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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Ide Group Holdings Plc | LSE:IDE | London | Ordinary Share | GB00BN4M3M55 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 72.50 | 70.00 | 75.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMIDE
RNS Number : 2940C
IDE Group Holdings PLC
28 September 2018
IDE Group Holdings Plc
("IDE", the "Group" or the "Company")
Unaudited Interim Results
IDE Group Holdings plc, the mid-market network, cloud and IT managed services provider, today announces its unaudited results for the six months ended 30 June 2018.
Summary
-- Revenue of GBP28.7 million (H1 2017: GBP29.6 million)
-- Adjusted EBITDA* loss of GBP7.0 million (H1 2017: profit of GBP2.4 million), following review of, inter alia, onerous contracts, capitalised staff costs and classification of exceptional items
-- Net debt as at 30 June 2018 of GBP11.3 million (31 December 2017: GBP9.7 million), following GBP2.0 million loan note issue on 29 May 2018
Post Period End
-- Fundraising of GBP5.55 million completed in August 2018, comprising of an equity raise of GBP3.75 million and the issue of GBP1.8 million of new convertible loan notes
-- Existing GBP2.0 million loan notes repaid by way of GBP1.25 million equity issue and GBP0.75 million issue of new convertible loan notes
* before net finance costs, tax, depreciation, impairment charges, amortisation, exceptional items and share based payment charges
IDE Group Holdings Plc Tel: +44 (0)344 Bill Dobbie, Interim Non-Executive Chairman 874 1000 Ian Smith, Executive Director finnCap Limited Tel: +44 (0)20 7220 Nominated Adviser and Broker 0500 Corporate finance: Jonny Franklin-Adams/ Scott Mathieson/ Hannah Boros ECM: Tim Redfern/ Richard Chambers MXC Capital Markets LLP Tel: +44 (0)20 7965 Financial Adviser 8149 Charlotte Stranner
Interim Review
As the only Executive Director of the Company, having joined the Board in May 2018, I have taken the responsibility of providing some form of commentary to explain the results for the first half of the current year.
At the time of reporting the Final Results for the year ended 31 December 2017, it was noted by the then Chairman that profitability in 2018 was expected to be significantly lower than in 2017 but was expected to improve steadily throughout 2018 following implementation of the strategic and operational review. This is far from the case as the results show.
Given the obvious severe financial pressures facing the Company, following publication of the Final Results, the Company raised GBP2.0 million by way of loan notes in May 2018. This raise was supported by Bill Dobbie, MXC Capital Limited ("MXC"), the largest shareholder and investment vehicle which I represent, and Kestrel Partners LLP, the other largest shareholder. It was at this time that I joined the Board and Julian Phipps, then FD, stood down. MXC Capital Markets LLP, MXC's corporate finance business, had previously acted as financial adviser to IDE, but resigned in July 2017 having been informed by the Directors at that time that neither they nor certain of the Company's other shareholders wanted MXC to be involved.
Further investigation into the state of the Company's finances led to an additional fundraising of GBP5.55 million which completed in August 2018. The combination of these two fundraisings has allowed the Company to continue restructuring with the aim of right sizing the business to enable the Company to trade profitably.
As part of the strategic and operational review we have reversed the little integration that had been initiated by the previous management and as such the Group has now been split back into the three component parts which comprised the original acquisitions made by the Company, namely, Selection Services, C4L and 365 ITMS. There was a considerable lack of clarity around the trading performance of the Group and in doing this we have been able to identify the activities which generate cash and those which are loss-making.
In terms of the results for the six months to 30 June 2018, having been a director of numerous companies over the years, I can safely say these are the worst set of results I have ever had to provide commentary for and there is nothing positive to point to. As can be seen from the numbers reported, we have seen fit to provide for numerous onerous contracts, revisit the capitalisation of staff costs and classification of exceptional items and adjust goodwill on the balance sheet to reflect the Board's assessment of the value of the acquired businesses, resulting in significant losses for shareholders.
