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ANNUAL REPORT & ACCOUNTS 2020
At LoopUp, we believe great
communications are at the heart
of all successful organisations.
Our mission is to help
multinational organisations
speak, meet and present
externally in the most secure,
reliable and productive way.
STRATEGIC REPORT
2 Financial Highlights
4 Why We Exist
6 LoopUp Platform Capabilities
8 Chief Executive Officers’ Statement
12 Strategic Priorities
14 GasLog Case Study
16 Our People and Culture
18 Corporate Social Responsibility
21 Streamlined Energy and Carbon Reporting (SECR)
22 Chief Financial Officer’s Review
24 Principal Risks
26 Section 172 Statement
GOVERNANCE
28 Board of Directors
30 Chairman’s Statement
31 Corporate Governance Report
40 Audit Committee Report
41 Nomination Committee Report
42 Renumeration Committee and Renumeration
Report
45 Directors’ Report
47 Directors’ Responsibilities Statement
FINANCIAL STATEMENTS
48 Independent Auditor’s Report
58 Consolidated Statement of
Comprehensive Income
59 Consolidated Statement of Financial Position
60 Company Statement of Financial Position
61 Consolidated Statement of Changes in Equity
62 Company Statement of Changes in Equity
63 Consolidated Statement of Cash Flows
64 Company Statement of Cash Flows
65 Notes to the Financial Statements
90 Company Information and Corporate Advisers
LoopUp Group plc | Annual Report & Accounts 2020
Strategic Report
Governance
Financial Statements
LoopUp Group plc | Annual Report & Accounts 2020
1
FINANCIAL HIGHLIGHTS
A strong, cash-generative
trading year
Revenue1,2
£50.2m
50.2
42.5
34.2
17.5
12.8
M
£
Gross profit1,2
£35.6m
35.6
28.2
23.9
13.4
9.6
M
£
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
Adjusted EBITDA1,2,3
£15.3m
15.3
7.7
6.4
3.5
1.3
M
£
Adjusted operating profit1,2,3
£9.0m
9.0
4.5
1.2
M
£
(0.3)
0.7
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
Cash at 31 December 2020
£12.1m
(2019: £3.0m)
Notes:
1. Historical financials exclude discontinued BT technology licensing line
of business that ended November 2016
2. 2018 includes 7 months of MeetingZone, acquired in June 2018
3. Adjusted EBITDA and operating profit exclude non-recurring transaction
costs, exceptional reorganisation costs, non-recurring transaction costs,
amortisation of acquired intangibles and share-based payments charges
2
LoopUp Group plc | Annual Report & Accounts 2020
Strategic Report
Governance
Financial Statements
REVENUE SEGMENTATION (FY2020) (%)
LPC REVENUE SEGMENTATION (FY2020) (%)
86%
82%
14%
6%
12%
Graph key:
LoopUp Platform Capabilities (LPC) – £43.0m
Other – £7.2m
Graph key:
Remote Meetings – £35.3m – 82%
Managed Events & Webcasts – £5.0m – 12%
Cloud Telephony – £2.7m – 6%
LoopUp Group plc | Annual Report & Accounts 2020
3
WHY WE EXIST
Global cloud platform
for premium external
communications
COVID-19 has intensified and accelerated a change in working habits.
We expect remote and hybrid working to become a permanent part
of business life.
To support this way of working, businesses are
increasingly investing in technology that delivers effective
communications and collaboration, both internally with
colleagues and externally with customers, partners and
suppliers.
While many unified communications platforms in the
market today focus primarily on the internal collaboration
experience, by contrast LoopUp’s platform is focused on
external communications. At LoopUp, we believe external
communications are business-critical and warrant a
best-in-class capability.
With external communications, there is little or no tolerance
for things going wrong, especially when it comes to audio
quality. LoopUp’s global voice network was built for the
stringent demands of professional services. We leverage
the relative strengths of 16 carefully selected regional
tier-1 carriers to achieve ‘highest quality routing’ and resilient
quality of service.
Security and compliance are non-negotiable, and LoopUp
is ISO 27001 accredited across its global operations. We
leverage the extensive experience and expertise of our
network operations team and in-house Microsoft voice
consultants to ensure a secure and compliant
implementation, globally.
Our platform comprises global capabilities for:
• Cloud Telephony: primarily focused on relatively
international and fully-managed implementations
for larger sized enterprises
• Remote Meetings: primarily focused on business-critical,
external client meetings for Professional Services firms
• Managed Events and Webcasts: primarily focused on
a premium end-to-end experience for hosts and
coordinators of important virtual corporate events
At LoopUp, we believe
external communications are
business-critical and warrant
a best-in-class capability"
Steve Flavell and Michael Hughes
4
LoopUp Group plc | Annual Report & Accounts 2020
Strategic Report
Governance
Financial Statements
INTERNATIONALLY
BUSINESS-CRITICAL
PREMIUM
DIFFERENTIATED
EXTERNAL
MANAGED EVENTS
CLOUD TELEPHONY
REMOTE MEETINGS
& WEBCASTS
We recognise that the quality of communications tools reflect brands in the outside world, and we embrace that
duty of care. More than 5,000 organisations trust LoopUp for their external communications – from major
multinationals to fast-growing SMEs, public sector bodies and professional services firms, including 20 of the top
100 global law firms.
LoopUp Group plc | Annual Report & Accounts 2020
5
LOOPUP PLATFORM CAPABILITIES
Our cloud platform for external and specialist
communications includes three core
capabilities: internationally-differentiated
cloud telephony, external remote meetings,
and premium managed events and webcasts.
CLOUD TELEPHONY
Description:
LoopUp Cloud Telephony offers full PSTN replacement
integration for Microsoft Teams, delivered over our
premium voice network via Direct Routing. We offer a
fully-managed service that includes solution design,
project planning, migration and ongoing support.
The service is primarily focused on relatively
international and fully-managed implementations for
larger sized enterprises.
Differentiation:
Regulatory coverage:
• LoopUp has market-leading coverage as a fully-
licensed and regulated telecommunications service
provider, and is set to be licensed in 60 country
jurisdictions by the end of 2021.
• We offer DDI number ranges and porting (where
permitted), domestic CLI pass-through, and dynamic
E911 routing / emergency services support. Where
regulated status is prohibited, we offer local SBC
support as part of the single global implementation.
Premium voice network:
• LoopUp’s premium PSTN voice network was built
originally for the stringent demands of the
professional services conference calling market.
• Our network brings together 16 carefully selected
tier-1 carriers, all of which are interconnected over our
resilient private global IP backbone.
Delivered as a premium fully-managed service:
• Our team of Microsoft voice experts work with the
customer on an end-to-end basis from initial
consultation, through proof-of-concept and detailed
design, to project-managed international rollout and
service support.
• Our regulated status, deep Microsoft voice and
‘modern workplace’ expertise, responsive global
account management, customer administration tools,
and 24/7 multilingual support combine to facilitate a
single global implementation to consistent
configurations, processes and standards. LoopUp is
a certified Microsoft Gold partner, TAP partner and
CSP / SPLA.
Optimised spend, globally:
• The LoopUp PerfectBundleTM enables organisations
– particularly international organisations – to optimise
spend and eliminate wasted spend across their global
billing entities.
• With PerfectBundle, international calls are
incorporated as well as domestic calls, and committed
spend can be pooled across users globally, not
limited to a specific billing entity.
Best-in-class integrations:
• Clearly, LoopUp Meetings can be added as an
integrated capability for business-critical, external
meetings with a minimalist user experience, no
downloads for guests and reliable PSTN audio quality.
• Cloud Telephony ISV partner integrations are also
offered for MIFID-compliant recording and Contact
Centre implementations.
Revenue Model:
Monthly user subscriptions based on multi-year contracts
(typically three year). Additional usage charges outside
of contracted bundles billed as incurred.
6
LoopUp Group plc | Annual Report & Accounts 2020
Strategic Report
Governance
Financial Statements
REMOTE MEETINGS
MANAGED EVENTS AND WEBCASTS
Description:
LoopUp Meetings is a premium audio, web and
video conferencing solution, focused primarily on
business-critical, external client meetings for
Professional Services firms.
Differentiation:
Audio quality and reliability, first and foremost:
• LoopUp audio is carried over 16 tier-1 PSTN carriers
with managed quality of service. All carrier routings
are objectively ‘PESQ’ scored for audio quality and
carrier selection is made on a ‘highest quality
routing’ basis.
Intuitive flow and no downloads for guests:
• Our software interface is simple and intuitive to
use, even for first-time users. The minimalist design
naturally guides meetings guests through a clear,
unambiguous flow – no training required and no
software downloads.
Video at the host’s discretion:
• Uniquely, LoopUp allows the host to retain control
over whether to add video to any given meeting. At
the host’s discretion, guests are invited to turn their
cameras on.
Security of platform and experience:
• The LoopUp Meetings software drives visibility,
security and control of meetings. The host receives
a ‘Call Start Alert’ when their first guest joins the
meeting, can see who has joined, can lock their
meetings rooms, and remove guests if necessary.
• LoopUp is ISO 27001 accredited across its global
operations and all data is encrypted both in transit
and at rest. We have data transfer ‘standard model
clauses’ in place, and legally-compliant data
deletion protocols globally.
Revenue Model:
Monthly subscription with committed contracts of one
year or more, or per-minute pay-as-you-go (PAYG).
Description:
LoopUp Managed Events and Webcasts are typically
used by customers for particularly important calls,
often with a large number of guests, such as
quarterly earnings announcements, product
launches and 'town hall’ briefings.
Differentiation:
Fully managed end-to-end experience:
• Customers receive a premium level of ‘white glove’
support throughout the event process – from
customised planning and coordination, dress
rehearsal, the event itself, and post event debrief.
Experienced multi-lingual event coordinators and
operators:
• While using the latest technology, the experience is
really differentiated by the quality of the people
delivering the service. Our event call operators are
put through our own 10-week Training Academy,
which equips them to deal with any scenario. Our
multi-lingual team operate events in English,
Danish, French, German, Italian, Norwegian, Polish,
Spanish and Swedish.
Reliable audio quality:
• The service leverages LoopUp’s secure, reliable,
global audio network which provides the highest
levels of call quality. Customers can join events
from any country using local or toll-free access
numbers, and with 24/7 customer support.
Revenue Model:
Priced per event.
LoopUp Group plc | Annual Report & Accounts 2020
7
CO-CHIEF EXECUTIVES' STATEMENT
Strong cash generation facilitating
strategic transition to a broader
technology platform
FY2020 was a strong trading year
for the Group, albeit characterised
by a material spike in business
volumes at the onset of the
COVID-19 pandemic.
Group revenue increased 18% to £50.2 million (FY2019:
£42.5 million), adjusted EBITDA increased 239% to
£15.3 million (FY2019: £6.4 million), and adjusted diluted
EPS increased 760% to 15.4 pence (FY2019: 2.2 pence).
The Group ended the year with a materially stronger
gross cash position of £12.1 million (FY2019: £3.0 million)
and improved net debt position of £0.7 million (FY2019:
£11.5 million).
The COVID-19 pandemic has had a material and almost
certainly irreversible impact on the broader market for
external communications. The spotlight is on a changing set of
effective and secure communications tools that work equally
well in offices, at home, on the road, and in hybrid settings.
In line with this fast-moving market backdrop, the Group has
swiftly and proactively reassessed its own product and
market strategy given the following considerations:
• While Meetings trading remained robust in our core
Professional Services (“PS”) target market, conditions
became increasingly more challenging and competitive in
non-PS sectors, which now account for just 12% of total
Group revenue;
• The market spotlight is squarely on the cloud telephony
market, which facilitates greater remote and hybrid working
flexibility compared with legacy on premise systems. This
$15.8 billion market is set to grow rapidly to $26 billion by
20241. LoopUp’s existing cloud telephony business, our
deep expertise in Microsoft voice technology, and our
differentiated voice architecture, create a competitively-
advanced foundation to enter the market as a
differentiated add-on capability to Microsoft Teams;
• The Group believes the enterprise communications
market is set to migrate to a set of more specialist,
use-case-specific communications tools, which
complement foundational UC suite capabilities and
integrate tighter with established business workflows
and processes.
Notes:
1 Source: Wainhouse Research, 2020
The COVID-19 pandemic
has had a material and
almost certainly irreversible
impact on the broader
market for external
communications."
Steve Flavell and Michael Hughes
8
Strategic Report
Governance
Financial Statements
As such, the Group is very excited to have expanded its
strategic scope from a single capability remote meetings
business into a broader cloud platform for external and
specialist communications.
LoopUp’s Cloud Telephony value proposition is particularly
differentiated for relatively international, managed
implementations in larger enterprises, who can achieve
single global supply driven by our:
Launch of Cloud Telephony as a core LoopUp Platform
Capability (“LPC”)
In July 2020, we launched our internationally-differentiated
Cloud Telephony capability, marking the first material step in
our expanded strategic scope. This capability essentially
gives customers the ability to make and receive external
phone calls via Microsoft Teams.
• Market-leading coverage as a fully-licensed and
regulated telecommunications service provider, where
phone number ranges are offered for compliant domestic
service, including requirements such as emergency
services access and domestic CLI (Caller Line
Identification or caller ID) pass-through;
• Premium PSTN voice network, built for the particularly
The Group has a strong heritage in Microsoft voice
technology, inherited from its acquisition of MeetingZone in
2018. With expertise that stretches back to Microsoft OCS
and Lync, their most recent implementation was a multi-
tenanted cloud telephony offering for both Microsoft Skype
for Business and Teams, with revenue of £2.7 million in
FY2020. Our July 2020 launch marked the migration of this
capability onto LoopUp’s core global technology platform
and our group-wide commercial focus to promote it as a
primary LPC alongside Meetings and Managed Events.
Cloud telephony for Microsoft Teams brings compelling
customer benefits:
• A unified calling experience for end users, rather than
using Teams for internal calls and a separate legacy
system for external calls;
• For home and hybrid working – and for travelling when it
returns to business life – end users can use their Teams
app on any internet-connected device to make and
receive calls; essentially their work direct dial business
number travels with them;
• Enterprise IT departments can eliminate the cost and
complexity of disparate legacy PBXs (on premise
telephony switches) and work to a consistent set of
standards and processes, globally.
stringent demands of the professional services
conference calling market. Our voice network
amalgamates 16 carefully selected tier-1 carriers, with
whom we interconnect at our six primary global data
centres, all of which are interconnected over our resilient
private global IP backbone. The quality of all carrier call
routings are regularly and proactively assessed with
objective ‘PESQ scoring’, and we leverage their relative
strengths on a ‘highest quality routing’ basis. As an
international organisation, why buy cloud telephony from
a single carrier when, with LoopUp, you can leverage that
carrier where it is strongest but 15 others in geographies
where they are stronger;
• Delivery of the capability as a premium, fully-managed
service, on an end-to-end basis from initial consultation,
through proof-of-concept and detailed design, to
international rollout project management and ongoing
service delivery. Our deep Microsoft voice and ‘modern
workplace’ expertise, responsive global account
management and support, unified customer
administration tools, and support of local deployments in
difficult regulatory jurisdictions, all combine to facilitate a
single global implementation to consistent configurations,
processes and standards;
• Complementary capabilities – not just other LoopUp
Meetings and Managed Events, but also third party
integration for compliant recording and contact centre
functionality;
• Unique pricing structure – the LoopUp PerfectBundle™ –
which enables international organisations to optimise
spend and eliminate wasted spend across their global
billing entities.
LoopUp Group plc | Annual Report & Accounts 2020
9
CO-CHIEF EXECUTIVES’ STATEMENT
CONTINUED
Strong commercial momentum in Cloud Telephony
Commercial traction of our new Cloud Telephony capability
has progressed at a rapid pace since July 2020, above and
beyond the Group’s pre-existing cloud telephony business
(£2.7 million in FY2020).
Our pipeline of live opportunities has grown from a potential
Total Contract Value (“TCV”)2 of £50 million at the time of our
September 2020 interims statement, to £84 million at our
November 2020 trading update, and now to approximately
£106 million. This TCV assumes an average minimum
contract term of two years, which we consider to be highly
conservative given nearly all later stage discussions are for
terms of at least three years. The pipeline currently
comprises 454 live opportunities at an average of
approximately £10,000 of monthly recurring subscription
revenue potential.
In the later stages of this pipeline, we now have 6 live Proofs
of Concept (“POC”) with customers whose intent is to move
ahead with LoopUp but first wish to test the capability in
their own environment. A POC period is typically 1-3 months.
The potential TCV of these live POCs is approximately
£5 million.
Most notably of all, however, we have achieved three new
Cloud Telephony contract wins since the start of FY2021.
They comprise an architectural engineering company, a
renewables energy company, and a marketing and
communications company, and have a minimum TCV in
excess of approximately £620,000. We have also received
notification of a further RFP win although this is yet to be
formally contracted.
The Group is also making swift progress in its strategic
initiative to maximise its international regulatory compliance
coverage, a key aspect of differentiation to our international
enterprise target market. We are comfortably ahead of our
stated target to be a fully-licensed telecommunications
service provider in at least 60 country jurisdictions by the
end of 2021.
Related to this international regulatory initiative, the Group is
also party to a growing number of exciting discussions with
potential indirect strategic distribution partners. Microsoft
has many global distribution partners, and while very few
aspects of Microsoft’s portfolio are broadly regulated, cloud
telephony is. In nearly all country jurisdictions, suppliers to
the end customer market have to be licensed and regulated.
Many major global Microsoft partners have end customers
that are considering moving to Teams cloud telephony, but
few are licensed telecommunications service providers, at
least on the multinational level of their end customers. For
this and other reasons – our voice network, expertise and
managed service platform – LoopUp is very well positioned
to add value as a specialist partner, which could become a
highly scalable medium term growth path for the Group.
Stark segmental performance contrast in Meetings
In its entirety, FY2020 was a strong trading year for the
Group. LPC revenue grew 25% to £43.0 million (FY2019:
£34.4m), LPC gross margin improved by one percentage
point to 77.8% (FY2019: 76.8%), and LPC business volumes
grew 41% to 1.00 billion minutes (FY2019: 0.71 billion minutes).
It was also a strong year for new business acquisition. Our
New Customer CAC Ratio – the fully-loaded cost to acquire
£1 of new ARR – improved to £0.84, from £1.38 in FY2019
and in comparison to the 2020 SaaS benchmark of £1.633 .
However, as announced in our 27 November 2020 trading
update, while trading spiked broadly at the onset of the
pandemic, we subsequently experienced a gradual decline
and a stark divergence in performance between our
core Professional Services (“PS”) sectors and non-core,
non-PS sectors:
• Gross revenue retention level was 86% in PS (in line with
2020 SaaS benchmark: 86%), but materially lower at 67%
in non-PS;
• Q4 2020 average revenue per day increased by 1%
versus pre-pandemic levels in PS, but reduced by 31% in
non-PS.
10
LoopUp Group plc | Annual Report & Accounts 2020
Strategic Report
Governance
Financial Statements
This performance gap highlights an acceleration of the trend
that the Group has spoken to over the last several results
cycles: that our Meetings capability is focused on business-
critical, external meetings and therefore performs materially
better in PS sectors, where the use case is dominated by
client meetings, both in terms of their volume and
importance. By contrast outside of PS, our Meetings
capability is less differentiated and competition is more
intense. We note, however, that while we expect trading to
remain challenging for our Meetings capability outside of PS,
that: (i) this performance gap only applies to our Meetings
Capability (and not to Cloud Telephony or Managed Events);
and (ii) that revenue from non-PS, pay-as-you-go Meetings
customers now represents just 12% of total revenue.
Post spike trading has also been impacted by the material
migration from rolling monthly pay-as-you-go contracts to
committed term subscription and minimum spend contracts.
Such committed contracts accounted for 48% of LPC
business by the end of the year, compared with just 13% at
the start of the year. While these committed term contracts
naturally come with more cost-effective pricing for the
customer, they benefit from a longer period of locked-in
revenue certainty.
The Group also continued to innovate and develop its
Meetings capability for its core PS target market, with
development projects including:
• Enhancing video to facilitate 20 concurrent cameras;
• Release of ‘LoopUp Rooms’, which leverages off-the-shelf
hardware to create high quality, plug-and-play video
conferencing suites;
• Access to a promotional ‘freemium’ plan to enable
end users and decision-makers to try the capability
on demand.
Business priorities
Looking ahead into FY2021, the Group is focused on the
following business priorities:
Pipeline development and conversion in Cloud Telephony:
Continuing the rapid growth of live opportunities; developing
the weighting of live opportunities to more progressed
stages in the sales cycle; generating an increasing rate
of successful conversions into new customer wins; and
reaching a state of material predictable revenue growth
at attractive unit customer acquisition economics;
Highly scalable strategic distribution partnerships:
Seeking to form strategic partnerships with major global
Microsoft partners who sell other related Microsoft
technology but are not licensed to sell cloud telephony,
particularly on a multi-jurisdictional basis consistent with
their enterprise customer bases;
Clear segmental focus on external Remote Meetings:
Instilling even greater focus into our Remote Meetings
marketing and development roadmap as a targeted
capability for business-critical, external meetings, in line
with our starkly stronger performance in the Professional
Services market;
Continued innovation in new technology capabilities:
Exploring a range of potential platform capability
enhancements – both organic and inorganic – to advance
our strategy as a leading cloud platform for premium
external and specialist communications.
Having expanded our strategic scope from a single
capability remote meetings business into a broader cloud
platform for external and specialist communications,
FY2021 is inevitably set to be something of a transitional
year for the Group. While we have formed a sizable and
engaged pipeline of live commercial opportunities, it will
naturally take some time to nurture and develop these
opportunities through the pipeline sales cycles stages for
what is, after all, a highly visible, business-critical and
long-term purchasing decision.
Furthermore, we note the clear residual market uncertainties
relating to the COVID-19 pandemic and the associated
instability around overall macro conditions, business
climate and working practices that may impact our business
to some extent. However, these factors notwithstanding,
the Group has a strong balance sheet coming out of
FY2020, an unprecedented commercial pipeline for our
newly-launched Cloud Telephony capability in terms of both
size and engagement levels, and many exciting avenues to
take our broader communications platform, both organically
and inorganically. We have a high quality, committed and
incentivised team, and are confident in our ability to
manage the transition and provide the platform for strong,
profitable growth.
