Half-year Report

Rosslyn Data Technologies plc

("Rosslyn" or the "Company" or the "Group")

Trading Update and Unaudited Group Interim Financial Statements for the six months ended 31 October 2018 (H1 2019)

Rosslyn Data Technologies plc (AIM:RDT), a leading provider of a Cloud-based enterprise data analytics platform, is pleased to announce its interim results for the half year ended 31 October 2018.

Financial Highlights

· Group revenues up 11% to £3,532,015 (H1 2018 restated: £3,172,255)

· Gross profit margin up 3.5% on H1 2018 (78.4% H1 2019 vs 74.9% H1 2018)

· Operating EBITDA (excluding acquisition costs and share based remuneration) loss reduced by more than £0.9M to £213,477 (2018 restated: loss of £1,118,845)

· Cash burn reduced by over £2.0m vs H1 2018 (£160k H1 2019 vs £2.2m H1 2018, including £800k acquisition payables)

· Annual Recurring Revenue carried forward increased by 12% vs H1 2018 (£5.05M vs £4.51m)

· Average contract values increased by 7% to £85.4k per annum

Operational and Strategic Highlights

· Our sales team continues to win contracts and recent contract wins have led to an increase in average contract value of more than 7%

· Customer wins during the period include a high profile global defence organisation, a major European logistics company, a leading UK based financial services company and a leading speciality metals organisation

· We have expanded our strategic partnerships in the US and Europe, including with a global data firm, which has resulted in growing our pipeline of opportunities considerably

· A number of significant deals are currently under negotiation through both direct and partner channels

· We are on track to achieve a cash flow break-even position this fiscal year

Roger Bullen, Chief Executive, said:

"We continue to make significant progress, with the Company being increasingly well positioned to take advantage of the growing number of opportunities coming to us by organisations seeking to significantly reduce the complexity, cost and time of leveraging data to deliver savings, manage compliance and improve business efficiencies.

Our RAPid platform is a recognised and sought-after brand, having received numerous accolades from industry experts for its innovative technologies that automatically aggregate, organise and make sense of data and documents in a single user experience. Development and design has started on the launch of new applications residing on the RAPid platform focused on the adjacent and high growth supply chain market Including Supplier Information Management solutions that integrate supplier onboarding, event-driven analytics and robotic process automation. These new capabilities, powered by AI and machine learning techniques, will allow clients to more effectively access all the value held within their data stored in diverse ERP systems and unstructured data lakes unified on the RAPid platform.

These product launches planned for 2019 calendar year will continue to demonstrate our ability to innovate for the benefit of our customers, and will provide our sales teams opportunities to expand revenue with prospective clients and our loyal client base.

We have continued to focus on reducing our cost run rate, and our expectation remains that by the end of this financial year the run rate will be below that of our average monthly revenues. This combination of progress, innovation and opportunity does, we believe, put the Company in an exciting position for the rest of this year and beyond."

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Chief Executive Review

This first half of the year saw us continue to acquire new customers, expand relationships with existing customers and partners, grow internationally and to continue to innovate. Through the acquisition of Integritie we have been able to develop and integrate new technologies and robotic process automation solutions that have been able to significantly reduce our cost base and achieve a position very close to break-even. These technologies have also enabled us to innovate and develop new tools for our RAPid platform, including our Supplier Information Management platform tools and our automated refresh hub.

I am pleased to report that our focus on integrating the acquisition into the business has been successful, and on the results from H1 this year, demonstrate the cost synergies anticipated, whilst also providing us with the visibility and confidence to expect a cash break-even position during this fiscal year.

Customer retention rate is greater than 95% and in most clients we are expanding our sales opportunities both through partners and through direct channels.

We believe that the strength of the RDT RAPid platform is being increasingly recognised in the industry, which is giving us the opportunity to take major steps forward on a number of important fronts, most notably our improved win loss ratio in competitive bids. Underpinning the progress is our talented and skilled team who are fuelling the continued development of innovative solutions and widening the sphere of sales opportunities. This is being played out through our growing list of clients, including the new additions in this half year. These include many leading global businesses and the increasing number of partnerships we are establishing. Partnerships that bring us closer to where high volumes of business and commerce meet, giving us the opportunity to play a significant supplier information management role.

Our sales teams continue to gain momentum and have delivered a strong performance. This strength and performance is demonstrated through our increasing pipeline. Furthermore, revenue growth from our installed customer base remains healthy as we continue to expand our annual recurring revenues with our current customer base. This, we believe, is evidence of success in our "land and expand" strategy as well as of the emerging value of the Rosslyn business model. Our customer churn remains extremely low, at less than 5% per annum.

We remain confident that, supported by strong contracted revenue visibility and new business momentum, we will continue to build on the solid progress and foundations laid during the first half of the year.

Business Review

The six months to 31 October 2018 saw revenues grow in line with the expectations we set at the beginning of the year. At the same time, we have been able to maintain the cost efficiencies that we worked hard last year to deliver. The revenue growth and the cost savings enable us to see a clear path to profitability in the second half of the year.

Our revenue growth was achieved through our approach of being able to assist enterprises to significantly reduce the complexities associated with capturing and managing their data whilst improving their analytics capabilities, reducing the costs of deploying analytics, increasing the speed of deployment whilst also being able to demonstrate a positive return on our clients' investments. As enterprises modernise, we are benefiting from the migration from traditional on-premise applications to cloud based services. The technology value gap between a traditional on-premise solution and our cloud-based approach is increasing as we continue to develop faster, better and more intuitive solutions. We believe this will assist us in improving our sales cycle metrics, accelerate our expansion plans and maintain a low churn rate.