I strongly believe that the strategy pursued by previous management, if allowed to continue, would have seen the Company become insolvent. For example, many onerous contracts were signed that created little or no value to the Company, including a single outsourced service contract that is costing the company more than GBP1.0 million a year and which has only generated net cost savings of GBP50,000. This contract, alongside others, was signed without due process or compliance with the Company's authority limits. The Company has sought legal advice in respect of this contract and we are currently considering our options in this respect.
Furthermore, generally when completing a "Buy and Build", which was IDE's stated strategy, synergies are part and parcel of the business case. One would reasonably expect that as a result of putting together the three companies that now comprise the Group, there would be a smaller number of staff than would have existed across the three companies at the time of acquisition. I can tell you that this is clearly not the case: at the time of the acquisitions there were a combined 440 members of staff across all three companies and as at 31 December 2017 the Group had 550 members of staff, an increase of over 100 heads for which there was little or no incremental revenue gain. This number has since been reduced to under 400.
I could provide many more such examples but the scale of the adjustments which have been made to the Adjusted EBITDA* profit of GBP0.25 million which the Group management accounts showed as at 30 June 2018 (as announced at the time of the trading update in July) to reflect what we believe is the true position of the Group speak for themselves. These adjustments have resulted in an Adjusted EBITDA* loss of GBP7.0 million.
Most importantly as shareholders you will want to know what is being done to support the Company and recover the value which has been lost. As detailed above, a further GBP7.55 million has been raised from existing shareholders to support the restructure and establish a profitable, cash generating platform from which to go forward. MXC invested a total of GBP3.2 million. I would like to thank the other shareholders who supported the fundraisings either by way of equity or loans, without which it is doubtful that there would have been an interim report to write.
Splitting the Group back into the component parts has for the first time allowed us to identify where all the additional headcount has gone, where the onerous contracts reside and to establish separate P&L's and balance sheets, which we believe will provide the Company with options going forward and I expect to report more on this shortly. We are currently in advanced discussions regarding the sale of one or more of these component parts. I am confident that with the actions we are taking, we will be able to recover shareholder value despite the dreadful starting position when I joined the Company in May of this year.
I would like to thank the many members of staff, who, despite the incredible pressure they have found themselves under, have behaved impeccably and in many cases have gone above and beyond to support the Company and service customers in the most difficult of circumstances. It is also comforting that the service delivered by the Group was described as "exceptional" by the Company's largest customer; this is the first time in my career service delivery levels have been described as such.
Furthermore, in an era where it is common for banks to be given a hard time I am delighted to report that NatWest (part of The Royal Bank of Scotland plc), the Company's bankers, have been remarkably supportive and consistent throughout these difficult times. Thank you to all at NatWest.
In summary, during the last four months we have worked fast and hard to get to the Group to stable position. The coming months will see further change in order to create a profitable trading Company for shareholders and I look forward to updating the market to this effect.
Ian Smith
Executive Director
Financial Review
Revenue for the six months to 30 June 2018 was GBP28.7 million (H1 2017: GBP29.6 million), with a full six months of revenue from IDE Group Collaboration Limited (formerly 365 ITMS Limited) compared with only 3 months in the comparative period. The decrease in revenue can be primarily attributed to a fall in lifecycle project revenues and reductions in certain key customer contracts.
At an Adjusted EBITDA* level the Group incurred a loss of GBP7.0 million (H1 2017: profit of GBP2.4 million). A thorough review of onerous contracts, the capitalisation of staff costs in previous periods and the classification of exceptional items resulted in the Group recognising various provisions and reallocating certain costs, most notably:
-- previously capitalised staff costs of GBP1.3 million have been reclassified to cost of sales with the associated depreciation reversed;
-- provisions totalling GBP5.66 million have been recognised in relation to onerous supply contracts and empty properties, including GBP2.24 million in relation to the outsourced supply contract referred to in the Interim Review above; and
-- GBP0.14 million of costs have been reclassified as not exceptional.
