Interim Results

10 March 2015

Kalibrate Technologies plc

("Kalibrate", the "Company" or the "Group")

INTERIM RESULTS

FOR THE SIX MONTHS ENDED 31 DECEMBER 2014

Kalibrate Technologies plc (AIM: KLBT), a provider of proprietary software-based products and services to the global fuel retail industry, announces its unaudited interim results for the six months ended 31 December 2014.

Financial highlights:

· Revenue increased by 11% to $15.6 million (H1 2014: $14.1 million)

o Recurring revenues of $20.7 million as at 31 December 2014, an increase of $1.1 million since 30 June 2014

· Underlying* EBITDA** increased by 18% to $2.3 million (H1 2014: $2.0 million)

· Underlying* operating profit before tax of $1.8 million (H1 2014: $1.7 million)

* - Before exceptional items, business combination amortisation, finance costs and other comprehensive expense or income

** - Earnings before interest, tax, depreciation and amortisation, exceptional items, business combination amortisation, finance costs and other comprehensive expense or income

Operational highlights:

· Strong performance in core markets of North America, Europe and South Africa with significant new clients acquired

· Geographical expansion with clients added in new markets including Mexico, Brazil, Kenya and the Philippines

· Successful cross-selling with 4 clients using both Pricing and Planning solutions, bringing the total to 31

· 100% client retention

· Launched Kalibrate Cloud to house all Pricing solutions in one cloud-based platform

· Multi-country managed services contract for a major oil company's petroleum retail network now fully implemented

· Strong growth in SaaS deals with 9 clients moving from perpetual license structure to SaaS platform, representing $2.9m in bookings

· 22 managed services clients now secured, up from 12 at the start of the financial year

Commenting on the results, Bob Stein, CEO of Kalibrate, said:

"These results demonstrate continued delivery against our stated strategy of growing in our core markets and expanding into new geographies, with more clients now using both our Pricing and Planning products. Our managed services offering continues to gain momentum and we are seeing good demand for our SaaS platform which further increases our revenue visibility.

"We have continued to invest in our product set and remain well placed to support existing and new clients in markets that are or will soon be deregulating fuel pricing.

"With over $20 million in recurring revenues at the start of the year and a strong deal pipeline as we enter the second half, we remain confident that the Group is on track to meet expectations for the year as a whole."

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About Kalibrate

Kalibrate's strategy and technology solutions empower fuel retailers around the globe to drive greater value on investment and achieve greater success on their own terms. Its proven software and analytics solutions draw on more than 20 years of strategic expertise and insight into the needs and opportunities of fuel retailers. Kalibrate is headquartered in Manchester (UK), United Kingdom with offices in Florham Park, New Jersey and, Tulsa, Oklahoma (US), Tokyo, Japan, Seoul, Korea, Mumbai, India, Shanghai, China and Rio de Janeiro, Brazil. For more information, please visit KalibrateTech.com

Chief Executive's Statement

Introduction and Overview

I am pleased to report our results for the six months ended 31 December 2014. During the period, Kalibrate has continued to build on its position as the worldwide leader in providing comprehensive demand management solutions to the fuel retail industry through its pricing automation and optimization tools and market planning solutions. We have continued to deliver against the strategy that we set out on our Admission to AIM. During the first half year, we have continued to deliver against our stated growth strategy of: (i) growing our core markets and cross-selling to existing clients; (ii) expanding our business into new geographic markets; (iii) expanding and enhancing our product suite; (iv) expanding our managed service offering; and (v) continuing to drive the conversion of our business to a Software as a Service (SaaS) offering.

Continued delivery against our growth strategy has led to further improvements in our financial performance with Group Revenue increasing by 11% year-on-year to $15.6 million (H1 2014: $14.1) and underlying EBITDA increased by 18% to $2.3 million (H1 2014: $2.0 million) over the same period.

This strong performance was achieved through our sales and marketing efforts in our principal markets of North America, Europe, and South Africa which enabled the Company to effectively cross-sell products to its existing clients as well as acquire significant new clients within these core markets. During this first half year, we have proactively reorganized and strengthened our sales and marketing departments to ensure that we have the appropriate level of resources to cross-sell our Pricing and Planning services to existing clients, whilst also having significant resources allocated to acquiring new clients. As a result of our cross-selling initiatives, an additional four clients now utilize both our Pricing and Planning solutions, bringing the total using both solutions to 31 clients. In addition to these sales efforts, we are pleased to report that our top priority of providing first class, in-depth client support allowed us to retain 100% of our clients during this past half year.

