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(ADT.L) AdEPT Telecom PLC Buy/Sell
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| Date/Time | Headline | Source |
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| 24-09-09 | RNS |
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RNS Number : 5753Z AdEPT Telecom plc 24 September 2009 AdEPT Telecom plc ("AdEPT Telecom" or the "Company") AGM Statement AdEPT Telecom is pleased to announce that at the Annual General Meeting ("AGM") of the Company held at 11.00am yesterday, the resolutions proposed, as set out in the notice of AGM dated 25 August 2009, were duly passed. Roger Wilson, Chairman of AdEPT Telecom, commenting at the Company's AGM said: "I am pleased to report that despite the current challenging economic conditions the Company has continued to be strongly cash generative. Net debt reduction since the last financial year end, 31 March 2009, has been underpinned by continuing strong cost control and improved customer cash collection. Despite lower year-on-year revenues, underlying EBITDA margin has been improved sufficiently through operational cost efficiencies, such that EBITDA is in line with last year." Enquiries:
AdEPT Telecom Plc
Astaire Securities Plc
This information is provided by RNS The company news service from the London Stock Exchange END
AGMLJMMTMMBTTJL More |
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| 30-07-09 | RNS |
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RNS Number : 6010W AdEPT Telecom plc 30 July 2009 AdEPT Telecom Plc ("AdEPT Telecom" or the "Company") Director Dealing The Company was advised on 29 July 2009 that on 29 July 2009 Roger Wilson, Chairman, acquired 10,000 ordinary shares of 10p each ("Ordinary Shares") in the Company, at a price of 22.4p per share. Following this purchase, Mr Wilson has a total beneficial interest in 788,300 Ordinary Shares, representing approximately 3.74% of the current issued share capital of the Company. For further information on AdEPT Telecom please visit www.adept-telecom.co.uk or contact: Enquiries:
AdEPT Telecom Plc
Astaire Securities Plc
This information is provided by RNS The company news service from the London Stock Exchange END
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| 07-07-09 | RNS |
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This news article is displayed preformatted as it may contain results tables
RNS Number : 2212V
AdEPT Telecom plc
07 July 2009
AdEPT Telecom plc
("AdEPT" or the "Company")
Final results for the year ended 31 March 2009
AdEPT, a leading independent provider of award-winning telecommunications services for fixed line, mobile and data connectivity, announces its results for the year ended 31 March 2009.
Financial Highlights
* Revenue increasing by 21% to £28.6 million driven by the acquisitions made during the previous period
* EBITDA excluding non-recurring costs increasing by 6% to £3.5 million (2008: £3.3m)
* Excellent cash generation with free cash flow of £2.1m (2008: £0.8m)
* 103% of EBITA (£2.0m) converted into cash generated from operating activities (£2.1m) (103% in 2008)
* Net debt reduction of £0.5m year on year, despite significant non-recurring costs of £1.3m
* Adjusted earnings per share, after adding back amortisation and non-recurring costs of 10.44p per share (2008: 11.43p)
Operational Highlights
* Achieved a higher mix of business customers with total business revenue of 95% of the total this year (2008: 93%), increasing stability of overall customer base
* Excellent progress in increasing revenue from fixed monthly charges, with line rental revenues at March 2009 up 45% at £11.3m (2008: £7.8m)
* Line rental and data products represented 44% of total revenues at March 2009 (35% March 2008)
* Overhead costs (excluding commissions and one-off restructuring costs) decreased to 17% of revenue (2008: 18%)
* 81% of revenue generated from customers taking more than one product or service (2008: 78%)
* Significant improvement to credit collection processes and debt management with year end debtor days of 34 (2008: 53 days)
Commenting upon these results Chairman Roger Wilson said:
"The business continues to perform well despite challenging economic conditions and be highly cash generative with an EBITA : Sales ratio amongst the sector leaders. AdEPT has no further acquisition payments to meet and therefore we look forward to a period of providing added investor value through deleveraging from continued strong operating cash generation."
Enquiries:
AdEPT Telecom Plc
Roger Wilson, Chairman 07786 111 535
Ian Fishwick, Managing Director 01892 550 225
John Swaite, Finance Director 01892 550 243
Astaire Securities Plc
Shane Gallwey 020 7448 4400
CHAIRMAN'S STATEMENT
It is with great pleasure that I announce our annual results.
For the year ended 31 March 2009 AdEPT Telecom plc ("AdEPT" or the "Company") delivered another strong trading performance.
Review of Operations
The business was established to be a consolidator of the highly fragmented UK fixed line reseller sector which is estimated to include approximately 700, mostly smaller telecom businesses. To date AdEPT has acquired 16 competitors and/or their customer bases.
A critical part of the acquisition strategy is the ability to integrate the acquired customer bases into AdEPT's systems within six weeks thus achieving economies of scale and cost efficiencies. However, this route to growth is increasingly being complemented by organic sales which have grown significantly in the past two years.
Achievements
Our retention and customer service teams have reduced customer churn substantially in the year. Our indirect sales channel of independent business partners continues to grow with over 60 partners active in bringing us new customers in the year. We have seen an increase in the size of new customers with important wins such as eleven more of the regional Probation Services (we now have 20 in total, representing over half of the Probation Services in the UK), the Italian restaurant chain Carluccio's and a 3000+ site data solution for the national gaming machine operator Gamestec.
Growing line rental revenues has been a key objective and we are delighted to report line rental revenues increased 45% to £11.3m compared to £7.8m in the prior year. Our revenue is becoming more stable as we reduce our reliance on variable monthly call charges, replacing them with fixed monthly line rentals.
Employees
As a Company we are immensely proud of the track record we have created in a relatively short period of time. Our success is a result of the efforts of all our employees and on behalf of the Board I would like to take this opportunity to thank them for all their hard work.
I would also like to take this opportunity to thank the former directors and non-executive directors who stepped down during the year for their substantial contributions to AdEPT and to wish them all the best for the future.
Shareholder Benefits Scheme
During the year AdEPT launched a new shareholder benefits scheme, which is available to all shareholders owning a minimum of 1,000 shares. Shareholders who register with the scheme are entitled to free residential line rental worth approximately £120 per annum for as long as they remain eligible shareholders.
Outlook
The past year has seen an almost unprecedented turmoil in the financial and credit markets, which has had an inevitable knock-on effect into the real world. However, management took early action at the half-year point to reduce overheads and tighten credit management. This has enabled the Company to increase its EBITDA levels despite the economic downturn - no mean achievement under the circumstances. Management also took steps at the end of 2008 to renegotiate and extend our banking facilities for a three year term, giving us certainty of funding going forward. The business focus for this coming year will remain on developing organic sales, improving customer retention, generating cash and paying down debt. We will therefore continue to grow our organic sales channels, invest in new products and complement this with continued investment in retention activities to retain more customers.
