30 September 2021

Rosslyn Data Technologies plc
("Rosslyn", the "Group" or the "Company")

Unaudited Results
For the year ended 30 April 2021

Rosslyn Data Technologies plc (AIM: RDT), the provider of a leading cloud-based enterprise data analytics platform, is pleased to announce its results for the year ended 30 April 2021.

Financial Summary

·    Revenue for the year grew 4.3% to £7.4 million (2020: £7.1 million).

·    Administrative costs increased to £7.2 million (2020: £6.0 million).  This increase is due to a one-off restructuring cost relating to people and property and an investment into Sales and Marketing.

·    Operating EBITDA (excluding share-based costs) fell to a loss of £200,000 (2020: profit of £36,000).

·    Investment into research and development continued at a high level with spend of £1.6million (2020: £1.3 million)

·    At the year end the Group had a cash balance of £6.7 million (2020: £0.8 million), and bank debt of £0.9 million (2020: £1.2 million)

·    Annual Recurring Revenue fell by 11% to £5.6 million (2020: £6.3 million)

·    Backlog fell 8% to £5.8 million (2020: £6.3 million)

Operational Highlights

·    Completed a successful fundraising of £7.3m (before expenses) to fuel our next stage of growth - allowing us to invest further in our team, as well as take advantage of evolving client needs for procurement savings and efficiencies, in line with increased corporate focus on

supply chain resilience, risk and sustainability.

·    Concluded an operational review of all business functions, with a focus on productisation for scalability. Key outcomes include the establishment of a Product Management function under the leadership of our Chief Technology Officer, setting Innovation Lifecycle Management as our backbone methodology.

·    Renewed focus on customer experience, bringing our value-engineering, customer success, project delivery and support function teams together under a single point of C-Level leadership, with a focus on standardising best practice, and launching our first Customer Advisory Board to fully validate design concepts against business impact.

·    Achieved a solid year of revenue growth, despite the challenging market and working conditions brought about by COVID-19. Partners are becoming an increasingly important sales channel following a strategic review and reset of these relationships. New partners this financial year include a European procurement consulting business with significant multinational customers.

·    Positive growth from Langdon Systems in its first full year in the Group. Highlights include the successful development and launch of the CustomsCloud™ platform, in response to additional customs procedures resulting from the UK's departure from the European Union. This will provide a key platform for long term growth in this market.

Commenting on the outlook for the Group, Paul Watts, CEO of Rosslyn Data Technologies said:

"Since becoming CEO in April 2021, I have conducted a thorough review of the business to ensure that we are providing the solutions to our clients' evolving needs.  The product and our customer will both be central to our ongoing initiative and the Group's business model.

Trading and the business at the start of FY22is performing in line with management's expectations. As the world emerges from the ravages of the impact of Covid-19 we have been pleased to see our opportunity pipeline start to unblock, with potential new customers now engaging fully and, importantly in a position, to commit to new projects. We are cautiously optimistic that this trend will continue and build momentum through into the second half of the year.  Recent successes have included signing a 5 year deal with an American multinational pharmaceuticals group for the procurement spend analytics solution and the continued growth of our CustomsCloudTM customs product.

During FY22 we have increased investment in our products and will release an update to our Rapid procurement product before the end of the year. I am extremely encouraged by the progress we have made against the initiatives I have set for the Group and this combined with a continued investment into sales and marketing throughout the year means I look to the future with confidence."

Notes to Editors

Rosslyn Data Technologies plc, (AIM: RDT) is a leading provider of a cloud-based big-data analytics platform. The company provides analytical services by combining four key technologies: bulk data extraction; cleansing; enrichment; and visualisation, through a single cloud platform enabling users with detailed data to make more informed decisions. Rosslyn's RAPid platform is the Group's primary product available to its multinational customers. Further information can also be found on the Company's website at:   www.rosslyndatatech.com

Chairman's statement

This year has been an unusual and unprecedented one for the world, with the global pandemic impacting and changing lives and businesses in a way no one could have predicted.  Our thoughts go out to all of those who have experienced pain in these difficult times.

