TIDMAD4
RNS Number : 8287S
adept4 plc
28 June 2018
Adept4 plc
("Adept4", the "Group" or the "Company")
Interim Results for the six months ended 31 March 2018
Adept4 plc (AIM: AD4), the AIM quoted provider of IT as a
Service, today announces its unaudited interim results for the six
months ended 31 March 2018.
FINANCIAL HIGHLIGHTS
-- Revenue increased 7% to GBP5.4m (H1 2017: GBP5.0m), of which 69% is recurring
-- Gross profit of GBP3.1m of which 68% comes from recurring
revenues (H1 2017: GBP3.1m), and which represents a gross profit
margin of 57% (H1 2017: 62%)
-- Trading Group EBITDA(1) of GBP0.5m (H1 2017: GBP0.6m)
-- Adjusted Group EBITDA(2) of GBP0.2m (H1 2017: 0.3m)
-- Loss before tax for the period GBP0.8m (H1 2017: GBP0.8m)
after GBP0.5m amortisation of intangible assets and GBP0.3m of
finance costs
-- Cash at bank of GBP2.0m (30 September 2017: GBP2.9m), with
net debt(3) standing at GBP3.0m (30 September 2017: GBP2.0m)
OPERATIONAL HIGHLIGHTS
Progress made against each key objective:
-- Strengthening of senior operational management team, with new
Sales Director identified post period end and due to join business
shortly to drive revenue growth
-- Development of partnership with Microsoft - awarded Gold Cloud Platform Partner status
-- Appointed as exclusive reseller of Nyotron cybersecurity products in the UK market
-- A number of strategic customer wins
Simon Duckworth, Non-Executive Chairman of Adept4,
commented:
"We are satisfied with the progress made in the period against
our stated key objectives and believe we have the building blocks
in place to allow us to focus on driving the operational
performance of the business.
"The appointment of a new Sales Director and a strengthening of
the sales team will be key to us achieving future revenue growth.
Successful execution of our cost rationalisation programme will
ensure we enter the next phase of our development with a cost base
appropriate to a business of our size whilst maintaining the
ability to capitalise on the pipeline of opportunities we have
built.
"There is work to be done to achieve the potential of the
business but we believe we have the right platform in place to move
forward."
(1) 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 Group EBITDA is measured as Trading Group EBITDA
after plc costs
(3) Net debt represents cash and cash equivalents less
short-term and long-term borrowings
All company announcements can be found at www.adept4.co.uk
For further information, please contact:
Adept4 plc
Simon Duckworth, Non-Executive Chairman
Nick Deman, Interim Finance Director 01925 398 255
N+1 Singer
Shaun Dobson / Jen Boorer 020 7496 3000
MXC Capital Markets LLP
Charlotte Stranner 020 7965 8149
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No 596/2014.
CHAIRMAN'S STATEMENT
I am pleased to report the results of the Group for the six
months ended 31 March 2018. As outlined in the 2017 Annual Report,
last year was one of consolidation for the Group, with the
completion of the integration of the three companies previously
acquired into one single operating platform, laying the foundations
for future growth in the IT as a Service sector. We also set out
our key areas of strategic development for 2018 to enable us to
build on those foundations. These key areas of focus primarily
comprised of the strengthening of our senior operational management
team, the development of our partnership with Microsoft,
development of our IT security offering and the transition of
customers' legacy telephone systems to next generation Skype.
I am pleased to report that we have made good progress against
each of these key objectives during the period under review, whilst
also moderately increasing our revenues across all segments of the
business.
There remains work to be done, but we believe we now have the
foundations in place to begin to drive the business forward. As we
transition from a period of development and investment into one of
operational execution, we are now able to recognise certain cost
synergies and have commenced a programme of cost rationalisation,
ensuring that our costs are appropriate for a business of our size
today, whilst maintaining our ability to scale the business as we
convert the pipeline of opportunities we have built.
BOARD CHANGES
In March we announced that Ian Winn, Chief Financial Officer and
M&A director, had stepped down from the Board to pursue other
interests. At the same time, Nick Deman was appointed to the Board
as Interim Finance Director. Nick is a chartered accountant who
recently performed the role of Interim Finance Director at
Thruvision Group plc ("Thruvision") where he managed the balance
sheet and capital restructuring following Thruvision's divestment
of its Video Business as well as overseeing the transitional
arrangements for the finance department. Prior to Thruvision Nick
was Finance Director at Bluefin Solutions Ltd, an international
technology consultancy acquired in July 2015 by Mindtree Limited,
an Indian multinational information technology and outsourcing
company.
