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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Sysgroup Plc | LSE:SYS | London | Ordinary Share | GB00BYT18182 | 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% | 24.00 | 23.00 | 25.00 | 24.00 | 24.00 | 24.00 | 240,058 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Computer Related Svcs, Nec | 22.71M | -5.9M | -0.0709 | -3.39 | 19.98M |
From Feb 2020 to Feb 2025
TIDMDAIP
RNS Number : 8037Z
Daily Internet PLC
01 June 2016
01 June 2016
Daily Internet plc
("Daily Internet" or the "Company" or the "Group")
Final Results for the year ended 31 March 2016
Daily Internet plc (AIM: DAIP) announces its final results for the year ended 31 March 2016.
HIGHLIGHTS
Financial
-- Revenue growth of 22.4% to GBP4.76m (2015: GBP3.89m) -- Gross Profit margin increased to 63.0% (2015: 62.2%) -- Adjusted EBITDA* profit of GBP0.67m (2015: GBP0.41m) -- Profit before tax of GBP0.25m (2015: GBP(0.14m)) -- Maiden profit after tax of GBP0.3m (2015: GBP(0.08m))
Operational
-- Largest Managed Hosting customer upsold and renewed for a further three years -- New key contract wins in the Merchant and Distribution sector -- Strategic partnership with Epicor Software
o SaaS platform developed for a subset of Epicor customers
-- Re-aligning of cost base completed which included:
o Closure of Maidenhead office
o Reduction of headcount in SME division
o Consolidation of duplicated functions across business units
o Netplan's legacy SME business transferred into the Group's SME division
o SME server estate consolidated into a common datacentre
Hot Features
Premium
2016 2015 % Increase
---------------------- ----------- ----------- -----------
Revenue GBP4.76m GBP3.89m 22.4%
Gross profit GBP3.00m GBP2.42m 24.2%
Gross profit margin 63.0% 62.2% 1.5%
Adjusted EBITDA* GBP0.67m GBP0.41m 62.0%
Profit/(loss) before GBP0.25m GBP(0.14)m N/A
tax
Cash generated from
operations GBP0.67m GBP0.35m 91.9%
Net (Cash)/Debt** GBP(0.21)m GBP0.39m N/A
Basic EPS (pence) 0.06p (0.02)p N/A
---------------------- ----------- ----------- -----------
*Adjusted EBITDA is earnings before interest, taxation, depreciation, amortisation, acquisition costs and fair value adjustments and share based payments
**Net (cash)/debt calculated as interest bearing debt, including obligations under financial leases, less cash
Chris Evans, Chief Executive commented: "Trading since the financial year-end has been in line with management expectations. During the year we repaid the remaining outstanding convertible loan notes, leaving the Group in a net cash position.
"With the continued growth in our Managed Hosting business, our cash generation and the slimming down of cost base in our SME Mass Market segment, we are well placed going into the 2016/2017 financial year with a strong foundation for future growth.
"We therefore look forward to the year ahead with confidence."
For further information
please contact:
Tel: 0151
Daily Internet plc 559 1777
Chris Evans, Chief Executive
Julie Joyce, Finance
Director
Shore Capital (Nomad Tel: 020
and Broker) 7408 4090
Bidhi Bhoma / Edward
Mansfield
Newgate Communications Tel: 020
Bob Huxford / Adam Lloyd 7653 9848
/ Ed Treadwell
About Daily Internet
Daily Internet is a leading cloud integrator. Solutions delivered comprise best of breed technologies, tailored and delivered to ensure customers benefit from the vast array of solutions and ever advancing hosting technologies. The Daily Group team keeps customers at the forefront of technology, enabling them to free up resources so they can focus on growing their core business without the distractions or complexity of the ever-changing hosting landscape.
The Group has offices in Liverpool, Nottingham and Coventry.
For more information, visit http://www.dailyplc.com
Chairman's Statement
I am pleased to report another year of substantial progress in which we reported positive profitability after tax for the first time. This follows on from us reporting our maiden adjusted EBITDA profit last year. The strong results delivered by the Group for the year ended 31 March 2016 highlight the substantial organic growth we have achieved, coupled with the successful integration of two acquisitions. Both of these acquisitions have now been fully integrated and continue to perform well.
The acquisition of Q4Ex Limited alongside the appointment of Chris Evans as CEO, in December 2014, was an important step in transitioning the business from our traditional SME Mass Market roots to one focused on Managed Hosting which is supported by longer term contracts and is consequently higher margin and more profitable.
Group revenues grew by 22% to GBP4.76m (2015: GBP3.91m). Growth was driven by our Managed Hosting division which increased revenues 36%, whilst the SME Mass Market division experienced steady revenue growth of 10%. Managed Hosting now represents the majority of Group revenues. In the SME Mass Market business we have focused on efficiencies through cost reductions to drive profitability.
During the year the balance of the outstanding convertible loan notes has been repaid. Consequently at the year end the Group had a net cash position of GBP0.21m. The strengthening of our balance sheet alongside investment in our capabilities provides the Group with a good platform for future growth.
Our dedicated staff have continued to work tirelessly and diligently to continue the growth in the business led by the example set by CEO Chris Evans and we believe this will ensure we can increase our growth in the coming year.
Michael Edelson
Chairman
31 May 2016
Chief Executive Officer's Report
Introduction
On entering this financial year we set ourselves a number of objectives, including the restructuring of our SME Mass Market division and an increased focus on growing our higher margin Managed Hosting division, while extending the average contract length of our larger Managed Hosting customers.
