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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Redcentric Plc | LSE:RCN | London | Ordinary Share | GB00B7TW1V39 | ORD 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 10.00 | 7.58% | 142.00 | 140.00 | 142.00 | 141.00 | 136.00 | 136.00 | 1,036,558 | 16:35:11 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Computer Related Svcs, Nec | 141.67M | -9.25M | -0.0589 | -23.94 | 221.36M |
From Apr 2019 to Apr 2024
TIDMRCN
RNS Number : 7825X
Redcentric PLC
29 November 2017
29 November 2017
Redcentric plc
Half year results for the six months ended 30 September 2017 (unaudited)
Solid first six months with strong operating cash flows and a reduction in net debt
Redcentric plc ("Redcentric" or "the Group") (AIM: RCN), a leading UK IT managed services provider, today announces its unaudited interim results for the six months to 30 September 2017.
Hot Features
Premium
Key financial measures Six Six Change
months months
to 30 to 30
Sept Sept
2017 2016
(restated)
---------------------------------------- -------- ------------ -------
Revenue (GBPm) 51.4 51.8 (0.8)%
Recurring monthly revenue (RMR)
(GBPm) 44.6 44.7 (0.1)%
Adjusted EBITDA (GBPm)(1) 9.1 8.9 1.1%
Gross profit (GBPm) 30.5 29.9 2.0%
Gross margin (%) 59.4 57.8 160bps
Adjusted diluted EPS (p)(2) 2.4 2.4 0.0%
Adjusted operating cash flow (GBPm)(3) 11.3 6.9 63.8%
Net debt (GBPm)(4) 33.3 34.2 (2.6)%
Statutory results
Operating profit (GBPm) 0.5 (1.9)
Loss before tax (GBPm) (0.0) (2.5)
Cash generated from operations
(GBPm) 10.5 6.1
Basic EPS (p) (0.04) (1.17)
(1) Adjusted EBITDA refers to underlying operating profit before depreciation, amortisation, non-recurring costs and share based payments.
(2) Adjusted Earnings per Share excludes amortisation of acquired intangibles, non-recurring items and share-based payments and replaces the reported tax credit with a notional tax charge at the full rate of corporation tax.
(3) Adjusted operating cash flow is before non-recurring items.
(4) Net debt is the sum of cash less bank balances, bank loans and overdrafts and other financial liabilities. The Finance Review provides a breakdown of net debt for the current and prior periods.
Highlights
-- Trading results in line with the equivalent period last year -- Recurring revenues remain high at 87% of total revenue (H1 FY16/17: 86%)
-- Strong operating cash flows as a result of positive working capital movements of GBP2.3m , reflecting success of initiatives to improve billing accuracy and cash collections
-- Net debt reduced by GBP6.2m over the six month period
-- The Board has been strengthened following the appointment of Chris Jagusz as Chief Executive Officer in October 2017
-- Remedial plan implemented with a significantly enhanced finance team and financial controls now in place
-- Optimisation of the cost base with a reduction in headcount and the closure of an office and third party data centre
-- Strategic moves to support the customer trend toward cloud-based compute, storage and services
-- Trading in the period was in-line with the Board's expectations and the outlook for the Group is encouraging
Chris Cole, Non-Executive Chairman, commented:
"Over the last six months we have focused on improving operating cash flows, reducing net debt and right-sizing
the cost base of the business. We have made excellent progress in all of these areas:
-- During the first half of the financial year, operating cash flows exceeded adjusted EBITDA by GBP2.3m, representing a cash conversion of 125%. This has been achieved as a result of a significant improvement in the invoicing and collection processes.
-- Net debt at 30 September 2017 stood at GBP33.3m, representing a GBP6.2m reduction over the six month period.
-- Actions taken to reduce operating costs with the full effects of cost savings to be realised in the second half of this financial year.
A year has now passed since the announcement of the accounting misstatements. Over this period the Board and the Company's employees have worked tirelessly to get the business back on to a "business as usual" footing.
The Chief Financial Officer, Peter Brotherton, has been in place for a year now. Over this time he has rebuilt and strengthened both the finance team and the financial systems and processes within the business. He and his team are engaged in all areas of the business and this is evidenced in the results for the first six months of the financial year.
In October 2017 the Board was further strengthened by the appointment of Chris Jagusz as Chief Executive Officer. Chris brings with him a wealth of sector and managerial experience. Now that the business has been stabilised, Chris's focus will be entirely forward looking. He has already started work on refining the strategy of the business and driving top line revenue growth."
Chris Jagusz, Chief Executive Officer, commented:
"I am delighted to have joined the Company. Despite the significant problems encountered as a result of the accounting misstatements, the business is fundamentally strong. Its product offering is well aligned to the demands of customers, it has a strong and loyal recurring revenue customer base and the business is cash generative. The issues surrounding the accounting misstatements have been addressed and so my focus is on providing the business with a clear strategy to enable the business to grow."
For further enquiries please contact:
Redcentric plc +44 (0)845 034 111
Chris Jagusz, Chief Executive Officer
Peter Brotherton, Chief Financial Officer
Tulchan +44 (0)20 7353 4200
James Macey White / Matt Low
Numis Securities Limited - Nomad and Joint Broker +44 (0)20 7260 1000
Simon Willis / Oliver Hardy
finnCap Ltd - Joint Broker +44 (0)20 7220 0500
Stuart Andrews / Rhys Williams
This announcement contains inside information. There will be a presentation for analysts held at 09:30hrs on 29 November 2017 at the offices of Tulchan Communications, 85 Fleet Street, EC4 1AE. Please contact redcentric@tulchangroup.com if you would like to attend.
Half Year Review
For the Six months to 30 September 2017
Results and performance
The Group's results for the period are in line with the equivalent period last year. Revenue was GBP51.4m, very similar to last year, and EBTIDA was GBP9.1m, GBP0.2m ahead of last year. Cash flows for the period were strong resulting in a net debt reduction of GBP6.2m. New appointments together with the merging of the billing and credit control teams have had a positive effect on cash collections and debtors ageing.
The financial performance of the business is covered in detail in the Finance Review. Key highlights include:
-- 87% of the Company's revenue is recurring in nature -- The business is profitable, delivering an adjusted EBITDA margin of 17.7% -- The business is cash generative and working capital is tightly controlled -- Strengthened balance sheet with net debt reduced by GBP6.2m
This is an extremely good base on which to build.
Cost reduction
During the period we undertook a review of the Company's cost base. Our review focused on two areas:
-- Rationalisation of property portfolio
o During the period, we consolidated our data centre customers meaning that we were able to vacate one of our third party data centres and allow the lease to lapse. This yielded annualised savings of GBP0.5m.
o We closed our London office during the period and transferred the relevant staff to our Shoreditch data centre. Annualised savings of GBP0.3m were made as a result.
-- Staff restructuring
o As part of the restructuring exercise, a headcount reduction of 20 was achieved, resulting in annualised savings of GBP1.2m
The combined effect of these measures is that GBP2.0m has been removed from the Company's annualised cost base. Some of these costs have been reflected in the results for the period but the full effect will be realised in the second half of the financial year.
New strategic initiatives
H1 FY17/18 has seen the development of several strategic initiatives for the Company building on its strong foundations in a health sector market in transformation, and the continuing transition of customers' computing workloads to the cloud.
- Health and Social Care Network Peering Exchange
The new Health and Social Care Network (HSCN) provides a reliable, efficient and flexible way for health and social care organisations to access and exchange electronic information. In January 2017 Redcentric announced it had been awarded the prestigious multi-year contract for the Peering Exchange at the core of the HSCN, and it has now been implemented. All accredited service providers to the public and private health sector will interconnect their networks at the Peering Exchange, putting Redcentric at the heart of the HSCN community.
