ASX RELEASE – APPENDIX 4C & OPERATIONAL UPDATE – MSL DELIVERS GROWTH
26 July 2018: MSL Solutions Limited (ASX: MPW) (MSL or the Company) has today lodged its Appendix 4C Report and is pleased to provide an update on the Company’s expected performance for the financial year ended 30 June 2018.
The financial results for year ended 30 June 2018 are subject to the finalisation of MSL’s audit, which is due by the end of August 2018.
- Total Revenue and Other Income of $35.1 million is in line with forecast, and represents a 44% growth on the prior year;
- MSL Solutions has achieved NPAT of $0.1 million for FY18, which exceeded forecast and an Adjusted(2) NPATA of $5.7 million, which is materially in line with guidance;
- Expansion overseas has continued, with 51% of MSL’s global revenues generated offshore; and
- Annualised recurring revenue for FY18 is $16.8 million, providing a strong platform for top line growth in FY19.
The table below provides a summary of the FY18 unaudited results, with a comparison to the prior year’s statutory performance:
- Other income includes the gain on the sale of Zuuse shares ($0.6m) and release of an earn out provision ($0.5m).
- Adjusted EBITDA and Adjusted NPATA excludes significant expense items of $1.1m predominately relating to transaction related expenses; and
- The Company’s NPAT benefited from a revision to the useful life of acquired intangible assets in FY17, resulting in a lower amortisation charge compared to forecast. Furthermore, the unaudited income tax estimate for FY18 was enhanced due to higher than forecasted R&D tax concessions and foreign based income at lower corporate tax rates.
Based on the unaudited results, MSL has delivered strong, profitable growth in FY18 that is materially in line with guidance, despite the delay in recognising approximately $1.5 million in revenue from contracts that were executed prior to 30 June 2018, which will now contribute to the results for FY19.
The Company has achieved significant sales momentum, with management successfully delivering on its growth strategy. Record new customer sales orders of circa $19.0 million were executed in FY18, which is up 42% on the prior corresponding period. Of the $19.0 million in new orders, there were new sales orders of $12.1 million executed in the second half of the financial year, with over $8.0 million in the final fourth quarter.
MSL’s revenue has grown at a Compound Annual Growth Rate (CAGR) of 57% over the last three years, and accordingly has built a strong base of annuity income and a foundation for future growth. For FY18, over 46% ($15.8 million) of the global operating revenues were recurring annuity revenues, and the Company enters FY19 with annualised recurring revenue of $16.8 million, which is expected to grow.
Due to the demand for our solutions in Europe, UAE and the United States, MSL brought forward investment of circa $0.8 million to drive future growth in these regions. This included product enhancements, establishment of a branch office in Dubai and key resources to drive international expansion.
The FY18 Adjusted(2) EBITDA of $5.2 million (after removing $1.1 million of significant items) represents a 225% increase on FY17. The FY18 EBITDA result was impacted by the following items:
- Approximately $1.5 million of revenue from sales executed prior to 30 June 2018 was not able to be recognised in FY18 due to timing of delivery of obligations;
- Other income of $1.1 million represents net proceeds from the sell-down of MSL’s investment in Zuuse of $0.6 million, and $0.5 million from the release of an earn out provision;
- During the year MSL brought forward investment of circa $0.8 million in product development and overseas expansion that was not forecasted, however is expected to deliver future growth in earnings; and
- In addition, the Company made key senior appointments to strengthen the management and sales teams globally.
Cash flow statement
MSL’s Appendix 4C cash flow statement for the quarter and year ended 30 June 2018 is attached.
Cash receipts for the quarter were $10.4 million, in line with the previous quarter and resulting in total cash receipts of $37.5 million for the financial year. Approximately $3.0 million of customer receipts have been delayed through timing relative to revenue recognised in relation to significant contracts.
As announced on 27 April 2018, the Company acquired Pricap Services Pty Ltd for $1.6 million, which is included in the fourth quarter’s investing cash flows. In addition, gross proceeds from the sale of Zuuse shares totalling $1.0 million were received. The net accounting gain from these sales of $0.6 million is included in the Company’s profit and loss statement.
The business currently carries no bank debt and has approximately $6.6 million cash in the bank.
The Board and management team look forward to continuing and augmenting sales momentum through to FY19. Investment in product development and overseas expansion, along with a strengthening of the management and sales team, will underpin sales growth. In addition, the Company’s growing recurring revenue base provides a strong foundation for growth in FY19.
The audited financial results for the year ended 30 June 2018 will be finalised next month, and the Company’s Board of Directors look forward to providing shareholders with a more detailed report on MSL’s first full year as an ASX listed company.
For further information, please contact:
Investor and Media enquiries
MSL Solutions Limited
Phone: +61 438 008 383
About MSL Solutions Limited
MSL Solutions Limited (ASX: MPW) is an Australian based global provider of hosted software as a service (SaaS) and on-site deployed solutions to clients in the sport, leisure and hospitality sector. MSL services member organisations across APAC, EMEA and North America through its MPower Platform. MSL has a head office in Brisbane and offices in Sydney, Melbourne, UK and Denmark. To discover more about MSL please visit www.mpowermsl.com.
About MPower Platform
MSL’s MPower Platform connects member organisations’ business software and data needs to improve guest engagement, loyalty, gain business efficiencies and improve governance. MSL provides scalable full venue business software applications and data solutions integrated through the MPower core integration architecture. This means that MSL can provide solutions to both small and large organisations and associations. MSL provides cloud based SaaS, hosted and on-site deployed software, data and loyalty/media solutions.