TIDMAD4
RNS Number : 5955C
adept4 plc
29 June 2016
adept4 plc ("adept4", the "Group" or the "Company")
Interim Results for the six months ended 31 March 2016
adept4 plc (AIM: AD4), the AIM listed provider of IT as a
Service, today announces its unaudited interim results for the six
months ended 31 March 2016.
Financial Summary Unaudited Unaudited
6 months 6 months to
to 31 March
31 March 2015
2016
GBP GBP
----------------------------------- ---------- ------------
Revenue from continuing operations 830,577 -
(4)
Gross Profit from continuing
operations (4) 462,186 -
Gross Profit Margin % 55.6% -
Adjusted Trading Group EBITDA(1) 166,132 -
Adjusted Group EBITDA(2) (138,919) (198,068)
Net Cash(3) 1,439,108 193,197
Net Assets 6,597,826 320,793
Loss for the period (695,338) (521,524)
One-off Reorganisation costs (458,338) -
Operational Highlights
-- Acquisitions of Ancar-B Technologies Limited ("Ancar"),
provider of IT support services and Weston Communications Limited
("Weston"), provider of telecoms and IT support services, in
February 2016
-- Placing and open offer raising gross proceeds of GBP4.80
million in February 2016 to fund cash element of acquisition of
Ancar and provide working capital
-- Acquisition of 70% shareholding not already held in Accent Telecom North in March 2016
-- Disposal of stake (40%) in Stripe 21, a provider of voice
over IP software, a non-core asset, for GBP0.4 million in March
2016.
Post Period End Highlights
-- Disposal of RMS Managed Security IT Limited in May 2016
-- Disposal of trade and assets of Pinnacle CDT Limited in May 2016 for gross proceeds of
GBP2.8 million
-- Acquisition of adept4 Limited, provider of IT as a Service,
in May 2016 with associated issue of GBP5 million loan notes to the
Business Growth Fund plc
-- Change of name to adept4 plc in June 2016
Commenting on the results, Gavin Lyons, Executive Chairman
stated:
"Since I was appointed in December 2015, our entire focus has
been on the turnaround of the business. Having executed five
acquisitions and three disposals in a very short period of time,
that turnaround is now complete
A consequence of all the above activity is that the numbers
reported in this interim condensed financial statement are not
representative of the new underlying trading business - we now have
a trading business with healthy gross margins, high recurring
revenues and positive cashflows.
Our focus now is on the integration of our acquisitions and
scaling our proposition to become a leading UK supplier of IT as a
Service."
(1) Adjusted Trading Group EBITDA is measured as Earnings from
continuing operations before plc costs, interest, taxation,
depreciation, amortisation of intangibles, separately identifiable
costs and income and share based payments
(2)Adjusted EBITDA is measured as Adjusted Trading Group EBITDA
after plc costs
(3)Net cash is calculated as cash and cash equivalents less any
short term borrowings
(4) Continuing operations solely relate to Ancar and Weston
(plus plc and separately identifiable costs and income relating to
these operations) acquired February 2016.
All company announcements can be found at www.adept4plc.com
For further information please contact:
adept4 plc
Gavin Lyons, Chairman
Ian Winn, Chief Operating Officer
and Finance Director 020 8185 6393
N+1 Singer
Shaun Dobson / Jen Boorer 020 7496 3000
MXC Capital Advisory LLP
Marc Young / Charlotte Stranner 020 7965 8149
About adept4
adept4 is seeking to become a leading provider of 'IT as a
Service' to the SME sector in the UK utilising asset light
technology and services so that customers always benefit from
innovative and aggregated solutions. Our value proposition is
focused on helping organisations with their IT strategy, being the
single trusted partner to manage the provisioning process and
provide superior customer experience and support.
adept4, through a dedicated professional services team
comprising software, infrastructure and project management
resources, is perfectly placed to transition customers into a fully
managed service, supported by a 24x7x365, UK based helpdesk. adept4
is a Tier 1 Microsoft SLPA and Cloud Service Provider. adept4 is a
public company quoted on the AIM market of the London Stock
Exchange with offices in Leeds, Warrington, Aberdeen, Brighton and
Northampton.
CHAIRMAN'S STATEMENT & BUSINESS AND OPERATIONAL REVIEW
INTRODUCTION
I am pleased to report upon my first set of results since I
joined the Group as Executive Chairman and also the first set of
results under our new name of adept4 plc. The period under review
has been one of considerable change.
I believe it is only appropriate to start by acknowledging the
service of my predecessor in the role of Chairman, James Dodd, as
well as that of Nicholas Scallan, former Chief Executive Officer,
both of whom left the business following the annual general meeting
in March 2016. I wish them well for the future. I also want to
thank former colleagues who left the business with the sale of RMS
Managed IT Security Limited and the disposal of the trade and
assets of Pinnacle CDT Limited. All of their efforts in the face of
challenging circumstances were very much appreciated, and it is to
their ultimate credit that we have been able to effect a
re-organisation which has, in my view, generated the best outcome
for all stakeholders of the business without any further financial
or employment losses.
STRATEGY, PROPOSITION & INITIAL PLAN
On 7 December I was appointed to the Board as Executive Chairman
to drive the strategy of the business and assist executive
management in the execution of that strategy.
In the announcement in January 2016 of the proposed acquisitions
of Ancar B Technologies Limited ("Ancar") and Weston Communications
Limited ("Weston") alongside a placing of new shares and an open
offer, we set out the Company's strategy of re-focusing the
business on higher margin services through a buy and build strategy
to become a leading provider of IT as a Service ("ITaaS").
We also announced the appointment of Ian Winn to the role of
Chief Operating Officer and Finance Director from 1 February with
Nicholas Scallan, CEO, stepping down from the board and the Company
at the end of March 2016.
