Full year results - 2020

Results in line with market expectations; strong revenue and profit growth

Eckoh plc (AIM: ECK), the global provider of Secure Payment products and Customer Contact solutions, is pleased to announce unaudited results for the twelve months to 31 March 2020.

Financial highlights

• Results in line with market expectations
• Double-digit growth overall, with revenue growth in both the US and UK divisions
  • Group revenues up 16% (14% at constant exchange rates⁶)
  • UK up 6% to £20.5m: driven by new business deployed and clients' transactional volumes
  • US up 32% to $16.1m: growth in Secure Payments and Coral offset the expected decline in Support
• Recurring revenue ⁷ up 4% to £24.8m (FY19 £23.8m), representing 79% of total revenues excluding the $3.8m Coral license contract won in H1 (FY19: 83%)
• Profit before taxation increasing by 171% to £3.3m
• Adjusted operating profit increased strongly by 53% to £4.7m (FY19: £3.1m)
• Adjusted diluted earnings per share up 62%
• Strong cash generation and robust balance sheet: net cash £11.6m (FY19: £8.3m)

Strategic highlights

• Record total business contracted, up 10% to £35.9m, with growth in orders both the UK and US
• Strong total business contracted for the UK; new business and renewals stronger in second half
• Increasing focus on US Secure Payments growth opportunity with a managed transition away from hardware-based support
• US Secure Payments driven by large deployments, increased regulation and fines for non-compliance:
  • Revenue increased by 63% to $8.1m (FY19: $5.0m)
  • New contracts $10.7m (FY19: $13.7m, which included our largest single contract to date of $7.4m)
  • Order book up 14% to $25.9m (FY19: $22.8m)
  • Clients from the Fortune 250 increased to ten
• Significant progress in growing our patent portfolio, adding a record number of new granted patents

COVID-19 Update

• Eckoh's business model, with high levels of recurring revenue, a record order book, blue chip enterprise clients and a strong balance sheet, means we are well placed to manage the impact of COVID-19
• A strong cash position and compliance with bank covenants where required
• Precautionary measures, including a salary and hiring freeze, already taken to maintain financial strength during the COVID-19 pandemic
• Maintenance of headcount ensures we are well-placed to meet recovery in demand when conditions stabilize
• US revenue 100% underpinned by fixed fees. UK transactional volumes impacted in March to May, but revenue not proportionately impacted due to contractual commitments
• Strong new demand for CallGuard Remote to enable business continuity by facilitating secure payments in remote working environments
• Guidance remains withdrawn and dividend will be reviewed by the Board when market conditions stabilize

Outlook

• New financial year trading is encouraging, with Group revenue and profit comparable to the previous year
• Notwithstanding the disruption relating to COVID-19, the Board remains confident of the future prospects for the Group, underpinned by balance sheet resilience, high recurring revenues, excellent sales pipelines and the long-term market opportunity

Nik Philpot, Chief Executive Officer, said:

"Eckoh had an excellent performance in the year, with double digit revenue and profit growth as well as record order levels for a second year running. Both UK and US Operations delivered growth and we remain market leader in the US for Secure Payments with revenue growing substantially to over $8m.

Eckoh's product portfolio can help organizations to respond positively to the challenging times ahead, so we can assist both new and existing clients to fulfil their fast-evolving requirements. Furthermore, the strength of Eckoh's performance, business model, market position and high recurring revenues, combined with our robust balance sheet and liquidity, means we are well placed to manage the impact of COVID-19, and we look forward to further progress in the year ahead."

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1. ^{2020 results have been prepared under IFRS 16: Leases. Prior period comparatives have not been restated.}
2. ^{Adjusted operating profit is the profit before tax adjusted for expenses relating to share option schemes and amortization of acquired intangible assets.}
3. ^{Adjusted diluted earnings per share (eps) excludes share option schemes and amortization of acquired intangible assets}
4. ^{Total business contracted includes new business from new clients, new business from existing clients as well as renewals with existing clients.}
5. ^{New business contracted excluding renewals with existing customers.}
6. ^{Constant currency (using last year exchange rates).}
7. ^{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.}