TIDMIDE
RNS Number : 7030N
IDE Group Holdings PLC
26 September 2019
IDE Group Holdings Plc
("IDE", the "Group" or the "Company")
Unaudited Interim Results
IDE Group Holdings plc, the mid-market network, cloud and IT
managed services provider, today announces its unaudited results
for the six months ended 30 June 2019.
Summary
-- Revenue of GBP14.7 million (H1 2018*: GBP21.8 million)
-- Adjusted EBITDA** profit of GBP1.2 million (H1 2018*: loss of
GBP7.6 million), including IFRS 16 adjustment of GBP0.57
million
-- The loss after tax for the period was reduced to GBP2.9
million (H1 2018 - continuing operations: loss of GBP35.5
million).
-- Net debt*** as at 30 June 2019 of GBP12.3 million (31
December 2018: GBP9.9 million), following GBP10.0 million loan note
issue in first quarter and repayment of Group bank debt
-- Loan notes subscribed for by existing shareholders, Company
now has no external debt other than with key shareholders
-- Significant customer multi-year contract renewals, including
a 3-year contract for cloud and hosting with a total value of GBP1
million
-- New partnership with a global IT services company, first
project started post-period end in August
* from continuing operations, excluding the results relating to
365 ITMS Limited and the PACT business which were sold in October
2018
** before net finance costs, tax, depreciation, impairment
charges, amortisation, exceptional items and share based payment
charges
*** excluding IFRS 16 liabilities
IDE Group Holdings Plc Tel: +44 (0)344
Andy Parker, Executive Chairman 874 1000
finnCap Limited Tel: +44 (0)20 7220
Nominated Adviser and Broker 0500
Corporate finance: Jonny Franklin-Adams/
Hannah Boros
ECM: Tim Redfern/ Richard Chambers
Executive Chairman's Statement
The first six months of the year has been a period of
stabilisation following the upheaval of the restructuring which
took place during 2018. As a result of the actions taken during
2018, we started 2019 in a much improved position with a strong
leadership team, an appropriate cost base as well as a clear focus
on operational execution and customer service to drive increased
profitability and cash generation. To that end, it is pleasing to
report an Adjusted EBITDA* of GBP1.2 million (including a GBP0.57
million IFRS adjustment as explained in the financial review) for
the period compared to the GBP7.6 million loss in the corresponding
last year, which reflected the significant challenges the business
faced last year.
Refinancing
In January 2019 we announced a proposed fundraising of GBP10.0
million by the way of the issue of secured loan notes in order to
fully repay the Group's bank facilities and provide additional
working capital. The first tranche of loan notes was issued in
January with the remaining loan notes issued in February and March
following which the Group's bank facilities were fully repaid. We
saw this as a very positive step as the Group now has secure, long
term funding and no external debt as the loan notes are held solely
by shareholders of the Company, predominantly the three largest,
two of whom are also represented on the Board. Further details of
the loan notes can be found in the financial review below.
Trading
Towards the end of 2018, several of the Group's material
customers renewed their contracts with IDE, some on a multi-year
basis and I am pleased to say that during the period under review,
the Group secured several other significant renewals including a 3
year contract for cloud and hosting services with a total contract
value of over GBP1 million.
The restructuring last year meant that we entered this year with
an appropriate cost base and the refinancing in the first quarter
has given us a stable platform from which to grow. To that end, in
May this year we recruited a new Head of Sales to drive sales
growth. Already our level of engagement with our key customers,
including a large international outsourcer, has immeasurably
improved. In addition, we are being awarded extensions to other
contracts and have commenced new projects which we expect to grow
over the coming months.
Furthermore, we were very pleased to enter into a new
partnership with another global IT services company during the
period, and the first project under this new partnership commenced
post-period end in August. We believe there is significant
potential for growth with this partner and look forward to updating
shareholders in this respect.
