TIDMECSC
RNS Number : 9010R
ECSC Group PLC
27 September 2017
27 September 2017
ECSC Group plc
("ECSC" or the "Company" or the "Group")
Interim results for the 6 months ended 30 June 2017
ECSC Group plc (AIM: ECSC), the provider of cyber security
services, announces its interim results for the 6 months ended 30
June 2017.
Highlights
-- Significant investment of IPO proceeds into scaling the infrastructure of the Company
-- Organic revenue growth of 9% to GBP1.93m (2016: GBP1.77m)
Consulting revenue up 14% to GBP1.14m (2016: 1.01m)
Managed Services recurring revenue up 13% to GBP0.43m (2016:
GBP0.38m)
-- EBITDA loss of GBP1.47m (2016: EBITDA profit of GBP0.36m),
reflecting the expensing of the enlarged cost base
-- Operating loss of GBP1.58m (2016: Operating profit of GBP0.29m)
-- Cash outflow of GBP1.86m, leaving cash of GBP3.13m at 30 June
2017 (GBP4.99m at 31 December 2016)
-- Delays experienced in conversion of sales pipeline into
committed orders and reported revenue
-- Full year revenue and EBITDA expected to be below market expectations
Ian Mann, CEO of ECSC, commented:
"The first six months of the year represented a period of
considerable change for the Company in which we have focused on
deploying existing and recruiting new resources to scale the
business to deliver a step change in revenue in 2018 and beyond.
The investment programme has progressed to plan, having increased
our headcount, broadened our UK operating infrastructure with low
cost facilities in Leeds and London, and established a
'follow-the-sun' Security Operations Centre in Australia.
The number of sales leads being generated by the enlarged team
has, in recent months, started to increase materially over previous
years. However, as we advised in June 2017, we are experiencing
delays converting our sales pipeline into committed orders and
revenue. Since June 2017, sales conversion delays have continued to
be evident and therefore, whilst our revenue is scaling, the rate
of growth remains below our revised expectations, such that full
year revenue will be below market expectations.
In light of the lower revenue levels currently being generated,
the Board, whilst protecting key revenue generating resources, has
reviewed the operational cost base of the Company and identified a
number of savings which will be immediately implemented. Whilst
these savings, together with the Company's growing revenue levels,
will materially reduce the monthly EBITDA loss, they will not be
sufficient to fully offset the reduced revenue levels and therefore
we also expect full year EBITDA to be below market
expectations.
Despite these revenue challenges, the Board remains confident
that its organic growth strategy is appropriate given the long-term
opportunity in the cyber security market."
The information contained in this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon publication of this
announcement, this inside information is now considered to be in
the public domain.
Enquiries:
ECSC Group plc
Ian Mann (Chief Executive Officer)
Stephen Hammell (Chief Financial +44 (0) 1274
Officer) 736 223
Stockdale Securities (NOMAD and
Broker)
Robert Finlay +44 (0) 20 7601
Hanan Lee 6100
Alma PR (Financial PR)
Joshua Royston +44 (0) 20 8004
Hilary Buchanan 4217
For more information please visit the following:
www.ecsc.co.uk
Notes to Editors
ECSC is a proven provider of cyber security services with a
blue-chip client base that offers a comprehensive range of
solutions.
The Company has over 16 years' experience in the design,
implementation and management of cyber security solutions. ECSC's
consultancy-led approach, and its combination of custom
methodologies and in-house proprietary technologies, enables the
Company to provide individually tailored services to its clients.
The Company has significant intellectual property, including
bespoke products delivering remotely managed cyber security
services and custom-made internal support and delivery systems.
The Company floated on AIM in December 2016 to accelerate its
growth strategy and to take advantage of the importance attached to
cyber security by company boards as a result of the recent
proliferation of high profile cyber security breaches.
Chairman's Statement
The Board continues to believe that there is an opportunity to
substantially increase the scale of ECSC's business to meet current
demand and expected market growth. The UK cyber security sector was
worth approximately GBP3.3 billion in 2016, with the UK market
predicted to grow at a rate of 10-12% per annum over the next 5
years.
