Annual Report 2024
2 | P a g e
CONTENTS
Strategic Report
3 Highlights of the year
5 Chairman’s Statement
6 Chief Executive’s Review
14 Key performance indicators / operational measures
16 Stakeholder value creation & Section 172(1) statement
17 Sustainability Report
21 Financial Review
23 Principal Risks and Uncertainties
Corporate Governance
25 Board of Directors
26 Chairman’s Statement on Corporate Governance
30 Audit Committee Report
32 Remuneration Committee Report
38 Directors’ Report
39 Statement of Directors’ responsibilities
40 Independent Auditors’ Report
Financial Statements
45 Consolidated statement of total comprehensive income
46 Consolidated statement of financial position
47 Company statement of financial position
48 Consolidated statement of changes in equity
49 Company statement of changes in equity
50 Consolidated statement of cash flows
51 Notes to the financial statements
3 | P a g e
ECKOH PLC STRATEGIC REPORT
HIGHLIGHTS OF THE YEAR
Eckoh plc (AIM: ECK), the global provider of Customer Engagement Data Security Solutions, is pleased to announce its full year
audited results for the year ended 31 March 2024.
£m unless otherwise stated
FY24
FY23
Change
Revenue
37.2
38.8
-4%
Gross profit
31.0
31.2
-1%
Total ARR1,2
30.8
30.4
+1%
North America Secure Payments ARR ($m) 1
16.8
15.9
+6%
Adjusted EBITDA3
10.2
9.4
+8%
Adjusted operating profit4
8.3
7.7
+8%
Profit after taxation
4.5
4.6
-2%
Basic earnings pence per share
1.56
1.58
-1%
Adjusted earnings pence per share5
2.20
1.98
+11%
Net cash
8.3
5.7
+2.6
Proposed final dividend (pence)
0.82
0.74
+11%
Total contracted business6
52.6
34.5
+52%
New contracted business7
18.7
14.4
+29%
Financial highlights
•
Record level of total contracted business6 at £52.6m, up 52% (FY23: £34.5m), driven by strong multi-year renewals and in
strong new contracted business in H2. New contracted business increased by 29% to £18.7m (FY23: £14.4m)
•
Record new business contracted in North America for Security Solutions, up 44% to $16.8m (FY23: $11.3m)
•
Group ARR1 £30.8 million, up 1% year-on-year or 3% at constant currency
•
North America Security Solutions ARR1 up 6% to $16.8m (FY23: $15.9m), which represents a CAGR of 27% since FY21
and with the new business contracted in H2 but not yet live this represents a further 14% of growth
•
Group revenue £37.2m, (FY23: £38.8m), down 4% largely because of the timing of the new business wins and the ongoing
transition of clients to the cloud, which removes hardware fees and reduces set up costs
•
Gross profit margin 83% (FY23: 80%), an increase of 290bp
•
Adjusted operating profit4 up 8% to £8.3m (FY23: £7.7m), this includes a £0.1m FX loss versus a FX gain of £0.5m in FY23,
a 17% increase year-on-year pre-forex
•
Continued improvement of adjusted operating profit margin driven by the cloud transition and operational efficiency,
increasing by 250 bp to 22.4% (FY23: 19.9%)
•
Group recurring revenue increased to 84% (FY23: 80%), reflecting strong renewals and the cloud transition
•
Recurring revenue in North America increased to 82% (FY23: 76%) and to 86% (FY23: 83%) for UK & ROW
•
Strong cash generation with net cash position ahead of market expectations at £8.3m (FY23: £5.7m), up £2.6m
•
Eckoh’s balance sheet remains robust, with no debt or drawdown on credit facilities
•
Proposed final dividend of 0.82p per share (FY23: 0.74p), demonstrating the Board’s confidence in the significant growth
opportunity
1.
ARR is the annual recurring revenue of all contracts billing and contractually committed at the end of the period.
2.
Included within ARR is all revenue that is contractually committed and an element of UK&ROW 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 and exceptional items.
4.
Adjusted operating profit is the profit from operating activities adjusted for amortisation of acquired intangible assets, expenses relating to share option schemes and exceptional
items.
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 25%.
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 2024 is revenue of £38.9 million, adjusted operating profit of £8.2 million and cash of £8.2m.
4 | P a g e
Strategic highlights
•
Our drive to transition clients to cloud-based SaaS solution model continues successfully:
o
Delivering cost efficiencies, improving operating margins and quality of earnings
o
Group ARR now represents 83% of Group revenue, a 5% increase on the prior year (FY23: 78%)
o
100% of all new client wins were for cloud deployment (first ever cloud deal was FY20)
o
Positive reception from new and existing clients to the expanded Secure Engagement Suite, with new clients
contracting for multi-products alongside successful upsells and cross-sells to our existing clients
•
New global commercial strategy focussing on the North American addressable market is delivering clear benefits:
o
Record North American new business up 44%, with several key deals closed in H2
o
Record North America pipeline includes several contracts where Eckoh is selected vendor, but longer than
expected sales and contracting cycles are delaying completion and therefore revenue
o
Record level of client renewals include a majority of multi-year renewals, enabling future expansion
•
Notable new business wins include:
o
a 5-year contract with a US travel technology company that has multiple global online brands
o
a 5-year healthcare contract with a leading US homecare business
o
a 3-year contract with a Fortune 500 office supplies retailer
o
a 3-year contract with a UK-based media and telecoms company deploying into Amazon Connect
•
The new PCI DSS v4.0 regulation, which was effective from April 2024, has increased complexity and cost of compliance
for merchants and we are already seeing tangible signs of the impact the standard is having
Current trading and Outlook
•
The Board is confident of progress in the year ahead and the following underpins the expected growth in FY25:
o The business is optimally positioned as market leader for an increased outsourcing trend driven by regulatory
change (PCI DSS v4.0), increasing complexity and security challenges for businesses
o We expect new business coming from existing client to grow significantly with the new product set and
increasing interest in AI bots for contact centres provides a further opportunity for growth
o The business continues to benefit from the transition to a SaaS business model and cloud deployment with
further operating profit margin improvements expected
•
Overall, a positive start to the year with £8m+ of total contracted business signed year to date
5 | P a g e
CHAIRMAN’S STATEMENT
I am pleased to report on the results for the financial year to
March 2024. The business delivered both adjusted operating
profit and cash marginally ahead of market consensus, with
revenue slightly behind market expectations. The revenue for the
year was impacted by the timing of the new business, which was
largely contracted in the second half of the year. It led to the
Company’s largest ever order intake with the first half dominated
by renewals and the second half dominated by new contracts
with large enterprise organisations.
Results
Total revenue for the year was £37.2 million, a decrease year-on-
year of 4% (FY23: £38.8 million) or 3% adjusting for constant
exchange rates.
Adjusted operating profit was £8.3 million, an increase of 8%
(FY23: £7.7 million). Adjusted operating profit margin has
increased to 22.4% up from 19.9% the previous year, as a result
of the continued move of new business to the cloud and the
operational leverage that is achieved with this new business.
Adjusted earnings per share at 2.20 pence is a year-on-year
increase of 11% (FY23: £1.98 pence recalculation for tax rate at
25%).
Group and North America Security Solutions ARR1 has increased
with group ARR at £30.8 million as at 31st March 2024, a 1%
increase year-on-year (FY23: £30.4 million). The North America
Security Solutions ARR is $16.8 million, an increase of 6% from the
same time last year (FY23: $15.9 million), however, when taking
into account the contracts signed in the second half that are
expected to commence billing in the first half of FY25, that growth
rises a further 14%.
Profit after tax was £4.5 million (FY23: £4.2 million), this is after
exceptional costs for restructuring of £0.5 million (FY23: £nil),
exceptional legal fees and settlement agreements of £1.3 million
(FY23: £203k) and a tax credit of £1.1 million (FY23: tax charge
£383k). The exceptional costs for restructuring resulted in a cost
saving in last financial year of £1m and a further cost saving
benefit in FY25 of £1m, in total a cost saving of £2m as previously
disclosed as the business focuses on our Secure Engagement
solutions.
The Group continues to have a strong balance sheet with a year-
end net cash balance of £8.3 million (FY23: £5.7 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 page 38.
Dividend
The Board has increased the proposed dividend by 11% to 0.82
pence per share (FY23: 0.74 pence per share).
Board
During the financial year ended 31 March 2024, David Coghlan, a
Non-Executive Director and Chairman of the Remuneration
Committee, resigned on 12 February 2024. Since his resignation,
and whilst we actively recruit for a Non-Executive Director I have
replaced David as Chair of the Remuneration Committee. On
behalf of the whole Board and the team at Eckoh I would like to
thank David for his substantial contribution to the Company over
the past seven years. Full details of the current Directors are on
page 25.
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 page 26, 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 17 to 20 reflects the progress we
have made. It details the four key strategic areas, the objectives
set, and the targets we have delivered in the financial year to
March 2024.
Full details of the Company’s Principal Risks and Uncertainties are
on page 23 to 24.
People
We would also like to thank all employees for their continued
commitment and resilience through what has been a busy period.
Over the past year the Global Commercial team, Sales, Marketing
and Client Services embraced the changes and moved to the
Global structure with their key focus the North American market.
The collaboration across the technical team continues to deliver
product enhancements for our clients and the multi-cloud
capability.
The whole Board plan to attend the AGM on 12 September 2024
and we look forward to the opportunity to meet with as many
Shareholders as possible on the day.
Christopher Humphrey
Chairman
10 June 2024
6 | P a g e
Chief Executive’s Review
I am pleased to report another significant and positive year for
Eckoh, with our strategy to become a cloud-first SaaS solutions
provider continuing to make good progress. Our first half was all
about excellent multi-year contract renewals, and the second half
was about new business wins resulting in a record level of total
contracted business at the year-end of £52.6m, up 52% (FY23:
£34.5m). We also generated record levels of new business in
North America, validating our decision to focus on that key
market.
This year was notable for being the first time that 100% of our
new client contracts were for cloud delivery. It has taken since
FY20 to move from an entirely on-premise client base to one
which is now largely cloud. The ongoing transition will continue
to deliver benefits and enhance our business model, further
enhancing levels of recurring revenue and our revenue visibility,
improving our gross profit margin and enhancing our operational
efficiency as demonstrated by our adjusted operating profit
margin improving 250 basis points to 22.4% for the year.
Momentum is building in our key North American market. The
new business contracted in North America in H2 demonstrated
the strong pipeline we had, and continue to have, in this key
market and underpins the expected growth of the business as we
move into the new financial year.
Background to our proposition
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 or 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
that occur through their contact centres. Our secure engagement
solutions help protect sensitive customer data and can be utilised
over any common customer engagement channel (voice, live
chat, messaging, email, social channels, etc.) and via any device
the customer chooses.
The pandemic was a catalyst for the rapid evolution of the contact
centre industry to a predominantly remote or hybrid-located
workforce. This has brought new levels of flexibility to the
delivery of these services for businesses, but also major security
challenges, which has in turn created a further compelling growth
driver for Eckoh.
More recently there has been much debate about the role that AI
and in particular ‘conversational bots’ will play in the evolution of
the contact centre industry and the way that customers will
engage in the future. We see this as an opportunity rather than a
threat, as our technology works just as effectively with a bot as it
does with a human providing the necessary security that will still
be required to manage sensitive data shared with this technology.
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. If
the process can be performed without doing this, then this
removes the risk of breach for our client or fraud for the
customer. This is our specialism and an approach for which we
have a growing portfolio of patents.
A clear growth strategy
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.
New commercial strategy the right move and successful launch of
Secure Engagement Suite
A year ago, we combined our commercial teams based in the UK
and US to focus almost entirely on the North American territory,
where we have the largest addressable market and a significant
opportunity for continued strong growth. Our estimates are that
the addressable market in North America is around 15 times that
of the UK and given the average contract value is significantly
higher this makes the differential even greater. It therefore
seemed sensible to pool our resources to address the largest
opportunity in the most effective manner.
We introduced multiple products into the North American market
for the first time in FY24, with the launch of our Secure
Engagement Suite, which is delivered through our cloud
platforms. This new go-to-market approach is still in the early
stages but is already delivering tangible results, as demonstrated
with the record levels of new business and the success in
procuring multi-year renewals with some of our largest clients.
Given the H2 timing of a large proportion of the new business in
the year, the revenue from this new contracted business is not
yet visible in the reported revenue, but it can be seen in our
Annual Recurring Revenue. North America ARR1 as at 31 March
2024 was $16.8 million (FY23: $15.9 million), a year-on-year
increase of 6%. However, if the new business contracted in H2 is
included (as it is scheduled to go live in H1 FY25), it represents a
further 14% of growth with ARR expected to increase to $19.2
million.
7 | P a g e
•
Cloud-first – the share of ARR in the North American (NA)
market coming from cloud deployments grew to 55% in the
year and by the half year in September 2024 we expect this
to reach 60%. 100% of all new client deals won in FY24 were
for cloud deployment.
•
Expanding existing clients – the new commercial strategy is
showing encouraging signs with increasing levels of cross-
selling and upselling to existing clients and the highest level
of multi-year renewals ever achieved. This provides a strong
platform to develop client relationships over time, expand
into other parts of their business and bring new products to
the table.
•
North America focus – the strategic decision to focus our
commercial resources on the North American market is
validated by the 27% CAGR in ARR achieved from FY21 to
FY24. With ARR expected to reach $19.2m by H1 FY25 (based
on contracts already signed) and a record sales pipeline.
•
Scalable growth – the cost and efficiency benefits from our
ongoing move to cloud and SaaS solutions is driving
improved adjusted operating profit margins with an
underlying improvement of 250 basis points to 22.4%.
Eckoh is on a mission to set the standard for secure interactions
between consumers and the world’s leading brands. We have
made clear progress this year on our strategic pillars outlined
below, taking us closer to achieving this overall goal.
Use cloud technologies to develop and enhance our proprietary
solutions to support scalable growth
The procurement of data security solutions globally will only
increase, and our focus is to continue investing in our Secure
Engagement Suite and cloud platforms to support the growth
from our largest territory and strategic focus, North America. Our
market leadership lies in our ability to offer our clients a choice of
cloud platform and to deliver multiple complementary SaaS
solutions without any additional deployment effort or complex
integrations.
Continued innovation and expansion of our platforms and product
offering
During the year we have expanded our Secure Voice Cloud
platform globally to support our international clients, launching
our first dedicated Asia-Pacific Secure Voice Cloud platform in
Sydney.
Our unified team developed the new Secure Call Recording
solution using the cloud-native methodology and technology that
we implemented some years ago. This approach has not only
reduced the time it takes us to launch new solutions, but it has
simplified the process of continual development and sped up the
addition of new features. It also enables us to automatically scale
up or down the size of our cloud platforms, responding instantly
to changes in demand from our clients, leading to optimum
operational performance and cost to serve.
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 55%, and by the end of
H1 it is expected to reach 60%.
This graph illustrates the difference between a contract where
the solution is deployed on-premise versus the cloud. Whilst the
total revenue is lower for a cloud deployment, the recurring
revenue, gross profit margin and operating margin are all higher
and it is more operationally efficient to deploy.
8 | P a g e
During the financial year, 100% of contracts won in North America
were for cloud deployments. In addition, for the clients whose
contracts were renewed during the financial year, five of them
renewed to move to the cloud as part of the renewal and a
number requested an option to migrate to the cloud during the
new multi-year renewal term. While cloud deployment is a key
goal and advantage, many of the largest enterprises, especially
those in North America, may still take several years to achieve
that objective. Retaining the capability to deploy as required in a
client’s own data centre and environment, and then migrate
those accounts to a cloud solution at some later point, continues
to give us a tactical advantage over our competitors.
Capitalise on external global market trends and regulations to
help protect customer data through continual innovation
The implications of the new Payment Card Industry
Data Security Standard v4.0
One of the key drivers for the adoption of our solutions
is the Payment Card Industry Data Security Standard
(‘PCI DSS’), which all merchants need to comply with to
help protect their customer’s payment data, to avoid
higher payment processing charges and to reduce the
risk of substantial fines. Eckoh has maintained
continual PCI DSS compliance at level 1, the highest
level, since 2010.
The PCI DSS has evolved over time to try and address
the ever-increasing threat of fraud and hacking. The
most meaningful change to the standard since 2016
came into force from April 2024, when v4.0 became
applicable. From this date, any organisation that is
audited for compliance with the Standard (this security
audit has to occur every year) will be expected to comply with the
new regulations that were first published in March 2022. Further
additional changes will come into force in 2025.
In the graphic above, it is clear how significant the level of change
is, with the number of pages in the Standard rising from 139 to
360. There are 60 new requirements that have been added, and
71 that have been changed in v4.0. The implication for merchants
is that this increase in complexity will drive up compliance costs
and increase the resources required to complete ‘business as
usual’ processes. It is also probable that a percentage of
companies will fail their audits due to the scale and challenge of
the changes. With PCI DSS still being the regulation that drives
most sales conversations for Eckoh, it is anticipated that the
challenges (and increased risk) associated with implementing
v4.0 by merchants will lead to an increase in sales opportunities
for Eckoh’s solutions.
Shift to home-based agents creates new data security challenges,
driving significant new opportunities
The global contact centre industry remains extremely large,
representing around 4% of the entire workforce in both the UK
and US markets. Despite the introduction of new technology and
customer contact channels over the past 20 years and an
increasing drive by companies to try and move interactions to
digital channels away from voice, the size of the industry has
changed relatively little.
In the key US market, Contact Babel estimates that the number
of agent positions will only decrease 1% by 2027, representing
only 35,000 agents. (Source: “US Contact Centers: 2024-2028”;
graphic below: see page 48 of this report).
Voice remains resolutely the dominant channel of choice for
customers, especially in the US, where in 2023 it represented
63.7% of all interactions. This is forecast to only fall by 1.6% in the
coming 4 years, even with the prospect of increasing use of
conversational bots.
The fastest emerging channel is webchat which is forecast to grow
to 10.6% of all interactions by 2027, largely at the expense of
email which suffers from being a less immediate channel for
assistance. Our ChatGuard product facilitates the ability to take
payments securely within this channel of choice in the same way
that CallGuard does in the voice channel, and we see this as being
a naturally complementary product for any client who operates
the chat channel. What is interesting is how few organisations
initially approach chat as a sales channel, focusing primarily on it
as an assistance tool for the customer. The advent of ChatGuard
unlocks the sales value providing a safe and secure environment
for the agent and customer to transact successfully.
What has fundamentally changed in the way the contact centre
industry operates in recent years, as a direct consequence of the
pandemic, is the massive shift to remote and hybrid working.
Looking at Eckoh’s largest market North America, the figures
outlined in Contact Babel’s ‘US Contact Centers 2024-2028’
research document regarding the percentage of remote agents in
the industry, are particularly striking:
9 | P a g e
Mean % of US contact centre agents that are hybrid or fully
remote industry-wide
While the proportion of remote or hybrid agents has decreased
somewhat from the pandemic peak, it’s clear the overall change
is both seismic and permanent. Post-pandemic, contact centres
have been under acute pressure to adapt to retain agent staff, as
the convenience of working from home is popular, enabling
flexibility of working hours. This flexibility is also a positive for the
enterprises that employ such agents as they can deploy agents to
work short shifts to cope with unexpected customer demand.
The graph below shows how the split of agent work locations is
expected to vary across different sizes of contact centre by the
end of 2024. Notably, it is the largest contact centres that have
the highest proportion of fully remote or hybrid agents with 88%,
and it is this group that is Eckoh’s primary target market.
This changed landscape brings many and varied complications to
the running of such remote and hybrid contact centres and
companies now need to tackle the challenge and inherent data
security risks that come from remote working agents. A managed
facility is far easier to control from a data security point of view
than multiple home locations and it is largely impossible to
replicate such an environment. This presents a significant
challenge if the agent is handling customer data and especially
payment data.
The remote working trend provides a massive opportunity for
Eckoh’s solutions, not just for data security but also for agent
performance and efficiency. Our data security proposition
enables companies to remove the risk of fraud or data breaches
in remote environments by ensuring that sensitive data isn’t just
blocked but replaced with valueless placeholders that can be
safely stored in the client’s systems. Our patented technology
wraps around the client’s infrastructure seamlessly and means
that from the client’s point of view, they do not actually collect
any sensitive personal data.
Within Eckoh’s new product suite, our real-time transcription
solution will offer sentiment analysis and AI-led agent assistance,
which ensures that all customers can be triaged and dealt with
swiftly and effectively, without compromising their customer
experience or the security of their personal data. This ability to
assist a less-experienced agent to engage like an experienced one,
will help to improve agent churn as well as driving significant
operational efficiency and cost reduction for our clients.
Maximise lifetime client value and aid retention by cross and up-
selling to increase recurring revenue
With our product roadmap extending into a broader data security
proposition, we expect to be able to increase the lifetime value of
our clients and continue to have high renewal rates and very low
levels of churn.
Across the Group we have around 230 clients, which range greatly
in both size and opportunity. As part of our change in commercial
strategy to create a single global team, we reorganised how we
support and service our client accounts to ensure the most focus
is given to the key accounts with the largest perceived
opportunity for growth. The sales team and account managers
have been assigned specific accounts to manage and develop
across the different tiers of client opportunity and have cross-
selling and upselling targets as well as new business targets. In
the top key account tier, we have around 25 accounts of which
only two are in the UK&I region, reinforcing again the rationale
for the realignment of our valuable resources.
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 Suite
plus our expanding and scalable cloud platforms, which provide
us with the opportunity not only to extend our reach
geographically, but also increase the opportunity within every
client account to land and expand.
