TIDMAFRN
RNS Number : 2346B
Aferian PLC
10 February 2022
10 February 2022
AFERIAN PLC
("Aferian", the "Company" or the "Group")
FULL YEAR RESULTS FOR THE YEARED 30 NOVEMBER 2021
Double digit revenue and profit growth
Improved quality of earnings and enhanced revenue visibility
achieved
Aferian plc (LSE AIM: AFRN), the B2B video streaming solutions
company, announces its results for the year ended 30 November
2021.
Donald McGarva, Chief Executive Officer of Aferian plc,
said:
"I am proud of the strong performance we've achieved in our
first full year of executing and innovating against our 2025
strategy. We have delivered double digit growth across the majority
of our key performance metrics and significantly improved our
quality of earnings and revenue visibility with an exit run rate
ARR up 43% on the previous year. This strong performance was
delivered thanks to the incredible teamwork, resilience and hard
work of our people and despite ongoing uncertainty brought on by
the pandemic and global supply chain issues.
"We enter 2022 in a strong position both financially and
operationally. Aferian sits at the centre of the converging worlds
of streaming services and traditional Pay TV. This convergence
excites our customers, engages viewers and energises our product
teams as we continue to innovate new ways to make it easy for
people to connect to TV and video when and how they want."
Financial Key Figures
US$m unless otherwise stated 2021 2020 Change
%
----------------------------------- ------ ------ -------
Revenue 92.9 82.7 12%
Exit run rate Annual Recurring
Revenue (ARR) (1) 15.2 10.6 43%
Statutory gross profit 44.9 40.7 10%
Statutory operating profit 5.7 5.1 12%
Statutory operating cash flow
before tax 14.1 16.8 (16%)
Statutory basic earnings per
share (US cents) 7.52 4.06 85%
----------------------------------- ------ ------ -------
Adjusted gross profit (2) 44.7 39.7 13%
Adjusted operating profit (3) 11.8 10.5 12%
Adjusted operating cash flow
before tax (4) 16.7 18.2 (8%)
Adjusted basic earnings per share
(US cents) (5) 11.45 10.07 14%
----------------------------------- ------ ------ -------
Net cash 14.2 9.5 49%
Dividend per share (pence) 3.09 1.87 65%
Notes
(1) Exit run rate ARR is annual run-rate recurring revenue as at
30 November 2021.
(2) Adjusted gross profit is a non-GAAP measure and excludes exceptional
items. Further details of these adjustments are set out in note
4.
(3) Adjusted operating profit is a non-GAAP measure and excludes
amortisation of acquired intangibles, exceptional items and share-based
payment charges. Further details of these adjustments are set
out in note 4.
(4) Adjusted operating cash flow before tax is a non-GAAP measure
and excludes exceptional items. Further details of these adjustments
are set out in note 4.
(5) Adjusted basic earnings per share is a non-GAAP measure and excludes
amortisation of acquired intangibles, exceptional items and share-based
payment charges. Further details of these adjustments are set
out in note 4.
Financial Highlights
-- Further improved quality of earnings and enhanced revenue visibility
-- higher-margin software and services revenue of approximately
$22.4m , up 15%, including recurring revenue of $12.9m, up 21%
-- exit run rate ARR of $15.2m (2020: $10.6m), up 43%
-- Strong balance sheet maintained with strengthened cash
position, and new banking facility of up to $100m to support our
targeted M&A strategy
-- A final dividend of 2.09 pence (2.87 US cents) per share
(2020: 1.87 pence / 2.39 US cents) in line with our new dividend
policy to deliver returns to shareholders through growth and
income
Strategic and Operational Highlights
-- Strong progress against our 2025 strategic goals in the first year of execution
-- Continued focus and investment to drive growth in recurring
software revenues and conversion of the streaming and Pay TV
convergence opportunity
-- 24i : continued focus on building recurring revenues and
migrating subscribers from legacy systems to 24i's more flexible
and extensible platform
-- Amino : grew revenues by 19% to $75.1m, maintaining strong margins and cash generation
-- Strategically important customer deployments achieved during
the period across 24i and Amino:
-- 24i: deployed 24i's streaming platform for new customers
including the Canadian Hockey League and Cinessance, a subscription
video on demand service, which launched in November 2021 as the
'Netflix of French Film'
-- Amino: multiple new deployments of Amino's Android TV
platform including at Go Malta and CableNet in Europe, Optage in
APAC and Conway, Home Telecom and Hay Communications in North
America
-- Successful integration of Danish streaming and Pay TV
platform specialist , Nordija (now part of 24i), immediately adding
$2.1m ARR upon acquisition.
-- Continued product innovation and success , 24i's video
platform named best OTT Video Platform in the Streaming Media
European Readers' Choice Awards, and Amino's Hybrid Android TV
streaming device securing CSI Magazine's Award for Best Customer
Premise Technology 2021
Current trading and outlook
-- We enter 2022 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.
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)1954 234100
Mark Wells, Chairman
Donald McGarva, Chief Executive Officer
Mark Carlisle, Chief Financial Officer
Investec plc (NOMAD and Broker) +44 (0)20 7597 5970
David Anderson / Patrick Robb / Cameron MacRitchie
FTI Consulting (Financial communications) +44 (0)20 3727 1000
Matt Dixon / Elena Kalinskaya / Gregory Hynes
About Aferian plc
Aferian plc (AIM: AFRN) is a B2B video streaming solutions
company. Our end-to-end solutions bring live and on-demand video to
every kind of screen. We create the forward-thinking solutions that
our customers need to drive subscriber engagement, audience
satisfaction, and revenue growth.
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 traded on the London Stock Exchange's AIM stock
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
.
Chairman's statement:
I joined the Board of Aferian on 1 January 2022 as its
Non-Executive Chairman and it's a privilege to join at such an
exciting time of growth and development. Throughout my career, I've
been lucky enough to help guide innovative British technology
businesses as they pursue growth and become global leaders in their
field. This is where my enthusiasm still lies, and why I'm excited
to have joined Aferian, an equally ambitious British and
international software business. The Group is at the heart of a
structural industry shift towards the convergence of streaming
services and traditional Pay TV, and I'm looking forward to sharing
knowledge and experience to help the Company grow even more and
deliver on its ambition.
This report marks the first full year since the Group announced
its 2025 strategy. Whilst there is still plenty of work ahead of
us, significant progress has already been made against the 2025
strategic goals. The Group has delivered another strong financial
and operational performance, through both organic growth and with
the acquisition of Nordija.
Since its inception, the Group's founding purpose has been to
enable high quality video to be delivered over broadband. As both
the video market and broadband speeds have evolved, so has the
Group, but our promise has always remained unchanged - to make it
easy for people to connect to the video they love, whenever they
want. To continue delivering on this promise, Aferian has invested
in the capability to deliver video to any screen at any time in
line with the changing demands of consumers.
In June 2021, at minimal cost, the Group changed its name from
Amino Technologies plc to Aferian plc to reflect its renewed
purpose and expanded capabilities. The Board felt 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 international opportunity on which our team is now
capitalising.
Aferian Group Strategy to 2025
The Group's strategic aims remain underpinned by building a
predictable and profitable software-driven growth business, with a
proven track record of expanding its addressable market both
organically and through targeted M&A. Our objectives are 1) to
continue to grow margin through value-based investments; 2) to
maintain strong levels of cash generation; 3) to deliver
appropriate returns to shareholders, and 4) invest in the future
growth of the Company. This year we have made significant progress
against all of these objectives.
Our Group strategy to 2025 is focussed on four key drivers as
follows:
-- Transformation to a software-led company
Aferian is a software-led business focused on growing higher
margin recurring software revenues. This year ARR has increased by
43% to $15.2m and software & services revenue has grown by 15%
to $22.4m.
-- Data-centric product development to drive growth and innovation
Aferian's data-centric product development is focused on
enhancing value for our existing customers to drive upsell of
product licenses, as well as on attracting new customers. As the
Group has expanded it has continued to collect and enhance
increasing volumes of data. Our products are designed to deliver
premium levels of support and monitoring at every point in the
Group's video streaming platform, as well as giving customers new
and actionable insights that will help them to grow consumer
engagement and loyalty.
-- A product roadmap focussed on the consumer experience
Aferian aims to deliver choice, usability and convenience to the
consumer. During the year the Group has continued to develop new
and existing platforms that enable pay TV to be integrated with
third-party streaming services like YouTube, Netflix and Amazon
Prime Video on a single streaming device. Consumers prize this
level of convenience, and it helps our clients retain subscribers.
The ongoing investment in developing the Group's productised video
streaming platform ensures end users have the widest-possible
choice of ways to access and watch the content they love.
-- M&A strategy to further underpin revenue growth and visibility
The Group is already delivering on its M&A growth ambitions
and is expanding its capacity to continue to do so. In May 2021,
the Group acquired Nordija (now part of 24i), a Danish specialist
in Pay TV and streaming, which immediately had a positive impact on
revenue and ARR. In December 2021, just after the year end, the
Group also announced an increased bank facility of $50m which also
includes a further $50m available by way of an accordion. The
increased facility provides support to the Group in achieving its
2025 strategy, particularly with regards to the execution of
potential acquisitions.
Environmental, Social and Governance ("ESG")
This year we were proud to publish our first ESG report. Our
approach to ESG uses the Japanese concept of Ikigai meaning "a
reason for being", which refers to having a meaningful direction or
purpose in life. The ESG report provides an overview of how our
business is aligned to the United Nations Sustainable Development
Goals.
