24% growth in revenue, 21% growth in profit after tax, 17% ... · 24% growth in revenue, 21% growth...

24% Growth in Revenue, 21% Growth in Profit after Tax, 17% Growth in Adjusted EBITDA Full Year Guidance Re-affirmed

Dublin, Ireland - 29 August 2017: Datalex plc (ISE: DLE), a leading provider of digital commerce solutions to travel

retailers, today announces interim results for the six months ended 30 June 2017.

H1 2017 Highlights include:

• 24% growth in Total revenue to US$30.3m

• 9% increase in Platform revenue to US$12.8m

• 17% growth in Adjusted EBITDA to US$5.4m

• 21% increase in Profit after tax

• Continued investment in innovation & product capabilities to drive new revenue streams, including the

establishment of Datalex Labs in Silicon Valley

H1 2017 Overview

The first half of 2017 was another period of strong performance for Datalex, with double-digit growth across key

metrics including Revenue, Adjusted EBITDA and Profit after tax. A summary of the results is set out below:

Six months ended 30 June 2017 2016 Change

US$M US$M %

Total revenue 30.3 24.4 24%

Platform revenue included in total revenue 12.8 11.8 9%

Total operating costs 28.5 23.0 24%

Profit after tax 1.6 1.3 21%

Adjusted EBITDA 5.4 4.6 17%

Cash (used in) / generated from operations -1.3 5.4 -124%

Cash and cash equivalents 16.9 18.0 -6%

Commenting on today’s results, Aidan Brogan, CEO of Datalex said: “The first half of 2017 was another period of strong performance and investment for Datalex. The market opportunity continues to expand as more airlines undertake the transformation necessary to prosper in the digital economy. We continue to see a strong new customer pipeline across global markets. Our priority is to continue to invest in scaling the organisation and new platform capabilities to generate new revenue streams and execute on the market opportunity”.

H1 2017 Performance

Total revenue for the period grew by 24% to US$30.3m (H1 2016: US$24.4m), which included a 9% increase in

platform revenue to US$12.8m (H1 2016: US$11.8m). This growth was driven by a number of factors, including the

H1 contribution from Swiss International Air Lines, a member of the Lufthansa Group, who went live on our platform

in late 2016, together with two Chinese carriers that went live during 2016, Air Changan and Tianjin Airlines. We are

also achieving broad organic growth across our existing customer base.

2

The primary driver of revenue growth in H1 was our services revenue, which grew by 43% or US$4.9m to US$16.4m

(H1 2016: US$11.5m). This was driven primarily by ongoing deployment work, including the Lufthansa Group, coupled

with increased demand from existing customers. This revenue stream is highly recurring and strategically very

important for Datalex, in terms of both bringing new customers live on our platform and delivering new functionality

to existing customers, both of which will drive future platform revenue growth.

Total operating costs in H1 2017 increased by 24% or US$5.4m to US$28.5m (H1 2016: US$23.0m) driven by an

increase of US$5.0m in resource costs. The investment in additional resources delivered the increase of US$4.9m in

services revenue and an additional US$1.8m in product investment during the period. Capitalised product investment

in H1 was US$5.9m (H1 2016: US$4.1m), and amortisation of capitalised development was US$2.5m (H1 2016:

US$2.2m).

Resource costs amounted to 82% of our cost base (excluding depreciation and amortisation) in H1 2017 (H1 2016:

78%), and contractors / outsource partners were 53% of this total, compared to 38% in H1 2016. A strong feature of

our flexible operating model is that as our business scales and we use proportionately more resources from our

various partners, we are beginning to see an improving margin profile in our services revenue. This can be seen in

our H1 Adjusted EBITDA margin, which at just under 18%, was broadly in line with H1 2016 (Adjusted EBITDA margin

of 18.8%), despite a 43% growth in services revenue during the period.

Adjusted EBITDA in H1 2017 grew 17% to US$5.4m (2016 H1: US$4.6m), and Profit after tax was US$1.6m (2016 H1:

US$1.3m).

Financial Position at 30 June 2017

Our cash reserves at 30 June 2017 were US$16.9m (2016: US$18.0m), representing a 6% decrease over H1 2016.

Cash (used in) / generated from operations decreased to -US$1.3m from US$5.4m in H1 2016, reflecting:

• the increased working capital investment in new deployments, including the Lufthansa Group,

• the acceleration of product investment in a number of key areas as our market opportunity grows. We are

accelerating our product investment in a number of key areas such as system performance, digital payments,

AI-driven pricing and revenue optimisation, to take advantage of our growing market opportunity with

Global Tier 1 carriers, and

• Our investment in Datalex Labs and our new Digital Advisory Service.

Trade debtors and accrued income (i.e. work done ahead of the next billing milestone) at 30 June 2017 was

US$18.5m, up 39% on the previous year (H1 2016: US$13.3m), reflecting work on new engagements such as the

Lufthansa Group deployment and increasing demand from existing customers. We will have a substantial investment

in working capital at the end of 2017 relating to a number of new deployments, consequently we anticipate cash

reserves at year end of approximately US$16m.

