Form: 424B3

Prospectus filed pursuant to Rule 424(b)(3)

February 28, 2019



  
 
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-229213
PROSPECTUS SUPPLEMENT NO. 1

AMERICAN DEPOSITARY SHARES

endavalogoa06.jpg


REPRESENTING CLASS A ORDINARY SHARES

This Prospectus Supplement No. 1 supplements the prospectus, dated February 1, 2019, relating to the resale, from time to time, of the American Depositary Shares, or ADSs, each representing one Class A Ordinary Share, being offered by the selling shareholders identified therein. This Prospectus Supplement No. 1 is not complete without, and may not be delivered or utilized except in connection with the prospectus, including any amendments or supplements thereto. If there is any inconsistency between the information in the prospectus and this Prospectus Supplement No. 1, you should rely on the information in this Prospectus Supplement No. 1.
 
Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 4 of the prospectus to read about factors you should consider before purchasing any of our securities.

This Prospectus Supplement No. 1 is filed for the purpose of including in the prospectus the results of Endava plc for the three and six months ended December 31, 2018 set forth below, which were also reported in a Current Report on Form 6-K, which was filed with the U.S. Securities and Exchange Commission on February 28, 2019.
 
Neither the U.S. Securities and Exchange Commission nor any state or other foreign securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

_______________________
 
The date of this Prospectus Supplement No. 1 is February 28, 2019.
 
 
 
 
 
 
 







INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT

ENDAVA ANNOUNCES SECOND QUARTER FISCAL YEAR 2019 RESULTS

Q2 FY2019
43.6%Year on Year Growth in Revenue to £71.8 million
42.4% Constant Currency Revenue Growth
IFRS diluted EPS £0.14 compared to £0.10 in the prior year period
Adjusted diluted EPS £0.20 compared to £0.12 in the prior year period
London, U.K. – Endava plc (NYSE: DAVA), a global provider of digital transformation, agile development and intelligent automation services, today announced results for the three months ended December 31, 2018, the second quarter of its 2019 fiscal year ("Q2 FY2019").

"Q2 FY2019 was another record quarter for Endava, with revenue of £71.8 million, a strong growth of 43.6% Year on Year on a reported basis from £50 million in the same quarter in the previous fiscal year. This remarkable revenue growth was driven by the expansion of our existing customers particularly our larger ones, as well as the acquisition of new customers." said John Cotterell, Endava’s CEO.

“We delivered strong results in Q2 FY2019 with Profit Before Tax at £9.4 million and Adjusted Profit Before Tax at £13.6 million. Our strong client relationships contributed to our revenue growth and underpin future growth.” said Mark Thurston Endava’s CFO.”

FINANCIAL HIGHLIGHTS:

Revenue for the second quarter ended December 31, 2018 was £71.8 million an increase of 43.6% compared to £50.0 million in the same period in the prior year.
Revenue growth rate at constant currency (a non-IFRS measure) was 42.4% in the second quarter compared to 29.0% in the same period in the prior year.
Profit before tax in the second quarter was £9.4 million compared to £6.0 million in the same period in the prior year or 13.1% of revenue compared to 12.0% in the same period in the prior year.
Adjusted profit before tax (a non-IFRS measure) in the second quarter was £13.6 million compared to £7.5 million in the same period in the prior year or 18.9% of revenue compared to 15.0% in the same period in the prior year.
Profit for the period was £7.4 million in the second quarter, resulting in a diluted EPS of £0.14, compared to profit for the period of £4.8 million and diluted EPS of £0.10 in the same period in the prior year.
Adjusted profit for the period (a non-IFRS measure) was £10.9 million in the second quarter, resulting in adjusted diluted EPS (a non-IFRS measure) of £0.20 compared to adjusted profit for the period of £6.1 million and adjusted diluted EPS of £0.12 in the same period in the prior year.





