Datalex Plc — Interim / Quarterly Report 2022

Sep 2, 2022

National Storage Mechanism | Additional information RNS Number : 0260Y Datalex PLC 02 September 2022 Datalex plc H1 2022 Interim Financial Report Continued progress and ready for the next phase of growth Dublin, Ireland - 2 September 2022: Datalex plc (the "Company" or the "Group") (Euronext Growth Dublin: DLE), a market leader in digital retail technology focused on the airline market, today announces its results for the six months ended 30 June 2022 ("H1 2022"). Significant developments �� In H1 2022, the Group's total revenues declined by 17% during the period (in comparison to H1 2021). This year-on-year variance is primarily attributable to a reduction in transaction volumes in China, where air travel remains heavily impacted by COVID-19, and a decrease in services projects during the period (in comparison to the same period in the prior year). �� The Group's commercial model delivers revenue and profit growth over the lifetime of a contract, following initial investment in the deployment of our product suite. That dynamic will be evident as we add new customers to the business. �� Cost of Sales has increased when compared to the same period in the prior year. However, when allowing for the impact of Covid-19 wages subsidies and a one-off supplier credit in the prior year, Cost of Sales has reduced year-on-year. Headcount costs, contractor costs, and other spending areas were carefully managed while key priorities were funded. �� Investment in product development has continued. A new product, Datalex Pricing AI, was launched to the market on 31 May 2022. This product is an entry into a new business segment for Datalex within airline retail and expands the Group's total addressable market. The product has been trialled with two airlines to date and we are confident that it will drive material benefits for the airline industry. �� The Virgin Australia implementation is progressing as expected and an NDC project has recommenced. �� Sales and marketing spend has increased in response to a strong rise in RFP and general sales activity. We exit the first half of 2022 with a robust pipeline of opportunities to progress over the coming months. Financial highlights �� Total revenue for the six-month period ending 30 June 2022 was $10.4 million, a 17% decline versus the same period in 2021 (H1 2021: $12.6 million). �� Platform revenue of $5.9 million declined by 21% in comparison to H1 2021 (H1 2021: $7.5 million). �� Total operating costs before exceptional items in the first half of 2022 increased by 13% to $13.8 million (H1 2021: $12.2 million). �� Adjusted EBITDA loss of $2.1 million in H2 2022, a decrease of $3.9 million versus the same period in 2021 (H1 2020: EBITDA $1.8 million). Customer acquisition An important strategic milestone announced on 1 September 2022 was the signing of easyJet as a new customer. It is significant that one of the world's leading low-cost airlines has chosen Datalex and its technology to enhance their retailing and digital experience. It is also significant for Datalex to win a major European low-cost carrier airline, as the low-cost carrier segment is the fastest growing segment within the airline market. This follows the addition of Virgin Australia, a key Asia Pacific carrier, to Datalex's customer base over the past nine months. Commenting on today's announcement, Sean Corkery, CEO of Datalex, said: "Despite the lower than expected activity levels in certain areas in H1 2022, I believe significant progress has been made in 2022 so far. In particular, the signing of easyJet as a new customer on 1 September is a significant milestone for the Group and a strong affirmation of the value that our products provide to airlines that want to accelerate their digital retail roadmap. In addition to the first eight months of 2022 being a period of strong sales activity, we have also continued progress across our product strategy. Looking forward, I expect that the positive momentum in sales activity experienced in the first eight months of 2022 will continue. However, as outlined in the guidance issued today, it will take time for this progress to be reflected in our financial performance. As I look beyond 2022, I am encouraged by the strong signs of industry recovery in H1 2022. We remain confident in the ability of our business to grow in the medium to long term." Trading update & outlook The first half of 2022 has seen strong increases in demand for travel across the world. However, airports and airlines have faced challenges due to the unprecedented scaling up of operations resulting in capacity constraints and intermittent flight cancellations. Datalex H1 2022 services activity levels were reduced as airlines focused on core operational priorities. Additionally, we have seen continued travel restrictions in some regions such as China, where they follow a zero-Covid policy, which affected Datalex transaction volumes. However, it is anticipated that there will be a continued recovery in H2 2022, and that the China market will experience a material recovery in the second half of the year versus H1 2022. Based on current assumptions, and absent any major dislocations in the macro-environment, the Company expects to report Revenue of $25 million to $27 million and Adjusted EBITDA of -$3 million to -$4.5 million for the 2022 full financial year (see notes below regarding basis of preparation). Currently the Group has drawn down ���2.5m of the ���10m available under the existing debt facility ("Facility B"). Any amounts drawn under this facility are required to be repaid by 30 June 2023. The latest Group's cash flow forecasts indicate that refinancing or alternative funding will be required to repay the loan facility as it falls due and to fund the working capital needs of the Group in 2023 and beyond. The Board will evaluate funding options available to the Group over the coming months, update shareholders as appropriate and seek necessary approval if required. H1 2022 results presentation Management will review the H1 2022 results on a conference call at 1pm Dublin time today. A copy of the presentation will be available on our website at investors.datalex.com and the call details are provided below: Join on your computer or mobile app Click here to join the meeting Meeting ID: 319 640 147 398 Passcode: UQnS7u Download Teams | Join on the web Or call in (audio only) +353 1 566 1167, 486196761# Ireland, Dublin Phone Conference ID: 486 196 761# Notes The financial information in this announcement is not audited and does not constitute statutory financial statements of Datalex plc. IFRS 15 recognition rules specify that timing of revenue recognition may be affected by factors outside our control, for example, including the credit rating of our customers. This may impact on the timing of recognition of forecast revenues and costs, as included in this guidance statement. Adjusted EBITDA (Note 4) is defined as earnings from operations before (i) interest income and interest expense, (ii) tax expense, (iii) depreciation and amortisation expense, (iv) share-based payments cost and (v) exceptional items (see Note 7). This announcement contains certain forward-looking statements. Actual results may differ materially from those projected or implied in such forward-looking statements. Such forward-looking information involves risks and uncertainties that could significantly affect expected results. Those forward-looking and other statements speak only as at the date of this announcement. Datalex undertakes no obligation to update any forward-looking statements. No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per share for the current or future financial years would necessarily match or exceed the historical published earnings per share. Statements contained in this announcement are based on the knowledge and information available to the Board at the date it was prepared and therefore facts stated, and views expressed may change after that date. Nothing in this announcement is intended to constitute an invitation or inducement to engage in investment activity. This announcement does not constitute or form part of any offer for sale or subscription of, or any solicitation of any offer to purchase or subscribe for, any securities nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract, commitment or investment decision in relation thereto. This announcement does not constitute a recommendation regarding any securities. Contact information Investor Enquiries Neil McLoughlin, Datalex plc +353 1 806 3500 neil.mcloughlin@datalex.com Media Enquiries Michael Moriarty, FleishmanHillard +353 87 243 2550 michael.moriarty@fleishmaneurope.com About Datalex Datalex's purpose is to transform airline retail. Datalex is a market leader in airline retail technology, offering unique products that enable airlines to drive revenue and profit as digital retailers. Datalex has a strong track record of delivering digital retail transformation for progressive airline brands worldwide. The Group is headquartered in Dublin, Ireland, and maintains offices across Europe, the USA, China