Rosslyn was equally impacted, and the Board is full of admiration for how effectively our senior management team and staff rose to the challenges presented by COVID-19, working hard to support our customer and staff throughout the year.

In May 2020 we successfully raised £6.8 million (net of expenses) by way of a placing.  We have invested part of the proceeds to invest into product development; launching a new Customs reporting product called CustomsCloud^TM in December 2020; and are currently working on the launch of a significant update of our RAPid procurement analytics suite. We also invested part of the proceeds into Sales and Marketing; following the reviews detailed below in the CEO report, we expect the impact of these investments to be felt towards the end of this year. The Board believes that the combination of these products positions the Group strongly in the two growing markets of procurement and customs.

The effects of the COVID-19 started to be felt in the business just before the beginning of the 2021 financial year, slowing down our conversion of pipeline opportunities. For much of the remainder of the year new clients were unwilling to sign new contracts because they were controlling costs during the economic downturn, and/or managing the operational challenges of their reduced revenues.

In August 2020, we appointed Paul Watts to the Board as Chief Customer Officer, and his expertise in growing SaaS businesses have been invaluable this year with the investments we have made and those still to be made in Sales and Marketing. Following the departure of Roger Bullen in April, Paul has stepped up into the CEO role and has been undertaking a full-scale operational review of the business. His previous experience in growing software companies in international businesses has been and continues to be invaluable to the Group.

Ash Mehta stepped down from the Board in August 2020 to pursue another opportunity, and following the year-end, Hugh Cox stepped down from the Board, remaining an employee with a plan to transition out of the business during 2022. I'd like to thank Roger, Hugh and Ash for their contributions to the Group having taken it through two acquisitions and managed it during some difficult times with little cash. We continue to evaluate the optimum composition of the board to ensure that this has a broad spectrum of skills; we have appointed an interim Finance Director and are hiring a permanent Finance Director role as a Board level role. The executive team is well shaped and positioned to drive future growth in the business.

This year has been one of reviewing the team and product set, strengthening the foundations of the business, preparing new versions of our product for launch and building a sales pipeline. We are continuing to invest to build a scalable growing business organically and are focussed on delivering shareholder value over the longer term.  As such we are planning some significant, but carefully judged, investments in product and leadership during FY22 and expect the Group to reap the benefits of this investment in FY23 and beyond.

I look forward to updating you with our half year results in January 2022.

Chief Executive's statement

Introduction

Notwithstanding the fact that the last financial year has been a challenging one due to the slowdown resulting from COVID-19, I am pleased to say that it is also one in which we have made significant progress and achieved a solid performance. The dynamics of the markets in which we operate are changing and we need to evolve to take advantage of the changes to grow and scale our business. We have started that process but there is still much to do to build a scalable business and transform our growth prospects.

We started the last financial year with the positive news in May of having raised funding for the next stage of growth. By that time, we were in the midst of  the Global pandemic and the varying degrees of restrictions that that brought with it and already seeing potential new customers delaying making purchasing decisions. When I joined Rosslyn in the role of Chief Customer Officer in August 2020, the initial focus was on building an execution engine for Sales and Marketing so as to create the systematic processes essential for scalable growth.              However, testing the effectiveness of that engine has been a challenge as we have had to adjust to a radically different customer engagement model due to the pandemic.  With the evolution of the market conditions we have also had to look at other parts of our business, in particular our product strategy, and how our developments can help our clients with their needs in the future. I am confident as we go forward that Rosslyn will rise to the challenge and be successful.

Building a product-led business

During my early tenure and whilst looking at producing the execution engine it became apparent that, as mentioned above, a product strategy review was necessary. We have completed that exercise with the goal of realizing a leadership position in our key markets.  This was done with use of product marketplace SWOT analysis incorporating input from a broad spectrum of sources including customers, prospects, partners, analysts, employees, and academic thought-leaders.