Net cash from operating activities was £9.6 million in the second quarter compared to £8.6 million in the same period in the prior year.
Free cash flow (a non-IFRS measure) was £9.2 million in the second quarter compared to free cash flow of £7.4 million in the same period in the prior year.
At December 31, 2018, Endava had cash and cash equivalents of £51.0 million, compared to £15.0 million at June 30, 2018. Net cash at December 31, 2018 was £51.0 million compared to net borrowing of £4.7 million at June 30, 2018.

OTHER METRICS:

Headcount reached 5,389 at December 31, 2018, with 4,845 average operational employees in the second quarter compared to a headcount of 4,580 at December 31, 2017 and 3,684 average operational employees in the second quarter of the prior year.
Number of clients with over £1 million in spend grew to 60 on a rolling twelve months basis at December 31, 2018 compared to 42 at December 31, 2017.
Top 10 clients accounted for 38% of revenue in the second quarter down from 45% in the same period in the prior year.
By geographic region, 27% of revenue was generated in North America, 28% was generated in Europe and 45% was generated in the United Kingdom in the second quarter. This compares to 15% in North America, 37% in Europe and 48% in the United Kingdom in the same period in the prior year.
Revenue by industry vertical was as follows in the second quarter, Payments and Financial Services 53%, TMT 27% and Other 20%. This compares to Payments and Financial Services 62%, TMT 26% and Other 12% in the same period in the prior year.







ABOUT ENDAVA PLC:
Endava is a leading next-generation technology services provider and helps accelerate disruption by delivering rapid evolution to enterprises. Using distributed enterprise agile at scale, Endava collaborates with its clients, seamlessly integrating with their teams, catalysing ideation and delivering robust solutions. Endava helps its clients become digital experience-driven businesses by assisting them in their journey from idea generation to development and deployment of products, platforms and solutions. It services clients in the following industries: Payments, Financial Services, TMT, Consumer Products, Logistics and Healthcare. Endava had 5,389 employees as of December 31, 2018 located in offices in North America and Western Europe and delivery centres in Romania, Moldova, Bulgaria, Serbia, Macedonia, Argentina, Uruguay, Venezuela, and Colombia.
NON-IFRS FINANCIAL INFORMATION:
To supplement Endava’s Consolidated Statements of Comprehensive Income and Consolidated Balance Sheets presented in accordance with IFRS, the Company uses non-IFRS measures of certain components of financial performance. These measures include: revenue growth rate at constant currency, adjusted diluted EPS, adjusted profit before tax, adjusted profit for the period and free cash flow.

Revenue growth rate at constant currency is calculated by translating revenue from entities reporting in foreign currencies into British Pounds using the comparable foreign currency exchange rates from the prior period. For example, the average rates in effect for the fiscal quarter ended December 31, 2017 were used to convert revenue for the fiscal quarter ended December 31, 2018 and the revenue for the comparable prior period.

Adjusted diluted EPS is defined as the Company's profit for the period adjusted to exclude the impact of share-based compensation expense, amortisation of acquired intangible assets, realized and unrealized foreign currency exchange gains and losses, fair value adjustment of contingent consideration, initial public offering expenses incurred and Sarbanes-Oxley compliance readiness expenses incurred (all of which are non-cash other than realized foreign currency exchange gains and losses, initial public offering and Sarbanes-Oxley compliance readiness expenses) and the tax impact of these adjustments, divided by weighted average number of shares outstanding - diluted.





Adjusted profit before tax is defined as the Company’s profit for the period adjusted to exclude the impact of share-based compensation, amortization of acquired intangible assets, realized and unrealized foreign currency exchange gains and losses, fair value adjustment of contingent consideration, initial public offering expenses incurred and Sarbanes-Oxley compliance readiness expenses incurred (all of which are non-cash other than realized foreign currency exchange gains and losses, initial public offering and Sarbanes-Oxley compliance readiness expenses).

Adjusted profit for the period is defined as the Company's profit for the period adjusted to exclude the impact of share-based compensation expense, amortisation of acquired intangible assets, realized and unrealized foreign currency exchange gains and losses, fair value adjustment of contingent consideration, initial public offering expenses incurred and Sarbanes-Oxley compliance readiness expenses incurred (all of which are non-cash other than realized foreign currency exchange gains and losses, initial public offering and Sarbanes-Oxley compliance readiness expenses).

