TIDMEIT
8 June 2015
Enables IT Group Plc
("Enables IT", "the Company" or "the Group")
Unaudited interim results for the six months ended 31 March 2015
Enables IT, a leading provider of cloud computing, managed and professional
services, is pleased to announce its interim results for the six months ended
31 March 2015.
Highlights:
* Revenue for the six months at GBP2.8 million (H1 2014: GBP3.6m)
* Recurring revenue 67.7% (H1 2014 54%)
* Gross profit at GBP0.93 million (H1 2014: GBP1.04m)
* Operating loss before exceptional items of GBP456k (H1 2014: loss GBP478k)
* Cash at bank of GBP417,000 as at 31 March 2015
Commenting on the results, Michael Walliss, CEO of Enables IT said:
"Whilst overall revenues were down, I am encouraged that recurring revenue
levels increased as a proportion of total revenue during the period. However,
growing the business from a low base continues to be a challenge. It is taking
us longer than expected to secure solid growth and we have taken a number of
steps which we hope will result in improved performance over time."
FURTHER ENQUIRIES
Enables IT Group plc
Michael Walliss Tel: 01372 541 984
Cairn Financial Advisers LLP(Nominated Adviser and Broker)
Tony Rawlinson/ Emma Earl Tel: 020 7148 7900
Redleaf Polhill Limited
David Ison / Rebecca Sanders-Hewitt Tel: 020 7382 4730
CEO Statement:
Overview
We continue to improve our efficiency in managing work for customers and have
been pleased with the levels of customer renewals during the period.
Initiatives in managing our group operations have already resulted in cost
savings, both in cost of sales as a percentage of revenue, and operating
expenditure. However, whilst we had anticipated a period of stabilisation,
further reorganisation has been required due to performance in some areas not
meeting targets.
Trading
Revenue in the period under review was down compared to the same period to the
31 March 2014 due to delays in existing customers commencing projects and a
general downturn in the amount of project work we were able to secure.
Acquisition of new clients has been slower than expected which has hindered our
growth expectations. The bulk of the losses arose in our European division,
whilst the US made a small loss. During this period we have made investments
into sales and marketing which have yet to deliver the expected returns,
especially in respect of new business in the UK.
As announced in March this year, we have a loan facility in place to draw upon
and we anticipate utilising this facility during the second half of the year,
to assist in managing our working capital requirements.
Outlook
We have put in place a number of steps which we hope will lead to improved
performance in the second half of the year. However, at this stage it is too
early to predict the outcome and we will make further announcements as the
situation unfolds.
Michael Walliss
CEO
Consolidated Income Statement
For the six months ended 31 March 2015
6 months to 6 months to Year to
31 March 31 March 30
2015 2014 September
(unaudited) (unaudited) 2014
(audited)
GBP'000 GBP'000 GBP'000
Revenue - Continuing operations 2,755 3,578 7,035
2,755 3,578 7,035
Cost of sales (1,825) (2,540) (4,521)
Gross profit 930 1,038 2,514
Operating expenses (1,386) (1,516) (3,116)
Operating loss before exceptional items (456) (478) (602)
Exceptional items
Restructuring and redundancy costs (85) (201) (164)
Impairment and amortisation of intangible (120) (175) (1,409)
assets
Foreign exchange gain on inter company 157 - -
balances
Operating loss (504) (854) (2,175)
Finance costs - (4) (6)
Loss before taxation (504) (858) (2,181)
Taxation 17 40 69
Loss for the period (487) (818) (2,112)
- -
Loss per share (pence)
Basic and Diluted (1.79)p (3.30)p (8.35)p
Consolidated Balance sheet
As at 31 March 2015
As at As at As at
31 March 31 March 30 September
2015 2014 2014
(unaudited) (unaudited) (audited)
Assets GBP'000 GBP'000 GBP'000
Non-current assets
Tangible fixed assets 775 868 813
Intangible assets 360 656 481
Goodwill 900 1,997 900
2,035 3,521 2,194
Current assets
Inventories 21 - 21
Trade and other receivables 713 1,728 1,264
Cash and cash equivalents 417 682 624
1,151 2,410 1,909
Total Assets 3,186 5,931 4,103
Liabilities
Current liabilities
Trade and other payables 767 1,134 997
Deferred income 545 699 479
Loans and other borrowings - 30 12
Corporation tax (20) 41 (20)
Obligations under finance leases - due - 8 -
within one year
Deferred consideration - 425 -
1,292 2,337 1,468
Non current liabilities
Deferred income 43 42 159
