This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

Big Technologies PLC
("the Company" or "the Group")

Unaudited interim results for the six months ended 30 June 2023

Big Technologies PLC (AIM: BIG), the leading, integrated technology platform for the remote monitoring of individuals, is pleased to announce its interim results for the six-month period to 30 June 2023 (the "period").

Financial highlights

·      Revenue increased by 19% in H1 2023 driven by new contract wins and an increase in revenues earned from existing customers;

·    Gross margin increased by 190 bps to 73.3% in H1 2023 as a result of the revenue growth and the scalable operating model;

·    Adjusted EBITDA of £16.1m in H1 2023 with adjusted EBITDA margin of 59.1%. The Group has been impacted by adverse foreign currency movements in the period;

·   Cash generated from operating activities of £12.4m in H1 2023, delivered by the positive trading performance in the period;

·      Significant net cash balance of £75.4m at 30 June 2023, underpinning a very strong balance sheet.

Operational highlights

·    Continuation of growth in the number of electronic monitoring devices deployed with customers across the world;

·    Made good progress against delivering the future product roadmap with a number of new products in the final stages of development;

·     Continued our engagement with potential new customers across Europe and the rest of the world.

Summary and outlook

·   The Group remains well positioned with the financial resources in place to provide continued flexibility to invest in the business and to take advantage of the value-enhancing opportunities that are expected to materialise in the coming years;

·   The Group continues to benefit from high levels of recurring revenue and the Board has good revenue visibility for the second half of the year and is confident of continued cash generation;

·   Assuming no further strengthening in sterling over the second half of the year and no new contract wins, the Board expects the Group to deliver full-year revenue of approximately £54m with an adjusted EBITDA margin of around 60%, which is at the lower end of current market expectations⁽¹⁾.

(1)   Latest company compiled view of market expectations show adjusted EBITDA of £32.7m to £34.7m (stated before share-based payments).

Commenting on the results, Sara Murray OBE, Chief Executive Officer said:

"We have delivered pleasing revenue and profit performance during the first half of the financial year, clearly illustrating our proven, resilient and cash-generative business model. We continued to support new and existing customers with our product offering, helping to keep societies and communities safe around the world. We have a pipeline of exciting new products in the final stages of development and expect to release these to customers in the second half of the year. The demand for all our products remains strong and the solid foundations on which our business is built, means it is well positioned with the financial resources in place to take advantage of value-enhancing opportunities as they arise."

For further information please contact:

The person responsible for arranging the release of this information is Daren Morris, Chief Financial Officer and Company Secretary.

Half Year Review

Overview

The Group has continued to deliver revenue and profit growth in the first half of 2023, showing the resilience of its cash-generative business model despite the persistence of uncertain global macroeconomic conditions.

Financial Performance

Revenue

Revenue in the first half of 2023 grew by 19% to £27.3m (H1 2022: £22.9m), driven by new contract wins in the Asia-Pacific and European regions and an increase in revenues earned from existing customers. The majority of revenues continue to be derived from customers in the criminal justice sector, which accounts for 99% of reported revenue (H1 2022: 98%).

Revenue growth was primarily driven by the Asia-Pacific and European regions, which grew at 27% and 44% respectively. The Group's eight-year national monitoring contract with the New Zealand Department of Corrections has now achieved its full run-rate and there were contract wins in Europe. Reported revenue in the Americas region declined due to strengthening sterling, but grew by 2% on a constant currency basis.

The Group has been impacted by adverse foreign currency movements in the period with sterling strengthening against the US dollar, Australian dollar and New Zealand dollar, the Group's main sales currencies. On a constant currency basis, revenue would have been £0.4m higher than reported if exchange rates had remained the same as H1 2022 and £0.8m higher than reported if exchange rates had remained the same as H2 2022.

Profitability

Gross profit increased by 22% to £20.0m (H1 2022: £16.3m), with gross margin increasing by 190 bps to 73.3% (H1 2022: 71.4%) as a result of the revenue growth and the Group's scalable operating model, which allows for the deployment of additional electronic monitoring devices to customers with increased efficiency. Profits earned on incremental revenues were able to offset increases in labour, freight and manufacturing costs caused by the high inflationary environment.

Adjustments made to the interim financial results before tax were £5.7m (H1 2022: £3.3m) and are for the amortisation of acquired intangible assets and share-based payments. See note 3 for further details.