and Australia. In 2022, Datalex was awarded the 'Great Place to Work��' and 'Best Workplaces in Tech���' certifications. Datalex plc is a publicly listed company, on Euronext Growth, Dublin. Learn more at www.datalex.com Datalex PLC Interim Financial Report For the six months ended 30 June 2022 Chief Executive Officer's Review H1 macro-economic conditions & impact on Datalex's H1 2022 performance 2022 began with an outspread of the Omicron COVID-19 variant, which had a large impact on air travel as further travel restrictions were imposed in many regions. However, once restrictions were lifted, demand for air travel was strong with most markets experiencing significant pent-up demand in Q2 2022. The exception to this recovery in Q2 2022 was the China market, where there was a sharp fall in travel compared to the previous year as a result of its zero-COVID policy measures. Domestic revenue passenger kilometres ("RPKs") in the domestic China market were down -80.8% in April 2022, -73.2% in May 2022, and -45.0% in June 2022 versus the same months in 2021[1]. While demand overall was very positive in the first half of 2022, and in Q2 in particular, most airlines faced other challenges during the period. These challenges included having to manage rising inflation rates and costs (energy and fuel prices in particular), having to adopt network plans in a period of increasing global instability, needing to recruit and train staff in a time of labour market shortages, in addition to having to manage airports and other service providers who also experienced recruiting and capacity constraints. Despite all of this complexity, many airlines still prioritised and progressed their digital retail plans during the period. In terms of Datalex's H1 2022 revenue performance, Datalex was impacted by the decreased travel volumes in the China market. We do expect that there will be some recovery in this market in H2 2022. Secondly, the Group also didn't benefit from the full Q2 volume recovery as some existing customer contracts do not have a variable structure. Thirdly, the Group had delayed services revenue in H1 2022 versus the same period in the prior year. Business development momentum During the period, the Group experienced a significant increase in business development activity. As airlines transition from recovery mode to growth mode, we have seen an acceleration in airlines prioritising investment in digital retail as a key enabler for their growth. Whilst the importance of digital investment to drive future growth for airlines was never in question, many airlines put digital investment projects on hold during 2020 and 2021 while their business and operations were heavily impacted by COVID-19. The Group increased investment in sales and marketing during the period in response to this increase in demand and increase in RFP and general sales activity. However, airline retail technology RFP processes can typically range from 6 - 18 months, so it does takes time before this return on investment materialises. One outcome of Datalex's investment in business development materialised in the Group announcing on 1 September that it has signed easyJet as its' newest customer. easyJet is one of the world's leading low-cost airlines carrying over 96 million passengers in 2019. It is significant that easyJet has chosen Datalex's technology to enhance their retailing and booking experience and is a strong affirmation of our product proposition. It is also significant for Datalex to win a low-cost carrier airline, as this is the fastest growing segment of Datalex's target addressable market. The Group exits the first half of 2022 with a strong pipeline of opportunities to progress. Customer developments & implementation projects The Group invested in customer implementation projects during the period. As announced in December 2021, Virgin Australia selected Datalex to implement its' digital retail products to deliver on the retail-focused elements of their technology roadmap. This implementation is now well underway and progressing well. A large NDC project that was paused in 2020 as a result of COVID-19 impacts, also resumed during the period. These implementation projects will bode well for future transaction revenue growth for the Group once they go-live. However, it can take up to 18 months for multi-product implementations to fully complete, as airlines often choose to a introduce new technology into their digital eco-systems in phases over a steady period of time. Chief Executive Officer's Review (continued) Continued investment in our product The Group continued to invest during the period across all product areas. Datalex's newest product, Datalex Pricing AI, was launched to the market on 31 May 2022. This product, which can be implemented in 12 weeks, is an entry into a new market segment of airline retail for Datalex and expands the Group's total addressable market. The product has been trialled with two airlines to date and we are confident that it will drive material benefits to airlines. This product is for airlines who wish to leverage data and AI technology to inform their pricing decisions so that they can achieve the highest possible price for the air fares, without causing a negative impact on their conversion rates and load factors. The product enables airlines to forego the legacy practices of filing fares and enable them to price in real-time. Summary As outlined in the guidance issued today, our financial results are expected to improve in the second half of 2022, and we expect that the Group will report revenue of $25 million to $27 million for FY 2022. Achieving this revenue in 2022 however, is dependent on there being some recovery in travel volumes in the China market. Despite the short-term financial results, I am satisfied with the progress made in the first half of 2022 and in particular with the progress made in terms of business development. The Group has signed two new airlines in the past 9 months - easyJet in September 2022 and Virgin Australia in December 2021. Both of these airlines are well-established leading airlines in their respective markets and their selection of Datalex as their digital retail technology partner of choice is affirmation of the strength of Datalex's capability. The Group has invested during the period to secure new customer growth, and we will continue to invest where we see strong signs of return. Sean Corkery Chief Executive Officer 02 September 2022 Financial summary �� Total revenue for the six-month period ending 30 June 2022 was $10.4 million, a 17% decline versus the same period in 2021 (H1 2021: $12.6 million) �� Platform revenue of $5.9 million declined by 21% in comparison to H1 2021 (H1 2021: $7.5 million). This reduction was driven by decreased travel volumes in the China market. �� Services revenue of $3.8 million declined by 12% in comparison to H1 2021 (H1 2021: $4.3 million). Some service projects were delayed as airlines focused attention on other operational challenges within the industry. �� Total operating costs before exceptional items in the first half of 2022 increased by 13% to $13.8 million (H1 2021: $12.2 million). This highlights the Group's investment in future growth. �� Adjusted EBITDA loss of $2.1 million in H2 2022, a decrease of $3.9 million versus the same period in 2021 (H1 2020: EBITDA $1.8 million). �� Loss after tax for the period of $3.1 million (H1 2021: Loss of $3.8million). Net exceptional gain of $0.3 million (H1 2021: cost of $1.5million) primarily related to remeasurement of regulatory provision. �� Cash balance as at 30 June 2022 amounted to US $2.7 million, decreasing from $8.3 million on 31 December 2021 ($2.4 million cash balances at 30 June 2021). 2022 half year results summary Unaudited Unaudited Audited For the six months ended 30 June 2022 30 June 2021 31 December 2021 As reported As reported Period on period change As reported US$'M US$'M % US$'M Platform revenue (1) 5.9 7.5 -21% 13.3 Services revenue 3.8 4.3 -12% 8.5 Consultancy revenue 0.7 0.8 -13% 1.5 Other revenue - - - 2.2 Total revenue 10.4 12.6 -17% 25.5 Operating costs (2) 13.8 12.2 13% 27.3 Exceptional (income)/costs (0.3) 1.5 0.3 Adjusted EBITDA (3) (2.1) 1.8 2.4 Foreign Exchange adjusted EBITDA (4) (2.5) 1.1 1.4 Loss after tax for the period (3.1) (3.8) (4.9) Cash and cash equivalents 2.7 2.4 8.3 Debt (leases and secured related party loan) (1.3) (20.2) (1.8) Net debt 1.4 (17.8) 6.5 Cash (used)/generated in operations (2.9) 1.3 0.4 EPS - basic and diluted (US cent) (2.4) (4.6) (4.7) (1) Platform revenue is earned from the use of the Group's Digital Products by our customers. (2) Operating costs are as stated in Note 5. Amounts are stated before separately disclosed exceptional items. (3) Adjusted EBITDA (Note 4) is defined as earnings from operations before (i) interest income and interest expense, (ii) tax expense, (iii) depreciation and amortisation expense with the exception of deferred commission costs per Note 4, (iv) share-based payments cost and (v) exceptional items (see Note 7). (4) Foreign currency adjusted EBITDA (Note 4) is a KPI introduced during 2020. Our functional currency is US$. In the prior year the Group loan funding was denominated in Euro as a result the adjusted EBITDA (Note 4) results of the group were subject to movements beyond management's control arising from movements in foreign exchange rates. The foreign exchange input into the foreign currency adjusted EBITDA (Note 4) KPI is arrived at by combining the foreign exchange movements per Note 8 and the additional foreign exchange movements (Loss of: US$288k) on those Euro denominated Trade Debtor balances fully provided at the end of 30 June 2022 and 30 June 2021. Forward Looking Statements Certain statements made in this document are forward���looking. These represent expectations for the Group's business, and involve known and unknown risks and uncertainties, many of which are beyond the Group's control. The Group has based these forward���looking statements on current expectations and projections about future events. These forward-looking statements may generally, but not always, be identified by the use of words such as 'will', 'aims', 'anticipates', 'continue', 'could', 'should', 'expects', 'is expected to', 'may', 'estimates', 'believes', 'intends', 'projects', 'targets', or the negative thereof, or similar expressions. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future and reflect the Group's current expectations and assumptions as to such future events and circumstances that may not prove accurate. A number of material factors could cause actual results and developments to differ materially from those expressed or implied by forward-looking statements. You should not place undue reliance on any forward-looking statements. These forward-looking statements are made as of the date of this announcement. The Group expressly disclaims any obligation to publicly update or review these forward-looking statements other than as required by law. This announcement contains inside information for the purposes of the Market Abuse Regulation. Statement of Directors' Responsibilities The Directors of Datalex plc are responsible for preparing this interim management report and the Half-Yearly Financial Report in accordance with IAS 34, Interim Financial Reporting, as adopted by the European Union. Each of the Directors listed on page 42 and 43 of the 2021 annual report confirm that, to the best of their knowledge: �� The Directors of Datalex plc are responsible for preparing this interim management report and the Half-Yearly Financial Report in accordance with IAS34, Interim Financial Reporting, as adopted by the European Union. �� The Interim Management Report includes a fair review of the important events that have occurred during the first six months of the financial year and their impact on the Half-Yearly Financial Report for the half year ended 30 June 2022 and a description of the principal risks and uncertainties for the remaining six months which has been provided in Note 24 of the Half-Yearly Financial Report. �� The Half-Yearly Financial Report includes a fair review of related party transactions that have occurred during the first six months of the current financial year and that have materially affected the financial position or the performance of the Group during that period, and any changes in the related party transactions described in the last Annual Report that could have a material effect on the financial position or performance of the Group in the first six months of the current financial year. On behalf of the Board Sean Corkery Dan Creedon Director Director 02 September 2022 02 September 2022 Condensed Consolidated Interim Statement of Financial Position as at 30 June 2022 (unaudited) Notes 30 June 2022 31 December 2021 Unaudited Audited US$'000 US$'000 ASSETS Non-current assets Property, plant and equipment 215 249 Intangible assets 16 5,281 3,669 Right-of-use assets 17 891 1,187 Deferred contract fulfilment costs 18 1,970 2,867 Trade and other receivables 9 112 319 Total non-current assets 8,469 8,291 Current assets Deferred contract fulfilment costs 18 1,182 - Trade and other receivables 9 4,476 3,951 Contract assets 9 1,187 722 Cash and cash equivalents 2,725 8,251 Total current assets 9,570 12,924 TOTAL ASSETS 18,039 21,215 EQUITY Capital and reserves attributable to the equity holders of the Company Issued ordinary share capital 19 13,267 13,215 Other issued equity share capital 262 262 Other reserves 37,857 37,604 Retained loss (53,272) (50,189) TOTAL EQUITY (1,886) 892 LIABILITIES Non-current liabilities Borrowings 10 726 895 Provisions 11 282 663 Trade and other payables 12 5,871 5,332 Contract liabilities 13 2,772 4,419 Total non-current liabilities 9,651 11,309 Current liabilities Borrowings 10 550 891 Provisions 11 225 569 Trade and other payables 12 4,400 3,953 Contract liabilities 13 4,948 3,414 Current income tax liabilities 151 187 Total current liabilities 10,274 9,014 TOTAL EQUITY AND LIABILITIES 18,039 21,215 Condensed Consolidated Interim Income Statement For the six months ended 30 June 2022 (unaudited) Notes Six months ended 30 June Year ended 31 December 2022 2022 2022 2021 2021 2021 2021 2021 2021 Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Audited Audited Audited Before exceptional items Exceptional items (Note 7) Total Before exceptional items Exceptional items (Note 7) Total Before exceptional items Exceptional items (Note 7) Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Continuing operations Revenue from contracts with customers 4 10,367 - 10,367 12,593 - 12,593 25,473 - 25,473 Cost of sales 5 (7,251) - (7,251) (5,894) - (5,894) (13,256) - (13,256) GROSS PROFIT 3,116 - 3,116 6,699 - 6,699 12,217 - 12,217 Selling and marketing costs 5 (334) - (334) (149) - (149) (417) - (417) Administrative expenses 5 (7,301) 325 (6,976) (7,121) (1,541) (8,662) (15,093) (268) (15,361) Net impairment writeback on financial and contract assets 5 311 - 311 515 - 515 744 - 744 Impairment of intangible assets - - - - - - (106) - (106) Other income 215 - 215 106 - 106 1,760 - 1,760 Other gains 8 732 - 732 445 445 716 - 716 OPERATING (LOSS)/PROFIT (3,261) 325 (2,936) 495 (1,541) (1,046) (179) (268) (447) Finance costs (119) - (119) (2,696) - (2,696) (4,350) - (4,350) LOSS BEFORE INCOME TAX (3,380) 325 (3,055) (2,201) (1,541) (3,742) (4,529) (268) (4,797) Income tax charge 14 (28) - (28) (36) - (36) (77) - (77) LOSS FOR THE PERIOD (3,408) 325 (3,083) (2,237) (1,541) (3,778) (4,606) (268) (4,874) LOSS PER SHARE (in US$ cents per share) Basic and diluted 15 (2.4) (4.6) (4.7) Condensed Consolidated Interim Statement of Comprehensive Income For the six months ended 30 June 2022 (unaudited) Six months ended Year ended 30 June 2022 30 June 2021 31 December 2021 Unaudited Unaudited Audited US$'000 US$'000 US$'000 Loss for the period (3,083) (3,778) (4,874) Other comprehensive income: Items that may subsequently be reclassified to profit or loss: Foreign currency translation adjustments - Arising in the period (238) 145 (142) Total items that may be subsequently reclassified to profit or loss (238) 145 (142) Comprehensive income for the period (3,321) (3,633) (5,016) Condensed Consolidated Interim Statement of Changes in Equity For the six months ended 30 June 2022 (unaudited) Issued ordinary share capital Other issued equity share capital Other reserves Retained (loss)/ earnings Total equity US$'000 US$'000 US$'000 US$'000 US$'000 Unaudited Balance at 1 January 2021 8,215 262 11,777 (43,952) (23,698) Loss for the period - - - (3,778) (3,778) Other comprehensive income - - 145 - 145 Total comprehensive income for the period - - 145 (3,778) (3,633) Share-based payments charge - - 450 - 450 Balance at 30 June 2021 8,215 262 12,372 (47,730) (26,881) Audited Balance at 1 January 2021 8,215 262 11,777 (43,952) (23,698) Loss for the year - - - (4,874) (4,874) Other comprehensive income - - (141) - (141) Total comprehensive income for the year - - (141) (4,874) (5,015) Share-based payments charge - - 983 - 983 Issue of ordinary shares on capital raise 5,000 - - - 5,000 Premium on shares issued - - 24,710 - 24,710 Share issuance costs - - - (1,363) (1,363) Disposal of Trust shares - - 275 - 275 Balance at 31 December 2021 13,215 262 37,604 (50,189) 892 Unaudited Balance at 1 January 2022 13,215 262 37,604 (50,189) 892 Loss for the period - - - (3,083) (3,083) Other comprehensive income - - (238) - (238) Total comprehensive income for the period - - (238) (3,083) (3,321) Share-based payments charge - - 228 - 228 Issue of ordinary shares on exercise of options 52 - 263 - 315 Balance at 30 June 2022 13,267 262 37,857 (53,272) (1,886) Condensed Consolidated Interim Cash Flow Statement For the six months ended 30 June 2022 (unaudited) Notes Six months ended Year ended 30 June 2022 30 June 2021 31 December 2021 Unaudited Unaudited Audited US$'000 US$'000 US$'000 CASH FLOWS FROM OPERATING ACTIVITIES Cash (used in)/generated from operations 20 (2,926) 1,263 447 Income tax paid (64) (75) (5) NET CASH IN OPERATING ACTIVITIES (2,990) 1,188 442 CASH FLOWS FROM INVESTING ACTIVITIES Additions to intangible assets 16 (2,101) (855) (2,448) Proceeds from sales of property, plant and equipment - - 23 Purchase of property, plant and equipment (73) - (119) NET CASH USED IN INVESTING ACTIVITIES (2,174) (855) (2,544) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares (including share premium) 315 - 29,710 Costs of share placing paid - - (1,363) Proceeds from disposal of trust shares - - 275 Repayment of borrowings - - (19,134) Amounts paid associated with lease amendments - - (278) Payment of interest on lease liabilities (79) (228) (343) Payment of capital on lease liabilities (433) (664) (1,177) Interest paid (40) - (46) NET CASH (USED IN)/GENERATED FROM FINANCING ACTIVITIES (237) (892) 7,644 Net (decrease)/increase in cash and cash equivalents (5,401) (559) 5,542 Foreign exchange loss on cash and cash equivalents (125) (21) (316) Cash and cash equivalents at beginning of period 8,251 3,025 3,025 CASH AND CASH EQUIVALENTS AT END OF PERIOD 2,725 2,445 8,251 Notes to the Interim Financial Report 1. General information The principal activity of the Group is the development and sale of digital retail products and solutions to the airline industry. Datalex plc ("the Company") is a public limited company incorporated and domiciled in Ireland and listed on the Euronext Growth market. The company registration number is 329175, and the registered office is Block V, EastPoint, Clontarf, Dublin 3, D03 H704, Ireland. This Half-Yearly Financial Report was authorised for issue by the Board of Directors on 1 September 2022. 2. Basis of preparation The Half-Yearly Financial Report ("Interim financial statements") of Datalex plc (the 'Group'), which is presented in US Dollars (denoted as "US$") and expressed in thousands, has been prepared as at, and for the period ended 30 June 2022, in accordance with Central Bank (Investment Market Conduct) Rules 2019 and with International Accounting Standard 34, Interim Financial Reporting, ("IAS 34") as adopted by the European Union. The Half-Yearly Financial Report does not include all information required for full annual financial statements and should be read in conjunction with the consolidated financial statements for the year ended 31 December 2021 included in the Datalex plc 2021 Annual Report which is available on the Group's website www.datalex.com. The Half-Yearly Financial Report is unaudited and has not been reviewed by auditor pursuant to the Financial Reporting Council guidance on Review of Interim Financial Information. Statutory information The interim financial statements are considered non-statutory financial statements for the purposes of the Companies Act 2014 and in compliance with section 340(4) of that Act we state that: �� the interim financial statements as at, and for the period commencing 1 January 2022 and ended 30 June 2022 have been prepared to meet our obligations under the Central Bank (Investment Market Conduct) Rules 2019; �� the interim financial statements as at, and for the period commencing 1 January 2022 and ended 30 June 2022 do not constitute the statutory financial statements of the Group and are unaudited; �� the statutory financial statements as at, and for the financial year ended 31 December 2021 will be annexed to the 2022 annual return and filed with the Companies Registration Office; �� the statutory auditor of the Group has made a report under section 391 in the form required by section 336 Companies Act 2014 in respect of the statutory financial statements of the Group; �� whether any matters referred to in the statutory auditors' report were qualified or unqualified, or whether the statutory auditors' report included a reference to any matters to which the statutory auditors drew attention by way of emphasis without qualifying the report. 2. Basis of preparation (continued) Going concern The Half-Yearly Financial Report has been prepared on the going concern basis, which assumes that the Group will be able to continue in operational existence for the foreseeable future. The time period that the Board has considered in evaluating the appropriateness of the going concern basis in preparing the Half-Yearly Financial Report for 2022 is a period of twelve months from the date of approval of this report. The Group incurred a loss of US$3.1m in the six months to 30 June 2022 (2021 financial year: loss of US$4.9m). At 30 June 2022, the Group had net liabilities of US$1.9m (31 December 2021: net assets of US$0.9m) and net current liabilities of US$0.7m (31 December 2021: net current assets of US$3.9mm). The total decrease in cash in the six months to 30 June 2022 was US$5.5m (2021 financial year: US$5.2m increase). In adopting the going concern basis in preparing the financial statements, the Directors have considered the Group's available sources of finance including access to the equity markets, the credit facility available as part of the Second Amendment and Restatement Agreement with Tireragh Limited ("Facility B"), the Group's cash-on-hand, cash generation and preservation projections, together with factors likely to affect its future performance, as well as the Group's principal risks and uncertainties. In evaluating our cash flow needs, we have taken into account our commitments to customers in both deployment and ongoing services commitments, the working capital requirements for recent customer wins and also of potential new customers. To prepare financial forecasts for the business is challenging as the Group operates in a competitive environment which continues to be impacted by macro-economic matters, which are outside the control of the Group. Those risks and uncertainties include but are not limited to: �� Conflict in Ukraine: While the majority of Datalex's customers do not fly into the directly affected areas there may be adverse impacts on the expected recovery of travel volumes across Europe and on Transatlantic routes after the pandemic. �� Oil Prices: Higher oil prices may adversely impact the airline industry. Fuel surcharges and hedging may mitigate those impacts in the short term but the impact on Datalex's customers is uncertain. �� COVID-19 pandemic: Recovery from the pandemic is evident across the markets that Datalex's customers serve but the emergence of new variants and potential future localised lockdowns would have adverse impacts on travel. �� Inflationary pressures: A continuation of increasing rates of inflation globally may have an adverse impact on travel as consumers disposable incomes reduce. �� Customer contract renewals: Key customer contracts are scheduled for renewal by the end of 2022. The Board notes that renewal discussions are ongoing and progressing as expected. One new customer has been secured in 2022. While the above matters give rise to material uncertainties for the business, the Board are satisfied that it remains appropriate to adopt the going concern basis of preparation. In arriving at this decision, the Board considered, among other things: �� The Group's access to Facility B for an amount of ���7.5m which is available for drawdown until 31 December 2022 (a ���10m facility of which ���2.5m was drawn down on 2 Aug 2022). �� The Group's flexibility to react quickly to negative external factors as illustrated during COVID-19 when the Group took decisive action by reducing operating expenses and improving cash flows. �� Assessment of our commitments to customers in both deployment and ongoing service commitments. �� Datalex's ability to win new customers such as shown by the contract signings of Virgin Australia in December 2021 and easyJet in September 2022 for all four Datalex flagship products - Datalex Direct, Datalex NDC, Datalex Merchandiser and Datalex Dynamic - as well as the Digital Configurator. 2. Basis of preparation (continued) The Group is currently required to repay all outstanding principal amounts and associated accrued interest then outstanding under Facility B by 30 June 2023, which is within twelve months of the approval of these interim financial statements. At the approval date of the interim financial statements the Group had drawn down ���2.5m of the ���10m available under the facility. The latest Group's cash flow forecasts indicate that refinancing or alternative funding will be required to repay the loan facility as it falls due and to fund the working capital needs of the Group in 2023 and beyond. The Board will evaluate funding options available to the Group over the coming months, update shareholders as appropriate and seek necessary approval if required. These alternatives may include but are not limited to the following: �� Refinancing of the Facility B agreement or alternative debt financing: Such financing could be subject to interest rate uncertainty or fluctuation given recent global inflationary trends. �� Equity financing: An equity fundraising, depending on its structure, may require the convening of an extraordinary general meeting at which shareholder approval of the arrangements would be sought. The successful completion of a refinancing or alternative fundraising nevertheless remains subject to third party, internal and external risks. The Directors believe, however, that in light of the progress of the business over the previous 12 months, including new customer wins, that the risk of not successfully completing a refinancing or alternative fundraising prior to the date of repayment of Facility B is low. The Directors recognise that there are material uncertainties, as stated above, which may cast significant doubt as to the Group's ability to continue as a going concern. Nevertheless, based on the assessment of the adequacy of the financial forecasts, the current funding facilities outlined, and the alternatives available to the Group, the Directors have formed a judgement, at the time of approving the financial statements, that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for a period of at least twelve months from the date of approval of this report. For this reason, they continue to adopt the going concern basis in preparing the financial statements and the financial statements do not include any adjustments that would be required if the Group was unable to continue as a going concern. 