To further underscore the Group's commitment to making ESG
foundational in what we do, in the current financial year the
Remuneration Committee has introduced variable compensation targets
for the Executive Directors based on the Group's ESG goals.
Board change
After almost six years on the Group's Board of Directors, Karen
Bach stepped down from her role as non-executive Chairman on 31
December 2021. During her tenure, Karen 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 visibility and growth. On behalf
of the Board and all our Aferian employees, I would like to thank
Karen for her service, dedication and support during her
tenure.
Dividend
In line with our dividend policy of paying between a third and a
half of adjusted EPS as a dividend, the Board is proposing a final
dividend of 2.09 pence per share (2.87 US cents*) which, if
approved, would, with the already paid interim dividend of 1.0
pence (1.38 US cents*) per share, result in a total dividend for
the year of 3.09 pence (4.25 US cents*) per share.
*GBP1: $1.37528
Mark Wells
Chairman
9 February 2022
Chief Executive Officer's review:
Strong progress towards our 2025 strategic goals
Our 2025 strategy addresses the convergence of streaming
services and traditional Pay TV. Aferian has always been a B2B2C
video streaming solutions company. The 2025 strategy capitalises on
the increasing consumer expectation that we should all be able to
connect to the TV and video content 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 consume TV and video
content in the way they want.
We have made strong progress towards our 2025 strategic goals.
We report revenue of $92.9m (2020: $82.7m), up 12%, and improved
quality of earnings and enhanced visibility with an exit run rate
ARR of $15.2m (2020: $10.6m) up 43%. Recurring software revenue was
58% (2020: 55%) of total software & services revenue.
Outstanding team effort driving strong business results
We could not have achieved these results without the incredible
teamwork, resilience and effort from our people. This year we have
seen the continued impact of the global COVID-19 pandemic on our
supply chains and our working practices. Many of our teams have
continued to work from home most of the time. Delays in the supply
chain of our streaming devices meant teams had to work doubly hard
to source components on time as well as to source, test and
validate alternative components. Despite this, our teams around the
world have continued to collaborate effectively with each other,
our customers and our suppliers to ensure that we have continued to
provide our customers with high levels of service and timely
assistance. I would like to thank our teams for their ongoing
resilience and dedication in the face of a global pandemic, the
impacts of which continue to be felt.
Building a predictable, software-driven growth business
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 and invest
in the future growth of the Group.
Our targeted M&A strategy is supported by our strong balance
sheet and $50m bank facility which we signed in December 2021. Our
M&A strategy has three pillars:
1. Acquisition of key and emerging technologies which gives the
Group a competitive advantage and, therefore, improves gross
margins. We have identified a number of areas which could
significantly add value to our platform's capabilities by using the
latest technologies to enhance our streaming platforms and make it
easier for end-consumers to find the video and content they
love.
2. Acquisition of market share and scale to drive operating cost
efficiencies and take advantage of the growing demand for
'configurable' video experience solutions based on a standard
platform . Our technology vision is founded on the iterative
development of a modular video streaming platform that delivers
both segmental (modular) as well as integral (end-to-end) solutions
for our clients and partners, based on customisable products.
3. Acquisition of market entry capabilities and expanded market
penetration, both in terms of additional geographies and industry
verticals. Aferian has a very strong position in video being
distributed over broadband via Pay TV as well as by broadcasters,
publishers and content owners. The video market is dynamic, and our
end-to-end streaming capabilities mean we are well placed to serve
companies wishing to stream content to viewers in additional
sectors such as education, hospitality and others. We are targeting
additional geographies and industry verticals to market those
capabilities.
In May 2021, we commenced our targeted M&A programme by
completing the acquisition of Nordija, a Danish streaming and Pay
TV platform specialist, for a total consideration of EUR5.3m
($6.4m). 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 added $2.2m to exit run rate ARR as well as
bringing specialist capabilities to our team. Nordija has a
reputation for innovation and has brought high quality customers to
the Group including Denmark's Waoo, Swisscom Broadcast and Telenor
Sweden. We were delighted to welcome Nordija employees into our
growing Group. The integration of Nordija into 24i was completed in
2021 and the acquisition was earnings enhancing in the financial
year.
To provide the Group with additional funds to aid execution of
its acquisitive growth strategy, Aferian also completed a share
placing in the year, raising $12.7m (GBP9.0m). Initially, these
funds were intended to support the purchase of MobiTV, a US live TV
and on-demand platform provider, which was in an auction process.
Whilst our bid was ultimately unsuccessful, the availability of
these additional funds enhances the Group's position in negotiating
and executing future acquisitions.
The streaming market
Streaming is now a mass-market industry. Demand for streamed
content continues to grow significantly, accelerated by changes in
viewing habits during the COVID-19 pandemic. The 2021 research*
issued by the research firm Ampere Analysis found out that:
-- Baby boomers are now just as likely to binge-watch streamed
content as their grandchildren.
-- Consumers are also shopping around for a better streaming
platform deal and content, driving increased diversity in the
streaming market: The average US household now subscribes to four
different streaming services (+1 since 2020).
-- The average US household spends $47 per month on streaming
services (up from $38 since 2020).
-- More than 1-in-10 US households are signed up to seven or
more different streaming services.
*Source: cordcuttersnews.com
Within this growing industry, Aferian serves a range of market
verticals:
-- Pay TV operators - companies offering a package of linear TV
channels and often associated on demand content to consumers on a
subscription basis. Research from SPGMI suggests 90% of operators
in EMEA and 74% of operators in North America are integrating
streaming with their linear channels.
-- Enterprise video providers - companies making video available
to consumers on managed streaming devices but not offering
traditional Pay TV to consumer homes, for example in-room
entertainment in hotels, hospitals etc. Research from Market
Intelligence suggests the Global enterprise market is set to grow
at CAGR +8% to $2.1bn by 2025.
-- Content owners - for example Netflix, Disney+, Pure Flix, and
Cinessance. A study by Digital TV Research suggests gross revenue
from streaming TV and movies will reach $210bn on 1.5bn
subscriptions by 2026.
-- Sports rights holders - for example FIFA, UEFA, NFL, and
Canadian Hockey League. Research from Deltatre suggests sports
rights holders worldwide spend 15% of their total budgets on their
video streaming platform. That's $6.8bn in North America alone.
-- Broadcasters - for example the BBC, ITV, CNN, Game Show
Network, and NPO. Research from Amagi Analytics found advertisers
are shifting from traditional TV to streaming TV, with ad-supported
video spendings estimated to rise to $25bn by 2025.
Aferian's Total Addressable Market
The revenues generated through streaming video over the internet
are growing fast. Digital TV Research predicts the total global
market will be worth $167bn by 2025. A large proportion of this
will go to the industry giants like Amazon, Disney and Netflix, but
that leaves significant revenue shared between the companies that
make up Aferian's target market: smaller telecom operators,
streaming services and enterprise video providers.
Research commissioned by Aferian and conducted by Media Asset
Capital in November 2021 found that all Aferian's solutions service
a total addressable market worth over $8.6bn:
Vertical Solution Market Size CAGR
Streaming Amino streaming devices $7.5bn 8% CAGR
Devices & software
------------------------- ------------ ---------------------------
Video Streaming 24i end-to-end streaming $1.1bn 7% CAGR
Platforms platform 10% recurring revenue
growth CAGR due to
transition from perpetual
licenses to SaaS
------------------------- ------------ ---------------------------
2021 Key Performance Indicators
Our six key performance indicators demonstrate continued
strategic progress during 2021 as we work towards our 2025 strategy
goals. The Group reported revenue growth of 12%, with exit run rate
ARR up 43%. Adjusted gross profit margin is consistent with the
prior year. The Group also continues to generate strong operating
cash flows. This year we also report for the first time a net
customer revenue retention rate (based on recurring revenue) which
increased 13% because of a very low churn rate and increased
upsells to existing customers during the year.
2021 2020 Change
$m $m %
------------------------------------- ----- ----- -------
Total revenue 92.9 82.7 +12%
Software & services revenue 22.4 19.5 +15%
Annual run rate recurring revenue
("ARR") at 30 November 15.2 10.6 +43%
Adjusted gross profit margin % 48% 48% -
Adjusted operating cash flow before
tax 16.7 18.2 (8%)
Net customer revenue retention rate
on recurring revenue 117% 104% +13bps
------------------------------------- ----- ----- -------
Operational review
The Group has two operating companies: 24i and Amino.
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 61% in exit run
rate ARR (29% increase year-on-year on an organic basis). As
previously highlighted, we will continue to invest in both sales
& marketing and in our products to build our sales
pipeline.
We continue to migrate customers to the latest version of our
industry-leading end-to-end streaming platform, which was launched
last year. The new platform enables our customers to get their TV
and video content to consumers faster and more cost-effectively. In
December 2021, we unveiled 24i Mod Studio as the new identity and
go to market name for our new platform. The new name and image are
designed to better articulate the flexibility and modularity of the
platform as well as its ability to rapidly meet the end-to-end
needs of our target markets with turnkey solutions. Generally,
across our platforms, customers are now benefiting from the
worldwide shift to streaming and consumer demand for more flexible
viewing powered by our platform.
24i continues to grow recurring revenue organically. This is in
part a reflection of low customer churn but also the success that
customers enjoy from using the 24i video streaming platform which
has led to increased use of recurring software licenses. For
example, during the period, we have seen growth in per-subscriber
revenues from customers like Delta Fiber in the Netherlands who
have migrated more of their consumer base to the 24i Pay TV
streaming platform from legacy systems.
