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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% | 30.50 | 30.00 | 31.00 | 30.50 | 30.50 | 30.50 | 1,843 | 07:43:20 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Computer Related Svcs, Nec | 21.65M | -7k | -0.0001 | -3,050.00 | 14.93M |
From Apr 2019 to Apr 2024
TIDMSYS
RNS Number : 6815S
SysGroup PLC
27 June 2018
27 June 2018
SysGroup plc
("SysGroup" or the "Company" or the "Group")
Final Results for the year ended 31 March 2018
SysGroup PLC (AIM:SYS), the managed IT services and cloud hosting provider is pleased to announce its final results for the year ended 31 March 2018.
HIGHLIGHTS
Financial
-- Record revenues delivered with revenue increasing by 45.7% to GBP10.45 million (2017: GBP7.17 million) benefiting from the contribution of Rockford IT Ltd ("Rockford IT") in H2 2018
o GBP7.13m of revenue is recurring in nature (2017: GBP5.0m)
o Organic revenue growth of 20.8% generating revenues of GBP8.65 million
-- Adjusted EBITDA* increased by 61.3% to GBP1.0 million (2017: GBP0.62 million)
o GBP0.86 million EBITDA delivered in H2
-- Adjusted PBT** growth of 104.2% to GBP0.49 million (2017: GBP0.24 million) -- Cash generated from operations of GBP0.79 million (GBP1.00 million) -- Net (debt)/cash*** of GBP(0.92) million (2017: GBP3.07 million)
Operational
Hot Features
Premium
-- Integration of System Professional Ltd ("Sys-Pro") completed
-- Acquisition of Rockford IT in November 2017 for an aggregate consideration of GBP3.85 million and subsequent integration completed
-- Improved sales and marketing functions
o Creation of a single team focused on managed IT services and cloud hosting
o Appointment of a Group Marketing Director
o Investment in a single CRM system, to unify the sales operations onto a single platform
-- Three year cGBP1.0 million contract win with T.J. Morris Limited demonstrating success of sales and marketing focus
Board transition
-- Mark Quartermaine appointed as an independent Non-Executive Director in November 2017 -- Mike Fletcher appointed as an independent Non-Executive Director in January 2018
-- New executive team with the appointment of Adam Binks as CEO, having joined the Board as COO in October 2017, and Martin Audcent appointed as CFO post period end
Post period-end developments
-- Transition to a single brand complete
-- Momentum generated in H2 FY2018 continuing into H1 FY2019 with trading in line with expectations
2018 2017 2018% increase/decrease
Revenue (continuing operations) GBP10.45m GBP7.17m +45.7%
------------ ----------- ------------------------
Gross Margin GBP5.99m GBP4.38m +36.8%
------------ ----------- ------------------------
Gross Margin % 57.4% 61.3% (6.4)%
------------ ----------- ------------------------
Adjusted EBITDA* (continuing
operations) GBP1.00m GBP0.62m +61.3%
------------ ----------- ------------------------
Adjusted PBT** GBP0.49m GBP0.24m +104.2%
------------ ----------- ------------------------
(Loss) before tax (continuing
operations) GBP(0.007)m GBP(1.35)m -
------------ ----------- ------------------------
Operating cash inflow GBP0.79m GBP1.0m (21.0)%
------------ ----------- ------------------------
Net (debt)/cash*** GBP(0.92)m GBP3.07m -
------------ ----------- ------------------------
(*) Adjusted EBITDA, is earnings before interest, taxation, depreciation, amortisation, acquisition and restructuring costs, fair value adjustments and share based payments
(**) Adjusted PBT is profit before taxation after adding back share-based payments, amortisation on acquired intangibles, fair value adjustments, share based payments and costs relating to acquisition and restructuring
(***) Net (debt)/cash represents cash balances less loans and finance lease liabilities
Adam Binks, Chief Executive Officer commented:
"I am delighted to report, for the first time as Chief Executive Officer, what has been a transformational year for SysGroup. The acquisition of Rockford IT has added further capabilities to the Group's offering as well as providing additional scale. We have completed the integration of the previously acquired businesses, significantly strengthened the Board and begun to see the initial success of our newly focused sales and marketing teams.
Group revenue grew by 45.7% largely driven by the Managed Services division and supplemented by value added resale. Our sales pipeline continues to grow and I am confident we are now well placed to take advantage of the strong market dynamics as the demand for managed IT services and cloud hosting continues to grow.
We remain committed to investment in order to accelerate our organic growth strategy whilst continuing to assess complementary strategic acquisition opportunities.
I am confident we can continue to build on the strong momentum we've developed in FY2018 into FY2019 and beyond."
For further information please contact: Tel: 0151 559 1777 SysGroup plc Adam Binks, CEO Julian Llewellyn, CFO Shore Capital (Nomad and Broker) Tel: 020 7408 4090 Edward Mansfield / Anita Ghanekar Alma PR (Financial PR) Tel: 020 8004 4218 Josh Royston / Helena Bogle
About SysGroup
SysGroup is a leading provider of Managed IT Services, Cloud Hosting, and expert IT Consultancy. The Group delivers solutions that enable clients to understand and benefit from industry leading technologies and advanced hosting capabilities. SysGroup focuses on a customer's strategic and operational requirements - enabling clients to free up resources, grow their core business and avoid the distractions and complexity of delivering IT services.
The Group has offices in Liverpool, Coventry, London and Telford.
For more information, visit http://www.sysgroupplc.com
STRATEGIC REPORT
Chairman's statement
SysGroup made considerable progress during the financial year to 31 March 2018. Revenue increased by 45.7% (including organic growth of 20.8%) with Adjusted EBITDA improving by 61.3%. Recurring revenue for the year increased to GBP7.13m (2017: GBP5.0m), evidence that the transformation of the Group into a trusted provider of managed IT services and cloud hosting is now complete.
During the course of the year Chris Evans left the business to focus on his health following long-standing issues. The Board naturally considered his replacement extensively and ultimately were delighted that Adam Binks, previously Chief Operating Officer, agreed to step up to become Chief Executive Officer in April 2018.
Adam has been integral to the development of SysGroup and has an unrivalled knowledge of our business through his previous role as Chief Operating Officer. The Board has been impressed with his strategic vision for the Company. As separately announced this morning, Martin Audcent will be joining the Company as Chief Financial Officer in July, following Julian Llewellyn's decision to pursue other opportunities. Julian will remain with the Group for a brief period to oversee an orderly handover and we thank him for his contribution to the Group and wish him success for the future. Martin's appointment completes an Executive team positioned to drive this business through its next phase of growth and which will be ably supported by a Board which was strengthened further during the year with the appointments of Mark Quartermaine and Mike Fletcher as Non-Executive Directors. Mark and Mike bring a significant blend of industry and listed company expertise.
The market opportunity for SysGroup is both considerable and growing as the secular trend continues towards trusted, outsourced partners driven by increasingly complex regulatory requirements and security needs. The Board believes that it has the right strategy and the right team in place to execute. With further investment in the current year we are confident that we can take advantage of this opportunity and look forward to another busy year.
Michael Edelson
Chairman
27 June 2018
Chief Executive Officer's report
Introduction
During the financial year ended 31 March 2018 my role was that of Chief Operating Officer, joining the Board of Directors at the end of October 2017 before taking up the post of Chief Executive Officer at the outset of the current financial year. I believe that the operational insights that I gained as COO provide the right grounding for driving the strategic direction of the business. SysGroup is well placed for continued profitable organic and acquisitive growth. I'd also like to thank Michael Edelson for his contribution and support during his tenure as Interim Executive Chairman towards the end of the period.
In 2016 SysGroup commenced a transition of the business to become a trusted provider of managed IT services and cloud hosting. This has been executed through the acquisitions of Sys-Pro (2016) and Rockford IT (2017) and disposal of the Group's SME mass market business (2016). These corporate actions, coupled with structural change within the organisation, have transformed the Group. The Group now has a robust platform, underpinned by high levels of recurring income, to execute its growth strategy.
Following the integration of the Sys-Pro and Rockford IT businesses the Group now has the capability to offer fully managed end to end solutions for its prospects and customers. From managed end user support through to hosted infrastructure, we have an excellent platform from which to deliver further organic growth. Another beneficial aspect of the integration is that we have been able to establish and develop a highly capable senior leadership team across the Group and an engaged workforce who are committed to executing our strategic objectives.
