30 September 2022

LOOPUP GROUP PLC
("LoopUp" or the "Group")

Interim results for the period ended 30 June 2022

LoopUp Group plc (AIM: LOOP), the cloud platform for premium hybrid communications, announces its unaudited interim results for the six months ended 30 June 2022 ("H1-22").

Financial Highlights:

Operating Highlights:

Post Period Highlights

Steve Flavell and Michael Hughes, co-CEO's of LoopUp, commented:

"We continued to make progress during the half, as we strategically transition our business and technology into a broader cloud platform for hybrid communications.

Our primary growth line of business, Cloud Telephony, has seen contract wins accelerate by 264% in the second year post service launch, and the recent PGi Connect deal will materially boost our legacy Meeting business, which we expect to return to growth in HY 2022 as a result.

Looking ahead, we are excited by the growth potential of Cloud Telephony, and welcome the material cash boost from the PGi Connect deal and the proposed Capital Raising, which will enable us to take Cloud Telephony into its next phase of commercial acceleration."

About LoopUp Group plc

LoopUp (LSE AIM: LOOP) is a cloud platform for premium hybrid communications. The Group's flagship Cloud Telephony solution for Microsoft Teams enables multinational enterprises to consolidate their global telecommunications into a single, consistently managed cloud implementation rather than disparate implementations from multiple carriers. The Group's hybrid auditorium and events solution, Hybridium (www.hybridium.com), brings unrivaled engagement and analytics to larger scale hybrid education, training and events such as management onsites, departmental kick-offs, capital markets days and thought leadership seminars.

The Group is listed on the AIM market of the London Stock Exchange (LOOP) and is headquartered in London, with offices in the US, Spain, Germany, Hong Kong, Barbados and Australia.

Chief Executive Officers' Business Review

The Group has made strong continued progress during H1-22 with the continued transition of our business, and expansion of our technology, into a broader cloud platform for hybrid communications.

In our legacy Meetings business, the recently announced deal with PGi Connect gives this business unit a material boost that is expected to return the business back to growth in H2-22 and FY2023. While this business remains in underlying decline as enterprises progressively embrace more holistic Unified Communications (UC) platforms such as Microsoft Teams, this material book of business from PGi Connect is expected to contribute approximately £10 million in revenue and £5 million in net cash to the Group over the 12-month period from October 2022 to September 2023.

Meanwhile, the Group's primary growth line of business and source of long-term shareholder value - Cloud Telephony - has demonstrated material commercial acceleration in its second-year post service launch. This is the result of the Group's compelling commercial value proposition targeted at the multinational mid-market and enterprise market, facilitating single vendor telephony service provision globally, rather than supply from a patchwork of multiple domestic/regional telecommunications carriers. Contract wins accelerated by 264% in the second-year post service launch, and specifically by 224% in the twelve months to June 2022 versus the equivalent prior year period.

We are excited by the growth potential of Cloud Telephony, and welcome the material expected cash boost from the PGi Connect deal, together with the proposed Capital Raising as announced on 28 September (subject to shareholder approval), to take this primary growth line of business for the Group through its next phase of commercial acceleration.

Group business overview

The Group has three lines of business:

·   Meetings - legacy cash generative business

·   Cloud Telephony - primary growth line of business

·   Hybridium - secondary growth line of business

Meetings and PGi Connect deal

The Group's Remote Meetings business has been declining in the post pandemic environment as enterprises progressively embrace more holistic Unified Communications (UC) platforms, such as Microsoft Teams, which incorporate meetings functionality.

However, on 1 September 2022, the Group announced that it had entered into a major revenue sharing and customer transfer agreement with PGi Connect, giving LoopUp the rights to transfer materially all of PGi Connect's conferencing services customers over to LoopUp. While no initial or fixed consideration is payable, the Group will pay PGi Connect a share of revenue invoiced and received from successfully transferred customers for a period of three years.

On 2 September 2022, PGi Connect sent out the first (and largest) batch of contract assignment notices to c.8,100 of its direct enterprise customers, concerning the transition of services to LoopUp from 1 October 2022. As at July 2022, these 8,100 customers had an annualised revenue run-rate of c.£34 million to PGi Connect.

The Group has prior experience of large-scale customer transitions onto its platform following the acquisition of MeetingZone in 2018. The Group is not taking on any of PGi's infrastructure, equipment, datacentres or vendor contracts, making the transition clean and cost efficient. Nevertheless, from customers' perspective, the transition will be seamless with dial-in numbers, meetings access codes and active calling rates remain unchanged in nearly all cases, and with standard PGi terms and conditions remaining in place meaning no re-contracting.

While this is clearly a highly material level of assigned business, and while more is expected to be taken on in due course relating to PGi Connect's indirect business, the Group is making prudent assumptions regarding transition loss for non-term-committed customers as well as general ongoing business attrition, and so expects the agreement to generate revenue of approximately £10 million and net cash contribution to the Group of approximately £5 million over the twelve-month period from October 2022 to September 2023.

