Final Results

2019 was a year of significant change. This started in February when the Group announced a fundamental reorganisation of the business.  This involved merging the two UK offices into a single, expanded location in Basingstoke, together with also relocating and expanding our Eastleigh development facility.  The Group has streamlined its corporate structures and operations, resulting in the UK businesses being combined into one trading entity and renamed Ikiru People Limited.  A similar reorganisation has occurred in Australia.  These changes came into effect on 31 December 2019, were delivered on time and within budget, and are delivering the planned efficiencies.

The restructuring was an important step in our plan to streamline our operating procedures while maintaining our excellent reputation for client service in order that the Group could deliver significantly improved performance starting immediately from 2020.

2020 started well for the Group with our early months delivering results ahead of internal expectations.  However, the impact of the Covid-19 pandemic on our target market – the recruitment sector – is clear.  We’ve seen many of our clients shrink, with some clients closing. We have additionally supported many clients through agreeing discounted periods and deferred terms.

The Board has reacted swiftly, taking advantage of various government schemes, including furloughing, and staff unanimously supporting a temporary pay-cut, including all executive and non-executive directors.  In June 2020, the Company secured a loan of £1.5m under the UK Government’s Business Interruption Loan scheme.  This enables us to continue to deliver and develop products with confidence.

The reorganisation in 2019 resulted in some staff working from home and this led to investment in infrastructure to support this.  This therefore enabled the Group immediately to move to home working for the majority of staff as a result of the pandemic and still operate efficiently and effectively.

Looking back at 2019, overall, Group revenue fell 8% to £8.027m, of which recurring revenue fell 8% to £6.593m of which £0.130m related to the loss of a major client as previously announced.

There was an adjusted operating loss in 2019 of £0.207m (2018: Profit £0.055m), mainly due to the fall in revenue and with the full benefits of the reorganisation not expecting to be seen until 2020. The operating loss including reorganisation and acquisition related items was £1.090m (2018: loss £0.414m).

Dividends
The Group is not recommending a final dividend in respect of the year to 31 December 2019 (2018: nil).

Staff
On behalf of the Board I would like to take this opportunity to thank all of our staff for their individual and collective contributions during 2019 and for the professional way they have all risen to the challenges of the pandemic, continuing to deliver for our clients. They ensured that we continued to deliver excellent service throughout 2019’s major restructuring and it is through their efforts, commitment and determination that we continue to be a leading technology provider.

Corporate governance
It is the Board’s duty to ensure that the Group is managed for long-term benefit of all stakeholders.

We have made a number of changes to our Group Board over the last 12 months.  I would like to sincerely thank my predecessor, Dr Mike Love, for his outstanding leadership of the Board over last 9 years.  I am very grateful to him for staying on in a non-executive role to allow for a smooth transition.

I also thank Rory Howard and Alistair Milne who both stepped down from the Board as the restructuring completed. They have both contributed extensively to the business over very many years.  I am delighted to welcome Paul Mather and Simon Warburton to the Board. Both Paul and Simon joined the Group in 2011 on the acquisition of Voyager and have been leading members of the Executive Team.

Outlook
The Group was trading ahead of internal targets for 2020 prior to the impact of Covid-19 and swift action by management has helped mitigate some of the impact of the pandemic.

The majority of our clients are in the recruitment sector and this has been significantly affected by the recession.  Our client base has reduced in size with many of our clients having fewer licences than previously.  We believe this would be true for virtually any supplier in our sector.

However, we are pleased to report that – while revenue from existing clients has fallen – the business has improved its new business performance on the same period in 2019, winning more new contracts for a higher combined value, despite our decision to withdraw our “Evolve” product from the market.  While this will not make up for the loss of revenue from existing clients, it demonstrates our ability to compete successfully and gives us confidence of a return to growth when markets return to a semblance of normality.

However, the most likely outcome for H1 will be a small and much reduced loss compared with the prior year. It remains too early to quantify the impact of the pandemic over the full year, but the Board currently expects to see an improvement on our 2019 result.

With a healthy cash balance and having protected, and now, increasing investment in our product development, the Board is optimistic that the business will emerge strongly as the economy recovers.