REG - AdvancedAdvT Limited - Interim Results for 6 months to 31 August 2024
14/11/2024 07:00
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RNS Number : 1615M AdvancedAdvT Limited 14 November 2024
14 November 2024
AdvancedAdvT Limited
Interim results - strong revenue and EBITDA growth
AdvancedAdvT Limited (LSE: ADVT, "AdvT", the "Group"), the international
software solutions provider for business, compliance, and resource management,
has published its unaudited interim results for the six months to 31 August
2024, following the Group's change of year end to 28 February.
Financial performance
• Revenue reported from continuing operations up 31% to £19.9m (6 months to
December 2023: £15.1m(1))
• Recurring revenue represented 80% of total revenues (6 months to December
2023: 76%)
• Adjusted EBITDA grew by 8% to £4.0m - ahead of management expectations (6
months to December 2023: £3.7m1)
• Pre-tax profit increased by 147% to £8.3m2 (6 months to December 2023:
£3.4m(1))
• Reported EPS up 150% to 5.89p (6 months to December 2023: 2.36p)
• Cash of £83.3m at 31 August 2024 (February 2024: £82.1m). In addition, the
Group holds a 9.8% stake in M&C Saatchi Plc valued at £25.1m on 31 August
2024.
Proforma financial performance
• Proforma revenue growth of 16.6% and Adjusted EBITDA growth of 53.7%3 on the
initial 4 acquired businesses (6months to 31 August 2024 vs. 31 August 2023) -
driven by the adoption of best practices and securing a number of multi-year
contract renewals with significantly enhanced contract values
Highlights
• Acquisition of Celaton, provider AI based process automation, on 1 July 2024
for £4.8m net of cash
• Continued focus on implementing best practices within acquired businesses with
significant progress on;
• Transition and integration activities
• Adoption of new Go to Market ("GTM") strategy leading to an increased
pipeline of opportunities
• Developing a high-performance culture
Vin Murria, AdvancedAdvT's Executive Chairperson, said:
"In the short time since we acquired the Capita businesses, their operational
performance has improved markedly with, a number of multi-year million pound
contracts secured with proforma revenue growth of 16.6% and EBITDA growth of
53.7%(3).
"We are pleased to have established a core software platform for developing
the Group further and continue to identify and prioritise the best potential
acquisition opportunities to complement and broaden the existing product
range. The acquisition of Celaton, a machine learning automation platform, in
July is a prime example of this strategy and has already resulted in sales to
the existing customer base.
"We remain optimistic about the opportunities for organic and acquisitive
growth ahead."
1 6 months to December 2023 included the first 5 months of trading from the original 4 acquisitions and excluded AIM plc running costs which commenced in January 2024
2 Pre-tax profit includes £4.26m increase in the fair value of the investment
in M&C Saatchi plc
3 Unaudited proforma results for the 6 months to 31 August 2024 and 6 months
to 31 August 2023 for the 4 acquired businesses on 31 July 2023 (excluding
Celaton that was recently acquired on 1 July 2024)
Enquiries:
AdvancedAdvT Limited
Vin Murria, Chairperson c/o Meare Consulting
Gavin Hugill, Chief Financial Officer
Singer Capital Markets (Nominated Adviser and Broker) Tel: 020 7496 3000
Philip Davies / Sam Butcher
KK Advisory (Investor Relations) Tel: 020 7039 1901
Kam Bansil
Meare Consulting
Adrian Duffield Tel: 07990 858548
Note to Editors
AdvancedAdvT Limited (AdvT) provides software solutions and platforms across
two business transformational areas: business solutions & healthcare
compliance, and human capital management.
The Group's operations are IBSS (financial management software), CHKS (AI
based healthcare intelligence compliance and accreditation software), Retain
(global resource planning and talent management software), WFM (workforce
management software provider) and Celaton, a machine-learning AI based
intelligent process automation ("IPA") platform (inSTREAM).
AdvT is an agent for change. The Group enables the delivery of Artificial
Intelligence ("AI"), data analytics and business intelligence, all of which
are key future drivers for growth in these sectors where long term
digitisation trends are set to transform the workplace for professionals.
AdvT is developing both organically and through acquisitions, by expanding its
presence across adjacent markets, geographical boundaries and digital sectors.
Interim Report
AdvT made significantly good progress in the six months to 31 August 2024.
The Group focused on implementing operational and financial best practice in
the acquired businesses, which resulted in a significant improvement in the
financial performance of the initial four acquisitions - revenue up 16.6% and
EBITDA growth of 53.7%4.
In July 2024, the Group acquired Celaton, a machine-learning AI based
intelligent process automation ("IPA") platform ("inSTREAM"). This business is
complementary to the Group, with our public sector clients expected to be the
primary beneficiaries with three clients already signing up to the inSTREAM
platform
Strategic overview
The Group's strategy is centred around backing sectors characterised by long
term AI, digital transformation, data analytics and business intelligence
trends that are in the early stages of adoption and set to transform the
professional workplace for the next few decades. Embracing a long-term
perspective, the aim is to build a lasting and thriving business.
M&A continues to be a core part of the Group's strategy and there has been
a notable increase in inbound opportunities alongside the outbound
opportunities we identify. The Board will continue to evaluate these against
its acquisition criteria.
The Group continues to hold a 9.8% stake in M&C Saatchi plc.
Current trading and outlook
The year-on-year proforma performance provides a strong foundation on which to
develop and execute both existing and future revenue opportunities. Building
on this momentum, we are well positioned to leverage our expertise in digital
and cloud software and services to deliver added value for our clients.
Current trading remains strong and aligned with our strategic objectives and
Board's expectations. We anticipate continued growth as we capitalise on our
commitment to client engagement, expertise in digital software solutions, and
our recent inclusion on the G-Cloud14 procurement framework. Looking ahead, we
are confident that our focused approach will enable sustained progress and
deliver strong results across our expanding client base.
Operational review
Our business solutions and healthcare compliance operations, comprising IB
Software and Solutions (Ireland) Limited and Integrated Business Software and
Solutions Limited (together "IBSS"), CHKS Limited ("CHKS") and Celaton Limited
("Celaton") have placed heightened emphasis on the Go To Market strategy and
the clients evolving needs in order to maximise the value of the software and
digital solutions delivered.
Within the human capital management operations, Retain International Software
Limited and Retain International Software USA LLC (together "Retain"), and
Workforce Management Software Limited ("WFM"), successfully secured and
increased the value of a number of multi-year contracts and onboarded several
new clients to its SaaS platform. Additionally, both continue to invest in
their roadmap and product strategy.
As anticipated, the Group is seeing positive digitalisation trends across both
business solutions and healthcare compliance operations. The recently launched
automated clinical coding solution continues to deliver value and to attract
further opportunities. Client demand for the new Centros cloud platform
remains strong, with over 60 of the clients either live or in the process of
migrating to it. Additionally, the Ireland-based operation is experiencing
growing demand for digital services and solutions.
Human capital management operations are also experiencing strong client demand
as both new and existing clients increasingly adopt the cloud-based resources
platform. This shift has resulted in a 92% increase in annual recurring
revenue ("ARR") on the SaaS solution over the 12 months ending 31 August 2024.
The platform plays a crucial role in streamlining and standardising best
practice processes, enabling broader adoption of AI capabilities, and is
supported by an adaptability engine in the latest releases.
Financial review
For the six months ended 31 August 2024 continuing operations generated
revenues of £19.9 million from the acquired businesses5 (6 months to December
2023: £15.1m6). Recurring revenue from continuing operations as a proportion
of total revenue was 80% during the period (6 months to December 2023 76%).
This revenue increase and improved revenue ratio were driven by the successful
renegotiation of a number of multi-year contracts, incorporating enhanced
pricing, and a focus on a cloud strategy with its clients. Additionally,
Celaton contributed £0.6m in revenue within the two months following its
acquisition.
