TIDMAD4
RNS Number : 0659C
adept4 plc
17 January 2018
Adept4 plc
("Adept4", the "Group" or the "Company")
Preliminary results for the year ended 30 September 2017
Adept4 plc (AD4) the AIM quoted provider of IT as a Service is
pleased to announce preliminary results for the year ended 30
September 2017.
Highlights for the year
Financial
-- Revenues of GBP10.3m (FY16: GBP4.9m(1) )
-- Gross profit margin of 60% (FY16: 62%)
-- Recurring revenues of GBP7.3m (FY16: GBP3.2m), representing 71% of total revenues (FY16: 65%)
-- Recurring gross profit covers 96% of trading overheads(2)
-- Adjusted trading Group EBITDA(3) of GBP1.5m (FY16: GBP0.9m(1) )
-- Trading Group EBITDA of GBP1.2m (FY16: GBP0.9m)
-- Group EBITDA of GBP0.6m (FY16: GBP0.1m)
-- Loss before tax for the year of GBP0.8m (FY16: GBP1.4m)
-- GBP2.9m cash at bank at 30 September 2017 (FY16: GBP4.3m)
resulting in net debt of GBP2.0m(5) (FY16: GBP1.6m)
Operational
-- Creation of single operating platform: one system, one
operational structure, one brand, one website and one business
-- Significant revenue growth in key Microsoft areas of Azure and Office 365
-- Increased offering of complementary solutions, building on
our Microsoft and telephony legacy through successful reseller
partnerships, yielding results
Post-year-end highlights
-- Addition of further complementary solutions to the portfolio
to enhance our IT Security offering as part of ITaaS
-- Further management changes to strengthen the day to day
operational management of the business and enhance credibility in
cloud services
1 From continuing operations.
2 Other operating expenses before head office and plc costs.
3 Adjusted trading Group EBITDA represents earnings before
interest, tax, depreciation and amortisation, share-based costs,
separately identifiable costs and head office and plc costs of
GBP0.9m (FY16: GBP0.8m).
4 Trading Group EBITDA represents earnings before interest, tax,
depreciation and amortisation, share-based costs, separately
identifiable costs and plc costs of GBP0.6m (FY16: GBP0.8m).
5 Net debt represents cash and cash equivalents of GBP2.9m
(FY16: GBP4.3m) and short-term and long-term borrowings of GBP4.9m
(FY16: GBP5.9m).
Simon Duckworth, Chairman of Adept4, commented:
"The creation of a single operating platform for future growth
has been at the heart of everything that we have sought to do in
the last 12 months. The successful establishment of an integrated
business with a single brand, proposition, structure and platform
was imperative, and I am pleased to report our success in achieving
this objective. We look forward to success in the future with this
business model."
For further information please contact:
Adept4 plc
Simon Duckworth, Non-Executive Chairman
Ian Winn, Group CFO & M&A Director 01925 204 844
N+1 Singer (Nominated Adviser and Broker)
Shaun Dobson
Jen Boorer 020 7496 3000
MXC Capital Markets LLP
Marc Young
Charlotte Stranner 020 7965 8149
This announcement contains inside information.
Chairman's statement
Introduction
I am pleased to comment upon this year's annual results, my
first as Non-Executive Chairman, having stepped up to this role in
August 2017.
If the year to 30 September 2016 ("FY16") was a period of
significant and substantial M&A activity, then the year to
September 2017 ("FY17") was a period of integration, consolidation
and rationalisation.
The creation of a single operating platform for future growth
and acquisitions has been at the heart of everything that we have
sought to do in the year. The successful establishment of an
integrated business with a single brand, proposition, structure and
platform was imperative, and I am pleased to report our success in
achieving this objective.
Results
Our results for the period have demonstrated progress in a
number of areas:
-- revenue for the period was GBP10.3m (FY16: GBP4.9m), an
increase of 7% on a like for like basis;
-- recurring revenues were GBP7.3m (FY16: GBP3.2m), an increase
of 9% on a like for like basis, and represented 71% of total
revenues;
-- we increased spend and customers with Microsoft's Cloud
offering (under our Cloud Solution Partner relationship) by 168%
and 313% respectively (on a like for like basis), demonstrating the
success of this reseller arrangement and the potential for future
growth;
-- our telephony business (which was formerly the Weston
Communications Limited business) increased its revenues by 9% (on a
like for like basis), demonstrating the important role of telephony
in our solution set for our customer base;
-- adjusted trading Group EBITDA was GBP1.5m (FY16: GBP0.9m);
-- Group EBITDA was GBP0.6m (FY16: GBP0.1m); and
-- loss for the period was GBP0.6m (FY16 GBP0.6m).
We finished the year with cash balances of GBP2.9m.
Additionally, the performance criteria for achievement of the earn
out relating to Adept4 Managed IT Limited were not achieved by the
vendors of the business and therefore the full value of the
contingent consideration accrued (of GBP1.1m) has been written
back.
People
We remain a service-based business and our people are the key to
our success. We understand that in reshaping a number of businesses
into one business the change process can be painful. I would
therefore particularly like to thank our staff for their endeavours
through the year and for their dedication to creating the single
operating platform we now have. At times it has not been easy but
we are now just beginning to reap the rewards. The benefits of a
larger integrated group also open up opportunities for our staff to
progress in terms of skills and seniority. It has been particularly
gratifying that a significant number of our staff have grasped
these opportunities and we have seen a number of internal
promotions during the year.
Board
There have also been changes at Board level during the year.
Gavin Lyons stepped down from the Board as Executive Chairman on 1
August 2017 at which point I assumed the role of Non-Executive
Chairman. Jill Collighan was appointed to the Board as Executive
Director on 20 July 2017 to assist with the Group's continuing
development and strategy implementation.
Strategy
Our strategy, which is articulated more fully in the Business
Review, remains very straightforward. We aim to provide IT as a
Service to our customers on a pay-as-you-go basis, based on
consumption of the service and utilising an asset-light delivery
model (reducing our investment and leveraging public Cloud
providers' investments, particularly those of Microsoft). To
succeed we need to "delight" our customers and we need to
sufficiently differentiate ourselves from the competition.
As we have moved from consolidation and rationalisation of our
operating platform we have been able to fully focus on "delighting"
the customer. We operate in an industry where things will go wrong
no matter how good the service is, and "delighting" the customer is
not just about recovery and rescue from these situations but is
also about dealing with customers with honesty and integrity. We
have rolled out an "emoji" feedback mechanism with our ticketing
system which provides real-time insight into levels of customer
satisfaction - and the feedback we are receiving is indicating that
we are getting this right.
