REG - PCI-PAL PLC - Interim Results, Analyst Briefing & Investor Pres
14/03/2023 07:00
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RNS Number : 8180S PCI-PAL PLC 14 March 2023
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the company's obligations under Article 17 of
MAR.
14 March 2023
PCI-PAL PLC
("PCI Pal" or "the Group" or "the Company")
Interim Results, Analyst Briefing & Details of Investor Presentation
PCI-PAL PLC (AIM: PCIP), the global cloud provider of secure payment solutions
for business communications, is pleased to announce its unaudited interim
results for the six months to 31 December 2022.
Financial highlights for the period
H1 FY23 ending 31 December 2022 H1 FY22 ending 31 December 2021
change
Revenue £7.26m £5.47m +33%
Gross Margin % 87% 81%
% of revenues from recurring contracts 85% 90%
Adjusted EBITDA(1) loss (£0.57m) (£0.58m) +2%
Loss from operating activities (£1.88m) (£1.10m) -71%
New ACV(2) contract sales in period £1.47m £1.76m -16%
TACV(3) £14.74m £11.34m +30%
ARR(4) £11.92m £8.96m +33%
NRR(5) 106% 120%
Customer retention(6) 95% 97%
Cash £1.88m £5.53m
Operating highlights in the period
· On-going accumulation of TACV driving continued strong increase
in revenue
· Successfully balancing drive to near-term profitability whilst
investing in continued strong growth
· Further increase in gross margin to 87% driven by customer demand
for true cloud services
· Partner eco-system performing well with 87% of contracts in
period signed through resellers
· 77 new logo customers signed in the period, a record. 39 upsell
contracts were also signed.
· Launched Open Banking product, the first in series of new
features adding to the existing value proposition of the Group's cloud
platform
· Strong customer retention of 95% including positive net retention
of 106%
Current trading
· The Board is confident of making further strong progress in the
second half as PCI Pal continues to execute against its near-term plans.
Trading in the first two months of H2 is in line with management's
expectations and revenue momentum continues with strong visibility of the full
year number.
· Given the trading momentum being demonstrated by the Group, the
Board reiterates the outlook set out in its trading update on 2 February 2023
and that it remains firmly on track to deliver monthly cashflow breakeven in
this financial year, in line with the Board's expectations.
( )
(1) Adjusted EBITDA is the loss on Operating Activities before depreciation
and amortisation, exchange movements charged to the profit and loss,
exceptional items and expenses relating to share option charges
(2) ACV is the annual recurring revenue generated from a contract.
(3) TACV is the total annual recurring revenue of all signed contracts,
whether invoiced and included in deferred revenue or still to be deployed
and/or not yet invoiced.
(4) ARR is the Annual Recurring Revenue of all the deployed contracts.
(5) NRR is the net retention rate of the contracts that are live on the AWS
platform rate and is calculated using the opening total value of deployed
contracts 12 months ago less the ACV of lost deployed contracts in the last 12
months plus the ACV of upsold contracts signed in the last 12 months all
divided by the opening total value of deployed contracts at the start of the
12 month period.
(6) Customer retention is calculated using the formula 1 minus (the ACV of lost deployed contracts on the AWS platform in the last 12 months divided by the opening total value of deployed contracts 12 months ago).
Commenting on the results for the period, James Barham, Chief Executive
Officer said:
"We have delivered another strong period of growth at PCI Pal. It's been a
period that has emphasised the strength of our business model given the
backdrop of increased global economic challenges. As the market-leaders in
cloud solutions in our space, with our patented cloud capabilities, we
continue to see the benefits of the focus on our partner eco-system and our
capability to deliver our services in a light-touch way, anywhere in the
world.
"As previously announced, we enter H2 confident of delivering monthly cashflow
breakeven in the current financial year. This financial progress is balanced
with the investment required to continue to realise the opportunities in front
of us; further growing our addressable market through the expansion of our
product suite; which in turn will not only drive sales, but also support us to
maintain high levels of customer retention."
Analyst Briefing: 9.30am today, Tuesday 14 March 2023
An online briefing for Analysts will be hosted by James Barham, Chief
Executive, and William Good, Chief Financial Officer, at 9.30am today Tuesday
14 March 2023 to review the results and prospects. Analysts wishing to attend
should contact Walbrook PR on pcipal@walbrookpr.com
(mailto:pcipal@walbrookpr.com) or 020 7933 8780.
Investor Presentation: 3.00pm on Thursday 16 March 2023 (UK time)
The Directors will hold an investor presentation to cover the results and
prospects at 3.00pm on Thursday 16 March 2023 (UK time).
