Information  X 
Enter a valid email address

Kape Technologies (KAPE)

  Print      Mail a friend

Tuesday 17 September, 2019

Kape Technologies

Half-year Results

RNS Number : 5207M
Kape Technologies PLC
17 September 2019
 

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014

 

17 September 2019

 

Kape Technologies plc

("Kape," the "Company," or the "Group")

 

HALF YEAR RESULTS FOR SIX MONTHS ENDED 30 JUNE 2019

 

Kape Technologies plc (AIM: KAPE), a global cybersecurity and malware protection SaaS business, announces its unaudited results for the six months ended 30 June 2019.

 

Financial highlights

·     Another strong period marked by international expansion and organic growth driving a rise in profitability:

Revenues1 increased 24.2% to $29.9 million (H1 2018: $24.1 million)

Strong growth in recurring revenues to $21.2 million, an increase of 301.5% (H1 2018: $5.3 million)

Adjusted EBITDA2 up 21.3% to $5.8 million (H1 2018: $4.7 million)

Robust balance sheet with cash of $36.4 million as at 30 June 2019 and no debt

Increase of 14.9% in Adjusted Earnings Per Share3 to 2.5 cents (H1 2018: 2.2 cents)

Deferred income increased to $10.9 million (December 2018: $9.5 million)

·     On track to meet full-year expectations

 

Operational highlights

·     Strong progress in transitioning to a SaaS revenue model:

Significant improvement in customer retention ratio to 82% (December 2018: 74%)

Over one million subscribers, up 24% on prior year, supported by continued investment in direct sales and marketing

Expect to deliver $38 million in revenues from existing customers in future financial years, up 27% (December 2018: $30 million)

·     Strategic acquisitions enhancing global capabilities:

Intego materially strengthened the Company's position in the North American market and expands Kape's internet security software capability

ZenMate is highly complementary to CyberGhost, Kape's existing VPN solution, and has strengthened the Company's presence in the German market

$1.7 million in annualised cost savings identified relating to ZenMate

·     Both acquisitions are performing in line with expectations

 

Outlook

·     Significant long-term growth opportunities across target markets

·     Clear delivery plans for organic growth

·     Successful integration of acquisitions has accelerated implementation of the Group's strategy

·     The board remains confident in delivering year on year growth for the current financial year, in line with market expectations

 

Ido Erlichman, Chief Executive Officer of Kape, commented:

 

"We are pleased to report another period of earnings growth. This performance, coupled with the continued expansion of both our user base and SaaS-based model, provides Kape with a strong foundation from which to drive forward. Our results demonstrate the power of our business model as we head into the second half of the year having generated strong momentum.

 

"We have significant ambitions for Kape and having now reached over one million subscribers and increased our retention rate to 82% - one of the highest in the consumer SaaS space, we firmly believe much more is possible.

 

"In the near-term, we plan to further drive sustainable growth and profitability through ongoing investment in R&D, ensuring we remain at the forefront of the digital privacy arena and address consumers' ever-increasing concerns. The progress that Kape has demonstrated in the first six months of 2019 has been key in underpinning its ongoing investment proposition."

 

 

An audio webcast of Kape's results presentation is now available via the following link: http://bit.ly/KAPEH119webcast

 

 

1Revenues from continuing operations only

2 Adjusted EBITDA from continuing operations only. Adjusted EBITDA is a non GAAP measure and a company specific measure which excludes other operating income and expenses which are considered to be one off and non-recurring in nature.

3 Adjusted EPS was calculated from the earnings per share from continuing operations adding back interest, depreciation, share-based payments and non-recurring costs 

 

Enquiries:

 

Kape Technologies plc

Ido Erlichman, Chief Executive Officer

Moran Laufer, Chief Financial Officer

 

via Vigo Communications

Shore Capital (Nominated Adviser & Broker)

Mark Percy / Toby Gibbs / James Thomas

 

+44 (0)20 7408 4090

N+1 Singer (Joint Broker)

Harry Gooden / George Tzimas

 

+44 (0) 20 7496 3000

Vigo Communications (Financial Public Relations)

Jeremy Garcia / Antonia Pollock

[email protected]

+44 (0)20 7390 0237

 

 

About Kape

Kape is a leading 'privacy-first' digital security software provider to consumers. Through its range of privacy and security products, Kape focusses on protecting consumers and their personal data as they go about their daily digital lives.

 

To date, Kape has over 1 million paying subscribers, supported by a team of over 300 people across eight locations worldwide. Kape has a proven track record of revenue and EBITDA growth, underpinned by a strong business model which leverages our digital marketing expertise.

