TIDMEIT
RNS Number : 0695Z
Enables IT Group PLC
03 February 2014
Date: Monday 3 February
On behalf of: Enables IT Group plc ("Enables IT", the "Company"
or the "Group")
Embargoed until: 0700hrs
Enables IT Group plc
Final results for the year ended 30 September 2013
The Board of Enables IT Group plc (AIM: EIT), a leading provider
of cloud computing, managed and professional services, is pleased
to announce its final results for the year ended 30 September
2013.
FINANCIAL HIGHLIGHTS
-- Group revenues were GBP7.13m for FY2013 (FY:2012 GBP2.69m restated)
-- Operating profit before exceptional items was GBP186,706 (FY:2012 GBP136,835 restated)
OPERATIONAL HIGHLIGHTS
-- Successfully completed the reverse acquisition of Nexus Management plc in November 2012
-- Integration of the businesses was completed ahead of schedule
-- In line with the stated strategy, the Group completed its
first acquisition in July 2013, including securing funding via a
placing with new and existing shareholders
-- New business wins including a GBP0.75m data centre design and
build with three year maintenance contract in the healthcare
sector
-- Strengthening of both the Board and management teams
-- Continued investment in Group infrastructure including both
US and UK data centre and strengthening the corporate brand
POST PERIOD HIGHLIGHTS
-- Acquisition of the business and assets of US-based, Know
Technology LLC to enhance and complement the Group's existing
services
-- Oversubscribed placing of GBP2.5m
Michael Walliss, Chief Executive Officer, said:
"Enables IT made great progress in 2013, laying the foundations
for 2014 and beyond. Our business model remains sound with
recurring revenue now representing 57% of group revenue, well above
the Board's target of 50%. With ongoing investment in strengthening
our global brand and the significant planned increase in sales
consultants, the Board is confident that the Group's growth
objectives will continue to be met."
This announcement has been extracted from the accounts. The full
Report and Accounts can be found on the Enables website at
www.enablesit.com
Enquiries
Enables IT Group plc Via Redleaf Polhill
Michael Walliss, CEO enablesit@redleafpr.com
Cenkos Securities plc (Nominated Adviser
and Broker) +44 (0)20 7397 8900
Max Hartley, Corporate Finance
Andy Roberts, Sales
Redleaf Polhill (Financial PR) +44 (0)20 7382 4730
Dwight Burden enablesit@redleafpr.com
Rebecca Sanders-Hewett
David Ison
About EnablesIT
Enables IT Group plc is a leading provider of cloud computing,
managed and professional services in the UK and North America. From
on-premise private cloud networks, our IAAS/SAAS platform HAVEN
within both our US and UK Data centres, to backend core network and
wireless solutions, Enables IT specialises in the delivery and
management of mission-critical services, enabling customers to
reduce the costs, complexity and risks associated with their IT
infrastructure.
CHAIRMAN'S STATEMENT
Since joining the Enables IT Board in July 2013 I am pleased
with the progress that the Group has made. Our first objective was
to address a number of fairly deep rooted problems that we
inherited, a number of legacy issues which required remediation and
this has now been completed as planned. Going forward, given our
plans to build our business both organically and by acquisition, it
was clear that we needed to assemble a strong leadership team
across the Sales, Operations and Finance silos. We feel confident
that the new teams heading up each of these departments have
quickly gained traction and are already achieving good results in
line with the strategic objectives.
From an acquisition perspective, our plan is to both build our
existing service offering across new geographies and, where
possible, to identify targets who we believe have IP that we can
use to provide smart solutions for our clients here and in the US.
Organically, the growth of the business remains dependent upon our
ability to attract customers to our data centers and Cloud
services. For this reason we remain committed to a continual
programme of M&A and investment in these areas. It remains
strategically important, both in the UK and the US, for the service
side of our business to consult and successfully execute on project
delivery. We aim to have our customers use both our data centers
and our managed support services which attract contracted recurring
revenues - our goal is to increase our recurring revenue as a
percentage of total.
Although a direct comparison is difficult given the reverse
take-over in 2013, we are very pleased to report year on year
organic growth in line with group expectations and our contractual
recurring revenue is up from 50% to 57%. Additionally, the figures
are in line with market expectations.
The Group's financial position remains strong with adequate cash
funds for current business operation and our immediate strategic
plans. The Board was very pleased with the continued realisation of
the Group's stated strategy which resulted in strong shareholder
support throughout the calendar year of 2013, including two
successful placings, one of which was completed after the year end,
which raised a total GBP3.5m (gross) of new capital for the Group.
We are pleased to welcome our new investors ahead of what
represents an exciting phase of the Group's development.
I would like to take the opportunity to thank the Management
team for their efforts and commitment during my first year in
office and I look forward to working with the team to successfully
build Enables IT over the coming months and years.
Miles Johnson
Non-executive chairman
CHIEF EXECUTIVE'S REPORT
Year in Review
This past year saw the formation of Enables IT Group plc through
the successful reverse takeover of Nexus Management plc.
The ultimate strategy of the Group is to be able to offer cloud
computing, managed and professional services in the UK and USA to
blue chip clients in sectors such as Health, Professional Services
and Education. We continue to build the business around this
strategy, with HAVEN (High Availability Virtual Enterprise
Network), our Virtual Private Cloud platform, at its centre.
During the course of the financial year ended 30 September 2013
we saw a strong level of interest in our services. Like for like
sales growth was up as expected and recurring revenue represented
57% of Group revenue our first acquisition has been fully
integrated, and we made further internal investment in both our US
and UK data centers. As a result, our cloud computing offering has
been strengthened and we are progressing well in the delivery of
our long term strategy.
Post completion of the reverse takeover, the Board successfully
implemented a number of changes to both US and UK operations. I am
pleased to report that there has been good progress across all
areas. A number of changes were instigated to resolve the inherited
structure of Nexus, not least planning the expected exit of a large
customer that had represented almost half of its revenue. Whilst
this was well understood prior to the reverse takeover, the impact
inevitably meant significant changes to the global operation were
required. This was completed as planned and has ensured the
foundations of the business are correctly aligned for continued
growth of our target 15-20% per annum.
A key unique selling point of Enables IT is the ability to offer
a global, dedicated 24/7 technical helpdesk. The strengthening of
our service capabilities was a priority in 2013 and I am pleased to
report that following the successful acquisition of The Support
Force Group in July 2013 and through the integration of their
operations in Cape Town, SA, we have been able to do so
successfully.
Additionally, we were able to settle an outstanding convertible
loan note in advance of the expiry date in 2015. This was inherited
through the reverse takeover and its early repayment has generated
savings in the Group's interest charge.
Strategy and Outlook
The Group continues to successfully execute on its focused
growth strategy, providing high quality cloud, managed and
professional services to its customers. Customer demand for Enables
IT services remains strong with a growing sales pipeline reflecting
the continuing market shift towards cloud based solutions and the
need to create flexible and cost effective workforce solutions.
The acquisition of Know Technology, LLC for US$1.5 million was
completed in December 2013 alongside the successful placing which
raised gross proceeds of approximately GBP2.5 million. I am pleased
to report that the early signs are positive and that we believe the
combined management team is well-equipped to move forward in the
coming months. The acquisition has enabled the Group to meet a
number of strategic objectives: our customer base, particularly in
the US market, has been strengthened; the model with recurring
revenue in cloud and managed services has been improved; and cost
synergies have been successfully generated. In addition, we are now
able to benefit from healthy upselling opportunities.
We continue to invest for growth in our data center platform,
HAVEN, improving and reinforcing our robust secure cloud
infrastructure within both US and UK data centers. Our proprietary
platform ensures we are able to offer IaaS (Infrastructure as a
Service) and SaaS (Software as a Service) fully replicated between
our data centers, thus giving our customers full Disaster Recovery
and Business Continuity options around the globe.
Our ongoing investment in our cloud platform will see the launch
of our 'Enables Office' in both US and UK data centres. Enables IT
will therefore be able to meet customer demand for complete,
enterprise grade email and messaging services, with further options
to have Microsoft Office suite products made available via a
self-service billing engine. Rather than outsource to third parties
and jeopardise the quality, the Board has decided to utilise the
Group's in-house expertise to build and expand these services.
Whilst this will ensure a better, more reliable and timely
delivery, some of the costs incurred in developing the cloud
platform will be treated as a cost to the Group, and will impact
our overall results for the immediate future, but strengthen our
financial objectives during 2015 and beyond.
