REG - Pulsar Group PLC - Interim Results
08/07/2024 07:00
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RNS Number : 4041V Pulsar Group PLC 08 July 2024
PULSAR GROUP PLC
("Pulsar Group", the "Company" or the "Group")
INTERIM RESULTS
Pulsar Group Plc (AIM: PULS), the technology innovator delivering
Software-as-a-Service ("SaaS") solutions for the global marketing and
communications industries, is pleased to announce its unaudited half year
results for the six months ended 31 May 2024.
Highlights:
The Group has continued to make good progress against its strategic
objectives, delivering accelerated Annual Recurring Revenue ("ARR") growth in
both its APAC and EMEA & North America regions:
· The Group's ARR increased by £2.2m(1) in the period, demonstrating a
significant increase in growth momentum in comparison to ARR growth of
£1.3m(1) in H1 2023. Each individual region contributed accelerating ARR
growth during the first half.
ARR (£'m) November 2022 H1 2023 May H2 2023 November 2023 H1 2024 May
Change 2023 Change Change 2024
EMEA & North America 28.6 1.1 29.7 - 29.7 1.2 30.9
(Constant Currency)
EMEA & North America 29.4 1.1 30.5 - 30.5 0.4 30.9
(Reported)
APAC 29.1 0.2 29.3 1.4 30.7 1.0 31.7
(Constant Currency)
APAC 30.6 (1.3) 29.3 1.5 30.8 0.9 31.7
(Reported)
Group 57.7 1.3 59.0 1.4 60.4 2.2 62.6
(Constant Currency)
Group 60.0 (0.2) 59.8 1.5 61.3 1.3 62.6
(Reported)
· Total revenue for the period was £30.8m, compared to £30.4m(1) in
H1 2023 (£31.3m reported) with 96% of revenue being recurring (H1 2023: 95%).
· The Group delivered Adjusted EBITDA(2) in the period of £3.1m, a
year-on-year increase of £1.1m (H1 2022: £2.0m).
· As a result of the actions taken over the last two years to optimise
the business for profitable growth and free cash flow generation, the Board
anticipates strong cash generation in the second half of the financial year.
With the momentum being shown across the regions, the Group continues to trade
in line with the Board's full year expectations.
Christopher Satterthwaite, non-executive Chairman, commented:
"As governments, corporations, brands, and individuals respond to today's
complex communication landscape, the rising demand for audience intelligence
is evident. Pulsar Group's cutting-edge audience intelligence solution
continues to drive innovation in marketing and communications. Our technology
provides the critical insights and engagement strategies necessary for
organisations to navigate these challenges, which have only been intensified
by the increasing use of Artificial Intelligence in media and social channels.
The Board is pleased with the progress made during the first half of the year,
including enhancements to the Group's product offerings and a significant
acceleration in ARR growth alongside improved Adjusted EBITDA margins, despite
the ongoing challenges of a difficult macro-economic environment.
The Group remains focussed on enhancing profitability and cash generation,
with a number of cost optimisation initiatives delivered to date and continued
emphasis to be placed on this during the remainder of the financial year.
Overall, the Board remains confident in Pulsar Group's outlook for the second
half of the year and beyond."
( )
1. On a constant currency basis. Prior periods recalculated at H1 2024
rates.
2. Adjusted EBITDA is earnings before interest, tax, depreciation and
amortisation and adjusted for share based payments, share of losses of an
associate and non-recurring expenses primarily relating to acquisition,
integration and restructuring costs in respect of Isentia.
For further information:
Pulsar Group plc 020 3426 4070
Joanna Arnold, CEO
Mark Fautley, CFO
020 7220 0500
Cavendish Capital Markets Limited (Nominated Adviser and Broker)
Corporate Finance:
Marc Milmo / Fergus Sullivan
Corporate Broking:
Sunila de Silva
Chairman's statement
I am pleased to announce our unaudited interim results for the six months
ended 31 May 2024.
