TIDMXPT
RNS Number : 2065M
XploiTe PLC
26 January 2009
26 January 2009
Xploite plc
Strong revenue growth and disposal drive earnings up
Xploite plc ("Xploite", "the Group", AIM: XPT), the operator and aggregator of
strategic and high growth IT services businesses, publishes its preliminary
results for the 12 months to 31 October 2008.
Highlights
* Revenues from continuing operations up 60% to GBP46.3m (2007: GBP28.9m)
* Gross profit from continuing operations up 101% to GBP12.6m (2007: GBP6.3m)
* Adjusted* EBITDA including discontinued operations up 231% to GBP4.3m (2007:
GBP1.3m)
* Adjusted** earnings per share up 428% to 12.85p (2007: 2.43p)
* Successful integration of three businesses under Anix brand
* Storage Fusion established - substantial licensing potential
* Realised a pre tax profit of GBP1.1m from disposal of part of Itheon business
* Net debt down to GBP0.2m as at 31 October 2008
* Acquisition of four Cantono businesses in December 2008; extends managed
services contract base
* Encouraging start to trading for the current year and substantial contract wins
secured
Ian Smith, Xploite Chief Executive commented,
"Despite the current economic climate, we have made good progress; integrating
three businesses, launching a new software licensing operation and selling for
an excellent IRR part of one business. The latter is a clear demonstration of
the successful implementation of our strategy.
"Demand for managed services in both the public and private sector continues to
increase. Trading has started well in the current financial year which with
growing forward visibility and strong cash generation, gives us confidence for
another good performance."
Enquiries
+-------------------------------------------+-------------------------------------+
| Xploite plc www.xploite.com | 0870 737 2001 |
+-------------------------------------------+-------------------------------------+
| Ian Smith, Chief Executive Officer | |
+-------------------------------------------+-------------------------------------+
| Robert Arrowsmith Finance Director | |
+-------------------------------------------+-------------------------------------+
| | |
+-------------------------------------------+-------------------------------------+
| KBC Peel Hunt Ltd | 0207 418 8900 |
+-------------------------------------------+-------------------------------------+
| Oliver Scott/Nicholas Marren | |
+-------------------------------------------+-------------------------------------+
| | |
+-------------------------------------------+-------------------------------------+
| College Hill | 020 7457 2020 |
+-------------------------------------------+-------------------------------------+
| Adrian Duffield / Rozi Morris | |
+-------------------------------------------+-------------------------------------+
*Adjusted for integration and strategic costs (these costs are added back by
management to enable an understanding of the underlying profitability of the
businesses)
**Adjusted for add back of integration and strategic costs and amortisation of
intangible assets
Chairman's Statement
I am delighted to report results ahead of expectations for 2008, with total
revenues from continuing operations up 60% to GBP46.3m, gross profits from
continuing operations up 101% to GBP12.6m and an adjusted EBITDA from continuing
operations up 436% to GBP3.7m. The group also made a profit on the disposal of
part of the Itheon business of GBP1.1m. The Group has benefited from the
combined effects of tight working capital management, the successful integration
of the businesses acquired over the previous year and the disposal of part of
the Itheon business, so that as at 31 October 2008 net debt was GBP0.2m.
This is a considerable achievement by the management team, particularly when set
against the backdrop of the prevailing adverse macro-economic conditions and the
fact that the Group was also in an offer period from 11 December 2007 to 27
March 2008.
Our strategy is to identify, acquire, consolidate and develop innovative, high
growth businesses in the IT services marketplace. We create shareholder value by
identifying and acquiring underperforming businesses, integrating and developing
them, and improving their performance through 'active management'. It is out
strategy that, at an appropriate time, we will exit these businesses returning
profits to shareholders. We continue to believe this remains a sound strategy,
particularly in the current market where there are significant new opportunities
for consolidation.
In our 2007 financial year we acquired four businesses which satisfied our
strategic requirements: Anix, Posetiv, Red Squared and Itheon. The 2008
financial year has seen us deliver on the integration and development of these
businesses. Our stewardship has begun to build significant shareholder value by
shifting the focus of these businesses onto recurring revenue sources, improving
margins, winning major contracts and disposing of non-core activities. We
focussed our acquisitions into two divisions Anix and Itheon (now Storage
Fusion) and both have made substantial progress in the 2008 financial year.
The consolidation of three of the acquired businesses (Anix, Red Squared and
Posetiv) under the single Anix brand was completed in January 2008 and we have
installed a single operating board for that operation. The objective for the
enlarged Anix business is to become the UK's leading mid-market managed service
provider in the storage and server infrastructure sector, focused on building
strong recurring revenue streams. The ability of the business to secure a number
of high value managed services contracts during the year and post year end has
demonstrated that there is a strong customer demand for managed services and
enabled us to build a business with long term, visible revenues and improving
margins.
The Group's fourth acquisition, Itheon, was acquired for its software
development skills rather than what was then the bulk of its business. In the
2008 financial year, we split its activities and renamed the retained part,
being the Storage Resource Analysis (SRA) software business Storage Fusion. The
legacy monitoring software solutions operation was sold in October 2008 and with
it the Itheon brand, to Bluechip Customer Engineering for GBP3.3m, realising a
profit on disposal of this business before tax of GBP1.1m.
Storage Fusion is gaining considerable traction from its SRA business; we
recently announced some significant license and royalty agreements. Anix has
also successfully integrated Itheon's innovative monitoring software into its
own service offerings.
As a specialist service company it is imperative that we retain high quality
employees. The high level of service that our customers expect has always been
maintained and it is thanks to the dedication of our colleagues that this has
been possible.
The Group's trading to date in the current financial year is line with the
Board's expectations, with good cash generation. As our forward visibility
grows, the Directors remain confident that the Group's strategic focus will
continue to provide attractive returns for shareholders.
John Standen
Chairman
Chief Executive's review
Strategic overview
Our objective is to identify, acquire, consolidate and develop underperforming
companies and businesses in which we see opportunities to create value through a
combination of integration, investment and enhancing both corporate and
operational infrastructure. The Board aims to grow the Group both organically
and by acquisition, and to convert this growth into higher profit and cash flow,
through increased margins achieved by careful cost control and management of the
revenue mix.
Xploite's management team first adopted its buy and build strategy in 2003.
Between 2003 and 2006 it acquired nine businesses in the network integration
sector of the IT industry. These were consolidated into two operating divisions.
In February 2006 and June 2006 the two operating divisions were sold realising a
profit of GBP19.2m and shortly thereafter GBP10.3m was returned to shareholders.
Since February 2007 Xploite has begun to acquire and consolidate in the managed
services and software as a service (SaaS) sector of the IT industry. Since then
the Group has acquired four and disposed of two businesses.
Following the disposal of the Itheon brand in October 2008, the Group operates
two trading businesses Anix and Storage Fusion. Anix is a leading implementer of
advanced storage solutions and one of IBM's leading partners in the UK. Our
strategy is to develop Anix into the UK's number one mid market managed services
provider. Storage Fusion is a software company focussed entirely on the SaaS
model for storage analytics with a range of tools focussed on storage analytics.
The current world market place makes for a potentially difficult time for IT
services businesses. However, in an economic downturn all companies look to save
cost and in both Anix and Storage Fusion we have businesses that allow our
customers to do just that.
Demand for managed services in both the public and private sector is increasing
as organisations look to third parties with the necessary specialist skills and
scale to implement and host key applications on a cost effective basis.
As a result, the Board expects demand for the Group's services to increase as
more companies recognise the benefits of having their data networks actively
managed by a trusted third party.
Anix
Our objective for Anix has been to become the UK's number one mid market managed
services partner with a focus on storage and server infrastructure. The key
performance indicator of our success against this objective is the significant
underlying growth in recurring revenues and gross margin achieved throughout the
year.