- HSCN Consumer Network Service Provider
All NHS organisations are required to buy their connectivity from HSCN. In May 2017 Redcentric became the first commercial provider of the legacy NHS National Network (N3) to become accredited to provide HSCN connections. This builds on the Company's strong position as a connectivity provider direct to commercial health organisations and the community of independent software vendors supporting them, and opens up new markets selling direct to the NHS.
- Hosted Collaboration Solution
The Redcentric Hosted Collaboration Solution (HCS) provides customers with messaging, voice and video communications to improve their agility, application integration and control in an affordable and flexible way. HCS can be overlaid as an additional service on Redcentric's connectivity solutions for commercial and health sector customers, enabling, for example, collaboration across complex large NHS organisations and between multiple health and social care agencies.
- Services for Crown Hosting customers
The Crown Hosting Service is data centre colocation specifically for the UK public sector. It provides a Government-accredited rapid route to the cloud avoiding technology and vendor lock-in. Redcentric will enable public sector organisations to accelerate their use of Crown Hosting with connectivity, design, implementation, migration, monitoring and management services for customer-owned infrastructure in Crown Hosting data centres. Other Redcentric services available to Crown Hosting customers include HSCN, Database-as-a-Service and managed Microsoft Azure Stack.
- Microsoft Azure and Amazon Web Services (AWS)
As a Microsoft Cloud Solution Provider and Amazon Web Services Partner Network Consulting Partner, Redcentric helps its customers create and implement sophisticated cloud strategies which can blend systems and services on-premise, at Redcentric data centres and in the Azure AWS public clouds.
Dividend
While the Group's cash generation has improved, the Board has decided that it is not appropriate to pay a dividend in respect of the half year ended 30 September 2017. The Board would keep the matter under review and would give guidance on our dividend policy when the full year results are announced in June 2018.
Board
In October 2017, the Group announced the appointment of Chris Jagusz as Chief Executive Officer. Chris has over twenty-five years of experience in the telecoms and managed services industry, during which time he has built a track record of delivering growth and business transformation.
In June 2017, the Group appointed Stephen Vaughan to the Board as Non-Executive Director. Through his career, Mr Vaughan has held a number of executive and non-executive roles focused on the technology sector. Until 2015, Mr Vaughan was Chief Executive of Phoenix IT Group plc, the main-market listed IT Infrastructure Services business.
Summary and outlook
We are pleased with the performance of Redcentric in the first half with results in line with the equivalent period last year. Good progress has been made in improving operating cash flows, reducing net debt and right-sizing the cost base. Operationally the business has continued to add new customers and increase its share of wallet from existing relationships, in line with our growth strategy. As Redcentric returns to a normal financial footing, focus now turns to resuming revenue growth supported by a strong track record and a product portfolio well-suited to address demand from mid-market businesses in the UK. The Board believes that the outlook for the Group is encouraging.
Prior year comparatives
The prior half year comparative numbers for the 6 months ended 30 September 2016 have been restated from those issued and presented in December 2016. At the time these numbers were released, the forensic review had just been completed. Further to this review, all of the Company's subsidiaries' accounts were re-audited resulting in additional adjustments, the Indian operation was correctly accounted for as a subsidiary rather than a branch and errors in the group consolidation were eliminated. The prior year comparative figures are presented on a consistent basis with the audited figures for the full year ended 31 March 2017. The detail of the prior year restatement is as per note 15.
Finance Review
Revenue
Revenue for the six months to 30 September 2017 was GBP51.4m, a very slight reduction of GBP0.5m on the equivalent period last year.
Six Six
months months
to 30 to 30
Sept Sept
2017 2016
(restated) Variance
GBP'000 GBP'000 GBP'000 %
--------------------------- -------- ------------ -------- --------
Recurring monthly revenue 44,644 44,682 (38) (0.1)%
Product sales 4,121 3,094 1,027 33.2%
One off service revenue 2,609 4,073 (1,464) (35.9)%
--------------------------- -------- ------------ -------- --------
51,374 51,849 (475) (0.9)%
--------------------------- -------- ------------ -------- --------
The Company's prime focus is on recurring monthly revenues ("RMR") but product and service sales are undertaken to support the recurring revenue base. Product and Services revenues can fluctuate from period to period.
The key revenue metric of RMR was in-line with the equivalent period last year and accounted for 87% of total revenue (H1 FY16/17: 86%).
Gross profit
Six Six
months months
to 30 to 30
Sept Sept
2017 2016
(restated) Variance
GBP'000 GBP'000 GBP'000 %
-------------- -------- ------------ -------- -----
Gross profit 30,507 29,947 560 1.7%
-------------- -------- ------------ -------- -----
Gross margin 59.4% 57.8%
-------------- -------- ------------
Gross profit increased by GBP0.6m largely reflecting improved management of third party costs.
Adjusted Operating costs
Six Six
months months
to 30 to 30
Sept Sept
2017 2016
(restated) Variance
GBP'000 GBP'000 GBP'000 %
------------------------------ -------- ------------ -------- -------
Staff costs 11,940 11,946 (6) (0.1)%
Office and data centre costs 3,589 3,716 (127) (3.4)%
Network and equipment costs 3,286 2,812 474 16.9%
Other sales, general and
administration costs 1,575 1,738 (163) (9.4)%
Offshore costs 999 773 226 29.2%
------------------------------ -------- ------------ -------- -------
21,389 20,985 404 1.9%
------------------------------ -------- ------------ -------- -------
Adjusted operating costs excludes depreciation, amortisation, non-recurring costs and share based payments.
Employees
Headcount 30 Sept 30 Sept
2017 2016 Variance
----------- -------- -------- ---------
UK 366 387 (21)
India 140 139 1
----------- -------- -------- ---------
Total 506 526 (20)
----------- -------- -------- ---------
Overall, adjusted operating costs for H1 FY17/18 were GBP0.4m (1.9%) higher compared to the equivalent period last year. Management have been focused on improving the operating cost base of the group and significant actions have been taken with the full annualised benefit to be effective in the second half of the year.
Office and data centre costs were down on the equivalent period last year reflecting the closure of the London office and a third party data centre.
On 30(th) September 2016, the Company disposed of its fibre network to City Fibre and now pays a monthly rental fee for use of certain parts of the network. This has resulted in an increase in network and equipment costs.
Savings have also been made in other sales, general and administration costs, achieved by reducing the number of third party consultants in the business and a tighter control of marketing and corporate costs. In addition selective headcount reduction has been made which has resulted in employee cost savings.
During H1 FY17/18, the Company moved its Indian service centre to larger offices to facilitate potential expansion. The additional costs associated with these larger offices account for most of the increase over H1 FY16/17.
Adjusted Earnings Before Interest, Taxation and Amortisation (EBITDA)
Six Six
months months
to 30 to 30
Sept Sept
2017 2016
(restated) Variance
GBP'000 GBP'000 GBP'000 %
------------------------ -------- ------------ -------- -----
Adjusted EBITDA 9,118 8,962 156 1.7%
------------------------ -------- ------------ -------- -----
Adjusted EBITDA margin 17.7% 17.3%
------------------------ -------- ------------
Adjusted EBITDA is the key measure that the Company uses to assess the underlying profitability of the business. Adjusted EBITDA excludes non-recurring items and share based payments.
Adjusted EBITDA increased by GBP0.2m or 1.7% to GBP9.1m reflecting an increase in gross profit of GBP0.6m and an increase in operating costs of GBP0.4m.
