WANdisco plc
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“ We cannot solve our problems with the same
thinking we used when we created them.”
~ Albert Einstein
About us
No downtime.
No data loss.
No latency.
We provide enterprise-ready, non-stop software
that enables globally distributed organisations to meet
today’s data challenges of secure storage, scalability
and real-time availability.
Our patented technology enables 100% real-time data access
across widely distributed deployments of the open source tools,
Hadoop (for Big Data) and Subversion or Git (for Application
Lifecycle Management), creating seamless global networks.
WANdisco plc
Annual report and accounts 2014
Overview
1
Financial and operational highlights
2 WANdisco at a glance
4 Our business
6 Our markets
Strategic report
8
Chairman’s statement
9 Chief Executive Officer’s report
12
Our strategy and key
performance indicators
14 Strategy in action
16 Risks
18 Financial review
Governance
20 Board of Directors
21 Corporate governance report
24 Remuneration Committee report
26 Directors’ report
29 Statement of Directors’ responsibilities
Financial statements
30
Independent auditor’s report
31
Consolidated statement of profit and
loss and other comprehensive income
32
Consolidated balance sheet
33
Consolidated statement of
changes in equity
34 Consolidated statement of cash flows
35
Notes to the consolidated
financial statements
58 Five year record
59 Notice of Annual General Meeting
63 Secretary and advisers
Find additional content online
www.wandisco.com
Financial highlights
Operational highlights
Bookings ($m)
$17.4m
+18%
17.4
14.8
7.9
4.6
Revenue ($m)
$11.2m
+40%
11.2
8.0
6.0
3.9
2011
2012
2013
2014
2011
2012
2013
2014
Deferred revenue ($m)
$19.3m
+47%
Net cash ($m)ii
$2.5m
-90%
19.3
25.7
13.1
6.4
4.5
14.6
0.1
2.5
2011
2012
2013
2014
2011
2012
2013
2014
Big Data
Product
» Non-Stop Hadoop achieved enterprise standard for live
Big Data operations after a number of successful production
trials at scale
» OhmData, Inc. acquisition advanced Non-Stop HBase product
» Non-Stop Hadoop product evolved into WANdisco Fusion to
unify data across multiple Hadoop-compatible storage vendors
»
Second patent allowed, extending protection from
the fundamentals of data replication to the dynamics
of replication networks (post year-end)
Customers
»
Nine new Big Data customers – successful production
trials led to our first set of subscription contracts
»
»
British Gas expanded its solution in our largest Big Data
deal to date
Three of the world’s top ten banks (including a new bank
customer after the year-end)
Partnerships
»
Joined the Hadoop Open Data Platform (“ODP”) with
Hortonworks, EMC, IBM and others (post year-end)
Application Lifecycle Management (“ALM”)
»
46 new ALM subscriptions from global corporations such
as Panasonic, Polycom and Zurich Insurance
»
»
»
54 upgraded or expanded ALM subscriptions, including Cisco,
Pitney Bowes, Fannie Mae and Pixelworks
High renewal rates sustained, demonstrating the relevance
and reliability of our products
New ALM products released for Git and Gerrit software
development environments
Adjusted EBITDAi ($m)
$(17.9)miii
-128%
2011
2012
2013
2014
0.1
(3.0)
(7.8)
(17.9)
8
9
Chairman’s statement
Chief Executive
Officer’s report
18
Financial review
i EBITDA loss excluding equity-settled
share-based payment, capitalised product
development, acquisition-related items
and exceptional items.
ii $26.1m net equity fundraise (post year-end).
iii Refer to Note 6 for a reconciliation of
statutory operating loss to Adjusted EBITDA.
WANdisco plc
Annual report and accounts 2014
1
Overview WANdisco at a glance
WANdisco stands for Wide Area Network distributed computing. We are a leading
provider of enterprise-ready, non-stop software enabling globally distributed organisations
to meet today’s Big Data challenges of storage, scalability, performance and availability.
Our products make data available consistently and reliably, synchronised both
within and between data centres.
...
... is the new definitive source of competitive advantage across all industries.
For those organisations that understand and embrace the new reality of
Big Data, the possibilities for new innovation, improved agility, and
increased profitability are nearly endless.”
~ Wikibon, 2014
Big Data
Non-Stop Hadoop has incorporated new features
for mission-critical operations, such as: 100%
utilisation by eliminating idle back-up hardware;
selective replication to keep data within regulated
boundaries; cluster zoning to direct data processing
to cost-effective hardware; and multi-data centre
ingest to collect data from all over the world.
ALM
In ALM, our Subversion Multisite and Git Multisite
products enable geographically distributed teams
of software developers to collaborate without
data loss or delay.
Our products
Unique patented technology
Our products are differentiated by patented,
active-active data replication technology, meeting
crucial continuous availability requirements for
both Big Data and ALM. We eliminate the costs
of data loss, downtime and recovery.
2
WANdisco plc
Annual report and accounts 2014
We are global and we think globally. Across several locations, we have some
of the best and brightest architects, engineers and technologists in the industry.
Belfast,
Northern Ireland
New York, NY
Sheffield,
UK headquarters
Chengdu, China
Tokyo, Japan
San Ramon, CA,
US headquarters
Sydney, Australia
Patents for our replication technology
Patents allowed
Patents pending
Active-active replicationi
Dynamic management
of replication networks
Hadoop distributed
file system consistency
Replication sitesii
Replication workloadiii
i Active-active data replication across sites connected over a wide area network.
ii Dynamic addition of new replication sites to a live global deployment.
iii Redistribution of replication workload between sites in a live deployment.
Hadoop metadata
co-ordination over
a wide area network
WANdisco plc
Annual report and accounts 2014
3
Overview Our business
Our customers include many Fortune Global 1000 companies.
For them, WANdisco is more than a product, we are a business
necessity that enables success, saves costs and brings in revenue.
Big Data
Top Big Data customers
Non-Stop Hadoop applies WANdisco’s patented active-active
replication technology to enable 100% uptime for global
multi-data centre deployments of Hadoop. Access and
analyse data anywhere, with the same data available
at every location.
Open Data Platform partners
ALM
Top ALM customers
The only products that allow widely distributed software
development teams using Subversion and Git open source
code development tools to collaborate as if they were all
in the same location without downtime or data loss.
200
live subscriptions
4
WANdisco plc
Annual report and accounts 2014
180
>80%
deals per year
subscription renewal rates
Big Data
5 reasons why Hadoop needs WANdisco
1. Continuous availability
WANdisco’s patented technology removes
the bottleneck of a single active "NameNode"
store of essential data in a balanced workload
across data centres, and enables local speed
read/write at any global location without
downtime or data loss – even during Hadoop
upgrades and maintenance.
3. Cluster zoning
Delegates the most resource-intensive data load
and in-memory applications to high-spec servers
while running less critical batch applications
on commodity servers. Maintains quality of
service for all users and eliminates the need
for costly hardware.
5. Selective replication
WANdisco makes Hadoop data centre-aware,
enabling global, company-wide roll-up analysis
from anywhere regardless of how data
is distributed.
2. 100% utilisation
Active-active architecture eliminates
read-only back-up servers by making
all servers fully readable and writeable,
to take full advantage of the hardware
at each location.
4. Multi-data centre ingest
Ingests data at any number of locations
simultaneously, automatically replicates
where chosen and enables analysis from
anywhere with no single point of failure.
No administrative overhead, no loss of data.
12
Our strategy
14
Strategy in action
WANdisco plc
Annual report and accounts 2014
5
Overview Our markets
The market for software that enables continuously available Big Data over
wide area networks is both large and rapidly growing and we believe we
are in a leading position in this market.
Well positioned in a fast-growing market
Our Big Data products, Non-Stop Hadoop and WANdisco Fusion, remove the
single point of failure in Hadoop implementations and our partnerships with
Hadoop distributors mean we are ideally positioned to provide the standard
continuous availability solution for enterprise Hadoop deployments.
$5bn
annual spend by 2017*
+50%
annual growth by 2017*
70%
of IT decision-makers consider their organisation’s
ability to exploit value from Big Data as critical
to their future success.”
~ Forbes, 2015
6
WANdisco plc
Annual report and accounts 2014
* Source: Gartner, IDC, Wikibon, WANdisco research.
The “Storage Gap”
Digital storage
60% annual growth
IT budgets
5% annual growth
Source: IDC.
High market growth rate
Cumulative growth %
Non-Stop Big Data software (WANdisco)
Hadoop – MapReduce (Market analysis.com)
Hadoop and NoSQL (Wikibon)
600%
500%
400%
300%
200%
100%
0%
The “Storage Gap”
Significant growth in the Big Data market is due not only to the explosion
in the volume and variety of data that enterprises are seeking to make use of,
but also to the inability of traditional database storage systems to accommodate
this data without enormous escalation in costs. In the capture, curation and
analysis of very large pools of structured and unstructured data, traditional
data platforms are unable to handle data of the scale and diversity embraced
by Hadoop across distributed operations.
Hadoop saves costs by distributing data over widespread commodity
hardware. As the Hadoop ecosystem has matured into Hadoop 2.0, we have
seen “run-time” (processing and real-time transactional) use cases come
to the fore alongside data storage use cases. Such “run-time” use cases
are well represented in our pipeline of opportunities.
High market growth rate
Much of the usage of this data is in mission-critical operations, by the
rapidly growing vanguard of organisations using Hadoop distributions
in “live production”, which by the end of 2014 had reached over 1,500
(source: Gartner).
WANdisco’s critical data replication technology is the only means by
which an enterprise can ensure continuous availability of Hadoop over
a wide area network.
During the year, we began to target customers of Hadoop distributors
such as Hortonworks and Cloudera and run production trials with them.
By addressing those customers with significant continuous availability
and performance needs, we are well placed to derive good commercial
value for our layer of the Hadoop stack.
2015
2016
2017
2018
2019
2015–2017: based on market size estimates.
2017–2019: WANdisco extrapolations based on 2015–2017 market size estimates.
Cumulative growth based on compounding of annual growth rates.
>1,500
customers subscribing
to Hadoop distributions
332
Hortonworks subscription
customers, December 2014
WANdisco plc
Annual report and accounts 2014
7
Overview Chairman’s statement
After WANdisco’s second full year as a listed
company, I am pleased to see further growth in
the business and progress against the strategic
objectives that were set out at the time of
our flotation.
WANdisco’s software addresses a critical challenge for
enterprise data: availability of data and software code
for geographically and organisationally distributed
software development and operational applications.
So far, we have successfully applied our patented
technology in two markets. Firstly, ALM, with our
source code management software. Secondly, and
more recently, Big Data, with our software for live
operation of applications built on the fast-evolving
Hadoop data and applications platform.
During the year we made some significant
breakthroughs in the Big Data business, signing
nine new customers and working with existing
customers to scale up their contracts significantly.
Facilitating these contract successes, our Big Data
product has evolved to become demonstrably
part of standard Hadoop enterprise architecture.
After the end of the year, we joined the Hadoop
Open Data Platform (“ODP”) to collaborate and
integrate with Hortonworks, IBM, Pivotal, EMC,
SAS and others. This brings opportunities for
our new WANdisco Fusion product to unify
storage across these vendors.
With reference customers like British Gas,
dunnhumby and UCI Health, all of which put our
product through exacting trials before selecting
it, we are well-placed to substantially grow this
business in 2015.
In the more established ALM market, we saw strong
sales bookings trends for most of the year, albeit the
resource devoted to breakthrough Big Data deals
late in the year detracted from our annual result.
46 new customers during the year attests to the
growth potential remaining in the ALM business.
Given the advanced state of our ALM products
and the continuing growth in this market as open
source software code development spreads, we
are well-positioned in this business, and aim to
take it towards profitability in 2015.
8
WANdisco plc
Annual report and accounts 2014
“ Well-placed to
develop the business
after important
breakthroughs.”
Our EBITDA loss for the year reflects the expansion
of our sales force to take advantage of our clear
opportunities, and continued development of our
unique products in both ALM and Big Data. With cost
reductions made in some of the more mature parts
of the business, our cost base is appropriate for
our current stage of evolution. Our new equity and
debt funding, raised during the year and shortly
afterwards, has made available sufficient cash
resources for developing the business through
2015 and beyond.
Our world-class open source and Hadoop
technologists responded quickly to the needs of
our customers – integrating with partner products,
committing open source code to help customers
make the best use of our products, and directing
our product roadmaps to where market demand
is strongest.
2015 has started well, with some impressive
new Big Data customers and a successful equity
fundraise. I am confident of a successful year
as we develop this exciting market.
Our breakthroughs during the year were
made possible by establishing and maintaining
a team of highly skilled engineers, salespeople
and senior managers that have been attracted
to WANdisco by our exciting product proposition
and by the opportunity to participate in a unique
market opportunity.
Paul Walker
Chairman
14
Read more about our
customer case studies
Chief Executive
Officer’s report
2014 was a pivotal year in the evolution of the Big Data
marketplace, as global corporations started to shift
from trailing Hadoop applications to using Hadoop
actively for real-time mission-critical data. WANdisco
played a key role in this transition by enabling some
key customers to cross over into "live production",
ensuring enterprise-standard resiliency by licensing
our technology.
Our established ALM business continued to gather new
customers in a growing market and generate resilient
subscription revenues from its large customer base,
providing financial momentum to help support
our growth.
The uniqueness of the technology underpinning
our software products was demonstrated, shortly
after the year-end, by the award of our second patent,
allowed on 29 January 2015. Building on the replication
fundamentals covered by our first patent, this new
patent covers the management of replication network
members, protecting features that our customers
use to ensure reliability, save costs and comply
with data protection regulations.
Big Data
As Hadoop deployments have moved more emphatically
into enterprise implementations at global scale, our
Non-Stop Hadoop product, ensuring continuous data
availability and high processing performance, has started
to come into its own as an essential requirement for
taking Hadoop applications into live production. We
are enabling customers across industries to realise
performance, insight, reliability and savings that they
otherwise could not achieve. Many of our new Big
Data customers intend to expand significantly their
WANdisco solutions as they take more and more
data into their mission-critical applications.
Increasing customer adoption
Nine new customers selected Non-Stop Hadoop
during the year, six of these in the fourth quarter.
Amongst these customers, in the consumer sector,
dunnhumby and Epsilon are using our product to
transform the capture, interrogation, availability and
responsiveness of their customer data. In financial
services, two global banks adopted our technology
to enable analysis of buying behaviour, verification of
financial transactions and management of risk, including
fraud. We expect all of these customers to scale up
to significantly bigger subscriptions over time as they
develop their Hadoop operations.
Operational and strategic highlights
Big Data
» Nine new customer wins
»
»
OhmData, Inc. acquired, accelerating go-to-market for our HBase database product
Joined the Hadoop Open Data Platform “ODP” with Hortonworks, EMC, IBM
and others (post year-end)
» Non-Stop Hadoop product evolved into WANdisco Fusion to unify data
across multiple Hadoop-compatible storage vendors
»
British Gas expanded its Big Data solution in the largest Big Data deal to date
Application Lifecycle Management (“ALM”)
»
46 new ALM subscriptions from global corporations such as Panasonic,
Polycom and Zurich Insurance
»
»
»
54 upgraded or expanded ALM subscriptions, including Cisco, Pitney Bowes,
Fannie Mae and Pixelworks
High subscription renewal rates maintained, demonstrating the reliability
of our business model
New ALM products released for Git and Gerrit software
development environments
Big Data
Growing deal volumes
Broad industry spread
of customers
2
Q1
1
Q2
1
Q3
6
Q4
3
3
Consumer
goods
Financial
services
Utilities
Information
technology
Healthcare
1
1
1
Includes both British Gas deals: initial (Q1)
and expansion (Q4)
British Gas: two deals but counted
as a single customer
WANdisco plc
Annual report and accounts 2014
9
Strategic report Chief Executive Officer’s report continued
New customers
November 2014
Global Credit Cards
Transaction verification
Insights into buying trends
Management information
Reasons to use WANdisco
1
Continuous availability
3
Cluster zoning
4
Multi-data centre ingest
December 2014
Point of sale data capture
Fast querying of buying behaviour
Reasons to use WANdisco
1
Continuous availability
3
Cluster zoning
4
Multi-data centre ingest
10
WANdisco plc
Annual report and accounts 2014
Big Data continued
Increasing customer adoption continued
Our first example of a customer adopting the product
and subsequently scaling up its subscription contract
came with British Gas, which, after its first contract
in March 2014, carried out extensive testing and
subsequently scaled up for live production, entering
into a new subscription that is our largest-ever
Big Data contract.