We need to guard against complacency given the continued uncertainty in the economic outlook, but I am confident that the business is in a much stronger position than before with a more stable customer base, a higher proportion of fixed monthly revenues and increased focus on customers paying by direct debit. We will also continue to focus very closely on our debtors to ensure payment terms do not get extended.
Roger Wilson
Non-executive Chairman
FINANCIAL AND BUSINESS REVIEW
SUMMARY of three year financial performance:
Year ending March
2009 Year-on-Year Growth 2008 Year-on-Year Growth % 2007
£'000 % £'000 £'000
Revenue 28,567 21% 23,618 25% 18,827
Gross margin 10,341 18% 8,754 20% 7,291
EBITDA* 3,490 6% 3,280 32% 2,490
Net debt 10,843 11,295 2,910
* excluding non-recurring costs
REVENUE
Group revenue increased by 21% to £28.6m (2008: £23.6m) with growth primarily derived from the full twelve month contribution from the two acquisitions completed during 2008. The proportion of revenue derived from business customers has increased to 95% (2008: 92%).
The proportion of revenue, which is fixed monthly values, represent 44% of total revenue for the year ended March 2009 (2008: 34%) following the continued focus on multi-product sales (calls and line rental) and the introduction of a broad range of data connectivity products in 2008. The proportion of revenue generated from customers taking more than one product or service has increased to 81% for the year ended March 2009 (2008: 78%) which should provide a more stable future revenue stream.
Average customer monthly spend increased year-on-year by 3.8% to £72.49 in March 2009 reflecting the Group's success in gaining contracts with higher spending customers and an increasing proportion of higher spending business customers.
GROSS MARGIN
Overall Group gross margin has increased by 18% year-on-year from £8.75m to £10.34m. Margins for calls, lines, data connectivity and broadband have remained broadly stable despite pressures arising from a highly competitive market, however, the net impact on overall margin arising from the changing sales mix is a decrease to 36.2% (2008: 37.1%) as lower margin line rental, data connectivity and broadband revenue is an increased proportion of the total.
ADMINISTRATION COSTS
Administration costs (excluding depreciation, amortisation and non-recurring costs) increased to £6.9m which is 24% of revenue (2008: 23%). Administration costs include commissions payable to business partners, the proportion of which increased significantly with the Telecom Direct acquisition. Excluding partner commissions, underlying administration costs have reduced by 1% in the year, from 18% to 17% of revenue. We believe that we remain one of the lowest cost operators in the industry.
The non-recurring costs are those incurred in the Telecom Direct division and restructuring costs which will not recur next year. The bulk of these costs are represented by staff, property and leases, which when stripped out leave the underlying administrative costs for the business. The close-out of the Telecom Direct division was completed during the year.
EBITDA
Excluding non-recurring costs EBITDA has increased by £0.2m during the year. Revenue growth has been absorbed in part by the margin reduction arising from changes in the sales mix towards lower margin revenue streams combined with the full year cost of partner commissions associated with the prior period acquisitions.
EARNINGS PER SHARE
Adjusted earnings per share, based on retained earnings adding back amortisation and non-recurring costs (see note 5), has reduced by 9% to 10.44p per share (2008: 11.43p). This arises largely due to lower EBITA margin, driven by gross margin movement from changes to the sales mix, combined with a higher interest cost arising from a full year's interest charge for the debt increase associated with the Telecom Direct acquisition.
CASH FLOW
The Group benefits from an excellent operating cash model, with EBITA turning into cash. Adjusted EBITA turned into net cash from operating activities is 99% (2008: 79%). Working capital movement during the year was neutral. The Group has focussed on managing its credit risk in the current economic climate and with the introduction of new processes collections of trade receivables were significantly improved during the year with a reduction of customer collection periods to 34 days (2008: 53 days) resulting in an absolute reduction of £0.8m to trade receivables being achieved.
After servicing its debt the Group achieved an increase in cash and cash equivalents of £0.6m during the year. All acquisitions have been paid for and no further earn-out payments are due.
CAPITAL EXPENDITURE
The Group has low capital requirements and therefore expenditure on tangible assets is low at 0.1% of revenue (2008: 0.8%). Expenditure on intangible assets was £0.1m (2008: £7.4m), which is significantly lower than the prior year comparative which includes the investment in the two customer bases acquired during 2008.
NET DEBT
Net debt, which comprises cash balances and bank borrowings, improved by £0.5m to £10.8m (2008: £11.3m). This reduction to net debt was achieved through strong cash flow and despite significant non-recurring costs of £1.3m during the year from the close-out of Telecom Direct Limited, restructuring costs and the bank arrangement fees in relation to the new facilities.
The Group continues to manage its exposure to interest rate risks arising from financing activities. After the year end the Group entered an agreement to manage the interest rate risk on 100% of the Group's fixed term debts through to December 2011 at a more favourable rate than that which it replaced.
KEY PERFORMANCE INDICATORS (KPIs)
The KPIs outlined below are intended to provide useful information when interpreting the accounts. The KPIs outline the Group's position as at the final month of the year, March, which provides an indication of the starting point for the following financial year.
Key Performance Indicators (as at 31 March)
Residential Business Total
2009 2008 2009 2008 2009 2008
REVENUE BY PRODUCT
Line rental 1.3% 1.1% 37.7% 32.1% 39.0% 33.2%
Calls 4.0% 6.9% 53.4% 56.3% 57.4% 63.2%
Broadband and data 0.0% 0.0% 2.2% 1.6% 2.2% 1.6%
Mobile 0.0% 0.0% 0.6% 0.5% 0.6% 0.5%
Other 0.0% 0.0% 0.8% 1.5% 1.5% 1.5%
Total 5.3% 8.0% 94.7% 92.0% 100.0% 100.0%
Average monthly spend per £11.31 £12.93 £101.47 £95.23 £72.42 £69.76
customer (ex VAT)
Note: analysis only includes those customers who received a bill and customers are only billed if the bill exceeds £2.99.
RESILIENT BUSINESS MODEL
Despite the unprecedented conditions in the UK economy the Board believes that AdEPT has a number of resilient features and a strong customer proposition which it is believed will present opportunities in the coming year. These features include:
* highly cash generative with strong underlying profitability;
* supplies are nearly all business critical - an essential part of the customer's daily operational requirements;
* highly automated systems provides sector leading labour costs : turnover productivity;
* low capital investment requirements relative to turnover;
* continued focus on broadening its product range, particularly with regard to data connectivity;
* customers are spread across all industries, the top ten customers account for approximately 11% of revenues;
* trade suppliers and partners are all top tier suppliers, providing confidence in the continuity and reliability of service to customers;
* 65% of the Group's customers pay by monthly direct debit, reducing the Group's credit risk; and
* the Group has agreed banking facilities through to December 2011. With the elimination of the excess costs associated with the Telecom Direct acquisition, the reorganisation and the level of cash generation forecast, the Board expects the Group's net borrowing position to improve significantly over the next twelve months.