I am pleased to report that we have been successful in delivering on all of our objectives. The re-organisation was completed in the second half of our financial year and the Managed Hosting division now forms the majority of our revenues and remains the primary focus going forward. We also succeeded in ensuring our larger customers were contracted for longer term periods (the majority of which for three years). This has provided the Group with improved visibility of earnings and improved margins.
Our SME Mass Market division delivered an EBITDA contribution to the Group of GBP0.56m (2015: GBP0.28m) whilst Managed Hosting contributed GBP0.74m (2015: GBP0.57m). Group adjusted EBITDA was GBP0.67m, (after central costs of GBP0.63m) an increase of 62.0% (2015: GBP0.41m).
Operational Review
Managed Hosting division
Our Managed Hosting division has maintained its strength in Payment Card Industry Data Security Standard hosting ("PCI DSS"). We are a Level 1 Visa certified Service Provider and we consider this a strong differentiator to many of our peers. The PCI DSS business has continued to perform well with an overall trend of increasing customer spend. In particular, our largest customer renewed and extended the scope of its contract to bring in additional projects and add 'compute and storage' capacity to existing resources. This contracted revenue provides considerable forward visibility. We are also seeing an increase in consulting revenue as more of our customers seek help with their overall IT solution, this has in turn assisted in driving further contracted managed services.
The specialist Merchant and Distribution division of our Managed Hosting business delivered solid growth with a number of key strategic client wins in its sector. We furthered our partnership with Epicor software which, the Directors' believe, provides the most advanced Enterprise Resource Planning ("ERP") solution to the Merchant and Distribution industry in the form of their BisTrack suite of products. Our knowledge of this software application has driven consulting revenue and has assisted in creating the differentiator in this sector for our managed services providing a relatively unique one-stop specialist service to this vertical.
We developed a platform for a subset of Epicor customers effectively allowing them to purchase BisTrack application in a Software as a Service ("SaaS") model. Work with Epicor is continuing to build a joint sales pipeline for this SaaS product and other managed services.
Our technical team has also developed a cost effective disaster recovery solution. This solution utilises the Amazon Web Services ("AWS") public cloud platform allowing our customers to benefit from the 'pay as you use' elements of public cloud. We continue to work on other offerings which can leverage a basket of technologies to bring best of breed solutions to our clients in a cost effective manner.
We have continued to invest in our Managed Hosting business adding a number of key recruits to expand our technical capabilities. In addition, we continue to invest in our staff, providing technical training and certification. Alongside this we are tracking commercial trends so that we can continue to evolve and capitalise on changes within the Managed Hosting landscape.
SME Mass Market division
During the second half of the financial year we completed the re-organisation of our SME Mass Market business. This included the closure of one of our offices; the centralisation of a number of functions, including the removal of some duplicated roles across the Group; and a simplification of management reporting lines. The overall effect was to reduce staff numbers to a level more appropriate to the lower levels of growth expected from this segment. This re-organisation improved overall EBITDA margin and ensured we could focus our efforts on capitalising on the growing opportunities in the more profitable Managed Hosting division, where gross profit is higher and contracts are typically longer term.
Acquisitions
The businesses acquired in the previous financial year, being Evohosting and Q4Ex (which now trades as Netplan), have been fully integrated and continue to perform well.
The Board continues to evaluate acquisitions opportunities to supplement our organic growth but these must fit the board's stringent acquisition criteria.
Current trading and outlook
Trading since the financial year-end has been in line with management expectations. During the year we repaid the remaining outstanding convertible loan notes, leaving the Group in a net cash position.
With the slimming down of cost base in our SME Mass Market segment, the continued growth in our Managed Hosting business along with our cash generation we are well placed going into the 2016/2017 financial year with a strong foundation for future growth.
We therefore look forward to the year ahead with confidence.
Chris Evans
Chief Executive Officer
31 May 2016
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 MARCH 2016
2016 2015
Group Group
Notes GBP'000 GBP'000
======================================= ====== ========= ============
Revenue 4 4,764 3,891
Cost of sales (1,755) (1,469)
Gross profit 3,009 2,422
Operating expenses before
depreciation, amortisation
, acquisition and integration
costs, fair value adjustments
and share based payments 2,343 2,011
======================================= ====== ========= ============
Operating profit before depreciation,
amortisation , acquisition
and integration costs, fair
value adjustments and share
based payments 666 411
======================================= ====== ========= ============
Depreciation 292 263
Amortisation of acquired intangibles 301 272
Amortisation of purchased
intangibles 18 4
Acquisition and integration
costs 34 148
Fair value adjustment 3 (207) (83)
Share based payments (8) (118)
======================================= ====== ========= ============
Administrative expenses 5 (2,710) (2,497)
======================================= ====== ========= ============
Profit (loss) from operations 299 (75)
======================================= ====== ========= ============
Finance costs 6 (51) (63)
======================================= ====== ========= ============
Profit (loss) before taxation 248 (138)
Taxation 54 54
======================================= ====== ========= ============
Total comprehensive income
(loss) attributable to the
equity holders of the company 302 (84)
Basic and fully diluted earnings
(loss) per share 9
Basic earnings (loss) per GBP0.006 GBP(0.0002)
share
Fully diluted earnings (loss) GBP0.006 GBP(0.0002)
per share
The Group's results are derived from continuing
operations.
