TIDMEUSP
RNS Number : 7808P
EU Supply PLC
05 September 2017
5 September 2017
EU Supply Plc
("EU Supply", the "Company" or the "Group")
Interim results for the six months ended 30 June 2017
EU Supply, the e-procurement SaaS provider, is pleased to
announce its unaudited interim results for the six months ended 30
June 2017.
Financial Highlights:
-- Revenue grew by 40% to GBP2.17m (H1 2016: GBP1.55m) - up
approximately 31% on a constant currency basis
-- Maiden operating profit of GBP9k (H1 2016: loss of GBP673k)
-- As a result of substantial one-off projects delivered in the
period, at 30 June 2017 c.63% of revenue in H1 2017 was of
recurring or repeated nature (H1 2016: c.74%), representing an
absolute increase of c. 20%
-- Despite the weakening Pound, compared to the same period last
year, operational costs were held at GBP2.2m (H1 2016: GBP2.1m
excluding restructuring costs of GBP0.1m)
-- Cash balance increased to GBP1.04m at 30 June 2017 (H1 2016: GBP0.91m, FY 2016: GBP0.97m)
Operational highlights:
-- New framework agreement signed with existing customer for up
to GBP3.1m allowing call-offs of support and maintenance renewals
and customer-paid enhancements
-- A number of significant paid-for enhancement contracts delivered partly or in full
-- Several smaller contracts signed with new customers for the
Group's CTM(TM) platform, notably in Denmark and Norway
-- Selective recruitment of staff and consultants to satisfy continuing growth
Post-period end:
-- Several new contracts signed, including a first end-customer
contract in Germany through distributor
-- Recruited Fredrik Wallmark as new CFO
Commenting on the results, Thomas Beergrehn, CEO of EU Supply,
said:
"I am happy to announce that EU Supply reported a maiden
operating profit and was cash generative for the second consecutive
six month period.
The Group achieved strong revenue growth, with contributions
from both new customer contracts, expanding the Company's recurring
revenue base, and from additional contracts with existing
customers.
The Board continues to see increasing market activity in several
of the Group's markets, including increasing number of tenders for
e-procurement solutions and numerous enquiries and meeting requests
from prospective customers. This is in part driven by the
requirements for mandatory e-tendering provisions at milestones
before November 2018 in the EU/EEC states. The Board also sees an
increased demand for additional value added enhancements to
existing contracts with the Group's current customer base.
The Board anticipates continued strong growth during the second
half of 2017 compared to the same period last year. With a strong
order book and a promising pipeline of opportunities, the Board
expects the Group to achieve a first annual operating profit and to
report results for the year ending 31 December 2017 in line with
market expectations."
FURTHER ENQUIRIES
EU Supply PLC Tel: 020 7601 6100
Thomas Beergrehn, CEO
Fredrik Wallmark, CFO
Stockdale Securities Tel: 020 7601 6100
Tom Griffiths, David Coaten
A copy of this announcement is available at
www.eu-supply.com.
Notes to Editors
EU Supply is the UK holding company of the EU Supply Group, a
Sweden-based e-commerce business, which has an established,
market-leading, multilingual e-procurement platform for e-sourcing,
e-tendering and contract management, tailored for the highly
regulated European public sector market.
Since 2006, the Group has invested heavily in employing
specialist programmers to add functionality, legal compliance as
required and security features to its Complete Tender
Management(TM) ("CTM(TM)") platform to ensure that the Group is
ideally placed to secure new contracts with EU Member States and
their Contracting Authorities. The platform is available in 16
different languages.
The Directors believe that the Group's CTM(TM) platform is one
of the easiest to use and most functionally advanced solutions
available in the market. The CTM(TM) platform is used by over 8,000
European public sector bodies in 9 EU/EEC Member States and has
National Procurement System status in four Member States (the UK,
Ireland, Norway and Lithuania).
The Company's shares were admitted to trading on AIM in November
2013. In August and September 2015, the Company raised a total of
GBP2.061m (before expenses) through a placing of new shares and the
issue of first and second tranches of Convertible Loan Notes to
institutional and other investors.
CEO Statement
I am pleased to report EU Supply's unaudited interim results for
the six months ended 30 June 2017.
