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RNS Number : 1245W
Panoply Holdings PLC (The)
09 December 2019
9 December 2019
The Panoply Holdings PLC
("The Panoply", or the "Group")
Interim results for H1 FY2020
The Panoply, a digitally native technology services company,
announces its results for the six month period ended 30 September
2019.
Financial highlights
-- Revenue up 33% to GBP13.4m (H1 2019: GBP10.1m(2) )
-- Adjusted EBITDA(1) of GBP0.9m (H1 2019: GBP0.9m(2) ),
reflecting significant investments made into new Group
capabilities
-- Adjusted EBITDA(1) , removing the impact of investments
into start-ups totalling GBP0.4m, was up 37.8% to GBP1.3m
(H1 2019: GBP0.9m(2) )
-- Profit after tax of GBP0.3m (H1 2019: GBP(0.7)m)
-- Basic earnings per share of 0.01p
-- Cash at bank of GBP4.3m as at 30 September 2019 (H1 2019:
GBP0.3m)
-- Sales Backlog(3) of GBP12.8m to 31 March 2020 and GBP12.2m
beyond 31 March 2020
Operational highlights
-- Continued growth in customer base with 209 billed in
H1 2020 (H1 2019: 90)(4)
-- 78% of customers billed in H1 2020 were also billed in
2019 and 2018 demonstrating our long-standing client
relationships
-- Reduction in reliance on top ten clients which represented
42% of revenue (FY 2019: 54%)
-- Clients where two or more Group companies were involved
in their engagement totalled GBP2m, representing 15%
of total revenue
-- Acquisition of FutureGov completed. Largest acquisition
to date, strengthening our position in the public sector
and expanding our digital transformation capability
-- Now established as a challenger brand in digital transformation
in public services with 59% of revenue coming from that
sector in the period
-- GBP5m three year revolving credit facility entered into
with HSBC to be used for future acquisitions and working
capital. GBP3.55m currently drawn
Outlook
Significant investments were made in the period into new Group
capability around robotic process automation, conversational
interfaces and Microsoft .NET development. All these areas have
great long-term potential for the Group. They are already
generating revenues and we expect them to become material practices
for the Group over the coming years. This, combined with our sales
backlog and strong pipeline of business built across the rest of
the Group, underpins the expectation that full year forecasts will
be achieved.
Neal Gandhi, Chief Executive Officer, commented:
"It has been a very busy period for the Group, and we are
delighted that with the acquisition of FutureGov and the increasing
collaboration between our group businesses, The Panoply companies
are aligning around a clear proposition: a strong digital
transformation services provider to the Public Services sector in
the UK. Thanks to the unique end-to-end offering we are able to
provide to this market, we have won several major clients from
across the sector over the period and taking further market share
will continue to be a key focus in the second half and beyond.
Our investments into businesses that focus on conversational
interfaces and robotic process automation have hit the ground
running and are already generating revenues for the Group. Both are
set to benefit from significant structural growth trends, and the
calibre of clients won so far demonstrate that the offerings we've
built are best of breed."
(1) Adjusted EBITDA is a non-IFRS measure that the Company uses
to measure its performance and is defined as earnings before
interest, taxation, depreciation and amortisation and after add
back of exceptional items related to acquisitions made by the
Group, fair value adjustments, share based payment charges and pre
IFRS 16 adjustments. Further details are set in the Income
Statement below.
(2) Pro forma results relating to the period prior to the IPO
and initial acquisitions adjusted for normalised salaries and
bonuses to provide a like for like basis and the same central costs
as reported in the current year.
(3) The value of contracted revenue that has yet to be
recognised.
(4) Comparative based on clients billed by four companies
acquired at IPO.
Enquiries:
The Panoply Holdings
Neal Gandhi (CEO) Via Alma PR
Oliver Rigby (CFO)
Stifel Nicolaus Europe Limited +44 (0)207 710 7600
(Nomad and Broker)
Fred Walsh
Alex Price
Neil Shah
Luisa Orsini Baroni
Alma PR panoply@almapr.co.uk
(Financial PR) +44(0)203 405 0206
Josh Royston 07780 901979
Susie Hudson
About The Panoply
The Panoply is a digitally native technology services company,
built to service clients' digital transformation needs. Founded in
2016, with the aim of identifying and acquiring best-of-breed
specialist information technology, design and innovation consulting
businesses across Europe, the Group collaborates with its clients
to deliver the technology outcomes they're looking for at the pace
that they expect and demand.
www.thepanoply.com
Chief Executive's review
I am pleased to report our H1 2020 results, with revenue up 33%
to GBP13.4m, and like-for-like adjusted EBITDA, prior to
investments, up 37.8% to GBP1.3m versus the same period in the
prior year.