The accompanying notes form an integral part
of this consolidated statement of comprehensive
income.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2016
2016 2015
Group Group
(as restated)
Notes GBP'000 GBP'000
=============================== ====== ======== ===============
Assets
Non-current assets
Goodwill 10 4,454 4,454
Intangible assets 10 1,329 1,594
Property, plant and equipment 11 450 592
=============================== ====== ======== ===============
6,233 6,640
Current assets
Trade and other receivables 598 594
Cash and cash equivalents 513 426
=============================== ====== ======== ===============
1,111 1,020
=============================== ====== ======== ===============
Total Assets 7,344 7,660
=============================== ====== ======== ===============
Equity and Liabilities
Equity attributable to the
equity shareholders of the
parent
Called up share capital 15 2,552 2,399
Share premium reserve 6,493 6,493
Other reserve 1,008 656
Retained losses (5,118) (5,420)
=============================== ====== ======== ===============
4,935 4,128
=============================== ====== ======== ===============
Non-current liabilities
Obligations under finance
leases 14 91 126
Contingent consideration due
on acquisitions 435 1,225
Deferred taxation 242 327
768 1,678
=============================== ====== ======== ===============
Current liabilities
Trade and other payables 718 712
Deferred Income 707 756
Contingent consideration due - -
on acquisitions
Convertible loan notes 13 - 103
Other loans 13 105 175
Obligations under finance
leases 14 111 108
=============================== ====== ======== ===============
1,641 1,854
=============================== ====== ======== ===============
Total Equity and Liabilities 7,344 7,660
=============================== ====== ======== ===============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 MARCH 2016
Attributable to equity holders
of the parent
========================== ============================================================
Share Share premium Other Accumulated Total
capital account reserve
losses
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========================== ========= ============== ========= ============ ========
At 1 April 2014 2,038 6,185 206 (5,336) 3093
========================== ========= ============== ========= ============ ========
Loss and comprehensive
loss - - - (84) (84)
Issue of share
capital 361 332 571 - 1,264
Expenses of
share issue - (24) (3) - (27)
Movement in
share option
reserve - - (118) - (118)
========================== ========= ============== ========= ============ ========
At 31 March
2015 2,399 6,493 656 (5,420) 4,128
========================== ========= ============== ========= ============ ========
Profit and comprehensive
profit - - - 302 302
Issue of share
capital 153 - 367 - 520
Expenses of
share issue - - (7) - (7)
Movement in
share option
reserve - - (8) - (8)
========================== ========= ============== ========= ============ ========
At 31 March
2016 2,552 6,493 1,008 (5,118) 4,935
========================== ========= ============== ========= ============ ========
The following describes the nature and purpose
of each reserve within equity:
========================================================================================
Reserve Description and purpose
========================== ============================================================
Share Premium Amount subscribed for share capital
Reserve in excess of nominal values.
Other Reserve Amount reserved for share based
payments to be released over the
life of the instruments and the
equity element of convertible
loans and the amount subscribed
for share capital in excess of
nominal value of acquisition of
another company
Retained losses All other net gains and losses
and transactions with owners (e.g.
dividends) not recognised elsewhere.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 MARCH 2016
2016 2015
Group Group
Notes GBP'000 GBP'000
======================================= ====== ======== ========
Cash flows used in operating
activities
Profit (loss) after tax 302 (84)
Adjustments for:
Depreciation and other amortisation 11/12 611 539
Fair Value adjustment on contingent
consideration 3 (270) (83)
Finance costs 51 63
Acquisition costs 34 84
Share based payments (8) (118)
Taxation (54) (54)
Operating cash flows before movement
in working capital 666 347
======================================= ====== ======== ========
Decrease / (increase) in trade
and other receivables 58 (201)
(Decrease) / increase in trade
and other payables (74) 240
Net cash generated in operating
activities 650 386
======================================= ====== ======== ========
Cash flows from investing activities
Payments to acquire property,
plant & equipment (72) (191)
Payments to acquire intangible (54) -
assets
Acquisition costs (34) (75)
Payment for acquisitions net
of cash received - (880)
Net cash used in investing activities (160) (1,146)
======================================= ====== ======== ========
Cash flows from financing activities
Net proceeds from issue of ordinary
share capital (7) 408
Drawdown of invoice discounting
facility 105 175
Repayment of loan facility (175) -
Repayment of loan notes 13 (105) (170)
Loan note interest paid (10) (24)
Interest element of finance lease
payments (39) (32)
Capital repayment of finance
leases (172) (170)
Net cash (used)/generated from
financing activities (403) 187
======================================= ====== ======== ========
Net increase (decrease) in cash
and cash equivalents 87 (573)
Cash and cash equivalents at
the beginning of the year 426 999
======================================= ====== ======== ========
Cash and cash equivalents at
the end of the year 513 426
======================================= ====== ======== ========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 MARCH 2016
1. Accounting policies
Basis of preparation
These accounts have been prepared in accordance with the accounting policies set out in the Annual Report and Financial Statements of Daily Internet plc for the year ended 31 March 2015.
The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies. The areas where significant judgements and estimates have been made in preparing the Financial Statements and their effect are disclosed in note 2.
Going concern
The Directors have prepared the Financial Statements on a going concern basis which assumes that the Group and the company will continue to meet liabilities as they fall due.