Trade and other payables at 30th June 2017 were US$23.0m (H1 2016: US$19.3m).

Business Development

During H1 2017 we continued to build momentum in our business across a number of headings:

• Customer Success - We are ideally positioned to address the market forces driving airline adoption of new

digital commerce technologies and we are pursuing a strong pipeline of airline opportunities. We are in

advanced discussions with a number of major airlines and expect to announce further signings in the second

half of 2017.

3

• Digital Advisory - A key objective of any digital transformation programme is to look for opportunities to

create value by improving the efficiency of the systems and processes that deliver products, and service the

customer. To this end, Datalex has established a Digital Advisory Service for airlines. Led by our CTO and a

team that leverages more than 100 years of experience in system design for the airline industry, this team

will assist and advise airlines on developing and implementing their digital transformation strategy, which

will help drive pipeline opportunities for Datalex.

• Strategic Partnerships - A key strand of our scaling strategy is to work with market leading partners to

enhance our product and market reach. In H1, we commenced development, with IBM, of an industry

offering that integrates IBM cloud and cognitive technologies with Datalex Digital Commerce capabilities.

IBM has begun actively marketing this solution to drive pipeline opportunity. During the period we also

advanced co-development of joint solution and services offerings with Neusoft, the largest IT Services

organisation in China and we are actively partnering on joint pipeline opportunities in China.

Product Investment

In the first half of 2017 we continued to invest in broadening the capabilities of our product portfolio, and these will

deliver a number of industry-first solutions that will help extend our current revenue streams:

• Artificial Intelligence (‘AI’) – Through our investment in AI and Machine Learning we have developed new

capabilities in dynamic pricing, offer creation and revenue optimisation for airline retailers. We will deliver

an industry-first dynamic pricing solution to our first customer in H1 2018.

• OTA (Online Travel Agent) Platform – In H2, we will complete the development of an OTA platform for

airlines, which will allow them for the first time to compete directly with OTA/Tour Operators and provide

a full end-to-end travel retail offering to its customers. We will bring our first customer – JetBlue - live on

this solution in the coming months.

• Digital Payments – This is an area that we believe will experience significant disruption in the travel industry

in the near future and one which represents a major opportunity for Datalex. The new EU Payment Services

Directive (‘PSD2’) will change how digital retailers interact with their customers from a payment

perspective. Datalex has developed a cloud-based digital payments portfolio which enables airlines to

leverage virtual currencies and manage credit payment facilities with its customers and partners. We

currently have a number of customers using these products, and we expect to bring further customers live

in the coming months.

Innovation and Thought Leadership - Datalex Labs and API Airways

Earlier this year we announced the launch of ‘Datalex Labs’ in Silicon Valley, in partnership with JetBlue Technology

Ventures. One of our first major initiatives was the launch of a unique approach to open innovation called ‘API

Airways’. API Airways is our vision for an airline of the future in the API (‘Application Programming Interface’)

Economy and consists of a full airline retail platform for our Labs’ teams and airline partners to evaluate solutions in

a realistic airline environment.

To date in 2017, we have selected fifteen start-ups for evaluation at our Datalex Labs facility and we have already

integrated one of these (‘FLYR’ - a pricing analytics tool) into our platform in support of JetBlue Technology Ventures.

We have also announced our participation with Boeing HorizonX in the ‘Propeller Shannon’ partnership, a global

aviation partnership with Shannon Group’s International Aviation Service’s Centre (IASC) and the Dublin City

University Ryan Academy to assist new start-up aviation and travel tech companies at Shannon in Ireland.

4

We believe that these initiatives, together with our own investment in new product capabilities, will help maintain

Datalex’s position as the leading provider of innovation solutions to travel retailers in the years ahead.

FY 2017 Outlook

The first half of 2017 has been another period of strong performance and investment for Datalex, with double digit

growth across a number of key metrics. In parallel, our market opportunity continues to grow, and we continue to

invest in our people, product & partnerships to ensure we are well positioned to take advantage of this opportunity.

We will also continue to invest in innovation to ensure we maintain our market-leading position.

In that context we are confident we will achieve growth of 15-20% in Adjusted EBITDA for the full year.

About Datalex

Datalex is a market leader in Digital Commerce for travel retailers. The Datalex Digital Commerce Platform enables a travel

marketplace of over one billion shoppers covering every corner of the globe, driven by some of the world’s most innovative airline

retail brands. Its customers include Aer Lingus, Air China, Air Malta, Air Transat, Copa Airlines, Hainan Group of Airlines, HP

Enterprise Services, JetBlue Airways, Lufthansa Group, Philippine Airlines, SITA, STA Travel and Virgin Australia. The company is

headquartered in Dublin, Ireland, and maintains offices across Europe, USA and China. Datalex is a publicly listed company and is

listed on the Irish Stock Exchange (ISE: DLE). Learn more at datalex.com or follow on Twitter@Datalex.

This press release contains certain forward-looking statements. Actual results may differ materially from those projected or implied in such forward-looking statements. Such forward-looking information involves risks and uncertainties that could significantly affect expected results. Datalex undertakes no obligation to update any forward-looking statements.

