TIDMECK
RNS Number : 1879R
Eckoh PLC
13 June 2018
13 June 2018
Eckoh plc
("Eckoh" or the "Group")
Full year results for the year ended 31 March 2018
Results in line with expectations, with continued growth and
strong US payments momentum
Eckoh plc (AIM: ECK), the global provider of secure payment
products and customer contact solutions, is pleased to announce its
final results for the year to 31 March 2018.
GBPm unless otherwise stated FY18 FY17 change
------------------------------
Revenue 30.0 29.1 3%
------ ------ ---------
Recurring Revenue %(1) 76% 76% -
------ ------ ---------
US revenue mix % 37% 33% +400 bps
------ ------ ---------
Gross profit 22.9 20.3 13%
------ ------ ---------
Adjusted EBITDA(2) 6.5 5.8 13%
------ ------ ---------
Adjusted operating profit(3) 5.3 4.3 22%
------ ------ ---------
Adjusted operating profit
margin 17.7% 14.8% 290 bps
------ ------ ---------
Profit before taxation 2.4 1.6 61%
------ ------ ---------
Diluted Earnings per share 1.03p 0.56p 84%
------ ------ ---------
Proposed Full Year Dividend
per share 0.55p 0.48p 15%
------ ------ ---------
Net Cash 3.6 0.2 n.m.
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Strategic highlights:
-- Full year results in line with market expectations
-- Growth in revenues, margin and profit
-- US revenues up 16%, or 32% at organic local currency, representing 37% of Group revenues
-- Excellent progress in US Secure Payments with revenues up 179% to $6.7m (FY17: $2.4m)
o 12 payment contracts won worth $9.3m (FY17: nine contracts
worth $8.3m)
o Unrecognised payments revenue of $9.7m (FY17 $6.5m);
encouraging pipeline for 2018
o Two new 20-year patents awarded, underpinning all US payments
revenue
-- Year of transition in the UK
o Restructured UK sales function and focus on larger strategic
accounts bearing fruit
o More than twice the number of contracts won in H2 compared to
H1
o Strong order book offering renewed momentum
Financial highlights:
-- Revenues up 3% to GBP30.0m, or 7.6% at organic constant currency(4)
-- Gross profit increased 13% to GBP22.9m (FY17: GBP20.3m)
-- Adjusted operating profit(3) up to GBP5.3m (FY17: GBP4.3m)
-- Profit before taxation GBP2.4m (FY: GBP1.6m)
-- Balance sheet significantly strengthened with net cash of GBP3.6m (FY17 GBP0.2m)
-- Increased proposed final dividend of 0.55p per share (FY17: 0.48p)
Current Trading:
-- Two three-year UK contracts worth a combined GBP1.3m won in
the insurance sector since period end
-- Four-year US payment contract win worth $1.1m with large
healthcare company since period end
-- Significant increase in interest in Omni-channel offering and Chatbot technology
1. Recurring revenue is defined as on-going revenue on a
transactional basis, rather than revenue derived from the set-up
and delivery of a new service or the delivery of hardware.
2. Adjusted earnings before interest, tax, depreciation and
amortisation (EBITDA) is the profit before tax adjusted for
depreciation, amortisation, finance income, finance expense, legal
fees and settlement costs, and expenses relating to share option
schemes and acquisitions.
3. Adjusted operating profit is the profit before adjustments
for finance income, finance expense, legal fees and settlement
costs, and expenses relating to share option schemes and
acquisitions.
4. Organic constant currency (using last year exchange rates),
excludes the closed Professional Services division and the acquired
K2C division
Nik Philpot, Chief Executive Officer, said:
"Eckoh is at the forefront of contact centre security and
innovative customer engagement - two highly complementary
propositions that drive long-term benefit for our customers. This
is reflected in our performance, with growth in revenues, profit
and margin. Our momentum in US Payments is particularly pleasing,
where we are the market leader in contact centre security.
"In US Payments, given the size of the market opportunity, the
quality of our patented products and the limited competition, we
expect to see strong US growth over the coming years. After a year
of transition, the UK operation has made good progress and is
expected to return to growth this year. With the Group continuing
to scale recurring revenues, and with our strong pipeline the Board
remains confident in Eckoh's long-term prospects and continued
growth in the year ahead."
For more information, please contact:
Eckoh plc
Nik Philpot, Chief Executive Officer Tel: 01442 458
300
Chrissie Herbert, Chief Financial Officer
www.eckoh.com
FTI Consulting LLP Tel: 020 3727 1000
Ed Bridges / Jamie Ricketts / Emma Hall
/ Darius Alexander
eckoh@fticonsulting.com
N+1 Singer (Nomad & Joint Broker)
Shaun Dobson, Lauren Kettle Tel: 020 7496 3000
www.n1singer.com
Berenberg (Joint Broker)
Ben Wright, Chris Bowman, Mark Whitmore Tel: 020 3207 7800
www.berenberg.de/en
About Eckoh plc
Eckoh is a global provider of secure payment products and
customer contact solutions, supporting an international client base
from its offices in the UK and US.
Our secure payments products help our customers take payments
securely from their clients through multiple channels. Our
products, which include the patented CallGuard, can be hosted in
the Cloud or deployed on the client's site and remove sensitive
personal and payment data from contact centres and IT environments.
Our products offer merchants a simple and effective way to reduce
the risk of fraud, secure sensitive data and become compliant with
the Payment Card Industry Data Security Standards ("PCI DSS") and
wider data security regulations. Eckoh has been a PCI DSS Level One
Accredited Service Provider since 2010, processing over GBP1bn in
card payments annually.
Eckoh's customer contact solutions enable enquiries and
transactions to be performed on whatever device the customer
chooses, allowing organisations to increase efficiency, lower
operational costs and provide a true Omni-channel experience. We
also assist organisations in transforming the way that they engage
with their customers by providing support and transition services
as they implement our innovative customer contact solutions.
Our large portfolio of clients come from a broad range of
vertical markets and includes government departments, telecoms
providers, retailers, utility providers and financial services
organisations.
Introduction
I am pleased to report a year of growth for Eckoh, and a
particularly strong performance in the United States as we scale
our Secure Payments proposition.
Our momentum in US Payments is pleasing, where we are the market
leader in contact centre security. Another strong year of US Secure
Payments contract wins was further strengthened by many of our
largest Secure Payments deployments successfully going live, which
gives us positive case studies and customer references that we can
leverage for further new customer growth. In US Payments, given the
size of the market opportunity, the quality of our patented
products and the limited competition, we expect to see strong US
growth over the coming years.
As outlined at the half year, trading in the UK has been more
challenging, but the changes we have made halfway through the year
to the sales team and further organisational changes at the
beginning of this year have resulted in a marked improvement and
renewed activity both direct and via channel partners. Second half
sales performance and contract wins were significantly improved on
the first half and the pipeline is strong. Whilst the Group did not
secure any new contracts through the Capita channel during the
year, for the first time since our partnership started five years
ago, current activity levels give us cause for optimism that this
year will see a more normal picture and improved performance. As a
result, in overall terms we would anticipate that the UK operation
will have a stronger year than last.