This rate of growth is being driven by a proliferation of cyber
security breaches, increasing the importance of cyber security for
corporate boards in the private and public sectors. Many businesses
lack the IT departments, specialist resources, and complex software
necessary to combat cyber risk and face the real risk of going out
of business if subjected to a sustained attack. The regulatory
framework of the industry is also changing - the looming step
change in May 2018 with the advent of the General Data Protection
Regulation ('GDPR') is likely to bring the need for proper cyber
security into even sharper focus.
ECSC's vision and strategy is to scale its business to
capitalise on this market opportunity - to build significantly on
the organic growth achieved to date, to expand its client base, and
to deliver enhanced revenue and profitability. The IPO was timed
and executed to provide ECSC with the working capital to execute
its strategy in this growing market and invest in its sales and
operating infrastructure.
With our enlarged operating capacity, the Board is now seeing an
increased demand for ECSC's services, evidenced by a material
increase in client requests for new proposals. However, as advised
in June 2017, the growth of revenues has been slower than expected.
This trend has continued during the summer months and, as a result,
it is now expected that full year revenue will be below market
expectations.
In response to this slower revenue growth, the Board has
reviewed the operating cost base of the Company and is implementing
a number of cost saving measures whilst protecting key revenue
generating resources. These savings will, however, only partially
offset the impact of lower revenues and therefore full year EBITDA
is expected to be below market expectations.
The Board will continue to monitor revenue growth closely and
will manage the Company's cost base and financial resources
accordingly to protect the core business and provide the platform
to execute the organic growth strategy during 2018 and beyond.
Nigel Payne
Chairman
26 September 2017
Chief Executive's Review
The 6 months to 30 June 2017 has been a period of considerable
change for ECSC and has seen significant investment into the
infrastructure of the Company and continued organic growth of
revenue.
Investment has been focused on scaling up the sales capability
and the delivery capacity of the business. In addition, ongoing
investment has also been made in our proprietary security software
to improve the technical capability of our Managed Service
proposition and to maintain its leading edge for the benefit of our
clients. From an operational point of view, the post-IPO plan to
scale the business is progressing on track, with all planned sales,
delivery, and management positions recruited and integrated into
the business.
The expansion of the sales team has progressed broadly in line
with expectations, with a commitment to continued investment in
training and development. Our marketing activities have been
increased and this has delivered record levels of new sales leads.
The new management structure is also fully implemented, with
Service Delivery Directors and Regional Sales Managers all in
place.
The new Australian Security Operations Centre opened in
September 2017, providing a critical support function to our
clients based on 24/7/365 service provision. Our Incident Response
facility in London is also operational, enabling us to provide
faster Incident Response to client sites and more efficient
hardware replacement for Managed Services clients. Enhanced
Incident Response services are central to our client preparations
for the new GDPR regulations, where mandatory reporting of breaches
within 72 hours will become law within the UK and across
Europe.
In June 2017 we advised of delays in the conversion of sales
pipeline into reported revenue. This was caused, in part, by
underestimating the impact on the existing sales team of recruiting
and training the new team. To improve the rate of conversion, we
have re-organised the Managed Services sales team to dedicate more
existing sales staff and better match our skills to commercial
opportunities. With new sales staff, we have focused our efforts on
encouraging and developing strong performers at an accelerated
pace, whilst removing under-performers, thereby concentrating the
sales pipeline into the hands of our best people.
However, since June 2017, we have continued to experience delays
in order commitments. In light of this slower revenue growth,
management has reviewed the enlarged cost structure of the Company
and identified a number of immediate savings with limited cost to
implement, whilst protecting key revenue generating resources.
Therefore, whilst we continue to scale our revenue, the overall
growth trajectory and EBITDA are expected to be below market
expectations. With a more focused sales effort, including a
re-organised Managed Services sales team and a reviewed cost
structure being implemented, we remain confident our organic growth
strategy is appropriate given the long term opportunity in the
cyber security market.
Ian Mann
Chief Executive Officer
26 September 2017
Financial Review
The company change programme since IPO has driven a substantial
increase in the operating cost base of the Company alongside
continued organic revenue growth.