After the end of the year, a global top ten bank selected
Non-Stop Hadoop following rigorous trials. The bank
has included WANdisco in its standard architecture
for Big Data, which it intends to roll out across the bank.
With the bank’s data infrastructure covering tens of
thousands of data nodes, the potential for its subscription
to expand in value is considerable, making it, at full
utilisation, WANdisco’s largest Big Data customer to date.
Our fourth quarter sales marked an increase in
momentum in Big Data, with some significant contract
wins in a short period of time. Our pipeline of sales
opportunities grew significantly during the year and
now includes a broad industry spread, with opportunities
in the EMEA and Asia-Pacific regions building up to
complement our well-established opportunities in the
Americas. A number of recently successful production
trials are expected to lead to new subscription
contracts during 2015.
Extending our product leadership
Responding to customer requirements, we have
added to the core continuous availability features
of Non-Stop Hadoop. New features enable data
capture from multiple data centres; allocation of
data processing to the most cost-effective hardware;
and selective replication of data to comply with
national data governance regulations. These
features are controlled through a new
administrative user interface.
We broadened our product offering by acquiring
OhmData, Inc., a developer of HBase, an open
source, non-relational, distributed Hadoop database.
Alongside our existing distributed computing experts,
OhmData has advanced our Big Data products,
including Non-Stop HBase, not least because
of the ability to commit new Hadoop code to
improve integration between WANdisco products
and the Hadoop open source platform.
To widen Big Data storage and availability options,
we have evolved Non-Stop Hadoop into WANdisco
Fusion: a common access layer which unifies storage
between Hadoop and Hadoop-compatible vendors.
The product is easy to install and enables seamless
and interchangeable use of multiple data sources.
New partnerships
During the year, we partnered with the two principal
Hadoop distributors, Cloudera and Hortonworks.
We became a certified partner in the Oracle Big Data
Appliance hardware and applications stack, and in the
IBM Infosphere BigInsights stack, opening up access
to global enterprise sales forces and vast customer
bases of large corporations. dunnhumby was our
first customer win from the Oracle partnership.
After the end of the year, we joined the Hadoop
Open Data Platform (“ODP”) to collaborate and
integrate with Hortonworks, IBM, Pivotal, EMC,
SAS and others. This brings opportunities for our
new WANdisco Fusion product to unify storage
across these vendors. Sales collaboration will
now be focused principally on ODP vendors.
WANdisco Fusion will nevertheless be able to
connect with storage systems outside of the ODP
without access to their underlying technology.
ALM
Our well-established ALM products generated
$14.6m of sales bookings in the year. Whilst last
year’s multi-year renewals impacted overall growth,
new subscriptions grew by 29%.
Notable new customers amongst the 46 new
enterprise subscriptions included Globant, Panasonic,
Synaptics, Polycom, Zurich Insurance and PetSmart.
Amongst existing customers we sustained high
subscription renewal rates, with several customers
signalling confidence in our products by renewing
on a multi-year basis. Significant renewals included
Cisco, Fannie Mae and Pixelworks. 54 of our customers
extended usage of our product across their organisations,
including Pitney Bowes and Huawei.
Our close links with the software development and
open source communities have allowed us to move
fast in introducing new products. Over one-third of our
ALM sales in the fourth quarter were of products based
on the emerging Git open source code management
environment, which is now the leading platform.
Key product releases in the year included:
2014 milestones
» Git MultiSite 1.2, providing scalability and continuous
availability for Git access and collaboration. New
features simplify administration, enforce global
policies, and enhance performance and security.
»
»
Support for the increasingly popular Git
collaboration tools, GitLab and Gerrit.
Access Control Plus, the first unified access
control solution for both the Subversion and
Git open source tools, providing consistent
authorisation, authentication and audit across
globally distributed development sites.
We continue to see strong potential in the source
code management segment of the ALM market that
we focus on. Software development continues to
become more geographically and organisationally
distributed and greater control and efficiency is
sought, both amongst software publishers and
in industry more generally.
People
Over the year we have augmented our unique blend
of renowned experts in distributed and open source
computing, with experienced operational management
drawn from the world’s best technology vendors.
Our leading open source committers significantly
advanced our products, keeping them well integrated
with Hadoop, Git and other open source projects.
We successfully completed exhaustive Big Data
production trials with some of the world’s most
exacting technology customers.
Since the end of the year we have made some
leadership changes in our sales and partnership
activities that we expect to lead to greater focus and
effectiveness in delivering on our sales opportunities.
These efforts, and others on the part of our people,
were the reason for our success over the year.
On behalf of the Board I thank all of our people
for their dedication to our business.
Outlook
As 2014 progressed we achieved a marked increase
in momentum in our Big Data business, as successful
production trials led into some significant contract
wins. Alongside these new customer wins, our first
contract expansion by an existing customer was
particularly encouraging.
Product
Partners
Trials
Non-Stop Hadoop
launched with
early adopters
Distribution &
stack partnerships
into effect
Embarked on
production trials
Live
production
Subscription
contracts
expected over
coming months
Jan
Feb
Mar
Apr
May
Jun
July
Aug
Sep
Oct
Nov
Dec
Non-Stop
Hadoop early
adopters
Distribution &
infrastructure
partnerships
Embarked on
production
trials
Significant
customer
wins
Financial,
Industrial
Consumer,
Technology
"Land"
"Expand"
Our ALM business continues to generate resilient
subscription revenues in a growing market, and
we aim to take it towards profitability in 2015.
We began 2015 by winning one of the world’s top
ten banks as a Big Data customer, and are addressing
a number of exciting new sales opportunities, made
more tangible by powerful references from 2014’s
new customers. We look forward to reporting more
customer successes as the year progresses.
We have deepened our relationship with a range of
existing partners as part of the Hadoop Open Data
Platform, with whom we will be selling our next
generation Big Data product, WANdisco Fusion.
We have begun to work on new sales collaboration
efforts with these partners.
David Richards
Chief Executive
WANdisco plc
Annual report and accounts 2014
11
Strategic report Our strategy
Build
Build our products, evolve our partnerships
Our progress in 2014
WANdisco Fusion for the Open Data Platform
Cross-platform product
Commercial benefits
Single access and consistency across
all Hadoop-compatible storage
Seamless use of
multiple distributions
Standard Hadoop APIs
Enables migration between
storage vendors
Range of data stores: EMC,
Teradata, NetApp and others
Easy install
Non-invasive to underlying storage
Connects with non-ODP vendors
Deployed without heavy integration
Requires no support from
Hadoop distributors
12
WANdisco plc
Annual report and accounts 2014
Big Data
»
Responding to customer requirements, we added new features
to the core continuous availability of Non-Stop Hadoop, enabling
data handling processes like zoning and selective replication
» Non-Stop HBase product enhanced through
OhmData, Inc. acquisition
» WANdisco Fusion developed to unify data access and
availability between Hadoop and Hadoop-compatible
storage (post year-end)
» Development of channel by joining Hadoop Open Data Platform
(“ODP”) (post year-end)
ALM
»
ALM product offering aligned to emerging open source software
code development environments like Git
»
Key product releases during the year included: Git MultiSite 1.2,
Git collaboration tools and Access Control Plus
Our priorities for 2015
» Our technology becomes part of standard Big Data architecture
for large enterprises
» WANdisco Fusion provides an alternative to storage vendor lock-in
» Open Data Platform (“ODP”) expands our market of potential
addressable customers
»
Exit from the SmartSVN webstore business reduces
development and support costs
» More efficient ALM product development as the ALM business
moves towards profitability
Land
Attract further new customers
Our progress in 2014
Big Data
»
Successfully completed
production trials with some
of the world’s largest
technology customers
» Nine new customers
selected Non-Stop
Hadoop during the year
»
»
Increased pipeline of
opportunities for 2015
Post year-end closed a deal
with a global top ten bank
Our priorities for 2015
ALM
»
46 new enterprise
subscriptions leading
to a 29% increase
in new customer
sales bookings
»
Increased proportion
of bookings based
on the emerging Git
open source code
management environment
»
»
»
Increased Big Data deals from production trials pipeline
Sales collaboration with members of the ODP partnership
ALM sales coverage expands with dedicated ALM sales resource
Expand
Realise our customers’ clear potential to scale
up their Big Data and ALM software solutions
Our progress in 2014
Big Data
»
First scale-up of an existing
customer (British Gas)
leading to largest-ever
Big Data contract
ALM
»
54 customers extended usage
of our product across their
organisations leading to a
significant increase in bookings
Our priorities for 2015
» New and future Big Data customers scale up their contracts
»
ALM customers add more users, more administrative features
and apply our product to new open source software code
management tools such as Git
Key performance indicators (“KPIs”)
Our KPIs reflect the business’ financial
success throughout the year.
Commentary on the actual performance
of the Group against each of these KPIs
is set out in the Chairman’s statement,
the Chief Executive Officer’s review and
Financial review.
Sales bookings
$17.4m
17.4
14.8
7.9
Revenue ($m)
$11.2m
11.2
8.0
6.0
2012
2013
2014
2012
2013
2014
Number of Big Data
new customer wins
9
9
4
0
2012
2013
2014
WANdisco plc
Annual report and accounts 2014
13
Strategic report Strategy in action
For global corporations, WANdisco is more than a product – we are a business necessity
that enables success. And the proof is our strong renewal rate and our client results.
Customer case studies
UK household
energy supplier
“ Non-Stop Hadoop enabled
the capture of real-time
data from over a million
household appliances”
Reasons to use WANdisco
1
Continuous availability
2
100% utilisation
4
Multi-data centre ingest
14
WANdisco plc
Annual report and accounts 2014
Background
An initial trial deployment of WANdisco’s Non-Stop Hadoop enabled the capture
of real-time data from over a million household appliances, to demonstrate cost
savings in data storage and processing, and to minimise data loss and downtime
in compliance with regulators. WANdisco was able to demonstrate performance
at scale that otherwise could not have been achieved.
Solution
Non-Stop Hadoop is now going into live production, with the amount of data
under management in Hadoop scaled up to more than twice its original level.
Real-time analytics on household consumption patterns will bring benefits
such as dynamic matching of energy supply with demand patterns.
Results
Across the company’s infrastructure, Non-Stop Hadoop accelerates
the transformation to a consolidated and available body of management
information, for which data centre storage and processing will be
handled more efficiently and less expensively.
Initial contract
Hadoop cluster experimentation
and build
» Data ingest from household appliances
» CRM consolidation
» Data centre efficiencies
Expansion contract
Live production roll-out
»
»
Trial established faster data capture
and zero data loss
Customer service benefits, cost savings
and supply efficiencies
» Going live with 2.5x the trial data
2015 and beyond
Further adoption of household
appliances = greater data load
Hadoop applied to wider IT estate =
greater availability requirement
Background
dunnhumby is a leading customer science and
market research company. Its data scientists are
developing new analytics platforms to deepen
understanding of customer behaviour using
dunnhumby’s rich trove of point of sale and
customer information.
Use case
Ensuring that vital data is protected through
enterprise-grade back-up and disaster recovery,
minimising disruption of the end-user experience.
Making more data accessible to analysts and
clients in a cost-effective manner, without
expanding storage spending.
Integration with Oracle Big Data Appliance
server infrastructure.
Solution
Non-Stop Hadoop will make personalised
customer analysis available to dunnhumby’s
clients with the highest levels of reliability.
With sales data volumes accelerating and
new dunnhumby analysis products coming
on stream, demand for Hadoop data
processing will grow.
Non-Stop Hadoop’s “zoning” of data
processing workloads will provide important
“burst-out” capabilities to quickly add new
processing power during times of peak
seasonal retail sales.
In the future, dunnhumby intends
to use Hadoop to interrogate more
historical customer information to better
understand growing consumer trends.
Background
Epsilon runs marketing campaigns across
e-mail, mobile and social media, based on
deep and wide analysis of shopping habits.
Epsilon’s e-mail marketing platforms generate
60 billion e-mails a year, provide insights into
campaign effectiveness, and dynamically
evolve campaigns by responding to results.
Use case
A new e-mail marketing platform needed to
handle more varied and voluminous data at
greater speed. Epsilon wanted to promise its
customers high service levels for availability
and recovery of data, explicitly referencing
active data replication as an alternative to
redundant Hadoop servers.
Epsilon liked the utilisation benefits
of active-active replication, with load
balancing to make the utilisation equation
even more compelling.
Solution
To “survive without back-ups” was very appealing
and it was clear that WANdisco was the only
vendor that could make that a reality.
Building applications in Hadoop (including the
HBase database that WANdisco supports) is one
of the biggest interests of Epsilon’s Applications
Architecture group over the coming year. Epsilon
will look to bring a similar degree of real-time user
interaction into other analytics and marketing
products that they are serving up to customers.
WANdisco plc
Annual report and accounts 2014
15
Strategic report Risks
The long-term success of the Group depends on the continual review, assessment
and control of the key business risks it faces. The Group’s principal risks and
mitigation thereof, are briefly outlined below.
Risk description
Mitigation
People
Our future success depends on attraction and retention of senior management and
key technical personnel. Whilst much of our proprietary knowledge is documented,
our technical experts contribute valuable skills and knowledge and, despite contractual
confidentiality agreements, there can be no guarantee that those individuals will
not in future join competitors or establish themselves in competition.
The Group is expanding rapidly and recruiting new resource, particularly in the
engineering and sales functions. It is essential that the right talent is attracted,
retained and motivated.
Stock-based compensation has proved to be an important component of
attracting, retaining and motivating key talent and so we will continue to
deploy stock selectively.
During the year we augmented the human resources function with
an experienced Chief People Officer to work with senior management
on recruitment, retention, reward and talent development. The function also
oversees employee communications to ensure, given our rapidly developing
markets, employees’ understanding of our strategic direction enables them
to make meaningful contributions to the achievement of our goals.
Competition
There can be no guarantee that competitors will not develop superior products.
Competitors may have or develop greater financial, marketing or technical resources,
enabling them to successfully develop and market competing products.
As the open source software on which we depend is licenced for free, our ability
to sell value-added products may be limited by potential customers opting to rely
purely on the underlying open source software, together with any free extensions
that might be developed to address the same challenges as our software.
We protect our intellectual property by securing patents whenever possible.
Two key patents for our underlying replication technology have already
been allowed or issued, and a further four patent applications are in process.
We continue to dedicate significant resource to the constant enhancement
of our core intellectual property.
Senior management devotes significant time and resource to monitoring
product releases by potential competitors in both ALM and Big Data.
Distribution partner engagement
We serve the Big Data market in partnership with an array of vendors that distribute
Hadoop, support Hadoop and provide data storage that is compatible and integrates
with Hadoop.
Some of these partnerships, including our membership of the new Hadoop Open
Data Platform alliance, are relatively new business relationships. There is a risk that
we mismanage these relationships or that partners decide not to devote significant
sales or product integration resource to our products.
16
WANdisco plc
Annual report and accounts 2014
We have devoted experienced leadership resource, recruited from within
the business, focused on proactively developing our new partner relationships
and creating new commercial propositions that derive long-term value from
these relationships.
Risk description
Mitigation
Resource allocation and operational execution
We address a significant and rapidly growing market, but as a small company we
have limited resources of people and capital. Over time it will be essential to keep
adding to and refreshing this resource, but at all times it will remain essential that
we ensure that resource is effectively directed to addressing and delivering on
our strategic goals.
We have established a business planning process to ensure the investments
we make and the allocation of existing resource are aligned with our strategic
goals, which in turn are responsive to the evolution of our marketplace.
We have significantly improved internal reporting of key business lines.
These reports are regularly monitored by senior management and the Board.
