23 March 2021
essensys plc
("essensys" or the "Group")
Half year results for the six months ended 31 January 2021
Performance in line with management expectations - strong US momentum; UK resilient
essensys plc (AIM:ESYS), the leading global provider of mission critical software-as-a-service (SaaS) platforms and on-demand cloud services to the flexible workspace industry, announces unaudited results for the half year ended 31 January 2021. All information relates to this period, unless otherwise specified.
Current trading and outlook:
| · Trading since the period end has continued in line with our expectations, with increased visibility of longer term pipeline of business: o The Group has 51 Connect sites contracted for delivery post half year end o Sales activity levels and bookings are increasing month on month o Early signs of improved activity levels within existing customer base however timing of implementation remains uncertain due to the ongoing, albeit reducing, impact of Covid-19
· Underlying office occupancy has started to recover noticeably following the very recent announcements regarding the route out of lockdown in the UK which is expected to lead to a recovery in Marketplace revenues in due course
· Business development activity is accelerating, particularly in the broader real estate sector where the Group is now engaged with three of the world's largest real estate firms creating a significant long term growth opportunity. Engagement with landlords and real estate investors, including those with global portfolios, is increasing and a number of our existing flexible workspace operator customers are re-starting their expansion programmes. · The existing contracted pipeline, increased sales bookings and improved customer activity levels means that the Board continues to expect results for the current year to be in line with market expectations. The Group's performance during Covid-19 has demonstrated the resilience of the business, and the Board believes the pandemic has accelerated the long term opportunity due to the structural shift to more flexible working arrangements.
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Strategic highlights:
| · Resilient performance against a challenging market backdrop and in line with management expectations: o Continued expansion of customer base; 18 new customers added o Momentum building: 431 Connect sites live, up 8% year on year
· Strong momentum in North America as market opportunity continues to accelerate: o US recurring revenue up 23%; US expansion continues and accelerating; o Appointment of CEO for North America to drive continued expansion · Continued investment to capture market growth via land and expand strategy: o New strategic customer wins provide significant expansion opportunities o Launch of Flex Services Platform to support push into broader corporate real estate market o Growth of North American sales and marketing team o Launch of European go-to-market capability; making good early progress o Further expansion of UK based R&D capability |
Financial highlights:
| · Revenue and underlying profits in line with management expectations o Recurring revenue marginally increased (at constant currency) compared to last year representing 91% of total revenue (H1 2020: 85%) o Group Annual Recurring Revenue ("ARR") gross margin of 70% (H1 2020: 70%)
· US recurring revenues up 23% in US Dollar terms; UK recurring revenues down 18% primarily due to reduced Marketplace revenue and net reduction in customer sites due to the impact of Covid-19
· As expected, Adjusted EBITDA was lower due to the: o Full period effect of continued investment in sales and marketing, product development and expansion of the Group's North American operations together with a reduction in non-recurring revenue in the period o Impact of the strengthening of the pound against the US Dollar
· Strong balance sheet with cash position of £5.9m at period end; no debt
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Mark Furness, CEO of essensys, said:
"essensys has delivered results in the period in line with management expectations, in a year of a global pandemic. The resilience and strength of our performance reflects excellent momentum in the US, 91% recurring revenues, and robust retention rates.
Despite the short-term impact of Covid-19 on market conditions, we expect the pandemic to accelerate the adoption of flexible workspace solutions for companies of all sizes. We continue to see traditional landlords and commercial real estate companies accelerate the development of their own flexible workspace products and services, which we believe will be a key driver of our future growth. This has supported our investment in long-term growth with the launch of our Flex Services Platform, and expansion of our teams in the UK, continental Europe and North America.
essensys' resilient trading, contracted new Connect sites, healthy pipeline and plans to increase new product development underlines our simple and clear strategy to capture the large and attractive market opportunity in the global flexible workspace market. This provides us with confidence of continuing to meet market expectations for the full year."
Financial summary:
| £m unless otherwise stated | Six months to January 2021 | Six months to January 2020 | Change |
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| Revenue | 10.6 | 11.4 | -7.0% |
| Recurring revenue1 | 9.6 | 9.7 | -1.0% |
| Run Rate Annual Recurring Revenue1, 2 | 19.9 | 19.7 | +1.0% |
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| Revenue at constant currency2 | 10.8 | 11.4 | -5.3% |
| Recurring revenue at constant currency1 | 9.8 | 9.7 | +1.0% |
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| Statutory (loss) before tax | (1.7) | (0.1) |
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| Adjusted EBITDA3 | 0.7 | 1.9 | -63% |
| Adjusted EBITDA margin | 6.6% | 16.7% |
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| (Loss)/profit before tax (prior to share based payment expenses)3 | (1.4) | 0.2 |
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| Loss per share (pence) | (3.27)p | (0.2)p |
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| Cash | 5.9 | 1.7 |
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Notes
1. See CFO Review below for description and breakdown
2. Current period revenue and/or costs translated into GBP using the average exchange rate for the comparative prior period
3. Adjusted for share option charges and exceptional costs where applicable
For further information, please contact:
| essensys plc |
| +44 (0)20 3102 5252 |
| Mark Furness, Chief Executive Officer |
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| Alan Pepper, Chief Financial Officer & Chief Operating Officer |
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| N+1 Singer (Nominated Adviser and Joint Broker) |
| +44 (0)20 7496 3000 |
| Peter Steel / Harry Gooden / George Tzimas |
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| Berenberg (Joint Broker) |
| +44 (0)20 3207 7800 |
| Richard Kauffer / Tejas Padalkar / Alix Mecklenburg-Solodkoff |
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| FTI Consulting |
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| Jamie Ricketts / Eve Kirmatzis / Debbie Oluwaseyi Sonaike / Talia Jessener |
| +44 (0)20 3727 1000 |
About essensys plc
essensys is the leading global provider of mission-critical SaaS platforms and on-demand cloud services to the high growth flexible workspace industry. essensys' software is specifically designed and developed to help solve the complex operational challenges faced by landlords and multi-site flexible workspace operators as they grow and scale their operations. The Group's technology allows operators to deliver a range of differentiated, flexible and customer-specific services to a broad base of tenants across multiple locations and helps operators to manage the cost, operational and technological challenges they typically encounter.
essensys' Flex Services Platform addresses these significant operational pain points head on and reduces costs by simplifying the day-to-day management of flexible workspaces and the provision of on-demand technology and infrastructure services to tenants. essensys technology delivers secure digital infrastructure, effective space setup, seamless operations, and mobile-first occupier interactions. It automates key tasks and processes and helps flexible workspace providers deliver highly efficient, customer-centric workspace solutions and in-building experiences with enterprise class services.
Chef Executive Officer's Report
Underlying growth
Despite the continued challenging trading environment, I am pleased to report continued growth in our underlying business with further new customers added, an increased number of customer sites, expanded geographical coverage, new product launches and accelerating expansion of our market opportunity. Whilst the last year has been the most challenging the business has faced, the medium to long term outlook for the business is very positive.
