TIDMKLBT
RNS Number : 2566K
Kalibrate Technologies plc
20 September 2016
This announcement contains inside information for the purposes
of Article 7 of Regulation 596/2014 (MAR).
20 September 2016
Kalibrate Technologies plc
("Kalibrate", the "Company" or the "Group")
FINAL RESULTS ANNOUNCEMENT
FOR THE FISCAL YEARED 30 JUNE 2016
Kalibrate Technologies plc (AIM: KLBT), the provider of strategy
and technology services to the global fuel and convenience retail
industry, announces its final audited results for the fiscal year
ended 30 June 2016.
Financial highlights:
-- Revenue increased by 7% to $34.9 million (2015: $32.5 million)
o Pricing revenue up 3% to $22.2 million (2015: $21.5
million)
o Planning revenue surged 15% to $12.7 million (2015: $11.0
million)
o Strengthened annualised recurring revenues to $23 million, an
increase of $2 million since 30 June 2015, providing greater
revenue visibility and stability
-- Underlying EBITDA* maintained at $4.3 million (2015: $4.36 million) following:
o continued investment in infrastructure to meet demand for
future software as a service ("SaaS") and new Merchandise Pricing
and Promotion Solution
o change in mix between Pricing and Planning
-- Underlying operating profit** of $2.6 million (2015: $3.2 million)
-- Profit before tax of $1.8 million (2015: $2.3 million)
-- Net cash of $2.4 million as at 30 June 2016 (2015: $4.6 million)
* Underlying EBITDA is operating profit before share-based
payments, restructuring costs and business combination amortisation
after adding back depreciation and amortisation
** Operating profit before share based payments, business
combination and restructuring costs
Operational highlights:
-- Continued growth with significant deals:
o signing in late Q4 of a $1.85 million Pricing perpetual
licence contract with a US-based national fuel and convenience
store chain with over 1,400 locations;
o signing in late Q4 of a $1.57 million Pricing perpetual
licence deal with an independent refiner and B2B fuel retailer. The
relationship includes a new B2B/wholesale Pricing solution;
o continuing to win new SaaS contracts, including a large
multi-country European fuel retailer;
o ongoing progress in emerging markets with the first contract
win in Chile with a leading multi-country South American fuel
retailer;
o continued success in Mexico with one Pricing and two Planning
contact wins following its entry into the marketplace in December
2015; and
o a first Pricing perpetual licence deal signed in China.
-- New business and expansion in Mexico, India, SE Asia, China and South America
-- Successfully entered 4 new territories: China, Chile, the Netherlands and Belgium
-- Now cross-selling to 33 clients which has almost doubled from 18 since the admission to AIM
-- Over 99% client retention over past 7 years
-- Launched Merchandise Pricing and Promotion platform during the fiscal year
-- Continued interest in our SaaS offering: 10 clients
transitioned from perpetual licence resulting in approximately $2.0
million of SaaS bookings
-- 41 hosted clients now secured, up from 28 at the start of the financial year
Post-period highlights:
-- Post period end, Kalibrate formed an entity with its
long-time agent in India to sell locally as it positions the Group
for future growth in this recently deregulated market
Commenting on the results, Bob Stein, CEO of Kalibrate,
said:
"We are pleased to report our financial results which are in
line with market expectations. Our key strategies deployed since
the IPO continue to result in year-on-year growth. As we enter a
new financial year, in order to enhance sustainable growth in the
longer term, we will increase our capital allocation in the key
growth areas that we have identified.
In FY17, we will strategically invest from operating cash flow
in positioning Kalibrate to the opportunities in Rest of World, in
particular India, Asia and Africa, where we see opportunities for
growth as deregulating markets can benefit from our expertise. At
the same time, as sales cycles in emerging markets tend to be more
challenging, we will diversify our offer by investing in our new
Merchandise Pricing and Promotion platform and improved
wholesale/B2B Pricing proposition to provide new products to our
global client base.
We look forward to the year ahead with optimism believing this
planned investment will allow us to capitalise on the opportunities
open to us and position the Group well for continued success."
For further information please contact:
Kalibrate Technologies plc via FTI Consulting, LLP
Robert B Stein, Jr. Chief Executive
Officer
Gregg R Budoi, Chief Financial Officer
N+1 Singer Advisory LLP +44 (0) 20 7496 3000
Shaun Dobson
Alex Price
FTI Consulting, LLP +44 (0) 20 3727 1000
Matt Dixon / Chris Lane / Emma Appleton
/ Elena Kalinskaya
* * * * *
About Kalibrate
For over 20 years, Kalibrate (LSE: KLBT) has advised fuel and
convenience retailers throughout the world on how to be
best-in-class operators in the fast changing marketplace.
Kalibrate's global footprint and local presence are the result of a
merger between two market leaders: KSS Fuels, the forerunner in
fuel pricing automation, and MPSI, recognized leaders of retail
network planning. Clients gain fuller visibility, truer insight and
more effective control over what matters most-total site
profitability. Headquartered in Manchester, United Kingdom and
Florham Park, New Jersey, Kalibrate has centers of excellence in
Mumbai, India; Tulsa, Oklahoma; and Melbourne, Australia as well as
offices in 10 other countries. For more information, visit
kalibrate.com.
Chairman's statement
As the Chairman of the Board of Directors I am pleased to
present the report on the Group's annual performance. Once again
the Group has demonstrated its solid position as the market leader
in providing comprehensive strategy and technology services to the
global fuel and convenience retailers.
For the seventh consecutive year, Kalibrate has achieved
year-on-year revenue growth through focused execution of its
strategy. The Group posted another record revenue result of $34.9
million, a 7.2% increase over the prior year. While the Group
always strives for achieving sustained revenue growth, it remains
keenly focused on demonstrable profitable growth. This fiscal year,
as highlighted in our interim results, we continued to invest in
infrastructure to meet our future SaaS demand resulting in an
underlying EBITDA* of $4.3 million for the period, similar to its
$4.36 million in fiscal year 2015, and a statutory pre-tax profit
of $1.8 million.
Our clients are constantly faced with increased competition in
both the motor fuel area and in retail merchandising. This past
fiscal year saw the continuation of unparalleled and prolonged
price pressure and volatility for many integrated fuel companies.
In such times of volatility Kalibrate stands out as the only global
provider of both Pricing and Planning solutions delivered through a
single platform, powered by an unmatched, verified market
intelligence dataset.