Steve Flavell
Co-CEO
Michael Hughes
Co-CEO
Notes:
2 Conservatively assuming an average contract term of 2 years
3 KBCM Technology Group (formerly Pacific Crest Securities) SaaS survey
LoopUp Group plc | Annual Report & Accounts 2020
11
STRATEGIC PRIORITIES
Expanding our proven
distribution model and
continuing to develop our
proposition remain top priorities
PRIORITY
EXPLANATION
NEW BUSINESS ACQUISITION
Building scalable and efficient routes
to market, with increasing focus on
our cloud telephony solution.
CONTINUE TO DEVELOP OUR
PLATFORM AND SOLUTIONS
Continue to innovate and develop
our suite of platform capabilities to
complement foundational UC suites,
such as Microsoft Teams.
12
LoopUp Group plc | Annual Report & Accounts 2020
Strategic Report
Governance
Financial Statements
ACHIEVEMENTS
OUTLOOK
• Rapid development of Cloud Telephony pipeline, reaching an
estimated potential Total Contract Value of >£80 million by the
end of 2020
Invest in content-led digital marketing and
social prospecting to generate new
business leads
•
Increased volume of target market inbound leads by focusing
marketing activity on reaching IT decision makers at
international organisations with 1000+ employees across
Europe, US and APAC
• Expanded range of marketing activities to include third-party
publisher lead generation, content syndication campaigns and
increased marketing content output
• Strengthened our existing Pre-sales, Consulting and Project
Delivery teams with senior hires in the UK, and expanded the
team’s reach with hires in the US and Australia
Develop our pipeline for progressive Cloud
Telephony new customer wins
Enter into strategic partnership discussion for
indirect distribution of Cloud Telephony
Maximize cross-sales from Remote Meetings
and Cloud Telephony into our Managed Events
and Webcasting capability
• Launched Cloud Telephony for Microsoft Teams on our global
technology platform
•
Integrated remote meetings solution with Microsoft Teams
and Slack, enabling users to initiate LoopUp Remote Meetings
on demand
• Launched LoopUp Rooms, which combines our remote
meeting solution with off-the-shelf hardware to create high
quality, plug-and-play video conferencing suites
• Enhanced our video capability to 20 concurrent cameras
•
Introduced a new security verification feature for guests who
join a meeting by dialling in and then wish to view content
Expand where we are a fully licenced and
regulated telecommunications service provider
to 60 country jurisdictions
Introduction of PerfectBundleTM rating and
billing for Cloud Telephony
Add computer audio (VoIP) to LoopUp
Remote Meetings
Add a ‘webcasting’ capability to our Managed
Events solution
LoopUp Group plc | Annual Report & Accounts 2020
13
GASLOG CASE STUDY
How a global liquefied natural gas
shipping company migrated to Microsoft
Teams and implemented cloud telephony
across the business with LoopUp
GasLog is the leading global
provider of liquefied natural gas
(LNG) shipping services. GasLog’s
fleet consists of 35 LNG vessels
and the company has offices in
Greece, London, New York and
Singapore and over 1,800
onshore and offshore staff.
GasLog is introduced to LoopUp
Back in 2015, GasLog was using different telephony
providers in each of its offices. This was causing
operational complexity and driving up costs.
GasLog decided to implement a global unified
communications solution that would move all staff
onto a consistent platform.
The company realised that a project of this scale
would require an experienced partner to manage
the deployment. LoopUp was recommended by
GasLog’s UK Microsoft Representatives.
LoopUp advised GasLog on the different UC
technologies available and suggested Skype for
Business was the most suitable for their needs. Due to
the company’s strong knowledge and experience of
Microsoft voice solutions, GasLog selected LoopUp as
their partner. LoopUp deployed on-premises Skype
for Business across all of GasLog’s worldwide offices
and vessels. GasLog was able to replace all their
voice providers with a single managed service.
GasLog decides to migrate to Teams in 2020
After five years of using on-premises Skype for
Business, GasLog decided they wanted to move
their telephony to the cloud. They were also looking
for a tool that could offer them more collaboration
functionality such as document sharing and
group messaging.
LoopUp suggested moving to Microsoft Teams and
implementing Teams Calling. It would allow users to
make and receive external calls directly from Teams
on any compatible and internet-connected device
from anywhere in the world. Teams also offers a more
diverse feature-set than Skype for Business. This
includes group messaging, document sharing, file
storage and app integration in addition to voice calling,
video conferencing, and IM functionality.
When the COVID-19 pandemic struck and GasLog
office employees were forced to work remotely,
they decided to accelerate the migration.
The migration process
The full migration took three weeks. The first part
involved a consultation and design phase where each
stage in the migration was mapped out. A phased
migration needed to be planned carefully as different
groups would be moved over at different stages and
communication between the two systems, Teams and
Skype for Business, would not be possible. GasLog
initially decided to conduct the transition office by
office, starting with the Greek headquarters. LoopUp
advised against this as the majority of users were
based in this office and would be communicating with
vessels, vendors and the other offices on a daily basis.
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LoopUp Group plc | Annual Report & Accounts 2020
Strategic Report
Governance
Financial Statements
Instead, LoopUp recommended the
migration take place on a departmental
basis. This would allow the team to focus
on a certain subset of users with similar
requirements. It would also help
overcome challenges with adoption.
Next, GasLog’s ICT team tested all the
functions of Microsoft Teams – meetings,
file sharing, cloud voice and calling
groups. LoopUp then proceeded to
deploy Microsoft Teams across each
department. Microsoft’s Phone System
was connected to the public switched
telephone network (PSTN) using Direct
Routing over LoopUp’s premium voice
network. Call transfer, forwarding and
voicemail were set up and all existing
telephone numbers were migrated
over to the Teams environment.
Results
LoopUp worked closely with GasLog to
deploy Teams across their business,
onshore and offshore, and to implement
cloud telephony, allowing users to make
and receive external calls from Teams on
any device, anywhere in the world.
This proved critical to the function of the
vessel staff and to keep communications
open with remote workers during
COVID-19. The project was a success
and adoption of Teams for internal
collaboration and voice calls has been
widespread across the business.
The plan was quite complex and
challenging but LoopUp responded
very quickly and were professional at
every step. They had a great
understanding of our company’s
requirements and that was the key to
success. They really listened to our
concerns and recognised our
limitations. We had a very good
project team that worked with us
closely. LoopUp delivered what they
had to in a perfect way”
Stelios Sabanis, Head of ICT, GasLog
LoopUp Group plc | Annual Report & Accounts 2020
15
OUR PEOPLE AND CULTURE
At LoopUp, we recognise that our
people are our most valuable asset
It is our employees who shape our business, make
us who we are and ultimately drive our success.
KEY STATS
Employees (at year end)
Female employees
245
42%
16
Number of offices
Percent of staff
promoted in 2020
30%
We strive to foster a culture of respect, and are committed to making our
workplace diverse, inclusive and accessible for all our employees. We believe
that a workplace that is characterized by openness, trust, and teamwork will lead
to higher motivation, more creativity, and innovative solutions for our customers.
A collaborative culture
At LoopUp, we place a clear emphasis on teams and cooperative team-working
across our business. We believe this leads to better decision-making, which in
turn drives high performance for our business.
Our new business development employees work in small teams or pods. Each
pod is incentivised solely as a team on the basis of new recurring revenue
brought into the business. It drives a collaborative culture in contrast to
self-interested choices inspired by individual commission schemes.
Our engineers work in scrum teams, with each scrum including a mix of
engineering, quality assurance and product management resource. Each Scrum
team typically consists of five to seven employees, working together to deliver
product improvements or new releases. Scrums are self-organised and cross-
functional. They choose how best to accomplish their work, rather than being
directed by others outside the team and they have all competencies needed to
accomplish the work without depending on others not part of the team. This
makes our engineers nimbler and more productive, and ultimately leads to faster
and higher quality product innovation.
Our customer success department operates as a global team in a ‘follow the sun’
model. Each team member hands off work at the end of their workday, to another
team who is starting their day on the other side of the world. This method allows
us to provide 24-hour service without putting the burden on one site and
requiring employees to work late shifts or overtime.
Strengthening our team
In order to expand our cloud telephony offering, LoopUp made seven new hires that
were Director Level and above in 2020. The new hires were made in the UK, the US,
Australia and Europe. The roles included SVP of Telecommunications Strategy, Senior
Director of Project Delivery, Microsoft Technology Lead, Global Head of Consulting
and Associate Director of Commercial Operations.
16
LoopUp Group plc | Annual Report & Accounts 2020
Strategic Report
Governance
Financial Statements
Championing diversity
At LoopUp, we are committed to building a diverse and
inclusive culture. In 2020, we launched Inclusivity, Diversity
and Equality at LoopUp (IDEAL), an inclusion group that aims
to develop understanding of issues around gender, age,
race, nationality, sexual orientation and disability. IDEAL is
open to all employees. More than 60 volunteers have
donated their time to plan activities and educational
sessions for the wider company to drive awareness of
diversity and inclusion. The group also share books, articles,
films and podcasts on our company intranet which educate
on diversity. IDEAL also raise awareness of prominent
holidays and events such as Black History Month,
Juneteenth and Pride.
IDEAL Speaker Series
In September 2020, IDEAL ran a speaker series which
included a live discussion with Erika McCall, Founder of the
Go For Yours Foundation on the black experience in America.
The conversation covered topics such as diversity in the
workplace and how we can discuss racial issues with others
whilst ensuring conversations are respectful, informative,
and productive.
Safeguarding our employees during the pandemic
We quickly introduced home working for all our offices as
lockdown measures were introduced in most countries.
We ensured all staff were equipped and able to work
efficiently remotely, making the most of the
technology available.
Motivation and engagement of employees has been
paramount, especially during a time of uncertainty. Regular
communications from our co-CEOs, Executive Leadership
Team and senior management team have served to
reassure, support and connect colleagues while they were
distanced from one another. We increased the frequency of
all-hands calls to bi-weekly, ensuring all our employees are
updated on important initiatives across the business.
To support our employees’ wellbeing, we made articles
available for coping with stress, anxiety and uncertainty on
our company intranet, The Loop. We also hosted virtual
social activities such as yoga, cooking classes and quizzes
to bring staff together. We have monitored how our people
have been feeling through online surveys and equipped our
leaders on how to motivate and look after their teams during
these uncertain times.
Our values
ACTING WITH
PROFESSIONALISM
• Being accountable
and reliable
• Displaying professionalism
• Acting with integrity
DEMONSTRATING A
‘ONE TEAM’ ATTITUDE
• Treating others with trust
and respect
• Being collaborative, helpful
and supportive
• Making the job fun
DISPLAYING A
PASSION FOR RESULTS
• Being industrious,
determined and ambitious
• Taking ownership and
being a self-starter
• Being innovative, curious
and agile
• Focusing on business
outcomes and taking a
lean approach
LoopUp Group plc | Annual Report & Accounts 2020
17
CORPORATE SOCIAL RESPONSIBILITY
Focusing on the environment,
our communities and
our future
We recognise that we have a responsibility to our
employees, to the communities in which we work,
and to our planet.
Our Corporate Social Responsibility (CSR) programme is an
intrinsic part of our business. At LoopUp, we are committed
to reducing the impact of our activities on the environment,
promoting equality and social mobility, and supporting
entrepreneurial activities. We contribute through a
combination of charitable giving, volunteering and
mentorship, and we collaborate with charities, not-for-profit
organisations and community groups.
Reducing business travel with our products
We recognise we can make positive contributions to the
environmental agenda through our products. Our solutions
are designed to inspire our customers to meet remotely as
much as possible rather than feeling the need to travel.
In light of changing working practices stemming from the
COVID-19 pandemic, we are working with our customers to
help them use our technology to reduce their own
environmental footprints, while continuously improving the
product experience to move the needle further.
Green Earth Appeal
Respect for the environment is integral to our CSR
commitments. In our partnership with Green Earth Appeal, a
global not-for-profit social enterprise supported by the
United Nations, we plant a fruit tree for every new, fully
set-up LoopUp user. Since the programme’s launch, we have
now planted over 55,000 new trees.
The fruit trees, which are planted in some of the world’s
poorest locations across South America, Africa and Asia,
serve both to reverse the impact of greenhouse gas
emissions and also provide food and revenue for the local
communities.
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LoopUp Group plc | Annual Report & Accounts 2020
Strategic Report
Governance
Financial Statements
Giving Week
We provide financial support to not-for-profit organisations
that align with our CSR goals through our Giving Week
initiative. The programme was launched in 2020, after a
group of LoopUp employees suggested the idea to our
management team.
Each quarter, our Giving Week coordinators select four
charities or non-profit groups that advance social causes
such as anti-racism, equality, education and the
environment. During Giving Week, our employees are
educated on these charities and are asked to vote on a
relative allocation of donations. In 2020, we donated to
charities including Black Girls Code, Equal Justice Initiative,
Sutton Trust, NGO Open Arms and Sarah’s Circle.
Shine Through Sport
We are committed to giving back to the communities in
which we live and work. In the UK, we work with Shine
Through Sport, a not-for-profit organisation that provides
local schools and communities with access to high-quality,
qualified professional coaches.
The programme uses the power of coach-led sport to help
inspire and lead children towards healthy lifestyles and a
lifelong love of sport. In 2020, Shine Through Sport and its
sponsors delivered over 1,500 coaching hours to 1,050
children, across 8 academic institutions.
GBx
At LoopUp, we believe that entrepreneurship is key to
innovation and job creation. We support GBx, a community
of British tech entrepreneurs, investors and senior
technology executives in the San Francisco Bay Area.
GBx offers help, support and advice to other entrepreneurs
looking to establish themselves in the area, and also helps to
inform British Government policy thinking on some of the key
emerging issues in the tech space. The organisation was
founded by eight entrepreneurs including our co-CEO,
Michael Hughes.
Silicon Valley Internship Programme
We want to give back to the entrepreneurial community and
help spread innovation, diversity, and entrepreneurship
around the world. The Silicon Valley Internship Programme
(SVIP) was founded by LoopUp’s co-CEO Michael Hughes in
2013. The programme aims to expose some of the most
talented young people around the world to the tools,
experiences and network they need to flourish.
The programme is open to all top-ranking Software
Engineering and Computer Science graduates globally.
Successful applicants are offered a one-year internship at a
high growth tech company in Silicon Valley. In 2020, we
hired five engineers through the SVIP.
LoopUp Group plc | Annual Report & Accounts 2020
19
We partner with the Green
Earth Appeal to offset the
greenhouse gas emissions
resulting from business
expansion. Under this
programme, a tree is planted
for every new user fully set
up on the LoopUp platform."
Edward Cooper
20
LoopUp Group plc | Annual Report & Accounts 2020
STREAMLINED ENERGY AND CARBON REPORTING (SECR)
Strategic Report
Governance
Financial Statements
In 2020 the Group’s employees were located
in 16 offices around the world
In some office buildings, energy usage is metered and the
Group pays for energy directly consumed. In other office
buildings, energy usage is pooled across all building
tenants and the Group pays a service charge that includes
energy consumed.
Energy consumption across the Group has been estimated
by calculating electricity usage per employee in our main
London office, where data is available for energy directly
consumed. This electricity usage per employee figure has
then been applied to all employees in the Group.
The greenhouse gas emissions have been calculated using
a conversion factor of 0.233 tCO2e per MWh. This is the
greenhouse gas conversion factor recommended by the
UK Government for company reporting purposes.
The Group has no significant energy consumption which
falls into scope 1.
LoopUp energy consumption data, 2020
UK
International
Total
Energy consumption
(MWh)
Scope 2: (tCO2e)
Employees
tCO2e per employee
100
23.4
160
0.15
62
14.5
99
0.15
162
37.8
259
0.15
In 2020 the Group identified several actions to reduce
energy consumption and greenhouse gas emissions.
These include increasing the number of employees that
work remotely for some or all of the week, rather than being
present in the office, and introducing more hotdesks.
This will allow the Group to rationalise its office space
requirements by closing some offices and reducing
the capacity of others, which will reduce total
energy consumption.
In addition, the Group partners with the Green Earth Appeal
to offset the greenhouse gas emissions resulting from
business expansion. Under this programme, a tree is
planted for every user fully set up on the LoopUp platform.
LoopUp Group plc | Annual Report & Accounts 2020
21
CHIEF FINANCIAL OFFICER’S REVIEW
A year of continued strong
top-line growth
2020 saw the launch of
our enhanced Cloud
Telephony capability, and
the strategic shift to a
broader cloud platform
for external and specialist
communications."
Simon Healey
During FY2020, the Group
benefitted from of a period of
materially-increased demand, which
significantly strengthened our
balance sheet and provided a strong
platform to invest in launching our
Cloud Telephony capability onto our
core global platform.
Operating results
Group revenue increased by 18% in FY2020 to £50.2 million.
This was as a result of a significant spike in demand for both
our Meetings and Managed Event capabilities during March
and April 2020, after which demand gradually declined with
starkly-divergent performance between core Professional
Services (“PS”) sectors and non-core, non-PS sectors, for the
reasons outlined in the CEOs’ review.
Following the launch of our enhanced Cloud Telephony
capability during 2020, and the strategic shift to a broader
cloud platform for external and specialist communications,
the Group has evolved its segmental reporting analysis
accordingly. Revenue from our Cloud Telephony, Remote
Meetings and Managed Events capabilities, all delivered on
LoopUp’s global technology platform, will now be
categorised as LoopUp Platform Capabilities (“LPC”). The
Group’s remaining revenue, from the resale of Cisco WebEx
Meetings, will be categorised as ‘third party resale services’.
FY2020 revenue from LPC increased by 25% to £43.0 million
(FY2019: £34.4 million), and revenue from third party resale
services fell by 12% to £7.2 million (FY2019: £8.1 million).
22
LoopUp Group plc | Annual Report & Accounts 2020
Strategic Report
Governance
Financial Statements
Revenue
£50.2m
FY2019: £42.5m
Adjusted EBITDA
£15.3m
FY2019: £6.4m
The Group’s overall gross profit increased by 26% to £35.6
million (FY2019: £28.2 million), and LPC gross profit increased
by 27% to £33.5 million (FY2019: £26.4 million). This represents
a gross margin of 77.8%, one percentage point higher than
FY2019, representing both: (i) improvements in telephony rates,
the main cost of sale; and (ii) the slight change in mix, with more
high margin Managed Event revenue. Overall gross margins
increased by 4.5 percentage points to 70.9%, reflecting the
change in mix, with relatively less third party resale revenue at
significantly lower gross margins.
The Group was able to deliver this additional revenue with a
lower cost base – administrative expenses fell 7.7% to £20.3
million (FY2019: £21.8 million). The majority of these savings
were in overheads, with the Group able to reduce expenditure
on premises (the majority of our offices are in flexible spaces
rather than long term leases), marketing (due to the suspension
of trade show activity), and travel.
Staff costs were broadly similar to FY2019. Total headcount
fell by approximately 20 during the year, largely due to a
reduction in more junior, commercial staff. However, this was
offset by: (i) the Group investing materially in specialist
expertise for the Cloud Telephony market; and (ii) an
increase in staff bonuses as a result of trading performance.
The Group reported no exceptionals in the year
(FY2019: £0.5m).
Amortisation costs increased to £4.6 million (FY2019:
£3.8 million), and spend on development activities increased
from £5.0 million in FY2019 to £6.9 million in FY2020,
reflecting both the increased investment in Cloud Telephony
and increased bonuses, as above.
The resulting statutory operating profit for the year was
£6.3m (2019: loss of £2.1m) and profit before tax was £5.7m
(2019:loss of £2.8m).
The Group continues to receive a tax benefit from its
development activities, and expects to receive an R&D
tax credit of £1.4 million from HMRC for FY2020 (FY2019:
£1.3 million), payable during FY2021. This credit was partly
offset by £0.7 million of tax charges payable in the Group’s
non-UK subsidiaries.
Assets and Cash Flow
The Group generated operating cash flow after capital
expenditure of £11.4 million (FY2019: £0.1m) and, after debt
repayments, increased its cash balance by £9.1 million to
£12.1 million. Resulting net debt has fallen to £0.7 million as
at 31 December 2020 (FY2019: £11.4 million).
The Group did not take advantage of any Government
furlough scheme or international equivalent during FY2020
or since. However, £1.0 million of VAT payments from
H1 2020 were automatically deferred and are payable in
H1 2021.
Even after the profitability of FY2020, the Group still has
accumulated trading tax losses of £8.5 million and non-trade
losses of £1.5 million available for offset against future UK
profits. These losses, alongside the significant additional
relief available for our ongoing development spend, will
continue to benefit the Group’s tax charge in FY2021
and beyond.
Due to the reduction in revenues later in FY2020 and the
continued uncertainties relating to the COVID pandemic, the
Group’s management and Board have carefully reviewed both
near and mid-term forecasts and are comfortable with the
Group’s going concern status.
While the reduction in revenue is also considered an
indicator of potential impairment in relation to the Group’s
intangible assets balances, following detailed modelling of
future cash generation, the Board is comfortable that there is
no requirement to impair these assets as at 31 December
2020. However, recent increases in churn, particularly in
non-PS Meetings customers, indicates that the useful
economic life of the Customer Relationships asset acquired
with MeetingZone may be lower than the 15 years originally
estimated for accounting purposes. Any impact from this
on the Group’s amortisation charge is immaterial for FY2020,
but the Group will continue to monitor these metrics
and make adjustments to the useful economic lives
as appropriate.
Key Performance Indicators (KPIs)
The Group's KPIs, including key financial measures
alongside measures such as churn and customer wins, are
discussed in detail in the co-CEO's statement.
Simon Healey
CFO
LoopUp Group plc | Annual Report & Accounts 2020
23
PRINCIPAL RISKS
As with any business, the Group is subject to a number of
risks and uncertainties, some of which are outside of our
control. The Board confirms that there are ongoing
processes for identifying, evaluating and mitigating the
significant risks facing the Group. The processes are
consistent, so far as appropriate given the size and nature of
the business, with the guidance issued by the Financial
Reporting Council.
Below, we have identified the principal risks and
uncertainties which could have an adverse material impact
on the Group. This list is not exhaustive and it should be
noted that additional risks, which the Group does not
consider material, or of which it is not aware, could have an
adverse impact.