In recent times, the marketing and communications industry has grappled with
significant challenges stemming from a volatile geopolitical and macroeconomic
environment. Additionally, the rapid advancement and widespread adoption of
Chat GPT and generative AI technologies have further complicated the landscape
by influencing national, corporate, brand, and individual narratives, often
leading to misinformation and disinformation.
The sheer volume of online content and the increasing difficulty in discerning
fact from fiction have made it exceptionally challenging for marketing and
communications professionals. Consumers now demand both personalised and
authentic interactions. Without leveraging advanced audience insights and
innovative technology, marketers face the risk of failing to resonate with
their target audiences, potentially losing their connection with key
communities.
This challenging period also presents a significant opportunity for brands to
differentiate themselves with authenticity and relevance. Effective audience
intelligence is crucial for marketers and communicators to forge credible
connections with their audiences. Pulsar has long been highly regarded as the
leading technology offering in the rapidly growing audience intelligence
market and its products and services are used every day by over 6,000
governments, corporations, brands, and individuals.
Sustained growth in EMEA & North America
In EMEA & North America the Group has continued to grow, delivering an
increase in ARR of £1.2m(1) in the period (H1 2023: £1.1m(1)). Performance
in Europe has remained on track while the pace of enterprise level decision
making in North America continues to be slow. As reported in May, however, we
have developed a healthy pipeline of opportunities and leading global agencies
including Havas and McCann have now adopted our combined audience intelligence
proposition. We've also seen an acceleration in ARR growth in the region with
a number of opportunities from the North America pipeline closing during the
first half.
EMEA & North America revenue has increased by £0.7m(1) compared to the
comparative period last year, benefitting from the ongoing ARR growth in the
region. Regional adjusted EBITDA has also improved due to the year-on-year
revenue growth alongside cost optimisation initiatives undertaken by the
Group.
New client wins in the EMEA & North America region during the period
include: Alpine Racing, A&E Television Networks, Coty, Electronic Arts,
Historic Royal Palaces, Huel, National Audit Office, NatWest, Next, Ofcom,
Publicis, Reckitt Benckiser, Syneos Health, Trenitalia, Unilever, University
College London and WWF.
Acceleration of ARR growth in APAC
In APAC there has been an acceleration in performance with ARR growth of over
£1.0m(1) being delivered during the period (H1 2023: £0.2m(1)). New features
and functionality from the global Pulsar proposition have resonated strongly
with clients and prospects, which has led to a number of significant new
business wins and winbacks, as well as upsells to existing clients.
APAC revenue for the first half decreased by £0.2m(1) year on year due to a
reduction in one-off, non-recurring campaign revenue, although this was
partially offset by an increase in recurring revenue. Non-recurring revenue
now represents just 6% of total APAC revenue, compared to 8% in H1 2023. This
decrease is due to fewer one-off campaigns by customers, influenced by broader
macro-economic conditions, and a key element of the Group's APAC turnaround
strategy has been to focus the sales team's efforts on the delivery of
long-term recurring revenue contracts, which is how the Group's commercial
teams are now incentivised. Adjusted EBITDA in the region has increased year
on year as a result of further synergies and other cost optimisation
initiatives delivered.
The Group has won a number of new clients (including client win backs) in the
APAC region during the first half, including: Ambulance Victoria, Asics,
Climate Change Authority, Energy Australia, Federation of Australian
Scientific and Technological Societies, Insular Life, Insurance Council of
Australia, Medicines New Zealand, OCBC, Queensland Police, Securities
Commission Malaysia and Universities Australia.
Optimisation of the Group's operations
Over the past two years, one of Pulsar Group's primary objectives has been to
establish a stable and profitable core business to serve as a foundation for
future growth. In alignment with the Group's global integration strategy,
headcount has reduced from 1,110 FTE in November 2022 to 911 FTE by May 2024.
