Source - LSE Regulatory
RNS Number : 5422X
WANdisco Plc
05 May 2021
 

5 May 2021

WANdisco plc

("WANdisco", the "Company" or the "Group")

 

Audited results for the year ended 31 December 2020

 

- Primary strategic goal achieved, deeply embedding WANdisco into cloud fabric

- Microsoft Azure go-to-market launched and Migration Competency with Amazon Web Services achieved

- Growing opportunity enabling data analytics through Databricks and Snowflake partnerships

 

WANdisco (LSE: WAND), the LiveData company announces audited results for the year ended 31 December 2020.

 

Financial headlines

 

·     

Revenue for the year of $10.5 million (2019: $16.2 million)

·     

Cash overheads1 of $36.9 million (2019: $31.7 million)

·     

Adjusted EBITDA2 loss of $22.2 million (2019: $11.7 million)

·     

Statutory loss from operations of $34.3 million (2019: $28.3 million)

·     

Cash at 31 December 2020 of $21.0 million (2019: $23.4 million)

·     

Debt at 31 December 2020 of $0.6 million (2019: $2.2 million)

 

Strategic and operational highlights

 

·     

Go-to-market launch of LiveData Platform for Microsoft Azure in Q4 2020:

 

Microsoft's preferred data lake migration solution, appearing as a native Azure service with metered billing, delivering self-service data lake migration with zero downtime, disruption and risk

 

Microsoft has estimated a total addressable market ("TAM") of 200-300 exabytes of on-premise analytical data. Targeting migration of >100 petabytes of data in FY21

 

 

·     

Launched LiveData Migrator on Amazon Web Services ("AWS") Cloud and achieved Migration Competency status in Q3 2020:

 

Landmark success with launch customer GoDaddy, seamlessly migrating 500 terabytes of live data featuring 21,000 change operations every second - only possible through WANdisco's solution

 

Providing AWS customers, a no downtime, easy and efficient migration of petabyte-scale data lakes to the cloud and targeting migration of >30 petabytes of data in FY21

 

 

·     

Expanded partnerships with data analytics platforms Databricks and Snowflake:

 

Growing opportunity to support machine learning and artificial intelligence in the cloud

 

Post-period end announced partnership with Snowflake, to automate, accelerate and simplify the migration of on-premises Hadoop analytics workloads to Snowflake's data platform

 

 

·     

Evolution in 2021 towards consumption-based revenue model - the standard for the cloud ecosystem:

 

With metered billing on Azure, revenue is shifting from a subscription model in which revenue is recognised up front, to a consumption-based model where revenue is recognised over time

 

 

·     

Meaningful commercial momentum with blue chip customers and partners support FY21 pipeline:

 

Blue chip cloud migration contracts won with: one of the world's largest media and telecommunications companies; one of the world's largest airlines; a major British supermarket; a top three mobile operator; and one of the largest banks in Africa 

 

Secured a further $3 million contract with one of the world's largest media and telecommunications companies to migrate an initial 13PB Hadoop cluster to Microsoft Azure

 

Signed a global reseller agreement with major systems integrator Infosys focused on migration

 

Integrated LiveData Migrator into IBM's Big Replicate to capitalise on near-term opportunity of enterprises migrating off legacy Hadoop platforms

 

Outlook

 

·     

With the Q4 2020 launch of LiveData Migrator on AWS and the LiveData Platform on Azure, 2021 marks the beginning of the growth phase for the Company

·     

Significant commercial progress with Microsoft Azure and AWS partnerships, and expanding ties with system integrators, underpins the Board's confidence in our outlook and target to deliver at least $35m in revenues in FY21, targeting the migration of >100PB of data on Azure and >30PB on AWS

 

David Richards, Chief Executive Officer and Chairman of WANdisco, commented:

 

"In 2020 we achieved our primary strategic goal of launching our LiveData Platform for Microsoft Azure as a native offering - becoming deeply embedded into the cloud fabric as Microsoft's preferred data lake migration solution. In addition, we launched LiveData Migrator on AWS and became the only vendor to achieve Migration Competency status, positioning WANdisco as the global standard for cloud migration to AWS. These milestone achievements position WANdisco for significant scalable growth in FY21.

 

"WANdisco is uniquely positioned to enable the next generation of machine learning and artificial intelligence in the cloud. Our partnerships with the major cloud vendors and solutions like Databricks and Snowflake provides a growing opportunity to become integral to the entire lifecycle of analytical data.

 

"In FY21, the business is focused on accelerating the conversion of the 200-300 exabyte cloud migration market identified by Microsoft by continuing to expand our partner relationships and delivering on our pipeline. WANdisco enters FY21 with an unparalleled solution, deeply embedded into the world's largest cloud ecosystems and with the experience and financial platform to convert on a vast market opportunity. With these drivers and the Group's current pipeline and visibility, we remain confident in our ability to achieve at least $35m in revenues in FY21."

 

2

Operating loss adjusted for: depreciation, amortisation and equity-settled share-based payment. See Note 4 to the condensed consolidated financial statements for a reconciliation.

