Eagle Eye Regulatory News (EYE)

18 July 2017

Eagle Eye Solutions Group PLC

("Eagle Eye", "Group" or the "Company")

Trading Update

Strong position to capitalise on market opportunity

Eagle Eye, the SaaS technology company that validates and redeems digital promotions in real-time for the grocery, retail and hospitality industries, is pleased to announce the following trading update ahead of its audited results for the year ended 30 June 2017 (the "Period"), which are expected to be announced on 19 September 2017.

Financial Highlights*:

· Group revenue increased by 71% to £11.1m (FY16: £6.5m)

· Redemption volumes increased by 58% to 60.4m, (FY16: 38.4m)

· SMS volumes of 44.4m, an increase of 10% (FY16: 40.3m)

· Revenue from subscription fees and transactions over the network represented 68% of total revenue (FY16: 80%)

· 3 year contract signed with John Lewis PLC in May 2017 for the deployment of the AIR platform

· Cash position expected to be £3.7m (FY16: £1.3m) at 30 June 2017

· Successful placing in May 2017 realised net proceeds of £5.8m

· As announced on 6 July 2017 post year-end, a 2 year contract renewal was signed with Toshiba Global Commerce Solutions for Asda Stores Limited

* Based on unaudited figures

Trading

Based on unaudited figures, turnover for the Period is expected to be in the region of £11.1m, up 71% on the prior year (FY16: £6.5m). Overall revenue from the AIR platform is expected to be c.85% of total revenue, £9.4m up 103% from prior year (FY16: £4.6m). This result has been driven by delivering on our strategy: winning new customers, increasing transactions from existing customers and deepening our customer relationships. 

In May 2017, the Company signed a three-year contract with John Lewis PLC ("John Lewis") for the deployment of its Eagle Eye AIR platform to deliver improved digital customer marketing. Since the year end the Company announced the renewal of its contract with Toshiba Global Commerce Solutions for Asda Stores Limited. Both these UK contract announcements reinforce the clear competitive benefits our solutions deliver to retailers.

Redemption volumes, which are a key measure of usage of the AIR platform and delivering against our 'transact' strategy, are expected to have grown by 58% year-on-year to 60.4m. Volume growth was primarily driven by the full year effect of our coupon counting solution for Asda going fully live in February 2016. In addition, volumes were boosted by increased volumes from existing Food & Beverage clients and initial transactions for Sainsbury's during the fourth quarter. During the Period, Asda acted as a nationwide redemption channel to run an effective campaign with Coke Zero Sugar, generating a redemption rate of over 10%. Eagle Eye has also run several successful digital campaigns through our Food & Beverage network with leading drinks brands including Heineken, Desperados and Bulmers.

Although SMS volumes increased 10% in the Period, as expected overall messaging revenue is expected to fall to c.£1.6m for the Period (FY16: £1.8m), reflecting lower margins in this increasingly competitive market.

Revenue generated from subscription fees and transactions over the network represented approximately 68% of total revenue (FY16: 80%). This reflects the progress we are making in deepening Eagle Eye's system capability within major accounts, which will open up recurring transactional revenues in future Periods.

The cash position as at 30 June 2017 is expected to be £3.7m. During the Period the Company successfully raised £5.8m (net of costs) from a placing of new shares, and has begun to invest in operational and marketing capabilities to capitalise on recent momentum in the business and pursue growth opportunities. In addition, the Company extended its unutilised banking facility with Barclays Bank PLC to £3.0m.

Reflecting our planned investment, group-adjusted EBITDA loss for the Period is expected to be £1.8m (2016: loss £1.8m). To provide a better guide to the underlying business performance, adjusted EBITDA excludes share-based payment charges along with depreciation, amortisation, interest and tax from the measure of profit.

Tim Mason, Chief Executive, said:

"The Group has continued to trade well, whilst accelerating its growth.

"This reflects a period of strong operational progress where we have won new customers, increased transactions through the platform and continued to deepen our tier 1 customer relationships. Looking forward, following the successful placing in May 2017, the Group is in a strong position to capitalise on the business momentum and market opportunity.

"We look forward to providing a detailed update on the full year's trading and strategy when we announce our full year results in September."

Eagle Eye is a leading SaaS technology company that securely validates and redeems digital promotions in real-time for the grocery, retail and hospitality industries.

The Company's digital marketing platform, Eagle Eye AIR, enables the secure, real-time, multi-channel issuance, management and redemption of digital promotions and rewards, replacing previously used paper-based methods. Our Eagle Eye platform creates a network effect between merchants, distributors and brands enabling stronger connections and value to all parties. Through our four products we enable brands and merchants to reduce cost, improve their customer offer and accelerate their innovation.

The Company's current customer base comprises leading names in UK grocery, retail and hospitality including Asda, J Sainsbury, Greggs, JD Sports, Ladbrokes, Marks & Spencer, Mitchells & Butlers, Pizza Express, Tesco and Thomas Pink.

Cautionary statement

This announcement contains unaudited information based on management accounts and forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts and undue reliance should not be placed on any such statements because they speak only as at the date of this announcement and are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and the Group's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements. Eagle Eye undertakes no obligation to revise or update any forward-looking statement contained within this announcement, regardless of whether those statements are affected as a result of new information, future events or otherwise, save as required by law and regulations.