TIDMADT
RNS Number : 2461S
AdEPT Telecom plc
07 July 2015
AdEPT Telecom plc
("AdEPT" or the "Company")
Final results for the year ended 31 March 2015
AdEPT (AIM: ADT), a leading UK independent provider of
award-winning telecommunications services for business-to-business
communications, announces its results for the year ended 31 March
2015.
Financial Highlights
-- Twelfth consecutive year of increased underlying EBITDA up 13.5% to GBP4.6m (2014: GBP4.0m)
-- Revenue increased by 5.8% to GBP22.1m (2014: GBP20.9m)
-- Underlying EBITDA margin % increased by 1.4% to 20.8% (2014: 19.4%)
-- 15.8% increase to Profit Before Tax to GBP2.1m (2014: GBP1.8m)
-- 15.3% increase to Profit After Tax to GBP1.5m (2014: GBP1.3m)
-- 11.8% increase to Earnings Per Share of 6.90p (2014: 6.17p)
-- 11.5% increase to Adjusted Earnings Per Share of 15.76p (2014: 14.13p)
-- 58.3% increase to dividends declared to 4.75p (Interim 2.25p, Final 2.50p) (2014: 3.00p)
-- Cash generation with free cash flow, after interest, of GBP4.3m (2014: GBP2.6m)*
-- Net debt reduction of GBP1.5m year-on-year to GBP1.5m (2014: GBP3.0m)**
-- Total interest costs reduced by 9.1% to GBP0.23m (2014: GBP0.26m)
Operational Highlights
-- 15.0% increase to data connectivity and broadband revenues year-on-year
-- Acquisition of entire issued share capital of Bluecherry
Telecom Limited completed in April 2014
*Calculated as net cash from operating activities less interest
paid.
** Calculated as cash and cash equivalents less short-term and
long-term borrowings.
Commenting upon these results Chairman Roger Wilson said:
"AdEPT has delivered its 12th consecutive year of increased
EBITDA and continues to deliver consistently free cash flow
generation. The Company achieved a significant reduction to net
borrowings despite undertaking an acquisition during the year. The
continued strong cash generation has funded a 58% increase to
dividends declared during the year and the Board is confident that
continued focus on underlying profitability and strong cash
generation will support a progressive dividend policy.
Organically the Company has strengthened its position during the
year through successfully renewing and leveraging its various
frameworks to increase the scale of its public sector customer
base. The new larger debt facility put in place after the year end
has been partially used by the Company to complete a further
acquisition in May 2015, which enables the Company to extend its
product portfolio to include specialist unified
communications."
For further information on AdEPT please visit
www.adept-telecom.co.uk or contact:
AdEPT Telecom Plc
Roger Wilson, Chairman 07786 111 535
Ian Fishwick, Chief Executive 01892 550 225
John Swaite, Finance Director 01892 550 243
Northland Capital Partners Limited
Nominated Adviser
Edward Hutton / Gerry Beaney
Broking
John Howes / Abigail Wayne 020 7382 1100
CHAIRMAN'S STATEMENT
Review of Operations
I am pleased to report a 12th consecutive increase to underlying
EBITDA, up 13.5% to GBP4.6m. EBITDA margin has improved further
from 19.4% to 20.8%. In April 2014 AdEPT completed its 19th
acquisition, the entire issued share capital of Bluecherry Telecom
Limited which was fully integrated into the customer management
system in Tunbridge Wells, Kent in April 2014.
AdEPT's continued strong cash flow generation resulted in
GBP4.3m of free cash flow after interest. This free cash flow is
after making corporation tax payments of GBP0.3m, which is
considerably lower than the prior year as that included the
transition to large company status for corporation tax purposes.
GBP2.2m of free cash has been used to fund the contingent
consideration of the customer base acquisition from Bluebell
Telecom Limited in August 2013 and the initial consideration for
the acquisition of the entire issued share capital of Bluecherry
Telecom Limited. GBP0.7m of free cash was used to meet dividend
payments to shareholders as the Company continues to apply its
progressive policy.
The issue of new equity during the year to directors increasing
their shareholdings following the exercise of share options
resulted in a cash inflow of GBP0.2m, which was used by the Company
to repurchase 122,203 of its own shares during the year ended 31
March 2015 at an average price of 148.9p pursuant to the stock
exchange announcement issued on 18 December 2014. The Board
believes that share repurchase scheme can improve stock liquidity
and increase value to shareholders.
In line with its progressive policy, AdEPT has increased the
dividend year-on-year by 58.3%, declaring a final dividend of 2.50p
per Ordinary Share (2014: 1.50p), making total dividends declared
during the year ended 31 March 2015 of 4.75p per Ordinary Share
(2014: 3.00p). The Board is confident that the continued strong
cash generation will support a progressive dividend policy.
AdEPT continues to provide voice and data services to its
customers by offering best of breed products from all major UK
networks. Continued deployment and development of 21CN data
connectivity products with the tier-1 network partners has led to
data and broadband revenues increasing by 15.0% in the year ended
31 March 2015. As the demand for faster data connectivity speeds
continues AdEPT has seen further customer orders for 1-10Gb
Services, particularly from its base of University and College
customers.
Growth strategy
The strategy of the Company remains that of increasing EBITDA
and free cash generation by concentrating organic sales efforts on
winning direct new business with larger customers, particularly in
the public sector, and complementing this with earnings enhancing
acquisitions.
AdEPT has been highly successful in gaining traction in the
public sector space during the past two years with a number of
organic contract wins with public sector clients, including 25
Councils. During the year we also won our first NHS Trust
(Berkshire) and two Housing Associations.
We continue to concentrate on winning frameworks rather than
individual tenders. In July 2014 AdEPT successfully renewed its
approved supplier status for a further 4 years with Ja.net which
allows AdEPT to continue to sell data connectivity to UK Colleges
and Universities. In October 2014 AdEPT successfully renewed its
status for a further 2 years as the sole supplier under the ESPO
Telecom Framework 7 for calls, lines, broadband, super-fast
internet access and SIP to public sector and registered charities
nationwide. In February 2015 AdEPT was also awarded approved
supplier status under the G-Cloud 6 RM1557vi framework. This is in
addition to AdEPT's existing framework agreement with the Crown
Commercial Service under the RM1035 framework.
On 1 April 2014 the Company acquired the entire issued share
capital of Bluecherry Telecom Limited. The acquisition
consideration was funded from operating cash flow.
Post balance sheet events
After the balance sheet date, on 22 April 2015 the Company
signed a new 5 year GBP15 million revolving credit facility
agreement with Barclays Bank plc. This longer term facility
replaced the previous GBP5 million revolving credit facility, which
had an 18 month term remaining, and the term loan which was due for
repayment by September 2015. The new revolving credit facility
offers the Company significantly greater funding flexibility and is
on improved commercial terms when compared to the facility which it
replaces.
On 1 May 2015 the Company acquired the entire issued share
capital of Centrix Limited ("Centrix") for an initial cash
consideration of GBP7 million. Further consideration of between
GBPNil and GBP3.5 million will be payable, also in cash, dependent
upon performance of Centrix post-acquisition. Centrix, based in
Hook, is a well-established UK based specialist provider of complex
unified communications, Avaya IP telephony, hosted IP solutions and
managed services. Centrix offers its clients the delivery of
complex unified communications and managed service solutions, which
is an increasing requisite for AdEPT's existing and targeted
enterprise and public sector customer base. Our revenue from public
sector and healthcare will more than double with the acquisition.
Centrix skills and product set will complement and enhance AdEPT's
existing services and we will retain the office and customer
service operation in Hook, Hampshire. Approximately 80% of Centrix
revenue is generated from recurring revenue streams. AdEPT and
Centrix have both adopted capital asset light strategies and are
dedicated to offering a full suite of flexible data and unified
communication strategies.
Our new banking facilities have enabled the Board to continue to
identify and evaluate strategic acquisitions that are considered to
meet the criteria of complementing existing business whilst adding
value to our shareholders. The organic growth strategy continues to
be winning larger customers and existing client retention. We also
continue to target greater cross-sell penetration and development
of new products.
Employees
The improved profitability and free cash flow generation this
year was made possible by the continued hard work and focus of all
employees at AdEPT. As a Company we are immensely proud of the
track record we have created over the last 12 years and on behalf
of the Board I would like to take this opportunity to thank all of
our employees for their continued hard work.
Shareholder Benefits Scheme
The AdEPT shareholder benefits scheme has continued to attract
new members during the year. The scheme, which is available to all
shareholders owning a minimum of 250 shares, provides eligible
shareholders with free residential line rental worth approximately
GBP154 per annum for as long as they remain eligible
shareholders.
Outlook
The improved EBITDA this year was underpinned by focus on
underlying profitability through improving margins on customer
contracts, operational efficiencies, tight credit control and
strategic acquisition of a complementary customer base. The Board
is confident that continued strong cash generation will support a
progressive dividend policy.
The business focus for the coming year remains on continued
development of organic sales through leveraging AdEPT's approved
supplier status on the various telecom frameworks, maintaining
profitability and cash flow generation, which will be used to
reduce net borrowings and/or fund suitable earnings-enhancing
acquisitions, if identified. We will therefore continue to invest
in our organic sales channels, work with our network partners to
develop new products, complement this with further investment in
retention activities to retain customers and work with strategic
partners to actively identify potential acquisition targets which
meet the Company's requirements.
Roger Wilson
Non-executive Chairman
STRATEGIC REPORT
PRINCIPAL ACTIVITIES AND REVIEW OF BUSINESS
The principal activity of the Company is the provision of voice
and data communication services to both domestic and business
customers. A review of the business is contained in the chairman's
statement and the highlights are summarised in the strategic
report.