Highly complementary and attractive proposition
Eckoh's go-to-market proposition encompasses two highly
complementary areas: secure payments products and customer contact
solutions. We continue to see good demand in both areas, as
customers recognise the value of our combined offering. With the
recent arrival of the General Data Protection Regulation ("GDPR"),
we anticipate further demand for our proposition, as businesses are
required to increase their commitment to best-in-class data
protection and focus on greater levels of compliance with security
regulation.
Our proposition comprises two key parts:
-- The Group's patented Secure Payment products remove sensitive
personal and payment data from IT environments and contact centres.
This helps organisations to reduce the risk of fraud; secure
sensitive data; comply with the Payment Card Industry Data Security
Standards ("PCI DSS") and wider security regulations such as GDPR.
Our Secure Payments products are generally straightforward to
deploy; enjoy extremely high renewal rates and provide an excellent
platform from which to cross-sell other Eckoh solutions to our
customer base.
-- The Group's Customer Contact solutions help organisations
transform the way they engage with their customers by enabling
enquiries and transactions to be performed on whatever device the
customer chooses, through whatever form of communication. Eckoh's
proposition includes interactive voice, web, email, SMS, mobile,
web chat, chatbots and social media, enabling our clients to
increase efficiency, lower operational costs and provide a true
Omni-channel experience.
Contracts for both propositions are typically multi-year in
length and have a high proportion of recurring charges, usually
underpinned by minimum commitments. Eckoh's two key markets are the
UK and US, although the Group also sells its secure payment
products in other international markets. In the UK, almost all
solutions are delivered from Eckoh's hosted managed service
platform, whilst in the US customers are currently more predicated
to deploy our solutions on site.
In the UK the Group sells its full portfolio of services and
over the course of the last 15 years has built a client base of
90(1) customers, many of which have been with the Group for more
than a decade. Of these 90 clients, 45% take a combination of both
our Payment services and Customer Contact solutions.
In the US, a territory that Eckoh entered only four years ago,
the Group's focus is on products where we have the greatest
differentiation and the least competition - such as secure
payments, contact centre infrastructure support and our
browser-based agent desktop tool, Coral. It is anticipated that we
will be taking some of the Omni-channel offering, notably web chat
incorporating secure payments, into the US market this year.
1. Clients who each generate more than GBP25,000 of revenue per annum.
A significant and largely untapped market opportunity
Our target market both in the UK and US is any sizeable
enterprise or organisation that either transacts or engages with
its customers at scale and at volume. This activity will usually be
supported either by an in-house or outsourced contact centre
provider. The greater the volume of transactions or customer
engagement activity that organisation has, the more attractive they
are to Eckoh, and the larger the contact centre operation
supporting the organisation is likely to be.
The contact centre industry in the UK and US is so large that,
in each case, it represents around 4% of the entire workforce, and
the industry continues to grow. According to ContactBabel, at the
end of 2017 there were 6,200 contact centres in the UK with 770,000
agent seats employing nearly 1.3 million staff. We typically target
organisations that utilise contact centres with more than 50 agent
seats and this represents over 2,500 in number and over 500,000
agent seats. With 90 clients each generating more than GBP25k of
annual revenue, we cover just over 3% of our addressable UK
market.
The US market is five times larger than the UK with over 40,000
contact centres and over 3.6 million agent seats, employing 6
million staff. There are 14,000 US contact centres with more than
50 seats, representing 2.9 million agent seats in total. With a
base of 46(1) clients in the US today (FY17: 41) we cover less than
1% of our addressable US market.
With regulation tightening and the financial impact of data
breaches and fraud growing, organisations around the world are
increasingly looking for ways to secure themselves and we see that
trend only continuing. Information security budgets and remit is
broadening, and this can only benefit Eckoh with our payments
proposition enabling companies to effectively remove the risk of
data breach from some of the most challenging parts of their
businesses. With so little of our target market currently
addressed, and with very limited competition to our offering, this
represents a huge opportunity for Eckoh in the coming years.
But mining this potentially huge opportunity requires a
disciplined approach. As a result, we are focusing our sales and
R&D resources on segments where clients prioritise the volume
or value of payment transactions, the sensitivity of the data
handled or the level of engagement with the customer. Our priority
sectors include companies in the insurance, retail and
distribution, financial services, transport and travel, healthcare
and utilities industries.
1. Clients who each generate more than $35,000 of revenue per annum.
A clear growth strategy
Our strategic objectives reflect our aim to become the global
leader in our areas of expertise, and in particular, Secure
Payments in the US.
Our objectives include:
-- Expanding our US footprint and the size of our team to
capitalise on the fast-growing market for secure payment
opportunities
-- Broadening channel partnerships in both UK and US markets
-- Continuing to extract value from the businesses acquired in recent years
-- Continuing to invest in R&D to underpin next generation
product development; protect and enhance our proprietary
technologies; and maintaining our market leading position
-- Maximising client value through cross-selling
-- Continuing to evaluate acquisition opportunities that can
support our growth strategy, where timely and accretive, but on an
opportunistic basis
Operational Review
US Division (37% of Group revenue, 57% recurring revenue(2)
)
This was a strong performance from the US Division. Revenue from
US operations increased by 14% to GBP11.1m (FY17: GBP9.7m) and now
represents 37% of Group revenues. Included in the results for last
year was the closed Professional Services activity (FY17: $1.6m).
Excluding the closed Professional Services activity, US division
grew by 32% year on year.
In the US, the Group focuses on three activities where we have
the greatest differentiation and the least competition: Secure
Payments; Support (of contact centre infrastructure); and Product
(notably Coral, an Omni-channel contact centre agent desktop
product).
-- Secure Payments revenue more than doubled (179% increase) to
$6.7m (FY17: $2.4m), representing 46% of the US division's revenue
compared to 20% for the same period last year.
-- Support revenue accounted for 39% of revenue in the period at
$5.8m and decreased by 3% year on year (FY17: $6.0m).
-- Coral product had revenue of $1.7m in the period and
decreased by 26% year on year (FY17: $2.2m) and other product
revenues in the period were $0.5m (FY17: $0.3m).
2. Recurring revenue is defined as on-going monthly revenue,
rather than revenue derived from the set-up and delivery of a new
service or the delivery of hardware.
The US division continues to strengthen its base of contracted
revenues and enters the new financial year with a monthly run rate
of revenue from existing customers at the period end of $1.0m
(FY17: $0.7m). Recurring revenues for the year in the US were
improved to 57% (FY17: 54%) and this is anticipated to grow further
in the coming year as the focus remains on securing long term
'Opex' contracts and the proportion of revenue from secure payments
increases.
Excellent progress has been made in Secure Payments with new
contract numbers and total contract value increasing once again. We
have moved our contracts almost entirely to the 'SaaS style' (which
we refer to as 'Opex' pricing) as our preferred model, and in the
period all but one of the new contract wins were of this nature.
With this model, typically 15%-35% of the contract value is
recognised over the implementation period, which can be between six
to eight months for our patented, on-site tokenisation solution,
CallGuard, which is selected by most of our US clients. The balance
of the revenue is recognised equally each month over the remainder
of the contract once the solution is operational, which is
generally three years.