We also continue to invest time and resource into the solution
set we offer, identifying new technologies and solutions which
fulfil our customers' needs. We have had some real success in this
area with Anywhere 365, a Skype-native contact centre solution, and
a number of other emerging technologies which address our
customers' needs - particularly IT Security. This aspect of our
development is a crucial part of ensuring we have a differentiator
from the competition.
We also make no excuse for being very firmly a Microsoft Cloud
Solution Partner and we regard this as an integral part of our
strategy. We will continue to seek to align ourselves with
Microsoft's go-to-market strategy and to make ourselves as relevant
as possible to Microsoft. This is evidenced by the recent
appointment in our business of a former Microsoft Partner
Technology Strategist as Chief Technical Officer and our continued
investment in further Microsoft accreditation.
Outlook
A continued shift to the Cloud, consumptive pricing for IT ("pay
as you go") and increasing focus on security will remain the
defining growth factors in our market.
We have confidence that our business model is addressing these
issues, and our continued success will be dependent upon our
ability to execute effectively.
We also remain vigilant in looking at acquisition opportunities
that provide the appropriate mix of skills, capability and
contribution at the right price, and which will enhance growth in
our business and increase shareholder value.
I look forward to increased success in the future and to
providing further updates on our progress.
Simon Duckworth
Non-Executive Chairman
16 January 2018
Business overview
Overview
It is worth remembering that whilst the three businesses that
came together in FY16 to form the Group were ostensibly providing
similar and aligned services they were doing this with very
different operating models and, just as importantly, with
fundamentally different cultures.
In last year's accounts we outlined the value proposition,
markets and culture we intended to pursue and our strategy for
doing this. The focus throughout the year under review, for
management and staff alike, was to be one of integration and
consolidation and we are satisfied with our progress in this
area.
Significantly, during the year, we have:
-- created a single operating platform established from the integration activities;
-- pursued a Microsoft-focused, ITaaS-led strategy;
-- cross-sold telephony (the Weston skillset) into the rest of the base;
-- grown recurring revenues;
-- created wider opportunities for staff and hence reduced staff attrition; and
-- developed and expanded our solutions portfolio to continue to
make ourselves relevant to our customers.
Our progress during the period, and the lessons learned from the
integration, have positioned us well for future growth.
Market developments and our target market place
The factors that have driven growth in the macro ITaaS market
show no signs of abating. Increasing complexity, budgetary
pressures, flexibility, high-profile security breaches and resource
scarcity all remain relevant and are the key drivers of growth in
the market.
More importantly customers are now fully aware of the benefits
that can evolve from cloud computing, and the cultural and
historical issues and sensitivities around not owning the
infrastructure on which a business' data and systems reside are
largely being consigned to history.
Culturally businesses are also embracing the use of IT as a tool
to improve competitiveness and capability rather than simply just a
cost of doing business. This cultural shift is moving down the
business chain with smaller businesses just as likely to be
receptive to this as larger businesses. The recent evolution of
Microsoft's Office 365 Cloud offering is a clear indicator of this
with its emphasis on teamwork, collaboration, analytics and machine
learning being delivered as standard to businesses big and
small.
The UK SME market for ITaaS, with one or two notable sectors,
remains relatively strong and growing. The providers to that market
remain fragmented and regionalised, and with the move to
asset-light delivery models (relying upon Amazon, Microsoft and
Google's infrastructure, to name but a few) the barriers to entry
are remarkably low. Capability, customer service and price are the
key buying criteria.
With the establishment of a clear operating base in the North of
England during the last twelve months, putting us close to our
customers, we remain ideally placed to service the fast-growing SME
base in the Manchester, Liverpool and Leeds areas (M62 corridor) as
well as the wider region.
Our "sweet" spot in terms of customers remains the 50 to
250-seat organisation where we can add the greatest value and bring
to bear the broad spectrum of capabilities that we are able to
offer - including access to a dedicated software team with
substantial development experience.
We are proud to be a Microsoft reseller. We continue to maintain
our Tier 1 status as a Cloud Solution Partner. Microsoft's
Cloud-based offering continues to resonate with customers as
evidenced by its continuing quarterly growth in revenues in excess
of 90% and it is now a $20bn run rate business per quarter. The
scale and size of this market is driving its own ecosystem which
provides further opportunities for us.
What do we do and how do we deliver?
Four-stage approach to our customers and the provision of a
corporate IT department
In bringing together the Group under one proposition last year
we were clear that our approach to our customers was built around a
four-stage method: stabilise, leverage, transform and innovate
(SLTI). This approach leverages the expertise we have in the
business, acts as a differentiator to competitors and allows us to
continue to build value from customers by adding additional
services as we deepen the relationship with the customer beyond the
initial engagement. We can only do this by having experienced
technical resource engaging with our customers regularly and
understanding their business, acting, in essence, as consultant
CTOs or equivalent. In providing this level of service we also see
great value in our software team, which is able to deliver bespoke
systems. Clearly there is an increased cost of delivery with such
an approach but, ultimately, we believe it cultivates customer
relationships which endure.
A recent example of this approach working in practice concerns
our largest customer, where through strategic input from us we have
been able to streamline and drive efficiencies for it in its
contact centre by utilising technology to address its payment card
(PCI) needs whilst leveraging its existing assets.
Close to the customer, small enough to care and large enough to
cope
In integrating the businesses, we have been careful to retain
the reasons why customers historically dealt with us.
Our larger customers interact with us primarily through our
account management, technical account managers and our 24/7/365
ITIL service desk. Our smaller customers interact with us through
account managers and field service engineers.
During the year we have therefore consolidated our first line
service desk into our Warrington office - this is primarily triage,
basic fault resolution and non-urgent adds/move and changes. Our
second line service desk and field service engineers have remained
in the office local to the customer and are therefore on hand to
provide that personal level of service.
Consumptive pricing
Our customers all wish to ensure that they only pay for what
they receive. The days of fixed/inflexible costs are long gone. Our
customers need to be able to flex services and pricing to suit
their resource needs and allow them to budget more effectively. We
understand this and seek to provide tailored, flexible solutions
which are billed monthly and stepped up or down dependent upon the
"amount" consumed.