This strategic restructuring has been accompanied by improved renewal rates in
both regions, which has significantly contributed to the acceleration in ARR
growth.
Restructuring costs associated with the FTE reduction, along with the
unwinding of some working capital, resulted in a cash outflow during the
period. Anticipating this, the Group arranged a £3.0m overdraft facility and
a £3.0m loan facility in the first half of the year to ensure adequate
liquidity. The Group's net debt position at 31 May 2024 was £3.2m and the
Board is confident in delivering positive cash flow in the second half through
improved profitability and working capital enhancement as its ARR growth leads
to additional invoicing.
Results for the half year
The primary key performance indicator monitored by the Board is the growth in
ARR year-on-year. This reflects the annual value of new business won, together
with upsell into the Company's existing customer base as it delivers against
its land and expand strategy, less churn. It is an important metric for the
Group as it is a leading indicator of future revenue.
During the period, the Group's ARR grew by £2.2m(1) (H1 2023: £1.3m(1)). ARR
at 31 May 2024 was £62.6m, comprising £30.9m in EMEA and North America and
£31.7m in APAC.
Revenue for the period was £30.8m (H1 2023: £30.4m(1), £31.3m reported),
with recurring revenue comprising 96% of total revenue for the period (H1
2023: 95%).
EMEA & North America revenue increased by £0.7m(1) year on year to
£14.3m (H1 2023: £13.6m(1), £13.6m reported) as a result of ongoing ARR
growth in the region. Recurring revenue comprised 99% of total EMEA &
North America revenue in the period (H1 2023: 98%).
APAC revenue declined by £0.2m(1) year on year to £16.5m (H1 2023:
£16.7m(1), £17.7m reported) due to a decline in non-recurring campaign
revenue, although this was partially offset by an increase in recurring
revenue. Recurring revenue comprised 94% of total APAC revenue in the period
(H1 2023: 92%), with the decrease in non-recurring revenue being due to the
combined effect of a reduction in non-recurring campaign revenue and
commercial teams being incentivised to focus on increasing long-term recurring
revenue.
The Group delivered a gross margin of 72% in the period (H1 2023: 75%).
Adjusted earnings before interest, tax, depreciation and amortisation
("EBITDA") were £3.1m (H1 2023: £2.0m). Adjusted EBITDA excludes certain
non-recurring expenses totalling £3.6m for the period (H1 2023: £3.8m), in
addition to the Group's share of loss of an associate of £0.1m (H1 2023:
£0.1m) and a share-based payments charge of £0.2m (H1 2023: £0.5m).
Non-recurring items in the period included continuing restructuring and
migration costs of £3.6m (H1 2023: £3.6m) as the Group continues to improve
operational efficiencies in Isentia. Since the 2022 financial year, salary and
related costs have reduced by over £8.0m per annum as a result of the
restructuring activities undertaken. The Group's reported EBITDA loss was
£0.9m (H1 2023: loss of £2.5m).
The Group has continued to invest in its software platforms with identifiable
new product development activity being capitalised. The Group capitalised
development costs of £3.4m for the period (H1 2023: £4.2m), with a further
£0.5m (H1 2023: £1.1m) of product, research and development costs being
expensed through profit and loss.
The Group's operating loss was £4.3m (H1 2023: loss £6.0m). The Group
incurred £3.4m of depreciation and amortisation charges (H1 2023: £3.5m).
The basic loss per share was 2.92p (H1 2023: 6.29p).
The Group net debt position at the end of the period was £3.2m (H1 2023: net
cash of £2.7m).
New LTIP
The Board is very focused on aligning the interests of all stakeholders of the
Group and is therefore implementing a new LTIP with the aim of incentivising
and rewarding key employees across the Group. The LTIP will provide the
potential for rewards only if shareholders benefit from sustained growth in
shareholder value over a four-year period. Further details will be provided
shortly.