Revenue Growth
Total revenue in the 6 months to 30 June 2016 was GBP1.93m, up
9% on prior year of GBP1.77m. Within this, Consulting revenue rose
by 14% to GBP1.14m (2016: GBP1.01m), an encouraging performance
given a reasonable percentage of time has been spent embedding new
capacity.
Managed Services revenue comprises 3 elements - recurring
revenues from contracted clients, one-off set-up revenues from new
clients and Incident Response revenues from emergency call-outs.
Managed Services revenue was stable at GBP0.58m (2016: GBP0.58m).
Recurring revenue from contracted clients expanded by 13% to
GBP0.43m (2016: GBP0.38m), with 9 new contract wins in the period.
Set-up revenues were stable compared to prior year at GBP0.11m
(2016: GBP0.11m). However, there was a decline in Incident Response
revenue in the period to GBP0.04m (2016: GBP0.09m), driven by a
relatively low level of call-outs.
Vendor Products revenue in the period was modest, albeit above
prior year.
Margin Generation
Gross margin has fallen to 50% (2016: 68%) as expected,
reflecting the rapid scale-up of delivery capacity brought on ahead
of being necessary to support revenue growth.
Consulting margins have fallen in the period to 56% (2016: 71%).
The underlying pricing of Consulting days has remained stable in
the period, with the decline in margin driven by the low initial
utilisation of new staff as they progress through their induction
and training cycle. Consulting margins are expected to trend
upwards as utilisation rates improve and new staff become fully
productive.
Managed Services margins have also fallen in the period to 52%
(2016: 85%) for similar reasons, reflecting expansion of the
Managed Services headcount and a reduction in the R&D
development activities of the team, against the backdrop of stable
revenues. Managed Services margins are also expected to trend
upwards.
EBITDA & Operating Profit
EBITDA in the period was a loss of GBP1.47m (2016: EBITDA profit
of GBP0.36m), reflecting the decline in reported gross profit and
the significant increase in Sales & Marketing costs, and
Administrative expenses associated with the scaling of the
business. Operating loss in the period was GBP1.58m (2016:
Operating profit of GBP0.29m).
Cash Flow
The cash balance at the start of the year was GBP4.99m, boosted
by the IPO proceeds. During the period, the cash balance has fallen
due to the EBITDA loss (GBP1.47m), working capital investment
(GBP0.2m), capital expenditure (GBP0.26m), and development costs
(GBP0.07m). The main items of capital expenditure are computer
equipment for new staff, leasehold property improvements, and
initial establishment costs for the new Security Operations Centre
in Australia.
During the period, Stockdale Securities Limited exercised its
Equity Warrant, subscribing for 89,941 new Ordinary Shares. This
resulted in a capital inflow of GBP0.15m.
The cash balance at 30 June 2017 was GBP3.1m. The Board
considers the cash balance to be sufficient to fund the ongoing
growth and development of the Company for the foreseeable
future.
Dividend
The Board has not declared a dividend for the interim period
(2016: GBP0.07m).
Stephen Hammell
Chief Financial Officer
26 September 2017
ECSC Group plc
Independent Auditors' Review Report
To the members of ECSC Group plc
Introduction
We have been engaged by the company to review the condensed set
of interim financial statements in the half-yearly financial report
for the 6 months ended 30 June 2017 which comprises the Statement
of Comprehensive Income, Statement of Financial Position, Statement
of Cash Flows, Statement of Changes in Equity and the related
explanatory notes that have been reviewed.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' Responsibilities
The Interim Report, including the financial information
contained therein, is the responsibility of and has been approved
by the Directors. The Directors are responsible for preparing the
Interim Report in accordance with the rules of the London Stock
Exchange for companies trading securities on AIM which require that
the half-yearly report be presented and prepared in a form
consistent with that which will be adopted in the company's annual
accounts having regard to the accounting standards applicable to
such annual accounts.
Our Responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Our report has been prepared in accordance with the terms of our
engagement to assist the company in meeting the requirements of the
rules of the London Stock Exchange for companies trading securities
on AIM and for no other purpose. No person is entitled to rely on
this report unless such a person is a person entitled to rely upon
this report by virtue of and for the purpose of our terms of
engagement or has been expressly authorised to do so by our prior
written consent. Save as above, we do not accept responsibility for
this report to any other person or for any other purpose and we
hereby expressly disclaim any and all such liability.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity", issued by the 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 Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the 6 months ended 30 June
2017 is not prepared, in all material respects, in accordance with
the rules of the London Stock Exchange for companies trading
securities on AIM.