Eckoh’s Secure Engagement Suite comprises complementary
data security products that can be delivered to a client either
individually or as a solution set and that are sold in a conventional
SaaS licensing model usually on multi-year contracts. After
acquiring Syntec in December 2021 we redesigned our platform
and products into this new suite that is delivered to the clients
through a common cloud platform we call our Secure Voice
Cloud.
The Secure Engagement Suite was formally launched in early
2023 and over time it is expected that more new clients will take
multiple products as part of their initial contract and that existing
clients will add further products because of our cross-selling
initiatives. This is already beginning to bear fruit in the results we
have seen in the period and the pipeline that is building.
2018
2019
2020
2021
2022
2023
13%
13%
66%
82%
79%
72%
10 | P a g e
The diagram above shows the evolution of the products over time
together with a representative value or importance of the
opportunity they offer. The first seven are all now available and
are delivered through our Secure Voice Cloud, which is deployed
in AWS and Azure, but with the vast majority of our clients using
our AWS platforms.
Launching our new Secure Call Recording product
•
Our new product automatically secures sensitive customer
data and incorporates the ability to transcribe calls into text
at a highly accurate level, unlocking the business intelligence
and insight that these conversations contain
•
Reception to the product has been excellent and we already
have clients deployed and live
•
An increasing number are expected to take the service over
time as their existing call recording contracts come up for
renewal, or as they move to the cloud.
Addition of Secure Screen Recording
•
An important requirement for certain clients is the addition
of screen recording, which is available imminently
•
This feature records visually whatever activity the agent is
doing on their desktop and what applications they have open.
It also allows the audio from the call recording to be played
back synchronously while reviewing the visuals
•
This is helpful for training purposes as well as providing a
further level of security
•
We do not expect this capability to be sold on a standalone
basis but alongside Secure Call Recording, and those clients
who take it will incur an additional monthly per agent fee.
Updated our Secure Digital Payments product
During the year, we launched a significant update to our
Secure Digital Payments product, offering enhanced digital
payment choice and convenience within contact centres
•
Customers now have the freedom to combine their preferred
contact channel with their favourite payment method: Apple
Pay over WhatsApp, Pay by Bank via live chat, pay-later apps
over the phone, or other combinations
•
It enables contact centres to:
o
better serve customer needs
o
extend their services to social media and third-party
channels
o
increase payment volumes and speed
o
provide greater choice with pay-now or pay-later
options and,
o
provide stronger authenticated security through
methods such as fingerprint or facial recognition
•
This will be followed with an upgrade to ChatGuard to add
alternative payment methods, which will be available to
clients in the second quarter of this new financial year.
Roadmap - real-time insight and transcription solution
•
On the roadmap for launch this year is our real-time insight
and transcription solution that uses AI and machine learning
to assist advisors in providing the best possible assistance,
whether they are experienced agents or not
•
The first phase will see the release of the insight tool which
will allow our client real-time visibility of their agent activity
across their contact centre facilities and agent’s home
locations
•
Monitoring the performance of a hybrid agent workforce is
challenging, and security concerns are heightened, so this
tool, which can be used in combination with the Voice
Security, Secure Call Recording or the Real-time Transcription
& AI products will be a valuable addition to our client’s ability
to drive both service quality and security
•
Phase two will deliver real-time transcription and sentiment
analysis to enable managers or supervisors to view active
conversations between agents and customers to aid or assess
performance
•
The AI engine will be able to guide the agent to the next best
action, based on its knowledge of previous historic outcomes,
enabling less experienced agents to perform at a higher
standard thus increasing both customer and agent
satisfaction.
The impact of AI on Eckoh’s market
Recently there has been significant interest and discussion
regarding the impact that AI and the use of ‘conversational bots’
will have on the contact centre industry. Automation is nothing
new in customer engagement and increased self-service from AI
bots will not remove the need for, or the benefits that clients
11 | P a g e
derive from Eckoh’s security solutions. While over time the
proportion of interactions successfully handled by bots will
increase, human agents will continue for the foreseeable future
to be the dominant provider of customer engagement for
enterprises.
Sensitive data will still need to be kept out of the client
environment to simplify PCI DSS compliance and to minimise
security risks from cyber-attacks. Bots will frequently need to
‘hand off’ the interaction to a human agent when they are unable
to successfully complete the task. This means that sensitive data
will still need to be protected and excluded from every session.
Eckoh’s Universal License allows organisations to utilise our
software on any customer channel and interchangeably between
human agents and bots. It provides complete future-proofing for
our clients who know their customer engagement strategy will
evolve, but are unsure (as most are) exactly how this will manifest
itself.
Conversational AI Bots undoubtedly deliver a compelling
opportunity for Eckoh’s clients to reduce overhead on their
human agents and reduce the cost to serve. AI Bots for large
enterprises will, however, require significant ‘domain-specific’
design to deliver a level of performance that will be sufficiently
good enough to be both suitable and worthwhile for well-known
brands. Eckoh has 20 years’ experience in designing and
delivering domain-specific natural language speech applications,
so we understand through experience what is required to achieve
success. As a provider that is already in a position of trust with our
client, is in the customer contact path and has presence at the
agent desktop we are uniquely placed to cross-sell Conversational
Bots to existing clients or include them in solutions for new
clients.
Operational review
North America (NA) Territory (48% of group revenues)
The decision was taken just 18 months ago to focus our sales
efforts on the North American market and to unify our
commercial team to achieve that goal. Up to that point, we had
only been actively selling the Voice Security product – either
CallGuard or CardEasy – to clients in the North American market,
with only the occasional client taking other products.
The advent of our new cloud-delivered set of products that secure
all engagement channels - our Secure Engagement Suite - and our
ability to provide other relevant capability with security at its
core, opened up a huge opportunity to grow the North American
market and other international markets faster. We expect to see
the value and scope of initial new client contracts increase as we
deliver multiple products from the outset, and we expect to see
existing client values grow over time as we successfully upsell to
them with additional products and licenses.
A good example of this is a new client contract won at the end of
the year with a US-based travel technology company that
operates several online global travel brands. They ran a formal
process to procure a solution from an organisation that had
proven experience in successfully supporting the largest
companies under severe load over many years, with the highest
level of availability and technical performance. We could
demonstrate that we have supported some of the largest US
brands through successive Black Friday weekends since 2018,
when volumes can rise several times overnight, with no negative
impact. They also wished to secure all their customer channels
where they may take a payment, and to ensure the process was
‘frictionless’ for their customers, so they chose to purchase Eckoh
licenses which cover voice, chat and digital channels. This
contract, which will start billing at the end of the first half of the
year, is the largest cloud contract won to date for multiple
products, but we expect it to be the first of many such
agreements.
The base of North American clients we have already contracted
(around 100 in total) are typically huge organisations that are
likely to have additional divisions or other standalone businesses,
that may be suitable targets to upsell our products to. In addition,
the Secure Engagement Suite contains complementary products
(that will only increase in number over time) that provide ample
opportunity to cross-sell into these accounts. We expect that the
new business we can win from existing clients will in time be at
least as large as the value from net new clients, and this is the
clear rationale for the change in commercial approach.
Retaining client contracts is as important to us as winning new
ones, and multi-year renewals are highly significant and
important for Eckoh’s future growth. It is more common in North
America for companies to default to an annual renewal cycle for
technology services to ensure flexibility around future changes in
their business or market. In contrast, Eckoh’s Account
Management and Client Success teams have successfully made
multi-year renewals the preferred choice for our clients. During
the year, our most common contract renewal was for three years,
but we also had five-year renewals with clients who previously
had signed shorter contracts. This illustrates not just the
satisfaction that our clients have with our products and the
strength of our relationship, but crucially the perception they
have of the ongoing importance and longevity of the products to
their security strategy.
12 | P a g e
The North American territory continues to deliver the highest
growth and the Data Security Solutions ARR1 at the end of the
year was $16.8 million, a year-on-year increase of 6% (FY23: $15.9
million). This represents a CAGR of 27% since FY21. The delay in
signing new business in H1, due to the extended sales and
contracting process, temporarily slowed the ARR growth in this
region. However, when considering the contracts signed in H2
that are either expected or contracted to commence billing in the
first half of FY25, that growth rises to a further 14% and will lead
to a meaningful positive impact on the revenue in the second half
of FY25.
Total North American ARR1, which includes both Data Security
Solutions and Coral (our agent desktop product) grew to $17.9
million (FY23: $16.9 million). The Group’s ARR now represents
83% of Group revenue, a 5% increase on the prior year (FY23:
78%).
Revenue for the year was $22.6 million. At a total revenue level,
this is an increase year-on-year of 6% (FY23: $21.3 million),
however, recurring revenue has increased by 11% year-on-year
and is now 82% of revenue (FY23: 76%). This increase is as
expected and comes from new contracts being delivered through
the cloud with a higher recurring revenue percentage than for an
on-premise solution.
During the year several clients with large enterprise deals have
renewed their contracts for the first time. At the point of renewal,
the hardware fees and implementation fees from the initial term
of the contract are fully recognised. This combination of new
cloud deals and large renewals in the year has seen a 24% decline
in this one-off revenue year-on-year. The majority of this year-on-
year decline is due to the hardware revenue component.
Despite this shift in revenue the North American territory has
continued to grow and increase its share of Group revenue and
now accounts for a 48% share (FY23: 45%). With the contracts
signed in H2 in North America, North American revenue will be
greater than the UK, Ireland and ROW in FY25 for the first time.
Total and New Contracted Business
•
A combination of new contracted business and the
increasing number of contract renewals has grown the total
contracted business by 69% year-on-year to $35.3 million
(FY23: $20.9 million)
•
Increase in sales momentum as anticipated in H1, with new
contracted business wins of $17.5 million, an increase year-
on-year of 39% (FY23: $12.6 million)
•
Security Solutions new contracted business of $16.3 million
with 80% of this coming from new clients, with multi-
product contracts and 100% of new clients contracts
contracted to deploy in the cloud.
Contract Renewals
•
Within total contracted business are renewals of $17.8
million, more than double the previous year.
•
During the year eleven renewals were successfully
completed, where at the point of renewal, the hardware and
setup fees from the initial contract are fully recognised. In
addition, we have had several clients, whose initial contract
was on-premise and at renewal they have contracted to
migrate to the cloud in their next contract term.
•
Two clients did not renew due to a sale of their business, one
through a partner.
As clients’ contracts are increasingly being deployed in the cloud,
in addition to higher recurring revenue, the gross profit margin of
the North American business continues to improve. Gross profit
margin was 81%, an improvement year-on-year of 250 basis
points.
The majority of our new business continues to be contracted
directly and this remains our preferred sales model as it enables
us to develop deep relationships and pursue our cross-sell and
upsell strategy. The % of revenue from partnership deals remains
at 8% (FY23: 8%). We are intent on entering into strategic
partnerships where we can win business that is largely outside
our normal target market. The recently announced relationship
with RingCentral is a good illustration of that approach.
Coral
In the period, Coral had revenue of $2.4 million (FY23: $2.0 million
Coral & third-party Support). Coral, a browser-based agent
desktop, aids the following:
•
increases efficiency by bringing all the contact centre agent’s
communication tools into a single screen;
•
enables organisations, particularly those grown
by
acquisition, to standardise their contact centre facilities; and
•
can be implemented in environments that operate on
entirely different underlying technology.
Coral contracts are small in number but high in value when they
occur. They have a very long sales cycle (usually years) as the
decision has long term ramifications for the client. This makes the
timing of any new agreements both lumpy and hard to predict. It
is the only product we sell that is not our own proprietary
technology; the relationship coming from a historic acquisition.
This leads to a lower gross profit than the rest of our offering.
UK and Rest of World (UK & ROW) Territory (52% of group
revenues)
Total revenue for the year was £19.2 million, a decrease of 9.9%
(FY23: £21.3 million). The year-on-year decrease was impacted by
£1.4 million from the loss of two clients in H1 FY23 as previously
reported. In addition, there have been a number of smaller self-
service clients that have terminated during the year, reducing
revenue by a further £1.1 million.
All of the UK clients are either deployed on our own private cloud,
or on the combined Secure Voice Cloud, our integrated product.
As a result, the UK & ROW business has high recurring revenue at
86% (FY23: 83%) and a strong gross profit margin at 86% (FY23:
82%), an improvement of 360 basis points year-on-year.
We continue to see those clients who take security solutions as
part of their overall solution set to be much less likely to churn,
and the proportion of revenue now generated from clients who
take no security solution from us is only 10%. ARR1 at the end of
the year was £16.6 million, an increase of 1.4% (FY23: £16.3
million).
As we did in North America we saw extremely high levels of
contract renewals with multi-year agreements. What was also
notable was the number of early renewals, which has reduced the
number and value of contracts that are scheduled for renewal in
this new financial year.
13 | P a g e
Total and New contracted business
•
Total contracted business was £24.4 million, 42% higher
than the previous year (FY23: £17.2 million)
•
New contracted business was £4.8 million (FY23: £4.2
million)
•
The largest new contract win was for a three-year
contract
with
a
large
UK-based
media
and
telecommunications provider for voice and chat
security worth £2.3m (of which £0.8m is a renewal of
an existing service that has migrated to the cloud).
Contract Renewals
•
Within total contracted business are renewals of £19.6
million (FY:23 £13.0 million), an increase year-on-year
of 51%
•
In H1 we had a very strong level of renewals that all
contained our Data Security Solutions and were all
multi-year. This was driven by our four largest renewals
for Capita O2, Tenpin, Premier Inn and Vanquis
(through Maintel). In the second half, there were
further large multi-year renewals for Allpay, PowerNI as
well as VMO2, which has now contracted directly with
Eckoh.
Our strategic decision to prioritise the North American region
does inevitably mean we are likely to sacrifice possible modest
growth in UK&I for much more lucrative gains in North America.
Nevertheless,
we
will
continue
to
pursue
meaningful
opportunities in the region as illustrated by the substantial new
three-year contract with a UK-based media and telecoms
company to deploy our security solution into their new Amazon
Connect solution.
Outlook
The strategic decision to create a single commercial team focused
on North America has delivered early success, with the record
level of new business and the number of multi-year contract
renewals, which gives Eckoh excellent revenue visibility and
improves our ability to further increase our strong cross-sell and
upsell pipeline. We expect further progress with this strategy in
FY25, as we continue to unlock the value in our largest accounts
and leverage our cloud platforms and enhanced product set.
The Board is confident of progress in the year ahead, which has
started well with over £8m of total contracted business already
signed. Furthermore, momentum is building in our key market
with a record North American sales pipeline and the large
contracts signed in the second half of FY24 expected to
commence billing in the first half of FY25.
Our expected growth in FY25 is further underpinned by the fact
that Eckoh is optimally positioned as market leader for an
increased outsourcing trend driven by ongoing regulatory change
(PCI DSS v4.0), the shift to hybrid working in contact centres and
growing security challenges for companies. We expect new
business from our existing clients to grow significantly with the
new commercial strategy and enhanced product set, while the
increasing interest in AI bots for contact centres provides a future
opportunity for growth. Our transition to a SaaS business model
and cloud deployment continues to benefit the business with
further operating efficiencies and profit margin improvements
expected.
We are confident that Eckoh will continue to strengthen our
market-leading position by assisting enterprises with the growing
challenges that they are facing globally, to maintain regulatory
compliance and keep their customers' data and engagements
secure.
Nik Philpot
Chief Executive Officer
10 June 2024
14 | P a g e
Key Performance indicators/ operational measures
At a Group level, we have a number of key financial and operational measures. Throughout the Annual Report there is reference to the
metrics set out below, some of which serve as alternative performance measures. Where adjusted measures are used in the report they are
clearly presented and specifically used to provide a balanced view of the Group and its performance. The Directors believe that these
measures, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders with additional relevant
information and enable an alternative comparison over time.
Total contracted business (£m)
Definition and purpose
Total contracted business includes new business from new clients,
new business from existing clients as well as renewals with existing
clients. Total contracted business is an indicator of revenue visibility
and future revenue growth.
Result
Increased by 52% to £52.6 million (2023: £34.5 million), our
strongest year to date. Within total contracted business, new
business increased to £18.7 million (2023: £14.4 million), an
increase of 29% year-on-year.
Total Revenue (£m) and Recurring Revenue (£m & %)
Definition and purpose
Total revenue is a statutory measure and includes both recurring
revenue and one-off revenue, such as implementation fees and
hardware fees. Recurring revenue is an alternative performance
measure, as the business transitions to a cloud business, the
recurring revenue continues to grow and improve as a % of total
revenue, given the business greater revenue visibility.
Result
Total revenue has decreased year-on-year, due to the successful
renewals in the North America territory. At renewal the hardware
revenue is fully recognised. The recurring revenue as a % of total
revenue has increased by 4% or 430 basis points (2023: 4%).
North America (NA) Security Solutions revenue ($m) and Annualised Recurring Revenue (ARR)
Definition and purpose
NA Security Solutions Revenue is the total revenue for NA
recognised in the income statement during the year. NA Security
Solutions ARR is measured on the last day of the financial period
and is the contracted annual revenue. ARR measures the full impact
of clients live and billing and indicates the forward revenue visibility
of the business.
Result
NA Security Solutions revenue has grown by 6% with recurring
revenue growing by 11%.
NA Security Solutions ARR increased year-on-year by 6%, however,
when taking into account the contracts signed in H2 that are
expected to commence billing in the first half of FY25, that growth
rises a further 14%.
15 | P a g e
Adjusted earnings per share (eps) (pence)
Definition and purpose
This key measure indicates the profit attributable to individual
shareholders. It measures not only trading performance but also
the impact of treasury management and bank and interest charges.
Adjusted earnings per share uses the adjusted profit before tax and
applies a normalised tax rate.
Adjusted profit before tax is the profit adjusted for depreciation of
owned and leased assets, amortisation, expenses relating to share
option schemes, exceptional items and costs relating to business
combinations.
Result
Increased by 11% to 2.20p per share (2023: 1.98p) reflecting the
improvement in overall performance of the business.
16 | P a g e
Stakeholder value creation & Section 172(1)
Statement
Section 172 of the Companies Act 2006 requires a Director of a
Company to act in a way that promotes the success of the
Company for the benefit of Shareholders whilst simultaneously
showing regard for the interest of its stakeholders.
The Board follows a robust decision-making process, which is
designed to ensure that any decisions made reflect our mission as
a business. The key reference points for decision-making by the
Board are: the impact on the overall Group’s strategic objectives;
consideration of its principal risks and uncertainties; and positive
alignment with the Eckoh values, one of which is Humanity, which
includes the impact on employees and the Communities we
operate in. At the heart of all these factors is consideration of the
Group’s stakeholders, because it is these groups who have the
greatest potential to create positive outcomes for the Group as it
strives to create long-term value.
It is the Group’s policy to manage and operate worldwide
business activities in conformity with applicable laws and
regulations as well as with the highest ethical standards. Both the
Group’s Board of Directors and Executive Management are
determined to comply fully with the applicable law and
regulations, and to maintain the Company’s reputation for
integrity and fairness in business dealings with third parties.
Our people
The delivery of the Group’s strategic objectives is dependent on
our ability to attract, develop and retain a highly skilled and
motivated workforce. We strive to create an inclusive culture in
which diversity of thought, skills and perspectives helps us thrive.
We are committed to strong recognition and reward strategies
that fairly reflect the contributions our people make to help us
progress.
Engagement
Our employee engagement strategy focuses on providing our
people with platforms to actively participate in the Group’s
decision-making processes, and we are also committed to
transparency around the issues that matter most to them.
Shareholders
Support from our shareholders underpins the success of our
strategy. We aim to provide fair, balanced and understandable
information to shareholders to clearly demonstrate strategic
success.
Engagement
Our interim and year end reporting periods conclude with analyst
briefing sessions and investor roadshows and our Annual General
Meeting.
The Executive Directors maintain close contact with shareholders
and maintain strong relationships to facilitate one-to-one
engagements and conference calls. One decision in the year
which impacted Shareholders is dividends, see page 22.
Clients
We recognise the importance of our clients to the success and
sustainability of our business. Relationships with clients are
fostered and we listen to feedback through regular client
meetings and annual client surveys.
Engagement
Our clients’ journeys start with interaction from our Project
Management team through delivery and deployment. There is a
tight handover to our Client Services team, who support our
client’s once solutions and services have been delivered. As part
of this process, they engage our Product team with our clients to
ensure the products we are developing are aligned to their needs
and their customer needs.
Suppliers
Strong relationships with our suppliers are crucial to ensure that
the services we receive support the delivery of our services and
solutions effectively. We are also committed to ensuring mutually
high standards of responsible business from our suppliers.
Engagement
We maintain strong and accessible communication channels with
suppliers, to promote good relationships and to set clear
expectations of the products and services we require. Our
supplier code of conduct clearly communicates to all our suppliers
the high standards of responsible business practise we expect
from them.
The environment and communities we operate within
We have a responsibility to have a positive impact on the
environment and the communities we operate within. This
responsibility plays an important part in protecting the wellbeing
of our employees, and in contributing to the future health of our
planet for the benefit of all our stakeholders.
Engagement
We are committed to carbon emission reductions and the team
have made excellent progress during the last year. Year-on-year
we have reduced our carbon footprint and we expect this to
continue over the current year as we deliver the actions under
our strategic plan to become net zero by 2045.
We encourage our employees to engage positively with the
communities we work within and we organise, for our employees
based from our office in Hemel Hempstead, a day annually to
volunteer for a local charity.
In addition to the financial KPIs disclosed on page 21 in the
financial review, the Group has introduced a section in this annual
report detailing, over time the performance of the group using
the key performance indicators and operational measures the
Board uses to measure the Group’s performance. The Group also
uses non-financial KPIs to assess its progress in relation to its
sustainability strategy, as outlined on pages 17 to 20.
