Rosslyn Data Regulatory News (RDT)

Rosslyn Data Technologies plc

("Rosslyn" or the "Company" or the "Group")

Unaudited Group Interim Financial Statements for the six months ended 31 October 2017

Rosslyn, a leading global data technology company which has developed "machine learning" technologies that are enabling companies of all sizes to turn their complex data into meaningful information, is pleased to announce its interim results for the half year ended 31 October 2017.

Financial Highlights

· Group revenues up 74% to £2,901,048 (2016: £1,666,577)

· EBITDA loss, excluding acquisition costs, £1,496,355 (2016: £1,074,174)

· Loss before tax, excluding acquisition costs, £1,587,825 (2016: £1,081,665)

· Net Cash at 31 October 2017 £1.0m (2016: £0.7m)

· Subscription revenue remains strong

Operational and Strategic Highlights

· We have continued to develop strategic partnerships particularly in the USA and a more recent partnership with a leading Global data firm is strengthening our pipeline opportunities considerably

· Integration of Integritie is complete and more than 85% of the expected synergies have been realised

· Customer wins during the period include one of the largest privately owned FMCG groups

· Total customer numbers up year on year by 20% to around 190 clients

· A number of significant deals are currently under negotiation through both Direct and Partner channels

· Progress on track to achieve cash flow break-even during this calendar year

Post Period Highlights

· Momentum in the partner program continues - the Company has secured a valuable white label agreement with one partner which has created a significant pipeline opportunity and we continue negotiations with other partners for white labelling and resell opportunities

· Relationship with a global defence contractor significantly expanded, resulting in greater than 100% increase in contracted revenue from that client since original contract signature

· A number of new multiyear contracts have been signed including a pharmaceutical company, a facility management company and a security company totalling more than £200K per annum.

· Launch of new apps on the RAPid platform, including Supplier onboarding, benchmarking and predictive analytics through AI and machine learning - new tools allowing clients to more effectively tap into all the value held within their diverse ERP platforms. The Board is excited by this new launch and believes it could disrupt and replace the need for the combination of expensive consultants and complicated tools currently needed by customers to achieve these goals.

· Broad and growing sales pipeline with significantly higher average contract values

· Forrester Research, a leading global independent technology and market research company that provides advice on the existing and potential impact of technology, ranks Rosslyn's RAPid Big Data platform as a "strong performer"

Roger Bullen, Chief Executive, said, "We continue to make progress and I believe that the Company is increasingly well positioned to take advantage of the growing business opportunity it is seeing in the market.

The RDT RAPid platform remains a recognised and well regarded technology in this large, growing market and, through our continued and disciplined execution and innovation we expect progress to continue. Our pipeline is extremely healthy and through the impact of our new tools and services we are negotiating contracts significantly larger than we have done in prior years, including three that are greater than £300K each per annum. Given their size, these contracts are taking longer to negotiate and an increased lead time for delivery. The Board is working to deliver these contract wins during the current financial year but is mindful that certain of these contract negotiations may extend past the year end. The ability to sign these contracts before the year end will have a significant impact on the outcome of our revenues, EBITDA and Cash for this year.

We have continued to focus on reducing our cost run rate; it is our expectation that by the end of the financial year this run rate will be below that of our average monthly revenues.

This combination of progress and opportunity does, we believe, put the Company in an exciting position for the rest of this year and beyond."

This announcement contains price sensitive information.

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Chief Executive Review

This first half of the year saw us continue to acquire new customers, expand relationships with existing customers and partners, grow internationally and to continue to innovate. The integration of Integritie, our acquisition in May 2017, has enabled us to focus on increasing our market opportunity and to expand our client base. It has also been instrumental in allowing us to innovate and develop new tools for our RAPid platform, including our On-boarding platform tools and our automated refresh hub.