Our business model remains sound with recurring revenue now
representing 57% of group revenue, well above the Board's target of
50%. Management remains confident that the desired split of
recurring, project and product revenues of 50%, 30% and 20%
respectively remains achievable.
With ongoing investment in strengthening our global brand and
the significant planned increase in sales consultants, the Board is
confident that the Group's growth objectives will continue to be
met in the full year to 30 September 2014.
We ended the year in an encouraging position and look forward to
yet another 12 months of sustainable growth with similar growth
expectations as the year ended 30 September 2013
Michael Walliss
Chief executive officer
GROUP STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED
30
SEPTEMBER 2013
Year ended Year ended
30 September 2013 30 September 2012
As restated
GBP GBP
Continuing operations Notes
Revenue 4 7,131,326 2,687,502
Cost of sales (4,695,491) (1,766,764)
Gross profit 2,435,835 920,738
Operating expenses
excluding exceptional
expenses (2,249,129) (783,885)
Operating profit
before exceptional
items 186,706 136,853
Exceptional items 5 (563,014) (47,159)
Operating (loss)/profit (376,308) 89,694
Finance costs 8 (34,598) (321)
------------------ ------------------
(Loss)/profit before
tax (410,906) 89,373
Tax 9 107,067 (29,186)
(Loss)/Profit for
the year (303,839) 60,187
Attributable to
equity holders of
the parent 22 (303,839) 60,187
================== ==================
(Loss)/Profit per
share
Basic and diluted 11 (2.07)p 0.41p
Continuing operations
basic and diluted 11 (2.07)p 0.41p
The 2012 comparatives are noted as restated as they relate to
Enables IT Limited. See Principal Accounting Policies for further
details.
The accompanying accounting policies and notes form an integral
part of these financial statements.
STATEMENT OF CHANGES IN EQUITY ATTRIBUTABLE TO THE EQUITY
SHAREHOLDERS OF THE PARENT FOR THE YEAR ENDED 30 SEPTEMBER 2013
Share Share Retained FX Other Share Merger Reverse Total
capital premium earnings reserves reserve options reserve acquisition
Group account reserve reserve
GBP GBP GBP GBP GBP GBP GBP GBP GBP
As at 1
January 2012
(as restated) 1,633 - 110,596 - 288 - - - 112,517
Profit and
total
comprehensive
income for
the period - - 60,187 - - - - - 60,187
Transactions
with owners:
- Equity
dividends - - (180,005) - - - - - (180,005)
As at 30
September
2012
(Restated) 1,633 - (9,222) - 288 - - - (7,301)
Loss and total
comprehensive
loss for the
year - - (303,839) - - - - - (303,839)
Shares issued
by legal
parent prior
to reverse
acquisition 2,949,629 5,128,950 - - - - - - 8,078,579
Legal parent
reserves
prior to
reverse
acquisition - - (114,098) 38,876 972,874 - - 897,652
Movement in
the year - - - 2,410 - - - - 2,410
Shares issued
by the legal
parent on
reverse
acquisition 119,097 - - - - 1,001,763 - 1,120,860
Shares issued 26,497 933,483 - - - - - - 959,980
Share issue
expenses - (71,649) - - - - - - (71,649)
Repayment of
convertible
loan notes - - - (38,876) - - - (38,876)
Reverse
acquisition
adjustment (1,633) - - (288) - - (8,977,072) (8,978,993)
Share based
payment
charge - - - - - 1,965 - - 1,965
As at 30
September
2013 3,095,223 5,990,784 (313,061) (111,688) - 974,839 1,001,763 (8,977,072) 1,660,788
========== ========== ========== ========== =========== ======== ========== ============ ============
Company Share Share Retained Other reserve Merger Share Total
capital premium earnings reserve options
account reserve
GBP GBP GBP GBP GBP GBP GBP
As at 1
October 2011 2,855,880 5,072,700 -6,418,917 38,876 - 971,079 2,519,618
Loss for the
year - - -1,846,950 - - - -1,846,950
Shares issued 93,750 56,250 - - - - 150,000
Share based
payment
charge - - - - - 1,795 1,795
------------- ------------- ------------- -------------- ------------- ------------- -----------
As at 30
September
2012 2,949,630 5,128,950 -8,265,867 38,876 - 972,874 824,463
============= ============= ============= ============== ============= ============= ===========
As at 1
October 2012 2,949,630 5,128,950 -8,265,867 38,876 - 972,874 824,463
Profit for
the year - - 429,812 - - - 429,812
Shares issued
on reverse
acquisition 119,096 - - - - - 119,096
Reverse
acquisition
adjustment - - - - 1,001,763 - 1,001,763
Shares issued 26,497 933,483 - - - - 959,980
Repayment of
convertible
loan notes - - - -38,876 - - -38,876
Share issue
expenses - -71,649 - - - - -71,649
Share based
payment
charge - - - - - 1,965 1,965
------------- ------------- ------------- -------------- ------------- ------------- -----------
As at 30
September
2013 3,095,223 5,990,784 -7,836,055 - 1,001,763 974,839 3,226,554
============= ============= ============= ============== ============= ============= ===========
Merger reserve
Merger reserve represents the premium on the shares issued to
acquire Enables IT Limited in accordance with the provisions of
S612 of the Companies Act 2006.
Reverse acquisition
As disclosed in Note 2, the reverse acquisition reserve relates
to the reverse acquisition between Enables IT Limited and Enables
IT Group plc on 26 November 2012.
GROUP BALANCE SHEET AS AT 30 SEPTEMBER 2012 30 September 30 September
2013 2012
As restated
GBP GBP
ASSETS Notes
Non-current assets
Property, plant and equipment 12 713,370 71,286
Intangible assets 14 580,820 -
Goodwill 13 1,389,879 -
2,684,069 71,286
------------- -------------
Current assets
Inventories 16 - 1,448
Trade and other receivables 17 883,424 451,646
Cash and cash equivalents 440,519 404,083
------------- -------------
1,323,943 857,177
------------- -------------
Total assets 4,008,012 928,463
------------- -------------
LIABILITIES
Current liabilities
Trade and other payables 18 (2,068,906) (906,578)
Loans and other borrowings 19 (46,732) -
Current tax liabilities (51,418) (29,186)
Obligations under finance leases 20 (20,954) -
------------- -------------
(2,188,010) (935,764)
------------- -------------
Non-current liabilities
Trade and other payables (22,830) -
Loans and other borrowings 19 - -
Deferred tax liabilities 10 (136,384)
(159,214) -
------------- -------------
Total liabilities (2,347,224) (935,764)
------------- -------------
Total assets less liabilities 1,660,788 (7,301)
============= =============
EQUITY
Shareholders' equity
Called up share capital 21 3,095,223 1,633
Share premium 22 5,990,784 -
Merger reserve 22 1,001,763 -
Reverse acquisition reserve 22 (8,977,072) -
Other reserves 22 863,151 288
Retained earnings 22 (313,061) (9,222)
------------- -------------
Total equity attributable to the equity holders of the parent 1,660,788 (7,301)
============= =============
The financial statements were approved by the Board and authorised for issue on 31 January
2014 and signed on its behalf by:
M Walliss - Director M Elliott - Director
31 January 2014 31 January 2014
30 September 30 September
2013 2012
GBP GBP
ASSETS Notes
Non-current assets
Property, plant and equipment 12 306,975 -
Investments 15 2,395,753 362,220
Trade and other receivables 17 860,193 480,446
3,562,921 842,666
------------- -------------
Current assets
Trade and other receivables 17 83,436 127,339
Cash and cash equivalents 151,482 733,501
------------- -------------
234,918 860,840
------------- -------------
Total assets 3,797,839 1,703,506
------------- -------------
LIABILITIES
Current liabilities
Trade and other payables 18 (571,285) (523,750)
Non-current liabilities
Loans and other borrowings 19 - (355,293)
Total liabilities (571,285) (879,043)
------------- -------------
Total assets less liabilities 3,226,554 824,463
============= =============
EQUITY
Shareholders' equity
Called up share capital 21 3,095,223 2,949,630
Share premium 22 5,990,784 5,128,950
Other reserves 22 1,976,602 1,011,750
Retained earnings 22 (7,836,055) (8,265,867)
------------- -------------
Total equity attributable to the equity holders of the parent 3,226,554 824,463
============= =============
The financial statements were approved by the Board and authorised for issue on 31 January
2014 and signed on its behalf by:
M Walliss - Director M Elliott - Director
31 January 2014 31 January 2014
Company Registration number 03895363
GROUP CASH FLOW STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2012 30 September 30 September
2013 2012
As restated
GBP GBP
CONTINUING OPERATIONS
Cash flows from operating activities
(Loss)/profit before tax (410,906) 89,373
Adjustments for:
Interest paid 33,014 321
Impairment of intangible assets 379,188
Amortisation of intangible assets 76,413 -
Write off on investment - 2
Depreciation 132,061 19,757
Other non-cash items 5,833 -
Currency exchange adjustment (1,388) -
------------- -------------
Operating cash flows before movements in working capital 214,215 109,453
Share option costs 1,965 -
Decrease in inventories 1,448 7,557
Decrease in trade and other receivables 109,546 58,738
(Decrease)/increase in trade and other payables (288,748) 243,527
------------- -------------
Cash generated from operations 38,426 419,275
Interest paid (33,014) (321)
Tax paid (33,226) (29,186)
Net cash (used in)/generated from operating activities (27,814) 389,768