Adjusted operating profit of £13.9m increased by 15% against H1 2022, with a decrease in adjusted operating margin to 51.1% (H1 2022: 52.9%). The decrease in adjusted operating margin was primarily driven by adverse foreign currency movements in the first half of 2023 as sterling strengthened against the Group's main sales currencies. Foreign currency movements in the first half of 2022 were positive due to a one-off gain on the revaluation of US Dollar denominated cash deposits.

Adjusted administrative expenses (defined as administrative expenses before share-based payments and amortisation of acquired intangible assets) increased from £4.2m in H1 2022 to £6.1m in H1 2023 due to adverse foreign currency movements (as stated above, a one-off gain in H1 2022 from the revaluation of our US dollar cash deposits resulted in a credit to administrative expenses, in that period). When the impacts of foreign currency movements are excluded, adjusted administrative expenses were the same in both periods.

Adjusted EBITDA

Adjusted EBITDA, which provides a more consistent comparison of trading between financial periods, increased by 17% to £16.1m (H1 2022: £13.7m), with adjusted EBITDA margin decreasing by 100 bps to 59.1% (H1 2022: 60.1%). The decrease in adjusted EBITDA margin was primarily driven by the adverse foreign currency movements discussed above.

Taxation

The Group's total tax charge for the period (including deferred taxes) was £0.1m (H1 2022: £0.2m credit), an effective tax rate of 0.6% (H1 2022: (2.8)%). The Group's effective tax rate is affected by a number of factors including the recognition of deferred tax assets in relation to share-based payments and the tax deductibility of exercised employee share awards. The Group also benefits from allowances claimed for research and development and the UK Patent Box. The Group's current tax charge for the period was £1.5m (H1 2022: £0.8m), an effective tax rate of 16.6% (H1 2022: 9.0%).

Earnings per share

Adjusted diluted earnings per share (EPS), which excludes adjusting items and their associated tax effect as well as the dilutive impact of shares issuable in the future, was 4.3p (H1 2022: 3.7p), reflecting the underlying profitability of the Group. Adjusted basic EPS, which excludes adjusting items and their associated tax effect was 4.6p (H1 2022: 3.9p). Diluted EPS, which includes the dilutive impact of shares issuable in the future, was 2.9p (H1 2022: 3.0p). Basic EPS was 3.1p (H1 2022: 3.1p). The dilutive impact of shares issuable in the future relates to the expected settlement of the Group's employee share scheme obligations.

Cash generation

The Group increased its net cash balances (defined as cash and cash equivalents less lease liabilities) to £75.4m (H1 2022: £56.9m) at 30 June 2023. The Group generated £12.4m (H1 2022: £11.3m) in cash from operations (before paying tax) despite recording a £3.7m (H1 2022: £2.9m) net working capital outflow. The cash conversion rate (defined as percentage of adjusted EBITDA converted to cash from operations) decreased from 82.2% to 77.0% of adjusted EBITDA.

Levels of inventory increased in the period and the Group now holds sufficient components (absent a major contract win in H2 2023) to support new and existing customers. Decreases in trade and other payables reflect supplier payment timing differences and a reduction in accruals, provisions and deferred income balances.

Taxation payments for the period were £1.9m (H1 2022: £0.4m). Taxation payments in H1 2022 are net of historic tax refunds totaling £0.8m.

Net cash utilised in investing activities of £1.8m (H1 2022: £2.4m) reflects the continued increase in the number of electronic monitoring devices, which are manufactured in-house and leased to customers. The Group continued to invest in research and development activities and also benefitted from increased interest income, reflecting interest earned on its cash balances at improving interest rates.

Cash outflows from financing activities of £0.1m (H1 2022: £0.2m inflow) reflect the proceeds received from the exercise of employee share options in the period, offset by the repayment of lease liabilities.

Operational performance

The Group delivered a robust operational performance in the first half of 2023 and continued to increase its international footprint and global presence in the criminal justice sector through contract wins in new territories and an increase in revenues earned from existing customers.

The Group's national monitoring contract with the New Zealand Department of Corrections is now fully operational and delivering revenue at its full run-rate. The Group received positive feedback from the customer in New Zealand on its partnership approach.

The Group is committed to ensuring that its products maintain their competitive advantage in the criminal justice sector and therefore continues to invest in research and development to support its future product roadmap. This roadmap includes the development of substance detection technologies, as well as further location solutions, to provide an integrated monitoring offering for our customers and future customers. Initial feedback from customers on these new solutions is positive.