Market
The overall market for our services continues to be buoyant. Companies are increasingly looking for trusted partners to manage their IT needs, driven by the growing focus on security and burdens of compliance and governance, rather than applying internal resource that could struggle with the changing regulatory dynamics. As well as ensuring the best solutions this frees up time and resources for management teams to focus on their business operations.
As with most evolving and growing markets, ours is highly fragmented with a vast array of providers on a national and regional basis varying from full service offerings such as SysGroup through to niche operators.
Strategy
SysGroup's clear focus is to expand its position as a trusted provider of managed IT services and cloud hosting to clients in the UK. The Board believes that a business focused on the provision of managed IT services offers the highest growth opportunity and the potential for increased margins and longer-term contracts, thereby providing greater revenue visibility for the future. In pursuit of this strategy, the Group has been positioned as an extension of a customer's existing IT department, with an emphasis on consultative-led sales to guide customers through the complexities and developments in the market.
Acquisitions
In November 2017 the Group acquired Rockford IT for an aggregate consideration of GBP3.85m in cash (on a cash-free/debt-free basis). Rockford enhanced the Group's offering in hosting and security services as well as complementing with connectivity capabilities which now completes the product offering for the provision of end to end managed solutions.
Acquisitions will continue to play a significant role in the Group's strategy to complement organic growth. As previously mentioned, the market in which we operate remains highly fragmented and we believe that we are well placed to be a consolidator. The Board remains alert to earnings enhancing opportunities which will enable us to expand our customer base and / or enhance our offering alongside our internal initiatives.
Sales and Marketing
As highlighted in the group's Half Year Report, a number of strategic changes to the Sales and Marketing functions were implemented in the first half of the year to better support the business. The sales function was restructured to create a single team focused fully on managed IT services and cloud hosting, now headed up by the post-period appointment of Colin Deamer to the role of Group Sales Director. Colin was previously Group Sales Director at IDE Group Holding plc. All supporting teams have likewise been integrated across the Group with single teams operating across the service desk, infrastructure support, cloud delivery and professional services teams. Investments have been made in a new CRM system which has enabled us to unify our sales operations onto a single platform across the group.
In Marketing, the Group initiated a complete overhaul of the marketing efforts to create a new strategic marketing function. This included the appointment of Emmy Lippold to the newly created role of Group Marketing Director. Emmy has previously held senior positions in technology companies with Data8 Limited and Upland Software Inc. based in the USA. This has led to a much more coherent message and strategy with a newly embraced digital marketing capability.
The results of the improved sales and marketing functions are already being seen in the business, as evidenced by the three year contract with T.J Morris Limited which was announced in March of this year. This contract win came as a direct result of our improved marketing initiatives and underpinned the Board's belief in this strategy. As a result, further investments in marketing will be made throughout the current financial year. Whilst this will have an impact on profitability in the current year, the Board firmly believes that it will accelerate our rate of growth and enable us to better take advantage of the current market opportunity.
Financial review
In the following review, the numbers provided for 2017 exclude operations which were discontinued during that year, in order to give a meaningful comparison for progress achieved in the year to 31 March 2018.
Group revenue for the year grew by 45.7% to GBP10.45m for the year to 31 March 2018 (2017: GBP7.17m). Revenue growth was predominately driven by the Managed Services division and complemented by the value added resale services that the Group offers. Organic revenue growth was 20.8% for the year to 31 March 2018.
We continue to have good visibility of future revenues as the vast majority of our customers have entered into multi-year contracts. As at 31 March 2018 there is GBP0.43m of deferred revenue (2017: GBP0.47m) which will be released to profit in future periods.
Gross profit for the year was GBP5.99m (2017: GBP4.38m) representing a gross margin of 57.4% (2017: 61.2%). The reduction in gross margin is attributable to the change of sales mix during the year including the introduction of connectivity products which contribute less at the gross margin level. The loss before tax for the year of GBP(0.007)m was a significant improvement on the previous period (2017: GBP(1.35)m).
Adjusted earnings before interest, taxation, depreciation and amortisation ("EBITDA") for the year to 31 March 2018 increased by 61.3% to GBP1.0m (2017: GBP0.62m). Adjusted EBITDA is calculated after excluding acquisition and restructuring costs, share based payment costs and fair value adjustments. The Directors consider that an adjusted EBITDA figure is a more appropriate measure of the underlying performance of the business.
2018 2018 2017 2017
Revenue by operating segment GBP'000 % GBP'000 %
================================ ======== ===== ======== =====
Hosting/Managed Services 7,130 68% 5,400 69%
Value Added Reseller 3,321 32% 1,765 22%
SME Mass Market (discontinued) - 0% 700 9%
================================ ======== ===== ======== =====
10,451 100% 7,865 100%
================================ ======== ===== ======== =====
Balance sheet, cashflow and net (debt)/cash
Net cash inflow from operating activities during the year amounted to GBP0.79m (2017: GBP1.0m). Net debt (comprising cash balances less loans and finance lease liabilities) at 31 March 2018 was GBP(0.92)m (2017: net cash GBP3.07m). During the period the Group drew down GBP2.0m from an acquisition facility to part fund the acquisition of Rockford IT on 1 November 2017.
Summary and outlook
With the integration of acquired businesses and subsequent transformation of the Group now complete, I am confident that SysGroup is well placed to take advantage of strong market dynamics. The momentum within the business is demonstrated by the fact that GBP0.86 million of the Group's Adjusted EBITDA performance was delivered in the second half of the year.
We have a full end-to-end managed service offering which provides the solutions that our clients need in an increasingly complex regulatory environment and with the necessary levels of security to protect their businesses. We have a clear go-to-market strategy that has already started to deliver results, led by an impressive senior leadership team and supported by a highly engaged workforce and the appropriate levels of infrastructure.
Our successful track record of identifying and integrating acquisitions positions us well in a market ripe for further consolidation, which will complement and enhance our organic initiatives.
The current year has started well and trading in line with expectations supported by a growing pipeline of opportunities. The Board will continue to invest in this financial year as we look to accelerate our growth and target profitability improvements next year and beyond.
Adam Binks
Chief Executive Officer
27 June 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 MARCH 2018
2018 2017
(Restated*)
Group Group
Notes GBP'000 GBP'000
------------------------------------- ------ ---------- -------------
Revenue
Total group revenue - continuing
and discontinued operations 4 10,451 7,865
Revenue discontinued operations - 700
===================================== ====== ========== =============
Revenue - continuing operations 10,451 7,165
Cost of sales (4,456) (2,783)
Gross profit 5,995 4,382
===================================== ====== ========== =============
Operating expenses before
depreciation, amortisation,
acquisition and restructuring
costs, fair value adjustment
and share based payments (4,995) (3,767)
===================================== ====== ========== =============
Adjusted EBITDA - continuing 1,000 618
====== ========== =============
Depreciation 14 (372) (324)
Amortisation of intangibles 13 (500) (326)
Acquisition and restructuring
costs 8 (581) (791)
Fair value adjustments 3 540 (498)
Share based payments 9 (10) -
===================================== ====== ========== =============
Administrative expenses (5,918) (5,706)
Profit/(loss) from operations 77 (1,324) ===================================== ====== ========== ============= Finance costs 6 (84) (27) Loss before taxation (7) (1,351) Taxation 12 245 20 ===================================== ====== ========== ============= Profit/(loss) from continuing operations 238 (1,331) Profit from discontinued operations - net of income tax 23 - 1,508 ===================================== ====== ========== ============= Total comprehensive profit attributable to the equity holders of the company 238 177 Basic earnings per share (EPS) 11 GBP0.0103 GBP0.0090 Diluted earnings per share (EPS) 11 GBP0.0102 GBP0.0088 ===================================== ====== ========== ============= *Restated - note 22
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2018
2018 2017
(Restated*)
Group Group
Notes GBP'000 GBP'000
================================================ ====== ======== ============
Assets
Non-current assets
Goodwill 13 9,727 7,620
Intangible assets 13 3,094 1,617
Property, plant and equipment 14 809 666
================================================ ====== ======== ============
13,630 9,903
Current assets
Trade and other receivables 16 1,624 1,311
Cash and cash equivalents 1,315 3,473
================================================ ====== ======== ============
2,939 4,784
================================================ ====== ======== ============
Total assets 16,569 14,687
================================================ ====== ======== ============
Equity and liabilities
Equity attributable to the equity shareholders
of the parent
Called up share capital 21 231 231
Share premium reserve - -
Other reserve 2,010 2,000
Translation reserve 4 4
Retained earnings 9,092 8,854
================================================ ====== ======== ============
11,337 11,089
================================================ ====== ======== ============
Non-current liabilities
Obligations under finance leases 19 128 184
Contingent consideration due on acquisitions 17 - 690
Bank loan 18 1,742 -
Deferred taxation 12 674 365
2,544 1,239
================================================ ====== ======== ============
Current liabilities
Trade and other payables 17 1,900 1,671
Deferred income 17 425 465
Bank loan 18 216 -
Obligations under finance leases 19 147 223
================================================ ====== ======== ============
2,688 2,359
================================================ ====== ======== ============
Total Equity and liabilities 16,569 14,687
================================================ ====== ======== ============
*Restated - notes 21 and 22
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2018
2018 2017
(Restated*)
Company Company
Notes GBP'000 GBP'000
======================================== ====== ======== ============
Assets
Non-current assets
Investments 15 14,279 10,429
Intangible assets 13 25 -
Property, plant and equipment 14 54 56
======================================== ====== ======== ============
14,358 10,485
Current assets
Trade and other receivables 16 135 100
Cash and cash equivalents 115 2,077
======================================== ====== ======== ============
250 2,177
======================================== ====== ======== ============
Total assets 14,608 12,662
======================================== ====== ======== ============
Equity and liabilities
Equity attributable to the equity
shareholders of the parent
Called up share capital 21 231 231
Share premium reserve - -
Other reserve 2,010 2,000
Retained earnings 7,533 8,059
======================================== ====== ======== ============
9,774 10,290
======================================== ====== ======== ============
Non-current liabilities
Contingent consideration due
on acquisitions 17 - 690
Bank loan 18 1,742 -
1,742 690
======================================== ====== ======== ============
Current liabilities
Bank loan 18 216 -
Amounts due to subsidiary undertakings 2,584 1,531
Trade and other payables 17 292 151
3,092 1,682
======================================== ====== ======== ============
Total Equity and liabilities 14,608 12,662
======================================== ====== ======== ============
Restated - notes 21 and 22
As permitted by section 408 of the Companies Act 2006, the holding company's profit and loss statement has not been included in the financial statements.