In keeping with our strategic plan of providing more offerings
to motor fuel and convenience retailers, Kalibrate was pleased to
introduce a new in-store Merchandise Pricing and Promotion offering
during the period. This is a new platform that we believe will
assist convenience retailers in gaining more visibility into their
merchandise categories within their stores. Additionally, in this
upcoming fiscal year, the Group will be modifying its existing
wholesale Pricing platform to accommodate global
business-to-business ("B2B") pricing analytics. These new offerings
in addition to the regular updates and enhancements to our
Kalibrate Cloud suite of products will provide the cornerstone of
future global growth.
To support our larger clients with their global expansion, we
improved our ability to serve our global markets through increased
investment in sales and sales support personnel around the globe.
Leveraging on our reputation as the global industry leader,
Kalibrate continued to add new clients during the year that are
viewed in their respective markets as the best in class
retailers.
Our staff
The key to our continued success rests upon our people.
Kalibrate has created a culture in which our employees have an
unmatched commitment to providing first class service to our new
and existing clients. The industries we serve not only recognize
Kalibrate as a leader in its software but, more importantly, in the
insight provided by our employees to our clients and to the
industry as a whole. On behalf of the Board, I thank all employees
for their continued dedication to the success of our business and
look forward to their involvement in our future progress.
Planned investment and outlook
As we enter a new financial year, the Board remains committed to
executing on our stated strategy. We have proven that sticking to
our plan has achieved continuously improved revenue while adding
value for our clients.
This coming year we will place particular emphasis upon
improving even more the global breadth of our business, focusing
our attention on areas with higher growth potential. As such, we
plan to increase investment from operating cash flow into the Rest
of the World, our Merchandise Pricing and Promotion platform &
B2B/wholesale Pricing solution to better position Kalibrate for
long term global growth.
We are confident in our ability to continue to grow Kalibrate in
accordance with expectations but increasingly our ability to do
this requires us to secure significant wins from the emerging
markets and countries with higher growth potential such as India,
Asia and Africa. For the current financial year we are seeing
encouraging signs that this will prove to be the case but often
sales cycles in these markets tend to be more prolonged in terms of
timing for closing deals.
* Underlying EBITDA is operating profit before business
combination amortisation, share based payments, restructuring costs
and after adding back depreciation and amortisation.
Notwithstanding that, we have always expected medium-term growth
to come from emerging markets where we see opportunities for higher
growth as deregulating markets can benefit from our expertise. At
the same time as investing in the rest of the world we are
diversifying our offering into our new Merchandise Pricing and
Promotion and wholesale/B2B Pricing platforms. We view this
investment as extremely important to Kalibrate going forward and
believe these service areas will provide us with new avenues of
growth in addition to our expectations from emerging markets.
We look forward to the year ahead with optimism believing this
planned investment will allow us to capitalise on the opportunities
open to us and position the Group well for continued success.
Philip Lawler
Chairman of the Board
19 September 2016
Chief Executive's review
FOCUSED STRATEGY LEADS TO CONSISTENT GROWTH
This past fiscal year ended 30 June 2016, Kalibrate achieved its
seventh consecutive year of record revenue, with $34.9 million in
revenue compared with the prior year of $32.5 million. The Group
was able to achieve this by remaining focused on the five main
components of its strategic plan that was set out at Kalibrate's
admission to AIM in November 2013. This included: (1) driving
growth through the expansion in our core markets and cross-selling
to existing clients; (2) expanding our global outreach into new
geographic markets; (3) developing complementary products and
services; (4) expanding upon our managed services offering; and (5)
driving the transition of Kalibrate clients to a SaaS model.
Kalibrate continues to make progress in blending its Pricing and
Planning lines of business into one unified offering, but, as of
today we still report them separately. I am pleased that the Group
reported increased revenue in both the Planning and Pricing
segments. The Planning business increased by 15% to $12.7 million
in revenue and the revenue for Pricing products grew by 3% to $22.2
million. As a result, our annualised recurring revenue increased to
$23 million from $21 million in the prior year, and our order book
increased to $43.5 million, both of which provide us with greater
revenue visibility and stability for the future.
OUR INVESTMENT INTO THE FUTURE
Traditionally, a majority of the Group's revenue and profits has
been generated from the continued adoption of Kalibrate's Pricing
and Planning solutions in its core markets, namely the USA, Europe
and Japan.
1. Reliance on Global expansion
Moving forward, the Group considers that new geographical
markets outside of these three core markets will become
increasingly more important for Kalibrate and its growth in the
medium-term. As such, in order to embolden its presence and derive
future growth, the Group plans on increasing its investment in
these new and exciting territories, specifically in India,
Southeast Asia, China and Africa. In that regard, Kalibrate has
recently formed a local entity in India, formalizing an arrangement
with its long-time agent to support the Group's plans.
2. New Merchandise Pricing and Promotion platform
On 14 September 2015 the Group announced its new Merchandise
Pricing and Promotion offering. Kalibrate has already experienced
significant interest in this solution, both from existing clients
that use the Group's Pricing and Planning solutions as well as from
new, convenience-store only operators. Kalibrate therefore intends
to invest in this offering so as to ensure that it is able to
capitalise on this interest and anticipated demand.
3. New Global wholesale/B2B solution
The Group also intends to invest into its wholesale/B2B Pricing
solutions for the oil and gas industry. All integrated oil
companies and most fuel retailers around the globe maintain a B2B
wholesale division. Most of these companies utilize legacy in-house
systems that are able to provide varying levels of data analytics
to assist with the pricing of wholesale contracts. The Group's
existing and planned new B2B platform will fill an unmet need
within the industry. The Group has witnessed clear global interest
from existing clients and potentially new customers for this
solution, as evidenced by a deal signed in the second half of
fiscal year 2016.
Following the UK's vote to leave the European Union, the Group
notes that the Pound Sterling exchange rate against the Euro and US
dollar has been significantly affected. The Group reports in US
dollars with approximately 15% of its revenue and 27% of its costs
in Pound Sterling, therefore the Group currently anticipates only a
minimal impact going forward on its trading from current movements
in exchange rates. We continue to monitor the situation, and as a
global business operating in 70 countries, we are well diversified
which provides us with a natural level of hedging as we continue to
focus our attention on helping our clients around the world.
