Annual Report 2023
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Strategic Report | Contents
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Contents
01
Strategic
Report
Highlights of the Year 05
Chairman’s Statement 08
Chief Executive’s Review 10
Principal Risks & Uncertainties
20
Financial Review 24
Sustainability Report
Board of Directors
28
36
02
Chairman’s Statement on Corporate Governance 38
Audit Committee Report 44
Corporate
Governance
Remuneration Committee Report 47
Directors' Report
53
Independent Auditors’ Report 56
Consolidated Statement of Total Comprehensive Income 64
03
Consolidated Statement of Financial Position 65
Company Statement of Financial Position 66
Financial
Statements
Consolidated Statement of Changes in Equity 67
Company Statement of Changes in Equity
Consolidated Statement of Cash Flows
68
69
Notes to the Financial Statements 70
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04
Strategic Report | Eckoh Annual Report 2023
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05
Strategic Report
Eckoh plc (AIM: ECK), the global provider of Customer
Engagement Data Security Solutions, is pleased to announce
full year audited results for the year ended 31 March 2023.
Highlights of the Year
REVENUE
£38.8m
£21.3m
UK&I and ROW REVENUE
Up 22% from FY22
Up 10% on FY22
UK&I and
ROW 55%
NA
45%
NORTH AMERICA REVENUE
$21.3m
Up 25% from FY22
TOTAL
CONTRACTED
BUSINESS
NET
CASH
£34.5m
£5.7m
GROUP
ANNUAL
RECURRING
REVENUE
Up 18%
£30.4m
ADJUSTED
EARNINGS
PER SHARE
2.09
pence
per
share
56%Up from FY22
NORTH AMERICA SECURE PAYMENTS
ANNUAL RECURRING REVENUE
$15.9mUp 34%
£7.7m
ADJUSTED
OPERATING
PROFIT
48%
Up from FY22
UK&I and ROW - UK&I and Rest of World NA - North America
6
08
Strategic Report | Highlights of the Year
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09
Highlights of the Year
Financial highlights
Strategic highlights
• Revenue for the year increased by 22% to £38 8 million (FY22:
• Strategic focus and a cloud-first product proposition supports
£31 8 million) and at constant exchange rates by 16%, driven by
our scalable growth:
organic growth and the full year impact from the acquisition
– By offering cloud platform choice and multiple SaaS solutions
of Syntec in December 2021
without additional deployment effort, we deliver scalability
into larger client opportunities in the NA territory and
• Adjusted operating profit4 up 48% to £7 7m, driven by sales
across international mandates, with significant cross-sell
growth, increased cross-selling, operational leverage, and a
opportunities and faster new client deployments, increasing
£0 5m favourable impact from FX movements
total client value
• Growth in adjusted diluted earnings per share demonstrates
• Our proprietary cloud Secure Call-Recording product was
good organic growth from the underlying business combined
launched in April 2023, to an encouraging response
with the impact of the earnings enhancing acquisition of
– Expected to support the growth in cross-selling and generate
FY23
FY22
Change
Syntec in December 2021
Revenue
Gross profit
North America Secure Payments ARR ($m)1
Total ARR2
Adjusted EBITDA3
Adjusted operating profit4
Profit before taxation
Basic earnings pence per share
Adjusted diluted earnings pence per share5
Net cash
Proposed final dividend (pence)
Total contracted business6
New contracted business7
38.8
31.2
15.9
30.4
9.4
7.7
5.0
1.58
2.09
5.7
0.74
34.5
14.4
31.8
25.4
11.9
25.8
6.8
5.2
2.3
0.59
1.34
2.8
0.67
22.5
10.8
+22%
+23%
+34%
+18%
+38%
+48%
+117%
+167%
+56%
+102%
+10%
+53%
+33%
1 ARR is the annual recurring revenue of all contracts billing at the end of the period
2
Included within Total ARR is all revenue that is contractually committed and an element of UK&I revenue that has proven to be repeatable, but not contractually committed
3 Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) is the profit from operating activities adjusted for depreciation of owned and leased assets,
amortisation, expenses relating to share option schemes, exceptional items and costs relating to business combinations
4 Adjusted operating profit is the profit from operating activities adjusted for amortisation of acquired intangible assets, expenses relating to share option schemes, exceptional
items and costs relating to business combinations
5 Adjusted earnings per share and adjusted diluted earnings per share uses the adjusted operating profit and applies a normalised tax rate to both years of 19%.
6 Total contracted business includes new business from new clients, new business from existing clients as well as renewals with existing clients
7 New contracted business includes new business from new clients and new business from existing clients, including product upsells and cross-sells
8 Eckoh believes that consensus market expectations for the year ending 31 March 2023 is revenue of £40.25 million, adjusted operating profit of £7.45 million and cash of £5.2m
new client contracts at a time when 24% of US contact
centres are looking to update their call recording solution
• Excellent performance from North American Data Security
in the next 12 months
Solutions, where we have the largest addressable market and
a significant opportunity for continued strong growth:
• Global Commercial team now fully aligned to our strategic
– North America Security Solutions ARR1 up 34% and revenue
focus on the North America market:
up 25%
– Embedded a unified proposition into our new go-to-market
– Recurring revenue increased 54% driven by ongoing cloud
vision of Customer Engagement Data Security Solutions,
transition and successful contract renewals
formally launched in April 2023
– Total Addressable Market (TAM) is currently estimated to be
• Refreshed go-to-market strategy drove up new contracted
20 times the size of the UK market
business chiefly through winning cloud deals and international
mandates in North America, which accounted for 71% of all
• Total contracted business6 showed strong growth through
new business
securing new business wins and several successful renewals
• UK & Ireland and Rest of World showed a resilient performance
with revenue up 10%
• Notable new client wins and successful renewals during the
with key clients in North America
• Growth in adjusted diluted earnings per share demonstrates
– A Fortune 100 retailer, purchasing two solutions; first client to
growth from the underlying business and the earnings
go-live on our new Azure cloud platform
enhancing acquisition of Syntec in December 2021
– New two-year voice security contract across more than 20
• Balance sheet remains strong with net cash ahead of
– New global reseller contract with a US based unified
expectations8 at £5 7m (FY22: £2 8m)
communications company, 3 contracts delivered to date
territories with a leading, global hotel company
period included:
• Proposed final dividend of 0.74p per share (FY22: 0.67p),
demonstrating confidence in our product portfolio and the
clear opportunity to capitalise on the scale of the North
American opportunity
Current trading and Outlook
• Positive start to the year with total order value more
• Eckoh is well placed to benefit from favourable industry
than £7m in the first two months.
trends in its target markets including the shift to hybrid
• The Board is confident of further progress in the year ahead,
supported by an encouraging new business pipeline,
increased revenue visibility through continued ARR growth
and a robust balance sheet and cash position
contact centre working and increasing regulatory
requirements around personal data management
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Strategic Report | Chairman’s Statement
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Chairman’s Statement
We made significant progress in the year to March 2023.
The business has focused on the integration of Syntec,
which was acquired in December 2021. Revenue and profits
increased by the amounts that were expected at the time
of the acquisition.
The acquisition of Syntec has facilitated a catalyst in
product development and continued growth especially in
North America (NA).
Results
Board
Total revenue for the year was £38 8 million, an increase year-
In the financial year ended 31 March 2023, there were no
on-year of 22% (FY22: £31 8 million) or 16% adjusting for constant
significant changes to the Board. Full details of the current
exchange rates Growth has been driven both organically and
Directors are on pages 36 to 37
from the full year impact of the acquisition of Syntec
Adjusted operating profit was £7.7 million, an increase of 48%
(FY22: £5 2 million) Adjusted operating profit margin has
increased to 19 9% up from 16 5% the previous year, this coupled
with the improvement in adjusted diluted earnings per share
at 2 09 pence (FY22: £1 34 pence), demonstrate the strong set
of results with growth from the underlying business and the
earnings enhancing acquisition of Syntec in December 2021
Group and North America Security Solutions ARR1 has grown
strongly with group ARR at £30 4 million as at 31 March 2023,
an 18% increase year-on-year (FY22: £25 8 million, restated to
include Coral in North America) The North America Security
Solutions ARR is $15 9 million, an increase of 34% from the same
time last year, demonstrating the strong underlying growth in the
business and the strong visibility of revenues across the business
The Group continues to have a strong balance sheet with a
year-end net cash balance of £5 7 million (FY22: £2 8 million)
Going Concern
The Board has carried out a going concern review and concluded
that the Group will generate adequate cash to continue in
operational existence for the foreseeable future The Directors
have prepared cash flow forecasts for a period in excess of 12
months from the date of approving the financial statements. In
all scenarios tested, the Directors were able to conclude that the
Group will generate adequate cash to continue in operational
existence for the foreseeable future Further information is
included in the Directors’ Report on pages 53 to 55
Dividend
Corporate Governance
As a Board of Directors, we feel the Quoted Companies Alliance
Corporate Governance Code (QCA Code) is the most appropriate
code for Eckoh plc to apply, given the Group’s size, risk, complexity
and stage of maturity In the Governance section of this report on
pages 38 to 43, we outline the Company’s approach to Corporate
Governance and how we have complied with the QCA code The
Board considers that it does not depart from any principles of
the QCA code
Over the last year, we have focused on our Environmental,
Social and Governance strategy (ESG) and I am pleased our
Sustainability report on pages 28 to 33 reflects the progress we
have made It details the four key areas of our approach, the
objectives set, and the targets we have delivered in the financial
year to March 2023
Full details of the Company’s Principal Risks and Uncertainties
are on pages 20 to 23
People
We would also like to thank all employees for their continued
commitment and resilience through what has been a busy
period The collaboration across the technical team has been
exceptional and has resulted in the significant strides being
made in the product enhancements and the multi-cloud
capability In addition, the Sales, Client Services and Marketing
teams have embraced the change and moved to the Global
commercial team to maximise the opportunity we have as a
Group focussing on our key North American market
The whole Board plan to attend the AGM on 13 September 2023
The Board has increased the proposed dividend by 10% to 0 74
and we look forward to the opportunity to meet with as many
pence per share (FY22: 0 67 pence per share)
Shareholders as possible on the day
Christopher Humphrey
Chairman
14 June 2023
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Strategic Report | Chief Executive Review
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09
Chief Executive Review
I am pleased to report Eckoh performed strongly in the
financial year ended 31 March 2023 delivering organic growth
alongside the positive impact of our earnings enhancing
acquisition of Syntec in December 2021, and making significant
progress with our overall strategy. Adjusted operating profit and
cash were both ahead of market expectation, and ARR growth
was strong, especially in our key North American market.
In the 18 months following the acquisition we have completed the
integration of Syntec, also a provider of data security solutions,
which brought complementary technology, IP, clients, learnings,
and people into Eckoh.
e are already seeing positive impacts in both our
To support our strategy to be the market leader in Customer
W
strategic progress and financial performance
and we have started the new year positively
with over £7 million in total contracted business
in the first two months. As indicated at our interim results in
November 2022, following the integration of Syntec these
financial results have been presented on a territory basis for
this period
A clear growth strategy
At Eckoh, we’re on a mission to set the standard for secure
interactions between consumers and the world’s leading brands
Companies today need to provide an exceptional customer
experience with a frictionless and secure payment or process
journey Every interaction and transaction should be secure We
make sure that happens through our innovative products which
build trust and deliver value through exceptional experiences
We’re trusted by well-known global brands, predominantly
from the retail, healthcare, telecoms, financial services, utilities,
and travel sectors, to help process customer enquiries and
payments safely, usually via their customer contact centres,
which are either operated in-house or outsourced Given the
sensitive nature of the solutions we sell, it is unusual for these
companies to be willing to be publicly named, but they are
often happy to provide client references
Our secure engagement solutions help protect sensitive
customer data and can be utilised over any customer
engagement channel (voice, live chat, messaging, email,
social channels etc ) and via any device the customer chooses
Our philosophy when it comes to data security is that the best
way to protect your data is not to collect it Many of the most
sensitive engagement processes, especially taking a payment
itself, do not require the enterprise to collect and store data,
and if the process can be performed without doing this, then
this removes the risk of breach or fraud for the customer This is
our specialism and an approach for which we have a growing
portfolio of patents
Our strategy is driving strong growth in our key markets
with total revenue for the year increasing to £38 8 million,
an increase year-on-year of 22% (FY22: £31 8 million) or 16%
adjusting for constant exchange rates Recurring revenue for
the period was 80% of Group revenue at £31 0 million, a year-
on-year increase of 29% North America ARR1 was $15 9 million,
an increase of 34% year-on-year, again demonstrating strong
progress and the high level of visibility we now have in our
business model
Engagement Data Security Solutions, we completed the
acquisition of Syntec, in December 2021 Our “Syntegration” plan
(our process of integrating and unifying Syntec into Eckoh’s
operations), was split into three phases and covered people,
process and product & technology. Over the last financial
year, we have combined the underlying platform technology
for delivering Eckoh’s existing voice security product branded
as, CallGuard, and Syntec’s solution, branded CardEasy, to
create a new unified platform appliance, we call our Secure
Voice Appliance (SVA) The SVA is the cornerstone of our new
global Secure Voice Cloud platform, which supports our Secure
Engagement Suite of solutions that can be bought either singly
or in multiples by our enterprise clients and delivered through
the same platform
Our delivery infrastructure for new clients and new products is
now fully integrated across the Secure Voice Cloud platform
Aligned to this, we have integrated our operational teams and
processes through Eckoh’s Global Network Operation Centre
(NOC), to provide a unified, cross-trained global support
capability across our client base
Phases 1 & 2 are complete and during the third phase, we
are tasking the unified development team to develop new
solutions for the Secure Engagement Suite in key growth areas
I am pleased to confirm that we launched our first new solution
from the unified team as planned at the beginning of the new
financial year - our new Secure Call Recording solution. We
are only a few weeks into showcasing and demonstrating the
solution, but we are very encouraged by the reaction of existing
and new clients alike
Progressing well against
our strategic goals
We have made excellent progress during the year with our
strategic objectives, which reflect our ambition to be the global
leader in Customer Engagement Data Security Solutions Our
strategic goals are outlined below:
Our overarching strategic goal is our mission To set the
standard for secure interactions between consumers and the
world’s leading brands. By delivering on our five strategic goals
this will take us closer to achieving this overall goal
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Strategic Report | Chief Executive Review
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Our overarching strategic goal is our mission - to set the standard for secure
interactions between customers and the world's leading brands. By delivering
on our five strategic goals this will take us closer to achieving this overall goal.
1 Capitalise on external global market trends
and regulation to help protect customer
data through continual innovation
5 Evaluate acquisition opportunities
that can support our growth strategy in
Customer Engagement Data Security
2 Grow our leadership position in
Customer Engagement Data Security
Solutions to increase Shareholder value
Our
strategic
goals
4 Maximise lifetime client value and
aid retention by cross and up-selling
to increase recurring revenue
3 Use cloud technologies to develop
and enhance our proprietary solutions
to support scalable growth
1.
Capitalise on external global market trends
and regulation to help protect customer
data through continual innovation
key account tier we have around 30 accounts all of which
are based in the North America region, reinforcing again the
rationale for the realignment of our precious resources
Eckoh is well placed to capitalise on favourable
industry trends with a more focused
Commercial team
With the launch of our unified go-to-market proposition of
Customer Engagement Data Security Solutions combined with
our global Commercial team, we are better positioned to drive
growth This is underpinned by our new Secure Engagement
Eckoh has historically targeted organisations that either
Suite of solutions plus our expanding and scalable cloud
transact or engage with its customers at scale, at volume
platforms, which provide us with the opportunity not only
and utilise contact centres with more than 50 agent seats
to extend our reach geographically, but also increase the
in either the UK or US This represented a target market of
opportunity within every client account to land and expand
over 2,500 potential customers in the UK and 12,000 in the
US During the last year and spearheaded by our new Group
Marketing Director we have invested in and implemented new
MarTech tools which have provided us with a more granular
Increasing regulation and data security
challenges drive demand
way of assessing the global opportunity for our solutions By
With increasing regulation regarding the management of
being more granular in our analysis we have identified a total
personal data and the financial impact of data breaches and
addressable market (TAM) of over 150,000 companies, with the
fraud growing, organisations are increasingly looking for ways
North American market representing 48% of that TAM making
to move beyond the requirement of merely being compliant to
it nearly ten times larger than the UK & Ireland at 5% However,
securing their data more comprehensively This has made IT
when looking at the average value of a North American
information security budgets one of the most protected areas
contract compared to one in the UK that would increase
of spend within enterprises Eckoh is well placed to navigate
the North American TAM value to more than 20 times the UK
these data security challenges, working behind the scenes as
& Ireland
To better pursue this opportunity, in the fourth quarter we
actively re-organised our Commercial teams (comprising
our Sales, Marketing and Client Services teams) to service the
market and clients globally, and specifically to focus more of
a ‘sales enabler’, converting sales in a secure way on behalf of
an increasingly diversified and global client base.
Our addressable target market is large and has
fundamentally changed post pandemic
our collective resources on the large North American market
The contact centre
industry globally
is extremely
large,
Prior to this the UK-based team, which was larger in size than
representing around 4% of the entire workforce in both the
the US one, was focused predominantly on the UK market Now
UK and US markets The pandemic and the current economic
our unified global team is set up to sell globally, mobilised in an
climate have fundamentally changed the way our industry
effective way with no geographical boundaries to service the
operates and the added pressures it has brought to navigating
client need, anywhere in the world
the new remote and hybrid working environments Looking at
the largest market, the US, the figures shown below, outlined
A year ago, it would arguably have been too soon to make
in Contact Babel’s ‘US Contact Centers 2022-2026’ research
this change, as we only had a single product line, that of voice
document, are particularly striking:
security, available to sell through a common cloud platform in
the US market But with the advent of our cloud-based Secure
Engagement Suite we now have multiple complementary
solutions that are available to any client anywhere in the world
and this means that our existing North American client base
are prime targets for cross-selling
Percentage of US
contact centres with
more than 50% of agents
working remotely
2019
2020
2021
2022*
10%
87%
89%
77%
Across the Group we have around 200 clients, which range
*Estimate
greatly in both size and opportunity Given this we have
Pre-pandemic only 10% of US contact centres had more than
reorganised how we support and service our client accounts
50% of their agents working remotely A huge shift to using
globally to ensure the most focus is given to the key accounts
remote agents peaked in 2021 with 89% of US contact centres
with the largest perceived opportunity for growth The sales
having more than half their agents working from home Even
team and account managers have been assigned specific
those organisations who were very reluctant to use remote
accounts to manage and develop across these different tiers
working have been forced to adapt In 2022 the estimate is that
of client opportunity and have significant cross-selling and
this figure is 77% and is expected to remain at these levels for
up selling targets as well as new business targets In the top
the foreseeable future
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15
Shift to home-based agents creates new
data security challenges, driving significant
new opportunities
environments when customers engage with an enterprise and
make payments for goods and services With a chief aim of
not compromising the quality of the customer experience, as
a unified offering all our new customer engagement offerings
3.
Use cloud technologies to develop and
enhance our proprietary solutions to
support scalable growth
We are excited by the growing proportion of cloud deployments
secured in the North American market The share of North
America ARR from cloud revenue is now 50%, rising from a
35% share a year ago Landing and expanding within our
Post pandemic, contact centres have been under acute
will be underpinned with security features and capabilities
The procurement of data security solutions to be deployed
client base is a key focus and has the benefit of increased
pressure to adapt in order to retain agent staff as the
to assist our clients to address data security concerns and
across multiple territories is certainly increasing, and our focus
visibility of revenue through recurring revenues and improved
convenience of working from home is popular, enabling
increasing regulation
is on investing in our Customer Engagement Data Security
margin With our product roadmap extending into a broader
flexibility of working hours. This flexibility is also a positive for
Solutions to be deployed on our scalable cloud platform to
data security proposition, we expect to be able to increase the
the enterprises that employ such agents as they can deploy
This clarity of approach has led us to rationalise and retire
support the growth from our largest territory and absolute
lifetime value of our clients and continue to have high renewal
agents to work short shifts to cope with unexpected customer
several product offerings, especially those that require
strategic focus, North America Our market leadership lies in
rates and very low levels of churn
demand This changed landscape does however bring many
significant levels of bespoke implementation and professional
and varied complications to the running of such remote
services Going forward our new Secure Engagement Suite will
our ability to offer our clients a choice of cloud platform and
delivering multiple complementary SaaS solutions without any
and hybrid contact centres and the companies now need to
focus on those offerings that deliver value to our enterprise
additional deployment effort or complex integrations
We’re flexible to client needs, retaining the ability
to deploy locally
tackle the challenges and inherent data security risks that
clients through that security layer and whilst we will retain
come from remote working agents A managed facility is far
flexibility in delivery, the overall methodology will be SaaS.
Our unified team developed the new Secure Call Recording
The proportion of cloud contracts won in North America remains
easier to control from a data security point of view than many
solution using the cloud native methodology and technology
very high at over 80%, and whilst we still expect a small number
remote locations It is largely impossible to replicate such an
In recent years Eckoh has been developing a highly relevant
that we implemented some years ago This approach has
of on-premise deployments, these will reduce over time While
environment, which presents a significant challenge if the
suite of data security solutions, designed to protect without
not only reduced the time it takes us to launch new solutions,
cloud deployment is a key goal and advantage, many of the
agent is handling customer data and especially payment data
compromising user experience, and delivered in the cloud (or
but it has simplified the process of continual development
largest enterprises, especially those in North America, may
on premise if that is still required) For example, our live chat
and sped up the addition of new features It also enables
still take several years to achieve that objective Retaining the
Within Eckoh’s new solutions suite, our real time transcription
offering incorporates our patented and unique ChatGuard
us to automatically scale up or down the size of our cloud
capability to deploy as required in a client’s own data centres
solution will offer sentiment analysis and AI
led agent
capability This enables payment or personal information
platforms responding instantly to changes in demand from our
and environment and then migrate those accounts to a cloud
assistance, which ensures that all customers can be triaged
to be entered by a customer into a live chat session without
clients, leading to optimum operational performance and cost
solution at some later point, continues to give us a tactical
and dealt with swiftly and effectively, without compromising
any of that information traversing the clients’ environment
to serve
their customer experience or the security of their personal data
or being shared with an advisor The key difference now
advantage over our competitors. During the first half, we saw
two clients migrate from on-site deployments to our cloud
is that those solutions which we consider to be part of our
One of the largest contracts won in the year was for a Fortune
platform and as part of the renewal process, three more clients
This trend provides a massive opportunity for Eckoh’s solutions,
go-forward proposition have been amalgamated in our
100 retailer who purchased two cloud-based solutions, voice
have now contracted to migrate in FY24
not just for data security but also agent performance and
Secure Engagement Suite and delivered from our Secure Voice
security and digital payments, and was the first client to go-
efficiency. Our data security proposition enables companies
Cloud platforms, enabling clients to more easily deploy and
live on our new Azure cloud platform The time to revenue for
to reduce further, or remove, the risk of data breaches by
purchase them
ensuring that sensitive data isn’t just blocked but replaced
with placeholders that can be safely stored in the client’s
Our patented products already help organisations to reduce
new clients is significantly improved when they opt to use a
cloud deployed solution, and it enables their ability to access
the other offerings in our Secure Engagement Suite with little or
systems Our patented
technology wraps around
the
the risk of fraud; secure sensitive data; comply with the
no additional implementation effort
client’s infrastructure seamlessly and means that from the
Payment Card Industry Data Security Standard (“PCI DSS”) and
client’s point of view, they do not actually collect any sensitive
wider security regulations such as the General Data Protection
personal data
2.
Grow our leadership position in Customer
Engagement Data Security Solutions to
increase Shareholder value
Leverage our trusted supplier status to broaden
the scope of our offering to our clients
Regulation (“GDPR”) or the US Consumer Privacy Acts We can
grow our leadership position most quickly by adding additional
solutions that assist our clients to protect wider forms of data
and in different ways, as well as broader security requirements
such as identifying fraudulent customers The nature of
the solution we have initially sold the client has already
established Eckoh as a trusted advisor, and we can leverage
that position to get access more readily to potential buyers of
other complementary solutions within the organisation, such
The acquisition and then integration of Syntec served as a
as the recently launched Secure Call Recording
catalyst for us to refine how we go to market and how we want
Eckoh to be perceived in the market. We unified and clarified
our proposition into Customer Engagement Data Security
Solutions which is delivered to our clients through our Secure
Engagement Suite Over the past 20 years we have delivered
many different products and services, but our differentiator and
strength in the customer engagement market, which has led to
our success and growth, is our ability to deliver great customer
experience with a data security focus Eckoh prevents sensitive
personal and payment data from entering IT and contact centre
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Strategic Report | Chief Executive Review
17
Secure Engagement Suite
Our suite of data security solutions called Eckoh’s Secure Engagement Suite,
which has been developed and refined through the Syntegration process is
displayed in the honeycomb visual below.
8.
Verification
and Fraud
Prevention
6.
Secure Call
Recording
7.
Transcription
and AI
3.
Digital
Payments
Reporting
and
Analytics
1.
Voice
Security
4.
DataGuard
2.
Secure
Chat
5.
Advanced
Speech
Live
In flight
Future
1
2
3
4
5
6
7
8
Voice Security
Our core product to protect phone payments under the CallGuard or CardEasy brand
Secure Chat
Live chat incorporating our patented ChatGuard solution to take payments securely
Digital Payments
Allowing customers to pay through a secure mobile link whilst connected live to an advisor
DataGuard
Securing other forms of personal data as well as payment information
Advanced Speech
Using speech recognition to take payment information securely where key entry is unviable
Secure Call Recording
Recording, transcribing and analysing calls, and redacting sensitive information
Transcription and AI
Using real time transcription to enable agents to deliver effective and fast assistance
Verification and Fraud
Improving the verification process to help identifiy fraudulent activity
4.
