20 Sep 2017 07:00
20 September 2017
ATTRAQT Group plc
("ATTRAQT", the "Group" or the "Company")
INTERIM RESULTS
ATTRAQT Group plc (AIM: ATQT), a leading provider of online merchandising, onsite search and eCommerce personalisation, announces its unaudited results for the six months ended 30 June 2017.
Financial highlights
Following the completion of the Fredhopper acquisition on 8th March 2017:
· Revenue increased 224% to £5.5m (H1 2016: £1.7m)
· Recurring revenue increased by 194% to £4.7m (H1 2016: £1.6m)
· Adjusted EBITDA1 losses were £0.5m (H1 2016: £0.8m)
· Losses before tax were £3.1m (H1 2016: £0.9m)
· Adjusted basic EPS loss 4.0p per share (H1 2016: 3.2p loss per share)
· Gross margin for the Group of 71% (H1 2016: 86%) following the acquisition of Fredhopper, a historically lower-margin business
· Cash at period end of £2.7m (H1 2016: £1.8m)
· Annualised H1 Exit Rate2 up 380% to £16.5m (H1 2016: £3.4m)
1. Adjusted EBITDA refers to earnings before interest, tax, exceptional costs, depreciation, amortisation and share based payments
2. June monthly revenue x 12
Operational highlights
· Successful integration of Fredhopper with planned cost savings delivered.
· 13 new logos signed during period, bringing total to over 230.
o Including Arc'teryx, Auchan, Brora, Hunter Boots, Specsavers, and The White Company.
· Average new contract value of £54k (H1 2016: £38k).
· 41 upgrades and 100+ client renewals.
Post-period highlights
· Significant new logo win, the Group's second largest, with one of the largest global sportswear manufacturers across both EMEA and North American regions.
· Other significant new logos signed include: Blancheporte (FRA), Olymp (GER) and Divertimenti (UK).
· Incremental spend of up to £0.5m approved in H2 2017 to secure next year's revenue.
André Brown, Group CEO, commented,
"I am delighted to report that the integration of the Fredhopper business has been achieved whilst maintaining significant sales momentum. The Group is already reaping the benefits of the increased scale and improved access to the enterprise retail market that this acquisition has brought.
"We continue to gain traction with leading retailers in the UK, Europe and North America, having signed significant new logos in the period including Hunter Boots, Specsavers and The White Company. At the same time, our proposition remains key to our current customers with a significant number of upgrades and renewals.
"The momentum has continued post period with the signing of the second largest logo in the Group's history, plus contracts across a variety of territories. This momentum, underpinned by high recurring revenue and a strong pipeline for new business in the second half of the year, gives us confidence in the ongoing success of ATTRAQT for the remainder of 2017."
For further information, please contact:
ATTRAQT Group plc | via Newgate |
André Brown, Group CEO Eric Dodd, CFO |
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Gemma Williams (née Owen-Smith), Head of Marketing and Communications |
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N+1 Singer | Tel: 020 7496 3000 |
Shaun Dobson, Lauren Kettle |
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Newgate | Tel: 020 7680 6550 |
Adam Lloyd, Charlotte Coulson, Sophie O'Donoghue |
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About ATTRAQT
ATTRAQT Group plc specialises in onsite search, online merchandising and eCommerce personalisation with two product offerings: Freestyle Merchandising and Fredhopper. The Group's customer base is made up of over 230 client logos ranging from SMEs to global, blue-chip businesses. ATTRAQT has a strong base in the UK and Western Europe, with a presence in North America, eastern Europe and ANZ. For more information, please visit: www.attraqt.com.
Chairman's Statement
ATTRAQT's longstanding vision has been to become the eCommerce acceleration platform of choice for retailers in the UK, Europe, North America and ANZ, and over this milestone period for the Group we have made great steps towards achieving this goal.
With over 230 clients, including many high value marquee names and a widening global presence, it is clear that ATTRAQT's strategy to capitalise on the growing eCommerce industry, and the desire of online retailers to optimise their revenues, is paying off and that the demand for our technology is strong.
Whilst undoubtedly this period is notable for the transformational acquisition made and its successful integration, our sales momentum has been robust, and this has been maintained post-period.
