REG - i-nexus Global PLC - Final Results
20/12/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20221220:nRST2392Ka&default-theme=true
RNS Number : 2392K i-nexus Global PLC 20 December 2022
20 December 2022
i-nexus Global plc
("i-nexus", the "Company" or the "Group")
Final Results
i-nexus Global plc (AIM: INX), a leading provider of cloud-based Strategy
software solutions designed for the Global 5000, today provides its audited
results for the year ended 30 September 2022 ("FY22").
Financial Highlights
· Year on year growth in Underlying Monthly Recurring Revenue(1)
("MRR") of 12% to £250k (FY21: £223k) driven by a record number of new
business wins and the expansion of existing customer relationships; equivalent
Reported MRR(1) was £250k (FY21: £235k)
· Highlighting both the increasing strength of our client relationships
and the release of enterprise software budgets, net retention(2) in the year
was 98% (2021: 74%)
· Total revenue, 90% of which is recurring, reduced despite a record
number of sales to £3,127k (FY21: £3,639k) due to the lagged impact of the
exceptional levels of non-renewing contracts in the prior year
· Cost control initiatives provided a loss before tax for the year in
line with FY21 at £1,105k (FY21: £1,133k) despite the movement in revenue
· Cash & cash equivalents at the period end of £99k (FY21:
£575k), with the end of the financial year representing a low cash flow point
given the seasonality in recurring revenue collection
Operational Highlights
· Marketing initiatives resulted in record levels of engagement, reach
and therefore leads, confirming our ability to rebuild our prospect pipeline
· Record number of new customers secured in the year, winning nine new
logos (FY21: four) and delivering £30k of additional MRR
· Smaller initial deals have already seen expansion in the year,
providing the foundation for a strong existing account growth rate in FY23
Post Period End Highlights & Outlook
· Sales momentum continuing in FY23, with a further three logos signed
and one account expansion, producing net MRR growth of £12k
· Primed to again deliver double-digit net Monthly Recurring Revenue
(MRR) growth in FY23, capitalising on the strong prospect pipeline and
increased opportunities within our base
Commenting on the results, Simon Crowther, Chief Executive, said: -
"I am pleased to report on a year of solid progress at i-nexus, in which we
delivered on all three areas of our strategic plan, resulting in growth in new
business wins, a more stable cash runway, and greater clarity on our future
direction. The sales successes in the year combined with the significant
improvement in customer renewals enabled us to achieve our target of
double-digit underlying MRR growth in the year.
The growing interest in strategy software, the relaxation of enterprise
software budgets, the enhancements we have made to our products and our
increased sales and marketing skills, all combine to provide us with
confidence in our outlook and ability to deliver another year of double digit
MRR growth."
For further information please contact:
i-nexus Global plc Via: Alma PR
Simon Crowther, Chief Executive Officer
Drew Whibley, Chief Financial Officer
Singer Capital Markets (Nominated Adviser and Broker) Tel: +44 (0)207 496 3000
Sandy Fraser / Alaina Wong (Corporate Finance)
Tom Salvesen (Corporate Broking)
Alma PR Tel: +44 (0)203 405 0205
Caroline Forde
About i-nexus Global plc
i-nexus Global plc ("i-nexus") helps organisations achieve their goals.
Whether executing a strategy, driving operational excellence and continuous
performance improvement, or coordinating portfolios and programs to transform
results, i-nexus strategy software underpins success.
Today, we support organisations in managing over 200,000 strategic programmes
around the world.
i-nexus transforms how organisations plan, execute, and track goals. We
inspire the confidence to leave behind the spreadsheets, presentations and
reports those organisations rely on, replacing it with a cloud-based,
collaborative solution.
Throughout this announcement:
(1) Underlying MRR excludes MRR movements related to IFRS adjustments and
Foreign Exchange variances, these items are included within the Reported MRR
value.
(2) Net Retention is measured by the total of on-going MRR at the year-end
from clients in place at the start of the year as a percentage of the opening
MRR from those clients.
Chairman's Statement
In my 2020/21 Chairman's Report I commented on the immediate challenges that
i-nexus faced delivering its Business Improvement and Strategy Deployment
software to large enterprises beginning to recover from the global pandemic.
Few commentators predicted that 2021/22 would be characterised by even greater
economic and political uncertainty. Businesses such as ours benefit from our
customers looking forward with optimism and implementing clear long-term
strategies across complex organisations. To do so successfully requires
certainty and stability which are not conditions which currently prevail
across the global economy. Nonetheless, against this challenging sales
environment, the team delivered a record number of new logo wins and closed
the year with a clear cash runway.
While creating a challenging sales environment in the short-term, these
macro-economic changes have highlighted the need for global strategy solutions
across large enterprises. Issues such as faltering supply chains, changing
distribution models, price inflation, social and environmental factors, and
changing working practices are just a few examples of factors influencing
large enterprise strategies.
Enterprises have learnt quickly that uncertainty is the new normal and that to
succeed their strategies must be deployed faster, with more agility and that
tools such as i-nexus can help them to do so.
Last year our three strategic objectives were to manage our cash resources as
effectively as possible, while continuing to develop our i-nexus platform and
drive our developing sales pipeline as hard as possible with our limited
resources. We have not needed further working capital support from our
shareholders and, although cash is tighter than we originally forecast, we
remain confident given our current projections for FY23 that we will not
require further working capital to deliver on our growth plans. If our
ambitions change through accelerating sales or unequivocal demand for new
product the Board will of course consider all options to fund such growth. It
is the Board's responsibility to ensure that i-nexus takes full advantage of
the opportunities available to it. It is also incumbent upon the Board to
ensure that i-nexus remains at the forefront of its chosen market. We will
find the necessary resources, within our limited overhead, to ensure we are
looking forward with our customers and market analysts to ensure we can
provide broader capability, unlocking a larger and potentially more dynamic
market.