The directors have reviewed forecasts prepared for the period ending 31 March 2018 and considered the projected trading forecasts and resultant cash flows together with confirmed loan facilities and other sources of finance.
The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group can continue to operate within the current facilities available to it.
The Directors therefore have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and thus they continue to adopt the going concern basis of accounting in preparing the financial statements.
2. Significant accounting estimates and judgements
The preparation of this financial information requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities at the period end date and the amounts reported for revenues and expenses during each period. However the nature of estimation means that actual outcomes could differ from those estimates. The key sources of estimation that have a significant impact on the carrying value of assets and liabilities are discussed below.
Impairment of goodwill and other intangibles
The Group tests goodwill for impairment on an annual basis in line with the accounting policy noted above. This involves judgement regarding the future development of the business and the estimation of the level of future profitability and cash flows to support the carrying value of goodwill. An impairment review has been performed at the reporting date and no impairment has been identified. More details including carrying values are included in note 10.
Impairment of other assets
The Group reviews the carrying value of all other assets for indications of impairment at each period end. If indicators of impairment exist, the carrying value of the asset is subject to further testing to determine whether its carrying value exceeds its recoverable amount.
Valuation of intangibles acquired in business combinations
Determining the fair value of customer relationships acquired in business combinations requires estimation of the value of the cash flows related to those relationships and a suitable discount rate in order to calculate the present value. More details including carrying values are included in note 10.
Valuation of contingent consideration
When valuing the contingent consideration still payable on acquisitions, the Group considers various factors including the performance of the acquired entity since acquisition together with its expected performance to the end of the earn-out period. Following the adoption of IFRS 3 (revised) - Business Combinations, contingent consideration is recognised at, and carried thereafter at, fair value. All changes in fair value (other than measurement period adjustments) are reflected in the income statement.
Useful economic lives of intangible assets
Intangible asset are amortised over their useful economic lives. Useful lives are based on management's estimates of the period over which the assets will generate revenue, which are periodically reviewed for continued appropriateness. Changes to estimates can result in changes in the carrying values and hence amounts charged to the income statement in particular periods which could be significant.
3. Financial instruments - risk management
The Group's financial instruments comprise cash and liquid resources, convertible bonds and various items such as trade receivables and trade payables that arise directly from its operations.
There have been no substantive changes in the Group's objectives, policies and processes for managing those risks or the methods used to measure them from previous periods.
The Group's objective is to ensure adequate funding for continued growth and expansion.
All of the Group's financial instruments are carried at amortised cost with the exception of contingent consideration. There is no material difference between the carrying and fair value of its financial instruments, in the current or prior year, due to the instruments bearing interest at fixed rates or being of short term nature.
A summary of financial instruments held by category is shown below:
Group Company
Financial assets 2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
============================= ======== ======== ======== ========
Loans and receivables
Cash and cash equivalents 513 426 11 2
Trade receivables 306 425 - -
============================= ======== ======== ======== ========
Total financial assets 819 851 11 2
============================= ======== ======== ======== ========
Group Company
Financial liabilities 2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
============================= ======== ======== ======== ========
At amortised cost
Trade and other payables 563 544 71 45
Loans and other borrowings 105 278 - 103
============================= ======== ======== ======== ========
At fair value 668 822 71 148 Contingent consideration 435 1,225 435 1,225 ============================= ======== ======== ======== ======== Total financial liabilities 1,103 2,047 506 1,373 ============================= ======== ======== ======== ========
Per the fair value hierarchy classifications under IFRS 7 Financial Instruments the contingent consideration due on acquisitions shown above are considered to be level 3 financial liabilities as there are no observable inputs for valuation.
Group Company
GBP'000 GBP'000
=========================== ======== ========
Contingent consideration
At 1 April 2014 933 933
Settled during the
year (850) (850)
Fair value adjustment
through Income Statement (83) (83)
At acquisition 1,225 1,225
At 31 March 2015 1,225 1,225
Settled during the
year (520) (520)
Fair value adjustment
through Income Statement (270) (270
At 31 March 2016 435 435
============================ ======== ========
The fair value adjustment relates to the change in fair value calculation of the contingent consideration expected to be payable on the Q4Ex acquisition completed in the year.
Liquidity risk
Liquidity risk arises from the Group's management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.
The Group's policy is to prepare periodic working capital forecasts, allowing an assessment of the cash requirements of the Group and Company, to manage liquidity risk. Cash resources are managed in accordance with planned expenditure forecasts and the directors have regard to the maintenance of sufficient cash resources to fund the Group and Company's immediate operating requirements and capital expenditure.