This is the first full period since IPO and we are pleased that
15% of revenue has been generated from clients where two or more
group companies have been involved in delivery.
The pivotal acquisition of FutureGov, completed in June 2019,
means that the Group now has an integrated end-to-end digital
transformation offering in Public Services. This marks the creation
of a true challenger brand in a category that will have a total
addressable market of GBP20bn by 2025(5) . On a run rate basis,
these sectors now account for nearly 60% of Group revenue. We now
have true critical mass and the ability to pursue significantly
larger opportunities compared with those that any single group
company could have bid for prior to joining the Group. During the
period, the Group won numerous new clients across sectors including
local government (Essex, North East Lincolnshire), central
government (Food Standards Agency, UK Hydrographics Office),
housing (Hackney, Rochdale), health and social care (NHS Digital),
higher education (Brunel, UCL, University of York) and not for
profits (WWF, Young Epilepsy).
At the same time our work with commercial sector clients remains
strong, contributing GBP5.5m in the period (H1 2019: GBP5.6m) with
key wins including Cargill, Tails (part of Nestlé) and growth with
News UK (part of News International). This is a strong result when
taking into account the end of a significant contract in July 2018.
The pipeline for this division is strong for the second half of the
financial year.
Adjusted EBITDA(1) post central costs and including investments
for the period was GBP0.9m. This reflects the Group's first full
reporting period as a listed business with associated PLC-related
costs, which includes the cost of salary normalisation of our group
company owner-managers, as well as the significant investments made
into the business over the first half. These investments have
already begun to deliver for the Group and support the statement we
made at the time of our preliminary results that profitability in
the current financial year was likely to be second half weighted,
as well as creating exciting future organic growth opportunities.
Like-for-like Adjusted EBITDA(1) , removing the impact of these
investments, was up 37.8% to GBP1.3m.
209 clients were invoiced during the period, up 132% on H1 2019,
and the Group is now significantly de-risked with the largest
client responsible for 14% of revenue (FY 2019: 24%). Our top ten
clients now represent 42% of revenue (54% during FY19).
5http://www.public.io/wp-content/uploads/2017/07/Public_GovTech_market.pdf
Growth strategy
Our strategy remains to build a panoply of experts that together
empower positive, sustainable digital transformation. We foster an
environment where each of our Group companies remains able to
attract high calibre practitioners. Our ability to create teams
made up of a collection of capabilities, cultures, ideas and
opinions means our clients achieve outstanding outcomes at the pace
that they expect, all the while upskilling their own staff members.
This delivers the kind of diverse teams our clients value and sets
us apart from our competitors. We believe that it is this that will
drive growth over the longer term.
Crystallising our go to market proposition for key target
verticals
The acquisition of FutureGov in June 2019 greatly enhanced the
Group's offering in the Public Sector. FutureGov's capabilities in
the discovery and alpha phases of Government Digital Services
projects marries perfectly with Notbinary's experience in the Beta
and Live phases giving us for the first time a true end to end
proposition.
Alongside this, FutureGov's CEO, Dominic Campbell became UK
Managing Director for Public Sector across the Group, with a remit
to take our end-to-end value proposition out to the sector. This
gives us the ability to pitch for more valuable mandates than we
have previously been able to and, in so doing, gives us an exciting
opportunity to further accelerate organic growth.
Looking forward in the UK, we will drive organic growth further
by pursuing this integration of our go-to-market positioning in the
Public Sector, bringing our entire capability to market.
Investing to build out key capabilities
In the UK, we have continued to focus on investing in areas that
we believe will deliver exceptional growth opportunities over the
longer term. During the period, we invested in both our robotic
process automation (RPA) and conversational AI businesses with both
rapidly securing important client wins. Between them they have
generated GBP0.38m revenue in the half year. We see huge
opportunity for these businesses and are considering further
investment in sales capacity to take advantage of the great demand
they are generating.