Deferred tax 55 161 73
98 203 232
Total liabilities 1,390 2,540 1,700
Total assets less liabilities 1,796 3,391 2,403
Equity
Share capital 3,183 3,171 3,183
Share premium 8,757 8,465 8'757
Merger reserve 1,002 1,002 1,002
Reverse acquisition reserve (8,977) (8,977) (8,977)
Other reserves (232) 861 (112)
Retained earnings (1,937) (1,131) (1,450)
Total equity 1,796 3,391 2,403
Consolidated Cash Flow Statement
For the six months ended 31 March 2015
6 months to 6 months to Year to
31 March 31 March 30
2015 2014 September
(unaudited) (unaudited) 2014
(audited)
GBP'000 GBP'000
GBP'000
Cash inflow from operating activities
Loss from operations (504) (858) (2,181)
Adjustments for:
Interest paid - 4 -
Depreciation 113 106 225
Impairment of intangible assets 32 109 1,259
Amortisation of intangible assets 88 66 150
Loss on disposal of fixed assets - - 1
Currency exchange adjustment (304) (2) (3)
(575) (575) (549)
(Increase) in inventories - - (21)
Decrease)/(Increase) in receivables 550 (834) (380)
(Decrease)/Increase in liabilities (122) 287 55
Cash used in operations (147) (1,122) (895)
Interest paid - (4) -
Tax paid - (11) (66)
Net cash used in operating activities (147) (1,137) (961)
Cash flows from investing activities
Acquisition of subsidiaries - (9) (434)
Purchase of goodwill and assets of business - (334) (653)
Purchase of customer lists - (244) (244)
Proceeds from disposal of fixed assets - - 2
Purchases of property, plant and equipment (48) (240) (325)
Net cash used in investing activities (48) (827) (1,654)
Cash flows from financing activities
Proceeds from issue of share capital - 68 88
Premium on issue - 2,392 2,991
Costs relating to share issues - (225) (225)
Decrease in borrowings (12) (17) (34)
Finance lease principle payments - (12) (21)
Net cash generated from financing activities (12) 2,206 2,799
Net (decrease)/increase in cash and cash (207) 242 184
equivalents
Cash and cash equivalents at beginning of 624 440 440
period
Cash and cash equivalents at end of period 417 682 624
Consolidated Statement of changes in equity
For the six months ended 31 March 2015
Share Share Retained Merger Reverse Other Total
Capital Premium Earnings Reserve Acquisi-tion Reserves
Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 October 2012 (as 2 - (9) - - - (7)
restated)
Loss and total - - (304) - - - (304)
comprehensive loss for the
year
Shares issued by legal 2,950 5,129 - - - - 8,079
parent prior to reverse
acquisition
Legal parent reserves prior - - - - - 898 898
to reverse acquisition
Currency exchange - - - - - 2 2
adjustment
Shares issued by the legal 119 - - 1,002 - - 1,121
parent on reverse
acquisition
Shares issued 26 934 - - - - 960
Share issue expenses - (72) - - - - (72)
Repayment of convertible - - - - - (39) (39)
loan notes
Reverse acquisition (2) - - (8,977) - (8,979)
adjustment
Share based payment charge - - - - - 2 2
As at 30 September 2013 3,095 5,991 (313) 1,002 (8,977) 863 1,661
Loss and total - - (818) - - - (818)
comprehensive loss for the
period
Movement in the period - - - - - (2) (2)
Shares issued during the 76 2,699 - - - - 2,775
period
Share issue expenses - (225) - - - - (225)
As at 31 March 2014 3,171 8,465 (1,131) 1,002 (8,977) 861 3,391
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year ended 30 September
2014
As at 1 October 2013 3,095 5,991 (313) 1,002 (8,977) 863 1,661
Loss and total - - (2,112) - - - (2,112)
comprehensive loss for the
year
Shares issued 88 2,991 - - - - 3,079
Share issue expenses - (225) - - - - (225)
Transfer of reserves - - 975 - - (975) -
As at 30 September 2014 3,183 8,757 (1,450) 1,002 (8,977) (112) 2,403
Loss and total - - (487) - - - (487)
comprehensive loss for the
period
Foreign currency exchange - - - - - (120) (120)
movement in the period
As at 31 March 2015 3,183 8,757 (1,937) 1,002 (8,977) (232) 1,796
Notes to the Interim Results
1. General information and basis of preparation
The financial information set out in these condensed consolidated interim
financial statements for the six months ended 31 March 2015 and the comparative
figures for the six months ended 31 March 2014 are unaudited. They have been
prepared taking into account the requirements of IAS 34 Interim Financial
Reporting and the AIM Rules. They do not contain all the information required
for full annual financial statements and should be read in conjunction with the
consolidated financial statements of the Group for the year ended 30 September
2014, which have been prepared in accordance with IFRS as adopted by the
European Union.
