REG - itim Group PLC - Interim Results
21/09/2022 07:01
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RNS Number : 0495A itim Group PLC 21 September 2022
21 September 2022
itim Group plc
("itim" or the "Company and with its subsidiaries the Group")
Interim Results for the six months ended 30 June 2022
itim Group plc (AIM:ITIM) a SaaS based technology company that enables store
based retailers to optimise their businesses to improve financial performance,
is pleased to announce its unaudited interim results for the 6 months ended 30
June 2022.
Financial Highlights
· Group revenues of £6.8m (Half Year 2021 ("HY21"): £6.4m, Full Year
2021("FY21"): £13.5m)
· Booked Recurring Revenue £5.6m (HY21: £4.9m, FY21: £10.3m)
· Recurring revenue percentage of Group revenue 82% (HY21: 77%, FY21: 77%)
· Annual recurring revenue ("ARR") £12.6m (HY21: £10.6m, FY21: £11.1m)
· Annual growth in ARR is 19% (HY21: £10%, FY21: 16%)
· Adjusted EBITDA(1) £0.3m (HY21: £1.2m, FY21: £2.2m)
· Adjusted EBITDA(1) margin 5% (HY21: 19%, FY21: 17%)
· (Loss)/profit before tax (£0.4)m (HY21: (£0.1)m, FY21: £0.2m)
· Cash at £5.3m (HY21: £9.6m, FY21: £6.2m)
· Earnings per share (1.20) pence, (HY21: (0.20) pence, FY21: 0.88 pence)
· Adjusted Earnings per share(2) (1.06) pence (HY21: 2.59 pence, FY21: 3.75
pence)
Full year numbers quoted above are audited and half year numbers quoted above
are unaudited.
1. EBITDA has been adjusted to exclude share-based payment charges,
exceptional items, along with depreciation, amortisation, interest and tax
from the measure of profit.
2. The profit measure has been adjusted to exclude exceptional items and share
option charge
Ali Athar, CEO of itim Group plc, said: "We have continued to invest
significant sums in product development and ensuring that we have the
resources to deliver a first rate service to our growing, high quality
customer base. In these testing economic times, I see the deployment of
itim's products and services as being vital in helping clients weather the
storm. I am optimistic that itim is well placed to respond to the challenges
presented in the year ahead".
This announcement contains inside information for the purposes of Article 7 of
the UK version of Regulation (EU) No 596/2014, which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon
the publication of this announcement via a Regulatory Information Service,
this inside information is now considered to be in the public domain.
Enquiries:
Itim Group plc Ali Athar, CEO 0207 598 7700
Ian Hayes CFO
WH Ireland (NOMAD & Broker) Katy Mitchell 0207 220 1666
Harry Ansell
Darshan Patel
IFC Advisory Graham Herring 020 3934 6630
Florence Chandler
ABOUT ITIM
itim was established in 1993 by its founder, and current Chief Executive
Officer, Ali Athar. itim was initially formed as a consulting business,
helping retailers effect operational improvement. From 1999 the Company began
to expand into the provision of proprietary software solutions and by 2004 the
Company was focused exclusively on digital technology. itim has grown both
organically and through a series of acquisitions of small, legacy retail
software systems and associated applications which itim has redeveloped to
create a fully integrated end to end Omni-channel platform.
CEO Statement
I am pleased to report that the period ended 30 June 2022 was one of steady
growth in sales and recurring revenues. Revenue for the 6 month period was
£6.8m (HY21: £6.4m) an increase of 6%, of which recurring revenues were
£5.6m (HY21: £4.9m) representing 82% of sales and underpinning future sales.
Adjusted EBITDA (EBITDA excluding share-based payment charges and exceptional
items) fell to £0.3m (HY21: £1.2m) mainly due to increases in headcount as
we build capability ahead of new projects and increase staff resilience.
Consequently, EBITDA margin fell in line with this investment to 5% (HY21:
19%). The results also reflect the increase in associated public company costs
following our admission to AIM in June 2021. Cash balances totalled £5.3m at
the period end (FY21: 6.2m) the change reflecting the significant investments
we have made in asset purchases and product development needed to underpin
future growth. Adjusted loss per share was 1.2p (HY21: loss 2.59p).
