1	Accounting policies

Basis of preparation

The principal accounting policies adopted in the preparation of the consolidated financial statements are set out below.  The policies have been consistently applied to all the years presented, unless otherwise stated.

These interim financial statements are for the six months ended 30 April 2020.  They have been prepared on a going concern basis and in accordance with IAS 34, Interim Financial Reporting as adopted in the European Union.  They do not include all of the information required for full annual financial statements, and should be read in conjunction with Blue Prism Group Plc's audited financial statements for the year ended 31 October 2019.

The financial information for the year ended 31 October 2019 set out in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 October 2019 have been filed with the Registrar of Companies and can be found on the Group's website.  The auditor's report on those financial statements was unqualified and did not contain statements under Section 498(2) or Section 498(3) of the Companies Act 2006.

The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates.  It also requires Group management to exercise judgment in applying the Group's accounting policies.  The areas where significant judgements and estimates have been made in preparing the financial statements and their effect are disclosed in note 2.

          All figures presented are rounded to the nearest £m to 1 decimal place, unless stated otherwise.

Going concern

The Directors have a reasonable expectation that there are no material uncertainties that cast significant doubt about the Groups's ability to continue in operation and meet its liabilities as they fall due for the foreseeable future, being a period of at least 12 months from the date of approval of the interim financial statements. The Directors recognise that the COVID-19 pandemic does create risks and uncertainties. The Group raised gross proceeds of £100.0m via an equity issue in April 2020 to provide significant headroom in the event of prolonged disruptions relating to the COVID-19 pandemic.

The Directors consider the strong statement of financial position, with good cash reserves and working capital, provide ample liquidity. Accordingly, the Group has prepared the interim report on a going concern basis.  

 

New or amended accounting standards

The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 October 2019 as described in the annual financial statements with the exception of the adoption of IFRS 16 'Leases', the impact of which has been detailed below.

a)   New standards, interpretations and amendments effective from 1 November 2019

IFRS 16 Leases

IFRS 16 Leases has replaced IAS 17 Leases for the year commencing 1 November 2019.

The new standard will impact the accounting for leases in which the Group is the lessee. The Group previously accounted for these leases as operating leases, with rentals payable charged to the income statement on a straight-line basis as an operating expense. Under the new standard, the Group recognises additional lease assets and lease liabilities on the statement of financial position to account for the right to use the leased items and the obligation to make future lease payments. The costs of the leases are recognised in the income statement split between depreciation of the lease asset and a finance charge on the lease liability.

The Group elects to apply the exemptions available for short-term leases with a lease term of 12 months or less and leases of low value. The Group has adopted the modified retrospective method with no restatement of prior period numbers and a right of use asset equal to the lease liability plus or minus any prepayment or accrual will be recognised. As a practical expedient the recognition exemption for leases with a remaining term of less than 12 months from the adoption date was applied upon adoption.

	Statutory as reported under IFRS 16	Impact of IFRS 16	Statutory under IAS 17
	£'m	£'m	£'m
Operating expenses	(101.1)	0.1	(101.2)
Operating loss	(41.4)	0.1	(41.5)
Finance cost	(0.1)	(0.1)	-
Loss before income tax	(41.4)	-	(41.4)

 

 

	On transition to IFRS 16 at 1 November 2019	During the period ended 30 April 2020	Total impact
	£'m	£'m	£'m
Non-current assets
Property, plant and equipment	5.8	(1.1)	4.7
Total non-current assets	5.8	(1.1)	4.7
Current liabilities
Trade and other payables	(1.8)	-	(1.8)
Total current liabilities	(1.8)	-	(1.8)
Non-current liabilities
Other payables	(4.2)	1.1	(3.1)
Total non-current liabilities	(4.2)	1.1	(3.1)
Net assets	(0.2)	0.0	(0.2)
Total equity	0.2	0.0	0.2

 

b)   New standards, interpretations and amendments not yet effective

A number of new standards, amendments and interpretations are effective for periods beginning on or after 1 November 2020 and have not yet been applied in preparing these financial statements.

·      Amendments to References to Conceptual Framework in IFRS Standards

·      Definition of Material (Amendments to IAS 1 and IAS 8)

·      Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7)

The directors do not believe they will have a material impact on the Group.

Basis of consolidation

The consolidated financial statements present the results of the company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.  The financial statements of the Group have been prepared on a going concern basis and in accordance with International Financial Reporting Standards ('IFRS') and their interpretations which have been issued by the International Accounting Standards Board ('IASB'), as adopted by the European Union. They have also been prepared with those parts of the 2006 Companies Act applicable to companies reporting under IFRS.

Revenue recognition

Licence and support revenue

Software licence revenue represents fees earned from the licence of our software to customers.  Licences of our product are delivered by providing our customers with a licence key that enables them to access the software.

The performance obligations inherent in a licence sale include the delivery of a licence key in addition to maintenance, standard support, and upgrades over the licence term. A portion of revenue from licences is recognised at the point in time that the licence key is delivered. The remaining revenue is recognised on a straight line over the licence term as the other performance obligations are satisfied.

