TIDMAFRN
RNS Number : 3259H
Aferian PLC
03 August 2021
AFERIAN PLC
("Aferian", the "Company" or the "Group")
HALF YEAR RESULTS
2025 Strategy driving earnings enhancement
Aferian plc (LSE AIM: AFRN), a software-led global media
technology company that delivers modern TV experiences, announces
unaudited results for the six months ended 31 May 2021 ("H1
2021").
Strategic and operational highlights
-- Significant progress against 2025 strategic goals:
o Double digit growth in both revenue and annual recurring revenue
("ARR") driving improved revenue quality and visibility.
o Double digit growth also achieved in adjusted EBITDA and adjusted
operating profit.
o Acquisition of Nordija, a Danish streaming and Pay TV platform
specialist, for EUR5.3m accelerating the Group's TV as a Service
offering.
o A strong balance sheet to support M&A.
-- Continued focus and investment to drive growth in recurring software
revenues and conversion of the streaming and Pay TV convergence
opportunity.
-- Strategically important deployments with PCCW (Android TV), Canadian
Hockey League (Smart Apps Next-Gen platform), Go Malta and Cablenet
(Pay TV+).
-- Rebrand to Aferian plc to better reflect the true scale, breadth
and potential of the Group's operations and market positioning
at minimal cost.
-- We announce today that the 8% minority shareholders of 24i Unit
Media B.V intend to exercise their right to sell their shares in
24i Unit Media B.V to the Company for either cash or shares, at
the Company's election.
Financial summary
$m unless otherwise stated H1 2021 H1 2020 Change
----------------------------------- ------- ------- ------
Revenue 45.3 38.0 19%
Exit Annual Recurring Revenue
("ARR") (1) 13.8 10.1 37%
Adjusted gross profit (2) 20.6 19.0 8%
Adjusted EBITDA(3) 8.3 7.1 17%
Adjusted operating profit (4) 5.1 4.2 21%
Adjusted profit before tax (4) 4.7 3.9 21%
Adjusted basic earnings per share
(US cents)(4) 5.05c 4.88c 3%
------------------------------------ ------- ------- ------
Statutory gross profit 20.6 19.2 7%
Statutory operating profit 1.9 0.7 171%
Statutory profit before tax 1.5 0.5 200%
Statutory basic earnings per share
(US cents) 1.16c 0.92c 26%
------------------------------------ ------- ------- --------
Net cash(5) 10.1 2.1
------------------------------------ ------- ------- --------
Interim dividend per share (GBP
pence) 1.0 -
------------------------------------ ------- ------- --------
Donald McGarva, CEO of Aferian plc, said:
"Last February we launched our 2025 strategy to drive
software-led growth and capitalise on the structural shifts in the
TV market. Since then, Aferian has moved rapidly to convert the
opportunity in front of us. The focus and dynamism within our
business is delivering results, with a 19% rise in revenues and a
37% increase in recurring revenue, providing greater forward
visibility than ever before."
"Our 2025 strategy targets both organic growth and strategic
M&A. We made the first of our software focussed acquisitions in
May, adding Nordija's streaming and Pay TV platform capabilities to
our market leading 24i business. Having pivoted towards software
and streaming, in June we became Aferian plc to reflect our updated
market positioning at a Group level, with 24i and Amino continuing
as our go-to-market brands."
"We enter the second half of the year with a clear strategy,
building recurring revenues and a strong balance sheet to support
software focussed M&A. The Board remains confident in the
Group's ability to meet current full year expectations and in our
future prospects as we execute our 2025 strategy."
Current trading and outlook
-- The Group has traded well in the first half, driving double digit
revenue and ARR(1) growth, which in combination with earlier customer
hardware orders due to longer supply lead times, provides excellent
visibility.
-- The integration of Nordija is underway and on track and is expected
to be earnings enhancing in the first full financial year of ownership.
-- Aferian enters H2 with a strong balance sheet and in a solid position
to execute on its pipeline of potential M&A opportunities.
-- The Board remains confident in the Group's ability to meet current
full year expectations and in the Group's future prospects as it
executes its 2025 strategy.
This announcement contains information that was previously
Inside Information, as that term is defined in the Market Abuse
Regulation (Regulation (EU) No 596/2014 of the European Parliament
and of the Council of 16 April 2014) and successor UK
legislation.
For the purposes of MAR and Article 2 of Commission Implementing
Regulation (EU) 2016/1055, this announcement is being made on
behalf of the Company by Mark Carlisle, Chief Financial
Officer.
For further information please contact:
Aferian plc +44 (0)1223 598197
Donald McGarva, Chief Executive Officer
Mark Carlisle, Chief Financial Officer
+44 (0)20 7220
finnCap Limited (NOMAD and Broker) 0500
Matt Goode / Simon Hicks - (Corporate Finance)
Tim Redfern / Richard Chambers - (Equity Capital
Markets)
+44 (0)20 3727
FTI Consulting LLP (Financial communications) 1000
Matt Dixon / Emma Hall / Chris Birt / Gregory
Hynes
About Aferian plc
Aferian plc (AIM: AFRN) is a software-led, global Media
Technology company. We deliver modern TV experiences the way
viewers want them, seamlessly integrating streaming and Pay TV
services. Our award-winning Next Generation technology platforms
enable operators, broadcasters and content owners to provide
viewers the choice, usability and convenience they expect.
It is our belief that successful media companies and services
will be those that are most consumer-centric, data driven and
flexible to change. We focus on innovating technologies that enable
our customers stay ahead of evolving viewer demand by providing
smarter, more cost-effective ways of delivering end-to-end modern
TV and video experiences to consumers. By anticipating
technological and behavioural audience trends, our software
solutions empower our customers to heighten viewer enjoyment, drive
growth in audience share and ultimately, their profitability.
Aferian plc has two operating companies: 24i, which focusses on
streaming video experiences, and Amino, which connects Pay TV to
streaming services. Our two complementary companies combine their
products and services to create solutions which ensure that people
can consume TV and video how and when they want it. Our solutions
deliver modern TV and video experiences every day to millions of
viewers globally, via our growing global customer base of over 500
service providers.
Aferian plc is listed on the London Stock Exchange Alternative
Investment Market (AIM: symbol AFRN). Headquartered in Cambridge,
UK, the company has over 350 staff located in offices in San
Francisco, Amsterdam, Helsinki, Copenhagen, Madrid, Porto, Brno,
Buenos Aires and Hong Kong. For more information, please visit
www.aferian.com .
Notes
1. Exit Annual Recurring Revenue (ARR) is annual run-rate recurring revenue as at 31 May 2021.
2. Adjusted gross profit is a non-GAAP measure and excludes exceptional items.
3. Adjusted EBITDA is a non-GAAP measure and excludes
depreciation, amortisation, interest, tax, exceptional items and
share-based payment charges.
4. Adjusted operating profit, adjusted profit before tax and
adjusted basic earnings per share are non-GAAP measures and
excludes amortisation of acquired intangibles, exceptional items,
share-based payment charges, and non-recurring finance income and
expenses.
5. Net cash is cash and cash equivalents less loans and bank borrowings.
Chief Executive Officer's review
Strong first half progress towards our 2025 strategy
At the full year results in February we set out our ambitious
new 2025 strategy to address the convergence of streaming services
and traditional Pay TV. We have an ambition to triple Group
revenues to c$250m and drive recurring revenue as a percentage of
Group software revenues to 70% by 2025.
This new strategy capitalises on the increasing consumer
expectation that we should all be able to connect to the TV and
video we love on any device, at any time, wherever we may be.
Aferian is well positioned to capture this opportunity, making it
easy for people to connect to the TV and video in the way they
want.
