27 Sep 2018 07:00
Maistro plc
("Maistro", the "Group" or the "Company")
Unaudited Interim Results
Maistro, the online B2B Marketplace and AI-powered delivery platform, presents its unaudited interim results for the six months ended 30 June 2018.
Highlights
The Board is pleased to report significant improvement in both Revenue and Gross Profit performance, with Revenue increasing by 255% when compared to H1 2017, and by 41% when compared to H2 2017. As a result of the Company's continued drive to recognise efficiencies from investment in its software platform, the Gross Profit contribution has increased by 1,127% when compared to H1 2017. The EBITDA* loss has reduced by 5.7% when compared to H1 2017.
Revenue is being driven by the increasing take up of services by Multinational Enterprises with the financial performance continuing to improve with our Enterprise** customers driving operational efficiencies whilst maintaining stringent cost control.
The Board concluded in 2018 that the reporting currency of the Company has been changed to GBP Sterling from US Dollars to provide greater transparency in the operating results of the Company.
In relation to strategic and operational highlights, the successful re-branding of the business was completed in January 2018. The Company appointed Ian Cleverly to the Board as Chief Financial Officer on 9 April, and appointed Pricewaterhouse Coopers as its auditors.
The Board is encouraged by the Company's performance over the six months ended 30 June 2018, and as a result, is accelerating investment in its software platform and expanding its business development team to enable the Enterprise Customer strategy to deliver an increased volume in the number of projects, whilst retaining margins and delivering value to its customers. The Board is confident with the Company's outlook for the rest of the year and beyond.
Summary Financial Results
| H1 2018 | H1 2017 | FY 2017 |
| |
| Unaudited | Unaudited | Unaudited | H1 2018 on H1 2017 change | |
| £'000s | £'000s | £000s | % | |
Revenue | 596 | 168 | 592 | 254.5% | |
Gross profit | 74 | 6 | 100 | 1,127.4% | |
Adjusted EBITDA* | (923) | (979) | (2,082) | (5.7)% | |
Loss for the period | (1,354) | (1,458) | (2,250) | (7.1)% | |
Cash balance at period end | 1,085 | 755 | 2,454 | (55.8)% |
* Adjusted EBITDA is profit before interest, tax, depreciation and amortisation, foreign exchange movements and share option costs. EBITDA is a key monitoring tool used by the Board to monitor underlying trading performance while excluding the impact of non-trading items which may, due to one off adjustments, materially impact reported performance.
** Maistro defines the Enterprise as a business with more than 50 employees
Chairman David Rowe commented:
I am pleased to report that the Company has made excellent progress during the last six months.
Firstly, the Company under Laurence Cook's leadership has successfully built a core customer base in the Enterprise segment for its PaaS (Procurement as a Service) product. Revenue has grown rapidly as a result and the momentum going forward gives the Board confidence for the remainder of the year and beyond.
Secondly, the rebranding to Maistro at the turn of the year has been universally well received and the company is gaining acceptance and recognition as a leader in its field. Building on this recognition we expect the business to attract projects from existing and new customers to ramp up the value of business going through the platform.
The Company is well positioned and poised to grow rapidly whilst maintaining margins and delivering strong value to its customers.
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
For further information, please contact:
Maistro plc investors@Maistro.com
N+1 Singer
Shaun Dobson/James White Tel: +44 (0) 20 7496 3000
About Maistro plc at Maistro.com
Maistro is a public company quoted on the London Stock Exchange's AIM market (MAIS) and is headquartered in the UK.
Chief Executive Officer's review
Since June 2017 we have posted 4 consecutive quarters of revenue growth and that trajectory continues at an increasing pace. This success is based on more repeat business from our core Multinational Enterprise customer base together with new customers joining the platform. It's pleasing to see that H1 2018 results have exceeded full FY 2017 and is further evidence that our strategy of focussing on large Enterprises where there is significant opportunity for a high volume of business is paying off. As we provide services for these customers we have extended our reach into Europe and the Far East where we have successfully delivered large projects in a variety of categories. In doing so we continue to increase the number and quality of suppliers on our marketplace giving all our customers greater choice of new and innovative service providers.
Whilst growing top line revenue we have been laser focussed on ensuring that the Gross Margin maintains its upward path and at the same time managing cash effectively. The strategy of investing in our software platform continues as we develop the AI capability which will incrementally speed up the sourcing of suppliers and as a result provide an even faster and more cost-effective solution for our growing customer base.
Over the last 6 months we have extended our collaborations in the procurement industry through a partnership agreement with Odesma advising large enterprises on cost-optimisation strategies and through an exclusive knowledge partnership agreement with CIPS* focussing on B2B Marketplaces. We are increasingly being recognised by the procurement industry as an exciting player in the Procurement as a Service sector.
I am very encouraged by our performance to date and look forward to the second half of the year being even more successful than the first as we take on more new customers and grow our repeat business within existing Enterprises. The outlook for H2 is encouraging and with an increasing run-rate the pace of growth into 2019 is set to be very positive.
