26 November 2024
essensys plc
("essensys", the "Company" or the "Group")
Full year results
Performance ahead of market expectations, as previously guided
Successful transition to pure-play SaaS model supports scalable, sustainable growth
On track to be EBITDA profitable in FY25
essensys plc (AIM:ESYS), the leading global provider of software and technology to the flexible workspace industry, announces its audited results for the twelve months ended 31 July 2024 ("FY24"). All information relates to this period, unless otherwise specified.
Financial summary:
| £m unless otherwise stated | FY24 | FY23 | Change |
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| Revenue | 24.1 | 25.3 | -4% |
| Recurring revenue1 | 20.2 | 20.9 | -3% |
| Run Rate Annual Recurring Revenue (ARR)1 | 20.3 | 20.0 | 2% |
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| Revenue at constant currency2 | 24.8 | 25.3 | -2% |
| Recurring revenue at constant currency | 20.8 | 20.9 | -1% |
| Run rate ARR at constant currency | 21.1 | 20.0 | 5% |
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| Adjusted LBITDA3 | (0.9) | (6.3) | 86% |
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| Statutory loss before tax | (5.5) | (15.5) | 65% |
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| Loss per share (pence) | (5.1)p | (24.4)p |
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| Net Cash | 3.1 | 7.9 |
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Strategic progress supports higher quality of earnings and a return to profit in FY25
· Migration of all customers to pure-play SaaS product, essensys Platform, completed in FY24
· essensys Platform is a significant evolution of our proposition, setting a strong foundation for sustainable growth:
· Scalable model expected to deliver greater recurring revenues and higher gross margin
· Streamlined offering is easier for customers to buy, with faster time to deployment at lower entry cost
· Operational benefits to commercial real estate operators from enhanced products and improved functionality, such as essensys Platform's Intelligence Engine
· Momentum with strategic customers supporting greater revenue visibility and quality of earnings:
· Land: eleven new strategic customers, resulting in growth of 9% in number of strategic customers
· Expand: two major expansion contracts with strategic customers, expected to deliver at least £1.5m ARR by September 2025
· Grow: launch of Intelligence Engine in H1 FY24 and impending launch of Smart Access solution in H2 FY25 provide further opportunity for growth
· 7% growth in number of sites globally, with significant contributions from North America, Europe, and the Asia-Pacific region
· Strategic customer Net Revenue Retention of 111%, reflecting success in retaining and growing with our existing customer base
· Leaner organisation supports better decision-making, collaboration and drive towards profitability
Continued improvement in key financial metrics driving improved revenue mix
· Revenue, LBITDA and cash ahead of market expectations, as previously guided in the Company's full year trading update on 29 August 2024, reflecting progress with strategy
· £9m delivery of annualised cost savings, following the reorganisation implemented in FY23
· Annual recurring revenue up 5% at constant currency reflecting growth from strategic customers
· ARR from strategic customers up 8%, accounting for the majority of Group ARR (82%)
· ARR now 84% of total revenue
· Lower revenues, as expected, from non-strategic customers and marketplace
· Group revenue down 2% at constant currency as a result of reduction in non-strategic customers and lower non-recurring revenue
· Adjusted LBITDA significantly reduced by 86% to loss of £0.9m (FY23: £6.3m loss), following completion of Group reorganisation
· essensys remains debt-free with net cash of £3.1m at 31 July 2024, including a £0.9m tax credit received in Q424
Current trading and outlook
· On track to deliver positive adjusted EBITDA in FY25 and moving to run rate cash generation by the end of the financial year
· Sustainable, continued improvement in revenue mix expected as customers benefit from our pure-play SaaS product (essensys Platform)
· Sales bookings expectations supported by strategic customers' expansion plans and new customer opportunities
· We remain confident in the long-term structural growth opportunity in the office and flexible workspace market
Mark Furness, Chief Executive Officer of essensys, said:
"essensys has delivered revenue, profitability and cash ahead of market expectations, as previously announced. This is a robust outcome in market conditions which continue to be challenging, with delays to sales cycles and lower capex budgets constraining the activity of our customers.
"Our progress reflects the continuing implementation of our strategy. Firstly, we have now migrated all customers to our differentiated and market-leading product, essensys Platform. This sets a strong foundation for long-term, sustainable growth. Secondly, our longstanding strategy to land, expand and grow with strategic customers has once again improved our revenue mix. Thirdly, we have continued to invest in product development, with the launch of essensys Platform Intelligence Engine, yielding positive feedback.
"As a result of this strategic progress - combined with the benefits of the operational efficiencies we delivered in FY23 - we remain on track to deliver positive EBITDA in FY25. We look forward to sharing further progress in the year ahead. We remain confident in the long-term structural growth opportunity in the office and flexible workspace market, with a flight to high quality, amenity-rich office buildings aligned with the types of assets essensys is designed to empower."
For further information, please contact:
| essensys plc | | +44 (0)20 3102 5252 |
| Mark Furness, Chief Executive Officer | | |
| Greg Price, Chief Financial Officer | | |
| | | |
| Singer Capital Markets (Nominated Adviser and Broker) | | +44 (0)20 7496 3000 |
| Peter Steel / James Fischer | | |
| | | |
| FTI Consulting | | |
| Jamie Ricketts / Eve Kirmatzis / Usama Ali | | +44 (0)20 3727 1000 |
About essensys plc
essensys is the leading global provider of software and technology for flexible, digitally-enabled spaces, buildings and portfolios. The essensys Platform simplifies and automates the delivery and management of next generation, flexible, multi-tenant real estate.
The real estate industry is transforming - it must be flexible to changing market demands, accommodate hybrid working styles, provide move-in ready spaces and deliver frictionless experiences and on-demand services. The office sector is becoming an increasingly digital-first landscape - driven by end-user demand and delivering digitally enabled spaces is key to success. The essensys Platform has been designed and developed to help solve the complex operational challenges faced by landlords and flexible workspace operators as they grow and scale their operations. It helps our customers to deliver a simple, secure and scalable proposition, respond to changing occupier demands, provide seamless occupier experiences, and realise smart building and ESG ambitions.
Founded in 2006 and listed on the AIM market of the London Stock Exchange since 2019, essensys is active in the UK, Europe, North America and APAC.
Chairman's statement
In FY24, essensys made solid progress toward profitability, with strategic investments in innovation supporting both the Company's growth ambitions and the evolving demands of the flexible workspace sector.
I would like to extend my sincere thanks to the entire essensys team for their hard work and commitment; their dedication has been instrumental in advancing our strategic objectives this year.
We have also taken deliberate steps to enhance the quality of our customer base by focusing on high-value, strategic customers. This transition, while resulting in a 2% reduction in revenue at constant currency as we move away from smaller, lower value customers, has established a strong foundation for sustainable growth.
