Announcement PDF RNS Number : 7033A Crimson Tide PLC 27 September 2022 27 September 2022 Crimson Tide plc Interim results for the six months ended 30 June 2022 Crimson Tide plc ("Crimson Tide" or "the Company"), the provider of the mpro5 solution is pleased to announce its unaudited interim results for the six months ended 30 June 2022. Financial headlines · Revenue increase of 15.3% to £2.3m (H1 2021: £2.0m) · Annual recurring revenue (ARR) increase of 22.7% to £4.4m (H1 2021: £3.6m) · Gross margin of 84.5% (H1 2021: 84.9%) · EBITDA loss post-investment programme of £(0.3)m (H1 2021: +£0.3m) Operational highlights · Consistent growth in core recurring revenue · Contract wins since period end will contribute to H2 ARR · Resilient gross margins · Continued investment in product development, marketing activity and US opportunity using funds raised · Substantial progress on single-platform strategy Barrie Whipp, Founder and Chairman, commented, "Our focus on high-margin, long-term contracted revenue continues, and we are on track with our key internal metrics. Our single platform strategy should allow us to add further annual recurring revenue in wider vertical and geographic sectors." About the Company Crimson Tide's mpro5 platform allows organisations to complete simple or complex processes and compliance obligations on any modern smart device. The Company's high-margin, long-term contracted revenues model underpins growth in a wide range of vertical and geographic markets. mpro5 is provided as a fully interactive service, including reports, alerting, KPIs and sensor data, as well as integrating with clients' back-end systems. mpro5 quickly embeds itself into our clients' operations. Enquiries: Crimson Tide plc Barrie Whipp / Jacqueline Daniell +44 1892 542444 finnCap Ltd (Nominated Adviser and Broker) Corporate Finance: Julian Blunt / James Thompson Corporate Broking: Andrew Burdis +44 20 7220 0500 Alma PR (Financial PR) Josh Royston +44 7780 901979 Chairman's Statement The half year to 30th June represented a one-year milestone from our fundraise in 2021. The purpose of the raise was to prosecute opportunities across our business, and I am pleased to report good progress in those areas. It is important firstly to highlight mpro5's core enterprise business, which continues to add high-quality, highmargin business on long-term contracts. Our core ARR metric moved ahead well year on year, up 22.7% to £4.4m (H1 2021: £3.6m). Our performance at the revenue line was equally solid, with growth coming from a range of existing, expanding customer requirements and new transactions. Contract wins were particularly pleasing in continental Europe under our Master Services Agreement with Compass Group. Our high margin ensures that much of the revenue translates to cash, with mpro5 revenues bolstering our opportunities to invest in growth. Our bottom line will continue to be impacted in the short term by higher than normal investment expenditure utilising the funds raised in 2021, albeit slightly less than expected in the period with some delayed marketing expenditure and delays in recruitment. Our investment in our "one platform, many apps" strategy is progressing very well. This platform will not only support mpro5 but also future development of our other applications in small business, healthcare and other vertical markets. A new web client will be rolled out in the coming months, followed by a new version of our mpro5 mobile app in Q1 2023. These technologies will fast-track further developments to market, using the latest technologies and a single repository code base for the first time. Our app for small businesses is currently undergoing its first iteration app store release. Extensive feedback has informed the functionality of this release and will flow through into incremental releases in the coming year. We believe the small business market we addressed when we started our mobile solutions will find the app store version compelling. Our experience marketing this application gives us insight into opportunities for mpro5 and our new healthcare app, which is next in line in our one platform, many app strategy. Our business in the United States is now established with four full-time staff in Raleigh, NC. A pipeline has been established, and