The financial information for the year ended 30 September 2014 set out in this
interim report does not constitute statutory accounts as defined in section 434
of the Companies Act 2006. The Group's statutory financial statements for the
year ended 30 September 2014 have been filed with the Registrar of Companies.
The Auditor's Report in respect of those financial statements was unqualified
and did not contain statements under section 498 of the Companies Act 2006.
The condensed consolidated interim financial statements are presented in
Sterling, which is also the functional currency of the parent company.
Enables IT Group plc is the Group's ultimate parent company. The Company is a
Public Limited Company incorporated and domiciled in the United Kingdom. Its
registered office and principal place of business is Unit 5, Mole Business
Park, Randalls Road, Leatherhead, Surrey KT22 7BA. Its shares are listed on
the Alternative Investment Market.
The condensed consolidated interim financial statements have been approved for
issue by the Board of Directors on 5 June 2015.
2. Significant accounting policies
The condensed consolidated interim financial statements have been prepared in
accordance with the accounting policies adopted in the last annual financial
statements for the year ended 30 September 2014.
The accounting policies have been applied consistently throughout the Group for
the purposes of preparation of these condensed consolidated interim financial
statements.
3. Principal risks and uncertainties
The management of the business and the execution of the Group's strategy are
subject to a number of risks. The key business risks affecting the Group are
set out below.
Dependence on major customers
Dependence on key suppliers
Competition
Technology
These risks are unchanged from those reported in the group's 2014 Annual Report
and further details may be found on page four of that report.
4. Segmental information
The services the group provides are in regard to one activity. Accordingly the
primary segmental disclosure is based on geographical location.
Europe US Eliminations Continuing
and
consolidated
operations
GBP'000 GBP'000 GBP'000 GBP'000
6 months ended 31 March 2015
Segmental revenue - continuing 1,664 1,091 - 2,755
Segmental operating result (361) (95) - (456)
Restructuring and redundancy costs (85)
Impairment and amortisation of (120)
intangible assets
Foreign exchange gain on inter 157
company
Taxation 17
Loss for the six months (487)
Year ended 30 September 2014
Segmental revenue - continuing 4,806 2,229 - 7,035
Segmental operating result (440) (162) - (602)
Restructuring and redundancy costs (164)
Impairment and amortisation of (1,409)
intangible assets
Finance costs (6)
Taxation 69
Loss for the year (2,112)
6 months ended 31 March 2014
Segmental revenue - continuing 2,479 1,099 - 3,578
Segmental operating result (492) 14 - (478)
Restructuring and redundancy costs (201)
Impairment and amortisation of (175)
intangible assets
Finance costs (4)
Taxation 40
Loss for the six months (818)
5. Goodwill and intangible assets
Goodwill 6 months to 6 months to Year to
31 March 31 March 30
2015 2014 September
(unaudited) (unaudited) 2014
(audited)
GBP'000 GBP'000
GBP'000
Cost
Opening balance 1,965 1,390 1,390
Additions - 607 654
Adjustment due to reduced final - - (79)
consideration
Closing balance 1,965 1,997 1,965
Impairment
Opening balance (1,065) - -
Impairment charge - - (1,065)
Closing balance (1,065) - (1,065)
Net book value 900 1,997 900
Goodwill and other intangibles relate to the reverse acquisition of Enables IT
Limited, the acquisition of The Support Force Group Limited and the acquisition
of the business and assets of Know Technology LLC.
Impairment testing has been performed over the total balance of intangible
assets which were allocated to the one cash generating unit (CGU) of the Group,
that of the sale of IT managed services and technologies. The Group tests
goodwill annually for impairment or more frequently if there are indications
that goodwill may be impaired.
The carrying value of intangible assets and goodwill has been assessed for
impairment by reference to the value in use. Value in use was determined by
discounting the future cash flows generated from the continuing use of the
unit.
An impairment charge of GBP32,395 was recognised at 31 March 2015 (GBP109,000 at 31
March 2014) against the carrying value of certain customers at Enables IT (UK)
Ltd and Enables IT Inc. which were considered to have no future value to the
business.
Amortisation and impairment charges are recorded within exceptional items.
6. Loss per share
The loss per share is based on the net loss for the period attributable to
ordinary equity holders divided by the weighted average number of ordinary
shares outstanding during the period.
The basic loss per share has been calculated by dividing the retained loss for
the period of GBP487,288 (2014: loss of GBP817,991) by the weighted average number
of ordinary shares of 27,284,303 (2014: 24,771,764) in issue during the period.
7. Dividends
No dividend is proposed for the six months ended 31 March 2015.
8. Copies of Interim Results
Copies of the Interim Results will be available on the Enables IT website,
Investor Section - www.enablesit.com
END
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