This year also marked the completion of our reorganisation aimed at simplifying our operational structure and aligning our cost base with current revenues. This has delivered significant cost savings and drives a sharper focus on our core customers and offerings, and means we are well-positioned to support the future of flexible workspaces.
We achieved a significant milestone by migrating all customers onto the essensys Platform, reinforcing our leadership in flexible workspace technology. We have made strides in product development, including the launch of our Intelligence Engine. We remain on track to launch our Smart Access product in H2.
Looking ahead to FY25, we anticipate achieving positive Adjusted EBITDA, which will be an important step toward run rate net cash generation by the end of the financial year. With a considerably reduced cash burn, we remain debt-free and ended the year with a net cash position of £3.1 million.
Our ambitions are based on the long-term growth opportunity, supported by strong partnerships with strategic customers and an expanding pipeline of new prospects. We are confident that essensys is well-positioned to lead in providing technology to the flexible workspace sector, creating enduring value for our investors and meeting the evolving needs of an increasingly dynamic market.
Chief Executive Officer's Report
Strong foundations for sustainable growth
While market conditions remain challenging, essensys made important progress in FY24 and delivered a robust trading performance.
During the year we made positive and significant strides forward in three key areas: our product offering, with all customers now migrated onto essensys Platform; product development and innovation; and our long-term growth strategy to land, expand and grow with strategic customers.
This enabled us to deliver revenue, profitability and cash ahead of market expectations in FY24, as previously announced, after we revised our financial forecasts downward at the half year in the context of delays to sales cycles and lower capex budgets, which have constrained the activity of our customers. Despite this, we signed two significant contract expansions in the year, with one of the world's largest privately owned commercial real estate companies and with an Australian listed REIT. The significant expansion opportunity that exists within such strategic customers provides a strong foundation for our future growth ambitions.
In FY24 we continued to place a strong emphasis on cost management and operational simplification. Building on the £8m in cost efficiencies identified, we delivered a further £1m of savings, bringing total annualised cost savings to £9m. These measures align with our focus on strategic customers and are delivering a sustainable improvement to our earnings, keeping us on track for a return to profit in FY25.
We remain debt-free and had a net cash position of £3.1m at the year end. essensys is now a leaner organisation and has an appropriate operational structure and product offering to support the growth plans of our strategic customers and deliver our long-term growth strategy.
Product
Our accelerated investment in product development over the past four years is beginning to deliver results and lays the foundation for long-term, sustainable growth. Our product development efforts are focussed on solving the key operational challenges of large multi-site office landlords and flexible workspace operators whilst reducing time-to-value and adoption costs of our solutions.
Our investment into essensys Platform to deliver a fully converged Access, Intelligence and Experience solution for our customers continues to be a key priority for our business. Our Product & Development team represents 30% of our total headcount which we believe demonstrates our commitment to delivering compelling, differentiated solutions for our customers.
essensys Platform
We have now migrated all customers to our differentiated and market-leading product, essensys Platform. We expect margins to improve materially over time as essensys Platform revenues increase as an overall proportion of our recurring revenues and lower margin essensys Cloud revenues decrease.
As previously announced, we have separated essensys Platform from our global private network (essensys Cloud). This allows us to reduce barriers to entry and simplify the customer onboarding journey for essensys Platform. Alongside the innovation set out below, this will allow our customers to access a pure-play SaaS product, which will provide the answers to the issues that the commercial real estate industry is facing.
As a result, we expect lower future demand for the hardware supply and installation services we offer. essensys Platform is now the primary driver of customer demand with both essensys Cloud and Operate (our billing platform solution) increasingly being relevant to only a small proportion of strategic customers. We expect this to result in a fundamental change to our revenue mix over the coming years as essensys Cloud and Operate revenues reduce as a percentage of total ARR as essensys Platform revenues increase.
Over time we expect a reduction in these lower margin non-recurring revenues (for example Wi-Fi and networking equipment and essensys Cloud installations) and so whilst customer capex budgets remain under pressure, we see the reduction to these onboarding costs as a positive enabler of future customer adoption.
essensys Platform: Intelligence Engine
During the year, we launched our insight solution, Intelligence Engine. This has now been released to all customers and has seen good levels of engagement, particularly across our strategic customers.
A CBRE Global Workplace and Occupancy Insights report published in December 2023 noted that the operational and financial impacts of underutilised space remain a top concern for commercial real-estate leaders who had a need for more detailed, higher quality utilisation data.
The report references utilisation rate as the occupancy metric that matters most and whilst contracted occupancy has historically been a key performance measure for landlords and workspace operators, the industry has tended to primarily rely on low-resolution security badge swipes for this more valuable utilisation data.
Since the pandemic, office utilisation rates are increasingly seen as a predictor of performance and future returns. With global average office utilisation of 35%, well below the pre-pandemic global average of 64%, landlords and workspace providers are having to adapt their offering to increase occupier utilisation.
In addition to space utilisation, the quality of the in-building digital experience (DX) is also crucial for landlords and workspace operators. Their challenge is providing frictionless access to spaces and services as well as a seamless digital experience. Therefore, WiFi and internet performance are now key data points.
Using space utilisation and DX as the foundations for Intelligence Engine we have developed a solution that provides customers with deep insights that can help them understand how their spaces are used and experienced. We also believe that as essensys Platform converges disparate systems and traditionally unconnected data sources (e.g. Wi-Fi/network, bookings, access control, IoT sensors), we can provide the high-fidelity and high-resolution insights that the commercial real estate industry is seeking.
Initial feedback on Intelligence Engine has been very positive and supports future pipeline growth, including the re-engagement of previous prospects, as well as driving increased retention and traction with strategic customers.
essensys Platform: Bookings and Smart Access
The dynamic booking of shared spaces such as meeting rooms in multi-tenanted commercial office real estate continues to be a pain point for our strategic customers and the recent release of Space Bookings in essensys Platform has allowed our customers the ability to manage the complex demands of their enterprise tenants across their portfolio. This emerging new capability in essensys Platform will become increasingly powerful due to its real-time integration with Smart Access, allowing dynamic booking and access to shared spaces in the future using simply a smartphone.
We have continued to make progress with the development of our embedded access control and IoT hardware solution that we currently refer to as Smart Access. Smart Access leverages the ubiquity of smartphone wallets to create a seamless tap-book-open experience for building occupiers. The solution converges access control, space bookings and an IoT sensor gateway to provide a powerful answer to the problem of managing real-time access and control of space in today's dynamic and flex-enabled world. The hub's embedded IoT gateway will also enable the collection of real-time sensor data, further improving the quality of insights Intelligence Engine can provide. As previously announced, both hardware elements (reader and hub) are now fully FCC and CE certified and production tooling is well underway, targeting customer availability early in H2 FY25.
Strategic customers: Land, Expand and Grow
Our longstanding strategy to Land, Expand and Grow with strategic customers continues to underpin the improvement to our customer mix, product adoption and revenue quality.