OUR BUSINESS SEGMENTS
Pricing - 64% of total revenue
The Group's fuel Pricing solution automates and scales the
analysis and execution of optimal pricing based on strategic
criteria each client defines. Advanced price elasticity models,
critical historical price/volume and competitor data and flexible
formulas result in predictive analytics for the most competitive
prices. The Group's Pricing platform continues to be recognized as
the industry standard in not only its core markets of North America
and Europe but also around the globe. In those core markets, the
Group has many of the top tier fuel retailers as clients which
helps to sell our products and services both within the core and
new geographic markets.
During the 2016 fiscal year I am delighted to report that we
were successful in a number of significant client wins,
including:
-- signing in late Q4 of a $1.85 million Pricing perpetual
licence contract with a US-based national fuel and convenience
store chain with over 1,400 locations;
-- signing in late Q4 of a $1.57 million Pricing perpetual
licence deal with an independent refiner and B2B fuel retailer. The
relationship includes a new B2B/wholesale Pricing solution;
-- continuing to win new SaaS contracts, including a large
multi-country European fuel retailer;
-- ongoing progress in emerging markets with the first contract
win in Chile with a leading multi-country South American fuel
retailer;
-- continued success in Mexico with one Pricing and two Planning
contact wins following its entry into the marketplace in December
2015; and
-- a first Pricing perpetual licence deal signed in China.
As announced previously, the Group is encouraging its new and
existing clients to transition to a SaaS model by upgrading to our
new Kalibrate Cloud offer. However, in certain circumstances this
is not always possible. During the past year the Group's largest
deals have come in the form of a perpetual licence sales that have
a recurring stream of associated software maintenance revenue. In
North America, the Group signed significant contracts with four of
the top retailers that combined control in excess of 4,000 retail
locations, all as perpetual licences. This does not depart from the
Group's objective of continuing to increase adoption of its SaaS
offering for its Pricing software where applicable.
The Group's Pricing segment continues to grow as a whole, with
the core Pricing platform up 8% whilst a legacy service offering
that provides significant recurring revenue at a very low margin
declined in revenue by approximately 22%. We are of course pleased
that the overall demand for the Group's Pricing software continues
to increase as retailers search for every advantage against their
competitors.
Planning & strategy - 36% of total revenue
Our Planning solutions provide Kalibrate's clients with in-depth
market and demand analysis, capital investment scenario analysis,
forecast changes in demand and rapid assessment of the competition,
as well as forecasting sales volumes of fuel, convenience stores,
fast food restaurants and car washes often located on petrol retail
sites. The increase in revenue for the Group's Planning products
has been largely driven by the consolidation of fuel and
convenience retailers in the Group's core markets of Europe and
North America. The Group has signed several multi-year Planning
projects in Europe in this past year which provides a solid stream
of recurring revenue.
A saleable by-product of the Planning business is the vast
amount of traffic counts, demographic, retail volume statistical
data that is collected as the Group complete market study models
for its clients. This data is then packaged into separate analytic
offerings that clients purchase on a recurring basis. The data
resale category is a relatively small but growing segment within
the Group.
Kalibrate's Strategy Group division provides consultative
expertise in Pricing, Planning and market intelligence that
leverages Kalibrate's extensive data set with its industry leading
consultants. Kalibrate's Strategy Group division is at the
forefront of market and industry trends, contributing thought
leadership that raises Kalibrate's profile in the industry as a
whole. Through the combination of its expertise in market
analytics, the Group's solutions remain a critically important
decision making tool for site planning.
OUR GEOGRAPHIES
North America - 55% of Group revenue
In North America, the Group achieved balanced year-on-year
growth in both Pricing and Planning revenue. The Pricing revenue
was up 9% attributable to several significant perpetual licence
deals with four premier retailers which provides evidence that
Kalibrate's products resonate with the larger top tier retailers.
Similarly, Planning Revenue increased 9.7% mostly as the result of
successfully cross-selling Planning products to existing Pricing
clients and due to the consolidation that continues throughout the
region.
Europe - 24% of Group revenue
The revenue for Europe was relatively flat year-on-year. This
was mainly due to a large deal originally designed as perpetual
that came in as SaaS, although this decrease was partly offset by
the implementation of two large Planning deals. The significant
merger and acquisition activity in the European market has been
driving considerable interest in the Group's Planning segment. In
the second quarter of fiscal year 2017 the Group will commence
another multi-year Planning engagement with one of its Pricing
clients for a new significant cross-sell opportunity.
Rest of World - 21% of Group revenue
To a large degree the Rest of World growth revolves around the
various stages of deregulation in several countries around the
globe. Most notable of these deregulation stories for fiscal year
2016 was related to the quick deregulation of Mexico. As the market
deregulated, there was an immediate response from the retailers to
accelerate their level of preparedness to meet the changing market
requirements.
The other significant deregulation revolves around the more
measured approach demonstrated by the retailers in India. In order
to be better prepared for the market growth, Kalibrate established
a legal entity in India in the form of the strategic arrangement
with its long-time agent. By having an entity in the local market,
the request for proposal process and the sales cycles should be
more streamlined.
During the year, we are pleased to have re-entered and
transacted business in China for a retail Pricing contract. While
it was a relatively small deal for Kalibrate in the fiscal year, it
marked a potentially monumental shift in the way the Chinese
retailers view petroleum retail competition.
The Asia-Pacific region has provided many opportunities over the
years and this past fiscal year the Group saw revenue growth for
the Pricing segment. The vast decoupling of motor fuel retail from
convenience retailer in the marketplace means that it is very
likely that this market will be more conducive to utilize
Kalibrate's new Merchandise Pricing and Promotion platform.
OUR STRATEGY
We have achieved consistent growth through sticking to our plan
and executing on our core strategies. Success to date has been
achieved by maintaining our focus and investing in the resources
necessary to execute our plan. While we continue to focus on
improving all areas of our strategy, we plan to place additional
emphasis and investment in accelerating our growth into new
geographic regions.
Geographic expansion ("Think Globally")
While the Group continues to progress within its core markets of
North America and Europe, its priority for this coming year is to
be more global as reflected in the new corporate theme, "Think
Globally". Although the Group has a global footprint with the
presence in over 70 countries, only 21% of its revenue is comprised
of "Rest of World" sales. The Group's success in creating market
dominance in its core markets was driven by its industry expert
staff domiciled within or near those markets. As such, in order to
accelerate its growth within existing non-core markets and adding
new geographies, the Group plans to invest in additional sales and
sales support resources specifically in India, Southeast Asia,
China and Africa. With particular interest to the Group are markets
that are planning to, or recently have, deregulated.