Exceptional costs (post the reclassification above) amounted to GBP1.0 million (H1 2017: GBP0.44 million) and related predominantly to redundancy costs as a result of the reduction in headcount referred to in the Interim Review.
Impairment charges totalling GBP27.5 million (H1 2017: GBPnil) have been recognised in relation to goodwill and intangible assets resulting from the acquisitions of Selection Services and 365 ITMS to reflect what the Directors believe are the true and current values of these businesses. These significant charges have been the major contributor towards the loss before tax of GBP39.4 million (H1 2017: GBP1.6 million).
Loss per share was 19.48p (H1 2017: 0.66p).
The Group's cash outflow from operating activities in the period was GBP1.6 million (H1 2017: GBP0.5 million) comprising the Adjusted EBITDA* loss of GBP7.0 million (H1 2017: profit of GBP2.4 million) and operating working capital movements of GBP6.2 million (H1 2017: GBP(0.4) million), primarily relating to an increase in provisions as described above.
The net debt balance at 30 June 2018 was GBP11.3 million (31 December 2017: GBP9.7 million), including GBP2 million of loan notes issued in May 2018. Net debt as at 26 September 2018 was GBP10.3 million, including GBP2.55 million of convertible loan notes issued in August. The GBP2 million loan notes issued in May 2018 were repaid in August by a combination of new convertible loan notes (included in the GBP2.55 million above) and equity.
* before net finance costs, tax, depreciation, impairment charges, amortisation, exceptional items and share based payment charges.
Consolidated Statement of Comprehensive Income
Hot Features
Premium
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
Note GBP000 GBP000 GBP000
----------------------------------------------- -------------- ------------ -------------
Revenue 2 28,681 29,592 64,951
Cost of sales 3 (26,735) (18,313) (40,993)
---------------------------------------- ------ -------------- ------------ -------------
Gross profit 1,946 11,279 23,958
Administrative expenses (13,546) (12,730) (27,119)
Impairment charge on goodwill (27,525) - (9,339)
---------------------------------------- ------ -------------- ------------ -------------
Operating loss (39,125) (1,451) (12,500)
---------------------------------------- ------ -------------- ------------ -------------
Analysed as:
Adjusted EBITDA* (6,995) 2,433 5,393
Exceptional items 4 (994) (447) (1,567)
Depreciation of property,
plant and equipment (1,278) (1,426) (3,158)
Amortisation of intangible
assets (2,121) (1,955) (3,602)
Impairment of goodwill & intangibles (27,525) - (9,339)
Loss on disposal of fixed
assets (155) - (112)
Charges for share based
payments (57) (57) (115)
Net financial costs (287) (149) (341)
(Loss)/profit before taxation (39,412) (1,601) (12,841)
Income tax 303 306 1,600
---------------------------------------- ------ -------------- ------------ -------------
Loss for the period from continuing
operations attributable to
owners of the parent company (39,109) (1,295) (11,241)
Loss for the period after
taxation (39,109) (1,295) (11,241)
---------------------------------------- ------ -------------- ------------ -------------
Other comprehensive income:
Items that are or may be classified
subsequently to profit or
loss:
Foreign exchange translation
differences - equity accounted
investments (2) 2 3
---------------------------------------- ------ -------------- ------------ -------------
Loss for the period and total
comprehensive income attributable
to equity holders of the parent (39,111) (1,293) (11,238)
---------------------------------------- ------ -------------- ------------ -------------
Basic and diluted loss per
share 5
Basic (pence per share) (19.48p) (0.66p) (5.67p)
Diluted (pence per share) (19.48p) (0.66p) (5.67p)
---------------------------------------- ------ -------------- ------------ -------------
* Earnings from continuing operations before interest, tax, depreciation, amortisation, impairment charges, share based payments and exceptional costs
Consolidated Statement of Financial Position
Unaudited Unaudited Audited
30 June 30 June 31 December
2018 2017 2017
GBP000 GBP000 GBP000
------------------------------- ---- ------------------ ------------------- -------------
Non-current assets
Intangible assets 10,309 26,164 26,308
Goodwill 14,997 37,432 29,042
Property, plant and equipment 11,470 13,441 13,044