We are seeing this strategy bear fruit in our focus on high value, strategic customers with the potential to deliver at least $1m ARR. These are typically large enterprise customers, particularly blue-chip landlords, who are instrumental in shaping the future of the commercial real estate industry. Typically, strategic customers engage us for multiple sites, generate higher revenues per account and deliver stronger net margins due to the lower costs afforded by our operational efficiency to serve.
We continue to see improvements in the quality of our customer base with strategic customers now accounting for 82% of our revenues, up from 77% in FY23. As a result, the majority of new sites now come from strategic customers. Net Revenue Retention of 111% within our strategic customer cohort is higher than net retention across our whole customer base (103%).
One result of our focus on higher-value strategic customers is continuing churn in the long tail of our non-strategic clients. These smaller customers, which now represent 18% of overall revenues, are largely single site operators that do not offer an expansion opportunity and have high service costs and we expect their numbers to continue to reduce further in the year ahead.
Land
Despite a challenging macro backdrop in which sales cycles and capital deployment decisions are taking longer, we signed eleven new strategic customers in FY24. This saw us expand our footprint, resulting in growth of 9% in our volume of strategic customers.
Expand
In FY24 we signed two major expansion contracts with existing customers, developing a strategic plan to align our product roadmap with their long-term goals.
The first of these portfolio MSAs (Master Service Agreement) is with one of the world's largest privately-owned commercial real estate companies. Headquartered in the US and with a large global portfolio, this customer is contracted to deliver a minimum of US$1m ARR by September 2025 with the total expansion opportunity being significantly larger.
The second is a with an Australian listed REIT which is rolling out essensys Platform across its existing portfolio as part of a five-year contract and is expected to reach a run-rate of US$1m ARR by July 2025.
Grow
We have also seen customer site growth across all our operating regions. The number of sites utilising our essensys Platform has grown by 7% globally, with contributions across all regions.
The Group's gross retention rates within our strategic customer cohort have improved to 93% (from 83% in FY23), while net retention rates have reached 111%, indicating that existing customers are not only staying with us, but are also expanding their use of our services.
US momentum and Global progress
We have continued our momentum in the US, which remains the largest, highest growth market for the flexible workspace industry - and our primary growth engine. The US continues to provide a significant long-term opportunity and accounted for nearly 60% of Group revenues in the year.
US ARR was up 2% and while US total revenue decreased by 10% from £15.8m to £14.2m, this was due to pressure on capex budgets impacting on non-recurring revenue. US recurring revenue at constant currency grew by 2%.
Our U.S. pipeline remains robust, with over 200 sites currently in our pipeline. Notably, 80% of these are with our strategic customers, underscoring the strength of our relationships. Our strategic customer base continues to show promising growth trajectories, with expansion plans and strengthened partnerships driving forward our growth targets. Key highlights include:
· A premier US landlord is set to expand significantly, with plans to add over 20 new sites within the next year. This rapid growth underlines their commitment to our platform and highlights a mutual goal of delivering seamless operational experiences across an expanding portfolio.
· In the UK, one of our larger strategic customers is also planning for a large-scale expansion, which will further solidify our relationship. This expansion aligns with our strategy of supporting top tier landlords and enables us to provide them with scalable, robust solutions.
Strategic landlords are using essensys Platform to deliver a premier digital experience to occupiers. Customers are taking a portfolio based approach, working with a select number of partners across their sites, as opposed to site by site solutions, to deliver an integrated tech stack.
The essensys Platform provides robust, multi-layered security features that safeguard both tenant data and operational integrity across all sites. Additionally, strategic landlords are using the essensys Platform Intelligence Engine to gather insights that offer actionable data points on space utilisation and identify trends that will benefit customer satisfaction.
Current trading, market conditions and outlook
Our progress in challenging market conditions reflects a continued focus on the execution of our strategy and strength of our customer relationships.
We believe our transition to a pure-play SaaS model through essensys Platform, investment in our market-leading product and longstanding strategy to land, expand and grow with strategic customers position us well to prosecute the long-term opportunity.
As a result of this strategic progress - combined with the benefits of the operational efficiencies we started in FY23 - we remain on track to deliver positive EBITDA in FY25. We see this in our sales pipeline and ARR, which are driven by our strategic customers' expansion plans. As these customers see the operational benefits of our pure-play SaaS product (essensys Platform), we expect a sustainable, continued improvement in gross margins.
The ongoing structural shift in the global office sector, driven by the bifurcation of offices between premium, amenity rich buildings, which appeal in the new world of hybrid wording, with older office stock, translates into an enduring growth opportunity for essensys and our products as landlords update their assets to meet tenant needs. However, we expect to continue to see delays to sales cycles and lower capex budgets constraining our customers' expansion plans, until the macro-economic outlook improves. We remain confident in the long-term outlook for the business.
Chief Financial Officer's Report
The financial results included in this announcement cover the Group's consolidated activities for the twelve months ended 31 July 2024. The comparatives for the previous twelve months were for the Group's consolidated activities for the twelve months ended 31 July 2023.
Financial Key Performance Indicators
| £'m unless otherwise stated | Twelve months to July 2024 | Twelve months to July 2023 | Change |
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| Group Total Revenue | 24.1 | 25.3 | -4% |
| North America | 14.2 | 15.8 | -10% |
| UK & Europe | 8.5 | 8.7 | -2% |
| APAC | 1.4 | 0.8 | 74% |
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| Recurring Revenue | 20.2 | 20.9 | -3% |
| North America | 12.3 | 12.6 | -2% |
| UK & Europe | 6.6 | 7.8 | -15% |
| APAC | 1.3 | 0.5 | 160% |
| Recurring Revenue %age of Total | 84% | 83% |
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| Run Rate Annual Recurring Revenue1 | 20.3 | 20.0 | 2% |
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| Recurring Revenue at constant currency | 20.8 | 20.9 | -1% |
| North America | 12.8 | 12.6 | 2% |
| UK & Europe | 7.2 | 7.8 | -8% |
| APAC | 0.8 | 0.5 | 60% |
| Run rate ARR | 21.1 | 20.0 | 5% |
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| Non-recurring revenue | 3.9 | 4.4 | -11% |
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| Gross Profit | 13.7 | 14.9 | -8% |
| Gross Profit percentage | 57% | 59% |
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| Recurring Revenue margin %age | 62% | 63% |
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| Operating Expenses | (14.6) | (21.2) | 31%
5% |
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| Adjusted LBITDA | (0.9) | (6.3) | 86% |
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| Statutory loss before tax | (5.5) | (15.5) | 65% |
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| Cash | 3.1 | 7.9 |
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Revenue
Run Rate ARR grew by 2% to £20.3m (FY23: £20.0m). At constant currency, stripping out the negative impact of movements in the US Dollar results in ARR growth of 5%, reflecting growth in strategic customers.