 

 

 

For further information, please contact:

 

 

WANdisco plc

via FTI Consulting

David Richards, Chief Executive Officer and Chairman

 

Erik Miller, Chief Financial Officer

 

Daud Khan, VP Corporate Development

 

 

 

FTI Consulting

+44 (0)20 3727 1137

Matt Dixon / Chris Birt / Kwaku Aning

 

 

 

Stifel (Nomad and Sole Broker)

+44 (0)20 7710 7600

Fred Walsh / Richard Short

 

 

About WANdisco

WANdisco is the LiveData company. WANdisco solutions enable enterprises to create an environment where data is always available, accurate and protected, creating a strong backbone for their IT infrastructure and a bedrock for running consistent, accurate machine learning applications. With zero downtime and zero data loss, WANdisco's products keep geographically dispersed data at any scale consistent between on-premises and cloud environments allowing businesses to operate seamlessly in a hybrid or multi-cloud environment. WANdisco has over a hundred customers and significant go-to-market partnerships with Microsoft Azure, Amazon Web Services, Google Cloud, Oracle, and others as well as OEM relationships with IBM and Alibaba. For more information on WANdisco, visit http://www.wandisco.com.  

 

BUSINESS REVIEW

In 2020, we delivered on our primary strategic goal of launching LiveData Platform for Microsoft Azure, with joint go-to-market activity with Microsoft from October 2020, firmly establishing WANdisco as part of the global cloud fabric. A new Azure service, the LiveData Platform for Azure, allows customers to use our software as if it were a native Azure offering. As an Azure service, customers can deploy WANdisco's LiveData products by selecting it from the same Azure menu used for native Microsoft services such as compute and storage, with metered billing added on their existing monthly Azure payments. No software to install, no new contracts to sign, no barrier to entry.

 

Our LiveData Migrator product also launched on AWS in September 2020. AWS launch customer GoDaddy had a data set that was considered impossible to migrate to the cloud with a data set featuring 21,000 change operations every second. WANdisco was able to migrate GoDaddy's target 500 terabytes of live data in a single scan - a landmark achievement for the Group and the unique LiveData Migrator product.

 

In September 2020, we signed a reseller contract with Infosys, a major global systems integrator with a large cloud migration practice. Our new LiveData Migrator product will unlock a previously difficult to service market for them for large, on-premises to cloud migrations as well as our LiveData Platform providing hybrid and inter cloud data consistency solutions.

 

WANdisco continued to build customer momentum heading into Q4 2020, securing a large $3 million further contract with one of the world's largest media and telecommunications companies in November 2020. Other significant contracts included major blue chip organisations such as a large media company, a British supermarket chain, and a major bank in the Southeastern US.

 

Post-period end in March 2021, the Group completed a successful fundraising of $42.5 million, to accelerate and strengthen the Group's commercial position by building balance sheet strength in order to capitalise on future opportunities to further scale the business, including expand opportunities with other cloud vendors such as AWS and Google (GCP), provide capital to accelerate growth and pursue closer ties with Machine Learning and Artificial Intelligence ("ML/AI"), Independent Software Vendors ("ISVs") and widening its System Integrator ("SI") relationships; and provide capital for greater enablement support for the early stages of growth as the Group's relationships with current SIs deepen.

 

On 11 March, the Group also announced a LiveData Migrator partnership with Snowflake, the data cloud company, to automate, accelerate and simplify the migration of on-premises Hadoop analytics workloads to Snowflake's data platform. The partnership opens a new distribution channel for WANdisco with Snowflake's c.4,000 customers and significant market share of Fortune 500 customers. The future of analytical data, machine learning and artificial intelligence is in the cloud, building a medium-term opportunity for the Group supporting the likes of Databricks and Snowflake across the entire data lifecycle.

 

With WANdisco now deeply integrated into the cloud fabric, the Group is well positioned to scale significantly and to convert the pipeline of opportunities ahead. More so than ever following the COVID-19 pandemic, the cloud is where all businesses must operate and WANdisco now stands as the de facto standard for cloud migration for petabyte scale blue chip data sets, delivering self-service migration at any scale, with zero business disruption, zero risk and best time-to-value. WANdisco enters FY21 with an unparalleled solution, deeply embedded into the world's largest cloud ecosystems and with the experience and financial platform to convert on a vast market opportunity.

 

The Group also announced its intention to consider the potential value creation provided by a US market listing, offering access to a greater pool of capital in the region where many of the Company's investors reside, alongside an increased profile in the US with its commercial partners. While the Group continues to be committed to the AIM market which has supported WANdisco's growth to date through access to capital, the scale of the opportunity ahead and increasing US concentration of both customers and investors provides a compelling rationale to pursue a potential US listing.

 

COVID-19 update

 

The global nature of the COVID-19 virus has resulted in macroeconomic uncertainty. The impact of COVID-19 in certain geographies has prompted a reassessment of credit risk and the realisation of certain receivables.  Where appropriate, an estimate of the potential impairment of these receivables has been made. The impairment of these receivables is not material to the liquidity of the Group. Due to the uncertainty of the impact of COVID-19 and related governmental restrictions, management intends to review credit risk related to these impacts at each reporting date.