During the first half of the year we have made early progress
towards our 2025 strategy. We report revenue of $45.3m (H1 2020:
$38.0m), up 19%, and improved quality of earnings and enhanced
visibility with an exit Annual Recurring Revenue (ARR) of $13.8m
(H1 2020: $10.1m) up 37%. Recurring software revenue is currently
56% (H1 2020: 53%) of total software and services revenue.
We are focussed on building a predictable, software-driven
growth business, while expanding our addressable market both
organically and via targeted M&A. We continue to grow margins
through value-based investments; maintain strong levels of cash
generation; deliver appropriate returns to shareholders; as well as
invest in the future growth of the Company.
In May 2021, we commenced our targeted M&A programme by
securing the acquisition of Nordija, a Danish streaming and Pay TV
platform specialist, for a total consideration of EUR5.3m. As
customers increasingly look to offload the day-to-day burden of
managing and maintaining their end-to-end video platforms to expert
partners like Amino and 24i, this move accelerates our progress in
the TV as a Service ("TVaaS") market. This enables us to better
capture the opportunity created by the convergence of streaming
services and traditional Pay TV, which is where we see the greatest
opportunity for growth.
This acquisition immediately added $2.1m to ARR as well as
bringing specialist capabilities to our team. Nordija has a
reputation of innovation and has brought high quality customers to
the Group including Waoo, Swisscom Broadcast and Telenor Sweden. I
am delighted to welcome Nordija into our growing Group. The
integration of Nordija into 24i has started well and is on track to
be earnings enhancing in the first full financial year of
ownership.
To provide the Group with additional funds to aid execution of
its acquisitive growth strategy, Aferian also completed a share
placing in the period, raising GBP9.4 million. Initially, this was
intended to support a bid and auction process to acquire MobiTV, a
US live TV and on-demand platform provider. Whilst the bid process
was not successful the availability of these additional funds
enhances the Group's position in negotiating and executing future
acquisitions.
Change of name to Aferian plc
Post period end, in June, the Group changed its name from Amino
Technologies plc to Aferian plc. We felt strongly that as our
business evolved, it was right that the Group's name was changed to
enable us to better articulate the nature of business and the
larger opportunity on which our global team is now
capitalising.
The two Aferian plc Group operating companies, 24i and Amino,
will continue to operate under their existing go-to-market brands.
Together they provide a state-of-the-art, Streaming and Pay TV
eco-system that enables over 100 million people around the world to
enjoy the TV and video they love every day.
H1 2021 Key Performance Indicators
Our five key performance indicators demonstrate continued
strategic progress during the first half as we work towards our
2025 strategy goals reporting growth in revenue up 19% and ARR up
37%. Adjusted gross profit margin is slightly lower due to a higher
percentage of lower margin device revenue compared to the prior
period. The Group also continues to generate strong operating cash
flows.
H1 2021 H1 2020
$m $m
------------------------------------------- -------- --------
Total revenue 45.3 38.0
Software and services revenue 9.9 9.7
Annual run rate recurring revenue ("ARR")
at 31 May 13.8 10.1
Adjusted gross profit margin % 45% 50%
Adjusted operating cash flow before tax 4.0 4.8
------------------------------------------- -------- --------
Operational review
24i
24i offers a robust technology platform that streams TV and
video programming to any type of screen. 24i has a 12-year
market-leading position and works with customers like NPO, Telenor,
Pure Flix and Broadway HD.
24i continues to focus on building recurring revenues and has
reported a significant year-on-year increase of 47% in ARR at the
period end, which includes $2.1m from the Nordija acquisition. The
increased focus on driving ARR supports the Group's software-led
strategy. As expected therefore, one-off and non-recurring
professional services-led revenues has declined. As previously
highlighted, we will continue to invest in FY21 both in sales and
marketing and in our products to build our pipeline.
We continue to migrate customers to our industry-leading Smart
Apps Next-Gen platform, which was launched last year. This enables
our customers to deploy faster and more cost-effectively.
Generally, across our platforms, customers are now benefiting from
the worldwide shift to streaming and a user desire for more
flexible viewing powered by our platform. This has resulted in a
23% increase in monthly average active users over the reported
period since last financial year in our Backstage management
system. One key customer has shown 47% growth in video consumption
compared to the same period in 2020.
24i has reported strong organic growth of 120% in monthly
average active users accessing video content via our Smart Video
platform through to May 2021 compared to the same period last year.
This has been driven both by the general growth in streaming
services over the period and by the migration of a significant
population of Pay TV subscribers from legacy systems to 24i's more
flexible and extensible platform.
Enhancements to our Backstage content and application management
interface provide our customers with the ability to control and
monitor the Smart Video backend from within the same online tool
manages the front-end user experience. This makes the benefits of
our end-to-end video solution clearer in the market and has
supported sales of product-based solutions rather than custom
implementations. This drives ARR growth. During the period we
implemented our Smart Apps Next-Gen platform, including Backstage,
for the Canadian Hockey League, together with our partner Verizon
Media.
Amino
Amino seamlessly connects Pay TV to streaming services and
provides the features required in a multiscreen entertainment
world. Amino has a 20-year heritage with customers like PCCW,
Cincinnati Bell, T-Mobile NL and Entel.
During the period Amino grew revenues in the half by 25% to
$37.8m and maintained its strong margins and cash generation. By
offering services that converge linear TV and streaming Amino
delivered several new deployments of its Android TV platform in the
period. These include Go Malta and CableNet in Europe, Optage in
APAC and Conway, Home Telecom and Hay Communications in North
America. These deployments showcase our ability to roll out a next
generation TV experience as operators look to combine the best of
both worlds for linear TV and streaming apps such as Disney+.
Post period end, in APAC, we have completed the implementation
of our Android TV platform and Netflix integration with PCCW in
Hong Kong to enable its Now TV video service. This was done using
Amino's Hailstorm Partnership with Netflix. This partnership cuts
the time to integrate Netflix from as long as 12 months to a few
weeks.
Engage, our leading SaaS device software management, customer
support and analytics solution, continued to grow strongly. 18 new
customers deployed Engage in the period and the user base grew by
22% year-on-year. We regard this solution as a key differentiator
in our competitive landscape.
The global supply chain shortage continues to be a challenge for
businesses globally. This is a market-wide issue and the impact of
Covid-19 continues to be seen in our supply chain. We have seen
extended lead times of key components such as semi-conductors in
the period. We continue to actively manage the situation and are
working closely both with customers on longer-term supply
arrangements to enhance visibility and with suppliers to ensure
timely deliveries of materials. Despite these challenges, we
shipped approximately 30% more devices in H1 2021 compared to H1
2020.
Environmental, Social and Governance ("ESG")
Today we have published our first ESG report. This can be found
on our website at https://aferian.com/esg/. Our approach to ESG
uses the Japanese concept of Ikigai meaning "a reason for being"
and which refers to having a meaningful direction or purpose in
life. The ESG report provides an overview of our progress against
our chosen six of the United Nations Sustainable Development Goals
as well as the Sustainable Accounting Standards Board's ("SASB")
Software and IT Services and Hardware sustainability accounting
standards.
Board change
Post period end, after more than five years on the Group's Board
of Directors, our Non-Executive Chairman, Karen Bach notified the
Board of her intention to step down from her role. During her
tenure, Karen has made a significant contribution to the Group,
including leading the Board as it developed the Group's 2025
strategy, which is already delivering meaningful improvements in
revenue quality and growth.
On behalf of the Board and all of our Aferian employees, I would
like to thank Karen for her service, dedication and support during
her tenure. We have all benefitted from her energy and perspective
and wish her well in her future endeavours. A search process has
commenced to find a new Chair and Karen will continue to serve in
the role until a successor has been appointed.