The presentation will be hosted through the digital platform Investor Meet
Company. Investors can sign up to Investor Meet Company and add to meet
PCI-PAL PLC via the following link
https://www.investormeetcompany.com/pci-pal-plc/register-investor
(https://urldefense.proofpoint.com/v2/url?u=https-3A__www.investormeetcompany.com_pci-2Dpal-2Dplc_register-2Dinvestor&d=DwMGaQ&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=05PHl3GHdShYuaCii2fBRpoqaNr9B1d97X09daeosu0&m=2cbaZ6I4laLZbM7rmMgwZbEMeL2NX7hkjIpg7mqgo34&s=pwrBTMxZzny86eeBmluEYAAy3krXblozKaNUaPXNO7s&e=)
. For those investors who have already registered and added to meet the
Company, they will automatically be invited.
Questions can be submitted pre-event to pcipal@walbrookpr.com
(mailto:pcipal@walbrookpr.com) or in real time during the presentation via the
"Ask a Question" function.
For further information, please contact:
PCI-PAL PLC Via Walbrook PR
James Barham - Chief Executive Officer
William Good - Chief Financial Officer
finnCap (Nominated Adviser and Broker) +44 (0) 20 7227 0500
Marc Milmo/Simon Hicks (Corporate Finance)
Sunila De Silva (Corporate Broking)
Walbrook PR +44 (0) 20 7933 8780
Tom Cooper/Nick Rome/Joe Walker +44 (0) 797 122 1972
PCIPAL@walbrookpr.com
About PCI Pal:
PCI Pal is a leading provider of Software-as-a-Service ("SaaS") solutions that
empower companies to take payments from their customers securely, adhere to
strict industry governance, and remove their business from the significant
risks posed by non-compliance and data loss. Our products secure payments and
data in any business communications environment including voice, chat, social,
email, and contact centre. We are integrated to, and resold by, some of the
worlds' leading business communications vendors, as well as major payment
service providers.
The entirety of our product-base is available from our global cloud platform
hosted in Amazon Web Services ("AWS"), with regional instances across EMEA,
North America, and ANZ.
For more information visit www.pcipal.com (http://www.pcipal.com) or follow
the team on Linkedin: https://www.linkedin.com/company/pci-pal/
(https://www.linkedin.com/company/pci-pal/)
Chief Executive Officer's Business Review
Overview
I am pleased to report a strong first half of growth for PCI Pal. Revenue
increased 33% to £7.3 million (2021: £5.5 million). PCI Pal's early adoption
of true cloud solutions continues to benefit the financial health of the
business, with gross margins growing further to 87% (2021: 81%). This increase
in margins reflects the continued accumulation of license based income
generated by the business across its globally available AWS-hosted secure
payments platform.
Adjusted EBITDA for the period was in line with the prior year loss of c.£0.6
million, which, given the substantial additional investments in new employees
and technology developments over the last 12 months, highlights the further
progress of the business. Furthermore, having ended H1 in a strong position,
the Board has confidence of meeting management expectations for FY23, as well
as hitting sustained monthly cashflow positivity in the second half of the
current financial year.
PCI Pal's sales model is partner-first and, as a result, we have built a
robust partner program supported by a commitment to channel across our entire
organisation. This approach is at the core of everything we do. The strategy
continues to pay off with a record number of new customer contracts signed in
the period and 87% of these signed through resellers. ACV for the period was
below the same period last year at £1.5 million (2021: £1.8 million),
however, as commented at the time, the prior year included several large
expansion upsells to our largest customers. The sales outlook for H2 remains
strong. Supporting this strong outlook is the continued accumulation of TACV,
a key indicator of future recurring revenues, which increased 30% to £14.7
million (2021: £11.3 million).
Sales highlights in H1 include good progress in our plans to increase our
enterprise customer-base, particularly in the US where we have achieved strong
pipeline momentum in the period. This was evidenced by two of the larger deals
signed in H1; the first with one of the largest clothing retailers in the
world; the second with a large US-headquartered energy company. The clothing
retailer is now live across more than 2,500 contact centre agents in the US;
and the energy company signed at the end of the second quarter is going
through deployment across over 1,200 agents in the US and Canada.
Supporting our sustained strong revenue growth is the continued low churn
rates of existing customers. Churn in the period was just 5% (2021: 3%).
Additionally, NRR was 106% which was ahead of management expectations for the
period. The prior year (2021: 120%) benefitted significantly from the large
expansion upsells to existing customers, as mentioned above.