The Opex method of pricing provides the Group with greater
visibility on future revenues and higher levels of recurring
revenue in line with the UK financial model. This is compared to
the 'Capex pricing', where customers would pay 65%-70% of the
contract up front for the implementation of their service followed
by a three-year annual support and maintenance contract
representing the remaining 30%-35%.
Over the last two years the change in contracting strategy for
payment clients has been extremely successful as shown in the table
below;
Contract Total Contract Average Contract Capex Opex Pricing
wins Value Value Pricing
FY15 5 $0.3m $53K 5 Nil
--------- --------------- ----------------- --------- -------------
FY16 9 $1.6m $173K 8 1
--------- --------------- ----------------- --------- -------------
FY17 9 $8.3m $918K 2 7
--------- --------------- ----------------- --------- -------------
FY18 12 $9.3m $776k 1 11
--------- --------------- ----------------- --------- -------------
During the year, twelve contracts were secured with a total
contract value of $9.3m (FY17: $8.3m). We have stated that we
expect average contract values for direct sales to generally be in
the range of $700k-$750k. Our average contract value this year was
slightly above the level we typically expect and was, as expected,
lower than last year's average, which was distorted by a large
contract worth $3.7m. The total of unrecognised payments revenue,
our Secure Payments Order Book, as at 31 March 2018 is $9.7m (FY17:
$6.5m), which will largely be recognised over the next three
years.
We have successfully gone live during the period with many of
our larger implementations and this has provided us with excellent
customer references in many of our key sectors. This is helping us
achieve a high win rate in competitive sales processes and as an
illustration since the period end we have won a four-year contract
worth $1.1m with a very large healthcare company through such a
process. We currently have more live US secure payments customers
than any of our narrow universe of competitors, and these customers
are typically large household names. A particularly significant new
contract this year was with a well-known US retailer who had
previously suffered a very large data breach relating to card data.
To be chosen by such a customer who is acutely aware of the
importance of managing data securely, supports our belief that we
are the established market leader.
Our payment products have been developed and evolved over many
years and in February 2018 we secured two further US patents, which
means that all our US payments revenue is now under-pinned by at
least one patent (see the Innovation section for more detail).
This year we expect to increase our pipeline and sales from our
US partner channel, and to support this strategy we have employed a
Head of Channel Sales. We have added a small number of new partners
so far this calendar year, but we are focused on only adding
partners that we believe will be able to deliver a sustainable
volume and scale of opportunities in our target market. It is not
our intention to pursue partners who may deliver high numbers of
small deals. Given the scale of the opportunity in the US, the
Group is focused on the largest value opportunities due to the
disproportionate level of effort and cost required for low value
customers.
In Support, where we provide expert third party support for
Contact Centre infrastructure from vendors such as Avaya, Cisco,
Genesys and Aspect guidance, revenue declined by 3%. This was
mainly due to one of our largest customers reducing the overall
level of support they required in the second half of the year. The
average length of a specific support engagement is three years, but
many of our customers take multiple support contracts so the
overall relationship can last for much longer and given the nature
of the service we provide it is very common for us to contract with
historic customers after a break of some years. We continue to
pursue new Support opportunities and see this activity as an
important part of our US strategy as we seek to leverage the team
who work in Support across our other sales channels. Our customers
in this area are typically large enterprises and as such can often
be excellent prospects for both our Secure Payments and Coral
product, as seen from the lucrative contracts the Group has won
through cross selling.
The third of our sales activities is our browser-based agent
desktop tool Coral, which increases efficiency and reduces Average
Handling Time ("AHT") by bringing all agent communications into a
single screen. It also enables organisations, particularly those
which have grown by acquisition, to standardise their Contact
Centre facilities, as Coral can be implemented in environments that
operate on entirely different underlying technology. In the year,
revenues declined by 26%, reflecting no additional licence sales
for the Coral product but as stated previously, the exact timing of
licence orders is unpredictable. However, one of our largest US
customers has approved Coral as its standard agent desktop, so the
expectation is that there will be significant future licence
orders, although the timing is uncertain. Eckoh has been the
exclusive reseller for Coral since the product was launched some
years ago and in the period the contract has been renewed for a
six-year period, with the exclusive arrangement in place until at
least 2021.
UK Division (63% of Group revenue, 86% recurring revenue(1)
)
In the UK, revenue decreased by 2% to GBP18.8m (FY17: GBP19.4m).
Recurring revenue was 86% in the year (FY17: 87%), with the small
reduction reflecting the improvement in new business in the second
half of the year and the implementation fees recognised. The UK
business had an exit monthly recurring revenue run rate of GBP1.4m,
in line with last year. Gross margins in the UK have improved to
85% (FY17: 83%).
The UK operation had a somewhat disappointing performance
compared to recent years, with a weak sales performance in the
first half of the year and lower than expected new activity from
our channel partners, notably Capita.
To improve our focus and performance, we have taken swift and
decisive action to restructure our UK sales team. This led to a
much-improved second half performance with nine new contracts won.
These contracts came from important sectors including healthcare,
insurance, retail, telecoms and payments. One of the payment
contract wins was with a subsidiary of one of our new US customers,
pointing to a growing trend of companies looking to standardise
their secure payments with the same supplier on an international
basis. Since period end the improved performance has continued with
contract wins including two three-year deals in the insurance
sector worth a total of GBP1.3m.
We now have 90 (FY17: 87) UK clients who each generate more than
GBP25k revenue per annum, more than twice the level we had four
years ago (FY14: 43). The largest contract renewal this year was
with Tenpin, for a further three years to December 2020, to provide
both Secure Payments and Customer Contact Services.
Of these UK clients, those who only take Secure Payment services
represented 28% (FY17: 23%), whilst those only taking Customer
Contact solutions accounted for 27% (FY17: 33%). This means the
largest segment at 45% (FY17: 44%) take a combined solution of both
Payment and Customer Contact and the average contract value of
these clients is GBP521k, significantly higher than the overall
average client contract value of GBP205k per annum and higher than
contracts for just one of our services. Cross selling to existing
clients in this way is a key part of the Eckoh strategy, not only
to drive incremental revenue but to continue the trend of extremely
high levels of client retention and to increase the lifetime value
of the customer.
Partnerships remain an important channel to market for us and
our largest partners are Capita, BT and Teleperformance. In the
period 32% of revenue came through partners. Capita has been a key
partner over the last five years and this was the first year since
our partnership began not to result in a new contract. We had
started working on a new opportunity with Capita in the latter part
of the year that ultimately did not come to fruition, but we are
hopeful following their successful restructuring earlier this year
that the relationship will once again begin delivering sizeable
contracts. We have renewed our partnership agreement with our
long-standing partner BT for a further three years and our
relationship with Teleperformance, which to date has predominantly
been for our Omni-channel solutions, has strengthened and we now
have two of their customers who have contracted for our full
product suite, one of which is Her Majesty's Passport Office. We
also have strategic relationships with specialists like allpay, who
provide payment services to housing associations, and during the
year we have supplied, through allpay, secure payment services to
eight more of their associations.
With GDPR having come into force in May 2018 organisations face
the prospect of very significant fines for non-compliance and need
to take even greater steps to secure their customer's personal
data. Eckoh is well placed to assist in that regard with our
solutions which ensure that personal data including card data is
handled compliantly and removed or de-scoped from our clients' IT
environment.