We have also made solid progress to expand our global footprint beyond our core markets by adding clients in new markets of Mexico, Brazil, Kenya and the Philippines. Our sales resources are focussed on expanding our geographical presence both through an ongoing direct sales effort and channel partners. We have been active in providing consultation and education programmes to companies that operate in countries that are planning to undergo government deregulation of motor fuel pricing. During the first half year, India, Mexico and Kenya announced that they are planning to deregulate their markets and we are actively pursuing clients in certain countries in Southeast Asia and Africa due to their anticipated deregulation announcements that are projected to occur within the next two years. We are uniquely positioned to provide expertise to fuel retailers so that they can not only understand the impact of the new deregulation on their business but also provide Kalibrate's suite of products and services to support their business growth in a competitive environment both during the deregulation transition and also for ongoing business management into the future.

In September 2014 we introduced the Kalibrate Cloud ("kCloud") platform which houses all of our Pricing solutions in one cloud-based platform. During the second half, we plan to add our Planning software product, kLocate, to the kCloud platform so that our clients can have access to both our Pricing and Planning offerings within one platform. We remain committed to following our product roadmap that includes (i) creating new business modules to support our core Pricing and Planning solutions; (ii) expanding our capabilities, including mobile technology; and (iii) introducing new products that complement the Group's Pricing and Planning services. To further bolster our existing best-in-class development capability, we recently launched an integrated development program with NashTech, the IT outsourcing arm of Harvey Nash Plc. This program will increase our ability to cost effectively deliver new business solutions to the market by enabling us to significantly increase development capacity and reduce the cost and time to market of delivering new business solutions.

To enable us to maintain our high client retention rate, we employ a very consultative approach when providing services to our clients and as such, during this half year we formalized our consultative capability by implementing a strategic advisory services ("KSAS") group within our company. Further, in keeping with our ability to combine rich data along with a track record of industry leading expertise we have been marketing a 7 Elements of Retail Success ("7E") strategic analytic process during 2014 to our existing and prospective clients. The 7E process combines information that we have amassed in our data warehouse to measure and provide a score upon which retailers can benchmark the seven elements that make retailers successful in their marketplaces; Pricing, Location, Brand, Facility, Operations, Merchandising and Market. This benchmarking score, combined with our KSAS group, will enable us to provide strategic consultative advice alongside our software products that support retailers' strategic plans. This 7E platform will remain the cornerstone upon which we foster Kalibrate's growth and it will provide a roadmap for most of our future business development and/or merger and acquisition activity as we improve upon our ability to provide enhanced technical solutions around each element of 7E.

The by-product of providing market planning services throughout North America, Europe, Japan, South Africa and certain countries in Latin America and Asia afforded us the opportunity to amass data that we can utilize to support our clients within the 7E process or allow us to sell this data to other third parties. Most notably, the Group maintains up-to-date traffic statistics at over 4 million traffic points in North America and in various countries around the globe. We have successfully resold this robust global data and continue to focus our efforts on finding new markets to sell this data to support our Planning business.

We are pleased to report that we have now fully implemented our first major multi-country managed services contract for a major oil company's petroleum retail network, providing managed hosting services for their entire fuel pricing process and procedures. This managed services contract carried out in conjunction with the company's hosting partner, Rackspace, is expected to generate approximately $2.0 million per year in recurring revenue. Now that this agreement has been fully implemented, it is setting the stage for future managed services agreements with other retailers to support their 24 hours per day, 7 days per week pricing needs. As part of the project implementation we have opened a managed services centre in Melbourne, Australia so that we now have global managed service centres to support our clients in all time zones around the world.

A key strategic objective outlined in Kalibrate's Admission Document is the conversion of the licensing model from an upfront perpetual license model to a SaaS recurring subscription model, thereby giving the Group greater visibility of earnings. Now that kCloud has been fully introduced into the market, more clients and potential new clients are expressing an interest in moving to an outsourced solution for their Planning and Pricing software. In the first half of this year, due to client demand, we saw 9 clients, representing $2.9 million in bookings move from the historical perpetual license structure to the SaaS platform. This move to SaaS is in line with the market trends of IT departments outsourcing niche solution offerings. It is our intention to seek to sell more SaaS deals in the future as well as convert existing clients to a hosted/subscription offering. While we are making significant progress to transform more clients to the SaaS model, the introduction of kLocate and other offerings will further enhance our position as a SaaS solutions provider. Increasing SaaS sales have further improved our recurring revenue pipeline with $1.7 million in new recurring revenue added in the first half of the year compared to the end of the prior half year, which equates to a total of approximately $20.7 million in annual recurring revenue for our Company.