The Group continues to pursue an active pipeline of organic growth opportunities in the criminal justice sector with governmental customers across Europe and the rest of the world.

Alternative performance measures

In the analysis of the Group's financial performance and position, operating results and cash flows, alternative performance measures are presented to provide readers with additional information. The principal measures presented are adjusted measures of earnings including adjusted operating profit, adjusted EBITDA and adjusted earnings per share. See notes 3 and 5 for further details.

Research and development

Research and development (R&D) activities remain a priority for the Group to ensure its products retain their competitive advantage. Development costs of £0.5m (H1 2022: £0.5m) have been capitalised. Total R&D costs expressed as a percentage of adjusted administrative expenses stood at 26% (H1 2022: 30%).

Foreign currency exposure

The Group faces currency exposure on its foreign currency transactions and translation exposure in relation to its overseas subsidiaries. The Group maintains a natural hedge to transactional exposure by matching the cash inflows and outflows in the respective currencies wherever possible.

In H1 2023, the proportion of revenue earned in currencies other that sterling was 85.1% (H1 2022: 85.0%).

Foreign exchange translation has provided a headwind for revenue and profit during the period (H1 2022: tailwind), with sterling strengthening against the Group's main sales currencies compared with comparative periods.

The Group's most material exposures are to US dollars, Australian dollars and New Zealand dollars. The sensitivity to a 10% weakening/strengthening of sterling against these currencies in aggregate (excluding amounts held on the balance sheet) equates to an annualised profit increase (or decrease) of approximately £2.4m. The Group's forward currency exposure is currently unhedged.

Litigation

Legal proceedings have commenced against the Group with a claim being filed with the High Court of Justice in England and Wales in August 2023. As set out within the admission document in July 2021 (the "Admission Document"), a letter of potential claim had been received from a small number of former shareholders of Buddi Limited, one of the subsidiaries of the Group, in respect of the acquisition of Buddi Limited, dating back to May 2018. The Group has taken advice from its lawyers and from King's Counsel and remains of the view that the Claim lacks legal and factual merit and intends to defend its position robustly.

Summary and outlook

The Group has delivered a positive financial and operational performance in the first half of the year. The Board anticipates that revenue and profit will be more evenly weighted across the two halves of the year compared with previous years, and assuming no further strengthening in sterling over the second half of the year and no new contract wins, expects to deliver full-year revenue of approximately £54m with an adjusted EBITDA margin of around 60%, which is at the lower end of current market expectations⁽¹⁾.

The Group continues to benefit from high levels of recurring revenue and has good revenue visibility for the second half of the year.

(1)   Latest company compiled view of market expectations show adjusted EBITDA of £32.7m to £34.7m (stated before share-based payments).

Unaudited condensed consolidated statement of comprehensive income
for the six months ended 30 June 2023

Unaudited condensed consolidated statement of financial position

as at 30 June 2023

Unaudited condensed consolidated statement of changes in equity

for the six months ended 30 June 2023

Unaudited condensed consolidated statement of cash flows

for the six months ended 30 June 2023

Notes to the unaudited condensed interim consolidated financial statements

For the six months ended 30 June 2023

1.   General information and basis of preparation

Big Technologies PLC is a public limited company incorporated in the United Kingdom, listed on the Alternative Investment Market ('AIM') of the London Stock Exchange. The Company is domiciled in the United Kingdom and its registered office is Talbot House, 17 Church Street, Rickmansworth, WD3 1DE. The unaudited interim consolidated financial statements comprise the Company and its subsidiaries (together referred to as the 'Group').

The principal activity of the Group is the development and delivery of remote monitoring technologies and services to a range of domestic and international customers.

The Directors confirm that, to the best of their knowledge, the interim financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the United Kingdom and the AIM Rules for Companies, and that the interim report includes a fair review of the information required.

The condensed interim financial statements should be read in conjunction with the Group's latest annual consolidated financial statements, for the year ended 31 December 2022.

These interim financial statements do not include all of the information required for a complete set of financial statements prepared in accordance with IFRS Standards. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual consolidated financial statements.

The financial information provided for the six-month period ended 30 June 2023 is unaudited, however, the same accounting policies, presentation and methods of computation have been followed in these interim financial statements as those which were applied in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2022.