During the year, the revenue from services (the majority of which are recurring
revenues) represented 51% (2007: 36%) of total Anix revenues. In addition, gross
margin from services grew by 119% from GBP10.4m to GBP22.8m. Notable wins across
the year included a major European bank, Speedy Hire, Wyevale Garden Centres,
Atos Orgin and a major high street retailer.
In the year, Anix was also awarded IBM Server Services SPL strategic supplier
status, demonstrating the depth of relationship Anix enjoys with its largest
supplier. Our pipeline of new business is strong and already in the 2009
financial year we have announced new contract wins totalling GBP10m. Our Total
Contract Value (TCV) per contract is also increasing with an average value now
of circa GBP3m on new contracts won.
In the current economic climate, managed services are becoming more attractive
to both new and existing customers. The opportunity to replace capital
expenditure with operating expenditure allows companies to preserve cash for
their core business and also removes the fear of running under staffed or under
budgeted IT departments. Our experience has shown the greatest driver for our
customers is not cost savings per se, but the assurance of the smooth running of
their IT systems, backed by near 100% service level agreements.
Despite the growth of its managed services revenues, hardware reselling remains
an important feature of the Anix business and brings substantial benefits to the
managed services strategy. For example, it helps the business to secure high
level discounts by virtue of our tier one hardware and software relationships
with leading vendors, and provides a built-in prospect base for the managed
services practice.
Storage Fusion
This business was born out of the Storage Resource Analysis (SRA) software
business components of Itheon which was acquired in late 2007.
One of the reasons Itheon was originally acquired was to deliver cost savings
into the Anix managed services operation. The core technology of Itheon was
based around server monitoring which is a key function of running a managed
service. During the year we migrated away from using expensive IBM Tivoli
licences in our operations and replaced them with the Itheon server monitoring
technology.
Towards the year end we identified the opportunity to sell Itheon, whilst at the
same time retaining the core SRA technology within the Group, at the same time
enabling Anix to continue to utilise Itheon at the same price point. We took
this opportunity and realised disposal proceeds of GBP3.3m and a gain of GBP1.6m
after tax. The opportunity resulted in an overall Internal Rate of Return (IRR)
of 51% for the Itheon business.
The second reason for the acquisition of Itheon was the potential we saw to
deliver its SRA solution. We have invested heavily in the development of this
software which enables us to provide storage analytics as a SaaS solution.
This software is very powerful and enables the customer to identify and recover
large areas of reclaimable capacity within their existing infrastructure thereby
saving and deferring capital outlay. We believe this will prove to be a very
compelling proposition particularly in the current economic environment.
SRA has been successfully trialled by IT Vendors, IBM, Sun Microsystems, EMC and
Dell in the UK. End user customers have included T-Mobile, Reuters, Johnson and
Johnson and ING among many others. These trials have been successful and are now
beginning to deliver revenues. As an indication the minimum revenue from such a
client could be GBP1,500 per report with the largest so far in the region of
GBP40,000. In order to really extract the full value from this system many
customers will elect to run regular reports.
SRA was successfully sold to two USA companies on a licence basis at the end of
the 2008 year. This gives these customers the ability to host the software on
their own platform and sell the service to their own customers on a
non-exclusive basis. Fees per report will also arise from these sales.
Our expectation in the year to 31 October 2009 is to sell more licences of this
nature. We also anticipate setting up our own portal which will allow any
customer anywhere in the world to log in and utilise the software on a regular
basis paid for on an as used basis. In addition to this, we are also in
discussion with major storage vendors to deliver branded open SRA portals.
Post year end events
On 15 December 2008, the group completed the acquisition of Blue River Systems
Limited ('Blue River') from Cantono plc ('Cantono') and the assets of three of
Cantono's managed services businesses, following the approval of Cantono's
shareholders. The main reason for this transaction was to acquire Cantono's
existing managed service contract base. These managed service contracts are
expected to increase the value of annuity revenues in the group which is in line
with our overall objectives.
Financial Review
These results have been prepared under International Financial Reporting
Standards (IFRS) as adopted by the EU. These are the first full financial
statements to be prepared under IFRS. The layout used in the statutory numbers
is prescribed by IFRS. In order to highlight numbers that management consider
important and that management use to manage the business, the table below has
been prepared in order to show the relationship between the statutory accounts
and those numbers referred to in this review.
Sales and gross margin
+------------------+------------+--------------+----------+------------+--------------+----------+
| | 2008 | 2007 |
+------------------+--------------------------------------+--------------------------------------+
| | Continuing | Discontinued | Total | Continuing | Discontinued | Total |
+------------------+------------+--------------+----------+------------+--------------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------+------------+--------------+----------+------------+--------------+----------+
| | | | | | | |
+------------------+------------+--------------+----------+------------+--------------+----------+
| Sales | 46,315 | 1,692 | 48,007 | 28,927 | 2,300 | 31,227 |
+------------------+------------+--------------+----------+------------+--------------+----------+
| Cost of sales | (33,690) | (395) | (34,085) | (22,641) | (1,326) | (23,967) |
+------------------+------------+--------------+----------+------------+--------------+----------+
| Gross margin | 12,625 | 1,297 | 13,922 | 6,286 | 974 | 7,260 |
+------------------+------------+--------------+----------+------------+--------------+----------+
| | 27% | 77% | 29% | 22% | 42% | 23% |
+------------------+------------+--------------+----------+------------+--------------+----------+
Total group revenue for the year ended 31 October 2008 was GBP48.0m which was up
54% on 2007 reflecting the larger revenues from the four new businesses acquired
in the previous financial year. Overall gross margin has improved from 23% to
29%. Gross margin for continuing businesses has grown from 22% to 27%.
In the medium term, the board expects that the anticipated change in the mix of
sales i.e. greater proportion of service sales compared to hardware sales with a
resultant improvement in overall margin. Furthermore, the board expects the
revenue visibility of the operating business to improve as a consequence of the
move towards long term customer contracts and away from lower margin, one-off
hardware sales.
Adjusted* EBITDA and profit for the year
+----------------------+------------+--------------+----------+------------+--------------+---------+
| | 2008 | 2007 |
+----------------------+--------------------------------------+-------------------------------------+
| | Continuing | Discontinued | Total | Continuing | Discontinued | Total |
+----------------------+------------+--------------+----------+------------+--------------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------+------------+--------------+----------+------------+--------------+---------+
| | | | | | | |
+----------------------+------------+--------------+----------+------------+--------------+---------+
| Adjusted* EBITDA | 3,733 | 583 | 4,316 | 697 | 564 | 1,261 |
+----------------------+------------+--------------+----------+------------+--------------+---------+
| Less depreciation | (1,069) | (27) | (1,096) | (516) | (5) | (521) |
+----------------------+------------+--------------+----------+------------+--------------+---------+
| Adjusted EBITA | 2,664 | 556 | 3,220 | 181 | 559 | 740 |
+----------------------+------------+--------------+----------+------------+--------------+---------+
| Less amortisation | (1,896) | (281) | (2,177) | (536) | - | (536) |
+----------------------+------------+--------------+----------+------------+--------------+---------+
| Adjusted EBIT | 768 | 275 | 1,043 | (355) | 559 | 204 |
+----------------------+------------+--------------+----------+------------+--------------+---------+
| Integration and | (1,204) | (52) | (1,256) | (171) | - | (171) |
| strategic costs | | | | | | |
+----------------------+------------+--------------+----------+------------+--------------+---------+
| Operating | (436) | 223 | (213) | (526) | 559 | 33 |
| (loss)/profit | | | | | | |
+----------------------+------------+--------------+----------+------------+--------------+---------+
| Net finance | (641) | - | (641) | 225 | - | 225 |
| (costs)/income | | | | | | |
+----------------------+------------+--------------+----------+------------+--------------+---------+
| Gain on disposal | - | 1,112 | 1,112 | - | (20) | (20) |
+----------------------+------------+--------------+----------+------------+--------------+---------+
| (Loss)/profit before | (1,077) | 1,335 | 258 | (301) | 539 | 238 |
| tax | | | | | | |
+----------------------+------------+--------------+----------+------------+--------------+---------+
| Taxation credit on | - | 470 | 470 | - | (42) | (42) |
| disposal | | | | | | |
+----------------------+------------+--------------+----------+------------+--------------+---------+
| Tax on ordinary | 741 | 72 | 813 | 51 | - | 51 |
| activities | | | | | | |
+----------------------+------------+--------------+----------+------------+--------------+---------+
| Total tax | 741 | 542 | 1,283 | 51 | (42) | - |
+----------------------+------------+--------------+----------+------------+--------------+---------+
| Total (loss)/profit | (336) | 1,877 | 1,541 | (250) | 497 | 247 |
| for the year | | | | | | |
+----------------------+------------+--------------+----------+------------+--------------+---------+
*Adjusted for integration and strategic costs. These costs are added back by
management to enable an understanding of the underlying profitability of the
businesses.