Group revenue in the period was impacted by certain projects and
contracts coming to an end and a general level of churn in the
business, in particular with respect to our cloud and networks
divisions. In order to address this going forward, we continue to
enhance our cloud platform and offering and are developing a joint
value proposition with Equinix, Inc. a multi-national data centre
and co-location provider. Furthermore, we continue to close down
legacy networks in order to improve service and profitability.
In summary, the first half of the year has shown a significant
turnaround from the upheaval of the previous year. We have been
successful in renewing significant customer contracts and in
progressing new relationships. We continue to explore further areas
where costs can be saved whilst investing in areas that will help
drive growth. We are confident in the outlook for the Group and
remain ambitious in securing and improving margins and cash
generation.
Andy Parker
Executive Chairman
Financial Review
Results for the six months to 30 June 2019
Revenue for the six months to 30 June 2019 was GBP14.7 million
(H1 2018 - continuing operations: GBP21.8 million). The decrease in
revenue can be primarily attributed to a fall in lifecycle revenues
included within managed services and reductions in project revenues
due to certain significant projects coming to an end last year and
during the period under review. Furthermore, as referred to in the
Chairman's statement, there has been a general level of churn
across the business, in particular within the cloud and networks
divisions.
Gross profit for the six months to 30 June 2019 was GBP3.6
million (including a GBP0.1 million IFRS 16 adjustment) (H1 2018 -
continuing operations: GBP0.3 million), representing an overall
gross margin of 24%, a significant improvement to the prior period.
The low level of gross profit in the six months to 30 June 2018 was
due predominantly to the inclusion within cost of sales of a
provision of GBP2.2 million in relation to an onerous supply
contract.
At an Adjusted EBITDA* level the Group generated a profit of
GBP1.2 million (including an IFRS 16 adjustment of GBP0.57 million
as detailed above) from continuing operations as compared to a loss
of GBP7.6 million from continuing operations in the first half of
2018. The results six months to 30 June 2018 included GBP5.7
million of provisions in relation to onerous contracts and empty
properties which were a major contributor to the loss at Adjusted
EBITDA* level in that period.
Exceptional costs amounted to GBP0.4 million (H1 2018 -
continuing operations: GBP0.9 million) and related predominantly to
legacy redundancy costs as a result of the reduction in headcount
in the previous financial year. Going forward, we expect
exceptional costs to continue to decrease.
Depreciation increased to GBP1.5 million for the six months to
30 June 2019 compared to GBP1.2 million for H1 2018 as a result of
a GBP0.5 million adjustment in relation to IFRS 16.
There were no impairment charges for the six months to 30 June
2019, whereas for the six months to 30 June 2018 impairment charges
totalling GBP27.5 million were recognised in relation to goodwill
and intangible assets resulting from the acquisition of IDE Group
Manage (formerly Selection Services), although at the time of the
final results for the year to 31 December 2018, GBP13.7 million of
these charges were reversed.
Net financial costs have increased to GBP1.0 million (H1 2018 -
continuing operations: GBP0.3 million), which include GBP0.7
million of interest on the loan notes issued in the first half of
the year which is payable at the end of their term. In addition the
costs include GBP0.1 million of notional interest in relation to
the convertible loan notes issued last year and an additional
GBP0.1 million of interest expense relating to the IFRS 16
adjustment.
The loss after tax for the period was GBP2.9 million (H1 2018 -
continuing operations: loss of GBP35.5 million).
Loss per share was 0.73p (H1 2018 - continuing operations:
17.86p).
Cashflow and Net Debt
The Group's cash outflow from operating activities in the period
was GBP0.5 million (H1 2018: GBP1.6 million). A number of onerous
contracts have been provided for and hence do not impact the
Group's Adjusted EBITDA*, but continue to affect the Group's
cashflow, however continued efforts are being made in identifying
further areas where costs can be rationalised in order to improve
both profitability and cash flow.
As at the beginning of the period the Group's facilities with
National Westminster Bank plc ("Natwest") comprised a five-year,
fully drawn GBP4.75 million Revolving Credit Facility ("RCF") and a
GBP3.5 million overdraft facility (the "Facilities"). Interest was
payable on the utilised RCF at 2% above LIBOR.