We are continuing to invest in our sales and marketing teams, particularly focusing on large enterprises in key industry segments sold predominantly through our partner channel. We have deployed dedicated partner managers whose focus is on establishing deep and trusted relationships with these strategic accounts. Supporting each of these areas is a customer success team who support not just the implementation but also the expansion of the footprint of the platform in each account.

The Company's sales pipeline continues to grow and I am pleased to report that we are in negotiations with a number of large enterprises and look forward to updating shareholders in due course. On the partner front, our focus is on making our existing partners ever more effective in selling the benefits of the platform through which we extend and scale our sales capability.

We are continuing to build on our world-class and well-regarded development team. Their depth of expertise and agile approach enables us to respond quickly to customer needs and market opportunities and give us an advantage over the traditional on-premise approach.

The Group's strategy remains to build a strong and dynamic company focused on growth and building shareholder value.

Financial Review

Group revenues increased by 11% to £3,532,015 (H1 2018 restated: £3,172,255). Operating EBITDA loss was £213,477 (H1 2018 restated: £1,118,845) with a loss after tax of £659,591, of which £505,726 relates to amortisation of the Integritie intangible assets (H1 2018 restated £1,823,835). The basic and diluted loss per share for the period was 0.36p (H1 2018 restated 1.07p).

Cash at the end of the six month period was £0.4m (H1 2018: £1.0m). Cash consumed in the first half equated to £0.15m (H1 2018: £2.2m). Consistent with the Group's working capital cycle, we will be cash generating in the second half of the year.

Average headcount in the period decreased to 62 (H1 2018: 77), which represents the synergies achieved following the acquisition last year.

Prospects

The second half of the year has begun well. There have been a number of new contract wins as well as expansion of our current customer portfolio. The firm has been short listed as the preferred vendor in the US, UK and Europe for potential new contracts which cover a number of new exciting verticals and applications for RDT and we look forward to updating shareholders in due course. The contracts incorporate the combined Integritie and RAPid product suite.

The research and development team are executing on an exciting schedule of improvements and new technologies, which we expect to be released into full production during the second half of this financial year. Of note, we expect to deliver: simple self-service tools that will enable clients to improve data management capabilities; predictive analytical capabilities; supplier information management capabilities and full contract to cash management capabilities. We expect these tools to improve our customers' risk analytics and compliance reporting capabilities along with information and insights to support their strategic decision making.

Our pipeline is healthy and, through the impact of our new solutions and services, we are negotiating contracts with significantly larger values than we have done in the past. Given their size, these contracts are taking longer to negotiate but we have been able to automate many internal processes, reducing the lead-time for delivery and shortening the time to value for our clients, although the Board is working to deliver these contract wins during the current financial year. The ability to sign these contracts before the year end will have a significant impact on the outcome of our revenues, EBITDA and cash for this year.

The directors are pleased with the progress made to date and believe that the Company is increasingly well positioned to take advantage of opportunities. The RDT RAPid platform is emerging as a recognised and well-regarded technology in this large and growing market place, and through our continued and disciplined execution, we expect progress to continue. As a result, we believe the Company is in an exciting position for the rest of this year and beyond.

Notes to the Unaudited Group Interim Financial Statements for the six months ended 31 October 2018

1. Nature of operations and general information

The principal activity of the Company and its subsidiaries (together the Group) is the provision of data analytics using a proprietary platform, data capture, data mining and workflow management.

Rosslyn Data Technologies plc is the group's ultimate parent company. It is incorporated and domiciled in the UK. The registered office of the Company is 60 St Martin's Lane, Covent Garden, London WC2N 4JS, which is also the principal place of business for its UK based operating subsidiary, Rosslyn Analytics Limited.

Rosslyn Data Technologies plc's shares are listed on AIM, a market operated by the London Stock exchange. This consolidated unaudited half-yearly report was approved by the Board of Directors on 22 October 2018.

The financial information set out in this half-yearly financial report does not constitute statutory accounts as defined in Sections 434(3) and 435(3) of the Companies Act 2006. The Group's statutory financial statements for the year to 30 April 2017 have been filed with the Registrar of Companies and are available at www.rosslyndatatechnologies.com. The auditors' report on those financial statements was unqualified and did not contain any statement under Section 498(2) or Section 498(3) of the Companies Act 2006.

2. Basis of preparation

The financial information presented in this document has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations that are expected to be applicable for the year ending 30 April 2019. The principal accounting policies used in preparing these Interim Results are unchanged from those adopted and disclosed in the audited financial statements for the year ended 30 April 2018.

The financial information in this statement relating to the six months ended 31 October 2018 has neither been audited nor reviewed pursuant to guidance issued by the Auditing Practices Board. The financial information for the period ended 31 October 2018 does not constitute the full statutory accounts for that period. The financial information in this statement relating to the six months ended 31 October 2017 has not been audited and does not constitute full statutory accounts for that period. The Annual Report and Financial Statements for 2018 have been filed with the Registrar of Companies. The Independent Auditor's Report on the Annual Report and Financial Statements for 2018 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

3. Accounting policies

The accounting policies applied are consistent with those of the annual financial statements for the year ended 30 April 2018. 

4. Segmental Reporting

All segment revenue, loss before taxation, assets and liabilities are attributable to the principal activity of the Group being the provision of data analytics using a proprietary form and other related services.

5. Basic and diluted loss per share

Basic earnings per share is calculated by diving the net loss for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share is calculated by dividing net profit for the period attributable to ordinary shareholders outstanding during the period plus the weighted average number of ordinary shares that would be issued on the conversion of all dilutive potential ordinary shares into ordinary shares.

Earnings per share has been calculated in accordance with IAS 33.

6. Principal risks and uncertainties

The principal risks and uncertainties for this 6 month period remain broadly consistent with those set out in the Financial Review section of the financial statements of the Group for the year ended 30 April 2018.