With other customers, growth has come from use of an increased
range of 24i solutions. For example, the convenience of 24i's
cross-platform application codebase has enabled customers like KPN
to upgrade their Smart TV applications and expand their offering to
new devices including Android TV screens.
Likewise, many of our existing customers are using more of 24i's
products (with associated license fees) as they transition away
from their legacy, custom-built applications to using our
productized solution instead. We have also enhanced our content
management system to allow customers to manage the processing of
their video files from the same web tool they use to promote their
content and manage their user experience. This helps our customers
to more clearly see the benefits of our end-to-end solution and in
turn helps our sales team to more clearly articulate the benefits
of our solutions.
During the year we implemented our video platform for the
Canadian Hockey League, and Cinessance, an SVOD service that
launched in November 2021 with the aim of becoming the 'Netflix of
French Film'. The integration of Nordija was completed in 2021 and
24i enters 2022 with a strong product portfolio, customer base and
pipeline of opportunities with which to continue to grow recurring
revenue.
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 year, Amino grew revenues by 11% to $75.1m 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 included 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, such as Disney+, look to combine the best
of both worlds for linear TV and streaming apps.
During the year, Amino 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 only a few
weeks.
Our leading SaaS device software management, customer support
and analytics solution continued to grow strongly. 29 new customers
deployed this solution in the year and the user base grew by 53%
year-on-year. We regard this solution as a key differentiator in
our competitive landscape.
The global component supply chain shortage continues to be a
challenge for businesses globally, though one we are navigating
well. 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 and cost increases of key components such as
semi-conductors in the year. Despite these challenges, we shipped
approximately 5% more devices in 2021 compared to 2020. 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. As we
enter 2022, we therefore have increased visibility of orders.
Environment, Social and Governance ("ESG")
ESG is a focus for the Company, and we set out our policies and
goals in detail in our first ESG report which was published in
August 2021 and can be found on our website. Aferian's approach to
ESG uses the Japanese concept of Ikigai meaning "a reason for
being" which refers to having a meaningful direction or purpose in
life, constituting the sense of one's life being made worthwhile.
Using the concepts of Ikigai, we have developed our ESG framework
and aligned our business to some of the United Nations Sustainable
Development Goals. We have continued to make good progress on ESG
as our report outlines. Notable examples of our progress
include:
-- We are currently reviewing the sustainability of our hardware
supply chain. All of our Tier 1 hardware suppliers operate under
our Code of Conduct, which aligns with the Responsible Business
Alliance (RBA) Code of Conduct and the UN Global Compact. In 2021
we launched a Tier 1 hardware supplier sustainability audit
programme using RBA recognised auditors to enhance and complement
our existing facility audit programmes. Though somewhat inhibited
by COVID restrictions, 66% of supplier facilities were audited to
RBA Validated Assessment Program (VAP) or equivalent by December
2021. 100% are scheduled to be audited by March 2022.
-- The total energy consumed by the Group's offices and computer
servers directly within its control (i.e. Scope 1 Green House Gas
emissions) declined during 2021. Whilst this is primarily due to
the impact of COVID restrictions, we remain focussed on achieving
our goal of being carbon neutral by 2025 and fully throughout our
supply chain by 2030.
-- We continue to survey employees as part of our Diversity and
Inclusion programme. The results of our latest survey, performed by
a third party, in May 2021 once again showed that employees were
engaged, and the Group scored higher than average on the Diversity
and Inclusion index compared to external benchmarks. Whilst we do
not collect or disclose racial or ethnic group data, our last
survey showed that Group's employees represent 35 different
nationalities. This year we also launched a project led by our
employees in Brno, Czech Republic, sponsoring women in technology,
with the aim of funding their studies and then employing them via
our graduate recruitment programme.
Current trading & outlook
Overall, the Group traded well during 2021 with both 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 our exit run rate ARR. Having commenced our
targeted M&A programme to capitalise on the convergence of Pay
TV and streaming, the integration of Nordija has been completed,
and we continue to evaluate a good pipeline of potential
acquisition opportunities.
We enter 2022 in a solid position as we seek to continue to
deliver against our 2025 strategy. We have increased firepower to
pursue targeted opportunities with a strengthened net cash position
at the end of the financial year, and our new banking facility to
draw on. The Board remains confident in the Group's ability to meet
its current full year expectations and in the Group's future
prospects as it executes its strategy and vision to make it easy
for people to connect to the TV and video that they love.
Donald McGarva
Chief Executive Officer
9 February 2022
Chief Financial Officer's review
Overview
The Group's financial results for the year ended 30 November
2021 demonstrate continued progress against the Group's financial
objectives that were set out a year ago: to grow high margin
software & services revenue, with a focus on recurring
revenue.
Total revenue increased by 12% to $92.9m (2020: $82.7m).
Excluding the impact of the Nordija acquisition in May 2021,
revenue grew by 9%.
High margin software & services revenue increased by 15% to
$22.4m (2020: $19.5m). Excluding the impact of the Nordija
acquisition, software & services revenue increased by 3%.
Software & services adjusted gross profit represented 41% of
total adjusted gross profit in the year, an increase from 40% in
2020. Adjusted gross margin has remained consistent with the prior
year at 48% (2020: 48%). In addition, the visibility of the Group's
revenues increased as exit run rate Annual Recurring Revenues (ARR)
increased to $15.2m (2020: $10.6m), representing growth of 43%.
Excluding the impact of the Nordija acquisition, exit run rate ARR
increased by 23%.
The Group continued to generate strong operating cash flows.
Adjusted operating cash flow before exceptional costs was $16.7m
(2020: $18.2m) representing an adjusted EBITDA cash conversion of
91% (2020: 109%). Operating cash flow was $14.1m (2020:
$16.8m).
The Group had net cash of $14.2m at 30 November 2021 (2020:
$9.5m). Since the year end date, the Group has secured a new
banking facility with Barclays Bank plc, Silicon Valley Bank, and
Bank of Ireland. This increased facility of $50m, split evenly
across the new three bank club, also includes a further $50m
available by way of an accordion. The new facility has a three-year
term to 23 December 2024 with options to extend by a further one or
two years.
The $15.0m banking facility that existed as at the balance sheet
date, remained undrawn (2020: $nil).
Revenue and adjusted gross profit
2021 2020 Change
$m $m
------------------------------ ----- ----- -------
Software & services
Revenue
Recurring 12.9 10.7 21%
Non-recurring 9.5 8.8 8%
Total revenue 22.4 19.5 15%
Adjusted gross profit 18.4 15.8 16%
Adjusted gross profit margin
% 82% 81% 1bps
------------------------------ ----- ----- -------
Devices including integrated
software
Revenue
Recurring - - -
Non-recurring 70.5 63.2 12%
Total revenue 70.5 63.2 12%
Adjusted gross profit 26.3 23.9 10%
Adjusted gross profit margin
% 37% 38% (1bps)
------------------------------ ----- ----- -------
Total
Revenue
Recurring 12.9 10.7 21%
Non-recurring 80.0 72.0 11%
Total revenue 92.9 82.7 12%
Adjusted gross profit 44.7 39.7 13%
Adjusted gross profit margin
% 48% 48% -
------------------------------ ----- ----- -------
Software & services revenue increased by 15% in the past
financial year and grew by 3% excluding the impact of the Nordija
acquisition. Software & services revenues as a proportion of
total revenues for the year was steady at 24% (2020: 24%). However,
the Group continues to focus on growing recurring revenues that
increased by 21% from $10.7m to $12.9m. Overall, recurring software
& services revenue accounts for 58% of total software &
services revenue (2020: 55%).
At 30 November 2021, exit run rate ARR increased to $15.2m
(2020: $10.6m), of which $2.2m relates to the Nordija acquisition
during the year.
The increase in exit run rate ARR provides enhanced revenue
visibility as the Group moves forward. In addition, we report for
the first time a net customer revenue retention rate, based on
recurring revenue, for the Group of 117% (2020: 104%). The net
revenue retention rate is calculated by reference to recurring
revenue from existing customers, including upsells, less recurring
revenue lost from customer churn during the year. The increase of
13% is due to a very low churn rate combined with increased upsells
to existing customers during the year.
Revenue and adjusted EBITDA
Revenue Adjusted EBITDA
------------ ------------------
2021 2020 2021 2020
$m $m $m $m
-------------- ----- ----- --- -------- --------
24i 17.8 15.2 1.2 0.5
Amino 75.1 67.5 19.7 18.2
Central costs - - (2.5) (2.0)
-------------- ----- ----- --- -------- --------
Total 92.9 82.7 18.4 16.7
Adjusted EBITDA for the year ended 30 November 2021 was $18.4m
(2020: $16.7m). Adjusted EBITDA is reconciled below, and 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. 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
2021 2020
$m $m
--------------------------------------- ------- -------
Software & services 17.4 15.2
Devices including integrated software 0.4 -
Revenue 17.8 15.2
Adjusted cost of sales (3.8) (3.3)
--------------------------------------- ------- -------
Adjusted gross margin 14.0 11.9
Adjusted gross margin % 79% 78%
Adjusted operating costs (12.8) (11.4)
--------------------------------------- ------- -------
Adjusted EBITDA 1.2 0.5
Adjusted EBITDA % 7% 4%
Capitalised development costs 5.8 3.7
--------------------------------------- ------- -------
Revenue in the 24i segment increased by 17% to $17.8m (2020:
$15.2m). Excluding the impact of the Nordija acquisition, revenue
is broadly in line with the prior year. This is due to a shift in
focus during the year towards driving recurring software revenue.