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

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







CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
Six Months Ended December 31
Three Months Ended December 31
 
2018
2017
2018
2017
 
£’000
£’000
£’000
£’000
REVENUE
138,248

97,542

71,834

50,011

Cost of sales
 
 
 
 
Direct cost of sales
(83,026)

(60,321)

(42,668)

(30,904)

Allocated cost of sales
(7,305
)
(6,046
)
(3,737
)
(3,099
)
Total cost of sales
(90,331
)
(66,367
)
(46,405
)
(34,003
)
GROSS PROFIT
47,917

31,175

25,429

16,008

Selling, general and administrative expenses
(31,008
)
(18,050
)
(16,345
)
(9,832
)
OPERATING PROFIT
16,909

13,125

9,084

6,176

Net finance (expense) / income
(4,860
)
(660
)
331

(153
)
PROFIT BEFORE TAX
12,049

12,465

9,415

6,023

Tax on profit on ordinary activities
(2,584)

(2,607)

(1,998)

(1,250)

PROFIT FOR THE PERIOD AND PROFIT ATTRIBUTABLE TO OWNERS OF THE PARENT
9,465

9,858

7,417

4,773

Other comprehensive income
 
 
 
 
Items that may be reclassified subsequently to profit or loss:
 
 
 
 
Exchange differences on translating foreign operations
662

255

930

234

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO OWNERS OF THE PARENT
10,127

10,113

8,347

5,007

 
 
 
 
 
EARNINGS PER SHARE:
 
 
 
 
Weighted average number of shares outstanding - Basic
48,859,382

45,100,165

49,454,195

45,100,165

Weighted average number of shares outstanding - Diluted
54,454,333

49,436,677

54,892,513

49,596,219

Basic EPS
0.19

0.22

0.15

0.11

Diluted EPS
0.17

0.20

0.14

0.10







CONDENSED CONSOLIDATED BALANCE SHEETS
 
December 31, 2018

June 30, 2018
December 31, 2017

 
£’000
£’000
£’000
 
 
 
 
ASSETS - NON-CURRENT
 
 
 
Goodwill
42,447

41,062

40,517

Intangible assets
30,303

30,787

31,356

Property, plant and equipment
9,989

8,584

8,716

Deferred tax assets
2,519

2,488

919

TOTAL
85,258

82,921

81,508

ASSETS - CURRENT
 
 
 
Inventories

16

14

Trade and other receivables
63,766

52,352

49,349

Corporation tax receivable
546

677


Cash and cash equivalents
51,044

15,048

25,066

TOTAL
115,356

68,093

74,429

TOTAL ASSETS
200,614

151,014

155,937

LIABILITIES - CURRENT
 
 
 
Borrowings
39

19,744

38,917

Trade and other payables
41,892

40,243

28,522

Corporation tax payable
1,270

1,488

741

Contingent consideration
1,244

5,259

5,141

Deferred consideration
4,691

4,401

11,993

TOTAL
49,136

71,135

85,314

LIABILITIES - NON CURRENT
 
 
 
Borrowings
3

20

45

Contingent consideration

7,251

6,961

Deferred consideration


1,235

Deferred tax liabilities
2,601

2,832

2,692

Other liabilities
284

277

267

TOTAL
2,888

10,380

11,200

EQUITY
 
 
 
Share capital
1,061

996

996

Share premium
48,614

2,678

2,678

Merger relief reserve
4,430

4,430

4,430

Retained earnings
73,956

59,260

48,519

Other reserves
22,804

4,410

5,075

Investment in own shares
(2,275
)
(2,275
)
(2,275
)
TOTAL
148,590

69,499

59,423

TOTAL LIABILITIES AND EQUITY
200,614

151,014

155,937






CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 
     Six Months Ended December 31
  Three Months Ended December 31
 
