REG - Ten Lifestyle Group - Half-year Report
11/05/2022 07:00
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RNS Number : 0213L Ten Lifestyle Group PLC 11 May 2022
11 May 2022
Ten Lifestyle Group plc
("Ten", the "Company" or the "Group")
Interim results for the six months ended 28 February 2022
Ten Lifestyle Group plc (AIM: TENG), a leading technology-enabled global
concierge platform for the world's wealthy and mass affluent, announces its
unaudited Interim Results for the six months ended 28 February 2022 ("H1
2022", or "the period").
Financial
· Net Revenue(1) increased 21% to £20.8m (H1 2021: £17.2m) with
growth in all three global regions (EMEA, Americas, APAC)
o Corporate revenue of £18.4m (13% higher than H1 2021: £16.3m)
o Supplier revenue of £2.4m (167% higher than H1 2021: £0.9m and back to
pre-COVID levels)
· Operating expenses increased to £19.9m (H1 2021: £15.5m after
£2.1m benefit of payroll assistance(2)) due to an increase in employees
during the period to support a recovery in demand
· Adjusted EBITDA(3) fell to £0.9m (H1 2022: £1.7m) due to the
higher cost base and the impact of Omicron(4) in Q2
· Loss before tax improved to £(2.8)m (H1 2021: £(3.6)m) largely
due to a reduction in the share option charge and lower depreciation
· Cash and cash equivalents of £5.1m (H1 2021: £9.2m, FY 2021:
£6.7m)
Operational
· 100% retention of Material Contracts(5) with some key contract
renewals and contract extensions signed, including with Barclays Bank, DNB
Bank and St James's Place
· High conversion rate of the new business pipeline has seen new
contract wins with market leading wealth managers in each of EMEA, the
Americas and APAC
· Continued investment in proprietary digital platforms,
communications, and technologies to improve service quality and efficiencies,
£6.5m (H1 2021: £5.5m)
· 9% increase in total Active Members(6) during the period to 221k (FY
2021: 203k(7)), with growth in all regions
· Recovery of high member satisfaction levels(8) following a temporary
decline at the start of the period due to an increase in service demands while
staff were recruited and trained
CURRENT TRADING AND OUTLOOK
In the two months since the end of February, monthly request numbers have
increased in all regions, with Net Revenue now above pre-COVID levels (H1
2020: £23.8m) and travel bookings increasing Supplier revenue above pre-COVID
levels (H1 2020: £2.5m). This is despite travel remaining subdued in parts of
the Americas and APAC and the closure of our Moscow office from 9 March.
Further easing of worldwide travel restrictions and concerns are expected to
result in further organic growth in request numbers and related revenue. In
addition, three previously announced new Material Contracts are expected to
launch in the second half of the year and drive further growth across the rest
of this financial year.
We continue to make improvements to servicing, content, digital and
operational efficiencies, including the productive deployment of new staff
recruited before Omicron, to deliver improved profitability in the second half
and achieve full year Adjusted EBITDA in line with the Board's expectations.
We also continue to invest in technology to further drive the growth engine
whilst maintaining a positive net cash position.
Alex Cheatle, CEO of Ten Lifestyle Group, said;
"As we anticipated, revenue from corporate clients grew at the start of the
period as we accelerated out of the pandemic. The arrival of Omicron at the
end of November then stalled growth. However, we have now returned to growth
and since February, Net Revenue is tracking above levels last seen in the
period before COVID emerged (H1 2020: £23.8m).
In order to manage the increased level of demand, we recruited new staff at
the start of the period and retained them despite the temporary fall in demand
caused by Omicron, to support new contract launches and the recovery in demand
we are now seeing. This increase in cost base, combined with the nonrecurrence
of payroll assistance, caused a short-term fall in profitability during the
period.
We believe the improvements made to our member proposition and operational
efficiencies, along with contracted launches in the coming months, our strong
pipeline of new business opportunities and the gradual return of demand for
our core services, means we are well positioned to continue to drive our
growth engine."
Analyst Presentation
An online analyst presentation will be held by video link today at 9:00am.
The Group will also be presenting an Investor Webinar for current and
prospective investors on Tuesday 17 May 2022 at 5:30pm BST.
To attend either the Analyst Presentation or the Investor Webinar, please
email investorrelations@tengroup.com (mailto:investorrelations@tengroup.com)
.
