TIDMBST
RNS Number : 3567J
Big Sofa Technologies Group PLC
28 June 2017
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014. Upon the publication
of this announcement, this inside information is now considered to
be in the public domain.
28 June 2017
Big Sofa Technologies Group plc
("Big Sofa", the "Group" or the "Company")
Final Results for the Year Ended 31 December 2016
Big Sofa (AIM: BST), a fast-growing international video
analytics provider to consumer brands and market research agencies,
announces final results for the year ended 31 December 2016.
These results cover a period during the Company's development
phase when Big Sofa was constrained by limited cash resources,
prior to its admission to the AIM market on 19 December 2016 and
associated fundraising of GBP6.1 million which has enabled the
Company to accelerate growth.
2016 highlights
-- Successful listing on AIM on 19 December 2016
-- Raised GBP6.1 million by way of a placing of and subscription
for new ordinary shares at 17 pence per share
-- Key benefits of the listing included:
o Expansion of US operations to target large market
opportunity
o Accelerating near-term growth opportunities with key customers
to develop a significant new business pipeline
o Strengthening management's ability to recruit, retain and
incentivise employees
o Providing currency for selective bolt-on acquisitions
-- Revenues grew to GBP757,000 in 2016, with average monthly
revenue approximately double that in 2015
-- Positioned the Company for growth, including hiring a new
experienced senior management team, taking the total number of
employees to 23 people as at 31 December 2016
Post year-end highlights
-- Strong start to 2017, with revenues in June more than three times greater than January
-- Secured several significant contracts which underpin a
substantial new business pipeline, which are expected to contribute
material revenues during the current year, including:
o Formally appointed as a global partner to Procter & Gamble
(P&G) to facilitate the acquisition and analysis of both new
and existing video content on projects across the global
business
o A three-year Master Service Agreement signed with Ipsos which
is delivering strong revenue growth
o Secured a Supplier Service Agreement with Survey Sampling
International (SSI)
-- Big Sofa's software platform is now generating monthly recurring income
-- Expanded the Group's operational team to 34 across UK and US offices
-- Continued to focus on and invest in product development,
recruiting a specialist product team to scope and specify new
features that drive greater client value
Simon Lidington, Chief Executive Officer of Big Sofa,
commented:
"The year culminated in our listing on AIM and the fundraising
that enabled us to accelerate the commercialisation of our
technology and the development of a material pipeline of
business.
"With an even stronger foundation of blue-chip customers to
build-upon, I am pleased to say that we are making excellent
progress against our strategic objectives and signs of this are
beginning to be reflected in current trading.
"I believe that the outlook for Big Sofa is extremely positive
and anticipate that our existing partnerships with P&G,
Unilever, Ipsos, SC Johnson and SSI will deliver material revenue
during the current financial year.
"Big Sofa is exceptionally well-placed to capitalise on the vast
opportunity that exists to help consumer brands and research
agencies make genuine use of the large quantities of video content
they are generating. We have received significant industry
validation in a short space of time, as reflected in the three-year
Master Service Agreement with Ipsos, a global partnership with
P&G, a continuing global partnership with Unilever and the
numerous relationships developing with new global clients.
"I look forward to reporting on further milestones as we work to
build a profitable business of scale."
Enquiries
Big Sofa Technologies Group via Vigo Communications
plc
Simon Lidington, CEO
Matt Lynch, CSO
Joe MacCarthy, CFO
+44 (0)20 3368
SPARK Advisory Partners (NOMAD) 3554
Neil Baldwin / Mark Brady
+44 (0) 20 7070
Hobart Capital Markets (Broker) 5656
Lee Richardson / Raju Haldankar
Vigo Communications (Financial +44 (0) 20 7830
Public Relations) 9700
Jeremy Garcia / Ben Simons
/ Antonia Pollock
About Big Sofa Technologies Group plc
Big Sofa is a B2B technology business servicing the marketing
and consumer insight industries with video analytics.
Our software platform collates, analyses and organises large
volumes of raw/unstructured video content enabling companies to
perform detailed and sophisticated consumer insight analysis; and
make genuine use of their video content.
