Eckoh : Annual Report 2022

Annual Report 2022

ECKOH plc

ANNUAL REPORT AND FINANCIAL STATEMENTS 2022

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CONTENTS

Strategic Report

3 Highlights

1. Chairman's Statement
2. Chief Executive Review

1. Principal Risks and Uncertainties

1. Financial Review

1. Sustainability Report

Corporate Governance

1. Board of Directors
2. Chairman's Statement on Corporate Governance

1. Audit Committee Report

1. Remuneration Committee Report

1. Directors' Report

1. Independent Auditors' Report

Financial Statements

1. Consolidated statement of total comprehensive income
2. Consolidated statement of financial position
3. Company statement of financial position
4. Consolidated statement of changes in equity
5. Company statement of changes in equity
6. Consolidated statement of cash flows
7. Notes to the financial statements

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ECKOH PLC STRATEGIC REPORT

HIGHLIGHTS OF THE YEAR

Eckoh plc (AIM: ECK), the global provider of Secure Payment products and Customer Contact solutions, is pleased to announce its final results for the year ended 31 March 2022.

£m unless otherwise stated	FY22	FY21	Change
Revenue	31.8	30.5	+4%
Gross profit	25.4	24.2	+5%
US Secure Payments ARR ($m) 1	11.9	6.5	+82%
Total ARR1	25.2	17.0	+48%
Adjusted EBITDA2	6.8	6.4	+7%
Adjusted operating profit3	5.2	4.7	+10%
Profit before taxation	2.3	3.5	(34%)
Adjusted earnings pence per share4	1.57	1.49	+5%
Adjusted diluted earnings pence per share4	1.34	1.45	(8%)

Strategic highlights

• Strong ARR1 growth, especially in the US market, driven primarily by our clients' need to protect data and comply with increasing regulation without compromising customer experience
• UK business returned to growth with strong second half revenues as most client activity recovered
• Transformational Syntec acquisition performing in line with our expectations with integration on track

• 1. Unification and enhancement of product offering on track for go-to-market launch in 2022
• As part of our long-term strategic direction, multi-platformcloud-enablement of our offering is driving:
• 1. Market leadership and competitive advantage

1. Scalability into larger client opportunities on an international basis, characterised by recent contracts

• 1. Significant cross-sell opportunities and faster deployments will drive increased client value
• Realignment of sales capability and go-to-market proposition to drive top-line growth, and restructuring of cost base to create greater operational efficiency

Financial highlights

• Strong performance, as previously announced in Trading Update on 17 May 2022
• Group ARR1 up 48%, reflecting market opportunity and ongoing shift to cloud

• 1. Adjusted operating profit3 up 10% with successful pivot to higher quality earnings following the completed exit from US and UK Support, which contributed £2m to FY21 adjusted operating profit3
• US Secure Payments performed strongly:
• 1. Revenue up 8%, underlying growth stronger

• 1. US ARR1 increased 82% to $11.9m (FY21 $6.5m), up 38% on an organic basis
• UK revenues returned to growth with transactional volumes largely returned to pre-pandemic levels
• 1. Revenue up 9%, excluding third-party support or 3% total

1. • 1. UK ARR1 of £16.5m,up 8% on an organic basis and up 36% including Syntec
   • Profit before taxation includes £1.0m of transactional costs (in connection with the acquisition of Syntec) and £0.9m of one-off restructuring costs
   • Balance sheet remains strong following the Syntec acquisition with net cash of £2.8m (FY21: £11.7m)
   • Increased final proposed Dividend at 0.67p per share (FY21: 0.61p), demonstrating increasing confidence in the ongoing growth opportunity
2. ARR is the annual recurring revenue of all contracts billing at the end of the period. Included within Group ARR is all revenue that is contractually committed and an element of UK revenue that has proven to be repeatable, but not contractually committed.
3. 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, restructuring costs and transactional costs.
4. Adjusted operating profit is the profit from operating activities adjusted for amortisation of acquired intangible assets, expenses relating to share option schemes, restructuring and transactional costs
5. Adjusted earnings pence per share - the Group issued 36.2m new ordinary shares during the year in connection with the acquisition of Syntec which results in an increase in the weighted average shares in issue across the period.

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Current trading and Outlook

• Current order levels already substantially exceed FY22's first quarter outcome
• Significant strengthening of Eckoh's new business pipeline in the first quarter, including major opportunities for large blue-chip organisations

1. Progress reflects success with our strategy to pursue larger, higher quality opportunities through management action to improve sales function and

• 1. Renewals post-period end includes our largest contract scheduled for FY23, worth £2.1m
• First client deployed and live on our new Azure Cloud platform signed new 3-year contract worth $1.5m and a further contract worth $0.6m to secure live chat agents with digital payments
• As previously indicated, the Board expects FY23 revenue and profit to be significantly higher than FY22, driven by benefits of the Syntec integration, strong organic ARR growth, operational efficiencies and synergistic benefits of the Syntec integration
• The Board is confident of further progress in the year ahead, supported by an encouraging pipeline, a model with high recurring revenues and a robust balance sheet

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