We continue to see client reliance on both of our software platforms increasing, resulting in continuing client upgrades and renewals during H1, and we expect to see this trend continue through the second half of the year.
The Group continues to develop its core software platforms, and I look forward to seeing some exciting technology developments being released in H2 including our new data import API, a Demandware cartridge and our new advanced reporting module.
As the dynamics of the eCommerce market continue to develop, we have taken the prudent decision to increase spend on some aspects of the business in order to mitigate potential future risk. By taking steps to secure next year's revenue now, we look forward to maintaining the strong momentum we have built over the first half in the long term.
As ATTRAQT continues to demonstrate strong sales growth and robust financial and operational progress, we remain confident in the outlook for the rest of the year.
Nick Habgood
Chairman
19 September 2017
Group CEO's Statement
We are pleased with the strong progress achieved by ATTRAQT in the first half of the year, which has been realised alongside the successful integration of the Fredhopper business, acquired in March 2017.
As expected, the acquisition of Fredhopper has been truly transformational for the Group, providing the Company with access to the larger enterprise retail market, greatly enhanced scale and financial strength, and has made us the only market player offering a full suite of high-quality solutions. The main cost savings which were identified at the time of the transaction have been delivered, creating an efficient organisational structure with single sales, customer success ("CSM") and product development teams.
It is particularly pleasing that both our customers and staff have embraced the enlarged opportunity for the Group, and testament to the success of the integration is the continued momentum we have achieved throughout.
Business model
The Company's SaaS business model is robust, based primarily on a recurring monthly (or quarterly) service fee together with one-off set-up fees, additional follow-on project fees and professional service fees. Clients on the Freestyle Merchandising platform typically sign for a minimum of 12 months, larger clients and clients on the Fredhopper platform typically sign for a period of 2-3 years.
The current sales model is based upon direct sales via a dedicated sales team. Due to the importance of the functionality provided by both software platforms to the client, and net client churn typically only represents 2-4 per cent of revenue, with most clients automatically renewing at the end of the contracted term.
Growth strategy
The Group's objective is to become the eCommerce acceleration platform of choice for online retailers in the UK, Europe, North America and ANZ.
The Group continues to execute against its business plan, which is simple and scalable, founded on four key elements:
1. Focus on sales and marketing to grow the client base and volume of recurring revenue;
2. Invest in customer success to ensure that our customers make full use and derive full benefit from our platforms;
3. Expand the Company's production capacity to keep pace with accelerating sales;
4. Extend the capabilities of the ATTRAQT platforms through continued investment in research and development, adding new features and creating new products to initiate new revenue streams.
Review of Sales and Operations
Customer wins demonstrate growing traction.
Illustrative of ATTRAQT's strong proposition is the large number of significant client renewals and service upgrades secured during the period, being 100+ and 41 respectively. It is pleasing to see the number of existing clients trusting the Company to undertake follow-on project work, migrating to new eCommerce platforms, changing integration types and adding additional features to existing sites.
13 new logos were also signed during the first half, including household names such as Arc'teryx, Auchan, Hunter Boots, Specsavers and The White Company. This brings the total number of client logos to over 230 at the end of June 2017.
The Group continues to deliver in line with its strategy, not only growing its client base but securing more contracts of a larger average value (increasing by 67 per cent to £48k pa). ATTRAQT's ability to win and service these contracts demonstrates our unrivalled proposition, reflecting a clear return on investment for our technology products, the growing maturity of our sales process and the increasing size of our typical client.
International Growth
Over the period the company has been successful in building its position in many of its key target regions, with significant new client wins globally.
ATTRAQT remains committed to expanding its client base in North America, and appointed a new VP of Sales, Bruce Gilburne. Since his appointment, the newly bolstered team has been focused on building the new business pipeline.
The acquisition of Fredhopper has added capability to our product suite which furthers the Group's appeal internationally, and with this in addition to the Group's increased scale and strength, we are confident that we continue to be a leading player in all our target markets.
Market developments
Online retail is a highly competitive industry that is constantly evolving as retailers continue to develop their multichannel propositions and extend their eCommerce platforms into international markets, looking for new ways to drive conversion rates and increase customer loyalty. The challenge for these retailers is to ensure consistency of merchandising across channels and countries - something that ATTRAQT successfully achieves through its Fredhopper and Freestyle Merchandising platforms.
