TIDMTENG
RNS Number : 2505G
Ten Lifestyle Group PLC
24 November 2020
24 November 2020
Ten Lifestyle Group plc
("Ten", the "Company" or the "Group")
Preliminary results for the year ended 31 August 2020
Ten Lifestyle Group plc (AIM: TENG), a leading
technology-enabled, global concierge platform for the world's
wealthy and mass affluent, announces its preliminary results for
the year ended 31 August 2020.
Financial
-- Net Revenue(1) down 3.5% to GBP44.2m (2019: GBP45.8m)
o Corporate revenue increase of 1.6% to GBP40.9m (2019:
GBP40.3m) supported by growing member engagement
o Supplier revenue decrease of 40.3% to GBP3.3m (2019: GBP5.5m)
due largely to impact of COVID-19 on travel
-- EMEA (2) region growth partly offset declines in APAC (3) and Americas regions
o 7% Net Revenue growth in EMEA
o 13% Net Revenue decline in the Americas
o 11% Net Revenue decline in APAC
-- Adjusted EBITDA(4) of GBP4.8m (pre-IFRS 16(5) : GBP0.9m;
2019: pre-IFRS 16 loss GBP(3.3)m); improved margin(6) 10.8% (2019:
pre-IFRS 16 loss (7.2)%)
o This reflects improved efficiencies and prudent cost reduction
actions taken in H2
o Maintained a high level of investment in technology of
GBP12.2m (2019: GBP12.2m)
-- Reduced loss before tax of GBP(5.9)m (2019: GBP(7.3)m)
-- Net cash at GBP10m (2019: GBP12.3m)
o Decrease in net cash of GBP2.3m: (H2 increase of GBP0.4m; H1
decrease of GBP2.7m (unaudited))
o GBP1m long-term debt (USA)
-- Total operating expenses GBP39.4m, GBP9.8m lower than 2019,
as a result of improved efficiency and cost reduction in the second
half of the year, together with GBP3.8m reclassification due to
IFRS 16
Operational
-- Year-on-year record member satisfaction(7)
-- Expanded an existing contract in the Americas into an Extra Large contract(8)
-- Won a Medium contract(8) in Australia, launched in September 2020
-- Ten Digital Platform live with 22 client brands (2019: 14)
-- GBP12.2m (2019: GBP12.2m) invested in proprietary digital
platforms, communications and technologies to enhance member
experience and create competitive advantage
-- Delivered a number of key milestones in the Group's digital transformation
-- Improved efficiencies and proposition from greater digital
capabilities, operational maturity and stronger supplier
partnerships
Key COVID-19 operational measures
-- Migration to home working with no service interruption and
continued PCI DSS Level 1 compliance
-- Continuing to successfully flex member proposition to adapt
to members' changing lives and needs
-- Leveraged improved content and member communications to engage members
-- Prudent cost management delivered over GBP5m of cost savings compared to prior year
Alex Cheatle, CEO of Ten Lifestyle Group, said;
"The growth engine within the Ten model helped us to achieve
EBITDA profitability and record service levels in the year. We
maintained revenue from corporate clients by continuing to provide
value to members, including during the pandemic. Our improving
proposition, along with our strong pipeline of new contract
opportunities, means we are well positioned to continue our
momentum as the impact of the COVID-19 pandemic eases."
Post-balance sheet contract events
Since the year end, the Group has won contracts with new and
existing corporate clients, including:
-- a multiple-year renewal of a master services agreement, which
includes an Extra Large contract in the Americas;
-- commission from an existing client to launch Ten's
digitally-enabled concierge services into a new EMEA territory,
further expanding an existing Extra Large contract;
-- a multiple-year contract with a global financial services firm to initially launch Ten's digitally-enabled concierge service to customers in Africa, replacing an incumbent supplier of similar services;
-- a three-year contract, including a contractual minimum, with a bank in APAC to launch Ten's digitally-enabled concierge service;
-- a contract with a bank in APAC to provide Ten's high-touch
concierge services to private banking clients; and
-- a second contract with an existing banking client in China to
provide Ten's high-touch concierge services to a new cohort of
banking clients.
Although the individual new contract wins are Small, we will
have opportunities to develop them as the pandemic eases and as we
prove a return on the corporate client's investment The Board does
not expect the contracts summarised here to have a material impact
on their expectations for the 2021 financial year.
(1) Net Revenue excludes the direct cost of sales relating to
certain member transactions managed by the Group.
2 The Europe, Middle East and Africa region.
3 The Asia-Pacific region.
4 Adjusted EBITDA is post-IFRS16 and is operating profit/(loss)/
before interest, taxation, amortisation, share-based payments and
exceptional costs.
6 pre-IFRS 16 means the adoption of IFRS 16 using the modified
retrospective approach, comparative information has not been
restated.
6 Adjusted EBITDA margin is post-IFRS16 and is Adjusted EBITDA
as a percentage of Net Revenue.
7 Ten measures member satisfaction using the Net Promoter Score
management tool, which gauges the loyalty of a firm's customer
relationships (https://en.wikipedia.org/wiki/Net_Promoter).
8 Ten categorises its corporate client contracts based on the
annualised value paid, or expected to be paid, by the corporate
client for the provision of concierge and related services by Ten
as: Small contracts (below GBP0.25m); Medium contracts (between
GBP0.25m and GBP2m); Large contracts (over GBP2m); and Extra Large
contracts (over GBP5m). This does not include the revenue generated
from suppliers through the provision of concierge services.
Analyst Presentation
An online analyst presentation will be held by video link at
9:00am on 24 November 2020. To attend, please email
investorrelations@tengroup.com
Dial-in details for the presentation are also available:
Dial-in number: +44 203 051 2874
Meeting ID: 882 3347 3834
The Group will also be presenting an Investor Webinar for
current and prospective investors at 5:30pm on 3
December 2020. If you would like to attend, please email investorrelations@tengroup.com .
For further information please visit www.tenlifestylegroup.com/
or call:
Ten Lifestyle Group plc
Alex Cheatle, Chief Executive Officer +44 (0)20 7850
Alan Donald, Chief Financial Officer 2796
Peel Hunt LLP, Nominated Advisor and Broker
Edward Knight
Paul Gillam +44 (0) 20 7418
Nick Prowting 8900
Notes to Editors:
About Ten Lifestyle Group Plc
Ten Lifestyle Group Plc is a leading technology-enabled, global
concierge platform, helping wealthy and mass affluent individuals
and their families to discover, organise, and enjoy dining, live
entertainment, travel and premium retail (and other relevant
services) with better results and quicker than they could
themselves.
Underpinned by industry-first technology, Ten provides its
trusted concierge services to its more than 2 million members,
24/7, 365 days a year, wherever they are in the world. Founded in
1998, the business listed on the AIM market of the London Stock
Exchange in November 2017 (AIM: TENG). Ten Lifestyle Group's
objective is to become the most trusted service platform in the
world.
For further information about Ten Lifestyle Group Plc, please go
to: www.tenlifestylegroup.com
Chairman's Statement
Overview
I am pleased to update our stakeholders on the Group's progress
towards becoming the world's most trusted service. In the first
half of the year, we made very good headway towards our goals of
revenue growth, cash generation and profitability. In the second
half of the year, and in the face of significant challenges posed
by the COVID-19 pandemic, the Group took appropriate action to
generate revenue and manage costs to improve EBITDA profitability
in the year.
The Group's agile and highly-effective response to the COVID-19
pandemic has demonstrated the resilience and flexibility of our
team and our tech-enabled service proposition and the strength of
the underlying business model, which, with scale and time in
market, builds efficiency, service quality as well as value to our
members and corporate clients. At the heart of Ten's business lies
a growth engine that has allowed Ten to improve its cash position
through the second half of the year and EBITDA profitability across
the full year. It has also enabled us to develop a stronger member
and client proposition, helping us to retain existing contracts and
develop new ones; although the impacts of COVID-19 on relevant
markets and the wider economy has slowed the winning of new
contracts and growth of existing contracts.