Maximise lifetime client value and aid
retention by cross and up-selling to increase
recurring revenue
Enterprise provides significant cross sell
opportunity
The significant enterprise deals we won during the period
particularly with the expansion and enhancement of our
show the merit of Eckoh’s long-standing strategy to pursue
security suite and the global nature of our cloud platform
larger opportunities and reflects the continuing trend towards
Given our long-standing cross-selling experience in the UK
cloud adoption and more international mandates in our target
market we believe it is entirely credible that potential customer
Enterprise expands our total addressable market even further,
markets
The Eckoh offering
value could double compared to what was achievable from
just the sale of the core voice security product
Our suite of data security solutions called Eckoh’s Secure
It is encouraging that in the period the proportion of new
Engagement Suite, which has been developed and refined
business in North America coming from existing clients was
through the Syntegration process is displayed in the honeycomb
already 38% What is uncertain at this point is how many
visual opposite and includes the following segments:
additional organisations will be appropriate targets for the
call recording, transcription, and verification products, which
The first six are all now available, with the first release of Secure
arguably have an even wider applicability
Call Recording launched as planned in April this year and
delivered through our new Secure Voice Appliance and Secure
Voice Cloud
Later this year we will add the seventh, which will be the real
5.
Evaluate acquisition opportunities that can
support our growth strategy in Customer
Engagement Data Security
time transcription solution that uses AI and machine learning
Syntec has been a strategically important acquisition in terms
to assist advisors to provide the best possible assistance
of reinforcing Eckoh’s position as the market leader in our field,
whether they are experienced agents or not It will also allow
being the catalyst for expanding our security suite and re-
contact centre managers and supervisors to identify problem
engineering our core cloud platform We believe that through
calls instantly through the sentiment analysis tool which will
an ongoing focus on both organic growth and selective M&A,
provide a heatmap across all agent conversations in real time,
we are well placed to seize the opportunities we see in our
highlighting where issues may be occurring With so many
sizeable addressable market
agents now working remotely, this oversight task is critical to
ensure performance is not compromised because of hybrid
working Both this solution and Secure Call Recording should
have an even larger TAM than our other solutions as neither
necessitate the client to be taking payments to make them
attractive solutions This gives us the opportunity to target new
companies that historically would not have featured in our
marketing efforts
Our first solution in the Verification and Fraud area is on
our solution roadmap for the end of FY24 This will include
commercialising patents that we already have granted,
notably our reverse authentication patent This enables a
consumer to verify the identity of an adviser contacting them
regarding activity on their account, conveniently and easily
We all know these inbound customer calls are a common
route for scamming and fraud and so for the end customer
to be able to verify that the call is genuine, we believe will be a
unique and valuable solution This will streamline the process
for both parties, thereby improving efficiency for our enterprise
clients and increasing satisfaction for the end customer
18
Strategic Report | Chief Executive Review
19
Operational review
In the following section all comparatives have been restated for
Total and New Contracted Business
Coral
New contracted business
the new reporting territories
• Increase in sales momentum as anticipated in H1, with new
In the period, Coral had revenue of $2 0 million (FY22: $1 8 million
• Most global deals, which drive the revenue and growth in
North America (NA) Territory (45% of group revenues)
on-year of 70% (FY22: $7 4 million)
desktop aids the following:
Sales team This will change with the new alignment of the
Following a thorough review of the opportunity and our go-to-
• Security Solutions new contracted business of $11 3 million with
global commercial team
market strategy, we are delighted that North America continues
38% of this coming from existing clients
• to increase efficiency by bringing all the contact centre agent’s
• Contract for voice security won with the Irish division of one of
to power strong growth across all key KPIs underlining our
• Combination of new contracted business and the increasing
communication tools into a single screen;
the world’s largest insurance companies, worth $0 6 million
strategic focus and the significant market opportunity we are
number of contract renewals has grown the total contracted
• to enable organisations, particularly those grown by
This is one of the first clients to utilise the new enhanced cloud
targeting in this territory
business by 91% year-on-year to $20 9 million (FY22 $10 9
acquisition to standardise their contact centre facilities; and
platform developed through “Syntegration”
contracted business wins of $12 6 million, an increase year-
Coral & Third-Party Support) Coral, a browser-based agent
Ireland and the ROW, have been contracted through the UK
This is best demonstrated through Security Solutions ARR, which
grew 34% to $15 9 million (FY22: $11 9 million) Total NA ARR, which
Contract Renewals
million)
• to be implemented in environments that operate on entirely
• A further new UK contract also worth £0 6 million was won with
different underlying technology
a financial services company to provide voice security for their
debt collection service
includes both our Security Solutions and Coral (our agent
• Recurring revenue increased to 76% (FY22: 69%), because
Coral contracts remain small in number but high in value when
desktop product) grew to $16 9 million (FY22: $12 6 million)
of the ongoing cloud transition and six clients’ initial
they occur, and they have a very long sales cycle (usually years)
Contract renewals
Revenue for the period was $21 3 million, an increase of 25% (FY22:
and implementation fees from the initial contract are fully
makes the timing of any new agreements both lumpy and hard
contract through Capita for a large public service organisation
$17 1 million) and North America now accounts for a 45% share of
recognised
to predict There is a proof of concept being planned with a large
worth £2 1 million
Group revenue (FY22: 40%) In FY24, we expect North American
• Six further contracts renewed during the year, three of which
global financial services company, however, there is no certainty
• Contract through BT for the Ministry of Justice for taking
revenue will at least be of equal size to revenue from the UK and
migrated from on premise solutions to the cloud
at this stage if this will lead to a contract
payments for fixed penalty notices and magistrates fines also
Ireland territory
• One client did not renew due to a sale of their business
renewed, the second largest in the year
contract renewals At the point of renewal, the hardware
as the decision has long term ramifications for the client. This
• Successfully renewed the year’s largest contract; a 5-year
During the period, in the region we have seen twelve successful
Cross-selling
renewals, an increase in the level of cloud deployments and
We continue to focus on winning new large enterprise contracts,
UK & Ireland (UK&I) Territory, and Rest of World (ROW)
• Other important renewals this year include Kingfisher, Target,
Territory (55% of group revenues)
PowerNI, Transport for London and Allied Irish Bank
cross-selling of additional licences and product, strengthening
alongside cross-selling additional products introduced to the
• Total revenue for the year was £21 3 million, an increase of 10%
our recurring revenue and gross profit.
North American territory in H1 with new and existing clients
(FY: £19 3 million)
Two large enterprise deals were contracted in the period
outlined below:
New enterprise deal #1
A Fortune 100 retailer
New enterprise deal #2
A leading, global hotel company
• Secured purchase of two product lines
• Won a $1 3 million, 2-year contract
• 3-year enterprise contract included a $1 4m fee for voice
• Cloud deployment model to incorporate voice
• ARR1 at the end of the year was £16 3million (FY22: £16 5 million)
with growth hindered by the loss of a significant (non-security)
client in the first half.
• Gross profit in the period was £17.5 million, an increase of 9%
(FY22: £16 1 million) and gross margin was 82%, a decrease
year-on-year of 1% (FY22: 83%), due principally to the inclusion
of the Syntec UK & Ireland and ROW business
• Total contracted business was £17 2 million compared to £13 4
million in the prior year and new contracted business was £4 2
million, a decrease of 12% year-on-year (FY22: £4 7 million)
• The ROW territory is expected to grow quickly with the large
international contracts deployed, but for FY23 as this territory
accounts for 2% of total revenue it has been reported together
security to secure their phone agents and a $0 6m fee
payment security, digital payments, and advanced
with the UK&I
for digital payments to secure their live chat agents
speech recognition
• Multiproduct contract and first client to go-live on new
• Single cloud deployment that will cover more than
Azure cloud platform
20 territories and an equivalent number of speech
recognition languages
• Because of the realignment of the global commercial team
and focus on North America, we think it is reasonable to expect
UK & Ireland growth to be modest at best The effort involved in
growing this territory would be disproportionate to the value
generated compared to the more lucrative and larger market
in North America
Outlook
The year’s performance reflects the continued progress of Eckoh’s
strategy to pursue large enterprise opportunities, cross-sell from
a broader product suite and continue the trend towards cloud
adoption and more international mandates With a refreshed
go-to-market approach, coupled with an encouraging pipeline,
a resilient business model of high recurring revenues, operational
efficiencies, on-going cloud adoption and a robust balance
sheet, the Board remains confident in delivering its expectations
and achieving continued growth in FY24
Nik Philpot
Chief Executive Officer
14 June 2023
20
Strategic Report | Principal Risks & Uncertainties
21
Principal Risks & Uncertainties
Specific Risk
Mitigation
Cyber, technology & processes
The Group's approach is to minimise exposure to reputational, financial and
operational risk while accepting and recognising a risk/ reward trade-off
in the pursuit of its strategic and commercial objectives. The nature of the
products and services the Group provides means that the integrity of the
business is crucial and cannot be put at risk.
The Group has a framework for reviewing and assessing these risks on a
regular basis and has put in place appropriate processes and procedures
to mitigate against them. However, no system of control or mitigation can
completely eliminate all risks. The Board has determined that the following
are the principal risks facing the Group.
Loss or inappropriate usage of data
The Group has established physical and logical security
The Group’s business requires the appropriate and
secure usage of client, consumer and other sensitive
information Fraudulent activity, cyber-crime or
security breaches in connection with maintaining
data and the delivery of our products and services
could harm our reputation, business and operating
results
controls across all operating locations with rigorous
cyber security controls In addition, a dedicated Security
Operations Centre function provides Group wide
monitoring, recruitment and training schemes and active
threat hunting The Group is signed up to the National
Cyber Security Centre which aids the monitoring of cyber
activity Continued investments are made in cyber security,
infrastructure, monitoring and services, improvements in
email, web filtering and enhanced data loss prevention
tools The Group also screens new employees carefully
Eckoh has maintained its program of PCI DSS, ISO27001
and Cyber Essentials Syntec Limited operated to these
same standards, and the Group is on track to integrate the
acquired Syntec business into the Group programs
Interruptions in business processes or systems
Comprehensive business continuity plans and
The Group’s ability to provide reliable services largely
depends on the efficient and uninterrupted operation
of our platforms, network systems, data and contact
centres as well as maintaining sufficient staffing levels.
System or network interruptions, recovery from fraud
or security incidents or the unavailability of key staff
or management resulting from a pandemic outbreak
could delay and disrupt our ability to develop, deliver or
maintain our products and services This could cause
harm to our business and reputation, resulting in loss of
customers or revenue
incident management programmes are maintained
to minimise business and operational disruptions,
including system or platform failure Testing and
confirmation of plans is performed to ensure business
continuity relevance and training is maintained
In addition, and following the COVID-19 pandemic,
the business operates a hybrid working policy, where
all staff work regularly between office and home
as required This provides greater resilience to the
business and ensures we are able to maintain high
service levels at all times We continually monitor our
suppliers to ensure the components we require for our
on-site solution in NA are available
Legal, regulatory and industry standards
Risk of non-compliance with legal and industry standards
We continually audit, review and enhance our controls,
The Group’s operations require it to be compliant with
certain standards including Payment Card Industry
Data Security Standard (PCI DSS) and wider security
regulations such as the General Data Protection
Regulation (GDPR) or the US Consumer Privacy Acts
Failure to comply with such regulations and standards
could significantly impact the Group’s reputation and
could expose the Group to fines and penalties.
processes and employee knowledge to maintain good
governance and to comply with legal requirements and
industry standards Our new employees are carefully
screened and follow a robust induction and security
training and are required to maintain ongoing security
awareness
22
Strategic Report | Principal Risks & Uncertainties
23
Specific Risk
Mitigation
Specific Risk
Mitigation
Legal, regulatory and industry standards
Loss or infringement of intellectual property rights
The Group, where appropriate and feasible, relies upon
a combination of patent and trademark laws to protect
our intellectual property The Group also continues to
monitor competitors in the market to identify potential
infringements of our intellectual property rights
The Group would vigorously defend all third-party
infringement claims
The Group’s success depends, in part, upon proprietary
technology and related intellectual property rights Some
protection can be achieved but, in many cases little
protection can be secured Third parties may claim that
the Group is infringing their intellectual property rights
or our intellectual property rights could be infringed by
third parties If we do not enforce or defend the Group’s
intellectual property rights successfully, our competitive
position may suffer, which could harm our operating
results We may also incur cost from any legal action that
is required to protect our intellectual property
HR & personnel
Dependence on recruitment and retention of highly
The Management team reviews key individuals regularly
skilled personnel
The ability of the Group to meet the demands of the
market and compete effectively is, to a large extent,
dependent on the skills, experience and performance
of its personnel Following the Great Resignation in FY22,
resources are more stable both in our current workforce
and where we need to recruit in the open market for
individuals with appropriate knowledge and experience
in payment security, IT development, telecoms and
support services The inability to attract, motivate or
retain key talent could have a serious consequence on
the Group’s ability to service client commitments and
grow our business
and career development plans are put in place for
individuals. Compensation and benefits programmes
were extensively reviewed in FY22 and a larger number of
Managers and employees than previously were granted
share awards to ensure Eckoh remains competitive in
the marketplace Employee feedback is encouraged, an
employee engagement survey has been undertaken in
the year with results and actions communicated with
employees
Unchanged risk
Increased risk
Products & clients
Technological & product development
The Group is committed to continued research and
The Group provides technical solutions for clients and their
end customers As customer preferences and technology
solutions develop, competitors may develop products and
services that are superior to ours, which could result in the
loss of clients or a reduction in revenue
Dependence on key clients
While the Group has a wide customer base, the loss of a
key customer, or a significant worsening in their success
or financial performance, could result in a material
impact on the Group’s results Eckoh’s largest customer
accounted for less than 10% (FY22: < 10% of revenue) of
total revenue
Economic growth
Executing the NA opportunity
The Group has a low market share in NA, where there
is significant market opportunity for its Customer
Engagement Data Security Solutions The inability to
execute in NA, winning new clients and implementing the
wider Customer Engagement Data Security Solutions for
clients, could have a material impact on the Group’s results
Exchange rate
The Group is exposed to the US Dollar and the
translation of net assets and income statements of its
North America territory and, following the acquisition of
Syntec, is also exposed to client contracts denominated
in US Dollars and Euros
Reputation of the Eckoh Group
investment in both existing and new products and
technology to support its strategic plan Product
development roadmaps for Customer Engagement
Data Security Solutions are managed centrally in the UK
We mitigate this risk by monitoring closely our
contract performance, churn and renewal success
with all customers by maintaining strong relationships
We continue to expand our customer base,
particularly in the NA business
The Group sets clear targets for growth expectations for
the NA business We continually assess our performance
and adapt our approach, taking into account our actual
and anticipated performance Product offerings are
being extended to expand the reach of the services
offered in NA Cloud-based solutions have been adopted
to ensure Eckoh offer all potential solutions that clients
may demand
We regularly review and assess our exposure to changes
in exchange rates The Group does not hedge the
translation effect of exchange rate movements on the
Income Statement or Balance Sheet of the North America
division
Damage to our reputation and our brand name can
We address this risk by recognising the importance of our
arise from a range of events such as poor solution
reputation and attempting to identify any potential issues
design or product performance, unsatisfactory client
quickly and address them appropriately We recognise
services and other events either within, or outside,
the importance of providing high quality solutions, good
our control
client services and managing our business in a safe and
professional manner Eckoh has concluded its program of
ISO9001 certification to further audit these measures.
24
Strategic Report | Financial Review
25
Financial Review
Eckoh has had a successful year delivering a robust level
of adjusted operating profit of £7.7 million, an increase of 48%
year-on-year (FY22: £5.2 million) and ahead of consensus
market expectations. Adjusted operating profit margin was 19.9%,
an improvement from last year of 340 basis points (FY22: 16.5%).
The growth was driven by North America and the focus on large
enterprise clients, our cloud-based offering and the full year
impact of the acquisition of Syntec Holdings Limited on
21 December 2021, integration of Syntec (“Syntegration”)
and a £0.5 million EBITDA foreign currency benefit
(FY22: loss £0.1 million and first half gain
of £0.7 million) arising from the strength
of our North American activity.
R
evenue for the year increased by 22% to £38 8 million
(FY22: £31 8 million) and at constant exchange3 rates
by 16% This is split £31 8 million recurring revenue (FY22:
£24 1 million and £7 8 million one-off revenue (FY22:
£7 1 million) with recurring revenue increasing year-on-year
by 29% and one-off revenue by 2% Group recurring revenue
was therefore 80% (FY22: 76%), the increase being driven from
the North America territory. Adjusted operating profit1 was £7 7
million an increase of 48% year-on-year (FY22: £5.2 million). Profit
after tax for the year was £4 6 million, compared to £1 6 million
in FY22. The prior year profit after tax of £1.6 million, included £1.0
million of transaction costs relating to the acquisition of Syntec
and exceptional restructuring costs of £0 9 million In the current
year there is an exceptional legal cost and settlement agreement
item of £0 2 million
Group ARR showed strong progress and demonstrates the high
level of visibility we have in our business model As of 31 March
2023, Group ARR was £30 4 million, an increase of 18% year-on-
year after restating last year’s Group ARR to include the North
American Coral business (FY22 restated: £25 8 million) Group
ARR increased by 11% at constant exchange rates
Total contracted business5 for the financial year at the Group
level was £34 5 million (FY22: £22 5 million), a year-on-year
increase of 53% New contracted business increased 33% to £14 4
million (FY22: £10.8 million) and the strong first half continued
into the second half
Basic earnings per share for the year ended 31 March 2023 was
1 58 pence per share (FY22: 0 59 pence per share) Adjusted
earnings per share for the year ended 31 March 2023 was 2 14
pence per share (FY22: 1 57 pence per share) demonstrating
both the strong organic growth and accretion following the
acquisition of Syntec in December 2021
Revenue in North America, which represents 45% of total
group revenues, increased to £17 5 million (FY22: £12 5m) UK&I
represented 53% of total group revenues at £20 6 million and
ROW represented 2% of group revenues
Further explanations of movements in revenue between North
America, UK & Ireland and ROW territories have been addressed
in the Operational Review above
Gross profit
The Group’s gross profit increased to £31.2 million (FY22: £25.4
million), an increase year-on-year of 23%. Gross profit margin
was 80% for the year, in line with last year (FY22: 80%) The UK&I
gross profit margin was 82%, a 1% decrease based on the new
territories or a 2% decrease from the UK division last year In
North America, the full year margin was 79% an increase from
last year’s NA margin of 75% or 74% for last year’s US division This
increase in margin as previously indicated is as a result of the
continued deployment of the new Customer Engagement Data
Security Solutions in the cloud environment together with the
successful renewals of the earlier contracted on-site solution
deployments, where the lower margin hardware component
becomes fully recognised at the point of renewal
In the UK&I, as the service is hosted on an Eckoh platform, there
is typically no hardware provided to clients and the gross profit
margin is expected to remain at 82-83% In North America, we
would expect the gross profit margin to continue to marginally
increase from 79% to c 80% This is driven by the continued
growth of the Secure Payments activities for cloud solutions
coupled with a small number of clients with on-site solutions,
who in the coming year are due to renew their initial contract, at
which point the hardware component will be fully recognised
Territory performance
– NA, UK&I, & ROW
Administrative expenses
Total administrative expenses for the year were £26 2 million
(FY22: £23 0 million) Included in administrative expenses, is the
Historically we have focused solely on the UK and US markets, but
£2 5 million of amortisation for the acquired intangible assets
with the integration of the Syntec business into Eckoh’s operations
from the acquisition of Syntec Holdings Limited on 21 December
and an increasingly cloud-based security proposition enabling
increased activity to come from an expanding international
2021 (FY22: £0 8m) and exceptional legal fees and settlement
agreements of £0 2 million Adjusted administrative expenses4
market, we have shifted to segmenting our activity into North
for the year were £23 5 million (FY22: £20 2 million)
America (NA), UK and Ireland (UK&I) and Rest of World (ROW)
revenue streams
26
Strategic Report | Financial Review
27
Profitability measures
Earnings per share
Adjusted operating profit was £7.7 million, an increase of 48%
Adjusted diluted earnings per share was 2 09 pence per share
year-on-year (FY22: £5.2 million). Included in the profit was a
(FY22: 1 34 pence per share) a year-on-year increase of 56%,
foreign currency gain of £0 5 million (FY22: loss £0 1 million), which
due to the increase in adjusted profit before tax and essentially
is unlikely to be repeated to the same extent in the financial year
to 31 March 2024 Adjusted EBITDA2 for the year was £9 4 million, an
unchanged number of issued Ordinary Shares Basic earnings
per share was 1 58 pence per share (FY22: 0 59 pence per share)
increase of 38% year-on-year (FY22: £6 8 million)
Diluted earnings per share was 1 55 pence per share (FY22: 0 51
Year ended
31 March 2023
£'000
Year ended
31 March 2022
£'000
pence per share)
Client contracts
Contract liabilities
and contract assets
Contract liabilities and contract assets relating to IFRS 15 Revenue
from Contracts with Customers has continued, as expected,
to decrease in the current year, principally as new contracted
business in NA has been predominantly for cloud-based solutions
Where clients contract for their services to be provided in the
cloud or on our internal cloud platform, the level of hardware
is significantly reduced, and implementation fees are typically
lower This reduces the level of upfront cash received but drives
a greater level of revenue visibility and earnings quality Total
contract liabilities were £9 9 million (FY22: £12 5 million), included
Dividends
Post year end the Board are proposing a final dividend for the
year ended 31 March 2023 of 0 74 pence per Ordinary Share be
paid to the Shareholders whose names appear on the register
at the close of business on 22 September 2023, with payment on
20 October 2023 The ex-dividend date will be 21 September 2023
This recommendation will be put to the Shareholders at the Annual
General Meeting Based on the shares in issue at the year end, this
payment would amount to £2 2m
Chrissie Herbert
Chief Financial Officer
14 June 2023
Profit from operating activities
Amortisation of acquired
intangible assets
Expenses relating to share
option schemes
Exceptional restructuring costs
Exceptional legal costs and
settlement agreements
Costs relating to
business combinations
Adjusted operating profit1
Amortisation of other
intangible assets
Depreciation of owned assets
Depreciation of leased assets
Adjusted EBITDA2
Finance charges
5,020
2,473
40
-
203
-
7,736
398
643
617
9,394
2,386
751
241
866
-
985
5,229
392
680
495
6,796
Client contracts are typically multi-year in length and have a
in this balance are £6 3 million of contract liabilities relating to the
high proportion of recurring revenues, usually underpinned by
Secure Payments product, hosted platform product or Syntec’s
minimum commitments With a greater proportion of contracts
CardEasy Secure Payments’ product, a decrease of £1 8 million at
being delivered through the cloud the initial set up fees and
the same time in the previous year Contract assets as at 31 March
1 Adjusted operating profit is the profit before adjustments for expenses relating to share
hardware costs associated with larger customer premise
2023 were £2 4 million (FY22: £3 8 million)
deployments will be reducing, leading over time to an increase
in operating margin
Statement of financial position
Cashflow and liquidity
Gross cash at 31 March 2023 was £5 7 million (FY22: £2 8 million), as
at 31 March 2023 there was no drawdown of debt (FY22: £nil million
Our balance sheet remains robust with a strong net cash position
debt). As a result of the acquisition of Syntec in the financial year
option schemes, amortisation of acquired intangible assets, exceptional costs and costs
relating to business combinations
2 Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) is the
profit from operating activities adjusted for depreciation of owned and leased assets,
amortisation, expenses relating to share option schemes, exceptional items and costs
relating to business combinations
3 At constant exchange rates (using last year exchange rates)
4 Adjusted administrative expenses are administrative expenses excluding expenses
relating to share option schemes, depreciation of owned and
leased assets,
amortisation of acquired intangible assets, exceptional items and costs relating to
business combinations
5 Total contracted business includes new business from new clients, new business from
of £5 7 million, an increase of £2 9 million year-on-year (FY22: £2 8
to 31 March 2022, we secured a new £10 million debt facility with
existing clients as well as renewals with existing clients
million) The business has a Revolving Credit Facility of £5 million,
Barclays Bank, which comprised a £5 0 million overdraft and a £5 0
secured against the Group’s UK head office, which is an asset
million revolving credit facility In November 2022, the overdraft
we own outright As at 31 March 2023 our revolving credit facility
facility was cancelled and the RCF remains in place, but undrawn
remains undrawn
as at 31 March 2023
While Eckoh continues to innovate by developing new products
During the year there has been a net cash outflow from working
and features such as those detailed in the Chief Executive Officer’s
capital of £1.6 million (FY22: £1.7 million cash outflow) due to the
For the financial year ended 31 March 2023, the interest payable
review, there has been an increase in the amount capitalised to
charge was £53k (FY22: £74k) The interest charge is made up of
intangible assets in the financial year to £0.6 million relating to
timing of invoicing and cash receipts and as the deferred revenue
for the NA large on-site deployments has been recognised over
bank interest of £nil (FY22: £23k) and interest on leased assets
the Call-Recording product (FY22: £0 3m), which was launched
the term of the contract, generally three years
of £53k (FY22: £51k). The finance interest received was £53k
as expected in April 2023
(FY22: £6k)
Taxation
For the financial year ended 31 March 2023, there was a tax charge
of £383k (FY22: £743k charge). The effective tax rate in the financial
year ended 31 March 2023 was 7 6% (FY22: 43 8%) The current
year tax rate is impacted by a prior year adjustment relating to
Syntec Holdings balance sheet as they adopted International
Accounting Standards
28
Strategic Report | Sustainability Report
29
Sustainability Report
During the year we have been working on our Environmental
Social and Governance strategy (ESG). This is underpinned
by our mission as a business, which is to set the standard for
secure interactions between consumers and the world’s leading
brands because we care about making the world a secure
place. Our sustainability strategy is split into four key areas;
the product we provide our customers and their customers; the
security first approach we adopt across the business, which
also encompasses the knowledge and the experts we have in
our team; the culture we create through our values and the
environmental responsibility we take in the way we do business.
As we successfully drive progress against our broader
strategic objectives, we remain committed to making
sustainable business decisions. We continue to listen
to our stakeholders and we will continue to refine our
sustainability strategy to ensure that it drives long
term value for all of them.
I am pleased that in the financial year to
March 2023, we have made significant progress
in terms of setting targets and working towards
those targets. The following section lays out
the targets and progress made against
each of the four areas.
Our Products
Core objective:
Environmental Responsibility
Core objective:
• Use cloud technology to develop and enhance our
• Reduce environmental impact by minimising our carbon
proprietary solutions
footprint and committing to our cloud-first approach.