In the same announcement, we outlined the Board's intention to
perform a full review of the existing Pinnacle business which would
include the possibility of making disposals and potential
acquisitions of joint ventures already within the business to
maximise shareholder value.
As I report to you today, I believe that we have made
substantial progress in a relatively short time frame. Through
executing this strategy we now have a sustainable operational
platform from which to grow the Company organically and through
potential further acquisitions.
ACQUISITIONS AND DISPOSALS DURING THE PERIOD
In February 2016, following shareholder approval, we completed
the acquisitions of Ancar and Weston to create a Yorkshire hub for
provision of ITaaS to SME customers for gross consideration of
GBP6.5m, GBP5.0m net of cash in this business at completion. The
net GBP5m consideration was satisfied by the issue of GBP2.25m new
shares in the Group and GBP2.75m of cash from the placing and open
offer referred to below.
The combined businesses, on a pro-forma basis based on historic
filed information, were generating annual revenues of GBP5m (of
which 59% were recurring) and EBITDA of GBP0.8m.
At the same time, we raised GBP4.8m through a placing and open
offer for new ordinary shares at 4.2p per share, in order to fund
the cash consideration for the acquisition of Ancar and provide
working capital for the Group.
Following the acquisitions of Ancar and Weston, we undertook a
strategic review of the legacy Pinnacle business. The strategic
review concluded, inter alia, that the fragmented operational and
contractual organisation structure required a significant overhaul.
In order to help achieve this, we made the decision to rationalise
the joint venture arrangements in place. To that end, on 14 March
2016 we announced that we had reached agreement with two out of
three of our joint venture partnerships to effectively acquire the
rights to 100% of the gross profit originated by them for an
initial consideration of GBP0.40m, with a further payment to be
made in March 2017 for GBP0.26m. The annual commission payments
saved were GBP0.40m. On the same date we also announced that we had
successfully sold our minority shareholding in Stripe 21 Limited, a
provider of voice over IP software considered non-core to the
Group, for GBP0.39m.
On 31 March 2016, we completed a group re-organisation where we
'hived' up the trade and assets of the majority of the legacy
Pinnacle subsidiaries which provided a range of data,
telecommunication and fixed line services. Following the 'hive' up,
all the activities of those businesses were transacted by a single
legal entity - Pinnacle CDT Limited ("Pinnacle CDT").
We also took the commercial decision to look for ways to exit
from both Pinnacle CDT and RMS Managed IT Security Limited ("RMS"),
which were no longer considered to be in line with the Group's new
strategy and I am pleased to report that, post period end, we
achieved exits for both businesses as described further below.
POST PERIOD
During April 2016 we announced to staff in the Ancar and Weston
businesses that we would be consolidating onto a single site -
Ancar's existing office. This integration is on track to be
completed by July 2016 and will generate a modest level of cost
savings.
On 3 May 2016, we announced the disposal of RMS, to Intronovo
Limited for GBP1. At the date of transfer RMS had net liabilities
of GBP45,000, excluding intra group indebtedness of GBP2.15m which
was written off immediately prior to disposal.
On 16 May 2016 we announced that we had disposed of the trade
and assets of Pinnacle CDT to Chess ICT Limited for cash
consideration of GBP2.8m.
The sale of these two businesses meant that all of the Group's
legacy businesses which formed the trading business of the Group at
the start of the financial period were no longer part of the Group.
As part of these disposals, approximately 33 people left the Group,
and the Group no longer has an operating presence in Stoke-on-Trent
or Glasgow.
On 26 May 2016 we announced the acquisition of adept4 Limited, a
provider of ITaaS encompassing fully managed IT service contracts,
cloud based services, professional services, software support and
development. Initial consideration for the acquisition was GBP4.5m,
payable in cash, plus deferred consideration of GBP1m in cash,
payable in January 2018. Further contingent consideration of up to
GBP1.5m in cash is payable in March 2018, subject to performance
criteria for the year to 31 December 2017.
adept4 Limited has a widely experienced and capable executive
management team which will be retained and leveraged across the
larger group. We believe that this team combined with two dedicated
operation centres in Warrington and Leeds provides a strong
platform for future organic and acquisition led growth.
The decision was also taken to rename the Company to adept4 plc,
for which shareholder approval was obtained in June 2016 and the
name change became effective on 13 June 2016, signalling the
beginning of a new era for the Group.
Business Growth Fund plc ("BGF")
In order to fund the acquisition of adept4 Limited, the Company
issued GBP5m loan notes to the BGF in June 2016, with an associated
GBP3m option to subscribe for shares in the Company at 6 pence,
representing a 43% uplift from the February placing price of 4.2
pence. We were particularly pleased to secure the investment from
BGF and also at the speed with which the funding was completed
which, combined with the exercise price of the option, I believe
provides clear external validation of the strategy we are
pursuing.
FINANCIAL SUMMARY
A consequence of all the above activity is that the numbers
reported are not representative of the new underlying trading
business.
The RMS and Pinnacle CDT businesses have been treated as
'discontinued operations' and therefore continued operations relate
solely to the trading performance of Ancar and Weston post
acquisition (10 February 2016) plus plc costs.
On the Consolidated Statement of Financial Position the assets
and liabilities related to discontinued operations have each been
separately identified and classified as a single value and included
in current assets and current liabilities held for sale.
The previous segmentation used to analyse the business is no
longer appropriate for the business as it now exists. ITaaS should
be viewed as a holistic approach to meeting a customer's
requirements and therefore a granular break down of revenue streams
and profitability between data connectivity, mobiles,
telecommunication services etc. is not appropriate. For the
purposes of the interim statement we have analysed revenues and
profitability between recurring and non-recurring. As we integrate
adept4 Limited we will further review any additional segmentation
which is required to effectively manage and control the business
for group reporting purposes.