Analyst/Investor Enquiries:

Press Enquiries:

David Kennedy Ornagh Hoban

Chief Financial Officer Chief Marketing Officer

+353 1 806 3500 +353 1 806 3500

[email protected] [email protected]

mailto:[email protected]

mailto:[email protected]

Datalex plc

Interim Report Condensed Consolidated Financial Information

For the six months ended 30 June 2017

2

Datalex plc

Chief Executive Officer’s Review for the six months ended 30 June 2017

Summary

The first half of 2017 was another period of strong performance for Datalex, with double-digit growth across key metrics including Revenue, Adjusted EBITDA and profit after tax.

Performance

Total revenue for the period grew by 24% to US$30.3m (2016 H1: US$24.4m), which included a 9% increase in platform revenue to US$12.8m (2016 H1: US$11.8m). This growth in H1 was driven by a number of factors, including the H1 contribution from Swiss International Air Lines, a member of the Lufthansa Group, who we brought live on our platform in late 2016, together with two Chinese carriers that went live during 2016, Air Changan and Tianjin Airlines, coupled with broad organic growth across our customer base.

The primary driver of revenue growth in H1 was services revenue, which grew by 43% or US$4.9m to US$16.4m (2016 H1: US$11.5m). This was driven primarily by the ongoing deployment work, including the Lufthansa Group program, together with increasing demand at existing customers.

Total operating costs in H1 2017 increased by 24% or US$5.4m to US$28.5m (2016 H1: US$23.0m) driven by an increase of US$5.0m in resource costs. The investment in additional resources delivered the increase of US$4.9m in services revenue and the additional US$1.8m in product investment during the period.

Capitalised product investment in H1 was US$5.9m (H1 2016: US$4.1m). We continued to invest in broadening out the capabilities of our product portfolio and these will deliver a number of industry-first solutions that will help broaden our current revenue streams:

• Dynamic pricing - Through our investment in Artificial Intelligence (‘AI’) and Machine Learning we have developed new capabilities in dynamic pricing, offer creation and revenue optimisation for airline retailers.

• OTA (Online Travel Agent) Platform - In H2, we will complete the development of an OTA Platform for airlines, which will allow them for the first time to compete directly with OTA/Tour Operators, and provide a full end-to-end travel retail offering to its customers.

• Digital payments – Datalex has developed a range of innovative solutions, including virtual reward, pre-pay and credit payment facilities. We currently have a number of customers using these products, and we expect to bring further customers live in the coming months.

Adjusted EBITDA grew 17% in H1 2017 to US$5.4m (2016 H1 US$4.6m). Profit after tax in the period was US$1.6m (2016 H1: US$1.3m).

Financial position at 30 June 2017

Our cash reserves at 30 June 2017 were US$16.9m (2016 H1: US$18.0m), representing an 6% decrease year on year. Cash generated from / (used in) operations decreased year on year from US$5.3m to (US$1.3m), reflecting:

• the increased working capital investment in new deployments, including at the Lufthansa Group and;

• the acceleration of product investment in a number of key areas as our market opportunity grows

Trade debtors and accrued income (i.e. work done ahead of the next billing milestone) at 30 June 2017 was US$18.5m, up 39% on the previous year (H1 2016: US$13.3m), reflecting work on new engagements, such as the Lufthansa Group deployment and increasing demand from existing customers. We will have a substantial investment in working capital at the end of 2017 relating to a number of new deployments, which will unwind as they go live during 2018.

Trade and other payables at 30th June 2017 were US$23.0m (H1 2016: US$19.3m).

3

Business Development

During H1 2017 we continued to build momentum in our business across a number of headings:

• Customer Success - We continue to pursue a strong pipeline of airline opportunities. We are in advanced

discussions with a number of major airlines, and expect to announce further signings in the second half of 2017.

• Digital Advisory - Led by our CTO and a team that leverages more than 100 years of experience in

systems design for the airline industry, we have established a Digital Advisory Service for airlines. This team will assist and advise airlines on developing and implementing their digital transformation strategy.

• Strategic partnerships - In H1, we commenced development, with IBM, of an industry offering that

integrates IBM cloud and cognitive technologies with Datalex Digital Commerce capabilities. IBM has begun actively marketing this solution to drive pipeline opportunity. During the period, we also advanced co-development of joint solution and services offerings with Neusoft, the largest IT Services organisation in China and we are actively partnering on joint pipeline opportunities in China.

Innovation and Thought leadership – Datalex Labs and API Airways

Earlier this year Datalex announced the launch of ‘Datalex Labs’ in Silicon Valley, in partnership with JetBlue Technology Ventures, where one of our first major initiatives was the launch of a unique approach to open innovation called ‘API Airways’. ‘API Airways’ is our vision for an airline of the future, and consists of a full airline retail platform for our Labs team and airline partners to evaluate high potential start-up solutions in a realistic airline environment.

To date in 2017, we have selected fifteen start-ups for evaluation at our Labs facility in San Francisco. We completed the integration of FLYR (a pricing analytics tool) to our platform in support of JetBlue Technology Ventures.

