[ADVERT]
Share Name Share Symbol Market Type Share ISIN Share Description
Adept4 Plc LSE:AD4 London Ordinary Share GB00B8GRBX01 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.0% 2.05 1.90 2.20 0.00 01:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Software & Computer Services 10.2 -4.0 -1.7 - 10

Cloudcoco Group PLC Interim Results

09/06/2021 7:01am

UK Regulatory (RNS & others)


Adept4 (LSE:AD4)
Historical Stock Chart


From Apr 2021 to Oct 2021

Click Here for more Adept4 Charts.

TIDMCLCO

RNS Number : 2391B

Cloudcoco Group PLC

09 June 2021

9 June 2021

CloudCoCo Group plc

("CloudCoCo", "the Group" or "the Company")

Interim Results

CloudCoCo (AIM: CLCO), a UK provider of IT and communications solutions to businesses and public sector organisations, announces its unaudited interim results for the six months ended 31 March 2021.

Financial highlights

 
      --   Revenue of GBP4.14m (H1 2020: GBP4.43m, H2 2020: GBP3.54m) 
 
      --   Trading Group EBITDA (1) increased 435% to GBP364k (H1 
            2020: GBP68k, H2 2020: GBP193k) 
 
      --   Pre-tax loss of GBP0.67m (H1 2020: loss of GBP1.57m, 
            H2 2020: loss of GBP1.39m) 
 
      --   Cash at bank of GBP0.57m at 31 March 2021 (H1 2020: GBP0.27m) 
            and GBP0.4m undrawn working capital facility 
 
 

(1) earnings before net finance costs, tax, depreciation, amortisation, plc costs, separately identifiable items and share-based

income and payments

Operational highlights

 
      --   Resilient response to the impact of Covid with some colleagues 
            choosing to continue to work remotely 
 
      --   Secured multi-year contract extensions with Vantage Motor 
            Group and Baywater Healthcare, two of CloudCoCo's largest 
            clients by revenue 
 
      --   Maturation of cost actions linked to 'get well' phase 
            now delivering annual savings 
 
      --   'CoCo-One' people initiative progressing well with introduction 
            of performance-based share options scheme and the alignment 
            of technical teams in Warrington and Leeds offices 
 
 

Post-period highlights

 
      --   Continued demand for the Group's services and growing 
            pipeline 
 
      --   Appointment of Nigel Redwood, former CEO of AIM-listed 
            Nasstar PLC, as Strategic Consultant (a non-board position) 
            in line with the Board's decision to begin reviewing 
            options to scale the business 
 

Board changes

 
      --   As announced earlier today, Darron Giddens, Group Finance 
            Director, replaces Mike Lacey as Chief Financial Officer 
            and member of the Board 
 

Mark Halpin, CEO of CloudCoCo, commented:

"I am proud to report another period of significant progress for the Group, with execution against all of our company objectives and continued growth in our profitability, with Trading EBITDA in the first half up 435% year on year on the prior period. We have delivered a resilient performance in the period, with notable revenue and total contract value increases on the second half of 2020, despite the continued impact of Covid on the trading environment.

"The business is in good health, both operationally and in the pipeline of opportunities ahead of us. There will continue to be challenges to overcome, but we will meet them head on and remain confident of making further progress in the second half and beyond.

"Progress through the next phase in our development will be bolstered by the post-period hire of Nigel Redwood as Strategic Consultant. Nigel has a track record of accelerating growth - particularly in the listed IT managed services space - and recognises the importance of fostering a strong company ethos and culture. I have no doubt his counsel will prove invaluable as we deliver our organic growth initiatives and begin to explore the possibility of M&A."

 
 Contacts 
 
 CloudCoCo                                  via Alma PR 
 Mark Halpin, CEO 
 Darron Giddens, CFO 
 
 N+1 Singer (nominated adviser & broker)    +44 (0)20 7496 3000 
 Peter Steel 
 
 Alma PR (financial PR adviser)             +44 (0)20 3405 0205 
 David Ison                                 cloudcoco@almapr.co.uk 
 Josh Royston 
 Kieran Breheny 
 

About CloudCoCo

Supported by a team of industry experts and harnessing a diverse ecosystem of partnerships with blue-chip technology vendors, CloudCoCo makes it easy for businesses and public sector organisations to work smarter, faster and more securely by providing a single point of purchase for their connectivity, telephony, cyber security, cloud, IT hardware and support needs.

CloudCoCo has offices in Warrington and Leeds in the UK.

www.cloudcoco.co.uk

CHIEF EXECUTIVE'S REVIEW

Introduction

The first half of FY21 was another period of continued profit growth, with the Group delivering further incremental operational improvements and a strong financial performance particularly considering H1 2020 comparators substantially pre-date the onset of the Covid pandemic. Trading EBITDA increased 435% to GBP364k (H1 2020: GBP68k, H2 2020: GBP193k), with Group revenues and total contract value growing versus the second half of 2020 despite the continued effects of the pandemic on our end markets.

