Unaudited interim results for the six months ended 30 September 2020

24 Nov 2020

Robust performance, driven by high recurring revenues and prudent cost control

Eckoh plc (AIM: ECK) (“Eckoh” or the “Group”), the global provider of secure payment products and customer contact solutions, is pleased to announce unaudited results for the six months to 30 September 2020.

£m unless otherwise stated H1 FY21 H1 FY20 Change
Revenue 15.7 18.0 (13%)
Gross profit 12.8 14.2 (10%)
Adjusted operating profit 1 3.4 3.4 n.m
Profit after taxation 2.0 2.0 n.m
Adjusted diluted earnings pence per share 2 1.11p 1.10p +1%
Net cash 12.9 10.9 +2.0m
Total business contracted 3 14.0 19.4 (28%)
New business contracted 4 7.9 11.8 (33%)

Financial highlights

  • Year on year profit maintained, in line with Board expectations, despite difficult conditions in recent months
  • Revenue down 13% overall; 4% decrease after adjusting for the one-off Coral contract in the prior year
  • US Secure Payments revenue increased significantly by 80% to $6.5m (H1 FY20: $3.6m), offset by planned decline in Support (61%) and expected decline in Coral (85%)
  • UK revenue down 11%, with COVID-19 impacting some transactional revenues
  • Adjusted operating profit1 level to prior year at £3.4m, and up 34% after adjusting for the Coral contract
  • Recurring revenue5 £11.5m (H1 FY20 £12.8m), 73% of total revenues (H1 FY20: 79%, excluding the Coral contract), reflecting a transition towards higher growth US Secure Payments
  • Strong cash generation, robust balance sheet and special dividend; net cash £12.9m (H1 FY20: £10.9m)

Strategic highlights

  • Total business contracted3, £14.0m (H1 FY20 £19.4m, excluding Coral contract £16.4m) down 15%
  • New business contracted4, £7.9m (H1 FY20: £11.8m, excluding Coral contract £9.3m) down 15%
  • UK new business up 17% to £3.2m (H1 FY20: £2.7m) with 68% of new business coming from existing clients. Total UK business up 8% with several significant renewals completed and more expected in the second half
  • US Secure Payments revenue grew very strongly, reinforcing the rationale to focus on this growth opportunity by instigating a planned transition away from Support, which is progressing as expected
    - New business contracted $5.9m (H1 FY20: $7.3m), with H1 FY21 increasing 73% over H2 FY20 ($3.4m), and momentum increasing in the second quarter after a challenging first quarter
    - Larger number of contracts won in the period for contracts to be delivered in the cloud
    - US Secure Payments Order book $25.9m (H1 FY20: $26.9m or FY20 $25.9m)

Outlook

  • With a highly relevant product portfolio and resilient business model, Eckoh is well prepared to successfully manage the current challenges, although the outlook remains uncertain due to COVID-19
  • The Board expects profits for this financial year to be comparable to the prior year

Nik Philpot, Chief Executive Officer, said:

“In this challenging trading period Eckoh delivered a robust performance, in line with our expectations, generating comparable levels of profit to last year, which reflects the resilience of our business. I would like to thank everyone at Eckoh for this performance. All of our team have adapted extremely well to the challenges presented by COVID-19, they’ve been committed and highly effective, despite the difficult conditions of recent months.

Our high levels of recurring revenue, a solid order book, enterprise clients, a strong balance sheet, and prudent cost control have enabled us to manage the impact of the pandemic effectively. With a strong sales pipeline, we look to the future with confidence.”

  1. Adjusted operating profit is the profit before tax adjusted for finance income, finance expense expenses relating to share option schemes and acquired intangibles amortisation
  2. Adjusted diluted earnings per share (eps) is the diluted eps adjusted for expenses relating to share option schemes and acquired intangibles amortisation
  3. Total business contracted includes new business from new clients, new business from existing clients as well as renewals with existing clients.
  4. New business contracted excluding renewals with existing customers.
  5. Recurring revenue is defined as on-going revenue on a transactional basis, rather than revenue derived from the set-up and delivery of a new service or hardware.
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For more information, please contact:

Eckoh PLC
Nik Philpot, Chief Executive Officer
Chrissie Herbert, Chief Financial Officer
Tel: +44 (0) 1442 458 300
www.eckoh.com

FTI Consulting LLP
Ed Bridges / Jamie Ricketts / Tom Blundell
Tel: +44 (0) 203 727 1017
eckoh@fticonsulting.com

Singer Capital Markets (Nomad & Joint Broker)
Shaun Dobson / Tom Salvesen / Alex Bond / Kailey Aliyar
Tel: +44 (0) 20 7496 3000
www.singercm.com

Canaccord Genuity Limited (Joint Broker)
Simon Bridges, Andrew Potts
Tel: +44(0) 20 7523 8000
www.canaccordgenuity.com