*CIPS - Chartered Institute of Procurement and Supply
Chief Financial Officer's review
In the first half of 2018, Maistro continued to focus on its Enterprise strategy, developing and expanding its relationships with its customer base. The strategic outlook is very encouraging, as we report significant improvements in both Revenue and Gross Margin performance with a continued focus on the operational costs and improving operational efficiencies to drive performance towards a positive EBIDTA.
The Board concluded in H1 2018 to change the currency it presents its financial results from US Dollars to GBP Sterling. Accordingly, the previously reported results for the six months ended 30 June 2017 and for the year ended 31 December 2017 have been translated from US Dollars to GBP Sterling using the exchange rates set out in Note 1.
Revenue
Overall revenue performance for the six months to 30 June 2018 increased by 255% to £0.60m (H1 2017: £0.17m) within which Project fee revenue increased by 393% to £0.58m (H1 2017: £0.12m). Revenue growth was due to two key factors:
a. The ongoing development of Maistro's relationships with global Enterprise customers.
b. Successful engagement with new global Enterprise customers.
Gross margin
Gross profit was £0.07m in H1 2018 (H1 2017: £0.01m. This increase has been driven by the reduction to operations staff costs charged to cost of sales, which reduced by 28% to £0.05m (H1 2017: £0.07m). Further automation of Maistro's software platform and delivery processes has driven improved operational efficiency.
Costs
Total administrative expenses decreased by 2% to £1.49m (H1 2017: £1.52m) reflecting actions taken to realign costs last year. Headcount costs remained stable, decreasing by 1% compared to H1 2017. Share based payments reduced by 7% compared to H1 2017.
The credit risk associated with the customers using the marketplace resulted in a £(0.01m) (H1 2017: £(0.08m) bad debt provision included in administrative costs. The credit balance was, in part, driven by recovery of previously provided for bad debts. The bad debt provision at 30 June 2018 was £nil (H1 2017: £0.03m reflecting a material improvement in the level of service provided to customers.
EBITDA
The EBITDA loss (Earnings before Interest, Tax, Depreciation and Amortisation, Foreign Exchange movements and Share Option costs) for H1 2018 reduced by 5.7% to £0.92m (H1 2017: £0.98m). This was driven by the increase in Gross Margin and reduction in administrative costs in the period.
Loss after tax
The loss after tax for the period reduced by 7.1% to £1.35m (H1 2017: £1.46m).
Finance income improved to £0.007m (H1 2017: £0.001m) reflecting increased cash balances held on deposit.
Cash
The cash balance at the period end was £1.1m (31 December 2017: £2.5m). The Group predominantly holds its cash in Sterling. At 30 June 2018, the Group's Sterling deposits totaled £1.06m with a further £0.03m held in USD and EUR denominated accounts.
The net decrease in cash and cash equivalents was 7% higher in H1 2018 compared to H1 2017, driven by the longer cash cycle associated with Enterprise customers.
The Company's cash balance as at 31st August 2018 was £1.004m. As disclosed in the 2017 Annual Report the Company is developing its business model and continues to be loss making. The Company is well positioned and poised to grow rapidly and as such the Board recognises that the Company may require additional funding in the future and would be reliant on either Warrants being exercised or other additional funding from time to time.
Chief Financial Officer's review cont'd
Capital Investment
Maistro invested £0.26m (H1 2017: £0.29m) in its software platform during the period. Investment is principally focused on the development and implementation of "AI" (Artificial Intelligence) within the software platform to enhance functionality and improve operational efficiency.
Risks and uncertainties
The key business risks affecting the Group remain as stated in the Annual Report for the Year ended 31 December 2017.
Condensed Consolidated Statement of Total Comprehensive Income
for the period ended 30 June 2018
|
| Six Months Ended | Six Months Ended |
|
| 30 June 2018 | 30 June 2017 |
|
| Unaudited | Unaudited |
| Note | £ | £ |
|
|
|
|
Revenue | 2 | 595,681 | 168,052 |
Cost of sales |
| (521,268) | (161,989) |
|
|
|
|
Gross profit |
| 74,413 | 6,063 |
|
|
|
|
Total administrative expenses |
3 |
(1,489,166) |
(1,523,022) |
|
|
|
|
Loss from operations |
| (1,414,753) | (1,516,960) |
|
|
|
|
Finance income |
| 6,885 | 1,318 |
Finance expense |
| (28) | (16) |
|
|
|
|
Loss before tax |
| (1,407,896) | (1,515,657) |
|
|
|
|
Tax credit |
| 54,347 | 58,150 |
|
|
|
|
Loss for the year attributable to equity holders of the parent Company |
| (1,353,549) | (1,457,507) |
|
|
|
|
Condensed Consolidated Statement of Total Other Comprehensive Income for the Period Ended 30 June 2018
|
| Six Months Ended 30 June 2018 Unaudited £ | Six Months Ended 30 June 2017 Unaudited £ |
(Loss) for the year |
| (1,353,549) | (1,457,507) |
Other comprehensive income |
|
|
|
Exchange gains/(losses) arising on the translation of foreign subsidiaries (could subsequently be reclassified to profit and loss) |
| 34 | (501) |
Total comprehensive losses attributable to equity holders of the parent Company |
| (1,353,515) | (1,458,008) |
Basic and diluted loss per share for losses attributable to the owners of the parent during the year | 5 | (0.01) | (0.03) |
The results reflected above relate to continuing activities.