Now, with our platform and the right foundations in place for future growth, we move forward with a focus on further optimisation and new business development.

Progress against strategy

At the end of FY20, we outlined the proposed evolution of our strategy for FY21, with a focus on landing new contracts and improving the quality of our revenues while maintaining the highest standards of service.

With this in mind, our core objectives for the current financial year are to:

   1.    Accelerate sales 
   2.    Maintain excellent support levels 
   3.    Maintain cost vigilance 
   4.    Improve cash position 

In order to simplify our reporting, we have taken the decision to condense our reporting segments into two new categories - Managed IT Services and Value Added Resale.

 
                          6 months to   6 months to   6 months to        Year to 
                                   31            30            31   30 September 
                                March     September         March 
                                 2021          2020          2020           2020 
                              GBP'000       GBP'000       GBP'000        GBP'000 
----------------------   ------------  ------------  ------------  ------------- 
 By operating segment 
 Managed IT Services            2,910         2,909         3,222          6,131 
 Valued Added Resale            1,234           631         1,208          1,839 
-----------------------  ------------  ------------  ------------  ------------- 
 Total revenue                  4,144         3,540         4,430          7,970 
-----------------------  ------------  ------------  ------------  ------------- 
 

We continued to see prospective customers exercise caution in committing to long-term investments in the period, but nonetheless secured a number of important long-term contracts and our pipeline remains healthy.

In Managed IT Services, Vantage Motor Group and Baywater Healthcare, two of our largest customers by deal value, renewed their contracts with us on a multi-year basis. We also re-signed a UK university on a long-term deal and, testament to our leading capability in Microsoft and telephony, secured a large professional services order with a major UK educational institution to migrate 70,000 users from Skype to Teams while integrating the customer's existing PBX telephone system.

In Value Added Resale, demand for our collaboration and cyber security solutions remained strong, in line with the rise in remote working and the need to do so safely and securely. Contract wins of note include helping a leading law firm and a major English council successfully transition to home working through the delivery of our IT hardware and telephony solutions. boohoo, who we won as a new customer in FY20, continued to grow the breadth and depth of the services they take from us.

We launched our new website at the start of the current financial year and have continued to enrich it with informative content and regular tech-tip videos while ramping up our social media output. Pleasingly, traffic to the website in March 2021 was up 42% versus October 2020 and LinkedIn followers grew 11% in the same period.

During the period, we continued to strengthen our relationships and accreditations within our diverse ecosystem of blue-chip technology vendor partners, a key competitive advantage for the Group. In January 2021, Lenovo awarded us 'Gold' status in its national partner programme.

To improve efficiency, knowledge sharing and ultimately deliver faster and better projects across the Group, we combined our technical teams in our Warrington and Leeds offices. We continued to deliver excellent levels of customer services in the period, reflected in our consistently high customer satisfaction scores.

We are pleased to report material overhead savings versus the first half of the previous financial year. Through these reductions, these costs are now more closely aligned with the size of the business. Management continues to take steps to make the business as efficient as possible from a cost perspective.

The Group continues to improve its cash position. As at 31 March 2021, the Group's cash at bank had increased GBP0.30m year-on-year to GBP0.57m (H1 2020: GBP0.27m), maintaining an GBP0.4m undrawn working capital facility.

Our people

We recognise that our people are the foundation of our success, and we are continually looking at new and innovative ways we can reward good performance and make CloudCoCo a great place to work. Our colleagues have again demonstrated exceptional dedication and resolve in testing circumstances and I would like to personally thank them all for their contribution.

In November, we introduced CoCo-One, a comprehensive initiative comprising a number of projects designed to empower our colleagues, bring them closer together and generally enhance their experience as CloudCoCo team members. As part of this initiative, all qualifying colleagues were granted performance-based share options designed to enable them to share in the success of the business and align their incentivisation with the interests of shareholders. Through CoCo-One, we now have processes in place to ensure the development, implementation and evaluation of our people strategy continues in a structured and organised way.

Post-period, we appointed Nigel Redwood as Strategic Consultant, a non-board position. Nigel has over 20 years' experience working with private equity-backed and public businesses, including six years as CEO of AIM-listed IT managed services company Nasstar plc. At Nasstar, Nigel took the business from being loss making on turnover of GBP2.5m to making an EBITDA profit of GBP6.4m on turnover of GBP26.1m, driven by the acquisition of four businesses and a focus on instilling strong and consistent team values through the integration process. Working alongside senior management, Nigel will help support CloudCoCo's growth through regular consultation across the Group's organic growth initiatives and people strategies, as well as in the appraisal of possible acquisitions targets.