we are working hard to expand this and close our first contracts. Our US operation is also progressing well with our relationship with Cisco, where we are demonstrating mpro5's IoT capabilities. It is appropriate to mention that two significant contract wins closed in the three weeks following the half year. These contracts have been under discussion for some months and will positively impact the second half and notably the ARR. It is also important to mention that, in August, Jacqueline Daniell assumed the role of Group CEO, and I am very optimistic about further progress under Jacqui's leadership of the executive team. Our focus on high-margin, long-term contracted revenue continues, and we are on track with our key internal metrics. Our single platform strategy should allow us to add further ARR in wider vertical and geographic sectors. Barrie Whipp Founder and Chairman 27 September 2022 Chief Executive's Statement Crimson Tide's performance during the first half of 2022 has really begun to illustrate the business growth we have planned. Although we are still only in the relatively early stages of post-fundraise investment deployment, a lot has been achieved and solid foundations set allowing all areas of the business to effectively scale. Investment in the Development Roadmap has already achieved technology scalability. Working inside a single flexible platform means that we can support new applications for new markets, currently manifested in the mpro5 platform being made available to smaller businesses. Investment in the product means we can offer the features, functionality and usability that our customers want. Our internal teams can work more efficiently and empower users thus also scaling the service element of our offering. Insights and metrics measuring the customer experience of our product and service have long demonstrated loyalty and suggest a brand of world-class potential. This year's growth in revenue, long-term contract commitments and low churn are the recent validations of the value of the product. Continued investment in marketing has resulted in a significant increase in sales pipelines, both in the UK and the US. An initial outbound marketing focus at the beginning of the year launched a digital program of activity, content creation and partner collateral. Later in the year, this was complemented with an inbound approach, resulting in go-to-market strategies for a range of business sectors and territories. The overall effect has seen specific deal activity being directly attributed to marketing investment. The outlook is extremely promising. A focused organisation with a unique product and service combination, a strong pipeline and visibility of revenue means we can be confident about reaching our targets and longer-term ambitions. Jacqueline Daniell Group CEO 27 September 2022 Financial Review Financial indicator Revenue Gross profit EBITDA (Loss)/Profit before tax Annual recurring revenue (ARR) Cash Churn rate Six months ended 30 June 2022 £'000 2,324 1,964 (344) (860) 4,368 3,731 1% Six months ended 30 June 2021 £'000 2,015 1,711 588 286 3,600 6,596 1.4% Year ended 31 December 2021 £'000 4,114 3,483 183 (582) 3,804 5,736 2.4% Revenue Revenue increased by 15.3% compared to the corresponding period of 2021, while Annual Recurring Revenue (ARR) increased by 22.7% to £4.4m. Contracted long-term revenue exceeded 90% of total revenue and revenue churn remained negligible. The geographic split of revenue remains consistent with the prior year, with a UK weighting of 91% of revenue (H1 2021: 92%). Cashflow and liquidity Cash at the period-end was £3.7m (H1 2021: £6.6m). Operating cash flows before movements in working capital for the period was an outflow of £376k (H1 2021: £530k inflow). This outflow is in line with management expectations and the Company's previous communication following the capital fundraise in 2021. The funds were utilised on additional marketing expenditure and territorial expansion in North America to enable further revenue growth. Lease liabilities The company entered into a new office lease agreement at the beginning of 2022. This created a lease liability of £883k with a related Right-of-Use asset. The lease liability will be settled, and the related asset depreciated, over a 