Annual Report 2023
2 | Strategic Report | Contents | 3 |
Contents
01
Strategic
Report
02
Corporate Governance
03
Financial Statements
Highlights of the Year | 05 |
Chairman's Statement | 08 |
Chief Executive's Review | 10 |
Principal Risks & Uncertainties | 20 |
Financial Review | 24 |
Sustainability Report | 28 |
Board of Directors | 36 |
Chairman's Statement on Corporate Governance | 38 |
Audit Committee Report | 44 |
Remuneration Committee Report | 47 |
Directors' Report | 53 |
Independent Auditors' Report | 56 |
Consolidated Statement of Total Comprehensive Income | 64 |
Consolidated Statement of Financial Position | 65 |
Company Statement of Financial Position | 66 |
Consolidated Statement of Changes in Equity | 67 |
Company Statement of Changes in Equity | 68 |
Consolidated Statement of Cash Flows | 69 |
Notes to the Financial Statements | 70 |
04 Strategic Report | Eckoh Annual Report 2023
Strategic Report
Eckoh plc (AIM: ECK), the global provider of Customer Engagement Data Security Solutions, is pleased to announce full year audited results for the year ended 31 March 2023.
05
Highlights of the Year
REVENUE UK&I and ROW REVENUE
£38.8m £21.3m
Up 22% from FY22
Up 10% on FY22
UK&I and | NA | NORTH AMERICA REVENUE | ||||||||
ROW 55% | 45% | |||||||||
$Up 21.3m | ||||||||||
25% from FY22 | ||||||||||
TOTAL | NET | |||||||||
CONTRACTED | ||||||||||
BUSINESS | CASH | |||||||||
£34.5m | £5.7m | |||||||||
GROUP | ||||||||||
NORTH AMERICA SECURE PAYMENTS | ANNUAL | |||||||||
ANNUAL RECURRING REVENUE | RECURRING | |||||||||
$15.9m | ||||||||||
REVENUE | Up 18% | |||||||||
Up 34% | £30.4m | |||||||||
£7.7m | EARNINGS | |||||||||
ADJUSTED | ||||||||||
ADJUSTED | 48% | PER SHARE | 56% | |||||||
OPERATING | per | |||||||||
PROFIT | pence | |||||||||
Up from FY22 | 2.09share Up from FY22 |
UK&I and ROW - UK&I and Rest of World NA - North America
086 Strategic Report | Highlights of the Year
Highlights of the Year
709
Financial highlights | Strategic highlights |
FY23 | FY22 | Change | |||
Revenue | 38.8 | 31.8 | +22% | ||
Gross profit | 31.2 | 25.4 | +23% | ||
North America Secure Payments ARR ($m)1 | 15.9 | 11.9 | +34% | ||
Total ARR2 | 30.4 | 25.8 | +18% | ||
Adjusted EBITDA3 | 9.4 | 6.8 | +38% | ||
Adjusted operating profit4 | 7.7 | 5.2 | +48% | ||
Profit before taxation | 5.0 | 2.3 | +117% | ||
Basic earnings pence per share | 1.58 | 0.59 | +167% | ||
Adjusted diluted earnings pence per share5 | 2.09 | 1.34 | +56% | ||
Net cash | 5.7 | 2.8 | +102% | ||
Proposed final dividend (pence) | 0.74 | 0.67 | +10% | ||
Total contracted business6 | 34.5 | 22.5 | +53% | ||
New contracted business7 | 14.4 | 10.8 | +33% | ||
- Revenue for the year increased by 22% to £38.8 million (FY22: £31.8 million) and at constant exchange rates by 16%, driven by organic growth and the full year impact from the acquisition of Syntec in December 2021.
- Adjusted operating profit4 up 48% to £7.7m, driven by sales growth, increased cross-selling, operational leverage, and a £0.5m favourable impact from FX movements.
- Growth in adjusted diluted earnings per share demonstrates good organic growth from the underlying business combined with the impact of the earnings enhancing acquisition of Syntec in December 2021.
- Excellent performance from North American Data Security Solutions, where we have the largest addressable market and a significant opportunity for continued strong growth:
- North America Security Solutions ARR1 up 34% and revenue up 25%
- Recurring revenue increased 54% driven by ongoing cloud transition and successful contract renewals.
- Refreshed go-to-market strategy drove up new contracted business chiefly through winning cloud deals and international mandates in North America, which accounted for 71% of all new business.
- UK & Ireland and Rest of World showed a resilient performance with revenue up 10%.
- Growth in adjusted diluted earnings per share demonstrates growth from the underlying business and the earnings enhancing acquisition of Syntec in December 2021.
- Balance sheet remains strong with net cash ahead of expectations8 at £5.7m (FY22: £2.8m).
- Proposed final dividend of 0.74p per share (FY22: 0.67p), demonstrating confidence in our product portfolio and the clear opportunity to capitalise on the scale of the North American opportunity.
- Strategic focus and a cloud-first product proposition supports our scalable growth:
- By offering cloud platform choice and multiple SaaS solutions without additional deployment effort, we deliver scalability into larger client opportunities in the NA territory and across international mandates, with significant cross-sell opportunities and faster new client deployments, increasing total client value.
- Our proprietary cloud Secure Call-Recording product was launched in April 2023, to an encouraging response.
- Expected to support the growth in cross-selling and generate new client contracts at a time when 24% of US contact centres are looking to update their call recording solution in the next 12 months.