• Our products lessen the burden of compliance for our
clients, reduce fraud and the impact of a data breach and
Delivering stakeholder value
in turn makes the world a safer place
• Committing to environmental responsibility protects the
Delivering stakeholder value
future of our people and demonstrates to customers that
we strive to deliver products with minimal environmental
• Grow our market leadership position in Customer Engagement
impact
Data Security solutions to increase Shareholder value
• The growing number of our patents demonstrate that we
Meeting our 2023 targets
protect our IP and the integrity of our solutions
• Transitioned to renewable energy supplies for all energy
• Our Secure Customer Engagement Suite of solutions provide
contracts managed directly
a robust payments solution for our clients, enhancing their
• Completed and published our first carbon reduction plan
governance and enabling our clients’ contact centre
and set targets to achieve net zero by 2045
agents to take payments securely as well as preventing
• Invested in one of our US datacentres, which will reduce our
the exposure of sensitive customer data to contact
carbon footprint due to the enhanced technology
centre agents
Meeting our 2023 targets
• Becoming system-agnostic to offer freedom of choice to
our customers, we delivered our first live client as a multi-
cloud provider
• Delivery of a new unified cloud platform, based on our
Secure Voice Appliance (SVA)
• Delivery of a Secure Call Recording product
Security First Governance
Core objective:
Our Culture
Core objective:
• We maintain a Security First approach in the design, build
• Create an inclusive workplace that supports, empowers,
and operation of our service
develops and fairly rewards all our people
Delivering stakeholder value
Delivering stakeholder value
• People, Process and Technology aligned to drive a Security
• Fostering a positive culture will attract and retain the
First decision tree to identify and mitigate risks
best talent, accelerating delivery of our strategy
• Project delivery cycles, product development, legal
• Investing in our people benefits the communities we operate
contracts aligned to support the security and availability
in by delivering an exceptional employee experience
of our solutions and operations
• Trusted advisor to our customers
Meeting our 2023 targets
Meeting our 2023 targets
• March 2022 completed an employee survey Results were
shared with employees in April 2022 and three key focus
• PCI-DSS Level 1 Service Provider for 13 successive years
areas identified.
• Dedicated Security Operations Centre monitoring our
• Members of the Leadership team led each of the three key
security posture both internally and externally
focus areas and used focus groups with representation
• Maintained and renewed all the Groups ISO certifications
from across the business to develop action plans All actions
and Cyber Essentials
from the focus areas were delivered in the year
• Encouraging our team to fundraise through the year for
local charities in the UK and US
30
Strategic Report | Sustainability Report
31
Our Products
Security First Governance
Our Culture
Environmental Responsibility
At the heart of our sustainability strategy is our mission as a
As the compliance landscape continually evolves, whether
Alongside our Security First Governance approach, our culture
Our commitment to environmentally responsible operations is
business, which is to set the standard for secure interactions
this is currently the introduction of Version 4 of the PCI-DSS
and our values are key In particular our Humanity value
an essential part of our contribution to creating a healthy planet
between consumers and the world’s leading brands because
or USA’s strengthening data privacy rules, we act as trusted
reflects our welcoming spirit, embracing diversity and respect
for our people, our clients and our employees Our biggest
we care about making the world a secure place This starts
advisors to our clients. In order to be experts in our field, we
for each other We draw on our Humanity value in the way
direct impacts on the planet come from our datacentres, our
with the products we provide to our customers Our data
need to ensure we adopt robust and responsible business
we treat each other, our clients, partners and suppliers and
offices and our employees travel, which includes an estimate
Our aim is to be flexible to our clients’ needs, to
do this we retain the ability to deploy locally to
clients’ datacentres or we can offer our clients a
choice of cloud platform, providing our solutions
in a system-agnostic way.
practices across the organisation This is
achieved through our mantra of Security
First, which encompasses our people, our
processes and our technology to drive a
Security First decision tree This approach
feeds the project delivery cycles, product
development and legal contracts to align in
order to support the security and availability
of our solutions and operations
The
Security
First approach means
security solutions help protect sensitive customer data and
responsible business practices are at the heart of how
can be performed via any customer engagement channel
we operate and this can be demonstrated through the
(voice, live chat, advanced speech, digital) and on any device
certifications we hold as an organisation. Alongside being a
the customer chooses The best way to secure data is not to
PCI-DSS Level 1 Service Provider, we also hold certifications for
collect it and this is our specialism
Cyber Essentials; ISO27001 – which covers how we manage the
also how we interact with our local community We recognise
of their commuting
the significant benefits of a diverse workforce and we do not
tolerate discrimination, harassment, or victimisation in the
We have set net-zero carbon targets with a baseline year of
workplace Instead we encourage an inclusive workplace with
2022 and have developed a carbon reduction plan to progress
strong employee engagement and participation by all
to carbon neutrality in advance of 2050 We have set ambitious
Alongside our Security First
Governance approach, our culture
and our values are key. In particular
our Humanity value reflects our
welcoming spirit, embracing
diversity and respect for each other.
reduction targets in respect of Scope 1 and 2 emissions in
advance of 2050 The full extent of Scope 3 emissions will be
refined in the current financial year as we collate and gather
the data from sources we do not directly control The following
are our targets:
• Scope 1 emissions will be eliminated by 2030
• Scope 2 emissions which are driven by our datacentres and
our offices, will be reduced and be net zero by 2045
• Scope 3 emissions will be net zero by 2045
Our aim is to be flexible to our clients’ needs, to do this we
details or
information entrusted to us by third parties;
In March 2022 we completed a staff survey, listening to our
conversion
factors published by
the Department
for
retain the ability to deploy locally to clients’ datacentres or we
and ISO9001 – which demonstrates our Quality Management
employees is important to us The results were fedback to our
Environment, Food and Rural Affairs (‘Defra’) and the
can offer our clients a choice of cloud platform, providing our
System process and our ability to consistently meet customer
employees in April 2022. As a Management team we identified
Department for Business Energy and Industrial Strategy (‘BEIS’)
solutions in a system-agnostic way. During the financial year
and regulatory requirements
three areas to focus on and created employee focus groups
All group entities have been included in the reporting
security of assets such as financial information, IP, employee
Energy use has been assessed using the 2022 emission
we delivered our first client live through a new cloud provider,
for each area with developed action plans being shared with
giving us a multi-cloud proposition going forward
In addition to the certifications demonstrating our Security and
the wider business Over a period of six months the agreed
The baseline year includes the acquired Syntec Holdings
Over the last financial year and following the acquisition
the global PCI Security Standards
of Syntec, we have combined Eckoh’s existing technology
As we advocate high standards internally we echo this
coupled with the return to travel post the COVID pandemic has
inclusion of the Syntec business for a full twelve months
underpinning the voice security product solution, CallGuard,
Internally we manage and monitor our security risk through our
sentiment in respect of our external stakeholders by taking a
increased our energy consumption and carbon footprint year-
with Syntec’s technology underpinning their payment solution
Security Operations Centre A dedicated team use a number of
zero-tolerance approach to any forms of unethical behaviour
on-year. During the financial year to 31 March 2024, we expect
for contact centres, CardEasy This has enabled us to develop
KPI measurements - third party scorecards, internal scanning
within our wider operations and supply chains
the Scope 2 – indirect emissions to decrease
Control credentials, we are also a participating organisation of
actions have been implemented
Limited for a three-month period from December 2021 The
a new core component of our unified platform, which we call
and vulnerability monitoring and active threat hunting to seek
our Secure Voice Appliance (SVA). The SVA takes the benefits
out and increase our security posture across the board The
from each of the CallGuard and CardEasy products and
results of the Security Operations Centre are shared across the
provides significantly improved density of telephony traffic
business as a way to continually educate our employees with
for our clients This in turn will provide improvements for our
best practice, raise awareness and ensure the Security First
clients’ environmental footprint as well as Eckoh’s operational
approach is delivered consistently across the business
efficiency as the new appliances are rolled out across new and
existing clients
We remain committed to the highest standards of compliance
in this area and in the year we achieved our goals to deliver:
Building on the unified platform, at the end of the financial year
• >99% acceptance of acceptable use and data protection
we launched a new Secure Call-Recording product As well as
policies;
recording calls, the product enables the client to transcribe
• >99% completion of annual online security training;
and analyse the calls delivering business intelligence and
• 0 phishing incidents resulting in the loss of data; and
redact sensitive information
• externally monitor our Security Scorecard to maintain
A Rating
Global carbon footprint assessment
Emissions from:
Scope 1 – direct emissions
Scope 2 – indirect emissions
CO2 turnover ratio Scope 1 and 2 (tonnes of Co2 per £m revenue)
CO2 EBITDA ratio Scope 1 and 2 (tonnes of Co2 per £m EBITDA)
Scope 3 – other indirect emissions
Total (all Scope 1, 2 & 3)
Total UK energy consumption (kWh)
Total global energy consumption (kWh)
31 March 2022
Baseline Tonnes of CO2e
31 March 2023
Baseline Tonnes of CO2e
Change since
baseline %
18 13
335 09
0 014
0 061
59 12
412.34
978,759
1,158,197
21 82
431 78
0 013
0 060
107 79
561.39
1,259,930
1,397,021
+20%
+29%
+11%
(1%)
+82%
+36%
+29%
+21%
32
Strategic Report | Sustainability Report
33
Reducing our environmental impact
Our Group strategy to drive investment in our product and
We are currently reviewing options for our two UK offices to
cloud-first approach will have a significant impact on our
eliminate Scope 1 emissions and have set a target these will be
carbon footprint in the future years By migrating our data-
eliminated by 2030
centres into the cloud, we will be both more operationally
efficient and reduce our carbon footprint. Our targets for the
During the year to 31 March 2023 and post the COVID-19
reduction of our Scope 2 emissions all focus on our data-
pandemic our emissions from travel have increased compared
centres and the continued adoption of cloud technology for
to the prior year to 31 March 2022 The increase is driven from
our solutions
employees commuting under a hybrid working arrangement
and international travel for our US and UK employees having
With respect to our UK offices and locations where we contract
face-to-face meetings We are therefore working on initiatives
directly, we procure our energy from renewable sources,
to adapt our approach to travel in a way that allows us to reap
our lighting is energy efficient and LED lights are utilised
the benefits of face-to-face interaction whilst minimising the
throughout our UK offices, with motion sensor lighting too.
associated carbon footprint We do not provide company
vehicles to employees or Directors or operate any form of
vehicle fleet, we do offer our UK employees a cycle to work
scheme to promote healthy living practises and further
reducing our carbon footprint from daily commuting
Our Scope 3 emissions include our employee travel, whether
commuting or business travel, our water usage in our office and
our office waste management. Other than specific business
travel, all calculations in this area are based on estimates
Nik Philpot
Chief Executive Officer
14 June 2023
Our Group strategy to drive
investment in our product and cloud-
first approach will have a significant
impact on our carbon footprint in the
future years. By migrating our data-
centres into the cloud, we will be
both more operationally efficient and
reduce our carbon footprint.
34
35
Corporate Governance
The Board has overall responsibility for establishing and
maintaining sound risk management and internal control
systems, and for the monitoring of these systems to ensure
that they are effective and fit for purpose.
36
Corporate Governance | Board of Directors
37
Board of Directors
Independent Directors
Executive Directors
Christopher Humphrey BA MBA FCIMA
Nik Philpot
Non-Executive Chairman
Committee Membership:
Appointed to the Board – 21 June 2017
Nominations (Chair), Audit, Remuneration
Appointed Chairman – 21 September 2017
Skills & Experience:
Christopher is currently Chairman at
Group Chief Executive Officer of Anite plc
Heywood Pension Technologies Limited
from 2008 until August 2015, having joined
He was previously a Non-Executive
Anite in 2003 as Group Finance Director
Director at AVEVA Group plc, Videndum plc
He has held senior positions in finance at
(previously The Vitec Group plc), Alterian
Conoco, Eurotherm International plc and
plc and SDL plc Christopher was formerly
Critchley Group plc
Guy Millward
Non-Executive Director
Committee Membership:
Appointed to the Board – 1 October 2016
Audit (Chair), Nominations, Remuneration
Skills & Experience:
Guy is currently Chief Financial Officer
Group plc, Advanced Computer Software
at Wilmington plc He has extensive
Group plc, Quixant plc, Metapack Limited
experience in senior finance positions
and Bighand Limited, Group Finance
at several publicly and privately held
Director at Alterian plc, Morse plc and
companies in the electronics, software
Kewill plc Guy is a Fellow of the Institute
and IT sectors His previous roles include
of Chartered Accountants in England and
that of CFO at Imagination Technologies
Wales (ICAEW)
David Coghlan
Non-Executive Director
Committee Membership:
Appointed to the Board – 1 December 2017
Remuneration (Chair), Audit, Nominations
Skills & Experience:
David is currently Chairman of Quadrant
Chairman of the Audit Committee, of
Group Limited, a leading independent
SCISYS plc, a software company quoted
supplier of aviation simulation and
on AIM He has extensive experience
training, with subsidiaries in the UK and US
with technology companies in the
Until February 2023 he was Chairman of
business-to-business field. In his
Synectics plc, an AIM-quoted provider of
earlier career, David was a partner at
high-end electronic security systems and
Bain & Company, a leading strategy
previously a Non-Executive Director, and
consulting firm.
Executive Director - Chief Executive Officer
Appointed to the Board
– 2 February 1999
Appointed to Chief Executive Officer
– September 2006
Skills & Experience:
Nik is a founder of Eckoh with more than
leading provider of Customer Engagement
30 years’ experience in the voice services
Data Security Solutions working with some
industry; he was originally at British Telecom
of the largest global brands to enhance and
before establishing a number of start-up
protect interactions with their customers
businesses in the telecoms and technology
sectors As CEO of Eckoh, he has created a
Chrissie Herbert
Executive Director – Chief Financial Officer & Company Secretary
Appointed to the Board – 2 May 2017
Skills & Experience:
Chrissie has held several senior finance
from PayPoint plc, where she was
positions with both publicly listed
UK & Ireland Finance Director
and privately held businesses Her
considerable background in high growth,
Chrissie qualified as a Chartered
consumer facing organisations includes
Accountant with KPMG and is a
Collect+ and Travelodge Hotels Ltd and
Fellow of the ICAEW
she has gained payments experience
38
Corporate Governance | Chairman’s Statement
39
Chairman’s Statement
on Corporate Governance
Dear Shareholder,
As a Board of Directors, we feel the Quoted Companies Alliance Corporate Governance Code
(QCA Code) is the most appropriate code for Eckoh plc to apply, given the Group’s size, risk,
complexity and stage of maturity
The QCA Code follows 10 basic principles that requires companies to provide an explanation
of how they consider that they are meeting those principles through a set of disclosures on
their website and in their Annual Report
As Chairman of Eckoh plc, I am ultimately responsible for the Corporate Governance of the
Group but the Board as a whole considers that good corporate governance is a key driver
in the success of the business and accountability to the Company’s stakeholders, including
Shareholders, customers, suppliers and employees is a vital element in that governance
In this Governance section we outline the Company’s approach to Corporate Governance and how we have complied with the
QCA Code The Board considers that it does not depart from any principles of the QCA code It is the intention that the information
contained within the report will be updated annually alongside the publication of the Group’s Annual Report or more frequently for
any fundamental changes
During the year we have been working on our ESG strategy This is underpinned by our mission as a business, which is to set the standard
for secure interactions between consumers and the world’s leading brands because we care about making the world a secure place
The ESG strategy encompasses the products we provide our clients, the way we provide them, the way we do business, both from an
ethical approach and also with consideration for the environment In January 2023 we issued our Carbon Reduction Plan, the targets
we have committed to and the progress to date can be found in the Sustainability report on pages 28 to 33
Christopher Humphrey
Chairman
14 June 2023
Quoted Companies Alliance Code Compliance
The following paragraphs set out the 10 QCA Code principles and how Eckoh has complied with those principles
1.
Establish a strategy and business model
which promotes long-term value for
Shareholders
3.
Take into account wider stakeholder and
social responsibilities and their implications
for long-term success
The strategy and business model which explains the strategic
Eckoh’s Sustainability report focuses on our environmental, social
objectives of the Group and how the Company generates and
and governance strategy and is found on pages 28 to 33
preserves value over the longer term are set out in the Strategic
Report on pages 4 to 33 of this Annual Report
In addition to the stakeholders covered in the Sustainability
Report, our customers are also important stakeholders, whose
The Board is collectively responsible for the long-term success
opinions and voice Eckoh values highly We have various
of the Company and provides effective leadership by setting
channels for customers and prospects to communicate with the
the strategic aim of the Company and overseeing the efficient
Group, through regular business reviews, which are conducted
implementation of these aims in order to achieve a successful
by our Client Services team, to post project reviews An annual
and sustainable business In practice the Executive Directors
Customer Satisfaction survey was conducted in the year for our
prepare and present the strategic plan to the Board which the
UK&I and ROW, and we intend to carry out a similar survey for our
Board challenges in order to determine the strategic priorities
NA customers in the financial year 2024.
On an ongoing basis the Board ensures that the strategic plan is
taken into consideration in its decision-making process
Seek to understand and meet Shareholders’
needs and expectations
The Directors consider that the Annual Report and Financial
2.
4.
Embed effective risk management,
considering both opportunities and threats,
throughout the organisation
The Board has overall responsibility for establishing and
maintaining sound risk management and internal control
Statements play an important role in providing Shareholders
systems, and for the monitoring of these systems to ensure
with an evaluation of the Company’s position and prospects The
that they are effective and fit for purpose. The Audit Committee
Board aims to achieve clear reporting of financial performance
provides support to the Board in this regard and oversees the
to all Shareholders The Board acknowledges the importance
monitoring process Further information on the risk management
of an open dialogue with its institutional Shareholders and
and internal control system is set out in the Audit Committee
welcomes correspondence from private investors
report on pages 44-46
The Executive Directors have an ongoing programme of meetings
The Directors have carried out a robust assessment of the
with institutional investors and analysts twice a year for up to
principal risks facing the Group and how these risks could affect
two weeks at a time Feedback from these meetings is reported
the business, financial condition or operations of the Group. The
to the Board The Non-Executive Chairman has held meetings
explanation of these principal risks, including how they are being
during the year with the major Shareholders, independently of
mitigated, can be found on pages 20 to 23
the Executive Directors
In addition to the Annual Report and the Company’s website,
the Annual General Meeting (AGM) is an ideal forum at which
5.
Maintain the Board as a well-functioning,
balanced team led by the Chair
The Board, led by the Chairman, has a collective responsibility
to communicate with investors, and the Board encourages
and legal obligation to promote the interests of the Group The
Shareholder participation All Board members are planning to
Chairman is ultimately responsible for Corporate Governance
be present at the AGM and are available to answer questions
However, the Board is responsible for defining the Corporate
from Shareholders
Governance policies
The articles of association require that at the AGM one third, or as
The Board is made up of three Non-Executive Directors and
near as possible, of the Directors will retire by rotation However,
two Executive Directors and has delegated certain roles and
as is best practice, all Director’s will retire and put themselves
responsibilities to its Audit, Nomination and Remuneration
forward for re-election at the AGM
Committees while retaining overall responsibility
40
Corporate Governance | Chairman’s Statement on Corporate Governance
41
Non-Executive Directors are all independent and are
Company’s corporate calendar There were twelve scheduled
expected to devote sufficient time to the Company to meet
meetings during the year and two meetings at short notice
their responsibilities
Directors in principle attend all meetings either in person
or by video or telephone conference arrangements The table
The Board and its Committees met regularly throughout the
below shows Directors’ attendance of Board and Committee
year with the meetings scheduled around key dates in the
meetings
Directors’ meeting attendance 2022/23
Board
Audit
Remuneration
Nomination
Scheduled
Short notice
Scheduled
Short notice
Scheduled
Short notice
Scheduled
Short notice
Executive Directors
Chrissie Herbert
Nik Philpot
Non-Executive Directors
Christopher Humphrey
David Coghlan
Guy Millward
12
12
12
112
12
2
2
2
2
2
31
31
3
3
3
-
-
-
-
-
31
31
3
3
3
2
2
2
2
2
11
11
1
1
1
-
-
-
-
-
1 By invitation. The Executive Directors are not members of any of the Board Committees and they attended only the committee meetings to which they were specifically invited.
2 David Coghlan was unable to attend the January Board meeting due to an overseas commitment
At Board meetings the Chairman ensures that effective decisions are reached by facilitating debate and consultations with
Management and external advisors as necessary The work undertaken by the Board during the year is set out in the table below:
Divisions of roles and responsibilities
The Chairman is responsible for the leadership of the Board and ensuring the effectiveness on all aspects of its role There is a clear
division of responsibility between the Chairman and the Chief Executive, which is as follows:
Chairman
Chief Executive
Christopher Humphrey is the Non-Executive Chairman
Nik Philpot is the Chief Executive and he is responsible
and he is responsible for managing the Board and
for running the Group’s business by proposing
ensuring it works effectively Below are the roles and
and developing the Group’s strategy and overall
responsibilities of the Chairman for the financial year
commercial objectives, which he does in close
ended 31 March 2023
consultation with the Chairman and the Board
• Setting the Board’s agenda and ensuring the Board
• Providing input to the Board’s agenda and ensuring
receives accurate, timely and clear information on
that reports provided to the Board are accurate,
all matters reserved to its decision and the Group’s
timely and include accurate information
The agenda for each Board meeting includes the following as standing items:
performance and operations
• Risk analysis, including by risk, the risk factor and the
• Finance report, which is prepared and presented
monitoring mechanism
by the Chief Financial Officer and includes the
management accounts and business performance,
• Management report which is prepared and presented
including forecast as appropriate
by the Chief Executive Officer
Other matters which are covered by the Board routinely during the year include:
• Review of Annual Report and preliminary
• Review and approval of the interim management
announcement
statements for release to the market
• Review of Executive Directors’ presentation of the full
• Recommendation of the final dividend
year results to analysts and investors
• Strategy session at which the Board considers
• Company secretarial & legal
Management’s presentation of the Strategic Plan
• Setting of the Board calendar for the year
and gives its approval
• Ensuring compliance with the Board’s approved
Company Secretary as appropriate, compliance
procedures
with the Board’s approved procedures
• Ensuring, in consultation with the Chairman and the
• Chairing the Nomination Committee and facilitating
• Ensuring that the Chairman is alerted to forthcoming
the appointment of effective and suitable members
complex, contentious or sensitive issues affecting
and Chairman of Board Committees
the Group of which he might not otherwise be aware
• Ensuring that there is effective communication
• Providing information and advice on succession
by the Group with its Shareholders, including by
planning to the Chairman, the Nomination
the Chief Executive and Chief Financial Officer
Committee, and other members of the Board,
ensuring that members of the Board develop an
particularly in respect of Executive Directors
understanding of the views of the major investors in
the Group
• Promoting the highest standards of integrity, probity
• Leading the communication programme
with Shareholders
and corporate governance throughout the Group
• Promoting and conducting the affairs of the
and particularly at Board level
Group with the highest standards of integrity and
corporate governance
42
Corporate Governance | Chairman’s Statement on Corporate Governance
43
6.
Ensure that between them, the Directors have
the necessary up-to-date experience, skills
and capabilities
All members bring different experiences and knowledge to
9.
Maintain governance structures and
processes that are fit for purpose and
support good decision-making by the Board
The Board provides the strategic leadership for the Company
the Board and between them they provide a blend of business
and ensures that the business operates within the Corporate
understanding, technical knowhow, experience of public
Governance framework that has been adopted Its prime
markets and financial expertise. The Board consider that this is
purpose is to ensure the delivery of Shareholder value in the long
appropriate to enable it to successfully execute its long-term
term by setting the business model and defining the strategic
strategy
goals to achieve this
All members of the Board attend seminars and regulatory events
The Board is supported by a Remuneration Committee, Audit
to ensure that their knowledge is up to date and relevant Where
Committee and Nomination Committee Each Committee has
the Board considers it does not possess the necessary expertise
formally delegated duties and responsibilities and the terms
Committees of the Board
Nomination Committee
The Nomination Committee currently comprises David Coghlan,
Guy Millward and Christopher Humphrey, who is the Committee
Chairman It met once during the period and the details of
meeting attendance are set out on page 40
The Committee is responsible for considering and making
recommendations on the appointment of additional Directors,
the retirement of existing Directors and for reviewing the size,
structure and composition of the Board and membership
of Board Committees, which are considered against
or experience it will engage the services of professional advisors
of reference for the Committees are reviewed annually The
objective criteria
Relationships with customers are
fostered and we listen to feedback
through customer surveys. We also
develop the relationships with clients
through cross-selling appropriate
additional product and services,
which maximises client value and
also ensures high retention of clients.
The Board considers that the three non-Executive Directors,
Committee Chair is responsible for reporting, throughout the
including the Chairman, are independent
year, to the Board any recommendations or issues which require
further consideration by the Board The Board reviews annually
The biographies of each of the Directors can be found on pages
the list of matters that are reserved for the Board
36 to 37
7.
Evaluate Board performance based on clear
and relevant objectives, seeking continuous
improvement
The report on the Nomination Committee is set out below and
the reports of the Audit Committee and the Remuneration
Committee are set out on page 44 and page 47 respectively
During the financial year ended 31 March 2023, the Chairman
The role and responsibilities of the Chairman, Chief Executive
led a formal review of the Board, its Committees and each
and other Directors have been set out under principle 5 on page
Director The performance evaluation of the Chairman was
41 of the Annual Report
undertaken by the Chair of the Remuneration Committee,
David Coghlan The review centred on the following areas:
• the Board’s role and scope of its authority, how it is led by
10.
Communicate how the Group is governed
and is performing by maintaining a
dialogue with Shareholders and other
the Chairman, the frequency and time allotted to the Board
relevant stakeholders
meetings and their agendas
The Company is committed to open communication with
• the Committees’ terms of reference,
leadership, the
all its Shareholders Communication with Shareholders is
frequency and time allotted to the Committee meetings and
predominantly through the Annual Report and AGM The
their agendas
last AGM results can be found on the Group’s website Other
• the Directors’ feedback was free-ranging and unstructured
communications are in the form of full-year and half-year
with guidance on areas to consider
announcements, periodic market announcements (as
appropriate) one-to-one meetings and investor roadshows The
A Board evaluation process will be carried out annually
Remuneration Committee report is included on pages 47 to 52
The Group’s website www.eckoh.com is regularly updated
Annual Reports and Notices of Meetings can be found on the
Group website
8.