Our RPA business, human+, leverages Blue Prism with a view
towards becoming a premier professional services partner in the
Public Sector. The business has secured a number of recent
strategic wins with NHS Wales (in health), UCL (in higher
education) and L&Q (in housing). UCL is worthy of particular
mention in that, post period, they have appointed human+ as RPA
provider of choice following a competitive tendering process with a
plan to automate as many as 15-20 processes. We believe this to be
one of the largest RPA roll outs in higher education in the UK and
is the second time human+ has converted an initial proof of value
engagement into a significantly larger engagement.
Our conversational AI company, GreenShoot Labs, is equally
exciting, having secured a major strategic win with the Defence
Science and Technology Laboratory with our start up fending off
competition from Accenture and IBM Watson. The company also
continued to work with global audit firm BDO and won a highly
scalable opportunity with Brunel University to create a "clearing
bot".
Other investments include the launch of a new .Net practice for
Manifesto, which became immediately revenue generating. We also
appointed Lesley Seary, previously CEO of Islington Council, as a
Non-executive Director on the FutureGov board.
Continued scope to enhance Group competencies both organically
and by acquisition
We will further grow our capabilities either through
acquisitions or by helping existing staff to launch new
propositions, supporting entrepreneurialism and innovation from the
edges of our organisations.
During the period we established our own internal M&A
origination team and that has resulted in an acquisition pipeline
that at period end had 30 companies in it with a combined annual
revenue of GBP150m. We also entered into a three year GBP5m
revolving credit facility with HSBC in June 2019, of which GBP3.55m
is currently drawn, putting us in a strong financial position to
pursue future opportunities.
We will look to add further capabilities around the Microsoft
stack, CRM and enterprise CMS. We will consider acquisitions that
add scale to our existing companies. More widely, our network is
growing as is our reputation and as a consequence our acquisition
pipeline includes companies from Europe and further afield.
Outlook
Current trading is robust, despite the uncertainty around
Brexit, and we continue to see our group businesses working ever
more closely together. Our go-to market strategies for our key
sectors are becoming increasingly aligned across the Group, and
this will be a key focus over the second half of the year and
beyond. We have created a very powerful offering, with which we
will continue to challenge our 20(th) century competitors.
In line with all of the commentary that we are seeing we expect
spending patterns to return to normal or stronger once we have a
clearer political backdrop. Both of the main political parties have
committed to substantial further expenditure, which bodes well for
the future. There can of course be no guarantees on whether the
pre-election commitments translate into actual spending nor indeed
on the timing of any such spending.
We have a sales backlog of GBP25m committed, GBP12.8m of which
is expected to fall in the current financial year.
Our acquisition pipeline is healthy and we continue to see a
number of opportunities to grow The Panoply, each of which will be
explored on its own merits.
Digital transformation is reaching the stage where it is so
all-encompassing that some market commentators believe we are
entering a 'post-digital' era, and into an era of 'continuous
next'. Embracing change has become mission critical to all
enterprises and therefore our strength in digital consultancy
services positions us well. We look forward to updating
shareholders on our progress.
Financial review
The Panoply achieved revenue of GBP13.4m (H1 19: GBP10.1m)
representing an increase of 33%. Growth was underpinned by an
increase in our Public Services revenue from GBP4.6m to GBP7.9m,
representing 59% of group revenue.
Significant investments in the period in Greeshoot Labs and
human+ reflect the Group's commitment to innovation. We also
invested heavily in our central team in order to build a business
that can scale further through acquisition and organic growth.
Despite these significant investments, the Group has reported
Adjusted EBITDA(1) , including the cost of these and central costs,
of GBP0.9m.
FutureGov was acquired on 12 June 2019 via a combination of cash
and share consideration. A revolving credit facility of GBP5m was
entered into with HSBC in order to fund the deal as well as
utilisation of cash within the Group. This has had an impact on the
cash balance which has moved from GBP5.7m as at 31 March 2019 to
GBP4.3m as at 30 September 2019. This is still a strong cash
balance reflecting the cash generative nature of our subsidiary
businesses. Indeed net cash flow from operations was GBP1.4m
compared with GBP(1.2)m for the year ended 31 March 2019. At the
end of the reporting period, the Group had debt of GBP3.6m
resulting in a net cash position of GBP0.7m.
Goodwill of GBP10.7m and intangible assets of GBP1.6m has been
recognised from the acquisition of FutureGov. These are unaudited
preliminary figures and final figures will be presented in the 31
March 2020 financial statements.