Nick has been appointed on an interim basis as we continue to
undertake a process to find a permanent successor.
OPERATIONAL REVIEW
During the period, we have further strengthened the management
team responsible for the day to day operations of the business. We
have brought in a Director of Operations from a large metropolitan
police authority and a Chief Technology Officer from Microsoft.
These appointments, together with our existing executives, provide
us with an effective team to guide the business through its next
phase of development. It has taken time to identify a suitable
candidate for the key role of Sales Director and this is affecting
our sales performance in the short term. We have now identified a
suitable candidate for the role and look forward to them joining
the business in the near future.
We have continued the development of our technical skills, our
competencies and our engagement with our key vendor partners. We
have been awarded Microsoft's coveted 'Gold Cloud Platform' partner
status; a certification that validates our high level of competency
in cloud technologies, identity management, systems management,
virtualization, storage and networking. In addition, we have
completed, with Microsoft, an end to end review of our managed
services capability; the purpose of this review is to demonstrate
our suitability to qualify for entry into the Microsoft Managed
Service Partner (MSP) program. MSP status is only open to a limited
number of companies and provides the Microsoft indirect sales team
with trusted partners to fulfil Microsoft sales enquiries. We
envisage that if we are successful in securing a place on this
programme, this will become a source of significant opportunity for
the Company.
In relation to our security proposition, we have been awarded
exclusivity to sell the Nyotron security portfolio in the UK.
Nyotron's next generation cybersecurity solution distinguishes
between legitimate operating system behaviour of IT users versus
threatening activities carried out by attackers. This provides
real-time protection from any attack without foreknowledge of the
exploit. We are now able to dramatically improve the security of
our customers by bundling Nyotron products within our managed
service proposition. We have already seen significant interest for
this next generation product and we are working on several large
opportunities across a number of territories.
Our customers' adoption of Skype and Anywhere365 (the
replacement for legacy telephony platforms) has increased, with
sales across a number of market sectors demonstrating the reach and
appetite for next generation contact centre technology. We continue
to develop our technical skills and service capability to meet
demand as we increase our customer penetration and pipeline
development.
Our customer service engagement model has further developed with
the introduction of a technical account manager (TAM) as a trusted
advisor and strategist for all major clients on all matters of a
technical nature. This approach is providing high levels of
customer satisfaction and is proving to generate new opportunities
and additional revenue.
During the period, we have had success in securing new sales
across each of our market segments. Some of the highlights
include:
-- Global provider of Customer Contact Centres - GBP0.3m application development
-- Real estate and business centre provider - GBP0.3m, 5-year telephony managed service
-- First two Nyotron next generation security orders - minimum GBP0.2m, multi-year contracts
Within our sales pipeline, we are clearly starting to see an
increase in our customers' appetite to understand how they can
embrace digital transformation, i.e. how they can utilise cloud
technology to drive business agility, improve time to market,
understand and predict client behaviour and make better use of
their business data. We are seeing a steady increase in these early
discussions on how to approach such a significant change in their
business and how Adept4 can assist in doing so.
As part of digital transformation, customers typically see a
change in the profile of their IT spend with an increase in upfront
professional services to make the journey from "traditional to
cloud" but then a reduction in infrastructure hardware and monthly
recurring spend as they have less infrastructure for us to support.
This is manifesting itself in a reduction in recurring spend which
is likely to reduce revenue growth in the short term but we expect
the impact of this to lessen as we add new customers as well as
continuing to assist existing customers with their digital
transformation.
We are also seeing this reduction in recurring spend being
replaced by our customers' willingness to adopt new services as
part of their digital transformation program including technology
areas such application redevelopment, BOT technology and Artificial
Intelligence alongside Big Data and analytics. We believe we are
well placed to benefit from these opportunities and replace any
potential loss of recurring revenue, and as such we are already
seeing an increase in pipeline and orders won in our software
development division which can provide many of these new services.
We have agreed a partnership with a "nearshore" development
provider to assist with our own software development capabilities
in a cost efficient and scalable manner.
We continue to monitor our cost base closely to ensure that it
is always appropriate for our current and near-term future
operations. As we transition from a period of development and
investment into one of operational execution, we have commenced a
programme of cost rationalisation which we believe can be effected
without impacting the operational performance of the business.
