17:00 Thu 09 Apr 2020
IMImobile PLC - Trading & COVID-19 Update and Equity Placing
This announcement contains inside information as stipulated under the Market Abuse Regulation (EU No 596/2014).
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Trading & COVID-19 Update and Equity Placing
Financial highlights
· Strong trading performance continued in the second half of the year with growth in all regions
· Revenue up approximately 17% to at least
o Organic revenue growth of approximately 7%
· Gross profit up approximately 26% to at least
o Organic growth of cloud communication products of approximately 15%, now representing over 80% of gross profit
o Overall, organic gross profit growth of approximately 8%
· Adjusted EBITDA1 up approximately 20% to at least
· Net debt of
1Adjusted EBITDA is defined as operating profit/(loss) before depreciation, amortisation, acquisition related expenditure, impairment charges and share-based compensation.
Operational highlights
· Growth across all sectors and regions for cloud communication platform, products and services
· Strong momentum in
· Integration substantially completed for milestone acquisition of 3Cinteractive Corp ("3C")
· Strong period of new client wins, partner acquisition and renewal of all major contracts falling during the period
· Growing adoption of new richer messaging channels including RCS (Rich Communications Services), WhatsApp Business and Apple Business Chat
· Continued product innovation by launching and taking live of new healthcare video consultation product, eClinic, for the
· Decline in Operator VAS and mobile payments in line with management expectations
COVID-19 update
The Company continues to monitor the situation closely and review the impact of COVID-19 across the business. In order to protect the health and safety of its team, clients and the communities it operates in, over 1,100 global employees have been transitioned to remote working. Business continuity has been unaffected with the Group continuing to provide a full service to clients.
Whilst there has been little impact to date, the Board appreciates the global severity of the pandemic and associated prevention measures, making the short-term outlook significantly more uncertain with its ultimate effect on the business and end customers yet to materialise. Notwithstanding the current lack of material impact, management have taken rapid steps to reduce costs in order to help offset reductions in messaging volumes and delayed projects. As a precautionary measure, the Company has introduced a hiring freeze and imposed early restrictions on travel. Temporary three-month employee salary reductions have also been introduced, including a 33% reduction for the Board, as well as arrangements for the furlough of certain
The Company is also involved with enabling additional emergency communications for customers, which should help to mitigate any negative impact. In addition, the Company has adapted its offering to provide customers with specific solutions such as video assistance for healthcare appointments or engineer call outs and enabling the setup of remote contact centres to support homeworking.
The Board believes that COVID-19 will have a limited impact on the business in the medium to long term due to the fundamental need for its customers to communicate and use digital channels for customer interaction. The Group's client base is well diversified across geographies and sectors and the long-term consequences may expand the demand for its services if, subsequently, there is an acceleration in digital transformation initiatives.
Equity placing - background to and reasons for
The last 12 months have been a period of significant investment and strategic progress for the Group. In
Against this backdrop however, given the uncertainty surrounding the duration and impact of COVID-19, management have modelled scenarios on differing degrees of revenue impact, duration and periods of recovery reflecting a range of gross profit for FY21 of between
Financial position
As at
Covenants are tested quarterly and test adjusted leverage being less than 2.75x adjusted EBITDA - capitalised development and cashflow cover being no more than 1.25x. The Group expects to be able to meet all covenant tests in FY21.
Trading Update Year to
Cloud Communication Products
It has been a good period of strategic and commercial progress for the Group's cloud communication product set which now represents over 80% of Group gross profit. The broader market for cloud-based communication products (Communication Platform as a Service - "CPaaS") continues to grow strongly, with the Group's cloud communication platform, products and services business growing organically by 15% during the period.
In
The MEA and APAC regions have also experienced a solid trading performance enhanced by the growth of new messaging channels such as RCS and WhatsApp Business and the implementation of automation technologies for major utility companies and banks.
The Group's North American business continues to make strong progress and the Board is significantly encouraged having been selected by one of the world's largest retailers for its CPaaS offering ('IMIconnect') following a competitive tender process. This project is now in deployment and provides clear evidence of the relevance of the product suite in
Management are very encouraged by the significant pipeline of opportunities created across all regions of the Group and in particular the progress made in the
Operator VAS (Value Added Service) and Mobile Payments
The Group's operator VAS and mobile payments business experienced a decline of 13% in line with management expectations. This is predominately due to structural changes in the market for mobile operator value added services.
However, despite these headwinds, the business has seen new demand from mobile operators to move existing telco VAS infrastructure to the cloud.
The COVID-19 situation is evolving rapidly. There is currently no certainty regarding the impact and duration on our business and our customers. We continue to monitor the situation and macroeconomic climate closely. We are focussed on taking actions to protect our people's health and to secure the strength of our financial position and operations. The Group's recurring revenue base from long-standing, blue-chip customers, strong pipeline and healthy cash generation gives us confidence of the Group's long-term prospects. I would like to thank employees, customers, shareholders and partners for their support and commitment during these uncertain times."
This announcement is released by
For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, the person responsible for releasing this announcement is
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For further information, please contact:
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c/o Alma PR |
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Mike |
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Alma PR |
Tel: +44 (0)20 3405 0205 |
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Investec Bank - Nominated Adviser and Joint Broker |
Tel: +44 (0)20 7597 5970 |
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N+1 Singer - Joint Broker |
Tel: +44 (0)20 7496 3000 |
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