John Swaite
Finance Director
CONSOLIDATED INCOME STATEMENT
For the year ended 31 March 2009
2009 2008
Note £'000 £'000
REVENUE 4 28,567 23,618
Cost of sales (18,226) (14,864)
GROSS PROFIT 10,341 8,754
Administrative expenses (10,451) (8,843)
OPERATING LOSS (110) (89)
Total operating profit - analysed:
Operating profit before non-recurring costs,
depreciation and amortisation 3,490 3,280
Non-recurring costs (1,314) (1,381)
Depreciation of tangible fixed assets (160) (119)
Amortisation of intangible fixed assets (2,126) (1,869)
Total operating loss (110) (89)
Finance costs 7 (1,294) (653)
Finance income 1 4
LOSS BEFORE INCOME TAX (1,403) (738)
Income tax credit/(expense) 10 162 (105)
RETAINED EARNINGS (ACCUMULATED LOSSES) 19 (1,241) (843)
Attributable to:
Equity holders of the parent (1,241) (843)
Earnings per share
Basic earnings per share 26 (5.89)p (4.00)p
Diluted earnings per share 26 (5.89)p (4.00)p
All amounts relate to continuing operations. Notes 1 to 28 form part of these financial statements.
CONSOLIDATED BALANCE SHEET
As at 31 March 2009
31 March 31 March
2009 2008
Note £'000 £'000
ASSETS
Non-current assets
Intangible assets 11 20,532 22,514
Property, plant and equipment 12 135 280
Deferred income tax 13 799 713
21,466 23,507
CURRENT ASSETS
Trade and other receivables 15 3,218 4,304
Income tax receivable 50 -
Cash and cash equivalents 733 155
4,001 4,459
TOTAL ASSETS 25,467 27,966
CURRENT LIABILITIES
Trade and other payables 16 5,288 6,597
Income tax - 103
Short-term borrowings 1,474 923
6,762 7,623
NON-CURRENT LIABILITIES
Long-term borrowings 17 10,103 10,527
TOTAL LIABILITIES 16,865 18,150
NET ASSETS 8,602 9,816
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Share capital 18 2,107 2,107
Share premium 19 7,965 7,965
Retained earnings 19 (1,470) (256)
TOTAL EQUITY 8,602 9,816
The financial statements were approved and authorised for issue by the Board on 6 July 2009 and signed on its behalf.
Ian Fishwick
Director
Notes 1 to 28 form part of these financial statements.
COMPANY BALANCE SHEET
As at 31 March 2009
31 March 31 March
2009 2008
Note £'000 £'000
ASSETS
Non-current assets
Intangible assets 11 20,532 22,514
Property, plant and equipment 12 135 280
Deferred income tax 13 799 713
21,466 23,507
CURRENT ASSETS
Trade and other receivables 15 3,218 4,304
Income tax receivable 50 -
Cash and cash equivalents 733 155
4,001 4,459
TOTAL ASSETS 25,467 27,966
CURRENT LIABILITIES
Trade and other payables 16 5,288 6,597
Income tax - 103
Short-term borrowings 1,474 923
6,762 7,623
NON-CURRENT LIABILITIES
Long-term borrowings 17 10,103 10,527
TOTAL LIABILITIES 16,865 18,150
NET ASSETS 8,602 9,816
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Share capital 18 2,107 2,107
Share premium 19 7,965 7,965
Retained earnings 19 (1,470) (256)
TOTAL EQUITY 8,602 9,816
The financial statements were approved and authorised for issue by the Board on 6 July 2009 and signed on its behalf.
Ian Fishwick
Director
Notes 1 to 28 form part of these financial statements.
GROUP AND COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2009
Attributable to equity holders of the parent
Share Share Retained Total
capital Premium earnings equity
£'000 £'000 £'000 £'000
Equity at 1 April 2007 2,107 7,965 552 10,624
Loss for the year - - (843) (843)
Share-based payments - - 35 35
Net income/(expense) recognised 2,107 7,965 (256) 9,816
directly in equity
Equity at 31 March 2008 2,107 7,965 (256) 9,816
Loss for the year - - (1,241) (1,241)
Share-based payments - - 27 27
Net income/(expense) recognised 2,107 7,965 (1,470) 8,602
directly in equity
Equity at 31 March 2009 2,107 7,965 (1,470) 8,602
Notes 1 to 28 form part of these financial statements.
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 March 2009
2009 2008
£'000 £'000
Cash flows from operating activities
Loss before income tax (1,403) (738)
Depreciation and amortisation 2,286 1,989
Profit on sale of property, plant and equipment (1) -
Profit held in trust - (31)
Share-based payments 27 35
Net finance costs 1,293 644
Operating cash flows before movements in working 2,202 1,899
capital
Decrease in trade and other receivables 787 79
Decrease in trade and other payables (920) (138)
Cash generated from operations 2,069 1,840
Income taxes paid (79) (709)
Net cash from operating activities 1,990 1,131
Cash flows from investing activities
Interest received 1 4
Interest paid (995) (665)
Acquisition of subsidiary, net of cash acquired - (5,144)
Purchase of intangible assets (762) (2,009)
Purchase of property, plant and equipment (14) (196)
Net cash used in investing activities (1,770) (8,010)
Cash flows from financing activities
Repayment of finance leases (47) (6)
Repayment of borrowings (1,350) (1,500)
Increase of bank loan 1,755 7,200
Net cash from financing activities 358 5,694
Net increase/(decrease) in cash and cash equivalents 578 (1,185)
Cash and cash equivalents at beginning of year 155 1,340
Cash and cash equivalents at end of year 733 155
Cash and cash equivalents :
Cash at bank and in hand 733 155
Bank overdrafts - -
Cash and cash equivalents 733 155
Notes 1 to 28 form part of these financial statements.
COMPANY CASH FLOW STATEMENT
For the year ended 31 March 2009
2009 2008
£'000 £'000
Cash flows from operating activities
Loss before income tax (1,403) (738)
Depreciation and amortisation 2,286 1,989
Profit on sale of property, plant and equipment (1) -
Profit held in trust - (31)
Share-based payments 27 35
Net finance costs 1,293 644
Operating cash flows before movements in working 2,202 1,899
capital
Decrease in trade and other receivables 787 79
Decrease in trade and other payables (920) (138)
Cash generated from operations 2,069 1,840
Income taxes paid (79) (709)
Net cash from operating activities 1,990 1,131
Cash flows from investing activities
Interest received 1 4
Interest paid (995) (665)
Acquisition of subsidiary, net of cash acquired - (5,144)
Purchase of intangible assets (762) (2,009)
Purchase of property, plant and equipment (14) (196)
Net cash used in investing activities (1,770) (8,010)
Cash flows from financing activities
Repayment of finance leases (47) (6)
Repayment of borrowings (1,350) (1,500)
Increase of bank loan 1,755 7,200
Net cash from financing activities 358 5,694
Net increase/(decrease) in cash and cash equivalents 578 (1,185)
Cash and cash equivalents at beginning of year 155 1,340
Cash and cash equivalents at end of year 733 155
Cash and cash equivalents :
Cash at bank and in hand 733 155
Bank overdrafts - -
Cash and cash equivalents 733 155
Notes 1 to 28 form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS AND GENERAL INFORMATION
AdEPT Telecom plc is one of the UK's leading independent providers of voice and data telecommunications services with award winning customer service. The Group is focused on delivering a complete telecommunications service for small and medium sized business customers with a targeted product range including landline calls, line rental, broadband, mobile and data connectivity services.