Revenue for the period was GBP0.83m, with gross profit at
GBP0.46m, which represented a gross profit margin of 55%.
Recurring revenues for the period were GBP0.57m, which
represented 69% of total revenue, and generated gross profit of
GBP0.35m, representing 76% of gross profit.
Trading Group EBITDA for the period was GBP0.16m, which, as
previously stated, represented only two months trading results for
Ancar and Weston.
Plc costs for the period were GBP0.3m and reflected the higher
costs associated with my executive chairmanship due to the
significantly larger time commitment to the business than in the
previous period.
Separately identifiable costs and income for the period were
GBP0.46m comprising costs for the following - compensation for loss
of office GBP0.08m, deal origination costs GBP0.13m and legal and
advisory fees on the Group restructure GBP0.25m.
Discontinued activities generated a loss for the period of
GBP0.32m, which I believe fully vindicates the decisions we took
during the period to exit these business lines.
Group loss after tax for the period was GBP0.7m (H1
2015:GBP0.5m).
The placing and open offer in February 2016 resulted in the
issue of 114.3 million new ordinary shares raising GBP4.64m net of
issue costs which was used to acquire Ancar, settle the joint
venture arrangements, cover re-organisation costs and provide
working capital.
Intangible assets recognised on the acquisition of Ancar and
Weston based on the provisional opening balancing sheet were
GBP5.8m, split between goodwill GBP1.8m and customer contracts
GBP4.0m (which will be amortised over 10 years). As a result of the
disposal of Pinnacle CDT after the period end for GBP2.8m there has
been no need to impair the intangible assets related to this asset
as these proceeds more than support the carrying value of
intangibles at the period end.
At the period end net cash balances were GBP1.39m (H1 2015:
GBP0.15m). Following the acquisition of adept4 Limited and
receiving funding from the BGF the cash balances of the group were
GBP4.3m at 27 May 2016.
During the period there was a net cash inflow of GBP0.8m. This
breaks down as follows:
-- Trading cash inflow from continuing operations (excluding plc costs) of GBP0.2m;
-- Corporate activity, including the placing and open offer,
acquisitions, restructure costs and the cost of running the plc
generated net cash inflow of GBP1.0m; and
-- Operating cash outflow from discontinued operations was GBP0.4m.
OUTLOOK
Having acquired three trading businesses, all of which are
profitable, our focus is now on the integration of our acquisitions
so that we can scale our 'IT as a Service' proposition. We have
started to cross sell across these businesses and we expect to make
further progress on this front.
We have a strategy which is aligned with an asset light approach
and therefore does not require us to make substantial investments
in technology or assets, allowing us to be flexible and pick best
of breed solutions that meet our customers' requirements.
We now have a strong operational management team, who are
motivated through an earn-out and an employee share scheme is in
the process of being put in place (in line with the detail in my
announcement in January 2016), and which firmly aligns their
rewards with the creation of shareholder value.
Finally we have funds in the bank which allow us the potential
to make further acquisitions, subject to identifying suitable
targets, which align with our strategy.
I look forward to providing further updates through the
remainder of this year on our progress and look to the future with
confidence.
Gavin Lyons
CHAIRMAN
29 June 2016
INDEPENT REVIEW REPORT TO ADEPT4 PLC ("the Company")
Introduction
We have been engaged by the Company to review the interim
condensed financial statements for the six months ended 31 March
2016 which comprises the consolidated statement of financial
position, the consolidated income statement, consolidated statement
of changes in equity, consolidated statement of comprehensive
income, consolidated statement of cash flows and the related
explanatory notes.
We have read the other information contained in the half-yearly
report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial
information in the condensed set of financial statements.
This report is made solely to the Company in accordance with the
terms of our engagement to assist the Company in meeting the
requirements of the AIM Rule 18. Our review has been undertaken so
that we might state to the Company those matters we are required to
state to it in this report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company for our review work, for this
report or for the conclusions we have reached.
Directors' responsibilities
The half-yearly report is the responsibility of, and has been
approved by, the directors. The directors are responsible for
preparing the half-yearly report in accordance with AIM Rule
18.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with IFRS as adopted by the
European Union. It is the responsibility of the directors to ensure
that the condensed set of financial statements included in this
half-yearly report have been prepared on a basis consistent with
that which will be adopted in the Group's annual financial
statements.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly report
based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK and
Ireland) and consequently does not enable us to obtain assurance
that we would become aware of all significant matters that might be
identified in an audit. Accordingly we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly report for the six months ended 31 March 2016 is
not prepared, in all material respects, in accordance with the
requirements of the AIM rules.