 

Through our subscription-based platform, Kape has fast established a highly scalable SaaS-based operating model, geared towards capitalising on the vast global consumer digital privacy market.

www.kape.com

Twitter LinkedIn

 

Chief Executive Officer's review

 

Overview

 

In the first half of 2019, we have seen strong demand for our core software products, demonstrated by the 24.2% increase in the Group's revenue to $29.9 million (H1 2018: $24.1 million from continued operations), as well as a 21.3% increase in Adjusted EBITDA to $5.8 million (H1 2018: $4.7 million from continued operations).

 

With the growing need for consumers globally to control and protect their information online, Kape continues to capitalise on the increasing demand for privacy-first online security products. The scope and quality of our software suite, our ability to drive individuals to our products and our capability to retain users, has resulted in Kape securing a growing proportion of what is a relatively nascent market.

 

The Group's performance continues to benefit from our digital marketing expertise and technologies, which sets us apart from many of our peers. Notably, the performance of both Intego and ZenMate has improved in the first half, following completion of their integration, which we expect to continue as we further accelerate our digital marketing efforts for these solutions. Additionally, CyberGhost and ZenMate are experiencing increased brand awareness, which is driving organic user acquisition, providing a complementary growth engine.

 

Our growth is testament to our ability to identify, acquire and then integrate acquisition targets in order to generate heightened performance from these businesses, with $1.7 million in annualised cost savings also achieved in relation to ZenMate since its acquisition.

 

Key Performance Indicators

 

In the first six months of the year, Kape has achieved significant growth against its KPIs, which we set out last year in order to focus the Group on profitability, growth and earnings predictability.

 

 

 

 

30 Jun

2019

 

31 Dec

2018

Paying users (thousands)

 

 

1,215

 

1,101

Subscriptions (thousands)

 

 

1,027

 

830

Retention rate

 

 

82%

 

74%

Deferred income ($'000)

 

 

10,931

 

9,514

 

 

 

 

 

 

 

 

 

Six months ended 30 June 2019

(unaudited)

 

Six months ended 30 June 2018

(unaudited)

Adjusted operating cash flow:

 

 

 

 

 

Attributable to current year ($'000)

 

 

7,297

 

6,359

Investment in growth

 

 

(7,094)

 

(3,427)

Adjusted operating cash flow ($'000)

 

 

203

 

2,932

 

The stand-out achievement for the Group in this period has been the significant improvement in our user retention rate to 82%, which is a key focus for Kape for 2019, as it underpins the quality of our earnings and the Group's ability to generate revenues for future periods. We believe the improvement in retention is largely as a result of our constant focus on R&D and product development, ensuring our solutions are the best available, and we are proud that our customers are choosing to consistently renew our products year after year. Our retention rate is now one of the highest amongst consumer-focused SaaS providers.

 

The first six months of 2019 also saw a 23.7% increase in our subscription user base, which, alongside our improving retention rate, means the Group is very well-placed to achieve sustained growth in the years to come. This has already been evidenced by the Group generating over $10.9 million in deferred income in the period as we continue to enhance Kape's ongoing revenue visibility.

 

Product development

 

We continue to invest in R&D, with 44% of our workforce (excluding staff in our customer support centre in the Philippines) allocated to R&D and the Group's malware detection capabilities, to ensure that our solutions are consistently at the forefront of the digital privacy space. This enables us to fully capitalise on the significant and growing market opportunity that exists.

 

As consumers' digital lives continue to expand, and their online privacy needs as a result, it is critical that our products' capabilities broaden simultaneously.

 

Development of our existing product stack has been key in the first half of 2019. Most notable is the significant progress we have made with ZenMate, which the Group acquired in October 2018. This included the launch of the ZenMate Ultimate app, the most comprehensive update of ZenMate's VPN platform to-date, which adopts a new infrastructure with central developments including augmented location features, server security improvements, a mobile connection checker and faster speeds. In addition, Kape launched ZenMate Pulse, a comprehensive web firewall extension which protects against pop-up ads, trackers, phishing schemes, malware and malvertising. Not only does ZenMate Pulse protect against these threats, it also enables the user to understand specifically what the types of threats are.

 

In addition, Kape's macOS security analyst team discovered number of important malware security threats for Apple users: OSX/CrescentCore malware, which installs malicious Safari extension software, and OSX/Linker, that seeks to capitalise on existing macOS Gatekeeper security flaws. Kape's users are now fully protected against both.