Achievements
We highlighted earlier the integration of the combined
businesses into a single operating platform - this undoubtedly has
been the single largest achievement during the period.
We have also built revenues with existing customers through our
SLTI approach and attracted new customers. Some of the highlights
include the following:
-- On the telephony front we have:
-- successfully completed a high-profile hardware refresh for a
local council in the North of England worth GBP0.2m;
-- re-signed, for a further three years at 50% uplift, a
maintenance agreement for a large, leading university. We believe
further value will accrue as we leverage our Skype for Business
skills to assist them with future migration to IP-based telephony;
and
-- installed and deployed a Skype-native contact centre for an
outsourcing provider in less than two weeks and closed a further
three opportunities worth GBP0.3m.
-- On the ITaaS front we have:
-- secured a three-year contract for ITaaS covering a range of
managed services, including IT helpdesk support, managed
infrastructure services and transition consulting worth
GBP0.8m;
-- maintained customer retention at over 90% during a time of
substantial change in the business; and
-- expanded our security offering by selling a managed firewall
and monitoring service to a number of our customers, including a
professional services organisation and a business in the retail
motor trade. We are monitoring for activity against a
pre-determined number of "use cases" based on automated analysis of
log activity. This, combined with the deployment of Microsoft SPE
tools for two of our larger customers, is the start of building an
IT Security offering beyond traditional anti-virus and anti-spam
product resell.
-- In respect of our Microsoft capability we have:
-- grown our revenues and customers with Microsoft by 168% and
313% respectively - which helps further cement our continuing
relationship with them;
-- implemented a 600 plus user Office 365 deployment. We were
chosen for our expertise and our insight into the emerging services
associated with Office 365;
-- been acknowledged at the Microsoft Cloud and Hosting Summit
2017 for our use of Azure to provide a Disaster as a Recovery
service; and
-- post the year end we have been delighted to welcome a former
Partner Technology Strategist from Microsoft's Cloud and Hosting
unit as our new Chief Technical Officer. We believe this is a great
coup and will enable us to further develop our Microsoft-focused
approach.
Developments
We continue to assess how we remain relevant and add value to
our customers. Given our role as a proxy IT department to our
customers this inevitably involves continuing to assess and
determine technologies which will assist our customers but for
which we have the capability, both financially and technically, and
which align with our asset-light strategy. Our key areas of
development in the next twelve months are as follows:
-- May 2018 sees the introduction into UK legislation of General
Data Protection Regulations. This, combined with recent
high-profile ransomware attacks, has continued to push IT Security
to the fore of most businesses' thoughts. As indicated above we
have an emerging solution set for this area but recognise the need
to continue to build out this capability;
-- in recent months we have received an order intake of GBP0.3m
for Anywhere 365, a Skype-native contact centre. We are seeing real
traction in the interaction between PBX telephony and Skype for
Business, and increasingly customers are looking to benefit from
both the cost and flexibility of Skype. Given our joint heritage in
both traditional PBX telephony and Skype we will be looking to
build upon our existing base to secure further business; and
-- following on from the year end we have further streamlined
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 CTO from Microsoft as
detailed above. These appointments, combined with our recently
appointed Managing Director, David Griffiths, who has over 20 years
of Managed IT experience, provide us with an effective team to
guide the trading business through its next phase of
development.
Challenges
In executing any business plan it is important to be prepared
and mitigate against the obvious risks and challenges we face.
However, there are a number of key challenges which we will need
to address through this current year.
Microsoft's significant growth in Cloud revenues and its recent
refocus on partners means that we will need to work harder to
remain relevant to it. In earlier years we have benefited from a
close relationship with Microsoft through our CSP Tier 1 status and
through our willingness to "early adopt" some of its Cloud
technologies. Primarily we are going to need to improve and enhance
our accreditations and also look within our customer base, where we
can build vertical sector-based managed service solutions. The
recent appointment of our CTO, who has spent his last six years in
the very part of Microsoft we engage with, should uniquely position
us to address this challenge.
We need to increase our level of training and accreditation in a
number of technologies. Over the last year we have made use of
apprenticeships to bring entry level staff into the business at
first line support level - we now need to work with and encourage
the development of these employees and others who wish to develop a
career in IT through us. This is something we are actively
targeting with both resource and budget.
The last twelve months has seen input prices rise for resold
services - primarily software/hardware from US-based vendors - as a
consequence of sterling's depreciation following the EU referendum.
So far we have been able to pass through these price increases, but
this is not something we can guarantee in the future.
Our people
Our people remain the most important component of our business.
We strive to create, and remain committed to creating, a working
environment in which all members of staff can grow and develop
their skills. Our commitment to training and development will
increase given our comments above on the need for us to improve and
extend our accreditations. Through the year the integration into
one business has provided opportunities for a number of employees
to further their career ambitions through internal promotions and
we seek to continue to achieve this. We also believe that
establishing a shared culture and set of behaviours takes a little
while when effecting the level of change we have seen during the
last twelve months - so we continue to work at this.
We have continued to engage all employees half yearly with the
progress of the business through a dedicated Company "away" day
when we can bring all the teams together. We want to make the Group
a fun and fulfilling place of work and, in that regard, we are only
just at the start of the process.
Summary and outlook
In summary, the last twelve months has been a period of
significant change and progress and we have made good headway with
our strategy of growing a profitable, customer-focused ITaaS
business, adopting an asset-light approach.
We are now positioned to drive the business forward and we look
forward to providing further updates through the current financial
year.
Financial review
The year under review represents the first full year of trading
for all three businesses acquired during the previous financial
year. To provide some context of the progress made by the business
in certain instances we have compared against the like for like
performance of the business on a pro-forma basis for the year ended
30 September 2016 rather than the statutory numbers which
incorporate eight months' trading for Ancar-B Technologies Limited
("Ancar") and Weston Communications Limited ("Weston") and four
months' trading for Adept4 Managed IT Limited ("MIT") (see Note
3).
Revenue and gross margin
Group revenue for the year was GBP10.3m (FY16: GBP4.9m), which
represented a 7% increase on a like for like basis. All acquired
businesses produced top-line revenue growth on a like for like
basis - with the telephony business of Weston generating the
highest growth of 9% highlighting the continued importance of
telephony sales to our ITaaS solutions portfolio.
