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Dods Group PLC (DODS)

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Tuesday 29 October, 2019

Dods Group PLC

Half-year Report

RNS Number : 3949R
Dods Group PLC
29 October 2019
 

 

29 October 2019                                                                         

Dods Group plc

 ("Dods" or "the Group")

 

UNAUDITED INTERIM RESULTS FOR THE HALF YEAR ENDED 30 SEPTEMBER 2019

 

Dods, a leading technology company specialising in data, code, business intelligence and media, announces its unaudited interim results for the half year ended 30 September 2019. The Group continues to enhance its business credentials as a leading provider of Augmented Intelligence2 by embedding its services into client workflows, further enabled by the acquisition of Meritgroup Limited ("Merit") on 18 July 2019.

 

 

Financial Highlights

Continuing operations

 

 

 

H1 2020

H1 2019

 

 

30 Sept 19

30 Sept 18

Total revenue (£)

 

12.5m

10.7m

Gross margin (%)

 

34%

42%

Adjusted EBITDA (£) 1

 

1.4m

1.5m

Adjusted EBIT (£) 2

 

0.2m

0.9m

 

(Loss) / profit before tax (£)

 

(0.3m)

0.4m

Adjusted basic EPS (Pence)

 

0.04p

0.30p

Basic EPS (Pence)

 

(0.08p)

0.11p

 

 

 

 

Cash at bank (£)

 

6.8m

8.3m

Debt (£)

 

5.0m

-

Total assets (£)

 

64.3m

39.5m

 

 

 

 

 

1. Adjusted EBITDA is calculated as earnings before interest, tax, depreciation, amortisation of intangible assets, share based payments and non-recurring items.

2. Adjusted EBIT is calculated as operating profit plus non-recurring costs.

 

Operational Highlights

 

·      Successful completion of the acquisition of Merit for £22.4 million, with associated net assets of £2.3 million  

·      Integration of Merit proceeding well and realisation of annual synergies of £0.5 million on track

·      Commencement of technology upgrade of current business intelligence platform with phase one scheduled for delivery first half of calendar year 2020

·      Delivery of an enterprise resource planning software system due to be completed before year end.

 

 

Board Changes in H1 2020

 

·      As disclosed on 2 September 2019, Dods Group plc received notice of resignation from Nitil Patel, Director and Chief Financial Officer. Nitil has a notice period of 12 months and will facilitate an orderly transition to his successor.

 

 

Outlook

 

The results for the period have been in line with the Board's expectations and following completion of the Merit acquisition, the Group will benefit from an 8-month contribution from Merit in the current financial year. The Group continues to be cash generative and has strengthened and diversified its capabilities.

 

Due to the uncertainties in the political and economic environment, and with an approaching general election in the UK, the Board remains cautious about the outlook for the second half of the year.

 

 

Dr David Hammond, Chairman, commented:

 

"The Group continues to deliver quality products and services in a challenging environment. The addition of Merit has enabled us to diversify and increase our recurring revenue base. Notwithstanding the current cautious outlook, the Board views the Group's medium to long-term prospects with confidence."

 

 

This announcement is released by Dods Group plc and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 ("MAR"), and is disclosed in accordance with the Group's obligations under Article 17 of MAR.

For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is being made on behalf of the Group by Nitil Patel, Chief Financial Officer.

 

 

For further information, please contact: 

 

Dods Group plc

Simon Presswell - CEO                                                 020 7593 5500

Nitil Patel - CFO

 

www.dodsgroup.com

 

Liberum (Nomad and Broker)

Neil Patel                                                                      020 3100 2000  

Cameron Duncan

Louis Davies

 

 

 

 

 

Business and operational review

 

The interim results are in line with expectations and progress continues to be made in building a sustainable growth business with higher annual recurring revenues.

 

Having completed the acquisition of Merit and substantially concluded the integration on 30 September 2019, Dods is now one step closer to realising our ambition to become a leading Augmented Intelligence2 business, acting as trusted adviser to prominent brands seeking to navigate an increasingly complex political and economic environment.

