expected to result in the Group being run-rate Adjusted EBITDA positive during
the first quarter of FY24 and run-rate cash flow positive by the end of FY24.
The Group expects to maintain a minimum cash balance of at least £3m going
forward.
The reorganisation comprises a centralisation of the sales and marketing
function, reorganisation of operational capabilities and streamlining of the
executive and regional management structures.
* the Group's go-to-market capability has been centralised under the leadership
of a newly appointed Chief Revenue Officer, Daniel Brown, who will is now
responsible for all sales and marketing activities globally;
* the Group's APAC operations have been centralised in a hub location in Sydney,
Australia, resulting in the closure of its Singapore and Hong Kong based
offices;
* all Group customer operations have been streamlined into global functional
teams which are expected to deliver an improved customer journey with better
alignment and lower cost to serve; and
* collectively, these actions have removed the need for regional executive
leadership. As a result, the regional CEO positions have been removed. James
Lowery, previously CEO for UK & Europe, has moved into role of Chief
Customer Officer.
As at 31 January 2023, only a limited element of the reorganisation had been
implemented and therefore the financial information for H1 23 includes the
costs associated with that element of the reorganisation. The remaining costs
will be recognised in H2 23.
Board Changes
The Board has concluded that the reorganisation and resultant simplification
of operational structures has also removed the need for the Chief Operating
Officer ("COO") role. As a consequence, and by mutual agreement, Alan Pepper
will be leaving the business. Alan has been a valued and important leader at
essensys as CFO and COO over the past five years, helping to oversee the
significant development of the business including its culture, strategy and
global operations. Alan has stepped down from the Board as an executive
director with immediate effect but will remain with the business until the end
of May 2023 to provide an orderly handover of his responsibilities.
Progressing our strategy to capture the expanding market opportunity
We continue to make good progress in the execution of our growth plan and
towards our longer-term strategic goals.
We continue to win new customers globally with the most recent new live
customers including large landlords in the US, Australia, Singapore and
Ireland, each presenting significant expansion opportunities. Our existing
customer base, particularly in the US, is indicating continued growth over the
coming years as they look to increase the amount of flexible space they
operate. We remain engaged at senior levels with large commercial real
estate organisations, helping them to understand how essensys Platform can
help their transition to more flexible, digital-first real-estate offerings
and whilst most of these landlords are in the early phase of flex adoption it
is these strategic customers that will continue to provide the Group with
significant long-term expansion opportunities.
Continued growth in the US
The North American market remains the primary growth driver for the Group.
Revenue growth of 36% (18% at constant currency) is primarily driven by
non-recurring revenue from new sites going live, with site numbers up by four
year on year to 300 (H1 22: 296). A number of our key customers are setting
out their expansion plans for the rest of this calendar year and beyond
providing visibility of expected future site growth. Evidence of the
structural shift to a more flexible way of working continues to grow with an
increasing number of landlords using essensys
to deliver flexible real-estate solutions as they continue to repurpose
traditional office space assets. Those engagements involve a number of
recognisable global real estate operators which each individually provide the
opportunity for significant long term account growth.
UK & Europe
We continue to see activity levels rebound in both the UK and mainland
Europe. We have upsold essensys Platform to an existing large Operate
customer in France, have expanded into Europe with one of our large US
customers and have added new sites in Ireland in the first half of this
financial year.
As previously announced, the UK experienced a higher level of site closures
with the increased churn of our smaller legacy customers. We also saw
continued site rationalisation with some large UK customers as they have
exercised their option to close sites within their current contract. This
contract mechanic allows them to close an agreed number of sites within the
contract period, this is primarily used if the customer is exiting that
location.
This customer site rationalisation during FY22 led to a decline in UK revenue
and site numbers. H1 23 has seen some continuation of this trend as some
customers continue to optimise their portfolios. We believe this optimisation
is necessary and will serve to strengthen our customers businesses and our
relationship with them and so will continue to provide this flexibility for
our largest partners.
APAC
We onboarded 3 new sites with new and existing strategic customers in
Australia and Singapore in H1 23, with additional new strategic clients signed
with sites due to go live over the coming quarter. Our recent reorganisation
will see our APAC team primarily focused on sales and customer success with
all associated operational support provided centrally from the Group. Our
pipeline in the region is strong, and we have signed the first 4 sites with a
multi-site operator that we believe will be a key strategic customer for APAC
and serve as a powerful case study.