PCI Pal's continued progress has always been underpinned by an excellent scale
up working culture. Highlighting this in the period we achieved employee
retention of 93%. It is our people that support this business to successfully
balance the execution of our strategic initiatives; driving further strong
revenue growth and near term month to month profitability; and supporting the
continued investment to expand our addressable market opportunity.
Further Global Expansion
Having launched our operations in Australia and Canada last year, we can
report good progress: providing on-the-ground support to our global partners;
as well as enabling regional expertise in those local markets. We have strong
teams in place in both regions and we can see early benefits of this coming
through in our sales pipelines, as well as positive engagement and feedback
from partners' teams locally.
As reported at the last full year, at PCI Pal today we are taking a more
holistic view of the global addressable market opportunity available to us,
particularly as our products have relevance to any contact centre, anywhere in
the world. With the strongholds we have established in the UK and US, and the
new presence in Canada and Australia, we have a solid foundation from which to
press on cost-efficiently into other corners of the globe leveraging our major
partner relationships and current cloud technology stack.
Product
PCI Pal was the first to launch a true cloud solution to the market in early
2017, and as a result has the most mature, and most utilised platform. PCI
Pal's patented approach disrupted a market that was previously burdened by
hardware-led, on-premise solutions, and as a result we have empowered our
customers to secure consumer's data through the use of our highly flexible,
light-touch, and easy-to-integrate cloud solutions.
Amazon Web Services is our chosen provider of virtualised cloud services where
our platform is hosted today. AWS is also the most commonly used cloud hosting
provider across all our partners, making it easier to integrate our solutions
with theirs. Furthermore, our platform has been designed to be agnostic to any
third party environments it operates with so as to not limit who we can work
with. This cloud strategy has been a key factor in our capability to partner
with some of the world's leading technology companies in the business
communications (CCaaS, UCaaS, CPaaS) and payments markets, including Genesys,
8x8, Vonage, Talkdesk, Worldpay, and Amazon Connect.
Having successfully established this core cloud technology platform, combined
with a strong partner eco-system, we are beginning to increase the breadth of
our product offering to best capitalise on our investments to date. As a
result, PCI Pal's product vision is evolving to incorporate many of the
digital payment methods available to merchants across e-commerce environments
and bringing those capabilities to the contact centre.
PCI Pal's near term product roadmap includes further features incorporating
modern-day digital payment methods, such as Buy Now Pay Later and e-Wallets,
as well as enhancements to its user interfaces and data analytics
capabilities. The majority of these enhancements and new features, over time,
will not only drive further demand and retention in our core licenses today,
but also help to drive incremental transactional revenue as PCI Pal benefits
from more involvement in the individual payments being processed.
One of the first of the new payment methods was launched in the period. The
digitally-native Open Banking product, allows consumers to pay merchants using
our services directly from their bank account rather than using a credit or
debit card. PCI Pal's offering can facilitate payments from virtually all
banks in the UK, where the product has been first launched. This enhancement
adds both fraud risk mitigation and transaction processing cost reduction to
the existing PCI Pal security value proposition. Open Banking is one of the
fastest growing payment methods in the UK and is taking hold across the globe.
Update on the unfounded claims of patent infringement
It is nearly 18 months since the Company became subject to unfounded claims of
patent infringement in both the UK and US by one of its competitors, Semafone
Ltd (now renamed Sycurio Ltd). The action was brought against PCI Pal shortly
after Sycurio was acquired by the investment firm Livingbridge. It is our
belief that the claims have been made in an attempt to disrupt our momentum
and gain a commercial advantage given PCI Pal is the fastest growing provider
in the space, with the most extensive partner eco-system, and the most mature
public cloud offering.
The Directors continue to strongly refute the claims being made and as a
result we have both defended our position on infringement, as well as made a
number of counterclaims against Sycurio whose patents we believe to be
invalid. We have worked closely with our legal advisors both in the UK and the
US and remain confident in being successful across the breadth of our case.
The court hearing in the UK is scheduled for mid-June 2023, with the US court
dates yet to be set but expected late 2024.
Our counterclaims of invalidity are independent claims to those made by
Sycurio, and therefore fully within our control. It is well known that patents
are not properly tested until they are litigated. We have pursued invalidity
in considerable depth, and as such intend to see through invalidating
Sycurio's patents.
PCI Pal has its own patents for the way in which its Agent Assist services
integrate with third party environments in the cloud and how card data is
captured. In FY22, we reported that we had been granted a patent for these
methods in the US following a 4-year application process. This grant was
preceded by a review undertaken by the US Patent Office against a number of
competitor patents, including the patents Sycurio has asserted against PCI
Pal. Since then, PCI Pal's patent has been granted in the EU, UK, Australia
and New Zealand.
