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Harwood Wealth Management Group PLC Interim Results

03/07/2018 7:00am

UK Regulatory (RNS & others)


Harwood Wealth (LSE:HW.)
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RNS Number : 3427T

Harwood Wealth Management Group PLC

03 July 2018

3 July 2018

Harwood Wealth Management Group PLC

("HWMG" or the "Group")

Unaudited interim results for the six months ended 30 April 2018

Harwood Wealth Management Group (AIM: HW.), a leading UK-based financial planning and discretionary wealth management business, is pleased to announce its unaudited consolidated interim results for the six months ended 30 April 2018.

Financial highlights:

   --     Assets under influence (AUI) up 30% to GBP4.3bn (H1 2017: GBP3.3bn) 

o 37% of this growth was through acquisition

   --     Revenue up 44% to GBP15.1m (H1 2017: GBP10.5m) of which approximately 68% is recurring 
   --     Gross profit up 39% to GBP6.8m (H1 2017: GBP4.9m) 

-- Gross margin at 45% (H1 2017: 47%), reflecting the full impact of the acquisition of Network Direct, a naturally lower margin business

   --     Adjusted EBITDA[1] up 50% to GBP2.7m (H1 2017: GBP1.8m) 
   --     EPS increased to 0.91p (H1 2017: 0.27p) 

-- Net cash generated by operations of GBP2.2m (H1 2017: GBP1.5m) and total cash balances at the period end of GBP13.9m (H1 2017: GBP19.8m)

   --     Interim dividend of 1.08 pence per share (H1 2017: 1.00) proposed 

-- Nine acquisitions completed during the period for an aggregate consideration of GBP10.9m (GBP9.2m net of cash acquired)

Peter Mann, Chairman of Harwood Wealth Management Group, commented:

"The first half of the year has seen substantial progress, with the Group delivering profitable growth across all its divisions, achieved in line with our clear growth strategy. Harwood completed nine acquisitions in the period, many of which were on a larger scale than those executed in previous years. These acquisitions are important not only in boosting our earnings but also building the Group's capabilities and driving future growth. To date, all companies acquired have integrated well and are performing as expected.

Through maintaining the highest levels of service to our clients, providing advice and solutions truly appropriate to their needs, the Group continues to build on its strong client relationships as well as attracting an ever-increasing number of external mandates.

The Group's growth strategy remains appropriate to the market place we serve today, as demonstrated by the strong results achieved thus far and continued momentum into the second half. With strong visibility on revenues and an excellent pipeline of acquisition opportunities available to us, we look forward to the remainder of the year and beyond with confidence."

For further information please contact:

 
 Harwood Wealth Management Group plc 
  Alan Durrant, Chief Executive Officer    +44 (0)23 9355 2004 
 N+1 Singer Advisory LLP 
  Shaun Dobson 
  Ben Farrow                               +44 (0)20 7496 3000 
 Alma PR 
  Rebecca Sanders-Hewett / Susie Hudson    +44 (0)20 8004 4218 
 

Website

www.harwoodwealth.co.uk

CEO's statement

Introduction

The Group remains focused on delivering profitable growth in three areas: organic, through both the existing client base and attracting new clients; acquisitions of small to medium sized financial advisory and wealth management businesses which can help to fuel future organic growth; and improving the efficiency of our operations and economies of scale as the business grows.

Over the first half of the year we have made progress across all areas. The Group has continued to rapidly grow its client bank, alongside many of our existing clients choosing to expand their accounts with us as they turn to advisers they trust in order to navigate new tax and other legislative changes. It has also been a busy period for acquisitions, with the Group taking on nine quality businesses; the client portfolios of four IFA businesses and the entire issued share capital of five similar businesses. We are confident that they will be beneficial to our future growth and are pleased to note that they have benefitted from integration with Harwood as expected so far. The Group has begun to see the impacts of growing economies of scale, with more potential vendors approaching us directly and our administrative expenses as a ratio of revenues dropping.

Assets under influence (AUI) and assets under management (AUM)

-- Organic growth and asset market price movement accounted for 63% of the growth in AUI to GBP4.3bn (H1 2017: GBP3.3bn).

-- AUM doubled to GBP1.6bn (2017 H1: GBP0.8bn). This growth has been delivered primarily through our strategy of acquiring client portfolios and providing suitable investment solutions that meet each individual client's needs.