------------- -------------
Investing activities
Acquisition of subsidiaries (280,225) -
Cash acquired with acquired subsidiaries under reverse acquisition 446,047 -
Dividend paid - (180,005)
Purchases of property, plant and equipment (499,670) (47,008)
------------- -------------
Net cash used in investing activities (333,848) (227,013)
------------- -------------
Financing activities
Proceeds from issue of share capital 25,293 -
Premium on issue 884,703 -
Costs relating to share issues (71,649) -
Decrease in borrowings (409,225) -
Repayment of obligations under finance lease (31,024) -
Net cash generated from financing activities 398,098 -
------------- -------------
Net cash generated from continuing operations 36,436 162,755
------------- -------------
Net increase in cash and cash equivalents 36,436 162,755
Cash and cash equivalents at beginning of year 404,083 241,328
Cash and cash equivalents at end of year 440,519 404,083
============= =============
30 September 30 September
2013 2012
GBP GBP
CONTINUING OPERATIONS
Cash flows from operating activities
Profit/(loss) before tax 429,812 (1,846,950)
Adjustments for:
Loss on disposal of subsidiary - 1,535,694
Interest paid 27,808 49,694
Other non-cash item 5,833 -
Depreciation 24,777 -
Operating cash flows before movements in working capital 488,230 (261,562)
Share option costs 1,965 1,795
Increase in trade and other receivables (335,844) (247,572)
(Decrease)/increase in trade and other payables (465,141) 468,331
Cash (used in) operations (310,790) (39,008)
Interest paid (27,808) (49,694)
Net cash used in operating activities (338,598) (88,702)
------------- -------------
Investing activities
Acquisition of subsidiaries (350,000) -
Purchase of plant and equipment (331,752) -
Proceeds from disposal of subsidiary - 500,000
Legal costs on disposal of subsidiary - (11,359)
Net cash (used in)/generated from investing activities (681,752) 488,641
------------- -------------
Financing activities
Proceeds from issue of share capital 25,277 93,750
Premium on issue 884,703 56,250
Costs relating to share issues (71,649) -
Decrease in borrowings (400,000) (190,000)
Net cash generated from/(used in) financing activities 438,331 (40,000)
------------- -------------
Net cash (used in)/generated from continuing operations (582,019) 359,939
------------- -------------
Net (decrease)/increase in cash and cash equivalents (582,019) 359,939
Cash and cash equivalents at beginning of year 733,501 373,562
Cash and cash equivalents at end of year 151,482 733,501
============= =============
NOTES TO THE FINANCIAL STATEMENTS AT 30 SEPTEMBER 2012
The financial year represents the year ended 30 September 2013
(prior financial year ended 30 September 2012). The consolidated
financial statements for the year ended 30 September 2013 comprise
the financial statements of the Company and its subsidiaries
('Group').
1. GOING CONCERN
As set out on page 22, the Group recorded a loss of GBP303,839
including an operating profit on existing businesses (before
restructuring costs, impairment and amortisation of intangible
assets and finance costs) of GBP186,706. The steps that the
Directors have taken have returned the Group to profitability and
they are confident the Group is able to generate positive cash flow
from operations going forward.
The Directors therefore believe that the Group has adequate
resources to continue in operational existence in the foreseeable
future and as such have prepared the financial statements on the
going concern basis.
2. PRINCIPAL ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these financial statements
are set out below. These policies have been consistently applied to all years presented, unless
otherwise stated.
Basis of accounting
The financial statements have been prepared in accordance with EU Endorsed International Financial
Reporting Standards and IFRIC interpretations (IFRS) and the Companies Act 2006 applicable
to companies reporting under IFRS. The financial statements have been prepared under the historical
cost convention.
Judgements and estimates
The Group makes judgements and assumptions concerning the future that impact the application
of policies and reported amounts. The resulting accounting estimates calculated using these
judgements and assumptions will, by definition, seldom equal the related actual results but
are based on historical experience and expectations of future events. The judgements and key
sources of estimation uncertainty that have a significant effect on the amounts recognised
in the financial statements are discussed below.
Goodwill impairment
The Group is required to assess whether goodwill has suffered any impairment loss, based on
the recoverable amount of its cash generating units (CGUs). The recoverable amounts of the
CGUs have been determined based on value in use calculations and these calculations require
the use of estimates in relation to future cash flows and suitable discount rates. Actual
outcomes could vary from these estimates.
Impairment of assets
Financial and non-financial assets including other intangibles are subject to impairment reviews
based on whether current or future events and circumstances suggest that their recoverable
amount may be less than their carrying value. Recoverable amount is based on a calculation
of expected future cash flows which includes management assumptions and estimates of future
performance.
If there is an indication that impairment exists, the recoverable amount of the asset is estimated
in order to determine the extent of the impairment loss (if any). Where the asset does not
generate cash flows that are independent from other assets, the Group estimates the recoverable
amount of the cash-generating unit to which this asset belongs. An intangible asset with an
indefinite useful life is tested for impairment annually and whenever there is an indication
that the asset may be impaired.
Recoverable amount is the higher of the fair value less costs to sell and value in use. In
assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset for which the estimates of the future cash flows
have not been adjusted.
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount,
the carrying amount of the asset (CGU) is reduced to its recoverable amount. An impairment
loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (CGU) is
increased to the revised estimate of its recoverable amount, but so that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment
loss been recognised for the asset (CGU) in prior years. A reversal of an impairment loss
is recognised as income immediately unless the relevant asset is carried at a revalued amount,
in which case the reversal of the impairment loss is treated as a revaluation increase.
New standards adopted early
At the date of the authorisation of the financial statements, no standards and interpretations,
which are issued but not yet effective, have been adopted early.
New standards and interpretations not yet adopted
At the date of the authorisation of the financial statements, the following standards, and
interpretations, which are issued but not yet effective, have not been applied:
Effective for the Group for future financial years:
Amendment to IFRS 7 'Financial Instruments: Disclosures' (effective date year beginning 1
January 2013)
Re-issue of IFRS 9 'Financial Instruments' (effective date year beginning 1 January 2013)
Amendment to IFRS 10 'Consolidated Financial Statements' (effective date year beginning 1
January 2013)
Amendment to IFRS 11 'Joint Arrangements' (effective date year beginning 1 January 2013)
Amendment to IFRS 12 'Disclosure of Interests in Other Entities' (effective date year beginning
1 January 2013)
IFRS 13 'Fair Value Measurement' (effective date year beginning 1 January 2013)
Amendment to IAS 1 'Presentation of Financial Statements' (effective date year beginning 1
January 2013)
Amendment to IAS 19 'Employee Benefits' (effective date year beginning 1 January 2013)
Reissued IAS 27 'Separate Financial Statements' (effective date year beginning 1 January 2013)
Reissued IAS 28 'Investments in Associates and Joint Ventures' (effective date year beginning
1 January 2013)
Amendment to IAS 32 'Financial Instruments: Presentation' (effective date year beginning 1
January 2013)
Amendment to IAS 32 'Financial Instruments: Presentation' (effective date year beginning 1
January 2014)
Amendment to IAS 36 'Impairment of Assets' (effective date year beginning 1 January 2014)
Amendment to IAS 39 'Financial Instruments: Recognition and Measurement' (effective date year
beginning 1 January 2014)
IFRIC 21 'Levies' (effective date year beginning 1 January 2014)
The Group has considered the above new standards, interpretations and amendments to published
standards that are not yet effective and concluded that, except for the amendments to IAS
1 'Presentation of Financial Statements' and IFRS 10 'Consolidated Financial Statements',
they are either not relevant to the Group or that they would not have a significant impact
on the Group's financial statements.