Nexia Smith & Williamson 25 Moorgate
Statutory Auditor London
Chartered Accountants EC2R 6AY
29 June 2016
CONSOLIDATED INCOME STATEMENT
for the six month period ended 31 March 2016
6 months 6 months Year
to to to
31 March 31 March 30 Sept
2016 2015 2015
Note GBP GBP GBP
------------------------------- ----- ------------ ---------- ------------
Revenue 3 830,577 - -
Cost of sales (368,391) - -
------------------------------- ----- ------------ ---------- ------------
Gross profit 462,186 - -
Operating expenses (1,131,768) (205,431) (476,562)
------------------------------- ----- ------------ ---------- ------------
Operating loss (669,582) (205,431) (476,562)
Trading EBITDA 166,132 - -
Head Office costs (305,051) (198,068) (457,547)
------------ ---------- ------------
Adjusted EBITDA loss (138,919) (198,068) (457,547)
Amortisation of Intangible
Assets 8 (65,105) - -
Depreciation (6,050) - -
Separately identifiable
costs and expenses 4 (458,338) - -
Share based payments (1,170) (7,363) (19,015)
Operating loss (669,582) (205,431) (476,562)
------------------------------- ----- ------------ ---------- ------------
Interest receivable 33 123 96
Interest payable (219) (1,041) (254)
------------------------------- ----- ------------ ---------- ------------
Net Finance expense (186) (918) (158)
------------------------------- ----- ------------ ---------- ------------
Profit on sale of associate 284,592 - -
Loss before tax (385,176) (206,349) (476,720)
Taxation 6 13,021 - -
------------------------------- ----- ------------ ---------- ------------
Loss for the period
from continuing operations (372,155) (206,349) (476,720)
------------------------------- ----- ------------ ---------- ------------
Discontinued operations
Loss for the period
from discontinued operations 5 (323,183) (315,175) (775,322)
------------------------------- ----- ------------ ---------- ------------
Loss for the period (695,338) (521,524) (1,252,042)
------------------------------- ----- ------------ ---------- ------------
Loss per share (pence)
basic and fully diluted
- continuing operations 7 (0.56) (0.51) (0.95)
basic and fully diluted
- discontinued operations 7 (0.48) (0.78) (1.56)
basic and fully diluted 7 (1.04) (1.29) (2.51)
Notes 1 to 11 form part of the analysis of the
interim condensed financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 March 2016
At 31 March At 31 March At 30
2016 2015 September
2015
Note GBP GBP GBP
--------------------------- ----- ------------- ------------- -------------
Non-current assets
Goodwill 8 1,849,177 - -
Intangible assets 8 3,962,551 790,029 490,773
Investments 35,319 165,300 100,408
Property, plant
and equipment 79,331 170,876 125,664
Total non-current
assets 5,926,378 1,126,205 716,845
--------------------------- ----- ------------- ------------- -------------
Current assets
Inventories 65,941 33,118 7,365
Trade and other
receivables 1,169,679 1,565,255 1,461,011
Assets of the disposal
group and non-current
assets classified
as held for sale 5 2,947,768 - -
Cash and cash equivalents 1,439,108 193,197 640,838
--------------------------- ----- ------------- ------------- -------------
Total current
assets 5,622,496 1,791,570 2,109,214
--------------------------- ----- ------------- ------------- -------------
Total assets 11,548,874 2,917,775 2,826,059
--------------------------- ----- ------------- ------------- -------------
Liabilities
Short term borrowings (57,497) (64,506) (65,881)
Trade and other
payables (703,628) (1,602,817) (1,486,429)
Liabilities of
the disposal group
classified as held
for sale 5 (2,354,093) - -
Other taxes and
social security
costs (279,987) (172,369) (158,910)
Accruals and other
payables (763,333) (584,254) (604,822)
--------------------------- ----- ------------- ------------- -------------
Total current liabilities (4,158,538) (2,423,946) (2,316,042)
--------------------------- ----- ------------- ------------- -------------
Non-current liabilities
Long term borrowings - (7,130) (10,079)
Deferred tax liability (792,510) (165,906) (98,155)
--------------------------- ----- ------------- ------------- -------------
Total liabilities (4,951,048) (2,596,982) (2,424,276)
--------------------------- ----- ------------- ------------- -------------
Net assets 6,597,826 320,793 401,783
--------------------------- ----- ------------- ------------- -------------
Equity
Share capital 2,270,651 6,949,092 591,826
Share premium account 13,050,861 7,171,261 7,839,475
Capital Redemption
Reserve 6,488,907 - 6,488,907
Merger reserve 283,357 283,357 283,357
Other reserve 52,210 39,387 51,040
Fair value adjustment (1,064,130) (1,064,130) (1,064,130)
Retained earnings 9 (14,484,030) (13,058,174) (13,788,692)
--------------------------- ----- ------------- ------------- -------------
Total equity 6,597,826 320,793 401,783
--------------------------- ----- ------------- ------------- -------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for six month period ended 31 March 2016
Capital
Share Share Redemption Merger Other Fair Retained
Capital Premium Reserve Reserve Reserve Value Earnings Total
GBP GBP GBP GBP GBP GBP GBP GBP
--------------- ---------------- ---------------- ----------- -------- -------------- -------------------- ------------- ------------
At 1 October
2014 6,862,250 6,774,870 - 283,357 32,024 (1,064,130) (12,536,650) 351,721
Loss and total
comprehensive
loss for the
period - - - - - - (521,524) (521,524)
Transactions
with owners
564,470
Share Issue 86,842 477,628 - - - - - ,
Share based
payments - - - - 7,363 - - 7,363
Expenses on
Share Issue - (81,237) - - - - - (81,237)
Total
Transactions
with owners 86,842 396,391 - - 7,363 - - 490,596
--------------- ---------------- ---------------- ----------- -------- -------------- -------------------- ------------- ------------
Total
movements 86,842 396,391 - - 7,363 - (521,524) 30,928
--------------- ---------------- ---------------- ----------- -------- -------------- -------------------- ------------- ------------
66
Equity at
31 March 2015 6,949,092 7,171,261 - 283,357 39,387 (1,064,130) (13,058,174) 320,793
--------------- ---------------- ---------------- ----------- -------- -------------- -------------------- ------------- ------------