17 | P a g e
Sustainability Report
Our Environmental Social and Governance strategy (ESG) has
evolved over the last year as we continue to learn and update our
strategy as we work towards our net zero target in 2045. I am
pleased to report we are currently making the progress we set for
ourselves.
Our ESG strategy 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 towards our broader strategic
objectives, we remain committed to making sustainable business
decisions. We continue to listen to our stakeholders (see page 16)
and we will continue to refine our sustainability strategy to
ensure that it drives long term value for all of our stakeholders.
The following section lays out the targets and progress made
against each of the four areas.
Nik Philpot
Chief Executive Officer
10 June 2024
Our Products
Core objective:
•
Use cloud technology to develop and enhance our
proprietary solutions.
•
Our products lessen the burden of compliance for our
clients, reduce fraud and the impact of a data breach,
which in turn makes the world a safer place.
Delivering stakeholder value
•
Grow our market leadership position in Customer
Engagement Data Security solutions to increase
shareholder value.
•
The growing number of our patents demonstrate that we
protect our IP and the integrity of our solutions.
•
Our Secure Customer Engagement Suite of solutions
provide a robust payments solution for our clients,
enhancing their governance and enabling our clients’
contact centre agents to take payments securely as well
as preventing the exposure of sensitive customer data to
contact centre agents.
Meeting our 2024 targets
•
We expanded our Secure Voice Cloud platform globally,
launching our first dedicated Asia-Pacific Secure Voice
Cloud platform launched in Sydney.
•
New Secure Call Recording solution developed using
cloud native methodology and technology.
•
launched significant update to our Secure Digital
Payments product, offering enhanced digital payment
choice and convenience within contact centres.
Environmental Responsibility
Core objective:
•
Reduce environmental impact by minimising our carbon
footprint and committing to our cloud-first approach.
Delivering stakeholder value
•
Committing to environmental responsibility protects the
future of our people and demonstrates to customers that
we strive to deliver products with minimal environmental
impact.
Meeting our 2024 targets
•
Completed the digitalisation project in our US
datacentres, which will reduce our carbon footprint due
to the enhanced technology.
•
Exited the acquired Syntec datacentre, moving to the
cloud.
•
Pre-planning application submitted for the Hemel office,
the first stage of the exit from the office space.
•
Initiated marketing activity to exit the Syntec Office
space.
Security First Governance
Core objective:
•
We maintain a Security First approach in the design, build
and operation of our service.
Delivering stakeholder value
•
People, Process and Technology aligned to drive a
Security First decision tree to identify and mitigate risks.
Our Culture
Core objective:
•
Create an inclusive workplace that supports, empowers,
develops and fairly rewards all our people.
Delivering stakeholder value
•
Fostering a positive culture will attract and retain the best
talent, accelerating delivery of our strategy.
18 | P a g e
•
Project delivery cycles, product development, legal
contracts aligned to support the security and availability
of our solutions and operations.
•
Trusted advisor to our customers.
Meeting our 2024 targets
•
PCI-DSS Level 1 Service Provider for 14 successive years.
•
Dedicated Security Operations Centre (SOC) monitoring
our security posture both internally and externally.
•
Maintained and renewed all the Groups ISO certifications
and Cyber Essentials. Secured the Cyber Essentials Plus
certification.
•
Completed gap analysis of requirements from PCI DSS
version 3.2.1 and Version 4.0.
•
Actioned all identified gaps to be PCI DSS version 4 ready
by the required date of 31st March 2024
•
Trialled an online learning platform specifically focussed
on security awareness.
•
Investing in our people benefits the communities we
operate in by delivering an exceptional employee
experience.
Meeting our 2024 targets
•
Investing in our teams to attract and retain the best
talent, during the year - we bought all team members in
the technology team together for the Tech Summit. This
was a series of meetings and training around product,
security, innovation and technology and facilitating the
sharing of information and best practise.
•
Building on the learning and development initiative from
last year, we have trialled and launched online training
hubs and specific training platforms for developers.
•
Encourage our team to fundraise through the year for
local charities in the UK and US.
Our Products
At the heart of our sustainability strategy is 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. This starts with the products we provide to our
customers. Our data security solutions help protect sensitive customer data and can be utilised via any customer engagement channel (voice,
live chat, advanced speech, digital) and on any device the customer chooses. The best way to secure data is not to collect it and this is our
specialism.
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. During the year we expanded our Secure Voice Cloud
platform globally to support our international clients, launching our first dedicated Asia-Pacific Secure Voice Cloud platform in Sydney.
The new Secure Call Recording solution was developed using the cloud native methodology and technology that we implemented some years
ago. The approach enables us to automatically scale up or down the size of our cloud platforms responding instantly to changes in demand
from our clients, leading to optimum operational performance, cost to serve and carbon footprint.
Security First Governance
As the compliance landscape continually evolves, whether this is the introduction of version 4 of the PCI-DSS or the USA’s strengthening data
privacy rules, we act as trusted advisors to our clients. In order to be experts in our field, we need to ensure we adopt robust and responsible
business 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 responsible business practices are at the heart of how we operate and this can be demonstrated through
the certifications we hold as an organisation. Alongside being a PCI-DSS Level 1 Service Provider, we also hold certifications for Cyber
Essentials and Cyber Essentials Plus; ISO27001 - which covers how we manage the security of assets such as financial information, IP,
employee details or information entrusted to us by third parties; and ISO9001, which demonstrates our Quality Management System process
and our ability to consistently meet customer and regulatory requirements.
In addition to the certifications demonstrating our Security and Control credentials, we are also a participating organisation in the global PCI
Security Standards.
Internally we manage and monitor our security risk through our Security Operations Centre. A dedicated team use a number of KPI
measurements, such as third-party scorecards, internal scanning and vulnerability monitoring as well as active threat hunting to seek out
and increase our security posture across the board. The results of the Security Operations Centre are shared across the business as a way to
continually educate our employees with best practice, raise awareness and ensure the Security First approach is delivered consistently across
the business.
We remain committed to the highest standards of compliance in this area and in the year we achieved our goals to deliver:
•
>99% acceptance of acceptable use and data protection policies;
•
>99% completion of annual online security training;
•
0 phishing incidents resulting in the loss of data; and
•
externally monitor our Security Scorecard to maintain A Rating.
19 | P a g e
Our Culture
Alongside our Security First Governance approach, our culture and our values are key. In particular our value of Humanity reflects our
welcoming spirit, embracing diversity and respect for each other. We draw on our Humanity value in the way we treat each other, our clients,
partners and suppliers and also how we interact with our local community. We recognise the significant benefits of a diverse workforce and
we do not tolerate discrimination, harassment, or victimisation in the workplace. Instead, we encourage an inclusive workplace with strong
employee engagement and participation by all. Below are the KPI’s we measure with respect to our workforce:
Last year we reported on the feedback and actions taken from the staff survey we completed in in March 2022. We have continued to build
on the three focus areas identified and in particular on focus area of learning and development. Our employees in the technology teams are
key for us as a business to embed learning and development. We therefore invested in a Tech Summit; a three-day event, bringing the whole
team together for a series of meetings and training around product, security, innovation and technology as well as facilitating the sharing of
information and best practise. During the year we also trialled and launched online training hubs and introduced specific training platforms
for developers.
Our staff survey is run every two years and will be shortly launched to the team.
As we advocate high standards internally we echo this sentiment in respect of our external stakeholders, by taking a zero-tolerance approach
to any forms of unethical behaviour within our wider operations and supply chains.
Environmental Responsibility
Our commitment to environmentally responsible operations is an essential part of our contribution to creating a healthy planet for our
people, our clients and our employees. Our biggest direct impacts on the planet come from our data centres, our offices and our employees'
travel, which includes an estimate of their commuting.
We have set net-zero carbon targets with a baseline year of 2022 and have developed a carbon reduction plan to progress to carbon neutrality
in advance of 2050. We have set ambitious reduction targets in respect of Scope 1 and 2 emissions in advance of 2050. The following are our
targets, which remain unchanged from last year:
•
Scope 1 emissions will be eliminated by 2030
•
Scope 2 emissions which are driven by our data centres and our offices, will be reduced and be net zero by 2045
•
Scope 3 emissions will be net zero by 2045.
Energy use has been assessed using the 2023 emission conversion factors published by the Department for Environment, Food and Rural
Affairs (‘Defra’) and the Department for Business Energy and Industrial Strategy (‘BEIS’). The assessment follows the market-based approach
for assessing Scope 2 emissions from electricity usage. The operational control approach has been used. All group entities have been included
in the reporting. Advice over the data used to calculate emissions has been obtained from a third-party consultant. The use of employee and
revenue ratios is important in order to reflect Eckoh’s relative performance in relation to two of the measures that fluctuate in line with
strategic business change. Our acquired Syntec entity has historically been assessed under ISO 14001 and this will be extended to the Eckoh
Group in the next assessment.
20 | P a g e
Global carbon footprint assessment
31 March 2022
Baseline
Tonnes of CO2e
31 March 2023
Tonnes of CO2e
31 March 2024
Tonnes of CO2e
Change
since
baseline %
Change in
the year %
Emissions from:
Scope 1 – direct emissions
Scope 2 – indirect emissions
18.13
335.09
21.82
431.78
16.32
362.27
(10.0)
+8.1
(25.2)
(16.1)
CO2 turnover ratio Scope 1 and 2 (tonnes of CO2 per
£m revenue)
0.013
0.014
0.012
(3.8)
(13.7)
CO2 EBITDA ratio Scope 1 and 2 (tonnes of CO2 per
£m EBITDA)
0.061
0.060
0.046
(24.6)
(23.9)
Scope 3 – other indirect emissions
59.12
107.79
85.93
+45.3
(20.3)
Total (all Scope 1,2 & 3)
412.34
561.39
464.51
+12.7
(17.3)
Total UK energy consumption (kWh)
978,759
1,259,930
1,019,412
+4.2
(19.1)
Total global energy consumption (kWh)
1,158,197
1,397,021
1,085,920
(6.2)
(22.3)
The baseline year includes the acquired Syntec Holdings Limited for a three-month period from December 2021. The inclusion of the Syntec
business for a full twelve months coupled with the return to travel post the COVID pandemic increased energy consumption and carbon
footprint in the financial year ended 31 March 2023.
During the financial year to 31st March 2024, the Scope 2 – indirect emissions have decreased, as expected, as we have closed one of the
Syntec data centres. In addition, the number of employees using their own vehicles for client visits and commuting to the office has decreased
and where appropriate employees are using rail transport instead. We anticipate similar reductions in FY25 due to the timing of these
initiatives in FY24.
Reducing our environmental impact
We are starting to see the benefits of our Group strategy, driving investment in our product and a cloud-first approach. During the year we
completed the digitalisation of one of our North American data centres; the closure of a Syntec data centre, with the solutions and clients’
services migrating to the cloud. In addition, we have commenced the digitalisation of our first UK data centres. By migrating our datacentres
to the cloud, we will be both more operationally efficient and reduce our carbon footprint. Our targets for the reduction of our Scope 2
emissions all focus on our data centres and the continued adoption of cloud technology for our solutions.
With respect to our UK offices and locations where we contract directly, we procure our energy from renewable sources. Our lighting is
energy efficient and LED lights are utilised throughout our UK offices, with motion sensor lighting too. We continue to review options for our
two UK offices to eliminate Scope 1 emissions and have set a target for these to be eliminated by 2030.
During the year to 31st March 2024 and post the COVID-19 pandemic, our emissions from travel have increased, compared with our base in
31 March 2022. The increase is driven by employees commuting under a hybrid working arrangement and international travel for our US and
UK employees having face-to-face meetings. We are therefore working on initiatives to adapt our approach to travel in a way that allows us
to reap the benefits of face-to-face interaction whilst minimising the 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 reduce 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
10 June 2024
21 | P a g e
Financial Review
Eckoh has delivered a strong level of adjusted operating profit of
£8.3 million ahead of consensus market expectations. Adjusted
operating profit increased by 8%, (FY23: £7.7 million) and
adjusted operating profit margin was 22.4%, an improvement
from last year of 250 basis points (FY23: 19.9%). The growth of
the business continues to be driven by North America and the
focus on large enterprise clients and our cloud-based offering.
After adjusting for the foreign exchange loss this year of £0.1m
and the foreign currency benefit in FY23 of £0.5 million the year-
on-year growth was 17%.
Revenue for the year was £37.2 million, a decrease of 4% (FY23:
£38.8 million) and at constant exchange3 rates a decrease of 3%.
This is split £31.3 million recurring revenue (FY23: £31.8 million)
and £5.9 million one-off revenue (FY23: £7.8 million). Group
recurring revenue was 84% (FY22: 80%), an increase of 360 basis
points year-on-year and the increase being driven from the North
American territory. Adjusted operating profit1 was £8.3 million,
an increase of 8% year-on-year (FY23: £7.7 million). Profit after
tax for the year was £4.5 million (FY23: £4.6 million). The prior
year profit after tax of £4.6 million included exceptional legal fees
and settlement agreement item of £0.2m. In the current year,
there are restructuring costs of £0.5 million and exceptional legal
fees and settlement agreement of £1.3 million.
Group ARR showed strong progress and demonstrates the high
level of visibility we have in our business model. As of 31 March
2024, Group ARR was £30.8 million, an increase of 1% year-on-
year, at constant exchange rates an increase year-on-year of 3%.
Total contracted business5 for the financial year at the Group level
was £52.6 million (FY23: £34.5 million), a year-on-year increase of
52%. New contracted business increased 29% to £18.7 million
(FY23: £14.4 million).
Basic earnings per share for the year ended 31 March 2024 was
1.56 pence per share (FY23: 1.58 pence per share). Adjusted
earnings per share for the year ended 31 March 2024 was 2.20
pence per share (FY23: 1.98 pence per share recalculated for 25%
tax rate), an increase year-on-year of 11%, demonstrating the
strong operational performance delivered in the year.
Territory performance – NA, UK & ROW
Revenue in North America, which represents 48% of total group
revenues, increased to £18.0 million (FY23: £17.5 million). UK&I
represented 50% of total group revenues at £19.2 million and
ROW represented 2% of group revenues.
Further explanations of movements in revenue between North
America, UK & ROW territories have been addressed in the
Operational Review above.
Gross profit
The Group’s gross profit increased to £31.0 million (FY23: £31.2
million). Gross profit margin was 83% for the year, an increase of
290 basis points on last year (FY23: 80%). The UK & ROW gross
profit margin was 86%, an increase of 360 basis points (FY23:
82%). In North America, the full year margin was 81%, an increase
of 190 basis points (FY23 79%). 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-premise solution deployments, where the
lower margin hardware component becomes fully recognised at
the point of renewal.
In the UK & ROW, the service is hosted on either an Eckoh
platform or on the Group’s cloud platform. In both deployment
solutions, there is typically no hardware provided to clients. The
gross profit margin has improved during the year as a number of
large clients in the UK & ROW have renewed their contracts. At
this point any implementation fees have become fully recognised.
Implementation fees tend to have a lower gross profit margin
than the recurring revenue fees. In North America, we would
expect the gross profit margin to continue to marginally increase
from 81% to c. 82%. This is driven by the continued growth of the
Secure Payments activities for cloud solutions.
Administrative expenses
Total administrative expenses for the year were £27.8 million
(FY23: £26.2 million). Included in administrative expenses is the
£2.5 million of amortisation for the acquired intangible assets
from the acquisition of Syntec Holdings Limited on 21 December
2021 (FY23: £2.5 million), exceptional legal fees of £1.3 million
(FY23: £0.2 million credit) and exceptional restructuring costs of
£0.5 million (FY23: £nil million). Adjusted administrative
expenses4 for the year were £22.7 million (FY23: £23.5 million), a
decrease year-on-year of 3%. Costs continue to be well
controlled, and with the continued deployment of new business
to the cloud, the operational efficiency of the group is leveraged
to deliver operating profit margin improvement.
Profitability measures
Adjusted operating profit was £8.3 million, an increase of 7.6%
year-on-year (FY23: £7.7 million). Included in the profit was a
foreign currency loss of £0.1 million (FY23: gain £0.5 million).
Adjusted EBITDA2 for the year was £10.2 million, an increase of
8% year-on-year (FY23: £9.4 million).
1.
Adjusted operating profit is the profit before adjustments for expenses
relating to share option schemes, amortisation of acquired intangible
assets and exceptional costs.
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 and exceptional items.
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 and exceptional
items.
5.
Total contracted business includes new business from new clients, new
business from existing clients as well as renewals with existing clients.
22 | P a g e
Year
ended
31 March
2024
£000
Year
ended
31 March
2023
£000
Profit from operating activities
3,246
5,020
Amortisation of acquired intangible
assets
2,479
2,473
Expenses relating to share option
schemes
771
40
Exceptional restructuring costs
531
-
Exceptional legal fees and settlement
agreements
1,300
203
Adjusted operating profit1
8,327
7,736
Amortisation of other intangible assets
516
398
Depreciation of owned assets
636
643
Depreciation of leased assets
681
617
Adjusted EBITDA2
10,160
9,394
Exceptional restructuring costs
The exceptional restructuring costs are presented separately as
irregular costs unlikely to reoccur in the near future. The
exceptional restructuring costs incurred in the financial year
ended 31 March 2024 of £531k have been incurred
predominantly in Eckoh UK (£405k), with £127k incurred in Eckoh
US. The restructuring costs relate to employees who previously
delivered the large bespoke self-service projects as the business
continues to focus on its SaaS style cloud deployed products. In
addition, there were a number of the UK Sales team who were
made redundant, with the shift in focus to the US market and
operating as a Global team. There were no exceptional
restructuring costs incurred in the financial year ended 31 March
2023.
Exceptional legal fees and settlement agreements
In the financial year ended 31 March 2024 legal fees and
settlement agreements of £1,300k (FY23: £202k settlement
income of £950k received was 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.
Finance charges
For the financial year ended 31 March 2024, the interest payable
charge was £45k (FY23: £53k). The interest charge is made up of
bank interest of £nil (FY23: £nil) and interest on leased assets of
£45k (FY23: £53k). Finance interest received was £234k (FY23:
£53k).
Taxation
For the financial year ended 31 March 2024, there was a tax credit
of £1,109k (FY23: £383k charge). The tax credit predominantly
relates to the recognition of tax losses from Syntec Limited. When
Syntec was acquired, it was uncertain as to whether these losses
would be able to be utilised in the short to medium term. This has
now been re-evaluated and they have been recognised in FY24.
Earnings per share
Adjusted earnings per share was 2.20 pence per share (FY23: 1.98
pence per share recalculated for 25% tax rate) a year-on-year
increase of 11%. Basic earnings per share was 1.56 pence per
share (FY23: 1.58 pence per share).
Client contracts
Client contracts are typically multi-year in length and have a high
proportion of recurring revenues, usually underpinned by
minimum commitments. With a greater proportion of contracts
being delivered through the cloud, the initial set up fees and
hardware costs associated with larger customer premise
deployments will be reduced, leading over time to an increase in
operating margin.
Statement of financial position
Our balance sheet remains robust with a strong net cash position
of £8.3 million, an increase of £2.6 million year-on-year (FY23:
£5.7 million). The business has a Revolving Credit Facility of £5
million, secured against the Group’s UK head office, which is an
asset we own outright. As at 31 March 2024 our revolving credit
facility remains undrawn.
While Eckoh continues to innovate by developing new products
and features such as those detailed in the Chief Executive
Officer’s review, there has been an increase in the amount
capitalised to intangible assets in the financial year to £0.8 million
(FY23: £0.6 million).
Contract liabilities and contract assets
Contract liabilities and contract assets relating to IFRS 15 Revenue
from Contracts with Customers have continued, as expected, to
decrease in the current year, principally as new contracted
business in NA has been wholly for cloud-based solutions. Where
clients contract for their services to be provided in the cloud or
on our internal cloud platform, there is no hardware component,
and the level of implementation fees is 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 £8.5 million (FY23: £9.9 million). Included in this
balance are £3.9 million of contract liabilities relating to the
Secure Payments product, hosted platform product or Syntec’s
CardEasy Secure Payments product, a decrease of £2.9 million at
the same time in the previous year. Contract assets as at 31
March 2024 were £1.3 million (FY23: £2.4 million).
Cashflow and liquidity
Gross cash at 31 March 2024 was £8.3 million (FY23: £5.7 million).
As at 31 March 2024 there was no drawdown of the £5 million
RCF debt facility (FY23: £nil million debt).
During the year there has been a net cash outflow from working
capital of £1.2 million (FY23: £1.6 million cash outflow) due to the
timing of invoicing and cash receipts and as the deferred revenue
for the NA large on-site deployments has been recognised over
the term of the contract, generally three years.
Dividends
Post year end the Board are proposing a final dividend for the
year ended 31 March 2024 of 0.82 pence per Ordinary Share be
paid to the shareholders whose names appear on the register at
the close of business on 20 September 2024, with payment on 18
October 2024. The ex-dividend date will be 19 September 2024.
This recommendation will be put to shareholders at the Annual
General Meeting. Based on the shares in issue at the year end,
this payment would amount to £2.4 million.
Chrissie Herbert
Chief Financial Officer
10 June 2024
23 | P a g e
Principal Risks and Uncertainties
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 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.
Specific risk
Mitigation
Cyber, technology & processes
Loss or inappropriate usage of data
The Group’s business requires the appropriate and secure usage
of client, consumer and other sensitive information. Fraudulent
activity, cybercrime or security breaches in connection with
maintaining data and the delivery of our products and services
could harm our reputation, business and operating results.