Sales
As we reported in previous statements, itim has steadily widened its product
offering to its client base with the aim of creating deeper relationships. As
the number and depth of our customer relationships grow, so does our knowledge
and insight into the retail industry. We look to use this knowledge to further
enhance our products and client service.
During the interim period under review our client base continued to grow and
our proportion of revenues which are recurring will continue to increase.
Costs
Costs have increased significantly in the period to support growth. As noted
in the highlights above, we have invested heavily in new headcount in the past
12 months, with 27 new staff appointed in the 12 month period from 1(st) July
2021 to 30(th) June 2022 of which 13 were added in the period under review.
Additionally, pay rises were awarded to existing staff in line with inflation.
The objective of this investment is to build the required capability ahead of
potential new subscription sales and to increase staff capacity to cover busy
periods. We have also invested circa £100k in new security software products
for our hosting centre.
Public company costs also increased compared to the same period in 2021 due to
the costs of being an AIM quoted company - these are mainly additional board
costs and professional advisory fees.
Trading background
The economic predictions for the next 12 months (and beyond) make for quite
negative reading and we can expect there to be an impact on the retail sector
and our customers. Notwithstanding this, I am confident that itim's technology
is designed to help retailers weather this storm in a range of critical areas
and accordingly, we are well placed to weather the storm alongside them.
Key areas for our software include:
Price and Promotions Optimisation. In the current environment retailers may be
tempted to run promotions to drive up sales and sell through inventory, on the
other hand retailers may be forced to increase prices to recover costs. By
being more strategic retailers could maximise cash margin without damaging
competitive positioning. itim successfully works with over 30 retailers
globally on price and promotions optimisation with our industry leading
software.
Digital Supplier Collaboration. Retailers can deliver cost savings by closer
collaboration across their trading relationships. There are many areas of
opportunity such as consignment stock models, drop shipment, reducing payment
costs, improved supplier debits, data collection and reduced administration,
itim has a digital hub that can deliver this.
Stock Optimisation. For the last 10 years, we believe low interest rates, have
allowed retailers to be more casual about stock holdings. We believe this is
because excess stock may appear to be a good hedge against inflation, but it
also ties up cash. We now know from our customers that the P&L impact of
excess stock is about 11% of the cost of the stock (in terms of stock handling
and distribution costs across the retail network). itim has expertise and
experience in helping reduce stocks, including helping move stock holdings
back up the supply chain.
Home Delivery Charges. itim can reduce cost of delivery, as despatch from
store is now often cheaper than despatch from central warehouses. Our research
suggests most national retailers' customers live within 15 minutes from their
stores. We have demonstrated improvements in profit for our customers from
this simple shift. We believe itim's 'shop local' business model combined with
a delivery route manager for local deliveries is proving to be a success with
our clients.
The Directors believe it is our job is to ensure these messages are clearly
understood by our existing and potential clients and that we have the
resources to deliver services to support them as needed. This is why we have
invested heavily in headcount and product development since our IPO and have
been prepared to do this despite a short term impact on profits.
Against this background, notwithstanding some near term contract delays, I am
optimistic that itim is well placed to respond to the challenges presented in
the year ahead.
People
As always I am indebted to all of our staff for the enormous effort and skill
that they deploy every day for itim and our clients.
Outlook
I remain confident that we will continue to see a continued uplift in
revenues, particularly in meeting our objectives related to growth of ARR.
However, we remain mindful of the economic challenges facing all companies in
the next twelve months and look to the future with cautious optimism.
