Last checked at 22 May 2017 07:00
22 May 2017
AIM: CER
Cerillion plc
("Cerillion" or "the Company" or "the Group")
Interim results for the six months ended 31 March 2017
Cerillion, the billing, charging and customer relationship management software solutions provider, today issues its interim results for the six months ended 31 March 20171.
Highlights
· Continuing encouraging progress
· Revenue up by 10% to £7.5m (2016: £6.9m)
- helped by strong growth in software revenue2, up 47% to £4.1m
- services revenue contributed £3.1m
· Recurring revenue3 accounted for 29% of total revenues at £2.2m (2016: £2.2m)
· Strong level of new orders, up by 37% to £9.4m (2016: £6.9m) - a record for any six-month period
· Back order book4 up by 11% to £14.7m (2016: £13.3m) - a record level
· Adjusted profit before tax up by 31% to £0.9m1 (2016: £0.7m)
· Adjusted earnings per share up by 25% to 2.8p5 (2016: 2.3p)
· Net cash as at 31 March 2017 stood at £1.1m
· Interim dividend increased by 8% to 1.4p (2016: 1.3p)
· Major new contracts included:
- $2.8m follow-on contract with major customer in the Americas
- €3.3m contract with a new, quad-play customer in Europe
- €2.4m contract with a new, wholesale customer in Europe
· Group remains well positioned for further progress
Louis Hall, CEO of Cerillion, commented:
"We have made pleasing progress over the period, delivering increased profitability, in line with management expectations. Our core enterprise software business secured significant new orders, including two new customer wins, as well as a major follow-on contract with an existing customer. These new wins, combined with our back order book which stands at a record high, will help to underpin the Group's ongoing performance.
With a strong level of contracted sales in place, the Board anticipates further progress over the second half and believes that Cerillion remains well positioned to meet its expectations for the full year."
Notes
1 Cerillion plc acquired Cerillion Technologies Limited on 18 March 2016 in conjunction with the completion of its IPO on AIM. Prior to 18 March 2016, Cerillion plc had no trading activity. Consequently, the results referred to in these highlights and in the Chairman and Chief Executive Officer's Report are based on the consolidated figures for the Cerillion Technologies Limited Group, prepared under United Kingdom Generally Accepted Accounting Principles, which includes Cerillion Technologies Limited and its subsidiaries (Cerillion (India) pvt and Cerillion Inc). Interim Financial Information for Cerillion plc is included in Appendix 1.
2 Revenue derived from software licence, support and maintenance sales.
3 Recurring revenue includes annualised support and maintenance, managed service and Skyline revenue.
4 Back order book consists of £10.4m of sales contracted but not yet recognised at the end of the reporting period plus £4.3m of annualised support and maintenance revenue. It is anticipated that 70% of the £10.4m of sales contracted but not yet recognised as at the end of the reporting period will be recognised within the next 4 to 5 quarters.
5 Based on earnings for Cerillion Technologies Limited for the reporting period and the total number of Cerillion plc shares in issue as at 31 March 2017.
For further information please contact:
Cerillion plc Louis Hall, CEO Oliver Gilchrist, CFO |
| c/o KTZ Communications T: 020 3178 6378 |
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Shore Capital (Nomad and Broker) |
| T: 020 7408 4090 |
Bidhi Bhoma Toby Gibbs |
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KTZ Communications |
| T: 020 3178 6378 |
Katie Tzouliadis Emma Pearson |
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About Cerillion
Cerillion is a leading provider of mission critical software for billing, charging and CRM, with a 17 year track record in providing comprehensive revenue and customer management solutions. The Company has 80 customer installations across 42 countries, principally serving the telecommunications market.
The Company is headquartered in London and also has operations in Pune, India, Miami and Sydney.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S REPORT
Overview
Cerillion continues to make very encouraging progress and the financial results for the six months ended 31 March 2017 reflect this. Revenue is up by 10% to £7.5m, helped by strong software revenue sales, and adjusted profit before tax is up by 31% to £0.9m, in line with management expectations. New orders secured in the period were also strong, rising by 37% to £9.4m, a new high for a six month period.