- Global Commercial team now fully aligned to our strategic focus on the North America market:
- Embedded a unified proposition into our new go-to-market vision of Customer Engagement Data Security Solutions, formally launched in April 2023.
- Total Addressable Market (TAM) is currently estimated to be 20 times the size of the UK market.
- Total contracted business6 showed strong growth through securing new business wins and several successful renewals with key clients in North America.
- Notable new client wins and successful renewals during the period included:
- A Fortune 100 retailer, purchasing two solutions; first client to go-live on our new Azure cloud platform.
- New two-year voice security contract across more than 20 territories with a leading, global hotel company.
- New global reseller contract with a US based unified communications company, 3 contracts delivered to date.
- ARR is the annual recurring revenue of all contracts billing at the end of the period.
- Included within Total ARR is all revenue that is contractually committed and an element of UK&I revenue that has proven to be repeatable, but not contractually committed.
- Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) is the profit from operating activities adjusted for depreciation of owned and leased assets, amortisation, expenses relating to share option schemes, exceptional items and costs relating to business combinations.
- Adjusted operating profit is the profit from operating activities adjusted for amortisation of acquired intangible assets, expenses relating to share option schemes, exceptional items and costs relating to business combinations.
- Adjusted earnings per share and adjusted diluted earnings per share uses the adjusted operating profit and applies a normalised tax rate to both years of 19%.
- Total contracted business includes new business from new clients, new business from existing clients as well as renewals with existing clients.
- New contracted business includes new business from new clients and new business from existing clients, including product upsells and cross-sells.
- Eckoh believes that consensus market expectations for the year ending 31 March 2023 is revenue of £40.25 million, adjusted operating profit of £7.45 million and cash of £5.2m
Current trading and Outlook
- Positive start to the year with total order value more than £7m in the first two months.
- The Board is confident of further progress in the year ahead, supported by an encouraging new business pipeline, increased revenue visibility through continued ARR growth and a robust balance sheet and cash position.
- Eckoh is well placed to benefit from favourable industry trends in its target markets including the shift to hybrid contact centre working and increasing regulatory requirements around personal data management.
08 Strategic Report | Chairman's Statement
Chairman's Statement
9
Results | Board |
We made significant progress in the year to March 2023.
The business has focused on the integration of Syntec, which was acquired in December 2021. Revenue and profits increased by the amounts that were expected at the time of the acquisition.
The acquisition of Syntec has facilitated a catalyst in product development and continued growth especially in North America (NA).
Total revenue for the year was £38.8 million, an increase year- on-year of 22% (FY22: £31.8 million) or 16% adjusting for constant exchange rates. Growth has been driven both organically and from the full year impact of the acquisition of Syntec.
Adjusted operating profit was £7.7 million, an increase of 48% (FY22: £5.2 million). Adjusted operating profit margin has increased to 19.9% up from 16.5% the previous year, this coupled with the improvement in adjusted diluted earnings per share at 2.09 pence (FY22: £1.34 pence), demonstrate the strong set of results with growth from the underlying business and the earnings enhancing acquisition of Syntec in December 2021.
Group and North America Security Solutions ARR1 has grown strongly with group ARR at £30.4 million as at 31 March 2023, an 18% increase year-on-year (FY22: £25.8 million, restated to include Coral in North America). The North America Security Solutions ARR is $15.9 million, an increase of 34% from the same time last year, demonstrating the strong underlying growth in the business and the strong visibility of revenues across the business.
The Group continues to have a strong balance sheet with a year-end net cash balance of £5.7 million (FY22: £2.8 million).
Going Concern
The Board has carried out a going concern review and concluded that the Group will generate adequate cash to continue in operational existence for the foreseeable future. The Directors have prepared cash flow forecasts for a period in excess of 12 months from the date of approving the financial statements. In all scenarios tested, the Directors were able to conclude that the Group will generate adequate cash to continue in operational existence for the foreseeable future. Further information is included in the Directors' Report on pages 53 to 55.
Dividend
The Board has increased the proposed dividend by 10% to 0.74 pence per share (FY22: 0.67 pence per share).
In the financial year ended 31 March 2023, there were no significant changes to the Board. Full details of the current Directors are on pages 36 to 37.
Corporate Governance
As a Board of Directors, we feel the Quoted Companies Alliance Corporate Governance Code (QCA Code) is the most appropriate code for Eckoh plc to apply, given the Group's size, risk, complexity and stage of maturity. In the Governance section of this report on pages 38 to 43, we outline the Company's approach to Corporate Governance and how we have complied with the QCA code. The Board considers that it does not depart from any principles of the QCA code.
Over the last year, we have focused on our Environmental, Social and Governance strategy (ESG) and I am pleased our Sustainability report on pages 28 to 33 reflects the progress we have made. It details the four key areas of our approach, the objectives set, and the targets we have delivered in the financial year to March 2023.
Full details of the Company's Principal Risks and Uncertainties are on pages 20 to 23.
People
We would also like to thank all employees for their continued commitment and resilience through what has been a busy period. The collaboration across the technical team has been exceptional and has resulted in the significant strides being made in the product enhancements and the multi-cloud capability. In addition, the Sales, Client Services and Marketing teams have embraced the change and moved to the Global commercial team to maximise the opportunity we have as a Group focussing on our key North American market.
The whole Board plan to attend the AGM on 13 September 2023 and we look forward to the opportunity to meet with as many Shareholders as possible on the day.
Christopher Humphrey
Chairman
14 June 2023
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Eckoh plc published this content on 07 August 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 August 2023 06:08:31 UTC.