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Endava Announces Fourth Quarter FY18 and Full Year FY18 Financial Results

October 11, 2018 7:00 AM

Q4 FY2018

42.8% Year over Year Growth in Revenue to £61.5 million

44.2% Constant Currency Revenue Growth1

IFRS Diluted EPS £0.10 representing an 11% YoY increase

Adjusted diluted EPS2 £0.15 representing a 36.4% YoY growth

FY2018

36.5% Year over Year Growth in Revenue to £217.6 million

37.2% Constant Currency Revenue Growth

IFRS Diluted EPS £0.38 representing an 11.8% YoY increase

Adjusted diluted EPS £0.53 representing a 32.5% YoY growth

LONDON--(BUSINESS WIRE)-- Endava (NYSE: DAVA), a global provider of digital transformation, agile development and intelligent automation services, today announced results for its fourth quarter ended June 30, 2018 and for its fiscal year 2018.

“We are pleased with our fourth quarter results which reflected strength with existing customers as well as new. The integration of Velocity Partners in North America is proceeding smoothly,” said John Cotterell, Endava’s CEO.

“Our strong client relationships contributed significantly to our constant currency revenue growth of 44.2% for the quarter and give us good visibility into the next quarter. We delivered that growth profitably, with PBT at £6.7m or 10.9% PBT margin and Adjusted PBT3 at £9.7m, or 15.7% Adjusted PBT margin,” said Mark Thurston Endava’s CFO.

1 Revenue growth rate at constant currency is calculated by translating revenue from entities reporting in foreign currencies into British Pounds using the comparable foreign currency exchange rates from the prior period.
2 Adjusted diluted EPS is our profit after taxes adjusted to exclude the impact of share-based compensation expense, amortization of acquired intangible assets, realized and unrealized foreign currency exchange gains and losses and initial public offering expenses incurred (all of which are non-cash other than realized foreign currency exchange gains and losses and initial public offering expenses) and the tax impact of these adjustments, divided by weighted average number of shares outstanding – diluted.
3 Adjusted PBT, is defined as our profit before taxes adjusted to exclude the impact of share-based compensation expense, amortization of acquired intangible assets, realized and unrealized foreign currency exchange gains and losses and initial public offering expenses incurred (all of which are non-cash other than realized foreign currency exchange gains and losses and initial public offering expenses).

FOURTH QUARTER OF FISCAL 2018 FINANCIAL HIGHLIGHTS:

FISCAL YEAR 2018 FINANCIAL HIGHLIGHTS:

CASH FLOW:

As of June 30, 2018, Endava had cash and cash equivalents of £15.0 million, compared to £23.6 million at the end of June 30, 2017. Net borrowings at June 30, 2018 were £4.7 million compared to £5.8 million at June 30, 2017. On completion of the IPO Endava received £40.2m net proceeds which has been partially used to repay all amounts outstanding on our bank facility.

OTHER METRICS FOR THE QUARTER ENDED JUNE 30, 2018:

4 Free cash flow is the Company’s net cash from (used in) operating activities, plus grants received, less purchases and non-current tangible and intangible assets.

OTHER METRICS FOR THE FISCAL YEAR ENDED JUNE 30, 2018:

FOURTH QUARTER 2018 BUSINESS HIGHLIGHTS:

Endava opened a new Delivery Unit in Timisoara, Romania in May of this year. Timisoara is one of the four major university towns in Romania and the only one where Endava did not yet have a presence.

OUTLOOK:

Given the timing of the reporting for the quarter, the company is unable to provide outlook guidance for the first quarter of fiscal 2019 and for the fiscal year ended June 30, 2019. However, the company plans to provide guidance for both the second quarter of fiscal 2019 and for the fiscal year ended June 30, 2019 when it reports its first quarter of fiscal 2019 results.

CONFERENCE CALL DETAILS:

The company will host a conference call at 8:00 am EST today to review the fourth quarter and the fiscal year 2018 results. To participate in Endava’s fourth quarter and fiscal year 2018 earnings conference call, please dial in at least five minutes prior to the scheduled start time (866) 393-4306 or (734) 385-2616 for international participants, Conference ID 8178518.

Investors may listen to the call on Endava’s Investor Relations website at http://investors.Endava.com. The webcast will be recorded and available for replay until Friday October 26, 2018.