 

Outlook

 

We look forward to continuing to execute on the board's strategy of leveraging Kape's key growth drivers:

 

·     High-growth target market: capturing a larger piece of the consumer digital privacy segment;

 

·     R&D capabilities: leveraging these and continuing to invest to ensure Kape's products remain at the forefront of the market;

 

·     Proprietary digital distribution and online marketing expertise: helping maximise our product sales; and

 

·     Strong business model: giving us the ability to generate high-quality recurring revenues by growing our user base and bettering our user retention.

 

We remain focused on driving organic growth initiatives across the business, as well as evaluating select earnings enhancing acquisitions which either add product capabilities or extend our market reach.

 

The board remains very confident in delivering growth in the full year 2019 and in the years to come, in-line with market expectations.

 

 

Ido Erlichman

Chief Executive Officer

16 September 2019

 

Chief Financial Officer's review

 

 

Overview

 

Total reported revenues from continued operations in the first half of 2019 increased by 24.2% to $29.9 million (H1 2018: $24.1 million from continued activities). Segmental results increased by 28.2% to $14.7 million (H1 2018: $11.5 million from continued activities) driven by an increase in direct marketing expenses of $11.1 million (H1 2018: $9.8 million) and strong performance from the Group's user acquisition campaigns. Adjusted EBITDA increased by 21.3% to $5.8 million (H1 2018: $4.7 million).

 

Adjusted cash flow from operations attributable to the current financial period was $7.3 million (H1 2018: $6.4 million), which represents cash conversion of 127%. In addition, during the period $7.1 million was reinvested in user acquisition costs that will be expensed in future periods (H1 2018: $3.4 million). When including this investment, adjusted cash flow from operations decreased to $0.2 million (H1 2018: $2.9 million). The Group's balance sheet remains strong with a cash balance of $36.4 million at 30 June 2019 (31 December 2018: $40.4 million) and no debt.

 

Segmental result

 

The segmental result has been calculated using revenue less costs directly attributable to that segment. Cost of sales comprises payment processing fees and infrastructure costs of the Group's VPN products. Direct sales and marketing costs related to user acquisition expenditure.

 

 

 

 

 

 

 

App distribution

 

 

H1 2019

 

H1 2018

 

 

 

$'000

 

$'000

Revenue

 

 

29,933

 

24,108

Cost of sales

 

 

(4,163)

 

(2,812)

Direct sales and marketing costs

 

 

(11,071)

 

(9,829)

Segment result

 

 

14,699

 

11,467

Segment margin %

 

 

49.1

 

47.6

 

On 26 July 2018, the Group disposed of its Media division, which represented a separate reportable segment in the prior year and is presented as a discontinued operation. As a result, the Group's management reporting system includes one reportable segment during the period ended 30 June 2019, which comprised the Group's own software and SaaS products and distribution platform - App distribution.

 

Adjusted EBITDA from continued operations

 

Adjusted EBITDA for the six months to 30 June 2019 was $5.8 million (H1 2018: $4.7 million). Adjusted EBITDA is a non-GAAP company specific measure which is considered to be a key performance indicator for the Group. It excludes share-based payment charges and expenses, which are considered to be one-off and non-recurring in nature and are excluded from the following analysis:

 

 

 

 

 

 

 

 

 

 

H1 2019

 

H1 2018

 

 

 

$'000

 

$'000

Revenue

 

 

29,933

 

24,108

Cost of sales

 

 

(4,163)

 

(2,812)

Direct sales and marketing costs

 

 

(11,071)

 

(9,829)

Segment result

 

 

14,699

 

11,467

 

 

 

 

 

 

Indirect sales and marketing costs

 

 

(3,687)

 

(2,507)

Research and development costs

 

 

(1,384)

 

(803)

Management, general and administrative cost

 

 

(3,872)

 

(3,411)

Adjusted EBITDA

 

 

5,756

 

4,746

EBITDA margin %

 

 

19.2

 

19.7

 

Operating profit

 

A reconciliation of Adjusted EBITDA to operating profit is provided as follows:

 

 

 

 

 

 

 

 

 

 

H1 2019

 

H1 2018

 

 

 

$'000

 

$'000

Adjusted EBITDA

 

 

5,756

 

4,746

Employee share-based payment charge

 

 

(989)

 

(187)

Exceptional and non-recurring costs

 

 

(519)

 

(721)

Depreciation and amortisation

 

 

(2,840)

 

(1,696)

Operating profit

 

 

1,408

 

2,142

 

Exceptional and non-recurring costs in H1 2019 comprised non-recurring staff costs of $0.4 million (H1 2018: $0.5 million) related to the restructuring of Intego and Zenmate, and $0.1 million (H1 2018: $0.1 million) for professional services for acquisitions and restructuring expenses. The increase in employee share-based payment charge is due to a share award grant made in August 2018. The increase in depreciation and amortisation derives from amortisation charges of acquired intangible assets that were added through the acquisitions of Intego and Zenmate in July and October 2018 respectively.