New standards adopted during the year
In the current period, the Group has adopted all of the new
and revised Standards and Interpretations issued by the International
Accountancy Standards Board (the IASB) and the International
Financial Reporting Interpretations Committee (the IFRIC) of
the IASB that are relevant to its operations and effective
for reporting dates beginning on 1 October 2012.
Revenue recognition
Revenue is taken on fee income in the year to which it relates.
Project income is recognised in the year in which the project
is worked on. For projects which fall over the financial year
end income is recognised to reflect the partial performance
of the contractual obligations.
The income from annual maintenance contracts is recognised
in equal instalments over the period to which the service is
provided. The income from product sales is recognised at the
date of shipment.
Goodwill policy
Goodwill represents the excess of the cost of an acquisition
over the fair value of the Group's share of the identifiable
assets and liabilities of the acquired subsidiary at the date
of acquisition.
Goodwill impairment
Goodwill is tested annually for impairment and carried at cost
less accumulated impairment losses. (Any impairment charge
is recognised in the income statement in the year in which
it occurs.) Impairment losses on goodwill are not reversed.
Gains and losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose
of impairment testing. The allocation is made to those cash-generating
units or Groups of cash-generating units that are expected
to benefit from the business combination in which the goodwill
arose. Goodwill is allocated to cash-generating units that
represent each business segment.
Impairment of property, plant and equipment and intangible
assets
At each balance sheet date, the Group reviews the carrying
amounts of its property, plant & equipment and intangible assets
to determine whether there is any indication that those assets
have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset, which is the higher of
its fair value less costs to sell and its value in use, is
estimated in order to determine the extent of the impairment
loss. Where the asset does not generate cash flows that are
independent from other assets, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
Any impairment charge is recognised in the income statement
in the year in which it occurs for assets carried at cost if
recoverable amount is less than the carrying value. Where an
impairment loss, other than an impairment loss on goodwill,
subsequently reverses due to a change in the original estimate,
the carrying amount of the asset is increased to the revised
estimate of its recoverable amount.
Investments
Available for sale investments are non-derivatives that are
either designated in this category or not classified in any
of the other categories. They are included in non-current assets
unless management intends to dispose of the investment within
12 months of the balance sheet date.
Available for sale investments are initially recognised at
fair value plus transaction costs. After initial recognition,
available for sale investments are measured at fair value,
with gains or losses recognised as a separate component of
equity until the investment is derecognised or until the investment
is determined to be impaired, at which time the cumulative
gain or loss previously reported in equity is included in the
income statement.
The fair values of investments are based on current bid prices.
If the market for an available for sale investment is not active
the Group establishes fair value by using valuation techniques.
These include the use of recent arm's length transactions,
reference to other instruments that are substantially the same,
discounted cash flow analysis, and option pricing models making
maximum use of market inputs and relying as little as possible
on entity-specific inputs.
Property, plant and equipment
Property, plant and equipment assets are stated at cost less
accumulated depreciation and impairment losses. Depreciation is
calculated to write down their cost to their estimated residual
values by equal annual instalments over the year of their estimated
useful economic lives, which are considered to be:
Fixtures & Fittings 5 years
Office & Computer Equipment 4 years
Over the remaining term of the
Short Leasehold Improvements lease
Intangible assets
Identifiable intangible assets are recognised when the Group
controls the asset, it is probable that future economic benefits
attributable to the asset will flow to the Group and the cost of
the asset can be reliably measured. All intangible assets, other
than goodwill and indefinite lived assets, are amortised over their
useful economic life. The method of amortisation reflects the
pattern in which the assets are expected to be consumed. If the
pattern cannot be determined reliably, the straight line method is
used.
Customer lists acquired through business combinations are
recorded at fair value at the date of acquisition. Assumptions are
used in estimating the fair values of acquired intangible assets.
These include management's estimates of revenue and profits to be
generated by the acquired business.
The estimated useful lives of intangible assets are:
Customer lists 10 years straight line
Pension costs
The Group makes defined contributions to its employees' personal
plans. The pension costs charged in the financial statements
represents the contributions payable by the Group during the
period.
Leased assets and obligations
Leases are classified as finance leases when the terms of the
lease transfer substantially all the risks and rewards of ownership
to the Group. All other leases are classified as operating leases.
For property leases, the land and building elements are treated
separately to determine the appropriate lease classification.
Finance leases
Assets funded through finance leases are capitalised as
property, plant and equipment and depreciated over their estimated
useful lives or the lease term, whichever is shorter. The amount
capitalised is the lower of the fair value of the asset or the
present value of the minimum lease payments during the lease term
at the inception of the lease. The resulting lease obligations are
included in liabilities determined. Lease payments are apportioned
between finance charges and reduction of the lease obligation so as
to achieve a constant rate of interest on the remaining balance of
the liability. Finance costs on finance leases are charged directly
to the income statement.
Operating leases
Assets leased under operating leases are not recorded on the
balance sheet. Rental payments are charged directly to the income
statement on a straight line basis over the lease term.
Foreign currencies
Transactions in foreign currencies are translated into Sterling
using the exchange rates prevailing at the date of the transaction.
Foreign exchange gains or losses resulting from the settlement of
such transactions and from the translation of monetary assets and
liabilities denominated in foreign currencies at the balance sheet
date are recognised in the income statement. On consolidation,
assets and liabilities of foreign undertakings are translated into
Sterling using the year end exchange rates. The results of foreign
undertakings are translated into Sterling at average rate of
exchange for the year. Foreign exchange differences arising on
retranslation are recognised directly in equity.
Current and deferred taxation
Current tax is the expected tax payable on taxable income for
the year, using tax rates enacted or substantively enacted at the
balance sheet date, and any adjustments to tax payable in respect
of previous years.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profits ('temporary differences') and is
accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all
taxable temporary differences. Where there are taxable temporary
differences arising on subsidiaries, deferred tax liabilities are
recognised.
Deferred tax is calculated for all business combinations in
respect of intangible assets. A deferred tax liability is
recognised to the extent that the fair value of the assets for
accounting purposes exceed the fair value of those assets for tax
purposes and will form part of the associated goodwill on
acquisition.
Deferred tax assets are generally recognised to the extent that
it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Where there are
deductible temporary differences arising on subsidiaries, deferred
tax assets are recognised only where it is probable that they will
reverse in the foreseeable future and taxable profits will be
available against which the temporary differences can be
utilised.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient tax profits will be available to allow all
or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised.
Deferred tax is charged or credited to the income statement,
except when it relates to items charged or credited directly to
equity, in which case the deferred tax is also dealt with in
equity.
Share based payments
The Group has applied the requirements of IFRS 2 'Share-Based
Payments'. In accordance with the transitional provisions, IFRS 2
has been applied to all grants of equity instruments after 7
November 2002 that were unvested as of 1 January 2005.
The Group issues equity-settled share-based payments to certain
employees, including share options with non-market based vesting
conditions. Equity-settled share-based payments are measured at
fair value at the date of grant. The fair value determined at the
grant date of the equity-settled share-based payment is expensed on
a straight-line basis over the vesting period, based on the Group's
estimate of shares that will eventually vest.
Fair value is measured by use of a Black-Scholes model for the
majority of share options in issue. The expected life used in the
model has been adjusted, based on management's best estimate, for
the effects of non-transferability, exercise restrictions, and
behavioural considerations.
Financial Instruments
Financial assets and financial liabilities are recognised on the
Group's balance sheet when the Group has become party to the
contractual provisions of the instrument.
Trade and other receivables
Trade receivables are stated at fair value. A provision for
impairment is made where there is objective evidence of impairment
(including customers in financial difficulty or seriously in
default against agreed payment terms). There is no material
variance between carrying and fair values.
Inventories
Inventories are valued at the lower of cost or net realisable
value. The directors carry out an annual valuation of inventories.
The cost of any inventories that are valued below the current
book value is written off to the income statement. Cost is
determined using the average cost basis.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held
at call with banks, other short-term highly liquid investments
with original maturities of three months or less, and bank
overdrafts. Bank overdrafts are shown within borrowings in
current liabilities on the balance sheet.
Trade and other payables
Trade payables are recognised at fair value. There is no material
variance between book and fair values.
Borrowings
Bank loans and overdrafts are recorded initially at their fair
value, net of direct transaction costs and finance charges
are recognised in the income statement over the term of the
instrument. Note 19 provides details of the applicable interest
rates. There is no material variance between book and fair
values.
Equity instruments
Equity instruments are recorded at the proceeds received, net
of direct issue costs.