For completeness, and in keeping with the prudent and thorough way that we run
this business, we have also made plans in the unlikely scenario that all
proceedings go against us, with various options for product adjustments and
enhancements that should ensure our ability to continue operating in a
non-infringing manner. As is normal in patent cases of this nature, we have
filed a number of these product variants with the courts already.
Given the confidence levels and proximity to the UK trial in June 2023, the
Company is fully prepared for court, both defending its position on
infringement as well as being successful in its own suit to invalidate
Sycurio's patents.
Outlook
Following the strong financial performance in H1 we are seeing the revenue
momentum continue into H2. This revenue momentum is supported by the
continued strength of our sales pipeline which combined gives the Board
confidence that the Company will meet management expectations for the full
year to end June 2023.
Additionally, our positive cash momentum is evidenced by the recent
improvement in just the first two months of H2 and now stands at the end of
February 2023 at £3.4 million (end December 2022: £1.9 million).
The new business sales outlook remains strong. This is underpinned by high
levels of engagement and activity with our key partners, as well as the
enablement of new partners further adding to the strength of our
market-leading partner eco-system.
I look forward to updating you with further progress later in the year.
James Barham
Chief Executive Officer
14 March 2023
CFO's Financial Review
The Group's financial performance for the six months to December 2022 has
continued to be very good. The Company is delivering strong growth and
continues to move towards sustained monthly cash breakeven, expected in
H2FY23.
Revenue and gross margin
The Group continues to focus on signing and delivering high-quality recurring
revenues from its growing customer base. Group revenue grew by 33% in the
period to £7.26 million (2021: £5.47 million). This high-quality revenue,
paired with the operational efficiency of its true cloud platform hosted on
AWS, has allowed the Group to continue to improve Gross Margin to 87% in the
period (2021: 81%). Of the revenue recorded in the period, 85% (2021: 90%) has
come from annually recurring licences or equivalent transactions. The decline
in the comparative percentage is due to us taking on a short-term contract, in
the last 12 month, with one of our major customers in the UK, the revenue for
which we are not treating as recurring.
TACV at the half year has grown to £14.74 million (2021: £11.34 million),
which provides the Group with a high visibility of revenue for the remainder
of the financial year, and beyond. Run rate ARR of "live" contracts has
increased by 33% at period end to £11.92 million (2021: £8.96 million).
Currency
Since 31 December 2021 the US dollar exchange rate has changed from $1.32 to
$1.24. This 6% exchange rate swing has accounted for approximately £0.13
million of the revenue growth or 2.3% of the reported growth. On the converse
side, our US dollar expenses which mainly relate to staffing in the US have
increased by a similar number and so the net difference to the Group's
reported losses is not material.
Churn and Net Retention
In line with its expectations for the year, the Directors are pleased to
report that the Group has continued to up-sell more contracts to its existing
customer base than it loses, and as a result Net Revenue Retention ("NRR") for
its AWS platform, remains positive at 106% (30 June 2022: 120%). The year on
year decrease in NRR was expected as H1FY22 included a number of large
expansion sales to several enterprise-sized customers.
Contributing to the positive NRR, customer churn rates remain on target at 5%
(30 June 2022: 3%). The churn accounts for £0.32m of lost ARR, of which the
largest single customer churned accounted for £0.09m (28%). This customer
ceased using services after they were acquired by another company who was
using an in-house compliance capability.
Given the growing TACV and low churn levels, revenues are expected to grow in
line with management expectations.
Administrative expenses
Total administrative expenses were £8.19 million (2021: £5.54 million), an
increase of 48%.
As planned following the fundraising in April 2021, the Group has continued to
hire new headcount to support its international growth and product development
plans with the number of employees increasing to 108 (2021: 86) at the period
end. Reflecting this growth in head count, personnel costs charged to the
Statement of Comprehensive Income (including commission, bonuses and travel
and subsistence expenses) grew to £5.85 million (2021: £4.02 million), of
which £0.70 million (2021: £0.47 million) were capitalised as Software
Development costs. Personnel costs make up 79% (2021: 73%) of the adjusted
administrative costs (excluding exchange movements, share option charges and
exceptional items) of the business.
The expense of running our AWS global platform and associated software was
£0.46 million in the period (2021: £0.45 million).
Included in the administrative expenses is a charge for foreign exchange
movements of £0.18 million (2021: credit of £0.33 million) which has been
caused by the strengthening of the US dollar from $1.3215 (31 December 2021)
to $1.2309 (30 June 2022) to $1.2406 (31 December 2022).
Depreciation/amortisation of £0.57 million (2021: £0.45 million) has also
been charged as part of the administrative expenses.