Non-recurring items
Six Six
months months
to 30 to 30
Sept Sept
2017 2016
(restated) Variance
GBP'000 GBP'000 GBP'000 %
---------------------------------- -------- ------------ -------- ---------
Professional fees associated
with the forensic review
and Financial Conduct Authority
(FCA) investigation 509 - 509 100.0%
Integration & restructuring 840 282 558 197.9%
Non recurring impairment
of trade debtor balances - 2,933 (2,933) (100.0)%
Sale of metro ring to City
Fibre - 207 (207) (100.0)%
Vacant property provisions - 266 (266) (100.0)%
---------------------------------- -------- ------------ -------- ---------
1,349 3,688 (2,339) (63.4%)
---------------------------------- -------- ------------ -------- ---------
Overall, the level of non-recurring items has decreased from GBP3.7m to GBP1.3m. The key movements are as follows:
-- Professional fees associated with the forensic review and FCA investigation
o These costs relate to legal and forensic advice received in respect of the ongoing FCA investigation.
-- Integration and restructuring costs
o The integration costs relate to the integration of the City Lifeline acquisition which was undertaken in January 2016.
o Following the forensic review, the Company undertook a cost reduction exercise and one off redundancy costs were incurred as a result.
-- Non recurring impairment of trade debtor balances
o Following the audit of the 31 March 2017 annual results, a further debtor impairment charge was taken in H1 FY16/17.
-- Sale of metro ring to City Fibre
o On 30 September 2016, the Company disposed of its fibre network assets. This led to a one off loss on disposal of GBP0.3m in H1 FY16/17.
Net financing costs
Six Six
months months
to 30 to 30
Sept Sept
2017 2016
(restated) Variance
GBP'000 GBP'000 GBP'000 %
---------------------------------- -------- ------------ -------- ---------
Interest receivable
Other interest receivable (257) - (257) (100.0)%
Interest payable
Interest payable on bank
loans and overdrafts 724 563 162 28.8%
Amortisation of loan arrangement
fees 34 34 - -
-------- ------------ -------- ---------
758 597 162 27.2%
Net financing costs 501 597 (95) (15.9)%
---------------------------------- -------- ------------ -------- ---------
During H1 FY17/18, the Company received an interest payment of GBP257k in respect of historical supplier overcharges dating back to the period 2006 to 2011. This interest income is therefore non-recurring in nature.
The higher interest payable costs in H1 FY17/18 reflect the higher level of debt throughout the period and the increased interest margin payable following the RCF restructuring undertaken in April 2017.
Share-based payments
Six Six
months months
to 30 to 30
Sept Sept
2017 2016
(restated) Variance
GBP'000 GBP'000 GBP'000 %
----------------------------- -------- ------------ -------- -------
SAYE schemes 132 87 45 52%
Director and senior manager
schemes 65 (117) 182 156%
MXC options 148 317 (169) (53)%
Employers NI - 61 (61) (100)%
----------------------------- -------- ------------ -------- -------
345 348 (3) (1)%
----------------------------- -------- ------------ -------- -------
The share based payments charge for SAYE schemes increased in the period due to the number of employees within the scheme.
Taxation
Current tax for the six-month period represents the best estimate of the average annual effective tax rate expected for the full year, applied to the pre-tax income of the six-month period. Deferred tax is calculated based on the expected annual outturn.
The charge to the condensed consolidated statement of comprehensive income reflects;
i) The revenue attributable to City Lifeline which has no trading losses with which to offset.
ii) Overseas tax paid via Redcentric Solutions Private Ltd, a wholly owned subsidiary of the Group incorporated in India.
iii) Movement in the deferred tax asset on temporary differences. GBP1.2m of deferred tax assets have not been recognised at 30th September 2017 (GBP1.1m at 31st March 2017).
Earnings per share and Dividends
Basic adjusted earnings per share for H1 FY17/18 was 2.5p, compared to 2.5p in H1 FY16/17. Diluted adjusted earnings per share for H1 FY17/18 was 2.4p compared to 2.4p in H1 FY16/17 (see note 9).
In September 2016 a final dividend of GBP4.4m in respect of the year ended 31 March 2017 was distributed to shareholders. No dividends were paid during H1 FY17/18.
Financial position
The summary financial position of the Group is set out below:
Six Six Year
months months ended
to 30 to 30 31 March
Sept Sept 2017
2017 2016
(restated)
GBP'000 GBP'000 GBP'000
--------------------------------- --------- ------------ ----------
Non-current assets 107,510 112,003 110,723
Current assets (excl. net debt) 25,950 26,485 26,442
Net current liabilities (excl.
net debt) (20,701) (23,383) (17,586)
Non-current liabilities (excl.
net debt) (2,486) (4,775) (3,319)
Net debt (33,324) (34,211) (39,531)
Net assets 76,949 76,119 76,729
--------------------------------- --------- ------------ ----------
Net debt and cash flows
Six Six Year
months months ended
to 30 to 30 31 March
Sept Sept 2017
2017 2016
(restated)
GBP'000 GBP'000 GBP'000
----------------------------------- -------- ------------ ----------
Revolving credit facility 32,000 25,000 38,000
Term loans 2 377 323
(Cash) / overdraft balance (4,692) 3,615 (4,340)
Finance leases 6,184 5,457 5,752
Unamortised loan arrangement fees (170) (238) (204)
Net Debt 33,324 34,211 39,531
----------------------------------- -------- ------------ ----------
During H1 FY17/18, net debt fell from GBP39.5m at 31 March 2017 to GBP33.3m at 30 September 2017. The movements in net debt are analysed below along with the prior half year comparative.
Six Six
months months
to 30 to 30
Sept Sept
2017 2016
(restated)
GBP'000 GBP'000
---------------------------------------------- -------- ------------
Adjusted EBITDA 9,118 8,962
Working capital movements 2,278 (2,109)
---------------------------------------------- -------- ------------
Adjusted cash generated from operations 11,396 6,853
Cash conversion 125% 77%
Corporation tax (55) 50
---------------------------------------------- -------- ------------
Adjusted net cash inflow from operating
activities 11,341 6,903
---------------------------------------------- -------- ------------
Net debt movements from investing activities
Purchase of property, plant and equipment
* Cash purchases (2,276) (2,804)
* Finance lease purchases (1,464) (1,056)
---------------------------------------------- -------- ------------
(3,740) (3,860)
---------------------------------------------- -------- ------------
Net debt movements from financing activities
---------------------------------------------- -------- ------------
Interest paid (665) (512)
---------------------------------------------- -------- ------------
Non cash movements in net debt
---------------------------------------------- -------- ------------
Amortisation of loan arrangement fees (34) (34)
Effect of exchange rates (15) -
---------------------------------------------- -------- ------------
Decrease in net debt pre dividends and
non-recurring items 6,887 2,497
---------------------------------------------- -------- ------------
Dividends paid - (4,406)
---------------------------------------------- -------- ------------
Non-recurring net debt movements
Non-recurring expense items (937) (754)
Sale of metro ring to City Fibre - 5,000
Non-recurring interest income 257 -
Proceeds from the issue of share capital - 1,189
(680) 5,435
---------------------------------------------- -------- ------------
Decrease in net debt at 30 Sept 2017/
2016 6,207 3,526
---------------------------------------------- -------- ------------
Six Six
months months
to 30 to 30
Sept Sept
2017 2016
(restated)
GBP'000 GBP'000
-------------------------- --------- ------------
Net debt at 31 March (39,531) (37,737)
Net decrease in net debt 6,207 3,526
Net debt at 30 September (33,324) (34,211)
-------------------------- --------- ------------
Working capital movements
Working capital movements total GBP2.3m, of which GBP2.5m relate to trade debtors, accrued income, deferred income and other debtors. This resulted in cash conversion in the period of 125% compared to 77% in the prior period.
Improved control of billing and collections has resulted in the positive working capital movement.