The Group operates within the global fuel retail marketplace which has recently experienced a significant decline in the market price of petroleum products. During the period of August 2014 to January 2015, the price of Brent Crude Oil decreased from $106 per barrel to a low of $46 per barrel which caused the average retail price of motor fuel to drop commensurately. In times of prolonged price drops such as this, the integrated refiner/retailers can experience capital pressures which may lead to delays in capital spending. To date, the Group has not experienced any effects on its business as a result of the lower crude prices, however, we continue to monitor the situation closely. We believe that our business has been sheltered from possible negative effects from the petroleum price swings due to: (i) our client base which comprises retail and diversified oil companies, convenience stores, grocery and hypermarkets, many of which do not participate in the operations upstream from retail; (ii) clients who do not have refining or further upstream operations typically perform better and generate more capital for use in their business when petroleum prices fall; (iii) since our Pricing platform is a longer term business process that is not easily replaced by a new process, our business does not generally feel the effects of shorter term market changes; (iv) the volatility in fuel prices creates a greater need for companies to utilize our products and services so that they may better navigate the changes; and (v) with the continued trends of countries deregulating fuel prices there will be a need for automated and sophisticated solutions for Pricing and Planning.

Pricing

The Group's Pricing solution is a complete end-to-end fuel Pricing solution that provides clients with critical historical price/volume and competitor data and tools to determine optimal wholesale and retail fuel pricing strategies and fully automates the fuel pricing process. This advanced market intelligence enables retailers to achieve their financial goals and improve operational efficiencies, whilst at the same time ensuring regulatory compliance. The Group is able to price all forms of fuel that are distributed by petroleum retailing sites including unleaded, diesel, auto gas, LPG and ethanol.

Revenues for our Pricing products rose by 15.6% to $10.2 million, contributing 65% of Group revenue in the period. This growth has been achieved as a result of new licence sales and selling into both new and existing clients through our core markets.

At the time of our flotation, we stated our belief that the Group had at least 100 existing pricing clients who would be suitable for a managed services offering. As at 31 December 2014, we had secured 22 managed services clients, up from 12 at the start of the current financial year. Our focus remains on continuing to convert existing clients as well as adding new clients to our managed services offering in order to grow a strong additional recurring revenue base. We are in the process of increasing operational and sales resources to support our growing managed services offering.

Planning

Our Planning solutions provide Kalibrate's clients with in-depth market and demand analysis, capital investment scenario analysis, forecast changes in demand and rapid assessment of the competition, as well as forecasting sales volumes of fuel, convenience stores, fast food restaurants and car washes often located on petroleum retail sites. More generally speaking, Planning incorporates site evaluation, retail network planning and demand data.

Revenues for our Planning products increased by approximately 3% to $5.4 million, driven by a 43% increase in North American business, that was offset by declining revenues in Japan due to a reduction in site count in the country. The Group has seen increased interest in Europe, where it has signed agreements to conduct market studies in Ireland and Finland. The Planning business will be instrumental in assisting companies that operate in either newly deregulated or soon to be deregulated countries.

Geographic Review

North America - 50% of Group revenue

In North America, the Group achieved a modest 4.6% year-on-year growth in revenue. The Group experienced a 43% increase in Planning revenue that was the result of successfully cross-selling Planning products to existing Pricing clients during the period and from generating new revenue from additional data reselling to existing clients. The Pricing segment had a slight decline in revenue as several clients chose to move to the SaaS model instead of the perpetual license up front model. This we believe is a strategically important shift for the Group in the long term.

Europe - 28% of Group revenue

Revenue in Europe was approximately 60% higher than the prior year period due in part to the successful implementation of the significant managed hosting relationship with a major oil company that will provide approximately $2.0 million in annual revenue each year. In addition, the Group signed several new Planning deals that encompassed the markets of Ireland and Finland.

Rest of World - 22% of Group revenue

The revenue for the Rest of World was down 12.5% year-on-year as we saw a decline in the Japanese market due to a reduction in sites to survey, offset by some improvement in market studies in Africa. With the deregulation trends continuing in various countries throughout the world, we continue to see growing demand for both our Pricing and Planning product lines in the Rest of World. The Group continues to expand its client base in Malaysia and widen its footprint in Africa with new market studies conducted in Kenya and Morocco. In keeping with our strategy of assisting companies to prepare for the deregulation of motor fuel management, we completed a consulting assignment for a client that operates in Mexico on the recent deregulation plans of the country and we remain hopeful that this project will lead to Pricing and/or Planning opportunities in Mexico.