Current trading and outlook
Overall, the Group has traded well during the first half with
revenue and recurring revenue up and continued improvement in
earnings quality and visibility. In short, we have more visibility
today than ever before as evidenced by further growth in ARR.
Having commenced our targeted M&A programme to capitalise on
the convergence of streaming, the integration of Nordija is
underway and on track.
We enter the second half in a solid position and continue to
strengthen our pipeline of potential M&A opportunities as we
seek to continue to deliver against our 2025 strategy. The Board
remains confident in the Group's ability to meet current full year
expectations and in the Group's future prospects as it executes it
strategy and vision to make it easy for people to connect to the TV
and video they love.
Donald McGarva
Chief Executive Officer
3 August 2021
Chief Financial Officer's review
Revenue increased significantly by 19% to $45.3m (H1 2020:
$38.0m). This strong year on year organic growth resulted in a 21%
increase to adjusted operating profit for the period to $5.1m (H1
2020: $4.2m). Operating profit increased by 171% to $1.9m (H1 2020:
$0.7m) as a result of the revenue growth in the period.
The Group reported gross cash of $17.0m and debt drawn of $6.9m
resulting in net cash at 31 May 2021 of $10.1m (31 May 2020: $2.1m,
30 November 2020: $9.5m). The Group has remaining credit facilities
of $8.1m (31 May 2020: $12.9m; 30 November 2020: $15.0m) to support
further M&A activity and working capital requirements.
Revenue and gross profit
H1 2021 H1 2020 Change
$m $m
------------------------------ -------------- -------------- -------------
Software and services
Revenue
Recurring 5.5 5.1 8%
Non-recurring 4.4 4.6 (4%)
Total revenue 9.9 9.7 2%
Gross profit 7.8 8.0 (3%)
Gross profit margin % 79% 82% (3bps)
------------------------------ -------------- -------------- -------------
Devices including integrated
software
Revenue
Recurring - - -
Non-recurring 35.4 28.3 25%
Total revenue 35.4 28.3 25%
Gross profit 12.8 11.0 16%
Gross profit margin % 36% 39% (3bps)
Total
Revenue
Recurring 5.5 5.1 8%
Non-recurring 39.8 32.9 21%
Total revenue 45.3 38.0 19%
Gross profit 20.6 19.0 8%
Gross profit margin % 45% 50% (5bps)
------------------------------ -------------- -------------- -------------
High margin software and services represent 22% of total
revenues for the period (H1 2020: 26%), of which 56% was recurring
(H1 2020: 53%). This comprises revenues from our 24i division,
upcycling projects, our AminoOS and Amino Engage software (sold
independently from devices) and support for our Amino View devices.
At 31 May 2021 ARR increased significantly to $13.8m (31 May 2020:
$10.1m), which represents year on year growth of 37%.
Volumes of devices shipped in the period increased c30% year on
year resulting in device revenue of $35.4m (H1 2020: $28.3m),
representing a growth rate of 25%. The phasing of revenue in FY20
was impacted by manufacturing facilities shutting down temporarily
in Q2 2020 due to the COVID-19 pandemic.
Software and services gross margin reduced from 82% in H1 2020
to 79% in the current period. This reduction was driven by higher
3(rd) party costs incurred for the set-up phase of projects. On a
full year basis, software and services margins are expected to be
slightly ahead of the prior year.
Device gross margin declined from 39% last year to 36% for the
current period due to phasing and mix of products sold in the
period compared to the prior year. On a full year basis, device
margins are expected to be similar to the prior year.
Segment result
Revenue Segment result
H1 2021 H1 2020 H1 2021 H1 2020
$m $m $m $m
---------------- --------- ----------- ---- ----------- ---------
24i 7.5 7.7 0.2 0.2
Amino 37.8 30.3 9.3 8.0
Central costs - - (1.2) (1.1)
---------------- --------- ----------- ---- ----------- ---------
Total 45.3 38.0 8.3 7.1
---------------- --------- ----------- ---- ----------- ---------
The segment result shown above is in accordance with those shown
to the Chief Operating Decision Maker. Segment result has been
calculated as Adjusted EBITDA for each segment; the Adjusted EBITDA
for the six months to 31 May 2021 was $8.3m (H1 2020: $7.1m).
Adjusted EBITDA is a company specific measure which is calculated
as operating profit before depreciation, interest, tax,
amortisation, exceptional items and employee share-based payment
charges. This is consistent with the way the financial performance
of the Group is presented to the Board and Chief Operating Decision
Maker.
The Directors believe that this provides a more meaningful
comparison of how the business is managed and measured on a
day-to-day basis.
24i segment result
H1 2021 H1 2020
$m $m
---------------------------------------
Software and services 7.5 7.7
Devices including integrated software - -
Revenue 7.5 7.7
Cost of sales (1.9) (1.7)
--------------------------------------- -------- --------
Gross profit margin 5.6 6.0
Gross profit margin % 75% 78%
Operating costs (5.4) (5.8)
--------------------------------------- -------- --------
Segment result 0.2 0.2
Segment margin 3% 3%
Capitalised development costs 2.6 1.6
--------------------------------------- -------- --------
With the increased focus on annualised recurring revenue (ARR),
that aligns to the Group's software-led strategy, ARR has grown
from $6.8m to $10.0m in the last 12 months. This represents
year-on-year growth of 47% and includes $2.1m from the Nordija
acquisition. The decrease in revenue compared to the prior year was
due to fewer one-off professional services led projects.
Segment result (continued)
Amino segment result
H1 2021 H1 2020
$m $m
---------------------------------------
Software and services 2.4 2.1
Devices including integrated software 35.4 28.3
Revenue 37.8 30.4
Cost of Sales (22.8) (17.4)
--------------------------------------- ----------- -----------
Gross profit margin 15.0 13.0
Gross profit margin % 40% 43%
Operating costs (5.7) (5.0)
--------------------------------------- ----------- -----------
Segment result 9.3 8.0
Segment margin 25% 26%
Capitalised development costs 0.9 1.0
--------------------------------------- ----------- -----------
The Amino segment comprises the results of the sales of Amino
devices, related support as well as the AminoOS middleware and
Amino Engage management platform.
Central costs
H1 2021 H1 2020
$m $m
Operating costs (1.2) (1.1)
----------------- -------- --------
Segment result (1.2) (1.1)
----------------- -------- --------
Central costs comprise the costs of the Board, including
executive directors, as well as costs associated with the Company's
listing on the London Stock Exchange.
Capitalised development costs
The Group continues to invest in research and the development of
new products and capitalised $3.5m (H1 2020: $2.6m). This
investment is focussed on driving further growth in recurring
revenue from the Group's 24i NextGen Platforms and Amino device
management SaaS platform.
Operating profit
A reconciliation of Adjusted EBITDA to operating profit is
provided as follows:
H1 2021 H1 2020
$m $m
------------------------------- -------- --------
Adjusted EBITDA 8.3 7.1
Exceptional items (1.4) (0.6)
Share-based payment charge (0.4) (0.3)
Depreciation and amortisation (4.6) (5.5)
------------------------------- -------- --------
Operating profit 1.9 0.7
------------------------------- -------- --------
Exceptional items
Exceptional items within cost of sales were $nil (H1 2020:
$0.2m).
Exceptional items within operating expenses were $1.4m (H1 2020:
$0.8m) and comprised:
-- $0.3m (H1 2020: $0.8m) contingent post-acquisition remuneration
in respect of the acquisition of 24i Unit Media BV;
-- $0.8m (H1 2020: $nil) one-off costs in respect of acquisitions
and legal costs, which includes costs associated with aborted acquisitions;
and
-- $0.3m (H1 2020: $nil) post-acquisition integration and associated
restructuring costs.