-- External mandates successes, including Frenkel Topping, boosted AUM and the investment performance of the centralised investment proposition continues to attract new clients. Being selected to manage mandates such as these is further validation of the strength of our investment management credentials. Wellian Investment Solutions was also awarded Platinum awards for the Best-Balanced Portfolio and the Best-Aggressive Portfolio in the boutique firm category at the Portfolio Adviser Wealth Manager Awards in January 2018.

Revenue analysis

 
                           6 Months    6 Months        Year 
                              ended       ended       ended 
                          30-Apr-18   30-Apr-17   31-Oct-17 
                          Unaudited   Unaudited     Audited 
                                       Restated 
 Revenues                     GBP'm       GBP'm       GBP'm 
 Financial Planning             6.6         6.1        12.9 
 Investment Management          2.1         1.4         3.2 
 Network                        6.4         3.0         9.8 
                               15.1        10.5        25.9 
                         ==========  ==========  ========== 
 

All three business divisions contributed to the 44% growth in revenue.

-- The Financial Planning business delivered an increase in income of 8%. Acquisitions accounted for a 5-percentage point revenue growth and the balance being net organic growth. The Financial Planning division also grew the AUM of the Group's centralised investment proposition by 28% to GBP648m (H1 2017: GBP506m).

-- The Investment Management business grew revenues 50%, with mandates driven by the discretionary fund management subsidiary accounting for 81% of the growth. The balance was delivered from the Financial Planning business as highlighted above.

-- The full period impact of the Network Direct acquisition led the growth in the Network Services division. This division was the major revenue growth driver over the period and accounted for 74% of the growth in revenue to GBP15.1m from GBP10.5m.

Organic growth accounted for GBP0.7m of the revenue increase over the period, a 7% organic growth rate. It is estimated that 68% of the Group's total revenue is of a recurring nature. The Network Direct business has a lower recurring income stream of just over 50% because there was previously no investment management offering within the business. The Group's recurring revenue excluding the Network Direct impact is estimated to be 84%.

Gross profit and margins

Overall gross profit has improved by 39% to GBP6.8m (H1 2017: GBP4.9m) with all divisions showing an increase to the prior period. The improvement in the Financial Planning gross margins results from acquisitive activity. As highlighted earlier, the Investment Management AUM has grown strongly but some of the large organic mandate successes have naturally been at a lower gross margin. Network Direct is a structurally different business and a gross margin of 9% is as expected. The full period impact of this acquisition has driven the blended gross margin's decline to 45% (H1 2017: 47%). The gross margin excluding Network Direct increased to 71% (H1 2017: 64%).

 
                                        6 Months         6 Months             Year 
                                           ended            ended            ended 
                                       30-Apr-18        30-Apr-17        31-Oct-17 
                                       Unaudited        Unaudited          Audited 
                                                         Restated 
 Source of gross profits and margin        GBP'm    %       GBP'm    %       GBP'm    % 
 Financial Planning                          4.3   65         3.5   57         7.4   57 
 Investment Management                       1.9   90         1.3   93         3.0   94 
 Network                                     0.6    9         0.1    3         0.8    8 
                                             6.8   45         4.9   47        11.2   43 
                                      ==========  ===  ==========  ===  ==========  === 
 

Administrative expenses

Administrative expenses increased to GBP5.5m from GBP4.2m as the scale of the Group's operations continues to grow. Pleasingly, the ratio of administrative expenses to revenue fell to 36% from 40% as the Group benefits from economies of scale and a close focus on cost control. Administrative expenses include amortisation of GBP1.4m (H1 2017: GBP1.2m).

Administrative expenses excluding amortisation and depreciation increased to GBP4.1m from GBP3.0m and as a percentage of revenue decreased to 27% from 29%.

Exceptional items

In the period under review, some final deferred consideration payments in connection with prior period acquisitions were settled. These payments were contingent on actual recurring revenues received. At the time of completion, the deferred consideration was estimated based on the expected future recurring revenue. If the actual revenue is higher than expected, the final contingent consideration is also higher than the deferred consideration on the balance sheet and the difference is written off (or written on if the actual revenue is lower) to the profit and loss. The net write-off in the period was GBP123,000 (H1 2017: GBP20,000).

Profitability

The primary measure of profitability in the sector is adjusted EBITDA, being earnings before interest, taxation, depreciation and amortisation and exceptional items. Adjusted EBITDA for the period showed growth of 50% to GBP2.7m (H1 2017: GBP1.8m).

The profit before taxation of GBP932,000 was 6.2% of revenue (H1 2017: 3.1%).