3. Accounting policies The accounting policies and methods of computation applied by the Group in the Half-Yearly Financial Report are the same as those applied by the Group in its consolidated financial statements for the year ended 31 December 2021. There have been no changes to significant judgements in applying the Group's accounting policies and/or the key sources of estimation uncertainties for the Half-Yearly Financial Report since the 2021 Annual Report. The 2021 Annual Report was published on the 28 April 2022. Newly adopted Standard or amendments No IFRSs or IFRIC interpretations are effective for the first time for the financial period beginning on 1 January 2022 that have a material impact on the Group. 4. Segmental information The Group is organised into two operating segments. This section provides information on the financial performance for the period on a segmental basis. The Group's reportable operating segments are based on the reports reviewed by the chief operating decision makers (Executive Leadership Team, the "ELT") which are used to make strategic decisions. The ELT assesses the performance of the operating segments based on the Adjusted EBITDA measure, in conjunction with reviewing other metrics such as Revenue. 4. Segmental information (continued) The ELT reviews business performance from a product and service perspective. In 2021 and 2020, TPF Consulting (Transaction Processing Facility) did not meet the quantitative thresholds for mandatory disclosure under IFRS 8 Operating Segments (IFRS 8 para 13). However, the executive management team have opted to continue to disclose this segment separately on the basis that TPF Consulting is managed independently, and that the executive management team review the performance of the segment separately. The TPF Consulting business has different characteristics and business challenges compared to the E-Business reporting segment. Throughout the year, management considers the performance of E-Business and TPF Consulting on a separate basis. The reportable operating segments derive their revenue primarily from the sale of products and services associated with the Group's suite of travel related technology and TPF Consulting revenue. Segment profit is measured using Adjusted EBITDA, which is defined as earnings before interest, tax, depreciation, amortisation (with the exception of deferred commission costs), exceptional costs and the costs of share options and interests granted to Executive Directors and employees. Sales between segments are carried out at arm's length. The revenue from external parties reported to the executive management team is measured in a manner consistent with that in the Consolidated Statement of Profit and Loss. The E-Business segment consists of the development and sale of a variety of direct distribution software products and solutions to the Airline and Travel industry. The TPF consulting segment provides IT consultancy services to a number of major airlines. The segment information provided to the executive management team for the reportable segments for the period ended 30 June 2022 is as follows: 30 June 2022 Unaudited 30 June 2021 Unaudited E- Business US$000 TFP Consulting US$000 Total US$000 E- Business US$000 TFP Consulting US$000 Total US$000 Revenue from contracts with customers 9,710 657 10,367 11,760 1,222 12,982 Inter-segment revenue - - - - (389) (389) External revenue 9,710 657 10,367 11,760 833 12,593 Adjusted EBITDA (2,391) 247 (2,144) 1,566 199 1,765 Share-based payments charge (228) - (228) (450) - (450) EBITDA (2,619) 247 (2,372) 1,116 199 1,315 Depreciation (394) (6) (400) (583) (13) (596) Amortisation (489) - (489) (224) - (224) Operating (loss)/profit before exceptional items (3,502) 241 (3,261) 309 186 495 Exceptional items (Note 7) 325 - 325 (1,541) - (1,541) Operating (loss)/ profit after exceptional items (3,177) 241 (2,936) (1,232) 186 (1,046) Finance costs (121) 2 (119) (2,696) - (2,696) Loss before income tax (3,055) (3,742) Income tax expense (28) (36) Loss for the period (3,083) (3,778) 4. Segmental information (continued) A reconciliation of Adjusted EBITDA to Loss before income tax is provided as follows: Unaudited Audited Six months ended Year ended 30 June 2022 30 June 2021 31 December 2021 US$'000 US$'000 US$'000 Adjusted EBITDA (2,144) 1,765 2,435 Depreciation (400) (596) (1,098) Amortisation - Development costs (366) (118) (224) Amortisation - Software (123) (65) (247) Amortisation - Contract acquisition costs - (41) (62) Finance costs (119) (2,696) (4,350) Share-based payments cost (228) (450) (983) Exceptional items (Note 7) 325 (1,541) (268) Loss before income tax (3,055) (3,742) (4,797) Unaudited Audited Six months ended Year ended 30 June 2022 30 June 2021 31 December 2021 US$'000 US$'000 US$'000 Adjusted EBITDA (2,144) 1,765 2,435 Foreign Exchange (394) (634) (1,046) Foreign currency adjusted EBITDA (2,538) 1,131 1,389 Foreign currency adjusted EBITDA was a KPI introduced during H2 2020. Refer to Note 18 of the Group's 2021 Annual Report for the definition of foreign currency adjusted EBITDA. The amounts provided to the executive management team with respect to total assets are measured in a manner consistent with that of the financial statements. These assets are allocated based on operations of the segment and the physical location of the asset. Total segment assets and liabilities are as follows: Unaudited Audited 30 June 2022 31 December 2021 E-business TPF Consulting Total E-business TPF Consulting Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Total segment assets 15,231 2,808 18,039 18,454 2,761 21,215 Total segment liabilities (19,546) (379) (19,925) (19,988) (335) (20,323) 4. Segmental information (continued) Analysis of revenue by category Unaudited Audited Six months ended Year ended 30 June 2022 30 June 2021 31 December 2021 US$'000 US$'000 US$'000 Platform revenue 5,900 7,496 13,288 Services revenue 3,810 4,264 8,477 Consultancy revenue 657 833 1,533 Other revenue - - 2,175 Revenue from contracts with customers 10,367 12,593 25,473 Revenue from external customers is derived from the sales of E-business products and services associated with the Group's suite of travel related technology and TPF Consulting revenue. The Group has a number of customers whom the collectability criteria under IFRS 15.9 is not met. There are no remaining performance obligations associated with contracts with such customers. Consequently, revenue is only recognised when consideration is received in accordance with IFRS15.15. 5. Expenses by nature Unaudited Unaudited Audited Six months ended Six months ended Year Ended 31 December 2022 2022 2022 2021 2021 2021 2021 2021 2021 Before exceptional items Exceptional items (Note 7) Total Before exceptional items Exceptional items (Note 7) Total Before exceptional items Exceptional items (Note 7) Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Employee benefit expense (Note 6) - net of capitalisation 7,782 - 7,782 7,233 - 7,233 17,467 - 17,467 Consultant and contractor costs - net of capitalisation 2,404 - 2,404 1,074 - 1,074 3,062 - 3,062 Amortisation - development cost 366 - 366 118 - 118 224 - 224 Amortisation - software 123 - 123 65 - 65 247 - 247 Deferred commission amortisation - - - 41 - 41 62 - 62 Establishment costs 406 - 406 410 - 410 741 - 741 Hosting 581 - 581 723 - 723 1,429 - 1,429 Professional fees 356 (325) 31 463 1,628 2,091 683 301 984 Travel 143 - 143 35 - 35 87 - 87 Depreciation - PP&E 104 - 104 183 - 183 326 - 326 Depreciation - Right-of-use Assets 296 - 296 413 - 413 772 - 772 Net impairment writeback on financial and contract assets (311) - (311) (515) - (515) (744) - (744) Third party services 417 - 417 231 - 231 175 - 175 Impairment of non-current assets - - - - - - 106 - 106 Share option expense/(credit) 228 - 228 450 - 450 983 - 983 Communication 60 - 60 73 - 73 122 - 122 Software maintenance and other online charges 410 - 410 389 - 389 831 - 831 Other 1,210 - 1,210 1,263 (87) 1,176 1,555 (33) 1,522 Total cost of sales, selling and marketing costs, administrative expenses and net impairment losses on financial and contract assets 14,575 (325) 14,250 12,649 1,541 14,190 28,128 268 28,396 Other gains (Note 8) (732) - (732) (445) - (445) (716) - (716) Total