Depreciation and amortisation
Excluding amortisation of intangibles recognised on acquisition,
depreciation and amortisation was $3.2m (H1 2020: $3.0m).
Amortisation of intangibles recognised on acquisitions was $1.4m
(H1 2020: $2.5m). The decrease of $1.1m in the period relates to
acquired intangibles from the Entone and Booxmedia acquisitions in
2015 being fully amortised by the end of FY20.
Operating profit
Adjusted operating profit was $5.1m (H1 2020: $4.2m) excluding
share-based payment charges of $0.4m (H1 2020: $0.3m), exceptional
items of $1.4m (H1 2020: $0.6m) and amortisation of intangibles
recognised on acquisition of $1.4m (H1 2020: $2.5m). Statutory
operating profit was $1.9m (H1 2020: $0.7m).
Taxation
The tax charge of $0.8m (H1 2020: $nil) comprises:
-- $1.1m (H1 2020: $0.5m) current tax charge; and
-- $0.3m (H1 2020: $0.5m) credit relating to the unwinding of the
deferred tax liability recognised in respect of the amortisation
of intangible assets recognised on acquisition.
The reason for the increase in the current tax charge is due to
the UK tax losses being fully utilised at the end of FY20.
Profit after tax was $0.7m (H1 2020: $0.5m).
Cash flow
A reconciliation of adjusted operating cash flow before tax to
cash generated from operations before tax is provided as
follows:
H1 2021 H1 2020
$m $m
--------------------------------------------- -------- --------
Adjusted operating cashflow before tax 4.0 4.8
Post-acquisition integration and associated (0.3) -
restructuring costs
Acquisition and one-off legal costs (0.1) -
Aborted acquisition deposit (1.8) -
--------------------------------------------- -------- --------
Cash generated from operations before tax 1.8 4.8
--------------------------------------------- -------- --------
Adjusted cash flow from operations was $4.0m (H1 2020: $4.8m)
and represented 48% of adjusted EBITDA (H1 2020: 68%). The
reduction in adjusted cash flow from operations, and the conversion
to adjusted EBITDA, was due to cash outflow for working capital of
$3.6m (H1 2020: $1.9m). This is primarily due to orders shipped to
customers at the end of H1 2021 with longer average payment terms
than those at the end of FY 2020. In addition one specific customer
order for $3.3m took longer to collect however cash has been
received after the period end date.
Cash generated from operations before tax was $1.8m (H1 2020:
$4.8m). This includes an amount of $1.8m in relation to a deposit
paid for the proposed acquisition of MobiTV. This deposit was
refunded on 2 June 2021 following the completion of the sale of
MobiTV to TiVo Corporation.
Tax payments, principally in respect of UK corporation tax,
totalled $2.8m during the period (H1 2020: $0.6m). The increase is
due to tax losses in the UK being fully utilised by the end of FY
2020 and instalment payments required for the current financial
year.
Cash flow (continued)
During the period the Group spent $0.1m (H1 2020: $0.1m) on
capital expenditure in respect of tangible fixed assets and
capitalised $3.5m of research and development costs (H1 2020:
$2.6m). The increase of $0.9m is due to further investment to drive
further growth in recurring revenue from the Group's 24i NextGen
Platforms and Amino device management SaaS platform.
The acquisition of Nordija included initial cash consideration
of $4.9m, net of cash acquired of $0.1m.
Following the equity placing in May 2021, the Group raised
$12.7m, net of share issue costs. A final dividend in respect of
the year ended 30 November 2020 of $2.0m (H1 2020: $nil) was also
paid during the period.
Financial position
The Group had cash of $17.0m and debt drawn of $6.9m resulting
in a net cash balance at 31 May 2021 of $10.1m (30 November 2020:
$9.5m). The Group has retained the $12.7m net proceeds received
from the equity placing in May 2021. At 31 May 2021 the Group also
had $8.1m (30 November 2020: $15.0m) undrawn on its multicurrency
working capital loan facility, which expires in November 2022.
At 31 May 2021 the Group had total equity of $101.9m (30
November 2020 restated: $88.0m) and net current assets of $5.5m (30
November 2020 restated: net current liabilities assets of $0.5m).
58% of trade receivables were insured (30 November 2020: 51%) and
debtor days were 39 days (30 November 2020: 23 days). Debtor days
increased due to a higher proportion of the period revenue being
recognised in the latter months of the period, compared the prior
year.
It remains the Group's policy to obtain insurance and where this
is not possible, due to the territory or customer involved, payment
in advance is required to a level that limits exposure to the
margin on the sale of devices.
Prior period restatement
During the period we identified that the number of shares used
in the calculation of the put option liability at inception, in
respect of the 8% minority shareholders of 24i Unit Media B.V, a
subsidiary of the Company, was incorrect. As a result, the initial
recognition of the put option liability in FY19 was understated by
$1.1m. The comparative period in the interim financial statements
has therefore been restated. The impact on the comparative
financial information is summarised in note 2.
Dividend
Last year the Company announced a new dividend policy, to
deliver returns to shareholders via growth and income, and
reflecting the Company's growth ambitions. This policy of paying
between 33-50% of adjusted EPS in dividend is expected to provide
shareholders with a growing income stream whilst allowing the
Company to invest in growth.
The Board intends to pay an interim dividend of 1.0 GBP pence
(1.38 US cents) per share (H1 2020: nil GBP pence). This interim
dividend will be payable on 2 September 2021, to shareholders on
the register on 13 August 2021, with a corresponding ex-dividend
date of 12 August 2021.
Going concern
In carrying out the going concern assessment, the Directors have
considered a number of scenarios, taking account of the possible
impacts of the pandemic, in relation to revenue forecasts for the
next 12 months. The current global economic conditions continue to
create uncertainty, and specific to the Group, recognising the
strength and flexibility of the Group's software-led strategy,
there are potential risks that the Group will be impacted by
decisions further up our supply chain. This could lead to delays in
contract negotiations and deferring or cancelling of anticipated
sales, and that sales and settlement of existing debts are impacted
too.
In reaching their going concern assessment, the Directors have
considered the foreseeable future, a period extending at least 12
months from the date of approval of this interim financial report.
This assessment has included consideration of the forecast
performance of the business, as noted above, the payment of
proposed dividends and deferred contingent consideration, and the
cash and financing facilities available to the Group. In light of
all of this analysis, the Directors are satisfied that, even if
this downside scenario were to occur, the Group has sufficient cash
resources over the period of at least 12 months from the date of
approval of the interim consolidated financial statements. As such,
the interim consolidated financial statements have been prepared on
a going concern basis.
Brexit
The United Kingdom ("UK") formally left the European Union
("EU") on 30 January 2020. The transition period ended on 31
December 2020, where upon the UK-EU Trade & Cooperation
Agreement (together with other connected Agreements concluded on by
the UK and EU, which includes the Exchanging and Protecting of
Classified Information Agreement) signed on the 24 December 2020
came into effect.
The effects of the UK's current transitional period outside the
EU and the adoption of the UK-EU Trade & Cooperation Agreement
has not had a significant impact on the Group's operations nor does
the Group consider it likely that it will be significantly impacted
in the future due to the global geographical footprint of the
business. However, the Group continues to monitor the situation so
it can manage the risk of any volatility in the global financial
markets, that could arise due to Brexit, and the effect on global
economic performance.
Principal risks and uncertainties
The principal risks and uncertainties facing the Group remain
consistent with the principal risks and uncertainties reported in
Aferian's 2020 Annual Report.
The impact of COVID-19 on the Group continues to not be as
marked as other organisations. However, the full effect on the
business still requires focus and real time management of the
working practices, health and wellbeing of our global workforce and
the risk of delays to the global supply chain for components used
in Amino devices. As the COVID-19 pandemic continues, it is not yet
clear when global economic activity will recover to pre-pandemic
levels.