3. BUSINESS COMBINATIONS
1. On 1 July 2013, Enables IT Group plc acquired the entire issued share capital of The Support
Force Group Ltd for a total consideration of GBP912,674. The Support Force Group Ltd is an
IT Managed Services provider.
Acquisitions Total
------------------------
Book Value Fair Value GBP
Net Assets acquired
Fixed assets 13,037 - 13,037
Trade and other receivables 79,877 - 79,877
Cash and cash equivalents 69,775 - 69,775
Deferred tax liabilities - (65,306) (65,306)
Trade and other payables (470,493) (30,055) (500,548)
----------
Fair Value of net assets acquired (307,804) (95,361) (403,165)
----------- -----------
Goodwill arising on acquisition 1,315,839
Total Assets Acquired 912,674
----------
Satisfied by:
Cash consideration 350,000
Issue of shares 50,000
Deferred consideration 512,674
Total consideration 912,674
----------
Cash flow
Cash consideration 350,000
Cash acquired (69,775)
Net cash outflow from acquisition 280,225
----------
2. On 26 November 2012, the Company acquired 100% of the issued
share capital of Enables IT Limited, which was satisfied by the
issue of 11,798,475 consideration shares. Under IFRS 3, this
transaction has been accounted for as a reverse acquisition.
The cost of the acquisition has been determined from the
perspective of Enables IT Limited. As there was no readily
available fair value of the legal subsidiary's equity instruments
at the date of the acquisition, the total fair value of all the
issued equity instruments of the legal parent, Enables IT Group
plc, before the combination was used as the basis for determining
the combination's cost. Immediately before the acquisition, the
legal parent had 1,179,851,765 ordinary GBP0.0025 shares in issue
with a market value of GBP0.00095 each valuing the combination at
GBP1,120,859.
Enables IT Group plc
Book Value Fair Value GBP
Net Assets acquired
Current assets 937,878 - 937,878
Non current assets 260,,401 - 260,,401
Current liabilities (644,810) - (644,810)
Deferred tax liabilities - - -
Non current liabilities (370,000) (173,071) (543,071)
----------- ----------- ---------------------
Net assets acquired 183,469 (173,071) 10,398
Goodwill arising on acquisition 1,110,461
---------------------
Total consideration 1,120,859
=====================
Satisfied by:
Issue of shares 1,120,859
=====================
4. BUSINESS AND GEOGRAPHICAL SEGMENTS
The segment reporting format is determined to be the geographical segments as the Group's
risk and rates of return are affected predominately by the location of its customers. The
Group has two main geographical segments, namely the USA and Europe.
The segment results for the year ended 30 September 2013 are as follows:
Europe USA Inter-Group trading Continuing Consoli-dated
operations
Year ended 30 September 2013 GBP GBP GBP GBP GBP
Revenue
Segmental revenue - external 4,664,002 2,467,324 - 7,131,326 7,131,326
Segmental revenue - internal 39,400 - (39,400) - -
---------- ---------- -------------------- ------------ ---------------
Total segmental revenue 4,703,402 2,467,324 (39,400) 7,131,326 7,131,326
---------- ---------- -------------------- ------------ ---------------
Operating profit/(loss) 214,293 (27,587) - 186,706 186,706
Restructuring costs (43,318) (43,318)
Redundancy costs (58,600) (58,600)
Amortisation of intangible assets (76,413) (76,413)
Impairment of intangible assets (379,188) (379,188)
Share based payments (1,965) (1,965)
Foreign currency translation (3,530) (3,530)
Finance costs (34,598) (34,598)
Taxation 107,067 107,067
Loss for the year (303,839) (303,839)
============ ===============
Europe USA Inter-Group trading Continuing Consoli-dated
operations
Year ended 30 September 2012
GBP GBP GBP GBP GBP
Revenue
Segmental revenue - external 2,687,502 - - 2,687,502 2,687,502
Segmental revenue - internal - - - - -
---------- ---- -------------------- ------------ --------------
Total segmental revenue 2,687,502 - - 2,687,502 2,687,502
---------- ---- -------------------- ------------ --------------
Operating profit 136,853 - - 136,853 136,853
Acquisition costs re Enables IT (47,159) (47,159)
Finance costs (321) (321)
Taxation (29,186) (29,186)
Profit for the year 60,187 60,187
============ ==============
Revenues from two customers of the Group amounted to more than
10% of the Group's total revenue. The total revenues from these
customers are detailed below, by segment:
2013 2012
GBP GBP
Revenue - Europe 2,204,031 1,906,303
Revenue - USA 803,260 -
---------- ----------
3,007,291 1,906,303
========== ==========
Segmental Analysis of the Balance Sheet
Europe USA Inter-Group balances Continuing operations Consoli-dated
Year ended 30 September GBP GBP GBP GBP GBP
2013
Additions to non-current
assets 1,210,202 42,502 - 1,252,704 1,252,704
============ ============== ===================== ====================== ==============
Depreciation (66,051) (66,010) - (132,061) (132,061)
Impairment (379,188) - - (379,188) (379,188)
Amortisation (76,413) - - (76,413) (76,413)
Segment assets 3,600,031 407,981 - 4,008,012 4,008,012
============ ============== ===================== ====================== ==============
Segment liabilities (2,168,319) (644,086) 465,181 (2,347,224) (2,347,224)
============ ============== ===================== ====================== ==============
Europe USA Inter-Group balances Continuing operations Consoli-dated
GBP GBP GBP GBP GBP
Year ended 30 September 2012
Additions to non-current assets 47,008 - - 47,008 47,008
============ ==== ===================== ====================== ==============
Depreciation (19,757) - - (19,757) (19,757)
Impairment - - - - -
Amortisation - - - - -
Segment assets 928,463 - - 928,463 928,463
============ ==== ===================== ====================== ==============
Segment liabilities (935,764) - (935,764) (935,764)
============ ==== ===================== ====================== ==============
5. EXPENSES AND AUDITOR'S REMUNERATION
The Group's results include charges/(credits) for the following:
2013 2012
GBP GBP
Depreciation on tangible fixed assets owned 104,329 19,757
Depreciation on tangible fixed assets held under finance lease 27,732 -
Auditor's remuneration 48,750 7,000
Operating lease costs 150,633 28,670
============ =======
Exceptional items:
Redundancy costs 58,600 -
Share based payment 1,965 -
Restructuring costs 43,318 -
Committed acquisition costs - 47,159
Amortisation of intangible assets 76,413 -
Impairment of intangible assets 379,188 -
Net loss on foreign currency translation 3,530 -
Total Exceptional items 563,014 47,159
============ =======
The profit attributable to the parent company for the year was GBP429,812 (2012: loss GBP1,846,950).
Auditor's remuneration
The fees charged by the auditors can be further analysed under the following headings for
services rendered:
2013 2012
GBP GBP
Audit services
Fees payable to Company auditor for the audit of parent Company
and consolidated accounts 14,000 5,950
The audit of Company's subsidiaries pursuant to legislation 28,250 -
Non-audit services
Fees payable to the Company's auditor and its associates for
other services
Tax compliance and advisory services 6,500 1,050
48,750 7,000
========== =======
6. EMPLOYEES
The average monthly number of employees of the Group (including directors) during the year
was:
2013 2012
Number Number
Management and administration 15 3
Technicians 59 20
Sales 10 2
84 25
=============== =======================
Staff costs during the year were as follows:
2013 2012
GBP GBP
Wages and salaries 2,814,049 699,950
Social security costs 267,394 63,289
Other pension costs 41,062 12,066
Share based payment expense 1,965 -
--------------- -----------------------
3,124,470 775,305
=============== =======================
7. DIRECTORS
Total emoluments of Directors included in staff costs were as follows:
2013 2012
GBP GBP
Directors' remuneration (including benefits in kind) 546,549 107,566
Company pension fund contributions to money purchase
schemes 15,882 3,465
562,431 111,031
======================== ================
Directors' emoluments split by director are shown in the table below:
2013
Remuneration (inc BIKs) Pension contributions Total
GBP GBP GBP
M Walliss 170,000 4,620 174,620
M Johnson 2,917 - 2,917
M Bradburn 110,000 - 110,000
M Elliott 5,000 - 5,000
M Yeoman 66,500 - 66,500
P J Weller 147,938 11,262 159,200
M B Battles 44,194 - 44,194
546,549 15,882 562,431
========================== ========================== =========
2012
Remuneration (inc BIKs) Pension contributions Total
GBP GBP GBP
M Walliss 65,696 - 65,696
M Bradburn 41,870 3,465 45,335
107,566 3,465 111,031
========================== ========================== =========
Details of Directors' share options are disclosed in note 20.