BDO LLP
Registered Auditors
Leeds
United Kingdom
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
ECSC Group plc
Statement of Comprehensive Income
For the 6 months ended 30 June 2017
Restated* Restated*
Unaudited Unaudited Audited
6 months 6 months 15 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
Note GBP'000 GBP'000 GBP'000
Revenue 6 1,926 1,770 4,510
Cost of Sales (960) (566) (1,723)
---------- ------------ --------------
Gross Profit 6 966 1,204 2,787
Other Income 7 45 54 158
Sales & Marketing
Costs (1,310) (486) (1,245)
Administrative
Expenses (1,285) (480) (1,247)
---------- ------------ --------------
Operating (Loss)/Profit (1,584) 292 453
Finance Income - - 5
Exceptional Items
- IPO Costs - - (975)
(Loss)/Profit before
Taxation 9 (1,584) 292 (517)
Taxation 10 44 - 118
---------- ------------ --------------
(Loss)/Profit for
the Period (1,540) 292 (399)
Other Comprehensive
Income - - -
Total Comprehensive
Income
for the Period (1,540) 292 (399)
========== ============ ==============
Attributable to
Equity Holders
of the Company (1,540) 292 (399)
========== ============ ==============
(Loss)/Earnings
per Share (pence) 11
Basic (loss)/earnings
per share (17.1) 5.8 (8.4)
Diluted (loss)/earnings
per share (17.1) 5.8 (8.4)
* The comparative figures have been restated in accordance with
Note 3.
ECSC Group plc
Statement of Financial Position
As at 30 June 2017
Unaudited Unaudited Audited
as at as at as at
30 June 30 June 31 December
2017 2016 2016
Note GBP'000 GBP'000 GBP'000
ASSETS
Non-current Assets
Intangible Assets 12 388 309 363
Property, Plant
and Equipment 500 156 298
Total non-current
assets 888 465 661
---------- ---------- ---------------
Current Assets
Inventory 69 - -
Trade and Other
Receivables 13 994 935 1,033
Corporation Tax
Recoverable 225 54 182
Cash and Cash Equivalents 3,128 258 4,987
Total Current Assets 4,416 1,247 6,202
---------- ---------- ---------------
TOTAL ASSETS 5,304 1,712 6,863
LIABILITIES
Current Liabilities
Trade and Other
Payables 14 (1,143) (726) (1,263)
Corporation Tax -
Payable - (74)
---------- ---------- ---------------
Total Current Liabilities (1,143) (800) (1,263)
---------- ---------- ---------------
Non-current Liabilities
Deferred Tax - (10) (49)
---------- ---------- ---------------
Total Non-current
Liabilities - (10) (49)
---------- ---------- ---------------
TOTAL LIABILITIES (1,143) (810) (1,312)
---------- ---------- ---------------
NET ASSETS 4,161 902 5,551
========== ========== ===============
EQUITY
Equity attributable
to owners
of the Parent:
Share Capital 91 24 90
Share Premium Account 5,661 158 5,512
Retained Earnings (1,591) 720 (51)
TOTAL EQUITY 4,161 902 5,551
========== ========== ===============
ECSC Group plc
Statement of Cash Flows
For the 6 months ended 30 June 2017
Unaudited Unaudited Audited
6 months 6 months 15 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Cash Flow from Operating
Activities:
(Loss)/Profit before Taxation (1,584) 292 (517)
Exceptional Items - IPO
costs - - 975
Grant Income Adjustment (45) (54) -
Adjustment for:
Amortisation of Intangibles 50 45 112
Depreciation of Property,
Plant and Equipment 62 24 65
---------- ---------- -------------
Cash from Operating Activities
before changes in Working
Capital (1,517) 307 635
Change in Inventory (69) - 1
Change in Trade and Other
Receivables 39 (202) (411)
Change in Trade and Other
Payables (123) 26 643
---------- ---------- -------------
Cash generated from Operating
Activities (1,670) 131 868
Corporation Tax received - - 36
---------- ---------- -------------
Net Cash Flow from Operations (1,670) 131 904
---------- ---------- -------------
Acquisition of Property,
Plant and Equipment (264) (109) (296)
Development Costs capitalised (75) (82) (221)
Net Cash Flow used in
Investing Activities (339) (191) (517)
---------- ---------- -------------
Dividends Paid - (71) (254)