5-year period. Intangible assets Software development costs of £771k (H1 2021: £259k) were capitalised during the period under review, while amortisation amounted to £203k (H1 2021: £123k). The value of the capitalised software intangible asset at periodend was £2.8m (H1 2021: £1.8m). Other intangible assets related to goodwill, website development costs and incremental contract costs. Loss before taxation The Company made a loss before taxation of £860k (H1: 2021 £286k profit). The loss was in line with management expectations and arose due to the investments in sales and marketing and territorial expansion in North America as mentioned above. The current market forecast is for the Company to return to profitability in 2024. Earnings per share Basic and diluted loss per share was 0.13p (H1 2021: 0.05p earnings) during the period under review. 16.7 million share options outstanding were not included in the calculation of diluted earnings per share because they are anti-dilutive in terms of IAS 33. Crimson Tide plc Condensed Consolidated Statement of Profit or Loss for the 6 months to 30 June 2022 Unaudited 6 Months ended 30 June 2022 Audited 12 Months ended 31 December 2021 £000 Restated Unaudited 6 Months ended 30 June 2021 £000 Revenue 2,324 2,015 4,114 Cost of Sales (360) (304) (631) Gross Profit 1,964 1,711 3,483 Other income 5 123 142 £000 Operating expenses Operating (loss)/profit (2,313) (344) (1,246) 588 (3,442) 183 Finance costs (21) (12) (10) Depreciation (194) (108) (185) Amortisation (301) (182) (570) (Loss)/Profit before taxation (860) 286 (582) - - (32) (860) 286 (614) Unaudited 6 Months ended 30 June 2022 Unaudited 6 Months ended 30 June 2021 Audited 12 Months ended 31 December 2021 Basic (pence) (0.13) 0.05 (0.10) Diluted (pence) (0.13) 0.05 (0.10) Unaudited 6 Months ended 30 June 2022 £000 Unaudited 6 Months ended 30 June 2021 £000 Audited 12 Months ended 31 December 2021 £000 (860) 286 (614) Exchange differences on translating foreign operations (14) 1 2 Total comprehensive (loss)/profit recognised in the period and attributable to equity holders of parent (874) 287 (612) Taxation (Loss)/Profit for the period attributable to equity holders of the parent (Loss)/Earnings per share Condensed Consolidated Statement of Comprehensive Income for the 6 months to 30 June 2022 (Loss)/Profit for the period Other comprehensive income/(loss) for period: Condensed Consolidated Statement of Financial Position at 30 June 2022 Unaudited As at 30 June 2022 Audited As at 31 December 2021 £000 Restated Unaudited As at 30 June 2021 £000 ASSETS Non-current assets Intangible assets Property, plant & equipment Right-of-use asset Deferred tax asset Total non-current assets 3,928 260 795 4,983 2,959 189 64 32 3,244 3,282 167 36 3,485 Current assets Inventories Trade and other receivables Cash and cash equivalents Total current assets 1,406 3,731 5,137 6 1,038 6,596 7,640 1,079 5,736 6,815 Total assets 10,120 10,884 10,300 1,071 1 136 1,208 741 7 134 882 1,160 5 98 1,263 749 64 - 749 64 - Total liabilities 1,957 946 1,263 Net assets 8,163 9,938 9,037 £000 LIABILITIES Current liabilities Trade and other payables Borrowings Lease liabilities Total current liabilities Non-current liabilities Lease liabilities Total non-current liabilities EQUITY Share capital 657 657 657 Share premium 5,590 5,590 5,590 Other reserves 467 481 481 Reverse acquisition reserve (5,244) (5,244) (5,244) Retained earnings 6,693 8,454 7,553 Total equity 8,163 9,938 9,037 Condensed Consolidated Statement of Changes in Equity Six-month period ended 30 June 2022 (Unaudited) Share capital £000 Share premium £000 Other reserves £000 Reverse acquisition reserve £000 Retained earnings £000 Total £000 Balance at 31 December 2021 657 5,590 481 (5,244) 7,553 9,037 Loss for the period - - - - (860) (860) Translation movement - - (14) - - (14) 657 5,590 467 (5,244) 6,693 8,163 Retained earnings £000 Total £000 8,167 4,007 Balance at 30 June 2022 Six-month period ended 30 June 2021 (Unaudited) Share capital £000 Share premium £000 Other reserves £000 Reverse acquisition reserve £000 Balance at 31 December 2020 457 148 479 (5,244) Shares issued 200 5,442 - - - 5,642 Profit for the period - - - - 286 286 Translation movement - - 2 - 1 3 657 5,590 481 (5,244) 8,454 9,938 Balance at 