VELA TECHNOLOGIES #VELA INVESTEE COMPANY – SKILLCAST #SKL – FINAL RESULTS FOR YEAR ENDING DEC 31 May 10, 2022 – Posted in: Blog, Vela Technologies Plc (VELA) – Tags: , , , ,

Skillcast Group (AIM: SKL), the provider of content and technology for digital compliance transformation, is pleased to announce its audited results for the year ended 31 December 2021.

 Financial and operating highlights

2021

£ million

2020

£ million

Revenue

8.4

7.3

Revenue growth

15%

8%

Gross Margin

71%

69%

Annualised recurring revenue*

5.8

4.5

Adjusted EBITDA*

1.1

1.1

Cash in bank

7.9

3.8

·    Revenue growth of 15% (2020: 8%) driven by increased subscription revenue

o  Second half recovery also in professional services revenues

·    H1 2021 total revenue 4% higher than H1 2020

·    H2 2021 total revenue 27% higher than H2 2020

·    Cash in bank of £7.9 million (31 December 2020: £3.8 million) due to £3.5 million placing, higher revenues and improved debt collections

·    Proposed final dividend of 0.279p per share to give total dividend for year of £400k or 0.447p per share, based upon the number of shares currently in issue, in line with previous year

Total revenue growth driven by recurring revenues from subscriptions

·    62% of total revenues were recurring (2020: 56%)

·    Recurring revenues from subscriptions grew by 28% to £5.2 million (2020: £4.1 million)

·    Non-recurring revenues from professional services steady at £3.2 million (2020: £3.2 million)

Current trading and outlook

·    Strong start with first quarter client acquisitions higher than first quarter of 2021

·    Continued growth expected in recurring revenues from subscriptions, while professional services remains steady 

Vivek Dodd, Chief Executive Officer of Skillcast, said:

“We are pleased with how the increase in our subscription revenue helped accelerate total revenue growth from 8% in 2020 to 15% in 2021. We help our clients build more ethical, inclusive and resilient workplaces in an increasingly hybrid and fluid work environment. Companies face increasing regulations and societal demands which, along with cost pressures, are causing them to rethink and transform their staff compliance. Skillcast is helping them to educate employees, and record, monitor, analyse and evidence their activities for legal, regulatory and standards compliance with our e-learning content and compliance technology.

“Over the next two years we intend to use the funds we raised in December to build on our leadership position through investments in our technology and content IP and through promoting our solutions to a wider market. The cost of these investments will impact profit margins in the short term but is designed to drive future growth. Our focus is on building ARR to enhance the sustainable recurring nature of our business.

“Trading in the early part of the year has started well, in line with our expectations, with continued year on year growth in subscription related revenue. We have made material progress on hiring the new talent needed to achieve our technology development plans and our new business development team has gained early successes with new client acquisitions in the first quarter up on the same period last year.

“With a strong balance sheet, an excellent set of products and an enthusiastic and well-motivated team, we believe we are well placed to deliver on the growth plans we have set out to build a substantial and sustainable digital compliance transformation business.”

*Further details on the calculation of adjusted EBITDA and ARR are set out in the Financial Review below

Enquiries:

Skillcast Group plc

+44 (0)20 7929 5000

Richard Amos, Chairman

Vivek Dodd, Chief Executive Officer

Chris Backhouse, Chief Financial Officer

Allenby Capital Limited (Nominated Adviser & Broker)

+44 (0)20 3328 5656

James Reeve, Piers Shimwell (Corporate Finance)

Tony Quirke (Sales and broking)

Chairman’s Statement

I would like to take this opportunity to thank shareholders who supported our flotation in December and the associated fund-raise that we undertook at the same time. That process was the culmination of several years of preparation by the executive team and marks a pivotal moment in the growth aspirations of the business. We are very excited to be entering this new investment phase for the Company.