Outlook
During the first half of 2024, Pulsar Group has continued to focus its efforts
in three key areas: the continued advancement of its market leading products;
further refinement of the Group's operating model to improve EBITDA margins
and enable free cash flow conversion; and the acceleration of global ARR
growth.
The Group's ongoing investment in products and operations will provide
customers across all regions with a fully integrated offering that surpasses
traditional media monitoring and social listening, delivering deep audience
intelligence. This enhanced offering supports the Group's ARR growth ambitions
through improved sales and renewals, ultimately increasing average order
values as more customers utilise a wider array of products and services.
The ARR growth delivered by the Group during the first half is expected to
contribute to higher revenue in the second half, whilst the Group's pipeline
also continues to grow with a number of strategic opportunities expected to
close during the second half.
Alongside the continued ARR growth being delivered, the steps that the Group
has taken to enhance operational efficiency together with the fact that the
majority of expected non-recurring costs have been incurred in the first six
months of the financial year are all expected to contribute to improved free
cash flow conversion into the second half of the financial year. The Group's
third quarter is usually a strong period for customer invoicing and we
therefore expect to see the net debt position reduce over the coming months.
Overall, the Board is pleased with the progress being made and remains
confident in the outlook for the Group in the second half of the year and
beyond.
Christopher Satterthwaite
Non-executive Chairman
Pulsar Group Plc
Consolidated Statement of Comprehensive Income
for the six months ended 31 May 2024
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
31-May-24 31-May-23 30-Nov-23
£'000 £'000 £'000
Revenue 30,817 31,277 62,402
Cost of sales (8,748) (7,927) (16,340)
Gross profit 22,069 23,350 46,062
Recurring administrative expenses (19,017) (21,364) (38,799)
Adjusted EBITDA 3,052 1,986 7,263
Non-recurring administrative expenses (3,614) (3,849) (8,988)
Share of loss of associate (100) (116) (198)
Share-based payments (227) (498) (915)
EBITDA (889) (2,477) (2,838)
Depreciation of tangible fixed assets (144) (270) (524)
Depreciation of right-of-use assets (535) (944) (1,526)
Amortisation of intangible assets - internally generated (1,890) (1,118) (3,639)
Amortisation of intangible assets - acquisition related (843) (1,179) (2,065)
Operating loss (4,301) (5,988) (10,592)
Financial income 8 7 12
Financial expense (159) (137) (253)
Loss before tax (4,452) (6,118) (10,833)
Taxation credit 761 1,052 2,931
Loss for the period (3,691) (5,066) (7,902)
Other comprehensive income
Items that will or may be reclassified to profit or loss (39) (2,967) (3,701)
Total comprehensive loss for the period attributable to the owners of parent
company
(3,730) (8,033) (11,603)
Earnings per share:
Basic loss per share (2.92)p (6.29)p (9.09)p
Diluted loss per share (2.92)p (6.29)p (9.09)p
Pulsar Group Plc
Consolidated Statement of Financial Position
at 31 May 2024
Unaudited Unaudited Audited
As at As at As at
31-May-24 31-May-23 30-Nov-23
£'000 £'000 £'000
Non-current assets
Intangible assets 69,253 68,142 68,621
Investment in associate 164 346 264
Right-of-use assets 1,454 2,450 2,190
Property, plant and equipment 669 688 793
Deferred tax assets 6,554 5,037 6,808
Total non-current assets 78,094 76,663 78,676
Current assets
Trade and other receivables 9,968 10,935 9,765
Current tax receivables 222 240 -
Cash and cash equivalents 1,252 2,670 2,248
Total current assets 11,442 13,845 12,013
TOTAL ASSETS 89,536 90,508 90,689
Current liabilities
Trade and other payables 12,167 10,285 13,533