Product development
Our targeted investment in our products continues, primarily through the
evolution of essensys Platform. The focus of our development efforts is
tightly tied to the requirements of strategic customers, ensuring that our
solutions solve specifically for the needs of large-scale landlords and flex
operators. This year we have enhanced its core functionality and also added
new capability that is designed to extend essensys Platform further into the
spaces themselves, as we seek to help landlords connect their existing tenants
digitally to the amenities and communal spaces in their buildings. We see this
trend continuing as enterprises of all size adopt hybrid models and landlords
respond by providing access to a wide variety of digitally connected spaces
across their portfolios.
We're excited by the progress we've made with our Smart Access IoT (Internet
of Things) hardware product which leverages the ubiquity of smartphone wallets
to create a seamless book-pay-access experience for occupiers. This solution
will converge access control, booking and a sensor gateway to provide a
powerful answer to the problem of managing real-time access and control of
space in today's dynamic and flex-enabled world. We are currently expecting
final CE and FCC certification of the hardware components shortly before the
end of FY23.
Last year we announced a capital-light model which allows us to take advantage
of essensys Platform's new capabilities to reduce the requirement for future
essensys data centre expansion. This de-couples our global private network
from our software and allows essensys Platform to be deployed over existing
third-party internet connectivity. We expect this to remove entry barriers for
many new customers and support existing customer expansion, as well as
reducing sales cycle length and speeding up onboarding. We also expect that,
over time, this will lead to an improvement in per-site gross margins as cost
of goods will significantly reduce if we do not provide the lower margin
network element of the solution. Initial customer feedback has been very
positive, particularly as this is an option which is provided alongside our
global private network which remains of significant value to large premium
space operators due to its design and performance.
Current trading and outlook
We had an encouraging first half in terms of new business activity and
continue to see strong customer dynamics into the second half of FY23. Our
sales pipeline is growing, underlying customer occupancy appears to have
stabilised and both our operator and landlord customers are reporting
increased occupier demand. The developments in our software platform also
continue to progress well with positive engagement with our large customers
giving confidence in our strategy.
We remain confident that the underlying structural shift towards more flexible
working in real estate is here to stay and we are excited by the long-term
global opportunity for essensys. Pipeline activity is increasing with new
and existing customers and we are able to demonstrate a unique platform to
support our customers' expansion plans.
Like all businesses, we are mindful of the ongoing macroeconomic environment
and are keeping the Group's financial investment plans under constant review.
Our committed plan for accelerated return to profitability and cash generation
provides us with a sustainable base for future growth. We remain confident
in meeting market expectations for FY23.
Mark Furness
Chief Executive Officer
28 March 2023
Chief Financial Officer's Report
The unaudited financial results included in this announcement cover the
Group's consolidated activities for the six months ended 31 January 2023. The
comparatives for the previous six months were for the Group's consolidated
activities for the six months ended 31 January 2022.
Financial Key Performance Indicators
£'m unless otherwise stated Six months to January Six months to January Change
2023 2022
Group Total Revenue 12.9 10.9 +18%
North America 8.1 5.9 +36%
UK & Europe 4.5 4.9 -8%
APAC 0.3 0.1
Recurring Revenue 1 (#_ftn1) 10.6 9.9 +8%
North America 6.4 5.2 +23%
UK & Europe 4.0 4.6 -12%
APAC 0.2 0.1
Recurring Revenue %age of Total 82.2% 90.8%
Run Rate Annual Recurring Revenue(1) 21.0 20.3 +3%
Recurring Revenue at constant currency 9.8 9.9 -1%
North America 5.6 5.2 +6%
UK & Europe 4.0 4.6 -11%
APAC 0.2 0.1
Non-recurring revenue 2.3 1.0 +112%
Gross Profit 7.3 6.9 +6%
Gross Profit percentage 56.8% 62.8%
Recurring Revenue margin %age 61.0% 65.2%
Statutory loss before tax (7.7) (4.7) -64%
Adjusted EBITDA 2 (#_ftn2) (4.2) (2.9) -45%
Cash 12.6 30.5 -59%
Revenue
Group total revenue grew 18% to £12.9m in H1 23 (H1 22 £10.9m). The solid
momentum witnessed in the second half of FY22 has continued into the current
financial year, with strong growth in North America, particularly the US which
continues to be our key growth market. Total revenue in North America was up
by 36% (22% in local currency), mitigating the decline in the UK as we see the
wash through of previously announced FY22 site closures. Our APAC region grew
revenue in H1 23 with an increase in sites with existing customers and deals
signed with new customers contributing £0.3m of revenue, noting that this
region was only established during H1 22.