Products
The software on which our products are based is complex and the products
may contain undetected defects which may be discovered after first introduction.
Such defects could damage the Group’s reputation, and reduce revenue from
subscription renewals and extensions. Many of our products are designed for use
with open source software, whose development, by the open source community,
we do not solely control. Changes to its structure and development path may
impair the effectiveness of our products.
Regulation of data transfer is rapidly evolving and additional compliance on user
privacy, content liability, data encryption and copyright protection may reduce
the value added by our products.
We have invested significantly in both people and quality control processes
within our engineering team. We have also strengthened our sales engineering
team which helps to ensure that commitments made to customers as to product
capability are wholly deliverable. We have a team dedicated committing code
to relevant open source tools, to ensure our products interact well with open
source components, and to monitoring evolving open source projects to
which we could potentially add commercial value.
Our product roadmap is based on requirements expressed by customers with
whom we are pursuing sales opportunities. Features such as "selective replication"
deal with regulatory constraints on data transfer. Our product managers are
mandated to propose roadmap alterations if regulations render our intended
features either more or less relevant.
Sales cycles and customers’ budget constraints
Any economic downturn may have an adverse effect on the funds available for customers
to invest in our products. Increasing budget scrutiny may periodically extend sales cycles,
from customers’ evaluations through to commencement of subscription contracts.
Variability of sales cycles across different sizes and types and customer may bring
quarterly volatility to our quarterly results.
New sales executives joining the business in a rapidly changing marketplace may
take longer than expected to reach full productivity in concluding sales transactions.
Our products enable significant savings on data storage and processing and
therefore demand should be relatively insensitive to economic conditions.
Our strategy is oriented to generating a broad-based set of sales opportunities,
across regions, industries, sizes of customer and technology use cases. We have
invested in senior management and systems to manage the completion of sales
engagement in an efficient and commercially beneficial manner.
WANdisco plc
Annual report and accounts 2014
17
Strategic report
Financial review
Summary
»
Sales bookings up 18% to $17.4m (2013: $14.8m)
»
»
»
»
»
Revenue up 40% to $11.2m (2013: $8.0m)
Deferred revenue from booked sales
up 47% to $19.3m (2013: $13.1m)
Adjusted EBITDAi loss $17.9m (2013: $7.8m loss)
Net cash $2.5m at 31 December 2014
(30 December 2013: $25.7m)
New funds: $10.0m credit facility; $26.1m
net equity fundraise (post year-end)
Sales bookings were $17.4m (2013: $14.8m) representing
18% growth compared to the prior year. Sales bookings
are total subscription contract values, subsequently
recognised as revenue over the life of the contract.
Bookings remain weighted to the well-established
ALM business.
Revenue for the year grew 40% to $11.2m (2013: $8.0m).
This growth includes revenue deferred from previous
periods, in particular revenue from large multi-year
contracts sold at the end of 2013.
Deferred revenue from sales booked during the year
and in previous years (and not yet recognised as revenue)
increased 47% to $19.3m at 31 December 2014
(31 December 2013: $13.1m), reflecting success
in securing forward revenue from multi-year
new and renewed contracts.
Big Data
$2.8m of bookings came from our Big Data products
(2013: $0.2m). This included a record $2.1m in the
fourth quarter (Q4 2013: $nil).
Nine new customers selected our Non-Stop Hadoop
product. Amongst these, British Gas, after a period
of extensive testing, progressed to live production,
entering into a new subscription that is our largest-ever
Big Data contract.
Contract values ranged up to $750,000, with customers
indicating plans to scale up these contracts as they
further develop their Hadoop operations.
“ Strong growth
in sales bookings,
with significant Big
Data contribution.”
On 30 June 2014 we announced the acquisition
of San Francisco-based OhmData, Inc., a developer
of HBase, an open source, non-relational,
distributed Hadoop database. The enterprise value
of the acquisition was $2.4m, paid in WANdisco
stock. This included a post-acquisition share-based
payment, which is included in exceptional items.
ALM
$14.6m of bookings came from our ALM products,
(2013: $14.6m). The prior year’s bookings benefitted from
one large multi-year renewal deal in the final quarter.
The high proportion of bookings from new subscriptions,
and high renewal rates, continue to demonstrate the
potential of the ALM market. Multi-year contracts
continue to be prevalent.
Based on its operating scale and revenue potential,
it remains our intention to advance the ALM business
towards profitability in 2015.
Profit and loss
Our headcount increased to 182 as at 31 December
2014 (31 December 2013: 143), reflecting investment
to develop and take to market our Big Data products.
This includes recruitment of product engineers
and sales executives.
The adjusted EBITDA loss for the year (excluding
equity-settled share-based payment, capitalised product
development, acquisition-related items and exceptional
items) was $17.9m (2013: $7.8m loss). The loss resulted
from significant investment to address our high growth
markets, albeit in parallel we have begun to realise
cost efficiencies across a number of functions.
Headcount by department
Product development
Sales and marketing
Customer support
Administration
31 December
2014
31 December
2013
96
51
16
19
182
76
39
13
15
143
i EBITDA loss excluding equity-settled share-based payment, capitalised product development, acquisition-related items and exceptional items.
18
WANdisco plc
Annual report and accounts 2014
Sales bookings history ($m)
Deferred revenue release 2014
4.4
4.3
4.0
3.4
3.0
3.0
5.3
4.7
2.1
8 %
%
9
1
$19.3m
4
4
%
0.2
0.1
0.2
0.1
0.4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2013
2014
WANdisco
Big Data
2015
2016
2017
2018+
2
9
%
$8.5m
$5.4m
$3.6m
$1.8m
In product development, as our products have
matured we have concentrated most of our activity
in testing, user interface and release management
in our lower-cost UK locations. Resulting cash cost
savings enabled us to accelerate development of our
core Big Data product features and the underlying
technology platform, which remains in the US. Product
development expenditure for the year was $9.0m
(2013: $7.4m). All of this expenditure was devoted
to new product features and was capitalised.
Balance sheet and cash flow
Trade and other receivables at 31 December 2014
were $14.5m (31 December 2013: $10.5m). $4.4m of
receivables was billed by the year end (31 December
2013: $4.5m), $8.0m comprised contractual payments
not yet billed (31 December 2013: $4.7m), largely
from multi-year contracts, and $2.1m related to
non-trade receivables (31 December 2013: $1.3m).
Net cash stood at $2.5m at 31 December 2014
(31 December 2013: $25.7m). After the end of the year,
we secured $26.1m of new equity funds (net of fees),
from a selection of UK and US investors. The new shares
commenced trading on 18 February 2015. This is in
addition to the existing revolving credit facility with
HSBC Bank plc, announced on 5 August 2014, which
remained undrawn at 31 December 2014. The funds
available will be used to finance continued expansion in
the Big Data market, including product development
and go-to-market activities.
Paul Harrison
Chief Financial Officer
21
Corporate governance report
30
Financial statements
WANdisco plc
Annual report and accounts 2014
19
Strategic report
Board of Directors
1. Paul Walker
Chairman and Non‑executive Director
2. David Richards
President, CEO and co‑founder
Committees Audit, Nomination (Chair)
and Remuneration (Chair)
Paul served as chief executive officer of The Sage
Group plc from 1994 to 2010. Paul joined Sage as
company accountant in 1984 and served as its finance
director from 1987 until 1994.
Paul serves as non-executive chairman of Halma plc.
He is also a non-executive director of Experian plc, chair
of governors at Newcastle Royal Grammar School
and a member of council at Newcastle University.
Paul previously served as a non-executive director
of MyTravel Group plc from December 2000
to December 2004 and was on the board
of Diageo plc from 2002 to 2011.
Committees None
Since co-founding the Company in Silicon Valley in
2005, David has led WANdisco on a course for rapid
international expansion, opening offices in the UK,
Japan and China. David spearheaded the acquisition
of AltoStor, which accelerated the development of
WANdisco’s first products for the Big Data market.
With over 15 years’ executive experience in the
software industry, David sits on a number of advisory
and executive boards of Silicon Valley start-up ventures.
A passionate advocate of entrepreneurship, he has
established many successful start-up companies in
enterprise software and is recognised as an industry
leader in enterprise application integration and its
standards. David is also a non-executive director
and interim non-executive chairman of 1Spatial plc.
David is a frequent commentator on a range
of business and technology issues, appearing
regularly on Bloomberg and CNBC.
3. Paul Harrison
Chief Financial Officer
Committees None
Prior to joining WANdisco in September 2013, Paul
spent over 16 years with The Sage Group plc. Paul
joined Sage in 1997, becoming its chief financial officer
in 2000. During that time, Sage grew its revenues from
£152m to £1,340m, its profit before taxation from
£38m to £356m, its employee base from 1,900 to
13,500 and its country presence from four to 25.
It also supplemented organic growth with the
conclusion of over 100 acquisitions.
Paul is also a non-executive director of Hays plc,
one of the world’s largest specialist recruiters. He joined
Hays in 2007, becoming its senior independent director
in 2011. He also chairs Hays’ remuneration committee.
A chartered accountant, Paul’s earlier career was
spent in professional practice, latterly with PwC
where he was a senior manager.
4. James Campigli
Chief Product Officer and co‑founder
5. Ian Duncan
Non‑executive Director
Committees None
James, known as Jim, has over 25 years of software
industry experience at both early-stage and public
companies. In his previous role as a founder and
Chief Technology Officer (“CTO”) of Librados from
2003 to 2004, Jim was responsible for overall product
strategy and product messaging and served as an
evangelist for Librados’ standards-based approach
to enterprise application integration. Jim was also
a member of the management team that led the
acquisition of Librados by NetManage, Inc. Following
its acquisition, Jim joined NetManage as CTO for the
Librados products group.
Prior to Librados, Jim was the vice president of
product management for Insevo, Inc. from 2001
to 2003. Jim also held senior product management
and consulting management positions at BEA
Systems and SAP AG.
Committees Audit (Chair), Nomination
and Remuneration
Ian was group finance director of Royal Mail
Holdings plc from 2006 to 2010. Prior to this,
Ian served for eight years as chief financial officer
and senior vice president of Westinghouse Electric
Company LLC in Pennsylvania, US. Between 1993
and 1998 Ian was at British Nuclear Fuels plc, latterly
as corporate finance director. Prior to this Ian was an
associate director at Lloyds Merchant Bank Limited
and a manager at Desdner Kleinwort Wasserstein
Limited. Ian qualified as a chartered accountant
at Deloitte and Touche in 1985. Ian is currently a
non-executive director and chairman of the audit
committee at Babcock International Group plc,
the Mouchel Group and Bodycote plc.
20
WANdisco plc
Annual report and accounts 2014
Corporate governance report
The UK Corporate Governance Code
Whilst the Company is listed on AIM, it is
not required to adopt the provisions of the UK
Corporate Governance Code (“the Code”). The
Board, however, is committed to the maintenance
of high standards of corporate governance and after
due consideration it has adopted many, although
not all, aspects of the Code as described below.
The Board of Directors and Committees
of the Board of Directors
The Board comprises three Executive and two
Non-executive members. This ensures compliance
with the Code, which states that a smaller company
should have at least two independent directors.
On 20 March 2014, Paul Walker, an independent
Non-executive Director, assumed the role of
Chairman of the Board. David Richards, who
formerly held this role, remains Chief Executive
Officer. This change was made in light of best
corporate governance practice, which advocates
a separation of the Chairman and CEO roles.
The Board normally meets at least four times per
year, with ad hoc meetings also being held. The role
of the Board is to provide leadership of the Group
and to set strategic aims but within a framework
of prudent and effective controls which enable
risk to be managed.
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 its obligations to its shareholders and
others. It also approves acquisitions and disposals
of businesses, major capital expenditure and annual
financial budgets and recommends interim and final
dividends. It receives recommendations from the Audit
Committee in relation to the appointment of the auditor,
its remuneration and the policy relating to non-audit
services. The Board agrees the framework for Executive
Directors’ remuneration with the Remuneration
Committee and determines fees paid to Non-executive
Directors. Recommendations for the appointment
of new Directors are received from the Nomination
Committee. Board papers are circulated before Board
meetings in sufficient time to be meaningful.
The performance of the Board is evaluated
informally 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 in a satisfactory manner; and whether
there is a clear strategy and objectives.
A new Director, on appointment, is briefed on
the activities of the Group. Professional induction
training is also given as appropriate. The Chairman
briefs Non-executive Directors on issues arising
at Board meetings if required and Non-executive
Directors have access to the Chairman at any time.
Ongoing training is provided as needed. Directors
are updated on a frequent and regular basis on the
Group’s business and on issues covering employment,
social, ethical, environmental and health and safety
matters by means of Board presentations.
In the furtherance of his duties or in relation to
acts carried out by the Board or the Company, each
Director has been informed that he is entitled to seek
independent professional advice at the expense of
the Company. The Company maintains appropriate
cover under a Directors’ and Officers’ insurance
policy in the event of legal action being taken
against any Director.
Each Director’s performance is appraised through
the normal appraisal process. The Executive Board
members are appraised by the Chief Executive and
the Non-executive Board members by the Chairman.
Each Director has access to the services of the
Company Secretary if required.
The Non-executive Directors are considered by
the Board to be independent of management and
are free to exercise independence of judgement.
They have never been employees of the Company
nor do they participate in the Company’s bonus
arrangements. They receive no other remuneration
from the Company other than the Directors’ fees.
Consistent with the appointment of Paul Walker
as Chairman, David Richards retired from the
Remuneration Committee on 20 March 2014.
The table below shows the number of Board meetings
and Audit, Remuneration and Nomination Committee
meetings held during the year and the attendance
of each Director.
Executive Directors
David Richards
James Campigli
Paul Harrison
Non-executive Directors
Paul Walker
Ian Duncan
Board meetings
Audit
Remuneration
Nomination
Possible
Attended
Possible
Attended
Possible
Attended
Possible
Attended
Committee meetings
7
7
7
7
7
7
7
7
7
7
—
—
—
4
4
—
—
—
4
4
1
—
—
4
4
1
—
—
4
4
—
—
—
1
1
—
—
—
1
1
WANdisco plc
Annual report and accounts 2014
21
Governance Corporate governance report continued
as a basis the Report to the Committee prepared by the
external auditor and taking into account any significant
accounting policies, any changes to them and any
significant estimates or judgements. Questions are
asked of management of any significant or unusual
transactions where the accounting treatment could
be open to different interpretations.
The Nomination Committee
The Nomination Committee is chaired by Paul Walker
and the other member of the Committee is Ian Duncan.
The Nomination Committee meets at least once a year,
with the Chief Executive Officer in attendance as
appropriate. The Nomination Committee considers
appointments to the Board.
The Committee receives reports from management
on the effectiveness of the system of internal controls.
It also receives from the external auditor a report of
matters arising during the course of the audit which the
auditor deems to be of significance for the Committee’s
attention. The statement on internal controls and
the management of risk, which is included in the
annual report, is approved by the Committee.
The 1998 Public Interest Disclosure Act (“the Act”) aims
to promote greater openness in the workplace and
ensures “whistle blowers” are protected. The Group
voluntarily maintains a policy in accordance with the
Act, which allows employees to raise concerns on a
confidential basis if they have reasonable grounds in
believing that there is serious malpractice within the
Group. The policy is designed to deal with concerns,
which must be raised without malice and in good faith,
in relation to specific issues which are in the public
interest and which fall outside the scope of other
Group policies and procedures. There is a specific
complaints procedure laid down and action will be
taken in those cases where the complaint is shown
to be justified. The individual making the disclosure
will be informed of what action is to be taken and
a formal written record will be kept of each stage
of the procedure. Any issues arising under this
policy are reported to the Committee.
The external auditor is required to give the
Committee information about policies and
processes for maintaining its independence and
compliance regarding the rotation of audit partners
and staff. The Committee considers all relationships
between the external auditor and the Company
to ensure that they do not compromise the auditor’s
judgement or independence particularly with
the provision of non-audit services.
The Remuneration Committee
The Remuneration Committee is chaired
by Paul Walker and the other member of the
Committee is Ian Duncan. David Richards retired
from the Remuneration Committee on 20 March 2014.