 

Through the period, the operational priorities were:

 

·      complete the acquisition and integration of Merit;

·      leverage the expertise of Merit's founder as Chief Technology Officer of the enlarged Group;

·      develop and invest in digital products to continue to drive recurring revenue;

·      maintain focus on improving the retention of recurring revenues;

·      explore opportunities to sell Merit's services to Dods customers and vice versa;

·      search, appoint and induct the Chief Revenue Officer and the Chief Information Officer;

·      continue to invest in data management, marketing automation and the Group's sales effectiveness;

·      focus our growth in revenue across our owned events and engagement portfolio.

 

During the period the Group secured a number of notable contracts including those with Oracle, Fuji Film, Boehringer, GE, Google and the Coca-Cola Corporation and extended a contract with UK Government to provide Civil Service Live to October 2020. 

 

Our Training division continued to win international contracts and deliver various programmes across the globe from the Supreme Court (UK), United Nations, CBI and the Government of India and over 315 (H1 FY2019: 220) training workshops to the UK Government.

 

Our digital media titles have continued to enjoy strong growth in readership, with page views for PoliticsHome up 104% on the same period to 10.6 million and unique visitors up 63% to 6.7 million.

 

We continue to expand our points of contact within our customer base, going beyond public affairs and into the Chief Data Science, Information, Technology and Marketing Officer's agenda as we seek to help customers manage risk and find competitive advantage in the regulated markets within which they operate.

 

We do this by providing data and technology solutions that inform, engage and connect professionals who wish to drive actionable insights for business-critical decisions, not just in political and policy areas, but increasingly across new and existing regulated markets.

 

Outlook

 

Whilst it is impossible to predict the extent of the continued political uncertainty and any impact this might have on the second half of the year the Board remains confident in the medium to long-term prospects of the Group.

 

 

Simon Presswell

Chief Executive Officer

 

 

Financial review

Income statement 

 

The Group's revenue from continuing operations increased by 16.8% to £12.5 million (H1 FY2019: £10.7 million) and gross profit decreased by 6.7% to £4.2 million (H1 FY2019: £4.5 million). This reflects the 2.4 months results of the Merit business.

 

Gross margin decreased from 42% to 34% in the period. The decrease in gross margin is a combination of the change in the product mix following the addition of Merit and the increased venue and delivery costs experienced by Dods in H2 FY2019.

 

The Group has adopted IFRS16 and therefore reclassified material operating leases (right-of-use-assets) both on the income statement and statement of financial position. Consequently, administration costs decreased by 6.7% to £2.8 million (H1 FY2019: £3.0 million).

 

Adjusted EBITDA decreased by 9.3% to £1.36 million (H1 FY2019: £1.5 million). Operating loss was £0.1 million (H1 FY2019: profit of £0.4 million), after a right-of-use assets charge of £0.5 million (H1 FY2019: £nil), an amortisation charge of £0.3 million (H1 FY2019: £0.2 million) for business combinations and a charge of £0.1 million (H1 FY2019: £0.3 million) for intangible assets. The depreciation charge in the period remained flat at £0.2 million (H1 FY2019: £0.2 million). During the period, the Group incurred £0.3 million of non-recurring costs (H1 FY2019: £0.5 million). 

 

Net finance costs have increased for the period to £0.2 million (H1 FY2019: income of £4,000) reflecting IFRS16 adoption (charge of £0.2 million), borrowing costs following the acquisition of Merit (charge of £39,000) and foreign exchange movement during the period (income of £61,000).

 

The taxation charge for the period was £37,000 (H1 FY2019: £nil) and relates to the Group's Belgian operations. For the overall Group, the tax charge is based on the use of accumulated tax losses.

 

Adjusted earnings per share, both basic and diluted, from continuing operations in the period were 0.04 pence (H1 FY2019: 0.30 pence) and were based on the adjusted profit for the period of £0.2 million (H1 FY2019: £1.0 million) with a weighted average number of shares in issue during the period of 431,276,215 (H1 FY2019: 341,774,286). 

 

Earnings per share, both basic and diluted, from continuing operations in the period were a loss of 0.08 pence (H1 FY2019: earnings of 0.11 pence) and were based on the net loss for the period of £0.3 million (H1 FY2019: net profit of £0.4 million).

 

The Board is not proposing a dividend (H1 FY2019: £nil).