Recurring revenue comprises income invoiced for services that are repeatable,
and are 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 2023); 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.
Recurring revenue increased by 8% compared to H1 22 (-1% decline at constant
currency). North America recurring revenue grew by 23% (6% at constant
currency) following a net increase in site numbers to 300 (from 296 as at 31
January 2022) and higher value activity with large customers. UK &
Europe recurring revenue declined by 12% as a result of the full period impact
of the FY22 customer re-contracting, and consolidation at the low end of the
customer base.
Run Rate ARR increased by 3% year on year reflecting the higher value customer
base and increase in sites but decreased by 4% from FY22 year end as a result
of some specific customer re-contract activity, a continued decline in the
Operate revenue stream and the known loss of a UK customer from in the final
month of FY22. These factors offset the positive impact of higher average
value sites opened compared with sites closed during the period.
Gross margins
Gross profit increased by 6% in the period but overall gross margins reduced
as a result of a higher proportion of non-recurring revenue. Recurring gross
margin was also reduced as a result of the higher proportion of revenue
generated in North America, where the components of recurring margins are
generally lower margin than the UK, with higher circuit cost revenue and lower
marketplace revenue. Gross margin is further impacted by an increase in the
fixed operational running costs of data centres in the period, with a full
period impact of the APAC region.
Administrative expenses
Excluding depreciation, amortisation and impairment charges, administrative
expenses grew by £2.6m (27%) compared to the prior period. This growth was
primarily driven by the full year impact of headcount increases during FY22,
particularly in the second half of that year. Marketing expenditure and
professional fees in the period were also higher, reflecting a full period
impact of the APAC region with brand building activity and legal and
compliance cost.
Statutory loss for the half year
The Group incurred a £7.7.m statutory loss before tax for the half year to
January 2023 (H1 FY22: loss of £4.7m), analysed as follows:
£'m H1 FY23 H1 FY22
UK (including non-capitalised R&D) (2.6) (0.9)
US 0.2 (0.3)
Canada (0.1) -
Europe (0.2) (0.3)
Asia Pacific (2.4) (0.7)
Central costs (2.5) (2.3)
Loss before tax (before share based payment expenses)
(7.6) (4.5)
Share based payment expense (0.1) (0.2)
Loss before tax for the period (7.7) (4.7)
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,
impairment charges and exceptional items) is calculated as follows:
£'m H1 FY23 H1 FY22
Operating (loss) (7.7) (4.7)
Add back:
Depreciation & Amortisation 2.3 1.6
Impairment charge 0.6 -
EBITDA (4.8) (3.1)
Add back:
Share Option Charge 0.1 0.2
Exceptional costs 0.5 -
Adjusted EBITDA (4.2) (2.9)
The Adjusted EBITDA loss for the half year was £1.3m higher than H1 FY22 due
to the full period impact of headcount increases during FY22 and a full period
impact of investment in the APAC region.
Taxation
The tax charge incurred by the Group in the prior year is in relation to
calculated income tax payable in the US.
Cash
Cash at the half year end was £12.6m. The Group continues to maintain
sufficient cash reserves to fund its working capital requirements and its
return to cash generating operations. The Group has no debt.
In light of the continued impacts of global macroeconomic uncertainty, the
Board has considered a number of different scenarios regarding trading and
financial performance over the balance of this financial year and into FY24
and is confident that, in the event of a significant long-term downturn, the
Group will have sufficient cash resources.
Working capital movements
The Group had a £3.3m negative working capital impact during H1 23 as a
result of one-off payments for a significant inventory purchase to mitigate
supply chain issues and price increases in addition to a wider creditor unwind
following FY22.
Leasehold payments
The Group had a full period cash impact of leasehold payments for data centres
and office space in the APAC region and an end to the rent-free period of UK
leasehold space.
Capitalised Software Development Costs
As previously reported, the Group continues to invest heavily in product
development. These costs are now all borne in the UK as the Group ceased work
in its outsourced offshore development centre at the start of FY23. 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 £1.8m in respect of software development (H1
FY22: £1.5m).