Software support revenue represents fees earned from providing customers with support services at standard and premium rates, which includes unspecified future software updates and upgrades. Upgrades are released at multiple points throughout the year as available.  These benefits are received and consumed over the contract term.  Revenues from upgrade and support services are recognised on a straight line over the contract term.

Revenue in respect of the licence performance obligation is recognised for the full contract term at contract inception.  Revenue for upgrades and support and maintenance are recognised on a straight line basis over the contract term.

Revenue from SaaS cloud offerings where the Group's performance obligation is the grant of a right to continuously access a cloud offering for a certain term is recognised based on time elapsed and thus rateably over the term. 

Professional services and training

Professional services and training revenue are typically recognised over time.  Where the Group stands ready to provide the service (such as access to learning content), revenue is recognised based on time elapsed and thus rateably over the service period.  Consumption-based services, for example separately identifiable professional services, are recognised over time as the services are utilised, typically following the percentage-of-completion method or rateably. 

Sponsorship and other revenue

Revenue is recognised from Blue Prism World events. This mainly relates to sponsorship revenue received from various partners and external organisations participating in the events.  Revenue is recognised at the time of the event taking place.

Cost of sales

Cost of sales includes the amortisation of research and development costs in respect of product upgrades and the amortisation of cost to obtain contract asset costs in respect of sales commission paid to sales personnel.  Costs which are incremental to sales and IFRS 15 performance obligations are included in cost of sales. It also includes direct costs associated with the provision of cloud services.

Costs of obtaining customer contracts

The Group incurs certain costs to obtain customer contracts in the form of commissions paid to sales employees. The commission costs of obtaining any contract with a customer are recognised as an asset on the statement of financial position. They are then subsequently amortised over the period during which the related revenue is recognised, with the cost reflected in cost of sales.  Other directly attributable costs are expensed as incurred.

Billing arrangements

The Group bills licence and support annually in advance.  Professional services, training, sponsorship and other revenue is billed in line with contractual arrangements.  In the event that the Group invoiced in advance for the full contract term and if this were greater than one year, consideration would be given as to whether there was a financing component of the given contract.

Foreign currency

The consolidated financial statements are presented in sterling, which is the functional currency of the Group and the presentation currency for the consolidated financial statements.

Foreign currency transactions are recorded at the rates of exchange prevailing on the dates of the transactions. Foreign currency monetary items are translated at the rates prevailing at the end of the reporting period. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlements of monetary items and on the retranslation of monetary items are included in profit or loss for the period.

The assets and liabilities of the Group's subsidiaries outside the UK are translated into sterling using period-end exchange rates. Income and expense items are translated at the average exchange rates for the period. Where differences arise between these rates, they are recognised in other comprehensive income and the foreign exchange reserve.

Trade receivables

Trade receivables are amounts due from customers for services provided in the ordinary course of business. These are stated net of any provision for impairment. Impairment provisions are recognised when there is objective evidence that the Blue Prism Group will be unable to collect all of the amounts due. The amount of such a provision is the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. Refer to Impairment of finance assets for further detail.

Cash and cash equivalents

Cash and cash equivalents includes cash and deposits with banks, and other short term highly liquid investments with original maturities of three months or less.

Cash and cash equivalents are held for the purpose of meeting short term cash commitments rather than for investment or other purposes.  For an investment to qualify as a cash equivalent, it must be readily convertible to a known amount of cash and be subject to an insignificant risk of changes in value.

Short term investments

Short term investments on deposit with longer term maturities are classified as short term investments and are readily available if the interest earnt is waived.
 

 Financial assets

The Group classifies its financial assets in the following categories:

(i)            Fair value through profit and loss (FVTPL),

(ii)           Financial assets at amortised cost and

(iii)          Fair value through other comprehensive income (FVTOCI).

 

The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. At each statement of financial position date included in the financial information, the Group held only items classified as financial assets at amortised cost.

The Group's financial assets measured at amortised cost comprise trade and other receivables, cash and cash equivalents, and short term investments in the consolidated statement of financial position.

Impairment of financial assets

Impairment provisions for trade receivables are recognised based on the simplified approach within IFRS 9 using the lifetime expected credit losses (ECLs). During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised within net impairment losses on financial assets in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision. In addition to the ECL method, a specific provision is recognised for trade receivables that are considered doubtful after a detailed review of the ledger.

The expected loss rates are based on the Group's historical credit losses experienced over the last period prior to the period end.  The historical loss rates are then adjusted for current and forward-looking information on macroeconomic factors affecting the Group's customers. 

Impairment provisions for other receivables are recognised based on the general impairment model within IFRS 9.  Under the General approach, at each reporting date, the Group determines whether there has been a significant increase in credit risk since initial recognition and whether the receivable is credit impaired. This determines whether the receivable is in Stage 1, Stage 2 or Stage 3, which in turn determines the amount of ECL to be recognised i.e. 12-month ECL or Lifetime ECL.

Financial liabilities

Financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument.

All financial liabilities are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method other than those categorised as fair value through income statement.