Net retention is of course central to the success of any subscription business
and we are pleased that this has seen a marked improvement in the year to 98%
(FY21: 74%) (measured by the total of on-going MRR at the year-end from
clients in place at the start of the year as a percentage of the opening MRR
from those clients). We are confident that this positive increase is
sustainable over the next 12 months. Importantly we are back winning new
customers and although initial engagements are deliberately smaller, the
opportunities to grow these accounts following successful initial deployments
is, in many cases, contractually assured. New customers, growth from existing
customers and improving partner sales all underpin our growth aspirations for
2022/23. In challenging market conditions we have broadly achieved our aims
for 2021/22 and look forward with optimism for the current year.
As we look forward it is clear that our current market capitalisation has
little or no relationship to the underlying value of the business, its
customer base, its well established technology or its financial position. It
is a reflection of the challenges that many small businesses quoted on AIM
currently have. The Board will seek ways to reengage with the market to help
awaken a greater appreciation of the value of the business, while considering
all options in the best interest of all stakeholders.
The management team has faced tough times over the last few years and have
remained at the helm throughout, never faltering in the most harsh
circumstances. During the year, Alyson Levett, our CFO, decided to step down
to pursue her career as a pluralist non-executive director. She has been an
outstandingly committed executive director, steering the business through its
IPO and subsequent challenging economic times. I would like to thank Alyson
for her contribution to the business and wish her well with her future
endeavors.
We are delighted to have found an exceptional CFO to take up the role, Drew
Whibley, joining us from his role as Group Finance Manager at LSE listed
software business Aptitude Software Group plc. Drew has fitted into the
management team with ease and has already proven a fantastic asset to us and
we are delighted to have him on board. In addition I'd like to thank all our
employees for their continued commitment to the business, their hard work and
dedication.
Without downplaying the obvious challenges ahead in any way, I look forward to
the coming years with increased optimism underpinned by a small but
exquisitely formed team, a growing market, a sound product, blue chip
customers and "baked in" account growth.
Richard Cunningham
Chairman
Chief Executive Officer's Report
Overview
I am pleased to report on a year of solid progress at i-nexus, in which we
delivered on all three areas of our strategic plan, resulting in growth in new
business wins, a more stable cash runway, and greater clarity on our future
direction. The sales successes in the year combined with the significant
improvement in customer renewals enabled us to achieve our target of
double-digit Underlying MRR growth in the year.
The successful reignition of our marketing activities was key to building a
strong sales pipe which we are confident will continue to deliver. We proved
during the year we could convert these deals into new wins, and quickly
demonstrate value to our customers, ensuring higher levels of renewals and
expansion deals. The efforts we made to re-build our sales momentum mean we
are continuing to deliver a consistent volume of well verified leads each
month and currently have a further fifteen trial implementations in progress,
providing visibility on the pipeline into the new year.
For the i-nexus workbench product, we invested heavily in those areas that
simplify use for quicker and easier adoption which has provided much deeper
engagement during both the sales journey and customer deployment.
Trading
We secured a record number of new customers in the year, winning nine new
logos (FY21: four), which along with the existing account upsells and lower
levels of churn, delivered an exit Underlying MRR for the year uplift of 12%
to £250k MRR (FY21: £223k, Reported MRR £235k). As is typical with our new
customers, each of these wins services limited business areas or teams within
the customer and so each presents considerable expansion opportunities.
We renewed over 90% of our customers, a considerable improvement on the prior
year, and expanded the use of our software within four existing accounts
(FY21: two). The improvement in renewal rates reflects the rigour and routine
we have brought to the review of accounts with our customer stakeholders, and
the release of enterprise software budgets following the freeze experienced
during Covid times.
Fundamental to these successes has been our increased understanding of where
we sit within the competitive market landscape. We are now clearer on our
differentiators and confident our platform is the best in class to support
enterprise level strategy execution - a view confirmed to us by our prospects.
We continue to refine our sales approach to ensure we are best placed to
capture this growing market. Areas of improvement include streamlining the
onboarding process to under 30 days, ensuring ROI and customer value are front
and centre of the sales discussion and simplification of our initial product
demonstrations, particularly around our key differentiator: our ability to
deliver Hoshin Kanri methodology.
We continue to be approached by a range of potential partners and will
consider ways to capitalise on this interest in the year ahead.
Market opportunity
All businesses set goals, plan how to deliver them and track performance. The
challenge is if they can do this at pace, with insight and high levels of
visibility across their complex ecosystems where i-nexus' software delivers
considerable value.
Our software category - Strategy Execution Management (SEM) - continues to
evolve and gain momentum as companies accelerate digitalising mission-critical
processes in this post pandemic world. Faced with market uncertainty, this
"new normal" future requires companies to increase responsiveness by
dynamically managing their strategic plan; something that we believe simply
cannot be achieved on spreadsheets and other conventional productivity tools.
The growing importance of the SEM market has been acknowledged by leading
analysts including Gartner Research, with SEM now considered an integral part
of the new Strategy Portfolio Management (SPM) software category. We have
seen greater demand for strategy execution post-Covid, in response to the "no
normal" business environment. And while we have seen a higher level of smaller
software providers entering the market, with SME targeted offerings, we
continue to dominate the enterprise level part of the market.
Our competitive strength
We are seeing an increased sophistication in our market, with prospects
frequently now coming to us with very well thought through capability
requirements, having pre-evaluated i-nexus against the competition on a matrix
of criteria.
We continue to see that i-nexus has several clear advantages in strategy
execution against SPM vendors: the market leading Hoshin Kanri capabilities
built into our platform, including our X-Matrix; the configurability and
flexibility of the platform; the depth of functionality including powerful
strategic planning and performance management capabilities that complement
portfolio management features; and proven enterprise readiness.