 

We expect that the launch of products with Microsoft and AWS will overcome any short-term headwinds from the economic uncertainty surrounding the impact of COVID-19. With the exception of the impairment of certain receivables discussed above, we have experienced minimal effects to our customer base and order flow, and have not reduced employee-based costs.

 

KPIs to map the shift to consumption-based revenue model

 

Group revenues have historically been typified by subscription contracts in which revenues are recognised up front. With the introduction of metered billing on Azure, WANdisco has begun a shift to a consumption-based model. Consumption is the true SaaS, with customers expecting to purchase on a consumption basis within the cloud ecosystem through metered billing.

 

To effectively build consumption revenue streams, sales compensation must also be changed to incentivise the activation of customers and the early commitment of customers to build consumption through the year, as opposed to a single point of sale.

 

A consumption-based model provides greater agility and the ability to scale as required and provides valuable data to evolve our product and offering. Data on how customers are using the product drives interaction with customer success much of which is automated.

 

This shift to a consumption model, where revenue is recognised over time rather than up-front, will lead to revenues scaling over the year, with revenue recognised further into the sales cycle, metered through use.

 

As our business continues to evolve, the metrics we use to measure our success also need to change. To aid in mapping pipeline progress against this changing revenue model, we will provide a business update in the short term providing new KPIs (in addition to the existing revenue and subscription as a % of revenue KPIs) including:

 

·     

Number of customer wins

·     

Notional MRR (metered plus an estimate of subscription revenue as MRR)

·     

Retention rate (% of customers using the product vs. those using a year earlier)

 

The objective of these KPIs is to provide an indication of the rate of conversion of the cloud migration opportunity ahead, to account for revenues being recognised later in the sales cycle and financial year through metered consumption.

 

Outlook

 

Our cloud platform, SI, and ISV partners have recognised the huge opportunity of moving Hadoop data into the cloud. With the changing dynamics in the Hadoop on-premises market, and companies seeking to leverage cloud economics and scalability, the time to capitalise on this opportunity is now. The creation of a native Azure service with our technology provides a platform to capitalise on that opportunity, taking advantage of billing and technical integrations. With the go-to-market launch of LiveData Platform for Azure, we can execute against the growing pipeline of opportunities to move data at scale into the cloud without an interruption to service.

 

Outside of Azure, we are also seeing growing demand from our other cloud partners, in particular AWS, as the need to capitalise on the cloud and move on-premises workloads becomes a business imperative. The Board's confidence in our outlook is built upon the convergence of the market opportunity, product readiness, and deepening commitments from our partners.

 

For FY21, we expect to migrate in excess of 100PB of data to the Azure cloud (with more than 50 customers signed over the year) and greater than 30PB into the AWS cloud. Combined with the flow of metered billing from Q4 2020 this year we expect a minimum revenue of $35m in FY21.
 

FINANCIAL REVIEW

 

Revenue for the year ended 31 December 2020 was $10.5 million (2019: $16.2 million).

 

Deferred revenue from sales booked during 2020 and in previous years, and not yet recognised as revenue, is $3.8 million at 31 December 2020, at 31 December 2019 this stood at $3.8 million. Our deferred revenue represents future revenue from new and renewed contracts, many of them spanning multiple years.

 

Adjusted EBITDA loss2 was $22.2 million (2019: $11.7 million), due primarily to the reduction in revenue and continued investments in the business.

 

Revenue

 

Revenue was $10.5 million (2019: $16.2 million), reflecting the ongoing change in revenue mix between our legacy business and our big data business as well as an increasing shift to cloud-based revenues with recurring annual revenues, away from perpetual, on-premises based revenue. Some deals were delayed into future years, as potential customers were assessing cloud-based strategies for data management and analytics, and comparing the availability of our stand-alone products vs. the launch of our cloud native service on Azure in October 2020. However, our big data revenue in 2020 grew 18% over 2019, and some larger Application Lifecycle Management ("ALM") deals in 2019 did not repeat in 2020.

 

42% of revenues came from 3 new customers during the year, with a large media and telecommunication company, its analytics subsidiary, and a large British supermarket chain adopting our big data solutions with the majority of this revenue based on multi-year subscription agreements. In 2019, the top 3 customers represented 43% of revenues, with the majority relating to our ALM business.

 

Contract wins continue to exhibit variability in the timing of their completion.

 

Operating costs 

 

Cash overheads1 increased in the year as we made investments in go-to-market resources and engineering, rising to $36.9 million from $31.7 million in 2019. 

 

Product development expenditure capitalised was $5.2 million in the year (2019: $5.1 million). All of this expenditure was associated with new product features.

 

Our headcount was 180 as at 31 December 2020 (31 December 2019: 162). Headcount increases in the year were principally in engineering and sales and marketing as we added capacity to service our new and expanded channel partner relationships and develop new cloud-focused products.

 

Profit and loss

 

Adjusted EBITDA2 loss for the year was $22.2 million (2019: $11.7 million).