Share capital and share premium

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Where equity settled share options or awards are awarded to employees, the fair value of the options at the date of grant is charged to the consolidated statement of comprehensive income over the vesting period.  Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest.  Non-vesting conditions and market vesting conditions are factored into the fair value of the options granted.  As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied.  The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied.

Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the consolidated statement of comprehensive income over the remaining vesting period.

Where equity instruments are granted to persons other than employees, the consolidated statement of comprehensive income is charged with the fair value of goods and services received.

Where employers' social security is liable on the exercise of a share option or award, an estimate of the amount due is accrued over the expected exercise period. The accrual is then reviewed and amended at each subsequent statement of financial position date under IFRS 2.

Defined contribution pension schemes

Contributions to defined contribution pension schemes are charged to the consolidated statement of comprehensive income in the year to which they relate.

Leased assets

Where the Group identifies a contract containing a lease, being 'right to use an asset (the underlying asset) for a period of time in exchange for consideration', it recognises a right-of-use-asset and a lease liability on the statement of financial position. 

At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or an estimate of the Group's incremental borrowing rate.

The right-of-use asset is initially measured at the same value as the lease liability. The Group depreciates the right-of-use asset on a straight-line basis from the lease commencement date to the end of the lease term.

Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification. When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset.

The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term. On the statement of financial position, right-of-use assets have been included in property, plant and equipment and lease liabilities have been included in trade and other payables.

Deferred taxation

Deferred tax is recognised in respect of relevant temporary differences that have originated but not reversed at the Statement of financial position 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. The deferred tax assets and liabilities are not discounted.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if any. The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. 

Depreciation is calculated under the straight-line method to write off the depreciable amount of the assets over their estimated useful lives. The principal annual rates used for this purpose are:-

-     Computer equipment - straight line over 3 years

-     Fixtures and fittings - straight line over 5 years

-     Leasehold improvements - straight line over 5 years

 

Research and development expenditure

Research expenditure is recognised as an expense when it is incurred.

 

Criteria for recognition of software development costs

Internally-generated RPA development costs qualify for capitalisation when Blue Prism can demonstrate all the following:

·      The technical feasibility of completing the intangible asset so that it will be available for use or sale;

·      Its intention to complete the intangible asset and use or sell it;

·      Its ability to use or sell the intangible asset;

·      How the intangible asset will generate probable future economic benefits;

·      The existence of a market or, if it is to be used internally, the usefulness of the intangible asset;

·     The availability of adequate technical, financial and other resources to complete the development and to use or sell the   intangible asset;

·      Its ability to measure reliably the expenditure attributable to the intangible asset during development.

 

Generally, commercial viability of new RPA innovations and product enhancements is not proven until development issues have been resolved through testing pre-launch versions. Blue Prism assesses the eligibility of development costs for capitalisation on a project-by-project basis.

Development costs which are incurred after the release of internally-generated RPA or costs which are incurred in order to enhance existing RPA products are expensed in the period in which they are incurred and included within research and development expense in the consolidated statement of profit or loss and other comprehensive income.

Where indications of impairment of intangible assets are identified by management, an impairment review is undertaken.

Amortisation of intangible assets

 

Amortisation is charged to the income statement on a straight-line basis over the estimated useful life of internally generated RPA. The Group currently has intangible assets with finite lives excluding goodwill.

 

The estimated useful life of intangible assets are:-

 

-     18 months to 2 years for internally generated RPA development assets

-     5 years for technology assets acquired in the business combination with Thoughtonomy

-     10 years for customer relationships acquired in the business combination with Thoughtonomy

 

Business combinations

 

When the Group completes a business combination, the consideration transferred for the acquisition and the identifiable assets and liabilities acquired are recognised at their fair values.  The amount by which the consideration exceeds the net assets acquired is recognised as goodwill.  The application of accounting policies to business combinations involves the use of estimates.

 

During the prior year, the Group acquired Thoughtonomy Ltd and its subsidiary, Thoughtonomy Inc. 

 

Estimates were required in the measurement of the deferred consideration payable as part of the acquisition.

 

Where intangible assets have been separately identified and valued as part of the acquisition, these have been distinguished on the Statement of financial position and amortised over their estimated useful life.

 

Goodwill and intangible impairment

 

Goodwill is the excess of consideration over the net assets at acquisition.  It is tested for impairment annually.

 

Intangible assets with finite useful lives will be assessed for indicators of impairment and where identified a detailed impairment assessment will be carried out.

 

Research and development taxation credits

 

Tax credits for research and development activities relate to government tax incentives in certain operating territories.  The tax credits are recognised within other operating income when the tax credits are received by the Group.

 

 

2	Key accounting estimates and judgements

 

The Group makes certain estimates and judgements regarding the future which are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.  In the future, actual experience may differ from these estimates and judgements.  The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

 

          Revenue recognition

 

Under IFRS 15, management identified three performance obligations including the software licence, upgrades and support. Upgrades are deemed a separate performance obligation as they are not considered to be transformative and the software licence has stand alone value.