AdEPT Telecom plc is the Group's ultimate parent Company and is incorporated and domiciled in the UK. The Company's shares are listed on the Alternative Investment Market (AIM) of the London Stock Exchange.
The Group's statutory financial statements for the year ended 31 March 2008, prepared under International Financial Reporting Standards, have been filed with the Registrar of Companies. The auditors' report on those financial statements was unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985.
2. ACCOUNTING POLICIES
Basis of preparation of financial statements
The consolidated financial statements have been prepared in accordance with applicable International Financial Reporting Standards (IFRS) as adopted by the EU, as issued by the International Accounting Standards Board.
The date of transition to IFRS was 1 April 2007 (transition date).
The Company has taken advantage of s230 CA 1985 to not present a Company income statement. The loss for the year dealt with in the holding Company, which has been approved by the Board, was £1,462,216 (2008: £842,743).
Certain new standards, amendments and interpretations of existing standards that have been published and which are effective for the Group's accounting periods beginning on or after 1 July 2008 and which are applicable to the Group, but which have not been adopted early are:
* IAS 1 Presentation of Financial Statements (revised 2007)
* IFRS 8 Operating segments: Disclosure
* IAS 23 Borrowing costs (revised)
* IFRS 3 Business combinations
* IAS 39 Financial instruments: Recognition and measurement (amendment)
* IFRS 7 Improving disclosures about financial instruments (amendments and disclosures)
The adoption of these standards, amendments and interpretations is not expected to have a material impact on the Company's profit for the year or equity. Application of these standards will result in some changes in presentation of information within the consolidated financial statements.
Basis of consolidation
The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to 31 March 2009. Subsidiaries are entities over which the Group has the power to control the financial and operating policies so as to obtain benefits from its activities. The Group obtains and exercises control through voting rights.
Unrealised gains on transactions between the Company and its subsidiaries are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.
Acquisitions of subsidiaries are dealt with by the purchase method. The purchase method involves the recognition at fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the subsidiary are included in the consolidated balance sheet at their fair values, which are also used as the basis for subsequent measurement in accordance with the Group's accounting policies. Goodwill is stated after separating out identifiable intangible assets. Goodwill represents the excess of acquisition cost over the fair value of the Group's share of the identifiable net assets (including intangibles) of the acquired subsidiary at the date of acquisition.
Revenue
Revenue is measured by reference to the fair value of consideration received or receivable by the Group for goods supplied and services provided, excluding VAT and trade discounts. Revenue is recognised upon the performance of services or transfer of the risks and rewards of ownership to the customer.
Revenue comprises of both invoiced and un-invoiced amounts for performance of network services supplied by the Group during the year. The network services, which include call revenues (billing for call minutes) and fixed charges such as line rental or broadband, are generally billed monthly in arrears. The revenue is recognised in the month to which the calls relate. Revenue from mobile commissions is recognised when the customers are connected to the relevant network.
Investments
Shares in the subsidiaries are valued at cost less provision for permanent impairment.
Intangible fixed assets acquired as part of a business combination and amortisation
In accordance with IFRS 3 Business Combinations, an intangible asset acquired in a business combination is deemed to have a cost to the Group of its fair value at the acquisition date. The fair value of the intangible asset reflects market expectations about the probability that the future economic benefits embodied in the asset will flow to the Group.
Intangible fixed assets continue to be subject to an impairment review on the first anniversary after acquisition, when appropriate lives are selected.
The intangible asset "customer base" is amortised to the income statement over its estimated economic life on a reducing balance basis. The average useful economic life of all the customer bases has been estimated at 12 years (2008: 12 years).
Other intangible assets
Also included within intangible fixed assets are the development costs of the Group's billing and customer management system plus an individual license. These other intangible assets are stated at cost, less amortisation and any provision for impairment. Amortisation is provided at rates calculated to write off the cost, less estimated residual value of each intangible asset, over its expected useful life on the following basis:
Customer management system - 3 years straight line
Other licences - Contract licence period
Property, plant and equipment and depreciation
Property, plant and equipment are stated at cost, less depreciation and any provision for impairment. Depreciation is provided on all property, plant and equipment at rates calculated to write off the cost, less estimated residual value of each asset, over its expected useful life on the following basis:
Short term leasehold improvements - 5 years straight line
Fixtures and fittings - 3 years straight line
Office equipment - 3 years straight line
Computer software - 3 years straight line
Leasing and hire purchase commitments
Assets held under finance leases and hire purchase contracts, which are those where substantially all the risks and rewards of ownership of the asset have passed to the Company, are capitalised in the balance sheet and depreciated over their useful lives. The corresponding lease or hire purchase obligation is treated in the balance sheet as a liability.
The interest element of the rental obligations is charged to the income statement over the period of the lease and represents a constant proportion of the balance of capital repayments outstanding.
Rentals under operating leases, where substantially all of the benefits and risks of ownership remain with the lessor, are charged to the profit and loss on a straight line basis, even if payments are not made on such a basis.
Pensions
The Group contributes to personal pension plans. The amount charged to the income statement in respect of pension costs is the contribution payable in the year.
Capital instruments
The costs incurred directly in connection with the issue of debt instruments are charged to the income statement on a straight line basis over the life of the debt instrument.
Income tax
Income tax is the tax currently payable based on taxable profit for the year.
Deferred income tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred income tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit.
The hive up of intangible assets between Group companies is not considered a business combination under IFRS 3 (Business Combinations) and therefore deferred income tax is not provided on the intangible customer base asset thus acquired by AdEPT Telecom plc.
Deferred income tax on temporary differences associated with shares in subsidiaries is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future. In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred income tax assets.
Deferred income tax liabilities are provided in full, with no discounting. Deferred income tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred income tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date.
Changes in deferred income tax assets, or liabilities are recognised as a component of income tax expense in the income statement, except where they relate to items that are charged or credited directly to equity in which case the related deferred income tax is also charged or credited directly to equity.
Share-based payments
The cost of equity-settled transactions with employees is measured by reference to the fair value of the award at the date at which they are granted and is recognised as an expense over the vesting period, which ends on the date at which the relevant employees become fully entitled to the award. Fair value is appraised at the grant date and excludes the impact on non-market vesting conditions such as profitability and sales growth targets, using an appropriate pricing model for which the assumptions are approved by the directors. In valuing equity-settled transactions, only vesting conditions linked to the market price of the shares of the Company are considered.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied.