 

The loss after tax for the year increased to $34.3 million (2019: $28.3 million), as a result of the lower revenue and increased overheads and partially offset by a lower share-based payment charge. The finance loss of $1.8 million (2019: $2.0 million loss), reported within finance costs, arose from the retranslation of intercompany balances at 31 December 2020, reflecting the increase in Sterling against the US dollar. The impact of FX rates changes on the financial statements should be restricted to the retranslation of US dollar denominated intercompany loans, as opposed to the operating activities of the business. A translation gain arising on the net assets of overseas subsidiaries reported in reserves results in a minimal impact on the group net assets.

 

Balance sheet and cash flow

 

Trade and other receivables at 31 December 2020 were $10.1 million (31 December 2019: $8.5 million). This includes $5.3 million of trade receivables (31 December 2019: $2.8 million) and $4.8 million related to non-trade receivables (31 December 2019: $5.7 million). The increase in trade receivables was due primarily to the timing of revenues during the year, which predominantly occurred in the fourth quarter.

 

Net consumption of cash was $24.2 million before financing (2019: $19.4 million), resulting in a closing cash balance of $21.0 million at 31 December 2020. The consumption of cash was due primarily to lower revenues and a modest increase in cash overheads. At 31 December 2020, we had drawings under our revolving credit facility with Silicon Valley Bank of $0.6 million.

 

On 12 June 2020 the Group announced a placing for the subscription of 3,100,000 new ordinary shares of 10 pence each in the Company at a price of 650 pence, raising gross proceeds of $24.9m.

 

Subsequent events

 

After the year end, on 10 March 2021 the Group announced the subscription and placing of 6,885,572 new ordinary shares of 10 pence each in the Company by existing shareholders at a price of 446 pence (a discount of 0.4% on the closing share price on 9 March 2021) raising gross proceeds of $42.5 million. The proceeds will be used to support our relationships with strategic partners and provide growth working capital.

 

As at 30 April 2021 the Group had cash reserves of $55.3 million and with the injection of new capital, the Company expects to invest further in Engineering and Go to Market resources bringing total cash costs in 2021 to c.$44 million.

 

Whilst the medium- and long-term impact of COVID-19 is still uncertain, we are moving forward this year with continued business momentum as evidenced by our go-to-market launch of LiveData Platform with Microsoft announced in October 2020. Our cloud partners continue to see an acceleration of business operations moving to the cloud since the beginning of the pandemic and the business continues to be aligned to this trend. Hence, management expects that the potential of the agreement with Microsoft will overcome any short-term headwinds from the economic uncertainty surrounding the impact of COVID-19.

 

Consolidated statement of profit or loss and other comprehensive income

For the year ended 31 December 2020

 

 

 

 

Year ended

31 December 2020

(Audited)

Year ended

31 December

2019

(Audited)

Continuing operations

 

Note

$'000

$'000

Revenue

 

3

10,532

16,155

Cost of sales

 

 

(1,066)

(1,186)

Gross profit

 

 

9,466

14,969

Operating expenses

 

4

(43,373)

(42,148)

Operating loss

 

4

(33,907)

(27,179)

Finance income

 

 

305

604

Finance costs

 

 

(2,183)

(2,574)

Net finance costs

 

 

(1,878)

(1,970)

Loss before tax

 

 

(35,785)

(29,149)

Income tax

 

 

1,453

885

Loss for the year

 

 

(34,332)

(28,264)

 

 

 

 

 

Other comprehensive income

Items that are or may be reclassified subsequently to profit or loss:

 

 

 

 

Foreign operations - foreign currency translation differences

 

 

3,872

1,765

Other comprehensive income for the year, net of tax

 

 

3,872

1,765

Total comprehensive income for the year attributable to owners of the parent

 

 

(30,460)

(26,499)

 

 

 

 

 

Loss per share

 

 

 

 

Basic and diluted loss per share

 

5

($0.68)

($0.63)

 

The notes form an integral part of these condensed consolidated financial statements.

           

           

Consolidated statement of financial position

At 31 December 2020

           

 

 

 

31 December 2020

(Audited)

31 December

2019

(Audited)

 

 

Note

$'000

$'000

Assets

 

 

 

 

Property, plant and equipment

 

 

2,895

3,735

Intangible assets

 

 

5,027

4,877

Other non-current assets

 

6

2,215

3,016

Non-current assets

 

 

10,137

11,628

Trade and other receivables

 

7

10,142

8,545

Cash and cash equivalents

 

 

21,039

23,354

Current assets

 

 

31,181

31,899

Total assets

 

 

41,318

43,527

 

 

 

 

 

Equity

 

 

 

 

Share capital

 

 

7,641

7,097

Share premium

 

 

172,868

149,336

Translation reserve

 

 

(1,711)

(5,583)

Merger reserve

 

 

1,247

1,247

Retained earnings

 

 

(150,851)

(121,922)

Total equity

 

 

29,194

30,175

Liabilities

 

 

 

 

Loans and borrowings

 

8

1,778

2,889

Deferred income

 

9

659

1,188

Deferred tax liabilities

 

 

4

4

Non-current liabilities

 

 

2,441

4,081

Current tax liabilities

 

 

12

66

Loans and borrowings

 

8

1,115

2,212

Trade and other payables

 

 

5,462

4,371

Deferred income

 

9

3,094

2,622

Current liabilities

 

 

9,683

9,271

Total liabilities

 

 

12,124

13,352

Total equity and liabilities

 

 

41,318

43,527

 

The notes form an integral part of these condensed consolidated financial statements.