The Group has established physical and logical security controls
across all operating locations with rigorous cyber security controls
and a defence in-depth approach. 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 programme of PCI DSS, ISO27001, Cyber
Essentials and Cyber Essentials Plus and the Group is on track to
integrate the acquired Syntec business into the Group programmes.
Interruptions in business processes or systems
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
the loss of customers or revenue.
Comprehensive business continuity plans and incident management
programmes are maintained to minimise business and operational
disruptions, including system or platform failure. Testing and
confirmation of plans are performed to ensure business continuity
relevance and training is maintained.
The business operates a hybrid working policy, where all staff work
regularly between the office and home as required. This provides
greater resilience to the business and ensures we can maintain high
service levels at all times.
Legal, regulatory & industry standards
Risk of non-compliance with legal and industry standards
The Group’s operations require it to be compliant with certain
standards including the 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.
We continually audit, review and enhance our controls, 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 programme. All employees are required to
maintain ongoing security awareness training.
Loss or infringement of intellectual property rights
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 costs from any
legal action that is required to protect our intellectual property.
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.
24 | P a g e
Specific risk
Mitigation
HR & personnel
Dependence on recruitment & retention of highly
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. In the last 18
months, we have found 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.
The Management team reviews key individuals regularly and career
development plans are put in place for individuals. Compensation
and benefits programmes are reviewed annually as part of the
Annual Budget process and key individuals have been granted share
awards as part of their benefits package to ensure Eckoh remains
competitive in the marketplace. Employee feedback is encouraged,
and a formal employee engagement survey will take place in the
summer 2024, these formal staff engagement surveys are typically
carried out every two years.
Products & clients
Technological & product development
The Group provides technical solutions for clients and their end
customers. As customer preferences and technology solutions
develop, competitors may create products and services that are
superior to ours, which could result in the loss of clients or a
reduction in revenue.
The Group is committed to continued research and investment in
both existing and new products & technology to support its strategic
plan. Product development roadmaps for Customer Engagement
Data Security Solutions are managed centrally in the UK.
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%
(FY23: < 10% of revenue) of total revenue.
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 North America (NA) business.
Economic growth
Executing the NA opportunity
The Group has a low market share in NA, where there is a
significant market opportunity for its Customer Engagement
Data Security Solutions. The inability to execute in NA, win new
clients and implement the wider Customer Engagement Data
Security Solutions for clients, could have a material impact on
the Group’s results.
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 offers all potential solutions that
clients may demand.
Exchange rate
The Group is exposed to the US dollar and the translation of net
assets and income statements of its North American territory
and, following the acquisition of Syntec, is also exposed to client
contracts denominated in US dollars and Euros.
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 American division. During the FY24 financial year
client contracts acquired through the acquisition of Syntec have
been novated to Eckoh Inc, mitigating the foreign exchange currency
exposure in Syntec Limited.
Reputation of the Eckoh Group
Damage to our reputation and our brand name can arise from a
range of events such as poor solution design or product
performance, unsatisfactory client services and other events
either within, or outside, our control.
We address this risk by recognising the importance of our
reputation, attempting to identify any potential issues quickly and
address them appropriately. We recognise the importance of
providing high quality solutions, good client services and managing
our business in a safe and professional manner. Eckoh has
concluded its programme of ISO 9001 certification to further audit
these measures.
25 | P a g e
BOARD OF DIRECTORS
Independent Directors
Christopher Humphrey BA MBA
FCIMA
Non-Executive Chairman
Appointed to the Board – 21 June
2017
Appointed Chairman – 21
September 2017
Committee Membership:
Nominations (Chair), Audit,
Remuneration
Skills & Experience:
Christopher is currently Chairman at Heywood Pension Technologies
Limited and the Senior Independent Non-Executive Director and
Chair of the Remuneration Committee at RM plc. He was previously
a Senior Independent Non-Executive Director at AVEVA Group plc,
Videndum plc (previously The Vitec Group plc), and a Non-Executive
Director at Alterian plc and SDL plc. Christopher was formerly Group
Chief Executive Officer of Anite plc from 2008 until August 2015,
having joined Anite in 2003 as Group Finance Director. He has held
senior positions in finance at Conoco, Eurotherm International plc
and Critchley Group plc.
Guy Millward
Non-Executive Director
Appointed to the Board – 1
October 2016
Committee Membership:
Audit (Chair), Nominations,
Remuneration
Skills & Experience:
Guy is currently Chief Financial Officer at Wilmington plc. He has
extensive experience in senior finance positions at several publicly
and privately held companies in the electronics, software and IT
sectors. His previous roles include that of CFO at Imagination
Technologies Group plc, Advanced Computer Software Group plc,
Quixant plc, Metapack Limited and Bighand Limited, Group Finance
Director at Alterian plc, Morse plc and Kewill plc. Guy is a Fellow of
the Institute of Chartered Accountants in England and Wales
(ICAEW).
Executive Directors
Nik Philpot
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 30 years’ experience in the
voice services industry; he was originally at British Telecom before
establishing a number of start-up businesses in the telecoms and
technology sectors. As CEO of Eckoh, he has created a leading
provider of Customer Engagement Data Security Solutions working
with some of the largest global brands to enhance and protect
interactions with their customers.
Chrissie Herbert
Executive Director - Chief
Financial Officer & Company
Secretary
Appointed to the Board – 2 May
2017
Skills & Experience
Chrissie has held several senior finance positions with both publicly
listed and privately held businesses. Her considerable background in
high growth, consumer-facing organisations includes Collect+ and
Travelodge Hotels Ltd and she has gained payments experience
from PayPoint plc, where she was UK & Ireland Finance Director.
Chrissie qualified as a Chartered Accountant with KPMG and is a
Fellow of the ICAEW.
26 | P a g e
CORPORATE GOVERNANCE
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 require 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, clients, 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.
The Board was made up of three Non-Executive Directors and two
Executive Directors up until February 2024. Following the
resignation of David Coghlan, the Board is actively recruiting for a
replacement Non-Executive Director.
The Board has delegated certain roles and responsibilities to its
Audit, Nomination and Remuneration Committees while
retaining overall responsibility.
During the year we have continued to develop our ESG strategy
Our ESG strategy is underpinned by our mission, 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. During the year we have
updated our Carbon Reduction Plan, which details the progress
we have made towards our targets. A further update can be found
in the sustainability report on pages 17 to 20.
Christopher Humphrey
Chairman
10 June 2024
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
The strategy and business model which explains the strategic
objectives of the Group and how the Company generates and
preserves value over the longer term are set out in the Strategic
Report on pages 3 to 24 of this Annual Report.
The Board is collectively responsible for the long-term success of
the Company and provides effective leadership by setting the
strategic aim of the Company and overseeing the efficient
implementation of these aims to achieve a successful and
sustainable business. In practice, the Executive Directors prepare
and present the strategic plan to the Board, which the Board
challenges in order to determine the strategic priorities. On an
ongoing basis, the Board ensures that the strategic plan is taken
into consideration in its decision-making process.
2.
Seek to understand and meet Shareholders’ needs and
expectations
The Directors consider that the Annual Report and Financial
Statements play an important role in providing Shareholders with
an evaluation of the Company’s position and prospects. The
Board aims to achieve clear reporting of financial performance to
all Shareholders. The Board acknowledges the importance of an
open dialogue with its institutional Shareholders and welcomes
correspondence from private investors.
The Executive Directors have an ongoing programme of meetings
with institutional investors and analysts twice a year for up to two
weeks at a time. Feedback from these meetings is reported to the
Board. The Non-Executive Chairman has held meetings during the
year with the major Shareholders, independently of 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 to
communicate with investors, and the Board encourages
Shareholder participation. All Board members are planning to be
present at the AGM and are available to answer questions from
Shareholders.
The articles of association require that at the AGM one third, or
as near as possible, of the Directors will retire by rotation.
27 | P a g e
However, as is best practise, all Directors will retire and put
themselves forward for re-election at the AGM.
3.
Take
into
account
wider
stakeholder
and
social
responsibilities and their implications for long-term success
Eckoh’s Sustainability Report focuses on our environmental,
social and governance strategy and is found on pages 17 to 20.
In addition to the stakeholders covered in the Sustainability
Report, our customers are also important stakeholders, whose
opinions and voices Eckoh values highly. We have various
channels for customers and prospects to communicate with the
Group, through regular business reviews and product forums,
which are conducted by our Client Services team, to post-project
reviews.
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
systems, and for the monitoring of these systems to ensure that
they are effective and fit for purpose. The Audit Committee
provides support to the Board in this regard and oversees the
monitoring process. Further information on the risk management
and internal control system is set out in the Audit Committee
report on page 30.
The Directors have carried out a robust assessment of the
principal risks facing the Group and how these risks could affect
the business, financial condition or operations of the Group. The
explanation of these principal risks, including how they are being
mitigated, can be found on page 23 to 24.
5.
Maintain the Board as a well-functioning, balanced team
led by the Chair
The Board, led by the Chairman, has a collective responsibility and
legal obligation to promote the interests of the Group. The
Chairman is ultimately responsible for Corporate Governance.
However, the Board is responsible for defining the Corporate
Governance policies.
The Board was made up of three Non-Executive Directors and two
Executive Directors and has delegated certain roles and
responsibilities to its Audit, Nomination and Remuneration
Committees while retaining overall responsibility.
Non-Executive Directors are all independent and are expected to
devote sufficient time to the Company to meet their
responsibilities.
The Board and its Committees met regularly throughout the year
with the meetings scheduled around key dates in the Company’s
corporate calendar. There were twelve scheduled meetings
during the year and two meetings at short notice. Directors in
principle attend all meetings either in person or by video or
telephone conference arrangements. The table below shows
Directors’ attendance at Board and Committee meetings.
Directors’ meeting attendance 2023/24
Board
Audit
Remuneration
Nomination
Scheduled
Short
notice
Scheduled
Short
notice
Scheduled
Short
notice
Scheduled
Short
notice
Executive Directors
Chrissie Herbert
12
2
31
-
41
-
11
-
Nik Philpot
12
1
31
-
41
-
11
-
Non-Executive Directors
Christopher Humphrey
12
2
3
-
4
-
1
-
David Coghlan
82
2
3
-
4
-
1
-
Guy Millward
12
2
3
-
4
-
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 December and January Board meeting.
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:
The agenda for each Board meeting includes the following as
standing items:
-
Risk analysis, including by risk, the risk factor and the
monitoring mechanism
-
Management report which is prepared and presented by
the Chief Executive Officer
-
Finance report, which is prepared and presented by the
Chief Financial Officer and includes the management
accounts and business performance, including forecast as
appropriate.
Other matters which are covered by the Board routinely during
the year include:
-
Review of Annual Report and preliminary announcement
-
Review of Executive Directors’ presentation of the full-
year results to analysts and investors
-
Strategy
session
at
which
the
Board
considers
Management’s presentation of the Strategic Plan and
gives its approval
-
Review and approval of the interim management
statements for release to the market
-
Recommendation of the final dividend
-
Company secretarial and legal
-
Setting of the Board calendar for the year.
28 | P a g e
Divisions of roles and responsibilities
The Chairman is responsible for the leadership of the Board and
ensuring the effectiveness of all aspects of its role. There is a clear
division of responsibility between the Chairman and the Chief
Executive, which is as follows:
Chairman
Christopher Humphrey is the Non-Executive Chairman. He is
responsible for managing the Board and ensuring it works
effectively. The roles and responsibilities of the Chairman for the
financial year ended 31 March 2024 are outlined below.
-
Setting the Board’s agenda and ensuring the Board
receives accurate, timely and clear information on all
matters reserved to its decision and the Group’s
performance and operations
-
Ensuring compliance with the Board’s approved
procedures
-
Chairing the Nomination Committee and facilitating the
appointment of effective and suitable members and
Chairman of Board Committees
-
Ensuring that there is effective communication by the
Group with its Shareholders, including by the Chief
Executive and Chief Financial Officer, ensuring that
members of the Board develop an understanding of the
views of the major investors in the Group
-
Promoting the highest standards of integrity, probity and
corporate governance throughout the Group and
particularly at Board level.
Chief Executive
Nik Philpot is the Chief Executive. He is responsible for running
the Group’s business, by proposing and developing the Group’s
strategy and overall commercial objectives, which he does in
close consultation with the Chairman and the Board. The roles
and responsibilities of the Chief Executive are outlined below.
-
Providing input to the Board’s agenda and ensuring that
reports provided to the Board are accurate, timely and
include accurate information
-
Ensuring, in consultation with the Chairman and the
Company Secretary as appropriate, compliance with the
Board’s approved procedures
-
Ensuring that the Chairman is alerted to forthcoming
complex, contentious or sensitive issues affecting the
Group of which he might not otherwise be aware
-
Providing information and advice on succession planning
to the Chairman, the Nomination Committee, and other
members of the Board, particularly in respect of Executive
Directors
-
Leading
the
communication
programme
with
Shareholders
-
Promoting and conducting the affairs of the Group with
the highest standards of integrity and corporate
governance.
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 the
Board and between them, they provide a blend of business
understanding, technical know-how, experience of public
markets and financial expertise. The Board consider that this is
appropriate to enable it to successfully execute its long-term
strategy.
All members of the Board attend seminars and regulatory events
to ensure that their knowledge is up-to-date and relevant. Where
the Board considers it does not possess the necessary expertise
or experience it will engage the services of professional advisors.
The Board considers that the two Non-Executive Directors,
including the Chairman, are independent.
The biographies of each of the Directors can be found on page 25.
7.
Evaluate Board performance based on clear and relevant
objectives, seeking continuous improvement
During the financial year ended 31 March 2024, the Chairman led
a formal review of the Board, its Committees and each Director.
The performance evaluation of the Chairman was undertaken by
the Chair of the Audit Committee, Guy Millward. The review
focussed on the following areas:
-
the Board’s role and scope of its authority, how it is led
by the Chairman, the frequency and time allotted to the
Board meetings and their agendas
-
the Committees’ terms of reference, leadership, the
frequency and time allotted to the Committee meetings
and their agendas
-
the
Directors’
feedback
was
free-ranging
and
unstructured with guidance on areas to consider.
A Board evaluation process will be carried out annually.
8.
Promote a corporate culture that is based on ethical values
and behaviours
Our Stakeholders report on page 16 sets out how we do business
with our clients and our suppliers. This Stakeholders report and
our Sustainability report on page 17 sets out our ESG strategy
which includes our culture. 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.
9.
Maintain governance structures and processes that are fit
for purpose and support good decision-making by the
Board
The Board provides strategic leadership for the Company and
ensures that the business operates within the Corporate
Governance framework that has been adopted. Its prime purpose
is to ensure the delivery of Shareholder value in the long term by
29 | P a g e
setting the business model and defining the strategic goals to
achieve this.
The Board is supported by a Remuneration Committee, Audit
Committee and Nomination Committee. Each Committee has
formally delegated duties and responsibilities and the terms of
reference for the Committees are reviewed annually. The
Committee Chair is responsible for reporting, throughout the
year, to the Board any recommendations or issues which require
further consideration by the Board. The Board reviews annually
the list of matters that are reserved for the Board.
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 30 and page 32 respectively.
The role and responsibilities of the Chairman, Chief Executive and
other Directors have been set out under principle 5 on page 28 of
the Annual Report.
10. Communicate how the Group is governed and is
performing by maintaining a dialogue with Shareholders
and other relevant stakeholders
The Company is committed to open communication with all its
Shareholders.
Communication
with
Shareholders
is
predominantly through the Annual Report and AGM. The last
AGM results can be found on the Group’s website. Other
communications are in the form of full-year and half-year
announcements,
periodic
market
announcements
(as
appropriate) one-to-one meetings and investor roadshows. The
Remuneration Committee report is included on pages 32 to 37.
The Group’s website www.eckoh.com is regularly updated.
Annual Reports and Notices of Meetings can be found on the
Group website.
Committees of the Board
Nomination Committee
The Nomination Committee currently comprises 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 27.
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 objective criteria. The
Nomination Committee is actively involved in the recruitment of
a third Non-Exec Director.
30 | P a g e
AUDIT COMMITTEE REPORT
Dear Shareholder,
On behalf of the Audit Committee, I am pleased to present our
report for the year ended 31 March 2024. The Committee has
considered the integrity of the Group’s financial reporting and
provided advice to the Board that the 2024 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 and Christopher
Humphrey. During the year and up to 12 February 2024 David
Coghlan was also a member of the Audit Committee. 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 page 25.
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
material accounting policy information 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
-
monitoring and reviewing the scope and areas internal audit
should cover alongside the other programmes and process
reviews 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 27.
Guy Millward
Chairman Audit Committee
10 June 2024
In the year under review, the Audit Committee’s activities were
as follows:
Topic:
Actions:
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 2024 (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.
Audit plans
and audit
findings
Reviewed and agreed the external auditors’ plan in
advance of their audit for the year ended 31 March
2024.
Discussed the report received from the external
auditors regarding their audit in respect of the year
ended 31 March 2024 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 23 to 24.
Reviewed and monitored the effectiveness and
robustness of the Company's internal financial
controls and processes and determined whether an
internal audit function is required.
Committee
governance
Reviewed and updated the Audit Committee terms
of reference
The significant issues considered by the Committee in relation to
the 2024 financial statements, and how these were addressed,
were:
-
Risk of fraud in revenue recognition (including contract
accounting)
Revenue recognition is complex and can be judgemental.
Controls are in place to ensure revenue is only recognised for
product solutions such as the hosted Customer Engagement
Data Security Solutions, 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 license
fee revenue, which includes support and maintenance, all of
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.
-
Management override of controls
We are satisfied adequate controls are in place and use the
monthly management reporting and the results of the
external audit to assess this on an on-going basis.
31 | P a g e
External audit
An annual review of the effectiveness of the external audit is
undertaken by the Committee.
The effectiveness of the audit process is underpinned by the
appropriate audit planning and risk identification at the outset of
the audit cycle. The auditors provide a detailed audit plan, which
includes the level of materiality and its assessment of the risks
and other key matters for review. For the year ended 31 March
2024, the primary risks identified were: risk of fraud in revenue
recognition (including contract accounting) and management
override of controls. The Committee reviews and challenges the
work undertaken by the auditors to test Management’s
assumptions on these matters. An assessment of the
effectiveness of the audit process in addressing these items is
performed through the reporting received from the auditors at
the year end. The Committee seeks feedback from management
on the effectiveness of the audit process. No significant issues
were raised with respect to the audit process for the financial
year ended 31 March 2024 and the quality of the audit process
was assessed to be good.
Based on the Committee’s assessment, the Committee has
provided the Board with its recommendation to the Shareholders
on the re-appointment of PricewaterhouseCoopers LLP as
external auditors for the year ending 31 March 2025. There are
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
included in the Notice of Meeting which accompanies this report.
Non-audit services
The Committee reviews the level of non-audit fees for services
provided by the auditors in order to satisfy itself that the auditors’
independence is safeguarded. There were no non-audit fees paid
to PricewaterhouseCoopers LLP in the year ended 31 March 2024.
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.
Details of the remuneration paid to the auditors for the statutory
audit are set out in note 7.
Risk management and internal control
The review of risks facing the Group is shown on page 23 to 24.
The Group has clearly defined lines of accountability and
delegation of authority which are closely adhered to and include
policies and procedures that cover financial planning and
reporting, accounts preparation, information security, project
governance and operational management. The reporting and
review processes provide regular assurance to the Board as to the
adequacy and effectiveness of internal controls.
There are ongoing processes for identifying, evaluating and
managing the Company’s significant risks, based on a combined
ISO27001/9001 Information Security Management Systems
(ISMS) Manual ensuring required internal controls are integrated
into the Company’s operations. Such processes are reported to,
and reviewed by, the Board at each meeting. These processes
have identified the risks most important to the Company
(business, operational, financial, security and compliance),
determined the financial implications, and assessed the adequacy
and effectiveness of their control. The reporting and review
process provides routine assurance to the Board as to the
adequacy and effectiveness of the internal controls.
Internal audit
The Audit Committee annually reviews the requirement for an
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
10 June 2024
32 | P a g e
REMUNERATION COMMITTEE REPORT
Dear Shareholder,
Following David Coghlan’s resignation in February 2024, and
whilst we appoint a new Non-Executive Director I have taken on
the Remuneration Committee Chair role for the Board.
I am pleased to present our Remuneration Report for the financial
year ended 31 March 2024, 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 2024; 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 2024.
The membership and responsibilities of the Remuneration
Committee are set out on page 32 of this report. Amongst its
objectives, the Committee strives to ensure the Executive
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.
In respect of the year under review, the Remuneration
Committee’s activities were as follows:
-
The
Remuneration
Committee
has
reviewed
the
Remuneration Policy for Senior Management and key
employees to ensure it remains in line with market
conditions and supports the business’ retention policy. As a
result, a further tranche of Share Options was awarded to
key employees in June 2023.
-
Shares options equal to 109% of salary were granted to the
CEO and CFO in June 2023, (the FY24 Awards). This was in
line with the consultation with Shareholders in FY22 and the
granting of share options in January 2022 and July 2022 to
the CEO and CFO equal to 200% of their respective salaries
(in line with the exceptional grant limit) (the FY22 Awards
and FY23 Awards respectively).
Further details of the award targets are on page 33.
-
The Committee approved an increase in the Chief Executive
Officer’s and Chief Financial Officer’s salaries with effect
from 1 April 2024 of 5%, 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 5% from 1 April
2024
-
Bonus payments were accrued for the Executive Directors
and Senior Management for the financial year ended 31
March 2024. Those relating to the Executive Directors are set
out on page 34. Bonus payments for staff members were
accrued at an average of 5% of salary (FY23: 5%).