SUMMARY of three year financial performance:
Year ended March
2015 2014 2013
GBP'000 Year-on-Year GBP'000 Year-on-Year GBP'000
% %
-------------- --------- --------------- --------- --------------- ---------
Revenue 22,066 5.8% 20,852 (0.8%) 21,023
Gross margin 8,298 9.4% 7,584 4.4% 7,261
EBITDA 4,591 13.5% 4,043 8.3% 3,732
Net debt 1,539 2,962 3,270
-------------- --------- --------------- --------- --------------- ---------
REVENUE
During the year AdEPT has continued its diversification from a
traditional fixed line service provider towards next generation
products. Total revenue generated from data, mobile, inbound and
other services represented 27.4% of total revenue in the year ended
31 March 2015 (2014: 24.7%).
Total revenue increased by 5.8% to GBP22.1m (2014:
GBP20.9m):
-- Traditional fixed line revenues increased to GBP16.0m (2014:
GBP15.7m), which is largely a reflection of the contribution from
the Bluecherry Telecom Limited acquisition which has been partially
offset by the continued impact of the OFCOM regulatory price
control for mobile termination costs reducing call spend from
landline to mobile networks. In addition, call volume reductions
arising from continued substitution with email and mobile based
telephony applied further top line pressure to call revenues.
However, the Company's reliance on call revenues continues to
reduce with call revenue providing only 25.3% of total revenue in
the year ended 31 March 2015 (2014: 29.3%).
-- Data and broadband product revenues increased by 15.0% to
GBP3.8m (2014: GBP3.3m). AdEPT has continued to make progress in
expanding the number of circuits and connections from new customer
additions and through cross-selling into the existing customer
base. As the demand for faster data connectivity speeds continues
AdEPT has seen further customer orders for 1-10Gb Services.
The Company continues to focus on products delivering fixed
monthly revenue streams to reduce revenue volatility. The
proportion of revenue, which is fixed monthly values, increased to
65.9% of total revenue for the year ended March 2015 (2014: 63.3%)
following the continued focus on multi-product sales (calls, line
rental, broadband and data connectivity products) and the
enhancement of the data connectivity product portfolio.
AdEPT has been highly successful in gaining traction in the
public sector space during the last two years through leveraging
its approved status on various frameworks; this contract success is
included in the 2015 revenue figures. In July 2014 AdEPT
successfully renewed its approved supplier status for a further 4
years with Ja.net under which AdEPT is one of only a small number
of companies approved to sell data connectivity to UK Colleges and
Universities. In October 2014 AdEPT successfully renewed its status
for a further 2 years as the sole recommended supplier to public
service bodies and registered charities for calls, lines,
broadband, super-fast broadband (fibre) and SIP trunks. In February
2015 AdEPT was also awarded approved supplier status under the
G-Cloud 6 RM1557vi framework for Software As A Service (SaaS). This
is in addition to AdEPT's existing framework agreement with the
Crown Commercial Service under the RM1035 framework.
The Company is continuing to focus its organic sales efforts on
adding and retaining larger customers whilst complementing this
with an acquisitive strategy. AdEPT's largest 1,000 customers
account for approximately 50% of total revenue, with the top 10
customers accounting for 12.9% of total revenue (March 2014:
13.8%).
GROSS MARGIN
The price of calls to mobiles continued to decrease during the
year ended March 2014 as a result of the OFCOM regulatory impact of
reduced mobile termination rates. However, gross margins have been
maintained at an absolute and per cent. level through close
monitoring of customer profitability and supply chain management of
wholesale contracts.
As the product mix has moved further towards the relatively
lower margin data and broadband revenue streams, this has provided
some downward pressure on blended total gross margin.
EBITDA
Underlying EBITDA is defined as operating profit after adding
back depreciation, amortisation and impairment charges and share
based payment charges.
EBITDA has increased for the twelfth consecutive year since
AdEPT's inception in 2003. The Company has focussed on the
underlying profitability of customers and revenue streams combined
with tight overhead control, industry leading debt collection and
wholesale supply chain negotiation.
FINANCE COSTS
Total interest costs have reduced by 9.1% to GBP0.23m (2014:
GBP0.26m) arising from further deleveraging combined with treasury
management of surplus cash balances.
PROFIT BEFORE TAX
This year the Company has recorded a GBP0.29m improvement to
profit before tax with a reported GBP2.14m (2014: GBP1.85m). The
improvement to profit before tax arises from the EBITDA improvement
combined with the reduction in finance costs.
PROFIT AFTER TAX AND EARNINGS PER SHARE
The profit for the year, after taxation, amounted to GBP1.53m
(2014: GBP1.33m). Basic earnings per shares increased by 11.8% to
6.90p (2014: 6.17p). Adjusted earnings per share, based on the
profit for the year attributable to equity holders adding back
amortisation and non-recurring costs (see Note 24), increased by
11.5% to 15.76p per share (2014: 14.13p).
On 18 December 2014 the Company issued an announcement to the
stock exchange that pursuant to the general authority given to it
at the Company's 2014 Annual General Meeting that it intended to
commence a limited share buyback of its own ordinary shares in
order to improve stock liquidity and increase value to
shareholders. During the year ended 31 March 2015 the Company
repurchased 122,203 shares at an average price of 148.9p, the cost
of these repurchases were met from the cash proceeds of share
options exercised by the Executive Directors during the year. All
share repurchased by the Company were cancelled prior to the year
end. The Directors will continue to monitor the level of cash
required for the business and determine if further repurchases
remain in the shareholders' best interests.
DIVIDENDS AND DIVIDEND PER SHARE
On the back of strong cash flow generation AdEPT announced an
interim dividend of 2.25p per share, which was paid to shareholders
on 10 April 2015. The Board of AdEPT Telecom announced on 7 April
2015 that, subject to Shareholder approval at the Annual General
Meeting later in the year, it is declaring a final dividend of
2.50p per Ordinary Share (2014: 1.50p). This dividend is expected
to be paid on or around 9 October 2015 to shareholders on the
register at 18 September 2015.
Total dividends approved and declared during the year ended 31
March 2015 of 4.75p per Ordinary Share represent a 58.3% increase
year-on-year (2014: 3.00p). The Board constantly monitors
shareholder value and is confident that the continued strong cash
generation will support a progressive dividend policy.
CASH FLOW
The Company benefits from an excellent cash generating operating
model. Low capital expenditure results in EBITDA turning into cash.
Reported EBITDA turned into net cash from operating activities is
98.4% (2014: 69.8%), this has increased during the year as the
prior period included the cash impact of the transition to large
company status for corporation tax purposes which resulted in the
company paying both the prior year corporation tax liability and
three quarters of the current year's tax liability by advance
instalments during the 12 months ended 31 March 2014. The Company
has continued to manage its credit risk in the current economic
climate and the collections of trade receivables have been reduced
during the year with customer collection periods of 24 days (2014:
28 days).
Cash interest paid has reduced by 28.4% during the year to
GBP0.17m (2014: GBP0.24m) which arises from a reduction in net
borrowing across the period combined with active treasury
management of surplus cash.
Cash outflows of GBP2.2m have been incurred in the year ended 31
March 2015 in relation to acquisitions. The contingent
consideration in respect of the customer base of Bluebell Telecom
Limited was paid in September and October 2014 with no further
amounts due. The initial cash consideration of GBP1.78m was paid in
April 2014 in relation to the acquisition of the entire issued
share capital of Bluecherry Telecom Limited. On 20 April 2015,
after the year end, the contingent consideration of GBP0.2m was
paid with no further amounts due.
Dividends paid during the year ended 31 March 2015 absorbed
GBP0.66m of cash (2014: GBP0.32m), this increase over the prior
period arises from the continued application of the progressive
dividend policy.
Cash inflows of GBP0.2m were generated from the issue of new
equity during the year. Three of the executive director team
increased their shareholdings in the Company following the exercise
of share options. Pursuant to the stock exchange announcement
during December 2014 these funds were used by the Company to make
strategic purchases of its own shares.
There was a decrease to cash and cash equivalents during the
year of GBP1.7m, this arises from a net reduction in the drawn
element of the Barclays revolving credit facility across the year
to reduce interest charges. The Company will continue to apply its
treasury management policies to minimise the cost of finance whilst
retaining flexibility to meet its growth strategies.
CAPITAL EXPENDITURE
The Company operates an asset light strategy and has low capital
requirements, therefore expenditure on fixed assets is low at 0.3%
of revenue (2014: 0.4%).
BUSINESS COMBINATIONS
The strategy of the Company is to concentrate organic sales
efforts on attracting larger customers, particularly in the public
sector. Rather than operate a telesales operation aimed at
acquiring smaller business customers organically we instead use our
free cash generation to acquire customer bases from other
telecommunications suppliers in the industry.
On 1 April 2014 the Company acquired the entire issued share
capital of Bluecherry Telecom Limited, a supplier of fixed line
calls, line rental and data connectivity products to small and
medium-sized businesses. Total consideration was GBP2.01 million
plus the value of the net assets at completion (amounting to
GBP0.28 million and being represented by cash), with GBP1.81
million initial consideration paid in cash with the contingent
consideration of GBP0.2 million paid in cash on 20 April 2015.
Acquisition related costs have been recognised as an expense in the
statement of comprehensive income for the period ended 31 March
2015.
A fair value of GBP2.01 million in relation to the customer
contracts for the acquired business has been recognised as
intangible asset additions in the year ended 31 March 2015. The
intangible assets, being represented by the customer base, were
hived up to AdEPT immediately upon acquisition. No other assets or
liabilities were acquired. Included in the fair value calculations
above is an intangible asset, representing the estimate of future
cash flows of the acquired customer base in the hands of the
Company.
Further details on the acquisition during the year are described
in Note 26 to the financial statements.