We maintained investment in our proprietary technology
throughout the year. Our technology underpins the Group's
competitive position as a leading technology-enabled, global
lifestyle and travel service platform for individuals and their
families.
Strategy
The Group continues to develop strong partnerships with
corporate clients, primarily in the financial services sectors,
that seek to improve the engagement, retention and acquisition of
their most valuable customers by offering access to our
technology-enabled travel and lifestyle services. The Group also
offers individuals the opportunity to access its services through a
private membership proposition.
Members get access to a wide range of propositions across key
consumer markets, including dining, travel, entertainment and
premium retail. By combining the buying power of its membership,
the Group secures attractive offers and discounts, meaning members
often achieve better and more cost effective outcomes, more
conveniently than they could on their own. Ten's services are made
available to members to search and book online though Ten's
market-leading lifestyle and travel proprietary digital platform,
the "Ten Digital Platform", or by submitting a request to our
expert Lifestyle Managers via phone, email, live chat and
WhatsApp.
The Group adapted and enhanced its proposition in response to
the effects of COVID-19 on these consumer markets and to the lives
of our members. In doing so, Ten has demonstrated the extraordinary
flexibility of its service model to deliver relevant and valued
services to our members, value to our corporate clients, as well as
continuing to generate revenue and profit. This was made possible
by the Group's continued investment in technology and content which
drives digital transformation, improving service speed and
efficiency, as well as increased cash generation and margins.
Ten's mission remains to become the world's most trusted
service. Our strategic goals to achieve this are to drive our
growth engine by building an ever-stronger member proposition,
continuing to invest in technology and content and securing greater
corporate client impact and investment.
Results
The Group has continued to make good progress towards each of
these strategic objectives, resulting in Adjusted EBITDA of GBP4.8m
(pre-IFRS 16: GBP0.9m; 2019: pre-IFRS 16 loss GBP(3.3)m) and a
healthy net cash position of GBP10.0m (H1 2020: GBP9.6m
(unaudited)) (FY 2019: GBP12.3m). Returning to EBITDA profitability
and an improved cash position through the second half of the year
are key milestones in the Group's strategy after a period of
investment.
Group Net Revenue declined by 3.5% in the year to GBP44.2m.
However, this was predominantly a result of decreased supplier
revenue from reduced member travel due to the COVID-19 pandemic.
Overall in the year, corporate revenue grew by 1.6% and supplier
revenue decreased by 40.3%. Revenue from our supplier base, such as
hotels, airlines, and event promoters which sometimes pay
commission, has been very low since March 2020.
The resulting decline of Net Revenue in the second half was, in
part, mitigated by a smaller decrease in revenue from our corporate
clients. This was achieved by the Group's agile response to our
members' changing needs throughout the COVID-19 crisis, allowing us
to remain relevant to our corporate clients and members.
The Group has secured some strategic new contract wins,
including a new client in Australia, as well as important,
multi-year contract extensions and significant expansions of
contracts with our existing corporate clients. We have not lost any
clients to competitors. We have been well supported by contractual
minimums. However, growth from new contracts and development of
existing corporate programmes contracted in the second half due to
wider economic uncertainty. Our continued investment in technology
and content during the year has allowed us to maintain a strong
sales pipeline, remain differentiated from our competitors and
develop our proven ability to help clients engage, retain and
acquire their most valuable customers.
Whilst maintaining record levels of member satisfaction, the
Group has achieved a significant digital transformation of the
business by increasing automation in the servicing of member
requests. Over the last two years, the number of requests serviced
using automation rose by 75% and fully automated requests increased
fourfold over the last year. Increased automation drives the speed
and efficiency of our service, which contributes to increased cash
generation and the improved margin(9) of 10.8% (2019: (7.2)%).
The Group ended the year with a strong net cash position of
GBP10.0m (2019: GBP12.3m) resulting from the Group improving its
cash position through the second half of the year. This has been
achieved by the increasing efficiency of the business model as well
as prudent cash management, including the implementation of a
salary sacrifice for options scheme and participation in government
funded coronavirus initiatives.
People
The Group continues to benefit from a stable, founder-led
management team who have shown strong leadership, innovation and
resilience in all regions to overcome the challenges posed as a
result of COVID-19. The Group reduced its levels of full-time
equivalent (FTE) employees in the year in response to regional
growth rates, improved efficiencies and regional cost
optimisation.
On behalf of the Board I would like to thank the whole Ten team
for demonstrating adaptability, professionalism, and steadfast
commitment throughout the year, for which we are extremely grateful
and proud.
Summary
I am very pleased to report that the Group has delivered on some
of the Board's key strategic goals, including achieving Adjusted
EBITDA profitability in the full year, improved cashflow in the
second half of the year and our ongoing digital transformation in
how the service is delivered. This has been achieved through the
growth engine that lies at the heart of Ten's business, which is
more fully explained on our website at
www.tenlifestylegroup.com/investors .
The Group has also achieved critical mass, our business model is
strong and competitively robust and we have a healthy net cash
position, leaving us well placed to continue to grow and secure
profitability as we come out of the COVID-19 crisis. We are
confident in the strength of our relationships with our existing
clients and we have proved our value in helping corporate clients
engage, retain and acquire their most valuable customers, which
bodes well for the future.
Bruce Weatherill
Chairman
23 November 2020
(9) Adjusted EBITDA as a percentage of Net Revenue.
Chief Executive's statement
Overview
I am proud of how the Group has continued to deliver on our
mission to become the world's most trusted service and create value
for our corporate clients during a highly challenging year, whilst
delivering Adjusted EBITDA of GBP4.8m and improved net cash in the
second half of the year.
The Group's strategy of continued investment in technology,
content and supplier partnerships has given the business the
resilience to respond to the changing needs of our members
throughout the COVID-19 crisis. By leveraging our members' combined
buying power and our relationships with new and existing supplier
partners, we adapted our service and improved the ways we
personalise, target and communicate with our members. By doing so,
we have remained relevant to our members. The resulting record
levels of satisfaction and engagement support the value of our
proposition with corporate clients.
Additional personalisation and localisation capability has
further enhanced our market-leading, multichannel, transactional
proprietary platform (the "Ten Digital Platform"), where members
can enjoy superior access, offers, benefits and discounts across
dining, travel and tourism, entertainment and premium brand
markets; all supported by our expert Lifestyle Managers. By
delivering a global "one stop shop" personalised to the individual,
our service can flex to meet the needs of the member.
Before COVID-19, 85-90% of our Net Revenue came from service or
subscription fees, paid by our corporate clients or private
members. In contrast, almost all other providers of similar
services (e.g. travel agents or ticket portals) rely on commission
or mark-ups on bookings. This differentiation allows us to
prioritise an attractive member proposition and continue to provide
market-leading value for our members, even when key markets are
disrupted.
The COVID-19 pandemic since February 2020, has resulted in
reduced Net Revenue in the second half of the year. Despite this,
we made good progress towards achieving our strategic aims,
including a positive Adjusted EBITDA of GBP4.8m (pre-IFRS 16:
GBP0.9m; 2019: pre-IFRS 16 loss GBP(3.3)m) in addition to improving
the Group's cash position through the second half of the year.
We maintained high levels of investment in our technology,
communications and content by spending GBP12.2m in the year (2019:
GBP12.2m). It is largely because of this that the growth engine
which lies at the heart of our business has gained momentum in key
areas, delivering a stronger member proposition, engagement and
ultimately increasing value for our corporate clients to encourage
them to invest more in our business.
Engagement with our corporate clients has remained strong
throughout the year. We believe that the way in which we have
adapted and innovated to meet their needs as well as the needs of
their most valued customers, without compromising on our digital
commitments, has grown our reputation and credibility in the
market.
Ten's international footprint, including offices in over 20
countries, enabled the Group to build valuable best practices and
experience as the pandemic progressed across our three regions from
APAC to EMEA and the Americas and is enabling us to develop a
robust strategy for recovery.
APAC - the first region affected by COVID-19
The rapid response by our teams in Singapore, Hong Kong,
Shanghai, Japan and Melbourne to the early effects of COVID-19 on
the lives of our clients, members and colleagues mitigated the
impact on the business. It also helped shape the Group's global
response, meaning the rest of the Group was well prepared by the
time the pandemic disrupted EMEA and the Americas.