The total adjusted EBITDA for the year increased by 231% from GBP1.3m to
GBP4.3m, while adjusted EBITA was up 357% from GBP0.7m to GBP3.2m. Integration
and strategic costs, which relate to restructuring and reorganising the
acquisitions into one coherent operation, increased from GBP0.2m to GBP1.3m.
During October 2008, the group disposed of a part of the Itheon business and
realised a pre tax profit of GBP1.1m. This also resulted in a release of a
deferred tax provision of GBP0.5m.
After net finance costs of GBP0.6m, the Group reported an adjusted pretax profit
of GBP1.6m (2007: GBP0.4m) and an actual pre-tax profit of GBP0.3m (2007:
GBP0.2m).
The total taxation credit for the year of GBP1.3m is shown in three places, the
first as a credit of GBP0.5m relating to the profit on sale of Itheon, the
second as credit on the trading profit of the discontinued operation of GBP0.1m
and finally a credit on ordinary activities of GBP0.7m. GBP1.0m of these credits
relate to the release of deferred tax provisions.
Earnings per share (EPS)
+----------------------+------------+--------------+---------+------------+--------------+---------+
| | 2008 | 2007 |
+----------------------+-------------------------------------+-------------------------------------+
| | Continuing | Discontinued | Total | Continuing | Discontinued | Total |
+----------------------+------------+--------------+---------+------------+--------------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------+------------+--------------+---------+------------+--------------+---------+
| | | | | | | |
+----------------------+------------+--------------+---------+------------+--------------+---------+
| (Loss)/profit | (336) | 1,877 | 1,541 | (250) | 497 | 247 |
| attributable to | | | | | | |
| equity holders | | | | | | |
+----------------------+------------+--------------+---------+------------+--------------+---------+
| Adjustments: | | | | | | |
+----------------------+------------+--------------+---------+------------+--------------+---------+
| Amortisation of | 1,896 | 281 | 2,177 | 536 | - | 536 |
| intangible assets | | | | | | |
+----------------------+------------+--------------+---------+------------+--------------+---------+
| Integration and | 1,204 | 52 | 1,256 | 171 | - | 171 |
| strategic costs | | | | | | |
+----------------------+------------+--------------+---------+------------+--------------+---------+
| Earnings (adjusted | 2,764 | 2,210 | 4,974 | 457 | 497 | 954 |
| and before | | | | | | |
| amortisation) | | | | | | |
+----------------------+------------+--------------+---------+------------+--------------+---------+
| | | | | | | |
+----------------------+------------+--------------+---------+------------+--------------+---------+
| | Pence | Pence | Pence | Pence | Pence | Pence |
+----------------------+------------+--------------+---------+------------+--------------+---------+
| Basic earnings per | (0.87) | 4.85 | 3.98 | (0.64) | 1.27 | 0.63 |
| share | | | | | | |
+----------------------+------------+--------------+---------+------------+--------------+---------+
| Earnings per share | 7.14 | 5.71 | 12.85 | 1.17 | 1.27 | 2.43 |
| (adjusted | | | | | | |
| and before | | | | | | |
| amortisation) | | | | | | |
+----------------------+------------+--------------+---------+------------+--------------+---------+
Earnings per share (adjusted and before amortisation) was up 428% from 2.43p per
share to 12.85p per share. Reported basic earnings per share was up 532% from
0.63p to 3.98p.
The Board believes that retention and re-investment of capital will be
beneficial for shareholders and, accordingly, will not be paying a dividend.
Cash flow
Net cash generated from operations was GBP2.2m (2007: GBP5.8m). The main
elements of the 2008 cash generated from operationsis adjusted EBITDA of GBP4.3m
less integration and strategic costs of GBP1.3m and increased working capital
requirements of approximately GBP0.8m.
As at 31 October 2008 the Group's net debt was GBP0.2m of which GBP5.1m was bank
debt. Included within the net debt figures is GBP2.2m received on the disposal
of Itheon.
Balance sheet
At 31 October 2008 the Group had total shareholders equity of GBP17.4m, an
increase of GBP1.7m on the previous year.
No additional equity has been raised in the year. The Group has financed its
operations by increasing bank borrowings by GBP2.6m, by realising a gain on
disposal of Itheon of GBP1.1m and judiciously managing working capital.
Key
performance indicators (KPIs)
The Board is focussed on a number of Key Performance Indicators (KPIs) that are
used to measure performance.
The Group's performance against these metrics were as follows:
a) Financial measures
+------------------------------------------+--------------------------------------------------+
| Growth in recurring revenues | - increased 2007 service based revenues by |
| | GBP12.4m (119%) |
+------------------------------------------+--------------------------------------------------+
| Growth in total gross margin | - increase on 2007 by GBP6.6m (90%) |
+------------------------------------------+--------------------------------------------------+
| | - actual margin improvement from 23% in 2007 to |
| | 29% in 2008 |
+------------------------------------------+--------------------------------------------------+
| Growth in total adjusted EBITDA | - increase on 2007 by GBP3.0m (231%) |
+------------------------------------------+--------------------------------------------------+
| Growth in total adjusted EBITA | - increase on 2007 by GBP2.5m (357%) |
+------------------------------------------+--------------------------------------------------+
| Earnings per share (adjusted and before | - increase on 2007 by 10.42p (429%) |
| amortisation) | |
+------------------------------------------+--------------------------------------------------+
| IRR on business sold | - 51% from the sale of part of the Itheon |
| | business |
+------------------------------------------+--------------------------------------------------+
b) Commercial measures
Total value of annuity revenue contracts signed: GBP14m
Performance against service level agreements for availability of servers -
99.9%. The target for this is 99% per the contractual customer relationships.