Overall Group revenue in the period was impacted primarily by fewer Connect sites commissioning compared to the pre-Covid period last year and by reduced Marketplace revenue driven by fewer occupants in offices (particularly in the UK). We have nevertheless maintained overall recurring revenue levels in line with the prior period and seen a slight increase in ARR run rate to £19.9m (at constant currency).
Market overview and outlook
We are now seeing a considerable acceleration of the trend towards more traditional real estate providers entering the flexible workspace environment. This ranges from smaller landlords being more open to management arrangements with major global property operators to the mid and larger sized, more operationally capable, landlords looking to establish their own branded and differentiated products. Where we are dealing with international property owner-operators they are approaching this fundamental market shift strategically with the aim of establishing and scaling a specific offering across their portfolio globally.
Recent industry commentary supports this expectation of a significant expansion of the provision of flexible workspace after the pandemic. This includes a forecast that, in the US "the number of flexible workspace locations double or triple over the next five years - despite a temporary setback from the Covid-19 pandemic"1. Another report predicts a global increase in supply of 21% in 20212. A recent survey from CBRE indicates that 86% of global occupiers see flexible office space as a critical component of their future real estate strategy3.
The real estate industry has continued to invest in the flexible workspace market. There have been two recent significant examples of the traditional real estate industry investing in established, specialist operators - CBRE's acquisition of 40% of Industrious, and the integration of their Hana business into it; together with Newmark Knight Frank's recent acquisition of Knotel.
Whilst this recent activity has been concentrated in the US we are seeing this extend into our UK and newly established European businesses. In both territories we are seeing large landlords and real estate investors investigating how to enter the market and starting to run pilot sites. At the same time the existing flexible workspace operators are re-commencing their expansion activities.
There remains uncertainty about the short-term recovery timing from the Covid-19 pandemic. There is no doubt, however, that these market developments and expanding market opportunities will benefit the Group in the medium to longer term, given our positioning as a leading global provider of mission-critical SaaS platforms and on-demand cloud services to the high growth flexible workspace industry.
Expanding opportunity
We continue to expand our customer base, across all geographies, with a further 18 new customers added in the period. Among these new customers are large property companies and commercial real estate operators who are at the early stages of establishing their flexible workspace operations with the aim of
1 Flex Forward - The Flexible Workspace Report 2020, Colliers US, November 2020
2 2021 CRE Predictions, The Instant Group, December 2020
3 The End of the Beginning, North America Flex Office Market in 2020, CBRE, December 2020
growing extensively across their portfolios. These types of strategic customers provide the Group with significant long term expansion opportunities.
Our active Connect sites continued to grow in the period - to 431 at January 2021 (January 2020: 400) and following the repositioning of Operate, we continued to see pricing improvements and increases in site numbers in the period.
Whilst there remains uncertainty around the timing of the short term recovery from the Covid-19 pandemic, we have contracted commitments for a further 51 Connect sites for delivery post 31 January 2021.
Continued growth in the US
Our US business continued to grow in the first half with a 21% increase in Connect sites over the prior period to 240 (H1 FY20: 199) leading to a 23% increase in US recurring revenue (in USD) in the period. This growth in the US market is accelerating as the Covid-19 restrictions are reduced and the structural shift towards landlords providing flexible solutions for their occupiers takes hold.
At the same time, the larger, well-funded, existing flexible workspace operators have restarted their growth plans which, whilst not evident in H1 FY21, are expected to benefit us towards the end of FY21 and more significantly into FY22. Increasingly we are engaging with mid and large tier landlords across North America and whilst initial business is expected to be relatively modest, this provides a significant long term opportunity for the Group.
Our recent investment in additional go-to-market capability in the US is delivering results with initial sites contracted with a number of larger owners and operators due to go live in the balance of FY21.
Resilience of underlying business
We are pleased with the resilience shown by the business during the pandemic. Overall Connect site numbers increased to 431 at January 2021 (January 2020: 400) driven by strong momentum in the US. Site churn has remained very low and mostly in the UK where operators have taken the opportunity to rationalise estates as existing site contracts have come to natural end.
As previously reported, we saw a reduction in Marketplace revenues during the period as service utilisation reduced in line with lower underlying occupancy levels, particularly in the UK where sites are more mature and Marketplace revenues higher. Whilst initial expectations were for a recovery in underlying occupancy in the first six months of the year, this was limited by continued government restrictions, but we are now seeing a recovery. Following the setting out of the UK government's roadmap for exiting lockdown and improvements in the Covid-19 situation in both the UK and the US we have seen a 34% increase in underlying customer site occupancy in the UK since the end of January and at the same time an 11% increase the US.
Product development
I am pleased to report that, following substantial investment in software and product development since just before our IPO in May 2019, we launched our new Flex Services Platform on 16 March 2021. The Flex Services Platform will provide workspace providers, whether specialist operators or more traditional landlords, with a single software and digital infrastructure platform to operate and scale up their flexible workspaces.
Built on our private network and cloud infrastructure, the platform supports the four key components that determine the quality of occupier experience: secure digital infrastructure, effective space setup, flexible operations management, and easy-to-use mobile-first occupier interactions.
The launch of Flex Services Platform is the first element of our longer-term vision to deliver all the technology needed for next-generation flexible workspace experiences across commercial real estate. Already incorporating the recently launched Smart Access capability, the roadmap that we have set out at launch incorporates further new capabilities to create seamless experiences across Digital Infrastructure, Space Management, Flexible Operations and Occupier Experience, with a longer-term plan to deliver visitor management, space visualisation and integrated support for environmental & occupancy sensors along with other Internet of Things devices.
In addition to this recent, significant, development we are already seeing the benefit of previous product releases. Over 50% of activity across our network now routes directly to the major cloud service providers (including Amazon, Apple, Dropbox and Salesforce). This is of considerable benefit to our customers as they are able to attract and retain high-value enterprise clients because they can, via our platforms, deliver the secure, private, high performance 'on-net' solutions that many enterprises now demand.
To help us address the expanding market opportunity and meet customer requirements for ever more integrated property technology solutions we have established a specific function within our development capability (essensysLabs) to research the application of new technologies to our customer base and to develop products that complement our software platform and deliver value to our expanding customer base.
We continue to increase our investment in UK based development capability with our UK based team increasing by approximately one third over the period. This has allowed us to continue the ongoing reduction in our offshore based development capability. We anticipate continuing to invest in UK based development capability as the business continues to grow.
Geographical & 'go-to-market' expansion
Our expansion in North America is expected to accelerate as we see the US market expand. Following the appointment of our new CEO North America, Jeremy Bernard, we have improved the go-to-market capability, and expect to make additional business development appointments in the coming months. The investment we made previously in this area is already bearing fruit and we see significant benefit in more proactive senior engagement across the broader real estate market in North America.