The Company remains well positioned for the second half of the year and we continue to work on a strong pipeline of new customer opportunities.
Financial Overview
For the six months to 31 March 2017, the Group's total revenue rose by 10% to £7.5m (2016: £6.9m), helped by strong growth in software revenues2, which increased by 47% to £4.1m (2016: £2.8m) and accounted for 54% of total revenue (2016: 41%). This significant increase reflected both the level of new software licence sales as well as the growth in the customer base.
Services revenue contributed £3.1m (2016: £3.7m) and made up 41% of total revenue (2016: 53%). Third party income was stable at £0.4m (2016: £0.4m) and accounted for 5% of total revenue (2016: 6%).
Established customers (those acquired at least 12 months before the beginning of the reporting period) typically generate a high proportion of the Group's income and, in the first half, established customers generated 79% of total revenue (2016: 78%). Recurring revenue, from support and maintenance and managed service contracts, was broadly flat at £2.2m (2016: £2.2m) and accounted for 29% of the Group's income (2016: 32%).
As expected, overhead costs increased to £4.1m (2016: £3.8m), reflecting the expansion in resource, with personnel costs higher at £2.5m (2016: £2.3m).
Increased revenues largely drove the significant rise in adjusted operating profit, which was 40% higher at £1.0m (2016: £0.7m). The charge for amortisation of R&D costs was £0.4m (2016: £0.2m).
Adjusted profit before tax rose by 31% to £0.9m (2016: £0.7m) and adjusted earnings per share increased by 25% to 2.8p5 (2016: 2.3p).
The Group ended the period with increased net assets of £12.9m (2015: £12.1m) of which £5.3m was cash (2016: £6.5m).
Cash Flow and Banking
Net cash as at 31 March 2017 stood at £1.11m, reflecting cash at £5.25m and debt at £4.14m (2016: £5m). The Company generated net cash from operations of £1.825m in the six month period to 31 March 2017.
Expenditure on capitalised R&D was in line with the prior period at £0.3m as we continued to invest in product development to enhance our intellectual property. Expenditure on fixed assets was £0.075m (2016: £0.1m), resulting in free cash generation of £1.45m in the period. This was utilised to pay the final dividend of £0.8m declared in respect of the year ended 31 December 2016 and to repay £0.4m of the £5m term loan taken up in conjunction with the AIM IPO, £0.9m has now been repaid since the IPO (2016: nil).
Dividend
The Board is pleased to declare an interim dividend of 1.4p per share. This represents an 8% increase on the prior year's interim dividend of 1.3p per share. The interim dividend will become payable on 22 June 2017 to those shareholders on the Company's register as at the close of business on the record date of 2 June 2017. The ex-dividend date is 1 June 2017.
As previously stated, the Board intends to pay out between a third to a half of the Group's free cash flow as dividends each year, subject to the Group's performance.
Operational Overview
The Company's admission to AIM in March 2016 has enhanced Cerillion's market positioning and, later in the year, in November 2016, we were also pleased to see Cerillion designated in the "Visionaries" quadrant of Gartner's report*, "Magic Quadrant for Integrated Revenue and Customer Management (IRCM) for CSPs". In the prior year, in 2015, Cerillion was positioned in the "Niche Players" quadrant. Gartner evaluated both our core Cerillion Enterprise suite, the Company's pre-integrated BSS/OSS solution, as well as Cerillion Skyline, our Software-as-a-Service (SaaS) billing and subscription management solution.
We were pleased with the progress the Group made over the first half. We secured new orders worth a total of £9.4m (2016: £6.9m) for our enterprise CRM and billing platform. This included the three major wins we previously announced, which were: a $2.8m contract with an existing customer in the Americas; a €3.3m agreement with new customer, Scarlet, a Belgian virtual network operator, owned by Proximus, which provides fixed and mobile telephony services to the residential market; and a €2.4m contract with a new wholesale customer in Europe.