In addition to the above, i-nexus' customers benefit from insight gained from
over fifteen years of market experience in strategy execution. Our experience
and long-standing in the industry also mean our software is calibrated to
integrate smoothly into an enterprise's existing strategy processes.
People
We have a talented, committed team at i-nexus, all pulling in the same
direction and now delivering better results. The results this year are even
more impressive when taking into account the considerably reduced size of the
team. Each person has gone above and beyond to grow sales momentum, develop
our products and deepen customer relationships, and the Board would like to
once again thank them all for their commitment.
During the year we spent time on various activities to help strengthen our
team and ensure we have the right qualities and shared purpose to take us
forward. These included defining our Vision and Values, introducing
improvements to our employment packages, even more rigorous hiring processes
and the select expansion of our teams to ensure we had sufficient depth to
properly service our existing customer base. As a result of these measures, we
have a strong, cohesive team, working together to deliver on our growth plan.
Strategic focus for the year ahead
Our strategy for the current year is focused on three main programs of work:
1. To accelerate the landing of new logos - which we
will achieve though continuing to reduce friction in buying i-nexus and
enhancing the trial experience.
2. Prove our ability to expand within accounts - with
nine new logos secured in FY22, proving we can grow these accounts is key. We
are launching an updated set of value measures and increased customer
marketing and forums.
3. Improve the customer experience within our Workbench
product - developing key insights and output screens as requested by
customers.
We believe through continued focus on these programs, we will drive the
success of the business.
Innovation
This year and next year we will continue to focus our innovation efforts on
increasing the usability of our platform and the delivery of valuable
insights. Through this we intend to increase growth from existing customers
which is a key component to our land and expand sales model; providing focus
on giving the best user experience, eliminating waste and delivering valuable
insight.
Being a software/product company, we continually look at product innovations
in our space. This last year and next year are no different. We have a number
of potential product candidates, currently being assessed for customer
validation, that we hope to take through to a minimal viable product in the
year ahead.
Current Trading and Outlook
Following the growth in MRR and our careful management of the impacts of cost
inflation on the business, we continue to have clear visibility of our cash
runway.
The growing interest in strategy software, the relaxation of enterprise
software budgets, the enhancements we have made to our products and our
increased sales and marketing skills, all combine to provide us with
confidence in our outlook and ability to deliver another year of double digit
MRR growth.
Simon Crowther
Chief Executive Officer
Chief Financial Officer's Report
Revenue
Licence revenues
Monthly recurring revenue ('MRR'), the key financial metric for the Group,
grew by 12% in the year to £250k at 30 September 2022 (30 September 2021:
£223k after adjusting for foreign exchange and IFRS adjustments, Reported MRR
£235k) as the business secured a record nine new logos (FY21: four) alongside
continuing to expand the use of our software in a growing number of accounts.
These results represent a significant turnaround from both 2021 and 2020
(reduction in MRR of 23% and 10% respectively) as the Group's key markets were
disrupted by the onset of the pandemic.
Highlighting both the increasing strength of our client relationships and the
release of enterprise software budgets following the freeze experienced during
the last two years, net retention in the year was 98% (FY21: 74%). As
expected, software revenues recognised in 2022 reduced to £2,857k (FY21:
£3,333k) due to the lagged impact of the exceptional levels of non-renewing
contracts the business experienced in the prior year.
As a consequence of our subscription revenue model, the new customer successes
achieved in the year and growing expansion opportunities in our base set the
business up well to return to software revenue growth in FY23. This view is
further supported by the business securing three new logos and one account
expansion in Q1 2023 delivering £12k of net MRR growth.
Services revenues
Revenue from associated professional services was broadly in line with
prior-year levels at £270k (FY21: £306k) despite the 40% reduction cited at
the half year against H1 2021. The uplift in H2 reflects the timing of
delivering new customer deployments and existing change orders, a trend
expected to continue into H1 FY23 underpinned by the deferred revenue balance
related to services at 30 September 2022 being three times higher than at 30
September 2021.
Gross Margin
Gross Margin in the year remained stable at 79% (FY21: 83%) with the reduction
in revenue driving the fall from £3,004k to £2,461k.
Reported Gross Margin is the combined gross margin over both recurring
software subscriptions and professional services.
Adjusted EBITDA
Adjusted EBITDA (EBITDA excluding the impact of impairment, loss on disposal
of assets, share-based payments and non-underlying items) totalled a loss of
£552k for the period (FY21: loss of £257k), with the fall in gross margin of
£542k being constrained by a drop in overhead costs of £247k reflecting the
full impact of the cost control initiatives undertaken last year.
Whilst the Group's continuing focus is to return to EBITDA breakeven, during
the second half of 2022 the business decided to accelerate a select number of
investments both in its existing employee base to preserve retention and in
additional resource needed for operational delivery. The strengthening of the
team was considered fundamental to the Group realising the market opportunity
and delivering on the next stage of its growth strategy.
There are currently no plans to make further investments in FY23 until such
time as revenue growth is delivering a positive Adjusted EBITDA.
Depreciation, amortisation and impairment
Total costs in respect of depreciation, amortisation, and impairment were
£385k in FY22 (FY21: £552k). With the business having low capital
expenditure requirements, the value is principally made up of amortisation on
intangible assets, being capitalised development costs, (£165k, FY21: £79k)
and any subsequent impairment charges (£155k, FY21: £294k).
These costs are reflective of the continual evolution of the market in which
the Group operates, the needs of its customers, both present and prospective,
and the Group's agile approach to continually developing and improving its
offering.