Proceeds from Issuance
of Shares 150 85 5,818
Exceptional Items - IPO
costs - - (1,288)
Net Cash used in Financing
Activities 150 14 4,276
---------- ---------- -------------
Net (decrease)/ increase
in Cash & Cash Equivalents (1,859) (46) 4,663
Cash & Cash Equivalents
at beginning of period 4,987 304 324
Cash & Cash Equivalents
at end of period 3,128 258 4,987
---------- ---------- -------------
ECSC Group plc
Statement of Changes in Equity
For the 6 months ended 30 June 2017
Share Share Retained
Capital Premium Earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
Balance at 30 September
2015 22 75 602 699
Profit and Total Comprehensive
Income for the Period - - (399) (399)
Transaction with owners:
Dividends - - (254) (254)
Issue of Shares 2 83 - 85
Bonus Issue 26 (26) - -
Issue of Shares at
IPO 30 4,970 - 5,000
Exercise of Share
Options 10 723 - 733
Share Issue Costs - (313) - (313)
Balance at 31 December
2016 90 5,512 (51) 5,551
Profit and Total Comprehensive
Income for the Period - - (1,540) (1,540)
Exercise of Equity
Warrant 1 149 - 150
Balance at 30 June
2017 91 5,661 (1,591) 4,161
======== ======== ========= ========
This statement is unaudited.
ECSC Group plc
Notes to the Group Condensed Consolidated Interim Financial
Statements
For the 6 months ended 30 June 2017
1. Corporate Information
ECSC Group plc ("the Company") is incorporated in England and
Wales and quoted on the London Stock Exchange's Alternative
Investment Market (AIM: ECSC). Further copies of these results will
be available at the Company's registered office: 28 Campus Road,
Listerhills Science Park, Bradford, BD7 1HR or on the Company
website at www.ecsc.co.uk. These interim financial statements were
approved by the Board of Directors on 26 September 2017.
2. General Information
The unaudited interim condensed financial statements for the 6
months ended 30 June 2017 do not comprise statutory accounts and
should be read in conjunction with the Annual Report for the 15
months ended 31 December 2016. Those accounts have been reported
upon by the Company auditors and delivered to Companies House in
the United Kingdom. The report of the auditors on those accounts
was unqualified. The Annual Report is published in the investors
section of the Group website at https://investor.ecsc.co.uk.
These condensed interim financial statements are for the 6
months ended 30 June 2017. The comparative figures for the 15 month
period ending 31 December 2016 are derived from the statutory
accounts for that financial period which were approved by the
Directors on 21 March 2017 and delivered to the Registrar of
Companies. The audit report received on those accounts was
unqualified and did not contain any emphasis of matter paragraph
nor any statement under Section 498 of the Companies Act 2006.
The condensed interim financial statements do not include all
the information and disclosures required in the annual financial
statements and should be read in conjunction with the Group's
financial statements as at 31 December 2016.
The condensed interim financial statements for the 6 months to
30 June 2017 have not been audited or reviewed by an auditor
pursuant to the Auditing Practices Board guidance on Review of
Interim Financial Information. The same applies to the 6 months to
30 June 2016 as this period is not audited but does form part of
the 15 months audited results to 31 December 2016.
AIM-traded companies are not required to comply with IAS 34
'Interim Financial Reporting' and accordingly the Company has taken
advantage of this exemption.
This report may contain certain statements about the future
outlook for ECSC Group plc. Although the Directors believe their
expectations are based on reasonable assumptions, any statements
about future outlook may be influenced by factors that could cause
actual outcomes and results to be materially different.