Our geographical expansion strategy continues to be executed with additional go-to-market capability coming on stream in Canada and, more recently, France with the establishment of our European business. We have appointed personnel with deep knowledge of their local real estate markets, who are already showing encouraging engagements with multi-site, multi-jurisdiction landlords, and in the case of France, with a number of established flexible workspace operators. Sales cycles for multi-site, multi-jurisdictional landlords are expected to be longer as landlords enter this market for the first time. However, our engagement with existing operators in Europe is expected to provide earlier revenue opportunities. We continue with our ongoing expansion plans in Europe.
Inevitably the establishment of our Asia Pacific business has been delayed by the continued impact of the Covid-19 pandemic. Whilst we have undertaken all our preparatory work for market entry locally, we have been unable to undertake any in-country work or identify appropriate personnel as yet. We continue to have existing customer engagement for Asia Pacific locations and expect our first Connect site to be live in region in Q1 FY22.
As part of this business expansion, we continue to invest in broader marketing capability to support this business development activity and product marketing.
Current trading and outlook
Trading since the period end has continued in line with our expectations with continued increase in sales pipeline activity, sales bookings and engagement with large property groups referred to previously. We are starting to see improvements in the general trading environment in our core markets with a steady increase in underlying occupancy of customer locations and existing customers adding additional sites. There still remains a risk of delays to new site deliveries however any such delays are becoming shorter.
The recent launch of our Flex Services Platform has been well received by existing customers and prospects alike and our increasing engagement with the broader corporate real estate market is already delivering business. It remains clear to us that the structural shift to more flexible working arrangements has been accelerated by the Covid-19 pandemic and we are increasingly optimistic for the future opportunity for essensys.
In the shorter-term activity levels in our US business are accelerating and we will be increasing our investment there over the coming months. Whilst there remains uncertainty over the exact timing of the recovery from Covid-19 our current activity levels mean that we continue to expect results for the full year to be in line with market expectations.
Mark Furness
Chief Executive Officer
22 March 2021
Chief Financial Officer's Report
This is the second interim report issued by essensys since its Admission to AIM on May 2019 and covers the six months to 31 January 2021. The prior comparative period ended 31 January 2020 was the period immediately prior to the impact of the Covid-19 pandemic.
Financial Key Performance Indicators
| £'m unless otherwise stated | Six months to January 2021 | Six months to January 2020 | Change |
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| Group Total Revenue | 10.6 | 11.4 | -7.0% |
| UK | 5.4 | 6.6 | -18% |
| USA | 5.2 | 4.8 | +8.3% |
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| Recurring Revenue1 | 9.6 | 9.7 | -1.0% |
| UK | 5.2 | 5.9 | -12% |
| USA | 4.4 | 3.8 | +16% |
| Recurring Revenue %age of Total | 91% | 85% |
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| Run Rate Annual Recurring Revenue1 | 19.9 | 19.7 | +1.0% |
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| Recurring Revenue at constant currency | 9.8 | 9.7 | +1.0% |
| UK | 5.2 | 5.9 | -12% |
| USA | 4.6 | 3.8 | +21% |
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| Non-recurring revenue | 1.0 | 1.7 | -41% |
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| Product Revenue |
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| Connect | 9.6 | 10.5 | -8.6% |
| Operate | 1.0 | 0.9 | +11% |
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| Gross Profit | 7.1 | 7.2 | -1.4% |
| Gross Profit percentage | 67% | 63% |
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| Recurring Revenue margin %age | 70% | 70% |
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| Statutory (loss) before tax | (1.7) | (0.1) |
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| Adjusted EBITDA2 | 0.7 | 1.9 | -63% |
| Adjusted EBITDA margin | 6.6% | 17% |
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| (Loss)/profit before tax (prior to share based payments) | (1.4) | 0.2 |
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| Cash | 5.9 | 1.7 |
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Revenue
Group Total Revenue fell to £10.6m in H1 FY21 (H1 FY20 £11.4) due to a combination of lower non-recurring revenue from a smaller number of new Connect sites commissioned in the period and lower recurring revenue in the UK, primarily from reduced occupancy based Marketplace revenue. Reported revenue was also negatively impacted by the strengthening of pound sterling in the period (see further commentary below). Total Revenue from the Group's US business grew 8% compared to H1 FY20.
Recurring revenue comprises income invoiced for services that are repeatable and consumed and delivered on a monthly basis over the term of a customer contract. Run Rate Annual Recurring Revenue (Run Rate ARR) is an annualisation of the recurring revenue for the month identified (January 2021); this is used by
1 See Revenue section for explanation
2 See Adjusted EBITDA explanation below
management as an indication of the annual value of the recurring revenue for that month and to monitor long term revenue growth of the business.
As noted above reported revenue had been impacted by the strengthening of the pound against the US Dollar. Excluding this impact Run Rate ARR grew slightly compared to the prior period as reduced revenue from the impact of Covid-19 primarily in reduced marketplace revenue was offset by the 8% overall increase in Connect sites to 431 at 31 January 2021 (January 2020: 400).
In constant currency terms recurring revenue increased slightly compared to H1 FY20. Following the previously reported repositioning of the Operate business, a combination of the continued increase in revenue per site and a 6% increase in site numbers resulted in an increase of 10% in Operate recurring revenue in the period. US Connect recurring revenue grew 23% in US Dollar terms following an increase in site numbers to 240 (from 199 at 31 January 2020). UK recurring revenue was negatively impacted by a combination of the ending of non-cash deferred income release related to a pre-IPO recontract, reduced occupancy based Marketplace revenue and, a net reduction in customer sites as a result of the impact of the Covid-19 pandemic.
Gross margins
Overall gross margins increased year on year from a combination of an increased proportion of recurring revenue and an increase in recurring revenue margins in the US. UK recurring revenue margins have been maintained at a consistent level despite the reduction in marketplace revenue as a result of cost efficiencies. Operate margins continue to increase driven by increased numbers of sites and higher revenue per site.
Administrative expenses
Excluding depreciation charges, administrative expenses grew by £1.1m compared to the prior period in line with the Group's strategic plans and management expectations. This was primarily driven by increases in staff costs resulting from increases in business development personnel in the US and Europe and the appointment of the new US CEO. Marketing expenditure in the period was greater in H1 FY21 in support of the group's expanding 'go to market' capability. The Group incurred increased professional fees as it continues to grow, including establishing its Canadian and European businesses and made additional provision for estimated credit losses following the Covid-19 pandemic.
Statutory loss for the half year
The Group incurred a £1.7m statutory loss for the half year to January 2021 (H1 FY20: loss of £0.1m), analysed as follows:
| £'m | H1 FY21 | H1 FY20 |
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| UK (including non-capitalised R&D) | 0.0 | 1.2 |
| US | 0.4 | 0.4 |
| Canada | (0.1) | - |
| Europe | (0.1) | - |
| Central costs | (1.6) | (1.4) |
| (Loss)/Profit before tax (before share based payment expenses) |
(1.4) |
0.2 |
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| Share based payment expense | (0.3) | (0.3) |
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| Loss before tax for the period | (1.7) | (0.1) |
The UK continues to bear the cost of the Group's product and software development teams to the extent that these are not capitalised.