This produced a gross profit of GBP6.2m (FY16: GBP3.0m)
representing a very healthy gross margin of 60% (FY16: 62%). The
slight reduction in margin from last year is primarily attributable
to our sales mix, increased direct input costs and the migration of
some services from our infrastructure to a third party (Microsoft)
in line with our asset-light strategy. The latter point, whilst
initially resulting in some margin reduction, will provide greater
scope to increase average revenue per customer and will clearly
reduce the future demand for capital expenditure.
The business is now very firmly based around three segments:
product, professional services and recurring services, with the
initial sale of product or professional services eventually leading
to and driving the future sale of recurring services.
Segment highlights
Product
Revenues from product sales were GBP2.2m (FY16: GBP1.1m)
generating a gross profit of GBP1.0m (FY16: GBP0.5m) and gross
margin of 45% (FY16: 40%). We benefited from a significant
contribution from both telephony and product sales to the smaller
end of our customer base where we enjoy improved margins. Specific
highlights in the year included:
-- a hardware refresh for a large, local authority telephony system worth GBP0.2m;
-- the sale of Anywhere 365 contact centre software to an international contact centre; and
-- continued and repeat hardware refreshes at both an
infrastructure and user level from a significant section of our
customer base. This demonstrates the trust our customers place in
us to look after their IT estate.
Recurring Services
Revenues from Recurring Services were GBP7.3m (FY16: GBP3.2m)
generating a gross profit of GBP4.4m (FY16: GBP2.0m) and gross
margin of 60% (FY16: 63%). Gross margin is marginally down from
last year due to the migration of certain hosted services from
in-house (predominantly hosted email and other hosting services) to
Microsoft. Whilst there is some short-term margin erosion this
strategy reduces risk and cost of ownership for us and allows for a
more flexible basis to sell/upsell additional services to the
customer.
On a like for like basis, revenues from Recurring Services
increased by 9% demonstrating the success of our strategy to focus
on this area through pushing consumptive pricing and
"pay-as-you-go" IT. The proportion of our total revenue derived
from Recurring Services is at 71% providing a strong and visible
future revenue base.
Specific highlights in the year included:
-- implementation and provision of a three-year contract for
ITaaS covering a range of managed services, including IT helpdesk
support and managed infrastructure services, worth up to
GBP0.8m;
-- provision of a number of managed security services utilising
the Microsoft suite of security tools, third-party vendors and
deployment of our own SIEM service; and
-- renewal of a telephony maintenance support contract for a
large leading university for a further three years against strong
competition, worth GBP0.3m.
Professional Services
Revenues from Professional Services were GBP0.8m (FY16: GBP0.6m)
generating a gross profit of GBP0.8m (FY16: GBP0.5m) as permanent
employee costs are included in overheads. Whilst the "run rate"
business from this source was in line with previous years we
undertook a smaller number of large transition projects in the
period. We were successful in securing two orders towards the end
of the financial year for GBP0.3m for large transition projects,
the majority of which falls to be delivered in the current
financial year (year ended 30 September 2018).
Specific highlights in the year included:
-- implementation consultancy for rolling out Office 365 across
600 plus users for an online retailer worth GBP0.1m; and
-- transitional infrastructure consultancy involved in
onboarding a number of managed service customers, including a
housebuilder and a number of professional services
organisations.
Operating results - costs and EBITDA
In presenting the results for the Group last year and at the
half year, we focused on two key metrics: trading Group EBITDA and
Group EBITDA.
Trading Group EBITDA was defined as Group profit before
interest, tax, depreciation and amortisation, share-based payment
costs, separately identifiable costs, plc costs and head office
costs. This description was used in order to ensure meaningful
comparison with the pro-forma results of the three businesses that
came together to form the Group on a like for like basis. For
transparency, and for reasons more fully detailed below, we have
now reclassified this as adjusted trading Group EBITDA. In future
periods we will no longer use this measure as a reportable
metric.
Trading overheads were GBP4.6m (FY16: GBP2.1m), of which staff
costs comprised 81% (FY16: 78%). Given the level of gross profit
generated from recurring revenue this meant that we achieved 96%
(FY16: 96%) coverage of the trading overhead base. Inevitably in a
business which has integrated under a single operating platform
there has been some upward pressure on salary costs through a
combination of aligning roles and rates of pay. We have been able
to partially mitigate against this by the consolidation of our
first line service desk into a single location at the end of the
financial year. The result of this is that the trading overheads
entry monthly run rate flagged at the time of last year's results
of GBP0.4m per month is broadly what we exited the year at, in
spite of the higher activity levels.
Adjusted trading Group EBITDA for the year was GBP1.5m (FY16:
GBP0.9m).
The presentation of adjusted trading EBITDA was done to provide
a comparison with the underlying pro-forma results of the three
acquired businesses. This has meant that certain costs in the year
under review have not been categorised as trading as it was felt
that their contribution in the year was to the integration of a
single platform and these had also not previously been incurred by
the three acquired businesses. These costs included consultancy and
rebranding costs and amounted to GBP0.4m.
Trading Group EBITDA, after including these costs, was GBP1.2m
(FY16: GBP0.9m).
Moving forward we have recruited a full-time Operations Director
to run the operations of the business in steady state and as
indicated earlier now have a full-time Managing Director fully
responsible for running the trading business. Our marketing
activities are now focused on tactical activities aligned with our
sales plan and therefore likely to be directly income generating
rather than simply creating brand capital. It is therefore entirely
appropriate to include these costs, running at GBP35,000 per month
in the trading overhead base for the current year to 30 September
2018 onwards. The remaining annual head office costs of GBP0.6m
relate entirely to the costs associated with running the plc and
cover the costs of the Executive Chairman (left 1 August 2017), the
Group CFO (who is now also responsible for M&A), the remainder
of the Board and professional fees related to the Company's AIM
listing and Group legal matters. Following the structural changes
referred to above, the costs of running the plc are expected to
reduce in 2018.
Group EBITDA for the year was GBP0.6m (FY16: GBP0.1m).
Loss for the period and separately identifiable income/costs
The year was one of integration, which necessitated further
costs as follows:
-- impairment of goodwill of GBP0.2m;
-- integration and reorganisation costs of GBP0.1m;
-- provision for dispute with Chess ICT Limited of GBP0.1m; and
-- termination payment to Executive Chairman of GBP0.1m.
At the interims we identified the need for a provision of
GBP0.1m which related to a dispute arising from the sale of the
trade and assets of Pinnacle CDT Limited ("CDT") to Chess ICT
Limited ("Chess") in May 2016. The dispute related to the recovery
of an asset included in this sale. We have now resolved this
dispute and the GBP0.1m became payable on 2 October 2017.