At each balance sheet date, the cumulative expense (as above) is calculated, representing the extent to which the vesting period has expired and management's best estimate of the achievement or otherwise of non market conditions, the number of equity instruments that will ultimately vest, or in the case of an instrument subject to a market condition, be treated as vesting described above. The movement in the cumulative expense since the previous balance sheet date is recognised in the income statement, with a corresponding entry in equity.
Non-recurring items
Material and non-recurring items of income and expense are separated out in the income statement. Examples of items which may give rise to disclosure as non-recurring items include costs of restructuring and reorganisation of existing businesses, integration of newly acquired businesses and asset impairments. Non-recurring costs include the current year expense charged to the income statement in relation to restructuring which has taken place since the year end to derive the underlying profitability of the Group and Company.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
Financial instruments
Financial assets and liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.
The Group makes use of derivative financial instruments to hedge its exposure to interest rate risks arising from financing activities. In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes.
Derivative financial instruments are recognised initially at fair value, i.e. cost. Subsequent to initial recognition derivative financial instruments are measured at fair value. The gain or loss on re-measurement to fair value is recognised immediately in the income statement as a component of financing income or cost.
The fair value of the derivative financial instrument is the estimated amount that the Group would receive or pay to terminate the instrument at the balance sheet date, taking into account current interest rates and the current creditworthiness of the instrument counterparties.
Capital
The capital structure of the Group consists of debt, which includes the borrowings disclosed in Note 17, cash and cash equivalents, and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in Notes 18 and 19.
Borrowings and borrowing costs
Borrowings are recorded initially at the proceeds received, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any differences between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.
Borrowing costs are expensed to the income statement as incurred with the exception of arrangement fees which are deducted from the related liability and are released over the term of the related liability in accordance with IAS 39.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities with the next financial year are discussed below.
Impairment of intangible assets
The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the 'value in use' of the cash-generating units to which the intangible value is allocated. Estimating a value in use amount requires management to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. More details including carrying values are included in Note 11.
Deferred tax assets
Deferred tax assets are recognised for all unused tax losses and other timing differences to the extent that it is more likely than not that taxable profit will be available against which the losses and other timing differences can be utilised. Management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.
Share-based payment
The estimation of the fair value of share options and other equity instruments at the date of grant requires management to make estimates concerning the number of employees likely to exercise their options together with the expected volatility and dividends payable on the underlying shares.
Receivables
Debts are recognised to the extent that they are judged recoverable. Management reviews are performed to estimate the level of provision required for irrecoverable debt. Provisions are made specifically against invoices where recoverability is uncertain.
4. REVENUE
The whole of the revenue is attributable to the provision of voice and data communication services to both residential and business customers. The directors regard the Group as having a single business segment. All revenue arose within the United Kingdom.
5. OPERATING LOSS
The operating (loss)/profit is stated after charging:
2009 2008
£'000 £'000
Amortisation of customer base, billing system and license 2,126 1,869
Depreciation of tangible fixed assets:
- owned by the Group 160 119
Loss on disposal of tangible fixed assets (1) -
Share option expense 27 35
Minimum operating lease payments land and buildings 192 342
motor vehicles and 162 102
other equipment
The operating loss includes non-recurring costs of £1,314,069 (2008: £1,481,827), in relation to the costs of restructuring and reorganising existing businesses, which will not recur next year. The bulk of these costs are represented by staff, property and leases, which when stripped out leave the underlying administrative costs for the business. Included within this figure, is amortisation of £Nil (2008: £100,889), relating to the billing system for that division.
Included within the share option expense for the year is £3,498 relating to the warrant instrument issued to Barclays Bank plc, see Note 18.
6. AUDITORS' REMUNERATION
2009 2008
£'000 £'000
Fees payable to the Company's auditor for the audit
of the Company's annual financial statements 31 31
Fees payable to the Company's auditor and its associates
in respect of :
Other services relating to taxation 5 5
Services relating to corporate finance transactions - 20
All other services - 14
7. FINANCE COSTS
2009 2008
£'000 £'000
On bank loans and overdrafts 942 564
Bank fees 299 78
Finance leases 4 1
Other interest payable 49 10
1,294 653
8. EMPLOYEE COSTS
Staff costs, including directors' remuneration, were as follows:
2009 2008
£'000 £'000
Wages and salaries 2,944 2,835
Social security costs 327 279
Share option expense 23 35
Other pension costs 18 16
3,312 3,165
Employee costs include £1,016,194 non-recurring costs (Note 5) (2008: £810,796).
The average monthly number of employees, including the directors, during the year was as follows:
2009 2008
Number Number
Non-executive directors 4 4
Administrative staff 74 65
78 69
Key personnel:
The directors are considered to be the key management personnel of the Company, having authority and responsibility for planning, directing and controlling the activities of the Group.
9. DIRECTORS' EMOLUMENTS
2009 2008
£'000 £'000
Emoluments 848 794
Group pension contributions to money purchase pension schemes 13 16
During the year retirement benefits were accruing to 1 director (2008: 1) in respect of money purchase pension schemes. The highest paid director received remuneration of £231,239 (2008: £207,050). Termination benefits of £128,250 were paid to a director during the year.
The value of the Group's contributions paid to a money purchase pension scheme in respect of the highest paid director amounted to £13,971 (2008: £15,889).
The share option expense recognised during the year in respect of the directors was £5,000 (2008: £8,968).
10. INCOME TAX EXPENSE
2009 2008
£'000 £'000
Current tax (see Note below)
UK corporation tax credit on losses for the year (51) 65
Adjustments in respect of prior periods (25) -
Total current tax (76) 65
Deferred tax
Origination and reversal of timing differences 52 40
Adjustments in respect of prior periods (138) -
Total deferred tax (see Note 13) (86) 40
Total income tax (credit)/expense (162) 105
Factors affecting tax charge for year
The relationship between expected tax expense based on the effective tax rate of AdEPT at 30% (2008: 30%) and the tax expense actually recognised in the income statement can be reconciled as follows:
2009 2008
£'000 £'000
(Loss) before income tax (1,403) (738)
Tax rate 28% 30%
Expected tax credit (392) (221)
Expenses not deductible for tax purposes 7 32
Amortisation not deductible for tax purposes 353 303
Share option relief 14 -
Effect of rate change on losses carried back 19 -
Adjustments to tax charge in respect of prior periods (163) -
Marginal relief - (8)
Other timing differences - -
Actual tax (credit)/expense net (see Note above) (162) 105
There were no material factors that may affect future tax charges.
11. INTANGIBLE FIXED ASSETS
Computer Customer
License software base Total
Group and Company £'000 £'000 £'000 £'000
Cost
At 1 April 2007 22 458 17,171 17,651
Additions 4 204 9,425 9,633
Addition from subsidiary - 96 - 96
Retrospective adjustment - (96) - (96)
At 1 April 2008 26 662 26,596 27,284
Additions - 89 55 144
Disposals - - - -
At 31 March 2009 26 751 26,651 27,428
Amortisation
At 1 April 2007 3 226 2,767 2,996
Charge for the year 3 241 1,626 1,870
Disposals - (96) - (96)
At 1 April 2008 6 371 4,393 4,770
Charge for the year 3 175 1,948 2,126
Disposals - - - -
At 31 March 2009 9 546 6,341 6,896
Net book value
At 31 March 2009 17 205 20,310 20,532
At 31 March 2008 20 291 22,203 22,514
The Group has no internally generated intangible assets.