As per the Board Changes announcement released earlier today, Darron Giddens will replace Mike Lacey as CFO and member of the Board with immediate effect.

Finally, we remind shareholders of our intention to appoint an additional Independent Non-executive Director as and when we find a suitable candidate.

Current trading and outlook

Post-period, we continue to see demand for our services and further progress in developing our partnership ecosystem, with CloudCoCo becoming one of the few UK partners to be listed on the AWS (Amazon Web Services) Marketplace for Dynamic Cloud Security solutions; Mitel awarding the Group 'Gold' partner status; and THG Hosting, The Hut Group's web hosting business, announcing CloudCoCo as a UK partner.

With an increasing pipeline of opportunities despite the ongoing impact of Covid, we remain confident in our prospects for the second half, facilitated by the easing of restrictions. I am pleased to report that the Board is currently looking at ways to scale the business. While our strategy is predicated on growing the business organically, we are also giving consideration to growing by acquisition.

Since the completion of the acquisition of CloudCoCo Limited in October 2019, we have made advances in positioning the business for sustainable and profitable growth, and I look forward to progressing in a similar vein in the months and years ahead as we strive to deliver long-term value for shareholders.

Consolidated income statement

for the six-month period ended 31 March 2021

 
                                                               Unaudited     Unaudited     Unaudited         Audited 
                                                          6 months to 31   6 months to   6 Months to         Year to 
                                                                   March            30            31    30 September 
                                                                    2021     September         March            2020 
                                                                                  2020          2020 
-------------------------------------------------  ----  ---------------  ------------  ------------  -------------- 
                                                   Note          GBP'000       GBP'000       GBP'000         GBP'000 
-------------------------------------------------  ----  ---------------  ------------  ------------  -------------- 
Continuing operations 
Revenue                                               3            4,144         3,540         4,430           7,970 
Cost of sales                                                    (2,499)       (2,041)       (2,513)         (4,554) 
-------------------------------------------------  ----  ---------------  ------------  ------------  -------------- 
Gross profit                                                       1,645         1,499         1,917           3,416 
Other income                                                          46            97             -              97 
Administrative expenses                                          (2,081)       (2,698)       (3,265)         (5,963) 
                                                                                                      -------------- 
Trading Group EBITDA (1) - non statutory measure                     364           193            68             261 
Amortisation of intangible assets                                  (495)         (824)         (799)         (1,623) 
Plc costs                                                          (222)         (227)         (234)           (461) 
Depreciation                                                        (47)          (85)          (28)           (113) 
Exceptional items                                     4             (41)         (159)         (381)           (540) 
Share-based payments                                                  51             -            26              26 
-------------------------------------------------  ----  ---------------  ------------  ------------  -------------- 
Operating loss                                                     (390)       (1,102)       (1,348)         (2,450) 
Interest receivable                                                    -             -             1               1 
Interest payable                                                   (279)         (291)         (227)           (518) 
-------------------------------------------------  ----  ---------------  ------------  ------------  -------------- 
Net finance expense                                                (279)         (291)         (226)           (517) 
Loss before taxation                                               (669)       (1,393)       (1,574)         (2,967) 
Taxation                                                              94           138           150             288 
-------------------------------------------------  ----  ---------------  ------------  ------------  -------------- 
Loss and total comprehensive loss for the period 
 attributable to owners of the parent                              (575)       (1,255)       (1,424)         (2,679) 
-------------------------------------------------  ----  ---------------  ------------  ------------  -------------- 
Loss per share 
Basic and fully diluted                               5          (0.12)p       (0.25)p       (0.31)p         (0.56)p 
-------------------------------------------------  ----  ---------------  ------------  ------------  -------------- 
 

(1) earnings before net finance costs, tax, depreciation, amortisation, plc costs, exceptional items and share-based payments