I am pleased to report that our focus on integrating the acquisition into the business has been successful and this has been achieved ahead of our planned timeline. Our focus on achieving cost synergies and performance provides us with the visibility and confidence to expect cash break-even during this calendar year. Customer losses have been minimal and we are expanding our sales opportunities both through partners and Direct.

Our objective of establishing a strong capital base and delivering on our key business objectives across our operations and target market remains on track.

The strength of the RDT RAPid platform is being increasingly recognised in the industry, which is giving us the opportunity to take major steps forward on a number of important fronts, most notably our improved win loss ratio in competitive bids. Underpinning the progress is our talented and skilled team who are fuelling the continued development of innovative smart solutions and widening the sphere of sales opportunities. This is being played out through our growing list of clients, which include many leading global businesses, and the increasing number of partnerships we are establishing with technology, BPO and consultancy firms. These partnerships bring us closer to where high volumes of business and commerce meet, giving us the opportunity to play a significant data management role.

The direct sales teams continue to gain momentum and have delivered a strong performance. This strength and performance is demonstrated through our increasing pipeline. Furthermore, revenue growth from our installed customer base remains healthy as we continue to expand our annual recurring revenues with our customers. This, we believe, is evidence of success in our "land and expand" strategy as well as of the emerging value of the Rosslyn business model. Our customer churn remains extremely low, at less than 5% per annum.

We remain confident that, supported by strong contracted revenue visibility, and new business momentum we will continue to build on the solid progress and foundations laid during the first half of the year.

Business Review

The six months to 31 October 2017 saw the Company acquire the Integritie business whilst continuing to generate market traction. The Company won new contracts with large enterprises and the Directors believe that the Company is well positioned to execute its plans and develop new market opportunities.

Our sales growth was achieved through our approach of being able to assist enterprises to significantly reduce the complexities associated with capturing and managing their data whilst improving their analytics capabilities, reducing the costs of deploying analytics, increasing the speed of deployment whilst also being able to demonstrate a positive return on our clients' investments. The comparative value gap between a traditional on-premise solution and our cloud based approach is increasing as we continue to develop faster, better and more intuitive solutions. We believe this will assist us in improving our sales cycle metrics, accelerate our expansion plans and maintain a low churn rate.

We are continuing to invest in our sales and marketing teams particularly in the US, focusing on large enterprises in key industry segments sold predominantly through our Partner channel. We have deployed dedicated partner managers whose focus is on establishing deep and trusted relationships with these strategic accounts. Supporting each of these areas is a customer success team who support not just the implementation but also the expansion of the footprint of the platform in each account.

The Company's sales pipeline is growing and I am pleased to report that we are in contract negotiations with a number of large enterprises and look forward to updating shareholders in due course. On the partner front, our focus is on making our existing partners ever more effective in selling the benefits of the platform through which we extend and scale our sales capability.

We are continuing to build on our world-class and well regarded development team. Their depth of expertise and agile approach enables us to respond quickly to customer needs and market opportunities and give us an advantage over the traditional on-premise approach.

The Group's strategy continues to be to build a strong and dynamic company focused on growth and building shareholder value.

Financial Review

Group revenues increased by 74% to £2,901,048 (2016: £1,666,577) reflecting the acquisition of Integritie. EBITDA loss was £1,647,041 (2016: £1,074,174) with a loss before tax of £1,804,348 (2016: £1,081,665), after charging £150,849 in respect of acquisition costs. The basic and diluted loss per share for the period was 0.96p (2016 1.19p).

Cash at the end of the six month period was £1.0m (2016: £0.7m). Cash consumed by operating activities in the first half equated to £2.2m (2016: £1.2m). Consistent with the Group's working capital cycle, cash consumption during the second half of the year is expected to be lower than during the first half.

Average headcount in the period increased to 77 (2016: 45), which represents the acquisition of Integritie less reductions achieved to date from synergies.

Prospects

The second half of the year has begun well. There have been a number of new contract wins as well as expansion of our current customer portfolio. The firm has been short listed as the preferred vendor in the US, UK and Europe for potential new contracts which cover a number of new exciting verticals and applications for RDT and we look forward to updating shareholders in due course. The contracts incorporate the combined Integritie and RAPid product suite.