PRINCIPAL RISK
IMPACT
MITIGATION
COMPETITION AND
TECHNOLOGICAL
CHANGE
PEOPLE
KEY SYSTEM
FAILURE OR
DISRUPTION
The Group’s Meetings business is in
a market that has been materially
impacted by the COVID-19
pandemic. Certain competitors may
benefit more from the pandemic than
LoopUp in terms of brand
prominence and product network,
which may in turn lead to higher
churn in LoopUp’s customer base.
The Group’s primary competitors are,
in many cases, significantly larger
enterprises with greater financial and
marketing resources. There can be
no guarantee that the Group’s
current competitors or new entrants
to the market will not bring new or
superior technologies, products or
services at similar or lower prices.
Difficulties encountered in retaining
senior staff and recruiting
appropriate employees, and the
failure to do so, or a change in
market conditions that renders
current incentivisation structures
lacking, may hinder the Group’s
ability to grow.
Any malfunctioning of the Group’s
technology and systems, or those of
key third parties, even for a short
period of time, could result in a lack
of confidence in the Group’s
services, with a consequential
material adverse effect on operations
and results.
In our Meetings business, we
maintain and promote a
differentiated value proposition for
the Professional Services market. In
this market segment, remote
meetings are ‘mission-critical’ and
typically involve external guests, in
contrast to other providers which
target the mainstream where most
remote meetings occur internally
between colleagues.
In 2020 the Group is increasing its
investment in product development
and is introducing new product
capabilities – most notably Cloud
Telephony – which benefits from
greater growth and different
competitor dynamics.
The Group believes it has the
appropriate incentivisation structures
in place to attract and retain the
calibre of employees necessary to
ensure the efficient management,
operation and growth of the
business.
The Group regularly reviews the
appropriate redundancy and
resiliency in its network operations,
is ISO 27001 certified across its
global operations, and has
implemented a sophisticated Service
Event Response Team (SERT) with
detailed processes and procedures
for responding to any size or type of
service outage or disruption.
Members of the SERT are located
around the world, enabling 24x365
coverage.
24
LoopUp Group plc | Annual Report & Accounts 2020
Strategic Report
Governance
Financial Statements
Key
Increased
Decreased
Unchanged
PRINCIPAL RISK
IMPACT
MITIGATION
PRODUCT
DEVELOPMENT
INTELLECTUAL
PROPERTY
FOREIGN
EXCHANGE
All product releases are put through
rigorous quality assurance cycles,
followed by internal user acceptance
testing before release to customers
in a considered and organised
rollout strategy. Care is also taken to
be able to ‘roll back’ to previous
versions of the product whenever
practically possible.
The Group is aware neither of any
challenges to its intellectual
property, including its three granted
patents, nor of any infringements to
others’ intellectual property. We
maintain an active policy regarding
patents and trademarks as
appropriate.
We maintain robust contracts with
any key software licensed from third
parties, and are aware of and
informed about alternative sources
of supply as necessary.
The Group’s costs and revenues in
US Dollars are broadly aligned,
providing a natural hedge. This
position is monitored continually by
management.
New capabilities and enhancements
introduced into the Group’s product
may contain undetected defects that
fail to meet customers’ performance
expectations or satisfy contract
specifications, and this may impact
the Group’s results and reputation.
Challenges to the Group’s
intellectual property or alleged
infringements of others’ intellectual
property, by either competitors or
other third parties, could result in
costs, liabilities and operational
uncertainties for the Group and
there can be no guarantee as to the
outcome of any such challenge or
associated litigation.
The Group also licences software
from third parties and the Group’s
continuing rights to do so cannot be
guaranteed.
Given the Group’s material US sales
and operations, fluctuations in
foreign currency exchange rates
could have a material effect on the
Group’s revenue and profitability,
and there can be no guarantee that
the Group would be able to
compensate or hedge against such
effects.
The UK’s exit from the European
Union has the potential to increase
foreign exchange volatility.
LoopUp Group plc | Annual Report & Accounts 2020
25
SECTION 172 STATEMENT
We believe that proactively engaging with, and
acting on the needs of, our key stakeholders is
critical to a culture and strategy that achieves
long-term sustainable success
The Board identifies the following as its key stakeholders,
and it is committed to effective engagement with them to
promote the success of the company for the benefit of
each group:
Shareholders
Our aim is to promote long term value and growth to our
shareholders. Through our AGMs, Capital Markets Days
(from time to time), investor meetings and other discussions
with our shareholders, we are able to communicate
effectively with this group to help shape our commercial
strategy. Please see our Corporate Governance Report
from page 31 for further information.
Community
We believe in making a commitment to the communities we
live and work in, to our planet and to society more broadly.
Please see our Corporate Social Responsibility section on
pages 18 and 19 for further information.
Relevant information obtained from our key stakeholders is
provided to the Board through reports sent in advance of
each Board meeting and through in-person presentations.
As a result of these activities, the Board has an overview of
engagement with stakeholders, and other relevant factors,
which enables the Directors to comply with their legal duty
under section 172 of the Companies Act 2006.
This strategic report was approved by the Board of Directors
and authorised for issue on 17 May 2021.
It was signed on their behalf by:
Steve Flavell
Co-CEO
17 May 2021
Employees
We are committed to investing in our people and creating an
environment where every employee can reach their full
potential. We regularly communicate with our employees via
face-to-face meetings, employee surveys as well as team
and company-wide meetings. Such communication drives
the process on how we can support our employees reaching
their potential. Please see the section on Our People and
Culture on pages 16 and 17 and our Corporate Governance
Report on page 31 for further information.
Customers
We pride ourselves on providing a reliable, secure and
productive service to customers for business-critical
communications. As well as the day-to-day contact from our
Account Managers with customers we also seek feedback at
the end of each call via LoopUp and host product advisory
sessions. This information shapes how we innovate and
develop our services. Please see our Why We Exist section
on page 4 and our Corporate Governance Report on page
31 for further information.
26
LoopUp Group plc | Annual Report & Accounts 2020
Strategic Report
Governance
Financial Statements
We are committed to investing
in our people and creating an
environment where every
employee can reach their
full potential."
Steve Flavell and Michael Hughes
LoopUp Group plc | Annual Report & Accounts 2020
27
BOARD OF DIRECTORS
Non-Executives
Mike Reynolds
Independent Non-Executive Director
and Non-Executive Chairman
Keith Taylor
Independent Non-Executive Director
Mike was appointed Acting Non-Executive Chairman
following the death of Lady Barbara Judge in August 2020,
and was formally appointed Chairman in May 2021.
Mike most recently held the position of EVP at Syniverse
Technologies, before which he served as CEO of 2degrees
Mobile. Prior to 2degrees Mobile, Mike spent more than
seven years in a variety of senior positions, including
President at Singapore listed network operator, StarHub. As
President, he was responsible for the day-to-day operations
of 2,800 employees and US$1.4bn of revenue.
Keith has extensive experience in finance having operated
in the industry for nearly 30 years. He has worked for
Barclays for over 20 years, most recently as a Managing
Director within the Corporate & Investment Bank. He has
also served as a Vice Chairman and Board Member of the
Loan Market Association.
Additional Board experience includes several years as a
Trustee Director of the Barclays UK Retirement Fund (one of
the largest UK pension funds). Keith has a first class honours
degree from Cambridge University and an MBA with
distinction from Cass Business School.
Previously, Mike spent 24 years at BellSouth, which included
appointments as President of BellSouth China and CEO of
BellSouth International Wireless Services.
A
R
N
Mike has BBA and MBA degrees, both from the University
of Georgia.
A
R
N
Nico Goulet
Non-Executive Director
Nico is a managing partner at Adara Ventures where he has
managed venture capital funds for the last 20 years. Nico
has been actively involved with more than 40 early-stage
ventures and served on the boards of 30 companies.
Prior to Adara, Nico was a partner at Monitor Company. Nico
has a BSc degree in Aerospace Engineering from the École
Centrale de Paris, an MSc in Aeronautics & Astronautics
from MIT, and an MBA from INSEAD.
A
R
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LoopUp Group plc | Annual Report & Accounts 2020
Strategic Report
Governance
Financial Statements
Executives
Steve Flavell
Co-CEO
Michael Hughes MBE
Co-CEO
Michael co-founded LoopUp alongside Co-CEO Steve
Flavell. Based in San Francisco, Michael oversees the
Group’s product development, engineering and network
operations worldwide. Prior to LoopUp, Michael was a
founding member and CEO of Pagoo, a pioneering VoIP
company, overseeing the company’s expansion into Europe
and Asia.
Prior to Pagoo, Michael was a strategy consultant with
Monitor. Michael has an MEng from Imperial College, an MBA
from Stanford as an Arjay Miller Scholar, and was awarded
a Sainsbury Management Fellowship by the Royal Academy
of Engineering.
Michael was made a Member of the Order of the British
Empire (MBE) in Her Majesty’s 2017 New Year’s Honours List
for services to graduate development via the Silicon Valley
Internship Programme.
Steve co-founded LoopUp alongside Co-CEO Michael
Hughes. Based in London, Steve oversees global
commercial and investor relations activities, and is
accountable for setting and delivering the Group’s
financial plan. Prior to LoopUp, Steve was EVP and main
board Director at GoIndustry, an online industrial
auctioneering platform, where as part of its founding team,
Steve was involved in the company’s organic growth and
several acquisitions.
Previously, Steve spent time at Monitor Company, Mars & Co,
and Mobil Oil.
Steve has an MBA from Stanford and an MEng/BA Hons from
St. John’s College, Cambridge.
N
Simon Healey
CFO
Based in London, Simon is responsible for LoopUp’s global
finance function. He joined the business in 2011 as CFO.
Prior to LoopUp, Simon held senior finance positions at
Streetcar (which was sold to Zipcar, the global car-sharing
service, in 2010) and Research Now, the formerly AIM-listed
online market research firm, since acquired by E-Rewards.
Simon is a Chartered Accountant who trained with KPMG
and holds a degree in Accountancy from the University
of Birmingham.
Key to Committees
A
R
Audit
Remuneration
N
Nomination
LoopUp Group plc | Annual Report & Accounts 2020
29
CHAIRMAN’S STATEMENT
A strong year of challenges
and opportunity
Most notably, in July 2020, we
announced the launch of our cloud
telephony capability for Microsoft
Teams. The cloud telephony market is
forecast to become a $26 billion market
by 2024, and we are very encouraged
by the strong early commercial traction
generated in just nine months since
bringing this differentiated capability
onto our core global platform.
Looking ahead, 2021 will inevitably be
a transitional year as we commercialise
our broader technology platform.
However, we have a strong balance
sheet, and I am very confident in our
ability to manage the transition and to
continue delivering significant value
for our customers through our
premium and differentiated,
communications capabilities.
I am pleased to count on the support
of such a strong and committed
management team and Board of
Directors, and I look forward to
connecting with shareholders at
the Group’s 2021 AGM.
Mike Reynolds
Chairman
17 May 2021
In its entirety, 2020 was a strong and
highly cash-generative trading year,
and the Group ended the year with a
materially stronger balance sheet as a
foundation to invest in future growth
opportunities. As the year progressed,
the COVID-19 pandemic led to both
opportunities and challenges for
the Group.
In our core remote meetings business,
we saw a surge in business volumes at
initial lockdown, followed by a gradual
decline thereafter as many customers
switched from volume-based pricing
to monthly subscriptions, and as
competition from products such as
Teams and Zoom impacted customer
churn, particularly outside of our
Professional Services market
sweet spot.
More broadly, the pandemic has shaken
up the enterprise communications
landscape and accelerated trends we
were already seeing towards cloud
communications. The Group has
actively driven strategic change into
the business to capitalise on these
opportunities in a fertile and fast-
moving market. In 2020, we
transitioned from a single capability
remote meetings business into a
broader technology platform,
combining a suite of external and
specialist communications capabilities
that complement foundational UC
platforms, such as Microsoft Teams.
2020 sadly marked the loss of our
Chairman, Lady Barbara Judge, who
died from pancreatic cancer in August.
The Group benefitted hugely from her
stewardship, her wealth of experience
and the calm guidance she brought to
us, and she is missed by us all. I was
honoured to be asked to take on the
role and was comfortable to do so,
having previously chaired the Group
prior to our 2016 IPO.
It is not hyperbole to describe 2020 as
“a year like no other” given the unique
global challenges that were brought on
by the COVID-19 pandemic. Group
trading and strategy were, of course
heavily influenced in 2020 by the
pandemic. We are, however, very proud
that we were well positioned to help
our customers with their business-
critical communications in these
challenging times, by providing simple,
reliable and secure products that are
diligently operated and supported. I
would like to thank and congratulate
our entire team for their tremendous
and ongoing efforts under these highly
challenging circumstances.
30
LoopUp Group plc | Annual Report & Accounts 2020
CORPORATE GOVERNANCE REPORT
Strategic Report
Governance
Financial Statements
Committed to high standards
of corporate governance
A note on corporate governance
The Board recognises the importance of, and remains
committed to, the maintenance of high standards of
corporate governance. Through these high standards,
it is the Board’s aim to deliver growth, maintain a dynamic
management framework and build trust – such matters
being key ingredients to delivering long-term
sustainable performance.
After due consideration, the Board continues to report
against the Quoted Companies Alliance Corporate
Governance Code (“QCA Code”). The following Statement
of Compliance sets out in broad terms how we comply at this
point in time against the ten principles set out in the QCA
Code. The Board shall review and update this Statement of
Compliance periodically as the business progresses.
The composition of the Board was considered carefully
prior to the Group’s admission to AIM in 2016 to ensure an
appropriate mix of skills and experience and again in light
of the acquisition of MeetingZone in 2018, the departure of
Barmak Meftah from the Board in 2019, and the death of
Lady Barbara Judge last year. The Board generally holds its
strategic decision-making meetings in various Group offices,
taking the opportunity to meet with members of both the
Executive Team and wider senior management team,
building their knowledge of the business.
We remain of the opinion that LoopUp creates significant
value for its customers by delivering a premium cloud
platform with differentiated and specialist communications
capabilities, which we continue to innovate and improve.
LoopUp Group plc | Annual Report & Accounts 2020
31
CORPORATE GOVERNANCE REPORT
CONTINUED
QCA Code Statement
of Compliance
Delivering growth
Principle
Application
Compliance
1. Establish a
strategy and
business model
which promote
long-term value
for shareholders.
The Board must be able to express a
shared view of the Group’s purpose,
business model and strategy. It should
go beyond the simple description of
products and corporate structures and
set out how the Group intends to deliver
shareholder value in the medium to
long-term. It should demonstrate that
the delivery of long-term growth is
underpinned by a clear set of values
aimed at protecting the Group from
unnecessary risk and securing its long
term future.
The Group’s strategy is focused on commercialising the
value created through its cloud platform for specialist
enterprise communications.
Platform capabilities are carefully selected on the basis
of being differentiated from and complementary to
those found in foundational unified communications
platforms, such as Microsoft Teams.
Critical platform capabilities currently comprise:
• Cloud Telephony: primarily focused on relatively
international and fully-managed implementations
for larger sized enterprises
• Remote Meetings: primarily focused on business-
critical, external client meetings for Professional
Services firms
• Managed Events and Webcasts: primarily focused
on a premium end-to-end experience for hosts and
coordinators of important virtual corporate events
Details of the Group’s strategic priorities are set out on
page 12. The principal risks and uncertainties to the
Group (including how they are mitigated) are detailed
on page 24.
2. Seek to
understand and
meet shareholder
needs and
expectations.
Directors must develop a good
understanding of the needs and
expectations of all elements of the
Group’s shareholder base.
The Board aims to respond promptly and suitably to
shareholder enquiries and comments. The Board
regularly meets with the Group’s major shareholders
and takes on feedback from such meetings.
The Board must manage shareholders’
expectations and should seek to
understand the motivations behind
shareholder voting decisions.
Shareholders are invited to participate at the Group’s
AGMs (be these in person or remotely) and are
encouraged to continue any discussion of the Group’s
activities following the conclusion of the formal
AGM agenda.
All queries should be directed to the Company
Secretary or the General Counsel.
32
LoopUp Group plc | Annual Report & Accounts 2020
Strategic Report
Governance
Financial Statements
Principle
Application
Compliance
3. Take into account
wider stakeholder
and social
responsibilities and
their implications for
long-term success.
4. Embed effective
risk management,
considering both
opportunities and
threats, throughout
the organisation.
Long-term success relies upon good
relations with a range of stakeholder
groups both internal (workforce) and
external (suppliers, customers, partners,
regulators and others). The Board
needs to identify the Group’s
stakeholders and understand their
needs, interests and expectations.
Where matters that relate to the Group’s
impact on society, the communities
within which it operates or the
environment have the potential to
affect the Group’s ability to deliver
shareholder value over the medium
to long-term, then those matters must
be integrated into the Group’s strategy
and business model.
Feedback is an essential part of all
control mechanisms. Systems need
to be in place to solicit, consider
and act on feedback from all
stakeholder groups.
The Board needs to ensure that the
Group’s risk management framework
identifies and addresses all relevant
risks in order to execute and deliver
strategy; the Group needs to consider
its extended business, including the
Group’s supply chain, from key suppliers
to end-customer.
Setting strategy includes determining
the extent of exposure to the identified
risks that the Group is able to bear
and willing to take (risk tolerance
and risk appetite).
The Group endeavours to keep in regular contact with
its customers, partners and strategic key suppliers and
users.
There is an ability to rate every LoopUp call, so that we
are able continually to review and improve our services
to ensure that we are providing a premium service.
Additionally, we have dedicated Customer Success and
Account Managers who are on hand to provide clarity
and assistance wherever required by our customers.
The Group is active, both financially and in terms of
participation, in wider areas of corporate
responsibilities, such as promoting equality in both its
workplace and the communities in which it operates.
The Board is well advised by its Nomad and maintains
regular contact with other key stakeholders, which
enables the Group to evaluate and ultimately mitigate
risks or act on opportunities when they arise.
The Board considers risk and uncertainties at each
Board meeting. The Board meets at least quarterly, with
at least two meetings held in person (subject to
pandemic restrictions). The remaining meetings are held
remotely on LoopUp’s platform.
The Board, together with the Executive Leadership Team
and senior management, is responsible for reviewing
and evaluating risks. Additionally, the Information
Security Management Team (ISMT) meets quarterly
and assesses risks relating to information security.
A sub-committee of the ISMT meets every month to
review and update the information security risk register.
The Group is ISO 27001 accredited.
The principal risks and uncertainties to the Group
(including how they are mitigated) are detailed on page
24 of this Report.
LoopUp Group plc | Annual Report & Accounts 2020
33
CORPORATE GOVERNANCE REPORT
CONTINUED
Maintaining a dynamic management framework
Principle
Application
Compliance
5. Maintain the
Board as a well-
functioning,
balanced team led
by the chair.
The Board members have a collective
responsibility and legal obligation to
promote the interests of the Group, and
are collectively responsible for defining
corporate governance arrangements.
Ultimate responsibility for the quality of,
and approach to, corporate governance
lies with the chair of the Board.
The Board (and any committees)
should be provided with high quality
information in a timely manner to
facilitate proper assessment of the
matters requiring a decision or insight.
The Board should have an appropriate
balance between the executive and
Non-Executive Directors and should
have at least two independent Non-
Executive Directors. Independence
is a Board judgment.
The Board should be supported by
committees (e.g. audit, remuneration,
nomination) that have the necessary
skills and knowledge to discharge their
duties and responsibilities effectively.
Directors must commit the time
necessary to fulfil their roles.
The Board is responsible for the long-term success of
the Group. It sets strategic objectives and oversees
implementation within a framework of prudent and
effective controls, ensuring that only acceptable risks
are taken. It provides leadership and direction and is
responsible for the corporate governance and the
overall financial performance of the Group.
The Board comprises three Executive Directors and
three Non-Executive Directors (including the Chairman).
Two of the Non-Executive Directors are considered by
the Board to be independent and are free to exercise
independence of judgement.
Membership of the Audit Committee and Remuneration
Committees each comprises three Non-Executive
Directors, of which two are deemed independent.
Membership of the Nomination Committee comprises
two independent Non-Executive Directors both of
whom are deemed independent and one executive
director.
The Board and each of its committees receive regular
and timely reports on the Group’s operational and
financial performance. Board packs are circulated in
advance of each Board meeting and minutes reviewed
and approved following each meeting. The Board has
direct access to the advice and services of the
Company Secretary and General Counsel, and is able
to take independent advice as well, if required.
The Board considers that each Director has suitable
knowledge and experience to guide the Group in its
strategic aims.
Details of each of these committees and the Board and
committee composition, together with recent
attendance records, are set out on page 28 onwards.
34
LoopUp Group plc | Annual Report & Accounts 2020
Strategic Report
Governance
Financial Statements
Principle
Application
Compliance
6. Ensure that
between them the
Directors have the
necessary up-to-
date experience,
skills and
capabilities.
The Board must have an appropriate
balance of sector, financial and public
markets skills and experience, as well
as an appropriate balance of personal
qualities and capabilities. The Board
should understand and challenge its
own diversity, including gender balance,
as part of its composition.
7. Evaluate Board
performance based
on clear and
relevant objectives,
seeking continuous
improvement.
The Board should not be dominated by
one person or group of people. Strong
personal bonds can be important but
also divide a board.
As companies evolve, the mix of skills
and experience required on the Board
will change, and Board composition will
need to evolve to reflect this change.
The Board should regularly review the
effectiveness of its performance as a
unit, as well as that of its committees
and the individual Directors.
The Board performance review may be
carried out internally or, ideally,
externally facilitated from time to time.
The review should identify development
or mentoring needs of individual
Directors or the wider senior
management team.
It is healthy for membership of the
Board to be periodically refreshed.
Succession planning is a vital task for
boards. No member of the Board should
become indispensable.
The primary purpose of the Nomination Committee is to
lead the process for Board appointments and to make
recommendations to the Board to achieve the optimal
composition. Following the death of Lady Barbara
Judge in 2020, the Committee still considers the Board
to have an appropriate mix of skills and experience.
The Board has considered diversity in broader terms
than gender and believes it is also important to reach
the correct balance of skills, experience, independence
and knowledge of the Board. All Board appointments
will be made on merit and with the aim of achieving a
correct balance. The Group has formal policies in place
to promote equality of opportunity across the whole
organisation, and training is provided to assist with this.
The Board operates in a highly collaborative manner,
and having two Co-CEOs helps to provide balanced
executive input.