Promote a corporate culture that is based
on ethical values and behaviours
Our Sustainability report on page 28 sets out our ESG strategy
Our ESG strategy starts with our mission as a business, which is
to set the standard for secure interactions between consumers
and the world’s leading brands because we care about making
the world a secure place Our ESG strategy also covers the
way we do business and includes the value we place on our
employees and the culture we drive in the NA and UK&I business,
with our Humanity value playing a significant part in the way we
operate both internally with our employees and also with the
communities we operate within
Section 172(1) Statement –
Board engagement with our stakeholders
Section 172 of the Companies Act 2006 requires a Director of a
The Board regularly receives updates on feedback from investors
Company to act in the way he or she considers, in good faith,
from the Executive Management In addition, the Chairman,
would be most likely to promote the success of the Company
CEO and CFO meet frequently with institutional investors to
for the benefit of its members as a whole. In doing this, section
discuss and provide updates about – and seek feedback on
172 requires a Director to have regard, among other matters,
– the business, strategy, long-term financial performance,
to: the likely consequences of any decision in the long-term;
Directors’ remuneration policy and dividend policy to the
the interests of the Company’s employees; the need to foster
extent appropriate Considering the capital growth aims of
the Company’s business relationships with suppliers, customer
Shareholders, the Directors are focused on growing the NA
and others; the impact of the Company’s operations on the
business through the enhanced Customer Engagement Data
community and the environment; the desirability of the Company
Security Solutions The Group is successfully integrating Syntec
maintaining a reputation for high standards of business conduct;
Holdings Limited, which it acquired in December 2021, into the
and the need to act fairly with members of the Company The
Eckoh business and its portfolio of solutions, this together with
Directors give careful consideration to the factors set out above
our organic growth will further strengthen our market leading
in discharging their duties under section 172 The stakeholders we
position in the Customer Engagement Data Security Solutions
consider in this regard are the people who work for us, buy from
market Going forward we will continue to evaluate acquisition
us, supply to us, own us, regulate us, and live in the societies we
opportunities that can support our growth strategy in Customer
serve and the planet we all inhabit The Board recognises that
Engagement security
building strong relationships with our stakeholders will help us
deliver our strategy in line with our long-term values and operate
Relationships with customers are fostered and we listen to
the business in a sustainable way The Board is committed to
feedback through customer surveys We also develop the
effective engagement with all its stakeholders
relationships with clients through cross-selling appropriate
additional product and services, which maximises client value
For further details of how the Board operates and the way in
and also ensures high retention of clients
which it makes decisions, including key activities during the
financial year ended 31 March 2023 and Board governance, see
It is the Group’s policy to manage and operate worldwide
pages 38 to 43 and the Board Committee reports thereafter The
business activities in conformity with applicable laws and
Board regularly receives reports from Management on issues
regulations as well as with the highest ethical standards Both
concerning customers, the environment, communities, suppliers,
the Group’s Board of Directors and Executive Management
employees, regulators, governments and investors, which it takes
are determined to comply fully with the applicable law and
into account in its decision-making process under section 172
regulations, and to maintain the Company’s reputation
In addition to this, the Board seeks to understand the interests
for integrity and fairness in business dealings with
and views of the Group’s stakeholders by engaging with them
third parties
directly as appropriate
44
Corporate Governance | Audit Committee Report
45
Audit Committee Report
In the year under review the Audit Committee’s activities were as follows:
Topic
Actions
Dear Shareholder,
On behalf of the Audit Committee, I am pleased to present our report for the year ended 31
March 2023. The Committee has considered the integrity of the Group’s financial reporting
and provided advice to the Board that the 2023 Annual Report and Financial Statements,
taken as a whole, is fair, balanced and understandable, providing Shareholders with the
necessary information to assess the Company’s position, performance, business model
and strategy The activities of the Committee are kept under review in line with regulatory
and market developments
The Audit Committee currently comprises myself, David Coghlan and Christopher Humphrey
The Board considers that I have recent and relevant financial experience in accordance with
the Code Full biographical details of each of the current Committee members, including
relevant financial experience are set out on pages 36 to 37.
The key responsibilities of the Audit Committee are as follows:
• monitoring the financial reporting process, including the integrity of the financial statements of the Company and any formal
announcements relating to the Company’s financial performance including reviewing significant financial reporting judgements
contained therein
• reporting to the Board on the appropriateness of the significant accounting policies and practices of the Group
• risk management and the effectiveness of the Group’s system of internal financial control
• overseeing the external auditors including its scope and cost effectiveness and monitoring and reviewing the independence of
our external auditors and the provision of non-audit services to the Group
• overseeing the quality of the internal and external audit processes
Financial reporting
Assessed and reported to the Board on whether the Annual Report and Accounts were fair, balanced
and understandable
Reviewed and discussed with the external auditors the key accounting considerations and judgements
reflected in the Group’s results for the year to 31 March 2023 (as reported below).
Reviewed, together with the Board, the Risk Assessment and the going concern basis for preparation
of the financial statements and recommendation of the going concern statement to the Board.
Reviewed the post-acquisition performance of Syntec Holdings Limited, to ensure the expected
value from the acquisition was being achieved
Audit plans and audit findings
Reviewed and agreed the external auditors’ plan in advance of their audit for the year ended
31 March 2023
Discussed the report received from the external auditors regarding their audit in respect of the
year ended 31 March 2023 which included comments on their findings on internal control and a
statement of their independence and objectivity
Risk management and
internal controls
Reviewed the principal risks and the mitigation of these risks as set out on page 20 to 23
Reviewed and monitored the effectiveness and robustness of the Company's internal financial
controls and processes and determine whether an internal audit function is required
Committee governance
Review and update of the Audit Committee terms of reference
• monitoring and reviewing the scope and areas internal audit should cover alongside the other programmes and process reviews
Committee in relation to the 2023 financial statements, and how these were addressed, were:
the Company has
The Committee has met three times during the year inviting the external auditors, the Chief Financial Officer and the Chief Executive
Officer to each of these meetings. During one of the Audit Committee Meetings, the auditors were present, without the Chief
Financial Officer or the Chief Executive Officer being present. Details of meeting attendance are set out on page 40.
• Risk of fraud in revenue recognition (including contract
• Management override of controls
accounting)
We are satisfied adequate controls are in place and use
Revenue
recognition
is complex,
involves calculation
the monthly management reporting and the results of the
schedules and can be judgemental Controls are in place to
external audit to assess this on an on-going basis
Guy Millward
Chairman Audit Committee
14 June 2023
ensure revenue is only recognised for product solutions such
as the hosted Customer Engagement solutions and Secure
Payment solutions, which are in effect a hosted solution,
when the client accepts the service The provision of the
solution is deemed to be one single performance obligation,
which includes the hardware revenue, the implementation
fees and the ongoing licence fee revenue, which includes
support and maintenance, which are spread evenly over the
term of the contract once the solution has been delivered to
the client The costs directly attributable to the delivery of the
hardware and the implementation fees will be capitalised
as ‘costs to fulfil a contract’ and released over the contract
term, thereby also deferring costs to later periods
46
Corporate Governance | Audit Committee Report
47
External audit
An annual review of the effectiveness of the external audit is
Non-audit services
The Committee reviews the level of non-audit fees for services
undertaken by the Committee
provided by the auditors in order to satisfy itself that the
No significant issues were raised with
respect to the audit process for the
financial year ended 31 March 2023
and the quality of the audit process
was assessed to be good.
The effectiveness of the audit process is underpinned by the
appropriate audit planning and risk identification at the outset
auditors’ independence is safeguarded There were no non-
audit fees paid to PricewaterhouseCoopers LLP in the year ended
31 March 2023
In determining the most appropriate provider of non-audit
services, the Committee will consider the knowledge and
expertise of the potential providers and the proposed costs
Non-audit services will only be undertaken by the auditors where
it is deemed to be the preferred provider and the provision of
services poses no threat to its independence
of the audit cycle The auditors provide a detailed audit plan,
Details of the remuneration paid to the auditors for the statutory
which includes the level of materiality and its assessment of
audit are set out in note 7
the risks and other key matters for review For the year ended
31 March 2023, the primary risks identified were: risk of fraud
in revenue recognition (including contract accounting) and
Risk management and internal control
The review of risks facing the Group is shown on pages 20 to
management override of controls The Committee reviews
23. The Group has clearly defined lines of accountability and
and challenges the work undertaken by the auditors to test
delegation of authority which are closely adhered to and include
Management’s assumptions on these matters An assessment of
policies and procedures that cover financial planning and
the effectiveness of the audit process in addressing these items
reporting, accounts preparation, information security, project
is performed through the reporting received from the auditors at
governance and operational management The reporting and
the year end During the audit for the year ended 31 March 2023,
review processes provide regular assurance to the Board as to
the auditors implemented the new audit standard ISA (UK) 315
the adequacy and effectiveness on internal controls
(Revised) The Committee seeks feedback from management
on the effectiveness of the audit process. No significant issues
There are ongoing processes for identifying, evaluating and
were raised with respect to the audit process for the financial
managing the Company’s significant risks and related internal
year ended 31 March 2023 and the quality of the audit process
controls that are integrated into the Company’s operations
was assessed to be good
Such processes are reported to, and reviewed by, the Board
at each meeting. These processes have identified the risks
Based on the Committee’s assessment, the Committee has
most important to the Company (business, operational,
provided the Board with its recommendation to the Shareholders
financial, security and compliance), determined the financial
on the re-appointment of PricewaterhouseCoopers LLP
implications, and assessed the adequacy and effectiveness of
as external auditors for the year ending 31 March 2024
their control The reporting and review process provide routine
PricewaterhouseCoopers LLP was appointed as auditors to the
assurance to the Board as to the adequacy and effectiveness
acquired Syntec Holdings Limited and its subsidiaries There are
of the internal controls
no contractual obligations restricting the Committee’s choice
of auditors A resolution for appointment of the auditors will be
proposed at the forthcoming Annual General Meeting and is
Internal audit
The Audit Committee annually reviews the requirement for an
included in the Notice of Meeting which accompanies this report
internal audit function Eckoh Group is subject to a number of
externally audited certifications which were updated this year
as well as the external audit of its financial statements; the Audit
Committee has therefore not needed to recommend that the
Board requires an internal audit function
Guy Millward
Chairman Audit Committee
14 June 2023
Remuneration
Committee Report
Dear Shareholder,
On behalf of the Remuneration Committee, I am pleased to present our Remuneration
Report for the financial year ended 31 March 2023, which has been approved by the Board.
This report is divided into two sections:
• The annual statement setting out the work of the Remuneration Committee in the financial
year ended 31 March 2023; and
• The Remuneration Report, which sets out the Company’s Remuneration Policy for Executive
Directors and the Annual Remuneration Report detailing remuneration paid to Directors in
the year ended 31 March 2023
Directors’ remuneration is aligned with the interests of Shareholders The Remuneration Committee believes that Shareholders’
interests are best served by linking a significant proportion of total potential remuneration to long-term performance.
The membership and responsibilities of the Remuneration Committee are set out on page
49 of this report Amongst its objectives, the Committee strives to ensure the Executive
In respect of the year under review the Remuneration Committee’s activities were as follows:
• Share options equal to 200% of salary were granted to the CEO and CFO in July 2022, in respect of FY23 (the FY23 Awards) This was
in line with the consultation with Shareholders in FY22 and the granting of share options in January 2022 to the CEO and CFO equal
to 200% of their respective salaries (in line with the exceptional grant limit) (the FY22 Awards),
– From FY24 on, further annual awards will be considered per the scheme Rules up to the normal 120% of salary
award level Further details of the award targets are on page 50
• The Remuneration Committee has also reviewed the Remuneration Policy for Senior Management and key employees At the
beginning of the financial year there continued to be a difficult employment market in the technology sector. As a result, share
options were awarded in July 2022 to a larger number of key employees in the business
• The Committee approved an increase in the Chief Executive Officer’s and Chief Financial Officer’s salaries with effect from 1 April
2023 of 4%, reflecting pay increases within the Group’s workforce and current market conditions.
• The Base and Committee Chair fee of the Chairman and Non-Executive Directors were also increased by 4% from 1 April 2023
• Bonus payments were accrued for the Executive Directors and Senior Management for the financial year ended 31 March 2023.
Those relating to the Executive Directors are set out on page 50 Bonus payments for staff members were accrued at an average
of 5% of salary (FY22: 5%)
The Remuneration Report in respect of the financial year ended 31 March 2023, which includes the Remuneration Policy as set out
below, will be put to the Company’s Shareholders for an advisory vote at the AGM to be held on 13 September 2023 I encourage all
Shareholders to vote in favour of this resolution and I look forward to the opportunity to meet with Shareholders at the AGM
David Coghlan
Chairman Remuneration Committee
14 June 2023
49
Annual Report
on Remuneration
The following section provides details of how Eckoh’s
Remuneration Policy was implemented during the financial year
Summary of Shareholder voting at the 2022 AGM
The following table shows the results of the Shareholder advisory
ended 31 March 2023 The following pages contain information
vote on the Annual Remuneration Report:
that is required to be audited in compliance with the Directors’
Remuneration requirements of the Companies Act 2006
All narrative and quantitative tables are unaudited unless
otherwise stated
Remuneration Committee membership in 2022/23
The Remuneration Committee currently comprises myself,
Christopher Humphrey and Guy Millward The Committee
members are all independent Directors and are responsible for
developing policy on remuneration for the Executive Directors
The Remuneration Committee is formally constituted with written
terms of reference which set out the full remit of the Committee
The Remuneration Committee met five times during the year. The
Total number of
votes
% of votes
cast
For (including discretionary)
102,442,048
63 46%
Against
58,993,836
36 54%
Total votes cast
(excluding withheld votes)
Total votes withheld
Total votes cast
(including withheld votes)
161,435,884
45,873
161,481,757
details of meeting attendance are set out on page 40
Following the 2022 AGM held on 26 September 2022, the
Remuneration Committee and Board noted the significant
During the year, the Committee sought internal support from
minority vote against the Company’s Remuneration Report
the Chief Executive Officer and Chief Financial Officer, who
The Remuneration Committee was aware of the guidance from
attended Committee meetings by invitation from the Chairman,
Institutional Shareholder Services Inc (ISS) which states that
to advise on specific questions raised by the Committee. The
payment of transaction-related bonuses is not in line with its
Chief Executive Officer and the Chief Financial Officer were not
policy. The Remuneration Committee specifically considered
present for any discussions that related directly to their own
this point, together with the guidance from ISS, at the time the
remuneration
payment was approved and determined that, in this case, a
modest transaction-related bonus of the level approved was
In undertaking its responsibilities, the Committee seeks
entirely appropriate in recognition of the additional and intensive
independent external advice as necessary To this end, for
work involved during and immediately following the acquisition
the year under review the Committee received advice from FIT
of Syntec Holdings Limited, which provided savings in terms of
Remuneration Consultants LLP
professional fees significantly in excess of the approved amount.
48
Corporate Governance | Remuneration Committee Report
Remuneration Policy Report
The following is a summary of the Policy that covers remuneration for Executive Directors of the Company.
Purpose and link to strategy
Operation
Performance measures
Base salary is set at a level
to secure the service of
talented Executive Directors
with the ability to develop
and deliver a growth
strategy.
Fixed contractual cash amount usually paid monthly in
arrears
Not applicable
Reviewed annually, with any increases taking effect
from 1 April each year
This review is dependent on continued satisfactory
performance in the role of an Executive Director It also
includes a number of other factors, including experience,
development and delivery of Group strategy and Group
profitability, as well as external market conditions and
pay awards across the Company
To provide Executive
Directors with ancillary
benefits to assist them in
carrying out their duties
effectively.
Executive Directors are entitled to a range of benefits
including car allowance, private health insurance and
life assurance
Executive Directors are entitled to participate on
the same terms as all UK employees in the UK Share
Incentive Plan, the maximum contribution being
£1,800 pa
Not applicable
Paid annually and based on performance in the relevant
financial year.
Measurement criteria and targets for the annual
bonus are set annually by the Committee
To provide a material
incentive to drive Executive
Directors to deliver
stretching strategic and
financial performance
and to grow long-term
sustainable Shareholder
value.
Award levels for Executive Directors are up to 50% of the
Executive’s base salary The performance measures
are reviewed annually and the Committee ensures
that performance measures remain aligned to the
Company’s business objectives and strategic priorities
for the year
Currently, up to 75% of the annual bonus is based on
the achievement of annual targets set for the Group’s
adjusted earnings before interest, tax, depreciation
and amortisation The remainder is based on the
achievement of annual personal objectives
The Committee reserves the right to vary the
measurement criteria and targets annually to
ensure the annual bonus remains appropriate
and challenging
Targets are measured over a one-year period
Payments range between 0% and 50% of base
salary for threshold and maximum performance
Initial Awards
• 25% vesting for compound growth in Total
Shareholder Return (“TSR”) of 10% pa
• 100% vesting for compound growth in TSR of 25% pa
or greater
Straight line vesting for intermediate performance
between threshold and maximum performance
As the performance was below threshold none of the
award vested
FY22 & FY23 Awards:
50% based on three-year TSR Return targets
• 25% vesting for compound growth in TSR of 7 5% pa
• 100% vesting for compound growth in TSR of 15% pa
or greater
Straight line vesting for intermediate performance
between threshold and maximum performance
50% based on three-year adjusted Earnings Per Share
(EPS) growth targets
• 25% vesting for compound growth in EPS of 7 5% pa
• 100% vesting for compound growth in EPS of 15% pa
or greater
Straight line vesting for intermediate performance
between threshold and maximum performance
To provide a long-term
performance and retention
incentive for the Executive
Directors involving the
Company’s shares. To
link long-term rewards to
the creation of long-term
sustainable Shareholder
value by way of delivering
on the Group’s agreed
strategic objectives.
Under the PSP, the Initial Awards were made over a
fixed number of shares and over a performance period
of approximately 5 years from the 2017 AGM, ending
30 days after the announcement of the 2022 Full Year
Financial Results The performance conditions were not
met and the Initial Awards lapsed
FY22 and FY23 Awards were granted to the Executive
Directors, representing in each case 200% of the CEO’s
and CFO’s respective salaries
The FY22 and FY23 Awards will vest three years from the
respective grant dates, subject to continued service and
certain performance targets
From FY24 on, further annual awards will be considered
per the scheme Rules at up to the normal 120% of salary
award level
To provide a benefit
comparable with market
rates, helping with the
recruitment and retention of
talented Executive Directors
able to deliver a long-term
growth strategy.
Usually paid monthly in arrears
Not applicable
Executive Directors receive a contribution of 10% of base
salary into the Company’s Defined Contribution Plan, a
personal pension arrangement and/or a payment as a
cash allowance
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50
Corporate Governance | Remuneration Committee Report
51
Directors’ single figure of total remuneration (audited)
The following table sets out the single figure of total remuneration for Directors for the financial year ended 31 March 2023 and 2022:
Base salary/fees
Benefits1
Pension
Annual bonus
Total
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Awards will normally vest on the later of the expiry of the third
Fees
for
the Chairman, Non-Executive Directors and
anniversary of the date of grant of the award and the date that
Committee Chairmen are reviewed annually Both the fees for
the Committee determines the extent to which the applicable
the Chairman and Non-Executive Directors base salaries and
performance criteria have been satisfied and provided in normal
the Committee Chairman fee for the Audit Committee and
circumstances that the participant is still a Director or employee of
Remuneration Committee were increased by 4% from 1 April
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
the Company’s Group
2023 (FY22: 4% from 1 April 2022)
Executive Directors
Chrissie Herbert
Nik Philpot2
Non-Executive Directors
David Coghlan
Christopher Humphrey
Guy Millward
Total
196
339
38
66
38
189
326
37
64
37
677
653
14
18
-
-
-
32
14
17
-
-
-
31
20
-
-
-
-
20
19
-
-
-
-
19
61
96
-
-
-
55
48
-
-
-
291
453
38
66
38
277
391
37
64
37
157
103
886
806
1 Benefits includes car allowance, healthcare cover & death in service
2 N Philpot has elected to have all his Company pension contribution added to his salary The pension contribution has been reduced by the employer’s national insurance that is payable by the
Company for the amount added to his base salary
Incentive outcomes for the
Scheme interests awarded in
year ended 31 March 2023
the year ended 31 March 2023
Annual bonus in respect of 2022/23 performance
The annual bonus for the Executive Directors and Senior
Performance Share Plan (“PSP”) (audited)
The table below provides details of the Awards made under the PSP
During the financial year ended 31 March 2023, awards were made
to Senior Management and key individuals of Eckoh UK, Eckoh US and
Directors’ shareholdings (audited)
The shareholdings of the Directors and their connected persons
Syntec Details of awards can be found in note 24
in the Ordinary Shares of the Company against their respective
shareholding requirement as at 31 March 2023
Payments to past Directors (audited)
In the financial year ended 31 March 2023 and 2022, there were
no payments made to past Directors
Chairman and Non-Executive Director fees
The Chairman and Non-Executive Directors were paid the
Nik Philpot1
31 March 2023
Ordinary Shares
of 0.25 pence
each
31 March 2021
Ordinary Shares
of 0.25 pence
each
7,051,285
7,051,285
following fees in the financial year ending 31 March 2023:
Chrissie Herbert
35,000
35,000
Role
Chairman
Non-Executive Director
Chairman of a Committee
2023 Annual fee £k
Christopher Humphrey
525,000
525,000
66
33
5
David Coghlan2
325,000
200,000
1 Nik Philpot's spouse is the beneficial owner of 80,000 shares included above.
2 Members of David Coghlan’s family have a beneficial interest in Scawton Limited, which
owns 325,000 shares
Management for the year ended 31 March 2023 was based on
in the year ended 31 March 2022 and 31 March 2023 to Nik Philpot
Directors’ interests in shares in Eckoh’s long-term incentive plans and all-employee plans
the achievement of Adjusted Operating Profit before interest, tax,
and Chrissie Herbert Performance for these awards is measured
depreciation and amortisation (AOP) and personal objectives
over three years from Grant
Bonus payments were accrued for the Executive Directors at
30% of their base salary (FY22: 16%), compared to a maximum
In the ten-year period from the 2017 AGM, the Company may not issue
potential of 50%. The profit related element of the bonus was
under the PSP and any other employees’ Share plan adopted by the
based on a sliding scale formula for achieving AOP in excess
Company, interests in shares comprising in aggregate more than 10%
of a threshold established at the beginning of the year Bonus
of the issued Ordinary Share Capital of the Company
payments for staff members were accrued at an average of 5%
of salary (FY22: 5%)
Executive Director
Face
value
(% of salary)
Number
of shares
awarded
Face
value3
£
Potential award
for minimum
performance
Performance measures
Nik Philpot
25% of face value
• 25% vesting for compound growth in TSR of 7 5% pa
• 100% vesting for compound growth in TSR of 15% pa
73%
1,190,4431
601,174
50% based on three-year TSR Return targets
67%
1,477,0142
625,220
or greater
73%
749,9851
378,742
50% based on three-year adjusted Earnings Per
Share (EPS) growth targets
• 25% vesting for compound growth in EPS of 7 5% pa
• 100% vesting for compound growth in EPS of 15% pa
Chrissie Herbert
25% of face value
or greater
67%
930,5272
393,892
Straight line vesting for intermediate performance
between threshold and maximum performance
1 FY22 Awards made under the PSP on 17 January 2022
2 FY23 Awards made under the PSP on 20 July 2022
3 Face value has been calculated using the Company’s closing share price on the date of the Initial Award of £0 5125; for the FY22 Award the three-day average immediately prior to the
award of £0 505 and for the FY23 Award the three-day average immediately prior to the award of £0 4233
Directors’ share options (audited)
The Directors’ interests in share options are shown in the following table:
Note
At 1 April
2022
(number)
Granted
in year
(number)
Lapsed
in year
(number)
Exercised
in year
(number)
At 31 March
2023
(number)
Exercise
price
(pence)
Nik Philpot
Nik Philpot
Nik Philpot
Chrissie Herbert
Chrissie Herbert
Chrissie Herbert
Chrissie Herbert
1
1
1
2
1
1
1
3,750,000
1,190,443
-
-
-
1,477,014
500,000
2,250,000
749,985
-
-
-
-
930,527
(3,750,000)
-
-
-
(2,250,000)
-
-
-
-
-
-
-
-
-
-
1,190,443
1,477,014
500,000
-
749,985
930,527
1 Granted under the 2017 Eckoh plc Performance Share Plan (“PSP”), as approved at the 2017 AGM
2 Granted under the 2016 LTIP (see below)
Earliest
date for
exercise
15 07 22
17 01 25
Latest
date for
exercise
22 11 27
17 01 32
20 07 25
20 07 32
0 00
0 00
0 00
47 50
21 06 20
21 06 27
0 00
0 00
0 00
15 07 22
17 01 25
22 11 27
17 01 32
20 07 25
20 07 32
52
Corporate Governance | Remuneration Committee Report
53
Directors’ Report
The Directors present the Directors’ Report, together with the audited financial statements
for the year ended 31 March 2023
Principal activities, results and likely future developments
The principal activities of the Group are providing Customer Engagement Data Security
solutions, through a suite of patented products Our products help protect sensitive customer
data and can be performed via any customer engagement channel (voice, live chat,
advanced speech, digital) and any device the customer chooses
In addition, our solutions, which will enable our clients to ‘Engage, Secure and Protect’ their
customers, will all be delivered through our multi-vendor and global cloud platforms Further
comments on the development of the business are included in the Chairman’s Statement,
Chief Executive’s Report and Financial Review on pages 8 to 27
The profits for the year after taxation amounted to £4.6 million (2022: £1.6 million).