 

Profit before tax

 

Profit before tax was $1.3 million (H1 2018: $1.8 million). Finance costs of $0.4 million comprise mainly of foreign exchange differences derived from the Company's subsidiaries. The finance costs are offset by $0.3 million interest income generated from short-term deposits and deferred consideration assets.

 

Profit after tax

 

Profit after tax was $0.9 million (H1 2018: $1.5 million). The tax charge derives mainly from Group subsidiaries' residual profits.

 

Cash flow

 

 

 

 

 

 

 

 

 

H1 2019

 

H1 2018

 

 

 

$'000

 

$'000

Cash flow/(outflow) from operations

 

 

(350)

 

2,264

Exceptional and non-recurring cash outflow

 

 

553

 

721

Net cash flow from discontinued operating activities

 

 

-

 

(53)

Adjusted cash flow from operations

 

 

203

 

2,932

% of Adjusted EBITDA

 

 

4%

 

62%

Excluding increase of deferred contract costs

 

 

 

7,094

 

3,427

Adjusted Cash flow from operations attributable to current year

 

 

7,297

 

6,359

% of Adjusted EBITDA

 

 

127%

 

134%

 

Cash outflow from operations was $0.3 million (H1 2018: $2.3 million cash inflow). Adjusted cash flow from operations after adding back one-off payments was $0.2 million (H1 2018: $2.9 million). The decrease in operating cash flow is due to an increase in user acquisition investment attributable to future periods to $7.1 million (H1 2018: $3.4 million). Excluding the investment, adjusted operating cash flow attributable to the current financial period increased to $7.3 million (H1 2018: $6.4 million), which represents a cash conversion of 127%.

 

Net tax payments in the period were $0.8 million (H1 2018: $0.3 million). The increase was mainly due to prepayments in France and the United States by Group subsidiaries related to Intego.

 

Cash spent in the period on capital expenditure of $1.4 million (H1 2018: $0.9 million), comprises capitalised development costs and fixed asset purchases.

 

Cash outflows from financing activities of $1.4 million (H1 2018: $7.7 million) included a final instalment of $0.9 million (H1 2018: $0.5 million) for the repurchase of CyberGhost's founder's share-options, and payments of leases of $0.6 million (H1 2018: $0.6 million). Cash inflows from financing activities included $0.1 million (H1 2018: $0.1 million) of proceeds from the exercise of employee share options.

 

As a result, net cash outflow from investing and financing activities was $2.8 million (H1 2018: $8.6 million).

 

Financial position

 

At 30 June 2019, the Group had cash of $36.4 million (31 December 2018: $40.4 million), net assets of $74.9 million (31 December 2018: $72.9 million) and is debt free. At 30 June 2019, trade receivables and contract assets were $3.2 million (31 December 2018: $3.6 million) which represented 21 days outstanding (31 December 2018: 13 days).

 

 

Moran Laufer

Chief Financial Officer

16 September 2019

 

 

Consolidated statement of comprehensive income

For the six months ended 30 June 2019

 

 

 

Six months ended 30 June 2019

(unaudited)

 

Six months ended 30 June 2018

(unaudited)

 

Note

 

$'000

 

$'000

 

 

 

 

 

 

Revenue

3

 

29,933

 

24,108

Cost of sales

 

 

(4,163)

 

(2,812)

Gross profit

 

 

25,770

 

21,296

 

 

 

 

 

 

Selling and marketing costs

 

 

(14,827)

 

(12,572)

Research and development costs

 

 

(1,547)

 

(908)

Management, general and administrative costs

 

 

(5,148)

 

(3,978)

Depreciation and amortisation

 

 

(2,840)

 

(1,696)

Total operating costs

5

 

(24,362)

 

(19,154)

 

 

 

 

 

 

Operating profit

5

 

1,408

 

2,142

 

 

 

 

 

Adjusted EBITDA

5

 

5,756

 

4,746

 

 

 

 

 

 

Employee share-based payment charge

 

 

(989)

 

(187)

Exceptional and non-recurring costs

5

 