For further information please visit www.tenlifestylegroup.com
(http://www.tenlifestylegroup.com) or call:
Ten Lifestyle Group plc +44 (0)20 7850 2796
Alex Cheatle, Chief Executive Officer
Alan Donald, Chief Financial Officer
Peel Hunt LLP, Nominated Advisor and Broker +44 (0) 20 7418 8900
Edward Knight
Paul Gillam
James Smith
( )
(1) Net Revenue excludes the direct cost of sales relating to certain member
transactions managed by the Group.
(2) During the COVID pandemic, Ten Group benefited from various forms of
payroll assistance from governments in countries where it operated (i.e.
furlough) and operated a voluntary Salary Sacrifice Scheme in exchange for
share options, as described on pages 52 and 53 of the 2021 Annual Report &
Accounts.
(3) Adjusted EBITDA is operating profit/(loss) before interest, taxation,
amortisation, depreciation, share-based payment expense and exceptional items.
(4) The Omicron variant of COVID-19 was first reported to the World Health
Organization on 24 November 2021 and quickly spread around the world, causing
countries to re-imposed lockdown measures.
(5) Ten categorises its corporate client contracts based on the annualised
value paid, or expected to be paid, by the corporate client for the provision
of concierge and related services by Ten as: Small contracts (below £0.25m);
Medium contracts (between £0.25m and £2m); Large contracts (between £2m and
£5m); and Extra Large contracts (over £5m). This does not include the
revenue generated from suppliers through the provision of concierge services.
Medium, Large and Extra Large contracts are collectively Ten's "Material
Contracts".
(6) Active Members are members eligible to use Ten's services by virtue of
them holding an account, card, employment or other such position or product
linked to a corporate client programme who have used Ten's services at least
once in the 12 months prior.
(7) The number of Active Members in the prior year has been recalculated using
a more accurate measure of member eligibility, consistent with the definition
of Active Members, which has resulted in the figure for FY 2021 being revised
from 210k to 203k.
(8) Ten measures member satisfaction using the Net Promoter Score management
tool, which gauges the loyalty of a firm's customer relationships
(https://en.wikipedia.org/wiki/Net_Promoter
(https://en.wikipedia.org/wiki/Net_Promoter) ).
OPERATING AND FINANCIAL REVIEW
CHIEF EXECUTIVE'S STATEMENT
We started the financial year strongly with the launch of a Large contract
with Credit Saison, a leading premium credit card issuer in Japan and
expansion of an Extra Large contract with a corporate client in EMEA. These,
alongside the lifting of pandemic restrictions in EMEA and the USA, resulted
in the return to pre-COVID levels of global travel bookings. Additional staff
were recruited in response to the growth in order to service increased demand.
The Group's cost base increased as a result of this recruitment and
nonrecurrence of payroll assistance received in H1 2021, before Omicron
reduced member activity and revenue in the second half of the period. The
additional headcount was largely retained to support the forecast expansion of
existing contracts and new contract launches. We saw this anticipated recovery
in demand at the end of the period and it has accelerated since the end of the
period.
Despite disruption to the recovery in levels of member activity caused by
Omicron, Net Revenue increased by 21% compared to prior year.
The impact of lower demand due to Omicron, after the recruitment of staff
reduced Adjusted EBITDA to £0.9m compared to prior year (H1 2021: £1.7m).
Loss before tax fell to £(2.8)m compared to the prior year (H1 2021:
£(3.6)m), largely due to the absence of a salary sacrifice scheme and a
reduction in depreciation from lower office costs.
Corporate client developments
Total Material Contracts Held by Size
Contract size Launched by 28 February 2022 Signed and expected to be launched by 31 August 2022
Extra Large 3 3
Large 6 6
Medium 17 20
Total 26 29
During the period three new Material Contracts have been won as well as
multiple Small contract wins; all expected to launch by the end of the
financial year. These include a Medium contract with one of Japan's largest
wealth management businesses, a Medium contract to initially launch in the USA
with one of the world's largest private banks and a Medium contract with one
of the UK's largest wealth managers.
The Group retained all its Material Contracts in the period, securing contract
renewals and extensions with existing corporate clients, including Barclays
Bank, DNB Bank and St James's Place. This demonstrates the competitive
resilience of Ten's competitive position and the apparent value of our
concierge service to our clients as a customer retention tool.