Accruals 4,252 4,773 4,311
Contract liabilities 16,360 13,817 15,031
Interest bearing loans and borrowings 2,942 - -
Current tax liabilities - - 148
Provisions - - 217
Lease liabilities 481 1,602 1,300
Total current liabilities 36,202 30,477 34,540
Non-current liabilities
Interest bearing loans and borrowings 1,500 - -
Provisions 173 455 173
Lease liabilities 1,063 1,336 1,233
Deferred tax liabilities 4,415 5,401 5,057
Total non-current liabilities 7,151 7,192 6,463
TOTAL LIABILITIES 43,353 37,669 41,003
NET ASSETS 46,183 52,839 49,686
Equity
Share capital 6,526 6,526 6,526
Treasury shares (141) (141) (141)
Share premium account 74,424 74,424 74,424
Capital redemption reserve 395 395 395
Share option reserve 3,164 2,520 2,937
Foreign exchange reserve (1,004) (231) (965)
Other reserve 502 502 502
Retained earnings (37,683) (31,156) (33,992)
TOTAL EQUITY ATTRIBUTABLE TO EQUITY SHAREHOLDERS
46,183 52,839 49,686
Pulsar Group Plc
Consolidated Statement of Changes in Equity
for the six months ended 31 May 2024
Share Treasury Share Capital Share Foreign Other Retained Total
capital shares premium redemption option exchange reserve earnings
account reserve reserve reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 30 November 2022 6,526 (141) 74,424 395 2,022 2,736 502 (26,090) 60,374
Loss for the period - - - - - - - (5,066) (5,066)
Other comprehensive loss for the period - - - - - (2,967) - - (2,967)
Share-based payments - - - - 498 - - - 498
At 31 May 2023 6,526 (141) 74,424 395 2,520 (231) 502 (31,156) 52,839
Profit for the period - - - - - - - (2,836) (2,836)
Other comprehensive loss for the period - - - - - (734) - - (734)
Share-based payments - - - - 417 - - - 417
At 30 November 2023 6,526 (141) 74,424 395 2,937 (965) 502 (33,992) 49,686
Loss for the period - - - - - - - (3,691) (3,691)
Other comprehensive loss for the period - - - - - (39) - - (39)
Share-based payments - - - - 227 - - - 227
At 31 May 2024 6,526 (141) 74,424 395 3,164 (1,004) 502 (37,683) 46,183
Pulsar Group Plc
Consolidated Statement of Cash Flow
for the six months ended 31 May 2024
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
31-May-24 31-May-23 30-Nov-23
£'000 £'000 £'000
Loss for the year attributable to shareholders (3,691) (5,066) (7,902)
Adjustments for:
Taxation (761) (1,052) (2,931)
Financial expense 159 137 253
Financial income (8) (7) (12)
Depreciation and amortisation 3,411 3,510 7,753
Share based payments 227 498 915
Share of loss of associate 100 116 198
Operating cash outflow before working capital changes (563) (1,864) (1,726)
(Increase)/decrease in trade and other receivables (203) (92) 1,131
(Decrease)/increase in trade and other payables (1,258) 1,363 4,584
Decrease in accruals (59) (173) (635)
Increase in contract liabilities 1,329 2,851 4,012
Decrease in provisions (217) (16) (81)
Net cash (outflow)/inflow from operations before taxation (971) 2,069 7,285
Tax received - 1,134 1,272
Net cash (outflow)/inflow from operations (971) 3,203 8,557
Investing
Interest received 8 7 12
Acquisition of property, plant and equipment (32) (119) (509)
Acquisition of intangible assets (3,374) (4,203) (8,575)
Net cash outflow from investing activities (3,398) (4,315) (9,072)
Financing
Interest paid (151) (130) (241)
Drawdown of loans and other borrowings 4,442 - -
Lease liabilities paid (905) (917) (1,800)
Net cash inflow/(outflow) from financing activities 3,386 (1,047) (2,041)
Net decrease in cash (983) (2,159) (2,556)
Opening cash and cash equivalents 2,248 4,922 4,922
Exchange (losses)/gains on cash and cash equivalents (13) (93) (118)
Closing cash and cash equivalents 1,252 2,670 2,248
Notes
1. Unaudited notes
Basis of preparation and accounting policies
The financial information for the six months to 31 May 2024 is unaudited and
was approved by the Board of Directors on Friday 5(th) July 2024.