Financial Performance

The Group has delivered a strong financial performance in the first half of the current financial year, with Group Revenue increasing by 11% to $15.6 million for the period compared to revenues of $14.1 million in the first half year ended 31 December 2013. Revenues for our Pricing products rose by 15.5% to $10.2 million following strong growth in Europe and the addition of a number of new clients. Revenues for our Planning products increased by 2.7% to $5.4 million, driven by growth in North America from cross-selling to our Pricing clients to utilize our Planning products and services.

The Group began the current financial year with $19.6 million in annualised recurring revenues. In line with our strategy, Kalibrate has a growing recurring revenue base and as at 31 December 2014, the Group had $20.7 million in annualised recurring revenue, an increase of $1.1 million or 5.6% in the first six months of this year which further demonstrates our emphasis on increasingly transitioning clients to the managed services model. Our opening order book, as at 1 January 2015, stood at $23.6 million (1 July 2014: $22.0 million), an increase of 13%.

Underlying EBITDA, before exceptional items and business combination amortisation, for the period was $2.3 million, up 18% year-on-year, reflecting strong revenue performance and solid cost control during the period. As outlined at the time of our IPO, we plan to invest across the business over the coming years in order to execute the Group's growth strategy. We invested to strengthen our sales and marketing efforts, increased product development resources as well as added resources to support growth in our managed services business and, as such, our cost base increased to reflect our investment in the future.

Underlying operating profit for the period was $1.8 million compared to the $1.7 million for the first half of the year ended 31 December 2013. This modest increase in operating profit compared to the higher increase in underlying EBITDA reflects the Group's continued investment in new development projects which is increasing our non-cash amortisation expenses and higher operational costs to prepare for additional growth.

Profit before tax was $1.2 million compared to a loss of $0.5 million in the prior period resulting in an underlying profit for the period (before foreign currency translation differences) equal to $1.1 million compared to a loss of $0.4 million in the prior period.

Exceptional costs and business combination amortisation totalled $0.5 million compared to $2.1 million in the prior year of which $1.9 million were related directly to the cost of our AIM flotation and the pre-flotation rebranding as Kalibrate.

Net cash at the period end was $5.6 million which is $4.1 million lower than 30 June 2014. This reduction in cash is the result of: (i) $1.7 million of cash flow from operations; (ii) planned reduction in accrued payables of $2.9 million; (iii) investment in capitalized development of $1.4 million; (iii) increase of $1.5 million of accrued income and trade account receivables relating to a few transactions that closed near year end; and (iv) more SaaS deals versus perpetual license deals resulting in less up-front cash.

Current Trading and Outlook

We continue to make significant progress against all of our key strategic objectives which has resulted in very solid results for the first half of the current financial year. During the half, we proactively realigned our team to strengthen our ability to successfully cross-sell and have continued to invest in our platform for the future. Despite the dramatic reduction in retail prices, the fuel retail industry has performed extremely well with higher than normal fuel margins and therefore, plentiful capital for new projects. In addition, we continue to make progress with ongoing new product development activities which should provide new sources of revenue from our existing client base.

With capital projects continuing in our core markets, ancillary revenue from our new product slate combined with the possible opportunities following the announcement of deregulating fuel prices in India, Mexico, Kenya and Malaysia along with other countries to follow, we remain optimistic about our future organic growth prospects. As we enter the second half, our deal pipeline is strong and the Board remains confident that based upon our progress in the first half of the year, the Group is on track to meet expectations for the year as a whole. 

Robert B. Stein, Jr.

Chief Executive Officer & President

10 March 2015

Consolidated Statement of Comprehensive Income

for the six-month period ended 31 December 2014

Consolidated Statement of Financial Position

at 31 December 2014

Consolidated Statement of Cashflows

for the six-month period ended 31 December 2014

Consolidated Statement of Changes in Equity

for the six-month period ended 31 December 2014

Notes to the Interim Report

for the period ended 31 December 2014

1. Legal status

Kalibrate Technologies plc (the "Company") is a public limited company incorporated and domiciled in the UK.

The Interim Report of the Company for the half year ended 31 December 2014 comprises the Company and its subsidiaries (the "Group").