ARR from strategic customers increased in the year by 8% to £16.7m (FY23: £15.5m) and accounts for 82% of Group ARR. The Group introduced 11 new strategic customers in the year, which resulted in increased ARR of £0.5m. While ARR was only impacted in the year by the loss of a single strategic customer following their withdrawal from the flex office market and a net £1.1m of ARR was added in new sites (net of lost sites), as reported in our half year results, we expect our largest customer to downsize in H1 FY25, with a reduction of up to £3m in ARR. This mainly relates to our lower margin Cloud product (£2m), while our legacy software product, Connect, accounts for the balance. This is our last US customer using Connect, which is in the process of being retired.
Overall, ARR increased by £0.8m as a result of 18 new customers in total. ARR also benefited from a net increase of 32 sites, partly offset by the expected continuing decline in variable Marketplace revenues (£0.4m).
Group total revenue decreased by 4% to £24.1m in FY24 (FY23 £25.3m), primarily due to a reduction in non-strategic customers and lower non-recurring revenue in a capital-constrained market environment. As noted above, the US dollar also weakened relative to FY23, resulting in a negative impact to revenue. Total revenue at constant currency decreased by 2%.
Recurring revenue decreased by 3% compared to FY24 (decreasing by 1% at constant currency). North America underlying dollar denominated recurring revenue grew by 2% but the weakening of the US dollar compared with FY23 meant that reported recurring revenue decreased by 2% in the period. The US has seen a net increase of 9 sites since the FY23 year end, with the losses seen in H1 offset by gains achieved in H2. UK & Europe recurring revenue declined by 15% year on year, driven by losses of non-strategic customers and reduced demand for our Operate solution. We have seen a return to net site growth in this region with closing site numbers up 8 on FY23 year end. APAC growth continued with 15 new sites live in the year.
Non-recurring revenue comprises set up and installation costs and is recognised when a site is live. Non-recurring revenue reduced by 11% compared to FY23, reflecting challenging market conditions, with a reluctance from customers to invest in capital expenditure. The Group expects that following its initiative in FY25 to simplify installation, this will reduce the requirement for upfront investment, reducing barriers to entry and supporting the Group's emphasis on recurring revenue growth.
Gross margins
Gross profit decreased by 8% in the year, reflecting the reductions seen in revenue. Gross margins also declined to 57% (FY23: 59%), driven by the relative pressure on margins relating to installations, which reduced non-recurring margins by 4 percentage points. Recurring revenue margins also declined by 1 percentage point to 62%, due to the continuing decline in traditionally higher margin UK Marketplace services revenue. The move to a pure play SaaS platform will see the decommissioning of our private network (essensys Cloud) data centres over the coming months, which will result in improving margins.
Operating expenses
Operating expenses represent all administrative expenses, excluding restructuring costs and non-cash items of depreciation, amortisation, impairment and share option charges.
Operating expenses decreased by £6.6m (31%) compared to the prior year. This reduction was driven by the Group reorganisation, which began at the end of H1 FY23 and completed at the start of FY24 and reflects the strong emphasis on cost management and operational simplification in the business. Including the savings achieved in the prior year, the Group has delivered total annualised cost savings of £9m, an extra £1m more than the £8m originally identified.
Adjusted LBITDA
Adjusted LBITDA for the year was £5.4m lower than FY23 due to the impact of the Group reorganisation and continued focus on profitability and cash, which more than offset the reduction in gross profit.
The Group continues to invest in product development in the UK. 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 year, the Group capitalised £2.1m in respect of software development (FY23: £3.8m). This reduction reflects the impact of the Group reorganisation, but also reflects the progress made in developing our products, with Intelligence Engine launched in H1 FY24 and our Smart Access solution expected to launch in H2 FY25.
Taxation
The Group recognised a £2.2m tax credit in the year in respect of R&D activities for the financial years from FY21 to FY24. Of this, £1.0m was received during the year for FY21 and FY22, £0.9m was received after the year end for FY23 and £0.3m was accrued in respect of FY24. The Group had not previously recognised R&D tax credits but in light of claimed amounts being successfully recovered considers there a sufficiently reasonable expectation to recognise a receivable in respect of R&D credits unpaid as at the balance sheet date. £1.2m was reported on the balance sheet as a receivable at the year end. Excluding this, the Group incurred a tax charge in the year of £0.1m (FY23: £0.2m), which represents taxes paid on foreign income in the year. There remains over £7.5m in Group carried forward taxable losses and therefore there is no expectation of tax payments in the short term.
Cash
Cash at the year end was £3.1m (FY23: £7.9m). Cash at the half year was £3.5m, with cash outflows in H2 reduced to £0.4m. This was supported by tax credits in respect of R&D activities received in H2 of £0.9m, with an underlying cash outflow of £1.3m, compared to £4.4m in H1.
Following the year end, the Group has received a further £0.9m of tax credits in respect of R&D activities and expects cash burn to continue to reduce into FY25 as essensys Platform revenues increase and we optimise our Cloud costs. The Group continues to maintain sufficient cash reserves to fund its working capital requirements and its return to cash generating operations. Excluding leases, the Group has no debt and has an undrawn £2m loan facility committed until 31 July 2025.
In light of the continued impacts of global macroeconomic uncertainty, the Board has considered a number of different scenarios regarding trading and financial performance into FY25 and beyond and is confident that, in the event of a significant long-term downturn, the Group will have sufficient cash resources for the foreseeable future.