The primary conclusion of the product strategy review was that we needed a more product-led go to market business model.  Accordingly, we have established a Product Management function , under the leadership of our Chief Technology Officer.  We have placed Innovation Lifecycle Management as our backbone methodology, and will, this year, launch our first Customer Advisory Board to fully validate design concepts against business impact. The productization of our offering is a core foundation for scalability as we transition from a consulting led tailored solution for each customer, to a true SaaS unified platform installed base.

The release of an updated version of our RAPid platform in the current year will incorporate the user interface and user experience improvements we outlined last year during the fundraising as well as additional functionality improvements.

In previous periods, we have spoken of the extension of the RAPid platform from being about analytics to being a broader supplier information management platform. This vision will be realized through the release of a Procurement Portal solution this year.  It will integrate key components including supplier performance/relationship management, supply chain risk, contract management.  Underpinning this solution will be embedding the offering with our market leading data ETL tools and spend analytics capability.

The Customer Experience

We were delighted during the year to run a series of engagements with key customers such as Air France / KLM and CRH, who talked about the challenges of executing procurement transformation initiatives, and the importance of the RAPid platform in the complex multi-system environment most large corporates find themselves. 

 A key recommendation of my initial review was to bring together our customer experience management under a single point of C-Level leadership. Consequently, we will restructure and consolidate into a single team of our value-engineering, customer success, project delivery and support functions with some key hires being brought onboard. This will help standardize the customer experience to best practice across all customers, which we expect, in time, to have a positive impact on new business, renewals, and customer advocacy.

We have invested a great deal of time to bring the voice of the customer into our Go-To-Market messaging, as well as creating a value-engineering function to support the sales process, to ensure we hold ourselves accountable for a business impact of the RAPid platform far beyond any traditional return on investment (ROI) or total cost ownership (TCO) model.   As a result, we have already seen the quality of our pipeline increase to the best it has been in many years.

Langdon Systems

Langdon Systems has had a good year with the successful development and launch of the CustomsCloud^TM platform. This low price-point pure SaaS self-service solution is designed to enable importers to overcome the additional customs procedures resulting from the UK's departure from the European Union, many of whom have never had to file declarations before. It enables Langdon customers to register with HMRC and automates the filing of all import declarations, either individually or in bulk, calculate the VAT and duty owed on any imports and to report this information direct to HMRC for future payments. We successfully added many new customers to the CustomsCloud^TM platform, and the primary focus is now on empowering the product strategy team to add new functionality and complete an architectural modernisation program for the platform, that will underpin long-term growth.

During the year we also won numerous new customers for Langdon's enterprise Duty Management System which is targeted at large companies with complex requirements such as managing bonded stock.  We also won a prestigious contract with a major multinational grocery and general merchandise retailer based in the UK and with a significant international presence. The system will provide a comprehensive end to end solution complying with existing legislation and public notices to allow the customer to receive, manage and discharge duty suspended shipments from authorised suppliers under the Excise movement and control system (EMCS). It will also allow stock tracking and visibility at a depot level, and ultimately allow the compliant control and storage of duty suspended goods with non-customs goods in the Republic of Ireland.

People and Leadership

This year, more than any other, we are extremely grateful to all our employees for their contribution to the development of our business. We recognise the challenges that employees have faced; missing out on face-to-face interactions, managing home-schooling and the overall impact of working in a very different manner to which they are accustomed and the consequences for job satisfaction, family life and mental wellbeing. We have assisted them in several ways but nevertheless we know how difficult the last year has been.

Executing organisational change during a time of COVID-19 has been a challenge but we have recruited many new people to Rosslyn, some new positions and some replacements as we reviewed performance across all functions, again with the objective of creating a scalable high-performing organisation.

With 42% of the employee base having joined in the last 18-months, we have invested in some key tools for standardisation of processes with the goal being to ensure consistency of execution and successful implementation of cross-functional projects.

In order to manage the transition, we have created transformation teams consisting of key employees, and some external support. This will continue to run through to the end of October, when we expect to complete the recruitment and on-boarding of the additional members of my Leadership Team.

Customer and Partner Wins

Since the end of the last financial year, we have seen the opportunity pipeline start to unblock and potential new customers are now engaging fully and are now in a position to commit to new projects. We have signed a five-year contract with an American multinational pharmaceuticals group for the Spend Analytics solution and we are now in dialogue to expand into other divisions of the group as well as discussing the broader Procurement Portal offering.