Further details about each of the directors can be found
on the investor page of the LoopUp website, and on
page 28 onwards of this report.
The performance of the Board is evaluated on an
ongoing basis with reference to all aspects of its
operation including, but not limited to: the
appropriateness of its skill level; the way its meetings
are conducted and administered (including the content
of those meetings); the effectiveness of the various
committees; whether corporate governance issues are
handled satisfactorily; and whether there is a clear
strategy and objectives.
The Co-CEOs’ and CFO’s performance is appraised by
the Chairman. The Chairman is appraised by the other
Non-Executive Directors, and the other Non-Executive
Directors are appraised by the Chairman.
LoopUp Group plc | Annual Report & Accounts 2020
35
CORPORATE GOVERNANCE REPORT
CONTINUED
Principle
Application
Compliance
8. Promote a
corporate culture
that is based on
ethical values and
behaviours.
The Board should embody and promote
a corporate culture that is based on
sound ethical values and behaviours
and use it as an asset and a source
of competitive advantage.
The Board reviews the Group’s statement that
embodies its culture and values, and means of
communicating and instilling these values broadly
across the organisation.
The Group’s key cultural values include:
• Teamwork and being collaborative, helpful
and supportive;
• Treating others with respect;
• Acting with integrity, honesty and openness;
• Displaying professionalism; and
• Taking ownership and being reliable
and accountable.
Further details about our people, and culture and our
corporate social responsibility strategy are set out from
page 16.
Details of the governance structures of the Group are
set out from page 28.
The policy set by the Board should be
visible in the actions and decisions of
the chief executives and the rest of the
management team. Corporate values
should guide the objectives and
strategy of the Group.
The culture should be visible in every
aspect of the business, including
recruitment, nominations, training and
engagement. The performance and
reward system should endorse the
desired ethical behaviours across all
levels of the Group.
The corporate culture should be
recognizable throughout the disclosures
in the annual report, website and any
other statements issued by the Group.
The Group should maintain governance
structures and processes in line with its
corporate culture and appropriate to its:
(i) size and complexity; and (ii) capacity,
appetite and tolerance for risk.
The governance structures should
evolve over time in parallel with its
objectives, strategy and business
model to reflect the development
of the Group.
9. Maintain
governance
structures and
processes that are
fit for purpose and
support good
decision-making
by the Board.
36
LoopUp Group plc | Annual Report & Accounts 2020
Strategic Report
Governance
Financial Statements
Building trust
Principle
Application
Compliance
10. Communicate
how the Company
is governed and
is performing by
maintaining a
dialogue with
shareholders and
other relevant
stakeholders.
A healthy dialogue should exist
between the Board and all of its
stakeholders, including shareholders, to
enable all interested parties to come to
informed decisions about the Group.
In particular, appropriate communication
and reporting structures should exist
between the Board and all constituent
parts of its shareholder base. This will
assist: (i) the communication of
shareholders’ views to the Board; and
(ii) the shareholders’ undertaking of the
unique circumstances and constraints
faced by the Group.
It should be clear where these
communications practices are
described (annual report or website).
The Board aims to respond promptly and suitably to
all shareholder enquiries and comments. The Board
regularly meets with the Group’s major shareholders
and takes on any feedback from such meetings.
All shareholders are invited to participate at the
Group’s AGMs (subject to COVID-19 restrictions)
and encouraged to continue any discussion of the
Group’s activities following the conclusion of the
formal AGM agenda.
Reports from the Audit Committee, Nominations
Committee and Remuneration Committee are set
out from page 40.
Board meetings and attendance
The Board meets at least quarterly, with at least two
meetings held in person (once during the budget-setting
process and once mid-year) if possible. The remaining
meetings are generally held remotely using LoopUp’s
platform. One full in-person Board meeting was held during
2020 with a number of other meetings held remotely due
to the pandemic. The table below shows the attendance
at Board meetings during the year.
Board composition
The Board comprises three Executive and three
Non-Executive Directors (including the Chairman). The
Group appointed Lady Barbara Judge as Chairman and
Senior Independent Non-Executive Director at the time of
the IPO. Following Lady Barbara’s death in August 2020,
Mike Reynolds was appointed as acting Non-Executive
Chairman and as Chairman in May 2021.
Mike Reynolds and Nico Goulet remained in place from the
pre-IPO Ring2 Communications Board, with the former being
considered independent. Keith Taylor was appointed as an
Independent Non-Executive Director in 2019.
Steve Flavell and Michael Hughes were co-founders of the
Group in 2003, and have both served on the Board since
that time. Simon Healey, who has served as CFO to the
Group since 2011, was formally appointed to the Board at
IPO in August 2016.
LoopUp Group plc | Annual Report & Accounts 2020
37
CORPORATE GOVERNANCE REPORT
CONTINUED
Non-Executive Directors
Lady Barbara Judge
Mike Reynolds
Nico Goulet
Keith Taylor
Executive Directors
Steve Flavell
Michael Hughes
Simon Healey
Mike Reynolds
Nico Goulet
Keith Taylor
Steve Flavell
Michael Hughes
Simon Healey
Board meetings
Possible
Attended
5
10
10
10
10
10
10
5
10
10
10
10
9
10
Committee meetings
Audit
Remuneration
Nomination
Possible
Attended
Possible
Attended
Possible
Attended
2
2
2
2
–
2
2
2
2
2
–
2
3
3
3
3
–
–
3
3
3
3
–
–
1
–
1
1
–
–
1
–
1
1
–
–
Board responsibilities
The Board is responsible for the long-term success of
the Group. It sets strategic objectives and oversees
implementation within a framework of prudent and effective
controls, ensuring that only acceptable risks are taken.
It provides leadership and direction and is also responsible
for corporate governance and the overall financial
performance of the Group.
The Board has agreed the schedule of matters reserved
for its decision, which includes ensuring that the necessary
financial and human resources are in place to meet
obligations to shareholders and others. It also approves
any acquisitions and disposals, major capital expenditure,
annual budgets and dividend policy.
Board papers are circulated before Board meetings
in sufficient time to enable their review and consideration
in advance of meetings.
Board effectiveness
The performance of the Board is evaluated on an ongoing
basis with reference to all aspects of its operation including,
but not limited to: the appropriateness of its skill level; the
way its meetings are conducted and administered (including
the content of those meetings); the effectiveness of the
various Committees; whether corporate governance issues
are handled satisfactorily; and whether there is a clear
strategy and objectives.
The Co-CEOs’ and CFO’s performance is appraised by
the Chairman. The Chairman is appraised by the other
Non-Executive Directors, and the other Non-Executive
Directors are appraised by the Chairman.
38
LoopUp Group plc | Annual Report & Accounts 2020
Strategic Report
Governance
Financial Statements
Directors’ independence
Two of the Non-Executive Directors are considered by
the Board to be independent and are free to exercise
independence of judgement. They have never been
employed by the Group nor do they participate in the
Group bonus scheme. They receive no remuneration apart
from their fees and, in one case, limited options which were
issued prior to IPO, all of which are fully vested. During 2020,
Mike Reynolds exercised 75,000 options as detailed in the
Remuneration Report.
Board appointments
On appointment, a new Director is briefed on the activities
of the Group. Ongoing training is provided as needed.
Directors are updated on a regular basis regarding the
Group’s business.
The Board confirms that there are ongoing processes for
identifying, evaluating and mitigating the significant risks
facing the Group. The processes are considered to be
appropriate given the size and nature of the business.
The Group’s internal financial control and monitoring
procedures include:
Clear responsibility for the maintenance of good financial
controls and the production of accurate and timely
financial information;
The control of key financial risks through appropriate
authorisation levels and senior management oversight;
Detailed monthly reporting of trading results and financial
position, including variances against budget;
Reporting of any non-compliance with internal financial
controls; and
Review of reports issued by external auditors.
Directors are subject to re-election at the Annual General
Meeting following their appointment. In addition, at each
AGM, one-third (or the nearest whole number) of the
Directors retire by rotation.
The Audit Committee, on behalf of the Board, reviews reports
from the external auditor together with management’s
response. In this matter, it has reviewed the effectiveness
of the system of internal controls for the period.
Access to independent advice and support
In the furtherance of his or her duties or in relation to acts
carried out by the Board or the Group, each Director is
aware that he or she is entitled to seek independent
professional advice at the expense of the Group. The Group
maintains appropriate Directors’ and Officers’ insurance in
the event of legal action being taken against any Director.
Each Director has access to the advice and services of the
Company Secretary, if required, who is responsible for
ensuring that Board procedures are properly followed and
that applicable rules and regulations are complied with.
Internal controls and risk management
The Board is responsible for the Group’s system of internal
controls and for reviewing its effectiveness. Such a system
is designed to mitigate against and manage, rather than
eliminate, the risk of failure to achieve business objectives
and can only provide reasonable and not absolute
assurance against material misstatement or loss.
Shareholder communications
Executive Directors regularly meet with institutional
shareholders to foster a mutual understanding of objectives.
In particular, an extensive programme of meetings with
analysts and institutional shareholders is held following the
interim and preliminary results announcements. Feedback
from these meetings is presented to the Board.
All Directors encourage the participation of all shareholders,
including private investors, at the AGM. As a matter of policy,
the level of proxy votes lodged on each resolution is
declared at the meeting and published by announcement
to the London Stock Exchange and on the Group’s website.
The Group’s Annual Report and Accounts are published on
the Group’s website and can be accessed by shareholders.
LoopUp Group plc | Annual Report & Accounts 2020
39
AUDIT COMMITTEE REPORT
Committee composition
The Audit Committee (‘the Committee’) was established
in August 2016, although a similar committee did operate
under Ring2 Communications Limited prior to the
establishment of the Group as it currently stands.
Mike Reynolds is Chair of the Audit Committee and the
other members are Keith Taylor and Nico Goulet. The Board
considers the members to have relevant and recent financial
experience, given their biographies as set out on pages 28
and 29.
Committee responsibilities
The Committee is appointed by and responsible to
the Board. It has written terms of reference. Its main
responsibilities are:
Monitoring its satisfaction with the truth and fairness of
the Group’s financial statements before submission to
the Board for approval, ensuring their compliance with
appropriate accounting standards, the law and AIM rules;
Monitoring and reviewing the effectiveness of the
Group’s systems of internal control;
Making recommendations to the Board in relation to the
appointment and remuneration of the external auditor,
and reviewing the auditor’s objectivity and independence
on an ongoing basis; and
Implementing a policy relating to any non-audit services
performed by the external auditor.
The Committee is authorised by the Board to seek and
obtain information from any officer or employee of the
Group and obtain external advice as it deems necessary.
Committee meetings
The Committee aims to meet at least three times per year
either in person or remotely. These meetings are scheduled
to coincide with the review of the interim statement,
the scope and planning of the external audit and, finally,
the results and observations upon completion of the
external audit.
Two meetings were held during the year, with the 2020 audit
planning meeting delayed to January 2021. These meetings
were attended by the external auditor, one Co-CEO and
the CFO, as well as the three committee members. The
Committee also has the opportunity to meet with the
external auditor without any Executive Directors present
if it wishes to do so.
The Committee carried out a full review of the year-end
results and of the audit, using as a basis the reports to the
Committee prepared by the CFO and the external auditor.
Questions were asked of senior management around any
significant or unusual transactions where the accounting
treatment could be open to different interpretations.
The Committee received from the external auditor a report
of matters arising during the audit which the auditor deemed
to be of significance.
Significant matters considered by the Committee in relation
to the financial statements and areas of judgement routinely
considered and challenged were as follows:
Revenue recognition;
Capitalisation of development costs;
Impairment of intangible fixed assets; and
Going concern
The Committee is satisfied that the judgements made
by management are reasonable and that appropriate
disclosures in relation to key judgements and estimates
have been included in the financial statements. In reaching
this conclusion, the Committee has considered reports
and analysis prepared by management and has also
constructively challenged assumptions. The Committee has
also considered reports prepared by the external auditor.
Committee performance
The Committee regularly reviews its own performance
and has concluded that it is performing as expected.
External auditor
Grant Thornton UK LLP has been the external auditor
since 2014. The Group’s audit partner and senior manager
were both changed during 2019.
Since 2019 the Group has used KPMG LLP to advise on
global tax compliance processes, to ensure independence
of the external auditor.
As required, the external auditor provided the Committee
with information for review about policies and processes
for maintaining its independence and compliance regarding
the rotation of audit partners and staff. The Committee
considered all relationships between the external auditor
and the Group and was satisfied that they did not
compromise the auditor’s judgement or independence,
particularly around the provision of non-audit services.
Management reviewed the effectiveness of the external
audit process and were satisfied with the external auditor’s
knowledge of the business and that the scope of the audit
was appropriate and the audit process effective.
The Group will be reassessing the position of the auditor
during 2021 and will report on these findings at the AGM.
Internal audit function
Given the size and nature of the Group, the Board did not
consider it necessary to have an internal audit function
during the year, though this need will be reviewed regularly.
40
LoopUp Group plc | Annual Report & Accounts 2020
NOMINATION COMMITTEE REPORT
Strategic Report
Governance
Financial Statements
Committee composition
The Nomination Committee was established in August 2016.
Mike Reynolds is Chair of the Nomination Committee and the
other members are Keith Taylor and Steve Flavell.
Committee responsibilities
The primary purpose of the Committee is to lead the process
for Board appointments and to make recommendations to
the Board to achieve the optimal composition of the Board,
having regard to:
Its size and composition;
The extent to which required skills, experience or
attributes are represented;
The need to maintain the highest appropriate standard of
corporate governance; and
Ensuring that it consists of individuals who are best able
to discharge the responsibilities of Directors.
It has written terms of reference.
Committee meetings
The Committee met once during 2020 to confirm the
appointment of Mike Reynolds as acting Chairman following
the death of Lady Barbara Judge.
The Board has considered diversity in broader terms than
gender and believes it is also important to reach the correct
balance of skills, experience, independence and knowledge
on the Board. All Board appointments will be made on merit
and with the aim of achieving a correct balance. The Group
has formal policies in place to promote equality of
opportunity across the whole organisation, and training
is provided to assist this.
LoopUp Group plc | Annual Report & Accounts 2020
41
REMUNERATION COMMITTEE AND REMUNERATION REPORT
The Remuneration Committee
The Remuneration Committee was established in
August 2016.
The Committee’s primary purpose is to assist the Board
in determining the Company’s remuneration policies and,
in so doing, agree the framework for Executive Directors’
remuneration with the Board. It has written terms
of reference.
The Committee met three times during 2020, with
other Board members in attendance as appropriate.
Remuneration Committee report
As an AIM-listed company, LoopUp Group plc is not required
to comply with Schedule 8 to the Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations
2008. The content of this report is unaudited unless
stated otherwise.
Membership of the Remuneration Committee
The Remuneration Committee comprises three Non-
Executive Directors, namely Mike Reynolds as Chair, Nico
Goulet and Keith Taylor. The Remuneration Committee
reviews the performance of the Executive Directors and
makes recommendations to the Board on matters relating
to remuneration, terms of service, granting of share options
and other equity incentives.
Directors’ remuneration policy
The objectives of the remuneration policy are to ensure that
the overall remuneration of Executive Directors is aligned
with the performance of the Group and preserves an
appropriate balance of income and shareholder value.
Non-Executive Directors
Remuneration of Non-Executive Directors is negotiated
by the Executive Directors and agreed by the Board.
Non-Executive Directors are not permitted to participate
in pensions, annual bonuses or employee benefits. They are
entitled to participate in share option agreements relating to
the Company’s shares. Each of the Non-Executive Directors
has a letter of appointment stating his or her annual fee.
Their appointment may be terminated with three months’
written notice at any time.
Directors’ remuneration
The normal remuneration arrangements for Executive
Directors consist of basic salary, annual performance-related
bonuses, participation in share option and incentive
schemes, and private healthcare benefits. UK Executives
participate in a company contributory pension scheme, and
US executives have access to a corporate 401k plan, which
attracted no employer contribution in 2019 or 2020.
Annual bonuses
The 2020 annual bonus plan comprised a target bonus of
50% of salary for Steve Flavell and Michael Hughes and 25%
of salary for Simon Healey. Executive Directors are rewarded
based on the performance of the Group versus predefined
targets as well as the achievement of personal objectives.
The Group’s performance in terms of revenue, gross profit
and adjusted EBITDA significantly exceeded budgeted
expectations for 2020, and as a result a bonus payment of
175% of target has been accrued for the year. Final payment
of this bonus is at the discretion of the Remuneration
Committee, and will be confirmed or otherwise in May 2021.
This contrasts with 2019, where below-target performance
resulted in no bonus being payable.
Similar bonus principles will be adopted for future years.
Performance targets around revenue, gross margin and
EBITDA have been set by the Board. Meeting these targets
and achieving personal objectives will result in payout
percentages in line with those outlined above. Payouts can
exceed these amounts should performance exceed these
targets, and are capped.
42
LoopUp Group plc | Annual Report & Accounts 2020
Strategic Report
Governance
Financial Statements
Total Directors’ Remuneration
The table below sets out the total remuneration payable to the Directors:
Executive
Steve Flavell
Michael Hughes
Simon Healey
Non-Executive
Lady Barbara Judge
Mike Reynolds
Nico Goulet
Keith Taylor
Barmak Meftah
Salary and
fees
£000
Annual
bonus
£000
Healthcare
and pension
£000
230
272
145
33
23
–
23
–
201
238
63
–
–
–
–
–
9
4
6
–
–
–
–
–
2020
total
£000
440
514
214
33
23
–
23
6
2019
total
£000
239
281
145
50
23
–
18
6
Shares held by Directors
The beneficial interests of the Directors in the share capital of the Company at 31 December 2020 and 2019 were as follows:
Executive:
Steve Flavell
Michael Hughes
Simon Healey
Non-Executive:
Lady Barbara Judge
Mike Reynolds
Nico Goulet (as Managing Partner of shareholder,
Adara Ventures SICAR)
Keith Taylor
31 December 2020
31 December 2019
Number of shares
% of issued
ordinary
share capital
Number of shares
% of issued
ordinary
share capital
2,625,875
2,616,899
64,500
–
75,000
4.8%
4.7%
0.1%
–
0.1%
2,527,294
2,457,294
20,000
52,254
–
4.6%
4.5%
0.0%
0.1%
–
6,964,548
58,500
12.6%
0.1%
6,964,548
58,500
12.6%
0.1%
LoopUp Group plc | Annual Report & Accounts 2020
43
REMUNERATION COMMITTEE AND REMUNERATION REPORT
CONTINUED
Directors’ share options
Aggregate emoluments disclosed above do not include any amounts for the value of options to acquire ordinary shares
in the Group granted to or held by the Directors. Details of option holdings for Directors who served during the year are
as follows:
Executive:
Steve Flavell
Michael Hughes
Simon Healey
Non-Executive:
Lady Barbara Judge
Mike Reynolds
Nico Goulet
Keith Taylor
Number of
options at
31 December
2020 Exercise price
199,000
880,000
199,000
70,000
82,000
27,500
–
75,000
–
–
£1.105
£0.75
£1.105
£0.50
£0.75
£1.105
–
£0.75
–
–
During the year, the following options were issued to Executive Directors at an exercise price of £1.105:
199,000 to each of Steve Flavell and Michael Hughes; and
27,500 to Simon Healey.
During 2020, Steve Flavell and Michael Hughes each waived their rights to 120,000 share options with an exercise price
of £4.40 and 60,000 share options with an exercise price of £3.175. These options have been cancelled.
During the year, Mike Reynolds exercised 75,000 options at £0.0128 per share. These shares were not sold as of the
balance sheet date.
By order of the Board
Mike Reynolds
Chairman of the Remuneration Committee
17 May 2021
44
LoopUp Group plc | Annual Report & Accounts 2020
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
Strategic Report
Governance
Financial Statements
The Directors present their report and the audited financial
statements for the year ended 31 December 2020.
Principal activity
The principal activity of the Group is the provision of a
premium cloud communications platform for business-critical
external and specialist communications.
Business review and future developments
A review of the Group’s operations and future developments
is covered in the Strategic Report section of the Annual
Report and Accounts on pages 2 to 27. This report includes
sections on strategy and markets and considers key risks and
key performance indicators, and also includes a statement on
Streamlined Energy and Carbon Reporting (SECR).
Details of the Group’s financial results are set out in the
consolidated statement of comprehensive income, other
statements and related notes on pages 58 to 89.
Corporate status
LoopUp Group plc (the ‘Company’ or ‘Group’) is a public
limited company domiciled in the United Kingdom and was
incorporated in England and Wales with company number
09980752 on 1 February 2016. The company has its
registered office at The Tea Building, 56 Shoreditch High
Street, London E1 6JJ. The principal places of business of
the Group are its offices in London and San Francisco, and it
also operates a number of other offices in the United States,
as well as Germany, Spain, Sweden, Australia, Hong Kong
and Barbados.
Directors
The current members of the Group’s Board and Committees
are set out on pages 28 to 29. Mike Reynolds was appointed
as acting non-executive Chairman of the Group following the
death of Lady Barbara Judge in August 2020 and as
Chairman in May 2021. One-third of the Directors are
required to retire at the AGM and can offer themselves for
re-election.
The Company has agreed to indemnify the Directors against
third party claims which may be brought against them and
has put in place a Directors’ and Officers’ insurance policy.
Shares, dividends and significant shareholders
The middle market price of the Company’s shares on
31 December 2020 was 84.0 pence and the range during
the year was 40.5 pence to 284.0 pence with an average of
134.5 pence.
The Directors do not recommend the payment of a dividend
(2019: £nil).
The Company is informed that, at 30 April 2021, individual
registered shareholdings of more than 3% of the Company’s
issued share capital were as follows:
Adara Ventures SICAR
Andrew Scott(1)
Hargreaves Lansdown Asset Management
Interactive Investor
Herald Investment Management
Steve Flavell
Michael Hughes
Schroder Investment Management
1. This includes shares registered in the name of his wife, Rhonda Scott and SFT Capital Limited.
Number of
shares
% of issued
ordinary share
capital
6,964,548
6,665,002
4,024,046
3,283,669
2,800,000
2,625,875
2,616,899
2,289,913
12.6%
12.0%
7.3%
5.9%
5.1%
4.7%
4.7%
4.1%
LoopUp Group plc | Annual Report & Accounts 2020
45
DIRECTORS’ REPORT CONTINUED
Going concern
After making enquiries, the Directors have confidence that
the Group has adequate resources to continue in
operational existence for the foreseeable future.