Ten has been engaged by certain existing clients to deliver bespoke, paid-for
digital projects to develop and enhance the Ten's proprietary digital platform
and content to increase their customer metrics.
Members
As the world progressively emerges from the pandemic, we are seeing a gradual
increase (+9%) in the number of Active Members using the service in all
regions, which generally results in increased Net Revenue from corporate
accounts.
Member satisfaction levels dipped in the Autumn due to increase in demand and
lag between hiring new staff and them becoming fully trained, effective, and
efficient. Service levels have recovered during the second half of the period.
FINANCIAL REVIEW
Results
£m H1 2022 H1 2021
Revenue 21.3 17.5
Net Revenue 20.8 17.2
Operating expenses and Other income (19.9) (15.5)
Adjusted EBITDA 0.9 1.7
Adjusted EBITDA % of Net Revenue 4.3% 9.8%
Depreciation (1.3) (1.8)
Amortisation (2.2) (1.9)
Share-based payments and exceptional items charge (0.3) (1.2)
Operating loss before interest and tax (2.9) (3.2)
Net finance income/(expense) 0.1 (0.4)
Loss before taxation (2.8) (3.6)
Taxation charge (0.4) (0.3)
Loss for the period (3.2) (3.9)
Revenue
Revenue for the period was £21.3m, a 22% increase on H1 2021 (£17.5m). Net
Revenue (which is our key revenue measure) for the period was £20.8m, a 21%
increase on the same period of the prior year (H1 2021: £17.2m) and a 19%
increase on the previous period (H2 2021: £17.5m), however it remained 13%
lower than H1 2020: £23.8m, which was the last period before international
lockdowns took effect.
This revenue improvement was driven primarily by recovery in the business at
the start of the period offset by lower demand due to the impact of the
Omicron on member activity.
Corporate revenue was £18.4m, (paid by our corporate clients to service their
customers) compared to the prior year (H1 2021: £16.3m) but remains 14% below
pre-COVID levels (H1 2020: £21.3m). Supplier revenue (predominantly travel
related) was £2.4m, an 167% increase compared to the prior year (H1 2021:
£0.9m) and a return to pre-COVID levels (H1 2020: £2.5m), despite Omicron
affecting global travel during the period.
Operating expenses & other income excluding depreciation, amortisation,
share based payments and exceptional items
Operating expenses increased to £19.9m (H1 2021: £15.5m after benefit of
£1.4m of government salary subsidies and £0.7m salary sacrifice savings),
driven by increased activity in the period, particularly at the start of the
period as we recruited staff to service increases in requests alongside
nonrecurrence of payroll assistance from the previous year. Operating expenses
remain 8% lower than pre-COVID levels (H1 2020: £21.7m) due to improved
efficiencies.
When the impact of Omicron reduced activity, a decision was made to retain
staff as we saw Omicron as having a short-term impact on the business and it
was more efficient to retain staff rather than reduce and then rehire.
Adjusted EBITDA
Adjusted EBITDA, as reported, takes into account all Group operating costs,
other than depreciation of £1.3m (H1 2021: £1.8m), amortisation
of £2.2m (H1 2021: £1.9m), share-based payment expenses of £0.3m (H1
2021: £0.8m) and exceptional charges of £0.0m (H1 2021: £0.4m). On this
basis, Adjusted EBITDA was a profit of £0.9m (H1 2021: £1.7m).
Depreciation has declined by £0.5m, primarily due to a reduction in
Right-of-use Asset (lower lease costs). Amortisation increased by £0.3m,
reflecting our continued technology investment. Share-based payment expenses
decreased by £0.5m as the number of options granted in the period was lower
than in the prior year.
As a result of the above, Loss before tax has improved by 22% to £(2.8)m (H1
2021: £(3.6)m).
Regional performance
Segmental Net Revenue reporting reflects our servicing location rather than
the location of our corporate clients. This allows us to understand and track
the efficiency and profitability of our operations around the world.