8. NET FINANCE COSTS
2013 2012
GBP GBP
Finance Expense
Interest on finance lease 6,248 -
Interest on other borrowings 28,350 321
34,598 321
========== =========
9. TAXATION
2013 2012
i) Current tax charge/(credit) GBP GBP
The tax charge/(credit) comprises:
UK taxation
Corporation tax at 23.00% (2012: 20.00%) (2,279) 29,186
Non-UK taxation
Current - -
- -
Deferred taxation
Origination and reversal of temporary differences (104,788) -
---------- ---------
(107,067) 29,186
========== =========
ii) Tax reconciliation
The taxation expense on the loss for the year differs from the amount computed by applying
the corporation tax rate to the loss before tax for the following reasons:
2013 2012
GBP GBP
(Loss)/profit on ordinary activities before tax (410,906) 89,373
----------- --------
Theoretical tax charge at 23% (2012: 20%) (94,508) 17,875
Effects of:
Expenses (including goodwill) not deductible for tax purposes 113,798 10,578
Capital allowances less than depreciation 2,135 (763)
Other timing differences - 1,496
Deferred adjustment on impairment of goodwill (104,788) -
Unrelieved losses and other deductions (29,186) -
Marginal relief 5,482 -
Total tax charge for the year (107,067) 29,186
=========== ========
Factors that may affect future tax charges
At 30 September 2013 the Group has tax losses of approximately GBP453,893 (2012: GBP560,808)
to set against future profits of the same trade.
A deferred tax asset of GBP89,942 (2012: GBP129,954) arising from tax losses in the company
and subsidiary companies was not recognised on the grounds that recovery of these losses is
uncertain.
10. DEFERRED TAXATION
Other short
Purchased term temporary
intangibles differences Total
GBP GBP GBP
At 1 October 2012 (liability) - - -
Deferred tax on intangibles (238,377) (238,377)
Deferred tax on acquisitions (2,795) (2,795)
Amounts credited to the
income statement 104,788 104,788
At 30 September 2013 (133,589) (2,795) (136,384)
================ ================ =============
11. LOSS PER SHARE
Basic
Basic profit/(loss) per share is calculated by dividing the loss for the period attributable
to equity holders of the Group by the weighted average number of ordinary shares in issue
during the year.
The weighted average number of ordinary shares for the year ended 30 September 2013 assumes
that the 11,909,629 ordinary issued in relation to the reverse acquisition of Enables IT Limited
existed for the entire period. The consideration shares have been included since 26 November
2012, the date of the reverse acquisition, and all shares have been included in the computation
based on the weighted average number of days since issue.
Diluted
The weighted average number of the Group's ordinary shares used in the calculation of diluted
earnings per share has been adjusted for the effect of potentially dilutive share options
granted under the Group's share option schemes. (Potentially dilutive share options are options
with an exercise price less than the middle market price at 30 September 2013).
2013 2012
Loss Profit
attributable Weighted attributable
to equity average to equity
holders of Number of Loss holders of Weighted average Profit
the parent shares per share the company Number of shares per share
GBP GBP GBP GBP
Basic EPS calculation (303,839) 14,650,436 (0.02070) 60,187 14,650,436 0.0041
Effect of
dilutive options - -
------------- -------------------
Diluted EPS calculation (303,839) 14,650,436 (0.02070) 60,187 14,650,436 0.0041
Diluted loss per share is calculated using the weighted average
number of shares adjusted to assume the conversion of all dilutive
potential ordinary shares. There are 514,691 options (2012:
985,708) which could potentially dilute earnings per share in the
future. As a loss was recorded for the current and prior year the
issue of potential ordinary shares would have been anti-dilutive in
both years.
Potential dilutive items
2013 2012
Weighted average Weighted average
Number of shares Number of shares
Share options (see note 20) 514,691 985,708
----------------------------- ------------------
514,691 985,708
----------------------------- ------------------
12. PROPERTY, PLANT AND EQUIPMENT
Short leasehold Fixtures, fittings and Office and computer
Group improvements motor vehicles equipment Total
GBP GBP GBP GBP
Cost
At 1 October 2012 - 42,090 187,399 229,489
Assets acquired on
reverse acquisition 408,551 49,498 976,775 1,434,824
Assets acquired on
acquisition of Support
Force - 6,709 11,498 18,207
Additions 339,630 20,234 140,356 500,220
Disposals - (39,913) (118,806) (158,719)
Currency exchange
adjustment 658 - 1,099 1,757
At 30 September 2013 748,839 78,618 1,198,321 2,025,778
------------------------- ------------------------- ------------------------- ----------
At 1 October 2012 - 41,239 116,964 158,203
Assets acquired on
reverse acquisition 222,186 48,066 904,172 1,174,424
Assets acquired on
acquisition of Support - 2,842 2,878 5,720
Provided in the year 51,088 5,078 75,895 132,061
Disposals - (39,913) (118,806) (158,719)
Currency exchange
adjustment (456) 25 1,150 719
At 30 September 2013 272,818 57,337 982,253 1,312,408
------------------------- ------------------------- ------------------------- ----------
Net Book Value
At 30 September 2013 476,021 21,281 216,068 713,370
========================= ========================= ========================= ==========
At 30 September 2012 - 851 70,435 71,286
========================= ========================= ========================= ==========
Included in the total net book value of GBP713,370 is GBP54,264
(2012: GBP78,718) in respect of assets held under hire
Purchase agreements. The categories of these assets are short
leasehold improvements of GBP44,677 and computer and office
equipment of GBP9,587.
The depreciation charged to the Income Statement in the year in
respect of such assets is GBP27,732 (short leasehold improvements
of GBP4,124 and computer and office equipment of GBP23,608) (2012:
GBP51,103).
Short leasehold
Company property Total
GBP GBP
Cost
At 1 October 2012 - -
Additions 331,752 331,752
At 30 September
2013 331,752 331,752
---------------- --------
At 1 October 2012 - -
Provided in the
year 24,777 24,777
At 30 September
2013 24,777 24,777
---------------- --------
Net Book Value
At 30 September
2013 306,975 306,975
================ ========
At 30 September
2012 - -
================ ========
13. goodwill
Goodwill on consolidation
Group Total
GBP GBP
Cost
At 1 October 2012 - -
Additions 1,389,879 1,389,879
At 30 September 2013 1,389,879 1,389,879
-------------------------- -----------
Impairment
At 1 October 2012
- -
Impairment charge - -
At 30 September 2013 - -
-------------------------- -----------
Net book value
At 30 September 2013 1,389,879 1,389,879
========================== ===========
At 30 September 2012 - -
========================== ===========
Group
2013 2012
Enables IT Limited 357,977 -
The Support Force Group Limited 1,031,902 -
---------- -----
1,389,879 -
========== =====
Goodwill and other intangibles relate to the reverse acquisition
of Enables IT Limited and the acquisition of The Support Force
Group Limited.
Impairment testing has been performed over the total balance of
intangible assets which were allocated to the one cash generating
unit (CGU) of the Group, that of the sale of IT managed services
and technologies. The Group tests goodwill annually for impairment
or more frequently if there are indications that goodwill may be
impaired.
The carrying value of intangible assets and goodwill has been
assessed for impairment by reference to the value in use. Value in
use was determined by discounting the future cash flows generated
from the continuing use of the unit. The calculation of value in
use was based on the following key assumptions:
-- cash flow projections from approved budgets to September
2014. Cash flows beyond September 2014 budget are extrapolated
using a 2% per annum growth rate.
-- A pre-tax discount rate of 7% was applied in determining the
recoverable amount of the unit, being the estimated weighted
average cost of capital (WACC) of the unit.
-- The WACC was calculated based on the following:
i) risk free rate of 3%.
ii) market risk premium of 5.5%.
iii) beta equity of 0.52.
iv) debt to equity of 1.89.
Based on the testing, an impairment charge of GBP379,188 was
recognised against the carrying value of certain customers at
Enables IT (UK) Limited and Enables IT Inc. which were considered
to have no future value to the business.
Amortisation and impairment charges are recorded within
exceptional items.