Cash

In the six months under review, the net cash generated by operations was GBP2.2m, the net cash used in investing activities was GBP6.6m and the net cash used in financing activities was GBP0.6m. Discounted deferred consideration liabilities on the balance sheet total GBP7.1m of which GBP5.0m is payable within 12 months. The Group had no debt or borrowings at the period end and had a cash balance of GBP13.9m, down by GBP5.0m during the period.

After taking account of the deferred consideration liabilities (GBP7.1m), the dividend payable (GBP1.4m) and the Financial Conduct Authority's financial resource requirements (GBP1.8m), the amount of "free" cash available for acquisitions was GBP3.6m.

Financial advisers, network members and staff headcount

The number of financial advisers increased to 94 (H1 2017: 83). Network Direct members, who are not employees, stood at 87 (H1 2017: 90). Total staff headcount grew to 138 (H1 2017: 112). The Group welcomed the new advisers to support our organic and acquisitive growth strategy and continues to seek additional high-quality advisers.

Acquisitions

The Group completed the asset acquisition of the client portfolios of four IFA businesses and the entire issued share capital of another five similar businesses for an aggregate consideration of GBP10.9m (GBP9.2m net of cash acquired). These were acquired in line with the Group's rigorous selection model using a multiple of recurring revenue and an earn-out contingent on actual results. Integration of these businesses has progressed well and performing as expected.

Post period end non-binding heads of terms have been entered into with a further 18 potential business vendors.

We continue to see a strong pipeline of high quality businesses looking to engage with us. Some are driven by specific factors such as increasing capital adequacy costs or the need to invest in new technology. In other cases, the principals have simply reached a stage of their career at which they wish to retire. Whilst we recognise that there have always been competitors in the market looking for acquisitions, we do not sense any change in the number of such competitors. As a well-funded business that has a proven expertise in efficiently buying businesses, and with a culture that focuses on customers, clients and people, we are an attractive choice for anyone seeking to sell their business. Our increased profile since joining AIM has led to a greater number of potential vendors approaching us directly.

Dividends

Harwood has a progressive dividend policy in place and, in line with this, a final dividend of 2.24 pence per ordinary share in respect of the year ended 31 October 2017 was approved by shareholders at the Company's Annual General Meeting held on 18 April 2018. The final dividend, a total of GBP1.4m, was paid on 11 May 2018. The directors are proposing an interim dividend of 1.08 pence per share to be paid to shareholders on 9 November 2018 based on the register of shareholders at close of business on 26 October 2018.

Outlook

Our strategy is to deliver profitable growth, both organic and through acquisitions. The Group has successfully completed 69 acquisitions to date and has a healthy pipeline of potential acquisitions at various stages of progression for which the Directors are reviewing various financing options. The Directors are encouraged by the ongoing momentum in our investment management businesses which continue to add assets without increasing investment management costs. It is also pleasing to report that the demand for financial advice from clients has never been greater, driven in part by tax and other legislative changes, most notably pension freedoms.

We have a strong balance sheet and cash reserves and are confident that our clear strategy will continue to deliver strong and profitable growth.

I would like to take this opportunity to thank all of my colleagues for their hard work in delivering excellence to our clients. To our clients I say thank you for the ongoing trust you place in us to deliver you the performance and service you seek.

Alan Durrant

Chief Executive Officer

 
 Consolidated Statement of Comprehensive Income 
 
                                                                                      6 Months    6 Months        Year 
                                                                                         ended       ended       ended 
                                                                                     30-Apr-18   30-Apr-17   31-Oct-17 
                                                                                                 Unaudited 
                                                                                     Unaudited    Restated     Audited 
                                                                              Note     GBP'000     GBP'000     GBP'000 
 
 Revenue                                                                                15,135      10,509      25,885 
 
 Cost of sales                                                                         (8,289)     (5,652)    (14,719) 
 
 Gross profit                                                                            6,846       4,857      11,166 
 
 Administrative expenses                                                               (5,528)     (4,246)     (9,410) 
 
 Exceptional items                                                             3         (123)        (20)           - 
 
 Operating profit                                                                        1,195         591       1,756 
 
 Investment income                                                                          15          12          19 
 
 Finance costs                                                                           (278)       (273)       (577) 
 
 Profit before taxation                                                                    932         330       1,198 
 
 Income tax charge                                                             4         (365)       (180)       (492) 
 
 Profit and total comprehensive income for the period attributable to 
  equity owners of parent                                                                  567         150         706 
                                                                                    ==========  ==========  ========== 
 