30 June 2021 Condensed Consolidated Statement of Changes in Equity Year ended 31 December 2021 (Audited) Share capital £000 Share premium £000 Other reserves £000 Reverse acquisition reserve £000 Retained earnings £000 Total £000 Balance at 1 January 2021 457 148 479 (5,244) 8,167 4,007 Shares issued Profit for the period Translation movement 200 - 5,442 - 2 - (614) - 5,642 (614) 2 657 5,590 481 (5,244) 7,553 9,037 Balance at 31 December 2021 Condensed Consolidated Statement of Cash flows For the 6 months to 30 June 2022 Unaudited 6 Months ended 30 June 2022 Restated Unaudited 6 Months ended 30 June 2021 Audited 12 Months ended 31 December 2021 £000 £000 £000 (860) 286 (582) Amortisation of Intangible Assets 301 123 570 Depreciation of property, plant and equipment 103 80 129 Depreciation of right-of-use assets 91 28 56 Unrealised currency translation movement (14) 1 2 3 12 10 (376) 530 185 Cash flows from operating activities (Loss)/Profit before tax Adjustments for: Finance costs Operating cash flows before movement in working capital and provisions Decrease in inventories - - 6 (327) (253) (215) (Decrease)/increase in trade and other payables (89) (166) 253 Cash (utilised)/generated by operations (792) 111 229 Finance costs Net cash (used in)/ generated from operating activities (21) (10) (10) (813) 101 219 Purchases of property, plant and equipment (196) (34) (61) Purchases of other intangible assets (176) - (90) Development expenditure capitalised (771) (259) (964) Net cash used in investing activities (1,143) (293 (1,115) - 5,696 5,642 Increase in trade and other receivables Cash flows from investing activities Cash flows from financing activities Net proceeds from share issues Repayments of borrowings (4) (6) (8) Repayments of lease liability (45) (77) (177) Net cash (used in)/ from financing activities (49) 5,613 (5,457) Net movement in cash and cash equivalents (2,005) 5,421 4,561 Net cash and cash equivalents at beginning of period 5,736 1,175 1,175 Net cash and cash equivalents at end of period 3,731 6,596 5,736 Crimson Tide Plc Notes to the Unaudited Interim Results for the 6 months ended 30 June 2022 1. General information and basis of preparation Crimson Tide plc is a public company, limited by shares, and incorporated and domiciled in the United Kingdom. The Company's shares are publicly traded on the London Stock Exchange's AIM market. The address of its registered office is Brockbourne House, 77 Mt. Ephraim, Tunbridge Wells, Kent, TN4 8BS. Basis of preparation The condensed consolidated interim financial statements ("interim financial statements") have been prepared using accounting policies that are consistent with those applied in the previously published financial statements for the year ended 31 December 2021, which have been prepared in accordance with IFRS as adopted by the UK. The information for the period ended 30 June 2022 has neither been audited nor reviewed and does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The interim financial statements should be read in conjunction with the consolidated financial statements for the year ended 31 December 2021. A copy of the statutory accounts for that period has been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified and did not contain statements under section 498 (2) or (3) of the Companies Act 2006. Going concern The interim financial statements are prepared on the going concern basis. The financial position of the Company, its cash flows and liquidity position are described in the interim financial statement and notes. The Company has the financial resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. 2. Revenue and operating segments The Group has three main regional centres of operation; one in the UK, the others in Ireland and the United States but the Group's resources, including capital, human and non-current assets are utilised across the Group irrespective of where they are based or originate from. The Board is the chief operating decision maker ("CODM"). The CODM allocates these resources based on revenue generation, which due to its high margin nature and the Group's reasonably fixed overheads, in turn drives profitability and cashflow generation. The Board consider it most meaningful to monitor financial results and KPIs for