Greg Price
Chief Financial Officer
26 November 2024
essensys plc
Consolidated Statement of Comprehensive Loss
for the year ended 31 July 2024
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| Notes | 2024 | 2023 |
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| £000 | £000 |
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| | |
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| Turnover | 2 | 24,131 | 25,254 |
| Cost of sales | | (10,393) | (10,347) |
| | | _________ | _________ |
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| Gross profit | | 13,738 | 14,907 |
| | |
| |
| Administrative expenses | | (19,051) | (26,176) |
| Expected credit loss provision | | (308) | (1,037) |
| Share based payment expense | | 448 | (597) |
| Restructuring expenses | 3 | (207) | (2,610) |
|
| | _________ | _________ |
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| Operating loss | 4 | (5,380) | (15,513) |
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| |
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| Interest receivable and similar income | | 21 | 216 |
| Interest payable and similar charges | | (133) | (164) |
| | | _________ | _________ |
| | |
| |
| Loss before taxation | | (5,492) | (15,461) |
| | | | |
| Taxation | 5 | 2,183 | (245) |
| | | _________ | _________ |
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| Loss for the year from continuing operations |
| (3,309) | (15,706) |
| | | _________ | _________ |
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| Other comprehensive loss |
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| | |
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| Items that may be reclassified to profit or loss: | |
| |
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| Currency translation differences | | (59) | (246) |
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| | _________ | _________ |
| | |
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| Other comprehensive loss for the year |
| (59) | (246) |
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| | _________ | _________ |
| | | | |
| Total comprehensive loss for the year |
| (3,368) | (15,952) |
| | | _________ | _________ |
| | | | |
| Basic and Diluted loss per share | 6 | (5.1p) | (24.4p) |
| | | _________ | _________ |
essensys plc
Consolidated Statement of Financial Position
as at 31 July 2024
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| Notes | 2024 | 2023 |
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| £000 | £000 |
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| ASSETS |
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| Non-current assets | |
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| Intangible assets | 7 | 9,426 | 10,059 |
| Property, plant and equipment | | 847 | 1,577 |
| Right of use assets | | 1,319 | 1,140 |
| | | _________ | _________ |
| | |
| |
| | | 11,592 | 12,776 |
| | | | |
| Current assets | |
| |
| Inventories | | 888 | 2,260 |
| Trade and other receivables | | 7,143 | 4,617 |
| Cash at bank and in hand | | 3,101 | 7,862 |
| | | _________ | _________ |
| | | | |
| | | 11,132 | 14,739 |
| | | _________ | _________ |
| | | | |
| TOTAL ASSETS | | 22,724 | 27,515 |
| | | _________ | _________ |
| EQUITY AND LIABILITIES | |
| |
| | | | |
| EQUITY | |
| |
| | | | |
| Shareholders' equity | |
| |
| Called up share capital | | 162 | 162 |
| Share premium | | 51,660 | 51,660 |
| Merger reserve | | 28 | 28 |
| Retained earnings | | (35,086) | (31,270) |
| | | _________ | _________ |
| | | | |
| TOTAL EQUITY | | 16,764 | 20,580 |
| | | | |
| LIABILITIES | |
| |
| | | | |
| Non-current liabilities | |
| |
| Lease liabilities | | 432 | 307 |
| | | _________ | _________ |
| | | | |
| | | 432 | 307 |
| | | | |
| Current liabilities | |
| |
| Trade and other payables | | 3,844 | 4,762 |
| Contract liabilities | | 648 | 420 |
| Lease liabilities | | 1,008 | 1,264 |
| Current taxes | | 28 | 182 |
| | | _________ | _________ |
| | | | |
| | | 5,528 | 6,628 |
| | | _________ | _________ |
| | | | |
| TOTAL LIABILITIES | | 5,960 | 6,935 |
| | | _________ | _________ |
| | | | |
| TOTAL EQUITY AND LIABILITIES | | 22,724 | 27,515 |
| | | _________ | _________ |
essensys plc
Consolidated Statement of Changes in Equity
for the Year Ended 31 July 2024
|
| Share | Share | Merger | Retained | Total |
|
| capital | premium | Reserve | earnings | equity |
|
| £000 | £000 | £000 | £000 | £000 |
| | | | | | |
| 1 August 2023 | 162 | 51,660 | 28 | (31,270) | 20,580 |
|
| | | | |
|
| Comprehensive loss for the year | | | | |
|
| Loss for the year | - | - | - | (3,309) | (3,309) |
| Currency translation differences | - | - | - | (57) | (59) |
| | _______ | _______ | _______ | _______ | _______ |
| | | | | |
|
| Total comprehensive loss for the year | - | - | - | (3,168) | (3,168) |
| | _______ | _______ | _______ | _______ | _______ |
| | | | | |
|
| Transactions with shareholders | | | | |
|
| | | | | |
|
| Share based payment charge | - | - | - | (448) | (448) |
| | _______ | _______ | _______ | _______ | _______ |
| | | | | |
|
| 31 July 2024 | 162 | 51,660 | 28 | (35,086) | 16,764 |
| | _______ | _______ | _______ | _______ | _______ |
Consolidated Statement of Changes in Equity
For the Year Ended 31 July 2022
|
| Share | Share | Merger | Retained | Total |
|
| capital | premium | Reserve | earnings | equity |
|
| £000 | £000 | £000 | £000 | £000 |
| | | | | |
|
| 1 August 2022 | 161 | 51,660 | 28 | (15,889) | 35,960 |
|
| | | | |
|
| Comprehensive loss for the year | | | | |
|
| Loss for the year | - | - | - | (15,706) | (15,706) |
| Currency translation differences | - | - | - | (272) | (272) |
| | _______ | _______ | _______ | _______ | _______ |
|
| | | | |
|
| Total comprehensive loss for the year | - | - | - | (15,978) | (15,978) |
| | _______ | _______ | _______ | _______ | _______ |
| | | | | |
|
| Transactions with shareholders | | | |
|
|
| | | | | |
|
| Share based payment charge | - | - | - | 597 | 597 |
| Issue of new shares | 1 | - | - | - | 1 |
| | _______ | _______ | _______ | _______ | _______ |
|
|
|
|
|
|
|
| 31 July 2023 | 162 | 51,660 | 28 | (31,270) | 20,580 |
| | _______ | _______ | _______ | _______ | _______ |
essensys plc
Consolidated Statement of Cash Flows
for the Year Ended 31 July 2024
|
| Notes | 2024 | 2023 |
|
|
| £000 | £000 |
|
|
|
|
|
| Cash used by operations | 9 A | (2,010) | (9,745) |
|
| |
| |
| Corporation tax received / (paid) | | 860 | (63) |
| Foreign exchange differences | | 82 | (31) |
| | | _________ | _________ |
| | |
| |
| Net used by operating activities | | (1,068) | (9,839) |
|
| | _________ | _________ |
|
| |
| |
| Cash flows from investing activities | |
| |
| Purchases of intangible assets | 7 | (2,077) | (3,843) |
| Purchases of property plant and equipment | | (34) | (630) |
| Proceeds from the disposal of fixed assets | | - | 120 |
| Interest received | | 21 | 216 |
| | | _________ | _________ |
| | |
| |
| Net cash used in investing activities | | (2,090) | (4,137) |
|
| | _________ | _________ |
| | |
| |
| Cash flows from financing activities | |
| |
| Proceeds from the issuance of new shares | | - | 1 |
| Repayment of lease principal | | (1,408) | (1,842) |
| Interest paid on lease liabilities | | (133) | (164) |
| | | _________ | _________ |
| | |
| |
| Net cash used in financing activities | | (1,541) | (2,005) |
| | | _________ | _________ |
| | |
| |
| Net decrease in cash and cash equivalents | | (4,699) | (15,981) |
| Cash and cash equivalents at beginning of year | | 7,862 | 24,122 |
| Effects of foreign exchange rate changes on cash and cash equivalents | | (62) | (279) |
| | | _________ | _________ |
| | |
| |
| Cash and cash equivalents at end of year | | 3,101 | 7,862 |
|
| | _________ | _________ |
| Cash and cash equivalents comprise: | |
| |
| Cash at bank and in hand | | 3,101 | 7,862 |
|
| | _________ | _________ |
| 1 | Basis of Preparation |
The consolidated statement of comprehensive loss, the consolidated statement of financial position, the consolidated statement of changes in equity, the consolidated statement of cash flows and the associated notes for the year ended 31 July 2024 have been extracted from the Group's financial statements upon which the auditor's opinion is unqualified and does not include any statement under section 498 of the Companies Act 2006.