Capital Expenditure
In addition to the capitalisation of software development costs noted above,
the Group made its final payments in relation to data centre equipment for the
expansion of its private network in the APAC region. Capital expenditure in
the period was £0.5m (H1 FY22 £0.3m).
Sarah Harvey
Chief Financial Officer
28 March 2023
UNAUDITED INTERIM FINANCIAL INFORMATION OF ESSENSYS PLC GROUP
Consolidated statement of comprehensive income
Note Six months Six months
ended ended
31 January 31 January
2023 2022
£'000 £'000
(unaudited) (unaudited)
Revenue 3 12,909 10,928
Cost of sales (5,580) (4,068)
Gross profit 7,329 6,860
Administrative expenses (14,955) (11,220)
Expected credit loss provision charge (86) (324)
Other operating income - 4
Operating loss (7,712) (4,680)
Operating loss analysed by:
Operating loss before share based payments and exceptional items (7,054) (4,479)
Share based payment expenses (137) (201)
Exceptional restructuring costs (521) -
Finance income 127 9
Finance expense (67) (49)
Loss before taxation (7,652) (4,720)
Taxation - (195)
Loss for the period (7,652) (4,915)
Other comprehensive loss
Exchange differences arising on translation of foreign operations (518) 197
Total comprehensive loss for the period (8,170) (4,718)
Loss per share
Basic and diluted loss per share 4 (11.89p) (7.63p)
UNAUDITED INTERIM FINANCIAL INFORMATION OF ESSENSYS PLC GROUP
Consolidated statement of financial position
Note As at As at
31 January 31 July
2023 2022
£'000 £'000
(unaudited) (audited)
ASSETS
Non-current assets
Intangible assets 5 9,706 8,922
Property, plant and equipment 6 2,387 2,819
Right of use assets 7 1,588 2,482
13,681 14,223
Current assets
Inventories 3,084 2,546
Trade and other receivables 6,966 6,434
Cash at bank and in hand 10 12,601 24,122
22,651 33,102
TOTAL ASSETS 36,332 47,325
EQUITY AND LIABILITIES
Equity
Shareholders' equity
Called up share capital 8 161 161
Share premium 51,660 51,660
Share based payment reserve 2,945 2,811
Merger reserve 28 28
Retained earnings (26,870) (18,700)
Total equity 27,924 35,960
Non-current liabilities
Lease liabilities 9 981 1,659
Deferred tax - -
Total non- current liabilities 981 1,659
Current liabilities
Trade and other payables 4,837 7,422
Contract liabilities 3 1,136 815
Lease liabilities 9 1,454 1,469
Current taxes - -
7,427 9,706
TOTAL LIABILITIES 8,408 11,365
TOTAL EQUITY AND LIABILITIES 36,332 47,325
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 2022 (audited) 161 51,660 2,811 28 (18,700) 35,960
Comprehensive Income
Loss for the period - - - - (7,652) (7,652)
Currency translation differences - - (3) - (518) (521)
Total comprehensive loss - - (3) - (8,170) (8,173)
Transactions with owners
Currency translation differences - - - - - -
Share based payment expense - - 137 - - 137
Balance at 31 January 2023 (unaudited) 161 51,660 2,945 28 (26,870) 27,924
Balance at 1 August 2021 (as restated) 161 51,660 2,045 28 (8,484) 45,410
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 (unaudited) 161 51,660 2,252 28 (13,208) 40,962
Prior year adjustment
The opening reserves on the comparatives for the consolidated statement of
changes in equity have been restated to incorporate the correct accounting
treatment under IAS 12 - Income Taxes for the offset of deferred tax assets
against deferred tax liabilities where the balances are relating to the same
tax authority. The impact of the adjustment was to reduce the deferred
taxation liability in the financial year 2021 by £485,000 and increase
distributable reserves by the same amount. The prior year adjustment did not
have an impact on the brought forward position as at 1 August 2022.