Partners are becoming an increasingly important channel. Over the last year we had instigated a reset of our existing partner relationships and the fruits of this are now paying off. The reset has also resulted in new partner relationships being formed, most notably with a Swiss procurement consulting business with very significant multinational customers. This partner is not a typical referral partner as it is using the Rosslyn platform internally amongst its consulting teams to identify procurement savings and efficiencies in its own customer base, many of whom have already benefitted from the Rosslyn platform.

These wins illustrate the health of our opportunity pipeline as well as the credibility of Rosslyn such that customers are prepared to sign up for up to five years from the outset. We look forward to announcing further contract wins in the coming months.

Outlook: Creating a scalable business

As CEO since April 2021, I have conducted a review of the business so that we are fit to provide our client solution to meet our clients' evolving needs.  Central to our relaunch initiative will be putting the product and our customers at the centre of the Group's business model.  The more successful we are at transforming the customer experience, the higher quality input we will capture into our product strategy, which will underpin the realisation of our long-term goal to be a leader in our designated markets.  In the short term we are establishing a new leadership team and building a robust operating model to leverage the scalable opportunity in front of us.  I am confident that as we successfully implement of these primary initiatives in the next year that it will position us to take advantage of the market opportunities over the foreseeable future. We are laying the foundations for growth and transformation to a true product-led successful Cloud business.

Financial Review

Profit and loss account

Despite the slowdown due to COVID-19, revenue for the year grew 4.3% to £7.4 million (2020: £7.1 million). The gross margin percentage decreased to 82.3% (2020: 84.7%), partly as a result of investments into cybersecurity as we seek to maintain a leading position in protecting client data in our cloud platform.

Administrative costs increased to £7.2 million (2020: £6.0 million). Of the £1.2 million increase, £0.8m was one-off restructuring costs relating to people and property. The underlying costs increased through addition of headcount, principally in Sales and Marketing.

The absolute gross margin was similar to last year at £6.1 million (2020: £6.0 million) so with the increased Administrative costs this resulted in Operating EBITDA (excluding share-based costs) falling to a loss of £200,000 (2020: profit of £36,000).

Investment into research and development increased further during the year with spend of £1.6m million (2020: £1.3 million) on tax relief qualifying research and development on projects such as redesigning the user experience for both the RAPid and Langdon product suites, enhancing the supplier lifecycle management portfolio, and integration of Langdon into the new HMRC customs declaration system and Brexit changes.). The Group makes full use of the government's R&D Tax Credit scheme and during the year we received £301,000 relating to 2020, and expect to receive £427,000 relating to 2021.

The loss before income tax for the year was £2.5 million (2020: £1.9 million). This includes the impact of £1.1 million (2019: £1.7 million) of amortisation of intangible assets arising from the Integritie acquisition in 2017 and the Langdon acquisition in 2019, and a share-based payment charge of £204,000 (2020: £69,000).

Cash flow and funds

Cash flow from operating activities was a use of £563,000 (2020: use of £706,000).

Excluding bank debt, the cash balance at the year-end was £6.7 million (2020: £0.8 million). During the year we raised £6.8m (net of expenses) through an equity placing with new and existing shareholders.

Bank debt was £0.9 million at the year end (2020: £1.2 million) as a result of quarterly repayments of the term loan. £0.4 million is due over the next four quarters with the remaining £0.5 million due in March 2022.

Net cash at the year-end stood at £5.8 million (2020: net debt £0.4 million).

Balance sheet

The major movements in the balance sheet during the year were;

·    the intangible assets reducing to £1.0 million (2020: £2.0 million) as the assets recognised on previous acquisitions are written down over their useful economic lives in accordance with our accounting policy.

·    the repayment of debt, as described above.

·    the increase in cash, as described above

Key metrics

The Group regards Revenue and Operating EBITDA to be key financial metrics for the business along with ARR and Backlog.