In January 2019 the Company issued GBP5.3 million of secured
loan notes with a six-year term and a 12% coupon which is
compounded, rolled up and payable at the end of the term ("Secured
LNs"). The proceeds of the Secured LNs were used to repay GBP4.125
million to Natwest and the RCF was reduced to GBP625k. In February
and March 2019, a further GBP4.7 million in total of Secured LNs
were issued to repay the remaining Facilities, which were then
cancelled, and provide additional working capital. The Secured LNs
carry an arrangement fee of 2.5 per cent., payable at the end of
the term, and an exit fee of 2.5 per cent., also payable at the end
of the term.
The net debt balance (excluding IFRS 16 liabilities) at 30 June
2019 was GBP12.3 million (31 December 2018: GBP9.9 million), which
comprised the Secured LNs held at amortised cost using the
effective interest rate method resulting in a liability as at 30
June 2019 of GBP10.7 million (note 5), plus the convertible loan
notes of GBP1.7 million issued in August 2018 (note 6) and finance
lease liabilities of GBP0.6 million, net of cash of GBP0.7
million.
New IFRS implementation
The Company has adopted IFRS 16 - Leases for the financial year
ending 31 December 2019, and it has chosen to use the modified
retrospective approach to adoption which means there are no
restatements to the prior year figures.
IFRS 16 introduces a single lessee accounting model, whereby the
Group now recognises a lease liability and a right of use asset at
1 January 2019 for leases previously classified as operating
leases. Within the income statement, operating lease charges, which
previously sat in both cost of sales and administrative expenses,
have been replaced by depreciation and interest expenses.
The adoption of IFRS 16 resulted in a right of use asset of
GBP2.0 million, with a corresponding liability of GBP2.0 million,
being recognised as at 1 January 2019 which was depreciated to a
value of GBP1.5 million as at 30 June 2019.
In order to see how the impact of IFRS 16 has affected gross
profit and Adjusted EBITDA*, a reconciliation is presented
below:
6 months ended 6 months ended
30 June 2019 30 June 2018
(continuing
operations)
GBP000 GBP000
Gross profit - consistent with 2018
presentation and accounting policy 3,495 346
Changes due to new accounting policy 93 -
- IFRS 16
Gross profit - consistent with 2019
presentation and accounting policy 3,588 346
Adjusted EBITDA* - consistent with
2018 presentation and accounting
policy 651 (7,649)
Changes due to new accounting policy 567 -
- IFRS 16
Adjusted EBITDA* - consistent with
2019 presentation and accounting
policy 1,218 (7,649)
* before net finance costs, tax, depreciation, impairment
charges, amortisation, exceptional items and share based payment
charges.
Consolidated Statement of Comprehensive Income
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
Note GBP000 GBP000 GBP000
----------------------------------------------- -------------- ------------ -------------
Continuing Operations
Revenue 2 14,713 21,781 41,137
Cost of sales (11,125) (21,435) (34,521)
---------------------------------------- ------ -------------- ------------ -------------
Gross profit 3,588 346 6,616
Administrative expenses excluding
impairment (5,704) (12,162) (19,247)
Impairment charge on goodwill - (23,722) (17,528)
Operating loss (2,116) (35,538) (30,159)
---------------------------------------- ------ -------------- ------------ -------------
Analysed as:
Adjusted EBITDA* 1,218 (7,649) (3,886)
Exceptional items 3 (410) (846) (2,368)
Depreciation of property,
plant and equipment (1,491) (1,151) (2,848)
Amortisation of intangible
assets (1,433) (1,949) (3,290)
Impairment of goodwill & intangibles - (23,722) (17,528)
Loss on disposal of fixed
assets - (164) (441)
Charges for share based
payments - (57) 202
Net financial costs (1,007) (277) (389)
Loss before taxation (3,123) (35,815) (30,548)
Income tax 200 303 1,089
---------------------------------------- ------ -------------- ------------ -------------
Loss for the period from continuing
operations attributable to
owners of the parent company (2,923) (35,512) (29,459)
Discontinued operations
Loss after tax for the year
from discontinued operations - (3,597) (3,165)
---------------------------------------- ------ -------------- ------------ -------------
Loss for the period after
taxation (2,923) (39,109) (32,624)
---------------------------------------- ------ -------------- ------------ -------------
Other comprehensive income:
Items that are or may be classified
subsequently to profit or
loss:
Foreign exchange translation