The APAC region adapted well to the changing local requirements
and restrictions, supporting safe home-working for our staff and
offering tailored support to our members. As opportunities to
travel domestically and dine-out returned across the region, our
members took advantage of our services, which we appropriately
promoted through our improved targeted communication
capabilities.
We believe our sensitive and tailored approach to serving our
members' needs contributed towards another record year for Net
Promotor Scores (NPS) in the region. In a demanding economic
environment, achieving this key metric helps our clients in the
region to support the provision of Ten's services to their most
valued customers.
Although the effects of COVID-19 dampened the growth of new and
existing client contracts in the region, we achieved sufficient
growth of existing contracts to partly offset the loss of a Large
contract in the prior year, resulting in Net Revenue of GBP8.5m
(2019: GBP9.5m). During the period, we agreed a three-year
extension of a Large contract with a client in the region. This
contract is now expected to grow into an Extra Large contract
during the extended term.
We won a multiple-year contract with a new client in Australia,
signed in July and launched post year end in September 2020, which
now delivers Ten's concierge services to premium credit card
customers primarily from our Melbourne office and includes access
to the customised Ten Digital Platform. The contract is expected to
be our first Medium contract in Australia and brings us to five
Material Contracts(10) in the APAC region, in addition to a number
of Small contracts. Many of these have the potential to grow as the
wider economic environment improves.
Improved operational efficiencies in the region, primarily
driven by our continued digital transformation, as well as
significant cost saving measures, including a reduction in the
number of full-time equivalent (FTE) employees in H2, and our
participation in relevant government funded COVID-19 initiatives,
resulted in an improved Adjusted EBITDA pre-IFRS 16 loss of GBP0.3m
(2019: GBP1.3m loss).
EMEA
EMEA is our most mature global region, with significant
efficiencies achieved in the year, underpinned by our continued
digital transformation and mature scale within our high-touch
operations as well as our strong and increasingly integrated
supplier partnerships across the region.
Building on our early experiences in APAC, EMEA prepared well
for the impact of COVID-19 by establishing compliant home working
practices and renegotiating supplier and lease agreements to
achieve prudent cost savings. By working innovatively with our
established clients and supplier partners in the region, we
developed and tested a range of new member services, including
virtual cooking and cocktail masterclasses with top chefs, a
virtual book club with leading authors, and editorial staycation
guides. The most successful initiatives were rolled-out in other
regions.
By remaining relevant to our members and clients throughout the
year, we achieved a 7% growth in Net Revenue in the region, despite
a significant reduction in supplier revenue in the second half of
the year due to widespread travel restrictions limiting
commission-generating bookings since March 2020. As local
restrictions eased, we were able to proactively support our members
to make the most of travel, dining and live entertainment
opportunities, as well as continuing to support them through
periods of lockdown.
Our strong competitive position, underpinned by the continued
improvements to the Ten Digital Platform and our well-developed
member proposition in EMEA, was instrumental in securing important
corporate client contract renewals in the year. This included a
five-year extension of an existing Extra Large contract for which
we launched the customised Ten Digital Platform and the extension
of two Large contracts and a Medium contract.
Against a background of intense economic uncertainty, we are
pleased to have retained all of our Material Contracts in the
region, although the effects of COVID-19 have delayed some key
client developments and from September 2020 a Large corporate-pay
model contract was replaced with an affiliate model contract, which
we anticipate to be Small in size.
Due to these challenges, we took prudent cost saving actions
across the region in the second half of the year, including reduced
office costs and a reduction in the number of full-time equivalent
(FTE) employees. We also participated in available government
funded COVID-19 initiatives. These actions along with the continued
operational efficiencies in the region has delivered this
significant improved regional Adjusted EBITDA pre-IFRS 16 margin of
32% (2019: 11%).
Americas
Our key markets in the region: Latin America, the USA and Canada
were all significantly impacted by the effects of COVID-19 from
March 2020. By leveraging what we had learnt in the APAC and EMEA
regions, we took precautionary measures to protect the business,
including implementing safe home working for our staff and prudent
cost savings. We also developed member propositions tailored to our
members' changing lifestyles in the region, including staycation
guides paired with experiences and offers available with local
supplier partners.
In January 2020, we expanded an existing contract in the region,
incurring significant set-up costs in the first half of the year.
Although the contract is now categorised as an Extra Large
contract, its growth was impacted in the second half of the year by
the effects of COVID-19 in the region.
By strengthening the member proposition including improvements
to the Ten Digital Platform, we achieved a higher Net Promoter
Score (NPS) in the region than last year. This is a key metric for
our clients looking to retain and engage their most valuable
customers in the Americas and supports our continued discussions to
develop the existing client contracts.
Despite the measures taken in the Americas, widespread travel
restrictions throughout the second half of the year suppressed
supplier revenue earned on travel bookings as well as overall
service request volumes. This resulted in a 13% reduction in Net
Revenue, despite additional revenue from the contract expansion in
January 2020. The cost of the contract expansion contributed to a
GBP1.5m increase in the Adjusted EBITDA pre-IFRS 16 loss for the
region.
Our investment in technology and content continues to drive our
market-leading digital capability
As outlined in our strategy at IPO, we continued to undertake a
transformation of our digital capability by maintaining a
high-level of investment into technology and related areas, with
GBP12.2m in 2020 (2019: GBP12.2m) spent in the year and a total of
GBP34.9m spent since IPO on the Ten Digital Platform, TenMAID,
content, communications, and other technologies.
We believe our market-leading digital capabilities are at the
core of the Group's resilience, as demonstrated in the year and
underpins our long-term strategy to become the world's most trusted
service.
In the year, we delivered a number of key milestones in our
digital transformation, including; increased automation, improved
features on the Ten Digital Platform, enhanced communication and
use of content with members.
Stronger member proposition, satisfaction and engagement
Building a valued service and strong member proposition is the
key objective of the growth engine that underpins the Ten business
model. This delivers member engagement, which is a key objective
for our corporate clients, who invest in our service to acquire,
engage and retain their most valued customers.
In the year we have both strengthened our core propositions and
developed them to suit the changing needs of our members throughout
the COVID-19 pandemic, across all regions.
The more attractive and accessible our proposition is to new and
existing members, the more members engage, use and advocate for our
service. Member engagement and satisfaction is the key to building
value for corporate partners, aiming to improve the engagement,
retention and acquisition of their most valued customers. This
justifies their spending with us - and encourages new corporate
partners and new suppliers to work with us.
In the first half of the year, the number of unique users of the
service increased by 14% compared with the same period in the
previous year. In the second half of the year, the number of unique
users of the service increased by 18% compared with the same period
in the previous year, despite the effects of COVID-19. We have also
seen a 6% increase in repeat usage by members in the year,
demonstrating improving engagement and satisfaction with the
service.
We are delighted to have achieved another year-on-year record
level of member satisfaction, measured by Net Promoter Score
(NPS).
We believe that our strengthened member proposition and member
satisfaction levels have resulted in an increase in repeat usage of
our service and an increase in the number of unique service users
in the first and second halves of the year, when compared with the
same periods in the previous year.
We have received positive feedback from existing and prospective
corporate clients on our strengthened member proposition and member
engagement metrics. We believe our ability to respond to changing
member needs throughout the pandemic has helped to enhance our
reputation and credibility in the market.
Summary
We believe our competitive position is stronger than ever,
backed by a market-leading member proposition. This proposition is
valued by our members, whose engagement delivered a strong return
on the investment for our corporate clients. This has been achieved
by continuing to invest in our technology, content, market
expertise and better pricing, access, benefits and integration with
our supplier partners.
Although the effects of COVID-19 have constrained some of our
prospective clients from signing contracts, our pipeline is robust
and we have secured some important new mandates and contract
extensions. By maintaining the relevance of our service to our
members and in turn our corporate clients, we have achieved 1.6%
increase in Net Revenue from corporate clients during the year and
retained all but one of our Material Contracts in the year.