These interim financial statements do not constitute statutory accounts as defined in section 434 of the Companies Act 2006.  A copy of the most recent statutory accounts for the year ended 31 December 2022 has been delivered to the Registrar of Companies.  The auditor's report on these accounts was unqualified and did not contain a statement under section 498 of the Companies Act 2006.

These interim financial statements were authorised for issue by the Company's board of directors on 19 September 2023.

1.1 Going concern

The Directors have, at the time of approving these interim financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operation for the foreseeable future. The Group's forecasts and projections, taking into account reasonable possible changes in trading performance, show that the Group has sufficient financial resources, together with assets that are expected to generate cash flow in the normal course of business. Accordingly, the Directors have adopted the going concern basis in preparing these interim financial statements.

2.   Segment reporting

The Group derives revenue from the delivery of remote monitoring technologies and services to a range of domestic and international customers. The income streams are all derived from the utilisation of these products which, in all aspects except details of revenue, are reviewed and managed together within the Group and as such are considered to be the only segment. The Group operates across three regions: Europe, Asia Pacific and The Americas, and the Board of Directors monitors revenue on this basis.

Revenue for each of the geographical areas is as follows:

Assets and liabilities by segment are not regularly reviewed by the Board of Directors on a monthly basis and, therefore, are not used as a key decision-making tool and are not disclosed here.

Revenues are disaggregated as follows:

The nature of the Group's operations mean that recorded financial performance is not seasonal or cyclical in nature. The majority of revenues are derived from delivery of services to customers over time under long-term contracts.

3.   Alternative performance measures

These items are included in normal operating costs of the business, but are significant cash and non-cash expenses that are separately disclosed because of their size, nature or incidence. It is the Group's view that excluding them from operating profit gives a better representation of the underlying performance of the business in the period.

Share-based payments expense

These costs are excluded from the adjusted results of the Group since the costs are non-cash charges arising from recognition of the fair value of share options and other share-based incentives granted to employees of the Group. As such, they are not considered reflective of the core trading performance of the Group.

Amortisation of acquired intangibles

These costs are excluded from the adjusted results of the Group since the costs are non-cash charges arising from investment activities. As such, they are not considered reflective of the core trading performance of the Group.

4.   Taxation

Current tax is charged at 16.6% for the period (H1 2022: 9.0%) representing the best estimate of the average annual effective current tax rate expected to apply for the full year, applied to the pre-tax income of the current period.

The effective current tax rate is lower than the UK corporation tax rate due to allowances claimed for research and development, patent box and the deductibility of exercised employee share awards, offset by overseas tax at higher rates than in the UK.

Deferred tax recognised in the period relates to share options, acquired intangible assets and fixed asset timing differences.

In addition to taxation recognised in the consolidated income statement, the following amounts relating to tax have been credited directly in equity:

5.   Earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:

The adjusted earnings per share has been calculated on the basis of profit before adjusting items and share-based payments, net of tax. The Directors consider that this calculation gives a better understanding of the Group's earnings per share in the current and prior periods.

6.   Cash and cash equivalents

The carrying amounts of the cash and cash equivalents are denominated in the following currencies:

Net cash

Net cash comprises cash and cash equivalents and lease liabilities.

7.   Share capital

The allotted, called up and fully paid share capital is made up of 290,545,082 ordinary shares of £0.01 each. During the period the Group issued 145,000 shares (H1 2022: 1,653,000 shares), generating cash proceeds of £0.039m (H1 2022: £0.362m) to satisfy the exercise of options by employees under EMI and non-EMI share option plans.

8.   Share-based payments

The Group has a number of equity-settled share-based payment arrangements in operation, the details of which are disclosed in note 24 on pages 88-90 of the 2022 Annual Report and Accounts. The schemes were established to reward and incentivise the senior management team and employees to deliver share price growth. The charge made in respect of share-based payments is as follows:

9.   Principal risks and uncertainties

The principal risks and uncertainties impacting the Group are described on pages 30-33 of the 2022 Annual Report and Accounts and remain unchanged at 30 June 2023.

They include: reliance on key customers, failure to manage growth, change in government policy, failure to develop new products, competitor actions, reliance on third-party technology and communication systems, reputational risk, dependence on partners, loss of key personnel, supply chain, product liability, foreign exchange risk, credit risk, business taxation, bid pricing\key financial terms, cyber security/business interruption, intellectual property/patents and operating in global markets.