For the year ended 31 March 2018, the Company made a loss of GBP526,783 (2017: loss of GBP85,672)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 MARCH 2018
Attributable to equity holders of the parent
================================= ==================================================================
Share
Share premium Other Translation Retained
capital account reserve reserve profit Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================================= ========= ========= ========= ============ ========= ========
At 1 April 2016 2,552 6,493 1,008 - (5,118) 4,935
================================= ========= ========= ========= ============ ========= ========
Profit for the period - - - - 378 378
Translation of foreign
subsidiaries - - - 4 - 4
Issue of share capital
- placing 1,686 3,367 - - - 5,053
Issue of share capital
- consideration 382 - 616 - - 998
Expenses of share issue - (277) - - - (277)
Capital reorganisation - (9,583) - - 9,583 -
Movement in share option
reserve - - (2) - - (2)
At 31 March 2017 (as
previously reported) 4,620 - 1,622 4 4,843 11,089
================================= ========= ========= ========= ============ ========= ========
Treatment of the premium
on placing shares (note
22) (180) - 180 - - -
Capital reorganisation
(note 22) (4,209) - - - 4,209 -
Q4Ex - contingent consideration
(note 22) - - 198 - (198) -
================================= ========= ========= ========= ============ ========= ========
At 31 March 2017 (as
restated) 231 - 2,000 4 8,854 11,089
================================= ========= ========= ========= ============ ========= ========
Profit for the period - - - - 238 238
Share based payments - - 10 - - 10
At 31 March 2018 231 - 2,010 4 9,092 11,337
================================= ========= ========= ========= ============ ========= ========
The following describes the nature and purpose of each reserve within
equity:
=====================================================================================================
Reserve Description and purpose
================================= ==================================================================
Share premium account Amount subscribed for share capital 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 amounts in excess of nominal value for
shares issued as consideration.
Retained profit All other net gains and losses and transactions
with owners (e.g. dividends) not recognised
elsewhere.
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 MARCH 2018
Attributable to equity holders of the
Company
================================= ====================================================
Share
Share premium Other Retained
capital account reserve profits Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================================= ========= ========= ========= ========= ========
At 1 April 2016 2,552 6,493 1,008 (5,447) 4,606
================================= ========= ========= ========= ========= ========
Loss for the period - - - (86) (86)
Issue of share capital
- share placing 1,686 3,367 - - 5,053
Issue of share capital
- consideration shares 382 - 616 - 998
Expenses of share issue - (277) - - (277)
Capital reorganisation - (9,583) - 9,583 -
Movement in share option
reserve - - (2) (2) (4)
At 31 March 2017 (as
previously reported) 4,620 - 1,622 4,048 10,290
================================= ========= ========= ========= ========= ========
Treatment of the premium
on placing shares (note
22) (180) - 180 - -
Capital reorganisation
(note 22) (4,209) - - 4,209 -
Q4Ex - contingent consideration
(note 22) - - 198 (198) -
At 31 March 2017 (as
restated) 231 - 2,000 8,059 10,290
================================= ========= ========= ========= ========= ========
Loss for the period - - - (526) (526)
Share based payments - - 10 - 10
At 31 March 2018 231 - 2,010 7,533 9,774
================================= ========= ========= ========= ========= ========
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 MARCH 2018
2018 2017
(Restated)
Group Group
GBP'000 GBP'000
=================================================== ======== ===========
Cash flows used in operating activities
Profit after tax 238 177
Profit net of tax - discontinued operations - (1,508)
Adjustments for:
Depreciation and other amortisation 872 650
Fair value adjustment on contingent consideration (540) 501
Finance costs 84 27
Acquisition costs 581 791
Share based payments 10 -
Taxation (245) (20)
=================================================== ======== ===========
Operating cash flows before movement in
working capital 1,000 618
=================================================== ======== ===========
Decrease / (increase) in trade and other
receivables 190 (163)
(Decrease) / increase in trade and other
payables (405) 544
Taxation refunded/ (paid) 80 (197)
Cash generated from operations 865 802
=================================================== ======== ===========
Cash flows from investing activities
Payments to acquire property, plant & equipment (212) (380)
Acquisition and integration costs (592) (742)
Deferred consideration (150) -
Payments to acquire intangible assets (3,523) (3,425)
=================================================== ======== ===========
Net cash used in investing activities (4,477) (4,547)
=================================================== ======== ===========
Cash flows from financing activities
Net proceeds from issue of ordinary share
capital - 4,722
Repayment of loan facility - (105)
Interest element on acquisition loan (49) -
Interest element of finance lease payments (17) (27)
Drawdown of acquisition facility (net of 1,940 -
fees)
Drawdown of finance lease facility - 189
Capital repayment of finance leases (228) (153)
=================================================== ======== ===========
Net cash from financing activities 1,646 4,626
=================================================== ======== ===========
Net (decrease)/ increase in cash and cash
equivalents from continuing operations (1,966) 881
=================================================== ======== ===========
Cash flows from discontinued operations
=================================================== ======== ===========
Net cash used for operating activities (192) 99
Net cash provided for investing activities - 1,987
Net cash used for financing activities - (7)
=================================================== ======== ===========
Net (decrease)/ increase in cash and cash
equivalents from discontinued operations (192) 2,079
=================================================== ======== ===========
Cash and cash equivalents at the beginning
of the year 3,473 513
=================================================== ======== ===========
Cash and cash equivalents at the end of
the year 1,315 3,473
=================================================== ======== ===========
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEARED 31 MARCH 2018
2018 2017
(Restated)
Company Company
GBP'000 GBP'000
=================================================== ======== ===========
Cash flows used in operating activities
Loss after tax (526) (86)
Adjustments for:
Depreciation and other amortisation 26 15
Fair value adjustment on contingent consideration (540) 300
Impairment of investments 1,099
Finance costs 67 -
Acquisition and restructuring costs 316 791
Share based payments 10 -
Taxation (3) - Operating cash flows before movement in working capital (650) 2,119 =================================================== ======== =========== (Increase) in trade and other receivables (19) (66) Increase in trade and other payables 1,188 86 Taxation refund received 3 - Cash generated from operations 522 2,139 =================================================== ======== =========== Cash flows from investing activities Payments to acquire property, plant & equipment (24) (37) Payments to acquire intangible fixed assets (25) - Acquisition and restructuring costs (476) (742) Payments for acquisitions (3,850) (3,720) =================================================== ======== =========== Net cash used in investing activities (4,375) (4,499) =================================================== ======== =========== Cash flows from financing activities Net proceeds from issue of ordinary share capital - 4,722 Received from subsidiary company - (297) Drawdown of acquisition facility (net of 1,940 - fees) Interest element on acquisition loan (49) - Net cash from financing activities 1,891 4,425 =================================================== ======== =========== Net (decrease)/ increase in cash and cash equivalents from continuing operations (1,962) 2,065 =================================================== ======== =========== Cash and cash equivalents at the beginning of the year 2,077 12 =================================================== ======== =========== Cash and cash equivalents at the end of the year 115 2,077 =================================================== ======== ===========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 MARCH 2018
1. Accounting policies
SysGroup Plc (the 'Company') is a company incorporated and domiciled in the United Kingdom. The company's registered office is at Walker House, Exchange Flags, Liverpool, L2 3YL. These consolidated financial statements comprise the Company and its subsidiaries (together referred to as the 'Group').