Despite prudent cost controls we have maintained investments in
technology, content and supplier partnerships, which has enhanced
the service to clients and is crucial for our future success.
Greater efficiencies and cost control along with careful cash
management, has helped us to maintain a strong net cash position of
GBP10.0m (2019: GBP12.3m). We have delivered an Adjusted EBITDA of
GBP4.8m (2019: pre-IFRS 16 loss of GBP(3.3)m).
Our record service levels, strong technology platform, EBITDA
profitability, a healthy cash position and a strong robust pipeline
all combine to create confidence in a strong future for our
business as we emerge from the pandemic.
Outlook
Until the effects of COVID-19 ease globally, we expect that Net
Revenue will continue to be reduced due to lower demand for our
core services in dining, travel and live entertainment in each of
the regions. The timing of this recovery is uncertain and continues
to face delays, as demonstrated by the second wave of infection
across the globe.
Net Revenue is partially protected by minimum fee agreements
with some corporate clients and the flexibility and adaptiveness of
the service proposition. This proposition typically generates
revenue on the delivery of relevant services to members rather than
on the conversion of specific types of bookings. This
differentiates Ten from traditional agency business models in
travel or entertainment which rely predominantly on commission from
bookings.
We expect Supplier revenue to remain at the current very low
levels until global travel substantially recovers.
We continue to develop our pipeline of opportunities and it is
possible that some new Small and Medium contracts could be launched
in the first half of 2021. We do not expect to launch any new
larger contracts until the effects of COVID-19 on the wider economy
have eased due to the conservative planning that is characteristic
of our larger target clients.
We are focused on continuing to generate EBITDA profitability
and maintaining a healthy cash position by delivering services
relevant to our members, together with driving improved
efficiencies and ongoing cost savings, whilst maintaining
investment in technology. As a result of this continued investment
we expect some reduction in net cash.
Despite the COVID-19 pandemic adversely affecting our business,
we benefit from loyal corporate clients, a healthy revenue pipeline
and continued investment in our technology, which leaves us well
positioned for recovery as the pandemic eases.
Alex Cheatle
Group Chief Executive Officer
23 November 2020
(10) Ten categorises its corporate client contracts based on the
annualised value paid, or expected to be paid, by the corporate
client for the provision of concierge and related services by Ten
as: Small contracts (below GBP0.25m); Medium contracts (between
GBP0.25m and GBP2m); Large contracts (over GBP2m); and Extra Large
contracts (over GBP5m). This does not include the revenue generated
from suppliers through the provision of concierge services. Medium,
Large and Extra Large contracts are collectively Ten's "Material
Contracts".
Financial review
Despite the challenging trading conditions in the second half of
the year due to the COVID-19 pandemic, our Net Revenue was only
3.5% down on prior year. Combining this with continued efficiencies
in our business model, as well as appropriate cost actions taken to
conserve cash, we achieved an Adjusted EBITDA profit for the first
time since IPO in 2017 and maintained a strong balance sheet
position at the year end.
2020 2019
GBPm GBPm
Revenue 46.4 49.1
Net Revenue 44.2 45.8
Operating expenses and Other Income (39.4) (49.1)
----------------------------------------- ------ ------
Adjusted EBITDA 4.8 (3.3)
Adjusted EBITDA % 10.8% (7.2%)
Depreciation (4.4) (1.0)
Amortisation (3.4) (3.0)
Share-based payments & exceptional items (1.9) (0.5)
----------------------------------------- ------ ------
Operating loss before interest and tax (4.9) (7.8)
Net finance (expense)/income (1.0) 0.5
----------------------------------------- ------ ------
Loss before taxation (5.9) (7.3)
Taxation (1.0) (1.0)
----------------------------------------- ------ ------
Loss for the year (6.9) (8.3)
Net cash at 31 August 10.0 12.3
Adjusted EBITDA
Whilst Adjusted EBITDA is not a statutory measure, the Board
believes it is necessary to include this as an additional metric as
it is one of the main measures of performance used by the Board. It
reflects the underlying profitability of our business operations,
excluding amortisation of investment in platform infrastructures,
exceptional costs and share-based payment expenses.
Implementation of IFRS 16 "Leases" accounting standard
We implemented IFRS 16 "Leases" accounting standard in this
accounting period. The transition method used was the Modified
Retrospective method therefore comparatives have not been restated.
Adjusted EBITDA as reported was GBP4.8m in the year, which includes
a credit of GBP3.9m in respect of the implementation of IFRS 16.
The following table provides a breakdown of Adjusted EBITDA pre and
post-implementation of IFRS 16 for the Group and by region.
Group EMEA Americas APAC
----------------------------------- ----- ----- -------- -----
Reported Adjusted EBITDA post-IFRS
16 4.8 8.2 (3.9) 0.4
----------------------------------- ----- ----- -------- -----
IFRS 16 adjustment (3.9) (1.2) (1.9) (0.7)
Adjusted EBITDA (pre-IFRS 16) 0.9 7.0 (5.8) (0.3)
----------------------------------- ----- ----- -------- -----
As comparatives have not been restated, regional year on year
comparisons below use Adjusted EBITDA pre-IFRS 16.
Revenue and Net Revenue
Net Revenue(11) for the twelve months to 31 August 2020 was
GBP44.2m, down 3.5% compared to the prior year. Revenue for the
twelve months to 31 August 2020 was GBP46.4m, down 5.5% on the
twelve months to 31 August 2019. Net Revenue, which excludes the
direct cost of sales relating to member transactions managed by the
Group, is Ten's preferred measure of operating revenue as it
excludes the cost of member transactions where we are the principal
service provider (i.e. cost of airline tickets sold under the
Group's ATOL licences).
The reduction in Net Revenue of 3.5% was principally due to the
impact of the COVID-19 pandemic which started to impact our
business from February 2020 onwards. The biggest impact to our Net
Revenue has been the reduction in supplier commissions principally
due to the reduction in international travel across the world. The
following table sets out a comparison between H1 and H2 of this
financial year, compared to prior year, of our supplier commissions
as a percentage of Net Revenue.
2020 2020 2020 2019 2019 2019
H1 (unaudited) H2(unaudited) FY(audited) H1(unaudited) H2(unaudited) FY(audited)
------------------ --------------- -------------- ------------ -------------- -------------- ------------
Percentage of Net
Revenue 10.7% 3.4% 7.4% 11.7% 12.3% 12.0%
------------------ --------------- -------------- ------------ -------------- -------------- ------------
Our Corporate Revenue (paid by our corporate clients to service
their customers) increased year on year by 1.6% as we adjusted our
offering to corporate clients and members to meet their changing
requirements during the pandemic crisis.
(11) Net Revenue excludes the direct cost of sales relating to
certain member transactions managed by the Group.
Contract analysis
The following tables set out an analysis of our contracts by
size and by region. We have analysed only our Material contracts.
Note, the contract size is based on the annualised value paid or
expected to be paid by the corporate client for the provision of
concierge and related services by Ten. This does not include the
revenue generated from suppliers through the provision of these
concierge services
Contracts Contract
by size 2020 2019 change by region 2020 2019 change
----------- ----- ----- ------- ----------- ----- ----- -------
Extra
Large 3 2 +1 EMEA 8 8 -
Large 6 5 +1 Americas 10 11 -1
Medium 14 17 -3 APAC 4 4 -
Global 1 1 -
----------- ----- ----- ------- ----------- ----- ----- -------
23 24 -1 23 24 -1
----------- ----- ----- ------- ----------- ----- ----- -------
At the start of the financial year a new Large contract was
launched and in January 2020, we expanded a contract in the
Americas to become an Extra Large contract. In addition, we
consolidated two Medium contracts into existing Material Contracts,
with no contract losses.
Since the year end an additional multiple year contract has been
signed in APAC. We expect that this contract will grow to a Medium
contract within 12 months of launch.
Regional analysis
While there is a clear overlap between the geographic location
of our clients and their members' requests, members use our
concierge services across all the regions. Net revenue by region
reflects our servicing location rather than the location of our
corporate clients. This allows us to track the efficiency and
profitability of our operations around the world, and is therefore
presented on this basis.