Until recently, video has been difficult and expensive to
capture, upload, store, manage and analyse as a consumer insight
tool. However, proliferation of smart phones has empowered
consumers to speak directly to brands resulting in an evolution of
consumer insight and data analytics techniques, with video emerging
as a key platform in a massive $33 billion consumer research
market.
Big Sofa's shares are admitted to trading on the London Stock
Exchange's AIM market under the ticker BST.L.
To find out more, visit www.bigsofatech.com
Follow us on twitter at @bigsofatech
Chairman's Statement
I am pleased to present my first statement as chairman of Big
Sofa.
While the period under review was itself largely irrelevant from
a forward-looking perspective - in that it covers a period in which
the Company was still in development mode - the year culminated in
the transformational listing of Big Sofa's shares on AIM. The
associated fundraising of GBP6.1 million would subsequently enable
us to accelerate the commercialisation of our technology, open a US
office, significantly increase our personnel and create a pipeline
of new business opportunities which, I believe, will in due course
underpin a step-change in revenues.
Subsequent to the year-end, I am delighted with the operational
progress Big Sofa has made in its first six months since listing on
AIM, in developing both the scope and scale of our software
platform and a material new business pipeline.
Simon Lidington, our chief executive, elaborates on the
commercial progress of the business in his operational review;
however, notable achievements include a three-year Master Service
Agreement signed with Ipsos, one of the top-five largest market
research companies in the world; a global partnership with P&G;
and a Supplier Service Agreement with Survey Sampling
International, a leading global provider of data solutions and
technology for consumer and business-to-business survey
research.
Shareholders should be greatly encouraged by the third-party
validation of our technology and services that the Company is
receiving. The long-term strategic partnerships we have recently
secured are with world-leading consumer brands and research
companies, which we expect will become the backbone of the Company
going forward, and a significant catalyst for growth. Our close
client relationships define our business and distinguish Big Sofa
from many of its peers, who continue to rely on short-term,
low-value business.
Furthermore, the listing on AIM has provided the Company with an
enhanced profile to attract and retain key staff alongside
accelerating a number of key new business initiatives. The progress
in building the teams both in the UK and the US is very
promising.
I believe Big Sofa is exceptionally well-placed to capitalise on
the significant demand for video analytics in the multi-billion
dollar consumer insight sector and we look forward to reporting on
further progress during 2017.
Nicholas Mustoe
27 June 2017
Operational Review
Introduction
Big Sofa is a B2B technology company that provides video
analytics, with core customers including big brands and market
research agencies who are increasingly using video as a key medium
for conducting consumer insight in a multi-billion dollar a year
global market.
Our scalable platform enables users to perform detailed analysis
of video, images and audio content, by uploading unstructured video
content to our proprietary, analytics platform, which then
transcodes and, where appropriate, transcribes the data into a
structured, downloadable archive of content.
Content can be uploaded from most current generation camera
devices and the output translated from almost all spoken
languages.
The proliferation of smartphones and tablets has transformed
video into a fundamental means of communication between companies
and consumers and between consumers themselves. By 2020, video is
expected to account for 79 per cent. of all consumer internet
traffic. As a result of this, the market for video analytics is
anticipated to expand at a compound annual growth rate of 20.6 per
cent to GBP7.19 billion between 2015 to 2023.
Over the last few months, Big Sofa has made significant progress
converting customer relationships into formal agreements with a
number of global clients. This recent development not only allows
the Company to establish clearly defined commercial parameters, but
also confirms that the market research sector perceives Big Sofa's
platform as the best-in-class for capturing, organising and
analysing video to understand consumer behaviour. This is fast
becoming essential to clients with regards to their investment in
R&D and marketing innovation.
The Company's unique technology and hybrid-Artificial
Intelligence systems enable our clients to see how consumers
actually behave, rather than how they say they behave, which is
invaluable to brands and consumer insight agencies. The
accelerating demand from clients is evidence of Big Sofa's ability
to generate ground-breaking consumer insights and drive innovation
faster and better.