 

Consolidated statement of changes in equity

For the year ended 31 December 2020

 

 

Attributable to owners of the Company

 

Share

capital

Share

premium

Translation reserve

Merger

reserve

Retained earnings

Total

equity

Audited

$'000

$'000

$'000

$'000

$'000

$'000

Balance at 31 December 2018

6,361

115,909

(7,348)

1,247

(102,365)

13,804

 

 

 

 

 

 

 

Total comprehensive income for the year

 

 

 

 

 

 

Loss for the year

-

-

-

-

(28,264)

(28,264)

Other comprehensive income for the year

-

-

1,765

-

-

1,765

Total comprehensive income for the year

-

-

1,765

-

(28,264)

(26,499)

 

 

 

 

 

 

 

Transactions with owners of the Company

 

 

 

 

 

 

Contributions and distributions

 

 

 

 

 

 

Equity-settled share-based payment

-

-

-

-

8,707

8,707

Proceeds from share placing

706

33,085

-

-

-

33,791

Share options exercised

30

342

-

-

-

372

Total transactions with owners of the Company

736

33,427

-

-

8,707

42,870

Balance at 31 December 2019

7,097

149,336

(5,583)

1,247

(121,922)

30,175

 

 

 

 

 

 

 

Total comprehensive income for the year

 

 

 

 

 

 

Loss for the year

-

-

-

-

(34,332)

(34,332)

Other comprehensive income for the year

-

-

3,872

-

-

3,872

Total comprehensive income for the year

-

-

3,872

-

(34,332)

(30,460)

 

 

 

 

 

 

 

Transactions with owners of the Company

 

 

 

 

 

 

Contributions and distributions

 

 

 

 

 

 

Equity-settled share-based payment

-

-

-

-

5,403

5,403

Share options exercised

162

106

-

-

-

268

Proceeds from share placing

382

23,426

-

-

-

23,808

Total transactions with owners of the Company

544

23,532

-

-

5,403

29,479

Balance at 31 December 2020

7,641

172,868

(1,711)

1,247

(150,851)

29,194

 

The notes form an integral part of these condensed consolidated financial statements.       
 

Consolidated statement of cash flows

For the year ended 31 December 2020

 

 

 

Year ended

31 December

2020

(Audited)

Year ended

31 December 2019

(Audited)

 

 

Note

$'000

$'000

Cash flows from operating activities

 

 

 

 

Loss for the year

 

 

(34,332)

(28,264)

Adjustments for:

 

 

 

 

-          Depreciation of property, plant and equipment

 

 

1,203

1,101

-          Amortisation of intangible assets

 

 

5,070

5,701

-          Net finance costs/(income)

 

 

69

(77)

-          Income tax

 

 

(1,453)

(885)

-          Foreign exchange

 

 

3,773

1,869

-          Equity-settled share-based payment

 

10

5,403

8,707

 

 

 

(20,267)

(11,848)

Changes in:

 

 

 

 

-          Trade and other receivables

 

 

339

(1,203)

-          Trade and other payables

 

 

910

(562)

-          Deferred income

 

 

(57)

(508)

Net working capital change

 

 

1,192

(2,273)

 

 

 

 

 

Cash used in operating activities

 

 

(19,075)

(14,121)

Interest paid

 

 

(294)

(446)

Income tax received

 

 

662

807

Net cash used in operating activities

 

 

(18,707)

(13,760)

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Interest received

 

 

21

258

Acquisition of property, plant and equipment

 

 

(307)

(841)

Development expenditure

 

 

(5,220)

(5,062)

Net cash used in investing activities

 

 

(5,506)

(5,645)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Proceeds from issue of share capital

 

 

24,076

34,163

Repayment of bank loan

 

 

(1,666)

(1,667)

Payment of lease liabilities

 

 

(595)

(502)

Net cash from financing activities

 

 

21,815

31,994

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

 

 

(2,398)

12,589

Cash and cash equivalents at 1 January

 

 

23,354

10,757

Effect of movements in exchange rates on cash and cash equivalents

 

 

83

8

Cash and cash equivalents at 31 December

 

 

21,039

23,354

 

The notes form an integral part of these condensed consolidated financial statements.

 

 

Notes to the condensed consolidated financial statements

For the year ended 31 December 2020

 

1.     Reporting entity

WANdisco plc (the "Company") is a public limited company incorporated and domiciled in Jersey. The Company's ordinary shares are traded on AIM. These condensed consolidated financial statements ("Financial statements") as at and for the year ended 31 December 2020 comprise the Company and its subsidiaries (together referred to as the "Group"). The Group is primarily involved in the development and provision of global collaboration software.