The Remuneration Committee meets at least four
times a year, with the other Board members in
attendance as appropriate. It has written terms of
reference. The Remuneration Committee agrees
the framework for Executive Directors’ remuneration
with the Board.
Re‑election
Directors are subject to re-election at the Annual
General Meeting following their appointment. In
addition, at each Annual General Meeting one-third
(or the whole number nearest to one-third) of the
Directors will retire by rotation.
Shareholder communications
The Chief Executive Officer and the Chief Financial
Officer regularly meet with institutional shareholders
to foster a mutual understanding of objectives.
The Directors encourage the participation of all
shareholders, including private investors, at the Annual
General Meeting and as a matter of policy the level
of proxy votes (for, against and vote withheld) lodged
on each resolution is declared at the meeting.
The annual report and accounts is published
on the Company’s website, www.wandisco.com,
and can be accessed by shareholders.
The Audit Committee
The Audit Committee (“the Committee”) is
established by and is responsible to the Board. It has
written terms of reference. Its main responsibilities are:
»
»
»
to monitor and be satisfied with the truth and
fairness of the Group’s financial statements
before submission to the Board for approval,
ensuring their compliance with the appropriate
accounting standards, the law and the Listing
Rules of the Financial Conduct Authority;
to monitor and review the effectiveness
of the Group’s system of internal control;
to make recommendations to the Board in
relation to the appointment of the external
auditor and its remuneration, following
appointment by the shareholders in general
meeting, and to review and be satisfied with
the auditor’s independence, objectivity and
effectiveness on an ongoing basis; and
»
to implement the policy relating to any non-audit
services performed by the external auditor.
Ian Duncan is the Chairman of the Committee and
the other member of the Committee is Paul Walker.
The Board considers Ian Duncan to have relevant
and recent financial experience given his biography
set out on page 20.
The Committee meets with external auditors,
without the Executive Directors being present,
at least once a year.
The Committee is authorised by the Board to seek
and obtain any information it requires from any
officer or employee of the Group and to obtain
external legal or other independent professional
advice as is deemed necessary by it.
Meetings of the Committee are held at least four times
per year to coincide with the review of the scope of the
external audit and observations arising from its work in
relation to internal control and to review the financial
statements. The external auditor is invited to these
meetings and meets with the Committee at least three
times a year. At its meeting, it carries out a full review of
the year-end financial statements and of the audit, using
22
WANdisco plc
Annual report and accounts 2014
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 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.
Executive management considers the potential
financial and non-financial risks which may impact
on the business as part of the quarterly management
reporting procedures. The Board receives these
quarterly management reports and monitors the
position at Board meetings.
The Board confirms that there are ongoing
processes for identifying, evaluating and mitigating
the significant risks faced by the Group. The processes
have been in place throughout the year and up to the
date of approval of the annual report and accounts,
consistent with the guidance for Directors on internal
control issued by the Financial Reporting Council.
The Group’s internal financial control and monitoring
procedures include:
»
»
»
clear responsibility on the part of line and financial
management for the maintenance of good financial
controls and the production of accurate and timely
financial management information;
the control of key financial risks through
appropriate authorisation levels and
segregation of accounting duties;
detailed monthly budgeting and reporting of
trading results, balance sheets and cash flows,
with regular review by management of variances
from budget;
»
reporting on any non-compliance with internal
financial controls and procedures; and
»
review of reports issued by the external auditor.
The Audit Committee on behalf of the Board
reviews reports from the external auditor together
with management’s response regarding proposed
actions. In this manner it has reviewed the
effectiveness of the system of internal
controls for the year under review.
WANdisco plc
Annual report and accounts 2014
23
Governance Remuneration Committee report
As an AIM listed Company, WANdisco 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.
Membership of the Remuneration Committee
During the year, the Remuneration Committee comprised the Non-executive Chairman (Paul Walker), the Non-executive Director (Ian Duncan) and the Chief Executive
Officer (David Richards). David Richards stepped down from the Remuneration Committee on 20 March 2014.
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.
The Remuneration Committee meets at least four times a year.
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 the Non-executive Directors is determined by the Executive Directors. Non-executive Directors are not entitled to pensions, annual bonuses
or employee benefits. They are entitled to participate in share option arrangements relating to the Company’s shares but neither of them does at this time.
Each of the Non-executive Directors has a letter of appointment stating his annual fee and that his appointment is initially for a term of three years. Their
appointment may be terminated with three months’ written notice at any time.
Directors’ remuneration
The normal remuneration arrangements for Executive Directors consist of Directors’ fees, basic salary and annual performance related bonuses. In addition,
they receive private health care. The Committee intends to make further awards under the Long-Term Incentive Plan (“LTIP”) during 2015. Details of any
awards will be disclosed in next year’s Remuneration Committee report.
2014 annual bonus
The 2014 Bonus Plan comprised a target bonus of 75% of salary and a maximum bonus opportunity of 100% of salary. The level of the bonus was dependent upon
a) the value of total customer bookings achieved during the year and b) the number of Big Data customer wins.
The Company made solid progress during 2014. Whilst it did not meet its bookings target, it more than doubled its Big Data target. Having regard to the performance
of the business, the Remuneration Committee resolved to pay bonuses as set out on page 25.
Similar bonus principles will be adopted for 2015. The Company operates a scorecard which reflects its financial and strategic KPIs. Executive Directors will be rewarded
for their contribution to these goals as well as the achievement of personal objectives. Performance targets and weightings were set by the Remuneration Committee
at the start of the year.
Directors’ interests
Details of the Directors’ shareholdings are included in the Directors’ report on page 27.
24
WANdisco plc
Annual report and accounts 2014
Directors’ share options
Aggregate emoluments disclosed below do not include any amounts for the value of options to acquire ordinary shares in the Company granted to or held
by the Directors. Details of options for Directors who served during the year are as follows:
Executive
David Richards
James Campigli
Paul Harrison
Non-executive
Paul Walker (Chairman)
Ian Duncan
Number of
options at
31 December
2014
—
—
Exercise
price
—
—
298,183
$0.16
—
—
—
—
On 29 October 2014, Paul Harrison completed the exercise of 138,748 options over the ordinary share capital of the Company. As part of the transaction, 68,463 shares
were sold to fund the tax liability arising from the option exercise.
An award of additional options to Paul Harrison, first announced on 27 September 2013 as part of his recruitment arrangements, has now been finalised at 140,061 share
options with an exercise price of $0.16 per share.
This table is audited.
Executive
David Richards
James Campigli
Paul Harrison
Non-executive
Paul Walker (Chairman)
Ian Duncan
Payment
currency
Salary/fees
’000
Bonus
’000
Benefits
’000
31 December
2014
Total
’000
31 December
2013
Total
’000
$
$
$
£
£
448
308
473
110
40
180
116
180
—
—
17
12
12
—
—
645
436
665
110
40
692
595
317
40
40
The total Directors’ remuneration for the period ended 31 December 2014, in US dollars, was $1,992,000 (2013: $2,409,000).
Paul Walker
Chairman of the Remuneration Committee
31 March 2015
WANdisco plc
Annual report and accounts 2014
25
Governance Directors’ report
The Directors present their report and the audited financial statements for the year ended 31 December 2014.
Principal activity
The principal activity of the Group is the development and provision of global collaboration software.
Business review and future developments
A review of the Group’s operations and future developments is covered in the Strategic review section of the annual report and accounts on pages 8 to 19.
This report includes sections on strategy and markets and considers key risks and key performance indicators.
Financial results
Details of the Group’s financial results are set out in the Consolidated statement of profit and loss and other comprehensive income and other components
on pages 31 to 57.
Dividends
The Directors do not recommend the payment of a dividend.
Going concern
After making enquiries, the Directors have confidence the Group has adequate resources to continue in operational existence for the foreseeable future.
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 2.
Annual General Meeting
On pages 59 to 62 is the notice of the Company’s third Annual General Meeting to be held at 10am on 2 June 2015 at the offices of WANdisco plc in Sheffield.
Directors
The Directors who served on the Board and on Board Committees during the year are set out on page 20. One-third of the Directors are required to retire
at the Annual General Meeting and can offer themselves for re-election.
The Directors benefited from qualifying third party indemnity provisions in place during the financial year and at the date of this report.
Information on Directors’ remuneration and share option rights is given in the Remuneration Committee report on pages 24 and 25.
Significant shareholders
The Company is informed that, at 31 March 2015, individual registered shareholdings of more than 3% of the Company’s issued share capital were as follows:
Schroder Investment Management
Oppenheimer
Dr Yeturu Aahlad
David Richards
T Rowe Price
James Campigli
Global Asset Management
26
WANdisco plc
Annual report and accounts 2014
Number
of shares
3,483,370
3,288,889
2,825,021
2,783,153
1,897,513
1,544,143
1,456,223
% of issued
ordinary
share
capital
11.91%
11.25%
9.66%
9.51%
6.49%
5.28%
4.98%
Directors’ shareholdings
The beneficial interests of the Directors in the share capital of the Company at 31 December 2014 and at 31 March 2015 were as follows:
Executive
David Richards
James Campigli
Paul Harrison
Non-executive
Paul Walker (Chairman)
Ian Duncan
Number
of shares
2,783,153
1,544,143
70,285
111,111
—
% of issued
ordinary
share
capital
9.51%
5.28%
0.29%
0.45%
—
None of the Directors had any interest in the share capital of any subsidiary company. Further details of options held by the Directors are set out in the
Remuneration Committee report on pages 24 and 25.
The middle market price of the Company’s ordinary shares on 31 December 2014 was 477.50 pence and the range during the year was 273.50 pence to 1,370.00 pence
with an average price of 684.70 pence.
Research and development
The Group expended $9,040,000 during the year (2013: $7,443,000) on research and development, of which $9,040,000 (2013: $7,443,000) was capitalised
within intangible assets and $nil (2013: $nil) was charged to the income statement. In addition, an amortisation charge of $6,855,000 (2013: $3,670,000)
has been recognised against previously capitalised costs.
Derivatives and financial instruments
The Group’s policy and exposure to derivatives and financial instruments is set out in Note 19.
Employee involvement
It is the Group’s policy to involve employees in its progress, development and performance. 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.
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 is fortunate enough not to suffer from a disability. In the event of members of staff becoming disabled, every effort is made to ensure that their employment
with the Group continues.
Political and charitable donations
During the year ended 31 December 2014 the Group made political donations of $nil (2013: $nil) and charitable donations of $168 (2013: $409).
WANdisco plc
Annual report and accounts 2014
27
Governance Directors’ report continued
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 suppliers at the start of business
and then makes payments in accordance with contractual and other legal obligations.
The number of creditor days outstanding at 31 December 2014 was 45 days (2013: 45 days).
Disclosure of information to auditor
The Directors who held office at the date of approval of this Directors’ report confirm that, so far as they are aware, there is no relevant audit information of which
the Company’s auditor is unaware and each Director has taken all the steps that he or she ought to have taken to make himself or herself aware of any relevant
audit information and to establish that the Company’s auditor is aware of that information.
Auditor
A resolution for the re appointment of KPMG LLP as auditor of the Company is to be proposed at the forthcoming Annual General Meeting.
By order of the Board
Paul Harrison
Chief Financial Officer
31 March 2015
28
WANdisco plc
Annual report and accounts 2014
Statement of Directors’ responsibilities
in respect of the annual report and the financial statements
The Directors are responsible for preparing the financial statements in accordance with applicable law and International Financial Reporting Standards (“IFRS”).
Company law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Group and
of the profit or loss of the Group for that period. As required by the AIM Rules of the London Stock Exchange, they are required to prepare the financial statements
in accordance with IFRS as adopted by the European Union (”EU”) and applicable law. In preparing these financial statements, the Directors are required to:
»
select suitable accounting policies and apply them consistently;
» make judgements and estimates which are reasonable and prudent;
»
»
state whether they have been prepared in accordance with IFRS as adopted by the EU; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Group
and enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets
of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
WANdisco plc
Annual report and accounts 2014
29
Governance Independent auditor’s report
to the members of WANdisco plc
We have audited the Group financial statements of WANdisco plc for the year ended 31 December 2014 which comprise the Consolidated statement of profit and loss and
other comprehensive income, the Consolidated balance sheet, the Consolidated statement of changes in equity, the Consolidated statement of cash flows, and the related
notes. The financial reporting framework that has been applied in their preparation is applicable law and IFRS as adopted by the EU.
This report is made solely to the Company’s members, as a body, in accordance with Article 113A of the Companies (Jersey) Law 1991. 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.
Respective responsibilities of Directors and auditors
As explained more fully in the Statement of Directors’ responsibilities set out on page 29, the Directors are responsible for the preparation of financial statements which
give a true and fair view. Our responsibility is to audit, and express an opinion on, the financial statements in accordance with applicable law and International Standards
on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group’s
circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall
presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the
audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in
the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion the financial statements:
»
»
give a true and fair view, in accordance with IFRS as adopted by the EU of the state of the Group’s affairs as at 31 December 2014 and of the Group’s loss for the year
then ended; and
have been properly prepared in accordance with the Companies (Jersey) Law 1991.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies (Jersey) Law 1991 requires us to report to you if, in our opinion:
»
»
»
proper accounting records have not been kept by the Company; or
proper returns adequate for our audit have not been received from branches not visited by us; or
the Company financial statements are not in agreement with the accounting records and returns; or
» we have not received all the information and explanations we require for our audit.
Johnathan Pass
for and on behalf of KPMG LLP
Chartered Accountants
31 March 2015
Notes
»
The maintenance and integrity of the WANdisco.com website is the responsibility of the Directors; the work carried out by auditors does not involve consideration
of these matters and accordingly, KPMG LLP accepts no responsibility for any changes that may have occurred to the financial statements or our audit report
since 31 March 2015. KPMG LLP has carried out no procedures of any nature subsequent to 31 March 2015 which in any way extends this date.
»
Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. The Directors shall remain
responsible for establishing and controlling the process for doing so, and for ensuring that the financial statements are complete and unaltered in any way.