2020 2019
Net Revenue GBPm GBPm % change
------------ ----- ----- --------
EMEA 22.0 20.5 7%
Americas 13.8 15.8 -13%
APAC 8.5 9.5 -11%
------------ ----- ----- --------
44.2 45.8 -3.5%
------------ ----- ----- --------
EMEA Net Revenue increased by 7% with growth from our existing
clients as well as the impact of the new Large contract which
launched at the start of the year being partially offset by a
significant reduction in supplier commissions in H2 due to the
pandemic.
In the Americas, Net Revenue reduced by 13% primarily due to the
impact of the pandemic on both concierge revenue and supplier
commissions in the region partly offset by the expansion of a
contract to Extra Large in January.
In APAC, Net Revenue reduced by 11% principally due to the
pandemic and the annualised impact of a Large contract lost in the
last quarter of the prior year partly offset by growth from
existing clients during the year.
Operating expenses and other income
Operating expenses and other income reduced by GBP9.8m to
GBP39.4m (2019: GBP49.1m). As already stated, on the implementation
of IFRS 16 the transition method used was the Modified
Retrospective method. Therefore, 2019 comparatives have not been
restated. The impact of IFRS 16 implementation in 2020 was to
reclassify GBP3.8m of lease costs to depreciation and interest.
Therefore, the underlying operating expenses of the business on a
like-for-like basis compared to prior year were GBP42.9m, a
reduction of GBP5.9m. The majority of this reduction was due to
cost savings in the second half of the year in response to lower
revenue as a result of the pandemic.
These cost reduction actions included, but were not limited
to:
-- successful renegotiation with suppliers and landlords
-- a review of projects to focus on the most strategic core
investments (including development of our core technology platform,
where we continue to invest)
-- a freeze on employee bonuses and salary increases as well as some redundancies
-- voluntary salary sacrifice scheme in exchange for share options
-- use of various countries government support schemes (e.g. Furlough, Kurzarbeit).
Average headcount in the year has increased to 970 (2019: 837),
primarily due to additional resourcing for the expansion of a
contract to an Extra Large contract in the Americas during the
first half of the year. However, our working full time equivalent
(FTE) employees have decreased due the use of Furlough and
Kurzarbeit across various countries, accounted for in compliance
with respective rules and regulations with no ongoing liabilities,
as well as redundancies in the second half of the year. We finished
the year with fewer FTE than the end of prior year.
All Group property leases are short to medium-term or have
appropriate break clauses incorporated, allowing flexibility when
assessing space requirements across the world, especially in the
current working environment.
Regional Adjusted EBITDA
Adjusted EBITDA is after expenses, other than deprecation
GBP4.4m (2019: GBP1.0m), amortisation GBP3.4m (2019: GBP3.0m),
share-based payment and exceptional items expenses GBP1.9m (2019:
GBP0.5m). On this basis, Adjusted EBITDA was GBP4.8m (pre-IFRS 16:
GBP0.9m; 2019: pre-IFRS 16 loss GBP(3.3)m).
Adjusted EBITDA pre-IFRS16 increased to a profit of GBP0.9m from
a loss of GBP3.3m in 2019. The overall improvement has been driven
by continued operational efficiencies together with cost savings as
described above in the second half of the year.
After allocating the costs of central IT infrastructure,
software development, property, senior management and other central
costs, the Adjusted EBITDA pre-IFRS 16 for each region is set out
below:
Adjusted EBITDA pre-IFRS 2020 2019
16 GBPm GBPm
------------------------- ----- ------
EMEA 7.0 2.3
Americas (5.8) (4.3)
APAC (0.3) (1.3)
------------------------- ----- ------
Total 0.9 (3.3)
Adjusted EBITDA pre-IFRS
16 % 2.0% (7.2)%
------------------------- ----- ------
EMEA
Adjusted EBITDA pre-IFRS 16 margin in EMEA, defined as Adjusted
EBITDA pre-IFRS 16 as a percentage of Net Revenue, has increased to
32% from 11% in the prior year. Continued operational efficiencies
in the region and cost saving actions offset by lower supplier
revenue has delivered this significant improvement in margin.
Americas
The Americas region Adjusted EBITDA loss pre-IFRS 16 has
increased to GBP(5.8)m (2019:GBP(4.3)m)). This decline is, in part,
because of a reduction in Net Revenue due to the pandemic together
with one off set up costs (unconnected to acquiring or fulfilling
the contract) on the expansion of an existing contract to an Extra
Large contract. This decline was partly mitigated by improved
operational efficiencies in the period as the region matures as
well as cost reduction in the second half of the year.
APAC
The APAC region Adjusted EBITDA pre-IFRS 16 loss has improved in
the year by GBP1.0m to a loss of GBP0.3m. The improved performance
has also been driven by operational efficiencies as well as cost
saving measures in the second half of the year.
Amortisation
Amortisation costs, relating to the internal platform (TenMAID)
and the customer-facing platforms, were GBP3.4m in 2020 (2019:
GBP3.0m) reflecting continued investment in technology to drive
improvements in service levels, efficiency and competitive
advantage.
Net finance (expense)/income
Net finance expense in the year was GBP1.0m (2019: income of
GBP0.5m); the expense of GBP1.0m included IFRS 16 lease interest
expense as well as foreign exchange losses on the translation of
inter-company balances in the year.
Share-based payments and exceptional items expense
The share-based payments and exceptional items expense in the
year was GBP1.9m (2019: GBP0.5m). Of this, GBP1.5m (2019: GBP0.5m)
related to share based payments expense reflecting share grants
made under management incentive plans established after listing on
AIM and also two salary sacrifice share option schemes implemented
during the year. The exceptional items expense of GBP0.4m (2019:
GBP0.0m) was an impairment expense following a review of a database
previously capitalised were a specific portion of this was less
likely to generate future economic benefits due to the fall out of
the COVID-19 pandemic.
Loss before tax
The loss before tax improved to GBP(5.9)m from GBP(7.3)m in
2019.
Taxation
The taxation expense for the year was GBP1.0m (2019: GBP1.0m)
which related to tax liabilities and payments due in profitable
overseas entities. Approximately GBP0.3m related to the
crystallisation of non-UK legacy taxation positions in the current
year.
Loss per share
The total comprehensive loss for the year was GBP(6.9)m (2019:
GBP(8.3)m), resulting in a loss per share (excluding treasury
shares) of 8.6p (2019: loss per share of 10.3p). The Board does not
recommend the payment of a dividend.
Group cash flow
GBPm GBPm
2020 2019
Loss before tax (5.9) (7.3)
Net finance expense 0.5 -
Working capital changes 2.9 0.7
Non-cash items (depreciation and amortisation,
share-based payments and exceptional items
expenses) 9.7 4.5
----- -----
Operating cash flow 7.2 (2.1)
Capital expenditure (0.2) (1.2)
Investment in intangibles (5.3) (4.3)
Taxation (0.2) (0.5)
----- -----
Cash inflow/(outflow) 1.5 (8.1)
Cash flows from financing activities
Purchase of treasury shares - (0.1)
Loan receipts 1.0 -
Repayment of leases and net interest (3.6) (0.1)
----- -----
Net cash used by financing activities (2.6) (0.2)
Foreign currency movements (0.3) -
----- -----
Net decrease in cash and cash equivalents (1.4) (8.3)
Cash and cash equivalents 11.0 12.3
----- -----
Cash generated by operations was GBP7.2m (2019: cash used
GBP2.1m). The cash generated in the year has been achieved by
continuing operational efficiencies across the business, cost
savings primarily in H2 and a reduction in working capital,
predominately driven by lower revenue in the second half of the
year. In addition, non-cash items in the year increased versus
prior year reflecting implementation of IFRS 16 (increasing
depreciation and finance expenses), an increase in share-based
payment expenses due to implementation of two salary sacrifice for
share options schemes and exceptional item expenses (impairment
write down). The expenditure that was capitalised on IT
infrastructure, the Ten Digital Platform and TenMAID totalled
GBP5.5m as we continue to invest in our technology. Net cash used
by financing activities is primarily due to lease payments and
interest of GBP3.6m again reflecting implementation of IFRS 16
offset by long-term loan receipts of GBP1m. This has led to an
overall cash decrease of GBP1.4m significantly lower than prior
year of GBP8.3m. Note, cash decreased in H1 by GBP2.7m (unaudited)
but improved in H2 due to operational net cash inflow of GBP1.4m
(unaudited) including the loan receipts of GBP1.0m.