Financial and other assets 63 88 89
------------------------------------- ------------------ ------------------- -------------
36,839 77,126 68,483
------------------------------------ ------------------ ------------------- -------------
Current assets
Trade and other receivables 12,000 15,611 15,177
Stock 354 - 366
Cash and cash equivalents 3,833 336 1,106
16,187 15,947 16,649
------------------------------------ ------------------ ------------------- -------------
Total assets 53,026 93,073 85,132
------------------------------------- ------------------ ------------------- -------------
Current liabilities
Bank overdraft 4,850 767 2,604
Trade and other payables 13,770 12,204 15,429
Deferred income 6,571 7,393 6,405
Taxation 10 - -
Finance lease obligations 234 507 291
Provisions 2,510 1,684 1,157
27,945 22,555 25,886
------------------------------------ ------------------ ------------------- -------------
Non-current liabilities
Deferred income - - 341
Borrowings 9,500 8,175 7,402
Finance lease obligations 594 297 518
Deferred tax liabilities 4,812 6,199 5,115
Provisions 3,936 666 577
18,842 15,337 13,953
------------------------------------ ------------------ ------------------- -------------
Total liabilities 46,787 37,892 39,839
------------------------------------- ------------------ ------------------- -------------
Net assets 6,239 55,181 45,293
------------------------------------- ------------------ ------------------- -------------
Equity attributable to equity
holders of the parent
Called up share capital 5,018 5,018 5,018
Share premium account 35,439 35,439 35,439
Other reserves (129) (128) (127)
Retained earnings (34,089) 14,852 4,963
------------------------------------- ------------------ ------------------- -------------
Total equity 6,239 55,181 45,293
------------------------------------- ------------------ ------------------- -------------
Consolidated Statement of Changes in Equity
Share Share Retained Foreign
capital premium earnings currency Total
translation
reserve
GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------- --------- --------- ---------- ------------- ---------
At 1 January 2017 4,773 32,684 16,089 (130) 53,416
Total comprehensive
income for the period
Loss for the period - - (1,295) - (1,295)
Exchange rate differences - - - 2 2
Transactions with
owners recorded directly
in equity
Acquisition of 365ITMS
Share based payments 245 2,755 - - 3,000
- - 58 - 58
---------------------------- --------- --------- ---------- ------------- ---------
At 30 June 2017 5,018 35,439 14,852 (128) 55,181
Total comprehensive
income for the period
Loss for the period - - (9,946) - (9,946)
Exchange rate differences - - - 1 1
Transactions with
owners recorded directly
in equity
Share based payments - - 57 - 57
---------------------------- --------- --------- ---------- ------------- ---------
At 31 December 2017 5,018 35,439 4,963 (127) 45,293
Total comprehensive
income for the period
Loss for the period - - (39,109) (39,109)
Exchange rate differences - - - (2) (2)
Transactions with
owners recorded directly
in equity
Share based payments - - 57 - 57
---------------------------- --------- --------- ---------- ------------- ---------
At 30 June 2018 5,018 35,439 (34,089) (129) 6,239
---------------------------- --------- --------- ---------- ------------- ---------
Consolidated Cash Flow Statement
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
GBP000 GBP000 GBP000
---------------------------------------- ---- --------------------- ------------ ---------------------
Loss for the period (39,109) (1,295) (11,241)
Adjustments for:
Depreciation of property, plant
and equipment 1,278 1,426 3,158
Amortisation of intangible assets 2,121 1,955 3,602
Impairment Charge 27,525 9,339
Net financial costs 287 149 341
Equity settled share-based payment
expenses 57 58 115
Taxation (303) (306) (1,600)
Loss on disposal of property,
plant and equipment 155 - 112
Other reserve movements (1) 2 13
---------------------------------------------- --------------------- ------------ ---------------------
(7,990) 1,989 3,839
Decrease/ (increase) in trade
and other receivables 2,730 (6,693) (1,936)
(Decrease) increase in trade
and other payables (1,655) 4,898 496
Increase/ (decrease) in provisions 5,209 (639) (1,185)
6,284 (445) 1,214
Net corporation tax recovered/
(paid) 103 (9) -
Net cash from operating activities (1,603) (454) 1,214