In the absence of directly observable and stand-alone selling prices for each of the performance obligations, estimates must be made. Management's judgement is that due to the nature of the product and the relationship between Blue Prism and its customers the upgrade performance obligation accounts for a significant portion of the allocations of the stand-alone selling price. The allocation between the performance obligations is estimated by looking at margins on each individual obligation and where possible compared against comparable businesses. These are then adjusted where appropriate to better reflect the situational aspects of Blue Prism, where it is as a business in its lifecycle, and to take into account specifics of the business as a whole.

          Cost to obtain contract assets

 

Cost to obtain contract assets primarily consists of sales commissions earned by the Group's sales personnel.

The capitalised assets are amortised on a straight line basis over the period during which the related revenue is recognised.

The amortisation periods depend on the period of the contract but are typically three years.  Amortisation of the cost to obtain contract assets is reported within cost of sales.

          Research and development

 

Under IAS 38, Research and development costs, internally generated technology should be capitalised if the capitalisation criteria are met. Estimates are made with regard to assessing the expected future economic benefits, the economic useful life and the level of completion of the asset. Under IAS 38, at the point where activities no longer relate to development but to maintenance, capitalisation is to be discontinued.

The key judgements here are defining the cut-off point between when research ends and development starts, and reliably measuring the expenditure attributable to the asset. An assessment is made when looking at the costs incurred and criteria for development costs, including the commercial and technical viability of the costs being assured. The main costs attributed to research and development costs is that of payroll, with research and development team tasked with other aspects of quality assurance, customer support, project management, along with other tasks. 

Goodwill and intangible asset impairment testing

A key judgement is the ongoing appropriateness of the cash-generating units ("CGUs") for the purpose of impairment testing. The carrying value of intangibles is reviewed for impairment whenever events indicate that the carrying value may not be recoverable.

Goodwill of £39.9m is recognised in the Group's consolidated statement of financial position at 31 October 2019 in respect of Thoughtonomy.  In addition to goodwill, other intangible assets of £21.9m are recognised within the Thoughtonomy CGU at 31 October 2019. The main intangible assets recognised as a result of the Thoughtonomy acquisition are technology assets and customer relationships.  Amortisation is charged to the income statement on a straight-line basis over their estimated useful lives.

The recoverable amount of the Thoughtonomy CGU is determined as the higher of its fair value less costs of disposal and its value in use.  In determining value in use, consideration needs to be given to future cash flows discounted to their present value. 

The acquisition is within the hindsight period and so any changes to the purchase price accounting will be recorded in the financial statements for the year ending 31 October 2020. At 30 April 2020, management has reviewed both the cash flows prepared at the time of acquisition, the budget for the year ending 31 October 2020 and the performance against budget to the 30 April 2020.  As part of the acquisition accounting a purchase price allocation exercise had been undertaken and the forecasts and judgements included as part of this exercise remain unchanged.  There have been no changes to any of the key assumptions on which management has based its determination of the valuation of Thoughtonomy assets and liabilities. As at 30 April 2020 there have been no adjustments identified that would result in a change to the basis of valuation.

 

Adoption of IFRS 16 Leases

 

Operating lease contracts were recognised in the Statement of financial position by recognising right-of-use assets and corresponding lease liabilities at the transition date. In general, a corresponding right of-use asset was recognised for an amount equal to each lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to the specific lease contract, as recognised in the Statement of financial position.

 

At the transition date, the remaining lease payments were discounted, as required under the transition approach chosen, using the incremental borrowing rate as per the transition date of 1 November 2019. To determine the incremental borrowing rate a number of external and internal sources were considered and a suitable rate was determined. A practical expedient  was applied to use the same incremental borrowing rate across the portfolio of leases due to the similar characteristics shared by most. The majority of leases relate to commercial office premises.

 

 

 

3	Financial instruments - Risk management

 

In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments.  This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them.  Further quantitative information in respect of these risks is presented throughout these financial statements.

There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.

Capital risk management

The Group manages its capital to ensure that all Group entities will be able to continue on a going concern basis while maximising its long term return to shareholders. The capital structure of the Group consists of Company equity only, comprising issued capital, share premium, reserves and retained earnings. The Group is not exposed to any externally imposed capital requirements and has no borrowings.

Financial instruments by category

Financial assets

	30 April 2020	30 April 2019	31 October 2019
	£'m	£'m	£'m
Trade receivables	42.5	20.4	34.7
Other debtors	1.4	1.6	3.1
Cash and cash equivalents	90.8	129.4	45.5
Short term investments	50.0	-	28.6
	______	______	______
Total financial assets	184.7	151.4	111.9
	______	______	______

Financial liabilities

	30 April 2020	30 April 2019	31 October 2019
	£'m	£'m	£'m
Trade and other payables	5.8	5.7	9.9
Accruals and other payables	27.7	17.5	28.3
Lease liabilities	5.0	-	-
Deferred consideration	4.4	-	4.3
	______	______	______
Total financial liabilities	42.9	23.2	42.5
	______	______	______

 

General objectives, policies and processes

The Board has overall responsibility for the determination of the Group's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group's finance function. 

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility.  Further details regarding these policies are set out below:

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group is mainly exposed to credit risk from credit sales.  It is Group policy to assess the credit risk of new customers before entering contracts.