Management have prepared detailed, stress tested
forecasts which indicate the Group’s ability to continue to
trade with sufficient cash resources and within the covenant
tests agreed with Bank of Ireland for the Group’s debt facility.
For this reason, they continue to adopt the going concern
basis in preparing the Annual Report and Accounts. This is
described in more detail in note 1.03.
It is the policy of the Group that the training, career
development and promotion of a disabled person should,
as far as possible, be identical to that of a person who
does not have a disability. In the event of members of
staff becoming disabled, every effort is made to ensure
that their employment within the Group continues.
Political and charitable donations
The Group does not make political donations. Charitable
donations of £5,000 were made during the year
(2019: £5,000).
Supplier payment policy and practice
The Group does not operate a standard code in respect of
payments to suppliers. The Group agrees terms of payment
with each supplier at the start of business and makes
payments in accordance with these terms. The number
of creditor days outstanding at 31 December 2020 was
60 days (2019: 64 days).
Statement as to disclosure of information to the auditor
The Directors who were in office on the date of the approval
of these financial statements have confirmed that
so far as each director is aware, there is no relevant audit
information of which the company’s auditor is unaware;
and
the directors have taken all the steps that they ought to
have taken as directors in order to make themselves
aware of any relevant audit information and to establish
that the company’s auditor is aware of that information.
Research and development
Details of the Group’s policy for the recognition of
expenditure on research and development of its core
platform are set out in note 2.03 of the consolidated
financial statements.
Risk management objectives and policies
Details of the Group’s financial risk management and
policies are set out in note 19 of the consolidated financial
statements. The key non-financial risks faced by the Group
are set out in the Strategic Report on page 24.
Related party transactions
Details of the Group’s transactions and balances with
related parties are set out in note 21 of the consolidated
financial statements.
Employee involvement
It is the Group’s policy to involve employees in its progress,
development and performance. This has been
communicated through both formal and informal meetings
at all levels throughout the Group. During such meetings,
employees are encouraged to provide a free flow of
information and ideas.
Applications for employment by disabled persons are fully
considered, bearing in mind the respective aptitudes and
abilities of the applicants concerned. The Group is a
committed equal opportunities employer and has engaged
employees with broad backgrounds and skills.
46
LoopUp Group plc | Annual Report & Accounts 2020
DIRECTORS’ RESPONSIBILITIES STATEMENT
Strategic Report
Governance
Financial Statements
The Directors are responsible for preparing the Strategic
Report and Directors’ Report and the financial statements
in accordance with applicable law and regulations.
The consolidated financial statements of the Group have
been prepared in accordance with international accounting
standards in conformity with the requirements of the
Companies Act 2006. The consolidated financial statements
have been prepared under the historical cost basis.
Under Company law, the Directors must not approve the
financial statements unless they are satisfied that they give
a true and fair view of the state of affairs and profit or loss of
the Company and Group for that period. In preparing these
financial statements, the Directors are required to:
Select suitable accounting policies and then apply
them consistently;
Make judgements and accounting estimates that
are reasonable and prudent;
State whether applicable international accounting
standards have been followed, subject to any material
departures disclosed and explained in the financial
statements; and
Prepare the financial statements on the going concern
basis, unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information on the
Group’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
Mike Reynolds
Chairman
17 May 2021
LoopUp Group plc | Annual Report & Accounts 2020
47
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF LOOPUP GROUP PLC
Our opinion on the financial statements is unmodified
We have audited the financial statements of LoopUp Group Plc (the ‘parent company’) and its subsidiaries (the ‘group’) for
the year ended 31 December 2020 which comprise the Consolidated Statement of Comprehensive Income, the
Consolidated and Company Statements of Financial Position, the Consolidated and Company Statements of Changes in
Equity, the Consolidated and Company Statements of Cash Flows and notes to the financial statements, including a
summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is
applicable law and international accounting standards in conformity with the requirements of the Companies Act 2006 and,
as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act
2006.
In our opinion:
the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at
31 December 2020 and of the group’s profit for the year then ended;
the group financial statements have been properly prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006;
the parent company financial statements have been properly prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act 2006 and as applied in accordance with the
provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the ‘Auditor’s responsibilities for the audit of the financial
statements’ section of our report. We are independent of the group and the parent company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as
applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We are responsible for concluding on the appropriateness of the Directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s and the Company’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify the auditor’s opinion. Our conclusions are based on the audit
evidence obtained up to the date of our report. However, future events or conditions may cause the Group or the Company
to cease to continue as a going concern.
A description of our evaluation of management’s assessment of the ability to continue to adopt the going concern basis of
accounting, and the key observations arising with respect to that evaluation is included in the Key Audit Matters section of
our report.
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 parent company’s ability to continue as a
going concern for a period of at least twelve months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate.
The responsibilities of the directors with respect to going concern are described in the ‘Responsibilities of directors for the
financial statements’ section of this report.
48
LoopUp Group plc | Annual Report & Accounts 2020
Strategic Report
Governance
Financial Statements
Our approach to the audit
Materiality
Key audit
matters
Scoping
Overview of our audit approach
Overall materiality:
Group: £506,000 (2019: 639,000), which represents 1% of the group’s total revenue
(2019: 1.5% of the group’s total revenue);
Parent company: £293,000, which is based on 1% of Total assets however company
materiality was capped at 48% of component materiality (2019: £525,000)
Key audit matters were identified as
Revenue recognition,
Capitalisation of development costs, and
Impairment of the carrying value of goodwill and other intangible assets
Our auditor’s report for the year ended 31 December 2019 did not include any key audit
matters that have not been reported as a key audit matter in our current year’s audit
report.
We performed an audit of the financial information of the parent company and three of the
components using component materiality (full-scope) and an audit of one or more account
balances, classes of transactions or disclosures of the component (specific-scope audit)
of seven further components to gain sufficient appropriate audit evidences at the Group
level. We performed analytical procedures on the financial information on the remaining
seven components in the Group during the year.
Key audit matters
Key audit matters are those matters that, in our professional judgement,
were of most significance in our 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) that we identified.
These matters included those that 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 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.
In the graph below, we have presented the key audit matters,
significant risks and other risks relevant to the audit.
DESCRIPTION
AUDIT RESPONSE
KAM
DISCLOSURES
OUR RESULTS
High
Potential
financial
statement
impact
Intercompany
balances
Taxation
Revenue
Recognition
Impairment
Going
concern
Capitalisation of
development costs
Management
override of controls
Share options
Debtors
Payroll
Low
Low
Extent of management judgement
High
Key audit matter
Significant risk
Other risk
LoopUp Group plc | Annual Report & Accounts 2020
49
INDEPENDENT AUDITOR’S REPORT CONTINUED
Key Audit Matter – Group
How our scope addressed the matter – Group
Revenue Recognition
We identified revenue as one of the most significant
assessed risks of material misstatement due to fraud and
error.
Under ISA 240 (UK) there is a presumed risk that revenue
may be misstated due to the improper recognition of
revenue. The group has a high volume of revenue
transactions, captured on the LoopUp IT platforms and
transferred to the billing systems, that it recognises in
accordance with IFRS15 ‘Revenue from Contracts with
Customers’. There is a risk around the appropriate capture
of call minutes and standing charges, and the effective
transfer of recorded data between platforms and
accounting systems.
Revenue is the most significant financial item in the
consolidated statement of comprehensive income and
revenue growth is a key performance indicator for the Group.
In responding to the key audit matter, we performed the
following audit procedures:
We evaluated the revenue recognition policies to ensure
these were in line with the accounting policies, with IFRS
15, and were consistently applied.
We evaluated the internal control environment in respect
of revenue recognition and gained an understanding of
the processes and key controls in place. Further, we also
tested the operating effectiveness of the LoopUp
platform.
We engaged our IT specialists team who assessed design
and operating effectiveness of the core underlying
systems on the LoopUp platform and tested key IT
application controls over the revenue recognition
process.
In addition to IT systems testing on the LoopUp platform
by our IT specialist team, to address the risk of
occurrence, the audit team tested the operating
effectiveness of manual monthly controls around
management’s review of reconciliation.
The group has reported revenues of £50.2m (2019: £42.5m).
To test completeness of meetings revenue, we performed
We identified occurrence and completeness of revenue as
the relevant assertions for significant risk around revenue
recognition applicable to all significant revenue streams i.e.
Meetings, Events, Voice/Enablit (Cloud Telephony) and
Cisco/WebEx resale.
Relevant disclosures in the Annual Report and Accounts
The group’s accounting policy on revenue recognition is
shown in note 2.09 to the financial statements and related
disclosures are included in note 6.
a test of detail by selecting a sample of meetings/
conferences from the population of meetings/conferences
for the year and traced the sample selected to the
invoices issued and paid.
To gain assurance over the occurrence of the invoices
recognised as revenue, we performed a test of detail by
selecting a sample of invoices, traced these back to
source data i.e. minutes and rates per customer and
traced the receipt of the invoice to the bank.
Our results
Our audit testing did not identify any material deficiencies in
relation to the occurrence and completeness of revenue that
would have required us to expand the nature or scope of our
planned detailed testing work.
50
LoopUp Group plc | Annual Report & Accounts 2020
Strategic Report
Governance
Financial Statements
Key Audit Matter – Group
How our scope addressed the matter – Group
Capitalisation of development costs
We identified the Capitalisation of development costs as one
of the most significant assessed risks of material
misstatement due to error.
The group capitalises development costs within Intangible
Assets. The amount capitalised in the year amounted to
£6.8m (2019: £5m).
The group has been developing and enhancing its remote
meetings platform for a number of years and has continued
this development in the current year. The development
spend mainly includes the payroll cost of the skilled
developers who work on the development projects.
The capitalisation of development costs under International
Accounting Standard (‘IAS’) 38 ‘Intangible Assets’ involves
significant judgement and therefore there is a risk that a
material error could occur if items have been incorrectly
capitalised.
Relevant disclosures in the Annual Report and Accounts
The group’s accounting policy on development costs shown
in note 2.03 to the financial statements and related
disclosures are included in note 14.
Impairment of the carrying value of goodwill and other
intangible assets
We identified the impairment of the carrying value of goodwill
and other intangible assets as one of the most significant
assessed risks of material misstatement due to error.
The Group has a material amount of goodwill (of £31.5m) and
other intangible assets (Customer relationship of £25.8m and
Brand & trademarks of £1.6m) held on the balance sheet as at
31 December 2020. Goodwill is required to be tested for
annual impairment and the existence of impairment
indicators must be considered for other intangible assets.
Management has undertaken its annual impairment review
based on discounted cash flows. There are significant
judgements in the discounted cash flow calculations
including forecast operating cashflows, discount rate and
growth rate.
Relevant disclosures in the Annual Report and Accounts
The group’s accounting policy for goodwill and other
intangibles is shown in note 2.08 to the financial statements
and related disclosures are included in note 14.
In responding to the key audit matter, we performed the
following audit procedures:
We evaluated the development costs capitalised to
ensure these capitalised costs meet all the requirements
as stated within IAS 38 ‘Intangible Assets’.
We gained an understanding of relevant development
projects and evaluated the design effectiveness of key
controls ensuring appropriate capitalisation of costs.
We performed tests of detail over the development costs
capitalised. We inspected employment contracts of
employees whose salaries were capitalised, inspected
evidence of the major developments that took place in
2020 and held discussions with relevant management
personnel to ensure development costs capitalised met
all the requirements of IAS 38 ‘Intangible Assets’.
We challenged the management’s key assumptions, in
particular that the development cost met the technical
and commercial feasibility criteria.
We ensured the appropriateness of the disclosures in the
accounts in respect of capitalisation of development costs.
Our results
Our audit testing did not identify any material deficiencies in
relation to capitalisation of development costs that would
have required us to expand the nature or scope of our
planned detailed testing work.
In responding to the key audit matter, we performed the
following audit procedures:
We reviewed the design and implementation of controls
relevant to the impairment reviews for goodwill and other
intangible assets.
We reviewed management’s assessment of impairment,
including the discounted cash flow model and challenged
their assessment of its appropriateness and methodology in
line with the requirement of IAS 36 ‘Impairment of assets’.
This includes the consideration that the group has one single
cash generating unit (CGU), including all goodwill and other
intangibles.
We challenged the key assumptions around cash flow
forecast, growth rate and discount rates included within the
discounted cash flow model.
We reviewed the judgements and estimates applied in the
five year cash flow forecast, and ensured its reasonableness
through corroboration with supporting evidence.
We assessed the discount rate used in the model and used
the work of our auditor’s expert to assess its
reasonableness.
We performed downward sensitivity analysis on each
assumption, including performing a compounded sensitivity.
We assessed the reasonableness of the remaining useful
economic life for other intangible assets being amortised.
We evaluated the disclosures relating to the impairment
review.
Our results
Our audit testing did not identify any material deficiencies in
relation to impairment for carrying value of goodwill and other
intangible assets that would have required us to expand the
nature or scope of our planned detailed testing work.
LoopUp Group plc | Annual Report & Accounts 2020
51
INDEPENDENT AUDITOR’S REPORT CONTINUED
Key Audit Matter – Group
How our scope addressed the matter – Group
Going Concern
We identified going concern as a significant risk, which was
one of the most significant assessed risks of material
misstatement.
Covid-19 is one of the most significant economic global
events, and the market in which Loop Up operates has been
significantly impacted. An increased demand for product and
services has been matched by an increase in competition
and this competition could adversely impact the future
trading performance of the group and led the group to
reassess its product and market strategy, as set out in the
Co-CEOs’ statement. These factors contribute to increase
the extent of judgement and estimation uncertainty
associated with management’s decision to adopt the going
concern basis of accounting in the preparation of the
financial statements.
In undertaking their assessment of going concern for the
Group, the Directors considered the changing market
conditions in their forecast future performance of the Group
and anticipated cash flows:
Our audit work included, but was not restricted to:
obtaining and reviewing management’s paper and
assessment of going concern and challenging the
assumptions used in the cash flow forecasts, which have
been approved by the Board;
obtaining management’s forecast up to the period of
31 May 2022, together with supporting evidence for all
key trading, working capital and cash flow assumptions;
obtaining management’s downside scenario, which reflect
management’s assessment of uncertainties, and which
management consider to be unlikely. We evaluated the
assumptions regarding the forecast period and reduced
trading levels under each of these scenarios;
considering whether assumptions are consistent with our
understanding of the business obtained during the course
of the audit and the changing external circumstances;
testing the adequacy of the supporting evidence for the
cash flow forecast, reviewing and performing arithmetical
checks on the forecast; and
obtaining post year end management accounts and
comparing against amounts forecasted to assess
accuracy of forecasts;
Management performed a scenario testing exercise for
reviewing forecasts for covenant compliance given the
the period covered by the going concern forecast,
including considering a reasonable base case forecast
and a downside scenario.
The Board reviewed the results of both scenarios and
were satisfied in both cases the Group remains within
current facilities; and
The Directors have concluded, based on the scenarios
reviewed that the Group has sufficient resources available
to meet its liabilities as they fall due and have concluded
that there are no material uncertainties that cast
significant doubt over the entity’s ability to continue as a
going concern.
Relevant disclosures in the Annual Report and Accounts
The group’s accounting policy for going concern is shown
in note 1.03 to the financial statements.
lower trading environment which posed a risk of
breaching covenant compliance;
reviewing the policies and disclosures in respect of going
concern given in the financial statements for
appropriateness.
In our evaluation of the Directors’ conclusions, we
considered the inherent risks associated with the Group’s
and the Company’s business model including effects arising
from macroeconomic uncertainties such as United Kingdom’s
withdrawal from the European Union and Covid-19, we
assessed and challenged the reasonableness of the
forecasts made by the Directors and the related disclosures
and analysed how those risks might affect the Group’s and
the Company’s financial resources or ability to continue
operations over the going concern period.
Our results
We have nothing to report in addition to that stated in the
‘Conclusions relating to going concern’ section of our
report.
52
LoopUp Group plc | Annual Report & Accounts 2020
Strategic Report
Governance
Financial Statements
Our application of materiality
We apply the concept of materiality both in planning and performing the audit, and in evaluating the effect of identified
misstatements on the audit and of uncorrected misstatements, if any, on the financial statements and in forming the opinion
in the auditor’s report.
Materiality was determined as follows:
Materiality measure
Group
Parent company
Materiality for financial statements as
a whole
We define materiality as the magnitude of misstatement in the financial
statements that, individually or in the aggregate, could reasonably be expected
to influence the economic decisions of the users of these financial statements.
We use materiality in determining the nature, timing and extent of our audit work.
Materiality threshold
£506,000 which is 1% of group
revenue.
Significant judgements made by auditor
in determining the materiality
In determining materiality, we made the
following significant judgements:
This benchmark is considered the most
appropriate because there is
considerable volatility in profit/loss
before tax. Revenue is a key
performance indicator for the group.
Materiality for the current year is lower
than the level that we determined for
the year ended 31 December 2019 due
to the decrease in benchmark
percentage, reflecting the risk
assessment around increase in the
volume of revenue transactions.
The materiality determined was not
revised during the audit.
£293,000 which is 1% of parent company
total assets but capped at 48% of
component materiality.
In determining materiality, we made the
following significant judgements. This
benchmark is considered the most
appropriate because the company is a
holding company that does not actively
trade.
Materiality for the current year is lower
than the level that we determined for the
year ended 31 December 2019 due to
the capping by component materiality.
The materiality determined was not
revised during the audit.
Performance materiality used to drive
the extent of our testing
Materiality threshold
Significant judgements made by auditor
in determining the materiality
We set performance materiality at an amount less than materiality for the financial
statements as a whole to reduce to an appropriately low level the probability that
the aggregate of uncorrected and undetected misstatements exceeds materiality
for the financial statements as a whole.
£354,200 which is 70% of financial
statement materiality.
£205,100 which is 70% of financial
statement materiality.
In determining performance materiality,
we made the following significant
judgements:
In determining performance materiality,
we made the following significant
judgements:
Whether there were any significant
adjustments made to the financial
statements in prior years
Whether there were any significant
control deficiencies identified in
prior years
Whether there were any significant
adjustments made to the financial
statements in prior years
Whether there were any significant
control deficiencies identified in prior
years
Whether there were any changes in
Whether there were any changes in
senior management during the
period
Whether there were any significant
changes in business objectives/
strategy
senior management during the period
Whether there were any significant
changes in business objectives/
strategy
LoopUp Group plc | Annual Report & Accounts 2020
53
INDEPENDENT AUDITOR’S REPORT CONTINUED
Materiality measure
Specific materiality
Specific materiality threshold
Group
Parent company
We determine specific materiality for one or more particular classes of
transactions, account balances or disclosures for which misstatements of lesser
amounts than materiality for the financial statements as a whole could reasonably
be expected to influence the economic decisions of users taken on the basis of
the financial statements.
We determined a lower level of specific materiality for certain areas such as
directors’ remuneration and related party transactions, in with our calculated
trivial threshold for the group.
Communication of misstatements to
the audit committee
We determine a threshold for reporting unadjusted differences to the audit
committee.
Threshold for communication
£25,300 and misstatements below that
threshold that, in our view, warrant
reporting on qualitative grounds.
£14,650 and misstatements below that
threshold that, in our view, warrant
reporting on qualitative grounds.
The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance for potential
uncorrected misstatements.
Overall materiality – Group
Overall materiality – Parent company
Revenue £50.2m
Total Assets £61m
FSM £506k, 1%
FSM £293k, 1%
TFPUM
£152k, 30%
PM
£354k, 70%
TFPUM
£88k, 30%
PM
£205k, 70%
FSM: Financial statements materiality, PM: Performance materiality, TFPUM: Tolerance for potential uncorrected misstatements
54
LoopUp Group plc | Annual Report & Accounts 2020
Strategic Report
Governance
Financial Statements
An overview of the scope of our audit
Our audit approach was a risk-based approach founded on a thorough understanding of the Group’s business, its
environment and risk profile. In order to address the risks described above, as identified during our planning procedures,
we performed an audit of the financial information of the parent company and three of the components financial statements
using component materiality (full-scope) taking into account the structure of the Group, the accounting processes and
controls, and the industry in which they operate.
The components of the Group were evaluated by the Group engagement team based on a measure of materiality
considered as a percentage of total Group assets, revenues and operating profit before taxes, to assess the significance of
the component and to determine the planned audit response. For those components that we determined to be significant
components, either a full scope approach or specific procedures in relation to specific balances and transactions were
carried out. This approach was determined based on their relative materiality to the Group and our assessment of audit risk.
The Group’s components vary significantly in size. Of the Group’s eighteen components, we identified four which, in our
view, required an audit of their complete financial information, either due to their size or their risk characteristics. Specific
audit procedures over certain balances and transactions were performed on seven further companies to give appropriate
coverage of all material balances at reporting and Company level. Together, the components subject to audit procedures,
being full scope and specific procedures, were responsible for 98% of the Group’s revenues, 98% of the Group’s operating
profit before tax, and 99% of Group’s total assets.
We sought wherever possible, to rely on the effectiveness of the Group’s internal controls. We assessed the design and
operating effectiveness of the IT general controls within the LoopUp meetings platform. We then undertook substantive
testing on significant transactions and material account balances, including the procedures outlined above in relation to the
key risks. For the components where specific procedures were carried out a similar testing strategy was applied, focused on
the significant transactions and material account balances. There were no significant changes to the scope of the current
year audit from the scope of the prior year audit.
Audit approach
Full-scope audit
Specific-scope audit
Analytical procedures
No. of components
% coverage
Total assets
% coverage
Revenue
% coverage PBT
4
7
7
63%
36%
1%
83%
15%
2%
78%
21%
2%
Other information
The directors are responsible for the other information. The other information comprises the information included in the
annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express
any form of assurance conclusion 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 such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material misstatement in 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 in this regard.
Our opinion on other matters prescribed by the Companies Act 2006 is unmodified
In our opinion, based on the work undertaken in the course of the audit:
the information given in the strategic report and the Directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
the strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.
Matter on which we are required to report under the Companies Act 2006
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the
course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
LoopUp Group plc | Annual Report & Accounts 2020
55
INDEPENDENT AUDITOR’S REPORT CONTINUED
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors for the financial statements
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors
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 parent 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 parent company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s 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 auditor’s 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.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
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. Owing to
the inherent limitations of an audit, there is an unavoidable risk that material misstatements in the financial statements may
not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK).