operating costs 13,843 (325) 13,518 12,204 1,541 13,745 27,412 268 27,680 Disclosed as: - Cost of sales 7,251 - 7,251 5,894 - 5,894 13,256 - 13,256 - Selling and marketing costs 334 - 334 149 - 149 417 - 417 - Administrative expenses 7,301 (325) 6,976 7,121 1,541 8,662 15,093 268 15,361 - Net impairment (writeback)/losses on financial and contract assets (311) - (311) (515) - (515) (744) - (744) - Impairment of non-current assets - - - - - - 106 - 106 - Other gains (Note 8) (732) - (732) (445) - (445) (716) - (716) Total operating costs 13,843 (325) 13,518 12,204 1,541 13,745 27,412 268 27,680 6. Employee benefit expense Unaudited Audited Six months ended Year ended 30 June 2022 30 June 2021 31 December 2021 US$'000 US$'000 US$'000 Wages and salaries 7,562 7,178 17,458 Social security costs 760 792 1,493 Pension costs - defined contribution schemes 337 339 666 Employee benefit expense before capitalisation 8,659 8,309 19,617 Capitalised labour(i) (649) (626) (1,167) Employee benefit expense after capitalisation 8,010 7,683 18,450 Share based payments charge (228) (450) (983) Total 7,782 7,233 17,467 Total employee expense before capitalisation 8,431 7,859 18,634 Capitalisation (i) (649) (626) (1,167) Total employee benefit expense 7,782 7,233 17,467 (i) The capitalised employee costs are included in Capitalised Development costs (Note 16) together with relevant contractor costs. 7. Exceptional items Unaudited Audited Six months ended Year ended 30 June 2022 30 June 2021 31 December 2021 US$'000 US$'000 US$'000 Exceptional Gains Termination notice issued on UK office - Right-of-use asset - - (198) Termination notice issued on Dublin office - Right-of-use asset - (87) (91) - (87) (289) Exceptional Costs Professional fees in relation to investigations, business transformation programme and litigation procedures 95 260 395 (Utilisation/release) of Provision for costs associated with complying with regulatory investigations (443) - (94) Provision for dilapidation costs associated with the termination of Dublin office lease - - 256 Professional fees associated with termination of Dublin office lease 23 - - Costs associated with Capital Raise - 1,368 - (325) 1,628 557 Net exceptional items (325) 1,541 268 7. Exceptional items (continued) The exceptional items that arose in respect of the year ended 31 December 2021 are described in Note 23 of the Group's 2021 Annual Report. The exceptional items incurred in respect of the six months ended 30 June 2022 are outlined below: Provision for dilapidation costs associated with the Termination of Dublin office lease In accordance with the termination notice of the Datalex Ireland Limited lease agreement, a dilapidations provision was recognised at 31 December 2021. The execution of the early termination notice trigged the requirement for a dilapidations provision. During H1 2022 costs were incurred in regard to the early termination notice. Professional fees During H1 2022 the Group incurred additional professional fees relating to previously disclosed exceptional items. The costs incurred in H1 2022 primarily relate to professional legal fees relating to the ongoing Lufthansa and Swiss Airlines contractual dispute. Costs associated with complying with regulatory investigation The Group historically recognised a provision which relates to legal and compliance costs of ongoing regulatory investigations and the necessary requirements to obtain an end to the suspension order on the trading of the Group's shares on the Euronext Dublin exchange. The regulatory investigation and suspension of trading of the Group's shares arose following the significant breakdown in internal financial controls as disclosed in the 2018 Annual Report. The movement in the current year relates to the release of those parts of the provision no longer required since the Company's relisting on the Euronext Growth Dublin exchange, the discharge of associated costs and a release upon review of the provision assumptions by management. 8. Other gains Unaudited Audited Six months ended Year ended 30 June 2022 30 June 2021 31 December 2021 US$'000 US$'000 US$'000 Net foreign exchange gains 732 445 716 Net total 732 445 716 9. Trade and other receivables and contract assets Unaudited Audited 30 June 2022 31 December 2021 US$'000 US$'000 Current trade and other receivables and contract assets Trade receivables 5,693 6,051 Less: allowance for expected credit losses on trade receivables (2,956) (3,287) Trade receivables - net 2,737 2,764 Contract assets 1,221 763 Less: allowance for expected credit losses on contract assets (34) (41) Contract assets - net 1,187 722 Prepayments 1,017 542 Research and development tax credits 180 302 VAT receivable 385 132 Other receivables 157 211 Total other receivables 1,739 1,187 Total current trade and other receivables - net 4,476 3,951 Total current contract assets - net 1,187 722 Non-current trade and other receivables Research and development tax credit 112 319 Total non-current trade and other receivables 112 319 Total trade and other receivables and contract assets 5,775 4,992 The gross amounts of the Group's trade receivables and contract assets are denominated in the following currencies: Unaudited Audited 30 June 2022 31 December 2021 US$'000 US$'000 US dollar 2,624 2,718 Euro 3,780 4,070 Pound Sterling 112 26 Swedish Krona 15 - Australian Dollar 383 - Total 6,914 6,814 The fair value of trade receivables and contract assets approximate to the values shown above. The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group does not hold collateral as security. 10. Borrowings Unaudited Audited 30 June 2022 31 December 2021 US$'000 US$'000 Lease liabilities (Note 17) 1,276 1,786 Total borrowings 1,276 1,786 Disclosed as Current 550 891 Non-current 726 895 Total borrowings 1,276 1,786 Unaudited Audited Lease liabilities 30 June 2022 31 December 2021 US$'000 US$'000 Current 550 891 Non-current 726 895 Total lease liabilities 1,276 1,786 The carrying amounts of the Group's lease liabilities are denominated in the following currencies: Unaudited Audited 30 June 2022 31 December 2021 US$'000 US$'000 US dollar 558 669 Euro 213 457 Pound Sterling 456 560 Chinese renminbi 49 100 Total 1,276 1,786 11. Provisions Unaudited Audited 30 June 2022 31 December 2021 US$'000 US$'000 Current Regulatory Costs Compliance 39 267 Uncertain Tax Positions 62 46 Dilapidation Costs - 256 Onerous Contract 124 - Total Current 225 569 Non-current Regulatory Costs Compliance 176 464 Uncertain Tax Positions 106 199 Total Non-current 282 663 Total Provisions 507 1,232 A. REGULATORY COSTS COMPLIANCE As a result of the events that occurred in 2018, the Group is subject to a number of regulatory investigations that are likely to continue into the future. The Group has estimated the costs associated with responding to and addressing the requirements of the Regulators, including the Corporate Enforcement Authority, the Central Bank of Ireland and the Gardai. Unaudited Audited 30 June 2022 31 December 2021 US$'000 US$'000 At start of period 731 1,023 Released to the income statement (443) (120) FX movement on provision (73) 26 Utilised in the period - (198) At the end of period 215 731 11. Provisions (continued) B. UNCERTAIN TAX POSITIONS As a result of a review of tax compliance across the Group, which was performed in consultation with external professional advisors, the Group has provided for its best estimate of taxes, interest and penalties due to various tax authorities. The amount to be settled is subject to ongoing discussion and agreement with the related tax authorities. Unaudited Audited 30 June 2022 31 December 2021 US$'000 US$'000 At start of period 245 417 Released to the income statement (77) (2) Paid during the period - (16) Reclassified to accruals during the period - (154) At the end of period 168 245 C. DILAPIDATION PROVISION In accordance with the termination notice of a lease agreement in H2 of 2021 a dilapidations provision was recognised. The execution of the early termination notice triggered the requirement for a dilapidations provision. Unaudited Audited 30 June 2022 31 December 2021 US$'000 US$'000 At start of period 256 - Charged to the income statement 23 256 Paid during the period (279) - Unused amounts reversed - - At the end of period - 256 D. ONEROUS CONTRACT An onerous contract provision was created in H1 2022 for a loss-making contract with a customer. Unaudited Audited 30 June 2022 31 December 2021 US$'000 US$'000 At start of period - - Charged to the income statement 124 - Paid during the period - - Unwind of discount on provision - - At the end of period 124 - 12. Trade and other payables Unaudited Audited 30 June 2022 31 December 2021 US$'000 US$'000 Trade payables 1,760 632 Accruals 1,540 2,848 Pension contributions 137 146 Social security and other taxes 926 233 VAT payable 6 67 Other payables 31 27 Total current trade and other payables 4,400 3,953 Social security and other taxes 5,871 5,332 Total non-current trade and other payables 5,871 5,332 Total trade and other payables 10,271 9,285 The fair values of trade and other payables approximate to the values shown above. Trade Payables The