differences - equity accounted
investments 6 (2) (23)
---------------------------------------- ------ -------------- ------------ -------------
Loss for the period and total
comprehensive income attributable
to equity holders of the parent (2,917) (39,111) (32,647)
---------------------------------------- ------ -------------- ------------ -------------
Basic and diluted loss per
share - continuing operations 4
Basic (pence per share) (0.73) (17.69) (11.97)
Diluted (pence per share) (0.73) (17.69) (11.97)
---------------------------------------- ------ -------------- ------------ -------------
* Earnings from continuing operations before net finance costs,
tax, depreciation, amortisation, impairment charges, share based
payments and exceptional costs
Consolidated Statement of Financial Position
Unaudited Unaudited Audited
30 June 30 June 31 December
2019 2018 2018
GBP000 GBP000 GBP000
------------------------------- --- ---------- ------------------- ----------------
Non-current assets
Intangible assets 20,267 10,309 21,464
Goodwill 5,931 14,997 5,931
Property, plant and equipment 10,493 11,470 9,836
Financial and other assets - 63 -
------------------------------- --- ---------- ------------------- ----------------
36,691 36,839 37,231
------------------------------- --- ---------- ------------------- ----------------
Current assets
Trade and other receivables 7,970 12,000 8,893
Stock - 354 -
Cash and cash equivalents 690 3,833 -
8,660 16,187 8,893
------------------------------- --- ---------- ------------------- ----------------
Total assets 45,351 53,026 46,124
------------------------------- --- ---------- ------------------- ----------------
Current liabilities
Borrowings 5 - 4,850 7,586
Trade and other payables 6,578 13,770 7,670
Deferred income 2,190 6,571 2,962
Taxation 342 10 -
Finance lease obligations 613 234 214
Provisions 770 2,510 1,514
10,493 27,945 19,946
------------------------------- --- ---------- ------------------- ----------------
Non-current liabilities
Deferred income 13 - 13
Borrowings 5 10,676 9,500 -
Convertible loan notes 6 1,750 - 1,654
Finance lease obligations 1,526 594 494
Deferred tax liabilities 3,698 4,812 3,899
Provisions 1,705 3,936 1,705
19,368 18,842 7,765
------------------------------- --- ---------- ------------------- ----------------
Total liabilities 29,861 46,787 27,711
------------------------------- --- ---------- ------------------- ----------------
Net assets 15,490 6,239 18,413
------------------------------- --- ---------- ------------------- ----------------
Equity attributable to equity
holders of the parent
Called up share capital 10,020 5,018 10,020
Share premium account 35,439 35,439 35,439
Other reserves 811 (125) 817
Retained earnings (30,780) (34,092) (27,863)
------------------------------- --- ---------- ------------------- ----------------
Total equity 15,490 6,239 18,413
------------------------------- --- ---------- ------------------- ----------------
Consolidated Statement of Changes in Equity
Share Share Equity Retained Foreign
capital premium Reserve earnings currency Total
(a) (b) (c) (d) translation
reserve
(e)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------- --------- --------- --------- ---------- ------------- ---------
At 1 January 2018 5,018 35,439 - 4,963 (127) 45,293
Total comprehensive
income for the period
Loss for the period - - - (39,109) - (39,109)
Exchange rate differences - - - - (2) (2)
Transactions with
owners recorded directly
in equity
Share based payments - - - 57 - 57
At 30 June 2018 5,018 35,439 - (34,089) (129) 6,239
Total comprehensive
income for the period
Profit for the period - - - 6,485 - 6,485
Exchange rate differences - - - - (21) (21)
Transactions with
owners recorded directly
in equity
Share based payments - - - (259) - (259)
Share issues 5,002 - - - - 5,002
Convertible loan notes - - 967 - - 967
At 31 December 2018 10,020 35,439 967 (27,863) (150) 18,413
Total comprehensive
income for the period
Loss for the period - - - (2,917) - (2,917)
Exchange rate differences - - - - (6) (6)
At 30 June 2019 10,020 35,439 967 (30,780) (156) 15,490
---------------------------- --------- --------- --------- ---------- ------------- ---------
(a) Share capital represents the nominal value of equity shares
(b) Share premium represents the excess over nominal value of
the fair value of consideration received for equity shares; net of
expenses of the share issue;
(c) The equity reserve consists of the equity component of
convertible loan notes that were issued as part of the fundraising
in August 2018 less the equity component of instruments converted
or settled.