Capital
Share Share Redemption Merger Other Fair Retained Total
Capital Premium Reserve Reserve Reserve Value Earnings GBP
GBP GBP GBP GBP GBP GBP GBP
--------------- ------------ ---------- ------------ --------- --------- ------------ ------------- ----------
At 1 April
2015 6,949,092 7,171,261 - 283,357 39,387 (1,064,130) (13,058,174) 320,793
Loss and total
comprehensive
loss for the
period - - - - - - (730,518) (730,518)
Transactions
with owners
Share Issue 131,641 724,027 - - - - - 855,668
Cancellation
of Deferred
Shares (6,488,907) - 6,488,907 - - - - -
Share based
payments - - - - 11,653 - - 11,653
Expenses on
Share Issue - (55,813) - - - - - (55,813)
--------------- ------------ ---------- ------------ --------- --------- ------------ ------------- ----------
Total
Transactions
with owners (6,357,266) 668,214 6,488,907 - 11,653 - - 811,508
--------------- ------------ ---------- ------------ --------- --------- ------------ ------------- ----------
Total
movements (6,357,266) 668,214 6,488,907 - 11,653 - (730,518) 80,990
--------------- ------------ ---------- ------------ --------- --------- ------------ ------------- ----------
Equity at
30 September
2015 591,826 7,839,475 6,488,907 283,357 51,040 (1,064,130) (13,788,692) 401,783
--------------- ------------ ---------- ------------ --------- --------- ------------ ------------- ----------
Capital
Share Share Redemption Merger Other Fair Retained
Capital Premium Reserve Reserve Reserve Value Earnings Total
GBP GBP GBP GBP GBP GBP GBP GBP
--------------- ---------- ----------- ----------- -------- -------- -------------------- ------------- -----------
At 1 October
2015 591,826 7,839,475 6,488,907 283,357 51,040 (1,064,130) (13,788,692) 401,783
Loss and total
comprehensive
loss for the
period - - - - - - (695,338) (695,338)
Transactions
with owners
Share Issue 1,678,825 5,372,241 - - - - - 7,051,066
Share based
payments - - - - 1,170 - - 1,170
Expenses on
Share Issue - (160,855) - - - - - (160,855)
Total
Transactions
with owners 1,678,825 5,211,386 - - 1,170 - - 6,891,381
--------------- ---------- ----------- ----------- -------- -------- -------------------- ------------- -----------
Total
movements 1,678,825 5,211,386 - - 1,170 - (695,338) 6,196,043
--------------- ---------- ----------- ----------- -------- -------- -------------------- ------------- -----------
Equity at
31 March 2016 2,270,651 13,050,861 6,488,907 283,357 52,210 (1,064,130) (14,484,030) 6,597,826
--------------- ---------- ----------- ----------- -------- -------- -------------------- ------------- -----------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six month period ended 31 March 2016
6 months 6 months 12 months
to to to
31 March 31 March 30 Sept
2016 2015 2015
GBP GBP GBP
------------------------------ ---------- ---------- ------------
Loss for the year from
total operations (695,338) (521,524) (1,252,042)
Total comprehensive
negative income for
the year (695,338) (521,524) (1,252,042)
Attributable to equity
holders of the parent (695,338) (521,524) (1,252,042)
------------------------------ ---------- ---------- ------------
CONSOLIDATED STATEMENT OF CASH FLOWS
for the six month period ended 31 March 2016
6 months 6 months 12 months
to to to 30
31 March 31 March September
2016 2015 2015
Note GBP GBP GBP
------------------------------ ----- ------------ ---------- -----------
Cash flows from continuing
operating activities
Net cash flow from operating
activities 10 (325,436) (219,886) (499,824)
------------------------------ ----- ------------ ---------- -----------
Cash flows from investing
activities
Interest received 33 123 96
Acquisition of subsidiaries, (3,130,138) - -
net of cash acquired
Net cash used in investing
activities (3,130,105) 123 96
------------------------------ ----- ------------ ---------- -----------
Cash flows from financing
activities
Issue of shares 9 4,801,067 564,470 1,420,138
Expenses paid in connection
with share issue (160,855) (81,237) (137,050)
Interest paid (219) (1,041) (254)
------------------------------ ----- ------------ ---------- -----------
Net cash from financing
activities 4,639,993 482,192 1,282,834
------------------------------ ----- ------------ ---------- -----------
Cashflow from discontinued
operations (392,648) (168,668) (246,905)
------------------------------ ----- ------------ ---------- -----------
Net (decrease)/increase
in cash 791,804 93,761 536,201
Cash at bank and in
hand at beginning of
period 593,304 57,103 57,103
------------------------------ ----- ------------ ---------- -----------
Cash at bank and in
hand at end of period 1,385,108 150,864 593,304
------------------------------ ----- ------------ ---------- -----------
Comprising:
Cash at bank and in
hand 1,439,108 193,197 640,838
Bank overdrafts (54,000) (42,333) (47,534)
------------------------------ ----- ------------ ---------- -----------
1,385,108 150,864 593,304
------------------------------ ----- ------------ ---------- -----------
NOTES TO THE FINANCIAL INFORMATION
for the six month period ended 31 March 2016
1. General Information
Adept4 plc is a company incorporated in the United Kingdom under
the Companies Act 2006. The principal activity of the group is the
provision of IT as a Service ("ITaaS") to small and medium sized
businesses in the United Kingdom. The interim condensed financial
statements are presented in pounds sterling because that is the
currency of the primary economic environment in which each of the
Group's subsidiaries operates.
The address of its registered office is 5 Fleet Place, London,
EC4M 7RD and its principal places of business are Leeds and
Warrington. The company is listed on the AIM market of the London
Stock Exchange under ticker symbol AD4.L
2. Basis of preparation
These unaudited consolidated interim condensed financial
statements are for the six months ended 31 March 2016. They have
not been prepared in accordance with IAS 34 "Interim Financial
Reporting". They do not include all of the information required for
full annual financial statements and should be read in conjunction
with the consolidated financial statements of the group for the
year ended 30 September 2015.