This change has resulted in the growth of exit run rate ARR from
$6.9m to $11.1m, which represents 61% year-on-year growth.
Excluding the impact of the Nordija acquisition, exit run rate ARR
has grown by 29%. The increased focus on exit run rate ARR aligns
with the Group's software-led strategy.
Amino segment
2021 2020
$m $m
------------------------------- ------- -------
Software and services 5.0 4.3
Devices including integrated
software 70.1 63.2
Revenue 75.1 67.5
Adjusted cost of sales (44.4) (39.7)
------------------------------- ------- -------
Adjusted gross margin 30.7 27.8
Adjusted gross margin % 41% 41%
Adjusted operating costs (11.0) (9.6)
------------------------------- ------- -------
Adjusted EBITDA 19.7 18.2
Adjusted EBITDA % 26% 27%
------------------------------- ------- -------
Capitalised development costs 2.3 1.8
------------------------------- ------- -------
Device revenues increased by 11% during the year to $70.1m
(2020: $63.2m). This is a strong performance given the difficulties
faced within the supply chain caused by significantly increased
lead times, lack of availability of components, and scarcity of
shipping capacity caused by the COVID-19 pandemic. The key driver
behind the 11% increase in device revenues has come from volume
sales and average selling price, both of which increased by c.5%
compared to 2020.
The Group has a core customer base in respect of device
revenues, whereby repeat orders are placed by the same customers
over multiple financial years. Taking the last three financial
years, repeat orders from existing customers over that period has
accounted for 94% (2020: 97%) of total device revenue. It is this
loyal customer base, and continued product reliability, that has
helped contribute to the growth in the year.
Central costs
2021 2020
$m $m
------------------------------ ------ ------
Operating costs and adjusted
EBITDA (2.5) (2.0)
------------------------------ ------ ------
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. The increase of $0.5m during
the year is in respect of salary related expenses, including
performance related bonuses reflective of the Group's financial
performance for the year.
Adjusted EBITDA
2021 2020
$m $m
----------------------------------- ------- -------
Revenue 92.9 82.7
Adjusted cost of sales (48.2) (43.0)
----------------------------------- ------- -------
Adjusted gross margin 44.7 39.7
Adjusted gross margin % 48% 48%
Customer support and professional
services (6.0) (6.0)
Research and development (5.0) (4.6)
SG&A (15.3) (12.4)
----------------------------------- ------- -------
Total adjusted operating expenses (26.3) (23.0)
----------------------------------- ------- -------
Adjusted EBITDA 18.4 16.7
----------------------------------- ------- -------
Research & development costs
The Group continues to invest in research and in the development
of new products and spent $13.0m on R&D activities (2020:
$10.1m) of which $8.0m was capitalised (2020: $5.5m).
2021 % of revenue 2020
$m $m % of
revenue
-------------------------------- ------ ------------- ------ ---------
Core engineering expenses 11.9 13% 9.1 11%
Product management 0.6 1% 0.6 1%
R&D senior management 0.5 1% 0.4 -
-------------------------------- ------ ------------- ------ ---------
Total research and development
expenses 13.0 14% 10.1 12%
-------------------------------- ------ ------------- ------ ---------
Capitalised development costs (8.0) - (5.5) -
-------------------------------- ------ ------------- ------ ---------
Net research and development
costs 5.0 - 4.6 -
-------------------------------- ------ ------------- ------ ---------
The Group's spend on core engineering activities has increased
by $2.8m in the year to $11.9m (2020: $9.1m). This includes $0.9m
in relation to the Nordija acquisition in May 2021. The remaining
increase of $1.9m reflects a combination of an increased workforce
and salary inflation, the latter being driven by competitive labour
market conditions in which the Group operates, as well as the Group
continuing to invest in software development and related products.
Specifically, the Group has invested in the products that have been
driving ARR such as 24i's video streaming platforms and Amino's
SaaS device management platform, Engage.
Selling, general and administrative (SGA) expenses have
increased by $2.9m in the year to $15.3m (2020: $12.4m). This
increase is due to the Nordija acquisition as well as an increased
group bonus pool for employees that is reflective of the improved
financial performance of the Group.
A reconciliation of adjusted EBITDA to operating profit is
provided as follows:
2021 2020
$m $m
------------------------------------------- ------- -------
Adjusted EBITDA 18.4 16.7
Exceptional items:
-- Within cost of sales 0.2 0.9
-- Within operating expenses (1.7) (1.4)
Employee share-based payment charge (1.1) (0.7)
Depreciation and amortisation (10.1) (10.4)
------------------------------------------- ------- -------
Operating profit 5.7 5.1
------------------------------------------- ------- -------
Exceptional items
Exceptional items within cost of sales in 2021 comprised a $0.2m
credit (2020: $0.9m credit) in respect of royalty costs recognised
in prior years which have subsequently been renegotiated.
Exceptional items included within operating expenses in 2021
comprised:
-- $1.0m (2020: $0.2m) one-off costs in respect of acquisitions
and legal costs, which includes cost associated with aborted
acquisitions;
-- $0.3m (2020: $1.2m) contingent post-acquisition remuneration
in respect of the acquisition of 24i Unit Media BV; and
-- $0.4m (2020: $nil) post-acquisition integrations and associated restructuring costs.
Depreciation and amortisation
Excluding amortisation of intangibles recognised on acquisition,
depreciation and amortisation increased to $6.7m (2020: $6.2m). The
increase of $0.5m is due to higher capitalised development costs
during the year.
Amortisation of intangibles recognised on acquisition was $3.5m
(2020: $4.2m), which represents a decrease of $0.7m. The decrease
of $0.7m in the year relates to acquired intangibles from the
Entone and Booxmedia acquisitions in 2015 being fully amortised by
the end of the prior financial year. Offsetting this decrease is
the amortisation charge of $0.4m relating to the acquired
intangibles from the Nordija acquisition during the current
year.
Taxation
The tax credit of $0.5m (2020: $1.7m charge) comprises:
-- $2.8m (2020: $1.9m) current tax charge;
-- $nil (2020: $0.6m) deferred tax charge relating to a
reduction in the deferred tax asset as a result of tax losses
utilised in the year;
-- $2.7m credit (2020: $nil) in respect of the recognition of a
deferred tax asset relating to tax losses in 24i; and
-- $0.6m (2020: $0.8m) credit relating to the unwind of the
deferred tax liability recognised in respect of the amortisation of
intangible assets recognised on acquisitions.
The reason for the increase in the current tax charge is due to
the UK tax losses being fully utilised at the end of the prior
year.
The $2.7m tax credit is in relation to the recognition of a
deferred tax asset for tax losses in 24, which are now considered
recognisable (due to changes to local tax laws in the Netherlands,
and updated internal tax compliance procedures, the Group has
further clarification over the availability, and utilisation) for
tax losses that were present at the date of acquisition and have
arisen since acquisition. In 2019 a deferred tax liability was
recorded as part of the acquisition accounting relating to the
purchase of 24i and the Group are now of the opinion that this
deferred tax liability should be offset by this equal and opposite
deferred tax asset. Further details are provided in note 9 to the
condensed consolidated financial statements.
Profit after tax was $5.8m (2020: $2.7m).
Cash flow
A reconciliation of adjusted operating cash flow before tax to
cash generated from operations before tax is provided as
follows:
2021 2020
$m $m
----------------------------------------------------------- ------ ------
Adjusted operating cash flow before tax 16.7 18.2
Post-acquisition remuneration in respect of the
acquisition of 24i Unit Media BV (1.3) (1.1)
Post-acquisition integration and associated restructuring (0.3) -
costs
Acquisition and one-off legal costs (1.0) (0.3)
Cash generated from operations before tax 14.1 16.8
----------------------------------------------------------- ------ ------
Adjusted cash flow from operations was $16.7m (2020: $18.2m) and
represented 91% of adjusted EBITDA (2020: 109%). The reduction in
adjusted cash flow from operations, and the conversion to adjusted
EBITDA, was due to a cash outflow from working capital of $2.4m
(2020: $1.1m cash inflow). Whilst there has been no underlying
change to the Group's debtor profile or cash generated, navigating
the well-known supply chain issues in the year was challenging and
a higher proportion of device shipments were delivered in the
fourth quarter than the previous year. The vast majority of cash
due from those debtors has subsequently been collected in full
since the balance sheet date, in line with normal customer payment
terms.
Exceptional cash flows in 2021 comprised the final payment of
deferred consideration in respect of the 24i acquisition from 2019
of $1.3m (2020: $1.1m). In addition, one-off costs of $1.3m (2020:
$0.3m) in relation to acquisitions in the year, including the
aborted acquisition of MobiTV, were paid by the Group. Including
these exceptional cash outflows cash generated from operations
before tax was $14.1m (2020: $16.8m).
During the year the Group spent $0.3m (2020: $0.3m) on capital
expenditure in respect of tangible fixed assets and capitalised
$8.0m (2020: $5.5m) of research and development costs and software
licenses. The acquisition of Nordija included initial cash
consideration of $4.7m, net of cash acquired of $0.3m. In addition,
the Group acquired the remaining 8% minority interest in 24i Unit
Media B.V group which included cash consideration of $1.2m.
Following the equity placing in May 2021, the Group raised
$12.7m, net of share issue costs. The Group paid dividends of $3.1m
(2020: $nil) during the financial year, relating to FY20 ($2.0m)
and FY21 interim ($1.1m).
