Last checked at 20 Jan 2020 07:00
This announcement contains inside information for the purposes of article 7 of the Market Abuse Regulation EU No. 596/2014.
20 January 2020
Aptitude Software Group plc ("Aptitude Software" or the "Group")
Trading Update, Board Changes and Notice of Results
Aptitude Software, a specialist provider of powerful financial management software to large global businesses, today provides an update for the year ended 31 December 2019 and the current financial year.
Trading Update
Aptitude Software made good progress in 2019 and expects to report results in line with the Board's expectations.
The Group complemented a good new business performance in 2019, weighted towards the first half of the year as explained below, with several new contracts from existing clients as they expand the scope of their use of Aptitude Software's products.
A current focus for the Group is the opportunity with the Aptitude Insurance Calculation Engine ("AICE"), with several contract wins achieved in 2019. AICE allows an insurer to perform the calculations and detailed accounting movements they require to be compliant with the new insurance accounting standard IFRS 17. Recent speculation that the deadline for the implementation of IFRS 17 may be deferred by twelve months (currently effective for periods commencing on 1 January 2022) has caused delays with a small number of sales opportunities for AICE. These delays have had minimal impact on 2019 recognised revenue but have suppressed Annual Recurring Revenue ("ARR")1 growth as at 31 December 2019 from what would otherwise have been achieved.
New business success has also been achieved with the Aptitude Accounting Hub ("AAH") and Aptitude Revenue Management; particularly pleasing is the number of finance transformation led sales for AAH. A highlight in the year was the entry into an enterprise licence agreement with an existing client who is one of the UK's leading clearing banks. This client's use of AAH in a growing number of its operations led to incremental licencing requirements and further demonstrates the material value the Group's applications can bring to organisations looking to undertake finance transformation.
Despite the strengthening of Sterling versus the US Dollar in the final quarter of 2019, which reduced the Group's ARR at the year-end by £0.9 million, ARR increased in the year to £28.6 million, growth of 22% on a constant currency basis ("C/C") (31 December 2018: £23.5 million; 30 June 2019: £27.0 million (both comparatives restated for C/C)).
A further highlight in the year was the Group's successful inaugural user and partner conference in North America, AptConnect. The conference was held in Boston in November with over 60 delegates and demonstrates a further step in moving the Group to an increasingly client-centric business.
Future Investment and Outlook
Following both the re-organisation of the Group and change in leadership in 2019, opportunities in the market, client base and the business have been identified for additional investment.
Finance transformation, also known as digital finance, continues to be a significant opportunity for the Group with the benefits of an accounting hub, our key offering, being increasingly recognised by the market. To fully realise the opportunity, development is being increased in both functionality and technology, activity that is being performed at our integrated centre of excellence in Poland, the Aptitude Innovation Centre, which continues to be a material differentiator for the Group and where a growing number of activities are performed.
One of the other key areas of investment this year will be in the enablement and training of our clients and partners as well as our own people; an initiative which will accelerate the use of our products within the existing base, ensure highly successful implementations and, as a result, encourage wider adoption within the market. This investment will be in both people and technology and will also underpin our partner programme where such enablement is a differentiating capability.
Several operational areas of the business will also be strengthened in 2020, allowing the Group to further enhance the services it provides to its clients. These include support, solution management services, its SaaS offering and consultant and partner enablement. The Group's SaaS or cloud-based offerings continue to grow and scaling this service further is a key growth driver for the business. Investment will also continue in the professional services organisations responsible for the implementation of the Group's applications in conjunction with our clients and partners.
The acceleration in investment is to build the necessary foundations to fully realise the opportunities that have been identified. With the Board's overall revenue growth expectations for 2020 unchanged, the above investments (together with the aforementioned foreign exchange impact on ARR) are likely to result in 2020 adjusted operating profits being marginally ahead of those expected for 2019.
With a strong portfolio of product and service offerings, increasing worldwide presence, a well-established partner network and a growing proportion of higher margin recurring revenues, the Group is well placed and is confident that growth in profits will return to longer term trends in 2021 and following years.
Board Changes
The Board is pleased to confirm the appointment of Jeremy Suddards as Chief Executive Officer with immediate effect following a successful transition to the role since the announcement in July 2019. Tom Crawford retires from the Board of Aptitude Software today but will continue to work with the Group on a part time basis. The Board welcomes Jeremy to his new role and thanks Tom for his exceptional contribution to the Group in recent years.
Notice of Results
Aptitude Software anticipates issuing its results for the year ended 31 December 2019 on Wednesday 11 March 2020.
Contacts
Philip Wood, Deputy Chief Executive Officer and Chief Financial Officer 020-7496-8196
Caroline Forde / Hilary Buchanan, Alma PR 020-3405-0205
aptitude@almapr.co.uk
1 Annual Recurring Revenue ("ARR") is the value of Aptitude Software's software and subscription recurring revenue at a specific point in time, normalised to a one-year period. ARR includes recurring revenues contracted but yet to commence and excludes recurring revenues which are currently being received but are known to be terminating in the future.
About Aptitude Software
Aptitude Software's innovative solutions address finance transformation at the core complemented by regulatory-focused applications. Our various products take data from complex systems, typically with multiple siloed data sources across multiple business entities, to create a unified view of finance. This allows our clients to reap significant benefits including financial insights, enhanced control and regulatory compliance.
Our clients include the world's largest companies, typically organisations with complex financial data and technology landscapes. Whilst our products are relevant for all sectors the Group has established a strong presence in banking, insurance and technology, media and telecom ('TMT') complemented by several clients in a series of other industries.
The business generates revenue from its software through a combination of licence fees (primarily annual recurring licences), software maintenance/support, software subscriptions for its cloud-based offerings and implementation and other support services including solution management services. Development continues to be performed at the Aptitude Innovation Centre in Poland with sales, support and implementation services provided from Aptitude Software's London headquarters and the North American and Singaporean regional businesses.
Aptitude Software has six office locations around the world, with clients across four continents.
www.aptitudesoftware.com