The resolution of legacy debt issues has also led to a significant improvement in the ageing of trade debtors with a significant reduction in debtors aged > 90 days.
Trade creditor days were 25 at 30 September 2017 compared to 55 in the comparative period.
Six Six Year
months months ended
to 30 to 30 31 March
Sept Sept 2017
2017 2016
(restated)
GBP'000 GBP'000 GBP'000
----------------------------------- -------- ------------ ----------
Current 10,298 8,231 9,218
1 to 30 days overdue 1,957 2,084 2,828
31 to 60 days overdue 1,647 2,053 2,298
61 to 90 days overdue 628 682 615
91 to 180 days overdue 1,261 1,522 3,385
> 180 days overdue 1,802 5,928 4,482
----------------------------------- -------- ------------ ----------
Gross trade debtors 17,593 20,500 22,826
Trade debtor impairment provision (1,865) (7,118) (5,576)
Net trade debtors 15,728 13,382 17,250
----------------------------------- -------- ------------ ----------
Financing and covenants
The groups committed facilities at 30 September 2017 were GBP40m (H1 FY17/18: GBP40m). In addition to this, the Company has access to a GBP5m overdraft facility, a GBP6m finance lease facility and a GBP10m accordion facility.
As at 30 September 2017, the Company had drawn GBP32m on its revolving credit facility leaving a headroom of GBP8m.
Following the accounting misstatements, the Group's banking facilities were refinanced in April 2017. Whilst the covenant tests remained the same, the margin increased as a result.
Alternative Performance Measures
Alternative Performance Measures (APMs) are used by the Board in assessing the Group's performance and are applied consistently from one period to the next. They therefore provide additional useful information for shareholders on the underlying performance and position of the Group. These measures are not defined by IFRS and are not intended to be a substitute for IFRS measures.
The Group presents adjusted EBITDA, operating profit and EPS which are calculated as the statutory measures stated before amortisation of acquired intangibles, non-recurring items and share based payments, including related tax where applicable. The table below reconciles the APMs to the statutory reported measures.
Six months to 30 Sept Six months to 30 Sept
2017 2016 (restated)
Statutory Amort. Non-recurring Share-based Adjusted Statutory Amort. Non-recurring Share-based Adjusted
of items payments of items payments
acquired acquired
intangibles intangibles
--------------- ---------- ------------ -------------- ------------ --------- ---------- ------------ -------------- ------------ ---------
Revenue
(GBPm) 51.4 51.4 51.8 51.8
Adjusted
EBITDA
(GBPm) 9.1 9.0
Operating
profit/(loss)
(GBPm) 0.5 3.1 0.3 3.9 (1.9) 3.1 0.3 1.5
Net financing
costs (GBPm) (0.5) (0.3) (0.8) (0.6) (0.6)
Profit
before
tax (GBPm) 0.0 3.1 1.1 0.3 4.5 (2.5) 3.1 3.7 0.3 4.6
Net debt
(GBPm) 33.3 33.3 34.2 34.2
--------------- ---------- ------------ -------------- ------------ --------- ---------- ------------ -------------- ------------ ---------
Details of adjusted earnings and statutory and adjusted EPS are shown in Note 9 to the interim financial statements.
Responsibility Statement
The Directors are responsible for preparing the Interim Report in accordance with applicable law and regulations. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company, and enable them to ensure this it's financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
By Order of the Board
Chris Jagusz Peter Brotherton Chief Executive Officer Chief Financial Officer 29(th) November 2017 29(th) November 2017
Cautionary Statement
To the shareholders of Redcentric plc
The Interim report and accounts have been prepared solely to provide additional information to shareholders to assess the Company's strategies and the potential for those strategies to succeed. The report and accounts should not be relied on by any other party or for any other purpose. The report and accounts contains some forward looking statements. These statements are made by the directors in good faith based on information available to them at the time of their approval of this report, but such statements should be treated with caution due to the inherent uncertainties, including both economic and business factor risks, underlying any such forward looking information.
Consolidated income statement for the six months ended 30 September 2017 (unaudited)
Six Six Year
months months ended
to 30 to 30
Sept Sept
2017 2016
(Restated) 31 March
2017
Note GBP'000 GBP'000 GBP'000
--------------------------------- ----- --------- ------------ ----------
Revenue 3 51,374 51,849 104,623
Cost of Sales (20,867) (21,902) (44,159)
--------------------------------- ----- --------- ------------ ----------
Gross Profit 30,507 29,947 60,464
Operating Expenditure (30,034) (31,888) (63,459)
--------------------------------- ----- --------- ------------ ----------
Operating Profit/(Loss) 473 (1,941) (2,995)
Analysed as:
Adjusted EBITDA* 4 9,118 8,962 17,273
Depreciation (3,679) (3,606) (7,507)
Amortisation of intangibles (3,272) (3,261) (6,207)
Non-Recurring Costs 5 (1,349) (3,688) (5,474)
Share-based payments 6 (345) (348) (1,080)
--------------------------------- ----- --------- ------------ ----------
Operating Profit/(loss) 473 (1,941) (2,995)
--------------------------------- ----- --------- ------------ ----------
Net Finance costs 7 (501) (597) (1,253)
--------------------------------- ----- --------- ------------ ----------
Loss on ordinary activities
before taxation (28) (2,538) (4,248)
Tax credit/(charge) on profit
on ordinary activities 8 (36) 831 1,870
--------------------------------- ----- --------- ------------ ----------
Loss for the year (attributable
to owners of the parent) (64) (1,707) (2,378)
--------------------------------- ----- --------- ------------ ----------
Basic and diluted earnings
per share 9 (0.04)p (1.17)p (1.60)p
*Adjusted EBITDA refers to underlying operating profit before depreciation, amortisation, non-recurring costs and share based payments
Consolidated statement of comprehensive income (unaudited)
Six Six Year
months months ended
ended ended
30 Sept 30 Sept
2017 2016
(Restated) 31 March
2017
GBP'000 GBP'000 GBP'000
--------------------------------------- --------- ------------ ----------
Loss for the period (64) (1,707) (2,378)
Exchange differences arising on
re-translation of foreign subsidiary (2) 26 94
--------------------------------------- --------- ------------ ----------
Total comprehensive loss for the
period (66) (1,681) (2,284)
--------------------------------------- --------- ------------ ----------
Consolidated statement of changes in equity (unaudited)
Share Share Capital Retained Total
Capital Premium Redemption Earnings Equity
Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- --------- --------- ------------ ---------- --------
Balance at 31 March
2016 146 63,667 (9,454) 27,328 81,687
Loss for the period - - - (1,707) (1,707)
Other comprehensive
gain - before tax - - - 26 26
----------------------------- --------- --------- ------------ ---------- --------
Total comprehensive
income - - - (1,681) (1,681)
Transactions with owners:
Dividend - - - (4,406) (4,406)
Share issue less costs 1 1,188 - - 1,189
IFRS2 Charge - - - 287 287
Deferred tax on share-based
payments - - - (957) (957)
Balance at 30 September
2016 (restated) 147 64,855 (9,454) 20,571 76,119
Profit for the period - - - (671) (671)
Other comprehensive
gain - before tax - - - 68 68
----------------------------- ---- ------- -------- ------- -------
Total comprehensive
income - - - (603) (603)
Transactions with owners:
Share issue less costs 2 540 - - 542
IFRS2 Charge - - - 688 688
Deferred tax on share-based
payments - - - (17) (17)
----------------------------- ---- ------- -------- ------- -------
Balance at 31 March
2017 149 65,395 (9,454) 20,639 76,729
Loss for the period - - - (64) (64)
Other comprehensive
loss - before tax - - - (2) (2)
----------------------------- ---- ------- -------- ------- -------
Total comprehensive
income - - - (66) (66)
Transactions with owners:
IFRS2 Charge - - - 345 345
Deferred tax on share-based
payments - - - (59) (59)
----------------------------- ---- ------- -------- ------- -------
Balance at 30 September
2017 149 65,395 (9,454) 20,859 76,949
Consolidated balance sheet as at 30 September 2017 (unaudited)
Six Six Year
months months ended
to 30 to 30
Sept Sept
2017 2016
(Restated) 31 March
2017
Note GBP'000 GBP'000 GBP'000
-------------------------------- ----- -------- ------------ ----------
Non-Current Assets
Property, Plant and equipment 22,058 21,693 21,998
Intangible assets and goodwill 85,452 90,310 88,725