 

 

 

Statement of Financial Position

 

Assets

 

As mentioned previously, the Group has adopted IFRS16 and has reclassified operating leases as right-of-use assets and corresponding lease liabilities. Under the modified retrospective approach the Group has not restated prior periods. The impact has been to increase non-current assets by £8.6 million (H1 FY2019: £nil) and there is an associated increase in finance lease liability of £10.0 million (H1 FY2019: £nil). This has been shown as £1.5 million as current liability and £8.5 million as non-current liability.

 

Other non-current assets consisted of goodwill of £28.2 million (H1 FY2019: £13.3 million), intangible assets of £10.3 million (H1 FY2019: £8.0 million) and tangible fixed assets of £2.3 million (H1 FY2019: £2.2 million). The movements in goodwill, intangible and tangible fixed assets reflect the acquisition of Merit during the period.

 

The Group holds a 40% stake in the issued share capital of Sans Frontières Associates (SFA) and has loaned SFA £0.6 million (H1 FY2019: £0.7 million) at the period end. The loan is unsecured and carries no interest charge. Additionally, the Group holds a 30% stake in Social 360 at a cost of £0.5 million (H1 FY2019: £1.67 million).

 

Trade and other receivables increased by £1.8 million to £7.0 million (H1 FY2019: £5.2 million), as a result of the Merit acquisition. Included in prepayments is an amount of £0.8 million due in cash to certain vendors of Merit. The corresponding amount is in current and non-current liabilities as deferred consideration. The Group had a cash balance of £6.8 million (H1 FY2019: £8.3 million) and gross borrowings of £5 million at the period end (H1 FY2019: £nil).

 

The Group has borrowed a term loan of £3 million (H1 FY2019: £nil) over a 5-year period carrying a rate of 3.25% over LIBOR. In addition, it has a revolving credit facility (RCF) of £2 million carrying a rate of 3.5% over LIBOR. The current amount due is £0.3 million and non-current is £4.7 million.

 

Current liabilities increased by £2.9 million to £12.6 million (H1 FY2019: £9.7 million) as a result of the Merit acquisition, the adoption of IFRS16 and the impact of the current component of the bank loan. Deferred tax liability was £0.5 million (H1 FY2019: £0.8 million). The Group has also recognised a deferred consideration of £1.6 million (H1 FY2019: £nil) which is payable in both shares and cash over the coming two and three years to certain Merit vendors.

 

Total assets of the Group were £64.3 million (H1 FY2019: £39.4 million) with the main movements being an increase in goodwill and intangibles as well as the IFRS 16 adoption. Total equity increased by £7.7 million to £36.6 million (H1 FY2019: £28.9 million), mainly reflecting the issue of shares during the period.

 

Liquidity and capital resources

 

The Group has generated cash from operations of £0.2 million (H1 FY2019: £16,000) during the period.  It has received £13 million (H1 FY2019: £nil) from the issuance of shares, borrowed £5 million (H1 FY2019: £nil) and paid £19.2 million relating to investing activities (H1: FY2019: £0.4 million). The cash position at the period end was £6.8 million (H1 FY2019: £8.3 million).

 

As at 30 September 2019 the Group had a net cash position of £1.8 million.

 

 

 

Nitil Patel

Chief Financial Officer

 

 

 

Condensed consolidated income statement

For the half year ended 30 September 2019

 

 

 

 

 

 

 

 

Note

Unaudited

Half year ended

30 Sept 2019

£'000

Unaudited

Half year ended

 30 Sept 2018

£'000

Audited

Year ended

31 Mar 2019

£'000

 

 

 

 

 

Revenue

 

2

 

12,524

 

10,702

 

21,301

 

Cost of sales

 

 

(8,326)

(6,241)

(13,419)

 

Gross profit

 

 

4,198

 

4,461

 

7,882

 

 

 

 

 

Administrative expenses

 

(2,842)

(2,958)

(6,381)

 

Adjusted EBITDA

 

1,356

1,503

1,501

 

 

 

 

 

Depreciation of tangible fixed assets

 

(243)

(185)

(379)

Depreciation of right-of-use assets

 

(507)

-

-

Amortisation of intangible assets acquired through business combinations

 

(281)

(198)

(351)

Amortisation of software intangible assets

 

(144)

(267)

(1,789)

Non-recurring items

3

 

 

 

         Non-recurring acquisition costs and 

         professional fees

 

(70)

-

(2,239)