---------------------------------------------- --------------------- ------------ ---------------------
Cash flow from investing activities:
Interest received
Acquisition of 365ITMS, net of - - -
cash acquired - (3,682) (597)
Acquisition of Selection, net - - -
of cash acquired
Acquisition of C4L, net of cash - - -
acquired
Acquisition of plant and equipment - (1,190) (2,396)
Acquisition of other intangible
assets - - (754)
Acquisition of financial assets - (4)
Proceeds from sale of property,
plant and equipment 9 - 4
---------------------------------------------- --------------------- ------------ ---------------------
Net cash from/ (used in) from
investing activities 9 (4,872) (3,747)
---------------------------------------------- --------------------- ------------ ---------------------
Cash flows from financing activities:
Share issue, net of share issue - 3,000 -
costs
Proceeds from borrowings, net
of expenses 2,000 1,300 1,300
Repayment of loans and other
borrowings - (125) (800)
Repayment of finance lease obligations (109) (282) (763)
Net Interest paid (286) (130) (322)
Acquisition of financial and
other non-current assets 470 - 488
---------------------------------------------- --------------------- ------------ ---------------------
Net cash from/(used in) financing
activities 2,075 3,763 (97)
---------------------------------------------- --------------------- ------------ ---------------------
Net increase/ (decrease) in cash
and cash equivalents 481 (1,563) (2,630)
Cash and cash equivalents at
beginning of period (1,498) 1,132 1,132
Cash and cash equivalents at
end of period (1,017) (431) (1,498)
---------------------------------------------- --------------------- ------------ ---------------------
Being:
Cash and cash equivalents 3,833 336 1,106
Bank overdraft (4,850) (767) (2,604)
---------------------------------------------- --------------------- ------------ ---------------------
(1,017) (431) (1,498)
--------------------------------------------- --------------------- ------------ ---------------------
Notes to the half-yearly financial information
1. Basis of preparation
The condensed consolidated interim financial information for the six-month period ended 30 June 2018 and 30 June 2017 is unaudited. This statement has not been reviewed by the Company's auditor. This condensed consolidated interim financial information was approved by the Board of Directors and authorised for issue on 28 September 2018. A copy of this half-yearly financial report is available on the Company's website at www.idegroup.com
The Company is a public limited liability company incorporated and domiciled in Scotland. The address of its registered office is 24 Dublin Street, Edinburgh EH1 3PP. The Company is listed on the AIM market of the London Stock Exchange.
IDE and its subsidiaries have not applied IAS 34, 'Interim Financial Reporting' as adopted by the European Union, which is not mandatory for UK AIM listed companies, in the preparation of this half-yearly financial report.
This condensed consolidated interim financial information for the six-month period ended 30 June 2018 therefore does not comply 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 the Company as at and for the year ended 31 December 2017, which were 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 December 2017 were approved by the Board of Directors on 8 May 2018 and delivered to the Registrar of Companies. The report of the auditor was unqualified, did not contain an emphasis of matter paragraph and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
Accounting policies
The accounting policies used in the preparation of the condensed consolidated interim financial information for the six months ended 30 June 2018 are in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRS") as adopted by the European Union and are consistent with those that will be adopted in the annual statutory financial statements for the year ended 31 December 2018.
While the financial information included has been prepared in accordance with the recognition and measurement criteria of IFRS, as adopted by the European Union, these financial statements do not contain sufficient information to comply with IFRSs.
In these unaudited half year results the Group has, with effect from 1 January 2018, adopted IFRS 15. There were no significant transition differences in respect of this adoption.