Alongside this, we are undertaking a review of our customer base to
ensure that we are maximising our efficiencies and
profitability.
FINANCIAL SUMMARY
The financial results for the six months ended 31 March 2018,
reflect a period of further change, consolidation and investment as
we continue to pursue our strategy of delivering IT as a Service to
SMEs and public sector customers in the UK.
Continued revenue growth was demonstrated across all business
segments, delivering revenue of GBP5.4m in the six-month period to
31 March 2018 (H1 2017: GBP5.0m), representing year-on-year growth
of 7%. Our professional services segment, although the smallest
revenue contributor, delivered the largest percentage increase in
this period mainly due to the transformation projects performed for
some of our key customers (as can be seen in note 3.1). As
explained above, transformation projects can result in reduced
ongoing monthly recurring fees for our customers, offset by an
increase in one-off professional services revenues and other
revenues.
Given the timing of the transformation projects undertaken in
the period, overall, recurring revenues increased modestly by
GBP0.1m to GBP3.7m in the six-month period to 31 March 2018, (H1
2017: GBP3.6m) representing 69% (2017: 71%) of all revenues in the
period. This revenue stream relates to our regular contracted and
service-based revenues, recurring on a monthly, quarterly or annual
basis.
Gross profit for this current half-year was GBP3.1m (H1 2017:
GBP3.1m). Gross profit margin achieved for the period was 57% (H1
2017: 62%). The gross profit margin achieved in H1 2017 was higher
due to the increased proportion of recurring revenues and reduced
expenditure on third-party vendor services in that period, with the
result for the current period in line with the 58% achieved in the
second half of 2017.
Other operating costs, excluding plc costs, during the current
period increased by GBP0.1m to GBP2.6m (H1 2017: GBP2.5m) primarily
as a result of our continued investment in the management team. As
a consequence, our Trading Group EBITDA, representing the
underlying profits from the trading business, excluding plc costs,
was lower at GBP0.5m for the period (H1 2017: GBP0.6m).
Plc costs during the period were GBP0.3m (H1 2017: GBP0.3m),
whilst non-cash items charged to the income statement in respect of
amortisation of intangible assets, depreciation and share-based
payments totalled GBP0.6m (H1 2017: GBP0.6m). In addition, we
incurred GBP0.1m (H1 2017: GBP0.03m) of separately identifiable
costs relating to professional and legal fees and restructuring
costs.
After net interest costs of GBP0.3m (H1 2107: GBP0.5m) and a tax
credit of GBP0.1m (H1 2017: GBP0.1m), the loss after tax for the
period was GBP0.8m (H1 2017: GBP0.7m).
Cash balances at 31 March 2018 were GBP2.0m (30 September 2017:
GBP2.9m), an outflow of GBP0.9m in the six months. The cash
movement can be summarised as follows:
-- Cash flows from trading operations were neutral arising from
trading EBITDA of GBP0.5m offset by an increase of GBP0.5m in trade
debtors and accrued income;
-- Cash utilised on plc and separately identifiable costs of GBP0.4m;
-- Loan interest paid of GBP0.2m;
-- Investment in fixed assets of GBP0.1m;
-- Cash items relating to discontinued operations of GBP0.1m.
The increase in our trade receivables balance of GBP0.5m
includes GBP0.3m of accrued income relating to large customer
transformation projects and other professional services projects in
progress at 31 March 2018. These projects were worked on during the
months leading up to 31 March 2018, but were subsequently completed
and invoiced in full during April and May 2018. In addition, trade
debtors increased by GBP0.2m in the period as a result of some
large public sector and education sector invoices raised in March
2018 and collected during April and May 2018.
In respect of payments relating to discontinued operations, we
settled a dispute with Chess ICT Limited ("Chess") in October 2017
by payment of GBP0.1m, relating to the recovery of an asset
included in the sale of the trade and assets of Pinnacle CDT
Limited to Chess in May 2016. This cost was provided for in the
Group's financial statements for the year ended 30 September 2017.
A further GBP0.1m will be paid in September 2018 if no further
recovery of the asset is made. We expect to make some recovery
against this and therefore no further provision has been made.