2018
2017
2018
2017
 
£’000
£’000
£’000
£’000
OPERATING ACTIVITIES
 
 
 
 
Profit for the period
9,465

9,858

7,417

4,773

Income tax charge
2,584

2,607

1,998

1,250

Non-cash adjustments
13,305

2,672

4,808

1,057

Tax paid
(2,911
)
(2,274
)
(1,419
)
(963
)
UK research and development credit received

1,854


917

Net changes in working capital
(10,778
)
(2,289
)
(3,190
)
1,544

Net cash from operating activities
11,665

12,428

9,614

8,578

 
 
 
 
 
INVESTING ACTIVITIES
 
 
 
 
Purchase of non-current assets (tangibles and intangibles)
(3,964
)
(2,767
)
(2,070
)
(1,137
)
Proceeds/(Loss) from disposal of non-current assets
25


25


Acquisition of business / subsidiaries (net of cash acquired)

(17,392
)

(17,392
)
Interest received
126

23

52

19

Net cash used in investing activities
(3,813
)
(20,136
)
(1,993
)
(18,510
)
 
 
 
 
 
FINANCING ACTIVITIES
 
 
 
 
Proceeds from borrowings
3,500

22,979

3,500

22,971

Repayment of borrowings
(23,526
)
(13,643
)
(3,511
)
(4,620
)
Interest Paid
(222
)
(203
)
(74
)
(127
)
Grant received
1,784


1,679


Net proceeds from initial public offering
44,828




Net cash from financing activities
26,364

9,133

1,594

18,224

Net change in cash and cash equivalents
34,216

1,425

9,215

8,292

 
 
 
 
 
Cash and cash equivalents at the beginning of the period
15,048

23,571

41,765

16,634

Exchange differences on cash and cash equivalents
1,780

70

64

140

Cash and cash equivalents at the end of the period
51,044

25,066

51,044

25,066






RECONCILIATION OF ADJUSTED FINANCIAL MEASURES TO COMPARABLE IFRS FINANCIAL MEASURES

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

 
Six Months ended December 31
Three Months ended December 31
 
2018
2017
2018
2017
REVENUE GROWTH AT CONSTANT CURRENCY
41.1
%
31.7
%
42.4
%
29.0
 %
Foreign exchange rates impact
0.6
%
1.2
%
1.2
%
(0.5
%)
REVENUE GROWTH AS REPORTED UNDER IFRS
41.7
%
32.9
%
43.6
%
28.5
 %

RECONCILIATION OF ADJUSTED PROFIT BEFORE TAX AND ADJUSTED PROFIT FOR THE PERIOD:

 
Six Months Ended December 31
Three Months Ended December 31
 
2018
2017
2018
2017
 
£’000
£’000
£’000
£’000
 
 
 
 
 
PROFIT BEFORE TAX
12,049

12,465

9,415

6,023

Adjustments:
 
 
 
 
Share-based compensation expense
5,010

720

3,125

354

Amortisation of acquired intangible assets
1,752

960

873

479

Foreign currency exchange (gains) losses, net
(1,141
)
481

(436
)
44

Initial public offering expenses incurred
1,055

685

79

604

Sarbanes-Oxley compliance readiness expenses incurred
698


504


Fair value movement of contingent consideration
5,805




Total adjustments
13,179

2,846

4,145

1,481

ADJUSTED PROFIT BEFORE TAX
25,228

15,311

13,560

7,504

 
 
 
 
 
PROFIT FOR THE PERIOD
9,465

9,858

7,417

4,773

Adjustments:
 
 
 
 
Adjustments to profit before tax
13,179

2,846

4,145

1,481

Tax impact of adjustments
(2,349
)
(386
)
(666
)
(180
)
ADJUSTED PROFIT FOR THE PERIOD
20,295

12,318

10,896

6,074

 
 
 
 
 
Diluted EPS (£)
0.17

0.20

0.14

0.10

Adjusted diluted EPS (£)
0.37

0.25

0.20

0.12







RECONCILIATION OF NET CASH FROM OPERATING ACTIVITIES TO FREE CASH FLOW

 
Six Months Ended December 31
Three Months Ended December 31
 
2018
2017
2018
2017
 
£’000
£’000
£’000
£’000
 
 
 