The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of financial liabilities:
Group Between Between Between
Up to 3 and 1 and 2 and Over
3 months 12 months 2 years 5 years 5 years
At 31st March GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2015
========================== ========== =========== ========= ========= =========
Trade and other 544 - - - -
payables
Contingent consideration - - 1,225 - -
Loans and borrowings 175 103 - - -
========================== ========== =========== ========= ========= =========
719 103 1,225 - -
========================== ========== =========== ========= ========= =========
Group Between Between Between
3 and 1 and 2 and
Up to 12 2 5 Over
3 months months years years 5 years
At 31st March GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2016
========================== ========== =========== ========= ========= =========
Trade and other 563 - - - -
payables
Contingent consideration - - 435 - -
Loans and borrowings 105 - - - -
========================== ========== =========== ========= ========= =========
668 - 435 - -
========================== ========== =========== ========= ========= =========
Company Between Between Between
3 and 1 and 2 and
Up to 12 2 5 Over
3 months months years years 5 years
At 31st March GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2015
========================== ========== =========== ========= ========= =========
Trade and other 45 - - - -
payables
Contingent consideration - - 1,225 - -
Loans and borrowings - 103 - - -
========================== ========== =========== ========= ========= =========
45 103 1,225 - -
========================== ========== =========== ========= ========= =========
Company Between Between Between
3 and 1 and 2 and
Up to 12 2 5 Over
3 months months years years 5 years
At 31st March GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2016
========================== ========== =========== ========= ========= =========
Trade and other 71 - - - -
payables
Contingent consideration - - 435 - -
Loans and borrowings - - - - -
========================== ========== =========== ========= ========= =========
71 - 435 - -
========================== ========== =========== ========= ========= =========
Interest rate risk
The Group seeks to minimise exposure to interest rate risk by borrowing at fixed interest rates.
Credit risk
The Group's exposure to credit risk is limited as the majority of services provided within the SME Mass Market segment are under terms whereby payment is due on delivery or in advance of services provided. The managed hosting division gives 30 day terms and historically has had no requirement for doubtful debts. For cash and cash equivalents, the Group only uses recognised banks with high credit ratings.
Capital Disclosures
The Group monitors "adjusted capital" which comprises all components of equity (i.e. share capital, share premium, non-controlling interest, retained earnings, and revaluation reserve).
The Group's objective when maintaining capital are:
-- to safeguard the entity's ability to continue as a going concern, so that it can provide returns for shareholders in future periods and benefits for other stakeholders, and
-- to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.
The Group sets the amount of capital it requires in proportion to risk. The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.
4. Segmental analysis
The chief operating decision maker for the Group is the Board of Directors. The Group reports in two segments:-
-- SME Mass Market - this segment provides a range of VPS, shared hosting, email and domain registration services to individuals and SME's.
-- Managed Hosting - this segment provides all forms of Cloud hosting to larger customers. This segment was created on the acquisition of Netplan in November 2013. Q4Ex which provides Cloud and professional services was acquired during the prior year has been included in this segment since acquisition and now trades as Netplan.
Information regarding the operation of the reportable segments is included below. The performance of each operating segment is based on revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) before any allocation of Group overheads, share based payments, fair value adjustments or acquisition costs, as the Board believe this is the best measure for performance. The Groups Adjusted EBITDA has been calculated after deducting Group overheads which include the cost of the Board, Group marketing, legal and professional fees, share based payments, fair value adjustments and acquisition costs.
Assets and liabilities are not reviewed on a segmental basis. All segments are continuing operations. The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies. Transactions between segments are accounted for using an arms length commercial basis.
2016 2016 2015 2015
Revenue by operating GBP'000 % GBP'000 %
segment
======================== ========= ====== ======== ======
SME Mass Market 2,249 47% 2,039 52%
Managed Hosting 2,515 53% 1,852 48%
4,764 100% 3,891 100%
======================== ========= ====== ======== ======
Apart from one customer than accounts for 12.0%
of Group revenues no individual customer accounts
for more than 10% of the groups revenue (the
next highest being 6.2%).
The Group operates out of the UK and sells services
to the following geographical locations.
2016 2016 2015 2015
GBP'000 % GBP'000 %
======================== ========= ====== ======== ======
UK 3,792 80% 3,066 79%
Rest of World 972 20% 825 21%
4,764 100% 3,891 100%
======================== ========= ====== ======== ======
2016 2015
EBITDA EBITDA
before before
acquisition acquisition
costs Profit costs Profit
and share (loss) and share (loss)
based Depreciation before based Depreciation before
payments and amortisation tax payments and amortisation tax)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============= ============= ================== ======== ============= ================== ========
SME Mass
Market 558 (164) 394 278 (150) 128
Managed
Hosting 742 (435) 307 567 (389) 178
============= ============= ================== ======== ============= ================== ========
1,300 (599) 701 845 (539) 306
Group
overheads (635) (12) (647) (434) - (434)
------------- ------------- ------------------ -------- ------------- ------------------ --------
Acquisition
costs - - (34) - - (148)
------------- ------------- ------------------ -------- ------------- ------------------ --------
Share
based
payments - - 8 - - 118
------------- ------------- ------------------ -------- ------------- ------------------ --------
Fair value
adjustment - - 270 - - 83
------------- ------------- ------------------ -------- ------------- ------------------ --------
Group
interest - - (51) - - (63)
666 (611) 248 411 (539) (138)
============= ============= ================== ======== ============= ================== ========
5. Expenses
2016 2015
GBP'000 GBP'000
=========== ========================= ======== ========
Auditor's remuneration:
Group: Audit 31 31
Taxation - compliance 4 2
Corporate finance - 6
Other advisory 1 3
Company: Audit 4 4
Depreciation of tangible fixed
assets:
Owned 215 156
Held under finance leases 77 107
Amortisation of Intangible assets 319 276
Share based payments (8) (118)
Staff costs 1,671 1,191
Rentals payable under operating
leases 81 61
Marketing costs 90 156
Acquisition and integration costs 34 148
Other administrative costs 29 474
Total administrative expenses 2,710 2,497
======================================= ======== ========
6. Finance expense
2016 2015
GBP'000 GBP'000
==================================== ================ ========
Interest payable on finance leases 39 32
Interest payable on loan notes 12 31
51 63
==================================== ================ ========
7. Staff numbers and costs
The average number of full time persons employed by the Group, including executive Directors
during the year increased by 10% to 31 (2015: 28)
=============================================================================================
The aggregate payroll costs including executive Directors but excluding integration salary
costs and non-executive service fees were as follows:
================================================================================================
2016 2015
GBP'000 GBP'000
=========================================================== ================= ================
Wages and salaries 1,387 1,072
Social security costs 156 107
Benefits in kind 6 12
Pension benefits accrued 23 -
Share based payment credit (8) (20)
=========================================================== ================= ================
1,564 1,171
=========================================================== ================= ================
Key Management Personnel
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, including the Directors of the Company.
