REG - Made Tech Group PLC - Made Tech Group Interim Results
28/02/2022 07:00
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RNS Number : 9434C Made Tech Group PLC 28 February 2022
28 February 2022
MADE TECH GROUP PLC
("Made Tech" or "the Group")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 NOVEMBER 2021
Made Tech Group plc, a leading provider of digital, data and technology
services to the UK public sector, is pleased to announce its interim results
for the six month period ended 30 November 2021.
H1 FY22 H1 FY21 Change
%
Revenue £11.7m £5.1m +131%
Gross Profit £4.6m £2.3m +98%
Gross Profit Margin 39.1% 45.6% -6.5%
Adjusted EBITDA £1.2m £0.2m +664%
Adjusted EBITDA Margin 10.12% 3.06% +230%
Adjusted Profit before Tax £1m £12k +8582%
Sales Bookings £26.5m £10.7m +148%
Backlog £31.3m £11.6m +170%
Cash £11.1m £1.5m +669%
KEY HIGHLIGHTS
Delivering a strong financial performance
● Revenue up 131% to £11.7m (H1 FY21 £5.1m). Growth is all organic, and
revenue growth has accelerated with a historical CAGR of 89% (in the 3 years
to FY21), increasing to 131% in H1 FY22
● Adjusted EBITDA increased to £1.2m (H1 FY21: £0.2m) and Adjusted
Profit before Tax of £1.0m (H1 FY21: profit of £12k)
Expanding our headcount rapidly
● Headcount has increased by 89% to 216 (H1 FY21: 114), with employee
retention at 80.2% (H1 FY21: 83.75%)
● Significant progress in permanent recruitment, with 155 individuals
recruited and due to start in H2 FY22. Total headcount is forecast to increase
to 429 people by end of April, with 352 of those being permanent employees
● Geographic coverage expanded with our first employees hired in
Scotland, Newcastle and the Midlands
● Sourced our most significant Academy intake to date, with 21 members
having commenced training in January 2022. Our next Academy begins in May
2022; with over 600 applications received, and we expect to recruit and train
at least 50 of those individuals
Growing our market share within chosen industries
● We delivered strong growth from our long-term client relationships,
primarily through new contracts, extensions, renewals, and the cross-sell of
new service offerings
● Client base expanded with several new wins within Central
Government, Local Government, Health and Devolved Administrations
● Within the period, we were awarded our largest contract to date,
worth approximately £7m
● As announced today, Made Tech has been awarded a two year contract
with NHS Digital with a contract value of approximately £37.5m, with Made
Tech expected to receive approximately half of the total contract value
Investing in our core infrastructure to deliver long-term results
● Successful admission to AIM on 30 September 2021
● Appointment of three experienced non-executive directors to the
Group board
● Double-digit percentage increases recorded in billable utilisation and
average billable day rates, following the rollout of new systems and
operational processes
● Commenced the development of intellectual property (IP) to enhance our
offering within the industries we serve
Rory MacDonald, CEO, commented:
"We are delighted to report a strong H1 performance in our first set of
interim results. As stated at the time of our IPO, our strategy is to achieve
sustainable growth in revenue, profit, and cash generation by delivering
high-quality services to our public sector clients. We have a clear plan to
capture the market opportunity ahead of us, and we're making significant
operational progress.
Despite some short-term challenges relating to IR35 and staffing of public
sector contracts and increased overhead costs, which we expect to impact our
trading performance in Q4 FY22 and into the first half of FY23, the Group's
significant new contract bookings and robust pipeline underpin the Board's
confidence in the medium term outlook. We look forward to continuing to
deliver strong revenue growth in the second half of FY22 and beyond, and
remain incredibly positive about the Group's long-term prospects."