£m H1 2022 H1 2021 % change
EMEA 10.0 8.7 +15%
Americas 6.5 5.0 +30%
APAC 4.3 3.5 +23%
Total 20.8 17.2 +21%
After fully allocating our indirect central costs including IT, platform
support, non-lease costs and management across the regions, the Adjusted
EBITDA profitability of each regional segment is:
£m H1 2022 H1 2021
EMEA 1.8 3.0
Americas (1.1) (1.7)
APAC 0.2 0.4
Total 0.9 1.7
Adjusted EBITDA % of Net Revenue 4.3% 9.8%
EMEA
Net Revenue in the region increased by 15% to £10.0m (H1 2021: £8.7m). The
increase in Net Revenue of £1.3m is primarily driven by recovery of base
business and higher supplier revenue due to increased demand primarily at the
start of the period offset by slowing of activity in the second half of the
period due to the Omicron variant. Adjusted EBITDA of £1.8m is lower than
prior year of £3.0m due to additional staff and nonrecurrence of payroll
assistance, as previously explained.
AMERICAS
Net Revenue from the region increased by 30% to £6.5m (H1 2021: £5.0m). The
£1.5m increase in revenue in the region also reflected the recovery in base
business activity and increase in Supplier revenue as travel restrictions
started to ease. As a result, the Adjusted EBITDA loss of £(1.1)m is lower
than prior year of £(1.7)m.
APAC
Net Revenue increased by 23% to £4.3m (H1 2021: £3.5m). This increase is
primarily due to the new Large contract with Credit Saison that launched in
September 2021. The region remains relatively subdued from an activity
perspective as the impact of various lockdowns have further delayed recovery
in the region in the period. Further revenue recovery is dependent on the
timing on international travel and domestic activity fully opening up again in
the region. Adjusted EBITDA profit of £0.2m compared to an Adjusted EBITDA
profit of £0.4m in the prior period.
Cash flow
H1 2022
£m
Loss before tax (2.8)
Movement in working capital 0.5
Non-cash items (share-based payments, depreciation, amortisation charges and 3.7
exceptional items)
Pre-tax operating cash in flows 1.4
Capital expenditure (0.5)
Investment in intangibles (2.9)
Taxation (0.2)
Cash outflow (2.2)
Cash receipts from issue of new shares and sale of treasury shares 1.8
Repayment of leases and net interest (1.2)
Net Financing activities 0.6
Foreign currency movements 0.1
Reduction in cash (1.5)
Cash and cash equivalents balance 5.1
Pre-tax operating cash inflows of £1.4m, reflected a loss before tax of
£2.8m, increased net working capital of £0.5m, and add back of non-cash
items of £3.7m, as highlighted above.
Additionally, as planned, there was £2.9m (H1 2021: £2.5m) of capital
investment in the period in both our global content, our internal CRM platform
(TenMAID) and the continued development of our digital platform.
Cash receipts from issue of new shares of £1.3m, primarily from exercising of
salary sacrifice options and some CSOP options, sale of treasury shares of
£0.5m offset by Repayment of leases and net interest of £1.2m has resulted
in a cash outflow in the period of £1.5m.
Balance sheet
£'m H1 2022 FY 2021
Intangible assets 12.3 11.6
Property, plant and equipment 0.7 0.6
Right-of-use assets 2.7 2.6
Cash 5.1 6.7
Other current assets 8.4 5.8
Current liabilities (17.2) (13.7)
Other non-current liabilities (1.3) (1.7)
Net assets 10.7 11.9
Share capital/Share premium 30.7 29.4
Reserves (20.0) (17.5)
Total equity 10.7 11.9
With the increase in business activity, other current assets grew by £2.6m
primarily due to trade receivables and current liabilities, increased by
£3.5m as deferred income increased. Net assets of £10.7m includes cash of
£5.1m as at 28 February 2022.
Principle Risks and Uncertainties
The principle risks and uncertainties facing the Group remain broadly
consistent with the Principle Risks and Uncertainties reported in Ten's 2021
Annual Report. The conflict in Ukraine has had limited macroeconomic impact on
Ten's core service categories in the affected region and the impact of the
closure of the Group's Moscow office from 9 March 2022 is expected to be
limited (the Russia business contributed <1.5% of the Group's Net Revenue
in the period). Additional steps have been taken to ensure the Group's
continued compliance with international sanctions.