Basis of preparation
The preliminary financial information does not constitute statutory accounts for the financial years ended 31 March 2018 and 31 March 2017, but has been derived from those accounts. The accounting policies used in preparation of this preliminary announcement have remained unchanged from those set out in the 2017 annual report. Statutory accounts for 2017 have been delivered to the Registrar of Companies and those for the financial year ended 31 March 2018 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts and their reports were 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.
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 2020 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.
New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations have been issued during the year ended 31 March 2018 but are not yet effective, and therefore have not yet been adopted by the Group:
- IFRS 15 Revenue from Contracts with Customers is effective after 1 January 2018. This standard will change how revenue is recognised based on a framework. The interim accounts to 30 September 2018 will be prepared in accordance with IFRS15. IFRS15 seeks to identify linked revenue transactions and to recognise that revenue over the period in which benefits accrue to the customers. The potential impact on the Group has been assessed by management and there is not currently expected to be a significant impact.
- Amendments to IAS12 'Recognition of Deferred Tax Assets for Unrealised Losses' have not yet been endorsed but the IASB effective date will be 1 January 2018.
- IFRS 9 'Financial Instruments' is effective from 2018. This standard will simplify the classification of financial assets for measurement purposes but is not anticipated to have a significant impact on the financial statements.
- IFRS 16 Leases is expected to be applicable after 1 January 2019. If endorsed, this standard will affect the presentation of the Group financial statements with all leases apart from short term leases being recognised as on-balance sheet finance leases with a corresponding liability being the present value of lease payments. The potential impact on the Group has not yet been assessed by management.
The Group continues to monitor the potential impact of other new standards and interpretations which may be endorsed by the European Union and require adoption by the Group in future reporting periods.
The adoption of these standards does not have an impact on the results and net assets of the Group.
Revenue
Revenue is recognised to the extent that it is probable that the economic benefits associated with the transaction will flow into the Group. Revenue represents the fair value of amounts received or receivable for goods and services provided net of trade discounts and VAT. Revenue from the sale of managed IT services and cloud hosting is recognised evenly over the life of the contract as benefits accrue to the customer. Revenue from value added resale is recognised as these products or services are delivered. This revenue policy also applies to Rockford IT Ltd, acquired during the year.
Basis of consolidation
Where the company has control over an investee, it is classified as a subsidiary. The company controls an investee if all three of the following elements are present: power over the investee; exposure to variable returns from the investee; and the ability of the investor to use its power to affect those variable returns. Control is re-assessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquirer's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control ceases.
Business combinations
All business combinations are accounted for by applying the purchase method. On acquisition, all the subsidiaries' assets and liabilities that exist at the date of acquisition are recorded at their fair values reflecting the conditions at that date. The results of subsidiaries acquired in the period are included in the income statement from the date on which control is obtained.
Goodwill
Goodwill represents the excess of the cost of a business combination over the total acquisition date fair value of the identifiable assets, liabilities and contingent liabilities acquired. Goodwill is not amortised but is capitalised as an intangible asset with any impairment in carrying value being charged to the consolidated statement of comprehensive income. In determining the fair value of consideration, the fair value of equity issued is the market value of equity at the date of completion, and the fair value of contingent consideration is based on the expected future cashflows based on whether the Directors believe performance conditions will be met and thus the extent to which the further consideration will be payable. Where the fair value of identifiable assets, liabilities and contingent liabilities exceed the fair value of consideration paid, the excess is credited in full to the consolidated statement of comprehensive income on the acquisition date.
Impairment of non-financial assets
Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken annually at the financial year end. Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the asset's cash-generating unit (i.e. the lowest Group of assets in which the asset belongs for which there are separable identifiable cash flows that are largely independent of the cash flows from the other assets or Groups of assets). Goodwill is allocated on initial recognition to each of the Group's cash-generating units that are expected to benefit from the synergies of the combination giving rise to the goodwill.
The estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
Foreign currencies
Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the rate of exchange ruling at the balance sheet date and the gains or losses on translation are included in the consolidated statement of comprehensive income. The results of foreign subsidiaries that have a functional currency different from the group's presentation currency are translated at the average rates of exchange for the year. Assets and liabilities of foreign subsidiaries that have a functional currency different from the group's presentation currency, are translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising from the translation of the results of foreign subsidiaries and their opening net assets are recognised as a separate component of equity.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the Board of Directors.
Financial instruments
Financial instruments are classified and accounted for, according to the substance of the contractual arrangement, as either financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Financial assets
The Group's financial assets comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position. Trade receivables are stated at their nominal value and an impairment provision will be recognised if there is evidence that the amount is irrecoverable and will be shown in administrative expenses in the Consolidated Statement of Comprehensive Income. Cash and cash equivalents includes cash in hand and deposits held at call with banks.
Share capital
Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Group's ordinary shares are classified as equity instruments and are recorded at the proceeds received, net of direct issue costs. Proceeds of any share issue in excess of the nominal value of the share capital is recognised within the share premium account.
Financial liabilities
The Group classifies its financial liabilities into one of two categories, depending on the purpose for which it was acquired. The Group's accounting policy for each category is as follows:
Fair value through profit or loss
This category comprises only contingent consideration. They are carried in the statement of financial position at fair values with changes in fair value recognised in the consolidated income statement.
Other financial liabilities
Other financial liabilities include trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest rate method.
Fair value measurement hierarchy
IFRS 7 requires certain disclosures which require the classification of financial assets and financial liabilities measured at fair value to reflect the significance of the inputs used in making the fair value measurement. The fair value hierarchy has the following levels:
(a) Quoted prices in active markets for identical assets or liabilities (Level 1)
(b) Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) (Level 2); and
(c) Inputs from the asset or liability that are not based on observable market data (Level 3)
The level in the fair value hierarchy within which the financial asset or financial liability is categorised is determined on the basis of the lowest level input that is significant to the fair value measurement. Financial assets and financial liabilities are classified in their entirety into only one of the three levels.
Share based payments
The fair value of employee options, along with any share warrants granted, is charged to the consolidated statement of comprehensive income with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using the Black Scholes pricing model, considering the terms and conditions upon which the options were granted. The fair value of warrants is also reviewed to the extent that exercise of the warrants is considered likely.
Leases
Assets obtained under hire purchase contracts and finance leases are capitalised as tangible assets and depreciated over the shorter of the lease term and their useful lives. Obligations under such agreements are included in payables net of the finance charge allocated to future periods. The finance element of the rental payment is charged to the consolidated statement of comprehensive income so as to produce a constant periodic rate of charge on the net obligation outstanding in each period. Rentals payable under operating leases are charged against income on a straight-line basis over the lease term.
Property plant and equipment
Items of property, plant and equipment are stated at cost less depreciation. Depreciation is provided at annual rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, as follows:
IT hardware 20% - 33.3% straight line
Furniture and fittings 20% - 33.3% straight line Motor vehicles 25% straight line
Investment in subsidiaries
Fixed asset investments in the Parent Company are shown at cost less any provision for impairment as necessary.
Research and development
Research expenditure is written off to the consolidated statement of comprehensive income in the year in which the expenditure occurs. Development expenditure is treated in the same way unless the Directors are satisfied as to the technical, commercial and financial viability of individual projects, there is an intention to complete and sell the product and the costs can be easily measurable. In this situation, the expenditure is capitalised and the amortised expense is included in administrative expenses in the Consolidated Statement of Comprehensive Income over the years during which the Group is to benefit.