Mark Carlisle
Chief Financial Officer
3 August 2021
Consolidated Income Statement
For the six months ended 31 May 2021
Six months Six months ended
ended 31 May 2020
31 May 2021 Unaudited
Unaudited
Notes $000s $000s
-------------------------------------- ----- ------------ ----------------
Revenue 3 45,286 38,033
Cost of sales (24,667) (18, 796)
-------------------------------------- ----- ------------ ----------------
Gross profit 20,619 19,237
Operating expenses (18,763) (18,540)
Operating profit 1,856 697
Analysed as:
Adjusted operating profit 5,088 4, 172
Share based payment charge (394) ( 334)
Exceptional items 5 (1,414) ( 646)
Amortisation of acquired intangible
assets (1,424) ( 2,495)
-------------------------------------- ----- ------------ ----------------
Operating profit 1,856 697
----------------
Finance expense (561) ( 318)
Finance income 179 73
-------------------------------------- ----- ------------ ----------------
Net finance expense (382) (245)
-------------------------------------- ----- ------------ ----------------
Profit before tax 1,474 452
Tax (charge)/credit (803) 33
-------------------------------------- ----- ------------ ----------------
Profit after tax 671 485
-------------------------------------- ----- ------------ ----------------
Profit for the period from continuing
operations attributable to equity
holders 888 697
Non-controlling interest (217) (212)
-------------------------------------- ----- ------------ ----------------
Profit for the period 671 485
-------------------------------------- ----- ------------ ----------------
Basic earnings per 1p ordinary share 6 1.16c 0.92c
Diluted earnings per 1p ordinary
share 6 1.14c 0.88c
-------------------------------------- ----- ------------ ----------------
Consolidated Statement of Comprehensive Income
For the six months ended 31 May 2021
Six months ended Six months ended
31 May 2021 31 May 2020
Unaudited Unaudited
$000s $000s
------------------------------------------ ---------------- ----------------
Profit for the period 671 485
------------------------------------------ ---------------- ----------------
Foreign exchange difference arising on
consolidation 828 57
------------------------------------------ ---------------- ----------------
Other comprehensive income 828 57
------------------------------------------ ---------------- ----------------
Total comprehensive income for the period 1,499 542
------------------------------------------ ---------------- ----------------
Consolidated Balance Sheet
As at 31 May 2021
As at As at
31 May 2021 30 November
2020
Notes Unaudited Restated
(see note 2)
Assets $000s $000s
----------------------------------- ------- ------------ -------------
Non-current assets
Property, plant and equipment 647 510
Right of use assets 2,314 2,634
Intangible assets 8 100,531 92,067
Deferred tax assets - -
Other receivables 239 215
----------------------------------- ------- ------------ -------------
103,731 95,426
----------------------------------- ------- ------------ -------------
Current assets
Inventories 2,872 2,956
Trade and other receivables 21,428 14,422
Corporation tax receivable 431 242
Cash and cash equivalents 17,026 9,476
----------------------------------- ------- ------------ -------------
41,757 27,096
----------------------------------- ------- ------------ -------------
Total assets 145,488 122,522
----------------------------------- ------- ------------ -------------
Capital and reserves attributable
to equity holders of the business
Called-up share capital 9 1,462 1,367
Share premium 35,907 35,907
Shares to be issued 11 1,269 -
Capital redemption reserve 12 12
Foreign exchange reserves 550 (276)
Merger reserve 9 42,750 30,122
Other reserve (2,794) (2,794)
Retained earnings 22,753 23,475
----------------------------------- ------- ------------ -------------
Equity attributable to the owners
of the parent 101,909 87,813
----------------------------------- ------- ------------ -------------
Non-controlling interest (20) 195
----------------------------------- ------- ------------ -------------
Total equity 101,889 88,008
----------------------------------- ------- ------------ -------------
Liabilities
Current liabilities
Trade and other payables 28,072 24,861
Lease liabilities 1,195 1,187
Corporation tax payable - 1,461
Loans and borrowings 10 6,968 130
----------------------------------- ------- ------------ -------------
36,235 27,639
----------------------------------- ------- ------------ -------------
Consolidated Balance Sheet (continued)
As at 31 May 2021
As at As at
31 May 2021 30 November
2020
Unaudited Restated
(see note 2)
$000s $000s
----------------------------- ------------ -------------
Non-current liabilities
----------------------------- ------------ -------------
Trade and other payables 318 176
Lease liabilities 1,196 1,524
Provisions 1,236 1,227
Deferred tax liability 4,614 3,948
------------------------------ ------------ -------------
7,364 6,875
----------------------------- ------------ -------------
Total liabilities 43,599 34,514
------------------------------ ------------ -------------
Total equity and liabilities 145,488 122,522
------------------------------ ------------ -------------
Consolidated Cash Flow Statement
For the six months ended 31 May 2021
Six months Six months
ended 31 May ended 31 May
2021 2020
Unaudited Unaudited
Notes $000s $000s
---------------------------------------------- ----- ------------- -------------
Cash flows from operating activities
Cash generated from operations 7 1,816 4,798
Net corporation tax paid (2,823) ( 597)
---------------------------------------------- ----- ------------- -------------
Net cash (used in)/generated from operating
activities (1,007) 4,201
---------------------------------------------- ----- ------------- -------------
Cash flows from investing activities
Expenditure on intangible assets (3,504) ( 2,578)
Purchase of property, plant and equipment (136) ( 87)
Interest received - 44
Acquisition of subsidiary, net of cash
acquired 11 (4,901) -
---------------------------------------------- ----- ------------- -------------
Net cash used in investing activities (8,541) ( 2,621)
---------------------------------------------- ----- ------------- -------------
Cash flows from financing activities
Proceeds from exercise of employee share
options 128 -
Proceeds from issue of new shares (net
of expenses) 9 12,723 -
Interest paid (51) (142)
Repayment of borrowings - (5,236)
Lease payments (640) (550)
Proceeds from borrowings 6,887 -
Dividends paid (1,969) -
---------------------------------------------- ----- ------------- -------------
Net cash generated from / (used in) financing
activities 17,078 (5, 928)
---------------------------------------------- ----- ------------- -------------
Net increase / (decrease) in cash and
cash equivalents 7,530 ( 4,348)
Cash and cash equivalents at start of
the period 9,476 8,612
Effects of exchange rate fluctuations
on cash held 20 4
---------------------------------------------- ----- ------------- -------------
Cash and cash equivalents at end of period 17,026 4,268
---------------------------------------------- ----- ------------- -------------
Consolidated Statement of Changes in Equity
For the six months ended 31 May 2021
Total
Shares Put Foreign Capital Profit attributable
Share Share to be Merger option exchange redemption and to owners Non-controlling Total
capital premium issued reserve reserve reserve reserve loss of parent interest equity
Notes $000s $000s $000s $000s $000s $000s $000s $000s $000s $000s $000s
-------------- ----- ------- ------- ------ ------- ------- -------- ---------- ------- ------------ --------------- -------
Shareholders'
equity
at 30
November 2019
(previously
reported) 1,367 35,907 - 30,122 (1,750) (3,461) 12 19,790 81,987 598 82,585
-------------- ----- ------- ------- ------ ------- ------- -------- ---------- ------- ------------ --------------- -------
Prior year
adjustment 2 - - - - (1,044) - - - (1,044) - (1,044)
-------------- ----- ------- ------- ------ ------- ------- -------- ---------- ------- ------------ --------------- -------
Shareholders'
equity
at 30
November 2019
(restated) 1,367 35,907 - 30,122 (2,794) (3,461) 12 19,790 80,943 598 81,541