Strong growth in CTM(TM) and related services
EU Supply has achieved continued strong growth during the first
six months of 2017 with revenues up by 40 per cent. to GBP2.17m (H1
2016: GBP1.55m), up approximately 31 per cent. on a constant
currency basis. The revenue growth was generated mainly from the
delivery of paid-for enhancement orders and new recurring CTM(TM)
SaaS revenues from smaller contracts with new customers in several
markets, notably in Denmark and Norway, which were signed either
during the second half of 2016 or in the six months ended 30 June
2017.
At 30 June 2017, EU Supply's recurring revenue represented
approximately 63 per cent. of the revenue for H1 2017 (H1 2016:
approximately 74 per cent.) due to substantial one-off projects
delivered. This provides a solid platform for further growth in
future years.
The Group is still experiencing pricing pressure in most
markets. Given the increased number of tenders and enquiries
received for e-procurement solutions, the Group continues to be
selective on competitive contracts only focusing on business where
we can generate a positive contribution margin.
Break-even now achieved for the first six month period
The Company reported its maiden operating profit for the period,
with revenue growth of 40 per cent. and operational costs
increasing by less than 5 per cent., despite the weakening Sterling
and selective recruitment of staff and consultants.
Improved cash position
For the second consecutive six month period, the Group was cash
generative during the first half of 2017 with cash of GBP1,035k at
30 June 2017 (30 June 2016: GBP911k) compared to GBP965k as at 31
December 2016. The Board believes that the Group has sufficient
cash for its short and long term needs.
Cash management
The Group's policy to keep the majority of its cash in the
currencies where it foresees net cash outflows also partly hedges
the potential currency exchange fluctuations. However, any further
weakening of Sterling, mainly against the Swedish Krona, could have
a negative effect on the Group's underlying profit for the year
ending 31 December 2017. The sensitivity to such a scenario should
be reduced over time as the Group's revenues continue to grow in
non-Sterling currencies and since reaching break-even.
Selective recruitment
As previously announced, the Group has initiated selective
recruitment in order to satisfy demand. In addition, it is hiring
consultants as and when necessary to reinforce its operations where
the Directors have identified a reasonable return on investment
from such resources.
At 30 June 2017, the Group employed 47 (full-time equivalent)
employees (30 June 2016: 46), including Directors.
Outlook
The Board continues to expect an accelerated adoption of
e-procurement solutions through to the e-submission deadline before
November 2018 with additional modules, functionalities, system
integrations and services expected also to be demanded beyond the
deadline. It also considers that revenues may be generated both
short-term and longer-term through customers' additional service
demands as a result of expected further mandatory functionality
requirements in the EU public sector and by increasing focus on all
aspects of procurement, including for example on micro-procurement
and spend analytics.
As previously announced, discussions are continuing with an
existing customer on further contracts for larger enhancements. A
targeted increase of additional development capacity would be
required to deliver any additional orders before end of the year or
in early 2018, in addition to already contracted work.
The Company continues to focus on existing market segments where
it has a unique or strong position and expects to win additional
CTM(TM) business. The Group may also investigate and qualify,
either directly or through distributors, opportunities in
additional larger EU Member State markets where the Board perceives
that the potential is still high and where customers can be
supported with existing resources.
The Group's distributor in Germany, T-Systems Multimedia
Solutions GmbH, has since the period end signed its first contract
for EU Supply's CTM(TM) platform. The Board does not anticipate any
significant revenues in 2017 from Germany, but it is cautiously
optimistic that it will see step-by-step conversion of an
increasing share of the distributor's prospects into an order book
for the CTM(TM) platform in 2018 with the potential of more
significant recurring revenues therefore expected in 2019 in both
the private and public sectors.
Already announced signed paid-for enhancement contracts during
the second half of 2016 and in 2017, together with small and medium
sized new customer opportunities for the Company's CTM(TM) platform
expecting to add recurring SaaS revenues and additional prospective
paid-for enhancement opportunities, are supporting a healthy order
book and pipeline which are expected to lead to additional revenues
by the end of 2017 compared to the same period last year as well to
generate revenue growth in 2018.
EU Supply's partner in the oil and gas and energy industries is
now in more detailed discussions to supply services for several oil
and gas projects with an expected start date in 2018, where part of
the services includes supplier sourcing, qualification and the
licence to use the Company's CTM(TM) platform for tendering and
contract management.
The Board expects the Group to achieve a first annual operating
profit and to report results for the year ending 31 December 2017
in line with market expectations.