Exceptional costs
As explained in the CEO's review, we have been building both a strong defence
against the unfounded patent infringement claims made against the Company in
the UK and US by Sycurio Ltd, as well as strong counter-claims of invalidity
against the patents in question. In H1 FY23, the Group incurred £0.43 million
of legal fees relating to the patent claim, bringing the total expenditure to
£1.23 million since the claim was made in September 2021. These expenses have
been treated as an exceptional item in the Group's Statement of Comprehensive
Income.
Adjusted operating loss
The regional operating results and underlying performance analysis used within
the Group are shown in Notes 4 & 5 below. These adjusted figures are the
Company's preferred performance measures as it more accurately reflects the
underlying performance of the Group's operations.
Adjusted operating losses, excluding the charges resulting from the Group's
share option scheme, exceptional costs and any exchange gains and losses
charged to the Statement of Comprehensive Income, increased by 10% to a loss
of £1.14 million (2021: £1.04 million). The performance was better than the
Board's expectations and reflects the resilience of the business model having
taken on 22 additional employees in the last 12 months.
Adjusted EBITDA losses have remained stable at a loss of £0.57 million (2021:
£0.58 million).
Key financial performance indicators
The Directors use several Key Financial Performance Indicators (KPIs) to
monitor the progress and performance of the Group, its subsidiaries and
targets. All the core KPIs continue to show performance better than
expectations.
The principal financial KPIs are as follows:
Six months to 31 Dec 2022 Change % Six month to 30 Jun 2022 Change % six months to 31 Dec 2021
Revenue in the six month period £7.26m +12% £6.47m +18% £5.47m
Gross Margin in the six month period 86.9% 86.1% 81.2%
Recurring Revenue(1) in the six month period £6.17m +10% £5.62m +14% £4.95m
Recurring Revenue as % of Revenue in six month period 85% 87% 90%
Adjusted EBITDA(2) in six month period (£0.57m) +56% (£1.30m) -124% (£0.58m)
Cash £1.88m £4.89m £5.53m
Deferred Income £11.53m £10.62m £8.75m
(1) Recurring Revenue is the revenue generated from the recurring elements of
the contracts held by the Group and recognised in the Statement of
Comprehensive Income
(2) Adjusted EBITDA is the loss on Operating Activities before depreciation
and amortisation, exchange movements charged to the profit and loss,
exceptional items and expenses relating to share option charges
The principal operational KPIs are as follows:
As at 31 Dec 2022 Change % As at 30 Jun 2022 Change % As at 31 Dec 2021
Contracted TACV(1) deployed and live £11.92m +8% £11.05m +23% £8.96m
Contracted TACV in deployment £1.94m +73% £1.12m -41% £1.89m
Contracted TACV - projects on hold £0.88m -26% £1.19m +143% £0.49m
Total Contracted TACV £14.74m +10% £13.36m +18% £11.34m
% of TACV derived from variable transactions deemed recurring 18% 22% 23%
ARR(2) £11.92m +8% £11.05m +23% £8.96m
Signed ACV in six month period £1.47m -14% £1.70m -4% £1.76m
Rolling value of ACV of contracts cancelled before deployment in last 12 £0.11m £0.18m £0.12m
months
AWS Platform Churn(3) 5.1% 3.1% 3.4%
AWS Platform Net Retention Rate(4) 106.3% 117.7% 120.4%
Headcount at end of period (excluding non-executive directors) 108 103 86
Ratio Personnel cost to normalised administrative expenses 79% 74% 73%
(1)TACV is the total annual recurring revenue of all signed contracts, whether
invoiced and included in deferred revenue or still to be deployed and/or not
yet invoiced
(2) ARR is the Annual Recurring Revenue of all the deployed contracts
including an assessment of variable transactions deemed recurring
(3)AWS platform churn is calculated using the ACV of lost deployed contracts
in the last twelve months divided by the opening total value of deployed
contracts at the start of the twelve month period
(4) AWS platform net retention rate is calculated using the opening total
value of deployed contracts at the start of the period less the ACV of lost
deployed contracts in the period plus the ACV of upsold contracts signed in
the period all divided by the opening total value of deployed contracts at the
start of the period
Cashflow and liquidity
Cash as at the period end was £1.88 million (30 June 2022: £4.89 million).
The Directors, on a monthly basis, receive standard reports relating to cash
forecasts and future cash burn to ensure that the Group's expansion plans can
continue to be financed comfortably. The Group is on track to hit monthly
cashflow breakeven in this financial year.
Since the period end, the cash balances have grown following the payment of
two large licence renewals (one of which was a multi-year advance payment).