Consolidated income statement
Year ended 31 October 2008
+----------------------------------------+-------+----------------+----------------+
| |Notes | 2008 | 2007 |
| | | GBP'000 | GBP'000 |
+----------------------------------------+-------+----------------+----------------+
| | | | |
+----------------------------------------+-------+----------------+----------------+
| Revenue | 2 | 46,315 | 28,927 |
+----------------------------------------+-------+----------------+----------------+
| Cost of sales | | (33,690) | (22,641) |
+----------------------------------------+-------+----------------+----------------+
| Gross profit | | 12,625 | 6,286 |
+----------------------------------------+-------+----------------+----------------+
| | | | |
+----------------------------------------+-------+----------------+----------------+
| Administrative expenses | | (13,061) | (6,812) |
+----------------------------------------+-------+----------------+----------------+
| | | | |
+----------------------------------------+-------+----------------+----------------+
| Adjusted* EBITDA | | 3,733 | 697 |
+----------------------------------------+-------+----------------+----------------+
| Less: depreciation | | (1,069) | (516) |
+----------------------------------------+-------+----------------+----------------+
| Adjusted EBITA | | 2,664 | 181 |
+----------------------------------------+-------+----------------+----------------+
| Less: amortisation and impairment of | | (1,896) | (536) |
| intangibles | | | |
+----------------------------------------+-------+----------------+----------------+
| Less: integration and strategic costs | 3 | (1,204) | (171) |
+----------------------------------------+-------+----------------+----------------+
| Operating loss | | (436) | (526) |
+----------------------------------------+-------+----------------+----------------+
| | | | |
+----------------------------------------+-------+----------------+----------------+
| Finance income | | 147 | 327 |
+----------------------------------------+-------+----------------+----------------+
| Finance costs | | (788) | (102) |
+----------------------------------------+-------+----------------+----------------+
| Finance (costs)/income - net | | (641) | 225 |
+----------------------------------------+-------+----------------+----------------+
| | | | |
+----------------------------------------+-------+----------------+----------------+
| Loss before tax | | (1,077) | (301) |
+----------------------------------------+-------+----------------+----------------+
| | | | |
+----------------------------------------+-------+----------------+----------------+
| Tax credit | 5 | 741 | 51 |
+----------------------------------------+-------+----------------+----------------+
| | | | |
+----------------------------------------+-------+----------------+----------------+
| Loss for the year from continuing | | (336) | (250) |
| operations | | | |
+----------------------------------------+-------+----------------+----------------+
| | | | |
+----------------------------------------+-------+----------------+----------------+
| Discontinued operations | | | |
+----------------------------------------+-------+----------------+----------------+
| Profit for the year from discontinued | 2 | 1,877 | 497 |
| operations | | | |
+----------------------------------------+-------+----------------+----------------+
| | | | |
+----------------------------------------+-------+----------------+----------------+
| Profit for the year attributable to | | 1,541 | 247 |
| equity shareholders | | | |
+----------------------------------------+-------+----------------+----------------+
| | | | |
+----------------------------------------+-------+----------------+----------------+
| Earnings per ordinary share | 6 | | |
+----------------------------------------+-------+----------------+----------------+
| - basic | | 3.98 | 0.63 |
+----------------------------------------+-------+----------------+----------------+
| - diluted | | 3.88 | 0.59 |
+----------------------------------------+-------+----------------+----------------+
| | | | |
+----------------------------------------+-------+----------------+----------------+
| Earnings per ordinary share from | 6 | | |
| continuing operations | | | |
+----------------------------------------+-------+----------------+----------------+
| - basic | | (0.87) | (0.64) |
+----------------------------------------+-------+----------------+----------------+
| - diluted | | (0.87) | (0.64) |
+----------------------------------------+-------+----------------+----------------+
+----------------------------------------+-------+----------------+----------------+
| *Adjusted for integration and | | | |
| strategic costs | | | |
| (note 3) | | | |
+----------------------------------------+-------+----------------+----------------+
Consolidated balance sheet
As at 31 October 2008
+-------------------------------------+-------+------------------+------------------+
| |Notes | 2008 | 2007 |
| | | GBP'000 | GBP'000 |
+-------------------------------------+-------+------------------+------------------+
| Assets | | | |
+-------------------------------------+-------+------------------+------------------+
| Non-current assets | | | |
+-------------------------------------+-------+------------------+------------------+
| Intangible assets | 7 | 29,432 | 33,259 |
+-------------------------------------+-------+------------------+------------------+
| Property, plant and equipment | | 2,496 | 1,809 |
+-------------------------------------+-------+------------------+------------------+
| Deferred tax assets | | 188 | 371 |
+-------------------------------------+-------+------------------+------------------+
| Trade and other receivables | | 6,259 | 2,847 |
+-------------------------------------+-------+------------------+------------------+
| Deferred consideration on disposals | | - | 35 |
+-------------------------------------+-------+------------------+------------------+
| | | 38,375 | 38,321 |
+-------------------------------------+-------+------------------+------------------+
| | | | |
+-------------------------------------+-------+------------------+------------------+
| Current assets | | | |
+-------------------------------------+-------+------------------+------------------+
| Inventories | | - | 20 |
+-------------------------------------+-------+------------------+------------------+
| Trade and other receivables | | 15,077 | 14,493 |
+-------------------------------------+-------+------------------+------------------+
| Deferred consideration on disposals | | 1,120 | - |
+-------------------------------------+-------+------------------+------------------+
| Cash and cash equivalents | | 7,749 | 4,225 |
+-------------------------------------+-------+------------------+------------------+
| | | 23,946 | 18,738 |
+-------------------------------------+-------+------------------+------------------+
| | | | |
+-------------------------------------+-------+------------------+------------------+
| Liabilities | | | |
+-------------------------------------+-------+------------------+------------------+
| Current liabilities | | | |
+-------------------------------------+-------+------------------+------------------+
| Trade and other payables | | (23,765) | (26,739) |
+-------------------------------------+-------+------------------+------------------+
| Deferred consideration on | | (3,119) | - |
| acquisitions | | | |
+-------------------------------------+-------+------------------+------------------+
| Current tax liabilities | | (1,323) | (908) |
+-------------------------------------+-------+------------------+------------------+
| Borrowings | | (2,247) | (395) |
+-------------------------------------+-------+------------------+------------------+
| | | (30,454) | (28,042) |
+-------------------------------------+-------+------------------+------------------+
| | | | |
+-------------------------------------+-------+------------------+------------------+
| Non-current liabilities | | | |
+-------------------------------------+-------+------------------+------------------+
| Borrowings | | (5,656) | (2,978) |
+-------------------------------------+-------+------------------+------------------+
| Trade and other payables | | (6,531) | (3,667) |
+-------------------------------------+-------+------------------+------------------+
| Deferred tax liabilities | | (2,312) | (3,501) |
+-------------------------------------+-------+------------------+------------------+
| Deferred consideration on | | - | (3,183) |
| acquisitions | | | |
+-------------------------------------+-------+------------------+------------------+
| | | (14,499) | (13,329) |
+-------------------------------------+-------+------------------+------------------+
| | | | |
+-------------------------------------+-------+------------------+------------------+
| Net assets | | 17,368 | 15,688 |
+-------------------------------------+-------+------------------+------------------+
| | | | |
+-------------------------------------+-------+------------------+------------------+
| Shareholders' equity | | | |
+-------------------------------------+-------+------------------+------------------+
| Called up share capital | | 3,952 | 3,952 |
+-------------------------------------+-------+------------------+------------------+
| Share premium account | | 1,647 | 1,647 |
+-------------------------------------+-------+------------------+------------------+
| Merger reserve | | 3,511 | 3,511 |
+-------------------------------------+-------+------------------+------------------+
| Retained earnings | | 7,928 | 6,387 |
+-------------------------------------+-------+------------------+------------------+
| Share based payment reserve | | 330 | 191 |
+-------------------------------------+-------+------------------+------------------+
| Total shareholders' equity | | 17,368 | 15,688 |
+-------------------------------------+-------+------------------+------------------+
Consolidated statement of changes in equity
Year ended 31 October 2008
+---------------------------------------------+------------------+------------------+
| | 2008 | 2007 |
| | GBP'000 | GBP'000 |
+---------------------------------------------+------------------+------------------+
| Shareholders' equity at beginning of year | 15,688 | 25,251 |
+---------------------------------------------+------------------+------------------+
| Profit for the year | 1,541 | 247 |
+---------------------------------------------+------------------+------------------+
| Increase in share based payment reserve | 139 | 94 |
+---------------------------------------------+------------------+------------------+
| Shares issued in the year | - | 132 |
+---------------------------------------------+------------------+------------------+
| Share premium on shares issue in the year | - | 33 |
+---------------------------------------------+------------------+------------------+
| Issue of new shares on acquisition of | - | 243 |
| subsidiary | | |
+---------------------------------------------+------------------+------------------+
| Capital reduction | - | (10,312) |
+---------------------------------------------+------------------+------------------+
| Shareholders' equity at end of year | 17,368 | 15,688 |
+---------------------------------------------+------------------+------------------+