Adjusted EBITDA from continuing operations, which is a key underlying
measurement of the Group, was £4.0 million for the period (6 months to
December 2023: £3.7m7). The table below reconciles to the Condensed
Consolidated Statement of Comprehensive Income and is accompanied by further
detail in notes 4 and 5.
Summary results from continuing operations; 6 months to 31 August 2024 6 months to 31 December 2023
£000s £000s
Revenue 19,868 15,147
EBITDA 3,508 1,851
Acquisition expenses, stamp duties and relisting expenses 504 1,848
Adjusted EBITDA 4,012 3,699
Depreciation (38) (57)
Adjusted operating profit 3,974 3,642
Amortisation of acquired intangible assets (1,471) (1,134)
Acquisition expenses, stamp duties and relisting expenses (504) (1,848)
Fair value gain on Financial Assets 4,260 960
Operating profit 6,259 1,620
Based on its cash reserves, the Group had a net finance income of £1.9m (6
months to December 2023: £1.8m) and profit before tax from continuing
operations of £8.3m (6 months to December 2023: £3.4m).
As we continue to standardise, optimise and integrate the acquired businesses
we believe this will lead to improved margins, albeit initially offset by the
activities and related costs of decoupling from the Capita plc systems and
services.
Net cash was £83.3 million at 31 August 2024 (29 February 2024: £82.1m).
Adjusted Operating Cashflow was £4.7 million representing 117% cash
conversion of adjusted EBITDA (6 months to December 2023: £4.3m and 116%(5)).
Free cash flow, as presented below, from continuing activities was £6.0
million (6 months to December 2023: £4.4m(5)).
Basic and diluted EPS was 5.89pence (December 2023: 2.36pence). The Board is
not recommending the payment of an interim dividend.
Free cashflow from continuing activities 6 months to 31 August 2024 6 months to 31 December 2023
£000s £000s
Operating profit from continuing activities 6,259 1,620
Fair value on financial assets (4,260) (960)
Depreciation 38 57
Acquisition expenses, stamp duties and relisting expenses 504 1,848
Amortisation and impairment of intangible assets 1,471 1,134
Adjusted EBITDA 4,012 3,699
Unrealised Exchange losses (77) (1)
Decrease in working capital 744 1,357
Capex - (775)
Adjusted operating cashflow 4,679 4,280
Cash conversion 117% 116%
Acquisition expenses, stamp duties and relisting expenses (504) (1,848)
Interest and dividend income 1,857 1,994
Free cashflow 6,032 4,426
The Group has an investment in M&C Saatchi plc. This Level 1 Financial
asset is held at fair value through profit or loss (FVTPL) and was valued at
£25.1 million at 31 August 2024 (£20.8 million at 29 February 2024). An
increase of £4.26 million in fair value was recognised in the Condensed
Consolidated Statement of Comprehensive Income during the period.
On 1 July 2024, the Group acquired Celaton, the operator of an intelligent
document processing platform inSTREAM, for cash consideration of £4.8 million
net of cash acquired of £1.7m.
Results
The Group's profit after taxation for the six months to 31 August 2024 was
£7.9 million (31 December 2023: £3.1 million). The Group held cash and cash
equivalents at 31 August 2024 of £83.3 million (31 December 2023: £78.7
million).
Dividend policy
The Directors are not currently recommending a dividend. The Board intends to
evaluate the Group's dividend policy following significant deployment of the
raised capital and will only commence the payment of dividends when it becomes
commercially prudent to do so.
4 Unaudited proforma results for the 6 months to 31 August 2024 and 6 months
to 31 August 2023 for the 4 acquired businesses on 31 July 2023 (excluding
Celaton that was only recently acquired on 1 July 2024)
5 This includes two months of trading from Celaton (acquired 1(st) July 2024)
6 6 months to December 2023 included 5 months of trading from the original 4
acquisitions
7 6 months to December 2023 included 5 months of trading from the original 4
acquisitions and excluded AIM plc running costs which commenced in January
2024
Condensed Consolidated Statement of Comprehensive Income
Six months Six months
ended
ended
31 August 31 December
2024 2023
Note Unaudited Unaudited
£000s £000s
Revenue 5 19,868 15,147
Cost of sales (6,967) (6,065)
Gross Profit 12,901 9,082
Administrative expenses (9,393) (7,231)
Depreciation (38) (57)
Amortisation 10 (1,471) (1,134)
Changes in fair value on financial assets 11 4,260 960
Operating profit 7 6,259 1,620
Dividend received 192 -
Net finance income 1,875 1,754
Profit before tax for continuing operations 8,326 3,374
Taxation 8 (475) (284)
Profit for the period from continuing operations 7,851 3,090
Discontinued Operations
Profit for period from discontinued operations 22 - 48
Total comprehensive profit for the period attributable to owners of the parent 7,851 3,138
Other comprehensive income
Items that cannot subsequently be reclassified to profit and loss
Share-based payment expense (55) (54)
Translation - -
Total comprehensive income for the period attributable to owners of the parent 7,796 3,084
Profit per ordinary share (pence)
Basic 9 5.89 2.36
Diluted 9 5.86 2.34
Other than the discontinued operations included above and detailed in note 22,
the Group's activities derive from continuing operations.
The notes on form an integral part of these Interim Results.
Condensed Consolidated Statement of Financial Position
As at As at
31 August 29 February
2024 2024
Note Unaudited Audited
Non-current assets £000s £000s
Intangible assets 10 19,803 18,987
Goodwill 10 24,715 22,145
Property, plant and equipment 39 70
Contract fulfilment assets 484 775
Deferred tax 712 1,170
Financial asset at fair value through profit or loss 11 25,080 20,820
70,833 63,967
Current assets
Inventories 68 81
Trade and other receivables 12 11,349 7,067
Cash and cash equivalents 13 83,350 82,111
Total current assets 94,767 89,259
Total assets 165,600 153,226
Equity and liabilities
Sponsor shares 18 - -
Ordinary shares 18 131,166 131,166
Warrant reserve 18 98 98
Warrant cancellation reserve 18 350 350
Share-based payment reserve 18 528 473
Translation reserve (72) 5
Retained earnings/(accumulated losses) 5,970 (1,826)
Total equity 138,040 130,266
Liabilities
Current liabilities
Trade and other payables 14 5,390 5,036
Corporation taxation 535 248
Contract liabilities 15 15,407 11,051
Total current liabilities 21,332 16,335
Non-current liabilities
Deferred tax liability 4,060 3,769
Contract liabilities 15 490 814
Provisions 16 1,678 2,042
Total non-current liabilities 6,228 6,625
Total equity and liabilities 165,600 153,226
Condensed Consolidated Statement of Changes in Equity
Sponsor share Ordinary shares Warrant reserves Warrant cancellation Reserve Share based payment reserve Translation Reserve £000s Accumulated losses Total equity
£000s £000s £000s £000s £000s £000s £000s
Balance as at 30 June 2023 (Audited) - 131,166 98 350 401 - (8,829) 123,186
Total profit for the period attributable to owners of the parent - - - - - - 3,084 3,084
Other comprehensive income
Share-based payment expense - - - - 54 - - 54
Balance as at 31 December 2023 (Unaudited) - 131,166 98 350 455 - (5,745) 126,324
Total profit for the period attributable to owners of the parent - - - - - - 3,919 3,919
Other comprehensive income
Share-based payment expense - - - - 18 - - 18
Translation - - - - - 5 - 5
Balance as at 29 February 2024 (audited) - 131,166 98 350 473 5 (1,826) 130,266
Total profit for the period attributable to owners of the parent - - - - - - 7,851 7,851
Other comprehensive income
Share-based payment expense - - - - 55 - (55) -
Translation - - - - - (77) - (77)
Balance as at 31 August 2024 (Unaudited) - 131,166 98 350 528 (72) 5,970 138,040
The notes form an integral part of these Interim Results.