Ali Athar
Chief Executive Officer
20(th) September 2022
Consolidated Statement of Comprehensive Income
for the half-year ended 30 June 2022
Six month period ended Six month period ended Year ended
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
Notes £000 £000 £000
Continuing operations
Revenue 6,784 6,366 13,474
Cost of sales (4,588) (3,704) (7,953)
Gross profit 2,196 2,662 5,521
Administrative expenses (1,860) (1,433) (3,297)
EBITDA 336 1,229 2,224
Amortisation of intangible assets (443) (378) (746)
Share option charge (45) (91) (151)
Depreciation (20) (17) (38)
Depreciation of leased assets (184) (122) (297)
Loss on disposal of right-of-use assets - - 10
(Loss)/Profit from operations (356) 621 1,002
Finance costs - (48) (67)
Other interest - right of use assets (21) (51) (42)
Exceptional items - (630) (667)
(Loss)/Profit before taxation (377) (108) 226
Taxation 2 56 26
(Loss)/Profit for the period/year (375) (52) 252
Other comprehensive income
Exchange differences on retranslation of foreign operations 51 (74) (119)
Total comprehensive income for the period/year net of tax (324) (126) 133
Earnings per share
Basic 2 (1.20p) (0.20p) 0.88p
Diluted 2 (1.20p) (0.20p) 0.78p
Consolidated Statement of Financial Position
as at 30 June 2022
As at As at As at
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£000 £000 £000
Non-current assets
Intangible assets 9,233 8,391 8,733
Plant and equipment 508 54 280
Right-of-use assets 581 795 649
Deferred tax 4 205 65
10,326 9,445 9,727
Current assets
Trade and other receivables 3,512 3,361 3,702
Cash and cash equivalents 5,295 9,567 6,172
8,807 12,928 9,874
Total assets 19,133 22,373 19,601
Current liabilities
Trade and other payables (4,866) (4,613) (5,218)
Right-of-use liability (288) (297) (290)
(5,154) (4,910) (5,508)
Non-current liabilities
Trade and other payables due in more than one year (355) (3,727) (176)
Right-of-use liability (359) (578) (434)
Deferred tax (563) (496) (502)
(1,277) (4,801) (1,112)
Total liabilities (6,431) (9,711) (6,620)
Net Assets 12,702 12,662 12,981
Capital and reserves
Called up share capital 1,561 1,561 1,561
Share premium account 7,398 7,398 7,398
Share options reserve 500 395 455
Capital redemption reserve 1,103 1,103 1,103
Foreign exchange reserve 77 71 26
Retained profit/(loss) 2,063 2,134 2,438
Shareholders' funds 12,702 12,662 12,981
Consolidated Statement of Cash Flow
for the half-year ended 30 June 2022
Six month period ended Six month period ended Year ended
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
Notes £000 £000 £000
Cash flows from operating activities
Profit after taxation (375) (52) 252
Adjustments for:
Taxation (3) (56) (26)
Finance costs - 48 67
Share option charge 45 91 151
Other interest on leases 21 51 42
Exchange gain/ (loss) - (73) -
Amortisation and depreciation 647 517 1,081
Exceptional - IPO costs - 630 667
(Profit)/Loss on disposal of right of use asset - - (10)
Cash flows from operations before working capital changes 335 1,156 2,224
Movement in trade and other receivables 337 275 (354)
Movement in trade and other payables (383) 43 335
Cash generated from operations 289 1,474 2,205
Finance costs - (48) (4)
Corporation tax (42) - 543
Net cash flow from operating activities 247 1,426 2,744
Cash flow from investing activities
Capital expenditure on intangible assets (907) (619) (1,361)
Purchase of plant and equipment (28) (7) (49)
Proceeds from shares issued - IPO - 8,000 8,000
Proceeds from share option conversion - 181 181
IPO expenses - (1,129) (1,165)
Net cash flow from investing activities (935) 6,426 5,606
Cash flow from financing activities
Loan repayments - (284) (3,659)
Interest repayments - - (98)
Payment of lease liabilities (194) (128) (335)
Loan issued - - (210)
Net cash flow from financing activities (194) (412) (4,302)
Net (decrease)/increase in cash and cash equivalents (882) 7,440 4,048
Cash and cash equivalents at beginning of year 6,172 2,127 2,127
Exchange gains/(losses) on cash and cash equivalents 5 - (3)
Cash and cash equivalents at end of year 5,295 9,567 6,172
Consolidated Statement of Changes in Equity
as at 30 June 2022
Share Share Share option reserve Capital Redemption Reserve Foreign exchange reserve Retained Total
capital Premium Earnings Equity
£000 £000 £000 £000 £000 £000 £000
At 1 January 2022 1,561 7,398 455 1,103 26 2,438 12,981
Comprehensive income for the year - - - - (375) (375)
Foreign exchange movement - - - - 51
51
Total comprehensive income - - - 51 (375) (324)
Share option charge - - 45 - - - 45
At 30 June 2022 (unaudited) 1,561 7,398 500 1,103 77 2,063 12,702
At 1 January 2021 2,379 10,469 304 - 145 (8,283) 5,014
Comprehensive income for the year - - - - - (52) (52)