The Group generated adjusted free cash flow of $3.8m (2020:
$9.7m) in the year and a reconciliation is provided below:
2021 2020
$m $m
------------------------------------------- ------ ------
Adjusted operating cash flow before tax 16.7 18.2
Corporation tax paid (3.2) (1.4)
Purchases of intangible assets (8.0) (5.5)
Purchase of property, plant and equipment (0.3) (0.3)
Net interest paid (0.1) (0.2)
Lease payments (1.3) (1.1)
Adjusted free cash flow 3.8 9.7
------------------------------------------- ------ ------
The decrease in the year of $5.9m can be explained by the
negative working capital swing of $3.5m, that has been described
above, as well as increased investment in research and development
costs to support ARR growth, and higher tax payments of $1.8m. The
increased tax payments relate to the transition of the Group's UK
trading subsidiary from payments in arrears to quarterly
instalments paid in advance during the 2021 financial year.
Financial position
The cash balance at 30 November 2021 was $14.2m (2020: $9.5m).
Since the year end date, the Group has secured a new banking
facility with a consortium of three banks. This increased facility
of $50m also includes a further $50m available by way of an
accordion. The new facility has a three-year term to 23 December
2024 with options to extend by a further one or two years.
The facility that existed as at 30 November 2021 of $15m,
remained undrawn. This facility has subsequently been cancelled and
replaced by the new bank facility described above.
At 30 November 2021 the Group had equity of $104.4m (2020:
$88.0m restated) and net current assets of $9.2m (2020: net current
liabilities of $0.5m restated).
Prior year restatement
During the year the Group 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 2019 was understated by
$1.1m with a corresponding entry to equity. There is no impact on
the consolidated income statement or consolidated statement of
cashflows. The comparative year in the consolidated financial
statements has therefore been restated. The impact on the
comparative financial information is summarised in note 13 to the
financial statements.
Dividend
Last year the Company announced a new dividend policy, aiming 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.
In August 2021, the Company paid an interim dividend of 1.0
pence (1.38 US cents*) per share in respect of the year ended 30
November 2021.
The Board is proposing a final dividend of 2.09 pence (2.87 US
cents*) per share (2020: 1.87 pence). Subject to shareholder
approval at the annual general meeting to be held on 21 March 2022,
the dividend will be payable on 22 April 2022, to shareholders on
the register on 8 April 2022, with a corresponding ex-dividend date
of 7 April 2022. If approved, this would represent a total dividend
for the year of 3.09 pence (4.25 US cents*) per share (2020: 1.87
pence).
*GBP1: $1.37528
Mark Carlisle
Chief Financial Officer
9 February 2022
Aferian plc
Consolidated income statement
For the year ended 30 November 2021
Year to 30 Year to 30
November 2021 November 2020
Notes $000s $000s
--------------------------------------- ------ --------------- ---------------
Revenue 92,890 82,704
Cost of sales 3 (47,996) (42,043)
--------------------------------------- ------ --------------- ---------------
Gross profit 44,894 40,661
--------------------------------------- ------ --------------- ---------------
Operating expenses (39,234) (35,546)
Operating profit 5,660 5,115
--------------------------------------- ------ --------------- ---------------
Adjusted operating profit 11,759 10,482
Share-based payment charge (1,079) (681)
Exceptional items (1,505) (503)
Amortisation of acquired intangible
assets 4 (3,515) (4,183)
------ --------------- ---------------
Operating profit 5,660 5,115
--------------------------------------- ------ --------------- ---------------
Finance expense (688) (748)
Finance income 290 44
--------------------------------------- ------ --------------- ---------------
Net finance expense (398) (704)
--------------------------------------- ------ --------------- ---------------
Profit before tax 5,262 4,411
Tax credit / (charge) 494 (1,748)
--------------------------------------- ------ --------------- ---------------
Profit after tax 5,756 2,663
--------------------------------------- ------ --------------- ---------------
Profit for the year from continuing
operations attributable to equity
holders 6,044 3,087
Non-controlling interest (288) (424)
--------------------------------------- ------ --------------- ---------------
Profit for the year 5,756 2,663
--------------------------------------- ------ --------------- ---------------
Earnings per share
Basic earnings per 1p ordinary share 5 7.52c 4.06c
Diluted earnings per 1p ordinary
share 5 7.37c 3.98c
--------------------------------------- ------ --------------- ---------------
All amounts relate to continuing activities.
The accompanying notes are an integral part of these condensed
consolidated financial statements.
Aferian plc
Consolidated statement of comprehensive income
For the year ended 30 November 2021
Year to 30 Year to 30
November 2021 November
2020
Notes $000s $000s
--------------------------------------------- ------- --------------- -----------
Profit for the financial year 5,756 2,663
------------------------------------------------------ --------------- -----------
Items that may be reclassified subsequently
to profit or loss:
Net foreign exchange (loss)/gain
arising on consolidation (3,112) 3,206
------------------------------------------------------ --------------- -----------
Other comprehensive (expense) / income (3,112) 3,206
------------------------------------------------------ --------------- -----------
Total comprehensive income for the
year 2,644 5,869
------------------------------------------------------ --------------- -----------
Non-controlling interest 288 403
------------------------------------------------------ --------------- -----------
Total comprehensive income for the
financial year attributable to equity
holders 2,932 6,272
------------------------------------------------------ --------------- -----------
The accompanying notes are an integral part of these condensed
consolidated financial statements.
Aferian plc
Consolidated statement of financial position as at 30 November
2021
As at 30 November As at 30 November
As at 30 November 2020 Restated 2019 Restated
2021 (see note (see note
34) 34)
Assets Notes $000s $000s $000s
----------------------------------- ------ ------------------ ------------------ ------------------
Non-current assets
Property, plant and equipment 630 510 395
Right of use assets 1,910 2,634 -
Intangible assets 96,234 92,067 91,919
Deferred tax assets - - 637
Trade and other receivables 7 235 215 430
----------------------------------- ------ ------------------ ------------------ ------------------
99,009 95,426 93,381
----------------------------------- ------ ------------------ ------------------ ------------------
Current assets
Inventories 2,557 2,956 2,399
Trade and other receivables 21,936 14,422 16,483
Corporation tax receivable 113 242 8
Cash and cash equivalents 7 14,182 9,476 8,612
----------------------------------- ------ ------------------ ------------------ ------------------
38,788 27,096 27,502
----------------------------------- ------ ------------------ ------------------ ------------------
Total assets 137,797 122,522 120,883
----------------------------------- ------ ------------------ ------------------ ------------------
Capital and reserves attributable
to equity holders of the
Company
Called-up share capital 1,484 1,367 1,367
Share premium 11 39,249 35,907 35,907
Capital redemption reserve 11 12 12 12
Foreign exchange reserve (3,388) (276) (3,461)
Merger reserve 42,750 30,122 30,122
Other reserve 11 - (2,794) (2,794)
Retained earnings 8 24,249 23,475 19,790
----------------------------------- ------ ------------------ ------------------ ------------------
Equity attributable to owners
of the parent 104,356 87,813 80,943
----------------------------------- ------ ------------------ ------------------ ------------------
Non-controlling interest - 195 598
----------------------------------- ------ ------------------ ------------------ ------------------
Total equity 104,356 88,008 81,541
----------------------------------- ------ ------------------ ------------------ ------------------
Liabilities
Current liabilities
Trade and other payables 27,777 24,861 21,800
Lease liabilities 966 1,187 -
Corporation tax payable 774 1,461 684
Loans and borrowings 8 35 130 7,314
----------------------------------- ------ ------------------ ------------------ ------------------
29,552 27,639 29,798
----------------------------------- ------ ------------------ ------------------ ------------------
Non-current liabilities
Trade and other payables 8 677 176 3,829
Lease liabilities 1,002 1,524 -
Provisions 1,163 1,227 1,298
Deferred tax liabilities 9 1,047 3,948 4,417
----------------------------------- ------ ------------------ ------------------ ------------------
3,889 6,875 9,544
----------------------------------- ------ ------------------ ------------------ ------------------
Total liabilities 33,441 34,514 39,342
----------------------------------- ------ ------------------ ------------------ ------------------
Total equity and liabilities 137,797 122,522 120,883
----------------------------------- ------ ------------------ ------------------ ------------------
The accompanying notes are an integral part of these condensed
consolidated financial statements.
Aferian plc
Consolidated statement of cash flows
For the year ended 30 November 2021
Year to 30 Year to 30
November November
2021 2020
Notes $000s $000s
----------------------------------------------- ------ ----------- -----------
Cash flows from operating activities
Cash generated from operations 14,113 16,835
Corporation tax paid (3,241) (1,420)
----------------------------------------------- ------ ----------- -----------
Net cash generated from operating activities 10,872 15,415
----------------------------------------------- ------ ----------- -----------
Cash flows from investing activities
Purchases of intangible assets (8,035) (5,493)
Purchases of property, plant and equipment (329) (345)
Interest received - 44
Purchase of non-controlling interest (1,180) -
Acquisition of subsidiaries net of cash
acquired 10 (4,749) (160)
----------------------------------------------- ------ ----------- -----------
Net cash used in investing activities (14,293) (5,954)
----------------------------------------------- ------ ----------- -----------
Cash flows from financing activities
Proceeds from exercise of employee share
options 206 26
Proceeds from issue of new shares 11 12,723 -
Lease payments (1,341) (1,146)
Dividends paid 6 (3,118) -
Interest paid (131) (244)
Repayment of borrowings (6,887) (7,236)
Proceeds borrowings 6,887 -
----------------------------------------------- ------ ----------- -----------
Net cash generated from / (used in) financing
activities 8,339 (8,600)
----------------------------------------------- ------ ----------- -----------
Net increase in cash and cash equivalents 4,918 861
Cash and cash equivalents at beginning
of year 9,476 8,612
Effects of exchange rate fluctuations
on cash held (212) 3
----------------------------------------------- ------ ----------- -----------
Cash and cash equivalents at end of year 14,182 9,476
----------------------------------------------- ------ ----------- -----------
The accompanying notes are an integral part of these condensed
consolidated financial statements.