         Impairment expense - investment in equity

         accounted associate

 

-

-

(1,231)

         Impairment expense - intangible assets

 

-

-

(259)

         People-related costs

 

(121)

(315)

(332)

         Other non-recurring items

 

 

(116)

(146)

(697)

 

Operating (loss) / profit

 

(126)

392

(5,776)

 

 

 

 

 

Net finance costs

 

(177)

4

-

Share of profit / (loss) of associate

 

 

-

(18)

50

(Loss) / profit before tax

 

(303)

378

(5,726)

 

 

 

 

 

Income tax (charge) / credit

 

 

(37)

-

197

 

(Loss) / profit for the period

 

 

(340)

378

(5,529)

 

 

 

(Loss) / profit per share (pence)

 

Basic

4

(0.08p)

0.11p

(1.62p)

 

Diluted

 

4

(0.08p)

0.11p

(1.62p)

 

 

 

The following notes form part of these unaudited interim results.

 

 

 

Condensed consolidated statement of comprehensive income

For the half year ended 30 September 2019

 

 

 

 

 

Unaudited

Half year ended

30 Sept 2019

£'000

Unaudited

Half year ended

 30 Sept 2018

£'000

Audited

Year ended

31 Mar 2019

£'000

 

(Loss) / profit for the period

 

(340)

 

378

 

(5,529)

 

 

 

 

Items that may be subsequently reclassified to Profit and loss

 

 

 

Exchange differences on translation of foreign operations

 

-

-

(8)

Other comprehensive (loss) / income for the period

-

-

(8)

Total comprehensive (loss) / income for the period

(340)

378

(5,537)

 

The following notes form part of these unaudited interim results.

 

 

 

 

 

                                                                                      

 

 

 

 

Condensed consolidated statement of financial position

As at 30 September 2019

 

 

 

 

 

Note

Unaudited

30 Sept 2019

£'000

Unaudited

30 Sept 2018

£'000

Audited

31 Mar 2019

£'000

 

 

 

 

 

Non-current assets

 

 

 

 

 

Goodwill

5

28,218

13,282

13,282

Intangible assets

6

10,245

8,035

6,421

Property, plant and equipment

7

2,286

2,209

2,063

Right-of-use asset

10

8,629

-

-

Investment in associates

 

503

1,666

503

Long-term loan receivable

 

630

700

700

Total non-current assets

 

50,511

25,892

22,969

 

 

 

 

 

Current assets

 

 

 

 

Inventories

 

35

34

16

Trade and other receivables

 

7,010

5,169

3,584

Cash and cash equivalents

 

6,787

7,062

7,160

Restricted cash held in deposit account

 

-

1,266

1,266

Total current assets

 

13,832

13,531

12,026

 

 

 

 

 

Total assets

 

64,343

39,424

34,995

 

 

 

 

 

Capital and reserves

 

 

 

 

Issued capital

 

19,239

17,096

17,096

Share premium

 

20,082

8,142

8,142

Other reserves

 

409

409

409

Retained (loss) / profit

 

(3,148)

3,291

(2,616)

Share option reserve

 

55

44

55

Translation reserve

 

(67)

(59)

(67)

Total equity

 

36,570

28,923

23,019

 

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

 

9,381

9,738

11,489

Deferred consideration

9

1,318

-

-

Bank loan

 

353

-

-

Lease liability

10

1,524

-

-

Total current liabilities

 

12,576

9,738

11,489

 

 

 

 

 

Non-current liabilities

 

 

 

 

Deferred tax liability

 

487

763

487

Deferred consideration

9

1,590

-

-

Bank loan

 

4,647

-

-

Lease liability

10

8,473

-

-

Total non-current liabilities

 

15,197

763

487

 

 

 

 

 

Total equity and liabilities

 

64,343

39,424

34,995

 

The following notes form part of these unaudited interim results.           