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We obtained an understanding of the legal and regulatory frameworks applicable to the Company and the Group and
sector in which they operate. We determined that the following laws and regulations were most significant: International
accounting standards, Companies Act 2006, QCA Corporate governance code and taxation laws including the
application of local sales and use taxes and overseas permanent establishments.
We understood how the Company and the Group is complying with those legal and regulatory frameworks by making
inquiries to the management and those responsible for legal and compliance procedures. We corroborated our inquiries
through our review of board minutes and papers provided to the Audit Committee.
We assessed the susceptibility of the Company’s and Group’s financial statements to material misstatement, including
how fraud might occur. Audit procedures performed by the Group engagement team included:
identifying and assessing the design effectiveness of controls management has in place to prevent and detect fraud;
understanding how those charged with governance considered and addressed the potential for override of controls
or other inappropriate influence over the financial reporting process;
challenging assumptions and judgments made by management in its significant accounting estimates;
assessing the extent of compliance with the relevant laws and regulations as part of our procedures on the related
financial statement item; and
held discussions with those outside the finance team including, human resources, key management (CEO, CFO and
Directors), project and development team (CPO).
56
LoopUp Group plc | Annual Report & Accounts 2020
Strategic Report
Governance
Financial Statements
The engagement partner assessed whether the engagement team collectively had the appropriate competence and
capabilities to identify or recognise non-compliance with laws and regulations through the following:
understanding of, and practical experience with audit engagements of a similar nature and complexity through
appropriate training and participation; and
knowledge of the industry in which the client operates.
The engagement team also engaged with tax specialists in the UK to address the risk of non-compliance relating to tax
legislation.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Paul Naylor
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
17 May 2021
LoopUp Group plc | Annual Report & Accounts 2020
57
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
Revenue
Cost of sales
Gross profit
Adjusted operating expenses(i)
Adjusted EBITDA(ii)
Depreciation
Amortisation of development costs
Adjusted operating profit(iii)
Exceptional reorganisation costs
Amortisation of acquired intangibles
Share-based payment charges
Total administrative expenses
Operating profit/(loss)
Finance costs
Profit/(loss) before income tax
Income tax
Profit/(loss) for the year
Other comprehensive income
Currency translation loss
Total comprehensive income/(loss) for the year attributable to the equity
holders of the parent
Earnings/(loss) per share (pence):
Basic
Diluted
Note
6
7
7
7
7
7
20.06
7
10
11
12
2020
£000
50,230
(14,632)
35,598
(20,270)
15,328
(1,698)
(4,581)
9,049
–
(2,210)
(575)
2019
£000
42,541
(14,304)
28,237
(21,825)
6,412
(1,475)
(3,777)
1,160
(509)
(2,210)
(588)
(29,334)
(30,384)
6,264
(568)
5,696
826
6,522
(2,147)
(647)
(2,794)
789
(2,005)
(140)
(397)
6,382
(2,402)
11.8
10.8
(3.6)
(3.6)
(i) Total administrative expenses excluding depreciation, amortisation of development costs and acquired intangibles, exceptional reorganisation costs and
share-based payment charges.
(ii) Adjusted EBITDA is operating profit stated before depreciation, amortisation of development costs and acquired intangibles, exceptional reorganisation
costs and share-based payment charges.
(iii) Before amortisation of acquired intangibles, exceptional reorganisation costs and share-based payment charges.
58
LoopUp Group plc | Annual Report & Accounts 2020
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2020
Strategic Report
Governance
Financial Statements
Assets
Property, plant and equipment
Right of use assets
Development costs
Other intangible assets
Goodwill
Total non-current assets
Trade and other receivables
Cash and cash equivalents
Current tax
Total current assets
Total assets
Liabilities
Trade and other payables
Accruals and deferred income
Lease liabilities
Borrowings
Total current liabilities
Net current assets
Non-current liabilities
Borrowings
Lease liabilities
Deferred tax liability
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Other reserve
Foreign currency translation reserve
Share-based payment reserve
Retained loss
Shareholders’ funds attributable to equity owners of parent
Note
13
13
14
14
14
15
16
15
17
17
13
18
18
13
27
20
20
2020
£000
2,663
2,347
11,389
27,446
31,511
75,356
6,744
12,086
1,647
20,477
95,833
(6,363)
(3,605)
(747)
(1,700)
(12,416)
8,061
(11,050)
(1,600)
(5,581)
(18,231)
(30,647)
65,186
277
60,677
12,691
(2,472)
1,354
(7,341)
65,186
2019
£000
Restated
(note 24)
1 January 2019
£000
Restated
(note 24)
2.737
3,228
9,104
29,656
31,511
76,236
8,652
3,000
1,631
13,283
89,519
(5,415)
(2,578)
(862)
(1,700)
(10,555)
2,728
(12,750)
(2,366)
(5,709)
(20,825)
(31,380)
58,139
276
60,588
12,691
(2,332)
779
(13,863)
58,139
2,168
–
7,880
31,866
31,511
73,425
8,657
5,581
1,153
15,391
88,816
(4,487)
(2,601)
–
(1,700)
(8,788)
6,603
(14,450)
–
(5,709)
(20,159)
(28,947)
59,869
276
60,504
12,691
(1,935)
191
(11,858)
59,869
The financial statements were approved by the Board of Directors and authorised for issue on 17 May 2021. They were
signed on its behalf by:
Steve Flavell
Director
The notes on pages 65 to 89 form part of these financial statements.
Company number 09980752
LoopUp Group plc | Annual Report & Accounts 2020
59
COMPANY STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2020
Assets
Investments
Total non-current assets
Trade and other receivables
Total current assets
Total assets
Net assets
Equity
Share capital
Share premium
Retained profit
Shareholders’ funds attributable to equity owners of parent
Note
22
15
20
20
2020
£000
139
139
60,815
60,815
60,954
60,954
277
60,677
–
60,954
2019
£000
139
139
60,725
60,725
60,864
60,864
276
60,588
–
60,864
The financial statements were approved by the Board of Directors and authorised for issue on 17 May 2021. They were
signed on its behalf by:
Steve Flavell
Director
The notes on pages 65 to 89 form part of these financial statements.
The Company recorded no profit or loss in the period since incorporation on 1 February 2016.
Company number 09980752
60
LoopUp Group plc | Annual Report & Accounts 2020
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
Strategic Report
Governance
Financial Statements
Share
premium
£000
Other
reserve
£000
Foreign
currency
translation
reserve
£000
Share-based
payment
reserve
£000
Shareholders’
funds/deficit
attributable
to equity
owners of
parent
£000
Retained
loss
£000
60,504
12,691
(1,935)
191
(11,858)
59,869
Note
Share
capital
£000
276
–
–
–
–
–
–
–
–
–
84
–
–
–
–
–
–
(397)
(397)
–
–
276
276
60,588
12,691
(2,332)
60,588
12,691
(2,332)
–
–
–
–
1
–
–
–
–
89
–
–
–
–
–
–
(140)
(140)
–
–
–
–
–
(2,005)
–
(2,005)
(397)
(2,005)
(2,402)
588
–
779
779
–
–
–
575
–
–
–
588
84
(13,863)
58,139
(13,863)
58,139
6,522
–
6,522
(140)
6,522
6,382
–
–
575
90
20
20
20
20
As at 1 January 2019
Loss for the year
Other comprehensive income
Total comprehensive profit
for the year
Transactions with owners of
parent in their capacity as
owners:
Equity share-based payment
compensation
Shares issued net of
transaction costs
As at 31 December 2019
As at 1 January 2020
Loss for the year
Other comprehensive loss
Total comprehensive loss for
the year
Transactions with owners of
parent in their capacity as
owners:
Equity share-based payment
compensation
Shares issued net of
transaction costs
As at 31 December 2020
277
60,677
12,691
(2,472)
1,354
(7,341)
65,186
The notes on pages 65 to 89 form part of these financial statements.
LoopUp Group plc | Annual Report & Accounts 2020
61
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
As at 1 January 2019
Result for the year
Total comprehensive result for the year
Transactions with owners of parent in their capacity as owners:
Shares issued net of transaction costs
20
As at 31 December 2019
As at 1 January 2020
Result for the year
Total comprehensive result for the year
Transactions with owners of parent in their capacity as owners:
Shares issued net of transaction costs
20
As at 31 December 2020
The notes on pages 65 to 89 form part of these financial statements.
Note
Share
capital
£000
276
Share
premium
£000
60,504
–
–
–
–
–
84
276
276
60,588
60,588
–
–
1
–
–
89
277
60,677
Shareholders’
funds
attributable
to equity
owners of
parent
£000
60,780
–
–
84
60,588
60,588
–
–
90
60,954
Retained
profit
£000
–
–
–
–
–
–
–
–
–
–
62
LoopUp Group plc | Annual Report & Accounts 2020
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
Strategic Report
Governance
Financial Statements
Operating activities
Profit/(loss) before income tax
Non-cash adjustments
Depreciation and amortisation
Share based payments charge
Interest payable
Net tax received
Working capital adjustments
Decrease in trade and other receivables
Increase in trade and other payables
Net cash from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Addition of intangible assets
Net cash used in investing activities
Cash flows from financing activities
Proceeds from share issue net of issue costs
Repayment of loans
Payments for leased assets
Interest and finance fees paid
Net cash used in financing activities
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of year
Exchange differences on cash and cash equivalents
Cash and cash equivalents, end of year
The notes on pages 65 to 89 from part of these financial statements.
Note
7
13.01
14.01
20
18
2020
£000
5,696
8,490
575
568
1,200
1,997
1,370
19,896
(757)
(6,866)
(7,623)
90
(1,700)
(881)
(568)
(3,059)
9,214
3,000
(128)
16
12,086
2019
restated
(Note 24)
£000
(2,794)
7,466
588
647
401
80
737
7,125
(1,257)
(5,001)
(6,258)
84
(1,700)
(795)
(647)
(3,058)
(2,191)
5,581
(390)
3,000
LoopUp Group plc | Annual Report & Accounts 2020
63
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
Operating activities
Profit before income tax
Working capital adjustments
Increase in debtors
Net cash used by operations
Net cash from financing activities
Proceeds from share issue net of issue costs
Net cash generated by financing activities
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
The notes on pages 65 to 89 form part of these financial statements.
2020
£000
–
(90)
(90)
90
90
–
–
–
2019
£000
–
(84)
(84)
84
84
–
–
–
64
LoopUp Group plc | Annual Report & Accounts 2020
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Strategic Report
Governance
Financial Statements
1. Business description and basis of preparation
1.01 Business description
The principal activity of the Group is the cloud communications platform for external and specialist communications.
LoopUp Group plc (‘the Group’) is a limited liability company incorporated and domiciled in England and Wales, with
company number 09980752. Its registered office is The Tea Building, 56 Shoreditch High Street, London, E1 6JJ.
1.02 Basis of preparation
The financial reporting framework that has been applied in their preparation is applicable law and international accounting
standards in conformity with the requirements of the Companies Act 2006 and, as regards the parent company financial
statements, as applied in accordance with the provisions of the Companies Act 2006.
The preparation of financial information requires the Directors to exercise judgements in the process of applying accounting
policies as outlined in note 5.
Financial information is presented in Pounds Sterling (£) and, unless otherwise stated, amounts are expressed in thousands
(£000), with rounding accordingly.
Under section 408 of the Companies Act 2006, the Company is exempt from the requirement to present its own statement
of comprehensive income. The result for the year dealt with in the financial statements of the Company was £nil (2019: £nil).
The accounting policies used have been consistently applied throughout all periods presented in the financial statements.
1.03 Going concern
At the balance sheet date, the Group had cash of £12.1m, net debt of £0.7m and net assets of £65.2m.
At the balance sheet date, the Group had total outstanding borrowing facilities of £12.8m. These facilities were issued with
debt covenants which are measured on a quarterly basis. Management have reviewed forecasted cash flows and revenues
for at least the next 12 months following the date of these financial statements and are confident of remaining within agreed
covenant levels.
As set out in the Group’s Strategic Report, the COVID-19 pandemic has had a material and almost certainly irreversible
impact on the broader market for external communications. The Group has swiftly and proactively reassessed its own
product and market strategy, however there are clear residual market uncertainties which may impact the Group’s
operations to some extent. These uncertainties have been taken into account in the Group’s forecasting and budgeting
processes.
The Directors prepared a detailed budget covering the Group’s expected performance over a period covering at least the
next 12 months from the date of these financial statements. This reasonable base case modelled the expected activity of the
existing customer base and the current sales pipeline. The Directors also produced a number of scenarios and sensitivities,
including a worse case, downside model, in order for the board to satisfy that the Group has sufficient cash resources to
continue to trade successfully during this period.
As a consequence, the Directors have a reasonable expectation that the Group can continue to operate and to meet its
commitments and discharge its liabilities in the normal course of business for a period not less than 12 months from the date
of these financial statements. Accordingly, they continue to adopt the going concern basis in preparing these Group
financial statements.
1.04 Chief operating decision-maker
The Executive Leadership Team are considered the chief operating decision-maker.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2020
2. Summary of significant accounting policies
The principal accounting policies adopted are set out below:
2.01 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the
Company (‘the Subsidiaries’) made up to the accounting reference date each year. Subsidiaries are all entities over which
the Group has the power to control the financial and operating policies. Control is achieved when the Group has power over
an entity in which it has invested (‘the Investee’); is exposed, or has rights, to variable returns from its involvement with the
Investee; and has the ability to use its power to affect its returns.
The Group reassesses whether or not it controls an Investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control listed above. Consolidation of a subsidiary begins when the Group obtains
control over the subsidiary and ceases when the Group losses control of the subsidiary. Specifically, the results of
subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income
from the date the Group gains control until the date when the Group ceases to control the subsidiary.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used
into line with the Group’s accounting policies.
All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between the members
of the Group are eliminated on consolidation.
The consolidated financial statements incorporate the financial statements of the Company and all Group undertakings.
2.02 Currencies
(a) Functional and presentational currency
Items included in the consolidated financial statements are measured using the currency of the primary economic
environment in which the Parent Company operates (‘the functional currency’) which is UK Sterling (£). The consolidated
financial statements are presented in UK Sterling, as described in note 1.02 (‘the presentational currency’).
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of
the transactions or at an average rate for a period if the rates do not fluctuate significantly. Foreign exchange gains and
losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income.
Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
(c) Group companies that have a functional currency other than the presentational currency of the Group
The results and financial position of all Group companies that have a functional currency different from the presentational
currency of the Group are translated into the presentational currency as follows:
• assets and liabilities for each balance sheet presented are translated at the closing rate at the balance sheet date;
•
• all resulting exchange differences are recognised in other comprehensive income as a separate component of equity.
income and expenses for each income statement are translated at average exchange rates; and
On consolidation, exchange differences arising from the translation of the net investment in foreign operations are
recognised in other comprehensive income. When a foreign operation is partially disposed of or sold, exchange differences
that were previously recognised in other comprehensive income are reclassified to the income statement as part of the gain
or loss on sale.
2.03 Development costs
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
Development costs are capitalised when the related projects meet the recognition criteria of an internally generated
intangible asset, the key criteria being as follows:
(a) technical feasibility of the completed intangible asset has been established;
(b) it can be demonstrated that the asset will generate probable future economic benefits;
(c) adequate technical, financial and other resources are available to complete the development;
(d) the expenditure attributable to the intangible asset can be reliably measured; and
(e) management has the ability and intention to use or sell the asset.
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2. Summary of significant accounting policies continued
These projects are designed to bring new capabilities into the LoopUp product. Salaries associated with development time
and directly attributable overheads are capitalised within intangible assets.
Development costs recognised as assets are amortised on a straight-line basis over their expected useful life, which in
general is considered to be three years. Development expenditure is only amortised over the period the Group is expected
to benefit. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the
effect of any changes in estimate being accounted for on a prospective basis.
Intangible assets still in development and not available for use are reviewed annually for impairment. Intangible assets in
use are reviewed for impairment where an indicator has been identified.
2.04 Goodwill
Goodwill arising on business combinations represents the difference between the consideration for a business acquisition
and the fair value of the net identifiable assets acquired, less any accumulated impairment losses. The consideration for a
business acquisition represents the fair value of the assets given and equity instruments issued in return for the assets
acquired. Goodwill is not amortised but is subject to an impairment review performed at least annually.
2.05 Acquired intangible assets
Acquired intangible assets include customer relationships and brands. Intangible assets acquired in material business
combinations are capitalised at their fair value as determined by reference to the methodologies, judgements and policies
disclosed on page 80. Intangible assets are amortised on a straight-line basis over their useful economic life of 15 years.
Amortisation charges are charged to the income statement as other administrative expenses. The table in note 7 separates
out the amortisation of each asset category.
2.06 Investments
Investments in subsidiary and associated undertakings are stated at cost less provision for impairment.
2.07 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses. Cost includes
the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its
intended use.
Depreciation is charged so as to write off the costs of assets over their estimated useful lives, on a straight-line basis starting
from the month they are first used, as follows:
• Office equipment – 20-33% straight line
• Computer equipment – 20-33% straight line
• Certain assets in acquired subsidiaries are depreciated on a reducing balance basis, resulting in an immaterial difference
in depreciation charges.
The gain or loss arising on the disposal of an asset is determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in the consolidated statement of comprehensive income.
2.08 Impairment of non-current assets
For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash
inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at
cash-generating unit level. Goodwill is allocated to those cash-generating units that are expected to benefit from synergies
of a related business combination and represent the lowest level within the Group at which management monitors goodwill.
Cash-generating units to which goodwill has been allocated (determined by the Group’s management as equivalent to its
operating segments) are tested for impairment at least annually. All other individual assets or cash-generating units are
tested for impairment whenever events or charges in circumstances indicate that the carrying amount may not be
recoverable.
An impairment loss is recognised for the amount by which the asset’s (or cash-generating units) carrying amount exceeds its
recoverable amount, which is the higher of fair value less costs of disposal and value-in-use. To determine the value-in-use,
management estimates expected future cash flows from each cash-generating unit and determines a suitable discount rate
in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly
linked to the Group’s latest approved budget, adjusted as necessary to exclude the effects of future reorganisations and
asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect current market
assessments of the time value of money and asset-specific risk factors.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2020
2. Summary of significant accounting policies continued
Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated to that
cash-generating unit. Any remaining impairment loss is charged pro rata to the other assets in the cash-generating unit.
With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously
recognised may no longer exist. An impairment loss is reversed if the asset’s or cash-generating unit’s recoverable amount
exceeds its carrying amount.
2.09 Revenue recognition
Revenue comprises the transaction price, being the amount of consideration the Group expects to be entitled to in
exchange for transferring promised goods or services to a customer in the ordinary course of the Group’s activities.
Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group.
LoopUp Platform Capabilities revenue arises from the delivery of conferencing services using LoopUp’s proprietary
products, namely remote meetings, managed events and webcasting and cloud telephony, alongside resale of Cisco
WebEx Meetings (categorised as “third party resale services”).
The significant majority of revenue arises upon usage by customers of services delivered on a pay as you go model, based
on seconds of conference time, the number of participants on the conference, and usage of other value-added services. An
increasing proportion of customers are subject to contracted levels of minimum usage, however this is still invoiced on a
monthly basis. Revenue is recognised in relation to conferencing services as the service is performed, is invoiced to the
customer monthly in arrears, and is recognised at a point in time.
Subscription revenues are recognised over the life of the subscription term.
Revenue from equipment sales is recognised when delivery is made and the control of the equipment has passed to the
customer, with support costs recognised over the period of time to which the charges relate.
Revenue from the sale of third party services (Cisco WebEx Meetings) comprises a combination of re-sold seat subscriptions
sold on a ‘per host per month’ basis, typically on 12 month or more committed terms, and minutes and overage charges for
usage of these products. Revenue from these services is recognised evenly over the period of time to which the charges
relate. Revenue from usage is recognised at the time the service is performed.
Any difference between the amount of revenue recognised and the amount invoiced to a customer is included in the
statement of financial position as accrued or deferred income.
2.10 Cost of sales
Cost of sales consists of fees payable to third parties and other expenses that are directly related to sales.
2.11 Current and deferred tax
The tax expense or credit represents the sum of the tax currently payable or recoverable and the movement in deferred tax
assets and liabilities.
(a) Current tax
Current tax is based on taxable income for the period and any adjustment to tax from previous periods. Taxable income
differs from net income in the statement of comprehensive income because it excludes items of income or expense that are
taxable or deductible in other periods or that are never taxable or deductible. The calculation uses the latest tax rates and
laws for the period that have been enacted on substantively enacted by the reporting date.
(b) Research and development tax credits
R&D tax credits for applicable research and development expenditure is accounted for as a credit to the income tax
expense in the year in which it is earned.
(c) Deferred tax
Deferred tax is calculated at the latest tax rates and laws that have been enacted or substantively enacted by the reporting
date that are expected to apply when settled. It is charged or credited in the statement of comprehensive income, except
when it relates to items credited or charged directly to equity, in which case it is also dealt with in equity.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and
liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable
income, and is accounted for using the liability method. It is not discounted.
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Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised
to the extent that it is probable that taxable income will be available against which the asset can be utilised. Such assets are
reduced to the extent that it is no longer probable that the asset can be utilised.
Deferred tax assets are recognised to the extent it is probable that the underlying deductible temporary differences will be
able to be offset against future taxable income.
Deferred tax assets and liabilities are offset when there is a right to offset current tax assets and liabilities and when the
deferred tax assets and liabilities relate to taxes levied by the same taxation authority on either the same taxable entity or
different taxable entities where there is an intention to settle the balances on a net basis.
2.12 Leases
The Group is not party to any material leases where it acts as a lessor, but the Group does have certain material property
and equipment leases, under which it is a lessee.
Following the adoption of IFRS 16, for any new contracts entered into on or after 1 January 2019, the Group considers
whether a contract is, or contains a lease. A lease is defined as ‘a contract, or part of a contract, that conveys the right to use
an asset (the underlying asset) for a period of time in exchange for consideration’. To apply this definition the Group
assesses whether the contract meets three key evaluations which are whether:
•
the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being
identified at the time the asset is made available to the Group;
the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the
period of use, considering its rights within the defined scope of the contract;
the Group has the right to direct the use of the identified asset throughout the period of use. The Group assess whether
it has the right to direct ‘how and for what purpose’ the asset is used throughout the period of use.