Non-underlying items
Non-underlying items in the prior year totalling £144k comprise redundancy
costs and professional and consultancy fees relating to the raising of
finance. No such costs were incurred in FY22.
Statutory results
The Group reported a loss before taxation for the year of £1,105k (FY21:
£1,133k).
Cash and cash equivalents
The Group had cash & cash equivalents at 30 September 2022 of £99k (FY21:
£575k), with the end of the financial year representing a cash low point for
the business given the seasonality in cash flows arising from the timing of
the invoicing and collection of the Group's recurring revenue, the majority of
which is billed during Q1 and Q2.
During the year, we delivered on a key financial objective during FY22, to
become self-sufficient in working capital terms. This enabled us to complete a
select number of additional one-off strategic investments from within our own
cash resources, strengthening our team as we head into FY23. Driving this
outcome was a £725k reduction in the net outflow of funds from operating
activities (FY22: (£237k, FY21: £962k) reflecting the impact of new business
successes, improved service billing and a strong renewal performance.
Careful cash management will continue to be a priority focus for the Board. As
previously outlined, there are currently no plans to increase the existing
cost base in the coming year until such time that revenue growth delivers a
position of at least Adjusted EBITDA breakeven.
The Group also continues to apply treasury and foreign currency exposure
management policies where possible to minimise both the cost of finance and
our exposure to foreign currency exchange rate fluctuations.
Net debt at 30 September 2022 was £1,710k (FY21: £1,321k). On 30 September
2022, the Company agreed with the holders of the £1,325k Convertible Loan
Notes to extend the redemption date from 4 November 2023 to 4 November 2024,
see note 7 for further details.
The Group prepares budgets, cashflow forecasts and undertakes scenario
planning to ensure that the Group can meet its liabilities as they fall due.
The Board's assessment in relation to going concern is included in note 2 of
this report.
Balance sheet
Trade receivables (net) have increased to £604k due to the timing of receipt
of annual licence fee and subscription invoices issued in the final months of
the year (FY21: £557k).
The growth in the Group's MRR and accompanying services resulted in deferred
revenue increasing to £1,320k at 30 September 2022 (FY21: £1,030k). The
Group's cash collection disciplines remain strong with DSO (debtor days) at 30
September 2022 of 60 (2021: 70).
Principal risks and uncertainties
The Group's principal risks and uncertainties are set out in note 9 of this
report.
Drew Whibley
Chief Financial Officer
Primary statements
Consolidated Statement of Comprehensive income
For the year ended 30 September 2022
2022 2021
£ £
Revenue 3,126,804 3,639,111
Cost of sales (666,280) (635,532)
Gross profit 2,460,524 3,003,579
Other operating income - 88,316
Administrative expenses (3,408,424) (4,062,295)
Operating loss (947,900) (970,400)
Adjusted EBITDA (552,357) (256,873)
Depreciation, amortisation, impairment and profit/loss on disposal (384,975) (551,862)
Share based payment expense (10,568) (17,181)
Non-underlying items - (144,484)
Investment revenues 68 65
Finance costs (231,288) (162,855)
Other gains and losses 73,845 -
Loss before taxation (1,105,275) (1,133,190)
Income tax income 234,391 398,258
Loss for the year (870,884) (734,932)
Other comprehensive income:
Items that will not be reclassified to profit or loss
Currency translation differences (486) 17,346
Total items that will not be reclassified to profit or loss (486) 17,346
Total other comprehensive income for the year (486) 17,346
Total comprehensive income for the year (871,370) (717,586)
2022 2021
£ £
Earnings per share
Basic (0.03) (0.02)
Diluted (0.03) (0.02)
Consolidated Statement of Financial Position
As at 30 September 2022
2022 2021
£ £
Non-current assets
Intangible assets 915,696 1,099,313
Property, plant and equipment 26,413 67,111
942,109 1,166,424
Current assets
Trade and other receivables 781,838 791,948
Current tax recoverable 224,000 275,000
Cash and cash equivalents 98,987 575,203
1,104,825 1,642,151
Total assets 2,046,934 2,808,575
Current liabilities
Trade and other payables 682,840 952,157
Borrowings 9,707 71,425
Deferred revenue 1,319,674 1,030,315
2,012,221 2,053,897
Net current liabilities (907,396) (411,746)
Non-current liabilities
Trade and other payables 254,407 88,330
Borrowings 32,387 42,094
Convertible loan notes 1,766,925 1,782,458
2,053,719 1,912,882
Total liabilities 4,065,940 3,966,779
Net liabilities (2,019,006) (1,158,204)
Equity
Called up share capital 2,957,161 2,957,161
Share premium account 7,256,188 7,256,188
Foreign exchange reserve 1,390 1,876
Share option reserve 20,062 12,989
Equity reserve 231,851 231,851
Merger reserve 10,653,881 10,653,881
Retained earnings (23,139,539) (22,272,150)
Total equity (2,019,006) (1,158,204)
Consolidated Statement of Changes in Equity
For the year ended 30 September 2022
Share Share premium account £ Equity reserve Merger reserve Foreign exchange reserve £ Share option reserve £ Retained earnings Total
capital
£ £ £ £
£
Balance at 2,957,161 7,256,188 - (15,470) (689,650)
10,653,881 - (21,541,410)
1 October 2020
Year ended - - - - - - (734,932) (734,932)
30 September 2021: - - - - 17,346 - - 17,346
Loss for the year
Other comprehensive
income:
Exchange differences
on foreign operations
Total comprehensive - - - - 17,346 - (734,932) (717,586)
income for the year
Transactions with owners - - 231,851 - - - - 231,851
in their capacity as owners - - - - - 17,181 - 17,181
Issue of convertible - - - - - (4,192) 4,192 -
loan
Share option expense
in the year
Share options cancelled
Total contributions by and - - 231,851 - - 12,989 4,192 249,032
distributions to owners
of the Company
recognised directly in equity
Balance at 2,957,161 7,256,188 231,851 10,653,881 1,876 12,989 (22,272,150) (1,158,204)
30 September 2021
Year ended - - - - - - (870,884) (870,884)
30 September 2022: - - - - (486) - - (486)
Loss for the year
Other comprehensive
income:
Exchange differences
on foreign operations
Total comprehensive - - - - (486) - (870,884) (871,370)