UNAUDITED INTERIM FINANCIAL INFORMATION OF ESSENSYS PLC GROUP
Consolidated cash flow statements
Six months ended Six months ended
31 January 2023 31 January 2022
£'000 £'000
(unaudited) (unaudited)
Cash flows from operating activities
Loss before taxation (7,652) (4,720)
Adjustments for non-cash/non-operating items:
Amortisation of intangible assets 1,056 701
Depreciation of property, plant and equipment 628 343
Impairment of property, plant and equipment 305 -
Amortisation of right-of-use assets 602 524
Impairment of right-of-use assets 303 -
Share based payment expense 137 201
Finance income (127) (9)
Finance expense 67 49
Receipts from government grants treated as income - (4)
(4,681) (2,915)
Changes in working capital:
Increase in inventory (538) (253)
Increase in trade and other receivables (529) (789)
Decrease in trade and other payables (2,277) (326)
Cash (used by)/from operations (8,025) (4,283)
Taxation (paid)/received - (90)
Net cash (used)/from operating activities (8,025) (4,373)
Cash flows from investing activities
Purchase of intangible assets (1,840) (1,513)
Purchase of property, plant and equipment (486) (332)
Interest received 127 9
Net cash used in investing activities (2,199) (1,836)
Cash flows from financing activities
Receipts from government grants - 4
Repayment of lease liabilities (779) (413)
Interest on lease liabilities (67) (49)
Net cash used in financing activities (846) (458)
Net decrease in cash and cash equivalents (11,070) (6,667)
Cash and cash equivalents beginning of period 24,122 36,903
Effects of foreign exchange rate changes (451) 217
Cash and cash equivalents at end of period 12,601 30,453
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 2023. The annual financial statements of the Group are
prepared in accordance with the UK adopted international accounting standards
and as applied in accordance with the provisions of the Companies Act 2006.
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 Annual Report
for the year ended 31 July 2022. The financial information for the half year
ended 31 January 2023 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 2022 does not constitute full statutory accounts for that period. The
statutory Annual Report and Financial Statements for the year ended 31 July
2022 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 2022 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 2022 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 2022 and will be adopted in the 2023 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 2023.
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 the 16 month period
up to the end of July 2024 (FY24). 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 2023 the Group had cash
reserves of £12.6m 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 or are offset by continued attrition) 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 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. The Board is 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 which is the provision of
software and technology platforms that manage the critical infrastructure and
business processes, primarily to the flexible workspace segment of the real
estate industry. The Group has two revenue segments and three geographical
segments, as detailed in the tables below.
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, the essensys Platform/Connect and
Operate. 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:
The Group operates in three main geographic areas, North America; the United
Kingdom & Europe; and Asia Pacific region. The Group's revenue per
geographical area is as follows:
Six months ended Six months ended
31 January 2023 31 January 2022
unaudited unaudited
£'000 £'000
North America 8,063 5,948
United Kingdom & Europe 4,501 4,904
Asia Pacific 345 76
12,909 10,928
The Group has two main revenue streams, the essensys Platform/Connect and
Operate. The Group's revenue per revenue stream is as follows:
Six months ended Six months ended
31 January 2023 31 January 2022
unaudited unaudited
£'000 £'000
Connect/essensys Platform - software enabled infrastructure platform 12,029 10,020
Operate - workspace management software 880 908
12,909 10,928
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 2023 31 January 2022
unaudited unaudited
£'000 £'000
Revenue recognised at a point in time 2,281 1,075
Revenue recognised over time 10,628 9,853
12,909 10,928
Notes to the unaudited interim financial information
3. Segmental reporting (continued)
Revenue from customers greater than 10% in each reporting period is as
follows:
Six months ended Six months ended
31 January 2023 31 January 2022
unaudited unaudited
£'000 £'000
Customer 1 3,565 2,037
Contract assets and liabilities
Contract asset movements were as follows:
Unaudited £000
At 1 August 2022 887
Transfers in the period from contract assets to trade receivables (556)
Excess of revenue recognised over cash (or rights to cash) being recognised 217
during the period
Capital asset contract contributions capitalised 10
Capital asset contract contributions released as contract obligations are (2)
fulfilled
Capitalised commission cost released as contract obligations fulfilled (21)
Commission costs capitalised on contracts 5
At 31 January 2023 540
Audited £000
At 1 August 2021 345
Transfers in the period from contract assets to trade receivables (85)
Excess of revenue recognised over cash (or rights to cash) being recognised 558
during the period
Capital asset contract contributions capitalised 37
Capital asset contract contributions released as contract obligations are (28)
fulfilled
Capitalised commission cost released as contract obligations fulfilled (111)
Commission costs capitalised on contracts 171
At 31 July 2022 887
Contract liability movements were as follows:
Unaudited £000
At 1 August 2022 815
Amounts included in contract liabilities that were recognised as revenue (815)
during the period
Cash received and receivables in advance of performance and not recognised as 1,136
revenue during the period
At 31 January 2023 1,136
Audited £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 815
revenue during the period
At 31 July 2022 815
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.