14. INTANGIBLE ASSETS
Customer
Group List Total
GBP GBP
Cost
At 1 October 2012 - -
Additions 1,036,421 1,036,421
At 30 September 2013 1,036,421 1,036,421
---------- ------------
Amortisation
At 1 October 2012 - -
Impairment (379,188) (379,188)
Provided in the year (76,413) (76,413)
---------- ------------
At 30 September 2013 (455,601) (455,601)
Net book value at 30September 2013 580,820 580,820
========== ============
At 30 September 2012 - -
========== ============
Group
2013 2012
GBP GBP
Enables IT Limited 311,080 -
The Support Force Group Limited 269,740 -
-------- -----
580,820 -
======== =====
15. INVESTMENTS
Company Shares in Subsidiary Undertakings
GBP
At 1 October 2012 362,220
Additions 2,033,533
At 30 September 2013 2,395,753
===================================
The Company directly owns 100% of the issued share capital of the following subsidiary undertakings,
which have been included in the consolidated financial statements:
Subsidiary undertaking Country of registration Principal activity
Enables IT (UK) Limited England and Wales IT Support services
Enables IT Limited England and Wales IT Support services
The Support Force Group Limited England and Wales IT Support services
Active Office Services Limited England and Wales IT Support services
Enables (Leatherhead) Limited England and Wales IT Support services
Addax Support Services Limited England and Wales IT Support services
FixIT Worldwide Limited England and Wales IT Support services
PC Medics Group Limited England and Wales Holding Company
Enables IT Inc * USA IT Support services
* Investment held via PC Medics Group Limited
The Company owned 14.78% of the ordinary issued share capital of PD Financial, a company incorporated
in the USA, as at 30 September 2013. PD Financial's principal activity is direct marketing.
PD Financial has now ceased actively trading. In the directors' opinion this investment currently
has no value.
The additions to investments in 2013 relate to the reverse acquisition of Enables IT Limited
at a cost of GBP1,120,859 satisfied by the issue of 11,798, 475 consideration shares and the
acquisition of The Support Force Group Limited at a cost of GBP912,674, satisfied by GBP350,000
in cash, GBP50,000 in ordinary shares in Enables IT Group plc and a further amount of up to
GBP512,674 payable after June 2014.
16. INVENTORIES
Group
2013 2012
GBP GBP
Work in progress - 1,448
Total Inventories - 1,448
======================= ==========
The company had no inventories at 30 September 2013.
17. TRADE AND OTHER RECEIVABLES
Group Company
2013 2012 2013 2012
GBP GBP GBP GBP
Trade receivables 502,074 231,545 - -
Amounts owed by Group undertakings - - 860,193 480,446
VAT recoverable - - 30,384 27,265
Other receivables 34,968 - - -
Prepayments and accrued income 346,382 220,101 53,052 100,074
--------- -------- -------- --------
883,424 451,646 943,629 607,785
========= ======== ======== ========
Included in the Company total above is GBP860,193 (2012:
GBP480,446) relating to debtors due after more than one year.
There is no material variance between carrying and fair
values.
18. TRADE AND OTHER PAYABLES
Group Company
2013 2012 2013 2012
GBP GBP GBP GBP
Trade payables 469,406 242,028 26,374 22,679
Other payables 311,313 104,408 - -
Deferred consideration 512,674 - 512,674 -
Accruals and deferred income 775,513 589,328 32,237 501,071
---------- --------- --------- ---------
2,068,906 935,764 571,285 523,750
========== ========= ========= =========
There is no material variance between carrying and fair values.
19. LOANS AND OTHER BORROWINGS
Group Company
2013 2012 2013 2012
GBP GBP GBP GBP
Bank loans 46,732 - - -
Other loans - - - 355,293
--------- --------- --------- ---------
46,732 - - 355,293
Disclosed within current liabilities 46,732 - - -
--------- --------- --------- ---------
Disclosed as non-current liabilities - - - 355,293
========= ========= ========= =========
The borrowings are repayable as follows:
Group Company
2013 2012 2013 2012
GBP GBP GBP GBP
On demand or within one year 46,732 - - -
In the second to fifth years inclusive - - - 355,293
--------- --------- --------- ---------
46,732 - - 355,293
Less: Amount due for settlement within 12 months (shown under current
liabilities) 46,732 - - -
--------- --------- --------- ---------
Amount due for settlement after 12 months - - - 355,293
========= =========
Bank overdrafts and loans are arranged at floating rates,
exposing the Group to cash flow interest rate risk.
The weighted average interest rates paid were
as follows: 2013 2012
% %
Bank loans 5.2 -
The Group has a bank loan which was acquired with The Support
Force Group Ltd. The loan is from HSBC and the balance outstanding
at 30 September 2013 is GBP46,732.
Sensitivity analysis on the level of interest rates has not
been undertaken as the Directors believe that any increase/decrease
in interest rates during the current and previous year would
have had no material impact on the level of interest payable.
20. NET OBLIGATIONS UNDER FINANCE LEASES
Group Minimum lease payments Present value of lease payments
2013 2012 2013 2012
GBP GBP GBP GBP
Amounts payable under finance lease
Within one year 23,043 - 44,824 -
In the second to fifth years inclusive - - 21,785 -
23,043 - 66,609 -
Less: Future finance charges (2,089) - (4,428) -
Present value of lease obligations 20,954 - 62,181 -
Less: Amount due to settlement within 12 months
(shown under current liabilities) (20,954) - (41,263) -
Amount due to be settled after 12 months - - 20,918 -
Net obligations under finance leases contracts are secured on the assets concerned.
The main finance leases within the Group are:
Desktop PC's and laptops for Enables IT Inc. The lease, which
was for 32 replacement PC's and laptops, commenced in 2012. A
monthly rental of GBP194 is payable over 36 months, with an option
to purchase at a nominal amount after 36 months.
Addition to the "High availability virtual environment" (HAVEN)
for Enables IT Inc. The lease commenced in 2011. A monthly rental
of GBP1,601 is payable over 36 months, with an option to purchase
at a nominal amount after 36 months. The "High availability virtual
environment" contains five servers and storage units that house the
virtual server. Enables IT Inc. offer HAVEN as a remote storage or
virtual server product to its clients.
HVAC Air conditioning system for Enables IT Inc. The lease
commenced in 2009. A monthly rental of GBP1,349 is payable over 60
months, with an option to purchase at a nominal amount after 60
months.
Company
The company has no obligations under finance leases.
21. SHARE CAPITAL
No of Share
shares capital
No. GBP
Issued and fully paid
Enables IT Limited
As at 1 October 2012 and 30 September 2013 1,633 1,633
Enables IT Group Plc
As at 1 October 2012 1,179,851,765 2,949,630
Consolidation 300 for 1 - 1,175,918,926 -
3,932,839 2,949,630
Share split:
Deferred ordinary shares of GBP0.74 each - 2,910,301
Ordinary shares of GBP0.01 each - 39,329
Ordinary Shares issued to acquire Enables IT Limited 11,909,586 119,096
Ordinary Share subscriptions 2,649,676 26,497
At 30 September 2013 18,492,101 3,095,223
Under reverse acquisition accounting principles the share capital presented at 30 September
2013 is that of the legal parent, Enables IT Group plc and the comparative is that of the
legal subsidiary Enables IT Limited.
No. of shares GBP
Reconciliation - Allotted, called up and fully paid
At 1 October 2012 1,633 1,633
Shares issued in the year:
Shares issued by legal parent prior to reverse acquisition 3,932,839 2,949,630
Shares issued by legal parent on reverse acquisition 11,909,586 119,096
Shares issued at GBP0.36 each 2,527,722 25,277
Shares issued at GBP0.41 each 121,954 1,220
Reverse acquisition adjustment (1,633) (1,633)
At 30 September 2013 18,492,101 3,095,223
Share option schemes
On 6 April 2001 the Company adopted an Enterprise Management Incentive Scheme. As set out
below during the year the Company did not grant any options (2012: Nil options). Due to the
value of these options or the tax status of the recipients, none of these options will be
treated as if they were issued under an unapproved share option scheme. No provision is made
for National Insurance on the options, which are exercisable at the balance sheet date due
to a joint election in place between the Company and the individual under which the individual
has agreed to take on the Company's National Insurance liability.
Details of the number of share options and the weighted average exercise price (WAEP) outstanding
during the year are as follows:
2013 2012
Number WAEP Pence Number WAEP Pence
Outstanding at the beginning of the year 652,376 189p 955,354 189p
Granted during the year - - - -
Exercised during the year - - - -
Lapsed during the year (137,685) 195p (302,978) 183p
Outstanding at the end of the year 514,691 186p 652,376 177p
Exercisable at the end of the year 514,691 186p 652,376 177p
The weighted average share price at the date of exercise for share options exercised during
the year was nil (2012: nil).