Aferian plc
Consolidated statement of changes in equity
For the year ended 30 November 2021
Total
Foreign Capital Profit attributable
Share Share Merger Other exchange redemption and to owners Non-controlling Total
capital premium reserve reserve reserve reserve loss of parent interest Equity
Notes $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 13 - - - (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 expense - - - - 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 year - - - - - - 6,044 6,044 (288) 5,756
Other comprehensive expense - - - - (3,112) - - (3,112) - (3,112)
-------------------------------- ------ -------- -------- --------- -------- ---------- ----------- ---------- ------------- ---------------- ----------
Total comprehensive income
for the year attributable
to equity holders - - - - (3,112) - 6,044 2,932 (288) 2,644
-------------------------------- ------ -------- -------- --------- -------- ---------- ----------- ---------- ------------- ---------------- ----------
Share based payment charge - - - - - - 529 529 - 529
Exercise of employee share
options - - - - - - 206 206 - 206
Dividends paid 6 - - - - - - (3,118) (3,118) - (3,118)
Transfer of non-controlling
interest & put option reserve
on acquisition 8 - - - 2,794 - - (2,887) (93) 93 -
Issue of share capital,
net of issue costs
10 117 3,342 12,628 - - - - 16,087 - 16,087
-------------------------------- ------ -------- -------- --------- -------- ---------- ----------- ---------- ------------- ---------------- ----------
Total transactions with
owners 117 3,342 12,628 2,794 - - (5,270) 13,611 93 13,704
-------------------------------- ------ -------- -------- --------- -------- ---------- ----------- ---------- ------------- ---------------- ----------
Total movement in shareholders'
equity 117 3,342 12,628 2,794 (3,112) - 774 16,543 (195) 16,348
-------------------------------- ------ -------- -------- --------- -------- ---------- ----------- ---------- ------------- ---------------- ----------
Shareholders' equity at
30 November 2021 1,484 39,249 42,750 - (3,388) 12 24,249 104,356 - 104,356
-------------------------------- ------ -------- -------- --------- -------- ---------- ----------- ---------- ------------- ---------------- ----------
The accompanying notes are an integral part of these condensed
consolidated financial statements
Aferian plc
Notes to the condensed consolidated financial statements
For the year ended 30 November 2021
1 Basis of preparation
The financial information set out in this document does not
constitute the Group's Annual Report (which includes the statutory
financial statements) for the years ended 30 November 2021 or 2020.
The Annual Report (which includes the statutory financial
statements) for the years ended 30 November 2020 ("2020") and 30
November 2021 ("2021"), which were approved by the directors on 9
February 2022, have been reported on by the Independent Auditors.
The Independent Auditors' Reports on the statutory financial
statements for each of 2020 and 2021 were unqualified, did not draw
attention to any matters by way of emphasis, and did not contain a
statement under 498(2) or 498(3) of the Companies Act 2006.
The Group's Annual Report (which includes the statutory
financial statements) for the year ended 30 November 2020 have been
filed with the Registrar of Companies. The Annual Report (which
includes the statutory financial statements) for the year ended 30
November 2021 will be delivered to the Registrar in due course and
will be available from the Parent Company's registered office at
Botanic House, 100 Hills Road, Cambridge, England, CB2 1PH and from
the Company's website https://aferian.com/investors/ .
The financial information set out in these results has been
prepared using the recognition and measurement principles of
International Accounting Standards, International Financial
Reporting Standards and Interpretations in conformity with the
requirements of the Companies Act 2006. The accounting policies
adopted in these results have been consistently applied to all the
years presented and are consistent with the policies used in the
preparation of the financial statements for the year ended 30
November 2020, except for those that relate to new standards and
interpretations effective for the first time for periods beginning
on (or after) 1 January 2020. There are deemed to be no new
standards, amendments and interpretations to existing standards,
which have been adopted by the Group that have had a material
impact on the financial statements.
2 Going Concern
The consolidated financial statements have been prepared on a
going concern basis. The ability of the Group to continue as a
going concern is contingent of the ongoing working capital
facilities and wider viability of the Group. The Group meets its
day-to-day working capital requirements through its cash balances,
working capital facilities and wider capital management.
The COVID-19 pandemic continues to impact the Group's supply
chain operations, as well as employees throughout the Group having
to continue to work remotely from home. From the outset, 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 continues
to be 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. Where required, those
measures are still in place today as the Group follows the relevant
guidance set by authorities in the locations in which we
operate.
The Group had cash resources of $14.2m as at 30 November 2021
(2020: $9.5m) and a multicurrency working capital facility of
$15.0m, of which $nil was drawn at 30 November 2021 (2020: $nil).
Subsequent to the balance sheet date, the Group replaced this
facility with a new, increased facility of $50.0m with a further
$50.0m available to be drawn under an accordion commitment for
specific working capital events. The new facility expires on 23
December 2024 with options to extend by a further one or two years.
The Group had net current assets of $9.2m as at 30 November 2021
(2020: net current liabilities of $0.5m restated).
Aferian plc
Notes to the condensed consolidated financial statements
(continued)
For the year ended 30 November 2021
2 Going Concern (continued)
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 its 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. The
Group has a solid order book in respect of committed backlog device
orders to be delivered over the next 12 months, and together with
the growth in exit run rate ARR at 30 November 2021, this provides
enhanced visibility to future revenue forecasts and cash flows. In
respect of this going concern assessment, the Directors have
considered a number of scenarios, taking account of possible
further impact from the pandemic on the business, as noted above.
However, even in the material downside scenario, the Directors are
satisfied that the Group has sufficient cash resources over the
period and will be able to operate within its existing working
capital facilities and meet its liabilities as they fall due. On
that basis, the Directors therefore continue to adopt the going
concern basis when preparing its consolidated financial
statements.
3 Geographical external customer revenue analysis
For this disclosure revenue is determined by the location of the
customer.
Year to 30 November 2021 Year to 30 November 2020
Amino 24i Total Amino 24i Total
$000s $000s $000s $000s $000s $000s
-------------------- --------- -------- --------- --------- -------- ---------
USA 34,584 5,225 39,809 25,724 5,228 30,952
-------------------- --------- -------- --------- --------- -------- ---------
Latin America 8,117 987 9,104 10,784 346 11,130
-------------------- --------- -------- --------- --------- -------- ---------
Netherlands 21,167 6,879 28,046 18,245 6,292 24,537
Rest of EMEA 8,433 4,707 13,140 10,834 3,219 14,053
-------------------- --------- -------- --------- --------- -------- ---------
EMEA 29,600 11,586 41,186 29,079 9,511 38,590
-------------------- --------- -------- --------- --------- -------- ---------
Rest of the World 2,791 - 2,791 1,898 134 2,032
-------------------- --------- -------- --------- --------- -------- ---------
75,092 17,798 92,890 67,485 15,219 82,704
-------------------- --------- -------- --------- --------- -------- ---------
4 Exceptional items
Exceptional items within cost of sales and operating costs
comprise the following charges/(credits):
Year to Year to
30 November 2021 30 November
2020
$000s $000s
----------------------------------------------- ------------------- --------------
Credit relating to royalty costs recognised
in prior years and subsequently renegotiated (163) (917)
----------------------------------------------- ------------------- --------------
Subtotal cost of sales (163) (917)
----------------------------------------------- ------------------- --------------
Expensed contingent post-acquisition
remuneration in respect of the acquisition
of 24i Unit Media BV.
Redundancy and associated costs 347 1,164
Acquisition and one-off legal costs 304 -
Aborted acquisition costs 638 256
379 -
----------------------------------------------- ------------------- --------------
Subtotal operating expenses 1,668 1,420
----------------------------------------------- ------------------- --------------
Total exceptional items 1,505 503
----------------------------------------------- ------------------- --------------
Aferian plc
Notes to the condensed consolidated financial statements
For the year ended 30 November 2021
4 Exceptional items (continued)
Exceptional items within net finance expense comprise the
following charges/(credits):
Year to Year to
30 November 2021 30 November
2020
$000s $000s
---------------------------------------------- ------------------- --------------
Credit in relation to movement in contingent (179) -
consideration
---------------------------------------------- ------------------- --------------
Subtotal finance income (179) -
---------------------------------------------- ------------------- --------------
Unwinding discount on put option liability
regarding non-controlling interest of 532 -
the 24i Group
Unwinding discount on deferred consideration 79 -
regarding Nordija acquisition
---------------------------------------------- ------------------- --------------
Subtotal finance expense 611 -
---------------------------------------------- ------------------- --------------
Total exceptional items 432 -
---------------------------------------------- ------------------- --------------
5 Earnings per share
Year to Year to
30 November 30 November
2021 2020
$000s $000s
----------------------------------------------- ------------- -------------
Profit attributable to ordinary shareholders 6,044 3,087
----------------------------------------------- ------------- -------------
Exceptional items (see note 6) 1,505 503
Share-based payment charges 1,079 681
Finance income (see note 6) (179) -
Finance expense (see note 6) 611 -
Amortisation of acquired intangible assets 3,515 4,183
Deferred tax credit on acquired intangibles
(see note 9) (646) (797)
Deferred tax credit on tax losses recognised
(see note 9) (2,721) -
----------------------------------------------- ------------- -------------
Profit attributable to ordinary shareholders
excluding exceptional items,
share-based payments and amortisation of
acquired intangibles and associated taxation 9,208 7,657
----------------------------------------------- ------------- -------------
Weighted average number of shares (Basic) 80,385,687 76,037,936
----------------------------------------------- ------------- -------------
Dilutive share options outstanding 1,613,485 1,608,172
----------------------------------------------- ------------- -------------
Weighted average number of shares (Diluted) 81,999,172 77,646,108
----------------------------------------------- ------------- -------------
Basic earnings per ordinary share of 1p 7.52c 4.06c
----------------------------------------------- ------------- -------------
Diluted earnings per ordinary share of 1p 7.37c 3.98c
----------------------------------------------- ------------- -------------
Adjusted basic earnings per ordinary share
of 1p 11.45c 10.07c
----------------------------------------------- ------------- -------------
Adjusted diluted earnings per ordinary share
of 1p 11.23c 9.86c
----------------------------------------------- ------------- -------------
Aferian plc
Notes to the condensed consolidated financial statements
For the year ended 30 November 2021
5 Earnings per share (continued)
The calculation of basic earnings per share is based on profit
after taxation and the weighted average of ordinary shares of 1p
each in issue during the year. The Company holds 1,531,458 (2020:
2,021,058) of its own shares in treasury and these are excluded
from the weighted average above. The basic weighted average number
of shares also excludes 242 (2020: 242) being the weighted average
shares held by the EBT in the year.