period-on-period variance in trade payables is as a result of the timing of payments for various vendors. Amounts payable for contractors, hosting partners & professional services have all increased since 31 December 2021. Accruals The period-on-period variance in accruals is as a result of the release of accruals for Audit fees and other professional services for which invoices were received post 31 December 2021. Social security and other taxes During the period the Group availed of certain Government facilities in response to the COVID-19 pandemic. This allowed the Group to warehouse employment taxes for payment at a future date. The classification of warehoused employment taxes within current and non-current liabilities reflects the repayment schedule. The carrying amounts of the Group's trade payables are denominated in the following currencies: Unaudited Audited 30 June 2022 31 December 2021 US$'000 US$'000 US dollar 912 267 Euro 574 302 Pound sterling 253 39 Other 21 24 Total 1,760 632 13. Contract Liabilities Contract liabilities represent amounts received from customers in advance of the contractual performance obligations being 'satisfied'. Unaudited Audited 30 June 2022 31 December 2021 US$'000 US$'000 Advances for bundled performance obligations 4,435 4,419 Advances for service performance obligations 346 1,238 Advances for platform performance obligations 2,939 2,176 Total 7,720 7,833 Current 4,948 3,414 Non-current 2,772 4,419 The amount disclosed in "Advances for bundled performance obligations" in the current period relates to an ongoing delivery contract where the customer is estimated to go live in H2 2022. The balance will be unwound over the remaining life of the commercial contract. 14. Income tax Unaudited Audited Six months ended Year ended 30 June 2022 30 June 2021 31 December 2021 US$'000 US$'000 US$'000 Current tax Income tax charge 28 36 77 Current tax expense for the period 28 36 77 No deferred tax assets have been recognised in respect of the loss incurred in the six months ended 30 June 2022 due to uncertainties surrounding the utilisation of the assets against future taxable profits. Further information on the income tax expense recorded in the year ended 31 December 2021 is set out in Note 9 to the Group's 2021 Annual Report. 15. Loss per share Unaudited Audited Six months ended Year ended Basic 30 June 2022 30 June 2021 31 December 2021 Loss attributable to ordinary shareholders (US$'000) (3,083) (3,778) (4,874) Weighted average number of ordinary shares outstanding 131,143,222 81,563,842 104,123,931 Basic loss per share (in US$ cents) (2.4) (4.6) (4.7) Basic earnings per share is calculated by dividing the profit or loss attributable to the ordinary shareholders by the weighted average number of ordinary shares in issue during the period, excluding ordinary shares purchased/ issued by the Company and held as treasury shares. Unaudited Audited Six months ended Year ended Diluted 30 June 2022 30 June 2021 31 December 2021 Loss attributable to ordinary shareholders (US$'000) (3,083) (3,778) (4,874) Weighted average number of ordinary shares outstanding - basic 131,143,222 81,563,842 104,123,931 Adjustment for share options and share awards - - - Weighted average number of ordinary shares outstanding - diluted 131,143,222 81,563,842 104,123,931 Diluted loss per share (in US$ cents) (2.4) (4.6) (4.7) Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The categories of dilutive potential ordinary shares of the Group are employee share options, the Joint Share Ownership Plan ('JSOP') awards and Deferred Share Scheme awards. A calculation is performed to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of subscription rights attached to outstanding share options. No share options have been included in the calculation of diluted earnings per share because they are anti-dilutive for the six months ended 30 June 2022 and 30 June 2021, and for the year ended 31 December 2021 due to the loss recorded by the Group in these periods. The share options could potentially dilute basic earnings per share in the future. The weighted average potential dilutive impact of share options at 30 June 2022 is $nil based on losses incurred. As noted in the prior year, the weighted average potential dilutive impact of share options at 30 June 2021 could vary based on the average share price for the reporting period, the potentially dilutive shares could have fallen within the following range based on a share price upon relisting: Average share price below US$50c: nil potentially dilutive shares Average share price above US$50c and below US$70c: 2,718,976 potentially dilutive shares Average share price above US$70c and below US$90c: 4,340,083 potentially dilutive shares Average share price over US$90c: 266,450 potentially dilutive shares No JSOP or Deferred Share Scheme share awards have been included in the calculation of diluted earnings per share for the six months ended 30 June 2022 as all were disposed of during 2021. 16. Intangible assets This note details the intangible assets utilised by the Group to generate revenues and contribute to recorded results. The cost of software primarily represents the amounts originally paid to bring the software into use. The cost of product development primarily represents the direct labour costs incurred. All intangible assets are amortised over their estimated useful economic lives. Amortisation commences once the asset is available for use. Software Product development Product development WIP Total US$'000 US$'000 US$'000 US$'000 Unaudited Six months ended 30 June 2021 Opening carrying amount 592 474 732 1,798 Additions - - 1,038 1,038 WIP transfer - 151 (151) - Amortisation charge (65) (118) - (183) Closing carrying amount 527 507 1,619 2,653 Audited Year ended 31 December 2021 Opening carrying amount 592 474 732 1,798 Additions 178 - 2,270 2,448 WIP transfer - 845 (845) - Amortisation charge (247) (224) - (471) Impairment charge - (106) - (106) Closing carrying amount 523 989 2,157 3,669 At 31 December 2021 Cost 909 1,240 2,157 4,306 Accumulated amortisation and impairment (386) (251) - (637) Closing carrying amount 523 989 2,157 3,669 Unaudited Six months ended 30 June 2022 Opening carrying amount 523 989 2,157 3,669 Additions - - 2,101 2,101 WIP transfer - 1,693 (1,693) - Amortisation charge (123) (366) - (489) Closing carrying amount 400 2,316 2,565 5,281 At 30 June 2022 Cost 909 2,933 2,565 6,407 Accumulated amortisation and impairment (509) (617) - (1,126) Closing carrying amount 400 2,316 2,565 5,281 16. Intangible assets (continued) Intangible assets consist of capitalised development costs and software. These intangibles have finite useful lives and are valued based on actual costs incurred. Capitalised development costs are amortised over a period of three to five years (the majority being amortised over five years) commencing from when the related product is generally available for use. Work in Progress During the latter part of 2019 the Group completed the review of its approach to market and its product development activities. As a result of the review, the management team developed a "Strategic Product Roadmap" that aligned with the strategic objective of product first and future proofed platform. This roadmap outlines the Group's focus on technology enhancements and developments which represent distinct new capabilities. Work on these capabilities remains active. Once the platform enhancements are made available to the business and are available for use it will be moved out of work in progress into additions. Amortisation commences once the asset is available for use. Work in progress is review for impairment annually. 17. Right-of-use assets & lease liabilities The movements in right-of-use assets in the period were as follows: Office Buildings Computer Equipment Motor Vehicles Total US$'000 US$'000 US$'000 US$'000 Leased right-of-use assets Unaudited At 30 June 2021 Cost 2,680 1,940 83 4,703 Accumulated depreciation (1,306) (1,808) (68) (3,182) Net carrying amount 1,374 132 15 1,521 At 1 January 2021, net carrying amount 4,276 312 26 4,614 Disposals (2,680) - - (2,680) Depreciation charge for the period (222) (180) (11) (413) At 30 June 2021, net carrying amount 1,374 132 15 1,521 Audited At 31 December 2021 Cost 2,386 193 32 2,611 Accumulated depreciation (1,296) (103) (25) (1,424) Net carrying amount 1,090 90 7 1,187 At 1 January 2021, net carrying amount 4,276 312 26 4,614 Additions 589 - - 589 Disposals (3,244) - - (3,244) Depreciation charge for year (531) (222) (19) (772) At 31 December 2021, net carrying amount 1,090 90 7 1,187 Unaudited At 30 June 2022 Cost 2,386 193 32 2,611 Accumulated depreciation (1,544) (145) (31) (1,720) Net carrying amount 842 48 1 891 At 1 January 2022, net carrying amount 1,090 90 7 1,187 Depreciation charge for period (248) (42) (6) (296) At 30 June 2022, net carrying amount 842 48 1 891 17. Right-of-use assets & lease liabilities (continued) *During 2021, the group issued notice of termination on its head office in Dublin. The result of the termination notice was a substantial reduction in the lease term. The Group exited this lease