(519)

 

(721)

Depreciation and amortisation

 

 

(2,840)

 

(1,696)

Operating profit

 

1,408

 

2,142

 

 

 

 

 

 

Finance income

 

 

317

 

355

Finance costs

 

 

(420)

 

(676)

Profit before taxation

 

 

1,305

 

1,821

Tax charge

 

 

(369)

 

(313)

Profit from continuing operations

 

 

936

 

1,508

 

 

 

 

 

 

Loss from discontinued operations (attributable to equity holders of the company)

9

 

-

 

(245)

Profit for the period

 

 

936

 

1,263

Other comprehensive income:

 

 

 

 

 

Items that may be reclassified to profit and loss:

 

 

 

 

 

Foreign exchange differences on translation of foreign operations

 

 

6

 

84

Total comprehensive profit for the period

 

 

942

 

1,347

Total profit for the period attributable to:

 

 

 

 

 

Owners of the parent

 

 

936

 

1,209

Non-controlling interests

 

 

-

 

54

Total comprehensive income attributable to:

 

 

 

 

 

Owners of the parent

 

 

942

 

1,293

Non-controlling interests

 

 

-

 

54

 

 

 

 

 

 

Total profit/ (loss) for the period attributable to Owners of the parent:

 

 

 

 

 

Continuing operations

 

 

936

 

1,508

Discontinuing operations

 

 

-

 

(299)

 

 

 

936

 

1,209

Earnings per share from continuing operations attributable to the ordinary equity holders of the company:

 

 

 

 

 

 

Basic earnings per share (cents)

7

 

0.7

 

1.1

Diluted earnings per share (cents)

7

 

0.6

 

1.1

 

 

 

 

 

 

Earnings per share attributable to the ordinary equity holders of the company:

 

 

 

 

 

 

Basic earnings per share (cents)

7

 

0.7

 

0.9

Diluted earnings per share (cents)

7

 

0.6

 

0.9

 

 

*Adjusted EBITDA is a non GAAP measure and a company specific measure which is earnings before interest, tax, depreciation, amortisation share based payment charges and exceptional and non-recurring costs.

Consolidated statement of financial position

As at 30 June 2019

 

 

 

30 June

2019

(unaudited)

 

31 December 2018

(audited)

 

Note

 

$'000

 

$'000

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

Intangible assets

 

 

35,301

 

36,265

Property, plant and equipment

 

 

810

 

713

Right-of-use assets

 

 

1,393

 

1,769

Deferred consideration

 

 

1,026

 

934

Deferred contract costs

 

 

13,185

 

7,196

Deferred tax asset

 

 

756

 

728

 

 

 

52,471

 

47,605

Current assets

 

 

 

 

 

Software license inventory

 

 

112

 

52

Deferred contract costs

 

 

6,321

 

5,216

Deferred consideration

 

 

379

 

323

Trade and other receivables

 

 

5,777

 

6,101

Cash and cash equivalents

 

 

36,433

 

40,405

 

 

 

49,022

 

52,097

Total assets

 

 

101,493

 

99,702

 

 

 

 

 

 

Equity

 

 

 

 

 

Share capital

6

 

15

 

15

Additional paid in capital

 

 

131,165

 

131,091

Foreign exchange differences on translation of foreign operations

 

 

865

 

859

Retained earnings

 

 

(57,066)

 

(58,991)

Equity attributable to equity holders of the parent

 

 

74,979

 

72,974

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Contract liabilities

 

 

2,828

 

2,165

Deferred tax liabilities

 

 

3,019

 

3,125

Long term lease liabilities

 

 

685

 

816

Deferred consideration

 

 

160

 

143

 

 

 

6,692

 

6,249

Current liabilities

 

 

 

 

 

Trade and other payables

 

 

10,760

 

11,131

Contract liabilities

 

 

8,103

 

7,349

Short term lease liabilities

 

 

927

 

1,103

Deferred consideration

 

 

32

 

896

 

 

 

19,822

 

20,479

Total equity and liabilities

 

 

101,493

 

99,702

 

Consolidated statement of cash flows

For the six months ended 30 June 2019

 

 

Six months ended 30 June 2019

(unaudited)

 

Six months ended 30 June 2018

(Unaudited)

 

 

$'000

 

$'000

Cash flow from operating activities

 

 

 

 

Profit for the period after taxation

 

936

 

1,263

Adjustments for:

 

 

 

 

Amortisation of intangible assets

 

2,049

 

1,088

Depreciation of Right-to-use assets

 

628

 