ENDS
Enquiries:
Made Tech Group plc c/o SEC Newgate
Rory MacDonald, CEO
Deborah Lovegrove, CFO
Singer Capital Markets (Nominated Adviser & Joint Broker) Tel: +44 20 7496 3000
Mark Taylor / Jen Boorer / Harry Gooden / Asha Chotai
Berenberg (Joint Broker) Tel: +44 20 3207 7800
Mark Whitmore / Ciaran Walsh / Alix Mecklenberg-Solodkoff
SEC Newgate (Financial PR) Tel: +44 20 3757 6880
Bob Huxford / Robin Tozer / Ian Silvera Email: madetech@secnewgate.co.uk
About Made Tech
Made Tech is a high-growth provider of digital, data and technology services
to the UK public sector. Founded in 2008 and with a headcount of over 300
people across multiple UK locations, Made Tech provides services that enable
central government, healthcare and local government organisations to digitally
transform.
CHIEF EXECUTIVE OFFICER'S REPORT
We're delighted to report a strong set of interim results and would like to
thank our ambitious clients and talented colleagues who have worked
tirelessly, enabling us to deliver these results.
This period included a significant corporate milestone for the Group,
completing the IPO on the AIM market of the London Stock Exchange. We would
like to thank our new shareholders for their support. This investment is
providing the Group with the capital base to deliver on our ambitious growth
plans and we look forward to using the proceeds to build a significant
business in the years ahead.
Revenue for the period grew by 131% to £11.7m (H1 FY21: £5.1m). Adjusted
EBITDA increased by 664% to £1.2m (H1 FY21: 0.2m). We finished the period
with a cash balance which increased by 669% to £11.1m (H1 FY21: £1.5m).
The Group's client base and depth of client relationships continues to
strengthen. In the period to 30 November 2021, the Group acquired three
new clients (Ofqual, City of Lincoln and Ministry of Defence), and won new
mandates with existing clients including DVLA, Ministry of Justice, HMRC,
Department for International Trade, Department for Education and Department
for Levelling Up, Housing and Communities. The Group has 30 active clients,
with 9 of those being strategic client accounts, contributing between £1m -
£10m a year on an annualised run-rate basis. Across our industry verticals,
71% of revenue is derived from Central Government (H1 FY21: 55%), 18% from
Local Government (H1 FY21: 27%) and 11% from Healthcare (H1 FY21: 17%).
Sales bookings for the period totalled £26.5m (H1 FY21: £10.7m) with the
largest single contract coming from DVLA. The overall contracted backlog
increased by 170% to £31.3m (H1 FY21: £11.6m).
People and talent acquisition have been the major focus for the Group since
the IPO. We've made significant progress in a relatively short period of time,
recruiting 137 people between 1 October and 14 February 2022. This averages
out at approximately 7 experienced hires per week, who are being sourced
through our internal teams and using external partner support.
Wage inflation and the well-publicised challenges in the hiring market have
made recruitment more difficult than anticipated. We've had to significantly
increase our headcount within our internal Talent team and lean more heavily
on external recruiters than we had originally planned. This is leading to an
increase in both recruitment overheads and average staff costs, which we
expect to have an impact on our full year performance. The increase in our
billable staff costs has already been offset by delivering increased billable
utilisation across our staff and an increase in our average billable day rate,
so we're expecting our gross margin to remain broadly in-line with
expectations. However, we expect it to be more challenging to offset overhead
costs, though we will of course continue to look at this closely.
Our use of external contractors is becoming increasingly difficult as public
sector bodies have imposed tighter restrictions on the use of contractors due
to IR35. This has had a minor impact on our revenue in H1 and we expect this
challenge to become more acute in the second half and into next year. We see
this as a short-term challenge that significantly reduces as our permanent
headcount increases as we adapt to IR35 changes to meet our client's needs. We
believe this approach will strengthen relationships with our clients in the
public sector and enhance our ability to secure additional new contracts in
the future.
Our entry-level Academy programme has re-commenced, with several hundred
applications for places received, and we have accelerated the investment into
this programme as part of our long-term entry-level talent strategy. We are
on-track to bring 120 people through our Academy programme over the next 12
months.
We are targeting a permanent headcount of 450 billable staff by June 2022 and
710 billable staff by May 2023. Given the significant progress we've made on
both experienced and entry-level recruitment, we're confident in our ability
to deliver these numbers.