 

 

Condensed consolidated statement of changes in equity

For the half year ended 30 September 2019

 

 

 

 

 

 

Share capital

£'000

 

 

Share premium reserve1

£'000

 

 

 

Merger reserve2

£'000

 

 

Retained earnings

£'000

 

 

Translation reserve3

£'000

 

 

Share option reserve4

£'000

 

Total shareholders' funds

£'000

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

At 1 April 2018

 

17,096

8,142

409

2,913

(59)

44

28,545

Total comprehensive income

 

 

 

 

 

 

 

      Profit for the period

-

-

-

378

-

-

378

 

At 30 September 2018

 

 

17,096

 

8,142

 

409

 

3,291

 

(59)

 

44

 

28,923

 

Unaudited

 

 

 

 

 

 

 

At 1 April 2019

17,096

8,142

409

(2,616)

(67)

55

23,019

Effect of adoption of IFRS 16 Leases

-

-

-

(192)

-

-

(192)

At 1 April 2019 (adjusted)

17,096

8,142

409

(2,808)

(67)

55

22,827

Total comprehensive income

 

 

 

 

 

 

 

      Loss for the period

-

-

-

(340)

-

-

(340)

Transactions with owners

 

 

 

 

 

 

 

      Issue of ordinary shares

2,143

11,940

-

-

-

-

14,083

At 30 September 2019

19,239

20,082

409

(3,148)

(67)

55

36,570

 

 

 

 

 

 

 

 

1    The share premium reserve represents the amount paid to the Company by shareholders above the nominal value of shares issued.

2    The merger reserve represents accounting treatment in relation to historical business combinations.

3    The translation reserve comprises foreign currency translation differences arising from the translation of financial statements of the Group's foreign entities into sterling.

4    The share option reserve represents the cumulative expense recognised in relation to equity-settled share-based payments.

 

The following notes form part of these unaudited interim results.

 

 

Condensed consolidated statement of cash flows

For the half year ended 30 September 2019

 

 

 

Unaudited

Half year ended

30 Sept 2019

£'000

Unaudited

Half year ended

30 Sept 2018

£'000

Audited

Year ended

31 Mar 2019

£'000

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

(Loss) / profit for the period

 

(340)

378

(5,529)

Depreciation of property, plant and equipment

 

243

185

379

Depreciation of right-of-use assets

 

507

-

-

Amortisation of intangible assets acquired through business combinations

 

281

198

351

Amortisation of other intangible assets

 

144

267

1,789

Impairment charges

 

-

-

1,490

Share-based payments charge

 

-

1

11

Share of profit of associate

 

-

-

(50)

Lease interest expense

 

200

-

-

Non-recurring acquisition costs and professional fees

 

1,670

-

400

Income tax charge / (credit)

 

37

-

(197)

Operating cash flows before movement in working capital

 

2,742

1,029

(1,356)

Change in inventories

 

(18)

(22)

(4)

Change in trade and other receivables

 

(1,363)

(1,497)

(114)

Change in trade and other payables

 

(1,060)

506

2,337

Cash generated by operations

 

301

16

863

Taxation paid

 

(85)

-

(166)

Net cash from operating activities

 

216

16

697

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Interest and similar income received

 

-

-

12

Non-recurring acquisition costs and professional fees

 

(1,670)

(185)

(400)

Additions to property, plant and equipment

 

(45)

(68)

(115)

Additions to intangible assets

 

(161)

(191)

(512)

WIP on software not yet capitalised

 

(300)

-

-

Investment in subsidiaries (net of cash acquired)

 

(17,055)

-

-

Bank loan

 

5,000

-

-

Repayment of long-term loan by associate

 

70

-

-

Net cash used in investing activities

 

(14,161)

(444)

(1,015)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Proceeds from issue of share capital

 

13,037

-

-

Interest and similar expenses paid

 

-

-

(12)

Payment of lease liabilities

 

(731)

-

-

Net cash from / (used in) financing activities

 

12,306

-

(12)

Net decrease in cash and cash equivalents

 

(1,639)

(428)

(330)

Opening cash and cash equivalents

 

8,426

8,757

8,757

Effect of exchange rate fluctuations on cash held

 

-

(1)

(1)

Closing cash at bank

 

6,787

8,328

8,426

Comprised of:

 

 

 

 

Cash and cash equivalents

 

6,787

7,062

7,160

Restricted cash held in deposit account

 

-

1,266

1,266

Closing cash at bank

 

6,787

8,328

8,426

The following notes form part of these unaudited interim results.