Condensed Consolidated Statement of Cash Flows
Six months Six months
ended ended
31 August 31 December
2024 2023
Note Unaudited Unaudited
Cashflow from operating activities £000s £000s
Profit before taxation for the period 8,326 3,422
Adjustments for:
Depreciation 38 57
Amortisation 10 1,471 1,134
Interest income (1,875) (1,752)
Fair value adjustment on Investment 11 (4,260) (960)
Dividend (192) -
Unrealised exchange gains (77) (1)
Working capital adjustments:
Increase in trade and other receivables and Prepayments (3,150) (665)
Decrease/(Increase) in contractual fulfilment assets 285 (74)
Increase in trade and other payables 3,609 2,223
Net cash flows generated from operating activities 4,175 3,384
Cash flow used in investing activities
Purchase of property, plant and equipment - (5)
Development of intangible assets 10 - (886)
Acquisition of subsidiaries, net of cash acquired 17 (4,793) (30,443)
Net cash flow used in investing activities (4,793) (31,334)
Financing activities
Dividend 192 -
Interest income 1,665 1,992
Net cash flows from financing activities 1,857 1,992
Net increase/(decrease) in cash and cash equivalents 1,239 (25,958)
Cash and cash equivalents at the beginning of the period 82,111 104,696
Cash and cash equivalents at the end of the period 13 83,350 78,738
The notes form an integral part of these Interim Results.
Notes to the Condensed Consolidated Financial Statements
1. GENERAL INFORMATION
AdvancedAdvT Limited was incorporated on 31 July 2020 in the British Virgin
Islands ("BVI") as a BVI business company (registered number 2040954) under
the BVI Business Company Act, 2004. The Company was admitted to the AIM Market
of the London Stock Exchange on 10 January 2024 and has its registered address
at Commerce House, Wickhams Cay 1, P.O. Box 3140, Road Town, Tortola, British
Virgin Islands VG1110 and UK establishment address at 11 Buckingham Street,
London WC2N 6DF.
The Company has acquired five software and services businesses. The Group
provides software solutions and platforms across two business transformational
areas: business solutions & healthcare compliance, and human capital
management. The Group's operations are IBSS (financial management software),
CHKS (AI based healthcare intelligence compliance and accreditation software),
Retain (global resource planning and talent management software), WFM
(workforce management software provider) and Celaton (Intelligent Process
Automation software solutions). The Company is an agent for change, enabling
the delivery of Artificial Intelligence ("AI"), data analytics and business
intelligence, all of which are key future drivers for growth in these sectors
where long term digitisation trends are set to transform the workplace for
professionals.
The Group is developing both organically and through acquisitions, by
expanding its presence across adjacent markets, geographical boundaries and
digital sectors.
The Company was listed on the Main Market of the London Stock Exchange from 4
December 2020, the acquisitions on 31 July 2023 constituted a reverse takeover
and shares were therefore suspended from 8 June 2023, the Company was
subsequently admitted to AIM from 10 January 2024.
The accounting reference date was changed from 30 June to 29 February (or 28
February, as the case may be). resulting in a short accounting period of 8
months, with the results of the acquired entities being included for 7 months
from the date of acquisition. A shorter accounting period was selected to
align with Admission to AIM.
The members of the Group's accounting reference date have also been changed to
29 February (or 28 February, as the case may be).
The Company's wholly-owned subsidiaries are set out in note 11, together with
the Company, the "Group".
2. MATERIAL ACCOUNTING POLICIES
(a) Basis of preparation
The Interim Results have been prepared in accordance with the IAS 34 Interim
Financial Reporting and are presented on a condensed basis.
The Interim Report does not include all the notes of the type normally
included in an annual financial report. The Interim Report should be read in
conjunction with the annual consolidated financial statements for the year
ended 29 February 2024, which were prepared in accordance with International
Accounting Standards as adopted by the EU ("IFRS"), and the public
announcements made by the Company during the interim period, in particular the
Admission Document dated 8 January 2024 which are available on the Company's
website.
The principal accounting policies adopted in the preparation of the Interim
Results are set out below and have been consistently applied throughout the
period presented.
(b) Going concern
The Group meets its day-to-day working capital requirements from the positive
cash flows generated by its trading activities and its available cash
resources. The information in these Interim Results has been prepared on a
going concern basis, which assumes that the Group will continue to be able to
meet its liabilities as they fall due within the next 12 months from the date
of approval.
The Directors confirm that they have re-assessed the principal risks and
reviewed current performance and forecasts, combined with expenditure
commitments and including capital expenditure. The Group's forecasts
demonstrate it should generate profits and cash in the year ending 28 February
2025 and beyond and the Directors are satisfied that the Group has sufficient
cash reserves to enable it to meet its obligations as they fall due for a
period of at least 12 months from the date of signing these financial
statements.
(c) New standards and amendments to International Financial Reporting
Standards
Standards, amendments and interpretation effective and adopted by the Group
IFRSs applicable to the Interim Results of the Group for the period from 1
March 2024 to 31 August 2024 have been applied.
Standards issued but not yet effective
The following standards are issued but not applicable for the six months to 31
August 2024. The Group intends to adopt these standards, if applicable, when,
and as they become effective. It is not expected that these standards will
have a material impact on the Group.
Standard Effective date
Supplier Finance Arrangements - Amendments to IAS 7 and IFRS 7; 1 January 2024
Non-Current Liabilities with Covenants (Amendments to IAS 1) 1 January 2024
Amendments to IAS 21- Effects of Changes in Foreign Exchange Rates: Lack of 1 January 2025
Exchangeability*
Amendments to classification and measurement requirements for financial 1 January 2026
instruments (Amendments to IFRS 9 and IFRS 7)
Presentation and Disclosure in Financial Statements (IFRS 18) 1 January 2027
* subject to EU endorsement
(d) Basis of consolidation
Subsidiaries are entities controlled by the Company. Control exists when the
Company is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power
over the entity.
The Consolidated Financial Statements incorporate the results of business
combinations using the acquisition method. In the Statement of Financial
Position, the acquiree's identifiable assets and liabilities are initially
recognised at their fair values at the acquisition date. The results of
acquired operations are included in the Condensed Consolidated Statement of
Comprehensive Income from the date on which control is obtained. They are
deconsolidated from the date on which control ceases.
Intragroup balances, and any gains and losses or income and expenses arising
from intragroup transactions, are eliminated in preparing the Interim Results.
(e) Revenue recognition
The revenue and profits recognised in any period are based on the delivery of
performance obligations and an assessment of when control is transferred to
the customer and revenue has been earned.
In determining the amount of revenue and profits to record, and related
balance sheet items (such as contractual liabilities, contract fulfilment
assets, trade receivables and accrued income) to recognise in the period,
management is required to form a number of key judgements and assumptions.
These include an assessment of the costs the Group incurs to deliver the
contractual commitments and whether such costs should be expensed as incurred
or capitalised. These judgements are inherently subjective and may cover
future events such as the achievement of contractual milestones, performance
KPIs and planned cost savings. In addition, key assumptions are made
concerning contract extensions and amendments, as well as opportunities to use
the contract developed systems and technologies on other similar projects.
Revenue is recognised either when the performance obligation in the contract
has been performed (so 'point in time' recognition) or 'over time' as control
of the performance obligation is transferred to the customer.
In determining the transaction price, this includes, but is not limited to,
estimating variable consideration, adjusting the consideration for the effects
of the time value of money and measuring non-cash consideration.
The Group determines if the arrangement with a customer creates enforceable
rights and obligations. The Group enters into contracts which contain
extension periods, where either the customer or both parties can choose to
extend the contract or there is an automatic annual renewal, and/or
termination clauses that could impact the actual duration of the contract.
Judgement is applied to assess the impact that these clauses have when
determining the appropriate contract term. The term of the contract impacts
both the period over which revenue from performance obligations may be
recognised and the period over which contract fulfilment assets and
capitalised costs to obtain a contract are expensed.
For contracts with multiple components to be delivered, management applies
judgement to consider whether those promised goods and services are (i)
distinct - to be accounted for as separate performance obligations; (ii) not
distinct - to be combined with other promised goods or services until a bundle
is identified that is distinct or (iii) part of a series of distinct goods and
services that are substantially the same and have the same pattern of transfer
to the customer.