Consolidated cash flow statement
Year ended 31 October 2008
+-----------------------------------------------+--------+------------+--------------+
| | Notes | 2008 | 2007 |
| | | GBP'000 | GBP'000 |
+-----------------------------------------------+--------+------------+--------------+
| | | | |
+-----------------------------------------------+--------+------------+--------------+
| Cash flows from operating activities | | | |
+-----------------------------------------------+--------+------------+--------------+
| Cash generated from operations | (a) | 2,184 | 5,796 |
+-----------------------------------------------+--------+------------+--------------+
| Interest received | | 87 | 327 |
+-----------------------------------------------+--------+------------+--------------+
| Interest paid | | (502) | (102) |
+-----------------------------------------------+--------+------------+--------------+
| Tax received/(paid) | | 666 | (615) |
+-----------------------------------------------+--------+------------+--------------+
| Net cash inflows from operating activities | | 2,435 | 5,406 |
+-----------------------------------------------+--------+------------+--------------+
| | | | |
+-----------------------------------------------+--------+------------+--------------+
| Cash flows from investing activities | | | |
+-----------------------------------------------+--------+------------+--------------+
| Acquisition of subsidiaries (net of cash | | (123) | (18,590) |
| acquired) | | | |
+-----------------------------------------------+--------+------------+--------------+
| Deferred consideration paid on prior period | | - | (1,871) |
| acquisitions | | | |
+-----------------------------------------------+--------+------------+--------------+
| Disposal of subsidiaries (net of cash | 4 | 1,875 | 252 |
| disposed) | | | |
+-----------------------------------------------+--------+------------+--------------+
| Deferred consideration received on prior | | - | 5,875 |
| period disposals | | | |
+-----------------------------------------------+--------+------------+--------------+
| Purchase of intangible assets | | (669) | - |
+-----------------------------------------------+--------+------------+--------------+
| Purchase of property, plant and equipment | | (597) | (347) |
+-----------------------------------------------+--------+------------+--------------+
| Proceeds from sale of property, plant and | | - | 70 |
| equipment | | | |
+-----------------------------------------------+--------+------------+--------------+
| Available for sale investments | | - | 2,000 |
+-----------------------------------------------+--------+------------+--------------+
| Net cash flows from/(used in) investing | | 486 | (12,611) |
| activities | | | |
+-----------------------------------------------+--------+------------+--------------+
| | | | |
+-----------------------------------------------+--------+------------+--------------+
| Cash flows from financing activities | | | |
+-----------------------------------------------+--------+------------+--------------+
| Net proceeds from issue of ordinary share | | - | 63 |
| capital | | | |
+-----------------------------------------------+--------+------------+--------------+
| Capital repayment - reduction in share | | - | (10,312) |
| premium | | | |
+-----------------------------------------------+--------+------------+--------------+
| Net proceeds from issue of bank loan | | 2,970 | 2,500 |
+-----------------------------------------------+--------+------------+--------------+
| Finance lease principal payments | | (2,015) | (246) |
+-----------------------------------------------+--------+------------+--------------+
| Repayment of borrowings | | (352) | (855) |
+-----------------------------------------------+--------+------------+--------------+
| Net cash from/(used in) financing activities | | 603 | (8,850) |
+-----------------------------------------------+--------+------------+--------------+
| | | | |
+-----------------------------------------------+--------+------------+--------------+
| Net increase/(decrease) in cash and cash | | 3,524 | (16,055) |
| equivalents | | | |
+-----------------------------------------------+--------+------------+--------------+
| Cash and cash equivalents at start of year | | 4,225 | 20,280 |
+-----------------------------------------------+--------+------------+--------------+
| Cash and cash equivalents at end of year | (b) | 7,749 | 4,225 |
+-----------------------------------------------+--------+------------+--------------+
Notes to the consolidated cash flow statement
a) Cash generated from operations
+----------------------------------------+-------+----------------+----------------+
| | | 2008 | 2007 |
| | | GBP'000 | GBP'000 |
+----------------------------------------+-------+----------------+----------------+
| Continuing operations | | | |
+----------------------------------------+-------+----------------+----------------+
| Loss before tax | | (1,077) | (301) |
+----------------------------------------+-------+----------------+----------------+
| Adjustments for: | | | |
+----------------------------------------+-------+----------------+----------------+
| Finance cost/(income) - net | | 641 | (225) |
+----------------------------------------+-------+----------------+----------------+
| Depreciation | | 1,069 | 516 |
+----------------------------------------+-------+----------------+----------------+
| Amortisation | | 1,896 | 536 |
+----------------------------------------+-------+----------------+----------------+
| Share based payment charge | | 139 | 94 |
+----------------------------------------+-------+----------------+----------------+
| Decrease in inventories | | 20 | 35 |
+----------------------------------------+-------+----------------+----------------+
| Increase in trade and other | | (4,222) | (6,465) |
| receivables | | | |
+----------------------------------------+-------+----------------+----------------+
| Increase in trade and other payables | | 3,461 | 10,828 |
+----------------------------------------+-------+----------------+----------------+
| Cash generated from continuing | | 1,927 | 5,018 |
| operations | | | |
+----------------------------------------+-------+----------------+----------------+
+----------------------------------------+-------+----------------+----------------+
| Discontinued operations | | | |
+----------------------------------------+-------+----------------+----------------+
| Profit before tax | | 223 | 539 |
+----------------------------------------+-------+----------------+----------------+
| Adjustments for: | | | |
+----------------------------------------+-------+----------------+----------------+
| Depreciation | | 27 | 5 |
+----------------------------------------+-------+----------------+----------------+
| Amortisation | | 281 | - |
+----------------------------------------+-------+----------------+----------------+
| Decrease in inventories | | - | 487 |
+----------------------------------------+-------+----------------+----------------+
| (Increase)/decrease in trade and other | | (432) | 1,032 |
| receivables | | | |
+----------------------------------------+-------+----------------+----------------+
| Increase/(decrease) in trade and other | | 158 | (1,285) |
| payables | | | |
+----------------------------------------+-------+----------------+----------------+
| Cash generated from discontinued | | 257 | 778 |
| operations | | | |
+----------------------------------------+-------+----------------+----------------+
+----------------------------------------+-------+----------------+----------------+
| Cash generated from operations | | 2,184 | 5,796 |
+----------------------------------------+-------+----------------+----------------+
| | | | |
+----------------------------------------+-------+----------------+----------------+
b) Reconciliation of net cash flow to movement in net (debt)/funds
+----------------------------------------+-------+----------------+----------------+
| | | 2008 | 2007 |
| | | GBP'000 | GBP'000 |
+----------------------------------------+-------+----------------+----------------+
| | | | |
+----------------------------------------+-------+----------------+----------------+
| Increase/(decrease) in cash in the | | 3,524 | (16,055) |
| year | | | |
+----------------------------------------+-------+----------------+----------------+
| Net cash inflow in respect of bank | | (2,618) | (1,645) |
| loan | | | |
+----------------------------------------+-------+----------------+----------------+
| Cash outflow in respect of finance | | 2,015 | 246 |
| leases | | | |
+----------------------------------------+-------+----------------+----------------+
| Changes resulting from cash flows | | 2,921 | (17,454) |
+----------------------------------------+-------+----------------+----------------+
| Non cash changes: | | | |
+----------------------------------------+-------+----------------+----------------+
| Loans and finance leases acquired with | | - | (1,400) |
| subsidiaries | | | |
+----------------------------------------+-------+----------------+----------------+
| Amortisation of loan interest costs | | (12) | - |
+----------------------------------------+-------+----------------+----------------+
| New finance leases | | (3,915) | (547) |
+----------------------------------------+-------+----------------+----------------+
| Change in net debt | | (1,006) | (19,401) |
+----------------------------------------+-------+----------------+----------------+
| Net funds at beginning of period | | 852 | 20,253 |
+----------------------------------------+-------+----------------+----------------+
| Net (debt)/funds at end of period | | (154) | 852 |
+----------------------------------------+-------+----------------+----------------+
| | | | |
+----------------------------------------+-------+----------------+----------------+
| Analysis of net (debt)/funds | | | |
+----------------------------------------+-------+----------------+----------------+
| Cash and cash equivalents and bank | | 7,749 | 4,225 |
| overdrafts | | | |
+----------------------------------------+-------+----------------+----------------+
| Hire purchase and finance lease | | (2,798) | (898) |
| obligations | | | |
+----------------------------------------+-------+----------------+----------------+
| Bank loan | | (5,105) | (2,475) |
+----------------------------------------+-------+----------------+----------------+
| Net (debt)/funds | | (154) | 852 |
+----------------------------------------+-------+----------------+----------------+
| | | | |
+----------------------------------------+-------+----------------+----------------+
| Cash and cash equivalents | | | |
+----------------------------------------+-------+----------------+----------------+
| Cash at bank and in hand | | 7,749 | 4,225 |
+----------------------------------------+-------+----------------+----------------+
| | | | |
+----------------------------------------+-------+----------------+----------------+
| | | | |
+----------------------------------------+-------+----------------+----------------+
Notes to the preliminary announcement
For the year ended 31 October 2008
1 Basis of preparation
The preliminary results for the year ended 31 October 2008 have been prepared
in accordance with the accounting policies set out in the interim report for the
six months ended 30 April 2008.