Consolidated statement of financial position

as at 31 March 2021

 
                                      Unaudited  Unaudited        Audited 
                                       31 March   31 March   30 September 
                                           2021       2020           2020 
                                Note    GBP'000    GBP'000        GBP'000 
------------------------------  ----  ---------  ---------  ------------- 
Non-current assets 
Intangible assets                  6      9,864     11,540         10,359 
Property, plant and equipment               159         52            221 
------------------------------  ----  ---------  ---------  ------------- 
Total non-current assets                 10,023     11,592         10,580 
------------------------------  ----  ---------  ---------  ------------- 
Current assets 
Inventories                                  75         52             31 
Trade and other receivables        7      2,148      2,454          1,856 
Cash and cash equivalents                   575        274            588 
------------------------------  ----  ---------  ---------  ------------- 
Total current assets                      2,798      2,780          2,475 
------------------------------  ----  ---------  ---------  ------------- 
Total assets                             12,821     14,372         13,055 
------------------------------  ----  ---------  ---------  ------------- 
Current liabilities 
Trade and other payables           8    (2,482)    (2,262)        (2,465) 
Contract liabilities                      (969)      (707)          (565) 
Borrowings                         9      (109)          -          (104) 
Lease liability                            (78)       (95)          (122) 
------------------------------  ----  ---------  ---------  ------------- 
Total current liabilities               (3,638)    (3,064)        (3,256) 
------------------------------  ----  ---------  ---------  ------------- 
Non-current liabilities 
Contract liabilities                      (235)      (332)          (364) 
Borrowings                         9    (3,719)    (3,251)        (3,458) 
Lease liability                            (33)      (137)           (61) 
Deferred tax liability                    (846)    (1,357)          (940) 
------------------------------  ----  ---------  ---------  ------------- 
Total non-current liabilities           (4,833)    (5,077)        (4,823) 
------------------------------  ----  ---------  ---------  ------------- 
Total liabilities                       (8,471)    (8,141)        (8,079) 
------------------------------  ----  ---------  ---------  ------------- 
Net assets                                4,350      6,231          4,976 
------------------------------  ----  ---------  ---------  ------------- 
Equity 
Share capital                             4,952      4,952          4,952 
Share premium account                    17,630     17,630         17,630 
Capital redemption reserve                6,489      6,489          6,489 
Merger reserve                            1,997      1,997          1,997 
Other reserve                                71        122            122 
Retained earnings                      (26,789)   (24,959)       (26,214) 
------------------------------  ----  ---------  ---------  ------------- 
Total equity                              4,350      6,231          4,976 
------------------------------  ----  ---------  ---------  ------------- 
 

Consolidated statement of changes in equity

for the six-month period ended 31 March 2021

 
                                                                      Capital 
                                                 Share     Share   redemption    Merger     Other   Retained 
                                               capital   premium      reserve   reserve   reserve   earnings     Total 
                                               GBP'000   GBP'000      GBP'000   GBP'000   GBP'000    GBP'000   GBP'000 
--------------------------------------------  --------  --------  -----------  --------  --------  ---------  -------- 
At 1 October 2019                                2,271    11,337        6,489     1,997     1,720   (24,925)   (1,111) 
--------------------------------------------  --------  --------  -----------  --------  --------  ---------  -------- 
Loss and total comprehensive loss for the 
 period                                              -         -            -         -         -    (1,424)   (1,424) 
--------------------------------------------  --------  --------  -----------  --------  --------  ---------  -------- 
Transactions with owners 
 
  Extinguishment of BGF Loan Notes in 
  consideration for issue of 50,000,000 
  shares at 0.35p 
  per share                                        500     1,275            -         -   (1,330)      1,148     1,593 
Issue of 218,160,586 shares to CloudCoCo 
 vendors at 3.3p per share                       2,181     5,018            -         -         -          -     7,199 
Cancellation of 11,353,255 share warrants 
 held by MXC Guernsey on acquisition of 
 CloudCoCo 
 Ltd                                                 -         -            -         -     (242)        242         - 
Share-based payments                                 -         -            -         -      (26)          -      (26) 
--------------------------------------------  --------  --------  -----------  --------  --------  ---------  -------- 
Total transactions with owners                   2,681     6,293            -         -   (1,598)      1,390     8,766 
--------------------------------------------  --------  --------  -----------  --------  --------  ---------  -------- 
Total movements                                  2,681     6,293            -         -   (1,598)       (34)     7,342 
--------------------------------------------  --------  --------  -----------  --------  --------  ---------  -------- 
Equity at 31 March 2020                          4,952    17,630        6,489     1,997       122   (24,959)     6,231 
--------------------------------------------  --------  --------  -----------  --------  --------  ---------  -------- 
 
 
                                                                      Capital 
                                                 Share     Share   redemption    Merger     Other   Retained 
                                               capital   premium      reserve   reserve   reserve   earnings     Total 
                                               GBP'000   GBP'000      GBP'000   GBP'000   GBP'000    GBP'000   GBP'000 
--------------------------------------------  --------  --------  -----------  --------  --------  ---------  -------- 
At 1 April 2020                                  4,952    17,630        6,489     1,997       122   (24,959)     6,231 
--------------------------------------------  --------  --------  -----------  --------  --------  ---------  -------- 
Loss and total comprehensive loss for the 
 period                                              -         -            -         -         -    (1,255)   (1,255) 
--------------------------------------------  --------  --------  -----------  --------  --------  ---------  -------- 
Equity at 30 September 2020                      4,952    17,630        6,489     1,997       122   (26,214)     4,976 
--------------------------------------------  --------  --------  -----------  --------  --------  ---------  -------- 
 