At contract inception the total transaction price is estimated, being the
amount to which the Group expects to be entitled and has rights to under the
present contract. This includes an assessment of any variable consideration
where the Group's performance may result in additional revenues based on the
achievement of agreed KPIs. Such amounts are only included based on the
expected value or the most likely outcome method, and only to the extent that
it is highly probable that no revenue reversal will occur.
The transaction price does not include estimates of consideration resulting
from change orders for additional goods and services unless these are agreed.
Transactional (point in time) contracts
The Group delivers a range of goods and services in all reportable segments
that are transactional services for which revenue is recognised at the point
in time when control of the goods or services has transferred to the customer.
This may be at the point of physical delivery of goods and acceptance by a
customer or when the customer obtains control of an asset or service in a
contract with customer-specified acceptance criteria.
The nature of contracts or performance obligations categorised within this
revenue type is diverse and includes (i) fees received in relation to delivery
of professional services; (ii) passive software licence agreements; (iii)
provision of IT hardware goods; and (iv) commission received as agent from the
sale of third party software.
Performance obligations over time contracts
Passive software licences are licences which have significant stand-alone
functionality and the contract does not require, and the customer does not
reasonably expect, the Group to undertake activities that significantly affect
the licence code. Any ongoing maintenance or support services for passive
licences are typically separate performance obligations.
Software licences delivered by the Group can either be right to access
('active') or right to use ('passive') licences. Active licences are licences
which require continuous upgrade and updates for the software to remain
useful, often as part of a subscription or SaaS obligation. All other licences
are treated as passive licences and recognised upon delivery. The assessment
of whether a licence is active or passive involves judgement. The key
determinant of whether a licence is active is whether the Group is required to
undertake activities that significantly affect the licensed intellectual
property and code (or the customer has a reasonable expectation that it will
do so), so that the customer is, therefore, exposed to positive or negative
impacts resulting from those changes.
The Group considers for each contract that includes a separate licence
performance obligation all the facts and circumstances in determining whether
the licence revenue is recognised over time or at a point in time from the go
live date of the licence.
Consultancy, training and upgrades are typically assessed as a service
contract to provide distinct service work based on clear statements of work,
demonstrating separately identifiable obligations and standalone benefit to
the customer. The services are contracted for on either a time and materials
or fixed priced basis. Time and materials are recognised in the period in
which it is performed. Fixed price work is recognised on a percentage
completion basis of the remaining unbilled milestones. The percentage
completed is determined with reference to time incurred to date and time
required to complete the agreed works.
Support and maintenance, hosting and managed service revenue is typically
recognised over the period of the contract as the customer simultaneously
receives and consumes the benefits of the services provided by the Group
consistently over the contract term.
Contract modifications
The Group's contracts are often amended for changes in contract specifications
and requirements. Contract modifications exist when the amendment either
creates new or changes the existing enforceable rights and obligations. The
effect of a contract modification on the transaction price and the Group's
measure of progress for the performance obligation to which it relates, is
recognised as an adjustment to revenue in one of the following ways:
a. prospectively as an additional separate contract;
b. prospectively as a termination of the existing contract and
creation of a new contract;
c. as part of the original contract using a cumulative catch up; or
d. as a combination of (b) and (c).
For contracts for which the Group has decided there is a series of distinct
goods and services that are substantially the same and have the same pattern
of transfer where revenue is recognised over time, the modification will
always be treated under either (a) or (b); (d) may arise when a contract has a
part termination and a modification of the remaining performance obligations.
The facts and circumstances of any contract modification are considered
individually as the types of modifications will vary contract by contract and
may result in different accounting outcomes.
Principal versus agent
The Group has arrangements with some of its customers whereby it needs to
determine if it acts as a principal or an agent as more than one party is
involved in providing the goods and services to the customer. The Group acts
as a principal if it controls a promised good or service before transferring
that good or service to the customer. The Group is an agent if its role is to
arrange for another entity to provide the goods or services. Factors
considered in making this assessment are most notably the discretion the Group
has in establishing the price for the specified good or service, whether the
Group has inventory risk and whether the Group is primarily responsible for
fulfilling the promise to deliver the service or good.
This assessment of control requires judgement in particular in relation to
certain service contracts. Where the Group is acting as a principal, revenue
is recorded on a gross basis. Where the Group is acting as an agent revenue is
recorded at a net amount reflecting the margin earned.
Contract fulfilment assets
Contract fulfilment costs are divided into (i) costs that give rise to an
asset; and (ii) costs that are expensed as incurred.
When determining the appropriate accounting treatment for such costs, the
Group firstly considers any other applicable standards. If those other
standards preclude capitalisation of a particular cost, then an asset is not
recognised under IFRS 15.
If other standards are not applicable to contract fulfilment costs, the Group
applies the following criteria which, if met, result in capitalisation: (i)
the costs directly relate to a contract or to a specifically identifiable
anticipated contract; (ii) the costs generate or enhance resources of the
entity that will be used in satisfying (or in continuing to satisfy)
performance obligations in the future; and (iii) the costs are expected to be
recovered.
The assessment of this criteria requires the application of judgement, in
particular when considering if costs generate or enhance resources to be used
to satisfy future performance obligations and whether costs are expected to be
recoverable. Contract fulfilment assets are amortised on a systematic basis
consistently with the transfer of goods or services related to the asset.
Contractual liabilities and contract assets
The Group's customer contracts include a diverse range of payment schedules
dependent upon the nature and type of goods and services being provided. These
payment schedules may include performance-based payments or progress payments
as well as regular monthly or quarterly payments for ongoing service delivery.
Payments for transactional goods and services may be at delivery date, in
arrears or part payment in advance.
Where payments received are greater than the revenue recognised at the period
end date, the Group recognises a contractual liability for this difference.
Where payments received are less than the revenue recognised at the period end
date, the Group recognises an accrued income contract asset for this
difference.
At each reporting date, the Group assesses whether there is any indication
that accrued income assets may be impaired by considering whether the revenue
remains highly probable that no revenue reversal will occur. Where an
indicator of impairment exists, the Group makes a formal estimate of the
asset's recoverable amount. Where the carrying amount of an asset exceeds its
recoverable amount, the asset is considered impaired and is written down to
its recoverable amount. There are no obligations for refunds or returns.
The period between when it is expected that the services will be transferred
to the customer and when payment will be made at contract inception is less
than one year, and the Group therefore applies IFRS 15's practical expedient,
removing the need to adjust the promised amount of consideration for the
effects of a significant financing component.
Impairment
Financial Assets: impairment is based on expected credit losses for all
financial assets not held at fair value through profit or loss, reflecting the
Group's expectation of the creditworthiness of the financial asset and
includes accrued income.
Non-Financial Assets: including contract fulfilment assets, are subject to
impairment tests when there is an indication that the asset may be impaired,
comparing the carrying amount of the asset with its recoverable amount, which
is the higher of its fair value less costs to sell and its value in use.
(f) Intangible assets
All intangible assets, except goodwill, are stated at cost less accumulated
amortisation and any accumulated impairment losses.
Goodwill
Goodwill represents the amount by which the fair value of the cost of a
business combination exceeds the fair value of the net assets acquired.
Goodwill is not amortised and is stated at cost less any accumulated
impairment losses.
The recoverable amount of goodwill is tested for impairment annually or when
events or changes in circumstance indicate that it might be impaired.
Impairment charges are deducted from the carrying value and recognised
immediately in the income statement. For the purpose of impairment testing,
goodwill is allocated to each of the Group's cash-generating units expected to
benefit from the synergies of the combination. If the recoverable amount of
the cash generating unit is less than the carrying amount of the unit, the
impairment loss is allocated first to reduce the carrying amount of any
goodwill allocated to the unit and then to the other assets of the unit
pro-rata on the basis of the carrying amount of each asset in the unit. An
impairment loss recognised for goodwill is not reversed in a subsequent
period.