30
WANdisco plc
Annual report and accounts 2014
Consolidated statement of profit and loss and other comprehensive income
for the year ended 31 December 2014
Year ended 31 December 2014
Year ended 31 December 2013
Continuing operations
Revenue
Cost of sales
Gross profit
Operating expenses
Loss from operations
Finance income
Finance costs
Net finance income/(costs)
Loss before tax
Income tax
Loss for the year
Other comprehensive income
Items that are or may be reclassified to profit or loss:
Foreign operations – foreign currency translation differences
Other comprehensive income for the year, net of tax
5
6
9
9
9
8
Pre-
exceptional
$’000
Exceptional
items
$’000
Notes
11,218
(2,165)
9,053
—
—
—
Total
$’000
11,218
(2,165)
9,053
Pre-
exceptional
$’000
Exceptional
items
$’000
8,012
(1,579)
6,433
—
—
—
Total
$’000
8,012
(1,579)
6,433
(47,529)
(1,441)
(48,970)
(23,425)
(2,276)
(25,701)
(38,476)
(1,441)
(39,917)
(16,992)
(2,276)
(19,268)
584
(27)
557
—
—
—
584
(27)
557
52
(294)
(242)
—
(484)
(484)
52
(778)
(726)
(37,919)
(1,441)
(39,360)
(17,234)
(2,760)
(19,994)
11
1,053
—
1,053
263
—
263
(36,866)
(1,441)
(38,307)
(16,971)
(2,760)
(19,731)
(444)
(444)
—
—
(444)
(444)
136
136
—
—
136
136
Total comprehensive income for the year
(37,310)
(1,441)
(38,751)
(16,835)
(2,760)
(19,595)
Loss per share
Basic and diluted
12
$1.59
$0.90
WANdisco plc
Annual report and accounts 2014
31
Financial statements
Consolidated balance sheet
as at 31 December 2014
Assets
Intangible assets
Property, plant and equipment
Non-current assets
Trade and other receivables
Cash and cash equivalents
Current assets
Total assets
Liabilities
Borrowings – finance lease liabilities
Trade and other payables
Deferred income
Deferred government grant
Current tax liabilities
Current liabilities
Deferred income tax liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Translation reserve
Merger reserve
Retained earnings
Total equity
The financial statements on pages 31 to 57 were approved by the Board of Directors on 31 March 2015 and signed on its behalf by:
David Richards
Chief Executive Officer
Paul Harrison
Chief Financial Officer
Company registered number: 110497
32
WANdisco plc
Annual report and accounts 2014
Notes
2014
$’000
2013
$’000
13
14
16
17
18
18
18
11
20
20
20
20
20
9,814
410
10,224
14,452
2,481
8,092
311
8,403
10,511
25,673
16,933
36,184
27,157
44,587
(8)
(3,195)
(19,269)
(81)
(2)
(35)
(2,508)
(13,124)
(242)
—
(22,555)
(15,909)
(5)
(5)
(5)
(5)
(22,560)
(15,914)
4,597
28,673
3,879
56,587
(302)
1,247
3,755
53,882
142
1,247
(56,814)
(30,353)
4,597
28,673
Consolidated statement of changes in equity
for the year ended 31 December 2014
Balance at 1 January 2014
Total comprehensive income for the year
Loss for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners of the Company
Contributions and distributions
Shares issued as part of OhmData, Inc. acquisition
Equity-settled share-based payment
Share options exercised
Total transactions with owners of the Company
Share
capital
$’000
3,755
Share
premium
$’000
53,882
—
—
—
47
—
77
124
—
—
—
2,317
—
388
2,705
Translation
reserve
$’000
142
—
(444)
(444)
—
—
—
—
Merger
reserve
$’000
1,247
Retained
earnings
$’000
Total
equity
$’000
(30,353)
28,673
—
—
—
—
—
—
—
(38,307)
(38,307)
—
(444)
(38,307)
(38,751)
(1,502)
13,348
—
11,846
862
13,348
465
14,675
Balance at 31 December 2014
3,879
56,587
(302)
1,247
(56,814)
4,597
Balance at 1 January 2013
Total comprehensive income for the year
Loss for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners of the Company
Contributions and distributions
Shares issued by WANdisco plc
Share issue costs
Shares issued as part of TortoiseSVN.net IP purchase
Equity-settled share-based payment
Share options exercised
Total transactions with owners of the Company
Share
capital
$’000
Share
premium
$’000
Translation
reserve
$’000
Merger
reserve
$’000
Retained
earnings
$’000
Total
equity
$’000
3,388
23,332
6
1,247
(15,739)
12,234
—
—
—
323
—
8
—
36
367
—
—
—
30,381
(1,034)
674
—
529
30,550
—
136
136
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(19,731)
(19,731)
—
136
(19,731)
(19,595)
—
—
(682)
5,799
—
30,704
(1,034)
—
5,799
565
5,117
36,034
Balance at 31 December 2013
3,755
53,882
142
1,247
(30,353)
28,673
WANdisco plc
Annual report and accounts 2014
33
Financial statements
Consolidated statement of cash flows
for the year ended 31 December 2014
Cash flows from operating activities
Loss for the year
Adjustments for:
– Depreciation of property, plant and equipment
– Amortisation of intangible assets
– Net finance income
– Income tax
– Foreign exchange
– Equity-settled share-based payment
Changes in:
– Trade and other receivables
– Trade and other payables
– Deferred income
– Deferred government grant
– Provisions
Net working capital change
Cash used in operating activities
Interest paid
Income tax paid
Net cash used in operating activities
Cash flows from investing activities
Purchase of property, plant and equipment and computer software
Development expenditure
Interest received
Net cash used in investing activities
Cash flows from financing activities
Net proceeds from share issues
Payment of finance lease liabilities
Net cash from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the start of the year
Effect of movements in exchange rates on cash and cash equivalents
Cash and cash equivalents at the end of the year
34
WANdisco plc
Annual report and accounts 2014
2014
$’000
2013
$’000
(38,307)
(19,731)
267
8,283
(31)
(1,053)
156
13,348
138
4,918
(17)
(263)
743
5,799
(17,337)
(8,413)
(2,938)
737
6,145
(147)
—
(8,060)
(1,122)
6,756
(338)
(393)
3,797
(3,157)
(13,540)
(11,570)
(11)
(3)
(35)
—
(13,554)
(11,605)
(475)
(9,040)
58
(9,457)
465
(27)
438
(22,573)
25,673
(619)
2,481
(320)
(7,443)
52
(7,711)
30,235
—
30,235
10,919
14,545
209
25,673
Notes to the consolidated financial statements
for the year ended 31 December 2014
1. Reporting entity
WANdisco plc is a public limited company incorporated and domiciled in Jersey. The Company’s ordinary shares are traded on AIM. The consolidated financial
statements of the Company for the year ended 31 December 2014 comprise the Company and its subsidiaries (together referred to as “the Group”).
2. Basis of preparation
(a) Statement of compliance
The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”) as endorsed by the EU, IFRIC Interpretations,
and under the historical cost accounting convention, and those parts of Companies (Jersey) Law 1991 applicable to companies under IFRS.
Under Article 105(11) of the Companies (Jersey) Law 1991, a parent company preparing consolidated financial statements need not present solus (parent company only)
financial information, unless required to do so by an ordinary resolution of the company’s members.
(b) Going concern
As at 31 December 2014 the Group had net assets of $4,597,000 (31 December 2013: $28,673,000) as set out in the Consolidated balance sheet on page 32. The Directors
have prepared detailed forecasts of the Group’s performance over the coming years, this review included the benefit of $26,100,000 new equity funds (net of issue costs)
which were raised following the year end. As a consequence, the Directors believe that WANdisco plc and the Group are well-placed to manage their business risks
successfully despite the current uncertain economic outlook. After making enquiries, the Directors have a reasonable expectation that WANdisco plc and the Group
have sufficient working capital available for their present requirements, that is for the next twelve months from the date of this report. Accordingly, they continue
to adopt the going concern basis in preparing the Group financial statements.
(c) Functional and presentational currency
The consolidated financial statements are presented in US dollars, which is also the presentational currency of the Group. Billings to the Group’s customers during the
year were all in US dollars by WANdisco, Inc. with certain costs being incurred by WANdisco International Limited in sterling and WANdisco, Pty Ltd in Australian dollar.
All financial information has been rounded to the nearest thousand US dollars unless otherwise stated.
(d) Use of estimates and judgements
The preparation of financial information in conformity with adopted IFRSs requires management to make judgements, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates
are revised and in any future periods affected.
Estimates
Information about significant areas of estimation uncertainty in applying accounting policies that have the most significant effect on the amounts recognised
in the consolidated financial statements is included in the following notes:
» Note 13 – valuation of intangible assets; and
» Note 21 – valuation of share-based payment.
Judgements
The accounting policy descriptions set out the areas where judgement needs to be exercised, the most significant of which are:
»
»
Research and development – Development costs are capitalised in accordance with the accounting policy given below. Initial capitalisation of costs is based on
management’s judgement that technological and economical feasibility is confirmed, usually when a product development project has reached a defined milestone.
Intangible assets – The judgements in relation to intangible impairment testing relate to the assumptions applied in calculating the value in use of the Cash
Generating Unit being tested for impairment. The key assumptions applied in the calculation relates to the future performance expectations of the business.
The carrying value of intangible assets and the key assumptions used in performing the annual impairment assessment are disclosed in Note 13.
WANdisco plc
Annual report and accounts 2014
35
Financial statements 3. Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements.
(a) Basis of consolidation
As a result of IFRS 10 (2011) “Consolidated Financial Statements”, the Group has changed its accounting policy for determining whether it has control over and
consequently whether it consolidates its investees. IFRS 10 introduces a new control model that focuses on whether the Group has power over an investee, exposure
or rights to variable returns from its involvement with the investee and ability to use its power to affect those returns. In accordance with the transitional provisions of
IFRS 10, the Group reassessed the control conclusion for its investees at 1 January 2014. No modifications of previous conclusions about control regarding the Group’s
investees were required. The financial information of subsidiaries is included from the date that control commences until the date that control ceases.
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated
financial statements.
Business combinations
All business combinations are accounted for by applying the acquisition method. Business combinations are accounted for using the acquisition method
as at the acquisition date, which is the date on which control is transferred to the Group.
Acquisitions on or after 1 January 2009
For acquisitions on or after 1 January 2009, the Group measures goodwill at the acquisition date as:
»
»
»
»
the fair value of the consideration transferred; plus
the recognised amount of any non-controlling interests in the acquiree; plus
the fair value of the existing equity interest in the acquiree; less
the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the excess is negative, the negative goodwill is recognised immediately in profit or loss.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, are expensed as incurred.
(b) Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the foreign exchange rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the functional currency at the foreign
exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities
that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and
liabilities denominated in foreign currencies that are stated at fair value are retranslated to the functional currency at foreign exchange rates ruling at the dates
the fair value was determined.
(ii) Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to the Group’s presentational
currency, US dollars, at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated at an average
rate for the year, where this rate approximates to the foreign exchange rates ruling at the dates of the transactions.
Exchange differences arising from this translation of foreign operations are reported as an item of other comprehensive income and accumulated in the translation
reserve or non-controlling interest, as the case may be.
36
WANdisco plc
Annual report and accounts 2014
Notes to the consolidated financial statements continuedfor the year ended 31 December 2014 3. Significant accounting policies continued
(c) Financial instruments
(i) Non-derivative financial instruments
Non-derivative financial instruments comprise trade and other receivables, trade and other payables, cash and cash equivalents, and interest-bearing borrowings.
Trade and other receivables
Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest
method, less any impairment losses.
Trade and other payables
Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash
management are included as a component of cash and cash equivalents.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings
are stated at amortised cost using the effective interest method, less any impairment losses.
(ii) Classification of financial instruments issued by the Group
Following the adoption of IAS 32 ”Financial Instruments: Presentation”, financial instruments issued by the Group are treated as equity only to the extent that they meet
the following two conditions:
(a) they include no contractual obligations upon the Group to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another
party under conditions that are potentially unfavourable to the Group; and
(b) where the instrument will or may be settled in the Group’s own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable
number of the Company’s own equity instruments or is a derivative that will be settled by the Company’s exchanging a fixed amount of cash or other financial
assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of the
Company’s own shares, the amounts presented in these financial statements for called up share capital and share premium exclude amounts in relation to those shares.
(d) Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. The cost of property, plant and equipment
at 1 January 2009, the Group’s date of transition to IFRS, was determined by reference to its carrying value under UK and US Generally Accepted Accounting Principles.
(ii) Depreciation
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment.
The estimated useful lives for the current and comparative periods are as follows:
»
»
»
computer equipment
– 3 years
fixtures and fittings
– 3 years
leasehold improvements – 3 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date.
WANdisco plc
Annual report and accounts 2014
37
Financial statements 3. Significant accounting policies continued
(e) Intangible assets
(i) Goodwill
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortised but is tested annually for impairment.
(ii) Research and development
Expenditure on research activities, undertaken with the prospect of gaining new technical knowledge and understanding, is recognised in profit or loss when incurred.
Development activities relate to software development and involve a plan or design for the production of new or substantially improved products and processes.
Development expenditure is capitalised only if:
»
»
»
»
development costs can be measured reliably;
the product or process is technically and commercially feasible;
future economic benefits are probable; and
the Group intends to, and has sufficient resources to, complete development and to use or sell the asset.
The expenditure capitalised includes direct labour and overhead costs that are directly attributable to preparing the asset for its intended use.
Capitalised development expenditure is measured at cost less accumulated amortisation and accumulated impairment losses.
(iii) Amortisation
Amortisation of capitalised research and development costs is recognised in profit or loss on a straight-line basis over the estimated useful life of two years.
Intangibles in relation to acquired and computer software are amortised over an estimated useful life of two years.
Amortisation of the intangible assets recognised on the acquisitions of AltoStor, Inc. and OhmData, Inc. is recognised in profit or loss on a straight-line basis over their
estimated useful lives of three years.
(f) Impairment (excluding deferred tax assets)
(i) Financial assets (including receivables)
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired.
A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset and that the loss event had a negative
effect on the estimated future cash flows of that asset that can be estimated reliably.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the
estimated future cash flows discounted at the asset’s original effective interest rate. Interest on the impaired asset continues to be recognised through the unwinding
of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.
(ii) Non-financial assets
The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such
indication exists, then the asset’s recoverable amount is estimated. For goodwill, and intangible assets that have indefinite useful lives or that are not yet available for
use, the recoverable amount is estimated each year at the same time.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to
the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generate cash inflows
from continuing use that are largely independent of the cash inflows of other assets or groups of assets (“the cash-generating unit”). The goodwill acquired in a business
combination, for the purpose of impairment testing, is allocated to cash-generating units (“CGUs”). Subject to an operating segment ceiling test, for the purposes of goodwill
impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment is tested reflects the lowest level at which goodwill
is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies
of the combination.
38
WANdisco plc
Annual report and accounts 2014
Notes to the consolidated financial statements continuedfor the year ended 31 December 2014 3. Significant accounting policies continued
(f) Impairment (excluding deferred tax assets) continued
(ii) Non-financial assets continued
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in profit
or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce
the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting
date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine
the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have
been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
(g) Employee benefits
(i) Pension plans
There are no Group pension schemes to which the Group entities contribute or have any liabilities.
The Group is not obliged to make any contributions to the UK stakeholder scheme and it currently has no members.
(ii) Termination benefits
Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan
to either terminate employment before the normal retirement date or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.
(iii) Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or commission plans where the Group has a present legal or constructive
obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
(iv) Share-based payment
The grant date fair value of share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the
period that the employees unconditionally become entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the
related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards
that do meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date
fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
Share-based payment arrangements in which the Group receives goods or services as consideration for its own equity instruments are accounted for as equity-settled
share-based payment transactions, regardless of how the equity instruments are obtained by the Group.
No cash-settled share-based payment awards have been granted to employees.
(h) Revenue recognition
(i) Software licences
Sales of software licences are recognised once the licence has been granted and the customer has been provided with access to the software. Revenue derived
from sales of licences is spread over the period of the licence. Where licences are perpetual, revenue is recognised in full once the agreement is in place.
(ii) Support subscriptions
Sales of support subscriptions are recognised on a straight-line basis over the period of the contract.
(iii) Maintenance, training and other services
Sales of maintenance, training and other services are recognised on a straight-line basis over the period of the contract.
(iv) Customer bookings
Customer bookings are the amounts committed to by customers for software licences, subscriptions and services, net of discounts and sales taxes.
WANdisco plc
Annual report and accounts 2014
39
Financial statements 3. Significant accounting policies continued
(i) Operating lease payments
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease.
(j) Finance income and costs
Finance costs comprise interest expense on borrowings and exchange differences on intra-group balances.
(k) Taxation
Income tax comprises current and deferred tax. Income tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity,
in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment
to tax payable in respect of previous years.
Deferred tax is recognised using the statement of financial position method, providing for temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised in respect of temporary differences relating to investments
in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be
applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
(l) Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with.
When the grant relates to an expense item, it is recognised as income over the period necessary to match the grant on a systematic basis to the costs that it is intended
to compensate. Where the grant relates to an asset, the fair value is credited to a deferred income account and is released to the statement of comprehensive income
over the expected useful life of the asset.
(m) Segmental reporting
The Directors consider there to be one operating segment, being that of development and sale of licences for software and related maintenance.
The Group has adopted IFRS 8 “Operating Segments” from the date of transition to IFRS. IFRS 8 requires the Group to determine and present its operating segments
based on information which is provided internally to the chief operating decision maker (“CODM”). The CODM, who is responsible for allocating resources and
assessing the performance of the operating segment, has been identified as the Chief Executive Officer.
(n) Provisions
Provisions are created where the Group has a present legal or constructive obligation as a result of a past event, where it is probable it will result in an outflow
from the Group.
(o) Cost of sales
Cost of sales includes commissions earned on sales and direct costs relating to software supply.
(p) Exceptional items
Exceptional items comprise items of income and expense that are material in amount and unlikely to recur and that merit separate disclosure in order to provide
an understanding of the Group’s underlying financial performance.