At 30 September 2013 the following options were granted but not exercised. No options were
granted to any of the directors of the Company.
i) 147,383 options at 180p per share exercisable between 2/8/04 and 1/2/14.
ii) 8,197 options at 183p per share exercisable between 1/7/04 and 1/2/14.
iii) 9,896 options at 204p per share exercisable between 9/12/04 and 8/6/14.
iv) 4,587 options at 327p per share exercisable between 1/2/05 and 1/8/14.
v) 37,884 options at 225p per share exercisable between 1/10/05 and 17/5/15.
vi) 7,936 options at 189p per share exercisable between 29/9/05 and 27/4/14.
vii) 123,508 options at 177p per share exercisable between 18/11/05 and 17/5/15.
viii) 8,000 options at 147p per share exercisable between 31/5/06 and 31/5/15.
ix) 17,241 options at 174p per share exercisable between 13/10/06 and 12/4/16.
x) 12,000 options at 189p per share exercisable between 16/4/07 and 15/10/16.
xi) 1,158 options at 225p per share exercisable between 16/4/07 and 15/10/16.
xii) 1,220 options at 492p per share exercisable between 1/8/07 and 31/1/17.
xiii) 17,000 options at 195p per share exercisable between 3/9/09 and 8/12/18.
xiv) 11,111 options at 243p per share exercisable between 17/2/10 and 16/2/19.
xv) 1,667 options at 120p per share exercisable between 15/6/11 and 14/6/20.
The options outstanding at the end of the year have a range of
exercise prices from 120p to 492p. The estimate fair values of
options granted since 30 July 2003 were calculated using the
Black-Scholes option pricing model with the following inputs and
subsequent assumptions:
Grant date 02 Feb 04 02 Feb 04 09 Jun 04 02 Aug 04 28 Apr 05 18 May 05
Share price at grant date 1.5900 1.5900 1.7700 2.8500 1.6500 1.4250
Exercise price 1.8000 1.8000 2.0400 3.2700 1.8900 2.2500
Number of employees 7 7 6 3 3 40
Shares under option 147,383 19,126 89,869 4,587 7,937 37,884
Vesting period (years) 0.5 0.5 0.5 0.5 0.5 3
Expected volatility 85% 85% 85% 85% 78% 78%
Option life (years) 10 10 10 10 10 10
Expected life (years) 10 10 10 10 10 10
Risk free rates 4.60% 4.60% 4.60% 4.60% 4.60% 4.60%
Expected dividends - - - - - -
Fair value per option 1.0200 1.0200 1.1400 1.8300 1.0200 0.8400
Grant date 18 May 05 31 May 05 13 Apr 06 16 Oct 06 16 Oct 06 16 Oct 06
Share price at grant date 1.4250 1.2750 1.5000 1.8750 1.8750 1.8900
Exercise price 1.7700 1.4700 1.7400 1.8750 1.8750 2.2500
Number of employees 6 9 3 3 2 1
Shares under option 123,509 8,000 17,241 8,000 4,000 1,158
Vesting period (years) 0.5 3 0.5 0.5 3 3
Expected volatility 78% 78% 78% 78% 79% 77%
Option life (years) 10 10 10 10 10 10
Expected life (years) 10 10 10 10 10 10
Risk free rates 4.60% 4.60% 4.60% 4.60% 4.60% 4.60%
Expected dividends - - - - - -
Fair value per option 0.8700 0.7800 0.9300 1.1700 1.1700 1.1400
Grant date 01 Feb 07 09 Dec 08 17 Feb 09 15 Jun 10
Share price at grant date 4.9200 1.6800 2.4300 0.9000
Exercise price 4.9200 1.9500 2.4300 1.2000
Number of employees 2 7 3 7
Shares under option 1,220 17,000 11,111 16,667
Vesting period (years) 3 3 3 3
Expected volatility 79% 66% 65% 65%
Option life (years) 10 10 10 10
Expected life (years) 10 10 10 10
Risk free rates 4.60% 4.50% 4.50% 2.50%
Expected dividends - - - -
Fair value per option 3.0900 0.9300 1.3800 0.4500
No other conditions were included in the fair value
calculations.
The expected volatility is based on historical volatility over
the expected life period. The expected life of the average expected
period to exercise based on historical experience. The risk free
rate of return is the yield on zero-coupon UK government bonds of a
term consistent with the assumed option life.
On 26 November 2012, the 1,179,851,765 issued ordinary shares of
GBP0.01 each in the capital of the Company were consolidated into
new ordinary shares of GBP0.75 each in the capital of the Company
on the basis of 1 consolidated ordinary share for every 300
existing ordinary shares.
22. RESERVES
Share premium Retained Foreign Other reserve Merger Reverse Share options
account earnings currency reserve acquisition reserve
reserves reserve
GBP GBP GBP GBP GBP GBP GBP
Group
Balance at 1
October 2012 - (9,222) - - - - -
Legal parent
reserves
prior to
reverse
acquisition 5,128,950 (114,098) 38,876 972,874
Currency
exchange - - 2,410 - - - -
Shares issued
by the legal
parent on
reverse
acquisition - - - - 1,001,763 - -
Premium in
respect of
shares
issued in
the year 933,483 - - - - - -
Cost of
fundraising (71,649) - - - - - -
Repayment of
convertible
loan notes - - - (38,876) - -
Reverse
acquisition
adjustment - - - - - (8,977,072) -
Share based
payment
charge 1,965
Retained loss
for the year - (303,839) - - - - -
As at 30
September
2013 5,990,784 (313,061) (111,688) - 1,001,763 (8,977,072) 974,839
============= =============
Share premium account Retained earnings Other reserve Share options reserve Merger reserve
GBP GBP GBP GBP GBP
Company
Balance at 1 October
2012 5,128,950 (8,265,867) 38,876 972,874 -
Reverse acquisition
adjustment 1,001,763
Currency exchange
Premium in respect of
shares issued in the
year 933,483 - - - -
Share based payment
charge - - - 1,965 -
Cost of fundraising (71,649)
Repayment of
convertible loan
notes - - (38,876) - -
Retained profit for
the year - 429,812 - - -
As at 30 September
2013 5,990,784 (7,836,055) - 974,839 1,001,763
23. COMMITMENTS UNDER OPERATING LEASES
Future minimum operating lease payments for the Group were as follows:
2013 2012
GBP GBP
Land and buildings
In one year or less - -
Between one and five years - -
Over five years 178,852 -
178,852 -
The main operating leases within the Group are:
4 Industrial Parkway, Maine
The property is the subject of a 10 year lease, commencing in
2009. If Enables IT Inc. is not in arrears, the lease will be
automatically renewed for 2 further periods, each of 5 years.
Enables IT Inc. can terminate the lease by giving the landlord
notice of 180 days. The rent is currently GBP106,652 per annum,
increasing by 2.5% annually. If the rent payment is late, the
landlord charges a late payment fee of 5% of the rent.
Unit 5, Mole Business Park, Randalls Road, Leatherhead,
Surrey
The Group entered into a 10 year lease commencing June 2012 for
the property at Unit 5, Mole Business Park, Randalls Road,
Leatherhead, Surrey KT22 7BA. The rent/service charge was GBP31,726
per annum up to July 2013 and increased to GBP57,976
thereafter.
The Group terminated the leases at 120 Moorgate, London and
Station Square, Dornoch, Sutherland, Scotland during the year.
There were no liabilities in respect of these properties at 30
September 2013.
24. CAPITAL COMMITMENTS
As at 30 September 2013, the Group and Company had no capital commitments (2012: GBP270,000).
25. POST BALANCE SHEET EVENTS
On 1 December 2013, the company acquired the assets and business
of Know Technology LLC, a company based in the USA for GBP935,013
($1,500,000), which was satisfied by a cash payment of GBP621,041
and the issue of 738,757 Ordinary shares.
26. RELATED PARTY TRANSACTIONS
Group
The key management personnel of the Group comprise members of the Enables IT Group plc Board
of Directors and the Managing Directors of the Group's subsidiary undertakings.
The key management personnel compensation is as follows:
2013 2012
GBP GBP
Remuneration including benefits in kind and pension 383,871 -
Share based payments 1,965 -
385,836 -
Company
At 30 September 2013 the following amounts were due from/(to) related companies:
2013 2012
GBP GBP
Enables IT (UK) Limited 380,359 -
Enables IT Limited (97,994) -
Enables IT Inc 460,547 -
The Support Force Group Limited 100,000 -
PC Medics Group Limited 17,281 -
27. CONTROLLING PARTY
The Directors consider there to be no ultimate controlling party.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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Enables IT (LSE:EIT)
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