The Board has established a credit policy under which each new customer is analysed individually for creditworthiness before the Group's standard payment and delivery terms and conditions are offered. The Group's review includes external ratings, when available.

Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with minimum rating "A" are accepted.

Further disclosures regarding trade and other receivables, which are neither past due nor impaired, are provided in note 10.

 

Cash at bank and short-term deposits

The Group's cash is held on deposit with the Group's principal bankers.  

Foreign exchange risk

Foreign exchange risk arises when individual Group entities enter into transactions denominated in a currency other than their functional currency.  The Group's policy is, where possible, to allow group entities to settle liabilities denominated in their functional currency, with the cash generated from their own operations in that currency.  Where group entities have liabilities denominated in a currency other than their functional currency (and have insufficient reserves of that currency to settle them), cash already denominated in that currency will, where possible, be transferred from elsewhere within the Group.

During the year the Group's potential exposure to currency risk has increased due to the increased level of business in the US. The Group is predominantly exposed to currency risk on the balances held in working capital within the Group and the exposure is concentrated therefore in the movement of the US dollar against Sterling. The effect of a strengthening and weakening of 10% of the US dollar against Sterling at the reporting date on the working capital balances held at this date, on the basis that all other variables remained constant, would have resulted in the following pre-tax profit or (loss) impact for the year as follows:

 

	10% strengthening	10% weakening
	£'m	£'m
US dollar to sterling	1.2	(1.2)

Liquidity risk

Liquidity risk arises from the Group's management of working capital.  It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.

The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due.  To achieve this aim, it seeks to maintain cash balances (or agreed facilities) to meet expected requirements for a period of at least 90 days.  

The maximum exposure to liquidity risk is the trade payables and sales introduction commissions accrued at the period end, these are all current and expected to be settled within 90 days of the period end.

The Board receives rolling 12-month cash flow projections on a monthly basis as well as information regarding cash balances.  At the period end, these projections indicated that the Group expected to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances for at least 12 months from the date of signing these financial statements.

 

 

4	Segmental Analysis

The Group has one operating segment being the licensing of Robotic Process Automation (RPA) software used to automate routine, rules-based back office processes.

The Group operates across three regions: EMEA, The Americas and APAC. The chief operating decision maker, the Board of Directors only monitors revenue on this basis. Business performance is otherwise monitored by reference to total results against budget. Revenue for each of the geographical areas is as follows:

		6 months ending 30  April 2020	6 months ending 30 April 2019	12 months ending 31 October 2019
		£'m	£'m	£'m
	Revenue from EMEA Operations	33.4	18.8	47.5
	Revenue from The Americas Operations	26.5	16.2	40.9
	Revenue from APAC Operations	8.6	5.4	12.6
		_______	_______	_______
	Total	68.5	40.4	101.0
		_______	_______	_______

 

	Revenues from significant regions within the group:
		6 months ending 30  April 2020	6 months ending 30 April 2019	12 months ending 31 October 2019
		£'m	£'m	£'m
	UK	17.2	9.7	23.5
	US	21.0	12.9	32.8
	Europe	14.3	8.1	21.8
	Canada	4.5	2.5	6.2
	APAC	4.9	3.1	7.3
	ANZ	3.6	2.3	5.3
	Rest of the world	3.0	1.8	4.1
		_______	_______	_______
	Total	68.5	40.4	101.0
		_______	_______	_______

 

The Group derives revenue from three sources, over time and at a point in time, in the following major categories:

		6 months ending 30  April 2020	6 months ending 30  April 2020	6 months ending 30 April 2019	6 months ending 30 April 2019	12 months ending 31 October 2019	12 months ending 31 October 2019
		£'m	£'m	£'m	£'m	£'m	£'m
	Timing of revenue recognition	Over time	At a point in time	Over time	At a point in time	Over time	At a point in time
	Licence and support	63.0	3.8	35.5	3.8	92.4	4.2
	Professional services and training	1.7	-	1.1	-	2.6	-
	Sponsorship and other revenue	-	-	-	-	-	1.8
		_______	_______	_______	_______	_______	_______
	Total	64.7	3.8	36.6	3.8	95.0	6.0
		_______	_______	_______	_______	_______	_______

 

Assets, liabilities and sources of revenue are not analysed by geography as the business performance measure utilised by the chief operating decision maker, the Board of Directors, is the total business as disclosed  result. These results are shown within the primary statements.

There are no customers who generate 10% or more of the Group's revenues.

 

 

5	Cost of sales
		6 months ending 30  April 2020	6 months ending 30 April 2019	12 months ending 31 October 2019
		£'m	£'m	£'m
	Amortisation of cost to obtain contract assets	6.0	3.3	7.6
	Amortisation of development asset	1.4	0.1	0.9
	Direct cloud costs	1.0	-	-
		_______	_______	_______
	Total cost of sales	8.4	3.4	8.5
		_______	_______	_______

 

Amortisation of cost to obtain contract assets and of development assets totalling £3.4m has been re-presented from operating expenses to cost of sales in the comparative information for the six months ended 30 April 2019.