The interim financial statements do not include all of the information
required for full annual financial statements and should be read in
conjunction with the consolidated financial statements for the year ended 30
November 2023.
The interim financial information for the six months ended 31 May 2024,
including comparative financial information has been prepared on the basis of
the accounting policies set out in the last annual report and accounts.
The preparation of the interim financial statements requires management to
make judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income
and expense. Actual results may subsequently differ from those estimates.
In preparing the interim financial statements, the significant judgements made
by management in applying the Group's accounting policies and key sources of
estimation uncertainty were the same, in all material respects, as those
applied to the consolidated financial statements for the year ended 30
November 2023.
The Group has elected to present comprehensive income in one statement.
Going concern assumption
The Group meets its day to day working capital requirements through its cash
balance and during the period has entered into a £3.0m overdraft facility and
a £3.0m loan facility which are both in place at the date of this
announcement. The £3.0m debt facility is in place until November 2025 whilst
the overdraft is repayable on demand. As at the date of this report, the
directors have a reasonable expectation that the Company and the Group have
adequate resources to continue in operational existence for the foreseeable
future. For this reason, they continue to adopt the going concern basis in
preparing the financial statements.
Information extracted from the Group's 2023 Annual Report
The financial figures for the year ended 30 November 2023, as set out in this
report, do not constitute statutory accounts but are derived from the
statutory accounts for that financial year.
The statutory accounts for the year ended 30 November 2023 were prepared under
IFRS and have been delivered to the Registrar of Companies. The auditors
reported on those accounts. Their report was unqualified, did not draw
attention to any matters by way of emphasis and did not include a statement
under Section 498(2) or 498(3) of the Companies Act 2006.
2. Revenue
The Group's revenue is primarily derived from the rendering of services. The
Group's revenue was generated from the following territories:
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
31-May-24 31-May-23 30-Nov-23
£'000 £'000 £'000
United Kingdom 11,452 10,953 22,353
North America 1,518 1,363 2,875
Europe excluding UK 1,193 983 2,129
Australia and New Zealand 12,821 13,520 26,530
Asia 3,694 4,135 8,010
Rest of the world 139 323 505
30,817 31,277 62,402
3. Earnings per share
The calculation of earnings per share is based upon the loss after tax for the
respective period. The weighted average number of ordinary shares used in the
calculation of basic earnings per share is based upon the number of ordinary
shares in issue in each respective period.
The impact of share options granted under the company's share option scheme
are anti-dilutive due to the Group being in a loss-making position, so the
weighted average number of ordinary shares used in the calculation of diluted
earnings per share is the same as for basic earnings per share.
This has been computed as follows:
Unaudited Unaudited Audited
As at As at As at
31-May-24 31-May-23 30-Nov-23
Numerator
Loss for the year and earnings used in basic EPS (£'000) (3,730) (8,033) (11,603)
Earnings used in diluted EPS (£'000) (3,730) (8,033) (11,603)
Denominator
Weighted average number of shares used in basic EPS ('000) 127,699 127,699 127,699
Effects of:
Dilutive effect of options N/A N/A N/A
Weighted average number of shares used in diluted EPS ('000) 127,699 127,699 127,699
Basic loss per share (pence) (2.92) (6.29) (9.09)
Diluted loss per share (pence) (2.92) (6.29) (9.09)
4. Availability of interim results
The interim results will not be sent to shareholders but will be available at
the Company's registered office at The Johnson Building, 79 Hatton Garden,
London, EC1N 8AW and on the Company's website: www.pulsargroup.com
(http://www.pulsargroup.com) .
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