Urbanise.com Annual Report 2019

Annual Report 2019 Urbanise.com Limited Directors’ Report Operating and financial review The commentary below should be read with the consolidated financial statements and related notes in this report. Some parts of this commentary may include information regarding the plans and strategy for the business and may include forward looking statements that involve risks and uncertainties. Actual results and the timing of certain events may differ materially from future results expressed or implied in the forward-looking statements contained in the commentary. References to FY19 are to the year ended 30 June 2019. Some non-AASB measures have been included, as we believe they provide useful information to assist in understanding the Groups’ financial performance. Non-AASB financial measures should not be viewed in isolation nor considered as substitutes for measures reported in accordance with AASB. Non-AASB financial information, while not subject to audit, has been extracted from the financial report, which has been audited by our external auditors. The Group continued investment in staff and operational infrastructure in existing geographies to position for significant growth with large client opportunities, and to build scale. In addition, the Group continued its investment into product development, processes and systems to support customers in each geography. The strategy continued to be successful in the Australasian, Middle Eastern and South African markets where investment was made in the improvement and localisation of Urbanise’s platforms to continue support for client contracts. The Group maintained its existing footprint in Australasia, South Africa and the Middle East. The offshore software development team in Bulgaria was maintained while expanding the development capability in South Africa. Global Headcount remained at around 65 throughout the financial year. Financial performance During the 2019 financial year (FY19), Urbanise continued to deliver strong sales revenue growth of 48%, while demonstrating operational discipline in expense management. Sales revenue Total sales revenue growth was up by 48%, primarily driven by growth in Licence fees and activation revenue (up $2.2 million – 57%) and Professional services revenue (up $0.6 million – 50%). This was offset by a reduction in hardware sales of $0.2million following the disposal of the Devices business in FY18. Loss before tax Reported expenses reduced by 63% and, excluding the impact of impairment in FY18 ($15.2million), expenses decreased by 31%. The reported loss before tax decreased from $27.6 million to $4.8 million (83% improvement). The significant improvement of the reported net loss after tax was due to several factors including: –– the significant increase in sales revenue; –– no impairment cost in FY19; and –– discipline in containing cost. Cashflow The net cash outflow from operating activities, capitalisation of development cost and spend on PPE reduced by 64% during FY19 to $3.3m (2018: $9.2m). Capital and financial structure On 12 October 2018 Urbanise completed a fully underwritten rights issue of 151,666,175 shares at an issue price of 2.7 cents per share, raising funds of $4,084,282 before expenses. The rights issue closed with 66,363,106 shares issued to existing shareholders and 85,303,069 to the underwriters, KTM Capital Limited. At 30 June 2019 Urbanise had a net cash position of $3.7 million with no external debt or borrowings. 18