We continually monitor the market for trends and enhancements to incorporate into our platforms to ensure they meet all our clients' current and potential needs. We are confident that, although changes in market dynamics can sometimes prompt movements beyond our control, our product offerings are the best in the market and therefore our customers will ultimately continue to see the value in choosing our solutions. We are consistently validated in this belief as our clients choose to upgrade with us, expand their exposure to our products geographically, and return to using us.
Platform enhancements and product development
The product development roadmap is driven by observing trends in the market, listening to customer requirements and the company's bi-annual innovation day, which seeks to identify and prototype new ideas for development.
Financial Review
Total revenue increased by 224 per cent to £5.5m (H1 2016: £1.7m) reflecting the acquisition of the Fredhopper business as well as the addition of new clients and service upgrades and renewals from existing ones. The annualised revenue for H1 increased by 380 per cent to £16.5m (H1 2016: £3.4m). The Group's combined gross margin decreased to 71 per cent (H1 2016: 86 per cent), due to the mix with Fredhopper's lower historic gross margin of 59 per cent. Adjusted EBITDA losses were at £0.5m (H1 2016: £0.8m) in line with management expectations.
The Company continues to invest in technical enhancements to its existing product offering and in new products. Some of this cost is capitalised but much is absorbed as part of the operating costs of the business.
The cash balance at the end of the period was £2.7m.
Outlook
The Board is pleased with the progress achieved in the first half of the year; we have now completed the transformative integration period prompted by the Fredhopper acquisition and the management team is delivering to plan.
Post-period end, the sales team has been successful in securing one of the Company's largest ever contracts, as well as several other significant mandates across various territories. Our pipeline for H2 is strong and as such we are confident that we are trading in line to meet market expectations. However, the Board has identified a temporary market change which we see as a potential risk for 2018, and which we feel it is prudent to mitigate by taking specific action now.
There is a consolidation activity occurring in the ecommerce software market, leading to some retailers reviewing their entire ecommerce platform, including the technology stack that sits on top of it. Whilst we haven't seen much impact from this in H1, it is prudent to invest ahead of time in account management, sales and production, especially given the positive momentum the team is seeing and therefore the Board has approved an incremental spend of up to £0.5m in 2017.
With the scale and the strength of the enlarged Group, plus increasingly powerful and efficient merchandising platforms ATTRAQT is well positioned to address the significant market opportunity available to it.
André Brown
Group Chief Executive Officer
19 September 2017
ATTRAQT Group plc
Consolidated statement of comprehensive income
For the six months ended 30 June 2017
| Note | 30th June 2017 (unaudited) | 30th June 2016 (unaudited) |
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| £'000 | £'000 |
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Revenue |
| 5,453 | 1,682 |
Cost of sales |
| (1,586) | (239) |
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Gross profit |
| 3,867 | 1,443 |
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Administrative expenses |
| (5,007) | (2,410) |
Exceptional administrative expenses | 3 | (2,095) | - |
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Total administrative expenses |
| (7,102) | (2,410) |
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Loss from operations |
| (3,235) | (967) |
Finance Income |
| - | - |
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Loss before tax |
| (3,235) | (967) |
Tax credit | 4 | 136 | 102 |
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Loss for the period |
| (3,099) | (865) |
Consolidated statement of comprehensive income |
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| 30th June 2017 (unaudited) | 30th June 2016 (unaudited) |
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| £'000 | £'000 |
Loss for the period |
| (3,099) | (865) |
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Other comprehensive income: |
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Exchange differences on translation of foreign operations |
| (94) | 19 |
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Total comprehensive loss for the period |
| (3,193) | (846) |
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Basic and diluted loss per share | 5 | (4.0p) | (3.2p) |
ATTRAQT Group PLC
Consolidated statement of financial position
at 30 June 2017
| Note | 30th June 2017 (unaudited) | 31st Dec 2016 (audited) |
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| £'000 | £'000 |
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Assets |
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Non-current assets |
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Goodwill | 6 | 16,747 | - |
Intangible assets | 7 | 10,113 | 247 |
Property, plant and equipment |
| 123 | 39 |
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| 26,983 | 286 |
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Current assets |
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Trade and other receivables |
| 3,364 | 537 |
Corporation tax recoverable |
| 195 | 214 |
Cash and cash equivalents |