Alex Cheatle Alan Donald
Chief Executive Officer Chief Finance Officer
10 May 2022 10 May 2022
Consolidated statement of comprehensive income
Note 6 months to 28 Feb 2022 6 months to 28 Feb 2021
Unaudited Unaudited
£'000 £'000
Revenue 2 21,326 17,484
Cost of sales on principal member transactions (574) (318)
Net Revenue 2 20,752 17,166
Other cost of sales (638) (328)
Gross profit 20,114 16,838
Administrative expenses (23,139) (20,202)
Other income 150 150
Operating profit before amortisation, depreciation, interest, share based 886 1,689
payments, exceptional items and taxation ("Adjusted EBITDA")
Depreciation (1,305) (1,765)
Amortisation 3 (2,156) (1,877)
Share-based payment expense (300) (816)
Exceptional items - (445)
Operating loss (2,875) (3,214)
Net Finance Income/(expenses) 36 (365)
Loss before taxation (2,839) (3,579)
Taxation expense 4 (316) (351)
Loss for the period (3,155) (3,930)
Other comprehensive expense:
Foreign currency translation differences (174) (135)
Total comprehensive loss for the period (3,329) (4,065)
Basic and diluted loss per ordinary share 5 (3.8)p (4.9)p
The consolidated statement of comprehensive income has been prepared on the
basis that all operations are continuing operations.
Consolidated statement of financial position
Note 6 months to 28 Feb 2022 31 August 2021
Unaudited Audited
£'000 £'000
Non-current assets
Intangible assets 3 12,329 11,555
Property, plant and equipment 719 561
Right of use assets 2,674 2,601
Total non-current assets 15,722 14,717
Current assets
Inventories 70 98
Trade and other receivables 8,358 5,707
Cash and cash equivalents 5,122 6,662
Total current assets 13,550 12,467
Total assets 29,272 27,184
Current liabilities
Trade and other payables (14,761) (11,487)
Provisions (596) (568)
Lease Liabilities (1,819) (1,504)
Total current liabilities (17,176) (13,559)
Net current liabilities (3,626) (1,092)
Non-current liabilities
Lease Liabilities (1,356) (1,678)
Total non-current liabilities (1,356) (1,678)
Total liabilities (18,532) (15,237)
Net assets 10,740 11,947
Equity
Called up share capital 84 82
Share premium account 30,658 29,356
Merger relief reserve 1,993 1,993
Treasury reserve 523 5
Foreign exchange reserve (584) (410)
Retained deficit (21,934) (19,079)
Total equity 10,740 11,947
Consolidated statement of changes in equity
Share capital Share premium account Merger relief reserve Foreign exchange reserve Treasury reserve Retained deficit Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 September 2020 (Audited) 81 28,480 1,993 (405) 15 (14,931) 15,233
Loss for the year - - - - - (5,774) (5,774)
Foreign exchange - - - (5) - - (5)
Total comprehensive income for the year - - - (5) - (5,774) (5,779)
Shares purchased by Employee Benefit Trust (EBT) - - - - (10) - (10)
Issue of share capital 1 876 877
Equity-settled share-based payments charge - - - - - 1,626 1,626
Balance at 31 August 2021 82 29,356 1,993 (410) 5 (19,079) 11,947
Period ended 28 February 2022
Loss for the year (3,155) (3,155)
Foreign exchange - - - (174) - - (174)
Total comprehensive income for the year - - - (174) - (3,155) (3,329)
Equity-settled share-based payments charge - - - - - 300 300
Shares sold by Employee Benefit Trust (EBT) 518 - 518
Issue of new share capital 2 1,302 - - - - 1,304
Balance at 28 February 2022 (Unaudited) 84 30,658 1,993 (684) 523 (21,934) 10,740
Condensed consolidated statement of cash flows
Note 6 months to 28 Feb 2022 6 months to 28 Feb 2021
£'000 £'000
Cash flows from operating activities
Loss for the year, after tax (3,155) (3,930)
Adjustments for:
Taxation expense 4 316 351
Net Finance Income (36) 173
Amortisation of intangible assets 3 2,156 1,877
Depreciation of property, plant and equipment 229 376
Depreciation of right-of-use asset 1,076 1,389
Equity-settled share based payment expense 300 816
Impairment - 445
Movement in working capital:
Decrease in inventories 28 5
(Increase)/Decrease in trade and other receivables (2,723) 1,698
Increase/(Decrease) in trade and other payables 3,201 (786)
Cash from by operations 1,392 2,414
Tax paid (236) (227)
Net cash from operating activities 1,156 2,187
Cashflows from Investing activities
Purchase of intangible assets 3 (2,927) (2,525)
Purchase of property, plant and equipment (457) (49)
Net cash used by investing activities (3,384) (2,574)
Cash flows from financing activities
Lease Liability repayments (1,093) (1,544)
Sale of treasury shares 518 -
Interest paid on IFRS16 lease liabilities (93) (167)
Cash receipts from issue of share capital 1,302 597
Net cash used by financing activities 634 (1,114)
Foreign currency movements 54 (284)
Net decrease in cash and cash equivalents (1,540) (1,785)
Cash and cash equivalents at beginning of period 6,662 10,957