Big Sofa's platform
The platform's core functionality enables the automatic upload
of video, image and audio files. Our software then runs an
automatic association of the data uploaded enabling a more accurate
and detailed search of the content to be undertaken by the client.
This process involves transcoding, transcribing and translating the
dialogue, allowing the client to categorise their content by the
key themes they require.
Investment in the technology has enabled easier ingestion of
video content, faster processing and a greatly enhanced ability to
load, protect and access large volumes of video content anywhere in
the world with high levels of confidence. Substantial improvements
have been made to the robustness, security and scalability of the
Company's core analytics platform.
Access to the platform
The Big Sofa platform can be used on a SaaS basis or in
conjunction with Big Sofa's insight team, enabling customers to
choose to manage as much or as little of the end-to-end process as
they like. In addition, Big Sofa offers a range of ancillary
services that make it easier for brands, agencies and consumers to
upload video into the core platform. These technologies enable:
-- integration with existing survey software to enable video capture in any survey;
-- extraction of video from surveys into the core platform;
-- images or videos to be sent out for testing and video feedback to be received in response;
-- capture of consumer behaviours using a range of camera
devices and methods for detailed tagging and analysis on the
platform;
-- use of a broad range of analysis tools including tagging,
text, tone of voice, emotional response, sentiment, object
recognition, with AI playing an ever-increasing role; and
-- the creation of professional video reports to tell the
insight story and present the key data.
Customers
Big Sofa's core customers can be split into two main categories:
major brands/international companies and market research
agencies.
Current blue-chip brand customers include P&G, Unilever, SC
Johnson, Pernod Ricard and AB World Foods.
Market research agencies have developed both online and mobile
technology to conduct research with consumers. Big Sofa is engaging
with major market research agencies and marketing consultancies
including Ipsos, Morpace, GfK, Survey Sampling International,
Schireson Associates, Touchstone Partners and Niche Consulting to
provide visual data analytics that help them add greater value to
their end clients.
Post year-end developments
Since listing the Company on AIM in December 2016, the business
has enjoyed success in leveraging key relationships with existing
customers, including:
-- increased revenues from Unilever in Europe, Asia Pacific and the US;
-- increased revenues from SC Johnson in the US and Europe; and
-- projects with Pernod Ricard, Morpace, Mizzouri, The FA,
Touchstone Partners, Schireson Assocs., Compass, Waterson Garner,
AB World Foods and GfK
Our US office was opened in Philadelphia, PA in March 2017 -
with sub-offices in Chicago and Cincinnati - to accelerate customer
traction in the region. This has led to growth in our interaction
with potential blue-chip clients and has brought the Company strong
capabilities in sales, account management and operations.
In April 2017, the Company signed a three-year Master Service
Agreement with Ipsos. The MSA is a global licence for a SaaS
agreement, for an initial period of three years. It sets out the
terms upon which the entire market research organisation and its
affiliates may engage Big Sofa to provide video analytics
technology and services through a co-branded platform in support of
their rapidly increasing use of video and images to help their
clients better understand consumers and markets.
Since January 2017 - including the period leading up to signing
the MSA - Big Sofa and Ipsos have submitted over 120 co-branded
proposals to multiple global clients in the Consumer Packaged
Goods, Pharmaceutical, Automotive, Alcoholic Beverages, and Beauty
sectors.
In addition, a Supplier Service Agreement was signed with Survey
Sampling International ("SSI") in April 2017. SSI is a leading
global provider of data solutions and technology for consumer and
business-to-business survey research. Under the Agreement, Big Sofa
supplies SSI with sophisticated video capture and analytics
technology and services for their digital surveys.
In late May 2017, following an extensive procurement procedure,
Big Sofa became an approved supplier to P&G on their global
technology and research rosters, able to undertake projects that
facilitate the acquisition and analysis of both new and existing
video content for P&G. Previously, P&G had commissioned a
number of projects through an approved agency, but the demand for
Big Sofa's services across their global business reached a level
which meant they wanted to commission multiple projects directly
with Big Sofa.