The fair value of the equity component of convertible loan notes
issued is the residual value after deduction of the fair value of
the debt component of the instrument from the face value of the
loan note.
(d) Retained earnings represents retained profits and accumulated losses
(e) On consolidation, the balance sheets of the Group's foreign
subsidiaries are translated into sterling at the rates of exchange
ruling at the balance sheet date. Exchange gains or losses arising
from the consolidation of these foreign subsidiaries are recognised
in the foreign currency translation reserve.
Consolidated Cash Flow Statement
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
GBP000 GBP000 GBP000
----------------------------------------- ---- ------------ ------------------- -------------
Loss for the period (2,917) (39,109) (32,624)
Adjustments for:
Depreciation of property, plant
and equipment 1,491 1,278 3,033
Amortisation of intangible assets 1,433 2,121 3,549
Impairment Charge - 27,525 21,505
Net financial costs 1,007 287 390
Equity settled share-based payment
expenses - 57 (202)
Taxation (200) (303) (1,216)
Loss on disposal of fixed assets - 155 425
Other (6) (1) -
Profit on disposal of subsidiary - - (680)
----------------------------------------------- ------------ ------------------- -------------
808 (7,990) (5,820)
Decrease in trade and other receivables 923 2,730 6,284
Decrease in trade and other payables (1,521) (1,655) (11,320)
Decrease in inventory - - 366
(Decrease)/ increase in provisions (745) 5,209 1,485
(535) (1,500) (9,005)
Net corporation tax recovered/ - 103 -
(paid)
Net cash used in operating activities (535) (1,603) (9,005)
----------------------------------------------- ------------ ------------------- -------------
Cash flow from investing activities:
Proceeds from sale of subsidiary
and PACT business, net of overdraft
repaid - - 3,611
Acquisition of property, plant
and equipment (131) - (272)
Realisation of non-current financial
assets - 470 89
Proceeds from sale of fixed assets - 9 23
----------------------------------------------- ------------ ------------------- -------------
Net cash (used in)/ from investing
activities (131) 479 3,451
----------------------------------------------- ------------ ------------------- -------------
Cash flows from financing activities:
Share issue, net of share issue
costs - - 3,752
Proceeds from borrowings, net
of expenses 9,810 2,000 3,800
Repayment of loans and other
borrowings (4,750) - (2,750)
Repayment of finance lease obligations (613) (109) (335)
Net interest paid (186) (286) (320)
Net cash from financing activities 4,261 1,605 4,147
----------------------------------------------- ------------ ------------------- -------------
Net increase/ (decrease) in cash
and cash equivalents 3,595 481 (1,407)
Cash and cash equivalents at
beginning of period (2,905) (1,498) (1,498)
Cash and cash equivalents at
end of period 690 (1,017) (2,905)
----------------------------------------------- ------------ ------------------- -------------
Being:
Cash and cash equivalents 690 3,833 -
Bank overdraft - (4,850) (2,905)
----------------------------------------------- ------------ ------------------- -------------
690 (1,017) (2,905)
---------------------------------------------- ------------ ------------------- -------------
Notes to the half-yearly financial information
1. Basis of preparation
The condensed consolidated interim financial information for the
six-month period ended 30 June 2019 and 30 June 2018 is unaudited.