These policies have been prepared in accordance with International Financial
Reporting Standards as adopted by the European Union (IFRSs as adopted by the
EU), IFRIC interpretations and the Companies Act 1985 applicable to companies
reporting under IFRS. The consolidated results have been prepared under the
historical cost convention, as modified for any financial assets which are
stated at fair value through profit or loss.
2. Segmental information
The segment information provided to the Board for the reportable segments for
the year ended 31 October 2008 is as follows:
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| 2008 | Hardware | Services | Total | Software | Central | Total |
| | | | Hardware | | | |
| | | | and | | | |
| | | | Services | | | |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Continuing operations | | | | | | |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Revenue | 21,754 | 22,901 | 44,655 | 1,800 | - | 46,455 |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Less: intersegment sales | - | (140) | (140) | - | - | (140) |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Total revenue from third parties | 21,754 | 22,761 | 44,515 | 1,800 | - | 46,315 |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Cost of sales | (18,458) | (15,232) | (33,690) | - | - | (33,690) |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Gross profit | 3,296 | 7,529 | 10,825 | 1,800 | - | 12,625 |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| | | | | | | |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Total administrative expenses | | | (8,675) | (175) | (4,211) | (13,061) |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| | | | | | | |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Adjusted EBITDA | | | 4,300 | 1,625 | (2,192) | 3,733 |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Depreciation | | | (1,009) | - | (60) | (1,069) |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Adjusted EBITA | | | 3,291 | 1,625 | (2,252) | 2,664 |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Less: amortisation and impairment | | | (22) | - | (1,874) | (1,896) |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Less: integration and strategic | | | (1,119) | - | (85) | (1,204) |
| costs | | | | | | |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Total operating profit/(loss) | | | 2,150 | 1,625 | (4,211) | (436) |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| | | | | | | |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Finance income | | | 60 | - | 87 | 147 |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Finance cost | | | (116) | (1) | (671) | (788) |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Finance income - net | | | (56) | (1) | (584) | (641) |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| | | | | | | |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Profit before tax | | | 2,094 | 1,624 | (4,795) | (1,077) |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| | | | | | | |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Tax credit | | | 86 | - | 655 | 741 |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| | | | | | | |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Profit for the year from continuing | | | 2,180 | 1,624 | (4,140) | (336) |
| operations | | | | | | |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| | | | | | | |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Discontinued operations | | | | | | |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Revenue | | | - | 1,692 | - | 1,692 |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| | | | | | | |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Adjusted EBITDA | | | - | 583 | - | 583 |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Depreciation | | | - | (27) | - | (27) |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Adjusted EBITA | | | - | 556 | - | 556 |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Less: Amortisation | | | - | (54) | (227) | (281) |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Less: integration and strategic | | | - | (52) | - | (52) |
| costs | | | | | | |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Total operating profit/(loss) | | | - | 450 | (227) | 223 |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Tax credit | | | - | 8 | 64 | 72 |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Post tax result from discontinued | | | - | 458 | (163) | 295 |
| operations | | | | | | |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| (Loss)/gain on sale of company | | | - | (8) | 1,120 | 1,112 |
| (note 4) | | | | | | |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Tax credit | | | - | - | 470 | 470 |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Profit for the year from | | | - | 450 | 1,427 | 1,877 |
| discontinued operations | | | | | | |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| | | | | | | |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
| Profit/(loss) for the year | | | 2,180 | 2,074 | (2,713) | 1,541 |
| attributable to equity shareholders | | | | | | |
+-------------------------------------+----------+----------+----------+----------+---------+----------+
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| 2007 | Hardware | Services | Total | Software | Mobile | Central | Total |
| | | | hardware | | internet | | |
| | | | and | | solutions | | |
| | | | services | | | | |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Continuing operations | | | | | | | |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Revenue | 18,531 | 10,396 | 28,927 | - | | - | 28,927 |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Less: intersegment sales | - | - | - | - | | - | - |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Total revenue from third | 18,531 | 10,396 | 28,927 | - | | - | 28,927 |
| parties | | | | | | | |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Cost of sales | (15,726) | (6,915) | (22,641) | - | | | (22,641) |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Gross profit | 2,805 | 3,481 | 6,286 | - | | - | 6,286 |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| | | | | | | | |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Total administrative | | | (4,921) | - | | (1,891) | (6,812) |
| expenses | | | | | | | |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| | | | | | | | |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Adjusted EBITDA | | | 2,032 | - | | (1,335) | 697 |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Depreciation | | | (496) | - | | (20) | (516) |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Adjusted EBITA | | | 1,536 | - | | (1,355) | 181 |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Less: amortisation | | | - | - | | (536) | (536) |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Less: integration and | | | (171) | - | | - | (171) |
| strategic costs | | | | | | | |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Total operating | | | 1,365 | - | - | (1,891) | (526) |
| profit/(loss) | | | | | | | |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| | | | | | | | |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Finance income | | | 127 | - | | 200 | 327 |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Finance cost | | | (56) | - | | (46) | (102) |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Finance income - net | | | 71 | - | - | 154 | 225 |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| | | | | | | | |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Profit/(loss) before tax | | | 1,436 | - | - | (1,737) | (301) |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| | | | | | | | |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Tax credit | | | - | - | - | 51 | 51 |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| | | | | | | | |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Profit/(loss) for the year | | | 1,436 | - | - | (1,686) | (250) |
| from continuing operations | | | | | | | |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| | | | | | | | |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Discontinued operations | | | | | | | |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Profit for the year from | | | - | 67 | 430 | - | 497 |
| discontinued operations | | | | | | | |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Profit/(loss) for the year | | | 1,436 | 67 | 430 | (1,686) | 247 |
| attributable to equity | | | | | | | |
| shareholders | | | | | | | |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| | | | | | | | |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Discontinued operations | | | | | | | |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Revenue | | | | 171 | 2,129 | | 2,300 |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| | | | | | | | |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Adjusted EBITDA | | | | 72 | 492 | | 564 |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Depreciation | | | | (5) | - | | (5) |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Adjusted EBITA | | | | 67 | 492 | | 559 |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Less: amortisation | | | | - | - | | - |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Less: integration and | | | | - | - | | - |
| strategic costs | | | | | | | |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Total operating profit | | | | 67 | 492 | | 559 |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Post tax results from | | | | 67 | 492 | | 559 |
| discontinued operations | | | | | | | |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Loss on disposal of | | | | - | (20) | | (20) |
| company | | | | | | | |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Taxation | | | | - | (42) | | (42) |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Net gain on disposal | | | - | - | (62) | - | (62) |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| Total | | | - | 67 | 430 | - | 497 |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
| | | | | | | | |
+----------------------------+----------+----------+----------+----------+-----------+---------+----------+
3. Integration and strategic costs
In accordance with the group's policy for integration and strategic costs, the
following charges/(credits) were included in this category for the year:
+------------------------------------------------+---------------+---------------+
| | 2008 | 2007 |
+------------------------------------------------+---------------+---------------+
| | GBP'000 | GBP'000 |
+------------------------------------------------+---------------+---------------+
| Costs of integration | | |
+------------------------------------------------+---------------+---------------+
| - Staff redundancy costs and compromise | 860 | 285 |
| agreements | | |
+------------------------------------------------+---------------+---------------+
| - Staff costs incurred in notice | 226 | - |
| periods/gardening leave | | |
+------------------------------------------------+---------------+---------------+
| - Other costs | 85 | 89 |
+------------------------------------------------+---------------+---------------+
| Other strategic costs | | |
+------------------------------------------------+---------------+---------------+
| - Costs of aborted acquisitions | 35 | - |
+------------------------------------------------+---------------+---------------+
| - Costs of potential disposals | 50 | - |
+------------------------------------------------+---------------+---------------+
| Credit on settlement of liability | - | (203) |
+------------------------------------------------+---------------+---------------+
| | 1,256 | 171 |
+------------------------------------------------+---------------+---------------+
With respect to the above cost GBP1,204,000 (2007: GBP171,000) is included in
continuing operations and GBP52,000 (2007: GBPNil) is included in discontinued
operations. The 2008 'other costs' include costs incurred with re-structuring
the Network Operation Centres at Yate and Altringham.