-------------------------------- ----- -------- ------------ ----------
107,510 112,003 110,723
-------------------------------- ----- -------- ------------ ----------
Current Assets
Inventories 232 100 234
Trade and other receivables 10 25,323 26,007 25,839
Corporation tax receivable 395 378 369
Cash and Short Term Deposits 4,692 - 4,340
-------------------------------- ----- -------- ------------ ----------
30,642 26,485 30,782
-------------------------------- ----- -------- ------------ ----------
Total assets 138,152 138,488 141,505
-------------------------------- ----- -------- ------------ ----------
Equity
Called up share capital 14 149 147 149
Share premium account 65,395 64,855 65,395
Capital Redemption Reserve (9,454) (9,454) (9,454)
Retained earnings 20,859 20,571 20,639
Total Equity 76,949 76,119 76,729
-------------------------------- ----- -------- ------------ ----------
Non-current liabilities
Loans and Borrowings 13 35,337 27,804 41,092
Deferred Tax Liability 2,177 3,042 2,112
Provisions 12 309 1,733 1,207
-------------------------------- ----- -------- ------------ ----------
37,823 32,579 44,411
-------------------------------- ----- -------- ------------ ----------
Current Liabilities
Overdraft - 3,615 -
Trade and other payables 11 20,368 23,048 17,247
Loans and Borrowings 13 2,679 2,792 2,779
Provisions 12 333 335 339
-------------------------------- ----- -------- ------------ ----------
23,380 29,790 20,365
Net Liabilities 61,203 62,369 64,776
-------------------------------- ----- -------- ------------ ----------
Total Equity and Liabilities 138,152 138,488 141,505
-------------------------------- ----- -------- ------------ ----------
Consolidated cash flow statement for the six months ended 30 September 2017 (unaudited)
Six Six Year
months months ended
to 30 to 30
Sept Sept
2017 2016
(Restated) 31 March
2017
GBP'000 GBP'000 GBP'000
------------------------------------------ -------- ------------ ----------
Cash flows from operating activities
Loss before taxation (28) (2,538) (4,248)
Net finance expense 501 597 1,253
------------------------------------------ -------- ------------ ----------
Operating loss 473 (1,941) (2,995)
Depreciation and amortisation 6,951 6,867 13,714
Non-recurring items 1,349 3,688 5,474
Share based payments 345 348 1,080
------------------------------------------ -------- ------------ ----------
Operating cash flow before non-recurring
costs and movements in working
capital 9,118 8,962 17,273
Non-recurring costs and NI on
share based payments (937) (754) (3,159)
------------------------------------------ -------- ------------ ----------
Operating cash flow before movements
in working capital 8,181 8,208 14,114
Decrease in inventories 2 329 196
Decrease in trade and other receivables 665 2,130 1,589
Increase/(decrease) in trade and
other payables 1,611 (4,567) (9,616)
------------------------------------------ -------- ------------ ----------
Cash generated from operations 10,459 6,100 6,283
Corporation tax (paid)/received (55) 50 71
------------------------------------------ -------- ------------ ----------
Net cash inflow from operating
activities 10,404 6,150 6,354
------------------------------------------ -------- ------------ ----------
Cash flows from investing activities
Proceeds on disposal of property,
plant and equipment - 5,000 5,000
Purchase of property, plant and
equipment (2,276) (2,804) (6,744)
------------------------------------------ -------- ------------ ----------
Net cash outflow from investing
activities (2,276) 2,196 (1,744)
------------------------------------------ -------- ------------ ----------
Cash flows from financing activities
Dividends paid to shareholders - (4,406) (4,406)
Interest paid (462) (512) (1,209)
Finance fees paid on bank loans (50) - -
Repayment of borrowings (321) (69) (2,435)
(Repayment)/drawdown on revolving
credit facility (6,000) (3,000) 10,000
Proceeds of issue of shares less
costs of issue - 1,189 1,731
Finance Lease repayments (927) (1,192) -
------------------------------------------ -------- ------------ ----------
Net cash inflow from financing
activities (7,760) (7,990) 3,681
------------------------------------------ -------- ------------ ----------
Net increase (decrease) in cash
and cash equivalents 368 356 8,291
------------------------------------------ -------- ------------ ----------
Opening cash and cash equivalents
(as restated) 4,339 (3,970) (3,970)
Net increase in cash and cash
equivalents 368 356 8,291
Effect of exchange rates (15) (1) 19
------------------------------------------ -------- ------------ ----------
Cash and cash equivalents at end
of the period 4,692 (3,615) 4,340
------------------------------------------ -------- ------------ ----------
The accompanying notes form part of these financial statements.
Notes to the interim financial statements for the six months ended 30 September 2017
1. General information
Reporting entity
Redcentric plc ('the Company') is a company domiciled in England and Wales. These condensed consolidated interim financial statements ('interim financial statements') as at and for the six months to 30 September 2017 comprise the Company and its subsidiaries (together referred to as 'the Group'). The principal activity of the Group is the supply of IT managed services.
2. Accounting policies
Basis of accounting
These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting, and should be read in conjunction with the Group's last annual consolidated financial statements as at and for the year ended 31 March 2017 ('last annual financial statements'). They do not include all of the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual financial statements.
The information for the year ended 31 March 2017 does not constitute statutory accounts as defined in section 435 of the Companies Act 2016. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors reported on those accounts. The annual report for the year ended 31 March 2017 included a qualified audit opinion in respect of the comparative income statement and cash flow statement (for the year ended 31 March 2016) and also in relation to the opening balance sheet as at 1 April 2015, but was unqualified in all other respects and did not draw attention to any matters by way of emphasis.
Use of judgements and estimates
In preparing these interim financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 March 2017.
Going concern
The directors have prepared a detailed trading and cash flow forecast for a period which covers at least 12 months after the date of approval of these condensed interim financial statements. Having considered the forecasts and making other enquiries, the directors have a reasonable expectation that Redcentric has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the condensed interim financial statements.
Significant accounting policies
The accounting policies applied in these interim financial statements are the same as those applied in the last annual financial statements.
Standards issued but not yet effective
A number of new standards and amendments to standards are effective for annual periods beginning after 1 April 2017 and earlier application is permitted; however, the Group has not early adopted the following new or amended standards in preparing these condensed consolidated interim financial statements.
The Group has the following updates to information provided in the last annual financial statements about the standards issued but not yet effective that may have a significant impact on the Group's consolidated financial statements.
IFRS 2 (amendments) 'Classification and measurement of share-based payment transactions' is effective for periods beginning on or after 1st January 2018. The amendment provides guidance on three issues: the effects of vesting conditions on the measurement of cash-settled share-based payments; the classification of share-based payment transactions with net settlement features for withholding tax obligations; and the accounting for a modification to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled. The amendment is not expected to result in any material changes for the Group.
IFRS 9 Financial Instruments was issued by the IASB in July 2014, and is effective for the Group for the year ended 31 March 2019. Applying IFRS 9 will result in changes to the measurement and disclosure of financial instruments and introduces a new expected loss impairment model. . The Group is currently assessing the impact of the new standard and it is not practicable to quantify the effect of this standard until this detailed review has been completed.