As governments are moving toward deregulation of motor fuel and
allow the retailers to operate in a free market, Kalibrate is well
positioned to capitalise on this compelling opportunity. Over the
years, the Group has become a leader in providing not only the
tools to assist companies to operate in a newly deregulated market
but, is also called upon for its insight, advice and market
expertise through all phases of the deregulation process. Several
Latin American countries recently deregulated and the Group
mobilized sales staff directly into the market full time and, as a
result, the Group was able to sign $1.6 million of new contracts
within the fiscal year. Post-year end, in July 2016, the Group
formed an entity with its long time agent in India to create a
local presence in the country. The India market deregulated in 2015
and the major companies are all now seeking ways to navigate the
newly competitive landscape. The Group is using this new
arrangement to create a local presence and deploy its experts
directly in the market to accelerate sales cycles and support
clients.
During the year, we are pleased to have re-entered the Chinese
market with a Pricing contract. While China has not officially
deregulated the market, retailers are seeking ways to be more
competitive in managing their fuel pricing within this
environment.
Leverage our clients
The greatest asset of the Group is its unparalleled client base
within the fuel and convenience retail industry. There is no other
data analytics company that has the same level of top tier
integrated oil companies and fuel/convenience retailers around the
globe. While we are proud that we have the best in class client
base, we are more proud that we have achieved over 99% client
retention. At the time of our IPO, 18 of our over 150 tier 1
clients purchased both Pricing and Planning solutions and services.
This total now stands at 33, a steady increase but encouragingly
with further room to grow.
We have had significant success this year in generating revenue
from our existing clients, which has been achieved through
cross-selling our Pricing and Location/Planning products as well as
expanded services and data reselling. To evidence that our strategy
has been working, the Group signed a significant contract with one
of its long-time Planning clients to add retail Pricing and its
wholesale Pricing platforms generating a multi-year booking of over
$4 million.
The complexities of managing fuel and convenience retail
performance are increasing. Thus, a large number of legacy and
in-house systems being used by Kalibrate's existing and prospective
clients are no longer able to cope with the volume of data and
sophisticated analytics required to keep pace with market dynamics.
Kalibrate is well positioned to capitalise on these opportunities
to help clients manage and navigate this complexity.
Expand product offering
The cornerstone of our strategy relates to providing all the
services to assist fuel/convenience retail clients improve upon the
7 Elements for Fuel and Convenience Retail Success ("7E"). The
Group has identified that all successful retailers excel when they
manage these 7E (location, pricing, market, merchandising,
facility, operations and brand). The Group's Kalibrate Cloud has
been deployed to clients and provides the Pricing and Planning
intelligence under one unified platform to assist companies improve
their operating performance and profitability. Kalibrate's Cloud
offering allows clients to access their Pricing, Location and
Market Intelligence services securely in a cloud environment. This
offers the fuel and convenience retail industry an expert source
for intelligence, insight and action to support faster, more
confident decisions and is fully mobile enabled via desktop, tablet
or smartphone. Our SaaS solution provides the Group with another
way to win new clients, motivate existing clients to upgrade and
increasing recurring revenue. While the Group is encouraging all
existing and new clients to adopt the SaaS model, many larger
clients still prefer to acquire the software via a perpetual
licence.
In addition to the Kalibrate Cloud introduction, the most
significant product introduction relates to the Group's launch of a
Merchandise Pricing and Promotion platform which assists
convenience retailers with maximizing instore sales and profit. The
Group is presently modifying the platform to ensure that it meets
all the needs of the convenience retailer. This software has been
deployed at one of Kalibrate's long-term clients to further define
the business requirements while several other clients are planning
to test the platform in during the first half of fiscal year
2017.
As another offering for its existing and new clients, the Group
has improved its wholesale Pricing platform which has been
successfully deployed at clients in North America. During the
current fiscal year, the Group plans to invest development
resources toward making this platform ready to be deployed to its
global clients in other geographies.
These product offering expansions afford the Group the
opportunity to have a wider breadth of product suite to attract new
clients and cross sell within its existing client base.
Increase recurring revenue from SaaS and managed services
As the Group introduces its Kalibrate Cloud, Merchandise Pricing
and Promotion and improved B2B offering, it is encouraging its
client base, where possible, to migrate toward the SaaS model. To
accommodate the ease of the transition, Kalibrate maintains a
relationship with Rackspace, the industry leading provider of
hosting solutions. At the time of our flotation, the Group
identified that it had over 100 existing Pricing clients that would
be suitable for a managed/hosted services offering. As at 30 June
2016, the Group has secured 41 hosted clients, up from 14 at the
time of the floatation. The Group's focus remains on continuing to
convert existing clients as well as adding new clients to our
managed services/hosting offering in order to grow further our
recurring revenue base. The Kalibrate Cloud single platform will be
the driver for clients to move to managed services.
Historically, Kalibrate sold its Pricing product by way of the
sale of an upfront perpetual licence to a client. In line with the
Group's strategy, a number of new contracts this year have been
secured on a SaaS basis which offers Kalibrate greater revenue
visibility, longer-term client relationships typically of three to
five year fixed terms and higher overall gross margins. The Group
continues to encourage new clients to purchase its pricing software
via a SaaS model, however many larger clients still prefer to
acquire software under the perpetual licence purchase.
This past fiscal year the Group sold 10 clients under a SaaS
contract for a total booking of approximately $2.0 million while 4
significant contracts were signed in North America as perpetual
licences. Even under a perpetual licence arrangement, the Group
increased its recurring revenue as all perpetual licences have a
multi-year professional services/maintenance contract. During the
fiscal year, the Group increased its annualised recurring revenue
by $2.0 million to achieve an annualised recurring revenue total of
$23.0 million.
Our people are our strength
Kalibrate is distinguished among competitors through its
people's expertise and true dedication to client success. The Group
was able to retain over 99% global clients this past year as a
result of genuine dedication and domain expertise in our clients'
business. This fiscal year the Group is focused on ensuring that
its employee base is structured to meet its global growth plans. To
that end, the Group has invested in its employee base to
accommodate its future plans. I am proud that so many clients
consider us not just a solutions provider but a partner who cares
about their business. Every day around the world our professionals
build Kalibrate's reputation for precise business insight and
industry expertise. I warmly thank our people throughout the
world-Kalibrate's greatest strength.