 

 

Notes to the condensed consolidated financial statements
For the half year ended 30 September 2019

                                                           

1.    Basis of preparation                              

                                                                                                                               

Dods Group plc is a Company incorporated in England and Wales.                                                                                      

This condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. The annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU.  As required by AIM Rules, the condensed set of financial statements has been prepared, and applying accounting policies and presentation that were applied in the preparation of the Group's published consolidated financial statements for the year ended 31 March 2019, with the exception of IFRS 16 Leases, which was adopted on 1 April 2019.

 

The comparative figures for the year ended 31 March 2019 have been extracted from the Group's statutory accounts for that financial period.  Those accounts have been reported on by the company's auditor and delivered to the registrar of companies.  The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

 

The taxation charge for the six months ended 30 September 2019 is based on the utilisation of accumulated tax losses.

 

The condensed set of interim financial statements have been prepared on a going concern basis and were approved by the Board on 28 October 2019. 

 

 

2.    Segmental information 

                                                                                                                                 

Business segments                                                                                                                                                         

The Group considers that it has one operating business segment, being the provision of key information and insights into the political, public policy and other regulated environments around the UK and European Union. This is the basis on which operating results are reviewed and resources allocated by the senior management team.

                                                                                                                                                 

No client accounted for more than 10 percent of total revenue.

                                                                                                               

                                                   

Geographical segments  

The following table provides an analysis of the Group's segment revenue by geographical market. Segment revenue is based on the geographical location of customers.

 

 

Unaudited

 Half year ended

30 Sept 2019

£'000

 

Unaudited

Half year ended

30 Sept 2018

£'000

Audited

Year ended

31 Mar 2019

£'000

 

 

 

 

UK

 

10,244

8,753

16,183

Rest of world

 

2,280

1,949

5,118

 

 

12,524

10,702

21,301

 

 

Asset segment information has not been disclosed because this information is not reviewed by the senior management team for the purpose of allocating resources.
 

 

 

3.    Non-recurring items

 

Unaudited

 Half year ended

30 Sept 2019

£'000

 

Unaudited

Half year ended

30 Sept 2018

£'000

Audited

Year ended

31 Mar 2019

£'000

 

 

 

 

Non-recurring acquisition costs and professional fees

 

70

-

2,239

Impairment expense - investment in equity accounted associate

 

-

-

1,231

Impairment expense - intangible assets

 

-

-

259

People-related costs

 

121

315

332

Other

 

 

 

    - Branding and marketing

 

-

-

206

    - Costs relating to ongoing strategic corporate

      review and initiatives

 

-

-

244

    - Professional services

 

63

-

129

    - Consultancy

 

15

-

82

    - Other

38

146

36

 

 

307

461

4,758

 

 

 

 

 

4.    Earnings per share

 

 

 

Unaudited

 Half year ended

30 Sept 2019

£'000

 

Unaudited

Half year ended

30 Sept 2018

£'000

Audited

Year ended

31 Mar 2019

£'000

 

 

 

 

(Loss) / profit attributable to shareholders

 

(340)

378

(5,529)

Add: non-recurring items

 

307

461

4,758

Add: amortisation of intangible assets acquired through business combinations

 

281

198

351

Add: net exchange (gains) / losses

 

(61)

(4)

12

Add: share-based payment expense

 

-

-

11

Adjusted post-tax profit / (loss) attributable to shareholders

187

1,033

(397)

 

 

 

 

Unaudited

 Half year ended

30 Sept 2019

Ordinary shares

 

Unaudited

Half year ended

30 Sept 2018

Ordinary shares

Audited

Year ended

31 Mar 2019

Ordinary shares

 

 

 

 

Weighted average number of shares

 

 

 

 

In issue during the period - basic

 

429,464,215

341,524,286

341,640,953

Adjustment for share options

 

1,812,000

250,000

1,067,375

In issue during the period - diluted

 

431,276,215

341,774,286

342,708,328

 

 

 

 

 

Unaudited

 Half year ended

30 Sept 2019

Pence per share

 

Unaudited

Half year ended

30 Sept 2018

Pence per share

Audited

Year ended

31 Mar 2019

Pence per share

 

 

 

 

Earnings per share - continuing operations

 

 

 

 

Basic

(0.08)

0.11

(1.62)

Diluted

(0.08)

0.11

(1.62)

 

 

 

 

Adjusted earnings per share - continuing operations

 

 

 

 

Basic

0.04

0.30

(0.12)