3. Basis of Preparation
The condensed interim financial statements have been prepared in
accordance with International Financial Reporting Standards,
International Accounting Standards and Interpretations
(collectively IFRS) issued by the International Accounting
Standards Board ("IASB") as adopted by the European Union.
The condensed interim financial statements for the 6 months to
30 June 2017 have been prepared on the basis of the accounting
policies expected to be adopted for the year ended 31 December
2017. These are consistent with those set out in the Group's latest
annual financial statements for the 15 months ended 31 December
2016. These accounting policies are drawn up in accordance with
IFRS.
The condensed interim financial statements have been restated;
certain staff costs have been re-allocated from Administrative
Expenses to Cost of Sales. This is to allocate direct Consultancy
and Managed Service staff costs against revenue earned in these
activities. The effect of this change is to increase Cost of Sales
and to reduce Administrative Expenses by GBP255k in the 6 months
ended 30 June 2016 and by GBP708k in the 15 months ended 31
December 2016. This change has no impact on the reported
profit/loss for the respective periods.
The condensed interim financial statements have been presented
in thousands of Pounds Sterling (GBP'000, GBP), as this is the
currency of the primary economic environment in which the Company
operates.
4. Estimates
The preparation of interim financial information requires
management to make certain judgements, estimates and assumptions
that affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
amounts may differ from these estimates.
In preparing these interim financial statements the significant
judgements made by management in applying the Company's accounting
policies and the key sources of estimation uncertainty were the
same as those applied to the consolidated financial statements for
the 15 months ended 31 December 2016.
5. Going Concern
The condensed interim financial statements have been prepared on
the basis that the Company will continue as a going concern.
After making enquiries, the Directors consider that the Company
has adequate resources to continue in operational existence for the
foreseeable future. Consequently, they have adopted the going
concern basis in preparing these interim condensed financial
statements.
6. Revenue and Segment Information
The Company's principal revenue is derived from the supply of
cyber security professional services.
The Directors consider that there are three principal reportable
operating segments - Consulting, Managed Services and Vendor
Products. There were a small number of client re-charges recorded
during each period which are not considered to be part of any of
the three reportable operating segments. These are presented below
within the 'Re-chargeable Items' caption.
The Company's revenue and gross profit by operating segment were
as follows:
Restated Restated
Unaudited Unaudited Audited
6 months 6 months 15 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Revenue
Consulting 1,144 1,006 2,562
Managed Services 579 582 1,330
Vendor Products 53 18 235
Re-chargeable Items 150 164 383
1,926 1,770 4,510
========== =========== =============
Gross Profit
Consulting 642 717 1,701
Managed Services 298 493 1,059
Vendor Products 13 4 37
Re-chargeable Items 13 (10) (10)
966 1,204 2,787
========== =========== =============
7. Other Income
Unaudited Unaudited Audited
6 months 6 months 15 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Grant Income 45 54 158
========== ========== =============
A credit has been recognised within grant income as a result of
R&D tax credit claims.
In accordance with IFRS, R&D tax credits are shown as grant
income due to their being insufficient taxable profits in the
period against which they could be offset.
In the 15 months ended 31 December 2016, the R&D tax credit
claim was GBP135k and related to the FY14, FY15 and FY16
periods.
In the 6 months ended 30 June 2017, the R&D tax credit claim
has been estimated at GBP45k.