 Earnings per share                                                                      pence       pence       pence 
 Basic and fully diluted                                                       6          0.91        0.27        1.19 
 
 
 Consolidated Statement of Financial Position 
 
                                                           6 Months    6 Months        Year 
                                                              ended       ended       ended 
                                                          30-Apr-18   30-Apr-17   31-Oct-17 
                                                          Unaudited   Unaudited     Audited 
                                                            GBP'000     GBP'000     GBP'000 
 
 Non-current assets 
 Intangible assets                                           24,437      15,640      15,033 
 Property, plant and equipment                                   35          21          24 
                                                             24,472      15,661      15,057 
                                                         ----------  ----------  ---------- 
 
 Current assets 
 Trade and other receivables                                  1,283         833       1,075 
 Cash and cash equivalents                                   13,914      19,798      18,959 
                                                             15,197      20,631      20,034 
                                                         ----------  ----------  ---------- 
 
 Total assets                                                39,669      36,292      35,091 
                                                         ----------  ----------  ---------- 
 
 
 Current liabilities 
 Trade and other payables                                     6,383       3,416       5,160 
 Accruals and deferred income                                 1,244       1,455       1,284 
 Current tax liabilities                                        651         586         474 
 Dividends payable                                            1,401       1,251           - 
                                                              9,679       6,708       6,918 
                                                         ----------  ----------  ---------- 
 Net current assets                                           5,518      13,923      13,116 
                                                         ----------  ----------  ---------- 
 
 Non-current liabilities 
 Trade and other payables                                     2,125       2,023         252 
 Deferred tax liabilities                                     2,564       1,357       1,161 
                                                              4,689       3,380       1,413 
                                                         ----------  ----------  ---------- 
 Total liabilities                                           14,368      10,088       8,331 
                                                         ----------  ----------  ---------- 
 
 Net assets                                                  25,301      26,204      26,760 
                                                         ==========  ==========  ========== 
 
 Equity 
 Called up share capital                                        156         156         156 
 Share premium account                                       25,500      25,500      25,500 
 Retained earnings                                            (355)         548       1,104 
 Total equity attributable to the owners of the parent       25,301      26,204      26,760 
                                                         ==========  ==========  ========== 
 
 
 Consolidated Statement of Changes in Equity 
 
                                                                     Attributable to the 
                                                                     owners of the parent 
                                                                             Share 
                                                                   Share   premium   Retained 
                                                                 capital   account   earnings     Total 
                                                                 GBP'000   GBP'000    GBP'000   GBP'000 
 
 Balance at 1 November 2016                                          139    15,541      1,649    17,329 
 
 Profit and total comprehensive income for the period                  -         -        150       150 
                                                                --------  --------  ---------  -------- 
 
 Issue of share capital                                               17    10,414          -    10,431 
 
 Dividends                                                             -         -    (1,251)   (1,251) 
 
 Costs of share issue                                                  -     (455)          -     (455) 
 
 Total transactions with owners recognised directly in equity         17     9,959    (1,251)     8,725 
                                                                --------  --------  ---------  -------- 
 
 Balance at 30 April 2017                                            156    25,500        548    26,204 
                                                                --------  --------  ---------  -------- 
 
 Profit and total comprehensive income for the period                  -         -        556       556 
 
 Balance at 31 October 2017                                          156    25,500      1,104    26,760 
                                                                --------  --------  ---------  -------- 
 
 Profit and total comprehensive income for the period                  -         -        567       567 
                                                                --------  --------  ---------  -------- 
 
 Dividends payable                                                     -         -    (2,026)   (2,026) 
 
 Total transactions with owners recognised directly in equity          -         -    (2,026)   (2,026) 
                                                                --------  --------  ---------  -------- 
 
 Balance at 30 April 2018                                            156    25,500      (355)    25,301 
                                                                --------  --------  ---------  -------- 
 
 
 Consolidated Statement of Cash Flows 
                                                      6 Months    6 Months        Year 
                                                         ended       ended       ended 
                                                     30-Apr-18   30-Apr-17   31-Oct-17 
                                                     Unaudited   Unaudited     Audited 
                                                       GBP'000     GBP'000     GBP'000 
 Cash flows from operating activities 
 Profit before income tax                                  932         330       1,198 
 
 Non-cash adjustments 
 Depreciation and amortisation                           1,390       1,209       2,563 
 Net finance costs                                         263         261         558 
 
 Working capital adjustments 
 (Increase) in trade and other receivables               (144)        (73)       (316) 
 Increase in trade and other payables                      225         449         917 
 Cash inflow from operating activities                   2,666       2,176       4,920 
 