ABOUT ENDAVA PLC:

Endava is a leading next-generation technology services provider and helps accelerate disruption by delivering rapid evolution to enterprises. Using Distributed Enterprise Agile at scale, Endava collaborates with its clients, seamlessly integrating with their teams, catalysing ideation and delivering robust solutions. Endava helps its clients become digital experience-driven businesses by assisting them in their journey from idea generation to development and deployment of products, platforms and solutions. It services clients in the following industries: Payments, Financial Services, TMT, Consumer Products, Logistics and Healthcare. Endava had 4,819 employees as of June 30, 2018 located in offices in North America and Western Europe and delivery centres in Romania, Moldova, Bulgaria, Serbia, Macedonia, Argentina, Uruguay, Venezuela, and Colombia.

NON-IFRS FINANCIAL INFORMATION:

To supplement Endava’s Group Statement of Comprehensive Income and Group Balance Sheet presented in accordance with IFRS, the company uses non-IFRS measures of certain components of financial performance. These measures include: revenue in constant currency, adjusted profit before tax, adjusted profit attributable to shareholders and free cash flow, Revenue growth rate at constant currency is calculated by translating revenue from entities reporting in foreign currencies into British Pounds using the comparable foreign currency exchange rates from the prior period. For example, the average rates in effect for the fiscal year ended June�30, 2017 were used to convert revenue for the fiscal year ended June 30, 2018 and the revenue for the comparable prior period.

Free cash flow is the Company’s net cash from (used in) operating activities, plus grants received, less purchases of non-current tangible and intangible assets and plus initial public offering expenses paid. Adjusted profit before tax is the company’s profit before taxes adjusted to exclude the impact of share-based compensation expense, amortization of acquired intangible assets, realized and unrealized foreign currency exchange gains and losses and initial public offering expenses incurred

In order for Endava’s investors to be better able to compare its current results with those of previous periods, the company has shown a reconciliation of IFRS to non-IFRS financial measures. Management believes these measures help illustrate underlying trends in the company's business and uses the measures to establish budgets and operational goals, communicated internally and externally, for managing the company's business and evaluating its performance. Endava believes the presentation of its non-IFRS financial measures enhances an investor’s overall understanding of the company’s historical financial performance. The presentation of the company’s non-IFRS financial measures is not meant to be considered in isolation or as a substitute for the company’s financial results prepared in accordance with IFRS, and its non-IFRS measures may be different from non-IFRS measures used by other companies.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

� � � � � � � �

TWELVE MONTHS ENDED
JUNE 30

� � �

THREE MONTHS ENDED
JUNE 30

2018

£’000

� � � 2017

£’000

� � � 2018

£’000

� � 2017

£’000

REVENUE � � � 217,613 � � � 159,368 � � � 61,473 � � 43,046
Cost of sales � � � (145,443) � � � (108,760) � � � (40,058) � � (29,125)
Direct cost of sales � � � (132,775) � � � (98,853) � � � (36,671) � � (26,161)
Allocated cost of sales � � � (12,668) � � � (9,907) � � � (3,387) � � (2,964)
GROSS PROFIT � � � 72,170 � � � 50,608 � � � 21,415 � � 13,921
Selling, general and administrative expenses � � � (46,737) � � � (27,551) � � � (14,982) � � (7,558)
OPERATING PROFIT � � � 25,433 � � � 23,057 � � � 6,433 � � 6,363
Net Finance (expense) / income � � � (783) � � � (1,357) � � � 247 � � (842)
PROFIT BEFORE TAX � � � 24,650 � � � 21,700 � � � 6,680 � � 5,521
Tax on profit on ordinary activities � � � (5,675) � � � (4,868) � � � (1,782) � � (1,239)
PROFIT FOR THE PERIOD AND PROFIT ATTRIBUTABLE TO OWNERS OF THE PARENT 18,975 � � � 16,832 � � � 4,898 � � 4,282

EARNINGS PER SHARE:

� � � � � � � � � � � � � � �
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING � � � 45,100,165 � � � 45,258,750 � � � 45,100,165 � � 45,133,500
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED � � � 50,426,216 � � � 49,292,520 � � � 51,266,396 � � 49,175,768
BASIC EPS � � � 0.42 � � � 0.37 � � � 0.11 � � 0.09
DILUTED EPS � � � 0.38 � � � 0.34 � � � 0.10 � � 0.09
�

CONSOLIDATED BALANCE SHEET

� � � � � � � �
JUNE 30, 2018

£’000

� � � JUNE 30, 2017

£’000

ASSETS – NON CURRENT � � � � � � � �
Goodwill � � � 41,062 � � � 16,198
Intangible assets � � � 30,787 � � � 16,029
Property, plant and equipment � � � 8,584 � � � 7,486
Deferred tax asset � � � 2,488 � � � 867
Other assets -Non-current financial assets � � � - � � � 14
TOTAL � � � 82,921 � � � 40,594
ASSETS - CURRENT � � � � � � � �
Inventories � � � 16 � � � 62
Trade and other receivables � � � 52,352 � � � 41,494
Corporation tax receivable � � � 677 � � � 661
Cash and cash equivalents � � � 15,048 � � � 23,571
TOTAL 68,093 � � � 65,788
TOTAL ASSETS 151,014 106,382
LIABILITIES - CURRENT � � � � � � � �
Borrowings � � � 19,744 � � � 29,402
Trade and other payables � � � 40,243 � � � 24,358
Corporation tax payable � � � 1,488 � � � 1,000
Contingent consideration � � � 5,259 � � � -
Deferred consideration � � � 4,401 � � � -
TOTAL 71,135 54,760
LIABILITIES - NON-CURRENT � � � � � � � �
Borrowings � � � 20 � � � 63
Contingent consideration � � � 7,251 � � � -
Deferred tax liability � � � 2,832 � � � 2,586
Other liabilities � � � 277 � � � 253
TOTAL � � � 10,380 � � � 2,902
�

CONSOLIDATED BALANCE SHEET (CONTINUED)

� � � � � � � �
JUNE 30, 2018

£’000

� � � JUNE 30, 2017

£’000

EQUITY � � � � � � � �
Share capital � � � 996 � � � 996
Share premium � � � 2,678 � � � 2,678
Merger relief reserve � � � 4,430 � � � 4,430

Retained earnings

� � � 59,260 � � � 38,072
Other reserves � � � 4,410 � � � 4,819
Investment in own shares � � � (2,275) � � � (2,275)
TOTAL 69,499 � � � 48,720
TOTAL LIABILITIES AND EQUITY 151,014 106,382
�

CONSOLIDATED CASH FLOW STATEMENT

� � � � � � � �

Twelve Months Ended
June 30

� � �

Three Months Ended
June 30

2018 � � � 2017 � � � 2018 � � � 2017
£’000 � � � £’000 � � � £’000 � � � £’000
Operating activities
Profit for the year � � � 18,975 � � � 16,832 � � � 4,898 � � � 4,282
Income tax charge � � � 5,675 � � � 4,868 � � � 1,782 � � � 1,239
Adjustments � � � 6,249 � � � 3,519 � � � 1,796 � � � 1,171
Tax paid � � � (5,608) � � � (5,471) � � � (1,920) � � � (1,650)
UK research & development credit received � � � 1,854 � � � - � � � - � � � -
Net changes in working capital � � � 6,839 � � � (5,008) � � � 7,054 � � � 5,910
Net cash from operating activities 33,984 14,740 13,610 10,952
�
Investing activities � � � � � � � � � � � � � � � �
Purchase of non-current assets (tangibles and intangibles) � � � (5,483) � � � (6,372) � � � (1,803) � � � (2,954)
Proceeds / (Loss) from disposal of non-current assets � � � 79 � � � (106) � � � 77 � � � (106)
Acquisition of business / subsidiaries, consideration in cash � � � (28,765) � � � (13,807) � � � (1,089) � � � (810)
Cash and cash equivalents acquired with subsidiaries � � � 2,342 � � � 768 � � � 89 � � � -
Interest received � � � 35 � � � 18 � � � 5 � � � 4
Net cash used in investing activities (31,792) (19,499) (2,721) (3,866)
�
Financing activities � � � � � � � � � � � � � � � �
Proceeds from borrowings � � � 26,462 � � � 17,007 � � � 3,483 � � � 10
Repayment of borrowings � � � (36,768) � � � (3,462) � � � (8,674) � � � (104)
Grant received � � � 147 � � � 2,924 � � � - � � � 2,924
Interest paid � � � (573) � � � (391) � � � (160) � � � (93)
Dividends paid � � � - � � � - � � � - � � � -
Purchase of own shares � � � - � � � (1,240) � � � - � � � (176)
Net cash from/(used in)

financing activities

(10,732) 14,838 (5,351) 2,561
�
Net change in cash and cash equivalents (8,540) 10,079 5,538 9,647
Cash and cash equivalents at the beginning of the year � � � 23,571 � � � 12,947 � � � 9,462 � � � 14,023
Exchange differences on cash and cash equivalents � � � 17 � � � 545 � � � 48 � � � (99)
Cash and cash equivalents at the end of the year 15,048 � � � 23,571 � � � 15,048 � � � 23,571
�

ENDAVA PLC RECONCILIATION OF ADJUSTED FINANCIAL MEASURES TO COMPARABLE IFRS FINANCIAL MEASURES
(GBP IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

RECONCILIATION OF REVENUE GROWTH AT CONSTANT CURRENCY TO REVENUE GROWTH AS REPORTED UNDER IFRS:

� � �

TWELVE MONTHS ENDED
JUNE 30

� � �

THREE MONTHS ENDED
JUNE 30

2018 2017 � � � 2018 2017
£’000 £’000 � � � £’000 £’000
REVENUE GROWTH AS REPORTED � � � 36.5% 38.1% � � � 42.8% 34.5%
Foreign exchange rates impact � � � 0.7% (9.6%) � � � 1.4% (6.6%)

REVENUE GROWTH AT CONSTANT CURRENCY 1

� � � 37.2% 28.5% � � � 44.2% 27.9%
� � �

1 Revenue growth rate at constant currency is calculated by translating revenue from entities reporting in foreign currencies into British Pounds using the comparable foreign currency exchange rates from the prior period.

RECONCILIATION OF ADJUSTED FINANCIAL MEASURES TO COMPARABLE IFRS FINANCIAL MEASURES

RECONCILIATION OF ADJUSTED PROFIT AFTER TAX

� � � � � � � �

TWELVE MONTHS ENDED
JUNE 30

� � �

THREE MONTHS ENDED
JUNE 30

2018

�

2017

�

� � �

2018

�

2017

�

£’000

£’000

� � �

£’000

£’000

PROFIT BEFORE TAX � � � 24,650 21,700 � � � 6,680 5,521
Adjustments: � � � � � � � � � �
Share-based compensation expense � � � 1,505 854 � � � 479 178
Amortisation of acquired intangible assets � � � 2,653 1,715 � � � 849 459
Foreign currency exchange (gains) losses, net � � � 17 967 � � � (528) 755
Initial public offering expenses incurred � � � 4,643 - � � � 2,171 -
Total adjustments � � � 8,818 3,537 � � � 2,971 1,392
ADJUSTED PROFIT BEFORE TAX � � � 33,468 25,236 � � � 9,651 6,913

�

� � � � � � � � � �
PROFIT AFTER TAX � � � 18,975 16,832 � � � 4,898 4,282
Adjustments: � � � � � � � � � �
Adjustments to PBT � � � 8,818 3,537 � � � 2,971 1,392
Tax impact of adjustments � � � (976) (586) � � � (231) (221)

ADJUSTED PROFIT AFTER TAX 2

� � � 26,817 19,783 � � � 7,638 5,453
DILUTED EPS (£) � � � 0.38 0.34 � � � 0.10 0.09
ADJUSTED DILUTED EPS (£) � � � 0.53 0.40 � � � 0.15 0.11
�

2 Adjusted PAT is our profit after taxes adjusted to exclude the impact of share-based compensation expense, amortization of acquired intangible assets, realized and unrealized foreign currency exchange gains and losses and initial public offering expenses incurred (all of which are non-cash other than realized foreign currency exchange gains and losses and initial public offering expenses) and the tax impact of these adjustments.

SHARE BASED COMPENSATION EXPENSE

� � � � � � � �

TWELVE MONTHS ENDED
JUNE 30

� � �

THREE MONTHS ENDED
JUNE 30

2018 � � � 2017 � � � 2018 � � � 2017
£’000 � � � £’000 � � � £’000 � � � £’000
� � � � � � � � � � � � � � � � �
Direct cost of sales � � � 1,006 � � � 560 � � � 320 � � � 112
Selling, general and administrative expenses � � � 499 � � � 294 � � � 159 � � � 66
Total � � � 1,505 � � � 854 � � � 479 � � � 178
�

RECONCILIATION OF ADJUSTED FINANCIAL MEASURES TO COMPARABLE IFRS FINANCIAL MEASURES

RECONCILIATION OF NET CASH FROM OPERATING ACTIVITIES TO FREE CASH FLOW

� � � � � �

TWELVE MONTHS ENDED
JUNE 30

� � �

THREE MONTHS ENDED
JUNE 30

2018

� � �

2017

2018

� � �

2017

£’000

� � �

£’000

� � �

£’000

� � �

£’000

NET CASH PROVIDED FROM OPERATING ACTIVITIES 33,984 14,740 13,610 10,952
Adjustments: � � � � � � � � � � � � � � � �
Grant received � � � 147 � � � 2,924 � � � - � � � 2,924
Purchases of non-current assets (tangible and intangible) � � � (5,404) � � � (6,478) � � � (1,726) � � � (3,060)
FREE CASH FLOW � � � 28,727 � � � 11,186 � � � 11,884 � � � 10,816
�

ENDAVA PLC SUPPLEMENTARY INFORMATION (UNAUDITED)

� � � � � � � �

TWELVE MONTHS ENDED
JUNE 30

� � �

THREE MONTHS ENDED
JUNE 30

2018 � � � 2017 � � � 2018 � � � 2017
TOTAL CLOSING NUMBER OF EMPLOYEES 4,819 � � � 3,744 � � � 4,819 � � � 3,744
AVERAGE OPERATIONAL EMPLOYEES 3,957 � � � 3,181 � � � 4,340 � � � 3,380
TOP 10 CUSTOMERS % 42% � � � 49% � � � 39% � � � 47%
NUMBER OF CLIENTS WITH > £1M OF REVENUE

(ROLLING 12 MONTHS)

46 � � � 34 � � � 46 � � � 34
�

GEOGRAPHIC SPLIT OF REVENUE %

� � � � � � � � � � � � � � � �
North America � � � 21% � � � 16% � � � 26% � � � 15%
Europe � � � 34% � � � 34% � � � 31% � � � 34%
UK � � � 45% � � � 50% � � � 43% � � � 51%
100% 100% 100% 100%
�
INDUSTRY VERTICAL SPLIT OF REVENUE % � � � � � � � � � � � � � � � �
Payments and Financial Services � � � 57% � � � 57% � � � 53% � � � 60%
TMT � � � 28% � � � 31% � � � 28% � � � 28%
Other � � � 15% � � � 12% � � � 19% � � � 12%
100% 100% 100% 100%
�

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME – TRANSLATED INTO $

� � �

TWELVE MONTHS ENDED
JUNE 30

� � �

THREE MONTHS ENDED
JUNE 30

2018

� � �

2017

2018

� � �

2017

$’0003

� � �

$’0004

� � �

$’0005

� � �

$’0006

REVENUE � � � 293,255 � � � 202,158 � � � 83,708 � � � 55,021
Cost of sales � � � (195,999) � � � (137,962) � � � (54,547) � � � (37,228)
Direct cost of sales � � � (178,928) � � � (125,395) � � � (49,935) � � � (33,439)
Allocated cost of sales � � � (17,071) � � � (12,567) � � � (4,612) � � � (3,789)
GROSS PROFIT � � � 97,256 � � � 64,196 � � � 29,161 � � � 17,794
Selling, general and administrative expenses � � � (62,983) � � � (34,948) � � � (20,401) � � � (9,661)
OPERATING PROFIT � � � 34,274 � � � 29,248 � � � 8,760 � � � 8,133
Net Finance (expense) / income � � � (1,055) � � � (1,721) � � � 336 � � � (1,076)
PROFIT BEFORE TAX � � � 33,218 � � � 27,526 � � � 9,096 � � � 7,057
Tax on profit on ordinary activities � � � (7,648) � � � (6,175) � � � (2,427) � � � (1,584)
PROFIT FOR THE PERIOD AND PROFIT ATTRIBUTABLE TO OWNERS OF THE PARENT 25,571 21,351 6,670 5,473
�
EARNINGS PER SHARE: � � � � � � � � � � � � � � � �
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING � � � 45,100,165 � � � 45,258,750 � � � 45,100,165 � � � 45,133,500
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED � � � 50,426,216 � � � 49,292,520 � � � 51,266,396 � � � 49,175,768
BASIC EPS � � � 0.57 � � � 0.47 � � � 0.15 � � � 0.12
DILUTED EPS � � � 0.51 � � � 0.43 � � � 0.14 � � � 0.12

3 Translated solely for convenience into dollars at the rate of £1.00=$1.3476
4 Translated solely for convenience into dollars at the rate of £1.00=$1.2685.
5 Translated solely for convenience into dollars at the rate of £1.00=$1.3617.
6 Translated solely for convenience into dollars at the rate of £1.00=$1.2782.

INVESTORS:

Endava Plc

Laurence Madsen, Investor Relations Manager

[email protected]

Source: Endava

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