Adjusted EBITDA
As previously reported, adjusted results are prepared to provide a more comparable indication of the Group's core business performance by removing the impact of share based payment expenses, exceptional costs (where material and non-recurring), and other, non-trading, items that are reported separately. Adjusted results exclude adjusting items as set out in the statement of consolidated income and below, with further details given in the notes to the unaudited interim financial information below, where applicable. In addition, the Group also measures and presents performance in relation to various other non-GAAP measures, such as recurring revenue, run-rate annual recurring revenue and revenue growth.
Adjusted results are not intended to replace statutory results. These have been presented to provide users with additional information and analysis of the Group's performance, consistent with how the Board monitors results.
Adjusted EBITDA (being EBITDA prior to share based payment expenses and exceptional items) is calculated as follows:
| £'m | H1 FY21 | H1 FY20 |
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| Operating (loss)/profit | (1.3) | 0.0 |
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| Depreciation & Amortisation | 1.7 | 1.6 |
| EBITDA | 0.4 | 1.6 |
| Add back: |
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| Share Option Charge | 0.3 | 0.3 |
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| Adjusted EBITDA | 0.7 | 1.9 |
Adjusted EBITDA for the half year was down from H1 FY20 by £1.2m due to the full period effect of continued investment in sales and marketing, product development and expansion of the Group's North American operations together with a reduction in non-recurring revenue in the period and the impact of the strengthening of the pound against the US Dollar.
Currency impact
During the period the Group experienced a 5% increase in the value of the Pound Sterling against the US Dollar. As approaching 50% of the Group's revenues are denominated in USD this strengthening of the pound has impacted the reporting of the Group's revenues compared to the comparative period last year. Whilst the impact in the period was not overly significant (£255,000 negative impact on revenue and limited at EBITDA) the pound has continued to strengthen into the second half of the year. The Group does not currently expect that that the pound will weaken against the dollar whilst the proportion of the Group's revenues denominated in USD is expected to increase. It is expected therefore that there will be greater impact on reported revenues and profitability from changes in the pound to US dollar exchange rate in the second half of the year and in future years.
Taxation
The tax charge incurred by the Group in the period is in relation to deferred tax in the UK.
Cash
Following our equity fundraise in April 2020, net cash at the half year end was £5.9m, in line with management expectations. The Group continues to maintain sufficient cash reserves to fund its working capital requirements, planned product and software development together with any expected short-term geographic expansion.
In light of the current, Covid-19 situation the Board has considered a number of different scenarios regarding trading and financial performance over the balance of this financial year and into FY22 and is confident that it maintains sufficient cash resources in the event of a significant, long term, impact on the Group.
Capitalised Software Development Costs
As previously reported, the Group continues to invest heavily in product development. Increasingly these cost are borne in the UK following a decision to increase the UK based development team and reduce the size of the Group's outsourced offshore development centre in Hanoi, Vietnam. Where such work is expected to result in future revenue, costs incurred that meet the definition of software development in accordance with IAS38, Intangible Assets, are capitalised in the statement of financial position. During the half year the Group capitalised £1.0m in respect of software development (H1 FY20: £1.0m).
Capital Expenditure
In addition to the capitalisation of software development costs noted above, the Group continues to invest in expanding the capacity and capability of its private network. Capital investment in the period was £0.5m (H1 FY20 £0.6m).
Alan Pepper
Chief Financial Officer
22 March 2021
UNAUDITED INTERIM FINANCIAL INFORMATION OF ESSENSYS PLC GROUP
Consolidated statement of comprehensive income
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| Note | Six months ended 31 January 2021 £'000 (unaudited) | Six months ended 31 January 2020 £'000 (unaudited) |
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| Revenue | 3 | 10,596 | 11,407 |
| Cost of sales |
| (3,519) | (4,195) |
| Gross profit |
| 7,077 | 7,212 |
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| Administrative expenses |
| (8,424) | (7,216) |
| Other operating income |
| 34 | 11 |
| Operating (loss)/profit |
| (1,313) | 7 |
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| Operating (loss)/profit analysed by: |
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| Operating (loss)/profit before share based payments |
| (1,038) | 259 |
| Share based payment expenses |
| (275) | (252) |
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| Finance income |
| - | 2 |
| Finance expense |
| (339) | (90) |
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| Loss before taxation |
| (1,652) | (81) |
| Taxation |
| (70) | (12) |
| Loss for the period |
| (1,722) | (93) |
| Other comprehensive loss |
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| Exchange differences arising on translation of foreign operations |
| (154) | (184) |
| Total comprehensive loss for the period |
| (1,876) | (277) |
Loss per share
| Basic and diluted loss per share | 4 | (3.265p) | (0.193p) |
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UNAUDITED INTERIM FINANCIAL INFORMATION OF ESSENSYS PLC GROUP
Consolidated statement of financial position
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| Note
| As at 31 January 2021 £'000 (unaudited) | As at 31 July 2020 £'000 (audited) |
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| ASSETS |
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| Non-current assets |
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| Intangible assets | 5 | 5,472 | 5,013 |
| Property, plant and equipment | 6 | 1,671 | 1,695 |
| Right of use assets | 7 | 1,644 | 2,055 |
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| 8,787 | 8,763 |
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| Current assets |
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| Inventories |
| 160 | 323 |
| Trade and other receivables | 10 | 5,139 | 5,186 |
| Cash at bank and in hand | 10 | 5,937 | 8,496 |
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| 11,236 | 14,005 |
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| TOTAL ASSETS |
| 20,023 | 22,768 |
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| EQUITY AND LIABILITIES |
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| Equity |
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| Shareholders' equity |
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| Called up share capital | 8 | 132 | 132 |
| Share premium |
| 19,881 | 19,881 |
| Share based payment reserve |
| 1,763 | 1,490 |
| Merger reserve |
| 28 | 28 |
| Retained earnings |
| (7,311) | (5,435) |
| Total equity |
| 14,493 | 16,096 |
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| Non-current liabilities |
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| Lease liabilities | 9 | 566 | 796 |
| Deferred tax |
| 497 | 409 |
| Total non- current liabilities |
| 1,063 | 1,205 |