It is worth highlighting that our real-time Convergent Charging System ("CCS") helped to secure these major wins. CCS is a key differentiator as it enables telecoms operators and service providers to converge prepaid and postpaid billing for fixed and mobile services on a single platform, a key goal. The solution extends our coverage into prepaid as well as postpaid applications and is particularly relevant to the faster growing mobile and mobile data sectors.
The new order wins resulted in an 11% (or £1.4m) increase in our back order book4 to a record high of £14.7m (2016: £13.3m) and will help to drive implementation projects over the coming quarters. In addition to this, we are currently bidding on a range of strong opportunities and hope to convert a number of these.
We also saw an encouraging uptick in the Cerillion Skyline's pipeline. This still nascent part of the business leverages Cerillion's sophisticated billing capability - developed for the telecoms market place - to open up opportunities in other sectors. Our solution is a completely new cloud billing application which enables service providers of all sizes to access the same powerful billing capabilities that could previously only be afforded by large companies with significant resources.
Our new operations, in Miami and Australia, support our existing activities in these regions and are helping to drive new customer opportunities.
Outlook
The strong level of new orders won in the first half is very encouraging and will help to underpin ongoing growth in the second half of the year and beyond. Accordingly, the Board looks forward to reporting on further progress and believes that Cerillion remains well positioned to meet its expectations for the full year.
Louis Hall, Chief Executive Officer
Alan Howarth, Chairman
Notes:
1 Cerillion plc acquired Cerillion Technologies Limited on 18 March 2016 in conjunction with the completion of its IPO on AIM. Prior to 18 March 2016, Cerillion plc had no trading activity. Consequently, the results referred to in these highlights and in the Chairman and Chief Executive Officer's Report are based on the consolidated figures for the Cerillion Technologies Limited Group, prepared under United Kingdom Generally Accepted Accounting Principles, which includes Cerillion Technologies Limited and its subsidiaries (Cerillion (India) pvt and Cerillion Inc). Interim Financial Information for Cerillion plc is included in Appendix 1.
2 Revenue derived from software licence, support and maintenance sales.
3 Recurring revenue includes annualised support and maintenance, managed service and Skyline revenue.
4 Back order book consists of £10.4m of sales contracted but not yet recognised at the end of the reporting period plus £4.3m of annualised support and maintenance revenue. It is anticipated that 70% of the £10.4m of sales contracted but not yet recognised as at the end of the reporting period will be recognised within the next 4 to 5 quarters.
5 Based on earnings for Cerillion Technologies Limited for the reporting period and the total number of Cerillion plc shares in issue as at 31 March 2017.
*Gartner Report
Gartner Magic Quadrant for Integrated Revenue and Customer Management for CSPs by Norbert J Scholz, Jouni Forsman, Amresh Nandan, 17 October 2016. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. The Gartner Report(s) described herein, (the "Gartner Report(s)") represent(s) research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), and are not representations of fact. Each Gartner Report speaks as of its original publication date (and not as of the date of these Accounts) and the opinions expressed in the Gartner Report(s) are subject to change without notice.