This statement has not been reviewed by the Company's auditor. This
condensed consolidated interim financial information was approved
by the Board of Directors and authorised for issue on 26 September
2019. A copy of this half-yearly financial report is available on
the Company's website at www.idegroup.com.
The Company is a public limited liability company incorporated
and domiciled in Scotland. The address of its registered office is
24 Dublin Street, Edinburgh EH1 3PP. The Company is listed on the
AIM market of the London Stock Exchange.
IDE and its subsidiaries have not applied IAS 34, 'Interim
Financial Reporting' as adopted by the European Union, which is not
mandatory for UK AIM listed companies, in the preparation of this
half-yearly financial report.
This condensed consolidated interim financial information for
the six-month period ended 30 June 2019 therefore does not comply
with all the requirements of IAS 34, 'Interim Financial Reporting'
as adopted by the European Union. The consolidated interim
financial information should be read in conjunction with the annual
financial statements of the Company as at and for the year ended 31
December 2018, which were prepared in accordance with IFRS as
adopted by the European Union.
This condensed consolidated interim financial information does
not comprise statutory accounts within the meaning of section 434
of the Companies Act 2006. Statutory accounts for the year ended 31
December 2018 were approved by the Board of Directors on 24 July
2019 and delivered to the Registrar of Companies. The report of the
auditor was unqualified, did not contain an emphasis of matter
paragraph and did not contain a statement under section 498 (2) or
(3) of the Companies Act 2006.
Accounting policies
The accounting policies used in the preparation of the condensed
consolidated interim financial information for the six months ended
30 June 2019 are in accordance with the recognition and measurement
criteria of International Financial Reporting Standards ("IFRS") as
adopted by the European Union and are consistent with those that
will be adopted in the annual statutory financial statements for
the year ended 31 December 2019.
While the financial information included has been prepared in
accordance with the recognition and measurement criteria of IFRS,
as adopted by the European Union, these financial statements do not
contain sufficient information to comply with IFRSs. The accounting
policies applied by the Group in this financial information reflect
the adoption of IFRS 16 Leases which is effective as of 1 January
2019. The adoption of this standard has not resulted in a
restatement of the prior year figures.
Other than the adoption of IFRS 16 - Leases, the accounting
policies adopted in the interim financial statements are consistent
with those adopted in the financial statements for the year ended
31 December 2018.
IFRS 16 - Leases
The Group has adopted IFRS 16 on a modified retrospective basis.
As disclosed in the Financial Review, upon transition, a lease
liability has been recognised based on future lease payments
discounted at an appropriate borrowing rate. Additionally, a right
of use asset has been recognised along with a related lease
liability. Within the income statement, the operating lease charge
has been replaced by depreciation and interest expense. This has
resulted in a decrease in operating expenses and an increase in
finance costs.
Exceptional items and other non-recurring items
Items which are material because of their size or nature and
which are non-recurring are highlighted separately on the face of
the income statement. The separate reporting of exceptional items
helps provide a better picture of the Company's underlying
performance. Items which may be included within the exceptional
category include:
-- spend on major restructuring programmes;
-- significant goodwill or other asset impairments; and
-- other particularly significant or unusual items.
Exceptional items are excluded from the headline profit measures
used by the Group and are highlighted separately in the income
statement as management believe that they need to be considered
separately to gain an understanding the underlying profitability of
the trading businesses.
For further details, please refer to note 3.
Going concern
The condensed consolidated interim financial information has
been prepared on a going concern basis.
Taking into account the support of certain of the Company's
significant shareholders, of which two are represented on the
Board, as demonstrated by the refinancing at the beginning of the
year, the Directors have a reasonable expectation that the Group
has adequate resources to continue in operational existence for the
foreseeable future. For this reason, the Directors consider that
the adoption of the going concern basis is appropriate.
2. Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting to the Chief Operating Decision Maker ("CODM").
The CODM has been identified as the Board of Directors.