income for the year
Transactions with owners - - - - - 10,568 - 10,568
in their capacity as owners - - - - - (3,495) 3,495 -
Share option expense
in the year
Share options cancelled
Total contributions by and - - - - - 7,073 3,495 10,568
distributions to owners
of the Company
recognised directly in equity
Balance at 2,957,161 7,256,188 231,851 10,653,881 1,390 20,062 (23,139,539) (2,019,006)
30 September 2022
Consolidated Statement of Cash Flows
For the year ended 30 September 2022
£ 2022 £ 2021
£ £
Operating activities
Loss after tax (870,884) (734,932)
Adjusted for non-cash items:
Taxation credit (234,391) (398,258)
Amortisation, depreciation, 384,975 551,862
and adjustments on disposal
Share-based payment expense 10,568 17,181
Finance income (68) (65)
Finance charges 231,288 162,855
Decrease in provisions - (80,702)
Other gains (73,845)
(552,357) (482,059)
Decrease in trade and other 10,126 78,059
receivables
Increase/(decrease) in trade 20,043 (980,799)
and other payables
Cash used in operations (522,188) (1,384,799)
Income tax refunded 285,391 423,258
Net cash outflow from operating activities (236,797) (961,541)
Investing activities
Purchase of intangible assets - (136,234) (335,446)
internally generated
Purchase of property, plant and equipment (24,443) (1,171)
Proceeds on disposal of property, plant and equipment - 1,180
Interest received 68 65
Net cash used in investing activities (160,609) (335,372)
Financing activities
Issue of convertible loans - 1,937,500
Repayment of borrowings (71,425) (179,981)
Proceeds of new bank loans - 50,000
Payment of lease liabilities - (37,467)
Interest paid (6,899) (35,216)
Net cash (used in)/generated from financing activities (78,324) 1,734,836
Net (decrease)/increase in cash and cash equivalents (475,730) 437,923
Cash and cash equivalents at 575,203 120,011
beginning of year
Effect of foreign exchange rates (486) 17,269
Cash and cash equivalents at end of year 98,987 575,203
Notes to accounts
1. General information
i-nexus Global plc is a public company limited by shares incorporated in
England and Wales (registration number 11321642). The registered office is
27-28 Eastcastle Street, London, W1W 8DH. The Group's principal activities and
nature of its operations are disclosed on page 2 of this report.
The Group consists of i-nexus Global plc and all of its subsidiaries.
Significant accounting policies
The following principal accounting policies have been used consistently in the
preparation of consolidated financial information for i-nexus Global plc and
its subsidiaries (the 'Group').
Basis of preparation
The financial information has been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted for use in the United Kingdom
and with those parts of the Companies Act 2006 applicable to companies
reporting under IFRS.
The financial information is prepared in sterling, which is the functional
currency of the Group. Monetary amounts in this financial information are
rounded to the nearest £1.
This financial information has been prepared applying the accounting policies
applied in the Group's most recent publicly available financial statements.
The financial information incorporates the results of i-nexus Global plc and
all of its subsidiary undertakings as at 30 September 2022.
Going concern
After reviewing the Group's forecasts and projections, the Directors have a
reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future, being a period of at least
twelve months from the date of approval of these financial statements. The
Group therefore continues to adopt the going concern basis in preparing its
financial statements. Information used to make this decision is detailed
below.
A scenario testing exercise, in which the Directors prepared detailed cash
flow forecasts for the period covered by the going concern forecast, was
performed. The forecasts take into account the Directors' views of current and
future economic conditions that are expected to prevail over the period
including assumptions regarding the sales pipeline, future revenues and costs
with various scenarios which reflect growth plans, opportunities, risks and
mitigating actions. Alongside managements base case forecast, the Group
prepared an extreme downside scenario where, outside of the deals secured in
Q1 2023, any growth in MRR across the period would be offset by non-renewals,
reducing total billing across recurring and services revenue by £510k. Under
this extreme scenario, the Group has given consideration to the potential
actions available to management to mitigate the impact of these sensitivities,
in particular the discretionary nature of costs incurred by the Group, in
order to ensure the continued availability of funds. Financial performance in
2023 is not expected to be materially impacted from current year levels due to
the long-range revenue visibility achieved through the recurring revenue
business model. These recurring revenues, representing 90% of total revenue,
are considered resilient given the majority are on multi-year terms. The
forecast also assumed that the Group does not have access to any further
external funding. Based on current trading, the stress test scenario is
considered very unlikely.
The Group continues to monitor the collection of monies from clients with no
material delays in payment being cited. The business benefits from an Annual
Licence Fee Model in which software Licence fees are received annually in
advance.
Abridged financial information
This preliminary announcement has been prepared in accordance with the basis
of preparation set out above. Whilst the financial information included in
this preliminary announcement has been prepared in accordance with IFRS, this
announcement does not itself contain sufficient information to comply with
IFRS. This preliminary announcement constitutes a dissemination announcement
in accordance with Section 6.3 of the Disclosures and Transparency Rules
(DTR).
2. Revenue and segmental reporting
The Group has one single business segment and therefore all revenue is derived
from the rendering of services as stated in the principal activity. The Group
operates in six geographical segments, as set out below. This is consistent
with the internal reporting provided to the chief operating decision maker.