Net debt was GBP3.0m (H2 2017: GBP2.0m). This includes the
deferred consideration of GBP1.0m payable to the sellers of Adept4
Managed IT Limited ("MIT") on 2 January 2018. There is currently an
ongoing legal dispute with the vendors of MIT which has resulted
in, amongst other matters, a delay in the payment of the deferred
consideration. We continue to recognise the full amount of the
deferred consideration due to the early stage of this dispute.
In addition, as detailed in the Group financial statements for
the year ended 30 September 2017, the performance criteria for
achievement of the earn-out relating to the acquisition of MIT were
not achieved and therefore the full value of the contingent
consideration accrued (of GBP1.1m) was written back. Although the
vendors of MIT have not yet accepted this position, our assessment
remains unchanged and therefore no contingent liability has been
recognised. Once we have clarity on all these matters, we will
undertake a full impairment review of our intangible assets to
ensure that all amounts recognised in the accounts are
appropriately stated.
We have identified a number of opportunities to unlock cost
savings in the trading business which will reduce our overhead base
going forward. Our focus continues to be on developing and growing
our trading business to generate a cash surplus sufficient to
support the costs of the plc and loan interest payments and
increase our cash reserves.
OUTLOOK
We are satisfied with the progress made in the period against
our stated key objectives and believe we have the building blocks
in place to allow us to focus on driving the operational
performance of the business.
The appointment of a new Sales Director and a further
strengthening of the sales team will be key to us achieving future
revenue growth. Successful execution of our cost rationalisation
programme will ensure we enter the next phase of our development
with a cost base appropriate to a business of our size whilst
maintaining the ability to capitalise on the pipeline of
opportunities we have built.
There is work to be done to achieve the potential of the
business but we believe we have the right platform in place to move
forward.
Simon Duckworth
Non-Executive Chairman
27 June 2018
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
2018 which comprise the consolidated income statement, the
consolidated statement of financial position, consolidated
statement of changes in equity, consolidated statement of cash
flows and the related explanatory notes.
We have read the other information contained in the interim
results announcement 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 interim results announcement is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the interim results announcement 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
interim results announcement 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 interim results
announcement based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council 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
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 interim results announcement for the six months ended 31
March 2018 is not prepared, in all material respects, in accordance
with the requirements of the AIM Rules for Companies.
Nexia Smith & Williamson 25 Moorgate
Statutory Auditor London
Chartered Accountants EC2R 6AY
27 June 2018
CONSOLIDATED INCOME STATEMENT
for the six-month period ended 31 March 2018
6 months 6 months Year to
to to
31 March 31 March 30 September
2018 2017 2017
Note GBP000 GBP000 GBP000
---------------------------------------- ----- --------- ---------------------- -------------
Revenue 3 5,392 5,028 10,301
Cost of sales (2,323) (1,914) (4,137)
---------------------------------------- ----- --------- ---------------------- -------------
Gross profit 3 3,069 3,114 6,164
Other operating expenses excluding
plc costs (2,616) (2,479) (5,005)
Trading Group EBITDA 453 635 1,159
Plc costs (267) (288) (570)
---------------------------------------- ----- --------- ---------------------- -------------
Other operating expenses (2,883) (2,767) (5,575)
---------------------------------------- ----- --------- ---------------------- -------------
Profit from continuing operations
before amortisation, depreciation,
share based payment costs and
separately identifiable costs 3 186 347 589
Amortisation of intangible assets 7 (470) (437) (880)
Depreciation (39) (76) (162)
Separately identifiable costs
and expenses 4 (137) (26) 626
Share based payments (60) (66) (162)
---------------------------------------- ----- --------- ---------------------- -------------
Operating (loss)/profit from
continuing operations (520) (258) 11
Interest receivable 1 - -
Interest payable (330) (531) (842)
---------------------------------------- ----- --------- ---------------------- -------------
Net finance expense (329) (531) (842)
---------------------------------------- ----- --------- ---------------------- -------------
Loss before tax from continuing
operations (849) (789) (831)
Taxation 5 84 87 248
---------------------------------------- ----- --------- ---------------------- -------------
Loss for the period from continuing