The operating segments are defined by distinctly separate
product offerings or markets. The CODM assesses the performance of
the operating segments based on a measure of revenue and gross
profit.
The following table presents revenue and gross profit in respect
of the Group's operating segment for the six months ended 30 June
2019:
Unaudited for the six-month period ended 30 June 2019
Managed Services Cloud Hosting Networks Projects Central Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------------------- ----------------- -------------- --------- --------- -------- ---------
Revenue 5,777 4,204 3,014 1,718 - 14,713
Cost of Sales (4,015) (3,500) (2,545) (1,065) - (11,125)
---------------------------------------- ----------------- -------------- --------- --------- -------- ---------
Gross profit 1,762 704 469 653 - 3,588
Administrative expenses - - - - (5,704) (5,704)
Operating profit/ (loss) 1,762 704 469 653 (5,704) (2,116)
---------------------------------------- ----------------- -------------- --------- --------- -------- ---------
Analysed as:
Adjusted EBITDA* 1,762 704 469 653 (2,370) 1,218
Depreciation - - - - (1,491) (1,491)
Amortisation of intangible assets - - - - (1,433) (1,433)
Exceptional costs - - - - (410) (410)
---------------------------------------- ----------------- -------------- --------- --------- -------- ---------
Net financial costs - - - - (1,007) (1,007)
---------------------------------------- ----------------- -------------- --------- --------- -------- ---------
Profit/(loss) before taxation 1,762 704 469 53 (6,711) (3,123)
Tax on loss on ordinary activities - - - - 200 200
---------------------------------------- ----------------- -------------- --------- --------- -------- ---------
Profit/(loss) for the period after
taxation 1,762 704 469 53 (6,511) (2,923)
---------------------------------------- ----------------- -------------- --------- --------- -------- ---------
Unaudited for the six-month period ended 30 June 2018
Continuing Operations Managed Services Cloud Hosting Networks Projects Central Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------------- ----------------- -------------- --------- --------- --------- ---------
Revenue 8,115 5,324 4,051 4,291 - 21,781
Cost of Sales (9,091) (5,271) (4,026) (3,047) - (21,435)
--------------------------------------- ----------------- -------------- --------- --------- --------- ---------
Gross loss/ (profit) (976) 53 25 1,244 - 346
Administrative expenses (12,162) (12,162)
Impairment of goodwill & intangibles (23,722) (23,722)
Operating (loss)/ profit (976) 53 25 1,244 (35,884) (35,538)
--------------------------------------- ----------------- -------------- --------- --------- --------- ---------
Analysed as:
Adjusted EBITDA* (976) 53 25 1,244 (7,995) (7,649)
Equity settled share-based payments - - - - (57) (57)
Depreciation - - - - (1,151) (1,151)
Amortisation of intangible assets - - - - (1,949) (1,949)
Impairment of goodwill & intangibles - - - - (23,722) (23,722)
(Loss) / profit on Disposal - - - - (164) (164)
Exceptional costs - - - - (846) (846)
--------------------------------------- ----------------- -------------- --------- --------- --------- ---------
Net financial costs (277) (277)
--------------------------------------- ----------------- -------------- --------- --------- --------- ---------
(Loss)/ profit before taxation (976) 53 25 1,244 (36,161) (35,815)
Tax on loss on ordinary activities - - - - 303 303
--------------------------------------- ----------------- -------------- --------- --------- --------- ---------
Profit/(loss) for the period after
taxation (976) 53 25 1,244 (35,858) (35,512)
--------------------------------------- ----------------- -------------- --------- --------- --------- ---------
* Earnings from continuing operations before net finance costs,
tax, depreciation, amortisation, goodwill impairment, share based
payments and exceptional costs
Administrative expenses are not allocated against operating
segments in the Group's internal reporting. The statement of
financial position is not allocated between the operating segments
in the Group's internal reporting.