Post year end on 1 May 2015 the Company acquired the entire
issued share capital of Centrix Limited for an initial
consideration of GBP7 million plus the value of the cash balance at
completion (approximately GBP1.9 million), payable in cash. Further
consideration of between GBPNil and GBP3.5 million will be payable,
also in cash, dependent upon performance of Centrix
post-acquisition.
Further details on the acquisition post-balance sheet date are
described in Note 27 to the financial statements.
NET DEBT AND BANK FACILITIES
A key strength of AdEPT is its consistent, proven ability to
generate strong free cash flow, which is supported by more than
GBP10.5m reduction to net borrowings since the peak of GBP12.3m in
June 2008. As a result of the Company's focus on underlying
profitability and cash conversion, free cash flow after bank
interest of GBP4.3m was generated during the year ended March
2015.
GBP2.2m of free cash flow has been used to fund acquisitions of
customer bases, GBP0.3m being applied to net debt reduction during
the year, GBP0.7m dividends paid and GBP0.1m capital expenditure.
Net cash inflows of GBP0.3m have arisen from the issue of new
equity following the exercise of share options by executive
directors. Net debt, which comprises cash balances and bank
borrowings, has improved to GBP1.5m at the year-end (2014:
GBP3.0m).
On 22 April 2015 the Company signed a new 5 year GBP15 million
revolving credit facility agreement with Barclays Bank plc. This
longer term facility replaced the previous GBP5 million revolving
credit facility, which had an 18 month term remaining, and the term
loan which was due for repayment by September 2015. The new
revolving credit facility offers the Company significantly greater
funding flexibility and is on longer and improved commercial terms
when compared to the facility which it replaces. The new revolving
credit facility bears interest at 2.30% over LIBOR on drawn funds
and is repayable in full on the final repayment date of 21 April
2020.
The Company's available banking facilities are described in Note
25 to the financial statements.
KEY PERFORMANCE INDICATORS (KPIs)
The KPIs outlined below are intended to provide useful
information when interpreting the accounts.
Data,
inbound,
Fixed mobile
line and
other
services services Total
GBP'000 GBP'000 GBP'000
-------------------------- --------- --------- --------
Year ended 31 March 2015
Revenue 16,026 6,040 22,066
Gross profit 6,160 2,138 8,298
Gross margin % 38.4% 35.4% 37.6%
Year ended 31 March 2014
Revenue 15,705 5,147 20,852
Gross profit 6,016 1,568 7,584
Gross margin % 38.3% 30.5% 36.4%
PRINCIPAL RISKS AND UNCERTAINTIES
There are a number of potential risks and uncertainties, which
could have a material impact on the Company's long-term performance
and could cause actual results to differ materially from expected
results.
Liquidity risk
The Company seeks to manage financial risk by ensuring
sufficient liquidity is available to meet foreseeable needs and to
invest cash assets safely and profitably. External funding
facilities are managed to ensure that both short-term and
longer-term funding is available to provide short-term flexibility
whilst providing sufficient funding to the Company's forecast
working capital requirements.
Credit risk
The Company extends credit to customers of various durations
depending on customer creditworthiness and industry custom and
practice for the product or service. In the event that a customer
proves unable to meet payments when they fall due, the Company will
suffer adverse consequences. To manage this, the Company
continually monitors credit terms to ensure that no single customer
is granted credit inappropriate to its credit risk. Additionally,
67% of our customer receipts are by monthly direct debit. The risk
is further reduced by the customer base being spread across all
industry and service sectors. The top ten customers account for
approximately 13% of revenues.
Competitor risk
The Company operates in a highly competitive market with rapidly
changing product and pricing innovations. We are subject to the
threat of our competitors launching new products in our markets
(including updating product lines) before we make corresponding
updates and development to our own product range. This could render
our products and services out-of-date and could result in loss of
market share. To reduce this risk, we undertake new product
development and maintain strong supplier relationships to ensure
that we have products at various stages of the life cycle.
Competitor risk also manifests itself in price pressures which
are usually experienced in more mature markets. This results not
only in downward pressure on our gross margins but also in the risk
that our products are not considered to represent value for money.
The Company therefore monitors market prices on an ongoing
basis.
Acquisition integration execution
The Company has set out that its strategy includes the
acquisition of businesses where they are earnings enhancing. The
Board acknowledges that there is a risk of operational disturbance
in the course of integrating the acquired businesses with existing
operations. The Company mitigates this risk by careful planning and
rigorous due diligence.
John Swaite
Finance Director
STATEMENT OF COMPREHENSIVE INCOME
2015 2014
Note GBP'000 GBP'000
------------------------------------------ ---- -------- --------
Revenue 4 22,066 20,852
Cost of sales (13,768) (13,268)
------------------------------------------ ---- -------- --------
Gross profit 8,298 7,584
Administrative expenses (5,928) (5,482)
------------------------------------------ ---- -------- --------
Operating profit 2,370 2,102
------------------------------------------ ---- -------- --------
Total operating profit - analysed:
Operating profit before share based
payments, depreciation and amortisation 4,591 4,043
Share-based payments (3) (7)
Depreciation of tangible fixed assets (49) (34)
Impairment of intangible assets - (2)
Amortisation of intangible fixed assets (2,169) (1,898)
------------------------------------------ ---- -------- --------
Total operating profit 2,370 2,102
------------------------------------------ ---- -------- --------
Finance costs 7 (233) (257)
------------------------------------------ ---- -------- --------
Profit before income tax 2,137 1,845
Income tax expense 10 (603) (515)
------------------------------------------ ---- -------- --------
Profit for the year 1,534 1,330
Other comprehensive income - -
------------------------------------------ ---- -------- --------
Total comprehensive income 1,534 1,330
------------------------------------------ ---- -------- --------
Restated
2015 2014
Note GBP'000 GBP'000
------------------------------------------ ---- -------- --------
Earnings per share:
Basic earnings 24 6.90p 6.17p
Diluted earnings 24 6.49p 5.67p
------------------------------------------ ---- -------- --------
All amounts relate to continuing operations.
STATEMENT OF FINANCIAL POSITION
31 March 31 March
2015 2014
Note GBP'000 GBP'000
-------------------------------------- ---- -------- --------
Assets
Non-current assets
Intangible assets 12 14,874 15,018
Property, plant and equipment 13 82 79
Deferred income tax 14 145 115
-------------------------------------- ---- -------- --------
15,101 15,212
Current assets
Inventories 15 4 4
Trade and other receivables 16 2,198 2,332
Cash and cash equivalents 2,094 3,777
-------------------------------------- ---- -------- --------
4,296 6,113
-------------------------------------- ---- -------- --------
Total assets 19,397 21,325
-------------------------------------- ---- -------- --------
Current liabilities
Trade and other payables 17 3,165 3,854
Income tax 324 29
Short-term borrowings 538 1,206
-------------------------------------- ---- -------- --------
4,027 5,089
Non-current liabilities
Long-term borrowings 18 3,095 5,533
Total liabilities 7,122 10,622
-------------------------------------- ---- -------- --------
Net assets 12,275 10,703
-------------------------------------- ---- -------- --------
Equity attributable to equity holders
Share capital 19 2,230 2,194
Share premium 335 189
Retained earnings 9,710 8,320
-------------------------------------- ---- -------- --------
Total equity 12.275 10,703
-------------------------------------- ---- -------- --------
STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders
-----------------------------------------------------------
Share Capital redemption
Share Share option reserve Retained Total
capital premium reserve GBP'000 earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------- -------- -------- ------------------ --------- --------
Equity at 1 April
2013 2,107 - 150 - 7,490 9,747
Profit for the year - - - - 1,330 1,330
Other comprehensive -
income - - - - -
----------------------- -------- -------- -------- ------------------ --------- --------
Total comprehensive
income - - - - 1,330 1,330
Dividend - - - - (662) (662)
Deferred tax asset
adjustment - - - - 5 5
Share-based payments - - (78) - 85 7
Issue of share capital 87 189 - - - 276
----------------------- -------- -------- -------- ------------------ --------- --------
Equity at 1 April
2014 2,194 189 72 - 8,248 10,703
Profit for the year - - - - 1,534 1,534
Other comprehensive -
income - - - - -
----------------------- -------- -------- -------- ------------------ --------- --------
Total comprehensive
income - - - - 1,534 1,534
Deferred tax asset
adjustment - - - - 23 23
Share-based payments - - (14) - 17 3
Issue of share capital 48 146 - - - 194
Shares repurchased
and cancelled (12) - - 12 (182) (182)
----------------------- -------- -------- -------- ------------------ --------- --------
Equity at 31 March
2015 2,230 335 58 12 9,640 12.275
----------------------- -------- -------- -------- ------------------ --------- --------
STATEMENT OF CASHFLOWS
2015 2014
GBP'000 GBP'000
------------------------------------------ -------- --------
Cash flows from operating activities
Profit before income tax 2,137 1,845
Depreciation and amortisation 2,218 1,934
Share-based payments 3 7
Net finance costs 233 257
------------------------------------------- -------- --------
Operating cash flows before movements
in working capital 4,591 4,043
Decrease/(increase) in inventories - -
Decrease/(increase) in trade and other
receivables 76 (269)
(Decrease)/increase in trade and other
payables 153 201
------------------------------------------- -------- --------
Cash generated from operations 4,820 3,975
Income taxes paid (315) (1,149)
------------------------------------------- -------- --------
Net cash from operating activities 4,505 2,826
------------------------------------------- -------- --------
Cash flows from investing activities
Interest paid (175) (244)
Acquisitions (2,152) (2,176)
Purchase of intangible assets (11) (14)
Purchase of property, plant and equipment (52) (63)
------------------------------------------- -------- --------
Net cash used in investing activities (2,390) (2,497)
------------------------------------------- -------- --------
Cash flows from financing activities
Dividends paid (660) (318)
Share capital issued 194 276
Payments made for share repurchases (182) -
Increase in bank loan 2,250 3,100
Repayment of borrowings (5,399) (1,250)
------------------------------------------- -------- --------
Net cash from financing activities (3,797) 1,808
------------------------------------------- -------- --------
Net increase/(decrease) in cash and
cash equivalents (1,682) 2,138
Cash and cash equivalents at beginning
of year 3,777 1,639
------------------------------------------- -------- --------
Cash and cash equivalents at end of
year 2,095 3,777
------------------------------------------- -------- --------
Cash and cash equivalents:
Cash at bank and in hand 2,095 3,777
Bank overdrafts - -
------------------------------------------ -------- --------
Cash and cash equivalents 2,095 3,777
------------------------------------------- -------- --------
NOTES TO THE FINANCIAL STATEMENTS
1. Nature of operations and general information
AdEPT Telecom plc is one of the UK's leading independent
providers of voice and data telecommunication services with
award-winning customer service. The Company is focused on
delivering a complete telecommunications service for small and
medium-sized business customers with a targeted product range
including landline calls, line rental, broadband, mobile and data
connectivity services.