40
WANdisco plc
Annual report and accounts 2014
Notes to the consolidated financial statements continuedfor the year ended 31 December 2014 3. Significant accounting policies continued
(q) New accounting standards and amendments
(i) New and amended standards adopted by the Group
The following new standards and amendments to standards are mandatory for the first time for the financial year beginning on 1 January 2014:
»
»
»
»
»
»
IFRS 10 “Consolidated Financial Statements”, IAS 27 “Consolidated and Separate Financial Statements”, IFRS 11 “Joint Arrangements” and amendments
to IAS 28 “Investments in Associates and Joint Ventures”.
IFRS 12 “Disclosure of Interests in Other Entities”.
Amendments to IAS 32 “Financial Instruments: Presentation” – Offsetting Financial Assets and Financial Liabilities.
IFRIC Interpretation 21 “Levies”.
Amendments to IAS 36 “Impairment of Assets” – Recoverable Amount Disclosures for Non-Financial Assets.
Amendments to IAS 39 “Financial Instruments: Recognition and Measurement” – Novation of Derivatives and Continuation of Hedge Accounting.
These standards and amendments to standards have not had a material impact on the consolidated financial statements.
(ii) New and amended standards and interpretations issued but not effective for the financial year beginning 1 January 2014 and not early adopted
The Group has not applied the following amendments to standards which are EU endorsed but not yet effective:
»
»
»
Amendments to IAS 19 “Employee Benefits” – Defined Benefit Plans: Employee Contributions.
Annual Improvements to IFRSs 2010–2012 Cycle.
Annual Improvements to IFRSs 2011–2013 Cycle.
The Group is currently considering the implication of these standards, however it is not anticipated that they will have a material impact on the consolidated
financial statements.
4. Determination of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values
have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions
made in determining fair values is disclosed in the notes specific to that asset or liability.
(a) Intangible assets
Whilst development costs are valued at cost less amortisation, their carrying values are assessed to ensure that they do not exceed the recoverable amount at the end
of each reporting period. The recoverable amount of other intangible assets is based on the discounted cash flows expected to be derived from the use and eventual
sale of products developed.
(b) Trade and other receivables
The fair value of short-term trade and other receivables is deemed to be its book value less any impairment provision. The effect of discounting is considered to be immaterial.
(c) Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market
rate of interest at the reporting date.
WANdisco plc
Annual report and accounts 2014
41
Financial statements 5. Segmental analysis
Operating segments
The Directors consider there to be one operating segment, being that of development and sale of licences for software and related maintenance.
Geographical segments
The Group recognises revenue in three geographical regions based on the location of customers, as set out in the following table:
North America
Europe
Rest of the world
Total
2014
$’000
9,414
1,376
428
11,218
Management makes no allocation of costs, assets or liabilities between these segments since all trading activities are operated as a single business unit.
The Group has no (2013: nil) customers representing individually over 10% of revenue.
6. Operating expenses
Loss from operations has been arrived at after charging:
Staff costs (see Note 10)
Research and development – amortisation charge
Amortisation of intangible assets
Depreciation of property, plant and equipment
Auditor’s remuneration (see Note 7)
2014
$’000
25,886
6,855
1,428
267
89
Reconciliation of loss from operations to adjusted earnings before interest, taxation, depreciation and amortisation (“Adjusted EBITDA”)
2013
$’000
7,069
660
283
8,012
2013
$’000
12,133
3,670
1,248
138
262
Operating loss
Adjusted for:
Amortisation and depreciation
Acquisition-related items
Exceptional items within operating expenses (see Note 8)
EBITDA before exceptional items
Adjusted for share-based payment (see Note 21)
Adjusted EBITDA before exceptional items
Development expenditure capitalised (see Note 13)
Adjusted EBITDA before exceptional items including development expenditure
Acquisition-related items include legal and professional costs of $145,000 (2013: $nil), which were incurred on the acquisition of OhmData, Inc.
42
WANdisco plc
Annual report and accounts 2014
2014
$’000
2013
$’000
(39,917)
(19,268)
8,550
145
1,441
5,056
—
2,276
(29,781)
(11,936)
11,907
(17,874)
(9,040)
4,104
(7,832)
(7,443)
(26,914)
(15,275)
Notes to the consolidated financial statements continuedfor the year ended 31 December 2014 7. Auditor’s remuneration
Audit of these financial statements
Amounts receivable by auditor in respect of:
Audit of financial statements of subsidiaries pursuant to legislation
Other services related to taxation
Other services pursuant to legislation
8. Exceptional items
Exceptional items comprise the following:
Equity-settled share-based payment charge in relation to acquisitions:
– AltoStor, Inc.
– TortoiseSVN.net
– OhmData, Inc.
Total equity-settled share-based payment charge in relation to acquisitions
Reorganisation costs
Total exceptional items in loss from operations
Currency exchange loss
2014
$’000
70
14
—
5
89
2014
$’000
659
290
492
1,441
—
1,441
—
1,441
2013
$’000
65
13
99
85
262
2013
$’000
1,459
236
—
1,695
581
2,276
484
2,760
»
»
»
The equity-settled share-based payment charge recognised in the year in relation to the acquisitions of OhmData, Inc., AltoStor, Inc. and the purchase of the
intellectual property of TortoiseSVN.net has been classified as exceptional. See Note 21 for further details.
Reorganisation costs incurred in the prior year relate to certain specific organisational change activities in both the UK and the US.
The exchange loss in 2013 arose on cash balances held in sterling.
WANdisco plc
Annual report and accounts 2014
43
Financial statements 9. Net finance income/(costs) (pre-exceptional items)
Interest receivable – bank
Exchange gain
Finance income
Unwind of discount on pledged shares
Exchange loss
Interest payable on bank borrowings
Bank charges
Finance costs
Net finance income/(costs)
10. Staff numbers and costs
Wages and salaries
Social security costs
Other pension costs
Equity-settled share-based payment (see Note 21)
Development expenditure capitalised
Total staff costs
Average number of persons employed
The average number of persons employed by the Group (including Directors), analysed by category, was as follows:
Software development
Selling and distribution
Administration
Total number of employees
Remuneration of key management personnel
2014
$’000
58
526
584
(16)
—
(2)
(9)
(27)
557
2014
$’000
20,258
1,621
—
11,907
(7,900)
2013
$’000
52
—
52
—
(259)
(12)
(23)
(294)
(242)
2013
$’000
12,229
1,418
34
4,104
(5,652)
25,886
12,133
2014
Number
2013
Number
103
48
14
165
2014
Total
$’000
74
34
13
121
2013
Total
$’000
Short-term employee benefits of key management personnel
4,192
3,445
There were no other long-term benefits or post-employment benefits in the year ended 31 December 2014 (2013: $nil).
In addition to the above, an equity-settled share-based payment charge of $8,231,000 in relation to share options granted to key management personnel, was incurred
in the year ended 31 December 2014 (2013: $1,822,000).
Further details on the remuneration, share options and pension entitlement of the Directors are included in the Remuneration Committee report on pages 24 and 25.
44
WANdisco plc
Annual report and accounts 2014
Notes to the consolidated financial statements continuedfor the year ended 31 December 2014 11. Income tax
Current tax expense
Current year
Adjustment for prior years
Deferred tax expense
Origination and reversal of timing differences
Impact of changes in tax rates
Adjustment in respect of prior years
Total tax credit
Reconciliation of effective tax rate
Loss before taxation
Expected tax credit based on the Group’s domestic tax rate of 40%
Effects of:
Non-deductible expenses
Tax rates in foreign jurisdictions
R&D tax credits
Losses not recognised for current or deferred tax
Taxation credit for the year
2014
$’000
478
575
1,053
—
—
—
—
2013
$’000
—
263
263
—
—
—
—
1,053
263
2013
%
40%
2013
$’000
19,994
7,998
(13.4%)
(2,683)
1.2%
3.2%
247
633
(29.7%)
(5,932)
2014
%
40%
(14.0%)
(5.3%)
2.7%
(20.6%)
2014
$’000
39,360
15,744
(5,523)
(2,101)
1,053
(8,120)
2.7%
1,053
1.3%
263
Factors affecting the current and future tax charges
A reduction in the UK corporation tax rate to 20% (effective from 1 April 2015) was substantively enacted on 2 July 2013. This will reduce the Group’s future current
tax charge accordingly. The deferred taxation liability for UK tax resident members of the Group at 31 December 2014 has been calculated based on the rate of 20%
substantively enacted at the balance sheet date.
Deferred tax assets and liabilities
Deferred tax liabilities are attributable to the following temporary differences in respect of property, plant and equipment:
Deferred tax liability at 1 January
Recognised in profit or loss
Deferred tax liabilities at 31 December
2014
$’000
2013
$’000
(5)
—
(5)
(5)
—
(5)
The Group has unrecognised deferred tax assets of $11,689,000 (2013: $7,473,000) in respect of tax losses arising in the Group.
The Directors consider that there is not sufficient certainty over the availability of future taxable profits against which these losses may be offset and no asset has
therefore been recognised.
WANdisco plc
Annual report and accounts 2014
45
Financial statements 12. Loss per share
Basic loss per share
Basic loss per share is calculated based on the loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding:
Loss for the year attributable to ordinary shareholders
Weighted average number of ordinary shares
At the start of the year
Effect of shares issued in the year
Weighted average number of ordinary shares during the year
Basic loss per share
2014
$’000
2013
$’000
38,307
19,731
2014
Shares
‘000s
23,693
325
2013
Shares
‘000s
21,421
586
24,018
22,007
2014
$
1.59
2013
$
0.90
Adjusted loss per share
Adjusted loss per share is based on the result attributable to ordinary shareholders before exceptional items, acquisition-related items and the cost of equity-settled
share-based payment, and the weighted average number of ordinary shares outstanding:
Loss for the year attributable to ordinary shareholders
Add back:
Exceptional items
Acquisition-related items
Equity-settled share-based payment (excluding exceptional items)
Adjusted basic loss
Adjusted loss per share
2014
$’000
2013
$’000
38,307
19,731
(1,441)
(161)
(2,760)
—
(11,907)
(4,104)
24,798
12,867
2014
$
1.03
2013
$
0.58
Diluted loss per share
Due to the Group having losses in each of the years, the fully diluted loss per share for disclosure purposes, as shown in the Consolidated statement of profit and loss
and other comprehensive income, is the same as for the basic loss per share.
46
WANdisco plc
Annual report and accounts 2014
Notes to the consolidated financial statements continuedfor the year ended 31 December 2014 13. Intangible assets
Cost
At 1 January 2013
Additions – externally purchased
Additions – own work capitalised
At 31 December 2013
At 1 January 2014
Reclassification from property, plant and equipment
Acquisitions through business combinations
Additions – externally purchased
Additions – own work capitalised
Effect of movements in exchange rates
At 31 December 2014
Amortisation
At 1 January 2013
Amortisation charge for the year
Effect of movements in exchange rates
At 31 December 2013
At 1 January 2014
Reclassification from property, plant and equipment
Amortisation charge for the year
Effect of movements in exchange rates
At 31 December 2014
Net book value
At 31 December 2013
At 31 December 2014
Other
intangible
assets
$’000
Development
costs
$’000
Computer
software
$’000
2,308
—
—
2,308
2,308
—
846
—
—
—
6,304
—
7,443
13,747
13,747
—
—
—
9,040
—
995
35
—
1,030
1,030
30
—
103
—
26
Total
$’000
9,607
35
7,443
17,085
17,085
30
846
103
9,040
26
3,154
22,787
1,189
27,130
(94)
(766)
—
(860)
(860)
—
(935)
—
(3,850)
(3,670)
—
(7,520)
(7,520)
—
(6,855)
—
(122)
(482)
(9)
(613)
(613)
(19)
(493)
(21)
(4,066)
(4,918)
(9)
(8,993)
(8,993)
(19)
(8,283)
(21)
(1,795)
(14,375)
(1,146)
(17,316)
1,448
1,359
6,227
8,412
417
43
8,092
9,814
The carrying amount of the intangible assets is allocated across cash-generating units (“CGUs”). A CGU is defined as the smallest group of assets that generate cash
inflows from continuing use that are largely independent of the cash inflows of other assets or groups thereof. The recoverable amount of the CGUs are determined
using value in use (“VIU”) calculations. As at 31 December 2014 the Group had one CGU, the DConE CGU. The Group’s patented DConE replication technology forms
the basis of the Group’s products for the ALM market. This technology also underpins the enterprise-ready Apache-Hadoop products we have developed for the
Big Data market.
WANdisco plc
Annual report and accounts 2014
47
Financial statements 13. Intangible assets continued
Other intangible assets arose as part of the acquisitions of OhmData, Inc. in June 2014 and AltoStor, Inc. in November 2012. The intangibles arising as part of these acquisitions
are allocated to the DConE CGU. The recoverable amount of the DConE CGU has been calculated on a VIU basis at both 31 December 2014 and 31 December 2013.
These calculations use cash flow projections based on financial forecasts and appropriate long-term growth rates. To prepare VIU calculations, the cash flow forecasts
are discounted back to present value using a pre-tax discount rate of 10.0% (2013: 8.0%) and a terminal value growth rate of 2% from 2019. The Directors have reviewed
the recoverable amount of the CGU and do not consider there to be any indication of impairment.
Development costs are predominantly capitalised staff costs associated with new products and services. Development costs are allocated to the DConE CGU, the recoverable
amount of which has been determined on a VIU basis as described above.
On 19 September 2012 WANdisco International Limited purchased an item of software from SyntevoGmbH for consideration of $1.0m. This software became fully
amortised during the year ended 31 December 2014.
The amortisation charge on intangible assets is included in operating expenses in the Consolidated statement of profit and loss and other comprehensive income.
14. Property, plant and equipment
Cost
At 1 January 2013
Additions
At 31 December 2013
At 1 January 2014
Reclassification to intangible assets
Additions
At 31 December 2014
Depreciation
At 1 January 2013
Depreciation charge for the year
At 31 December 2013
At 1 January 2014
Reclassification to intangible assets
Depreciation charge for the year
Effect of movements in exchange rates
At 31 December 2014
Net book value
At 31 December 2013
At 31 December 2014
48
WANdisco plc
Annual report and accounts 2014
Leasehold
improvements
$’000
Fixtures and
fittings
$’000
Computers
$’000
Total
$’000
30
66
96
96
—
34
130
(2)
(29)
(31)
(31)
—
(44)
1
(74)
65
56
151
138
289
289
—
81
370
(78)
(58)
(136)
(136)
—
(89)
3
108
116
224
224
(30)
257
451
(80)
(51)
(131)
(131)
19
(134)
1
(222)
(245)
153
148
93
206
289
320
609
609
(30)
372
951
(160)
(138)
(298)
(298)
19
(267)
5
(541)
311
410
Notes to the consolidated financial statements continuedfor the year ended 31 December 2014 100%
100%
100%
100%
100%
100%
Nature of business
Development and provision of global collaboration software
Development and provision of global collaboration software
Development and provision of global collaboration software
Development and provision of global collaboration software
Development and provision of global collaboration software
Development and provision of global collaboration software
Country of
incorporation
Holding
Proportion
of shares held
15. Investments in subsidiaries
The Group has the following investments in subsidiaries:
Company name
WANdisco International Limited
WANdisco, Inc.
OhmData, Inc.
AltoStor, Inc.
UK
US
US
US
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
WANdisco, Pty Ltd
Australia
Ordinary shares
WANdisco Software (Chengdu) Ltd
China
Ordinary shares
All of the above entities are included in the consolidated financial statements.
16. Trade and other receivables
Trade receivables
Other receivables
– Unbilled receivables
– Other receivables
Total other receivables
Corporation tax
Prepayments
Included in other receivables is $4,895,000 which falls due after more than one year (2013: $3,252,000).
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
Ageing of trade receivables
Due from current month
Due from previous month
Due from earlier months
Total trade receivables
All trade receivables are denominated in US dollars.