3. Exceptional costs
In accordance with the Group's policy in respect of exceptional
costs, the following charges were incurred in relation to
continuing operations:
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
GBP000 GBP000 GBP000
---------------------------------- ------------ ------------ -------------
Restructuring and reorganisation
costs 410 994 2,368
----------------------------------- ------------ ------------ -------------
4. Earnings per share from continuing operations
The calculation of basic and diluted loss per share is based on
results from continuing operations attributable to ordinary
shareholders divided by the weighted average number of ordinary
shares in issue during the year. The weighted average number of
shares for the purpose of calculating the basic and diluted
measures in the reporting periods is the same. This is because the
outstanding options would have the effect of reducing the loss per
ordinary share and therefore would be anti-dilutive under the terms
of IAS 33. Basic and diluted unaudited loss per share from
continuing operations are calculated as follows:
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
GBP000 GBP000 GBP000
----------------------------------- -------------- ------------ -------------
Loss attributable to shareholders (2,923) (35,512) (29,459)
Weighted average number of
shares 400,802,032 200,729,121 246,067,004
Diluted weighted average number
of shares 420,931,989 211,784,158 259,333,840
------------------------------------ -------------- ------------ -------------
Basic loss per share (pence) (0.73) (17.69) (11.97)
Diluted loss per share (pence) (0.73) (17.69) (11.97)
5. Borrowings
As at the beginning of the period the Group's facilities with
National Westminster Bank plc ("Natwest") comprised a five-year,
fully drawn GBP4.75 million Revolving Credit Facility ("RCF") and a
GBP3.5 million overdraft facility (the "Facilities"). Interest was
payable on the utilised RCF at 2% above LIBOR.
In January 2019 the Company issued GBP5.3 million of secured
loan notes with a six-year term and a 12% coupon which is
compounded, rolled up and payable at the end of the term ("Loan
Notes"). The proceeds of the Loan Notes were used to repay GBP4.125
million to Natwest and the RCF was reduced to GBP625,000. In
February and March 2019, a further GBP4.7 million in total of Loan
Notes were issued to repay the remaining Facilities, which were
then cancelled, and provide additional working capital. The Loan
Notes carry an arrangement fee of 2.5 per cent., payable at the end
of the term, and an exit fee of 2.5 per cent., also payable at the
end of the term.
The Loan Notes are held at amortised cost using the effective
interest rate method. The effective interest rate for the Loan
Notes has been calculated to be 18%.
Unaudited Audited
Six months Unaudited Year
ended Six months ended
30 June ended 31 December
2019 30 June 2018
GBP000 2018 GBP000
GBP000
------------------------------ -------------- ------------- -------------
Non-Current
Loan Notes 10,676 - -
Bank Loan - 9,500 -
Total 10,676 9,500 -
------------------------------- -------------- ------------- -------------
Current
Bank Loan - - 4,750
Unamortised loan arrangement
fee - - (69)
Bank overdraft - 4,850 2,905
Total - 4,850 7,586
------------------------------- -------------- ------------- -------------
6. Convertible Loan Notes
On 21 August 2018, as part of a wider fundraising, the Company
issued GBP2.55 million of unsecured loan notes, which have a term
of 5 years and a zero per cent. coupon ("CLNs"). The CLNs can be
converted into new ordinary shares in the capital of IDE at a price
of 2.5 pence per share. Conversion is at the option of the holder
at any time during the 5-year term. At the end of the term, if the
holder has not chosen to convert the CLNs, the CLNs will be settled
with a cash repayment. At issue, the CLNs had a fair value of
GBP2.54 million, split into an equity component (GBP0.96 million)
and a debt component (GBP1.58 million).
Unaudited Audited
Six months Unaudited Year
ended Six months ended
30 June ended 31 December
2019 30 June 2018
GBP000 2018 GBP000
GBP000
-------------------------------- ---- -------------- ------------- -------------
Balance at beginning of period 1,654 - -
Additions - - 1,583
Interest unwound 96 - 71
Total 1,750 - 1,654
-------------------------------------- -------------- ------------- -------------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR LLFSTAVIEFIA
(END) Dow Jones Newswires
September 26, 2019 02:01 ET (06:01 GMT)
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