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| Current liabilities |
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| Trade and other payables |
| 2,799 | 3,561 |
| Contract liabilities | 3 | 631 | 550 |
| Lease liabilities | 9 | 1,037 | 1,346 |
| Current taxes |
| - | 10 |
|
|
| 4,467 | 5,467 |
|
|
|
|
|
| TOTAL LIABILITIES |
| 5,530 | 6,672 |
|
|
|
|
|
| TOTAL EQUITY AND LIABILITIES |
| 20,023 | 22,768 |
UNAUDITED INTERIM FINANCIAL INFORMATION OF ESSENSYS PLC GROUP
Consolidated statement of changes in equity
|
| Share capital £'000 | Share premium £'000 | Share based payment reserve £'000 | Merger Reserve £'000 | Retained earnings £'000 | Total £'000 |
|
|
|
|
|
|
|
|
| Balance at 1 August 2020 (audited) | 132 | 19,881 | 1,490 | 28 | (5,435) | 16,096 |
|
|
|
|
|
|
|
|
| Comprehensive Income |
|
|
|
|
|
|
| Loss for the period | - | - | - | - | (1,722) | (1,722) |
| Currency translation differences | - | - | - | - | (154) | (154) |
| Total comprehensive loss | - | - | - | - | (1,876) | (1,876) |
|
|
|
|
|
|
|
|
| Transactions with owners |
|
|
|
|
|
|
| Currency translation differences | - | - | (2) | - | - | (2) |
| Share based payment expense | - | - | 275 | - | - | 275 |
| Balance at 31 January 2021 (unaudited) | 132 | 19,881 | 1,763 | 28 | (7,311) | 14,493 |
|
|
|
|
|
|
|
|
| Balance at 1 August 2019 (audited) | 120 | 13,184 | 979 | 28 | (5,318) | 8,993 |
|
|
|
|
|
|
|
|
| Comprehensive Income |
|
|
|
|
|
|
| Loss for the period | - | - | - | - | (93) | (93) |
| Currency translation differences | - | - | - | - | (184) | (184) |
| Total comprehensive loss | - | - |
| - | (277) | (277) |
|
|
|
|
|
|
|
|
| Transactions with owners |
|
|
|
|
|
|
| Share based payment expense | - | - | 252 | - | - | 252 |
| Balance at 31 January 2020 (unaudited) | 120 | 13,184 | 1,231 | 28 | (5,595) | 8,968 |
|
|
|
|
|
|
|
|
UNAUDITED INTERIM FINANCIAL INFORMATION OF ESSENSYS PLC GROUP
Consolidated cash flow statements
|
|
| Six months ended 31 January 2021 £'000 (unaudited) | Six months ended 31 January 2020 £'000 (unaudited) |
| Cash flows from operating activities |
|
|
|
| Loss before taxation |
| (1,652) | (93) |
| Adjustments for non-cash/non-operating items: |
|
|
|
| Amortisation of intangible assets |
| 588 | 464 |
| Depreciation of property, plant and equipment |
| 525 | 299 |
| Amortisation of right-of-use assets |
| 596 | 839 |
| Share based payment expense |
| 275 | 252 |
| Finance income |
| - | (2) |
| Finance expense |
| 339 | 90 |
| Receipts from government grants treated as income |
| (34) | - |
|
|
| 637 | 1,849 |
| Changes in working capital: |
|
|
|
| Decrease/(increase) in inventory |
| 163 | (206) |
| Decrease/(increase) in trade and other receivables |
| 47 | (794) |
| (Decrease)/increase in trade and other payables |
| (681) | 826 |
| Cash from operations |
| 166 | 1,675 |
|
|
|
|
|
| Taxation received |
| 8 | 31 |
| Net cash from operating activities |
| 174 | 1,706 |
|
|
|
|
|
| Cash flows from investing activities |
|
|
|
| Purchase of intangible assets |
| (1,047) | (950) |
| Purchase of property, plant and equipment |
| (539) | (591) |
| Interest received |
| - | 2 |
| Net cash used in investing activities |
| (1,586) | (1,539) |
|
|
|
|
|
| Cash flows from financing activities |
|
|
|
| Receipts from government grants |
| 34 | - |
| Payment at termination of loan |
| (63) | - |
| Repayment of lease liabilities |
| (1,008) | (1,057) |
| Interest on lease liabilities |
| (86) | (90) |
| Net cash used in financing activities |
| (1,123) | (1,147) |
|
|
|
|
|
| Net decrease in cash and cash equivalents |
| (2,535) | (980) |
|
|
|
|
|
| Cash and cash equivalents beginning of period |
| 8,496 | 2,688 |
|
|
|
|
|
| Effects of foreign exchange rate changes |
| (24) | 12 |
| Cash and cash equivalents at end of period |
| 5,937 | 1,720 |
|
|
|
|
|
UNAUDITED INTERIM FINANCIAL INFORMATION OF ESSENSYS PLC GROUP
Notes to the unaudited interim financial information
1. Basis of preparation
The unaudited condensed interim financial information presents the consolidated financial results of essensys plc and its wholly owned subsidiaries (together, "essensys plc Group" or "the Group") for the six-month period to 31 January 2021. This financial information has been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards and International Accounting Standards Board (IASB) and interpretations (collectively "IFRS"). This financial information does not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 31 July 2020 Annual Report. The financial information for the half year ended 31 January 2021 does not constitute statutory accounts within the meaning of Section 434 (3) of the Companies Act 2006 and both periods are unaudited.
The comparative financial information presented herein for the year ended 31 July 2020 does not constitute full statutory accounts for that period. The statutory Annual Report and Financial Statements for the year ended 31 July 2020 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statements for the year ended 31 July 2020 was 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 has applied the same accounting policies and methods of computation in its interim consolidated financial statements as in its 2020 annual financial statements, except for those that relate to new standards and interpretations effective for the first time for periods beginning on (or after) 1 January 2020 and will be adopted in the 2021 financial statements. There were no new standards impacting the Group that will be adopted in the annual financial statements for the year ended 31 July 2021.
essensys plc is the Group's ultimate parent company. It is a public listed company and is domiciled in the United Kingdom. The address of its registered office and principal place of business is Aldgate Tower 7th Floor, 2 Leman Street, London E1 8FA. essensys plc's shares are listed on the Alternative Investment Market (AIM) of the London Stock Exchange.
2. Going Concern
The consolidated financial statements have been prepared on a going concern basis. In reaching their assessment, the directors have considered a period extending at least twelve months from the date of approval of this half yearly financial report.
The directors continue to monitor developments with, and potential impact of, Covid-19 in the short and medium term and is in particular focussed on the key risks of: delays by customers in activation of existing contracted sites; near term delays in customer contracting decisions in respect of new sites; potential reduction in marketplace service utilisation; and the impact of the current situation on the financial stability of customers.
The directors have prepared cash flow forecasts covering a period of at least 12 months from the date of releasing these interim financial statements. This assessment has included consideration of the forecast performance of the business for the foreseeable future, the cash and financing facilities available to the Group and the mitigating actions undertaken to reduce the impact of Covid-19. In preparing these forecasts, the directors have considered a number of sensitivities, including stress testing based on the loss of a major customer, loss of future growth market opportunities and the continued impact of Covid-19. At 31 January 2021 the Group had cash reserves of £5.9m and no debt.
Based on the sensitised cash flow forecasts prepared, the directors are confident that any funding needs required by the business will be sufficiently covered by the existing cash reserves.
Notes to the unaudited interim financial information
3. Segmental reporting
The Group has one single business reportable segment and generates revenue largely in the UK and the US. The majority of the Group's customers provide flexible office facilities together with ancillary services (e.g. meeting rooms and virtual services) including technology connectivity.