1 Recurring revenue is defined as on-going monthly revenue,
rather than revenue derived from the set-up and delivery of a new
service or the delivery of hardware.
Innovation
In February, the US Patent and Trademark Office granted us two
further 20-year patents for our industry-leading contact centre
security solution, CallGuard.
In 2015, Eckoh was awarded a US patent for part of its CallGuard
offering but these new awards will ensure that all current Eckoh US
payments revenue and future contracts will be protected by at least
one Eckoh patent. With $18m of US payments contracts won in the
last two years, and the US market growing rapidly, this protection
of Eckoh's intellectual property is strategically vital in ensuring
we continue to lead this key market.
The first new CallGuard patent was for Eckoh's tokenisation
process that automatically replaces real card payment data or other
personal data such as Social Security numbers with valueless
'placeholders' thereby encrypting and protecting customer's
sensitive data. These placeholders can flow safely through a
contact centre's telephony and data networks, reducing the risk of
hacking and ensuring agents are not exposed to customers' sensitive
data. The second patent was for transformational technology that
uses both voice biometrics to authenticate a caller, and a phone
'footprint' to authenticate the caller's mobile device. This dual
authentication mechanism will provide a more secure way for
merchants to verify that the caller is the genuine cardholder and
reduce the risk of fraud.
In the UK the development team are working on integrating the
Omni-channel technology that was obtained through the acquisition
of Kick2Contact ("K2C") in July 2016 into the core Eckoh platform.
With a two-year earn out in place on the K2C acquisition it has not
been feasible to commit significant technical resources from the
K2C team until now. Once complete this will allow us to deliver a
fully integrated customer engagement solution, branded as the Eckoh
Experience Portal ('EXP'), with information about activity made
through any channel shared in real-time across our platform. We
will also be able to provide conversational interfaces in both the
voice and web channels utilising a common knowledge base and
leveraging artificial intelligence where required. We see this use
of new Chatbot technology working in tandem with our
long-established speech recognition services as a key driver of new
business over the coming years.
Board Changes
In May 2017 we were pleased to welcome Chrissie Herbert to the
Board as Chief Financial Officer, and in June 2017 Christopher
Humphrey as a Non-Executive Director. Christopher was appointed as
Chairman at the AGM in September 2017. In December 2017, we were
pleased to appoint David Coghlan as a Non-Executive Director; David
brings with him extensive experience with technology companies in
the business-to-business field. In December 2017 Peter Simmonds
retired from the Board.
Current Trading and Outlook
The new financial year has started in line with expectations,
with the Group continuing to scale US operations, and seeing early
benefits from an improved UK sales performance, continuing the
momentum from the second half of the 2018 financial year. We have
strong sales pipelines in both markets with excellent revenue
visibility from recurring revenue. This, allied with high client
retention rates, give the Board confidence that the long-term
prospects for Eckoh remain extremely positive.
Financial Review
Revenue
Revenue for the year increased by 3.2% to GBP30.0m (FY17:
GBP29.1m) and adjusted operating profit for the year was 21.9%
higher at GBP5.3m (FY17: GBP4.3m). At constant exchange rates,
using last years rates and adjusting for the closed Professional
Services activity in the prior year and the acquired K2C business,
revenue increased by 7.6%. Adjusted operating profit, after
adjusting for the loss from the closed Professional Services
activity in the prior year, increased year on year by 5.0%.
Earnings per share increased by 80% to 1.08 pence per share (FY17:
0.60 pence per share).
Divisional Performance
Revenue in the UK, which represents 63% (FY17: 67%) of total
group revenues, decreased by 2.2% to GBP18.9m (FY17: GBP19.4m). The
US business represented 37% (FY17: 33%) of total group revenues and
revenues increased in the period by 14.0% to GBP11.1m. Revenues in
local currency and excluding the closed Professional Services
division grew by 32% year on year.
FY18 FY18 FY18 FY17 FY17 FY17
(UK) (US) Total (UK) (US) Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------- -------- -------- -------- -------- -------- --------
Revenue 18,937 11,068 30,005 19,371 9,707 29,078
Gross Profit 16,101 6,784 22,885 16,133 4,194 20,327
Gross Profit
% 85% 61% 76% 83% 43% 70%
-------------- -------- -------- -------- -------- -------- --------
Gross Profit
The Group's gross profit increased year on year by 12.6% to
GBP22.9m (FY17: GBP20.3m), with gross profit margin increasing in
both the UK and the US division. Margins within the US division
have typically been lower than those seen in the Eckoh UK business
due to the nature of its offering, however, as anticipated the
gross profit margin has increased to 61% (FY17: 43%). As the
business mix continues to move to Secure Payments, the growth area
of the division, it is anticipated that we will continue to see
gross margins increase to the same extent they have increased in
the underlying business after the closure of the Professional
Services activity. Because of this increased proportion of high
margin activity, it is anticipated that reported gross margins for
the Group should also increase.
Profitability Measures
Adjusted operating profit increased for the year by 21.9% to
GBP5.3m (FY17: GBP4.3m) and adjusted EBITDA for the year increased
by 13.3% to GBP6.5m (FY17: GBP5.8m). In the previous year there
were losses of GBP0.7m incurred for the now closed Professional
Services activity. In the year ended 31 March 2018, the deferred
consideration in relation to the K2C earn-out has been released.
Profit before tax increased from GBP1.6m to GBP2.4m, an increase of
50%.
Year Year
ended ended
31 March 2018 31 March 2017
GBP'000 GBP'000
--------------------------------------- --------------- ---------------
Profit before tax 2,435 1,623
Amortisation of acquired intangible
assets 2,329 2,186
Legal fees and settlement costs 595 -
Transactions relating to acquisitions - 319
Expenses relating to share
option schemes 793 24
Interest receivable (34) (43)
Change in contingent consideration (975) -
Finance charges 118 205
--------------------------------------- --------------- ---------------
Adjusted operating profit 5,261 4,314
--------------------------------------- --------------- ---------------
Amortisation of intangible
assets 325 433
Depreciation 914 1,059
--------------------------------------- --------------- ---------------
Adjusted EBITDA 6,500 5,806
--------------------------------------- --------------- ---------------
Legal fees and settlement costs
As disclosed in last year's Annual Report and the Interim
Statement in November 2017, in the financial year ended 31 March
2017 the Group received a legal claim from a client that had
discontinued a project related to the closed Professional Services
division. The Group has vigorously defended the claim, however, in
the year ended 31 March 2018 we have chosen to settle the claim to
bring this matter to a close. The settlement and legal costs were
GBP0.6m. The Group is not aware of any other contractual
commitments from the closed Professional Services division.
Statement of financial position
Whilst Eckoh continue to innovate by developing new products and
features such as those detailed in the Chief Executive's Review,
little of this is capitalised on the balance sheet with only
GBP0.3m (FY17: GBP0.2m) added in the year to the value of the
intangible fixed assets of the Company. Whilst taking a prudent
approach to capitalising salary cost reduces reported profit,
management believes this approach gives an accurate reflection of
the trading performance of the Company.