Cash and cash equivalents at end of period
Cash at bank and in hand 5,122 9,172
Cash and cash equivalents 5,122 9,172
Notes to the Interim Financial Information
1. Basis of preparation
These interim consolidated financial statements have been prepared using
accounting policies based on International Financial Reporting Standards (IFRS
and IFRIC Interpretations) issued by the International Accounting Standards
Board ("IASB") as adopted for use in the EU. They do not include all
disclosures that would otherwise be required in a complete set of financial
statements and should be read in conjunction with the 31 August 2021 Annual
Report. The financial information for the half years ended 28 February 2022
and 28 February 2021 does not constitute statutory accounts within the meaning
of Section 434 (3) of the Companies Act 2006 and both periods are unaudited.
The annual financial statements of Ten Lifestyle Group plc ('the Group') are
prepared in accordance with International standards in conformity with the
requirements of the Companies Act 2006 ('IFRS') and with those parts of the
Companies Act 2006 applicable to companies reporting under IFRS (except as
otherwise stated). The comparative financial information for the year ended 31
August 2021 included within this report does not constitute the full statutory
Annual Report for that period. The statutory Annual Report and Financial
Statements for year ended 31 August 2021 have been filed with the Registrar of
Companies. The Independent Auditors' Report in the Annual Report and Financial
Statements for the year ended 31 August 2021 was unqualified, did not draw
attention to any matters by way of emphasis and did not contain a statement
under 498(2)-(3) of the Companies Act 2006.
The Group has applied the same accounting policies and methods of computation
in its interim consolidated financial statements as in its year ended 31
August 2021 annual financial statements. The Groups tax charge is not
accounted for under the same basis as IAS 34. The tax charge is calculated
using the expected effective tax rate at the reporting date. There are no new
standards effective yet and that would be expected to have a material impact
on the entity in the current period.
Going Concern
As at 28 February 2022, the date of the interim consolidated financial
statements, the Group had cash of £5.1m. Subsequent to the period's end, as
announced on 28 March 2022, the Group borrowed £1.5m from a related party for
15 months to support the business' normal working capital cycles, to allow the
Group to continue to invest in its technology platform and to support revenue
growth, in line with management's expectations.
As indicated in the Current Trading and Outlook above, in the two months since
the end of February monthly request numbers have increased in all regions with
Net Revenue now above pre-COVID levels (H1 2020: £23.8m) and travel bookings
driving Supplier revenue above pre-COVID levels (H1 2020: £2.5m).
The Directors have taken account of this position when considering forecasts
to support their going concern conclusion. The following has been considered:
· Base Case cashflow forecast to 31 August 2023
· Downside cashflow forecast to 31 August 2023
· Mitigating actions available
Base Case Scenario
The Base Case forecast reviewed by the Directors is in line with expectations
for the current financial year and FY 2023. The Net Revenue assumptions in the
Base Case forecast are consistent with growth trends around base business
growth, net contract wins and Supplier revenue growth. Cost assumptions
reflect changes in Net Revenue as well as continual improvements in
operational efficiencies.
Under this scenario, the Group will remain in a net cash position during the
forecasted period.
Downside scenario and mitigating actions
The Directors consider that the major risks in the Base Case forecast is that
our Net Revenue growth assumptions are not met and remain flat during the
period. If this scenario were to develop, the Group has a number of mitigating
actions available to it, including reducing direct operating costs to align to
Net Revenue growth rates as well as reducing indirect costs supporting the
business.
The Directors are confident that the impact of these mitigating actions would
ensure the Group remains in a net cash position during the forecasted period.
Conclusion
Having considered the forecast scenarios, including the main risks within them
and mitigating actions described, there is a reasonable expectation that the
Group has adequate financial resources to continue to operate for at least the
next twelve months from the date of this interim report. Accordingly, the
consolidated financial statements have been prepared on a going concern basis.