•
•
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The
right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct
costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any
lease payments made in advance of the lease commencement date (net of any incentives received). The Group depreciates
the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life
of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when
such indicators exist.
At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that
date, discounted using the interest rate implicit in the lease if that rate is readily available or the Group’s incremental
borrowing rate. Lease payments included in the measurement of the lease liability are made up of fixed payments (including
in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value
guarantee and payments arising from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is
remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments. When the
lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-
of-use asset is already reduced to zero.
The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients.
Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an
expense in profit or loss on a straight-line basis over the lease term.
On the statement of financial position, right-of-use assets have been disclosed separately within non-current assets and
lease liabilities are disclosed separately within current and non-current liabilities.
2.13 Payroll expense and related contributions
Wages, salaries, payroll tax, paid annual leave and sick leave, bonuses, and non-monetary benefits are accrued in the
period in which the associated services are rendered.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2020
2. Summary of significant accounting policies continued
2.14 Benefits and pension costs
LoopUp Limited and MeetingZone Limited operate contributory pension schemes under the UK’s auto-enrolment rules.
Company contributions (3% in FY2019 and FY2020) are recognised as an expense in the statement of comprehensive
income as they fall due.
US staff qualify for a non-contributory 401k pension scheme. The Group has no further payment obligations once the
contributions have been deducted and paid. The costs of administering this scheme are charged as an expense to the
statement of comprehensive income in the period to which they relate.
2.15 Share-based compensation
The Group issues share-based payments to certain employees and Directors. Equity-settled share-based payments are
measured at fair value at the date of grant and expensed on a straight-line basis over any vesting period, along with a
corresponding increase in equity if they are deemed to be material to the Group.
At each reporting date, the Directors revise their estimate of the number of equity instruments expected to vest as a result
of the effect of non-market-based vesting conditions. The impact of any revision is recognised in the statement of
comprehensive income, with a corresponding adjustment to equity reserves.
The fair value of share options is determined using a Black-Scholes model, taking into consideration the best estimate of the
expected life of the option and the specific terms of the option grant.
2.16 Alternative performance measures
The Board assesses the performance of the Group using alternative performance measures (namely Adjusted operating
expenses, Adjusted EBITDA, Adjusted operating profit and Adjusted basic/diluted earnings per share) as in the Board’s
view, these reflect the underlying performance of the business and provides a more meaningful comparison of how the
business is managed and measured on a day-to-day basis and is used as a basis for incentive compensation arrangements
for employees.
Adjusted operating expenses represents total administrative expenses excluding depreciation, amortisation and impairment
of development costs and acquired intangibles exceptional reorganisation costs and share-based payments charges.
Adjusted EBITDA is defined as operating profit stated before depreciation, amortisation and impairment of development
costs and acquired intangibles, exceptional reorganisation costs and share-based payments charges.
Adjusted operating profit is defined as operating profit stated before amortisation of acquired intangibles, exceptional
reorganisation costs and share-based payments charges.
Adjusted earnings per share numbers are calculated using profit attributable to shareholders, adjusted for exceptional
reorganisation costs, amortization of acquired intangibles, share-based payment charges and deferred tax releases.
Exceptional reorganisation costs are considered to be one-off in nature and are of such significance to the performance of
the Group due to their size, nature or incidence that the board considers it necessary to show them separately on the face of
the statement of comprehensive income.
It is important to note that alternative performance measures are not defined under IFRS and therefore are defined as
‘Non-GAAP’ measures. The alternative performance measures used by the Group may not be directly comparable to
similarly titled measures reported by other companies. They are not intended to be a substitute for, or be superior to, GAAP
measures of performance.
2.17 Dividends
Dividends are recognised as a liability and deducted from equity at the time they are approved. Otherwise dividends are
disclosed if they have been proposed before the relevant consolidated financial statements are approved.
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2. Summary of significant accounting policies continued
2.18 Accounting developments
This report has been prepared based on the accounting policies detailed in the Group’s financial statements for the year
ended 31 December 2020 and is consistent with the policies applied in the previous financial year.
There are no other new standards, amendments and interpretations which are effective for periods beginning on or after
1 January 2020, which had any impact on the Group’s accounting policies and disclosures in these financial statements.
None of the new standards, amendments and interpretations, which are effective for periods beginning after 1 January 2020
and which have not been adopted early, are expected to have a significant effect on the consolidated financial statements
of the Group.
3. Financial instruments
Financial assets and financial liabilities are recognised in the Group’s statement of financial position when the Group
becomes party to the contractual provisions of the instrument. Financial assets are de-recognised when the contractual
rights to the cash flows from the financial asset expire or when the contractual rights to those assets are transferred.
Financial liabilities are de-recognised when the obligation specified in the contract is discharged, cancelled or expires.
3.01 Trade and other receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of
business. They are generally due for settlement within 30 days and are therefore all classified as current. Trade receivables
are recognised initially at the amount of consideration that is unconditional, unless they contain significant financing
components, when they are recognised at transaction price.
The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets and
records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows,
considering the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its
historical experience, external indicators and forward-looking information to calculate the expected credit losses using a
provision matrix. The Group assesses impairment of trade receivables on a collective basis as they possess shared credit
risk characteristics and have been grouped based on the days past due.
3.02 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid
investments maturing within 90 days from the date of acquisition that are readily convertible into known amounts of cash
and which are subject to an insignificant risk of changes in value.
3.03 Financial liabilities
The Group’s financial liabilities comprise borrowings, leases and trade and other payables.
Borrowings and trade and other payables
Trade and other payables are initially measured at their fair value and are subsequently measured at their amortised cost
using the effective interest rate method; this method allocates interest expense over the relevant period by applying the
‘effective interest rate’ to the carrying amount of the liability.
3.04 Classification as debt or equity
Debt and equity instruments issued are classified as either financial liabilities or as equity in accordance with the substance
of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the
assets of the Group after deducting all liabilities.
3.05 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued are recognised as the proceeds received, net of direct issue costs. The components of
equity are as follows:
(a) Share capital
The nominal values of equity shares. The rights attributable to the classes of equity in issue are disclosed in note 20.
(b) Share premium
The fair value of consideration received in excess of the nominal value of equity shares, net of expenses of the share issue.
(c) Retained earnings
The retained net profits or losses to date less distributions.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2020
3. Financial instruments continued
(d) Foreign currency translation reserve
The net foreign exchange gains or losses to date on consolidation of investments in overseas subsidiaries.
(e) Other Reserve
A reserve has been created to enable the reservation of a consolidated balance sheet which combines the equity structure
of the legal parent with the non-stationary reserves of the legal subsidiary.
(f) Share-based payments reserve
A reserve used to recognise the value of equity-settled share-based payments provided to employees, including Key
Management Personnel as part of their remuneration.
4. Financial risk management
4.01 Financial risk factors
The Group’s activities expose it to certain financial risks: market risk, credit risk and liquidity risk, as explained below. The
overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the Group’s financial performance. Risk management is carried out by the Directors, who identify and
evaluate financial risks in close cooperation with key staff.
(a) Market risk is the risk of loss that may arise from changes in market factors, such as competitor pricing, interest rates,
foreign exchange rates.
(b) Credit risk is the risk of financial loss to the Group if a client or counterparty to financial instruments fails to meet its
contractual obligation. Credit risk arises from the Group’s cash and cash equivalents and receivables balances.
(c) Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. This risk relates to
the Group’s prudent liquidity risk management and implies maintaining sufficient cash. The Directors monitor rolling
forecasts of liquidity, cash and cash equivalents based on expected cash flow.
4.02 Capital risk management
The Group is funded by equity and loans.
The objective when managing capital is to maintain adequate financial flexibility to preserve the ability to meet financial
obligations, both current and long term. The capital structure is managed and adjusted to reflect changes in economic
conditions. Expenditures on commitments are funded from existing cash and cash equivalent balances, primarily received
from issuances of shareholders’ equity.
Financing decisions are made based on forecasts of the expected timing and level of capital and operating expenditure
required to meet commitments and development plans.
There are no externally imposed capital requirements.
4.03 Fair value estimation
The carrying value less impairment provision of trade receivables and payables are assumed to approximate to their fair
values because the short-term nature of such assets renders the impact of discounting to be negligible.
5. Critical accounting estimates and judgements
Details of significant accounting judgements and critical accounting estimates include:
Judgements
5.01 Recoverability of deferred tax assets
Deferred tax assets are recognised to the extent that it is considered probable that those assets will be recoverable. This
involves an assessment of when those assets are likely to reverse, and a judgement as to whether there will be sufficient
taxable income available to offset the assets when they do reverse.
This requires assumptions regarding the future profitability of the Group for the foreseeable future. The Group has
recognised deferred tax assets in the year as detailed in note 25, The Group has trading losses of £8.5m (2019: £12.5m)
and non-trading losses of £1.4m (2019: £1.5m) carried forward, for which there is no deferred tax asset recognised as it is
not probable that future taxable profit will be available against which the unused tax losses can be utilised.
5.02 Capitalised development costs
Capitalisation of development costs requires the Directors to make judgements in allocating staff time appropriately to
relevant projects and in assessing the technical feasibility and economic potential of those projects.
These judgements have resulted in the intangible assets as set out in note 14.
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Estimates
5.03 Valuation of acquired intangibles
Management identified and valued acquired intangible assets on acquisitions that were made during the periods disclosed
in the financial statements. Management has applied judgements in identifying and valuing intangible assets separate from
goodwill that consist of assessing the value of brands and customer relationships. The Board have a policy of engaging
professional advisors on acquisitions with a purchase price greater than £5 million to advise and assist in calculating
intangible asset values. The Group consistently applies the following methodologies for each class of identified intangible:
• Customer relationships – Net present value of future cash flows
•
• Brands – Royalty relief method
Intellectual Property – Cost to recreate the asset
Assumptions are made on the useful life of an intangible and if shortened, would increase the amortisation charge
recognised in the income statement. The identified intangibles are set out in note 14. There are a number of assumptions in
estimating the present value of future cash flows including management’s expectation of future revenue, renewal rates for
subscription customers, costs, timing and quantum of future capital expenditure, long-term growth rates and discount rates.
5.04 Carrying value of goodwill and other intangibles
The carrying value of goodwill and other intangibles is assessed at least annually to ensure that there is no need for
impairment. Performing this assessment requires management to estimate future cash flows to be generated by the related
cash generating unit, which entails making judgements including the expected rate of growth of sales, margins expected to
be achieved, the level of future capital expenditure required to support these outcomes and the appropriate discount rate to
apply when valuing future cash flows.
The Group now considers that it has one single cash generating unit of the Group as a whole. In the period since acquisition,
the vast majority of MeetingZone’s audio revenue customer base have been transitioned onto the LoopUp platform. Staff
and overhead costs have also been amalgamated such that it is becoming increasingly difficult to separately identify the
acquired MeetingZone business. This is entirely in line with the intention at the time of the acquisition. Impairment testing
has therefore been carried out on this basis.
5.05 Intangible asset life
Intangible assets are amortised over their estimated useful lives.
5.06 Share based payments
The Group operates a share-based compensation plan under which the entity receives services from employees as
consideration for equity instruments (options) of the Group. The fair value of the employee services received in exchange for
the grant of the options and awards is recognised as an expense. The total amount to be expensed is determined by
reference to the fair value of the options granted, excluding the impact of any non-market service and performance vesting
conditions (for example, profitability, sales growth targets and remaining an employee of the entity over a specified time
period). Non-market vesting conditions are included in assumptions about the number of options and awards that are
expected to vest. The total amount expensed is recognised over the vesting period, which is the period over which all the
specified existing conditions are to be satisfied. At each reporting date, the entity revises its estimates of the number of
options and awards that are expected to vest based on the non-market vesting conditions. It recognises the impact of the
revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity. The significant
judgements involved in calculating the share based payments charge are the fair value at the date of grant which is
determined by using the Black-Scholes model, the staff retention rate which is determined with reference to historical churn
and the estimated vesting periods which are determined with reference to the Group’s forecasts. Additional disclosures on
the calculation of share-based payments are provided in note 20.
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73
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2020
6. Revenue and segmental reporting
The Directors have identified the segments by reference to the principal groups of services offered and the geographical
organisation of the business as reported to the chief operating decision-maker (CODM).
In July 2020 the Group announced a major extension to the LoopUp proposition to include global cloud voice services via
Direct Routing integration with Microsoft Teams. This capability will be marketed to customers alongside the existing
premium remote meetings and events solutions as part of a combined, core, LoopUp proposition. The Group therefore
considers that it has one key operating segment, referred to as LoopUp Platform Capabilities, which comprises revenue
from remote meetings, managed events and webcasts and cloud telephony, as well as revenues from the resale of
third-party services. Revenues within this segment are broken out below, both by geography and platform capability.
Segmental revenues are external and there are no material transactions between segments.
The Group’s largest customer represented less than 5% of total revenue in both years.
No segmental balance sheet was presented to the CODM.
The Group’s revenue disaggregated by primary geographical markets is as follows:
UK
EU
North America
Rest of World
Total
The Group’s revenue disaggregated by pattern of revenue recognition is as follows:
For the year ended 31 December 2020:
Services transferred at a point in time
Services transferred over time
Total
The Group’s revenue disaggregated by platform capability is as follows:
Remote meetings
Managed events and webcasts
Cloud telephony
Third party resale services
Total
The Group’s non-current assets disaggregated by primary geographical markets are as follows:
Geographical analysis of non-current assets:
UK
EU
North America
Rest of World
See note 24 for details of the prior year restatement.
2020
£000
25,591
7,790
15,909
940
50,230
2020
£000
41,373
8,857
50,230
2020
£000
35,340
4,985
2,725
7,180
50,230
2020
£000
74,230
24
1,097
5
75,356
2019
£000
22,544
5,774
13,653
570
42,541
2019
£000
32,823
9,718
42,541
2019
£000
29,483
2,166
2,774
8,118
42,541
2019
Restated
£000
74,753
62
1,410
11
76,236
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Governance
Financial Statements
7. Administrative expenses
The profit/loss from operations is stated after charging amounts as follows:
Staff costs (note 9)
Auditor’s remuneration (note 8)
Other administrative expenses
Total adjusted operating expenses
Depreciation of owned property, plant and equipment (note 13)
Depreciation of right of use assets (note 13)
Amortisation of development costs (note 14)
Amortisation of acquired intangibles (note 14)
Exceptional reorganisation costs
Share-based payment charge (note 20)
Total administrative expenses
2020
£000
13,773
135
6,362
20,270
818
880
4581
2,210
–
575
29,334
2019
£000
14,427
131
7,267
21,825
680
795
3,777
2,210
509
588
30,384
Exceptional re-organisation costs are legal and professional fees, provisions for onerous leases and staff termination costs
incurred in relation to the restructuring of the MeetingZone organisation following acquisition. These are not expected to
recur.
8. Auditor’s remuneration
The Group obtained the following services from the auditor and their associates:
Fees payable to the Group’s auditor for the audit of the consolidated financial statements
Fees payable to the Group’s auditor for the audit of the Parent Company’s financial
statements
Audit-related assurance services
Tax compliance services
Total auditor’s remuneration (included within adjusted operating expenses)
9. Staff and remuneration
9.01 Number of staff
Average number of employees (including Directors):
Executive Directors
Non-executive Directors
Commercial
Engineering and development
Other
2020
£000
115
10
10
–
135
2019
£000
95
10
10
16
131
2020
Number
2019
Number
3
3
104
53
78
241
3
4
136
44
86
273
LoopUp Group plc | Annual Report & Accounts 2020
75
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2020
9. Staff and remuneration continued
9.02 Remuneration
Aggregate remuneration of staff (including Directors):
Short-term remuneration
Social security costs
Benefits in kind
Capitalisation as development costs (note 14)
Included in adjusted operating expenses
2020
£000
2019
£000
16,952
1,532
1,265
19,749
(5,976)
13,773
15,508
1,551
1,424
18,483
(4,056)
14,427
In addition to the staff costs above, £844,000 (2019: £806,000) of outsourced contractor costs and £46,000 (2019:
£139,000) of other, non-salary costs were incurred and capitalised as development costs.
9.03 Directors’ remuneration
Remuneration of the Directors included within the statement of comprehensive income is as follows:
Short-term remuneration
Social security
Benefits in kind
Non-Executive Director fees
Short-term remuneration of highest paid Director
The remuneration of key management personnel is shown in note 21.01.
10. Finance expense
Interest on loans
Loan facility fees
Interest charges on right of use assets
11. Taxation
11.01 Income tax credit
Current and deferred tax:
Current period UK income tax
Current period foreign income tax
Adjustment for prior periods
Deferred tax adjustments (note 25)
Net income tax credit
2020
£000
1,150
100
19
80
1,349
514
2020
£000
424
49
95
568
2020
£000
(1,450)
530
222
(698)
(128)
(826)
2019
£000
644
63
21
97
825
274
2019
£000
524
49
74
647
2019
£000
(1,429)
283
357
(789)
–
(789)
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Governance
Financial Statements
11. Taxation continued
11.02 Factors affecting the tax charge
The income tax charge differs from the theoretical charge arising from applying UK corporate tax rates to the profits for the
reasons below:
UK corporate tax average rate
Profit/(loss) before income tax
Tax at the UK corporate tax rate
Effects of:
Expenses not deductible for tax purposes
Additional reduction for R&D expenditure
Set against brought forward losses
Effect of foreign tax rates
Adjustment for prior periods
Deferred tax adjustments
Other differences
Net income tax credit
2020
£000
19%
5,696
1,082
13
(1,451)
(713)
22
(156)
131
246
(826)
2019
£000
19%
(2,794)
(531)
386
(706)
(333)
(19)
357
–
57
(789)
11.03 Factors that may affect future tax charges
The effective rate of UK corporate tax at the period end was 19%. The government has announced an intention to increase
this to 25%, but this has not been enacted at the date of this report.
12. Earnings per share
The basic earnings per share is calculated by dividing the net profit attributable to equity holders of the Group by the
weighted average number of ordinary shares in issue during the year.
Profit/(loss) attributable to equity holders (£000)
Adjusted profit attributable to equity holders (£000)(i)
Weighted average number of ordinary shares in issue (000)
Basic adjusted earnings per share (pence)(ii)
Basic earnings per share (pence)
2020
000
6,522
9,307
55,330
16.8
11.8
2019
000
(2,005)
1,302
55,208
2.4
(3.6)
The diluted earnings per share have been calculated by dividing the net profit attributable to equity holders of the Group by
the weighted average number of shares in issue during the year, adjusted for potentially dilutive shares that are not
anti-dilutive.
Weighted average number of ordinary shares in issue
Adjustment for share options
Weighted average number of potential ordinary shares in issue
Diluted adjusted earnings per share (pence)(ii)
Diluted earnings per share (pence)
2020
000
55,330
5,065
60,395
15.4
10.8
2019
000
55,208
5,058
60,266
2.2
(3.6)
(i) Calculated as profit attributable to equity holders adjusted for exceptional reorganisation costs, amortisation of acquired intangibles and share based
payments charges.
(ii) Basic adjusted and diluted adjusted earnings per share are calculated using the profit above and adjusting for exceptional reorganisation costs,
amortisation of acquired intangibles and share based payments charges.
LoopUp Group plc | Annual Report & Accounts 2020
77
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2020
13. Property, plant and equipment
13.01 Property, plant and equipment (Group)
Cost:
As at 1 January 2019
Additions
Net exchange difference
As at 31 December 2019
Additions
Disposals
Net exchange difference
As at 31 December 2020
Accumulated depreciation:
As at 1 January 2019
Charge for the year
Net exchange difference
As at 31 December 2019
Charge for the year
Disposals
Net exchange difference
As at 31 December 2020
Carrying amount:
As at 1 January 2019
As at 31 December 2019
As at 31 December 2020
13.02 Property, plant and equipment (Company)
The Company held no property, plant and equipment during the period.
13.03 Right of use assets
The balance sheet shows the following amounts in relation to leases:
Right-of-use assets:
Buildings
Lease liabilities:
Current
Non-current
Additions to the right-of-use assets during 2020 were £nil (2019: £2,082,000).
Computer
equipment
£000
Office
equipment
£000
7,981
652
(74)
8,559
753
(575)
(83)
8,654
6,012
579
(66)
6,525
600
(575)
(73)
6,477
1,969
2,034
2,177
880
606
(4)
1,482
4
(551)
(6)
929
681
103
(5)
779
218
(551)
(3)
443
199
703
486
Total
£000
8,861
1,258
(78)
10,041
757
(1,126)
(89)
9,583
6,693
682
(71)
7,304
818
(1,126)
(76)
6,920
2,168
2,737
2,663
2020
£000
2019
£000
2,347
3,228
747
1,600
2,347
862
2,366
3,228
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Governance
Financial Statements
13. Property, plant and equipment continued
The income statement shows the following amounts relating to leases:
Depreciation charge of right-of-use assets Buildings
Interest expense
2020
£000
880
880
95
2019
£000
795
795
74
The Group’s leases include various office premises, typically on rental contracts from three to ten years. Lease terms are
negotiated on an individual basis and contain a wide range of different terms and conditions. The lease arrangements do
not impose any covenants other than the security interests in the leased assets held by the lessor. Leased assets may not
be used as security for borrowing purposes.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net
present value of the future expected lease payments. The lease payments are discounted using the Group’s incremental
borrowing rate, estimated at 3.5%.
Lease payments are allocated between principal and finance costs. The latter is charged to the income statement over the
lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right of use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight line
basis. Payments associated with short-term or low value leases are recognized on a straight line basis as an expense on the
income statement.