Change in contingent consideration
For the financial year ended 31 March 2018 finance income
includes a credit of GBP975k relating to the K2C contingent
consideration.
Finance charges
For the financial year ended 31 March 2018, the net interest
charge was GBP118k (FY17: GBP205k). In the full year ended 31 March
2017, included within finance expenses was a charge of GBP63k
relating to the unwinding of the discount on the contingent
consideration for the acquisition of K2C. No such charges were
incurred for the financial year ended 31 March 2018.
Taxation
For the financial year ended 31 March 2018, there was a tax
credit of GBP225k (FY17: 184k charge). This is principally due to
the US tax rate of 21% enacted at the Balance sheet date of 31
March 2018. This resulted in a tax credit for deferred tax of
GBP350k in the period.
Earnings per share
Basic earnings per share was 1.08 pence per share (2017: 0.60
pence per share). Diluted earnings per share was 1.03 pence per
share (2017: 0.56 pence per share).
Cashflow and liquidity
Net cash at 31 March 2018 was GBP3.6m, an improvement of GBP3.4m
from 31 March 2017 of GBP0.2m. In the period the Company has repaid
GBP1.3m of the loans outstanding to Barclays Bank in accordance
with the terms of the loan. During the year, there has been a net
cash inflow for trade debtors and trade creditors of GBP0.4m (FY17:
(GBP3.4m) cash outflow). In addition, a dividend payment of GBP1.2m
was made in November 2017.
Dividends
Post year end the Directors are recommending that a final
dividend for the year ended 31 March 2018 of 0.55 pence per
ordinary share be paid to the shareholders whose names appear on
the register at the close of business on 28 September 2018, with
payment on 26 October 2018. The ex-dividend date will be 27
September 2018. This recommendation will be put to the shareholders
at the Annual General Meeting. Based on the shares in issue at the
year-end, this payment would amount to GBP1.4m.
Prior Year Restatement
The company has reviewed the way the goodwill and intangible
assets and the related deferred tax liability for the acquisition
of PSS Inc in the year ended 31 March 2016 has been accounted for.
At the point of acquisition on 17 November 2015, the Goodwill and
intangible assets of both the US and UK business of PSS were
translated into sterling and held in the Company. On further
analysis the proportion of the Goodwill and intangible assets
relating to the US business of PSS Inc (87% of the business) should
have been held in US dollars in accordance with IAS 21. Accordingly
balance sheet and statement of change in equity figures in prior
years have been restated, further details are included in note
1.
Consolidated statement of Profit and Loss and Other
Comprehensive Income
for the year ended 31 March 2018
2018 2018 2017 2017
Notes GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------- ------ --------- --------- --------- -----------
Continuing operations
Revenue 2 30,005 29,078
Cost of sales (7,120) (8,751)
---------------------------------------------- ------ --------- --------- --------- -----------
Gross profit 2 22,885 20,327
--------- ---------
Administrative expenses before expenses
relating to share options schemes,
acquisition costs, legal fees and
settlement costs and amortisation
of acquired intangible assets (17,624) (16,013)
---------------------------------------------- ------ --------- --------- ---------
Profit from operating activities
before expenses relating to share
option schemes, acquisition costs,
legal fees and settlement costs and
amortisation of acquired intangible
assets 5,261 4,314
Amortisation of acquired intangible
assets (2,329) (2,186)
Transactions relating to acquisitions - (319)
Legal fees and settlement costs (595) -
Expenses relating to share option
schemes (793) (24)
---------------------------------------------- ------ --------- --------- --------- -----------
Total Administrative expenses 2 (21,341) (18,542)
Profit from operating activities 2 1,544 1,785
Finance charges (118) (205)
Change in contingent consideration 975 -
Interest receivable 34 43
Profit before taxation 2,435 1,623
Taxation credit / (charge) 225 (184)
---------------------------------------------- ------ --------- --------- --------- -----------
Profit for the year 2,660 1,439
============================================== ====== ========= ========= ========= ===========
2017
2018 GBP'000
(restated
- note
Other comprehensive income GBP'000 1)
Items that will be reclassified subsequently
to profit
or loss:
Foreign currency translation differences
- foreign operations (907) 845
---------------------------------------------- ------ --------- --------- --------- -----------
Other comprehensive income for the
year, net of income tax (907) 845
---------------------------------------------- ------ --------- --------- --------- -----------
Total comprehensive income for the
year attributable to the equity holders
of the parent company 1,753 2,284
============================================== ====== ========= ========= ========= ===========
Profit per share (pence)
---------------------------------------------- ------ --------- --------- --------- -----------
Basic earnings per 0.25p share 4 1.08 0.60
Diluted earnings per 0.25p share 4 1.03 0.56
Consolidated statement of financial position
as at 31 March 2018
2018 2017 2016
GBP'000 GBP'000
(restated (restated
- see note - see note
Notes GBP'000 1) 1)
---------------------------------- ------- -------- ------------- -------------
Assets
Non-current assets
Intangible assets 7,959 10,900 9,547
Tangible assets 4,703 5,023 5,376
Deferred tax assets 3,533 3,578 4,774
16,195 19,501 19,697
------------------------------------------ -------- ------------- -------------
Current assets
Inventories 724 713 748
Trade and other receivables 9,835 11,557 9,127
Cash and cash equivalents 8,164 6,083 6,617
18,723 18,353 16,492
------------------------------------------ -------- ------------- -------------
Total assets 34,918 37,854 36,189
Liabilities
Current liabilities
Trade and other payables (7,885) (9,155) (10,676)
Other interest-bearing loans and
borrowings (1,300) (1,300) (1,000)
------------------------------------------- -------- ------------- -------------
(9,185) (10,455) (11,676)
------------------------------------------ -------- ------------- -------------
Non-current liabilities
Other interest-bearing loans and
borrowings (3,250) (4,550) (3,750)
Contingent consideration - (975) -
Deferred tax liabilities (674) (1,383) (1,684)
(3,924) (6,908) (5,434)
------------------------------------------ -------- ------------- -------------
Net assets 21,809 20,491 19,079
------------------------------------------- -------- ------------- -------------
Shareholders' equity
Share capital 631 611 600
ESOP Reserve (238) (83) (17)
Capital redemption reserve 198 198 198
Share premium 2,640 2,660 2,612
Merger reserve 2,697 2,697 2,353
Currency reserve 329 1,236 391
Retained earnings 15,552 13,172 12,942
------------------------------------------- -------- ------------- -------------
Total shareholders' equity 21,809 20,491 19,079
------------------------------------------- -------- ------------- -------------
Consolidated statement of changes in equity
For the year ended 31 March 2018
Capital Total
Share ESOP redemption Share Merger Retained Currency shareholders'
capital reserve reserve premium reserve earnings reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- --------- --------- ------------ --------- --------- ---------- --------- ---------------
Balance at 1 April
2016 (as
previously