The Group acquired a billing system during the year ended 31 March 2008 by way of a hive up of assets from a subsidiary, with a net book value of £96,218 at the date of hive up. The billing system was required to maintain continuity of the billing cycle during the transitional period. Following the transition of the acquired customer base to the AdEPT billing platform the hived up billing system was disposed of.
12. PROPERTY, PLANT AND EQUIPMENT
Short term
leasehold Fixtures Office
improvements and fittings equipment Total
Group and Company £'000 £'000 £'000 £'000
Cost
At 1 April 2007 7 47 289 343
Additions - 73 124 197
Addition from subsidiary - 2 42 44
Disposals - - - -
At 1 April 2008 7 122 455 584
Additions - - 15 15
Disposals - - - -
At 31 March 2009 7 122 470 599
Depreciation
At 1 April 2007 5 35 144 184
Charge for the year 2 19 99 120
Disposals - - - -
At 1 April 2008 7 54 243 304
Charge for the year - 30 130 160
Disposals - - - -
At 31 March 2009 7 84 373 464
Net book value
At 31 March 2009 - 38 97 135
At 31 March 2008 - 68 212 280
The Group acquired tangible fixed assets during the year ended 31 March 2008 by way of a hive up of assets from a subsidiary, with a net book value of £44,454 at the date of hive up. These assets are in continuing use within the business.
13. DEFERRED TAXATION
2009 2008
£'000 £'000
At 1 April 2008 713 18
Income statement charge 86 (40)
Acquired with subsidiary - 735
At 31 March 2009 799 713
The deferred tax asset is made up as follows:
2009 2008
£'000 £,000
Capital allowances 121 78
Tax losses 678 621
Other timing differences - 14
799 713
The deferred tax asset has been recognised as the Group continues to generate taxable profits against which the asset continues to reverse.
14. FIXED ASSET INVESTMENTS
Total
Shares in Group undertakings £'000
Cost or valuation
At 1 April 2007 and 1 April 2008 12,829
Additions -
31 March 2009 12,829
Amounts written off
At 1 April 2007 and 1 April 2008 12,829
Amounts written off during the year -
31 March 2009 12,829
Net book value
At 31 March 2009 -
At 31 March 2008 -
Details of the principal Subsidiaries are disclosed in Note 23 to the financial statements.
15. TRADE AND OTHER RECEIVABLES
Group Company
2009 2008 2009 2008
£'000 £'000 £'000 £'000
Trade receivables 2,628 3,420 2,628 3,420
Other receivables 8 9 8 9
Prepayments and accrued income 582 875 582 875
3,218 4,304 3,218 4,304
As at 31 March 2009, trade receivables of £560,629 (2008: £380,125) were impaired and fully provided for. The ageing of the trade receivables which are past due and not impaired are as follows:
Group Company
2009 2008 2009 2008
£'000 £'000 £'000 £'000
31-60 days 68 380 68 380
61-90 days 1 84 1 84
Over 90 days 34 171 34 171
103 635 103 635
Movement of the Group provision for impairment of trade receivables are as follows:
Group Company
£'000 £'000
At 1 April 2007 412 412
Receivables written off during the year as uncollectible (570) (570)
Unused amounts reversed (5) (5)
Provision for receivables impairment for the year 543 543
At 1 April 2008 380 380
Receivables written off during the year as uncollectible (472) (472)
Unused amounts reversed (35) (35)
Provision for receivables impairment for the year 688 688
At 31 March 2009 561 561
The creation and release of a provision for impaired receivables has been included in administration expenses in the income statement. Amounts charged to the allowance account are generally written off when there is no expectation of recovering cash. Management regularly review the outstanding receivables and do not consider that any further impairment is required. The other assets classes within trade and other receivables do not contain impaired assets.
16. TRADE AND OTHER PAYABLES
Group Company
2009 2008 2009 2008
£'000 £'000 £'000 £'000
Trade payables 3,292 3,701 3,292 3,701
Other taxes and social security costs 411 503 411 503
Finance lease obligations 6 16 6 16
Other payables 150 143 150 143
Accruals and deferred income 1,429 2,234 1,429 2,234
5,288 6,597 5,288 6,597
The finance lease obligations are payable within one year and have a present value of £6,152. Included within accruals is deferred consideration of £Nil (2008: £619,044) in respect of the customer bases and subsidiaries acquired in the current and prior years.
17. LONG TERM BORROWINGS
Group Company
2009 2008 2009 2008
£'000 £'000 £'000 £'000
Between 1 and 2 years 1,474 1,712 1,474 1,712
Between 2 and 3 years 1,116 1,712 1,116 1,712
More than 3 years 7,513 7,103 7,513 7,103
Bank loans 10,103 10,527 10,103 10,527
The bank loan is secured by a debenture incorporating a fixed and floating charge over the undertaking and all property and assets present and future including goodwill, book debts, uncalled capital, buildings, fixtures, fixed plant and machinery. Details of the interest rates applicable to the loans are included in Note 27.
Included within bank loans are arrangement fees amounting to £278,897 which are being released over the term of the loan in accordance with IAS 39.
In addition an exit fee has also been included within this balance. Under the terms of the loan agreement an amount of between £587,500 and £87,500 is due to be paid on the settlement of the loan. The amount payable depends upon future targets based upon the ratio of Net Debt to EBITDA. At the balance sheet date the directors expect the maximum amount will become payable based upon the Group's forecasts. The amount is being charged to finance charges over the life of the loan.
18. SHARE CAPITAL
2009 2008
£'000 £'000
Authorised
65,000,000 Ordinary shares of 10p each 6,500 6,500
Allotted, called up and fully paid
21,067,443 Ordinary shares of 10p each 2,107 2,107
Share Options
At 31 March 2009, the following options and warrants over the shares of AdEPT were in issue:
2009 2009 2008 2008
Number of shares under option Weighted average exercise price Number of shares under option Weighted average exercise price
Outstanding at 1 April 2,313,046 75p 2,378,420 77p
Granted during the year 1,858,813 23p - -
Forfeited during the year (20,600) 140p (65,374) 145p
Exercised during the year - - - -
Outstanding at 31 March 4,151,259 52p 2,313,046 75p
The weighted average fair values have been determined using the Black Scholes-Merton Pricing Model with the following assumptions and inputs:
2009 2008
Risk free interest rate 2.71-4.13% 4.13%
Expected volatility 20.0-83.0% 20.0%
Expected option life (years) 1.25-5.7 years 1.25-5.7 years
Expected dividend yield 0% 0%
Weighted average share price 43p 60p
Weighted average exercise price 44p 60p
Weighted average fair value of options 5p 6p
granted
The expected average volatility was determined by reviewing the last 100 historical fluctuations in the share price prior to the grant date of each share instrument. An expected take up of 100% has been applied to each share instrument. Expected dividend yield is estimated at 0%, this estimate of nil is per the requirement of IFRS2 where a Company such as AdEPT has no current dividend history, it does not bear any relation to the actual dividend policy of AdEPT Telecom plc.