Long-Term Incentive arrangements for Directors
In addition to the PSP described above, the Company operates
March 2017 to a total of 34 Senior Management employees
an additional long-term share incentive scheme for Directors
The Chief Executive Officer was not awarded any share options
and Senior Managers (“the 2016 LTIP”) The 2016 LTIP was
in the years ended 31 March 2016 and 31 March 2017
implemented following prior discussions with major Shareholders
of the Company Under this scheme, the Company may issue a
Share options of 500,000 were awarded under the 2016 LTIP to
maximum of 2% of the share capital each year for the three years
Chrissie Herbert, Chief Financial Officer following her appointment
ending 31 March 2019 to the Senior Managers of the business
on 2 May 2017 These are disclosed in the above and below tables
All options granted under this scheme carry an exercise price
Total grants under the 2016 LTIP have been as follows:
equal to the market price at the date of grant and are subject to
vesting based on achievement of performance criteria Grants
of options under this arrangement were made in March 2016 and
Number of Senior
Management
Granted in year
(number)
Exercise price
(pence)
Earliest date for
exercise
Latest date for
exercise
23 March 2016
2 May 2016
13 October 2016
31 March 2017
21 June 2017
28
1
2
21
1
4,100,000
500,000
500,000
4,000,000
500,000
43 5
43 5
38 875
39 5
47 5
23 03 19
02 05 19
13 10 19
31 03 20
21 06 20
23 03 26
02 05 26
13 10 26
31 03 27
21 06 27
The Company does not intend to grant any further awards under the 2016 LTIP
Share Incentive Plan (audited)
The Group operates a Share Incentive Plan (SIP) in the UK The scheme and plan are open to all UK employees, including the Executive
Directors As at 31 March 2022 and 2023, Chrissie Herbert participates in the UK scheme and the details are shown below:
Number of
Partnership
Shares
purchased
at 31 March
2022
Number of
Matching
Shares
purchased
at 31 March
2022
Dividend
Shares1
acquired
at 31 March
2022
Total
Shares at
31 March
2022
Number of
Partnership
Shares2
purchased
during
the year
Matching
Shares3
awarded
during
the year
Dividend
Shares
acquired
during
the year
Dates of
release of
Matching
Shares4
Total
Shares at
31 March
2023
Chrissie Herbert
17,292
34,584
1,371
53,247
4,583
9,166
1,056
Dec 21 –
June 26
68,052
1 Dividend Shares are Ordinary Shares of the Company purchased with the value of dividends paid in respect of all other shares held in the plan
2 Partnership Shares are Ordinary Shares of the Company purchased, every six months by the Company with the monthly contributions made by the employee, during the period (at prices
from £0 38 to £0 41)
3 Matching Shares are Ordinary Shares of the Company awarded conditionally in line with the purchase of the Matching Shares every six months, during the period
4 The dates used are based on the earliest allocation of the Matching Shares Matching Shares will be released as each six-month Partnership Agreement matures, 3 5 years after
commencing
Executive Directors’ service contracts
Nik Philpot has a service contract that is terminable on twelve
External advisors
The Committee received independent advice from FIT
months’ notice by either party while Chrissie Herbert has a service
Remuneration Consultants LLP as the Committee’s appointed
contract that is terminable on nine months’ notice by either party
remuneration advisor during the financial year ended 31 March
2023 During the year the level of fees paid to remuneration
Chairman and Non-Executive Directors
The Chairman and Non-Executive Directors do not have service
advisors totalled £4k (2022: £11k)
contracts but serve under letters of appointment terminable by
David Coghlan
six months’ notice on either side
Chairman Remuneration Committee
14 June 2023
54
Corporate Governance | Directors Report
55
Statutory information
Eckoh plc (The Company) is a Public Limited Company
Financial instruments
The financial risk management objectives and policies of the
incorporated in the United Kingdom (Registration number
Group and the exposure of the Group to foreign currency risk,
03435822) The Company’s Ordinary Shares are traded on the
interest rate risk, and liquidity risk are outlined in note 3 to the
Alternative Investment Market of the London Stock Exchange (AIM)
consolidated financial statements.
The Company has a trading subsidiary, located in the USA, whose
operations and results are included in the financial statements of
Political contributions
Neither the Company nor any of its subsidiaries made any
the Company The subsidiary undertakings are listed in note 17
political donations or incurred any political expenditure during
Share capital
The Company has only Ordinary Shares of 0 25 pence nominal
value in issue along with 2,075,117 of shares held in treasury Note
Going concern
In determining the appropriate basis of preparation of the
22 to the consolidated financial statements summarises the
financial statements, the Directors are required to consider
the year (2022: £nil)
Subsequent events
Prior to the 31 March 2023, the Group were in settlement
Under company law, Directors must not approve the financial
discussions with a third party An agreement was reached with
statements unless they are satisfied that they give a true and
the third party and a settlement agreement entered into in favour
fair view of the state of affairs of the Group and Company and
of the Group The income and costs are included in exceptional
of the profit or loss of the Group for that period. In preparing the
items in Note 9
financial statements, the Directors are required to:
Disclosure of information to the auditors
The Directors who held office at the date of approval of this
Directors’ Report confirm that, so far as they are each aware, there
• select suitable accounting policies and then apply them
consistently;
is no relevant audit information of which the Company’s auditors
• state whether applicable UK adopted international
are unaware; and each Director has taken all the steps that they
accounting standards in conformity with the requirements
ought to have taken as a Director to make themselves aware of
of the Companies Act 2006 have been followed for the
any relevant audit information and to establish that the Company’s
Group financial statements and United Kingdom Accounting
rights of the Ordinary Shares as well as the number issued during
whether the Group and Company can continue in operational
auditors are aware of that information
the year ended 31 March 2023
existence for the foreseeable future
Substantial shareholdings
As at 31 March 2023, the Company had been advised under the
The Board has carried out a going concern review and concluded
that the Group and Company have adequate cash to continue
Dividends
No interim dividend was paid during the year (2022: £nil)
Standards, comprising FRS 101, have been followed for the
Company financial statements, subject to any material
departures disclosed and explained in the financial
statements;
Disclosure Guidance and Transparency Rules, or had ascertained
in operational existence for the foreseeable future
The Directors recommend the payment of a final dividend
• make judgements and accounting estimates that are
from its own analysis, that the following held more than 3% of the
of 0 74p (2022: 0 67p) per Ordinary Share amounting to £2 2
reasonable and prudent; and
issued capital:
The Directors have prepared cash flow forecasts for a period
million (2022: £2 0 million) to be paid on 20 October 2023
in excess of 12 months from the date of approving the financial
This recommendation will be put to the Shareholders at the
• prepare the financial statements on the going concern basis
statements As at 31 March 2023, the £5 million of Revolving Credit
Annual General Meeting
Name of holder
No. of Ordinary
Shares/voting
rights
% of issued
capital/voting
rights
Canaccord Genuity Wealth Mgt
48,245,544
Liontrust Asset Mgt
Chelverton Asset Mgt
Herald Investment Mgt
41,029,706
18,250,000
16,048,723
Blackrock Investment Mgt
12,436,498
16 50
14 03
6 24
5 49
4 25
Facility (RCF) from Barclays Bank is undrawn Bank covenants
have been reviewed and are comfortably achieved for the year
to 31 March 2023 and are forecast to continue to be so for at least
12 months from the date of approval of the financial statements.
that we are billing, demonstrate strong visibility of future revenue
In NA, we continue to see the majority of the Secure Payments
contracts won and delivered through Eckoh’s cloud platforms, as
large enterprises have accelerated their move into the cloud The
unless it is inappropriate to presume that the Group and
Company will continue in business
Independent Auditors
The independent auditors, PricewaterhouseCoopers LLP, have
The Directors are responsible for safeguarding the assets of the
expressed their willingness to continue as the Company’s
Group and Company and hence for taking reasonable steps for
auditors As outlined in the Audit Committee report on page 44,
the prevention and detection of fraud and other irregularities
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report
the Group’s and Company's transactions and disclose with
reasonable accuracy at any time the financial position of the
and the financial statements in accordance with applicable
Group and Company and enable them to ensure that the
The Directors are also responsible for keeping adequate
accounting records that are sufficient to show and explain
Our key business indicators, total orders, new business orders
resolutions proposing their appointment and to authorise their
and Annual Recurring Revenue (ARR), which includes all clients
remuneration will be proposed at the 2023 AGM
Annual General Meeting (AGM)
proportion of recurring revenue is higher for contracts delivered
law and regulation
financial statements comply with the Companies Act 2006.
The 2023 AGM will be held at 11:00 on 13 September 2023
through the cloud, which also improves our operational gearing,
The notice of the AGM and an explanation of the resolutions
the renewal rate for the UK&I and NA businesses to remain
to be put to the meeting are set out in the Notice of Meeting
unchanged during this period. When preparing the cash flow
statements for each financial year. Under that law the Directors
of the Company’s website Legislation in the United Kingdom
have prepared the Group Financial Statements in accordance
governing the preparation and dissemination of financial
accompanying this Annual Report The Board fully supports
forecasts the Directors have reviewed a number of scenarios,
with UK-adopted international accounting standards and
statements may differ from legislation in other jurisdictions
earnings quality and visibility in the business We anticipate
Company law requires the Directors to prepare financial
The Directors are responsible for the maintenance and integrity
all the resolutions and encourages Shareholders to vote in
including a severe but plausible downside scenario which
the company financial statements in accordance with United
favour of each of them as they intend to in respect of their own
assumes no new business In all scenarios the Directors were
Kingdom Generally Accepted Accounting Practice (United
shareholdings
able to conclude that the Group has adequate cash to continue
Kingdom Accounting Standards, comprising FRS 101 “Reduced
in operational existence for the foreseeable future
Disclosure Framework”, and applicable law)
Directors
The Directors who were in office during the financial year and at
the date of approving this report is provided on pages 36 to 37
Directors’ and Officers’ liability insurance and
indemnification of Directors
The Group has purchased and maintained throughout the year
Directors’ and Officers’ liability insurance in respect of itself and
its Directors and these remain in force at the date of this report
By order of the Board
Chrissie Herbert
Company Secretary
14 June 2023
56
Corporate Governance | Independent auditors report
57
Independent auditors’ report to the
members of Eckoh plc
Report on the audit of the financial statements
Opinion
In our opinion:
• Eckoh plc’s group financial statements and company financial statements (the “financial statements”) give a true and fair view
of the state of the group’s and of the company’s affairs as at 31 March 2023 and of the group’s profit and the group’s cash flows
for the year then ended;
• the group financial statements have been properly prepared in accordance with UK-adopted international accounting standards
as applied in accordance with the provisions of the Companies Act 2006;
• the company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure Framework”, and
applicable law); and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Financial Statements 2023 (the “Annual Report”),
which comprise: the Consolidated statement of financial position and Company statement of financial position as at 31 March 2023;
the Consolidated statement of total comprehensive income, the Consolidated statement of changes in equity and the Company
statement of changes in equity and the Consolidated statement of cash flows for the year then ended; and the notes to the financial
statements, which include a description of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section
of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
Our audit approach
Overview
Audit scope
• We conducted full scope audit work over the operations of Eckoh UK, Eckoh US and Syntec Limited due to their financial
significance to the group. In addition, we performed a full scope audit of Eckoh plc ("the Company"). The audit procedures
performed accounted for 100% of both the Group's revenue and profit for 2023 as well as net assets as at 31 March 2023.
Key audit matters
• Revenue recognition (group)
• Recoverability of investment in, and the loan to, subsidiary (parent)
Materiality
• Overall group materiality: £388,000 (2022: £317,800) based on 1% of total revenue.
• Overall company materiality: £639,000 (2022: £610,000) based on 1% of total assets (capped for the purpose of the
group audit).
• Performance materiality: £291,000 (2022: £238,300) (group) and £479,000 (2022: £457,000) (company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement (whether or
not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we
make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Accounting for the acquisition of Syntec, which was a key audit matter last year, is no longer included because no such
acquisitions have occurred during the financial year ended 31 March 2023. Otherwise, the key audit matters below are consistent
with last year.
Key audit matter
How our audit addressed the key audit matter
Revenue recognition (group)
Our procedures included the following:
Revenue in the year ended 31 March 2023 was £38,821k
(FY22: £31,780k) as set out in the consolidated statement
of total comprehensive income. The approach to revenue
recognition as set out under IFRS 15 is complex and can
be judgemental especially where contracts with customers
have variable considerations. Due to its expected impact
on the Group, we deem the contract revenue recognition
as a key audit matter.
Recoverability of investment in, and the loan to,
subsidiary (parent)
The company held an investment in subsidiary undertakings
and other investments of £51,528k (2022: £51,629k) as
disclosed in Note 16 and had amounts receivable from
subsidiary undertakings of £4,297k (2022: £4,034k) as
disclosed in Note 19. The assessment of the recoverability
of these assets required the application of management
judgement, particularly in determining whether any
impairment indicators have arisen that trigger the need for
a formal impairment assessment and in assessing whether
the carrying value of each investment and amounts owed by
group undertakings are recoverable. As changes to these
judgements and estimates could have a material impact on
the company financial statements, we consider this to be a
key audit matter.
• For a sample of customer contracts, determined whether
the correct judgement was exercised in recognising
revenue according to the five-step revenue recognition
approach set out by IFRS 15 and recalculating revenue
recognition schedules to confirm the accuracy of these
schedules.
• For a sample of customer contracts with deferred revenue
and costs at the year-end, we assessed management’s
judgements used in estimating the amounts deferred.
• We also performed testing on certain unusual revenue
journal entries
Based on the procedures performed, we noted no material
uncorrected issues.
Our procedures included the following:
• Evaluating management’s assessment of whether any
indicators of impairment existed.
• Assessing the recoverable value by reference to the net
assets of the underlying subsidiaries and amounts owed
by group undertakings with reference to the Directors'
intentions for the settlement of group-wide intercompany
balances.
• Verifying that Eckoh plc's market capitalisation is higher
than the total of the company's non-current and current
assets.
Based on the procedures performed, we noted no material
issues from our work.
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Corporate Governance | Independent auditors report
59
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the group and the company, the accounting processes and controls,
and the industry in which they operate.
Eckoh plc has both its corporate and operating headquarters in the United Kingdom. The audit engagement team is aligned
to Eckoh plc's geographical organisation and largely reflects the management structure. As Eckoh plc's corporate
headquarters are based in the UK, the Group audit engagement team is also based in the UK with no support required from
any auditors from other territories. The largest trading entity is Eckoh UK. This entity, along with Eckoh US, Syntec Limited
and the Company were the only components requiring an audit of their complete financial information for the purposes of
the consolidated Group audit. In total the audit work performed accounted for 100% of both consolidated revenue, profit and
net assets.
The impact of climate risk on our audit
As part of our audit we made enquiries of management to understand the extent of the potential impact of climate risk on the
group’s and company’s financial statements, and we remained alert when performing our audit procedures for any indicators
of the impact of climate risk. Our procedures did not identify any material impact as a result of climate risk on the group’s and
company’s financial statements.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent
of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements – group
Financial statements – company
Overall materiality
£388,000 (2022: £317,800).
£639,000 (2022: £610,000).
How we determined it
1% of total revenue.
Rationale for benchmark
applied
We have applied this benchmark as a
generally accepted auditing practice for
Group’s at the growth stage and based
on what management deems to be a key
performance indicator.
1% of total assets (capped at for the
purpose of the group audit).
We believe that total assets is the primary
measure used by the shareholders in
assessing the performance of the company,
and is a generally accepted benchmark.
The value is capped for the purpose of the
group audit.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality.
The range of materiality allocated across components was between £200,000 to £340,000. Certain components were audited
to a local statutory audit materiality that was also less than our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope
of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example
in determining sample sizes. Our performance materiality was 75% (2022: 75%) of overall materiality, amounting to £291,000
(2022: £238,300) for the group financial statements and £479,000 (2022: £457,000) for the company financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range
was appropriate.
We agreed with those charged with governance that we would report to them misstatements identified during our audit above
£19,400 (group audit) (2022: £15,800) and £31,900 (company audit) (2022: £30,500) as well as misstatements below those
amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group's and the company’s ability to continue to adopt the going concern
basis of accounting included:
• We reviewed the Directors’ model supporting their going concern assumption. We discussed with management
the assumptions applied in the going concern review so we could understand and challenge the rationale for those
assumptions, using our knowledge of the business. We tested the model’s mathematical accuracy and considered the
reasonableness of the revenue and cost assumptions made and the available headroom throughout a period of at least
twelve months from the date of approval of the financial statements; and
• We reviewed management’s sensitivity scenarios including their severe but plausible downside. We considered potential
mitigating actions available to the Group that are achievable and within management’s control. We then assessed the
availability of liquidity under the different scenarios and the associated covenant tests applicable.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the group’s and the company’s ability to continue as a going concern
for a period of at least twelve months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group’s and
the company’s ability to continue as a going concern.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’
report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover
the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated
in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in
the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based
on these responsibilities.
With respect to the Strategic report and Directors' Report, we also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
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Corporate Governance | Independent auditors report
61
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions
and matters as described below.
Strategic report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and
Directors' Report for the year ended 31 March 2023 is consistent with the financial statements and has been prepared in
accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and company and their environment obtained in the course of the
audit, we did not identify any material misstatements in the Strategic report and Directors' Report.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities, the directors are responsible for the preparation of the
financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view.
The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the group or the company or to cease operations, or have no realistic
alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to
which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and
regulations related to breaches of AIM regulations, Payment Card Industry Data Security Standards (PCI DSS), General Data
Protection Regulation (GDPR), and we considered the extent to which non-compliance might have a material effect on the
financial statements. We also considered those laws and regulations that have a direct impact on the financial statements
such as the requirements of the Companies Act 2006 and UK tax regulations. We evaluated management’s incentives and
opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined
that the principal risks were related to the risk that Group and Company management may record inappropriate journal entries,
and the risk of bias in accounting estimates and judgements. Audit procedures performed by the engagement team included:
•
•
•
•
Enquiring of management and those charged with governance together with inspection of policy documentation as to the
Group’s and Company's high-level policies and procedures to prevent and detect fraud, these enquiries were corroborated
through review of Board minutes provided;
Enquiring of those charged with governance and management as to whether they have knowledge of any actual,
suspected or alleged fraud and breaches of laws and regulations;
Identifying and testing journal entries, in particular certain journal entries posted with unusual account combinations (for
example credit to revenue with a debit entry to an unexpected account) or journals posted by senior management; and
Testing accounting estimates (because of the risk of management bias), including challenging assumptions and
judgements made by management in their significant accounting estimates.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of
non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial
statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations,
or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data
auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete
populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases,
we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
•
adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received
from branches not visited by us; or
certain disclosures of directors’ remuneration specified by law are not made; or
the company financial statements are not in agreement with the accounting records and returns.
•
•
We have no exceptions to report arising from this responsibility.
Matthew Mullins (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Watford
14 June 2023
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Corporate Governance | Independent auditors report
63
Financial Statements
Consolidated Statement of Total Comprehensive Income 64
Consolidated Statement of Financial Position 65
Company Statement of Financial Position 66
Consolidated Statement of Changes in Equity 67
Company Statement of Changes in Equity 68
Consolidated Statement of Cash Flows 69
Notes to the Financial Statements 70
Shareholder Information 102
Financial Statements | 64
Consolidated and Company Statements
65
Consolidated statement of total comprehensive income
Consolidated statement of financial position
for the year ended 31 March 2023
as at 31 March 2023
Notes
2023
£’000
2022
£’000
Notes
2023
£’000
2022
£’000
Continuing operations
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Adjusted operating profit
Amortisation of acquired intangible assets
Expenses relating to share option schemes
Exceptional restructuring costs
Exceptional legal fees and settlement agreements
Costs relating to acquisition
Profit from operating activities
Finance charges
Finance income
Profit before taxation
Taxation
Profit for the financial year
Other comprehensive income
Items that will be reclassified subsequently to profit or loss:
Foreign currency translation differences - foreign operations
Other comprehensive (expense) / income for the year, net of income tax
Total comprehensive income for the year attributable to the equity holders of the Company
Profit per share
Basic earnings per 0.25p share
Diluted earnings per 0.25p share
4
4
13
24
8
9
5
5
10
10
11
12
12
38,821
31,780
(7,578)
(6,357)
31,243
25,423
(26,223)
(23,037)
5,020
7,736
(2,473)
(40)
-
(203)
-
5,020
(53)
53
5,020
(383)
4,637
(389)
(389)
4,248
2,386
5,229
(751)
(241)
(866)
-
(985)
2,386
(74)
6
2,318
(743)
1,575
139
139
1,714
2023
2022
pence
pence
1.58
1.55
0.59
0.51
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use leased assets
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Trade and other payables
Lease liabilities
Non-current liabilities
Lease liabilities
Deferred tax liabilities
Net assets
Equity
Called up share capital
Share premium account
Capital redemption reserve
Merger reserve
Currency reserve
Retained earnings
Total equity
13
14
15
11
18
19
20
21
15
15
11
22
22
37,500
39,664
4,181
995
129
4,189
1,516
1,789
42,805
47,158
254
11,778
5,740
17,772
268
12,283
2,840
15,391
60,577
62,549
(16,190)
(18,286)
(482)
(609)
(16,672)
(18,895)
(569)
(928)
(1,528)
(2,983)
(2,097)
(3,911)
41,808
39,743
732
732
22,180
22,180
198
2,697
732
15,269
198
2,697
1,121
12,815
41,808
39,743
The financial statements were approved by the Board of Directors on 14 June 2023 and signed on its behalf by:
C Herbert
Chief Financial Officer
Company Registration Number 3435822
Financial Statements |
66
Consolidated and Company Statements
67
Company statement of financial position
Consolidated statement of changes in equity
as at 31 March 2023
for the year ended 31 March 2023
Assets
Non-current assets
Property, plant and equipment
Investments in group companies
Deferred tax asset
Long-term debtor
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Trade and other payables
Net assets
Equity
Called up share capital
Share premium account
Capital redemption reserve
Merger reserve
Retained earnings
Total equity
Notes
2023
£’000
2022
£’000
14
16
19
19
20
2,824
51,528
2
4,297
58,651
34
5,222
5,256
2,866
51,629
2
4,034
58,531
93
2,383
2,476
63,907
61,007
21
(31,555)
(26,896)
(31,555)
(26,896)
32,352
34,111
22
22
732
732
22,180
22,180
198
2,697
6,545
32,352
198
2,697
8,304
34,111
The Company has taken advantage of the exemption under Section 408 of the Companies Act 2006 from presenting its own
income statement in these financial statements. The Company’s profit after tax for the year was £424,000 (2022: £1,120,000). The
financial statements were approved by the Board of Directors on 14 June 2023 and signed on its behalf by:
C Herbert
Chief Financial Officer
Company Registration Number 3435822
Called up
share capital
Share
premium
account
Capital
redemption
reserve
Merger
reserve
Currency
reserve
Retained
earnings
Total
Shareholders’
equity
Balance at 1 April 2022
732
22,180
198
2,697
1,121
12,815
£’000
£’000
£’000
£’000
£’000
£’000
Total comprehensive income for the year
Profit for the financial year
Other comprehensive expense for the year
Total comprehensive income for the year
Dividends paid in the year
Shares transacted through Employee Benefit Trust
Shares purchased for share ownership plan
Share based payment charge
Transactions with owners recorded directly in equity
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,637
(389)
(389)
-
-
-
-
-
-
4,637
(1,959)
(2)
(120)
(102)
(2,183)
Balance at 31 March 2023
732
22,180
198
2,697
732
15,269
£’000
39,743
4,637
(389)
4,248
(1,959)
(2)
(120)
(102)
(2,183)
41,808
Called up
share capital
Share
premium
account
Capital
redemption
reserve
Merger
reserve
Currency
reserve
Retained
earnings
Total
Shareholders’
equity
Balance at 1 April 2021
638
2,663
198
2,697
982
13,239
£’000
£’000
£’000
£’000
£’000
£’000
Total comprehensive income for the year
Profit for the financial year
Other comprehensive income for the year
Total comprehensive income for the year
Dividends paid in the year
Shares transacted through Employee Benefit Trust
Purchase of own shares
Shares purchased for share ownership plan
Shares issued under the share options schemes
Share based payment charge
Shares issued as part of acquisition
Deferred tax on share options
Transactions with owners recorded directly in equity
Balance at 31 March 2022
-
-
-
-
-
-
-
3
-
91
-
94
732
-
-
-
-
-
-
-
226
-
19,291
-
19,517
22,180
£’000
20,417
1,575
139
1,714
1,575
-
1,575
(1,559)
(1,559)
(75)
(126)
(111)
-
464
-
(592)
(1,999)
(75)
(126)
(111)
229
464
19,382
(592)
17,612
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
139
139
-
-
-
-
-
-
-
-
-
198
2,697
1,121
12,815
39,743
Financial Statements |
68
Consolidated and Company Statements
69
Company statement of changes in equity
Consolidated statement of cash flows
for the year ended 31 March 2023
for the year ended 31 March 2023
Called up
share capital
Share
premium
account
Capital
redemption
reserve
Merger
reserve
Retained
earnings
Total
equity
Notes
2023
£’000
2022
£’000
Balance at 1 April 2022
732
22,180
198
2,697
8,304
£’000
£’000
£’000
£’000
£’000
£’000
34,111
Profit for the financial year and total comprehensive income
Dividends paid in the year
Shares transacted through Employee Benefit Trust
Shares purchased for share ownership plan
Share based payment charge
Transactions with owners recorded directly in equity
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at 31 March 2023
732
22,180
198
2,697
6,545
424
424
(1,959)
(1,959)
(2)
(120)
(102)
(2,183)
(2)
(120)
(102)
(2,183)
32,352
Called up
share capital
Share
premium
account
Capital
redemption
reserve
Merger
reserve
Retained
earnings
Total
Shareholders’
equity
Balance at 1 April 2021
638
2,663
198
2,697
8,576
£’000
£’000
£’000
£’000
£’000
£’000
14,772
Profit for the financial year and total comprehensive income
Dividends paid in the year
Shares transacted through Employee Benefit Trust
Purchase of own shares
Shares purchased for share ownership plan
Shares issued under the share option schemes
Share based payment charge
Shares issued as part of acquisition
Transactions with owners recorded directly in equity
Balance at 31 March 2022
-
-
-
-
-
3
-
91
94
732
-
-
-
-
-
226
-
19,291
19,517
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(75)
(126)
(111)
-
479
-
(1,392)
22,180
198
2,697
8,304
1,120
1,120
(1,559)
(1,559)
Cash flows from operating activities
Cash generated from operations
Tax (paid) / received
Interest paid
Interest paid on lease liability
Net cash generated from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Business acquisition
Interest received
Net cash used in investing activities
Cash flows from financing activities
Dividends paid
Repayment of borrowings
Principal elements of lease payments
Purchase of own shares
Shares purchased for share ownership plan
Issue of shares net of issue costs
(75)
(126)
(111)
229
479
19,382
18,219
34,111
Cash outflow from acquiring shares from the Employee Benefit Trust
Net cash (used in) / generated from financing activities
Increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the start of the period
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at the end of the period
The notes on pages 70 to 101 form an integral part of these financial statements.