2016 2015
GBP'000 GBP'000
=================== ============= =============
Fees and salaries 287 202
Benefits in kind 3 7
290 209
=================== ============= =============
The emoluments of the highest paid director Christopher Evans were GBP96,000 (2015: Mr Abby Hardoon GBP68,000).
The Group does not operate a defined benefits pension scheme and executive Directors who are entitled to receive pension contributions may nominate a defined contribution scheme into which the Company makes pension contributions. No pension contributions have been made in 2016 or 2015, though provision has been made in the accounts for pensions due of GBP8,700.
The fees relating to non-executive Directors are in some cases payable to third parties in connection with the provision of their services.
8. Share based payments and warrants
The Company has granted a number of EMI options. The Directors have the discretion to grant options to subscribe for ordinary shares up to a maximum of 10 per cent of the Company's issued share capital. Options can be granted to any employee of the Group. There is no performance criteria associated with the options. The weighted average exercise price is 1.76p per share.
Rights to options over ordinary shares of the Company are summarised as follows:
No. of Ordinary Shares
Grant Exercise Exercise At 31 Granted Waived At 31
date period price March March
2015 2015
============= ========== ========= ========== ========== ============ ==========
31 July
2007 to
30 July
24-Aug-07 2017 0.7p 89,286 - - 89,286
19 Dec
2012 to
18 Dec
19-Dec-12 2022 2p 4,025,000 - (1,850,000) 2,175,000
12 Dec
2013 to
11 Dec
12-Dec-13 2023 1.5p 825,000 - (200,000) 625,000
02 Mar
2015 to
01 Mar
02-Mar-15 2025 1.57p 300,000 - (200,000) 100,000
14 Aug
2015 to
13 Aug
14-Aug-15 2025 1.7p - 1,000,000 - 1,000,000
21 Feb
2016 to
20 Feb
21-Feb-2016 2026 1.38p - 475,000 - 475,000
============= ========== ========= ========== ========== ============ ==========
5,239,286 1,475,000 (2,250,000) 4,464,286
======================== ========= ========== ========== ============ ==========
The options have been valued, using the Black
Scholes method, using the following assumptions:
Number of instruments
granted 89,286 4,025,000 1,900,000
Grant date 23-Mar-09 19-Dec-12 12-Dec-13
Expiry date 30-Jul-17 18-Dec-22 11-Dec-23
Contract term (years) 8.2 10 10
Exercise price 0.7p 2p 1.5p
Share price at granting 5p 2.5p 2.125p Annual risk free rate (%) 5% 0.5% 0.5% Annual expected dividend yield (%) 0% 0% 0% Volatility (%) 50% 40% 90% Fair value per grant instrument 0.46p 1.36p 1.86p ========================== ========== ========== ========== Number of instruments granted 300,000 1,000,000 475,000 Grant date 12-Feb-15 14-Aug-15 21-Feb-16 Expiry date 11-Feb-25 13-Aug-25 20-Feb-26 Contract term (years) 10 10 10 Exercise price 1.57p 1.7p 1.38p Share price at granting 1.55p 1.7p 1.77p Annual risk free rate (%) 0.5% 0.5% 0.5% Annual expected dividend yield (%) 0% 0% 0% Volatility (%) 40% 90% 55% Fair value per grant instrument 0.8p 1.44p 1.19p The inputs to the share valuation model utilised at the grant of option is shown in the tables above. Management has determined volatility using their knowledge of the business.
At 31 March 2016 there were 5,600,000 outstanding warrants to subscribe for the ordinary share capital of the Company as follows:
No. of Warrants and Exercise
price
===============================
Grant date Expiry Date 5p Total
============ ============= =============== ==============
09.01.12 08.01.22 5,600,000 5,600,000
============ ============= =============== ==============
The fair value of the convertible loan warrants has been calculated at 0.009p based on the following assumptions - share price at granting 1.25p, annual risk free rate 0.5%, and volatility 20%. No provision has been made for the convertible loan note warrants in shared based payments.