Acquisition-related intangible assets
Net assets acquired as part of a business combination includes an assessment
of the fair value of separately identifiable acquisition-related intangible
assets, in addition to other assets, liabilities and contingent liabilities
purchased. These are amortised on a straight-line basis over their useful
lives which are individually assessed.
Branding
Branding intangible value Is the deemed fair value attributable to the
acquired brands.
Customer relationships
Customer relationships intangible is the allocated fair value of the customer
relationships of the acquired companies.
Software and IP on acquisition
Software and IP intangible value is the allocated fair value to the software
and IP acquired.
Internal software development
Research and development expenditure
Research expenditure is recognised as an expense when it is incurred and
included in administrative expenses.
Capitalised internally generated research and development expenditure
Development expenditure is recognised as an expense except that costs incurred
on development projects are capitalised as long-term assets to the extent that
such expenditure is expected to generate future economic benefits. Development
expenditure is capitalised only if it meets the criteria for capitalisation
under IAS 38.
Capitalised development expenditure is measured at cost less accumulated
amortisation and impairment losses, if any. Development expenditure initially
recognised as an expense is not recognised as an asset in subsequent periods.
Capitalised development expenditure is amortised using the straight-line
method over a period of between five and ten years when the products or
services are ready for sale or use. In the event that it is no longer probable
that the expected future economic benefits will be recovered, the development
expenditure is written down to its recoverable amount. The amortisation charge
is recognised within operating expenses.
Amortisation periods of intangible assets
Intangible asset Amortisation period
Branding 5 years
Customer relationships 5-10 years
Intellectual property 5-10 years
Internal software development 5-10 years
(g) Functional and foreign currencies
(i) Functional and presentation currency
The individual Financial Statements of each entity in the Group are presented
in the currency of the primary economic environment in which the entity
operates, which is the functional currency.
The Interim Results are presented in Pounds Sterling, which is the Group's
presentation currency.
(ii) Transactions and balances
Transactions in foreign currencies are converted into the respective
functional currencies on initial recognition, using the exchange rates
approximating those ruling at the transaction dates. Monetary assets and
liabilities at the end of the reporting period are translated at the rates
ruling as of that date. Non-monetary assets and liabilities are translated
using exchange rates that existed when the values were determined. All
exchange differences are recognised in profit or loss.
(iii) Foreign operations
Assets and liabilities of foreign operations are translated to Pounds Sterling
at the rates of exchange ruling at the
end of the reporting period. Revenues and expenses of foreign operations are
translated at the average rate of exchange. All exchange differences arising
from translation are taken directly to other comprehensive income and
accumulated in equity under the foreign exchange translation reserve.
Goodwill and fair value adjustments arising from the acquisition of foreign
operations are treated as assets and liabilities of the foreign operations and
are recorded in the functional currency of the foreign operations and
translated at the closing rate at the end of the reporting period. Exchange
differences are recognised in other comprehensive income.
(h) Discontinued operations
A discontinued operation is a component of the consolidated entity that has
been disposed of or is classified as held for sale and that represents a
separate major line of business or geographical area of operations, is part of
a single co-ordinated plan to dispose of such a line of business or area of
operations, or is a subsidiary acquired exclusively with a view to resale. The
results of discontinued operations are presented separately on the face of the
statement of profit or loss and other comprehensive income.
(i) Stated capital
Ordinary shares and sponsor shares are classified as equity. Incremental costs
directly attributable to the issue of new shares are shown in the associated
stated capital as a deduction from the proceeds.
(j) Share based payments
The A ordinary shares in MAC I (BVI) Limited (the "Incentive Shares"),
represent equity-settled share-based payment arrangements under which the
Company receives services as a consideration for the additional rights
attached to these equity shares.
Equity-settled share-based payments to Directors and others providing similar
services are measured at the fair value of the equity instruments at the grant
date. The fair value is expensed, with a corresponding increase in equity, on
a straight-line basis from the grant date to the expected exercise date. Where
the equity instruments granted are considered to vest immediately, the
services are deemed to have been received in full, with a corresponding
expense and increase in equity recognised at grant date.
(k) Warrants
On 4 December 2020, the Company issued 700,000 ordinary shares and matching
warrants. Under the terms of the warrant instrument, warrant holders can
acquire one ordinary share per warrant at a price of £1 per ordinary share.
The Warrants are exercisable until 4 December 2025 being any time up to five
years after the IPO date (4 December 2020). Warrants are accounted for as
equity instruments under IAS 32 and are measured at fair value at the date of
issue. Fair value of the warrants has been calculated using a Black Scholes
option pricing methodology, which considered the exercise price, expected
volatility, risk free rate, expected dividends, and expected term of the
Warrants. Of these factors estimates and judgement are required when
determining the expected volatility, dividends, and warrant term. No revisions
have been made in the period. Details of which are contained in the audited
financial statements to 29 February 2024.
(l) Earnings per ordinary share
Earnings per ordinary share ("EPS") is calculated by dividing the profit or
loss attributable to ordinary shareholders of the Company by the weighted
average number of ordinary shares outstanding during the period. Diluted
earnings per share is calculated by adjusting the weighted average number of
ordinary shares outstanding to assume conversion of all potentially dilutive
instruments into ordinary shares.
(m) Provisions
General
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the
obligation. When the Group expects some or all of a provision to be
reimbursed. The expense relating to a provision is presented in the statement
of profit or loss net of any reimbursement. If the effect of the time value of
money is material, provisions are discounted using a current pre-tax rate that
reflects, when appropriate, the risks specific to the liability. When
discounting is used, the increase in the provision due to the passage of time
is recognised as a finance cost.
Onerous contracts
If the Group has a contract that is onerous, the present obligation under the
contract is recognised and measured as a provision. However, before a separate
provision for an onerous contract is established, the Group recognises any
impairment loss that has occurred on assets dedicated to that contract. An
onerous contract is a contract under which the unavoidable costs (i.e., the
costs that the Group cannot avoid because it has the contract) of meeting the
obligations under the contract exceed the economic benefits expected to be
received under it. The unavoidable costs under a contract reflect the least
net cost of exiting from the contract, which is the lower of the cost of
fulfilling it and any compensation or penalties arising from failure to fulfil
it. The cost of fulfilling a contract comprises the costs that relate directly
to the contract (i.e., both incremental costs and an allocation of costs
directly related to contract activities).
(n) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of
one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, and subsequently
measured at fair value through profit or loss ("FVPL"), amortised cost, or
fair value through other comprehensive income ("FVOCI").
The classification of financial assets at initial recognition depends on the
financial asset's contractual cash flow characteristics and the Group's
business model for managing them. In order for a financial asset to be
classified and measured at amortised cost or FVOCI, it needs to give rise to
cash flows that are 'solely payments of principal and interest' on the
principal amount outstanding (the "SPPI Criterion").
Financial assets are initially measured at their fair value plus, for those
financial assets not at fair value through profit or loss, transaction costs.
Subsequent measurement
For the purposes of subsequent measurement, all of the Group's financial
assets (except its Level 1 financial asset as detailed below) are classified
as financial assets at amortised cost. Financial assets at amortised cost
comprise of assets that are held within a business model with the objective to
hold the financial assets to collect contractual cash flows that meet the SPPI
Criterion. This category includes the Group's other receivables. These assets
are subsequently measured at amortised cost using the effective interest
method. The amortised cost is reduced by impairment losses, interest income,
foreign exchange gains and losses and impairment losses are recognised in
profit or loss. Any gain or loss on derecognition is recognised in profit or
loss.
The Group holds an investment in M&C Saatchi plc which it has classified
as a Level 1 financial asset as detailed in note 11. The Company accounts
for the investment at FVTPL and did not make the irrevocable election to
account for the investment at FVOCI. The fair value was determined in line
with the requirements of IFRS 13 'Fair Value Measurement'. Assets in this
category are measured at fair value with gains or losses recognised in profit
or loss. The fair values of financial assets in this category are determined
by reference to active market transactions.
As at the balance sheet date the Group has not classified any assets as being
financial assets at FVOCI.