 Income tax paid                                         (466)       (681)     (1,212) 
 Interest paid                                               -           -           - 
 Net cash generated by operations                        2,200       1,495       3,708 
                                                    ----------  ----------  ---------- 
 
 Investing activities 
 Purchase of intangible assets                         (1,622)       (608)     (1,690) 
 Purchase of property, plant and equipment                (13)         (3)        (12) 
 Interest received                                          15          12          19 
 Acquisition of subsidiaries net of cash acquired      (5,000)     (1,600)     (2,317) 
 Net cash used in investing activities                 (6,620)     (2,199)     (4,000) 
                                                    ----------  ----------  ---------- 
 
 Financing activities 
 Proceeds from issue of shares (net of costs)                -       9,976       9,976 
 Dividends paid                                          (625)           -     (1,251) 
 Net cash (used in)/generated from                       (625)       9,976       8,725 
                                                    ----------  ----------  ---------- 
 financing activities 
 
 Net increase in cash and cash equivalents             (5,045)       9,272       8,433 
 Cash and cash equivalents brought forward              18,959      10,526      10,526 
 Cash and cash equivalents carried forward              13,914      19,798      18,959 
                                                    ----------  ----------  ---------- 
 

Notes to the interim financial information

   1.    General Information 

The interim financial information is unaudited. This condensed consolidated interim financial information was approved by the Directors and authorised for issue on 3 July 2018.

Harwood Wealth Management Group plc is a public limited liability company incorporated and domiciled in England and Wales. The Group's business activities are principally the provision of financial advice and investment management to the retail market. The address of the registered office is 5 Lancer House, Hussar Court, Westside View, Waterlooville, Hampshire, PO7 7SE. The Company is listed on the AIM market of the London Stock Exchange.

   2.    Basis of preparation and Accounting Policies 

Basis of preparation

The Group has not applied IAS 34, Interim Financial Reporting, which is not mandatory for UK AIM listed companies, in the preparation of this half-yearly report.

This condensed, consolidated interim financial information for the six months ended 30 April 2018 does not comply, therefore with all the requirements of IAS 34, "Interim financial reporting" as adopted by the European Union. The consolidated interim financial information should be read in conjunction with the annual financial statements of Harwood Wealth Management Group plc for the year ended 31 October 2017, which have been prepared in accordance with IFRS as adopted by the European Union.

This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 October 2017 were approved by the Board of directors on 22 January 2018 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under sections 498 (2) or (3) of the Companies Act 2006.

Accounting policies

The accounting policies used in the preparation of the financial information for the six months ended 30 April 2018 are in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRS") as adopted by the European Union (EU) and are consistent with those which will be adopted in the annual statutory financial statements for the year ended 31 October 2018.

While the financial information included has been prepared in accordance with the recognition and measurement criteria of IFRS, as adopted by the EU, these financial statements do not contain sufficient information to comply with IFRSs.

Basis of consolidation

These interim consolidated financial statements consolidate the financial statements of the Company and its subsidiary undertakings as at 30 April 2018. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control may cease. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.

Restatement of comparatives

Revenue from network services, which is a network of Appointed Representative financial advisers comprises firstly the initial fees receivable from clients on inception of a new policy or investment product, and then the recurring service fees (trail income) that follow. On 1 February 2017, the Group acquired the entire share capital of Network Direct Limited (NDL). The initial accounting treatment for network services revenue arising from this acquisition were recorded in the H1 2017 unaudited interim results net of any Appointed Representative payments for services in connection with the initial or recurring fees. The accounting treatment was amended in the full year audited accounts following a detailed assessment of the commercial and legal arrangements in place.

The effect of the adjustment on the comparative figures is as follows:

 
 
                             Revenue  Cost of sales  Gross profit 
Period ended 30 April 2017   GBP'000        GBP'000       GBP'000 
As previously reported         7,791        (2,934)         4,857 
Adjustment                     2,718        (2,718)             - 
 
 
As restated                   10,509        (5,652)         4,857 
 
 
   3.    Exceptional items 

In the period under review, some final deferred consideration payments in connection with prior period acquisitions were settled. These payments were contingent on actual recurring revenues received. At the time of completion, the deferred consideration was estimated based on the expected future recurring revenue. If the actual revenue is higher than expected, the final contingent consideration is also higher than the deferred consideration on the balance sheet and the difference is written off (or written on if the actual revenue is lower) to the profit and loss. The net write-off in the period was GBP123,000 (H1 2017: GBP20,000).