The exceptional charge of GBP0.3m primarily represents one-off
costs associated with the acquisition of FutureGov in the
period.
The half year accounts are presented on a basis consistent with
policies to be adopted for the Annual Report & Accounts for the
year ending 31 March 2019. The new accounting standard, IFRS 16:
Leases, has been adopted for the first time, adding GBP1.2m to
tangible fixed assets and lease liabilities and a GBP25k negative
impact to operating profits for the 6 months to 30 September
2019.
Earnout relating to acquisitions
As at 30 September 2019 further consideration of GBP10.9m is
payable as earn out consideration in ordinary shares in the Group
in respect of the first four acquisitions completed at IPO based on
results to 31 March 2019. These shares are to be issued at the
higher of 74p (being our price at IPO) and the prevailing share
price at the time of issue. The ordinary share consideration is
payable over twenty-four months following publication of the
Group's preliminary results earlier this year subject to certain
performance targets being met. At present these targets have not
been met and as a result the consideration payments have not yet
been made.
As a result of the exceptional performance of Deeson for the 12
months to 30 September 2019 further consideration of GBP0.96m is
also payable in respect of the acquisition of Deeson Group Holdings
Limited in ordinary shares in the Group. These shares are to be
issued at the higher of 82.5p and the prevailing market price at
the time. This is payable in four tranches over the next 18 months,
with the initial tranche of GBP0.25m payable on publication of
these results. In order to incentivise the management team of
Deeson we have increased the cap of total consideration from
GBP3.6m to GBP4.1m. An application will shortly be made for the
admission of the 291,065 new ordinary shares to trading on AIM.
Finance costs of GBP96k reflect the impact of IFRS 16 as well as
costs associated with the revolving credit facility.
Consolidated statement of comprehensive income
6 months to 12 months
30 September 6 months to 31 March
2019 to 30 September 2019
Statutory 2018 Statutory Statutory
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
Revenue 13,425 - 8,152
Cost of sales (8,385) - (4,811)
-------------- ----------------- -------------
Gross profit 5,040 - 3,341
Administrative expenses (4,892) (721) (4,992)
Other income 29 - 24
-------------- ----------------- -------------
Operating profit / (loss) 177 (721) (1,627)
Adjusted EBITDA 1,161 (251) 402
Amortisation of intangible
assets (657) - (339)
Depreciation (343) - (45)
Gain/(Loss) on fair value
movement contingent consideration 279 - (54)
Share-based payments (9) - (239)
Exceptional items -costs
directly attributable to
the business combination
and listing* (254) (470) (1,352)
-------------- ----------------- -------------
Operating profit / (loss) 177 (721) (1,627)
------------------------------------ ------ -------------- ----------------- -------------
Finance income - - 5
Finance costs (96) (1) (14)
-------------- ----------------- -------------
Net finance costs (96) (1) (9)
-------------- ----------------- -------------
Profit / (loss) before
tax 81 (722) (1,636)
Taxation 247 - (41)
Profit / (loss) for the
period 328 (722) (1,677)
-------------- ----------------- -------------
Other comprehensive income
Exchange differences on
translation of foreign
operations 36 - (38)
Total comprehensive profit
/ (loss) for the period 364 (722) (1,715)
-------------- ----------------- -------------
Earning / (Loss) per share
Basic 7 0.01p (0.05)p (9.22)p
Fully diluted 7 0.01p (0.05)p (9.22)p
*Exceptional items relating to listing is applicable for prior
year only
Consolidated statement of financial
position
30 Sept
30 Sept 2019 2018 31 Mar 2019
Statutory Statutory Statutory
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Non-current assets
Goodwill 31,321 - 20,585
Intangible assets 6,306 - 5,214
Property, plant and equipment 1,466 - 280
Deferred tax asset 16 - 14
------------- ----------- ------------
Total non-current assets 39,109 - 26,093
------------- ----------- ------------
Current assets
Trade and other receivables 4,391 46 3,918
Contract asset 573 - 232
Cash and cash equivalents 4,275 258 5,650
------------- ----------- ------------
Total current assets 9,239 304 9,800
------------- ----------- ------------
Total assets 48,348 304 35,893
------------- ----------- ------------
Current liabilities
Trade and other payables 1,331 333 2,210
Other taxes and social security
costs 2,529 13 1,539
Lease liability 532 - -
Deferred and contingent consideration 6,934 - 3,270
Contract liability 635 - 406