Exercise price (pence) Expected option life (years) 31 March 2009 31 March 2008
31 July 2003 29 5.7 152,160 152,160
28 December 2003 29 5.3 600,000 600,000
29 August 2004 42 4.6 342,216 342,216
6 June 2005 42 3.6-4.8 342,216 342,216
13 December 2005 140 2.3-4.1 342,216 342,216
14 February 2006 140 3.1-4.1 421,349 421,349
15 February 2006 140 1.25-2.25 86,761 107,361
9 May 2006 199 1.25-2.25 5,528 5,528
1 August 2008 42 3.0 750,000 -
21 January 2009 12 3.0 1,108,813 -
4,151,259 2,313,046
During the year a warrant was issued to Barclays Bank plc over 5% of the diluted share capital of the Company. As at 31 March 2009 this entitled the holder to 1,108,813 shares. The weighted average fair value of this equity instrument of £55,500 has been determined using the Black Scholes-Merton Pricing Model applying the same assumptions as those applied to the other equity instruments issued during the period due to Barclays Bank plc being unable to provide a sufficiently reliable estimate of the value of services provided in relation to these warrants.
The mid*market price of the ordinary shares on 31 March 2009 was 15.5p and the range during the year was 10.0p to 44.5p.
There have been no transactions with equity holders or dividends during the current or previous year.
19. RESERVES
Share
premium Profit and
account loss account
Group £'000 £'000
At 1 April 2007 7,965 552
Loss for the year - (843)
Share options issued during the year - 35
At 1 April 2008 7,965 (256)
Loss for the year - (1,241)
Share options issued during the year - 27
At 31 March 2009 7,965 (1,470)
Share
premium Profit and
account loss account
Company £'000 £'000
At 1 April 2007 7,965 552
Loss for the year - (843)
Share options issued during the year - 35
At 1 April 2008 7,965 (256)
Loss for the year - (1,241)
Share options issued during the year - 27
At 31 March 2009 7,965 (1,470)
20. PENSION COMMITMENTS
At 31 March 2009 there were no pension commitments (2008: £Nil).
21. OPERATING LEASE COMMITMENTS
At 31 March 2009 the Group and Company had lease commitments as follows:
Land and buildings Other
2009 2008 2009 2008
Group and Company £'000 £'000 £'000 £'000
Within 1 year 147 331 37 87
Between 2 and 5 years 484 612 7 29
More than 5 years - 25 - -
Land and Buildings:
The Group leases its offices under non cancellable operating lease agreements. There is no material contingent rent payable. The lease agreements do not offer security of tenure. The lease terms are for approximately 5 years.
Other:
The Group leases various office equipment and motor vehicles under non cancellable operating lease agreements. The lease terms are either 2 or 3 years.
The lease expenditure charged to the income statement during the year is disclosed in Note 5.
22. RELATED PARTY TRANSACTIONS
During the year CKR Holdings Ltd, a Company controlled by Mr C Fishwick, a director, provided consultancy services to the Group in the normal course of business and at an arm's length basis with a total value of £14,215 (2008: £10,000). There was no balance owing to CKR Holdings at the end of the year (2008: £Nil).
23. PRINCIPAL SUBSIDIARIES
Percentage shareholding of ordinary shares
Company name Country Description
Transglobal Telecommunications Limited England & Wales 100 Non-trading
Connaught Telecommunications Limited England & Wales 100 Non-trading
Call Options UK Limited England & Wales 100 Non-trading
Adept Managed Networks Limited England & Wales 100 Non-trading
Connectacom Network Solutions Limited England & Wales 100 Non-trading
Oxtalk Limited England & Wales 100 Non-trading
Telecom Direct Limited England & Wales 100 Non-trading
The business and assets of Subsidiaries are hived up to AdEPT immediately or within one month following acquisition. After the hive up, the Subsidiaries become inactive. With effect from April 2009 all of the above Subsidiaries, with the exception of Oxtalk Limited and Telecom Direct Limited (both non-trading), are in the process of being taken through a member's voluntary liquidation.
24. CAPITAL COMMITMENTS
At 31 March 2009 there were capital commitments of £65,000 (2008: £23,188).
25. ANALYSIS OF ACQUISITIONS
During the year ended 31 March 2008 the Group made two acquisitions. Following acquisition the customers were fully integrated into a single billing and customer service platform. Whilst revenue can be separately identified by acquisition, cost of sales cannot. Calls are routed across various network suppliers and the overhead base services all of our customers. The analysis of revenue by existing and acquired businesses is, therefore, as follows:
31 March 31 March
2009 2008
£'000 £'000
Sales revenue
Existing businesses as at 31 March 28,567 16,437
Businesses acquired in the year - 7,181
Total sales revenue 28,567 23,618
26. EARNINGS PER SHARE
Earnings per share is calculated on the basis of a loss of £1,240,975 (2008: loss £842,743) divided by the weighted average number of shares in issue for the year of 21,067,443 (2008: 21,067,443). The diluted earnings per share is calculated on the assumption that the unapproved and EMI share options as disclosed in note 18 to the financial statements are exercised. This would give rise to a total weighted average number of ordinary shares in issue for the period of 25,218,702 (2008: 22,959,140).
An adjusted earnings per share is calculated by adding back amortisation of intangible assets and non-recurring costs to retained earnings, giving £2,027,701 (2008: £2,407,683). This is divided by the same weighted average number of shares as above.
2009 2008
£'000 £'000
Earnings for the purposes of basic and diluted
earnings per share
Loss for the period attributable to equity holders (1,241) (843)
of the parent
Amortisation 2,126 1,869
Non-recurring costs 1,314 1,381
Adjusted profit attributable to equity holders of
the parent, adding back amortisation and 2,199 2,407
non-recurring costs
Number of shares
Weighted average number of shares used for 21,067,443 21,067,443
earnings per share
Dilutive effect of share plans 4,151,259 1,891,697
Diluted weighted average number of shares used to
calculate fully diluted earnings per share 25,218,702 22,959,140
Earnings per share
Basic earnings per share (5.89)p (4.00)p
Fully diluted earnings per share n/a n/a
Adjusted earnings per share, after adding back
amortisation and non-recurring costs
Adjusted basic earnings per share 10.44p 11.43p
Adjusted fully diluted earnings per share 8.72p 10.49p
Earnings per share is calculated by dividing the retained earnings attributable to equity holders of the parent by the weighted average number of ordinary shares in issue.
Adjusted earnings per share is calculated by dividing the retained earnings attributable to equity holders of the parent (after adding back amortisation and non-recurring costs) by the weighted average number of ordinary shares in issue.