reported) 600 (17) 198 2,612 2,353 12,942 157 18,845
Restatement (note
1) - - - - - - 234 234
Balance at 1 April
2016 (restated) 600 (17) 198 2,612 2,353 12,942 391 19,079
Total comprehensive income
Profit - - - - - 1,439 - 1,439
Retranslation
(restated) - - - - - - 845 845
-------------------- --------- --------- ------------ --------- --------- ---------- --------- ---------------
Total comprehensive
income (restated) - - - - - 1,439 845 2,284
-------------------- --------- --------- ------------ --------- --------- ---------- --------- ---------------
Transactions with owners of the Company
Contributions and distributions
Dividends paid
in the year - - - - - (1,084) - (1,084)
Shares issued
on acquisition
of Klick2Contact
EU Ltd 2 - - - 344 - - 346
Shares transacted
through Employee
Benefit Trust - 16 - 5 - (14) - 7
Purchase of own
shares - (82) - - - - - (82)
Shares issued
under the share
option schemes 9 - - 43 - - - 52
Share based payment
charge - - - - - 132 - 132
Deferred tax on
share options - - - - - (243) - (243)
-------------------- --------- --------- ------------ --------- --------- ---------- --------- ---------------
Total contributions
and distributions 11 (66) - 48 344 (1,209) - (872)
-------------------- --------- --------- ------------ --------- --------- ---------- --------- ---------------
Total transactions
with owners of
the Company 11 (66) - 48 344 (1,209) - (872)
-------------------- --------- --------- ------------ --------- --------- ---------- --------- ---------------
Balance at 31
March 2017
(restated) 611 (83) 198 2,660 2,697 13,172 1,236 20,491
-------------------- --------- --------- ------------ --------- --------- ---------- --------- ---------------
Consolidated statement of changes in equity (continued)
For the year ended 31 March 2018
Capital Total
Share ESOP redemption Share Merger Retained Currency shareholders'
capital reserve reserve premium reserve earnings reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April
2017 (restated) 611 (83) 198 2,660 2,697 13,172 1,236 20,491
Total comprehensive income
Profit - - - - - 2,660 - 2,660
Retranslation - - - - - - (907) (907)
-------------------- --------- --------- ------------ --------- --------- ---------- --------- ---------------
Total comprehensive
income - - - - - 2,660 (907) 1,753
-------------------- --------- --------- ------------ --------- --------- ---------- --------- ---------------
Transactions with owners of the Company
Contributions and distributions
Dividends paid
in the year - - - - - (1,209) - (1,209)
Shares transacted
through Employee
Benefit Trust - 1 - - - (49) - (48)
Purchase of own
shares - (156) - - - - - (156)
Shares issued under
the share option
schemes 20 - - (20) - - - -
Share based payment
charge - - - - - 554 - 554
Deferred tax on
share options - - - - - 424 - 424
-------------------- --------- --------- ------------ --------- --------- ---------- --------- ---------------
Total contributions
and distributions 20 (155) - (20) - (280) - (435)
-------------------- --------- --------- ------------ --------- --------- ---------- --------- ---------------
Total transactions
with owners of
the Company 20 (155) - (20) - (280) - (435)
-------------------- --------- --------- ------------ --------- --------- ---------- --------- ---------------
Balance at 31 March
2018 631 (238) 198 2,640 2,697 15,552 329 21,809
-------------------- --------- --------- ------------ --------- --------- ---------- --------- ---------------
Consolidated statement of cash flows
for the year ended 31 March 2018
2018 2017
Notes GBP'000 GBP'000
-------------------------------------------- ------ -------- --------
Cash flows from operating activities
Cash generated in operations 4 5,844 2,475
Taxation (3) (263)
-------------------------------------------- ------ -------- --------
Net cash generated in operating activities 5,841 2,212
-------------------------------------------- ------ -------- --------
Cash flows from investing activities
Purchase of property, plant and equipment (646) (598)
Purchase of intangible fixed assets (323) (200)
Proceeds from sale of intangible
fixed assets 6 18
Interest paid (118) (142)
Interest received 34 43
Acquisition of subsidiary, net of
cash acquired - (1,860)
Net cash utilised in investing activities (1,047) (2,739)
-------------------------------------------- ------ -------- --------
Cash flows from financing activities
Dividends paid (1,209) (1,084)
Proceeds from new loan - 6,500
Repayment of borrowings (1,300) (5,400)
Purchase of own shares (156) (82)
Issue of shares - 52
Shares acquired/sold by Employee
Benefit Trust (48) 7
-------------------------------------------- ------ -------- --------
Net cash generated in financing activities (2,713) (7)
-------------------------------------------- ------ -------- --------
Increase /(decrease) in cash and
cash equivalents 2,081 (534)
Cash and cash equivalents at the
start of the period 6,083 6,617
-------------------------------------------- ------ -------- --------
Cash and cash equivalents at the
end of the period 8,164 6,083
-------------------------------------------- ------ -------- --------
1. Basis of preparation
The preliminary results of Eckoh plc have been prepared in
accordance with the recognition and measurement principles of
International Financial Reporting Standards ("IFRS") in issue as
adopted by the European Union and effective at 31 March 2018. These
statements do not constitute the Company's statutory accounts
within the meaning of section 435 of the Companies Act 2006, but
have been derived from those accounts.
Statutory accounts for the year ended 31 March 2017 have been
delivered to the Registrar of Companies but those for the year
ended 31 March 2018 have not yet been delivered.
The auditors have reported on the accounts for the year ended 31
March 2018; their report was not qualified, did not include
references to any matters to which the auditors drew attention to
by way of emphasis without qualifying their report and did not
contain statements under section 498(2) or (3) of the Companies Act
2006.
The preliminary announcement complies with the recognition and
measurement criteria of IFRS, and with the accounting policies of
the Group which were set out on pages 48 to 55 of the 2017 annual
report and accounts. No subsequent material changes have been made
to the Group's accounting policies with selected accounting
policies included below.
The Directors are satisfied that the Group has adequate
resources to continue in operational existence for the foreseeable
future, a period of not less than 12 months from the date of this
report.
The Directors' review newly issued standards and interpretations
in order to assess the impact (if any) on the Financial Statements
of the Group in future periods. IFRS 15 Revenue from Contracts with
Customers, will be effective for the year ending 31 March 2019 and
its adoption is deemed to be significant for the Group. The review
of IFRS15 is ongoing and the Directors are cognisant of industry
practice, which is constantly evolving, that could impact the Group
in its implementation; however, based on the current position the
Directors have undertaken an assessment of the impact of the
standard on the Group based on the standard's latest authoritative
guidance. The Group will adopt IFRS 15 on 1 April 2018 and
anticipates applying the standard on a fully retrospective basis.
For the accounting period beginning on 1 April 2018 the standard
will be adopted and the prior year comparison will be restated
subject to the application of one or more of the practical
expedients available in the standard.