We have also announced our participation with Boeing HorizonX in the ‘Propeller Shannon’ partnership, a global aviation partnership with Shannon Group’s International Aviation Service’s Centre (IASC) and DCU Ryan Academy to assist new start-up aviation and travel tech companies at Shannon.

We believe that these initiatives, together with our own investment in new product capabilities, will help maintain Datalex’s position as the leading provider of innovation solutions to travel retailers in the years ahead.

Principal risks and uncertainties

The principal risks and uncertainties faced by the Group for the remaining part of the year are outlined in Note 18 to the condensed consolidated interim financial information.

Aidan Brogan

Chief Executive Officer, 28 August 2017

4

Datalex plc

Responsibility Statement in respect of the six months ended 30 June 2017

The directors, whose names and functions are listed on pages 36 to 38 in the Group’s 2016 Annual Report, are responsible for preparing this interim management report and the condensed consolidated interim financial information in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007, the related Transparency Rules of the Irish Financial Services Regulatory Authority and with IAS 34, Interim Financial Reporting as adopted by the European Union. The directors confirm that, to the best of their knowledge:

• the condensed consolidated interim financial information for the half year ended 30 June 2017 has been prepared in accordance with the international accounting standard applicable to interim financial reporting, IAS 34, adopted pursuant to the procedure provided for under Article 6 of the Regulation (EC) No. 1606/2002 of the European Parliament and of the Council of 19 July 2002;

• the interim management report includes a fair review of the important events that have occurred during the first six months of the financial year, and their impact on the condensed consolidated interim financial information for the half year ended 30 June 2017, and a description of the principal risks and uncertainties for the remaining six months which has been provided in Note 18 of the condensed consolidated interim financial information;

• the interim management report includes a fair review of related party transactions that have occurred during the first six months of the current financial year and that have materially affected the financial position or the performance of the Group during that period, and any changes in the related parties’ transactions described in the last Annual Report that could have a material effect on the financial position or performance of the Group in the first six months of the current financial year.

On behalf of the Board

Aidan Brogan David Kennedy

Director Director 28 August 2017

5

Datalex plc

Condensed Consolidated Interim Balance Sheet as at 30 June 2017 – unaudited

Notes 30 June 2017 31 Dec 2016

US$'000 Unaudited

US$'000 Audited

ASSETS Non-current assets Property, plant and equipment 2,067 2,275 Intangible assets 13 22,458 19,178 Deferred income tax assets 2,076 2,076 Trade and other receivables 8 334 329

Total non-current assets 26,935 23,858

Current Assets Trade and other receivables 8 21,565 15,153 Cash and cash equivalents 16,889 24,320

Total current assets 38,454 39,473

TOTAL ASSETS 65,389 63,331

EQUITY Capital and reserves attributable to the equity holders of the company Ordinary share capital 7,654 7,596 Other equity share capital 262 262 Other reserves 6,476 5,888 Retained earnings 26,916 29,093

TOTAL EQUITY 41,308 42,839

LIABILITIES Non-Current Liabilities Borrowings 9 212 458 Provision 477 326 Trade and other payables 10 76 113

Total non-current liabilities 765 897

Current liabilities Trade and other payables 10 22,880 19,142 Borrowings 9 353 336 Current income tax and liabilities 83 117

Total current liabilities 23,316 19,595

TOTAL EQUITY AND LIABILITIES 65,389 63,331

The accompanying notes form an integral part of these condensed consolidated interim financial information.

6

Datalex plc

Condensed Consolidated Interim Income Statement for the six months ended 30 June 2017 – unaudited

Notes Six Months Ended Year Ended 30 June 2017 30 June 2016 31 Dec 2016

US$'000

Unaudited US$'000

Unaudited US$'000 Audited

Revenue 4 30,337 24,442 55,321

Cost of sales 5 (22,019) (19,605) (41,374)

GROSS PROFIT 8,318 4,837 13,947

Selling and marketing costs 5 (3,986) (860) (4,826)

Administrative expenses 5 (2,556) (2,444) (3,579)

Other gains/(losses) 7 111 (95) (291)

OPERATING PROFIT 1,887 1,438 5,251

Finance income 15 13 26

Finance costs (298) (50) (56)

PROFIT BEFORE INCOME TAX 1,604 1,401 5,221

Income tax (expense) / credit 11 (6) (82) 172

PROFIT FOR THE PERIOD 1,598 1,319 5,393

PROFIT PER SHARE (in US$ cents per share)

Basic 12 2.12 1.80 7.22

Diluted 12 2.04 1.70 6.84


7

Datalex plc

Condensed Consolidated Interim Statement of Comprehensive Income for the six months ended 30 June 2017 – unaudited

Six Months Ended Year Ended

30 June 2017 30 June 2016 31 Dec 2016

US$'000 Unaudited

US$'000 Unaudited

US$'000 Audited

Profit for the financial period 1,598 1,319 5,393

Other comprehensive income:

Items that may subsequently be reclassified to profit or loss:

Foreign currency translation adjustments

- Arising in the year 38 (17) (65)

Total movement in items that may be subsequently reclassified to profit or loss 38 (17) (65)

Comprehensive income for the financial period 1,636 1,302 5,328


8

Datalex plc

Condensed Consolidated Interim Statement of Changes in Equity for the six months ended 30 June 2017 – unaudited

Equity share

capital

Other equity share

capital

Other reserves

Retained earnings

Total equity

US$’000 US$’000 US$’000 US$’000 US$’000

Unaudited

Balance at 1 January 2016 7,535 262 5,107 26,662 39,566

Profit for the period - - - 1,319 1,319

Other comprehensive expense - - (17) - (17)

Total comprehensive income for the period - - (17) 1,319 1,302

Share based schemes charge - - 265 - 265

Issue of ordinary shares on exercise of options 26 - 117 - 143

Decrease in treasury shares due to exercise of JSOP awards - - - - -

Dividends paid - - - (3,023) (3,023)

Balance at 30 June 2016 7,561 262 5,472 24,958 38,253


Profit for the year - - - 5,393 5,393

Other comprehensive income - - (65) - (65)

Total comprehensive income for the year - - (65) 5,393 5,328



Decrease in treasury shares due to exercise of JSOP awards - - 41 - 41

Dividends paid - - - (2,962) (2,962)

Balance at 31 December 2016 7,596 262 5,888 29,093 42,839


Profit for the period - - - 1,598 1,598

Other comprehensive income - - 38 - 38

Total comprehensive income for the period - - 38 1,598 1,636



Decrease in treasury shares due to exercise of JSOP awards - - 46 - 46

Dividends payable to shareholders (Note 17) - - - (3,775) (3,775)

Balance at 30 June 2017 7,654 262 6,476 26,916 41,308


9

Datalex plc

Condensed Consolidated Interim Cash Flow Statement for the six months ended 30 June 2017 – unaudited

Notes Six Months Ended Year Ended

30 June 2017

30 June 2016

31 Dec 2016

US$'000 US$'000 US$'000

CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations 15 (1,254) 5,384 17,105

Income tax paid (40) (53) (149)

NET CASH GENERATED FROM OPERATING ACTIVITIES (1,294) 5,331 16,956

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment (334) (1,246) (1,408)

Additions to Intangible assets 13 (5,916) (4,287) (9,429) Short term investments - 4,577 4,577

Interest received 15 13 26

NET CASH USED IN INVESTING ACTIVITIES (6,235) (943) (6,234)

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares (including share premium)

263 143 342

Proceeds from exercise of JSOP awards 46 - 41

Dividends paid to shareholders - (3,023) (2,962)

Decrease in finance liabilities (229) (536) (701)

Interest paid (298) (50) (56)

NET CASH USED IN FINANCING ACTIVITIES (218) (3,466) (3,336)

Net (decrease) / increase in cash and cash equivalents (7,747) 921 7,386 Foreign Exchange gain / (loss) on cash and cash equivalents

316 (122) (297)

Cash and cash equivalents at beginning of period 24,320 17,231 17,231

CASH AND CASH EQUIVALENTS AT END OF PERIOD

16,889 18,030 24,320


10

Datalex plc

Notes to the Condensed Consolidated Interim Financial Statements at 30 June 2017 – unaudited

1. General Information

The principal activity of the Group is the development and sale of a variety of direct distribution software products and solutions to the travel industry.

The Company is a public limited company incorporated and domiciled in Ireland and is listed on the Irish Stock Exchange. This condensed consolidated interim financial information were authorised for issue by the Board of Directors on 28 August 2017.

2. Basis of preparation

The condensed consolidated interim financial statements included in this report have been prepared in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007, the related Transparency Rules of the Irish Financial Services Regulatory Authority and with International Accounting Standard 34, Interim Financial Reporting (‘IAS 34’) as adopted by the European Union. These condensed statements do not include all information required for full annual financial statements and should be read in conjunction with the consolidated financial statements for the year ended 31 December 2016 included in the Group’s 2016 Annual Report which is available on the Group website www.datalex.com. The condensed consolidated interim financial statements presented do not constitute full statutory accounts. Full statutory accounts for the year ended 31 December 2016 will be filed with the Irish Registrar of Companies in due course. The Audit Report on those statutory accounts was unqualified.

The Group’s auditors have not audited or reviewed the condensed consolidated interim financial statements contained in this report.

Going Concern

The Group meets its day-to-day working capital requirements through its cash reserves. The Group’s forecasts and projections, taking account of reasonable possible changes in trading performance and the Group’s management of its principal risks and uncertainties, as described in the notes to these condensed consolidated interim financial statements, show that the Group should be able to operate within the level of its current facilities and resources. After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the going concern basis in preparing its condensed consolidated interim financial statements.

3. Accounting policies

The accounting policies applied by the Group in the condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2016.

There are no other IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on or after 1 January 2017 that had a material impact on the Group.

4. Segmental information

Management has determined the operating segments based on the reports reviewed by the executive management team that are used to make strategic decisions. The executive management team assesses the performance of the operating segments based on a measure of Adjusted EBITDA.