9. Earnings per share
2016 2015
Profit (loss) for the financial GBP248,000 (GBP84,000)
year attributable to shareholders
Weighted number of equity
shares in issue 483,059,433 456,047,673
Basic earnings (loss) per GBP0.0006 (GBP0.0002)
share
Diluted loss per share GBP0.0006 (GBP0.0002)
==================================== ============ ============
10. Intangible assets
Website Development Software Customer Positive
Group Cost Cost Licences relationships goodwill Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=================== ======== ============ ========= ============== ========= ========
Cost
At 1 April
2014 166 232 - 1,547 2,576 4,521
Additions 31 - 3 - - 34
Acquired
from acquisition 4 367 1,878 2,255
Disposals - - - - - -
=================== ======== ============ ========= ============== ========= ========
At 31 March
2015 197 232 7 1,914 4,454 6,810
At 1 April
2015 197 232 7 1,914 4,454 6,810
Additions - - 54 - - 54
Disposals - - - - - -
=================== ======== ============ ========= ============== ========= ========
At 31 March
2016 197 232 61 1,914 4,454 6,858
Accumulated amortisation
and impairment
At 1 April
2014 166 232 - 82 - 480
On disposals - - - - - -
Charge for
the year 3 - 1 272 - 276
=================== ======== ============ ========= ============== ========= ========
At 31 March
2015 169 232 1 354 - 756
At 1 April
2015 169 232 1 354 - 756
On disposals - - - - - -
Charge for
the year 11 - 7 301 - 319
=================== ======== ============ ========= ============== ========= ========
At 31 March
2016 180 232 8 655 - 1,075
Net book
value
At 31 March
2014 - - - 1,465 2,576 4,041
=================== ======== ============ ========= ============== ========= ========
At 31 March
2015 28 - 6 1,560 4,454 6,054
=================== ======== ============ ========= ============== ========= ========
At 31 March
2016 17 - 53 1,259 4,454 5,783
=================== ======== ============ ========= ============== ========= ========
The Company held no Intangible assets at 31 March 2016 or 31 March 2015.
All amortisation and impairment charges are included in the depreciation, amortisation and impairment of non-financial assets classification, which is disclosed as administrative expenses in the statement of comprehensive income.
During the year, goodwill was reviewed for impairment in accordance with IAS 36 "Impairment of Assets". No impairment charges arose as a result of this review.
The recoverable amount is determined based on discounted cash flow basis and is allocated to individual cash generating units. The calculation uses pre-tax cash flow projections based on financial budgets approved by the Board covering a two year period. Cash flows beyond the two year period are extrapolated using the estimated growth rates stated below. The growth rates and margins used to estimate future performance are based on past performance and the experience of growth rates.
The carrying value of each CGU is as follows:-
2016 2015
GBP'000 GBP'000
================= ======== ========
SME Mass Market 620 598
Managed Hosting 4,977 5,298
================= ======== ========
5,597 5,896
================= ======== ========
The assumptions used for the impairment reviews are as follows
SME Mass Managed
Market Hosting
Discount rate 15% 15%
Growth rate year 2 to year 5 1% 10%
Terminal growth rate 1% 5%
Forecast period for which cashflows 2 years 2 years
are estimated
===================================== ========= =========
The Group had no contractual liability for development costs at 31(st) March 2016. As a result of the impairment testing carried out on the basis of these estimates and assumptions, no impairment provisions are required.
11. Property Plant and Equipment
Furniture
and
Group equipment Total
GBP'000 GBP'000
=========================== ========== ========
Cost
At 1 April 2014 973 973
Additions 316 316
Disposals (5) (5)
Acquisition of subsidiary 57 57
=========================== ========== ========
At 31 March 2015 1,341 1,341
At 1 April 2015 1,341 1,341
Additions 161 161
Disposals (11) (11)
At 31 March 2016 1,491 1,491
Accumulated depreciation
At 1 April 2014 491 491
On disposal (5) (5)
Charge for the year 263 263
=========================== ========== ========
At 31 March 2015 749 749
At 1 April 2015 749 749
On disposal (2) (2)
Charge for the year 292 292
=========================== ========== ========
At 31 March 2015 1,041 1,041
Net book value
At 31 March 2014 482 482
=========================== ========== ========
At 31 March 2015 592 592
=========================== ========== ========
At 31 March 2016 450 450
=========================== ========== ========
Included in the net book value of GBP450,000 (2015: GBP592,000) for furniture and equipment are assets held under finance leases with a NBV of GBP151,000 (2015: GBP269,000).
The depreciation for the year on these assets was GBP77,000 (2014: GBP107,000).
Furniture
and
Company equipment Total
GBP'000 GBP'000
========================== ========== ========
Cost
At 1 April 2014 - -
Additions 3 3
Disposals - -
At 31 March 2015 3 3
At 1 April 2015 3 3
Additions 42 42
Disposals - -
At 31 March 2016 45 45
Accumulated depreciation
At 1 April 2014 - -
On disposal - -
Charge for the year - -
========================== ========== ========
At 31 March 2015 - -
At 1 April 2015 - -
On disposal - -
Charge for the year 12 12
========================== ========== ========
At 31 March 2015 12 12
Net book value
At 31 March 2014 - -
========================== ========== ========
At 31 March 2015 3 3
========================== ========== ========
At 31 March 2016 33 33
========================== ========== ========
The Company held no finance leases at 31 March 2016 or 31 March 2015.
12. Investments
Company Company
2016 2015
GBP'000 GBP'000
========================================= ============ ============
Investment in Subsidiaries
At 1 April 2015 6,575 5,147
Additions - 2,293
Impairment - (865)
========================================= ============ ============
Cost 31 March 2016 6,575 6,575
========================================= ============ ============
The Company's subsidiary undertakings all of
which are wholly owned (unless otherwise stated)
and included in the consolidated accounts are:
Undertaking Registration Principal activity
========================= ============== ==========================
Daily Internet Services England SME Mass Market Hosting
Limited
Netplan Internet England Managed hosting
Solutions Limited
Netplan LLC* USA Managed hosting
NameHOG Limited England Dormant
Q4Ex Limited England Dormant
18a Bridge Street England Dormant
Limited
========================= ============== ==========================
*Netplan LLC is a wholly owned subsidiary of Netplan Internet Solutions Ltd
The recoverable amounts have been determined from discounted cash flow calculations based on cash flow projections from approved budgets covering a one-year period to 31 March 2017. The major assumptions can be found in note 10.