2014
$’000
4,440
8,005
556
8,561
1,056
395
2013
$’000
4,511
4,668
706
5,374
263
363
14,452
10,511
2014
$’000
4,278
121
41
4,440
2013
$’000
2,764
894
853
4,511
WANdisco plc
Annual report and accounts 2014
49
Financial statements 17. Cash and cash equivalents
Cash at bank and in hand
Short-term deposits
Total cash and cash equivalents
18. Current liabilities
Trade and other payables
Trade payables
Other payables and accruals
Deferred income
Deferred income represents contracted sales for which services to customers will be provided in future years.
The movement on the deferred income balance is as follows:
At 1 January
Customer bookings
Released to revenue
At 31 December
2014
$’000
2,481
—
2,481
2014
$’000
722
2,473
3,195
2013
$’000
25,673
—
25,673
2013
$’000
854
1,654
2,508
2014
$’000
13,124
17,363
(11,218)
2013
$’000
6,368
14,768
(8,012)
19,269
13,124
Included in the 31 December 2014 year-end balance are amounts falling due after more than one year of $10,792,000 (2013: $6,844,000).
Borrowings – finance lease liabilities
Finance lease liabilities include amounts payable after more than one year of $nil (2013: $8,000).
19. Financial instruments and risk management
The Group’s principal financial instruments are cash and trade receivables.
The Group has exposure to the following risks from its use of financial instruments:
Market risk
The Group may be affected by general market trends, which are unrelated to the performance of the Group itself. The Group’s success will depend on market
acceptance of the Group’s products and there can be no guarantee that this acceptance will be forthcoming. Market opportunities targeted by the Group may change
and this could lead to an adverse effect upon its revenue and earnings.
50
WANdisco plc
Annual report and accounts 2014
Notes to the consolidated financial statements continuedfor the year ended 31 December 2014 19. Financial instruments and risk management continued
Credit risk
Credit risk arises from cash and cash equivalents and credit exposure to the Group’s customers.
Credit ratings of institutions which hold the Group’s financial assets are regularly monitored to ensure they meet the minimum credit criteria set by the Board through
the Group treasury policy.
The credit quality of customers is assessed by taking into account their financial position, past experience and other factors.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Board is responsible for ensuring that the Group has sufficient
liquidity to meet its financial liabilities as they fall due and does so by monitoring cash flow forecasts and budgets. The Board has considered the cash flow forecasts for
the next twelve months which show that the Group expects to operate within its working capital facilities throughout the year. Details of the going concern review is
included in Note 2.
Any excess cash balances are held in short-term, interest-bearing deposit accounts.
Capital management
The Group defines the capital that it manages as its total equity. The Group’s objectives when managing capital are to safeguard the Group’s ability to continue
as a going concern and support the growth of the business.
Foreign currency risk
The Group’s operations are split between the US, the UK, mainland Europe, Australia and China, and as a result the Group incurs costs in currencies other than
its presentational currency of US dollars. The Group also holds cash and cash equivalents in non-US dollar denominated bank accounts.
The following table shows the denomination of the year-end cash and cash equivalents balance:
2014 cash and cash equivalents
2013 cash and cash equivalents
Sterling
$’000
359
10,886
Australian
dollar
$’000
105
—
US dollar
$’000
2,017
14,787
Total
$’000
2,481
25,673
Had the foreign exchange rate between US dollar and sterling changed by 5%, this would affect the loss for the year and net assets of the Group by $28,000 (2013: $544,000).
Fair values of financial assets and financial liabilities
There are no material differences between the fair value and the book value of the Group’s financial assets and liabilities.
20. Share capital and reserves
Share capital
Allotted and fully paid
The ordinary share capital of WANdisco plc is designated in sterling.
2014
Number
2014
$’000
2013
Number
2013
$’000
24,435,035
3,879
23,692,555
3,755
WANdisco plc
Annual report and accounts 2014
51
Financial statements 20. Share capital and reserves continued
At 1 January 2013
Loss for the year
Foreign currency translation differences
Shares issued by WANdisco plc
Share issue costs
Shares issued as part of TortoiseSVN.net IP purchase
Equity-settled share-based payment
Shares options exercised
At 31 December 2013
At 1 January 2014
Loss for the year
Foreign currency translation differences
Shares issued as part of OhmData, Inc. acquisition
Equity-settled share-based payment
Shares options exercised
At 31 December 2014
Share
capital
$’000
Share
premium
$’000
Translation
reserve
$’000
3,388
23,332
—
—
323
—
8
—
36
3,755
3,755
—
—
47
—
77
—
—
30,381
(1,034)
674
—
529
53,882
53,882
—
—
2,317
—
388
6
—
136
—
—
—
—
—
142
142
—
(444)
—
—
—
Merger
reserve
$’000
1,247
—
—
—
—
—
—
—
1,247
1,247
—
—
—
—
—
Retained
earnings
$’000
(15,739)
(19,731)
—
—
—
(682)
5,799
—
(30,353)
(30,353)
(38,307)
—
(1,502)
13,348
—
3,879
56,587
(302)
1,247
(56,814)
Share capital and share premium
During the year, 742,480 ordinary shares were issued as a result of employees exercising share options.
On 1 October 2013, the Company issued an additional 2,000,000 ordinary shares at a price of £9.50 each, raising funds of $29.3m net of transaction costs.
Costs relating directly to the new issue of shares have been deducted from the share premium account.
Translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations.
Merger reserve
The acquisition by WANdisco plc of the entire share capital of WANdisco, Inc. in 2012 was accounted for as a reverse acquisition. Consequently the previously
recognised book values and assets and liabilities were retained and the consolidated financial information for the period to 16 May 2012 has been presented
as a continuation of the WANdisco business, which was previously wholly owned by the WANdisco, Inc. Group.
The share capital for the period covered by these consolidated financial statements and the comparative periods is stated at the nominal value of the shares issued
pursuant to the above share arrangement. The difference between the nominal value of these shares and the nominal value of WANdisco, Inc. shares at the time
of the acquisition has been transferred to the merger reserve.
21. Share-based payment
WANdisco plc operates share option plans for qualifying employees of the Group. Options in the plans are settled in equity in the Company and are normally subject
to a vesting schedule but not conditional on any performance criteria being achieved.
52
WANdisco plc
Annual report and accounts 2014
Notes to the consolidated financial statements continuedfor the year ended 31 December 2014 21. Share-based payment continued
Analysis of equity-settled share-based payment charge
Exceptional equity-settled share-based payment charge in relation to acquisitions:
– AltoStor, Inc.
– TortoiseSVN.net
– OhmData, Inc.
Total equity-settled share-based payment charge in relation to acquisitions (see Note 8)
Non-exceptional equity-settled share-based payment charge (see Note 10)
Total equity-settled share-based payment charge
2014
$’000
659
290
492
1,441
11,907
13,348
2013
$’000
1,459
236
—
1,695
4,104
5,799
Terms and conditions of share option grants
The terms and conditions of the share option grants between 16 May 2012 (the date WANdisco plc acquired WANdisco, Inc.) and 31 December 2014 are as follows:
Date of grant
16 May 2012
16 May 2012
16 May 2012
16 May 2012
16 May 2012
16 May 2012
16 May 2012
16 May 2012
16 May 2012
16 May 2012
21 June 2012
7 December 2012
21 January 2013
1 February 2013
25 February 2013
18 March 2013
1 April 2013
8 April 2013
13 May 2013
20 May 2013
1 July 2013
15 July 2013
Expected term
(years)
Exercisable between
Commencement
Lapse
7
8
8
9
9
9
9
9
9
9
10
10
10
10
10
10
10
10
10
10
10
10
16 May 2012
16 May 2012
16 May 2012
16 May 2012
16 May 2012
22 July 2012
22 July 2012
3 August 2019
15 September 2020
7 October 2020
14 September 2021
20 September 2021
14 September 2021
20 September 2021
1 August 2012
20 September 2021
13 January 2013
13 January 2013
21 June 2012
12 January 2022
30 January 2022
21 June 2022
7 December 2012
7 December 2022
21 January 2013
1 February 2013
21 January 2023
1 February 2023
25 February 2013
25 February 2023
18 March 2013
18 March 2023
1 April 2013
8 April 2013
13 May 2013
20 May 2013
1 July 2013
15 July 2013
1 April 2023
8 April 2023
13 May 2023
20 May 2023
1 July 2023
15 July 2023
Exercise
price
£0.24
$0.36
£0.45
$0.36
£0.46
$0.36
£0.46
£0.46
$0.36
£0.23
£2.00
£4.55
£5.68
£6.40
£8.20
£7.47
£8.03
£7.75
£9.80
£9.98
£9.38
£9.55
Vesting
schedule
(see below)
Outstanding at
31 December
2014
2
2
2
2
2
3
3
3
3
3
4
5
5
5
5
5
5
5
5
5
5
5
1,146
35,000
13,886
1,459
9,680
85,000
96,333
2,000
458,000
735,685
55,400
327,069
25,000
23,750
15,000
25,000
25,000
7,500
20,000
5,000
35,000
65,000
WANdisco plc
Annual report and accounts 2014
53
Financial statements 21. Share-based payment continued
Terms and conditions of share option grants continued
Date of grant
29 July 2013
15 August 2013
16 September 2013
27 September 2013
27 September 2013
27 September 2013
27 September 2013
15 October 2013
11 November 2013
27 November 2013
27 December 2013
14 March 2014
9 April 2014
24 April 2014
14 May 2014
16 June 2014
26 June 2014
18 August 2014
15 September 2014
3 November 2014
5 December 2014
5 December 2014
22 December 2014
Expected term
(years)
10
10
10
2.5
2.5
2.5
2.5
10
10
10
10
4
3
3
10
10
3
3
10
10
10
3
3
Exercisable between
Commencement
Lapse
29 July 2013
15 August 2013
29 July 2023
15 August 2023
16 September 2013
16 September 2023
27 September 2013
27 September 2013
27 September 2013
27 September 2013
15 March 2016
15 March 2016
15 March 2016
15 March 2016
15 October 2013
15 October 2023
11 November 2013
11 November 2023
27 November 2013
27 November 2023
27 December 2013
27 December 2023
14 March 2014
14 March 2018
9 April 2014
24 April 2014
14 May 2014
16 June 2014
26 June 2014
9 April 2017
24 April 2017
14 May 2024
16 June 2024
26 June 2017
18 August 2014
18 August 2017
15 September 2014
15 September 2024
3 November 2014
3 November 2024
5 December 2014
5 December 2024
5 December 2014
5 December 2017
22 December 2014
22 December 2017
Exercise
price
£9.25
£9.25
£11.68
£0.10
£0.10
£0.10
£0.10
£11.54
£12.71
£14.30
£11.93
£0.10
£0.10
£0.10
£5.79
£4.30
£0.10
£0.10
£4.00
£4.00
£3.80
£0.10
£0.10
Vesting
schedule
(see below)
Outstanding at
31 December
2014
5
5
5
6
7
6
7
5
5
5
5
8
9
9
5
5
9
5
5
5
5
9
9
20,000
20,000
5,000
100,000
58,122
70,030
70,031
30,000
10,000
40,000
205,000
100,000
150,000
100,000
55,000
350,000
323,076
80,000
288,500
65,000
25,000
15,000
55,000
The following vesting schedule applies:
1. Fully vested at grant date.
2. Partially vested at grant date; 1/48 of granted option shares vest monthly thereafter.
3. 25% of option vests on exercisable commencement date; 1/48 of granted option shares vest monthly thereafter.
4. Option vests on third anniversary of the grant date.
5. Option vests 25% on first anniversary of the vesting commencement date, with the balance vesting monthly thereafter until final vesting date.
6. Option vests 50% on 1 September 2014 and 50% on 1 September 2015.
7. Option vests 40% on 1 January 2014 and 60% on 1 January 2015.
8. Option vests 1/3 on 31 January 2015 and then 1/6 every six months until final vesting date.
9. Option vests 1/3 on first anniversary of vesting commencement date, with the balance vesting monthly thereafter until final vesting date.
54
WANdisco plc
Annual report and accounts 2014
Notes to the consolidated financial statements continuedfor the year ended 31 December 2014 21. Share-based payment continued
Share-based payment charges related to acquisitions
As part of the acquisitions of OhmData, Inc. in June 2014, AltoStor, Inc. in November 2012 and TortoiseSVN.net community website in June 2013, restricted shares
were issued to the former owners of the business for OhmData, Inc. and AltoStor, Inc. and the lead developer of the website for TortoiseSVN.net community website.
These shares were treated as contingent payments and have been accounted for under IFRS 2 “Share-based Payment” rather than as part of the acquisition
consideration under IFRS 3 “Business Combinations”.
Acquisition
OhmData, Inc.
AltoStor, Inc.
TortoiseSVN.net
Number and weighted average exercise price of shares
The number and weighted average exercise price of share options (including previous options in WANdisco, Inc.) were as follows:
Balance at the start of the year
Granted
Forfeited
Exercised
Balance at the end of the year
Exercisable at the end of the year
Vested at the end of the year
Weighted average exercise price for:
Shares granted
Shares forfeited
Options exercised
Exercise price in the range:
From
To
Weighted average contractual life remaining
Equity-settled
share-based
payment
charge
$’000
492
659
290
1,441
Restricted
shares
$’000
173,266
375,651
50,000
598,917
2014
Number
2013
Number
3,305,201
2,681,470
1,878,561
1,046,870
(414,100)
(201,372)
(467,995)
(221,767)
4,301,667
3,305,201
675,631
364,465
1,081,844
1,075,550
2014
$
3.25
11.06
0.99
0.16
20.96
2014
Years
6.5
2013
$
11.97
5.52
2.46
0.16
22.37
2013
Years
7.8
WANdisco plc
Annual report and accounts 2014
55
Financial statements 21. Share-based payment continued
Number and weighted average exercise price of shares continued
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:
Dividend yield
Risk-free interest rate
Stock price volatility
Expected life (years)
Weighted average fair value of options granted during the year
2014
2013
0.00%
2.28%
30%
4.9
$7.61
0.00%
2.19%
30%
3.2
$9.54
»
»
»
»
The dividend yield is based on the Company’s forecast dividend rate and the current market price of the underlying common stock at the date of grant.
Expected life in years is determined from the average of the time between the date of grant and the date on which the options lapse.
Expected volatility is based on the historical volatility of shares of listed companies with a similar profile to the Company.
The risk-free interest rate is based on the treasury bond rates for the expected life of the option.
22. Acquisition
On 27 June 2014, the Group acquired 100% of the share capital of OhmData, Inc. (“OhmData”) for a total consideration of $846,000. $526,000 was issued in shares at the
date of the acquisition, and $320,000 is deferred share consideration. OhmData is engaged in the development of database solutions based on the Apache HBase database.
Share type
Consideration – equity
Deferred consideration – equity
Total consideration – equity
Provisional net assets assumed at date of acquisition
Net assets – intangible assets
Goodwill arising on acquisition
The following table shows the shares that were issued as part of the transaction and the fair value of those shares at the acquisition date:
Share type
Shares issued at acquisition
Pledged shares
Restricted shares
Total shares issued
56
WANdisco plc
Annual report and accounts 2014
Number of
shares
Fair value
$’000
60,040
41,170
101,210
526
320
846
(846)
—
Number of
shares
Fair value
$’000
60,040
41,170
173,266
274,476
526
320
1,518
2,364
Notes to the consolidated financial statements continuedfor the year ended 31 December 2014
22. Acquisition continued
»
The pledged shares have been treated as deferred consideration and will be released to the OhmData founders 15 months after the acquisition date,
but contain no contingency clauses related to post acquisition performance.
»
»
»
The restricted shares have been treated as equity-settled share-based payment charges as they have conditions attached relating to employment post
acquisition, and have been accounted for under IFRS 2, “Share-based Payment”.
The equity-settled share-based payment charge will be recognised over the 2 1/2 year vesting period of the shares.
Prior to acquisition, OhmData generated revenue of $negligible and losses of $94,000.
» OhmData did not generate any revenues, profits or losses during the period from acquisition to 31 December 2014.
23. Commitments and contingent liabilities
Operating lease commitments
The total amounts payable under non-cancellable operating leases are as follows:
Land and buildings
Within one year
Between two and five years
Capital commitments and contingent liabilities
At 31 December 2014 the Group had no capital commitments (2013: $nil).