As at the 28(th) February 2023 the cash balances of the Group stood at
£3.41 million.
Capital expenditure
As required by IAS 38, we have capitalised a further £0.70 million (2021:
£0.47 million) in software development expenditure as we continue to invest
in our cloud platform and introduce new features and products.
The Group acquired £0.01 million of other intangible assets (2021: £0.09
million) and bought a negligible amount of new computer equipment in the
period, mainly equipment for new starters. Being a cloud-based business, the
Group has little demand for hardware.
Professional Services Fees
During the period the Group generated £0.73 million (2021: £0.50 million) of
set-up and professional services sales value, in conjunction with the new ACV
contracts reported above. Nearly all of these contracts are invoiced on
signature and form part of the Group's cash generation. The contract amounts
will be deferred and released as recognised revenue to the Income Statement
over the length of the related contract, in accordance with IFRS 15.
Trade receivables
Trade receivables grew to £4.65 million (30 June 2022: £2.96 million)
reflecting the increased scale of the growing business and the timing of
annual renewals.
Financial Outlook
The Board continues to balance its continued short-term revenue growth and
profitability plans against its long-term investment in the business. The
Group remains firmly on track to hit monthly cashflow breakeven in this
financial year and is continuing its strategic objective of delivering
continued international growth and launching new complimentary products to our
partners and customers. The Directors are pleased with the progress being made
against this objective.
William Good
Chief Financial Officer
14 March 2023
Consolidated statement of comprehensive income
for the six months ended 31 December 2022
Six months ended Six months ended Twelve months ended 30 June
31 December 31 December 2022
2022 2021
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Revenue 7,259 5,472 11,937
Cost of sales (950) (1,029) (1,924)
Gross profit 6,309 4,443 10,013
Administrative expenses (8,194) (5,543) (13,077)
Loss from operating activities (1,885) (1,100) (3,064)
Adjusted operating loss (1,324) (707) (2,021)
Expenses relating to share options (128) (108) (246)
Exceptional Items (433) (285) (797)
Loss from operating activities (1,885) (1,100) (3,064)
Finance income 2 - 1
Finance expenditure (20) (22) (44)
Loss before taxation (1,903) (1,122) (3,107)
Taxation - - 164
Total comprehensive loss for the period (1,903) (1,122) (2,943)
Other comprehensive expense: items that will be classified subsequently to
profit and loss
Foreign exchange translation differences 113 (422) (1,086)
Total comprehensive loss for the period (1,790) (1,544) (4,029)
Loss per share expressed in pence
Basic and diluted (2.91) (1.72) (4.50)
Consolidated statement of financial position
as at 31 December 2022
31 December 2022 31 December 30 June
2021 2022
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Assets
Non-current assets
Plant and equipment 213 87 238
Intangible assets 2,847 2,516 2,661
Trade & other receivables 999 822 964
Non-current assets 4,059 3,425 3,863
Current assets
Trade and other receivables 6,023 3,945 4,203
Cash and cash equivalents 1,876 5,528 4,888
Current assets 7,899 9,473 9,091
Total assets 11,958 12,898 12,954
Liabilities
Current liabilities
Trade and other payables (1,862) (1,625) (2,086)
Deferred Income (9,249) (7,165) (9,286)
Other interest-bearing loans and borrowings - - -
Current liabilities (11,111) (8,790) (11,372)
Non-current liabilities
Other payables (46) - (67)
Deferred Income (2,278) (1,587) (1,330)
Long term borrowings - - -
Non-current liabilities (2,324) (1,587) (1,397)
Total liabilities (13,435) (10,377) (12,769)
Net assets/(liabilities) (1,477) 2,521 185
Shareholders' equity
Share capital 656 656 656
Share premium 14,281 14,270 14,281
Other reserve 778 512 650
Currency reserve (507) 44 (620)
Profit and loss account (16,685) (12,961) (14,782)
Total shareholders' equity (1,477) 2,521 185
Deferred income has been disclosed separately in these interim unaudited
statements. This disclosure treatment differs from that in the audited
accounts for the year ending 30 June 2022.