This strategic partnership with P&G has already led to over
GBP500,000 worth of proposals submitted with GBP190,000 already
commissioned in Q2 2017. Big Sofa also expects P&G's level of
engagement with our technology to grow significantly in the
future.
Big Sofa has been Unilever's globally preferred video partner
since January 2016, and the first six months of 2017 saw
encouraging signs of a growing interest in Big Sofa's technology
from Unilever Consumer Technology Insight division - especially the
R&D teams in Europe, North America and the UK. Other parts of
Unilever are also interested in using Big Sofa's platform to
analyse the link between early innovation work and the successful
launch of products and marketing communications, and for
large-scale video data analytics.
The contract momentum across the business is a strong
endorsement of Big Sofa's proprietary software platform's ability
to appeal to the wider consumer insight market.
The Company was also pleased to retain its ISO27001
accreditation for our information security management system for
the second year running.
Furthermore, following the appointment of a Chief Technical
Officer in Q4 2016, significant developments have been made to Big
Sofa's technology offering including increasing the ease with which
the platform can be integrated into customers' own systems, which
is a focal part of Big Sofa's strategy for deployment of its
software.
Outlook
We have made significant operational and financial progress in
the first half of the year, growing a substantial new business
pipeline from just c.GBP100,000 at the outset of the year to over
GBP1.35 million today. Big Sofa's business comprises a mix of
enterprise level and ad hoc contracts with clients. Both involve a
recurring flow of project briefs that has increased as clients
re-commission Big Sofa on a continuing basis. While we naturally do
not expect all of that pipeline to convert into revenues, of the
proposals decided upon so far this year, Big Sofa has converted 54%
by value; and the average opportunity size has increased from
c.GBP5,000 in January to c.GBP15,000 in June.
Market awareness of Big Sofa is rising fast, and our strategy of
targeting the biggest global clients and global agencies is proving
highly successful. Global clients see Big Sofa as a long term
strategic partner, able to help them ingest, curate and analyse
large volumes of video. Global agencies, and in particular Ipsos,
are fast realising the value that video can add to their research
offering and are keen to work in partnership with Big Sofa to
deliver it. In so doing, they are exposing Big Sofa to multiple
major clients at a much faster rate than the Company could do on
its own.
The board therefore believes that the outlook for Big Sofa is
extremely positive and anticipates our existing partnerships with
P&G, Unilever, Ipsos, SC Johnson and SSI will deliver material
revenue during the current financial year.
Our unique platform provides our clients with real insight into
consumer behaviour and, combined with the rapid adoption of the
utilisation of video as a key element in good consumer research,
gives the Board confidence that Big Sofa has the ability to become
a genuinely disruptive force in that sector.
Our strong new business pipeline, robust technology platform and
clear strategic focus leave us well placed to capitalise on this
significant market opportunity.
Simon Lidington
Chief Executive Officer
27 June 2017
Financial Review
FY 2016 FY 2015(*) Change %
GBP'000s GBP'000s Pro rata*
Revenues 757 172 183%
Gross Profit 379 97 163%
Gross Margin 50% 56%
Operating expenses 4,676 443 440%
Operating Loss (4,297) (346) -517%
*based on 5 months' performance in 2015
The year under review was dominated by the Company's admission
to AIM in which we raised GBP6.1 million through a placing and
subscription. This has helped provide the funding for the Company
to accelerate its operational focus by both further developing our
technology and expanding our offering to an increasingly
international, blue-chip client base.
During the year, revenues grew organically to GBP757,000, a 183%
pro-rata increase in revenue, despite the injection of capital from
the fundraise only happening in late December 2016. Gross profit
was up 163% to GBP379,000 as Big Sofa continued to establish a
foothold in the marketplace - a strategy which is coming into
fruition in the current year, with growth in revenues from
customers which are now established clients of Big Sofa.
Operating expenses include GBP785,000 of AIM listing costs and
GBP705,000 of deemed reverse acquisition costs, both of which are
non-recurring. The increase in underlying administrative costs
relates to a rise in staff costs due to an increase in headcount in
order to drive sales and develop our proprietary platform, with a
particular focus on the hiring of an experienced, senior global
team.