The chief operating decision maker, who is responsible for allocating
resources and assessing performance, has been identified as the management
team comprising the executive directors who make strategic decisions.
Revenue analysed by class of business
Year ended Year ended
30 September 2022 30 September 2021
£ £
Licence 2,856,720 3,333,407
Services 270,084 305,704
3,126,804 3,639,111
Revenue analysed by geographical market
Year ended Year ended
30 September 2022 30 September 2021
£ £
United Kingdom 716,295 853,663
United States 882,707 1,211,192
Switzerland 639,380 629,921
Germany 538,561 329,959
Rest of Europe 190,976 476,513
Rest of the World 158,885 137,863
3,126,804 3,639,111
Other significant revenue Year ended Year ended
30 September 2022 30 September 2021
£ £
Grant income - 88,316
Grants of £88,316 were received in the prior year as part of the Government's
initiatives to provide immediate financial support as a result of the COVID-19
pandemic. There are no future related costs associated with these grants which
were received solely as compensation for costs incurred in the year.
3. Adjusted EBITDA
The calculation of Adjusted Earnings is consistent with the presentation of
Adjusted Earnings before Interest, Tax, Depreciation, and Amortisation, as
presented on the face of the Statement of Comprehensive Income. This adjusted
element also removes non-underlying items which, in the prior year, comprise
COVID-19 related redundancy costs and professional and consultancy fees
relating to the raising of finance. There were no such costs in the current
year.
The Directors have presented this Alternative Performance Measure ("APM")
because they feel it most suitably represents the underlying performance and
cash generation of the business, and allows comparability between the current
and comparative period in light of the rapid changes in the business, and will
allow an ongoing trend analysis of this performance based on current plans for
the business.
4. Earnings per share
The earnings per share has been calculated using the loss for the year and the
weighted average number of ordinary shares outstanding during the year, as
follows:
Year ended Year ended
30 September 2022 30 September 2021
£
Loss for the period attributable to equity holders of the company (870,884) (734,932)
Weighted average number of ordinary shares (for basic and diluted earnings per 29,571,605 29,571,605
share
Earnings per share (basic and diluted) (0.03) (0.02)
The Diluted EPS is the same as the basic EPS in the current and comparative
year as the Group has incurred losses in each of the periods concerned. The
Group has a number of potentially dilutive share options and convertible
redeemable loan stock that could dilute the earnings per share should the
Group become profitable. As at 30 September 2022 both the share options and
the convertible loan stock are out of the money.
5. Borrowings
At 30 September 2022 At 30 September 2021
£ £
Current
Bank loans 9,707 7,906
Other loans - 63,519
9,707 71,425
Non-current
Bank loans 32,387 42,094
32,387 42,094
Total borrowings 42,094 113,519
The Group had the following borrowings at 30 September 2022:
· A Bounce Back Loan Scheme loan within bank loans which has an
interest rate of 2.5% payable from November 2021 when the government grant
incentive period expires. The loan is carried at £42,094 in the financial
statements. This loan is unsecured.
· Venture debt, within other loans in the prior year, has a fixed
interest rate of the higher of 11.5% per annum or LIBOR plus 8% per annum and
is measured at amortised cost. The venture debt is secured by way of fixed and
floating charges over the title of all assets held by the Group. The venture
debt has been repaid in full during the current year.
The directors consider the value of all financial liabilities to be equivalent
to their fair value.
7. Convertible Loan note
The convertible loan notes consist of two tranches issued during the prior
year. The first tranche was issued on 4 November 2020 with total proceeds of
£1,325,000 and the second tranche was issued on 29 September 2021 with total
proceeds of £650,000.
When issued, both tranches had a redemption date 3 years following their date
of issue. The loan note holders are entitled, before the redemption date, to
convert all or part of their holding of loan notes into fully paid Ordinary
Shares on the basis of 1 Ordinary Share for every 10p of principal nominal
amount of loan notes held, or, convert all or part of their holding of loan
notes into fully paid Ordinary Shares at the conversion rate; and/or redeem
all or part of their holding of loan notes.
At the issue date the net proceeds received were split between the financial
liability element of £1,743,149 and an equity component of £231,851,
representing the fair value of the embedded option to convert the financial
liability into equity. The equity component of the convertible loan notes has
been credited to the equity reserve.
On 30 September 2022, the redemption date of the first tranche was extended by
a further year, to give a revised redemption date of four years following the
original date of issue, being November 2024. This modification was not
considered to be substantial, as defined in IFRS 9, therefore the existing
liability was re-calculated as the present value of the revised future cash
flows discounted at the original effective interest rate. A gain of £73,845
on the modification of the liability has been recognised in other gains and
losses.
The extension to the redemption date is a modification only of the existing
convertible loan notes and therefore has no impact on the equity element.
The liability component is measured at amortised cost, and the difference
between the carrying amount of the liability at the date of issue and the
amount reported in the statement of financial position represents the
effective interest rate less interest paid to that date.
The convertible loan notes carry a coupon rate of 8% and are recognised at
their net present value using a discount rate of 12%.
Liability
£
Issue of convertible loan note 1,743,149
Interest charged 127,639
Interest accrued (88,330)
Liability component at 30 September 2021 1,782,458
Interest charged 224,389
Interest accrued (166,077)
Gain on modification (73,845)
Liability component at 30 September 2022 1,766,925
8. Share capital
At 30 September 2022 At 30 September 2021
£ £
Authorised, allotted, called up and fully paid
29,571,605 (2020: 29,571,605) Ordinary shares of £0.10 each 2,957,161 2,957,161
Fully paid shares carry one vote per share and carry rights to a dividend.