Results and Dividend

Financial results for the year ended 31 December 2021 were encouraging. Revenue of £8.4 million was some 15% up on the prior year overall (2020: £7.3 million) and within that the strategically important software-as-a-service (“SaaS”) subscription revenue was up 28%.  Annual recurring revenue (“ARR”), our key performance indicator to measure subscription sales progress, grew by 29% to £5.8 million in December 2021. As anticipated, consistent with the investment we are making, despite the growth in revenue, adjusted EBITDA of £1.1 million was similar to the prior year (2020: £1.1 million). This profit performance reflected the start of the investment programme which is supported by the recent fund raise. Our stated plan is to expand our sales and marketing capability and to enhance our technology. The cost of both of these will impact profit margins in the short term but is designed to drive future growth.

With a business that is backed by recurring revenues that provide strong cash generation, the Board is committed to paying dividends. At the AGM on 22 June, the Board will propose a final dividend of 0.279p per ordinary share. Taken in combination with an interim dividend of 0.188p per share that was paid in November 2021, this takes the full year dividend to £400,000 (2020: £400,000) or an equivalent of 0.447p per share based upon the number of shares currently in issue. It is the Board’s stated policy to maintain the full year dividend at least at this level for the foreseeable future.

Strategy

Skillcast exists to enable companies of all sizes and markets to address in a digital format their need to ensure that their workforces are compliant with an ever-increasing range of regulatory requirements. To do this we provide an easy to integrate to RegTech platform which incorporates engaging, company-specific, tailored e-learning based training content, policy attestation hubs, registers for recording activities like continuing professional development (“CPD”) undertaken or gifts and hospitality received and the tools to monitor and administer all of the above.

With the growing burden of compliance that all companies are experiencing we believe that this is a key moment in the development of the digital compliance transformation market to help companies deal with this challenge.  With Skillcast’s history in producing engaging customisable e-learning content and by harnessing that with our internally developed Regtech platform, we believe we are uniquely placed to offer companies an easy to adopt, low-cost solution to something that is currently causing considerable challenges and concern.

Our strategy is to grow our recurring subscription-based revenues through a focus on supporting existing clients and acquiring similar new customers. Naturally we will primarily target new clients in regulated industries where the burden of compliance is at its highest although our services are equally applicable to all companies that have a need for efficient workplace compliance solutions. Whilst we are equally able to support companies of all sizes, our ‘sweet spot’ is medium sized enterprises for whom compliance requirements are increasingly complex but who are not large enough to warrant full bespoke solutions.

The recent fund-raise that we completed will allow us to invest in accelerating planned enhancements to our technology platform to make it more scalable and easier for customers to access and integrate with. It is also allowing us to expand our sales and marketing capability which in turn will allow us to build market share more rapidly as the market which we serve grows.

People and Board

I would like to thank and congratulate Vivek and the entire Skillcast team for all that they have achieved over the last twelve months. Their achievements in continuing to develop and grow the business despite the considerable distraction of the flotation process is something for which they should be rightly proud.

I also want to recognise my fellow Non-Executive Directors, Sally Tilleray who chairs the Audit Committee and Isabel Napper who chairs the Remuneration Committee. I’ve enjoyed working alongside them as we have helped the executive team to transition Skillcast to life as a public Company and develop the governance structures that are now required.

And I would also like to welcome the eighteen new members of the team who have joined us since the flotation. As we embark on our new growth journey their contribution will be vital and I look forward to working with them all.

Current Trading and Outlook

We believe that Skillcast faces a timely opportunity in a digital compliance transformation market that offers potential for significant growth with targeted and appropriate investment. That is why we undertook the fund- raise in December.  Investment in the technology enhancements and marketing expansion, which that cash allows us to undertake, will impact profits in the short term, as we explained at the time of the fund-raise, but will ultimately allow the business to accelerate top-line growth and capture share as the market develops.

Trading in the early part of the year has started well, in line with our expectations, with continued year on year growth in subscription related revenue. We have made material progress on hiring the new talent needed to achieve our technology development plans and our new business development team has gained early successes with new client acquisitions in the first quarter up on the same period last year.

With a strong balance sheet, an excellent set of products and an enthusiastic and well-motivated team, we believe we are well placed to deliver on the growth plans we have set out to build a substantial and sustainable digital compliance transformation business.

Richard Amos

Non-Executive Chairman

 

Link here to read the full announcement