Group balance sheet
2020 2019
GBPm GBPm
------------------------------ ------ ------
Intangible assets 10.5 9.0
Property, plant and equipment 1.1 1.8
Right of Use Assets 5.1 -
Cash 11.0 12.3
Other current assets 7.0 11.1
Lease liabilities (3.3) -
Other current liabilities (12.5) (13.3)
Long-term borrowings (1.0) -
Non-current lease liabilities (2.7) -
------ ------
Net assets 15.2 20.9
------------------------------ ------ ------
Share capital/share premium 28.6 28.6
Reserves (13.4) (7.7)
------------------------------ ------ ------
Total equity 15.2 20.9
------------------------------ ------ ------
Net assets were GBP15.2m (2019: GBP20.9m). The reduction in the
year is due to reductions in trade and other receivables and a
reduction in cash. Right-of-use Assets and lease liabilities
(current and non-current) arose as a result of the implementation
of IFRS 16. The Group's long-term borrowings of GBP1.0m consists of
a loan from the US government's Small Business Administration (SBA)
assisting businesses to keep their workforce employed during the
COVID-19 pandemic crisis.
Alan Donald
Chief Financial Officer
23 November 2020
Consolidated Statement of Comprehensive Income for the year
ended 31 August 2020
Note 2020 2019
GBP'000 GBP'000
Revenue 3 46,369 49,080
Cost of sales on principal member transactions (2,145) (3,248)
--------- ---------
Net Revenue 3 44,224 45,832
Other cost of sales (828) (1,327)
Gross profit 43,396 44,505
Administrative expenses (48,943) (52,489)
Other income 620 157
Operating profit/(loss) before amortisation,
depreciation, interest, share based payments,
exceptional items and taxation ("Adjusted
EBITDA") 4,778 (3,322)
Depreciation (4,395) (993)
Amortisation 5 (3,380) (3,011)
Share-based payment expense (1,525) (501)
Exceptional items 4 (405) -
------------------------------------------------ ----- --------- ---------
Operating loss (4,927) (7,827)
Finance income 2 554
Finance expense (966) (15)
--------- ---------
Loss before taxation (5,891) (7,288)
Taxation expense (1,005) (973)
--------- ---------
Loss for the year (6,896) (8,261)
========= =========
Other comprehensive (expense)/income:
Foreign currency translation differences (60) 153
Total comprehensive loss for the year (6,956) (8,108)
========= =========
Basic and diluted loss per ordinary share (8.6)p (10.3)p
The consolidated statement of comprehensive income has been
prepared on the basis that all operations are continuing
operations.
Consolidated Statement of Financial Position as at 31 August
2020
Note 2020 2019
GBP'000 GBP'000
Non-current assets
Intangible assets 5 10,532 9,009
Property, plant and equipment 1,126 1,843
Right-of-use assets 6 5,116 -
Total non-current assets 16,774 10,852
--------- ---------
Current assets
Inventories 66 56
Trade and other receivables 6,941 11,069
Cash and cash equivalents 10,957 12,341
---------
Total current assets 17,964 23,466
--------- ---------
Total assets 34,738 34,318
========= =========
Current liabilities
Trade and other payables (11,906) (12,745)
Obligations under finance
leases - (30)
Provisions (596) (596)
Lease liabilities 6 (3,335) -
Total current liabilities (15,837) (13,371)
--------- ---------
Net current assets 2,127 10,095
========= =========
Non-current liabilities
Borrowings (1,000) -
Obligations under finance
leases - (2)
Lease liabilities 6 (2,668) -
---------
Total non-current liabilities (3,668) (2)
--------- ---------
Total liabilities (19,505) (13,373)
========= =========
Net assets 15,233 20,945
========= =========
Equity
Called up share capital 81 81
Share premium account 28,480 28,480
Merger relief reserve 1,993 1,993
Treasury reserve 15 (30)
Foreign exchange reserve (405) (345)
Retained deficit (14,931) (9,234)
Total equity 15,233 20,945
========= =========
Consolidated Statement of Changes in Equity for the year ended
31 August 2020
Share Share Merger Foreign Treasury Retained Total
capital premium relief exchange reserve deficit
Note account reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 September
2018 81 28,480 1,993 (498) 77 (1,474) 28,659
--------- --------- --------- ---------- --------- --------- --------
Loss for the year - - - - - (8,261) (8,261)
Foreign exchange - - - 153 - - 153
--------- --------- --------- ---------- --------- --------- --------
Total comprehensive income
for the year - - 153 - (8,261) (8,108)
Shares sold by Employee
Benefit Trust (EBT) - - - - (107) - (107)
Equity-settled share-based
payments charge - - - - - 501 501
--------- --------- --------- ---------- --------- --------- --------
Balance at 31 August 2019 81 28,480 1,993 (345) (30) (9,234) 20,945
Change in accounting policy - - - - - (326) (326)
--------- --------- --------- ---------- --------- --------- --------
Balance at 31 August 2019
(as restated) 81 28,480 1,993 (345) (30) (9,560) 20,619
Loss for the year - - - - - (6,896) (6,896)
Foreign exchange - - - (60) - - (60)
--------- --------- --------- ---------- --------- --------- --------
Total comprehensive income
for the year - - - (60) - (6,896) (6,956)
Shares purchased by Employee
Benefit Trust (EBT) - - - - 45 - 45
--------- --------- --------- ---------- --------- --------- --------
Equity-settled share-based
payments charge - - - - - 1,525 1,525
--------- --------- --------- ---------- --------- --------- --------
Balance at 31 August 2020 81 28,480 1,993 (405) 15 (14,931) 15,233
========= ========= ========= ========== ========= ========= ========
Consolidated Statement of Cash Flows for the year ended 31
August 2020
GBP'000 Note 2020 2019
GBP'000 GBP'000
Cash flows from operating activities
Loss for the year, after tax (6,896) (8,261)
Adjustments for:
Taxation expense 1,005 973
Finance expense 455 15
Investment income (2) (60)
Amortisation of intangible assets 5 3,380 3,011
Depreciation of property, plant and equipment 913 993
Depreciation of right-of-use asset 6 3,482 -
Equity-settled share based payment expense 1,525 501
Exceptional Items 4 405 -
Movement in working capital
(Increase)/decrease in inventories (9) 30
Decrease/(increase) in trade and other receivables 4,128 (2,055)
(Increase) /decrease in trade and other payables (1,190) 2,710
Cash from/(used in) operations 7,196 (2,143)
Tax paid (150) (547)
Net cash from/(used in) operating activities 7,046 (2,690)
-------- ---------------
Cash flows from investing activities
Purchase of intangible assets 5 (5,308) (4,305)
Purchase of property, plant and equipment (217) (1,187)
Finance income 2 60
Net cash used in investing activities (5,523) (5,432)
-------- ---------------
Cash flows from financing activities
Lease liability repayments (3,162) -
Purchase of treasury shares (45) (100)
Payment of finance lease obligations - (73)
Loan receipts 1,000 -
Interest received / (paid) 5 (15)
Finance lease interest paid - (8)
Interest paid on lease liabilities (448) -
Net cash used in financing activities (2,650) (196)
-------- ---------------
Foreign currency movements (257) -
Net decrease in cash and cash equivalents (1,384) (8,318)
Cash and cash equivalents at beginning of
period 12,341 20,659
Cash and cash equivalents at end of period
Cash at bank and in hand 10,957 12,341
Cash and cash equivalents 10,957 12,341
======== ===============
Notes to the financial information
The financial information set out in this document does not
constitute the Group's statutory accounts for the years ended 31
August 2019 or 2020. Statutory accounts for the years ended 31
August 2019 and 31 August 2020, which were approved by the
directors on 23 November 2020, have been reported on by the
Independent Auditors. The Independent Auditors' Reports on the
Annual Report and Financial Statements for each of 2019 and 2020
were 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.