The financial information set out in these unaudited
consolidated interim condensed financial statements does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006. The consolidated statement of financial
position as at 30 September 2015 and the consolidated statement of
comprehensive income, consolidated statement of cash flows,
consolidated statement of changes in equity and associated notes
for the period then ended have been extracted from the group's
financial statements as at 30 September 2015. Page 33 of those
financial statements have received an unmodified report from the
auditors, Nexia Smith & Williamson LLP, and have been delivered
to the Registrar of Companies. The 2015 statutory accounts
contained no statement under section 498(2) or section 498(3) of
the Companies Act 2006.
The consolidated interim condensed financial statements for the
period ended 31 March 2016 have not been audited but reviewed in
accordance with International Standard on Review Engagements 2410
issued by the Auditing Practices Board. The independent review
report to adept4 plc follows the Chairman's Statement and Business
and Operational Review in this interim condensed financial
statement.
The interim statements were approved by the Board of Directors
on 29 June 2016.
3. Segment Reporting
Following the disposal of all of the trading operations which
comprised the Group's operating activities at 1 October 2015 and
the subsequent acquisitions, as referred to in note 8, the
operating segments used by the Group are currently under review to
ensure they meet its requirements for effective management and
reporting. However management consider that a key feature of the
business is the differentiation between recurring revenues, which
are by definition either contractual or a regular commitment to
take services, and non-recurring revenues, which are primarily
hardware, product or installation related. Segmental information
has therefore been presented on the basis of revenue and gross
profit split between these two revenue types.
All revenues for continuing operations relate to the UK.
3.1 Analysis of revenue 6 months 6 months 12 months
to to to
31 March 31 March 30 September
2016 2015 2015
GBP GBP GBP
--------------------------- ---------- ---------- --------------
By operating segment
Recurring and renewable -
- continuing operations 568,767 -
Non-Recurring - continuing -
operations 261,810 -
Continuing operations 830,577 - -
--------------------------- ---------- ---------- --------------
Total revenue 830,577 - -
--------------------------- ---------- ---------- --------------
3.2 Analysis of gross 6 months 6 months 12 months
profit for continuing to to to
operations 31 March 31 March 30 September
2016 2015 2015
GBP GBP GBP
--------------------------- ---------- ---------- --------------
By operating segment
Recurring and renewable -
- continuing operations 349,574 -
Non-Recurring - continuing -
operations 112,612 -
Continuing operations 462,186 - -
--------------------------- ---------- ---------- --------------
Total gross profit 462,186 - -
--------------------------- ---------- ---------- --------------
4. Separately identifiable costs and expenses
During the period, the Group incurred the following separately
identifiable costs and expenses which are material by their size or
incidence:
6 Months 6 Months 12 Months
to to to
31 March 31 March 30 September
2016 2015 2015
GBP GBP GBP
------------------------------- ---------- ---------- --------------
Costs:
Deal origination fees (125,000) - -
Legal and advisory fees - -
on group re-structure (249,329)
Settlement of former Directors - -
Service Agreements (84,009)
------------------------------- ---------- ---------- --------------
Separately identifiable
costs and expenses (458,338) - -
------------------------------- ---------- ---------- --------------
5. Discontinued operations
As detailed in Note 11, on 30 April 2016, the Group disposed of
the entire share capital of RMS Managed ICT Security Limited (and
its dormant subsidiary Aware Distribution Limited) to Intronovo
Limited, for a net gain of GBP45,000. On 13 May 2016, the Group
also sold the entire trade and assets of Pinnacle CDT Limited to
Chess ICT Limited for GBP2,800,000 in cash.
These transactions allowed the Group to exit the highly
competitive, but declining, IT Security and Telecommunications
markets and as such represent an exit from these major business
lines.
The decision and process to dispose of these businesses were
initiated prior to 31 March 2016 and in accordance with IFRS5, all
trade and assets relating to these disposals have been classified
as discontinued operations in the Income Statement of the
Group.
5.1 Net loss from discontinued
operations
6 Months 6 Months 12 Months
to to to
31 March 31 March 30 September
2016 2015 2015
GBP GBP GBP
---------------------------------- ------------ ------------ -------------
Revenue 3,744,044 3,987,548 7,883,640
Gross profit 1,093,861 1,242,868 2,317,790
Administrative expenses (1,170,972) (1,279,042) (2,432,671)
Amortisation and impairment
of intangible assets (88,471) (202,067) (501,323)
Depreciation (30,584) (105,196) (197,773)
Separately identifiable costs (70,000) - (64,892)
------------ ------------ -------------
Operating expenses (1,360,027) (1,586,305) (3,196,659)
Operating loss from discontinued
operations (266,166) (343,437) (878,869)
Interest payable (2,779) (14,062) (6,637)
Taxation (54,238) 42,324 110,184
Net loss from discontinued
operations (323,183) (315,175) (775,322)
---------------------------------- ------------ ------------ -------------
The separately identifiable cost of GBP70,000 above, relates to
a payment made to a joint venture partner during the period in full
and final settlement of their agreement with Pinnacle CDT Limited.
The intangible assets figure below includes GBP326,000 paid to the
owners of Accent Telecom North Limited, as part payment against the
acquisition of the remaining share capital in that business.