IFRS15 provides a single, principles-based five-step model to be
applied to all sales contracts, based on the transfer of control of
goods and services to customers. The Group has undertaken a review
of all the services and products the Company provides and the main
types of commercial arrangements used with each service and
product. Both the UK and the US business will be impacted by IFRS
15 and the most significant impact of implementing the standard is
for the hosted Customer Contact solutions and Secure Payment
solutions, which are in effect a hosted solution. The most
significant effects identified are as follows:
-- Revenue for implementation fees for our hosted Secure
Payments solution and hosted Customer Contact services; and revenue
for hardware and implementation fees for our onsite Secure Payments
Audio Tokenisation solution, will no longer be recognised at the
point of delivery of hardware or implementation fees recognised as
the project is being delivered. Under IFRS 15 these revenues will
be deferred to later periods. Only once the solution has been
delivered to the client will revenue begin to be recognised and
then it will be spread evenly over the term of the contract. The
costs directly attributable to the delivery of the hardware and the
implementation fees will be capitalised as 'costs to fulfil a
contract' and released over the contract term, thereby also
deferring costs to later periods. The impact of this standard means
15%-35% of total contract value, which would have been recognised
in the 3-12 month period after contract signing, will be delayed
for a minimum of 3-12 months before any revenue is recognised. Once
revenue starts to be recognised it will be spread on average over 3
years, the average length of contracts. The impact is to delay
revenue recognition of these specific fees by up to 4 years in
total.
-- Where contract modifications take place, these are currently
recognised as revenue at the point the modification is delivered to
the client. Under IFRS 15 consideration will need to be given as to
whether these are for services that are distinct from the original
contract. Where they are treated as a continuation of the original
contract, there may be a cumulative adjustment to revenue at the
point the modification was delivered to the client, with a portion
of the modification fees being recognised over the remainder of the
contract term.
The underlying business model and the market opportunity that
Eckoh has is not impacted by IFRS 15 nor is cash generation of the
business. In addition, in the US business, the revenue for the
Support, Coral and Other Product are not impacted by IFRS 15, nor
is the revenue impacted from CallGuard On-Site, the Group's entry
level Secure Payment product for PCI compliance.
The Company estimates, the impact of adoption of IFRS 15 for the
year ended 31 March 2018 would be to defer GBP3.7m of revenue and
costs of GBP1.3m in to future periods. The net impact is to reduce
retained earnings by GBP2.4m, increase deferred liabilities by
GBP3.7m and increase deferred assets by GBP1.3m. The development of
these estimates has been performed outside of the Group's
underlying financial systems. As a result, on full transition the
actual impact may differ from the amounts disclosed once individual
transactions have been processed. The Directors will continue to
monitor industry practice and experience of implementation and
update its assessment of the impact for the Group as
appropriate.
Cashflow from operating activities is not impacted nor is the
Company's ability to pay dividends.
The Company uses a number of key KPI's to monitor the
performance of the business. These will be impacted over the
initial 3-4 years following adoption of IFRS 15, as follows:
- Recurring revenue will initially increase by approx. 10
percentage points and over the subsequent 3-4 years following
adoption of IFRS 15 will gradually fall back to somewhat higher
than current levels due to the anticipated growth of the US secure
payments;
- Operating profit margin, which for the year ended 31 March
2018 was 18%, will initially decrease by approx. 12% to 6% and over
the subsequent 3-4 years following adoption of IFRS 15, will
increase to at least current levels due to the anticipated growth
of US secure payments;
- US Secure Pay total contract value will not be impacted; and
- Secure Pay and hosted services Order Book or unrecognised
revenue will increase equal to the amount of revenue deferred into
future periods.
Prior Year Restatement
The company has reviewed the way the goodwill and intangible
assets and the related deferred tax liability for the acquisition
of PSS Inc in the year ended 31 March 2016 has been accounted for.
At the point of acquisition on 17 November 2015, the Goodwill and
intangible assets of both the US and UK business of PSS were
translated into sterling and held in the Company. On further
analysis the proportion of the Goodwill and intangible assets
relating to the US business of PSS Inc (87% of the business) should
have been held in US dollars in accordance with IAS 21.
As a result, the value of goodwill and intangible assets has
increased since 17 November 2015 due to the fluctuation in the
sterling dollar exchange rate. As at 31 March 2016, the value of
Goodwill increased by GBP134k and the value of Intangible assets
increased by GBP151k. In the year ended 31 March 2017, the
cumulative value of the Goodwill increased by GBP482k and the value
of the other Intangible assets increased by GBP427k. The deferred
tax liability for the year ended 31 March 2016 was also revalued
and resulted in a credit to the deferred tax liability of GBP51k
for the year ended 31 March 2016. In the year ended 31 March 2017,
the cumulative value of the deferred tax liability increased by
GBP145k. As a result, the amortisation charged in the years ending
31 March 2016 and 2017 was understated by GBP10k and GBP92k
respectively and the deferred tax liability release to the tax
charge was understated by GBP3k and GBP31k. The net difference to
profit after tax for the year ended 31 March 2016 and 31 March 2017
was GBP7k and GBP61k respectively. The effect of these changes on
amortisation and release of the deferred tax credit to the Income
Statement for each of the two years ending 31 March 2016 and 2017
is immaterial and the cumulative effect has been included in the
income statement for the year ended 31 March 2018. The cumulative
amortisation related to prior periods recognised in the year ended
31 March 2018 is GBP102k (2016: GBP10k and 2017: GBP92k) and the
cumulative release of the deferred tax is GBP34k (2016: GBP3k and
2017: GBP31k).
2016 2016
Impact of
(as previously prior
reported) period adjustment (restated)
GBP'000 GBP'000 GBP'000
------------------------------ --------------- ------------------- -----------
Intangible assets - Goodwill 2,613 133 2,746
Intangible assets - other 6,649 152 6,801
------------------------------ --------------- ------------------- -----------
Intangible assets 9,262 285 9,547
Deferred tax liability (1,633) (51) (1,684)
Other assets/ liabilities
not impacted 11,216 - 11,216
------------------------------ --------------- ------------------- -----------
Net assets 18,845 234 19,079
Shareholders' equity
Currency reserve 157 234 391
Retained earnings 12,942 - 12,942
Other equity entries not
impacted 5,746 - 5,746
------------------------------ --------------- ------------------- -----------
Total Shareholders' equity 18,845 234 19,079
------------------------------ --------------- ------------------- -----------
2017 2017
Impact of
(as previously prior
reported) period adjustment (restated)
GBP'000 GBP'000 GBP'000
------------------------------ --------------- ------------------- -----------
Intangible assets - Goodwill 4,638 482 5,120
Intangible assets - other 5,353 427 5,780
------------------------------ --------------- ------------------- -----------
Intangible assets 9,991 909 10,900
Deferred tax liability (1,238) (145) (1,383)
Other assets/ liabilities
not impacted 10,974 - 10,974
------------------------------ --------------- ------------------- -----------
Net assets 19,727 764 20,491
Shareholders' equity
Currency reserve 472 764 1,236
Retained earnings 13,172 - 13,172
Other equity entries not
impacted 6,083 - 6,083
------------------------------ --------------- ------------------- -----------
Total Shareholders' equity 19,727 764 20,491
------------------------------ --------------- ------------------- -----------
Other Comprehensive Income 2017
GBP'000
----------------------------------------- --------
Balance at 1 April (as previously
reported) 315
Foreign currency translation
differences - foreign operations
* Goodwill (note 12) 349
* Intangible assets (note 12) 275
* Deferred tax liability (note 10) (94)
----------------------------------------- --------
Balance at 31 March (restated) 845
----------------------------------------- --------
2. Segment analysis
The segmentation is based on analysing Eckoh UK including PSS
UK, Eckoh US which includes PSS Inc, and K2C.