Annual Recurring Revenue fell by 11% to £5.6 million (2020: £6.3 million), due to clients terminating contracts during COVID-19 and no significant new client signings being made during the year.

The Backlog fell 8% to £5.8 million (2020: £6.3 million), as customers were unwilling to sign new deals in the pandemic.

Financial results

Consolidated statement of comprehensive income

Consolidated statement of financial position

Consolidated statement of changes in equity

Consolidated statement of cash flows

Reconciliation of loss before income tax to cash used in operations

Notes to the consolidated financial statements

1. General information

Rosslyn Data Technologies plc (the "Company") is a company domiciled in the UK. It is quoted on AIM, part of the London Stock Exchange. The address of the registered office is 1000 Lakeside North Harbour, Western Road, Portsmouth, Hampshire, PO6 3EN. The Company is the ultimate parent company of Rosslyn Analytics Ltd and Rosslyn Data Management Ltd, companies incorporated in the UK, and the ultimate parent company of Rosslyn Analytics, Inc., a company incorporated in the United States of America (collectively, the "Group"). The Group's principal activity is the provision of data analytics using a proprietary form, data capture, data mining and workflow management.

2. Accounting policies

Basis of preparation

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 435 of the Companies Act 2006.

Whilst the financial information included in this announcement has been prepared in accordance to IFRS, this announcement itself does not contain sufficient information to comply IFRS. Statutory accounts for the year ended 30 April 2020 have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not draw attention to any matters by way of emphasis without qualifying their report and did not contain a statement under section 498(2) Companies Act 2006. The statutory accounts for the year ended 30 April 2021 will be delivered to the Registrar of Companies following the Company's annual general meeting. The auditors have not yet reported on those accounts. Their report is expected to be unqualified and not draw attention to any matters by way of emphasis without qualifying their report and not contain a statement under section 498(2) Companies Act 2006.

The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) in accordance with the Companies Act 2006 as applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention.

Going concern

These financial statements have been prepared on the going concern basis, which assumes that the Group will continue to be able to meet its liabilities as they fall due. Although the Group has made losses in the current year, much of this loss was due to non-cash items such as depreciation and amortisation. The Directors have prepared cash flow statements for the periods to 30 April 2023 to ensure going concern criteria are met, and they have also produced scenarios for any downturn.

During the year the Company raised £6.8m, net of expenses, and this balance is expected to be able to provide the Group with sufficient liquidity for the foreseeable future. In making this assessment the Directors have taken into account any potential impact still arising from COVID-19, along with the impact on liquidity of other risks materialising.

Having considered the forecasts and downturn scenarios, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting in preparing these financial statements.

3. Segmental reporting

Management has determined the operating segments based on the operating reports reviewed by the Executive Directors that are used to assess both performance and strategic decisions. Management has identified that the Executive Directors are the Chief Operating Decision-Maker in accordance with the requirements of IFRS 8 Operating segments.

The determination is that the Group operates as a single segment, as no internal reporting is produced either by geography or division. The Group does view performance on the basis of the type of revenue, and the end destination of the client as shown below.

Included in Europe is the Netherlands which had revenues of £952,000 in the Year Ended 30 April 2021 (2020: £840,000)

Included in North America is the USA which had revenues of £1,109,000 in the Year Ended 30 April 2021 (2020:£1,196,000)

Analysis of future operations:

There were no significant customers who make up greater than 10% of total revenue in the year. The following revenue arose from the Groups largest customer in each year:

4. Operating EBITDA

Operating EBITDA is calculated from Operating loss as shown below.

Exceptional costs include £620,000 costs to complete an onerous contract and £236,000 of employment restructuring costs.

5. Loss per share

Basic earnings per share is calculated by dividing the net loss for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share is calculated by dividing the net loss for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all dilutive potential ordinary shares into ordinary shares.

Annual report and accounts

The annual report and accounts will be posted to shareholders on the 4^th October and will be available for members of the public at the Company's registered office 1000 Lakeside North Harbour, Western Road, Portsmouth, Hampshire, PO6 3EN, and on the company's website www.rosslyndatatech.com .