9. Principal risks and uncertainties
The Board of the Company regularly reviews business risk and the Group's
appetite for risk relative to its goals. There are a number of potential risks
and uncertainties, some of which could have a material impact on the Group's
performance, and therefore could cause actual results to differ materially
from those expected.
Set out below are the significant business risk areas identified, together
with an overview of the mitigating factors considered by the Board. This is
not an exhaustive list of the risks faced by the Group and is not necessarily
presented in order of priority.
Risk Description Mitigation
Working capital Whilst the Directors believe that the improvement in sales conversion seen in Trend: Level risk
FY22 is sustainable, the Group's working capital position is still exposed
Vulnerability of the Group's long term working capital. should this weaken and/or its expected growth with existing accounts be lower The Group prepares regular business forecasts and monitors its projected cash
than planned in FY23. flows, which are reviewed by the Board.
The Group's continuing viability in the longer term remains critically The scenarios and sensitivities demonstrate that there are mitigating actions
dependent on its ability to secure new sales and expand the use of the management can implement should the plans not deliver the expected sales
software in existing accounts. growth.
It is possible that the Group will experience a slower and/or lower sales
conversion rate than the Directors have modelled within their base case
financial projections. This could in turn have a material adverse effect on
the Group's business, results of operations, financial condition and
prospects.
Risk Description Mitigation
Market & product development Whilst the Board believes that there is strong evidence of an increasing trend Trend: Level risk
to digitalise strategy by its target customers, a large proportion of the
The strategy market may not evolve as expected or our products fail to meet Group's target market continues to use traditional methods and in-house The Group has internal sales and marketing functions, which are also supported
the expectations of the market. developed systems. by a network of consulting partners, that work with potential customers to
educate them on the benefits of digitising strategy and the associated
benefits the product can offer an organisation.
Although the Group has achieved its market position through a deep The rate of incoming enquiries supports the view that recent events appear to
understanding of the market, and the 10 years of development of its i-nexus have made the need to digitise strategy more widely accepted.
software, there is no guarantee that either our product continues to meet
customer expectations or that the Group's competitors and potential The Board feels that recent enhancements along with the Group's product
competitors (who may have significantly greater financial, marketing, service, strategy and R&D focus mitigates this risk. The Board monitors user
support, technical and other resources than the Group) may be able to develop satisfaction and the extent to which the software continues to meet customer
competing products, respond more quickly to changes in customer requirements expectation through various channels, including on the G2 platform.
and devote greater resources to the enhancement, promotion and sale of their
products, which could have a negative impact on the Group's business.
Account Proliferation An important aspect of the Group's growth strategy is to proliferate sales of Trend: Reducing risk
its i-nexus software with existing customers as a result of the natural
Failure of our existing accounts to grow as planned, resulting from evolution of the software use over time. Although the Group has a number of Many of the new logos signed in FY22 were "Land and Expand" opportunities with
dissatisfaction with the product and/or deployment issues. examples where this has occurred in the past, this is no guarantee that it clear intent, whereby a smaller subset of a much larger future deployment have
will continue to happen at the increasing rate predicted. Any failure of this commenced using the product first. The Board expect to see the beneficial
anticipated account proliferation occurring will impact the Group's future impact of this strategy in FY23 and have taken measures to increase the number
success and adversely affect its business, prospects and financial position. of Success Managers in the year. This team's efforts at growing our existing
accounts has been assisted by the recent product enhancements aimed at
improving user experience.
The Board continue to monitor the efficacy and outcomes of the Group's efforts
in growing existing accounts.
Risk Description Mitigation
Dependence on key Customers A small group of key customers provide approximately half of the Group's MRR, Trend: Level risk
with one representing nearly 20 per cent of closing MRR. The Group's financial
Failure to retain our larger key customers. performance is therefore partly dependent on the continued business The majority of this small group of customers are in contracts with a
relationship with these key customers. remaining term of more than one year and all bar one of them have been
longstanding clients for a period of at least five years and, in the case of
Failure to manage the ongoing renewal of the contracts with these key two of them, ten years.
customers on a commercially acceptable basis could materially affect the
Group's operations and/or its financial condition. As previously reported, the Group has a dedicated team of long-standing
experienced professionals acting as Success Managers. They have
well-established processes and reporting that allow them to get early warning
of any issues.
Whilst this cannot guarantee renewal of all customers in the face of
disruptive external factors that we cannot reasonably foresee or manage, the
overall risk level is aligned with FY22 where the business achieved its
highest retention rates.
Security Breaches and Cyber Attacks The Group is a Data Processor for its customers' confidential data. Although Trend: Level risk
the Group is ISO27001 accredited and therefore employs security and testing
Vulnerability of the Group's systems to security breaches or cyber attacks. measures for the software it deploys and the broader security environment is The Group takes its Information Security very seriously as demonstrated by its
well documented, these measures may not protect it from all possible security ISO27001 accreditation. Employees are trained in this area to ensure best
breaches that could harm the Group or its customers' business. Given the practice measures are followed for Information Security.
reliance of the business on its information technology systems, the software
is at risk from cyber attacks. Either of these security events may result in The Group utilises the latest security products such as end point security
significant costs being incurred and other negative consequences including systems, with staff receiving regular security awareness training and testing.
reputational damage. The security regime is regularly reviewed, and the Group invests in
state-of-the-art systems to keep both its cloud platform and office networks
protected against cyber-attack.
In addition, our systems are subjected to frequent and rigorous third-party
penetration testing to help ensure our system integrity.
The Group has cyber security insurance in place and the Group endeavors to
secure limitations of liability clauses in its customer contracts.
Risk Description Mitigation
Recruitment & retention As the Group grows it has a dependence on the recruitment and retention of Trend: Level risk
highly skilled employees and an ongoing reliance on a limited number of key
Risk of failing to attract and/or retain key personnel. personnel, including the Directors and senior management, who have significant The Group works closely with external parties to ensure competitive pay and
sector experience. benefits are being offered to both attract and retain people.