The Remuneration Report in respect of the financial year ended
31 March 2024, 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 12 September 2024. 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.
Christopher Humphrey
Chairman Remuneration Committee
10 June 2024
REMUNERATION 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
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
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
Not applicable
33 | P a g e
Purpose and link to strategy
Operation
Performance measures
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.
Benefits
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
Annual
Bonus
To provide a material
incentive to drive Executive
Directors to deliver
stretching strategic and
financial performance and to
grow long-term sustainable
Shareholder value.
Paid annually and based on performance in
the relevant financial year
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.
Measurement criteria and targets for the
annual bonus are set annually by the
Committee
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.
Performance
Share Plan
(“PSP”)
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.
FY22 and FY23 Awards were granted to the
Executive Directors, representing in each
case 200% of the CEO’s and CFO’s respective
salaries
FY24 Award were granted to the Executive
Directors, per the Scheme Rules at 109% of
salary award level
The FY22 and FY23 Awards will vest three
years from the respective grant dates,
subject to continued service and certain
performance targets.
FY22, FY23 & FY24 Awards:
50% based on three-year Total Shareholder
Return (TSR) 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.
Pension
contribution
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
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.
Not applicable
34 | P a g e
ANNUAL REPORT ON REMUNERATION
The following section provides details of how Eckoh’s
Remuneration Policy was implemented during the financial year
ended 31 March 2024. All narrative and quantitative tables are
unaudited unless otherwise stated.
Remuneration Committee membership in 2023/24
The Remuneration Committee currently comprises myself 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 details of meeting attendance are set out on page
27.
During the year, the Committee sought internal support from the
Chief Executive Officer and Chief Financial Officer, who attended
Committee meetings by invitation from the Chairman, to advise
on specific questions raised by the Committee. The Chief
Executive Officer and the Chief Financial Officer were not present
for any discussions that related directly to their own
remuneration.
In undertaking its responsibilities, the Committee seeks
independent external advice as necessary. To this end, for the
year under review, the Committee received advice from FIT
Remuneration Consultants LLP.
Summary of Shareholder voting at the 2023 AGM
The following table shows the results of the Shareholder advisory
vote on the Annual Remuneration Report:
Total number
of votes
% of
votes
cast
For (including discretionary)
183,642,624
99.99%
Against
17,638
0.01%
Total votes cast (excluding
withheld votes)
183,660,262
Total votes withheld
11,874
Total votes cast (including
withheld votes)
183,672,136
Directors’ single figure of total remuneration
The following table sets out the single figure of total remuneration for Directors for the financial year ended 31 March 2024 and 2023:
Base salary/fees
Benefits1
Pension
Annual bonus
Total
2024
£’000
2023
£’000
2024
£’000
2023
£’000
2024
£’000
2023
£’000
2024
£’000
2023
£’000
2024
£’000
2023
£’000
Executive Directors
Chrissie Herbert
204
196
15
14
20
20
28
61
267
291
Nik Philpot2
349
339
19
18
-
-
44
96
412
453
Non-Executive Directors
David Coghlan
37
38
-
-
-
-
-
-
37
38
Christopher Humphrey
69
66
-
-
-
-
-
-
69
66
Guy Millward
40
38
-
-
-
-
-
-
40
38
Total
699
677
34
32
20
20
72
157
825
886
1.
Benefits include car allowance, healthcare cover and 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 year ended 31 March 2024
Annual bonus in respect of 2023/24 performance
The annual bonus for the Executive Directors and Senior Management for the year ended 31 March 2024 was based on the achievement of
Adjusted Operating Profit before interest, tax, depreciation and amortisation (AOP) and personal objectives. Bonus payments were accrued
for the Executive Directors at 13% of their base salary (FY23: 30%), compared with a maximum potential of 50%. The profit related element
of the bonus was based on a sliding scale formula for achieving AOP in excess of a threshold established at the beginning of the year. Bonus
payments for staff members were accrued at an average of 5% of salary (FY23: 5%).
Scheme interests awarded in the year ended 31 March 2024
Performance Share Plan (“PSP”)
The table below provides details of the Awards made under the PSP in the year ended 31 March 2022, 31 March 2023 and 31 March 2024 to
Nik Philpot and Chrissie Herbert. Performance for these awards is measured over three years from Grant.
35 | P a g e
Executive
Director
Face value
(% of salary)
Number of
shares
awarded
Face
value3
£
Potential
award for
minimum
performance
Performance measures
Nik Philpot
73%
67%
36%
1,190,4431
1,477,0142
920,2433
601,174
625,220
354,294
25% of face
value
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
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.
Chrissie Herbert
73%
67%
36%
749,9851
930,5272
579,7573
378,742
393,892
223,206
1.
FY22 Awards made under the PSP on 17 January 2022.
2.
FY23 Awards made under the PSP on 20 July 2022.
3.
FY24 Awards made under the PSP on 21 June 2023.
4.
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.
In the ten-year period from the 2017 AGM, the Company may not issue under the PSP and any other employees’ Share plan adopted by the
Company, interests in shares comprising in aggregate more than 10% of the issued Ordinary Share Capital of the Company.
Awards will normally vest on the later of the expiry of the third anniversary of the date of grant of the award and the date that the Committee
determines the extent to which the applicable performance criteria have been satisfied and provided in normal circumstances that the
participant is still a Director or employee of the Company’s Group.
During the financial year ended 31 March 2024, awards were made to Senior Management and key individuals of Eckoh UK, Eckoh US and
Syntec. Details of awards can be found in note 25.
Payments to past Directors
In the financial year ended 31 March 2024 and 2023, there were no payments made to past Directors.
Chairman and Non-Executive Directors fees
The Chairman and Non-Executive Directors were paid the following fees in the financial year ending 31 March 2024:
Role
2024 Annual fee
£k
Chairman
69
Non-Executive Directors
34
Chairman of a Committee
6
Fees for the Chairman, Non-Executive Directors and Committee Chairmen are reviewed annually. Both the fees for the Chairman and Non-
Executive Directors base salaries and the Committee Chairman fee for the Audit Committee and Remuneration Committee were increased
by 5% from 1 April 2023 (FY23: 4% from 1 April 2022).
Directors’ shareholdings
The shareholdings of the Directors and their connected persons in the Ordinary Shares of the Company against their respective shareholding
requirement as at 31 March 2024.
31 March 2024
Ordinary Shares of 0.25 pence
each
31 March 2023
Ordinary Shares of 0.25 pence
each
Nik Philpot1
7,051,285
7,051,285
Chrissie Herbert
35,000
35,000
Christopher Humphrey
525,000
525,000
1.
Nik Philpot's spouse is the beneficial owner of 80,000 shares included above.
36 | P a g e
Directors’ interests in shares in Eckoh’s long-term incentive plans and all-employee plans
Directors' share options
The Directors’ interests in share options are shown in the following table:
Note
At 1 April
2023
(number)
Granted in
year
(number)
Lapsed in
year
(number)
Exercised in
year
(number)
At 31 March
2024
(number)
Exercise
price
(pence)
Earliest
date for
exercise
Latest date
for exercise
Nik Philpot
1
1,190,443
-
-
-
1,190,443
0.00
17.01.25
17.01.32
Nik Philpot
1
1,477,014
-
-
-
1,477,014
0.00
20.07.25
20.07.32
Nik Philpot
1
-
920,243
-
-
920,243
0.00
21.06.25
21.06.32
Chrissie Herbert
2
500,000
-
-
-
500,000
47.50
21.06.20
21.06.27
Chrissie Herbert
1
749,985
-
-
-
749,985
0.00
17.01.25
17.01.32
Chrissie Herbert
1
930,527
-
-
-
930,527
0.00
20.07.25
20.07.32
Chrissie Herbert
1
-
579,757
-
-
579,757
0.00
21.06.25
21.06.32
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).
Long-Term Incentive arrangements for Directors
In addition to the PSP described above, the Company operates an additional long-term share incentive scheme for Directors and Senior
Managers (“the 2016 LTIP”). The 2016 LTIP was implemented following prior discussions with major Shareholders of the Company. Under
this scheme, the Company may issue a maximum of 2% of the share capital each year for the three years ending 31 March 2019 to the Senior
Managers of the business. All options granted under this scheme carry an exercise price 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 March 2017 to a total of 34 Senior Management employees. The Chief Executive Officer was not awarded any share options in the years
ended 31 March 2016 and 31 March 2017.
Share options of 500,000 were awarded under the 2016 LTIP to Chrissie Herbert, Chief Financial Officer, following her appointment on 2 May
2017. These are disclosed in the above and below tables. Total grants under the 2016 LTIP have been as follows:
Date of issue
Number of
Senior
Management
Granted in year
(number)
Exercise price
(pence)
Earliest date
for exercise
Latest date
for exercise
23 March 2016
28
4,100,000
43.5
23.03.19
23.03.26
2 May 2016
1
500,000
43.5
02.05.19
02.05.26
13 October 2016
2
500,000
38.875
13.10.19
13.10.26
31 March 2017
21
4,000,000
39.5
31.03.20
31.03.27
21 June 2017
1
500,000
47.5
21.06.20
21.06.27
The Company does not intend to grant any further awards under the 2016 LTIP.
37 | P a g e
Share Incentive Plan
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 2023 and 2024, Chrissie Herbert participates in the UK scheme and the details are shown below:
Number of
Partnership
Shares
purchased
at 31 March
2023
Number of
Matching
Shares
purchased
at 31 March
2023
Dividend
Shares1
acquired
at 31
March
2023
Total
Shares at
31 March
2023
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
2024
Chrissie Herbert
21,875
43,750
2,427
68,052
4,909
9,818
1,533
Dec 21 –
June 27
84,312
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 £0.35 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 months’ notice by either party, while Chrissie Herbert has a service contract
that is terminable on nine months’ notice by either party.
Chairman and Non-Executive Directors
The Chairman and Non-Executive Directors do not have service contracts but serve under letters of appointment terminable by six months’
notice on either side.
External advisors
The Committee received independent advice from FIT Remuneration Consultants LLP as the Committee’s appointed remuneration advisor
during the financial year ended 31 March 2024. During the year the level of fees paid to remuneration advisors totalled £3k (2023: £4k).
Christopher Humphrey
Chairman Remuneration Committee
10 June 2024
38 | P a g e
DIRECTORS’ REPORT
The Directors present the Directors’ Report, together with the
audited financial statements for the year ended 31 March 2024.
Principal activities, results and likely future developments
The principal activities of the Group is the provision of 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 using 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 3 to 22.
The profits for the year after taxation amounted to £4.5 million
(2023: £4.6 million).
Statutory information
Eckoh plc (The Company) is a Public Limited Company
incorporated in the United Kingdom (Registration number
03435822). The Company’s Ordinary Shares are traded on the
Alternative Investment Market of the London Stock Exchange
(AIM).
The Company has a trading subsidiary, located in the USA, whose
operations and results are included in the financial statements of
the Company. The subsidiary undertakings are listed in note 17.
Directors
The Directors who held office during the year and up to the date
of this report, are set out on page 25 along with their biographies
and photographs.
David Coghlan, Non-Exec Director resigned on 12 February 2024.
There were no other changes to the Directors who held office
during the year and up to the date of this report.
Share capital
The Company has only Ordinary Shares of 0.25 pence nominal
value in issue along with 2,252,770 of shares held in treasury.
Note 23 to the consolidated financial statements summarises the
rights of the Ordinary Shares as well as the number issued during
the year ended 31 March 2024.
Substantial shareholdings
As at 31 March 2024, the Company had been advised under the
Disclosure Guidance and Transparency Rules, or had ascertained
from its own analysis, that the following held more than 3% of the
issued capital:
Name of holder
No. of Ordinary
Shares/ voting
rights
% of issued
capital/
voting rights
Canaccord Genuity Wealth
Mgt.
40,892,911
13.98
Liontrust Asset Mgt.
40,185,588
13.74
Herald Investment Mgt.
16,048,723
5.49
Chelverton Asset Mgt.
15,628,022
5.34
Harwood Capital
15,250,000
5.22
Blackrock Investment Mgt.
11,551,649
3.95
Annual General Meeting (AGM)
The 2024 AGM will be held at 11:00 on 12 September 2024.
The notice of the AGM and an explanation of the resolutions to
be put to the meeting are set out in the Notice of Meeting
accompanying this Annual Report. The Board fully supports all the
resolutions and encourages Shareholders to vote in favour of
each of them, as they intend to in respect of their own
shareholdings.
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.
Financial instruments
The financial risk management objectives and policies of the
Group and the exposure of the Group to foreign currency risk,
interest rate risk, and liquidity risk are outlined in note 3 to the
consolidated financial statements.
Political contributions
Neither the Company nor any of its subsidiaries made any political
donations or incurred any political expenditure during the year
(2023: £nil).
Going concern
In determining the appropriate basis of preparation of the
financial statements, the Directors are required to consider
whether the Group and Company can continue in operational
existence for the foreseeable future.
The Board has carried out a going concern review and concluded
that the Group and Company have 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 approval of the financial
statements. As at 31 March 2024, the £5 million of Revolving
Credit Facility (RCF) from Barclays Bank is undrawn. Bank
covenants have been reviewed and are comfortably achieved for
the year to 31 March 2024 and are forecast to continue to be so
for at least 12 months from the date of approval of the financial
statements. With the cash position at the end of March 2024 at
£8.3 million and the cash flow forecasts prepared, which show
continuing cash generation, the RCF facility will not be required
after December 2024, when the facility expires.
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 Secure
Payments contracts won and delivered through Eckoh’s cloud
platforms, as large enterprises have accelerated their move to the
cloud. The proportion of recurring revenue is higher for contracts
delivered through the cloud, which also improves our operational
gearing, earnings quality and visibility in the business. We
anticipate the renewal rate for the UK&I and NA businesses to
remain unchanged during this period. When preparing the cash
flow forecasts the Directors have reviewed a number of
scenarios, including a severe but plausible downside scenario
which assumes a reduction in new business of 25%. In all
scenarios the Directors were able to conclude that the Group has
39 | P a g e
adequate cash to continue in operational existence for the
foreseeable future.
Subsequent events
There were no events after the balance sheet date.
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 is no relevant audit information of which the Company’s
auditors are unaware; and each Director has taken all the steps
that they ought to have taken as a Director to make themselves
aware of any relevant audit information and to establish that the
Company’s auditors are aware of that information.
Dividends
No interim dividend was paid during the year (2023: £nil).
The Directors recommend the payment of a final dividend of
0.82p (2023: 0.74p) per Ordinary Share amounting to £2.4 million
(2023: £2.2 million) to be paid on 18 October 2024. This
recommendation will be put to the Shareholders at the Annual
General Meeting.
Independent Auditors
The independent auditors, PricewaterhouseCoopers LLP, have
expressed their willingness to continue as the Company’s
auditors. As outlined in the Audit Committee report on page 30,
resolutions proposing their appointment and to authorise their
remuneration will be proposed at the 2024 AGM.
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law
and regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law, the Directors
have prepared the Group Financial Statements in accordance
with UK-adopted international accounting standards and the
company financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards, comprising FRS 101 “Reduced
Disclosure Framework”, and applicable law).
Under company law, Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Company and of the
profit or loss of the Group for that period. In preparing the
financial statements, the Directors are required to:
•
select suitable accounting policies and then apply them
consistently;
•
state whether applicable UK adopted international
accounting standards in conformity with the requirements
of the Companies Act 2006 have been followed for the
Group financial statements and United Kingdom Accounting
Standards, comprising FRS 101, have been followed for the
Company financial statements, subject to any material
departures disclosed and explained in the financial
statements;
•
make judgements and accounting estimates that are
reasonable and prudent; and
•
prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and
Company will continue in business.
The Directors are responsible for safeguarding the assets of the
Group and Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The Directors are also responsible for keeping adequate
accounting records that are sufficient to show and explain the
Group’s and Company's transactions and disclose with
reasonable accuracy at any time the financial position of the
Group and Company and enable them to ensure that the financial
statements comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity
of the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
By order of the Board
Chrissie Herbert
Company Secretary
10 June 2024
Eckoh plc Annual Report 2024
40 | P a g e
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 2024 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 2024 (the “Annual Report”), which
comprise: the Consolidated statement of financial position and the Company statement of financial position as at 31 March 2024; 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,
comprising material accounting policy information and other explanatory information.
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"). This was all performed centrally by us as the
UK audit team.
Key audit matters
•
Revenue recognition (group)
•
Recoverability of investment in, and the loan to, subsidiary (parent)
Materiality
•
Overall group materiality: £375,000 (2023: £388,000) based on 1% of total revenue.
•
Overall company materiality: £667,000 (2023: £639,000) based on 1% of total assets (capped for the purpose of the group audit).
•
Performance materiality: £281,000 (2023: £291,000) (group) and £500,000 (2023: £479,000) (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)
Eckoh plc Annual Report 2024
41 | P a g e
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.
The key audit matters below are consistent with last year.
Key audit matter
How our audit addressed the key audit matter
Revenue recognition (group)
Revenue during the year ended 31 March 2024 was £37,204k
(FY23: £38,821k) as set out in the consolidated statement of
total comprehensive income. The approach to revenue
recognition as set out under IFRS 15 can be complex and
judgemental, particularly for new or renewed customer
contracts. Due to its expected impact on the Group, we
deem revenue recognition as a key audit matter.
Our procedures included the following:
•
For a sample of new or renewed customer contracts,
determined whether the Group had the right to recognise
revenue during the year based on assessing the terms and
nature of these contracts, along with any relevant operational
activity that is supportive of the occurrence of revenue
recognition and therefore whether the correct revenue
recognition was applied in accordance with IFRS 15.
•
For a sample of recurring customer contracts, recalculated
revenue recognised in accordance with the ongoing nature of
these contracts and IFRS 15.
•
For a sample of new, renewed and recurring customer
contracts with deferred revenue, we assessed management’s
judgements used in assessing the amounts deferred at the year
end.
•
We also performed testing on certain unusual revenue journal
entries posted during the year.
Based on the procedures performed we noted no material
uncorrected issues.
Recoverability of investment in, and the loan to, subsidiary
(parent)
The company held an investment in subsidiary undertakings
and other investments of £52,304k (2023: £51,528k) as
disclosed in Note 16 and had amounts receivable from
subsidiary undertakings of £4,220k (2022: £4,297k) 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 therefore 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's financial statements, we consider
this to be a key audit matter for the company.
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 and
ability 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.
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 entities are Eckoh UK Limited and Eckoh US Inc. These entities, along with 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.
Eckoh plc Annual Report 2024
42 | P a g e
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
£375,000 (2023: £388,000).
£667,000 (2023: £639,000).
How we
determined it
1% of total revenue
1% of total assets (capped for the purpose of the group
audit)
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.
We believe that total assets is the primary measure used
by the shareholders in assessing the performance and
position 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 £180,000 to £337,000. 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% (2023: 75%) of overall materiality, amounting to £281,000 (2023:
£291,000) for the group financial statements and £500,000 (2023: £479,000) 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 in the middle 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
£18,750 (group audit) (2023: £19,400) and £33,300 (company audit) (2023: £31,900) 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:
•
Reviewing the Directors’ assessment supporting their going concern assumption, which included cash flow forecasts for the
future. We discussed with management the assumptions applied in the going concern review so we could understand and
challenge the rationale for the assumptions in the forecasts, using our knowledge of the business and gained from our audit.
We tested the forecasts mathematical accuracy and considered the reasonableness of the revenue and cost assumptions made
and therefore 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 analysis including their severe but plausible downside scenario. 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.
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.
Eckoh plc Annual Report 2024
43 | P a g e
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.
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 2024 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) and General Data
Protection Regulation (GDPR), and we considered the extent to which non-compliance might have a material effect on the financial
Eckoh plc Annual Report 2024
44 | P a g e
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 relevant tax legislation. 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:
•
Inspection of policy documentation as to the Group and Company's policies and procedures to prevent and detect fraud;
•
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;
•
Reviewing board meeting minutes during the year;
•
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws
and regulations;
•
Reviewing legal expenses incurred during the year to assess any unknown litigation or non compliance with laws and
regulations;
•
Identifying and testing journal entries, in particular certain journal entries posted with unusual account combinations; and
•
Testing key accounting estimates which could have a risk of management bias.
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.