 

2.     Basis of preparation

a Basis of accounting

Whilst the financial information included in this preliminary announcement has been prepared on the basis of the requirements of International Financial Reporting Standards ("IFRSs") in issue, as adopted by the European Union ("EU") and effective at 31 December 2020, this announcement does not itself contain sufficient information to comply with IFRS.

The financial information set out in this announcement does not constitute the Group's Statutory Accounts for the year ended 31 December 2020 or 31 December 2019, but is derived from those accounts.  Statutory Accounts for the year ended 31 December 2019 which have been audited and delivered to the registrar of companies with the Jersey Financial Services Commission ("JFSC"), and those for 2020 will be delivered in May 2021. The auditor has reported on those accounts; the audit reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 113B (3) or (6) of the Companies (Jersey) Law 1991.

The Consolidated financial statements have been prepared in accordance with IFRSs as adopted for use in the EU. The Group has applied all accounting standards and interpretations issued by the IASB and International Financial Reporting Committee relevant to its operations and which are effective in respect of these Financial statements.

This announcement has been prepared using the accounting policies consistent with those of the Group's annual financial statements for the year ended 31 December 2020. 

From 1 January 2020 the new standards set out below were adopted by the Group.

(i) New and amended standards adopted by the Group

The following new standards and amendments to standards that are effective for the first time for the financial year beginning 1 January 2020 have been adopted:

-    

Definition of a Business (Amendments to IFRS 3)

-    

Definition of Material (Amendments to IAS 1 and IAS 8)

-    

Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7)

-    

COVID-19-Related Rent Concessions (Amendment to IFRS 16)

-    

Amendments to References to the Conceptual Framework in IFRS Standards

 

These amendments to standards have not had a material impact on these Financial statements.

 

(ii) New and amended standards and interpretations issued but not effective for the financial year beginning 1 January 2020 and not early adopted

A number of new standards are effective for annual periods beginning after 1 January 2020 and earlier application is permitted; however, the Group has not early adopted the new or amended standards in preparing these Financial statements.

The amended standards and interpretations are not expected to have a significant impact on the Group's consolidated financial statements.

 

2.     Basis of preparation (continued)

b Going concern basis of accounting

These Financial statements have been prepared on a going concern basis, which assumes that the Group will be able to meet the mandatory repayment terms of the banking facilities as disclosed in Note 8.

As at 31 December 2020 the Group had net assets of $29.2m (31 December 2019: $30.2m), including cash of $21.0m (2019: $23.4m) as set out in the consolidated statement of financial position, with a debt facility drawn of $0.6m (2019: debt facility drawn of $2.2m). In the year ended 31 December 2020, the Group incurred a loss before tax of $35.8m (2019: $29.1m) and net cash outflows before financing of $24.2m (2019: $19.4m).

During 2020, the performance of the Group declined, with revenues reducing by 35% to $10.5m (2019: $16.2m) and operating loss increasing to $33.9m (2019: $27.2m).

The Directors have prepared a detailed budget and forecast of the Group's expected performance over a period covering at least the next twelve months from the date of the approval of these financial statements. As well as modelling the realisation of the sales pipeline, these forecasts also cover a number of scenarios and sensitivities in order for the Board to satisfy itself that the Group remains within its current cash facilities, details of which are included in Note 8. The cash flow model includes the injection of $42.5m of cash which was raised following the year end ($30.0m on 9 March 2021 and $12.5m approved by the shareholders on 29 March 2021).

Whilst the Directors are confident in the Group's ability to grow revenue, the Board's sensitivity modelling (which considered the impact of Brexit and COVID-19) shows that the Group can remain within its facilities in the event that revenue growth is delayed (i.e. revenue does not increase from the level reported in 2020) for a period in excess of twelve months. The Directors' financial forecasts and operational planning and modelling also include the actions, under the control of the Group, that they could take to further significantly reduce the cost base during the coming year in the event that longer-term revenues were set to remain consistent with the level reported in 2020. On the basis of this financial and operational modelling, the Directors believe that the Group has the capability and the operational agility to react quickly, cut further costs from the business and ensure that the cost base of the business is aligned with its revenue and funding scale.

As a consequence, the Directors have a reasonable expectation that the Group can continue to operate within its existing facilities and be able to meet its commitments and discharge its liabilities in the normal course of business for a period not less than twelve months from the date of approval of these financial statements. Accordingly, they continue to adopt the going concern basis in preparing the Group financial statements.

 

c Functional and presentational currency

The consolidated financial statements are presented in US dollars, as the revenue for the Group is predominately derived in this currency. Billings to the Group's customers during the year by WANdisco, Inc. were all in US dollars with certain costs being incurred by WANdisco International Limited in sterling and WANdisco, Pty Ltd in Australian dollars. All financial information has been rounded to the nearest thousand US dollars unless otherwise stated.