27
10
10
14
13
-
10
15
22
20
20
6,956
(178)
-
(53)
6,725
(613)
(570)
-
53
3,362
88
(23)
(51)
3,376
(308)
(375)
(22,500)
6
(1,130)
(23,177)
(1,959)
(1,559)
-
(564)
-
(120)
-
-
(975)
(500)
(126)
(110)
13,311
(75)
(2,643)
9,966
2,952
2,840
(52)
5,740
(9,835)
12,706
(31)
2,840
Financial Statements |
70
Notes to the Financial Statements
71
Notes to the financial statements for the year ended 31 March 2023
General Information
New accounting standards effective for the Group and
The accounting policies set out below have, unless otherwise
Company in these financial statements:
2. Summary of principal accounting policies
losses of £7.2 million due to the statutory entity the losses
are held. It is possible that the deferred tax assets actually
stated, been applied consistently to all periods presented in
No new or revised accounting standards were adopted in
Critical accounting estimates and judgements
recoverable may differ from the amounts recognised if actual
these consolidated financial statements.
the year.
The preparation of financial statements in accordance with IFRS
taxable profits and capital expenditure differ from estimates.
requires the use of certain critical accounting estimates. It also
Eckoh plc is a public Company limited by shares and is
There are a number of other amendments and clarifications
requires management to exercise judgement in the process
Critical accounting judgements
incorporated in the United Kingdom and registered in England
to IFRS effective in future years, which are not expected to
of applying the Group’s and Company’s accounting policies.
Contract revenue
under the Companies Act 2006. The address of the Company’s
significantly
impact the Group’s consolidated results or
Estimates and judgements are continually evaluated and are
Following the acquisition of Syntec Holdings Limited
in
registered office
is Telford House, Corner Hall, Hemel
financial position.
Hempstead, HP3 9HN.
Going concern
based on historical experience and reasonable expectations of
December 2021,
IFRS
15: Revenue
from Contracts with
future events. Actual results may differ from those estimates.
Customers was implemented. As Syntec do not have a system
for capturing implementation costs on a client-by-client
Eckoh plc (the “Company”) is a global provider of Customer
In determining the appropriate basis of preparation of the
Critical accounting estimates and assumptions
basis, management have applied judgement in estimating
Engagement Data Security Solutions.
financial statements, the Directors are required to consider
The accounting policies cover areas that are considered by the
that the implementation costs per contract should be 20%
whether the Group and Company can continue in operational
Directors to require estimates and assumptions which have a
based on historical performance of the Eckoh NA business
The Group financial statements consolidate its subsidiaries
existence for the foreseeable future.
significant risk of causing a material adjustment to the carrying
as well as Management’s views on the efficiency of the
(together referred to as the “Group”). The Company’s financial
amounts of assets and liabilities within the next financial year.
Syntec implementation process. During FY23 a process was
statements present information about the Company as a
The Board has carried out a going concern review and
The policies, and the related notes to the financial statements,
implemented to novate all client contracts from Syntec Limited
separate entity and not about its Group.
concluded that the Group and Company have adequate cash
are found below:
to continue in operational existence for the foreseeable future.
The Company has net current liabilities, as balances are owed
Impairment of investments in subsidiaries (Company only)
project by project within the respective Eckoh business.
to either Eckoh Inc or Eckoh UK Limited. Once the client contracts
have been novated implementation costs will be captured
1. Basis of preparation
to subsidiary companies. The Board can confirm the subsidiary
The Company has an investment in subsidiaries balance of
companies will not request repayment within 12 months of
£51.5million (2022: £51.6million) and intercompany receivables
Deferred taxation
The Group’s financial statements have been prepared and
approval of the financial statements.
of £4.3million (2022: £4.0million). The company assess the
Deferred tax liabilities are recognised for all taxable temporary
approved by the Directors in accordance with UK adopted
carrying values of its investments in subsidiaries and the
differences but, where there exist deductible temporary
international accounting standards in conformity with the
The Directors have prepared cash flow forecasts for a period
recoverability of intercompany receivables at the end of
differences, judgement is required as to whether a deferred tax
requirements of the Companies Act 2006 and the Company’s
in excess of 12 months from the date of approving the financial
each reporting period. Where indicators of impairment are
asset should be recognised based on the availability of future
financial statements have been prepared in accordance with
statements. As at 31 March 2023, the £5 million of Revolving
identified the estimation of the recoverable values requires
taxable profits. Judgement is also required regarding the rate
United Kingdom Generally Accepted Accounting Practice
Credit Facility (RCF) from Barclays Bank is undrawn. Bank
an estimation of future cash flows from each subsidiary and
at which deferred tax is recognised, following the substantial
(United Kingdom Accounting Standards, comprising FRS101
covenants have been reviewed and are comfortably achieved
selection of appropriate discount rates in order to determine
enactment of Finance Bill 2021, resulting in an increase in the UK
“Reduced Disclosure Framework”, and applicable law). The
for the year to 31 March 2023 and are forecast to continue to
the net present value of the cash flows.
tax rate to 25% from 1 April 2023. As at 31 March 2022, UK deferred
Company has also applied the exemptions available under
be so for at least 12 months from the date of approval of the
FRS 101 in respect of the following disclosures:
financial statements.
Share-based payments
tax assets and liabilities expected to unwind prior to 1 April 2023
were recognised at 19%, with those expected to unwind after 1
• A Cash Flow Statement and related notes
• Comparative period reconciliation for share capital
• Disclosures in respect of transactions with wholly owned
subsidiaries
• Disclosures in respect of capital management
• IFRS 2 Share based payments in respect of group settled
share-based payments.
This financial information has been prepared on a going
concern basis and under the historical cost convention.
The Group’s and Company’s financial statements are presented
in Pounds Sterling, which is the Company’s functional currency.
All financial information presented has been rounded to the
nearest one thousand, except where stated.
Our key business indicators, total orders, new business orders
and Annual Recurring Revenue (ARR), which includes all clients
that we are billing, demonstrate strong visibility of future
revenue. In NA, we continue to see the majority of the Security
Solution contracts won and delivered through Eckoh’s cloud
platforms, as large enterprises have accelerated their move
into the cloud. The proportion of recurring revenue is higher
for contracts delivered through the cloud, which also improves
The fair value of share-based payments is estimated using the
April 2023 being recognised at 25%. At 31 March 2023, the Group
methods detailed in note 24 and using certain assumptions.
recognised deferred tax assets of £1.5 million and deferred tax
The Black Scholes and Monte Carlo valuation models have been
liabilities of £2.8 million. Included within the deferred tax asset
used in determining the fair value of share-based payments.
of £1.5 million is £1.1 million in respect of tax losses and tax
The key assumptions around volatility, expected life and risk-
credits and included within the deferred tax liabilities of £2.8
free rate of return are based, respectively, on historic volatility
million is £2.3 million in respect of the intangible asset from the
over a similar previous period, management’s estimate of
acquisition of Syntec.
the average expected period to exercise, and the yield on
zero-coupon UK government bonds of a term consistent with
Basis of consolidation
our operational gearing, earnings quality and visibility in the
assumed option life.
(a) Business combinations
business. We anticipate the renewal rate for the NA and UK&I
businesses to remain unchanged during this period. When
Deferred taxation
Business combinations are accounted for using the acquisition
method as at the acquisition date –
i.e. when control
preparing the cash flow forecasts the Directors have reviewed
a number of scenarios including a severe but plausible
downside scenario which assumes no new business. In all
scenarios the Directors were able to conclude that the Group
has adequate cash to continue in operational existence for the
foreseeable future.
The key estimates made for deferred taxation are on the future
is transferred to the Group. Control is the power to govern the
profitability of the business and the Company the trading
financial and operating policies of an entity so as to obtain
will reside in or capital expenditure to determine whether
benefits from its activities. In assessing control, the Group
deferred tax assets should be recognised. Deferred tax assets
takes
into consideration potential voting rights that are
amounting to £9.4 million were not recognised in respect
currently exercisable.
of trading and non-trading losses of £2.2 million and capital
Financial Statements | 72
Notes to the Financial Statements
73
The Group measures goodwill at the acquisition date as:
is accounted for as an equity-accounted investee or as an
amortised on a straight-line basis over the estimated useful
The Company holds an investment property, which comprises
• the fair value of the consideration transferred; plus
available-for-sale financial asset depending on the level of
life of the asset, which is generally assumed to be three years.
of freehold land and office buildings that are held for capital
• the recognised amount of any non-controlling interests in
influence retained.
the acquiree; plus
Amortisation is charged to administrative expenses in the
appreciation.
• if the business combination is achieved in stages, the fair
(d) Transactions eliminated on consolidation
income statement.
value of the pre-existing equity interest in the acquiree; less
• the net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is
recognised immediately in profit or loss.
The consideration transferred does not include amounts
Intra-group balances and transactions, and any unrealised
income and expenses arising from intra-group transactions,
are eliminated
in preparing the consolidated financial
statements. Unrealised gains arising
from
transactions
with equity accounted
investees are eliminated against
the investment to the extent of the Group’s interest in the
investee. Unrealised losses are eliminated in the same way as
unrealised gains, but only to the extent that there is no evidence
related to the settlement of pre-existing relationships. Such
of impairment.
amounts are generally recognised in profit or loss.
Transaction costs, other than those associated with the issue
of debt or equity securities, that the Group incurs in connection
with a business combination are expensed as incurred.
Intangible assets
(a) Goodwill
Goodwill represents the excess of the fair value of the
consideration paid over the fair value attributable to the
separately identifiable net assets acquired and is capitalised
Any contingent consideration payable is measured at fair
on the Group balance sheet.
value at the acquisition date. If the contingent consideration is
classified as equity, then it is not re-measured and settlement
is accounted for within equity. Otherwise, subsequent changes
Goodwill is not amortised and is reviewed for impairment at
least annually. Any impairment is recognised in the period in
in the fair value of the contingent consideration are recognised
which it is identified.
in profit or loss.
If share-based payment awards (replacement awards) are
required to be exchanged for awards held by the acquiree’s
employees (acquiree’s awards) and relate to past services,
then all or a portion of the amount of the acquirer’s replacement
awards is included in measuring the consideration transferred
in the business combination. This determination is based on
the market-based value of the replacement awards compared
with the market-based value of the acquiree’s awards and the
extent to which the replacement awards relate to past and/or
future service.
(b) Subsidiaries
Subsidiaries are entities controlled by the Group. The financial
statements of subsidiaries are included in the Consolidated
financial statements from the date that control commences
(b) Acquired intangible assets
Intangible assets acquired in a business combination are
initially recognised at their fair value at the acquisition date,
which is regarded as their cost. Where necessary the fair value
of assets at acquisition and their estimated useful lives are
based on independent valuation reports.
Acquired
intangible assets are carried at cost
less
accumulated amortisation and accumulated
impairment
losses. Amortisation is recognised on a straight-line basis over
estimated lives, on the following bases:
Customer relationships – 5 years
Intellectual property – 5 years
Trade name – 3 years
until the date that control ceases.
(c) Research and development
(c) Loss of control
On the loss of control, the Group derecognises the assets and
liabilities of the subsidiary, any non-controlling interests and
the other components of equity related to the subsidiary. Any
surplus or deficit arising on the loss of control is recognised in
profit or loss. If the Group retains any interest in the previous
subsidiary, then such interest is measured at fair value at the
date that control is lost. Subsequently that retained interest
Research costs are charged to the income statement in the
year in which they are incurred. Development expenses include
expenses incurred by the Group to set up or enhance services
to clients. Development costs that mainly relate to staff salaries
are capitalised as intangible assets when it is probable that
the project will be a success, considering its commercial
and technological feasibility, and costs can be measured
reliably. Development costs that do not meet those criteria
are expensed as incurred. Capitalised development costs are
The Investment Property was initially recognised at cost and
subsequently carried at cost less accumulated depreciation
The carrying value of intangible assets is assessed at the end
and accumulated impairment losses.
of each financial year for impairment.
Investments in subsidiaries
Impairment of non-financial assets
Investments in subsidiaries are held at cost less accumulated
An impairment loss is recognised in the income statement for
impairment losses.
the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of
Inventories
the asset’s fair value less costs to sell, and the value-in-use
Inventories are valued at the lower of cost and net realisable
based on an internal discounted cash flow evaluation. For
value. The cost of finished goods and work in progress
the purpose of assessing impairment, assets are grouped at
comprises design costs, direct labour and other direct costs.
the lowest levels for which there are separately identifiable
Net realisable value is the estimated selling price in the
cash flows. All assets are subsequently reassessed for
ordinary course of business less applicable selling expenses.
indications that an impairment loss previously recognised
may no longer exist.
Financial assets
Trade and other receivables
Property, plant and equipment
Trade and other receivables do not carry interest and are stated
Property, plant and equipment
is stated at cost or fair
at their fair value as reduced by allowances for estimated
value at acquisition, net of depreciation and any provisions
irrecoverable amounts. The Group applies the IFRS 9 simplified
for impairment. Cost includes expenditure that is directly
approach to measure expected credit losses which uses a
attributable to the acquisition of the items.
lifetime expected loss allowance for all trade receivables. To
measure the expected credit losses, trade receivables have
Subsequent costs are included in the asset’s carrying amount
been grouped based on shared credit risk characteristics and
or recognised as a separate asset, as appropriate, only when
the number of days past due. Trade receivables are written
it is probable that future economic benefits associated with
off when there is no reasonable expectation of recovery.
the item will flow to the Group and the cost of the item can
Indicators that there is no reasonable expectation of recovery
be measured reliably. All other repairs and maintenance are
include, amongst others, the failure of a debtor to engage
charged to the income statement during the financial period in
in a repayment plan with the Group and a failure to make
which they are incurred.
contractual payments for an extended period.
The gain or loss arising on the disposal of an asset is determined
Cash and cash equivalents
by comparing the disposal proceeds and the carrying amount
Cash and cash equivalents in the statement of financial
of the asset and is recognised in the income statement.
position comprise cash at bank and in hand, short-term
Depreciation is calculated using the straight-line method to
deposits and other short-term liquid investments.
allocate the cost of each asset to its estimated residual value
over its expected useful life, as follows:
In the cash flow statement, cash and cash equivalents
comprise cash and cash equivalents as defined above.
Credit and liquidity risk management is described in note 3.
Land – is not depreciated
Buildings – 25 years
Fixtures and equipment – between 3 and 6 years
Leasehold improvements – over the term of the lease
Material residual values and useful lives are reviewed, and
adjusted if appropriate, at least annually. An asset’s carrying
amount is written down immediately to its recoverable amount
if the asset’s carrying amount is greater than its estimated
recoverable amount.
Financial Statements | 74
Notes to the Financial Statements
75
Equity
Leases
Equity comprises the following:
Following the implementation of IFRS 16 Leases, from 1 April
• Share capital represents the nominal value of Ordinary
Shares.
• Capital redemption reserve represents the maintenance of
capital following the share buy back and tender offer.
• Share premium account represents consideration
for
Ordinary Shares in excess of the nominal value.
2019, each lease is recognised as a right-of-use asset with a
corresponding liability at the date at which the lease asset is
available for use by the Group. Interest expense is charged to
the consolidated income statement over the lease period so as
to produce a constant periodic rate of interest on the remaining
balance of the liability. The right-of-use asset is depreciated
over the shorter of the asset’s useful life and the lease term on a
• Merger reserve represents consideration in excess of the
straight-line basis.
nominal value of shares issued on certain acquisitions.
• Currency reserve represents exchange differences arising
on consolidation of Group companies with a functional
currency different to the presentation currency.
• Retained earnings represent retained profits less losses and
distributions.
Foreign currency transactions
Transactions
in foreign currencies are translated to the
respective functional currencies of Group entities at the foreign
exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at
the balance sheet date are retranslated to the functional
Assets and liabilities arising from a lease are initially measured
on a present value basis. The lease payments are discounted
using the interest rate implicit in the lease. If that rate cannot
be determined, the lessee’s incremental borrowing rate is used,
being the rate that the lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value in a similar
economic environment with similar terms and conditions.
Right-of-use assets are measured at cost comprising the
amount of the initial measurement of the lease liability, any
lease payments made at or before the commencement date
less any lease incentives received, any initial direct costs and
currency at the foreign exchange rate ruling at that date.
restoration costs.
Foreign exchange differences arising on translation are
recognised in the income statement, with the exception of
exchange differences arising on quasi-equity liabilities which
are recognised in other comprehensive income. Non-monetary
Where leases include an element of variable lease payment or
the option to extend the lease at the end of the initial term, each
lease is reviewed and a decision is made on the likely term of
assets and liabilities that are measured in terms of historical cost
the lease.
in a foreign currency are translated using the exchange rate at
the date of the transaction. Non-monetary assets and liabilities
denominated in foreign currencies that are stated at fair value
are retranslated to the functional currency at foreign exchange
rates ruling at the dates the fair value was determined.
Payments associated with short-term leases and leases of
low-value assets are recognised on a straight-line basis as an
expense in the consolidated income statement, during the year
there was a franking machine and the rental of a storage unit.
The Group does not enter into forward contracts to hedge
forecast transactions.
The assets and liabilities of foreign operations,
including
goodwill and fair value adjustments arising on consolidation,
are translated to the Group’s presentational currency, Sterling,
at foreign exchange rates ruling at the balance sheet date. The
revenues and expenses of foreign operations are translated at
an average rate for the year where this rate approximates to the
foreign exchange rates ruling at the dates of the transactions.
Exchange differences arising from this translation of foreign
operations are reported as an item of other comprehensive
income and accumulated in the translation reserve. Such
translation differences would be reclassified to profit and loss in
the period in which the operation is disposed of.
Employee Benefits
(a) Pensions
market vesting conditions are expected to be met, such that
the amount ultimately recognised as an expense is based on
The Group operates a defined contribution scheme to the
the number of awards that meet the related service and non-
benefit of its employees. Contributions payable are charged to
market performance conditions at the vesting date. For share-
income in the year they are payable.
based payment awards with non-vesting conditions, the grant
(b) Bonus schemes
date fair value of the share-based payment is measured to
reflect such conditions and there is no true-up for differences
The Group recognises a liability and an expense for bonuses
between expected and actual outcomes.
payable to i) employees based on achievement of a series of
financial targets; and ii) Senior Management and Executive
The fair value of the amount payable to employees in respect
Directors based on achievement of a series of financial and
of share appreciation rights, which are settled in cash, is
non-financial targets.
(c) Share-based payments
recognised as an expense with a corresponding increase in
liabilities, over the period that the employees unconditionally
become entitled to payment. The liability is re-measured at
From time to time on a discretionary basis, the Board of
each reporting date and at settlement date. Any changes
Directors award high-performing employee’s bonuses in the
in the fair value of the liability are recognised as personnel
form of share options. The options are subject to a three-
expenses in profit or loss.
year vesting period and their fair value is recognised as an
employee benefits expense with a corresponding increase in
(d) Employee Share Ownership Plan
equity over the vesting period. The fair value of share options
The Group’s Employee Share Ownership Plan (‘ESOP’) is a
granted is recognised within staff costs with a corresponding
separately administered trust. The assets of the ESOP comprise
increase in equity. The proceeds received are credited to share
shares in the Company and cash. The assets, liabilities, income
capital and share premium when the options are exercised.
and costs of the ESOP have been included in the financial
The fair value of share options was measured using the
purpose entities’ and IAS 32, ‘Financial Instruments: Disclosure
Black Scholes and Monte Carlo valuation models, taking into
and Presentation’. The shares in the Company are included at
account the terms and conditions upon which the grants were
cost to the ESOP and deducted from Shareholders’ funds. When
made. The amount recognised as an expense is adjusted to
calculating earnings per share these shares are treated as if
statements in accordance with SIC 12, ‘Consolidation - Special
reflect the actual number of share options that vest except
they were cancelled.
where forfeiture is only due to share prices not achieving the
threshold of vesting.
(e) US share save scheme
The Eckoh plc 2019 US Sharesave Scheme (the “2019 Sharesave
IFRS 2 has been applied to all options granted after 7 November
Scheme”), was approved by Shareholders at the 2019 AGM
2002 that have not vested on or before 1 April 2006. A deferred
and introduced to employees in December 2019. Employees
tax adjustment is also made relating to the intrinsic value of the
are invited to enrol in the 2019 Sharesave Scheme annually
share options at the balance sheet date (see separate policy).
and are granted an option to purchase up to a number of
Ordinary Shares at the end of the offering period. The number
As a result of the grant of share options since 6 April 1999 the
is determined by dividing the total payroll deductions credited
Company will be obliged to pay employer’s National Insurance
to the employee’s account as of the exercise date by the
contributions on the difference between the market value of
option price. The option price is equal to the closing price of
the underlying shares and their exercise price when the options
the Ordinary Shares on the London Stock Exchange on either
are exercised. A provision is made for this liability using the
(i) the date the offering period begins, or (ii) the date of
value of the Company’s shares at the balance sheet date and
exercise, whichever results in the lowest price per share. Any
is spread over the vesting period of the share options.
shares acquired will be held in accordance with the terms of
The grant date fair value of share-based payment awards
granted to employees is recognised as an employee expense,
Government Grants
the Scheme.
with a corresponding increase to equity, over the period that
The Group received government assistance as a result of
the employees unconditionally become entitled to the awards.
the COVID-19 pandemic in the form of contributions towards
The amount recognised as an expense is adjusted to reflect
employee costs. For Government assistance which meets
the number of awards for which the related service and non-
the definition of a Government grant, under IAS 20 the Group
Financial Statements | 76
Notes to the Financial Statements
77
applies the income approach to account for the grants
In addition to the initial set-up costs, there are on-going
Deferred tax on temporary differences associated with shares
Interest rate risk
received. As such, the grant is recognised in the Income
licence fees as well as support and maintenance and running
in subsidiaries is not provided if reversal of these temporary
The Group principally finances
its operations
through
Statement as a reduction of the related costs incurred. In the
costs of the service. In the NA business and the Syntec business
differences can be controlled by the Group and it is probable
Shareholders’ equity and working capital. The Group and
period ending 31 March 2023, grant income of £nil, (FY22: £12k)
where the Secure Payments business is contracted on an Opex
that reversal will not occur in the foreseeable future.
Company has exposure to interest rate fluctuations on the
relating to claims made for Contact Centre Agents, who are
style basis the monthly licence fee charged to the client is
loan, its cash and short-term deposits.
employed on Zero-hour contracts, was received. There are no
recognised in the month it relates to. In the UK&I, clients have
Changes in deferred tax assets or liabilities are recognised as
unfulfilled conditions or other contingencies attached to this
a variety of commercial models including fixed licence fees
a component of tax expense in the income statement, except
The Group has adopted a sensitivity analysis that measures
government assistance.
and transactional arrangements, the revenue, whether it is the
fixed monthly fee or based on transactions is recognised in the
Exceptional items
month it relates to.
If the Group incurs irregular or one-off costs for example
due to the closure of an activity, following the acquisition of
(ii) Coral product
a business or for one-off legal costs and settlement income
Revenue arises from the sale of licences, historically on a
these costs and income are disclosed in the Income Statement
perpetuity basis and in more recent years on an Opex/ SaaS
as exceptional items and excluded from adjusted earnings
style basis; implementation fees and on-going support and
before interest, tax, depreciation and amortisation (Adjusted
maintenance. Under IFRS 15, each component is defined as
EBITDA) and excluded from Adjusted Operating Profit. Adjusted
a performance obligation. Revenue is recognised for sales
where they relate to items that are charged or credited directly
changes
in the fair value of financial
instruments and
to equity in which case the related deferred tax is also charged
interest-bearing loans and any resultant impact on the
or credited directly to equity.
income statement of an increase or decrease of 2% in market
interest rates.
Financial liabilities
Financial liabilities are obligations to pay cash or other
financial assets and are recognised when the Group or
Company becomes a party to the contractual provisions of the
instrument. Financial liabilities are stated at amortised cost.
2% decrease
in interest
rates
£’000
2% increase
in interest
rates
£’000
(35)
35
Impact on financial interest
in the income statement:
(loss)/gain
measures are used by management in order to eliminate
of licences when they are delivered to the client; revenue
A financial liability is derecognised only when the obligation is
factors which distort year-on-year comparisons.
from implementation fees is recognised by estimating a
discharged, is cancelled or it expires.
Revenue recognition
percentage of completion based on the direct labour costs
incurred to date as a proportion of the total estimated costs
The Group recognises revenue in accordance with IFRS 15:
required to complete the implementation; and revenue for on-
Revenue from Contracts with Customers (“IFRS 15”). IFRS 15
going support and maintenance is recognised each month as
provides a single, principles-based five-step model to be
the service is provided.
applied to all sales contracts, based on the transfer of control of
goods and services to customers. Revenue represents the fair
(iii) Telephony services
3. Financial risk management
Foreign currency risk
The Group’s principal exposure to exchange rate fluctuations
arises on the translation of overseas net assets, profits and
The operations of the Group expose it to a variety of financial
losses into the presentation currency. This risk is managed
risks: liquidity risk, interest rate risk, foreign currency risk and
by taking differences that arise on the retranslation of the
credit risk. Policies for managing these risks are set by the
net overseas investments to the currency reserve. Foreign
value of the sale of goods and services and after eliminating
Syntec is Ofcom regulated and has a small number of
Board following recommendations from the Chief Financial
currency risk on cash balances is monitored through cash
sales within the Group and excluding value added tax or
contracts with clients to provide telecommunication services.
Officer. All financial risks are managed centrally. The policy for
flow forecasting and currency is held in foreign currency
overseas sales taxes. The following summarises the method of
These revenues are based on transactional volume and are
each of the above risks is described in more detail below.
bank accounts only to the extent that it is required for
recognising revenue for the solutions and products delivered
recognised in the month it relates to.
working capital purposes. No sensitivity analysis is provided in
by the Group.
Taxation
The Group’s financial instruments comprise cash, short-
respect of foreign currency risk as due to the Group’s working
term deposits and various items, such as receivables and
capital management practices the risk is considered to be
(i) Secure Payment solutions and hosted services
Current tax is the tax currently payable based on taxable profit
payables that arise directly from its operations. It is, and has
moderate. The risk is further explained in the principal risks and
Due to the unique nature of the Secure Payments solution
for the year.
and clients’ reliance on Eckoh’s and Syntec’s PCI-DSS Level
been throughout the year under review, the Group’s policy
uncertainties on pages 20 to 23.
that no trading in financial instruments shall be undertaken.