Thomas Beergrehn
Chief Executive Officer
Condensed Consolidated Statement of
Comprehensive Income for the six months
ended 30 June 2017
6 months 6 months Year to
to to
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Revenue - Continuing operations 2,171 1,548 3,444
2,171 1,548 3,444
------------- ------------- --------------
Administrative expenses excluding restructuring
expenses (2,162) (2,107) (4,163)
Restructuring expenses - (114) (114)
Total administrative expenses (2,162) (2,221) (4,277)
Operating profit/(loss) 9 (673) (833)
Finance costs (129) (121) (247)
Loss before taxation (120) (794) (1,080)
Taxation (13) (2) 126
------------- ------------- --------------
Loss for the period attributable to
owners of the parent (133) (796) (954)
Other comprehensive income:
Exchange differences arising on the
translation of foreign subsidiaries 4 20 23
------------- ------------- --------------
Total comprehensive loss for the period
attributable to owners of the parent (129) (776) (931)
============= ============= ==============
Basic and diluted loss per share attributable
to owners of the parent (0.002) (0.011) (0.014)
Condensed Consolidated Statement of Financial
Position at 30 June 2017
As at As at As at
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 44 90 50
Other long term receivables 9 9 9
-------------
Total Non-current assets 53 99 59
------------- ------------- -------------
Current assets
Trade and other receivables 1,067 1,103 576
Current tax assets 2 - 151
Cash and cash equivalents 1,035 911 965
------------- ------------- -------------
Total Current Assets 2,104 2,014 1,692
------------- ------------- -------------
Total assets 2,157 2,113 1,751
------------- ------------- -------------
EQUITY AND LIABILITIES
Equity
Share Capital 68 68 68
Share premium 6,497 6,497 6,497
Merger reserve 2,676 2,676 2,676
Other reserves 512 493 511
Foreign exchange reserve (20) (27) (24)
Retained earnings (10,663) (10,371) (10,530)
------------- ------------- -------------
Total equity (930) (664) (802)
------------- ------------- -------------
Non-current liabilities
Deferred tax liability 28 22 27
Loans and other borrowings 1,219 1,129 1,172
Obligations under finance leases - 20 -
-------------
Total Non-current liabilities 1,247 1,171 1,199
Current liabilities
Trade and other payables 1,840 1,597 1,354
Obligations under finance leases - 9 -
------------- ------------- -------------
Total Current Liabilities 1,840 1,606 1,354
------------- ------------- -------------
Total Liabilities 3,087 2,777 2,553
------------- ------------- -------------
Total equity and liabilities 2,157 2,113 1,751
------------- ------------- -------------
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2017
6 months 6 months Year to
to to
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Cash inflow from operating activities
Loss after taxation (129) (776) (932)
Adjustments for:
Interest expense (net) 129 121 247
Income tax 146 49 (60)
Depreciation and amortisation 13 16 29
Share option charge - 3 3
Net foreign exchange gain/(loss) (7) (12) (32)
Operating cash flows before movements
in working capital 152 (599) (745)
Decrease/(increase) in trade and other
receivables (491) (234) 294
Increase/(decrease) in trade and other
payables 486 363 120
Cash used in operations 147 (470) (331)
Interest paid (83) (83) (177)
Net cash used in operating activities 64 (553) (508)
------------- ------------- -------------
Cash flows from investing activities
Purchases of property, plant and equipment (6) (6) (8)
Decrease in long term receivables 0 - (1)
Net cash used in investing activities (6) (6) (9)
------------- ------------- -------------
Financing activities
Proceeds from issue of share capital - - -
Costs relating to share issues - - -
Increase in borrowings - - -
Repayments of obligations under finance - (4) -
leases
Net cash generated from financing activities - (4) -
------------- ------------- -------------
Net increase/(decrease) in cash and
cash equivalents 58 (563) (517)
Cash and cash equivalents at beginning
of period 965 1,431 1,431
Effect of foreign exchange translation
on cash equivalents 12 43 51
Cash and cash equivalents at end of
period 1,035 911 965
============= ============= =============
Condensed Consolidated Statement of changes in equity
For the six months ended 30 June 2017
Share Share Retained Merger Foreign Other
capital premium earnings reserve exchange reserves Total
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
6 months ended 30 June
2016
As at 1 January 2016
(audited) 68 6,497 (9,714) 2,676 (47) 625 105
Loss for the period - - (796) - - - (796)
Other Comprehensive
losses:
Exchange differences
arising on translation
of foreign subsidiaries - - - - 20 - 20
Untaxed reserves reclassified
to equity - - - - - 4 4
Share based payment - - 139 - - (136) 3
As at 30 June 2016 (unaudited) 68 6,497 (10,371) 2,676 (27) 493 (664)