operations (765) (702) (583)
---------------------------------------- ----- --------- ---------------------- -------------
Discontinued operations
Loss for the period from discontinued - (100) -
operations
---------------------------------------- ----- --------- ---------------------- -------------
Loss for the period (765) (802) (583)
---------------------------------------- ----- --------- ---------------------- -------------
Loss per share (pence)
Basic and fully diluted - continuing
operations 6 (0.34) (0.31) (0.26)
Basic and fully diluted - discontinued
operations 6 - (0.04) -
Basic and fully diluted 6 (0.34) (0.35) (0.26)
Notes 1 to 10 form part of the analysis of the interim
condensed financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 March 2018
At 30
At 31 At 31 March September
March
2018 2017 2017
Note GBP000 GBP000 GBP000
--------------------------------- ----- --------- ------------ ----------
Non-current assets
Intangible assets 7 11,369 12,307 11,804
Property, plant and equipment 214 288 228
Total non-current assets 11,583 12,595 12,032
--------------------------------- ----- --------- ------------ ----------
Current assets
Inventories 102 69 66
Trade and other receivables 2,822 2,284 2,349
Cash and cash equivalents 2,037 3,888 2,905
--------------------------------- ----- ------------ ----------
Total current assets 4,961 6,241 5,320
--------------------------------- ----- --------- ------------ ----------
Total assets 16,544 18,836 17,352
--------------------------------- ----- --------- ------------ ----------
Liabilities
Short-term borrowings 9 (1,035) (2,341) (1,012)
Trade and other payables (1,137) (1,448) (1,203)
Other taxes and social security
costs (554) (783) (490)
Accruals and other payables (1,426) (1,480) (1,590)
--------------------------------- ----- --------- ------------ ----------
Total current liabilities (4,152) (6,052) (4,295)
--------------------------------- ----- --------- ------------ ----------
Non-current liabilities
Long-term borrowings 9 (4,038) (3,795) (3,914)
Deferred tax liability 8 (1,332) (1,577) (1,416)
--------------------------------- ----- --------- ------------ ----------
Total liabilities (9,522) (11,424) (9,625)
--------------------------------- ----- --------- ------------ ----------
Net assets 7,022 7,412 7,727
--------------------------------- ----- --------- ------------ ----------
Equity
Share capital 2,271 2,271 2,271
Share premium account 11,337 11,337 11,337
Capital redemption reserve 6,489 6,489 6,489
Merger reserve 1,997 1,997 1,997
Other reserve 1,661 1,505 1,601
Retained earnings (16,733) (16,187) (15,968)
--------------------------------- ----- --------- ------------ ----------
Total equity 7,022 7,412 7,727
--------------------------------- ----- --------- ------------ ----------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six-month period ended 31 March 2018
Capital
Share Share redemption Merger Other Retained
capital premium reserve reserve reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- --------------------------- --------------------------- --------------------------- --------------------------- --------------------------- --------- ------------
At 1 October
2016 2,271 11,337 6,489 1,997 1,439 (15,385) 8,148
Loss and total
comprehensive
loss for the
period - - - - - (802) (802)
--------------- --------------------------- --------------------------- --------------------------- --------------------------- --------------------------- --------- ------------
Transactions
with owners
Share-based
payments - - - - 66 - 66
Total
transactions
with owners - - - - 66 - 66
--------------- --------------------------- --------------------------- --------------------------- --------------------------- --------------------------- --------- ------------
Total
movements - - - - 66 (802) (736)
--------------- --------------------------- --------------------------- --------------------------- --------------------------- --------------------------- --------- ------------
Equity at 31
March
2017 2,271 11,337 6,489 1,997 1,505 (16,187) 7,412
--------------- --------------------------- --------------------------- --------------------------- --------------------------- --------------------------- --------- ------------
Capital
Share Share redemption Merger Other Retained
capital premium reserve reserve reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------- --------- --------- ------------ --------- --------- ---------- --------
At 1 April 2017 2,271 11,337 6,489 1,997 1,505 (16,187) 7,412
Loss and total
comprehensive
loss for the
period - - - - - 219 219
-------------------- --------- --------- ------------ --------- --------- ---------- --------
Transactions with
owners
Share-based
payments - - - - 96 - 96
Total transactions
with owners - - - - 96 - 96
-------------------- --------- --------- ------------ --------- --------- ---------- --------
Total movements - - - - 96 219 315
-------------------- --------- --------- ------------ --------- --------- ---------- --------
Equity at 30
September
2017 2,271 11,337 6,489 1,997 1,601 (15,968) 7,727
-------------------- --------- --------- ------------ --------- --------- ---------- --------
Capital