Consolidated interim statement of changes in equity
as at 31 December 2022 (unaudited)
Total shareholders' equity
Share capital Share premium Other reserve Profit and loss account Currency reserve
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 July 2021 655 14,243 404 (11,839) 466 3,929
Share based payment charge - - 108 - - 108
New shares issued net of costs 1 27 - - - 28
Dividend paid - - - - - -
Transactions with owners 1 27 108 - - 136
Foreign exchange translation differences - - - - (422) (422)
Loss for the period - - - (1,122) - (1,122)
Total comprehensive loss - - - (1,122) (422) (1,544)
Balance at 31 December 2021 656 14,270 512 (12,961) 44 2,521
Balance as at 1 January 2022 656 14,270 512 (12,961) 44 2,521
Share based payment charge - - 138 - - 138
New shares issued net of costs - 11 - - - 11
Dividend paid - - - - - -
Transactions with owners - 11 138 - - 149
Foreign exchange translation differences - - - - (664) (664)
Loss for the period - - - (1,821) - (1,821)
Total comprehensive loss - - - (1,821) (664) (2,485)
Balance at 30 June 2022 656 14,281 650 (14,782) (620) 185
Balance at 1 July 2022 656 14,281 650 (14,782) (620) 185
Share based payment charge - - 128 - - 128
New shares issued net of costs - - - - - -
Dividend paid - - - - - -
Transactions with owners - - 128 - - 128
Foreign exchange translation differences - - - - 113 113
Loss for the period - - - (1,903) - (1,903)
Total comprehensive loss - - - (1,903) 113 (1,790)
Balance at 31 December 2022 656 14,281 778 (16,685) (507) (1,477)
Consolidated statement of cash flows
for the six months ended 31 December 2022
Six months ended 31 December Six months ended 31 December Twelve months ended 30 June
2022 2021 2022
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Cash flows from operating activities
Loss after taxation (1,903) (1,122) (2,943)
Adjustments for:
Depreciation of equipment and fixtures 53 36 85
Amortisation of intangible assets 43 42 85
Amortisation of capitalised development 473 374 803
Loss on disposal of equipment and fixtures - - 3
Interest income (2) - (1)
Interest expense 3 6 11
Exchange differences 148 (436) (1,124)
Income taxes - - (164)
Share based payments 128 109 246
Increase in trade & other receivables (1,855) (1,038) (1,438)
Increase in trade &other payables 687 633 2,918
Cash used in operating activities (2,225) (1,396) (1,519)
Dividend paid - - -
Income taxes received - - 164
Interest paid (3) (6) (11)
Net cash used in operating activities (2,228) (1,402) (1,366)
Cash flows from investing activities
Purchase of property, plant and equipment (29) (47) (124)
Purchase of intangible assets (5) (87) (48)
Development expenditure capitalised (732) (467) (1,098)
Interest received 2 - 1
Net cash used in investing activities (764) (601) (1,269)
Cash flows from financing activities
Principal element of lease payments (20) (15) (34)
Issue of shares - 28 39
Net cash generated in financing activities (20) 13 5
Net (decrease)/increase in cash (3,012) (1,990) (2,630)
Cash and cash equivalents at the start of the period 4,888 7,518 7,518
Net (decrease)/increase in cash (3,012) (1,990) (2,630)
Cash and cash equivalents at the end of the period 1,876 5,528 4,888
Notes to the interim financial statements for the six months ended 31 December 2022
1. Nature of activities and general information
PCI-PAL PLC is the Group's ultimate parent company. It is a public limited
company incorporated and domiciled in England and Wales (registration number
3869545). The company's registered office is Unit 7, Gamma Terrace, Ransomes
Europark, Ipswich, Suffolk, IP3 9FF. The Company's ordinary shares are quoted
and publicly traded on the AIM division of the London Stock Exchange. The
Group's consolidated interim financial statements (the "interim financial
statements") for the period ended 31 December 2022 comprise the Company and
its subsidiaries (the "Group").
The Company operates principally as a holding company. The main subsidiaries
provide organisations globally with secure cloud payment and data protection
solutions for any business communications environment.
The interim financial statements are presented in pounds sterling (£000),
which is also the functional currency of the parent company.
2. Basis of preparation
These consolidated interim financial statements have been prepared in
accordance with the UK adopted international accounting standards and the
requirements of the Companies Act 2006, using the accounting policies which
are consistent with those set out in the Group's annual report and accounts
for the year ended 30 June 2022.
The unaudited interim financial information for the period ended 31 December
2022 does not constitute statutory accounts within the meaning of Section 435
of the Companies Act 2006. The comparative figures for the year ended 30 June
2022 are extracted from the statutory financial statements which have been
filed with the Registrar of Companies and contain an unqualified audit report
and did not contain statements under Section 498 to 502 of the Companies Act
2006.
3. Dividends
Given the strategic growth plans of the Group it is not proposed to declare a
dividend for the period.