8. EBITDA
Earnings Before Interest Tax Depreciation and Amortisation
("EBITDA") is calculated as follows:
Unaudited Unaudited Audited
6 months 6 months 15 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Operating (Loss)/Profit (1,584) 292 453
Depreciation of Owned Assets 62 24 65
Amortisation of Intangibles
- Development Costs 50 45 112
---------- ---------- -------------
EBITDA (1,472) 361 630
========== ========== =============
9. Adjusted Profit before Taxation
Unaudited Unaudited Audited
6 months 6 months 15 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
(Loss)/Profit before Taxation (1,584) 292 (517)
Exceptional IPO costs - - 975
---------- ---------- -------------
Adjusted Profit before Taxation (1,584) 292 458
========== ========== =============
10. Taxation
Recognised in the Statement of Comprehensive Income
Unaudited Unaudited Audited
6 months 6 months 15 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
UK Corporation Tax - current
tax on profit for the
period - - (47)
UK Corporation Tax - prior
period adjustment 5 - (62)
Deferred Tax - reversal
of timing differences - - (9)
Deferred Tax - prior period
adjustment (49) - -
---------- ---------- -------------
(44) - (118)
========== ========== =============
Reconciliation of Effective Tax Rate
Unaudited Unaudited Audited
6 months 6 months 15 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Profit/(Loss) before Tax (1,584) 292 (517)
---------- ---------- -------------
Tax at the UK Corporation
Tax rate of 19.5% / 20.0% (309) 58 (103)
Expenses not deductible
for tax purposes 1 - 169
Income not taxable for
tax purposes (9) - -
Exercise of Share Options - - (175)
Difference between current
and deferred tax rates - - (9)
Over/under provision in
prior period - Corporation
Tax 5 - -
Over/under provision in
prior period - Deferred
Tax (49) - -
Tax losses on which deferred
tax not recognised 317 (58) -
(44) - (118)
========== ========== =============
Deferred Tax Assets & Liabilities
Unaudited Unaudited Audited
as at as at as at
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Deferred Tax Assets 105 - 41
Deferred Tax Liabilities (105) (10) (90)
Deferred Tax - Net Liability - (10) (49)
========== ========== =============
Unutilised Trading Losses
The Company continues to carry forward unutilised trading losses
of GBP1,669k (unutilised trading losses were
nil as at 30 June 2016).
A Deferred Tax Asset of GBP105k has been recognised as at 30
June 2016 in respect of the unutilised trading
losses. No further Deferred Tax Asset has been recognised
because the Board envisages that a significant
period of time will be required to generate sufficient profits
to utilise the trading losses carried forward.
11. Earnings per Share
Basic earnings per share amounts are calculated by dividing the
profit for the period attributable to equity holders of the Company
by the weighted average number of ordinary shares outstanding
during the period.
Diluted earnings per share amounts are calculated by dividing
the profit for the period attributable to equity holders of the
Company by the weighted average number of ordinary shares
outstanding during the period plus the weighted average number of
ordinary shares that would be issued on conversion of all the
potential dilutive ordinary shares into ordinary shares.
The following reflects the income and share data used in the
basic and diluted earnings per share computations:
Unaudited Unaudited Audited
6 months 6 months 15 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Net Profit attributable
to Equity Holders of the
Company (1,540) 292 (399)
Add back Exceptional Items
- IPO Costs - - 975
Adjusted Profit (1,540) 292 576
========== ========== =============
Number of Ordinary Shares
('000)
Initial weighted average
number of Ordinary Shares 8,994 24 22
---------- ---------- -------------
Adjusted to reflect split
into 100 1p shares 2,395 2,238
Bonus Issue 2,635 2,462
---------- ---------- -------------
Basic number of Ordinary
Shares 8,994 5,030 4,700
Weighted average of dilutive
shares in period 156 - 467
---------- ---------- -------------
Adjusted weighted average
number of Ordinary Shares 9,150 5,030 5,167
========== ========== =============
Basic earnings per share (17.1) 5.8 (8.4)
Diluted earnings per share (17.1)* 5.8 (8.4)*
Adjusted earnings per share (16.8) 5.8 11.1
========== ========== =============
On 28 October 2016, the Company passed a resolution to
re-designate all the Ordinary Shares of GBP1 each in issue as a
single class of shares. A resolution was then passed to sub-divide
every existing Ordinary Share of GBP1 each in issue into 100
Ordinary Shares of 1p. The Company then passed a resolution to
issue 110 Ordinary Shares of 1p each by way of a bonus issue pro
rata to shareholders. In accordance with IFRS, this has been
reflected in weighted average number of ordinary shares above.
Adjusted earnings per share are stated before charging IPO costs
of GBP975k.
On 19 and 22 May 2017, the Company granted options over 269,285
Ordinary Shares to selected employees.
On 9 June 2017, the Company allotted 89,941 Ordinary Shares of
1p each to Stockdale Securities Limited following their election to
exercise the Equity Warrant granted at the time of the IPO of the
Company.