Intangible assets
Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques (see section related to critical estimates and judgements below).
The significant intangibles recognised by the Group, their estimated useful economic lives and the methods used to determine the cost of intangibles acquired in business combinations are as follows:
Intangible asset Estimated UEL Valuation method
Customer relationships 5-7 years Estimated discounted cash flow
Software and web design costs 3-5 years Cost less amortisation
Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base, except for differences arising on:
-- the initial recognition of goodwill;
-- the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and
-- investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is highly probable that relief against taxable profit will be available.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:
-- the same taxable Group company; or
-- different Group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.
Deferred tax liabilities are recognised on intangible assets and other temporary differences recognised in business combinations.
2 Significant accounting estimates and judgements
The preparation of this financial information requires management to make 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.
Revenue
Management make judgements in determining the appropriate timing of revenue recognition and in unbundling contracts that relate to the provision of more than one service and/or product.
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, taking into account sensitivities around future business performance, covering a range of outcomes and risks over levels of revenue, cost and cash generation. No impairment has been identified. More details including carrying values are included in note 13.
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 13.
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 assets 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 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 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
2018 2017 2018 2017
Financial assets GBP'000 GBP'000 GBP'000 GBP'000
============================= ======== ======== ======== ========
Loans and receivables
Cash and cash equivalents 1,315 3,473 115 2,077
Trade receivables 1,101 902 - -
============================= ======== ======== ======== ========
Total financial assets 2,416 4,375 115 2,077
============================= ======== ======== ======== ========
Group Company
2018 2017 2018 2017
Financial liabilities GBP'000 GBP'000 GBP'000 GBP'000
============================= ======== ======== ======== ========
At amortised cost
Trade and other payables 1,377 1,349 262 134
Amounts due to subsidiaries - - 2,584 1,531
Loans and other borrowings 2,233 407 1,958 -
============================= ======== ======== ======== ========
At fair value 3,610 1,756 4,804 1,665
Contingent consideration - 690 - 690
============================= ======== ======== ======== ========
Total financial liabilities 3,610 2,446 4,804 2,355
============================= ======== ======== ======== ========
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
(Restated) (Restated)
GBP'000 GBP'000
=============================== =========== ===========
Contingent consideration at
1 April 2016 435 435
Settled during the year (243) (243)
Notional interest charged 116 116
Fair value adjustment through
income statement 382 382
================================= =========== ===========
At 31 March 2017 690 690
Settled during the year (150) (150)
Notional interest charged 16 16
Fair value adjustment through
income statement (556) (556)
================================= =========== ===========
At 31 March 2018 - -
================================= =========== ===========
The fair value adjustment related to the change in fair value calculation of the contingent consideration payable on the System Professional acquisition.
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 2018 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================= ========== =========== ========= ========= =========
Trade and other payables 1,377 - - - -
Contingent consideration - - - - -
Loans and borrowings 91 272 1,826 44 -
============================= ========== =========== ========= ========= =========
Total 1,468 272 1,826 44 -
============================= ========== =========== ========= ========= =========
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 2017 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================= ========== =========== ========= ========= =========
Trade and other payables 1,349 - - - -
Contingent consideration - - 690 - -
Loans and borrowings 56 167 136 48 -
============================= ========== =========== ========= ========= =========
Total 1,405 167 826 48 -
============================= ========== =========== ========= ========= =========
Company 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 2018 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================= ========== =========== ========= ========= =========
Trade and other payables 262 - - - -
Amounts due to subsidiaries 2,584 - - - -
Contingent consideration - - - - -
Loans and borrowings 52 164 1,742 - -
============================= ========== =========== ========= ========= =========
Total 2,898 164 1,742 - -
============================= ========== =========== ========= ========= =========
Company 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 2017 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================= ========== =========== ========= ========= =========
Trade and other payables 134 - - - -
Amounts due to subsidiaries 1,531 - - - -
Contingent consideration - - 690 - -
Total 1,665 - 690 - -
============================= ========== =========== ========= ========= =========
Interest rate risk
The Group seeks to minimise exposure to interest rate risk by borrowing at a mix of fixed and floating interest rates appropriate to the nature and term length of borrowings. During the period the Group drew down on a GBP2m acquisition facility with an interest rate set at LIBOR + 5%.
Credit risk
The Group generally gives 30-day credit terms on its continuing business and provides against doubtful debts only when recoverability is considered to be at risk. 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 and retained earnings).
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 adjusts 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:
-- Managed Services - this segment provides all forms of managed services to customers. This segment was created on the acquisition of Netplan in November 2013 and has been further expanded with the acquisition of Q4Ex Limited, System Professional Ltd and Rockford IT Limited.
-- Value Added Resale (VAR) of products/services - this segment provides all forms of VAR sales where the business is acting as a reseller. This segment was created following the acquisition of System Professional Limited and has been further expanded by the acquisition of Rockford IT Limited.
Information regarding the operation of the reportable segments is included below. The performance of each operating segment is based on revenue and gross profit as the Board believe this is the best measure for segmental performance.
Assets and liabilities are not reviewed on a segmental basis. All non-current assets are within the UK. 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 arm's length commercial basis.
2018 2018 2017 2017
Revenue by operating segment GBP'000 % GBP'000 %
================================== ================ ====== ======== ========
Managed Services 7,130 68% 5,400 69%
Value Added Reseller 3,321 32% 1,765 22%
SME Mass Market (discontinued) - - 700 9%
================================== ================ ====== ======== ========
10,451 100% 7,865 100%
================================== ================ ====== ======== ========
No individual customer accounts for more than
10% of the Group's revenue.
The Group operates out of the UK and sells services
to the following geographical locations.
2018 2018 2017 2017
GBP'000 % GBP'000 %
================================== ================ ====== ======== ========
UK 9,437 90% 7,267 92%
Rest of World* 1,014 10% 598 8%
================================== ================ ====== ======== ========
10,451 100% 7,865 100%
================================== ================ ====== ======== ========
*The largest components are: France GBP0.5m;
and USA GBP0.2m
2018 2017
GBP'000 GBP'000
================================== ================ ====== ======== ========
Revenue
SME Mass market - discontinued - 700
Managed IT Services - continuing 7,130 5,400
Value Added Resale (VAR)
- continuing 3,321 1,765
10,451 7,865
======== ========
Gross profit
SME Mass market - discontinued - 436
Managed IT Services - continuing 5,224 3,932
Value Added Resale (VAR)
- continuing 771 450
======== ========
5,995 4,818
======== ========
There were no sales between the two business segments,
and all revenue is earned from external customers. The
business segments' gross profit is reconciled to profit
before taxation as per the consolidated income statement.
The Group's overheads are managed centrally by the Board
and consequently there is no reconciliation to profit
before tax at a segmental level.
5 Operating profit/(loss)
2018 2017
GBP'000 GBP'000
=============== ============================= ======== ========
Operating profit/(loss) is after charging
the following:
Auditor's remuneration:
Group: Audit 49 36
Corporate finance - 75
Other advisory 5 1
Company: Audit 4 4
Depreciation of tangible fixed assets:
Owned 201 189
Held under finance leases 171 135
Amortisation of intangible assets 500 326
Staff costs (note 7) 3,972 3,622
Share based payments (note 9) 10 -
Rentals payable under operating leases 156 89
Acquisition and restructuring costs 581 791
=============================================== ======== ========
6 Finance expense
2018 2017
GBP'000 GBP'000
==================================== ======== ========
Interest payable on finance leases 17 27
Interest payable on bank loan 49 -
Arrangement fee amortisation on 18 -
bank loan
84 27
==================================== ======== ========
7 Staff numbers and costs
The average monthly number of full time persons employed
by the Group, including executive Directors during the year
was:
==================================================================
2018 2017
========================================= =========== ==========
Research and Development 4 6
Technical Support 48 37
Sales and Marketing 11 5
Executive and Administration 11 8
========================================= =========== ==========
74 56
========================================= =========== ==========
The aggregate monthly payroll costs including Executive
Directors and excluding Non-Executive Directors were as
follows:
==================================================================
2018 2017
GBP'000 GBP'000
========================================= =========== ==========
Wages and salaries 3,548 3,278
Social security costs 365 289
Benefits in kind 22 24
Pension benefits 37 31
Share based payment expense 10 -
========================================= =========== ==========
3,982 3,622
========================================= =========== ==========
Total staff costs for the Company are GBP836,188 (2017: GBP580,907). Average staff numbers for the Company are 14 (2017: 11).