The accompanying notes are an integral part of these financial statements.
Condensed Consolidated Statement of Financial Position
At 30 June 2018
|
|
|
|
|
|
| Six Months Ended 30 June 2018 | Year Ended 31 December 2017 |
|
|
| Unaudited | Unaudited |
|
| Note | £ | £ |
|
|
|
|
|
|
Non-current assets |
|
|
|
|
Property, plant and equipment |
| 25,027 | 25,269 |
|
Intangible assets | 6 | 1,230,542 | 1,368,423 |
|
Total non-current assets |
| 1,255,569 | 1,393,692 |
|
|
|
|
|
|
Current assets |
|
|
|
|
Trade and other receivables | 7 | 434,422 | 387,339 |
|
Tax Receivable |
| 203,050 | 151,775 |
|
Cash and cash equivalents |
| 1,085,204 | 2,454,191 |
|
Total current assets |
| 1,722,676 | 2,993,305 |
|
|
|
|
|
|
Total assets |
| 2,978,245 | 4,386,997 |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables (including derivatives) |
| 691,076 | 856,100 |
|
Social security and other taxes |
| 84,811 | 57,737 |
|
Loans and borrowings | 8 | - | 10,000 |
|
Total current liabilities |
| 775,887 | 923,837 |
|
|
|
|
|
|
Total liabilities |
| 775,887 | 923,837 |
|
|
|
|
|
|
Net assets |
| 2,202,358 | 3,463,160 |
|
|
|
|
|
|
Issued capital and reserves attributable to owners of parents |
|
|
| |
Called up share capital | 9 | 1,770,926 | 1,770,926 |
|
Share premium | 9 | 24,334,182 | 24,334,182 |
|
Equity conversion reserve |
| 11,118 | 5,559 |
|
Merger reserve |
| 1,061,789 | 1,061,789 |
|
Share based payment reserve | 10 | 307,471 | 220,317 |
|
Warrant Reserve |
| 307 | 307 |
|
Foreign exchange reserve |
| (9,618) | (9,652) |
|
Retained losses |
| (25,273,817) | (23,920,268) |
|
|
| 2,202,358 | 3,463,160 |
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
Condensed Consolidated Statement of Changes in Equity
for the Period Ended 30 June 2018
| Called Up Share Capital | Share Premium | Equity Conversion Reserve | Merger Reserve | Share Based Payment Reserve | Warrant Reserve | Foreign Exchange Reserve | Retained Loss | Total |
| £ | £ | £ | £ | £ | £ | £ | £ | £ |
Equity as at 1 January 2017 | 470,926 | 22,878,031 | 5,559 | 1,061,789 | 786,730 | - | (9,194) | (21,669,794) | 3,524,047 |
Loss for the period | - | - | - | - | - | - | - | (1,457,507) | (1,457,507) |
Other comprehensive income for the period | - | - | - | - | - | - | (501) | - | (501) |
Total comprehensive income/(loss) | 470,926 | 22,878,031 | 5,559 | 1,061,789 | 786,730 | - | (9,695) | (23,127,301) | 2,066,039 |
Issue of Ordinary shares | - | - | - | - | - | - | - | - | - |
Issue costs recognised in equity | - | - | - | - | - | - | - | - | - |
Share Based Payments | - | - | - | - | 89,168 | - | - | - | 89,168 |
Conversion of convertible debt | - | - | - | - | - | - | - | - | - |
Equity as at 30 June 2017 (Unaudited) | 470,926 | 22,878,031 | 5,559 | 1,061,789 | 875,898 |
- | (9,695) | (23,127,301) | 2,155,207 |
|
|
|
|
|
|
|
|
|
|
Equity as at 1 January 2018 | 1,770,926 | 24,334,182 | 5,559 | 1,061,789 | 220,317 | 307 | (9,652) | (23,920,268) | 3,463,160 |
Loss for the period | - | - | - | - | - | - | - | (1,353,549) | (1,353,549) |
Other comprehensive income for the period | - | - | - | - | - | - | 34 | - | 34 |
Total comprehensive income/(loss) | 1,770,926 | 24,334,182 | 5,559 | 1,061,789 | 220,317 | 307 | (9,618) | (25,273,817) | 2,109,645 |
Issue of Ordinary shares | - | - | - | - | - | - | - | - | - |
Issue costs recognised in equity | - | - | - | - | - | - | - | - | - |
Share Based Payments | - | - | - | - | 87,154 | - | - | - | 87,154 |
Conversion of convertible debt | - | - | 5,559 | - | - | - | - | - | 5,559 |
Equity as at 30 June 2018 (Unaudited) | 1,770,926 | 24,334,182 | 11,118 | 1,061,789 | 307,471 |
307 | (9,618) | (25,273,817) | 2,202,358 |
Condensed Consolidated Statement of Cashflows
for the Period Ended 30 June 2018
|
| Six Months Ended | Six Months Ended |
|
| 30 June 2018 | 30 June 2017 |
|
| Unaudited | Unaudited |
| Note | £ | £ |
Loss after taxation |
| (1,353,549) | (1,457,507) |
Interest (income)/expense (net) |
| (6,857) | (1,303) |
Income tax credit |
| (54,347) | (58,150) |
Fair value movement and unrealised FX |
| 9,909 | (670) |
Depreciation of property, plant and equipment |
| 8,892 | 4,622 |
Amortisation of intangible assets | 6 | 394,925 | 449,427 |
Share-based payments charge | 10 | 82,740 | 89,168 |
Loss on disposal of property, plant and equipment |
| - | - |
Cash outflows from operating activities before changes in working capital |
| (918,287) | (974,413) |
(Increase)/decrease in trade and other receivables |
| (47,086) | (53,955) |
Increase/(decrease) in trade and other payables |
| (147,950) | 43,051 |
Cash used in operations |
| (1,113,323) | (985,317) |
|
|
|
|
Interest received |
| 6,885 | 1,318 |