AdEPT Telecom plc is incorporated under the Companies Act,
domiciled in the UK and the registered office is located at One
London Wall, London EC2Y 5AB. The Company's shares are listed on
AIM of the London Stock Exchange.
2. Accounting policies
Basis of preparation of financial statements
The financial statements have been prepared in accordance with
applicable IFRS as adopted by the EU.
Accounting standards require the directors to consider the
appropriateness of the going concern basis when preparing the
financial statements. The directors confirm that they consider that
the going concern basis remains appropriate. The Company's
available banking facilities are described in Note 25 to the
financial statements. The Company has adequate financing
arrangements which can be utilised by the Company as required. Thus
they continue to adopt the going concern basis of accounting in
preparing the annual financial statements.
Consolidated accounts have not been prepared as all subsidiaries
of the Company have no assets or liabilities, therefore the
financial statements of the Company are the same as those of the
consolidated group. The following is a list of those subsidiaries
which form part of the group but are dormant and therefore not
consolidated:
-- Bluecherry Telecom Limited (company no. 06661541)
At the date of authorisation of these financial statements, the
directors have considered the Standards and Interpretations which
have not been applied in these financial statements were in issue
but not yet effective (and in some cases had not yet been adopted
by the EU) and only IFRS 15 "Revenue from Contracts with Customers"
was considered to be relevant. It is not clear whether the
application of IFRS 15 once effective will have a material impact
on the results of the Company. Adoption of the other Standards and
Interpretations are not expected to have a material impact on the
results of the Company Application of these standards may result in
some changes in presentation of information within the Company's
financial statements.
The financial statements are presented in sterling which is the
Company's functional and presentation currency. The figures shown
in the financial statements are rounded to the nearest thousand
pounds.
Segmental reporting
The directors have considered the requirements of IFRS 8
"Operating Segments" and have concluded that the Company has two
segments. For further information see Note 4 of the financial
statements.
Revenue
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and can be reliably
measured.
Revenue from calls, which excludes value added tax and trade
discounts, is recognised in the income statement at the time the
call is made. Calls made in the year, but not billed by year end,
are accrued within receivables as accrued income.
Revenue from line rental is recognised in the month that the
charge relates to, commencing with a full month's charge in the
month of connection. Revenue and related costs from the sales of
mobile handsets are recognised at the date of supply or
connection.
Revenue arising from the provision of internet and other
services is recognised evenly over the periods in which the service
is provided to the customer.
Connection commissions received from mobile network operators
are recognised when the customer is connected to the mobile network
after providing for expected future clawbacks.
The whole of the revenue is attributable to the provision of
voice and data telecommunication services to both residential and
business customers. All revenue arose within the United
Kingdom.
Intangible fixed assets acquired as part of a business
combination and amortisation
In accordance with IFRS 3 "Business Combinations", an intangible
asset acquired in a business combination is deemed to have a cost
to the Company of its fair value at the acquisition date. The
Company calculates the fair value of the intangible asset in
relation to customer base acquisitions as the cost to the Company
at the date of acquisition. The intangible asset value reflects
market expectations about the probability that the future economic
benefits embodied in the asset will flow to the Company.
After initial recognition, intangible assets are carried at cost
less any accumulated amortisation and any accumulated impairment
losses. Impairment reviews are conducted annually from the first
anniversary following acquisition.
The intangible asset 'customer base' is amortised to the income
statement over its estimated useful economic life on a straight
line basis. The average useful economic life of all the customer
bases has been estimated at 14 years (2014: 14 years) with a range
of seven to 16 years.
Other intangible assets
Also included within intangible fixed assets are the development
costs of the Company's billing and customer management system plus
an individual licence. These other intangible assets are stated at
cost, less amortisation and any provision for impairment.
Amortisation is provided at rates calculated to write off the cost,
less estimated residual value of each intangible asset, over its
expected useful economic life on the following basis:
Customer management system - Three years straight line
Other licences - Contract licence period
Computer software - Three years straight line
Property, plant and equipment and depreciation
Property, plant and equipment are stated at cost, less
depreciation and any provision for impairment. Depreciation is
provided on all property, plant and equipment at rates calculated
to write off the cost, less estimated residual value of each asset,
over its expected useful life on the following basis:
Short-term leasehold improvements - The shorter of five years
and the remaining period of the lease
Fixtures and fittings - Three years straight line
Office equipment - Three years straight line
Motor vehicles - Four years straight line
Inventories
Inventories are valued at the lower of cost and net realisable
value after making allowance for any obsolete or slow moving items.
Net realisable value is reviewed regularly to ensure accurate
carrying values. Cost is determined on a first-in-first-out basis
and includes transportation and handling costs.
Net realisable value is the estimated selling price in the
ordinary course of business, less the estimated costs necessary to
make the sale.
Pensions
The Company contributes to personal pension plans. The amount
charged to the income statement in respect of pension costs is the
contribution payable in the year.
Income tax
Income tax is the tax currently payable based on taxable profit
for the year.
Deferred income tax is generally provided on the difference
between the carrying amounts of assets and liabilities and their
tax bases. However, deferred income tax is not provided on the
initial recognition of goodwill, nor on the initial recognition of
an asset or liability unless the related transaction is a business
combination or affects tax or accounting profit.
Deferred income tax liabilities are provided in full, with no
discounting. Deferred income tax assets are recognised to the
extent that it is probable that the underlying deductible temporary
differences will be able to be offset against future taxable
income. Current and deferred income tax assets and liabilities are
calculated at tax rates that are expected to apply to their
respective period of realisation, provided they are enacted or
substantively enacted at the balance sheet date.
Changes in deferred income tax assets or liabilities are
recognised as a component of income tax expense in the income
statement, except where they relate to items that are charged or
credited directly to equity in which case the related deferred
income tax is also charged or credited directly to equity.
Share-based payments
The cost of equity-settled transactions with employees is
measured by reference to the fair value of the award at the date at
which they are granted and is recognised as an expense over the
vesting period, which ends on the date at which the relevant
employees become fully entitled to the award. Fair value is
appraised at the grant date and excludes the impact on non-market
vesting conditions such as profitability and sales growth targets,
using an appropriate pricing model for which the assumptions are
approved by the directors. In valuing equity-settled transactions,
only vesting conditions linked to the market price of the shares of
the Company are considered.
No expense is recognised for awards that do not ultimately vest,
except for awards where vesting is conditional upon a market
condition, which are treated as vesting irrespective of whether or
not the market condition is satisfied, provided that all other
performance conditions are satisfied.
At each balance sheet date, the cumulative expense (as above) is
calculated, representing the extent to which the vesting period has
expired and management's best estimate of the achievement or
otherwise of non-market conditions, the number of equity
instruments that will ultimately vest or, in the case of an
instrument subject to a market condition, be treated as vesting
described above. The movement in the cumulative expense since the
previous balance sheet date is recognised in the income statement,
with a corresponding entry in equity.
Non-recurring items
Material and non-recurring items of income and expense are
separated out in the income statement. Examples of items which may
give rise to disclosure as non-recurring items include costs of
restructuring and reorganisation of existing businesses,
integration of newly acquired businesses and asset impairments.
Non-recurring costs include the current year expense charged to the
income statement in relation to restructuring which has taken place
since the year end to derive the underlying profitability of the
Company.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits, together with other short-term, highly liquid investments
that are readily convertible into known amounts of cash and which
are subject to an insignificant risk of changes in value.
Share buybacks
The Company has returned surplus cash to shareholders through a
limited share buyback scheme pursuant to the authority given to it
at the Annual General Meeting. Shares purchased for cancellation
are deducted from retained earnings at the total consideration paid
or payable. The Company will continue to monitor the level of cash
required for the business and determine if further repurchases
remain in the shareholders' best interests.
Financial instruments
Financial assets and liabilities are recognised on the Company's
balance sheet when the Company becomes a party to the contractual
provisions of the instrument.
The Company has previously made use of derivative financial
instruments to hedge its exposure to interest rate risks arising
from financing activities. These derivative financial instruments
have been settled in prior periods and there are none in place at
the balance sheet date. In accordance with its treasury policy, the
Company does not hold or issue derivative financial instruments for
trading purposes.
Derivative financial instruments are recognised initially at
fair value, i.e. cost. Subsequent to initial recognition derivative
financial instruments are measured at fair value. The gain or loss
on re-measurement to fair value is recognised immediately in the
income statement as a component of financing income or cost.
The fair value of the derivative financial instrument is the
estimated amount that the Company would receive or pay to terminate
the instrument at the balance sheet date, taking into account
current interest rates and the current creditworthiness of the
instrument counterparties.