Exceptional items and other non-recurring items
Items which are material because of their size or nature and which are non-recurring are highlighted separately on the face of the income statement. The separate reporting of exceptional items helps provide a better picture of the Company's underlying performance. Items which may be included within the exceptional category include:
-- spend on the integration of significant acquisitions and the other major restructuring programmes;
-- significant goodwill or other asset impairments; and -- other particularly significant or unusual items.
Spend on integration is incurred by the Group when integrating one trading business into another. The types of costs include employment related costs of staff being made redundant as a consequence of integration, due diligence costs, property costs such as lease termination penalties and vacant property provisions, third party advisor fees and rebranding costs.
Exceptional items are excluded from the headline profit measures used by the Group and are highlighted separately in the income statement as management believe that they need to be considered separately to gain an understanding the underlying profitability of the trading businesses.
For further details, please refer to note 4.
Going concern
The condensed consolidated interim financial information has been prepared on a going concern basis.
Given the level of support shown by shareholders in the fundraisings in May 2018 and August 2018 and the support shown by the Company's bankers, NatWest, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, the Directors consider that the adoption of the going concern basis is appropriate.
2. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting to the Chief Operating Decision Maker ("CODM"). The CODM has been identified as the Board of Directors.
The operating segments are defined by distinctly separate product offerings or markets. The CODM assesses the performance of the operating segments based on a measure of revenue and gross profit.
The following table presents revenue and gross profit in respect of the Group's operating segment for the six months ended 30 June 2018:
Unaudited for the six-month period ended 30 June 2018
Managed Services Cloud Hosting Networks Projects Security Central Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------------- ----------------- -------------- --------- --------- --------- --------- ---------
Revenue 8,115 5,324 6,837 7,302 1,104 - 28,681
Cost of Sales (9,091) (5,271) (5,685) (5,588) (1,100) - (26,735)
--------------------------------------- ----------------- -------------- --------- --------- --------- --------- ---------
Gross profit/(loss) (976) 53 1,152 1,713 4 - 1,946
Administrative expenses (13,546) (13,546)
Impairment of goodwill & intangibles (27,525) (27,525)
Operating (loss)/ profit (976) 53 1,152 1,713 4 (41,071) (39,125)
--------------------------------------- ----------------- -------------- --------- --------- --------- --------- ---------
Analysed as:
Adjusted EBITDA* (976) 53 1,152 1,713 4 (8,941) (6,995)
Equity settled share-based payments (57) (57)
Depreciation (1,278) (1,278)
Amortisation of intangible assets (2,121) (2,121)
Impairment of goodwill & intangibles (27,525) (27,525)
Loss on Disposal (155) (155)
Exceptional costs (994) (994)
--------------------------------------- ----------------- -------------- --------- --------- --------- --------- ---------
Net financial costs (287) (287)
--------------------------------------- ----------------- -------------- --------- --------- --------- --------- ---------
Profit/(loss) before taxation (976) 53 1,152 1,713 4 (41,358) (39,412)
Tax on profit/(loss) on ordinary
activities 303 303
--------------------------------------- ----------------- -------------- --------- --------- --------- --------- ---------
Profit/(loss) for the period after
taxation (976) 53 1,152 1,713 4 (41,055) (39,109)
--------------------------------------- ----------------- -------------- --------- --------- --------- --------- ---------
Unaudited for the six-month period ended 30 June 2017
>?> Managed Services Cloud Hosting Networks Projects Central Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------------- ----------------- -------------- --------- --------- --------- --------- ---------
Revenue 10,265 5,529 6,079 7,719 - 29,592
Cost of Sales (6,592) (3,085) (3,707) (4,929) - (18,313)
--------------------------------------- ----------------- -------------- --------- --------- --------- --------- ---------
Gross profit/(loss) 3,672 2,444 2,372 2,790 - 11,279
Administrative expenses - - - - (12,730) (12,730)
--------------------------------------- ----------------- -------------- --------- --------- --------- --------- ---------