 

 

      

6	Staff costs
		6 months ending 30  April 2020	6 months ending 30 April 2019	12 months ending 31 October 2019
		£'m	£'m	£'m
	Staff costs (including directors emoluments) expensed in the period comprise:
	Wages and salaries	56.4	38.8	80.9
	Social security contributions and similar taxes	5.8	4.5	8.8
	Share-based payment expense	7.0	3.3	7.2
	Pension costs	1.7	0.8	2.1
	Other staff costs	2.4	6.2	8.2
		_______	_______	_______
	Total staff costs	73.3	53.6	107.2
		_______	_______	_______

 

Staff costs include sales introduction commissions in the amount of £4.1m (2019: £3.8m) relating to guaranteed and non-capitalisable sales commission.  A further £5.0m (2019: £3.3m) of sales commission has been capitalised as a cost to obtain contract asset and is amortised over the life of the contract as disclosed in Note 11.

Staff costs relating to intangible asset development of £0.9m (2019: £0.1m) have also been capitalised as disclosed in Note 8.

Average monthly number of employees (including Directors) during the period:

		6 months ending 30  April 2020	6 months ending 30 April 2019	12 months ending 31 October 2019
		Number	Number	Number
	Directors*	6	6	6
	Staff
	Administration	98	65	89
	Sales and marketing	541	415	488
	Technical services	360	125	151
		_______	_______	_______
		1,005	611	734
		_______	_______	_______

                                                                                                                                                    

*Directors denotes the average number of Blue Prism Group plc Directors including 3 non- executive directors.

 

 

7     Basic and diluted loss per share

                                                                                                                                                    

		6 months ending 30  April 2020	6 months ending 30 April 2019	12 months ending 31 October 2019
	Numerator	£'m	£'m	£'m
	Loss for the period and earnings used in basic EPS	(41.7)	(35.0)	(78.2)
	Denominator	'000	'000	'000
	Weighted average number of shares used in basic EPS	82,747	71,834	74,499
		_______	_______	_______
	Basic and diluted weighted losses per share (pence)	(50.39)	(48.72)	(104.96)
		_______	_______	_______

 

 

 

 

8	Intangible assets
		Goodwill  £'m	Customer relationships  £'m	Technology £'m	Development asset £'m	Total £'m
	Cost
	At 1 November 2018	-	-	-	0.3	0.3
	Additions	-	-	-	4.6	4.6
	Acquired in business combinations	39.9	12.6	10.2	-	62.7
	At 31 October 2019	39.9	12.6	10.2	4.9	67.6
	At 1 November 2019	39.9	12.6	10.2	4.9	67.6
	Additions	-	-	-	0.9	0.9
	At 30 April 2020	39.9	12.6	10.2	5.8	68.5
	Accumulated amortisation and impairment					£'m
	At 1 November 2018	-	-	-	0.1	0.1
	Amortisation	-	0.3	0.6	0.9	1.8
	At 31 October 2019	-	0.3	0.6	1.0	1.9
	At 1 November 2019	-	0.3	0.6	1.0	1.9
	Amortisation	-	0.6	1.0	1.4	3.0
	At 30 April 2020	-	0.9	1.6	2.4	4.9
	Net book value
	At 31 October 2018	-	-	-	0.2	0.2
	At 31 October 2019	39.9	12.3	9.6	3.9	65.7
	At 30 April 2020	39.9	11.7	8.6	3.4	63.6

 

On 17 July 2019, the Group acquired 100% of the share capital of the Thoughtonomy group. 

Goodwill arose on the acquisition of the Thoughtonomy group during the previous financial year.

The technology relates to the work performed by the Thoughtonomy group to date, to develop the platform used to deploy the products and services offered by the group.

The customer relationships arose on the long term contracts subscribed directly by customers or by third parties.

Any changes to the purchase price accounting will be reflected in the hindsight period and recorded in the financial statements for the year ending 31 October 2020.

Amortisation of £1.4m (2019: £0.1m) is included in cost of sales and £1.6m (2019: £nil) is included in operating expenses.
 

 

 