The number of dilutive share options above represents the share
options where the market price is greater than the exercise price
of the Company's ordinary shares.
6 Dividends
Year to Year to
30 November 30 November
2021 2020
$000s $000s
------------------------------------------------- ------------- -------------
Final dividend for the year ended 30 November 1,968 -
2020 of 1.87p
(2020: nil for year ended 30 November 2019) 1,150 -
per share
Interim dividend for the year ended 30 November
2021 of 1.0p (2020: nil) per share
------------------------------------------------- ------------- -------------
3,118 -
------------------------------------------------- ------------- -------------
The Board of directors has proposed a final dividend of
$2,410,000 for the current financial year (2020: $1,970,000). This
equates to 2.09 pence per share, bringing the total for 2021 to
3.09 pence per share (2020: 1.87 pence). The proposed final
dividend is subject to approval by shareholders at the Annual
General Meeting ("AGM") and has not been included as a liability in
these financial statements.
Aferian plc
Notes to the condensed consolidated financial statements
For the year ended 30 November 2021
7 Trade and other receivables
As at As at
30 November 30 November
2021 2020
$000s $000s
-------------------------------------------- ------------- -------------
Current assets:
Trade receivables 19,575 12,224
Less: provision against trade receivables (306) (367)
-------------------------------------------- ------------- -------------
Trade receivables (net) 19,269 11,857
Contract assets 1,527 1,418
-------------------------------------------- ------------- -------------
Total financial assets other than cash and
cash equivalents classified as amortised
cost 20,796 13,275
-------------------------------------------- ------------- -------------
Other receivables 601 364
Prepayments 539 763
-------------------------------------------- ------------- -------------
Total trade and other receivables 21,936 14,422
Corporation tax receivable 113 242
-------------------------------------------- ------------- -------------
Current assets: due within one year 22,049 14,664
-------------------------------------------- ------------- -------------
Non-current assets:
Other receivables 235 215
-------------------------------------------- ------------- -------------
Other receivables due in more than one year comprise rent
deposits. The carrying value of trade and other receivables
classified at amortised cost approximates fair value. The Group
does not hold any collateral as security.
Aferian plc
Notes to the condensed consolidated financial statements
For the year ended 30 November 2021
8 Trade and other payables
As at As at
30 November 30 November
2021 2020
$000s Restated
$000s
----------------------------------------------- ------------- -------------
Current liabilities
Trade payables 14,420 11,283
Other payables 233 76
Accruals 7,909 6,149
Deferred consideration - 167
Deferred post-acquisition remuneration - 770
----------------------------------------------- ------------- -------------
Total current financial liabilities, excluding
loans and borrowings, classified as financial
liabilities measured at amortised cost 22,562 18,445
Contingent consideration
24i founders put option 1,117 575
- 3,356
----------------------------------------------- ------------- -------------
Total current financial liabilities measured
at fair value 1,117 3,931
Social security and other taxes 1,837 874
Contract liabilities 2,261 1,611
----------------------------------------------- ------------- -------------
Total trade and other payables 27,777 24,861
Lease liabilities 966 1,187
Corporation tax payable 774 1,461
----------------------------------------------- ------------- -------------
29,517 27,509
----------------------------------------------- ------------- -------------
Non-current liabilities
Other payables 677 176
Lease liabilities 1,002 1,524
----------------------------------------------- ------------- -------------
1,679 1,700
----------------------------------------------- ------------- -------------
The carrying value of trade and other payables classified as
financial liabilities measured at amortised cost approximates fair
value.
The 24i founders put option liability is in respect of the
non-controlling interest following the acquisition of 24i Unit
Media BV in July 2019. The put option was settled in August 2021
completed via the payment of $1.2m cash and $2.7m through the issue
of 1,320,042 new Ordinary shares of 1p each in the Company at a
price of GBP1.4969 per Ordinary share (see note 11). Following the
acquisition of the remaining 8% the non-controlling interest
reserve balance of $93,000 and the put option reserve of $2,794,000
was transferred through equity to the Group profit and loss
reserve.
Aferian plc
Notes to the condensed consolidated financial statements
For the year ended 30 November 2021
9 Deferred tax
Deferred tax asset
The Group had recognised deferred tax assets as follows:
Tax effect of temporary differences Tax losses carried Equity settled
because of: forwards share options Total
$000s $000s $000s
------------------------------------ ------------------ -------------- -------
At 30 November 2019 481 156 637
Charged to the income statement (488) (159) (647)
Foreign exchange adjustment 7 3 10
------------------------------------ ------------------ -------------- -------
At 30 November 2020 - - -
Charged to the income statement - - -
Foreign exchange adjustment - - -
------------------------------------ ------------------ -------------- -------
At 30 November 2021 - - -
------------------------------------ ------------------ -------------- -------
The Group had potential unrecognised deferred tax assets as
follows:
As at 30 November As at 30 November
2021 2020
$000s $000s
-------------------------------------------- -------------------- -------------------
Tax effect of temporary differences because
of:
Differences between capital allowances
and depreciation 33 31
Tax losses carried forward 909 2,279
Equity-settled share options 50 21
Other short term temporary differences 14 1
---------------------------------------------------- ------------ ---- -------------
1,006 2,332
--------------------------------------------------- ------------ ---- -------------
Factors that may affect the future tax charge
The directors recognise a deferred tax asset in respect of
taxable losses based on their expectation of the Group generating
taxable profits in the next 12 months. No deferred tax asset is
recognised on a further $4.2m of other trading losses (2020:
$10.5m).
During the year, the Group used $0.2m of tax losses (2020:
$2.6m) that were previously unrecognised.
Aferian plc
Notes to the condensed consolidated financial statements
For the year ended 30 November 2021
9 Deferred tax (continued)
Deferred tax liability
The Group also had recognised deferred tax liabilities, net of
deferred tax assets, due to the tax effect of temporary differences
because of the acquisition of subsidiaries as follows:
As at 30 November 2021 As at 30 November
2020
----------------------------------- -------------------------------------- --------------------------------------
Amount recognised Amount unrecognised Amount recognised Amount unrecognised
Restated
Deferred tax liability $000s $000s $000s $000s
----------------------------------- ----------------- ------------------- ----------------- -------------------
At 1 December 3,948 - 4,417 -
Recognised in the income statement (3,296) - (797) -
Acquisition of subsidiary
(see note 10) 662 - - -
Foreign exchange adjustment (267) - 328 -
----------------------------------- ----------------- ------------------- ----------------- -------------------
At 30 November 1,047 - 3,948 -
----------------------------------- ----------------- ------------------- ----------------- -------------------
The amount recognised in the income statement was a credit of
$3.3m (2020: credit of $0.8m). This includes $2.7m (2020: $nil) in
respect of tax losses that have arisen in 24i Unit Media BV, a
subsidiary undertaking. This is in relation to the recognition of
tax losses in 24i, which are now considered recognisable (due to
changes to local tax laws in the Netherlands and updated internal
tax compliance procedures giving the Group enhanced visibility over
their availability and utilisation) for tax losses that were
present at the date of acquisition in 2019 and have arisen since
acquisition. In 2019 a deferred tax liability was recorded as part
of the acquisition accounting relating to the purchase of 24i and
the Group are now of the opinion that this deferred tax liability
should be offset by this equal and opposite deferred tax asset.
This is because it is now considered likely that the intangible
assets recorded at the acquisition date will give rise to taxable
profits, such that the accumulated tax losses held by 24i at the
time of acquisition can now be utilised.
The $0.7m recognised on the acquisition of Nordija relates to
fair value adjustment in relation to acquired intangibles as well
as local deferred tax liabilities in relation to temporary timing
differences net of recognised losses carried forward.
Aferian plc
Notes to the condensed consolidated financial statements
For the year ended 30 November 2021
10 Acquisition of subsidiary
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 EUR5.2m ($6.3m).
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 preliminary amounts recognised in respect of the
identifiable assets acquired and liabilities assumed are set out in
the table below.