Conditional upon the recovery of this asset no further sums will be
due; however, should this not be the case then a further payment of
up to a maximum of GBP0.1m will be payable to Chess in September
2018. This amount has not been provided in the financial statements
as recovery is considered likely.
The performance criteria for achievement of the earn out
relating to the acquisition of MIT were not achieved by the vendors
of that business and therefore the full value of the contingent
consideration accrued (of GBP1.1m) has been written back. As a
result of this we considered the impact of this specifically on the
value of intangibles arising on the acquisition of MIT, based on
current budgets and forecasts for the Group an impairment charge of
GBP0.2m against goodwill was made.
Amortisation of intangible assets was GBP0.9m (FY16: GBP0.4m)
representing a full-year charge for the acquisitions made during
the last financial year.
Interest cost was GBP0.8m (FY16: GBP0.4m), of which GBP0.4m was
cash cost and the remainder was the release to the income statement
of the fair value adjustments to the deferred and earn out
consideration relating to the acquisition of MIT and the Business
Growth Fund (BGF) loan notes.
Loss for the year from continuing operations before tax was
GBP0.8m (FY16: GBP1.4m).
Statement of Financial Position and cash
As referred to above, the performance criteria on the MIT earn
out were not met and therefore no earn out consideration will be
payable, and as a result the goodwill has been impaired by
GBP0.2m.
Trade and other receivables at the period end were GBP2.3m
(FY16: GBP1.6m). The increase in this category was primarily due to
higher trade receivables (an increase of GBP0.3m) based on activity
levels and a marginal deterioration in collections (see comment
below on cash) and prepaid costs relating to three managed service
contracts of GBP0.2m.
Cash balances at 30 September 2017 were GBP2.9m (FY16: GBP4.3m),
which excludes two large payments of GBP0.3m in total which were
due on the last day of the year but were received on 2 October
2017.
Net debt was GBP2.0m (FY16: GBP1.6m). This includes the deferred
consideration of GBP1.0m payable to the sellers of MIT on 2 January
2018. There is currently an ongoing legal dispute with the vendors
of MIT which has resulted in 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,
which has no effect on current performance and does not relate to
the performance of MIT since acquisition.
The main components of the Group's cash flows during the period
were as follows:
-- cash used in operating activities of GBP0.1m (including
separately identifiable costs of GBP0.3m and head office and Plc
costs of GBP0.9m);
-- payment of corporation tax on the acquired businesses and sale of CDT of GBP0.4m;
-- cash interest costs of GBP0.4m;
-- deferred consideration of GBP0.3m; and
-- acquisition of fixed assets of GBP0.2m.
Ian Winn
Group CFO and M&A Director
16 January 2018
Consolidated income statement
for the year ended 30 September 2017
2017 2016
Note GBP'000 GBP'000
---------------------------------------------- -------- --------
Revenue 3 10,301 4,939
Cost of sales (4,137) (1,897)
---------------------------------------------- -------- --------
Gross profit 6,164 3,042
---------------------------------------------- -------- --------
Other operating expenses excluding head
office costs and plc costs (4,627) (2,124)
Adjusted trading Group EBITDA 1,537 918
Head office costs (378) -
Trading Group EBITDA 1,159 918
Plc costs (570) (804)
---------------------------------------------- -------- --------
Total other operating expenses (5,575) (2,928)
---------------------------------------------- -------- --------
Profit from continuing operations before
amortisation, depreciation, share-based
payment costs and separately identifiable
costs 589 114
Amortisation of intangible assets 7 (880) (413)
Depreciation (162) (74)
Separately identifiable income/(costs) 4 626 (615)
Share-based payments (162) (61)
--------------------------------------------- -------- --------
Operating profit/(loss) from continuing
operations 4 11 (1,049)
--------------------------------------------- -------- --------
Interest receivable - 2
Interest payable (842) (360)
---------------------------------------------- -------- --------
Net finance expense 5 (842) (358)
--------------------------------------------- -------- --------
Loss before tax (831) (1,407)
Taxation 248 83
--------------------------------------------- -------- --------
Loss for the period and total comprehensive
loss from continuing operations attributable
to the equity holders of the parent (583) (1,324)
---------------------------------------------- -------- --------
Discontinued operations
Profit for the period from discontinued
operations - 725
--------------------------------------------- -------- --------
Loss for the period (583) (599)
---------------------------------------------- -------- --------
Loss per share
- Basic and fully diluted - continuing
operations 6 (0.26)p (0.80)p
- Basic and fully diluted - discontinued
operations 6 - 0.44p
- Basic and fully diluted 6 (0.26)p (0.36)p
--------------------------------------------- -------- --------
Consolidated statement of financial position
as at 30 September 2017
30 September 30 September
2017 2016
Note GBP'000 GBP'000
-------------------------------------- ------------ ------------
Non-current assets
Intangible assets 7 11,804 12,636
Property, plant and equipment 228 255
------------------------------------- ------------ ------------
Total non-current assets 12,032 12,891
-------------------------------------- ------------ ------------
Current assets
Inventories 66 22
Trade and other receivables 8 2,349 1,568
Cash and cash equivalents 2,905 4,266
------------------------------------- ------------ ------------
Total current assets 5,320 5,856
-------------------------------------- ------------ ------------
Total assets 17,352 18,747
-------------------------------------- ------------ ------------
Current liabilities
Short-term borrowings (1,012) (298)
Trade and other payables (1,203) (862)
Other taxes and social security costs (490) (649)
Accruals and deferred income (1,590) (1,539)
-------------------------------------- ------------ ------------
Total current liabilities 9 (4,295) (3,348)
------------------------------------- ------------ ------------
Non-current liabilities
Long-term borrowings 9 (3,914) (5,587)
Deferred tax liability (1,416) (1,664)
------------------------------------- ------------ ------------
Total non-current liabilities (5,330) (7,251)
-------------------------------------- ------------ ------------
Total liabilities (9,625) (10,599)
-------------------------------------- ------------ ------------
Net assets 7,727 8,148
-------------------------------------- ------------ ------------
Equity
Share capital 2,271 2,271
Share premium account 11,337 11,337
Capital redemption reserve 6,489 6,489
Merger reserve 1,997 1,997
Other reserve 1,601 1,439
Retained earnings (15,968) (15,385)
------------------------------------- ------------ ------------
Total equity 7,727 8,148
-------------------------------------- ------------ ------------
Consolidated statement of changes in equity
for the year ended 30 September 2017
Capital Fair
Share Share redemption Merger Other value Retained