 

d Alternative performance measures

The Group uses a number of alternative performance measures (“APMs”) which are non-IFRS measures to monitor the performance of its operations. The Group believes these APMs provide useful historical financial information to help investors and other stakeholders evaluate the performance of the business and are measures commonly used by certain investors for evaluating the performance of the Group. In particular, the Group uses APMs which reflect the underlying performance on the basis that this provides a more relevant focus on the core business performance of the Group and aligns with our KPIs. Adjusted results exclude certain items because if included, these items could distort the understanding of our performance for the year and the comparability between periods. The Group has been using the following APMs on a consistent basis and they are defined and reconciled as follows:

 

-         

Cash overheads: Operating expenses adjusted for: depreciation, amortisation, capitalisation of development expenditure and equity-settled share-based payment. See Note 4 for a reconciliation.

-         

Adjusted EBITDA: Operating loss adjusted for: depreciation, amortisation and equity-settled share-based payment. See Note 4 for a reconciliation.

 

e Use of judgements and estimates

In preparing these Financial statements, management has made judgements and estimates that affect the application of the Group's accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual financial statements.

 

3.     Revenue and segmental analysis

a Operating segments

The Directors consider there to be one operating segment, being that of development and sale of licences for software and related maintenance and support.

b Geographical segments

The Group recognises revenue in three geographical regions based on the location of customers, as set out in the following table:

 

 

 

Year ended

31 December

2020

(Audited)

Year ended

31 December

2019

(Audited)

Revenue

 

$'000

$'000

North America - USA

 

8,635

6,551

North America - other

 

34

44

Europe

 

1,096

2,152

Rest of the world - China

 

412

5,036

Rest of the world - South Africa

 

62

2,088

Rest of the world - other

 

293

284

 

 

10,532

16,155

Management makes no allocation of costs, assets or liabilities between these segments since all trading activities are operated as a single business unit.

c Major products

The Group's core patented technology, Distributed Coordinated Engine "DConE", enables the replication of data. This core technology is contained in all the Group's products. 

 

d Major customers

 

Year ended 31 December

2020

(Audited)

Year ended 31 December 2020

(Audited)

Year ended

31 December 2019

(Audited)

Year ended

31 December 2019

(Audited)

 

% of

revenue

Revenue $'000

% of

revenue

Revenue

$'000

Customer 1

24%

2,515

-

-

Customer 2

10%

1,070

-

-

Customer 3

3%

265

19%

3,117

Customer 4

1%

62

13%

2,088

Customer 5

1%

137

11%

1,857

No other single customers contributed 10% or more to the Group's revenue (2019: $nil).

e Split of revenue by timing of revenue recognition

 

 

Year ended

31 December

2020

(Audited)

Year ended

31 December

2019

(Audited)

Revenue

 

$'000

$'000

Licences and services transferred at a point in time

 

7,607

12,596

Services transferred over time

 

2,925

3,559

 

 

10,532

16,155

 

f Contract balances

The following table provides information about receivables and contract assets and liabilities from contracts with customers.

 

 

 

31 December

2020

(Audited)

31 December 2019

(Audited)

 

 

$'000

$'000

Receivables, which are included in "Other non-current assets - accrued income"

 

2,124

2,826

Receivables, which are included in "Trade and other receivables - accrued income"

 

1,480

2,964

Contract liabilities, which are included in "Deferred income" - non-current

 

(659)

(1,188)

Contract liabilities, which are included in "Deferred income" - current

 

(3,094)

(2,622)

 

4.     Cash overheads and Adjusted EBITDA

 

 

 

Year ended

31 December

2020

(Audited)

Year ended

31 December

2019

(Audited)

a Reconciliation of operating expenses to "Cash overheads":

 

Note

$'000

$'000

Operating expenses

 

 

(43,373)

(42,148)

Adjusted for:

 

 

 

 

Amortisation and depreciation

 

 

6,273

6,802

Equity-settled share-based payment

 

10

5,403

8,707

Development expenditure capitalised

 

 

(5,220)

(5,062)

Cash overheads

 

 

(36,917)

(31,701)

 

 

 

 

 

 

Year ended

31 December

2020

(Audited)

Year ended

31 December

2019

(Audited)

b Reconciliation of operating loss to "Adjusted EBITDA":

 

Note

$'000

$'000

Operating loss

 

 

(33,907)

(27,179)

Adjusted for:

 

 

 

 

Amortisation and depreciation

 

 

6,273

6,802

Equity-settled share-based payment

 

10

5,403

8,707

Adjusted EBITDA

 

 

(22,231)

(11,670)

Development expenditure capitalised

 

 

(5,220)

(5,062)

Adjusted EBITDA including development expenditure

 

 

(27,451)

(16,732)

 

5.     Loss per share

a Basic loss per share

The calculation of basic loss per share has been based on the following loss attributable to ordinary shareholders and weighted average number of ordinary shares outstanding:

 

 

Year ended

31 December 

2020

(Audited)

Year ended

31 December

2019

(Audited)

 

 

$'000

$'000

Loss for the year attributable to ordinary shareholders

 

34,332

28,264

 

 

 

 

Weighted average number of ordinary shares

 

Number of shares

 '000

Number of shares

 '000

Issued ordinary shares at 1 January

 

48,241

42,523

Effect of shares issued in the year

 

2,251

2,608

Weighted average number of ordinary shares at 31 December

 