Interest paid |
| (28) | (16) |
Income tax (paid)/received |
| 3,073 | (2,163) |
Net cash used in operations |
| (1,103,393) | (986,178) |
|
|
|
|
Purchase of property, plant and equipment |
| (8,650) | - |
Proceeds on disposal of property, plant and equipment |
| - | - |
Investment in intangible assets |
| (257,044) | (289,706) |
Net cash used in investing activities |
| (265,694) | (289,706) |
|
|
|
|
Issue of share capital |
| - | - |
Issue cost of shares |
| - | - |
Share based payments |
| - | - |
Proceeds from convertible debts |
| - | - |
Net cash generated in financing activities |
| - | - |
Net decrease in cash and cash equivalents |
| (1,369,087) | (1,275,884) |
Cash and cash equivalents at beginning of period |
| 2,454,191 | 2,030,867 |
Effect of foreign exchange translation on cash and equivalents |
| 100 | 170 |
Cash and cash equivalents at end of period |
| 1,085,204 | 755,153 |
|
|
|
|
The accompanying notes are an integral part of these financial statements. |
Note to the Condensed Consolidated Financial Information
1. Accounting policies
Basis of preparation
The principal accounting policies adopted in the preparation of these condensed Financial Statements are set out in the full accounts for 2017. The policies have been consistently applied to all the periods presented, except for the change in presentational currency from US Dollars to GBP Sterling.
These condensed Financial Statements have been prepared in accordance with IAS34 "Interim Financial Statements", as adopted by the European Union.
These condensed interim Financial Statements do not constitute statutory Financial Statements within the meaning of Section 434 of the Companies Act 2006. The financial information presented for the six-month periods ended 30 June 2018 and 30 June 2017 has not been audited. The comparative information presented for the year ended 31 December 2017 does not constitute the full statutory Annual Report of Maistro Plc for that year and is not audited due to the change in presentational currency (the audited statutory annual report of Maistro plc for the year ended 31 December 2017 was presented in US Dollars). A copy of the 31 December 2017 statutory Financial Statements has been delivered to the Registrar of Companies. The auditor's report on those statements was unqualified but included reference to an emphasis of matter in relation to Going Concern. That opinion did not contain a statement under section 498(2)-(3) of the Companies Act 2006.
The preparation of Financial Statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies. The accounting policies have been applied consistently throughout the Group for the purposes of the preparation of the Interim Financial Statements, except for the change in presentational currency.
The Group Financial Statements consolidate the Financial Statements of the Company and its subsidiaries (together referred to as "the Group").
Basis of consolidation
Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated Financial Statements present the results of the Company and its subsidiaries (the Group) as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.
Foreign currency
The functional currency of Maistro Group plc and Maistro Ltd is GBP Sterling, whereas of Maistro Inc. it is US Dollars.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the reporting period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement in either cost of sales or administrative expenses as appropriate.
On consolidation, exchange differences arising from the translation of the net investment in foreign entities are recognised in other comprehensive income and accumulated in a separate component of equity. Exchange differences are recycled to profit or loss as a reclassification adjustment upon disposal of the foreign operation.
Notes to the Condensed Consolidated Financial Information cont'd
Change in presentation currency
As part of a review, the Board concluded that from the beginning of the current financial year it would be changing the currency in which it presents its financial results from US Dollars to GBP Sterling. Accordingly, the previously reported results for the six months ended 30 June 2017 and for the year ended 31 December 2017 have been translated from US Dollars to GBP Sterling using the following exchange rates:
Exchange rates used USD:GBP | Year ended 31 December 2017 | Six months ended 30 June 2017 | Year ended 31 December 2016 |
Average rate | 1.3284 | 1.2949 | 1.2399 |
Year-end rate | 1.3493 | 1.3003 | 1.2341 |
2. Segmental analysis
The Group currently has one reportable segment, provision of services, and categorises all revenue from operations to this segment.