Cloud Telephony

In Q3 2020, the Group launched its Cloud Telephony solution, which has since developed into its primary growth line of business for long-term future value creation in the Group. The Cloud Telephony market is forecast to grow to $29 billion by 2025, and the Group's aspiration is to become one of a small number of winners in the multinational mid-market and enterprise segment, providing customers with single-vendor service provision globally rather than the status quo of multiple telecommunications carriers in specific countries and regions.

Since launch, the Group has secured 60 customer wins, comprising 130 individual contracts, and has done so at an accelerating win rate:

In aggregate, these 60 customer wins represent:

Operationally, all customer deployments to date have been successful, and all rollouts are progressing positively. One customer win case study is a leading global communications consulting firm with c.7,000 employees across 30 countries. The Group has successfully rolled out now to 18 of these countries with minimum committed ARR of c.£260K, bringing the customer's number of telephony vendors down from 20 to 1 in those countries. The remaining 12 countries are scheduled to be rolled out by March 2023. Other customer wins include a US-headquartered Fortune 100 technology company, a Germany-headquartered global industrial group, an Asia-Pacific-headquartered global food group, and a French-headquartered global logistics company. 

In addition to these 60 customer wins, the Group's sales pipeline of potential new Cloud Telephony opportunities continues to grow and now stands at more than £100 million of additional potential ARR, of which approximately 15% is at written proposal stage or later. The pipeline includes:

·   Proofs of Concept (PoC)

·   Strong opportunities

The Group is achieving this strong and accelerating commercial traction in Cloud Telephony due to its differentiated offer for multinational mid-market and enterprise customers versus competition from telecommunications carriers and UC platform calling plans. Specifically, this includes the Group's:

Hybridium

Following the acquisition of SyncRTC Inc. in October 2021 (www.hybridium.com), rebranded Hybridium combines video wall, hologram and virtual live stage technology, bringing unrivalled engagement and analytics to larger scale hybrid education, corporate training and events such as management onsites, departmental kick-offs, capital markets days and thought leadership seminars. Events with Hybridium benefit from ultra-low latency at ultra-high resolution, with full video wall layout flexibility facilitating any content on any screen.

In April 2022, Hybridium signed a deal with Telefónica for the deploying of its solution at 'Universitas', Telefónica's global innovation and talent hub located at its Madrid headquarters in Distrito Telefónica. While the Group wishes to sell Hybridium to more large enterprises, such as Telefónica, and while building pipeline for such opportunities is very achievable in the post pandemic hybrid working environment, the purchase ticket price is material (with the associated hardware), and many enterprises are still in the phase of assessing and formulating their future working policies rather than making major investments.

As such, the Group's primary planned route to market for this technology in the near term will be via renting a LoopUp-owned and managed facility, which will be at a much lower ticket price of approximately £15,000 per half day rental. The Group has identified a primary location in the City of London and is at heads of terms for a lease. The Group believes this route to market has the potential for fast investment payback and the potential to replicate in other major urban centres, as well as being an effective shop window and experiential facility for further enterprise sales such as Telefónica.

For context, planned forward-looking investment in Hybridium is materially less than that in Cloud Telephony at approximately one tenth of the investment.

Capital Raising

As announced on 28 and 29 September 2022, subject to shareholder approval at General Meeting to be held on October 17 2022, the Group has successfully closed a Capital Raising for approximately £3.5 million, by way of an institutional placing and direct subscriptions with the Company, at an issue price of £0.05.

Additionally, Turner Pope Investments Limited ("TPI") is currently conducting a broker offer (the "Broker Offer") allowing additional subscriptions from investors who did not participate in the Capital Raising for new Ordinary Shares through TPI at the same £0.05 Issue Price with a value expected to be around £1.0 million (and which may be increased by agreement between the Company and TPI in the case of sufficient demand), with priority being given to existing shareholders.

The Capital Raising, the proceeds of the Broker Offer and the expected cash generation from the PGi Connect agreement, will:

·   support the next phase of investment in Cloud Telephony (primary) and Hybridium (secondary);

·   support the transfer of Meetings customers from PGi Connect;

·   provide near term working capital for the Group; and

·   strengthen the Group's balance sheet going forward.

Restructuring of existing debt arrangements

In 2018, the Group entered into a term loan with Bank of Ireland for £17.0 million, which has since reduced to a current balance of £6.9 million, and a revolving credit facility. On the basis of the Group's deal with PGi Connect and this proposed Capital Raising, the Group and Bank of Ireland have agreed the following changes to the term loan arrangements:

Outlook

The PGi Connect deal, together with the proposed Capital Raising, gives the Group the cash boost it needs to take its primary Cloud Telephony business through the next phase of growth. The Group's solution is materially differentiated for the multinational segment in the large, growing Cloud Telephony market, and the Group is now building upon clearly accelerating commercial traction and success.