1 compliance, the delivery and on-going support and
Deferred taxation is provided in full, using the liability method,
Similarly, the Group did not undertake any financial hedging
Capital management
maintenance of the Secure Payments solution under IFRS 15
on temporary differences arising between the tax bases
arrangements during the year under review. The year-end
The Board’s policy is to maintain a strong capital base with
is one single performance obligation. Therefore, revenue for
of assets and liabilities and their carrying amounts in the
position reflects these policies and there have been no
the joint objectives to maintain investor, creditor and market
implementation fees for our hosted Secure Payments solution
consolidated financial statements. Deferred tax is not provided
changes in policies or risks since the year-end.
confidence and to sustain future development of the business.
and our hosted Customer Contact services; and revenue
if it arises from initial recognition of an asset or liability in a
for hardware and implementation fees for our hosted or
transaction, other than a business combination, that at the
Liquidity risk
Capital comprises all components of equity (i.e. share capital,
onsite Secure Payments solution are typically received at the
time of the transaction affects neither accounting nor taxable
Through detailed cash flow forecasting and capital expenditure
capital redemption reserve, share premium and retained
beginning of the contract and held on the balance sheet as
profit or loss. Deferred tax is calculated at tax rates that are
planning, the Group monitors working capital and capital
earnings). The Board manages the capital structure and makes
contract liabilities. This revenue is recognised evenly over the
expected to apply to their respective period of realisation,
expenditure requirements and through the use of rolling
adjustments as required in the light of changes in economic
period of the contract from the point of delivery of the solution
provided they are enacted or substantively enacted at the
short-term investments ensures that cash is available to
conditions. The Board may return capital to Shareholders, issue
to the client. Costs directly attributable to the delivery of the
balance sheet date.
hardware, the implementation fees and the sales commission
costs are deferred onto the balance sheet and held as contract
Deferred tax assets are recognised to the extent that it is
assets and released over the contract term from the point of
probable that future taxable profit will be available against
delivery of the solution to the client.
which the temporary differences can be utilised.
meet obligations as they fall due. Cash at bank is pooled and
new shares or sell assets in order to maintain capital.
invested in overnight money market accounts and deposits.
Credit risk management is described in note 19.
Financial Statements |
78
Notes to the Financial Statements
79
Financial assets – amortised costs
Other interest-bearing loans and borrowings
Dividends
Current financial assets
2023
£’000
2022
£’000
Information about the contractual terms of the Group’s
interest-bearing loans and borrowings, which are measured
at amortised cost are disclosed below. For more information
Final dividends are recorded in the Group’s financial statements
in the period in which they are approved by the Shareholders.
Interim and Special dividends are recorded in the financial
Trade receivables (note 19)
5,151
4,860
about the Group’s exposure to interest rate and foreign
statements in the period in which they are approved and paid.
Operating profit
2023
£’000
2022
£’000
-
-
-
-
Determination and presentation of operating segments
The Eckoh Group determines and presents operating
segments based on the information that internally is provided
to the Executive Management team, considered to be the Chief
Operating Decision Maker.
An operating segment is a component of the Eckoh Group
that engages in business activities from which it may earn
revenues and incur expenses. Following the acquisition of
Amortisation of acquired intangible
assets
Expenses relating to share option
schemes
Exceptional restructuring costs
Exceptional legal costs and
settlement agreements
Costs relating to business
combinations
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
5,020
2,473
40
-
203
-
2,386
751
241
866
-
985
Other receivables (note 19)
Accrued income (note 19)
670
2,364
852
1,501
Cash & cash equivalents (note 20)
5,740
2,840
Total financial assets
13,925
10,053
currency risk, see above.
Non-current financial liabilities
Secured bank loans
Financial liabilities – amortised costs
Current financial liabilities
Trade payables (note 21)
Other payables (note 21)
2023
£’000
2022
£’000
1,271
289
899
508
Current portion of secured bank loans
Terms and debt repayment schedule
As a result of the acquisition of Syntec Holdings Limited
in December 2021, the Group entered into new banking
Accrued liabilities (note 21)
3,726
4,416
arrangements with Barclays Bank for a £5.0 million Revolving
Lease liabilities (note 15)
1,051
1,537
credit Facility (RCF) and a £5.0 million overdraft facility. The RCF
is for a term of three years, interest is 2.5% above the Bank of
Total financial liabilities
6,337
7,360
England base rate and there is a non-utilisation fee of 0.88%.
Maturity
The overdraft is reviewed annually by the bank, has an interest
rate of 1.75% above the Bank of England base rate. In November
Syntec Holdings Limited on 22nd December 2021, and as part
Adjusted operating profit1
7,736
5,229
of the integration strategy of the acquired business, we have
during the financial year ended 31st March 2023, revised our
key segments. The key segments reviewed at Board level are
North America (NA), UK & Ireland (UK&I) and Rest of World
Amortisation of other intangible
assets
Depreciation of owned assets
(ROW). Prior to the acquisition of Syntec in December 2021, the
Depreciation of leased assets
398
643
617
392
680
495
segments used for reporting were Eckoh US and Eckoh UK, in
last year’s annual report for the 3 month period Syntec was
owned by the Group, Syntec was disclosed separately. Syntec
Adjusted EBITDA2
9,394
6,796
had clients based in the US, Canada, UK, Ireland, Europe and
1. Adjusted operating profit is the profit from operating activities adjusted for expenses relating
The table below analysis the Group’s financial liabilities into
22, the overdraft facility was cancelled.
Australia.
relevant maturity groupings on the remaining period at
the balance sheet date to the contractual maturity date.
As at 31 March 2023 there was no debt drawn under the RCF.
Alternative performance measures (APMs)
to share option schemes, amortisation of acquired intangible assets, exceptional items and
costs relating to business combinations.
2. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) is the profit
from operating activities adjusted for depreciation, amortisation, expenses relating to share
The amounts disclosed in the table are the contractual
undiscounted cash flows:
The collateral to these loans is the land and buildings carrying
Maturity of financial liabilities 2023
<1yr
1 – 2yrs
2 – 5 yrs
Trade and other payables1
Lease liabilities
Total financial liabilities
5,143
482
5,625
-
266
266
143
303
446
Maturity of financial liabilities 2022
<1yr
1 – 2yrs
2 – 5 yrs
value of £3 million.
Earnings per share
The Group presents basic and diluted earnings per share
(“EPS”) data for its Ordinary Shares. Basic EPS is calculated by
dividing the profit or loss attributable to Ordinary Shareholders
of the Company by the weighted average number of Ordinary
Shares outstanding during the reporting period. Diluted EPS
is determined by adjusting the weighted average number of
Ordinary Shares outstanding for the effects of all potential
Trade and other payables1
Lease liabilities
Total financial liabilities
1. Excluding deferred revenue
5,823
609
6,432
-
443
443
-
dilutive Ordinary Shares.
485
485
The Group presents adjusted basic and diluted earnings per
share (“Adjusted EPS”) data for its Ordinary Shares. Adjusted
EPS is defined as profit before tax, expenses relating to share
option schemes, amortisation of acquired intangible assets,
restructuring costs and costs relating to business combinations
with tax applied at the standard corporation tax rate.
The Directors consider that disclosing alternative performance
option schemes, exceptional items and costs relating to business combinations.
measures enhances Shareholders’ ability to evaluate and
analyse the underlying financial performance of the Group.
They have identified adjusted operating profit and adjusted
EBITDA as measures that enable the assessment of the
performance of the Group and assists in financial, operational
and commercial decision-making.
In adjusting
for this
measure the Directors have sought to eliminate those items of
income and expenditure that do not specifically relate to the
underlying operational performance of the Group in a specific
year. The table below reconciles operating profit to adjusted
operating profit1 and adjusted EBITDA2
identifying those
reconciling items of income and expense.
Financial Statements |
80
Notes to the Financial Statements
81
4. Segment analysis
Following the acquisition of Syntec Holdings Limited on 22 December 2021, and as part of the integration strategy of the acquired
business, we have during the financial year ended 31 March 2023, revised our key segments. The key segments reviewed at Board
level are North America (NA), UK & Ireland (UK&I) and Rest of World (ROW).
Information regarding the results of each operating segment is included below. Performance is measured on operating segments
based on the information that internally is provided to the Executive Management team, considered to be the Chief Operating
Decision Maker.
Current period segment analysis
Segment Revenue
Gross profit
Administrative expenses
Operating profit
Adjusted operating profit
Other expenses1
Operating profit
Profit before taxation
Segment assets
Trade and other receivables
Prepayments and contract assets
Segment liabilities
Trade and other payables
Accruals and contract liabilities
Capital expenditure
Purchase of tangible assets
Purchase of leases
Purchase of intangible assets
Depreciation and amortisation
Depreciation of property, plant & equipment
Depreciation of leased assets
Amortisation
NA
£’000
17,513
13,752
UK&I
£’000
20,573
16,780
ROW
£’000
Total 2023
£’000
735
711
38,821
31,243
(9,350)
(16,475)
(398)
(26,223)
4,402
4,552
(150)
4,402
4,371
2,864
2,503
344
7,099
519
-
-
189
162
-
305
2,871
(2,566)
305
337
2,784
3,259
2,147
6,156
94
77
570
444
443
2,871
313
313
-
313
312
173
195
8
384
-
-
-
10
12
-
5,020
7,736
(2,716)
5,020
5,020
5,821
5,957
2,499
13,639
613
77
570
643
617
2,871
1. Other expenses comprise expenses relating to share option schemes, amortisation of acquired intangible assets, exceptional costs and costs from business combinations.
In 2022/23 there was no one customer that individually accounted for more than 10% of the total revenue of the continuing
operations of the Group. In 2021/22 there was no one customer that individually accounted for more than 10% of the total revenue
of the continuing operations of the Group.
Current period segment analysis
Revenue by geography
United States of America & Canada
UK & Ireland
Rest of the World
Total Revenue
NA
£’000
UK&I
£’000
ROW
£’000
Total 2023
£’000
17,513
-
-
-
20,573
-
17,513
20,573
-
-
735
735
17,513
20,573
735
38,821
Timing of revenue recognition
Services transferred at a point in time
Services transferred over time
NA
£’000
3,371
14,142
17,513
UK & I
£’000
3,372
17,201
20,573
ROW
£’000
Total 2023
£’000
169
566
735
6,912
31,909
38,821
The following table provides information about receivables, contract assets and contract liabilities from contracts with customers.
Receivables, which are included in, ‘Trade and other receivables’
Contract assets which are included in ‘Trade and other receivables’
Contract liabilities which are included in ‘Trade and other payables’
2023
£’000
5,151
2,364
(9,909)
(2,394)
2022
£’000
4,860
3,828
(9,470)
(782)
Payment terms and conditions in client contracts may vary. In some cases, clients pay in advance of the delivery of solutions or
services; in other cases, payment is due as services are performed in arrears following the delivery of the solutions or services.
Differences in timing between revenue recognition and invoicing result in trade receivables, contract assets, or contract liabilities
in the statement of financial position.
Contract assets result when costs directly attributable to the delivery of the hardware and the implementation fees are capitalised
as contract assets and released over the contract term, thereby also deferring costs to later periods and revenue earnt not yet
invoiced. Contract liabilities result from client payments in advance of the satisfaction of the associated performance obligations
and relates primarily to revenue for hardware and implementation fees. Contract liabilities are released as revenue is recognised.
Contract assets and contract liabilities are reported on a contract-by-contract basis at the end of each reporting period.
Significant changes in the contract assets and contract liabilities balances during the year are as follows:
31 March 2023
31 March 2022
Contract
assets
£’000
Contract
liabilities
£’000
Contract
assets
£’000
Revenue recognised that was included in the contract liability balance
at the beginning of the period
Current year billings recognised in contract liabilities
Cost of sales recognised that was included in the contract assets
balance at the beginning of the period
Costs deferred in current year and unbilled revenue included in
contract assets
-
-
2,600
1,115
6,754
3,575
-
-
-
-
2,640
1,538
Contract
liabilities
£’000
6,938
4,108
-
-
Contract costs
Deferred implementation costs
Deferred hardware costs
31 March 2023
£’000
31 March 2022
£’000
958
157
1,115
1,028
510
1,538
Financial Statements | 82
Notes to the Financial Statements
83
Contract costs are capitalised as ‘costs to fulfil a contract’ and are amortised when the related revenues are recognised, which are
spread evenly over the length of the contract, typically 3 years.
Prior period segment analysis on old basis
The contract liabilities and contract assets has continued, as expected, to decrease in the current year, principally as new
contracted business in North America has been predominantly for cloud-based solutions. Where clients contract for their services
to be provided in the cloud or on our internal cloud platform, the level of hardware is significantly reduced, and implementation
fees are typically lower.
Transaction price allocated to the remaining performance obligations
The total amount of revenue allocated to unsatisfied performance obligations is £9.9m (FY22: £9.5m). We expect to recognise
approximately £7.6m (FY22: £3.9m) in the next 12 months, £1.7m (FY22: £5.5m) in 1-3 years and the remainder in 3 years or more in time.
The amount represents our best estimate of contractually committed revenues that are due to be recognised as we satisfy the
contractual performance obligations in these contracts. A large proportion of the Group’s revenue is transactional in nature or is
invoiced monthly for support and maintenance and these are not included in the contract liabilities.
Prior period segment analysis on new basis
Segment revenue
Gross profit
Administrative expenses
Operating profit
Adjusted operating profit
Other expenses2
Operating profit
Profit before taxation
Segment assets
Trade and other receivables
Prepayments and contract assets
Deferred tax asset
Segment liabilities
Trade and other payables
Accruals and contract liabilities
Capital expenditure
Purchase of tangible assets
Purchase of leases
Purchase of intangible assets
Depreciation and amortisation
Depreciation of property, plant & equipment
Depreciation of leased assets
Amortisation
NA
£’000
12,454
9,344
(7,916)
1,428
1,983
(555)
1,428
1,404
2,379
3,351
513
809
8,000
120
-
-
150
130
-
UK&I
£’000
18,961
15,727
ROW
£’000
Total 2022
£’000
365
352
31,780
25,423
(14,878)
(243)
(23,037)
849
3,138
(2,289)
849
805
3,295
3,004
1,276
1,516
7,342
188
686
375
523
360
1,143
109
109
-
109
109
38
216
-
11
608
-
-
-
7
5
-
2,386
5,229
(2,844)
2,386
2,318
5,712
6,571
1,789
2,336
15,950
308
686
375
680
495
1,143
1. Since date of acquisition of Syntec Holdings Limited on 22 December 2021.
2. Other expenses comprise expenses relating to share option schemes, amortisation of acquired intangible assets, exceptional restructuring costs and costs from business combinations.
Segment revenue
Gross profit
Administrative expenses
Operating profit
Adjusted operating profit
Other expenses2
Operating profit
Profit before taxation
Segment assets
Trade and other receivables
Prepayments and contract assets
Deferred tax asset
Segment liabilities
Trade and other payables
Accruals and contract liabilities
Capital expenditure
Purchase of tangible assets
Purchase of leases
Purchase of intangible assets
Depreciation and amortisation
Depreciation of property, plant & equipment
Depreciation of leased assets
Amortisation
Revenue by geography in new segments
United States of America & Canada
UK & Ireland
Rest of the World
Total Revenue
Revenue by geography in old segments
UK
United States of America
Rest of the World
Total Revenue
Eckoh UK
£’000
Eckoh US
£’000
Syntec1
£’000
Total 2022
£’000
18,596
15,593
11,487
8,473
1,697
1,357
31,780
25,423
(14,399)
(7,300)
(1,338)
(23,037)
19
307
2,386
5,229
(289)
(2,844)
19
13
2,386
2,318
1,194
3,194
(2,000)
1,194
1,156
2,904
2,798
1,103
1,364
6,216
187
-
375
525
353
1,143
NA
£’000
12,454
-
-
1,173
1,728
(555)
1,173
1,149
2,059
954
513
607
4,191
120
686
-
130
108
-
UK & I
£’000
-
18,961
-
12,454
18,961
Eckoh UK
£’000
Eckoh US
£’000
Syntec
£’000
18,117
339
140
-
11,314
173
739
776
182
18,596
11,487
1,697
749
2,819
173
367
5,543
1
-
-
25
34
-
ROW
£’000
-
-
365
365
5,712
6,571
1,789
2,336
15,950
308
686
375
680
495
1,143
2022
£’000
12,454
18,961
365
31,780
2022
£’000
18,856
12,429
495
31,780
Financial Statements | 84
Notes to the Financial Statements
85
Timing of revenue recognition in new segments
Services transferred at a point in time
Services transferred over time
Timing of revenue recognition in old segments
Services transferred at a point in time
Services transferred over time
NA
£’000
3,559
8,895
12,454
UK & I
£’000
3,451
15,510
18,961
29
336
365
Eckoh UK
£’000
Eckoh US
£’000
Syntec
£’000
3,403
15,193
18,596
3,411
8,076
11,487
225
1,472
1,697
1. The split between services transferred at a point in time and overtime were incorrectly disclosed in the Annual Report 2022 and have been corrected.
5. Profit from operating activities
The Group’s profit from operating activities is arrived at after charging / (crediting):
Employee benefits expense (note 6)
Foreign currency gains
Exceptional restructuring costs (note 8)
Exceptional legal fees and settlement agreements (note 9)
Exceptional costs relating to acquisition1
Amortisation of intangible assets (note 13)
Depreciation of property, plant and equipment (note 14)
Depreciation of leased assets (note 15)
Inventory recognised as an expense (note 18)
1. Acquisition of Syntec Holdings Limited on 22 December 2021.
6. Employee benefits expense
Government grants receivable towards employee costs
Wages and salaries
Less: Internal development costs capitalised in the year
Social security costs
Other pension costs
Share-based payments
2023
£’000
14,618
(516)
-
203
-
2,871
643
617
4
2023
£’000
-
13,814
(544)
1,168
203
40
ROW
£’000
Total 20221
£’000
The Remuneration Report on page 47 provides further details on the Directors’ emoluments. The monthly average number of people
(including Executive Directors) employed by the Group during the year was:
Technical support
Customer services
Administration and management
2023
Number
2022
Number
91
43
54
188
97
45
49
191
Excluded from the table above are 28 (2022: 25) full time equivalent casual contact centre employees who cost £374,563
(2022: £238,361) in the year.
7. Auditors’ remuneration
During the year the Group obtained the following services from the Group’s auditors at costs as detailed below:
Fees payable for the audit of the Company and consolidated financial statements
Fees payable for the audit of the financial statements of subsidiary undertakings
Total fees payable to the Group’s auditors
8. Exceptional restructuring costs
2023
£’000
71
128
199
2022
£’000
72
129
201
The exceptional restructuring costs are presented separately as irregular costs unlikely to reoccur in the near future. The exceptional
restructuring costs incurred in financial year ended 31 March 2022 of £866k have been incurred in Syntec Holdings Limited £289k,
Eckoh US £531k and Eckoh UK £46k. The Syntec costs of £289k relate to redundancy costs and contract termination costs post-
acquisition. The Eckoh US costs of £577k relate to redundancy costs for employees associated with the planned exit from the Third-
Party Support activity. There were no exceptional restructuring costs incurred in the financial year ended 31 March 2023.
9. Exceptional legal fees and settlement agreements
In the financial year ended 31 March 2023 legal fees and settlement agreements of £0.2 million (settlement income of £950k
received has been netted off against legal fee expenses), have been incurred regarding commercially sensitive matters which are
required to be kept confidential by agreements with third parties or ongoing legal negotiations.
7,039
24,741
31,780
20221
£’000
7,039
24,741
31,780
2022
£’000
13,797
(95)
866
-
985
1,143
680
495
11
2022
£’000
(12)
12,618
(343)
1,097
183
254
14,681
13,797
Financial Statements | 86
Notes to the Financial Statements
87
10. Finance income and finance charges
Interest receivable
Bank interest receivable
Total
Finance expense
Bank interest payable
Lease interest payable
Total
11. Taxation
Tax recognised in profit and loss
Current tax expense
Current year
Adjustments in respect of prior periods
Deferred tax credit
Origination and reversal of temporary differences
Adjustments in respect of prior periods
Foreign exchange translation
Effect of tax rate change
Total tax charge
2023
£’000
2022
£’000
53
53
6
6
2023
£’000
2022
£’000
-
(53)
(53)
(23)
(51)
(74)
2023
£’000
2022
£’000
132
18
150
746
(409)
-
(104)
233
383
13
(3)
10
1,198
(54)
4
(415)
733
743
A charge of £nil (2022: charge of £592k) for deferred taxation in relation to share options was recognised directly in equity.
The tax charge for the year is different to the standard rate of corporation tax in the UK of 19% (2022: 19%). The differences are
explained below:
Continuing operations
Profit before taxation
Profit multiplied by rate of corporation tax in the UK of 19% (2022: 19%)
Additional foreign tax suffered
Effect of expenses not deductible for tax purposes
Non-taxable income
Adjustments in respect of prior periods (current and deferred)
Movement on deferred tax not recognised
Impact of change in tax rate on opening deferred tax
Opening deferred tax rate change impact of share options
Impact of difference between current and deferred tax rates
Deferred tax impact of share options
Tax charge for the year
2023
£’000
5,020
954
28
18
(6)
(391)
(85)
-
-
(12)
(123)
383
2022
£’000
2,318
440
11
181
(9)
(57)
(25)
(119)
(296)
102
515
743
The 2021 Finance Bill was substantively enacted on 24 May 2021. The main rate of UK corporation tax increased from 19% to 25% with
effect from 1 April 2023. The Group’s UK deferred tax assets and liabilities have therefore been calculated at 25% in financial year to
31st March 2023.
Recognition of deferred tax assets and liabilities
Assets
Liabilities
Short term timing differences
Tax losses
Property, plant and equipment
Intangible assets
Tax assets and liabilities
Offset
Total assets and liabilities after offset
2023
£’000
183
997
206
-
1,386
(1,257)
129
2022
£’000
145
1,421
223
-
1,789
-
1,789
2023
£’000
(283)
-
(198)
(2,304)
(2,785)
1,257
2022
£’000
-
-
(224)
(2,759)
(2,983)
-
(1,528)
(2,983)
Included in the deferred tax liability is £nil (FY22: £nil) which relates to the Company. Deferred tax assets and liabilities have been
offset where they relate to Companies’ resident in the same tax jurisdiction and are expected to be realised on a net basis.
Movement in deferred tax balances during the year
Balance at 1 April
Arising through a business combination
Recognised in income statement
Recognised in equity
Other – Forex
Balance at 31 March
2023
£’000
(1,194)
2022
£’000
2,915
-
(2,797)
(233)
-
28
(733)
(592)
9
(1,399)
(1,194)
Financial Statements | 88
Notes to the Financial Statements
89
Unrecognised deferred tax assets
There are unprovided deferred taxation assets in respect of tax losses totalling (gross) £37,711k (2022: £38,152k). These have arisen
in respect of trading and non-trading losses of £8,853k (2022: £9,294k) and in respect of capital losses of £28,858k (2022: £28,858k).
The historic trading and non-trading losses in Eckoh plc and the pre-acquisition non-trading losses in Syntec Holdings Limited have
not been recognised for deferred tax purposes as a result of the conditions restricting their use. The capital losses have not been
recognised due to restrictions over their utilisation. There is no expiry date on the trading and non-trading losses or the capital
losses carried forward.
12. Earnings per share
The basic and diluted earnings per share are calculated on the following profit and number of shares. Earnings for the calculation
of earnings per share is the net profit attributable to equity holders of the Company.
Earnings for the purposes of basic and diluted earnings per share
Earnings for the purposes of adjusted basic and diluted earnings per share
Reconciliation of earnings for the purposes of adjusted basic and diluted earnings per share.
Earnings for the purposes of basic and diluted earnings per share
Taxation
Amortisation of acquired intangible assets
Expenses relating to share option schemes
Exceptional restructuring costs
Exceptional legal fees and settlement agreements
Costs relating to acquisition
Adjusted profit before tax
Tax charge based on standard corporation tax rate of 19%1 (2022: 19%)
Earnings for the purposes of adjusted basic and diluted earnings per share
1. Majority of Group taxable profit is in the UK so for an adjusted measure a tax rate of 19% is utilised.
Denominator
Weighted average number of shares in issue in the period
Shares held by employee ownership plan
Shares held in Employee Benefit Trust
Number of shares used in calculating basic earnings per share
Dilutive effect of share options
Dilutive effect of shares for acquisition Dec 21
Dilutive effect of placing Dec 21
Number of shares used in calculating diluted earnings per share
2023
£’000
4,637
6,266
2023
£’000
4,637
383
2,473
40
-
203
-
7,736
(1,470)
6,266
2022
£’000
1,575
4,181
2022
£’000
1,575
743
751
241
866
-
985
5,161
(980)
4,181
2023
£’000
2022
£’000
292,893
265,968
(2,338)
(2,028)
-
-
290,555
263,940
9,210
-
-
299,765
20,558
7,889
18,494
310,881
Profit per share
Basic earnings per 0.25p share
Diluted earnings per 0.25p share
Adjusted earnings per 0.25p share
Adjusted diluted earnings per 0.25p share
13. Intangible assets
Group
Cost
At 1 April 2021
Additions
Additions from business combinations
Foreign exchange
Disposals
At 31 March 2022
Additions
Foreign exchange
At 31 March 2023
Accumulated amortisation
At 1 April 2021
Charge for the year
Foreign exchange
At 31 March 2022
Charge for the year
Foreign exchange
At 31 March 2023
Carrying amount
At 31 March 2023
At 31 March 2022
2023
pence
2022
pence
1.58
1.55
2.14
2.09
0.59
0.51
1.57
1.34
Goodwill
£’000
Computer
software
£’000
Customer
relationships
£’000
Intellectual
property
£’000
Trade
name
£’000
Total
£’000
4,883
-
21,422
117
-
4,293
364
-
3
-
3,498
7,663
371
20,708
-
12,367
115
-
11
-
17
(3)
-
-
12
-
375
33,789
264
(3)
26,422
4,660
15,980
7,688
383
55,133
-
152
559
4
-
150
11
8
-
16
570
330
26,574
5,223
16,130
7,707
399
56,033
-
-
-
-
-
-
-
2,821
357
3
3,181
371
4
3,556
26,574
26,422
1,667
1,479
3,472
7,518
727
113
4,312
2,473
151
6,936
9,194
11,668
370
-
12
14,181
1,143
145
59
17
7,594
382
15,469
27
22
-
16
2,871
193
7,643
398
18,533
64
94
1
1
37,500
39,664
Financial Statements | 90
Notes to the Financial Statements
91
The Company has no intangible assets. (2022: £nil).