Borrowings 7 - -
------------- ----------- ------------
Total current liabilities 11,968 346 7,425
------------- ----------- ------------
Non-current liabilities
Deferred tax liabilities 1,305 - 925
Borrowings 3,556 - -
Lease liability 667 - -
Deferred and contingent consideration 5,442 - 8,292
------------- ----------- ------------
Total non-current liabilities 10,970 - 9,217
------------- ----------- ------------
Total liabilities 22,938 346 16,642
------------- ----------- ------------
Net assets 25,410 (42) 19,251
------------- ----------- ------------
EQUITY
Issued share capital 489 - 423
Share premium 26,499 1,130 20,779
Other reserves 251 - 206
Retained earnings (1,829) (1,172) (2,157)
------------- ----------- ------------
Total equity 25,410 (42) 19,251
------------- ----------- ------------
Consolidated statement of changes in equity
Share Share Capital Foreign Share Retained Total
capital premium redemption exchange option earnings
reserve reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ---------- --------- ------------ ---------- --------- ---------- --------
Balance at 1 April
2018 - 490 - - - (480) 10
Loss and total comprehensive
income for the period - - - - - (692) (692)
Transactions with
owners
Shares issued - 650 - - - - 650
Share issue costs - (10) - - - - (10)
Balance at 30 September
2018 - 1,130 - - - (1,172) (42)
------------------------------ ---------- --------- ------------ ---------- --------- ---------- --------
Loss for the period - - - - - (985) (985)
Exchange difference
on translation of
foreign operations - - - (38) - - (38)
Transactions with
owners
Share cancellation (5) - 5 - - - -
Shares issued 428 19,893 - - - - 20,321
Share issue costs - (244) - - - - (244)
Share based payments - - - - 239 - 239
---------------------- ---- ------- ----- ---- -------- -------
Balance at 31 March
2019 423 20,779 5 (38) 239 (2,157) 19,251
---------------------- ---- ------- ----- ---- -------- -------
Profit for the period - - - - - 328 328
Exchange difference
on translation of
foreign operations - - - 36 - - 36
Transactions with
owners
Share cancellation - - - - - - -
Shares issued 66 5,720 - - - - 5,786
Share issue costs - - - - - - -
Share based payments - - - - 9 - 9
------------------------- ---- ------- ---- ---- -------- -------
Balance at 30 September
2019 489 26,499 5 (2) 248 (1,829) 25,410
------------------------- ---- ------- ---- ---- -------- -------
Consolidated Statement of
cash flow
6 months to 6 months 12 months
30 September to 30 September to 31 March
2019 2018 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities:
(Loss) / profit before tax 81 (722) (1,636)
Depreciation of property,
plant and equipment 343 - 45
Amortisation 657 - 339
Share-based payments 9 - 239
Profit on disposal of property,
plant and equipment - - 2
Foreign exchange losses/(gains) (3) - 7
Net finance expense 96 1 9
Movement in fair value consideration (279) - 54
-------------- ------------------ -------------
904 (721) (941)
Working capital adjustments
Increase in trade and other
receivables (758) 6 384
Decrease/(increase) in trade
and other payables 1,102 210 (650)
Increase in inventory (10) - -
-------------- ------------------ -------------
1,238 (507) (1,207)
Tax credit 104 - 27
-------------- ------------------ -------------
Net cash generated from operating
activities 1,342 (507) (1,180)
-------------- ------------------ -------------
Cash flows from investing
activities:
Acquisition of subsidiaries
(paid) (6,560) - (5,613)
Cash inherited from acquisition
of subsidiary 2,151 - 6,978
Purchase of property, plant
and equipment (60) - (33)
Addition of intangible assets (120) - -
Payment of lease liabilities (241) - -
Interest received - - 5
Net cash used in investing
activities (4,830) - 1,337
-------------- ------------------ -------------
Net cash used from financing
activities
Issue of ordinary share capital - 640 5,659
Cost relating to the issue
of shares - - (254)
Repayment of deferred consideration (863) - -
Repayment of borrowings (507) - (24)
New borrowings 3,556 - -
Interest paid (73) (1) (14)
-------------- ------------------ -------------
Net cash generated from/
(used) in financing activities 2,113 639 5,367
-------------- ------------------ -------------
Net (decrease) / increase
in cash and cash equivalents (1,375) 132 5,524
-------------- ------------------ -------------
Cash and cash equivalents
at beginning of the period 5,650 126 126
-------------- ------------------ -------------
Cash and cash equivalents
at end of the period 4,275 258 5,650
-------------- ------------------ -------------
1. General information
The Panoply Holdings Plc is the Group's ultimate parent company.