Imran Younus (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Watford
10 June 2024
Eckoh plc Annual Report 2024
45 | P a g e
Consolidated statement of total comprehensive income
for the year ended 31 March 2024
2024
2023
Notes
£’000
£’000
Continuing operations
Revenue
4
37,204
38,821
Cost of sales
(6,168)
(7,578)
Gross profit
4
31,036
31,243
Administrative expenses
(27,790)
(26,223)
Operating profit
3,246
5,020
Adjusted operating profit
8,327
7,736
Amortisation of acquired intangible assets
13
(2,479)
(2,473)
Expenses relating to share option schemes
25
(771)
(40)
Exceptional restructuring costs
8
(531)
-
Exceptional legal fees and settlement agreements
9
(1,300)
(203)
Profit from operating activities
5
3,246
5,020
Finance charges
10
(45)
(53)
Finance income
10
234
53
Profit before taxation
3,435
5,020
Taxation
11
1,109
(383)
Profit for the financial year
4,544
4,637
Other comprehensive expense
Items that will be reclassified subsequently to profit or loss:
Foreign currency translation differences - foreign operations
(90)
(389)
Other comprehensive expense for the year, net of income tax
(90)
(389)
Total comprehensive income for the year attributable to the
equity holders of the Company
4,454
4,248
2024
2023
Profit per share
pence
pence
Basic earnings per 0.25p share
12
1.56
1.58
Diluted earnings per 0.25p share
12
1.50
1.55
Eckoh plc Annual Report 2024
46 | P a g e
Consolidated statement of financial position
as at 31 March 2024
2024
2023
Notes
£’000
£’000
Assets
Non-current assets
Intangible assets
13
35,334
37,500
Property, plant and equipment
14
4,222
4,181
Right-of-use leased assets
15
788
995
Deferred tax assets
11
570
129
40,914
42,805
Current assets
Inventories
18
216
254
Trade and other receivables
19
12,599
11,778
Cash and cash equivalents
20
8,309
5,740
21,124
17,772
Total assets
62,038
60,577
Liabilities
Current liabilities
Trade and other payables
21
(14,356)
(16,190)
Lease liabilities
15
(485)
(482)
Provisions for liabilities
22
(1,365)
-
(16,206)
(16,672)
Non-current liabilities
Lease liabilities
15
(344)
(569)
Deferred tax liabilities
11
(218)
(1,528)
(562)
(2,097)
Net assets
45,270
41,808
Equity
Called up share capital
23
732
732
Share premium account
23
22,180
22,180
Capital redemption reserve
198
198
Merger reserve
2,697
2,697
Currency reserve
642
732
Retained earnings
18,821
15,269
Total equity
45,270
41,808
The financial statements were approved by the Board of Directors on 10 June 2024 and signed on its behalf by:
C Herbert
Chief Financial Officer
Company Registration Number 3435822
Eckoh plc Annual Report 2024
47 | P a g e
Company statement of financial position
as at 31 March 2024
2024
2023
Notes
£’000
£’000
Assets
Non-current assets
Property, plant and equipment
14
2,781
2,824
Investments in group companies
16
52,304
51,528
Deferred tax asset
75
2
Long-term debtor
19
4,220
4,297
59,380
58,651
Current assets
Trade and other receivables
19
62
34
Cash and cash equivalents
20
7,349
5,222
7,411
5,256
Total assets
66,791
63,907
Liabilities
Current liabilities
Trade and other payables
21
(29,017)
(31,555)
(29,017)
(31,555)
Net assets
37,774
32,352
Equity
Called up share capital
23
732
732
Share premium account
23
22,180
22,180
Capital redemption reserve
198
198
Merger reserve
2,697
2,697
Retained earnings
11,967
6,545
Total equity
37,774
32,352
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 £6,995,000 (2023: £424,000). The financial
statements were approved by the Board of Directors on 10 June 2024 and signed on its behalf by:
C Herbert
Chief Financial Officer
Company Registration Number 3435822
Eckoh plc Annual Report 2024
48 | P a g e
Consolidated statement of changes in equity
for the year ended 31 March 2024
Called up share
capital
Share
premium
account
Capital
redemption
reserve
Merger
reserve
Currency
reserve
Retained
earnings
Total
Shareholders’
equity
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Balance at 1 April 2023
732
22,180
198
2,697
732
15,269
41,808
Total comprehensive income for the year
Profit for the financial year
-
-
-
-
-
4,544
4,544
Other comprehensive expense for the
year
-
-
-
-
(90)
-
(90)
Total comprehensive income for the year
-
-
-
-
(90)
4,544
4,454
Dividends paid in the year
-
-
-
-
-
(2,164)
(2,164)
Shares transacted through Employee
Benefit Trust
-
-
-
-
-
(11)
(11)
Shares purchased for share ownership
plan
-
-
-
-
-
(174)
(174)
Share based payment charge
-
-
-
-
-
776
776
Deferred tax on share options
-
-
-
-
-
581
581
Transactions with owners recorded
directly in equity
-
-
-
-
-
(992)
(992)
Balance at 31 March 2024
732
22,180
198
2,697
642
18,821
45,270
Called up share
capital
Share
premium
account
Capital
redemption
reserve
Merger
reserve
Currency
reserve
Retained
earnings
Total
Shareholders’
equity
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Balance at 1 April 2022
732
22,180
198
2,697
1,121
12,815
39,743
Total comprehensive income for the year
Profit for the financial year
-
-
-
-
-
4,637
4,637
Other comprehensive expense for the
year
-
-
-
-
(389)
-
(389)
Total comprehensive income for the year
-
-
-
-
(389)
4,637
4,248
Dividends paid in the year
-
-
-
-
-
(1,959)
(1,959)
Shares transacted through Employee
Benefit Trust
-
-
-
-
-
(2)
(2)
Shares purchased for share ownership
plan
-
-
-
-
-
(120)
(120)
Share based payment charge
-
-
-
-
-
(102)
(102)
Transactions with owners recorded
directly in equity
-
-
-
-
-
(2,183)
(2,183)
Balance at 31 March 2023
732
22,180
198
2,697
732
15,269
41,808
Eckoh plc Annual Report 2024
49 | P a g e
Company statement of changes in equity
for the year ended 31 March 2024
Called up
share
capital
Share
premium
account
Capital
redemption
reserve
Merger
reserve
Retained
earnings
Total
Shareholders’
equity
£’000
£’000
£’000
£’000
£’000
£’000
Balance at 1 April 2022
732
22,180
198
2,697
8,304
34,111
Profit for the financial year and total
comprehensive income
-
-
-
-
424
424
Dividends paid in the year
-
-
-
-
(1,959)
(1,959)
Shares transacted through Employee
Benefit Trust
-
-
-
-
(2)
(2)
Shares purchased for share ownership plan
-
-
-
-
(120)
(120)
Share based payment charge
-
-
-
-
(102)
(102)
Transactions with owners recorded
directly in equity
-
-
-
-
(2,183)
(2,183)
Balance at 31 March 2023
732
22,180
198
2,697
6,545
32,352
Called
up share
capital
Share
premium
account
Capital
redemption
reserve
Merger
reserve
Retained
earnings
Total equity
£’000
£’000
£’000
£’000
£’000
£’000
Balance at 1 April 2023
732
22,180
198
2,697
6,545
32,352
Profit for the financial year and total
comprehensive income
-
-
-
-
6,995
6,995
Dividends paid in the year
-
-
-
-
(2,164)
(2,164)
Shares transacted through Employee
Benefit Trust
-
-
-
-
(11)
(11)
Shares purchased for share ownership
plan
-
-
-
-
(174)
(174)
Share based payment charge
-
-
-
-
776
776
Transactions with owners recorded
directly in equity
-
-
-
-
(1,573)
(1,573)
Balance at 31 March 2024
732
22,180
198
2,697
11,967
37,774
Eckoh plc Annual Report 2024
50 | P a g e
Consolidated statement of cash flows
for the year ended 31 March 2024
2024
2023
Notes
£’000
£’000
Cash flows from operating activities
Cash generated from operations
28
7,113
6,956
Tax paid
(49)
(178)
Interest paid on lease liability
10
(45)
(53)
Net cash generated from operating activities
7,019
6,725
Cash flows from investing activities
Purchase of property, plant and equipment
14
(690)
(613)
Additions of intangible assets
13
(869)
(570)
Interest received
10
234
53
Net cash used in investing activities
(1,325)
(1,130)
Cash flows from financing activities
Dividends paid
(2,164)
(1,959)
Principal elements of lease payments
15
(700)
(564)
Shares purchased for share ownership plan
(174)
(120)
Cash outflow from acquiring shares from the Employee
Benefit Trust
(11)
-
Net cash used in from financing activities
(3,049)
(2,643)
Increase in cash and cash equivalents
2,645
2,952
Cash and cash equivalents at the start of the period
20
5,740
2,840
Effect of exchange rate fluctuations on cash held
(76)
(52)
Cash and cash equivalents at the end of the period
20
8,309
5,740
The notes on pages 50 to 75 form an integral part of these financial statements.
Eckoh plc Annual Report 2024
51 | P a g e
Notes to the financial statements for the year
ended 31 March 2024
General Information
The accounting policies set out below have, unless otherwise
stated, been applied consistently to all periods presented in these
consolidated financial statements.
Eckoh plc is a public Company limited by shares and is
incorporated in the United Kingdom and registered in England
under the Companies Act 2006. The address of the Company’s
registered office is Telford House, Corner Hall, Hemel Hempstead,
HP3 9HN.
Eckoh plc (the “Company”) is a global provider of Customer
Engagement Data Security Solutions.
The Group financial statements consolidate its subsidiaries
(together referred to as the “Group”). The Company’s financial
statements present information about the Company as a
separate entity and not about its Group.
1. Basis of preparation
The Group’s financial statements have been prepared and
approved by the Directors in accordance with UK adopted
international accounting standards in conformity with the
requirements of the Companies Act 2006 and the Company’s
financial statements have been prepared in accordance with
United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards, comprising FRS101 “Reduced
Disclosure Framework”, and applicable law). The Company has
also applied the exemptions available under FRS 101 in respect of
the following disclosures:
•
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.
These financial statements have 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 have been rounded
to the nearest one thousand, except where stated.
New accounting standards effective for the Group and Company
in these financial statements:
No new or revised accounting standards had a material impact on
the Group.
There are a number of other amendments and clarifications to
IFRS effective in future years, which are not expected to
significantly impact the Group’s consolidated results or financial
position.
Going concern
In determining the appropriate basis of preparation of the
financial statements, the Directors are required to consider
whether the Group and Company can continue in operational
existence for the foreseeable future.
The Board has carried out a going concern review and concluded
that the Group and Company have 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. As at 31 March 2024, the £5 million of Revolving
Credit Facility (RCF) from Barclays Bank is undrawn. Bank
covenants have been reviewed and are comfortably achieved for
the year to 31 March 2024 and are forecast to continue to be so
for at least 12 months from the date of approval of the financial
statements. With the cash position at the end of March 2024 at
£8.3 million and the cash flow forecasts prepared, which show
continuing cash generation, the RCF facility will not be required
after December 2024, when the facility expires.
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 Secure
Payments contracts won and delivered through Eckoh’s cloud
platforms, as large enterprises have accelerated their move to the
cloud. The proportion of recurring revenue is higher for contracts
delivered through the cloud, which also improves our operational
gearing, earnings quality and visibility in the business. We
anticipate the renewal rate for the UK & ROW and NA businesses
to remain unchanged during this period. When preparing the cash
flow forecasts the Directors have reviewed a number of
scenarios, including a severe but plausible downside scenario
which assumes a reduction in new business assumed of 25%. In
all scenarios the Directors were able to conclude that the Group
has adequate cash to continue in operational existence for the
foreseeable future.
2. Summary of material accounting policy information
Critical accounting estimates and judgements
The preparation of financial statements in accordance with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise judgement in the process of
applying the Group's and Company’s accounting policies.
Estimates and judgements are continually evaluated and are
based on historical experience and reasonable expectations of
future events. Actual results may differ from those estimates.
Critical accounting estimates and assumptions
The accounting policies cover areas that are considered by the
Directors to require estimates and assumptions which have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year.
The policies, and the related notes to the financial statements,
are found below:
Impairment of investments in subsidiaries and recoverability of
intercompany receivables (Company only)
The Company has an investment in subsidiaries balance of
£52.3million (2023: £51.5 million) and intercompany receivables
of £4.2 million (2023: £4.3 million). The company assess the
carrying values of its investments in subsidiaries and the
recoverability of intercompany receivables at the end of each
reporting period. The estimation of the recoverable values
Eckoh plc Annual Report 2024
52 | P a g e
require an estimation of future cash flows from each subsidiary
and selection of appropriate discount rates in order to determine
the net present value of the cash flows.
Impairment of Goodwill and intangible assets
As part of impairment testing, the Group is required to estimate
the recoverable amount of CGU’s by estimating future cash flows.
The assumptions involved in estimating the recoverable amount
include future growth rates and the discount rates used. Changing
the assumptions selected by management could significantly
affect the amount of headroom that currently exists.
Share based payments
The fair value of share-based payments is estimated using the
methods detailed in note 25 and using certain assumptions. The
Black Scholes and Monte Carlo valuation models have been used
in determining the fair value of share-based payments. The key
assumptions around volatility, expected life and risk-free rate of
return are based, respectively, on historic volatility over a similar
previous period, management’s estimate of the average expected
period to exercise, and the yield on zero-coupon UK government
bonds of a term consistent with assumed option life.
Deferred taxation
The key estimates made for deferred taxation are on the future
profitability of the business and the Company the trading will
reside in or capital expenditure to determine whether deferred
tax assets should be recognised. At 31 March 2024, the Group
recognised deferred tax assets of £2.4 million and deferred tax
liabilities of £2.0 million. Included within the deferred tax asset of
£2.4 million is £1.3 million in respect of tax losses and tax credits
and included within the deferred tax liabilities of £2.8 million is
£1.7 million in respect of the intangible assets arising from the
acquisition of Syntec. It is possible that the deferred tax assets
actually recoverable may differ from the amounts recognised if
actual taxable profits and capital expenditure differ from
estimates.
Critical accounting judgements
Deferred taxation
Deferred tax liabilities are recognised for all taxable temporary
differences but, where there exist deductible temporary
differences, judgement is required as to whether a deferred tax
asset should be recognised based on the availability of future
taxable profits. Deferred tax assets amounting to £0.4 million
were not recognised in respect of non-trading losses and £7.2
million in respect of capital losses have not been recognised due
to the statutory entity the losses arose in.
Basis of consolidation
(a) Business combinations
Business combinations are accounted for using the acquisition
method as at the acquisition date – i.e. when control is
transferred to the Group. Control is the power to govern the
financial and operating policies of an entity so as to obtain
benefits from its activities. In assessing control, the Group takes
into consideration potential voting rights that are currently
exercisable.
The Group measures goodwill at the acquisition date as:
•
the fair value of the consideration transferred; plus
•
the recognised amount of any non-controlling interests in
the acquiree; plus
•
if the business combination is achieved in stages, the fair
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 related
to the settlement of pre-existing relationships. Such 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.
Any contingent consideration payable is measured at fair 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 in the fair value
of the contingent consideration are recognised 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 until
the date that control ceases.
(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 is accounted
for as an equity-accounted investee or as an available-for-sale
financial asset depending on the level of influence retained.
(d) Transactions eliminated on consolidation
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 of impairment.
Eckoh plc Annual Report 2024
53 | P a g e
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 on
the Group balance sheet.
Goodwill is not amortised and is reviewed for impairment at least
annually. Any impairment is recognised in the period in which it
is identified.
(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
(c) Research and development
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 amortised on a
straight-line basis over the estimated useful life of the asset,
which is generally assumed to be three years.
Amortisation is charged to administrative expenses in the income
statement.
The carrying value of intangible assets is assessed at the end of
each financial year for impairment.
Impairment of non-financial assets
An impairment loss is recognised in the income statement for the
amount by which the asset's carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of the
asset’s fair value less costs to sell, and the value-in-use based on
an internal discounted cash flow evaluation. For the purpose of
assessing impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash flows. All assets are
subsequently reassessed for indications that an impairment loss
previously recognised may no longer exist.
Property, plant and equipment
Property, plant and equipment is stated at cost or fair value at
acquisition, net of depreciation and any provisions for
impairment. Cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to the
income statement during the financial period in which they are
incurred.
The gain or loss arising on the disposal of an asset is determined
by comparing the disposal proceeds and the carrying amount of
the asset and is recognised in the income statement. Depreciation
is calculated using the straight-line method to allocate the cost of
each asset to its estimated residual value over its expected useful
life, as follows:
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.
The Company holds an investment property, which comprises of
freehold land and office buildings that are held for capital
appreciation.
The Investment Property was initially recognised at cost and
subsequently carried at cost less accumulated depreciation and
accumulated impairment losses.
Investments in subsidiaries
Investments in subsidiaries are held at cost less accumulated
impairment losses.
Inventories
Inventories are valued at the lower of cost and net realisable
value. The cost of finished goods and work in progress comprises
design costs, direct labour and other direct costs. Net realisable
value is the estimated selling price in the ordinary course of
business less applicable selling expenses.
Financial assets
Trade and other receivables
Trade and other receivables do not carry interest and are stated
at their fair value at inception and subsequently at amortised
costs as reduced by allowances for estimated irrecoverable
amounts. The Group applies the IFRS 9 simplified approach to
measure expected credit losses which uses a lifetime expected
loss allowance for all trade receivables. To measure the expected
credit losses, trade receivables have been grouped based on
shared credit risk characteristics and the number of days past
due. Trade receivables are written off when there is no
reasonable expectation of recovery. Indicators that there is no
reasonable expectation of recovery include, amongst others, the
failure of a debtor to engage in a repayment plan with the Group
and a failure to make contractual payments for an extended
period.
Eckoh plc Annual Report 2024
54 | P a g e
Cash and cash equivalents
Cash and cash equivalents in the statement of financial position
comprise cash at bank and in hand, short-term deposits and other
short-term liquid investments.
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.
Equity
Equity comprises the following:
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.
Merger reserve represents consideration in excess of the 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 currency at the foreign
exchange rate ruling at that date. 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 assets and liabilities that are measured in
terms of historical cost 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.
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.
Leases
Leases are recognised in accordance with IFRS 16, 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 straight-line basis.
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 restoration
costs.
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 the
lease.
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
the rental of a storage unit.
Employee Benefits
(a) Pensions
The Group operates a defined contribution scheme to the benefit
of its employees. Contributions payable are charged to income in
the year they are payable.
(b) Bonus schemes
The Group recognises a liability and an expense for bonuses
payable to i) employees based on achievement of a series of
financial targets; and ii) Senior Management and Executive
Directors based on achievement of a series of financial and non-
financial targets.
(c) Share-based payments
From time to time on a discretionary basis, the Board of Directors
award high-performing employee’s bonuses in the form of share
options. The options are subject to a three-year vesting period
and their fair value is recognised as an employee benefits expense
with a corresponding increase in equity over the vesting period.
The fair value of share options granted is recognised within staff
costs with a corresponding increase in equity. The proceeds
received are credited to share capital and share premium when
the options are exercised.
The fair value of share options was measured using the Black
Scholes and Monte Carlo valuation models, taking into account
the terms and conditions upon which the grants were made. The
amount recognised as an expense is adjusted to reflect the actual
number of share options that vest except where forfeiture is only
due to share prices not achieving the threshold of vesting.
Eckoh plc Annual Report 2024
55 | P a g e
IFRS 2 has been applied to all options granted after 7 November
2002 that have not vested on or before 1 April 2006. A deferred
tax adjustment is also made relating to the intrinsic value of the
share options at the balance sheet date (see separate policy).
As a result of the grant of share options since 6 April 1999 the
Company will be obliged to pay employer’s National Insurance
contributions on the difference between the market value of the
underlying shares and their exercise price when the options are
exercised. A provision is made for this liability using the value of
the Company’s shares at the balance sheet date and is spread
over the vesting period of the share options.
The grant date fair value of share-based payment awards granted
to employees is recognised as an employee expense, with a
corresponding increase to equity, over the period that the
employees unconditionally become entitled to the awards. The
amount recognised as an expense is adjusted to reflect the
number of awards for which the related service and non-market
vesting conditions are expected to be met, such that the amount
ultimately recognised as an expense is based on the number of
awards that meet the related service and non-market
performance conditions at the vesting date. For share-based
payment awards with non-vesting conditions, the grant date fair
value of the share-based payment is measured to reflect such
conditions and there is no true-up for differences between
expected and actual outcomes.
The fair value of the amount payable to employees in respect of
share appreciation rights, which are settled in cash, is 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 each reporting date and
at settlement date. Any changes in the fair value of the liability
are recognised as personnel expenses in profit or loss.
(d) Employee Share Ownership Plan
The Group's Employee Share Ownership Plan (‘ESOP’) is a
separately administered trust. The assets of the ESOP comprise
shares in the Company and cash. The assets, liabilities, income
and costs of the ESOP have been included in the financial
statements in accordance with SIC 12, ‘Consolidation - Special
purpose entities’ and IAS 32, ‘Financial Instruments: Disclosure
and Presentation’. The shares in the Company are included at cost
to the ESOP and deducted from Shareholders' funds. When
calculating earnings per share these shares are treated as if they
were cancelled.
(e) US share save scheme
The Eckoh plc 2019 US Sharesave Scheme (the “2019 Sharesave
Scheme”), was approved by Shareholders at the 2019 AGM and
introduced to employees in December 2019. Employees are
invited to enrol in the 2019 Sharesave Scheme annually and are
granted an option to purchase up to a number of Ordinary Shares
at the end of the offering period. The number is determined by
dividing the total payroll deductions credited to the employee’s
account as of the exercise date by the option price. The option
price is equal to the closing price of the Ordinary Shares on the
London Stock Exchange on either (i) the date the offering period
begins, or (ii) the date of exercise, whichever results in the lowest
price per share. Any shares acquired will be held in accordance
with the terms of the Scheme.
Exceptional items
If the Group incurs irregular or one-off costs for example due to
the closure of an activity, following the acquisition of a business
or for one-off legal costs and settlement income these costs and
income are disclosed in the Income Statement as exceptional
items and excluded from adjusted earnings before interest, tax,
depreciation and amortisation (Adjusted EBITDA) and excluded
from Adjusted Operating Profit. Adjusted measures are used by
management in order to eliminate factors which distort year-on-
year comparisons.
Revenue recognition
The Group recognises revenue in accordance with IFRS 15:
Revenue from Contracts with Customers (“IFRS 15”). IFRS 15
provides a single, principles-based five-step model to be applied
to all sales contracts, based on the transfer of control of goods
and services to customers. Revenue represents the fair value of
the sale of goods and services and after eliminating sales within
the Group and excluding value added tax or overseas sales taxes.
The following summarises the method of recognising revenue for
the solutions and products delivered by the Group.