| 2,682 | 1,157 |
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| 6,241 | 1,908 |
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Total assets |
| 33,224 | 2,194 |
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Liabilities |
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Current liabilities |
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Trade and other payables |
| 6,489 | 774 |
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Non-current liabilities |
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Deferred Tax |
| 1,586 | - |
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Total liabilities |
| 8,075 | 774 |
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NET ASSETS |
| 25,149 | 1,420 |
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Equity |
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Share capital | 8 | 1,063 | 269 |
Share premium |
| 30,108 | 4,253 |
Merger reserve |
| 1,457 | 1,457 |
Share based payment reserve |
| 732 | 647 |
Foreign exchange reserve |
| 76 | (18) |
Retained earnings |
| (8,287) | (5,188) |
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TOTAL EQUITY |
| 25,149 | 1,420 |
ATTRAQT Group plc
Consolidated statement of cash flows
for the six months ended 30 June 2017
| Note | 30th June 2017 (unaudited) | 30th June 2016 (unaudited) |
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| £'000 | £'000 |
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Cash flows from operating activities |
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Loss for the period |
| (3,099) | (865) |
Adjustments for: |
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Depreciation of property, plant and equipment |
| 22 | 12 |
Amortisation of intangible fixed assets | 7 | 498 | 92 |
Income tax credit |
| (136) | (102) |
Share based payment expense |
| 85 | 85 |
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| (2,630) | (778) |
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(Increase) in trade and other receivables |
| (325) | (206) |
Increase/(Decrease) in trade and other payables |
| 708 | (41) |
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Cash used in operations |
| (2,247) | (1,025) |
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Interest received |
| - | - |
Tax received |
| 60 | 19 |
Net cash flows used in operating activities |
| (2,187) | (1,006) |
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Investing activities |
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Acquisition of subsidiary (net of cash acquired) | 6 | (22,536) | - |
Purchases of property, plant and equipment |
| (45) | (29) |
Development of intangibles | 7 | (357) | (162) |
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Net cash used in investing activities |
| (22,939) | (191) |
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Financing activities |
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Issue of ordinary shares, net of issue costs |
| 26,649 | - |
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Net cash inflow/(outflow) from investing and financing activities |
| 3,711 | (191) |
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Net increase/(decrease) in cash and cash equivalents |
| 1,524 | (1,197) |
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Cash and cash equivalents at beginning of period |
| 1,157 | 2,996 |
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Cash and cash equivalents at end of period |
| 2,681 | 1,799 |
ATTRAQT Group PLC
Consolidated statement of changes in equity
For the six months ended 30 June 2017
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| Share capital | Share premium | Merger reserve | Share based payment reserve | Foreign exchange reserve | Retained earnings | Total equity |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
Half year 2016 |
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01-Jan-16 | 269 | 4,253 | 1,457 | 477 | (32) | (3,397) | 3,027 |
Loss for the period | - | - | - | - | - | (865) | (865) |
Translation of foreign entity | - | - | - | - | 19 | - | 19 |
Total comprehensive Income for the period | - | - | - | - | 19 | (865) | (846) |
Share based payment charge | - | - | - | 85 | - | - | 85 |
30-Jun-16 | 269 | 4,253 | 1,457 | 562 | (13) | (4,262) | 2,266 |
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Loss for the period | - | - | - | - | - | (926) | (926) |
Translation of foreign entity | - | - | - | - | (5) | - | (5) |
Total comprehensive Income for the period | - | - | - | - | (5) | (926) | (931) |
Share based payment charge | - | - | - | 85 | - | - | 85 |
31-Dec-16 | 269 | 4,253 | 1,457 | 647 | (18) | (5,188) | 1,420 |
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Half year 2017 |
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Loss for the period | - | - | - | - | - | (3,099) | (3,099) |
Translation of foreign entity | - | - | - | - | 94 | - | 94 |
Total comprehensive Income for the period | - | - | - | - | 94 | (3,099) | (3,005) |
Share based payment charge | - | - | - | 85 | - | - | 85 |
Issue of share capital | 794 | 27,005 | - | - | - | - | 27,799 |
Issue Costs | - | (1,150) | - | - | - | - | (1,150) |
30-Jun-17 | 1,063 | 30,108 | 1,457 | 732 | 76 | (8,287) | 25,149 |
ATTRAQT Group PLC
Abbreviated notes to the consolidated financial statements
1. General information
The interim financial information of ATTRAQT Group PLC for the six months ended 30 June 2017 comprise the company and its subsidiaries (together "the Group"). The principal activity of the Group is the development and provision of online merchandising, onsite search and eCommerce personalization technology.