Capital
The capital structure of the Company consists of debt, which
includes the borrowings disclosed in Notes 18 and 25, cash and cash
equivalents, and equity attributable to equity holders, comprising
issued capital, reserves and retained earnings.
Borrowings and borrowing costs
Borrowings are recorded initially at the proceeds received, net
of transaction costs incurred. Borrowings are subsequently stated
at amortised cost. Any differences between the proceeds (net of
transaction costs) and the redemption value is recognised in the
income statement over the period of the borrowings using the
effective interest method.
Borrowing costs are expensed to the income statement as incurred
with the exception of arrangement fees which are deducted from the
related liability and are released over the term of the related
liability in accordance with IAS 39.
3. Critical accounting estimates and judgements
The key assumptions concerning the future and other key sources
of estimation and uncertainty at the balance sheet date, which have
a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities with the next financial year, are
discussed below.
Key sources of estimation and uncertainty are:
-- measuring the fair value of customer bases on acquisition;
-- subsequent impairment of customer bases; and
-- receivables.
Impairment of intangible assets
The Company determines whether intangible assets are impaired on
at least an annual basis. This requires an estimation of the 'value
in use' of the cash-generating units to which the intangible value
is allocated. Estimating a value in use amount requires management
to make an estimate of the expected future cash flows from the
cash-generating unit and also to choose a suitable discount rate in
order to calculate the present value of those cash flows.
The main estimates used to measure the fair value of the
customer bases on acquisition and to conduct the impairment review
are:
-- the churn rate (turnover of customers);
-- discount rate; and
-- gross margins.
Churn rates ranging between 1.8% and 19.3% are based upon actual
historical churn rates of the revenue stream for each customer
base.
The discount rate of 6.6% used to discount the cash flows is
based upon the Company's weighted average cost of Capital (WACC),
which is the recommended discount rate suggested by International
Financial Reporting Standards and is a calculated figure using
actual input variables where available and applying estimates for
those which are not, such as the equity market premium.
Gross margins of 45.3% are based upon actual margins achieved in
previous years. The actual outcomes have been materially
equivalent.
The calculations are sensitive to any movement in the discount
rate, margin or churn rate and would therefore result in an
impairment charge to the income statement. A 1% change to the
discount rate, gross margin and churn rate would result in
additional impairment charges of GBPNil, GBPNil and GBP12,500
respectively.
More details, including carrying values, are included in Note
12.
Allowance for impairment of receivables
Management reviews are performed to estimate the level of
provision required for irrecoverable debt. Provisions are made
specifically against invoices where recoverability is uncertain.
Further information on the receivables allowance account is given
in Note 16.
4. Segmental information
IFRS 8 "Operating Segments" requires identification on the basis
of internal reporting about components of the Company that are
regularly reviewed by the chief operating decision maker to
allocate resources to the segments and to assess their
performance.
The chief operating decision maker has been identified as the
Board. The Board reviews the Company's internal reporting in order
to assess performance and allocate resources. The operating
segments are fixed line services and data, mobile and other
services which are reported in a manner consistent with the
internal reporting to the Board. The Board assesses the performance
of the operating segments based on revenue, gross profit and
EBITDA.
Year ended 31 March
Year ended 31 March 2015 2014
-------------------------------------- --------------------------------------
Data, Data,
inbound, inbound,
mobile mobile
Fixed and Fixed and
line other Central line other Central
GBP'000 services services costs Total services services costs Total
------------------------ --------- --------- ------- ------- --------- --------- ------- -------
Revenue 16,026 6,040 - 22,066 15,705 5,147 - 20,852
Gross profit 6,160 2,138 - 8,298 6,016 1,568 - 7,584
Gross margin
% 38.4% 35.4% - 37.6% 38.3% 30.5% - 36.4%
------------------------ --------- --------- ------- ------- --------- --------- ------- -------
EBITDA 3,411 1,180 - 4,591 3,318 725 - 4,043
EBITDA % 21.3% 19.5% - 20.8% 21.1% 14.1% - 19.4%
------------------------ --------- --------- ------- ------- --------- --------- ------- -------
Amortisation (2,169) - - (2,169) (1,898) - - (1,898)
Impairment charge - - - - (2) - - (2)
Depreciation - - (49) (49) - - (34) (34)
Share-based
payments - - (3) (3) - - (7) (7)
------------------------ --------- --------- ------- ------- --------- --------- ------- -------
Operating profit/(loss) 1,242 1,180 (52) 2,370 1,418 725 (41) 2,102
------------------------ --------- --------- ------- ------- --------- --------- ------- -------
Finance costs - - (233) (233) - - (257) (257)
Income tax - - (603) (603) - - (515) (515)
------------------------ --------- --------- ------- ------- --------- --------- ------- -------
Profit/(loss)
after tax 1,242 1,180 (888) 1,534 1,418 725 (813) 1,330
------------------------ --------- --------- ------- ------- --------- --------- ------- -------
The assets and liabilities relating to the above segments have
not been disclosed as they are not separately identifiable and are
not used by the chief operating decision maker to allocate
resources. All segments are in the UK and all revenue relates to
the UK.
Transactions with the largest customer of the Company are less
than 10% of total turnover and do not require disclosure for either
2014 or 2015.
5. Operating profit
The operating profit is stated after charging:
2015 2014
GBP'000 GBP'000
--------------------------------------- -------- --------
Amortisation of customer base, billing
system and licence 2,169 1,900
Depreciation of tangible fixed assets:
- owned by the Company 49 34
Share option expense 3 7
Minimum operating lease payments:
- land and buildings 171 172
- motor vehicles and other equipment 42 46
--------------------------------------- -------- --------
6. Auditor remuneration
2015 2014
GBP'000 GBP'000
--------------------------------------------- -------- --------
Fees payable to the Company's auditor for
the audit of the Company's annual financial
statements 33 32
Fees payable to the Company's auditor and
their associates in respect of:
- other services relating to taxation 6 6
--------------------------------------------- -------- --------
7. Finance costs
2015 2014
GBP'000 GBP'000
----------------------------- -------- --------
On bank loans and overdrafts 174 244
Bank fees 59 75
Other interest payable - (62)
----------------------------- -------- --------
233 257
----------------------------- -------- --------
Included within interest is GBPNil (2014: GBP62,184) which
relates to the movement in the fair value of the interest rate swap
liability as calculated in accordance with IAS 39.
8. Employee costs
Staff costs, including directors' remuneration, were as
follows:
2015 2014
GBP'000 GBP'000
---------------------- -------- --------
Wages and salaries 1,884 1,808
Social security costs 243 237
Share option expense 3 7
Other pension costs 22 18
---------------------- -------- --------
2,152 2,070
---------------------- -------- --------
The average monthly number of employees, including the
directors, during the year was as follows:
2015 2014
Number Number
------------------------ ------- -------
Non-executive directors 3 3
Administrative staff 43 44
------------------------ ------- -------
46 47
------------------------ ------- -------
Key management personnel
The directors are considered to be the key management personnel
of the Company, having authority and responsibility for planning,
directing and controlling the activities of the Company.
9. Directors' emoluments
Post-
employment
Short-term employee benefits benefits
----------------------------------- --------------
Salary
and fees Bonus
paid or paid or Other Pension Total Total
receivable receivable benefits contributions 2015 2014
GBP GBP GBP GBP GBP GBP
------------ ----------- ----------- --------- -------------- ------- -------
R Wilson 43,258 - 6,778 - 50,036 47,936
C Fishwick 15,000 - - - 15,000 15,000
D Lukic 20,876 - 6,619 - 27,495 25,025
I Fishwick 207,050 62,500 3,343 15,648 288,541 252,163
A Woodruffe 141,020 26,713 2,337 - 170,070 160,902
J Murphy 90,000 28,284 14,436 - 132,720 120,140
J Swaite 82,500 26,712 6,482 - 115,694 105,182
------------ ----------- ----------- --------- -------------- ------- -------
Total 599,704 144,209 39,995 15,648 799,556 726,348
------------ ----------- ----------- --------- -------------- ------- -------
During the year retirement benefits were accruing to one
director (2014: one) in respect of money purchase pension schemes.
The value of the Company's contributions paid to a money purchase
pension scheme in respect of the highest paid director amounted to
GBP15,648 (2014: GBP12,463). During the year there were no share
option transactions in respect of the highest paid director (2014:
752,160 shares options exercised with an aggregate gain of
GBP829,642).
The share option expense recognised during the year in respect
of the directors was GBP2,789 (2014: GBP6,702). The aggregate
amount of gains made by directors on the exercise of share options
was GBP405,400 (2014: GBP942,742). There were three directors
(2014: two) who exercised share options during the year.