Statutory accounts for the year ended 31 August 2019 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 31 August 2020 will be delivered to the Registrar in
due course, and are available from the Company's registered office
at Floor 2, 355 Euston Road, London, England, NW1 3AL and are
available from the Company's website:
https://www.tenlifestylegroup.com/investors .
The financial information set out in these results has been
prepared using the recognition and measurement principles of
International Accounting Standards, International Financial
Reporting Standards and Interpretations adopted for use in the
European Union (collectively Adopted IFRSs). The accounting
policies adopted in these results have been consistently applied to
all the years presented and are consistent with the policies used
in the preparation of the financial statements for the year ended
31 August 2019, except for those that relate to new standards and
interpretations effective for the first time for periods beginning
on (or after) 1 January 2019. The new standard impacting the Group
that has been adopted in the annual financial statements for the
year ended 31 August 2020 is IFRS 16: Leases, further details of
which appear in Note 6 below. Other new standards, amendments and
interpretations to existing standards, which have been adopted by
the Group have not been listed, since they have no material impact
on the financial statements.
2. Going Concern
The consolidated financial statements have been prepared on a
going concern basis. The ability of the Company to continue as a
going concern is contingent on the ongoing viability of the Group.
The Group meets its day-to-day working capital requirements through
its cash balances and wider working capital management. The current
economic conditions continue to create uncertainty, particularly
over (a) corporate members' engagement; and (b) supplier revenue
volumes. The Group's forecasts and projections, taking account of
reasonably possible changes in trading performance, show that the
Group expects to be able to operate within the level of its current
cash resources. Having assessed the principal risks and the other
matters discussed in connection with the going concern statement,
the Directors considered it appropriate to adopt the going concern
basis of accounting in preparing its consolidated financial
statements.
Various sensitivity analyses have been performed to reflect a
variety of possible cash flow scenarios, taking into account the
COVID-19 pandemic, where the Group achieves significantly reduced
revenue for the twelve months following the date of this annual
report. Overall, the Directors have prepared cash flow forecasts
covering a period of at least twelve months from the date of
approval of the financial statements, which foresee that the Group
will be able to operate within its existing working capital
facilities.
The COVID-19 pandemic has had an impact on our business, noting
the Company has managed costs firmly to ensure operating
performances align with pre-COVID-19 levels and the Board believes
that the business is able to navigate through the impact of
COVID-19 due to the strength of its customer proposition, its
balance sheet and the net cash position of the Group.
However, the rapid emergence of the coronavirus pandemic has
caused significant disruption to many businesses where the
implementation of social distancing measures is not practical or is
deemed ineffective and this, had an implication for the wider
global economy and specifically for the supply chain within which
we reside - primarily our customer's willingness or ability to use
our services in the volumes planned prior to the pandemic. The
selection of assistance services available to our customers has
been increased in the year, which has encouraged their engagement.
There is, however, a risk that the Group will be further impacted
by continued social distancing restrictions impacting the volumes
of engages and by prospective customers delaying launches. If Net
revenue is not in line with cash flow forecasts, the Directors have
identified cost savings associated with the reduction in revenue
and have the ability to identify further cost savings if
necessary.
3. Segment reporting
The total revenue for the Group has been derived from its
principal activity, the provision of concierge services. This has
been disaggregated appropriately into operational segment and
geographical location.
The Group has three reportable segments: Europe, the Middle East
and Africa (EMEA), North and South America ("The Americas") and
Asia-Pacific (APAC). Each segment is a strategic business unit and
includes businesses with similar operating characteristics. They
are managed separately in similar time zones to reflect the
geographical management structure.
2020 2019
GBP'000 GBP'000
EMEA 21,975 20,494
Americas 13,784 15,795
APAC 8,465 9,543
Net Revenue 44,224 45,832
Add back: cost of sales on principal transactions 2,145 3,248
Revenue 46,369 49,080
EMEA 8,205 2,259
Americas (3,862) (4,264)
APAC 435 (1,317)
-------- ----------
Adjusted EBITDA 4,778 (3,322)
Amortisation (3,380) (3,011)
Depreciation (4,395) (993)
Share-based payment expense (1,525) (501)
Exceptional items (405) -
-------- ----------
Operating loss (4,927) (7,827)
Foreign exchange (loss)/gain (511) 554
Other net finance expense (453) (15)
Loss before taxation (5,891) (7,288)
Taxation expense (1,005) (973)
Loss for the year (6,896) (8,261)
-------- ----------
Net Revenue is a non-GAAP company measure that excludes the
direct cost of sales relating to member transactions managed by the
Group, such as the cost of airline tickets sold under the Group's
ATOL licences. Net Revenue is the measure of the Group's income on
which segmental performance is measured.
Adjusted EBITDA is a company non-GAAP specific measure excluding
interest, taxation, amortisation, depreciation, share-based payment
and exceptional costs.
Adjusted EBITDA is the main measure of performance used by the
Group's Chief Executive Officer, who is considered to be the chief
operating decision maker. Adjusted EBITDA is the principal
operating metric for a segment.
The statement of financial position is not analysed between
reporting segments. Management and the chief operating decision
maker consider the statement of financial position at Group
level.
4. Exceptional Items
2020 2019
GBP'000 GBP'000
Impairment of intangible asset (405) -
-------- ------------
(405) -
-------- ------------
The impairment charge in the year related to specific know-how,
enabling more cost-efficient servicing of concierge requests. An
assessment of the database capitalised determined that a specific
portion of this was less likely to generate future economic
benefits due to the fall-out of the COVID-19 pandemic. Such
impairment is considered to be one-off in nature and therefore
presented as an exceptional item.
5. Intangible assets
Capitalised Website Trademarks Total
development
costs
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 31 August 2018 20,817 1,909 55 22,781
Additions 4,305 - - 4,305
Disposals - - - -
At 31 August 2019 25,122 1,909 55 27,086
------------- -------- ----------- --------
Additions 5,308 - - 5,308
Impairment (405) - - (405)
------------- -------- ----------- --------
At 31 August 2020 30,025 1,909 55 31,989
------------- -------- ----------- --------
Accumulated amortisation
At 31 August 2018 13,363 1,648 55 15,066
Charge for the year 2,780 231 - 3,011
At 31 August 2019 16,143 1,879 55 18,077
------------- -------- ----------- --------
Charge for the year 3,350 30 - 3,380
At 31 August 2020 19,493 1,909 55 21,457
------------- -------- ----------- --------
Carrying amount
At 31 August 2019 8,979 30 - 9,009
------------- -------- ----------- --------
At 31 August 2020 10,532 - - 10,532
------------- -------- ----------- --------
All additions related to internal expenditure. The useful
economic lives of the capitalised development platforms and website
are assessed to be five years and three years respectively. The
impairment charge in the year related to specific know-how,
enabling more cost-efficient servicing of concierge requests. An
assessment of the database capitalised determined that a specific
portion of this was less likely to generate future economic
benefits due to the fall-out of the COVID-19 pandemic.
6. IFRS 16 "Leases"
IFRS 16 will primarily impact the accounting by lessees and will
result in the recognition of almost all leases on the balance
sheet. The standard removes the current distinction between
operating and financing leases as previously required under IAS 17
and requires recognition of an asset (the right to use the leased
item) and a financial liability to pay rentals for virtually all
lease contracts. The Group will take advantage of the optional
exemptions which exist for low-value leases. The income statement
is impacted due to the differences between straight line accounting
and using an incremental borrowing rate, with operating expense
replaced with interest and depreciation, so key metrics such as
EBITDA will change.
The Group has elected to apply IFRS 16, 'Leases', in accordance
with the transition provisions contained in IFRS 16. The new rules
will be adopted from 1 September 2019, with the cumulative effect
of initially applying the new standard recognised on that date.