13. Loans and borrowings
The book value and fair value of loans and borrowings are as follows:
Group Company Group Company
2016 2016 2015 2015
Non-Current GBP'000 GBP'000 GBP'000 GBP'000
======================== ======== ======== ======== ========
Finance lease creditor 91 - 126 -
======================== ======== ======== ======== ========
91 - 126 -
======================== ======== ======== ======== ========
2016 2016 2015 2015
Current GBP'000 GBP'000 GBP'000 GBP'000
======================== ======== ======== ======== ========
Convertible loan - - 103 103
Other loan 105 - 175 -
Finance lease creditor 111 - 108 -
======================== ======== ======== ======== ========
216 - 386 103
======================== ======== ======== ======== ========
Convertible Loan notes
During the year twenty-two GBP5,000 convertible loan notes were redeemed, there are no further convertible loan notes outstanding as at 31 March 2016.
14. Leases
Group finance leases
Future lease payments Minimum Present
are due as follows: lease payments Interest value
2015 2015 2015
GBP'000 GBP'000 GBP'000
========================= ================ ========= ========
Not later than one year 125 17 108
Later than one year and
not later than 5 years 133 7 126
Later than 5 years - - -
========================= ================ ========= ========
258 24 234
========================= ================ ========= ========
Minimum Interest Present
lease payments value
2016 2016 2016
GBP'000 GBP'000 GBP'000
========================= ================ ========= ========
Not later than one year 126 15 111
Later than one year and
not later than 5 years 97 6 91
Later than 5 years - - -
========================= ================ ========= ========
223 21 202
========================= ================ ========= ========
The Company has no finance leases.
Group operating leases
The total future value of minimum lease payments
is due as follows:
Leasehold Leasehold
Property Other Property Other
2016 2016 2015 2015
GBP'000 GBP'000 GBP'000 GBP'000
==================== ========== ======== ========== ========
Within one year 60 - 78 -
Within two to five
years 131 - 168 -
After five years 35 - 58 -
==================== ========== ======== ========== ========
226 - 304 -
==================== ========== ======== ========== ========
The Company has no operating leases.
15. Share capital
Group Company Group Company
2016 2016 2015 2015
GBP'000 GBP'000 GBP'000 GBP'000
============================== ======== ======== ======== ========
Allotted, called up and
fully paid
At start of year 479,791,101
Ordinary shares of 0.5p
each 2,399 2,399 2,038 2,038
Issued during the year
30,588,235 Ordinary shares
of 0.5p 153 153 361 361
============================== ======== ======== ======== ========
At end of year 510,379,336
Ordinary shares of 0.5p 2,552 2,552 2,399 2,399
============================== ======== ======== ======== ========
During the year the Company issued 30,588,235 ordinary shares of 0.5p each. These were issued at 1.7p per share in part settlement to the Q4Ex shareholders.
Under the terms of the EMI and unapproved share options a further 46,574,000 ordinary shares could be issued with a nominal value of GBP232,870.
16. Contingent liabilities
There are no contingent liabilities at the year-end for either the group or company.
17. Related party transactions
Details of Directors' remuneration are given
in the Directors' Remuneration Report. Other
related party transactions are as follows:-
Transaction Balance
value Due to Related
Party
2015 2016 2015 2016
Related party Type of GBP'000 GBP'000 GBP'000 GBP'000
relationship Transaction
================ ========================= ======== ======== ======== ========
Use of personal
credit cards to
pay online suppliers
and rent of office
Directors building* 412 450 34 0
Companies
in which
directors
or their
immediate
family have
a significant Provision of management
/ controlling services and website
interest design 17 58 9 1
*The practice of using personal credit cards to pay anything other than incidental expenses was ceased in the financial year, the company no longer permits this by policy.
18. Prior year restatement
An amount of GBP928,000 has been reclassified from the share premium account to the other reserve to reflect the amount subscribed for share capital in excess of nominal value of the acquisition of another company. This has increased the previously reported other reserve by GBP928,000 and reduced the previously reported share premium reserve by GBP928,000. This adjustment has had no impact on the reported net assets or loss for the year ended 31 March 2015.
19. The financial information set out above does not comprise the Company's statutory accounts. The Annual Report and Financial Statements for the year ended 31 March 2015 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statement for the year ended 31 March 2015 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
20. The Independent Auditors' Report on the Annual Report and Financial Statement for the year ended 31 March 2016 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. These will be delivered to the Registrar of Companies following the annual general meeting.
21. The Group's full statutory financial statements for 31 March 2016 have been prepared in accordance with International Financial Reporting Standards (IFRSs and IFRIC interpretations) as endorsed by the European Union ("endorsed IFRS") and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under endorsed IFRS.
22. This preliminary announcement was approved by the Board of directors on 31 May 2016.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UAVNRNVAVOAR
(END) Dow Jones Newswires
June 01, 2016 02:00 ET (06:00 GMT)
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