---------- ---------- ---------- ---------- ---------- ---------- --------
6 months ended 30 June
2017
As at 1 January 2017
(audited) 68 6,497 (10,530) 2,676 (24) 511 (802)
Loss for the period - - (133) - - - (133)
Other Comprehensive
losses:
Exchange differences
arising on translation
of foreign subsidiaries - - - - 4 - 4
Untaxed reserves reclassified
to equity - - - - - 1 1
Share based payment - - - - - - -
As at 30 June 2017 (unaudited) 68 6,497 (10,663) 2,676 (20) 512 (930)
---------- ---------- ---------- ---------- ---------- ---------- --------
Notes to the Condensed Consolidated Financial Statements
1. Basis of preparation
The condensed consolidated financial statements for the six
months ended 30 June 2017 have been prepared and presented in
accordance with IAS 34 'Interim Financial Reporting'. They have
been prepared on a going concern basis consistent with the
accounting policies and methods of computation and presentation set
out in the Group's consolidated financial statements for the year
ended 31 December 2016. The half yearly financial statements should
be read in conjunction with the Group's audited financial
statements for the year ended 31 December 2016, which have been
prepared in accordance with IFRS as adopted by the European
Union.
The information in this announcement does not comprise statutory
accounts within the meaning of section 434 of the Companies Act
2006. The Group's accounts for the year ended 31 December 2016 have
been reported on by the Group's auditors and delivered to the
Registrar of Companies. The report of the auditors was unqualified
and did not draw attention to any matters by way of emphasis. It
contained no statement under section 498(2) or (3) of the Companies
Act 2006.
The financial information for the six months ended 30 June 2017
is unaudited.
2. Segmental information
The Group currently has two reportable segments, Business Alert
services and services relating to the Group's CTM(TM) platform. The
Group categorises all revenue from operations to these two
segments. The Group currently does not allocate costs on a segment
basis and is therefore unable to report segment profit and loss.
Further, the Group does not allocate assets on a segment basis and
is therefore unable to report total assets per segment.
6 months 6 months Year to
to to 31 December
30 June 30 June 2016
2017 2016
GBP'000 GBP'000 GBP'000
Revenue - Continuing operations arises
from:
Business Alert services 297 274 490
Services relating to the CTM(TM) platform 1,757 1,274 2,941
Total provision of services 2,054 1,548 3,431
Other income 117 - 13
Administrative expenses (2,162) (2,107) (4,163)
Exceptional expenses - Restructuring
costs - (114) (114)
Operating profit/(loss) 9 (673) (833)
Finance charges (Net) (129) (121) (247)
--------- --------- -------------
Loss before taxation (120) (794) (1,080)
--------- --------- -------------
Other income for the 6 months to 30 June 2017 consists of two
separate grants received from the EUREKA programme as well as from
a project under the European Commission agency INEA's Connecting
Europe Facility through a consortia lead by a third party for
further development of modules integrated with the Group's Complete
Tender Management System.
The Group operates in three main geographic areas: UK, European
Union and Rest of the World. Revenue and non-current assets by
origin of geographical segment for all entities in the Group is as
follows:
Revenue Non- current assets
-------------------- -----------------------
6 months 6 months 6 months Year
ended ended ended ended
30 June 30 June 30 June 31 December
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
--------------- --------- --------- --------- ------------
UK 469 405 - -
European
Union 1121 615 53 59
Rest of World 581 528 - -
---------
Total 2,171 1,548 53 59
--------- --------- --------- ------------
3. Loss per share
The loss per ordinary share is based on the net loss for the
period attributable to ordinary equity holders divided by the
weighted average number of ordinary shares outstanding during the
period.
The basic loss per share has been calculated by dividing the
retained loss for the period of GBP0.129m by the weighted average
number of ordinary shares of 67,716,406 (2016 H1: 67,716,406) in
issue during the period.
The potential ordinary shares associated with share options and
convertible loan notes are anti-dilutive and are therefore excluded
from the weighted average number of ordinary shares for the purpose
of diluted earnings per share.
4. Dividends
No dividend is proposed to be declared for the six months ended
30 June 2017 (2016: nil).
5. Copies of Interim Results
Copies of the Interim Results announcement are available on the
Investor Relations section of the EU Supply website,
www.eu-supply.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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