Many of the expenses associated with growing the business were
incurred in the second half, which led to a number of creditors
being built-up prior to Admission to AIM in late December. The
funds raised at Admission were used, in part, to pay these
creditors and further invest in the business. Going forward as a
public company, whilst we will maintain tight control of expenses,
we anticipate these will further increase as we execute on our
growth strategy; but we also expect revenues and gross profit to
rise exponentially.
The Company's cashflow in the year was dominated by the
Admission to AIM and associated fundraising. Cash generated from
financing activities was GBP6.8 million; cash used in operating
activities, including the expenses of the AIM admission, was GBP2.8
million, and capex and other activities was GBP1.4 million. The
balance sheet at the end of 2016 remained strong with cash of
GBP2.5 million and we are already seeing significant revenue growth
in the current financial year.
The position of the business at the end of the year is almost
unrecognisable from the start of the 2016 - an experienced and
expanded team, a further developed platform and product offering, a
strong positive balance sheet and a considerable new business
pipeline. The foundations have been laid for continued rapid growth
for Big Sofa.
Joe MacCarthy
Chief Financial Officer
27 June 2017
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended Year ended
31 December 31 December
2016 2015
Notes GBP'000 GBP'000
------------------------- ------ ------------ ------------
Revenue 757 172
Cost of sales (378) (75)
Gross (loss)/profit 379 97
Deemed cost of reverse
takeover (705) -
AIM Listing costs (785) -
Administrative expenses (3,186) (443)
------------------------- ------ ------------ ------------
Operating loss (4,297) (346)
Finance expenses (123) (20)
------------------------- ------ ------------ ------------
Loss before income tax (4,420) (366)
Tax credit 142 -
Loss for the period (4,278) (366)
------------------------- ------ ------------ ------------
Attributable to owners
of the parent: (4,278) (366)
Loss per ordinary share
- basic and diluted
(GBP) 3 (82.58)p (12.39)p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 December 31 December
2016 2015
Notes GBP'000 GBP'000
----------------------------- ------- ------------ ------------
Non-current assets
Property, plant and
equipment 29 20
Intangible assets 483 1,007
Total non-current assets 512 1,027
-------------------------------------- ------------ ------------
Current assets
Trade and other receivables 523 47
Cash and cash equivalents 2,538 -
----------------------------- ------- ------------ ------------
Total current assets 3,061 47
-------------------------------------- ------------ ------------
Total assets 3,573 1,074
-------------------------------------- ------------ ------------
Current liabilities
Trade and other payables 444 548
Loans and borrowings 599 397
Total current liabilities 1,043 945
-------------------------------------- ------------ ------------
Total liabilities 1,043 945
-------------------------------------- ------------ ------------
Net assets 2,530 129
-------------------------------------- ------------ ------------
Share capital 1,703 1
Share premium account 5,670 494
Reverse acquisition
reserve (2,881) -
Merger relief reserve 2,501 -
Other reserves 181 -
Accumulated deficit (4,644) (366)
-------------------------------------- ------------ ------------
Total equity 2,530 129
-------------------------------------- ------------ ------------
These financial statements were approved and authorised for
issue by the board of directors on 27 June 2017 and were signed on
its behalf by:
Joe MacCarthy
Chief Financial Officer
Company number 07847321
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Reverse Merger
Share Share acquisition relief Other Accumulated
capital Premium reserve reserve reserves deficit Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ---------- ---------- ------------- ---------- ---------- ------------- --------
Big Sofa
Technologies
Limited
Equity as
at
1 October
2014 - - - - - - -
Loss for
the year - - - - - (366) (366)
Total comprehensive
loss - - - - - (366) (366)
Issue of
shares 1 494 - - - - 495
--------------------- ---------- ---------- ------------- ---------- ---------- ------------- --------
Equity as
at
31 December
2015 1 494 - - - (366) 129
-------------
Big Sofa
Technologies
Group PLC
Equity as
at
1 January
2016 1 494 - - - (366) 129
Loss for
the period - - - - - (4,278) (4,278)
Issue of
shares 1,614 - - - - - 1,614
Reverse
acquisition 88 5,176 (2,881) 2,501 - 4,884
Issue of
share options - - - - 14 - 14