The Group provides mission critical software-as-a-service ("SaaS") and Cloud services to the flexible workspace industry. The Group's software is designed specifically to serve the specific requirements of flexible workspace providers, removing operational complexity and enabling them to operate more efficient, tech-driven spaces and businesses.
The Connect software-enabled-services platform allows flexible workspace operators to provision, manage and monitor, in real-time, all of the critical infrastructure, IT and tech services that they provide to their customers. As part of providing this service, the Group also provides the technology infrastructure that supports these services.
The Group's Operate software platform is a comprehensive ERP platform for flexible workspace providers, allowing operators to more effectively and efficiently run their businesses day-to-day.
The Group generates revenue from the following activities:
| - Establishing services at customer sites (e.g. providing and managing installation services, equipment and providing training on software and services) - Recurring monthly fees for using the Group's platforms - Revenue from usage of on demand services such as internet and telephone usage and other, on demand, variable services. - Other ad-hoc services
|
The Group has one single business reportable segment which is the provision of software and technology platforms that manage their critical infrastructure and business processes, primarily to the flexible workspace industry.
The Group has two main revenue streams, Operate and Connect. Given that support for both revenue streams is provided in such a way as to make cost and therefore operating performance impractical, the two revenue streams are combined into a single reportable segment. The essensys plc Group's revenue per revenue stream is as follows:
|
| Six months ended 31 January 2021 £'000 | Six months ended 31 January 2020 £'000 |
|
|
|
|
| Operate - workspace management software | 1,021 | 943 |
| Connect - software enabled infrastructure platform | 9,575 | 10,464 |
|
| 10,596 | 11,407 |
Notes to the unaudited interim financial information
3. Segmental reporting (continued)
Revenue from customers greater than 10% in each reporting period is as follows:
|
| Six months ended 31 January 2021 £'000 | Six months ended 31 January 2020 £'000 |
|
|
|
|
| Customer 1 | 1,780 | 1,717 |
| Customer 2 | 1,177 | 1,542 |
| Customer 3 | - | 1,200 |
The Group operates in two main geographic areas, the United Kingdom and the United States of America. The Group's revenue per geographical area is as follows:
|
| Six months ended 31 January 2021 £'000 | Six months ended 31 January 2020 £'000 |
|
|
|
|
| United Kingdom | 5,427 | 6,621 |
| United States of America | 5,169 | 4,786 |
|
| 10,596 | 11,407 |
Group revenue disaggregated between revenue recognised 'at a point in time' and 'over time' is as follows:
|
| Six months ended 31 January 2021 £'000 | Six months ended 31 January 2020 £'000 |
|
|
|
|
| Revenue recognised at a point in time | 1,018 | 1,686 |
| Revenue recognised over time | 9,578 | 9,721 |
|
| 10,596 | 11,407 |
Notes to the unaudited interim financial information
3. Segmental reporting (continued)
Contract assets and liabilities
Contract asset movements were as follows:
|
| £000 |
|
|
|
| At 1 August 2020 | 420 |
| Transfers in the period from contract assets to trade receivables | (160) |
| Excess of revenue recognised over cash (or rights to cash) being recognised during the period | 396 |
| Capitalised commission cost released as contract obligations fulfilled | (147) |
| Commission costs capitalised on contracts | 95 |
| At 31 January 2021 | 604 |
|
|
|
|
| £000 |
|
|
|
| At 1 August 2019 | 475 |
| Transfers in the period from contract assets to trade receivables | (271) |
| Excess of revenue recognised over cash (or rights to cash) being recognised during the period | 164 |
| Capitalised commission cost released as contract obligations fulfilled | (159) |
| Commission costs capitalised on contracts | 211 |
| At 31 July 2020 | 420 |
|
|
|
Contract liability movements were as follows:
|
| £000 |
|
|
|
| At 1 August 2020 | 550 |
| Amounts included in contract liabilities that were recognised as revenue during the period | (517) |
| Cash received and receivables in advance of performance and not recognised as revenue during the period | 598 |
| At 31 January 2021 | 631 |
|
|
|
|
| £000 |
|
|
|
| At 1 August 2019 | 1,044 |
| Amounts included in contract liabilities that were recognised as revenue during the period | (1,044) |
| Cash received and receivables in advance of performance and not recognised as revenue during the period | 550 |
| At 31 July 2020 | 550 |
|
|
|
Contract assets are included within 'trade and other receivables' and contract liabilities are shown respectively on the face of the statement of financial position. Contract assets arise from the group's revenue contracts, where work is performed in advance of invoicing customers. Contract liabilities arise where revenue is received in advance of work performed. Cumulatively, payments received from customers at each balance sheet date do not necessarily equal the amount of revenue recognised on the contracts. Commission costs capitalised on contracts represents internal sales commission costs incurred on signing of customer contracts and, in line with the requirements of IFRS15, spread over the life of the customer contract.
4. Loss per share
The loss per share has been calculated using the loss for the period and the weighted average number of ordinary shares outstanding during the period, as follows:
|
| Six months ended 31 January 2021 £'000 | Six months ended 31 January 2020 £'000 |
|
|
|
|
| Loss for the period attributable to equity holders of Essensys Group | (1,722) | (93) |
| Weighted average number of ordinary shares | 52,743,329 | 48,107,567 |
| Loss per share | (3.265p) | (0.193p) |
As the Group is loss making in both periods presented, the share options over ordinary shares have an anti-dilutive effect and therefore no dilutive loss per share is disclosed.