It is a public limited company incorporated and domiciled in
England and Wales with registered office number 10533096. The
Company's shares are publicly traded on the AIM Market of the
London Stock Exchange.
The address of the registered office is 141-143 Shoreditch High
Street, London, England, England, E1 6JE. The principal activity of
the Group is the provision of digitally native technology services
to clients within the commercial, government and non-government
organisation ("NGO") sectors.
The interim financial information is unaudited.
2. Basis of preparation
The Group has not applied IAS 34 Interim Financial Reporting,
which is not mandatory for UK AIM listed companies, in the
preparation of this half-yearly report.
This consolidated interim financial information for the six
months ended 30 September 2019 does not, therefore, 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 Panoply plc for the year ended 31 March 2019,
which have been prepared in accordance with International Financial
Reporting Standards as adopted by the European Union ("IFRS").
This 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
March 2019 were approved by the Board of directors on 30 August
2019 and delivered to the Registrar of Companies. The report of the
auditors on those accounts was unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement
under sections 498 (2) or (3) of the Companies Act 2006.
The interim financial statements are presented in pound sterling
(GBP), which is the functional currency of the parent company.
The interim financial statements present comparative periods 6
months to 30 September 2018 and 12 months to 31 March 2019.
3. Basis of consolidation
These interim consolidated financial statements consolidate the
financial statements of the Company and its subsidiary undertakings
as at 30 September 2019. Subsidiaries are fully consolidated from
the date of acquisition, being the date on which the Group obtains
control, and continue to be consolidated until the date that such
control may cease. The financial statements of the subsidiaries are
prepared for the same reporting period as the parent company, using
consistent accounting policies.
4. Accounting policies
The accounting policies used in the preparation of the interim
consolidated financial information for the six months ended 30
September 2019 are in accordance with the recognition and
measurement criteria of IFRS and are consistent with those which
were adopted in the annual statutory financial statements for the
year ended 31 March 2019, except for those that relate to new
standards which have become effective this year, as set out
below.
IFRS 16 'Leases'
IFRS 16 Leases replaces IAS 17 Leases along with three
Interpretations (IFRIC 4 Determining whether an Arrangement
contains a Lease, SIC 15 Operating Leases-Incentives and SIC 27
Evaluating the Substance of Transactions Involving the Legal Form
of a Lease). The new standard has been applied using the modified
retrospective approach.
For contracts in place at the date of initial application, the
Group has elected to apply the definition of a lease from IAS 17
and IFRIC 4 and has not applied IFRS 16 to arrangements that were
previously not identified as lease under IAS 17 and IFRIC 4.
The Group has elected not to include initial direct costs in the
measurement of the right-of-use asset for operating leases in
existence at the date of initial application of IFRS 16, being 1
April 2019. At this date, the Group has also elected to measure the
right-of-use assets at an amount equal to the lease liability
adjusted for any prepaid or accrued lease payments that existed at
the date of transition.
Instead of performing an impairment review on the right-of-use
assets at the date of initial application, the Group has relied on
its historic assessment as to whether leases were onerous
immediately before the date of initial application of IFRS 16.
On transition, for leases previously accounted for as operating
leases with a remaining lease
term of less than 12 months and for leases of low-value assets
the Group has applied the optional exemptions to not recognise
right-of-use assets but to account for the lease expense on a
straight- line basis over the remaining lease term.
For those leases previously classified as finance leases, the
right-of-use asset and lease liability are measured at the date of
initial application at the same amounts as under IAS 17 immediately
before the date of initial application.
On transition to IFRS 16 the weighted average incremental
borrowing rate applied to lease liabilities recognised under IFRS
16 was 5.54%.
The Group has benefited from the use of hindsight for
determining lease term when considering options to extend and
terminate leases.