Steve Flavell                Michael Hughes

co-CEO                        co-CEO

Unaudited consolidated statement of comprehensive income for the six months to 30 June 2022

Unaudited consolidated statement of financial position at 30 June 2022

 

Unaudited consolidated statement of changes in equity at 30 June 2022

Unaudited consolidated statement of cash flows for the six months to 30 June 2022

Notes to the financial information for the six months ended 30 June 2022

1. General information

LoopUp Group plc (AIM: "LOOP", "LoopUp Group", or the "Group") is a global provider of hybrid communication software and services.  It is a public limited company incorporated and domiciled in England and Wales, with company number 09980752.  Its registered office is The Tea Building, 56 Shoreditch High Street, London, E1 6JJ.

2. Basis of preparation and significant accounting policies

These consolidated interim financial statements have been prepared in accordance with UK adopted International Accounting Standards ("IFRS") and IFRS Interpretations Committee (formerly IFRIC) interpretations in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. This results announcement does not constitute statutory accounts of the Group within the meaning of sections 434(3) and 435(3) of the Companies Act 2006. The balance sheet at 31 December 2021 has been derived from the full Group accounts published in the Annual Report and Accounts 2021, which has been delivered to the Registrar of Companies and on which the report of the independent auditors was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.

The results have been prepared in accordance with the accounting policies set out in the Group's 31 December 2021 statutory accounts, which are based on the recognition and measurement principles of IFRS.

These unaudited interim results have been prepared on the going concern basis. At the balance sheet date, the Group had cash of £0.7m and net assets of £45m. As announced on 1 September 2022, the Group has entered into an agreement whereby it has the right to transfer materially all of the business of PGi Connect, which the Directors expect to contribute around £5m of net cash to the Group in the twelve months following transition. As announced on 29 September 2022, the Group has raised additional capital of approximately £3.5m. Given these factors and based on detailed forecasts prepared by management, the Directors have a reasonable expectation that the Group has adequate resources to continue operations for the next twelve months, and as such these results have been prepared on a going concern basis.

The results for the six months ended 30 June 2022 were approved by the Board on 30 September 2022. A copy of these interim results will be available on the Group's web site www.loopup.com from 30 September 2022.

The principal risks and uncertainties faced by the Group have not changed from those set out in the Annual Report and Accounts 2021.

No impact is anticipated from new standards coming into effect from 1 January 2022.

3. Revenue and segmental reporting

IFRS 8 Operating Segments requires operating segments to be identified on the same basis as is used internally for the review of performance and allocation of resources by the CODM.  The Directors have identified the segments by reference to the principal groups of services offered and the geographical organisation of the business as reported to the CODM.

In July 2020, the Group announced a major extension to the LoopUp proposition to include global cloud voice services via Direct Routing integration with Microsoft Teams (known as Cloud Telephony). This capability, alongside the Group's longstanding Remote Meetings and Managed Events capabilities, combine into a category termed LoopUp Platform Capabilities (LPC). Revenue from resale of Cisco WebEx services is categorised as 'third party resale services'. In addition to the above segments adopted in the 2020 annual report and accounts, this year a new segment exists as a result of the acquisition of SyncRTC in October 2021, that of Hybridium.

Segmental revenues are external and there are no material transactions between segments.  The Group's largest customer represented less than 5% of total revenue in both years.

No segmental balance sheet was presented to the CODM. It is not possible to allocate overheads, and therefore profits, by segment due to the pooled nature of the overhead base and the capital structure. Overheads are not presented to the CODM on a segmental basis.

The Group's revenue disaggregated by primary geographical markets is as follows:

The Group's revenue disaggregated by pattern of revenue recognition is as follows:

The Group's revenue disaggregated by segment is as follows:

The Group's non-current assets disaggregated by primary geographical markets are as follows:

4. Earnings per share

The basic earnings per share is calculated by dividing the net profit attributable to equity holders of the Group by the weighted average number of ordinary shares in issue during the year. 

Since the Group made a loss in each of the periods above, there were no potentially dilutive shares that were not anti-dilutive, and the diluted earnings per share is identical to the basic earnings per share.

5. Dividends

The directors did not recommend the payment of a dividend for the years ended 31 December 2021 or 2020, or the six month periods ended 30 June 2022 or 2021.

6. Prior year restatements

The annual report and accounts for the year ended 31 December 2021 set out certain restatements made to prior years which impact on the 30 June 2021 comparative figures in this interim financial information.

(a) Right of use assets

During 2021, the Group identified that certain assets, liabilities and charges relating to right of use assets had been misstated in prior years. These balances were restated as at 1 January 2020 and 31 December 2020, and the total adjustment affecting the 30 June 2021 comparatives is set out below:

(b) Deferred tax

During 2021, the Group identified that in 2020 the deferred tax liability relating to the customer relationship and brand assets recognised on the acquisition of MeetingZone had been calculated at the incorrect main corporation tax rate. This deferred tax liability was initially calculated using a tax rate of 17%, as the reduction to this rate had been substantively enacted through parliament. However, in 2020, the UK government announced that the rate would remain at 19%. An adjustment should have been made in 2020, through the deferred tax charge, to reflect the new tax rate. The adjustment results in an increase of £518,000 in the Group's deferred tax charge and deferred tax liability in 2020.