The Company is a public limited company which is quoted on the Alternative Investment Market of the London Stock Exchange and is incorporated and domiciled in the UK. The address of the registered office is 3 Waterhouse Square, 138 Holborn, London, EC1N 2SW.
2. Basis of preparation
The financial information presented in this Interim Report has been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards issued by the International Accounting Standards Board, as adopted by the European Union. The principal accounting policies adopted in the preparation of the financial information in this Interim Report are unchanged from those used in the company's financial statements for the year ended 31 December 2016 and are consistent with those that the company expects to apply in its financial statements for the year ended 31 December 2017.
The comparative financial information for the year ended 31 December 2016 in this interim report does not constitute statutory accounts for that year. The Annual Report and Accounts for the year ended 31 December 2016 were audited and have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Accounts for the year ended 31 December 2016 was unqualified and did not draw attention to any matters by way of emphasis and did not contain statements under s498(2) or (3) of the Companies Act 2006. The financial information for the periods ended 30 June 2016 and 30 June 2017 is unaudited.
The Board of Directors approved this interim report on the 19 September 2017.
Accounting policies
Business combinations
The Group applies the acquisition method of accounting for business combinations. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair value of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquire and the equity interest issued by the Group. Acquisition costs are expensed as incurred.
The Group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognised in the acquired subsidiary's financial information prior to the acquisition. Assets acquired and liabilities assumed are measured at their acquisition-date fair values. Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the fair value of consideration transferred, over the Group's share of the acquisition-date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (i.e. gain on a bargain purchase) is recognised in profit or loss immediately. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.
Revenue recognition
Revenue represents sales to external customers at invoiced amounts less value added tax or local taxes on sales. Where work is completed at the year-end but not invoiced, the ATTRAQT Group accrues for this income. The Group derives the majority of its revenue from the provision of eCommerce services to online retailers which includes site search, merchandising and product recommendation technology. These are recurring revenues that are recognised on a monthly basis.
Revenue from services provided by the ATTRAQT Group is recognised when the ATTRAQT Group has performed its obligations and in exchange obtained the right to consideration which can be reliably measured and it is probable economic benefits will flow to the entity. If amounts have been invoiced in advance for services, these amounts are deferred until the service has been provided to the client at which point the income is recognised. Within the ATTRAQT Group income is recognised across three streams:
· Recurring revenues - a monthly subscription fee is earned from customers to the software as a service platform. Operation of the service is provided for a fixed term.
· One-off fees - work is undertaken for existing clients to expand or upgrade the service they receive and this is billed for separately. Revenue is recognised on stage of completion on this work. Stage of completion is calculated based on estimated hours to complete the work versus the number of hours already done.
· Professional services - Revenue from services rendered is recognised in income in proportion to the stage of completion of the transaction at the balance sheet date. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due or associated costs.
Intangible assets
Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives.
Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation technique.
The significant intangibles recognised by the Group, their useful economic lives and the methods used to determine the cost of intangibles acquired in a business combination are as follows:
Intangible Asset | Useful economic life | Valuation Method |
Customer Relationships | 11 years | Excess Earnings Method - the value of the intangible asset is the present value of the after-tax cash flows potentially attributable to it, net of the return on fair value attributable to tangible and other intangible assets.
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Existing Technology | 7 years | Relief from Royalty Method - the value of intangible assets are estimated by capitalising the royalties saved because the company owns the intangible asset.
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Trade Names | 10 years | Relief from Royalty Method - the value of intangible assets are estimated by capitalising the royalties saved because the company owns the intangible asset. |
Internally generated intangible assets (development costs)
Expenditure on internally developed products is capitalised if it can be demonstrated that:
· it is technically feasible to develop the product for it to be sold;
· adequate resources are available to complete the development;
· there is an intention to complete and sell the product;
· the Group is able to sell the product;
· sale of the product will generate future economic benefits; and
· expenditure on the project can be measured reliably.