the consolidated Group, and decisions are made by the Board accordingly. In due consideration of the requirements of IFRS 8 Operating Segments, the Board consider segmental reporting by (i) business activity, by turnover, and (ii) region, by turnover to be appropriate. Business activity is best split between (i) the strategic focus of the business, i.e. mobility solutions and the resulting development services that emanate from that, (ii) non-core software solutions, including reselling third party software and related development and support services, and (iii) hardware sales to existing customers. Segment information for the reporting periods is as follows: Unaudited 6 Months ended 30 June 2022 £000 Unaudited 6 Months ended 30 June 2021 £000 Audited 12 Months ended 31 December 2021 £000 2,109 1,837 3,766 215 178 348 2,324 2,015 4,114 Unaudited 6 Months ended 30 June 2022 £000 Unaudited 6 Months ended 30 June 2021 £000 Audited 12 Months ended 31 December 2021 £000 2,123 1,855 3,735 201 160 379 2,324 2,015 4,114 Revenue by business activity Mobility solutions and related development Software consultancy Revenue can be further analysed by geographic reason as follows: Revenue by geographic region UK European Union 3. Intangible assets Enterprise development expenditure Consumer focused development expenditure £000 £000 Website development costs £000 Incremental contract costs Goodwill Total £000 £000 £000 Cost At 1 January 2022 Additions At 30 June 2022 2,937 479 18 742 799 4,975 324 447 74 102 - 947 3,261 926 92 844 799 5,922 Enterprise development expenditure Consumer focused development expenditure £000 £000 Amortisation and impairment At 1 January 2022 - Incremental contract costs Goodwill Total £000 £000 £000 £000 - - (496) - (1,693) (203) - (10) (88) - (301) (1,400) - (10) (584) - (1,994) Carrying amount at 30 June 2022 1,861 926 82 799 3,928 Carrying amount at 30 June 2021 1,778 - - 799 2,959 Charge for the period At 30 June 2022 (1,197) Website development costs 260 382 4. Earnings per share The calculation of the basic earnings per share is based on the profit attributable to ordinary shareholders and the weighted average number of ordinary shares in issue during the period. The calculation of the diluted earnings per share is based on the profit per share attributable to ordinary shareholders and the weighted average number of ordinary shares that would be in issue, assuming conversion of all dilutive potential ordinary shares into ordinary shares. Reconciliations of the profit and weighted average number of ordinary shares used in the calculation are set out below: Unaudited 6 Months ended 30 June 2022 Unaudited 6 Months ended 30 June 2021 Audited 12 Months ended 31 December 2021 Reported (loss)/profit (£000) (860) 286 (614) Reported basic earnings per share (pence) (0.13) 0.05 (0.10) Reported diluted earnings per share (pence) (0.13) 0.05 (0.10) Unaudited Unaudited Audited Earnings per share 6 Months ended 30 June 2022 6 Months ended 30 June 2021 12 Months ended 31 December 2021 No. '000 No. '000 No. '000 657,486 457,486 457,486 - 76,243 138,630 657,486 533,729 596,116 - 291 - 657,486 534,020 596,116 Weighted average number of ordinary shares Shares in issue at start of period Effect of shares issued during the period* Weighted average number of ordinary shares for basic EPS Effect of share options outstanding Weighted average number of ordinary shares for diluted EPS *200 million ordinary shares were issued on 23 April 2021. At 30 June 2022 there were 16,700,000 (30 June 2021: 16,700,000; 31 December 2021: 16,700,000) share options outstanding. These share options were not included in the calculation of diluted earnings per share for the period ended 30 June 2022 and the year ended 31 December 2021 because they are antidilutive in terms of IAS 33. 5. Prior period restatement During the 2021 financial year, it was identified that under IFRS 15, costs that are incremental to obtaining a contract should be capitalised. There was therefore a reclassification applied from prepayments to intangible assets of £246,218 (2020: £357,138). The impact of this had £nil impact on reserves and £nil impact on total assets. This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. 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