Diluted

0.04

0.30

(0.12)

 

 

 

 

 

 

 

 

5.    Goodwill

 

 

 

Unaudited

 Half year ended

30 Sept 2019

£'000

 

Unaudited

Half year ended

30 Sept 2018

£'000

Audited

Year ended

31 Mar 2019

£'000

 

 

 

 

Cost and net book value

 

 

 

 

Opening balance

 

13,282

13,282

13,282

Acquisition of subsidiary

 

14,936

-

-

Closing balance

28,218

13,282

13,282

 

 

 

6.    Intangible assets

 

 

 

 

Assets acquired through business combinations

 

 

Software

 

 

 

Total

 

£'000

 

£'000

£'000

 

 

 

 

Cost

 

 

 

 

At 1 April 2018

 

24,215

2,907

27,122

Additions - internally generated

 

-

512

512

Impairment

(259)

-

(259)

 

At 31 March 2019

 

 

23,956

 

3,419

 

27,375

Additions - internally generated

 

-

161

161

Acquisition of subsidiary

4,086

-

4,086

At 30 September 2019

28,042

3,580

31,622

 

 

Accumulated amortisation

 

 

 

 

At 1 April 2018

 

17,359

1,455

18,814

Charge for the year

 

351

1,789

2,140

 

At 31 March 2019

 

17,710

3,244

20,954

Charge for the period

 

280

143

423

At 30 September 2019

17,990

3,387

21,377

 

 

Net book value

 

 

 

 

 

 

At 31 March 2018 - audited

 

 

 

6,856

 

1,452

 

8,308

 

At 31 March 2019 - audited

 

 

 

6,246

 

175

 

6,421

At 30 September 2019 - unaudited

 

10,052

193

10,245

 

 

 

 

 

 

7.    Property, plant and equipment

 

 

 

 

 

 

Leasehold Improvements

Equipment and Fixtures and Fittings

 

 

 

Total

 

 

£'000

 

£'000

£'000

 

 

 

 

 

Cost

 

 

 

 

 

At 1 April 2018

 

 

1,944

1,072

3,016

Additions

 

 

66

49

115

 

At 31 March 2019

 

 

 

2,010

 

1,121

 

3,131

Additions

 

 

4

41

45

Acquisition of subsidiary

 

-

421

421

At 30 September 2019

 

2,014

1,583

3,597

 

 

Accumulated depreciation

 

 

 

 

 

At 1 April 2018

 

 

279

410

689

Charge for the year

 

 

201

178

379

 

At 31 March 2019

 

 

 

480

 

588

 

1,068

Charge for the period

 

 

100

143

243

At 30 September 2019

 

580

731

1,311

 

 

Net book value

 

 

 

 

 

 

At 31 March 2018 - audited

 

 

 

1,665

 

662

 

2,327

 

At 31 March 2019 - audited

 

 

 

1,530

 

533

 

2,063

At 30 September 2019 - unaudited

 

1,434

852

2,286

 

 

 

8.    Interest-bearing loans and borrowings

                                                                                    

During the period, the Group borrowed a term loan of £3 million (H1 FY2019: £nil) over a 5-year period carrying a rate of 3.25% over LIBOR. In addition, it has a revolving credit facility (RCF) of £2 million carrying a rate of 3.5% over LIBOR.

 

 

 

9.    Acquisition of subsidiaries

 

During the current period, on 18 July 2019, the parent entity acquired 100 percent of the issued share capital of Meritgroup Limited and its subsidiaries, a provider of data services and software code. The acquisition will enable the Group to further diversify and strengthen its presence in new end markets and open up significant opportunities through the sharing of resources and talent across the Group.

 

There were no acquisitions in the half year ending 30 September 2018.

 

Details of the purchase consideration, the net assets acquired and goodwill are as follows:

 

 

Purchase consideration

 

Unaudited

Half year ended

 30 Sept 2019

£'000

 

 

 

Cash paid

 

18,231

Ordinary shares issued

 

 

1,046

Deferred consideration

 

2,091

Purchase consideration

 

 

21,368

 

The fair value of the 13,715,881 shares issued as part of the consideration was based on the average of the middle market quotations for Purchaser Ordinary Shares on AIM for each of the five dealing days prior to the completion date. The deferred consideration is not contingent on any future event occurring and requires the Group to issue a variable number of shares to the value of £1.045m on the first anniversary of the acquisition and £1.045m on the second anniversary of the acquisition.