Capitalised development costs are amortised over three years. The amortisation expense is included within administrative expenses in the consolidated statement of comprehensive income.
Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised in the consolidated statement of comprehensive income as incurred.
Foreign currency
Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which it operates (the "functional currency") are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or loss.
On consolidation, the results of overseas operations are translated into Pounds Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisitions of those operations, are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income and accumulated in the foreign exchange reserve.
Exchange differences recognised in profit or loss in Group entities separate financial statements on the translation of long-term monetary items forming part of the Group's net investment in the overseas operation concerned are reclassified to other comprehensive income and accumulated in the foreign exchange reserve on consolidation.
Taxation
Taxes on income for the interim periods are accrued using the tax rate that would be applicable to expected total earnings. Tax being shown in the Statement of Comprehensive Income is largely due to tax credits and a deferred tax credit
Deferred tax
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are recognised only to the extent that the level and timing of taxable profits can be measured and it is probable that these will be available against which deductible temporary differences can be utilized.
Deferred tax is calculated at tax rates that have been enacted or substantively enacted at the balance sheet date, and that are expected to apply in the period when the liability is settled or the asset realised.
Going Concern
The financial statements have been prepared under the going concern basis as the directors have undertaken a review of the future financing requirements of the ongoing operation of the group and are satisfied that sufficient cash together with bank and other facilities is available to meet its working capital requirements for at least 12 months from the date of signing these financial statements. The directors accordingly consider it appropriate for the financial statements to be prepared on a going concern basis.
3. Exceptional Costs
The exceptional costs consist of £1,655,000 (2016: £ Nil) relating to the legal and professional advisors fees in respect of acquisition costs and £440,000 of post-acquisition integration activities (2016: £ Nil).
4. Income Tax credit
The Tax charge credits represent a £63,000 (2016: £102,000) estimate for a tax refund to be received under the Research and Development Tax Credit legislation, and a deferred tax release of £73,000 (2016: £ Nil), following the acquisition of Fredhopper BV (note 6).
5. Loss per share
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of Ordinary Shares outstanding during the period.
| 30th June 17 | 30th June 16 | |
| £'000 | £'000 | |
Numerator |
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Loss for the period | (3,099) | (865) | |
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Denominator |
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Weighted average number of shares used in basic and diluted EPS | 77,406,531 | 26,942,340 | |
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Loss per share - basic and diluted | (4.0p) | (3.2p) | |
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In accordance with IAS 33 where there is a loss for the period, there is no dilutive effect of options and therefore there is no difference between the basic and diluted loss per share.
6. Acquisition of Subsidiary
On 8 March 2017, the Company acquired 100% of the issued equity instruments of Fredhopper BV from SDL Netherlands BV and subsidiary of SDL plc. Fredhopper BV is a company whose principal activity is to provide site search and merchandising software to online retailers. The principal reason for this acquisition was to secure the Company's primary competitor and become the 'go to' provider of online visual merchandising for retailers. The acquisition increased the existing client base and provides a strong presence in the US, UK and Continental European markets.
Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:
| Book Value £'000 | Adjustment £'000 | Fair Value £'000 |
Customer Relationships | - | 4,414 | 4,414 |
Technology | - | 4,805 | 4,805 |
Trade Name | - | 788 | 788 |
Property, plant and equipment | 60 | - | 60 |
Trade Receivables | 2,292 | - | 2,292 |
Other Debtors | 489 | - | 489 |
Trade Creditors | (522) | - | (522) |
Other Current Liabilities | (711) | - | (711) |
Corporation Tax Payable | (18) | - | (18) |
Deferred Revenue | (3,460) | - | (3,460) |
Deferred tax liability | - | (1,879) | (1,879) |
Total Net Assets/(Liabilities) | (1,870) | 8,128 | 6,258 |
On acquisition Fredhopper BV held trade receivables with a book and fair value of £2,292,000 representing contractual receivables of £2,408,000. Whilst the Group will make every effort to collect all contractual receivables, it considers it unlikely that £116,000 will ultimately be received.