Outlook
Kalibrate continues to deliver upon the strategic goals that
were outlined when the Group joined AIM. We have made solid
progress, achieved consistent financial performance, retained
existing clients, won new clients and invested further in our
platform offerings. By delivering comprehensive solutions to a
diverse client base in a dynamic industry, we are well placed to
retain our market-leading position.
We have been investing in our infrastructure in the Rest of the
World, in particular in India, Asia and Africa where we see
opportunities for growth. As we enter a new financial year, we are
hopeful these new markets will yield compelling opportunities
although we are still reliant on government timelines and, as such,
we believe it is critical to diversify our offering and invest now
from operating cash flow into our new Merchandise Pricing and
Promotion platform and wholesale/B2B Pricing offering to provide
new revenue sources and additional avenues of growth.
We are in the right place at the right time with the right
expertise and solutions. We move into the new financial year with
confidence that our strategic roadmap is correct for consistent
growth that will serve clients well and generate positive outcomes
for our shareholders.
Robert B Stein, Jr.
Chief Executive Officer
19 September 2016
Chief Financial Officer's review
Revenue
The Group has delivered a 7.2% revenue growth to report record
revenue of $34.9 million compared with $32.5 million in the prior
fiscal year. Revenue is segmented by the Group's Planning and
Pricing business lines and further by the geographies. Revenue in
the Planning business increased by 15% to $12.7 million as a result
of significant growth in European projects offset by a decline in
the African and Japanese markets (which is attributable to
shrinking fuel retail sites in these markets and devaluation of
currencies to the US dollar). Revenue for Pricing products grew by
3% to $22.2 million compared with $21.5 million in the prior fiscal
year with an increase of 8% in the core Pricing products offset by
a 22% decrease in a legacy price service offering. This legacy
Pricing offering is still being utilized by a number of clients to
gather competitive pricing data in the market. The Group is working
to identify ways to automate this process through electronic data
collection or crowd sourcing data. As such, until the Group
identifies alternative methods of data collection, it is
anticipated that this small part of the business will not be a
growth focus for the Group.
The Group ended the fiscal year with $23 million of annualised
recurring revenue which represented a 9.5% increase over the period
of $21 million. While continuing to encourage its clients to
migrate toward SaaS contracts, which have a higher recurring
revenue component, the Group successfully closed a number of
significant Pricing deals as perpetual licence deals at the request
of the clients. As mentioned above, the Group experienced
significant decline in its legacy Pricing service offering which
has a large recurring revenue component but low profit margins.
When adjusting for the decline in this legacy business line, the
recurring revenue on the core business increased by 11.5%. Further,
the Group's total order book increased in the fiscal year by 5% to
$43.5 million and the order book would have increased to $44.4
million if adjusted for the legacy business line.
Profit
Underlying EBITDA, which is operating profit before business
combination amortisation, share based payments, restructuring
costs, after adding back depreciation and amortisation, is the
Group's key profitability measure. Underlying EBITDA for the year
maintained at $4.3 million, compared to the $4.36 million in the
prior year. Whilst keenly focused on profitability improvement, the
Group has continued to invest in additional planned resources from
operating cash flow in the areas of sales, marketing and client
support to further its expansion into new geographies. In addition
and as planned, the Group invested in its new Merchandise Pricing
and Promotion platform. These planned investments were made to
accelerate the growth into new geographies and to introduce the
Merchandise offering to new and existing clients.
Operating profit before share based payments, restructuring
costs and business combination amortisation for the year was $2.6
million which is lower than the $3.2 million reported in the prior
year due to the EBITDA change above plus additional depreciation
and amortisation expense associated with the Group's planned
investment into new software and technology. Statutory operating
profit was $1.9 million (2015: $2.4 million). The statutory profit
before tax was $1.8 million (2015: $2.3 million).
Restructuring costs totalled $0.6 million (2015: $0.4 million
restructuring costs) in the period which related to a general
restructuring within the business in order to reallocate the
capital resources toward the Merchandise Pricing and Promotion
offering and our global initiatives that include more global sales,
support and thought leadership.
Finance costs
Net finance costs were $0.02 million (2015: $0.06 million)
related to an equipment lease for certain business equipment and
unused facility fees associated with its revolving line of credit.
In March 2016, the Group signed a borrowing facility with PNC Bank
in the United States of America for a two year $5 million revolving
line of credit. This facility will be used to support the issuance
of letters of credit, any acquisition or business development
activity and any general working capital needs.
Tax
The Group had a net tax benefit of $0.2 million (2015: expense
of $0.3 million). The Group's recognised deferred tax assets relate
to tax losses in the UK and the US. There are also unrecognised tax
losses arising in the UK of $9,475,000 at 18% per cent, $1,706,000
(2015: $12,100,000 at 20 per cent, $2,420,000). Tax losses arising
in the USA for which no deferred tax asset was recognised were $nil
(2015 $nil). These amounts have not been recognised due to
uncertainty over the timing of recoverability. At this time, the
Group anticipates that it will maintain the profitability to fully
utilize these benefits prior to their expiration date, if any.
During the year, the Group charged $832,000 in United States tax
related to the currency effect of intercompany transactions. This
tax charge is a deferred tax that would be payable upon the
repayment of the permanent intercompany investments, which the
Group does not anticipate occurring.
Earnings per Share
Statutory basic earnings per share of 6.0 cent per share
compared with basic earnings per share of 6.0 cents per share with
fully diluted earnings per share of 5.8 cents per share compared
with fully diluted earnings per share of 5.6 cents per share in the
prior year.
Headcount
At 30 June 2016, the Group's headcount stood at 158 employees
(2015: 158 employees) which does not include our third party
development contractors in Vietnam. This headcount takes into
account certain restructuring efforts and the addition of new
employees in key regions around the globe in newly created
positions to meet future growth. As planned, the Group will
continue to increase our investment in new staff during the coming
financial year to support growth initiatives in newly de-regulated
markets around the world as well as to develop and bring to market
our new Merchandise Pricing and Promotion and wholesale/B2B Pricing
solutions.