4. Analysis of results
The first half performance of the Group can be further analysed as follows:
Six months to Six months to Six months to Six months to Six months to
Dec 22 Dec 22 Dec 22 Dec 22 Dec 22
EMEA North America ANZ Central costs Total
£000s £000s £000s £000s £000s
Revenue
Revenue from recurring contract Fees 4,115 1,970 87 - 6,172
Non recurring transaction fees 355 - - - 355
Set up and Professional Services Fees ((1)) 433 281 14 - 728
Other Sales 4 - - - 4
Total 4,907 2,251 101 - 7,259
Gross Profit 4,007 2,202 100 - 6,309
Margin % 81.7% 97.8% 99.2% - 86.9%
Administrative Expenses (3,710) (3,369) (246) (869) (8,194)
Profit/(Loss) from Operating Activities 297 (1,167) (146) (869) (1,885)
Bank charges and Interest payable (14) (6) - - (20)
Finance Income - - - 2 2
Profit/ (Loss) before Taxation 283 (1,173) (146) (867) (1,903)
((1)) Set up and Professional Services Fees represents the amortisation of set
up fees and other professional services income deferred under IFRS 15
Six months to Six months to Six months to Six months to Six months to
Dec 21 Dec 21 Dec 21 Dec 21 Dec 21
EMEA North America ANZ Central costs Total
£000s £000s £000s £000s £000s
Revenue
Revenue from recurring contract Fees 3,564 1,350 38 - 4,952
Non recurring transaction fees - - - - -
Set up and Professional Services Fees ((1)) 310 178 15 - 503
Other Sales 17 - - - 17
Total 3,891 1,528 53 - 5,472
Gross Profit 2.950 1,441 52 - 4,443
Margin % 75.8% 94.3% 98.7% 81.2%
Administrative Expenses (2,757) (1,913) (104) (769) (5,543)
Profit/(Loss) from Operating Activities 193 (472) (52) (769) (1,100)
Bank charges and Interest payable (18) (4) - - (22)
Finance Income - - - - -
Profit/ (Loss) before Taxation 175 (476) (52) (769) (1,122)
((1)) Set up and Professional Services Fees represents the amortisation of set
up fees and other professional services income deferred under IFRS 15
5. Underlying financial performance analysis
The Group uses the following internal metric to calculate Adjusted EBITDA:
Six months to Six months to Six months to Six months to Six months to
Dec 22 Dec 22 Dec 22 Dec 22 Dec 22
EMEA North America ANZ Central Total
£000s £000s £000s £000s £000s
Profit/(Loss) before Taxation 283 (1,173) (146) (867) (1,903)
( )
Adjust for:
Expenses relating to share options - - - 128 128
Exceptional Items - 187 - 246 433
Exchange Loss/(Gain) 48 120 8 6 182
Bank charges and Interest Payable 14 6 - - 20
Finance Income - - - (2) (2)
Adjusted Profit/(Loss) from Operating Activities 345 (860) (138) (489) (1,142)
Depreciation & Amortisation 567 - 1 - 568
Adjusted EBITDA 912 (860) (137) (489) (574)
Six months to Six months to Six months to Six months to Six months to
Dec 21 Dec 21 Dec 21 Dec 21 Dec 21
EMEA North America ANZ Central Total
£000s £000s £000s £000s £000s
Profit/(Loss) before Taxation 175 (476) (52) (769) (1,122)
( )
Adjust for:
Expenses relating to share options - - - 108 108
Exceptional Items 34 46 - 205 285
Exchange Loss/(Gain) 45 (378) 3 - (330)
Bank charges and Interest Payable 18 4 - - 22
Finance Income - - - - -
Adjusted Profit/(Loss) from Operating Activities 272 (804) (49) (456) (1,037)
Depreciation & Amortisation 417 35 - - 452
Adjusted EBITDA 689 (769) (49) (456) (585)
6. Earnings per share
The basic and diluted earnings per share are calculated on the following
profit and number of shares. Earnings for the calculation of earnings per
share is the net profit attributable to equity holders of the parent.
Six months ended 31 December Six months ended 31 December Twelve months ended 30 June
2022 2021 2022
£000 £000 £000
Earnings for the purposes of basic and diluted earnings per
share
Loss after taxation (1,903) (1,122) (2,943)
Denominator '000 '000 '000
Weighted average number of shares in issue in the period 65,453 65,328 65,369
Dilutive effect of potential shares and share options 8,143 6,150 6,879
Number of shares used in calculating diluted earnings per share 73,596 71,478 72,248
Basic and diluted earnings per share expressed in pence (2.91) (1.72) (4.50)
There are no separate diluted earnings per share calculations shown as it is
considered to be anti-dilutive.
7. Subsequent events to 31 December 2022
There are no subsequent events to report.
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