The Group currently has four reportable categories which are:
1. Project revenues - for the provision of services from projects that list on Maistro's marketplace, where the customer accepts the bid from the expert supplier and a legally binding contract between Maistro and its customers is established;
2. Cancellation fees (formerly listing fees) - where the project is cancelled after listing and there is an expectation of collection. The Cancellation fee is a mandatory charge when a customer listed a project and decided to close their trading account or not to select an expert;
3. Premium services - comprising wrap around support services for projects;
4. Subscriptions and licenses - for the provision of tiered annual subscriptions to service providers to gain access to high value project opportunities and market insights; the provision of access to Maistro's Software Platform and for the provision of subscriptions of Maistro Data, which analyses the business services landscape including category trends, pricing and timeline forecasts.
| Project Revenue - Unaudited | Cancellation Fees (formerly Listing Fees) - Unaudited | Premium Services - Unaudited | Subscriptions - Unaudited | ||||||||
| Six Months Ended | Six Months Ended | Year Ended | Six Months Ended | Six Months Ended | Year Ended | Six Months Ended | Six months ended | Year Ended | Six months Ended | Six months Ended | Year Ended |
| 30 June 2018 | 30 June 2017 | 31 Dec 2017 | 30 June 2018 | 30 June 2017 | 31 Dec 2017 | 30 June 2018 | 30 June 2017 | 31 Dec 2017 | 30 June 2018 | 30 June 2017 | 31 Dec 2017 |
| £ | £ | £ | £ | £ | £ | £ | £ | £ | £ | £ | £ |
UK | 322,805 | 78,343 | 305,142 | - | - | - | 2,000 | 16,670 | 83,892 | 6,576 | 26,212 | 40,228 |
USA | 4,712 | 13,700 | 22,373 | - | - | - | - | 79 | 77 | 327 | 3,209 | 3,994 |
Rest of World | 256,749 | 26,387 | 128,699 | - | - | - | - | - | - | 2,512 | 3,452 | 7,613 |
Total | 584,266 | 118,430 | 456,214 | - | - | - | 2,000 | 16,749 | 83,969 | 9,415 | 32,873 | 51,835 |
Notes to the Condensed Consolidated Financial Information cont'd
2. Segmental analysis (continued)
The Group operates in three main geographic areas: UK, USA and Rest of the World. Revenue by origin of geographical segment for all entities in the Group is as follows:
| Six Months Ended | Six Months Ended | Year Ended |
| 30 June 2018 | 30 June 2017 | 31 December 2017 |
| Unaudited | Unaudited | Unaudited |
| £ | £ | £ |
UK | 331,381 | 121,225 | 429,262 |
USA | 5,039 | 16,988 | 26,444 |
Rest of World | 259,261 | 29,839 | 136,312 |
Total | 595,681 | 168,052 | 592,018 |
3. Loss from operations
The operating loss as at 30 June 2018 is stated after charging:
| Six Months Ended | Six Months Ended | Year Ended |
| 30 June 2018 | 30 June 2017 | 31 December 2017 |
| Unaudited | Unaudited | Unaudited |
| £ | £ | £ |
Amortisation of intangibles | 394,925 | 449,427 | 876,886 |
Bad debt provision | (14,836) | (84,135) | (5,993) |
Depreciation of property, plant and equipment | 8,892 | 4,622 | 9,563 |
(Profit)/Loss on disposal of property, plant and equipment | - | - | 924 |
Staff costs | 631,167 | 640,443 | 485,156 |
Operating lease expense - buildings | (6,970) | 39,972 | 79,411 |
Foreign exchange (gains)/ losses | 5,367 | (5,084) | (2,459) |
Other administrative expenses | 470,621 | 477,777 | 1,056,990 |
Total administrative and other expenses | 1,489,166 | 1,523,022 | 2,500,478 |
Notes to the Condensed Consolidated Financial Information cont'd
4. EBITDA
|
EBITDA is calculated as follows:
| Six months ended | Six months ended | Year ended |
30 June 2018 | 30 June 2017 | 31 Dec 2017 | |
| Unaudited | Unaudited | Unaudited |
| £ | £ | £ |
Earnings from operations | (1,414,753) | (1,516,960) | (2,400,215) |
Amortisation of intangibles | 394,925 | 449,427 | 876,886 |
Depreciation of property, plant and equipment | 8,892 | 4,622 | 9,563 |
(Profit)/Loss on disposal of property, plant and equipment | - | - | 924 |
Foreign exchange gains/(losses) | 5,367 | (5,083) | (2,459) |
Share based payments | 82,740 | 89,168 | (566,413) |
EBITDA | (922,829) | (978,826) | (2,081,714) |
5. Loss per share
Loss per ordinary share has been calculated using the weighted average number of shares in issue during the relevant financial periods. The basis for calculating the basic loss per share is as follows:
| Six Months Ended |
Six months Ended | Year Ended |
| 30 June 2018 | 30 June 2017 | 31 December 2017 |
| Unaudited | Unaudited | Unaudited |
| £ | £ | £ |
Weighted average number of shares for the purpose of earnings per share | 177,092,851 | 47,092,851 | 95,750,385 |
Loss after tax | (1,353,549) | (1,457,507) | (2,250,474) |
Loss per share | (0.01) | (0.03) | (0.02) |
Due to the loss in the period the effect of the share options was considered anti-dilutive and hence no diluted loss per share information has been provided.