Directors and key management personnel
2018 2017
GBP'000 GBP'000
================================ ======== ========
Fees and salaries 369 375
Social security costs 35 27
Benefits in kind 2 2
Pension benefits contributions 14 6
Share based payment expense 9 -
======== ========
429 410
================================ ======== ========
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, they are also the Directors of the Company listed on page 14.
The emoluments of the highest paid Director, Julian Llewellyn, were GBP136,609 (2017: Julie Joyce GBP128,000).
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.
The fees relating to Non-Executive Directors are in some cases payable to third parties in connection with the provision of their services. The balance outstanding at 31 March 2018 was GBP4,331 (2017: nil).
8 Acquisition and restructuring costs
2018 2017
GBP'000 GBP'000
========================================================= ======== ========
Professional fees on acquisition of System Professional
Limited - 414
Professional fees on aborted transaction - 38
Professional fees on acquisition of Rockford 186 -
IT Limited
Integration and restructuring of continuing
business* 395 339
========================================================= ======== ========
Total 581 791
========================================================= ======== ========
*Integration and restructuring costs relate to closing and relocating
offices/teams, streamlining operations and establishing single
front and back office IT platform/systems. This includes costs
of GBP94k (2017: GBP161k) in relation to the use of internal technical
staff and management resources to deliver the changes.
9 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. For options to vest the employee has to be employed by the Group at the vesting date. There are no other performance criteria attached to the options. The weighted average exercise price of options in issue is 48.4p per share.
Rights to options over ordinary shares of the Company are summarised as follows:
No. of Ordinary Shares
Grant date Exercise Exercise At 31 Granted Waived/lapsed At 31
period price March March
2017 2018
============ ============== ========= ======== ======== ============== ========
27/09/12
27/09/2012 to 26/09/15 80p 10,000 - - 10,000
19/12/12
19/12/2012 to 18/12/22 40p 54,375 - (54,375) -
12/12/13
12/12/2013 to 11/12/23 60p 15,625 - (10,000) 5,625
02/03/15
02/03/2015 to 01/03/25 62.8p 2,500 - (2,500) -
14/08/15
14/08/2015 to 13/08/25 68p 25,000 - (25,000) -
21/02/16
21/02/2016 to 20/02/26 55.2p 11,875 - - 11,875
15/08/16
15/08/2016 to 14/08/26 60.5p 3,125 - (3,125) -
13/09/16
13/09/2016 to 12/09/26 60.5p 5,000 - - 5,000
31/07/07
24/08/2017 to 30/07/17 28p 2,232 - (2,232) -
06/04/17
06/04/2017 to 05/04/27 47.5p - 125,000 - 125,000
30/08/17
30/08/2017 to 29/08/27 43p - 5,000 - 5,000
30/08/17
30/08/2017 to 29/08/27 43p - 15,000 (15,000) -
02/03/18
02/03/2018 to 01/03/28 35.5p - 30,000 - 30,000
129,732 175,000 (112,232) 192,500
=========================== ========= ======== ======== ============== ========
The options have been valued, using the Black Scholes method,
using the following assumptions:
Number of instruments
granted 10,000 5,625 11,875 5,000
Grant date 27-Sep-12 12-Dec-13 21-Feb-16 13-Sep-16
Expiry date 26-Sep-22 11-Dec-23 20-Feb-26 12-Sep-26
Contract term (years) 10 10 10 10
Exercise price 80p 60p 55.2p 60.5p
Share price at granting 2p 85p 70.8p 60.5p
Annual risk-free rate
(%) 5% 0.5% 0.5% 0.5%
Annual expected dividend
yield (%) 0% 0% 0% 0%
Volatility (%) 50% 90% 55% 55%
Fair value per grant instrument 18.4p 74.46p 47.6p 52.17p
================================= ========== ========== ========== ==========
Number of instruments
granted 125,000 5,000 30,000
Grant date 06-Apr-17 30-Aug-17 02-Mar-18
Expiry date 05-Apr-27 29-Aug-27 01-Mar-28
Contract term (years) 10 10 10
Exercise price 47.5p 43p 35.5p
Share price at granting 48p 43p 35.5p
Annual risk-free rate
(%) 1.4% 1.4% 1.4%
Annual expected dividend
yield (%) 0% 0% 0%
Volatility (%) 36% 36% 36%
Fair value per grant instrument 22.77p 20.39p 16.84p
================================= ========== ========== ==========
The inputs to the share valuation model utilised at the grant
of the option is shown in the tables above. Management has
determined volatility using their knowledge of the business.
At 31 March 2018 there were 2,500 outstanding warrants to subscribe for the ordinary share capital of the Company as follows:
No. of Warrants and Exercise price
=====================================
Grant date Expiry Date 200p Total
============ ============= ================== =================
09.01.12 08.01.22 2,500 2,500
============ ============= ================== =================
The fair value of the warrants has been calculated at 0.36p based on the following assumptions - share price at granting 50p, annual risk-free rate 0.5%, and volatility 20%. No provision has been made for the warrants in shared based payments.
10 Acquisitions
There has been one acquisition during the period. The Board strategically expect acquisitions to be a common component of growth in the future.
Acquisitions made during the year to 31 March 2018 were:
Rockford IT Limited
The Group acquired 100% of the share capital of Rockford IT Limited on 1 November 2017. Rockford provides managed services, cloud hosting, value added resale services, and IT consultancy support.
During the year to 31 March 2018 the Group incurred GBP186,458 of costs in relation to this acquisition. These costs are included in administrative expenses in the Group's consolidated statement of comprehensive income for the year ended 31 March 2018.
The fair value of acquired customer relationships intangible asset has been estimated using a discounted cashflow method, based on the estimated level of profit to be generated from them. A post tax discount rate of 10.3% was used in the valuation. Customer relationships are being amortised over an estimated useful life of 7 years.
Since the acquisition date to 31 March 2018, Rockford IT Limited has contributed GBP1,796,400 to Group revenue and GBP278,656 to Group EBITDA. Had the acquisition taken place on 1 April 2017, the contribution to Group revenue would have been GBP4,250,080 and GBP701,800 to Group EBITDA.
Recognised amounts of net assets acquired, Book value Fair value Fair value
and liabilities assumed GBP'000 adj GBP'000 GBP'000
============================================ =========== ============= ===========
Cash and cash equivalents 327 - 327
Trade and other receivables 446 34 480
Property, plant and equipment 421 (87) 334
Stock and work in progress 21 - 21
Intangible assets 95 1,850 1,945
Trade and other payables (791) (111) (902)
Current income tax liability (81) - (81)
Deferred tax liability (66) (315) (381)
Identifiable net assets 372 1,371 1,743
Goodwill 2,107
============================================ =========== ============= ===========
Total consideration 3,850
============================================ =========== ============= ===========
Satisfied by:
Cash consideration 3,850
Total consideration 3,850
============================================ =========== ============= ===========
11 Earnings per share
Continuing Discontinued
Operations Operations Total
2018 2018 2018
============================================ =============== ============== ==============
Profit for the financial year attributable GBP237,923 - GBP237,923
to shareholders
Weighted number of equity shares used
in basic EPS 23,103,898 - 23,103,898
Weighted number of equity shares used
in diluted EPS 23,298,898 - 23,298,898
Basic earnings per share GBP0.0103 - GBP0.0103
Diluted earnings per share GBP0.0102 - GBP0.0102
============================================ =============== ============== ==============
(Restated) (Restated) (Restated)
Continuing Discontinued
Operations Operations Total
2017 2017 2017
============================================ =============== ============== ==============
(Loss)/profit for the financial year (GBP1,331,054) GBP1,508,499 GBP177,445
attributable to shareholders
Weighted number of equity shares used
in basic EPS 19,805,397 19,805,397 19,805,397
Weighted number of equity shares used
in diluted EPS 20,164,861 20,164,861 20,164,861
Basic (Loss)/earnings per share (GBP0.0672) GBP0.0762 GBP0.0090
Diluted (Loss)/earnings per share (GBP0.0672) GBP0.0748 GBP0.0088
============================================ =============== ============== ==============
Basic (loss)/earnings per share is calculated by dividing the
earnings attributable to equity shareholders by the weighted
average of ordinary shares in issue during the year.
For diluted earnings per share, the weighted number of ordinary
shares in issue during the year is adjusted to include the weighted
average number of ordinary shares that would be issued on the
conversion on all the dilutive potential shares into ordinary
shares.