There were no new standards or amendments or interpretations to existing standards that became effective during the year that were material to the Group.
No new standards, amendments or interpretations to existing standards having an impact on the financial statements that have been published and that are mandatory for the Group's accounting periods beginning on or before 1 August 2024, or later periods, have been adopted early.
Whilst the financial information included in this announcement has been computed in accordance with international accounting standards, this announcement does not itself contain sufficient information to comply with all IFRS disclosure requirements. The Company's 2024 Annual Report and Accounts will be prepared in compliance with UK-adopted International Accounting Standards (IFRS).
This announcement does not constitute a dissemination of the annual financial report and does not therefore need to meet the dissemination requirements for annual financial reports. A separate dissemination announcement in accordance with Disclosure and Transparency Rules (DTR) 6.3 will be made when the annual report and audited financial statements are available on the Company's website.
Statutory Information
The financial information included in this announcement does not constitute statutory accounts and is consistent with the accounting policies of the Group, which were set out on pages 63 to 70 of the 2023 Annual Report and Accounts.
The statutory accounts for the year ended 31 July 2024 will be finalised on the basis of the financial information presented by the directors in this announcement and will be delivered to the Registrar of Companies following the Group's Annual General Meeting. The announcement of the results was approved on behalf of the Board of directors on 25 November 2024.
| 2 | Segmental Reporting |
|
|
The Group 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 generates revenue from the following activities:
· Establishing services at customer sites (e.g. providing and managing installations, equipment and training on software); Recurring monthly fees for using the Group's software platforms;
· Revenue from usage of on demand services such as internet and telephone usage and other, on demand, variable services; and
· Other ad-hoc service.
The Group has one single business segment which is the provision of software and technology platforms that manage the critical infrastructure and business processes, primarily to the flexible workspace segment of the real estate industry. The Group has two revenue streams and three geographical segments, as detailed in the tables below.
| 2A | Revenue analysis by geographic area |
|
| |
|
|
|
|
| |
| | The Group operates in two main geographic areas, the United Kingdom and North America. The whole of the turnover is attributed to the principal activity. The Group's revenue per geographical segment is as follows: | |||
|
|
|
|
| |
|
|
| 2024 | 2023 | |
|
|
| £000 | £000 | |
| | Analysis of turnover by country of destination: |
| | |
| | | | | |
| | North America | 14,158 | 15,747 | |
| | United Kingdom and Europe | 8,519 | 8,673 | |
| | Asia Pacific region | 1,454 | 834 | |
| | |
| | |
| | Total Income | 24,131 | 25,254 | |
| | |
|
| |
| 2B | Revenue analysis by revenue streams |
|
| |
| | |
|
| |
| | The Group has two main revenue streams, essensys Platform and Operate. The Group's revenue per revenue stream is as follows: | |||
| | |
|
| |
| | | 2024 | 2023 | |
| | | £000 | £000 | |
| | |
|
| |
| | Essensys Platform | 22,671 | 23,543 | |
| | Operate | 1,460 | 1,711 | |
| | | | | |
| | Total Income | 24,131 | 25,254 | |
Essensys Platform revenue includes all revenue generated in relation to the essensys Platform product. It includes revenue recognised at a point in time as well as recognised over a period of time.
Operate revenue includes all revenue generated in relation to the Group's Operate product. The revenue is recognised over a period of time.
| 2C | Revenue disaggregated by 'point in time' and 'over time' |
|
|
|
|
|
|
|
|
| The Group revenue disaggregated between revenue recognised 'at a point in time' and 'over time' is as follows: | ||
|
|
|
|
|
| | | 2024 | 2023 |
| | | £000 | £000 |
| | |
|
|
| | Revenue recognised at a point in time | 3,874 | 4,341 |
| | Revenue recognised over time | 20,257 | 20,913 |
| | | | |
| | Total Income | 24,131 | 25,254 |
|
|
|
|
|
| 2D | Revenue from customers greater than 10% of total revenue |
|
|
|
|
|
|
|
|
| Revenue from customers greater than 10% in each reporting period is as follows: | ||
|
|
|
|
|
| | | 2024 | 2023 |
| | | £000 | £000 |
| | |
|
|
| | Customer 1 | 5,917 | 6,865 |
| | |
| |
| 2E | Contract assets and liabilities |
|
|
|
| Contract asset movements were as follows: | ||
| | | 2024 | 2023 |
| | | £000 | £000 |
| | |
|
|
| | At 1 August | 468 | 887 |
| | Transfers in the period from contract assets to trade receivables | (176) | (544) |
| | Excess of revenue recognised over cash (or rights to cash) being recognised during the period | 242 | 175 |
| | Capital asset contract contributions capitalised | (21) | 57 |
| | Capital asset contract contributions released as contract obligations are fulfilled | - | (58) |
| | Capitalised commission cost released as contract obligations fulfilled | (356) | (210) |
| | Commission costs capitalised on contracts | 697 | 161 |
| | At 31 July | 854 | 468 |
| | | | |
| | | | |
|
| Contract liability movements were as follows: | ||
|
|
|
|
|
| | | 2024 | 2023 |
| | | £000 | £000 |
| | |
|
|
| | At 1 August | 420 | 815 |
| | Amounts included in contract liabilities that were recognised as revenue during the period | (420) | (815) |
| | Cash received and receivables in advance of performance and not recognised as revenue during the period | 648 | 420 |
| | At 31 July | 648 | 420 |
Contract assets are included within 'trade and other receivables' and contract liabilities is shown separately 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, and 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. Capital asset contract contributions represent costs incurred by the Group in the form of customer incentives spread over the life of the customer contract. 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.
| 3 | Restructuring costs |
|
|
|
|
|
|
|
|
| Restructuring costs were as follows: | ||
|
|
|
|
|
| | | 2024 | 2023 |
| | | £000 | £000 |
| | |
|
|
| | Restructuring costs | 207 | 2,610 |
During the year, an additional step in the global reorganisation plan from the previous year was actioned to ensure the most rapid return to profitability of the Group. The costs recognised in this financial year reflect that restructuring and residual costs incurred at the beginning of the year over the costs accrued in the previous financial year.