Share capital and share options
The Group has 33.8 million issued and outstanding shares with
another 1.87 million option shares issued under its 2008 unapproved
share option scheme and 3.1 million shares issued under the 2013
share option scheme to key employees. These share options, together
with any carried forward or exchanged pre-IPO share options, total
12% of the Group's fully diluted share capital at 30 June 2016.
Capital expenditure
The Group spent $3.8 million in total capital expenditure on
equipment and the development of software (2015: $2.6 million). The
Group continues to invest into its Kalibrate Cloud platform by
adding new enhancements and completing the merging of its Pricing
and Planning software into one offering. In addition, the Group has
begun the investment into its Merchandise Pricing and Promotion
platform and wholesale/B2B Pricing solution.
Cash and cash flow
Net cash was $2.4 million as at 30 June 2016 (2015: net cash of
$4.6 million). Cash was down due to a $3.8 million investment in
new product development and equipment, as well as a significant
increase in trade and other receivables, as we closed several
significant deals at the end of the fiscal year for which we did
not receive payment prior to year-end. In addition, the Group
entered into several perpetual licence sales wherein the payment of
the licences is partly deferred until completion of certain
milestones upon which the Group will receive payment. All
significant licence receivables are due from significantly sized
and credit worthy clients. To date, the Group has not borrowed on
the line of credit and continues to maintain sufficient
liquidity.
Gregg R. Budoi
Chief Financial Officer
19 September 2016
Consolidated Statement of Income
Year Year
ended ended
30 June 30 June
2016 2015
Continuing operations $000 $000
----------------------------------------------- --------- ---------
Revenue 34,895 32,549
Operating expenses (32,293) (29,319)
----------------------------------------------- --------- ---------
Operating profit before share-based
payments, business combination amortisation
and restructuring costs 2,602 3,230
Share-based payments (160) (170)
Business combination amortisation - (316)
Restructuring costs (586) (363)
----------------------------------------------- --------- ---------
Operating profit 1,856 2,381
Finance income 4 18
Finance costs (21) (62)
----------------------------------------------- --------- ---------
Profit before tax 1,839 2,337
Income tax (charge) 198 (348)
----------------------------------------------- --------- ---------
Profit for the financial year 2,037 1,989
Earnings per share
---------------------------------------------- --------- ---------
Basic earnings per share (cents) 6.04 5.97
Diluted earnings per share (cents) 5.78 5.64
----------------------------------------------- --------- ---------
Consolidated Statement of Comprehensive Income
Year Year
ended ended
30 June 30 June
2016 2015
Continuing operations $000 $000
Profit for the financial year 2,037 1,989
------------------------------------------------- -------- --------
Other comprehensive income
Items that are or may be reclassified
to profit and loss:
Foreign currency translation differences (1,198) (33)
Tax in respect of foreign currency translation
differences (832) -
------------------------------------------------ -------- --------
Other comprehensive income for the year (2,030) (33)
------------------------------------------------- -------- --------
Total comprehensive income recognised
in the year 7 1,956
------------------------------------------------- -------- --------
Attributable to:
Equity holders of the Company 7 1,956
------------------------------------------------- -------- --------
Consolidated Statement of Financial Position
30 June 30 June
2016 2015
$000 $000
------------------------------------- ------- -------
Assets
Non-current assets
Property, plant and equipment 564 464
Goodwill 2,683 2,683
Other intangible assets 5,255 4,031
Deferred tax assets 1,540 2,018
10,042 9,196
Current assets
Trade and other receivables 15,671 13,072
Cash and cash equivalents 2,416 4,612
-------------------------------------- ------- -------
18,087 17,684
Liabilities
Current liabilities
Trade and other payables (9,892) (9,109)
Borrowings (26) (39)
-------------------------------------- ------- -------
(9,918) (9,148)
------------------------------------- ------- -------
Net current assets 8,169 8,536
Non-current liabilities
Borrowings (52) -
(52) -
------------------------------------- ------- -------
Net assets 18,159 17,732
-------------------------------------- ------- -------
Equity
Capital and reserves attributable to
the equity holders of the Company
Share capital 112 110
Share premium 9,469 9,211
Share-based payment reserve 250 372
Foreign exchange reserve (2,109) (79)
Retained earnings 10,437 8,118
-------------------------------------- ------- -------
Total equity 18,159 17,732
-------------------------------------- ------- -------
Consolidated Statement of Cash flows
Year ended Year ended
30 June 30 June
2016 2015
$000 $000
----------------------------------------------- ----------- -----------
Cash flows from operating activities
Profit/(loss) for the year before taxation 1,839 2,337
Adjustments for:
Net finance cost - 44
Depreciation of property, plant and equipment 303 283
Amortisation of intangible assets 1,399 1,158
Share-based payments 160 170
Increase in trade and other receivables (2,121) (4,678)
Increase/(Decrease) in trade and other
payables 835 (1,626)
------------------------------------------------ ----------- -----------
Net cash from operations 2,415 (2,312)
Finance costs (21) (62)
Income tax (paid) 198 (152)
------------------------------------------------ ----------- -----------
Net cash generated from/(used in) operating
activities 2,592 (2,526)
------------------------------------------------ ----------- -----------
Cash flows from investing activities
Finance income 4 18
Purchase of property, plant and equipment (429) (228)
Purchase of intangible assets (3,350) (2,588)
Net cash used in investing activities (3,775) (2,798)
------------------------------------------------ ----------- -----------
Cash flows from financing activities
Issue of equity (net) 2 1
Exercise of share options 258 122
Finance lease capital repayments (15) (30)
Net cash generated from financing activities 245 93
------------------------------------------------ ----------- -----------
Net decrease in cash and cash equivalents (938) (5,231)
Exchange movements (1,258) 110
Cash and cash equivalents at the start
of the year 4,612 9,733
------------------------------------------------ ----------- -----------
Cash and cash equivalents at the end
of the year 2,416 4,612
------------------------------------------------ ----------- -----------
Consolidated Statement of Changes in Equity
Foreign
Share Share Other exchange Retained Total
capital premium reserve reserve earnings equity
$000 $000 $000 $000 $000 $000
---------------------------- -------- -------- -------- --------- --------- --------
At 1 July 2014 109 9,061 230 (46) 6,129 15,483
Exercise of options 1 150 (28) - - 123
Share-based payment charge - - 170 - - 170
---------------------------- -------- -------- -------- --------- --------- --------
Transactions with owners 1 150 142 - - 293
Profit for the year - - - - 1,989 1,989
Foreign exchange movements - - - (33) - (33)
Total comprehensive income - - - (33) 1,989 1,956
---------------------------- -------- -------- -------- --------- --------- --------
At 30 June 2015 110 9,211 372 (79) 8,118 17,732
Exercise of options 2 258 (282) - 282 260
Share-based payment charge - - 160 - - 160
---------------------------- -------- -------- -------- --------- --------- --------
Transactions with owners 2 258 (122) - 282 420
Profit for the year - - - - 2,037 2,037
Foreign exchange movements - - - (2,030) - (2,030)
Total comprehensive income - - - (2,030) 2,037 7
---------------------------- -------- -------- -------- --------- --------- --------
At 30 June 2016 112 9,469 250 (2,109) 10,437 18,159
Notes
1 Basis of preparation
The financial information set out above does not constitute the
company's statutory accounts for the year ended 30 June 2016 and
the year ended 30 June 2015 but is derived from those accounts.