Foreign exchange movement - - - - - (74)
(74)
Total comprehensive income - - - - (74) (52) (126)
Share option charge - - 91 - - - 91
Share buyback of deferred shares (1,103) - - 1,103 - - -
Cancellation of share premium (10,469) 10,469 -
Shares issued in the period - 260 7,740 - - - - 8,000
IPO
Share option conversion 25 156 - - - - 181
IPO expenses (498) (498)
At 30 June 2021 (unaudited) 1,561 7,398 395 1,103 71 2,134 12,662
At 1 January 2021 2,379 10,469 304 - 145 (8,283) 5,014
Comprehensive income for the year - - - - - 252 252
Foreign exchange movement - - - - (119) - (119)
Total comprehensive income - - - (119) 252 133
Share option charge - - 151 - - - 151
Share buyback of deferred shares (1,103) - - 1,103 - - -
Cancellation of share premium - (10,469) - - - 10,469 -
Shares issued in the period - 260 7,740 - - - - 8,000
IPO
Share option conversion 25 156 - - - - 181
IPO expenses - (498) - - - - (498)
At 31 December 2021 (audited) 1,561 7,398 455 1,103 26 2,438 12,981
Notes to the Financial Information
1. General information
itim Group plc is a public limited Company ("Company") incorporated in the
United Kingdom under the Companies Act 2006 (registration number 03486926).
The Company is domiciled in the United Kingdom and its registered address is
2(nd) Floor, Atlas House, 173 Victoria Street, London SW1E 5NH. The Company's
ordinary shares are admitted to trading on AIM, a market of the London Stock
Exchange ("AIM").
The Group's principal activities have been the provision of technology
solutions to help clients drive improvements in efficiency and
effectiveness.
The Group's interim report and accounts for the six months ended 30 June 2022
have been prepared using the recognition and measurement principles of
International Financial Reporting Standards and Interpretations as endorsed by
the European Union (collectively "Adopted IFRS").
These interim financial statements for the six months ended 30 June 2022 have
been prepared in accordance with the AIM Rules for Companies and should be
read in conjunction with the financial statements for the year ended 31
December 2021, which have been prepared in accordance with IFRS as adopted by
the European Union. The interim report and accounts do not include all the
information and disclosures required in the annual financial statements.
The interim report and accounts have been prepared on the basis of the
accounting policies, presentation and methods of computation as set out in the
Group's December 2021 Annual Report and Accounts, 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 2022 annual
financial statements.
The interim report and accounts do not comprise statutory accounts within the
meaning of section 434 of the Companies Act 2006. These interim financial
statements were approved by the Board of Directors on 20th September 2022. The
results for the six months to 30 June 2022 and the comparative results for the
six months to 30 June 2021 are unaudited. The figures for the period ended
31 December 2021 are extracted from the audited statutory accounts of the
Group for that period.
The Directors believe that a combination of the Group's current cash,
projected revenues from existing and future contracts will enable the Group to
meet its obligations and to implement its business plan in full. Inherently,
there can be no certainty in these matters, but the Directors believe that the
Group's internal trading forecasts are realistic and that the going concern
basis of preparation continues to be appropriate.
2. Earnings per share
Basic and diluted (loss)/earning per share is calculated by dividing the
(loss)/profit attributable to owners of the parent by the weighted average
number of ordinary shares in issue during the period. For the avoidance of
doubt the deferred shares have been excluded as they have no rights to profits
or capital. The Company's share options have a dilutive effect over the two
year period.
6 months ended 30 June 2022 6 months ended 30 June 2021 Year ended
Unaudited Unaudited 31 December 2021
Audited
£000 £000 £000
Profit after tax for the year (375) (52) 252
Exceptional items - 630 667
Share option charge 45 91 151
Adjusted Profit after tax for the year (330) 669 1,070
Weighted average number of shares
Basic - 000 31,211 25,817 28,536
Potentially dilutive share options - 000 3,657 3,679 3,668
Diluted average number of shares - 000 34,868 29,496 32,204
Earnings per share:
Basic - pence on continuing operations (1.20) (0.20) 0.88
Diluted - pence on continuing operations (1.20) (0.20) 0.78
Adjusted earnings - Basic - pence on continuing operations (1.06) 2.59 3.75
Adjusted earnings - Diluted - pence on continuing operations (1.06) 2.27 3.32
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