During the previous financial year, the Group announced a global reorganisation which positions it for sustainable growth, profitability and a return to cash generation. This included the simplification of global operations and moves the Group from a regional to a functional structure. The restructuring costs in FY23 reflect the total expected cost of the reorganisation, which was completed after the year end. The cost related to termination of employment, being redundancy costs and payment in lieu of notice in certain cases, and any other costs to achieve the reorganisation including the cost to exit office space and the cost of external legal advice specific to the reorganisation.
| 4 | Operating loss |
|
|
|
|
| 2024 | 2023 |
|
|
| £000 | £000 |
| | This is arrived at after charging/(crediting): |
| |
| | |
| |
| | Amortisation of intangible assets | 2,710 | 2,081 |
| | Depreciation of tangible fixed assets | 765 | 1,405 |
| | Depreciation of right of use assets | 1,247 | 1,349 |
| | Impairment of right of use assets | - | 274 |
| | Impairment of goodwill | - | 275 |
| | Accelerated amortisation of other intangible assets | - | 350 |
| | Impairment of tangible fixed assets | - | 313 |
| | Fees payable to the Group's auditor (see below) | 150 | 315 |
| | (Profit)/loss on disposal of tangible fixed assets | - | (5) |
| | Exchange differences | (5) | 31 |
| | Research & Development expense | 1,988 | 3,428 |
| | Staff costs | 13,517 | 19,858 |
| | Share based payments | (448) | 597 |
| | | | |
| | | | |
| | Analysis of fees paid to the Group's auditor: |
| |
| | |
| |
| | Annual financial statements - parent company | 50 | 75 |
| | Annual financial statements - subsidiary companies | 100 | 133 |
| | |
| |
| | Audit Fee | 150 | 208 |
| | |
| |
| | Assurance services | - | 41 |
| | Other services | - | 66 |
| | |
| |
| | Non audit services | - | 107 |
| | |
| |
| | Total fee | 150 | 315 |
| 5 | Taxation on loss on ordinary activities | ||
|
|
| 2024 | 2023 |
|
|
| £000 | £000 |
|
| Current tax |
| |
| | UK corporation tax | (300) | - |
| | Adjustment in respect of previous periods | (1,937) | - |
| | Foreign tax on income for the year | 54 | 245 |
| | Total current tax | (2,183) | 245 |
| | |
| |
| | Deferred tax |
| |
| | Origination and reversal of timing differences | - | - |
| | Adjustments in respect of prior periods | - | - |
| | Total deferred tax | - | - |
| | |
| |
| | Taxation on loss on ordinary activities | (2,183) | 245 |
The tax assessed for the year is higher than the standard rate of corporation tax in the UK applied to profit before tax. The differences are explained below:
|
|
| 2024 | 2023 |
|
|
| £000 | £000 |
| | |
| |
| | Loss on ordinary activities before tax | (5,492) | (15,473) |
| | |
| |
| | Tax using the Group's domestic tax rates (25% (2023:21%)) | (1,373) | (3,249) |
| | |
| |
| | Effects of: |
| |
| | Fixed asset differences | 70 | 53 |
| | Expenses not deductible for tax purposes | (70) | 175 |
| | Deductions for R&D expenditure relating to the current year | (300) | - |
| | Deductions for R&D expenditure relating to prior years | (1,937) | - |
| | Difference in current tax and deferred tax rates | - | (473) |
| | Other permanent differences | (506) | 669 |
| | Deferred tax not recognised | 1,933 | 3,070 |
| | Total tax (credit) / charge for period | (2,183) | 245 |
The Group received two payments in the year (and one post year end) in relation to claims made for UK research and development tax relief that resulted in receipts totalling £1,937,000. Recognition of the receivables was not considered probable until the claims were approved by the UK Tax Authorities. As a result of the successful claims made, management believe that a claim for this accounting period will mean a receipt for the sum of £300,000 is probable in the next accounting period and as such have recognised a receivable of the same amount.
| 6 | Earnings per share |
|
|
|
|
| 2024 | 2023 |
|
|
|
|
|
|
| Basic weighted average number of shares | 64,677,667 | 64,407,222 |
|
|
|
| |
|
| Fully diluted weighted average number of shares | 64,677,667 | 64,407,222 |
|
|
| 2024 | 2023 |
|
|
| £000 | £000 |
|
|
|
| |
| | Loss for the year attributable to owners of the group | (3,309) | (15,706) |
| | |
| |
| | Basic and diluted loss per share (pence) | (5.1p) | (24.4p) |
The loss per share has been calculated using the loss for the year and the weighted average number of ordinary shares outstanding during the period.
Share options held at the year-ended 31 July 2024 are anti-dilutive and so have not been included in the diluted earnings per share calculation.
| 7 | Intangible assets |
|
|
|
|
|
|
|
|
| Assets in the course | Customer | Internal software |
|
|
|
|
| Group | of construction | relationships | development | Software | Goodwill | Total |
|
|
| £000 | £000 | £000 | £000 | £000 | £000 |
|
| Cost | | | | | | |
| | At 1 August 2023 | 622 | 335 | 16,552 | 280 | 1,263 | 19,052 |
| | Additions | 410 | - | 1,667 | - | - | 2,077 |
| | Transfers | - | - | - | - | - | - |
|
| At 31 July 2024 | 1,032 | 335 | 18,219 | 280 | 1,263 | 21,129 |
|
|
|
|
|
|
|
|
|
|
| Amortisation | | | | | | |
| | At 1 August 2023 | - | 335 | 7,981 | 280 | 397 | 8,993 |
| | Charge for year | - | - | 2,710 | - | - | 2,710 |
| | Impairment | - | - | - | - | - | - |
| | | | - | | - | | |
|
| At 31 July 2024 | - | 335 | 10,691 | 280 | 397 | 11,703 |
|
|
|
|
|
|
|
|
|
|
| Net book value | | | | | | |
| | At 31 July 2024 | 1,032 | - | 7,522 | - | 866 | 9,426 |
| | | | | | | | |
| | At 31 July 2023 | 622 | - | 8,571 | - | 866 | 10,059 |
The goodwill relates to the acquisition of Hubcreate Limited on 18 February 2016. The goodwill all relates to the Operate cash generating unit (CGU).
The Group estimates the recoverable amount of the Operate CGU using a value in use model by projecting pre-tax cash flows for the next 5 years. The key assumptions underpinning the recoverable amount of the CGU are forecast revenue and forecast EBITDA percentage. The forecast revenues in the model are based on management's past experience and future expectations of performance. The post-tax discount rate used in all periods is 14% derived from a WACC calculation and benchmarked against similar organisations within the sector. Management do not anticipate this CGU providing long term future cash flows for the group. As such the latest projection shows an average 8% decline in revenue year on year, which is consistent with the average decline in revenue over the last three financial years. The average decline in revenue would need to be above 11.5% to remove any headroom between value in use and current carrying value. Using a discount rate of 14% (2023: 14%) resulted in no additional impairment, and as such no additional impairment charge has been booked in this period (2023: £275,000).