Proforma Consolidated Income Statement*
for the six months ended 31 March 2017
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| 2017 |
| 2016 |
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| £ |
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Revenue |
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| 7,544,199 |
| 6,853,228 |
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Cost of sales |
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| (1,921,620) |
| (1,897,375) | |
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Gross profit |
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| 5,622,579 |
| 4,955,853 | |
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Admin expenses |
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| (4,119,064) |
| (3,827,182) | |
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EBITDA |
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| 1,503,515 |
| 1,128,671 |
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Depreciation & amortisation |
| (518,838) |
| (427,166) | ||
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Operating profit |
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| 984,677 |
| 701,505 | |
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Financial expenses |
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| (61,585) |
| (1,198) | |
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Financial income |
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| 1,523 |
| 3,167 | |
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Profit before tax | 924,615 |
| 703,474 | |||
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Tax |
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| (95,807) |
| (38,716) |
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Profit for period |
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| 828,808 |
| 664,758 | |
*Cerillion plc acquired Cerillion Technologies Ltd on 18 March 2016 in conjunction with the completion of its IPO on AIM. Prior to 18 March 2016, Cerillion plc had no trading activity. Consequently, this Pro-Forma Consolidated Income Statement is based on the consolidated figures for the Cerillion Technologies Limited Group, which includes Cerillion Technologies Ltd and its subsidiaries (Cerillion (India) pvt and Cerillion Inc).
Appendix 1: Cerillion plc Interim Financial Information
Unaudited Consolidated Statement of Comprehensive Income8
for the six months ended 31 March 2017
£ | Consolidated Unaudited half year to 31 Mar 2017 | Consolidated Unaudited half year to 31 Mar 2016 | Consolidated Audited year to 30 Sep 2016 |
Continuing operations |
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Revenue | 7,544,199 | 411,117 | 8,364,774 |
Cost of sales | (1,921,620) | (141,461) | (2,262,699) |
Gross profit | 5,622,579 | 269,656 | 6,102,075 |
Operating expenses | (4,837,357) | (266,683) | (4,923,584) |
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Operating profit before exceptional transaction costs | 785,222 | 2,973 | 1,178,491 |
Exceptional transaction costs | - | (826,783) | (746,055) |
Operating profit/(loss) | 785,222 | (823,810) | 432,436 |
Finance costs | (61,584) | (57) | (199,559) |
Finance income | 1,523 | 3,728 | 6,059 |
Profit/(loss) before tax | 725,161 | (820,139) | 238,936 |
Taxation | (1,488) | - | 68,032 |
Profit/(loss) for the period | 723,673 | (820,139) | 306,968 |
Other comprehensive income |
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Exchange differences on translating foreign operations |
5,203 |
- |
145,913 |
Total comprehensive profit/(loss) for the period |
728,876 |
(820,139) |
452,881 |
All transactions are attributable to the owners of the parent.
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Basic and diluted profit/(loss) per share |
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from continuing operations | 2.45 pence | (6.2) pence | 1.3 pence |
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8 Comparatives for FY2016 do not include a full year of results of the subsidiary companies as the Group was only formed from the date of acquisition, being 18 March 2016.
Unaudited Condensed Consolidated Statement of Changes in Equity
as at 31 March 2017
£ | Share capital | Share premium | Foreign exchange reserve | Retained earnings | Total Equity |
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Balance at 1 October 2015 | 15,660 | - | - | (580,500) | (564,840) |
Loss for the period | - | - | - | (820,139) | (820,139) |
Total comprehensive income | - | - | - | (820,139) | (820,139) |
Shares issued | 131,907 | 13,318,725 | - | - | 13,450,632 |
Balance at 31 March 2016 | 147,567 | 13,318,725 | - | (1,400,639) | 12,065,653 |
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Profit for the period | - | - | - | 1,127,107 | 1,127,107 |
Exchange difference on translating foreign operations | - | - | 145,913 | - | 145,913 |
Total comprehensive income | - | - | 145,913 | 1,127,107 | 1,273,020
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Dividends | - | - | - | (383,675) | (383,675) |
Balance at 30 September 2016 |
147,567 |
13,318,725 |
145,913 |
(657,207) |
12,954,998 |
Profit for the period | - | - |
| 723,673 | 723,673 |
Exchange difference on translating foreign operations | - | - | 5,203 | - | 5,203 |
Total comprehensive income | - | - | 5,203 | 723,673 | 728,876 |