50,492

45,131

 

 

 

2020

$

2019

$

 

0.68

0.63

 

 

 

5.     Loss per share (continued)

b Adjusted loss per share

Adjusted loss per share is calculated based on the loss attributable to ordinary shareholders before net foreign exchange loss, acquisition-related items and the cost of equity-settled share-based payment, and the weighted average number of ordinary shares outstanding:

 

 

 

Year ended

31 December

2020

(Audited)

Year ended

31 December

2019

(Audited)

Adjusted loss for the year:

 

Note

$'000

$'000

Loss for the year attributable to ordinary shareholders

 

 

34,332

28,264

Adjusted for:

 

 

 

 

Net foreign exchange loss

 

 

(1,809)

(2,047)

Equity-settled share-based payment

 

10

(5,403)

(8,707)

Adjusted loss for the year

 

 

27,120

17,510

 

 

 

2020

$

2019

$

Adjusted loss per share

 

0.54

0.39

 

c Diluted loss per share

Due to the Group having losses in all years presented, the fully diluted loss per share for disclosure purposes, as shown in the consolidated statement of profit or loss and other comprehensive income, is the same as for the basic loss per share.

 

6.     Other non-current assets

 

 

 

31 December 2020

(Audited)

31 December

 2019

(Audited)

Due in more than a year:

 

 

$'000

$'000

Other receivables

 

 

91

190

Accrued income

 

 

2,124

2,826

Total other non-current assets

 

 

2,215

3,016

 

 

7.     Trade and other receivables

 

 

 

31 December 2020

(Audited)

31 December

2019

(Audited)

Due within a year:

 

 

$'000

$'000

Trade receivables

 

 

5,319

2,773

Other receivables

 

 

411

753

Accrued income

 

 

1,480

2,964

Corporation tax

 

 

2,277

1,441

Prepayments

 

 

655

614

Total trade and other receivables

 

 

10,142

8,545

           

 

 

 

8.     Loans and borrowings

 

 

 

31 December 2020

(Audited)

31 December 2019

(Audited)

 

 

 

$'000

$'000

Non-current liabilities

 

 

 

 

Secured bank loan

 

 

-

555

Lease liabilities

 

 

1,778

2,334

 

 

 

1,778

2,889

Current liabilities

 

 

 

 

Current portion of secured bank loan

 

 

556

1,667

Current portion of lease liabilities

 

 

559

545

 

 

 

1,115

2,212

Total loans and borrowings

 

 

2,893

5,101

 

At 31 December 2020, the $0.6m of bank loan (2019: $2.2m) represents term debt drawn down with Silicon Valley Bank. The facility comprises $0.6m (2019 $2.2m) term debt, with an interest-only period to 31 May 2018, followed by a three-year maturity at a floating interest rate charged at 1.5% above the US prime rate. The bank loan is secured over the assets of WANdisco, Inc.

 

9.     Deferred income

Deferred income represents contracted sales for which services to customers will be provided in future periods.

 

 

 

 

31 December 2020

(Audited)

31 December 2019

(Audited)

Deferred income which falls due:

 

 

$'000

$'000

Within a year

 

 

3,094

2,622

In more than a year

 

 

659

1,188

Total deferred income

 

 

3,753

3,810

 

10.  Share-based payment

The Group operates share option plans for employees of the Group.  Options in the plans are settled in equity in the Company and are normally subject to a vesting schedule but not conditional on any performance criteria being achieved. 

The terms and conditions of the share option grants are detailed in the Group annual financial statements for the year ended 31 December 2020.

a Expense recognised in profit or loss

 

 

 

Year ended

31 December

2020

(Audited)

Year ended 31 December

2019

(Audited)

 

 

 

$'000

$'000

Total equity-settled share-based payment charge

 

 

5,403

8,707

 

 

b Summary of share options outstanding

 

 

2020

2019

Number of share options outstanding:

 

Number of options

(Audited)

Number of options

(Audited)

Outstanding at 1 January

 

5,028,157

4,662,070

Forfeited during the year

 

(159,190)

(283,257)

Exercised during the year

 

(1,272,143)

(229,965)

Granted during the year

 

674,860

879,309

Outstanding at 31 December

 

4,271,684

5,028,157

Exercisable at 31 December

 

2,784,861

2,983,106

Vested at 31 December       

 

2,784,861

2,983,106

 

11.  Contingent liabilities

The Group had no contingent liabilities at 31 December 2020 (31 December 2019: None).

 

12.  Subsequent events

On 9 March 2021 the Group announced a new subscription of shares to an existing shareholder for 4,864,480 new ordinary shares of 10 pence each in the Company at a price of 446 pence raising gross proceeds of $30.0m.

In addition, on 10 March 2021 the Group announced the placing (which was approved by General Meeting on 29 March 2021) for 804,972 new ordinary shares of 10 pence each in the Company together with the subscription of 1,216,120 new ordinary shares of 10 pence each at a price of 446 pence (a discount of 0.4% on the closing share price on 9 March 2021), raising further gross proceeds of $12.5m.

 

 

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