The executive management team considers the business from a product and service perspective. At 30 June 2017, TPF consulting did not meet the quantitative thresholds for mandatory disclosure under IFRS 8 Operating Segments. However, the executive management team have opted to continue to disclose this segment separately on the basis that TPF consulting is managed independently and that the executive management team review the performance of the segment separately. The TPF business has different characteristics and business challenges compared to the E-business reporting segment. Throughout the year management considers the performance of E-business and TPF consulting on a separate basis.

The executive management team considers the business from a product and service perspective. Management considers the performance of E-business and TPF Consulting on a separate basis.

http://www.datalex.com/

11

Datalex plc

Notes to the Condensed Consolidated Interim Financial Statements at 30 June 2017 – unaudited (continued)

4. Segmental information (continued)

The reportable operating segments derive their revenue primarily from the sale of products and services associated with our suite of travel related technology and consulting revenue.

Sales between segments are carried out at arm’s length. The revenue from external parties reported to the executive management team is measured in a manner consistent with that in the income statement.

The segment information provided to the executive management team for the reportable segments for the financial period ended 30 June 2017 is as follows:

Six Months Ended Six Months Ended 30 June 2017 30 June 2016

E- business TPF

Consulting Total E-business

TPF Consulting

Total

US$'000 US$'000 US$'000 US$'000 US$'000 US$'000

Revenue 29,347 1,349 30,696 23,370 1,404 24,774

Inter-segment revenue - (359) (359) - (332) (332)

External Revenue 29,347 990 30,337 23,370 1,072 24,442

Adjusted EBITDA 5,204 159 5,363 4,477 111 4,588 Share options, ownership interests and deferred share awards granted to directors and employees (299) - (299) (265) - (265)

EBITDA 4,905 159 5,064 4,212 111 4,323

Depreciation 540 1 541 527 7 534

Amortisation 2,636 - 2,636 2,351 - 2,351

Operating profit 1,729 158 1,887 1,334 104 1,438 Finance costs (298) (50)

Finance income 15 13

Profit before income tax 1,604 1,401

Income tax expense (6) (82)

Profit after taxation 1,598 1,319

A reconciliation of Adjusted EBITDA to profit before income tax is provided as follows:

Six Months Ended Year Ended 30 June 2017 30 June 2016 31 Dec 2016

US$'000 US$'000 US$'000

Adjusted EBITDA 5,363 4,588 12,217

Depreciation (541) (534) (1,161)

Amortisation - Development Costs (2,513) (2,232) (5,031)

Amortisation - Software (123) (119) (250)

Finance income 15 13 26

Finance costs (298) (50) (56)

Share based payments charge (299) (265) (524)

Profit before income tax 1,604 1,401 5,221

12

Datalex plc


4. Segmental information (continued)

The amounts provided to the executive management team with respect to total assets are measured in a manner consistent with that of the financial statements. These assets are allocated based on the operations of the segment and the physical location of the assets.

Total segment assets and liabilities are as follows:

30 June 2017 30 June 2017 30 June 2017 31 Dec 2016 31 Dec 2016 31 Dec 2016

E- business TPF

Consulting Total E- business

TPF Consulting

Total

US$'000 US$'000 US$'000 US$'000 US$'000 US$'000

Total segment assets 64,479 910 65,389 62,525 806 63,331

Total segment liabilities (23,758) (323) (24,081) (20,247) (245) (20,492)

Revenues from external customers are derived from the sales of E-business products and services associated with the Group’s suite of travel related technology and consulting revenue.

Analysis of revenue by category Six Months Ended Year Ended 30 June 2017 30 June 2016 31 Dec 2016

US$’000 US$’000 US$’000

Platform revenue 12,817 11,755 26,372

Professional services 16,446 11,515 26,710

Consultancy 990 1,072 2,042

Other revenue 84 100 197

Total Revenue 30,337 24,442 55,321

Refer to Note 2.3 of the Group Annual Report for the definition of the different revenue categories included in the table above.

13

Datalex plc


5. Expenses by nature


30 June 2017 30 June 2016 31 Dec 2016

US$’000 US$’000 US$’000

Employee Benefit expense (Note 6) net of capitalisation 9,847 9,797 21,308

Consultants and contractors 12,928 7,732 18,762

Capitalisation of consultants and contractors costs (1,962) (1,744) (5,436)

Depreciation 541 534 1,161

Amortisation - Development costs 2,513 2,232 5,031

Amortisation - Software 123 119 250

Hosting 905 771 1,649

Establishment costs 766 704 1,443

Professional fees 464 494 1,136

Third party services 280 244 471

Travel 807 808 1,609

Communication 147 190 362

Auditors remuneration 131 152 188

Software maintenance and other online charges 151 143 275

Bad debt expense 1 - 7

Other 919 733 1,563

Total cost of sales, selling and marketing costs and administrative expenses

28,561 22,909 49,779

Other (gains)/losses (111) 95 291

Total operating costs 28,450 23,004 50,070

Disclosed as:

- Cost of sales 22,019 19,605 41,374

- Selling and marketing costs 3,986 860 4,826

- Administrative expenses 2,556 2,444 3,579

- Other (gains)/losses (111) 95 291

Total operating costs 28,450 23,004 50,070

6. Employee benefit expense Six Months Ended Year Ended 30 June 2017 30 June 2016 31 Dec 2016

US$’000 US$’000 US$’000

Wages and salaries 11,396 10,552 21,533

Social security costs 1,255 1,006 2,086

Pension costs – defined contribution schemes 340 317 646

Employee benefit expense before capitalisation 12,991 11,875 24,265

Capitalised labour (3,920) (2,343) (3,807)

9,071 9,532 20,458

Share options ownership interests and deferred share awards granted to directors and employees

299 265 524

Long term incentive plan granted to employees 477 - 326

Total 9,847 9,797 21,308

14

Datalex plc


7. Other gains/(losses)


US$’000 US$’000 US$’000

Net foreign exchange gains/(losses) 111 (95) (291)

Total 111 (95) (291)

8. Trade and other receivables 30 June 2017 31 Dec 2016

US$’000 US$’000

Trade receivables 4,373 3,306

Less: provision for impairment - (31)

Trade receivables – Net 4,373 3,275

Research and development tax credit

266 257

Prepayments 1,381 830

Accrued income 14,116 9,984

Other receivables 117 74

VAT receivable 1,312 733

Total current trade and other receivables

21,565 15,153

Non current research and development tax credit

334 329

Total trade and other receivables

21,899 15,482

The carrying amounts of the Group’s trade receivables and accrued income are denominated in the following currencies:

30 June 2017 31 Dec 2016 US$’000 US$’000

US Dollar 7,231 6,979

Euro 10,954 5,693

Sterling 137 35

Chinese Renminbi 167 583

Total 18,489 13,290

All amounts fall due within one year.

9. Borrowings

30 June 2017

31 Dec 2016

Financial Lease Liabilities US$’000 US$’000

Non-Current 212 458

Current 353 336

Total Borrowings 565 794

The carrying amount of the Group’s borrowings are denominated in US dollar. Lease liabilities are secured as the rights to the leased assets revert to the lessor in the event of default. The fair value of the finance leases has been determined using discounted cash flow analysis, where the inputs required (the payments and discount rates) are observable and do not require significant estimation (Level 2 fair value in the fair value hierarchy).

15

Datalex plc


10. Trade and other payables 30 June 2017

31 Dec 2016

US$’000 US$’000

Trade payables 7,686 6,964

Accruals 5,086 5,855

Deferred income 2,348 2,826

Customer advances 2,475 2,475

Pension contribution 171 132

Social security and other taxes 1,339 725

Withholding tax (Note 17) 522 -

Dividend payable (Note 17) Other payables

3,253

-

- 165

Total current trade and other payables 22,880 19,142

Total non current trade and other payables 76 113

Total trade and other payables 22,956 19,255

The fair values of trade and other trade payables approximate to the values shown above.

The carrying amounts of the Group’s trade payables are denominated in the following currencies:

30 June 2017 31 Dec 2016 US$’000 US$’000

US dollar

5,475

5,643

Euro 1,809 865

Sterling 400 446

Chinese Renminbi 2 6

Australian Dollar - 4

Total 7,686 6,964

11. Income tax Six Months Ended Year Ended

30 June 2017 30 June 2016 31 Dec 2016

US$’000 US$’000 US$’000

Current tax

Income tax expense / (credit) 6 82 (172)

Current tax expense / (credit) for the period 6 82 (172)

The 2016 tax credit relates mainly to the recognition of deferred tax losses forward which was addressed in Note 21 of the 2016 Annual Report, together with an explanation of the key judgements involved.

16

Datalex plc


12. Earnings per share


Basic 30 June 2017 30 June 2016 31 Dec 2016

Profit attributable to ordinary shareholders (US$’000) 1,598 1,319 5,393

Weighted average number of ordinary shares outstanding 75,212,783 74,390,433 74,719,811

Basic earnings per share (in US$ cents) 2.12 1.80 7.22

Basic earnings per share is calculated by dividing the profit attributable to the ordinary shareholders by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased/issued by the Company and held as treasury shares.


Diluted 30 June 2017 30 June 2016 31 Dec 2016

Profit attributable to ordinary shareholders (US$’000) 1,598 1,319 5,393


Adjustment for share options 3,307,317 4,000,083 4,130,023


Diluted earnings per share (in US$ cents) 2.04 1.70 6.84

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The categories of dilutive potential ordinary shares of the Group are employee share options, deferred share awards and Joint Share Ownership Plan (JSOP) awards. A calculation is performed to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company’s shares) based on the monetary value of subscription rights attached to outstanding share options.

At 30 June 2017, 43,333 deferred share awards were excluded from the calculation as the performance conditions attached to them have not been met (30 June 2016: 130,000).

Furthermore 563,333 share options under the 2012 share option scheme have been excluded from the number of potential dilutive shares as at 30 June 2017 as performance conditions have not yet been achieved (30 June 2016: 750,000).