Information regarding the results of each operating segment is
included below. Performance is measured based on segment profit or
loss before taxation as included in the internal management reports
provided to the Chief Executive Officer.
Current period segment Total Total
analysis Eckoh UK Eckoh US K2C 2018 2017
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment Revenue 18,016 11,068 921 30,005 29,078
------------------------------- --------- --------- -------- --------- ---------
Gross profit 15,319 6,784 782 22,885 20,327
Profit from operating
activities before expenses
relating to share options
schemes, acquisition costs,
legal fees and settlement
costs and amortisation
of acquired intangible
assets (10,481) (6,538) (605) (17,624) (16,013)
------------------------------- --------- --------- -------- --------- ---------
Profit from operating
activities before expenses
relating to share options
schemes, acquisition costs,
legal fees and settlement
costs and amortisation
of acquired intangible
assets 4,838 246 177 5,261 4,314
Other expenses(1) (2,378) (1,339) - (3,717) (2,529)
Operating profit 2,460 (1,093) 177 1,544 1,785
Interest received 1,008 - 1 1,009 43
Finance charges (94) (24) - (118) (205)
Profit before taxation 3,374 (1,117) 178 2,435 1,623
Taxation credit / (charge) 20 218 (13) 225 (184)
Profit after taxation 3,394 (899) 165 2,660 1,439
------------------------------- --------- --------- -------- --------- ---------
Segment assets
------------------------------- --------- --------- -------- --------- ---------
Trade receivables 2,801 2,175 173 5,149 7,076
Deferred tax asset 3,262 240 31 3,533 3,578
Segment liabilities
------------------------------- --------- --------- -------- --------- ---------
Trade and other payables 1,349 1,608 73 3,030 3,222
Capital expenditure
------------------------------- --------- --------- -------- --------- ---------
Purchase of tangible assets 590 56 - 646 598
Purchase of intangible
assets 318 5 - 323 200
Depreciation and amortisation
------------------------------- --------- --------- -------- --------- ---------
Depreciation 643 262 9 914 1,058
Amortisation 1,890 764 - 2,654 2,619
1. Other expenses include expenses relating to share option
schemes, acquisition costs, legal fees and settlement costs and,
amortisation of acquired intangible assets.
In 2017/18, there was no one customer that individually
accounted for more than 10% of the total revenue of the continuing
operations of the company (2016/17: one customer). In 2016/17
revenue from the largest customer, who is a major US
telecommunications company, totalled GBP3,354,000 which represented
11.5% of total revenue for the year.
The key segments reviewed at Board level are the UK, US and K2C
operations.
Eckoh UK Eckoh US K2C 2018 2017
Revenue by geography GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- --------- -------- -------- --------
UK 17,769 - 886 18,655 19,147
United States of America 137 10,800 3 10,940 9,302
Rest of the World 110 268 32 410 629
-------------------------- --------- --------- -------- -------- --------
Total Revenue 18,016 11,068 921 30,005 29,078
-------------------------- --------- --------- -------- -------- --------
Eckoh Eckoh Total
UK US K2C 2017
Prior period segment analysis GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 18,703 9,707 668 29,078
----------------------------------- --------- -------- -------- ---------
Gross profit 15,531 4,194 602 20,327
Administrative expenses before
expenses relating to share
options schemes, acquisition
costs, legal fees and settlement
costs and amortisation of
acquired intangible assets (11,293) (4,310) (410) (16,013)
----------------------------------- --------- -------- -------- ---------
Profit from operating activities
before expenses relating
to share options schemes,
acquisition costs, legal
fees and settlement costs
and amortisation of acquired
intangible assets 4,238 (116) 192 4,314
Other expenses(1) (2,450) (79) - (2,529)
----------------------------------- --------- -------- -------- ---------
Operating profit / (loss) 1,788 (195) 192 1,785
Interest received 43 - - 43
Finance charges (168) (37) - (205)
Profit / (loss) before taxation 1,663 (232) 192 1,623
Taxation (140) (19) (25) (184)
Profit / (loss) after taxation 1,523 (251) 167 1,439
----------------------------------- --------- -------- -------- ---------
Segment assets
----------------------------------- --------- -------- -------- ---------
Trade receivables 4,391 2,469 216 7,076
Deferred tax asset 3,519 15 44 3,578
Segment liabilities
----------------------------------- --------- -------- -------- ---------
Trade and other payables 1,904 1,267 51 3,222
Capital expenditure
----------------------------------- --------- -------- -------- ---------
Purchase of tangible assets 529 56 13 598
Purchase of intangible assets 195 5 - 200
Depreciation and amortisation
----------------------------------- --------- -------- -------- ---------
Depreciation 883 162 13 1,058
Amortisation 2,598 21 - 2,619
1. Other expenses include expenses relating to share option
schemes, acquisition costs, legal fees and settlement costs and,
amortisation of acquired intangible assets.
Eckoh UK Eckoh US K2C 2017
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- --------- -------- --------
Revenue by geography
UK 18,441 56 650 19,147
United States of America 8 9,294 - 9,302
Rest of the World 254 357 18 629
-------------------------- --------- --------- -------- --------
Total Revenue 18,703 9,707 668 29,078
-------------------------- --------- --------- -------- --------
3. Earnings per share
The basic and diluted earnings per share are calculated on the
following profit and number of shares. Earnings for the calculation
of earnings per share is the net profit attributable to equity
holders of the parent.
2018 2017
GBP'000 GBP'000
---------------------------------------- -------- --------
Earnings for the purposes of basic and
diluted earnings per share 2,660 1,439
---------------------------------------- -------- --------
2018 2017
Denominator '000 '000
---------------------------------------- -------- --------
Weighted average number of shares in
issue in the period 247,424 241,550
Shares held by employee ownership plan (805) (323)
Shares held in Employee Benefit Trust - (2)
---------------------------------------- -------- --------
Number of shares used in calculating
basic earnings per share 246,619 241,225
Dilutive effect of potential shares
and share options 12,384 15,281
---------------------------------------- -------- --------
Number of shares used in calculating
diluted earnings per share 259,003 256,506
---------------------------------------- -------- --------
2018 2017
Earnings per share pence pence
---------------------------------- ------ ------
Basic earnings per 0.25p share 1.08 0.60
Diluted earnings per 0.25p share 1.03 0.56
---------------------------------- ------ ------
4. Cash flow from operating activities
2018 2017
GBP'000 GBP'000
-------------------------------------------- -------- --------
Profit after taxation 2,660 1,439
Interest income (34) (43)
Finance income (975) -
Interest payable 118 142
Taxation (225) 184
Deferred tax - -
Depreciation of property, plant and
equipment 914 1,058
Exchange differences (263) 226
Amortisation of intangible assets 2,654 2,619
Share based payments 554 132
-------------------------------------------- -------- --------
Operating profit before changes in
working capital and provisions 5,403 5,757
(Increase)/decrease in inventories (11) 35
Decrease/(increase) in trade and other
receivables 1,722 (2,243)
Increase in trade and other payables (1,270) (1,074)
Net cash generated in operating activities 5,844 2,475
-------------------------------------------- -------- --------
5. Events after the Statement of Financial Position Date
As at the date of these statements there were no such events to
report.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR FKBDPFBKDDAD
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