2. Basis of preparation

This Interim Report for the six month period ended 31 December 2014 has been prepared in compliance with IAS 34 'Interim financial reporting' as adopted by the European Union. It does not constitute financial statements and does not include all the information and disclosures required for full annual financial statements.

The interim report should be read in conjunction with the consolidated financial statements of the Group for the year ended 30 June 2014, which were prepared under International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU"). Comparative figures are given for the six months ended 31 December 2013 and the year ended 30 June 2014.

The comparative figures for the financial year ended 30 June 2014 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The interim report has been prepared on a basis which is consistent with the accounting policies adopted by the Group for the last financial statements and in compliance with IAS34.

Presentational currency

This consolidated financial information is presented in US Dollars, which is now the presentational currency of the Group. The vast majority of the Group's revenues are now US Dollar denominated and, as there is also a growing majority of US Dollar denominated costs, it is more appropriate to present the Group's results with a lesser currency volatility.

Use of estimates and judgements

The preparation of financial information in conformity with IFRS as adopted by the EU requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experiences and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. In preparing the Interim Report, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the Consolidated Financial Statements of the Group for the year ended 30 June 2014.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

3. Segmental analysis

The segment results for the period ended 31 December 2014 are as follows:

The segment results for the period ended 31 December 2013 are as follows:

The segment results for the year ended 30 June 2014 are as follows:

The segment assets and liabilities at 31 December 2014 are as follows:

Unallocated assets and liabilities comprise net cash, deferred taxation assets and liabilities, goodwill and acquired intangible assets.

The segment assets and liabilities at 31 December 2013 are as follows:

The segment assets and liabilities at 30 June 2014 are as follows:

The parent company is domiciled in the UK. The Group's main business segments are based in the following locations:

· Pricing - North America, Europe and Rest of World

· Planning - North America, Europe and Rest of World

The geographical segments are based on an analysis of revenue by the location of the Group's customers as follows:

4. Exceptional items and business combination amortisation

Exceptional items consist of specific direct costs of the flotation and subsequent staff restructuring. Prior period exceptional items consist of the costs incurred in the preparation of the company for flotation (inclusive of the cost of the Group's change of name and related restructuring/rebranding) and the specific direct costs of the flotation.

Business combination amortisation arises from the intangible assets recognised (other than goodwill) from the acquisition of MPSI.

5. Earnings per share

As explained in note 6, in the year ended 30 June 2014 the company undertook an internal share capital restructuring (share split and bonus issue) in order to prepare itself for admission to AIM. In accordance with IAS 33, this has been treated as if it happened at the start of the period for the purpose if the earnings per share calculation.

6. Share capital

7. Share-based payments

The Company operates two equity separate settled share option schemes for qualifying employees of the Group; however no further share options are expected to be issued under the 2008 scheme.

Options in issue at the period-end are as follows.

2008 Unapproved share option scheme

2013 EMI share option scheme

The fair value of services received in return for the new share options granted under the 2013 share option scheme are measured by reference to the fair value of share options granted. The estimate of the fair value of services received is based on a Black Scholes share option pricing model. The key assumptions used in the model are as follows:

· interest rate - 1.0% (2013: 1.0%);

· volatility - 30% (2013: 30%);

· dividend yield - nil (2013: nil); and

· expected life of option - 3 years (2013: 3 years).

8. Dividends

No dividends were paid or proposed during the period (2013: $nil).

9. Forward-looking statements

Certain statements in these interim results are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by those forward-looking statements.

The Group undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

10. Related party disclosure

On 7 November 2014, Brad Ormsby ceased to be a director of Kalibrate Technologies plc. In accordance with the terms of his service agreement, a termination payment of $180,805 will be paid during the second half of fiscal year 2015. Other than the payment to Brad Ormsby, there has been no significant change to the nature and size of related party transactions, including the remuneration paid to key management personnel, from that disclosed in the 2014 annual report.

Independent review report to Kalibrate Technologies plc

for the six-month period ended 31 December 2014

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly report for the six months ended 31 December 2014 which comprises the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Cashflows, the Consolidated Statement of Changes in Equity and the related explanatory notes. We have read the other information contained in the half-yearly report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with the terms of our engagement. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The half-yearly report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly report in accordance with the AIM Rules.

As disclosed in note 2 the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly report for the six months ended 31 December 2014 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the AIM Rules.

Nicola Quayle, for and on behalf of KPMG LLP

Chartered Accountants

1 St Peter's Square

Manchester M2 3AE

10 March 2015