during H1 2022. The reduction in the lease liability was in excess of the net carrying amount of the associated right-of-us assets. As a result, a credit was recorded in the prior year income statement as an exceptional gain. Please see Note 7. Also, during 2021 the Group gave notice on the UK office lease as part of a cost reduction measures. As the carrying value of the lease liability was greater than the right-of-use asset value, the termination gave rise to an exceptional gain of approximately $200k in the prior year. No indicators of impairment have been identified in relation to the Group's right-of-use assets. The Group continues to utilise its Office Buildings, Computer Equipment and Motor Vehicles as of 30 June 2022. The movements in lease liabilities in the period were as follows: Office Buildings Computer Equipment Motor Vehicles Total US$'000 US$'000 US$'000 US$'000 Lease liabilities Unaudited At 1 January 2021 (5,601) (461) (32) (6,094) Settlement ** 2,841 - - 2,841 Translation adjustment 5 (1) - 4 Payments 787 90 15 892 Discount unwinding (218) (6) (5) (229) At 30 June 2021 (2,186) (378) (22) (2,586) Audited At 1 January 2021 (5,601) (461) (32) (6,094) Translation adjustment 196 12 2 210 Additions (589) - - (589) Disposals 764 - - 764 Settlements 2,762 - - 2,762 Payments 1,344 139 24 1,507 Discount unwinding (331) (11) (4) (346) At 31 December 2021 (1,455) (321) (10) (1,786) Unaudited At 1 January 2022 (1,455) (321) (10) (1,786) Translation adjustment 72 6 1 79 Payments 460 46 6 512 Discount unwinding (78) (2) (1) (81) At 30 June 2022 net carrying amount (1,001) (271) (4) (1,276) ** During 2021, the group issued notice of termination on its head office in Dublin. The result of the termination notice was a substantial reduction in the lease term. The Group exited the lease during H1 2022. The lease liability has been amended to reflect the change in the lease term. 18. Deferred contract fulfilment costs This note details the deferred contract fulfilment costs that arise from customer service contracts and comprise of staff and contractor / outsourced partner costs incurred. These costs are being deferred under IFRS 15 and will be recognised as the related performance obligations are fulfilled. The movements in the deferred contract fulfilment costs asset in the period were as follows: Unaudited Audited 30 June 2022 31 December 2021 US$'000 US$'000 At start of period 2,867 2,863 Costs incurred to fulfil the ongoing customer contracts in the period 285 4 At end of period 3,152 2,867 The deferred contract fulfilment cost assets at 30 June 2022 and 31 December 2021 are analysed as follows: Unaudited Audited 30 June 2022 31 December 2021 US$'000 US$'000 Current Costs incurred to fulfil customer contracts 1,182 - Non-current Costs incurred to fulfil customer contracts 1,970 2,867 Total 3,152 2,867 19. Share capital There were 132,677,009 ordinary shares in issue at 30 June 2022 (31 December 2021: 132,153,843). 20. Cash (used in)/generated from operations Unaudited Audited Six months ended Year ended 30 June 2022 30 June 2021 31 December 2021 US$'000 US$'000 US$'000 Loss before income tax (3,055) (3,742) (4,797) Adjustments for: Finance costs - net 119 446 4,350 Depreciation 104 183 326 Depreciation of right-of-use assets 296 413 772 Amortisation 489 65 471 Deferred commission amortisation - 41 62 Impairment - - 106 Share-based payments cost 228 450 983 Exchange translation adjustment (187) - (900) Loss on disposal of fixed assets - - 36 Contract fulfilment cost payments (285) (4) (2,291) (2,144) 1,405 Changes in working capital: Trade and other receivables (318) 1,459 3,189 Contract assets (465) (10) 131 Trade and other payables 986 2,421 (1,719) Contract liabilities (113) (280) (2,352) Provisions (725) (183) (207) Cash (used in)/generated from operations (2,926) 1,263 447 21. Related party transactions The Group's principal related parties are the Group's subsidiaries and key management personnel of the Group. The following transactions were entered with related parties during the period: A. KEY MANAGEMENT PERSONNEL Key management personnel include the two Executive Directors who held office during the period (six months ended 30 June 2021: two Executive Directors), the five Non-Executive Directors (six months ended 30 June 2021: five Non-Executive Directors) and eight members of the senior management team (six months ended 30 June 2021: ten members). Unaudited Unaudited Six months ended Six months ended 30 June 2022 30 June 2021 US$'000 US$'000 Short term employee benefits (1) 1,219 1,907 Share-based payment charge (2) 230 434 Termination benefits - - Retirement benefits expense (3) 57 79 Total 1,506 2,420 (1) Balance is made up of salaries, Directors' fees, and other short-term employee benefits. (2) The benefits included in this category relate to share option awards, JSOP awards, Long Term Incentive Plans and deferred share awards (3) Retirement benefits accrued in the period to two Executive Directors (six months ended 30 June 2021: two Directors) and nine members of the senior management team (six months ended 30 June 2021: ten members) under defined contribution schemes. The remuneration of, and transactions with, all Non-Executive Directors was as follows: Unaudited Unaudited Six months ended Six months ended 30 June 2022 30 June 2021 US$'000 US$'000 Directors' fees 162 182 B. OTHER Details of related party transactions in respect of the year ended 31 December 2021 are contained in Note 29 of the Datalex plc Annual Report 2021. The Group continued to enter into transactions in the normal course of business with its related parties during the period. There were no transactions with related parties in the first half of 2022 or changes to transactions with related parties disclosed in the 2021 Annual Report that had a material effect on the financial position or performance of the Group. 22. Dividends The Directors do not propose an interim dividend in respect of the six months ended 30 June 2022 (six months ended 30 June 2021: US$nil). Datalex plc paid a dividend to shareholders of US$3.8m on 5 September 2018. To enable the dividend to be paid, Datalex plc received a dividend of US$4.0m from its subsidiary, Datalex (Ireland) Limited ("Datalex Ireland") on 30 May 2018. This dividend was US$0.24 per share on the issued ordinary share capital of 16,607,262 shares. The dividend payment by Datalex plc had been approved by shareholders at the AGM on 18 June 2018 and interim financial statements to 31 May 2018 were filed at the Companies Registration Office to support this payment. Subsequent to the dividend payments, management identified that Datalex Ireland would not have had sufficient retained earnings to support the dividend payment to Datalex plc had there been appropriate recording of revenue, which had been subsequently amended. As such, the 2018 dividend payment by Datalex Ireland to Datalex plc of US$4.0m was an unlawful distribution in contravention of the provisions of Section 117 of the Companies Act 2014. In accordance with applicable legislation, the dividend of US$4.0m paid by Datalex Ireland to Datalex plc is repayable by Datalex plc. Accordingly, an intercompany payable to Datalex Ireland has been recognised for US$4.0m in the financial statements of Datalex plc and the dividend received had been derecognised in the income statement for 2018. The amount remains outstanding at 30 June 2022. 23. Events occurring after the statement of financial position date On 1 September 2022 the Group signed a new customer contract with leading global low-cost carrier easyJet. On 2 August 2022 the Group drew down ���2.5m of the ���10m available under Facility B. There were no other events that would have impacted on the Half-Yearly Financial Report for the six months ended 30 June 2022, up to the date of issue. 24. Principal risks and uncertainties The principal risks and uncertainties faced by the Group were last outlined on pages 34 to 37 of the Group's 2021 Annual Report. The Annual Report is available on our website https://investors.datalex.com. The risks highlighted in the annual report remain relevant for the remaining six month. Among other factors that are subject to change and could impact expected results for the remainder of the year are: �� Inflationary pressures: A continuation of increasing inflation rates globally may have an adverse impact on travel as consumers disposable incomes reduce. �� ATC strikes and staffing related disruptions: Delays similar to those that occurred over recent months in major European airports would have an adverse impact on travel. 25. Litigation and Disputes There has been no material change in the Group's legal dispute with Lufthansa and its subsidiary airline, Swiss International Airlines since the publication of the Datalex plc statutory financial statements for the year ended 31 December 2021. 26. Distribution of interim report This interim report is available on the Group's website www.datalex.com. Copies are also available to the public from the Company's registered office at Block V, EastPoint, Dublin, D03 AX24, Ireland. 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