Comparatives for the 31 August 2019 financial year will therefore
not be restated. In applying IFRS 16 for the first time, the Group
has used the following practical expedients permitted by the
standard:
-- the use of a single discount rate to a portfolio of leases
with reasonably similar characteristics;
-- the exclusion of initial direct costs for the measurement of
the right-of-use asset at the date of initial application; and
-- the use of hindsight in determining the lease term where the
contract contains options to extend or terminate the lease.
The Group has not applied the expedient, to not recognise all
classes of operating leases with a remaining lease term of less
than 12 months as at 1 September 2019 as short-term leases. The
policy applied has been applied consistently to leases of
underlying assets in the same class whereas the transitional
expedient can be applied on a lease-by-lease basis. The Group has
also elected not to apply IFRS 16 to contracts that were not
identified as containing a lease under IAS 17 and IFRIC 4,
"Determining whether an Arrangement contains a Lease".
The Group leases various properties for office space. Rental
contracts are typically made for rolling periods of 1 month to 5
years but might have extension options. Lease terms are negotiated
on an individual basis and contain a wide range of different terms
and conditions. Leases are recognised as a right-of-use asset and a
corresponding liability at the date at which the leased asset is
available for use by the Group. Each lease payment is allocated
between the liability and finance cost. The finance cost is charged
to the income statement over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the
liability for each period. The right-of-use asset is depreciated
over the shorter of the asset's useful life and the lease term on a
straight-line basis.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
-- fixed payments (including in-substance fixed payments), less
any lease incentives receivable;
-- amounts expected to be payable by the lessee under residual value guarantees; and
-- payments of penalties for terminating the lease, if the lease
term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate
implicit in the lease, if that rate can be determined, or the
Group's incremental borrowing rate. Right-of-use assets are
measured at cost comprising the following:
-- the amount of the initial measurement of lease liability;
-- any lease payments made at or before the commencement date
less any lease incentives received;
-- any initial direct costs; and
-- restoration costs.
IFRS 16 "Leases" (continued)
Payments associated with leases of low-value assets are
recognised on a straight-line basis as an expense in the income
statement. Low-value assets comprise IT equipment. On 1 September
2019, the Group will recognise lease liabilities in relation to
leases which had previously been classified as "operating leases"
under the principles of IAS 17. These liabilities will be measured
at the present value of the remaining lease payments, discounted
using the Group's assumed incremental borrowing rate as of 1
September 2019. The weighted average lessee's incremental borrowing
rate applied to the lease liabilities on 1 September 2019 was 6%.
The lease liability to be recognised at 1 September 2019 is
expected to be GBP7.5m and a right-of-use asset of GBP6.9m.
The Group has applied IFRS 16 using the modified retrospective
approach and comparative information has not been restated. The
Group has:
-- Recognised the lease liabilities as the present value of the
remaining lease payments, discounted using the borrowing rate at
the date of initial application;
-- Elected to measure its right-of-use assets using the approach
set out in IFRS 16.C8(b)(i) calculating the carrying value as if
IFRS 16 had applied at the lease commencement date but discounted
using the borrowing rate at the date of initial application;
and
-- Recognised the cumulative effect of initially applying IFRS
16 as an adjustment to the opening balance of retained earnings at
the date of initial application.
The following table sets out the impact of adopting IFRS 16 on
the statement financial position as at 1 September 2019:
As at Impact As at
31 August of IFRS 1 September
2019 16 2019
GBP'000 GBP'000 GBP'000
Assets
Property, plant and equipment 1,843 - 1,843
Intangible assets 9,009 - 9,009
Right-of-use assets (12) - 6,931 6,931
------------------- ---------------- ---------------
Total non-current assets 10,852 6,931 17,783
Total current assets 23,466 - 23,466
------------------- ---------------- ---------------
Total assets 34,318 6,931 41,249
Liabilities
Total current liabilities (13) (13,371) 275 (13,096)
Lease liabilities (14) - (7,532) (7,532)
Other liabilities (2) - (2)
------------------- ---------------- ---------------
Total liabilities (13,373) (7,257) (20,630)
Net assets 20,945 (326) 20,619
------------------- ---------------- ---------------
Total equity (15) 20,945 (326) 20,619
------------------- ---------------- ---------------
(12) The adjustment to right-of-use assets is related to all
operating type lease assets.
(13) The table above removes the opening rent accrual disclosed
in the Groups 31 August 2019 annual financial statements.
(14) The table above reconciles the minimum lease commitments
disclosed in the Group's 31 August 2019 annual financial statements
to the amount of lease liabilities recognised on 1 September
2019.
(15) Retained earnings were adjusted to record the net effect of
all other adjustments noted.
IFRS 16 "Leases" (continued)
Reconciliation of operating lease commitments
At 31 August 2019 and 1 September 2019
Operating Incremental Discounted Lease liability Difference
lease commitments borrowing rate lease commitment recognised at 1 September
at 31 August at 1 September at 1 September at 1 September 2019
2019 2019 2019 2019
GBP000 GBP000 GBP000 GBP000
Land and Buildings 7,548 6% 6,965 7,532 567
------------------- ---------------- ------------------ ---------------- ----------------
The difference of GBP567k on land and buildings includes
non-lease components which were previously included within
operating lease commitments at 31 August 2019 and not included in
lease liabilities.
In May 2020, the IASB issued an amendment to IFRS 16
(COVID-19-Related Rent Concessions). It was endorsed by the EU on 9
October 2020. It is effective for annual periods beginning on or
after 1 June 2020, but earlier application is permitted, including
in financial statements not authorised for issue at 28 May 2020.
The amendment provides relief to lessees from applying IFRS 16
guidance on lease modification accounting for rent concessions
arising as a direct consequence of the COVID-19 pandemic. As a
practical expedient, a lessee may elect not to assess whether a
COVID-19 related rent concession from a lessor is a lease
modification. A lessee that makes this election accounts for any
change in lease payments resulting from the COVID-19 related rent
concession the same way it would account for the change under IFRS
16, if the change were not a lease modification. While the company
was, amongst other limited and discrete lease term changes to
existing leases, granted rent rebates related as a direct
consequence of the COVID-19 pandemic, it has not applied this
practical expedient meaning that rent rebates and other lease
changes to existing leases were accounted as modifications to the
lease liability and Right-of-use asset only.
Lease Liabilities
2020
GBP'000
In one year or less 2,952
Between one and five years 3,254
--------
Total undiscounted lease liabilities at 31 August
2020 6,206
========
Lease liabilities included in the statement of
financial position at 31 August 2020
Current 3,335
Non-current 2,668
--------
6,003
========
Amounts recognised in the comprehensive income
statement
Interest expense on lease liabilities 448
IFRS 16 "Leases" (continued)
Right-of-use Assets
Land and Total
buildings
GBP'000 GBP'000
------------------------ --------------
At 1 September 2019 6,931 6,931
Additions 6,315 6,315
Lease Modifications (4,444) (4,444)
Translation differences (204) (204)
------------------------ --------------
At 31 August 2020 8,598 8,598
------------------------ --------------
Accumulated depreciation
At 1 September 2019 - -
Charge for the year 3,482 3,482
------------------------ --------------
At 31 August 2020 3,482 3,482
------------------------ --------------
Carrying amount
At 31 August 2020 5,116 5,116
======================== ==============
Lease modifications relate to renegotiations on leases, agreed
part way through the original lease term. Additions reflect the
renegotiated position and further new office leases.
7. Cautionary Statement
This document contains certain forward-looking statements
relating to Ten Lifestyle plc (the "Group"). The Group considers
any statements that are not historical facts as "forward-looking
statements". They relate to events and trends that are subject to
risk and uncertainty that may cause actual results and the
financial performance of the Group to differ materially from those
contained in any forward-looking statement. These statements are
made by the Directors in good faith based on information available
to them and such statements should be treated with caution due to
the inherent uncertainties, including both economic and business
risk factors, underlying any such forward-looking information.
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END
FR FIFIILRLSFII
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November 24, 2020 02:00 ET (07:00 GMT)
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