14. Intangible assets
14.01 Intangible assets (Group)
Cost:
As at 1 January 2019 as previously stated
Balance sheet restatement (note 24)
As at 1 January 2019 (restated)
Additions
As at 31 December 2019 (restated)
Additions
As at 31 December 2020
Accumulated amortisation:
As at 1 January 2019
Charge for the year
As at 31 December 2019
Charge for the year
As at 31 December 2020
Carrying amount:
As at 1 January 2019
As at 31 December 2019
As at 31 December 2020
Customer
relationships
£000
Brand and
trademarks
£000
Acquired
goodwill
£000
Development
costs
£000
31,178
–
31,178
–
31,178
–
31,178
1,212
2,078
3,290
2,078
5,368
29,966
27,888
25,810
1,977
–
1,977
–
1,977
–
1,977
77
132
209
132
341
1,900
1,768
1,636
30,950
561
31,511
–
31,511
–
31,511
–
–
–
–
–
30,950
31,511
31,511
18,252
–
18,252
5,001
23,251
6,866
30,117
10,370
3,777
14,147
4,581
18,728
7,880
9,104
11,389
Total
£000
82,355
561
82,916
5,001
87,917
6,866
94,783
11,659
5,987
17,646
6,791
24,437
70,696
70,271
70,346
LoopUp Group plc | Annual Report & Accounts 2020
79
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2020
14. Intangible assets continued
14.02 Development costs
Amortisation and any impairment charges are included in operating expenses in the statement of comprehensive income.
Intangible assets still in development and not available for use are reviewed annually for impairment. Intangible assets in
use are reviewed for impairment where an indicator has been identified.. Amortisation of each asset begins from the date
the asset becomes available for use.
The net book value of development cost assets which are incomplete at the balance sheet date was £1,149,000 (2019:
£513,000).
14.03 Goodwill, customer relationships and brands and trademarks
There were no additions to these assets during 2019 or 2020. These assets all relate to the acquisition of MeetingZone in
2018. The acquisition consisted of a single identifiable cash generating unit. The Group used specialist external advisors to
value the separately identifiable assets acquired using an income approach to identify the present value of the future
economic value of these assets and the resulting goodwill. Detailed three-year cash flow forecasts were produced at the
time of the acquisition to support these valuations. The acquired customer relationships and brand assets were considered
to have a useful economic life of at least 15 years when acquired, and are being amortised over that period, with a remaining
amortisation period of 12.5 years at the balance sheet date. The Group reassesses these useful economic lives at least
annually, and considers that the recent increases in churn of Meetings customers has had an immaterial impact on the
amortisation charge for FY2020. This will be reviewed in 2021 to reassess whether the remaining useful economic life needs
to be reduced.
In the period since acquisition, the vast majority of MeetingZone’s audio revenue customer base have been transitioned
onto the LoopUp platform. Staff and overhead costs have also been amalgamated such that it is becoming increasingly
difficult to separately identify the acquired MeetingZone business. This is entirely in line with the intention at the time of the
acquisition. To reflect this position, the Group considers that there is one single cash generating business which is the
Group as a whole. Impairment testing has therefore been carried out on this basis.
The Group has reviewed the valuation of these assets following the end of the financial year, updating these cash flow
forecasts in conjunction with the Group’s operating forecasts for a five-year period using the revised definition of cash
generating units. These forecasts support the valuation of these assets with no impairment required.
14.04 Impairment testing
The Group tests goodwill and development costs for intangible assets not yet in use for impairment on an annual basis by
considering the recoverable amount of the single cash generating unit.
There are no intangible assets with indefinite useful lives (other than goodwill).
For the purpose of impairment testing, the recoverable amount of the cash-generating unit has been calculated with
reference to value in use. The key assumptions for the period over which management approved forecasts are based and,
beyond this, for the value in use calculations overall, are those regarding discount rates, growth rates and achievement of
future revenues. In arriving at the values assigned to each key assumption management make reference to past experience
and external sources of information regarding the future. The assumptions have been reviewed in light of the current
economic environment. The key features of these calculations are shown below:
Period over which management approved forecasts are based
Growth rate applied beyond approved forecast period for both costs and revenues
Pre-tax discount rate
5 years
2%
8.8%
The discount rates used in each value in use calculation have been based upon divisional specific risk-taking account of
factors such as the nature of service user need, cost profiles and the barriers to entry into each market segment as well as
other macro-economic factors.
The Directors believe that, even in the current economic environment and taking into account the nature of the Group’s
operations, any reasonably possible change in the key assumptions on which the recoverable amounts are based would not
cause the cash-generating units’ carrying amount to exceed the recoverable amount.
14.06 Intangible assets (Company)
The Company held no intangible assets during the period.
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Financial Statements
15. Trade and other receivables
Trade receivables
Accrued revenue
Amounts owed by subsidiary undertakings
Other receivables
Deposits and prepayments
Current corporate tax
Group
2020
£000
4,804
222
–
8
1,710
6,744
1,647
Group
2019
restated
£000
6,561
193
–
149
1,749
8,652
1,631
Company
2020
£000
–
–
60,815
–
–
60,815
–
Company
2019
£000
–
–
60,725
–
–
60,725
–
The Directors believe that the carrying value of receivables represents their fair value. In determining the recoverability of a
receivable, the Directors consider any change in its credit quality from the date credit was granted up to the reporting date.
The largest single receivable at any time would typically constitute no more than 3% of total receivables and would relate to
a blue-chip customer. As such, the concentrated credit risk is considered minimal.
Details of the credit risk management policies are shown in note 19.05. No collateral is held as security for trade or other
receivables. The ageing analysis of trade receivables is as follows:
Not overdue
Up to 30 days overdue
Between 30 and 60 days overdue
Over 60 days overdue
Provision for credit losses
Group
2020
£000
2,067
1,675
499
1,027
5,268
(464)
4,804
Group
2019
£000
3,792
1,693
587
787
6,859
(289)
6,561
Company
2020
£000
Company
2019
£000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Amounts owed by subsidiary undertakings are repayable on demand and are interest free.
16. Cash and cash equivalents
Cash and cash equivalents
Group
2020
£000
12,086
12,086
Group
2019
£000
3,000
3,000
Company
2020
£000
–
–
Company
2019
£000
–
–
The cash and cash equivalents do not currently earn interest. The Directors consider that the carrying value of cash and
cash equivalents approximates to their fair value.
LoopUp Group plc | Annual Report & Accounts 2020
81
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2020
17. Trade and other payables
Current:
Trade payables
Other tax and social security
Other payables
Accruals
Deferred income
Lease liabilities (note 13.03)
Borrowings – due within one year (note 18)
Total current liabilities
Group
2020
£000
3,710
2,653
–
6,363
2,924
680
3,605
747
747
1,700
1,700
12,415
Group
2019
restated
£000
4,054
1,361
–
5,415
1,501
1,077
2,578
862
862
1,700
1,700
10,555
Company
2020
£000
Company
2019
£000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
All of the deferred income balances shown above represent invoices covering a period of less than one year, and hence all
of this income is recognised in the income statement in the next financial year.
18. Borrowings
Borrowings held at amortised cost
Current:
Bank loan
Total borrowings
Non-current:
Bank loan
Total borrowings
Group
2020
£000
1,700
1,700
Group
2020
£000
Group
2019
£000
1,700
1,700
Group
2019
£000
11,050
11,050
12,750
12,750
Total of current and non-current borrowings
12,750
14,450
Company
2020
£000
Company
2019
£000
–
–
–
–
Company
2020
£000
Company
2019
£000
–
–
–
–
–
–
The Group’s bank loan is a £17m facility arranged with the Bank of Ireland in June 2018 in connection with the acquisition of
MeetingZone. The facility is a 5-year term loan – 50% amortising, 50% bullet repayment at maturity, at a floating interest rate
of 2.5% over LIBOR, with a zero LIBOR floor. Repayments of £0.85m are made every six months. The maturity date for the
facility is June 2023. The Group also has access to a £3m revolving credit facility which has not been drawn at any stage.
The facility includes security over the assets of LoopUp Limited and certain other subsidiary companies. The Group is
required to ensure that it complies with covenants governing gross debt/Adjusted EBITDA and Adjusted EBITDA/gross
interest for the period of the loan. The Group has complied with all covenant tests up to the balance sheet date.
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Financial Statements
18. Borrowings continued
The Group’s non-derivative financial liabilities have contractual maturities as summarised below:
31 December 2020:
Trade payables
Bank loan
31 December 2019:
Trade payables
Bank loan
Within
six months
£000
Six to
12 months
£000
3,710
850
4,560
4,054
850
4,904
–
850
850
–
850
850
One to
five years
£000
–
12,750
12,750
–
12,750
12,750
Non-current
later than
five years
£000
–
–
–
–
–
–
The above amounts reflect the contractual undiscounted cash flows, which may differ to the carrying values of the liabilities
at the reporting date.
The changes in the Group’s liabilities arising from financing activities can be classified as follows:
At 1 January 2020
Cash flows
– Repayment
Non-cash flows
– Reclassification
At 31 December 2020
At 1 January 2019
Adoption of IFRS 16 (restated)
At 1 January 2019 (restated)
Cash flows
– Repayment (restated)
Non-cash flows
– Additions to leases (restated)
– Reclassification (restated)
At 31 December 2019 (restated)
Long-term
borrowings
£000’
12,750
Short-term
borrowings
£000’
1,700
Lease
liability
£000’
3,228
Total
£000’
17,678
–
(1,700)
(881)
(2,581)
(1,700)
11,050
14,450
–
14,450
1,700
1,700
1,700
–
1,700
–
2,347
–
1,852
1,852
–
15,097
16,150
1,852
18,002
–
(1,700)
(795)
(2,495)
–
(1,700)
12,750
–
1,700
1,700
2,171
–
3,228
2,171
–
17,678
In the table above, 2019 balances have been restated due to omission of lease liability from this table relating to a
presentation error in the cash flow statement (refer to note 24 for explanation) and a reclassification of £1.7m repayment of
borrowings which has been correctly classified under short term borrowings and was incorrectly presented under long
term borrowings in the prior year.
The maturity analysis of lease liabilities on the balance sheet is presented in note 13.03
19. Financial instruments
There is an exposure to the risks that arise from the financial instruments. The policies for managing those risks and the
methods to measure them are described in note 4.
19.01 Capital risk management
Funding to date has been by equity (note 20) and loans (note 18).
LoopUp Group plc | Annual Report & Accounts 2020
83
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2020
19. Financial instruments continued
19.02 Financial assets
The following financial assets were held, all classified as loans, cash or receivables:
Cash and cash equivalents
Trade receivables
Amounts owed by subsidiary undertakings
Other receivables
Deposits
Group
2020
£000
12,086
4,804
–
8
1,710
18,608
19.03 Financial liabilities
The following financial liabilities were held, all classified as other financial liabilities:
Trade payables
Loans
Group
2020
£000
3,710
12,750
16,460
Group
2019
£000
3,000
6,561
–
149
359
10,069
Group
2019
£000
4,054
14,450
18,054
Company
2020
£000
–
–
60,815
–
–
60,815
Company
2019
£000
–
–
60,725
–
–
60,725
Company
2020
£000
Company
2019
£000
–
–
–
–
–
–
19.04 Market risk
There is an exposure to the financial risk of changes in exchange rates impacting overseas revenues and costs. The
Directors do not consider it appropriate to engage in hedging activities at this point in time, as the Group’s US Dollar
revenues and costs are naturally hedged, to a large degree.
19.05 Credit risk
Careful consideration is given to the choice of bank in order to minimise credit risk. Cash is held at different banks in each
local jurisdiction. The amounts of cash held with those banks at the reporting date can be seen in the financial assets table
above. All of the cash and equivalents were denominated in UK Sterling. Cash is held in local currency in each jurisdiction.
Amount held in non-sterling accounts are minimised where possible.
There was no significant concentration of credit risk at the reporting date other than as described at note 15.
The carrying amount of financial assets, net of any allowances for losses, represents the maximum exposure to credit risk
without taking account of the value of any collateral obtained.
A provision of £464,000 (2019: £298,000) has been made for impairment losses in relation to trade receivables. This
represents 8.8% of gross outstanding trade receivables (2019: 4.3%). The Group considers the current level of this provision
to be adequate to cover expected credit losses on trade receivables. Bad debt expenses are reported in the income
statement.
In the Directors’ opinion, there has been no other impairment of financial assets. An allowance for impairment is made where
there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the
cash flows. The Directors consider the above measures to be sufficient to control the credit risk exposure. No collateral is
held as security in relation to its financial assets.
Amounts owed by subsidiaries are unsecured, have no fixed date of repayment and are repayable on demand.
19.06 Liquidity risk management
The Directors manage liquidity risk by regularly reviewing cash requirements by reference to short-term cash flow forecasts
and medium-term working capital projections.
19.07 Maturity of financial assets and liabilities
The maturity of non-derivative financial liabilities and assets at the reporting date are shown in note 18.
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Financial Statements
19. Financial instruments continued
19.08 Fair value
The fair values of all the financial assets and liabilities on the balance sheet are considered to be equal to their carrying
values.
Financial instruments are either carried at amortised cost, less any provision for impairment, or fair value. The fair value of
long-term borrowings is the same as the carrying value of long-term borrowings as at 31 December 2020. The Group uses
the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
• Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
• Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable,
either directly or indirectly; and
• Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on
observable market data.
As at 31 December 2020 or 2019, there were no financial instruments which met any of the above classifications.
Where market values are not available, fair values of financial assets and liabilities have been calculated by discounting
expected future cash flows at prevailing interest rates with the following assumptions being applied:
•
for trade and other receivables and payables with a remaining life of less than one year the carrying amount is deemed
to reflect the fair value;
for cash and cash equivalents the amounts reported on the balance sheet approximate to fair value.
•
20. Share capital and share premium
20.01 Number of shares in issue
Ordinary shares of 0.5p each
20.02 Share capital at par, fully paid
Carried forward:
Ordinary shares of 0.5p each
Movement in year:
Shares issued:
– Ordinary shares of 0.5p each
The classes of ordinary shares ranked pari-passu in respect of voting and dividends.
20.03 Changes in shares issued
Ordinary shares issued at £0.0128
Ordinary shares issued at £0.5000
Ordinary shares issued at £0.7500
Share issues in the year and prior year related to the exercise of share options.
2020
Number
2019
Number
55,441,182
55,245,182
55,441,182
55,245,182
2020
£000
277
277
1
1
2019
£000
276
276
–
–
2020
Number
75,000
9,000
112,000
196,000
2019
Number
–
–
113,139
113,139
LoopUp Group plc | Annual Report & Accounts 2020
85
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2020
20. Share capital and share premium continued
20.04 Share premium account
Brought forward
Arising during the year on issue of shares
Costs of share issue
Carried forward
2020
£000
60,588
89
–
60,677
2019
£000
60,504
84
–
60,588
20.05 Share options
The Group operates a shared-based payment scheme for employee remuneration, which is settled in equity. Options are
granted to the majority of employees on a periodic basis. Options under the scheme will vest if certain conditions, as
defined in the scheme, are met. Upon vesting, each option allows the holder to purchase one ordinary share at a price
determined upon the issue of the option.
Outstanding share options were as follows:
Outstanding at 1 January
Granted at £1.10
Granted at £3.175
Cancelled and not replaced
Cancelled for replacement
Replacement options granted at £0.75
Lapsed
Exercised (note 20.03)
Outstanding at 31 December
Number of options exercisable at the balance sheet date
Weighted average exercise price of outstanding options carried forward
2020
Number
2019
Number
4,992,645
1,195,700
–
(360,000)
–
–
(172,416)
(196,000)
4,732,978
–
1,057,250
–
(2,512,250)
2,171,800
(343,994)
(113,139)
5,459,929
4,992,645
2020
Number
2019
Number
2,669,108
2,311,369
£
0.83
£
1.05
In June 2019 the Group issued share options to a number of employees. A total of 1,078,750 options were issued at a strike
price of £3.175, equal to the market price at the date of grant. These options vest over a four-year period with a one year cliff.
In December 2019, the Group made an offer to holders of options priced at £4.40 (issued in August 2018) and £3.175 (issued
in June 2019) to re-issue these options with a revised strike price of £0.75 (compared to the market price at the time of grant
of £0.675. This modification involved a reduction in the number of options of 10% (for the £4.40 options) and 20% (for the
£3.175 options). A new four-year vesting period commenced upon the re-issue. This process resulted in the cancellation of
1,620,000 options previously priced at £4.40 and 892,250 options previously priced at £3.175, and the issuing of 2,171,800
new options at £0.75. Co-CEO’s Steve Flavell and Michael Hughes waived their rights to participate in the re-issue.
In May 2020, the Group issued a total of 1,195,000 new share options at a strike price of £1.105, equal to the market price at
the date of grant. These options vest over a four-year period with a one year cliff.
86
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Strategic Report
Governance
Financial Statements
20. Share capital and share premium continued
20.06 Share-based payments
The fair values of the options granted have been calculated using a Black-Scholes model. Assumptions used were an option
life of five years, a risk-free rate of 1.007%, a volatility of 25% and zero dividend yield. Other inputs were as follows:
Number granted in year
Share price at grant date
Exercise price
Fair value of each issued option
Vesting period (years)
Allowance for leavers and failed vestings
Total charge for grant
Charge for the year:
– 2020 grant
– 2019 grant
– 2018 grant
2020
Number
2019
Number
1,195,700
1,052,000
£1.105
£1.105
£0.265
4
10%
£285,000
£33,000
£144,000
£398,000
£4.35
£4,425
£0.76
4
10%
£720,000
–
£105,000
£483,000
£575,000
£588,000
The share option re-issue process during 2019 described above is considered to fall within paragraph 28(c) of IFRS 2 and
hence does not result in an accelerated share-based payment charge in relation to the cancelled options. Using the same
valuation techniques as detailed above for the reissued options results in a lower overall charge, and hence no adjustment
has been made to the charge in either year.
21. Related party transactions
21.01 Remuneration of key personnel
Key management of the Group are the members of the executive leadership team. Key management personnel
remuneration includes the following expenses:
Short-term remuneration
Social security
Benefits in kind
Total remuneration
21.02 Transactions and balances with key management personnel
Amounts owed by/(to) key personnel:
Steve Flavell
Michael Hughes
Mike Reynolds
Simon Healey
This amount represents unpaid expense claims or fee invoices.
2020
£000
2,850
272
62
3,184
2020
£000
(13)
(29)
(4)
–
(46)
2019
£000
1,808
179
79
2,066
2019
£000
(25)
(41)
(10)
(1)
(77)
LoopUp Group plc | Annual Report & Accounts 2020
87
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2020
21. Related party transactions continued
21.03 Transactions with related companies and businesses
The Group has purchased services in the normal course of business from certain companies related to individuals who are
or were Directors of the Group:
The purchases from these parties and the balances owed at year end are as set out below:
Purchases from related parties:
Silicon Valley Internship Program LLC
Amounts owed to (by) related parties:
Silicon Valley Internship Program LLC
2020
£000
(46)
(46)
–
–
2019
£000
(57)
(57)
–
–
22. Subsidiary undertakings
The Company owns 100% of the issued shares of the following telephony and conferencing services subsidiaries which
make up the carrying value of £139,000 (2019: £139,000). Investments in MeetingZone and other subsidiaries are held in
LoopUp Limited.
Country of
incorporation
and principal
place of business Principal activity
Proportion of
ownership interests
held by Group at year end
2020
2019
Owned directly by LoopUp
Group plc:
LoopUp Limited
Owned indirectly by LoopUp
Group plc:
LoopUp LLC
LoopUp (Barbados) Limited
LoopUp (HK) Limited
LoopUp Australia Pty Ltd
Pimco 2711 Limited
Warwick Holdco Limited
Warwick Debtco Limited
Warwick Bidco Limited
MeetingZone Limited
MeetingZone GmbH
MeetingZone Inc
MeetingZone Canada Limited
Comfy MeetingZone AB
Comfy MeetingZone AS
MeetingZone Hong Kong
UK
Telephony and conferencing services
100%
100%
USA
Barbados
Hong Kong
Australia
UK
UK
UK
UK
UK
Germany
USA
Canada
Sweden
Norway
Hong Kong
Telephony and conferencing services
Telephony and conferencing services
Telephony and conferencing services
Telephony and conferencing services
Dormant company
Holding company
Holding company
Holding company
Telephony and conferencing services
Telephony and conferencing services
Telephony and conferencing services
Telephony and conferencing services
Telephony and conferencing services
Telephony and conferencing services
Dormant company
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
All subsidiary undertakings have been included in the consolidation.
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Strategic Report
Governance
Financial Statements
23. Dividends
The Directors do not recommend the payment of a dividend (2019: £nil).
24. Restatements
During the year, the Group identified that certain assets and liabilities acquired as part of the acquisition of MeetingZone in
2018 had been misstated in the acquisition balance sheet. Accrued income assets had been overstated by £669,000 and
deferred revenue liabilities had been overstated by £108,000. The net impact of these adjustments is to increase the
goodwill asset relating to the acquisition by £561,000 – all of this asset is geographically located in the UK. The Group’s
2018 and 2019 balance sheets have been restated to reflect these adjustments. There is no impact on the income statement
in either year.
The restatement in the cash flow statement relates to a reclassification of payments for lease liabilities of £881,000
(2019:£795,000) which were previously included in operating activities, now classified as financing activities.
25. Deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Balance as at 1 January 2019 and 31 December 2019
Timing differences recognised on tax losses
Timing differences recognised on intangible assets
Reduction in timing differences on amounts amortised
Balance as at 31 December 2020
Intangible assets
timing differences
£000
Timing differences
on tax losses
£000
(5,709)
–
(2,238)
939
(7,008)
–
1,427
–
–
1,427
Total
£000
(5,709)
1,427
(2,238)
939
(5,581)
LoopUp Group plc | Annual Report & Accounts 2020
89
COMPANY INFORMATION AND CORPORATE ADVISERS
Advisers:
Legal Counsel
Pinsent Masons
30 Crown Place
Earl Street
London
EC2A 4ES
020 7418 7000
Financial Public Relations
FTI Consulting
200 Aldersgate Street
London
EC1A 4HD
020 7979 7400
Financial Adviser, NOMAD, Broker
Panmure Gordon
1 New Change
London
EC4M 9AF
020 7886 2500
Auditor
Grant Thornton UK LLP
30 Finsbury Square
London
EC2A 1AG
0207 383 5100
Registrars
Neville Registrars
Neville House
Steelpark Road
Halesowen
B62 8HD
0121 585 1131
Company Registration Number: 09980752
90
LoopUp Group plc | Annual Report & Accounts 2020
NOTES
Strategic Report
Governance
Financial Statements
LoopUp Group plc | Annual Report & Accounts 2020
91
NOTES
92
LoopUp Group plc | Annual Report & Accounts 2020
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LoopUp Group plc
The Tea Building
56 Shoreditch High Street
London
United Kingdom
E1 6JJ
Tel: +44 (0)20 3107 0206
Email: ir@loopup.com
www.loopup.com