* In accordance with IAS 33 p41 the effect of anti-dilutive
potential shares has been ignored.
12. Intangible Assets
Development Costs
Development Costs relate to staff costs incurred in enhancing
self-developed IT software and systems used to deliver services and
operate the business.
GBP'000
Cost
As at 1 October 2015 345
Additions 41
As at 31 December 2015 386
----------
As at 1 January 2016 386
Additions 82
----------
As at 30 June 2016 468
----------
As at 1 July 2016 468
Additions 99
As at 31 December 2016 567
----------
As at 1 January 2017 567
Additions 75
----------
As at 30 June 2017 642
----------
Amortisation
As at 1 October 2015 91
Amortisation Charge
for the 3 months 23
As at 31 December 2015 114
----------
As at 1 January 2016 114
Amortisation Charge
for the 6 months 45
----------
As at 30 June 2016 159
----------
As at 1 July 2016 159
Amortisation Charge
for the 6 months 45
As at 31 December 2016 204
----------
As at 1 January 2017 204
Amortisation Charge
for the 6 months 50
----------
As at 30 June 2017 254
----------
Net Book Value
----------
As at 31 December 2015 272
==========
As at 30 June 2016 309
==========
As at 31 December 2016 363
==========
As at 30 June 2017 388
==========
13. Trade and Other Receivables
Unaudited Unaudited Audited
as at as at as at
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Trade Receivables 885 742 928
Other Receivables 8 116 8
Prepayments and Accrued
Income 101 77 97
994 935 1,033
============ ============ ==============
The carrying amount of trade and other receivables approximates
to their fair value.
Other receivables, as at 30 June 2016, includes GBP92k in
respect of Directors' Loans and these loans were fully settled by
31 December 2016.
14. Trade and Other Payables
Unaudited Unaudited Audited
as at as at as at
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Trade Payables 204 98 484
Other Taxation and Social
Security 256 176 210
Other Payables & Deferred
Income 683 452 569
1,143 726 1,263
============ ============ ==============
The carrying amount of trade and other payables approximates to
their fair value due to their short term nature.
15. Related Party Transactions
Prior to the IPO dividends were paid to the Directors and their
close family members as follows:
Unaudited Unaudited Audited
6 months 6 months 15 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Dividends paid to Directors
and their close family members - 71 254
----------- ---------- -------------
In October 2015, loans amounting to GBP84,757 were granted to
two Directors to enable them to exercise share options. The loans
are interest free and are repayable on a sale or flotation of the
Company or earlier, at the borrowers' discretion. The loans were
discounted to GBP79,611 and were fully repaid in the period ended
31 December 2016.
An additional loan of GBP12,547 was made to a director in the
period ended 31 December 2016. This loan is interest free and was
repaid in the period ended 31 December 2016.
In the period 1 January 2017 to 30 June 2017, Merlin Consultancy
Ltd, a company owned by Nigel Payne (Non-Executive Chairman),
invoiced ECSC Group plc GBP8,647 for services rendered. These
transactions were entered into on an arms length basis.
16. Exceptional Costs
As part of the process of admission to trading on AIM for the
first time, costs of GBP1,288k were incurred. Of this total, costs
of GBP313k were allocated against Share Premium Account. The
remaining costs of GBP975k were charged to the Profit & Loss
Account in the 15 months to 31 December 2016.
17. Subsidiary Undertakings
The Company currently has the following wholly-owned
subsidiaries, which are incorporated and registered in England and
Wales, of which ECSC Group plc holds 100% of the share capital:
Name of Subsidiary Registered Date of Incorporation Principal
Office Activity
ECSC Services 28 Campus 18 April 2017 Dormant
Limited Road
Listerhills
Science Park
Bradford
BD7 1HR
ECSC Labs 28 Campus 18 April 2017 Dormant
Limited Road
Listerhills
Science Park
Bradford
BD7 1HR
ECSC Australia 28 Campus 29 September Dormant
Limited Road 2016
Listerhills
Science Park
Bradford
BD7 1HR
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAENKAAPXEAF
(END) Dow Jones Newswires
September 27, 2017 02:01 ET (06:01 GMT)
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