Statutory accounts for 2015 have been delivered to the registrar of
companies, and those for 2016 will be delivered in due course. The
auditor has reported on those accounts; their reports were (i)
unqualified, (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
The consolidated financial statements have been prepared and
approved by the Directors in accordance with International
Financial Reporting Standards as adopted by the European Union
(IFRSs), IFRIC Interpretations and the Companies Act 2006
applicable to companies reporting under IFRS. The consolidated
financial statements have been prepared under the historical cost
convention as modified by the revaluation of certain financial
instruments.
2 Presentational currency
The consolidated financial statements are presented in US
Dollars, which is the presentational currency of the Group. The
vast majority of the Group's revenues are US Dollar denominated
and, as there is also a growing proportion of US Dollar denominated
costs, it is considered to be appropriate to present the Group's
results in US Dollars. The functional currency of the Company is
Sterling.
3 Segmental analysis
The Chief Operating Decision Maker has been identified as the
Board of Directors. The Board reviews the Group's internal
reporting in order to make strategic decisions. The Board considers
the business from both an operational and geographical
perspective.
The segment results for the year ended 30 June 2016 are as
follows:
Pricing Planning Total
$000 $000 $000
------------------------------------------- -------- -------- --------
Revenue 22,231 12,664 34,895
Other operating expenses (20,050) (10,548) (30,598)
------------------------------------------- -------- -------- --------
Underlying EBITDA 2,181 2,116 4,297
------------------------------------------- -------- -------- --------
Depreciation and amortisation (1,454) (241) (1,695)
------------------------------------------- -------- -------- --------
Underlying operating profit 727 1,875 2,602
------------------------------------------- -------- -------- --------
Share-based payments (160)
Exceptional items and business combination
amortisation (586)
------------------------------------------- -------- -------- --------
Operating profit 1,856
-------------------------------------------
Net finance cost (17)
Profit before tax 1,839
Income tax credit 198
------------------------------------------- -------- -------- --------
Profit for the year 2,037
------------------------------------------- -------- -------- --------
The segment results for the year ended 30 June 2015 are as
follows:
Pricing Planning Total
$000 $000 $000
---------------------------------- -------- -------- --------
Revenue 21,534 11,015 32,549
Other operating expenses (18,915) (9,279) (28,194)
---------------------------------- -------- -------- --------
Underlying EBITDA 2,619 1,736 4,355
---------------------------------- -------- -------- --------
Depreciation and amortisation (875) (250) (1,125)
---------------------------------- -------- -------- --------
Underlying operating profit 1,744 1,486 3,230
Share-based payments (170)
Restructuring costs (363)
Business combination amortisation (316)
---------------------------------- -------- -------- --------
Operating profit 2,381
---------------------------------- -------- -------- --------
Net finance cost (44)
---------------------------------- -------- -------- --------
Profit before tax 2,337
Income tax charge (348)
---------------------------------- -------- -------- --------
Profit for the year 1,989
---------------------------------- -------- -------- --------
The segment assets and liabilities at 30 June 2016 are as
follows:
Unallocated
Pricing Planning items Total
$000 $000 $000 $000
------------------------------ ------- -------- ----------- -------
Assets 16,667 4,822 6,640 28,129
Liabilities (7,449) (2,521) - (9,970)
------------------------------ ------- -------- ----------- -------
Net assets 9,218 2,301 6,040 18,159
------------------------------ ------- -------- ----------- -------
Capital expenditure 2,871 908 - 3,779
Depreciation and amortisation (1,454) (241) - (1,695)
------------------------------ ------- -------- ----------- -------
Unallocated assets and liabilities comprise net cash, deferred
taxation assets and liabilities, goodwill and acquired intangible
assets.
The segment assets and liabilities at 30 June 2015 are as
follows:
Unallocated
Pricing Planning items Total
$000 $000 $000 $000
------------------------------ ------- -------- ----------- -------
Assets 13,828 3,739 9,313 26,880
Liabilities (5,325) (3,823) - (9,148)
------------------------------ ------- -------- ----------- -------
Net assets 8,503 (84) 9,313 17,732
------------------------------ ------- -------- ----------- -------
Capital expenditure 2,045 775 - 2,820
Depreciation and amortisation (875) (250) (316) (1,441)
------------------------------ ------- -------- ----------- -------
The parent company is domiciled in the UK. The Group's main
business segments are based in the following locations:
-- Pricing - North America, Europe and Rest of the World
-- Planning - Rest of the World, North America and Europe
The geographical segments are based on an analysis of revenue by
the location of the Group's customers as follows:
Year ended Year ended
30 June 30 June
2016 2015
$000 $000
------------------ ---------- ----------
North America 19,168 17,477
Europe 8,354 8,945
Rest of the World 7,373 6,127
------------------ ---------- ----------
Revenue 34,895 32,549
------------------ ---------- ----------
One global client contributed 12 per cent of the Group's revenue
(2015: 12 per cent, one global client); no other client contributed
greater than 9 per cent of the Group's revenue (2015: 6 per
cent).