Notes to the Condensed Consolidated Financial Information cont'd
6. Intangible assets
|
|
| |
| Trading Platform | Software Development | Total |
| £ | £ | £ |
COST |
|
|
|
At 1 January 2017 | 3,434,473 | 206,443 | 3,640,916 |
Additions - Internal Development | 527,224 | - | 527,224 |
Additions - External Costs | - | 2,924 | 2,924 |
Disposals | - | - | - |
At 31 December 2017 - Unaudited | 3,961,697 | 209,367 | 4,171,064 |
Additions - Internal Development | 256,596 | - | 256,596 |
Additions - External Costs | - | 448 | 448 |
Disposals | - | - | - |
At 30 June 2018 - Unaudited | 4,218,293 | 209,815 | 4,428,108 |
|
|
|
|
AMORTISATION |
|
|
|
At 1 January 2017 | 1,767,027 | 158,728 | 1,925,755 |
Charge for period | 831,916 | 44,970 | 876,886 |
Disposals | - | - | - |
At 31 December 2017 - Unaudited | 2,598,943 | 203,698 | 2,802,641 |
Charge for period | 391,490 | 3,435 | 394,925 |
At 30 June 2018 - Unaudited | 2,990,433 | 207,133 | 3,197,566 |
|
|
|
|
NET BOOK VALUE |
|
|
|
At 30 June 2018 | 1,227,860 | 2,682 | 1,230,542 |
At 31 December 2017 | 1,362,754 | 5,669 | 1,368,423 |
Notes to the Condensed Consolidated Financial Information cont'd
7. Trade and other receivables
| Six Months Ended | Year Ended |
| 30 June 2018 | 31 December 2017 |
| Unaudited | Unaudited |
| £ | £ |
Trade receivables - gross | 189,135 | 210,347 |
Provision for impairment | - | (27,528) |
Trade receivables - net | 189,135 | 182,819 |
Prepayments | 120,122 | 103,896 |
Accrued Income | 117,544 | 47,739 |
Other receivables | 7,621 | 52,884 |
| 434,422 | 387,338 |
All amounts shown under receivables are due within one year.
8. Loans and borrowings
| Six Months Ended | Year Ended |
| 30 June 2018 | 31 December 2017 |
| Unaudited | Unaudited |
Unsecured convertible loan note | £ | £ |
Current | - | 10,000 |
Total loans and borrowings | - | 10,000 |
Book value approximate to fair value for the convertible debt and is stated at fair value at initial recognition and at amortised cost subsequently.
The convertible loan notes (referred to as convertible debt II) were issued in 2011 with a coupon rate of 15% at a total face value of US$78,010. The loan notes are either repayable in four years from the issue date at its total face value, with interest accrued and payable as ordinary shares issued in the Company or can be converted at any time within two years into shares at the holder's option. The value of the liability component and the equity conversion component were determined at the date the instrument was issued.
During the period to 31 December 2012 loan note holders converted their loan notes into Ordinary shares of the company. Only one convertible loan note remained outstanding relating to Peter Tahany. There was an ongoing claim relating to the provision of Mr. Tahany's consultancy services from September 2009 to early 2010. During the period, the Board considered the risk of incurring costs relating to this claim remote, and as such wrote off the liability.
Notes to the Condensed Consolidated Financial Information cont'd
8. Loans and borrowings (continued)
There are no cash flow movements arising from loans and borrowings.
| Face value
| Equity conversion reserve
| Fair value of liability
|
| £ | £ | £ |
As at 1 January 2018 | 10,000 | 5,559 | 15,559 |
Accretion in loan note liability value | - | - | - |
Amounts written off during the period | (10,000) | 5,559 | (4,441) |
As at 30 June 2018 | - | 11,118 | 11,118 |
9. Share capital
Share capital allotted and fully paid up
Ordinary shares of £0.01 carry the right to one vote per share at general meetings of the Company and the rights to share in any distribution of profits or returns of capital and to share in any residual assets available for distribution in the event of a winding up. The shares are denominated in Pounds Sterling and translated at the historic rate.