The adjustment for the dilutive effect of share options has not been reflected in the calculation of the diluted loss per share as the effect would be anti-dilutive, therefore diluted and basic earnings per share are equal.
27. FINANCIAL INSTRUMENTS
Set out below are the Group's financial instruments. The directors consider there to be no difference between the carrying value and fair value of the Group's financial instruments.
2009 2008
£'000 £'000
Financial assets
Cash 733 155
Trade and other receivables 2,636 3,429
Financial liabilities
Interest bearing loans and borrowings:
Obligations under finance lease contracts 6 16
Floating rate borrowings 4,455 2,863
Fixed rate borrowings 7,400 8,588
Other financial liabilities - 619
11,861 12,086
Amounts due for settlement:
Within 12 months 1,579 1,952
After 12 months 10,282 10,134
11,861 12,086
The Facility A term loan bears interest at 3.5% over LIBOR and is repayable by quarterly instalments of £394,650. The final repayment is due on 31 December 2011. At the year end the amount outstanding in respect of this facility was £9.355m.
The Alternative Structured Facility bears cash interest at a rate at 5.5% over LIBOR. Payment In Kind interest is accruing on the Alternative Structured Facility at a rate of 2.0% per annum which is payable on the final repayment date of 31 December 2011. At the year end the amount outstanding in respect of the Alternative Structured Facility was £2.5m.
At 31 March 2009 the Group had no outstanding earnout liabilities (2008: £619,044). No interest is charged on these liabilities. The weighted average period of financial liabilities on which no interest is paid is 12 months (2008: 12 months).
The fixed interest rate liabilities relate to amounts payable on finance lease liabilities. The weighted average interest rate of these liabilities was 8.0% and the weighted average period for which the interest rates are fixed was 60 months.
The financial assets of the Group are surplus funds, which are offset against borrowings under the facility, and there is no separate interest rate exposure.
Barclays Bank plc has a cross guarantee and debenture incorporating a fixed and floating charge over the undertaking and all property and assets present and future including goodwill, book debts, uncalled capital, buildings, fixtures, fixed plant and machinery.
The bank also holds a charge over the life assurance policies of Ian Fishwick and Amanda Woodruffe, directors of the Company, for £250,000 and £1,500,000 respectively.
Obligations under finance leases
2009 2008
£'000 £'000
Finance lease liabilities - minimum lease payments:
No later than 1 year 6 17
Later than 1 years and no later than 5 years - -
Later than 5 years - -
Future finance charges on finance leases - (1)
Present value of finance lease liabilities 6 16
The present value of finance lease liabilities is as follows:
No later than one year 6 16
Later than 1 years and no later than 5 years - -
Later than 5 years - -
6 16
The Group has a certain amount of its property, plant and equipment under finance lease. For the year ended 31 March 2009 the average effective borrowing rate was 8.0%. Interest rates are fixed at the contract dates. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. All lease obligations are denominated in sterling. Finance lease liabilities are secured upon the underlying assets. Outstanding finance lease obligations at 31 March 2009 are due to be settled within 12 months. The fair value of the Group's lease obligations approximates to their carrying amount.
Sensitivity analysis
At 31 March 2009 it is estimated that a movement of one percentage point in interest rates would impact the Group's profit before tax by approximately £129,000. Given the interest rate hedge in place, this impact on profit would be reduced should interest rates rise above 3.77%.
Interest rate risk
The Group's policy is to manage its interest cost using a mix of fixed and variable rate debts. The Group's policy is to keep at least 75% of its borrowings at fixed rates of interest. At 31 March 2009, after taking into account the effect of interest rate management, 62.4% of the Group's borrowings are at a fixed rate of interest (2008: 75%).
Credit risk
Credit risk associated with cash balances and derivative financial instruments is managed by transacting with financial institutions with high quality credit ratings. Accordingly the Group's associated credit risk is deemed to be limited.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at 31 March 2009 was £3,369,207 (2008: £3,583,988).
Loans and receivables
31 March 31 March
2009 2008
£'000 £'000
Trade receivables 2,628 3,420
Other receivables 8 9
Cash and cash equivalents 733 155
3,369 3,584
Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and this policy has been implemented by requiring staff to carry out appropriate credit checks on customers before sales commence.
Trade receivables consist of a large number of customers, spread across diverse industries across the United Kingdom. Ongoing credit evaluation is performed on the financial condition of accounts receivable. The Group does not have any significant credit risk exposure to any single counterparty or any Group of counterparties having similar characteristics. The Group defines counterparties as having similar characteristics if they are connected parties.
Liquidity risk
The Group has an appropriate liquidity risk management framework for the management of the Group's short, medium and long-term funding and liquidity risk management requirements. The Group manages liquidity risk by maintaining adequate banking facilities and reserve borrowing facilities through cash flow forecasting, acquisition planning and monitoring working capital and capital expenditure requirements on an ongoing basis.
The table below analyses the Group's financial liabilities into relevant maturity Groupings based on the remaining period at the balance sheet dated to the contractual maturity date. The amounts disclosed in the table are the contracted undiscounted cash flows. Discounting is not required as this has no material effect on the financial statements.
Amortised cost
Within More than
1 year 1-2 years 2-5 years 5 years
Year ended 31 March 2009 £'000 £'000 £'000 £'000
Borrowings 1,474 1,474 8,629 -
Finance leases 6 - - -
Trade and other payables 3,442 - - -
4,922 1,474 8,629 -
Within More than
1 year 1-2 years 2-5 years 5 years
Year ended 31 March 2008 £'000 £'000 £'000 £'000
Borrowings 923 1,712 8,815 -
Finance leases 10 6 - -
Trade and other payables 3,845 - - -
4,778 1,718 8,815 -
Currency risk
The Group's operations are handled entirely in sterling.
28. EVENTS AFTER THE BALANCE SHEET DATE
The Group continues to manage its exposure to interest rate risks arising from financing activities. After the year end the Group entered an agreement to manage the interest rate risk on 100% of the Group's fixed term debts through to December 2011 at a more favourable rate than that which it replaced.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR RFMPTMMMMBML
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please deliver quickly,im a physician and i really can't concentrate in this atmosphere.thank you gail aplin
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| 08-05-08 | ||||
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Are these going anywhere? Im prepared to keep them for another few months and then Im out unless I get into profit .Im at break even at present
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| 11-12-07 | ||||
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Well up What?
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ha your a funny man - if i wasn't counting my winnings from the Mayweather fight I'd probably - giver you some stick, but i'm feeling far to smug at the minute, laughing - happy - and of course - well up -
bye bye di ck head! More | View thread (8) | Respond | Login to Vote up | Login to Vote down |
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The contents of the postings summarised here represents the opinions of the authors and not of Interactive Investor Trading Limited.
They have not been approved or issued by Interactive Investor Trading Limited.
They have not been approved or issued by Interactive Investor Trading Limited.
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