Notes to the unaudited interim financial information
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 2023 31 January 2022
unaudited unaudited
£'000 £'000
Loss for the period attributable to equity holders of essensys Group (7,652) (4,915)
Weighted average number of ordinary shares 64,385,219 64,385,219
Loss per share (11.89p) (7.63p)
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.
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 2022 215 335 13,116 280 1,263 15,209
Transfers (215) - 215 - - -
Additions - - 1,840 - - 1,840
At 31 January 2023 - 335 15,171 280 1.263 17,049
Amortisation
At 1 August 2022 - 335 5,550 280 122 6,287
Charge for year - - 1,056 - - 1,056
At 31 January 2023 - 335 6,606 280 122 7,343
Net book value
At 31 January 2023 - - 8,565 - 1,141 9,706
At 31 July 2022 215 - 7,566 - 1,141 8,922
Audited 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 215 - 3,872 - - 4,087
Transfers (1,412) - 1,412 - - -
At 31 July 2022 215 335 13,116 280 1,263 15,209
Amortisation
At 1 August 2021 - 335 4,309 280 - 4,924
Charge for year - - 1,241 - - 1,241
Impairment - - - - 122 122
At 31 July 2022 - 335 5,550 280 122 6,287
Net book value
At 31 July 2022 215 - 7,566 - 1,141 8,922
At 31 July 2021 1,412 - 3,523 - 1,263 6,198
Notes to the unaudited interim financial information
6. Property, plant and equipment
Unaudited Fixtures and fittings Computer equipment Leasehold improvements Total
£000 £000 £000 £000
Cost
At 1 August 2022 242 10,605 686 11,533
Additions - 421 65 486
Exchange adjustments - (23) - (23)
At 31 January 2023 242 11,003 751 11,996
Depreciation
At 1 August 2022 207 8,109 398 8,714
Charge for year 5 588 35 628
Impairment - 305 - 305
Exchange adjustments - (38) - (38)
At 31 January 2023 212 8,964 433 9,609
Net book value
At 31 January 2023 30 2,039 318 2,387
At 31 July 2022 35 2,496 288 2,819
Audited Fixtures and fittings Computer equipment Leasehold improvements Total
£000 £000 £000 £000
Cost
At 1 August 2021 382 8,387 130 8,899
Additions 34 1,504 3 1,541
Disposals (188) - (33) (221)
Transfers (note 7) - 180 584 764
Exchange adjustments 14 534 2 550
At 31 July 2022 242 10,605 686 11,533
Depreciation
At 1 August 2021 322 7,020 86 7,428
Charge for year 29 564 24 617
Disposals (152) - (33) (185)
Transfers (note 7) - 129 318 447
Exchange adjustments 8 396 3 407
At 31 July 2022 207 8,109 398 8,714
Net book value
At 31 July 2022 35 2,496 288 2,819
At 31 July 2021 60 1,367 44 1,471
As a result of the reorganisation that has centralised the Group's APAC
operations in Sydney, Australia and the evolution of the 'capital light'
strategy, Management have reviewed the carrying value of assets within the
APAC region and have impaired those assets where the carrying value was in
excess of their recoverable value resulting in an impairment of £305,000 and
as such the impairment charge has been booked in this period.