4 Restructuring costs and business combination amortisation
Year ended Year ended
30 June 30 June
2016 2015
$000 $000
---------------------------------- ---------- ----------
Restructuring costs 586 363
Business combination amortisation - 316
---------------------------------- ---------- ----------
586 679
---------------------------------- ---------- ----------
Restructuring costs totalling $0.6 million (2016: $0.3 million)
within the Group relates to a restructuring plan wherein, the Group
eliminated the long term cost associated with a group of employees
in order to reallocate the capital resources toward the merchandise
pricing offering and our global initiatives that include more
global sales, support and thought leadership.
Business combination amortisation in fiscal year 2015 arises
from the intangible assets recognised (other than goodwill) from
the acquisition of MPSI.
5 Earnings per share
Year ended Year ended
30 June 30 June
2016 2015
$000 $000
---------------------------------- ---------- ----------
Profit for the year 2,037 2,042
Share-based payments 160 170
Restructuring costs 586 363
Business combination amortisation - 316
---------------------------------- ---------- ----------
Adjusted profit for the year 2,783 2,891
---------------------------------- ---------- ----------
Cents Cents
------------------------------------ ----- -----
Basic earnings per share 6.04 5.97
Diluted earnings per share 5.78 5.64
------------------------------------ ----- -----
Adjusted basic earnings per share 8.26 8.52
Adjusted diluted earnings per share 7.90 8.05
------------------------------------ ----- -----
Shares Shares
------------------------------------------------------- ---------- ----------
Issued ordinary shares at start of the year 33,458,675 33,227,848
Net movement in ordinary shares during the year 341,360 230,827
------------------------------------------------------- ---------- ----------
Issued ordinary shares at end of the year 33,800,035 33,458,675
------------------------------------------------------- ---------- ----------
Weighted average number of shares in issue for the
year 33,706,022 33,303,192
Dilutive effect of options 1,534,394 1,939,055
------------------------------------------------------- ---------- ----------
Weighted average shares for diluted earnings per share 35,240,416 35,242,247
------------------------------------------------------- ---------- ----------
6 Share capital
Shares $000
---------------------------------- ----------- -----
Issued, called up and fully paid
Ordinary shares of GBP0.002 each
At 1 July 2015 33,458,675 110
Share issue (on exercise) 341,360 2
At 30 June 2015 33,800,035 112
---------------------------------- ----------- -----
During the fiscal year, share options totalling 341,360 shares
were exercised (2015, 230,827).
The market price of the Company's shares at 30 June 2016 was
GBP0.675 (2015: GBP1.025). The range for the year ended 30 June
2016 was GBP0.675 to GBP1.13 (2015: GBP0.955 to GBP1.325).
7 Share-based payments
As part of the change in capital structure relating to the
Company's admission to AIM in November 2013 (see note 6), all
options issued under the Company's existing unapproved share option
scheme were adjusted to maintain a dilutive position. Upon
flotation of the Company, all existing share options vested and a
proportion of these were exercised by certain of the Group's
employees. Additionally, certain of the unexercised share options
were exchanged for share options in the Company's new 2013
Enterprise Management Initiative (EMI) scheme. A further 1.75
million share options under the new EMI scheme were also issued to
Directors and employees at the date of the flotation.
The Company now operates two separate equity settled share
option schemes for qualifying employees of the Group; however no
further share options are expected to be issued under the 2008
scheme.
Options in issue at the year-end are as follows:
2008 unapproved share option scheme
1 July Option 30 June Exercise Exercisable
Date issued 2014 Granted adjustment Exercised Exchanged 2015 price from
------------ --------- ------- ---------- --------- --------- --------- --------- -----------
29 Nov
7 Jan 08 1,293,393 - - - - 1,293,393 GBP0.3288 13
29 Nov
9 Sep 08 215,651 - - - - 215,651 GBP0.3288 13
29 Nov
6 Dec 11 254,229 - - 36,400 - 217,829 GBP0.4421 13
29 Nov
5 Mar 13 145,602 - - 145,602 - - GBP0.6121 13
29 Nov
31 Oct 13 145,602 - - - - 145,602 GBP0.6121 13
------------ --------- ------- ---------- --------- --------- --------- --------- -----------
2,054,477 - - 182,002 - 1,872,475
------------ --------- ------- ---------- --------- --------- --------- --------- -----------
The share price at the date of share option exercise was
GBP0.79.
2013 EMI share option scheme
1 July 30 June Exercise Exercisable
Date issued 2014 Granted Exercised Lapsed 2015 price from
------------ --------- ------- --------- ------- --------- -------- -----------
29 Nov
29 Nov 13 169,355 - - - 169,355 GBP0.105 13
29 Nov
29 Nov 13 50,497 - - - 50,497 GBP0.168 13
29 Nov
29 Nov 13 81,439 - - - 81,439 GBP0.168 13
29 Nov
29 Nov 13 1,550,000 - 159,358 133,400 1,257,242 GBP0.79 16
20 Oct
20 Oct 14 575,000 - - 75,000 500,000 GBP1.055 17
7-Nov 14 400,000 - - 400,000 GBP1.080 7 Nov 17
20 Nov
20-Nov 15 - 545,000 - - 545,000 GBP1.945 18
18 Apr
7 Nov 14 - 100,000 - - 100,000 GBP0.920 19
------------ --------- ------- --------- ------- --------- -------- -----------
2,826,291 645,000 159,358 208,400 3,103,533
------------ --------- ------- --------- ------- --------- -------- -----------
The fair value of services received in return for the new share
options granted under the 2013 share option scheme are measured by
reference to the fair value of share options granted. The estimate
of the fair value of services received is based on a Black Scholes
share option pricing model. The key assumptions used in the model
are as follows:
-- interest rate - 1.0 per cent;
-- volatility - 30 per cent;
-- dividend yield - nil; and
-- expected life of option - 3.0 years.
The total expense recognised by the Group for the year, for all
continuing schemes, was $160,000 (2015: $170,000).
8 Dividends
No dividends were paid or proposed during the year (2015:
$nil).
9 Forward-looking statements
Certain statements in these results are forward-looking.
Although the Group believes that the expectations reflected in
these forward-looking statements are reasonable, it can give no
assurance that these expectations will prove to have been correct.
Because these statements involve risks and uncertainties, actual
results may differ materially from those expressed or implied by
those forward-looking statements.
The Group undertakes no obligation to update any forward-looking
statements whether as a result of new information, future events or
otherwise.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UKOWRNSAKAAR
(END) Dow Jones Newswires
September 20, 2016 02:01 ET (06:01 GMT)
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