The number of shares calculated as above is compared with the number of shares that would have issued assuming the exercise of the share options.

17

Datalex plc


13. Intangible assets

Software Product

Development Total

US$’000 US$’000 US$’000

Period to 30 June 2016

Opening net book value 602 14,835 15,437

Additions 195 4,092 4,287

Amortisation charge (119) (2,232) (2,351)

Closing net book value 678 16,695 17,373

Year Ended 31 December 2016


Additions 203 9,226 9,429

Government grant R&D tax credit assistance - (407) (407)



At 31 December 2016

Cost 2,256 60,210 62,466

Accumulated Amortisation (1,701) (41,587) (43,288)


Period to 30 June 2017


Additions 34 5,882 5,916



At 30 June 2017

Cost 2,290 66,092 68,382

Accumulated Amortisation (1,824) (44,100) (45,924)


Intangible assets consist of capitalised development costs and software. These intangibles have finite useful lives and are valued based on actual costs incurred.

Capitalised development costs are amortised over a period of three to five years (the majority being amortised over five years) commencing from the product being generally available for use.

14. Share capital

During the period to 30 June 2017, 581,500 ordinary shares were issued upon the exercise of employee share options into ordinary share capital.

18

Datalex plc


15. Cash (used in)/generated from operations


US$’000 US$’000 US$’000

Profit before income tax 1,604 1,401 5,221

Adjustments for:

Interest received (15) (13) (26)

Interest paid 298 50 56

Depreciation 541 534 1,161

Amortisation 2,636 2,351 5,281

Employee share option charge 299 265 524

Foreign currency (gain)/loss on operating activities (111) 95 291

LTIP Provision 151 - 326

Non current trade and other payables (37) - 113

Changes in Working Capital:

Trade and other receivables (6,899) (3,328) (3,361)

Trade and other payables 279 4,029 7,519

Cash (used in)/generated from operations

(1,254) 5,384 17,105

16. Related party transactions

The following transactions were carried out with related parties:

(a) Key management personnel includes the two Executive Directors who held office during the year (2016 HY: two Executive Directors), the five Non-Executive Directors (2016 HY: five Non-Executive Directors) and eight members of the senior management team (2016 HY: seven members). Key management compensation:

Six Months Ended Six Months Ended

30 June 2017 30 June 2016

US$’000 US$’000

Emoluments 1,476 1,237

Benefits under long-term incentive schemes 42 265

Benefits under long-term cash settled incentive scheme 32 -

Contributions to defined contribution schemes (1) 58 53

Total 1,608 1,555

(1) Retirement benefits are accruing to two directors (2016 HY: two directors) and eight members of the senior management team (2016 HY: seven members) under a defined contribution scheme.

(2) The remuneration of, and transactions with all Non-Executive Directors:

Six Months Ended Six Months Ended 30 June 2017 30 June 2016

US$’000 US$’000

Basic salaries and fees 161 166

Details of related party transactions in respect of the year ended 31 December 2016 are contained in Note 24 of our Annual Report. The Group continued to enter into transactions in the normal course of business with its related parties during the period. There were no transactions with related parties in the first half of 2017 or changes to transactions with related parties disclosed in the 2016 financial statements that had a material effect on the financial position or performance of the Group.

19

Datalex plc


17. Dividends

A dividend of US$3.8m was paid on 4 July 2017 (period ended 30 June 2016: US$3.0m). This represents a dividend of five US cents per share (30 June 2016: four US cents per share) which was paid to shareholders who were on the register at 2 June 2017. This dividend was proposed by the Board of Directors on 27 March 2017 and approved by shareholders on 23 May 2017.

On 28 April 2017, Datalex plc, the Group parent company, received a dividend of circa US$3.6m from its wholly owned subsidiary Datalex (Ireland) Limited.

18. Principal risks and uncertainties

(a) Principal risks

The principal risks and uncertainties faced by the Group were outlined in the Group’s 2016 Annual Report on pages 31-33. The Annual Report is available on our website www.datalex.com. The principal risks and uncertainties remain substantially the same for the remaining six months of the financial year as those outlined in the Group’s 2016 Annual Report.

(b) Litigation and disputes

There has been no material change in our contingent liabilities in the period ended 30 June 2017 since the approval of our statutory financial statements for the year ended 31 December 2016.

19. Seasonality

While management do not believe that seasonality has a material impact on the business of the Group, business performance is impacted by the timing of go-lives, which triggers the commencement of platform revenue from new customers.

20. Events occurring after the balance sheet date

As noted in Note 17, a dividend of US$3.8m was paid on 4 July 2017. There were no other events that would impact on the condensed consolidated interim financial statements for 30 June 2017, up to the date of issue.

21. Distribution of interim report

The interim report is available on the Group’s website www.datalex.com. Copies are also available to the public from the Company’s registered office at Block U, EastPoint, Clontarf, Dublin 3 D03 H704, Ireland.



24% growth in revenue, 21% growth in profit after tax, 17% ... · 24% growth in revenue, 21% growth...

Documents