9	Property, plant and equipment
		Computer	Leasehold	Fixtures and	Right of use
		equipment	improvements	fittings	assets	Total
		£'m	£'m	£'m	£'m	£'m
	Cost
	At 1 November 2018	1.1	0.1	0.1	-	1.3
	Additions	0.8	0.1	0.4	-	1.3
	Acquired in business combinations	0.1	-	-	-	0.1
	Disposals	(0.5)	-	-	-	(0.5)
		_______	_______	_______	_______	_______
	At 31 October 2019	1.5	0.2	0.5	-	2.2
		_______	______	_______	_______	_______
	At 1 November 2019	1.5	0.2	0.5	-	2.2
	Adjustment on transition to IFRS 16	-	-	-	5.8	5.8
	Additions	0.2	0.1	-	-	0.3
	Disposals	-	-	-	-	-
		_______	_______	_______	_______	_______
	At 30 April 2020	1.7	0.3	0.5	5.8	8.3
		_______	_______	_______	_______	_______
	Accumulated depreciation and impairment	£'m	£'m	£'m	£'m	£'m
	At 1 November 2018	0.4	-	-	-	0.4
	Depreciation	0.4	-	0.1	-	0.5
	Disposals	(0.3)	-	-	-	(0.3)
		_______	_______	_______	_______	_______
	At 31 October 2019	0.5	-	0.1	-	0.6
		_______	_______	_______	_______	_______
	At 1 November 2019	0.5	-	0.1	-	0.6
	Depreciation	0.3	0.1	0.1	1.1	1.6
	Disposals	-	-	-	-	-
		_______	_______	_______	_______	_______
	At 30 April 2020	0.8	0.1	0.2	1.1	2.2
		_______	_______	_______	_______	_______
	Net book value
	At 31 October 2018	0.7	0.1	0.1	-	0.9
	At 31 October 2019	1.0	0.2	0.4	-	1.6
	At 30 April 2020	0.9	0.2	0.3	4.7	6.1
		_______	_______	_______	_______	_______

 

 

 

 

10	Trade and other receivables
		30 April 2020	30 April 2019	31 October 2019
		£'m	£'m	£'m
	Trade receivables	43.5	20.6	35.4
	Less: provision for impairment of trade receivables	(1.0)	(0.2)	(0.7)
		_______	_______	_______
	Trade receivables - net	42.5	20.4	34.7
	Prepayments	4.0	5.9	6.5
	Accrued revenue	0.7	0.2	0.6
	Other taxes	0.2	-	0.5
	Accrued interest	0.1	-	0.2
	Other receivables	1.2	1.6	1.8
		_______	_______	_______
	Total trade and other receivables	48.7	28.1	44.3
		_______	_______	_______

 

As at 30 April 2020 trade receivables of £18.9m were past due but not impaired. They relate to customers with no default history. An impairment charge of £0.4m (6 months ending 30 April 2019: £0.1m) was recognised in the period relating to aged receivables. 

The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables and cost to obtain contract assets. To measure expected credit losses on a collective basis, trade receivables and cost to obtain contract assets are grouped based on similar credit risk and aging. The Group has not applied the expected credit loss matrix against cost to obtain contract assets as there is no credit loss associated with the balance.  The Group applies the general impairment model within IFRS 9 to other receivables.  Due to the nature of assets within this balance, no expected credit loss has been recognised.

The expected loss rates are based on the Group's historical credit losses experienced over the last financial year prior to the year end.

	<30 Days	31-60 Days	61-90 Days	>90 Days	Total
Gross trade receivables (£'m)	23.6	7.1	2.4	10.4	43.5
Less: Specifically impaired receivables	-	-	-	(0.9)	(0.9)
	_______	_______	_______	_______	_______
Net trade receivables (£'m)	23.6	7.1	2.4	9.5	42.6
Expected credit loss rate	0.08%	0.19%	0.23%	0.25%
	_______	_______	_______	_______	_______
Expected credit loss (£'m)	-	-	-	(0.1)	(0.1)
	_______	_______	_______	_______	_______
Net carrying amount (£'m)	23.6	7.1	2.4	9.4	42.5
	_______	_______	_______	_______	_______

 

	Provision for impairment of trade receivables
		£'m
	At 31 October 2018	0.1
	Increase during the period	0.1
	Receivable written off during the period	-
		_______
	At 30 April 2019	0.2
		_______
	Increase during the period	0.6
	Receivable written off during the period	(0.1)
		_______
	At 31 October 2019	0.7
		_______
	Increase during the period	0.4
	Receivable written off during the period	(0.1)
		_______
	At 30 April 2020	1.0
		_______

 

 

 

11	Cost to obtain contract assets and deferred revenue
	Cost to obtain contract assets	£'m
	Initial recognition of cost to obtain contract assets on adoption of IFRS 15	12.2
	Costs to obtain contracts with customers during the period	10.3
	Amortisation of cost to obtain contract assets in line with contract performance	(3.3)
		_______
	At 30 April 2019	19.2
		_______
	Costs to obtain contracts with customers during the period	13.3
	Amortisation of cost to obtain contract assets in line with contract performance	(4.3)
		_______
	At 31 October 2019	28.2
		_______
	Costs to obtain contracts with customers during the period	5.0
	Amortisation of cost to obtain contract assets in line with contract performance	(6.0)
	Foreign exchange movement	0.5
		_______
	At 30 April 2020	27.7
		_______

Cost to obtain contract assets consist of commission payable to sales employees and are amortised over the period of the customer contract to which they relate.

		30 April 2020	30 April 2019	31 October 2019
		£'m	£'m	£'m
	Current cost to obtain contract assets	11.9	7.4	12.2
	Non-current cost to obtain contract assets	15.8	11.8	16.0
		_______	_______	_______
		27.7	19.2	28.2
		_______	_______	_______

 

Deferred revenue represents amounts invoiced in advance in line with contractual arrangements.  This will be amortised in future periods in line with fulfilment of the respective performance obligations.  The Group expects to recognise most of the deferred revenue balance within one year of the statement of financial position date with a small amount being recognised as greater than one year. 