 
                                                                      Capital 
                                                 Share     Share   redemption    Merger     Other   Retained 
                                               capital   premium      reserve   reserve   reserve   earnings     Total 
                                               GBP'000   GBP'000      GBP'000   GBP'000   GBP'000    GBP'000   GBP'000 
--------------------------------------------  --------  --------  -----------  --------  --------  ---------  -------- 
At 1 October 2020                                4,952    17,630        6,489     1,997       122   (26,214)     4,976 
--------------------------------------------  --------  --------  -----------  --------  --------  ---------  -------- 
Loss and total comprehensive loss for the 
 period                                              -         -            -         -         -      (575)     (575) 
Share-based payments                                 -         -            -         -      (51)          -      (51) 
Total movements                                      -         -            -         -      (51)      (575)     (626) 
--------------------------------------------  --------  --------  -----------  --------  --------  ---------  -------- 
Equity at 31 March 2021                          4,952    17,630        6,489     1,997        71   (26,789)     4,350 
--------------------------------------------  --------  --------  -----------  --------  --------  ---------  -------- 
 

Consolidated statement of cash flows

for the six month period ended 31 March 2021

 
                                             Unaudited      Unaudited             Unaudited 6 months to        Audited 
                                           6 months to    6 months to                          31 March        Year to 
                                              31 March   30 September                              2020   30 September 
                                                  2021           2020                           GBP'000           2020 
                                               GBP'000        GBP'000                                          GBP'000 
----------------------------------------  ------------  -------------  --------------------------------  ------------- 
Cash flows from operating activities 
Loss before taxation                             (669)        (1,393)                           (1,574)        (2,967) 
Adjustments for: 
Depreciation - owned assets                         17              8                                28             36 
Depreciation - right of use assets                  30             77                                 -             77 
Amortisation                                       495            824                               799          1,623 
Share-based payments                              (51)              -                              (26)           (26) 
Net finance expense                                279            291                               226            517 
Costs relating to acquisition of 
 CloudCoCo Limited                                   -             89                               346            435 
(Increase) / decrease in trade and other 
 receivables                                     (292)            502                             (567)           (65) 
(Increase) / decrease in inventories              (44)             21                              (20)              1 
Increase in trade payables, accruals and 
 deferred income                                   318            110                               756            866 
Net cash from / (used in) operating 
 activities before acquisition costs                83            529                              (32)            497 
Costs relating to acquisition of 
 CloudCoCo Limited                                   -           (89)                             (346)          (435) 
----------------------------------------  ------------  -------------  --------------------------------  ------------- 
Net cash from / (used in) operating 
 activities                                         83            440                             (378)             62 
----------------------------------------  ------------  -------------  --------------------------------  ------------- 
Cash flows from investing activities 
Purchase of property, plant and 
 equipment                                        (17)           (22)                              (15)           (37) 
Acquisition of CloudCoCo Limited, net of 
 cash acquired                                       -              -                               157            157 
Interest received                                    -              -                                 1              1 
----------------------------------------  ------------  -------------  --------------------------------  ------------- 
Net (used in) / from investing 
 activities                                       (17)           (22)                               143            121 
----------------------------------------  ------------  -------------  --------------------------------  ------------- 
Cash flows from financing activities 
Proceeds from exercise of BGF share 
 options                                             -              -                               175            175 
Receipt of loan funds from MXCG                      -              -                               100            100 
Receipt of loan funds from COVID-19 
 Bounce Back Loan                                    -             50                                 -             50 
Payment of lease liabilities                      (72)          (134)                              (49)          (183) 
Interest paid                                      (7)           (20)                              (28)           (48) 
Net cash (used in)/ from financing 
 activities                                       (79)          (104)                               198             94 
----------------------------------------  ------------  -------------  --------------------------------  ------------- 
Net (decrease) / increase in cash                 (13)            314                              (37)            277 
Cash at bank and in hand at beginning of 
 period                                            588            274                               311            311 
----------------------------------------  ------------  -------------  --------------------------------  ------------- 
Cash at bank and in hand at end of 
 period                                            575            588                               274            588 
----------------------------------------  ------------  -------------  --------------------------------  ------------- 
Comprising: 
Cash at bank and in hand                           575            588                               274            588 
----------------------------------------  ------------  -------------  --------------------------------  ------------- 
 

Notes to the consolidated interim financial statements

1. General information

CloudCoCo Group plc (the "Group") is a public limited company incorporated in England and Wales under the Companies Act 2006. The address of the registered office is 5 Fleet Place, London, EC4M 7RD.The principal activity of the Group is the provision of IT Services to small and medium-sized enterprises in the UK. The financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which each of the Group's subsidiaries operates.