Accordingly, all assets held by the Group on behalf of RMS
Managed ICT Security Limited and Pinnacle CDT Limited (the disposal
group) at 31 March 2016 have been recorded as assets classified as
held for sale in the Consolidated Balance Sheet of the Group. The
net carrying value of these assets and liabilities at 31 March 2016
is GBP593,675, made up of current and non-current assets classified
as held for sale of GBP2,947,768 and liabilities classified as held
for sale of GBP2,354,093 as follows:
5.2 Assets of the disposal group and non-current
assets classified as held for sale
At 31
March
2016
GBP
-------------------------------------------------- ----------
Intangible assets 988,033
Property, plant and equipment 125,116
Inventories 18,424
Trade and other receivables 1,816,195
---------------------------------------------------- ----------
Assets of the disposal group and non-current
assets classified as held for sale 2,947,768
---------------------------------------------------- ----------
5.3 Liabilities of the disposal
group classified as held
for sale
At 31
March
2016
GBP
--------------------------------- ------------
Short term borrowings (24,658)
Trade and other payables (1,225,450)
Other taxes and social security
costs (94,511)
Accruals and other payables (781,472)
Long term borrowings (30,395)
Deferred tax liability (197,607)
----------------------------------- ------------
Liabilities of the disposal
group classified as held
for sale (2,354,093)
----------------------------------- ------------
6. Taxation
6 Months 6 Months 12 Months
to to to
The tax credit represents: 31 March 31 March 30 September
2016 2015 2015
GBP GBP GBP
------------------------------- --------- --------- -------------
Reversal of timing difference
in the period 13,021
------------------------------- --------- --------- -------------
Taxation 13,021 - -
------------------------------- --------- --------- -------------
7. Loss per share 6 Months 6 Months 12 Months
to to to
31 March 31 March 30 September
2016 2015 2015
p/share p/share p/share
--------------------------------- ----------- ----------- --------------
Basic and fully diluted -
continuing operations 0.56 0.51 0.95
Basic and fully diluted -
discontinued operations 0.48 0.78 1.56
Basic and fully diluted 1.04 1.29 2.51
Loss on continuing operations (372,155) (206,349) (476,720)
Loss on discontinued operations (323,183) (315,175) (775,322)
Loss attributable to ordinary
shareholders (695,338) (521,524) (1,252,042)
Weighted average number of
shares in issue:
Basic and fully diluted 66,757,368 40,427,272 49,924,907
--------------------------------- ----------- ----------- --------------
8. Intangible assets
Intangible assets are non-physical assets which have been
obtained as part of an acquisition and which have an identifiable
future economic benefit to the Group at the point of acquisition.
The Group's policy regarding assessing impairment of intangible
assets remains the same as disclosed in the financial statements
for the year ended 30 September 2015.
- Maintenance contracts to be amortised over a period of 10
years
- Customer lists to be amortised over a period of 10 years
- Intellectual property and software applications to be amortised over a period of 10 years
8.1 Movement on intangible As at As at As at
assets 31 March 31 March 30 September
2016 2015 2015
GBP GBP GBP
-------------------------------------- ------------- ------------- ---------------
Net intangible assets
at start of period 490,773 992,096 992,096
Transferred to non-current
assets held for sale (490,773) - -
Intangible asset additions
* Ancar-B Technologies Limited 3,021,712 - -
* Weston Communications Limited 1,005,944 - -
Impairment in the
period - (46,857) (190,903)
Amortisation in the
period (65,105) (155,210) (310,420)
--------------------------------------- ------------- ------------- ----------------
Net intangible assets
at period end 3,962,551 790,029 490,773
--------------------------------------- ------------- ------------- ----------------
8.2 Acquisition of Ancar-B Technologies Limited
On 10 February 2016, the Group acquired the entire issued share
capital of Ancar-B Technologies Limited for a total consideration
of GBP5.0 million which includes a cash for cash payment of GBP1.5
million resulting in net consideration of GBP3.5 million. The
consideration was satisfied as to GBP2.75 million in cash and
GBP0.75 million in new Ordinary Shares at 4.2p per share.
Provisional
8.2.1 Ancar-B Technologies Fair
Limited Book value Provisional
Cost adjustment Fair Value
GBP GBP GBP
-------------------------------- ---------- --------------- ---------------
Non-current assets
Intangible asset - 3,021,712 3,021,712
Property, plant and
equipment 153,576 (117,649) 35,927
Investments 35,319 - 35,319
-------------------------------- ---------- --------------- ------------
Total non-current
assets 188,895 2,904,063 3,092,958
-------------------------------- ---------- --------------- ------------
Current assets
Inventories 9,000 (9,000) -
Trade and other receivables 325,972 - 325,972
Cash at bank 1,625,941 - 1,625,941
-------------------------------- ---------- --------------- ------------
Total current assets 1,960,913 (9,000) 1,951,913
-------------------------------- ---------- --------------- ------------
Total assets 2,149,808 2,895,063 5,044,871
-------------------------------- ---------- --------------- ------------
Current liabilities
Trade and other payables (191,072) - (191,072)
Other taxes and social
security costs (227,094) - (227,094)
Deferred Income and
accruals (273,966) - (273,966)
-------------------------------- ---------- --------------- ------------
Total current liabilities (692,132) - (692,132)
-------------------------------- ---------- --------------- ------------
Total non-current
liabilities
Long term borrowings (13,676) - (13,676)
Deferred Tax Liability - (604,342) (604,342)
-------------------------------- ---------- --------------- ------------
Total liabilities (705,808) (604,342) (1,310,150)
-------------------------------- ---------- --------------- ------------
Net (Liabilities)
/ Assets 1,444,000 2,290,721 3,734,721
* Consideration in cash (4,250,000)
* Consideration in shares (750,000)
-------------------------------- ---------- --------------- ------------
Fair value of cost
of acquisition (5,000,000)
-------------------------------- ---------- --------------- ------------
Goodwill 1,265,279
-------------------------------- ---------- --------------- ------------
8.3 Acquisition of Weston Communications Limited
On 10 February 2016, the Group acquired the entire issued share
capital of Weston Communications Limited for a total consideration
of GBP1.5 million satisfied by the issue of 35,714,285 shares at
4.2p per share.