 
 
Net cash from operating activities
11,665

12,428

9,614

8,578

Adjustments:
 
 
 
 
Grant received
1,784


1,679


Net purchases of non-current assets (tangible and intangible)
(3,939
)
(2,767
)
(2,045
)
(1,137
)
Free cash flow
9,510

9,661

9,248

7,441


SUPPLEMENTARY INFORMATION

SHARE-BASED COMPENSATION EXPENSE
 
Six Months Ended December 31
Three Months Ended December 31
 
2018
2017
2018
2017
 
 
 
 
 
Direct cost of sales
1,939

482

1,191

237

Selling, general and administrative expenses
3,071

238

1,934

117

Total
5,010

720

3,125

354


EMPLOYEES, TOP 10 CUSTOMERS and REVENUE SPLIT
Six Months Ended December 31
Six Months Ended December 31
Three Months Ended December 31
 
2018
2017
2018
2017
Closing number of total employees
5,389

4,580

5,389

4,580

Average operational employees
4,726

3,621

4,845

3,684

 
 
 
 
 
Top 10 customers %
38
%
45
%
38
%
45
%
Number of clients with > £1m of revenue
(rolling 12 months)
60

42

60

42

 
 
 
 
 
Geographic split of revenue %
 
 
 
 
North America
27
%
15
%
27
%
15
%
Europe
28
%
37
%
28
%
37
%
UK
45
%
48
%
45
%
48
%
Industry vertical split of revenue %
 
 
 
 
Payments and Financial Services
53
%
61
%
53
%
62
%
TMT
27
%
27
%
27
%
26
%
Other
20
%
12
%
20
%
12
%





CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME – TRANSLATED INTO US$
 
Six Months Ended December 31
Three Months Ended December 31
 
2018
2017
2018
2017
 
US$’0001
US$’0002
US$’0003
US$’0004
REVENUE
179,004

128,609

92,429

66,395

Cost of sales
 
 
 
 
Direct cost of sales
(107,502)

(79,533)

(54,901)

(41,028)

Allocated cost of sales
(9,459
)
(7,972
)
(4,808
)
(4,114
)
Total cost of sales
(116,961
)
(87,505
)
(59,709
)
(45,142
)
GROSS PROFIT
62,043

41,104

32,720

21,253

Selling, general and administrative expenses
(40,149
)
(23,799
)
(21,031
)
(13,053
)
OPERATING PROFIT
21,894

17,305

11,689

8,200

Net Finance (expense) / income
(6,293
)
(870
)
426

(203
)
PROFIT BEFORE TAX
15,601

16,435

12,115

7,997

Tax on profit on ordinary activities
(3,346)

(3,437)

(2,571)

(1,660)

PROFIT FOR THE PERIOD AND PROFIT ATTRIBUTABLE TO OWNERS OF THE PARENT
12,255

12,998

9,544

6,337

Other comprehensive income
 
 
 
 
Items that may be reclassified subsequently to profit or loss:
 
 
 
 
Exchange differences on translating foreign operations
857

336

1,197

311

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO OWNERS OF THE PARENT
13,112

13,334

10,741

6,648

 
 
 
 
 
EARNINGS PER SHARE:
 
 
 
 
Weighted average number of shares outstanding
48,859,382

45,100,165

49,454,195

45,100,165

Weighted average number of shares outstanding - Diluted
54,454,333

49,436,677

54,892,513

49,596,219

Basic EPS
0.25

0.29

0.19

0.14

Diluted EPS
0.23

0.26

0.17

0.13


1Translated solely for convenience into US dollars at the rate of £1.00=1.2948
2Translated solely for convenience into US dollars at the rate of £1.00=1.3185
3Translated solely for convenience into US dollars at the rate of £1.00=$1.2867.
4Translated solely for convenience into US dollars at the rate of £1.00=$1.3276.