2. Basis of Preparation

2.1 Accounting Policies

The accounting policies used in the presentation of the unaudited consolidated interim financial statements for the six months ended 31 March 2021 are in accordance with applicable International Financial Reporting Standards (IFRSs) as applied in accordance with provisions of the Companies Act 2006. The principal accounting policies of the Group have been consistently applied to all periods presented unless otherwise stated.

2.2 Going concern

The Directors have prepared the financial statements on a going concern basis which assumes that the Group will continue to meet liabilities as they fall due.

The Directors have reviewed the forecast sales growth, budgets and cash projections for the period to June 2022. The Directors have performed sensitivity analysis which reflects uncertainty in assumptions regarding growth in services and customer projects and considered that the Group expects to have sufficient cash resources provided that the MXC Guernsey Limited ("MXCG"), a subsidiary of MXC Capital Limited ("MXC"), working capital facility is made available beyond October 2021. At the request of the Directors, MXC has provided confirmation that it will provide continuing financial support including the extension of the existing facility until March 2022. In addition, the Directors have reasonable expectations that working capital could be raised from other sources including invoice finance arrangements should it be required.

After reviewing the forecast sales growth, budgets and cash projections, including sensitivity analysis on the key assumptions such as the potential impact of COVID-19 on sales, for the next twelve months and beyond and after taking into account the assurance of ongoing support from a significant shareholder, which the Directors reasonably believe has sufficient resources to provide such support, the Directors have reasonable expectations that the Group has adequate resources to continue operations for the foreseeable future, being a period of at least one year from the date of approval of these unaudited interim financial statements. The Directors have not identified any material uncertainties that may cast doubt over the ability of the Group to continue as a going concern and the Directors continue to adopt the going concern basis in preparing these unaudited interim financial statements.

3. Segment reporting

The Chief Operating Decision Maker ("CODM") has been identified as the executive directors of the Company and its subsidiaries, who review the Group's internal reporting in order to assess performance and to allocate resources.

In order to simplify our reporting, the CODM has taken the decision to condense our reporting segments into two new categories - Managed IT Services and Value Added Resale.

-- Managed IT Services - this segment provides all forms of managed services to customers and includes professional services.

-- Value Added Resale - this segment provides all forms of product and licence sales procured from supplier partners.

All segments are continuing operations and there are no transactions between segments.

 
                          Unaudited      Unaudited      Unaudited        Audited 
                           6 months       6 months    6 months to           Year 
                                 to             to                            to 
                           31 March   30 September       31 March   30 September 
                               2021           2020           2020           2020 
                            GBP'000        GBP'000        GBP'000        GBP'000 
----------------------   ----------  -------------  -------------  ------------- 
 By operating segment 
 Managed IT Services          2,910          2,909          3,222          6,131 
 Valued Added Resale          1,234            631          1,208          1,839 
-----------------------  ----------  -------------  -------------  ------------- 
 Total revenue                4,144          3,540          4,430          7,970 
-----------------------  ----------  -------------  -------------  ------------- 
 

4. Exceptional Items

Items which are material and non-routine in nature are presented as exceptional items in the Consolidated Income Statement.

 
                                       Unaudited      Unaudited      Unaudited        Audited 
                                        6 months       6 months    6 months to           Year 
                                              to             to                            to 
                                        31 March   30 September       31 March   30 September 
                                            2021           2020           2020           2020 
                                         GBP'000        GBP'000        GBP'000        GBP'000 
-----------------------------------   ----------  -------------  -------------  ------------- 
 Costs relating to the acquisition 
  of CloudCoCo Limited                         -           (89)          (346)          (435) 
 Integration and restructure costs          (41)           (70)           (35)          (105) 
------------------------------------  ----------  -------------  -------------  ------------- 
 Exceptional items                          (41)          (159)          (381)          (540) 
------------------------------------  ----------  -------------  -------------  ------------- 
 

5. Loss per share

 
                                                                   Unaudited     Unaudited     Unaudited       Audited 
                                                                 6 months to   6 months to   6 months to       Year to 
                                                                    31 March  30 September      31 March  30 September 
                                                                        2021          2020          2020          2020 
                                                                     GBP'000       GBP'000       GBP'000       GBP'000 
--------------------------------------------------------------  ------------  ------------  ------------  ------------ 
Loss attributable to ordinary shareholders                             (575)       (1,255)       (1,424)       (2,679) 
 
 
                                                                      Number        Number        Number        Number 
Weighted average number of Ordinary Shares in issue, basic and 
 diluted                                                         495,225,986   495,225,986  461,720,917)   478,427,400 
Basic and diluted loss per share                                     (0.12)p       (0.25)p       (0.31)p       (0.56)p 
--------------------------------------------------------------  ------------  ------------  ------------  ------------ 
 