Directors' share options
Options
at 1 Options at
Option April Awarded Options Options 31 March Option Date of
scheme 2014 in year exercised lapsed 2015 price grant
------------ ----------- ------- -------- ---------- ------- ---------- ------ ----------------
A Woodruffe EMI 67,948 - (67,948) - - 42p 1 August 2008
A Woodruffe Unapproved 62,051 - (62,051) - - 42p 1 August 2008
A Woodruffe EMI 86,420 - (86,420) - - 40p 29 August 2011
A Woodruffe Unapproved 113,580 - (113,580) - - 40p 29 August 2011
J Swaite EMI 75,000 - (75,000) - - 40p 29 August 2011
J Murphy EMI 75,000 - (75,000) - - 40p 29 August 2011
A Woodruffe EMI 171,708 - - - 171,708 52p 13 November 2012
J Swaite EMI 25,000 - - - 25,000 52p 13 November 2012
J Murphy EMI 25,000 - - - 25,000 52p 13 November 2012
------------ ----------- ------- -------- ---------- ------- ---------- ------ ----------------
10. Income tax expense
2015 2014
GBP'000 GBP'000
----------------------------------------------- -------- --------
Current tax
UK corporation tax on profit for the year 637 465
Adjustments in respect of prior periods 3 35
----------------------------------------------- -------- --------
Total current tax 640 500
----------------------------------------------- -------- --------
Deferred tax
Origination and reversal of timing differences (30) 15
Effect of tax rate change on opening balance - 19
Adjustments in respect of prior periods (7) (19)
----------------------------------------------- -------- --------
Total deferred tax (see Note 14) (37) 15
----------------------------------------------- -------- --------
Total income tax expense 603 515
----------------------------------------------- -------- --------
Factors affecting tax charge for year
The relationship between expected tax expense based on the
effective tax rate of AdEPT at 21% (2014: 23%) and the tax expense
actually recognised in the income statement can be reconciled as
follows:
2015 2014
GBP'000 GBP'000
--------------------------------------------- -------- --------
Profit before income tax 2,137 1,845
Tax rate 21% 23%
Expected tax charge 449 425
Expenses not deductible for tax purposes 33 25
Amortisation not deductible for tax purposes 253 233
Change in deferred tax rate - 19
Adjustments to tax charge in respect of
prior periods (5) 17
Short term timing differences - 4
Financial liabilities movement - (14)
Share options (32) (9)
Share option relief (95) (185)
Actual tax expense net 603 515
--------------------------------------------- -------- --------
There were no material factors that may affect future tax
charges.
11. Dividends
On 25 September 2014 the directors approved an interim dividend
of 2.25p per ordinary share (2014: 1.50p), which was paid to
shareholders on 10 April 2015. On 26 March 2015 the directors
declared a final dividend, subject to shareholder approval at the
2015 annual general meeting, of 2.50p per ordinary share (2014:
1.50p). Total dividends approved and declared during the year will
absorb GBP1,054,001 of shareholders' funds in future periods (2014:
total GBP661,710).
12. Intangible fixed assets
Computer Customer
Licence software base Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------- -------- --------- -------- --------
Cost
At 1 April 2013 26 1,026 27,771 28,823
Additions - 14 2,289 2,303
-------------------- -------- --------- -------- --------
At 1 April 2014 26 1,040 30,060 31,126
Additions - 40 1,985 2,025
-------------------- -------- --------- -------- --------
At 31 March 2015 26 1,080 32,045 33,151
-------------------- -------- --------- -------- --------
Amortisation
At 1 April 2013 20 911 13,277 14,208
Charge for the year 2 61 1,835 1,898
Impairment charge - - 2 2
-------------------- -------- --------- -------- --------
At 1 April 2014 22 972 15,114 16,108
Charge for the year 3 56 2,110 2,169
Impairment charge - - - -
-------------------- -------- --------- -------- --------
At 31 March 2015 25 1,028 17,224 18,277
-------------------- -------- --------- -------- --------
Net book value
At 31 March 2015 1 52 14,821 14,874
-------------------- -------- --------- -------- --------
At 31 March 2014 4 68 14,946 15,018
-------------------- -------- --------- -------- --------
Intangible assets are reviewed annually or more frequently if
events or changes in circumstances indicate that the carrying value
may be impaired. The net present value of cash flows for each
cash-generating unit is reviewed against the carrying value at the
balance sheet date. At the final reporting date of 31 March 2015
the net present value of future cash flows of certain
cash-generating units indicated that the carrying value was correct
and the directors considered it was not appropriate to record an
impairment charge (2014: GBP2,282) or adjust the economic lives of
the respective cash-generating units appropriately.
Included within intangible asset additions is GBP200,000 (2014
GBP368,061) being the amount due in respect of contingent
consideration for acquisitions undertaken in the current year.
The Company has no internally generated intangible assets.
13. Property, plant and equipment
Short-term Fixtures
Motor leasehold and Office
vehicles improvements fittings equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- --------- ------------- --------- ---------- --------
Cost
At 1 April 2013 - 7 137 239 383
Additions 25 - - 42 67
Disposals - - - (4) (4)
-------------------- --------- ------------- --------- ---------- --------
At 1 April 2014 25 7 137 277 446
Additions - - 2 50 52
At 31 March 2015 25 7 139 327 498
-------------------- --------- ------------- --------- ---------- --------
Depreciation
At 1 April 2013 - 7 127 199 333
Charge for the year 3 - 4 27 34
-------------------- --------- ------------- --------- ---------- --------
At 1 April 2014 3 7 131 226 367
Charge for the year 6 - 4 39 49
-------------------- --------- ------------- --------- ---------- --------
At 31 March 2015 9 7 135 265 416
-------------------- --------- ------------- --------- ---------- --------
Net book value
At 31 March 2015 16 - 4 62 82
-------------------- --------- ------------- --------- ---------- --------
At 31 March 2014 22 - 6 51 79
-------------------- --------- ------------- --------- ---------- --------
14. Deferred taxation
2015 2014
GBP'000 GBP'000
------------------------------------------ -------- --------
At 1 April 2014 115 124
Income statement credit/(charge) 7 (14)
Movement in deferred tax on share options 23 5
------------------------------------------ -------- --------
At 31 March 2015 145 115
------------------------------------------ -------- --------
The deferred tax asset is made up as follows:
2015 2014
GBP'000 GBP'000
------------------------------ -------- --------
Capital allowances 26 29
Short term timing differences 17 9
Share options 102 77
------------------------------ -------- --------
145 115
------------------------------ -------- --------
15. Inventories
2015 2014
GBP'000 GBP'000
------------ -------- --------
Consumables 4 4
------------ -------- --------
There is no material difference between the replacement cost of
inventories and the amount stated above.
16. Trade and other receivables
2015 2014
GBP'000 GBP'000
------------------------------- -------- --------
Trade receivables 1,767 1,912
Other receivables 12 7
Prepayments and accrued income 419 413
------------------------------- -------- --------
2,198 2,332
------------------------------- -------- --------
As at 31 March 2015, trade receivables of GBP131,280 (2014:
GBP113,080) were impaired and fully provided for. The ageing of the
trade receivables which are past due and not impaired are as
follows:
2015 2014
GBP'000 GBP'000
------------- -------- --------
31-60 days 111 93
61-90 days 3 1
Over 90 days 2 2
------------- -------- --------
116 96
------------- -------- --------
Movement of the Company provision for impairment of trade
receivables is as follows:
GBP'000
--------------------------------------------- -------
At 1 April 2013 109
Receivables written off during the year as
uncollectable (82)
Provision for receivables impairment for the
year 86
--------------------------------------------- -------
At 1 April 2014 113
Receivables written off during the year as
uncollectable (99)
Provision for receivables impairment for the
year 117
--------------------------------------------- -------
At 31 March 2015 131
--------------------------------------------- -------
The creation and release of a provision for impaired receivables
has been included in administration expenses in the income
statement. Amounts charged to the allowance account are generally
written off when there is no expectation of recovering cash.
Management regularly reviews the outstanding receivables and does
not consider that any further impairment is required. The other
assets classes within trade and other receivables do not contain
impaired assets.
17. Trade and other payables
2015 2014
GBP'000 GBP'000
-------------------------------------- -------- --------
Trade payables 1,567 1,492
Other taxes and social security costs 538 528
Other payables 48 721
Accruals and deferred income 1,012 1,113
-------------------------------------- -------- --------
3,165 3,854
-------------------------------------- -------- --------
Included within accruals is GBP200,000 (2014: GBP368,061) being
the fair value of the contingent consideration in respect of
customer bases acquired in the current year. The fair value of the
contingent consideration liability was initially determined by
reference to the forecast churn rate for the customer base and
applying the contingent consideration matrix as specified in the
share purchase agreement.
18. Long-term borrowings
2015 2014
GBP'000 GBP'000
--------------------------- -------- --------
Between one and two years 3,095 533
Between two and five years - 5,000
More than five years - -
--------------------------- -------- --------
Bank loans 3,095 5,533
--------------------------- -------- --------
The bank loan is secured by a debenture incorporating a fixed
and floating charge over the undertaking and all property and
assets present and future including goodwill, book debts, uncalled
capital, buildings, fixtures, fixed plant and machinery. Details of
the interest rates applicable to the loans are included in Note
25.
Included within bank loans are arrangement fees amounting to
GBP48,973 (2014: GBP92,752) which are being released over the term
of the loan in accordance with IAS 39.
19. Share capital
2015 2014
GBP'000 GBP'000
--------------------------------------- -------- --------
Authorised
65,000,000 ordinary shares of 10p each 6,500 6,500
--------------------------------------- -------- --------
Allotted, called up and fully paid
22,297,400 (2014: 21,939,603) ordinary
shares of 10p each 2,230 2,194
--------------------------------------- -------- --------
Movement in shares in issue
31 March 31 March
2015 2014
Ordinary shares of 10p each 21,939,603 21,067,443
Issued under share option schemes 480,000 872,160
Share repurchased and cancelled (122,203) -
22,297,400 21,939,603
---------------------------------- ---------- ----------
Share buyback scheme
On 18 December 2014 the Company announced that it intended to
commence a limited share buyback of its own ordinary shares. During
the year ended 31 March 2015 the Company repurchased 122,203 shares
at an average price of 148.9p. All share repurchased by the Company
were cancelled prior to the year end.
Share options
At 31 March 2015, the following options and warrants over the
shares of AdEPT were in issue:
2015 2014
--------------------- ---------------------
Number Weighted Number Weighted
of shares average of shares average
under exercise under exercise
option price option price
-------------------------- ---------- --------- ---------- ---------
Outstanding at 1 April 1,955,668 27p 3,271,353 42p
Granted during the year 32,143 126p - -
Forfeited during the year (67,052) 73p (443,525) 134p
Exercised during the year (480,000) 41p (872,160) 32p
-------------------------- ---------- --------- ---------- ---------
Outstanding at 31 March 1,440,759 20p 1,955,668 27p
-------------------------- ---------- --------- ---------- ---------
The weighted average share price at date of exercise for options
exercised during the year was 126.6p (2014: 141.1p)
The weighted average remaining contractual life of share options
and warrants at 31 March 2015 was 4.5 years.