625

Depreciation of property, plant and equipment

 

163

 

146

Loss on sale of property, plant and equipment

 

37

 

40

Tax charge

 

369

 

444

Interest Income

 

(317)

 

(352)

Interest expenses

 

37

 

194

Share based payment charge

 

989

 

187

Interest received

 

169

 

352

Unrealised foreign exchange differences

 

39

 

75

Operating cash flow before movement in working capital

 

5,099

 

4,062

Decrease in trade and other receivables

 

321

 

3,663

Increase in software licences inventory

 

(60)

 

(82)

Decrease in trade and other payables

 

(33)

 

(2,375)

Increase in deferred contract costs

 

(7,094)

 

(3,427)

Increase in contract liabilities

 

1,417

 

423

Cash flow from operations

 

(350)

 

2,264

Tax paid net of refunds

 

(839)

 

(345)

Cash (used)/ generated from operations

 

(1,189)

 

1,919

 

 

 

 

 

Cash flow from investing activities

 

 

 

 

Purchases of property, plant and equipment

 

(302)

 

(99)

Sale of property, plant and equipment

 

6

 

-

Intangible assets acquired

 

(1)

 

(5)

Capitalisation of development costs

 

(1,084)

 

(772)

Net cash used in investing activities

 

(1,381)

 

(876)

 

 

 

 

 

Cash flow from financing activities

 

 

 

 

Repurchase of share-based consideration

 

(880)

 

(475)

Dividend paid

 

-

 

(6,763)

Payment of leases

 

(591)

 

(554)

Exercise of options by employees

 

74

 

49

Net cash used in financing activities

 

(1,397)

 

(7,743)

Net decrease in cash and cash equivalents

 

(3,967)

 

(6,700)

 

 

 

 

 

Revaluation of cash due to changes in foreign exchange rates

 

(5)

 

(130)

Cash and cash equivalents at beginning of year

 

40,405

 

69,502

Cash and cash equivalents at end of year

 

36,433

 

62,672

 

Notes

 

1.   General information

 

The financial information set out in this document is for Kape Technologies plc (the "Company") and its subsidiary undertakings (together the "Group") in respect of the six months ended 30 June 2019.

 

Kape is a leading 'privacy-first' digital security software provider to consumers. Through its range of privacy and security products, Kape focusses on protecting consumers and their personal data as they go about their daily digital lives.

 

To date, Kape has over one million paying subscribers, supported by a team of over 300 people across eight locations worldwide. Kape has a proven track record of revenue and EBITDA growth, underpinned by a strong business model which leverages its digital marketing expertise. Through its subscription based platform, Kape has fast established a highly scalable SaaS-based operating model, geared towards capitalising on the vast global consumer digital privacy market.

 

The Board of Directors approved this interim financial information on 16 September 2019.

 

2.   Basis of preparation

 

This interim consolidated financial information has been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted for use in the EU. They do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 31 December 2018 Annual Report. The financial information for the half years ended 30 June 2019 and 30 June 2018 does not constitute statutory accounts.

 

The annual financial statements of Kape Technologies Plc ('the group') are prepared in accordance with IFRS as adopted by the European Union. The comparative financial information for the year ended 31 December 2018 included within this report does not constitute the full statutory Annual Report for that period. The statutory Annual Report and Financial Statements for 2018 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statements for the year ended 31 December 2018 was unqualified and did not draw attention to any matters by way of emphasis.

 

The Group has applied the same accounting policies and methods of computation in its interim consolidated financial statements as in its 2018 annual financial statements including the early adoption of IFRS16, except for those that relate to new standards and interpretations effective for the first time for periods beginning on (or after) 1 January 2019, and are adopted in the 2019 financial statements.

 

IFRIC 23 'Uncertainty over Income Tax Positions' is effective for annual periods beginning on or after 1 January 2019. IFRIC 23 clarifies how to recognise and measure current and deferred income tax assets and liabilities when there is uncertainty over income tax treatments. When there is uncertainty over income tax treatments. IFRIC 23 does not have a significant impact on the amounts recognised in the Group's consolidated financial statements.

 

After making enquiries, the directors have concluded that the Group has adequate resources to continue operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the half-yearly consolidated unaudited financial statements.