6. Intangible assets

Intangible assets are non-physical assets which have been obtained as part of an acquisition or research and development activities, such as innovations, introduction and improvement of products and procedures to improve existing or new products. All intangible assets have an identifiable future economic benefit to the Group at the point the costs are incurred. The amortisation expense is recorded in administrative expenses in the Consolidated Income Statement

 
                                                          IT, billing and 
                                                                  website            Customer 
                                                Goodwill          systems     Brand     lists     Total 
Intangible assets                                GBP'000          GBP'000   GBP'000   GBP'000   GBP'000 
---------------------------------------------   --------  ---------------  --------  --------  -------- 
Cost 
At 1 October 2019                                  4,447              182     1,157     7,580    13,366 
Additions - acquisition of CloudCoCo Limited       3,845                -       700     3,400     7,945 
----------------------------------------------  --------  ---------------  --------  --------  -------- 
At 31 March 2020                                   8,292              182     1,857    10,980    21,311 
Additions - acquisition of CloudCoCo Limited       1,543                -     (200)   (1,700)     (357) 
----------------------------------------------  --------  ---------------  --------  --------  -------- 
At 30 September 2020                               9,835              182     1,657     9,280    20,954 
Additions                                              -                -         -         -         - 
---------------------------------------------   --------  ---------------  --------  --------  -------- 
At 31 March 2021                                   9,835              182     1,657     9,280    20,954 
----------------------------------------------  --------  ---------------  --------  --------  -------- 
 
 
Accumulated amortisation 
At 1 October 2019               -   (47)    (380)  (2,680)  (3,107) 
Charge for the period       (249)    (9)     (81)    (460)    (799) 
--------------------------  -----  -----  -------  -------  ------- 
At 31 March 2020            (249)   (56)    (461)  (3,140)  (3,906) 
Charge for the period         249  (102)    (517)    (454)    (824) 
--------------------------  -----  -----  -------  -------  ------- 
At 30 September 2020            -  (158)    (978)  (3,594)  (4,730) 
--------------------------  -----  -----  -------  -------  ------- 
Charge for the period           -    (6)     (25)    (464)    (495) 
--------------------------  -----  -----  -------  -------  ------- 
At 31 March 2021                -  (164)  (1,003)  (4,058)  (5,225) 
--------------------------  -----  -----  -------  -------  ------- 
 
 
Impairment 
At 1 October 2019        (4,447)  -(225)  (1,193)  (5,865) 
Charge for the period          -  -    -        -        - 
----------------------   -------   -----  -------  ------- 
At 31 March 2020         (4,447)  -(225)  (1,193)  (5,865) 
Charge for the period          -  -    -        -        - 
----------------------   -------   -----  -------  ------- 
At 30 September 2020     (4,447)  -(225)  (1,193)  (5,865) 
-----------------------  -------   -----  -------  ------- 
Charge for the period          -  -    -        -        - 
----------------------   -------   -----  -------  ------- 
At 31 March 2021         (4,447)  -(225)  (1,193)  (5,865) 
-----------------------  -------   -----  -------  ------- 
 
 
Carrying amount 
At 31 March 2021        5,388   18    429  4,029   9,864 
----------------------  -----  ---  -----  -----  ------ 
At 30 September 2020    5,388   24    454  4,493  10,359 
----------------------  -----  ---  -----  -----  ------ 
At 31 March 2020        3,596  126  1,171  6,647  11,540 
----------------------  -----  ---  -----  -----  ------ 
 

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows - cash generating units ("CGU"). The Group operates as a single business and there is a single CGU. For each reporting period , management compares the resulting cash flow projections using a value in use approach to assess the recoverable amount of the CGU to the carrying value of goodwill. Any material variance in this calculation results in an impairment charge to the Consolidated Income Statement.

The calculations used to compute cash flows for the CGU level are based on the Group's budget, growth rates, weighted average cost of capital ("WACC") and other known variables. The calculations are sensitive to movements in both WACC and the revenue growth projections. The current effective unsecured pre-tax borrowing rate is calculated at 12% per annum (FY20:12%) and the revenue growth rate is 5% per annum (FY20: 5%) for 5 years and a terminal growth rate of 2% (FY20: 2%) per annum. Sensitivities have been run on cash flow forecasts for the CGU. Management is satisfied that the key assumptions of revenue and EBITDA growth rates should be achievable and that reasonably possible changes to those key assumptions would not lead to the carrying amount exceeding the recoverable amount. Sensitivity analyses have been performed and the table below summarises the effects of changing certain key assumptions and the resultant excess (or shortfall) of discounted cash flows against the aggregate of goodwill and intangible assets.