Derecognition
A financial asset is primarily derecognised and removed from the Consolidated
Statement of Financial Position when the rights to receive cash flows from the
asset have expired.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified as financial liabilities at fair value
through profit or loss or amortised cost. All financial liabilities are
recognised initially at fair value and, in the case of payables, net of
directly attributable transaction costs.
Subsequent measurement
Financial liabilities are subsequently measured at amortised cost and in the
case of interest-bearing financial liabilities at amortised cost using the
effective interest rate method. Gains and losses are recognised in the
Statement of Comprehensive Income when the liabilities are derecognised.
Derecognition
A financial liability is derecognised when the obligation under the liability
is discharged or cancelled or expires.
3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the Financial Statements under IFRS requires the Directors
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent assets and liabilities.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors including expectations of future events that are
believed to be reasonable under the circumstances. Actual results may differ
from these estimates.
Key sources of estimation uncertainty
Identifiable assets acquired and liabilities assumed
As required by IFRS 3, we have measured the assets acquired and liabilities
assumed on the acquisitions in the period at their fair value on acquisition.
The fair values of contract liabilities at acquisition dates were estimated to
obtain a price that would be paid to transfer the liability in an orderly
transaction between market participants. The approach used was based on a
market participant's estimate of the costs that will be incurred to fulfil the
obligation plus a normal profit margin, based on the overall cost profile over
the life of the contract.
The determination of the fair value of assets and liabilities including
goodwill arising on the acquisition of businesses, the acquisition of
branding, customer relationships and intellectual property, whether arising
from separate purchases or from the acquisition as part of business
combinations, and development expenditure which is expected to generate future
economic benefits, are based, to a considerable extent, on management's
estimations.
The fair value of these assets is determined by discounting estimated future
net cash flows generated by the asset
where no active market for the assets exists. The use of different assumptions
for the expectations of future cash
flows and the discount rate would change the valuation of the intangible
assets.
Whilst the accounting for business combinations is substantially complete,
certain acquisition fair value estimates are in the process of being
finalised. Management have engaged with specialists in this regard and at
the date of this report do not expect any differences to have a material
effect on the numbers as reported in these Interim Results.
Critical accounting judgements
Revenue recognition
There are a number of areas where judgement has been applied in respect of
revenue recognition. A description of the way in which revenue and
associated assets are recognised is detailed in note 2. In applying IFRS 15
Revenue from Contracts with Customers significant judgement which may affect
the determination of the amount and timing of revenue from contracts with
customer include: assessment of the costs the Group incurs to deliver the
contractual commitments and whether such costs should be expensed as incurred
or capitalised.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only
if the consolidated entity considers it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
Provisions
Onerous contract provisions are recognised where the unavoidable costs under a
contract reflect the least net cost of exiting from the contract, which is the
lower of the cost of fulfilling it and any compensation or penalties arising
from failure to fulfil it.
For the period to 31 August 2024, the Directors do not consider that they have
made any other significant estimates, judgments or assumptions which would
materially affect the balances and results reported in these Financial
Statements.
4. ALTERNATIVE PERFORMANCE MEASURES
In reporting financial information, the Group presents alternative performance
measures ("APMs") which are not defined or specified under the requirements of
IFRS. The Group believes that these APMs, which are not considered to be a
substitute for IFRS measures, provide stakeholders with additional useful
information on the underlying trends, performance and position of the Group
and are consistent with how business performance is measured internally. The
alternative performance measures are not defined by IFRS and therefore may not
be directly comparable with other companies' alternative performance measures.
The key APMs that the Group uses are outlined below.
Closest equivalent IFRS measure Reconciling items to IFRS measure Definition and purpose
Income Statement Measures
Adjusted EBITDA OR PBT Operating Profit OR Profit before Tax Adjusting items Adjusted Operating profit/Profit before tax excludes adjusting items.
Adjusting items None Refer to definition Items which are not considered part of the normal operating costs of the
business, are separately disclosed because of their size, nature or incidence
are treated as adjusting. The Group believes the separate disclosure of these
items provides additional useful information to users of the financial
statements to enable a better understanding of the Group's underlying
financial performance. These may include the financial effect of adjusting
items such as, inter alia, restructuring costs, impairment charges,
amortisation of acquired intangibles, costs relating to business combinations,
one-off foreign exchange gains or losses, integration costs,
acquisition-related expenses, share-based payment charges, contingent
consideration and earn-outs, cloud computing configuration and customisation
costs, and right-of-use asset disposal gains or losses.
Recurring Revenue Revenue Refer to note 5 Recurring revenues are defined as the revenue streams of the Group that are
recurring in nature.
Transactional Revenue Revenue Refer to note 5 Transactional Revenue are recognised at the point of transfer (delivery) to a
customer.
Balance Sheet measures
Net cash or debt None Refer to notes Net cash debt is defined as Cash and cash equivalents and short-term deposits,
less Bank overdrafts and other current and non-current borrowings.
Cash Flow measures
Cash conversion None Refer to definition Adjusted operating cash flow as a percentage of Adjusted EBITDA.
Free cash flow None Refer to definition Cash flow in the period after accounting for operating activities, investing
activities, lease payments, interest and tax.
5. SEGMENT INFORMATION
Revenue from continuing operations
Six months Six months
ended 31
ended 31
August December
2024 2023
Unaudited Unaudited
£000s £000s
Recurring revenues 15,976 11,575
Transactional revenues 3,892 3,572
19,868 15,147
Revenue is recognised for each category as follows:
• Recurring revenues: income occurring continuously and repeatedly.
• Transactional revenues: recognised at the point of transfer (delivery) to
a customer
Operating segments
IFRS 8 requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the chief
operating decision makers to allocate resources to the segments and to assess
their performance.
The chief operating decision makers have been identified as the Executive
Directors. The Group revenue is derived from the sale and subscription of
recurring and transactional revenue engagements with its customers.
Consequently, the Executive Directors review the two revenue streams, but as
the costs are not recorded in the same way, the information on costs is
presented as one segment and as such the information included below is
presented in line with management information.
Six months Six months
ended
ended
31 August 31 December
2024 2023
Unaudited Unaudited
£000s £000s
Revenue 19,868 15,147
EBITDA 3,508 1,851
Acquisition expenses, stamp duties and relisting expenses 504 1,848
Adjusted EBITDA 4,012 3,699
Depreciation (38) (57)
Adjusted operating profit 3,974 3,642
Amortisation of acquired intangible assets (1,471) (1,134)
Acquisition expenses, stamp duties and relisting expenses (504) (1,848)
Fair value gain on financial assets 4,260 960
Operating profit 6,259 1,620
6. EMPLOYEES AND DIRECTORS
(a) Employment costs for the Group during the period:
Six months Six months
ended 31
ended 31
December
August
2023
2024
Unaudited
Unaudited
£000s £000s
Wages and salaries 7,897 6,758
Pension contributions 239 179
Social security costs 870 638
Total employment costs expense 9,006 7,575
(b) Key management/executive compensation
The Board considers the Directors of the Company, to be the key management
personnel of the Group.
During the six months ended 31 August 2024, the Company had the following
Executive Directors: Vin Murria, Gavin Hugill and Karen Chandler.
Full details in respect of the Directors' roles and remuneration are set out
in the Company's admission document dated January 8th, 2024 and in the
financial results to 29 February 2024. Since this date no changes were made to
directors remuneration.
Vin Murria, Gavin Hugill, Karen Chandler and Mark Brangstrup Watts all have a
beneficial interest in the A ordinary shares (Incentive Shares) issued by the
Company's subsidiary. This is disclosed in note 19 of these Interim Results.