The table below shows the movements in share capital for the year:
| Number of shares | Share Capital £ | Share premium £ | |||
| Six Months Ended |
Year Ended | Six Months Ended |
Year Ended | Six Months Ended |
Year Ended |
| 30 June 2018 | 31 December 2017 | 30 June 2018 | 31 December 2017 | 30 June 2018 | 31 December 2017 |
Movement in ordinary share capital | Unaudited | Unaudited | Unaudited | Unaudited | Unaudited | Unaudited |
Balance at the beginning of the period | 177,092,851 | 47,092,851 | 1,770,926 | 470,926 | 24,334,182 | 22,878,031 |
Issue of new shares | - | 130,000,000 | - | 1,300,000 | - | 1,649,693 |
Share issue costs | - | - | - | - | - | (193,542) |
Balance at the end of the period | 177,092,851 | 177,092,851 | 1,770,926 | 1,770,926 | 24,334,182 | 24,334,182 |
The Group does not hold any treasury shares.
Notes to the Condensed Consolidated Financial Information cont'd
9. Share capital (continued)
The Group has, in 2017, issued securities with warrant rights attached, as follows:
|
Warrant Rights 1 | Warrant Rights 2 |
Date of Issuance | 1st August 2017 | 11th October 2017 |
Number of Ordinary shares issued | 100,000,000 | 30,000,000 |
Warrant rights attached to Ordinary shares | 1 warrant per 4 Ordinary shares issued | 1 warrant per 2 Ordinary shares issued |
Number of warrant rights | 25,000,000 | 15,000,000 |
Warrant subscription price | £0.035 | £0.06 |
Initial exercise date | 1st August 2018 | 11th October 2018 |
Final exercise date | 1st August 2019 | 11th October 2019 |
Form of purchase | Cash purchase | Cash purchase |
10. Share-based payments
The company operates two option schemes, namely an unapproved option scheme and an Enterprise Management Incentive ('EMI') scheme.
In compliance with the requirements of IFRS 2 on share-based payments, the fair value of options granted during the period or which were granted in previous periods but had an extended period before vesting is calculated either using the Black Scholes option pricing model or on the basis of the fair value of remuneration waived in consideration for the grant.
Further, as disclosed in the 2017 Annual Report, options over Ordinary shares were expected to be granted by the Board to David Rowe as part of his incentive-based remuneration package. On 20 March 2018, these options were granted under the following terms:
- Condition A - If the Company's share price averages 10 pence or more for 3 consecutive months from the grant date until 31 December 2019 (inclusive), David Rowe will be entitled to subscribe for Ordinary Shares equivalent to 2.5% of the Company's issued share capital at that time.
- Condition B - If the Company's share price averages 15 pence or more for 3 consecutive months from the grant date until 31 December 2020 (inclusive), David Rowe will be entitled to subscribe for Ordinary Shares equivalent to 2.5% of the Company's issued share capital at that time.
- Condition C - If the Company in any financial year from the grant date until 31 December 2021 (inclusive) becomes EBITDA positive, David Rowe will be entitled to subscribe for Ordinary Shares equivalent to 2.5% of the Company's issued share capital at that time. For the purposes of Condition C, reference to the EBITDA shall be to the earnings before all interest, tax, depreciation, and amortisation for the relevant financial year as stated in the audited financial statements.
Notes to the Condensed Consolidated Financial Information cont'd
10. Share-based payments (continued)
In compliance with the requirements of IFRS 2 on share-based payments, the fair values of the options issued to David Rowe were estimated at the grant date using the share price at the grant date less the exercise price, multiplied by the probabilities of vesting, which reflect the market vesting conditions. The market vesting probabilities were determined using an adjusted form of the Black-Scholes model, which includes a Monte Carlo simulation process that takes into account the terms and conditions on which the options were granted (the exercise price, the term of the option, the share price at the grant date, the vesting conditions, the expected volatility of the underlying share, the expected dividend yield, and the short-term risk-free rate over the term of the option).
| Six Months Ended | Six Months Ended | Year Ended |
| 30 June 2018 | 30 June 2017 | 31 December 2017 |
| Unaudited | Unaudited | Unaudited |
| £ | £ | £ |
In the Statement of Comprehensive Income, the Company recognised the following charge in respect of its share-based payment plans: | 82,740 | 89,168 | (566,413) |
Notes to the Condensed Consolidated Financial Information cont'd
11. Related party transactions
The following payments were made to related parties during the period:
| Six Months Ended | Six Months Ended |
| 30 June 2018 | 30 June 2017 |
| Unaudited | Unaudited |
| £ | £
|
|
|
|
Consultancy fees1
| - | 21,323 |
| - | 21,323 |
Out of above balances outstanding at period end in trade payables and accruals are £nil (30 June 2017: £nil).
1 Consultancy fees of £nil (Six months ended 30 June 2017: £21,323) were paid to Revviva LLC, a company in which K Cardinale has an interest. These were paid for K Cardinale's director services.