Fair value
Book value adjustment Fair value
$000 $000 $000
----------------------------------------- ------------- ------------ -------------
Identifiable intangible assets 2,523 1,865 4,388
Right of use assets 468 - 468
Property, plant and equipment 115 - 115
Non-current trade and other receivables 41 - 41
Current assets
-- Current trade and other receivables 787 (90) 697
-- Cash and cash equivalents 269 - 269
Liabilities
-- Current trade and other payables (1,781) (66) (1,847)
-- Lease liability (468) - (468)
-- Deferred tax liability (252) (410) (662)
----------------------------------------- ------------- ------------ -------------
Total identifiable assets and
liabilities 1,702 1,299 3,001
Goodwill 3,340
----------------------------------------- ------------- ------------ -------------
Total consideration 6,341
----------------------------------------- ------------- ------------ -------------
Aferian plc
Notes to the condensed consolidated financial statements
For the year ended 30 November 2021
10 Acquisition of subsidiary (continued)
Satisfied by: Fair value
$000
-------------------------------------------------- ---- -----------
Initial consideration:
-- Cash 5,018
-- Equity instruments (315,511 ordinary shares
of Aferian plc) 659
Contingent consideration:
-- Cash 144
-- Equity instruments (292,030 ordinary shares
of Aferian plc) 610
-------------------------------------------------------- -----------
Total consideration before discounting 6,431
Fair value adjustment in relation to discounting
contingent consideration (89)
Total consideration transferred 6,342
Net cash outflow arising on acquisition
Cash consideration 5,018
Less: cash and cash equivalent balances acquired (269)
Net cash outflow on acquisition 4,749
-------------------------------------------------------- -----------
The estimated fair value of the financial assets includes trade
receivables with a fair value of $0.5m and a gross contractual
value of $0.6m. The best estimate at acquisition date of the
contract cash flows not to be collected is $0.1m.
Goodwill of $3.3m 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 ($0.7m) 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 EUR0.6m ($0.7m) of
contingent consideration. Included in this amount is EUR0.1m
($0.1m) of contingent cash. The remaining balance of EUR0.5m
($0.6m) is payable through the issue of ordinary shares of Aferian
plc. The contingent consideration payment is dependent upon Nordija
achieving certain milestones in respect of an existing customer
contract. The contingent consideration is expected to be settled
within 12 months of the acquisition date and has been recognised as
a liability in the consolidated statement of financial
position.
The costs of the acquisition were $0.4m. Nordija contributed
$2.8m revenue and $1.0m profit to the Group's adjusted operating
profit for the period between date of acquisition and the balance
sheet date. If the acquisition of Nordija had been completed on the
first day of the financial period, Group revenues for the year
would have been $94.3m and Group adjusted operating profit would
have been $11.5m.
The directors have not completed, to date, a full valuation of
the fair value attributable to certain customer assets acquired in
the transaction and this is currently being evaluated.
Aferian plc
Notes to the condensed consolidated financial statements
For the year ended 30 November 2021
11 Share capital
As at As at
30 November 30 November
2021 2020
$000s $000s
---------------------------------------- ------------- -------------
Allotted, called up and fully paid
86,419,410 (2020: 78,069,571) Ordinary
shares of 1p each 1,484 1,367
---------------------------------------- ------------- -------------
In May 2021 the Company 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 Company 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.
Reconciliation of movement in number of Ordinary shares of 1p
each during the year
Ordinary shares Treasury shares Shares with
of 1p each voting rights
---------------------------------------- --------------- --------------- --------------
At 1 December 2020 78,069,571 (2,021,058) 76,048,513
Placing of shares 6,714,286 - 6,714,286
Acquisition of Nordija (see note
9) 315,511 - 315,511
Settlement of 24i founders put option
(see note 8) 1,320,042 - 1,320,042
Exercise of share based payments - 489,600 489,600
---------------------------------------- --------------- --------------- --------------
At 30 November 2021 86,419,410 (1,531,458) 84,887,952
---------------------------------------- --------------- --------------- --------------
Analysis of movement in issued Ordinary shares of 1p each during
the year
Ordinary Ordinary shares
shares
Number Nominal Share premium Merger
value $000s reserve
$000s $000s
Placing of shares 6,714,286 95 - 12,628
Acquisition of Nordija (see note
10) 315,511 4 641 -
Settlement of 24i founders put option
(see note 8) 1,320,042 18 2,701 -
-------------------------------------- ---------- ------- ------------- --------
Total 8,349,839 117 3,342 12,628
-------------------------------------- ---------- ------- ------------- --------
Aferian plc
Notes to the condensed consolidated financial statements
For the year ended 30 November 2021
12 Cash generated from operations
Cash generated from operations Year to Year to
30 November 2021 30 November
2020
$000s $000s
---------------------------------------- ------------------ -------------
Profit for the year
Tax (credit)/charge
Net finance costs
Amortisation charge 5,756 2,663
Depreciation charge (494) 1,748
Loss on disposal of property, plant 398 704
and equipment 8,582 8,974
Share based payment charge 1,611 1,398
Small lease payments 9 7
Exchange differences 1,079 681
Decrease/(increase) in inventories - (36)
(Increase)/decrease in trade and other (249) (450)
receivables 399 (557)
Decrease in provisions (6,795) 2,275
Increase/(decrease) in trade and other (64) (72)
payables 3,881 (500)
---------------------------------------- ------------------ -------------
Cash generated from operations 14,113 16,835
---------------------------------------- ------------------ -------------
Adjusted operating cash flow before exceptional cash outflows
was $16,672,000 (2020: $18,164,000).
Year to Year to
30 November 2021 30 November
2020
$000s $000s
------------------------------------------- ------------------ -------------
Adjusted operating cashflow 16,672 18,164
Post-acquisition remuneration in respect
of the acquisition of 24i Unit Media
BV (1,270) (1,073)
Redundancy and associated costs
Acquisition and one-off legal costs (304) -
Aborted acquisition costs (606) (256)
(379) -
------------------------------------------- ------------------ -------------
Cash generated from operations 14,113 16,835
------------------------------------------- ------------------ -------------
Aferian plc
Notes to the condensed consolidated financial statements
For the year ended 30 November 2021
13 Prior year restatement
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 year 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
financial statements is as follows:
-- An increase of $1,044,000 to trade and other payables and an
increase of $1,044,000 to other reserves within equity as at 30
November 2020 and as at 30 November 2019. This impact has been
treated as a restatement and reflected in the statement of
financial position as shown below.
-- The increased finance expense from initial recognition to 30
November 2020 of $218,000 was deemed to be immaterial therefore no
restatement has occurred with the expense included within the 2021
consolidated income statement.
The Consolidated statement of financial position and
Consolidated statement of changes in equity have been restated to
reflect the above. There was no impact on the Consolidated income
statement or the Consolidated statement of cash flows.
Impact on the consolidated statement of financial position:
As at As at
30 November 30 November
2020 2019
$000s $000s
-------------------------------------------------- ------------- -------------
Current Liabilities: Trade and other payables
(as previously reported) 23,817 21,800
24i founders put option - prior year adjustment 1,044 -
Current Liabilities: Trade and other payables
(restated) 24,861 21,800
-------------------------------------------------- ------------- -------------
Non-current Liabilities: Trade and other
payables (as previously reported) 176 2,785
24i founders put option - prior year adjustment - 1,044
-------------------------------------------------- ------------- -------------
Non-current Liabilities: Trade and other
payables (restated) 176 3,829
-------------------------------------------------- ------------- -------------
Total equity (as previously reported) 89,052 82,585
Impact of the adjustments set out above (1,044) (1,044)
-------------------------------------------------- ------------- -------------
Total equity (restated) 88,008 81,541
-------------------------------------------------- ------------- -------------
Impact on the consolidated statement of changes in equity:
As at As at
30 November 30 November
2020 2019
$000s $000s
-------------------------------------------------- ------------- -------------
Put option reserve (as previously reported) (1,750) (1,750)
24i founders put option - prior year adjustment (1,044) (1,044)
Put option reserve (restated) (2,794) (2,794)
-------------------------------------------------- ------------- -------------
Total attributable to owners of parent (as
previously reported) 88,857 81,987
24i founders put option - prior year adjustment (1,044) (1,044)
-------------------------------------------------- ------------- -------------
Non-current Liabilities: Trade and other
payables (restated) 87,813 80,943
-------------------------------------------------- ------------- -------------
Total equity (as previously reported) 89,052 82,585
Impact of the adjustments set out above (1,044) (1,044)
-------------------------------------------------- ------------- -------------
Total equity (restated) 88,008 81,541
-------------------------------------------------- ------------- -------------
Aferian plc
Notes to the condensed consolidated financial statements
For the year ended 30 November 2021
14 Cautionary Statement
This document contains certain forward-looking statements
relating to Aferian plc (the "Group"). The Group considers any
statements that are not historical facts as "forward-looking
statements". They relate to events and trends that are subject to
risk and uncertainty that may cause actual results and the
financial performance of the Group to differ materially from those
contained in any forward-looking statement. These statements are
made by the Directors in good faith based on information available
to them and such statements should be treated with caution due to
the inherent uncertainties, including both economic and business
risk factors, underlying any such forward-looking information.
15 AGM / Annual Report
Pursuant to AIM Rule 20, the Annual Report and Accounts for the
financial year ended 30 November 2021 ("Annual Report") is
available to view on the Group's website: www.aferian.com and will
be posted to shareholders shortly. Aferian will hold its AGM on 21
March 2022.
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END
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