(c) Employed persons
The average monthly number of persons employed by the Group (including
Directors) during the period was as follows (persons from Acquisitions
included for five of the six months):
Six months Six months
ended 31
ended 31
December
August
2023
2024
Unaudited
Unaudited
number number
Leadership 12 9
Management 6 6
Technical 182 165
Sales & Marketing 20 18
Administration 18 11
238 209
7. OPERATING EXPENSES ARE STATED AFTER CHARGING
Six months Six months
ended 31
ended 31
December
August
2023
2024
Unaudited
Unaudited
£000s £000s
Group operating expenses by nature
Short-term lease costs 81 6
Depreciation 38 57
Amortisation 1,471 1,134
Audit fees 184 161
Net foreign exchange (gains)/losses (25) 108
Non-recurring project costs 504 1,848
Listing fees 31 45
8. TAXATION
Income tax expense is recognised based on management's estimate of the
weighted average income tax rate expected for the full financial year. Tax
is charged at 20.4% for the six months ended 31 August 2024 (31 December 2023:
22.8%) representing the best estimate of the average annual tax rate expected
to apply for the full year applied to the pre-tax income of the six month
period.
The effective rate applied for 2024 was lower than the standard rate of UK
corporation tax due to the brought forward tax losses held by the Group and it
subsidiaries and the effective rate of tax in Ireland. The effective tax
rate applied for the interim period to 31 August 2024 is affected by deferred
tax liability releases in relation to the intangibles created upon the
business combination.
9. PROFIT/LOSS PER ORDINARY SHARE
Basic EPS is calculated by dividing the profit/(loss) attributable to equity
holders of a company by the weighted average number of ordinary shares in
issue during the year. Diluted EPS is calculated by adjusting the weighted
average number of ordinary shares outstanding to assume conversion of all
potentially dilutive instruments into ordinary shares.
The Company has issued 700,000 warrants, each of which is convertible into one
ordinary share.
As more fully detailed in the annual financial statements to 29 February 2024,
incentive shares in MAC I (BVI) Limited have been issued. On exercise, the
value of these shares is expected to be delivered by the Company issuing new
ordinary shares, and hence the Incentive Shares could have a dilutive effect,
although the Company has the right at all times to settle such value in cash.
Whilst the Preferred Return is currently being achieved, the Incentive Shares
have not vested and therefore not been included in the calculation of diluted
EPS.
The Company has issued two sponsor shares, the sponsor shares have no right to
receive distributions and so have been ignored for the purposes of IAS 33.
Six months Six months
ended 31 ended 31
August December
2024 2023
Unaudited Unaudited
Basic
Profit attributable to owners of the parent (£000s) 7,851 3,138
Weighted average number of ordinary shares in issue 133,200,000 133,200,000
Basic profit per ordinary share (pence) 5.89 2.36
Diluted
Profit attributable to owners of the parent (£000s) 7,851 3,138
Weighted average shares in issue 133,200,000 133,200,000
Adjustment to number of shares for warrants 700,000 700,000
Adjusted weighted average shares in issue 133,900,000 133,900,000
Diluted profit/(loss) per ordinary share (pence) 5.86 2.34
Basic EPS on adjusted operating profit
Adjusted operating profit 3,974 3,642
Weighted average number of ordinary shares in issue 133,200,000 133,200,000
Basic adjusted operating profit per ordinary share (pence) 2.98 2.73
Adjusted operating profit has been calculated using the definitions in note 4
with further detail in note 5 to these financial statements.
10. INTANGIBLE ASSETS
Goodwill Customer relationships Brand names Software and IP on acquisition Internal software development Total
£000s £000s £000s £000s £000s £000s
Cost
At 1 March 2024 22,145 8,678 1,558 9,340 1,008 42,729
Acquisition of subsidiary 2,570 835 275 1,177 - 4,857
At 31 August 2024 24,715 9,513 1,833 10,517 1,008 47,586
Accumulated amortisation
At 1 March 2024 - 506 182 900 9 1,597
Amortisation - 451 165 810 45 1,471
At 31 August 2024 - 957 347 1,710 54 3,068
Carrying amount
At 29 February 2024 22,145 8,172 1,376 8,440 999 41,132
At 31 August 2024 24,715 8,556 1,486 8,807 954 44,518
Celaton acquired 1(st) July 2024 with further detail in note 17.
11. SUBSIDIARIES AND INVESTMENTS
Principal subsidiary undertakings of the Group
The Company owns directly the whole of the issued ordinary share capital of
its subsidiary undertaking. Details of the Company's direct subsidiary is
presented below:
Nature of business Country of incorporation Proportion of ordinary shares held by parent Proportion of ordinary shares held by the Group
Subsidiary
MAC I (BVI) Limited Incentive vehicle BVI 100% 100%
The registered office of MAC I (BVI) Limited Commerce House, Wickhams Cay 1,
P.O. Box 3140, Road Town, Tortola, British Virgin Islands VG1110.
Details of the indirectly held subsidiaries are presented below:
Nature of business Country of incorporation Proportion of ordinary shares held by the Group
Subsidiary
ADV Holding Group Limited Holding company England and Wales 100%
ADV Finance Holding Limited Holding company England and Wales 100%
ADV People Holding Limited Holding company England and Wales 100%
ADV US Inc. Holding company USA 100%
ADV Data Holding Limited Holding company England and Wales 100%
Integrated Business Software and Solutions Limited (1) Trading company England and Wales 100%
CHKS Limited ("CHKS") Trading company England and Wales 100%
Retain International Software Limited (2) Trading company England and Wales 100%
Workforce Management Software Limited ("WFM") Trading company England and Wales 100%
Celaton Limited ("Celaton") Trading company England and Wales 100%
IB Software and Solutions Limited (1) Trading company Ireland 100%
Retain International Software USA Limited (2) Trading company USA 100%
(1) Integrated Business Software and Solutions Limited and IB Software and
Solutions Limited together "IBSS".
(2) Retain International Software Limited and Retain International
Software USA Limited together "Retain".
On 1 July 2024, the Company acquired Celaton and as such these Interim Results
include 2 months of results from Celaton.
Financial assets
The Group directly owns an equity investment in M&C Saatchi plc which is
classified as FVTPL.
As at 31 August 2024 As at 29 February 2024
Unaudited Audited
£000s £000s
Level 1 Financial assets at fair value through profit or loss (FVTPL) 25,080 20,820
25,080 20,820
There were no transfers between levels for fair value measurements during the
year. The Group's policy is to recognise transfers into and out of fair value
hierarchy levels as at the end of the reporting period.
a) Level 1: The fair value of financial instruments traded in active
markets (such as publicly traded derivatives, and equity securities) is based
on quoted market prices at the end of the reporting period. The quoted market
price used for financial assets held by the Company is the current bid price.
These instruments are included in level 1.
b) Level 2: The fair value of financial instruments that are not traded
in an active market (e.g. over-the counter derivatives) is determined using
valuation techniques that maximise the use of observable market data and rely
as little as possible on entity-specific estimates. If all significant inputs
required to fair value an instrument are observable, the instrument is
included in level 2.
c) Level 3: If one or more of the significant inputs is not based on
observable market data, the instrument is included in level 3. This is the
case for unlisted equity securities.
During the period, the following gains/(losses) were recognised in profit or
loss:
Six months Six months
ended 31 ended 31
August December
2024 2023
Unaudited Unaudited
£000s £000s
Fair value gain on equity investments at FVTPL 4,260 960
4,260 960
12. TRADE AND OTHER RECEIVABLES
As at 31 As at 29
February
August
2024
2024 Audited
Unaudited
£000s £000s
Amounts receivable within in one year:
Trade receivables 8,506 5,128
Prepayments 919 352
Accrued income 1,642 1,466
Other receivables 282 121
11,349 7,067
There is no material difference between the book value and the fair value of
the receivables. Receivables are considered to be past due once they have
passed their contracted due date.
13. CASH AND CASH EQUIVALENTS
As at 31 As at 29
February
August
2024
2024 Audited
Unaudited
£000s £000s
Cash and cash equivalents
Cash at bank 24,954 22,996
Deposits on call 58,396 59,115
83,350 82,111
Credit risk is managed on a Group basis. Credit risk arises from cash and cash
equivalents and deposits with banks and financial institutions.