Revenue or other related receipts from key management personnel (including Directors):
| Six Months Ended | Six Months Ended |
30 June 2018 | 30 June 2017 | |
| Unaudited | Unaudited |
| £ | £
|
|
|
|
Project revenue1,2
| - | 2,483 |
| - | 2,483 |
1 Project revenue includes £nil (Six months to 30 June 2017: £515) revenue recognised for projects carried out on behalf of Letts Estates Limited, a company in which Philip Letts has an interest. The projects were carried out on an arms-length basis. There are no amounts outstanding to or from the company at the period end.
2 Project revenue includes £nil (Six months to 30 June 2017: £1,968) revenue recognised for projects carried out on behalf of Tanfield Limited, a company in which Richard Bourne-Arton has an interest. The projects were carried out on an arms-length basis. There are no amounts outstanding to or from the company at the period end.
Notes to the Condensed Consolidated Financial Information cont'd
11. Related party transactions (continued)
The following loans are due (to)/from Directors:
| Six Months Ended | Year Ended |
| 30 June 2018 | 31 December 2017 |
| Unaudited | Unaudited |
P Letts: | £ | £ |
Opening balance | - | (12,739) |
Amounts advanced from the Group | - | 12,774 |
Expenses incurred on behalf of the Group | - | (3,008) |
Exchange adjustments | - | 2,973 |
Closing balance | - | - |
|
|
|
Notes to the Condensed Consolidated Financial Information cont'd
11. Related party transactions (continued)
The Directors hold the following warrants, in the capacity of a shareholder, rather than in the capacity of a director providing services.
| 2018 | 2017 | 2017 | 2017 |
| No. Warrants | Warrant Issue 1* | Warrant Issue 2* | Total Warrants |
Laurence Cook 1 | - | - | - | - |
Ian Cleverly9 | - | - | - | - |
David Rowe 2,3 | - | 2,142,857 | 1,250,000 | 3,392,857 |
Preeti Mardia 2,3 | - | 214,286 | 250,000 | 464,286 |
Richard Rae 2,3 | - | 1,071,429 | 500,000 | 1,571,429 |
Richard Croft 2,3,4 | - | 357,143 | 250,000 | 607,143 |
Philip Letts 5 | - | - | - | - |
Kara Cardinale 6 | - | 69,159 | - | 69,159 |
Timothy Allen 7 | - | - | - | - |
Richard Bourne-Arton 3, 8 | - | - | - | - |
David John Sherriff 3,6 | - | 103,739 | - | 103,739 |
Roger de Peyrecave 3,6 | - | 34,580 | - | 34,580 |
Robert Wirszycz 3,6 | - | - | - | - |
Total | - | 3,993,193 | 2,250,000 | 6,243,193 |
* See Note 9 for specific warrant terms
1 Appointed 7 August 2017
2 Appointed 10 July 2017
3 Non-Executive Director
4 Company Secretary
5 Resigned 1 August 2017
6 Resigned 10 July 2017
7 Resigned 28 July 2017
8 Resigned 31 January 2017
9 Appointed 9 April 2018
Notes to the Condensed Consolidated Financial Information cont'd
11. Related party transactions (continued)
The following share options were granted to David Rowe on 20th March 2018 as part of his incentive-based remuneration package:
- Condition A - If the Company's share price averages 10 pence or more for 3 consecutive months from the grant date until 31 December 2019 (inclusive), David Rowe will be entitled to subscribe for Ordinary Shares equivalent to 2.5% of the Company's issued share capital at that time.
- Condition B - If the Company's share price averages 15 pence or more for 3 consecutive months from the grant date until 31 December 2020 (inclusive), David Rowe will be entitled to subscribe for Ordinary Shares equivalent to 2.5% of the Company's issued share capital at that time.
- Condition C - If the Company in any financial year from the grant date until 31 December 2021 (inclusive) becomes EBITDA positive, David Rowe will be entitled to subscribe for Ordinary Shares equivalent to 2.5% of the Company's issued share capital at that time. For the purposes of Condition C, reference to the EBITDA shall be to the earnings before all interest, tax, depreciation, and amortisation for the relevant financial year as stated in the audited Financial Statements.
In the Statement of Comprehensive Income, the Company recognised the following charge in respect of share options relating to David Rowe's incentive-based remuneration package:
| Six Months Ended | Six Months Ended |
| 30 June 2018 | 30 June 2017 |
| Unaudited | Unaudited |
| £ | £
|
|
|
|
Share option cost
| 66,055 | - |
| 66,055 | - |
Notes to the Condensed Consolidated Financial Information cont'd
12. Events after the reporting date
There are no disclosable events following the reporting date.
13. Control
There is no ultimate controlling party
Statement of Directors' Responsibilities
We confirm that to the best of our knowledge:
•the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU;
•the interim management report includes a fair review of the information required by:
(a)DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
(b)DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so
The directors of Maistro plc are listed in and are unchanged from those disclosed in the Maistro plc Annual Report for 31 December 2017, with the exception of Ian Cleverly, who was appointed to the Board on 9 April 2018.
By order of the Board
David Rowe
Chairman
David Rowe
27th September 2018