capital premium reserve reserve reserve adjustment earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- ----------- -------- -------- ----------- --------- --------
At 1 October
2015 592 7,840 6,489 283 51 (1,064) (13,789) 402
------------------- ----- -------- ----------- -------- -------- ----------- --------- --------
Loss and total
comprehensive
loss for the
period - - - - - - (599) (599)
------------------- ----- -------- ----------- -------- -------- ----------- --------- --------
Transactions with owners
Share issue 1,679 3,657 - 1,714 - - - 7,050
Share-based
payments - - - - 61 - - 61
Fair value of
equity in the
BGF loan - - - - 1,394 - - 1,394
Fair value of
interest in
the BGF loan - - - - (67) - 67 -
Reclassification
of reserves - - - - - 1,064 (1,064) -
Expenses on
share issue - (160) - - - - - (160)
------------------- ----- -------- ----------- -------- -------- ----------- --------- --------
Total transactions
with owners 1,679 3,497 - 1,714 1,388 1,064 (997) 8,345
------------------- ----- -------- ----------- -------- -------- ----------- --------- --------
Total movements 1,679 3,497 - 1,714 1,388 1,064 (1,596) 7,746
------------------- ----- -------- ----------- -------- -------- ----------- --------- --------
Equity at 30
September 2016 2,271 11,337 6,489 1,997 1,439 - (15,385) 8,148
------------------- ----- -------- ----------- -------- -------- ----------- --------- --------
Capital Fair
Share Share redemption Merger Other value Retained
capital premium reserve reserve reserve adjustment earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- ----------- -------- -------- ----------- --------- --------
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 - - - - - - (583) (583)
--------------------- ----- -------- ----------- -------- -------- ----------- --------- --------
Transactions with owners
Share-based payments - - - - 162 - - 162
--------------------- ----- -------- ----------- -------- -------- ----------- --------- --------
Total transactions
with owners - - - - 162 - - 162
--------------------- ----- -------- ----------- -------- -------- ----------- --------- --------
Total movements - - - - 162 - (583) (421)
--------------------- ----- -------- ----------- -------- -------- ----------- --------- --------
Equity at 30
September 2017 2,271 11,337 6,489 1,997 1,601 - (15,968) 7,727
--------------------- ----- -------- ----------- -------- -------- ----------- --------- --------
Consolidated statement of cash flows
for the year ended 30 September 2017
2017 2016
GBP'000 GBP'000
------------------------------------------------------ --------
Cash flows from operating activities
Loss before taxation (831) (1,407)
Adjustments for:
Depreciation 162 74
Amortisation 880 413
Share-based payments 162 61
Net finance expense 842 358
Write back of contingent consideration (1,122) -
Impairment of goodwill 200 -
Increase in trade and other receivables (781) (98)
Taxation 223 (151)
(Increase)/decrease in inventories (44) 1
Increase in trade payables, accruals and
deferred income 257 185
--------------------------------------------- ------- --------
Net cash used in operating activities (52) (564)
--------------------------------------------- ------- --------
Cash flows from taxation (383) -
--------------------------------------------- ------- --------
Cash flows from investing activities
Purchase of property, plant and equipment (248) (42)
Acquisition of subsidiaries, net of cash
acquired - (6,892)
Interest received - 2
--------------------------------------------- ------- --------
Net cash used in investing activities (248) (6,932)
--------------------------------------------- -------
Cash flows from financing activities
Issue of shares - 4,801
Receipt of loan funds - 5,000
Receipt of finance lease 16 51
Payment of finance lease liabilities (30) (16)
Interest paid (404) (147)
Expenses paid in connection with share
issue - (161)
--------------------------------------------- ------- --------
Net cash (used in)/from financing activities (418) 9,528
--------------------------------------------- ------- --------
Cash flows from discontinued operations
Cash outflow from operations of disposal
group - (832)
Sale of discontinued operations - 2,800
Acquisition of remaining shares in Accent
Telecom North Limited (260) (327)
--------------------------------------------- ------- --------
Net cash flows (used in)/from discontinued
operations (260) 1,641
--------------------------------------------- ------- --------
Net (decrease)/increase in cash (1,361) 3,673
Cash at bank and in hand at beginning of
period 4,266 593
--------------------------------------------- ------- --------
Cash at bank and in hand at end of period 2,905 4,266
--------------------------------------------- ------- --------
Comprising:
Cash at bank and in hand 2,905 4,266
--------------------------------------------- ------- --------
Notes to the consolidated financial information
1. General Information
Adept4 plc is a company incorporated in the United Kingdom under
the Companies Act 2006. The address of the registered office is 5
Fleet Place, London, EC4M 7RD.
The Board of Directors approved this preliminary announcement on
16 January 2017. Whilst the financial information included in the
preliminary announcement has been prepared in accordance with the
recognition and measurement criteria of International Financial
Reporting Standards ("IFRS") as endorsed by the European Union,
this announcement does not itself contain sufficient information to
comply with all the disclosure requirements of IFRS and does not
constitute statutory accounts of the Company for the years ended 30
September 2016 and 2017.
The financial information set out in this preliminary
announcement does not constitute the Group's financial statements
for the periods ended 30 September 2016 and 2017. The financial
information for the period ended 30 September 2016 is derived from
the statutory accounts for that year which have been delivered to
the Registrar of Companies. The statutory accounts for the year
ended 30 September 2017 will be delivered to the Registrar of
Companies following the Company's annual general meeting. The
auditors have reported on those accounts; their reports were
unqualified and did not contain a statement under s498(2) or
s498(3) of the Companies Act 2006.
2. Basis of Preparation
This financial information has been prepared in accordance with
the principles of International Financial Reporting Standards
("IFRS") as adopted by the European Union and International
Financial Reporting Interpretations Committee ("IFRIC")
recommendations and with those parts of the Companies Act 2006
applicable to companies reporting under IFRS. For the purposes of
the preparation of the consolidated financial information, the
Group has applied all standards and interpretations that are
effective for accounting periods beginning on or after 1 October
2016. There have been no changes in accounting policies during the
year. The financial information has been prepared under the
historical cost convention unless otherwise stated
3. Segment reporting
The chief operating decision maker has been identified as the
Executive Directors of the Company, who review the Group's internal
reporting in order to assess performance and to allocate resources.