Outlook and Current Trading
Whilst pleased with the Group's financial performance in H1, the board are
mindful of the challenges relating to IR35 and staffing of public sector
contracts and increased overhead costs, which we now expect to impact our
trading performance in Q4 FY22 and the early part of FY23. The Group has
established itself as a strong and trusted partner to public sector
organisations, which has led to a significant number of new contracts, a
strong order backlog and a robust sales pipeline for the months
ahead. Despite some short-term challenges to meet our client's requirements
the directors are confident that significant growth will be delivered over the
coming years.
Rory MacDonald
Chief Executive Officer
CHIEF FINANCIAL OFFICER'S REPORT
The six month period ended 30 November 2021 saw further strong performance
with significant year- on-year revenue and EBITDA growth. Made Tech has
reported revenues of £11.7m, up 131% from £5.1m in H1 2021. All of this
revenue growth is organic and has been driven by the Group's ability to win
and deliver larger scale programmes of work alongside continuing to enhance
our service offering to meet our client's needs.
H1 2022 H1 2021 Change
%
Revenue £11.7m £5.1m +131%
Adjusted Profit/(loss) after tax £1,034k £(17k) +6186%
Adjusted EBITDA £1.2m £0.2m +664%
Adjusted EBITDA margin 10.12% 3.06% +230%
Profit/(loss) for the period £121k (£17k) +813%
Basic Earnings per share £0.00 £0.00
Adjusted diluted earnings per share £0.01 £0.00
Diluted earnings per share £0.00 £0.00
Cash £11.1m £1.5m +669%
Gross Margins were 39.1% against 45.6% in the prior year. The reduction has
been driven by significant growth requiring support from contractors and third
parties and the impact of salary inflation. Despite the reduction, gross
margin is in line with expectations and we expect this to improve in the
medium term. Our ambition in coming years is to increase our gross margin by
reducing our reliance on contractors and third-party suppliers. We have
invested heavily in an in-house talent acquisition team and our Academy to
support headcount growth to meet demand and we expect to see recruitment being
managed internally in the future.
In response to the significant level of demand, our headcount has increased to
a total of 216 permanent employees at the end of November 2021 (H1 FY21:
114). Total billable heads were 168 (H1 FY21: 91). The average revenue per
billable head (including contractors) increased by 11% YOY demonstrating the
improvements we have made in utilisation levels and adding new capabilities
with more favourable margins.
Adjusted EBITDA was £1.2m up 664% from H1 FY21 (£0.2m) and the adjusted
EBITDA margin was 10.1% up from 3.1% in the prior year. The increase in
adjusted EBITDA and margin is very positive and in line with expectations.
Administrative expenses YOY increased by 94% to £4.4m (H1 FY21; £2.3m) as
anticipated by the Group in order to meet the new demand for services. The
growth in administrative expenses is in line with business and headcount
growth and reflects the introduction and investment in areas such as
recruitment, HR, sales and marketing, training, increased compliance costs as
a result of listing on AIM, introduction of the share-based payment charge and
facilities costs which were suppressed during the lockdown period.
The share-based payment expense incurred in the period was £707k. This is a
new non cash cost to the business as a result of the share options issued to
employees as a result of the Company's admission to AIM. As at 30 November
2021, a total of 6,847,812 share options have been distributed to staff and
provide cultural alignment with the Group's shareholders.
We are pleased to report a return to profitability, with the H1 FY22 Profit
after tax of £121k (H1 FY21 Loss of £17k). The Directors believe that an
adjusted Profit after tax and adjusted diluted and basic earnings per share
measures are more representative of underlying performance.
Cash Flow and Cash Conversion
Cash at the end of the period was £11.1 million (H1 FY21: £1.5 million).
This includes the proceeds of the fundraise completed in conjunction with the
IPO (£13.5 million net of all related costs). The CBILS loan was fully repaid
in the period (£1.25 million), and the Group has no external debt.