 

3.   Revenue disaggregation of revenue

 

The following table presents our revenues disaggregated by the timing of revenue recognition in accordance with our reporting segments:

 

 

Six months ended 30 June 2019

(unaudited)

$'000

Six months ended 30

June 2018

(Unaudited)

$'000

Revenue recognised over a period

10,058

 

6,149

 

Revenue recognised at a point in time

19,875

 

17,959

 

Total

29,933

 

24,108

 

 

4.   Segmental information

 

Segment revenues and results

On 26 July 2018, the Group disposed of its Media division, which represented a separate reportable segment in the prior year, and is presented as a discontinued operation. As a result, the Group management reporting system includes one reportable segment during the period ended June 30, 2019 which comprised the Group's own software and SaaS products and distribution platform.

 

Six months ended 30 June 2019

 

App distribution

 

 

Total

 

 

$'000

 

$'000

 

 

 

 

 

Revenue

 

 29,933

 

 29,933

Cost of sales

 

 (4,163)

 

 (4,163)

Direct sales and marketing costs

 

 (11,071)

 

 (11,071)

Segment result

 

14,699

 

14,699

Central operating costs

 

 

 

(8,943)

Adjusted EBITDA (note 5)

 

 

 

5,756

Depreciation and amortisation

 

 

 

(2,840)

Employee share-based payment charge

 

 

 

(989)

Exceptional and non-recurring costs

 

 

 

(519)

Operating profit

 

 

 

1,408

Finance income

 

 

 

 317

Finance costs

 

 

 

(420)

Profit before tax

 

 

 

1,305

Taxation

 

 

 

(369)

Profit from continuing operations

 

 

 

936

Loss from discontinued operations (attributable to equity holders of the company)

 

 

 

-

 

Profit for the period

 

 

 

936

 

 

Six months ended 30 June 2018

 

App distribution

 

 

Media

 

 

Total

 

 

$'000

 

 

$'000

 

$'000

 

 

 

 

 

 

 

 

Revenue

 

 24,108

 

 

-

 

 24,108

Cost of sales

 

 (2,812)

 

 

-

 

 (2,812)

Direct sales and marketing costs

 

 (9,829)

 

 

-

 

 (9,829)

Segment result

 

11,467

 

 

-

 

11,467

Central operating costs

 

 

 

 

 

 

(6,721)

Adjusted EBITDA (note 5)

 

 

 

 

 

 

4,746

Depreciation and amortisation

 

 

 

 

 

 

(1,696)

Employee share-based payment charge

 

 

 

 

 

 

(187)

Exceptional and non-recurring costs

 

 

 

 

 

 

(721)

Operating profit

 

 

 

 

 

 

2,142

Finance income

 

 

 

 

 

 

 355

Finance costs

 

 

 

 

 

 

(676)

Profit before tax

 

 

 

 

 

 

1,821

Taxation

 

 

 

 

 

 

(313)

Profit from continuing operations

 

 

 

 

 

 

1,508

Loss from discontinued operations (attributable to equity holders of the company)

 

 

 

 

(245)

 

 

(245)

 

Profit for the period

 

 

 

 

 

 

1,263

 

5.   Operating Profit

 

Adjusted EBITDA

Adjusted EBITDA is calculated as follows:

 

 

 

Six months ended 30 June 2019

 

Six months ended 30

June 2018

 

 

 

$'000

 

$'000

 

 

 

 

 

 

Operating profit

 

 

1,408

 

2,142

Depreciation and amortisation

 

 

2,840

 

1,696

Employee share-based payment charge

 

 

989

 

187

Exceptional and non-recurring costs:

 

 

 

 

 

      Non-recurring staff and exceptional costs

 

 

519

 

721

Adjusted EBITDA

 

 

5,756

 

4,746

 

Operating costs

Operating costs are further analysed as follows:

 

Six months ended 30 June 2019

Adjusted

$'000

Six months ended 30 June 2019

Total

$'000

 

Six months ended 30 June 2018

Adjusted

$'000

Six months ended 30 June 2018

Total

$'000

 

 

 

 

 

 

Direct sales and marketing costs

11,071

11,071

 

9,829

9,829

Indirect sales and marketing costs

3,687

3,756

 

2,507

2,743

Selling and marketing costs

14,758

14,827

 

12,336

12,572

Research and development costs

1,384

1,547

 

803

908

Management, general and administrative cost

3,872

5,148

 

3,411

3,978

Depreciation and amortisation

1,281

2,840

 

976

1,696

Total operating costs

21,295

24,362

 

17,526

19,154

 

Adjusted operating costs exclude share based payment charges, exceptional and non-recurring costs, amortisation of acquired intangible assets and other operational losses from the disposal of fixed assets.

 

6.   Shareholder's equity

 

Ordinary share capital as at 30 June 2019 amounted to $14,850 (30 June 2018: $14,850; 31 December 2018: $14,850).