(i)
Secure Payment solutions and hosted services
Due to the unique nature of the Secure Payments
solution and clients’ reliance on Eckoh’s and Syntec’s
PCI-DSS Level 1 compliance, the delivery and on-going
support and maintenance of the Secure Payments
solution under IFRS 15 is one single performance
obligation. Therefore, revenue for implementation fees
for our hosted Secure Payments solution and our
hosted Customer Contact services; and revenue for
hardware and implementation fees for our hosted or
onsite Secure Payments solution are typically received
at the beginning of the contract and held on the balance
sheet as contract liabilities. This revenue is recognised
evenly over the period of the contract from the point of
delivery of the solution to the client. Costs directly
attributable to the delivery of the hardware, the
implementation fees and the sales commission costs
are deferred onto the balance sheet and held as
contract assets and released over the contract term
from the point of delivery of the solution to the client.
In addition to the initial set-up costs, there are on-going
licence fees as well as support and maintenance and
running costs of the service. In the NA business and the
Syntec business where the Secure Payments business is
contracted on an Opex style basis the monthly licence
fee charged to the client is recognised in the month it
relates to. In the UK&I, clients have a variety of
commercial models including fixed licence fees and
transactional arrangements, the revenue, whether it is
the fixed monthly fee or based on transactions is
recognised in the month it relates to.
(ii)
Coral product
Revenue arises from the sale of licences, historically on
a perpetuity basis and in more recent years on an Opex/
SaaS style basis, implementation fees and on-going
support and maintenance. Under IFRS 15, each
component is defined as a performance obligation.
Revenue is recognised for sales of licences when they
are
delivered
to
the
client;
revenue
from
implementation fees is recognised by estimating a
percentage of completion based on the direct labour
Eckoh plc Annual Report 2024
56 | P a g e
costs incurred to date as a proportion of the total
estimated
costs
required
to
complete
the
implementation; and revenue for on-going support and
maintenance is recognised each month as the service is
provided.
(iii)
Telephony services
Syntec is Ofcom regulated and has a small number of
contracts with clients to provide telecommunication
services. These revenues are based on transactional
volume and are recognised in the month it relates to.
Taxation
Current tax is the tax currently payable based on taxable profit
for the year.
Deferred taxation is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated
financial statements. Deferred tax is not provided if it arises from
initial recognition of an asset or liability in a transaction, other
than a business combination, that at the time of the transaction
affects neither accounting nor taxable profit or loss. Deferred tax
is calculated at tax rates that are expected to apply to their
respective period of realisation, provided they are enacted or
substantively enacted at the balance sheet date.
Deferred tax assets are recognised to the extent that it is probable
that future taxable profit will be available against which the
temporary differences can be utilised.
Deferred tax on temporary differences associated with shares in
subsidiaries is not provided if reversal of these temporary
differences can be controlled by the Group and it is probable that
reversal will not occur in the foreseeable future.
Changes in deferred tax assets or liabilities are recognised as a
component of tax expense in the income statement, except
where they relate to items that are charged or credited directly
to equity in which case the related deferred tax is also charged or
credited directly to equity.
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.
A financial liability is derecognised only when the obligation is
discharged, is cancelled or it expires.
Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it is
probable that the Group will be required to settle the obligation
and a reliable estimate can be made of the amount of the
obligation. Provisions are measured as the best estimate of the
expenditure required to settle the obligation at the balance sheet
date and are discounted to present value where the effect is
material.
3. Financial risk management
The operations of the Group expose it to a variety of financial
risks: liquidity risk, interest rate risk, foreign currency risk and
credit risk. Policies for managing these risks are set by the Board
following recommendations from the Chief Financial Officer. All
financial risks are managed centrally. The policy for each of the
above risks is described in more detail below.
The Group’s financial instruments comprise cash, short-term
deposits and various items, such as receivables and payables that
arise directly from its operations. It is, and has been throughout
the year under review, the Group’s policy that no trading in
financial instruments shall be undertaken. Similarly, the Group
did not undertake any financial hedging arrangements during the
year under review. The year-end position reflects these policies
and there have been no changes in policies or risks since the year-
end.
Liquidity risk
Through detailed cash flow forecasting and capital expenditure
planning, the Group monitors working capital and capital
expenditure requirements and through the use of rolling short-
term investments ensures that cash is available to meet
obligations as they fall due. Cash at bank is pooled and invested
in overnight money market accounts and deposits.
Interest rate risk
The
Group
principally
finances
its
operations
through
Shareholders’ equity and working capital. The Group and
Company has exposure to interest rate fluctuations on the RCF,
its cash and short-term deposits.
The Group has adopted a sensitivity analysis that measures
changes in the fair value of financial instruments and interest-
bearing loans and any resultant impact on the income statement
of an increase or decrease of 5% in market interest rates.
5% decrease
in interest
rates
5% increase
in interest
rates
£’000
£’000
Impact on financial interest in the
income statement: (loss)/gain
(172)
172
Foreign currency risk
The Group’s principal exposure to exchange rate fluctuations
arises on the translation of overseas net assets, profits and losses
into the presentation currency. This risk is managed by taking
differences that arise on the retranslation of the net overseas
investments to the currency reserve. Foreign currency risk on
cash balances is monitored through cash flow forecasting and
currency is held in foreign currency bank accounts only to the
extent that it is required for working capital purposes. No
sensitivity analysis is provided in respect of foreign currency risk,
as due to the Group’s working capital management practices the
risk is considered to be moderate. The risk is further explained in
the principal risks and uncertainties on pages 23 to 24.
Capital management
The Board’s policy is to maintain a strong capital base with the
joint objectives to maintain investor, creditor and market
confidence and to sustain future development of the business.
Capital comprises all components of equity (i.e. share capital,
capital redemption reserve, share premium and retained
Eckoh plc Annual Report 2024
57 | P a g e
earnings). The Board manages the capital structure and makes
adjustments as required in light of changes in economic
conditions. The Board may return capital to Shareholders, issue
new shares or sell assets in order to maintain capital.
Credit risk management is described in note 19.
Financial assets – amortised costs
2024
2023
Current financial assets
£’000
£’000
Trade receivables (note 19)
6,636
5,151
Other receivables (note 19)
2,289
670
Accrued income (note 19)
973
2,364
Cash & cash equivalents (note 20)
8,309
5,740
Total financial assets
18,207
13,925
Financial liabilities – amortised costs
2024
2023
£’000
£’000
Trade payables (note 21)
1,727
1,271
Other payables (note 21)
301
289
Accrued liabilities (note 21)
2,762
3,726
Lease liabilities (note 15)
829
1,051
Total financial liabilities
5,619
6,337
Maturity
The table below analyses the Group’s financial liabilities into
relevant maturity groupings on the remaining period at the
balance sheet date to the contractual maturity date. The amounts
disclosed in the table are the contractual undiscounted cash
flows:
Maturity
of
financial
liabilities 2024
<1yr
1 – 2yrs
2 – 5
yrs
Trade
and
other
payables1
4,638
-
152
Lease liabilities
485
244
100
Total financial liabilities
5,123
244
252
1.
Excluding deferred revenue.
Maturity
of
financial
liabilities 2023
<1yr
1 – 2yrs
2 – 5
yrs
Trade
and
other
payables1
5,143
-
143
Lease liabilities
482
266
303
Total financial liabilities
5,625
266
446
1.
Excluding deferred revenue.
Other interest-bearing loans and borrowings
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 about the
Group’s exposure to interest rate and foreign currency risk, see
above.
2024
2023
Non-current financial liabilities
£’000
£’000
Secured bank loans
-
-
Current financial liabilities
Current portion of secured
bank loans
-
-
Terms and debt repayment schedule
Eckoh plc has a £5.0 million Revolving Credit Facility (RCF) with
Barclays Bank. The RCF is for a term of three years from December
2021, interest is 2.5% above the Bank of England base rate and
there is a non-utilisation fee of 0.88%.
As at 31 March 2024, there was no debt drawn under the RCF.
The collateral to these loans is the land and buildings carrying
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
dilutive Ordinary Shares.
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.
Dividends
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
statements in the period in which they are approved and paid.
Determination and presentation of operating segments
The Eckoh Group determines and presents operating segments
based on the information that is provided internally to the
Executive Management team, considered to be the Chief
Operating Decision Maker.
The key segments reviewed at Board level are North America (NA)
and UK & Rest of World (UK & ROW).
Alternative performance measures (APMs)
The Directors consider that disclosing alternative performance
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.
Eckoh plc Annual Report 2024
58 | P a g e
Year
ended
31 March
2024
£’000
Year
ended
31 March
2023
£’000
Operating profit
3,246
5,020
Amortisation of acquired intangible
assets
2,479
2,473
Expenses relating to share option
schemes
771
40
Exceptional restructuring costs
531
-
Exceptional legal fees and settlement
agreements
1,300
203
Adjusted operating profit1
8,327
7,736
Amortisation of other intangible assets
516
398
Depreciation of owned assets
636
643
Depreciation of leased assets
681
617
Adjusted EBITDA2
10,160
9,394
1. Adjusted operating profit is the profit from operating activities
adjusted for expenses relating to share option schemes,
amortisation of acquired intangible assets and exceptional items.
2. Adjusted earnings before interest, tax, depreciation and
amortisation (EBITDA) is the profit from operating activities adjusted
for depreciation, amortisation, expenses relating to share option
schemes and exceptional items.
Eckoh plc Annual Report 2024
59 | P a g e
4. Segment analysis
The key segments reviewed at Board level are North America (NA), UK and Rest of World (UK & ROW).
Information regarding the results of each operating segment is included below. Performance is measured on operating segments based on
the information that is provided internally to the Executive Management team, considered to be the Chief Operating Decision Maker.
Current period segment analysis
NA
UK&ROW
Total
2024
£’000
£’000
£’000
Segment Revenue
18,000
19,204
37,204
Gross profit
14,582
16,454
31,036
Administrative expenses
(9,535)
(18,255)
(27,790)
Operating profit
5,047
(1,801)
3,246
Adjusted operating profit
5,440
2,887
8,327
Other expenses1
(393)
(4,688)
(5,081)
Operating profit
5,047
(1,801)
3,246
Profit before taxation
5,032
(1,597)
3,435
Segment assets
Trade and other receivables
3,636
5,289
8,925
Prepayments and contract assets
1,647
2,027
3,674
Segment liabilities
Trade and other payables
452
2,660
3,112
Accruals and contract liabilities
6,667
4,577
11,244
Capital expenditure
Purchase of tangible assets
21
669
690
Purchase of leases
-
478
478
Additions of intangible assets
-
869
869
Depreciation and amortisation
Depreciation of property, plant & equipment
234
402
636
Depreciation of leased assets
86
595
681
Amortisation
166
2,829
2,995
1. Other expenses comprise expenses relating to share option schemes, amortisation of acquired intangible assets and exceptional costs.
In 2024 there was no one customer that individually accounted for more than 10% of the total revenue of the continuing operations of the
Group. In 2023 there was no one customer that individually accounted for more than 10% of the total revenue of the continuing operations of
the Group.
NA
UK & ROW
Total 2024
Revenue by geography
£’000
£’000
£’000
United States of America & Canada
18,000
-
18,000
UK & ROW
-
19,204
19,204
Total Revenue
18,000
19,204
37,204
NA
UK & ROW
Total 2024
Timing of revenue recognition
£’000
£’000
£’000
Services transferred over time
14,742
16,578
31,320
Services transferred at a point in time
3,258
2,626
5,884
18,000
19,204
37,204
The following table provides information about receivables, contract assets and contract liabilities from contracts with customers.
2024
2023
£’000
£’000
Receivables, which are included in, ‘Trade and other receivables’
6,636
5,151
Contract assets which are included in ‘Trade and other receivables’
1,340
2,364
Contract liabilities which are included in ‘Trade and other payables’
(8,482)
(9,909)
(506)
(2,394)
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.
Eckoh plc Annual Report 2024
60 | P a g e
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 relate 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 2024
31 March 2023
Contract assets
Contract liabilities
Contract assets
Contract liabilities
£’000
£’000
£’000
£’000
Revenue recognised that was included in the
contract liability balance at the beginning of the
period
-
4,734
-
6,754
Current year billings recognised in contract liabilities
-
2,560
-
3,575
Cost of sales recognised that was included in the
contract assets balance at the beginning of the
period
1,664
-
2,600
-
Costs deferred in current year and unbilled revenue
included in contract assets
775
-
1,115
-
Contract costs
31 March
2024
31 March
2023
£’000
£’000
Deferred implementation costs
636
958
Deferred hardware costs
139
157
775
1,115
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.
The contract liabilities and contract assets have 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 £8.5m (FY23: £9.9m). We expect to recognise approximately
£6.8m (FY23: £7.6m) in the next 12 months, £1.5m (FY23: £1.7m) 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.
Eckoh plc Annual Report 2024
61 | P a g e
Prior period segment analysis
NA
UK&ROW
Total 2023
£’000
£’000
£’000
Segment Revenue
17,513
21,308
38,821
Gross profit
13,752
17,491
31,243
Administrative expenses
(9,350)
(16,873)
(26,223)
Operating profit
4,402
618
5,020
Adjusted operating profit
4,552
3,184
7,736
Other expenses1
(150)
(2,566)
(2,716)
Operating profit
4,402
618
5,020
Profit before taxation
4,371
649
5,020
Segment assets
Trade and other receivables
2,864
2,957
5,821
Prepayments and contract assets
2,503
3,454
5,957
Segment liabilities
Trade and other payables
344
2,155
2,499
Accruals and contract liabilities
7,099
6,540
13,639
Capital expenditure
Purchase of tangible assets
519
94
613
Purchase of leases
-
77
77
Purchase of intangible assets
-
570
570
Depreciation and amortisation
Depreciation of property, plant & equipment
189
454
643
Depreciation of leased assets
162
455
617
Amortisation
-
2,871
2,871
1. Other expenses comprise expenses relating to share option schemes, amortisation of acquired intangible assets and exceptional restructuring costs.
NA
UK&ROW
2023
Revenue by geography
£’000
£’000
£’000
United Sates of America & Canada
17,513
-
17,513
UK & ROW
-
21,308
21,308
Total Revenue
17,513
21,308
38,821
NA
UK&ROW
Total 2023
Timing of revenue recognition
£’000
£’000
£’000
Services transferred at a point in time
3,371
3,541
6,912
Services transferred over time
14,142
17,767
31,909
17,513
21,308
38,821
5. Profit from operating activities
2024
£’000
2023
£’000
The Group’s profit from operating activities is arrived at
after charging / (crediting):
Employee benefits expense (note 6)
14,163
14,681
Foreign currency losses / (gains)
106
(516)
Exceptional restructuring costs (note 8)
531
-
Exceptional legal fees and settlement agreements (note 9)
1,300
203
Amortisation of intangible assets (note 13)
2,995
2,871
Depreciation of property, plant and equipment (note 14)
636
643
Depreciation of leased assets (note 15)
681
617
Inventory recognised as an expense (note 18)
14
4
Eckoh plc Annual Report 2024
62 | P a g e
6. Employee benefits expense
2024
2023
£’000
£’000
Wages and salaries
12,756
13,814
Less: Internal development costs capitalised in the year
(840)
(544)
Social security costs
1,253
1,168
Other pension costs
223
203
Share based payments
771
40
14,163
14,681
The remuneration of the Directors in Note 27 provides further details on the Directors’ emoluments.
The average monthly number of people (including Executive Directors) employed by the Group during the year was:
2024
2023
Number
Number
Technical support
79
91
Customer services
31
43
Administration and management
55
54
165
188
Excluded from the table above are 27 (2023: 28) full-time equivalent casual contact centre employees who cost £488,588 (2023:
£374,563) 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:
2024
2023
£’000
£’000
Fees payable for the audit of the Company and consolidated financial statements
75
71
Fees payable for the audit of the financial statements of subsidiary undertakings
136
128
Total fees payable to the Group’s auditors
211
199
8. Exceptional restructuring costs
The exceptional restructuring costs are presented separately as irregular costs unlikely to reoccur in the near future. The exceptional
restructuring costs incurred in the financial year ended 31 March 2024 of £531k have been incurred predominantly in Eckoh UK (£405k), with
£127k incurred in Eckoh US. The restructuring costs relate to employees who previously delivered the large bespoke self-service projects as
the business continues to focus on its SaaS-style cloud deployed products. In addition, there were a number of the UK Sales team who were
made redundant, with the shift in focus to the US market and operating as a global team. 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 2024 legal fees and settlement agreements of £1,300k (FY23: £202k- settlement income of £950k
received was 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.
10. Finance income and finance charges
2024
2023
£’000
£’000
Interest receivable
Bank interest receivable
234
53
234
53
2024
2023
£’000
£’000
Finance expense
Lease interest payable
(45)
(53)
(45)
(53)
Eckoh plc Annual Report 2024
63 | P a g e
11. Taxation
2024
2023
£’000
£’000
Tax recognised in profit and loss
Current tax expense
Current year
173
132
Adjustments in respect of prior periods
(111)
18
62
150
Deferred tax credit
Origination and reversal of temporary differences
(1,282)
746
Adjustments in respect of prior periods
48
(409)
Foreign exchange translation
-
-
Effect of tax rate change
63
(104)
(1,171)
233
Total tax (credit) / charge
(1,109)
383
A credit of £581k (2023: £nil) for deferred taxation in relation to share options was recognised directly in equity.
The tax (credit) / charge for the year is different to the standard rate of corporation tax in the UK of 25% (2023: 19%). The differences are
explained below:
2024
2023
Continuing operations
£’000
£’000
Profit before taxation
3,435
5,020
Profit multiplied by rate of corporation tax in the UK of 25% (2023: 19%)
859
954
Additional foreign tax (received) / suffered
(56)
28
Effect of expenses not deductible for tax purposes
72
18
Non-taxable income
-
(6)
Adjustments in respect of prior periods (current and deferred)
(63)
(391)
Movement on deferred tax not previously recognised
(1,831)
(85)
Impact of change in tax rate on opening deferred tax
64
-
Impact of difference between current and deferred tax rates
-
(12)
Deferred tax impact of share options
(154)
(123)
Tax (credit) / charge for the year
(1,109)
383
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 been calculated at 25% in financial year to 31st March 2024 (FY23:
25%).
Recognition of deferred tax assets and liabilities
Assets
Liabilities
2024
2023
2024
2023
£’000
£’000
£’000
£’000
Short term timing differences
1,073
183
(144)
(283)
Tax losses
1,325
997
-
-
Property, plant and equipment
2
206
(226)
(198)
Intangible assets
-
-
(1,678)
(2,304)
Tax assets and liabilities
2,400
1,386
(2,048)
(2,785)
Offset
(1,830)
(1,257)
1,830
1,257
Total assets and liabilities after offset
570
129
(218)
(1,528)
Included in the deferred tax asset is £75k (FY23: £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.
Eckoh plc Annual Report 2024
64 | P a g e
Movement in deferred tax balances during the year
2024
2023
£’000
£’000
Balance at 1 April
(1,399)
(1,194)
Recognised in income statement
1,171
(233)
Recognised in equity
581
-
Other – Forex
(1)
28
Balance at 31 March
352
(1,399)
Unrecognised deferred tax assets
There are unprovided deferred taxation assets in respect of tax losses totalling (gross) £30,619k (2023: £37,711k). These have arisen in
respect of trading and non-trading losses of £1,761k (2023: £8,853k) and in respect of capital losses of £28,858k (2023: £28,858k). The historic
non-trading losses in Eckoh plc 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 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.
2024
2023
£’000
£’000
Earnings for the purposes of basic and diluted earnings per share
4,544
4,637
Earnings for the purposes of adjusted basic and diluted earnings per share
6,387
5,802
Reconciliation of earnings for the purposes of adjusted basic and diluted earnings per share.
20241
20231
£’000
£’000
Earnings for the purposes of basic and diluted earnings per share
4,544
4,637
Taxation
(1,109)
383
Amortisation of acquired intangible assets
2,479
2,473
Expenses relating to share option schemes
771
40
Exceptional restructuring costs
531
-
Exceptional legal fees and settlement agreements
1,300
203
Adjusted profit before tax
8,516
7,736
Tax charge based on standard corporation tax rate of 25%1 (2023: 25%)
(2,129)
(1,934)
Earnings for the purposes of adjusted basic and diluted earnings per share
6,387
5,802
1.
Majority of Group taxable profit is taxed at 25% whether in the UK or in the US with a combination of Federal tax and State tax.
2024
2023
Denominator
‘000
‘000
Weighted average number of shares in issue in the period
292,921
292,893
Shares held by employee ownership plan
(2,587)
(2,338)
Shares held in Employee Benefit Trust
-
-
Number of shares used in calculating basic earnings per share
290,334
290,555
Dilutive effect of share options
13,459
9,210
Number of shares used in calculating diluted earnings per share
303,793
299,765
2024
20231
Profit per share
pence
pence
Basic earnings per 0.25p share
1.56
1.58
Diluted earnings per 0.25p share
1.50
1.55
Adjusted earnings per 0.25p share
2.20
1.98
Adjusted diluted earnings per 0.25p share
2.10
1.94
1.