-------------- ----- ------- ------- ------ ------- ------- -------- ---------- ------- ------------ --------------- -------
Profit for the
year - - - - - - - 3,087 3,087 (424) 2,663
Other
comprehensive
income - - - - - 3,185 - - 3,185 21 3,206
-------------- ----- ------- ------- ------ ------- ------- -------- ---------- ------- ------------ --------------- -------
Total
comprehensive
income
for the year
attributable
to equity
holders - - - - - 3,185 - 3,087 6,272 (403) 5,869
-------------- ----- ------- ------- ------ ------- ------- -------- ---------- ------- ------------ --------------- -------
Share based
payment
charge - - - - - - - 572 572 - 572
Exercise of
employee
share options - - - - - - - 26 26 - 26
-------------- ----- ------- ------- ------ ------- ------- -------- ---------- ------- ------------ --------------- -------
Total
transactions
with
owners - - - - - - - 598 598 - 598
-------------- ----- ------- ------- ------ ------- ------- -------- ---------- ------- ------------ --------------- -------
Total movement
in
shareholders'
equity - - - - - 3,185 - 3,685 6,870 (403) 6,467
-------------- ----- ------- ------- ------ ------- ------- -------- ---------- ------- ------------ --------------- -------
Shareholders'
equity
at 30
November 2020
(restated) 1,367 35,907 - 30,122 (2,794) (276) 12 23,475 87,813 195 88,008
-------------- ----- ------- ------- ------ ------- ------- -------- ---------- ------- ------------ --------------- -------
Profit for the
period - - - - - - - 888 888 (217) 671
Other
comprehensive
income - - - - - 826 - - 826 2 828
-------------- ----- ------- ------- ------ ------- ------- -------- ---------- ------- ------------ --------------- -------
Total
comprehensive
income
for the year
attributable
to equity
holders - - - - - 826 - 888 1,714 (215) 1,499
-------------- ----- ------- ------- ------ ------- ------- -------- ---------- ------- ------------ --------------- -------
Share based
payment
charge - - - - - - - 359 359 - 359
Issue of share
capital 9 95 - - 12,628 - - - - 12,723 - 12,723
Shares to be
issued as
part of
consideration 11 - - 1,269 - - - - - 1,269 - 1,269
Dividend paid - - - - - - - (1,969) (1,969) - (1,969)
Total
transactions
with
owners 95 - 1,269 12,628 - - - (1,610) 12,382 - 12,382
-------------- ----- ------- ------- ------ ------- ------- -------- ---------- ------- ------------ --------------- -------
Total movement
in
shareholders'
equity 95 - 1,269 12,628 - 826 - (722) 14,096 (215) 13,881
-------------- ----- ------- ------- ------ ------- ------- -------- ---------- ------- ------------ --------------- -------
Shareholders'
equity
at 31 May
2021 1,462 35,907 1,269 42,750 (2,794) 550 12 22,753 101,909 (20) 101,889
-------------- ----- ------- ------- ------ ------- ------- -------- ---------- ------- ------------ --------------- -------
Notes to the interim condensed consolidated financial
information
Six months ended 31 May 2021
1 General information
Aferian plc ('the Company') and its subsidiaries (together 'the
Group') specialise in the delivery of next generation video
experiences over IP using its end-to-end solution. This comprises
the 24i online video solution and Amino set-top box devices and
associated operating and device management software.
The Company is a public limited company which is listed on the
AIM market of the London Stock Exchange and is incorporated and
domiciled in England and Wales.
2 Basis of preparation
These interim consolidated financial statements have been
prepared using accounting policies based on International
accounting standards in conformity with the requirements of the
Companies Act 2006. They do not include all disclosures that would
otherwise be required in a complete set of financial statements and
should be read in conjunction with the 30 November 2020 Annual
Report. The financial information for the six months ended 31 May
2021 and 31 May 2020 does not constitute statutory accounts within
the meaning of Section 434 (3) of the Companies Act 2006 and both
periods are unaudited.
The annual financial statements of Aferian Plc ('the Group') are
prepared in accordance with International accounting standards in
conformity with the requirements of the Companies Act 2006. The
statutory Annual Report and Financial Statements for 2020 have been
filed with the Registrar of Companies. The Independent Auditors'
Report on the Annual Report and Financial Statements for the year
ended 30 November 2020 was unmodified, did not draw attention to
any matters by way of emphasis and did not contain a statement
under 498(2) - (3) of the Companies Act 2006.
The Group has applied the same accounting policies and methods
of computation in its interim consolidated financial statements as
in its 2020 annual financial statements.
Going Concern
In March 2020, the World Health Organisation declared a global
pandemic due to the COVID-19 virus that has spread across the
globe, causing different governments and countries to enforce
restrictions on people movements, a stop to international travel,
and other precautionary measures. In the short term this affected
the Group's supply chain operations, as well as employees
throughout the Group having to work remotely from home. The Group
implemented efficient and appropriate measures to limit the impact
of COVID-19 on the results of the business and its future
operations, and the directors believe that the business has been
able to navigate through the impact of COVID-19 due to the strength
of its customer proposition, its balance sheet, its cash position
and its available working capital.
In carrying out the going concern assessment, the Directors have
considered a number of scenarios, taking account of the possible
impacts of the pandemic, in relation to revenue forecasts for the
next 12 months. The current global economic conditions continue to
create uncertainty, and specific to the Group, recognising the
strength and flexibility of the Group's software-led strategy,
there are potential risks that the Group will be impacted by
decisions further up our supply chain. This could lead to delays in
contract negotiations and deferring or cancelling of anticipated
sales, and those sales and settlement of existing debts are
impacted too.
In reaching their going concern assessment, the Directors have
considered the foreseeable future, a period extending for at least
12 months from the date of approval of this interim financial
report. This assessment has included consideration of the forecast
performance of the business, the payment of proposed dividends and
deferred contingent consideration, as noted above, and the cash and
financing facilities available to the Group. In light of all of
this analysis, the Directors are satisfied that, even if this
downside scenario were to occur, the Group has sufficient cash
resources over the period of at least 12 months of the date of
approval of the interim consolidated financial statements. As such,
the interim consolidated financial statements have been prepared on
a going concern basis.
2 Basis of preparation (continued)
On 12 July 2019, the Group entered into a put option agreement
with regards to the remaining shares not held by the Group in 24i
Unit Media BV.
The option was valued at $1,750,000 on initial recognition.
However during the period it has been identified that the number of
shares used in the calculation was understated. The put option
liability should have been valued at $2,794,000 on initial
recognition. In addition, the finance charge since inception should
have been higher due to this error. A summary of the impact on the
interim financial statements is as follows:
-- An increase of $1,044,000 to trade and other payables within current
liabilities, and an increase of $1,044,000 to other reserves within
equity as at 30 November 2020.
-- The increased finance expense from initial recognition to 30 November
2020 of $218,000 has been included within the H1 2021 consolidated
income statement.
The Consolidated Balance Sheet and Consolidated Statement of
Changes in Equity have been restated to reflect the above. There
was no impact on the Consolidated Cash Flow Statement.
The Board of Directors approved this interim report on 3 August
2021.