The Group had no contingent liabilities at 31 December 2014 (2013: none).
24. Related parties and related party transactions
Identity of related parties
The Group has a related party relationship with its subsidiaries and with its Directors.
Transactions with subsidiaries
WANdisco plc recharges certain costs to its subsidiaries for provision of management services.
2014
$’000
290
477
767
2013
$’000
250
574
824
25. Post-balance sheet events
On 23 January 2015 the Group announced its intention to raise circa $25m (net of expenses) by a conditional non-preemptive placing of 4,798,859 new ordinary
shares of 10 pence each in the capital of the Company at a price of 375.00 pence per share. The condition was, inter alia, the passing of certain resolutions
by the shareholders of the Company.
On 17 February 2015, at a general meeting of the Company, the shareholders approved the disapplication of pre-emption rights and the allotment of the placing shares.
On 18 February 2015 the placing shares were admitted, dealing commenced and, as a result, $26.1m cash (net of expenses) was raised.
WANdisco plc
Annual report and accounts 2014
57
Financial statements Five year record
31 December
Bookings
Bookings growth
Revenue
Revenue growth
Deferred revenue
Deferred revenue growth
Net cash
Operating loss
Development costs and software amortised
Depreciation
Acquisition-related items
Exceptional items
EBITDA before exceptional costs
Add back equity-settled share-based payment charge
Adjusted EBITDA before exceptional items
Development expenditure capitalised
Adjusted EBITDA before exceptional items including development expenditure
2010
$’000
3,080
33%
2,984
21%
3,726
8%
2011
$’000
4,618
50%
3,878
30%
4,466
20%
2012
$’000
7,916
71%
6,031
56%
6,368
43%
2013
$’000
14,768
87%
8,012
33%
13,124
106%
2014
$’000
17,360
18%
11,218
40%
19,269
47%
(554)
74
14,545
25,673
2,481
(1,860)
(1,154)
597
49
—
204
(1,010)
182
(828)
(1,103)
(1,931)
980
46
—
205
77
73
150
(1,207)
(1,057)
(8,541)
2,018
52
—
2,656
(19,268)
(39,917)
4,918
138
—
2,276
8,283
267
145
1,441
(3,815)
(11,936)
(29,781)
813
4,104
11,907
(3,002)
(2,912)
(7,832)
(7,443)
(17,874)
(9,040)
(5,914)
(15,275)
(26,914)
58
WANdisco plc
Annual report and accounts 2014
Notice of Annual General Meeting
Notice is given that the third Annual General Meeting of WANdisco plc (“the Company”) will be held at the Company’s offices, Electric Works, 3 Concourse Way,
Sheffield Digital Campus, Sheffield S1 2BJ on 2 June 2015 at 10am for the following purposes:
To consider and, if thought fit, to pass the following resolutions as ordinary resolutions:
1. That the Company’s financial statements for the year ended 31 December 2014 and the reports of the Directors and auditors thereon be received and considered.
2. That David Richards, who retires by rotation as a Director of the Company, be re-appointed as a Director of the Company.
3. That Paul Walker, who retires by rotation as a Director of the Company, be re-appointed as a Director of the Company.
4. That KPMG LLP be re-appointed as auditor of the Company.
5. That the Directors be authorised to determine the remuneration of the auditor.
6. That in substitution for all existing authorities but without prejudice to any allotment, offer or agreement already made pursuant thereto, the Directors be and are
hereby generally and unconditionally authorised pursuant to Article 2.3 of the Company’s Articles of Association (“Articles”) to exercise all powers of the Company
to allot, grant options over or otherwise dispose of relevant securities (as that term is defined in the Articles) in respect of up to an aggregate nominal amount of
£974,661, provided that (unless previously revoked, varied or renewed) this authority shall expire on the earlier of the date which is 15 months after the date the
resolution was passed and the conclusion of the next Annual General Meeting of the Company, save that the Company may before such expiry make an offer
or agreement which would or might require relevant securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of
such an offer or agreement as if the power had not expired.
To consider and, if thought fit, to pass the following resolutions as special resolutions:
7.
That, subject to the passing of resolution 6 and pursuant to Article 2.10 of the Articles, the Directors be and are hereby generally empowered to allot, grant options
over or otherwise dispose of equity securities (within the meaning of the Articles) wholly for cash, pursuant to the general authority described in resolution 6 above,
as if pre-emption rights did not apply to any such allotment, such power being limited to:
7.1
the allotment of equity securities in connection with a rights issue, open offer or pre-emptive offer to holders on the register of the ordinary shares in the capital
of the Company (“ordinary shares”) on a date fixed by the Directors where the equity securities respectively attributable to the interests of all those shareholders
are proportionate (as nearly as practicable) to their respective holdings on that date subject to any exclusions or other arrangements as the Directors may
consider necessary or expedient in relation to fractional entitlements, legal or practical problems under the law of any territory or the regulations or requirements
of any relevant regulatory authority or stock exchange in any territory; and
7.2
the allotment (other than pursuant to resolution 7.1 above) wholly for cash of ordinary shares up to an aggregate nominal amount of £292,398,
provided that (unless previously revoked, varied or renewed), such authorities shall expire on the earlier of the date which is 15 months after the date the resolution
was passed and the conclusion of the next Annual General Meeting of the Company, save that the Company may before such expiry make an offer or agreement
which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of such an offer or
agreement as if the power had not expired.
8.
That the Directors be and are hereby authorised pursuant to Article 13 of the Articles and Article 57 of the Companies (Jersey) Law 1991, as amended (“the Law”)
to make market purchases of ordinary shares, subject to the following conditions:
8.1
the maximum number of ordinary shares authorised to be purchased may not be more than 15% of the issued share capital of the Company as at the date
of this notice;
8.2
the minimum price (exclusive of expenses) which may be paid for an ordinary share is £0.001; and
WANdisco plc
Annual report and accounts 2014
59
Financial statements
Notice of Annual General Meeting continued
8.3
the maximum price (exclusive of expenses) which may be paid for an ordinary share shall not exceed:
8.3.1
an amount equal to 105% of the average middle market quotation for ordinary shares taken from the London Stock Exchange plc Daily Official List
for the five business days immediately preceding the date on which such shares are to be contracted to be purchased; and
8.3.2
the higher of the price of the last independent trade and the highest current independent bid on the London Stock Exchange plc Daily Official List at the time,
such authority to expire on the earlier of the date which is 15 months after the date the resolution was passed and the conclusion of the next Annual General Meeting
of the Company, unless such authority is varied, revoked or renewed prior to such date.
9. That the articles of association of the Company be amended as follows:
9.1
Article 1.2.4 be deleted and the following provisions of Article 1 renumbered accordingly;
9.2
any references to “Financial Services Authority” be deleted and replaced with “Financial Conduct Authority”;
9.3
any references to “Financial Services Authority Handbook” be deleted and replaced with “Financial Conduct Authority Handbook”;
9.4
any references to “Disclosure and Transparency Rules” be deleted and replaced with “Disclosure Rules and Transparency Rules”;
9.5 Article 2.18 be deleted;
9.6 Article 2.19 be deleted and the following provisions of Article 2 renumbered accordingly;
9.7
at the end of Article 25.4, there shall be added: “In calculating any period of 48 hours referred to above, the Board may specify that no account shall be taken
of any part of a day that is not a working day”;
9.8
the final sentence of Article 27.1 be deleted;
9.9
the final sentence of Article 29.1 be deleted;
9.10
Article 30.3 be deleted and replaced with the following: “The Board may, by power of attorney or otherwise, appoint any person to be the agent of the Company
for such purposes, with such powers, authorities and discretions (not exceeding those vested in the Board) and on such conditions as the Board determines,
including without limitation authority for the agent to delegate all or any of his powers, authorities and discretions, and may revoke or vary such delegation.”;
9.11 Article 33.2 be deleted and the following provisions of Article 33 renumbered accordingly;
9.12 Article 36.3 be deleted and the following provisions of Article 36 renumbered accordingly ;
9.13
Article 36.5 be deleted and replaced with the following: “Questions arising at a meeting shall be decided by a majority of votes. In the case of an equality of votes,
the Chairman shall have a second or casting vote.”;
9.14
the first sentence of Article 36.11 be amended by deleting the words “provided that” and all of the following words in that sentence; and
9.15 Article 36.13 be deleted,
and that any relevant cross references within the articles of association of the Company be renumbered or deleted accordingly.
10. That, pursuant to Article 58A(1)(b) of the Law and Article 13 of the Articles, an ordinary share purchased pursuant to resolution 8 above may be held by the Company
as treasury shares in accordance with Articles 58A and 58B of the Law.
By order of the Board
Louise Hall
Company Secretary
31 March 2015
Registered in Jersey under the Companies (Jersey) Law 1991 with company number 110497.
60
WANdisco plc
Annual report and accounts 2014
Registered office
47 Esplanade
St. Helier
Jersey
JE1 0BD
Notes
Entitlement to attend and vote
1.
In accordance with Article 40(1) of the Companies (Uncertificated Securities) (Jersey) Order 1999, the right to vote at the meeting is determined by reference to
the register of members. Only those shareholders registered in the register of members of the Company as at 10am on 31 May 2015 (or, if the meeting is adjourned,
48 hours before the time of the adjourned meeting) shall be entitled to attend and vote at the meeting in respect of the number of shares registered in their name
at that time. Changes in entries in the register of members after that time shall be disregarded in determining the rights of any person to attend or vote (and the
number of votes they may cast) at the meeting.
Proxies
2.
A shareholder is entitled to appoint another person as his or her proxy to exercise all or any of his or her rights to attend and to speak and vote at the meeting
and on a poll, vote instead of him or her. A proxy need not be a shareholder of the Company.
A shareholder may appoint more than one proxy in relation to the meeting, provided that each proxy is appointed to exercise the rights attached to a different
share or shares held by that shareholder. Failure to specify the number of shares each proxy appointment relates to or specifying a number which when taken
together with the numbers of shares set out in the other proxy appointments is in excess of the number of shares held by the shareholder may result in the
proxy appointment being invalid.
A special resolution means a resolution passed by a majority of three-quarters of the holders who (being entitled to do so) vote in person, or by proxy, at a general
meeting of the Company or at a separate meeting of a class of members of the Company.
3.
A proxy may only be appointed in accordance with the procedures set out in Note 4 and the notes to the proxy form.
The appointment of a proxy will not preclude a shareholder from attending and voting in person at the meeting.
CREST members who wish to appoint a proxy or proxies or to give an instruction to a proxy (whether previously appointed or otherwise) by utilising the capital
and CREST electronic proxy appointment service may do so in relation to the meeting, and any adjournment(s) thereof, by utilising the procedures described in the
CREST Manual. In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message must be transmitted via the CREST system
so as to be received by Neville Registrars Limited (whose CREST ID is 7RA11) by the latest time for receipt of proxy appointments specified above. For this purpose,
the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the Company’s
agent is able to retrieve the message by enquiry to CREST in the manner prescribed. The Company may treat as invalid a CREST Proxy Instruction in the
circumstances set out in the Companies (Uncertificated Securities) (Jersey) Order 1999.
A proxy does not need to be a member of the Company but must attend the Annual General Meeting to represent you. Details of how to appoint the Chairman
of the Annual General Meeting or another person as your proxy using the proxy form are set out in the notes to the proxy form. You may appoint more than
one proxy to attend on the same occasion.
4.
A form of proxy is enclosed. When appointing more than one proxy, complete a separate proxy form in relation to each appointment. Additional proxy forms
may be obtained by the proxy form being photocopied. State clearly on each proxy form the number of shares in relation to which the proxy is appointed.
A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If no voting indication
is given in the proxy form, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit
in relation to any other matter which is put before the AGM.
WANdisco plc
Annual report and accounts 2014
61
Financial statements
Notice of Annual General Meeting continued
Notes continued
Proxies continued
In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will
be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company’s register of members in respect of the joint
holding (the first-named being the most senior).
To be valid, a proxy form must be received by post or (during normal business hours only) by hand at the offices of the Company’s registrar, Neville Registrars Limited,
18 Laurel Lane, Halesowen, West Midlands B63 3DA, no later than 10am on 31 May 2015 (or, if the meeting is adjourned, no later than 48 hours (excluding any part
of a day that is not a working day) before the time of any adjourned meeting).
To change your proxy instructions simply submit a new proxy appointment using the methods set out above. Any amended proxy appointment received after
the time specified above will be disregarded.
Where you have appointed a proxy using the hard-copy proxy form and would like to change the instructions using another hard-copy proxy form, please contact
Neville Registrars Limited.
If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take precedence.
In order to revoke a proxy instruction you will need to inform the Company by sending a signed hard-copy notice clearly stating your intention to revoke your proxy
appointment to Neville Registrars Limited. In the case of a member which is a company, the revocation notice must be executed under its common seal or signed
on its behalf by a duly authorised officer of the company or an attorney for the company. Any power of attorney or any other authority under which the revocation
notice is signed (or a notarially certified copy of such power or authority) must be included with the revocation notice. The revocation notice must be received by
Neville Registrars Limited prior to the commencement of the Annual General Meeting or adjourned meeting at which the vote is given or, in the case of a poll taken
otherwise than on the same day as the meeting or adjourned meeting, before the time appointed for taking the poll.
If you attempt to revoke your proxy appointment but the revocation is received after the time specified then your proxy appointment will remain valid.
Corporate representatives
5.
A shareholder which is a corporation may authorise one or more persons to act as its representative(s) at the meeting. Each such representative may exercise
(on behalf of the corporation) the same powers as the corporation could exercise if it were an individual shareholder, provided that (where there is more than
one representative and the vote is otherwise than on a show of hands) they do not do so in relation to the same shares. A director, the secretary or other person
authorised for the purpose by the secretary may require all or any such persons to produce a copy of the resolution of authorisation certified by an officer of the
corporation before permitting him to exercise his powers.
Method of voting
6.
Voting on all resolutions will be decided on a show of hands unless, before or on declaration of the result of, a vote on the show of hands, or on the withdrawal
of any other demand for a poll, a poll is duly demanded.
Documents available for inspection
7.
The following documents will be available for inspection during normal business hours at the registered office of the Company and at the Company’s business address,
Electric Works, Sheffield Digital Campus, Sheffield S1 2BJ, from the date of this notice until the time of the meeting. They will also be available for inspection at the
place of the meeting from at least 15 minutes before the meeting until it ends:
7.1
copies of the service contracts of the Executive Directors; and
7.2
copies of the letters of appointment of the Non-executive Directors.
Biographical details of Directors
8.
Biographical details of all those Directors who are offering themselves for appointment or reappointment at the meeting are set out on page 20 of the enclosed
annual report and accounts.
62
WANdisco plc
Annual report and accounts 2014
Secretary and advisers
Secretary
Louise Hall
Offices
UK office
Electric Works
Sheffield Digital Campus
Sheffield S1 2BJ
US office
5000 Executive Parkway
Suite 270
San Ramon, CA 94583
USA
Registered office
47 Esplanade
St. Helier
Jersey JE1 0BD
Nominated adviser and joint broker
Investec Bank plc
2 Gresham Street
London EC2V 7QP
Joint broker
UBS Investment Bank
1 Finsbury Avenue
London EC2M 2PP
Auditor
KPMG LLP
1 The Embankment
Neville Street
Leeds LS1 4DW
Legal advisers
DLA Piper UK LLP
1 St. Paul’s Place
Sheffield S1 2JX
Carey Olsen
47 Esplanade
St. Helier
Jersey JE1 0BD
Bankers
HSBC Bank plc
Yorkshire and North East Corporate Banking Centre
4th Floor
City Point
29 King Street
Leeds LS1 2HL
Barclays Bank plc
St. Paul’s Place
121 Norfolk Street
Sheffield S1 2JW
Registrars
Neville Registrars Limited
18 Laurel Lane
Halesowen
West Midlands B63 3DA
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Annual report and accounts 2014
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WANdisco plc
Electric Works
Sheffield Digital Campus
Sheffield S1 2BJ
UK
www.wandisco.com