IFRS 15 'Revenue from contracts with customers' is effective for periods beginning on or after 1st January 2018. The Group is currently assessing the impact of the new standard and it is not practicable to quantify the effect of this standard until this detailed review has been completed. The Group expects to adopt the standard from 1st April 2018 and will be considering whether to use fully or modified retrospective application.
IFRS 16 'Leases' introduces a single lessee accounting model and is effective for periods beginning on or after 1st January 2019. The new standard will require lessees to recognise a lease liability reflecting the obligation to make future lease payments and a 'right-of-use' asset for all leases unless exemption is taken for certain short-term leases or for leases of low-value assets. The Group is currently assessing the impact of the new standard and it is not practicable to quantify the effect of this standard until this detailed review has been completed. The Group expects to adopt the standard from 1st April 2018 and will be considering whether to use fully or modified retrospective application.
3. Business segments
As applied to the consolidated financial statements as at and for the year ended 31 March 2017, the Board believes that the Group comprises a single reporting segment being the provision of managed services to customers. Whilst the Board still reviews revenue streams of the three categories separately; recurring, product and service revenue, the operating costs and operating asset base used to derive these revenue streams are the same for all three categories and are presented as such in the Group's internal reporting.
4. Adjusted Earnings Before Interest, Tax, Depreciation and Amortisation (Adjusted EBITDA)
Management has presented the performance measure adjusted EBITDA because it believes that this measure is relevant to an understanding of the Group's financial performance. The definition of adjusted EBITDA is the same as in the last annual financial statements. Adjusted EBITDA is not a defined performance measure in IFRS. The Group's definition of adjusted EBITDA may not be comparable with similarly titled performance measures and disclosures by other entities.
Six Six Year
months months ended
to 30 to 30
Sept Sept
2017 2016
(Restated) 31 March
2017
GBP'000 GBP'000 GBP'000
----------------------------- -------- ------------ ----------
Operating Profit/(Loss) 473 (1,941) (2,995)
Adjustments for:
Depreciation 3,679 3,606 7,507
Amortisation of Intangibles 3,272 3,261 6,207
Non-recurring costs 1,349 3,688 5,474
Share-based payments 345 348 1,080
Adjusted EBITDA 9,118 8,962 17,273
----------------------------- -------- ------------ ----------
5. Non-recurring costs
Six Six Year
months months ended
to 30 to 30
Sept Sept
2017 2016
(Restated) 31 March
2017
GBP'000 GBP'000 GBP'000
---------------------------------------- -------- ------------ ----------
Non recurring impairment of trade
debtors balances - 2,933 2,933
Professional fees associated with
the forensic review and Financial
Conduct Authority (FCA) investigation 509 - 1,291
Integration and restructuring
costs 840 548 658
Sale of metro ring to City Fibre - 207 207
Vacant Property Provisions - - 385
Non recurring costs 1,349 3,688 5,474
---------------------------------------- -------- ------------ ----------
-- Professional fees associated with the forensic review and FCA investigation
o These costs relate to legal and forensic advice received in respect of the ongoing FCA investigation.
-- Integration and restructuring costs
o The integration costs relate to the integration of the City Lifeline acquisition was were undertaken in January 2016.
o Following the forensic review, the Company undertook a cost reduction exercise and one off redundancy costs were incurred as a result.
-- Non recurring impairment of trade debtor balances
o Following the audit of the 31 March 2017 annual results, a further debtor impairment charge was taken.
-- Sale of metro ring to City Fibre
o On 30 September 2016, the Company disposed of its fibre network assets. This led to a one off loss on disposal of GBP207k.
6. Share-based payment arrangements
Six Six Year
months months ended
to 30 to 30 31 March
Sept Sept 2017
2017 2016
(restated)
GBP'000 GBP'000 GBP'000
------------------------------------- -------- ------------ ----------
SAYE schemes 132 87 188
Director and senior manager schemes 65 (117) 156
MXC options 148 317 631
Employers NI - 61 105
------------------------------------- -------- ------------ ----------
345 348 1,080
------------------------------------- -------- ------------ ----------
At 30 September 2017, the Group had the following share-based payment arrangements.
i. Enterprise Management Incentives (EMI)
The Group has legacy position of EMI share options outstanding, issued prior to the formation of the Group.
ii. Long Term Incentive Plan (LTIP)
The Group operates a Long Term Incentive Plan (LTIP) under which the executive directors and key management personnel are awarded nil cost options that will vest subject to the achievement of performance conditions relating to the growth in earnings per share.
iii. Save As You Earn (SAYE)
The Group operates a HMRC approved SAYE scheme which offers its UK based employees the opportunity to participate in a share purchase plan. To participate in the plan, the employees are required to save an amount of their gross monthly salary, up to a maximum of GBP500 per month, for a period of 36 months. Under the terms of the plan, at the end of the three-year period the employees are entitled to purchase shares using funds saved at a price 20% below the market price at grant date. Only employees who remain in service and save the required amount of their gross monthly salary for 36 consecutive months will become entitled to purchase the shares. Employees who cease their employment, do not save the required amount of their gross monthly salary in any month before the 36-month period expires, or elect not to exercise their options to purchase shares will be refunded their saved amounts.
iv. MXC
Historic options awarded to MXC Capital Limited.
EMI LTIP SAYE MXC TOTAL
------------------------- ------------ ------------ ---------- ------------ ------------
Balance at 30 March
2016 4,393,111 - 1,144,353 8,692,988 14,230,452
------------------------- ------------ ------------ ---------- ------------ ------------
Forfeited in the period (700,000) - - - (700,000)
Exercised in the period (1,285,000) - - - (1,285,000)
Balance at 30 September
2016 2,408,111 - 1,144,353 8,692,988 12,245,452
Issued in the year - 919,048 - 919,048
Forfeited in the year (550,000) - (44,448) - (594,448)
Cancelled in the year - - (288,339) - (288,339)
Exercised in the year - - (1,308) (1,692,988) (1,694,296)
Lapsed in the year (550,000) - - - (550,000)
Balance at 30 March
2017 1,308,111 919,048 810,258 7,000,000 10,037,417
------------------------- ------------ ------------ ---------- ------------ ------------
Issued in the period - 1,092,330 1,234,818 - 2,327,148
Forfeited in the period (450,000) (1,428,422) - - (1,878,422)
Cancelled in the period - - (356,891) - (356,891)
Balance at 30 September
2017 858,111 582,956 1,688,185 7,000,000 10,129,252
------------------------- ------------ ------------ ---------- ------------ ------------
As at 31 March 2017 the Company had a total of 350,000 warrants in issue with an exercise price of 36p. The warrants were issued to Barclays Bank PLC on demerger in April 2013 in exchange for warrants previously held in Redstone Plc, and can be converted to shares at any time before the sale of the entire share capital of the Company.