Transfers represent right of use assets which reached their contract term and
where legal title transferred to 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 2022 7,049 162 - 7,211
Additions - - - -
Lease remeasurement - - - -
Transfers (note 6) - - - -
Exchange adjustments (6) - - (6)
At 31 January 2023 7,043 162 - 7,205
Depreciation
At 1 August 2022 4,567 162 - 4,729
Charge for year 602 - - 602
Transfers (note 6) - - - -
Impairment 303 - - 303
Exchange adjustments (17) - - (17)
At 31 January 2023 5,455 162 - 5,617
Net book value
At 31 January 2023 1,588 - - 1,588
At 31 July 2022 2,482 - - 2,482
Audited Leasehold Computer Leasehold
property equipment improvements Total
£000 £000 £000 £000
Cost
At 1 August 2021 5,482 342 584 6,408
Additions 1,062 - - 1,062
Lease remeasurement 1,136 - - 1,136
Disposal (872) - - (872)
Transfers (note 15) - (180) (584) (764)
Exchange adjustments 241 - - 241
At 31 July 2022 7,049 162 - 7,211
Depreciation
At 1 August 2021 3,693 278 277 4,248
Charge for year 1,214 13 41 1,268
Disposal (462) - - (462)
Transfers (note 15) - (129) (318) (447)
Exchange adjustments 122 - - 122
At 31 July 2022 4,567 162 - 4,729
Net book value
At 31 July 2022 2,482 - - 2,482
At 31 July 2021 1,789 64 307 2,160
As a result of the reorganisation that has centralised the Group's APAC
operations in Sydney, Australia and the evolution of the 'capital light'
strategy, Management have reviewed the carrying value of the right of use
assets within the APAC region and have impaired those assets where the
carrying value was in excess of their recoverable value resulting in an
impairment of £303,000 and as such the impairment charge has been booked in
this period.
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
2023 2022
unaudited audited
No. No.
Allotted, called up and fully paid
0.25p ordinary shares 64,385,219 64,385,219
31 January 31 July
2023 2022
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 2022 3,128 - - - 3,128
Additions - - - - -
Interest expense 79 - - - 79
Effect of modifying lease term - - - - -
Variable lease payment adjustment 78 - - - 78
Lease payments (858) - - - (858)
Foreign exchange movements 8 - - - 8
At 31 January 2023 2,435 - - - 2,435
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 1,454 - - - 1,454
Due in more than one year 981 - - - 981
2,435 - - - 2,435
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 2021 1,841 29 20 45 1,935
Additions 1,061 - - - 1,061
Interest expense 145 1 - 1 147
Effect of modifying lease term 877 - - - 877
Lease payments (944) (30) (20) (46) (1,040)
Foreign exchange movements 148 - - - 148
At 31 July 2022 3,128 - - - 3,128
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 1,469 - - - 1,469
Due in more than one year 1,659 - - - 1,659
3,128 - - - 3,128
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
2023 2022
unaudited audited
£'000 £'000
Cash and cash equivalents 12,601 24,122
Trade and other receivables 5,307 4,707
17,908 28,829
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
2023 2022
unaudited audited
£'000 £'000
Trade and other payables 4,551 7,178
Lease liabilities 2,435 3,128
6,986 10,306
Notes to the unaudited interim financial information
11. Financial instruments (continued)
The Group's activities expose it to a variety of financial risks:
á Market risk (including foreign exchange risk, price risk
and interest rate risk)
á Credit risk
á Liquidity risk
The financial risks relate to the following financial instruments:
á Cash and cash equivalents
á Trade and other receivables
á Trade and other payables
Risk management is carried out by the key management personnel. Key
management personnel include all the directors of the Company and the senior
management and directors of essensys (UK) Limited, the Group's principal
trading subsidiary, who together have authority and responsibility for
planning, directing, and controlling the activities of the Group. The key
management personnel 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,
Europe, North America and the Asia Pacific region, 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 2023 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. This tool
considers the majority of both its borrowings and payables.
10. Post balance sheet events
Following the period end the Group announced a Group reorganisation which
positions it for sustainable growth, profitability and a return to cash
generation. This includes the simplification of global operations and moves
the Group from a regional to a functional structure. The cost of activity
undertaken by 31 January 2023 of £521,000 is reflected in the unaudited half
year financial information as exceptional costs; the cost of the remaining
activity will be recognised in the second half of the financial year ending 31
July 2023.
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 2023 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 2023 which comprises the consolidated statement of comprehensive
income, the consolidated statement of financial position, the consolidated
statement of changes in equity, the consolidated cash flow statement and the
related explanatory notes that have been reviewed.
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 which require that the
half-yearly report be presented and prepared in a form consistent with that
which will be adopted in the Company's annual accounts having regard to the
accounting standards applicable to such annual accounts.
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 rules of the London
Stock Exchange AIM Rules for Companies 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
27 March 2023
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
1 (#_ftnref1) See Revenue section for explanation
2 (#_ftnref2) See Adjusted EBITDA explanation below
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