Dividends | - | - | - | (767,349) | (767,349) |
Balance at 31 March 2017 | 147,567 | 13,318,725 | 151,116 | (700,883) | 12,916,525 |
Unaudited Condensed Consolidated Balance Sheet8
as at 31 March 2017
£ |
Unaudited Note | Consolidated Unaudited 31 Mar 2017 | Consolidated Unaudited 31 Mar 2016 | Consolidated Audited 30 Sep 2016 |
Assets |
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Non-current |
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Goodwill |
| 2,053,141 | 1,973,141 | 2,053,141 |
Intangible assets |
| 6,689,066 | 6,949,814 | 6,979,370 |
Property, plant and equipment |
| 363,584 | 400,799 | 411,505 |
Deferred tax |
| 320,282 | 363,394 | 320,546 |
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| 9,426,073 | 9,687,148 | 9,764,562 |
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Current assets |
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Trade receivables |
| 3,245,899 | 2,927,708 | 2,894,015 |
Other receivables | 4 | 6,342,830 | 4,426,179 | 6,270,857 |
Cash and cash equivalents |
| 5,254,523 | 6,454,430 | 5,006,185 |
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| 14,843,252 | 13,808,317 | 14,171,057 |
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Total assets |
| 24,269,325 | 23,495,465 | 23,935,619 |
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Equity and liabilities |
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Shareholders' equity |
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Called up share capital |
| 147,567 | 147,567 | 147,567 |
Share premium account |
| 13,318,725 | 13,318,725 | 13,318,725 |
Foreign exchange reserve |
| 151,116 | - | 145,913 |
Retained loss |
| (700,883) | (1,400,639) | (657,207) |
Total Equity |
| 12,916,525 | 12,065,653 | 12,954,998 |
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Liabilities |
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Non-current |
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Borrowings |
| 3,138,111 | 4,000,000 | 3,572,602 |
Other non-current liabilities |
| 1,186,486 | 1,440,465 | 1,400,805 |
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| 4,324,597 | 5,440,465 | 4,973,407 |
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Current liabilities |
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Trade payables |
| 651,254 | 919,162 | 336,684 |
Other payables | 4 | 5,376,949 | 4,070,185 | 4,670,530 |
Borrowings - current |
| 1,000,000 | 1,000,000 | 1,000,000 |
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| 7,028,203 | 5,989,347 | 6,007,214 |
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Total equity and liabilities |
| 24,269,325 | 23,495,465 | 23,935,619 |
Unaudited Condensed Consolidated Cash Flow Statement
for the six months ended 31 March 2017
£ | Consolidated Unaudited half year to 31 Mar 2017 | Consolidated Unaudited half year to 31 Mar 2016 | Consolidated Audited year to 30 Sep 2016 |
Operating activities |
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Reconciliation of profit to operating cash flows |
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Profit/(loss) for the period | 723,673 | (820,139) | 306,968 |
Add back: |
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Taxation | 1,488 | - | (68,032) |
Depreciation | 127,988 | 9,157 | 142,695 |
Amortisation and impairment | 590,304 | 17,927 | 571,555 |
Finance costs | 61,584 | 57 | 199,559 |
Finance income | (1,523) | (3,728) | (6,059) |
| 1,503,514 | (796,726) | 1,146,686 |
(Increase)/ decrease in trade and other receivables | (423,857) | 45,119 | (1,765,866) |
Increase/ (decrease) in trade and other creditors | 868,989 | (106,823) | (101,524) |
Cash from/(used in) operations | 1,948,646 | (858,430) | (720,704) |
Finance costs | (61,584) | (57) | (72,981) |
Finance income | 1,523 | 3,728 | 6,059 |
Tax paid | (63,543) | - | (30,511) |
Net cash flows generated from/(used in) operations activities | 1,825,042 | (854,759) | (818,137) |
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Investing activities |
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Acquisition of subsidiary undertakings, net of cash and overdrafts acquired | - | (11,129,200) | (11,129,200) |
Capitalisation of development costs | (300,000) | - | (601,111) |
Purchase of property, plant and equipment | (74,496) | (27,084) | (136,993) |
Net cash flows used in investing activities | (374,496) | (11,156,284) | (11,867,304) |
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Financing activities |
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Issue of ordinary share capital | - | 13,450,632 | 13,450,632 |
Borrowings repaid | (434,492) | - | (427,398) |
Borrowings received | - | 5,000,000 | 5,000,000 |
Dividends paid | (767,349) | - | (383,675) |
Net cash flows (used in)/generated from financing activities | (1,201,841) | 18,450,632 | 17,639,559 |
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Net increase/ (decrease) in cash and cash equivalents | 248,705 | 6,439,589 | 4,954,118 |
Translation differences | (367) | - | 37,226 |
Cash and cash equivalents at beginning of period | 5,006,185 | 14,841 | 14,841 |
Cash and cash equivalents at end of period | 5,254,523 | 6,454,430 | 5,006,185 |
Unaudited Notes
1. Basis of Preparation and Accounting Policies
The condensed financial information is unaudited and was approved by the Board of Directors on 19 May 2017.