4. Discontinued operations
On 31 October 2008, the group sold its 100% interest in the share capital of
Itheon Ltd to Bluechip Engineering Ltd. Prior to the sale, the software and
assets in relation to SRA software were transferred to Storage Fusion Ltd (a
group company). A summary of the gain on disposal is set out below:
+--------------------------+--------+--------+---------+
| | | | GBP'000 |
+--------------------------+--------+--------+---------+
| | | | |
+--------------------------+--------+--------+---------+
| Proceeds received | | | 2,200 |
+--------------------------+--------+--------+---------+
| Fair value of deferred | | 1,073 |
| consideration | | |
+-----------------------------------+--------+---------+
| Total consideration | | | 3,273 |
+--------------------------+--------+--------+---------+
| Costs of disposal | | | |
+--------------------------+--------+--------+---------+
| Professional fees | | 104 | |
+--------------------------+--------+--------+---------+
| Directors' disposal | | 169 | |
| bonus | | | |
+--------------------------+--------+--------+---------+
| | | | (273) |
+--------------------------+--------+--------+---------+
| Net consideration | | | 3,000 |
+--------------------------+--------+--------+---------+
| Net book value of acquired intangibles | 1,880 |
| disposed | |
+--------------------------------------------+---------+
| Purchased intangibles | | | 288 |
| disposed | | | |
+--------------------------+--------+--------+---------+
| Other net liabilities | | | (280) |
| disposed | | | |
+--------------------------+--------+--------+---------+
| | | | 1,888 |
+--------------------------+--------+--------+---------+
| | | | |
+--------------------------+--------+--------+---------+
| Profit on disposal | | | 1,112 |
+--------------------------+--------+--------+---------+
| | | | |
+--------------------------+--------+--------+---------+
| Reconciliation to consolidated cash flow statement |
+------------------------------------------------------+
| Proceeds received | | | 2,200 |
+--------------------------+--------+--------+---------+
| Costs of disposal | | | (273) |
+--------------------------+--------+--------+---------+
| Cash disposed | | | (52) |
+--------------------------+--------+--------+---------+
| | | | 1,875 |
+--------------------------+--------+--------+---------+
Details of the results for the year for the discontinued operations are set out
in note 2.
5. Tax credit
+------------------------------------------------+---------------+---------------+
| | 2008 | 2007 |
+------------------------------------------------+---------------+---------------+
| | GBP'000 | GBP'000 |
+------------------------------------------------+---------------+---------------+
| Continuing operations | | |
+------------------------------------------------+---------------+---------------+
| Current tax | (180) | 167 |
+------------------------------------------------+---------------+---------------+
| Deferred tax | (561) | (218) |
+------------------------------------------------+---------------+---------------+
| | (741) | (51) |
+------------------------------------------------+---------------+---------------+
| Discontinued operations | | |
+------------------------------------------------+---------------+---------------+
| Current tax | (72) | 51 |
+------------------------------------------------+---------------+---------------+
| Deferred tax | (470) | - |
+------------------------------------------------+---------------+---------------+
| | (542) | 51 |
+------------------------------------------------+---------------+---------------+
| | | |
+------------------------------------------------+---------------+---------------+
| Total tax credit | 1,283 | - |
+------------------------------------------------+---------------+---------------+
The tax on the group's profit before tax differs from the theoretical amount
that would arise using the weighted average tax rate applicable to the
consolidated entities as follows:
+---------------------------------------------------------------+---------+---------+
| | 2008 | 2007 |
+---------------------------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
+---------------------------------------------------------------+---------+---------+
| Loss before tax - continuing operations | (1,077) | (301) |
+---------------------------------------------------------------+---------+---------+
| Profit before tax - discontinued operations | 223 | 559 |
+---------------------------------------------------------------+---------+---------+
| Profit before tax - gain/(loss) on sale of company - | 1,112 | (20) |
| discontinued operations | | |
+---------------------------------------------------------------+---------+---------+
| | 258 | 238 |
+---------------------------------------------------------------+---------+---------+
| Loss before tax multiplied by the average effective rate of | 75 | 71 |
| tax in the UK of 28.9% (2007: 30%) | | |
+---------------------------------------------------------------+---------+---------+
| | | |
+---------------------------------------------------------------+---------+---------+
| Timing differences between depreciation and capital | 5 | 30 |
| allowances | | |
+---------------------------------------------------------------+---------+---------+
| Items disallowed for tax | 88 | 5 |
+---------------------------------------------------------------+---------+---------+
| Brought forward losses utilised | (237) | (105) |
+---------------------------------------------------------------+---------+---------+
| Profit on disposal of subsidiaries | (368) | (93) |
+---------------------------------------------------------------+---------+---------+
| Enhanced research and development expenditure | (49) | - |
+---------------------------------------------------------------+---------+---------+
| Release of deferred tax liability on intangibles on sale of | (470) | - |
| subsidiary | | |
+---------------------------------------------------------------+---------+---------+
| Other timing differences | - | 25 |
+---------------------------------------------------------------+---------+---------+
| Movement on deferred tax asset - utilisation of losses | 158 | - |
+---------------------------------------------------------------+---------+---------+
| Prior year adjustment | (252) | 67 |
+---------------------------------------------------------------+---------+---------+
| Change in rate of deferred tax from 30% to 28% | (233) | - |
+---------------------------------------------------------------+---------+---------+
| | (1,283) | - |
+---------------------------------------------------------------+---------+---------+
6. Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to
equity holders of the company by the weighted average number of ordinary shares
in issue during the year.