Notes to the unaudited interim financial information
5. Intangible assets
|
|
|
Customer | Internal software |
|
|
|
|
|
| relationships | development | Software | Goodwill | Total |
|
|
| £000 | £000 | £000 | £000 | £000 |
|
|
|
|
|
|
|
|
|
| Cost |
|
|
|
|
|
|
| At 1 August 2020 | 335 | 6,751 | 280 | 1,263 | 8,629 |
|
| Additions | - | 1,047 | - | - | 1,047 |
|
| At 31 January 2021 | 335 | 7,798 | 280 | 1,263 | 9,676 |
|
|
|
|
|
|
|
|
|
| Amortisation |
|
|
|
|
|
|
| At 1 August 2020 | 293 | 3,043 | 280 | - | 3,616 |
|
| Charge for year | 18 | 570 | - | - | 588 |
|
| At 31 January 2021 | 311 | 3,613 | 280 | - | 4,204 |
|
|
|
|
|
|
|
|
|
| Net book value |
|
|
|
|
|
|
| At 31 January 2021 | 24 | 4,185 | - | 1,263 | 5,472 |
|
|
|
|
|
|
|
|
|
| At 31 July 2020 | 42 | 3,708 | - | 1,263 | 5,013 |
|
|
|
|
|
|
|
|
|
|
|
Customer | Internal software |
|
|
|
|
|
| relationships | development | Software | Goodwill | Total |
|
|
| £000 | £000 | £000 | £000 | £000 |
|
| Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| At 1 August 2019 | 335 | 4,461 | 280 | 1,263 | 6,339 |
|
| Additions | - | 2,290 | - | - | 2,290 |
|
| At 31 July 2020 | 335 | 6,751 | 280 | 1,263 | 8,629 |
|
|
|
|
|
|
|
|
|
| Amortisation |
|
|
|
|
|
|
| At 1 August 2019 | 217 | 2,162 | 228 | - | 2,607 |
|
| Charge for year | 76 | 881 | 52 | - | 1,009 |
|
| At 31 July 2020 | 293 | 3,043 | 280 | - | 3,616 |
|
|
|
|
|
|
|
|
|
| Net book value |
|
|
|
|
|
|
| At 31 July 2020 | 42 | 3,708 | - | 1,263 | 5,013 |
|
|
|
|
|
|
|
|
|
| At 31 July 2019 | 118 | 2,299 | 52 | 1,263 | 3,732 |
|
|
|
|
|
|
|
|
Notes to the unaudited interim financial information
6. Property, plant and equipment
|
|
| Fixtures and | Computer | Leasehold |
|
|
|
| fittings | equipment | improvements | Total |
|
|
| £000 | £000 | £000 | £000 |
|
|
|
|
|
|
|
|
| Cost |
|
|
|
|
|
| At 1 August 2020 | 247 | 6,601 | 132 | 6,980 |
|
| Additions | - | 539 | - | 539 |
|
| Exchange adjustments | (8) | (142) | (2) | (152) |
|
| At 31 January 2021 | 239 | 6,998 | 130 | 7,367 |
|
|
|
|
|
|
|
|
| Depreciation |
|
|
|
|
|
| At 1 August 2020 | 154 | 5,053 | 78 | 5,285 |
|
| Charge for year | 18 | 501 | 6 | 525 |
|
| Exchange adjustments | (5) | (107) | (2) | (114) |
|
| At 31 January 2021 | 167 | 5,447 | 82 | 5,696 |
|
|
|
|
|
|
|
|
| Net book value |
|
|
|
|
|
| At 31 January 2021 | 72 | 1,551 | 48 | 1,671 |
|
|
|
|
|
|
|
|
| At 31 July 2020 | 93 | 1,548 | 54 | 1,695 |
|
|
|
|
|
|
|
|
|
| Fixtures and | Computer | Leasehold |
|
|
|
| fittings | equipment | improvements | Total |
|
|
| £000 | £000 | £000 | £000 |
|
| Cost |
|
|
|
|
|
| At 1 August 2019 | 186 | 4,763 | 113 | 5,082 |
|
| Additions | 73 | 917 | 2 | 992 |
|
| Transfers | - | 1,305 | - | 1,305 |
|
| Exchange adjustments | (12) | (384) | (3) | (399) |
|
| At 31 July 2020 | 247 | 6,601 | 132 | 6,980 |
|
|
|
|
|
|
|
|
| Depreciation |
|
|
|
|
|
| At 1 August 2019 | 120 | 3,513 | 73 | 3,706 |
|
| Charge for year | 41 | 531 | 15 | 587 |
|
| Transfers | - | 1,136 | - | 1,136 |
|
| Exchange adjustments | (7) | (127) | (10) | (144) |
|
| At 31 July 2020 | 154 | 5,053 | 78 | 5,285 |
|
|
|
|
|
|
|
|
| Net book value |
|
|
|
|
|
| At 31 July 2020 | 93 | 1,548 | 54 | 1,695 |
|
|
|
|
|
|
|
|
| At 31 July 2019 | 66 | 1,250 | 60 | 1,376 |
|
|
|
|
|
|
|
Notes to the unaudited interim financial information
7. Right of use assets
|
|
| Leasehold | Fixtures and | Computer | Leasehold |
|
|
|
| property | fittings | equipment | improvements | Total |
|
|
| £000 | £000 | £000 | £000 | £000 |
|
|
|
|
|
|
|
|
|
| Cost |
|
|
|
|
|
|
| At 1 August 2020 | 4,204 | 142 | 1,527 | 584 | 6,457 |
|
| Additions | - | - | - | - | - |
|
| Lease remeasurement | 227 | - | - | - | 227 |
|
| Disposals | - | - | - | - | - |
|
| Exchange adjustments | (65) | - | - | - | (65) |
|
| At 31 January 2021 | 4,366 | 142 | 1,527 | 584 | 6,619 |
|
|
|
|
|
|
|
|
|
| Depreciation |
|
|
|
|
|
|
| At 1 August 2020 | 2,609 | 134 | 1,440 | 219 | 4,402 |
|
| Charge for year | 544 | 7 | 16 | 29 | 596 |
|
| Disposals | - | - | - | - | - |
|
| Exchange adjustments | (23) | - | - | - | (23) |
|
| At 31 January 2021 | 3,130 | 141 | 1,456 | 248 | 4,975 |
|
|
|
|
|
|
|
|
|
| Net book value |
|
|
|
|
|
|
| At 31 January 2021 | 1,236 | 1 | 71 | 336 | 1,644 |
|
|
|
|
|
|
|
|
|
| At 31 July 2020 | 1,595 | 8 | 87 | 365 | 2,055 |
|
|
|
|
|
|
|
|
|
|
| Leasehold | Fixtures and | Computer | Leasehold |
|
|
|
| property | fittings | equipment | improvements | Total |
|
|
| £000 | £000 | £000 | £000 | £000 |
|
|
|
|
|
|
|
|
|
| Cost |
|
|
|
|
|
|
| At 1 August 2019 | 4,362 | 142 | 2,815 | 584 | 7,903 |
|
| Lease remeasurement | (37) | - | 64 | - | 27 |
|
| Transfers | - | - | (1,305) | - | (1,305) |
|
| Exchange adjustments | (121) | - | (47) | - | (168) |
|
| At 31 July 2020 | 4,204 | 142 | 1,527 | 584 | 6,457 |
|
|
|
|
|
|
|
|
|
| Depreciation |
|
|
|
|
|
|
| At 1 August 2019 | 2,260 | 99 | 2,265 | 160 | 4,784 |
|
| Lease remeasurement | - | - | - | - | - |
|
| Charge for year | 985 | 35 | 345 | 59 | 1,424 |
|
| Transfers | - | - | (1,138) | - | (1,138) |
|
| Exchange adjustments | (40) | - | (32) | - | (72) |
|
| At 31 July 2020 | 2,609 | 134 | 1,440 | 219 | 4,402 |
|
|
|
|
|
|
|
|
|
| Net book value |
|
|
|
|
|
|
| At 31 July 2020 | 1,595 | 8 | 87 | 365 | 2,055 |
|
|
|
|
|
|
|
|
|
| At 31 July 2019 | 2,102 | 43 | 550 | 424 | 3,119 |
|
|
|
|
|
|
|
|
Notes to the unaudited interim financial information
8. Called up share capital
|
| As at 31 January 2021 No. | As at 31 July 2020 No. |
| Allotted, called up and fully paid |
|
|
| 0.25p ordinary shares | 52,743,329 | 52,743,329 |
|
|
|
|
|
| 31 January 2021 £'000 | 31 July 2020 £'000 |
| Allotted, called up and fully paid |
|
|
| 0.25p ordinary shares | 132 | 132 |
9. Lease liabilities
|
|
| Leasehold | Fixtures and | Computer | Leasehold |
|
|
|
| property | fittings | equipment | improvements | Total |
|
|
| £000 | £000 | £000 | £000 | £000 |
|
|
|
|
|
|
|
|
|
| At 1 August 2020 | 1,820 | 57 | 88 | 177 | 2,142 |
|
| Additions | - | - | - | - | - |
|
| Interest expense | 36 | 2 | 41 | 7 | 86 |
|
| Effect of modification to lease terms | 236 | - | 193 | - | 429 |
|
| Lease payments | (683) | (18) | (237) | (70) | (1,008) |
|
| Foreign exchange movements | (45) | - | (1) | - | (46) |
|
| At 31 January 2021 | 1,364 | 41 | 84 | 114 | 1,603 |
|
|
|
|
|
|
|
|
|
| Analysis by current and non-current: |
| ||||
|
|
|
|
|
|
|
|
|
|
| Leasehold | Fixtures and | Computer | Leasehold |