 
Sensitivity analysis                                                  CloudCoCo Group plc 
                                                                                  GBP'000 
------------------------------------------------------------------    ------------------- 
Excess of recoverable amount over carrying value: 
Base case - headroom                                                                4,169 
Discount rate increased by 1% - resulting headroom                                  1,156 
Revenues growth rate reduced by 1% per annum - resulting headroom                   1,166 
--------------------------------------------------------------------  ------------------- 
 

Base case calculations highlight that the impairment review is sensitive to the discount rate and growth rate. Given the Group's value proposition is centred around generating monthly recurring fees for IT and communication solutions, the Directors are satisfied that the Group's objectives are to maximise the cash flows generated through the sales of Recurring Services.

In determining whether intangible assets including goodwill were impaired, the Directors estimated the discounted future cash flows associated with the intangible assets over a ten-year period, using a discount rate equivalent to the WACC. The Directors also considered the impact of the customer notices of termination received and the improvement in Trading EBITDA during the year as indicators that there is no impairment of intangible assets.

7. Trade and other receivables

 
                                            Unaudited 
                              Unaudited 31         31          Audited 
                                     March      March               30 
                                      2021       2020   September 2020 
                                   GBP'000    GBP'000          GBP'000 
----------------------------  ------------  ---------  --------------- 
Trade receivables                    1,041      1,339              985 
Other Debtors                           13         13                6 
Contract assets                        202        269              101 
Prepayments                            892        833              764 
----------------------------  ------------  ---------  --------------- 
Trade and other receivables          2,148      2,454            1,856 
----------------------------  ------------  ---------  --------------- 
 

8. Trade and other payables

 
                                        Unaudited  Unaudited          Audited 
                                         31 March   31 March               30 
                                             2021       2020   September 2020 
                                          GBP'000    GBP'000          GBP'000 
--------------------------------------  ---------  ---------  --------------- 
Trade payables                              1,551      1,541            1,388 
Accruals                                      407        333              460 
Other taxes and social security costs         524        388              617 
--------------------------------------  ---------  ---------  --------------- 
                                            2,482      2,262            2,465 
--------------------------------------  ---------  ---------  --------------- 
 

9. Borrowings

9.1 Current

 
                                                           Unaudited  Unaudited          Audited 
                                                            31 March   31 March               30 
                                                                2021       2020   September 2020 
                                                             GBP'000    GBP'000          GBP'000 
---------------------------------------------------------  ---------  ---------  --------------- 
COVID-19 Bounce-back loan repayable - short-term element           9          -                4 
MXC Guernsey Limited working capital facility                    100          -              100 
---------------------------------------------------------  ---------  ---------  --------------- 
                                                                 109          -              104 
---------------------------------------------------------  ---------  ---------  --------------- 
 

MXCG provide a GBP0.5 million working capital facility of which GBP0.1 million had been drawn down at 31 March 2021. There are no set repayment terms but interest is payable at 12% per annum on drawn down amounts. This facility is set to expire in October 2021 but MXCG has confirmed it will extend to March 2022.

9.2 Non-current

 
                                                                   Unaudited  Unaudited 
                                                                    31 March   31 March             Audited 
                                                                        2021       2020   30 September 2020 
                                                                     GBP'000    GBP'000             GBP'000 
-----------------------------------------------------------------  ---------  ---------  ------------------ 
Loan notes                                                             3,045      2,983               3,014 
Accrued interest on loan notes repayable in October 2024                 633        268                 398 
-----------------------------------------------------------------  ---------  ---------  ------------------ 
Loan notes                                                             3,678      3,251               3,412 
COVID-19 Business Bounce-back loan repayable - long-term element          41          -                  46 
-----------------------------------------------------------------  ---------  ---------  ------------------ 
                                                                       3,719      3,251               3,458 
-----------------------------------------------------------------  ---------  ---------  ------------------ 
 

On 10 May 2020, the Company borrowed GBP50,000 from HSBC Bank UK Plc, under the COVID-19 Business Bounce-back loan scheme. In accordance with the UK Government's Business Interruption Payment scheme, the interest on the loan for the first 12 months is covered by the UK Government and the Company will repay the loan in 59 equal monthly instalments, commencing June 2021.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.

END

IR FFFLLRVITIIL

(END) Dow Jones Newswires

June 09, 2021 02:01 ET (06:01 GMT)

1 Year Adept4 Chart

1 Year Adept4 Chart

1 Month Adept4 Chart

1 Month Adept4 Chart
ADVFN Advertorial
Your Recent History
LSE
AD4
Adept4
Register now to watch these stocks streaming on the ADVFN Monitor.

Monitor lets you view up to 110 of your favourite stocks at once and is completely free to use.

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V:gb D:20211017 04:48:31