The job market is increasingly competitive in the cloud technology sector, We continue to invest in people development and training initiatives to
particularly following the pandemic and subsequent acceleration of cloud provide opportunities for career fulfillment and progression. Wherever
adoptions and digital transformation trends. appropriate we seek to develop and promote from within the existing staff
pool.
The business requires specialist technical skills that can be scarce.
The Group has invested heavily in this area in FY22 and is a continuing area
If members of the Group's key senior team depart, the Group may not be able to of focus for FY23.
find effective replacements in a timely manner, or at all, and its business
may be disrupted. Executive and staff remuneration plans, incorporating long-term incentives,
have been implemented to mitigate this risk.
Dependence on Channel Partners Part of the Group's strategy is to increasingly sell its software through Trend: Level risk
channel partners. There are no guarantees that sufficient channel partners
Failure to develop this additional route to market effectively. will be found to sell the Group's software at the rates planned. Renewed efforts in relation to the evolution of this strategic theme will take
place in FY23 as investment in resource is unlocked by growth. The Board will
The Directors are confident that engagements to date by existing and closely monitor progress.
prospective channel partners provide strong evidence of the opportunity
available. However, unlocking this potential has proven to be difficult in
recent years and failing to have productive channel partners in the future
could affect the Group's future success.
Risk Description Mitigation
Financial risk management Credit risk Trend: Level risk
The principal financial instruments used by the Group, from which financial Credit risk is the risk of financial loss to the Group if a partner or The Group is principally exposed to credit risk from credit sales and/or bank
risk arises, are trade receivables, cash at bank, trade and other payables. customer fails to meet its contractual obligations. default. It is Group policy to assess the credit risk of new customers and
partners before entering new contracts and it has a frequent and proactive
collections process.
Under the terms of our contracts many services are charged for in advance of
delivery, thus mitigating the risk further.
Trend: Level risk
On a monthly basis, the Directors review the Group's trading to date, the
Group's full year financial projections as well as information regarding cash
balances, debtors, trading and prospects. This allows the Directors to form an
opinion as to the working capital of the Group and its likely future
requirements in order to plan accordingly.
Liquidity risk
Trend: Level risk
Liquidity risk arises from the Group's management of working capital. It is
the risk that the Group will encounter difficulty in meeting its financial All geographies addressed by the Group can be readily serviced from the UK.
obligations as they fall due. The Group applies treasury and foreign currency exposure management policies
to minimise both the cost of finance and our exposure to foreign currency
exchange rate fluctuations.
Notwithstanding these hedging
arrangements, the Group does have exposure to translation effects arising from
movements in the relevant currency exchange rates against sterling. Therefore,
there can be no assurance that its future results or resources will not be
significantly affected by fluctuations in exchange rates.
Currency risk
As a consequence of the Group's exposure transacting in foreign currencies
there are risks associated with changes in foreign currency exchange rates.
The Group is based in the United Kingdom and presents its consolidated
financial statements in pounds Sterling.
The Group's current revenues are generated primarily in Sterling, US dollar
and Euros. The Group also has some contractual obligations that are
denominated in US Dollars.
Risk Description Mitigation
Inflation risk Trend: Increasing risk
Inflation risk has been very limited for most of the last decade. However, as The Board acknowledge that inflationary pressure is now mounting with certain
with many technology businesses, the Group is experiencing increased vendors already applying increases as a result. The Board have agreed that a
inflationary pressures within its cost base. The timing of a customer's review of the Group's vendor base and accompanying pricing model be undertaken
invoice for their typically annually in advance software fee can also as a potential countermeasure to ensure margins are preserved.
contribute to a delay in inflationary pressures being passed to customers.
10. Forward-looking Statements
This document contains forward-looking statements that involve risks and
uncertainties. All statements, other than those of historical fact, contained
in this document are forward-looking statements. The Group's actual results
could differ materially from those anticipated in the forward-looking
statements as a result of many factors. Investors are urged to read this
entire document carefully before making an investment decision. The
forward-looking statements in this document are based on the relevant
Directors' beliefs and assumptions and information only as of the date of this
document, and the forward-looking events discussed in this document might not
occur. Therefore, Investors should not place any reliance on any
forward-looking statements. Except as required by law or regulation, the
Directors undertake no obligation to publicly update any forward-looking
statements, whether as a result of new information, future earnings or
otherwise.
It should be noted that the risk factors listed above are not intended to be
exhaustive and do not necessarily comprise all of the risks to which the Group
is or may be exposed or all those associated with an investment in the Group.
In particular, the Group's performance is likely to be affected by changes in
market and/or economic conditions, political, judicial, and administrative
factors and in legal, accounting, regulatory and tax requirements in the areas
in which it operates and holds its major assets. There may be additional risks
and uncertainties that the Directors do not currently consider to be material
or of which they are currently unaware, which may also have an adverse effect
upon the Group.
11. Availability of Report and Accounts
The audited report and accounts for the year ended 30 September 2022 will be
published and posted to shareholders in due course. Following this a soft copy
of the report and accounts will also be available to download from the Group's
website, www.i-nexus.com (http://www.i-nexus.com) .
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR UKURRUOUUAUARecent news on i-nexus Global
See all newsREG - AIM i-nexus Global PLC - Cancellation - i-nexus Global plc
AnnouncementREG - i-nexus Global PLC - Result of General Meeting
AnnouncementREG - i-nexus Global PLC - Proposed Cancellation of Admission to Trading
AnnouncementREG - i-nexus Global PLC - Extension of Redemption Date of CLNs
AnnouncementRCS - i-nexus Global PLC - Contract Win
Announcement