3 Revenue
The geographical analysis of revenue from external customers
generated by the identified operating segment is:
Six months ended Six months
31 May 2021 ended
Unaudited 31 May 2020
Unaudited
$000s $000s
------------------ ---------------- ------------
North America 16,845 13,224
Latin America 7,077 6,632
Netherlands 15,589 10,147
Rest of EMEA 4,751 6, 997
------------------ ---------------- ------------
EMEA 20,340 17,144
Rest of the World 1,024 1, 033
------------------ ---------------- ------------
45,286 38,033
------------------ ---------------- ------------
The Group's revenue disaggregated by product is as follows:
Six months ended Six months
31 May 2021 ended
Unaudited 31 May 2020
Unaudited
$000s $000s
--------------------------------------- ---------------- ------------
Devices incorporating integrated Amino
software and associated accessories 35,382 28,292
Software and services 9,904 9,741
--------------------------------------- ---------------- ------------
45,286 38,033
--------------------------------------- ---------------- ------------
4 Segmental analysis
Operating segments are reported in a manner consistent with the
internal reporting provided to the Aferian plc chief operating
decision maker ("CODM") for the use in strategic decision making
and monitoring of performance. The CODM has been identified as the
Group Chief Executive and the Chief Financial Officer. The CODM
reviews the Group's internal reporting in order to assess
performance and allocate resources. Performance of the operating
segments is based on adjusted EBITDA. Information provided to the
CODM is measured in a manner consistent with that in the Financial
Statements.
The Group reports three operating segments to the CODM:
-- the development and sale of TV centric devices and solutions, including
licensing and support services ("Amino");
-- development and sale of online video solutions ("24i"); and
-- central costs which comprise the costs of the Board, including the
executive directors as well as costs associated with the Company's
listing on the London Stock Exchange.
Revenues and costs by segment are shown below.
24i Central
Amino $000s costs Total
2021 $000s $000s $000s
Software and
Revenue services 2,433 7,471 - 9,904
Devices * 35,382 - - 35,382
----------------------------------------- --------- -------- -------- ---------
Total 37,815 7,471 - 45,286
% Recurring 5% 47% - 12%
Cost of sales (22,781) (1,886) - (24,667)
------------------------------------------ --------- -------- -------- ---------
Gross profit 15,034 5,585 - 20,619
Operating expenses (5,745) (5,336) (1,225) (12,306)
------------------------------------------ --------- -------- -------- ---------
Segment result 9,289 249 (1,225) 8,313
Exceptional
items Operating expenses (1,414)
Share based payment charge (394)
Depreciation, amortisation,
and loss on disposal of fixed
assets (4,649)
------------------------------------------ --------- -------- -------- ---------
Operating profit 1,856
Net finance
expense (382)
------------------------------------------ --------- -------- -------- ---------
Profit before
tax 1,474
------------------------------------------ --------- -------- -------- ---------
Additions to non-current assets:
Capitalised development costs 903 2,601 - 3,504
------------------------------------------ --------- -------- -------- ---------
* incorporating integrated Amino software and associated
accessories.
4 Segmental analysis (continued)
24i Central
Amino $000s costs Total
2020 $000s $000s $000s
Software and
Revenue services 2,065 7,676 - 9,741
Devices * 28,292 - - 28,292
----------------------------------------- --------- -------- ---------- ---------
Total 30,357 7,676 - 38,033
% Recurring 6% 44% - 13%
Cost of sales (17,355) (1,638) - (18,993)
------------------------------------------ --------- -------- ---------- ---------
Gross profit 13,002 6,038 - 19,040
Operating expenses (4,990) (5,801) (1,117) (11,908)
------------------------------------------ --------- -------- ---------- ---------
Segment result 8,012 237 (1,117) 7,132
Exceptional
items Cost of sales 196
Operating expenses (842)
Share based payment charge (334)
Depreciation, amortisation,
and loss on disposal of fixed
assets (5,455)
------------------------------------------ --------- -------- ---------- ---------
Operating profit 697
Net finance
expense (245)
------------------------------------------ --------- -------- ---------- ---------
Profit before
tax 452
------------------------------------------ --------- -------- ---------- ---------
Additions to non-current assets:
Capitalised development costs 963 1,615 - 2,578
------------------------------------------ --------- -------- ---------- ---------
* incorporating integrated Amino software and associated
accessories.
5 Exceptional items
Exceptional items included within cost of sales and operating
expenses comprised:
Six months ended Six months ended
31 May 2021 31 May 2020
Unaudited Unaudited
$000s $000s
-------------------------------------------------- ---------------- ----------------
Credit relating to royalty costs recognised
in prior years and subsequently negotiated - ( 196)
-------------------------------------------------- ---------------- ----------------
Subtotal cost of sales - ( 196)
-------------------------------------------------- ---------------- ----------------
Post-acquisition integration and associated
restructuring costs 305 -
Acquisition and one-off legal costs 362 72
Aborted acquisition costs 465 -
Expensed contingent post-acquisition remuneration
in respect of the acquisition of 24i Unit
Media BV 282 770
-------------------------------------------------- ---------------- ----------------
Subtotal operating expenses 1,414 842
-------------------------------------------------- ---------------- ----------------
Total exceptional items 1,414 646
-------------------------------------------------- ---------------- ----------------
Within finance income is an exceptional credit of $179,000 (H1
2020: $nil) in relation to the movement in contingent
consideration. Furthermore within finance expense is an exceptional
debit of $218,000 being the increased finance expense in relation
to the put option restatement, see note 2.
The Group identifies and reports material, non-recurring and
incremental costs and income as exceptional items separately from
underlying operating expenses and income. Exceptional and other
costs may include: restructuring costs (as defined in IAS 37
Provisions, Contingent Liabilities and Contingent Assets), legal
and professional advisors fees in respect of acquisition costs,
including aborted acquisitions, and the release of royalty costs
recognised in prior years and subsequently renegotiated.
Exceptional income comprises material amounts outside the course of
normal trading activities.
6 Earnings per share
Six months ended Six months ended
31 May 2021 31 May 2020
Unaudited Unaudited
$000s $000s
---------------------------------------------- ---------------- ----------------
Profit attributable to shareholders 888 697
---------------------------------------------- ---------------- ----------------
Exceptional items 1,414 646
Share-based payment charges 394 334
Finance income (see note 5) (179) -
Finance expense (see note 5) 218 -
Amortisation of acquired intangible assets 1,424 2,495
---------------------------------------------- ---------------- ----------------
Tax effect thereon (295) ( 466)
---------------------------------------------- ---------------- ----------------
Profit attributable to shareholders excluding
exceptional items, share-based payments
and amortisation of acquired intangibles
and associated taxation 3,864 3,706
---------------------------------------------- ---------------- ----------------
Number Number
Weighted average number of shares (Basic) 76,590,374 76,030,228
---------------------------------------------- ---------------- ----------------
Weighted average number of shares (Diluted) 77,780,937 78,972,089
---------------------------------------------- ---------------- ----------------
Basic earnings per share (cents) 1.16 0.92
Diluted earnings per share (cents) 1.14 0.88
---------------------------------------------- ---------------- ----------------
Adjusted basic earnings per share (cents) 5.05 4.88
Adjusted diluted earnings per share (cents) 4.97 4.69
---------------------------------------------- ---------------- ----------------
The calculation of basic earnings per share is based on profit
after taxation and the weighted average number of ordinary shares
of 1p each in issue during the period, as adjusted for shares held
by an Employee Benefit Trust and held by the Company in
treasury.
Adjusted earnings per share is a non-GAAP measure and therefore
the approach may differ between companies.
For diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
dilutive potential ordinary share options and deferred
consideration equity instruments. The Group has only one category
of dilutive potential ordinary share options: those share options
where the exercise price is less than the average market price of
the Company's ordinary shares during the year.