7. Finance costs
Six Six Year
months months ended
to 30 to 30 31 March
Sept Sept 2017
2017 2016
(restated)
GBP'000 GBP'000 GBP'000
---------------------------------- -------- ------------ ----------
Interest receivable
Other interest receivable (257) - -
Interest payable
Interest payable on bank loans
and overdrafts 724 563 1,185
Amortisation of loan arrangement
fees 34 34 68
-------- ------------ ----------
758 597 1,253
Net financing costs 501 597 1,253
---------------------------------- -------- ------------ ----------
8. Taxation
Tax of profit on ordinary activities
Six Six Year
months months ended
to 30 to 30 31 March
Sept Sept 2017
2017 2016
(restated)
GBP'000 GBP'000 GBP'000
------------------------------------ -------- ------------ ----------
Current income tax 46 20 64
Prior year adjustment - - 38
Deferred tax:
Origination and reversal of timing
differences:
- Deferred tax asset: prior year
adjustments - - 312
- Deferred tax asset: current
year 521 654 200
- Deferred tax liability: prior
year adjustments - - (501)
- Deferred tax liability: current
year (531) (1,505) (1,983)
Total income tax charge/(credit)
reported in the income statement 36 (831) (1,870)
------------------------------------ -------- ------------ ----------
Reconciliation of the total income tax charge/(credit)
Six Six Year
months months ended
to 30 to 30 31 March
Sept Sept 2017
2017 2016
(restated)
GBP'000 GBP'000 GBP'000
-------------------------------------- -------- ------------ ----------
Profit before taxation (28) (2,537) (4,248)
-------------------------------------- -------- ------------ ----------
Profit multiplied by the UK standard
rate of corporation tax of 19%
(2017:20%) (4) (507) (850)
Expenses not deductible for tax
purposes 28 20 286
Movement in unprovided tax losses - - (847)
Prior year adjustments - - (151)
Effect of tax rate change 1 (332) (318)
Impact of overseas tax rates 11 (12) 10
Total income tax charge/(credit)
reported in the income statement 36 (831) (1,870)
-------------------------------------- -------- ------------ ----------
9. Earnings per share
Basic earnings per share have been calculated using a weighted average number of shares of 148,859,173 (H1 FY16/17: 146,335,704). The dilutive effect of share options in issue at 30 September 2017 increased the weighted average number of shares to 154,641,819 (H1 FY16/17: 153,613,323).
In addition, adjusted earnings per share have been calculated to reflect the underlying performance of the business. This measure is derived as follows:
Six Six Year
months months ended
to 30 to 30
Sept Sept
2017 2016
(Restated) 31 March
2017
GBP'000 GBP'000 GBP'000
------------------------------------------ ------------ ------------ ------------
Statutory earnings (64) (1,707) (2,378)
Amortisation of acquired intangibles* 3,126 3,126 5,944
Share-based payments 345 348 1,080
Tax (credit)/charge in income
statement 36 (831) (1,870)
Non-recurring interest (257) - -
Non-recurring costs 1,349 3,688 5,474
------------------------------------------ ------------ ------------ ------------
Adjusted earnings before tax 4,534 4,625 8,250
Notional tax charge at 19%; (H1
FY16: 20%; FY17 20%) (862) (925) (1,650)
------------------------------------------ ------------ ------------ ------------
Earnings for the purpose of earnings
per share being net profit attributable
to owners of the Group 3,673 3,700 6,600
------------------------------------------ ------------ ------------ ------------
Weighted average number of ordinary
shares for the purposes of basic
earnings per share 148,859,173 146,335,704 148,448,225
------------------------------------------ ------------ ------------ ------------
Weighted average number of ordinary
shares for the purposes of diluted
earnings per share 154,641,819 153,613,323 152,744,106
------------------------------------------ ------------ ------------ ------------
Statutory diluted and basic earnings
per share (0.04)p (1.17)p (1.60)p
Adjusted earnings per ordinary
share - basic 2.47p 2.53p 4.45p
Adjusted earnings per ordinary
share - diluted 2.38p 2.41p 4.32p
------------------------------------------ ------------ ------------ ------------
Reconciliation of Amortisation
Amortisation charge per P&L 3,272 3,261 6,207
Amortisation of software (146) (135) (263)
--------------------------------------- ------ ------ ------
*Amortisation of acquired intangibles 3,126 3,126 5,944
--------------------------------------- ------ ------ ------
10. Trade and other receivables
Six Six Year
months months ended
to 30 to 30 31 March
Sept Sept 2017
2017 2016
(Restated)
GBP'000 GBP'000 GBP'000
-------------------------------- -------- ------------ ----------
Trade Receivables 17,592 20,500 22,826
Less: Provision for impairment
of trade receivables (1,864) (7,118) (5,576)
-------------------------------- -------- ------------ ----------
Trade receivables - net 15,728 13,382 17,250
Other receivables 224 - 56
Prepayments 6,151 6,612 5,378
Accrued income 3,220 6,013 3,155
-------------------------------- -------- ------------ ----------
Total 25,323 26,007 25,839
-------------------------------- -------- ------------ ----------
11. Trade and other payables
Six Six Year
months months ended
to 30 to 30
Sept Sept
2017 2016
(Restated) 31 March
2017
GBP'000 GBP'000 GBP'000
------------------------------ -------- ------------ ----------
Trade Payables 6,122 10,450 7,483
Other Payables 1,004 677 104
Taxation and Social Security 2,667 4,031 1,592
Accruals 3,598 3,990 2,264
Deferred Income 6,977 3,900 5,804
------------------------------ -------- ------------ ----------
Total 20,368 23,048 17,247
------------------------------ -------- ------------ ----------
Provisions
Dilapidations Vacant Total
Property Provision
GBP'000 GBP'000 GBP'000
----------------------------------------- -------------- ---------- -----------
At 31 March 2016 593 1,681 2,274
Charged/(credited) to income statement:
Additional provisions created
during the year - 52 52
Utilisation of provision (258) - (258)
----------------------------------------- -------------- ---------- -----------
At 30 September 2016 335 1,733 2,068
Utilisation of provision (62) (460) (522)
----------------------------------------- -------------- ---------- -----------
At 31 March 2017 273 1,273 1,546
Additional provisions created
during the year 149 - 149
Utilisation of provision (85) (968) (1,053)
Reclassification of provision (7) 7 -
-----------------------------------------
At 30 September 2017 330 312 642
----------------------------------------- -------------- ---------- -----------
Dilapidation provisions are made in respect of contractual obligations relating to leased property. Vacant property provisions are made in respect of vacated properties under onerous leases.
At 30 September At 30 September
2017 2016
Dilapidations Vacant Total Dilapidations Vacant Total
Property Provision Property Provision
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- -------------- ---------- ----------- -------------- ---------- -----------
Current 21 312 333 - 335 335
Non-current 309 - 309 1,733 - 1,733
------------- -------------- ---------- ----------- -------------- ---------- -----------
Total 330 312 642 1,733 335 2,068
------------- -------------- ---------- ----------- -------------- ---------- -----------
12. Borrowings
Six Six Year
months months ended
to 30 to 30
Sept Sept
2017 2016
(Restated) 31 March
2017
GBP'000 GBP'000 GBP'000
------------------------------ -------- ------------ ----------
Bank Loan 32,000 25,000 38,000
Arrangement Fee (170) (238) (204)
Finance Leases - Non Current 3,507 3,042 3,296
------------------------------ -------- ------------ ----------
Total Non-Current 35,337 27,804 41,092
------------------------------ -------- ------------ ----------
Finance Leases - Current 2,677 2,415 2,456
Term Loans 2 377 323
------------------------------ -------- ------------ ----------
Total Current 2,679 2,792 2,779
------------------------------ -------- ------------ ----------
13. Capital and reserves
Issued share capital
Number GBP'000
-------------------------------- ------------ --------
At 30 September 2016 147,166,185 147
Issued during six month period 1,692,988 2
-------------------------------- ------------ --------
At 31 March 2017 148,859,173 149
Issued during six the period - -
-------------------------------- ------------ --------
At 30 September 2017 148,859,173 149
-------------------------------- ------------ --------
The following dividends were declared and paid by the Group:
Six Six Year
months months ended
to 30 to 30 31 March
Sept Sept 2017
2017 2016
GBP'000 GBP'000 GBP'000
------------------------ -------- -------- ----------
3.0p per ordinary share - 4,406 -
------------------------ -------- -------- ----------
14. Error restatement
The prior half year comparative numbers for the 6 months ended 30 September 2016 have been restated from those issued and presented in December 2016. At the time these numbers were released, the forensic review had just been completed. Further to this review, all of the Company's subsidiaries' accounts were re-audited resulting in additional adjustments, the Indian operation was correctly accounted for as a subsidiary rather than a branch and errors in the group consolidation were eliminated. The prior year comparative figures are presented on a consistent basis with the audited figures for the full year ended 31 March 2017.