Cash conversion, calculated as a percentage of cash flow from operations
divided by adjusted profit before tax is negative 145% for H1 FY22 (H1 FY21:
161%). This is a timing issue, with a high debtor balance (in line with
month-on-month revenue growth) at the end of November 2021. Debtors are
tightly controlled, with debtor days of 58 (H1 FY21: 47). The cash flow from
operations is expected to return to normal levels in 2023.
Consolidated statement of comprehensive income
6 months to 30 November 2021 6 months to 30 November 2020 12 months to 31 May 2021
£'000 £'000 £'000
Unaudited Unaudited Audited
Revenue 11,720 5,067 13,331
Cost of Sales (7,137) (2,755) (8,318)
Gross Profit 4,583 2,312 5,013
Administrative expense (4,442) (2,288) (5,789)
Operating Profit 141 24 (776)
Finance Expense (20) (12) (30)
Profit/(loss) before tax 121 12 (806)
Taxation 0 (29) 25
Profit after tax 121 (17) (781)
Consolidated statement of financial position
6 months to 30 November 2021 6 months to 30 November 2020 12 months to 31 May 2021
£'000 £'000 £'000
Unaudited Unaudited Audited
Assets
Non-current assets
Intangible assets 453 0 0
Property, plant and equipment 675 720 755
Total non-current assets 1,128 720 755
Current assets
Trade and other receivables 4,616 1,935 2,544
Cash and cash equivalents 11,147 1,449 922
15,763 3,384 3,466
Total assets 16,891 4,104 4,221
Current Liabilities .
Trade and other payables 3,102 2,452 3,283
Loans and borrowings 0 0 328
Total current liabilities 3,102 2,452 3,611
Non-current Liabilities
Loans and borrowings 243 1,585 1,397
Total non-current liabilities 243 1,585 1,397
Total Liabilities 3,345 4,037 5,008
Net assets/(liabilities) 13,546 67 (787)
EQUITY
Share capital 1 0 1
Share premium 13,506 0 0
Share-based payment reserve 707 0 0
Retained earnings/(deficit) (668) 67 (788)
Total equity 13,546 67 (787)
Consolidated statement of changes in equity
Share Capital Share Premium Share-based payment reserve Retained Earnings Total
£'000 £'000 £'000
£'000 £'000
Equity as at 1 June 2018 0 0 0 842 842
Profit for the financial year 0 0 0 490 490
Transactions with equity owners: Dividends 0 0 0 (253) (253)
Equity as at 31 May 2019 0 0 0 1,079 1,079
Profit for the financial year 0 0 0 336 336
Transactions with equity owners: Dividends 0 0 0 (244) (244)
Equity as at 31 May 2020 0 0 0 1,171 1,171
Profit for the financial year 0 0 0 (781) (781)
Transactions with equity owners: Issue of shares 1 0 0 0 1
Transactions with equity owners: Dividends 0 0 0 (1,178) (1,178)
Total Transactions with equity owners 0 0 0 (1,959) (1,958)
Deficit as at 31 May 2021 1 0 0 (788) (787)
Profit for the period 0 0 0 121 121
Shares issues 0 13,506 0 0 13,506
Share-based payments charge 0 0 707 0 707
Balance at 30 November 2021 1 13,506 707 (668) 13,546
Consolidated statement of cash flow
6 months to 30 November 2021 6 months to 30 November 2020 12 months to 31 May 2021
£'000 £'000 £'000
Unaudited Unaudited Audited
Cash flows from operating activities:
Profit/(loss) before tax 121 (17) (781)
Tax expense/(income) 0 (25) (25)
Share-based payment expense 707 0 0
Finance expense 20 12 30
Loss on disposal of property, plant and equipment 0 0 10
Depreciation of property, plant and equipment 132 131 265
Decrease/(increase) in trade and other receivables (2,072) (423) (1,032)
Decrease/(increase) in trade and other payables (338) 807 1,853
Cash generated by operations (1,430) 484 320
Income taxes (paid)/received 0 0 0
Net cash flows from operating activities (1,430) 484 320
Investing activities
Purchase of property, plant and equipment (52) (93) (272)
Addition of intangible assets (453) 0 0
Net cash used by investing activities (505) (93) (272)
Financing activities
Share issue 13,506 1 1
Interest paid 0 0 (6)
Dividend paid 0 (1,086) (1,178)
(Repayment) / drawdown of loans and borrowings (1,250) 1,250 1,250
Repayment of directors loan 0 (5) (5)
Repayment of lease liability (86) (74) (150)
Interest paid on lease liability (9) (12) (24)
Net cash used by financing 12,161 73 (112)
Net increase/(decrease) in cash and cash equivalents 10,226 464 (64)
Cash and cash equivalents at beginning of year 921 986 986
Cash and cash equivalents at end of year 11,147 1,450 922
1. General information
Made Tech Group Plc is a company incorporated on 13 September 2019 and
domiciled in England and Wales, registration number 12204805. The Company's
registered office is 4 O'Meara Street, Southwark, London, SE1 1TE. The
Company's shares are traded on AIM, a market operated by the London Stock
Exchange.