Operating profit/(loss) 3,672 2,444 2,372 2,790 (12,730) (1,451)
--------------------------------------- ----------------- -------------- --------- --------- --------- --------- ---------
Analysed as:
Adjusted EBITDA* 3,672 2,444 2,372 2,790 (8,845) 2,433
Equity settled share-based payments - - - - (57) (57)
Depreciation - - - - (1,426) (1,426)
Amortisation of intangible assets - - - - (1,955) (1,955)
Exceptional costs - - - - (447) (447)
--------------------------------------- ----------------- -------------- --------- --------- --------- --------- ---------
Net financial costs - - - - (149) (149) --------------------------------------- ----------------- -------------- --------- --------- --------- --------- --------- Profit/(loss) before taxation 3,672 2,444 2,372 2,790 (12,879) (1,601) Tax on profit/(loss) on ordinary activities - - - - 306 306 --------------------------------------- ----------------- -------------- --------- --------- --------- --------- --------- Profit/(loss) for the period after taxation 3,672 2,444 2,372 2,730 (12,573) (1,295) --------------------------------------- ----------------- -------------- --------- --------- --------- --------- ---------
* Earnings from continuing operations before interest, tax, depreciation, amortisation, goodwill impairment, share based payments and exceptional costs
Administrative expenses are not allocated against operating segments in the Group's internal reporting. The statement of financial position is not allocated between Managed Services, Cloud Hosting, Networks, Projects, Security and Central in the Group's internal reporting.
3. Cost of Sales
The following is a breakdown of what is included in cost of sales:
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
GBP000 GBP000 GBP000
---------------------------------- ------------ ------------ -------------
Arising from normal trading 21,924 18,313 40,993
Provisions for onerous contracts 4,100 - -
Reversal of capitalised staff 616 - -
costs
Change in classification of 96 - -
items as non-exceptional
26,735 18,313 40,993
---------------------------------- ------------ ------------ -------------
4. Exceptional costs
In accordance with the Group's policy in respect of exceptional costs, the following charges were incurred:
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
---------------------------------- ------------ ------------ -------------
GBP000 GBP000 GBP000
Restructuring and reorganisation
costs 994 182 1,034
Acquisition costs - 265 533
----------------------------------- ------------ ------------ -------------
994 447 1,567
---------------------------------- ------------ ------------ -------------
5. Earnings per share
The calculation of basic and diluted loss per share is based on results attributable to ordinary shareholders divided by the weighted average number of ordinary shares in issue during the year. The weighted average number of shares for the purpose of calculating the basic and diluted measures in the reporting periods is the same. This is because the outstanding options would have the effect of reducing the loss per ordinary share and therefore would be anti-dilutive under the terms of IAS 33. Basic and diluted unaudited loss per share are calculated as follows:
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
GBP000 GBP000 GBP000
----------------------------------- -------------- ------------ -------------
Loss attributable to shareholders (39,109) (1,293) (11,238)
Weighted average number of
shares 200,729,121 195,599,956 198,198,486
Diluted weighted average number
of shares 211,784,158 209,076,787 212,066,860
------------------------------------ -------------- ------------ -------------
Basic loss per share (pence) (19.48) (0.66) (5.67)
Diluted loss per share (pence) (19.48) (0.66) (5.67)
6. Subsequent events
On 21 August 180,072,911 new Ordinary Shares were issued at a price of 2.5 pence each in relation to the Conditional Subscription and the Open Offer and GBP1.8 million convertible loan notes ("CLNs") were issued, raising gross proceeds of GBP5.55 million.
Furthermore, on 21 August 2018 the Company repaid the GBP2 million unsecured loan notes issued on 29 May 2018 (the "Existing Loan Notes") to alleviate the Company of the financial burden of the interest attached to the Existing Loan Notes. Repayment of GBP1.25 million of the Existing Loan Notes was made by way of the issue of 50,000,000 new Ordinary Shares at 2.5 pence per share. Repayment of the remainder of the Existing Loan Notes, being GBP0.75 million, was made by way of the issue of additional CLNs, pursuant to the terms of the CLN Instrument.
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
IR SEMSIAFASELU
(END) Dow Jones Newswires
September 28, 2018 02:02 ET (06:02 GMT)
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