Reconciliation of Consolidated Statement of Income
30 Sept Error 30 Sept
2016 restatement 2016
As previously Restated
reported
GBP'000 GBP'000 GBP'000
------------------------------------------ ---------------- ------------- ----------
Revenue 52,982 (1,133) 51,849
Cost of Sales (23,798) 1,896 (21,902)
------------------------------------------ ---------------- ------------- ----------
Gross Profit 29,184 763 29,947
Operating Expenditure (28,268) (3,620) (31,888)
------------------------------------------ ---------------- ------------- ----------
Operating Profit/(Loss) 916 (2,857) (1,941)
Analysed as:
Adjusted EBITDA* 9,051 (89) 8,962 Depreciation (3,971) 365 (3,606) Amortisation of intangibles (3,409) 148 (3,261) Non-Recurring Costs (755) (2,933) (3,688) Share-based payments - (348) (348) ------------------------------------------ ---------------- ------------- ---------- Operating Profit/(Loss) 916 (2,857) (1,941) ------------------------------------------ ---------------- ------------- ---------- Net Finance costs (596) (1) (597) ------------------------------------------ ---------------- ------------- ---------- Profit/(Loss) on ordinary activities before taxation 320 (2,858) (2,538) Tax credit/(charge) on profit on ordinary activities 1,308 (477) 831 ------------------------------------------ ---------------- ------------- ---------- Profit/(Loss) for the year (attributable to owners of the parent) 1,628 (3,335) (1,707) ------------------------------------------ ---------------- ------------- ---------- Basic earnings per share 1.11p (2.28)p (1.17)p ------------------------------------------ ---------------- ------------- ----------
Reconciliation of Consolidated Balance Sheet
30 Error 30 Sept
Sept restatement 2016
2016 Restated
As previously
reported
GBP'000 GBP'000 GBP'000
-------------------------------- ---------------- ------------- ----------
Non-Current Assets
Property, Plant and equipment 23,723 (2,030) 21,693
Intangible assets and goodwill 88,702 1,608 90,310
-------------------------------- ---------------- ------------- ----------
112,425 (422) 112,003
-------------------------------- ---------------- ------------- ----------
Current Assets
Inventories 168 (68) 100
Trade and other receivables 28,021 (2,014) 26,007
Corporation tax receivable - 378 378
28,189 (1,704) 26,485
-------------------------------- ---------------- ------------- ----------
Total assets 140,614 (2,126) 138,488
-------------------------------- ---------------- ------------- ----------
Equity
Called up share capital 147 - 147
Share premium account 63,667 1,188 64,855
Capital Redemption Reserve (9,454) - (9,454)
Retained earnings 25,453 (4,882) 20,571
-------------------------------- ---------------- ------------- ----------
Total Equity 79,813 (3,694) 76,119
-------------------------------- ---------------- ------------- ----------
Non-current liabilities
Loans and Borrowings 28,285 (481) 27,804
Deferred Tax Liability 3,113 (71) 3,042
Provisions 1,773 (40) 1,733
-------------------------------- ---------------- ------------- ----------
33,171 (592) 32,579
-------------------------------- ---------------- ------------- ----------
Current Liabilities
Overdraft 3,839 (224) 3,615
Trade and other payables 21,145 1,903 23,048
Loans and Borrowings 2,311 481 2,792
Provisions 335 - 335
-------------------------------- ---------------- ------------- ----------
27,630 2,160 29,790
-------------------------------- ---------------- ------------- ----------
Net Liabilities 60,801 1,568 62,369
-------------------------------- ---------------- ------------- ----------
Total Equity and Liabilities 140,614 (2,126) 138,488
-------------------------------- ---------------- ------------- ----------
Reconciliation of Consolidated Cash Flow Statement
30 Error 30 Sept
Sept restatement 2016
2016 Restated
As previously
reported
GBP'000 GBP'000 GBP'000
------------------------------------------ ---------------- ------------- ----------
Cash flows from operating activities
Profit/(loss) before taxation 1,628 (4,165) (2,537)
Net finance expense 596 - 596
------------------------------------------ ---------------- ------------- ----------
Operating loss 2,224 (4,165) (1,941)
Depreciation and amortisation 7,380 (513) 6,867
Non-recurring items 498 3,190 3,688
Share based payments - 348 348
------------------------------------------ ---------------- ------------- ----------
Operating cash flow before non-recurring
costs and movements in working
capital 10,102 (1,140) 8,962
Non-recurring costs and NI on
share based payments - (754) (754)
------------------------------------------ ---------------- ------------- ----------
Operating cash flow before movements
in working capital 10,102 (1,894) 8,208
Decrease/ (increase) in inventories 329 - 329
Decrease/(increase) in trade and
other receivables 6,200 (4,070) 2,130
(Decrease)/increase in trade and
other payables (8,483) 3,916 (4,567)
------------------------------------------ ---------------- ------------- ----------
Cash generated from operations 8,148 (2,048) 6,100
Non-recurring items (498) 498 -
Corporation tax (paid)/received 133 (83) 50
------------------------------------------ ---------------- ------------- ----------
Net cash inflow from operating
activities 7,783 (1,633) 6,150
------------------------------------------ ---------------- ------------- ----------
Cash flows from investing activities
Proceeds on disposal of property,
plant and equipment 5,000 - 5,000
Purchase of property, plant and
equipment (4,524) 1,720 (2,804)
------------------------------------------ ---------------- ------------- ----------
Net cash outflow from investing
activities 476 1,720 2,196
------------------------------------------ ---------------- ------------- ----------
Cash flows from financing activities
Dividends paid to shareholders (4,406) - (4,406)
Interest paid (497) (15) (512)
Repayment of borrowings - (69) (69)
Drawdown on revolving credit facility (3,205) 205 (3,000)
Proceeds of issue of shares less
costs of issue - 1,189 1,189
Finance Lease repayments - (1,192) (1,192)
------------------------------------------ ---------------- ------------- ----------
Net cash inflow from financing
activities (8,108) 118 (7,990)
------------------------------------------ ---------------- ------------- ----------
Net increase (decrease) in cash
and cash equivalents 151 205 356
------------------------------------------ ---------------- ------------- ----------
Opening cash and cash equivalents
(as restated) (3,990) 20 (3,970)
Net increase (decrease) in cash
and cash equivalents 151 205 356
Effect of exchange rates - (1) (1)
------------------------------------------ ---------------- ------------- ----------
Cash and cash equivalents (3,839) 225 (3,615)
------------------------------------------ ---------------- ------------- ----------
15. Cost reclassification
31 Mar Cost reclassification 31 Mar
2017 As 2017 As
previously reclassified
reported
GBP'000 GBP'000 GBP'000
----------------------- ------------ ---------------------- --------------
Revenue 104,623 - 104,623
Cost of sales (43,304) (855) (44.159)
----------------------- ------------ ---------------------- --------------
Gross profit 61,319 (855) 60,464
Operating expenditure (64,314) 855 (63,459)
----------------------- ------------ ---------------------- --------------
Operating loss (2,995) - (2,995)
----------------------- ------------ ---------------------- --------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UWVKRBRAAUAA
(END) Dow Jones Newswires
November 29, 2017 02:00 ET (07:00 GMT)
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