Share Share redemption Merger Other Retained
capital premium reserve reserve reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------- --------- --------- ------------ --------- --------- ---------- ----------
At 1 October 2017 2,271 11,337 6,489 1,997 1,601 (15,968) 7,727
Loss and total
comprehensive
loss for the
period - - - - - (765) (765)
------------------- --------- --------- ------------ --------- --------- ---------- ----------
Transactions with
owners
Share-based
payments - - - - 60 - 60
Total transactions
with owners - - - - 60 - 60
------------------- --------- --------- ------------ --------- --------- ---------- ----------
Total movements - - - - 60 (765) (705)
------------------- --------- --------- ------------ --------- --------- ---------- ----------
Equity at 31 March
2018 2,271 11,337 6,489 1,997 1,661 (16,733) 7,022
------------------- --------- --------- ------------ --------- --------- ---------- ----------
CONSOLIDATED STATEMENT OF CASH FLOWS
for the six-month period ended 31 March 2018
6 months 6 months Year to
to to
31 March 31 March 30 September
2018 2017 2017
Note GBP000 GBP000 GBP000
---------------------------------------- ----- --------- -------------------- -------------
Cash flows from continuing operating
activities
Cash (used) / generated by operations 10 (514) 43 (52)
Taxation - (45) (383)
---------------------------------------- ----- --------- -------------------- -------------
Net cash used in operating activities (514) (2) (435)
---------------------------------------- ----- --------- -------------------- -------------
Cash flows from investing activities
Purchase of property, plant and
equipment (75) (109) (248)
Interest received 1 - -
Net cash used in investing activities (74) (109) (248)
---------------------------------------- ----- --------- -------------------- -------------
Cash flows from financing activities
Receipt of finance lease 56 - 16
Payment of finance lease liabilities (18) (27) (30)
Interest paid (218) (202) (404)
---------------------------------------- ----- --------- -------------------- -------------
Net cash used in financing activities (180) (229) (418)
---------------------------------------- ----- --------- -------------------- -------------
Cash flow from discontinued operations (100) (38) (260)
---------------------------------------- ----- --------- -------------------- -------------
Net decrease in cash (868) (378) (1,361)
Cash at bank and in hand at beginning
of period 2,905 4,266 4,266
---------------------------------------- ----- --------- -------------------- -------------
Cash at bank and in hand at end
of period 2,037 3,888 2,905
---------------------------------------- ----- --------- -------------------- -------------
NOTES TO THE FINANCIAL INFORMATION
for the six-month period ended 31 March 2018
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 quoted on AIM, the market of that name
operated by the London Stock Exchange, under ticker symbol
AD4.L
These interim condensed financial statements contain inside
information.
2. Basis of preparation
The annual financial statements of the group are prepared in
accordance with IFRS as adopted by the European Union. The interim
financial information in this report has been prepared using
accounting policies consistent with IFRS as adopted by the European
Union. IFRS is subject to amendment and interpretation by the
International Accounting Standards Board (IASB) and the IFRS
Interpretations Committee and there is an ongoing process of review
and endorsement by the European Commission. The financial
information has been prepared on the basis of IFRS that the
Directors expect to be adopted by the European Union and applicable
at 30 September 2018.
Financial information contained in this document does not
constitute statutory accounts within the meaning of section of 434
of the Companies Act 2006 ("the Act"). The statutory accounts for
the year ended 30 September 2017 have been filed with the Registrar
of Companies. The report of the auditors on those statutory
accounts was unqualified, did not draw attention to any matters by
way of emphasis and did not contain a statement under section
498(2) or (3) of the Act. The financial information for the six
months ended 31 March 2018 and 31 March 2017 is unaudited.
The accounting policies applied by the Group in these interim
condensed financial statements are the same as those applied by the
Group in the consolidated financial statements for the year ended
30 September 2017. In accordance with IFRS 3, prior period balances
as at 31 March 2017 and 30 September 2017 have been retrospectively
adjusted in order to reflect adjustments to provisional fair values
noted within the measurement periods arising from pre-acquisition
tax charges for the acquired entities.
After reviewing budgets, forecasts and cash projections for the
next twelve months and beyond, the Directors believe that the Group
have adequate resources to continue operations for the foreseeable
future and for this reason they have adopted a going concern basis
in preparing the interim condensed financial statements. The
interim condensed financial statements were approved by the Board
of Directors on 27 June 2018.