The Board of Directors approved this interim report on 10 May 2022.
2. Segmental Information
The total revenue for the Group has been derived from its principal activity;
the provision of concierge services.
6 months to 28 Feb 2022 6 months to 28 Feb 2021
(Unaudited) (Unaudited)
£'000 £'000
EMEA 10,014 8,735
Americas 6,483 4,997
APAC 4,255 3,434
Net Revenue 20,752 17,166
Add back: Cost of sales on principal member transactions 574 318
Revenue 21,326 17,484
EMEA 1,830 2,956
Americas (1,143) (1,653)
APAC 199 386
Adjusted EBITDA 886 1,689
Amortisation (2,156) (1,877)
Depreciation (1,305) (1,765)
Share-based payment expense (300) (816)
Exceptional Items - (445)
Operating loss (2,875) (3,214)
Foreign exchange gain/(loss) 129 (192)
Other net finance expense (93) (173)
Loss before taxation (2,839) (3,579)
Taxation expense (316) (351)
Loss for the year (3,155) (3,930)
Net Revenue is a non-GAAP Group measure that excludes the direct cost of
sales relating to member transactions managed by the Group, such as the cost
of airline tickets sold under the Group's ATOL licence's. Net Revenue is the
measure of the Group's income on which segmental performance is measured.
Adjusted EBITDA is a Group non-GAAP specific measure excluding interest,
taxation, depreciation, amortisation, share-based payments and exceptional
costs, the latter being expenses which are considered to be one-off and
non-recurring in nature (where applicable).
Adjusted EBITDA is the main measure of performance used by the Group's Chief
Executive Officer, who is considered to be the chief operating decision maker.
Adjusted EBITDA is the principal profit measure for a segment.
The statement of financial position is not analysed between reporting segment.
Management and the chief operating decision-maker consider the statement of
financial position at Group level.
3. Intangible Assets
The Group capitalised £2.9m (H1 2021: £2.5m, FY 2021: £5.4m) of costs
representing the development of Ten's global digital platform, TenMAID (Ten's
proprietary customer relationship management system) resulting in a net book
value of £12.3m (H1 2021: £10.7m, FY 2021: £11.6m) after an amortisation
charge of £2.2m (H1 2021: £1.9m, FY 2021: £4.0m).
4. Taxation
The income tax expense has been recognised based on the best estimate of the
weighted average annual effective UK corporation tax rate expected for the
full financial year. The Group currently forecasts a loss for the financial
year ending 31 August 2021 and therefore no charge has been recognised in
regard to UK corporation tax in the period.
The income tax expense of £0.4m (H1 2021: £0.4m) includes foreign taxes
recognised by overseas Group companies on a territory by territory basis using
the expected effective tax rate for the full year.
5. Earnings Per Share
6 months to 28 Feb 2022 6 months to 28 Feb 2021
£'000 £'000
Loss attributable to equity shareholders of the parent (3,155) (3,930)
Weighted average number of ordinary shares in issue (net of treasury) 83,195,255 80,302,498
Basic loss per share (pence) (3.8)p (4.9)p
Where the Group has incurred a loss in the six-month period to 28 February
2022, the diluted earnings per share is the same as the basic loss per share
as the loss has an anti-dilutive effect.
6. Post-period events
As a result of the conflict in Ukraine, the Group ceased its limited business
activities in Russia (c. 1-2% of the Group's annual Net Revenue) and closed
its Moscow office from 9 March. Additional steps have been taken to ensure
compliance with international sanctions.
As announced on 28 March 2022, the Group borrowed £1.5m from a related party
for a 15 month term to support the business' normal working capital cycles, to
allow the Group to continue to invest in its technology platform and to
support revenue growth, in line with management's expectations.
7. Cautionary Statement
This document contains certain forward-looking statements relating to Ten
Lifestyle Group plc. The Company considers any statements that are not
historical facts as "forward-looking statements". They relate to events and
trends that are subject to risk and uncertainty that may cause actual results
and the financial performance of the Company to differ materially from those
contained in any forward-looking statement. These statements are made by the
Directors in good faith based on information available to them and such
statements should be treated with caution due to the inherent uncertainties,
including both economic and business risk factors, underlying any such
forward-looking information.
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