The Directors present below the results for 2017 and 2016 based on
these reportable operating segments.
Product
* This segment comprises the resale of solutions
(hardware and software) from leading technology
vendors.
Recurring Services
("Service") * This segment comprises the provision of continuing IT
services which have an ongoing billing and support
element.
Professional
Services ("PS") * This segment comprises the provision of highly
skilled resource to consult, design, install,
configure and integrate IT technologies.
Plc costs ("PLC")
* This comprises the costs of running the Plc,
incorporating the cost of the Board, listing costs
and other professional service costs such as audit,
tax, legal and Group insurance.
------------------ ------------------------------------------------------------
Information regarding the operation of the reportable segments
is included below. Performance of the operating segments is
assessed based on revenue and a measure of earnings before
interest, depreciation and amortisation (EBITDA) before any
allocation of Group overheads (this includes both head office and
Plc costs) or charges for share-based payments. Segments are
measured below on this basis.
The segment information is prepared using accounting policies
consistent with those of the Group as a whole. The performance of
the Group is reviewed by the Executive Directors on a segmental
basis as has been disclosed. All segments are continuing
operations.
3.1 Analysis of continuing results
By operating segment
2017 2016
------------------ ------------------------------------------------ ------------------------------------------------
Product Service PS PLC Total Product Service PS PLC Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total segment
revenue 2,232 7,316 753 - 10,301 1,143 3,245 560 - 4,948
Inter-segment
revenue - - - - - - (9) - - (9)
------------------ -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
External revenue
from
continuing
operations 2,232 7,316 753 - 10,301 1,143 3,236 560 - 4,939
------------------ -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total segment
gross
profit from
continuing
operations 1,000 4,414 750 - 6,164 456 2,041 545 - 3,042
------------------ -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Adjusted trading
Group
EBITDA from
continuing
operations 254 1,093 190 - 1,537 138 616 164 - 918
------------------ -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Trading Group
EBITDA
from continuing
operations 193 822 144 - 1,159 138 616 164 - 918
Plc costs - - - (570) (570) - - - (804) (804)
Amortisation (142) (632) (106) - (880) (61) (277) (75) - (413)
Depreciation (26) (117) (19) - (162) (12) (48) (14) - (74)
Share-based
payment
costs - - - (162) (162) - - - (61) (61)
------------------ -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Operating
profit/(loss)
from continuing
operations
before separately
identifiable
costs/(income) 25 73 19 (732) (615) 65 291 75 (865) (434)
Separately
identifiable
income/(costs) - - - 626 626 - - - (615) (615)
------------------ -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Operating
profit/(loss)
from continuing
operations 25 73 19 (106) 11 65 291 75 (1,480) (1,049)
Interest
receivable - - - - - - - - 2 2
Interest payable - - - (842) (842) - - - (360) (360)
------------------ -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Profit/(loss)
before
tax from
continuing
operations 25 73 19 (948) (831) 65 291 75 (1,838) (1,407)
------------------ -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net assets 1,103 4,663 827 1,134 7,727 669 1,800 252 5,427 8,148
------------------ -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
3.2 Continuing results - like for like
2017 2016
----------------------------------- --------------------------------------
Weston Ancar MIT Total Weston Ancar MIT Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- -------- -------- -------- -------- -------- --------
Revenue 2,419 2,556 5,326 10,301 2,224 2,461 4,925 9,610
Recurring revenues 7,316 6,679
------------------- ----------------------------------- --------------------------------------
The table provides details of the performance for the twelve
months ended 30 September 2017 and 2016 for the acquired
businesses. The reported numbers for 2016 include results for
months which predated acquisition by the Group. These numbers have
been provided to report the performance of the Group on a like for
like basis.
4. Operating profit/(loss) from continuing operations
2017 2016
GBP'000 GBP'000
---------------------------------------------------- --------
Loss from continuing operations is stated after charging:
Depreciation of owned assets (162) (74)
Amortisation of intangibles (880) (413)
Research and development costs recognised
as expense - (22)
Other operating lease rentals:
- Buildings (114) (81)
Auditor's remuneration:
- Audit of parent company (14) (14)
- Audit of subsidiary companies (36) (45)
- Audit-related assurance services (5) (5)
- Corporation tax services (18) (18)
--------------------------------------------- ----- --------
Separately identifiable income/(costs)
Items that are material and non-recurring in nature are
presented as separately identifiable income or costs in the
Consolidated Income Statement, within the relevant account
heading.
2017 2016
GBP'000 GBP'000
---------------------------------------------------- --------
Gain on sale of share in associate company
(Stripe 21 Limited) - 259
Write back of contingent consideration 1,122 -
Professional fees, broker fees and due
diligence costs relating to acquisitions - (677)
Restructure costs relating to head office
and acquisitions (121) (197)
Termination payment for G Lyons (75) -
Provision for dispute with Chess ICT Limited (100) -
Impairment of goodwill (200) -
--------------------------------------------- ----- --------
Separately identifiable income/(costs) 626 (615)
--------------------------------------------- ----- --------
5. Finance income and finance costs
Finance cost includes all interest-related income and expenses.
The following amounts have been included in the Consolidated Income
Statement line for the reporting periods presented:
2017 2016
GBP'000 GBP'000
-------------------------------------------------- --------
Interest income resulting from short-term
bank deposits - 2
--------------------------------------------- --- --------
Finance income - 2
--------------------------------------------- --- --------
Interest expense resulting from:
Finance leases 4 2
BGF loan notes 400 145
Effective interest on liability element
of the BGF loan notes 199 67
Effective interest on deferred consideration
relating to Adept4 Managed IT Ltd 239 146
--------------------------------------------- --- --------
Finance costs 842 360
--------------------------------------------- --- --------
In accordance with IFRS 3, business combinations were accounted
for using the acquisition method, which required assets acquired
and liabilities assumed to be measured at their fair values at the
acquisition date. The acquisition of Adept4 Managed IT Ltd on 26
May 2016, for a total consideration of up to GBP7m, contained GBP1m
of deferred consideration payable in January 2018 and GBP1.5m of
contingent consideration payable in March 2018, based on the
financial performance of the Group in the calendar year to December
2017. The fair value of the deferred and contingent consideration
calculated at acquisition, using a discount rate of 16%, was
calculated at GBP1.73m.