Remeasured for tax rate of 25%
Eckoh plc Annual Report 2024
65 | P a g e
13. Intangible assets
Group
Goodwill
Computer
software
Customer
relationships
Intellectual
property
Trade
name
Total
£’000
£’000
£’000
£’000
£’000
£’000
Cost
At 1 April 2022
26,422
4,660
15,980
7,688
383
55,133
Additions
-
559
-
11
-
570
Foreign exchange
152
4
150
8
16
330
At 31 March 2023
26,574
5,223
16,130
7,707
399
56,033
Additions
-
869
-
-
-
869
Foreign exchange
(50)
(1)
(47)
-
(5)
(103)
At 31 March 2024
26,524
6091
16,083
7,707
394
56,799
Accumulated amortisation
At 1 April 2022
-
3,181
4,312
7,594
382
15,469
Charge for the year
-
371
2,473
27
-
2,871
Foreign exchange
-
4
151
22
16
193
At 31 March 2023
-
3,556
6,936
7,643
398
18,533
Charge for the year
-
516
2,479
-
-
2,995
Foreign exchange
-
(1)
(57)
-
(5)
(63)
At 31 March 2024
-
4,071
9,358
7,643
393
21,465
Carrying amount
At 31 March 2024
26,524
2,020
6,725
64
1
35,334
At 31 March 2023
26,574
1,667
9,194
64
1
37,500
The Company has no intangible assets. (2023: £nil).
Within the intangible category of computer software in the above table, is internally developed computer software. As at 31 March 2024 this had
a net book value of £2,020k (2023: £1,653k).
Amortisation of acquired intangible assets relating to Customer Relationships is included in the charge for the year in the above table was £2,479k
(2023: £2,473k).
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) and UK & Rest of World (UK & ROW) in the current year
and in the prior year. 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, and thereafter increased by an annual and longer term growth rate. 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 & Rest of World (UK & ROW)
These represent the lowest level within the Group at which Goodwill is monitored for internal management purposes.
Goodwill
31 March 2024
£’000
31 March 2024
Revenue growth
rate %
31 March 2024
Discount
rate %
Goodwill
31 March 2023
£’000
31 March 2023
Revenue growth
rate %
31 March 2023
Discount
rate %
NA
19,867
12%
13.9%
20,069
12%
13.9%
UK & ROW
6,657
5%
13.9%
6,505
1%
13.9%
Total
26,524
26,574
No impairment has been recorded in the current year for NA or UK& 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.
Eckoh plc Annual Report 2024
66 | P a g e
Sensitivity to the changes in assumptions
No impairment in the carrying values would be required if forecast revenues fell by 60% for NA, and if forecast revenues fell by 10% for UK
& ROW. This sensitivity is before any remediation activities available to Management.
14. Property, plant and equipment
Leasehold
improvements
Land and
buildings
Fixtures and
equipment
Assets
under
construction
Total
£’000
£’000
£’000
£’000
£’000
Cost
At 1 April 2022
29
3,207
8,692
-
11,928
Additions
-
-
178
435
613
Foreign exchange
-
2
341
-
343
Disposals
-
-
(287)
-
(287)
At 31 March 2023
29
3,209
8,924
435
12,597
Additions
-
-
690
-
690
Transfer from assets under construction
-
-
435
(435)
-
Foreign exchange
-
-
(64)
-
(64)
At 31 March 2024
29
3,209
9,985
-
13,223
Accumulated depreciation
At 1 April 2022
29
341
7,369
-
7,739
Charge for the year
-
43
600
-
643
Foreign exchange
-
1
320
-
321
Disposals
-
-
(287)
-
(287)
At 31 March 2023
29
385
8,002
-
8,416
Charge for the year
-
43
593
-
636
Foreign exchange
-
-
(51)
-
(51)
At 31 March 2024
29
428
8,544
-
9,001
Carrying amount
At 31 March 2024
-
2,781
1,441
-
4,222
At 31 March 2023
-
2,824
922
435
4,181
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 2024 was £2,781K (2023: £2,824k). This is the only property, plant and equipment held by the Company.
Assets under construction are assets relating to a US data centre, as at 31 March 2023 the assets were not yet being utilised. During the
financial year ended 31 March 2024 these assets were fully utilised and the project has been completed.
Eckoh plc Annual Report 2024
67 | P a g e
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
Buildings
Equipment
Total
£’000
£’000
£’000
Cost
At 1 April 2022
1,319
1,170
2,489
Additions
-
77
77
Foreign exchange
36
-
36
Lease extinguishment
(219)
-
(219)
At 31 March 2023
1,136
1,247
2,383
Additions
-
478
478
Foreign exchange
(6)
-
(6)
At 31 March 2024
1,130
1,725
2,855
Accumulated depreciation
At 1 April 2022
327
646
973
Charge for the year
226
391
617
Foreign exchange
17
-
17
Lease extinguishment
(219)
-
(219)
At 31 March 2023
351
1,037
1,388
Charge for the year
226
455
681
Foreign exchange
(2)
-
(2)
At 31 March 2024
575
1,492
2,067
Carrying amount
At 31 March 2024
555
233
788
At 31 March 2023
785
210
995
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.
2024
2023
Lease liabilities
£’000
£’000
Current
485
482
Non-current
344
569
829
1,051
2024
2022
Lease interest and expenses
£’000
£’000
Interest expense (included in finance costs)
(45)
(53)
Expenses relating to short-term leases (included in
cost of goods sold and administrative expenses)
(12)
(11)
The total cash outflow for leases in 2024 was £745k (2023: £617k), made up of principal lease payments of £700k (2023: £564k) and lease
interest payments of £45k (2023: £53k).
The Company does not hold any leased assets (2023: £nil).
Eckoh plc Annual Report 2024
68 | P a g e
16. Investments in Group companies
Shares in
subsidiary
undertakings
£’000
Other
investments
£’000
Total
£’000
At 1 April 2022
52,229
6,389
58,618
Disposals1
-
(101)
(101)
At 31 March 2023
52,229
6,288
58,517
Additions
-
776
776
At 31 March 2024
52,229
7,064
59,293
Accumulated Impairment
At 1 April 2022 and at 31 March 2023 and 2024
(6,989)
-
(6,989)
Net Book Value
At 31 March 2024
45,240
7,064
52,304
At 31 March 2023
45,240
6,288
51,528
1.
The disposal relates to the net share options credit in the year.
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 payment 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 25 of the consolidated financial statements.
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
England and Wales (ii)
Customer Engagement Data
Security Solutions
100%
Veritape Limited
England and Wales (ii)
Non-trading
100%
Eckoh Inc
United States of America (iii)
Customer Engagement Data
Security Solutions
100%
Eckoh France SAS
France (iv)
Non-trading
100%(i)
Eckoh Enterprises Limited
England and Wales (ii)
Dormant
67% & 33%(i)
Eckoh Projects Limited
England and Wales (ii)
Non-trading
100%
Avorta Limited
England and Wales (ii)
Dormant
100%(i)
Eckoh Technologies Limited
England and Wales (ii)
Dormant
100%(i)
Intelliplus Group Limited
England and Wales (ii)
Dormant
100%
Intelliplus Limited
England and Wales (ii)
Non-Trading
100%(i)
Medius Networks Limited
England and Wales (ii)
Non-Trading
100%(i)
Telford Projects Limited
England and Wales (ii)
Dormant
100%
Swwwoosh Limited
England and Wales (ii)
Dormant
100%(i)
Eckoh Omni Ltd
England and Wales (ii)
Non-Trading
100%
Syntec Holdings Limited (v)
England and Wales (ii)
Non-Trading
100%
Syntec Limited (v)
England and Wales (ii)
Trading
100%
Syntec Investment Limited (v)
England and Wales (ii)
Non-Trading
100%
Agentcall Limited (v)
England and Wales (ii)
Dormant
100% (i)
CardEasy Limited (v)
England and Wales (ii)
Dormant
100% (i)
Response Track Limited (v)
England and Wales (ii)
Dormant
100% (i)
Syntec Telecom Limited (v)
England and Wales (ii)
Dormant
100% (i)
Synpbx Limited (v)
England and Wales (ii)
Dormant
100% (i)
(i)
Share capital held by a subsidiary undertaking.
(ii)
The registered office is Telford House, Corner Hall, Hemel Hempstead, HP3 9HN.
(iii)
The registered office is 7172 Regional Street. #431, Dublin, California 94568.
(iv)
The registered office is Rue De La Vieille Poste Parc, Industriel et Technologique de la Pompignane, 34000 Montpellier.
(v)
Acquired as part of the acquisition of Syntec Holdings Limited.
Eckoh plc Annual Report 2024
69 | P a g e
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 companies under Section 479C
of the Act.
18. Inventories
GROUP
2024
2023
£’000
£’000
Finished goods
216
254
216
254
The cost of inventory recognised as an expense during the year was £14k (2023: £4k). The Company does not hold any inventory (2023:
£nil).
19. Trade and other receivables
GROUP
COMPANY
2024
2023
2024
2023
Current assets
£’000
£’000
£’000
£’000
Trade receivables
6,699
5,219
-
-
Less: Loss allowance
(63)
(68)
-
-
Net trade receivables
6,636
5,151
-
-
Other receivables
2,289
670
-
-
Prepayments and contract assets
3,674
5,957
62
34
12,599
11,778
62
34
Long-term debtor
Amount receivable from subsidiary undertakings
-
-
4,220
4,297
-
-
4,220
4,297
Trade receivables are stated after loss allowance of £63k (2023: £68k).
Included in Other receivables is £1,365k (2023: nil) equal to the amount held in note 22 Provisions for liabilities.
Included in prepayments and contract assets is £973k (2023: £2,364k) relating to accrued income.
Amounts receivable from subsidiary undertakings are unsecured, due in 3-5 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 full amount
to be recoverable.
GROUP
GROUP
Gross carrying amount -
trade receivables
Expected loss rate
2024
2023
2024
2023
Gross trade receivables – ageing
£’000
£’000
%
%
Current
4,664
4,273
0.0%
0.0%
1-30 days
1,164
607
0.0%
0.1%
31-60 days
472
103
0.0%
0.5%
61-90 days
157
83
0.0%
0.0%
Over 90 days
242
153
25.9%
43.3%
6,699
5,219
0.9%
1.3%
The Directors consider that the carrying value of the trade and other receivables approximate to their fair value.
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations. Credit risk arises principally from the Group’s trade and other receivables. Concentrations of credit risk with respect to trade
Eckoh plc Annual Report 2024
70 | P a g e
receivables are limited due to working capital practices of the market sector and the Group as well as the nature of the Group’s customer
base. The reputable nature of the Group’s current customer base limits exposure to credit risk.
20. Cash and cash equivalents
GROUP
COMPANY
2024
2023
2024
2023
£’000
£’000
£’000
£’000
Sterling
6,697
5,005
6,544
4,807
Euro
73
90
-
-
US dollars
1,539
645
805
415
8,309
5,740
7,349
5,222
2024
2023
2024
2023
£’000
£’000
£’000
£’000
Floating rate
6,697
5,005
6,544
4,807
Euro
73
90
-
-
US dollars
1,539
645
805
415
8,309
5,740
7,349
5,222
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 4.70% (2023: 2.14%).
The Group’s financial risk management is disclosed in note 3.
21. Trade and other payables
GROUP
COMPANY
2024
2023
2024
2023
£’000
£’000
£’000
£’000
Trade payables
1,727
1,271
22
19
Other payables
301
289
-
-
Other taxation and social security
1,084
995
-
-
Amounts payable to subsidiary undertakings
-
-
28,977
31,515
Accruals and contract liabilities
11,244
13,635
18
21
14,356
16,190
29,017
31,555
As set out in note 4, £1.7 million (2023: £2.3 million) of the contract liabilities are due in more than one year.
Included in accruals and contract liabilities is £2,762K (2023: £3,726k) relating to accrued liabilities.
All of the amounts above are payable within one year and trade payables that are more than three months old at the year-end represent
£24,000 (2023: £13,000).
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. Provisions for liabilities
Other provision
Total
£’000
£’000
At 1st April 2023
-
-
Additional provision
1,365
1,365
At 31 March 2024
1,365
1,365
At 31 March 2024
Current
1,365
1,365
Non-current
-
-
1,365
1,365
Eckoh plc Annual Report 2024
71 | P a g e
A provision is required for a current liability to HMRC for PAYE tax and NI relating to Share Options following the acquisition of Syntec Limited.
The potential liability was identified as part of the due diligence for the acquisition of Syntec Limited and an amount retained from the Sale
proceeds is held in escrow until the liability was agreed with HMRC. Included in Other receivables in Note 19 is an equal and opposite debtor
for the amount to be recovered from escrow which is deemed to be virtually certain.
23. Called up share capital and share premium account
Allotted called up and fully paid
Number of shares
Nominal value
Share Premium
Share type
£’000
£’000
Ordinary Shares of 0.25p each
At 1 April 2023
292,909,261
732
22,180
Shares issued under the share option schemes
40,000
-
-
At 31 March 2024
292,949,261
732
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 25.
24. Other Interest-bearing loans & borrowings
Bank
Loans
£’000
At 1 April 2023
-
Repaid during the year
-
At 31 March 2024
-
Loans and borrowings
Eckoh plc has a £5.0 million Revolving Credit Facility (RCF) with
Barclays Bank. The RCF is for a term of three years from December
2021, interest is 2.5% above the Bank of England base rate and
there is a non-utilisation fee of 0.88%.
As at 31 March 2024, there was no debt drawn under the RCF.
25. Share based payments
The Eckoh plc Share Option Scheme (‘the Scheme’) was
introduced in November 1999 and re-approved by the Board in
the year ended 31 March 2018. Under the Scheme, the Board can
grant options over shares in the Company to Group employees.
The grant price of share options is the middle market quotation
price as derived from the Daily Official List of the London Stock
Exchange on the date of the grant. The contractual life of an
option is ten years. Options granted under the Scheme become
exercisable subject to the share price exceeding RPI plus 15%
after the third anniversary of the grant date. Exercise of an option
is subject to continued employment, with certain exceptions, as
specified in the Scheme rules.
The Eckoh plc Share Incentive Plan (“the Plan”) was introduced in
September 2016. The Plan provides employees with the
opportunity to acquire shares in Eckoh plc. Shares are purchased
on behalf of the employee from amounts sacrificed from their
salary on a monthly basis and matched on a two for one basis by
the company. Any shares acquired will be held in a trust in
accordance with the terms of the Plan. In order to maximise the
tax benefits available, the employee must remain employed with
the company and hold the shares within the Trust for a minimum
of five years.
The Eckoh plc Performance Share Plan (“the PSP”) was introduced
in November 2017, following approval by Shareholders at the
2018 AGM. The Awards granted in FY22, FY23 and FY24 are
included in the Remuneration Committee report on page 32.
During the financial year, awards have been granted to Senior
Management, key employees and the Executive Directors. The
PSP awards granted to Management are subject to a Total
Shareholder Return performance condition, measured over a 3-
year performance period, the PSP awards granted to the
Executive Directors are subject to both a Total Shareholder
Return and Adjusted Earnings per Share performance condition,
measured over a 3-year performance period. Awards made in
FY22 to two Syntec Directors are subject to both a Total
Shareholder
Return
and
Adjusted
Earnings
per
Share
performance condition, measured over a 3-year performance
period.
The Eckoh plc 2019 US Sharesave Scheme (the “2019 Sharesave
Scheme”), was approved by Shareholders at the 2019 AGM and
introduced to employees in December 2019. Employees who
enrol in the 2019 Sharesave Scheme are granted an option to
purchase up to a number of Ordinary Shares. The number is
determined by dividing the total payroll deductions credited to
the employee’s account as of the exercise date by the option
price. The option price is equal to the closing price of the Ordinary
Shares on the London Stock Exchange on either (i) the date the
offering period begins, or (ii) the date of exercise, whichever
results in the lowest price per share. Any shares acquired will be
held in accordance with the terms of the Scheme.
The fair value of share options granted under the Scheme and the
PSP were measured using the QCA-IRS option valuer based on the
Monte-Carlo valuation models, taking into account the terms and
conditions upon which the grants were made. The fair value per
option granted and the assumptions used in the calculation are
as follows:
Eckoh plc Annual Report 2024
72 | P a g e
23 Mar
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
21 Jun
2023
21 Jun
2023
Share price (pence)
43.50
39.50
47.50
37.81
63.50
50.00
43.00
44.00
40.57
38.50
38.50
Exercise price
(pence)
43.50
39.50
47.50
-
-
0.25
-
0.25
-
0.25
-
No. of employees
8
6
1
10
43
2
74
2
3
2
64
Shares under option
1,050,000
1,200,000
500,000
525,000
1,999,139
1,940,428
6,406,042
2,407,541
180,000
1,500,000
4,075,000
Vesting period
(years)2
3
3
3
3
3
3
3
3
3
3
3
Expected volatility
32%
35%
35%
47%
30%
30%
30%
33%
33%
34.62%
34.61%
Option life (years)3
10
10
10
10
10
10
10
10
10
10
10
Risk free rate
0.78%
0.56%
0.56%
0.56%
0.18%
0.91%
1.36%
1.94%
1.94%
4.93%
4.93%
Expected dividends
expressed as a
dividend yield
0.89%
1.14%
1.22%
1.53%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
Fair value per
option (pence)
12.00
11.0
10.6
16.00
23.90
18.4+
49.76
20.481
22.3+
43.76
25.0
20.6+
38.28
23.07
23.28
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).
2.
Vesting period is the expected life of the Share options.
3.
Option life is the last exercise date under the Plan Rules.
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 the 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 2024 was 2,579,832. The charge for the year was £98k (2023: £98k).
The assumptions used in the US Sharesave Scheme fair value calculation are as follows:
A reconciliation of option movements over the year to 31 March 2024 and 31 March 2023 is shown below:
2024
2023
Number of
share options
Weighted
average
exercise price
(pence)
Number of
share options
Weighted
average
exercise price
(pence)
Outstanding at 1 April
21,644,689
11.38
25,618,344
17.74
Granted
6,690,957
2.04
3,303,254
4.61
Exercised
(993,728)
26.67
(205,229)
20.81
Lapsed
(2,243,733)
29.17
(6,000,000)
0.25
Forfeited
(577,821)
0.19
(1,071,680)
0.24
Outstanding at 31 March
24,520,364
6.85
21,644,689
11.38
Exercisable at 31 March
4,521,364
31.21
6,538,084
33.83
Commencement date
1 Dec
2021
1 Dec
2022
Share price (pence)
41.5
36.0
Exercise price (pence)
35.3
30.6
Number of employees
12
10
Shares under option
54,715
52,172
Vesting period (years)
2.00
2.00
Eckoh plc Annual Report 2024
73 | P a g e
2024
2023
Weighted average
remaining life
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
0.23
20,722
1.23
1.23
0.23
15,966
1.71
1.71
35.0 - 40.0
38.61
1,763
2.37
2.37
39.17
2,731
3.04
3.56
40.5 - 45.0
43.31
1,124
0.08
1.92
43.37
1,937
0.10
2.97
46.5 - 48.5
47.52
605
-
2.66
47.54
633
-
3.34
50.0 - 54.5
52.69
119
0.34
0.34
52.58
152
0.77
0.77
55.0 - 59.5
56.00
49
-
-
56.00
60
0.67
0.67
60.0 - 64.0
62.53
138
0.06
0.06
62.58
166
0.47
0.47
The total charge for the year relating to employee share-based payment plans was £771,000 (2023: £40,000), all of which related to equity-
settled share-based payment transactions. Included in the charge is a fair value share-based payment charge of £776,000 (2023: £102,000
charge) offset by a credit of £5,000 for the employer's NI accrual.
26. 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.
27. Related party transactions
Eckoh plc is the parent and ultimate controlling company of the Eckoh Group, the consolidated financial statements of which 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 one Director accruing benefits under the pension scheme. Employer pension contributions were £20k (2023: £20k). One 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.
During the years ending 31 March 2024 and 2023 the Executive Directors did not exercise Share options.
The following table sets out the single figure of total remuneration for Directors for the financial year ended 31 March 2024 and 2023:
Base salary/fees
Benefits1
Pension
Annual bonus
Aggregate Total
2024
£’000
2023
£’000
2024
£’000
2023
£’000
2024
£’000
2023
£’000
2024
£’000
2023
£’000
2024
£’000
2023
£’000
Executive Directors
Chrissie Herbert
204
196
15
14
20
20
28
61
267
291
Nik Philpot2
349
339
19
18
-
-
44
96
412
453
Non-Executive Directors
David Coghlan
37
38
-
-
-
-
-
-
37
38
Christopher Humphrey
69
66
-
-
-
-
-
-
69
66
Guy Millward
40
38
-
-
-
-
-
-
40
38
Total
699
677
34
32
20
20
72
157
825
886
1.
Benefits include car allowance, healthcare cover and 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.
Eckoh plc Annual Report 2024
74 | P a g e
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 (2023: £18,000). The amount
outstanding to them at the end of the current year was £Nil (2023: £Nil). There were no amounts written off in the current or prior year.
28. Cash generated from operations
2024
2023
£’000
£’000
Profit for the financial year
4,544
4,637
Finance income
(234)
(53)
Finance charges
45
53
Taxation
(1,109)
383
Depreciation of property, plant and equipment
636
643
Depreciation of leased assets
681
617
Amortisation of intangible assets
2,995
2,871
Exchange differences
36
(516)
Expenses relating to share option schemes
771
40
Operating profit before changes in working capital and provisions
8,365
8,675
Decrease in inventories
38
14
(Increase) / Decrease in trade and other receivables
(821)
505
Decrease in trade and other payables
(1,834)
(2,238)
Increase in provisions
1,365
-
Cash generated from operations
7,113
6,956
Eckoh plc Annual Report 2024
75 | P a g e
Shareholder information
Dealings permitted on the Alternative Investment Market (AIM) of the London Stock Exchange.
Directors and Company Secretary
C.J. Humphrey - Non-Executive Chairman
G.L. Millward - Non-Executive Director
N.B. Philpot – Chief Executive Officer
C.G. Herbert – Chief Financial Officer and Company Secretary
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
Joint Broker
Investec Bank PLC
30 Gresham Street
London, EC2V 7QP
Solicitor
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