The research and development team is executing on an exciting schedule of improvements and new technologies, which we expect to be released into full production during the second half of this financial year. Of note, we expect to deliver: simple self-service tools that will enable clients to improve data management capabilities; predictive analytical capabilities; supplier lifecycle management capability and full contract to cash management capabilities. We expect these tools to improve our customers' risk analytics and compliance reporting capabilities, and information and insights to support their strategic decision making.

The Directors are pleased with the progress made to date and believe that the Company is increasingly well positioned to take advantage of the business opportunity. The RDT RAPid platform is emerging as a recognised and well regarded technology in this large, growing market place and, through our continued and disciplined execution, we expect progress to continue. We remain focussed on delivering some of our largest ever contracts before the end of the financial year but are recognising that these larger contracts are taking longer to conclude than previously expected. As a result, we are taking a more prudent approach to our expectations for the year. That said through the combination of progress and opportunity, we believe, the Company is in an exciting position for the rest of this year and beyond.

Notes to the Unaudited Group Interim Financial Statements for the six months ended 31 October 2017

1. Nature of operations and general information

The principal activity of the Company and its subsidiaries (together the Group) is the provision of data analytics using a proprietary platform.

Rosslyn Data Technologies plc is the group's ultimate parent company. It is incorporated and domiciled in the UK. The registered office of the Company is Fox Court, Gray's Inn Road, London WC1X 8HN, which is also the principal place of business for its UK based operating subsidiary, Rosslyn Analytics Limited.

Rosslyn Data Technologies plc's shares are listed on AIM, a market operated by the London Stock exchange. This consolidated unaudited half-yearly report was approved by the Board of Directors on 30 January 2018.

The financial information set out in this half-yearly financial report does not constitute statutory accounts as defined in Sections 434(3) and 435(3) of the Companies Act 2006. The Group's statutory financial statements for the year to 30 April 2017 have been filed with the Registrar of Companies and are available at www.rosslyndatatechnologies.com. The auditors' report on those financial statements was unqualified and did not contain any statement under Section 498(2) or Section 498(3) of the Companies Act 2006.

2. Basis of preparation

The financial information presented in this document has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations that are expected to be applicable for the year ending 30 April 2017. The principal accounting policies used in preparing these Interim Results are unchanged from those adopted and disclosed in the audited financial statements for the year ended 30 April 2017.

The financial information in this statement relating to the six months ended 31 October 2017 has neither been audited nor reviewed pursuant to guidance issued by the Auditing Practices Board. The financial information for the period ended 31 October 2017 does not constitute the full statutory accounts for that period. The financial information in this statement relating to the six months ended 31 October 2016 has not been audited and does not constitute full statutory accounts for that period. The Annual Report and Financial Statements for 2017 have been filed with the Registrar of Companies. The Independent Auditor's Report on the Annual Report and Financial Statements for 2017 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

3. Accounting policies

The accounting policies applied are consistent with those of the annual financial statements for the year ended 30 April 2017.

4. Segmental Reporting

All segment revenue, loss before taxation, assets and liabilities are attributable to the principal activity of the Group being the provision of data analytics using a proprietary form and other related services.

The EBITDA by segment excludes the management recharge, which was recorded annually.

5. Basic and diluted loss per share

Basic earnings per share is calculated by diving the net loss for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share is calculated by dividing net profit for the period attributable to ordinary shareholders outstanding during the period plus the weighted average number of ordinary shares that would be issued on the conversion of all dilutive potential ordinary shares into ordinary shares.

Earnings per share has been calculated in accordance with IAS 33.

6. Principal risks and uncertainties

The principal risks and uncertainties for this 6 month period remain broadly consistent with those set out in the Financial Review section of the financial statements of the Group for the year ended 30 April 2017.