Employee share option schemes have a vesting period of 3 years,
are settled through new equity issues in return for cash
consideration and the maximum term of share options is 10
years.
The weighted average fair values of options issued during the
year have been determined using the Black-Scholes-Merton Pricing
Model with the following assumptions and inputs:
2015 2014
--------------------------------------- ----- ----
Risk-free interest rate 2.69% -
Expected volatility 3.0% -
Expected option life (years) 3.0 -
Expected dividend yield 2.0% -
Weighted average share price 126p -
Weighted average exercise price 140p -
Weighted average fair value of options
granted 0p -
--------------------------------------- ----- ----
The expected average volatility was determined by reviewing the
last 100 historical fluctuations in the share price prior to the
grant date of each share instrument. An expected take up of 100%
has been applied to each share instrument. Expected dividend yield
is estimated at 2.0%; this is based upon the past dividend yield of
AdEPT Telecom plc and in accordance with the guidance in IFRS
2.
Expected
Exercise option
price life 31 March 31 March
(p) (years) 2015 2014
15 February 2006 140 1.25-2.25 - 59,196
1 August 2008 42 3.0 - 130,000
21 January 2009 11 3.0 1,186,908 1,194,764
29 August 2011 40 3.0 - 350,000
13 November 2012 52 3.0 221,708 221,708
23 August 2013 126 3.0 32,143 -
----------------- -------- --------- --------- ---------
1,440,759 1,955,668
----------------- -------- --------- --------- ---------
During the year ended 31 March 2009 a warrant was issued to
Barclays Bank plc over 5% of the diluted share capital of the
Company. As at 31 March 2015 this entitled the holder to 1,186,908
shares. The weighted average fair value of this equity instrument
of GBP54,422 has been determined using the Black-Scholes-Merton
Pricing Model, applying the same assumptions as those applied to
the other equity instruments issued during the period due to
Barclays Bank plc being unable to provide a sufficiently reliable
estimate of the value of services provided in relation to these
warrants.
The mid-market price of the ordinary shares on 31 March 2015 was
141p and the range during the year was 50p.
20. Pension commitments
At 31 March 2015 there were no pension commitments (2014:
GBPNil).
21. Operating lease commitments
At 31 March 2015 the Company had lease commitments as
follows:
Land and
buildings Other
------------------ ------------------
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- -------- -------- --------
Within one year 165 165 45 38
Between two and five years 357 522 28 44
--------------------------- -------- -------- -------- --------
Land and buildings
The Company leases its offices under non-cancellable operating
lease agreements. There is no material contingent rent payable. The
lease agreements do not offer security of tenure. The lease terms
are for five years.
Other
The Company leases various office equipment and motor vehicles
under non-cancellable operating lease agreements. The lease terms
are three years.
The lease expenditure charged to the income statement during the
year is disclosed in Note 5.
22. Related party transactions
During the year CKR Holdings Limited and Rykesh Limited,
companies controlled by Chris Fishwick, a director, provided
consultancy services to the Company in the normal course of
business with a total value of GBP85,000 (2014: GBP85,000). There
was no balance owed to CKR Holdings Limited or Rykesh Limited at
the end of the year (2014: GBPNil).
At the year end dividends payable were owed to the following
directors:
2015 2014
GBP'000 GBP'000
------------ -------- --------
C Fishwick 145 193
I Fishwick 27 45
R Wilson 18 24
D Lukic 2 3
A Woodruffe 4 2
J Swaite 1 -
J Murphy 1 -
------------ -------- --------
There is no ultimate controlling party.
23. Capital commitments
At 31 March 2015 there were capital commitments of GBPNil (2014:
GBPNil).
24. Earnings per share
Earnings per share is calculated on the basis of a profit of
GBP1,534,128 (2014: GBP1,330,256) divided by the weighted average
number of shares in issue for the year of 22,219,140 (2014:
21,551,563). The diluted earnings per share is calculated on the
treasury stock method and the assumption that the weighted average
unapproved and EMI share options outstanding during the period are
exercised. This would give rise to a total weighted average number
of ordinary shares in issue for the period of 23,649,870 (2014:
23,463,604).
An adjusted earnings per share is calculated by adding back
amortisation of intangible assets and non-recurring costs to
retained earnings, giving GBP3,501,438 (2014: GBP3,044,908). This
is divided by the same weighted average number of shares as
above.
Restated
2015 2014
GBP'000 GBP'000
--------------------------------------- ---------- ----------
Earnings for the purposes of basic
and diluted earnings per share
Profit for the period attributable
to equity holders 1,534 1,330
Add: amortisation 2,169 1,900
Less: taxation on amortisation of
purchased customer contracts (202) (185)
--------------------------------------- ---------- ----------
Adjusted profit attributable to equity
holders, adding back amortisation 3,501 3,045
--------------------------------------- ---------- ----------
Number of shares
Weighted average number of shares
used for earnings per share 22,219,140 21,551,563
Weighted average dilutive effect of
share plans 1,430,730 1,912,041
--------------------------------------- ---------- ----------
Diluted weighted average number of
shares 23,649,870 23,463,604
--------------------------------------- ---------- ----------
Earnings per share
Basic earnings per share 6.90p 6.17p
Diluted earnings per share 6.49p 5.67p
Adjusted earnings per share, after
adding back amortisation.
Adjusted basic earnings per share 15.76p 14.13p
Adjusted diluted earnings per share 14.81p 12.98p
--------------------------------------- ---------- ----------
Earnings per share is calculated by dividing the retained
earnings attributable to the equity holders by the weighted average
number of ordinary shares in issue.
Adjusted earnings per share is calculated by dividing the
retained earnings attributable to the equity holders (after adding
back amortisation and non-recurring costs) by the weighted average
number of ordinary shares in issue.
Earnings per share for the prior year has been restated to take
into account the impact of the taxation deduction on purchased
customer contracts for which the amortisation was already included
in the calculation of the adjusted profit attributable to equity
holders and to apply the treasury stock method of calculation.
25. Financial instruments
Set out below are the Company's financial instruments. The
directors consider there to be no difference between the carrying
value and fair value of the Company's financial instruments.
2015 2014
GBP'000 GBP'000
---------------------------------------- -------- --------
Loans and receivables at amortised cost
Cash and cash equivalents 2,094 3,777
Loans and receivables 1,767 1,911
Financial liabilities at amortised cost
Liabilities at amortised cost 5,200 8,230
5,200 8,230
---------------------------------------- -------- --------
Amounts due for settlement
Within twelve months 2,105 2,697
After twelve months 3,095 5,533
---------------------------------------- -------- --------
5,200 8,230
---------------------------------------- -------- --------
The Facility A term loan bears interest at 2.25-3.5% over LIBOR,
dependent upon the EBITA: Net debt ratchet, and is repayable by
quarterly instalments of GBP312,500, with the final repayment due
on 30 September 2015. At the year end the amount outstanding in
respect of this facility was GBP0.582m.
The Facility B loan allows a maximum of GBP5m to be drawn and
bears interest at 2.75% over LIBOR and is repayable in full on the
final repayment date of 13 October 2016. At the year end the amount
outstanding in respect of Facility B was GBP3.1m and is included
within long term borrowings.
The financial assets of the Company are cash and cash
equivalents, trade and other receivables, which are offset against
borrowings under the facility, and there is no separate interest
rate exposure.
Barclays Bank plc has a cross guarantee and debenture
incorporating a fixed and floating charge over the undertaking and
all property and assets present and future including goodwill, book
debts, uncalled capital, buildings, fixtures, fixed plant and
machinery.
The bank also holds a charge over the life assurance policies of
Ian Fishwick and Amanda Woodruffe, directors of the Company, for
GBP1,500,000 and GBP250,000 respectively.
Contingent consideration obligations
At 31 March 2015 a financial liability of GBP200,000 has been
recognised in respect of the fair value of the contingent
consideration due in respect of acquisitions (2014:
GBP368,061).
Relationship
Financial assets/ Valuation Significant of unobservable
financial Fair value technique(s) and unobservable inputs to
liabilities Fair value as at hierarchy key input(s) input(s) fair value
31/3/2014 31/3/2015
------------------ --------- ---------- ------------------ ----------------- ------------------ ----------------
7) Contingent GBPNil GBP200,000 Level 3 The contingent Churn rate being The higher
consideration in a consideration was the gross margin the churn
business based upon a reduction as rate the lower
combination multiple of gross measured by actual the multiple.
margin calculated reduction of gross
by the churn margin The higher
rate over a over a 12 month the gross
period of 12 period. margin the
months and higher the
subject to a Gross margin based earn out.
minimum earn out upon actual gross
of GBP200,000 and margins achieved.
a maximum
of GBP750,000 due
for payment by 30
April 2015.
The earn out had not been achieved by 31 March 2015. On 16 April
2015 an amount of GBP200,000 was paid. Therefore the fair value of
the contingent consideration was considered to be GBP200,000.
Obligations under finance leases
As at 31 March 2015 the Company had no finance lease
obligations.
Sensitivity analysis
At 31 March 2015 it was estimated that a movement of 1% in
interest rates would impact the Company's profit before tax by
approximately GBP51,000.
Interest rate risk
The Company's policy is to manage its interest cost using a mix
of fixed and variable rate debts. The Company's current interest
rate policy is to keep no minimum percentage of its borrowings at
fixed rates of interest. This policy is subject to ongoing review
in line with the level of borrowings and potential interest risk
exposure. At 31 March 2015, after taking into account the effect of
interest rate management, none of the Company's borrowings are at a
fixed rate of interest (2014: 0%).