7 Cash generated from operations
Six months ended Six months ended
31 May 2021 31 May 2020
Unaudited Unaudited
$000s $000s
------------------------------------------------ ---------------- ----------------
Profit before tax 1,474 452
Net finance expense 382 245
Amortisation charge 3,923 4,828
Depreciation of right of use assets 596 503
Depreciation of property, plant & equipment 130 118
Loss on disposal of property, plant & equipment - 6
Share based payment charge 394 334
Exchange differences 304 180
Decrease/(increase) in inventories 84 (63)
(Increase)/decrease in trade and other
receivables (4,207) 777
Increase/(decrease) in provisions 9 (98)
Increase/(decrease) in trade and other
payables 481 ( 2,484)
Aborted acquisition deposit (1,754) -
------------------------------------------------ ---------------- ----------------
Cash generated from operations before tax 1,816 4,798
------------------------------------------------ ---------------- ----------------
Adjusted operating cash flow before tax was $4.0m (H1 2020:
$4.8m) and is reconciled to cash generated from operations before
tax as follows:
Six months ended Six months ended
31 May 2021 31 May 2020
Unaudited Unaudited
$000s $000s
------------------------------------------ ---------------- ----------------
Adjusted operating cashflow before tax 3,986 4,831
------------------------------------------ ---------------- ----------------
Redundancy and associated costs (312) -
Acquisition and one-off legal costs (104) (33)
Aborted acquisition deposit (1,754) -
Cash generated from operations before tax 1,816 4,798
------------------------------------------ ---------------- ----------------
Adjusted cash generated from operations before tax is a non-GAAP
measure and excludes cash from exceptional items.
7 Cash generated from operations (continued)
Six months ended Six months ended
31 May 2021 31 May 2020
Unaudited Unaudited
$000s $000s
--------------------------------------- ---------------- ----------------
Adjusted EBITDA 8,313 7,132
Adjusted operating cashflow conversion
% 48% 68%
Exceptional items (1,414) (646)
Share based payment charge (394) (334)
--------------------------------------- ---------------- ----------------
EBITDA 6,505 6,152
--------------------------------------- ---------------- ----------------
Operating cashflow conversion % 28% 78%
--------------------------------------- ---------------- ----------------
Adjusted EBITDA is a non-GAAP measure and is defined as earnings
before interest, taxation, depreciation, loss on disposal of
property, plant and equipment, amortisation, exceptional items and
share based payment charges.
8 Intangible assets
Movements in intangible assets comprised:
$000
-------------------------------------------- --------
Intangible assets - as at 30 November 2020 92,067
Acquisition of subsidiary (note 11) 8,115
Additions 3,504
Amortisation (3,923)
Movement in foreign exchange 768
Intangible assets - as at 31 May 2021 100,531
-------------------------------------------- --------
9 Share capital and merger reserve
As at As at
31 May 2021 30 November
2020
$000s $000s
---------------------------------------- ------------- -------------
Allotted, called up and fully paid
84,783,857 (2019: 78,069,571) Ordinary
shares of 1p each 1,462 1,367
---------------------------------------- ------------- -------------
During the Period, the Group conducted a non-pre-emptive placing
of 6,714,286 new ordinary shares at GBP1.40 per share generating
gross proceeds of $13,332,000 (GBP9,400,000). The placing was
undertaken using a cashbox structure. As a result, the Group was
able to take relief under section 610 of the Companies Act 2006
from crediting share premium and instead transfer the net proceeds
in excess of the nominal value to the merger reserve. Advisors'
fees of $609,000 have been netted off against the gross proceeds.
Net proceeds received by the Group was thus $12,723,000.
10 Loans and borrowings
As at As at
31 May 2021 30 November
2020
$000s $000s
------------------------- ------------- -------------
Bank loan and overdrafts 6,968 130
------------------------- ------------- -------------
There is no difference between the book value and the fair value
of the bank loan. The bank loan is denominated in USD and the rate
at which the loan is payable is 1.5% above bank reference rate. The
bank loan is secured by a fixed and floating charge over all assets
of the Group.
The Group has a $15,000,000 borrowing facility in the form of a
revolving credit facility that allows the Group to repay and draw
down loans during the initial three-year term and includes a
$5,000,000 overdraft facility of which $4,687,000 was used at 31
May 2021. During the period, the Group also drew down $2,200,000
from the facility which was repaid in full on 30 June 2021. As at
31 May 2021, the remaining loan balance of $81,000 relates to the
capitalised fees over the three-year term of the facility.
11 Acquisition of subsidiaries
On 27 May 2021 the Group acquired 100% of the issued share
capital of Nordija A/S, a Danish incorporated entity whose
principal activities are as a streaming and Pay TV platform
specialist, for EUR5.3m ($6.5m).
Nordija was acquired to enhance and scale the Group's end-to-end
video streaming portfolio. Nordija brings high quality customers to
the Group and its strong TV as a Service platform software, an
expert team and deep experience with a wide ecosystem of technology
partners and customers. The acquisition was completed in Euros.
The amounts recognised in respect of the identifiable assets
acquired and liabilities assumed below are currently estimated. A
full review of identifiable assets will be completed and updated in
the Group annual report to 30 November 2021.
Estimated Estimated Estimated
Book value Fair value adjustment Fair value
$000s $000s $000s
------------------------------------------------- ----------- ---------------------- -----------
Identifiable intangible assets 2,449 2,460 4,909
Right of use assets 228 - 228
Property, plant and equipment 114 - 114
Non-current trade and other
receivables 42 - 42
Current assets
* Current trade and other receivables 372 (100) 272
* Cash and cash equivalents 137 - 137
Liabilities
* Current trade and other payables (1,136) (93) (1,229)
* Lease liability (228) - (228)
* Deferred tax liability (421) (541) (962)
Total identifiable assets
and liabilities 1,557 1,726 3,283
------------------------------------------------- ----------- ---------------------- -----------
Goodwill 3,206
------------------------------------------------- ----------- ---------------------- -----------
Total consideration 6,489
------------------------------------------------- ----------- ---------------------- -----------
11 Acquisition of subsidiaries (continued)
Satisfied by: Fair value
$000
------------------------------------------------------------ -----------
Initial consideration:
* Cash 5,038
* Equity instruments (315,511 ordinary shares of
Aferian plc) 659
Deferred consideration:
* Cash 182
* Equity instruments (292,330 ordinary shares of
Aferian plc) 610
Total consideration transferred 6,489
Net cash outflow arising on acquisition
Cash consideration 5,038
Less: cash and cash equivalent balances acquired (137)
Net cash outflow on acquisition 4,901
------------------------------------------------------------ -----------
The estimated fair value of the financial assets includes trade
receivables with a fair value of $0.4m and a gross contractual
value of $0.5m. The best estimate at acquisition date of the
contract cash flows not to be collected is $0.1m.
The estimated goodwill of $3.2m arising from the acquisition
consists of expected growth in the sale of online video apps and
solutions. None of the goodwill is expected to be deductible for
income tax purposes.
The initial shares consideration of EUR0.5m ($0.6m) was based on
the volume weighted average share price for the 20 trading days
prior to the acquisition. The shares were issued on 2 June 2021.
Total consideration transferred includes EUR0.7m ($0.8m) of
deferred consideration. Included in this amount is EUR0.1m ($0.2m)
of deferred cash. The remaining balance of EUR0.6m ($0.6m) is
payable through the issue of ordinary shares of Aferian plc. The
deferred consideration payment is dependent upon Nordija achieving
certain milestones in a respect of an existing customer contract.
The deferred consideration is expected to be settled within 12
months of the acquisition date.
The costs of the acquisition were $0.4m. No revenue or profit
between the date of acquisition and the balance sheet date has been
included within the results to 31 May 2021 as the contribution was
deemed to be immaterial. If the acquisition of Nordija had been
completed on the first day of the financial period, Group revenues
for the period would have been $47.3m and Group profit after tax
would have been $0.9m.
12 Cautionary statement
This document contains certain forward-looking statements
relating to 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
IR UPUAGRUPGPUP
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