During the year, GBP239,000 (2016: GBP146,000) of effective
interest was charged to the income statement. The contingent
consideration, which was based on the financial performance of the
Group in the calendar year 2017, has now been reassessed and, based
on the stretching targets set, no contingent consideration will now
be paid.
This has resulted in GBP1,122,000 being written back to the
Consolidated Income Statement and a fair value of the deferred and
contingent consideration payable at 30 September 2017 of
GBP987,000.
6. Total and continuing loss per share
2017 2016
GBP'000 GBP'000
-------------------------------------------------- --------
Loss on continuing operations (583) (1,324)
Profit on discontinued operations - 725
------------------------------------------- ----- --------
Loss attributable to ordinary shareholders (583) (599)
------------------------------------------- ----- --------
Number Number
-------------------------------------------------------- -----------
Weighted average number of Ordinary Shares
in issue, basic and diluted 227,065,097 165,891,459
------------------------------------------- ----------- -----------
Basic and fully diluted loss per share
- continuing operations (0.26)p (0.80)p
Basic and fully diluted profit per share
- discontinued operations - 0.44p
Basic and diluted loss per share (0.26)p (0.36)p
------------------------------------------- ----------- -----------
Both the basic and diluted earnings per share have been
calculated using the net profit/(loss) after taxation attributable
to the shareholders of Adept4 Plc as the numerator.
7. Intangible assets
IT, billing
and
Maintenance website Customer
Goodwill contracts systems Brand lists Total
Intangible assets GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- ----------- ----------- -------- -------- --------
Cost
At 1 October 2015 206 100 764 - 4,281 5,351
Additions 4,312 - - 1,157 8,166 13,635
Disposals (206) (100) (764) - (4,867) (5,937)
--------------------------- -------- ----------- ----------- -------- -------- --------
At 1 October 2016 4,312 - - 1,157 7,580 13,049
Additions - - 113 - - 113
Adjustments to provisional
fair values 135 - - - - 135
--------------------------- -------- ----------- ----------- -------- -------- --------
At 30 September 2017 4,447 - 113 1,157 7,580 13,297
--------------------------- -------- ----------- ----------- -------- -------- --------
Accumulated amortisation
---------------------------------------------------------------------------------------------
At 1 October 2015 - (100) (716) - (2,289) (3,105)
Disposals - 100 716 - 2,360 3,176
Charge for the year
- discontinued operations - - - - (71) (71)
Charge for the year
- continuing operations - - - (35) (378) (413)
--------------------------- -------- ----------- ----------- -------- -------- --------
At 1 October 2016 - - - (35) (378) (413)
Charge for the year
- continuing operations - - (7) (115) (758) (880)
--------------------------- -------- ----------- ----------- -------- -------- --------
At 30 September 2017 - - (7) (150) (1,136) (1,293)
--------------------------- -------- ----------- ----------- -------- -------- --------
Impairment
---------------------------------------------------------------------------------------------
At 1 October 2015 (206) - (48) - (1,501) (1,755)
Disposals 206 - 48 - 1,501 1,755
--------------------------- -------- ----------- ----------- -------- -------- --------
At 1 October 2016 - - - - - -
Impairment charge (200) - - - - (200)
--------------------------- -------- ----------- ----------- -------- -------- --------
At 30 September 2017 (200) - - - - (200)
--------------------------- -------- ----------- ----------- -------- -------- --------
Carrying amount
At 30 September 2016 4,312 - - 1,122 7,202 12,636
--------------------- ----- --- ----- --------- ---------
At 30 September 2017 4,247 -106 1,007 6,444 11,804
--------------------- ----- --- ----- --------- ---------
Average remaining 8.8 years 8.8 years 8.8 years
amortisation period
--------------------- ------------------ --------- ---------
The following adjustments have been made to the provisional fair
values, which have resulted in an increase in the amount of
goodwill:
Unpaid share Corporation Contractual
capital tax liabilities provision Total
Company GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ------------ ---------------- ----------- --------
Ancar-B Technologies Limited - (4) - (4)
Adept4 Managed IT Limited (52) 41 150 139
---------------------------- ------------ ---------------- ----------- --------
(52) 37 150 135
------------------------------------------ ---------------- ----------- --------
8. Trade and other receivables
2017 2016
GBP'000 GBP'000
------------------------------------- --------
Trade receivables 1,476 1,127
Prepayments and accrued income 873 441
------------------------------ ----- --------
2,349 1,568
------------------------------------- --------
9. Trade and other payables
9.1 Current
2017 2016
GBP'000 GBP'000
----------------------------------------------------- --------
BGF Loan Notes repayable to the BGF between
three and seven years 5,000 5,000
Deferred consideration for Accent Telecom
North Limited - payable March 2017 - 260
Deferred consideration for Adept4 Managed
IT Limited - payable January 2018 1,000 1,000
Contingent consideration for Adept4 Managed
IT Limited - payable March 2018 - 1,500
Finance lease liability 67 81
-------------------------------------------- ------- --------
6,067 7,841
Less fair value adjustment relating to
the BGF Loan Notes (1,128) (1,326)
Less fair value adjustment relating to
deferred and contingent consideration above (13) (630)
Less non-current portion of liabilities (3,914) (5,587)
-------------------------------------------- ------- --------
Short-term borrowings 1,012 298
Trade payables 1,203 862
Accruals and deferred income 1,590 1,539
Other taxes and social security costs 490 649
-------------------------------------------- ------- --------
Total current liabilities 4,295 3,348
-------------------------------------------- ------- --------
9.2 Non-current
2017 2016
GBP'000 GBP'000
----------------------------------------------------- --------
Finance leasing liability - long-term element 42 43
BGF Loan Notes 3,872 3,673
Deferred and contingent consideration payable
on acquisitions - 1,871
---------------------------------------------- ----- --------
Total non-current liabilities 3,914 5,587
---------------------------------------------- ----- --------
10. Post-balance sheet events
The deferred consideration, of GBP1.0m, due on the acquisition
of MIT was payable to the vendors on 2 January 2018. There is
currently an ongoing legal dispute with the vendors of MIT which
has resulted in 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,
which has no effect on current performance and does not relate to
the performance of MIT since acquisition.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAEFKFAPPEAF
(END) Dow Jones Newswires
January 17, 2018 02:00 ET (07:00 GMT)
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