The Company is a public limited company, which was incorporated in England and Wales on 5 March 2015. The address of its registered office is 125 Shaftesbury Avenue, London, WC2H 8AD. The interim financial information for the six months ended 31 March 2017 has been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations endorsed by the European Union (EU). The interim financial information for the six months ended 31 March 2017 has been prepared under the historical cost convention.
The interim financial information for the six months ended 31 March 2017 does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 and no statutory accounts have been prepared, audited or filed with the Registrar of Companies in England and Wales since incorporation.
The preparation of the interim financial information for the six months ended 31 March 2017 in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Statements and the reported amounts of revenues and expenses during the period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.
There is no material difference between the fair value of financial assets and liabilities and their carrying amount.
The functional and presentational currency is UK Sterling.
2. Going concern
The Directors have assessed the current financial position of the Group, along with future cash flow requirements, to determine if the Group has the financial resources to continue as a going concern for the foreseeable future. The conclusion of this assessment is that it is appropriate that the Group be considered a going concern. For this reason the Directors continue to adopt the going concern basis in preparing the interim financial information for the six months ended 31 March 2017. The interim financial information does not include any adjustments that would result in the going concern basis of preparation being inappropriate.
3. Basis of consolidation
The consolidated financial information incorporates the financial information of the Company and entities controlled by the Company (its subsidiaries) at 31 March 2017. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefit from its activities.
Except as noted below, the financial information of subsidiaries is included in the consolidated financial statements using the acquisition method of accounting. On the date of acquisition the assets and liabilities of the relevant subsidiaries are measured at their fair values.
All intra-Group transactions, balances, income and expenses are eliminated on consolidation.
4. Other receivables and other payables
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| Unaudited 31 Mar 2017 £ | Unaudited 31 Mar 2016 £ | Audited 30 Sep 2016 £ |
Other receivables |
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Amounts recoverable on contracts Prepayments |
| 5,756,101 128,620 | 3,768,810 154,195 | 5,565,952 240,405 |
Other receivables |
| 458,109 | 503,174 | 464,500 |
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| 6,342,830 | 4,426,179 | 6,270,857 |
Other payables |
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Taxation |
| 131,714 | 121,444 | 99,714 |
Other taxation and social security |
| 195,150 | 462,880 | 255,876 |
Pension |
| 39,262 | 41,493 | 38,653 |
Accruals Deferred income |
| 1,168,903 3,173,884 | 820,909 2,055,623 | 1,729,473 1,972,192 |
Ubisense loan |
| 240,000 | 240,000 | 120,000 |
Derivative financial instrument Other payables |
| - 428,036 | - 327,836 | 121,410 333,212 |
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| 5,376,949 | 4,070,185 | 4,670,530 |
5. Availability of this announcement
This announcement together with the financial statements herein and a presentation in respect of the interim financial results are available on the Group's website, www.cerillion.com.