14. TRADE AND OTHER PAYABLES
As at 31 As at 29
February
August
2024
2024 Audited
Unaudited
£000s £000s
Amounts falling due within one year:
Trade payables 647 1,379
Taxes and social security 510 490
Accruals 4,040 3,051
Other payables 77 -
A ordinary share liability 116 116
5,390 5,036
There is no material difference between the book value and the fair value of
the trade and other payables.
15. CONTRACTUAL LIABILITIES
As at 31 As at 29
February
August
2024
2024 Audited
Unaudited
£000s £000s
Contractual liabilities up to 1year 15,407 11,051
Contractual liabilities over 1 year 490 814
15,897 11,865
The contractual liabilities balance relates to revenue from contracts with
customers.
16. PROVISIONS
As at 31 As at 29
February
August
2024
2024 Audited
Unaudited
£000s £000s
Onerous contract provision 1,678 2,042
1,678 2,042
A provision has been recognised upon acquisition for certain contracts with
customers of IBSS, for which the unavoidable costs of meeting the obligations,
relating to hosting costs at a data centre, exceed the economic benefits
expected to be received. It is anticipated that these costs will be incurred
over the next two to three financial years. No reimbursement is expected.
17. ACQUISITIONS
In the period, the Group acquired 100% of the equity interests in Celaton.
Outlined below is a summary of the consideration paid, the provisional fair
value of acquired intangible assets, the provisional fair value of other
acquired assets and liabilities assumed at the acquisition date and the
resulting goodwill for each entity acquired, subject to the finalisation of
the purchase price allocation report.
On 1 July 2024, AdvancedAdvT Limited completed the acquisition of Celaton for
cash consideration of £6.5 million, funded from the Company's cash resources.
The net cash outflow as detailed below reflects the consideration paid, net of
the cash acquired. Details on each of the entity's acquired is set out
below:
Celaton provides of intelligent process automation software solutions that
streamline data intensive clerical tasks.
The following table summarises the consideration paid for acquisitions, the
fair value of assets acquired and liabilities assumed at the acquisition date.
Celaton
Fair value
£000s
Consideration
Cash 6,500
Cash and cash equivalents acquired 1,707
Net Cash outflow 4,793
PPE: Computer equipment 9
Trade and other receivables 909
Trade and other payables (413)
Contractual Liabilities (6)
Deferred tax assets on acquisition (563)
Customer relationships identified on acquisition 835
Software and intellectual property identified on acquisition 1,177
Brand name identified on acquisition 275
Total identifiable net assets 2,223
Goodwill 2,570
4,793
Amortisation period
Customer relationships 8 years
Software and IP on acquisition 5 years
Brand name identified 5 years
Acquisition related costs of £0.1 million has been charged to the statement
of comprehensive income within administration expenses in the six months to
31(st) August 2024.
Goodwill arises due to: expectation of future economic benefits, going concern
value, excess business income, reputation, brand recognition, and proprietary
technology, strong and loyal customer base expertise of employees, social
impact of the company, stability and experience and synergistic benefits that
do not qualify for separate recognition as an intangible. None of the goodwill
is expected to be deductible for tax purposes. None of the goodwill is
expected to be deductible for tax purposes.
The acquisition recognised £0.6 million of revenue for the period between the
date of acquisition and the balance sheet date and £0.04 million of profit
before tax attributable to equity holders of the parent. As a preliminary
assessment, had the acquisition been completed on the first day of the period,
as opposed to the completion date of 1 July 2024, Group revenues from
continuing activities would have been approximately £1.1 million higher and
group profit before tax attributable to equity holders of the parent would
have been approximately £0.1 million higher.
18. EQUITY AND RESERVES
Authorised
Unlimited ordinary shares of no par value
Unlimited A shares of no par value
100 sponsor shares of no par value Stated Capital Stated Capital
As at 31 As at 29
August February
2024 2024
Unaudited Audited
Issued £000s £000s
133,200,000 ordinary shares of no par value 131,166 131,166
2 sponsor shares of no par value - -
Reserves
Warrant reserve 98 98
Warrant cancellation reserve 350 350
Share-based payment reserve 528 473
19. RELATED PARTY TRANSACTIONS
Transactions between Group undertakings, which are related parties, have been
eliminated on consolidation and are not disclosed in this note.
Vin Murria, Gavin Hugill, Karen Chandler, Mark Brangstrup Watts and Antoinette
Vanderpuije (the Company Secretary) have beneficial interests in the Incentive
Shares issued by the Company's subsidiary.
Details of their respective interests can be found in the Company's annual
financial statements to 29 February 2024, there have been no changes to these
interests in the period.
The acquisition of Celaton constituted a related party transaction for the
purposes of the AIM Rules for Companies. Vin Murria, a Director and
substantial shareholder of AdvT, and BGF Investment Management, a substantial
shareholder of AdvT, each owned approximately 45% of Celaton. In addition,
Karen Chandler, a Director of AdvT, was Chief Operating Officer and a minority
shareholder of Celaton.
The Directors independent of the acquisition (Gavin Hugill, Mark Bangstrup
Watts, Paul Gibson and Barbara Firth) having consulted with the Group's
nominated adviser, Singer Capital Markets, considered that the terms of the
acquisition to be fair and reasonable insofar as shareholders are concerned.
20. COMMITMENTS AND CONTINGENT LIABILITIES
There were no commitments or contingent liabilities outstanding at 31 August
2024 that require disclosure or adjustment in these financial statements.
21. POST BALANCE SHEET EVENTS
No other matter or circumstance has arisen since 31 August 2024 that has
significantly affected, or may significantly affect the consolidated entity's
operations, the results of those operations, or the consolidated entity's
state of affairs as at the date of this report.
22. DISCONTINUED OPERATIONS
On 26 January 2024, the Company sold Synaptic. Synaptic has been classified
was a discontinued operation within the 2023 Interim Financial Statements.
Results of Synaptic Software Limited included in the group consolidation for
the period are presented below:
Six Months to 31 August 2024 Six Months to 31 December 2023
£000s £000s
Revenue from contracts with customers - 1,009
Expenses - (959)
Operating Income - 50
Finance costs - (2)
Profit before tax for discontinued operations - 48
Tax Expense - -
Profit for period from discontinued operations - 48
The discontinued operation was not material to the calculation of earnings per
share as set out in note 9.
Carrying amounts of assets and liabilities disposed:
As at
26 January 2024
£000s
Cash and cash equivalents 1,407
Trade and other receivables 384
Deferred tax 256
Goodwill 793
Intangible assets 125
Total assets 2,965
Trade and other payables 309
Provisions 217
Total liabilities 526
Net Assets 2,439
Details of the disposal
As at
26 January 2024
£000s
Total sale consideration 5,101
Carrying amount of net assets disposed 2,439
Disposal costs 444
Profit on disposal before tax 2,218
Profit on disposal after tax 2,218
Advisers Company Secretary
Antoinette Vanderpuije
11 Buckingham Street
Nominated Adviser and Broker
London
Singer Capital Markets Advisory LLP
One Bartholomew Lane WC2N 6DF
London
EC2N 2AX
Registrar Registered Agent and Assistant Company Secretary
Link Market Services (Guernsey) Limited Conyers Corporate Services (BVI) Limited
Mont Crevelt House, Bulwer Avenue Commerce House, Wickhams Cay 1
St Sampson, Guernsey Road Town, VG1110
GY2 4LH Tortola, British Virgin Islands
Depository Solicitors to the Company (as to English law)
Akin Gump LLP
Link Market Services Trustees Limited
Eighth Floor
The Registry 34 Beckenham Road
Ten Bishops Square
Beckenham
London, E1 6EG
Kent, BR3 4TU
Auditor Solicitors to the Company (as to BVI Law)
Baker Tilly Channel Islands Limited Conyers Dill & Pearman
First floor, Kensington Chambers Commerce House, Wickhams Cay 1
46-50 Kensington Place Road Town, VG1110
St Helier Jersey JE4 0ZE Tortola, British Virgin Islands
UK establishment address
11 Buckingham Street
London
WC2N 6DF
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