There were no new financial reporting standards adopted in the
six months ended 31 March 2018. The following standards and
interpretations have not been early adopted by the Group and will
be adopted in future accounting periods:
-- International Financial Reporting Standard (IFRS) 15 Revenue
from Contracts with Customers (effective for annual financial
statement periods beginning on or after 1 January 2018);
-- International Financial Reporting Standard (IFRS) 9 Financial
Instruments (effective for annual financial statement periods
beginning on or after 1 January 2018); and
-- International Financial Reporting Standard (IFRS) 16 Leases
(effective for annual financial statement periods beginning on or
after 1 January 2019)
We have been assessing the likely impact from adopting the
standards as reported in the consolidated financial statements for
the year ended 30 September 2017 and will continue to do so.
3. Segment Reporting
Following the re-organisation of the business during early 2016
the operating segments of the business were redefined to reflect
the holistic nature of IT as a Service. Three segments were
identified which are defined below;
-- Product - comprises the resale of solutions (hardware and software) from leading vendors
-- Recurring Services - comprises the provision of continuing IT
services which have an ongoing billing and support element
-- Professional Services - comprises the provision of highly
skilled resource to consult, design, install, configure and
integrate IT technologies
All revenues for continuing operations relate to the UK.
3.1 Analysis of revenue 6 months 6 months Year to
to to
31 March 31 March 30 September
2018 2017 2017
GBP000 GBP000 GBP000
-------------------------------- --------- --------- -------------
By operating segment
Product 1,210 1,115 2,232
Recurring services 3,741 3,594 7,316
Professional services 441 319 753
--------------------------------- --------- --------- -------------
Total revenue 5,392 5,028 10,301
--------------------------------- --------- --------- -------------
3.2 Analysis of gross profit
By operating segment
Product 551 516 1,000
Recurring services 2,082 2,288 4,414
Professional services 436 310 750
---------
Total gross profit 3,069 3,114 6,164
--------------------------------- --------- --------- -------------
3.3 Analysis of Adjusted Group
EBITDA
Gross profit 3,069 3,114 6,164
Other operating expenses,
not including plc costs (2,616) (2,479) (5,005)
--------------------------------- --------- --------- -------------
Trading Group EBITDA 453 635 1,159
Other operating expenses,
plc costs (267) (288) (570)
--------------------------------- --------- --------- -------------
Adjusted Group EBITDA 186 347 589
--------------------------------- --------- --------- -------------
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 Year to
to to 30 September
31 March 31 March 2017
2018 2017 GBP000
GBP000 GBP000
----------------------------------------- ---------- ---------- --------------
Write back of contingent consideration - - 1,122
Termination payment for former Chairman - - (75)
Provision for dispute with Chess
ICT Limited - - (100)
Impairment of goodwill - - (200)
Professional and legal fees relating
to acquisitions (90) - -
Restructuring costs (47) (26) (121)
----------------------------------------- ---------- ---------- --------------
Separately identifiable (costs) and
expenses (137) (26) 626
----------------------------------------- ---------- ---------- --------------
5. Taxation
6 months to 6 months Year to
to
31 March 31 March 30 September
2018 2017 2017
GBP000 GBP000 GBP000
----------------------------------- ------------ --------- -------------
Current tax
UK corporation tax for the period - - -
on continuing operations
Deferred tax
Deferred tax on intangible assets
from continuing operations (84) (87) (248)
Total taxation credit for the
period (84) (87) (248)
----------------------------------- ------------ --------- -------------
6. Loss per share
6 months 6 months Year to
to to
31 March 31 March 30 September
2018 2017 2017
p/share p/share p/share
---------------------------------------- ------------ ------------ -------------
Basic and fully diluted - continuing
operations (0.34) (0.31) (0.26)
Basic and fully diluted - discontinued - (0.04) -
operations
Basic and fully diluted (0.34) (0.35) (0.26)
---------------------------------------- ------------ ------------ -------------
GBP000 GBP000 GBP000
---------------------------------------- ------------ ------------ -------------
Loss on continuing operations (765) (702) (583)
Loss on discontinued operations - (100) -
Loss attributable to ordinary
shareholders (765) (802) (583)