Fair value of consideration paid
Consideration | £'000 |
Cash Transferred | 23,005 |
Total Consideration | 23,005 |
There is no contingent consideration on the Fredhopper acquisition.
Goodwill
| £'000 |
Consideration transferred | 22,536 |
Cash received via acquisition | 469 |
Fair value of identifiable net assets | (6,258) |
Goodwill | 16,747 |
Acquisition costs of £2,805,000 arose as a result of the transaction and the private placing undertaken to fund it. Acquisition costs of £1,150,000 attributable to the issue of equity instruments, under the private placing, were recognised as part of share premium in the statement of financial position, other acquisition costs of £1,655,000 attributable to the integration of Fredhopper BV have been recognised as part of administrative expenses in the statement of comprehensive income.
The main factors leading to the recognition of goodwill are:
- Future customer relationships
- Future technology
- Assembled workforce of the acquired business, which do not qualify for separate recognition.
The goodwill recognised will not be deductible for tax purposes.
Since the acquisition date, Fredhopper has contributed £3,689,000 to group revenues. If the acquisition had occurred on 1 January 2017, group revenue contribution would have been £5,735,000.
7. Intangible Assets
|
|
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|
|
30th June 2017 |
| ||||
| Customer Relationships | Existing Technology | Trade Name | Software Development | 31st Dec 2016 | |||||
|
|
|
|
| (unaudited) | (audited) | ||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||
Cost |
|
|
|
|
|
|
| |||
Balance at the 1st January 2017 | - | - | - | 1,249 | 1,249 | 974 |
| |||
Capitalised development costs | - | - | - | 357 | 357 | 275 |
| |||
Acquired on acquisition of a subsidiary | 4,414 | 4,805 | 788 | - | 10,007 | - |
| |||
|
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|
|
|
|
|
| |||
Balance at the 30th June 2017 | 4,414 | 4,805 | 788 | 1,606 | 11,613 | 1,249 |
| |||
|
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|
| |||
Amortisation |
|
|
|
|
|
|
| |||
Balance at the 1st January 2017 | - | - | - | 1,002 | 1,002 | 804 |
| |||
Charge for the period | 190 | 216 | 25 | 67 | 498 | 198 |
| |||
|
|
|
|
|
|
|
| |||
Balance at the 30th June 2017 | 190 | 216 | 25 | 1,069 | 1,500 | 1,002 |
| |||
|
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|
| |||
Net Book Value |
|
|
|
|
|
|
| |||
At the 1st January 2017 | - | - | - | 247 | 247 | 170 |
| |||
At the 30th June 2017 | 4,224 | 4,589 | 763 | 537 | 10,113 | 247 |
| |||
8. Share Capital
|
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|
|
Issued and fully paid | 30th June 2017 (unaudited) |
|
|
| 31st Dec 2016 (audited) |
|
|
Ordinary shares of £0.01 each | Total Number of Shares |
| £000 |
| Total Number of Shares |
| £000 |
|
|
|
|
|
|
|
|
At the beginning of the period | 26,942,340 |
| 269 |
| 26,942,340 |
| 269 |
|
|
|
|
|
|
|
|
Issued during the year | 79,426,249 |
| 794 |
| - |
| - |
|
|
|
|
|
|
|
|
At the end of the period | 106,368,589 |
| 1,064 |
| 26,942,340 |
| 269 |
|
|
|
|
|
|
|
|
The company raised £27,799,000, before expenses, by a private placing of 78,572,000 1p Ord shares at 35p, and a further 854,249 1p Ord shares by an open offer to qualifying shareholders at 35p on 8 March 2017.
9. Cautionary Statement
This document contains certain forward-looking statements relating to ATTRAQT Group PLC ('the Group'). The Group 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 Group 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.
INDEPENDENT REVIEW REPORT TO ATTRAQT GROUP PLC
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 which comprises the consolidated statement of comprehensive income; consolidated statement of financial position; consolidated statement of cash flows; consolidated statement of changes in equity; and associated notes.
We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
Directors' responsibilities
The interim report, including the financial information contained therein, is the responsibility of and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on AIM which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the company's annual accounts having regard to the accounting standards applicable to such annual accounts.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on AIM and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 June 2017 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.
BDO LLP
Chartered Accountants and Registered Auditors
London
United Kingdom
19 September 2017
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).