12 Taxation
2018 2017
Current tax GBP'000 GBP'000
=============================================== ===================== ======================
Current tax - current year 32 65
Adjustments in respect of prior years (126) -
Tax refund (80) -
Total current tax credit (174) 65
===================== ======================
Deferred tax
Deferred tax - timing differences (71) (123)
Total deferred tax (71) (123)
===================== ======================
Total tax credit (245) (58)
===================== ======================
The effective tax rate for the year to 31 March
2018 is higher (2017: higher) than the standard
rate of corporation tax in the UK. The differences
are explained below:
2018 2018
GBP'000 GBP'000
===================== ======================
(Loss)/ profit on ordinary activities before
tax (7) 320
===================== ======================
(Loss)/ profit on ordinary activities before
taxation multiplied by the standard rate
of UK corporation tax of 19% (2017:20%) (1) 65
Effects of:
Expenses not deductible 33 -
Income not taxable (106) -
Prior year adjustment (126) -
Deferred tax - timing differences - (123)
Re-measurement of deferred tax due to changes
in UK rate 5 -
Deferred tax not recognised (130) -
Tax refund 80 -
Total tax credit (245) (58)
===================== ======================
The Group recognised deferred tax assets
and liabilities as follows:
2018 2017
GBP'000 GBP'000
=============================================== ===================== ======================
Deferred tax on customer relationships (588) (242)
Capital allowances timing differences (86) (123)
Deferred tax liability (674) (365)
=============================================== ===================== ======================
Recognition of deferred tax assets is restricted to those
instances where it is highly probable that relief against
taxable profit will be available.
The movement in the deferred tax account
during the year was:
Capital
allowances
timing Customer
differences relationships Total
GBP,000 GBP,000 GBP,000
=============================================== ===================== ====================== ========
Balance at 1 April 2017 - (365) (365)
Accelerated capital allowances (20) - (20)
Accelerated capital allowances acquired on
acquisition of Rockford IT (66) - (66)
Deferred tax recognised on customer lists
acquired on acquisition of Rockford IT - (315) (315)
Credited to statement of comprehensive income - 92 92
Balance at 31 March 2018 (86) (588) (674)
=============================================== ===================== ====================== ========
Factors affecting future tax charges:
The UK corporation tax rate will change from
19% to 17% on 1 April 2020.
13 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 2016 197 232 61 1,914 4,454 6,858
Additions - - 11 - - 11
Acquired from acquisition - - - 948 3,844 4,792
Disposals - (232) - (479) (678) (1,389)
=========================== ======== ============ ========= ============== ========= ========
At 31 March 2017 197 - 72 2,383 7,620 10,272
At 1 April 2017 197 - 72 2,383 7,620 10,272
Additions 26 - 6 - - 32
Acquired from acquisition
(note 10) - - 95 1,850 2,107 4,052
Disposals - - - - - -
=========================== ======== ============ ========= ============== ========= ========
At 31 March 2018 223 - 173 4,233 9,727 14,356
Accumulated amortisation and impairment
At 1 April 2016 180 232 8 655 - 1,075
On disposals - (232) - (479) - (711)
Charge for the year 11 - 22 638 - 671
=========================== ======== ============ ========= ============== ========= ========
At 31 March 2017 191 - 30 814 - 1,035
At 1 April 2017 191 - 30 814 - 1,035
On disposals - - - - - -
Charge for the year 7 - 47 446 - 500
=========================== ======== ============ ========= ============== ========= ========
At 31 March 2018 198 - 77 1,260 - 1,535
Net book value
At 31 March 2017 6 - 42 1,569 7,620 9,237
=========================== ======== ============ ========= ============== ========= ========
At 31 March 2018 25 - 96 2,973 9,727 12,821
=========================== ======== ============ ========= ============== ========= ========
The Company had intangible assets of GBP25,083, comprising website development costs, at 31 March 2018 (2017: Nil)
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 a 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:
2018 2017
GBP'000 GBP'000
===================== ======== ========
Netplan 4,564 5,348
System Professional 4,710 4,585
Rockford IT 3,892 -
13,166 9,933
===================== ======== ========
The assumptions used for the impairment reviews are as follows:
System Rockford
Professional Netplan IT
====================================== ============== ======== =========
Discount rate 10.13% 10.13% 10.13%
Growth rate year 2 to year
5 2.9% 2.9% 2.9%
Terminal growth rate 2.9% 2.9% 2.9%
Forecast period for which cashflows
are estimated 2 2 2
======================================= ============== ======== =========
The Group had no contractual liability for development costs at 31 March 2018. As a result of the impairment testing carried out on the basis of these estimates and assumptions, no impairment provisions are required.
14 Property, plant and equipment
Furniture
and
Group equipment Total
GBP'000 GBP'000
=========================== ========== ========
Cost
At 1 April 2016 1,491 1,491
Additions 571 571
Acquisition of subsidiary 96 96
Disposals (737) (737)
=========================== ========== ========
At 31 March 2017 1,421 1,421
At 1 April 2017 1,421 1,421
Additions 181 181
Acquisition of subsidiary 334 334
Disposals - -
=========================== ========== ========
At 31 March 2018 1,936 1,936
Accumulated depreciation
At 1 April 2016 1,041 1,041
Charge for the year 337 337
On disposal (623) (623)
=========================== ========== ========
At 31 March 2017 755 755
========== ========
At 1 April 2017 755 755
Charge for the year 372 372
On disposal - -
=========================== ========== ========
At 31 March 2018 1,127 1,127
Net book value
At 31 March 2016 449 449
=========================== ========== ========
At 31 March 2017 666 666
=========================== ========== ========
At 31 March 2018 809 809
=========================== ========== ========
Included in the net book value of GBP809,000 (2017: GBP666,000) are assets held under finance leases with a NBV of GBP322,823 (2017: GBP340,291).
The depreciation for the year on these assets was GBP170,143 (2017: GBP135,000).
Furniture
and
Company equipment Total
GBP'000 GBP'000
=========================== ========== ========
Cost
At 1 April 2016 45 45
Additions 36 36
Acquisition of subsidiary - -
Disposals - -
=========================== ========== ========
At 31 March 2017 81 81
At 1 April 2017 81 81
Additions 24 24
Acquisition of subsidiary 0 0
Disposals 0 0
=========================== ========== ========
At 31 March 2018 105 105
Accumulated depreciation
At 1 April 2016 12 12
Charge for the year 13 13
On disposal - -
=========================== ========== ========
At 31 March 2017 25 25
========== ========
At 1 April 2017 25 25
Charge for the year 26 26
On disposal - -
=========================== ========== ========
At 31 March 2018 51 51
Net book value
At 31 March 2016 33 33
=========================== ========== ========
At 31 March 2017 56 56
=========================== ========== ========
At 31 March 2018 54 54
=========================== ========== ========
The Company held no finance leases at 31 March 2018 or at 31 March 2017.
15 Investments
2018 2017
Company GBP'000 GBP'000
==================================================== ========== =========
Investment in Subsidiaries
At 1 April 2017 10,429 6,576
Acquisitions (note 10) 3,850 4,952
Impairment following disposals - (1,099)
==================================================== ========== =========
Cost 31 March 2018 14,279 10,429
==================================================== ========== =========
The Company's subsidiary undertakings all of which are wholly
owned and included in the consolidated accounts are:
Undertakings Registration Principal activity
==================================== ============== =====================
System Professional Limited England Managed Services
Netplan Internet Solutions Limited England Managed Services
Netplan LLC* USA Managed Services
SysGroup (DIS) Limited England Managed Services
SysGroup (NH) Limited England Managed Services
Project Clover Limited England Managed Services
SysGroup (EH) Limited England Managed Services
Rockford IT Limited England Managed Services
==================================== ============== =====================
*Netplan LLC is a wholly owned subsidiary of Netplan Internet Solutions Limited
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 2019. The major assumptions can be found in note 13. The impairment charge above relates to the disposal of the SME segment during the prior year.
SysGroup (NH) Limited (Company Number 03963376), SysGroup (EH) Limited (Company Number 05814619), SysGroup (DIS) Limited (Company number 05743110), Project Clover Ltd (Company number 08995906) are taking advantage of the exemption from audit under section 479a of the Companies Act 2006 following the guarantee provided by SysGroup plc under section 479C of the Companies Act 2006.
The registered office of all subsidiaries is the same as the registered office of the parent company with the exception of Netplan LLC whose registered office is c/o USA Corporate Services Inc, 19 West 34(Th) Street, Suite 1018, New York, 10001.