 

The number of shares in issue as at 30 June 2019 was 148,496,073 (30 June 2018: 148,496,073; 31 December 2018: 148,496,073).

 

As at 30 June 2019, the Company held in treasury a total of 4,390,442 ordinary shares of $0.0001 (30 June 2018: 6,561,685; 31 December 2018: 4,476,153). During the six months ended 30 June 2019, 85,111 ordinary shares of $0.0001 were transferred out of treasury to satisfy the exercise of options by the Company employees (30 June 2018: 88,563).

 

7.   Earnings per share

 

Basic profit (loss) per share is calculated by dividing the profit (loss) attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

 

 

 

 

Six months ended 30 June 2019

 

Six months ended 30 June 2018

 

 

 

cents

 

cents

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

From continuing operations

 

 

0.7

 

1.1

from discontinued operations

 

 

-

 

(0.2)

Total basic earnings per share

 

 

0.7

 

0.9

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

From continuing operations

 

 

0.6

 

1.1

from discontinued operations

 

 

-

 

(0.2)

Total diluted earnings per share

 

 

0.6

 

0.9

 

 

 

 

 

 

Adjusted basic

 

 

2.6

 

2.2

Adjusted diluted

 

 

2.5

 

2.2

 

Adjusted earnings per share is a non-GAAP measure and therefore the approach may differ between companies. Adjusted earnings have been calculated as follows:

 

 

 

 

Six months ended 30 June 2019

 

Six months ended 30 June 2018

 

 

 

$'000

 

$'000

 

 

 

 

 

 

Profit/(Loss) for the period

 

 

936

 

1,263

 

 

 

 

 

 

Post tax adjustments:

 

 

 

 

 

Employee share-based payment charge

 

 

1,010

 

187

Exceptional and non-recurring costs

 

 

416

 

662

Amortisation on acquired intangible assets

 

 

1,244

 

774

Loss from discontinued operations

 

 

-

 

245

Adjusted profit for the year

 

 

3,606

 

3,131

 

 

 

 

Number

 

Number

Denominator - basic:

 

 

 

 

 

Weighted average number of equity shares for the purpose of earnings per share

 

 

142,285,061

 

141,869,089

 

 

 

 

 

 

Denominator - diluted

 

 

 

 

 

Weighted average number of equity shares for the purpose of diluted earnings per share

 

 

145,512,872

 

142,216,068

 

 

 

 

 

 

 

The diluted denominator has not been used where this has anti-dilutive effect.

 

The difference between weighted average number of Ordinary shares used for basic earnings per share and the diluted earnings per share is 3,227,811 (H1 2018: 346,979) being the effect of all potentially dilutive Ordinary shares derived from the number of share options granted to employees.

 

8.   Related party transactions

 

The Group is controlled by Unikmind Holdings Limited, registered in Isle of Man, which owns 72.73% of the Company's shares. Mr. Teddy Sagi is the sole ultimate beneficiary of Unikmind Holdings Limited.

 

During the period the following transactions were carried out with related parties:

 

 

Six months ended 30 June 2019

 

Six months ended 30 June 2018

 

$'000

 

$'000

 

 

 

 

Revenue from common controlled company

-

 

86

Technical support services to end customers and Administration services provided by common controlled company

(165)

 

(1,880)

Development services provided by common controlled company

(30)

 

-

Payment processing services provided by common controlled company

(170)

 

(170)

Amortisation of Right-to-use assets with common controlled companies

(414)

 

(372)

Interest expenses from Lease liabilities to common controlled companies

(35)

 

(39)

 

(814)

 

(2,375)

 

9.   Discontinued operation

 

On 26 July 2018, the Group sold the Media division to Ecom Online Ltd. As at the sale date, the Media division included Clearvelvet Trading Limited ("Clearvelvet") and Intangible assets of the Media CGU. This sale is in-line with the Company's strategy to develop and distribute its own cybersecurity products.

 

10.   Cautionary statement

 

This document contains certain forward-looking statements relating to Kape Technologies plc ('the Group'). The Group considers any statements that are not historical facts as "forward-looking statements". They relate to events and trends that are subject to risk and uncertainty that may cause actual results and the financial performance of the Group to differ materially from those contained in any forward-looking statement. These statements are made by the directors in good faith based on information available to them and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

 


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. For further information, please contact [email protected] or visit www.rns.com.
 
END
 
 
IR LLFSDADIRLIA

a d v e r t i s e m e n t