   4.    Taxation 

An analysis of the income tax charge for the period is detailed below:

 
                                                       6 Months    6 Months        Year 
                                                          ended       ended       ended 
                                                      30-Apr-18   30-Apr-17   31-Oct-17 
                                                      Unaudited   Unaudited     Audited 
                                                        GBP'000     GBP'000     GBP'000 
 Current tax 
 Total current tax charge                                   497         356         769 
 
 
 Deferred tax 
 Origination and reversal of temporary differences        (132)       (109)       (210) 
 Effect of change in tax rate                                 -        (67)        (67) 
 Total deferred tax charge                                (132)       (176)       (277) 
 
 Total tax charge                                           365         180         492 
                                                     ==========  ==========  ========== 
 
   5.    Business combinations 

In the period the Group completed the acquisitions of the entire share capital of Finance For Life Ltd (FFL), Anthony Harding & Partners Ltd (AH&P), Wealth Planning Services Ltd (WPL), AE Financial Services Ltd (AEFS) and Fund Management Ltd (FM) for a total consideration of GBP9.1m. The assets and liabilities acquired were as follows:

 
                                                                 FFL      AH&P       WPS      AEFS        FM     Total 
                                                             GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
 
 Acquired client portfolio                                     1,080     1,283       363     5,063     1,234     9,023 
 Tangible assets                                                   -         -         -         5         -         5 
 Receivables                                                       -         -         -        63         -        63 
 Cash & cash equivalents                                           -         -         -     1,660        36     1,696 
 Trade and other payables                                          -         -         -       (1)         -       (1) 
 Accruals and deferred income                                      -         -         -      (29)         -      (29) 
 Current tax                                                       -         -         -     (130)      (16)     (146) 
 Deferred tax                                                  (183)     (218)      (62)     (861)     (210)   (1,534) 
 Net assets acquired                                             897     1,065       301     5,770     1,044     9,077 
 
 Goodwill arising                                                  -         -         -         -         -         - 
 
 The business combination has been recognised as follows: 
 Cash on completion                                              486       591       170     3,897       566     5,710 
 Contingent cash consideration                                   411       474       131     1,873       478     3,367 
 Total consideration                                             897     1,065       301     5,770     1,044     9,077 
 
 Less cash acquired                                                -         -         -   (1,660)      (36)   (1,696) 
 
 Total consideration less cash acquired                          897     1,065       301     4,110     1,008     7,381 
 

The initial accounting has not yet been completed in respect of all acquisitions and therefore the values are provisional.

In addition, four acquired client portfolios have been purchased in the period for a consideration of GBP1.8m, of which GBP1.0m was payable in cash on completion and the balance of GBP0.8m on deferred terms.

   6.    Earnings per share 

Basic earnings per share are calculated using a weighted average number of shares of 62,542,927 for the period (H1 2017: 56,049,966). Adjusted EBITDA per share has also been shown, as it is a common metric used by the market to monitor similar businesses.

 
                                              6 Months    6 Months        Year 
                                                 ended       ended       ended 
                                             30-Apr-18   30-Apr-17   31-Oct-17 
                                             Unaudited   Unaudited     Audited 
                                               GBP'000     GBP'000     GBP'000 
 Profit for the period                             567         150         706 
 Income tax                                        365         180         492 
 Net finance expense                               263         261         558 
 Depreciation                                        7           6          11 
 Amortisation                                    1,383       1,203       2,552 
 Exceptional items                                 123          20           - 
 Adjusted EBITDA                                 2,708       1,820       4,319 
 
 Statutory EPS - pence                            0.91        0.27        1.19 
 
 Basic adjusted EBITDA per share - pence          4.33        3.25        7.28 
 
   7.    2017 dividends 

On 10 November 2017 the Company paid an interim dividend of 1.00 pence per ordinary share totalling GBP0.6m.

At the Company's Annual General Meeting held on 18 April 2018, the Shareholders approved a final dividend of 2.24 pence per ordinary share totalling GBP1.4m payable on the 11 May 2018. This is included as a current liability in the consolidated statement of financial position for the six months period ended 30 April 2018.

All Ordinary Shares carry equal dividend rights.

As a holding company, the ability of the Group to pay dividends will principally depend upon dividends paid to it by its operating subsidiaries.

[1] Adjusted EBITDA, being earnings before interest, taxation, depreciation, amortisation and exceptional costs, is a non IFRS measure which the Group uses to assess its performance.

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

END

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