Credit risk
Credit risk associated with cash balances and derivative
financial instruments is managed by transacting with financial
institutions with high quality credit ratings. Accordingly the
Company's associated credit risk is deemed to be limited.
The carrying amount of financial assets represents the maximum
credit exposure. The maximum exposure to credit risk at 31 March
2015 was GBP3,873,300 (2014: GBP5,695,239).
Loans and receivables
2015 2014
GBP'000 GBP'000
-------------------------- -------- --------
Trade receivables 1,767 1,911
Other receivables 12 7
Cash and cash equivalents 2,095 3,777
-------------------------- -------- --------
3,874 5,695
-------------------------- -------- --------
Credit risk refers to the risk that the counterparty will
default on its contractual obligations resulting in financial loss
to the Company. The Company has adopted a policy of only dealing
with creditworthy counterparties and this policy has been
implemented by requiring staff to carry out appropriate credit
checks on customers before sales commence.
Trade receivables consist of a large number of customers, spread
across diverse industries across the United Kingdom. Ongoing credit
evaluation is performed on the financial condition of accounts
receivable. The Company does not have any significant credit risk
exposure to any single counterparty.
Liquidity risk
The Company has an appropriate liquidity risk management
framework for the management of the Company's short, medium and
long-term funding and liquidity risk management requirements. The
Company manages liquidity risk by maintaining adequate banking
facilities and through cash flow forecasting, acquisition planning
and monitoring working capital and capital expenditure requirements
on an ongoing basis.
The following table analyses the Company's financial liabilities
into relevant maturity groupings based on the remaining period at
the balance sheet dated to the contractual maturity date. The
amounts disclosed in the table are the contracted undiscounted cash
flows. Discounting is not required as this has no material effect
on the financial statements.
Amortised cost
More
Within 1-2 2-5 than
1 year years years 5 years
Year ended 31 March 2015 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- -------- -------- -------- --------
Borrowings 538 3,095 - -
Trade and other payables 1,567 - - -
------------------------- -------- -------- -------- --------
2,105 3,095 - -
------------------------- -------- -------- -------- --------
More
Within 1-2 2-5 than
1 year years years 5 years
Year ended 31 March 2014 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- -------- -------- -------- --------
Borrowings 1,206 533 5,000 -
Trade and other payables 1,491 - - -
------------------------- -------- -------- -------- --------
2,697 533 5,000 -
------------------------- -------- -------- -------- --------
Currency risk
The Company's operations are handled entirely in sterling.
Capital risk management
The Company is subject to the risk that its capital structure
will not be sufficient to support the growth of the business. The
Company's objectives when managing capital are to safeguard the
Company's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital. There were no changes to the Company's
approach to capital management during the year.
As part of the banking arrangements, the Company is required to
comply with certain covenants including net debt to adjusted EBITA,
interest cover and cash flow cover.
In order to maintain or adjust the capital structure, the
Company may return capital to shareholders, issue new shares or
sell assets to reduce debt.
26. Business combinations
On 1 April 2014 the Company acquired the entire issued share
capital of Bluecherry Telecom Limited for an initial consideration
of GBP1.8 million plus the value of the net assets at completion
(amounting to GBP0.28 million and being represented by cash), which
was paid in cash during the year ended 31 March 2015. Further
consideration of GBP0.2 million was paid post-year end in April
2015, also in cash, in relation to the performance of the contracts
post-acquisition. The fair value of the contingent consideration
liability was determined by reference to the forecast churn rate
for the customer base and applying the contingent consideration
matrix as specified in the share purchase agreement. The fair value
of the liability is the actual value of contingent consideration
paid in April 2015. Total consideration was GBP2.01 million.
Bluecherry Telecom Limited, based in Milton Keynes, was a
supplier of fixed line calls, line rental and data connectivity
products to small and medium-sized businesses. The acquisition
formed part of the Company's strategy as the acquired customer base
complements that of AdEPT and provides cross-selling
opportunities.
Fair
Book cost value
GBP'000 GBP'000
------------------------------- --------- --------
Intangible asset - 2,014
Cash 285 285
Other payables (7) (285)
------------------------------- --------- --------
Net assets 278 2,014
------------------------------- --------- --------
Cash (1,814)
Contingent cash consideration (200)
------------------------------- --------- --------
Fair value total consideration (2,014)
------------------------------- --------- --------
Goodwill -
------------------------------- --------- --------
A fair value of GBP2.01 million in relation to the customer
contracts for the acquired business has been recognised as
intangible asset additions in the year ended 31 March 2015. The
intangible assets, being represented by the customer base, were
hived up to AdEPT immediately upon acquisition. No other assets or
liabilities were acquired.
Management of the customer contracts was transferred to AdEPT's
office in Tunbridge Wells, Kent during April 2014. Acquisition
related costs of GBP21,228 have been recognised as an expense in
the statement of comprehensive income for the year ended 31 March
2015. The customer base acquired from Bluecherry Telecom Limited
contributed revenue and profit of GBP1.2 million and GBP0.4 million
respectively for the year ended 31 March 2015 and represents a full
year contribution.
27. Events after the balance sheet date
On 1 May 2015 the Company acquired the entire issued share
capital of Centrix Limited ("Centrix") for an initial consideration
of GBP7 million plus the value of the cash balance of Centrix at
completion (approximately GBP1.9 million), payable in cash. Further
consideration of between GBPNil and GBP3.5 million will be payable,
also in cash, dependent upon performance of Centrix
post-acquisition. The fair value of contingent deferred
consideration has been initially determined by reference to the
forecast churn/growth rate for the gross margin of the acquired
business and applying the deferred consideration matrix as
specified in the share purchase agreement. The fair value of the
contingent consideration liability is an estimate, as there have
been limited post-acquisition period financial results upon which
to determine the contingent consideration.
Centrix, based in Hook, is a well-established UK based
specialist provider of complex unified communications, Avaya IP
telephony, hosted IP solutions and managed services. Centrix offers
its clients the delivery of complex unified communications and
managed service solutions, which is an increasing requisite for
AdEPT's existing and targeted enterprise and public sector customer
base. Centrix skills and product set will complement and enhance
AdEPT's existing services. Approximately 80% of Centrix revenue is
generated from recurring revenue streams.
AdEPT and Centrix have both adopted capital asset light
strategies and are dedicated to offering a full suite of flexible
data and unified communication strategies.
Fair
Book cost value
GBP'000 GBP'000
------------------------------- --------- --------
Intangible asset - 9,791
Property, plant and equipment 109 109
Inventories 59 59
Trade and other receivables 1,420 1,247
Cash and cash equivalents 2,063 2,063
Trade and other payables (2,104) (2,102)
Income tax (147) (147)
Net assets 1,400 11,020
------------------------------- --------- --------
Cash (8,920)
Contingent cash consideration (2,100)
------------------------------- --------- --------
Fair value total consideration (11,020)
------------------------------- --------- --------
Goodwill -
------------------------------- --------- --------
Centrix will retain its current presence and customer service
operation in Hook, Hampshire. The vendors of Centrix are to be
retained in their current capacity within the business for a period
of at least 12 months post-acquisition.
The audited accounts of Centrix for the year ended 31 December
2014 reported turnover, operating profit and profit before tax of
GBP8.75 million, GBP2.26 million and GBP2.26m respectively. Capital
expenditure in the year ended 31 December 2014 was insignificant.
Net and gross assets at that date were GBP0.83 million and GBP2.80
million respectively. Acquisition related costs of GBP0.50 million
will be recognised as an expense in the statement of comprehensive
income for the year ending 31 March 2016.
New bank facility
On 22 April 2015 the Company signed a new 5 year GBP15 million
revolving credit facility agreement with Barclays Bank plc. This
longer term facility replaced the previous GBP5 million revolving
credit facility, which had an 18 month term remaining, and the term
loan which was due for repayment by September 2015. The new
revolving credit facility bears interest at 2.30% over LIBOR on
drawn funds and is repayable in full on the final repayment date of
21 April 2020.
As part of the new facility agreement Barclays Bank plc has been
issued a new cross guarantee and debenture incorporating a fixed
and floating charge over the undertaking and all property and
assets present and future including goodwill, book debts, uncalled
capital, buildings, fixtures, fixed plant and machinery.
The bank also continues to hold a charge over the life assurance
policies of Ian Fishwick and Amanda Woodruffe, directors of the
Company, for GBP1,500,000 and GBP250,000 respectively.
NOTE TO THE PRELIMINARY RESULTS ANNOUNCEMENT OF ADEPT TELECOM
PLC FOR THE YEAR ENDED 31 MARCH 2015
The financial information set out above does not constitute the
Group's financial statements for the years ended 31 March 2015 or
2014, but is derived from those financial statements. Statutory
financial statements for 2014 have been delivered to the Registrar
of Companies and those for 2015 will be delivered following the
Group's annual general meeting. The auditors have reported on the
2014 and 2015 financial statements which carried an unqualified
audit report, did not include a reference to any matters to which
the auditor drew attention by way of emphasis and did not contain a
statement under section 498(2) or 498(3) of the Companies Act
2006.
Whilst the financial information included in this preliminary
announcement has been computed in accordance with International
Financial Reporting Standards (IFRS), this announcement does not in
itself contain sufficient information to comply with IFRS. The
accounting policies used in preparation of this preliminary
announcement are consistent with those in the full financial
statements that have yet to be published. The preliminary results
for the year ended 31 March 2015 were approved by the Board of
Directors on 6 July 2015.
AVAILABILITY OF FINANCIAL STATEMENTS
The annual report containing the full financial statements for
the year to 31 March 2015 will be posted to shareholders on or
around 20 August 2015, a soft copy of which will be available to
download from the Company's website www.adept-telecom.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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