Provisional
8.3.1 Weston Communications Fair
Limited Book Value Provisional
Cost adjustment Fair Value
GBP GBP GBP
-------------------------------- ---------- --------------- ---------------
Non-current assets
Intangible asset 4,178 1,001,766 1,005,944
Property, plant and
equipment 48,832 - 48,832
Total non-current
assets 53,010 1,001,766 1,054,776
-------------------------------- ---------- --------------- ------------
Current assets
Inventories 51,361 (30,920) 20,441
Trade and other receivables 250,251 - 250,251
Cash at bank 175,281 - 175,281
-------------------------------- ---------- --------------- ------------
Total current assets 476,893 (30,920) 445,973
-------------------------------- ---------- --------------- ------------
Total assets 529,903 970,846 1,500,749
-------------------------------- ---------- --------------- ------------
Current assets
Trade and other payables (134,972) - (134,972)
Other taxes and social
security costs (33,023) - (33,023)
Deferred Income and
accruals (165,167) - (165,167)
-------------------------------- ---------- --------------- ------------
Total current liabilities (333,162) - (333,162)
-------------------------------- ---------- --------------- ------------
Total non-current
liabilities
Deferred Tax Liability - (251,486) (251,486)
-------------------------------- ---------- --------------- ------------
Total liabilities (333,162) (251,486) (584,648)
-------------------------------- ---------- --------------- ------------
Net (Liabilities)
/ Assets 196,741 719,360 916,101
-------------------------------- ---------- --------------- ------------
* Consideration in shares (1,500,000)
-------------------------------- ---------- --------------- ------------
Fair value of cost
of acquisition (1,500,000)
-------------------------------- ---------- --------------- ------------
Goodwill 583,899
-------------------------------- ---------- --------------- ------------
9. Profit and loss reserve & Share Capital
9.1 Profit and loss reserve
6 Months 6 Months 12 months
to to to
31 March 31 March 30 September
2016 2015 2015
GBP GBP GBP
--------------------- ------------- ------------- --------------
Opening deficit (13,788,692) (12,536,650) (12,536,650)
Loss for the period (695,338) (521,524) (1,252,042)
--------------------- ------------- ------------- --------------
Closing deficit (14,484,030) (13,058,174) (13,788,692)
--------------------- ------------- ------------- --------------
9.2 Share Capital
The total number of shares issued in the 6 month period to 31
March 2016 was 167,882,542 ordinary shares. The placing and open
offer resulted in the issue of 114,311,113 ordinary shares for 4.2
pence which raised GBP4,801,067 in cash. 53,571,429 ordinary
shares, with an aggregate fair value of GBP2,250,000, were issued
as consideration in relation to the acquisition of Ancar-B
Technologies Limited and Weston Communications Limited as
above.
10. Cashflow from operating 6 months 6 months 12 months
activities to to to 30
31 March 31 March September
Note 2016 2015 2015
GBP GBP GBP
------------------------------- ------ ---------- ---------- -----------
Loss before tax from
continuing operations (385,176) (206,349) (476,720)
Adjustments for:
Depreciation 6,050 - -
Amortisation 65,105 - -
Impairment of intangible - - -
assets
Share of loss from associate - - -
Share option charge 1,170 7,363 19,015
Loss on disposal of fixed - - -
assets
Interest expense 186 918 158
Decrease/(increase) in
trade and other receivables 348,359 3,646 37,167
Decrease/(Increase) in (63,146) - -
inventories
Increase/(decrease) in
trade payables, accruals
and other creditors (297,984) (25,464) (79,444)
--------------------------------------- ---------- ---------- -----------
Net cash flow from continuing
operations (325,436) (219,886) (499,824)
--------------------------------------- ---------- ---------- -----------
11. Post Balance Sheet Events
Disposal of RMS Managed ICT Security Limited
On 30 April 2016, the Group disposed of the entire share capital
of RMS Managed IT Security Limited ("RMS") (and its dormant
subsidiary Aware Distribution Limited) to Intronovo Limited for
GBP1. On disposal of RMS, the balance sheet of RMS was negative,
therefore the disposal represented a net gain to the Group of
GBP45,001.
Disposal of Pinnacle CDT Limited to Chess ICT Limited
On 13 May 2016, the Group sold the trade and assets of Pinnacle
CDT Limited to Chess ICT Limited ("Chess") for GBP2.8m in cash.
Business Growth Fund Loan of GBP5m
On 26 May the Company issued GBP5 million unsecured loan notes
("Loan Notes") to the Business Growth Fund Plc ("BGF"). The Loan
Notes have a 7 year term, with redemption permissible from the
third anniversary and required from the fifth anniversary, and
carry interest at a rate of 8% per annum. In addition, the Company
agreed to grant the BGF an option to subscribe for 50,000,000
ordinary shares of 1 pence each in the capital of the Company
("Ordinary Shares") at a price of 6 pence per Ordinary Share (the
"Option").
Acquisition of Adept4 Limited
On 26 May 2016, the Group announced that it had acquired the
entire issued share capital of adept4 Limited ("adept4"), a
provider of cloud based IT services and solutions headquartered in
Warrington, for an initial cash consideration of GBP4.5m, plus
deferred consideration of GBP1m payable in cash in January 2018.
Further contingent consideration of up to GBP1.5m is also payable
in cash in March 2018, subject to performance criteria for the year
to 31 December 2017.
Change of Name to adept4 Plc
On 13 June 2016 the Company changed its name from Pinnacle
Technology Group plc to adept4 plc.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR AKCDPPBKKPAB
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