+-------------------------+------------+--------------+------------+------------+--------------+------------+
| | 2008 | 2007 |
+-------------------------+----------------------------------------+----------------------------------------+
| | Continuing | Discontinued | Total | Continuing | Discontinued | Total |
+-------------------------+------------+--------------+------------+------------+--------------+------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------------+------------+--------------+------------+------------+--------------+------------+
| | | | | | | |
+-------------------------+------------+--------------+------------+------------+--------------+------------+
| Profit attributable to | (336) | 1,877 | 1,541 | (250) | 497 | 247 |
| equity holders | | | | | | |
+-------------------------+------------+--------------+------------+------------+--------------+------------+
| Adjustments: | | | | | | |
+-------------------------+------------+--------------+------------+------------+--------------+------------+
| Amortisation of | 1,896 | 281 | 2,177 | 536 | - | 536 |
| intangible assets | | | | | | |
+-------------------------+------------+--------------+------------+------------+--------------+------------+
| Integration and | 1,204 | 52 | 1,256 | 171 | - | 171 |
| strategic costs | | | | | | |
+-------------------------+------------+--------------+------------+------------+--------------+------------+
| Adjusted profit/(loss) | 2,764 | 2,210 | 4,974 | 457 | 497 | 954 |
| and before amortisation | | | | | | |
| of intangible assets | | | | | | |
+-------------------------+------------+--------------+------------+------------+--------------+------------+
| | | | | | | |
+-------------------------+------------+--------------+------------+------------+--------------+------------+
| | Number | Number | Number | Number | Number | Number |
+-------------------------+------------+--------------+------------+------------+--------------+------------+
| | | | | | | |
+-------------------------+------------+--------------+------------+------------+--------------+------------+
| Basic weighted average | 38,715,830 | 38,715,830 | 38,715,830 | 39,202,068 | 39,202,069 | 39,202,070 |
| number of shares | | | | | | |
+-------------------------+------------+--------------+------------+------------+--------------+------------+
| Impact of share options | 1,184,719 | 1,184,719 | 1,184,719 | 2,485,303 | 2,485,303 | 2,485,303 |
+-------------------------+------------+--------------+------------+------------+--------------+------------+
| Diluted weighted | 39,900,549 | 39,900,549 | 39,900,549 | 41,687,372 | 41,687,372 | 41,687,373 |
| average number of | | | | | | |
| shares | | | | | | |
+-------------------------+------------+--------------+------------+------------+--------------+------------+
| | | | | | | |
+-------------------------+------------+--------------+------------+------------+--------------+------------+
| Earnings per share - | | | | | | |
| pence | | | | | | |
+-------------------------+------------+--------------+------------+------------+--------------+------------+
| Basic | (0.87) | 4.85 | 3.98 | (0.64) | 1.27 | 0.63 |
+-------------------------+------------+--------------+------------+------------+--------------+------------+
| Diluted | (0.87) | 4.73 | 3.88 | (0.64) | 1.19 | 0.59 |
+-------------------------+------------+--------------+------------+------------+--------------+------------+
| | | | | | | |
+-------------------------+------------+--------------+------------+------------+--------------+------------+
| Adjusted and before | 7.14 | 5.71 | 12.85 | 1.17 | 1.27 | 2.43 |
| amortisation - Basic | | | | | | |
+-------------------------+------------+--------------+------------+------------+--------------+------------+
| Adjusted and before | 6.96 | 5.56 | 12.52 | 1.10 | 1.19 | 2.29 |
| amortisation - Diluted | | | | | | |
+-------------------------+------------+--------------+------------+------------+--------------+------------+
Where there is a loss per share from continuing operations, the share options
are not dilutive and hence the diluted earnings per share is the same as the
basic.
7.Intangible assets
+--------------------------+----------+---------+------------+----------+-------------+----------+
| At 31 October 2008 | Goodwill | Brands | Customer | Software | Development | Total |
| | | | and | | costs | |
| | | | related | | | |
| | | | contracts | | | |
+--------------------------+ + + + + + +
| | | | | | | |
+--------------------------+----------+---------+------------+----------+-------------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------------+----------+---------+------------+----------+-------------+----------+
| | | | | | | |
+--------------------------+----------+---------+------------+----------+-------------+----------+
| Cost | | | | | | |
+--------------------------+----------+---------+------------+----------+-------------+----------+
| At 1 November 2007 | 21,523 | 3,758 | 7,346 | 1,168 | - | 33,795 |
+--------------------------+----------+---------+------------+----------+-------------+----------+
| Adjustments to fair | (201) | - | - | - | - | (201) |
| value of consideration* | | | | | | |
+--------------------------+----------+---------+------------+----------+-------------+----------+
| Additions | - | - | - | 392 | 327 | 719 |
+--------------------------+----------+---------+------------+----------+-------------+----------+
| Disposals - sale of | (200) | (606) | (656) | (999) | - | (2,461) |
| subsidiary | | | | | | |
+--------------------------+----------+---------+------------+----------+-------------+----------+
| At 31 October 2008 | 21,122 | 3,152 | 6,690 | 561 | 327 | 31,852 |
+--------------------------+----------+---------+------------+----------+-------------+----------+
| | | | | | | |
+--------------------------+----------+---------+------------+----------+-------------+----------+
| Amortisation and | | | | | | |
| impairment | | | | | | |
+--------------------------+----------+---------+------------+----------+-------------+----------+
| At 1 November 2007 | - | 103 | 425 | 8 | - | 536 |
+--------------------------+----------+---------+------------+----------+-------------+----------+
| Amortisation | - | 283 | 1,037 | 219 | - | 1,539 |
+--------------------------+----------+---------+------------+----------+-------------+----------+
| Impairment** | - | 638 | - | - | - | 638 |
+--------------------------+----------+---------+------------+----------+-------------+----------+
| Disposals - sale of | - | (64) | (76) | (153) | - | (293) |
| subsidiary | | | | | | |
+--------------------------+----------+---------+------------+----------+-------------+----------+
| At 31 October 2008 | - | 960 | 1,386 | 74 | - | 2,420 |
+--------------------------+----------+---------+------------+----------+-------------+----------+
| | | | | | | |
+--------------------------+----------+---------+------------+----------+-------------+----------+
| Net book amount at | 21,122 | 2,192 | 5,304 | 487 | 327 | 29,432 |
| 31 October 2008 | | | | | | |
+--------------------------+----------+---------+------------+----------+-------------+----------+
| | | | | | | |
+--------------------------+----------+---------+------------+----------+-------------+----------+
8. Post balance sheet events
On 16 December 2008, Xploite plc completed the acquisition of 100% of Blue
River Systems Limited ('Blue River') from Cantono plc ('Cantono') and the assets
of three of Cantono's managed services businesses, following the approval of
Cantono's shareholders.
The total consideration was GBP3m. The initial GBP2m was payable on completion
and the further GBP1m is payable subject to verification work on the completion
balance sheet. Since the work on the completion balance sheet is still to be
finalised it would be impracticable to provide any further financial information
with respect to this transaction.
9. Status of preliminary announcement
The financial information set out in the announcement does not constitute the
group's statutory accounts for the year ended 31 October 2008.
The statutory accounts for the year ended 31 October 2008 will be finalised on
the basis of the financial information presented by the directors in this
preliminary announcement and will be delivered to the Registrar of Companies
following the Company's Annual General Meeting.
Statutory accounts for the year ended 31 October 2007 have been delivered to the
Registrar of Companies and the auditors' report on these accounts was
unqualified and did not contain a statement under either Section 237(2) or (3)
of the Companies Act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR IFFVILIIVFIA
Xploite (LSE:XPT)
Historical Stock Chart
From Aug 2024 to Sep 2024
Xploite (LSE:XPT)
Historical Stock Chart
From Sep 2023 to Sep 2024