The interim financial information is unaudited.
2. Basis of preparation
The financial information has been prepared in compliance with International
Financial Reporting Standards (IFRSs) and IFRS Interpretations Committee
(IFRIC) interpretations as adopted by the UK.
The presentation currency of the financial information is Pounds Sterling,
rounded to the nearest thousand (£'000) unless otherwise indicated. Made
Tech Limited and Made Tech Group Plc's functional currency is also Pounds
Sterling as this is the currency of the primary economic environment in which
the entity operates.
3. Basis of consolidation
The consolidated financial information comprises Made Tech Group Plc and its
subsidiary Made Tech Limited. Subsidiaries are consolidated from the date of
acquisition being the date on which the Group obtains control.
4. Accounting policies
The accounting policies used in the preparation of the interim consolidated
financial information for the six months ended 30 November 2021 are in
accordance with the recognition and measurement criteria of IFRS and are
consistent with those which were adopted in the annual financial statements
for the year ended 31 May 2021.
5. Borrowings
On 8 August 2020 Made Tech Limited entered into a COVID Business Interruption
Loan facility agreement with HSBC UK Bank Plc. The loan facility of
£1,250,000 plus all accrued interest was fully repaid on 12 October 2021.
6. Earnings per Share
Basic earnings per share is calculated by dividing the profit attributable to
ordinary shareholders of the parent company by the weighted average number of
ordinary shares in issue during the period.
To arrive at the adjusted diluted share number, the Directors have calculated
an adjusted share number by taking the weighted average basic shares and
included the maximum shares to be ussie in respect of contingent consideration
to be paid based on performance measures met in the period, together with the
maximum share options outstanding.
H1 FY22 H1 FY21 Change
(£'000) (£'000) %
Weighted average basic shares for the purposes of basic earnings per share 139,881 135,783 +3.02%
Effect of dilutive potential ordinary shares from share options in issue 6,848 0
Weighted average number of diluted shares for the purpose of diluted earnings 146,729 135,783 +8.06%
per share
Adjusted basic earnings per share £0.00 £0.00
Adjusted diluted earnings per share £0.01 £0.00
7. Reconciliation to adjusted EBITDA
H1 FY22 H1 FY21 Change
£'000 £'000 %
Operating Profit 141 24 +3291%
Add back Depreciation 132 131
Add back Share-based payment charge 707 0
Add back IPO costs 180 0
Add back Exceptional items 26 0
Adjusted EBITDA 1,186 155 +654%
8. Reconciliation to adjusted profit/(loss) before tax
H1 FY22 H1 FY21 Change
£'000 £'000 %
Profit before tax 121 12 +918%
Add back share-based payment charge 707 0 -100%
Add back IPO costs 180 0 -100%
Add back Exceptional items 26 0 -100%
Adjusted profit/(loss) before tax 1,034 12 +8582%
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