---------------------------------------- ------------ ------------ -------------
Weighted average number of shares
in issue:
Basic and fully diluted 227,065,100 227,065,100 227,065,097
---------------------------------------- ------------ ------------ -------------
7. Intangible assets
IT, billing
and
website Customer
Goodwill systems Brand lists Total
GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------- -------------- ----------------- ------- --------- --------
Cost
At 1 October 2016 4,312 - 1,157 7,580 13,049
Adjustments to provisional
fair values 108 - - - 108
At 31 March 2017 4,420 - 1,157 7,580 13,157
Additions - 113 - - 113
Adjustments to provisional
fair values 27 - - - 27
---------------------------- -------------- ----------------- ------- --------- --------
At 30 September 2017 4,447 113 1,157 7,580 13,297
Additions - 35 - - 35
---------------------------- -------------- ----------------- ------- --------- --------
At 31 March 2018 4,447 148 1,157 7,580 13,332
---------------------------- -------------- ----------------- ------- --------- --------
Amortisation
At 1 October 2016 - - (35) (378) (413)
Charge for the period - - (31) (406) (437)
At 31 March 2017 - - (66) (784) (850)
Impairment charge (200) - - - (200)
Charge for the period - (7) (84) (352) (443)
At 30 September 2017 (200) (7) (150) (1,136) (1,493)
Charge for the period - (10) (60) (400) (470)
At 31 March 2018 (200) (17) (210) (1,536) (1,963)
---------------------------- -------------- ----------------- ------- --------- --------
Net Book Value
At 31 March 2017 4,420 - 1,091 6,796 12,307
At 30 September 2017 4,247 106 1,007 6,444 11,804
At 31 March 2018 4,247 131 947 6,044 11,369
---------------------------- -------------- ----------------- ------- --------- --------
* Note: In accordance with IFRS 3, prior period balances as at
31 March 2017 and 30 September 2017 have been retrospectively
adjusted in order to reflect adjustments to provisional fair values
noted within the measurement periods arising from pre-acquisition
tax charges for the acquired entities.
8. Deferred tax 6 months 6 months Year to
to to 30 September
31 March 31 March 2017
2018 2017
GBP000 GBP000 GBP000
----------------------------------- ---------- ---------- --------------
Provision brought forward 1,416 1,664 1,664
Credits to income statement - on
intangibles (84) (87) (166)
Credits to income statement - for
change in future tax rates - - (82)
Provision carried forward 1,332 1,577 1,416
------------------------------------ ---------- ---------- --------------
9. Borrowings 6 months 6 months Year to
to 31 March to 31 30
2018 March September
2017 2017
GBP000 GBP000 GBP000
-------------------------------------------- ------------- --------- --------------------
Short-term borrowings
Finance lease 43 37 12
Deferred consideration for Accent Telecom - 223 -
North Limited
Deferred consideration for Adept4 Managed
IT Limited 992 1,000 1,000
Contingent consideration for Adept4 - 1,500 -
Managed IT Limited
Fair Value adjustment relating to deferred
and contingent consideration - (419) -
Total short-term borrowings 1,035 2,341 1,012
-------------------------------------------- ------------- --------- --------------------
Long-term borrowings
Finance lease 61 23 42
BGF loan notes repayable to BGF between
2021 and 2023 5,000 5,000 5,000
Fair value adjustment relating to BGF
loan notes (1,023) (1,228) (1,128)
-------------------------------------------- ------------- --------- --------------------
Total long-term borrowings 4,038 3,795 3,914
-------------------------------------------- ------------- --------- --------------------
10. Cashflow from operating activities 6 months 6 months Year to
to to 30
31 March 31 March September
2018 2017 2017
GBP000 GBP000 GBP000
------------------------------------------- --------- --------- -----------
Loss before tax from continuing
operations (849) (789) (831)
Adjustments for:
Depreciation 39 76 162
Amortisation 470 437 880
Share option charge 60 66 162
Interest expense 329 531 842
Increase in trade and other receivables (473) (716) (781)
Increase in inventories (35) (47) (44)
(Decrease) / increase in trade payables,
accruals and other creditors (55) 485 (442)
-------------------------------------------- --------- --------- -----------
Net cash (outflow)/inflow from continuing
operations (514) 43 (52)
-------------------------------------------- --------- --------- -----------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR BDLLLVQFFBBF
(END) Dow Jones Newswires
June 28, 2018 02:00 ET (06:00 GMT)
Cloudcoco (LSE:CLCO)
Historical Stock Chart
From Jun 2024 to Jul 2024
Cloudcoco (LSE:CLCO)
Historical Stock Chart
From Jul 2023 to Jul 2024