 

 

Deferred consideration

 

 

Current

£'000

 

Non-current

£'000

Unaudited

Total

£'000

 

 

 

 

 

Deferred consideration to be settled in shares

 

 

1,046

1,045

2,091

Contingent consideration to be settled in cash

 

272

545

817

 

 

1,318

1,590

2,908

 

 

 

Net assets acquired

 

Unaudited

Half year ended

 30 Sept 2019

£'000

 

 

 

Cash and cash equivalents

 

1,176

Trade and other receivables

 

 

2,336

Property, plant and equipment

 

 

421

Right-of-use assets

 

4,209

Identifiable intangible assets

 

 

4,086

Trade and other payables

 

 

(1,587)

Lease liabilities

 

(4,209)

Net identifiable assets acquired

 

 

6,432

Add: goodwill

 

 

14,936

Net assets acquired

 

 

21,368

 

The goodwill arising from the acquisition consists of largely intangible assets that cannot be separately recognised, such as the assembled workforce of the acquired entity and cost synergies expected to flow to the Group. The goodwill is not expected to be deductible for income tax purposes.
 

 

 

9.   Acquisition of subsidiaries - continued

 

 

 

Net cash outflow arising on acquisition

 

Unaudited

Half year ended

 30 Sept 2019

£'000

 

 

 

Cash paid

 

18,231

Less: cash and cash equivalent balances acquired

 

 

(1,176)

Net cash outflow

 

 

17,055

 

 

 

10.  Leases

 

The Group has adopted IFRS 16 Leases as at 1 April 2019, which replaces IAS 17 Leases. The Group has elected to apply the modified retrospective approach, with the cumulative effect of adopting IFRS 16 being recognised as an opening balance adjustment to retained earnings as at 1 April 2019. Prior periods have not been restated.

 

On transition to IFRS 16 on 1 April 2019, the Group recognised a £4.9m right-of-use asset, along with a corresponding lease liability of £6.2m. Accrued rent has been adjusted by £1.1m and the difference of £0.2m against opening retained earnings. The incremental borrowing rate used by the Group in applying IFRS 16 is 5 percent.

 

A reconciliation of total operating lease commitments disclosed at 31 March 2019 to the lease liability amount recognised on adoption of IFRS 16 is as follows:

 

 

 

 

Unaudited

£'000

 

 

 

Total operating lease commitments disclosed at 31 March 2019

 

7,546

Discounted using incremental borrowing rate

 

 

(1,359)

Total lease liabilities recognised under IFRS 16 at 1 April 2019

 

 

6,187

 

 

 

 

 

 

Unaudited

Right-of-use assets

£'000

Unaudited

Lease liabilities

£'000

 

 

 

 

On adoption - 1 April 2019

 

4,927

(6,187)

Additions through acquisition of subsidiary

 

4,209

(4,209)

Depreciation

 

(507)

-

Lease interest

 

-

(200)

Lease payments

 

-

731

Decrease in accruals/prepayments

 

 

-

(132)

30 September 2019

 

 

8,629

(9,997)

 

The right-of-use assets relate to office space.
 

 

 

11.  Related party transactions

 

During the period, Artefact Partners LLP provided strategic consultancy services to Dods Group plc to the value of £20,000. Current non-executive director Richard Boon is an LLP designated member of Artefact Partners LLP.

 

During the period, the Group received a repayment of £70,000 on its interest free loan to its associate Sans Frontieres Associates (SFA). At 30 September 2019 the balance of this loan was £630,000.

 

During the period, an amount of £24,650 was payable to an associate, Social 360 Limited, in relation to profit-share for monitoring services provided. At 30 September 2019, £24,650 was outstanding.

 

On acquisition of Merit, an arm's length non-repairing 7-year lease was entered into between a Merit subsidiary (Letrim Intelligence Services Private Limited) and Merit Software Services Private Limited. Cornelius Conlon, CTO of the Group, is the beneficial owner of Merit Software Services Private Limited. The lease relates to the Chennai office of Merit. During the period, payments of £158,000 were made to Merit Software Systems Private Limited in relation to the lease.


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