Capitalised internal software development costs relates to both the essensys CGUs, the first CGU being essensys Platform and the second CGU being Operate. The amounts specific to each CGU can be separately determined.
The Group estimates the recoverable amount of the essensys Platform CGU using a value in use model by projecting pre-tax cash flows for the next 5 years including a terminal value calculation after the fifth year. The key assumptions underpinning the recoverable amount of the CGU are forecast revenue and forecast EBITDA percentage. The forecast revenues in the model are based on management's past experience and future expectations of performance. The long-term growth rate used in the value in use calculation was 7.5%. The long-term growth rate would need to fall below 1% to remove any headroom between value in use and current carrying value. The post-tax discount rate used in all periods is 14% derived from a WACC calculation and benchmarked against similar organisations within the sector. Using a discount rate of 14% resulted in no impairment of the essensys Platform CGU; however, in the prior year in anticipation of all customers having moved from Connect to essensys Platform, management increased the rate of amortisation by £350,000 of those assets directly attributed to the Connect product which results in the carrying value of the Connect product being nil as at 31 July 2024.
The asset in course of construction capitalised this year is the cost to date for development of the software for the Group's in-development dynamic access control solution. It is expected that the asset will be complete before the end of the next financial year.
|
| |
|
|
|
|
|
|
|
|
| Assets in the course | Customer | Internal software |
|
|
|
|
| Group | of construction | relationships | development | Software | Goodwill | Total |
|
|
| £000 | £000 | £000 | £000 | £000 | £000 |
|
| Cost | | | | | | |
| | At 1 August 2022 | 215 | 335 | 13,116 | 280 | 1,263 | 15,209 |
| | Additions | 407 | - | 3,436 | - | - | 3,843 |
| | Transfers | - | - | - | - | - | - |
|
| At 31 July 2023 | 622 | 335 | 16,552 | 280 | 1,263 | 19,052 |
|
|
|
|
|
|
|
|
|
|
| Amortisation | | | | | | |
| | At 1 August 2022 | - | 335 | 5,550 | 280 | 122 | 6,287 |
| | Charge for year | - | - | 2,431 | - | - | 2,431 |
| | Impairment | - | - | - | - | 275 | 275 |
|
| At 31 July 2023 | - | 335 | 7,981 | 280 | 397 | 8,993 |
|
|
|
|
|
|
|
|
|
|
| Net book value | | | | | | |
| | At 31 July 2023 | 622 | - | 8,571 | - | 866 | 10,059 |
| | | | | | | | |
| | At 31 July 2022 | 215 | - | 7,566 | - | 1,141 | 8,922 |
| 8 | Events after the reporting date |
The group received a payment of £912,000 in relation to a tax credit for investment in research and development activities. This receipt has been considered an adjusting post balance sheet event and so has been included within other receivables and a credit to the income statement.
| 9 | Notes supporting statement of cash flows |
| 9 A Cash from operations |
|
|
|
|
|
|
|
|
|
|
| 2024 | 2023 |
|
|
| £000 | £000 |
| Cash flows from operating activities | |
| |
| | |
| |
| Loss for the financial year before taxation | | (5,492) | (15,461) |
|
| |
| |
| Adjustments for non-cash/non-operating items: | |
| |
| Amortisation of intangible assets | | 2,710 | 2,081 |
| Depreciation of property, plant and equipment | | 765 | 1,405 |
| Depreciation of right of use assets | | 1,247 | 1,349 |
| Impairment of goodwill | | - | 275 |
| Impairment of intangible assets | | - | 350 |
| Impairment of property, plant and equipment | | - | 313 |
| Impairment of right of use assets | | - | 274 |
| (Profit)/loss on disposal of fixed assets | | - | (5) |
| Movement in expected credit loss provision | | 153 | (241) |
| Inventory obsolescence provision | | 290 | - |
| Share based payment expense | | (448) | 597 |
| Losses on foreign exchange transactions | | (5) | 31 |
| Finance income | | (21) | (216) |
| Finance expense | | 133 | 164 |
| Other | | (160) | 51 |
| | |
| |
| | | (828) | (9,033) |
| | |
| |
| Changes in working capital: | |
| |
| Decrease/(increase) in inventories | | 1,082 | 286 |
| Decrease/(increase) in trade and other receivables | | (1,497) | 2,060 |
| (Decrease)/increase in trade and other payables | | (767) | (3,058) |
|
| |
| |
| Cash used by operations |
| (2,010) | (9,745) |
|
|
|
|
| |||||
|
|
|
|
|
|
|
|
| |
| 9 B | Movement in net debt |
|
|
|
| |||
|
|
|
|
| Cash and cash equivalents | Leases | Total |
| |
|
|
|
|
| £000 | £000 | £000 |
| |
| | | | | | | |
| |
| | | | As at 31 July 2022 | 24,122 | (3,128) | 20,994 |
| |
| | | | | | | |
| |
| | | | Lease additions | - | (292) | (292) |
| |
| | | | Effect of modifying lease term | - | (28) | (28) |
| |
| | | | Cashflow | (15,981) | 2,006 | (13,975) |
| |
| | | | Interest charge | - | (164) | (164) |
| |
| | | | Exchange movements | (279) | 35 | (244) |
| |
|
|
|
| As at 31 July 2023 | 7,862 | (1,571) | 6,291 |
| |
|
|
|
|
|
|
|
|
| |
|
|
|
| Lease additions | - | (1,074) | (1,074) |
| |
|
|
|
| Effect of modifying lease term | - | (293) | (293) |
| |
|
|
|
| Cashflow | (4,699) | 1,592 | (3,107) |
| |
|
|
|
| Interest charge | - | (86) | (86) |
| |
|
|
|
| Exchange movements | (62) | (8) | (70) |
| |
|
|
|
| As at 31 July 2024 | 3,101 | (1,440) | 1,661 |
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
| Cash and cash equivalents |
Leases | Total |
| |
|
|
|
|
| £000 | £000 | £000 |
| |
|
|
|
|
|
|
|
|
| |
|
|
|
| Balances as at 31 July 2024 |
|
|
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
| Current assets | 3,101 | - | 3,101 |
| |
|
|
|
| Current liabilities | - | (1,008) | (1,008) |
| |
|
|
|
| Non-current liabilities | - | (432) | (432) |
| |
|
|
|
|
| 3,101 | (1,440) | 1,661 |
| |
|
| | | | Cash and cash equivalents |
Leases | Total |
| |
|
| | | | £000 | £000 | £000 |
| |
|
| | | | | | |
| |
|
| | | Balances as at 31 July 2023 | | | |
| |
|
| | | | | | |
| |
|
| | | Current assets | 7,862 | - | 7,862 |
| |
|
| | | Current liabilities | - | (1,264) | (1,264) |
| |
|
| | | Non-current liabilities | - | (307) | (307) |
| |
|
| | | | 7,862 | (1,571) | 6,291 |
| |
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