Issue of
warrants - - - - 67 - 67
Issue of
convertible
loan notes - - - - 100 - 100
Equity as
at
31 December
2016 1,703 5,670 (2,881) 2,501 181 (4,644) 2,530
--------------------- ---------- ---------- ------------- ---------- ---------- ------------- --------
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended Year ended
31 December 31 December
2016 2015
GBP'000 GBP'000
------------------------------------ ------------ ------------
Cash flows from operating
activities
Loss before taxation (4,420) (366)
Adjustments for:
Deemed cost of reverse acquisition 705
Depreciation and amortisation 894 173
Finance expenses 123 20
Share-based payments 81 -
Operating loss before working
capital changes (2,617) (173)
Changes in working capital
Increase in trade and other
receivables (334) (47)
Increase in trade and other
payables 164 843
Cash (used in) / generated
by operations (2,787) 623
Tax received - -
------------------------------------ ------------ ------------
Net cash (outflow) / inflow
from operating activities (2,787) 623
------------------------------------- ------------ ------------
Investing activities
Purchase of property, plant
and equipment (21) (30)
Purchase of intangible assets (358) (1,170)
Acquisition, net of cash
acquired (1,013) -
Net cash flows used in investing
activities (1,392) (1,200)
------------------------------------- ------------ ------------
Financing activities
Issue of ordinary shares 6,109 494
Interest paid on loans and
borrowings (123) (20)
Repayment of loans (291)
Net proceeds from issue
of convertible loans 1,125 -
Net cash flows from financing
activities 6,820 474
------------------------------------- ------------ ------------
Net change in cash and cash
equivalents 2,641 (103)
Cash and cash equivalents
at the beginning of the period (103) -
------------------------------------- ------------ ------------
Cash and cash equivalents
at the end of the period 2,538 (103)
------------------------------------- ------------ ------------
Notes to the preliminary financial results
1. The figures for the years ended 31 December 2016 and 2015 do
not constitute statutory accounts within the meaning of Section 434
of the Companies Act 2006. The figures for the year ended 31
December 2016 have been extracted from the statutory accounts for
that year on which the auditor has issued an unqualified audit
report which have yet to be delivered to the Registrar of
Companies. The figures for the year ended 31 December 2015 have
been extracted from the statutory accounts for that year which have
been delivered to the Registrar of Companies. This announcement was
approved by the board of directors on 27 June 2017 and authorised
for issue on 28 June 2017.
2. The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards adopted
by the International Accounting Standards Board ('IASB') and
interpretations issued by the International Financial Reporting
Interpretations Committee of the IASB (together 'IFRS') as endorsed
by the European Union. The information in this preliminary
statement has been extracted from the audited financial statements
for the year ended 31 December 2016 and as such, does not contain
all the information required to be disclosed in the financial
statements prepared in accordance with the International Financial
Reporting Standards ('IFRS').
3. Earnings per share
Year ended Year ended
31 December 2016 31 December 2015
Basic and diluted
Loss for the period and earnings used in basic & diluted EPS (GBP) (4,278,403) (365,738)
Weighted average number of shares used in basic and diluted EPS 5,180,697 2,951,666
Loss per share (GBP) (82.58) (12.39)
-------------------------------------------------------------------- ------------------ ------------------
Basic earnings per share is calculated by dividing the loss
attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the period. The
weighted average number of shares for the current and prior years
included shares issued by Big Sofa Technologies Group PLC.
Due to the loss in the periods the effect of the share options
was considered anti-dilutive and hence no diluted loss per share
information has been provided.
Annual Report and Accounts
Copies of the Annual Report and Accounts, together with a notice
convening an annual general meeting, are being posted to
shareholders shortly and will be available within the Investors
section of the Company's website at www.bigsofatech.com.
Annual General Meeting
The annual general meeting of the Company will be held at 9.30
a.m. on 25 July 2017 at Martin House, 5 Martin Lane, London, EC4R
0DP.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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