The Group has un-invoiced amounts relating to the remaining term of customer contracts which are not included in the deferred revenue balance greater than one year.  There are support and upgrade performance obligations attached to the remaining term of customer contracts not yet invoiced.

		30 April 2020	30 April 2019	31 October 2019
		£'m	£'m	£'m
	Current deferred revenue	73.9	53.7	67.3
	Non-current deferred revenue	9.5	6.0	5.9
		_______	_______	_______
		83.4	59.7	73.2
		_______	_______	_______

 

 

 

12	Trade and other payables
		30 April 2020	30 April 2019	31 October 2019
		£'m	£'m	£'m
	Trade payables	5.8	5.7	9.9
	Other payables	6.9	1.5	4.7
	Lease liabilities	5.0	-	-
	Accruals	25.4	17.5	27.3
		_______	_______	_______
	Total trade and other payables	43.1	24.7	41.9
	Less non-current portion:
	Lease liabilities	(3.1)	-	-
		_______	_______	_______
	Total trade and other payables - current	40.0	24.7	41.9
		_______	_______	_______

 

 

 

13	Deferred consideration
		30 April 2020	30 April 2019	31 October 2019
		£'m	£'m	£'m
	Deferred consideration - cash	4.4	-	4.3
		_______	_______	_______
	Total deferred consideration	4.4	-	4.3
		_______	_______	_______

 

Deferred consideration is measured at a fixed price at the time of acquisition. The deferred consideration arrangements require the Group to pay £4.5m of cash in 2021. There are no performance obligations to be met.  This has been discounted to present value, and finance costs of £0.1m recognised in the period.

 

 

 

	14 Share Capital
			30 April 2020	30 April 2019	31 October 2019
	Allotted and fully paid up		£'m	£'m	£'m
	Ordinary share capital		0.9	0.7	0.8
	Deferred shares		1.1	1.1	1.1
			_________	_________	_________
	Total		2.0	1.8	1.9
			_________	_________	_________

 

		Issued and fully paid
				Share capital	Share  premium
			Number	£'m	£'m
	Total ordinary shares at 31 October 2018		67,047,399	0.6	50.2
			_________	_________	_________
	Share options exercised in the year		1,756,512	-	2.6
	Shares issued under the company Share Investment Plan		18,281	-	-
	Shares issued under the company Employee Stock Purchase Plan		27,758	-	0.4
	Shares issued under the company Employee Benefit Trust		1,979,335	0.1	-
	Shares issued to acquire subsidiary Thoughtonomy		1,096,011	-	-
	Shares placed in the year		9,090,910	0.1	99.9
	Cost of share placing		-	-	(2.8)
			_________	_________	_________
	Total ordinary shares at 31 October 2019		81,016,206	0.8	150.3
			_________	_________	_________
	Share options exercised in the period		1,444,320	-	2.8
	Shares issued under the Company Share Investment Plan		42,027	-	-
	Shares issued under the company Employee Stock Purchase Plan		34,436	-	0.3
	Shares issued under the company Employee Benefit Trust		859,776	-	-
	Shares placed in the period		9,090,910	0.1	99.9
	Cost of share placing		-	-	(2.9)
			_________	_________	_________
	Total ordinary shares at 30 April 2020		92,487,675	0.9	250.4
			_________	_________	_________

 

Total share based payment charges for options and awards recognised in the period are comprised of:

			6 months ending 30  April 2020	6 months ending 30 April 2019	12 months ending 31 October 2019
			£'m	£'m	£'m
	Share based payments		6.0	3.0	7.6
	Social security on share based payments		1.0	0.3	(0.4)
			_________	_________	_________
	Total		7.0	3.3	7.2
			_________	_________	_________

 

 

 

15	Notes supporting statement of cash flows

 

  Cash and cash equivalents for purposes of the statement of cash flows comprises:

		30 April 2020	30 April 2019	31 October 2019
		£'m	£'m	£'m
	Cash at bank available on demand	39.1	78.8	28.5
	Short-term deposits - maturing within 3 months from the date deposited	51.7	50.6	17.0
		_______	_______	_______
		90.8	129.4	45.5
		_______	_______	_______

          Short term investments are readily convertible to cash:

		30 April 2020	30 April 2019	31 October 2019
		£'m	£'m	£'m
	Short term deposits - maturing within 12 months from the date deposited	50.0	-	28.6
		_______	_______	_______
		50.0	-	28.6
		_______	_______	_______

 

 

 

16

Reserves

 

The following describes the nature and purpose of each reserve within equity:

 

	Reserves	Description and purpose
	Share premium	Amount subscribed for share capital in excess of nominal value.
	Shares to be issued	Deferred consideration in the form of shares as part of the acquisition of Thoughtonomy.
	Other reserves	Excess over nominal value of shares issued as part of the acquisition of Thoughtonomy
	Merger reserve	Amounts arising on share for share exchange.
	Accumulated losses	All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.
	Foreign exchange reserve	Gains or losses arising in retranslation of the net assets of the overseas operations into sterling.