Within the intangible category of computer software in the above table is internally developed computer software, as at 31 March
2023 this had a net book value of £1,653k (2022: £1,441k).
No impairment has been recorded in the current year for NA, UK&I or ROW. The main assumptions which related to sales volume, selling
prices and cost changes, are based on recent history and expectations of future changes in the market. The discount rate applied to
the cash flow forecasts is based on a market participant’s pre – tax weighted average cost of capital adjusted for the specific risks in the
CGUs. Growth rate used to extrapolate beyond the plan year and terminal values are based upon minimum expected growth rates of the
individual businesses.
Amortisation of acquired intangible assets included in the charge for the year in the above table was £2,473k (2022: £751k). This is
made up of Customer Relationships, Intellectual Property and Trade name, with the exception of £27k of Intellectual Property (2022:
Sensitivity to the changes in assumptions
£34k) which relates to amortisation on self-generated assets in Eckoh UK Limited. Within Intellectual Property is an intangible asset
If forecast revenues fell by 40%, no impairment in the carrying values of NA, UK&I or ROW would be required, In addition, if there was
acquired when Eckoh Omni Limited (previously known as Klick2Contact (EU) Limited) was purchased.
no further growth in either NA, UK&I or ROW, no impairment in the carrying value of NA, UK&I or ROW would be required.
On an annual basis an impairment review of Goodwill is undertaken to determine a value in use calculation for each cash generating
unit (CGU) using cashflow projections. Management have identified the CGUs as North America (NA), UK & Ireland (UK&I) and
Rest of World (ROW) in the current year and in the prior year Eckoh UK, Eckoh US and Syntec. Management have performed a
profitability forecast for the next five years for each of the CGUs, which are based on the latest three-year plan approved by the
Board. Management is satisfied that the carrying value of Goodwill and Other Intangible Assets are supported based on the
expected performance of the CGUs.
Goodwill acquired through business combinations have been allocated to the following CGUs:
• North America (NA)
• UK & Ireland (UK & I)
• Rest of World (ROW)
These represent the lowest level within the Group at which Goodwill is monitored for internal management purposes.
NA
UK&I & ROW
Total
Eckoh – UK
Eckoh - US
Syntec
Total
Goodwill
31 March 2023
£’000
31 March 2023
Revenue growth
rate %
31 March 2023
Discount
rate %
20,069
6,505
26,574
12%
1%
13.9%
13.9%
Goodwill
31 March 2022
£’000
31 March 2022
Revenue growth
rate %
31 March 2022
Discount
rate %
2,373
2,627
21,422
26,422
10%
20%
15%
13.9%
13.9%
12.0%
14. Property, plant and equipment
Cost
At 1 April 2021
Additions
Additions from business combinations
Foreign exchange
Disposals
At 31 March 2022
Additions
Foreign exchange
Disposals
At 31 March 2023
Accumulated depreciation
At 1 April 2021
Charge for the year
Foreign exchange
Disposals
At 31 March 2022
Charge for the year
Foreign exchange
Disposals
At 31 March 2023
Carrying amount
At 31 March 2023
At 31 March 2022
Leasehold
improvements
£’000
Land and
buildings
£’000
Fixtures and
equipment
£’000
Assets under
construction
£’000
29
-
-
-
-
29
-
-
-
29
29
-
-
-
29
-
-
-
29
-
-
3,177
8,454
-
-
30
-
3,207
-
2
-
3,209
268
43
30
-
341
43
1
-
385
2,824
2,866
308
235
45
(350)
8,692
178
341
(287)
8,924
7,056
637
26
(350)
7,369
600
320
(287)
8,002
922
1,323
-
-
-
-
-
-
435
-
-
435
-
-
-
-
-
-
-
-
-
435
-
Total
£’000
11,660
308
235
75
(350)
11,928
613
343
(287)
12,597
7,353
680
56
(350)
7,739
643
321
(287)
8,416
4,181
4,189
Financial Statements | 92
Notes to the Financial Statements
93
The land and buildings are held by the Company, the gross book value as at 31 March 2023 was £3,209k (2022: £3,207k). The net
book value at 31 March 2023 was £2,824K (2022: £2,866k). This is the only property, plant and equipment held by the Company.
Assets under construction are assets relating to a US datacentre, as at 31 March 2023 the assets were not yet being utilised. Following
the year end these assets are fully utilised and the project has been completed.
Lease liabilities
Current
Non-current
15. Leases
The Group enters into leases of buildings in relation to offices in the US. In addition, in the UK the Group leases equipment either in
the datacentres or in the offices.
Right-of-use assets
Cost
At 1 April 2021
Additions from business combinations
Foreign exchange
At 31 March 2022
Additions
Foreign exchange
Lease extinguishment
At 31 March 2023
Accumulated depreciation
At 1 April 2021
Charge for the year
Foreign exchange
At 31 March 2022
Charge for the year
Foreign exchange
Lease extinguishment
At 31 March 2023
Carrying amount
At 31 March 2023
At 31 March 2022
Buildings
£’000
Equipment
£’000
605
686
28
1,319
-
36
(219)
1,136
180
134
13
327
226
17
(219)
351
785
992
1,170
-
-
1,170
77
-
-
1,247
285
361
-
646
391
-
-
1,037
210
524
Total
£’000
1,775
686
28
2,489
77
36
(219)
2,383
465
495
13
973
617
17
(219)
1,388
995
1,516
In some cases, the contracts entered into by the Group include extension options which provide the Group with additional
operational flexibility. If the Group considers it reasonably certain that an extension option will be exercised the additional period is
included in the lease term.
2023
£’000
482
569
1,051
2023
£’000
(53)
(11)
2022
£’000
609
928
1,537
2022
£’000
(51)
(17)
Lease interest and expenses
Interest expense (included in finance costs)
Expenses relating to short-term leases (included in cost of goods sold and administrative expenses)
The total cash outflow for leases in 2023 was £617k (2022: £551k), made up of principle lease payments of £564k (2022: £500k) and
lease interest payments of £53k (2022: £51k).
The Company does not hold any leased assets (2022: £nil).
16. Investments in Group companies
At 1 April 2021
Additions
At 31 March 2022
Disposals1
At 31 March 2023
Accumulated Impairment
Shares in subsidiary
undertakings
£’000
Other
investments
£’000
21,232
52,229
479
–
52,229
5,910
479
6,389
(101)
6,288
Total
£’000
27,142
31,476
58,618
(101)
58,517
At 1 April 2021 and at 31 March 2022 and 2023
(6,989)
-
(6,989)
Net Book Value
At 31 March 2023
At 31 March 2022
1. The disposal relates to the net share options credit in the year.
45,240
45,240
6,288
6,389
51,528
51,629
The Directors have assessed the carrying values of the Company’s investments and concluded that no impairment triggers exist
that would require the Company’s investments to be impaired.
Other investments represent additional investments in Eckoh UK Limited as a result of the share-based payments arrangements
in place. As the Company grants options over its shares to employees of Eckoh UK Limited, the Company records an increase in
its investment in Eckoh UK Limited, the details of which are disclosed further in note 24 of the consolidated financial statements.
Financial Statements | 94
Notes to the Financial Statements
95
17. Investment in subsidiary undertakings
The Company has the following investments in subsidiaries, which are included in the consolidated financial statements:
Subsidiary undertakings
Country of incorporation
Principal activities
Percentage of
share capital held
Eckoh UK Limited
Veritape Limited
England and Wales (ii)
Customer Engagement Data Security Solutions
England and Wales (ii)
Non trading
Eckoh Inc
United States of America (iii)
Secure Payment Solutions & Support Solutions
100%
100%
100%
18. Inventories
Finished goods
Group
2023
£’000
254
254
2022
£’000
268
268
The cost of inventory recognised as an expense during the year was £4k (2022: £11k). The Company does not hold any inventory.
(2022: £nil)
Eckoh France SAS
France (iv)
Eckoh Enterprises Limited
England and Wales (ii)
Eckoh Projects Limited
England and Wales (ii)
Avorta Limited
England and Wales (ii)
Eckoh Technologies Limited
England and Wales (ii)
Intelliplus Group Limited
England and Wales (ii)
Intelliplus Limited
England and Wales (ii)
Medius Networks Limited
England and Wales (ii)
Telford Projects Limited
England and Wales (ii)
Swwwoosh Limited
England and Wales (ii)
Eckoh Omni Ltd
England and Wales (ii)
Cloud-based Software Provider
Syntec Holdings Limited (v)
England and Wales (ii)
Syntec Limited (v)
England and Wales (ii)
Syntec Investment Limited (v)
England and Wales (ii)
CardEasy North America Inc
United States of America (vi)
Agentcall Limited
CardEasy Limited
England and Wales (ii)
England and Wales (ii)
Response Track Limited
England and Wales (ii)
Syntec Telecom Limited
England and Wales (ii)
Synpbx Limited
England and Wales (ii)
Non-Trading
Trading
Non-Trading
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Non trading
100% (i)
Dormant
67% & 33% (i)
Non trading
Dormant
Dormant
Dormant
Non-Trading
Non-Trading
Dormant
Dormant
100%
100% (i)
100% (i)
100%
100% (i)
100% (i)
100%
100% (i)
100%
100%
100%
100%
100% (i)
100% (i)
100% (i)
100% (i)
100% (i)
100% (i)
19. Trade and other receivables
Current assets
Trade receivables
Less: Loss allowance
Net trade receivables
Other receivables
Prepayments and contract assets
Long-term debtor
Amount receivable from subsidiary undertakings
Group
Company
2023
£’000
5,219
(68)
5,151
670
5,957
11,778
-
-
2022
£’000
5,056
(196)
4,860
852
6,571
12,283
2023
£’000
2022
£’000
-
-
-
-
34
34
-
-
-
-
93
93
-
-
4,297
4,297
4,034
4,034
Trade receivables are stated after loss allowance of £68k (2022: £196k).
Included in prepayments and contract assets is £2,364k (2022: £1,501k) relating to accrued income.
Amounts receivable from subsidiary undertakings are unsecured, due in 4 - 6 years and have an interest rate of 1.35% to 4.66%.
No expected credit loss has been calculated for the amount receivable from subsidiary undertakings as the Directors expect the
(i)
Share capital held by a subsidiary undertaking.
(iv)
The registered office is Rue De La Vieille Poste Parc, Industriel et Technologique de la
full amount to be recoverable.
(ii) The registered office is Telford House, Corner Hall, Hemel Hempstead, HP3 9HN.
Pompignane, 34000 Montpellier.
(iii) The registered office is 7172 Regional Street. #431, Dublin, California 94568.
(v) Acquired as part of acquisition of Syntec Holdings Limited.
(vi) The registered office is 12 Timber Creek Lane, Newark, New Castle 19711.
All companies hold Ordinary Class Shares and have March year-ends, with the exception of Veritape, which has a September year
end. Information in relation to geographical operations is set out in note 4.
The subsidiary undertakings Eckoh Omni Limited (registered number: 07553916), Syntec Holdings Limited (registered number:
04690987), Syntec Investments Limited (registered number: 10385059) are exempt from the Companies Act 2006 requirements
relating to the audit of their individual accounts by virtue of Section 479A of the Act as this company has guaranteed the subsidiary
company under Section 479C of the Act.
Gross trade receivables - ageing
Current
1-30 days
31-60 days
61-90 days
Over 90 days
Group
Gross carrying amount
- trade receivables
Group
Expected loss rate
2023
£’000
4,273
607
103
83
153
2022
£’000
3,703
1,082
75
13
183
5,219
5,056
2023
%
0.0%
0.1%
0.5%
0.0%
43.3%
1.3%
2022
%
0.3%
1.0%
13.9%
78.3%
84.2%
3.9%
Financial Statements | 96
Notes to the Financial Statements
97
The Directors consider that the carrying value of the trade and other receivables approximate to their fair value.
As set out in note 4, £2.3 million (2022: £5.5 million) of the contract liabilities are due in more than one year.
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
Included in accruals and contract liabilities is £3,726K (2022: £4,416k) relating to accrued liabilities.
contractual obligations. Credit risk arises principally from the Group’s trade and other receivables. Concentrations of credit risk
with respect to trade receivables are limited due to working capital practices of the market sector and the Group and the nature
All of the amounts above are payable within one year and trade payables that are more than three months’ old at the year-end
of the Group’s customer base. The reputable nature of the Group’s current customer base limits exposure to credit risk.
represent £13,000 (2022: £99,000).
20. Cash and cash equivalents
Sterling
Euro
US dollars
Floating rate
Euro
US dollars
Group
Company
2023
£’000
5,005
90
645
2022
£’000
2,266
6
568
2023
£’000
4,807
-
415
2022
£’000
1,898
-
485
5,740
2,840
5,222
2,383
Group
Company
2023
£’000
5,005
90
645
2022
£’000
2,266
6
568
2023
£’000
4,807
-
415
2022
£’000
1,898
-
485
5,740
2,840
5,222
2,383
Cash and cash equivalents comprise cash held by the Group. Surplus cash is placed in an interest-bearing account. The average
interest rate on the interest-bearing account during the year was 2.14% (2022: 0.02%).
The Group’s financial risk management is disclosed in note 3.
21. Trade and other payables
Trade payables
Other payables
Other taxation and social security
Amounts payable to subsidiary undertakings
Accruals and contract liabilities
Group
Company
2023
£’000
1,271
289
995
-
13,635
16,190
2022
£’000
899
508
929
-
15,950
18,286
2023
£’000
2022
£’000
19
-
-
-
-
-
31,515
26,832
21
64
31,555
26,896
Amounts payable to subsidiary undertakings are unsecured, payable on demand and interest free.
The Group’s exposure to liquidity risk is disclosed in note 3.
22. Called up share capital and share premium account
Allotted called up and fully paid
Share type
Ordinary Shares of 0.25p each
At 1 April 2022
Shares issued under the share option schemes
At 31 March 2023
Number
of shares
Nominal value
£’000
Share Premium
£’000
292,869,261
40,000
292,909,261
732
-
732
22,180
-
22,180
All Ordinary Shares in issue are fully paid. The holders of the Ordinary Shares are entitled to receive dividends, if declared, and are
entitled to vote at general meetings of the Company. Potential Ordinary Shares are disclosed in note 24.
23. Other interest-bearing loans and borrowings
At 1 April 2022
Repaid during the year
At 31 March 2023
Loans and borrowings
Bank Loans
£’000
-
-
-
In December 2021 and in conjunction with the acquisition of Syntec Holdings Limited, Eckoh secured a new £10 million debt facility
with Barclays Bank, which comprised a £5.0 million overdraft and a £5.0 million Revolving Credit Facility (RCF). The RCF is for a
term of three years, interest is 2.5% above the Bank of England base rate and there is a non-utilisation fee of 0.88%. The overdraft is
reviewed annually by the bank and has an interest rate of 1.75% above the Bank of England base rate. In November 22, the overdraft
facility was cancelled.
As at 31 March 2023, there was no debt drawn under the RCF.
Financial Statements | 98
Notes to the Financial Statements
99
24. Share-based payments
The Eckoh plc Share Option Scheme (‘the Scheme’) was
details are included in the Remuneration Committee report on
introduced in November 1999 and re-approved by the Board in
page 48. During the financial year awards have been granted
the year ended 31 March 2018. Under the Scheme the Board can
to Senior Management, key employees and the Executive
grant options over shares in the Company to Group employees.
Directors. The PSP awards granted to Management are subject
The grant price of share options is the middle market quotation
to a Total Shareholder Return performance condition, measured
price as derived from the Daily Official List of the London
over a 3-year performance period, the PSP awards granted to
The expected volatility is based on historical volatility over the last three years. The expected life is the average expected period to
exercise. The risk-free rate of return is the yield on zero-coupon UK government bonds of a term consistent with assumed option life.
The fair value of share options granted under the Share Incentive Plan (SIP) was measured using the valuation model. The number
of share options in the SIP as at 31 March 2023 was 2,338,549. The charge for the year was £98k (2022: £83k)
Stock Exchange on the date of the grant. The contractual life
the Executive Directors and two Directors from the acquisition
The assumptions used in the US Sharesave Scheme fair value calculation are as follows:
of an option is ten years. Options granted under the Scheme
of Syntec are subject to both a Total Shareholder Return and
become exercisable subject to the share price exceeding RPI
Adjusted Earnings per Share performance condition, measured
plus 15% after the third anniversary of the grant date. Exercise
over a 3-year performance period.
of an option is subject to continued employment, with certain
exceptions, as specified in the Scheme rules.
The Eckoh plc 2019 US Sharesave Scheme (the “2019 Sharesave
Scheme”), was approved by Shareholders at the 2019 AGM and
The Eckoh plc Share Incentive Plan (“the Plan”) was introduced
introduced to employees in December 2019. Employees who
in September 2016. The Plan provides employees with the
enrol in the 2019 Sharesave Scheme are granted an option to
opportunity to acquire shares
in Eckoh plc. Shares are
purchase up to a number of Ordinary Shares. The number is
purchased on behalf of the employee from amounts sacrificed
determined by dividing the total payroll deductions credited to
from their salary on a monthly basis and matched on a two for
the employee’s account as of the exercise date by the option
one basis by the company. Any shares acquired will be held
price. The option price is equal to the closing price of the Ordinary
in a trust in accordance with the terms of the Plan. In order to
Shares on the London Stock Exchange on either the (i) the date
maximise the tax benefits available, the employee must remain
the offering period begins, or (ii) the date of exercise, whichever
employed with the company and hold the shares within the
results in the lowest price per share. Any shares acquired will be
Trust for a minimum of five years.
held in accordance with the terms of the Scheme.
The Eckoh plc Performance Share Plan (“the PSP”) was introduced
The fair value of share options granted under the Scheme and
in November 2017, following approval by Shareholders at the
the PSP were measured using the QCA-IRS option valuer based
2018 AGM. Initial Awards, at Nominal cost were granted to each
on the Monte-Carlo valuation models, taking into account the
of the Executive Directors in November 2017. Each of the PSP Initial
terms and conditions upon which the grants were made. The
awards is subject to a Total Shareholder Return performance
fair value per option granted and the assumptions used in the
condition, measured over a 5-year performance period. Further
calculation are as follows:
23 Mar
2016
2 May
2016
13 Oct
2016
31 Mar
2017
21 Jun
2017
23 Jul
2018
24 Jun
2021
10 Jan
2022
10 Mar
2022
20 Jul
2022
20 Jul
2022
Share price (pence)
43.50
43.50
38.875
39.50
Exercise price (pence)
43.50
43.50
38.88
39.50
No. of employees
10
1
1
9
47.50
47.50
1
37.81
63.50
50.00
43.00
44.00
40.57
-
13
-
53
-
2
-
94
-
2
-
3
Shares under option
1,350,000
500,000
400,000
2,000,000
500,000
635,000
2,415,000
1,940,428
7,850,000
2,435,457
180,000
Vesting period (years)
Expected volatility
Option life (years)
Expected life (years)
3
32%
10
3
3
31%
10
3
3
3
3
33%
35%
35%
10
3
10
3
10
3
3
47%
3
3
3
3
3
30%
30%
30%
3
3
3
3
3
3
3
33%
3
3
3
33%
3
3
Risk free rate
0.78%
0.24%
0.56%
0.56%
0.56%
0.56%
0.18%
0.91%
1.36%
1.94%
1.94%
Expected dividends
expressed as a
dividend yield
Fair value per option
(pence)
0.89%
1.03%
1.16%
1.14%
1.22%
1.53%
0.00%
0.00%
0.00%
0.00%
0.00%
12.00
8.50
8.19
11.0
10.6
16.00
23.90
18.4+
49.76
20.481
22.3+
43.76
25.0
1.
Included in the Share options granted on 10 March 2022 are 1,000,000 awards made to Directors, which have a fair value of 17.69 pence (50% TSR) and 42.76 pence (50% adjusted eps).
Commencement date
Share price (pence)
Exercise price (pence)
Number of employees
Shares under option
Vesting period (years)
1 Dec
2020
60.0
51.0
20
50,331
2.00
1 Dec
2021
41.5
35.3
12
54,715
2.00
A reconciliation of option movements over the year to 31 March 2023 and 31 March 2022 is shown below:
Outstanding at 1 April
Granted
Exercised
Lapsed
Forfeited
Outstanding at 31 March
Exercisable at 31 March
2023
2022
Number of
share options
Weighted average
exercise price
(pence)
Number of
share options
Weighted average
exercise price
(pence)
25,618,344
3,303,254
(205,229)
(6,000,000)
(1,071,680)
21,644,689
6,538,084
17.74
4.61
20.81
0.25
0.24
11.38
33.83
15,066,669
12,861,774
(1,762,022)
-
(548,077)
25,618,344
6,213,495
17.74
1.17
16.33
-
18.83
9.44
34.19
Financial Statements | 100
Notes to the Financial Statements
101
2023
Weighted average remaining life
2022
Weighted average remaining life
Range of exercise
prices (pence)
Weighted
average
exercise price
(pence)
Number
of shares
(000’s)
Expected
Contractual
Weighted
average
exercise price
(pence)
Number
of shares
(000’s)
Expected
Contractual
0 - 0.5
35.0 – 40.0
40.5 - 45.0
46.5 – 48.5
50.0 – 54.5
55.0 – 59.5
60.0 – 64.0
0.23
39.17
43.37
47.54
52.58
56.00
62.58
15,966
2,731
1,937
633
152
60
166
1.71
3.04
0.10
–
0.77
0.67
0.47
1.71
3.56
2.97
3.34
0.77
0.67
0.47
0.23
39.33
43.50
47.54
52.53
56.00
62.57
20,074
2,567
1,850
652
178
65
181
1.76
3.89
-
0.02
0.91
1.67
1.17
1.76
4.60
4.00
4.03
1.36
1.67
1.35
Further details of the Directors’ emoluments are disclosed within the Remuneration Report on page 50.
Rented apartment
An apartment owned by a Director, Nik Philpot, is rented to Eckoh Group for use by company employees when on business. The
rent is paid on a monthly basis and was charged at comparable market rates. The expense in the year was £18,000 (2022: £15,000).
The amount outstanding to them at the end of the current year was £Nil (2022: £Nil). There were no amounts written off in the
current or prior year.
27. Cash generated from operations
Profit for the financial year
Finance income
Finance charges
Taxation
The total charge for the year relating to employee share-based payment plans was £40,000 (2022: £241,000 charge) all of which
Depreciation of property, plant and equipment
related to equity-settled share-based payment transactions. Included in the charge is a fair value share-based payment credit of
£102,000 (2022: £479,000 charge) offset by a charge of £142,000 for the employers NI accrual.
25. Pension commitments
The Group operates a group personal pension scheme and, in addition, the subsidiary company Eckoh UK Limited operates a defined
contribution pension scheme. The assets of the pension schemes are held separately from those of the Group in independently
administered funds. The pension charge represents contributions payable by the Group to the funds. There were no outstanding
or proposed contributions at the balance sheet date.
26. Related party transactions
Depreciation of leased assets
Amortisation of intangible assets
Exchange differences
Expenses relating to share option schemes
Operating profit before changes in working capital and provisions
Decrease) / (increase) in inventories
Decrease in trade and other receivables
Decrease in trade and other payables
Cash generated from operations
Eckoh plc is the parent and ultimate controlling company of the Eckoh Group, the consolidated financial statements of which
28. Events after the statement of financial position date
include the results of the subsidiary undertakings set out in note 17.
Each subsidiary is 100% owned by the Eckoh Group and is considered to be a related party.
There is 1 Director accruing benefits under the pension scheme, employer pension contributions were £20k (FY22: £19k). 1 Director
has elected to have all his Company pension contributions added to his salary. The pension contribution has been reduced by the
employer’s national insurance that is payable by the Company for the amount added to his base salary.
The aggregate Directors’ emoluments are shown in the table below.
Directors
Aggregate emoluments
2023
£’000
886
886
2022
£’000
806
806
Prior to the 31 March 2023, the Group were in settlement discussions with a third party. An agreement was reached post year
end with the third party and a settlement agreement entered into in favour of the Group. The income and costs are included in
exceptional items in Note 9.
2023
£’000
4,637
(53)
53
383
643
617
2,871
(516)
40
8,675
14
505
2022
£’000
1,575
(6)
74
743
680
495
1,143
(95)
241
4,850
(5)
2,423
(2,238)
(3,906)
6,956
3,362
Financial Statements | 102
Shareholder Information
103
Shareholder information
Dealings permitted on Alternative Investment Market (AIM) of the London Stock Exchange.
Directors and Company Secretary
C.J. Humphrey - Non-Executive Chairman
D.J. Coghlan - Non-Executive Director
G.L. Millward - Non-Executive Director
N.B. Philpot – Chief Executive Officer
Joint Broker
Investec Bank PLC
30 Gresham Street
London EC2V 7QP
C.G. Herbert – Chief Financial Officer and Company Secretary
Solicitor
Registered Office
Eckoh plc
Telford House
Corner Hall
Hemel Hempstead
Hertfordshire, HP3 9HN
www.eckoh.com
Registered number: 3435822
Registrar
Link Group
Central Square
29 Wellington Street
Leeds
LS1 4DL
Nominated Advisor and Joint Broker
Singer Capital Markets Limited
One Barthlomew Lane
London, EC2N 2AX
Mills & Reeve LLP
Botanic House
100 Hills Road
Cambridge, CB2 1PH
Banker
Barclays Bank plc
11 Bank Court
Hemel Hempstead
Hertfordshire, HP1 1BX
Independent Auditors
PricewaterhouseCoopers LLP
40 Clarendon Road
Watford
WD17 1JJ
Financial Statements |
Eckoh plc,
Telford House,
Corner Hall,
Hemel Hempstead,
Hertfordshire,
HP3 9HN
01442 458 300
tellmemore@eckoh.com
www.eckoh.com