|
|
|
| property | fittings | equipment | improvements | Total |
|
|
| £000 | £000 | £000 | £000 | £000 |
|
|
|
|
|
|
|
|
|
| Due within a year | 798 | 41 | 84 | 114 | 1,037 |
|
| Due in more than one year | 566 | - | - | - | 566 |
|
|
| 1,364 | 41 | 84 | 114 | 1,603 |
|
|
|
|
|
|
|
|
Notes to the unaudited interim financial information
9. Lease liabilities (continued)
|
|
| Leasehold | Fixtures and | Computer | Leasehold |
|
|
|
| property | fittings | equipment | improvements | Total |
|
|
| £000 | £000 | £000 | £000 | £000 |
|
|
|
|
|
|
|
|
|
| At 1 August 2019 | 2,444 | 86 | 620 | 298 | 3,448 |
|
| Additions | 586 | - | - | - | 586 |
|
| Interest expense | 78 | 6 | 25 | 23 | 132 |
|
| Lease payments | (1,204) | (35) | (543) | (144) | (1,926) |
|
| Foreign exchange movements | (84) | - | (14) | - | (98) |
|
| At 31 July 2020 | 1,820 | 57 | 88 | 177 | 2,142 |
|
|
|
|
|
|
|
|
|
| Analysis by current and non-current: |
| ||||
|
|
|
|
|
|
|
|
|
|
| Leasehold | Fixtures and | Computer | Leasehold |
|
|
|
| property | fittings | equipment | improvements | Total |
|
|
| £000 | £000 | £000 | £000 | £000 |
|
|
|
|
|
|
|
|
|
| Due within a year | 1,113 | 31 | 71 | 131 | 1,346 |
|
| Due in more than one year | 707 | 26 | 17 | 46 | 796 |
|
|
| 1,820 | 57 | 88 | 177 | 2,142 |
|
|
|
|
|
|
|
|
10. Financial instruments
Financial assets
Financial assets measured at amortised cost comprise trade receivables, other receivables, accrued income and cash, as follows:
|
| As at 31 January 2021 £'000 | As at 31 July 2020 £'000 |
| Trade receivables | 3,107 | 3,116 |
| Other receivables | 915 | 655 |
| Cash at bank and in hand | 5,937 | 8,496 |
|
| 9,959 | 12,267 |
Financial liabilities
Financial liabilities measured at amortised cost comprise trade payables, accruals, other payables and lease liabilities, as follows:
|
| As at 31 January 2021 £'000 | As at 31 July 2020 £'000 |
| Trade payables | 1,047 | 1,912 |
| Other payables | 897 | 404 |
| Accruals | 855 | 789 |
| Lease liabilities | 1,603 | 2,142 |
|
| 4,400 | 5,247 |
The Group's activities expose it to a variety of financial risks:
| • Market risk (including foreign exchange risk, price risk and interest rate risk) • Credit risk • Liquidity risk |
The financial risks relate to the following financial instruments:
| • Cash and cash equivalents • Trade and other receivables • Trade and other payables |
Risk management is carried out by the directors. The directors identify and evaluate financial risks and provide principals for overall risk management.
(a) Credit Risk
Credit risk is the risk of financial loss to the Group if a customer fails to meet its contractual obligations. The Group is mainly exposed to credit risk from credit sales. It is Group policy, implemented locally, to assess the credit risk of new customers before entering contracts.
Notes to the unaudited interim financial information
10. Financial instruments (continued)
(b) Market risk
(i) Foreign exchange risk
Foreign exchange risk arises because the Group operates in the United Kingdom and the United States of America, whose functional currency is not the same as the presentational currency of the Group. Foreign exchange risk also arises when individual companies within the group enter into transactions denominated in currencies other than their functional currency. Such transactions are kept to a minimum either through the choice of suppliers or presenting sales invoices in the functional currency.
Certain assets of the group companies are denominated in foreign currencies. Similarly, the Group has financial liabilities denominated in those same currencies. In general, the Group seeks to maintain the financial assets and financial liabilities in each of the foreign currencies at a reasonably comparable level, thus providing a natural hedge against foreign exchange risk and reducing foreign exchange exposure to a minimal level.
(ii) Interest rate risk
The Group's interest rate exposure arises mainly from the interest-bearing borrowings. All the Group's facilities were floating rates excluding interest from leases, which exposed the group to cash flow risk. As at 31 January 2021 there are no loans outstanding. Therefore, there is no material exposure to interest rate risk
(c) Liquidity Risk
Prudent liquidity risk management implies maintaining sufficient cash flows for operations. The Group manages its risk to shortage of funds by monitoring forecast and actual cash flows. The Group monitors its risk to a shortage of funds using a recurring liquidity planning tool.
11. Post balance sheet events
There have been no post balance sheet events of any significance.
Since the end of the period the Group has continued to enter into new contracts with both existing and new customers and has continued to see an increase in underlying occupancy of customer sites.
As at 31 January 2021 the Group had cash reserves of £5.9m. Given the mission-critical nature of the Group's software and services, the commitments that its customers have in terms of their own site delivery plans and the recurring and contracted nature of the majority of the Group's revenue, management continues to expect its customers to meet their financial commitments to the Group.
UNAUDITED INTERIM FINANCIAL INFORMATION OF ESSENSYS PLC GROUP
INDEPENDENT REVIEW REPORT TO ESSENSYS PLC
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 January 2021 which comprises the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity and the consolidated cash flow statement.
We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
Directors' responsibilities
The interim report, including the financial information contained therein, is the responsibility of and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on AIM which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the Company's annual accounts having regard to the accounting standards applicable to such annual accounts.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 July 2021 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.
UNAUDITED INTERIM FINANCIAL INFORMATION OF ESSENSYS PLC GROUP
Use of our report
Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on AIM and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability
BDO LLP
Chartered Accountants
London
22 March 2021
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
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