16 Trade and other receivables
Group Company Group Company
2018 2018 2017 2017
Amounts due within one year GBP'000 GBP'000 GBP'000 GBP'000
================================ ======== ======== ======== ========
Trade debtors 1,101 - 902 -
Other debtors - 35 - -
Prepayments and accrued income 523 100 409 100
================================ ======== ======== ======== ========
1,624 135 1,311 100
================================ ======== ======== ======== ========
The Group is not exposed to any significant credit risk from trade receivables. There are no impaired trade receivables which are past due at 31 March 2018 or at 31 March 2017.
17 Trade and other payables
Group Company Group Company
2018 2018 2017 2017
Amounts due within one year GBP'000 GBP'000 GBP'000 GBP'000
================================= ======== ======== ======== ========
Trade payables 893 102 590 36
Amounts due to subsidiaries - 2,584 - 1,531
Accruals 484 160 653 98
================================= ======== ======== ======== ========
Total financial liabilities,
excluding loans and borrowings
measured at amortised cost 1,377 2,846 1,243 1,665
Corporation tax 85 - 106 -
Other taxes and social security
costs 439 30 322 17
Deferred income 425 - 465 -
================================= ======== ======== ======== ========
Total creditors 2,326 2,876 2,136 1,682
================================= ======== ======== ======== ========
Group Company Group Company
2018 2018 2017 2017
Contingent consideration due GBP'000 GBP'000 GBP'000 GBP'000
on acquisitions
================================= ======== ======== ======== ========
System Professional Limited - - 690 690
================================= ======== ======== ======== ========
The fair value of contingent consideration was based on the present value of cash flows and the market value of the shares to be issued.
To the extent trade payables and other payables are not carried at fair value in the consolidated balance sheet, book value approximates to fair value at 31 March 2018 and 31 March 2017.
Maturity of the financial liabilities, excluding loans and borrowings, classified as financial liabilities measured at amortised cost is shown in note 3.
18 Loans and borrowings
Group Company Group Company
2018 2018 2017 2017
Non- Current GBP'000 GBP'000 GBP'000 GBP'000
==================================== ========= ======== ======== ========
Obligations under finance leases 128 - 184 91
Bank loan* 1,742 1,742 - -
Total 1,870 1,742 184 91
==================================== ========= ======== ======== ========
Group Company Group Company
2018 2018 2017 2017
Current GBP'000 GBP'000 GBP'000 GBP'000
==================================== ========= ======== ======== ========
Obligations under finance leases 147 - 223 111
Bank loan* 216 216 - -
Other loan - - - 105
Total 363 216 223 216
==================================== ========= ======== ======== ========
*The bank loan is fully secured by a debenture over SysGroup PLC
and its subsidiaries and interest charged at LIBOR + 5% per annum.
19 Leases
Group obligations under finances leases
Minimum Present
lease payments Interest value
Future lease payments are due as follows: 2018 2018 2018
GBP'000 GBP'000 GBP'000
=========================================== ================ ========= ========
Not later than one year 158 11 147
Later than one year and not later
than 5 years 134 6 128
Later than 5 years - - -
=========================================== ================ ========= ========
Total 292 17 275
=========================================== ================ ========= ========
Minimum Present
lease payments Interest value
Future lease payments are due as follows: 2017 2017 2017
GBP'000 GBP'000 GBP'000
=========================================== ================ ========= ========
Not later than one year 235 12 223
Later than one year and not later
than 5 years 189 5 184
Later than 5 years - - -
=========================================== ================ ========= ========
Total 424 17 407
=========================================== ================ ========= ========
Group operating leases
The total future value of minimum lease payments
is due as follows:
==========================================================
Leasehold Leasehold
property Other property Other
2018 2018 2017 2017
GBP'000 GBP'000 GBP'000 GBP'000
======================== ========== ======== ========== ========
Within one year 193 - 109 -
Within two to five
years 268 - 364 -
After five years - - 13 -
======================== ========== ======== ========== ========
Total 461 - 486 -
======================== ========== ======== ========== ========
Company operating
leases
Leasehold Leasehold
property Other property Other
2018 2018 2017 2017
GBP'000 GBP'000 GBP'000 GBP'000
======================== ========== ======== ========== ========
Within one year 23 - 13 -
Within two to five
years 23 - 52 -
After five years - - - -
======================== ========== ======== ========== ========
Total 46 - 65 -
======================== ========== ======== ========== ========
20 Related party transactions
Details of Directors' remuneration are given in the Directors'
Remuneration Report. Other related party transactions are as follows:
==============================================================================================
Transaction Balance due
value to related
party
2018 2017 2018 2017
Related party relationship Type of transaction GBP'000 GBP'000 GBP'000 GBP'000
============================== ====================== ======== ======== ======== ========
Companies in which Directors
or their immediate family Provision of website 5 13 - -
have a significant / design services
controlling interest Training services 4 - - -
============================== ====================== ======== ======== ======== ========
21 Share capital and capital restructuring
Number GBP'000
========================================= ============== ========
At 1 April 2016 510,379,336 2,552
Consolidation of 0.5p shares to (497,619,852) -
20p shares
Issue of share capital - placing 9,391,667 1,686
Issue of share capital - consideration 952,747 382
At 31 March 2017 (as previously
stated) 23,103,898 4,620
========================================= ============== ========
Restatement of Court capital reduction
4 August 2016
Restatement of the excess over nominal
value on deferred consideration - (4,209)
shares on the acquisition of Q4Ex
Ltd - (180)
At 31 March 2017 (as restated) 23,103,898 231
========================================= ============== ========
At 1 April 2017 23,103,898 231
========================================= ============== ========
At end of year 23,103,898 Ordinary
shares of 1p 23,103,898 231
========================================= ============== ========
The Group now has distributable reserves and so is in a position to pay a dividend in the future if appropriate. When appropriate a progressive dividend policy will be adopted.
22 Prior year accounting restatement - share capital and reserves
The Group has identified an error in the way it accounted for the court sanctioned capital reduction in its interim results to 30 September 2016, and this error has been replicated in subsequent reporting, being corrected in the year ended 31 March 2018. The Group has aIso identified an unrelated error in the accounting for the deferred consideration on the acquisition of Q4Ex Ltd in the year ended 31 March 2017. The errors have been corrected by restating each of the affected financial statement line items for prior periods. The following tables summarise the impacts on the Group's consolidated financial statements.
Consolidated statement of Group Adjustments As restated
financial position As previously
reported
31 March 2017 GBP'000 GBP'000 GBP'000
================================= =========== ============ ================ ============ ============
Share capital 4,620 (4,389) 231
Share premium account - - -
Other reserves 1,622 378 2,000
Translation reserve 4 - 4
Retained profit 4,843 4,011 8,854
================================= =========== ============ ================ ============ ============
Total equity 11,089 - 11,089
================================= =========== ============ ================ ============ ============
Group
Consolidated statement of As previously Adjustments As restated
comprehensive income reported
31 March 2017 GBP'000 GBP'000 GBP'000
================================= =========== ============ ================ ============ ============
Fair value adjustment (300) (198) (498)
Others (830) (3) (833)
================================= =========== ============ ================ ============ ============
Loss from continuing operations (1,130) (201) (1,331)
Total comprehensive income 378 (201) 177
================================= =========== ============ ================ ============ ============
Basic earnings/ (loss) per GBP0.0190 GBP(0.0100) GBP0.0090
share
Diluted earnings/ (loss) GBP0.0187 GBP(0.0098) GBP0.0088
per share
===========
There is no impact on the total operating, investing or financing cash flows for the year ended 31 March 2017 and 31 March 2018.
23 Discontinued operations
Discontinued operations relate to the SME Mass Market business.
The trade and assets of this business were disposed of on
22 July 2016 for a total cash consideration of GBP2,735,727
(less an initial amount of GBP465,519 in respect of advance
receipts/payments).
The following table summarises the results of the SME Mass
Market segment included in discontinued operations in the
consolidated statement of income:
Year to Year to
31 March 31 March
2018 2017
GBP'000 GBP'000
Sales - 700
Costs and expenses - (566)
Profit on sale - 1,336
Profit before tax - 1,470
Taxation - 38
Profit attributable to the shareholders
of the Company - 1,508
Profit on disposal is calculated as the fair value of consideration
received less the fair value of assets and liabilities disposed.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR FQLLLVQFXBBV
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