The following is a reconciliation of total operating lease
commitments at 31 March 2019 (as disclosed in the financial
statements to 31 March 2019) to the lease liabilities recognised at
1 April 2019:
Total
GBP'000
--------------------------------------------- --------
Total operating lease commitments disclosed
at 31 March 2019 1,571
Short term lease commitments straight-line
expensed under IFRS 16 (9)
Discounted using incremental borrowing rate (364)
Total lease liabilities recognised under
IFRS 16 at 1 April 2019 1,198
The following tables show the reconciliation of adjusted EBITDA
and profit for the period pre and post application of IFRS 16.
Overall, the Group has recognised IFRS 16 depreciation and interest
costs of GBP303k versus IAS17 operating lease expenses of
GBP277k.
GBP'000
--------------------------------------------- --------
Adjusted EBITDA pre application of IFRS 16 884
Reversal of IAS 17 operating lease expenses 277
Adjusted EBITDA post application of IFRS
16 1,161
GBP'000
------------------------------------------------- --------
Adjusted profit for the period pre application
of IFRS 16 354
Reversal of IAS 17 operating lease expenses 277
Addition of IFRS 16 depreciation and finance
charges (303)
Adjusted profit for the period post application
of IFRS 16 328
5. Business combinations
On 12 June 2019, the Group acquired 100% of the issued share
capital and voting rights of FutureGov Limited (FutureGov), a
company based in the United Kingdom and a leader in digital service
design for the public sector and health sector (the
"Acquisition").
The Acquisition transformed the shape of The Panoply, with circa
45% of Group revenue, on a proforma basis, originating from the
health and public sectors following completion. The combination of
FutureGov's wealth of experience and The Panoply's extended
capabilities creates a very strong disrupter in these sectors,
challenging the status-quo of larger organisations. The Group is
now able to offer public sector clients an end-to-end service from
discovery through to live digital transformation programmes, which
is entirely tailored to the needs of the industry.
The Group has performed an initial review of FutureGov's assets
and liabilities which have been included in this set of interim
statements. The finalised valuation will be reported within its
next published financial statements.
The preliminary fair values of the identifiable intangible
assets have been determined provisionally as GBP1.6m at 30
September 2019, because the acquisition was completed late in the
period. The Group is currently obtaining the information necessary
to finalise its valuation.
The goodwill of GBP10.7m that arose on the combination can be
attributed to the value of the workforce of FutureGov which cannot
be recognised as an intangible asset. Goodwill has been
provisionally allocated to cash-generating units at 30 September
2019 and is attributable to the Consulting segment. The
amortisation of the goodwill that arose from this business
combination is not expected to be deductible for tax purposes.
From the date of the acquisition to 30 September 2019, FutureGov
contributed GBP2.3m and GBP0.2m to the Group's revenues and
profits, respectively. Had the acquisition occurred on 1 April
2019, the Group's revenue for the period to 30 September 2019 would
have been GBP14.9m and the Group's profit for the period would have
been GBP2.6m.
6. Borrowings
The Group entered into a three year GBP5m revolving credit
facility ("RCF") with HSBC UK Bank Plc ("HSBC") on 11 June 2019. On
the same day, GBP3.55m was drawn-down to pay a proportion of the
cash consideration payable pursuant to the acquisition of FutureGov
Group. HSBC has taken security over The Panoply and all of the
Group's material subsidiaries and their assets in connection with
the RCF Facility. The RCF Facility contains customary terms and
covenants, including financial covenants.
7. Earnings per share
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
--------------------------------- ------------- ------------- ---------
Profit / (loss) attributable to
ordinary shareholders 328 (722) (1,677)
Basic earnings per share Number Number Number
------------------------------------- ----------- ----------- -----------
Weighted average number of ordinary
shares in issue 46,269,812 15,679,267 18,186,006
Basic earnings / (loss) per share 0.01p (0.05)p (9.22)p
Diluted earnings per share Number Number Number
------------------------------------- ----------- ----------- -----------
Weighted average number of ordinary
shares in issue used in basic
earnings per share calculation 46,269,812 15,679,267 18,186,006
Dilutive shares 13,166,212 - -
Diluted earnings / (loss) per
share 0.01p (0.05)p (9.22)p
8. Dividends
The Board of directors do not recommend the payment of a
dividend for the interim period (31 March 2019: GBPNil, 2018:
GBPNil)
9. Events after the reporting date
There have been no significant events after the reporting date
that would materially impact these interim financial
statements.
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 BVLLBKLFEFBL
(END) Dow Jones Newswires
December 09, 2019 02:00 ET (07:00 GMT)
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